Repeals and Savings

Section 85 of the Arbitration and Conciliation Act, 1996, addresses the legal transitions and continuity between the old and new arbitration frameworks in India. This section deals with the repeal of earlier laws related to arbitration and ensures that no rights or legal obligations are lost in the transition. 

Section 85, thus, plays an essential role in preserving the validity of legal processes that began under the old laws while aligning them with the new legal regime introduced by the Arbitration and Conciliation Act, 1996.

Key Provisions of Section 85

1. Repeal of the Arbitration Act, 1940: Section 85(1) explicitly repeals the Arbitration Act, 1940, which was the governing law for arbitration before the introduction of the Arbitration and Conciliation Act, 1996. The Arbitration Act, 1940, had been in use for decades, but the 1996 Act replaced it to streamline the arbitration process in line with international standards.
2. Continuity of Legal Actions: Despite the repeal, Section 85(2) ensures that any legal action or proceeding that commenced under the previous law, i.e., the Arbitration Act, 1940, continues to be valid and enforceable under the new framework. Essentially, if an arbitration proceeding was initiated under the Arbitration Act, 1940, it will proceed under the Arbitration and Conciliation Act, 1996, without disrupting the ongoing process.
3. Saving of Specific Provisions: Section 85(3) makes provisions for specific saving clauses, which ensures that any existing orders, rules, or appointments made under the previous law continue to be valid. This safeguard protects the integrity of legal proceedings that had already started under the repealed law, as long as the specific arbitration-related provisions have not been superseded by the new Act.
4. Preservation of Rights: Section 85(4) addresses the preservation of rights and obligations that were established under the old Act. The repeal of the Arbitration Act, 1940, does not affect the legal rights that were granted to parties involved in arbitration under that Act. The section ensures that arbitration rights, awards, and ongoing proceedings continue to remain in effect despite the legislative change.

Significance of Section 85

1. Smooth Transition from Old to New Regime: Section 85 facilitates a smooth transition between the old and new legal systems governing arbitration. By repealing the Arbitration Act, 1940, and providing for the continuation of legal actions, the Act eliminates any disruption in the arbitration process. This ensures that cases initiated under the old Act can seamlessly move forward under the new legal framework.
2. Legal Certainty: This section provides clarity regarding the applicability of the new Act and confirms that the actions taken under the previous Act will continue to hold legal value. It reduces uncertainty for individuals and organizations that may have already commenced arbitration proceedings prior to the introduction of the 1996 Act.
3. Protection of Rights and Interests: By preserving the rights and obligations of the parties involved in arbitration under the old regime, Section 85 provides assurance to individuals and companies that their legal interests will remain protected, even as the law evolves. It ensures that ongoing arbitration processes, awards, and appointments made prior to the new law continue without prejudice.
4. Judicial Efficiency: The provision promotes judicial efficiency by avoiding the need to restart arbitration processes that were initiated under the previous law. This saves time, effort, and resources for both the parties involved and the judicial system, ensuring continuity in dispute resolution.
5. Prevents Loss of Legal Process: Section 85 ensures that no arbitration proceeding or award made under the old Arbitration Act is invalidated due to the change in law. This protects the interests of parties who have relied on arbitration as a means of resolving disputes before the enactment of the 1996 law.

 

Challenges and Criticism of Section 85

1. Potential Ambiguity in Application: One challenge associated with Section 85 is the potential ambiguity regarding the interpretation of saving provisions. The legal community and courts may face challenges when determining whether specific proceedings or awards fall within the scope of the saving provisions, potentially leading to delays or confusion in enforcing old awards.
2. Lack of Clarity on Awards Post-Repeal: The section provides for the continuation of proceedings under the old Act, but it may not address how new issues arising after the repeal are handled. For instance, the application of the Arbitration Act, 1996, to issues that were ongoing but unresolved when the new Act came into effect may create legal grey areas regarding the jurisdiction or procedure.
3. Overlap Between Laws: While Section 85 aims to avoid disruption, the overlap between the old and new provisions may create practical difficulties for parties involved in ongoing arbitrations. For example, differences in procedural provisions between the two Acts could lead to uncertainty about the applicable law and procedure for a particular case.
4. Transition Issues in International Arbitrations: While the domestic arbitration framework was clarified through Section 85, international arbitrations and foreign awards may face challenges during the transition. The repeal of the old Arbitration Act did not necessarily resolve the international aspects of arbitration law, leaving questions about the enforceability of foreign awards made under the old law.

 

Key Provisions Explained in Detail

1. Repeal of the Arbitration Act, 1940: The primary purpose of Section 85 is to repeal the outdated Arbitration Act, 1940. This old Act was seen as cumbersome and not in line with international arbitration standards, leading to delays and inefficiencies. By repealing this Act, the Arbitration and Conciliation Act, 1996, brings in a more streamlined and globally accepted mechanism for resolving disputes.
2. Continuation of Pending Proceedings: Section 85(2) ensures that legal actions initiated under the old law are not disrupted. This provision enables a smooth continuation of ongoing proceedings, even though the governing law has changed. As a result, parties involved in arbitration proceedings under the 1940 Act are not forced to restart their cases, preserving legal continuity.
3. Validity of Orders and Appointments: The saving clauses in Section 85(3) provide legal continuity for any orders, rules, or appointments made under the old law. This includes appointments of arbitrators, interim orders, and arbitration awards, which remain legally effective and enforceable even after the repeal of the 1940 Act.
4. Preservation of Pre-existing Rights and Liabilities: Section 85(4) ensures that no legal rights or obligations arising under the old law are lost due to the repeal of the Arbitration Act, 1940. This provision ensures that the parties involved in ongoing proceedings are not deprived of their legitimate rights and obligations due to the legal transition.

 

Comparative Perspective

When comparing Section 85 with arbitration laws in other countries, we can see that India’s approach to repealing an old law and saving rights and proceedings is not unique but is in line with international best practices. For example, in the United States, the Federal Arbitration Act (FAA) replaced older state laws, but like Section 85, it ensured that ongoing proceedings could continue uninterrupted.

In countries like the UK, the transition to the Arbitration Act, 1996 (UK) was similarly designed to avoid disrupting ongoing arbitration proceedings. This approach highlights the importance of legal certainty during transitions, ensuring that the arbitration process remains unaffected by changes in legislation.

 

Conclusion

Section 85 of the Arbitration and Conciliation Act, 1996, is a pivotal provision that ensures the legal continuity of arbitration processes during a transition from the old Arbitration Act, 1940, to the new regime. By preserving the validity of proceedings, orders, and rights, it offers a framework for a smooth transition without disrupting ongoing cases. While the provision is significant in maintaining judicial efficiency and protecting the interests of parties involved in arbitration, it does face challenges related to ambiguity and the overlap of old and new laws. Despite these challenges, Section 85 remains an essential part of India’s arbitration law, providing the stability required for the arbitration process to function seamlessly.

 

Frequently Asked Questions (FAQs)

1. What is the purpose of Section 85 of the  Arbitration and Conciliation Act, 1996?
   Section 85 of the Arbitration and Conciliation Act, 1996ings, legal rights, and obligations, making the transition to the new arbitration law seamless without affecting ongoing cases.
2. Does Section 85 affect ongoing arbitration proceedings?
   No, Section 85 ensures that any arbitration proceedings that were initiated under the previous Arbitration Act, 1940, will continue to be valid and enforceable under the new Arbitration and Conciliation Act, 1996, without disrupting the legal process.
3. What happens to orders and appointments made under the old Arbitration Act, 1940?
   Section 85(3) ensures that all orders, rules, or appointments made under the previous Arbitration Act, 1940, will remain valid and unaffected by the repeal, thereby ensuring the continuity of the arbitration process.
4. How does Section 85 help in the transition from the old Arbitration Act to the new one?
   Section 85 facilitates a smooth legal transition by repealing the outdated Arbitration Act, 1940, and preserving the rights and proceedings initiated under it. This allows ongoing arbitration cases to proceed without legal interruptions or need for re-initiation under the new law.
5. Can existing rights and liabilities under the old law be affected by Section 85?
   No, Section 85(4) protects existing rights and liabilities that were created under the old Arbitration Act, 1940. It ensures that these rights remain intact, even after the introduction of the new Arbitration and Conciliation Act, 1996.
6. Does Section 85 apply to international arbitration proceedings?
   While Section 85 provides legal continuity for domestic arbitration proceedings, international arbitration may face challenges regarding the enforceability of awards made under the old Act. However, it generally ensures that domestic arbitration under the previous Act continues seamlessly.
7. Why was the Arbitration Act, 1940, repealed under Section 85?
   The Arbitration Act, 1940, was repealed due to its inefficiencies and outdated provisions that did not align with international arbitration standards. The Arbitration and Conciliation Act, 1996, was introduced to modernize the arbitration process in India and make it more efficient and globally recognized.
8. How does Section 85 compare to arbitration laws in other countries?
   Similar provisions are seen in other jurisdictions, such as the U.S. and the UK, where old arbitration laws were repealed and replaced with new legislation, while ensuring the continuity of ongoing proceedings. Section 85 follows this best practice to ensure legal certainty during the transition to a more modern arbitration framework.