The conduct of arbitral proceedings is governed by S.18-27 of the Act. The overarching principle is party autonomy (parties may agree on procedure) subject to two non-derogable requirements: equal treatment (S.18) and fair opportunity to present one's case (S.18). Where parties have not agreed on procedure, the tribunal determines it.
Why: Flexibility in procedure is a key advantage of arbitration over litigation. Parties can tailor the process to suit the complexity, value, and urgency of the dispute while ensuring natural justice.
Legal Framework
| Section | Content |
|---|---|
| S.18 | Equal treatment of parties; full opportunity to present case |
| S.19(1) | Parties free to agree on procedure |
| S.19(2) | Failing agreement, tribunal conducts proceedings in manner it considers appropriate |
| S.19(3) | Tribunal's power includes power to determine admissibility, relevance, materiality, and weight of evidence |
| S.20 | Place (seat) of arbitration: parties agree; failing that, tribunal determines |
| S.21 | Commencement: proceedings commence on date respondent receives request for arbitration |
| S.22 | Language: parties agree; failing that, tribunal determines |
| S.23 | Statements of claim and defence |
| S.24 | Hearings and written proceedings |
| S.25 | Default of a party |
| S.26 | Expert appointed by tribunal |
| S.27 | Court assistance in taking evidence |
Key Procedural Provisions
Equal Treatment (S.18)
The parties shall be treated with equality and each party shall be given a full opportunity of presenting his case.
This is the fundamental rule of arbitral procedure. Non-derogable. Violation is a ground for setting aside under S.34(2)(a)(iii).
Commencement (S.21)
Arbitral proceedings commence on the date on which the request for the dispute to be referred to arbitration is received by the respondent.
Why: This date is critical for computing limitation (whether the claim is time-barred) and for the S.29A timeline.
Pleadings (S.23)
| Stage | Requirement |
|---|---|
| Statement of claim | Facts supporting claim, points at issue, relief sought. Filed within period agreed or determined by tribunal |
| Statement of defence | Response to claim. Filed within period agreed or determined |
| Amendment | Parties may amend/supplement during proceedings unless tribunal considers it inappropriate (undue delay) |
| Documents | Parties may submit documents/evidence with pleadings |
| S.23(4) | Completion of pleadings = date of receipt of statement of defence (trigger for S.29A) |
Hearings vs Written Proceedings (S.24)
| Mode | When |
|---|---|
| Oral hearings | Default: tribunal shall hold oral hearings for presentation of evidence/arguments unless parties agree otherwise (S.24(1)) |
| Written proceedings | Parties may agree on documents-only arbitration (no oral hearing) |
| Notice | Tribunal must give sufficient advance notice of hearings (S.24(2)) |
| Record | All statements, documents, and evidence communicated to both parties (S.24(3)) |
| Expert reports | Expert reports and evidentiary documents on which tribunal relies must be given to parties (S.24(4)) |
Default (S.25)
| Party Default | Consequence | Illustrated Example |
|---|---|---|
| Claimant fails to file statement of claim | Proceedings terminated (S.25(a)) | A claimant invokes arbitration but then never files the statement of claim (perhaps lost interest or settled informally). After the deadline passes with no claim filed, the tribunal terminates proceedings. The arbitration simply ends. If the claimant later wants to pursue, they must invoke arbitration again (subject to limitation). |
| Respondent fails to file defence | Proceedings continue; no deemed admission (S.25(b)) | NHAI is the respondent in a Rs. 80 crore claim by a contractor. NHAI deliberately does not file a defence (hoping to delay/frustrate). The tribunal proceeds WITHOUT the defence. But it does NOT treat NHAI's silence as admission. The contractor must still PROVE its claims on evidence. The tribunal will examine documents, hear the contractor's witnesses, and decide. NHAI's strategy fails: it loses the opportunity to present its side, but the contractor does not get an automatic win. |
| Party fails to appear at hearing or produce evidence | Tribunal may continue and decide on available evidence (S.25(c)) | Day of cross-examination: the respondent's key witness does not appear. The tribunal has two choices: |
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(a) adjourn (at its discretion)
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(b) proceed without the witness and decide on whatever evidence IS available.
Unlike a court (where absence leads to ex parte decree under Order IX), the tribunal simply decides on what it has. The absent party bears the consequence of its own non-cooperation. |
Why: S.25(b) protects against deliberate delay. A respondent cannot frustrate proceedings by simply not participating. But non-appearance is not deemed admission; the tribunal must still decide on evidence.
Evidence (S.19(3), S.26, S.27)
| Aspect | Provision | Illustrated Example |
|---|---|---|
| Admissibility | Tribunal determines (S.19(3)); not bound by Evidence Act | In court, a photocopy is inadmissible without the original (S.65, Evidence Act). In arbitration, the tribunal can accept the photocopy if it finds it reliable. A WhatsApp screenshot, a video recording, an unsigned internal memo: the tribunal decides admissibility based on relevance and reliability, not technical evidence rules. |
| Expert | Tribunal may appoint expert (S.26); party must provide information to expert | In a construction defect dispute, the tribunal (a retired judge) lacks engineering knowledge. It appoints a structural engineer as tribunal-appointed expert under S.26. The expert inspects the site, examines documents, and submits a report. Parties can question the expert. The tribunal considers the report alongside other evidence. |
| Court assistance | Tribunal/party with approval may apply to court for evidence-taking (S.27) | A crucial witness (employee of a third party not bound by the arbitration) refuses to appear before the tribunal. The tribunal has no power to compel third-party witnesses. The claimant applies under S.27: the court issues a summons compelling the witness to appear before the tribunal and give evidence. |
| Disclosure | No mandatory discovery (unlike litigation); parties produce documents voluntarily or as directed |
Recall Check
- What is the non-derogable rule under S.18?
- When do arbitral proceedings "commence" under S.21?
- What happens if the respondent fails to file a statement of defence?
Key Cases
Ssangyong Engineering v NHAI (2019) Ssangyong-Engineering-v-NHAI-2019 Issue: Whether the tribunal's procedure and evidence appreciation can be reviewed by courts. Rule: Courts cannot reappreciate evidence or correct errors of fact. The tribunal's findings on fact are final unless patently illegal. Held: Reinforced that S.19(3) gives the tribunal complete power over evidence. Courts under S.34 cannot act as appellate courts on factual findings.
Associate Builders v DDA (2015) Associate-Builders-v-DDA-2015 Issue: Scope of "patent illegality" in the context of tribunal proceedings and evidence appreciation. Rule: A tribunal's decision on facts, if based on evidence, cannot be interfered with even if the court would have arrived at a different conclusion. Held: Patent illegality must appear on the face of the award. Mere reappreciation of evidence or a different view on facts does not constitute patent illegality.
Distinctions
| Basis | Arbitral Proceedings | Civil Court Proceedings |
|---|---|---|
| Procedure | Party-determined or tribunal-determined (S.19) | Fixed by CPC |
| Evidence | Tribunal determines admissibility (S.19(3)); not bound by Evidence Act | Bound by Indian Evidence Act, 1872 |
| Hearings | Oral (default) or written (if agreed) | Oral hearings mandatory |
| Examination | Tribunal decides manner of examination | Cross-examination as of right (Order XVIII) |
| Discovery | No mandatory discovery | Interrogatories and discovery available (Order XI) |
| Default of respondent | Proceedings continue; no deemed admission (S.25(b)) | Ex parte decree possible (Order IX) |
| Language | Parties choose (S.22) | Court's official language |
| Seat/Venue | Parties choose (S.20) | Territorial jurisdiction rules |
| Time limit | 12+6 months (S.29A) | No statutory time limit for judgment |
Flashcards
Q: What is the mandatory procedural principle under S.18? A: Equal treatment of parties and full opportunity to present their case. This is non-derogable.
Q: When do proceedings commence under S.21? A: On the date the respondent receives the request for arbitration referral.
Q: Is the arbitral tribunal bound by the Indian Evidence Act? A: No. S.19(3) gives the tribunal power to determine admissibility, relevance, materiality, and weight of any evidence. It is not bound by the Evidence Act.
Q: What happens if the claimant fails to file a statement of claim? A: Proceedings are terminated under S.25(a), unless parties have agreed otherwise.
Q: What is S.27 and when is it used? A: S.27 allows the tribunal or a party (with tribunal approval) to apply to the court for assistance in taking evidence that the tribunal cannot itself procure.
Q: What is the significance of S.23(4)? A: It defines "completion of pleadings" as the date of receipt of the statement of defence, which triggers the 12-month countdown under S.29A.
Q: Can the tribunal appoint its own expert? A: Yes. Under S.26, the tribunal may appoint one or more experts to report on specific issues, and may require parties to provide information to the expert.
Exam Scenario
In an arbitration, the respondent submits its statement of defence 3 days beyond the deadline set by the tribunal. The claimant objects and asks the tribunal to proceed under S.25(b) (default). The respondent argues it should be allowed to file late as the delay is minor. Advise the tribunal.
Approach: S.25(b) applies when the respondent "fails to communicate his statement of defence in accordance with S.23(2)." The tribunal has discretion under S.19(2) to conduct proceedings as it considers appropriate. A 3-day delay in a complex commercial arbitration is de minimis. The overriding principle under S.18 requires "full opportunity" to present one's case. Rejecting the defence for a minor procedural delay would violate S.18 and could be a ground for setting aside under S.34(2)(a)(iii) (party unable to present case). The tribunal should accept the delayed defence, possibly with costs to compensate the claimant for any prejudice. Cite Associate Builders v DDA (2015) for the principle that substance prevails over form in arbitral proceedings.