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It is unfortunate for a system striving towards becoming an arbitration hub where the question – “what is the applicable law on arbitration?” – does not have a simple answer. The legislature and the judiciary appear to have played a ping pong match these last three years on this question, and we now, hopefully, have some finality on the matter.
At the heart of the controversy are very significant amendments to the Arbitration and Conciliation Act, 1996 introduced in 2015 (2015 Amendments).
The landmark case of BCCI vs. Kochi Cricket Pvt. Ltd. ((2018) 6 SCC 287), after 3.5 years and countless conflicting High Court decisions, provided some clarity on this issue by applying it to a wide range of arbitration and court proceedings – including those commenced before the 2015 Amendments.
The Supreme Court had warned the legislature against changing this position. However, on 9 August 2019, the Arbitration & Conciliation (Amendment) 2019 (2019 Amendment) to the Arbitration & Conciliation Act came into force and promptly nullified the decision in BCCI vs. Kochi.
On 27 November 2019, the Supreme Court in the case of Hindustan Construction Company Ltd v Union of India, (2019 SCC OnLine SC 1520) on questionable constitutional grounds, overturned the 2019 Amendment as being “manifestly arbitrary” and reverted to the position of law as laid down in BCCI v Kochi.
The cumulative effect of all these developments has unfortunately been significant uncertainty. The aim of this article is not to critically analyze these developments but rather to provide a practical guide for navigating the maze that the Indian arbitral regime has become.
Given the many permutations and combinations, a flowchart is the simplest representation:
Vikas Mahendra is a Partner at Keystone Partners and Mayuri Tiwari Agarwala is a Senior Associate at Shardul Amarchand Mangaldas & Co.