To enhance the attraction of arbitration, the Supreme Court ruled in Pam Developments Pvt Ltd v State of West Bengal that the government, as a party to arbitration, is not entitled to special or exceptional treatment. The provisions of the Arbitration and Conciliation Act, 1996 (act), apply equally to all the parties.
The respondent awarded Pam a special repairs contract in 2001. The work was completed in 2002. In May 2003, Pam made a claim for monies under the contract and disputes arose. A sole arbitrator was appointed by the Calcutta High Court, and he made his award in favour of Pam in January 2010. The award was challenged by the respondent in the high court. While the challenge was pending, section 36 of the act was amended with retrospective effect from October 2015, and the mere filing of a challenge under section 34 of the act would not automatically stay the execution of an award. A stay of execution would have to be ordered by a court, under the provisions of the Code of Civil Procedure, 1908 (CPC). Further, the Supreme Court’s judgement in BCCI (what does this stand for?) held that the amendment to the act would apply even to challenges awaiting adjudication.
Pam filed an execution application in the high court seeking attachment of the amounts held by the Reserve Bank of India on behalf of the respondent. The respondent succeeded in securing an unconditional stay of the execution of the award by relying on the provisions of order 27 rule 8A of the CPC. Pam challenged the order in the Supreme Court.
Karthik Somasundram is a partner and Sneha Jaisingh is a managing associate at Bharucha & Partners.
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