The Second Round of Amendments in 2005
In the essential case, the Hon'ble Supreme Court was of the view that Part I is to apply furthermore to international commercial arbitrations which happen out of India, except if the party by agreement, express or implied exclude it or any of its legislation, it was similarly held that the Arbitration Act of 1996 was not a well-drafted act and had a couple of lacunas.
The second round began around 2005, when there was a distinction of conclusion between the two Hon'ble Judges of the Hon'ble Supreme Court of India and the said issue was from there on, placed before a three-Judge Bench, which by its order directed the issues to be placed before the Constitution Bench. The Constitution Bench was of the view that Section 2(2) clarifies that Part I is constrained in its application to arbitrations which occur in India and that the Parliament by restricting the applicability of Part I to arbitrations which happen in India has expressed a legislative declaration.
The Bench additionally proceeded with a distinction between the arbitration in India and outside India. It held that Section 2(2) simply strengthens the limits of operation of the Arbitration Act, 1996 to India and it was additionally held that if Part I of the Act were relevant to arbitrations seated in foreign countries, certain words would need to be added to Section 2(2). The section would need to provide that "this part will apply where the place of arbitration is in India and to arbitrations having its place out of India."
Another fascinating question that was considered was whether Section 2(2) is in conflict with Sections 2(4) and 2(5). It was held that the language as utilized by the legislature in Sections 2(4) and 2(5) of the 1996 Act, implies the arbitration, that occurs in India. It was additionally explained that the provision doesn't admit an interpretation that any of the provisions of Part I, would have any application to arbitration which happens outside India. The 1996 Act, was fundamentally intended to give various treatments to the awards made in India and those made outside India. The distinction is essential to be made between the expressions "domestic awards" and "foreign awards".
It was additionally explained that Part I and Part II are exclusive of one another and the equivalent is likewise evident from the definitions. The issues identifying with the interim reliefs in an Inter-Parte Suit filed by the parties pending arbitration was held to be non-maintainable, as the pendency of the arbitration proceedings outside India would not provide any cause of action to a suit where the fundamental petition is for an injunction.