Impact of Covid-19 on Arbitration Proceedings in India

Posted On - 27 March, 2020 • By - Chandni Arora

Impact of COVID Outbreak on Arbitration Proceedings

The world is reeling under the impact of Covid-19, a global pandemic that has caused lockdowns in many countries. With the outbreak showing no signs of abating, the worldwide disruption in all facets of life seems set to continue. The legal system of India is no exception including the Alternate Dispute Resolution Mechanism, which has also been adversely affected.

The Supreme Court of India,
taking suo moto cognizance of the difficulties faced by
litigants throughout the country, on account of the Covid-19 Virus
with respect to the period of limitation under various laws passed an order
dated March 23, 2020. It was held that the period of limitation in all
proceedings before any Court or any Tribunal [whether under the general law or
Special Laws] shall stand extended w.e.f. March 15, 2020, till
further orders are passed.

The challenge to arbitral proceedings in the present
scenario and the implications of Section 29A

The situation of complete lockdown in the country prevents the physical
conduct of arbitral proceedings. Non-conduction of proceedings gives
rise to its own set of problems. Section 29A which was inserted by the
Arbitration and Conciliation (Amendment) Act in the year 2015, fixes
the time-period for passing the arbitral award at twelve months from
the date of reference to the arbitral tribunal (i.e. when notice of appointment is
received by the arbitrator)

 and is extendable by another six months with
the consent of the parties. Any further extensions can only be granted by the
concerned court, either prior to or after the expiry of the time period,
failing which the mandate of the arbitral tribunal shall terminate.
Hence, Section 29A, though enforcing a strict timeline for the conclusion of
arbitration proceedings, also provides a saving grace which may be resorted to
in situations such as the present one.

In order to seek an extension
of the statutory timeline for completion of arbitration proceedings, both the
parties (jointly) or either of the parties individually can file an application
before the concerned court within a
reasonable period
 from either before or after the expiry of 12

The pending arbitration
proceedings where the stipulated time period is expiring within the lockdown
period as mandated by the Government of India may take recourse to Section29A
for extension of time upon reopening of the courts of law.

Further, in line with
the direction of the Hon’ble Supreme Court dated March 23, 2020, the statutory
timelines for filing pleadings as well as conduction of all other proceedings
stand extended and may be referred to in the application for an extension being
filed. The order dated March 23, 2020, is all-encompassing and is applicable to
all Courts and Tribunals which includes an Arbitral Tribunal as well.

Litigation proceedings arising out of the Arbitration &
Conciliation Act

Statutory timelines
enumerated under the Arbitration & Conciliation Act wherein a Court of law
is mandated to be approached such as under Section 27, seeking Court assistance
for evidence or under Section 34 for challenging an arbitral award, also stand
affected in the present scenario. However, the order of the Hon’ble Supreme
Court dated March 23, 2020, provides relief in extending the limitation period
for all such stipulated timelines codified in the Act.

Modernized procedures in International Commercial Arbitration
to lead the way

The Indian Council of
Arbitration (ICA) is a leading arbitral institution in India
administering the conduct of arbitration proceedings including international
commercial arbitration. The ICA has been set up through the initiatives of the
Government of India and handles a vast number of arbitration cases. The ICA has
framed and adopted the International Commercial Arbitration Rules which govern
international commercial arbitration carried out by the ICA and serve as a
guideline to other arbitral institutions as well.

The rules of the ICA
mandate that the Arbitral Tribunal has the power to conduct arbitration
proceedings by video conference, telephone or any such other means of
communication as may be feasible and deemed fit. Since in international
commercial arbitration, the parties are often residents of different countries,
in order to enable the cost-effective arbitration proceedings and to meet the
strict statutory timelines, the use of modern technology is a necessity more
than a preference.

Since the virtual
conduct of proceedings is already an established norm in international
commercial arbitration, domestic arbitration proceedings will do well taking a
leaf out of their book and applying it to today’s tumultuous situation.

Continuity of Arbitration
Proceedings in the time of Corona

Despite the increasing
restrictions and complete lockdown in the country, some arbitral proceedings,
which are of urgent nature, may be conducted virtually. Section 19 of the
Arbitration & Conciliation Act, 1996 states that the Arbitral Tribunal shall
not be bound by the Code of Civil Procedure, 1908 nor the Indian Evidence Act,
1872. The parties to the arbitration proceeding or the Arbitral Tribunal may
decide on the procedure to be followed in the conduct of such arbitration

While the Arbitration
& Conciliation Act, 1996 is silent on the conduct of arbitration
proceedings through video conferencing, Section 19 certainly empowers the
Arbitral Tribunal to allow the same. The Arbitral Tribunal can direct the
parties to the arbitration proceedings to file pleadings through electronic
mail and conduct proceedings through the means of video conferences aiding
social distancing with minimal loss of productivity.

In fact, Arbitral
Tribunals in consonance with the changing technology and the strict statutory
timelines enumerated in the Arbitration & Conciliation Act, 1996 may even
resort to video conferencing in routine circumstances for convenience as well
as cost-effectiveness even in domestic arbitration proceedings.

Contributed By – Mirza Aslam Beg, Partner
& Chandni Arora, Senior Associate

King Stubb & Kasiva,
Advocates & Attorneys

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