Does A State Have Power To Amend Arbitration Act?
Live LawEntry 13 in the Concurrent List of the Seventh Schedule of the Constitution of India, 1950, gives the Legislature of the States along with Parliament, the power to “make laws with respect to any of the matters” set out in the entry. The Arbitration Act The Arbitration Act, as the long title suggests is “An Act to consolidate and amend the law relating to” domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards and further “to define the law relating to conciliation” and for matters connected or incidental thereto.” The Preamble to the Act recognizes that the United Nations Commission on International Trade Law had adopted the UNCITRAL Model law on International Commercial Arbitration in 1985 and the UNCITRAL Conciliation Rules in 1980 which the General Assembly recommended to give due consideration to and to use by nation states. There are several reasons to come to this conclusion: While interpreting Article 254 of the Constitution, the Supreme Court in Forum for People's Collective Efforts and another v. State of West Bengal sets out three tests of repugnancy: A situation of “an absolute or irreconcilable conflict or inconsistency between a provision contained in a State legislative enactment with a Parliamentary law with reference to a matter in the Concurrent List.” To illustrate, if the State amends Section 29A of the Arbitration Act by extending the period to make an arbitration award from 12 months to 24 months from date of completion of pleadings, there would be a direct conflict between the State amendment and the provision made by Parliament which would make the State amendment void. Both these entries read with Article 253 would be enough to conclude that Parliament had intended to implement the UNCITRAL Model Law and Conciliation Rules and enforce agreements with nation states that have adopted the Model Law and Conciliation Rules and therefore had the exclusive power to enact, alter and amend the Arbitration Act without State interference. While this question would seem logical, it would clearly be missing the wood for the trees because one could very well argue that a State has the power to make a law encouraging parties to arbitrate a dispute, by say exempting arbitration awards from Stamp Duty or to make a law, say under a town planning act which provides an option to parties to arbitrate for disputes on compensation awarded for acquisition of property under a town planning scheme; and hence, it is for this reason that the word “arbitration” finds its place in Entry 13 List III.
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