International Commercial Arbitration

Transcription

1 MUMBAI SILICON VALLEY BANGALORE SINGAPORE MUMBAI BKC NEW DELHI MUNICH NEW YORK International Commercial Arbitration Law and Recent Developments in India With inputs from - Singapore International Arbitration Centre (SIAC) March 2017 Copyright 2017 Nishith Desai Associates

2 International Commercial Arbitration Law and Recent Developments in India With inputs from - Singapore International Arbitration Centre (SIAC) March 2017 MUMBAI SILICON VALLEY BANGALORE SINGAPORE MUMBAI BKC NEW DELHI MUNICH NEW YORK ndaconnect@nishithdesai.com

3 International Commercial Arbitration Law and Recent Developments in India Contents 1. INTRODUCTION INDIAN ARBITRATION REGIME 02 I. History of Arbitration in India 02 II. Background to the Arbitra- tion and Conciliation Act, III. Scheme of the Act 02 IV. Arbitration and Conciliation Amendment Act, INTERNATIONAL COMMERCIAL ARBITRATION MEANING ARBITRABILITY UNDER INDIAN LAW INTERNATIONAL COMMERCIAL ARBITRATION WITH SEAT IN INDIA 07 I. Notice of arbitration 07 II. Referral to arbitration 07 III. Interim reliefs 08 IV. Appointment of arbitrators 08 V. Challenge to appointment of arbitrator 09 VI. Mandate of the arbitrator 10 VII. Challenge to jurisdiction 10 VIII. Conduct of arbitral proceedings 10 IX. Hearings and Written Proceedings 11 X. Fast track procedure 12 XI. Settlement during arbitration 12 XII. Law of limitation applicable 12 XIV. Interest and cost of arbitration 13 XV. Challenge to an award 13 XVI. Appeals 16 XVII. Enforcement and execution of the award INTERNATIONAL COMMERCIAL ARBITRATION WITH SEAT IN A RECIPROCATING COUNTRY 18 I. Referring parties to arbitra- tion under part II 19 II. Enforcement and execution of foreign awards 20 III. Appealable orders EMERGING ISSUES IN INDIAN ARBITRATION LAWS 23 I. Prospective applicability of the amendment act 23 II. Conundrum surrounding two indian parties having a foreign seat of arbitration 23 III. Arbitrability of oppression and mismanagement cases 24

4 International Commercial Arbitration Law and Recent Developments in India 8. CONCLUSION 25 ANNEXURE 26 I. Prospective Applicability of Arbitration and Conciliation Amendment Act, II. Two Indian Parties Opting for Foreign-Seated Arbitra- tion: No Bar? 29 III. Supreme Court Upholds Arbitration for a Pathologi- cal Arbitration Clause 33 IV. Bombay High Courts Rules on Arbitrability of Oppres- sion and Mis-Management Issues 35 V. Allegations of Fraud not a Bar to Foreign Seated Arbitration 38 VI. Enforcement of Foreign Awards Becomes Easier: Patent Illegality Removed from the Scope of Public Policy 40 VII. No Valid Arbitration if Clause in Unsigned Agreement 43 VIII. Delhi HC Adds to Uncertainty Over Applicability of the Arbitration & Conciliation (Amendment) Act IX. Appellate Arbitration Permissible In India But Should You Provide For It? 50 X. Allegations of Fraud Are Arbitrable - Even in Domestic Arbitrations in India 53 XI. Arbitration (Amendment) Act, 2015 Shall Apply Retrospectively to Court Proceedings in Relation to Arbitral Proceedings 57 XII. In Civil Courts we Trust : Trust Disputes Inarbitrable in India 60 XIII. Employees as Arbitrators? No, Says Delhi HC 63 ABOUT SIAC 69 SIAC INFORMATION KIT 74

5 International Commercial Arbitration Law and Recent Developments in India 1. Introduction Increasing international trade and investment is accompanied by growth in cross-border com- mercial disputes. Given the need for an efficient dispute resolution mechanism, international arbitration has emerged as the preferred option for resolving crossborder commercial disputes and preserving business relationships. With an influx of foreign investments, overseas com- mercial transactions, and open ended economic policies acting as a catalyst, international com- mercial disputes involving India are steadily rising. This has drawn tremendous focus from the international community on India s interna- tional arbitration regime. Due to certain controversial decisions by the Indian judiciary in the last decade, particularly in cases involving a foreign party; the international community has kept a close watch on the development of arbitration laws in India. The Indian judiciary has often been criticized for its interference in international arbitrations and extra territorial application of domestic laws in foreign seated arbitrations. However, the latest developments in the arbi- tration jurisprudence through recent court deci- sions clearly reflect the support of the judiciary in enabling India to adopt best international practices. Courts have adopted a pro-arbitration approach and a series of pro-arbitration rulings by the Supreme Court of India ( Supreme Court ) and High Courts have attempted to change the arbitration landscape completely for India. From 2012 to 2016, the Supreme Court delivered various landmark rulings taking a much needed pro-arbitration approach such as declaring the Indian arbitration law to be seat-centric; removing the Indian judiciary s power to interfere with arbitrations seated outside India; referring non-signatories to an arbitration agreement to settle disputes through arbitration; defining the scope of public policy in foreign-seated arbitration; and determining that even fraud is arbitrable. In furtherance of measures taken by the Indian government in support of the ease of doing business in India, and after two aborted attempts in 2001 and 2010 to amend the arbitration law; on October 23, 2015, the President of India promulgated the Arbitration and Conciliation (Amendment) Ordinance, 2015 ( Ordinance ). The Ordinance incorporated the essence of major rulings passed in the last two decades and most of the recommendations of 246th Law Commission Report, and have clarified major controversies that arose in recent years. Thereafter, on December 17, 2015 and December 23, 2015 respectively, the Arbitration and Con- ciliation (Amendment) Bill, 2015 ( Bill ) was passed by the Lok Sabha and Rajya Sabha respec- tively, with minor additions to the amendments introduced by the Ordinance. On December 31, 2015, the President of India signed the Bill and thereafter, gazette notification was made on Jan- uary 1, Accordingly, the Arbitration and Conciliation (Amendment) Act, 2015 ( Amend- ment Act ) came into effect, from October 23, The Amendment Act is applicable prospectively to the arbitral proceedings commenced after October 23, This paper aims to summarize the position under Indian law on international commercial arbitration ( ICA ), seated within and outside India and discusses the recent judicial decisions in this field. The changes introduced by the Amendment Act are a step in the right direction towards ensuring an arbitration friendly nation, and have been captured in this paper. 1

6 Provided upon request only 2. Indian Arbitration Regime I. History of Arbitration in India Until the Arbitration and Conciliation Act, 1996 ( Act ), the law governing arbitration in India consisted mainly of three statutes: 2 i. The Arbitration (Protocol and Convention) Act, 1937 ( 1937 Act ) ii. The Indian Arbitration Act, 1940 ( 1940 Act ) and iii. The Foreign Awards (Recognition and Enforcement) Act, 1961 ( 1961 Act ) The 1940 Act was the general law governing arbitration in India and resembled the English Arbitration Act of II. Background to the Arbitra- tion and Conciliation Act, 1996 To address raising concerns and with a primary purpose to encourage arbitration as a cost-effective and time-efficient mechanism for the settlement of commercial disputes in a national and international sphere, India in 1996, adopted a new legislation modeled on the Model Law in the form of the Arbitration and Conciliation Act, 1996 ( Act ). The Act was also aimed to provide a speedy and efficacious dispute resolu- tion mechanism in the existing judicial system which was marred with inordinate delays and backlog of cases. III. Scheme of the Act The Act has three significant parts. Part I of the Act deals with domestic arbitrations and ICA when the arbitration is seated in India. Thus, an arbitration seated in India between one foreign party and an Indian party, though defined as ICA is treated akin to a domestic arbitration. Part II of the Act deals only with foreign awards 1 and enforcement under the Convention on the Recognition and Enforcement of Foreign Arbi- tral Awards, 1958 ( New York Convention ) and Convention on the Execution of Foreign Arbi- tral Awards, 1927 ( Geneva Convention ). Part III of the Act is a statutory embodiment of conciliation provisions. In Part I, Section 8 regulates the commencement of arbitration in India, Sections 3, 4, 5, 6, 10 to 26, and 28 to 33 regulate the conduct of arbitration, Section 34 regulates the challenge to the award and Sections 35 and 36 regulate the recognition and enforcement of the award. Sections 1, 2, 7, 9,27, 37 and 38 to 43 are ancillary provisions that either support the arbitral process or are struc- turally necessary. 2 The courts have found that Chapters III to VI, specifically, Section 10 to 33 of Part 1 of the Act, contain curial or procedural law which parties would have autonomy to opt out from. The other Chapters of Part I of the Act form part of the proper law 3, thus making those provi-sions non-derogable by parties subjected to Part I, even by contract. Part II, on the other hand regulates arbitration only in respect to the commencement and rec- ognition / enforcement of a foreign award and no provisions under the same can be derogated by a contract between two parties. 4 The objective of the Act is to provide a speedy and cost-effective dispute resolution mecha- nism which would give parties finality in their disputes. In 1996, the Act was passed with a view to bring in winds of change, but fell into a chasm of its own. A number of decisions from the courts slowly but surely ensured 1. A foreign award is award delivered in an arbitration seated outside India 2. Bharat Aluminum Co. v. Kaiser Aluminum Technical Service, Inc., 2012 (9) SCC Anita Garg v. M/S. Glencore Grain Rotterdam B.V., 2011(4) ARBLR 59 (Delhi) 4. Bharat Aluminum Co. v. Kaiser Aluminum Technical Service, Inc., 2012 (9) SCC 552

7 International Commercial Arbitration Law and Recent Developments in India that the preferred seat in any cross-border contract was always a heavily negotiated point and, more often than not, ended up being either Singapore, New York, or London (the established global arbitration centers). Foreign investors and corporates doing business in India were just not ready to risk with the Indian legal system. IV. Arbitration and Conciliation Amendment Act, 2015 The modifications introduced by the Amendment Act have made significant changes to the Act and are in the right direction to clarify several issues with regard to the objectives of the Act. The Amendment Act provides with strict timelines for completion of the arbitral proceedings along with the scope for resolving disputes by a fast track mechanism. The Amendment Act has introduced insertion of new provisions in addition to amendments to the existing provisions governing the process of appointment of an arbitrator. It also clarified the grounds to challenge an arbitrator for the lack of independence and impartiality. As a welcome move, the Amendment Act provides for assistance from Indian courts, even in foreign-seated arbitrations in the form of interim relief before the commencement of the arbitration. Further, the introduction cost follow the event regime in the Act has been inserted to bring the Act in line with inter- national standards. The process of enforcement and execution under the Act has also been streamlined so that challenge petitions do not operate as an automatic stay on the execution process. Below are the snapshots to the major amend- ments introduced by the Amendment Act: A. Pre-arbitral proceedings i. Independence and impartiality Applications for appointment of an arbitrator should be endeavored to be disposed of within a period of (60) sixty days from date of service of notice on the opposite party. Detailed schedule on ineligibility of arbitrators have been put in place. ii. Interim reliefs Flexibility has been granted to parties with foreign-seated arbitrations to approach Indian courts for aid in foreign seated arbitration; Section 9 applications to be made directly before High Court in case of international commercial arbitrations seated in India as well as outside. Interim reliefs granted by arbitral tribunals seated in India are deemed to be order of courts and are thus enforceable in the new regime. Post grant of interim relief, arbitration proceedings must commence within 90 days or any further time as determined by the court. B. Arbitral proceedings i. Expeditious disposal A twelve-month timeline for completion of arbitration seated in India has been pre- scribed. Expeditious disposal of applications along with indicative timelines for filing arbitra- tion applications before courts in relation to interim reliefs, appointment of arbitrator, and challenge petitions; Incorporation of expedited/fast track arbi- tration procedure to resolve certain disputes within a period of six months. ii. Costs Detailed provisions have been inserted in relation to determination of costs by arbitral tribunals seated in India; introduction of costs follow the event regime. 3

8 Provided upon request only C. Post-arbitral proceedings i. Challenge and enforcement In ICA seated in India, the grounds on which an arbitral award can be challenged has been narrowed; Section 34 petitions to be filed directly before High Court in case of international commer- cial arbitrations seated in India. Section 34 petition to be disposed of expeditiously and in any event within a period of one year from date on which notice is served on opposite party. Upon filing a challenge, under Section 34 of the Act, there will not be any automatic stay on the execution of award and more specifically, an order has to be passed by the court expressly staying the execution proceedings. 4

9 International Commercial Arbitration 3. International Commercial Arbitration Meaning Law and Recent Developments in India The scope of this section was determined by the Section 2(1)(f) of the Act defines an ICA as a legal Supreme Court in the case of TDM Infrastruc- ture Pvt. relationship which must be considered commercial, 5 Ltd. v. UE Development India Pvt. Ltd., 6 wherein, despite where either of the parties is a foreign national or resident or is a foreign body corporate or is a company, it was concluded that, a company incorporated in India TDM Infrastructure Pvt. Ltd. having a foreign control, association or body of individuals whose central management or control is in foreign hands. Thus, under can only have Indian nationality for the purpose of the Act. Thus, though the Act recognizes companies Indian law, an arbitration with a seat in India, but controlled by foreign hands as a foreign body corpoinvolving a foreign party will also be regarded as an rate, the Supreme Court has excluded its applica- ICA, and hence subject to Part I of the Act. Where an tion to companies registered in India and having ICA is held outside India, Part I of the Act would have Indian nationality. Hence, in case a corporation has no applicability on the parties (save the stand alone dual nationality, one based on foreign con- trol and provisions introduced by the Amendment Act unless other based on registration in India, for the purpose excluded by the parties, as discussed later) but the parties would be subject to Part II of the Act. of the Act, such corporation would not be regarded as a foreign corporation. The Amendment Act has deleted the words a company from the purview of the definition thereby restricting the definition of ICA only to the body of individuals or association. There- fore, by inference, it has been made clear that if a company has its place of incorporation as India then central management and control would be irrelevant as far as its determination of being an international commercial arbitration is concerned. 5. Commercial should be construed broadly having regard to the manifold activities which are an integral part of interna- tional trade today (R.M. Investments & Trading Co. Pvt. Ltd. v. Boeing Co., AIR 1994 SC 1136) (14) SCC 271 5

10 Provided upon request only 4. Arbitrability under Indian Law Arbitrability is one of the issues where the contractual and jurisdictional facets of international commercial arbitration meet head on. It involves the simple question of what type of issues can and cannot be submitted to arbitration. In Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd. 7 the Supreme Court discussed the concept of arbitrability in detail and held that the term arbitrability had different meanings in different contexts: (a) disputes capable of being adjudicated through arbitration, (b) dis- putes covered by the arbitration agreement, and (c) disputes that parties have referred to arbi- tration. It stated that in principle, any dispute than can be decided by a civil court can also be resolved through arbitration. However, certain disputes may, by necessary implication, stand excluded from resolution by a private forum. Such non-arbitrable disputes include: (i) dis- putes relating to rights and liabilities which give rise to or arise out of criminal offences; (ii) matri- monial disputes relating to divorce, judicial separation, restitution of conjugal rights, or child custody; (iii) guardianship matters; (iv) insol- vency and winding up matters; (v) testamentary matters (grant of probate, letters of administra- tion and succession certificate); and (vi) eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes. Also, the Supreme Court has held in N. Radhakr- ishnan v. M/S Maestro Engineers 8 that, where fraud and serious malpractices are alleged, the matter can only be settled by the court and such a situation cannot be referred to an arbitrator. The Supreme Court also observed that fraud, financial malpractice and collusion are allegations with criminal repercussions and as an arbitrator is a creature of the con tract, he has limited jurisdiction. The courts are more equipped to adjudicate serious and complex allegations and are competent in offering a wider range of reliefs to the parties in dispute. But the Supreme Court in Swiss Timing Limited v. Organizing Committee, Commonwealth Games 2010, Delhi 9 and World Sport Group (Mauritius) Ltd. v. MSM Satellite (Singapore) Pte. Ltd. 10 held that allegations of fraud are not a bar to refer parties to a foreign-seated arbitration and that the only exception to refer parties to foreign-seated arbitration are those which are specified in Sec tion 45 of Act. For example.in cases where the arbitration agreement is either (i) null and void; or (ii) inoperative; or (iii) incapable of being performed. Thus, it seemed that though allegations of fraud are not arbitrable in ICA s with a seat in India the same bar would not apply to ICA s with a foreign seat. The decision of the Supreme Court in A Ayyasamy v. A Paramasivam & Ors, 11 has clarified that allegations of fraud are arbitrable as long as it is in relation to simple fraud. In A Ayyasamy, the Supreme Court held that: (a) allegations of fraud are arbitrable unless they are serious and complex in nature; (b) unless fraud is alleged against the arbitration agreement, there is no impediment in arbitrability of fraud; (c) the decision in Swiss Timing did not overrule Radhakrishnan. The judgment differentiates between simplicitor fraud and serious fraud, and concludes while serious fraud is best left to be determined by the court, simplicitor fraud can be decided by the arbitral tribunal. However, in Vimal Shah & Ors. v Jayesh Shah & Ors, the Supreme Court has held that disputes arising out of Trust Deeds and the Indian Trusts Act, 1882 cannot be referred to arbitration (5) SCC (1) SCC (6) SCC AIR 2014 SC (2016) 10 SCC Civil Appeal No of 2016 (Arising out of SLP (C) No of 2013)].

11 International Commercial Arbitration Law and Recent Developments in India 5. International Commercial Arbitration with seat in India As per the 2015 QMUL International Arbitration Survey, the five most preferred and widely used seats for international commercial arbitration are London, Paris, Hong Kong, Singapore, and Geneva. For instance, out of all disputes submitted to SIAC, one of the highest number of filings were generated from India. 13 Despite an increasing number of Indian parties opting for arbitra- tion to resolve their disputes, the number of such international arbitrations with seat in India has not increased significantly. The laws applicable to ICA when seat of arbitration is India are discussed in detail below. I. Notice of arbitration Arbitration is said to have commenced when the notice of arbitration requires the other party to take steps in connection with the arbitration or do something on his part in the matter of arbitration. Under Section 21 of the Act, a notice of arbitration has to be served to the other party, requesting that the dispute be referred to arbitration. The day on which the respondent receives the notice, arbitral proceedings commences under the Act. In a Notice of Arbitration, a party communicates: a) an intention to refer the dispute to arbitration; and b)the requirement that other party should do something on his part in that regard. This will generally suffice to define the commencement of arbitration under the Act. Applicability of Amendment Act The date of commencement of the arbitration in accordance with Section 21 of the Act is crucial with regards the applicability of the Amend- ment Act. In the event, the date of commence-ment is after October 23, 2015, the provisions of the Amendment Act will be applicable,as against the Act with respect to arbitral proceedings. II. Referral to arbitration Under Part I, the courts can refer the parties to arbitration if the subject matter of the dispute is governed by the arbitration agreement. Section 8 of the Act provides that if an action is brought before a judicial authority, which is subject-matter of an arbitration, upon an application by a party, the judicial authority is bound to refer the dispute to arbitration. It is important to note that the above applica- tion must be made by the party either before or at the time of making his first statement on the substance of the dispute and the applica- tion shall be accompanied by a duly certified or original copy of the arbitration agreement. Applicability of Amendment Act The Amendment Act narrows the scope of the judicial authority s power to examine the prima facie existence of a valid arbitration agreement, thereby reducing the threshold to refer a matter before the court for an arbitration for purposes of arbitrations commenced on or after October 23, More importantly, taking heed from the judg- ment of the Supreme Court in Chloro Controls 14, which effectively applied only to foreign-seated arbitrations, the definition of the word party to an arbitration agreement has been expanded under the Amendment Act to also include persons claiming through or under such party. 13. ( SIAC_Annual_Report_2015.pdf) There were 91 parties which used SIAC in the year 2015, being the highest foreign nationality contributing to the SIAC caseload. 14. Chloro Controls India (P) Ltd. v. Severn Trent Water Purifica- tion Inc., (2013) 1 SCC 641 7

12 Provided upon request only Thus, even non-signatories to an arbitration agreement, insofar as domestic arbitration or Indian seated ICA, may also participate in arbitration proceedings as long as they are proper and necessary parties to the agreement. 15 III. Interim reliefs Under the Act, the parties can seek interim relief from courts and arbitral tribunals under Section 9 and 17 respectively. A party may, before, or during arbitral proceedings or at any time after the making of the Arbitral Award but before it is enforced, apply to a court for seeking interim measures and protections including interim injunctions under Section 9 of the Act. The Arbitral Tribunal in accordance with Section 17 can also provide interim measures of protection or ask a party to provide appropriate security in connection with the matter of dis- pute, as is found appropriate during the course of the arbitral proceedings. However the powers of the Arbitral Tribunal were narrow compared to the powers of the court under Section 9 of the Act. Applicability of Amendment Act The Amendment Act has made significant changes which will affect the granting of interim relief in an arbitration proceedings commenced after October 23, A. Interim reliefs under Section 9 a. If an arbitral tribunal has been constituted, an application for interim protection under Section 9 of the Act will not be entertained by the court unless the court finds that circumstances exist which may not render the remedy provided under Section 17 inefficacious. b. Post the grant of interim protection under Section 9 of the Act, the arbitral proceed- ings must commence within a period of 90 (ninety) days from the date of the interim protection order or within such time as the court may determine. B. Interim reliefs under Section 17 Section 17 has been amended to provide the Arbitral Tribunal the same powers as a civil court in relation to the grant of interim measures. Notably, the Arbitral Tribunal would have powers to grant interim relief post award but prior to its execution. Further, the order passed by an Arbitral Tribunal in arbitrations seated in India will be deemed to be an order of the court and will be enforceable under the Code of Civil Procedure, 1908 ( CPC ) as if it were an order of the court, which provides clarity on its enforceability. The intention appears to be vest significant powers with the Arbitral Tribunal and reduce the burden and backlog before the courts. There has been extensive confusion on the extent and scope of arbitrator s powers to grant interim relief, and enforceability of such orders has proven difficult. This issue has been aptly addressed by making the enforceability of orders issued under Section 9 and 17 of the Act identical in case of domestic and international commercial arbitrations seated in India. However, in certain situations, a party will be required to obtain an order of interim relief from a court only (e.g. injunctive relief against encashment of a bank guarantee). IV. Appointment of arbitrators The parties are free to agree on a procedure for appointing the arbitrator(s). The agreement can provide for a tribunal consisting of three arbitrators and each party will appoint one arbitrator and the two appointed arbitrators will appoint the third arbitrator who will act as a presiding arbitrator. 16 If one of the parties does not appoint an Arbitrator within 30 days, or if two appointed Arbitrators do not appoint third Arbitrator within 30 days, the party can request Chief Justice of India ( CJI ) to appoint an Arbitrator in case of international commercial arbitrations. 17 The CJI 15. Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya, (2003) 5 SCC Section 11(3) of the Act 17. Section 11(4) of the Act

13 International Commercial Arbitration Law and Recent Developments in India can authorize any person or institution to appoint an Arbitrator. Some High Courts have authorized District Judge to appoint an Arbitrator. In case of domestic arbitrations, application has to be made to Chief Justice of respective High Court within whose jurisdiction the parties are situated. 18 Applicability of Amendment Act If one of the parties does not appoint an arbitra- tor within 30 days, or if two appointed arbitra- tors do not appoint third arbitrator within 30 days, the party can request the Supreme Court or relevant High Court (as applicable) to appoint an arbitrator. 19 The Supreme Court/High Court can authorize any person or institution to appoint an arbitrator. 20 In case of an ICA, the application for appointment of arbitrator has to be made to the Supreme Court and in case of a domestic arbitration, the respective High Courts having territorial jurisdiction will appoint the Arbitrator. The Amendment Act empowers the Supreme Court in an India-seated ICA and High Courts in domestic arbitration to examine the existence of an arbitration agreement at the time of making such appointment. 21 This should be noted against the threshold contained in a Section 8 application for referring a dispute to arbitration which empowers a court only to merely exam- ine the prima facie existence of an arbitration agreement. A recent Delhi High Court decision 22 has emphasized that the courts, while deciding an application for appointment of an arbitrator must confine their enquiry to the existence of an arbitration agreement. The question of arbitrability of the issue would be decided by the arbitral tribunal and not the courts. The application for appointment of the arbitrator before the Supreme Court or High Court, as the case may be, is required to be disposedof as expeditiously as possible and an endeavor shall be made to do so within a period of 60 days; such appointment would 18. Section 11(12) of the Act 19. Section 11(6) of the Act 20. Section 11 (6)(b) of the Act 21. Section 11 (6)(a) of the Act 22. Picasso Digital Media Pvt. Ltd. v. Pick-A-Cent Consultancy Service Pvt. Ltd., ARB.P. 635/2016. not amount to delega- tion of judicial power and is to be treated as an administrative decision. There has always been a concern in India with respect to the time taken for appointment of arbitrators due to the existing jurisprudence and procedure. The time-frame for such appoint- ment was usually months. This amend- ment seeks to address this delay by introduc- ing a timeline and clarifying the procedure of appointment to be an exercise of administrative power by the courts. V. Challenge to appointment of arbitrator An arbitrator is expected to be independent and impartial. If there are circumstances due to which his independence or impartiality can be challenged, he must disclose the circumstances before his appointment. 23 Appointment of an arbitrator can be challenged only if a. Circumstances exist that give rise to justifiable doubts as to his independence or impartiality; or, b. He does not possess the qualifications agreed upon by the parties. 24 The challenge to appointment has to be decided by the arbitrator himself. If he does not accept the challenge, the proceedings can continue and the arbitrator can make the arbitral award. However, in such cases, application for setting aside the arbitral award can be made to the court under Section 34 of the Act. If the court agrees to the challenge, the arbitral award can be set aside. 25 Thus, even if the arbitrator does not accept the challenge to his appointment, the other party cannot stall further arbitration proceedings by rushing to the court. 23. Section 12(1) of the Act 24. Section 12(3) of the Act 25. Section 13(6) of the Act 9

14 Provided upon request only The arbitration can continue and challenge can be made in court only after the arbitral award is made. Applicability of Amendment Act The Amendment Act provides a form for disclo- sure in the new Fifth Schedule. Such disclosure is in accordance with internationally accepted practices to be made applicable for arbitration proceedings commenced on or after October 23, In the Amendment Act, the legislators have listed scenarios in Seventh Schedule which may result in justifiable doubts as to the inde- pendence and impartiality of an arbitrator such as relationship with the parties, counsel or the subject matter of the dispute, such as that of the employee of one of the parties. 26 There is however, a decision of Punjab and Haryana High Court which has held that there is, no bar on a former employee to sit as an arbitrator in a dispute. 27 This is an indicative list in addition to disqualifying situations that have been affirmed by case law such as the holding of the Supreme Court that the arbitrator cannot be qualified to arbitrate if he is the part of the contract. 28 VI. Mandate of the arbitrator An encouraging position of Indian arbitration law is the jurisprudence relating to the mandate of an arbitrator. The Supreme Court in its deci- sion in NBCC Ltd. v. J.G. Engineering Pvt. Ltd. 29 has laid down that the mandate of the arbitrator expires in case an award is not delivered within the time limit stipulated by the parties in the arbitration agreement. Applicability of Amendment Act The Amendment Act has clarified the lacuna that existed since the inception of the Act. The provision earlier only dealt with the expiration of the man- date 26. Section 11(5) of the Act inserted by the Amendment Act. Also see Assignia-Vil JV v Rail Vikas Nigam Ltd, 2016 SCC Online Del Reliance Infrastructure Ltd. v. Haryana Power Generation Corporation Ltd, Arbitration Case No. 166 of 2016 (O&M) 28. Indian Oil Corporation Ltd. v. Raja Transport Pvt. Ltd., (2009) 8 SCC (2) SCC 385 of an arbitrator and did not deal with the procedure for re-appointment. For arbitrations commencing after October 23, 2015, a fresh application for appointment need not be filed in case of termination and substitution may be made, however the practical application is yet to be tested. This will surely help a party to ensure a time bound arbitration process while entering into a contract and in compelling the arbitrator to deliver his award within the stipulated time- lines. At the same time it equally becomes impor- tant to stipulate realistic timeliness for conclu- sion of an arbitration process so as to avoid forced expiry of the arbitrator s mandate despite best efforts to deliver an award in a timely fashion. VII. Challenge to jurisdiction Under Section 16 of the Act, an Arbitral Tribu- nal has competence to rule on its own jurisdic- tion, which includes ruling on any objections with respect to the existence or validity of the arbitration agreement. The doctrine of compe- tence-competence confers jurisdiction on the Arbi- trators to decide challenges to the arbitration clause itself. In S.B.P. and Co. v. Patel Engineering Ltd. and Anr., 30 the Supreme Court has held that where the Arbitral Tribunal was constituted by the parties without judicial intervention, the Arbitral Tribunal could determine all jurisdic- tional issues by exercising its powers of compe- tence-competence under Section 16 of the Act. VIII. Conduct of arbitral proceedings A. Flexibility in Respect of Procedure, Place and Language The Arbitral Tribunal should treat the parties equally and each party should be given full opportunity to present its case. 31 The Arbitral Tribunal is not bound by the CPC or (8) SCC Section 18 of the Act 10

15 International Commercial Arbitration Law and Recent Developments in India the Indian Evidence Act, The parties to arbitration are free to agree on the procedure to be followed by the Arbitral Tribunal. If the parties do not agree to the procedure, the procedure will be as determined by the Arbitral Tribunal. The Arbitral Tribunal has complete powers to decide the procedure to be followed, unless parties have otherwise agreed upon the procedure to be followed. 33 The Arbitral Tribunal also has powers to determine the admissibility, relevance, materiality and weight of any evidence. 34 Place of arbitration will be decided by mutual agreement. However, if the parties do not agree to the place, the same will be decided by the tribunal. 35 Similarly, the language to be used in arbitral proceedings can be mutually agreed. Otherwise, the Arbitral Tribunal can decide on the same. 36 B. Submission of Statement of Claim and Defense The Claimant should submit the statement of claims, points of issue and the relief or remedy sought. The Respondent should state his defense in respect of these particulars. All relevant docu- ments must be submitted. Such claim or defense can be amended or supplemented at any time. 37 Applicability of Amendment Act The Amendment Act now provides for an application for counterclaim/set-off to be adjudicated upon in the same arbitration proceeding without requiring a fresh one. 38 The Arbitral Tribunal, under the amended Section 25 of the Act, can also exercise its discretion in treating the right of defendant to file the statement of defence as forfeited under specified circumstances. 39 IX. Hearings and Written Proceedings After submission of pleadings, unless the parties agree otherwise, the Arbitral Tribunal can decide whether there will be an oral hearing or whether proceedings can be conducted on the basis of documents and other materials. However, if one of the parties requests the Arbitral Tribunal for a hearing, sufficient advance notice of hearing should be given to both the parties. 40 Thus, unless one party requests, oral hearing is not mandatory. Applicability of Amendment Act For the expeditious conclusion of the arbitration proceedings a proviso has been introduced by the Amendment Act on the conduct of oral proceedings and furnishing of sufficient cause in order to seek adjournments. The amended provision has also made a room for the tribunal to impose costs including exemplary costs in case the party fails to provide sufficient reasoning for the adjournment sought. By the Amendment Act, the time limit for conduct of the arbitral proceedings have been streamlined and arbitrators are mandated to complete the entire arbitration proceedings within a span of 12 (twelve) months from the date the Arbitral Tribunal enters upon the reference. 41 However, a 6 (six) months extension may be granted to the arbitrator by mutual consent of the parties. 42 Beyond 6 (six) months, any further extension may be granted to the arbitrator at the discretion of the court 43 or else the proceedings shall stand terminated. 44 An appli- cation for extension of time towards completion 32. Section 19(1) of the Act 33. Section 19(3) of the Act 34. Section 19(4) of the Act 35. Section 20 of the Act 36. Section 22 of the Act 37. Section 23 of the Act 38. Section 23(2-A) of the Act 39. Section 25(b) of the Act 40. Section 24 of the Act 41. Section 29A(1) of the Act 42. Section 29A(3) of the Act 43. Section 29A(5) of the Act 44. Section 29A(4) of the Act 11

16 Provided upon request only of arbitral proceedings has to be disposed of expeditiously. 45 There is also a provision made for awarding additional fees, as consented upon by the parties, to them for passing the award within the time span of 6 months. 46 X. Fast track procedure The Amendment Act has inserted new provisions to facilitate an expedited settlement of disputes based solely on documents subject to the agreement of the parties. The tribunal for this purpose consists only of a sole arbitrator who shall be chosen by the parties. 47 For the stated purpose the time limit for making an award under this section has been capped at 6 months from the date the Arbitral Tribunal enters upon the reference. 48 Parties can before constitution of the Arbitral Tribunal, agree in writing to conduct arbitration under a fast track procedure. 49 Under the fast track procedure, unless the parties otherwise make a request for oral hearing or if the arbitral tribunal considers it necessary to have oral hearing, the Arbitral Tribunal shall decide the dispute on the basis of written pleadings, documents and submissions filed by the parties without any oral hearing. 50 XI. Settlement during arbitration It is permissible for parties to arrive at a mutual settlement even when the arbitration proceed- ings are going on. In fact, even the tribunal can make efforts to encourage mutual settlement. If parties settle the dispute by mutual agreement, the arbitration shall be terminated. However, if both parties and the Arbitral Tribunal agree, the settlement can be recorded in the form of an arbitral award on agreed terms, which is called consent award. Such arbitral award shall have the same force as any other arbitral award. 51 Under Section 30 of the Act, even in the absence of any provision in the arbitration agreement, the Arbitral Tribunal can, with the express consent of the parties, mediate or conciliate with the parties, to resolve the disputes referred for arbitration. XII. Law of limitation applicable The Limitation Act, 1963 is applicable to arbitrations under Part I. For this purpose, date on which the aggrieved party requests other party to refer the matter to arbitration shall be considered. If on that date, the claim is barred under Limitation Act, the arbitration cannot continue. 52 If arbitration award is set aside by court, time spent in arbitration will be excluded for the purposes of Limitation Act. This enables a party to initiate a fresh action in court or fresh arbitration without being barred by limitation. XIII. Arbitral award A decision of an Arbitral Tribunal is termed as Arbitral Award. An arbitral award includes interim awards. But it does not include interim orders passed by arbitral tribunals under Section 17. Arbitrator can decide the dispute injustice and in good faith only if both the parties expressly authorize him to do so. 53 The decision of Arbitral Tribunal will be by majority. 54 The Arbitral Award shall be in writing and signed by all the members of the tribunal. 55 It must state the reasons for the award unless the parties have agreed that no reason for the award is to be given. 56 The Award should be dated and the place where it is made should be mentioned (i.e. the seat of arbitration). A copy of the award 45. Section 29A(9) the section endeavours the application to be disposed of within a period of 60 days. 46. Section 29A(2) of the Act 47. Section 29B(2) of the Act 48. Section 29B(4) of the Act 49. Section 29B(1) of the Act 50. Section 29B(3) of the Act Section 30 of the Act 52. Section 43(2) of the Act 53. Section 28(2) of the Act 54. Section 29 of the Act 55. Section 31(1) of the Act 56. Section 31(3) of the Act

17 International Commercial Arbitration Law and Recent Developments in India should be given to each party. Arbitral Tribunals can also make interim awards. 57 XIV. Interest and cost of arbitration The interest rate payable on damages and costs awarded, unless the arbitral award otherwise directs, shall be 18 percent per annum, calculated from the date of the award to the date of payment. Applicability of Amendment Act The interest rate payable on damages and costs awarded, as per the Amendment Act shall, unless the arbitral award otherwise directs, shall be 2 percent higher than the current rate of interest prevalent on the date of award, from the date of award to the date of payment. 58 A. Regime for Costs (Introduced by the Amendment Act) Cost of arbitration means reasonable cost relating to fees and expenses of Arbitrators and witnesses, legal fees and expenses, administration fees of the institution supervising the arbitration and other expenses in connection with arbitral proceedings. The tribunal can decide the cost and share of each party. 59 If the parties refuse to pay the costs, the Arbitral Tribunal may refuse to deliver its award. In such case, any party can approach the court. The court will ask for a deposit from the parties and on such deposit, the award will be delivered by the tribunal. Then court will decide the cost of arbitration and shall pay the same to Arbitrators. Balance, if any, will be refunded to the party. 60 The regime for costs has been established which has applicability to both arbitration proceedings as well as the litigations arising out of arbitration. The explanation defining the term costs for the purpose of this sub-section has been added. The circumstances which have to be taken into account while determining the costs have been laid down in the sub-section (3) of the freshly added section (Section 31 A). In a nutshell this provision is added to determine the costs incurred during the proceedings including the ones mentioned under Section 31(8) of the Act. XV. Challenge to an award Section 34 provides for the manner and grounds for challenge of the arbitral award. The time period for the challenge is before the expiry of 3 months from the date of receipt of the arbitral award (and a further period of 30 days on suf- ficient cause being shown for condonation of delay). If that period expires, the award holder can apply for execution of the arbitral award as a decree of the court. But as long as this period has not elapsed, enforcement is not possible. Under Section 34 of the Act, a party can challenge the arbitral award on the following groundsi. the parties to the agreement are under some incapacity; ii. the agreement is void; iii. the award contains decisions on matters beyond the scope of the arbitration agreement; iv. the composition of the arbitral authority or the arbitral procedure was not in accordance with the arbitration agreement; v. the award has been set aside or suspended by a competent authority of the country in which it was made; 57. Section 31(6) of the Act 58. Section 31(7)(b) of the Act 59. Section 31(8) of the Act 60. Section 39 of the Act vi. the subject matter of dispute cannot be settled by arbitration under Indian law; or vii. the enforcement of the award would be contrary to Indian public policy. 13

18 Provided upon request only Applicability of Amendment Act The Amendment Act has added an explanation to Section 34 of the Act. In the explanation, public policy of India has been clarified to mean only if: (a) the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or 81; or (b) it is in contravention with the fundamental policy of Indian law; or (c) it is in contravention with the most basic notions of the morality or justice. The Amendment Act clarifies that an award will not be set aside by the court merely on erroneous application of law or by re-appreciation of evidence. 61 A court will not review the merits of the dispute in deciding whether the award is in contravention with the fundamental policy of Indian law. 62 The Amendment Act has also introduced a new section providing that the award may be set aside if the court finds that it is vitiated by patent illegality which appears on the face of the award in case of domestic arbitrations. For ICA seated in India, patent illegality has been keep outside the purview of the arbitral challenge. 63 Process for Challenge & enforcement Domestic Award/ICA seated in India 3 Months + 30 days of the date of receipt of award / date of correction Enforcement of Award a as a decree Application to set aside the Award Rejected Appeals Appeals District court or HC (as applicable), where subject-matter of dispute lies or where respondent resides or carries on business in case of domestic award 61. Proviso to section 34(2A) of the Act 62. Explanation 2 to section 48 of the Act 63. Section 34(2A) of the Act 14

19 International Commercial Arbitration Law and Recent Developments in India A challenge under this section can be filed only after providing prior notice to the opposite party. 64 A challenge has to be disposed of expeditiously and in any event within a period of one year from the date of the prior notice referred above. 65 The amended section also states that where the time for making an application under section 34 has expired, then subject to the provisions of the CPC, the award can be enforced. Under the Act, there was an automatic stay once an application to set aside the award under Section 34 of the Act was filed before the Indian courts. The Amendment Act now requires parties to file an additional application and specifically seek a stay by demonstrating the need for such stay to an Indian court. However, there is lack of clarity on whether a challenge initiated after 23 October 2015 to an arbitral award, passed prior to that date, would result in an automatic stay because of conflicting High Court decisions on the same. 66 NA Pre-Amendment a. Party was under some incapacity; b. Arbitration agreement not valid under the governing law of the agreement; c. Applicant not given proper notice and not able to present its case; d. Award deals with a dispute not contemplated by terms of the submission to arbitration, or beyond the scope of the submission to arbitration; e. Composition of Arbitral Tribunal or the arbitral procedure not in accordance with the agreement or not in accordance with Part I of the Act; f. Subject-matter of the dispute not capable of settlement by arbitration under the law; g. Award in conflict with the public policy of India (if induced or affected by fraud or corruption or was in violation of confidentiality requirements of a conciliation or where a confidential settlement proposal in a conciliation is introduced in an arbitration). Pre-Amendment GROUNDS FOR CHALLENGE Domestic Award/ICA seated in India TIME-LINES FOR CHALLENGE Post-Amendment Ground (a) (f) in the pre-amendment era has been retained with the addition of the following: a. In the explanation to Section 34 of the Act, public policy of India has been clarified to mean only if: (a) the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or 81; or (b) it is in contravention with the fundamental policy of Indian law; or (c) it is in contravention with the most basic notions of the morality or justice; b. A new section has been inserted providing that the award may be set aside if the court finds it vitiated by patent illegality which appears on the face of the award. For international commercial arbitrations seated in India, patent illegality has been keep outside the purview of the arbitral challenge; c. An award will not be set aside by the court merely on erroneous application of law or by re-appreciation of evidence; d. A court will not review the merits of the dispute in deciding whether the award is in contravention with the fundamental policy of Indian law. Post-Amendment Challenge can be filed only after providing prior notice to the opposite party and has to be disposed of expeditiously and in any event within a period of one year from the date of the prior notice. 64. Section 34(5) of the Act 65. Section 34(6) of the Act 66. New Tirupur Area Development Corporation Ltd. v. M/s. Hindustan Construction Co. Ltd A. NO of 2016 in O.P. No. 931 of 2015; Tufan Chatterjee v. Rangan Dhar AIR 2016 Cal 213; Ardee Infrastructure Pvt. Ltd. v. Anuradha Bhatia 2017 SCC Online Del

20 Provided upon request only XVI. Appeals Only in exceptional circumstances, a court can be approached under the Act. The aggrieved party can approach the court only after arbitral award is made or in case of an order passed under Section 17 of the Act, after the order is passed. Appeal to court is now permissible only on certain restricted grounds. An appeal lies from the following orders and from no others to the court authorized by law to hear appeals from original decrees of the court passing the order 67 - i. granting or refusing to grant any measure under Section 9; ii. setting aside or refusing to set aside an Arbitral Award under Section 34 However, a three judge Bench of the Supreme Court has recently held in Centrotrade Minerals & Metal v. Hindustan Copper 68 that parties may provide for an appeal to lie from the award to an appellate arbitral tribunal. Such a clause was held not to be contrary to the laws of the country and thus enforceable. It appears that the scope of appeal in such cases is far wider than an appeal to a court. Applicability of Amendment Act The Amendment Act has widened the ambit of appeal by including the order refusing to refer the parties to arbitration under Section 8 of the Act. Appeal shall also lie to a court from an order of the Arbitral Tribunali. accepting the plea referred to in sub-section (2) or subsection (3) of Section 16; or ii. granting or refusing to grant an interim meas- ure under Section 17. Moreover, no second appeal shall lie from an order passed in appeal under this Section but nothing in Section 37 shall affect or take away any right to appeal to the Supreme Court. XVII. Enforcement and execution of the award In India, the enforcement and execution of arbitral awards both domestic and foreign are governed by the Act read with the CPC. While the former lays down the substantive law governing enforceability and execution of an award, the latter deals with the procedures required to be followed when seeking execution of an award. According to Section 35 of the Act, an arbitral award shall be final and binding on the parties and persons claiming under them. Thus an arbi- tral award becomes immediately enforceable unless challenged under Section 34 of the Act. When the period for filing objections has expired or objections have been rejected, the award can be enforced under the CPC in the same manner as if it were a decree passed by a court of law. 69 An ex parte award passed by an Arbitral Tribunal under Section 28 of the Act is also enforceable under Section 36. Even a settlement reached by the parties under Section 30 of the Act can be enforced under Section 36 of the Act as if it were a decree of the court. A. Institution of Execution Petition For execution of an arbitral award the procedure as laid down in Order XXI of the CPC has to be followed. Order XXI of the CPC lays down the detailed procedure for enforcement of decrees. It is pertinent to note that Order XXI of the CPC is the longest order in the schedule to the CPC consisting of 106 Rules. 67. Section 37 of the Act (12) SCALE N. Poongodi v. Tata Finance Ltd., 2005 (3) ARBLR 423 (Madras)

21 International Commercial Arbitration Law and Recent Developments in India Where an enforcement of an arbitral award is sought under Order XXI CPC by a decree- holder, the legal position as to objections to it is clear. At the stage of execution of the arbitral award, there can be no challenge as to its validity. 70 The court executing the decree cannot go beyond the decree and between the parties or their representatives. It ought to take the decree according to its tenor and cannot entertain any objection that the decree was incorrect in law or in facts. All proceedings in execution are commenced by an application for execution. 71 The execution of a decree against property of the judgment debtor can be effected in two ways i. Attachment of property; and ii. Sale of property of the judgment debtor The courts have been granted discretion to impose conditions prior to granting a stay, including a direction for deposit. The amended section also states that where the time for mak- ing an application under section 34 has expired, then subject to the provisions of the CPC, the award can be enforced. 72 Also, the mere fact that an application for setting aside an arbitral award has been filed in the court does not itself render the award unenforceable unless the court grants a stay in accordance with the provisions of sub-section 3, in a separate application. It is the discretion of the court to impose such conditions as it deems fit while deciding the stay application. 73 If the property is immoveable, the attachment is to be made by an order prohibiting the judg- ment debt or from transferring or charging the property in any way and prohibiting all other persons from taking any benefit from such a transfer or charge. The order must be proclaimed at some place on or adjacent to the property and a copy of the order is to be affixed on a conspicuous part of the property and upon a conspicuous part of the courthouse. 74 Where an attachment has been made, any private transfer of property attached, whether it be movable or immovable, is void as against all claims enforceable under the attachment. 75 If during the pendency of the attachment, the judgment debtor satisfies the decree through the court the attachment will be deemed to be withdrawn. 76 Otherwise the court will order the property to be sold. 77 C. Sale of attached property Order XXI lays down a detailed procedure for sale of attached property whether movable or immovable. If the property attached is a move- able property, which is subject to speedy and natural decay, it may be sold at once under Rule 43. Every sale in execution of a decree should be con- ducted by an officer of the court except where the property to be sold is a negotiable instrument or a share in a corporation which the court may order to be sold through a broker. 78 B. Attachment of Property Attachable property belonging to a judgment debtor may be divided into two classes: (i) move- able property and (ii) immoveable property. 70. Vasudev Dhanjibhai Modi v. Rajabhai Abdul Rahman, 1970 (1) SCC 670; Bhawarlal Bhandari v. Universal Heavy Mechanical Lifting Enterprises, 1999 (1) SCC Rule 10 of the CPC 72. Section 36(1) of the Act 73. Proviso to Section 36(3) of the Act 74. O.XXI R.54 of the CPC 75. Section 64 of the CPC XXI R. 55 of the CPC R. 64 of the CPC XXI R.76 of the CPC 17

22 Provided upon request only 6. International Commercial Arbitration with seat in a reciprocating country Post the decision of the Supreme Court in BALCO 79, Indian arbitration law has been made seat-centric. The Amendment Act clarifies that Part I of the Act will not be applicable in foreign seated arbitrations, save and except the stan- dalone provisions discussed below in the table. the Central Government, being satisfied that reciprocal provisions made may, by notifi- cation in the Official Gazette, declare to be terri- tories to which the said convention applies. Pre-Balco (Bhatia Regime) Post-Balco Amendment Act Unless impliedly or expressly excluded by the parties, Part I of the Act will apply even to a foreign seated arbitration Part I of the Act will not apply in case of foreign seated arbitration. The decision was given prospective effect and therefore applied to only arbitration agreements executed on or after September 6, If the arbitration agreement was executed prior to September 6, 2012, necessary modifications would have to be made in the arbitration agreement in order to be governed by the ruling in BALCO. 80 Part I of the Act will not apply in case of foreign seated arbitration except Sections 9, 27 and 37 unless a contrary intention appears in the arbitration agreement. The Amendment Act is applicable prospectively with effect from October 23, 2015 (i.e. the commencement of the arbitral proceedings should be on or after October 23, 2015) 81 Part II of the Act is applicable to all foreign awards sought to be enforced in India and to refer parties to arbitration when the arbitra- tion has a seat outside India. Part II is divided into two chapters, Chapter 1 being the most rel evant one as it deals with foreign awards delivered by the signatory territories to the New York Convention which have reciprocity with India, while Chapter 2 is more academic in nature as it deals with foreign awards delivered under the Geneva Convention. 82 A foreign award under Part II is defined as (i) an arbitral award (ii) on differences between per- sons arising out of legal relationships, whether contractual or not, (iii) considered as commer- cial under the law in force in India, (iv) madeon or after 11th day of October, 1960 (v) in pursu ance of an agreement in writing for arbitration to which the convention set forth in the first schedule applies; and (vi) in one of such territo- ries as 79. Bharat Aluminum Co. v. Kaiser Aluminum Technical Service, Inc., 2012 (9) SCC Harmony Innovation Shipping Ltd v. Gupta Coal India Ltd.& Anr, 2015 (3) SCALE 295 (for our analysis please see: research-and-articles/ nda-hotline/nda-hotline-single-view/article/have-you- amended-your-arbitration-agreement-post-balco.html?no_ cache=1&chash= cd27f35dbcb4ce62517c1fc3) 81. Recently the courts have adopted differential view with regard to applicability of the Amendment Act on the ccourt proceedings arising out of the underlying arbitral proceed- ings. 82. As mostly all parties signatory to the Geneva Convention as now members of the New York Convention, Chapter 2 of Part II remains primarily academic. 18 Thus, even if a country is a signatory to the New York Convention, it does not ipso facto mean that an award passed in such country would be enforceable in India. There has to be further notification by the Central Government declar- ing that country to be a territory to which the New York Convention applies. In the case of Bhatia International v Bulk Trading, 83 ( Bhatia International ) the Supreme Court expressly clarified that an arbitration award not made in a convention country will not be considered a foreign award. About 48 countries have been notified by the Indian government so far. They are:- Australia; Austria; Belgium; Botswana; Bulgaria; Central African Republic; Chile; China (including Hong Kong and Macau) Cuba; Czechoslovak Socialist Republic; Denmark; Ecuador; Federal Republic of Germany; Finland; France; German; Democratic Republic; Ghana; Greece; Hungary; Italy; Japan; Kuwait; Malagasy Republic; Malaysia; Mauritius, Mexico; Morocco; Nigeria; Norway; Philippines; Poland; Republic of Korea; Roma- nia; Russia; San Marino; Singapore; Spain; Sweden; Switzerland; Syrian Arab Republic; Thailand; The Arab Republic of Egypt; The Neth- erlands; Trinidad and Tobago; Tunisia; United Kingdom; United Republic of Tanzania and United States of America. 83. AIR 2002 SC 1432

23 International Commercial Arbitration Law and Recent Developments in India Thus, to reach the conclusion that a particular award is a foreign award, the following condi- tions must be satisfied - 84 i. the award passed should be an arbitral award, ii. it should be arising out of differences between the parties; iii. the difference should be arising out of a legal relationship; iv. the legal relationship should be considered as commercial; v. it should be in pursuance of a written agree- ment to which the New York Convention applies;and, vi. the foreign award should be made in one of the aforementioned 47 countries. I. Referring parties to arbitra- tion under part II A judicial authority under Section 45 of the Act has been authorized to refer those parties to arbi- tration, who under Section of the Act have entered in an arbitration agreement. The Section is based on Article II (3) of New York Convention and with an in-depth reading of the Section 45 of the Act, it can be clearly understood that it is mandatory for the judicial authority to refer parties to the arbitration. Section 45 of the Act starts with a non obstante clause, giving it an overriding effect to the provision and making it prevail over anything contrary contained in Part I or the CPC. It gives the power to the Indian judicial authorities to specifically enforce the arbitration agreement between the parties. But as an essential pre-condition to specifically enforcing the arbitration agreement, the court has to be satisfied that the agreement is valid, operative and capable of being performed. A party may not be entitled to a stay of legal proceedings in contravention to the arbitration agreement under Section 45 in the absence of a review 84. National Ability S.A. v. Tinna Oil Chemicals Ltd., 2008 (3) ARBLR Section 44 of the Act by the court to determine the validity of the arbitral agreement. The review is to be on a prima facie basis. 86 A. Distinction between Section 8 and Section 45 Section 8 and Section 45 of the Act, both pertaining to court referring disputes to arbitration, vary with regards to the threshold of discretion granted to the courts. The primary distinction appears to be that Section 8 of the Act leaves no discretion with the court in the matter of refer- ring parties to arbitration whereas Section 45 of the Act grants the court the power to refuse a reference to arbitration if it finds that the arbitration agreement is null and void, inoperative or incapable of being performed. 87 The Supreme Court in World Sport Group (Mauritius) Ltd v MSM Satellite (Singapore) Pte. Ltd. 88 has opined that no formal application is necessary to request a court to refer the matter to arbitration under Section 45 of the Act. In case a party so requests even through affidavit, a court is obliged to refer the matter to arbitration with the only exception being cases where the arbitra- tion agreement is null and void, inoperative and incapable of being performed, thus limiting the scope of judicial scrutiny at the stage of referring a dispute to foreign seated arbitrations. Thus, though Section 8 of the Act envisages the filling of an application by a party to the suit seeking reference of the dispute to arbitration, Section 45 needs only a request for that purpose. Further, Section 45 can only be applied when the matter is the subject of a New York Conven- tion arbitration agreement, whereas Section 8 applies in general to all arbitration clauses falling under Part I of the Act. In Chloro Controls (I) P. Ltd. v. Severn Trent Water Purification Inc. & Ors., 89 the Supreme Court has held that the expression person claiming through or under as provided under Section 45 of the Act would mean and include within its ambit multiple and multi-party agreements. 86. Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre, 2005 (3) ArbLR 1; Korp Gems (India) Pvt. Ltd. v. Precious Diamond Ltd., 2007 (3) ArbLR (3) ArbLR Swiss Timing Limited v. Organizing Committee, Commonwealth Games 2010, Delhi, 2014 (6) SCC (1) SCC

24 Provided upon request only Hence even non-signa- tory parties to some of the agreements can pray and be referred to arbitration. This ruling has widespread implications for foreign investors and parties as now, in certain exceptional cases involving composite transactions and interlinked agreements, even non-parties such as a parent company, subsidiary, group companies or directors can be referred to and made parties to an ICA. II. Enforcement and execution of foreign awards When a party seeking enforcement of a New York Convention award under the provisions of the Act, must make an application to the Court of competent jurisdiction with the following documents i. The original/duly authenticated copy of the award; ii. The original/duly authenticated copy of the agreement; and iii. Such evidence as may be necessary to prove that the award is a foreign award. There are several requirements for a foreign arbitral award to be enforceable under the Act A. Commercial transaction The award must be given in a convention country to resolve commercial disputes arising out of a legal relationship. In the case of RM Invest- ment & Trading v. Boeing, 90 the Supreme Court observed that the term commercial should be liberally construed as having regard to manifold activities which are an integral part of international trade. B. Written agreement The Geneva Convention and the New York Convention provide that a foreign arbitral agreement must be made in writing, although it does not have to be 90. AIR 1994 SC 1136 worded formally or be in accordance with a particular format. C. Agreement must be valid The foreign award must be valid and arise from an enforceable commercial agreement. In the case of Khardah Company v. Raymon & Co. (India), 91 the Supreme Court held that an arbitration clause cannot be enforceable when the agreement of which it forms an integral part is declared illegal. Recently, the Delhi High Court in Virgoz Oils and Fats Pte. Ltd.v National Agricultural Marketing Federation of India has held that a contract containing an arbitration agreement must be signed by all parties to the contract, in order to make the arbitration agreement valid and binding upon the parties. 92 D. Award must be unambiguous In the case of Koch Navigation v. Hindustan Petroleum Corp., 93 the Supreme Court held that courts must give effect to an award that is clear, unambiguous and capable of resolution under Indian law. Under Section 48 of the Act, in case of a New York Convention award, an Indian court can refuse to enforce a foreign arbitral award if it falls within the scope of the following statutory defenses i. the parties to the agreement are under some incapacity; ii. the agreement is void; iii. the award contains decisions on matters beyond the scope of the arbitration agreement; iv. the composition of the arbitral authority or the arbitral procedure was not in accordance with the arbitration agreement; v. the award has been set aside or suspended by a competent authority of the country in which it was made; 91. AIR 1962 SC Virgoz Oils and Fats Pte. Ltd.v National Agricultural Marketing Federation of India, Ex. P. 149/2015 & EA (OS) No. 66/2016] 93. AIR 1989 SC

25 International Commercial Arbitration Law and Recent Developments in India vi. the subject matter of dispute cannot be settled by arbitration under Indian law; or, vii. the enforcement of the award would be contrary to Indian public policy. The term public policy as mentioned under Section 48 (2) (b) is one of the conditions to be satisfied before enforcing a foreign award. The Supreme Court in Renusagar Power Co. Ltd. v. General Electric Co., 94 ( Renusagar ) held that the enforcement of foreign award would be refused on the ground that it is contrary to public policy if such enforcement would be contrary to (i) fundamental policy of India; or (ii) the interest of India; or (iii) justice or morality. Thus by the above decisions, the courts in India have laid down certain threshold which defines public policy for enforcing foreign awards in India. The courts, after the land mark judg- ment, have further narrowed down the meaning of the words public policy in order to give effect to the Act. In Penn Racquet Sport v. Mayor International Ltd. 95,, the petitioner, a company based in Arizona, sought to enforce in India an Interna- tional Chamber of Commerce ( ICC ) award passed in its favor. The respondent, an Indian company, challenged the execution of the award on grounds, inter alia, that the award was contrary to the public policy of India. In a well-reasoned decision, the Delhi High Court, rejected the objections raised by the Indian company and held that the foreign award passed in favor of the American company was enforceable in India. It held that because the award went against the interest of an Indian company was not enough to qualify as working against the public policy of India. However, in Shri Lal Mahal Ltd. v. Progetto Grano Spa 96 ( Lal Mahal ), it was held that enforcement of foreign award would be refused under Section 48(2) (b) only if such enforcement would be contrary to (i) fundamental policy of Indian law; or (ii) the interests of India; or (iii) justice or morality. The wider meaning given to the expression public policy of India occurring in Section 34(2)(b)(ii) in Saw Pipes 97 is not applicable where objection is raised to the enforcement of the foreign award under Section 48(2)(b). The Supreme Court further discussed Phulchand Exports Limited v. O.O.O. Patriot 98 ( Phulchand ), wherein it was accepted that the meaning given to the expression public policy of India in Section 34 in Saw Pipes, must be applied to the same expression occurring in Section 48(2)(b) of the 1996 Act. The Supreme Court concluded that public policy of India used in Section 48(2) (b) has to be given a wider meaning and the award could be set aside, if it is patently illegal does not lay down correct law, and has hence overruled the earlier decisions on this point. On fulfilling the statutory conditions mentioned above, a foreign award will be deemed a decree of the Indian court enforcing the award and thereafter will be binding for all purposes on the parties subject to the award. The Supreme Court has held that no separate application needed be filed for execution of the award. A single application for enforcement of award would undergo a two-stage process. In the first stage, the enforceability of the award, having regard to the requirements of the Act (New York Convention grounds) would be determined. Foreign arbitration awards, if valid, are treated on par with a decree passed by an Indian civil court and they are enforceable by Indian courts having jurisdiction as if the decree had been passed by such courts. 99 Once the court decides that the foreign award is enforceable, it shall proceed to take further steps for execution of the same, the process of which is identical to the process of execution of a domestic award. The Amendment Act seems to have taken into account the findings of the court in pro-arbitration judgments such as Shri Lal Mahal Ltd. vs Progetto Grand Spa by now specifically providing an explanation in Section 48, for the avoidance of all 94. (1994) 2 Arb LR (1) ArbLR 244 (Delhi) (8) SCALE Oil and Natural Gas Corporation Ltd. v. Saw Pipes, AIR 2003 SC (10) SCC Section 49 of the Act 21

26 Provided upon request only doubts, that an award is in conflict with the public policy of India, only if (i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or (ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of morality or justice. III. Appealable orders Under Section 50 of the Act, an appeal can be filed by a party against those orders passed under Section 45 and Section 48 of the Act. How- ever, no second appeal can be filed against the order passed under this Section. These orders are only appealable under Article 136 of the Con- stitution of India ( Constitution ) and such an appeal is filed before the Supreme Court. The Supreme Court in Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd., held that- Out of several issues raised in Jindal Exports Ltd. v. Fuerst Day Lawson Ltd., 101 one was whether a letters patent appeal would lie against an order under Section 50 of the Act wherein a petition seeking execution of an award was dismissed and no appeal was maintainable under the Act. Further, the single judge, under Section 45, refused to refer the parties to arbitration. A letters patent appeal was filed against the impugned order. The matter was later referred to the Supreme Court to clarify whether the appeal was maintainable. The Supreme Court in its decision held In light of the discussions made above, it must be held that no letters patent appeal will lie against an order which is not appealable under Section 50 of the Arbitration and Conciliation Act, 1996 Thus it is clearly understood that an order under Section 45 is only appealable under Article 136 of the Constitution. While a second appeal is barred by Section 50, appeal under Article 136 of the Constitution of India to the Supreme Court has not been taken away. However, Article 136 does not provide a party a right to an appeal; it is a discretion which the Supreme Court may choose to exercise. Thus, where there existed an alternative remedy in the form of a revision under Section 115 of the Civil Procedure Code or under Article 227 of the Constitution before the High Court, the Supreme Court refused to hear an appeal under Article 136 even though special leave had initially been granted (3) ArbLR (2000) 4 RAJ

27 International Commercial Arbitration Law and Recent Developments in India 7. Emerging Issues in Indian Arbitration Laws In the recent past, there has been a lot of enthusiasm on evolving laws of arbitration in India and the emerging issues therein, such as (a) prospective applicability of the Amendment Act; (b) whether two Indian parties can chose a foreign seat of arbitration; (c) whether it is possible to arbitrate a dispute arising over allegations of oppression and mismanagement. I. Prospective applicability of the amendment act There are conflicting decisions of various High Courts. The Madras High Court in New Tripur Area Development Corporation Limited v. M/s. Hindustan Construction Co. Ltd. & Ors., 102 had ruled that the language used in the Section of the Amendment Act only refers to arbitral proceedings and not court proceedings due to deletion of the language in relation to. Section 26 of the Amendment Act is not applicable to the stage post arbitral proceedings. This view has been supported by the division bench of Calcutta High Court in Tufan Chatterjee v. Rangan Dhar AIR 2016 Cal 213; However, the division bench of Delhi High Court in Ardee Infrastructure Pvt. Ltd. v. Anuradha Bhatia has held that the amended provisions would not be applicable to court proceedings initiated postamendments, unless they were merely procedural and did not affect any accrued right. Therefore, if a challenge petition is filed post amendment, it would be governed by the un-amended Section 34 of the Act so long as arbitration was invoked in the preamendment era. 104 II. Conundrum surrounding two indian parties having a foreign seat of arbitration Even though this issue has been addressed by a number of High Courts in the past, there is still no clarity on ability of two Indian parties to choose a foreign seat of arbitration. In Addhar Mercantile Private Limited v. Shree Jagdamba Agrico Exports Pvt. Ltd., 105 the Bombay High Court expressed a view that two Indian parties choos- ing a foreign seat and a foreign law governing the arbitration agreement could be considered to be opposed to public policy of the country. Recently, in the case of Sasan Power Ltd v. North America Coal Corporation India Pvt. Ltd., 106, the Madhya Pradesh High Court opined that two Indian parties may conduct arbitration in a foreign seat under English law. The Madhya Pradesh High Court primarily relied on the ruling in the case of Atlas Exports Industries v. Kotak & Company, 107 wherein the Supreme Court ruled that two Indian parties could contract to have a foreign-seated arbitration; although, the judgment was in context of the 1940 Arbitration Act. Under appeal, although expected, the Supreme Court did not opine on this issue Application No of 2015 in O.P. No. 931 of Section 26 Act not to apply to pending arbitral proceedings: - Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of Section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commenced or on after the date of commencement of this Act 104. Ardee Infrastructure Pvt. Ltd. v. Anuradha Bhatia 2017 SCC Online Del Judgment in Arbitration Petition No. 910/2013 dated June 12, Judgment in First Appeal No. 310/2015 dated September 11, (1999) 7 SCC 61 23

28 Provided upon request only However, one must be wary of the ruling in TDM Infrastructure, 108 wherein the court ruled that two Indian parties could not derogate from Indian law by agreeing to conduct arbitration with a foreign seat and a foreign law. But as TDM Infrastructure was a judgment under Section 11 of the Act, there are questions on its precedential value. 109 III. Arbitrability of oppression and mismanagement cases A landmark judgment on this issue was delivered by the Bombay High Court in Rakesh Malhotra v. Rajinder Kumar Malhotra, 110 wherein the court held that disputes regarding oppression and mismanagement cannot be arbitrated, and must be adjudicated upon by the judicial authority itself. However, in case the judicial authority finds that the petition is mala fide or vexatious and is an attempt to avoid an arbitration clause, the dispute must be referred to arbitration. Arguably, this could have an unintended impact on the prima facie standard in section 8, as amended and introduced by the Amendment Act. The Bombay High Court opined that a petition under Sections 397 and 398 of the Companies Act, 1953 may comprise of conduct of clandestine non-contractual actions that result in the mismanagement of the company s affairs or in the oppression of the minority shareholders, or both. In such cases, even if there is an arbitration agreement, it is not necessary that every single act must, ipso facto, relate to that arbitration agree- ment. Further, the fact that the dispute might affect rights of third parties who are not party to the arbitration agreement renders such dis- putes non-arbitrable. In addition to the above emerging issues, please find enclosed Annexure containing detailed list of our hotlines which cover the analysis of the recent judgments and issues faced in the arbitration regime in India TDM Infrastructure Pvt. Ltd. v. UE Development India Pvt. Ltd., (2008) 14 SCC West Bengal v, Associated Contractors, 2015) 1 SCC Rakesh Malhotra v. Rajinder Kumar Malhotra, (2015) 2 CompLJ 288 (Bom). 24

29 International Commercial Arbitration Law and Recent Developments in India 8. Conclusion A fast-growing economy requires a reliable stable dispute resolution process in order to be able to attract foreign investment. With the extreme backlog before Indian courts, commercial players in India and abroad have developed a strong preference to resolve disputes via arbitration. In spite of India being one of the original signa- tories of the New York Convention, arbitration in India has not always kept up with international best practices. However, the last five years have seen a significant positive change in approach. Courts and legislators have acted with a view to bringing Indian arbitration law in line with international practice. With the pro-arbitration approach of the courts and the Amendment Act in place, there is cause to look forward to best practices being adopted in Indian arbitration law in the near future. Exciting times are ahead for Indian arbitration jurisprudence and our courts are ready to take on several matters dealing with the interpreta- tion of the Amendment Act. 25

30 Provided upon request only Annexure I. Prospective Applicability of Arbitration and Conciliation Amendment Act, 2015 Prospective applicability of Arbitration & Conciliation (Amendment) Act 2015 would be limited to arbitral proceedings and not to court proceedings; Section 26 of the Amendment Act cannot be extended to include post arbitration proceed- ings, when the award is passed before the commencement of the Amendment Act; Separate application needs to be filed to stay enforcement of arbitral award as court pro- ceedings are distinct from arbitral proceed- ings. A. Background The Arbitration and Conciliation Amendment Act, 2015 ( Amendment Act ) has introduced certain amendments to the provisions of the Arbitration and Conciliation Act, 1996 ( Act ) and is deemed to be effective from October 23, However, Section inserted in the newly enacted Amendment Act stipulates that nothing in the Amended Act, shall apply to arbitral proceedings commenced as per Section 21 of the Act, before the commencement of the Amendment Act Section 26 Act not to apply to pending arbitral proceedings: - Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of Section 21 of the principal Act, before the com- mencement of this Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commenced or on after the date of commencement of this Act. B. Introduction and Factual Matrix The Madras High Court ( Madras HC ) in its recent judgment of New Tirupur Area Devel- opment Corporation Ltd. ( NTADCL ) v. M/s Hindustan Construction Co. Ltd. ( HCC ) 112 has dealt with the interpretation and applicability of Section 26 of the Amendment Act. The Madras HC held that Section 26 of the Amendment Act is not applicable to post arbitral proceedings and therefore separate application needs to be filed under Section 36 (2) of the Act as required under the amended provisions to stay enforcement proceedings pending challenge of an arbitral award. Section 36 (2) and (3) as introduced by the Arbi- tration Ordinance, with effect from October 23, 2015 stipulates a condition for filing a separate application along with the Section 34 petition for setting aside the arbitral award to stay the enforcement proceedings. C. Contentions of the Parties NTADCL had filed certain applications under Section 36 (2) of the Act for stay on enforcement of arbitral awards in the on-going petitions for setting aside the arbitral awards dated August 17, 2015 before the Madras HC. The issue before the Madras HC in the present case pertains to inter- pretation and applicability of Section 26 of the Amendment Act to post arbitral proceedings Application No of 2015 in O.P. No. 931 of Section 36 (2) Where an application to set aside the arbitral award has been filed in the Court under section 34, the filing of such an application shall not by itself render the award unenforceable, unless upon a separate application made for that purpose, the Court grants stay of the operation of the award in accordance with the provisions of sub-section (3) hereof; Section 36 (3) Upon filing of the separate application under subsection (2) for stay of the operation of the award, the court may, subject to such conditions as it may deem fit, grant stay of the operation of the award for reasons to be recorded in writing. 26

31 International Commercial Arbitration Law and Recent Developments in India NTADCL had filed its challenge to an arbitral award and contended that since Section 26 of the Amendment Act clarifies that it is not applicable to arbitration proceedings commenced under the Act, there is no requirement to file a separate stay application. By virtue of filing the challenge petition under Section 34 of the Act, the arbitral award automatically becomes unenforceable till such time the challenge petition under section 34 of the Act is disposed of. Further relying on the Supreme Court ruling of Thyssen Stahl Union GMBH v. Steel Authority of India Ltd. 114, NTADCL argued that the require- ment of filing of separate stay application under the amended Section 36 (2) would apply only in relation to arbitral proceedings commenced on or after the date of commencement of the Amendment Act. The Supreme Court in Thyssen held that the expression in relation to arbitral proceedings would also cover court proceedings within its ambit due to the usage of the words in relation to. The judgment was ren- dered in the context of repeal and savings clause. Section 85(2) of the Act is applicable in two limbs which clarifies that provisions of the old act would apply to arbitral proceedings which commenced prior to the Act coming into force unless otherwise agreed by the parties and Act would apply in relation to arbitral proceedings which commenced on or after the Act came into force. The usage of the words in relation to cannot be interpreted in a narrow manner and would include all proceedings including court proceedings. HCC contended that there is a difference between arbitral proceedings and court proceedings and literal interpretation needs to be given to the language of the statute. Accordingly, HCC contended that though provisions of the Amendment Act, would not apply to any arbitral proceedings initiated prior to the commencement of the Amendment Act but nothing prevents the application of the provisions of the Amendment Act to court proceedings initiated after October 23, Section 26 of the Amendment Act provides that it will not be applicable to arbitration proceedings commenced prior to coming into effect of the Amendment Act. D. Judgement and Analysis Based on the comparative study of Section 26 of the Amended Act and Section 85(2) of the Act, the Madras HC held that the legislative intention under Section 85 (2) of the Act was to apply the provisions in relation to arbitral proceedings which commenced before the Act and included court proceedings within its ambit. The court held that the legislative intent of making the provisions of the Amendment Act applicable to court proceedings was clear in view of the following: 1. In section 26, the expression in relation to before arbitral proceedings is deleted. In Thyssen, the Supreme Court interpreting the repeal and savings clause held that the usage of the words in relation to arbitral proceedings threw an ambiguity and could not be interpreted in a narrow manner to mean only pendency of the arbitration proceedings before Arbitrator but would also cover proceedings before court; 2. absence of the expression court proceed- ings in section 26; 3. Insertion of the Section 36(2), which in the facts of this particular case, specifically provides for filing a separate application to stay the enforcement of the award. The Madras HC held that the interpretation of Section 26 cannot be extended to include post arbitral proceeding (including court proceed- ings), even where the award has been passed before the commencement of the Amendment Act. Section 36 (2) & (3) have been inserted for a specific purpose to ensure that an application challenging the award does not automatically render the award unenforceable but a separate application is required to be filed to stay enforcement proceedings. These sections are applicable to post arbitral proceedings. The procedure to be followed dur- ing the stage of arbitral proceedings and after the award are distinct. Court proceedings are not arbitral proceedings. Therefore the Madras HC held that the applicability of the (9) SCC

32 Provided upon request only provisions of the Amendment Act should be read with the new provisions (Section 26 read with amended Section 36 (2) of the Act). Interestingly the applicability of Amendment Act has been considered by the Calcutta High Court and contrary decision has been passed. The Calcutta High Court in the case of Electro Steel Casting Limited v. Reacon (India) Pvt. Ltd. 115 while explaining the application of Section 26 on arbitral proceedings, held that where arbitration proceedings commences before the commencement of Amendment Act, the provisions of the Act would apply, and enforcement of the award would be stayed automatically upon the filing of application for setting aside an award. This judgment deals only with the scenario of post arbitral proceedings however the ruling may have a much wider impact in case of other types of court proceedings (interim reliefs, seek- ing evidence, appeals) initiated post October 23, 2015 in cases where arbitration proceedings may have commenced prior to coming into force of the Amendment Act. There will be two set of laws applicable in such cases with no clarity on the practical implementation of the different regimes to arbitral and court proceedings. Payel Chatterjee, Moazzam Khan & Vyapak Desai You can direct your queries or comments to the authors 115. Application No of 2015 decided on January 14,

33 International Commercial Arbitration Law and Recent Developments in India II. Two Indian Parties Opting for Foreign- Seated Arbitra- tion: No Bar? Madhya Pradesh High Court upholds arbitration agreement mandating two Indian Parties to take recourse to a foreign-seated arbitration with foreign substantive law; Holds that the resultant award would be a foreign award, as envisaged under Part II of the Arbitration & Conciliation Act, 1996; This is a step forward in the longstanding debate on whether arbitration proceedings between two Indian entities can be seated in a foreign country. A. Background The Madhya Pradesh High Court ( Court ) in its recent decision in Sasan Power Ltd v. North America Coal Corporation India Pvt Ltd 116 has held that two Indian parties may conduct arbi- tration in a foreign seat under English law. The Court relied upon an earlier decision of a Division Bench of the Supreme Court of India ( Supreme Court ) in Atlas Exports Industries v. Kotak & Company 117 ( Atlas Exports ) wherein the Supreme Court, under the Arbitration Act, 1940 ( 1940 Act ), had held that it was not against the public policy of India when two Indian parties contract to have a foreign-seated arbitration. B. Factual Matrix Sasan Power entered into an association agreement with North American Coal Corporation-US ( NACC-US ) in 2007 ( Agreement ). The Agreement, inter alia, provided for resolution of disputes by way of arbitration to be administered by ICC in London, England, under laws of the United Kingdom. In 2011, NACC-US assigned its rights, liabilities and obligations under the Agreement to the Respondent - North America Coal Corporation India Pvt Ltd. ( NACC-India ) by way of an Assignment Agreement. Interestingly, whilst an assignment to NACC-India was conducted, it appears that the obligations and liabilities of NACC-US under the Agreement continued. In 2014, NACC-India terminated the Agree- ment and filed a request for arbitration claiming compensation of INR 1,82,59,301. Sasan Power filed its objection to this request for arbitration. Sasan Power, thereafter, filed a suit before the District Court and sought an anti-arbitration injunction. The injunction was granted by the District Court. A second request for arbitration was filed by NACC-US before the ICC. Sasan Power filed a second suit challenging the request for arbitration filed by NACC-US. NACC-India filed applications for rejection of plaint under Order VII Rule 11 of the Code of Civil Procedure, 1908 ( Code ) read with Section 45 of the Arbitration & Conciliation Act, 1996 ( Act ) and vacation of the anti-arbitration injunction granted by District Court ( Applica- tions ), before the District Court. The District Court allowed the Applications moved by NACC-India and dismissed the suit filed by Sasan Power. Consequently, Sasan Power filed this appeal under Section 96 of the Code. Whilst this judgment provides certain answers in the longstanding and yet inconclusive debate on the issue of whether two Indian parties can seat their arbitration abroad, it also throws up larger questions First Appeal 310 of (1999) 7 SCC 61 29

34 Provided upon request only C. Issues The Court, amongst other things, considered: 1. Whether the appeal filed by Sasan Power was maintainable in light of Section 50 of the Act? 2. Whether two Indian parties could choose to seat their arbitration in a foreign country? D. Gist of Arguments Sasan Power contended that TDM Infrastructure did not permit two Indian parties to derogate from Indian law by agreeing to conduct arbitration with a foreign seat and a foreign substantive law. Further, reliance on Atlas Exports was erroneous since it was a judgment under the 1940 Act and only the Act would be applicable to the present case. The mandate of Section 45 of the Act would not be attracted since an arbitration clause contemplating a foreign seated arbitration between two Indian parties was invalid; hence Applications based on such a void, null and inoperative arbitration clause would not be maintainable. NACC-India argued that that no appeal laid against an order passed under Section 45 of the Act. Further, it was argued that TDM Infrastruc- ture was limited in scope to appointment of an arbitrator during proceedings under Section 11(6) of the Act, where the seat of arbitration was India. The provisions of Section 28(1) of the Act were not applicable in the present situation since the seat of arbitration was England. Atlas Exports, wherein it was stated that by virtue of the Exception 1 to Section 28 of the Contract Act, two Indian parties could have a foreign seated arbitration; would apply. Given that Atlas Exports was passed by a two- judge bench, it would be considered precedent even assuming TDM Infrastructure were to apply not only in cases related to Section 11(6) of the Act. E. Highlights of the Judgment The Court saw no reason to interfere with the impugned judgment which referred the parties to arbitration under Section 45 of the Act and dismissed the appeal, while providing the following reasons: 1. The Court observed that only orders refusing to refer parties to arbitration could be appealed as per Section 50 of the Act. 2. The Court, while, placing reliance on the judgment in Atlas Exports, observed that Section 28 of the Indian Contract Act, 1872 read with the Exception 1 would not be a bar to a foreign seated arbitration. Further, it was observed that when two Indian parties had willingly entered into an agreement in relation to arbitration, the contention that a foreign seated arbitration would be opposed to Indian public policy was untenable. 3. The Court stated that the principle laid down in Atlas Exports (that was by a larger bench than TDM Infrastructure) would, in light of the decision in Fuerst Day Lawson Ltd v. Jindal Exports 118, wherein it was observed by the Supreme Court that there was not much difference between provi- sions of the Act and 1940 Act; be binding precedent in relation to the issue at hand. 4. The Court noted that in TDM Infrastructure the Supreme Court had clarified by way of an Official Corrigendum that: It is, however, made clear that any findings/ observations made hereinbefore were only for the purpose of determining the jurisdiction of this Court as envisaged under Section 11 of the 1996 Act and not for any other purpose. 5. The Court observed that the scheme of the Act indicated that the classification of an arbitration as an international commercial arbitration depended only on the national- ity of the parties, which is only relevant for the appointment arbitrators as contem- plated under Section 11 of the Act. 6. The Court opined that the nationality of the parties would not influence the applicability of Part II of the Act, the applicability of which would flow depending on the seat of arbitration (2011) 8 SCC

35 International Commercial Arbitration Law and Recent Developments in India 7. The Court, relying upon Enercon (India) Private Limited v. Enercon GMBH 119 and Chatterjee Petroleum v. Haldia Petro Chemicals 120, was of the opinion that where the parties had agreed to resolve their disputes through arbitration, the courts were to give effect to the intention of the parties and interfere only when the agreement was null or void or inoperative. 8. The Court observed that once parties by mutual agreement had agreed to resolve their disputes by a foreign-seated arbitration, Part I of the Act would not apply. Further where the agreement fulfilled the requirements of Section 44, provisions of Part II of the Act would apply. It was held that a court, under Section 45, would have to refer parties to arbitration where it was found that the agreement was not null or void or inoperative. F. Analysis This judgment interprets the scheme of the Act, whereby it clarifies that applicability of Part II of the Act is not based on the nationality of the parties but on the basis of where the arbitration is seated. If arbitration is seated outside India, irrespective of the nationality of the parties involved, it will be considered to be a foreign award. The issue before the court was whether two Indian parties could seat an arbitration in a foreign country with foreign law as the substantive law governing the dispute. The concern with allowing the same has been the permissibility for Indian parties to be governed by laws other than the laws of India. The consequence of such an act, allowing Indian parties to expressly contract out of Indian law, being arguably against Indian public policy; is a matter of concern since it would impact the enforceability of the award. The present judgment applies Atlas Exports, while restricting the applicability of TDM Infrastructure to issues related to Section 11(6) of the Act, to reiterate the legality of two Indian parties choosing to seat their arbitration in foreign country. An argument was raised that such arbitrations would be limited by the restriction contained in Section 28(1) of the Act and parties would not be permitted to choose a foreign substantive law when only parties having Indian nationality were involved. The court clarified the same stating that when the seat of arbitration is outside India, the conflict of law rules of the country in which the arbitration takes place would have to be applied and it would not be an arbitration under Part I of the Act. That being said, the restrictive interpretation of TDM Infrastructure adopted by the Court may, in effect, be a reading down of a judgment that categorically states that Indian parties cannot derogate from Indian law, as a matter of public policy. The resultant issues that it raises, needing further consideration, are (i) whether Indian parties would be allowed to choose a foreign substantive law; and (ii) whether, as held in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc 121, by choosing a foreign seat the non- derogable substantive provisions of Part 1 would not be available to parties, thereby denying access to Indian courts. This issue may require greater clarity from the Supreme Court in light of a recent decision of the Bombay High Court in M/s Addhar Mer- cantile Private Limited v. Shree Jagdamba Agrico Exports Pvt Ltd 122 which interpreted a vague arbitration clause which provided for Arbitration in India or Singapore and English law to be apply between two Indian parties. The court found that the clause to mean arbitra- tion in India with Indian law applicable taking a view that arbitration would have to be conducted in India and making English law applicable would make the clause pathological. However, the Court also noted that position was qualified with a statement that if the seat of arbitration would have been at Singapore, certainly English law will have to be applied. It is pertinent to note that this was in relation to an application for appointment of arbitrators under Section 11, therefore, the Bombay High Court was bound by the decision of the Supreme Court in TDM Infrastructure (5) SCC ARBLR 456 (SC) 121. (2012) 9 SCC Arbitration Application 197 of

36 Provided upon request only Should this judgment be upheld, another poten- tial issue that may arise is that since the arbitra- bility of a dispute is determined by the law of the seat, it would not be unimaginable for Indian parties to refer disputes, which would otherwise not be arbitrable in India, to binding arbitration merely by choosing foreign seat. In the meanwhile, this judgment would come as some relief for Indian companies (especially subsidiaries of foreign companies) that may have unwittingly entered into arbitration agreements providing for a foreign seat and a foreign substantive law, with other Indian parties; perhaps unaware of the complexities surrounding this issue. At the very least, enforcement of such award still remains untested and may prove to be a chal- lenge. In light of the contentious point of law and the various issues, it is expected that this matter may find its way before the Supreme Court in due course. The judgment of the Supreme Court is eagerly awaited in this respect. -International Dispute Resolution and Arbitration Practice You can direct your queries or comments to the authors 32

37 International Commercial Arbitration Law and Recent Developments in India III. Supreme Court Upholds Arbitration for a Pathologi- cal Arbitration Clause The Supreme Court: reasonably and meaningfully construes a pathological arbitration clause, ensuring that the arbitral process is not derailed; acknowledges that the Court cannot ques- tion the appointment of a sole arbitrator by the SIAC Chairman and the partial award passed by the sole arbitrator on the issue of jurisdiction in proceedings under Section 11(6) of the Act; sends out a strong pro-arbitration signal; A. Introduction The Supreme Court of India ( Court ), in the case of Pricol Limited ( Pricol ) v. Johnson Controls Enter- prise Ltd. ( Johnson ) & Ors. 123 once again demon- strated its pro-arbitration approach by reasonably and meaningfully construing a pathological arbi- tration agreement. Further, the Court held that (a) appointment of a sole arbitrator by the Singapore International Arbitration Centre ( SIAC ); and (b) a partial award having being passed by the arbitral tribunal on the issue of jurisdiction; cannot be examined in a petition under Section 11(6) of the Arbitration Act. B. Facts The parties entered into a Joint Venture Agreement on December 26, 2011( JVA ). The JVA contained an arbitration agreement which provided as under Arbitration Case (Civil) No. 30 of 2014; In case of such failure, the dispute shall be referred to sole arbitrator to be mutually agreed upon by the Parties. In case the parties are not able to arrive at such an arbitrator, the arbitrator shall be appointed in accordance with the rules of arbitration of the Sin- gapore Chamber of Commerce. The JVA also provided that (a) the arbitration proceedings would be held at Singapore; and (b)it would be governed and construed in accordance with the laws of India. Disputes arose between the parties and since they were unable to agree on a sole arbitrator, Johnson, construing the said reference to the Singapore Chamber of Commerce to be SIAC, moved SIAC for the appointment of an arbitra- tor. SIAC, exercising its powers under Section 8(2) 124 and 8(3) 125 of the Singapore Interna-tional Arbitration Act ( IAA ), appointed one Mr. Steven Lim as a sole arbitrator. In the prelim- inary meeting, Pricol participated and indicated that it would be challenging the jurisdiction of the sole arbitrator. After exchange of written submissions, a hearing on the question of juris- diction was held in Singapore. The sole arbi- trator passed a partial award holding that the appointment made by the SIAC under the IAA is valid as the parties had expressly agreed that Singapore would be the seat of Arbitration. The main contentions of Pricol were that the rights of the parties are to be governed by the laws of India; therefore, in the absence of any contrary intention, even the arbitration agree- ment would be governed by Indian Law. The seat of arbitration continued to be India inas- much as the parties had only expressed Singa- pore to be the venue for proceedings. Part 1 of the Arbitration & Conciliation Act, 1996 ( Act ), would continue to apply and the procedural law governing the conduct of the arbitration would be the law prevailing in India. Even assuming that the seat of arbitration was held to be Singapore, the (2) The Chairman of the Singapore International Arbi- tration Centre shall be taken to have been specified as the authority competent to perform the functions under Article 11(3) and (4) of the Model Law; (3) The Chief Justice may, if he thinks fit, by notification published in the Gazette, appoint any other person to exercise the powers of the Chairman of the Singapore Inter- national Arbitration Centre under subsection (2). 33

38 Provided upon request only rights of the parties are to be governed by Indian law. It is only the curial law of Singapore that would apply to regulate the proceedings after the appointment of the Arbitrator and till the passing of the award. Pricol argued that the appointment of the sole arbitrator by SIAC was without jurisdiction and the Court ought to proceed to exercise its powers under the Act. Johnson contended that the parties had agreed that the seat of arbitration would be Singapore and while substantive law would be Indian law, the appointment of the arbitrator would be in terms of the arbitration agreement. Pleading a reasonable understanding of the arbitration agreement, the Respondents argued that in light of the Singapore Chamber of Commerce not being an Arbitral Institution, the real intention of the parties was to approach the SIAC for appointment of an Arbitrator in the event of failure of a mutual agreement. Johnson also pointed out Pricol s conduct of dragging its feet as well as the fact that a partial award had already been passed by the arbitrator on the issue of jurisdiction. C. Judgment Giving a reasonable and meaningful construc- tion to a pathological arbitration agreement, the Court held that reference to Singapore Chamber of Commerce, which was admittedly not an Arbitration institution having its own rules for appointment of Arbitrators, actually meant SIAC. Without dealing with Pricol s contentions regarding the issue of the procedural law that would govern the conduct of arbitration, the Court noted that the proceedings before the SIAC were first in time and had resulted in the appointment of a sole arbitrator as well as the partial award on the issue of jurisdiction. The Court acknowledged that the appointment of the sole arbitrator by SIAC and the partial award on the issue of jurisdiction cannot be questioned in proceedings under Section 11(6) of the Act. If that were done, it would amount to the Court sitting in appeal over the decision of SIAC as well as the partial award, which would be wholly inappropriate D. Analysis In the present case, the Court has undertaken a reasonable and meaningful construction of a pathological arbitration agreement. The real intention of parties to arbitrate, not withstanding the fact that it was under a non-existent institution, has been given due recognition and upheld. In doing so, the Supreme Court effectively ensured that the arbitral process was not derailed and parties would not spend time, effort and money in litigating further on this issue. The Court has also, rather significantly, acknowledged that any order passed by it would, in effect, amount to it sitting in appeal over the decision of SIAC and/or the partial award passed by the sole arbitrator, which would be inappropriate. While this approach bodes well for the litigant who wants to arbitrate, it once again reminds us of the care that is imperative whilst drafting an arbitration agreement so that such needless issues are not permitted to fester. An arbitration agreement must be well-drafted and must not permit mischievous interpretation. Siddharth Ratho, Sahil Kanuga & Vyapak Desai You can direct your queries or comments to the authors 34

39 International Commercial Arbitration Law and Recent Developments in India IV. Bombay High Courts Rules on Arbitrability of Oppres- sion and Mis- Management Issues Bombay High Court holds that oppression and mis-management claims fall outside the purview of an arbitration proceeding. Petitions filed before Company Law Board if malafide, vexatious or oppressive and is merely a dressed up to avoid arbitration, then it can be referred to arbitration. Company Law Board is bound by the orders of a foreign court if ruling on the same issue and not entitled to take its own view, subject to complying with principles under Section 13 of Civil Procedure Code. The Bombay High Court recently in the case of Rakesh Malhotra v. Rajinder Kumar Malhotra 126 held that maintainability of oppression and mis-management claims by minority shareholders as referred under Section 241 read with Section 242 of the Companies Act, 2013 or Sections 397 and 398 read with Section 402 of the Companies Act, 1956 ( Companies Act ), would not be affected by the existence of an arbitration clause. Allegations of oppression and mismanagement fall outside the purview of an arbitration agreement, a sine qua non for an arbitration proceeding. A. Facts Supremax Group, world s second largest man- ufacturer of razor blades and allied products, was run by Rajindra Kumar Malhotra ( RKM/ Respondent ) and his family members. Major portion of the business was controlled by RKM and his wife along with his younger son Rajiv and his wife Kunika, who had small share- holdings therein. There are and were several companies in this group, both in India as well as overseas. Following a restructuring in 2008 all the assets, business and plants that belonged to Indian companies were transferred to a newly incorporated company under the control of Rakesh Malhotra ( Appellant ), RKM s elder son. However, RKM along with his wife and younger son continued to hold some equity in those Indian companies. During the course of restructuring, a Subscription and Shareholding Deed ( SSD ), Supplementary Deed along with other business agreements, were executed that gave Appellant the sole authority to represent the Respondent in all transactions. The Appellant also became the sole bank account operating authority and deployed funds received by Indian companies held by RKM to, inter-alia, guarantee bank loans and other facilities to the newly formed com- pany under his control. The SSD contained an arbitration clause providing for resolution of disputes in Geneva under the rules of London Court of International Arbitration. By virtue of the restructuring, all the directors of the RKM- held Indian companies became employees of the entities controlled and held by the Appellant. Subsequently, no information was divulged to RKM related to funds deployed or other liabil- ities incurred due to Appellant s actions. RKM along with others, to prevent diversion of funds, filed several company petitions before Company Law Board ( CLB ) at different locations u/s 397, 398 read with S. 402 of the Companies Act, alleging oppression and mis-management, seeking wide orders of removal and appointment of directors, setting aside the re-structuring. During the same period, Appellant obtained an ex-parte anti-suit injunction from the Commercial Court of Queen s Bench Division of the Royal Courts of Justice ( UK Court ) restraining Respondent from proceedings before CLB, which was subsequently over-turned as proceedings before CLB related to post-restructuring dealings and transactions. The Appellant thereafter filed applications before CLB seeking orders to refer the dispute to arbitration under S. 45 of the Arbitration & Conciliation Act, 1996 ( Act ) [2015] 53 taxmann.com 135 (Bombay) 35

40 Provided upon request only The application was dismissed and CLB held that no such reference could be made to arbitration in case of allegations of oppression and mis-man- agement. CLB also appointed an independent Observer-cum- Facilitator on the Board. The pres- ent dispute arose from a group of appeals filed against the CLB order on the issue whether dis- putes arising out of SSD should be referred to arbitration. B. Issues The primary issue before the Bombay High Court ( Bombay HC ) was whether disputes under Section 397 and 398 read with S. 402 of the Companies Act can ever be referred to arbitration. While deciding the same, the Bombay HC also looked into the aspect whether decisions of foreign court ( UK Commercial Court ) was binding on CLB. C. Contentions i. Appellant s Arguments The Appellant contended that there should not be any blanket embargo on reference to arbitra- tion. If a dispute falls within the realm of an arbitration agreement, then such reference must be made regardless of the kind of relief arbitral tribunal can provide. The Appellant relying on Sec- tion 45 of the Act submitted that it makes no reference to relief or power but only to the dispute. The Appellant also submitted that CLB is not bound by the decision of UK Commercial Court as it was contrary to the Supreme Court decision in Chloro Controls India (P.) Ltd. v. Severn Trent Water Purification Inc. 127 which held that in case of several agreements constituting a composite transaction, the court may for an effective and complete implementation make reference to arbitration even of the disputes existing between signatory or non-signatory parties. Therefore, order passed by CLB that current disputes are not covered by arbitration is not conclusive under S. 13(c) of CPC. Further with respect to applicability of Sections 397 and 398 and their allied sections it was submitted that they do not confer exclusive jurisdiction on CLB to exclude the jurisdiction of the Civil Court. It is therefore wholly illogical to say that an action seeking an alternate remedy under Sections 397 and 398 by the same party under same agreement cannot be referred to arbitration, although, had that very party come to a civil court, the reference to arbitration would have been inevitable. ii. Respondent s Arguments The Respondent submitted that any dispute invoking the powers under Section 402 of the Companies Act is inherently incapable of being referred to a private dispute resolution tribunal. There need not be an express ouster or bar. How- ever, the test must be in relation to the source of power and not on how the relief is casted or split up. Equally it is not possible to refer some reliefs to an arbitral resolution while retaining others for a determination by the CLB. The Respondent relied on several past deci-sions 128 and submitted that issue arises whether the source itself permits any such reference to a private dispute resolution. Jurisdiction of CLB under Sections 397 and 398 is statutory and therefore it cannot be ousted by an arbitration clause. The Respondent contended that disputes before CLB were outside the purview of arbitra- tion clause in the SSD as it involved different parties, therefore the ruling of the UK Court was conclusive and binding, thus the Appellant could not re-agitate the same issue in another forum, having lost in the one of his own choice. D. Judgment and Analysis The Bombay HC dismissed the appeal dealing with the following issues [2013] 1 SCC Surendra Kumar Dhawan v. R. Vir, [1977] 47 Comp Cas 276 (Delhi); See also Manavendra Chitnis v. Leela Chitnis Studios P. Ltd., 1985 (58) Comp Cas

41 International Commercial Arbitration Law and Recent Developments in India i. Case of Oppression and Mismanagement not to be referred to arbitration The Bombay HC while examining the issue of oppression and mis-management before an arbitral tribunal, analysed all the provisions of the Companies Act in relation to oppression and mismanagement, held they are not capable of being referred to arbitration, having regard to the nature and scope of the power invoked. S. 8 and 45 of the Act use the expression a judicial authority, when seized of an action in a matter in respect of which the parties have made an agreement (S. 45), and a judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement (S. 8). The operative word here appears to be matter. Therefore, the matter must be the one in respect of which there is an arbitration agreement in order to be referred to arbitration. In an oppression and mismanagement action before the CLB, the matter invokes CLB s statutory powers under those sections including S. 402 and not exercisable by a civil court. The civil courts are vested with the power to entertain an action in oppression and mis-management, however, not the same as vested with CLB under S. 402 of the Companies Act. Therefore, disputes in oppression and mis-management cases are those such that demand the exercise by the CLB of its wide powers under S. 402 and not those that can be exercised by a civil court, certainly not by an arbitral forum. Several precedents were considered and were referred to analyse powers of CLB in an oppres- sion and mis-management cases and whether it was in the nature of an action in rem. The Bombay HC relying on past decisions including Haryana Telecom Ltd. v. Sterlite Industries (India) Ltd. 129, which held that though petition for winding up is a matter in rem, no agreement between parties can vest an arbitral panel with such power of winding up. Similarly, no arbi- tration agreement can vest an arbitral tribunal with the powers to grant the kind of reliefs against oppression and mismanagement that the CLB might provide. The Bombay HC held 129. [1999] 2 SCL 156 (SC) that if CLB s plenary and expansive powers are properly invoked and petitions are not mala fide, oppressive, vexatious or an attempt at dressing up to evade an arbitral clause, then a narrowly tailored arbitral proceeding or merely the exist- ence of an arbitration agreement is not sufficient to capture the broad and far reaching reliefs that can likely be sought by parties in such cases. CLB is vested with the powers to refer disputes to arbitration if petition is mischievous, vexatious and malafide. ii. Decision of a foreign court is binding on the CLB The Bombay HC held that the decision given by UK court, on the issue whether petition before CLB was covered by the aforementioned arbitration clause, was not covered by any of the exceptions to S. 13 of Code of Civil Procedure, 1908 ( CPC ). Therefore, it bound the CLB, and the CLB was not, as it held, free to take its own view. That being so, there is no question of any reference being made to arbitration. Conclusive and binding nature of judgment is decided based on the issues before it. The Bombay HC held that UK Court decision was on the same issues which were before the CLB and therefore the reasoning given by the CLB for not being bound by the orders of the foreign court were untenable. D. Conclusion This ruling marks an important step in clarifying the issues related to overlap of arbitration proceedings and maintainability of oppression and mis-management claims before CLB. The judgment has thrown light upon the limita tions of an arbitral tribunal to entertain cases of oppression and mis-management. However, at the same time it has clarified that CLB is bound by the orders made by a foreign court if ruled on the same issue. Thus, from the commercial perspective, parties should be mindful at the stage of drafting their arbitration clause and depending on the relief sought, should approach the correct forum as both are mutually exclusive. Payel Chatterjee & Vyapak Desai You can direct your queries or comments to the authors 37

42 Provided upon request only V. Allegations of Fraud not a Bar to Foreign Seated Arbitration Supreme Court held that allegation of Fraud is not a bar to refer parties to foreign seated arbitrations; The law does not require a formal applica- tion to refer parties to arbitration; If an arbitration agreement exists and a party seeks reference to a foreign seated arbitration, court is obliged to refer the par- ties to arbitration; The only exception is in cases where the court finds the arbitration agreement to be null and void or inoperative or incapable of being performed. A. Introduction In a landmark decision the Supreme Court of India has expressly removed allegations of fraud as a bar to refer parties to foreign seated arbitrations. The Supreme Court by its decision dated January 24, 2014 in World Sport Group (Mauritius) Ltd ( WSG ) v. MSM Satellite (Singapore) Pte. Ltd ( MSM ) set aside the judgment of the Division Bench of the Bombay High Court ( Bombay HC ) in MSM Satellite (Singapore) Pte. Ltd v. World Sport Group (Mauritius) Ltd dated September 17, 2010 ( Impugned Judgment ). Previously as the law stood, allegations of fraud were arguably not arbitrable under Indian Law. The Supreme Court has now clarified the position, removing another possible hurdle that one could face while arbitration against Indian Parties outside India. B. Background The dispute pertained to obtaining media rights for the Indian sub-continent from the Board of Cricket Control of India. In this regards WSG and MSM entered into a Deed for Provision of Facilitation Services (Facilitation Deed ), where under MSM was to pay WSG 4,250,000,000 as facilitation fees. The Facilitation Deed was governed by English Law and parties had agreed to settle their disputes through arbitration before the International Chamber of Commerce ( ICC ), with a seat of arbitration in Singapore ( Arbitration Agreement ). Eventually, MSM rescinded the Facilitation Deed alleging certain misrepresentations and fraud against WSG and initiated a civil action before the Bombay HC for inter alia a declara- tion that the Facilitation Deed was void an for recovery of sums already paid to WSG. WSG filed a request for arbitration with ICC and ICC issued notice to the MSM to file its answer. In response MSM filed initiated a fresh action seeking an anti-arbitration injunction against WSG from proceeding with the ICC arbitration. C. MSM s Case It was MSM s case that since the Facilitation Deed, which contained the Arbitration Agreement, in null and void on account of the misrepresentation and fraud of WSG, the Arbitration Agreement itself was void and could not be invoked. D. WSG s Case It was WSG s case unless the Arbitration Agreement, itself, apart from the Facilitation Deed, is assailed as vitiated by fraud or misrepresentation; the Arbitral Tribunal will have jurisdiction to decide all issues including validity and scope of the arbitration agreement. E. Impugned Judgment The Bombay HC had, in the impugned Judg- ment, held that disputes where allegation of fraud and serious malpractice on the part of a party are in issue, it is only the court which can decide these issues through furtherance of judicial evidence by the party and these issues cannot be properly gone into by the arbitrator, thereby granting the anti-arbitration injunction sought for. This decision of the Bombay HC was the only judgment where an Indian Court 38

43 International Commercial Arbitration Law and Recent Developments in India had held allegations of fraud as a bar to foreign seated arbitrations, though such findings were prevalent in the sphere of domestic arbitrations. F. Judgment of the Supreme Court The Supreme Court, by re-enforcing its pro-arbi- tration approach, set aside the Impugned Judgment and held that only bar to refer parties to foreign seated arbitrations are those which are specified in Section 45 of the Indian Arbitra- tion and Conciliation Act, 1996 ( Act ) i.e. in cases where the arbitration agreement is either (i) null and void or (ii) inoperative or (iii) incapable of being performed. While explaining the term null and void, the Supreme Court clarified that the arbitration agreement being a separate agreement does not stand vitiated if the main contract is terminated, frustrated or is voidable at the option of one party. The Supreme Court held that a court will have to see in each case whether the arbitration agreement is also void along with the main agreement or whether the arbitration agreement stands apart from the main agreement and is not null and void, thus accepting the submissions of WSG. The Supreme Court interpreted the terms inop- erative and incapable narrowly, adopting the interpretation of the international authors of these terms in Article II (3) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 ( New York Conven- tion ). The expression inoperative is under- stood to cover situations where the arbitration agreement has ceased to have effect such as where parties may have by conduct or otherwise revoked the arbitration agreement. Further, incapable of being performed covers situations where the arbitration cannot be effectively set into motion and covers the practical aspects of the prospective arbitration. Accordingly, the court held that arbitration agreements do not become inoperative and incapable of being per- formed where allegations of fraud have to be inquired into and the court cannot refuse to refer the parties to arbitration as provided in Section 45 of the Act. The Supreme Court also opined that no formal application is necessary to request a court to refer the matter to arbitration under Section 45 of the Act and in case a party so requests even through affidavit, a court is obliged to refer the matter to arbitration with the only exception being cases where the arbitration agreement is null and void, inoperative and incapable of being performed, thus limiting the scope of judi- cial scrutiny at the stage of referring a dispute to foreign seated arbitrations. G. Analysis This is a welcome decision for foreign parties having arbitration agreements with Indian counter-parts. Before this judgment was deliv- ered, Indian parties were increasing challenging arbitrability of disputes where allegations of fraud were made against them, relying of the Supreme Court s own decision in the case of N. Radhakrishnan v. Masestro Engineers & Ors 130 ( N Radhakrishnan ). By this decision the Supreme Court has limited the applicability of its decision in N Radhakrishnan to domestic arbitrations hence clarifying that, allegations of fraud against a party or consequential rescission of the main agreement is not a bar on arbitrabil- ity of disputes between the parties under Indian Law, when the seat of arbitration is outside India. Ashish Kabra, Prateek Bagaria & Vyapak Desai You can direct your queries or comments to the authors 130. (2010) 1 SCC 72 39

44 Provided upon request only VI. Enforcement of Foreign Awards Becomes Easier: Patent Illegality Removed from the Scope of Public Policy The ever-growing judicial support to interna- tional commercial arbitration and the seminal shift in judicial mindset is now more than estab- lished from yet another landmark ruling of the apex court of the land in Shri Lal Mahal Ltd. v. Progetto Grano Spa 131, where the court has gone ahead to in fact overrule its own decision passed less than two years back. The Supreme Court while dealing with objections to enforceability of certain foreign awards on the grounds that such awards are opposed to the public policy of India, has significantly curtailed the scope of the expression public policy as found under Section 48(2)(b) of the Arbitration and Concilia- tion Act, 1996 ( Act ) and thereby have limited the scope of challenge to enforcement of awards passed in foreign seated arbitrations. The judgment unmistakably establishes a dif- ference between the scope of objections to the enforceability of a foreign award under Section of the Act and a challenge to set aside an award altogether under section of the Act Civil Appeal No of 2013 arising from SLP(c) No of Conditions for enforcement of foreign awards. (2)Enforcement of an arbitral award may also be refused if the court finds that- (a)the subject -matter of the difference is not capable of settlement by arbitration under the law of India; or (b)the enforcement of the award would be contrary to the public policy of India. Explanation: Without prejudice to the generality of clause (b), it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption Application for setting aside arbitral award. (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3). (2) An arbitral award may be set aside by the Court only if (a) (b) the Court finds that (i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or (ii) the arbitral award is in conflict with the public policy of India. Explanation: Without prejudice to the generality of sub-clause (ii), it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced of affected by fraud or corruption or was in violation of section 75 or section 81. A. Facts The dispute arose out of a contract between an Indian seller ( Appellant ) and a foreign buyer ( Respondent ) whereby the Appellant had agreed to supply certain type of wheat to the Respondent. The Respondent had alleged that the wheat supplied was not of the quality as agreed to by the parties and as a result it had suffered significant damages. The matter was referred to the Arbitral Tribunal of the Grain and Feed Trade Association, London ( GAFTA ), which passed an award in favour of the Respondent. Thereafter, the Appellant carried such award in appeal before the Board of Appeal of GAFTA, which also passed the award in favour of the Respondent. The awards were then challenged by the Appellant before the courts in U.K., where again the awards were upheld. The Respondent then sought the enforcement of the awards in India in accordance with the provisions of the Act, to which the Appellant took objection by asserting that the award is against the public policy of India and accord- ingly enforcement of such awards in India ought to be refused. The Appellant contended the award to be opposed to public policy of India on the ground that such award was contrary to clearly terms of the contract entered into by the parties. The questions pertained to the certification provided by the expert regarding the quality of the wheat and whether such certification was in the form which was agreed by the parties. The Respondent on the other hand argued that the matters as raised by the Appellant were questions regarding appreciation of evidence and were questions of fact which could not be gone into at the stage of challenge to enforcement of a foreign award under section 48 of the Act. B. Issue Thus, issue arose regarding the scope and interpretation of the expression public policy which is provided as a ground to refuse enforcement of a foreign award under section 48(2)(b) of the Act and whether the enforcement of the awards could be refused on the grounds as alleged by the Appellant. 40

45 International Commercial Arbitration Law and Recent Developments in India The issue further was whether the expression public policy shall have the same meaning and purport under section 34(2)(b)(ii) and section 48(2)(b) of the Act? C. Judgment As the question revolved around the interpreta- tion of the scope of the expression public policy the Supreme Court considered the following three landmark rulings in this regard: 1. Oil and Natural Gas Corporation Ltd. v. Saw Pipes Ltd. 134 ( ONGC ); 2. Phulchand Exports Limited v. O.OO. Patriot 135 ( Phulchand ); and 3. Renusagar Power Co. Limited v. General Elec- tric Company 136 ( Renusagar ). The Supreme Court overruling the judgment in Phulchand held that the meaning of the expression public policy under Section 48 was narrower as compared to section 34. Relying on Renusagar, the Court made a highly impor- tant observation that there is a fine distinction between applying the rule of public policy in a matter governed by domestic laws and a matter involving conflict of laws as is the case in majority of international commercial arbitrations. The court observed that the applicability of the doctrine of public policy is comparatively limited in cases involving conflict of laws and matters involving foreign element such as a foreign seated arbitration, the courts would not be easily inclined to invoke such doctrine. The court further observed that ONGC dealt with a situation where the arbitral award was sought to be set aside under section 34 as opposed to an application to refuse enforce- ment of an award under section 48. It was stated that the expression public policy of India under 34 was required to be interpreted in the context of the jurisdiction of the court where the validity of the award is challenged before it becomes final and executable in contrast to enforcement of award after it becomes 134. (2003) 5 SCC (2011) 10 SCC Supp (1) SCC 644 final. Thus, it was seen that under Section 34 the expression public policy would also entail within its folds any patent illegality for setting aside the award. Accordingly, the court held that: enforcement of foreign award would be refused under Section 48(2)(b) only if such enforcement would be contrary to 1. fundamental policy of Indian law; or 2. the interests of India; or 3. justice or morality. The wider meaning given to the expression public policy of India occurring in Section 34(2)(b) (ii) in Saw Pipes (ONGC) is not applicable where objection is raised to the enforcement of the foreign award under Section 48(2)(b). Thus, relying on the above law, the Supreme Court observed that the same ground had also been raised by the Appellant before the courts in U.K. to have the award set aside. However, the High Court of Justice at London did not consider the ground to be sufficient enough for the award to be set aside. Thus, the court viewed that the same argument could hardly be good enough to refuse enforcement. The court further provided that section 48 does not offer an opportunity to have a second look at the foreign award at the enforcement stage. The court affirmed that sec- tion 48 does not permit review of the award on merits and also that procedural defects in course of foreign arbitration do not necessarily imply that foreign award would be unenforceable. Accordingly, the appeal was dismissed by the court and that award was held to be enforceable. D. Analysis The judgment in ONGC led to expansion of the meaning of the expression public policy as provided under section 34 of the Act, which opened the floodgates to petitions challenging the arbi- tral award on the ground of patent illegality. The decision was criticized as it allowed the parties to have a second bite at the matter, to the extent that the ground of patent illegality was viewed broad/y. 41

46 Provided upon request only The above decision coupled with the pre- BALCO 137 scenario i.e. applying the law as enunciated under the Bhatia International case 138, permitted awards passed in arbitrations seated outside India to be challenged under section 34 in certain cases. This led to a very broad ground being available to parties to set aside awards passed in international commercial arbitrations. Though, the BALCO decision has now clarified that awards passed in foreign seated arbitra- tions 139 cannot be challenged under section 34, the difficulty arose on account of the judgment of Phulchand. Therefore, now enforcement of foreign awards would not be refused so easily. Thus, a practi- cal takeaway from the above would be to give preference to a foreign seated arbitration as a mechanism for dispute resolution as this would afford a speedy remedy without signifi- cant court interference. -Ashish Kabra, Payel Chatterjee and Vyapak Desai You can direct your queries or comments to the authors Phulchand 140 expanded the meaning of the expression public policy as provided under section 48 of the Act and provided that the scope and purport of the expression under section 34 and 48 would be the same. The decision of Phulchand thus also received heavy criticism. Surprisingly, Hon ble Justice R.M. Lodha, who previously wrote the judgment in Phulchand on behalf of the bench has now himself, overruled the decision of the court of Phulchand and it has now been laid down that the meaning of the expression public policy is narrower under sec- tion 48 as compared to section Bharat Aluminium Company and Ors. v. Kaiser Aluminium Technical Service, Inc. and Ors., (2012) 9 SCC Bhatia International v. Bulk Trading S.A. and Anr., (2002) 4 SCC Where the arbitration agreement has been entered into after September 6, Please refer to our hotline titled Enforcement of Awards- Eras- ing the distinction between Domestic and Foreign Award 42

47 International Commercial Arbitration Law and Recent Developments in India VII. No Valid Arbitration if Clause in Unsigned Agreement DELHI HIGH COURT: Reaffirms the criteria to deem a foreign arbitral award valid under section 44 of the Arbitration and Conciliation Act, 1996 and the Convention on the Recognition and Enforcement of Awards, A contract containing an arbitration agreement must be signed by all parties to the contract, in order to make the arbitration agreement valid and binding upon the parties. A. Introduction The Delhi High Court ( Court ) in the case of Virgoz Oils and Fats Pte. Ltd. ( Vigoz ) v National Agricultural Marketing Federation of India 141 ( NAFED ) has refused the enforcement of a foreign arbitral award after allowing an objection to its enforcement under Section 48 of the Arbitration and Conciliation Act, 1996 ( The Act ). The Court has referred to and relied upon the requirements set out under the Convention on the Recognition and Enforcement of Awards, 1958 ( The Convention ) and the Act, to examine the requirements of a valid arbitration agreement. Applying these guidelines, the Court has held that the arbitration agreement between the parties in the present matter, was a part of a written agreement which was not signed by NAFED. Thereby, rendering the arbitration agreement inoperable and invalid against NAFED. contracts were formed, which were transmitted to NAFED by the broker. NAFED, upon receipt of the same, requested a deferred date of shipment of the goods to the broker, who in turn, communicated the same to Virgoz. The contracts were amended accordingly by Virgoz with the changes in the date of shipment being the only material alteration. The contracts were signed by the broker and Virgoz, but not by NAFED or its representatives ( Impugned Contracts ). Virgoz, proceeded, with its obligations under the Impugned Contracts assuming the same to have become effectively concluded between the parties and shipped the goods to NAFED. Upon NAFED s failure to provide a Letter of Credit, as per the terms of the Impugned Contracts, Vigoz declared NAFED to be in default. Thereafter, Virgoz proceeded to initiate arbitration proceedings before an arbitral tribunal constituted under the Palm Oil Refiners Association of Malaysia, Rules of Arbitration and Appeal ( PORAM Rules ), in accordance with the arbitration clause contained in the contracts. The Tribunal passed an award on April 5, 2012, which accepted two key submissions advanced by Virgoz being (a) a letter dated July 29, 2008, from NAFED requesting a deferred date of shipment while making reference to the contracts, was evidence of the existence of a contractual arrangement between the parties and (b) the signing of an Agreement by a broker on behalf of the buyer, was common practice in the industry. The award was passed in favor of Virgoz. Virgoz, vide an enforcement petition filed before the Court sought to enforce the award against NAFED and its assets in India. C. Issue Whether there existed a valid arbitration agreement between the parties. B. Facts Virgoz and NAFED, through a broker, had entered into negotiations for the sale of edible oil by Virgoz to NAFED. Through the negotiations, a series of sales 141. EX.P. 149/2015 & EA(OS) No. 66/2016 D. Contentions Virgoz advanced two primary contentions to establish that the award being a foreign award must be enforced under Part II of the Act, they were (a) the parties were dealing with each other through a broker and therefore there was no requirement for 43

48 Provided upon request only NAFED to sign the Impugned Contract and (b) the Letter dated July 29, 2008, indicated that NAFED had accepted the terms of the Impugned Contract and requested a deferred date of shipment. NAFED, stated that there were no communications directly between Virgoz and NAFED implying that NAFED had consented to the terms of the Impugned Contract. Further, NAFED had not signed the Impugned Contract thereby making it invalid against NAFED. E. Judgment The Court analyzed the definition of a foreign award under section 44 of the Act, which stipulates that the award must be rendered in pursuance of an arbitration agreement in writing between the parties, to which the Convention shall apply. In order to examine whether there was a valid arbitration agreement in terms of the Convention, the Court analyzed Paragraph 2 of Article II of the Convention, which states that an agreement in writing would inter alia mean an arbitration clause contained in a contract signed by the parties or contained in an exchange of letters or telegrams. The Court held that, Virgoz had relied upon an arbitration agreement contained in the Impugned Contracts and not in any correspondence exchanged between the parties. Therefore, as per the aforementioned requirements under the Convention, the Impugned Contracts should have been signed by all parties to the contract in order to deem it as a valid arbitration agreement. This requirement was not met as NAFED had not signed the contracts, thus, resulting in the arbitration agreement becoming invalid and inoperative with respect to NAFED. The Court also examined the communications between the parties, holding that the Letter dated July 29, 2008, did not evidence the intention of NAFED to bind itself to the terms of the Impugned Contract or the arbitration clause contained therein. 1. Although NAFED was described as a buyer, with a specific provision for its signature in the Impugned Contract, no signatures appear by NAFED at the designated parts of the Impugned Contracts. 2. The broker signed the Impugned Contract in his own capacity and not for and on behalf of NAFED 3. There were no correspondences exchanged between the parties establishing a meeting of minds as to their intention to submit their disputes to arbitration. Thus, the Court concluded that under section 48, there were valid reasons to refuse the recognition and enforcement of the award and passed orders effecting the same. F. Analysis The judgment of the Court, might be construed as a departure from the pro-arbitration stance adopted by the judiciary of late. If an appeal was to be preferred it would be interesting to observe whether the Appellate Court would consider (a) the usual trade practice between parties trading in palm oil in India to have unsigned contracts; (b) the correspondence exchanged between the parties by which the Impugned Contract was deliberated upon and amended and (c) the verdict of an expert body mandated to preside over disputes in that particular industry. However, it must be noted that the legal analysis conducted by the Court which formed the basis of the judgment is sound. The requirement of an agreement in writing, when evidenced in an arbitration agreement, results in the consequent requirement that the agreement must be of the nature of a valid contract. The lack of a party s signature upon the contract, would be strong evidence as to the lack of the party s consent to the agreement and consequently to an arbitration clause contained therein. The Court based its judgment on the following reasoning:- 44

49 International Commercial Arbitration Law and Recent Developments in India A valuable take away from this pronouncement is to ensure that all parties to a contract containing the arbitration agreement should sign the same even if they are being represented by another for all practical purposes. Further, if parties intend to enter into commercial transactions basis communications exchanged, then they must ensure to incorporate a dispute resolution mechanism in the same. Arjun Gupta & Vyapak Desai You can direct your queries or comments to the authors 45

50 Provided upon request only VIII. Delhi HC Adds to Uncertainty Over Applicability of the Arbitration & Conciliation (Amendment) Act 2015 Delhi High Court has held that the amended provisions would not be applicable to court proceedings initiated post-amendments, unless they were merely procedural and did not affect any accrued right ; It has been held that amendments to Sections 34 and 36 of the Act, which pertain to the enforceability of an award, affect the accrued rights of the parties. Contrary to earlier decisions, it has been held that a challenge petition filed post amendment would be governed by un-amended Section 34 of the Arbitration and Conciliation Act, 1996 so long as arbitration was invoked in the pre-amendment era; A challenge to a pre-amendment arbitral award filed post the amendment, would necessarily result in an automatic stay on enforcement of the award; A. Introduction The applicability of the amendments to Indian Arbitration & Conciliation Act, 1996 ( Act ) have been the bone of contention in several cases. Section of the Arbitration & Conciliation (Amendment) 142. Section 26 of the Amendment Act provides that: Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commenced on or Act 2015 ( Amendment Act ) clarified that the amendment will be prospectively applicable. However, the Madras 143 and Calcutta High Courts 144 have previously held that the prospective applicability of the Amendment Act would be limited to arbitral proceedings and not to court proceedings. The Bombay High Court 145 took a slightly different view: wherein it was held that it makes no difference if the application under Section 34 filed by the award-debtor was prior to 23 rd October, 2015 (discussed later). Similar issue came up for consideration before the Delhi High Court ( Court ) in the decision of Ardee Infrastructure Pvt. Ltd. ( Appellant ) v. Anuradha Bhatia ( Respondent ) 146 with Ardee Infrastructure Pvt. Ltd. ( Appellant ) v. Yashpal & Sons ( Respondents ). 147 B. Facts and Arguments Advanced A final award was made in favour of the Respondents on 13 October 2015, which was challenged under Section 34 of the Act on 4 January The Single Judge issued notice on Respondents challenge petition under Section 34 of the Act, subject to deposit of a sum of Rs crores. Subsequently, an appeal was filed against Single Judge s order before the Division Bench. The primary contention was the applicability of the Amendment Act and whether merely filing a challenge under Section 34 of the Act would lead to an automatic stay on the enforcement proceedings. i. Arguments by the Appellant The Appellant contended that the petitions under Section 34 of the Act would be governed by the un-amended provisions of, inter alia, Sections 34 and 36, therefore, entitled to the right of an automatic after the date of commencement of this Act New Tirupur Area Development Corporation Ltd. v. M/s. Hindustan Construction Co. Ltd A. NO of 2016 in O.P. No. 931 of 2015 judgment dated 27 January 2016 (Madras High Court) [click here for our hotline] 144. Tufan Chatterjee v. Rangan Dhar AIR 2016 Cal Rendezvous Sports World v. the Board of Control for Cricket in India, 2016 SCC Online Bom SCC Online Del ibid 46

51 International Commercial Arbitration Law and Recent Developments in India stay on the filing of the petitions under Section 34 of the said Act. The basic premise of the Appellant for adopting a prospective interpretation of Section 26 of the Amendment Act was that the amendment tends to take away vested rights (substantive rights) of the party challenging the award, to have an automatic stay on the award. ii. Arguments by the Respondents The Respondents argued that the amended provisions would apply to court proceedings and, therefore, there would be no question of any automatic stay and that the order made by the Single Judge was within his powers. The Respondents relied on the case of Thyssen Stahlunion Gmbh v. Steel Authority of India Limited 148 ( Thyssen ) to interpret the difference between to arbitral proceedings and in relation to arbitral proceedings in Section 26, as the latter referring to not only proceedings pending before the court but also proceedings emanating from or related to such arbitral proceedings like court proceedings etc. related to the arbitration. It was also argued that the amendment leading to disentitlement of having an automatic stay subsequent to a challenge of an award, does not divest a party s right to challenge, rather it only introduces minor changes to such an interim relief, which is not a vested or accrued substantive right. C. Judgment On examining the contentions put forth by the parties and the contents of Section 26 of the Amendment Act, the Court came to a finding that the date of commencement of the Amending Act, that is, 23 October 2015, is what separates Section 26 into two parts: (i) the amendments shall not apply to arbitral proceedings commenced before the commencement of the Amendment Act, and (ii) the amendments shall apply in relation to arbitral proceedings commenced on or after the commencement of the Amendment Act. The Court referred to the Thyssen judgment where the Supreme Court had observed that the right to enforce an award when arbitral proceedings commenced under the old Act under that very Act was certainly an accrued right and, there is no necessity that legal proceedings must be pending when the new Act comes into force. The Court construed this as equivalent to arbitral proceedings commenced prior to 23 October 2015, and an award being made prior to 23 October 2015 but challenge being made postamendments, which is the present case. The Court accepted that the second part of Section 26 covers both, proceedings before the arbitral tribunal as well as court proceedings in relation thereto or connected therewith. However, the Court opined that if the applicability of the amendments to both parts are treated differently, it would lead to serious anomalies. This is primarily because of the fact that there have been amendments to Section 9 as well as Section 17 of Act 149 and, in respect of arbitral proceedings commenced prior to 23 October 2015, the amended provisions would apply to proceedings under Section 9 of the Act, but not to Section 17 thereof. Thus, the expression to arbitral proceedings should be given the same expansive meaning as in relation to arbitral proceedings so that all arbitral proceedings (including court proceedings) that commenced prior to 23 October 2015 are governed by the un-amended provisions. To further illustrate all the arbitral proceedings, which commenced in accordance with the provisions of Section 21 of the Act prior to 23 October 2015, the Court referred to the following graphical representation: (9) SCC Section 9 deals with the power of the court to grant interim measures, while Section 17 deals with powers of the arbitral tribunal to grant interim measures. 47

52 Provided upon request only Category I Arbitral proceedings commence award S.34 petition t 0 23/10/2015 t 1 t 2 Time Proceedings before Arbitral Tribunal Proceedings before court Category II Arbitral proceedings commence award S.34 petition t 0 t 1 23/10/2015 t 2 Time Proceedings before Arbitral Tribunal Proceedings before court Category III Arbitral proceedings commence award S.34 petition t 0 t 1 t 2 23/10/2015 Time Proceedings before Arbitral Tribunal Proceedings before court t 0 = date on which arbitral proceedings commence t 1 = date of award t 2 = date of filing of petition under section 34 of the said act 23/10/2015 = date on which amending act commenced. 48

53 International Commercial Arbitration Law and Recent Developments in India Based on this representation, the Court concluded that if the first part of Section 26 applies only to arbitral proceedings in the sense of proceedings before arbitral tribunals and not to court proceedings, then, it is obvious that Section 26 is silent on second and third categories of cases. Thus, no contrary intention of retrospectivity could be inferred upon a reading of Section 26 of the Amending Act. The Court, expanded the scope of the right to enforce an award as an accrued right to be inclusive of the negative right of the award-debtor to not have the award enforced. Thus, on considering that the right to have an automatic stay on the enforcement of the award has ceased, pursuant to the amendments, the Court concluded that these amendments are to be treated as prospective in operation. D. Analysis This judgment clearly conflicts with the earlier observations of the Madras High Court 150 and the Calcutta High Court, 151 wherein it was clarified that arbitral proceedings do not include court proceedings and by virtue of Section 26 of the Amendment Act, the amendments would apply to court proceedings but not to arbitral proceedings. Undoubtedly, these judgments rightfully establish the distinction between arbitral proceedings and proceedings emanating from or related to such arbitral proceedings as expressed in Section 26 of the Amendment Act, which has been diluted by the Court in this judgment. removed, by way of the amendments. Meanwhile, the rights of the award-debtor were kept intact to the extent that interim reliefs can be sought from the court during the pendency of an application of challenge under Section 34. Thus, the Bombay High Court concluded that removal of such a shadow over the rights of the award-holder cannot be said to be prejudicial to the award-holder. There is a risk of extension of automatic stay principle which was prevalent in the pre-arbitration regime, debated and purposely omitted in the amendments to the Act. This judgment, if followed may defeat the intention of the amended Section 36 of the Act. The decision of the Bombay High Court has been appealed and pending adjudication before Supreme Court of India. Hopefully, the Supreme Court will settle the position on applicability of the Amendment Act and bring the divergent views of various High Courts to an end. Shweta Sahu, Alipak Banerjee & Vyapak Desai You can direct your queries or comments to the authors The Bombay High Court 152 looked into the intention behind the amendments and observed that the amendments to Section 36 sought to balance between the rights and liabilities of the award-holder and the award-debtor, thus prospective in nature. Earlier, a challenge under Section 34 would cast a shadow on the award-holder s right to enforce the award since an automatic stay would operate. Subsequently, this shadow over the rights of the award-holder was 150. New Tirupur Area Development Corporation Ltd. v. M/s. Hindustan Construction Co. Ltd A. NO of 2016 in O.P. No. 931 of 2015 judgment dated 27 January 2016 (Madras High Court) 151. Tufan Chatterjee v. Rangan Dhar AIR 2016 Cal Rendezvous Sports World v. the Board of Control for Cricket in India, 2016 SCC Online Bom

54 Provided upon request only IX. Appellate Arbitration Permissible In India But Should You Provide For It? Supreme Court permits two-tier i.e. appellate arbitration in India Party autonomy is paramount in arbitration under the Indian Arbitration & Conciliation Act, No express and implied prohibition of appellate arbitration is contained in the Arbitration & Conciliation Act, A three-judge bench, of the Supreme Court of India (SC), in Centrotrade Minerals & Metal v. Hindustan Copper has found that parties may provide for an appeal in their arbitration clause and such a choice would not be contrary to the laws of India. The issue, originally heard in 2006, had been referred to a higher bench due to a difference of opinion between the two judges hearing the case. A. The Dispute Resolution Clause The question before the SC was whether a settlement of disputes or difference through a two tier arbitration procedure provided for in the contract between the parties was permissible under Indian law. The arbitration agreement contained in Clause 14 of the contract provided: 14. Arbitration - All disputes or differences whatsoever arising between the parties out of, or relating to, the construction, meaning and operation or effect of the contract or the breach thereof shall be settled by arbitration in India through the arbitration panel of the Indian Council of Arbitration in accordance with the Rules of Arbitration of the Indian Council of Arbitration. If either party is in disagreement with the arbitration result in India, either party will have the right to appeal to a second arbitration in London, UK in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce in effect on the date hereof and the result of this second arbitration will be binding on both the parties. Judgment upon the award may be entered in any court in jurisdiction It is also relevant to note that the applicable substantive law was also Indian law. B. Judgment The SC first noted that a plain reading of the arbitration agreement indicated that the intention of the parties was to provide for two opportunities at resolving their disputes or differences. Let s label the decision of the first tribunal as First Award and that of the second tribunal as the Second Award. The SC addressed several argument raised by counsel in the judgment, of which the significant ones are listed below: A. Is the First Award an arbitral award? The SC noted that the First Award is an arbitral award and not just a decision rendered by a tribunal with no enforceable effect. The reasons for this finding were two fold- 1. The First Award contained all the elements and ingredients of an arbitration award; and 2. If the decision was not considered to be an arbitral award, a legal vacuum would exist post the arbitration result. While the SC has found that no such vacuum can be read to exist and such an award would be enforceable under the Indian Arbitration & Conciliation Act, 1996 (A&C Act, 1996), it has not addressed whether or not the First Award can be enforced while the second tribunal is hearing the matter in appeal. B. Is appellate arbitration contrary to the laws of India? The SC noted that it was inappropriate to argue that appellate arbitration is contrary to the laws of India because that would indicate that the party knowingly 50

55 International Commercial Arbitration Law and Recent Developments in India entered into a contract wherein one of the provisions of the contract was contrary to the laws of India. This could amount to serious fraud and would have serious long-term ramifications on international commercial contracts with Indian parties. The SC then divided the argument raised in appeal into three parts: 1. Whether the A&C Act, 1996 does not sanction appellate arbitration; 2. Whether the A&C Act, 1996 contains an implied prohibition to appellate arbitration; and 3. Whether appellate arbitration is contrary to Indian public policy. The SC took note of the Report of the UNCITRAL Working Group, the Arbitration Act of 1940, referred to some commentaries, as well as previous judgments to find that appellate arbitration has historically been considered valid. The SC duly considered this and found that that the legislature would be aware of such a practice at the time of drafting the A&C Act, 1996 and the lack of specific proscription would indicate that appellate arbitration is permissible in India. The SC took note of the argument that the right of appeal can only be provided by statute. After studying various precedents on the issue, the SC noted that the right of appeal is a substantive right and is not just a mere matter of procedure. On this ground, the SC distinguished appellate arbitration vis a vis statutory appeals before courts and tribunals, to find that an appeal procedure contained in an arbitration agreement was a substantive right created by the parties by mutual consensus. In regards the implied prohibition contained in the A&C Act, 1996, the court read Section in together to find that the availability of recourse to a court for challenging an award, contained in the statue, does not ipso facto prohibit the parties from mutually agreeing to a second look. Furthermore, the idea that an arbitration award is final and binding does not necessary rule out the possibility of an appeal. The SC found that an award being final and binding indicates that it has legal effect and doesn t preclude appellate arbitration. As for the public policy argument, the court dismissed the same stating that there is nothing fundamentally objectionable in the parties preferring and accepting a two-tier appellate arbitration mechanism. Such a choice would not violate any mandatory provision of the A&C Act, Lastly and most importantly, the SC has placed significant emphasis on party autonomy while arriving at this decision, even noting that it is virtually the backbone of arbitration and that the intention in the A&C Act, 1996 is not to throttle the autonomy of parties or preclude them from adopting any other acceptable method of redressal such as appellate arbitration. Therefore, there is nothing in the A&C Act, 1996 that prohibits the parties from explicitly or implicitly agreeing on appellate arbitration. C. Analysis The present judgment continues the line of proarbitration judgments in India. Special mention should be made to the increasing respect being accorded by courts to party autonomy in arbitration. One cannot ignore that parties may be concerned about the possibility of error in high-stakes disputes and appellate arbitration may safeguard the integrity of the arbitration process and protect parties from such errors. Similarly, the knowledge of the availability of an appeal, may also serve as an encouragement to parties to complete the first proceeding expeditiously. Arbitration can no longer take a standard, one-size-fitsall approach and it must evolve to address the interests of parties in different disputes of varying quantum. These manifold pros of an appeals procedure has also been noted in investor state arbitration and and an optional appeals procedure has been made available to give the process greater legitimacy. While the judgment can be hailed for its partyautonomy oriented approach to the issue which echoes the adoption of appellate mechanisms in arbitration in other jurisdictions, it is pertinent to ask 51

56 Provided upon request only While appellate arbitration has been found to be permissible in India, is it good for your dispute? The availability of an appeals mechanism also has various cons. A simple example could be that it provides a recalcitrant respondent yet another delaying tactic. However, the larger concern is the lack of clarity on how the availability of an appellate mechanism in arbitration will affect the arbitration system as a whole. Parties choose arbitration over litigation for its final and binding effect at first instance. While the need for an appeal mechanism to protect legitimate interests of parties must be acknowledged, the mechanics will surely implement the structure and spirit of international arbitration. It is up to arbitral institutions now to draft and provide appellate procedure rules that can cover operational issues that are likely to arise. Some examples are questions regarding which issues can be submitted to an appeal as against the commencement of de novo procedures; when would time for the purposes of limitation stop running; or how soon would an appeal need to be filed. While this judgment is surely an interesting development in Indian arbitration law, its implications remain to be seen. Niyati Gandhi & Vyapak Desai You can direct your queries or comments to the authors 52

57 International Commercial Arbitration Law and Recent Developments in India X. Allegations of Fraud Are Arbitrable - Even in Domestic Arbitrations in India The Supreme Court has held that: Allegations of fraud are arbitrable unless serious and complex in nature; N. Radhakrishnan did not make blanket exclusion of fraud from the purview of arbitration; Swiss Timing does not over-rule N. Radhakrishnan since it arose under Section 11 of the A&C Act; Issues of fraud are arbitrable unless the arbitration agreement itself is impeached. A. Introduction The Supreme Court of India ( Supreme Court ), in A. Ayyasamy (Appellant) v. A. Paramasivam & Ors. (Respondents) 153 has held that disputes involving allegations of fraud arising out of contracts bearing an arbitration clause shall be referred to arbitration. Distinguishing, yet not casting away, the oftcited ruling of the Supreme Court in the case of N. Radhakrishnan v. Maestro Engineers 154 in matters involving arbitrability of fraud, a division bench of the Supreme Court has held that N. Radhakrishnan did not subscribe to the blanket proposition of nonarbitrability of fraud and that allegations which could be adjudicated upon in courts could also be adjudicated upon in arbitral proceedings, subject to certain carve-outs. B. Facts The parties entered into a partnership deed on 1 April 1994 for running a hotel. While the Appellant was entrusted with administration, the Respondents alleged that the Appellant had failed to make regular deposits of money into the common operating bank account and had fraudulently siphoned off an amount of INR 10,00,050. In a separate raid conducted by the CBI on premises of the Appellant s relative, an amount of INR 45,00,000 was seized and alleged to have been given by the Appellant for business of the hotel. The Respondents filed a civil suit seeking right of administration of the hotel. The Appellant sought reference of the dispute to arbitration under Section 8 of the Arbitration & Conciliation Act, 1996 ( A&C Act ). The High Court rejected the Appellant s application on the ground that the dispute involved allegations of fraud. Aggrieved by the decision, the Appellant preferred an appeal before the Supreme Court. C. Contentions of the Respondents The Respondents made the following contentions: The allegations constituted acts of fraud which were attributed to the Appellant. Where allegations of fraud are involved, civil courts are the appropriate forum for adjudication. The Respondents took recourse to judgment of the Supreme Court in N. Radhakrishnan wherein disputes revolved around serious malpractices, manipulation of accounts and cheating by the partners. The Supreme Court had held that since the allegations were serious and required evaluation of detailed evidence, they could not be properly gone into by the Arbitrator Civil Appeal Nos and 8246 of (2010)1 SCC 72 53

58 Provided upon request only D. Findings of the Supreme Court i. Minimum intervention by courts The Supreme Court delved into the underlying objective of the A&C Act to minimize court interference in disputes involving arbitration. It held that Section 8 of the A&C Act mandated reference to arbitration unless, on a prima facie evaluation, the arbitration agreement was found to be invalid. It noted that Section 8 offered little discretion to courts to assume jurisdiction and made a conscious departure from the language of its equivalent provision under the UNCITRAL Model Law where reference could be rejected on wider grounds (viz. where the arbitration agreement was null and void, inoperative or incapable of being performed). The Court held that Section 16 of the A&C Act also operated in the same vein while equipping the arbitrator to rule upon its own jurisdiction and minimizing court intervention. Further, the doctrine of separability (where the arbitration agreement survived nullity, even if embodied in a contract assailed on the grounds of fraud), helped to retain powers of the arbitral tribunal and adjudicate upon nullity of the contract. Thus, tribunals are vested with jurisdiction to consider issues of fraud. ii. No demarcation of arbitrable and non-arbitrable disputes under the A&C Act Noting that arbitrability is quintessential to ensure enforcement of awards and that the A&C Act is silent on types of non-arbitrable disputes, the Supreme Court outlined judicially enumerated issues which cannot be referred to arbitration - based on analysis of the types of rights involved (rights in rem or in personam), conferment of jurisdiction on special courts or on public policy. These include matters involving crimes, matrimony, insolvency and winding up, guardianship, tenancy, testamentary matters, 155 trusts 156 and consumer protection. 157 However, it held that the law did not exclude issues of fraud as being non-arbitrable. iii. N. Radhakrishnan is frequently misread The Court held that N. Radhakrishnan involved serious allegations of fraud which necessitated evaluation of detailed evidence. This could only be done properly by Courts. However, the Supreme Court considered that in ruling so, N. Radhakrishnan had relied extensively on the judgment of Abdul Kadir Shamsuddin Bubere v. Madhav Prabhakar Oak 158 which arose under the Arbitration and Conciliation Act, offering wide discretion to courts to assume jurisdiction. However, the A&C Act had limited court discretion and intervention under Section 8. Despite the aforesaid observation, the Supreme Court did not expressly reject the reasoning in N. Radhakrishnan and held that serious allegations of fraud were non-arbitrable, while mere allegations of fraud would be arbitrable. It distinguished, by way of example, between simple and serious allegations of fraud. However, it emphasized that it was incumbent upon courts to sift through the materials and identify, on a prima facie basis, if the case involved allegations of a serious nature. Since the present dispute did not involve complex issues but merely matters of accounts, the Supreme Court held that the allegations could be easily ascertained by the arbitrator. iv. Swiss Timing does not over-rule N. Radhakrishnan The Supreme Court considered the ruling in Swiss Timings Ltd. v. Commonwealth Games 2010 Organizing Committee 159 where a Single Judge of the Supreme Court held that N. Radhakrishnan (delivered by Division Bench) was per incuriam. The Supreme Court clarified that Swiss Timing dealt with Section 11(6) of the A&C Act which conferred 155. Booz Allen & Hamilton vs. SBI Home Finance Ltd., (2011)5 SCC Vimal Kishore Shah vs. Jayesh Dinesh Shah, Civil Appeal No of Skypak Courier Ltd. Vs. Tata Chemical Ltd., (2000)5 SCC AIR 1962 SC (2014) 6 SCC 677. Our analysis of the judgment can be viewed here 54

59 International Commercial Arbitration Law and Recent Developments in India power on the Chief Judge of India or the Chief Justice of the High Court as a designate to appoint an arbitrator. The exercise of power by the Court under Section 11 and the judgment so delivered could not be deemed to have precedential value. Therefore, it cannot be deemed to have overruled the proposition of law laid down in N. Radhakrishnan. v. Reliance on foreign case law to focus on party intent Relying on decisions of the UK courts 160, the Court held that it is inconceivable that ordinary businessmen would engage in a contractual tug of war by intending that questions of nullity of contract would be decided by the arbitrator while issues of fraud would be decided by the court. Arbitration is intended to be a one-stop forum unless parties expressly excluded certain disputes from its ambit. Therefore, unless the arbitration clause itself is impeached on grounds of fraud, the disputes will be capable of reference to arbitration. However, it was rare for a party to procure an arbitration agreement fraudulently, even in cases where the contract may have borne connection with fraud. vi. Multiple allegations of civil and criminal wrongdoing Rejecting the general notion that elements of criminal wrongdoing or statutory violation detracted from the jurisdiction of the arbitral tribunal, the Supreme Court held that contractual power did not conflict with statutory power. Parties could exercise the power under the arbitration agreement; thereby giving teeth to the well accepted phenomenon of acceptance of criminal and contractual procedures. 161 E. Analysis The judgment is seminal in the arena of fraud related disputes arising out of contracts bearing arbitration clauses in India seated domestic arbitrations. In case of foreign seated arbitrations, the Supreme Court in World Sport Group (Mauritius) Ltd. v. MSM Satellite (Singapore) Pte. Ltd. 162 had held that allegations of fraud did not prevent the court from making reference to arbitration under Section 45 of the A&C Act. However, in the case of India seated domestic arbitrations, there was a cloud on efficacy of arbitral proceedings to resolve issues of fraud, particularly in light of the ruling in N. Radhakrishnan. The present judgment sets to rest the conundrum created by N. Radhakrishnan. It recognizes that disputes which can be adjudicated upon by courts can, by default, be adjudicated upon by arbitral tribunals and that exceptions to this rule lie in limited frontiers of public policy, statutory legislation and rights in rem. It carefully pulls the rope bearing the weight of N. Radhakrishnan its primary reliance on the judgment in Abdul Kadir. It clarifies that N. Radhakrishnan can be applied only where serious and complex allegations of fraud necessitating extensive evaluation of evidence are involved. Pursuant to this ruling, N. Radhakrishnan cannot be used for the purpose of making an unimpeachable statement on non-arbitrability of fraud, nor can it be used as a subterfuge to detract from jurisdiction of the arbitral tribunal by masking allegations as fraud. Every allegation of fraud would need to be weighed on a scale of seriousness and complexity, with an eye that sifts through material to identify veracity of the allegations. The Court has also subtly stated that allegations of fraud can be adjudicated upon in courts when the person against whom such allegations are levelled desires to be tried in court. This will be an additional factor to be considered by courts in deciding applications for reference to arbitration. It will also be crucial for courts to scrutinize if fraud is directed at the arbitration agreement, thereby impeaching the agreement (and the resultant arbitration, the same being creature of the arbitration agreement), as contra-distinguished from the main contract Fiona Trust & Holding Corporation vs. Yuri Privalov (2007)1 AllER (Comm) 891; Premium Nafta Products Ltd. vs. Fily Shipping Co. Ltd. (2007) UKHL Hindustan Petroleum Corporation Ltd. Vs. Pinkcity Midway Petroleum, (2003) 6 SCC AIR 2014 SC 968; Our analysis of the judgment can be viewed here 55

60 Provided upon request only The judgment acts as a fail-safe judgment as it takes into account universally-accepted principles of kompetenz kompetenz, separability and party autonomy as the epicenter of arbitration, and accords due respect to ordinary business rationale underlying arbitration clauses in contracts. It fortifies the intention of the judiciary to be a partner in arbitral proceedings and offer support, both in an active and passive manner, where questions arise with respect to reference to arbitration. - Kshama Loya Modani, Shweta Sahu & Vyapak Desai You can direct your queries or comments to the authors 56

61 International Commercial Arbitration Law and Recent Developments in India XI. Arbitration (Amendment) Act, 2015 Shall Apply Retrospectively to Court Proceedings in Relation to Arbitral Proceedings The Delhi High Court Holds that provisions of the Arbitration & Conciliation ( Amendment Act), 2015 ( Amendment Act ) to apply retrospectively to all court proceedings related to arbitration proceedings instituted post the Amendment Act even if the arbitration commenced prior to the Amendment Act; Recognizes that the position regarding nonapplicability of Part I of the Arbitration & Conciliation Act, 1996 ( Act ) with respect to foreign seated arbitrations stands amended by virtue of Section 2 (2) 163 of the amended Act thereby making Section 9 of the Act available to parties even in case of a foreign seated arbitration even if the arbitration commenced prior to the Amendment Act; Holds that choosing a foreign law or foreign seat or foreign institutional rules does not amount to implied exclusion of Section 9 of the Act; A. Brief Facts Recently, the Delhi High Court ( Court ) in Raffles Design International India Pvt Ltd. ( Petitioner ) vs. Educomp Professional Education Ltd. 164 ( Respondent ) allowed a petition seeking interim relief under Section 9 of the Act ( Petition ) in a Singapore seated arbitration, and held that the provisions of the Amendment Act would apply to all court proceedings in relation to arbitral proceedings instituted after the Amendment Act came into force, even if the arbitration commenced prior to the Amendment Act. The parties had agreed to resolve their disputes through arbitration seated in Singapore, with the governing law as Singapore Law, and arbitration to be conducted in accordance with the rules of the Singapore International Arbitration Centre ( SIAC ). Certain disputes arose between parties wherein the Petitioner proceeded to initiating arbitration in Singapore and also filed for the appointment of an emergency arbitrator under the SIAC rules, pursuant to which certain reliefs were granted to the Petitioner which were later confirmed by the arbitral tribunal. Due to subsequent contravention of the emergency award by the Respondent, the Petitioner filed the present Petition before the Court, to which the Respondent raised a preliminary objection regarding its maintainability. B. Respondent s Objections The Respondent s primary objection was on the ground that Part I of the Act is inapplicable to proceedings held outside India and that by choosing Singapore as the Seat, the parties have impliedly excluded the applicability of Section 9 of the Act and that therefore the present Petition is not maintainable. The Respondent s also contended that the Amendment Act is inapplicable to the present arbitral proceedings by virtue of Section of the Amendment Act, as the arbitral 163. Section 2 ( 2) This Part shall apply where the place of arbitration is in India: [Provided that subject to an agreement to the contrary, the provisions of sections 9, 27 and clause (a) of sub-section (1) and sub-section (3) of Section 37 shall also apply to international commercial arbitration, even if the place of arbitration is outside India, and an arbitral award made or to be made in such place is enforceable and recognized under the provisions of Part II of this Act.] 164. O.M.P.(I) ( COMM.) 23/2015 & CCP (O) 59/2016, IA Nos /2015 & 2179/ Section 26 : Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act (Emphasis supplied) 57

62 Provided upon request only proceedings had commenced prior to the date of commencement of the Amendment Act. C. Petitioner s Contentions The Petitioner contended that the very purpose for the amended Section 2 (2) was to confer jurisdiction on Indian Courts in respect of Sections 9 and 27 of the Act, even if the seat is foreign and that the expression subject to an agreement to the contrary as found in the amended Section 2 (2) would mean and require something more than mere choice of law and seat of arbitration. It was also contended that the expression to arbitral proceedings as used in the first limb of Section 26 does not apply to court proceedings and that therefore the Amendment Act ought to apply to the present case. D. Issues Before The Court Whether the provisions of the Amendment Act were applicable to the present Petition? If the answer to the above is in the affirmative, whether the parties had excluded application of Part I of the Act, since the arbitration was seated in Singapore with the governing law being Singapore Law? E. Judgment & Analysis The Court clarifies that Section 26 of the Amendment Act is in two parts, the first couched in negative form, and the second in the affirmative. Relying upon the decision of the Supreme Court in Thyssen Stahlunion Gmbh vs. Steel Authority of India 166 the Court observes that the usage of the word to in the first limb instead of in relation to clearly restricts the import of the first limb of Section 26. The Court therefore holds that the use of the phrase in relation to indicates that the legislature intended the second limb of the provision to have a wider sweep thus covering all proceedings connected to arbitral proceedings, and that therefore the amendments would apply to Court proceedings instituted post commencement of the Amendment Act (1999) 9 SCC 334 In coming to such a conclusion, the Court has upheld recent judgments of the Madras High Court [Click Here to access NDA hotline], 167 the Bombay High Court 168 and the Calcutta High Court 169 which came to similar conclusions. The Court however, also observes that the two limbs of Section 26 of the Amendment Act are not exhaustive as the first limb refers only to proceedings commenced in accordance with Section 21 (found in Part 1) of the Act, and that therefore Section 26 is silent regarding applicability of the Amendment Act to proceedings which are not expressly indicated therein. Due to the lack of any express indication as to the applicability of the Amendment Act to arbitrations instituted outside India, the Court adopts a purposive interpretation, sets out the legislative intent behind the Amendment Act, and holds that even in cases where there is no express provision regarding retrospective applicability of the new law, the Courts should look to further intention of the legislature. Considering that the very purpose of the amended Section 2 (2) of the Act was to enable a party to approach Indian Courts for interim relief even in foreign seated arbitrations, the Court clarifies that the position regarding non-applicability of Part I of the Act in foreign seated arbitrations, as held in Bharat Aluminium Company Vs. Kaiser Aluminium Technical Services Inc. 170, stands amended as far as Section 2 (2) of the Act is concerned and that parties now have recourse to Section 9 of the Act even in foreign seated arbitrations. The Court therefore allows the present Petition and makes it clear that choice of a foreign law or a foreign seat or foreign institutional rules does not amount to implied exclusion of Section 9 of the Act New Tirupur Area Development Corporation vs. Hindustan Construction limited, Madras High Court, A.No of 2016 in O.P. No. 931 of Rendesvous Sports World vs. the Board of Control for Cricket in India, Bombay High Court, Chamber Summons No of Sri Tufan Chatterjee vs. Sri Rangan Dhar, 2016 SCC Online Cal (2012) 9 SCC

63 International Commercial Arbitration Law and Recent Developments in India The Court has demonstrated its pro-arbitration approach in adopting an effective and purposive interpretation of the provisions to further the intention of the legislature regardless of an apparent lacuna in the law so as to make the provisions of the Amendment Act effective immediately. Such an approach adopted by Courts would go a long way in enhancing the effectiveness of the alternate dispute resolution scenario in India. Parties can now choose a foreign seat and foreign law and still retain the benefit of seeking recourse to Indian courts for interim measures. The question of law regarding the retrospective applicability of the Amendment Act to arbitral proceedings vis-à-vis court proceedings however, is currently pending before the Supreme Court. Siddharth Ratho & Vyapak Desai You can direct your queries or comments to the authors 59

64 Provided upon request only XII. In Civil Courts we Trust : Trust Disputes Inarbitrable in India Disputes arising out of Trust Deeds and the Indian Trusts Act, 1882 cannot be referred to arbitration. Clauses providing for arbitration in a Trust Deed do not constitute an arbitration agreement. Provisions governing dispute resolution and legal remedies in the Trusts Act act as an implied bar to arbitration of trust related disputes. A. Introduction The Supreme Court of India ( SC ), in Vimal Shah & Ors. vs Jayesh Shah & Ors. 171, recently held that disputes arising between beneficiaries or trustees of a Trust cannot be referred to arbitration as an arbitration clause contained in a Trust Deed is not an arbitration agreement between the trustees inter se, between the beneficiaries inter se or between the trustees and the beneficiaries for the purposes of the Arbitration & Conciliation Act, 1996 ( Arbitration Act ) unless the respective parties specifically agree to the same. It was further held that all disputes arising out of a Trust Deed and the Indian Trusts Act, 1882 ( Trust Act ) are not arbitrable in India. This ruling is significant because, currently, several trust deeds of private trusts governed by the Trust Act contain arbitration clauses in relation to resolution of disputes between trustees, between beneficiaries and between trustees and beneficiaries. Due to the high likelihood of potential disputes when relationship between family members get 171. Civil Appeal No of 2016 strained, especially in cases where the trustee is given discretionary powers on various aspects (including distributions to beneficiaries, investment decisions, etc.), such arbitration provisions have been considered highly important, given key advantages such as timely resolution of disputes, confidentiality, efficiency and the flexibility to appoint arbitrators who have knowledge about the affairs of the family, etc. Moreover, in the past few years appointment of institutional trustees have been on the rise on account of their ability to act independently and professionally. When institutional trustees are so appointed, arbitration clauses give such institutional trustees a lot of comfort in terms of taking up the role of a trustee, particularly, as trustees are bound by fiduciary obligations, which are subjective in nature. B. Background A Trust is a legal obligation annexed to the ownership of property and is not a separate legal entity. A Trust arises out of confidence placed by a person (referred to as the settlor) in another (the trustee), for the benefit of certain persons (the beneficiaries) as identified by the settlor. The trustee is the legal and beneficial owner of the trust property. A Trust Deed is an instrument by which the settlor reposes confidence in a trustee and settles property into the Trust. Typically, a trust deed is only executed by the settlor and the trustees. In the present case, a family trust deed ( Trust Deed ) had been executed in favor of six minor beneficiaries. Clause 20 of the Trust Deed contained an arbitration clause, providing that any dispute or differences dispute or difference arising regarding the interpretation of the Trust Deed or any disputes arising inter se trustees, between the trustees and beneficiaries or inter se beneficiaries shall be resolved under the Indian Arbitration Act, 1940 and the decision of the arbitrator(s) shall be final and shall bind the parties to the arbitration. Differences arose among the beneficiaries with respect to the conduct of the affairs and business of the trust. An application under Section 11 of the Arbitration Act was made by some of the beneficiaries to refer the disputes to arbitration in accordance with Clause 20 60

65 International Commercial Arbitration Law and Recent Developments in India of the Trust Deed. The Bombay High Court allowed the application referring the disputes to arbitration. Aggrieved by such order, other beneficiaries filed an appeal before the SC by way of special leave. C. Issues The following issues were before the SC for determination in the present appeal: 1. Was an arbitration clause contained in a Trust Deed a valid arbitration agreement for resolution of disputes between beneficiaries of a Trust? 2. Whether trust-related disputes are arbitrable in India? D. Judgment 1. Is an arbitration clause in a Trust Deed a valid arbitration agreement under the Act? The SC found that an arbitration clause contained in a Trust Deed does not meet the requirements of a valid arbitration agreement prescribed in the Arbitration Act. The SC relied on its earlier judgment in Vijay Kumar Sharma 172 which held that an arbitration clause contained in a Will is not a valid arbitration agreements since the legatees are not signatories to the testamentary document. Comparing Trust Deeds with testamentary documents, the SC held that beneficiaries of a trust, like legatees to a Will, are not parties to an arbitration agreement since they do not execute the trust deed containing the arbitration clause. Furthermore, the SC clarified that even if the beneficiaries are considered to have accepted the trust deed vis-à-vis the settlor by accepting the benefits thereunder, such acceptance does not imply that an arbitration agreement exists for the resolution of disputes between beneficiaries, trustees, or between trustees and beneficiaries. The SC further referred to the Calcutta High Court ruling in Bijoy Ballav Kundu 173 which held that upon signing a Trust Deed, trustees only undertake to carry out the terms of the Trust Deed in accordance with applicable law. Further, it was held that interpreting arbitration clause in a trust deed as an arbitration agreement inter se the trustees would be absurd as the arbitration clause does not satisfy a basic requirement for constituting an agreement inter-se the trustees, i.e., there is no proposal and acceptance between them. The SC held that similar to the above, merely by virtue of Beneficiaries accepting a trust deed by accepting benefits under the Trust, the trust deed cannot be interpreted as an agreement inter se the beneficiaries and the present dispute could not be referred to arbitration for want of a valid arbitration agreement. 2. Are trust disputes arbitrable in India? Arbitration is a private dispute resolution mechanism available to resolve civil and commercial disputes. However, certain varieties of disputes are considered inarbitrable in the interest of public policy and can only be addressed in a competent public forum. In an earlier judgment of Booz Allen &Hamilton Inc. vs SBI Home Finance Ltd 174, the Supreme Court of India has listed six varieties of disputes as inarbitrable in India. They are: (i) rights and liabilities arising out of or giving rise to criminal offences; (ii) matrimonial disputes; (iii) guardianship matters; (iv) insolvency and winding up; (v) testamentary matters; (vi) eviction or tenancy matters where tenants enjoy statutory protection. In the present case, the SC laid down an additional category of cases to the list of disputes considered to be inarbitrable in India i.e. disputes arising out of a Trust Deed or otherwise covered by the Trusts Act. The SC analyzed the scheme of the Trust Act finding that it comprehensively and adequately covers each subject pertaining to trust law, right from the creation of the trust and extending to management of the trust as well as provisions relating to beneficiaries and trustees, including remedies available to get grievances settled. Specifically on the point of legal remedies, the SC observed that the Trust Act provides specifically for the resolution of various disputes and confers jurisdiction for the same on Civil Courts. The SC referred to the (2) SCC AIR 1965 Calcutta (2011) 5 SCC

66 Provided upon request only principle of interpretation that where a specific remedy is prescribed by statute, the person facing such a grievance is denied of any other remedy. Therefore, the SC concluded that the presence of provisions in the Trust Act specifically dealing with the forum for dispute resolution reflects the intention of the legislature to impliedly bar arbitration of such disputes. E. Analysis Trusts may be public (i.e., charitable or religious) or private. Public trust are governed by specific state legislations on charitable and religious trusts and are not particularly governed by the Trust Act, even though general common law principles underlying the Trust Act are also applicable to public trusts. It may be against the public policy of a country to allow arbitration of disputes arising in public trusts. However, extending that principle to private trusts, including commercial trusts, may not be in best interest of the stakeholders involved. In terms of value of assets held in trust, the vast majority are trusts of a commercial nature, including but not limited to pension schemes and investment funds. Disputes listed as inarbitrable in India in the earlier ruling of Booz Allen have been found to be better resolved in public fora as a matter of public policy. However, given the benefits of arbitration which are well-known and manifold, various disputes arising out of Trust Deeds are better suited to arbitration, such as disputes involving: (a) fees and costs, including trustee s fees and legal fees; (b) appropriateness of investments; (c) interpretation of trust deed; (d) protection of trust corpus and income; (e) trust termination & severances; (f) trust accounting; (f) appointment, removal and retirement of trustees; etc. The finding that disputes arising out of Trust Deeds and in relation to the Trust Act are inarbitrable is a departure from the previous position taken by the Delhi High Court in Chhaya Shriram. 175 In that case, the court had held that beneficiary has benefits in the trust not by virtue of a contract with the Trustee(s) and/ 175. AAP 61 of 2008, dated 19 February or Settlor and that therefore, an arbitration clause in a Trust Deed is not a valid agreement to arbitrate for disputes between beneficiaries. To that extent, the SC does not deviate from the HC s ruling. However, the court did not consider trust-related disputes to be inarbitrable, per se, and it recognized that a separate arbitration agreement between beneficiaries could constitute a valid arbitration agreement. The present SC judgment was in appeal to a judgment of the Bombay High Court which had found that the beneficiary is in a contractual relationship with the Trustee and a Settlor. The present judgment confirms that the nature of the relationship is not contractual on the same lines as what was held by the Delhi HC. However, it remains to be clarified if the beneficiaries among themselves can create a contractual relationship with regards the distribution of benefits of the trust. Having said that, in the context of the recent ruling and in the context of the importance of arbitration options for private trusts, for trust disputes to be arbitrable in India, a statutory amendment to the Trusts Act appears to be necessary in line with those found in various other jurisdictions. 176 In the interim, parties can seek mediation and binding conciliation of disputes as an alternatives to the remedies available under the Trusts Act. Ishaan Vyas, Niyati Gandhi & T.P. Janani You can direct your queries or comments to the authors 176. For example, section 63 of the Trusts (Guernsey) Law 2007provides that, Settlement of action against trustee by alternative dispute resolution to be binding on beneficiaries. 63. (1) Where (a) the terms of a trust direct or authorise, or the Court so orders, that any claim against a trustee founded on breach of trust may be referred to alternative dispute resolution ( ADR ), (b) such a claim arises and, in accordance with the terms of the trust or the Court s order, is referred to ADR, and (c) the ADR results in a settlement of the claim which is recorded in a document signed by or on behalf of all parties, the settlement is binding on all beneficiaries of the trust, whether or not yet ascertained or in existence, and whether or not minors or persons under legal disability. (2) Subsection (1) applies in respect of a beneficiary only if (a) he was represented in the ADR proceedings (whether personally, or by his guardian, or as the member of a class, or otherwise), or (b) if not so represented, he had notice of the ADR proceedings and a reasonable opportunity of being heard,and only if, in the case of a beneficiary who is not yet ascertained or in existence, or who is a minor or person under legal disability, the person conducting the ADR proceedings certifies that he was independently represented by a person appointed for the purpose by a court of law. 62

67 International Commercial Arbitration Law and Recent Developments in India XIII. Employees as Arbitrators? No, Says Delhi HC The Delhi High Court clarifies applicability of Arbitration and Conciliation Amendment Act, 2015 ( Amendment Act ) in case of invocation of arbitrations post October 23, The Delhi High Court stresses the significance of adhering to the detailed guidelines on ineligibility of arbitrators as provided in the Seventh Schedule to the Amendment Act. Positive move to do away with the practice of appointment of in-house arbitrators for resolution of disputes. A. Introduction The Delhi High Court ( Delhi HC ) in one of its recent judgment in Assignia-Vil ( Petitioner ) JV v Rail Vikas Nigam Ltd.( Respondent ) 177, taking cognizance of the amendment to Section 12(5) of the Arbitration & Conciliation Act, 1996 ( Act ) held that under the Amendment Act, the court is duty bound to secure appointment of an independent and impartial Arbitral Tribunal. B. Brief Facts The parties entered into a works contract ( Contract ) under which the Petitioner undertook to carry out certain construction works ( Work ) for the Respondent, to be completed by February 15, Certain disputes arose between the parties. The Petitioner had raised three claims ( First Dispute ) against the Respondents during the execution of the Contract and sought payments. Due to failure of Respondent, to resolve issues amicably, an arbitral tribunal ( the First Tribunal ) was constituted in relation to these three claims. The First Tribunal consisted of serving and retired employees of the Respondent and was constituted before the commencement of the Amendment Act. During the pendency of the First Dispute, an extension of time for completion of work was granted to the Petitioner, however before this period had lapsed the Respondent served a notice of termination to the Petitioner due to faulty execution of the Work. The Petitioner opposed the termination and sought losses suffered due to untimely termination. As the attempt to resolve disputes amicable failed, the Petitioner by its letter dated October 26, 2015 invoked arbitration ( Second Dispute ) and called upon the Petitioner to suggest five names for constituting an independent arbitral tribunal. The Respondent s failure to respond to the said invocation of arbitration, lead to the present application under Section 11 (6) of the Act. C. Issue The issue before the Delhi HC was whether the dispute relating to the termination of the Contract had to be referred to the First Tribunal for resolution, or to a newly constituted independent arbitral tribunal, in view of the Amendment Act. D. Arguments Contentions of the Petitioner The Petitioner based their arguments on the following main contentions:- 1. Issue of termination of Contract constitutes a distinct and complicated issue; 2. First Tribunal had been constituted to adjudicate specific issues and only to deal with the three original claims; 3. Nomination of arbitrators who are serving or retired employees would not constitute an independent and unbiased tribunal; 4. Arbitration with respect to the Second Dispute was invoked post October 23, 2016, making provisions of the Amendment Act applicable Arbitration Petition No. 677 of

68 Provided upon request only The Second Dispute, therefore cannot be referred to First Tribunal. Contentions of the Respondent 1. The Respondent argued that there was already an existing tribunal and new claims could be added to the pending arbitration. The Respondent had given its consent to add/modify claims subsequent to the termination of contract, to be considered by First Tribunal itself. Placing reliance on State of Orissa v Asis Ranjan 178 and HL Batra & Co. v State of Haryana 179 and Shyam Charan Agarwal & Sons 180 the Respondent argued that additional claims could be raised before the First Tribunal and that there was no legal justification in restricting the scope of arbitration, as the aim of the procedure was to settle all disputes between the parties and avoid future litigation. 2. No objections were raised on the independence or impartiality of the First Tribunal by the Petitioner till date and therefore the Second Dispute may also be dealt with by the same tribunal. The Respondent contended that the Petitioner could not demand constitution of a new Tribunal and take benefit of its own mistake, after failing to participate in the proceedings before the First Tribunal E. Judgment The Delhi HC, after hearing all the submissions, held that in the normal course, with due consent of parties, the issue of termination of Contract could be referred to the First Tribunal in the pending arbitration proceedings itself. This would be in the interest of time, cost- efficiency and to avoid conflicting decisions (1999) 9 SCC (1999) 9 SCC (2002) 6 SCC 201 The Respondents had relied upon certain case laws to argue that all disputes arising out of an agreement could be referred to the same Arbitral Tribunal, and that therefore the issue of the untimely termination of the contract should also be referred to the first Tribunal. The Delhi HC refered to the Supreme Court s decision in Dolphin Drilling Limited v Oil and Natural Gas Corporation Limited 181 which had dealt with the issue of disputes arising between the parties prior to the invocation of arbitration and those arising during the pendency of the arbitration dealing with the past disputes. The Delhi HC thereafter noted that the First Dispute was invoked before the commencement of the Amendment Act and the Second Dispute was invoked post commencement. On the question of applicability of the Amendment Act, the Delhi HC highlighted that the arbitration clause in the Contract encompassed statutory modifications to the Arbitration and Conciliation Act, 1996, and therefore, since the amendments came into force prior to the invocation of arbitration of the Second Dispute, the provisions of the Amendment Act would apply. 182 In light of the amendments brought about by the Amendment Act, the Delhi HC held that it was the prerogative of the Petitioner to seek constitution of an independent and impartial Arbitral Tribunal for adjudicating the issue of termination of the Contract, due to change in law under Section 11 (8) of the Act 183 and the fact that the First Tribunal comprised of employees of the Respondent. Having the same 181. (2010) 3 SCC Section 26 of the Amending Act Act not to apply to pending arbitral proceedings- Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of Section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act Section 11(8) of the Amendment Act- (8) The Supreme Court or, as the case may be, the High Court or the person or institution designated by such Court, before appointing an arbitrator, shall seek a disclosure in writing from the prospective arbitrator in terms of sub-section (1) of section 12, and have due regard to (a) any qualifications required for the arbitrator by the agreement of the parties; and (b) the contents of the disclosure and other considerations as are likely to secure the appointment of an independent and impartial arbitrator. ; 64

69 International Commercial Arbitration Law and Recent Developments in India tribunal resolve the Second Dispute would negate the very purpose of the amendments to Section 12 of the Amendment Act. 184 F. Analysis The recent judgment may be amongst the first of many heralding a new era for the arbitration regime in India, bringing it in line with international best practices having stringent conflict of interest regimes. It has been common practice for public sector undertakings in India to have a panel of in-house arbitrators that are technically proficient in that particular sector, leading to an unfair advantage over the opposite party. This judgment has dealt with several aspects in relation to appointment of arbitrators and procedure required to be followed pre and post amendment of the Act. The recourse to statutory provisions for appointment of arbitrator under Section 11(6) arises only upon failure of one party to follow procedure based on terms and conditions of the agreement. It is settled law that in the event of a corporation forfeiting its right to appoint an arbitrator, with similar clauses providing for employees as Arbitrators, the courts are entitled to appoint an independent and impartial arbitrator, giving a go-bye to the terms of the arbitration clause. 185 In the short term, this judgment may result in the constitution of multiple tribunals dealing with disputes under the same agreement if new disputes have arisen post the Amendment Act, while proceedings are pending for previous disputes before an arbitrator tribunal, unless both parties consent otherwise. This judgment marks the end of such in-house arbitrators and stresses the importance of compliance with guidelines provided under Section 12(5) read with Seventh Schedule of the Amendment Act for appointment of arbitrators to maintain independence and impartiality. Interestingly, the Delhi HC, by directing the parties to appear before the Delhi International Arbitration Centre, may have taken a conscious decision to go in for institutional arbitration, instead of ad-hoc. This may also be in line with the push for institutional arbitration as was envisaged under the law commission report but did not find place in the Amendment Act. Siddharth Ratho, Alipak Banerjee, Payel Chatterjee & Vyapak Desai You can direct your queries or comments to the authors 184. Section 12 (5) of the Act read with the newly enacted Seventh Schedule identifies three categories of situations in which people would be ineligible to serve as arbitrators on an arbitral tribunal (i) when the arbitrator has a relationship with one of the parties; (ii) has provided advice/an opinion to a party to the dispute, or; (iii) has an interest in the outcome of the dispute. The first category of situations identifies a relationship of employment between the arbitrator and a party to the dispute. The Fifth Schedule elucidates that justifiable doubts as to the independence or impartiality of the arbitrator would arise when he is an employee Deep Trading Company v. Indian Oil Corporation and Ors. (2013) 4 SCC 35 and North Eastern Railway v. Tripple Engineering Works. (2014) 9 SCC

70 With Institutional Inputs from SIAC Copyright 2017 Nishith Desai Associates

71 International Commercial Arbitration Law and Recent Developments in India About SIAC Established in 1991 as an independent, not-forprofit organisation, the Singapore International Arbitration Centre (SIAC) has a proven track record in providing neutral arbitration services to the global business community. SIAC arbitration awards have been enforced in many countries including Australia, China, Hong Kong, India, Indonesia, UK, USA and Vietnam, amongst other New York Convention countries. In 2015, SIAC a received a record number of 271 fresh cases and issued a total of 116 SIAC awards. These included 3 awards / orders issued by emergency arbitrators for urgent interim relief. Integrity, fair rules and procedures, efficiency and competence are key to SIAC s success. SIAC s case management services are supervised by a Court of Arbitration that comprises of 18 of the most eminent, experienced and diverse international arbitration practitioners. The Court of Arbitration is headed by its President, and offers a wealth of experience and specialist knowledge in international dispute resolution from all major jurisdictions, including Australia, Belgium, China, France, India, Japan, Korea, UK, USA and Singapore. SIAC s operations, business strategy and development, as well as corporate governance matters are overseen by the Board of Directors comprising of senior members of the legal and business communities. SIAC s Board of Directors consists of well-respected lawyers and corporate leaders from China, India, Korea, UK, HongKong and Singapore. SIAC s multinational and multi-lingual Secretariat comprises of dual qualified and experienced arbitration lawyers from both civil and common-law jurisdictions including Belgium, Canada, China, India, Korea, Philippines, Singapore and the USA. Headed by the Registrar, SIAC s Secretariat supervises and monitors the progress of each case and also scrutinises draft awards to enhance the enforceability of awards and minimise the risk of challenges. Recognising the need for dedicated expertise in cases dealing with intellectual property (IP)rights, SIAC set up an exclusive panel of IP arbi-trators in early 2014 (the SIAC IP panel). The SIAC IP Panel complements SIAC s existing multi-jurisdictional panel of over 400 leading arbitrators from across 40 jurisdictions. In 2015, SIAC consolidated its position as one of the world s leading arbitral centres. For the last three years, SIAC consistently received over 200 new cases each year. Over the last 10 years new case filings at SIAC grew by almost 200%, thereby reinforcing its position as one of the fastest growing arbitral institutions in the world. SIAC established its first overseas liaison office in Mumbai, India in 2013 (the Indian office) in recognition of the significant role played by India towards SIAC s success over the years as an international arbitral institution. This was followed later that year with the opening of a second overseas liaison office at the International Dispute Resolution Centre in Seoul, South Korea. Recently, SIAC has opened an office in the Free Trade zone in Shanghai, China and has also entered into an MoA with GIFT, Gujarat to open a presence in GIFT City. The Indian office is the embodiment of SIAC s commitment to develop a greater awareness and consciousness of international arbitration in India. The Head of South Asia at SIAC is based and operates out of the Indian office and leads its business development initiatives in the region as well as oversees operations. The primary objectives of the liaison offices are the dissemination of practical information on arbitration at SIAC and in Singapore; to promote the use of institutional arbitration; to create a line of communication for SIAC and the community in Singapore with key players in international arbitration in India and South Korea; to obtain feedback on SIAC s services as an arbitral institution; and to exchange ideas on local hot topics and issues in international arbitration. 69

72 Provided upon request only The physical presence of SIAC in India, South Korea and China has proved immensely beneficial over the past couple of years, with users and the legal community reaching out to further understand thebenefits of arbitration under the SIAC Rules. As a result, SIAC interacts closely with companies and the legal community in India and South Korea, thereby strengthening ties with its current and potential users. 70

73 International Commercial Arbitration Law and Recent Developments in India I. SIAC Facilitates the Efficient Resolution of Your Dispute We provide the certainty of established and tested Rules, so there is less risk of tactical delay or obstruction of the process We appoint arbitrators where parties are unable to agree under the SIAC Rules, UNCITRAL Rules and ad hoc cases. Appointments are made on the basis of our specialist knowledge of an arbitrator s expertise, experience and track record There are strict standards of admission for SIAC s Panel of Arbitrators, thus minimising the risk of challenges and delays Our full-time staff manage all the financial aspects of the arbitration, including: Regular rendering of accounts; Collecting deposits towards the costs of the arbitration; and Processing the Tribunal s fees and expenses Transparent financial management of the case according to published guidelines allows legal representatives to provide accurate cost projections, timelines and costs for each stage of the arbitration process to their clients We supervise and monitor the progress of the case. We conduct a scrutiny of the arbitral award, thus minimizing the likelihood of challenges to enforcement SIAC s administration fees are competitive in comparison with all the major international arbitral institutions and are based on an ad valorem model II. Special Procedures at SIAC A. Emergency Arbitrator (EA) 1 st international arbitral institution in Asia to introduce EA provisions in July 2010 EA deals with requests for urgent interim relief before a Tribunal is constituted SIAC is an international leader in terms of the number of EA cases handled B. Why the need? Challenges with seeking interim relief from courts Lack of confidence in national courts Desire for confidentiality C. How to apply? Application in writing to the Registrar: - Concurrent with or following filing of Notice of Arbitration - Prior to constitution of Tribunal Notify Registrar and all other parties in writing of: - Nature of relief sought - Why party is entitled to such relief - Reasons why such relief is required on emergency basis Application has to be accompanied by payment of any deposits set by Registrar D. Who decides? President of SIAC Court of Arbitration E. Who will be the EA and what powers does EA have? SIAC Panel of Arbitrators with * by an arbitrator s name indicates willingness to act as EA EA has : - Same powers as Tribunal - Power to order or award any form of interim relief - To give reasons in writing for decision - No power to act after the Tribunal is constituted Tribunal may reconsider, modify or vacate the interim award by EA If Tribunal is not constituted within 90 days, EA s order or award ceases to have effect 71

74 Provided upon request only F. How long does it take? Action Appointment of EA Challenge to appointment of EA Schedule for consideration of application by EA Time Within 1 day of receipt by Registrar of application and payment of fee Within 2 days of communication by Registrar of appointment and circumstances disclosed Within 2 days of appointment G. When will EA s award or order be issued? Average time for issuance of EA order or award is 8.5 to 10 days after appointment of EA, but can be faster H. Is EA s order or award enforceable? EA s orders and awards are enforceable in both Singapore-seated and foreign-seated arbitrations under the International Arbitration Act If parties agree In cases of exceptional urgency B. Who decides? President of SIAC Court of Arbitration C. What is the procedure? Dispute will be referred to sole arbitrator Award will be made within 6 months from date of constitution of Tribunal In practice, high rate of voluntary compliance I. Common types of relief sought? Preservation orders Singapore The most preferred seat of Arbitration in Asia Global market survey on international arbitration by Queen Mary University of London Freezing orders General injunctive relief III. Expedited Procedure Fast-track 6-month procedure introduced in July 2010 Popular procedure for lower value, less complex disputes A. When to use it? If sum in dispute does not exceed SGD 6,000,000 IV. The SIAC Growth Story Active case load of over 600 cases 84% of new cases filed with SIAC in 2015 were international in nature About half of our new cases involve foreign parties with no connection whatsoever to Singapore Indian parties largest contingent of cases at SIAC in 2009, 2010, 2011, 2013 &

75 International Commercial Arbitration Law and Recent Developments in India Average sum in dispute for Indian cases in 2015 was SGD 8 million with highest sum in dispute of SGD 85.1 million V. Singapore and SIAC offer Over 400 arbitrators from across 40 jurisdictions UNCITRAL Model Law and a judiciary that provides maximum support & minimum intervention in arbitrations Freedom of choice of counsel in arbitration proceedings regardless of nationality. No restriction on foreign law firms engaging in and advising on arbitration in Singapore. Competitive cost structure The Tribunal shall consist of (1 or 3) arbitrator(s). The language of the arbitration shall be. Applicable Law The applicable law clause should be drafted under legal advice. The following is a simple model clause: This contract is governed by the laws of **. ** State the country or jurisdiction Contacts Pranav Mago Head (South Asia) e: pranav@siac.org.sg m: SIAC arbitration awards enforced in over 150 countries Unmatched connectivity to India with over 360 flights a week Influence your business outcome with the SIAC Model Clause In drawing up international contracts, we recommend that parties include the following arbitration clause: Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration administered by the Singapore International Arbitration Centre ( SIAC ) in accordance with the Arbitration Rules of the Singapore International Arbitration Centre ( SIAC Rules ) for the time being in force, which rules are deemed to be incorporated by reference in this clause. The seat of the arbitration shall be [Singapore] *. * If the parties wish to select an alternative seat to Singapore, please replace [Singapore] with the city and country of choice (e.g., [City, Country] ). 73

76 Provided upon request only SIAC Information Kit I. Why SIAC? Choosing an institution guarantees defined rules and procedures. Choosing an institution guarantees that you have a Secretariat which supervises the entire process and consistently guides parties and arbitrators through the process. SIAC s Court of Arbitration consists of some of the most eminent practitioners of international arbitration who supervise case management at SIAC. Choosing SIAC guarantees that arbitrators fees are subject to a maximum cap in accordance with the SIAC schedule of fees. SIAC controls how arbitrators are paid and determines arbitrator fees on actual work done (not hours spent). SIAC controls timelines of cases. The average time for completion of a case is 9 to 12 months. SIAC scrutinises awards to ensure that they are enforceable in any jurisdiction. SIAC awards have been successfully enforced in Australia, China, Hong Kong, India, Indonesia, UK, USA and Vietnam, amongst other New York Convention countries. SIAC appoints arbitrators from a qualified and publicly available panel of over 400 accredited and trained arbitrators from across 40 jurisdictions. Hearings are not conducted once every month in SIAC cases. There is typically only one or two hearings. Parties need not incur costs to fly down to Singapore for a hearing. They can conduct a hearing where convenient. Arbitrators appointed by SIAC will set out a schedule for the conduct of the case at the beginning of the case and follow that schedule, including for the hearing. Hearings are only conducted for the purpose of final submissions and cross-examination of witnesses and not for parties to file documents and pleadings. SIAC also provides special procedures such as: a. a fast track procedure (expedited procedure) which guarantees an award in 6 months from the constitution of the tribunal b. a procedure to seek urgent interim relief from an emergency arbitrator appointed for that purpose an emergency arbitrator is normally appointed in 24 hours and deals with request for interim relief (having heard both parties) in a matter of days If Singapore is chosen as the seat, Singapore courts will not normally interfere in the arbitral proceedings and will not review the award on merits in a challenge. Singapore is the most popular seat for international arbitration in Asia. It is cost effective, well connected, neutral, permits foreign counsel, and has an arbitration legislation in place that is most up to date with international practices and jurisprudence. II. Statistics The SIAC s Annual Report for 2015 which is available on the Centre s website siac.org.sg/ will give you details of the numbers and value of cases handled by SIAC in Some important facts are as follows: i. In 2015, SIAC consolidated its position as one of the world s leading arbitral centres. For the last three years, SIAC consistently received over 200 new cases each year. Over the last 10 years, new case filings at SIAC grew by almost 200%, 74

77 International Commercial Arbitration Law and Recent Developments in India reinforcing its position as one of the fastest growing arbitral institutions in the world. ii. In 2015, SIAC received 271 new cases from parties from 55 jurisdictions spanning six continents. 84% of these new cases filed with SIAC were international in nature. For new cases filed in 2015, the total sum in dispute amounted to S$6.23 billion and the highest amount claimed was S$2.03 billion. This was a new milestone as the highest number of cases were filed in 2015, a 22% increase from iii. A diverse range of claims was filed at SIAC in 2015, arising from key sectors such as commercial, trade, shipping/maritime, corporate, construction/ engineering, insurance, mining, energy, IP/IT, financial services and aviation. Trade and commercial disputes have been key areas in relation to which disputes have been filed at SIAC and this remained the case in iv. In 2015, the highest number of filings was generated by parties from India, with 91 Indian parties having used SIAC, followed by parties from the China and South Korea. Parties from China and India have remained strong contributors of cases to SIAC over the past five years. Parties from the USA were a close fourth and were consistent with the number of cases received last year from them. Cases involving parties from Australia, Vietnam and Hong Kong also increased in The other parties in the top ten list of foreign users were Indonesia, British Virgin Islands and Malaysia. v. The largest case for 2015 involving an Indian party dealt with a sum in dispute of over SGD 85.1 million. vi. The average value of a dispute at the SIAC in 2015 was over SGD 23 million, and the highest claim amount in 2015 was SGD 2.03 billion. vii. The average sum in dispute at the SIAC for 2015 in cases involving Indian parties was SGD 8 million. It is indisputable that India s significant contribution continues to remain a key factor to SIAC s unwavering success as an international arbitral institution. Recognising this, SIAC opened its first overseas office in Mumbai, India in May SIAC s Indian office facilitates SIAC s interactions and information sharing on a regular basis with current and potential users from India. Soon SIAC will be opening another office in GIFT City, Gujarat which is India s first approved IFSC. III. Costs at SIAC The cost of an arbitration at SIAC is determined in accordance with the Schedule of Fees. It can be easily calculated on our website using the Fee Calculator siaccalculator/?itemid=448 On costs, it is important to note that the SIAC s cost structure comprises of the following: 1. Filing fees for a claim or counter claim; ii. Administration Fees; iii. Arbitrators Fees; iv. Expenses of the arbitration SIAC revised its Schedule of Fees on 1 August 2014, applicable to all arbitrations commenced on or after this date. From the Schedule of Fees, which is available on the website yourfees/siac-schedule-of-fees, it is possible to see that: i. Arbitrators and SIAC s fees are determined on an ad valorem rate; and ii. the fees are caps (or ceilings) that are applicable to the administration fees and arbitrators fees. In the first instance, when an arbitration commences, the SIAC estimates the costs of arbitration as comprising of: 75

78 Provided upon request only i. SIAC; ii. fees and expenses of the Tribunal; and iii. facilities and services required for the physical conduct of the arbitration Deposits are sought from the parties on the basis of this estimate of the costs of arbitration. The actual cost is determined by the Registrar of the SIAC at the conclusion of a case on the basis of the stage at which the matter has been con- cluded. Hence, the actual cost of an arbitration will always be lesser than the cap indicated in the Schedule of Fees for a dispute of a particular sum. Moreover, this aids the Registrar in an objective determination of the arbitrators fees based on work performed and the stage at which a case concludes. Parties are also free to agree upon alternative methods of determining tribunals fees in SIAC arbitrations. Several international surveys have been con- ducted comparing costs at various international arbitral institutions, which categorise SIAC as a cost effective option for parties. For more information on cost comparisons with other institutions, do feel free to contact us. IV. Duration of an Arbitration at SIAC While there is no absolute data on the duration of a case at the SIAC, experience suggests that an arbitration with a sole arbitrator is likely to require between 9 and 12 months from commencement of arbitration to the delivery of an award. Similarly, in a three-member arbitral tribunal, owing to factors such as the complexity and quantum of the dispute and other logistical issues, it would appear that an arbitration would require between 15 and 18 months from commencement of arbitration to the delivery of an award. Needless to say, this depends entirely on the particularities of a case and the attitude of the parties, and can vary. The following is a depiction of caseflow at the SIAC: Month Notice of Arbitration SIAC writes to parties on commencement Calculation of estimated costs of arbitration Response to Notice 1st tranche of deposits Constitution of Tribunal 2nd tranche of deposits Preliminary meeting Statement of Claim Statement of Defence Replies, if any Request to produce documents Ruling on requests 3rd tranche of deposits Witness statements Reply witness statements Expert reports, if any Written opening submissions for hearing Hearing tranche 76

79 International Commercial Arbitration Law and Recent Developments in India (1-5 days) Written closing submissions Submissions on Costs Draft award sent to SIAC Determination of costs of arbitration Signed award issued to parties V. Innovations in Reducing Cost and Time in International Arbitrations at SIAC Of some additional interest are the SIAC Rules 2010 and 2013, which introduced two new mechanisms to reduce the duration of proceedings or be used in cases where urgent or emergency relief is required. A. Expedited Procedure Parties can choose to apply the SIAC s Expedited Procedure under Rule 5 of the SIAC Rules (i) in their contract by using the SIAC Expedited Procedure Model Clause (which is available on our website); or (ii) post-dispute by agreement between parties. Alternatively, a party can choose to make an application to the SIAC for the Expedited Proce- dure if the amount in dispute does not exceed the equivalent amount of SGD 5,000,000 or in cases of exceptional urgency. This amount has been increased to SGD 6,000,000 in the recent amendments to the SIAC Rules. If the President of the SIAC Court of Arbitration determines that the arbitral proceedings should be conducted in accordance with the Expedited Procedure, an award will be made within six months of the constitution of the tribunal. As of June 2015, SIAC received 184 requests for the application of the Expedited Procedure, of which SIAC accepted 129 requests. A few examples are below. i. Case Study 1 In one of the cases decided under the Expedited Procedure, the following were the brief facts of the case: The parties were a Japanese claimant and an Indian respondent The dispute was an international trade dispute regarding shipment of iron ore in the sum of SGD 1,600,537 1 October 2010 Claimant filed notice of arbitration and request for Expedited Proce- dure nominating a particular individual to be appointed as the sole arbitrator 3 November 2010 Respondent agreed to the Expedited Procedure and to the appointment of the Claimant s nominee 19 November 2010 SIAC Chairman determined that the arbitral proceedings in this reference shall be conducted in accordance with the Expedited Procedure. The parties were informed of this decision and SIAC approached the parties joint nominee regarding his prospective appointment on that day 26 November 2010 Nominee was appointed by the Chairman as the sole arbitrator in this matter 30 November 2010 Tribunal communicated to the parties regarding further conduct of this arbitration and circulated the draft Procedural Timetable. 10 December 2010 Tribunal held the first preliminary meeting with the parties via tele- phonic conference 77

80 Provided upon request only 9 May 2011 Hearing on merits took place at Maxwell Chambers, Singapore 11 May 2011 SIAC received the draft award from the Tribunal for scrutiny 25 May 2011 Tribunal issued the signed Award Total time between filing and rendering of Award 7 months, 25 days Total time between constitution of Tribunal and rendering of Award 6 months ii. Case Study 2 In another case to which the Expedited Procedure was applied, the following was the timeline: The parties were an Indian claimant and a Hong Kong SAR incorporated respondent The dispute was an international trade dispute regarding shipment of coal with a claim amount in the sum of about SGD 1 million 06 June 2011 Claimant filed notice of arbitration and request for Expedited Procedure nominating a particular individual to be appointed as the sole arbitrator 08 June 2011 Arbitration deemed commenced 29 August 2011 Chairman, SIAC was requested to determine whether the Expedited Procedure ought to be applied on the basis of the parties submissions up to such date 31 August 2011 SIAC approached a prospective arbitrator for appointment in the case 01 September 2011 Prospective arbitrator reverted to accept appointment on the condi- tion that the hearing be held in January September 2011 Parties were informed of the arbitrator s condition and their views were requested 16 September 2011 Parties accepted the prospective arbitrator s condition on the hearing to be held in January September 2011 Arbitrator appointed by Chairman, SIAC 23 September 2011 Arbitrator informed parties that given their different locations, the preliminary meeting did not require a physcal meeting 04 October 2011 All procedural steps and timelines finalised 29 November 2011 Parties settled the dipute and consent terms agreed Total time between commencement and completion of proceedings 5 months, 22 days Total time between constitution of Tribunal and completion 2 months, 11 days The following is a depiction of caseflow at the SIAC for an Expedited Procedure case: 30 August 2011 Chairman, SIAC determined that the Expedited Procedure ought to be applied 78

81 International Commercial Arbitration Law and Recent Developments in India Month Notice of Arbitration SIAC writes to parties on commencement Calculation of estimated costs of arbitration Response to Notice 1st tranche of deposits Determination of Expedited Procedure Application Constitution of Tribunal 2nd tranche of deposits Preliminary meeting Statement of Claim Statement of Defence Replies, if any Request to produce documents Ruling on requests 3rd tranche of deposits Witness statements Reply witness statements Expert reports, if any Written opening submissions for hearing Hearing tranche (1-5 days) Written closing submissions Submissions on Costs Draft award sent to SIAC Determination of costs of arbitration Signed award issued to parties B. Emergency Arbitrator A party in need of emergency relief prior to the constitution of the Tribunal may apply for such relief pursuant to Rule 30.2 and Schedule 1 of the SIAC Rules. Under this mechanism: i. the President, SIAC Court of Arbitration will appoint an Emergency Arbitrator within one business day of deciding to accept an application for emergency relief under these provisions; ii. any challenge to the appointment of the Emergency Arbitrator must be made within one business day of his appointment; iii. the Emergency Arbitrator must establish a schedule for considering the application for emergency relief within two business days of his appointment; Singapore s international Arbitration Act was amended in 2012 to provide for the enforceability of awards and orders issued by emergency arbitrators in Singapore. This makes Singapore the first jurisdiction globally to adopt legislation for the enforceability of such awards and orders. Most cases handled by SIAC under these provisions have seen voluntary compliance of the orders and awards issued by emergency arbitrators. The SIAC was the first Asian arbitral institution to introduce these provisions. In 2015, SIAC received 12 applications to appoint an emergency arbitrator. SIAC accepted all 5 requests, taking the total number of emergency arbitrator applications accepted by SIAC to 50 (as at July 2016), since the introduction of these provisions in the SIAC Rules in July Interestingly, a 2014 decision of the Bombay High Court in HSBC v Avitel endorsed, validated and effectively enforced interim awards issued 79

82 Provided upon request only by an emergency arbitrator appointed in SIAC administered arbitrations under the SIAC 2010 Rules, wherein the emergency arbitrator had issued interim protective orders. A few examples of case studies involving the emergency arbitrator procedure are below. i. Case Study 1 In the first case where an Emergency Arbitrator was appointed, the following were the brief facts of the case: Claimant: Indian Respondent: Indian Broad nature of interim relief sought: The Claimant sought an injunction restraining the Respondent from calling upon certain performance bank guarantees provided under a contract for provision of dredging services by the Claimant at a port in India. The SIAC received the application at 21:30 hrs Singapore Time The Chairman, SIAC determined that the application should be accepted and on the basis of the nature of dispute, nationality of parties and relief sought, appointed the Emergency Arbitrator the next day The Emergency Arbitrator appointed was well recognised as a leading international arbitrator, having sat as arbitrator in more than 170 cases and written numerous awards Within one day of his appointment, the Emergency Arbitrator established a schedule for consideration of the application for emergency relief As per the schedule, the parties made written submissions on the application and a telephonic hearing was conducted within one week of the appointment of the Emergency Arbitrator The Emergency Arbitrator passed an ad-interim order one day thereafter Parties, by consent, amended the terms of the order and the main arbitral tribunal was constituted Parties, thereafter, settled the case. Number of days between request for emergency relief & first interim order: 4 days Number of days from First interim order to Award on interim relief: 9 days Whether the interim relief sought was granted by the EA: Yes ii. Case Study 2 In another case where an Emergency Arbitrator was appointed, the brief facts were as follows: Claimant: Indian Respondent: BVI Broad nature of interim relief sought: The Indian company filed an application for emergency interim relief seeking an order (i) restraining the BVI company from breaching the confidentiality provisions; and (ii) abiding by the contractual dispute resolution mechanism of arbitration at the SIAC The Claimant initiated arbitration on the basis that the BVI company had breached the shareholders agreement and was alleging that it would breach the confidentiality obligation by initiating court action in multiple jurisdictions Within 20 hrs of the receipt of the application, the SIAC appointed the Emergency Arbitrator A preliminary hearing was scheduled within one day of the appointment of the Emergency Arbitrator An preliminary order was issued on the same day to preserve the status quo 80

83 International Commercial Arbitration Law and Recent Developments in India An interim award was issued two days thereafter and a supplemental interim thereafter The parties, thereafter, settled the matter Number of days between request for emergency relief & first interim order: 1 day Number of days from First interim order to Award on interim relief: 19 days Whether the interim relief sought was granted by the EA: Yes iii. Case Study 3 In a third case where an Emergency Arbitrator was appointed, the brief facts were as follows: Claimant: Indonesian Respondent: Chinese Broad nature of interim relief sought: This occurred over the Chinese New Year Holiday The dispute between a Chinese company and an Indonesian company was in relation to the quality of a shipment of coal The Indonesian shipper wanted to sell the cargo of coal pending the resolution of the dispute as the cargo was deteriorating They contacted the SIAC on Monday morning warning us of their intention to make an emergency arbitrator application The Indonesian applicant filed their papers at 2pm and by 5pm, an experienced Singaporean shipping lawyer was appointed as the Emer- gency Arbitrator The Emergency Arbitrator gave his preliminary directions that evening and a hearing was scheduled for the next day On the next day, he made an order permitting the sale and directing the respondents to co-operate to permit the cargo to leave the port Number of days between request for emergency relief & first interim order: 1 day Number of days from First interim order to Award on interim relief: 2 days Whether the interim relief sought was granted by the EA: Yes C. ARB MED ARB Arb-Med-Arb is a process where a dispute is first referred to arbitration before mediation is attempted. If parties are able to settle their dispute through mediation, their mediated settlement may be recorded as a consent award. The consent award is generally accepted as an arbitral award, and, subject to any local legislation and/or requirements, is generally enforceable in approximately 150 countries under the New York Convention. If parties are unable to settle their dispute through mediation, they may continue with the arbitration proceedings. Parties wishing to take advantage of this tiered dispute resolution mechanism as administered by SIAC and SIMC, may consider incorporating the following Arb-Med-Arb Clause in their contracts: Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration administered by the Singapore International Arbitration Centre ( SIAC ) in accordance with the Arbitration Rules of the Singapore International Arbitration Centre ( SIAC Rules ) for the time being in force, which rules are deemed to be incorporated by reference in this clause. The seat of the arbitration shall be [Singapore]*. * If the parties wish to select an alternative seat to Singapore, please replace [Singapore] with the city and country of choice (e.g., [City, Country] ). The Tribunal shall consist of (1 or 3) arbitrator(s). The language of the arbitration shall be. The parties further agree that following the commencement of arbitration, they will attempt in good faith to 81

84 Provided upon request only resolve the Dispute through mediation at the Singapore International Mediation Centre ( SIMC ), in accordance with the SIAC-SIMC Arb-Med-Arb Protocol for the time being in force. Any settlement reached in the course of the mediation shall be referred to the arbitral tribunal appointed by SIAC and may be made a consent award on agreed terms VI. Arbitrators SIAC retains a Panel of accredited arbitrators of local as well as international experts, from which the majority of SIAC appointments of arbitrators are made. In addition to administering entire arbitrations, SIAC also offers a service for the appointment of arbitrators in ad hoc arbitrations seated in Singapore, including those under the UNCITRAL Arbitration Rules. SIAC performs this function as the statutory appointing authority under applicable legislation in Singapore. As of 31 December 2015, SIAC had made a total of 126 individual appointments of arbitrators to 86 sole arbitrator tribunals and 40 three-member tribunals. Of these arbitrator appointments, 116 were appointments made under the SIAC Rules, whilst the remaining 10 were appointments made under the UNCITRAL Arbitration Rules and in ad hoc arbitrations. The SIAC Panel of Arbitrators and their curriculum vitae are publicly available on our website sg/our-arbitrators/siac-panel Recognising the need for dedicated expertise in cases dealing with intellectual property (IP) rights, SIAC set up an exclusive panel of IP arbitrators in early 2014 (the SIAC IP panel) which complements SIAC s existing multi-jurisdictional panel of over 400 leading arbitrators from 40 jurisdictions. The Panel also has several strict standards for admission including e.g. minimum 10 years PQE, fellowship accreditation, acted as arbitrator in at least 5 cases, written at least 2 awards. The Board of the SIAC determines the applications to be added on the Panel. Parties are free to choose anybody outside the Panel while nominating arbitrators in their cases at the SIAC. In 2015, 35% of the party appointed arbitrators were from Singapore, 11% from the UK and 2% from India. VII. Confidentiality Confidentiality is a key advantage of international arbitration. Arbitration proceedings conducted at the SIAC are private and confidential in nature. Under the SIAC Rules, 2016: i. unless the parties agree otherwise, all meetings and hearings shall be in private, and any recordings, transcripts, or documents used shall remain confidential [Rule 24.4]; ii. the parties and the Tribunal are required to treat all matters relating to the proceedings and any award as confidential [Rule 39.1]; iii. the obligation in respect of confidentiality extends to the existence of the proceedings, the pleadings, evidence and other materials in the arbitration proceedings, all other documents produced by a party in the proceedings and the award arising from the proceedings, but excludes any matter that is otherwise in the public domain [Rule 39.3]; iv. the Tribunal is vested with the power to take appropriate measures including issuing an order or award for sanctions or costs if a party breaches the provisions under Rule 35 enumerated above [Rule 39.4]; v. there are certain recognized exceptions provided to the obligations of confidentiality. Hence, a party or any arbitrator shall not, without the prior written consent of all the parties, disclose to a third party any such confidential matter except: a. for the purpose of making an application to any competent court of any State to enforce or challenge the award; b. pursuant to the order of or a subpoena issued by a court of competent jurisdiction; 82

85 International Commercial Arbitration Law and Recent Developments in India c. for the purpose of pursuing or enforcing a legal right or claim; d. in compliance with the provisions of the laws of any State which are binding on the party making the disclosure; e. in compliance with the request or requirement of any regulatory body or other authority; or f. pursuant to an order by the Tribunal on application by a party with proper notice to the other parties [Rule 41.2] The SIAC Code of Ethics for arbitrators found also prescribes that arbitration proceedings shall remain confidential and that an arbitrator should not use confidential information acquired during the course of the proceedings to gain personal advantage or advantage for others, or to adversely affect the interest of others. VIII. Enforceability The SIAC scrutinises awards in draft form before they are made and issued to parties by tribunals in order to ensure consistency and enforceability under the New York Convention. Under the SIAC Rules, the Registrar may suggest modifications as to the form of the award and without affecting the Tribunal s liberty of decision also draw attention to points of substance. The SIAC performs this duty also with a view to its general duty to ensure enforceability of any SIAC award under rule SIAC awards have been enforced in many jurisdictions across the world including Australia, China, Hong Kong, India, Indonesia, Vietnam, UK and the USA. IX. Traning and Development A. SIAC Arbitration Training Video The SIAC Arbitration Training Video is a unique and innovative tool, conceptualised and developed by SIAC to demonstrate a typical international commercial arbitration administered under the SIAC Rules SIAC decided to produce the video to demystify international arbitration. Given the confidential nature of arbitral proceedings, SIAC felt it would be useful for those who have never experienced an international arbitration before to have a visual guide to take them through the various stages of an arbitral process. The video is a user-friendly learning and teaching tool for arbitrators, practitioners, in-house counsel, judges and university students, and has been well received at SIAC workshops in India, China, Indonesia, Japan, Korea and the Philippines. In addition to being an educational tool, the video promotes Singapore as a neutral seat and convenient location for international arbitration. The three and a half hour film was shot mostly on location in the state-of-the-art hearing facilities at Maxwell Chambers in Singapore, to showcase Singapore s world-class hearing venue and modern video-conferencing technology. The video is based on a fictitious fact situation, and includes scenes on a range of topics such as commencement of an arbitration, emergency arbitrator hearing, appointment of and challenge to arbitrators, hearing on jurisdiction, crossexamination of witnesses, scrutiny of the draft award, costs of arbitration and enforcement. Further details can be found on our website sg/ / /siacarbitration-training-video 83

86 Provided upon request only B. Young SIAC (YSIAC) SIAC rejuvenated its Young SIAC membership (for younger lawyers aged below 40) by rebranding the group as YSIAC and forming a new Committee to spearhead and implement initiatives. The YSIAC Committee s mandate is to promote the use of international arbitration and other forms of alternative dispute resolution, both regionally and internationally, and to provide a platform for young professionals to work together to address the unique challenges faced by the legal and business communities across a diverse range of Asian jurisdictions and cultures. Membership to YSIAC is free of charge and can be acessed about-us/how-to-join-ysiac For more information on SIAC, please visit our website at 84

87 Provided upon request only About NDA Nishith Desai Associates (NDA) is a research based international law firm with offices in Mumbai, Bangalore, Palo Alto (Silicon Valley), Singapore, New Delhi, Munich and New York. We provide strategic legal, regulatory, and tax advice coupled with industry expertise in an integrated manner. As a firm of specialists, we work with select clients in select verticals on very complex and innovative transactions and disputes. Our forte includes innovation and strategic advice in futuristic areas of law such as those relating to Bitcoins (block chain), Internet of Things (IOT), Autonomous Vehicles, Artificial Intelligence, Privatization of Outer Space, Drones, Robotics, Virtual Reality, Med-Tech, Ed-Tech and Medical Devices and Nanotechnology. We specialize in Globalization, International Tax, Fund Formation, Corporate & M&A, Private Equity & Venture Capital, Intellectual Property, International Litigation and Dispute Resolution; Employment and HR, Intellectual Property, International Commercial Law and Private Client. Our industry expertise spans Automobile, Funds, Financial Services, IT and Telecom, Pharma and Healthcare, Media and Entertainment, Real Estate, Infrastructure and Education. Our key clientele comprise marquee Fortune 500 corporations. According to the recent report by India Brand Equity Foundation (IBEF), India s Civil Aviation Industry is on a high-growth trajectory expected to grow from being the 9th largest aviation market in the world with a size of around US$ 16 billion to being the 3rd biggest by 2020 and the largest by The Government of India (GOI) also envisions airport infrastructure investment of US$ 11.4 billion under the Twelfth Five Year Plan ( ). It has opened up the airport sector to private participation. The Airports Authority of India (AAI) also aims to bring around 250 airports under operation across the country by 2020.We at NDA accordingly prepare ahead, envisaging the coming 10 to 15 years, in order to provide clients appropriate insights based on our understanding of current as well as future legal and regulatory issues. Our ability to innovate is endorsed through the numerous accolades gained over the years and we are also commended by industry peers for our inventive excellence that inspires others. Most recently, NDA was ranked the Most Innovative Asia Pacific Law Firm in 2016 by the Financial Times - RSG Consulting Group in its prestigious FT Innovative Lawyers Asia-Pacific 2016 Awards. While this recognition marks NDA s ingress as an innovator among the globe s best law firms, NDA has previously won the award for the Most Innovative Indian Law Firm for two consecutive years in 2014 and As a research-centric firm, we strongly believe in constant knowledge expansion enabled through our dynamic Knowledge Management ( KM ) and Continuing Education ( CE ) programs. Our constant output through Webinars, Nishith.TV and Hotlines also serves as effective platforms for cross pollination of ideas and latest trends. Our trust-based, non-hierarchical, democratically managed organization that leverages research and knowledge to deliver premium services, high value, and a unique employer proposition has been developed into a global case study and published by John Wiley & Sons, USA in a feature titled Management by Trust in a Democratic Enterprise: A Law Firm Shapes Organizational Behavior to Create Competitive Advantage in the September 2009 issue of Global Business and Organizational Excellence (GBOE). 86

88 International Commercial Arbitration Law and Recent Developments in India A brief below chronicles our firm s global acclaim for its achievements and prowess through the years. IDEX Legal Awards: In 2015, NDA won the M&A Deal of the year, Best Dispute Management lawyer, Best Use of Innovation and Technology in a law firm and Best Dispute Management Firm. Nishith Desai was also recognized as the Managing Partner of the Year in Merger Market: has recognized NDA as the fastest growing M&A law firm in India for the year Legal 500 has ranked us in tier 1 for Investment Funds, Tax and Technology-Media-Telecom (TMT) practices (2011, 2012, 2013, 2014) International Financial Law Review (a Euromoney publication) in its IFLR1000 has placed Nishith Desai Associates in Tier 1 for Private Equity (2014). For three consecutive years, IFLR recognized us as the Indian Firm of the Year ( ) for our Technology - Media - Telecom (TMT) practice. Chambers and Partners has ranked us # 1 for Tax and Technology-Media-Telecom (2015 & 2014); #1 in Employment Law (2015); # 1 in Tax, TMT and Private Equity (2013); and # 1 for Tax, TMT and Real Estate FDI (2011). India Business Law Journal (IBLJ) has awarded Nishith Desai Associates for Private Equity, Structured Finance & Securitization, TMT, and Taxation in 2015 & 2014; for Employment Law in 2015 Legal Era recognized Nishith Desai Associates as the Best Tax Law Firm of the Year (2013). 87

89 Provided upon request only Please see the last page of this paper for the most recent research papers by our experts. Disclaimer This report is a copyright of Nishith Desai Associates. No reader should act on the basis of any statement contained herein without seeking professional advice. The authors and the firm expressly disclaim all and any liability to any person who has read this report, or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any such person in reliance upon the contents of this report. Contact For any help or assistance please us on ndaconnect@nishithdesai.com or visit us at 88

90 International Commercial Arbitration Law and Recent Developments in India The following research papers and much more are available on our Knowledge Site: EdTech: From IT to AI E-Commerce in India The Curious Case of the Indian Gaming Laws July 2016 Corporate Social Responsibility & Social Business Models in India July 2015 Joint-Ventures in India September 2015 Preparing For a Driverless Future March 2016 November 2014 June 2016 Internet of Things Doing Business in India Private Equity and Private Debt Investments in India April 2016 June 2016 June 2015 NDA Insights TITLE TYPE DATE ING Vysya - Kotak Bank : Rising M&As in Banking Sector M&A Lab January 2016 Cairn Vedanta : Fair or Socializing Vedanta s Debt? M&A Lab January 2016 Reliance Pipavav : Anil Ambani scoops Pipavav Defence M&A Lab January 2016 Sun Pharma Ranbaxy: A Panacea for Ranbaxy s ills? M&A Lab January 2015 Reliance Network18: Reliance tunes into Network18! M&A Lab January 2015 Thomas Cook Sterling Holiday: Let s Holiday Together! M&A Lab January 2015 Jet Etihad Jet Gets a Co-Pilot M&A Lab May 2014 Apollo s Bumpy Ride in Pursuit of Cooper M&A Lab May 2014 Diageo-USL- King of Good Times; Hands over Crown Jewel to Diageo M&A Lab May 2014 Copyright Amendment Bill 2012 receives Indian Parliament s assent IP Lab September 2013 Public M&A s in India: Takeover Code Dissected M&A Lab August 2013 File Foreign Application Prosecution History With Indian Patent Office IP Lab April 2013 Warburg - Future Capital - Deal Dissected M&A Lab January 2013 Real Financing - Onshore and Offshore Debt Funding Realty in India Realty Check May 2012 Pharma Patent Case Study IP Lab March 2012 Patni plays to igate s tunes M&A Lab January 2012 Vedanta Acquires Control Over Cairn India M&A Lab January