Complex commercial transactions and arrangements often contemplate a requirement to engage in good faith negotiations/discussions or mediation in order to resolve the dispute amicably before the parties can resort to arbitration. It is also common in these arrangements that the parties are required to spell out their claim in writing and provide the other party with an opportunity to respond before good faith negotiations can commence. Given the complex nature of arrangements, stakes involved and multitude of relationships between the parties, often a considerable amount of time is spent in exploring ways to amicably resolve matters instead of “washing dirty linen in public”. It has been a matter of considerable debate whether the time spent in good faith negotiations/discussions/mediation can be excluded for the purpose of computing the period of limitation for reference to arbitration.
The recent Supreme Court judgement in the case of Geo Miller & Co. Pvt. Ltd. v. Rajasthan Vidyut Utpadan Nigam Ltd. (Geo Miller Case) has explained the legal position on this aspect and paved the way for making a carve out for time spent in exhausting pre-arbitration procedures for the purpose of computing the period of limitation for reference to arbitration.