Conduct of Arbitral Proceeding: Section 25 of Arbitration and Conciliation Act
Section 25: Conduct of Arbitral Proceedings
1. Overview
Section 25 of the Arbitration and Conciliation Act, 1996, deals with the conduct of arbitral proceedings once the arbitral tribunal has been constituted. It grants the tribunal the authority and autonomy to manage the arbitration process efficiently and fairly.
2. Text of Section 25
“Section 25. Rules applicable to substance of dispute
(1) Subject to the provisions of this Part, the arbitral tribunal shall decide the dispute in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction.
(2) The arbitral tribunal shall conduct the proceedings so as to avoid unnecessary delay and expense, and shall provide a fair opportunity to all parties to present their cases.
(3) The arbitral tribunal may, unless otherwise agreed by the parties, hold such conferences as it considers appropriate to discuss any aspect of the proceedings.
(4) The arbitral tribunal shall adopt appropriate measures to ensure that the arbitration proceedings are conducted efficiently and fairly.”**
3. Explanation and Key Points
(a) Decision According to Terms of Contract and Trade Usages (Subsection 1)
The arbitral tribunal must decide the dispute based on the terms agreed in the contract.
It should also consider trade usages and customs relevant to the transaction, giving contextual fairness.
This emphasizes party autonomy—the tribunal cannot go beyond the scope of the contract.
(b) Avoidance of Delay and Expense & Fair Opportunity (Subsection 2)
The tribunal is duty-bound to conduct proceedings expeditiously, avoiding unnecessary delays and costs.
At the same time, it must ensure all parties have a fair chance to present their case.
Balances efficiency with fairness — avoiding procedural gamesmanship while respecting natural justice.
(c) Power to Hold Conferences (Subsection 3)
The tribunal can hold preliminary or procedural conferences to:
Discuss issues in dispute,
Set timelines,
Address procedural matters,
Facilitate smoother conduct.
This is optional unless parties agree otherwise, giving flexibility.
(d) Appropriate Measures for Efficiency and Fairness (Subsection 4)
The tribunal should proactively adopt appropriate procedural and managerial steps.
Examples include:
Setting timetables,
Managing document exchange,
Limiting evidence or witnesses,
Using technology for hearings,
Encouraging settlement discussions.
4. Importance
Section 25 empowers the arbitral tribunal with wide discretion to manage proceedings.
Promotes party autonomy and ensures the process is efficient, cost-effective, and fair.
Helps avoid prolonged and expensive arbitrations, which can defeat the purpose of arbitration.
Ensures a balance between procedural flexibility and due process.
5. Related Case Law
Case: S.B.P. & Co. vs. Patel Engineering Ltd. (2005) 8 SCC 618
Held: The Supreme Court emphasized that arbitrators must act fairly and impartially, conduct proceedings with due diligence, and ensure that both parties get a fair hearing. Section 25 supports this by mandating fairness and avoiding unnecessary delays.
Case: Chloro Controls India Pvt Ltd vs. Severn Trent Water Purification Inc. (2013) 1 SCC 641
Held: The arbitral tribunal has a duty to ensure efficient conduct of proceedings. Section 25's mandate to avoid unnecessary delay was stressed, and tribunals must actively manage proceedings.
6. Summary
| Aspect | Explanation |
|---|---|
| Scope | Governs how arbitral proceedings are to be conducted by the tribunal |
| Decision Basis | Contract terms & trade usages |
| Proceeding Conduct | Fair opportunity, avoid delay & expense |
| Procedural Flexibility | Tribunal may hold conferences |
| Management Role | Tribunal adopts measures for efficiency & fairness |
RELATED Blog
0 comments