Written by Bageerathan, Advocate, Madras High Court
The Arbitration and Conciliation (Amendment) Act, 2015 was a pivotal reform in the Indian arbitration landscape. Emerging from the recommendations of the Law Commission's 246th Report, the Amendment aimed to modernize arbitration, reduce judicial interference, and enhance the efficacy of dispute resolution. Key amendments to Sections 9, 11, 17, 34, and 36 sought to streamline arbitration processes and address delays caused by the earlier framework.
However, the 2015 Amendment Act also sparked debates about its applicability: Should its provisions apply retrospectively to arbitration proceedings already underway before its enactment on October 23, 2015, or only to those commenced thereafter?
The Core Debate: Prospective or Retrospective Application
1. Legislative Intent and Section 26 of the Amendment Act
Section 26 clarifies that the Amendment Act applies prospectively to arbitral proceedings initiated post-enactment unless the parties agree otherwise. It introduced duality:
The first part concerns arbitral proceedings, stating that the amendments apply only to those initiated after the commencement date.
The second part pertains to court proceedings related to arbitration, allowing amendments to apply to such proceedings commenced after October 23, 2015.
2. Supreme Court’s Interpretation in the BCCI Case (2018)
The Supreme Court in Board of Control for Cricket in India v. Kochi Cricket Private Limited (2018) dissected Section 26. It held that the Amendment is generally prospective but does not apply to court proceedings initiated before October 23, 2015, unless otherwise agreed. The Court eliminated the "automatic stay" on arbitral awards under Section 36, emphasizing legislative intent to curtail delays.
3. Conflicting Judicial Decisions
Subsequent judgments rekindled ambiguity:
In Ellora Paper Mills v. State of Madhya Pradesh (2022), the Supreme Court applied the amended provisions retrospectively to disqualify a tribunal comprising state officers.
Conversely, the Calcutta High Court in West Bengal Housing Board v. Abhishek Construction (2023) ruled against the retrospective application for arbitral proceedings initiated pre-amendment.
Addressing the Divergence
1. Applicability to Arbitral Proceedings under Section 21
The courts consistently referenced Section 21 of the Arbitration Act, which considers arbitration proceedings as commenced upon issuing a notice to arbitrate. Judgments such as Union of India v. Parmar Construction Company (2019) affirmed the prospective nature of the 2015 Amendment for arbitration proceedings initiated before the enforcement date.
2. Impact on Court Proceedings
The Supreme Court in Shree Vishnu Constructions v. Military Engineering Services (2023) clarified that the Amendment applies prospectively to Section 34 challenges filed post-commencement, even if the arbitration commenced earlier. This distinction aligned with BCCI v. Kochi Cricket.
Recent Developments
In Sh. Pankaj v. Delhi Metro Rail Corporation Ltd. (2024), the Delhi Commercial Court reaffirmed that parties could opt for the 2015 Amendment to apply to proceedings commenced before its enactment. This consensus highlights the adaptability of the arbitration framework while respecting legislative intent.
Conclusion
The Arbitration and Conciliation (Amendment) Act, 2015 leans towards prospective applicability, as consistently interpreted by higher judiciary in cases like BCCI and Shree Vishnu Constructions. While initial ambiguities led to conflicting rulings, the framework now provides clarity, balancing procedural fairness with efficient dispute resolution mechanisms.
The evolution of judicial interpretations underscores India's commitment to pro-arbitration reforms, fostering trust among domestic and international stakeholders.
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