The use of arbitration is a prevalent form of alternative dispute resolution (ADR). It offers a systematic approach to adjudication of disputes outside of court. As with any legal process, arbitration must eventually conclude. This is called termination of arbitral proceedings.
Arbitration can be terminated due to several reasons, such as the receipt of an award, a resolution between parties, or procedural errors. The meaning, process, legal aspects, and consequences of concluding arbitral proceedings are outlined in this article.
What is Termination of Arbitral Proceedings?
Termination of arbitral proceedings refers to the formal conclusion of an arbitration case. It marks the point at which the tribunal or sole arbitrator closes the case and ends their authority over the dispute. An arbitral decision can lead to termination. The dispute is brought to a close by an award. However, there are occasions when arbitration concludes without a verdict, such as when the parties come to an agreement or abandon the process.
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Ways in which Arbitral Proceedings are Terminated
Arbitral proceedings can be concluded in two main ways:
1. Termination by Final Award
Arbitration is commonly concluded when the arbitrator issues a conclusive decision. The verdict is the ultimate one and must be followed by both parties. The final ruling indicates the official conclusion of the arbitration. It may include:
Monetary compensation.
Specific performance of a contract.
Dismissal of claims.
Allocation of costs and fees.
2. Termination Without an Award
Arbitral proceedings can conclude without final verdict for several reasons:
A. Mutual Settlement: Prior to issuing an award, parties can settle their dispute. If they come to a consensus, then they can either ask the arbitrator to agree or close it.
B. Withdrawal of Claim: If the claimant withdraws the claim, the arbitration could be terminated. But if the other party objects and has a legitimate counterclaim, the process may go forward.
C. Failure to Proceed: Arbitration may be terminated if:
A party refuses to participate in the proceedings.
There is excessive delay in taking necessary steps.
The arbitrator determines that continuation is impossible.
D. Death or Insolvency: If a party dies or if an insolvency occurs, arbitration can be ended without legal representation.
E. Lack of Jurisdiction: The arbitrator or tribunal may halt the proceedings if they determine that they lack jurisdiction over the dispute.
F. Expiration of Time Limit: The resolution of disputes is typically subject to time constraints in arbitration agreements. Unless mutually agreed upon, the proceedings may be prolonged if the arbitrator fails to award an award within the allotted time.
Legal Provisions Governing Termination of Arbitration
The termination of arbitration proceedings is recognized by most national and international arbitration laws.. Key legal provisions include:
1. UNCITRAL Model Law on International Commercial Arbitration
Many countries have adopted the UNCITRAL Model Law, which declares that arbitration will end when:
The final award is made.
The Tribunal mandates termination based on withdrawal, settlement, or failure to proceed.
2. Arbitration and Conciliation Act, 1996
According to Section 32 of the Indian Arbitration Act, arbitration terminates at:
When the final award is issued.
If the tribunal determines that the process is not required or feasible.
3. New York Convention (1958)
Arbitration's final judgments are legally binding and subject to interpretation by the New York Convention in various jurisdictions. After being discontinued, the award is acknowledged worldwide.
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Consequences of Termination of Arbitration
When arbitration is halted, there are several outcomes:
1. Loss of Tribunal's Authority: Unless parties apply for clarification or correction of the award, the arbitrator or tribunal has no further jurisdiction on the matter.
2. Enforcement of the Award: In case of a final award, the winning party can resort to national court proceedings under arbitration laws for enforcement.
3. Costs and Fees: Decisions regarding cost allocation and arbitration expenses are frequently included in termination orders.
4. Right to Challenge or Appeal: Arbitration results in a judgment that can be appealed in court by the losing party on specific grounds, including fraud or procedural irregularities.
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Can Arbitral Proceedings Be Revived After Termination?
The termination is generally conclusive. Nevertheless, there are situations where arbitration can be resumed or renewed:
If there is a typographical or clerical mistake in the award, the tribunal can correct it within a specified period.
If a court nullifies the award because of legal issues, the arbitration process may begin again.
If a case was withdrawn without prejudice, the claimant has the option to re-file the dispute.
Summing Up
The termination of arbitral proceedings represents an important milestone in arbitration. It signals the formal end of the dispute resolution process, whether by award or otherwise. Arbitration, in general, does end by making a final award, but there are other factors, such as settlement, withdrawal, and jurisdictional issues that also lead to termination. By understanding how termination works, the parties can make sure that they properly follow the appropriate procedures and know their rights after arbitration comes to an end.
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Termination of Arbitral Proceedings: FAQs
Q1.What is termination of arbitral proceedings?
It's the formal conclusion of an arbitration case, either by a final award or other reasons like settlement or withdrawal.
Q2. How does arbitration end?
Arbitration ends with a final award, settlement, withdrawal of claims, lack of jurisdiction, or failure to proceed.
Q3. What happens after arbitration is terminated?
The arbitrator loses authority, the award may be enforced, and cost distribution is decided.
Q4. Can arbitration be reopened after termination?
In rare cases, arbitration can be revived if an award is corrected, set aside, or claims are resubmitted.
Q5. Which law governs the termination of arbitration?
The UNCITRAL Model Law, the New York Convention, and national arbitration laws like the Arbitration & Conciliation Act regulate termination.
