What is Termination of Proceedings in Arbitration

Section 32 deals with the termination of proceedings. It provides that the proceedings automatically terminate when the final award is made. Arbitration is also terminated by an order of the tribunal where-

• Claimant withdraws the claim unless the respondent objects and the tribunal finds legitimate interest in obtaining a final settlement.
• The parties agree on the termination of proceedings.
• The tribunal finds the continuation of the proceedings is unnecessary or impossible.

The mandate of the tribunal also terminates with the termination of the proceedings.

Section 32(2)(c), which lays down the ground for termination due to continuation becoming unnecessary or impossible, has been a source of uncertainty as it leaves room for debate as to what exactly is meant by impossibility and uncertainty. “Unnecessary” usually encompasses situations where the parties have no legitimate interest in continuing the proceedings. “Impossible” implies a legal or material barrier to the continuation of the proceedings.

The text of the Section 32 can be found below:

“32. Termination of proceedings- (1) The arbitral proceedings shall be terminated by the final arbitral award or by an order of the arbitral tribunal under sub-section (2).

(2) The arbitral tribunal shall issue an order for the termination of the arbitral proceedings where—

(a) the claimant withdraws his claim, unless the respondent objects to the order and the arbitral tribunal recognises a legitimate interest on his part in obtaining a final settlement of the dispute,

(b) the parties agree on the termination of the proceedings, or

(c) the arbitral tribunal finds that the continuation of the proceedings has for any other reason become unnecessary or impossible.

(3) Subject to section 33 and sub-section (4) of section 34, the mandate of the arbitral tribunal shall terminate with the termination of the arbitral proceedings.”