Section 29A(1) of the Arbitration and Conciliation Act, 1996 (the "Arbitration Act") prescribes, inter alia, the time limit for arbitral tribunals to make arbitral awards under the Arbitration Act. The Arbitration and Conciliation (Amendment) Act, 2019 had with effect from August 30, 2019 (the "Effective Date"), amended Section 29A(1) of the Arbitration Act to state, inter alia, "...the award in matters other than international commercial arbitration shall be made by the arbitral tribunal within a period of twelve months from the date of completion of pleadings under sub-section (4) of section 23...". However, it was ambiguous whether the amended Section 29A(1) of the Arbitration Act will have retrospective application to arbitrations which had commenced prior to, but were pending adjudication as on the Effective Date.
- DELHI HIGH COURT CLARIFIES ON THE RETROSPECTIVE APPLICABILITY OF THE AMENDED SECTION 23(4) AND SECTION 29A(1) OF THE ARBITRATION ACT
The Hon'ble High Court of Delhi (the "Court") has in the case titled 'Shapoorji Pallonji and Co. Private Limited v. Jindal India Thermal Power Limited', put the aforementioned ambiguity to rest vide its order dated January 23, 20201 (the "Order") wherein it has examined whether the amendments introduced to Section 29A(1) and Section 23(4) of the Arbitration Act will be applicable retrospectively.
The Court herein noted that the arbitral tribunal had entered upon reference on May 26, 2018. Accordingly, as per the unamended Section 29A(1) of the Arbitration Act, the arbitral award had to be made by the arbitral tribunal within a period of 12 months thereof. However, the parties to the arbitral proceedings had mutually consented to extend the time period for making of the arbitral award by a further period of 6 months under Section 29A(3) of the Arbitration Act.
The Court held that the amended Section 23(4) and Section 29A(1) of the Arbitration Act are procedural in nature and hence, these sections will be retrospectively applicable to all pending arbitral proceedings as on the Effective Date, further providing a time period of 6 months under the amended Section 23(4) of the Arbitration Act for completion of pleadings.
The Court while disposing of the petition held that the period of 12 months for completion of all pending arbitral proceedings under Section 29A(1) of the Arbitration Act would commence only once the period of 6 months under the amended Section 23(4) of the Arbitration Act for completion of pleadings has expired as opposed to the commencement of such 12 month period from the date on which the arbitral tribunal enters upon the reference.
- INDUSLAW VIEW
The Order appears to have been passed in line with the judgment of the Hon'ble Supreme Court of India in 'BCCI v. Kochi Cricket'2 wherein it was held that Section 36 of the Arbitration Act is a procedural provision and a judgment debtor cannot upon filing of a petition under Section 34 of the Arbitration Act, enjoy the substantive vested right of an automatic stay on the execution of an arbitral award. Accordingly, Section 36 of the Arbitration Act as amended by the Arbitration and Conciliation (Amendment) Act, 2015 (the "2015 Amendment") will also apply retrospectively to arbitral awards in cases where an application for setting aside of an arbitral award under Section 34 of the Arbitration Act had already been filed or were pending on the date on which the 2015 Amendment became effective i.e. October 23, 2015.
The Order is likely to significantly reduce the petitions filed under Section 29A of the Arbitration Act for extension of mandates of the arbitrators and the time limit for making of arbitral awards, which ultimately delayed speedy resolution of arbitral disputes. Such extensions defeat the entire purpose of statutorily prescribed strict timelines for conclusion of arbitral proceedings, and on a larger picture, the entire purpose of alternative dispute mechanisms such as arbitrations.
1 Order available at http://delhihighcourt.nic.in/dhcqrydisp_o.asp?pn=14300&yr=2020
2 2018 (6) SCC 287
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