Say the ratio out loud before you open Reasoning — recalling it unprompted is exactly what the exam pays for.
Why it matters
Every repealing statute creates a transition problem, and the 1996 Act created a long one: arbitrations begun under the 1940 Act were still running for years afterwards. Thyssen is the case that tells you which Act governs a given arbitration, and it supplies a second, separate rule about foreign awards under the repealed 1961 Act.
Facts
Arbitral proceedings had commenced before the 1996 Act came into force on 25 January 1996, and the award was made after it came into force. A related question concerned a foreign award where the arbitral proceedings had begun abroad before that date but the award came after it.
Held
On the domestic transition. Section 85(2)(a) preserves the 1940 Act for arbitral proceedings commenced before the 1996 Act came into force, unless the parties otherwise agree. So where proceedings commenced before 25 January 1996 but the award was made afterwards, the award is enforced under the 1940 Act. Where proceedings had commenced before that date and were pending before the arbitrator, it remains open to the parties to agree that the 1996 Act shall apply.
On foreign awards. A foreign award given after the 1996 Act came into force can be enforced only under Part II of that Act. There is no vested right to have it enforced under the repealed Foreign Awards (Recognition and Enforcement) Act, 1961, and it does not matter that the arbitral proceedings had commenced in the foreign jurisdiction before the 1996 Act commenced.
Reasoning
Step one — fix the commencement date. The 1996 Act, though assented to on 16 August 1996, is a continuation of the Arbitration and Conciliation Ordinance and is deemed effective from 25 January 1996. Everything in the transition turns on that date.
Step two — read the saving clause as it is written. Section 85(2)(a) keys the saving to the commencement of arbitral proceedings, not to the date of the award or of the enforcement petition. Section 21 lets the parties fix their own date of commencement, so the parties retain a measure of control.
Step three — distinguish a vested right from a mode of enforcement. The right to enforce a foreign award is not the same as a right to a particular procedure of enforcement. A repealed procedural regime confers no vested right, so the new Part II applies to awards made after the new Act begins.
Exam use
It opens: Explain the transition from the Arbitration Act, 1940 to the Arbitration and Conciliation Act, 1996 — and it is the case to cite for s. 85(2)(a).
Use the second holding in the foreign-award module, alongside Fuerst Day Lawson (one proceeding suffices for recognition and execution) and NTPC v. Singer (what makes an award foreign).
Pair the transition reasoning with BCCI v. Kochi Cricket, which is the same kind of problem for the 2015 amendment: which proceedings does a change in the arbitration statute reach?
It does not decide anything about the content of the grounds of challenge under either Act; its whole work is choosing the applicable statute.