NO AUTOMATIC STAY OF ENFORCEMENT

 By: Ravi Shankar
In a recent judgment dated 14th June 2016 the High Court of Bombay in a well-reasoned judgement held that the amended Arbitration & Conciliation Act, 1996 which came into effect on 23rd October 2015 is applicable in the enforcement proceedings of arbitral awards even for the arbitrations started before the above said cutoff date. As per the un-amended Arbitration & Conciliation Act, 1996, if any party challenges an arbitration award under Section 34 of the act, there is an automatic stay on the enforcement proceedings initiated by the successful party, till the disposal of the challenge by the appropriate court. The above said judgement has taken away the automatic stay procedure, by holding that the amended Section 36 of the Act is in curative nature as per the observations made by the Supreme Court of India in NALCO case and hence applicable to all pending cases.

FACTS OF THE CASE: The Board of Control for Cricket in India (BCCI) lost two arbitration proceedings filed by M/S Rendezvous Sports World (RSW) and Kochi Cricket Pvt. Ltd (KCPL) and awards dated 22.06.2015 were pronounced. On 16th September 2015, BCCI challenged both the above said arbitration awards by filing applications under Section 34 of the act. In the meantime, i.e., on 23rd October 2015, the Ordinance 2015 was promulgated by the President of India. Later both the houses of Parliament of India passed the said amendment act and the amended provisions came into effect from 23rd October 2015. The successful parties to the arbitration proceedings filed execution applications seeking to enforce the above said two awards. BCCI filed chamber summonses in the High Court of Bombay seeking dismissal of the above said applications for execution of arbitral award because the same are misconceived and not maintainable.

CONTENTIONS OF THE PARTIES: The main contention of BCCI was that the above said amending act of 2015 is prospective in nature and can be applied to the arbitration proceedings or related cases, only if the arbitration had been initiated on or before 23rd October 2015. But the parties which filed the enforcement application contented that the amendment is retrospective in nature and since it is a curative provision, it comes into force for the post arbitration proceedings with immediate effect. The High Court even though held that the amending Act and its provisions are prospective in nature but the amended Section 36 being curative in nature, is applicable to all pending proceedings.

Conclusion: As per the above said Judgment of the High Court of Bombay, in all the pending S.34 applications, challenging parties must file an application under S.36 of the amended Act and seek stay of the enforcement proceedings. If either the application is not filed or application is dismissed the enforcement can go on.
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