By Ripudaman Rawat, Agrata Chaturvedi
Agrata is currently a 3rd year law student at Lloyd Law College and Ripudaman is currently a 2nd year law student at NALSAR University of Law, Hyderabad.
Section 29A of the Arbitration and Conciliation Act, 1996 was built as a multi-layered deterrence mechanism against arbitral delay. In Viva Highways Ltd v. Madhya Pradesh Road Development Corporation Ltd (2026), the Supreme Court held that termination of an arbitrator’s mandate under Section 29A does not automatically require substitution which essentially was a departure from the “empowering and obligating” language of Mohan Lal Fatehpuria v. Bharat Textiles (2025). This comment asks whether treating substitution as an exceptional remedy protects procedural efficiency or quietly guts the statutory timeline’s deterrent logic. Drawing on comparative institutional practice and the legislative history of the 2015 Amendment, it proposes a graduated-response framework to reconcile time discipline with tribunal continuity and party autonomy.
Keywords: Section 29A, Arbitrator Substitution, Tribunal Mandate, Party Autonomy
Section 29A [“S.29A”] of the Arbitration and Conciliation Act, 1996 was born from a specific diagnosis: delay as the greatest evil undermining Indian arbitration. Inserted by the 2015 Amendment, it imposed a twelve-month timeline for rendering awards, backed by escalating consequences i.e. fee reduction, and ultimately, substitution of the arbitral tribunal. Within a decade, two Supreme Court [“SC”] decisions have pulled that substitution mechanism in opposite directions, and the tension between them is more instructive than either decision alone.
In Mohan Lal Fatehpuria v. M/S Bharat Textiles [“Fatehpuria”], the Court declared that S.29A(6) “empowers and obligates” courts to substitute an arbitrator on mandate expiry. Barely two months later, in Viva Highways Ltd v. Madhya Pradesh Road Development Corporation Ltd [“Viva Highways”], the Court reinterpreted that language, holding that substitution would follow only “if the situation so warranted.” The Court held that this was not an overruling, but merely a clarification. But the clarification reversed the operational outcome, and that deserves attention.
The current debate surrounding S.29A centers on two conflicting approaches to an expired arbitral mandate. In Fatehpuria, the court enforced the rule of automatic substitution of the arbitrator, prioritizing strict adherence to statutory timelines, ensuring speedy resolution. In contrast, Viva Highways rejected this absolute mandate in favour of judicial discretion and allowed courts to extend the mandate without changing the tribunal, if the context warrants it. By moving away from automatic substitution, Viva Highways recognized a practical reality i.e. replacing an arbitrator without examining the underlying causes could be counterproductive.
The automatic substitution’s rule fails to distinguish between delays that are caused by an arbitrator’s inefficiency, party’s deliberate tactics or unavoidable systemic bottlenecks. Furthermore, forcing a newly appointed tribunal to restart the proceedings wastes both time and resources, ultimately undermining the very efficiency that S.29A aims to protect. However, replacing a strict rule with an unstructured discretion is only half an answer. Discretion without clear guidelines gives way to unpredictability, and unpredictability has its own costs for a provision whose logic depends on credible and consistent consequences, thereby neutralizing the deterrent effect. Therefore, the answer isn’t either Fatehpuria’s rigidity, or Viva Highways’ open-ended standard, but a graduated framework which focuses on context without leveraging the deterrent effect that S.29A was designed to create.
The 246th Report of the Law Commission of India identified delay as inherent in the arbitration process. Proceedings routinely stretched beyond a decade, and expeditious resolution has become a fiction. S.29A was the legislature’s response: not just deadlines, but a tiered structure of consequences.
S.29A(1) requires an award within twelve months from the date the tribunal enters upon reference; S.29A(3) allows parties, by mutual consent, to extend this by a further six months; Section S.29A(4) allows the court, on application, to grant further extensions, but where delay is attributable to the tribunal, it may order fee reduction of up to five per cent per month; Section S.29A(6) empowers the court, while extending time, to substitute the arbitrator(s).
The logic of this provision is inherently escalatory. The statutory time cap provides a structural baseline, escalating to financial penalties and ultimately substituting the tribunal. Each tier is designed to reinforce the one below it, therefore, if the threat of substitution is diluted by unpredictability, the entire disciplinary framework loses its teeth.
In Fatehpuria, an arbitrator appointed by the Delhi High Court had failed to render an award within the statutory period. (¶ 11) Rather than substituting him, the High Court simply extended his mandate. (¶ 12) The SC reversed this. Once a mandate expires under S.29A(4), the arbitrator becomes functus officio. (¶ 11) S.29A(6), the Court held, “empowers and obligates” courts to appoint a substitute. (¶ 13) A new arbitrator was directed, with proceedings to continue from the stage already reached. (¶ 14) The decision treated substitution not as a discretionary remedy but as a structural consequence of expiry, an interpretation that left little room for judicial hesitation.
Viva Highways quietly dismantled this. The Madhya Pradesh High Court had done exactly what Fatehpuria seemed to require: on mandate expiry, it terminated the appointment and directed substitution. The SC set this aside, holding that the High Court had misread the precedent. (¶ 4) The Court clarified that “obligates” does not imply a blanket mandate, it simply means substitution is an available remedy when the situation demands it. It would follow only “if the situation so warranted.” (¶ 4)
The tension sits in that single word. “Empowers” and “obligates” are not synonyms, one gives a court an option, the other removes it. When Fatehpuria used both in tandem, the jurisdiction to substitute an arbitrator not only existed but had to be exercised. Reading “obligates” as simply restating “empowers” makes the word pointless. The practical effect of this is that it transforms a strict rule of automatic substitution into a discretionary standard where substitution only happens if the specific facts warrant it.
S.29A works through credible commitment, wherein, the legislature deliberately imposes a deadline precisely so that both, the parties and arbitrators take it seriously. If the consequence of missing that deadline is uncertain, with extension possible and substitution merely discretionary, the deterrent loses force. An arbitrator who expects accommodation rather than replacement has weaker reason to conclude within time. The ICC Commission’s work on controlling time and costs has noted that the primary cause of high costs and long durations in international arbitration is the unnecessary complication of proceedings. S.29A represents India’s attempt to break this cycle of delay, using the substitution mechanism as its sharpest instrument.
What makes India’s approach worth pausing on is how unusual it is. Neither the UNCITRAL Model Law, nor the English Arbitration Act 1996, nor the Singapore International Arbitration Act prescribes a statutory time limit on making an award, let alone a substitution mechanism triggered by its breach. India went further than virtually every major arbitration jurisdiction, and deliberately so. The delay in domestic arbitration is a genuine, documented problem for which the parliament brought about strict statutory deadlines, Viva highways suggests that the judiciary is moving towards sensitivity to context rather than imposing rigid and automatic consequences.
There is a genuine paradox at the heart of substitution as the remedy for delay itself causes delay. In complex infrastructure disputes, like that of Viva Highways, a substitute arbitrator must re-read voluminous submissions, re-examine evidence, and reconstruct a procedural context they had no part in building. Practitioner experience in institutional arbitration puts tribunal reconstitution at three to six additional months, with significant added costs. S.29A(6) anticipates this partially, providing that the substitute “shall continue” from the stage already reached and may rely on evidence already recorded. But there is a real gap between continuing from a stage and actually understanding a complex dispute at that stage. A tribunal that has heard witnesses, absorbed the cadence of arguments, and formed tentative impressions carries institutional memory that a handover can hardly replicate.
The downstream litigation costs compound this. Every substitution risks generating fresh applications, potential challenges under Sections 12 and 13, and further time-extension proceedings. Viva Highways is itself a good example, wherein, the SC had to intervene to correct a High Court that was itself trying to apply Fatehpuria correctly. If mechanical substitution produces more ancillary litigation than it prevents, the efficiency rationale for the strict rule starts to look weaker than it first appeared.
Neither the Fatehpuria rule (automatic substitution) nor the Viva Highways standard (substitution if warranted) is adequate on its own. The former is over-inclusive and the latter, under-determinate. S.29A requires structured discretion ,a framework that calibrates the consequence to the context.
Courts adjudicating S.29A(4) applications could be guided by –
This preserves the deterrent core of S.29A wherein, substitution remains a live and credible consequence for tribunal-attributable delay, while avoiding the perverse outcome of a remedy that compounds the problem it was designed to cure. Where both parties prefer the existing tribunal and delay stems from case complexity rather than tribunal default, extension is the proportionate response.
Critically, courts applying this framework should record reasons for choosing extension over substitution, or vice versa. Over time, that body of reasoning will provide the guideposts Viva Highways currently does not.
Viva Highways shifts towards a more pragmatic judicial reality. Statutory deadlines, as helpful as they are, shouldn’t be allowed to wreck the very process they were meant to serve. But pragmatism alone can be unpredictable if it doesn’t have a clear structure. This ruling leaves us with an unanswered question which is when is the substitution actually “warranted”?
The answer lies in a graduated framework linking the choice of remedy to the stage of proceedings, the cause of delay, party preferences, and proportionality. S.29A’s deterrence structure need not be dismantled to accommodate contextual judgment; it needs to be supplemented with standards that give judicial discretion shape and transparency.
The real reform S.29A awaits is not a choice between Fatehpuria’s rigidity and Viva Highways’ flexibility. It is a framework that treats time discipline and tribunal continuity not as adversaries, but as co-dependent values in service of one objective i.e. arbitral justice that is both timely and just.
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