Pleadings, Hearings, and What Happens When a Party Does Not Turn Up

First proviso: the tribunal shall hold oral hearings, at an appropriate stage, on a request by a party, unless the parties have agreed that no oral hearing shall be held.

Read the two together. The tribunal chooses, but a party can force an oral hearing by asking for one, unless the parties have agreed there will be none. So a documents-only arbitration happens either because nobody asks for a hearing or because everybody agreed there would not be one.

Second proviso, inserted by the 2015 amendment: the tribunal shall, as far as possible, hold oral hearings on a day-to-day basis, and not grant any adjournments unless sufficient cause is made out, and may impose costs including exemplary costs on the party seeking adjournment without sufficient cause.

This is the Act legislating against the habit that made arbitration in India as slow as litigation: hearings once a month, adjourned on request. Note the sanction: exemplary costs against the party seeking an adjournment without sufficient cause.

Section 24(2): the parties shall be given sufficient advance notice of any hearing and of any meeting of the tribunal for inspection of documents, goods or property.

Section 24(3): all statements, documents or other information supplied to, or applications made to, the tribunal by one party shall be communicated to the other party, and any expert report or evidentiary document on which the tribunal may rely in making its decision shall be communicated to the parties.

Section 24(3) is section 18 in operational form, and it is the provision that catches the most common real complaint: the tribunal relied on something one side never saw. Note that it covers not only what a party supplies but any expert report or evidentiary document the tribunal may rely on, whatever its source.

Section 25: default of a party

Unless otherwise agreed, where without showing sufficient cause:

• (a) the claimant fails to communicate his statement of claim under section 23(1), the tribunal shall terminate the proceedings;
• (b) the respondent fails to communicate his statement of defence under section 23(1), the tribunal shall continue the proceedings without treating that failure in itself as an admission of the allegations by the claimant, and shall have the discretion to treat the right of the respondent to file such statement of defence as having been forfeited;
• (c) a party fails to appear at an oral hearing or to produce documentary evidence, the tribunal may continue the proceedings and make the arbitral award on the evidence before it.

Clause (b) is the cleanest contrast in this Module between arbitration and a civil suit, and it is a favourite question.

In a civil court, a defendant who does not file a written statement can have the suit decreed against him. In arbitration, he cannot. The tribunal continues, but the failure is not in itself an admission of anything. The claimant still has to prove its case on evidence.

The words "and shall have the discretion to treat the right of the respondent to file such statement of defence as having been forfeited" were added by the 2019 amendment. They do not change the no-admission rule; they let the tribunal shut the door on a late defence so the case can move.

And note the asymmetry between (a) and (b). A defaulting claimant loses the arbitration outright, because there is nothing to decide. A defaulting respondent does not, because there is still a claim to prove.

"Without showing sufficient cause" governs all three clauses. A party with a good reason for the failure is not in default at all.

A worked example

An arbitration begins. The tribunal of three receives written notice of appointment on 10 January. The claimant files its statement of claim on 20 February. The respondent files nothing, ignores two hearing notices, and then, at the fourth hearing in October, sends an advocate asking to file a defence and for an adjournment.

When should pleadings have been complete? By 10 July, six months from the date all the arbitrators received written notice of appointment, under section 23(4).

What could the tribunal have done in the meantime? Under section 25(b), continued the proceedings, not treating the failure as an admission of the claimant's allegations, and it may exercise the discretion added in 2019 to treat the respondent's right to file a defence as forfeited.

Was the claimant entitled to an award simply because nobody answered? No. That is the whole point of section 25(b). It must still prove its claim on the evidence, and under section 25(c) the tribunal may continue and make the award on the evidence before it.

Must the tribunal now allow the late defence and the adjournment? It has a discretion. Section 23(3) lets a party amend or supplement unless the tribunal considers it inappropriate having regard to the delay, and the second proviso to section 24(1) tells the tribunal not to grant adjournments without sufficient cause and permits exemplary costs against a party seeking one without it.

Change the facts. Suppose it was the claimant who never filed a statement of claim. Then section 25(a) applies and the tribunal shall terminate the proceedings. There is no equivalent of continuing, because there is no claim.

And suppose the tribunal, deciding the case, relies on a technical report it obtained itself and never showed anybody. That breaches section 24(3), which requires any expert report or evidentiary document the tribunal may rely on to be communicated to the parties, and it breaches section 18.

What beginners get wrong

A respondent's silence is not an admission. Section 25(b) says so in terms, and this is the commonest error in this Module.

A defaulting claimant is treated quite differently from a defaulting respondent. Termination under (a); continuation under (b).

A party can insist on an oral hearing, under the first proviso to section 24(1), unless the parties agreed there would be none.

Section 23(4)'s six months is for pleadings, not for the award. The award period is section 29A.

Set-off and counterclaim are different things, though section 23(2A) covers both.

Quick revision

• 23(1): claim states the facts, the points at issue and the relief sought; the defence answers them. 23(2): documents may be filed or referred to. 23(2A): a counterclaim or set-off is adjudicated if within the scope of the arbitration agreement. 23(3): amendment allowed unless inappropriate having regard to the delay. 23(4): pleadings complete within six months of all arbitrators receiving written notice of appointment.
• 24(1): the tribunal decides on oral hearings, but must hold one if a party asks, unless the parties agreed otherwise; hearings day to day as far as possible, no adjournments without sufficient cause, and exemplary costs may be imposed. 24(2): sufficient advance notice. 24(3): everything supplied by a party, and any expert report or evidentiary document the tribunal may rely on, must be communicated to the parties.
• 25: without sufficient cause, (a) claimant's failure to file the claim, proceedings terminated; (b) respondent's failure to file the defence, proceedings continue, not an admission, and the tribunal may treat the right to file as forfeited; (c) failure to appear or produce documents, the tribunal may continue and make the award on the evidence before it.

Test yourself

1. A respondent files no defence at all. Can the claimant get an award without proving its case? No. Section 25(b) requires the tribunal to continue the proceedings without treating the failure in itself as an admission of the claimant's allegations. The claimant must still prove its claim, and under section 25(c) the tribunal makes the award on the evidence before it.

2. What happens if the claimant files no statement of claim? Under section 25(a), where the claimant fails without showing sufficient cause to communicate his statement of claim in accordance with section 23(1), the tribunal shall terminate the proceedings.

3. Can a tribunal decide an arbitration without any oral hearing? Yes, under section 24(1), if it so decides and no party requests a hearing, or if the parties have agreed that no oral hearing shall be held. But the first proviso requires the tribunal to hold oral hearings at an appropriate stage on a party's request, unless there is such an agreement.

4. May a respondent bring a counterclaim in the same arbitration? Yes. Section 23(2A) permits a counterclaim or a plea of set-off, to be adjudicated by the tribunal, provided it falls within the scope of the arbitration agreement.

5. By when must pleadings be complete, and why does it matter? Within six months from the date the arbitrator or all the arbitrators received written notice of their appointment, under section 23(4). It matters because section 29A's twelve month period for making the award runs from the date of completion of pleadings.