Nepal | Chapter 4

Chapter 4
Arbitration Proceedings and powers of Arbitrators

Submission of Claims, Counter-Claims, objections or Rejoinders:
The claimant shall submit its claim to the arbitrator in writing explicitly mentioning the details of the subject-matter of the dispute and the remedy sought, along with evidence, and also supply a copy thereof to the other party within the time limit mentioned in the agreement, if any, and within three months from the date when a dispute requiring arbitration has arisen in case only the name of the arbitration has been mentioned in the agreement without mentioning any time limit, and from the date of appointment of the arbitrator in case the arbitrator has been appointed after the dispute has arisen.

After a claim is filed pursuant to Sub-section (1), the other party shall submit its objection to it within 30 days from the date of receipt of the claim, unless otherwise provided for in the agreement.

The other party shall submit its objection, as well as its counterclaim, if any, in that connection within the time limit mentioned in Subsection (2). In case it submits a counter-claim also, the arbitrator shall provide a time limit of 15 days to claimant submit its rejoinder over such counter-claim. In case a rejoinder is so submitted a copy thereof shall be supplied to the party making the counter claim.

In case any party fails to submit its .....?objection, or rejoinder within the time limit mentioned in Sub-section (2) or (3) due to circumstances beyond its control, it may submit an application to the arbitrator for an extension of the time limit within 15 days from the date of expiry of the time limit, explicitly mentioning satisfactory reasons for its failure to do so. The arbitrator may, if he/she finds the reasons mentioned in the application to be satisfactory, extend the time limit for not more than seven days.

While submitting claims, counter-claims, objections or rejoinders under this section, all documents, as well as evidence substantiating them, if any, shall also be submitted. In case the parties wish to substantiate any point through witness, they must mention the full name and address of such witnesses in their claims, counter claims, objections or rejoinders, and they shall themselves be responsible for presenting such witnesses before the arbitrator on the day prescribed by him/her.

Each party submitting documents to the arbitrator in connection with arbitration proceedings under this Act shall supply copies thereof to the other party.

Circumstances in which Arbitration Proceedings shall Terminate or Continue: Except when otherwise provided for by the parties, arbitration proceedings shall terminate or continue in the following circumstances:

The arbitration proceedings shall terminate in case the claimant does not submit his/her claim within the time- limit mentioned in Section 14 (1).

Even if no objection is submitted within the time limit mentioned in Section 14 (2), this alone shall not be taken as the acceptance by the party not submitting its counter-claim to the claim made by the claimant, and the arbitrator shall continue proceedings in such a manner as to evaluate the claimant's claim and the evidence submitted to substantiate the claim.

The arbitrator may pronounce the verdict on the basis of the evidence that has been submitted or in case any party does not present itself or does not submit any written evidence at the time of hearing prescribed by the arbitrator. Arbitration shall send a copy of the verdict to the party not submitting its objection as well.

Power of the Arbitrator to Determine Jurisdiction:
In case any party claims that the arbitrator has no jurisdiction over the dispute which has been referred to him/her for settlement, or that the contract because of which the dispute has emerged is itself illegal or null and void, it may claim so before the arbitrator. The arbitrator shall take a decision on his/her jurisdiction or the validity or effectiveness of the contract before starting the proceeding on the matter referred to him/her,

Any party is not satisfied with the decision taken under Subsection (2) may file an appeal with the Appellate Court within 30 days from the date of decision, and the decision taken by that court on the matter shall be final.

For the purpose of taking a decision on the validity or effectiveness of a contract pursuant to Sub-section (1), in case the contract contains provisions for the settlement of disputes through arbitration as its integral part, such provisions shall be taken as a separate agreement, and even if the arbitrator takes a decision holding the contract as null and void, such provisions shall not be held to be legally null and void for that reason alone.

No claim may be made pursuant to Sub-section (1) after the expiry of the time limit for submitting objections prescribed pursuant to Sub-section (2) of section 14.

No party shall be deemed to have been deprived of the opportunity to claim pursuant to Sub-section (1) simply for the reason of having appointed an arbitrator on its behalf, or participated in or agreed to the appointment of the arbitrator.

The filling of a petition with the Appellate Court pursuant to Sub-section (2) shall not be deemed to have prejudiced the power of the arbitrator to continue the proceedings and pronounce the decision before the petition is finally disposed of by the court.

Procedure to be Adopted by Arbitrators:
The procedure to be adopted by the arbitrator while taking a decision on a dispute shall be as mentioned in the agreement, and in case no such procedure has been mentioned in the agreement, it shall be as laid down in this Act. Provided that the procedure not laid down in the Act shall be as prescribed by the arbitrator with the consent of the parties, and in case the parties fail to reach an agreement in that connection, it shall be as prescribed by the arbitrator him/herself.

The arbitrator shall start arbitration proceedings immediately after receiving all such claims, objections, counter-claims or rejoinders as need to be received by him/her.

The arbitrator must inform the parties about the type of proceedings to be held, and the day and time fixed for the purpose and also keep records thereof in the concerned case file.

In respect to a dispute which has been referred to three or more arbitrators, the arbitrators who are present may conduct all arbitration proceedings other than taking the final decision or issuing the final order.

The arbitrator may continue arbitration proceedings and pronounce his/her decision on the basis of the available evidence even if any party does not present itself on the day and at the time of arbitration proceedings after receiving a notice pursuant to Sub-section (3).

After the completion of the process of hearing, the arbitrator shall issue an order with the effect that the hearing has concluded and keep a record thereof in the case file. No evidence may be examined or the parties heard thereafter.

Notwithstanding otherwise claimant in the agreement, the arbitrator must read out his/her written decision within 30 days from the date of issue of an order pursuant to Sub-section (6).

Substantive Law to be followed by Arbitrators:
The Nepal Law shall be the substantive law to be followed by the arbitrator, except when otherwise provided for in the agreement.

The arbitrator may settle the dispute according to the principle of justice and conscience (Ex aqua et bono) or natural justice (amiable compositor) only when explicitly authorised by the parties to do so.

Notwithstanding anything contained elsewhere in this act, the arbitrator shall settle the dispute according to the conditions stipulated in the concerned contract. While doing so, arbitrator shall also pay attention to the commercial usages applicable to the concerned transaction.

Arbitration Hearings to be held in Camera: Except when otherwise desired by the parties, arbitration proceedings shall be held in-camera.

Saving Notices and Summon:
Notwithstanding anything contained in the prevailing law, any notice to be surved in connection with arbitration, or any notice or summon to be furnished in the name of any party residing within or outside the Nepal in connection with the hearing by the arbitrator, or with the dispute under consideration of the arbitrator, may be delivered directly to the concerned party or sent to its telex, telefax or telegram address or to the address of any other communication media whose printed records can be maintained, if such address is mentioned in the agreement, or if the concerned parties have supplied such address to each other or to their respective arbitrators after signing the agreement , except when otherwise provided for in the agreement. In case the address of such communication media or any other address has not been supplied, such notices or summonses shall be served at the place of business or permanent residence of the concerned party. Notice or summon so served shall be deemed to have been duly served. Provided that notice or summon to be served by the postal service shall be served only after registering it .

Notwithstanding anything contained in Sub-section (1), this provision shall have no prejudicial impact on the function and proceeding of the court.

Power of the Arbitrator:
The powers of the arbitrator shall be as follows, except when otherwise provided for in the agreement:

To direct the concerned parties to appear before him/her to submit documents, and record their statements as required .

To record statements of the witness.

To appoint expert and seek their opinion or cause examination on any specific issue.

In case party is a foreign national so that the decision pronounced by the arbitrator is not likely to be implemente for that reason, to obtain a bank guarantee or any other appropriate guarantee as determined by the arbitrator.

To inspect the concerned place, object, product, structure, production process or any other related matter which are connected with the dispute on the request of the parties or on his/her own initiative if he/she so deems appropriate, and in case there is any material or object which is likely to be destroyed or damaged, to sell them in consultation with the parties, and keep the sale proceeds as a deposit.

To exercise any specific power conferred by the parties.
To issue preliminary orders, or interim or inter locating orders in respect to any matter connected with the dispute on the request of any party, or take a conditional decision.

To issue certified copy of document.

To exercise the other power conferred by this Act.

Any party which is not satisfied with the order issued by the arbitrator pursuant to Clause (g) of Sub-section (1) may submit an application to the appellate court within 15 days, and the decision made by the Appellate Court shall be final.

Parties to have Equal Opportunity:
Each party shall be provided with an equal and adequate opportunity In the arbitration proceedings to present its case subject to this Act.

Any party may attend the arbitration proceedings either in person or by proxy, and also designate a legal practitioner on its behalf.

Assistance of the Court May be Sought to Examine Any Evidence:
Notwithstanding anything contained in the prevailing law, in case the arbitrator requires the assistance of the court to examine any evidence concerning a dispute under the consideration, the arbitrator him/herself may, on his/her own or on the request of any party, request the District Court for such assistance. In case any such request is received, the District Court shall provide assistance in examining the evidence according to the prevailing law.