HC interprets applicability of amendments to Arbitration Act

The changes made in 2015 to the Arbitration Act, under which there is no automatic stay on an award being challenged, would not apply if they affect enforceability of an award in proceedings which commenced before the amendment came into effect on October 23, 2015, the Delhi High Court has said.
A bench of justices Badar Durrez Ahmed and Ashutosh Kumar noted that the right to have an award enforced or not is an accrued right and if the amendment is applied to arbitral proceedings held under the unamended provisions, then it would impinge upon the accrued right of the party against whom the award is given.

"Since an accrued right is affected, unless a contrary intention appears in the amending statute, the amendments would have to be treated as prospective in operation. Prospective from the standpoint of commencement of the arbitral proceedings," the court said.
The court's ruling came on a plea by Ardee Infrastructure Pvt Ltd against a single judge's decision to apply the amended sections 34 (application for setting aside arbitral award) and 36 (enforcement of arbitral award) of the Arbitration Act and directing it to deposit Rs 2.7 crore failing which its petition challenging an arbitral award would be dismissed.
The amendments were introduced with retrospective effect from October 23, 2015, and as per the amended provisions when an application to set aside an arbitral award is filed under section 34 before a court, the filing of such an application would not by itself render the award non-enforceable unless the court granted an order of stay on a separate application made for that purpose, the court said.

The amended provisions also allowed the court to impose conditions, as it may deem fit, on the petitioner who seeks stay of the award.

Ardee had contended that in its case as the arbitral
award was given prior to October 23, 2015, therefore, the unamended provisions of the Act would apply and it would be entitled to automatic stay.
The other side comprising certain individuals had argued that amended provisions would apply and, therefore, there would be no question of any automatic stay.
The bench observed that section 26 of the amendment Act which amended sections 34 and 36 of the Arbitration Act "is silent on those categories of cases where the arbitral proceedings commenced prior to October 23, 2015 and where even the award was made prior to October 23, 2015, but where either a petition under section 34 was under contemplation or was already pending on that date".

It said that 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. 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".
"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 automatic stay of enforcement of the award till the disposal of the said petitions," the court said and set aside the single judge's order directing Ardee to deposit Rs 2.7 crore.