Date of Applicability of the New Arbitration Act

The new Indian Arbitration and Conciliation Act (ACA-2016) which was notified on 1/1/2016 and made retrospectively effective from October 23, 2015 (The date when the related ordinance was notified) has changed the nature of Arbitration law in India to the extent that we need to look at all judicial precedence in the old Act with skepticism as to its applicability in the new regime.

Recently, the Delhi High Court had to adjudicate whether the amendments which are deemed to be effective from 23rd October 2015 apply to an award made prior to that date and lying before the Court on an appeal.

This was the case of Ardee Infrastructure Ltd V Bhatia. In this case the arbitration had been commenced before October 23, 2015 and an appeal had been preferred before the Court. In he old Act, when an appeal for setting aside of an arbitration award has been made under Section 34, it also operated as a stay on the arbitration award. In the amended act, “Stay” required an express granting of the “Stay” by the Court and a mere admission of the appeal was not considered as automatically granting a “Stay”.

The Single Judge of the Delhi High Court in an order dated May 31, 2016 ordered that the appellant (Ardee) had to deposit Rs 2.7 crores to the Court without considering the admission of the appeal as a “Stay”. The aggrieved party then had invoked a challenge before the Division Bench. The Division Bench set aside the order to the extent that it imposed a condition that the appellant had to pay Rs 2.7 crores on January 6, 2017.

The view was that the amendment did not apply to the current case since there was an “Accrued Right” under the Arbitration as per the old Act which could not be disturbed by the amendment.

According to the provisions of Section 26 of the Amendment Act,

“Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act”.

The Division Bench did recognize that there was an ambiguity in this respect as to the term “arbitral proceedings” is restricted to the proceedings before the Tribunal or extends to the proceedings before the Court also.

It however ruled not to interfere with the accrued right of the appellant and decided that the amended act is applicable only for arbitration commenced after October 23, 2015.


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