Entry 13 in the Concurrent List of the Seventh Schedule of the Constitution of India, 1950 (“the Constitution”), gives the Legislature of the States along with Parliament, the power to “make laws with respect to any of the matters” (see Article 246) set out in the entry. Entry 13 has the following subject-matter: “Civil procedure, including all matters included in the Code of Civil Procedure at the commencement of this Constitution, limitation and arbitration”. Suppose a State intended to amend the Arbitration and Conciliation Act, 1996 (“the Arbitration Act”), then would such a State have the power to do so?

Article 246 (2) of the Constitution, “also” gives the power to the Legislature of State (subject to Article 246(1)) to make laws with respect to any matters enumerated in the Concurrent List of the Seventh Schedule. Article 246 ought to be read with Article 254 titled “Inconsistency between laws made by Parliament and laws made by the Legislature of States”. Article 254 (1) clearly states that incase of repugnancy between a State law and a law made by Parliament in the Concurrent List which Parliament is competent to enact, the provision of a law made by Parliament shall prevail “and the law made by the Legislature of the State shall, to the extent of the repugnancy shall be void”. However, Article 254 (2) states that if such State legislation (a) is reserved for the consideration of the President and (b) has received Presidential Assent, the State legislation shall prevail unless of course Parliament enacts a law with respect to the same matter “including a law adding to, amending, varying or repealing the law so made by the Legislature of the State”. Therefore, even for entries in the Concurrent List, Parliament would have the power to undo what a State Legislature undertakes.

The Arbitration Act, as the long title suggests is “An Act to consolidate and amend the law relating to” (a) domestic arbitration, (b) international commercial arbitration and (c) 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 (“UNCITRAL”) 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. Therefore, Parliament thought it “expedient to make law” with respect to arbitration and conciliation taking into account the aforesaid Model Law and Conciliation Rules. Clause 3 Statement of Objects and Reasons appended to the Arbitration and Conciliation Bill, 1995 (“SOR”) states that though the UNCITRAL Model Law and Conciliation Rules are intended to deal with international commercial arbitration and conciliation it recognized that with appropriate modifications, they could serve as a model legislation on domestic arbitration and conciliation.

The Arbitration Act has five parts. Part I titled, “Arbitration”, Part IA (inserted in 2019) titled, “Arbitration Council of India”, Part II titled, “Enforcement of Certain Foreign Awards”, Part III titled, “Conciliation” and Part IV tiled, “Supplementary Provisions”. On the interplay between Part I and II, the Supreme Court in Bharat Aluminum Company v. Kaiser Aluminum Technical Services Limited Bharat Aluminum Company v. Kaiser Aluminum Technical Services Limited(“BALCO”) has held that Part I and II “are mutually exclusive to each other” and Part I would have no application to international commercial arbitrations held outside India.

If a State intended to amend the Arbitration Act, which would obviously be through an amending act enacted its Legislature, could it derive its power to do so by relying on Entry 13 of the Concurrent List? The answer to this question would be an emphatic “No!”. There are several reasons to come to this conclusion:

1. While interpreting Article 254 (2) of the Constitution, the Supreme Court in  sets out three tests of repugnancy:

a. 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 (1) 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.

b. The second test “involving a conflict between” State and Union legislations may arise in a situation where “Parliament has evinced an intent to occupy the whole field”, thereby prompting Parliament to make a complete and exhaustive code on the subject giving the State no leeway. A reading of the Preamble of the Arbitration Act makes it evident that Parliament intended to occupy the whole field by implementing the recommendation of the General Assembly to follow the UNCITRAL Model Law and Conciliation Rules and by implementing and enforcing the New York and Geneva Conventions (see Part II of the Arbitration Act) by virtue of the powers given to it under  of the Constitution.

c. “The third test of repugnancy is where the law enacted by Parliament and by the State legislature regulate the same subject. In such a case the repugnancy” would arise “because the subject which is sought to be covered by the State legislation is identical to and overlaps” with the Union legislation on the subject. For instance, a State cannot make its own Arbitration Act as it would conflict with the Union law. The only exception would have been for the State of Jammu and Kashmir up to 2019 prior to the implementation of the Jammu and Kashmir Reorganisation Act of 2019.