Tata Sons gets arbitration revived after 2019 amendment saves time limit

Tata Sons' arbitration was dead—the arbitrator's mandate expired during insolvency. Then a 2019 amendment brought it back to life. The Supreme Court had to decide whether a single sentence in a statute could resurrect a proceeding that everyone assumed had already died.

The question was deceptively simple: Could a stalled international arbitration between two Indian companies be revived because Parliament changed the rules about time limits? The answer would determine whether Tata Sons could pursue a claim against Siva Industries — or whether the entire arbitration was a dead letter.

When the buyback promise broke

Tata Sons and Siva Industries were shareholders in Tata Tele Services Ltd (TTSL), a telecom venture. When Japanese telecom company NTT Docomo bought shares in TTSL, the parties signed agreements requiring Siva Industries to buy back shares proportionately if Docomo ever exercised a sale option.

Docomo did exercise that option. It won an international arbitration award against Tata Sons in London. Tata Sons paid up — and then turned to Siva Industries, asking it to honour its contractual obligation to pay its share of the buyback.

Siva Industries refused. In June 2017, Tata Sons sent an arbitration notice — a letter that would sit in a file, waiting, as the clock began to tick. When Siva Industries failed to appoint its nominee arbitrator, Tata Sons approached the Supreme Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 (the provision that lets a court appoint an arbitrator when one party refuses to cooperate). In January 2018, the Supreme Court appointed a sole arbitrator.

The arbitration began in February 2018. The arbitrator, Justice S N Variava, took his seat. The pleadings were exchanged. The arbitrator's signed order sheet, dated February 2018, sat in its manila folder — a record of proceedings that would soon be frozen in time. Then everything stopped.

The insolvency wall

Before the arbitrator could proceed far, insolvency proceedings were initiated against Siva Industries under the Insolvency and Bankruptcy Code (IBC). This triggered a moratorium under Section 14 of the IBC — a legal freeze that halts all ongoing legal proceedings against a company once it enters the Corporate Insolvency Resolution Process (CIRP). The arbitration could not continue. The file sat untouched on a desk, the ink on the pleadings already dry, the manila folder collecting dust.

By the time the moratorium was lifted, the arbitrator's mandate had expired. Under the Arbitration Act as it stood before August 2019, an arbitral tribunal was required to make its award within twelve months of completing the pleadings (the formal exchange of claims and defences). The clock had run out.

Tata Sons was stuck. The arbitration had barely begun, but the statutory time limit had already passed. The company filed a Miscellaneous Application before the Supreme Court in December 2019, asking for the arbitrator's mandate to be extended.

The 2019 amendment that changed the game

But between the moratorium being lifted and Tata Sons filing its application, something significant had happened. On 30 August 2019, the Arbitration and Conciliation (Amendment) Act, 2019 came into effect. Among its changes was an amendment to Section 29A — the provision that sets time limits for arbitral awards.

The amended Section 29A(1) now read differently for international commercial arbitrations (arbitrations involving at least one party from outside India, or where the dispute touches international commerce, as defined under Section 2(1)(f) of the Act). For such arbitrations, the twelve-month deadline was no longer mandatory. Instead, the tribunal was only expected to "endeavour" to complete proceedings within twelve months from the completion of pleadings under Section 23(4).

Tata Sons argued that this change applied to its arbitration — which was an international commercial arbitration because one of the parties, Siva Industries, was a company registered in Seychelles. The arbitrator's mandate, they said, had not actually expired. It had simply continued under the new, relaxed regime.

Siva Industries disagreed. The amendment, they argued, could not revive a mandate that had already lapsed. The time limit was procedural, and procedural laws do not apply retrospectively to revive dead proceedings.

The rustle of paper in Courtroom 1

The bench of Chief Justice Dr Dhananjaya Y Chandrachud and Justice Pamidighantam Sri Narasimha had to resolve a tension between two competing principles: the general rule that procedural amendments apply to pending proceedings, and the specific language of the 2019 amendment. The courtroom was silent as the arguments unfolded — the only sound the rustle of paper as the judges turned the pages of the Arbitration Act, the weight of the case file palpable on the counsel table.

The court began by examining the nature of the amendment. Was it creating a new obligation — or removing an existing one? The answer was clear: the amendment removed a mandatory time limit and replaced it with a directory one. That made it "remedial" in nature — it fixed a problem rather than creating a new burden.

Remedial amendments, the court noted, are presumed to apply to all pending proceedings unless Parliament expressly says otherwise. The 2019 Amendment Act did not contain a provision like Section 26 of the 2015 Amendment Act, which had specified that certain amendments would apply only to arbitrations commenced after a particular date. The absence of such a provision was significant.

The court also looked at the language of the amended Section 29A(1). It said the tribunal "shall endeavour" to complete the arbitration within twelve months. That word — "endeavour" — was not mandatory. It was an expectation, not a command. For international commercial arbitrations, the twelve-month period was merely directory (a guideline, not a hard deadline).

As the bench observed, the amended provision was "remedial in nature" — it removed a mandatory obligation rather than creating new ones — and was therefore "applicable to all pending arbitral proceedings as on the effective date of 30 August 2019."

This meant that the arbitrator's mandate had not actually expired when the moratorium lifted. It had continued in existence, because the mandatory time limit never applied to this arbitration in the first place — once the 2019 amendment was applied retrospectively.

The distinction that saved the arbitration

The court relied on a line of precedents to hold that procedural amendments — especially those that are remedial — apply to all pending proceedings as of the date they come into force. In Hitendra Vishnu Thakur v. State of Maharashtra, the court had established that amendments which are procedural and remedial in nature apply retrospectively to pending proceedings unless vested rights are affected. Thirumalai Chemicals Ltd v. Union of India reinforced this principle, holding that procedural changes that remove burdens rather than creating them operate on all pending matters. The court also drew support from Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd., which had examined the retrospective operation of arbitration amendments, and from Jose Da Costa v. Bascora Sadasiva Sinai Narcornim, which laid down the general rule that procedural amendments apply to pending actions. The Delhi High Court's decisions in Shapoorji Pallonji & Co. Pvt. Ltd. v. Jindal India Thermal Power Ltd., ONGC Petro Additions Ltd. v. Ferns Construction Co. Inc., and MBL Infrastructures Ltd v. Rites Ltd. were also cited, all holding that the 2019 amendment applied retrospectively.

The key distinction was between "vested rights" and "procedural rights". A vested right is a substantive entitlement that cannot be taken away by a change in law. A procedural right is merely the method by which a claim is enforced. The time limit for an arbitral award was procedural, not substantive. Changing it did not take away any vested right from Siva Industries.

On the contrary, the court observed, applying the amendment retrospectively would serve the purpose of the Arbitration Act: to ensure that disputes are resolved efficiently without being derailed by technical time limits that the parties never controlled.

What this means for your arbitration

For practitioners and parties involved in international commercial arbitrations in India, this judgment offers a clear answer: the twelve-month deadline under Section 29A(1) is not a sword hanging over your head. If your arbitration is an international commercial arbitration, the tribunal's mandate does not automatically expire after twelve months. The tribunal is expected to try to finish within that time, but failure to do so does not kill the arbitration.

This is particularly important for arbitrations that get stalled by external events — insolvency moratoriums, court proceedings, or simply the complexity of the dispute. The judgment gives tribunals and parties breathing room to complete the arbitration without rushing to file extension applications every time the clock runs close.

THE PLAY: If your international commercial arbitration was pending on 30 August 2019 and the arbitrator's mandate has expired under the old twelve-month rule, file an application before the same court that appointed the arbitrator — the mandate is automatically revived under the amended Section 29A(1).

The clock that stopped ticking

The Supreme Court allowed Tata Sons' application. The Miscellaneous Application No. 2680 of 2019 in Arbitration Case (Civil) No. 38 of 2017 was disposed of, and the arbitrator's mandate was revived. The arbitration that had been frozen by insolvency, then declared dead by the calendar, was alive again — because a 2019 amendment had quietly turned a mandatory deadline into a mere aspiration. The file that had gathered dust was pulled from the shelf, the manila folder opened once more, the arbitrator's pen ready to move.