- The Arbitration & Conciliation (Amendment) Ordinance 2015 came into force on 23 Oct 2015
- The amendments were made at the back of a comprehensive Law Commission Report on the subject (246th Law Commission Report)
- Sec 29 A and B are new additions to the Arbitration & Conciliation Act
- Sec 29 A deals with the time limit for issuing an arbitral award (an Award needs to be made in 12 months).
- Ordinances enjoy the same position as that of a law passed by the legislature.
- Retrospective application of a law can be either made via an express provision or by necessary implication.
- The 246th Law Commission Report whose recommendations were relied upon in promulgating the said ordinance had a Section dealing with scope of operation of the proposed amendments
- Sec 85A of the Law Commission Report reads as follows:
Transitory provisions —
1. Unless otherwise provided in the Arbitration and Conciliation (Amending) Act, 2014, the provisions of the instant Act (as amended) shall be prospective in operation and shall apply only to fresh arbitrations and fresh applications, except in the following situations
a. the provisions of section 6-A shall apply to all pending proceedings and arbitrations. Explanation: It is clarified that where the issue of costs has already been decided by the court/tribunal, the same shall not be opened to that extent.
b. the provisions of section 16 sub-section (7) shall apply to all pending proceedings and arbitrations, except where the issue has been decided by the court/tribunal.
c. the provisions of second proviso to section 24 shall apply to all pending arbitrations.
2. For the purposes of the instant section,—
a. “fresh arbitrations” mean arbitrations where there has been no request for appointment of arbitral tribunal; or application for appointment of arbitral tribunal; or appointment of the arbitral tribunal, prior to the date of enforcement of the Arbitration and Conciliation (Amending) Act, 2014.
b. “fresh applications” mean applications to a court or arbitral tribunal made subsequent to the date of enforcement of the Arbitration and Conciliation (Amending) Act, 2014.
[NOTE: This amendment is to clarify the scope of operation of each of the proposed amendments with respect to pending arbitrations/proceedings.]
- The above section makes it abundantly clear that ordinarily the provisions are meant to apply prospectively.
- However this provision was not adopted in the 2015 Ordinance. The absence of such a clause in the Ordinance could be considered as indicative of the lawmaker’s intention (in this case the Executive) for at least some of the provisions to apply retrospectively. In other words there is no wholesale negation of retrospective application of the law.
- It is a well-settled principle that a new law dealing with substantive rights is ordinarily prospective in operation unless the language of the Statute indicates otherwise.
- Since there is no express provision regarding the retrospective application of the law, the language of each provision must be considered within the context of the object and purpose of the Statute to determine its scope.
- At this point it is important to refer to the actual provision in question. Sec 29A reads as follows:
1. The award shall be made within a period of twelve months from the date the arbitral tribunal enters upon reference.
Explanation – For the purpose of this sub-section, an arbitral tribunal shall be deemed to have entered upon reference on the date on which the arbitrator or all the arbitrators, as the case may be, have received notice, in writing, of their appointment.
2. If the award is made within a period of six months from the date the tribunal enters upon the reference, the arbitral tribunal shall be entitled to receive such amount of additional fees as the parties may agree.
3. The parties may by consent, extend the period specified in sub-section (1) for making award for a further period not exceeding six months.
4. If the award is not made within the period specified in sub-section (1) or the extended period under sub-section (3), the mandate of the arbitrator(s) shall terminate unless the court has either prior to or after the expiry of the period so specified, extended the period:
Provided that while extending the period under this sub-section, if the court finds these proceedings have been delayed for the reasons attributable to the arbitral tribunal, then, it may order a reduction of fees of arbitrator(s) not exceeding five per cent, for each month of such delay.
5. The extension of the period under sub-section (4) may be on the application of any of the parties and may be granted only for sufficient cause and on such terms and conditions as may be imposed by the court.
6. While extending the period in sub-section (4), it shall be open to court to substitute one or all of the arbitrators and if one or all of the arbitrators are substituted, the arbitral proceedings shall continue from the stage already reached and on the basis of evidence and material already on record, and the arbitrator(s) appointed under this section shall be deemed to have received the said evidence and material.
7. In the event of arbitrator(s) being appointed under this section, the arbitral tribunal thus reconstituted shall be deemed to be in continuation of the previously appointed tribunal.
8. It shall be open to court to impose actual or exemplary costs upon any of the parties under this section.
9. An application filed under sub-section (5) shall be disposed off by the court as expeditiously as possible and endeavour shall be made to dispose of the matter within a period of 60 days from the date of service of notice on the opposite party.
- A plain reading of the above section does not rule out any retrospective application of the same. However based on the settled principle of prospective application of law involving substantive rights, proceedings commenced prior to the date of entry into force of the ordinance should remain unaffected.
- However considering that one of the main object and purpose of the amendment is to provide speedy, timely and efficient resolution of disputes, it can be argued that Sec 29A by necessary implication should apply retrospectively to pending proceedings.
- Sec 29A when applied retrospectively would lead to some of the following scenarios:
- The mandate of the arbitrator might possibly terminate as per Sec 29A(4), thus creating more uncertainty and delays in resolving the dispute.
- Or in the alternative if the parties seek an extension as per Sec 29A(5), they risk entailing further delays to the completion of such proceedings, as the endeavour to be made by courts under sub-section (9) are more directory in nature.
- Moreover the power conferred upon the court under sub-section (5) is subject to wide discretion and thereby the principle of minimal judicial interference will be compromised.
- Lastly, there is no clarity on what happens to proceedings when the mandate of an arbitrator is terminated, whether applied prospectively or retrospectively.
- From the above illustration, it is clear that the object and purpose of the amendments would actually be defeated if Sec 29A is applied retrospectively.
- Moreover for a law to apply retrospectively by necessary implication, it should stand the test of fairness laid down in several cases. 
- The illustrations above clearly indicate that the outcome of applying Sec 29A retrospectively to pending proceedings would be completely unfair to the interests of the parties.
- This would also be against the party autonomy principle in that such an application would effectively be over-riding the will of the parties with regards to the conduct of proceedings.
In summary, there is no blanket ban on retrospective application of provisions of the 2015 Ordinance. However with regard to the time limits set under Sec 29A of the Ordinance, retrospective application would lead to undesirable effects and be unfair to the parties involved and therefore should apply only prospectively.
 Hitendra Vishnu Thakur vs. State of Maharashtra, 1994 (4) SCC 602; Justice G.P. Singh, Principles of Statutory Interpretation, Pg. 532
 Justice G.P. Singh, Principles of Statutory Interpretation, Pg. 539