Retrospectivity of Amendments to The Arbitration And Conciliation Act, 1996: Delhi High Court Rules
In a landmark decision, the Division Bench of the Delhi High Court in Ardee Infrastructure Pvt. Ltd. v. Anuradha Bhatia, has opined that the unamended provisions of the Arbitration & Conciliation Act, 1996 would apply to arbitrations commenced (in terms of Section 21 of the Arbitration & Conciliation Act, 1996) prior to 23.10.2015.
The division Bench analysed Section 26 of the Amending Act and held that the first part stipulates that nothing contained in the Amending Act shall apply to the arbitral proceedings commenced in accordance with the provisions of Section 21 of the principal Act before the commencement of the Amending Act (i.e., on 23.10.2015), unless, of course, the parties otherwise agree. The second part makes it clear that the Amending Act and, consequently, the amendments brought about by it in the said Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of the Amending Act. It is, therefore, clear that Section 26 bifurcates cases on the basis of the commencement of the arbitral proceedings being prior or on or after the date of commencement of the Amending Act. In other words, the date of commencement of the Amending Act, that is, 23.10.2015, is what separates the two parts of Section 26. Insofar as the second part is concerned, there is and can be no confusion inasmuch as the Amending Act and consequently, the amendments brought about by it in the said Act, would clearly apply in relation to arbitral proceedings which commence on or after the date of commencement of the Amending Act (i.e., 23.10.2015). In other words, in cases of any arbitral proceedings which commence on or after 23.10.2015, the amendments would apply to the entire gamut of such proceedings.
An issue had been raised before the bench as to whether there was any difference in the expressions “to the arbitral proceedings” and “in relation to arbitral proceedings” appearing in the two parts of Section 26 of the Amending Act. In that context, the Supreme Court had observed that the expression “in relation to” did not admit of a restrictive meaning and that the first limb of Section 85(2)(a) was not a limited saving clause as it saved not only the proceedings pending at the time of commencement of the Arbitration and Conciliation Act, 1996, but also the provisions of the Arbitration Act, 1940 for enforcement of the award under that Act (i.e., the 1940 Act). It was contended on behalf of the respondents that in Section 26 of the Amending Act, while the expression “in relation to arbitral proceedings” is used in the second part, in the first part the expression employed is “to the arbitral proceedings”. It was, therefore, contended that the first part of Section 26 which saved the unamended provisions of the said Act only had reference to arbitral proceedings, i.e., proceedings before an arbitral tribunal and not to any other proceedings emanating from or related to such arbitral proceedings, including proceedings before the court.
The apex court held that it is to be seen as to whether the two limbs of Section 26 if interpreted in the manner suggested by the respondents exhaust all the categories of cases. To put it differently, does Section 26 of the Amending Act deal with all types of cases, which could fall for consideration under the said Act. It is clear that insofar as the second limb of Section 26 is concerned, it takes within its fold every type of situation, which may arise in relation to arbitral proceedings, including both proceedings before the arbitral tribunal and court proceedings in relation thereto or connected therewith. Therefore, insofar as the second limb is concerned, there is no dispute that for all arbitration proceedings commenced on or after 23.10.2015, the Amending Act would apply and, therefore, the amended provisions of the said Act would be applicable.
The Bench considered the first part of Section 26. This part saves the application of the unamended provisions of the said Act to arbitral proceedings.
They assumed that, for the time being, that the expression arbitral proceedings cover only those proceedings which are pending before the arbitral tribunal and not to other proceedings which may be pending before the court or are in the process of being instituted in the court. If this interpretation were to be accepted, then it would be clear that those situations, where arbitral proceedings commenced prior to 23.10.2015 but were not pending before the arbitral tribunals, would have no reference either in the first part of the second part of Section 26 of the Amending Act.
The conclusions that were drawn from the analysis and discussion were: –
1) Section 26 of the Amending Act, if a narrow view of the expression “to the arbitral proceedings” is to be taken, is silent on those categories of cases where the arbitral proceedings commenced prior to 23.10.2015 and where even the award was made prior to 23.10.2015, but where either a petition under Section 34 was under contemplation or was already pending on 23.10.2015;
2) In such eventuality, the amended provisions pertaining to those categories would apply only if they were merely procedural and did not affect any accrued right;
3) In the facts of the present case, the amendment to Sections 34 and 36, which pertain to the enforceability of an award, certainly affect the accrued rights of the parties;
4) As a result, the petitions filed by the appellants under Section 34 of the said Act would have to be considered under the unamended provisions of the said Act and consequently, the appellants would be entitled to an automatic stay of enforcement of the award till the disposal of the said petitions.