Section 32 of the Arbitration and Conciliation Act, 1996: Termination of Proceedings

Section 32 explains when arbitral proceedings come to an end and when the mandate of the arbitral tribunal terminates. Proceedings ordinarily end with a final arbitral award, but the tribunal must also terminate them in certain situations involving withdrawal, agreement between the parties, or circumstances that make continuation unnecessary or impossible.

Current legal position: Section 32 continues to provide the statutory framework for termination of arbitral proceedings. Its operation must be read with Section 33 and Section 34(4), because the tribunal's mandate may continue for the limited purposes permitted by those provisions.

Text of Section 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--

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;
the parties agree on the termination of the proceedings; or
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.

What Section 32 Means

1. Final arbitral award normally ends the proceedings

Under Section 32(1), arbitral proceedings are terminated when the tribunal makes the final arbitral award. This is the ordinary mode by which arbitration reaches its procedural conclusion.

2. Withdrawal of claim can lead to termination

Section 32(2)(a) requires termination where the claimant withdraws the claim, but this is subject to an important safeguard. If the respondent objects and the tribunal recognises that the respondent has a legitimate interest in obtaining a final settlement of the dispute, the proceedings need not be terminated merely because the claimant wishes to withdraw.

3. Parties may agree to terminate the proceedings

Section 32(2)(b) applies where both parties agree that the arbitral proceedings should end. This reflects the principle of party autonomy that runs throughout the Arbitration and Conciliation Act, 1996.

4. Proceedings may become unnecessary or impossible

Section 32(2)(c) gives the tribunal power to terminate proceedings where continuation has become unnecessary or impossible for some other reason. The provision is framed broadly so that the tribunal can formally close proceedings when there is no longer a practical or legal basis for continuing them.

5. Tribunal's mandate generally ends with the proceedings

Section 32(3) provides that the tribunal's mandate terminates when the arbitral proceedings terminate. However, this rule is expressly subject to Section 33 and Section 34(4).

Important exception: Section 33 allows limited post-award functions such as correction of specified errors, interpretation of a part of the award where agreed, and an additional award on claims presented but omitted. Section 34(4) also permits a Court, where appropriate and requested by a party, to adjourn setting-aside proceedings so that the tribunal may resume the arbitral proceedings or take other action to eliminate the grounds for setting aside the award.

Termination under Section 32 and Settlement under Section 30

Settlement during arbitration is specifically addressed by Section 30. Where the parties settle the dispute, the tribunal terminates the proceedings and, if requested by the parties and not objected to by the tribunal, may record the settlement as an arbitral award on agreed terms. Section 32 provides the broader statutory framework for termination of arbitral proceedings.

Key Points at a Glance

A final arbitral award terminates the arbitral proceedings.
The tribunal may also terminate proceedings by an order under Section 32(2).
Withdrawal by the claimant does not automatically end the matter if the respondent has a legitimate interest in obtaining a final settlement.
Mutual agreement of the parties is a statutory ground for termination.
The tribunal may terminate where continuation has become unnecessary or impossible.
The tribunal's mandate generally ends when the proceedings terminate.
Sections 33 and 34(4) create limited statutory exceptions to the termination of the tribunal's mandate.

Official Legal Source

For the authoritative and updated statutory text, see the Arbitration and Conciliation Act, 1996 on India Code.