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Retrospective Applicability of the 2015 Amendments to Indian Arbitration Law

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Badrinath Srinivasan
Badrinath Srinivasan

The presentation provides a descriptive comment of the recent decision of the Supreme Court of India in BCCI v Kochi Cricket Ltd. (15.03.2018), which partially answers whether the 2015 amendments to the Arbitration and Conciliation Act, 1996 are prospective or even apply to pending proceedings

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RETROSPECTIVE APPLICABILITY OF THE 2015 AMENDMENTS TO THE ARBITRATION & CONCILIATION ACT, 1996 Badrinath Srinivasan, LL.M., A.I.I.I., M.C.I. Arb. http://in.linkedin.com/pub/badrinath- srinivasan/13/604/916 www.practicalacademic.blogspot.in http://ssrn.com/author=665603
The Background For more than two years, the question of applicability of the 2015 amendments to pending court proceedings has vexed Indian Arbitration Law. In BCCI v Kochi Cricket Ltd. (15.03.2018), the SC has put a quietus to a part of the issue.
Facts Board of Control for Cricket in India (BCCI) and Kochi Cricket Pvt. Ltd. (KCPL) enter into a IPL franchise agreement in March 2011 Disputes arise between parties and KCPL invokes arbitration in January 2012. Sole Arbitrator appointed who passes two awards in KCPLs favour in June 2015. Award challenged by BCCI in September 2015 2015 Amendments to 1996 Act come into force on 23.10.2015
Question KCPL filed execution petitions for executing awards BCCI challenged the same in Bombay High Court and sought stay as S. 36 as it existed pre-amendment applied. Judge found S 36 to apply. SLP filed Other cases in the batch are similar
Pre-Amendment Position Under S. 36 pre-amendment, stay against execution automatically came into effect if an award is challenged. National Aluminium Co. Ltd. v. Pressteel & Fabs. (2004) 1 SCC 540- suggested that S. 36 has to be amended.
2015 on S.36 Amendments Enforced like a decree Filing of S 34 application cannot itself make the application invalid Separate application has to be made and court has to grant a stay on the operation of the award Conditional stay While granting the stay and imposing conditions, due regard to CPC provisions on stay of money decree to be given
Question Whether S 36 as amended would in respect of S. 34 petitions pending as on, or filed after, 23.10.2015 ?
Arguments for Appellants Section 26 is in two parts, the first part being the rule and the second being the exception By S 6 of the General Clauses Act, 1897, Vested rights to challenge the awards cannot be disturbed Amendment is prospective and cannot apply to awards delivered prior to 2015 amendments S 36 is substantive in nature and an amendment to it cannot have retrospective operation Justice Srikrishna Report suggested prospective operation Thyssen Stahlunion v SAIL (1999) 9 SCC 334 applied
Arguments for Respondent First part of S 26 doesnt mention Court proceedings while the second part doesnt speak of commencement under S 21. Hence S 26 is retrospective In Thyssen, the SC interpreted the expression in relation to in the manner that is being suggested by the Respondents. S 26 has to be interpreted keeping the objects of the 2015 amendments.
Summary of Judgement (1) Section 26 of the 2015 Amendment Act contains two parts: the first part clarifies that the amendments shall not apply to pending arbitral proceedings which commenced (as per S 21) prior to 23.10.2015 (commencement of the 2015 Act) the second part states that it would apply to arbitration related court proceedings which commenced on or after the above date. However, S. 26 is not retrospective. It is prospective
Summary of Judgement (2) S. 26 has to be read literally first and then purposively & pragmatically keeping the object of the provision The use of in relation to in the second part of the provision and its absence in the first part clearly conveys that both parts are to be treated differently. The second part does not refer to commencement as per S 21. The reason for the negative language in the first part is to convey that parties can agree otherwise as well (i.e., amendments would apply if parties agree even if arbitration is commenced before
Summary of Judgement (3) S 6 of General Clauses Act cannot apply to S 26 because plain language of S 26 provides for a contrary intent. 2015 Act will apply prospectively from 23.10.2015 and only to: arbitration proceedings commenced on or after 23.10.2015 and court proceedings filed on or after 23.10.2015 Thus, S 34 petitions filed after 23.10.2015 will be governed by 2015 amendments and the amended Section 36 would apply. The judgement in Thyssen dealt with a differently worded provision
Summary of Judgement (4) Since execution of decree relates to procedure, there is no vested substantive right in a judgement debtor to resist execution. So the amended S 36 would apply even to S. 34 petitions pending as on 23.10.2015. No opinion is being expressed on whether other amendments would apply in pending (as on 23.10.2015) petitions Mere anomalies in application will not be the cause for ignoring plain language and object of the amendment. Government should take a cautious approach in the proposed amendments making the 2015 amendments apply to
Summary of Judgement (5) Mere anomalies in application will not be the cause for ignoring plain language and object of the amendment. Government should take a cautious approach in the proposed amendments making the 2015 amendments apply to court proceedings relating to arbitrations commenced after 22.10.2015.

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Retrospective Applicability of the 2015 Amendments to Indian Arbitration Law

  • 1. RETROSPECTIVE APPLICABILITY OF THE 2015 AMENDMENTS TO THE ARBITRATION & CONCILIATION ACT, 1996 Badrinath Srinivasan, LL.M., A.I.I.I., M.C.I. Arb. http://in.linkedin.com/pub/badrinath- srinivasan/13/604/916 www.practicalacademic.blogspot.in http://ssrn.com/author=665603
  • 2. The Background For more than two years, the question of applicability of the 2015 amendments to pending court proceedings has vexed Indian Arbitration Law. In BCCI v Kochi Cricket Ltd. (15.03.2018), the SC has put a quietus to a part of the issue.
  • 3. Facts Board of Control for Cricket in India (BCCI) and Kochi Cricket Pvt. Ltd. (KCPL) enter into a IPL franchise agreement in March 2011 Disputes arise between parties and KCPL invokes arbitration in January 2012. Sole Arbitrator appointed who passes two awards in KCPLs favour in June 2015. Award challenged by BCCI in September 2015 2015 Amendments to 1996 Act come into force on 23.10.2015
  • 4. Question KCPL filed execution petitions for executing awards BCCI challenged the same in Bombay High Court and sought stay as S. 36 as it existed pre-amendment applied. Judge found S 36 to apply. SLP filed Other cases in the batch are similar
  • 5. Pre-Amendment Position Under S. 36 pre-amendment, stay against execution automatically came into effect if an award is challenged. National Aluminium Co. Ltd. v. Pressteel & Fabs. (2004) 1 SCC 540- suggested that S. 36 has to be amended.
  • 6. 2015 on S.36 Amendments Enforced like a decree Filing of S 34 application cannot itself make the application invalid Separate application has to be made and court has to grant a stay on the operation of the award Conditional stay While granting the stay and imposing conditions, due regard to CPC provisions on stay of money decree to be given
  • 7. Question Whether S 36 as amended would in respect of S. 34 petitions pending as on, or filed after, 23.10.2015 ?
  • 8. Arguments for Appellants Section 26 is in two parts, the first part being the rule and the second being the exception By S 6 of the General Clauses Act, 1897, Vested rights to challenge the awards cannot be disturbed Amendment is prospective and cannot apply to awards delivered prior to 2015 amendments S 36 is substantive in nature and an amendment to it cannot have retrospective operation Justice Srikrishna Report suggested prospective operation Thyssen Stahlunion v SAIL (1999) 9 SCC 334 applied
  • 9. Arguments for Respondent First part of S 26 doesnt mention Court proceedings while the second part doesnt speak of commencement under S 21. Hence S 26 is retrospective In Thyssen, the SC interpreted the expression in relation to in the manner that is being suggested by the Respondents. S 26 has to be interpreted keeping the objects of the 2015 amendments.
  • 10. Summary of Judgement (1) Section 26 of the 2015 Amendment Act contains two parts: the first part clarifies that the amendments shall not apply to pending arbitral proceedings which commenced (as per S 21) prior to 23.10.2015 (commencement of the 2015 Act) the second part states that it would apply to arbitration related court proceedings which commenced on or after the above date. However, S. 26 is not retrospective. It is prospective
  • 11. Summary of Judgement (2) S. 26 has to be read literally first and then purposively & pragmatically keeping the object of the provision The use of in relation to in the second part of the provision and its absence in the first part clearly conveys that both parts are to be treated differently. The second part does not refer to commencement as per S 21. The reason for the negative language in the first part is to convey that parties can agree otherwise as well (i.e., amendments would apply if parties agree even if arbitration is commenced before
  • 12. Summary of Judgement (3) S 6 of General Clauses Act cannot apply to S 26 because plain language of S 26 provides for a contrary intent. 2015 Act will apply prospectively from 23.10.2015 and only to: arbitration proceedings commenced on or after 23.10.2015 and court proceedings filed on or after 23.10.2015 Thus, S 34 petitions filed after 23.10.2015 will be governed by 2015 amendments and the amended Section 36 would apply. The judgement in Thyssen dealt with a differently worded provision
  • 13. Summary of Judgement (4) Since execution of decree relates to procedure, there is no vested substantive right in a judgement debtor to resist execution. So the amended S 36 would apply even to S. 34 petitions pending as on 23.10.2015. No opinion is being expressed on whether other amendments would apply in pending (as on 23.10.2015) petitions Mere anomalies in application will not be the cause for ignoring plain language and object of the amendment. Government should take a cautious approach in the proposed amendments making the 2015 amendments apply to
  • 14. Summary of Judgement (5) Mere anomalies in application will not be the cause for ignoring plain language and object of the amendment. Government should take a cautious approach in the proposed amendments making the 2015 amendments apply to court proceedings relating to arbitrations commenced after 22.10.2015.