The Supreme Court has warned that an amendment being proposed by the Centre to the Arbitration and Conciliation Act may ultimately have the effect of putting on the backburner changes made to the Act in 2015. A bench of Justices R F Nariman and Navin Sinha while referring to the government’s plan to introduce a new Section 87 in the Act said “the immediate effect of the proposed Section 87 would be to put all the important amendments made by the Amendment Act on a back-burner…”.
Senior advocates including Abhishek Manu Singhvi, P Chidambaram and Kapil Sibal appeared on behalf of Vashi & Vashi and AZB law firms, which represented the winning side, while senior counsels Arvind Datar, CA Sundaram and KV Viswanathan appeared on behalf of Cyril Amarchand Mangaldas for the petitioners. Additional Solicitor General Tushar Mehta also appeared in the matter.
The court referred to the 2015 Act which was enacted “to provide for speedy disposal of cases relating to arbitration with least court intervention.” The amendment came in the backdrop of delays in arbitration caused by “interpretation of the provisions of the Act by courts in some cases…”.
It also referred to the proposed section 87 which intends “to clarify that unless parties agree otherwise the Amendment Act 201 shall not apply to (a) Arbitral proceedings which hav commenced before the commencement of the Amendment Act of 2015 (b) Court proceedings arising out of or in relation to such arbitral proceeding irrespective of whethe such court proceedings are commenced prior to or afte the commencement o the Amendment Act of 2015 and shall apply only to Arbitral proceedings commenced o or after the commencemen of the Amendment Act of 2015 and to court proceedings arising out of or in relation to such Arbitral proceedings.”
The government had in a press note dated March 7 referred to the move to insert the new section 87. The court recalled the same and said “the press release states that the Union Cabinet, chaired by the Prime Minister, has approved the Arbitration and Conciliation (Amendment) Bill, 2018 in which a new Section 87 is proposed to be inserted..”.
The bench was dealing with appeals which raise the question whether the substitution made to Section 36 of the Arbitration Act by 2015 Amendment would apply even to appeals under Section 34 filed before October 23, 2015 when the amendment came into effect.
Answering this, the court held that “in all cases where the Section 34 petition is filed after the commencement of the Amendment Act, and an application for stay having been made under Section 36 therein, will be governed by Section 34 as amended and Section 36 as substituted.”
The Amendment Act is to be applied only prospectively with effect from the date of its commencement, and only to arbitral proceedings and to court proceedings in relation thereto, which have commenced on or after the commencement of the Amendment Act.
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