25. Default of a party.—
Unless otherwise agreed by the parties, where, without showing sufficient
cause,—
(a) the claimant fails to communicate his statement of claim in accordance with sub-section
(1) of
section 23, the arbitral tribunal shall terminate the proceedings;
(b) the respondent fails to communicate his statement of defence in accordance with sub-section
(1) of section 23, the arbitral tribunal shall continue the proceedings without treating that failure in
itself as an admission of the allegations by the claimant 3[and shall have the discretion to treat the
right of the respondent to file such statement of defence as having been forfeited].
(c) a party fails to appear at an oral hearing or to produce documentary evidence, the arbitral
tribunal may continue the proceedings and make the arbitral award on the evidence before it.
26. Expert appointed by arbitral tribunal.—
(1) Unless otherwise agreed by the parties, the arbitral
tribunal may—
(a) appoint one or more experts to report to it on specific issues to be determined by the arbitral
tribunal, and
(b) require a party to give the expert any relevant information or to produce, or to provide access
to, any relevant documents, goods or other property for his inspection.
(2) Unless otherwise agreed by the parties, if a party so requests or if the arbitral tribunal considers it
necessary, the expert shall, after delivery of his written or oral report, participate in an oral hearing where
the parties have the opportunity to put questions to him and to present expert witnesses in order to testify
on the points at issue.
(3) Unless otherwise agreed by the parties, the expert shall, on the request of a party, make available
to that party for examination all documents, goods or other property in the possession of the expert with
which he was provided in order to prepare his report.
27. Court assistance in taking evidence.—
(1) The arbitral tribunal, or a party with the approval of
the arbitral tribunal, may apply to the Court for assistance in taking evidence.
(2) The application shall specify—
(a) the names and addresses of the parties and the arbitrators;
(b) the general nature of the claim and the relief sought;
1. Ins. by Act 33 of 2019, s. 5 (w.e.f. 30-8-2019).
2. Ins. by Act 3 of 2016, s. 12 (w.e.f. 23-10-2015).
3. Ins. by s. 13, ibid. (w.e.f. 23-10-2015).
16
(c) the evidence to be obtained, in particular,—
(i) the name and address of any person to be heard as witness or expert witness and a
statement of the subject-matter of the testimony required;
(ii) the description of any document to be produced or property to be inspected.
(3) The Court may, within its competence and according to its rules on taking evidence, execute the
request by ordering that the evidence be provided directly to the arbitral tribunal.
(4) The Court may, while making an order under sub-section
(3), issue the same processes to
witnesses as it may issue in suits tried before it.
(5) Persons failing to attend in accordance with such process, or making any other default, or refusing
to give their evidence, or guilty of any contempt to the arbitral tribunal during the conduct of arbitral
proceedings, shall be subject to the like disadvantages, penalties and punishments by order of the Court
on the representation of the arbitral tribunal as they would incur for the like offences in suits tried before
the Court.
(6) In this section the expression “Processes” includes summonses and commissions for the
examination of witnesses and summonses to produce documents.
CHAPTER VI
Making of arbitral award and termination of proceedings
28. Rules applicable to substance of dispute.—
(1) Where the place of arbitration is situate in
India,—
(a) in an arbitration other than an international commercial arbitration, the arbitral tribunal shall
decide the dispute submitted to arbitration in accordance with the substantive law for the time being
in force in India;
(b) in international commercial arbitration,—
(i) the arbitral tribunal shall decide the dispute in accordance with the rules of law designated
by the parties as applicable to the substance of the dispute;
(ii) any designation by the parties of the law or legal system of a given country shall be
construed, unless otherwise expressed, as directly referring to the substantive law of that country
and not to its conflict of laws rules;
(iii) failing any designation of the law under clause
(a) by the parties, the arbitral tribunal
shall apply the rules of law it considers to be appropriate given all the circumstances surrounding
the dispute.
(2) The arbitral tribunal shall decide ex aequoet bono or as amiable compositeur only if the parties
have expressly authorised it to do so.
1
[
(3) While deciding and making an award, the arbitral tribunal shall, in all cases, take into account
the terms of the contract and trade usages applicable to the transaction.]
29.Decision making by panel of arbitrators.—
(1) Unless otherwise agreed by the parties, in arbitral
proceedings with more than one arbitrator, any decision of the arbitral tribunal shall be made by a
majority of all its members.
(2) Notwithstanding sub-section
(1), if authorised by the parties or all the members of the arbitral
tribunal, questions of procedure may be decided by the presiding arbitrator.
2
[29A. Time limit for arbitral award.— 3 [
(1)The award in matters other than international
commercial arbitration shall be made by the arbitral tribunal within a period of twelve months from the
date of completion of pleadings under sub-section
(4) of section 23:
Provided that the award in the matter of international commercial arbitration may be made as
expeditiously as possible and endeavor may be made to dispose of the matter within a period of twelve
months from the date of completion of pleadings under sub-section
(4) of section 23.]
1. Subs. by Act 3 of 2016, s. 14, for sub-section
(3) (w.e.f. 23-10-2015).
2. Ins. by s. 15, ibid. (w.e.f. 23-10-2015).
3. Subs. by Act 33 of 2019, s. 6, for sub-section
(1) (w.e.f. 30-8-2019).
17
(2) If the award is made within a period of six months from the date the arbitral tribunal enters upon
the reference, the arbitral tribunal shall be entitled to receive such amount of additional fees as the parties
may agree.
(3) The parties may, by consent, extend the period specified in sub-section
(1) for making award for a
further period not exceeding six months.
(4) If the award is not made within the period specified in sub-section
(1) or the extended period
specified under sub-section
(3), the mandate of the arbitrator
(s) shall terminate unless the Court has,
either prior to or after the expiry of the period so specified, extended the period:
Provided that while extending the period under this sub-section, if the Court finds that the
proceedings have been delayed for the reasons attributable to the arbitral tribunal, then, it may order
reduction of fees of arbitrator
(s) by not exceeding five per cent. for each month of such delay.
1
[Provided further that where an application under sub-section
(5) is pending, the mandate of the
arbitrator shall continue till the disposal of the said application:
Provided also that the arbitrator shall be given an opportunity of being heard before the fees is
reduced.]
(5) The extension of period referred to in sub-section
(4) may be on the application of any of the
parties and may be granted only for sufficient cause and on such terms and conditions as may be imposed
by the Court.
(6) While extending the period referred to in sub-section
(4), it shall be open to the Court to substitute
one or all of the arbitrators and if one or all of the arbitrators are substituted, the arbitral proceedings shall
continue from the stage already reached and on the basis of the evidence and material already on record,
and the arbitrator
(s) appointed under this section shall be deemed to have received the said evidence and
material.
(7) In the event of arbitrator
(s) being appointed under this section, the arbitral tribunal thus
reconstituted shall be deemed to be in continuation of the previously appointed arbitral tribunal.
(8) It shall be open to the Court to impose actual or exemplary costs upon any of the parties under this
section.
(9) An application filed under sub-section
(5) shall be disposed of by the Court as expeditiously as
possible and endeavour shall be made to dispose of the matter within a period of sixty days from the date
of service of notice on the opposite party.
STATE AMENDMENT
Jammu and Kashmir and Ladakh (UTs).—
Amendment of sections 29A.—
(a) for sub-section
(1), the following sub-section shall be substituted, namely:––
“
(1) The award shall be made within a period of twelve months from the date the arbitral tribunal
enters upon the reference.
Explanation.—For the purposes of this sub-section, an arbitral tribunal shall be deemed to have
entered upon the reference on the date on which the arbitrator or all the arbitrators, as the case may
be, have received notice, in writing, of their appointment.”;
(b) in sub-section
(4), omit second and third provisos.
[Vide the Jammu and Kashmir Reorganization (Adaptation of Central Laws) Order, 2020, notification
No. S.O. 1123(E) dated (18-3-2020) and Vide Union Territory of Ladakh Reorganisation (Adaptation of
Central Laws) Order, 2020, notification No. S.O. 3774(E), dated (23-10-2020).]
29B. Fast track procedure.—
(1) Notwithstanding anything contained in this Act, the parties to an
arbitration agreement, may, at any stage either before or at the time of appointment of the arbitral tribunal,
agree in writing to have their dispute resolved by fast track procedure specified in sub-section
(3).
1. Ins. by Act 33 of 2019, s. 6 (w.e.f. 30-8-2019).
18
(2) The parties to the arbitration agreement, while agreeing for resolution of dispute by fast track
procedure, may agree that the arbitral tribunal shall consist of a sole arbitrator who shall be chosen by the
parties.
(3) The arbitral tribunal shall follow the following procedure while conducting arbitration
proceedings under sub-section
(1):—
(a) The arbitral tribunal shall decide the dispute on the basis of written pleadings, documents and
submissions filed by the parties without any oral hearing;
(b) The arbitral tribunal shall have power to call for any further information or clarification from
the parties in addition to the pleadings and documents filed by them;
(c) An oral hearing may be held only, if, all the parties make a request or if the arbitral tribunal
considers it necessary to have oral hearing for clarifying certain issues;
(d) The arbitral tribunal may dispense with any technical formalities, if an oral hearing is held,
and adopt such procedure as deemed appropriate for expeditious disposal of the case.
(4) The award under this section shall be made within a period of six months from the date the arbitral
tribunal enters upon the reference.
(5) If the award is not made within the period specified in sub-section
(4), the provisions of sub-
sections
(3) to
(9) of section 29A shall apply to the proceedings.
(6) The fees payable to the arbitrator and the manner of payment of the fees shall be such as may be
agreed between the arbitrator and the parties.]
30. Settlement.—
(1) It is not incompatible with an arbitration agreement for an arbitral tribunal to
encourage settlement of the dispute and, with the agreement of the parties, the arbitral tribunal may use
mediation, conciliation or other procedures at any time during the arbitral proceedings to encourage
settlement.
(2) If, during arbitral proceedings, the parties settle the dispute, the arbitral tribunal shall terminate the
proceedings and, if requested by the parties and not objected to by the arbitral tribunal, record the
settlement in the form of an arbitral award on agreed terms.
(3) An arbitral award on agreed terms shall be made in accordance with section 31 and shall state that
it is an arbitral award.
(4) An arbitral award on agreed terms shall have the same status and effect as any other arbitral award
on the substance of the dispute.
31. Form and contents of arbitral award.—
(1) An arbitral award shall be made in writing and shall
be signed by the members of the arbitral tribunal.
(2) For the purposes of sub-section
(1), in arbitral proceedings with more than one arbitrator, the
signatures of the majority of all the members of the arbitral tribunal shall be sufficient so long as the
reason for any omitted signature is stated.
(3) The arbitral award shall state the reasons upon which it is based, unless—
(a) the parties have agreed that no reasons are to be given, or
(b) the award is an arbitral award on agreed terms under section 30.
(4) The arbitral award shall state its date and the place of arbitration as determined in accordance with
section 20 and the award shall be deemed to have been made at that place.
(5) After the arbitral award is made, a signed copy shall be delivered to each party.
(6) The arbitral tribunal may, at any time during the arbitral proceedings, make an interim arbitral
award on any matter with respect to which it may make a final arbitral award.
(7)
(a) Unless otherwise agreed by the parties, where and in so far as an arbitral award is for the
payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at
such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the
period between the date on which the cause of action arose and the date on which the award is made.
19
1
[
(b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry
interest at the rate of two per cent. higher than the current rate of interest prevalent on the date of award,
from the date of award to the date of payment.
Explanation.—The expression “current rate of interest” shall have the same meaning as assigned to it
under clause
(b) of section 2 of the Interest Act, 1978 (14 of 1978).]
2
[
(8) The costs of an arbitration shall be fixed by the arbitral tribunal in accordance with section 31A.]
Explanation.—For the purpose of clause
(a), “costs” means reasonable costs relating to—
(i) the fees and expenses of the arbitrators and witnesses,
(ii) legal fees and expenses,
(iii) any administration fees of the institution supervising the arbitration, and
(iv) any other expenses incurred in connection with the arbitral proceedings and the arbitral
award.
3
[31A. Regime for costs.—
(1) In relation to any arbitration proceeding or a proceeding under any of
the provisions of this Act pertaining to the arbitration, the Court or arbitral tribunal, notwithstanding
anything contained in the Code of Civil Procedure,1908 (5 of 1908), shall have the discretion to
determine—
(a) whether costs are payable by one party to another;
(b) the amount of such costs; and
(c) when such costs are to be paid.
Explanation.—For the purpose of this sub-section, “costs” means reasonable costs relating to—
(i) the fees and expenses of the arbitrators, Courts and witnesses;
(ii) legal fees and expenses;
(iii) any administration fees of the institution supervising the arbitration; and
(iv) any other expenses incurred in connection with the arbitral or Court proceedings and the
arbitral award.
(2) If the Court or arbitral tribunal decides to make an order as to payment of costs,—
(a) the general rule is that the unsuccessful party shall be ordered to pay the costs of the
successful party; or
(b) the Court or arbitral tribunal may make a different order for reasons to be recorded in writing.
(3) In determining the costs, the Court or arbitral tribunal shall have regard to all the circumstances,
including—
(a) the conduct of all the parties;
(b) whether a party has succeeded partly in the case;
(c) whether the party had made a frivolous counterclaim leading to delay in the disposal of the
arbitral proceedings; and
(d) whether any reasonable offer to settle the dispute is made by a party and refused by the other
party.
(4) The Court or arbitral tribunal may make any order under this section including the order that a
party shall pay—
(a) a proportion of another party’s costs;
(b) a stated amount in respect of another party’s costs;
1. Subs. by Act 3 of 2016, s. 16, for clause
(b) (w.e.f. 23-10-2015).
1. Subs. by Act 3 of 2016, s. 16, for sub-section
(8) (w.e.f. 23-10-2015).
2. Ins. by s.17, ibid. (w.e.f. 23-10-2015).
20
(c) costs from or until a certain date only;
(d) costs incurred before proceedings have begun;
(e) costs relating to particular steps taken in the proceedings;
(f) costs relating only to a distinct part of the proceedings; and
(g) interest on costs from or until a certain date.
(5) An agreement which has the effect that a party is to pay the whole or part of the costs of the
arbitration in any event shall be only valid if such agreement is made after the dispute in question has
arisen.]
32. Termination of proceedings.—
(1) The arbitral proceedings shall be terminated by the final
arbitral award or by an order of the arbitral tribunal under sub-section
(2).
(2) The arbitral tribunal shall issue an order for the termination of the arbitral proceedings
where—
(a) the claimant withdraws his claim, unless the respondent objects to the order and the
arbitral tribunal recognises a legitimate interest on his part in obtaining a final settlement of the
dispute,
(b) the parties agree on the termination of the proceedings, or
(c) the arbitral tribunal finds that the continuation of the proceedings has for any other reason
become unnecessary or impossible.
(3) Subject to section 33 and sub-section
(4) of section 34, the mandate of the arbitral tribunal shall
terminate with the termination of the arbitral proceedings.
33. Correction and interpretation of award; additional award.—
(1) Within thirty days from the
receipt of the arbitral award, unless another period of time has been agreed upon by the parties—
(a) a party, with notice to the other party, may request the arbitral tribunal to correct any
computation errors, any clerical or typographical errors or any other errors of a similar nature
occurring in the award;
(b) if so agreed by the parties, a party, with notice to the other party, may request the arbitral
tribunal to give an interpretation of a specific point or part of the award.
(2) If the arbitral tribunal considers the request made under sub-section
(1) to be justified, it shall
make the correction or give the interpretation within thirty days from the receipt of the request and the
interpretation shall form part of the arbitral award.
(3) The arbitral tribunal may correct any error of the type referred to in clause
(a) of sub-section
(1),
on its own initiative, within thirty days from the date of the arbitral award.
(4) Unless otherwise agreed by the parties, a party with notice to the other party, may request, within
thirty days from the receipt of the arbitral award, the arbitral tribunal to make an additional arbitral award
as to claims presented in the arbitral proceedings but omitted from the arbitral award.
(5) If the arbitral tribunal considers the request made under sub-section
(4) to be justified, it shall
make the additional arbitral award within sixty days from the receipt of such request.
(6) The arbitral tribunal may extend, if necessary, the period of time within which it shall make a
correction, give an interpretation or make an additional arbitral award under sub-section
(2) or
sub-section
(5).
(7) Section 31 shall apply to a correction or interpretation of the arbitral award or to an additional
arbitral award made under this section.
CHAPTER VII
Recourse against arbitral award
34. Application for setting aside arbitral award.—
(1) Recourse to a Court against an arbitral award
may be made only by an application for setting aside such award in accordance with sub-section
(2) and
sub-section
(3).
(2) An arbitral award may be set aside by the Court only if—
21
(a) the party making the application 1[establishes on the basis of the record of the arbitral tribunal
that]—
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it
or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an
arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms
of the submission to arbitration, or it contains decisions on matters beyond the scope of the
submission to arbitration:
Provided that, if the decisions on matters submitted to arbitration can be separated from those
not so submitted, only that part of the arbitral award which contains decisions on matters not
submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance
with the agreement of the parties, unless such agreement was in conflict with a provision of this
Part from which the parties cannot derogate, or, failing such agreement, was not in accordance
with this Part; or
(b) the Court finds that—
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law
for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
2
[Explanation 1.—For the avoidance of any doubt, it is clarified that an award is in conflict with the
public policy of India, only if,—
(i) the making of the award was induced or affected by fraud or corruption or was in violation
of section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2.—For the avoidance of doubt, the test as to whether there is a contravention with the
fundamental policy of Indian law shall not entail a review on the merits of the dispute.]
3
[(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations,
may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality
appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of an erroneous application of the
law or by reappreciation of evidence.]
(3) An application for setting aside may not be made after three months have elapsed from the date on
which the party making that application had received the arbitral award or, if a request had been made
under section 33, from the date on which that request had been disposed of by the arbitral tribunal:
Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from
making the application within the said period of three months it may entertain the application within a
further period of thirty days, but not thereafter.
(4) On receipt of an application under sub-section
(1), the Court may, where it is appropriate and it is
so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the
1. Subs. by Act 33 of 2019, s. 7, for “furnishes proof that” (w.e.f. 30-8-2019).
2. Subs. by Act 3 of 2016, s. 18, for the Explanation (w.e.f. 23-10-2015).
3. Ins. by s. 18, ibid. (w.e.f. 23-10-2015).
22
arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the
opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award.
1
[
(5) An application under this section shall be filed by a party only after issuing a prior notice to the
other party and such application shall be accompanied by an affidavit by the applicant endorsing
compliance with the said requirement.
(6) An application under this section shall be disposed of expeditiously, and in any event, within a
period of one year from the date on which the notice referred to in sub-section
(5) is served upon the other
party.]
STATE AMENDMENT
Jammu and Kashmir and Ladakh (UTs).
Amendment of section 34.—
(i) after sub-section
(2), insert the following sub-section, namely:—
“(2A) An arbitral award may also be set aside by the Court, if the Court finds that the award is
vitiated by patent illega
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