Conduct of Arbitral Proceeding: Section 25 of Arbitration and Conciliation Act-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 subsection (1) of section (2), 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 alienations by the claimant;
(c) A party fails to appear a tan oral hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make the arbitral award on the evidence before it.
ARBITRATOR POWER TO PROCEED:
Where a party did not appear on the adjourned date in spite of a note by the arbitrator in the minutes of the hearing that if the party doesn’t appear on the appointed date and time, the hearing would proceed ex parte and no separate notice is given, the ex parte award, in such a case is legal has been stated in case of Nagasirinivasulu vs. GLADA Finance Ltd. (2009). A party who, though repeatedly written to, doesn’t appear before the arbitrator and allows the proceedings to go ex parte, cannot later on say that he was not given the opportunity of being heard.
If a party shows sufficient cause for his non-appearance before the arbitrator, the court will set aside the award passed ex-parte as stated in case of H.C. Whitehouse vs. Kahn Kahn and Co. (1914). In the case of State of U.P. vs. Combined Chemicals (2011), the appellant sought adjournment on the ground that he had filed an appeal against the order of the trial court on the question of maintainability of petition, the arbitrator granted adjournment but the appellant failed to obtain stay order from the appellant court and continued to abstain from the arbitral proceedings, it was held that the arbitrator was justified in proceeding ex parte against such party.
In the case of Mordue vs. Parmer (1871), it was held that an arbitrator having signed his award is functus officio and cannot alter his award and cannot alter the slightest error in it, even though such error has arisen from the mistake of a clerk in copying the draft. The proper course in such was to obtain an order to refer the award back to the arbitrator.
TERMINATION OF PROCEEDING:
Section 25(a) and 32(2) (c) are read conjointly it would lead to the irresistible conclusion that the arbitrator can terminate the proceeding if the claimant fails to communicate his statement of claim. In the case of Mohan Singh vs. International Authority of India (1997), the Supreme Court observed that, the word “shall” though prima facie gives the impression of being of mandatory character, it requires to be considered in the light of the intention of the legislature by carefully attending to the scope of the statute, its nature and design and the consequences that would flow from the construction thereof one way or the other. It must constrained by the combination of the essential ingredients of public and general convenience and the provisions thus be interpreted harmoniously to supress public mischief and promote public justice.
The basic principle of the settlement of the dispute is that the arbitrator should know as to what is the claim of the claimant and as to what is the standoff the respondent and what are the factual and legal issues involved in the matter. An arbitral tribunal can also recall the order of termination of the proceeding if done with a due cause and found merit in the case.
- Section 18: Equal treatment of parties
- Section 19: Determination of rules of procedure
- Section 20: Place of arbitration
- Section 21: Commencement of Arbitral Proceedings
- Section 22: Language
- Section 23: Statement of claim and defence
- Section 24: Hearing and written proceedings
- Section 25: Default of a Party
- Section 26: Expert appointment by arbitral tribunal
- Section 27: Court assistance in taking evidence
- More notes on Arbitration and Conciliation Act
- More law notes
Author Details: Vaibhav Goyal (BA LLB Student, Panjab University)