The Arbitration and Conciliation (Amendment) Act, 2015
(Amendment Act) was notified in the Official Gazette on 1 January
2016. The Amendment Act is deemed to have come into force with
effect from 23 October 2015. The Amendment Act makes substantial
changes to the Arbitration and Conciliation Act, 1996 (Act) for
making arbitration a preferred mode for settlement of commercial
disputes by making it more user-friendly and cost effective and
leading to expeditious disposal of cases.
Arbitration and Conciliation (Amendment) Ordinance 2015: debate
on prospective or retrospective application?
Report No 246 of the Law Commission of India on Amendments to
the Arbitration and Conciliation Act 1996 contained a transitory
provision in the form of Section 85A. As per Section 85A, the
provisions of the amended Act shall be prospective in operation and
shall apply to fresh arbitrations and fresh applications. However,
the Arbitration and Conciliation (Amendment) Ordinance, 2015
(Arbitration Ordinance) was promulgated absent a transitory
provision which in turn stirred a debate on whether the new law
would be applicable prospectively or retrospectively.
The Arbitration Ordinance hit the first roadblock in court when
a division bench of the Madras High Court in the case of Delphi TVS
Diesel Systems Ltd v Union of India1 asked the Central
Government to clarify whether the Arbitration Ordinance would apply
prospectively or retrospectively. The Petitioners challenged the
retrospective application of Section 29A of the Amendment
Ordinance, which provided for a time period for completion of
arbitration proceedings. The Petitioners contended that such
provision could apply only to the arbitration commencing after the
Arbitration Ordinance came into force or in the alternative, the
time period would have to commence from the date when the
Arbitration Ordinance came into force. The Madras High Court found
prima facie force in the Petitioner's contention but
observed that it was a larger issue to be examined and listed the
matter for hearing in January 2016.
The Bombay High Court is hearing a different aspect of the
prospective/retrospective debate with respect to the amendment to
Section 36 of the Act to the effect that mere filing of an
application for challenging the award would not automatically stay
execution of the award. The issue being considered by the Bombay
High Court is:
"As to whether the amendments under the Ordinance to
Section 36 of the Arbitration and Conciliation Act 1996, apply to
the Petitions under Section 34 of the Act, already filed and
pending as on the date of the amendments."
This matter has been part-heard before the Bombay High
Amendment Act provides clarity on the applicability to pending
The Amendment Act addresses the issue of applicability of the
new law to pending arbitration proceedings by adopting the
"26. Nothing contained in this Act shall apply to the
arbitral proceedings commenced, in accordance with the provisions
of section 21 of the principal Act, before the commencement of this
Act unless the parties otherwise agree but this Act shall apply in
relation to arbitral proceedings commenced on or after the date of
commencement of this Act."
The inclusion of a transitory provision in the Amendment Act has
allayed the widespread concerns on the issue of
prospective/retrospective application. Absent such clarification
this issue may have been the subject matter of considerable
litigation defeating the very object of the Amendment Act of making
arbitrations more time and cost efficient. The transitory provision
in the Amendment Act was the need of the hour and was therefore a
Time will tell whether the Amendment Act will be a 'Game
Changer' for arbitration in India. The attitude of all
stakeholders and approach of the courts will be crucial to
implementation of the Amendment Act in its letter and spirit.
1. In the Madras High Court, W.P. No 37355 of
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