The way in which Arbitral proceeding is terminated are provision for the termination of Arbitral proceeding are made under section 32 of the Arbitration and Conciliation Act 1996. Section 32 reads as under-
- The Arbitral proceeding shall be terminated by the final arbitral award or by an order of the Arbitral Tribunal under subsection (2).
- The Arbitral Tribunal Shall issue an order for the termination of the Arbitral proceeding where-
- The claimant withdraws his claim unless the respondent object to the order and the arbitral tribunal recognise a legitimate interest on his part in obtaining a final settlement of the dispute.
- The parties agree on the termination of the proceedings
- The Arbitral Tribunal finds that the continuation of the proceedings has for any other reason become unnecessary or impossible.
- Subject to section 33 and subsection (4) of section 34 the mandate of the Arbitral Tribunal shall terminate with the termination of the Arbitral proceeding.
According to section 32 Arbitral Proceeding Terminate under the following circumstances:
- By final Arbitral AwardAccording to section 32(1), arbitral proceeding terminates under the following two circumstances:
(I)When the final Arbitral Award has been passed
(II)When arbitral tribunal issues an order under subsection 2 of section 32.
It is a common thing for which dispute the matter is referred to the arbitration and the Arbitrator while disposing of it has finally passed an award termination of Arbitral proceeding is natural. Arbitral Proceedings are also terminated in the circumstances details in subsection (2).
- In the withdrawal of Claim by the ClaimantThe Arbitral Proceeding Terminates on the withdrawal of Claim by the claimant. But, it requires two things:
(i) Non-objection to the order by the application
(ii) The Arbitral Tribunal does not recognise a legitimate interest on his part in obtaining a final settlement of the dispute.In other words, it could be said that the Arbitral proceeding terminates on the withdrawal of Claim by the claimant because under these circumstances nothing lefts ahead with the Arbitrator for further processing.
- By Agreement of PartiesParties to the dispute may call to terminate the Arbitral proceeding by an agreement. It can also be said that Parties can terminate Arbitral proceedings by mutual consent. In this situation, either party has no objection with the termination of Arbitral proceeding. There is also no question of recognition of valid interest by the tribunal.
In the case of T.Sriniwas Rao Versus Union of India (A.I.R. 2009 NOC 1428 Andhra Pradesh), it has been held by the High Court of Andhra Pradesh that the parties may make a provision of termination of the appointment of the Arbitrator in the agreement and such an agreement will be effective. In such a case, there will be no need of approaching the civil court for termination of the appointment of Arbitration.
- Continuance of Proceedings being Unnecessary or impossibleWhen it appears to Arbitral Tribunal that to continue Arbitral Proceedings is:
(II) ImpossibleThere the Arbitral proceeding is terminated.
Generally, it happens when there is an agreement between the parties or parties are themselves not interested in continuing these proceedings.
- Other circumstances of TerminationOther than the circumstances mentioned in Section 32 of the Act there are several other circumstances in which Arbitral Proceedings are terminated. Such circumstances are as follows:
- When the claimant fails to communicate his statement of claim under section 23(1). ( Section 25).
- When the dispute is settled by the settlement Award.[ Section 30(2)].
- When the parties to dispute request to dispose of the dispute to the Arbitral Tribunal and the Arbitral Tribunal accepts such requests.
- When a party challenges the jurisdiction of Arbitral Tribunal and the tribunal accepts such challenge then Arbitral proceeding is automatically terminated.
- Where under the proviso of section 38 (2) where one party fails to pay his share of the deposit, the other party may pay that share.But where the other party also does not pay the aforesaid share in respect of the claim or the counterclaim the Arbitral Tribunal may suspend or terminate the arbitral proceeding in respect of such claim or counterclaim. The provisions of section 32 of the Arbitration and Conciliation Act, 1996 are based on Article 32 of the model law.
Article 32 reads as under:
- The Arbitral proceeding are terminated by the final award or by an order of the Arbitral Tribunal following paragraph (2) of this article.
- The Arbitral Tribunal Shall issue an order for the termination of the Arbitral proceedings when:
- The claimant withdraws his claim unless the respondent object thereto and the arbitral tribunal recognise a legitimate interest on his part in obtaining a final settlement of the dispute.
- The parties agree on the termination of the proceedings.
- The Arbitral Tribunal finds that the continuation of the proceedings has any other reason become unnecessary or impossible.
- The mandate of the Arbitral Tribunal Termination with the termination of the Arbitral proceedings, subject to the provisions of articles 33 and 34(4)