Introduction
The new amended Arbitration Act 2015 ('Amended Act') was introduced on 23 October 2015 in the form of an Ordinance. Since its inception, various High Courts and jurists stood divided as to the applicability of the Amended Act and, particularly, whether such amended provisions would apply to proceedings instituted under the Arbitration and Conciliation Act 1996 ('Principal Act') because, at the time of promulgation of the Ordinance, the Government had not clarified whether the Act would have prospective application.
The issue of the applicability of the Act became a matter of speculation and a clarification was sought by the Madras High Court from the Central Government in Delphi TVS Diesel Systems Ltd v Union of India1.
The question was repeatedly brought up before the other curts in India as well. The Bombay High Court in Kochi Cricket Pvt Ltd v The Board of Control for Cricket in India2, issued notice to all litigants to determine the question of whether the Amended Act would apply to pending matters. The issue also became a point of contention in the Parliament with members seeking a clarification on this matter.
Parliament Clarification
Putting all speculation to rest, the Lok Sabha on 17 December 2015 passed the Arbitration (Amendment) Act and inserted §26 which mandated that the Amended Act would not apply to proceedings instituted under the Principal Act unless agreed by the parties.
Pursuant to the Parliament clarifying the issue, different High Courts have taken the view that the Act applies prospectively. In Jumbo Bags Ltd3, while dealing with the appointment of an Arbitrator under the Amended Act, the Chief Justice of the Madras High Court held that since the arbitration commenced under the Principal Act, the procedure in the Principal Act should be followed.
Recently, the High Court of Calcutta in Reliance Capital v Chandra Creation4 held that the Amended Act would not apply to proceedings instituted under the Principal Act. The case involved the issue of whether pending a §34 application execution of an award is automatically stayed. While the position under the Principal Act was indeed that pending a §34 application, the execution of an award is automatically stayed. The Amended Act altered the position in that a party had to file an application to specifically seek a stay and the court is entitled to put parties to terms.
In its decision, the High Court relying upon judgments of the co-ordinate bench of the Calcutta High Court in Electrosteel Castings Limited v Reacon Engineers (India) Private Limited5 and Shri Nitya Ranjan Jena v Tata Capital Financial Services Ltd6 ruled that since the §34 application in the case was filed before the Amended Act came in to force, the Amended Act would not be applicable to the facts of the case by virtue of §26 of the Amended Act. Accordingly, the award was automatically deemed to be stayed pending the §34 application.
Doubts Persist
Despite the judgments of the Madras and Calcutta High Courts some controversy persists on whether §26 of the Amended Act is applicable prospectively to all proceedings under it. For instance in the Kochi Cricket case, it has been argued before the Bombay High Court that since §26 states that the Act will apply prospectively to 'arbitral proceedings commenced under section 21' of the Principal Act, the prospective application of the Amended Act is limited to proceedings before an arbitral tribunal alone and that the Act would apply retrospectively to proceedings under §34 dealing with a challenge to arbitration awards as the arbitration proceedings are closed at the stage of challenge. Judgment in the matter has been reserved and an order on the issue is expected shortly.
The lingering controversy notwithstanding the judgments of the Calcutta and the Madras High Court have brought some clarity on the issue of the applicability of the Amended Act. The judgment of the Bombay High Court in the Kochi Cricket case, should further clarify the issue. A final word on the matter can be expected once the Supreme Court rules on the issue.
Footnotes
1. WP 37355 of 2015 decided on 24.11.2015
2. Execution Application (L) No. 2482 of 2015
3. Jumbo Bags Ltd v New India Assurance Co Ltd (Madras High Court) decided on 10.03.2016
4. EC 301/2012 decided on 17 May 2016
5. AP No. 1710/2015 decided on 14 January 2016
6. AP No 15/2016 GA no 145/2016 decided on 2 March 2016
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
