RETROSPECTIVE APPLICABILITY OF EXTENSION OF TIME FOR PASSING ARBITRAL AWARD

In a recent decision titled ONGC Petro Additions Ltd. v. Ferns Construction Co. Inc.,[1] the Delhi High Court held that Section 29A of the Arbitration and Conciliation Act, 1996 (“the Act”) shall be applicable to all pending arbitrations seated in India as on August 30, 2019 and commenced after 23 October 2015, except international commercial arbitrations. Section 29A of the Act was inserted by way amendment in 2015 prescribes the time limit for passing an arbitral award.

The Petitioner, ONGC Petro Additions Ltd and the Respondent, Ferns Construction Co. Inc (Indian subsidiary) entered into an agreement. Dispute arose due to the agreement and the parties invoked its arbitration clause and an Arbitral Tribunal was constituted to adjudicate the disputes. The Delhi High Court had earlier rejected a plea by the Respondent for an anti-arbitration injunction against the Petitioner in April 2019.

While the arbitration was underway, the Court was approached by the Petitioner seeking extension of time limit under Section 29A of the Act. The plea was granted, and the Court extended the time for the Arbitral Tribunal to complete the proceedings and deliver the award within eighteen months which would be effective from June 24, 2019.

Meanwhile, Section 29A was amended by the 2019 Amendment. Further, since the Respondent is an International company, the dispute would be that of International Commercial Arbitration by nature. Prior to this, the said Section was applicable to all arbitration proceedings seated in India. However, Section 29A of the Act was amended to the effect that the time limit for the Arbitral Tribunal to pass the Award does not apply to international commercial arbitration. Thus, the Petitioner argues that Section 29A of the Act does not apply to the proceedings between the parties on the date when such petition was filed due to the retrospective applicability of the amendment made to Section 29A.

The Court

The Court deliberated upon the precedents and observed that in Shapoorji[2], the Court held that the amended section 29A(1) of the Act being procedural law would also apply to the pending arbitrations as on the date of the amendment. While in MLB Infrastructure[3], the Court held that the said provisions do not have a retrospective effect. However, the Court decided that this judgement is per incuriam and hence not binding.

After perusing through a few more precedents the Court said that in case of Shapoorji wherein it was held that the amendment being procedural in nature shall be applicable to all pending applications as on the date on amendment is correct. It relied on the judgement of BCCI[4] and Workmen[5] which held that amendment to substantive laws affecting the rights and liabilities of a party or imposing a disability must be prospective in nature. While any amendment to the provisions of stature dealing merely with matters of procedure shall be retrospective in nature, unless there exists a contrary intention of the legislature. Thus, it held that the provisions of Section 29A (1) shall be applicable to all pending arbitrations seated in India as on August 30, 2019 and commenced after October 23, 2015.

Conclusion

This judgment also lays down that there is no strict timeline of 12 months prescribed to the proceedings which are in nature of international commercial arbitration seated in India clearing the path for future arbitrations of such nature as well.

[1] OMP (MISC) (COMM) 256/2019, I.A. 4989/2020. [2] Shapoorji Pallonji & Co. Pvt. Ltd v. Jindal India Thermal Power Limited, O.M.P.(MISC.)(COMM.) 512/2019. [3] MBL Infrastructures Ltd. v. Rites Ltd. O.M.P.(MISC)(COMM) 56/2020. [4] BCCI v. Kochi Cricket (P) Ltd., (2018) 6 SCC 287. [5] Workmen v. Firestone Tyre & Rubber Co. of India (P) Ltd., (1973) 1 SCC 813.