The Calcutta High Court recently addressed the prospective application of amendments to the Arbitration and Conciliation Act, 1996 in East Indian Minerals Limited v. The Orissa Minerals Development Company Limited and Anr. The court rejected the argument that the arbitration agreement allowed for the application of statutory modifications under Section 29A of the Act. This article examines the case, the court’s reasoning, and the implications of the judgment.
The case involved a Joint-Venture Company (Petitioner) and the first Respondent, a company holding iron mines. The agreement, spanning 20 years, entailed establishing a crushing and processing plant and selling iron ore. Disputes arose, leading the Petitioner to invoke the arbitration clause in 2006. However, due to the death of an arbitrator, the proceedings were stalled. The Petitioner later requested the appointment of a new arbitrator, but criminal proceedings caused further delays. In 2021, after the exoneration of the Petitioner’s director, the Petitioner sought the appointment of a third arbitrator, leading to the present petition.
The Respondent opposed the petition, arguing that undue delays rendered the revival of arbitral proceedings impossible and made the dispute irrelevant. They claimed their agreement contained a statutory modification clause, making Section 29A of the Act applicable. This provision mandates that an arbitral award must be made within 12 months of the completion of proceedings.
The Calcutta High Court, considering the arguments, referred to the BCCI v. Kochi Cricket Pvt. Ltd. case, where it was established that the applicability of the 2015 Amendment Act required the parties to “otherwise agree” if the arbitral proceedings began before the Amendment Act’s enforcement. The court also relied on the S.P. Singla Constructions (P) Ltd. v. State of Himachal Pradesh case, emphasizing that the 1996 Act applies prospectively unless the parties agree otherwise.
The court clarified that Section 29A of the Amendment Act applies prospectively to arbitration proceedings initiated under Section 21 of the Act after the Amendment Act, unless there is an agreement to the contrary. It further noted that the delay in resuming arbitral proceedings does not invalidate the arbitration reference, but the Arbitral Tribunal must assess whether the delay constitutes clear evidence of abandonment. The court also emphasized that purely procedural provisions apply retrospectively, unless otherwise specified in a statute.
Based on these considerations, the High Court terminated the previous arbitrator’s mandate and appointed Justice Asok Kumar Ganguly, Former Judge of the Supreme Court of India, as the substitute/presiding arbitrator to resolve the dispute between the parties.
The judgment of the Calcutta High Court in East Indian Minerals v. The Orissa Minerals Development clarifies the prospective application of amendments to the Arbitration and Conciliation Act, 1996. It reaffirms that, unless the parties agree otherwise, the Act applies prospectively. The court’s decision also emphasizes the significance of the parties’ agreement in determining the applicability of amendments to ongoing arbitral proceedings. Furthermore, the court’s clarification regarding delays in resuming arbitral proceedings and the potential for abandonment provides guidance for future cases.
