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of <h1>Arbitration Act 1940 vs. Arbitration Act 1996: Retroactive Application and Enforcement Rules clarified</h1> The court held that the old Arbitration Act, 1940, applies to arbitral proceedings commenced before the new Arbitration and Conciliation Act, 1996, came ... Whether the award would be governed by the new Act for its enforcement or whether provisions of the old Act would apply? Held that:- There is no corresponding provision anywhere in the new Act with reference to foreign arbitral proceedings to hold as to what is to be treated as ‘date of commencement’ in those foreign proceedings. We would, therefore, hold that on proper construction of section 85(2)(a) the provision of this sub-section must be confined to the old Act only. Once having held so it could be said that section 6 of the General Clauses Act would come into play and foreign award would be enforced under the Foreign Awards Act. But then it is quite apparent that a different intention does appear that there is no right that could be said to have been acquired by a party when arbitral proceedings are held in a place resulting in a foreign award to have that award enforced under the Foreign Awards Act. We, therefore, hold that the arbitral proceedings commenced before the Arbitration and Conciliation Act, 1996 came into force on 25-1-1996, would be enforced under the provisions of Arbitration Act, 1940 Issues Involved:1. Applicability of the old Arbitration Act, 1940, or the new Arbitration and Conciliation Act, 1996, to arbitral proceedings commenced before the new Act came into force.2. Interpretation of the phrase 'in relation to arbitral proceedings' under Section 85(2)(a) of the new Act.3. Validity of agreements referring to future laws for arbitration.4. Applicability of the Foreign Awards Act, 1961, for enforcement of foreign awards after the new Act came into force.Detailed Analysis:1. Applicability of the Old Act or the New Act:Thyssen Stahlunion GMBH Case:- The contract contained an arbitration agreement, and disputes arose leading to arbitration proceedings commencing on 14-9-1995 under the old Act.- The award was given on 24-9-1997, after the new Act came into force on 25-1-1996.- The question was whether the award would be governed by the new Act for enforcement or the old Act.Western Shipbreaking Corporation Case:- The arbitration proceedings commenced before the new Act came into force, and the award was made on 25-2-1996.- The question was whether the award is governed by the new Act for enforcement or by the Foreign Awards Act.Rani Constructions P. Ltd. Case:- The arbitration agreement referred to the Indian Arbitration Act, 1940, or any statutory modification or re-enactment thereof.- The dispute was whether the new Act would apply to the arbitration proceedings and award enforcement.Conclusion:- The provisions of the old Act shall apply to arbitral proceedings commenced before the new Act came into force.- The new Act would apply to arbitral proceedings commenced on or after the new Act came into force.2. Interpretation of 'In Relation to Arbitral Proceedings':- The phrase 'in relation to arbitral proceedings' covers not only the proceedings pending before the arbitrator but also proceedings before the court and any proceedings required under the old Act for the award to become a decree.- The expression 'in relation to' has a wide import and includes the whole gamut of arbitration culminating in the enforcement of the award.3. Validity of Agreements Referring to Future Laws:- Parties can agree to the applicability of the new Act even before the new Act comes into force.- The agreement can anticipate that the new enactment may come into operation at the time the disputes arise.- The expression 'unless otherwise agreed' in Section 85(2)(a) allows parties to agree that the new Act will apply to pending arbitration proceedings.4. Applicability of the Foreign Awards Act:- A foreign award given after the commencement of the new Act can be enforced only under the new Act.- There is no vested right to have the foreign award enforced under the Foreign Awards Act.- The Foreign Awards Act and the Arbitration (Protocol and Convention) Act, 1937, are concerned only with the recognition and enforcement of foreign awards and do not contain provisions for the conduct of arbitral proceedings.Conclusion:- The award in the Thyssen Stahlunion GMBH case would be enforced under the provisions of the old Act.- The arbitration clause in Rani Constructions indicates that the new Act will apply.- The foreign award in the Western Shipbreaking Corporation case would be governed by the provisions of the new Act.Final Judgments:- Civil Appeal Nos. 6036 of 1998 and 4928 of 1997 are dismissed.- Civil Appeal No. 61 of 1999 is allowed.- Parties shall bear their own costs.
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