Document-only arbitration

A full hearing takes time, and a small dispute does not always need one. If an investor's claim is small, arbitration can still resolve it fairly just by reading the papers both sides submit.

Document-only arbitration is that lighter process. There is still a sole arbitrator, and there is still a binding award — the difference is that the arbitrator normally decides on documents alone, without calling either side in for a hearing.

The workbook (Chapter 7, section 7.3.8) sets the threshold precisely: when the value of the claim and/or counter-claim is Rs 1,00,000 or below (or such other sum SEBI may specify), the sole arbitrator must conduct a document-only arbitration process and pass the arbitral award within 30 calendar days of appointment — the same 30-day period that applies to larger, hearing-based arbitrations.

The arbitrator is not absolutely barred from holding a hearing: for reasons recorded in writing or electronically, the arbitrator may grant a hearing to the parties even in a document-only case. If a party gives no representation at all in the proceedings, the arbitrator may pass an ex-parte order, but only after giving that non-cooperating party 7 calendar days' notice.

Above Rs 1,00,000, arbitration instead proceeds with one or more hearings, and for claims above Rs 30 lakh the matter goes to a three-member arbitral tribunal rather than a sole arbitrator at all.

An investor, Priya Shenoy, claims her broker wrongly debited Rs 72,000 from her trading account. Conciliation fails to resolve the dispute.

Because her claim is below Rs 1,00,000, a sole arbitrator is appointed and conducts the case as a document-only arbitration. Priya submits her contract notes, account statements and a written statement of her case; the broker submits its reply and supporting records. No hearing is scheduled, and the arbitrator passes an award within 30 calendar days of appointment based on the papers alone.

Suppose the arbitrator finds the dispute turns on a disputed phone recording that really needs to be discussed live. The arbitrator can still grant a hearing, but must record reasons in writing for departing from the normal document-only process — the exception exists, but it is not automatic just because the arbitrator would prefer one.

Chapter 7 (Investor Grievances and Arbitration, section 7.3.8, Arbitration) sets the Rs 1,00,000 threshold and the document-only procedure directly, in the same paragraph that fixes the three-tribunal-member threshold at Rs 30 lakh. Expect a question distinguishing the Rs 1,00,000 (document-only) and Rs 30 lakh (sole versus three-arbitrator tribunal) thresholds from each other — they are easy to swap.

• Rs 1,00,000 or below triggers document-only arbitration — this is a different, lower threshold from the Rs 30 lakh line that decides sole arbitrator versus a three-member tribunal.
• A hearing can still be granted in a document-only case, but only for reasons the arbitrator records in writing or electronically — it is an exception, not the default.
• The 30-calendar-day award deadline is the same for document-only and hearing-based arbitration; document-only changes the process, not the timeline.
• An ex-parte order needs 7 calendar days' notice to the non-cooperating party first.
• Do not confuse document-only arbitration with conciliation — conciliation is a separate, earlier, consensual stage; document-only arbitration is still adversarial arbitration, just without a hearing.