Principal steps in arbitration and interim measures

1. The principal steps

• Notice and commencement (section 21). Unless otherwise agreed, proceedings commence on the date the respondent receives a request to refer the dispute to arbitration. This date stops limitation (section 43(2)).
• Constitution of the tribunal under sections 10 and 11, with disclosure under section 12.
• Rules of procedure (section 19). The tribunal is not bound by the CPC or the Evidence Act (now the Bharatiya Sakshya Adhiniyam, 2023). The parties may agree on the procedure; failing that, the tribunal conducts the proceedings as it considers appropriate, including deciding admissibility, relevance, materiality and weight of evidence.
• Place (section 20). The parties may agree on the place; failing agreement, the tribunal determines it having regard to the circumstances, including the convenience of the parties. The tribunal may still meet elsewhere for hearing witnesses or inspection.
• Language (section 22). The parties may agree; failing agreement, the tribunal determines it, and the choice applies to written statements, hearings, the award and communications. The tribunal may require translations of documents.
• Statements of claim and defence (section 23). The claimant states the facts, issues and relief; the respondent his defence, and he may add a counterclaim or set-off within the scope of the agreement (section 23(2A)). Pleadings must be completed within six months of the arbitrators receiving notice of appointment (section 23(4), added in 2019).
• Hearings (section 24). The tribunal decides whether to hold oral hearings or proceed on documents, but must hold an oral hearing on a party's request unless the parties agreed otherwise. Hearings should be day to day, without adjournment except for sufficient cause, with costs for unjustified adjournments. Every document supplied by one side goes to the other.
• Default (section 25). If the claimant fails to file his claim, the tribunal terminates the proceedings; if the respondent fails to file a defence, the tribunal continues without treating that as an admission and may treat his right to file as forfeited; if a party fails to appear or produce evidence, the tribunal may proceed and make the award on the evidence before it.
• Experts (section 26) and court assistance in taking evidence (section 27), including summons to witnesses; defaulting witnesses face the same penalties as in a suit.
• Law applicable (section 28). In a domestic arbitration, the substantive law of India; in an international commercial arbitration, the law chosen by the parties. The tribunal decides ex aequo et bono only if expressly authorised, and must in all cases consider the contract terms and trade usages.
• Decision by majority (section 29), with procedural questions left to the presiding arbitrator if authorised.
• Time limit (section 29A). In matters other than international commercial arbitration, the award must be made within twelve months of completion of pleadings, extendable by six months by consent, and thereafter only by the court for sufficient cause; otherwise the mandate terminates. The court may reduce fees for delay attributable to the tribunal (up to 5% per month) and may substitute arbitrators. For an international commercial arbitration, the award is to be made as expeditiously as possible, with an endeavour to finish within twelve months.
• Settlement (section 30), award (section 31), termination (section 32) and correction, interpretation and additional award (section 33). These are dealt with in the next note.

2. Interim measures by the court: section 9

A party may apply to the court before or during the arbitral proceedings, or after the award but before its enforcement under section 36, for:

• appointment of a guardian for a minor or person of unsound mind for the purpose of the proceedings; or
• an interim measure of protection for: preservation, interim custody or sale of goods that are the subject matter; securing the amount in dispute; detention, preservation or inspection of property; interim injunction or appointment of a receiver; or any other measure that is just and convenient.

The court has the same powers as in a suit. Three limits were added in 2015:

• If the court grants relief before arbitration begins, proceedings must commence within 90 days or such further time as the court fixes (section 9(2)).
• Once the tribunal is constituted, the court shall not entertain a section 9 application unless the remedy under section 17 may not be efficacious (section 9(3)). In Arcelor Mittal Nippon Steel India Ltd. v. Essar Bulk Terminal Ltd., 2021 INSC 478, (2022) 1 SCC 712, the Court held that the bar applies to the stage of entertaining the application; where the court has already taken it up and applied its mind before the tribunal was constituted, it may decide it.
• For foreign-seated international commercial arbitrations, section 9 is available unless excluded by agreement (proviso to section 2(2)).

Relief before commencement needs a manifest intention to arbitrate: in Sundaram Finance Ltd. v. NEPC India Ltd., 1999 INSC 10, (1999) 2 SCC 479, the Court held that a section 9 application may be made before the arbitral proceedings begin, once the applicant shows a valid agreement and an intention to arbitrate. The court applies the ordinary tests for interim relief: prima facie case, balance of convenience and irreparable injury.

3. Interim measures by the tribunal: section 17

• Since the 2019 amendment, a party may apply to the tribunal during the arbitral proceedings (the words allowing post-award applications were omitted) for the same range of measures listed in section 9.
• The tribunal has the same powers as a court (section 17(1)).
• Its order is deemed to be an order of the court and is enforceable under the CPC as if it were a court order (section 17(2), substituted in 2015). Before 2015 such orders had no effective means of enforcement.
• An appeal lies to the court against an order granting or refusing an interim measure under section 17 (section 37(2)(b)), and against a court's order under section 9 (section 37(1)(b)).

In Amazon.com NV Investment Holdings LLC v. Future Retail Limited, 2021 INSC 385, (2022) 1 SCC 209, the Court held that an emergency arbitrator appointed under the institutional rules chosen by the parties is an arbitral tribunal for this purpose, and his order is an order under section 17(1) enforceable under section 17(2).

4. Problem

Dinku and Pinku decide to refer a business dispute to an arbitrator, but fail to decide in which language the proceedings should be conducted. Advise. (December 2018; the same question is set on the place of proceedings.)

Issue. Who determines the language of the arbitral proceedings where the parties have not agreed.

Law. Section 22(1) leaves the parties free to agree on the language or languages. Section 22(2) provides that, failing agreement, the arbitral tribunal shall determine the language or languages. Under section 22(3) the choice applies to written statements, hearings, the award and other communications, and under section 22(4) the tribunal may order translations of documentary evidence. Section 18 requires equal treatment and a full opportunity to each party.

Application. The failure to agree does not affect the validity of the arbitration agreement or stall the proceedings. Once constituted, the arbitrator will decide the language, considering the language of the contract and correspondence, the language the parties and witnesses understand, and fairness to both. He may fix more than one language, for example English with Kannada for the oral evidence of a witness, and order translations. Dinku and Pinku can still agree at any time, and their agreement would bind the arbitrator. If the dispute were over the place of arbitration, section 20(2) would apply in the same way: the tribunal fixes the place having regard to the circumstances, including the convenience of the parties.

Conclusion. The arbitrator determines the language under section 22(2). Neither party may refuse to proceed on that ground, and a party who is denied an effective hearing because of the language chosen may later challenge the award under section 34(2)(a)(iii) as having been unable to present his case.

How this is examined

“Principal steps in arbitration” is answered by walking through sections 21 to 33 in order, as in part 1. Interim measures are asked as a short note or as part of salient features: contrast section 9 (court, before, during or after) with section 17 (tribunal, during), give the 2015 enforcement change and the Amazon emergency arbitrator case. Procedure problems on language and place come straight from sections 20 and 22.