Arbitration and Conciliation Act, 1996: s. 29A (as amended) – Time limit for arbitral award – Time limit of 12 months as provided under the amended s. 29A (1) for passing an arbitral award – Applicability of, to international commercial arbitrations – Held: Timeline of twelve months for making an arbitral award is not applicable to ‘international commercial arbitrations’ – In terms of the amended provisions of s. 29A, arbitral tribunals in international commercial arbitrations are only expected to make an endeavor to complete the proceedings within twelve months from the date of completion of pleadings and are not bound to abide by the time limit prescribed for domestic arbitrations – As regards, prospective or retrospective application of s. 29A, the 2019 Amendment Act does not contain any provision equivalent to s. 26 of Act 3 of 2016 evincing a legislative intent making the application of the amended provision prospective – Since s. 29A(1), as amended, is remedial in nature, it should be applicable to all pending arbitral proceedings as on the effective date-30 August 2019 – Thus, in the instant case, the sole arbitrator to decide upon any further extension of time beyond the originally stipulated – Sole arbitrator may issue appropriate procedural directions for extension of time while endeavoring an expeditious conclusion of the arbitration. Procedural law: Nature of – Prospective or retrospective application – Held: Procedural law establishes a mechanism for determining rights and liabilities of a party and a machinery for enforcing them – Generally, procedural laws are presumed to be retrospective, unless there is a clear indication that such was not the intention of the legislature, or the procedural law imposes new obligations qua transactions already concluded or creates new rights or liabilities.
Allowing the applications, the Court
HELD: 1.1 After the amendment, Section 29A(1) of the Arbitration and Conciliation Act, 1996 stipulates that the award “in matters other than international commercial arbitration” shall be made by the arbitral tribunal within a period of twelve months from the date of the completion of the pleadings under Section 23(4). The expression “in matters other than an international commercial arbitration” makes it abundantly clear that the timeline of twelve months which is stipulated in the substantive part of Section 29A(1), as amended, does not apply to international commercial arbitrations. This is further reaffirmed in the proviso to Section 29A(1) which stipulates that the award in the matter of an international commercial arbitration “may be made as expeditiously as possible” and that an “endeavour may be made to dispose of the matter within a period of 12 months” from the date of the completion of pleadings. The expression “as expeditiously as possible” coupled with the expression “endeavour may be made” demonstrate that the intent of Parliament is that the period of twelve months for making the award is not mandatory in the case of an international commercial arbitration. In an international commercial arbitration, the arbitral tribunal is required to endeavour, that is, make an effort to render the arbitral award within a period of twelve months or in a timely manner. In a domestic arbitration, Section 29A(1) stipulates a mandatory period of twelve months for the arbitrator to render the arbitral award. In contrast, the substantive part of Section 29A(1) clarifies that the period of twelve months would not be mandatory for an international commercial arbitration. Hence, post amendment, the time limit of twelve months as prescribed in Section 29A is applicable to only domestic arbitrations and the twelve-month period is only directory in nature for an international commercial arbitration. [Para 25][1279-C-G]
1.2 The Committee chaired by Justice B.N. Srikrishna indicated that international arbitration institutions had been critical of the setting up of timelines for conducting international arbitrations. International arbitral institutions with their own machinery for case management were of the view that they did not require the monitoring of timelines by the intervention of the court. The Committee also noted that in other jurisdictions, timelines for arbitral proceedings are usually agreed by the parties themselves in accordance with the nature and complexity of the dispute. The intervention of the court in the extension of timelines was criticized by arbitral institutions and eventually led to the formulation of the amended provisions of Section 29A which have expressly kept international commercial arbitrations outside the purview of the mandatory timelines provided in Section 29A. Hence, in terms of the amended provisions of Section 29A, arbitral tribunals in international commercial arbitrations are only expected to make an endeavor to complete the proceedings within twelve months from the date of completion of pleadings and are not bound to abide by the time limit prescribed for domestic arbitrations. [Para 29][1282-A-D]
1.3 Procedural law establishes a mechanism for determining rights and liabilities of a party and a machinery for enforcing them. Generally, procedural laws are presumed to be retrospective, unless there is a clear indication that such was not the intention of the legislature,or the procedural law imposes new obligations qua transactions already concluded or creates new rights or liabilities. [Para 33][1283-G; 1284-A]
1.4 The 2019 Amendment Act does not contain any provision equivalent to Section 26 of Act 3 of 2016 evincing a legislative intent making the application of the amended provision prospective. The amended provisions of Section 29A, in terms of which the arbitral tribunal has to endeavour to dispose of the proceedings in an international commercial arbitration as expeditiously as possible within a period of twelve months from the completion of the pleadings are remedial in nature. The amended provision has excepted international commercial arbitrations from the mandate of the twelve month timeline which governs domestic arbitrations. The amendment is intended to meet the criticism over the timeline in its application to international commercial arbitrations. The amendment is remedial in that it carves out international commercial arbitrations from the rigour of the timeline of six months. This lies within the domain of the arbitrator and is outside the purview of judicial intervention. The removal of the mandatory time limit for making an arbitral award in the case of an international commercial arbitration does not confer any rights or liabilities on any party. Since Section 29A(1), as amended, is remedial in nature, it should be applicable to all pending arbitral proceedings as on the effective date i.e.,
30 August 2019. [Para 34][1284-B-E]
1.5 Consistent with the amended provisions of Section 29A, the sole arbitrator in the instant case, would be acting within his domain and jurisdiction to decide upon any further extension of time beyond what is originally stipulated at the meeting which was held on 21 March 2018. The sole arbitrator may issue appropriate procedural directions for extension of time while at the same time endeavoring an expeditious conclusion of the arbitration. [Para 37][1285-D]
Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd (2018) 6 SCC 287 : [2018] 2 SCR 829; Thirumalai Chemicals Ltd v. Union of India (2011) 6 SCC 739 : [2011] 4 SCR 838; Jose Da Costa and Anr. v. Bascora Sadasiva Sinai Narcornim, (1976) 2 SCC 917; Gurbachan Singh v. Satpal Singh (1990) 1 SCC
445 : [1989] 1 Suppl. SCR 292; Rajendra Kumar v. Kalyan (D) by Lrs, (2000) 8 SCC 99 : [2000] 2 Suppl. SCR 114; Hitendra Vishnu Thakur v. State of
Maharashtra, (1994) 4 SCC 602 : [1994] 1 Suppl. SCR 360; Shapoorji Pallonji & Co. Pvt. Ltd. Vs Jindal India Thermal Power Ltd. OMP (Misc) (Comm.) No 512/2019; ONGC Petro Additions Ltd. vs Ferns Construction Co. Inc. OMP (Misc) (Comm) 256/2019; M/s SARA International Pvt. Ltd. Vs Southern Eastern Railways & Anr. ARBP No. 28 of 2020; MBL Infrastructures Ltd v. Rites Ltd. OMP (Misc) (Comm) 56/2020, as decided on 10 February 2020 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
This page is for informational and research purposes only and does not constitute legal advice. Consult a qualified advocate for advice specific to your situation.