Ex Parte Proceedings in Arbitration

May 3, 2023

This article has been written by Ms. Anchita Niranjan Chavan, a 3^rd year BLS LLB student at Oriental College of Law, Navi Mumbai.

EX PARTE PROCEEDINGS IN ARBITRATION

INTRODUCTION

Arbitration is a form of alternative dispute resolution (ADR) that resolves disputes outside the judiciary courts. The dispute will be decided by one or more persons (the ‘arbitrators’, ‘arbiters’ or ‘arbitral tribunal‘), which renders the ‘arbitration award‘. An arbitration decision or award is legally binding on both sides and enforceable in the courts, unless all parties stipulate that the arbitration process and decision are non-binding. The Legislative Council of India passed the Indian Arbitration Act in 1899. This act was India’s first comprehensive piece of law dealing with arbitration. It was only valid in presidential towns like Calcutta, Bombay, and Madras, though. This legislation expanded the scope of arbitration by defining “submission” as “a written agreement to submit current and future disagreements to arbitration, whether or not an arbitrator is designated therein.”

An arbitration is a private method of dispute resolution. The Arbitration Act imposes upon an arbitration tribunal a duty to act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting their case and answering that of their opponent. The arbitration tribunal is permitted to adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense and to provide a fair means for the resolution of the dispute.

EX PARTE PROCEEDINGS IN ARBITRATION

Section 25 in THE ARBITRATION AND CONCILIATION ACT, 1996

Default of a party-

The arbitration tribunal has the power to proceed ex parte (an order which is given in absence of one of the parties caused on their own will) if any of the following conditions arise-

the claimant fails to communicate his statement of claim in accordance with section 23, the arbitral tribunal shall terminate the proceedings;
the respondent fails to communicate his statement of defence in accordance with section 23, the arbitral tribunal shall continue the proceedings without treating that failure in itself as an admission of the allegations by the claimant;
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.

What happens when the case is ex parte?

Ex parte evidence, signifies the collection and examination of the evidence of only one party to the dispute before the adjudicating authority thereby abstaining the other from presenting the same. Often judicial decisions are also reached by means of ex parte evidence.

What is ex parte arbitration award in India?

India follows the adversarial system. The courts will proceed ex parte only if the defendant fails to appear despite being served with proper notice of court proceedings. An award may be recognized and enforced on the basis of an application made by the award holder under section 47 of the Arbitration Act. The judgment debtor may file written objections challenging the application for recognition and enforcement of the award under section 48 of the Act. Once the court is satisfied that the award is enforceable, the award is deemed to be a decree of that court under section 49 of the Act and enforced as per the procedure laid down in the CPC.

Object of Section 21 of The Arbitration and Conciliation Act 1996 with case laws.

West Bengal Power Development Corporation Limited Vs Sical Mining Limited (Calcutta High Court) In terms of Section 21 of the Arbitration and Conciliation Act, 1996, unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent. In this case, requirement of Section 21 has not been complied with, therefore, the AP is dismissed as premature with liberty to the applicant to give due notice to the respondent invoking the arbitration clause and in case if the parties fail to appoint the sole arbitrator with consent within the stipulated time, the applicant can approach this Court with appropriate prayer.

The Delhi High Court in a recent judgment dated February 28, 2017, delivered by Justice S. Murlidhar in Alupro Buildings Systems Pvt Ltd Vs. Ozone Overseas Pvt Ltd, has given a much needed interpretation and clarity to the object and purpose of issuing the notice under Section 21 of the Arbitration and Conciliation Act (hereinafter referred to as the Act) holding that the provisions under Section 21 of the Act are mandatory in nature and cannot be dispensed with and forms the preceding act in initiation and reference of the disputes between the parties . It was further held that the provisions of Section 21 are not limited only for the purpose of determining limitation and a party cannot straight away file a claim before the Arbitrator without issuing the notice under Section 21 of the Arbitration and Conciliation Act.

The notice under Section 21 of the Act by the Claimant invoking the arbitration, preceding the reference of the disputes to arbitration, is mandatory and without such notice, the arbitration proceedings which are commenced would be unsustainable in law.

Section 47 of the Arbitration Act-

In Hugo Neu Corporation v. Lloyds Steel Industries, 2009, SCC Online Bom 785, an affidavit was filed by the attorney appearing on behalf of the petitioner after the original award and other documents were destroyed. The court held that even though section 47 provides that the award holder shall produce such evidence with the application for enforcement of a foreign award, this being a procedural requirement, a pragmatic, flexible and non-formalist approach must be taken. The non-production of documents at the initial stage should not entail a dismissal of the application for enforcement. The party may be permitted to produce the evidence during the course of the proceedings, to enable the court to decide the enforcement petition. It has been observed that excessive formalism in the matter of enforcement of foreign awards must be deprecated.

Section 25 of the Act-

The provision of section 25 make it clear the arbitrator may pass order ex parte in the absence of any of the parties to arbitration. Before passing ex parte order it is the duty of the arbitrator to inform the parties concerned about his intention to proceed with the case of ex parte.

In Halsbury’s Laws of England it has been stated that where the arbitrator proposes to proceed with the reference notwithstanding the absence of one of the parties it is advisable that he should give that party a distinct notice of his intention to do so.

CONCLUSION

The Bombay High Court has shed some light on the powers of an arbitral tribunals to pass interim orders under Section 17 of Act, and the distinction between the powers of a Civil Court to grant interim reliefs under Section 9 of the Act.

A party who repeatedly does not appear before the arbitrator and allows the proceedings ex parte, cannot later on say that he was not given an opportunity of being heard. Although it is to be noted that an arbitration tribunal cannot pass an ex parte order on the mere filing of an interim application as the Arbitration and Conciliation Act, 1996 mandates sufficient advance notice for any hearing.

REFERENCES

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May 3, 2023