The Arbitration and Conciliation (Amendment) Act, 2015 is a landmark in the history of Arbitration in India. The idea for the change emerged in the Law Commission Report presented in 2014, which recommended an overhaul of the existing framework of Arbitration. ^{The amendment aimed to reduce judicial intervention and ensure timely resolution of Arbitration issues by amending Articles 9, 11, 17, 34 and 36 of the Law. However, the amendment created uncertainty as to its applicability to Arbitration Proceedings initiated before the Amendment Act came into force. Article 26 of the 2015 Amendment resolved this confusion to some extent.}

at the Supreme Court Ellora Paper Mills v. Madhya Pradesh State (2022) It clarified that the provisions changed by the 2015 Law will also apply to arbitration proceedings initiated before the amendment came into force. In a contrary decision, West Bengal Housing Board – Abhishek Construction (2023)^{The Calcutta High Court held that the 2015 Amendment Act will not apply to arbitration proceedings initiated before its coming into force. This difference in judicial interpretation has reignited the unresolved debate over the retroactive applicability of the 2015 amendment.}

This article discusses, together with other related matters, the issue of the applicability of the 2015 Amendment to Arbitration Proceedings commenced before the commencement date of 23 October 2015.

Background of the 2015 Amendment Bill

Initially, the Arbitration Act was criticized for having an ‘automatic stay’ provision; This meant that appealing a decision under Article 34 meant that the implementation of the decision was immediately suspended. This provision undermined the efficiency of the arbitration process by encouraging parties to routinely challenge awards and delay payments to awardees. To resolve this issue, the Arbitration and Conciliation (Amendment) Act, 2015 was passed. The 2015 Amendments Act eliminated the automatic stay, ensuring that awards are not delayed solely because of a pending Chapter 34 petition.

However, the 2015 Amendment Act has introduced new uncertainties regarding the implementation of its provisions. In particular, there was uncertainty as to whether the amended Act would apply to court proceedings relating to arbitrations initiated before its commencement on 23 October 2015. It remained unclear whether the lifting of the automatic stay applied to appeals already pending under Article 34. Start Date.

This uncertainty was resolved by the Supreme Court decision. Board of Control for Cricket in India (BCCI) v. Kochi Cricket Private Limited and Ors., (2018), He stated that Section 26 of the 2015 Amendment Act will apply prospectively, unless the parties agree otherwise. The Court held that decisions would not be subject to automatic suspension even if an objection had been made before the Start Date.

Later, the government introduced the Arbitration and Conciliation (Amendment) Act, 2019. Article 87 reintroduced the automatic stay of decisions for certain cases and repealed Section 26 of the 2015 Amendment Act. Ultimately, this legislative change was submitted to the court. Hindustan Construction Company case. The court declared Article 87 unconstitutional.

The debate on the retrospective application of the 2015 Amendment Act was reignited in the Supreme Court’s 2015 decision. Ellora Paper Mills v. Madhya Pradesh State (2022).Inside Ellora Paper Mills (above), The Supreme Court ruled that a tribunal composed solely of Civil Servants “loses its jurisdiction” under a 2015 amendment to the Arbitration and Conciliation Act, which prohibits the appointment of arbitrators who have a business relationship with a party. Although the arbitration had begun before the amendment, the Court applied this prohibition retroactively, disqualifying the members of the tribunal.

The court did not strictly apply the amendment retroactively, but relied on adjournment to conclude that the trial had technically begun after the amendment. The decision brings to the fore questions about its broader implications.

Inside Shree Vishnu Constructions v. Chief Engineer, Military Engineering Service and Others (2023)^, The Supreme Court considered the applicability of the 2015 Amendment Act to cases in which a notice calling for arbitration was issued before the amendment. The Court held that the 2015 Amendment Act, which came into force on 23 October 2015, did not apply to arbitration proceedings initiated under Section 21 of the Act before that date. “Unless the parties agree otherwise”.

Interpretation of Section 26: Prospective and Retrospective Applicability Discussion

inside BCCI (above)The Supreme Court examined Section 26 of the Amendment Act, 2015. He observed that this provision was divided into two parts. While the first part covers the application of the amendment law to arbitration proceedings, the second chapter covers the application of the amendment law to court proceedings. This distinction is further strengthened by the reference to Article 21 of the Basic Law in its first section titled “Conduct of Arbitration by the Arbitral Tribunal”, which falls under Chapter V of the main law. As for the second part. , the reference to Section 21 is notable for its absence, which further supports the conclusion that it refers to arbitration proceedings other than proceedings before the Arbitral Tribunal.

Examining the distinction between the two parts of the section, the court also noticed that the first part was worded negatively because it restricted the application of the amendment act. “In the Arbitration Process” It is initiated after the commencement of the law, unless the parties agree to be bound by the provisions of the Amendment Law. The second part of the chapter positively extends the application of the Amendment Act to initiated proceedings. “Regarding Arbitration” after the amendment law came into force. As for the second part, the Amendment Act cannot be applied retroactively if the suit was filed before the amendment Act came into force.

The upshot of this debate is that the intention of the legislature is to keep the implementation of the Amendment Act forward-looking in nature.

It is important to note that in the above case the court considered proceedings under Articles 34 and 36 of the Arbitration Act. In this context, the court held that the amendment statute was future-oriented in nature. The Court did not consider the effects of the Amendment on other amended provisions, such as articles 9, 11 and 17 of the main law.

The question of whether the nature of the amendment is prospective or retroactive has been further emphasized by the Supreme Court. Union of India v. Parmar Construction Company (2019)The interpretation of section 11 as amended is directly addressed here.

In the case of Parmar Construction (above), The question for consideration before the Supreme Court was whether the amendment act was applicable to applications made after the amendment act had come into force under Article 11(6) of the Arbitration Act and the arbitration notice had been received by the other party under Article 21. arbitration law before the commencement of the amendment act.

The Court initially held that, unless otherwise agreed by the parties, the amending statute does not apply to arbitration proceedings in which a notification under section 21 has been made before the commencement of the amending act under section 26 of the Act.

The court also noted the combined effect of sections 21 and 26 and observed:

“We are also of the opinion that the 2015 Amendment Law, which came into force on 23 October 2015, will not apply to arbitration proceedings that have commenced in accordance with the provisions of Article 21 of the Main Law 1996. Unless the parties agree otherwise, the Amendment Act 2015 shall come into force.”

at the Supreme Court Union of India v. Pradeep Vinod Construction Company, (2020) He approved his decision in Parmar Construction (above) and ruled that if the request to refer the parties to arbitration is made before the entry into force of the Amendment Law, the arbitration proceedings will be governed by the unamended law on the appointment of the arbitrator. The same thing was repeated here Ratnam Sudesh Iyer v. Jackie Kakubhai Shroff (2021)These cases specifically addressed concerns regarding the appointment of the arbitrator and recognized that the Amendment Act was prospective in nature unless the parties agreed to be bound by the Amendment Act.

Inside Shree Vishnu Constructions (Supra), the court observed: BCCIit was kept like that “The Amendment Act is prospective in nature and will apply to arbitration proceedings commenced on or after the Amendment Act 2015 and to court proceedings commenced on or after the Amendment Act 2015, as understood in Article 21 of the Main Law. It came into force in 2015.” The Court further held that the cases of Parmar Constructions Company (supra) and Pardeep Vinod Construction Company (supra) cannot be said to stand alone and/or conflict with the case of BCCI (supra).

Latest Developments

Recently, the Delhi Commercial Court grappled with the same question. Ş. Pankaj / Delhi Metro Rail Corporation Ltd. (2024) wherein the court while referring to the Supreme Court decision in BCCI stated: “hence, clearly, the 2015 Amendment Act would be applicable in the present case by virtue of the agreement of the parties. As stated earlier, Section 26 of the 2015 Amendment Act clearly provides that parties may agree on the application of the 2015 Amendment Act even in proceedings initiated before the 2015 Amendment Act comes into force.

This resolves the debate on the applicability of the Amendment Act to arbitration proceedings initiated before the entry into force of the Amendment Act.

Solution

Although Article 26 of the 2015 Amendment clearly stated that it did not apply to proceedings initiated before the Amendment Act came into force, conflicting decisions were still being made.

The issue was finally decided in the Supreme Court BCCI lawsuit and Shree Vishnu Constructions The case in which other provisions amended by the Amendment Act, 2015 were interpreted in the light of Article 26 of the Act.