Comprehensive Analysis of the Supreme Court's Decision in Board of Control

for Cricket in India v. Kochi Cricket Pvt. Ltd. and Its Impact on Indian
Arbitration Law

Introduction

The Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter referred to as "the
Amendment Act") brought about substantial reforms to Indian arbitration law, with the
primary objective of making the process of arbitration quicker, more efficient, and in tune
with international standards. One of the significant cases interpreting the Amendment Act
was the landmark judgment delivered by the Supreme Court of India on March 15, 2018, in
Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd.. The judgment clarified
whether the 2015 Amendment Act should be applied retrospectively or prospectively, and its
interpretation of various provisions has had a profound effect on the enforceability of arbitral
awards in India.

The case addressed critical issues surrounding the application of the Amendment Act to both
arbitral proceedings initiated prior to the Amendment's effective date and court proceedings
initiated after the cut-off date of October 23, 2015. The ruling reinforced India’s commitment
to becoming a pro-arbitration jurisdiction by streamlining the execution of arbitral awards
and reducing unnecessary delays caused by procedural roadblocks.

Legislative Background and Amendments to the 1996 Act

The Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the 1996 Act") was
India’s comprehensive legislation that aimed to provide a unified legal framework for
arbitration and conciliation in the country. The Act was inspired by the UNCITRAL Model
Law on International Commercial Arbitration and was seen as a progressive step forward.
However, over time, practical issues arose in its application, with significant delays in the
execution of arbitral awards due to procedural loopholes, particularly the automatic stay
provision under Section 36.

Before the 2015 amendment, Section 36 of the Act stipulated that the mere filing of an
application under Section 34 challenging an arbitral award automatically stayed its
enforcement. This led to prolonged delays in the realization of awards, undermining the very
purpose of arbitration as an effective alternative dispute resolution (ADR) mechanism. The
Amendment Act was introduced to address such anomalies, with one of its principal goals
being to remove the automatic stay provision in Section 36.

The Amendment Act made several other vital changes, including fast-tracking the arbitration
process, ensuring more transparency, and allowing the tribunal to impose interim measures. It
sought to bring Indian arbitration laws in line with international best practices and to make
India an attractive hub for arbitration, especially for foreign investors.

Key Issue: Prospective or Retrospective Application of the Amendment Act

The crux of the matter in Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd.
revolved around whether the Amendment Act, particularly Section 36, would apply
retrospectively to arbitral awards rendered before October 23, 2015. The Amendment Act did
not explicitly clarify the application of its provisions to pending arbitral and court
proceedings, which led to confusion and inconsistent interpretations by various High Courts
in India. The Supreme Court was called upon to settle this ambiguity.

The question was whether, if an arbitral award was passed before the effective date of the
Amendment Act, but the challenge to the award (a Section 34 application) was filed after the
cut-off date, the amended provisions of Section 36 (i.e., no automatic stay) would apply.

The Court’s Interpretation of Section 26: Prospective vs. Retrospective Operation

The resolution of this question depended on the interpretation of Section 26 of the

Amendment Act. Section 26, which replaced Section 85 of the original Act, governs the
applicability of the Amendment Act and reads as follows:

"Nothing contained in this Act shall apply to arbitral proceedings commenced, in accordance
with the provisions of Section 21 of the principal Act, before the commencement of this Act
unless the parties otherwise agree. But this Act shall apply in relation to arbitral proceedings
commenced on or after the date of commencement of this Act."

This section was pivotal in determining the scope of the Amendment Act’s retrospective
application. The Supreme Court divided Section 26 into two distinct parts:

1. The first limb relates to the application of the Amendment Act to arbitral proceedings.
It specifies that the Amendment Act will not apply to arbitral proceedings initiated
before the commencement of the Amendment Act unless the parties agree otherwise.
Here, the language is clear in limiting the prospective application of the Amendment
Act to arbitral proceedings initiated after October 23, 2015.
2. The second limb concerns court proceedings “in relation to arbitral proceedings.” The
phrase “in relation to” was critical in determining that while the first part only deals
with arbitral proceedings (i.e., proceedings before the arbitral tribunal), the second
part extends the scope of the Amendment Act to include court proceedings, such as
Section 34 and Section 36 applications, regardless of when the arbitral proceedings
were commenced.

The Court’s interpretation of the phrase “in relation to arbitral proceedings” provided clarity
that the Amendment Act applies to court proceedings related to arbitration, even if the
underlying arbitration itself began prior to the effective date of the Amendment Act. This was
crucial because it meant that the amended Section 36, which removed the automatic stay on
execution, applied to pending Section 34 applications, effectively making the Amendment
Act retrospective in its operation concerning the execution of awards.

Automatic Stay and Section 36: Procedural vs. Substantive Rights

One of the significant discussions in the judgment concerned the nature of Section 36—
whether the right to automatic stay under the unamended Act constituted a substantive right
or merely a procedural mechanism. The Court held that the execution of an award is a
procedural right, whereas the enforcement of an award is a substantive right.

This distinction was essential because procedural changes are generally presumed to apply
retrospectively unless stated otherwise, while substantive changes apply prospectively. The
removal of the automatic stay under Section 36 was deemed procedural, as it merely altered
the manner in which arbitral awards could be executed, without affecting the substantive
rights of the parties. As a result, the amended Section 36 applied retrospectively, even to
arbitral awards rendered before the Amendment Act came into force.

Implications of the Judgment on Indian Arbitration

The decision in Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd. had far-
reaching implications for Indian arbitration law. By interpreting the Amendment Act in favor
of retrospective application to court proceedings related to arbitral awards, the Supreme
Court reaffirmed the importance of ensuring swift and efficient enforcement of arbitral
awards. This decision was in line with international arbitration norms, where awards are
treated as final and binding, and their enforcement is not subject to unnecessary delays.

The judgment also underscored India’s commitment to being a pro-arbitration jurisdiction,

reducing the uncertainty that had arisen due to conflicting interpretations of the Amendment
Act by different High Courts. The removal of the automatic stay provision has been
instrumental in preventing parties from using procedural loopholes to delay the enforcement
of awards, thereby enhancing India’s appeal as a hub for commercial arbitration.

Obiter: Concerns About Section 87 of the Proposed 2018 Amendment

In passing, the Supreme Court also expressed its concern over the proposed Arbitration and
Conciliation (Amendment) Bill, 2018, which sought to introduce Section 87 into the Act.
Section 87 proposed that the Amendment Act of 2015 would not apply to arbitral proceedings
commenced before October 23, 2015, or to court proceedings arising from such arbitral
proceedings. The Court was of the view that this provision would take Indian arbitration law
backward by reintroducing delays and procedural hurdles that the 2015 Amendment had
sought to eliminate. The Court urged the government to reconsider this proposal,
emphasizing the importance of maintaining a pro-arbitration regime.

Fortunately, the concerns of the judiciary were heeded, and Section 87 was not implemented.
Instead, the Arbitration and Conciliation (Amendment) Act, 2019, repealed Section 87,
thereby ensuring the continued application of the 2015 Amendment Act to both arbitral and
related court proceedings.

Analysis and Remaining Lacunae

While the judgment in BCCI v. Kochi Cricket Pvt. Ltd. resolved significant ambiguities
surrounding the application of the Amendment Act, it left certain issues open for future
adjudication. For instance, while the Court clarified the retrospective application of Section
36, it did not explicitly address the retrospective application of other amended provisions,
such as the expanded grounds for challenging an arbitral award under Section 34. This
omission has led to some uncertainty, as parties may still attempt to argue whether other
procedural changes introduced by the Amendment Act should apply to pending proceedings.

Moreover, the question of whether the amendments to Section 34 create new substantive
rights for parties (and therefore should apply prospectively) remains unresolved. As the Court
did not delve deeply into this issue, it remains to be seen how future cases will interpret the
amended Section 34 and its retrospective application.
Conclusion

The judgment in Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd. marks a
significant milestone in the evolution of Indian arbitration law. By clarifying the prospective
and retrospective application of the Amendment Act and addressing the procedural nature of
the automatic stay under Section 36, the Supreme Court has bolstered India’s arbitration
regime. This decision ensures that arbitral awards can be executed without undue delays,
reinforcing the importance of finality in arbitration.

The ruling, combined with subsequent legislative reforms, sends a strong message that India
is committed to creating a robust and efficient arbitration framework. While certain questions
remain unanswered, particularly concerning the application of Section 34, the decision has
undoubtedly set India on a progressive path toward becoming a global hub for commercial
arbitration.