chhatramani/Nepal-Legal-Text-Corpus-44laws huggingface dataset:
Arbitration Act 2055

Preamble
Date of authentication and publication:
2 Chaitra 2056
1. The Act Amending Some Nepal Acts, 2064              2064/5/9
Act No. 1 of the year 2056
An act made to make legal provisions for arbitration
Preamble: Whereas it is expedient to update the prevailing legal provisions relating to arbitration,
Now, therefore, be enacted by the Parliament in the 27th year of the reign of His Majesty King Birendra Bir Bikram Shah Dev.

Arbitration Act 2055

Chapter-1 Preliminary

Section 1: Short Title and Commencement
1) This Act may be called the “Arbitration Act, 2056.”
2) It shall come into force immediately.

Arbitration Act 2055

Chapter-1 Preliminary

Section 2: Definitions
In this Act, unless the subject or the context otherwise requires:
(a) “Agreement” means a written agreement reached between the concerned parties for a settlement through arbitration of any dispute concerning any specific legal issue that has arisen or may arise in the future under a contract or otherwise.
Explanation: For the purpose of this clause, the concerned parties shall be deemed to have entered into a written agreement in case any of the following documents exists:
(1) Any contract containing a provision for arbitration or any separate agreement signed in that connection.
(2) Letter, telex, telegram, telefax message, or any other similar at-time message exchanged through telecommunication media whose records can be maintained in a written form between the concerned parties, which provides for referring their disputes to arbitration.
(3) In case any party has presented a claim for referring any dispute to arbitration and the objection to that claim submitted by the party objecting to that claim without rejecting the proposal for referring the dispute to arbitration.
(b) “Party” means any party connected with arbitration.
(c) “District Court” means the District Court of the place prescribed in the agreement as the place of arbitration, if any, and if no such place has been prescribed, the place where the dispute has arisen or where the arbitration proceedings have been conducted and decisions taken, or the territorial jurisdiction over the place where any party generally resides.
(d) “Appellate Court” means the Appellate Court of the place prescribed in the agreement as the place of arbitration, if any, and if no such place has been prescribed, the place where the dispute has arisen or where the arbitration proceedings have been conducted and decisions taken, or the territorial jurisdiction over the place where any party generally resided.
(e) “Dispute” means a dispute which can be settled through arbitration under this Act.
(f) “Counter-claim” means a claim made by the Respondent on the Claimants.
(g) “Rejoinder” means a claim to the counter-claim by the Claimants.
(h) “Arbitrator” means an arbitrator appointed for the settlement of a dispute and the term also includes a panel of arbitrators.
Arbitration Act 2055

Chapter-2 Settlement of Disputes Through Arbitration

Section 3: Disputes to be Settled through Arbitration
1) In case any agreement provides for the settlement of disputes through arbitration, the disputes connected with that agreement or with issues coming under that agreement shall be settled through arbitration according to the procedure prescribed in that agreement, if any, and if not, according to this Act.
2) Notwithstanding anything contained in sub-section (1), in case of concerned parties to a civil suit of a commercial nature which has been filed in a court and which may be settled through arbitration according to prevailing laws, file an application for its settlement through arbitration, such dispute shall also be settled through arbitration.

Arbitration Act 2055

Chapter-2 Settlement of Disputes Through Arbitration

Section 4: Cancellation of Records of the Suit
1) The court may order for cancellation of the records of a suit filed in connection with a dispute which the concerned parties have sought to settle through arbitration pursuant to sub-section (2) of Section 3.
2) Notwithstanding anything contained in Sub-section (1), the court shall not order for the cancellation of a suit in the following circumstances:
(a) In case it is deemed necessary to pronounce a decision on any issue which cannot be arbitrated together with an issue which can be arbitrated or
(b) In case there appears to be any appropriate reason why the dispute cannot be settled through arbitration.

Arbitration Act 2055

Chapter-3 Appointment of Arbitrators and Their Office

Section 5: Number of Arbitrators
1) The number of arbitrators is as specified in the agreement. In case the agreement does not specify the number of arbitrators, there shall ordinarily be three arbitrators.
2) In case the number of arbitrators appointed under the agreement is an even one, it shall be turned into an odd one by designating an additional arbitrator chosen by them.

Arbitration Act 2055

Chapter-3 Appointment of Arbitrators and Their Office

Section 6: Appointment of Arbitrator
1) Notwithstanding otherwise contained in the agreement, the process of appointing arbitrators must be started within 30 days from the date when the reason for the settlement of a dispute through arbitration arises.
2) In case the agreement mentions the names of arbitrators, they themselves shall be recognised as having been appointed as arbitrators.
3) In case the agreement has made any separate provision for the appointment of arbitrators, arbitrators shall be appointed accordingly.
4) Notwithstanding otherwise contained in the agreement, each party shall appoint one arbitrator, and the arbitrators shall appoint the third arbitrator, who shall work as the chief arbitrator.
Arbitration Act 2055

Chapter-3 Appointment of Arbitrators and Their Office

Section 7: Appointment of Arbitrators by Court
1) Any party may submit an application to the Appellate Court for the appointment of arbitrators in the following circumstances:
(a) In case no arbitrator can be appointed upon following the procedure contained in the agreement.
(b) In case the agreement does not mention anything about the appointment of arbitrators.
2) The application to be filed pursuant to sub-section (1) must explicitly mention the full name, address, occupation and field of specialisation of at least three persons who can be appointed as arbitrators and also be accompanied by a copy of the agreement.
3) Upon receiving an application pursuant to sub-section (1), the Appellate Court shall notify all the parties and shall appoint arbitrators from the persons proposed by them in the case of consensus in that connection and in the case of failure to consensus, the persons deemed appropriate by the Appellate Court, within 60 days from the date of receipt of the application. The decision taken by the court in that manner shall be final.

Arbitration Act 2055

Chapter-3 Appointment of Arbitrators and Their Office

Section 8: Fulfilment of Arbitrators in Special Circumstances
1) In case the appointed arbitrator for the purpose of arbitration falls vacant by reason of his resignation or refusal to function in that capacity or of his/her death or any other reason, it shall be filled up by appointing another arbitrator ordinarily within 30 days from the date when the vacancy has occurred in the manner in which the arbitrator had originally been appointed.
2) In case the vacant arbitrator was not filled up within the time limit mentioned in sub-section (1), any party may apply to the Appellate Court within 15 days from the date of expiry of that time limit. In case such an application is filed, the Appellate Court shall appoint an arbitrator ordinarily within 15 days, subject to section 7.

Arbitration Act 2055

Chapter-3 Appointment of Arbitrators and Their Office

Section 9: Arbitrators to Take Oath
1) Before starting the arbitration proceedings, the arbitrator must affix his signature to two copies of a written oath as indicated in the schedule regarding impartiality and honesty, send one copy to the Appellate Court, and keep the other copy in the case file.
2) Before taking oath pursuant to sub-section (1), the arbitrator must make clear matters, if any, which raise a reasonable doubt about his /her impartiality or independence with respect to the dispute which he/she has to settle.
Arbitration Act 2055

Chapter-3 Appointment of Arbitrators and Their Office

Section 10: Qualifications of Arbitrators
The following persons shall not be disqualified for appointment as arbitrators:
(a) Disqualified for entering into contracts as per prevailing laws.
(b) Punished by a court on criminal charges involving moral turpitude.
(c) Become insolvent or been declared bankrupt.
(d) Any personal interest in the dispute which has to be settled through arbitration.
(e) Not having any specific qualification specified in the agreement for becoming eligible for appointment as an arbitrator.

Arbitration Act 2055

Chapter-3 Appointment of Arbitrators and Their Office

Section 11: Removed of Arbitrators
1) The condition and procedure for the removal of an arbitrator shall be as mentioned in the agreement.
2) In case the condition and procedure have not been mentioned in the agreement pursuant to sub-section (1), any party may, in any of the following circumstances, submit an application to the arbitrator requesting permission to remove an arbitrator within 15 days from the date of his/her appointment or from the date when the party learns that the concerned arbitrator has failed to act:
(a) In case any arbitrator is clearly seen to have shown a bias toward or discrimination against any party instead of working in an impartial manner,
(b) In case any arbitrator engages in improper conduct or commits fraud in the course of arbitration,
(c) In case any arbitrator frequently commits mistakes or irregularities in the course of arbitration,
(d) In case any arbitrator does not attend arbitration meetings or refuses to take part in arbitration proceedings more than three times without furnishing satisfactory reasons with the objective of prolonging or delaying the arbitration proceedings in an improper manner,
(e) In case any arbitrator takes any action which is opposed to the principles or rules of natural justice or
(f) In case any arbitrator is found to be lacking the necessary qualifications, or to have ceased to be qualified.
3) Upon received an application pursuant to sub-section (2), if the arbitrator whose removal has been demanded does not relinquish his/her post voluntarily, or the other party does not agree with the grounds on which his/her removal, the arbitrator must take a decision on the matter within 30 days from the date of application.
4) A complaint may be filed before the Appellate Court against the decision pursuant to sub-section (3), and the decision of the Appellate Court shall be final.
Arbitration Act 2055

Chapter-3 Appointment of Arbitrators and Their Office

Section 12: Location of Office of the Arbitrator
1) The office of the arbitrator shall be located at the following place:
(a) At the place specified in the agreement, if any.
(b) If the agreement does not specify the location of the arbitrators office, at the place selected by the concerned parties.
(c) In case the concerned parties do not select such place within 15 days from the date of appointment of the arbitrator, or in case the concerned parties fail to reach an agreement in that connection, at the place specified by the arbitrator in the light of all the relevant circumstances.
2) Notwithstanding anything contained elsewhere in this Section, the arbitrators may, except when any other arrangement has been made by the concerned parties, designate through mutual consultations the location of their office at any other appropriate place which is convenient for them to record the statements of witnesses, obtain the opinion of experts, and inspect any document, object or place.

Arbitration Act 2055

Chapter-3 Appointment of Arbitrators and Their Office

Section 13: Language to be used by Arbitrators in their Proceedings
The language to be used by the arbitrators in the proceedings shall be as specified in the agreement, if any. In case the agreement does not specify any such language, they shall use the language determined by them through mutual consultations. In case the arbitrators fail to determine the language to be used by them, the language used in the agreement shall be the language to be used by the arbitrators.
Arbitration Act 2055

Chapter- 4 Arbitration Proceedings and Powers of Arbitrators

Section 14: Submission of Claims, Counter-Claims, Objections or Rejoinders
1) 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.
2) 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.
3) The other party shall submit its objection, as well as its counter-claim, if any, in that connection within the time limit mentioned in sub-section (2). In case it submits a counter-claim, the arbitrator shall also provide a time limit of 15 days for the claimant to 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.
4) In case any party fails to submit its
1
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 to not more than seven days.
5) 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 a 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.
6) Each party submitting documents to the arbitrator in connection with arbitration proceedings under this Act shall supply copies thereof to the other party.
1 Deleted by the Act Amending Some Nepal Acts, 2064
Arbitration Act 2055

Chapter- 4 Arbitration Proceedings and Powers of Arbitrators

Section 15: 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:
(a) The arbitration proceedings shall terminate in case the claimant does not submit his/her claim within the time limit mentioned in Section 14 (1).
(b) 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.
(c) 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.

Arbitration Act 2055

Chapter- 4 Arbitration Proceedings and Powers of Arbitrators

Section 16: Power of the Arbitrator to Determine Jurisdiction
1) 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.
2) Any party not satisfied with the decision taken under sub-section (2) may file an appeal with the Appellate Court within 30 days from the date of the decision, and the decision taken by that court on the matter shall be final.
3) 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.
4) 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.
5) 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.
6) The filing 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.
Arbitration Act 2055

Chapter- 4 Arbitration Proceedings and Powers of Arbitrators

Section 17: Procedure to be Adopted by Arbitrators
1) 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.
2) 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.
3) 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.
4) 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.
5) 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).
6) After the completion of the hearing process, the arbitrator shall issue an order stating that the hearing has concluded and keeping a record thereof in the case file. No evidence may be examined, and neither may the parties be heard thereafter.
7) 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).

Arbitration Act 2055

Chapter- 4 Arbitration Proceedings and Powers of Arbitrators

Section 18: Substantive Law to be followed by Arbitrators
1) The Nepal Law shall be the substantive law to be followed by the arbitrator, except when otherwise provided for in the agreement.
2) 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.
3) 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, the arbitrator shall also pay attention to the commercial usages applicable to the concerned transaction.

Arbitration Act 2055

Chapter- 4 Arbitration Proceedings and Powers of Arbitrators

Section 19: Arbitration Hearings to be held in Camera
Except when otherwise desired by the parties, arbitration proceedings shall be held in-camera.
Arbitration Act 2055

Chapter- 4 Arbitration Proceedings and Powers of Arbitrators

Section 20: Saving Notices and Summon
1) Notwithstanding anything contained in the prevailing law, any notice to be served in connection with arbitration, or any notice or summon to be furnished in the name of any party residing
within or outside 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.
2) Notwithstanding anything contained in sub-section (1), this provision shall have no prejudicial impact on the function and proceeding of the court.

Arbitration Act 2055

Chapter- 4 Arbitration Proceedings and Powers of Arbitrators

Section 21: Power of the Arbitrator
1) The powers of the arbitrator shall be as follows, except when otherwise provided for in the agreement:
(a) To direct the concerned parties to appear before him/her to submit documents and record their statements as required.
(b) To record statements of the witness.
(c) To appoint an expert and seek their opinion or cause examination on any specific issue.
(d) In case the party is a foreign national so that, the decision pronounced by the arbitrator is not likely to be implemented for that reason to obtain a bank guarantee or any other appropriate guarantee as determined by the arbitrator.
(e) 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.
(f) To exercise any specific power conferred by the parties.
(g) 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.
(h) To issue a certified copy of the document.
(i) To exercise the other power conferred by this Act.
2) 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.