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TIME PERIOD FOR APPOINTMENT OF ARBITRATOR

Hello friends today we shall talk about various aspects of the limitation act governing the arbitration proceedings. Although there are no specific sections in the limitation act regarding the arbitration proceedings. But still some provisions of Limitation Act are applicable on Arbitration proceedings, let us see how.


Sec 21 and 43 of the Arbitration and Conciliation Act

  • Sec 43 of the Arbitration Act stipulates that the Limitation act will also apply to arbitrations as it applies in Courts. 
  • For purpose of this section, date of commencement of arbitration proceedings shall be computed in accordance with Sec 21 of the Arbitration Act according to which unless otherwise agreed, arbitral proceedings are deemed to commence on the date when a request to refer a particular dispute for arbitration is received by respondent. 
  • Moreover as per Sec 43, in case an arbitral award is set aside by the court, then time taken during such proceedings shall be excluded for the purpose of limitation.

Sec 11 of the Arbitration Act

As provided under this provision of the Act, parties are free to agree upon a procedure for appointment of the arbitrators. In case of 3 arbitrators, each party shall nominate one arbitrator who in turn shall appoint the third arbitrator through mutual consent. In cases of sole arbitrator, each party shall make a request to the other party who shall give a response within 30 days period, failing which any party shall have the right to get the appointment done by filing a petition to the before the High Court or the Supreme Court as the case may be. The main thing which is ensured in such an appointment that the person so appointed must be well qualified and he should be selected keeping in mind that he should be impartial and independent.  

 

Limitation with respect to the appointment of arbitrator under Sec 11 of the Arbitration Act Act.

In consideration of the provisions of both acts as discussed herein, since no specific period of limitation prescribed for appointment of arbitrators in the Limitation Act, thus it shall be governed under Article 137 of the Limitation Act which says that in case no period of limitation is prescribed in particular, then period of limitation shall be 3 years starting from the date when the right to apply accrues, which is  the date when a request to refer a particular dispute for arbitration is received by respondent as per Sec 21 of the Arbitration Act as stated above.

 

 

Limitation with respect to the substantive claims

It means that cases where though the appointment of arbitrators is made within period of limitation, however the substantive claims under dispute are time barred, e.g Suppose both A & B enter into an agreement, which also contained arbitration clause for redressal of disputes. Say A was to do some works for B, for which B was required to pay to A. Now lets say some of the bills of the year 2015 remained unpaid for which A sent a notice to B for initiation of arbitration in the year 2020. In this situation, as per Article 137 as discussed above, within 3 years i.e. 2023, arbitration proceedings may be invoked. But if the payments claimed thereunder are ex-facie time barred for which the Limitation period was 3 years i.e until 2018, then the bills of the year 2015 cannot become payable in the year 2023 even if  the initiation of arbitration proceedings is within due course of time. 

In such an event there is no use of entering into the arbitration proceedings as it will ultimately result in dismissal on account of time barred claims. Moreover, it is settled law that claims which are ex-facie time barred by limitation need not be referred for decision in the arbitration proceedings.

 

From the above it is clear that for initiation of the arbitration proceedings or appointment of arbitrator, two essentials which should be kept in mind is that firstly the arbitral proceedings must be instituted in due course as stipulated under Article 137 of the Limitation Act and secondly, the factum of dispute i.e. the arrears in question shall not have become time – barred.

 

I hope the article clearly explained the time period for appointment of arbitrator. For any query, please feel free to write in our comment section.


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