Arbitration Mediation and Conciliation

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Introduction:

The Limitation Act, 1963 is a legislation that bars legal remedy to those who have not exercised their right to act on a particular issue within the bounds of time prescribed by the law. Such limitation has been placed upon the legal rights of persons not to deprive them of their rights but to provide the necessary motivation to exercise them. The legislation finds its roots in the legal maxim, vigilantibus non dormientibus jura subveniunt, i.e., the law assists the vigilant and not those who are sluggish in asserting their rights.

Section 43

The Arbitration Mediation and Conciliation Act, 1996 provides for limitation in arbitration under Section 43. This section provides for the conditions regarding application of limitation to cases, the start of proceedings, when the claims would be barred by time and conditions that need to be met for time extensions to be granted. Here, limitation shall apply to arbitrations as it applies to proceedings in Court. It also provides that an arbitration shall be believed to have commenced on the date referred to in Section 21, i.e., the date on which a request for that dispute to be referred to arbitration is received by the respondent.

Section 11

Section 11 of the Arbitration Mediation and Conciliation Act, 1996 deals with the appointment of arbitrators, the procedure, requirements and limitations in arbitration insofar as it applies to any stage of the proceedings.

Section 11(4) states that if a party fails to appoint an arbitrator within 30 days from the receipt of the request to do so or if 2 appointed arbitrators fail to agree on the third arbitrator within 30 days from the date of their appointment, the appointment shall be made by the High Court, or the Supreme Court, as the case may be, on the request of a party.

BSNL versus Nortel Network India Pvt. Ltd.

This Supreme Court’s judgment in Bharat Sanchar Nigam Ltd. v. M/s Nortel Network India Pvt. Ltd. 1 laid down the law to follow in regard to time-barred claims and applications in arbitration.

This case raised two important questions for decision:

1. the period of limitation for filing an application under Section 11 of the Arbitration and Conciliation Act, 1996 and
2. whether the Court may refuse to make the reference under Section 11 where the claims are ex facie time-barred.

Due to the vacuum in the law to provide a period of limitation under Section 11, the Courts in prior judgments held that the limitation period would be governed by Article 137 of the First Schedule to the Limitation Act, 1963, which provides for a period of 3 years from the date when the right to apply begins.

The Court observed that it would be necessary for the Parliament to pass an amendment to Section 11 of the Arbitration and Conciliation Act, 1996, prescribing a specific period of limitation within which a party may approach the Court for making an application for appointment of the arbitrator under Section 11.

The Court also pointed out the Arbitration Mediation and Conciliation Act, 1996 (see Section 29A) was amended in 2015 and 2019 to provide time limits for speedy disposal of arbitral proceedings.

This case has been crucial in the determination of the limitation period for the appointment of an arbitrator.

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