The Supreme Court will hear on Friday the important issue of whether the new or the old arbitration law will apply to cases pending in the courts before commencement of the amended arbitration Act, which came into force on October 23, 2015.
The apex court has been asked to give its decision in the first-ever case on applicability of the arbitration (amendment) Act to post-award proceedings pending before the courts. So far, it has been uncertain which law applies to proceedings pending as on the date of the amendments.
The issue has been raised in appeals filed by BCCI and others challenging the Bombay High Court’s June 22 decision that held that Section 36 of the Arbitration and Conciliation Act, 1996, as amended by the Arbitration and Conciliation (Amendment) Act, 2016, is applicable even in cases where an application under Section 34 of the Act had already been filed prior to the amended Act having come into force.
However, the high courts of Delhi and Calcutta have taken contrary views on the issue.
Under the unamended Act, if an application for setting aside an arbitral award was filed, such arbitral award could not be enforced until the application is refused. This prevented the award-holder from enjoying the fruits of his success merely because the unsuccessful party had filed an application against the award.
However, after the amendment to Section 36, an arbitral award now becomes enforceable on expiry of three months from the date on which it is made irrespective of whether an application for setting aside the arbitral award has been filed unless the court grants stay of operation of the arbitral award.
There is “a sharp cleavage of judicial opinion on the issue of retrospective application of the Amending Act” and this requires the authoritative pronouncement by the apex court, BCCI stated in its appeal.
BCCI had terminated its agreements with certain companies in 2011 and arbitral proceedings were initiated in 2012. Three separate arbitral awards were passed in respect of arbitrations between BCCI and Kochi Cricket, BCCI and Rendezvous Sports World and others. While the sole arbitrator had ruled against the Board, the latter had challenged the arbitral awards before the Bombay HC.
During the pendency of BCCI’s petitions, the new Act came into force.
According to BCCI, despite being aware that its plea against the arbitral award is pending, the companies sought execution of arbitral awards on “the erroneous premise that the provisions of the Amending Ordinance were applicable even in cases where an application under Section 34 of the Act had already been filed (and has not been refused) prior to the Amending Ordinance having come into force”.
However, BCCI’s objections against the execution of the arbitral award were rejected by the high court.