Alternative Dispute Resolution

Introduction

• This is a landmark judgment related to Section 29A of the Arbitration and Conciliation Act, 1996 (A&C Act).

Facts

• The applicant, first respondent and Tata Tele Services Ltd (TTSL) executed a share subscription agreement on 24^th February 2006 for the issuance and allotment of shares of TTSL to Siva Industries.
• Later, a share subscription agreement was made between NTT Docomo, the applicant and TTSL.
• Thereafter, the applicant, TTSL and the respondents executed an Inter se agreement. The agreement, inter alia, obliged the respondents to purchase the TTSL shares on a pro-rata basis.
• Disputes having arisen between the applicant and Docomo, and Docomo invoked arbitration against the applicant under the Rules of the London Council for International Arbitration.
• A Tribunal made its award, and the applicant was called upon to make payment to Docomo and to acquire the shares of TTSL which were put by Docomo.
• Thereupon, the applicant called upon the first respondent under the Inter se agreement to proportionately pay for and acquire back its shares in TTSL from Docomo.
• The applicant issued a notice of arbitration to both the respondents, but the respondents did not appoint their nominee arbitrator despite the service of the arbitration notice.
• The applicant filed a petition before the court for the constitution of an arbitral tribunal in an international commercial arbitration.
• Justice S N Variava was appointed as the sole arbitrator with the consent of the parties.
• The 12-month period and extension of 6 months agreed upon by the parties expired.
• On 14^th December 2019, a Miscellaneous Application was filed by the applicant before the Supreme Court.

Issues Involved

• Whether the amended provisions of Section 29A (in 2019) are applicable to International Commercial Arbitrations?
• Whether the timeline of 12 months given under section 29A applicable to International Commercial Arbitration?
• Whether the amended Section 29A would apply prospectively or retrospectively?

Observation

• The court clarified that the Amendment Act, 2019 has excluded international commercial arbitrations from the statutorily prescribed mandatory time limits.
• The amended provision of Section 29A of the A&C Act has excluded international commercial arbitrations from the mandate of the twelve-month timeline and governs domestic arbitrations only.
• The provisions of Section 29A, as introduced by Amendment Act, 2015 were prospective in nature by virtue of Section 26 of the Amendment Act, 2015.
• Generally, procedural laws are presumed to be retrospective, unless there is a clear indication that such was not the legislature's intention.
  • The Amendment Act, 2019 does not contain any provision equivalent to Section 26 of Amendment Act, 2015 which clears the legislative intent making the application of the amended provision prospective.

Conclusion

• After the amendment in 2019, the twelve-month time limit as prescribed in Section 29A is applicable to only domestic arbitrations and the twelve-month period is only directory for an international commercial arbitration.
  • And Sub-section (3) of Section 29A empowers the parties to extend the 12-month timeline for making the award for a further period not exceeding six months.
• The court stated that Section 29A created new obligations and laid down a strict timeline for rendering an arbitral award.