When Time Runs Out: Setting Aside of Delayed Arbitral Awards in India

Can an award be set aside because of a delayed decision by the arbitrator?

In principle, yes — but only where the delay has a demonstrable adverse effect on the reasoning of such an award. The Indian Supreme Court (“SC”) has emphatically so held in its recent judgement in Lancor Holdings Limited v. Prem Kumar & Ors. (2025) (“Lancor”), settling a question which had previously divided several High Courts in India: whether delay in issuing awards can be a ground for setting them aside under Section 34 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”), which provides the grounds for setting aside awards seated in India.

The core dispute in this matter pertains to whether the construction of a building was completed as per the agreed terms under a Joint Development Agreement, resulting in the arbitration. While the arbitrator closed the proceedings in July 2012, the award, was only issued in March 2016, after three years and eight months, without any meaningful explanation by the arbitrator for the delay. The SC held that whilst delay by itself is not an autonomous ground to set aside an award under Section 34 of the Arbitration Act, where such delay has the effect of failing to provide equitable relief to the parties, it may be set aside on the grounds of public policy of India and patent illegality, both recognised grounds under Section 34 of the Arbitration Act. Patent illegality arises where the award contravenes: (a) the substantive laws of India; (b) the provisions of the Arbitration Act itself; or (c) the terms of the underlying contract that formed the subject matter of the arbitration proceedings.

Evolution of the Legislative Framework

Before the Arbitration Act, Section 28 of the Arbitration Act, 1940, mandated that an arbitrator was to issue its decision within the period prescribed by the Indian courts. However, the Arbitration Act does not stipulate any such time limit for the issuance of awards. Although Article 14 of the UNCITRAL Model Law on International Commercial Arbitration, 1985 (“Model Law") (on which the Arbitration Act is based) requires arbitrators to conduct proceedings without undue delay, it does not specify any time limit or define what constitutes a delay.

Following the 2015 amendments to the Arbitration Act, Section 29-A was introduced, stipulating that an award was to be issued within twelve months from the completion of the pleadings, extendable by six months with the parties’ mutual consent. If the award is not rendered within these timelines, the arbitrator’s mandate terminates unless the court grants an extension.

Judicial evolution

The Delhi High Court (“DHC”) delved into this issue in Harji Engineering Works (P) Ltd. v. Bharat Heavy Electricals Ltd. (2008) (“Harji Engineering”), where an award issued with a delay of three years was set aside. It was observed that if the award was issued without any satisfactory explanation for the delay, it is liable to be set aside, reasoning that arbitrators might naturally forget parties’ contentions and arguments if a substantial time gap between the last hearing and issuance of the award occurs. These findings were followed in BWL Ltd. v. Union of India (2012), which set aside an award rendered in September 2010, after a delay of two years and seven months from the last clarificatory hearing held in February 2008. In this case, thr DHC emphasised that ‘human memory is short’ and questioned whether hearings concluded years earlier left sufficient imprints on the arbitrator’s mind. This approach was consistently followed in subsequent cases [DGCRPF v. Fibroplast Marine (P) Ltd (2022) (delay of one and a half years); Department of Transport v. Star Bus Services (P) Ltd, (2023) (delay of one and a half years); and HR Builders v. Delhi Agricultural Marketing Board (2024) (delay of two years eight months)] establishing a clear trend of setting aside awards for unreasonable delays compromising the integrity of the arbitral process.

Inconsistency in approach and the distinguishing factor

However, the approach of the DHC has not been entirely consistent. In Peak Chemical Corporation v. NALCO (2012), the DHC, despite a delayed issuance of the award found it inappropriate to set aside the award solely for delay. Subsequently, in Union of India v. NIKO Resources (2012) (“Niko”), the DHC set aside an award that was issued in December 2009, four years after the closure of final arguments in August 2005. However, the rationale for setting aside the award was on account of the arbitrator’s failure to address certain issues due to a misinterpretation of the underlying contract, and the arbitrator’s adjudication being beyond the scope of the contract, amounting to patent illegality. In this context, the DHC emphasised that delay alone does not vitiate an award — the illegality arising from such delay does.

Therefore, the determining factor is whether the delay results in a patently illegal or unjust award (perverse or irrational findings, or violations of public policy) and not the existence of delay itself. In Niko, it was also opined that the parties must primarily approach the arbitral tribunal with a prayer for expediting the award, and if unsuccessful, they must exhaust the remedy under Section 14(2) of the Arbitration Act before challenging the award under Section 34 thereof.

Section 14(1) provides that the mandate of an arbitrator shall terminate and be substituted with another arbitrator where the arbitrator, under Section 14(1)(a) becomes de jure or de facto unable to perform its functions, or fails to act without undue delay; or under Section 14(1)(b), such arbitrator withdraws from office or the parties agree to such termination. Section 14(2) further provides that if a controversy remains concerning any of the grounds in Section 14(1)(a), either party may apply to the court to decide on the termination of the arbitrator’s mandate.

More recently, in GL Litmus Events Pvt. Ltd. v. Delhi Development Authority (2025), the DHC set aside an award issued after a delay of over one year and seven months from the concluding arguments in May 2016 on the grounds of public policy. Relying on a Supreme Court decision in Anil Rai v. State of Bihar (2001) that ‘justice delayed is justice denied’, the DHC held that this principle applies equally to arbitral proceedings given the Arbitration Act‘s objective of speedy dispute resolution. Further, relying on Harji Engineering, it observed that arbitrators’ ability to recollect oral submissions and evaluate evidence diminishes over time, causing substantive prejudice to parties.

Opinion of the Bombay High Court (“BHC”): A different perspective

The BHC has taken a stricter approach to contractual time limits in arbitration. In Bharat Oman Refineries Ltd. v. Mantech Consultants (2012) (“Bharat Oman Refineries”), it set aside an award, issued two years and four months after the closing arguments, despite the arbitrator having agreed to issue the award within a year of the concluding arguments. Applying the principle that once the contractually agreed time limit expires, the arbitrator becomes functus officio, and without a fresh written agreement from both parties extending the deadline, the arbitrator has no legal authority to issue the award, the BHC held that the issuance of the award was unauthorised and constituted misconduct under the Arbitration Act, rendering the award ‘bad in law’ and subject to being set aside.

Harmonisation in Lancor

In the backdrop of these varying interpretations, the Supreme Court in Lancor held that delay in the issuance of an award, by itself, is not sufficient to set it aside. However, each case must be examined on its own facts to ascertain whether the delay had an adverse impact on the final decision such that the award stands vitiated due to lapses committed by the arbitral tribunal owing to such delay.

It was further observed that when undue delay in the delivery of an award compromises its quality — such that the award fails to address the issues between the parties, or suffers from repetition or a perverse reading of the contract — such delay, particularly where it remains unexplained, may result in the award attracting the grounds for setting aside (of public policy and patent illegality) under Section 34 of the Arbitration Act. It was further held that the recommendation in Niko regarding the exhaustion of the remedy under Section 14(2) of the Arbitration Act is not a prerequisite for an aggrieved party to challenge the delayed and tainted award.

The Lancor judgement also holds that the very basis underlying the arbitration process is that it results in speedier resolution of disputes. If that purpose is not fulfilled by a delayed award such that it results in patent illegality or perversity, then there may be no choice left but for the court to set it aside and potentially remand the matter back for fresh adjudication. Moreover, if the award alters the parties’ positions in a manner that disrupts the balance between them that existed prior to arbitration, it would conflict with the public policy of India and be patently illegal, liable to be set aside.

International perspectives on delayed awards and enforcement

Foreign jurisdictions vary in their treatment of delayed awards. Switzerland and France take strict approaches, with Swiss courts annulling awards rendered even one day after agreed deadlines, and French courts refusing enforcement for minimal delays on public policy grounds. The Italian Arbitration Act under Article 829(6) expressly provides for setting aside awards that exceed statutory time limits. Conversely, the courts in the United Kingdom and Singapore have generally refused to deny recognition solely due to delays, adopting a more lenient position. Accordingly, the enforceability of delayed awards varies depending on the approach adopted by a particular jurisdiction, ranging from strict enforcement to flexible interpretation.

Concluding Remarks

The approach laid down in Lancor is not entirely infallible and may, in certain cases, create more ambiguity than clarity. By rejecting delay as a standalone ground whilst simultaneously recognising it as a vitiating factor, the Supreme Court has essentially shifted the burden onto the challenging party to demonstrate causation between delay and defective reasoning. Proving that an arbitrator forgot something or made errors because of delay can be challenging, since the internal thought processes of an arbitrator, months or years after hearings, cannot always be ascertained.

While the Supreme Court’s approach resolves conflicting High Court decisions and offers pragmatic flexibility, it arguably weakens the stricter standard set in Bharat Oman Refineries. At the same time, the judgment respects the arbitrator’s procedural latitude, ensuring that awards are not set aside on procedural grounds alone without evidence of resulting substantive prejudice.

On a conspectus, when parties specifically negotiate and agree upon timelines for rendering an award, such agreement becomes integral to the arbitrator’s mandate. The Supreme Court’s flexible approach, whilst pragmatic, may in some cases, inadvertently dilute the binding force of contractually agreed timelines and potentially validate even delayed awards, considering the position that awards may not be invalidated merely for breaching agreed deadlines.

A more balanced approach would be to draw a clear distinction: where parties have contractually agreed upon specific timelines, those should be strictly enforced, and any award rendered beyond such period should be treated as being without authority. However, where no such agreement exists, the court could examine whether the delay actually affected the quality and fairness of the award before setting it aside. Such a distinction would balance procedural efficiency, the sanctity of contractual agreements, and the autonomy of the parties.