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Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd. and Etc.

Civil Appeal · 2018 INSC 238Decided 15 Mar 2018
Civil Appeal Nos. 2879-2880 of 2018
Justice Rohinton Fali Nariman · Justice Navin Sinha

Background

A sole arbitrator had passed two awards against the BCCI in favour of Kochi Cricket Pvt. Ltd. (arising from a franchise agreement). BCCI challenged the awards under Section 34 of the Arbitration Act, and Kochi Cricket sought to execute the awards while that challenge was pending. BCCI argued that, under the old (pre-2015) Section 36, filing a Section 34 challenge automatically stayed enforcement, but the Bombay High Court held that the 2015 Amendment Act's new Section 36 (which removed this automatic stay) applied instead, so enforcement could proceed. This appeal, along with seven other similarly-situated appeals from different cases, asked the Supreme Court to settle whether the amended Section 36 governs Section 34 applications that were filed, or pending, before the Amendment Act came into force on 23 October 2015.

Decision Breakdown

The Supreme Court held that Section 26 of the 2015 Amendment Act makes the Act prospective only in relation to the arbitral proceedings themselves, but the substituted Section 36, being a provision about court enforcement proceedings, not about the arbitration itself, applies to all Section 34 applications to set aside an award that were pending before a court on or after 23 October 2015, regardless of when the underlying arbitration or the Section 34 application was filed. This meant there is no automatic stay merely because a Section 34 challenge exists; a party must separately apply for, and the court must specifically grant, a stay of enforcement, generally on terms of deposit of security. Applying this interpretation, the Court agreed with the Bombay High Court's view in BCCI's own case and dismissed this entire batch of appeals (including BCCI's).

Lesson Learnt

Challenging an arbitral award in court no longer automatically freezes its enforcement, since the 2015 amendment, a party must actively seek a stay and satisfy the court it deserves one (often by depositing security), a rule that applies to pending court enforcement proceedings even if the arbitration or the challenge itself began before the amendment.

Official source (sci.gov.in)View Judgment (PDF)

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