In the realm of arbitration, the principle of expeditious dispute resolution holds significant weight. Recognizing the potential for parties or their legal representatives to intentionally or negligently protract proceedings, the Arbitration and Conciliation Act, 1996 (ACA), empowers both the arbitral tribunal and the court to levy costs as a deterrent against unwarranted delays. This mechanism, particularly emphasized in the context of the statutorily mandated timelines for issuing the final award, underscores the seriousness with which procedural efficiency is regarded within the Indian arbitration framework.

The Legislative Intent - Ensuring Timely Resolution:

The ACA, particularly with the introduction of amendments over time, reflects a clear legislative intent to streamline the arbitration process and ensure the timely issuance of the final award. Section 29A of the Act, while primarily focused on prescribing timelines for the completion of arbitration proceedings, implicitly and explicitly acknowledges the authority of the court to address delays. This provision operates in conjunction with the inherent powers of the arbitral tribunal to manage the proceedings efficiently.

The Court's Power to Impose Costs for Delays:

When the court is seized of matters related to the arbitration, particularly concerning the extension of timelines for the final award under Section 29A (4) and (5), it assumes a supervisory role in ensuring the proceedings progress without undue delay. The Act explicitly empowers the court to impose costs on any party it deems responsible for causing delays in the arbitration process. This power is not unfettered; the court typically exercises it when it determines that the delay was intentional or designed to confer an unjust benefit upon one of the parties at the expense of the other or the efficiency of the arbitral process.

Circumstances Warranting the Imposition of Costs by the Court:

• Frivolous Applications for Extension of Time: If a party files repeated or baseless applications seeking extensions of the timelines for the arbitral tribunal to render its award, without any genuine or justifiable reason, the court may impose costs to discourage such dilatory tactics.
   
• Intentional Obstruction of Proceedings: Actions by a party aimed at deliberately hindering the progress of the arbitration, such as repeated non-appearance at hearings without valid cause, obstructive tactics during the presentation of evidence, or the filing of frivolous applications before the tribunal, may be brought to the court's attention during timeline extension requests, potentially leading to the imposition of costs.
   
• Collusion to Delay: If the court finds evidence of collusion between a party and their counsel to intentionally prolong the proceedings for strategic advantage, it may exercise its power to levy costs on the responsible party.
   
• Failure to Comply with Court Directions: If a party fails to adhere to the directions issued by the court in relation to the arbitration proceedings, leading to delays, the court may impose costs as a measure of enforcing its orders and ensuring procedural discipline.
   

The imposition of costs by the court serves as a significant deterrent against dilatory practices, reinforcing the legislative mandate for the timely conclusion of arbitration proceedings. It ensures that parties are held accountable for actions that unnecessarily prolong the resolution of the dispute, thereby upholding the efficiency and integrity of the arbitral process.

The Arbitral Tribunal's Inherent Powers to Manage Costs:

While Section 29A primarily focuses on the court's role in the context of extending timelines, the arbitral tribunal itself possesses inherent powers under Section 19 of the ACA to conduct the proceedings in the manner it considers appropriate. This includes the power to manage costs associated with the arbitration. Section 31A of the ACA explicitly grants the arbitral tribunal the discretion to determine:

• The costs of the arbitration: This includes fees and expenses of the arbitrators, administrative costs of the arbitral institution (if any), and other expenses incurred in relation to the proceedings.
• Which party shall bear these costs or in what proportion they shall be borne.

In exercising this power, the arbitral tribunal can certainly take into account the conduct of the parties during the proceedings, including instances of undue delay caused by a party or their counsel. While the Act does not explicitly mandate the tribunal to levy costs solely for delays under Section 31A, the tribunal's broad discretion allows it to consider such dilatory conduct as a factor when allocating the overall costs of the arbitration.

Mechanisms for the Tribunal to Address Delays Through Costs:

• Adverse Cost Orders: If a party is found to have caused significant and unwarranted delays, the tribunal may order that party to bear a disproportionately higher share of the arbitration costs, effectively penalizing their dilatory conduct.
• Specific Costs for Wasted Hearings: If a hearing is adjourned or rendered unproductive due to the fault or deliberate action of a party or their counsel, the tribunal may order that party to bear the costs incurred for that wasted hearing.
• Conditional Orders: The tribunal may issue procedural orders with cost implications if a party fails to comply within a specified timeframe, thereby incentivizing timely action and discouraging delays.

Interplay Between the Court's and Tribunal's Powers:

It is important to note that the court's power to impose costs for delays under Section 29A operates primarily in the context of timeline extensions, while the arbitral tribunal's power under Section 31A relates to the overall costs of the arbitration. However, both provisions share the underlying objective of discouraging dilatory tactics and promoting the efficient conduct of arbitration proceedings. The court's intervention often occurs when the delays impact the statutory timelines, whereas the tribunal addresses delays within the procedural management of the arbitration itself.

Conclusion - Upholding Efficiency Through Cost Implications:
The Arbitration and Conciliation Act, 1996, reflects a strong emphasis on the timely resolution of disputes through arbitration. To achieve this objective, both the court and the arbitral tribunal are vested with the authority to levy costs on parties or their counsels responsible for causing unwarranted delays. The court's power is particularly pronounced in the context of extending statutory timelines for the final award, while the tribunal exercises its discretion in allocating the overall costs of the arbitration, taking into account the conduct of the parties, including dilatory practices.

This dual mechanism serves as a significant deterrent against protraction, promoting procedural efficiency and reinforcing the integrity of arbitration as a swift and effective means of dispute resolution. By holding parties accountable for the cost implications of their delays, the ACA aims to ensure that arbitration remains a viable and expeditious alternative to traditional litigation.
 
Written By: Md.Imran Wahab, IPS, IGP, Provisioning, West Bengal
Email: [email protected], Ph no: 9836576565