{"id":266293,"date":"2022-05-02T12:00:37","date_gmt":"2022-05-02T06:30:37","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=266293"},"modified":"2022-05-02T11:15:34","modified_gmt":"2022-05-02T05:45:34","slug":"waiver-of-the-right-to-object-under-the-arbitration-and-conciliation-act-1996","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2022\/05\/02\/waiver-of-the-right-to-object-under-the-arbitration-and-conciliation-act-1996\/","title":{"rendered":"Waiver of the Right to Object under the Arbitration and Conciliation Act, 1996"},"content":{"rendered":"

Based on the principle of estoppel, Article of the Uncitral Model Law on International Commercial Arbitration (\u201cModel Law\u201d) was introduced with a view to ensure efficiency in the arbitration process.1<\/sup><\/u> However, in the travaux preparatoires<\/em> (or the official record of the negotiations), the States expressed concern that if applied too rigidly, the provision could be used unfairly against a party.2<\/sup><\/u> This act of balancing the rigour of the waiver provision with the rightof a party in arbitration remains a concern especially in countries like India where ad hoc arbitration continues to be a significant part of the arbitration proceedings3<\/sup><\/u>. Article of the Model Law finds place in Section 4<\/a> of the Arbitration and Conciliation Act, 1996<\/a> (\u201cthe Act\u201d) which provides for the deemed waiver by a party of the right to object in certain circumstances.4<\/sup><\/u><\/p>\n

 <\/p>\n

This contribution seeks to trace the origin of Section 4<\/a> of the A&C Act<\/a> and to analyse it in the context of the other provisions of the Act and recent judgments of the courts in India. Section I sets out chronologically the discussions of the States in an attempt to provide the context in which Article of the Model Law came to be introduced. Against the background set out in Section I, Section II analyses the text of Section 4<\/a> of the A&C Act<\/a> and the conditions governing its application with a focus on the interplay between Section and other provisions of the Act. By analysing Section 4<\/a> of the A&C Act<\/a> in light of the judgments of the courts in India, these sections hope to provide an insight into the functioning of Section 4<\/a> of the A&C Act<\/a> and if it is in fact furthering its objective of efficiency.<\/p>\n

 <\/p>\n

WAIVER UNDER THE UNCITRAL MODEL LAW<\/strong><\/span><\/p>\n

Indian courts routinely refer to the discussions preceding the enactment of the Model Law with a view to determine the context in which a particular article was introduced.5<\/sup><\/u> In the present case, given that the language of Section 4<\/a> of the A&C Act<\/a> mirrors the language contained in Article of the Model Law6<\/sup><\/u>, the travaux preparatoires<\/em> provide insight into the objective with which a particular phrase or word came to be adopted by the parties.<\/p>\n

 <\/p>\n

The need for a general principle of waiver was first discussed in the Fifth Session of the Working Group on International Contract Practices, United Nations Commission on International Trade Law (\u201cthe Working Group\u201d) in the context of whether an arbitration agreement would stand invalidated if it did not comply with the requirements of the proposed model law.7<\/sup><\/u> However, it was only in the Sixth Session of the Working Group that the parties gave form to the general principle of waiver by introducing \u201cArticle I quarter\u201d.8<\/sup><\/u> The proposed provision read as follows:\u2014<\/p>\n

A party who knows that any provision of, or requirement under<\/em>, this Law has not been complied with and yet proceeds with the arbitration without stating his objection to such non-compliance promptly or<\/em>, if a time-limit is provided therefor in this Law, within such period time shall be deemed to have waived his right to object.\u201d9<\/sup><\/u><\/p>\n

(emphasis supplied)<\/p>\n

 <\/p>\n

Although some supported the deletion of such a draft article, the prevailing view was that a general waiver rule was required but in a less rigid form so that it can only be applied in cases of fundamental violations of procedural provisions.10<\/sup><\/u> Parties suggested that the language be softened by removing the word \u201cpromptly\u201d with less strict words such as \u201cwithout delay\u201d and that the provision be restricted in its application to only non-mandatory provisions as against all provisions.11<\/sup><\/u> Parties also discussed introducing a provision which specified which provisions of the Model Law would be mandatory.12<\/sup><\/u><\/p>\n

 <\/p>\n

In the subsequent Seventh Session, the Working Group made three notable changes to the text: the first was the introduction of \u201cA party who knows or ought to have known<\/em>\u201d in place of \u201ca party who knows<\/em>\u201d; the second was the replacement of \u201cpromptly<\/em>\u201d with \u201cwithout delay<\/em>\u201d; and, the third was the introduction of \u201cor, if a time-limit is provided thereof, within such period of time<\/em>\u201d.13<\/sup><\/u> The language regarding knowledge of the person appears to be in consonance with the general requirement that there can be no waiver unless the person against whom the waiver is claimed has full knowledge of his rights and of the facts which would have enabled him to make an effective election as to the waiver.14<\/sup><\/u> Even in this Session, although there were some parties which wanted the article to be deleted as they felt that the situation of waiver or estoppel was best left to the arbitrators; the prevailing view was to retain the provision.15<\/sup><\/u> The Session also discussed the important aspect of scope of the provision. While one faction was in favour of the provision being given effect to only during the arbitration proceedings, the majority felt that its effect ought to be extended to the post-award stage as well i.e. in the stage of recognition and enforcement of the award.15<\/sup><\/u><\/p>\n

 <\/p>\n

Of relevance is also the consent amongst the parties of the Working Group to do away with the draft provision which set out a list of mandatory provisions.16<\/sup><\/u> In its place, based on the note of the Secretariat, the Working Group agreed that the non-mandatory character of the articles, such as Articles , and should be expressed in those provisions by words such as \u201cunless otherwise agreed by the parties\u201d.17<\/sup><\/u> More importantly, the Working Group also clarified that merely because in some articles the non-mandatory character was expressed therein, it did not automatically mean that all those provisions of law which did not express their non-mandatory character were necessarily of a mandatory character.18<\/sup><\/u> Ultimately, the Working Group felt that the nature of a provision where its non-mandatory nature was not specifically expressed therein, ought to be determined by the arbitrator and the Judges.18<\/sup><\/u> In fact, it appears that both India and Sweden did not favour a demarcation of mandatory and non-mandatory provisions under the proposed Article .19<\/sup><\/u> Sweden took the view that the demarcation if at all, ought to be left to the arbitrator or the Judge depending on the facts of the case.20<\/sup><\/u> However, the predominant view in the Working Group was the need to draw a line between mandatory and non-mandatory provisions in the proposed Article .21<\/sup><\/u><\/p>\n

 <\/p>\n

Taking all these discussions into consideration, the Secretariat in its report22<\/sup><\/u> observed that the application of the proposed Article was subject to the following conditions: first, the procedural requirement which has not been compiled with, must be either a non-mandatory provision of the Model Law or in the arbitration agreement. If extended to fundamental procedural defects, it would result in rigidity22<\/sup><\/u>; second, the party knew or ought to have known of the non-compliance. However, it was clarified that \u201cought to have known\u201d should not be applied to every kind of negligent ignorance but should be restricted to instances where a party could not claim to be unaware of the defect;23<\/sup><\/u> third, the party did not state his objections without delay, or, if a time-limit is provided, within such period of time.24<\/sup><\/u>; lastly, the party without objecting should proceed with the arbitration.25<\/sup><\/u> Pertinently, the report also clarified that the object of the waiver provision was to ensure that a party who has deemed to have waived his right to object is prevented from raising the objection in the subsequent stage of the proceeding as well as after the award was rendered.26<\/sup><\/u> That is, the party cannot use the non-compliance as a ground for setting aside the award or preventing enforcement of the same.<\/p>\n

 <\/p>\n

However, the final text of Article of the Model Law adopted by the Uncitral was different from the text discussed by the Secretariat in its report as it omitted the phrase \u201cought to have known\u201d.6<\/sup><\/u> Further, it also appears that \u201cwithout delay\u201d was modified to \u201cwithout undue delay\u201d.6<\/sup><\/u> This could have been because of the objections raised by parties including Unctad that the phrase \u201cwithout delay\u201d was too vague.27<\/sup><\/u> Further, although there were requests to demarcate the mandatory and non-mandatory provisions28<\/sup><\/u>, the final text adopted by the Uncitral does not make any such demarcation.<\/p>\n

It is in this background that Article of the Model Law came to be introduced.<\/p>\n

 <\/p>\n

WAIVER UNDER SECTION OF THE ARBITRATION AND CONCILIATION ACT<\/strong><\/span><\/h3>\n

Although structured slightly differently, Section 4<\/a> of the A&C Act<\/a> retains language identical to Article of the Model Law; it is reproduced as follows:<\/p>\n

    \n
  1. \n
      \n
    1. Waiver of right to object<\/em>.\u2014A party who knows that<\/em>\u2014<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n

      (a<\/em>) any provision of this Part<\/em> from which the parties may derogate<\/em>, or,<\/p>\n

      (b<\/em>) any requirement under the arbitration agreement<\/em>,<\/p>\n

      Has not been complied with and yet proceeds with the arbitration<\/em> without stating his objection to such non-compliance without undue delay<\/em> or, if a time-limit is provided for stating that objection, within that period of time, shall be deemed to have waived his right to so object<\/em>.<\/p>\n

      (emphasis supplied)<\/p>\n

       <\/p>\n

      It is apparent from the language of Section 4<\/a> of the A&C Act<\/a> that a party must have knowledge of the derogation or violation for the provision to apply.29<\/sup><\/u> Knowledge of the party has always been a prerequisite in the general application of the principle of waiver.30<\/sup><\/u> As in the case of the Model Law, the term \u201cwaiver\u201d has not been defined under the Act. Indian courts have defined waiver as the intentional or voluntary relinquishment of a legal right or advantage.31<\/sup><\/u> In fact, courts have drawn a distinction between \u201cwaiver\u201d and \u201cestoppel\u201d based on intent as in waiver the essential element is actual intent to abandon or surrender right, while in estoppel such intent is immaterial.32<\/sup><\/u> However, \u201cwaiver\u201d and \u201cabandonment\u201d have been used synonymously as the latter also includes an element of intent.33<\/sup><\/u> This requirement of actual intent or knowledge is also reflected in the language of Section 4<\/a> of the A&C Act<\/a> which is distinct from the language used in the earlier draft Article of the Model Law which was \u201ca party who knows or ought to have known\u201d13<\/sup><\/u>. The phrase \u201cknow that\u201d has been interpreted to mean \u201cactual knowledge\u201d as it does not contain the phrase \u201cknows or ought to know\u201d.34<\/sup><\/u><\/p>\n

       <\/p>\n

      Knowledge of the party is also closely linked to the conduct of the party during the arbitration \u2014 whether the party despite having knowledge of the defect participated in the proceeding without stating the objection in time.35<\/sup><\/u> Russel on Arbitration<\/em> states that a party who takes part in the proceeding is in a different position from one who does not take part in the proceedings.36<\/sup><\/u> To this effect, Section 4<\/a> of the A&C Act<\/a> states \u201cyet proceeds with arbitration\u201d.37<\/sup><\/u> The travaux preparatoires<\/em> referring to Article of the Model Law states:\u2014<\/p>\n

      \u2026 \u201cproceeding\u201d would include, for example, appearance at a hearing or a communication to the Arbitral Tribunal or the other party<\/em>. Therefore, a party would not be deemed to have waived his right, if for instance, a postal strike or similar impediment prevented him for an extended period of time<\/em> from sending any communication at all.\u201d38<\/sup><\/u><\/p>\n

      (emphasis supplied)<\/p>\n

       <\/p>\n

      Hence, time at which the party was expected to raise an objection is an important factor to determine when a party is said to have proceeded to arbitration. The time-limit contemplated under the provision must be provided in the arbitration agreement, or the rules relating to arbitration or may be such as may be allowed by the tribunal.39<\/sup><\/u> If there is no time-limit specified, then the said objection must be raised \u201cwithout undue delay\u201d.37<\/sup><\/u><\/p>\n

       <\/p>\n

      Another significant precondition for the application of Section 4<\/a> of the Arbitration and Conciliation Act<\/a> is the phrase \u201cany provision of this part from which parties may derogate<\/em>\u201d.40<\/sup><\/u> One of the earliest cases on what constitutes a mandatory provision was Narayan Prasad Lohia<\/em> v. Nikunj Kumar Lohia<\/em>41<\/sup><\/u> (Lohia<\/em>) where a three-Judge Bench of the Hon’ble Supreme Court was presented with the issue of whether a mandatory provision of the Act can be waived by the parties42<\/sup><\/u>. In the said case, parties had proceeded to arbitration with two arbitrators.43<\/sup><\/u> Thereafter, one of the parties sought to set aside the award on the ground that Section 10<\/a> of the A&C Act<\/a> was a mandatory provision which could not be derogated from and hence the award was invalid.43<\/sup><\/u> The Hon’ble Supreme Court observed that the answer to whether Section 10<\/a> of the A&C Act<\/a> was derogable depended upon if the party had the right to object to the composition of the Arbitral Tribunal and if so, at what stage.44<\/sup><\/u> Applying the said test, the Hon’ble Supreme Court held that Section 10<\/a> of the A&C Act<\/a> was a derogable provision as a party was free to object to the composition of the Arbitral Tribunal under Section 16(2)<\/a> of the A&C Act<\/a>.45<\/sup><\/u> Further, the Hon’ble Court held that if a party did not raise the objection regarding composition of the Arbitral Tribunal under Sections , and , then it was precluded from raising the same at a later stage.46<\/sup><\/u> It is interesting to note that the Hon’ble Court held that so long as the composition of the Arbitral Tribunal was in terms of the arbitration agreement between the parties, Section 34<\/a> of the A&C Act<\/a> does not permit challenge of the award merely because the composition of the Arbitral Tribunal was in violation of the provisions of Part I of the Act.47<\/sup><\/u> The Court relied on this observation to conclude that this also indicates that Section is a derogable provision.47<\/sup><\/u><\/p>\n

       <\/p>\n

      Although the reference to the larger Bench was made in Lohia<\/em>41<\/sup><\/u> (supra) to clarify if mandatory provisions can be waived42<\/sup><\/u>, the findings in the judgment were restricted to Section 10<\/a> of the A&C Act<\/a>. The Hon’ble Court also did not apply its test of opportunity to object under Section 16<\/a> of the A&C Act<\/a> to the other provisions such as Sections 12<\/a> and 13<\/a> of the A&C Act<\/a>. It is also relevant to note that although the appellant in the said case had identified provisions which could be derogated from under the Act48<\/sup><\/u>, the Hon’ble Court did not comment on the nature of these provisions and chose to restrict its judgment to Section 10<\/a> of the A&C Act<\/a>.<\/p>\n

       <\/p>\n

      In the subsequent case of Adani Enterprises Ltd.<\/em> v. Antikeros Shipping Corpn.<\/em>49<\/sup><\/u>, one of the parties relied on the decision in Lohia<\/em>41<\/sup><\/u> to argue that Section 11<\/a> of the A&C Act<\/a> could be derogated from and the petitioner having addressed arguments before the arbitrator had waived its right50<\/sup><\/u>. The Hon’ble Bombay High Court referred to Lohia<\/em>41<\/sup><\/u> and observed that in the said case, the Court had applied the test of Section 16<\/a> read with Section 10<\/a> of the A&C Act<\/a> to determine whether Section 10<\/a> of the A&C Act<\/a> was derogable.51<\/sup><\/u> However, in the case of Section 11<\/a> of the A&C Act<\/a>, the Hon’ble Court was of the view that such a test could not be applied51<\/sup><\/u> as Section could not be derogated from since the provision confers powers on the High Court and the Supreme Court.51<\/sup><\/u> Therefore, a party by its conduct, cannot have deemed to have waived its right to recourse under Section 11<\/a> of the A&C Act<\/a>.<\/p>\n

       <\/p>\n

      Therefore, the above demonstrates the preconditions governing the application of Section 4<\/a> of the A&C Act<\/a>. Understanding these conditions in light of a few key provisions of the Act may help provide insight into how the provision applies to arbitration or related proceedings.<\/p>\n

       <\/p>\n

      Section 4<\/a> and Section 8<\/a> of the Arbitration and Conciliation Act<\/a><\/strong><\/h3>\n

      Section 8(1)<\/a> of the A&C Act<\/a> provides the right of a party to refer the dispute to arbitration subject to the condition that the same is done within the timeline set out therein i.e. before submitting the first statement on the substance of the dispute. The Hon’ble Supreme Court in Rashtriya Ispat Nigam Ltd.<\/em> v. Verma Transport Company<\/em>52<\/sup><\/u> held that if a party has filed an application before actually filing its first statement on the substance of the dispute, the party cannot have said to have waived its right or acquiesced itself to the jurisdiction.53<\/sup><\/u> Further, the Hon’ble Court held that for waiver to apply, there must be a finding on the part of the judicial authority that the party has waived its right to invoke arbitration.53<\/sup><\/u> In the subsequent judgment of Booz Allen & Hamilton Inc.<\/em> v. SBI Home Finance Ltd.<\/em>54<\/sup><\/u>, it was clarified that the intention of the party to submit to the jurisdiction of the court must be deciphered from the statement, application, affidavit but a mere objection to an interim application cannot be considered as submission of a statement on the substance of the dispute55<\/sup><\/u>. More importantly, the Hon’ble Supreme Court also held that though Section 8<\/a> of the A&C Act<\/a> does not prescribe a time-limit, an application under Section 8<\/a> of the A&C Act<\/a> must be filed at the earliest opportunity and a party that willingly participates in the proceedings in the suit and subjects himself to the jurisdiction of the court cannot subsequently say that the parties should be referred to arbitration in view of the existence of an arbitration agreement.56<\/sup><\/u> It has been clarified that simultaneous filing of the reference to arbitration along with written statement has been held to be valid under Section 8<\/a> of the A&C Act<\/a>.57<\/sup><\/u> However, where a party has filed the written statement prior to seeking a reference to arbitration albeit with a \u201cwithout prejudice to the arbitration agreement\u201d, the same was held insufficient to defend a consequence of waiver of arbitration.58<\/sup><\/u><\/p>\n

      Thus the conduct of the party must be taken into consideration while determining whether the party has waived its right.59<\/sup><\/u><\/p>\n

      In the context of interim orders, any action taken to vacate an interim order has been held to not amount to waiver.60<\/sup><\/u> This is because, an interim proceedings being incidental to the main proceeding, any step taken to contest an existing interim order cannot be considered as waiver or abandonment of the right under an arbitration agreement.61<\/sup><\/u><\/p>\n

       <\/p>\n

      Section 4<\/a> and Section 11<\/a> of the Arbitration and Conciliation Act<\/a><\/strong><\/p>\n

       <\/p>\n

      Unlike Section 8<\/a> of the A&C Act<\/a>62<\/sup><\/u>, Section does not contain any explicit reference to the power of the court to determine the validity of arbitration agreement. However, the phrase \u201cexistence of arbitration agreement\u201d as reflected in Section 11<\/a> of the A&C Act<\/a> has been held to include the aspect of validity of arbitration agreement63<\/sup><\/u> and the scope of judicial review of the court under the two provisions have been held to be identical.64<\/sup><\/u> However, Section 11<\/a> of the A&C Act<\/a> does not specify a fixed time by which any objection with respect to the existence of the arbitration agreement ought to be raised. In the absence of such a limit, pursuant to Section 4(b)<\/a> of the A&C Act<\/a>, a party may be required to raise an objection without undue delay. Delay has been considered in petitions under Section 11<\/a> of the A&C Act<\/a> wherein a party at a belated stage has been precluded from raising objections with respect to arbitrability of the dispute, having not raised the said objection previously.65<\/sup><\/u><\/p>\n

       <\/p>\n

      In BSNL<\/em> v. Motorola India (P) Ltd.<\/em>66<\/sup><\/u>, the appellant challenged the order67<\/sup><\/u> of the Hon’ble High Court appointing an arbitrator pursuant to Section 11<\/a> of the A&C Act<\/a> on the ground that the arbitration agreement did not cover a dispute with respect to liquidated damages.68<\/sup><\/u> The Hon’ble Supreme Court relied on Section 4<\/a> of the A&C Act<\/a> and held that after the Hon’ble High Court had passed orders appointing the arbitrator subject to further objections, the appellants ought to have raised an objection prior to the first arbitration hearing and since the appellants had not raised any such an objection, the appellants had clearly failed to meet the stated requirement to object to the arbitration without delay; hence, the Hon’ble Court held that their right to object was deemed to be waived.68<\/sup><\/u><\/p>\n

       <\/p>\n

      It is well established that mere participation in the appointment of an arbitrator cannot be termed deemed waiver of the party’s right to object on the grounds of jurisdiction or arbitrability.69<\/sup><\/u> This is in consonance with Section 16(2)<\/a> of the A&C Act<\/a> which states that merely because a party has participated in the appointment of an arbitrator, it cannot be precluded from raising an objection on the grounds of jurisdiction or maintainability.<\/p>\n

      Therefore, it can be argued that in the absence of a fixed time, the appropriate time-limit by which objection should be raised will be subject to the facts and circumstances of the case.<\/p>\n

       <\/p>\n

      Section 4<\/a> and Sections 12<\/a> and 13<\/a> of the Arbitration and Conciliation Act<\/a><\/strong><\/h3>\n

      Section 12<\/a> of the A&C Act<\/a> provides the grounds of challenge to the appointment of an arbitrator and Section lays down the procedure for challenging the arbitrator. Under the said provisions, a party who wishes to challenge the appointment must raise its objection within the following time-frame70<\/sup><\/u>: (a<\/em>) provided under the agreement71<\/sup><\/u>; or, (b<\/em>) within fifteen days from the date on which the tribunal is constituted72<\/sup><\/u> or the party becomes aware of the circumstances of conflict72<\/sup><\/u>. A party, however, who has participated in the appointment of an arbitrator is not precluded from raising an objection under Section 12<\/a> of the A&C Act<\/a> if he becomes aware of the circumstances after the appointment.73<\/sup><\/u><\/p>\n

       <\/p>\n

      The waiver of a party’s right to object with respect to institution of Section 12<\/a> of the A&C Act<\/a> may be contingent upon the nature of the ineligibility. The Law Commission of India74<\/sup><\/u> in its Report suggested having two lists, one based on the red and orange lists of the IBA Guidelines on Conflicts of Interest in International Arbitration and the other being a smaller more serious subset of situations.75<\/sup><\/u> Accordingly, Section 12<\/a> of the A&C Act<\/a> was amended to include two schedules: the Fifth Schedule76<\/sup><\/u> and the Seventh Schedule77<\/sup><\/u>. With respect to the latter, in Haryana Space Application Centre<\/em> v. Pan India Consultants (P) Ltd.<\/em>78<\/sup><\/u> (Haryana<\/em>), the Hon’ble Supreme Court held that notwithstanding any prior agreement, Section 12(5)<\/a> of the A&C Act<\/a> read with the Seventh Schedule was a mandatory provision which could not be derogated from.79<\/sup><\/u> However, the Hon’ble Court in Haryana failed to consider the proviso to Section 12(5)<\/a> of the A&C Act<\/a> which permits parties to waive such ineligibility subsequent to the dispute arising between the parties.80<\/sup><\/u><\/p>\n

       <\/p>\n

      This right to waive an ineligibility of the arbitrator was based on the Law Commission of India envisaging situations such as family arbitrations, where parties subsequent to the dispute arising may want to retain an arbitrator despite his ineligibility.81<\/sup><\/u> However, the Hon’ble Supreme Court has clarified in Bharat Broadband Network Ltd.<\/em> v. United Telecoms Ltd.<\/em>82<\/sup><\/u>, that while waiver under Section 4<\/a> of the A&C Act<\/a> includes cases of deemed waiver by conduct, the waiver under Section 12(5)<\/a> of the A&C Act<\/a> must be by way of an express agreement in writing by the parties.83<\/sup><\/u> The Hon’ble Court also held that given the express language in Section 12(5)<\/a> of the A&C Act<\/a>, Section 4<\/a> of the A&C Act<\/a> would not apply.84<\/sup><\/u> Hence, merely by participating in an arbitration proceeding or by failing to object, a party cannot have deemed to have waived its right to object under Section 12(5)<\/a> of the A&C Act<\/a> as it is a mandatory provision.<\/p>\n

       <\/p>\n

      Section 4<\/a> and Section 16<\/a> of the Arbitration and Conciliation Act<\/a><\/strong><\/h3>\n

      Section 16<\/a> of the A&C Act<\/a> encompases the kompetenz kompetenz<\/em> principle and governs the power of the Arbitral Tribunal to rule on its own jurisdiction.85<\/sup><\/u> However, any objection with respect to the Arbitral Tribunal’s jurisdiction must be raised at a stage not later than the submission of the statement of defence86<\/sup><\/u> and a plea that the Arbitral Tribunal is exceeding its authority should be raised as soon as it is possible87<\/sup><\/u>. Any delay in making such a plea, may be condoned subject to the party being able to justify such delay.88<\/sup><\/u><\/p>\n

       <\/p>\n

      In Konkan Railway Corpn. Ltd.<\/em> v. Rani Construction (P) Ltd.<\/em>89<\/sup><\/u> the Hon’ble Supreme Court held that the authority of the Arbitral Tribunal under Section 16<\/a> of the A&C Act<\/a> is not confined to the width of its jurisdiction, but goes to the very root of its jurisdiction. Therefore, the Arbitral Tribunal has wide powers to determine any objection that affects its jurisdiction. However, any such objection must be raised within the time stipulated in the said provision.90<\/sup><\/u> Should an award be passed without an objection being raised with respect to jurisdiction within the time period provided, the courts have held that an award cannot be annulled on the said ground.91<\/sup><\/u><\/p>\n

       <\/p>\n

      In the more recent decision of Quippo Construction Equipment Ltd.<\/em> v. Janardan Nirman (P) Ltd.<\/em>92<\/sup><\/u>, the Hon’ble Supreme Court reiterated this finding and held that where the respondent despite being aware of the proceedings, had not participated in the arbitration proceedings and raised the objections with respect to the jurisdiction, the respondent was deemed to have waived all such objections.93<\/sup><\/u> However, even where a party did not raise the objection before the Arbitral Tribunal under Section 16(2)<\/a> of the A&C Act<\/a> but raised it in the earlier proceedings under Section 11<\/a> of the A&C Act<\/a> which was pending appeal, the Hon’ble Supreme Court held that the principle of waiver would not be applicable.94<\/sup><\/u> Therefore, it appears that a party who was aware of the arbitral proceedings but chose not to participate in the proceeding and has also not raised it in any stage prior to the petition under Section 34<\/a> of the A&C Act<\/a>, is deemed to have waived its right to object.<\/p>\n

       <\/p>\n

      Section 4<\/a> and Section 34<\/a> of the Arbitration and Conciliation Act<\/a><\/strong><\/h3>\n

       <\/p>\n

      The grounds provided under Section 34(2)(a) and (b)<\/a> of the A&C Act<\/a> can be divided into three categories \u2014 grounds which affect the jurisdiction of the arbitration proceedings; grounds which affect party interest alone; and grounds which go to the public policy of India as explained in the Explanation contained therein.95<\/sup><\/u> More importantly, any such ground must ordinarily be established from the arbitral record.96<\/sup><\/u> With respect to the first ground on the jurisdiction of the Arbitral Tribunal, as stated earlier, a party is deemed to have waived its right to object in a proceeding under Section 34<\/a> of the A&C Act<\/a> if it did not raise the objection before the Arbitral Tribunal under Section 16<\/a> of the A&C Act<\/a>.97<\/sup><\/u> However, in the case of other grounds, any number of irregularities in the arbitral proceedings may form the basis for such a ground. In such a case, to avoid waiver by conduct, a party must make clear that he is proceeding with the arbitration despite such irregularity without prejudice to his right to raise such an objection at a later stage.98<\/sup><\/u> This provides sufficient opportunity to not only rectify the irregularity but also prevents a court from holding that such an irregularity has been waived at a later stage.98<\/sup><\/u><\/p>\n

       <\/p>\n

      In addition, with respect to some grounds such as public policy of India under Section 34(2)(b)(ii)<\/a> of the A&C Act<\/a> where an element of public interest may be involved, the doctrine of waiver cannot be applied.99<\/sup><\/u> Thus, the applicability of Section 4<\/a> of the A&C Act<\/a> to Section 34<\/a> of the A&C Act<\/a>, may be subject to the nature of the ground being taken by the party to challenge the award.<\/p>\n

       <\/p>\n

      CONCLUSION<\/strong><\/span><\/h3>\n

      The issue of waiver is often a contentious one. The party who is driving an arbitration may want to take advantage of the tardiness of the rival party. This problem is more pronounced in India where ad hoc arbitration is very common and institutional arbitration is only beginning to make inroads.2<\/sup><\/u> Part of the solution lies in the moving to institutional arbitration since the process in institutional arbitration is far more definite. Additionally, institutions have a mechanism to deal with the many of these issues that relate to waiver.100<\/sup><\/u><\/p>\n

       <\/p>\n

      The question of how stringent the rule of waiver should be, has no easy answer. The effect of a waiver could be to extinguish a right in a party. On the other hand, it should also not amount to rewarding (or not penalising) a party who has not been diligent. One way in which to balance the two to ensure efficiency, could be to introduce a more rigorous regime of costs, which the Act provides for101<\/sup><\/u> but is not being implemented sufficiently. If a party wishes to contest a waiver, it ought to be saddled with suitable costs.<\/p>\n

       <\/p>\n

      Ultimately, the law would have to ensure that justice is done. Arbitration proceedings cannot be removed from this notion. Indian courts must also strive to ensure a pro arbitration tilt by keeping interventions to the minimum. Where a balancing act is needed by a court intervention on account of the lack of diligence on the part of a party to promote efficiency, it cannot be without consequences of costs. One hopes that such a regime would ensure that parties are a lot more diligent and efficient. If parties do that, the whole question of waiver may become academic in time to time, which ironically, may be the most fitting tribute to the provision.<\/p>\n

      \u2014\u2014\u2014<\/p>\n

      *The article has been published with kind permission of SCC Online cited as<\/span> (2022) 3 SCC J-4<\/strong><\/a><\/p>\n

      \u2020<\/sup> Advocate, enrolled with the Bar Council of India from 2017.<\/strong><\/p>\n

      \u2021<\/sup> Senior Advocate.<\/strong><\/p>\n

      1<\/sup> Report of the Secretary General: International Commercial Arbitration, Analytical Commentary on Draft Text of a Model Law on International Commercial Arbitration, UNGA A\/CN. 9\/264 (18th Session, Vienna, 3-6-1985 to 21-6-1985).<\/p>\n

      2<\/sup> Report of the United Nations Commission on International Trade Law on the work of its Eighteenth Session, UNGA A\/40\/17 (18th Session, Vienna, 3-6-1985 to 21-6-1985) Paras 11-333.<\/p>\n

      3<\/sup> Report of the High Level Committee to review the Institutionalisation of Arbitration Mechanism in India, 30-7-2016, the link can be found here: <https:\/\/legalaffairs.gov.in\/sites\/default\/files\/Report-HLC.pdf<\/a>>.<\/p>\n

      4<\/sup> Arbitration and Conciliation Act, 1996<\/a>, S. 4<\/a>.<\/p>\n

      5<\/sup> Generally see, Hindustan Construction Co. Ltd.<\/em> v. Union of India<\/em>, (2020) 17 SCC 324<\/a>, para 27; BALCO<\/em> v. Kaiser Aluminium Technical Services Inc.<\/em>, (2012) 9 SCC 552<\/a>, para 68.<\/p>\n

      6<\/sup> Model Law on International Commercial Arbitration 1985 (United Nations Commission on International Trade Law, UN Doc. A\/40\/17, Annex I), Article 4.<\/p>\n

      7<\/sup> Report of the Working Group on International Contract Practices on the work of its Fifth Session, A\/CN.9\/233, 28-3-1983, Para 66.<\/p>\n

      8<\/sup> Report of the Working Group on International Contract Practices on the work of its Sixth Session, A\/CN.9\/245, (29-8-1983 to 9-9-1983).<\/p>\n

      9<\/sup> Id.<\/em>, para 176.<\/p>\n

      10<\/sup> Id.<\/em>, para 177.<\/p>\n

      11<\/sup> Id.<\/em>, para 178.<\/p>\n

      12<\/sup> Id.<\/em>, paras 175 and 178.<\/p>\n

      13<\/sup> Report of the Working Group on International Contract Practices on the work of its Seventh Session, A\/CN.9\/246, Para 178 (6-2-1984 to 17-2-1984).<\/p>\n

      14<\/sup> Waiver of Right of Recourse Against Arbitral Award, a Global Perspective, Justice Datuk, Dr Hamid Sultan Bin Abu Backer and Arun Kasi, Asia Pacific Regional Arbitration Group, Please find at: <http:\/\/www.aprag.org\/wp-content\/uploads\/2021\/05\/6-Waiver-of-Right-of-Recourse-against-Arbitral-Awards.pdf<\/a>>.<\/p>\n

      15<\/sup> Report of the Working Group on International Contract Practices on the work of its Seventh Session, A\/CN.9\/246, Para 180 (6-2-1984 to 17-2-1984).<\/p>\n

      16<\/sup> Id.<\/em>, paras 174 and 175.<\/p>\n

      17<\/sup> Id.<\/em>, para 176.<\/p>\n

      18<\/sup> Id.<\/em>, para 177.<\/p>\n

      19<\/sup> Analytical compilation of comments by Governments and International Organizations on the draft text of a model law on international commercial arbitration, A\/CN.9\/263, Para 2, p. 15.<\/p>\n

      20<\/sup> Id.<\/em>, para 3, p. 16.<\/p>\n

      21<\/sup> Report of the Working Group on International Contract Practices on the work of its Seventh Session, A\/CN.9\/246, Para 182 (6-2-1984 to 17-2-1984).<\/p>\n

      22<\/sup> Report of the Secretary General: International Commercial Arbitration, Analytical Commentary on Draft Text of a Model Law on International Commercial Arbitration, UNGA A\/CN. 9\/264, Para 2 (3-6-1985 to 21-6-1985).<\/p>\n

      23<\/sup> Report of the Secretary General: International Commercial Arbitration, Analytical Commentary on Draft Text of a Model Law on International Commercial Arbitration, UNGA A\/CN. 9\/264, Para 2 (3-6-1985 to 21-6-1985), Para 3.<\/p>\n

      24<\/sup> Id.<\/em>, para 4.<\/p>\n

      25<\/sup> Id.<\/em>, para 5.<\/p>\n

      26<\/sup> Id.<\/em>, para 6.<\/p>\n

      6<\/sup> Model Law on International Commercial Arbitration 1985 (United Nations Commission on International Trade Law, UN Doc. A\/40\/17, Annex I), Article 4.<\/p>\n

      27<\/sup> Analytical compilation of comments by Governments and International Organizations on the draft text of a model law on international commercial arbitration, A\/CN.9\/263, Para 6, p. 16.<\/p>\n

      28<\/sup> Id.<\/em>, para 4, p. 16.<\/p>\n

      29<\/sup> Indu Malhotra, O.P. Malhotra’s the Law and Practice of Arbitration and Conciliation: The Arbitration and Conciliation Act<\/em>, 1996 (3rd Edn.), p. 294.<\/p>\n

      30<\/sup> Associated Hotels of India Ltd.<\/em> v. S.B. Sardar Ranjit Singh<\/em>, (1968) 2 SCR 548 : AIR 1968 SC 933, para 14.<\/p>\n

      31<\/sup> Ibid; Basheshar Nath<\/em> v. CIT<\/em>, 1959 Supp (1) SCR 528 : AIR 1959 SC 149.<\/p>\n

      32<\/sup> Provash Chandra Dalui<\/em> v. Biswanath Banerjee<\/em>, 1989 Supp (1) SCC 487<\/a>, para 24.<\/p>\n

      33<\/sup> Indu Malhotra, O.P. Malhotra’s the Law and Practice of Arbitration and Conciliation<\/em> (3rd Edn.) p. 295; Ramdev Food Products (P) Ltd.<\/em> v. Arvindbhai Rambhai Patel<\/em>, (2006) 8 SCC 726<\/a>.<\/p>\n

      13<\/sup> Report of the Working Group on International Contract Practices on the work of its Seventh Session, A\/CN.9\/246, Para 178 (6-2-1984 to 17-2-1984).<\/p>\n

      34<\/sup> Ku-ring-gai Council<\/em> v. Ichor Constructions Pty Ltd.<\/em>, (2019) 364 Aust LR 728, para 69 (New South Wales, Court of Appeal).<\/p>\n

      35<\/sup> SBI<\/em> v. Ram Das<\/em>, (2003) 12 SCC 474<\/a>, para 27.<\/p>\n

      36<\/sup> Sutton, Kendall and Gill, Russel on Arbitration<\/em> (23rd Edn., 2007) p. 481, Paras 8-065.<\/p>\n

      37<\/sup> Arbitration and Conciliation Act, 1996<\/a>, S. 4(b).<\/p>\n

      38<\/sup> Report of the Secretary General: International Commercial Arbitration, Analytical Commentary on Draft Text of a Model Law on International Commercial Arbitration, UNGA A\/CN. 9\/264 (18th Session, Vienna, 3-6-1985 to 21-6-1985) Para 4.<\/p>\n

      39<\/sup> Indu Malhotra, O.P. Malhotra’s the Law and Practice of Arbitration and Conciliation<\/em> (3rd Edn.), p. 305.<\/p>\n

      37<\/sup> Arbitration and Conciliation Act, 1996<\/a>, S. 4(b)<\/a>.<\/p>\n

      40<\/sup> Arbitration and Conciliation Act, 1996<\/a>, S. 4<\/a>.<\/p>\n

      41<\/sup> (2002) 3 SCC 572<\/a>.<\/p>\n

      42<\/sup> Id.<\/em>, para 6.<\/p>\n

      43<\/sup> Id.<\/em>, para 5.<\/p>\n

      44<\/sup> Id.<\/em>, para 14.<\/p>\n

      45<\/sup> Id.<\/em>, para 16.<\/p>\n

      46<\/sup> Id.<\/em>, para 18.<\/p>\n

      47<\/sup> Id.<\/em>, para 19.<\/p>\n

      48<\/sup> Id.<\/em>, para 9.<\/p>\n

      49<\/sup> 2019 SCC OnLine Bom 528<\/a>.<\/p>\n

      41<\/sup> Narayan Prasad Lohia<\/em> v. Nikunj Kumar Lohia<\/em>, (2002) 3 SCC 572<\/a>.<\/p>\n

      50<\/sup> Id.<\/em>, para 14.<\/p>\n

      51<\/sup> Id.<\/em>, para 17.<\/p>\n

      52<\/sup> (2006) 7 SCC 275<\/a>.<\/p>\n

      53<\/sup> Id.<\/em>, para 36.<\/p>\n

      54<\/sup> (2011) 5 SCC 532<\/a>.<\/p>\n

      55<\/sup> Id.<\/em>, para 25.<\/p>\n

      56<\/sup> Id.<\/em>, para 29.<\/p>\n

      57<\/sup> Pricewaterhouse Coopers Service Delivery Centre (Banglore)(P) Ltd.<\/em> v. Mohan Kumar Thakur<\/em>, 2020 SCC OnLine Kar 3434<\/a>, para 51.<\/p>\n

      58<\/sup> Lindsay International (P) Ltd.<\/em> v. Laxmi Niwas Mittal<\/em>, 2020 SCC OnLine Cal 1658<\/a>, para 41.<\/p>\n

      59<\/sup> Id.<\/em>, para 29.<\/p>\n

      60<\/sup> Food Corpn. of India<\/em> v. Yadav Engineer & Contractor<\/em>, (1982) 2 SCC 499<\/a>. Although the judgment is with respect to the interpretation of Section 34 of the Arbitration Act, 1940<\/a> which no longer finds place in the Act, 1996, the observations of the Court insofar as waiver and taking action to vacate an interim order are still relevant. In particular, since the same was tested against general principles of abandonment of right by a party.<\/p>\n

      61<\/sup> Food Corpn. of India<\/em> v. Yadav Engineer & Contractor<\/em>, (1982) 2 SCC 499<\/a>, para 12.<\/p>\n

      62<\/sup> Arbitration and Conciliation Act, 1996<\/a>, S. 8(1)<\/a>.<\/p>\n

      63<\/sup> Vidya Drolia<\/em> v. Durga Trading Corpn.<\/em>, (2021) 2 SCC 1<\/a>, para 153.<\/p>\n

      64<\/sup> Id.<\/em>, para 154.2.<\/p>\n

      65<\/sup> Reliance Industries Ltd.<\/em> v. Union of India<\/em>, (2014) 11 SCC 576<\/a>, para 57.<\/p>\n

      66<\/sup> (2009) 2 SCC 337<\/a>.<\/p>\n

      67<\/sup> Motorola India (P) Ltd.<\/em> v. BSNL<\/em>, AR No. 18 of 2006, order dated 26-10-2006 (Ker).<\/p>\n

      68<\/sup> BSNL<\/em> v. Motorola India (P) Ltd.<\/em>, (2009) 2 SCC 337<\/a>, para 39.<\/p>\n

      68<\/sup> BSNL<\/em> v. Motorola India (P) Ltd.<\/em>, (2009) 2 SCC 337<\/a>, para 39.<\/p>\n

      69<\/sup> Vidya Drolia<\/em> v. Durga Trading Corpn.<\/em>, (2021) 2 SCC 1<\/a>, para 130.<\/p>\n

      70<\/sup> Indu Malhotra, O.P. Malhotra’s the Law and Practice of Arbitration and Conciliation<\/em> (3rd Edn.) p. 708<\/p>\n

      71<\/sup> Arbitration and Conciliation Act, 1996<\/a>, S. 13(1)<\/a>.<\/p>\n

      72<\/sup> Arbitration and Conciliation Act, 1996<\/a>, S. 13(2)<\/a>.<\/p>\n

      73<\/sup> Arbitration and Conciliation Act, 1996<\/a>, S. 12(4)<\/a>.<\/p>\n

      74<\/sup> Amendments to the Arbitration and Conciliation Act, 1996<\/a>, Law Commission of India, Report No. 246, August 2014.<\/p>\n

      75<\/sup> Id.<\/em>, Para 59.<\/p>\n

      76<\/sup> Arbitration and Conciliation Act, 1996<\/a>, S. 12(1)(b)<\/a>.<\/p>\n

      77<\/sup> Arbitration and Conciliation Act, 1996<\/a>, S. 12(5)<\/a>.<\/p>\n

      78<\/sup> (2021) 3 SCC 103<\/a><\/p>\n

      79<\/sup> (2021) 3 SCC 103<\/a>, para 18.<\/p>\n

      80<\/sup> Arbitration and Conciliation Act, 1996<\/a>, S. 12(5)<\/a> Proviso.<\/p>\n

      81<\/sup> Arbitration and Conciliation Act, 1996<\/a>, S. 12(1)(b)<\/a>.<\/p>\n

      82<\/sup> (2019) 5 SCC 755<\/a>.<\/p>\n

      83<\/sup> Id.<\/em>, para 17.<\/p>\n

      84<\/sup> Id.<\/em>, para 21.<\/p>\n

      85<\/sup> IFFCO Ltd.<\/em> v. Bhadra Products<\/em>, (2018) 2 SCC 534<\/a>, para 16.<\/p>\n

      86<\/sup> Arbitration and Conciliation Act, 1996<\/a>, S. 16(2)<\/a>.<\/p>\n

      87<\/sup> Arbitration and Conciliation Act, 1996<\/a>, S. 16(3)<\/a>.<\/p>\n

      88<\/sup> Arbitration and Conciliation Act, 1996<\/a>, S. 16(4)<\/a>.<\/p>\n

      89<\/sup> (2002) 2 SCC 388<\/a><\/p>\n

      90<\/sup> M.P. Rural Road Development Authority<\/em> v. L.G. Chaudhary Engineers and Contractors<\/em>, (2018) 10 SCC 826<\/a>, para 16; Narayan Prasad Lohia<\/em> v. Nikunj Kumar Lohia<\/em>, (2002) 3 SCC 572<\/a>, para 20; Narayan Prasad Lohia<\/em> v. Nikunj Kumar Lohia<\/em>, (2002) 3 SCC 572<\/a>, para 20<\/p>\n

      91<\/sup> M.P. Rural Road Development Authority<\/em> v. L.G. Chaudhary Engineers and Contractors<\/em>, (2018) 10 SCC 826<\/a>, para 17; Krishna Bhagya Jala Nigam Ltd.<\/em> v. G. Harischandra Reddy<\/em>, (2007) 2 SCC 720<\/a>; S.N. Malhotra & Sons<\/em> v. Airport Authority of India<\/em>, 2008 SCC OnLine Del 442 : (2008) 149 DLT 757.<\/p>\n

      92<\/sup> (2020) 18 SCC 277<\/a><\/p>\n

      93<\/sup> Id.<\/em>, para 24.<\/p>\n

      94<\/sup> M.P. Rural Road Development Authority<\/em> v. L.G. Chaudhary Engineers and Contractors<\/em>, (2018) 10 SCC 826<\/a>.<\/p>\n

      95<\/sup> Vijay Karia<\/em> v. Prysmian Cavi E Sistemi SRL<\/em>, (2020) 11 SCC 1<\/a>, para 58.<\/p>\n

      96<\/sup> Emkay Global Financial Services Ltd.<\/em> v. Girdhar Sondhi<\/em>, (2018) 9 SCC 49<\/a>, para 21.<\/p>\n

      97<\/sup> Narayan Prasad Lohia<\/em> v. Nikunj Kumar Lohia<\/em>, (2002) 3 SCC 572<\/a>, para 20.<\/p>\n

      98<\/sup> Mustill and Boyd, Commercial Arbitration<\/em>, (2nd Edn., Lexis Nexis) p. 598.<\/p>\n

      99<\/sup> All India Power Engineer Federation<\/em> v. Sasan Power Ltd.<\/em>, (2017) 1 SCC 487<\/a>, para 21.<\/p>\n

      2<\/sup> Report of the United Nations Commission on International Trade Law on the work of its Eighteenth Session, UNGA A\/40\/17 (18th Session, Vienna, 3-6-1985 to 21-6-1985) Paras 11-333.<\/p>\n

      100<\/sup> Singapore International Arbitration Centre Rules, 2016, R. 41.1; Mumbai Centre for International Arbitration Rules, 2016, R. 34.3.<\/p>\n

      101<\/sup> Arbitration and Conciliation Act, 1996<\/a>, S. 31-A(3)(a)<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

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