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Landmark Judgement by SC on Arbitration Fees

In a groundbreaking verdict, the Himachal Pradesh High Court has revolutionized the way arbitration timelines are understood and upheld. The court's recent interpretation of Section 29A(3) of the Arbitration and Conciliation Act has highlighted the pivotal role of implied consent in extending the arbitral period. This landmark decision signifies a departure from the conventional notion that consent must be in writing and opens up new dimensions in the realm of arbitration law.

In the case that brought about this trailblazing ruling, multiple appeals raised questions surrounding land acquisition for a crucial four-lane road project by the National Highways Authority of India (NHAI). The dispute centered on compensation enhancement under the National Highways Act, 1956.

The dispute resolution mechanism saw the appointment of an Arbitrator who initially enhanced the value of the acquired land and awarded statutory benefits. However, the NHAI contested the award, arguing that it was non-compliant with Section 29A of the Act due to its pronouncement after the mandated 12-month period. The NHAI contended that neither the parties had given express consent nor had the Court granted an extension order.

The District Judge sided with NHAI, setting aside the award and propelling the case into the Himachal Pradesh High Court.

Justice Jyotsna Rewal Dua took center stage in the adjudication of the matter. She delved into the intricacies of Section 29A(3), dissecting the requirement that the award be made within 12 months from the initiation of the reference. However, the court emphasized that this timeline could be stretched by six months through the consent of the parties.

Crucially, the court emphasized that the statute does not explicitly demand written consent. Instead, consent can be inferred from the parties' conduct during the arbitration process. In the current case, both parties continued the proceedings beyond the stipulated 12-month period without objection, indicating their implied consent for the extension.

Justice Dua stated, "Their acquiescence in proceeding with the arbitration case beyond twelve months without raising any objection to the continuation of proceeding does amount to consent. On the basis of such consent, the arbitral award if passed within a further period of six months would be a valid award.”

This perspective paved the way for the court's conclusion that the award, passed by the Arbitrator within two months after the initial 12-month period's expiration, was indeed valid under Section 29A(3). This verdict aligns with the extended time limit allowed by the parties' implied consent.

The ramifications of this precedent-setting ruling are immense. It marks a paradigm shift in arbitration law, focusing on parties' actions rather than just their written consent. This ruling recognizes the dynamics of real-world scenarios, where parties may not always express consent in writing but exhibit it through their continued participation.

Legal experts have lauded the Himachal Pradesh High Court's decision, recognizing its potential to reshape arbitration practices across the nation. This ruling underscores the importance of a holistic understanding of consent and conduct in arbitration proceedings, giving due consideration to the complexities that often arise during dispute resolution.

As arbitration continues to be a popular avenue for resolving disputes swiftly and efficiently, this judgement ushers in a new era of flexibility. It harmonizes the statutory framework with practical realities and reinforces the notion that the essence of consent can often be found beyond the ink on paper.

The Himachal Pradesh High Court's verdict on implied consent's role in extending the arbitral period is poised to leave an indelible mark on India's arbitration landscape. The ruling has shifted the focus from mere formalities to a comprehensive assessment of parties' conduct, allowing arbitration to adapt to the intricacies of real-world situations. As the legal community grapples with the implications of this groundbreaking decision, one thing is clear: arbitration has taken a significant step forward in aligning with the nuances of human behavior and consent.