Reconsidering Fast Track Arbitration: A Legislative Case For Amending Section 29B Of Arbitration And Conciliation Act, 1996

Legislative Framework and the Promise of Expedition

Section 29B came into being by Section 15 of the Arbitration and Conciliation (Amendment) Act, 2015. The section gives the parties to an arbitration agreement the option of mutually agreeing to have their dispute settled via a fast track procedure. Sub-section (1) states that such an agreement may be entered into either "before" or "at the time of appointment" of the arbitral tribunal. Sub-section (2) of Section 29B further specifies that under the fast track procedure, the arbitral tribunal shall decide the case on the basis of written pleadings and documents without holding oral hearings except where either all the parties request so or the tribunal feels that an oral hearing is necessary to clarify certain issues.

Further, under sub-section (4), the award must be issued within six months from the day on which the arbitral tribunal "enters upon the reference"; provided that the expression "enters upon the reference" shall have the meaning as assigned to it by Section 23(4), that is, in relation to an arbitrator, it is the date of his receipt of the notice of his appointment.

Thus, the framework goes hand in hand with international arbitral practice, such as the ICC Expedited Procedure Rules or the expedited provisions of SIAC, and such a procedure would be suitable especially in disputes with lesser factual complexity or smaller monetary value.

Restrictive Nature Under Section 29B(1): The Procedural Bottleneck

Though the paramount aim of Section 29B is cognate with the dictum of speedy resolution of disputes, sub-section (1) takes an exceedingly restrictive view. The fast track procedure is permitted to be invoked up to the point where the tribunal is constituted; it does not envisage a situation where the parties have evaluated the complexity of the dispute after the pleadings and wish to adopt a fast track mechanism at a later stage.

Birds of feather flock alike, ad hoc arbitrations sit high on the Indian arbitration tree. The parties may not be conversant enough to settle on fast track arbitrations even at the pre-appointment stage. It is merely after claim, defence, counterclaim, or set-off are exchanged—that is to say, when pleadings have been substantially completed—that parties are much more comfortable in deciding on such a procedure.

This, in essence, is a serious shortcoming as the provision ignores the dynamic nature of arbitral proceedings wherein decisions on procedure are often revisited in light of the emerging complexities or an express agreement between the parties.

Legislative Intent versus Textual Rigidity

Narrow drafting of the 29B(1) section is notably in contrast to the Statement of Objects and Reasons appended to the Arbitration and Conciliation (Amendment) Bill 2015. Paragraph 6(vii) of the Statement explicitly used to provide that the Bill seeks:

"to provide that the parties to a dispute may at any stage agree in writing that their dispute be resolved through fast track procedure..."

Despite such laying down of broad policy, the actual text of Section 29B narrows any such agreement for fast track procedure to only before the appointment of an arbitrator. The presence of this language with a non-obstante clause further suggests that such restriction shall override any flexibility in procedure that the Act might otherwise allow.

This formulation would thus neutralize the greater procedural discretion available under Section 19(2) of the Act to parties for agreeing mutually on the procedure to be followed. Section 29B(1), by way of the non-obstante clause, prevents a party from waiving out of the fast track procedure once the tribunal is already constituted, despite the willingness of the parties and the tribunal to adopt such a procedure.

Judicial Economy and Section 23(4): An Unattainable Fit

Section 23(4) inserted by the 2019 amendment, requires that the statement of claim and defence be completed within six months from the date on which the arbitrator(s) get notice of appointment. This time-bound arrangement is therefore complementary to the larger idea of time-bound arbitration.

No such provision exists in Section 29B that would allow the fast track procedure to be initiated after the Section 23 pleadings conclude; this is another missed opportunity for legislative synchrony. In reality, if, after pleadings, the parties decide that there will be no oral evidence, they should be allowed to enter the fast track at that time. The statute, as it stands, does not provide such a route.

Proposed Amendments: Realignment of Text with Purpose

To address this statutory disconnect, two key amendments are proposed:

1. Amendment to Section 29B(1):

The provision should be revised to allow parties to agree in writing to adopt the fast track procedure “at any stage prior to the commencement of oral evidence or hearing.” This would necessarily ensure that the parties mutually come to a considered decision to expeditiously deal with the matter without having arbitrary cut-offs in the procedure.

2. Amendment to Section 29B(4):

In cases where this fast track agreement is made after the completion of pleadings, then the arbitral award should be made in a shorter duration of time, say three months from the date of completion of pleadings, so that the spirit of expedition embedded in the original provision is still adhered to.

Such changes would enhance procedural flexibility and would take a step forward in affirming India's commitment towards a contemporary, party-friendly arbitration set-up.

Conclusion: Toward a Functional and Flexible Fast Track Regime

With the insertion of Section 29B, the legislature moved away from a docile legislative approach. But, as it stands now, its wording has completely nullified any chance of it fulfilling the provided purpose. By narrowly construing situations under which the parties may have recourse to fast track arbitration, the provision seems to, perhaps unwittingly, stand against the very idea of procedural efficiency.

Providing Section 29B the textual latitude as suggested in the Statement of Objects and Reasons and aligning it with Sections 19 and 23 would allow party autonomy, encourage procedural economy, and take Indian arbitration practice a step closer to global standards.

Law changes not only with grand reforms but also with a few precise corrections. Amending Section 29B is therefore one such precise correction — simple to articulate, revolutionary in effect.

Views are personal.