MANADATE OF ARBITRATOR IS TERMINABLE BY EFFLUX OF TIME

(Bharat Omen Refineries Ltd., -vs- Mantecn Consultant, 2012(2) Arb. LR 482 (DB) BOMBAY)

The Arbitration Agreement specifically contemplates that the Award should be made in writing and published by the arbitrator within two years after entering upon the reference or within such extended time not extending further twelve months.  The parties to the arbitration had advanced their arguments on 21.04.2006.  After a considerable delay, the Arbitrator wrote a letter on 14.03.2006 to the respondent that he is trying to publish the Award by 31.03.2006 and in any case latest by 30.04.2006 and that the Arbitrator requested the respondent to send him a Stamp Paper of Maharashtra State for Rs.100/- preferably by 23.03.2006 to publish the Award.  The Arbitrator wrote another letter on 19.05.2006 to the parties stating that he had received a call from the respondent who had requested the Arbitrator to publish the Award as quickly as possible.  By the said letter the Arbitrator stated that he could not publish the Award within 30.04.2006 as he had drafted the Award in respect of certain claims and he is expected to complete the Award of other claims shortly and publish the final Award on 31.03.2006.  Thereafter, the Arbitrator published the Award on 17.08.2006.  The said Award was challenged by the respondent u/s 34 of the Arbitration and Conciliation Act, 1996 and that the learned single Judge was pleased to set aside the Award on the ground that the Arbitrator becomes functus officio as the Award was not made within the stipulated time as mandated under the arbitration agreement.  Against which an appeal was preferred before the Division Bench of Bombay High Court wherein the Division Bench was pleased to confirm the order of the learned single Judge holding inter-alia that the jurisdiction of Arbitrator depends upon the Arbitration Clause in agreement itself; after conclusion of arguments, sending a stamp paper to Arbitrator is nothing but a ministerial act on the part of the respondent and it cannot be said to be effective  participation in arbitration proceedings;  simply because the respondent has provided a stamp paper or might have entered into telephonic conversation with Arbitrator itself cannot be treated as an act of waiver or it cannot be construed as an active participation in judicial proceedings before the Arbitrator;  the Award of Arbitrator is against the mandate given to the Arbitrator in the agreement and the subsequent proceeding after conclusion of arguments cannot be said to be legal and valid;   Arbitrator looses his jurisdiction as per the mandate of Section 14 and 15  once agreed time is lapsed and the said defect is incurable unless both the parties agreed by a fresh agreement in writing giving authority to the Arbitrator to declare the Award even after the stipulated time in furtherance of the original agreement;  implied consent cannot confer jurisdiction once the agreed period is lapsed;  once the agreed period is lapsed, the Arbitrator could have and/or might have refused to pass the Award or terminate the arbitral proceedings suo moto; or could have asked the consent of parties for extension of time;  the delay by the Arbitrator in passing the Award itself is misconduct;  parties cannot be deprived of their right to challenge the Award on the ground that there is a delay of 2 years and 4 months and Award as declared after such a long period can be challenged u/s 34 and finally the Division Bench dismissed the appeal confirming the order of setting aside the Award by relying upon the judgment reported in the Judgment of Supreme Court of India in the case of N.B.C.C. Ltd., -vs- J.G. Engineering Private Ltd. [2010(1) Arb.LR 165 S.C]

BY

D.SARAVANAN

CHAIRMAN

COUNCIL FOR NATIONAL AND INTERNATIONAL COMMERCIAL ARBITRATION (CNICA)