Transitional arbitration law: old regime saved for pending proceedings, party autonomy upheld, and post-commencement foreign awards governed by the 1996 Act.

Section 85(2)(a) of the Arbitration and Conciliation Act, 1996 was construed to preserve the Arbitration Act, 1940 for arbitral proceedings commenced before 25 January 1996, and that saving extended to enforcement-related court proceedings as well. The Court treated the right to have such awards dealt with under the old law as an accrued right. Party autonomy could nonetheless displace the default position: even before commencement, parties could validly agree that the 1996 Act would govern pending proceedings. Foreign awards made after the 1996 Act commenced were held to fall under the 1996 Act rather than the repealed Foreign Awards Act.

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Issues: (i) Whether arbitral proceedings commenced before the Arbitration and Conciliation Act, 1996 came into force, and the enforcement of the resulting award, were governed by the Arbitration Act, 1940 or by the 1996 Act; (ii) whether parties could agree, even before the 1996 Act came into force, that the new Act would apply to pending arbitral proceedings; and (iii) whether a foreign award made after the commencement of the 1996 Act was enforceable under the Foreign Awards (Recognition and Enforcement) Act, 1961 or under the 1996 Act.

Issue (i): Whether arbitral proceedings commenced before the Arbitration and Conciliation Act, 1996 came into force, and the enforcement of the resulting award, were governed by the Arbitration Act, 1940 or by the 1996 Act.

Analysis: The saving clause in section 85(2)(a) was read as extending to the whole gamut of the arbitration where proceedings had begun under the old law. The expression "in relation to" was held to be of wide import and not confined to the conduct before the arbitrator alone. On that construction, the old Act continued to govern not only the reference before the arbitrator but also the court proceedings necessary for making the award enforceable. The Court further held that the right to have the award dealt with under the old Act was an accrued right and not a mere inchoate expectation.

Conclusion: The Arbitration Act, 1940 applied to enforcement of awards arising from arbitral proceedings commenced before 25 January 1996.

Issue (ii): Whether parties could agree, even before the 1996 Act came into force, that the new Act would apply to pending arbitral proceedings.

Analysis: The phrase "unless otherwise agreed by the parties" was held to permit party autonomy even in advance of the new Act's commencement. The Court treated the contractual language referring to the law "for the time being in force" as capable of embracing the law in force when the arbitration was actually conducted. It also held that such an agreement was not hit by the prohibition on restraints of legal proceedings.

Conclusion: Parties could validly agree, even before commencement of the 1996 Act, that the new Act would govern pending arbitral proceedings.

Issue (iii): Whether a foreign award made after the commencement of the 1996 Act was enforceable under the Foreign Awards (Recognition and Enforcement) Act, 1961 or under the 1996 Act.

Analysis: The Foreign Awards Act was treated as a special regime dealing only with recognition and enforcement of foreign awards, and no accrued right was found to insist on its continued operation after repeal. The Court held that the saving provision in section 85(2)(a) did not preserve a right to enforce such an award under the repealed statute, and that enforcement had to proceed under the new Act.

Conclusion: A foreign award made after the commencement of the 1996 Act was enforceable under the Arbitration and Conciliation Act, 1996.

Final Conclusion: The common judgment resolved the transitional issue by preserving the old law for pending domestic arbitral proceedings begun before the new regime, while allowing party autonomy to adopt the new Act and holding that post-commencement foreign awards fall under the 1996 Act.

Ratio Decidendi: In transitional arbitration matters, the saving clause in section 85(2)(a) preserves the old Act for proceedings commenced before the 1996 Act, and the words "in relation to arbitral proceedings" extend to enforcement-related court proceedings as well; however, party agreement may displace that default rule, and foreign awards made after the new Act's commencement are governed by the 1996 Act.

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