Conduct of Arbitral Proceedings: Sections 18 to 27

Ten sections govern how a reference is actually run. They are built on a single architectural choice: the parties settle the procedure, and the Act supplies defaults where they have not. Section 19 frees the tribunal from the Code of Civil Procedure, 1908 and from the law of evidence, so there is no fixed procedure to be followed and none to be departed from. The one provision that does not yield to agreement is Section 18, which requires the parties to be treated with equality and each to be given a full opportunity to present his case. Everything that can go wrong in the conduct of an arbitration is tested against that section.

The ten sections and the function each performs

1. Equal Treatment: Section 18

The section states the two limbs of natural justice in a form suited to a private tribunal. Equality of treatment is the counterpart of the rule against bias: the same time, the same access to the tribunal and the same procedural indulgences must be available to both sides. A full opportunity to present the case is the counterpart of audi alteram partem: notice of the case to be met, sight of the material the tribunal will use, and a chance to answer it.

What Section 18 does not require is the procedure of a court. There is no right to cross examine every witness at length, no obligation to follow the order of proceedings laid down in the Code, and no right to insist on formal pleadings beyond what Section 23 requires. The tribunal may fix a timetable, limit the length of submissions, decide the dispute on documents where Section 24 allows, and refuse an adjournment. The line is crossed when a party is prevented from putting its case at all, or when the tribunal acts on material the party has not seen.

2. Rules of Procedure and Evidence: Section 19

What is excluded by Section 19(1), and what continues to apply

The exclusion of the two statutes is often overstated in answers. What Section 19(1) removes is the binding force of the Code and of the law of evidence, not the principles underlying them. A tribunal still allocates the burden of proof, still prefers the original document to secondary evidence where the original is available, and still applies the rules of privilege, because these are incidents of a fair enquiry rather than technicalities of the Code. The reference to the Indian Evidence Act, 1872 is now to be read as a reference to the Bharatiya Sakshya Adhiniyam, 2023, which replaced it.

Three matters continue to apply notwithstanding Section 19. The law of limitation applies by Section 43, which provides that the Limitation Act, 1963 applies to arbitrations as it applies to proceedings in court. The substantive law governing the contract applies by Section 28. And Section 18 applies as a mandatory provision. Beyond these, procedure is a matter for the parties, and institutional rules or the IBA Rules on the Taking of Evidence are commonly adopted to fill the gap.

3. Place of Arbitration: Section 20

Section 20(1) leaves the parties free to agree on the place of arbitration; Section 20(2) provides that failing agreement the tribunal determines it having regard to the circumstances of the case and the convenience of the parties; and Section 20(3) permits the tribunal, unless otherwise agreed, to meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of documents, goods or other property. The word place carries the sense of seat in the first two sub-sections and of venue in the third. The seat fixes the curial law and the supervisory court; the venue is merely where the sitting happens. The consequences of that distinction, and the authorities on it, are treated in the topic on definitions and kinds of arbitration.

4. Commencement: Section 21

The date fixed by this section does more work than its length suggests.

• Limitation. Section 43(2) provides that an arbitration is deemed to commence on the date referred to in Section 21, and the period of limitation for the claim is reckoned accordingly.
• Which law applies. The date of commencement determines whether a reference is governed by the Act as it stood before or after an amendment; this was the basis on which the application of the Amendment Act of 2015 was worked out.
• Section 9(2). Where an interim measure is obtained before commencement, the arbitral proceedings must begin within ninety days of that order.
• Section 11. The thirty-day periods for appointment run from the receipt of the request, so an application to the court is premature until they expire.
• Scope of the reference. The disputes described in the request define what has been referred, which matters when a party later seeks to add a claim.

4.1 The essentials of a notice

1. Identify the parties and the contract, and the arbitration clause relied on.
2. Describe the disputes with enough particularity to show what is being referred, since the scope of the reference is measured by the notice.
3. State unambiguously that arbitration is invoked, rather than merely threatening it.
4. Deal with the appointment: nominate an arbitrator, or call on the other party to concur in the appointment of a sole arbitrator, and give the period the clause or Section 11 requires.
5. Record compliance with any pre-arbitral tier the clause imposes, or explain why it is inapplicable.
6. Serve it so that receipt can be proved, since the section turns on receipt by the respondent and Section 3 supplies the rules of deemed delivery.

5. Language: Section 22

The parties are free to agree on the language or languages to be used. Failing agreement, the tribunal determines it, and the agreement or determination applies to any written statement by a party, any hearing and any award, decision or other communication by the tribunal. The tribunal may order that documentary evidence be accompanied by a translation into the agreed language. In domestic references the practical question is usually the translation of correspondence and site records, and the cost of translation forms part of the costs of the arbitration under Section 31A.

6. Pleadings: Section 23

Within the period agreed or determined by the tribunal, the claimant states the facts supporting his claim, the points at issue and the relief or remedy sought, and the respondent states his defence in respect of these particulars, unless the parties have agreed as to the required elements of those statements. The parties may submit with their statements all documents they consider relevant or add a reference to the documents or other evidence they will submit.

• Counterclaim and set-off. Section 23(2A), inserted in 2015, provides that the respondent, in support of his case, may also submit a counterclaim or plead a set-off, which shall be adjudicated upon by the tribunal if it falls within the scope of the arbitration agreement. The provision put beyond doubt what had earlier been argued, namely whether a counterclaim required a separate notice under Section 21.
• Amendment. Section 23(3) permits either party to amend or supplement his claim or defence during the proceedings, unless the tribunal considers it inappropriate to allow the amendment having regard to the delay in making it. The test is delay and prejudice, not the formal rules of Order VI Rule 17 of the Code.
• Time for pleadings. Section 23(4), inserted in 2019, requires the statement of claim and defence to be completed within six months from the date the arbitrators received notice in writing of their appointment. The period matters because Section 29A now runs the twelve-month limit for the award from the date of completion of pleadings.

7. Hearings and Written Proceedings: Section 24

Section 24(1) provides that the tribunal decides whether to hold oral hearings for the presentation of evidence or for oral argument, or whether the proceedings are to be conducted on the basis of documents and other materials. The first proviso requires the tribunal to hold oral hearings at an appropriate stage of the proceedings on the request of a party, unless the parties have agreed that no oral hearing shall be held. The second proviso, inserted in 2015, requires the tribunal, as far as possible, to hold oral hearings for the presentation of evidence or for oral argument on a day-to-day basis, and not to grant any adjournment without sufficient cause, with power to impose costs including exemplary costs on the party seeking an adjournment without sufficient cause.

Section 24(2) requires sufficient advance notice of any hearing and of any meeting of the tribunal for the purposes of inspection. Section 24(3) requires that all statements, documents or other information supplied to the tribunal by one party be communicated to the other, and that any expert report or evidentiary document on which the tribunal may rely in making its decision be communicated to the parties. Sub-section (3) is the procedural expression of Section 18, and it is the provision breached when a tribunal relies on material the other side has not seen.

8. Default of a Party: Section 25

The three defaults and the different consequence of each

Where the claimant fails to communicate his statement of claim in accordance with Section 23(1), the tribunal terminates the proceedings. Where the respondent fails to communicate his statement of defence, the tribunal continues the proceedings without treating that failure in itself as an admission of the allegations by the claimant, and, by a proviso inserted in 2019, may treat the right of the respondent to file the statement of defence as having been forfeited. Where a party fails to appear at an oral hearing or to produce documentary evidence, the tribunal may continue the proceedings and make the arbitral award on the evidence before it.

Two consequences deserve emphasis. An ex parte award is not an award by default: the claimant must still establish his claim on the material before the tribunal, and the award must state reasons under Section 31(3). And the tribunal must be able to show that the absent party had sufficient advance notice under Section 24(2), because the absence of notice is a ground under Section 34(2)(a)(iii).

9. Expert Appointed by the Tribunal: Section 26

Unless otherwise agreed, the tribunal may appoint one or more experts to report to it on specific issues and may require a party to give the expert any relevant information or to produce or provide access to any relevant documents, goods or other property for inspection. On the request of a party, or if the tribunal considers it necessary, the expert must participate in an oral hearing after delivery of his report, where the parties have the opportunity to put questions to him and to present expert witnesses to testify on the points at issue. The expert must, on request, make available to a party for examination all documents and property in his possession which were provided to him. A tribunal expert supplements the evidence; he does not decide, and a tribunal which simply adopts his conclusions without applying its own mind exposes the award to challenge.

10. Court Assistance in Taking Evidence: Section 27

The tribunal has no power to compel a person who is not a party. Section 27 supplies the answer. The tribunal, or a party with the approval of the tribunal, may apply to the court for assistance in taking evidence. The application must specify the names and addresses of the parties and the arbitrators, the general nature of the claim and the relief sought, the evidence to be obtained, the name and address of the person to be heard as witness or expert and the statement of the subject matter of the testimony required, and the description of any document to be produced or property to be inspected.

• The court may, within its competence and according to its rules on taking evidence, execute the request by ordering that the evidence be provided directly to the tribunal.
• It may issue the same processes to witnesses as it issues in suits tried before it.
• A person failing to attend in accordance with such process, or making any other default, or refusing to give evidence, or guilty of any contempt of the tribunal, is subject to the like disadvantages, penalties and punishments by order of the court as he would incur for the like offences in suits tried before the court.

11. Related Topics and Provisions