Law, Practice and Procedure of Arbitration in India [1 ed.] 9789391340612

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LAW, PRACTICE AND PROCEDURE OF ARBITRATION IN INDIA

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SUNDRA RAJOO

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LAW, PRACTICE AND PROCEDURE OF ARBITRATION IN INDIA

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Chartered Arbitrator (CIArb) Certified International ADR Practitioner (AIADR) Advocate & Solicitor (High Court of Malaya) Registered Professional Architect and Registered Town Planner (Malaysia) BSc (HBP) (Hons) (USM) LLB (Hons) (London), CLP, Hon LLD (Leeds Beckett) Grad Dip in Architecture (TCAE) Grad Dip in Urban and Regional Planning (TSIT) MSc in Construction Law and Arbitration (With Merit) (LMU) MPhil in Law (Manchester) Diploma in International Commercial Arbitration (CIArb) FAIADR, FPAM, APPM, FCIArb, FMIArb, FSIArb, FICA, FRICS, FCABE

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Also Former Deputy Chairman, FIFA Adjudicatory Chamber (2018) Chairman, Asian Domain Name Dispute Resolution Centre (2018) Founding and current President, Asian Institute of Alternate Dispute Resolution (2018 to date) President, Chartered Institute of Arbitrators (2016) President, Asia Pacific Regional Arbitration Group (APRAG) (2011) Founding President, Society of Construction Law Malaysia Founding President, Malaysian Society of Adjudicators Founding President, Sports Law Association of Malaysia

First Edition 2021 Copyright © Sundra Rajoo 2021 The author asserts the moral right to be identified as the author of this work.

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No part of this publication may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in any retrieval system of any nature without the written permission of the copyright owners.

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This book can be exported from India only by the publishers or by the authorized suppliers. Infringement of this condition of sale will lead to Civil and Criminal prosecution.

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Publishers: Thomson Reuters, Legal (A division of Thomson Reuters South Asia Private Limited)

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ISBN: 978-93-91340-61-2

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Price in India INR 4250 Price abroad US $ 60.00

Cover image: best_vector / Shutterstock.com

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Note: Due care and diligence has been taken while editing and printing the book, neither the author nor the publishers of the book hold any responsibility for any mistake that may have inadvertently crept in.

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Publishers shall not be liable for any direct, consequential, or incidental damages arising out of the use of the book. In case of binding mistake, misprints, or for missing pages etc., Publisher’s entire liability, and your exclusive remedy, is replacement of the book within one month of purchase by similar edition/​reprint of the book. Printed and bound in India. Thomson Reuters South Asia Private Limited 10th Floor, Building Number 9B, DLF Cyber City Phase-​III, Gurgaon-​122002 Phone: + 91 124 488 6700

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Dedications For My parents,

For

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My family

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With love and respect

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Mr Nadarajah Kuppusamy and Madam Letchumi

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Whose unconditional love through thick and thin is priceless For

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Dato’ Mahadev Shankar,

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Great Malaysian Court of Appeal Judge and Doyen of the Malaysian Bar For My Teacher Late Professor Ray Turner, Great Mentor, like Father and Friend

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CONTENTS Foreword by Hon’ble Mr Justice A.K. Sikri............................................................

xiii

Foreword by Professor Anthony Lavers ..................................................................

xxiii

Foreword by Professor Dr. Dr. h.c. Rolf A. Schütze.................................................

xxvi

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Foreword by Right Hon’ble YABhg Tun Zaki Azmi.............................................. xxviii

xxxii

Foreword by Professor Philip Yang..........................................................................

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Foreword by H.E. Professor Kennedy Gastorn........................................................

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Foreword by Chan Leng Sun SC.............................................................................. xxxviii

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Preface and Acknowledgements...............................................................................

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Table of Cases ..........................................................................................................

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Editorial Board .......................................................................................................

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Table of Statutes....................................................................................................... ccxxiii

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Division 1 Introductory Framework of Arbitration 3

Chapter 2: Legislative Development of Arbitration...............................................

15

Chapter 3: Defining an Arbitration..........................................................................

38

Chapter 4: Relevance of Arbitration in Resolving Disputes.................................

72

Chapter 5: Privacy, Confidentiality and Transparency in Arbitration................

112

Chapter 6: Types of Arbitrations..............................................................................

133

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Chapter 1: Nature of Arbitration..............................................................................

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Law, Practice and Procedure of Arbitration in India

Division 2 The Arbitration Agreement and Reference to Arbitration 163

Chapter 8: Separability of Arbitration Clause........................................................

230

Chapter 9: Jurisdiction of the Arbitral Tribunal.....................................................

252

Chapter 10: Who May Refer Matters to Arbitration?............................................

276

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Chapter 7:Arbitration Agreements..........................................................................

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Chapter 11: Scope of Arbitration Agreement.........................................................

341

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Chapter 12: Existence of Disputes or Differences..................................................

320

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Division 3 Effect of the Arbitration Agreement

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Chapter 13: Effect of Arbitration Agreement.........................................................

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Chapter 14: Stay of Concurrent Proceedings in Court.........................................

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Chapter 15: Conditions for Obtaining a Stay.........................................................

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Chapter 16: Effect and Terms of a Stay....................................................................

367 397 420 443

Division 4 Role of the Courts

Chapter 17: Injunctions Restraining Arbitration Proceedings.............................

465

Chapter 18: Ousting the Jurisdiction of the Court................................................

487

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Contents

Division 5 Commencement of Arbitration and Constitution of the Arbitral Tribunal 503

Chapter 20: Appointment of an Arbitral Tribunal under the Arbitration Agreement.............................................................................................................

541

Chapter 21: Composition of Arbitral Tribunals.....................................................

577

Chapter 22: Appointment of Arbitral Tribunal under the Arbitration Act......................................................................................................

599

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Chapter 19: Commencement of Arbitration..........................................................

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Chapter 23: Challenge of Authority and Removal of Arbitrator..........................

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Chapter 24: Remuneration of the Arbitrator..........................................................

617

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Division 6 Conduct of the Arbitration

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Chapter 25: Conduct of the Arbitration..................................................................

747 784

Chapter 28: Consequences of Default by Parties...................................................

806

Chapter 29: Evidence in Arbitration........................................................................

831

Chapter 30: Representation in Arbitrations............................................................

874

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Chapter 27: Procedure at the Hearing.....................................................................

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Chapter 26: Procedure Prior to the Hearing...........................................................

707

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Law, Practice and Procedure of Arbitration in India

Division 7 Powers, Duties and Jurisdiction of the Arbitral Tribunal and Court 893

Chapter 32: Powers of the Arbitral Tribunal..........................................................

928

Chapter 33: Jurisdiction of the High Court............................................................

949

Chapter 34: Powers of a High Court........................................................................

971

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Division 8 The Award

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Chapter 31: Powers, Duties and Liabilities of the Arbitral Tribunal...................

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Chapter 35: Types of Award......................................................................................

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Chapter 36: Making of the Award............................................................................

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Chapter 37: Substantive Requirements of an Award.............................................

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Chapter 38: Mistakes or Omissions in the Award..................................................

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Chapter 39: Effects of a Valid Award.......................................................................

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Chapter 40: Remedies and Reliefs............................................................................

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Chapter 41: Award of Interest...................................................................................

995 1025 1051 1073 1096 1115 1133

Division 9 Allocation of Costs

Chapter 42: Costs of the Arbitration.......................................................................

1177

Chapter 43: Offers of Settlement and Costs Protection........................................

1226

Chapter 44: Determination of Costs........................................................................

1247

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Contents

Division 10 Challenge to Arbitral Awards 1265

Chapter 46: Recourse against the Award.................................................................

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Chapter 45: Challenge to the Arbitral Award.........................................................

Chapter 47: Effect of Order for Remission or Setting Aside of Award................

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Division 11 Recognition and Enforcement of Arbitral Awards

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Chapter 48: Enforcement and Recognition of Arbitral Awards...........................

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Chapter 49: Enforcement and Recognition of Arbitral Awards under the Geneva Convention..............................................................................................

1354 1362

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Chapter 50: Conflict of Laws in Arbitration...........................................................

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Division 12 Arbitration Under Investment Treaties 1393

Appendices

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Chapter 51: Investment Arbitration.........................................................................

1451

Appendix 2:  Arbitration and Conciliation (Amendment) Act, 2015.................

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Appendix 1:  The Arbitration and Conciliation Act, 1996....................................

Appendix 3:  Arbitration and Conciliation (Amendment) Act, 2019.................

1538

Appendix 4:  Arbitration and Conciliation (Amendment) Act, 2021.................

1550

Appendix 5:  UNCITRAL Model Law on International Commercial Arbitration 1985 (With Amendments as Adopted in 2006)...........................

1553

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Law, Practice and Procedure of Arbitration in India

1593

Appendix 7:  Geneva Convention on the Execution of Foreign Arbitral Awards, 1927.........................................................................................................

1600

Appendix 8:  UNCITRAL Arbitration Rules (As Adopted in 2013)...................

1604

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Appendix 6:  New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958.......................................................................

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Index.........................................................................................................................

1639

FOREWORD

FEW ACKNOWLEDGEMENTS

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Let me start with certain acknowledgements, and few confessions as well. Invitation from Prof. Sundra Rajoo Nadarajah to write this foreword for the book brought me some pleasant surprises. I have known Prof. Rajoo for many years. I was particularly impressed by the manner in which he turned around and brought glory to the otherwise dormant KLRCA by making it one of the premier arbitral institutions in Asia and simultaneously ensuring that its presence and significance is recognised in other parts of the world as well. It was sheer dynamic leadership and administrative qualities, coupled with his steering knowledge in domestic and international arbitration law and practice, as well as enriching experience that brought KLRCA to limelight and placed it on a high pedestal. Over a passage of time, I became conversant with the other qualities, qualifications and attributes of Prof. Rajoo, which made me a silent fan of his. His contribution to the arbitration field is phenomenal. He has also excelled himself as an accomplished author, in this field of law with number of publications to his credit. A request from such a person to write a foreword to the book authored by him on arbitration law was the first pleasing surprise.

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Prof. Rajoo is a Malaysian national, whose hitherto endeavours, and achievements are in Malaysian Arbitration law, transcending to the Western world. It gave me a pleasant sensation to know that he has authored this book on the Indian law of arbitration. It greatly intrigues me as to what prompted him to take up such a venture. It surprises me and at the same time also provides me with a sense of pride, when I find that the Indian jurisdiction in the field of arbitration is catching overseas attention. It is there to thrive.

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No doubt, the book is authored by a person who is from the same continent, viz., Asia, I am sure that the author has in mind the global reach of his stupendous work. On going through the coverage of Indian Arbitration Law from the manuscript supplied by Prof. Rajoo to me. How easily Prof. Rajoo has been able to master this law prevalent in Indian territory sprung up another pleasant surprise. I think it is a mix of his scholarship and deep knowledge-​cum-​expertise in international arbitration law which smoothened the transition and his grip over the arbitration law in India, including the manner and style in which it is practiced in this jurisdiction. The dexterity and skill with which he has handled the project undertaken by him, explaining various teasing, troubling and debatable issues, and in the process touching upon the varied nuances and the angles, is remarkable. The final outcome in the form is this book is going to be

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Law, Practice and Procedure of Arbitration in India

a treat for everyone who is concerned about or deals with this branch of law. Such an accomplishment by a non-​Indian is not only wonderous and amazing, but also boosts and enhances the image of the author in the world of arbitration.

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On an assumption which is a perfectly valid that the book at hand shall have global reach, I am happy to note that the author has beautifully traced the history of arbitration in India. This will generate awareness among the various stakeholders in other countries that dispute resolution methods in this country in the form of arbitration as well as akin to arbitration have been invoked from time immemorial. This subcontinent is, therefore, a pioneer in resolving the disputes through amicable means.1 Though such a history may not be relevant when it comes to the application of the present and existing arbitration law and its practice, a message which stands eloquently delivered by recounting the historical background of such dispute resolution methods including arbitration, is the ethos, culture and right mindset of Indian people who have a keen desire to settle the disputes by such methods. In the process, it also demonstrates that arbitration as a means of dispute resolution has not only thrived in India over a period of time, but it will keep on making further strides. Arbitration is here to stay as an effective means of dispute resolution and is gaining popularity. Simultaneously, there is a need to bring the desired reforms. This book sends this profound message as well.

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HISTORICAL BACKGROUND

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The Indian Arbitration Act, 1899 was replaced by Act of 1940, which was based on English legislation, and it remained in the statute book for more than 50 years. Globalisation changed the environment of business in the entire world. India ushered into the era of liberalisation and globalisation in the early 1990s. With this, not only the Indian economy started growing at a massive pace, it also boosted India’s international trade and cooperation. In the last 30 years, India has witnessed massive inflow of Foreign Direct Investment (FDI) as well as foreign collaborations. What started with multinational companies setting up their business ventures in India, i.e., West to East (which trend continues even today) has assumed the character of two-​way traffic (East to West as well) with Indian multinationals having their presence felt in various other countries. Conflicts and disputes, as a universal phenomena and as a part of human society, which were largely domestic in nature, started having cross-​border implications. It is amazing that the author has kept an eye on the fast-​paced developments in law in India through various judicial pronouncements and incorporated even the most recent of them in his book.

1. This applies to indigenous mediation techniques as well which were prevalent in varied forms even in ancient India.

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This development at international level with disputes assuming transnational character gave rise to legitimate demand for uniformity of certain laws across the globe, including arbitration laws. UNCITRAL model of law on Arbitration to bring about this convergence came to be adopted by many countries. India also enacted Arbitration and Conciliation Act, 1996 on the UNCITRAL Model Law. The aim and objective of this law was to take care of various anomalies and weaknesses of the 1940 Act, the working experience whereof was not very satisfactory, particularly in the context of frequent courts’ intervention, challenge to arbitral awards and enforcement of these awards. There were voices for change in law. Law Commission of India had suggested extensive amendments in the 1940 Act way back in the year 1978. Within a few years thereafter came following scathing remarks from the Apex Court in Guru Nanak Foundation v Rattan Singh and Sons:2

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“However, the way in which the proceedings under the Act are conducted and without an exception challenged in Courts, has made lawyers laugh and legal philosophers weep. Experience shows and law reports bear ample testimony that the proceedings under the Act have become highly technical accompanied by unending prolixity, at every stage providing a legal trap to the unwary. Informal forum chosen by the parties for expeditious disposal of their disputes has by the decisions of the Courts been clothed with ‘legalese’ of unforeseeable complexity.”

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The aforesaid sentiments were echoed again by the Supreme Court in Raipur Development Authority v Chokhamal Contractors3 when it said:

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“… indeed, this branch of the system of dispute-​resolution has, of late, acquired a certain degree of notoriety by the manner, in which in may cases, the financial interests of government have come to suffer by awards which have raised eyebrows by doubts as to their rectitude and propriety.”

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In the aforesaid prevailing environment, when the 1996 Act was enacted, there was an air of hope all around. The statement of Object and Reasons attached to the Bill, which became the Act, stated many objectives that depicts legislative intent and are noted hereinafter.

COURTS AND ARBITRATION ACT, 1996

The Arbitration Act, 1996 is founded on some core principles, which are also articulated in Section 1 of the Arbitration Act. These are (i) speedy, inexpensive and fair trial by an

2. (1981) 4 SCC 634. 3. 1990 AIR SC 1426.

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impartial tribunal; (ii) party autonomy; and (iii) minimum court intervention. An Arbitral tribunal under the Act is legally mandated to carry out dispute resolution in an independent manner based on the principle of fairness. However, in the limited cases of its inability to carry out the arbitration proceedings in line with principles of a fair hearing or party autonomy, the role of the courts kick in. A court plays a supporting role to ensure that the Arbitration adheres to the principles laid down in the Arbitration law of the specific country. Arbitration is thus a hybrid system where the assistance of courts is required at different stages. It may be for the appointment of an arbitrator, for passing interim measures and for securing witnesses to appear before an arbitral tribunal. After an award is rendered by arbitral tribunals, courts assume an important role of recognising and enforcing the awards.

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“Judicial Policy” in dealing with arbitration matters is of paramount importance as a system cannot be treated as arbitration friendly, if the judicial involvement is such that a feeling is generated that it does not work in the aid of arbitration. The principle of minimal interference of courts when the arbitral proceedings are on has been elaborated upon by Lord Mustill, the outstanding British barrister and judge, who had emphasised the need of following arbitral procedure. He says:

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“Ideally, the handling of arbitral disputes should resemble a relay race. In the initial stages, before the arbitrators are seized of the dispute, the baton is in the grasp of the court; for at that stage there is no other organisation which could take steps to prevent the arbitration agreement from being ineffectual. When the arbitrators take charge they take over the baton and retain it until they have made an award. At this point, having no longer a function to fulfil, the arbitrators hand back the baton so that the court can, in case of need, lend its coercive powers to the enforcement of the award.”

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Again, he emphasised the balancing of court’s function and arbitration process, in the following well-​articulated words:4

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“There is the central importance of a harmonious relation between the courts and the arbitral process. This has always involved a delicate balance, since the urge of any judge is to see justice done, and to put right injustice wherever he or she finds it; and if it is found in an arbitration, the judge feels the need to intervene. On the other side, those active in the world of arbitration stress its voluntary nature, and urge that it is wrong in principle for the courts to concern themselves with disputes which the parties have formally chosen to withdraw from them, quite apart from the waste of time and expense caused by gratuitous judicial interference. To a degree both views were right, and remain so; the problem has been to give proper weight to each of them.”

4. Foreword to Mr. O.P. Malhotra’s Book on “The Law and Practice of Arbitration and Conciliation”.

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Foreword

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He stressed on the importance of maintaining a balance with a recognition by the courts, by observing that arbitration exists only to serve the interests of the community and that court’s judicial powers are conferred only to support, not supplant, the extra-​ judicial process which the parties have chosen to adopt. The judicial impulse to change decisions of arbitral tribunals must, at all costs, be resisted. The parties have chosen arbitration, and (directly or indirectly the arbitrator) as the medium for resolving their disputes. The court must respect this choice, and if the outcome proves unsatisfactory this is the price which must be paid, however painful it may be for the court to stand by and do nothing. This very ethos of the 1996 Act, it seems, was glossed over by the Indian Courts in the early periods

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The Supreme Court started on a right note when the difference between the 1940 Act and the 1996 Act was eloquently brought out by it in Sundaram Finance Ltd. v NEPC India Ltd.,5 with the following significant observations:

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“The 1996 Act is very different from the Arbitration Act, 1940. The provisions of this Act have, therefore, to be interpreted and construed independently and in fact reference to 1940 Act may actually lead to misconstruction. In other words the provisions of 1996 Act have to be interpreted being uninfluenced by the principles underlying the 1940 Act. In order to get help in construing these provisions it is more relevant to refer to the UNCITRAL Model Law rather than the 1940 Act.”

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It appears that for some time thereafter, the Indian Supreme Court lost its way. The main purpose of passing the 1996 Act was to achieve harmony between the arbitration and the courts. Due to certain reasons, however, working of the 1996 Act witnessed some unpleasant developments. With passing years, courts started making ingress into the independence of the arbitration proceedings and enabled court’s interference. The landmark case of Bhatia International v Bulk Trading SA6 is one example of the court’s interference. The problem arising from Bhatia International case was compounded with the rendition of another judgment in Venture Global v Satyam Computer,7 wherein the Supreme Court held that even in respect of foreign awards, the provisions of Part I of the Act (which part is applicable to domestic arbitrations only) apply, including international commercial arbitrations seated outside India, unless the parties have expressly or impliedly excluded its application.

5. (1999) 2 SCC 479. 6. (2002) 4 SCC 105. 7. (2008) 4 SCC 190.

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Law, Practice and Procedure of Arbitration in India

Another judgment which added to the woes was the judgment in the case of ONGC v Saw Pipes8 which expanded the test of “public policy” to mean an award that violates the statutory provisions of Indian law or terms of the contract.

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Whereas Bhatia International was overruled 10 years later by a constitutional bench judgment rendered in Bharat Aluminium Co. v Kaiser Aluminium Technical Services Inc,9 the judgment in ONGC has been legislatively overruled by bringing an amendment to the Act in the year 2015.

USHERING INDIA

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This judicial approach necessitated smoothing out the rough edges encountered thereby. It happened at the level of legislature as well as judiciary which has started taking pragmatic view.

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Various amendments were carried out vide Arbitration Amendment Acts of 2015 and 2019. It cannot be argued that the legislature has not made worthwhile changes to the Act, however, it has to be seen that judiciary complements and completes the changes brought forth by providing clarity where the legislature may have failed: For instance, in Board of Control for Cricket in India,10 the Supreme Court held that the Amendment Act, 2015 would apply to Section 34 petitions that are made after 23 October 2015 (the day on which the Amendment Act came into force).

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In 2012, a Constitution Bench of five judges of the Supreme Court in Bharat Aluminium Company (BALCO) v Kaiser Aluminium Technical Services Inc11 overruled the decision in Bhatia International and held that Part I would have no application to international commercial arbitrations held outside India and that no application for interim relief would be maintainable under Section 9 in such arbitrations. The Constitution Bench however held that since Bhatia International had been consistently followed since 2002, “to do complete justice” the new ruling would only apply prospectively to all arbitration agreements executed after 6 September 2012. Accordingly: –​ if the arbitration agreement providing for international commercial arbitration outside India was executed prior to BALCO, Part I would continue to be applicable to it unless expressly or implied excluded under the agreement.

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8. AIR 2003 SC 2629. 9. (2012) 9 SCC 649. 10. Board of Control for Cricket in India v Kochi Cricket Private Limited and Ors. MANU/​SC/​0256/​2018 : (2018) 6 SCC 287. 11. (2012) 9 SCC 552.

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–​ if the agreement was executed after BALCO, there would be no possibility of obtaining interim relief under Section 9 in respect of arbitrations seated outside India.

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An award may be set aside on account of patent illegality which is now provided by Section 34(2A), as interest by the 2015 amendment. However, that does not specify the grounds for the same. The Supreme Court in Patel Engineering Ltd. v North Eastern Electric Power Corporation Ltd.12 observed that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes a contract in a manner which no fair minded or reasonable person would take i.e., if the view taken by the arbitrator is not even a possible view to take. In all, the court noted three grounds: (i) if the decision of the arbitrator is found to be perverse, or so irrational that no reasonable person would have arrived at the same; or (ii) the construction of the contract adopted by the arbitrator is such that no fair or reasonable person would take; or (iii) that the view of the arbitrator is not even a possible view.

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Section 11 does not prescribe any time period for filing an application under sub-​ section (6) for appointment of an arbitrator. Since there is no provision in the 1996 Act specifying the period of limitation for filing an application under Section 11, one would have to take recourse to the Limitation Act, 1963, as per Section 43 of the Arbitration Act, which provides that the Limitation Act shall apply to arbitrations, as it applies to proceedings in court. Thus, it was held In Bharat Sanchar Nigam Ltd. and Ors. v Nortel Networks India Pvt. Ltd.13 that the period of limitation for filing an application under Section 11 of the Arbitration and Conciliation Act, 1996 would be governed by Article 137 of the First Schedule of the Limitation Act, 1963.

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However, noting the lacune in the law, the court called out the requirement of another amendment in the following words:

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“17. Given the vacuum in the law to provide a period of limitation Under Section 11 of the Arbitration and Conciliation 1996, the Courts have taken recourse to the position that the limitation period would be governed by Article 137, which provides a period of 3 years from the date when the right to apply accrues. However, this is an unduly long period for filing an application Under Section 11, since it would defeat the very object of the Act, which provides for expeditious resolution of commercial

12. (22 May 2020 –​SC) : MANU/​SC/​0447/​2020; see also Ssangyong Engineering and Construction Company Limited v National Highways Authority of India (NHAI) MANU/​SC/​0705/​2019 : (2019) 15 SCC 131; Associate Builders v Delhi Development Authority MANU/​SC/​1076/​2014 : (2015) 3 SCC 49; South East Asia Marine Engineering & Constructions Ltd v Oil Limited (dated 11 May 2020, in Civil Appeal No. 673 of 2012). 13. (10 March 2021 –​SC) : MANU/​SC/​0171/​2021; see also the Bombay High Court in Leaf Biotech v Municipal Corporation Nashik MANU/​MH/​1448/​2010 : 2010 (6) Mh LJ 316.

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disputes within a time bound period. The 1996 Act has been amended twice over in 2015 and 2019, to provide for further time limits to ensure that the arbitration proceedings are conducted and concluded expeditiously. Section 29A mandates that the arbitral tribunal will conclude the proceedings within a period of 18 months. In view of the legislative intent, the period of 3 years for filing an application Under Section 11 would run contrary to the scheme of the Act. It would be necessary for Parliament to effect an amendment to Section 11, prescribing a specific period of limitation within which a party may move the court for making an application for appointment of the arbitration Under Section 11 of the 1996 Act.”

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There has been a paradigm shift in the judicial approach with progressive pronouncements14 in the last few years that have sent an eloquent message to the stakeholders that India is an arbitration friendly jurisdiction.

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In substance, the judiciary has adopted the ethos of minimal interference with the arbitration process, geared its approach towards enforcements of domestic and foreign arbitration awards. Some landmark judgments have come on the independence and impartiality of the arbitrator, procedure autonomy of arbitration, including development of kompetenz-​kompetenz rule and substantive autonomy of arbitration process. The book elaborately discusses and critically analyses all these pronouncements.

SOME GLITCHES REMAIN

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The judiciary, as helpful it is in clearing the conundrums involved in the law of arbitration can also been inconsistent. In Government of India v Vedanta Limited and Ors.15 the court affirmed that an enforcement court under Section 48 of the Act could not re-​assess or re-​appreciate evidence or review the merits of the underlying dispute. It observed that:

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“The enforcement Court cannot set aside a foreign award, even if the conditions Under Section 48 are made out. The power to set aside a foreign award vests only with the court at the seat of arbitration, since the supervisory or primary jurisdiction is exercised by the curial courts at the seat of arbitration. The enforcement court may ‘refuse’ enforcement of a foreign award, if the conditions contained in Section 48 are made out. This would be evident from the language of the Section itself, which provides that enforcement of a foreign award may be ‘refused’ only if the Applicant furnishes proof of any of the conditions contained in Section 48 of the Act. The opening words

14. Legislative amendments. 15. (16 September 2020 –​SC) : MANU/​SC/​0689/​2020.

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Foreword

of Section 48 use permissive, rather than mandatory language, that enforcement ‘may be’ refused … the enforcement court is not to correct the errors in the award Under Section 48, or undertake a review on the merits of the award, but is conferred with the limited power to ‘refuse’ enforcement, if the grounds are made out.”

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However, the court’s approach on public policy in Vedanta contrasts with its own judgment from earlier this year in National Agriculture Co-​operative Marketing Federation of India (NAFED) v Alimenta S.A.16 where the court refused enforcement of a foreign award after undertaking a review of its merits. It remains to be seen which approach will ultimately win out.

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Still, there are some burning issues, which are still at fluid stage and in churning process, relate to anti-​arbitration injunctions, nuances of kompetenz-​kompetenz doctrine, jurisdiction of the arbitral tribunal in the wake of exclusionary clauses touching upon the limits of arbitrability and power of the arbitral tribunal to award interest. There is also prevailing incoherence in the matters relating to anti-​arbitration injunctions, hybrid model of dispute resolution (also known as multi-​tiered dispute resolution or pre-​arbitral procedures), roping in the parties to the arbitration process who are non-​signatories to the arbitration agreement, emergency arbitrations, etc. India has still to cover a long distance in catching up with international arbitration and also in imbibing good interaction practices in the conduct of arbitration cases.

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CONCLUDING REMARKS

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I have traversed the landscape of Indian arbitration law in brief which gives a bird’s eye view about the direction in which the arbitration is heading in this country, the issues it is grappling with and the challenges ahead. The purpose is to deliver a message to readers that all these aspects, in a subtle was, are deftly dealt with by the author in his book, which can be described as a Treatise on Indian Arbitration Law.

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Apart from its significant feature of party autonomy, the arbitration is supposed to be cost effective and speedy. Over a period of time, these two fundamental qualities attached to the arbitration have been lost. There may be various justifiable reasons for that, which include complexity of the issues involved. Venturing into arbitration world is now like taking a journey with Alice in Wonderland which is fascinating and at the same time intriguing as well. It springs up surprises at certain times and we are faced with complexities at other times. But when Prof. Rajoo is the storyteller, who in the process keeps untying knots, journey becomes exciting and enjoyable. The reader keeps

16. Dated 22 April 2020, in Civil Appeal No. 667 of 2012.

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getting answers to mysterious questions that she comes across and puzzling issues become simple and get resolved. Prof. Rajoo has wisely articulated his discussion subject-​wise rather than giving section-​wise commentary of the 1996 Act. This approach has brought much clarity and objectivity to the discussions. All these has resulted in an outstanding handling of the otherwise complex subject thereby clearing many cobwebs.

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The author is a force to reckon with in the field of arbitration, not only in Malaysia or in Asia, but world over. Now, with the launch of this book, the Indian arbitration family and stakeholders would particularly acknowledge his prowess. Prof. Rajoo is, indubitably, a very fine person and authoring this book ensures that he has become aware of his self and his potential. He has proved that he is a seeker. I am confident that this quality in him would lead to adding many more feathers in his cap.

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Justice A.K. Sikri Former Judge, Supreme Court of India Presently IJ, Singapore International Commercial Court Dated: 19 July 2021

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It was indeed an honour to be asked to provide a Foreword to this magisterial work. Law Practice and Procedure of Arbitration (Malaysia) by the same author has a prominent place amongst international texts on the bookshelf of my London office: the Forewords were provided by late Professor Ray Turner, who taught Sundra at Leeds Metropolitan University (now Leeds Beckett) and Tuan Haji Kuthubul Zaman bin Bukhari, the then President of the Malaysian Bar, and I am proud to be invited to join such distinguished company.

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Sundra Rajoo Nadarajah is himself a man of no little distinction. In professional and academic terms, he is a genuine polymath. There cannot be many lawyers who have qualifications covering every phase of development; planning, architecture, construction, and arbitration. Of the greatest relevance to the context of this book was his experience as President of the Chartered Institute of Arbitrators, having earlier chaired the Malaysian branch and been Director of the Kuala Lumpur Regional Centre for Arbitration.

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It has required someone out of the ordinary to undertake such a project as the Law, Practice and Procedure of Arbitration in India. It is a subject with a lengthy history; one of many, many things I have learned from my privileged early access to the manuscript is that dispute resolution methods akin to arbitration in the Indian subcontinent go back many centuries, well before the colonial era and the Arbitration Acts of 1899 and 1940, based on English legislation. But although there is interest in the early chapters (Chapters 1 and 2) on the development of arbitration and arbitration legislation, the importance of this book to its readers will lie not in the historical background but in its use as a resource for practitioners and students of the subject, in the present and the future. No doubt many users of this book, like Sundra at some stages of his varied career (and like me), will be engaged in the practice of construction law and the resolution of construction disputes. This is not mere guesswork on my part. Construction is of enormous economic importance to India; it is currently the country’s second-​largest industry after agriculture and this significance will surely only increase as part of the phenomenal performance of one of the world’s fastest-​growing major economies.

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Especially notable in this growth is the infrastructure sector. My own indirect acquaintance with construction arbitrations in India is through studying a body of caselaw in the High Court (often in Delhi) and on occasion in the Supreme Court of India. Many of the cases involve the National Highways Authority of India (“NHAI”) and derive from the massive programme of road building which has continued throughout the first two decades of the 21st century: for example, the JSC Centrodorstroy litigation which reached the Supreme Court of India in 2016 and NHAI cases in the High Court against contractors Som Datt (2007), Unitech (2008), NCC –​KNR (2012), KMC (2013) and, more recently, Gammon India, Sunway Construction and Progressive Constructions (all 2019). To these may be added NTPC v Hindustan Constructions (2015),1 State of West Bengal v Afcon (2011),2 Angerlehner Structural and Civil Engineering Co. v Municipal Corporation of Greater Mumbai (2016) on a sewerage upgrade scheme,3 and EFS Facilities Services (I) Private Limited v Indeen Bio Power Limited (2019),4 concerning a biomass energy plant project in Rajasthan.

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Although the cases are primarily of importance to me for the analysis by the Indian courts of the FIDIC contracts used, rather than for points of procedural law, they are nevertheless of value to an understanding of how such disputes are resolved. They have in common that they originate with awards of domestic arbitrators under the Arbitration and Conciliation Act, 1996 (as amended) and provide strong indicative evidence of the central role which arbitration plays in construction dispute resolution in India. This book offers assistance to practitioners and users at every stage of the process.

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It is, of course, crucial to get that process right from the start, with clear, enforceable contractual provisions. This is not always a given, even for FIDIC users, as appeared from the Persero litigation (2010–​2015) which ended up in Singapore’s Court of Appeal. The chapters on arbitration agreements (Chapter 7), separability/​severability (Chapter 8), jurisdiction (Chapter 9), scope of agreement (Chapter 11), and existence of disputes/​differences (Chapter 12) should assist the parties to a contract in avoiding many of the misconceptions by which the machinery is flawed from the outset. Part of ensuring a sound basis relates to the quality of the decision-​makers –​it has been wisely remarked that “arbitration is only as good as the arbitrators.” The book gives proper attention to appointment and composition of the tribunal (Chapters 20, 21



1. 2. 3. 4.

2017 SCC OnLine Del 6552. 2011 SCC OnLine Cal 3752. 2017 SCC OnLine Bom 1743. 2021 SCC Online Del 3414.

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and 22) and the related issues of removal (Chapter 23) and remuneration (Chapter 24) of arbitrators.

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Although “documents-only” arbitrations may be appropriate in individual situations and have, for example, become normal for routine consumer disputes in some jurisdictions, for matters of any size, the hearing is at the centre of the resolution process. The chapters on the conduct of the arbitration (Chapter 25) pre-​hearing procedure (Chapter 26) and procedure at the hearing (Chapter 27), evidence (Chapter 29) (which contains a noteworthy section on experts) and representation (Chapter 30) will be valuable for tribunal members and party representatives alike in their efforts to conduct the hearing stage with maximum efficiency.

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However, a well-​conducted hearing is worth little if the end-product is defective and there is quite rightly a strong emphasis on the award stage: types of award (Chapter 35), making the award (Chapter 36), substantive requirements (Chapter 38) and effect (Chapter 39) and ancillary issues: interest (Chapter 41) and costs (Chapters 42, 43 and 44). Of course, the ideal is that the award is indeed final and binding as between the parties, but even though finality is much to be desired, legal scrutiny of process and decision means that there must always exist the possibility of challenge and, potentially, continuation of the conflict in the courts.

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Unsurprisingly, from a lawyer author there is a heavy emphasis on the role of the courts –​and rightly so. In the early stages, it is stays of proceedings (Chapters 14, 15, and 16), injunctions (Chapter 17) and ouster of the court’s jurisdiction (Chapter 18); and judicial powers (Chapters 33 and 34) and in the later stages the prospects of challenge/​recourse/​setting aside (Chapters 45, 46, and 47) and enforcement (Chapter 49).

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Conflict of Laws (Chapter 50) and Investment Arbitration (Chapter 51) are given discrete treatment at the end of the book; they will be especially important, for example, where international projects are concerned.

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It would be an understatement to call this work Herculean, since Sundra Rajoo has undertaken many more than the 12 challenges of Greek myth in completing it. He has produced a comprehensive practical and legal coverage of arbitration in one of the world’s great common law jurisdictions and is to be congratulated on his achievement. Professor Anthony Lavers LL.B M.Phil Ph.D D.Litt MCI.Arb FRICS Barrister Counsel, White & Case LLP, London Visiting Professor, Law, King’s College, London

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It is indeed an honour and a great pleasure to having been invited to write a foreword for the new book of Datuk Professor Sundra Rajoo Law, Practice and Procedure of Arbitration in India. I had the opportunity to make myself familiar with the book by reading the galley proofs and I must confess I was enthusiastic about it after reading. It is indeed an excellent work that the author and editor present to the international arbitral community!

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One might ask why a lawyer from a foreign jurisdiction –​not even a common law jurisdiction –​dares to review a book on arbitration in India. But I have learned in international arbitration cases in some decenniums of my life how necessary access to and knowledge of foreign law may become. Thus, I remember my first arbitration in Malaysia. I was sitting as an arbitrator in Kien Tat v Klöckner in Kuala Lumpur, a case that took about 100 days of oral hearing, the taking of evidence, and deliberations. How much had I then needed a book on the Malaysian arbitration law and practice like Datuk Professor Sundra Rajoo’s most learned book on Law, Practice and Procedure of Arbitration, of which I am the proud owner of the 2nd edition of 2016. Now I look for another Indian case, to be able to use my newly attained knowledge of Indian arbitration law and practice.

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Reading through the book –​more precise the galley proofs –​I find myself in Greek Mythology. It seems as if I am in the situation of Theseus who was guided by the thread of Ariadne through the Labyrinth of Minos. Like Theseus, who found his way through the Labyrinth in Crete, I found my way through law and practice of Indian arbitration law. Every lawyer can praise her-​or himself happy to now have such a guidance at hand. Datuk Sundra is already well known in Europe through his publications on Malaysian law, especially the recently published 2nd edition of Law, Practice and Procedure of Arbitration the contents of which cross the borders of his Malaysian home jurisdiction and give a broad international perspective also. This publication framed the concept of his new book on the Indian arbitration law. But it is not only the author who got famous, it is the lawyer who has done so much for developing alternative dispute resolution, especially arbitration, by being the founding president of the Asian Institute of Alternative Dispute Resolution, the past president of the Chartered Institute

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of Arbitrators and especially –​amongst other high positions –​the Director of the KLRCA –​now the AIAC –​an arbitral institution, which was for nearly 30 years a sleeping beauty –​like Dornröschen in the famous German fairy tale –​and was reanimated when Datuk Professor Sundra Rajoo took the helm in 2010.

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The new book on Indian arbitration will become a standard work immediately after its publication. From that date onwards, no arbitrator of reputation can arbitrate under an Indian lex arbitri without having consulted the “Rajoo”. The work will find its place in the first row of the bookshelves of every legal library and onto the desks of practitioners, scholars, and students of Indian arbitration law not only in India but elsewhere in our globalised arbitration community.

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German doctorate certificates used to be drafted in Latin language and started with the wish: Quod faustum felixque esse iubeat summum numen. This is my wish for this book too.

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FOREWORD I am delighted to write this Foreword for Datuk Professor Sundra Rajoo’s exceptional contribution to arbitral jurisprudence in the form of his new book Law, Practice and Procedure of Arbitration in India. As always, it is an honour to be invited to read, analyse, comment, and discuss the thorough written works of Datuk Professor Sundra Rajoo.

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Datuk Sundra and I go way back when I was Chief Justice of Malaysia. During my tenure, I focused on reducing the backlog of cases in the Malaysian Justice system. I required my judges to achieve Key Performance Index (“KPI”) in completing their cases in a timely manner, encouraged mediation and arbitration as ADR techniques alternative to litigation. All the initiatives, working in parallel with my other CJ directives, became a great success. The backlog of cases in the Malaysian courts was reduced considerably.

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At that time, I had the opportunity to observe and support Datuk Sundra Rajoo’s leadership abilities, extensive knowledge, and contribution to Malaysian and Asian arbitration. His work as the Director of the Kuala Lumpur Regional Centre of Arbitration (now known as the Asian International Arbitration Centre) brought out the best application of his experience, knowledge, and innovative ability to get things done in a difficult environment. He was instrumental in the revival, transformation, and growth of the Centre from 2010 to 2018. Before his tenure, the Regional Centre of Arbitration was a laid back and minor arbitral centre. His contribution to enhance the Malaysian and Asian Alternative Dispute Resolution (“ADR”) ecosystem is the result of his hard and indefatigable effort.

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However, I am delighted that he is continuing to contribute by helming the Asian Institute of Alternative Dispute Resolution (“AIADR”) which is now starting to make an impact toward ADR education, capacity building, and accreditation. Datuk Sundra has also made immense contributions to construction and arbitration laws through his other eight books and commentaries which have been received well by readers in Malaysia and the world over. I have perused the contents of this book Law, Practice and Procedure of Arbitration in India. It covers all recent developments, legislative statutes and amendments, judicial precedents, and international best practices of domestic and international arbitrations

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in India. It is still really courageous of Datuk Sundra to write for a complex jurisdiction like India. It is a remarkable piece of work and will serve as a benchmark text across Asia and the world.

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India plays a pivotal role in the world economy. It is envisaged to be one of the largest economies in the world. Fast-​paced economic growth depends on the swift resolution of commercial disputes to avoid delays in the performance of contracts. Owing to the overburdened caseload faced by the Indian judiciary, other forms of ADR really present a natural alternative for the time-​bound resolution of commercial disputes by litigation, arbitration and mediation being the two main ADR mechanisms. Indian courts have also become more arbitration-​friendly over the years. Over the last decade, the procedure and practice of arbitration in India have continued to align themselves with global practices.

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Noticeably, Datuk Sundra (with the support of his competent and talented young people termed as the Senior and Junior Editorial Boards) has carved out a niche in this book. I would say for me that it is the true guide to law, practice, and procedure of international and domestic arbitrations in India. In addition to maintaining the highest levels of academic credibility, Datuk Sundra’s first-​hand experience coupled with his knowledge from past arbitral publications will provide this book with its wide and detailed coverage of the subject matter. This book will be on the bookshelf of every law library, user, practitioner, and judges’ chambers.

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It is noteworthy that each chapter of the book traverses beyond mere discussions on Indian jurisprudence. It provides an in-​depth comparison of Indian laws with other common law and civil law jurisdictions. As a result, the book is a boon for both seasoned domestic practitioners and international practitioners dealing with issues pertaining to the Indian arbitration landscape.

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Chapters 1 to 4 introduce the reader to arbitration. They provide a succinct overview of the Indian arbitration legislation and its subsequent amendments. The chapters also discuss the 360-​degree shift made by the Indian Parliament since 1996 on time limits for completion of arbitral proceedings and issuance of awards. It is an approach in tandem with my directive in requiring my High Courts judges during my tenure as CJ to complete their cases within nine months of its commencement. The dividends of such an approach reduce delay or postponement and encourage the quick completion of the cases. Privacy and confidentiality have evolved to be the defining features of arbitration. Chapter 5 breathes fresh air into the book by dedicatedly discussing privacy, confidentiality, and transparency in arbitrations. Privacy and confidentiality are independently discussed, and so is the conflict with the growing need for transparency in arbitrations.

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Chapters 10 to 16 present a detailed analysis of issues at the heart of every arbitration, that is, the capacity of parties to arbitrate, the scope and effect of an arbitration agreement, and the relationship between litigation and arbitral proceedings. A standout of these chapters is that they comprehensively deal with Indian and international judicial precedents, including arbitral awards passed in international commercial and investment treaty arbitrations. Chapters 14 to 16 boldly discuss the staying of litigations in favour of arbitrations and vice-​versa.

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Chapters 20 to 30 are exceptionally drafted and comprise a complete guide to the procedural and practical aspects of arbitration in India. The topics range from composition and appointment of an arbitral tribunal, commencement of arbitral proceedings, hearings at different stages of an arbitration, defaults by parties, and leading evidence in an arbitration.

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These chapters also discuss the latest universal best practices making the chapters future proof. Such foresight provides invaluable inputs to readers to adopt best practices. The chapters focussing on defaults and evidence lay down outstanding research of ground-​level best practices in domestic and international arbitration across countries such as India, England, Scotland, the United States, Germany, Sweden, Switzerland, China, Singapore, and Malaysia. I believe these chapters will assist lawyers and arbitrators alike.

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Division 8 that consists of Chapters 35 to 41 is the most detailed presentation of research on issues related to arbitral awards I have come across in recent times. Beginning with the types and requirements of an arbitral award, Division 8 also delves into the effects of valid awards, other remedies and reliefs in arbitrations, and the much-​ debated issue of award of interest. The chapters being divided subject-​wise makes Datuk Sundra’s book cover aspects of arbitration otherwise overlooked.

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Divisions 10 and 11 form an integral part of the book. Encompassing Chapters 45 to 50, these divisions discuss the heavily litigated aspects of an arbitration –​challenges to arbitral awards, setting aside of an award, enforcement and recognition of arbitral awards and conflict of laws in arbitration. Chapters 45 to 50 are indispensable for any practitioner. A marked feature is that these chapters do not limit themselves to Indian awards and decisions. The chapters dedicatedly discuss challenges and enforcement of awards passed in international commercial and investment treaty arbitrations. These chapters simplify the complicated nature of the law and procedure followed in Indian courts pertaining to challenges and enforcement of arbitral awards. The succinctly drafted chapters are a boon to international practitioners looking to face the Indian judicial system with these issues.

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Finally, Chapter 51 is amongst the most impressive discussions on investment arbitration I have come across. Datuk Sundra’s experience and knowledge make the chapter incredibly thorough and detailed. It discusses every dispute arising out of a Bilateral Investment Treaty where India was a party. Accordingly, the chapter also discusses the latest decisions in Vodafone International Holdings BV v India1 and Cairn v India.2 The chapter also discusses the landmark investment arbitration awards from across the world. Chapter 51 is an invaluable resource for not just users and practitioners, but also law students and policymakers.

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I found all the 12 Divisions and 51 Chapters to be well-​structured and reader-​ friendly. The book does not follow the usual section-​wise approach but follows the more holistic subject-​wise approach. In my opinion, this approach has helped the book to cover every aspect of arbitration in India in significant detail.

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I congratulate Datuk Professor Sundra Rajoo for his efforts in researching, structuring, drafting, and editing this book. His more than three decades of experience in over 300 domestic and international arbitrations and reputation as one of the foremost, experienced arbitration thinkers and practitioners is reflected in the book. The contents of this book make it an invaluable resource for Indian and foreign arbitration practitioners and users. I predict that it will be an indispensable reference and classic text, going into many editions in the future, to be used by all and sundry interested or involved in arbitration law and practice.

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1. Vodafone International Holdings BV (The Netherlands) v India, PCA Case No. 2016-​35, Award, September 2020. 2. Cairn Energy PLC and Cairn UK Holdings Limited v Republic of India, PCA Case No. 2016-​7, Award, 21 December 2020.

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As Secretary-​General of the Asian African Legal Consultative Organization (“AALCO”), since 2016, I have been engaged in continued efforts to establish AALCO as a forum for Asian-​African cooperation in legal matters. Apart from providing the Member States with advice on international law, AALCO has also historically played an important role in the development of institutional arbitration in Asia and Africa.

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This has been done through the launching of an integrated scheme for settlement of disputes in economic and commercial transactions, and through the establishment of five regional arbitration centres that promote international commercial arbitration. As Secretary-​General, I have continued to make active efforts to foster institutional arbitrations in the arbitration centres formed by AALCO and provide continuous support in matters such as the appointment of arbitrators and conduct of arbitration.

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One such arbitration centre, the Asian International Arbitration Centre (“AIAC”) was formed pursuant to a host country agreement between Malaysia and AALCO in Kuala Lumpur. It is through the AIAC that I became acquainted with Datuk Sundra Rajoo, who served as its Director for eight enriching years, from 2010 to 2018.

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During his tenure as Director, Datuk Sundra Rajoo transformed the AIAC into a provider of world-​class institutional support and made it a much sought-​after venue for the resolution of both domestic as well as international arbitral disputes.

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Prior to Datuk Sundra Rajoo’s directorship, from its conception in 1978 until 2010, the AIAC had only administered 22 disputes; however, his initiatives and pioneering techniques resulted in a yearly increase in the number of cases administered by the AIAC. By 2019, the arbitration, adjudication, and mediation cases had increased exponentially to a total of 2,745. This is all due to the indefatigable and innovative efforts of Datuk Sundra Rajoo with the renewed support of AALCO and the host. Being a great admirer of Datuk Sundra Rajoo’s commitment, creativity, and passion to pursue development in the field of arbitration, I was honoured when he approached me with a request to write a foreword for his book dealing with the law, practice, and procedure of arbitration in the Indian subcontinent.

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India being one of the founding members of the AALCO, and New Delhi being the permanent headquarters of the AALCO, I have always shared a deep personal relationship with India. My unique position has provided me with the ability and avenues to examine the development of arbitration law in the country.

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Historically the spread of institutional arbitration in India has been fairly limited, with parties preferring to opt for ad hoc arbitrations instead. The provisions of the (India) Arbitration and Conciliation Act, 1996 were formulated keeping ad hoc arbitrations in mind, and failed to boost institutional arbitration.

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In August 2014, the Law Commission of India, in its 246th Report, when discussing amendments to the Arbitration Act noted that institutional arbitrations provide certain “distinct advantages” that are unavailable to parties opting for ad hoc arbitration, commended the establishment and working of the Delhi High Court International Arbitration Centre, Punjab and Haryana High Court Arbitration Centre, the Indian Council of Arbitration, and the Nani Palkhivala Arbitration Centre, Chennai.

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It further observed that the existing Arbitration Act is “institutional arbitration agnostic –​meaning thereby, it neither promotes nor discourages parties to consider institutional arbitration” and suggested that the Act be amended so as to encourage parties to opt for institutional arbitration. Further, to encourage new arbitration centres to open within the country, it was suggested that the Government provide land and funds for the establishment of new centres and form a specialised body to encourage the spread of institutional arbitration in the country.

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Though, the Arbitration and Conciliation (Amendment) Act, 2015, was a step towards granting legislative sanction to institutional arbitrations, more efforts were required to be made. Subsequently, a High Level Committee was constituted in July 2017 to review the institutionalisation of the Arbitration Mechanism in India. The High Level Committee, in its Report, evaluated institutional arbitrations in India and made certain recommendations.

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(3) An Arbitration Council of India was established to “promote and encourage arbitration, mediation, conciliation or other alternative dispute resolution mechanism and for that purpose to frame policy and guidelines for the

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establishment, operation and maintenance of uniform professional standards in respect of all matters relating to arbitration.”

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Hence, in the past decade, India has made significant progress towards recognising and moving towards institutional arbitrations. Further, there have been considerable amendments to the law to achieve this. Each of these amendments has been holistically captured by Datuk Sundra Rajoo in his book. The book even analyses and deals with the provisions of the latest amendment –​the Arbitration and Conciliation (Amendment) Act, 2021 and so is up to date with the present law.

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Furthermore, Datuk Sundra Rajoo’s analysis on every subject is enlightening and gives an insight into the intricacies of the law and the practical aspects of its functioning. Wherever necessary, apart from drawing attention to the procedures under the ICC, SIAC, and UNCITRAL Rules, he has also highlighted the procedure under Indian arbitral institutions such as the Mumbai Centre for International Arbitration and Delhi International Arbitration Centre. This enables the reader to comprehensively compare and understand the interplay between the different rules.

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H.E. Professor Kennedy Gastorn Secretary-​General Asian African Legal Consultative Organisation

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FOREWORD A few years ago, my good friend, Datuk Sundra Rajoo approached me with a request to write the foreword for the second edition of his book dealing with the law, practice, and procedure of arbitration law in Malaysia.

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I welcomed this opportunity. Both he and I had started our practice in Asia well over 30 years ago, a time when books focusing on arbitration in this continent were fairly limited. Most leading commentaries and arbitration works were centred on arbitration in England. For this reason, I was quite certain that his book, focused on the practical aspects of the development of arbitration law in Malaysia, would be well received.

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I was not disappointed. I found the book to be well researched and comprehensive. It extensively cited and referred to the classic reference works of Born, International Commercial Arbitration (2nd edn, 2014); Merkin and Flannery, Arbitration Act, 1996 (5th edn, 2014); Blackaby and Partasides with Redfern and Hunter, Redfern and Hunter on International Arbitration (6th edn, 2015); Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, 2015) etc. as well as leading English cases, but at the same time drew independent parallels to Malaysian law on international and domestic arbitration by analysing Asian jurisprudence (Malaysian court cases as well as those from other Asian seats such as Singapore and Hong Kong SAR were extensively referred to).

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Datuk Sundra Rajoo is a pioneer in the field of arbitration in Asia. Through his book he managed to capture and exhibit procedural similarities and differences when conducting arbitration in Asia, as compared to England, thereby making it easy for international practitioners. To this day, I often refer to his work when faced with an intriguing question of law. Fast forward five years, and it appears that Datuk Sundra Rajoo has developed another masterpiece. I admire his productivity. Despite all the support, his day must have many more hours than there is in a day to deal with another major work like this. With a view to benefitting arbitral practitioners and users in India, Datuk Sundra Rajoo has applied his demonstrable knowledge on international arbitration to write this great book dealing with the law, practice, and procedure of Indian arbitration law.

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I must confess that I know little about arbitration in India even though in my early days, say 40–​45 years ago, I regularly came across Indian parties and lawyers in London maritime arbitrations. So, I am conscious of the fact that there are a lot of expertise and knowledge in international arbitration amongst Indian friends and acquaintances. What I am not familiar with is India as a seat of arbitration and its arbitration law and practice. Of course, I do hear a lot about arbitration in India that is slowly gaining traction with courts now adopting a more pro-​arbitration stance that is aligned with the global approach. For me, it is Datuk Sundra Rajoo’s this new book that gives me an insight, respect, and admiration into the intricacies of the arbitration law, practice, and procedure in India.

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I understand that Datuk Sundra Rajoo has taken the assistance of a group of young Indian arbitration practitioners when writing this book. This has enabled him to holistically examine the law and offer varying practical perspectives. As a practising arbitrator and sometimes academician, I am sure this approach is especially useful.

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The book is extremely user-​friendly and this has always been the writing style of Datuk Sundra Rajoo. I was told that it departs from the section-​wise approach taken by most authors examining the Indian law and instead chooses to deal with every aspect of the law “topic-​wise” which makes research by practitioners easier. Hence, every chapter is a comprehensive analysis of the subject and extensively cites leading judgments delivered by courts in common and civil law jurisdictions, including England, HK SAR, and Singapore, as well as decisions rendered by the Supreme Court of India and High Courts across the continent. Further, by referring to international commentaries and relevant works the position in India has been contrasted with the position taken in other common law jurisdictions.

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Several difficult and controversial topics have been identified and clearly explained in this book. For example, Datuk Sundra Rajoo has holistically examined and dealt with the perceived global threat of arbitration (Chapter 1), the durability of arbitration (Chapter 4), interplay between confidentiality/​privacy of arbitration and the recent demand for transparency and data control (Chapter 5), separability of an arbitration agreement (Chapter 8), anti-​suit injunctions (Chapter 14), anti-​arbitration injunctions (Chapter 17), remuneration of the arbitrator (Chapter 24), grounds to challenge a domestic award (Chapter 46), grounds for refusing enforcement of a foreign award (Chapter 48), and the conflict of laws in arbitration (Chapter 50). His analysis is insightful and will enable even foreign lawyers to gain an insight into how controversial topics in the field of arbitration are viewed and dealt with in the Indian subcontinent. Datuk Sundra Rajoo has also comprehensively dealt with important topics such as the legislative development and subsequent amendments to the (Indian) Arbitration and

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Conciliation Act, 1996, including the recent 2021 amendment to the Act (Chapter 2), sports and maritime arbitration (Chapter 6), manner of appointment of the arbitral tribunal and challenges to the tribunal (Division 5), the arbitral tribunal’s duties and liabilities (Chapter 31), jurisdiction of the court at the pre-​arbitration stage, during arbitration and at the post-​award stage (Chapter 33), checklist for an award to be valid (Chapter 36), arbitral tribunal’s power to award interest (Chapter 41), and the intricacies of investment treaty arbitration (Chapter 51).

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I am sure this book is a true practical guide to arbitrations in the Indian subcontinent, and also is an ode to the increasing harmonisation of international arbitral practice throughout the world. While on the one hand, it shall aid dispute resolution lawyers in navigating the law, on the other, it will provide other users (and perhaps, students) with a more nuanced understanding of the “law, practice and procedure” of arbitrations, thereby providing them with the requisite tools for delve into the subject matter.

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I am confident that the unique approach adopted by Datuk Sundra Rajoo in his book will benefit the arbitral practitioners not only in India but globally in the years to come. Datuk Sundra Rajoo simply continues working on a roadmap for arbitration … which jurisdiction is next?

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Professor Philip Yang Honorary Chairman, Hong Kong International Arbitration Centre Past President, Asia-​Pacific Regional Arbitration Group Past Vice-​Chairman, Documentary Committee, BIMCO, Denmark

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FOREWORD

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The instruments that shaped international commercial arbitration into a unified system practised by all, such as the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 and the UNCITRAL Model Law on International Commercial Arbitration 1985 (amended 2006), were the product of collaboration between common law and civil law jurists. Nonetheless, many practices, such as cross-​ examination and the adversarial approach, are influenced by the common law bar.

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India is the most populous common law country in the world. Its lawyers and arbitrators are steeped in the legal traditions and skills that transpose well from a courtroom to the world of arbitration. They adapt quickly and adeptly to arbitration. Many are veterans of arbitration proceedings in many seats of arbitration in Europe and Asia.

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It is not easy to disseminate knowledge and achieve a harmony of purpose in a country with a billion people. Nonetheless, India has moved with admirable resolve to modernise an arbitration regime that meets the expectations of users and practitioners anywhere, not just within India.

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India is, of course, party to both the New York Convention and the UNCITRAL Model Law. Its Arbitration and Conciliation Act, 1996 harmonised Indian arbitration laws with the rest of the world by adopting the UNCITRAL Model Law. India did not stop there. In 2001, the Law Commission of India undertook a comprehensive review of the arbitration regime at that time. The work continued through the years, as did legislative changes to improve the arbitral process. The latest is the Arbitration and Conciliation (Amendment) Bill, 2021.

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The Supreme Court in India has been setting a progressive tone in the development of arbitration jurisprudence. In its recent landmark decision in PASL Wind Solutions Private Ltd v GE Power Conversion India Private Limited (Civil Appeal No. 1647 of 2021), the Indian Supreme Court held that two Indian parties can choose a foreign seat of arbitration. It upheld the enforcement of a Swiss award made in an arbitration between two Indian companies. The apex Court signals a rejection of parochialism by deciding that: “The balancing act between freedom of contract and clear and undeniable harm to the public must be resolved in favour of freedom of contract as there is no clear and undeniable harm caused to the public.”

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Foreword

We have also seen numerous arbitration institutions being established in India, managed by people who are conversant with the ethos of international arbitration and empanelled with top-​flight arbitrators. Thus, the legislature, the judiciary, and the private sector are each doing its part to enhance the arbitration ecosystem. It is timely that someone records Indian arbitration law at this important stage of its development.

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This is where the indefatigable Datuk Professor Sundra Rajoo steps in. He has long served arbitration communities everywhere with his prolific output. Having already written several leading textbooks on Malaysian arbitration law, he sets his sights on this ambitious project to traverse the Law, Practice, and Procedure of Arbitration in India. The scale of scholarship of an undertaking of this nature cannot be overestimated. This is especially so given the volume of materials and case law from the subcontinent.

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Sundra has enlisted the assistance of rising arbitration stars India who form the book’s Senior Editorial Board. They no doubt add critical local insight to the treatise. Commendably, Sundra has also given an opportunity to bright and eager law students to contribute to the project as its Junior Editorial Board. They have no doubt worked extremely hard throughout the challenging times that India is going through. They will find this a rewarding experience that will stand them in good stead as they take their turn in the sun. The fortitude, intellectual rigour, and drive that these young people have are representative of the abundant talent that will hopefully ensure that India, too, will soon emerge triumphant from its ordeal.

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Chan Leng Sun SC Duxton Hill Chambers, Singapore

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PREFACE AND ACKNOWLEDGEMENTS

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The journey for this book really began in the year 1999 when I started working on the first “Law, Practice and Procedure of Arbitration (in Malaysia)”, focusing on the Malaysian Arbitration Act, 1952. However, within two years of its publication in 2003, the UNCITRAL Model Law in the form of the Arbitration Act 2005 was adopted in Malaysia. The Malaysian arbitration regime was completely revamped.

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I was then repeatedly requested to revise and update my 2003 book to reflect the changes in the arbitration regime. However, I was reluctant to do so. My misgivings stemmed from the apprehension that I would not be able to devote my time and energy to the book project due to my existing work as its Director to build up the then Kuala Lumpur Regional Centre of Arbitration (now known as the Asian International Arbitration Centre (AIAC)), other professional and teaching commitments.

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Eventually, with constant nudging and encouragement from my then publisher, Lexis Nexis and my peers, I began the difficult task of revising and updating the 1st edition of “Law, Practice and Procedure of Arbitration” to follow the new Model Law Regime. I was assisted by Smrithi Ramesh, Nicholas Towers, and Dr Ioannis Konstantinidis in the task. They are all doing so well in their chosen fields which is extremely gratifying for me.

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The 2nd edition of “Law, Practice and Procedure of Arbitration (in Malaysia)” was completed and published in 2016. It was well-​received both in Malaysia and around the world.

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Honourable Justice Arjan Kumar Sikri in his foreword states that he is intrigued as to what prompted me to take up this venture to write a Law, Practice and Procedure of Arbitration in India. There is an explanation. In May 2018, the Malaysian general elections brought about a regime change. Then, a catastrophic event occurred in November 2018 to AIAC and me. It may have been partly motivated by professional jealousy, envy, part of a job grab and takeover of the Centre. My life’s work at the Centre from 2010 to 2018 was totally degraded.

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Law, Practice and Procedure of Arbitration in India

Despite being an International Organisation recognised under Malaysian Law, AIAC was raided on November 19, 2018 and documents seized despite it being inviolable under the Vienna Convention on Privileges and Immunities. The next day, I was arrested at the airport as I returned from a FIFA Adjudicatory Chamber meeting in Zurich amidst widespread domestic and international publicity. Upon overnight detention, I was forced to resign by duress from the position of Director.

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Thereafter, on 21 November 2018, the Magistrate refused a 7-​day remand requested by the arresting authorities on the basis that I was a former High Officer of a recognised International Organisation and clothed with diplomatic immunity for things done in my official capacity as Director. I was freed.

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A vendetta was launched to ensure that I would not have any role in the Malaysian scene or anywhere else. It focused on erasing and expropriation of my contributions to Alternative Dispute Resolution (ADR) in Malaysia and the world.

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The event and actions by the former Attorney General, the Honourable Tommy Thomas, the then Government of Malaysia, the Acting Director of AIAC, Mr Vinayak Pradhan and others (some of whom I thought were friends and allies in the cause of the Centre) were based on an anonymous letter.

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It then translated into criminal charges against me in March 2019 that the purchase of my “Law, Practice and Procedure of Arbitration (in Malaysia)” used for promotional activities of AIAC was for my personal benefit.

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The Asian African Legal Consultative Organisation (AALCO) as the parent International Organisation of AIAC had supervision and dominion over AIAC and its funds, clarified that it was aware and had approved the purchase of the books for the said promotional activities and communicated the same to the Malaysian authorities. It also confirmed that I had donated the royalties received on the book back to the Centre.

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Unfortunately, it was ignored. There was another regime change in Malaysia in March 2020. The actions continued. It was left to the Malaysian courts to rule on it. In the end, I was resoundingly vindicated by the Malaysian High and Federal Courts in a process that ended in April 2021. The charges were quashed by the High Court and the Federal Court upheld the judgment. The two courts in landmark judgments held the Attorney General’s absolute discretion and powers to prosecute is subject to judicial review in rare and appropriate cases. It took 2 years plus to clear the hurdles. However, the damage was inflicted and lasting.

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Preface and Acknowledgements

On 1 July 2021, AALCO followed up on the judgments requesting the Malaysian Minister in charge of Law and the Malaysian Attorney General that I either be reinstated to the position of Director of AIAC or be compensated. Thus far, AALCO’s request has been ignored.

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From the start of the tragic event in November 2018, I was in despair with nothing much to do. I had just completed a 931-​page definitive book with Dr Thomas Kloetzel on the Malaysian Arbitration Act 2005 (Amended 2011 and 2018) and AIAC Arbitration Rules (2018) published by Sweet & Maxwell, showcasing the updated Malaysian arbitration regime of 2018. The book was poorly received given the adverse publicity on me.

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I was quite free to take up new assignments with very little coming from Malaysia. Many advised that I should leave Malaysia to work overseas until the whole episode is forgotten. I could not do so as my passport was impounded.

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When one door closes, another opens.

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In 2019, I decided to apply myself in figurative exile on creating an arbitration book not based on Malaysia. Having successfully analysed and captured the arbitration regime in Malaysia, I felt equipped to undertake a similar exercise in other Asian jurisdictions, with developing arbitration regimes. It was to help set out a road map for Asian arbitration.

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Also, it will be part of my longer-​term contribution and ambition to support Asian and African jurisdictions wanting to make themselves attractive as a safe seat and a hub to retain their own arbitrations and attract arbitrations from outside. All these would lead to a better investment, trading and commercially viable ecosystem bringing prosperity and gain for the heartland.

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I also encouraged the translation of my “Law, Practice and Procedure of Arbitration (in Malaysia)” into Mandarin for use in the Chinese speaking world. The Chinese translation of the book was published in late 2020 in China.

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Next, India seemed a natural choice. It has always been near to my heart. My ancestors from my father’s side came from Tamil Nadu, India to Malaysia in the 19th century when migration was the norm in search of a better life, and also contributed to nation building in our new homeland. My mother was ethnically Chinese but culturally Tamil. My siblings and I spoke Tamil at home particularly with our parents. As Malaysian Indians, we shared a common culture but owed our loyalty to Malaysia. I have been closely following legal developments in India. The development of Indian arbitration was intriguing.

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Law, Practice and Procedure of Arbitration in India

In recent years, especially, with the enactment of the Arbitration and Conciliation (Amendment) Act, 2015, Indian courts have started aligning themselves with the global pro-​enforcement approach and philosophy. India as a country where majority of the arbitrations were ad hoc, suddenly started making efforts to legislatively recognise and encourage institutional arbitrations.

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There was tremendous interest in arbitration in India with weighty learned tomes written with gravitas. On analysing them, I realised that most Indian books are detailed commentaries with a section-​by-​section approach to analysing the Act and the law.

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This presented an opportunity to me. I wished to develop a more holistic practice guide that would focus on the practical and procedural aspects of arbitrations in the country, and would serve as a useful guideline for arbitration practitioners. Thus, my journey continued.

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Although the book was initially intended to be focused on India, during the process of developing ideas and structuring chapters, I decided to alter my approach and instead, blend the global international arbitration practice into its text and contrast and compare it with the Indian position.

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My objective was that this book should serve as a “One Stop Text”, for readers and practitioners, giving them a holistic insight into the Indian arbitration practice compared and contrasted with the international scenario.

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As luck would have it, I commenced work on the manuscript in early 2020, right before the sudden onset of the coronavirus pandemic. While 2020 is certainly a year that most of us would want to forget, working on the manuscript made it bearable for me.

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I had a base text in the form of “Law, Practice and Procedure of Arbitration (in Malaysia)”. It was a useful start as the structure of the book was sound. However, it required considerable reworking for in the Indian context and the changed times in 2021. During the initial stages of drafting, I received assistance from a team comprising of students, namely, Ridhima Sharma, Ketayun H. Mistry, Mitansh Shah, Parth Sharma, Tushar Nagar, Rohith M. Subramonian, and Navya Jain whose initial research and inputs were integral to the shaping and structuring of the book. Unfortunately, Rohith M. Subramonian and Navya Jain were unable to continue given their study commitments. As for the remaining members, I have termed them as members of the Junior Editorial Board.

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Preface and Acknowledgements

Thereafter, in November 2020, I recruited a team of young practitioners after advertising on Linkedin. They comprised of Anushka Shah, Pratik Singhvi, Pritika Malhotra, Rohan Deshpande, Sarthak Malhotra, Aashna Aggarwal, Aastha Chawla, Astha Singh, Geetanjali Murti, Vishal Aggarwal, Mahi Mehta, Puneeth Ganapathy, and Mohit Mahla. They were members of the Senior Editorial and were paid a modest stipend during the duration they worked on their chapters.

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The various chapters were further updated and refined. Each chapter that was worked on was subjected to peer review by exchanging between the team. The manuscript underwent meticulous checking. The complete draft manuscript was completed in March 2021, a duration of 5 months of intensive research, writing, and scrutiny.

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I remain indebted to these young, energetic teams nominally called the Senior and Junior Editorial Board. Without their assistance, this work will be still in progress.

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This book aims to provide a practical guidance to arbitration practitioners, in-​ house counsels, judges and institutions, both in India and abroad to expand their knowledge on the law, practice, and procedure of arbitration in India (ironically the title of this book).

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I have sought to explain and set out best practices for conducting arbitration in India. My task was made more interesting due to the purposive legislative changes made on a regular basis and the number of landmark judgments progressing the use of arbitration as alternative dispute resolution mechanism.

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For example, in the midst of working on the manuscript, I had to incorporate the amendments made to the statute by the Arbitration and Conciliation (Amendment) Act, 2020. The team assisted me in reviewing and redoing previously finalised chapters to follow the new legislative position.

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We also had to incorporate important new rulings as issued by the courts particularly the Supreme Court of India including the PASL v GE Power1 and Amazon v Future Retail2 cases. With the view of facilitating every reader, this book is not structured as per the Sections of the Arbitration Act but instead as a topic-​by-​topic perusal of the essential procedures under the Act.

1. (2021) SCC OnLine SC 331. 2. (2021) SCC OnLine SC 557.

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Law, Practice and Procedure of Arbitration in India

This approach, in my opinion, provides a complete picture of the law, practice, and procedure of arbitration in India moving beyond the contents of the Arbitration Act. Further, adopting such an approach has enabled me to clearly show the interplay of the Arbitration Act with the rules of major arbitration institutions in India as well as other arbitration institutions around the world and the New York Convention.

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The debts that I owe for this book are enormous. As always, I have received much help from various persons and record my thanks. I am extremely grateful to my two Editorial Boards comprising young practitioners and students in the field of international arbitration.

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It was indeed a delight to work with each one of them and learn from each other in the process. I thoroughly enjoyed the journey of familiarising myself with the Indian arbitration space through these bright young minds, often through valuable discourses and writing them into the text of the manuscript.

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Separately, I wish to thank Mr Mihir Naniwadekar, Senior Advocate who read first draft of Chapter 51: Investment Arbitration and made useful comments to improve it. I have incorporated his valuable comments in the said chapter.

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I also remain forever indebted to my old friend, Hew Dundas who painstakingly reviewed several chapters of my book. His insightful comments and keen inputs helped me refine and further develop my ideas. In fact, he went above and beyond by even picking up typos. Our friendship spans over 20 years and has not diminished.

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My thanks also to David Bateson who reviewed the manuscript and gave valuable inputs.

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I am also grateful to my dear friend, Dr Thomas Kloetzel. He was a special contributor of our 2019 book on the Malaysian Arbitration Act, 2005 (Amended 2011 and 2018) and AIAC Arbitration Rules (2018). His kindness, empathy, and sharing of wonderful classical music and hymns soothed my nerves in testy moments.

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Dato’ Quek Ngee Meng and Jayems Dhingra’s expert stewardship of the Asian Institute of Alternative Dispute Resolution (AIADR) in 2019 and 2020 ensured that the Institute survived the aftermaths and buffeting of the 2018 event. The Institute’s secretariat was temporarily moved to Singapore in 2019. It is now moved back to Kuala Lumpur, Malaysia. We are building it up as a thriving membership and accreditation Institute for Asia and Africa. I am really appreciative of their commitment and friendship. I would also like to thank Mr Himanshu Suman, Mr Ishan Das, Ms Swarupa Madhavan, Ms Pallavi Anantharam, Ms Nupur Priya, Mr Arpit Mullick, Mr Sanjay Khan Chowdhury, Ms Sakshi Kalyanpur, Ms Gunjan Soni, Ms Smitha Agy, Ms

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Preface and Acknowledgements

Abhilasha Vij, Ms Ritika Bharti, and Mr Pranjit Bhattacharya who helped with research for specific chapters in the book. They are all talented, skilled, and knowledgeable, and I am grateful for their support. I have received nothing but help and kindness from the luminaries who have contributed forewords for this book.

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I express my deepest gratitude to Honourable Justice Arjan Kumar Sikri, Former Judge, Supreme Court of India, presently International Justice of the Singapore International Commercial Court for his kind, informative, and candid foreword. My words do not do justice to how privileged I feel to have him as one of the foremost Indian jurists and now, very successful international arbitration practitioner to write the foreword for this book.

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Professor Anthony Lavers was a young lecturer at National University of Singapore when I first came across his co-​authored work with Nigel Robinson et al. on Construction Law in Malaysia and Singapore. It was a pioneering book which served the building community well. He was instrumental in procuring seed money and encouraging me to set up the Society of Construction Law (SCL) in Malaysia when he was Chairman of (Mother) SCL in England. It is wonderful to connect up again after 20 years to invite him to write a foreword. Anthony is now visiting professor of law in the Centre of Construction Law at King’s College, London and is co-​author of FIDIC Contracts: Law and Practice and joint editor of Studies in European Construction Law.

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I am really appreciative of my former boss, HE Professor Dr Kennedy Gastorn, the Secretary General of the Asian African Legal Consultative Organisation and Permanent Representative of the United Republic of Tanzania to the United Nations together with my good friend, Professor Philip Yang, who despite their busy schedules took time out to write forewords for my book. They have been generous with their deeds and encouragement. No one could ask for more, or expect as much, from them. They never wavered in their support and stood by me through the darkest times when all seem tarnished and lost.

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I feel privileged that Right Honourable Chief Justice Tun Zaki Azmi felt my book worthy enough to write a foreword. I have always admired and looked up to him and his efforts to streamline and increase the efficiency of litigation in Malaysia and now in the Middle East. Tun Zaki is a good citizen of Malaysia, always wise to the ways of the Malaysian polity. Professor Dr Dr h.c. Rolf A. Schuetze, whose work I have always admired has been kind enough to write a foreword of his own. I feel humbled that he suggests my book will benefit and assist people of his stature and give them an insight into the law in India. It is so generous and very kind of him to say so.

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Law, Practice and Procedure of Arbitration in India

Mr Chan Leng Sun SC is a friend of mine. He is one of the young and upcoming stars in the global arbitration community with an innate ability of promoting the cause. He has a first in Law from University of Malaya. Singapore has become a beneficiary of his great talent, industry, and knowledge. He is currently the Deputy Chairman of the SIAC Board.

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My family has always been there for me. They are the bedrock of my existence. My love for them not only remains undiminished but now is enhanced since the terrible events of 2018. My greatest debt is acknowledged in the dedication.

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My gratitude extends to the editorial team at Thomas Reuters India Pte Ltd especially, Gowri, Srividhya, Bhavana, Deeksha, Jaimeena, and Rajagopal for their editorial assistance and strong support required to successfully publish this book. It is a delight to work with such professionals.

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Girish Kamat and Rachel Jacques of Thomson Reuters Asia Sdn Bhd (based in Malaysia) introduced and vouched for me to Gowri of Thomas Reuters India Pte Ltd for this book project. I hope their faith in me is not misplaced. They are always been enthusiastic of all the book projects I have imposed on them.

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I trust that the “Law, Practice, and Procedure of Arbitration in India” will provide readers with an almost complete reference guide to answering important questions which arise during the course of practice of arbitration in India and perhaps, elsewhere. Where possible, important changes have been incorporated between that date and the finalisation of the proofs for publication.

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The book therefore also showcases the excellent human resources and talent which I was able to harness from India. I am fortunate to be able to work with them. However, whatever faults may have inadvertently crept in the manuscript are solely mine.

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I apologise, in advance, if any reader may think that I have incorrectly stated the facts or concepts or the law and for any jurisprudence which I have omitted to deal with in this book. I hope to correct such shortcomings over a period of time as this book will become a living and breathing document with the help of improved dialogues, engagement, and debate, updated from time to time. The views expressed in this book are my own. A reader would find that I have offered my own opinions on issues that are either not settled with clarity or remain an open to discussion. Where my view has been offered, it is supported by reasoned argument, to the extent that it is necessary to place all aspects of the issue before the readers. I hope

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Preface and Acknowledgements

that this book will not only be informative but also stimulate debate and dialogue amongst practitioners. The law is stated as at September 2021.

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Datuk Sundra Rajoo Kuala Lumpur, Malaysia, September 2021

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EDITORIAL BOARD

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INTRODUCTION TO THE SENIOR AND JUNIOR EDITORIAL BOARDS

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It is with the assistance and input of the various individuals that I have mentioned in the Preface and Acknowledgment that this book was completed.

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However, I have to do a special mention for individuals identified in the Editorial Boards who have really and substantially assisted me to arrive at this comprehensive Law, Practice and Procedure of Arbitration in India book.

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They are a combination of young, talented, and highly qualified Indian lawyers together with hardworking, clever law students who will eventually evolve to fall into the former category.

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I organised them in the form of Senior and Junior Editorial Boards.

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The Senior Editorial Board comprised Anushka Shah, Pratik Singhvi, Pritika Malhotra, Rohan Deshpande, Sarthak Malhotra, Aashna Aggarwal, Aastha Chawla, Astha Singh, Geetanjali Murti, Vishal Aggarwal, Mahi Mehta, Puneeth Ganapathy, and Mohit Mahla.

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Many members of the Senior Editorial Board have worked and are still working with Senior Counsels and have acted or still acting as tribunal secretaries to Arbitrators dealing with arbitration-​related disputes and arbitration-​related litigations in India and abroad. They have helped me to delve into the theoretical and practical aspects of arbitration in India. Each member assisted in redrafting, research, editing, and peer-​reviewing specific chapters of the book in late 2020 and early 2021. They were paid a modest stipend each month when they worked on their particular chapters. Pritika Malhotra and Pratik Singhvi assisted me with the final updating of the manuscript to insert the useful comments and changes to the manuscript suggested by Hew

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Law, Practice and Procedure of Arbitration in India

Dundas, David Bateson, and Adof Peter. I retained Pratik Singhvi to assist with the copy editing of the manuscript until publication which he did magnificently. The Junior Editorial Board comprised law students. They included Ketayun H. Mistry, Mitansh Shah, Parth Sharma, Ridhima Sharma, and Tushar Shankar Nagar. Each of these bright law students has helped with original drafts and research concerning the chapters assigned to them. They did their work gratis.

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This book is therefore a result of our joint unending passion, hard work, and dedication. Working with these young legal practitioners and law students from India has been a memorable experience and a life-​defining lesson for me.

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I am forever indebted to them. I commend the Senior and Junior Editorial Board to you with their curriculum vita as follows:

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SENIOR EDITORIAL BOARD

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Anushka Shah is an Advocate based in New Delhi. Anushka graduated from Government Law College, Mumbai in 2018 and started her career as an Associate at the Mumbai office of one of India’s leading law firms –​AZB & Partners. Anushka specialises in international disputes and litigation, with a focus on commercial law involving cross border trade, corporate transactions, as well as disputes in the energy and construction sector. She has worked on various domestic and international arbitrations conducted under the SIAC and ICC Rules.

Pratik Singhvi is an alumnus of Government Law College, Mumbai and an Indian qualified lawyer. He is also on his way to qualify as a solicitor in England and Wales. He has worked in one of India’s premier dispute resolution practices, Bharucha & Partners and Shardul Amarchand Mangaldas & Co., under the mentorship of Mr M. P. Bharucha and Mr Rishab Gupta respectively. Pratik has represented international and domestic clients in over 75 litigations, arbitrations (international and domestic), and advisory mandates. His practice areas include constitutional and commercial disputes concerning telecommunication, media, technology, cyber-​ security, contract, construction, competition, labour, and company laws. Pratik is passionate about arbitration as an ADR process and regularly reads and researches on issues pertaining to investment arbitration and international commercial arbitration. He is also an active member of the Young International Arbitration Group, London Court of International Arbitration. On the personal front, Pratik follows football and is a certified diver. He may be contacted at pratik.singhvi95@ gmail.com.

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Editorial Board

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Pritika Malhotra graduated from National Law University, Delhi in 2017, where she won accolades for the university through her participation in international ADR competitions. She began her professional career with the dispute resolution department of P&A Law Offices, a boutique disputes resolution firm, where, notably, she was a part of the team representing the Republic of India in two investment arbitrations. Thereafter, Pritika went on to work in one of India’s premier law firms, especially known for its disputes resolution, Khaitan & Co., where she regularly advised and represented multi-​national corporations in both, international and commercial arbitrations as well as litigation arising out of these arbitrations, conducted under the LCIA, SIAC, ICC, and UNCITRAL Rules. Presently pursuing the Teach for India fellowship, on the personal front, Pritika is an avid reader who also spends her spare time experimenting with baking. She may be contacted at [email protected]. Rohan Deshpande is a Counsel at the Chambers of Mihir Naniwadekar. Based out of Mumbai, he maintains a broad commercial practice with an emphasis on commercial litigation, arbitration, taxation, and insolvency resolution. He routinely appears before the Bombay High Court, the National Company Law Tribunal and various ad hoc arbitral tribunals, in addition to being instructed at the appellate stage in matters. He has numerous reported decisions to his credit, both as an arguing and as a junior Counsel. He is also a frequent contributor to legal blogs and journals, writing about his areas of academic interest that include constitutional and administrative law, arbitration, and insolvency.

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Sarthak Malhotra is an Indian qualified lawyer. He represents and advises corporate, sovereign, and private clients in complex disputes before arbitral tribunals and courts. He has a B.Com. LL.B. from the Gujarat National Law University and is an incoming candidate at the Geneva LLM in International Dispute Settlement (MIDS) (2021-​22), the joint LLM program of the Graduate Institute of International and Development Studies and the University of Geneva. He writes regularly on issues of international dispute settlement.

Aashna Aggarwal is presently working as an Associate at Cyril Amarchand Mangaldas, specialising in restructuring and insolvency law. She obtained her LLM in International Arbitration and Dispute Resolution from the National University of Singapore. Prior to that, she pursued her BA LLB from OP Jindal Global University. Qualified to practice as an advocate in India, Aashna has worked alongside teams in several top-​tier firms and with independent legal practitioners, both in India and abroad. She has all-​round work experience in the fields of civil and commercial dispute resolution, covering areas of law such as property law, insolvency law, rent, and revenue matters. On the personal front, Aashna enjoys travelling and playing tennis and football.

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Law, Practice and Procedure of Arbitration in India

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Aastha Chawla, Principal Associate at Khaitan & Co., is an arbitration professional practising in India since 2015 and has obtained an LLM degree in International Commercial Arbitration Law from Stockholm University. She has worked on various arbitrations revolving around oil and gas disputes, construction disputes, and real estate disputes. She regularly appears before various ad hoc and institutional arbitral tribunals. She has also worked on electricity disputes and has appeared before the Appellate Tribunal for Electricity and central and state electricity commissions.

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Astha Singh is an Associate in the Dispute Resolution team of L&L Partners Law Offices, New Delhi. She regularly advises and represents corporations in domestic and international commercial arbitrations relating to, inter alia, banking and financial services, construction, infrastructure and energy projects, distribution and sales contracts, share purchase and asset purchase transactions. Astha provides strategic advice on drafting dispute resolution clauses in international commercial contracts and frequently advises clients on the enforceability of foreign arbitral awards. Astha holds an LLM degree, in Corporate and Commercial Law, from the London School of Economics and Political Science, where she also attended seminars on the practice of international arbitration by leading arbitral practitioners. She has received her undergraduate degree in law from Gujarat National Law University, Gandhinagar. Astha takes a keen interest in research-​oriented learning and has written legal articles on contemporary commercial topics. She has acquired academic and practical insight on issues pertaining to governing law, extension of arbitration agreements to non-​signatories, and the role of public policy. By drawing on these experiences, she has assisted and advised clients in realising their business objectives. Geetanjali Murti began her career in law in 2017, post completing her bachelor’s degree in law from Campus Law Centre, Delhi University. An alumna of Mayo College Girl’s School, Ajmer. Geetanjali also has an undergraduate degree in Psychology from Lady Shri Ram College for Women, New Delhi and an MA in Criminal Justice from King’s College, London. Since July 2018, she has been an Arbitration Lawyer at LexArbitri where she has worked on international, as well as domestic commercial arbitrations, with a focus on Energy and Engineering, Procurement & Construction (“EPC”), and Infrastructure disputes. She regularly appears before the Delhi High Court and other judicial fora for contractual, civil, and commercial disputes. On a personal front, Geetanjali is a trained Odissi dancer, national level debater, and loves to play tennis. She also taught students from underprivileged backgrounds while pursuing her undergraduate degree.

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Editorial Board

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Vishal Aggarwal is an Indian Qualified Lawyer focusing on commercial litigation and arbitration. He completed his LLM in the field of commercial/​investment arbitration, conflict of laws and international commercial contracts from the London School of Economics. He has also taken the intensive certification course offered by ICC Paris, attended the International Arbitration Academy in 2018 and the Columbia Summer Program on International Law 2017. During his time at the LSE, he was the Vice-​President of the International Arbitration Society. Vishal has worked on investment arbitrations with city law firms in London. He has acted as a junior counsel in an arbitration conducted under SIAC, LCIA, and UNCITRAL Arbitration Rules. He is also associated and working with a Dubai-​based arbitrator for capacity building programs in International Arbitration for the MENA region. Mahi Mehta is a law graduate from the 2018 batch of NMIMS School of Law, Mumbai and is primarily a dispute resolution lawyer. Since 2018, she has been associated with Advani & Co., a boutique dispute resolution law firm led by Mr Hiroo Advani. In her professional pursuits, she has advised a range of private and corporate clients in relation to arbitrations in both domestic and international jurisdictions including ad hoc as well as institutional arbitrations under the rules of ICC and SIAC. She has also advised various public sector enterprises as well as multi-​national corporations primarily in the EPC, oil and gas, power, and petroleum sectors and under the MSME Act, 2006 and Lok Adalat Act, 1987. Mahi has also authored various articles on contemporary issues in the field of arbitration that have been published by renowned legal content platforms. She can be reached at [email protected]. Puneeth Ganapathy is a Disputes lawyer with a primary focus on international and domestic commercial arbitrations. He also represents parties in complex commercial and insolvency disputes before courts and tribunals in India. His experiences in arbitration include a PCA Investment Treaty arbitration involving a claim in excess of 1 billion USD; two London-​seated LCIA parallel arbitrations arising from a 5-​star hotel JV in Russia; two Kuala-​Lumpur seated ICC parallel arbitrations arising from an electronics manufacturing JV and several New Delhi-​seated ICC arbitrations arising from high value works contracts and tenders awarded by a major Indian PSU. He has also worked on arbitrations seated in Paris, Hong Kong, and Singapore. He currently practices with a leading Indian law firm and has previously worked in Mumbai, London, and Kuala Lumpur on arbitrations involving substantive Indian, English, Malaysian, Hong Kong, and Ethiopian law. He is qualified to practice in India and to enrol as a Solicitor in England and Wales having cleared the QLTS in 2018. He graduated from the National University of Juridical Sciences, India in 2014 and received the Master of Laws (“LLM”) degree from University College London in 2017, with a distinction in Investment Treaty Law.

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Law, Practice and Procedure of Arbitration in India

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JUNIOR EDITORIAL BOARD

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Mohit Mahla completed his LLM in International Business Laws from National University of Singapore in 2014. He graduated from Rajiv Gandhi National University of Law, Patiala, in 2012, having completed his BA LLB (Hons) degree. A common-​law qualified dispute resolution lawyer, he specialises in commercial/​investment arbitration and complex cross border disputes. Mohit has extensive experience in domestic and international arbitrations arising out of commercial disputes in oil and gas, mining, construction, and real estate sectors. He has also acted for clients in litigation and arbitration-​related court proceedings before various courts in India. Previously, he worked with top tier global law firms in Singapore, Dubai, and London, and did mini-​pupillages with top barrister chambers in London. Mohit is an active member of various arbitration bodies like the Young ICCA, YSIAC, and Young MCIA, and is involved in global initiatives in the field of international arbitration. He is a Steering Committee Member at the “Campaign for Greener Arbitrations” and acts as Secretary at “REAL (Racial Equality for Arbitration Lawyers)”. He is a regular contributor to international arbitration resources, such as Kluwer Arbitration Blog and Young ICCA Arbitration Blog as well.

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Ketayun H. Mistry is a 4th year student at Government Law College, Mumbai. An ardent student of alternative dispute resolution mechanisms, she is passionate about working in the field of international arbitration and commercial dispute resolution. She has worked with several boutique law firms to hone her skills. She also headed the ADR Cell in college and volunteered with the Teach for India organisation, while winning laurels in a variety of national and international moot courts, debates, and negotiation competitions.

Mitansh is an Associate with the Dispute Resolution Team of AZB & Partners, Mumbai. He has a keen interest and motivation to work in the field of international arbitration. Embracing this fascination, Mitansh has worked as a research assistant to Mr Rahul Donde (Counsel, Lévy Kaufmann-​Kohler). He has even had the opportunity to intern and learn under the tutelage of Hon’ble Justice Ms Indu Malhotra, Supreme Court of India.

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Editorial Board

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Parth Sharma is a final-​year student at Symbiosis Law School, Noida. He is passionate about international commercial law and alternative dispute resolution, and has represented India in various national and international moot court competitions including the Foreign Direct Investment International Arbitration Moot, 2020 and Frankfurt Investment Arbitration International Moot 2020-​2021. Parth also attended the prestigious summer program at King’s College London on International Commercial Law, where he presented a paper highlighting the complexity and challenges faced in dispute-​settlement under the WTO regime. He has interned with various well-​known law firms in India and aims to pursue a career in Corporate and International Commercial law.

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Ridhima Sharma is a final year BBA, LLB. student at Symbiosis Law School, Noida. She is greatly interested in International Arbitration and has written and published research articles on various aspects of international commercial arbitration and investment arbitration. She also runs a blog focusing on trends in domestic and international arbitration. Further, she has interned with arbitrators, mediators, and dispute resolution teams of various Indian law firms. She has also participated in prestigious Indian maritime arbitration moots –​NUALS International Maritime Law Arbitration Competition, 2019 and NLUO International Maritime Arbitration Moot, 2020.

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Tushar Shankar Nagar a student of Government Law College, Mumbai, will graduate in 2022. He has interned with Shardul Amarchand Mangaldas & Co. and Khaitan and Co. and the Centre for Trade and Investment Law, among others. Apart from writing for international law blogs and journals, Tushar has demonstrated his interest in arbitration through moot courts. He believes that academic examination of law is as necessary as applying it practically. Outside work, Tushar likes to read, debate, and involve himself in sports.

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TABLE OF CASES A

A Schroeder Music Publishing Co v Macaulay [1974] 3 All ER 616 ......................................205 A v B [2011] EWHC 2345 (Comm) ..........................................................................................637

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A v B (No 2) [2007] EWHC 54 (Comm), [2007] 1 Lloyds Rep 358 .......................... 411, 1222 A v B [2006] EWHC 2006 (Comm), [2007] 1 All ER (Comm) 591 .....................................426

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A v B [2010] EWHC 3302 ..........................................................................................................273

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A v B [2011] EWHC 2345 (Comm) ..........................................................................................636 A v B [2015] 3 HKLRD 586 ..................................................................................................... 1041

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A. Ayyasamy v A. Paramasivam (2016) 10 SCC 368 ...................................................... 339, 370

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A. Ayyasamy v A. Paramasivam & Ors (2016) 10 SCC 386 ....................58–​60, 245, 267–​268, 351, 363, 436, 488

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A. Ayyasamy v A. Paramasivam & Ors. AIR 2016 SC 4675 ............................................ 58, 538

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A.B.C. Laminart (P) Ltd. v A.P. Agencies (1989) 2 SCC 163 ..................................................490

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A.K. Patel and Company, Surat and Anr. v Tata Finance Limited and Anr. (1996) SCC OnLine Bom 387 ......................................................................................... 1061

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A.P. Power Coordination Committee v Lanco Kondapalli Power Ltd. (2016) 3 SCC 468 .................................................................................................................505

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A/​S Det Dansk-​Franske Dampskibsselskab A/​S v Compagnie Financière d’Investissements Transatlantiques SA (Compafina), The Himmerland [1965] 2 Lloyd’s Rep 353 .....................................................................................................535 AA Amram Ltd v Bremar Co Ltd [1966] 1 Lloyd’s Rep 494 ........................................ 719, 1306 AAA Landmark Ltd. v Akme Projects Ltd. (2018) SCC OnLine Del 7586 ...........................490 AAOT Foreign Econ. Ass’n (VO) Technostroyexport v Int’l Dev. & Trade Servs. Inc. 139 F.3d 980, 982 (2d Cir. 1999) ........................................................ 1304 AAOT Foreign Economic Ass’n (VO) Technostroyexport v Int’l Dev & Trade Services Inc. 139 F.3d 980 (2d Cir. 1998) ................................................................659

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Law, Practice and Procedure of Arbitration in India

Aarka Sports Management Pvt. Ltd. v Kalsi Buildcon Pvt. Ltd. Arb. P. 662/​2019 ................491 AAY and Ors. v AAZ (AAY) 2011 1 SLR 1093 .........................................................................116 AAY and Others v AAZ [2011] 1 SLR 1093 .............................................................116, 124, 919 Abaclat and Others v Argentine Republic ICSID Case No. ARB/​07 /​5 ............................... 1407 ABB ABL Ltd. v Cement Corporation of India (1999) 49 DRJ 131 ........................................514

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ABB AG v Hochtief Airport GmbH [2006] 2 Lloyd’s Rep 1 ....................................................724 ABB Lummus Global Ltd v Keppel Fels Ltd [1999] 2 Lloyd’s Rep 24 .....................................257 Abbey National Mortgages PLC v Key Surveyors Nationalwide Ltd [1996] 3 All ER 184, [1996] 1 WLR 1534 .........................................................................855

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Abdul Kadir Shamsuddin Bubere v Madhav Prabhakar Oak & Anr AIR 1962 SC 406 ........58

Abdul Latif Jameel Transp. Co. Ltd. v FedEx Corp. 989 F. 3d 710 (6th Cir. 2019) ................983

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Abheya Realtors Pvt Ltd. v SSIPL Retail Ltd. (2009) SCC OnLine Cal 2656 ........................458

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Abhijeet Saraswat v Nalamaty Doraiah 2003 SCC OnLine Bom 1117 .................... 1044, 1048

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Abhinav Knowledge Services Pvt. Ltd. v Babasaheb Ambedkar Open University 2017 SCC OnLine Guj 1170 ............................................................................................ 1103

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Able Associates and Anr. v K.S. Ramakrishna Rao 2007 (4) ArbLR 219 AP ........................608 Abrathut v Brandon [1713] 1 WLUK 39 ...................................................................... 1052, 1060

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Abu Dhabi Gas Liquefaction Co Ltd v Eastern Bechtel Corpn and Chemichal Engineering & Construction Co Ltd [1982] 2 Lloyd’s Rep 425 .......................................320

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Abu Hamid Zahiea Ala v Golam Sarwar (1916) SCC OnLine Cal 183 ............................. 1069

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Abubakar Abdul Inamdar v Harun Abdul Inamdar (1995) 5 SCC 612 ............................. 1294

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Abuja International Hotels Ltd. v Meridien SAS [2012] EWHC 87 .................................... 1055

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ACC Ltd. v Global Cements Ltd. (2012) 7 SCC 71 ..................................................380, 441, 551 Accounting Publication Sdn Bhd v. Ho Soo Furniture Sdn Bhd [1998] 4 MLJ 497 ...............407

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ACD Tridon Inc. v Tridon Australia Pty Ltd [2002] NSWSC 896 .........................................432 Ace Bermuda Insurance Ltd v Allianz Insurance Company of Canada [2005] ABQB 975 ................................................................................................................274 ACE Capital Re Overseas, Ltd v Cent. United Life Ins. Co. 307 F.3d 24 (2d Cir. 2002) .......245 ACE Pipeline Contracts (P) Ltd. v Bharat Petroleum Corporation Ltd. (2007) 5 SCC 304 ................................................................................................145, 550, 638 Active Media v Divisional Commercial Manager, Northern Railway ........................... 142, 525 Adams v Bankart (1835) 15 Cr M & R 681 ..............................................................................301

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Table of Cases

ADC v Hungary, Award, 2 October 2006 .............................................................................. 1422 Addis v Gramophone Co Ltd [1909] AC 488 ......................................................................... 1128 ADF Group Inc v United States of America ICSID Case No. ARB (AF)/​00/​1 6 ICSID Rep 449, Award 9 January2003, at para. 536–​537 ......................................... 1425 Adhunik Steels Ltd. v Orissa Manganese and Minerals (P) Ltd. (2007) 7 SCC 125 .................................................................................................................602

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Adhunik Steels Ltd. v Orissa Manganese & Minerals Pvt. Ltd. (2007) 7 SCC 125, at para. 12 .................................................................................... 951, 978 Advanis S.A. v Royal Unibrew A/​S. Case No. T 8043-​13, decided on 20 March 2015, 385

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Aero Club v Solar Creations Pvt. Ltd (2020) SCC OnLine Bom 472 ..............1006, 1097, 1098

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Aeroflot Russian Airlines v Berezovsky (2013) 2 Lloyd’s Rep 242 ...........................................453 Aeroflot-​Russian Airlines v Berezovsky (2013) EWHC Civ 748 .............................................425

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AES Ust-​Kamenogorsk Hydropower Plant LLP v Ust-​Kamenogorsk Hydropower Plant JSC [2011] EWCA Civ 647, affirmed [2013] UKSC 35, SC .................................472

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AES Ust-​Kamenogorsk Hydropower Plant LLP v Ust-​Kamenogorsk Hydropower Plant JSC [2013] UKSC 35 ................................................................................950, 951, 988

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Afcons Infrastructure Limited v. Ircon International Limited High Court of Delhi Arbitration Petition No. 21 of 2017 ...................................................................................378

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Afcons Infrastructure Ltd. and Anr. v Cherian Varkey Construction Co. (P) Ltd. and Ors. (2010) 8 SCC 24 ............................................................................................ 42, 150

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AG for Manitoba v Kelly [1922] 1 AC 268 ............................................................................. 1275

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Agri Gold Exims Ltd. v Sri Lakshmi Knits & Wovens (2007) 3 SCC 686 ..............................351 Agrimex Ltd v Tradigrain SA [2003] EWHC 1656 (Comm) ............ 683, 854, 916, 1042, 1070

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Ahmad Al-​Naimi (T/​A Buildmaster Construction Services) v Islamic Press Services Inc [2000] APP LR 01/​28, [2000] 1 Lloyd’s Rep 522 ........................428–​429, 453

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Ahmad Baravati v Josepthal, Lyon & Ross Incorporated and Peter Sheib 28 F.3d 704 (7th Cir 1994) ..................................................................................................727 Aiden Shipping Co Ltd v Interbulk Ltd, The Vimeira (No 2) [1985] 2 Lloyd’s Rep 377 ........................................................................................ 1215, 1306 Aiglon Ltd. and L’Aiglon SA v Gau Shan Co. Ltd. [1993] 1 Lloyd’s Rep 164 .........................989 Air (PTY) Ltd v International Air Transport Association, Tribunal de Premiere Instance (2 May 2005) Case No. C/​1043/​2005-​15SP (Switzerland), translated in (2005) 23 A.S.A Bull. 739 .................................................................... 469, 475

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Law, Practice and Procedure of Arbitration in India

Air India Ltd. v Caribjet Inc [2002] 1 Lloyd’s Rep. 314 ........................................................ 1324 Airbus Indus. GIE v Patel [1998] 1 Lloyd’s Rep. 631 (House of Lords) .................................415 Airbus SAS v Aviation Partners Inc. No. C12-​1228JLR, United States District Court by its decision dated 25 October 2012 ...................................................................433 Aircraft Support Industries Pty Ltd v. William Hare UAE LLC [2015] NSWCA 229 ................................................................................................. 727, 1057

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Aitcheson v Cargey (1824) 2 Bing 199 .................................................................................... 1056 Aitken v Bachelor (1893) 62 LJQB 193, 68 LT 530 ..................................................................201 Aitken v Ishimaru Ltd [2007] NZHC 1133, NZ .......................................................................190

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Ajay Singh (Sunny) Deol v Suneel Darshan, High Court of Bombay, Arbitration Petition No. 819 of 2011 .................................................................................................. 1207

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AJWA for Food Industries Co (MIGOP), Egypt v Pacific Inter Link Sdn Bhd [2013] 4 AMR 789, [2013] 5 MLJ 625, [2013] 7 CLJ 18 .................................................203

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Akbarally’s & Ors v Indian Oil Corporation (2015) SCC OnLine Bom 705, at para. 17 ............................................................................................................935

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AKN v ALC [2015] SGCA 18

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Akram-​Un-​Nissa Bibi & Ors. v Mustafa-​Un-​Nissa Bibi AIR 1929 All 238 .............................67 Aktiebolaget Legis v V Berg & Sons Ltd [1964] 1 Lloyd’s Rep 203 ...................................... 1107

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Al Hadha Trading Co v Tradigrain SA [2002] 2 Lloyd’s Rep 512 ........ 1018, 1079, 1082, 1079, 1086, 1268

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Al Raha Grp. for Tech. Servs. v PKL Servs, Inc. No. 1:18-​cv-​04194, 2019 U.S. Dist. LEXIS 156249 (N.D. Ga. 6 September 2019) ................................................................ 1007

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Albon (trading as N A Carriage Co) v Naza Motor Trading Sdn Bhd (No 3) [2007] EWHC 665 Ch, [2007] 2 All ER 1075 ..................................................................426

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Albon v Naza Motor Training SDN BHD [2008] 1 All ER (Comm) 351, [2008] 1 Lloyd’s Rep 1, CA .................................................................................................478

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ALBtelecom SHA v UNIFI Commc’ns, Inc. 16 Civ. 9001 (PAE) (SDNY 30 May 2017) ....................................................................................................... 1011 ALC v ALF [2010] SGHC 231, at para. 49 ...............................................................872, 974, 979 Alcatel Space SA v Loral Space &Commc’ns Ltd. 2002 WL 1391819 (SDNY) ......... 1001, 1078 Alchemist Asset Reconstruction Company Ltd. v M/​s. Hotel Gaudavan Pvt. Ltd. (2018) 16 SCC 94 ........................................................................................................ 313, 383 Alcove Industries Ltd v Oriental Structural Engineers Ltd. 2007 SCC OnLine Del 1709, 2008 (1) Arb LR 393 ........................................573, 654, 662

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Table of Cases

Alder v Savill (1814) 5 Taunt 454 ............................................................................................ 1117 Alenco Inc v Niska Gas Storage US [2009] AWLD 2128 .........................................................769 Alex Miller (Merchants) Ltd v AC Runo Aktiebolag 59 Cal WN 61 .......................................538 Alexander Scott v George Avery (1856) 5 HL Cas 811 ....................................................492–​494 Alfred McAlpine Construction Ltd v RMG Electrical Ltd [1998] ADRLJ 53 ................ 210, 359

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Alfred McAlpine Construction Ltd v Unex Corporation Ltd. (1994) 17 BLR 26 ...................306 Alfred McApline Construction v Unex Corp [1994] NPC 16 ..................................................304 Ali Shipping Corp v Shipyard Trogir 1998 2 All ER 136 ................................................. 116, 124

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Ali Shipping Corporation v Shipyard Trogir [1998] 2 All ER 136, [1999] 1 WLR 136 ..............................................................................................114, 881, 919

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Alimenta S.A. v National Agriculture Co-​op Marketing Foundation of India Ltd. (1987) 1 SCC 615

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Alimenta SA v National Agricultural Coop Marketing Federation of India Ltd. (2000) SCC OnLine Del 72 ............................................................................................. 1336

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Alka Chandewar v Shamshul Ishrar (2017) 16 SCC 119 ........................................863, 933, 966

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All India Radio v Unibros (2010) (6) RAJ 217 (Del) ............................................................. 1204 Alliance Petroleum Australia NL v Australian Gas Light Co (1985) 39 SASR 84 .................564

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Allianz SpA v West Tankers Inc, West Tankers Inc v RAS Riunione Adriatica di Sicurta SpA [2009] All ER (D) 82 (Feb) .......................................................................401

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Allianz Versicherungs Aktiengesellschaft v Fortuna Co Inc, The Baltic Universal [1999] 1 Lloyd’s Rep 497 .....................................................................................................517

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Allianz Versicherungsaktiengesellschaft v Fortuna Co Inc, The Baltic Universal [1999] 2 All ER 625, [1999] 1 WLR 2117 .........................................................................523

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Allied Marine Transport Ltd v Vale do Rio Doce Navegacao SA, The Leonidas D [1985] 2 All ER 796 .............................................................................................................480

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Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 All ER 685, [1984] 1 WLR 394, CA (Eng) .......................................................................................... 1241 Alma Shipping Corpn v Union of India, The Astraea [1971] 2 Lloyd’s Rep 494 .......... 530, 538 Al-​Naimi v Islamic Press Agency Inc [2000] 1 Lloyd’s Rep 522 ..................................... 257, 439 Al-​Nozha Misdemeanor Court in Cairo, Case No. 12648 of Judicial Year 2018, Cairo Court of Appeal, Appeal No. 695 of Judicial Year 2019 ..............................67 Aloe Vera of America, Inc v Asianic Food (S) Pte Ltd [2006] 3 SLR(R) 174 .......................................................................... 1272, 1289, 1340, 1348

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Law, Practice and Procedure of Arbitration in India

Alpha Projektholding v Ukraine, ICSID Case No. ARB/​07/​16 ............................................ 1160 Alphapoint Shipping Ltd. v Rotem Amfert Negev Ltd, The Agios Dimitros [2004] EWHC 2232 (Comm) ......................................................................................... 1293 Altco Ltd v Sutherland [1971] 2 Lloyd’s Rep 515 ............................................205, 438, 715, 803 Alupro Building Systems Pvt. Ltd. v Ozone Overseas Pvt. Ltd, 2017 SCC OnLine Del 7228 ...................................................................................... 513, 537

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Am. Int’l Specialty Lines Ins. Co. v Allied Capital Corp. 35 N.Y.3d 64 (2020), 149 N.E.3d 33 (N.Y.2020) ........................................................................ 1005, 1074 Amalgamated Coal Fields Ltd. v Janapada Sabha AIR 1964 SC 1013, at para. 18, 1108

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Amazon.com NV Investment Holdings LLC v Future Coupons Private Limited & Ors. O.M.P. (ENF) (COMM)No. 17 of 2021, decided on 2 February 2021, 1022, 1099, 1127, 1281, 1321

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AMCO v Republic of Indonesia (Resubmitted Case), ICSID Case No. ARB/​81/​1 (1992) 89 ILR 552 ............................................................................................................. 1109

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Amec Civil Engineering Ltd v Secretary of State for Transport [2004] EWHC 2339 (TCC) at para. 68, affirmed [2005] EWCA Civ 291 .............. 48, 63, 344, 349

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Ameet Lalchand Shah & Ors. v Rishabh Enterprises & Anr (2018) 15 SCC 678 ...........................................................37, 58, 65, 316, 318, 370, 390, 954

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American Manufacturing & Trading, Inc v Republic of Zaire ICSID Case No ARB/​93/​1 ............................................................................................... 1418 Ames v Milward (1818) 8 Taunt 637 .........................................................................................712

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Amex Civil Engineering Ltd v Secretary of State for Transport [2005] EWCA CIV 291 .......................................................................................................347

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Amin Rasheed Shipping Corpn v Kuwait Insurance Co, The Al Wahab [1984] AC 50, 1383

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Amina Bibi v Saiyid Yusuf ILR (1922) 44 All 748 ....................................................................280 Amit Suryakant Lunavat v Kotak Securities 2010 SCC OnLine Bom 1434, at para. 9 ........................................................................................................ 1091 Amizola v Dolphin Shipowner, SA 354 F.Supp.2d 689, p. 697 (E.D. La. 2004) .....................398 Anand Brothers v Union of India (2014) 9 SCC 212 ................................................... 1044, 1048 Anant Raj Agencies v Delhi Development Authority (1998) SCC OnLine Del 610 ................................................................................. 1043, 1051 Ananthesh Bhakta v Nayana S. Bhakta (2017) 5 SCC 185 .....................................................425

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Table of Cases

Anderson v Beland (In re Am. Exp. Fin. Advisors Secs. Litig.) 672 F.3d 113, 140 (2d Cir. 2011) ........................................................................................475 Anderson v Wallace (1835) 3 Cl & Fin 26 ........................................................................ 856, 914 Anderson v Wallace 6 ER 1347, HL ...........................................................................................917 Andre et Cie SA v Marine Transocean Ltd, The Splendid Sun [1981] QB 694 ......................480

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Andrew v Grove [1902] 1 KB 625, at p. 628, per Channell JJ .............................................. 1211 Andrews (t/​a BA Construction) v John H. Bradshaw, H Randell & Son Ltd [2000] BLR 6, [1999] 7 WLUK 641 .....................................................................................62

Andros Compania Maritime SA v Marc Rich & Co AG 579 F.2d 691 ...................................644 Angel Broking Ltd. v Sharda Kapoor (2017) SCC OnLine Del 8211 .................................. 1315

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Angel Infin Pvt. Ltd. v Echjay Industries Ltd. 2007 SCC OnLine Bom 50, at para. 19 .......................................................................................1169, 1170, 1173

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Angelique International Limited v SSJV Projects Pvt. Ltd. 2018 SCC OnLine Del 8287 at paras. 28, 29 .......................................................................................782

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Angile Insulations v Davy Ashmore India Ltd. (1995) 4 SCC 153 ..........................................490 Anglia Auto Accessories Limited v The Czech Republic SCC Case No. 2014/​181 .............. 1407

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Anglo-​Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873 ................................................................................................ 1208, 1241

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Anglo-​Newfoundland and Development Corporation v R [1920] 2 KB 214 ................199–​200

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Angus v Smythies; Smythies v Angus (1861) 2 F & F 381, (1861) 175 ER 1106 ....................721 Anil Jain v Madhunam Appliances P. Ltd. (1997) 2 Arb LR 325 at para. 9 ...........................767

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Anil Kumar Bannerjee v Indian Oil Corp (2005) 3 Arb LR 155 p. 161 .............................. 1219

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Anil Rishi v Gurbaksh Singh (2006) 5 SCC 558 ............................................................... 424, 850

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Anil v Rajendra (2015) 2 SCC 583 .......................................................................................... 1107

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Anilkumar Jinabhai Patel v Pravinchandra Jinabhai Patel and Ors. (2018) 15 SCC 178 ............................................................................................................ 1036 Anita Mantri v Karvy Stock Broking Ltd. (2011) SCC OnLine Del 3799 ........................... 1092 Anon (1648) Jenk 128; R v Humphryes (1649) Sty 154 ..........................................................854 Anr Pando Compania Naviera SA v Filmo SAS [1975] QB 742, [1975] 2 All ER 515 .............................................................................................................561 Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191, [1984] 3 All ER 229 .......................................................................................................... 1217 Antram v Chace (1812) 15 East 209 ..........................................................................................301

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Law, Practice and Procedure of Arbitration in India

Antrix Corporation Ltd. v Devas Multimedia P. Ltd. (2018) SCC OnLine Del 9338 ..........490 Antrix Devas Ltd. v Devas Multimedia (P) Ltd. (2014) 11 SCC 560 .....................................957 Anup Equipment Pvt. Ltd. v Ganapati Co-​op Housing Society Ltd. AIR 1999 Bom 219 ..............................................................................................................622 Anwar Siraj v Teo Hee Lai Building Construction Pte Ltd [2014] 1 SLR 52, [2013] SGHC 200 ...................................................................................546

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Anwar Siraj v Ting Kang Chung [2003] 2 SLR(R) 287 ............................................................647 Aoki India Ltd. v. Mira International (2006) 3 CTC 476 ........................................................375 APC Logistics Pty Ltd v CJ Nutracon Pty Ltd [2007] FCA 136 (Aus) ...................................438 Apex Towing Co. v Trading Corp. of Pakistan 1986 WL 10713 (SDNY) ............................ 1076

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Apis AS v Fantazia Kereskedelmi KFT [2000] 9 WLUK253 ................................................ 1324

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Appleton v Norwich Union Fire Insurance Society Ltd (1922) 13 Ll L Rep 345 .......................................................................... 671, 702, 1250, 1253

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Aramco Servsco v EAC Bulk Transport Inc (1993) WL 405996 [MDFLA 25 January 1993] ..................................................................................................................621 Arasmeta Captive Power Company Private Limited v Lafarge India Private Limited ..........330

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Aravalli Power Co. Pvt. Ltd. v Era Infra Engineering Ltd. (2017) 15 SCC 32 .......................572

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Arbitration Petition No. 710 of 2019 decided on 19 May 2020 by the High Court of Delhi ............................................................................................................603

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Archital Luxfer Ltd v Henry Boot Construction Ltd [1981] 1 Lloyd’s Rep 642 ....... 1207, 1208, 1238, 1243, 1245, 1258

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Ardeshar Irani v State of M.P. 1974 SCC OnLine MP 48 ........................................................683

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Arduina Holdings BV v Celtic Resources Holdings Plc [2006] EWHC 3155 (Comm) ................................................................................................................... 1267, 1304 Arenson v Casson Beckman Rutley & Co. (1975) 3 WLR 815 ..................................................54

E-

Arenson v Casson Beckman Rutley & Co. [1975] 3 All ER 901 ..............................................922 Arenson v Casson Beckman, Rutley & Co. [1977] AC 405 .....................................................45 Argolis Shipping Co SA v Midwest Steel & Alloy Corpn The Angeliki [1982] 2 Lloyd’s Rep 594 ..............................................................................1212, 1241, 1242 Ariba India Private Ltd v M/​S Ispat Industries Ltd 2011 SCC OnLine Del 2653 .................135 Arjun Singh v Mohinder Kumar (1964) 5 SCR 946 .................................................................941 Armada (Singapore) Pte Ltd. v Ashapura Minechem Ltd. (2015) SCC OnLine Bom 4783 ................................................................................................... 1343

lxvii

Table of Cases

Armitage v Walker 2 K & J 221 ............................................................................................... 1118 Arnhold Karberg & Co v Blythe, Green, Jourdain & Co [1915] 2 KB 379, at p. 393 ......... 1189 Arnold v National Westminster Bank plc (No 2) [1993] 1 EG 94 ........................................ 1108 Arnold v National Westminster Bank Plc (No.1) [1991] 2 WLR 1177 .....................................97

ul at io n

Arnold v National Westminster Bank plc. [1991] 3 All ER 41, [1991] 2 AC 93 ..............................................................................................1101, 1105, 1108 Arsanovia Ltd v Cruz City 1 Mauritius Holdings [2012] EWHC 3702 (Comm) .......................................................... 1371, 1372, 1374, 1376 Arthur John Spackman v Plumstead District Board of Works (1885) 10 App Cas 229 ........................................................................................................723

irc

Arts & Antiques Ltd. v Richards [2013] EWHC 3361 ................................................ 1106, 1113

rC

Arvind Constructions v Kalinga Mining Corporation and Others (2007) 6 SCC 798 .................................................................................................................977

fo

Arvind V. Sheth v Mahendra Mohanlal Jain High Court of Bombay Commercial Arbitration Petition No. 343 of 2019 (11 September 2019) .............................. 1315, 1316

ot

Ascot Commodities NV v Olam International Ltd. [2002] CLC 777 ..............1041, 1057, 1312

-N

Ashapura Mine-​Chem Limited v. Gujarat Mineral Development Corporation (2015) 8 SCC 193 .................................................................................................................379

py

Ashesh Busa v Atul Gandhi (2019) SCC OnLine Bom 1102 ............................................... 1297

co

Ashiana v Adani 2018 SCC OnLine Del 9110 .........................................................................573 Ashlock William Grover v SetClear Pte Ltd [2012] SGCA 20, [2012] 2 SLR 625 .................413

w

Ashok Kalra v Akash Paper Board Pvt. Ltd. 2013 SCC OnLine Del 3299 ............................474

ie

Ashok Kashyap v Sudha Vasist (1987) 1 SCC 717 ................................................................. 1328

re v

Ashok Traders v Gurumukh Das Saluja (2004) 3 SCC 155 ....................................................245 Ashville Investments Ltd v Elmer Contractors Ltd [1988] 2 All ER 577 ............................. 1125

E-

Ashville Investments Ltd v Elmer Contractors Ltd. [1988] 2 Lloyd’s Rep 73 .........................326 Ashville Investments Ltd. v Elmer Contractors Ltd. [1988] 3 WLR 867 .................................176 Ashwani Minda and Jay Ushin Limited v U-​shin Limited and Minebea Mitsumi Inc. (2020) SCC OnLine Del 721 .............................................................................956, 960, 977 Asian Agricultural Products Ltd v Republic of Sri Lanka ICSID Case No ARB/​87/​3 Award, 27 June 1990 ...................................................................... 1418 Asian Electronics Ltd v M.P. State Electricity Board (2007) SCC OnLine MP 179 ..................................................................................... 9981001

lxviii

Law, Practice and Procedure of Arbitration in India

ASM Shipping Ltd of India v TTMI Ltd of England [2005] EWHC 2238 (Comm), [2006] 1 Lloyd’s Rep 375 ...........................................................................636, 644, 652, 660, 663, 871, 899, 1304 ASM Shipping Ltd of India v TTMI Ltd of England [2005] EWHC 2238 (Comm) .............636 ASM Shipping Ltd of India v TTMI Ltd of England [2007] EWHC 927 (Comm) ...... 652, 663

ul at io n

Assam State Weaving & Manufacturing Co Ltd v Vinny Engg Enterprises Pvt. Ltd. 2010 (4) AJ 609 (Cal) ................................................................................ 689, 1307 Assam Urban Water Supply v Subhash Projects & Marketing Ltd. (2012) 2 SCC 624 ...... 1285 Assimina Maritime Ltd. v Pakistan National Shipping Corp. [2005] 1 Lloyd’s Rep. 525 ....................................................................................................981

rC

irc

Associate Builders v Delhi Development Authority (2015) 3 SCC 49 ...........63, 792, 968, 1047, 1053, 1282, 1293, 1301, 1302

fo

Associated Bulk Carriers Ltd v Koch Shipping Inc, The Fuohsan Maru [1978] 2 All ER 254, [1978] 1 Lloyd’s Rep 24, CA (Eng) ................................................345

ot

Associated Electric & Gas Insurance Services Ltd. v European Reinsurance Co. of Zurich [2003] 1 WLR 1041 .........................................................................1106–​1107

-N

Associated Electric and Gas Insurance Services Ltd v European Reinsurance Co of Zurich [2003] UKPC 11 ................................................................................. 124, 1098

py

Associated Engineering Co. v Government of Andhra Pradesh (1991) 4 SCC 93, at paras 24–​25 .................................................................1053, 1058, 1294

co

Assudomal Dwarakadas v Jessmal Jethanand AIR 1933 Sind 115 .........................................658

w

Astel-​Peiniger Joint Venture (A Joint Venture Partnership) v Argos Engineering & Heavy Industries Co Ltd [1995] 1 HKLR 300 ...............................................................................214

re v

ie

Astel-​Peiniger Joint Venture v Argos Engineering and Heavy Industries Co Ltd [1994] 3 HKC 328 ................................................................................................................214

E-

Astro Nusantara International BV & Ors v PT Ayunda Prima Mitra & Ors. [2016] SGHC 34 ...................................................................................................................261 Astro Nusantara International BV v PT Ayunda Prima Mitra [2012] SGHC 212, [2013] 1 SLR 636 ................................................................................713 Astro Vencedor Compania Naviera Sa of Panama v Mabanaft GmbH, [1971] 2 All ER 1301 ...........................................................................................................356 Astro Vencedor Compania Naviera SA of Panama v Mabanaft GmbH The Damianos [1971] 2 QB 588 ...................................................................................................................326 AT & T Corpn v Saudi Cable Co [2000] 2 Lloyd’s Rep 127, CA (Eng) .................................625

lxix

Table of Cases

AT&T Corp v Saudi Cable [2000] 2 All ER (Comm) 625 ......................................................898 AT&T Technologies Inc v Communications Workers of America (1986) 475 US 643 ..........215 Atlanska Plovidba v Consignaciones Asturianas SA, The Lapad [2004] EWHC 1273 (Comm), [2004] 2 Lloyds Rep 109 ................................................516 Atlantic Lines & Navigation Co Incv. Italmare SpA, The Apollon [1985] 1 Lloyd’s Rep 597 .................................................................................................. 1068

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Atlantic Shipping and Trading Co Ltd v Louis Dreyfus & Co [1922] 2 AC 250, [1922] All ER Rep 559, HL (Eng) .............................................. 497, 529 Atlantic Shipping and Trading Co. Ltd. v Louis Dreyfus Co. [1922] 2 AC 250 .....................497

irc

Atlantic Shipping Co SA v Tradax Internacional SA, The Bratislava [1977] 2 Lloyd’s Rep 269 .....................................................................................................537

rC

Atlas Export Industries v Kotak & Co (1997) 7 SCC 61 ..........................................................157

fo

Atlas Power Ltd. v National Transmission & Despatch Co. Ltd. [2018] EWHC 1052 (Comm) ......................................................................................... 1281

ot

Attorney General of the Republic of Ghana v Texaco Overseas Tankships Ltd, The Texaco Melbourne [1994] 1Lloyd’s Rep 473 ............................................................................... 1120

-N

Attorney General v Mobil Oil NZ Ltd. [1989] 2 NZLR 649, 1 July 1987, 4 ICSID Reports 117 ...........................................................................................................................482

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Attorney-​General for the Province of Manitoba v Thomas Kelly Ltd [1922] 1 AC 268 ...................................................................................................................712

co

Attorney-​General v Barker Brothers Ltd [1976] 2 NZLR 495, CA, 46 ................................ 1130

w

Attorney-​General v Tozer (No 3) 2 September 2003, M1528-​IM02 CP607/​97 ...................715

ie

Atul R Shah v M/​S V Vrijlal Lalloobhai & Co AIR 1999 Bom 67, 1998 (4) Bom CR 867 (Bombay) .............................................................................. 718, 795

re v

Atul R Shah v M/​s V Vrijlal Lalloobhai and Co (1998) SCC OnLine Bom 403 .......................................................................... 821, 941, 1014, 1291

E-

Atwell v Ministry of Public Buildings and Works [1969] 1 WLR 1074 ............................... 1186 Aubert v Maze (1801) 2 Bos & Pul 371 .....................................................................................712 Auckland Co-​operative Taxi Society Ltd v Perfacci Ltd (unreported) HC Auckland CIV 2003-​404-​5495 ....................................................................................651 Auriol v Smith [1823] 3 WLUK 13 ............................................................................... 1052, 1060 Austbulk Shipping SDN BHD v PEC Ltd. (2005) 2 Arb LR 6 (Del) ............................ 869, 1337 Australian Medic-​Care Company Ltd v Hamilton Pharmaceutical Pty Limited (No 2) [2009] FCA 1494 .................................................................................... 1235

lxx

Law, Practice and Procedure of Arbitration in India

Autopista Concesionada de Venezuela, CA v Bolivarian Republic of Venezuela ICSID Case No ARB/​00/​5, 1166, 1403 AV Asia Sdn Bhd v Pengarah Kuala Lumpur Regional Centre for Arbitration [2013] MLJU 183 .................................................................................................................601 Avi Coach Builders v Union of India (2009) SCC OnLine Del 100 ..................................... 1046

ul at io n

Avitel Post Studioz Limited v HSBC PI Holdings (Mauritius) Ltd (2014) SCC OnLine Bom 929 ............................................................................... 1299, 1348 Avitel Post Studioz Ltd & Ors. v HSBC PI Holdings (Mauritius) Ltd & Ors. 2020 SCC Online SC 656 ............................................................................................. 60, 245

Avonwick Holdings Ltd v Webinvest Ltd [2014] EWHC 3322 (Ch) .................................... 1229

irc

Avraham v Shigur Express Ltd 1991 US Dist LEXIS 12267 (SDNY 1991) ........................ 1305

rC

Awasthi Construction Co. v Government NCT of Delhi 2012 SCC OnLine Del 5443 ..............................................................................810, 813, 817

fo

AWG Group v Argentina, Decision on Liability, 30 July 2010 ............................................. 1414

ot

Axios Navigation Co. Ltd. v Indian Oil Corporation Ltd. (2012) SCC OnLine Bom 4 at para. 11, 1030,

-N

Ayscough v Sheed, Thomson & Co (1924) 93 LJKB 94, 19 Ll L Rep 104 ...............................530 Azov Shipping Co v Baltic Shipping Co (No 2) [1999] 1 All ER (Comm) 716 ......................260

py

Azov Shipping Co v Baltic Shipping Co (No 3) [1999] 2 Lloyd’s Rep 159 ..............................257

co

Azurix Corp v Argentina ICSID Case No ARB/​01/​12, Award, 14 July 2006 at paras 421–​422 ............................................................................... 1418, 1423

ie

w

Azurix v Argentina Award, 14 July 2006, at para. 364 ......................................................... 1415

B

re v

B v A [2010] EWHC 1626 ....................................................................................................... 1067 B. v S [2011] EWHC 691 (Comm) ............................................................................................497

E-

B.E. Simoese Von Staraburg Niedenthal v Chattisgarh Investment Ltd. (2015) 12 SCC 225 ...................................................................................................... 490, 961 B.K. Dhar (Private) Ltd. v Union of India 1964 SCC OnLine Cal 146 AIR 1965 Cal 424, 645 B.R. Arora & Associates (P) Ltd. v Airport Authority of India (2015) SCC OnLine Del 8155 at para. 9, 1081 Babu Ram Gupta v Union of India 2002 SCC OnLine Del 223 .......................................... 1292 Bache v Billingham [1894] 1 QB 107 ...................................................................................... 1292

lxxi

Table of Cases

Badat & Co. v East India Trading Co. (1964) 4 SCR 19 ....................................................... 1351 Badger Chiyoda v CBI NZ Ltd [1986] 2 NZLR 599 .................................................................943 Badri Singh Vinimay Pvt. Ltd. v MMTC Ltd. 2020 SCC OnLine Del 106 ............................517 Bailey v Curling 20 LJQB 235 .................................................................................................. 1063 Baillie v Edinburgh Oil Gas Light Co. (1835) 3 CI & Fin 639 .............................................. 1061

ul at io n

Bajjuri Ramakistam v Bhoopati Somalingam (1962) SCC OnLine AP 4, at paras 12–​15 ......................................................................................................... 1069 Baker Hughes Singapore Pte v Shiv-​Vani Oil & Gas Exploration Services Ltd. (2014) SCC OnLine Bom1663 ...........................................................................................932 Baker Marine (Nig.) Ltd. v Chevron (Nig.) Ltd. 191 F.3d 194 (2nd Cir. 1999) .................. 1348

irc

Baker v Cotterill (1849) 7 Dow & L 20 ......................................................................................856

rC

Baker v Cotterill 18 LJQB 345 ....................................................................................................853

fo

Baker v Hunter [1847] 4 WLUK 53 .............................................................................. 1312, 1313 Baker v Yorkshire Fire and Life Assurance Co [1892] 1 QB 144 .............................................201

ot

Bal Kishan Bansal v Pramit Bansal (2007) 1 Arb LR 47 .........................................................408

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Balaji Coke Industry (P) Ltd. v Maa Bhagwati Coke Gujarat (P) Ltd. (2009) 9 SCC 403 .................................................................................................................490

py

Balasore Alloys Ltd. v Medima LIC 2020 SCC OnLine Cal 1698 .........................474–​475, 477

co

Balfour Beatty Construction Ltd v Kelston Sparkes Contractors Ltd [1996] ADRLN 18 ............................................................................................................ 1151 Balkishen Gulzari Lal v Pannal Lal Sud AIR 1973 Del 108 ....................................................144

w

Ball v Dunsterville (1791) 4 TR 313 ..........................................................................................301

ie

Balmukund Pandey v V.K. Singh (2009) SCC OnLine MP 30 ............................................ 1029

re v

Balmukund Pandey v V.K. Singh AIR 2010 MP 117 at para. 7, 936

E-

Balwant Singh v Jagdish Singh (2010) 8 SCC 685 ........................................................... 811, 941 Banco de Seguros del Estado v Mut. Marine Offices, Inc. 230 F.Supp.2d 362, 367-​68 (SDNY2002) ...................................................................................................................... 1007 Banfill v Leigh (1800) 8 Term Rep 571 ......................................................................................359 Bani v Korea Shipbuilding and Engineering Corpn [1987] 2 Lloyd’s Rep 445, CA (Eng) ..................................................................... 1198, 1207 Bank Mellat v GAA Development and Construction Co. Ltd [1988] 2 Lloyd’s Rep 44 .......................................................................................... 1031, 1067 Bank Mellat v Helliniki Techniki SA [1983] 3 All ER 428 .......................................................943

lxxii

Law, Practice and Procedure of Arbitration in India

Bank of Baroda v Kotak Mahindra Bank (2020) SCC OnLine SC 324 .............................. 1331 Bank of Credit and Commerce International SA v Ali [2001] UKHL 8, [2001] All ER (D) 06 (Mar) ............................................................................................. 1245 Bankers Trust Co v PT Jakarta International Hotels and Development [1999] 1 All ER (Comm) 785 .............................................................................................413 Bankers Trust Co v PT Mayora Indah (20 January 1999, unreported) .................................413

ul at io n

Bankhaus Wolbern v China Constr. Bank Corp. [2012] EWHC 3285, at paras. 23–​24 (Comm) (England and Wales High Court) .....................................................................524 Banks v Banks 1835 1 Gale 46 ................................................................................................. 1298 Banks v Grey District Council [2004] 2 NZLR 19. CA (NZ) ..................................................651

rC

irc

Banner Industrial & Commercial Properties v Clark Paterson (1990) 47 EG 64 ................................................................................................................ 1306 Banwari Lal v Jagannath Prasad and Anr. AIR 1958 All 717 at para. 6, 866

fo

Bar Council of India v A.K. Balaji (2018) 5 SCC 379 ....................95–​96, 876, 879, 1256, 1257

ot

Barclays Bank PLC v The Nylon Capital LLP [2011] EWCA Civ 826 .....................................50 Bareilly Electricity Supply Co. Ltd. v The Workmen and Ors AIR 1972 SC 330, 865, 866

-N

Barlett v Higgins [1901] 2 KB 230 .......................................................................................... 1251 Barnard v National Dock Labour Board [1953] 2 QB 18 ........................................................914

py

Barnardiston v Fowler (1714) Gilb 125 ......................................................10 Mod Rep 204, 361

co

Barnes v Greenwell (1600) Cro Eliz 858 ....................................................................................359 Barnes v Hayward (1857) 1 H & N 742 ....................................................................................701

ie

w

Baron v Sunderland Corp [1966] 2 QB 56 at p. 64, [1966] 1 All ER 349 at 351, CA (Eng) ...............................................................................188

re v

Baroness Wenlock v River Dee Co (1883) 36 Ch D 675 ...........................................................721

E-

Barrass v Bank Banking & Trust Company (In re Checking Account Overdraft Litig. MDL No. 2036), 685 F.3d1269 (11th Cir. 2012), CA ......................................... 1195 Barton v Ranson (1838) 3 M & W 322 ................................................................................... 1061 Bata India v Sagar Roy (2014) SCC OnLine Cal 17998 ....................................................... 1043 Bateman v Countess of Ross (1813) 1 Dow 235, [1813] 1 WLUK 6, 58 Bates v Townley 2 Exch 152 ........................................................................................................692 Bauer (M) Sdn Bhd v Daewoo Corp [1999] 4 MLJ 545 at p. 565 CA, 199 Bawejem Ltd v MC Fabrications Ltd [1999] 1 All ER (Comm) 377 ......................................296

lxxiii

Table of Cases

Baxendale-​Walker v APL Management Ltd. [2018] EWHC 543 (Ch) ............................... 1102 Bayindir v Pakistan, Award, 27 August 2009 ........................................................................ 1420 Bayliss Baxter Ltd v Sabath [1958] 2 All ER 209, at p. 214, [1958] 1 WLR 529, at p. 536, CA (Eng) ......................................................................... 1215 Baytur SA v Finagro Holding SA [1992] QB 61 .......................................................................313

ul at io n

Baytur SA v Finagro Holdings SA [1991] 4 All ER 129 ...........................................................297 BAZ v BBA [2018] SGHC 275 ................................................................... 723, 1041, 1094, 1310 BBA and Others v BAZ and Another [2020] SGCA 53 ........................................................ 1009 BCCI v Kochi Cricket Pte. Ltd (2018) 6 SCC 287 .................................................................. 1326

irc

BCY v BCZ [2016] 2 Lloyd’s Rep 583 ........................................................................................248 BCY v BCZ [2016] SGHC 249 ...................................................................................... 1371, 1374

rC

BEA Hotels NV v Bellway LLC [2007] EWHC 1363 (Comm) ...............................................480

fo

Beadle v M & Local Authority Moore Ltd [1998] 3 NZLR 271, CA ................................... 1216 Beattie v E & F Beattie Ltd [1938] Ch 708, [1938] 3 All ER 214, CA (Eng) ........................201

ot

Beaumont v Senior and Bull [1903] 1 KB 282 ....................................................................... 1215

-N

Beck Interiors Ltd v UK Flooring Contractors Ltd [2012] EWHC 1808 (TCC), [2012] BLR 417 ....................................................................................................................349

py

Beetham v Trinidad Cement Ltd [1960] 1 All ER 274 ...................................................... 49, 355 Behren v Bremer (1854) 3 CLR 40 .................................................................................... 856, 914

w

co

Behring International Inc v Islamic Republic of Iran Air Force et al. (1992) Yearbook Com Arb 382, Iran US Claims Tribunal .......................................... 1214

ie

Beijing Jianlong Heavy Industry Group v Golden Ocean Group [2013] EWHC 1063 (Comm), [2013] 2 All ER (Comm) 436 ........................................244

re v

Belcher v Roedean School Site and Building Ltd (1901) 85 LT 468 ........................................642

E-

Belize Bank Ltd v Attorney General of Belize [2011] UKPC 36 ..............................................636 Bell Aerospace Co. v Local 516, Int’l Union, United Auto, Aerospace & Agric. Implement Workers of Am. (UAW) 500 F.2d 921, p. 923 (2d. Cir. 1974) .......................424, 832, 849 Belsfield Court Construction Co Ltd v Pywell [1969] 3 WLR 1051 ..................................... 1275 Ben Barrett and Son (Brickwork) Ltd v Henry Boot Management Ltd. 193. [1995] CILL 1026 .................................................................................................................210 Benabu & Co. v Produce Brokers Co. (1921) 7 Ll. L. Rep 45 ............................................... 1018 Benabu & Co. v Produce Brokers Co. [1921] 4 WLUK 42 .................................................... 1081

lxxiv

Law, Practice and Procedure of Arbitration in India

Benara Bearings and Pistons Ltd. v Mahle Engine Components India Pvt. Ltd. (2017) SCC OnLine Del 7226, at para. 24 ........................................................................961 Benarsi Krishna Committee v Karmyogi Shelters (P) Ltd. (2012) 9 SCC 496 ..........1035–​1036 Bendex Eng v Efficient Pet (Nig) [2001] 8 NWLR (Part 715) 333, CA (Nigeria) .................614 Beni Datt & Ors. v Bajinath AIR 1938 Oudh 125 ...................................................................310

ul at io n

Benihana Inc. v Benihana of Tokyo LLC 784 F.3d 887 (2nd Cir. 2015) .................................972 Benson Pump Co v South Cent Pool Supply Inc, 325 F.Supp.2d 1152, p. 1156 (D Nev 2004), US .................................................................................................................189 Beoco Ltd v Alfa Laval Co Ltd [1994] 3 WLR 1179 .............................................................. 1241 Bergesen v Joseph Muller Corp. 710 F.2d 928 (2nd Cir. 1983) ............................................. 1337

rC

irc

Bernardus Henricus Funnekotter v Republic of Zimbabwe ICSID Case No ARB/​05/​6 ............................................................................................... 1421

fo

Bernuth Lines Ltd v High Seas Shipping Ltd [2005] EWHC 3020 (Comm), [2005] All ER (D) 332 (Dec) .............................................................................514, 516, 522

ot

Besant v Wood (1879) 12 Ch. D. 605, [1879] 3 WLUK 105 .....................................................58 Bestech India Private Limited v GF Developments Ltd. (2009) 161 DLT 282 .......................296

-N

Beveridge v Dontan Pty Ltd. (1991) 24 ALD 196 .........................................................................9 Bfil Finance Ltd. v G. Tech Stone Ltd. (2002) SCC OnLine Bom 734, at para. 16 ............ 1029

py

BG Group v Argentina, UNCITRAL Arbitration, Award dated 24 December 2007 ......... 1162

co

BGS SGS Soma JV v NHPC Limited (2020) 4 SCC 234 ............................... 339, 490–​491, 969, 1034, 1284, 1377

w

BGS SGS Soma JV v NHPC Ltd. (2019) SCC OnLine 1585 ................................191, 795, 1034

ie

Bhagawati Oxygen Ltd. v Hindustan Copper Ltd. (2005) 6 SCC 462 .............1134, 1142, 1173

re v

Bhagwan Devi v Chairman, Delhi Agricultural Marketing Board (2006) 2 Arb LR 374 ..............................................................................................................53

E-

Bhandari Engineering and Builders Pvt. Ltd. v You One Maharia 2011 SCC OnLine Del 4947 ...............................................................................................943 Bhanu Kumar Jain v Archana Kumar & Anr. (2005) 1 SCC 787 .............................. 1102, 1103 Bharat Aluminium Co. v Kaiser Aluminium Technical Services Inc. (2012) 9 SCC 552 ....................................................................29, 490–​491, 969, 1034, 1281, 1330, 1333, 1351, 1366–​1367, 1377 Bharat Broadband Network Ltd. v United Telecoms Ltd. (2019) 5 SCC 755 ..............................................................................................376, 900, 1306

lxxv

Table of Cases

Bharat Catering Corporation v Indian Railway Catering and Tourism Corporation Limited & Anr (2009) SCC OnLine Del 3434 ............................................986 Bharat Coking Coal Limited v M/​s. Annapurna Construction 2003 (7) SCALE 20 .............836 Bharat Coking Coal Ltd. V Annapurna Construction (2003) 8 SCC 154 ........................... 1295 Bharat Engineering Enterprises v Delhi Development Authority (2006) SCC OnLine Del 1376 ......................................................................................... 1042

ul at io n

Bharat Heavy Electrical Ltd. v Silor Associates (2014) SCC OnLine Del 4442 .....................940 Bharat Heavy Electricals Limited v M/​s. Jyothi Turbopower Services (2016) SCC OnLine Mad 4029 ..........................................................................................813 Bharat Heavy Electricals Ltd. v C.N. Garg and Ors. (2000) SCC OnLine Del 773 ........... 1297

rC

irc

Bharat Heavy Electricals Ltd. v Jyothi Turbopower Services Pvt. Ltd. & Anr. 2017 (1) Arb LR 289 (Madras)(DB) ..................................................................................813 Bharat Heavy Electricals Ltd. v Silor Associates S.A (2014) SCC OnLine Del 4442 ............982

fo

Bharat Petroleum Corporation. Ltd. v. Great Eastern Shipping Co. Ltd. (2008) 1 SCC 503 .................................................................................................................379

-N

ot

Bharat Sanchar Nigam Limited and Anr. v Vindhya Telelinks Limited 2006 SCC OnLine Del 415 .................................................................................................711

py

Bharat Sanchar Nigam Limited v BWL Industries Pvt. Ltd. 2010 SCC OnLine Del 1668 ............................................................................................ 1219 Bharat Sanchar Nigam Ltd. v Motorola India Pvt. Ltd. (2009) 2SCC 337 ............... 1304, 1305

co

Bhartia Cutler Hammer v AVN Tubes 1991 SCC OnLine Del 322 ........................................188

ie

w

Bhaskar Industrial Development Ltd. v South Western Railway (2016) SCC OnLine Kar 8330 ......................................................................................... 1276

re v

Bhaskar Wires Private Limited v Union of India 2002 SCC OnLine Del 1378, (2003) 102 DLT 870 .............................................................................................................564

E-

Bhatia International v Interbulk Trading SA (Bhatia) (“Bhatia”) (2002) 4 SCC 105 .......................................................................................................... 28, 472 Bhear v Harradine [1852] 1 WLUK 241 ................................................................................ 1056 BHEL v C.N. Garg & Ors. 2000 SCC OnLine Del 773 ......................2000 (3) Arb LR 674, 654 BHEL v Tata Projects Ltd. (2015) 5 SCC 682, at para. 4 ...................................................... 1165 Bhuwalka Bros Ltd. v. Fatehchand Murlidhar ILR (1951) 2 Cal 115 .....................................374 Bhuwalka Brothers Ltd. v Fatehchand Murlidhar (1950) SCC OnLine Cal 35 ....... 1042, 1070 Bibby Bulk Carriers Ltd v Cansulex Ltd [1989] QB 155 (QB) ....................................... 113, 880

lxxvi

Law, Practice and Procedure of Arbitration in India

Bidois v Leef [2015] NZCA 176 .................................................................................................175 Biggs v Hansell (1855)16 CB 562 .................................................................................. 1304, 1305 Bignall v Gale (1841) 2 Man & G 830 .................................................................................... 1304 Bignall v Gale (1841) 9 Dowl 631 ..............................................................................................719 Bigney v Johnson (2002) Sask DJ 709 ..................................................................................... 1060

ul at io n

Bihar State Mineral Development Corporation v Encon Builders (I) Pvt. Ltd. (2003) 7 SCC 418 ..........................................................................................47, 329, 369, 908 Biju Xavier and Anr. v Christiy Fernandez (2010) 3 KLJ 774 .................................................859 Biju Xavier v Christiy Fernandez (2010) SCC OnLine Ker 4945, at para. 6-​9 ............ 935, 938

irc

Bill Biakh K/​S A/​S and Bill Biali v Hyundai Corpn [1988] 1 Lloyd’s Rep 187 ............... 732, 76

rC

Bina Modi & Ors. v Lalit Modi & Ors. 2020 SCC OnLine Del 1678, paras 77, 86, 87 .......................................................................................... 472, 474

fo

Bird v Penrice [1840] 1 WLUK 169 ........................................................................................ 1313 Birse Construction Limited v St David Limited [1999] BLR 194 ................................... 199, 429

-N

ot

Birtley and District Co-​operative Society Ltd v Windy Nook and District Industrial Co-​operative Society Ltd [1959] 1 All ER 43 ................................................ 1127 Bithrey Construction Ltd v Edmunds [1996] 35 BLISS 1 ........................................................699

py

BIVAC B.V. v The Republic of Paraguay, ICSID, Case No. ARB/​07/​9 ................................ 1399

co

Biwater Gauff (Tanzania) Ltd v Tanzania ICSID Case No ARB/​05/​22, Procedural Order No 3, 29 September2006, at para. 136 ............................................ 1445 Biwater Gauff Ltd v United Republic of Tanzania ICSID Case No ARB/​05/​22 ................. 1407

w

Bjorn-​Jensen & Co v Lysaght (Australia) Ltd, The Gamma [1979] 1 Lloyd’s Rep 494 ...... 1313

ie

Black and Veatch Singapore Pte Ltd v Jurong Engineering Ltd [2004] SGCA 30 ..................734

re v

Black-​Clawson v Papierwerke [1981] 2 Lloyds Rep 446 ............................................. 1364, 1373

E-

Blackdale Ltd. v McLean Homes South East Ltd. [2001] All ER (D) 55 (Nov.) ................. 1086 Blackford & Sons (Calne) Ltd v. Christchurch Corp [1962] 1 Lloyd’s Rep 349 .................. 1056 Blackpool Borough Council v F Parkinson Ltd (1991) 58 BLR 85 ................................. 514, 523 Blackwell (R W) & Co Ltd v Derby Corporation (1909) 75 JP 129 ........................................641 Blanalko v Lysaght Building Solutions Pty Ltd. (2017) VSC 97 ................................. 1091, 1272 BLC and Ors v BLB and Anr. [2014] SGCA 40 ..................................................................... 1094 Blennerhassett v Day (1812) 2 Ball & B 104 .............................................................................712 Blexen Ltd v G Percy Trentham Ltd [1990] 42 EG 133, CA (Eng) ............................ 1197, 1201

lxxvii

Table of Cases

Bloor Construction UK Ltd. v Bowmer & Kirkland (London) Ltd. [2000] BLR 314 ......... 1081 Blue Horizon IT Solutions Pvt. Ltd. and Ors. v Anuj Bairathi and Ors (2016) SCC OnLine Del 4647 ......................................................................................... 1047 Blue Horizon Shipping Co SA v E D & F Man Ltd The Aghios Nicolaos [1980] 1 Lloyd’s Rep 17, CA (Eng) .................................................1191, 1193–​1194, 1202, 1206–​1208, 1221, 1258

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BMBF (No. 12) Ltd v Harland and Wolff Shipbuilding and Heavy Industries Ltd. [2001] 2 Lloyd’s Rep 227 .................................................................................................. 1017 BNA v BNB [2019] SGCA 84 at para. 55, 1370 BNP Paribas v Deloitte & Touche supra n. 50, p. 236, 864

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BNP Paribas v Deloitte & Touche LLP [2003] EWHC 2874 (Comm) ..................................981

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BNP Paribas v Deloitte and Touche LLP [2004] 1 Lloyd’s Rep 233 .......................................774 Board of Control for Cricket in India v Kochi Cricket Pvt. Ltd. (2018) 6 SCC 287 ...... 78, 1302

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Board of Education v Rice [1911] AC 179 .................................................................................723

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Board of Trade v Cayzer, Irvine & Co Ltd [1927] AC 610 ........................................................63 Board of Trustees for Port of Calcutta v Engineers-​De-​Space-​age (1996) 1 SCC 516 ........ 1153

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Board of Trustees for the Port of Calcutta v Batliboi & Co. Ltd, 2007 SCC OnLine Cal 686, ................................................................................................565

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Board of Trustees of the Port of Kolkata v Louis Dreyfus Armatures SAS 2014 SCC OnLine Cal 17695 .................................................................................. 472, 1440

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Board of Trustees of the Port of Kolkata v. Louis Dreyfus Armatures SAS, G.A. 1997 of 2014 and C.S. No. 220 of 2014 .............................................................................397

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BOC NZ Ltd v TransTasman Properties Ltd (1996) 10 PRNZ 199 ........................................643

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Bocotra Construction Pte Ltd v A-​G [1995] 2 SLR(R) 282 at para. 31 ..................... 1124, 1125 Bolam v Friern Hospital Management Committee [1957] 1 WLR 582 ..................................926

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Bolton v Mahadeva [1972] 1WLR 1009 at p. 1014, per Cairns LJ, 1185 Bombay Construction and Engineering Pvt. Ltd. v Mehta Finstock Pvt. Ltd. (2009) SCC OnLine Bom 1527 ....................................................................................... 1292 Boncorp Pty Limited v Thames Water Asia/​Pacific Pty Limited (1996) 12 BCL 139 ...........657 Bonnin v Neame [1910] 1 Ch 732 ..............................................................................................307 Booz Allen & Hamilton Inc. v SBI Home Finance Ltd. & Ors. (“Booz Allen”) (2011) 5 SCC 532 ..............................................................................57–​59, 70–​71, 308, 324, 332, 382, 430–​431, 434, 481, 488, 606, 954, 1053, 1299

lxxviii

Law, Practice and Procedure of Arbitration in India

Borneo Samudera Sdn Bhd v Siti Rahfizah bt Milhaldin & Ors [2008] 6 MLJ 817 .................................................................................................................173 Bosnia and Herzegovina v Serbia and Montenegro ICJ Case No. 91, 26 February 2007, 425, 851 Bottero S.P.A v Euro Glass Ltd. 2017 SCC OnLine Bom 9250 ...............................................432 Boughton and Marston v Knight (1873) LR 3 PD 64 ...............................................................280

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Bowes v Fernie [1838] 12 WLUK 94 ....................................................................................... 1054 Bowes v Gernie (1838) 4 My & Cr 150 ................................................................................... 1056

BP Chemicals Ltd v Kingdom Engineering (Fife) Ltd [1994] 2 Lloyd’s Rep 373 ....................................................38 Con LR 14, 1140, 1068, 1152

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BPL Communications Ltd. v Punj Lloyd Ltd. 2003 SCC OnLine Del 1032 ................. 422, 447

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BPL Communications Ltd. v Punj Lloyd Ltd. 2004 (1) Arb LR 46 (Delhi) ...........................408 BPL Communications Ltd. v Punj Lloyd Ltd. AIR 2010 SC 488 .............................................400

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Brace Transport Corporation of Monrovia Bermuda v Orient Middle East Lines Ltd Saudi Arabia (1995) Supp 2 SCC 280, 1320, 1338 Bradford & Bingley Plc v Rashid [2006] UKHL 37, [2006]All ER (D) 145 (Jul) ............... 1229

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Bradshaw v Air Council [1926] Ch 329 .................................................................................. 1199 Brahmani River Pellets Ltd. v Kamachi Industries Ltd. (2020) 5 SCC 462 ............................491

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Brandon v MedPartners Inc. 203 FRD 677 .......................................... 686 (SD Fla. 2001), 1121

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Braspetro Oil Services Co. v The Management and Implementation Authority of the Great Man-​Made River Project, Court of Appeal of Paris (1 July 1999) XXIV Y.B. COM. ARB. 296 (1999) ....................................... 998, 1001

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Braunstein v Accidental Death Insurance Co (1861) 1 B & S 782 ..........................................494

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Bremer Handelsgesellschaft mbH v Ets Soules & Cie and Scott [1985] 2 Lloyd’s Rep 199 .....................................................................................................641

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Bremer Handelsgesellschaft mbH v Vanden Avenne-​Izegem PVBA [1978] 2 Lloyd’s Rep 109 .....................................................................................................186 Bremer Handelsgesellschaft mbH v Westzucker GmbH (No 2) [1981] 2 Lloyd’s Rep 130 .................................................................................................. 1043 Bremer Oeltransport GmbH v Drewry (1933) 1 KB 753 ............................................ 1105, 1319 Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corporation Ltd. [1981] AC 909 ..................................................... 233, 478, 490, 731–​732, 812, 973, 1252 Brian McGowan v. Summit at Lloyds 2002 Scot (D) 14/​6 ......................................................407

lxxix

Table of Cases

Bridgman v Holt [1693] 1 Show PC 111 ...................................................................................642 Bright v River Plate Construction Co Ltd [1990] 2 Ch 835 .....................................................643 Brighton Marine Palace and Pier Ltd v Woodhouse [1893] 2 Ch 486 ....................................457 Brightside Kilpatrick Engineering Services v Mitchell Construction (1973) Ltd [1975] 2 Lloyd’s Rep 493, CA (Eng) ...............................................................345

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British Airways Board v Laker Airways Ltd [1985] AC 58, HL ........................................... 1116 British Caribbean Bank Ltd v The Attorney General [2013] CCJ 4 (AJ) ...............................476 British Caribbean Bank Ltd. v The Government of Belize [2013] CCJ 3 (AJ) .......................482 British Oil and Cake Mills Ltd. v Horace Battin and Co. Ltd. [1922] 13 Lloyd’s Rep 443 ........................................................................................ 718, 1293

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British Westinghouse Electric and Manufacturing Company, Limited v Underground Electric Railway Company of London, Limited [1912] AC 673 ......................................712 Brodyn Pty Ltd t/​as Time Costand Quality v Davenport [2004] NSWCA 394 .................. 1057

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Brooke v Mitchell (1840) 9 L.J. Ex. 269 ................................................................................... 1037

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Brooks v Parsons (1843) 1 Dow & L 691 ................................................................................ 1208

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Brown v Llandovery Terra Cotta and Co Ltd (1909) 25 TLR 625 ........ 674, 682–​684, 692, 696 Brown v Watson (1839) 6 Bing NC 118 ......................................................................... 362, 1116

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Brown v Witco Corp. 340 F.3d 209 ............................................. 219 (5th Cir. 2003), 1088, 1090 BRS v BRQ & Another [2020] SGCA 108, at para. 68 .......................................................... 1086

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Bruns v Colocotronis, The Vasso [1979] 2 Lloyd’s Rep 412 .....................................................304

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Brunswick Bowling & Billiards Corporation v Shanghai Zhonglu Industrial Co Ltd [2009] HKCFI 94 ............................................................................... 1297

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BSM v BSN & Ors. [2019] SGHC 185 .................................................................................... 1094

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BSNL v Motorola India (P) Ltd. (2009) 2 SCC 337 ....................................................... 493, 1059

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BSNL v Telephone Cables Ltd. (2010) 5 SCC 213 .....................................................................441 Buckeye Check Cashing Inc. v Cardegna 126 S Ct 1204 (2006) ..............................................232 Budhiraja Mining v Ircon International Ltd. (2012) SCC OnLine Del 2568 at para. 17, 1083 Bulfracht (Cyprus) Ltd. v Boneset Shipping Co. Ltd. “The MV Pamphilos” [2002] EWHC 2292 ...............................................................................................................74 Bulgarian Foreign Trade Bank Ltd v AI Trade Finance Inc NYH Juridiskt Arkiv [NJA] [Supreme Court] 2000 ref. T1881-​99 ................................................................................124 Bulk Oil (Zug) AG v Trans-​Asiatic Oil Ltd SA [1973] 1 Lloyd’s Rep 129 ..............................320

lxxx

Law, Practice and Procedure of Arbitration in India

Bulk Transport Corp v Sissy Steamship Co. Ltd. [1979] 2 Lloyd’s Rep289 ......................... 1037 Bullock v London General Omnibus Co [1907] 1 KB 264, CA (Eng) ................................. 1215 Bundesgerichtshof SchiedsVZ 2007 ........................................................273, VII ZR 105/​06, 191 Bunten and Lancaster (Produce) Ltd v Kiril Mischeff Ltd [1964] 1 Lloyd’s Rep 386 ...........644 Burgess v Stafford Hotel Ltd [1990] 3 All ER 222, [1990] 1 WLR 1215, CA (Eng) ........... 1258

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Burkett Sharp & Co v Eastcheap Dried Fruit Co and Perera [1961] 2 Lloyd’s Rep 80, affd [1962] 1 Lloyd’s Rep 267, CA (Eng) ....................... 641, 698 Burne v Young (29 May 1991, CP 68/​89) (unreported), NZ ..................................................856 Burrell v Jones (1819) 3 B & Ald 47 ...........................................................................................308

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Burroughes v Clarke (1831) 1 Dowl 48 .....................................................................................691 Business Computers Ltd v Anglo African Leasing Ltd [1977] 2 All ER 741 ........................ 1158

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BV Bureau Wijsmuller v USA 1976 AMC 2514 (SDNY 1976) ...............................................282

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BV Scheepswerf Damen Gorinchem v Marine Institute [2015] EWHC 1810 (Comm) ............................................................................................904

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BXS v. BXT [2019] SGHC (I) 10 ................................................................................................969

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C.H. Ramalinga Reddy v Superintending Engineer & Anr (1999) 9 SCC 610 ......... 1059, 1295

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C.V. Rao v Strategic Port Investments KPC Ltd. (2014) SCC OnLine Del 4441 at para. 42, 978

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CA Monterosso Shipping Co Ltd v International Workers Federation The Rosso [1982] ICR 675, [1982] 3 All ER 841, CA, 1383

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Cadmus Investment Ltd v Amec Building Ltd [1998] ADRLJ 72 ........................................ 1241

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Cadogan Maritime Inc. v Turner Shipping Inc. [2013] EWHC 138 (Comm) .................... 1055 Caerleon Tinplate Co v Hughes (1891) 60 LJQB 640 ...............................................................199

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Cahill v Cahill (1883) 8 App. Cas. 420 (HL) [1883] 5 WLUK 22 .............................................58 Cairn Energy PLC and Cairn UK Holdings Limited v Republic of India PCA Case No. 2016-​7 .........................................................1413, 1436–​1437, 1440 Cairn v Republic of India PCA Case No. 2016-​7 Procedural Order No. 2, 12 August 2016, 1445 Cala Homes (South) Ltd v Alfred McAlpine Homes East Ltd (1995) CILL 1083 at p. 1086, [1995] EWHC 7 (Ch), [1995] FSR 818, 855 Calcutta Insurance Madras v Thirumalai Animal AIR 1982 Mad 83 ....................................298

lxxxi

Table of Cases

Calderbank v Calderbank [1975] 3 All ER 333 ................................................ 1230, 1234–​1235 Calderbank v Calderbank [1976] Fam 93, [1975] 3 WLR 586 ............................................ 1214 Caledonian Railway Co v Turcan [1898] AC 256 ................................................................. 1319 Caledonian Rly Co v Lockhart 3 Macq 808 ...............................................................................856 Cameron (A) Ltd. v Mowlem (John) & Co. Plc. [1990] 11 WLUK 310 ...............52 BLR 24, 55

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Cameron v Cuddy, 1914 AC 651 ................................................................................................991 Campbell et al v Murphy [1993] CanLII 5460 (ON SC) .........................................................190 Campos Brothers Farms v Matru Bhumi Supply Chain Pvt. Ltd. (2019) SCC OnLine Del 8350 ............................................................................... 1041, 1345

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Campus and Stadium Ireland Development Ltd v Dublin Waterworld Ltd [2005] IEHC 334 ..................................................................................................................698

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Canada v The Plan Group [2009] ONCA 548 (CanLII) .........................................................508

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Canadian National Railway Company v Lovat Tunnel Equipment Inc [1999] CanLII 3751 (ON CA) ............................................................................................190

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Capital India Power Mauritius I and Energy Enterprises (Mauritius) Company v India ICC Case No 12913/​MS ............................................. 2005, IIC 43, 1435

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Capping Corp Ltd v Aquawalk Sdn Bhd [2013] 6 MLJ 579 ....................................................601 Caprihans India Ltd. v Hindoostan Mills Ltd. (2019) SCC OnLine Bom 906 ......... 1046, 1315

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Caratti v Caratti [No. 2] [2014] WASC 65 ...............................................................................472

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Caratube International Oil Company LLP v Republic of Kazakhstan ICSID Case No. ARB/​ 08/​12, Award, 5 June 2012 ............................................................................................... 1446

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Caravel Shipping Services v Premier Sea Foods Exim (2019) 11 SCC 461 ............................201

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Carey & Browne v Henderson & Liddell (1920) 2 Lloyd’s Rep 479 (CA) ................... 803, 1234

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Cargey v Aitcheson (1823) 2 B & C 170 ................................................................................. 1063

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Cargill International SA Antigua (Geneva Branch) v Sociedad Iberica De Molturacion SA, The Times 12 November 1997 ...........................................................................................655 Carillion Construction Ltd. v Devonport Royal Dockyard Ltd. [2006] BLR 15 ......................52 Carlisle Place Investments Ltd v Wimpey Construction (UK) Ltd (1980) 15 BLR 109 ........731 Carlisle Place investments v Wimpey Construction UK Ltd. [1981] 1 WLUK 60 .................934 Carlsberg Breweries A/​S v. Som Distilleries and Breweries Limited 2017 SCC OnLine Del 8125 .................................................................................... 136, 1231 Carmichael v Caledonian Railway Co (1870) 8 M. (HL) 119, at 131 ................................. 1135

lxxxii

Law, Practice and Procedure of Arbitration in India

Carolina Power & Light Co. v Uranex 451 F. Supp. 1044 (ND Cal. 1977) ............................971 Carpatsky Petroleum Corporation v PJSC Ukrnafta [2020] EWHC 769 (Comm) ........... 1104 Carrasco v Johnson 2018 EWCA (Civ.) 87 (Eng.) ................................................................. 1150 Carter (t/​a Michael Carter Partnership) v Harold Simpson Associates (Architects) Ltd [2004] 2 Lloyd’s Rep 512 .............................................................. 684, 1312

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Carus-​Wilson and Greene’s Arbitration, Re (1886) 18 QBD 7, [1886] 10 WLUK 12 ....................................................................................................... 50–​51

Casaceli v Natuzzi S.p.A. [2012] FCA 691 ................................................................................449 Casata Ltd v General Distributors Ltd [2006] NZSC 8 ........................................................ 1193 Casillo Grani v Napier Shipping Co, The World Ares [1984] 2 Lloyd’s Rep 481 .......... 526, 537

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Cassa di Risparmio della Repubblica Di San Marino SpA v Barclays Bank Ltd. [2011] EWHC 484 ............................................................................................................ 1172

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Cast Shipping Ltd v Tradax Export SA, The Hellas in Eternity [1979] 2 Lloyd’s Rep 280, CA (Eng) ..................................................................................537

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Castel Electronics Pty Ltd v TCL Air Conditioner (Zhongshan) Co Ltd (No 2) [2012] FCA 1214 .................................................................................................................727

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Castro v Tri Marine Fish Co. LLC 921F.3d 766 (9th Cir. 2019) .......................................... 1013 Castrol India Ltd. v Apex Tooling Solutions, 2015 SCC OnLine Mad 20195 ........................188

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Catalina (Owners) v Norma (Owners) 82 Sol Jo 698 ..............................................................629

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Catalina SS (Owners) v Norma (Owners) [1938] 61 Ll L Rep 360 ........................................648 Catherine Anderson v Ashwani Bhatia (2019) 11 SCC 299 ....................................................608

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Cathiship SA v Allanasons Ltd, The Catherine Helen [1998] 3 All ER 714 .................. 359, 523

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CC/​Devas v India, Award on Jurisdiction and Merits, 25 July 2016, 1420

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CCIC Consultech International v Silverman [1991] CanLII 2868 (QC CA) ........................190

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CDR. S.P. Puri (Retd.) Sole Proprietor Spiral Services v Agricultural Produce Market Committee 2019 SCC OnLine Del 9861 ..............................................................361 Cecrop Co v Kinetic Sciences Inc [2001] BCSC 532 (CAnLII) ....................................... 234, 245 Cefetra BV v Alfred C Toepfer International GmbH [1994] 1 Lloyd’s Rep 93 ..........1045–​1047 Central Bank of India v Ravindra and Ors (2002) 1 SCC 367, at para. 36, 1169 Central Organization for Railway Electrification v M/​s ECI-​SPIC-​SMO-​MCML (JV) A Joint Venture Company 2019 SCC OnLine SC 1635 ...............................................................566 Centrala Morska Importowo Eksportowa (known as Centromor) v Companhia Nacional de Navegacao SARL [1975] 2 Lloyd’s Rep 69 ............................1190, 1200, 1203

lxxxiii

Table of Cases

Centreland Management Ltd v HSBC Pension Trust (UK) Ltd [2013] EWHC 3238 ................................................................................................ 1238, 1241 Centrotrade Minerals & Metals Inc. v Hindustan Copper Ltd (2006) 11 SCC 245 ........................................................ 1048, 1077, 1088, 1271, 1301, 1344 Centrotrade Minerals and Metals Inc. v Hindustan Copper Limited, (2017) 2 SCC 228 .....................................................................46, 65, 709, 1097, 1268, 1277

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Centrotrade Minerals and Metals Inc. v Hindustan Copper Ltd. 2020 SCC OnLine SC 479 ....................................................................................................78 Cetaco SA v Bombay Export International (1999) SCC OnLine Bom 797 at para. 4, 1337

Cetaco SA v. Bombay Export International (2000) 3 Arb LR 69 (Bom) ................................869

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Cetelem SA v Roust Holdings Ltd [2005] EWCA Civ 618 .......................................................972

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Cetelem SA v Roust Holdings Ltd. [2005] 1 WLR 3555 ..........................................951, 976, 988 Ceval Alimentos SA v Agrimpex Trading Co Ltd [1995] 2 Lloyd’s Rep 380 ....................... 1185

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Chai Ming v The Overseas Assce Corpn Ltd [1962] MLJ 282 .................................................492

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Chairman and MD, NTPC Ltd v. Reshmi Constructions, Builders & Contractors (2004) 2 SCC 663 .............................................................................................................. 1230

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Chairman, Board of Mining Examination and Chief Inspector of Mines & Anr. v Ramjee (1977) SCC 2 256 .................................................................................................................727

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Chandanmull v Donald Campbell (1916) 23 CWN 707, PC ..................................................349

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Chandmull Moolchand & Co v Weis & Co Ltd (1921) 9 Ll L Rep 412 ..................................718

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Chandni Construction Company Ltd. v Executive Engineer & Ors. (2013) SCC OnLine P&H 10419 .................................................................................... 1018

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Chandok Machineries v S.N. Sunderson (2018) SCC Online Del 12782, at para. 10–​11 .1069

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Channel Island Ferries Ltd v Cenargo Navigation Ltd, The Rozel [1994] 2 Lloyd’s Rep 161 ........................................................ 1202, 1206–​1208, 1213–​1214

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Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] 1 All ER 664 .......................................................... 182, 402, 407, 955, 971–​972, 989 Chantiers de l’Atlantique SA v Gaztransport & Technigaz SAS [2011] EWHC 3383 (Comm) ............................................................................................834 Charis Compania Maritima SA v Pagnan SpA (The “Angelic Grace”) (1995) 1 Lloyd’s Rep 87 .......................................................................................................443 Charles M Willie & Co (Shipping) Ltd v Ocean Laser Shipping Ltd & George Roussos Sons, SA, The Smaro [1999] 1 Lloyd’s Rep 225 ..........517, 522, 1000–​1001, 1100 Chase Perdana Berhad v Pekeliling Triangle Sdn Bhd [2001] MLJU 389 ..............................429

lxxxiv

Law, Practice and Procedure of Arbitration in India

Chatsworth Investments Ltd v Cussins (Contractors) Ltd [1969] 1 All ER 143, [1969] 1 WLR 1, CA (Eng) ............................................................298 Chatterjee Petrochem Company and Anr. v Haldia Petrochemicals Limited and Ors (2014) 14 SCC 574 .................................................................472, 474, 828 Checkpoint Ltd v Strathclyde Pension Fund [2003] EWCA Civ 84, [2003] All ER (D) 56 (Feb) ............................................................................856, 1055, 1065

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Cheeseman v Bowaters United Kingdom Paper Mills Ltd [1971] 3 All ER 513, [1971] 1 WLR 1773, CA (Eng) ................................................... 1238 Chennai Container Terminal Pvt. Ltd. v Union of India (2007) SCC OnLine Mad 506, at para. 9 ....................................................................... 1282

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Chetan Properties Limited v Kasturi and Sons Limited (2018) 16 SCC 413 ..............................................................65, 277, 288, 290, 370, 386, 388, 970, 1096, 1327 Chessum & Sons v Gordon [1901] 1 KB 694, CA (Eng) ....................................................... 1082

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Chevron Corporation (USA) and Texaco Petroleum Company (USA) v The Republic of Ecuador UNCITRAL, PCA Case No 34877, 1438 Chin Sen Wah v Public Prosecutor [1958] MLJ 154 .................................................................854

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China Agribusiness Development Corporation v Balli Trading [1998] 2 Lloyd’s Rep 76 .................................................................................................... 1341

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China Holdings Ltd. v Grand Pacific Holdings Ltd. [2007] HKCFI 715 ................................635

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China Merchants Heavy Industry Co Ltd v JGC Corporation [2000] HKCFI 544 ...............191

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China Nanhai Oil Joint Service Corporation v Gee Tai Holdings Co. Ltd. 1995 XX YBCA 671 .......................................................................................................... 1346

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China Nanhai Oil Joint Service Corporation, Shenzhen Branch v Gee Tai Holdings Co Ltd [1994] 3 HKC 375 ......................................................................... 1341

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China Ocean Shipping Co Owners of the M/​V Fu Ning Hai v Whistler International Ltd Charters of the M/​V Fu Ning Hai [1999] HKCFI 655 ......................................................10 China State Construction Engineering Corporation, Guangdong Branch v Madiford Limited [1992] HKCFI 160 ................................................................................190 Chinney Construction Co Ltd v Po Kwong Marble Factory Ltd [2005] 3 HKLRD 758 ............................................................................................. 1227, 1237 Chiranjilal Shrilal Goenka v Jasjit Singh & Ors. (1993) 2 SCC 507 ........................ 59, 327, 435 Chiron Corporations v Ortho Diagnostic Systems Inc, 207 F.3d 1126 (9th Cir. 2000), decided on 28 March 2000 ................................................................... 1109

lxxxv

Table of Cases

Chiswell Shipping Ltd. v State Bank of India, The World Symphony (No 2) [1987] 1 Lloyd’s Rep 157 .................................................................................................. 1060 Chittaranjan Maity v Union of India (2017) 9 SCC 611 at paras 17, 20, 21, 1154

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Chloro Controls (India) Pvt. Ltd. v Severn Trent Water Purification Inc (2013) 1 SCC 641 ..........................................................................65–​66, 286–​289, 299, 303, 307, 316, 386, 388, 390, 406–​407, 452 Chooney Money Dussee v Ram Kinkar ILR (1901) 28 Cal 155 ................................................53

Christiani & Nielsen Ltd v Birmingham City Council [1994] CILL 1015 .............................495

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Christopher Brown Ltd. v Genossenschaft Oesterreicher Waldbesitzer R GmbH 1954 1 QB 8 ..........................................................................................................................930

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Christopher James Briggs and Others. v Alexander Clay & Ors. [2019] EWHC 102 (Ch.) .................................................................................................. 1229

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Chromalloy Aeroservices Inc. v Arab Republic of Egypt 939 F. Supp 907 (DDC1996) ........................................................................................................................ 1348

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Chuan Hup Agencies Pte Ltd v Global Minerals (Sarawak) Sdn Bhd [1990] 1 MLJ 305 .................................................................................................................517

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Chung and Wong v CM Lee [1934] MLJ 153 ................................................................. 568, 1082

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Chung Siu Hong Celment v Primequine Corporation Ltd [1999] HKCFI 1472 (HK) .........167

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Cie du Sénégal et de la Côte Occidentale d’Afrique v Smith & Co and Woods & Co. (1883) 53 LJ Ch 166 .................................................................................................... 449, 457 Cie Graniere SA v Fritz Kopp AG [1978] 1 Lloyd’s Rep 511 ...................................... 1103, 1105

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CIMMCO Ltd. v Union of India (2019) SCC OnLine Del 7655 at paras 88–​90, 1070

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Cinema Press Ltd v Picture and Pleasures Ltd [1945] KB 356 ............................................. 1258

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Cinergy Corporation Pte Ltd. v National Agricultural Cooperative Marketing Federation of India Ltd. (2012) SCC OnLine Del 5954 ................................................ 1343

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Cinevistaas Ltd. v Prasar Bharti 2008 SCC OnLine Del 1173 ...............................................658 Cinevistaas Ltd. v Prasar Bharti (2019) SCC OnLine Del 7071 at paras 22, 36–​37 ...................................................................................................... 1001, 1007 Citigroup Glob. Markets Inc. v Al Children’s Hosp Inc. 5 F. Supp. 3d 537. 542 (SDNY 2014) ........................................................................................................................475 City Centre Properties (ITC Pensions) Ltd v Tersons Ltd (or Matthew Hall & Co Ltd (sued in name of Tersons Ltd)) [1969] 2 All ER 1121, [1969] 1 WLR 772, CA (Eng) .............................................................................................663

lxxxvi

Law, Practice and Procedure of Arbitration in India

Civil Service Co-​operative Society v General Steam Navigation Co [1903] 2 KB 756 ...................................................................................................... 1201, 1211 CL v. SCG [2019] HKCFI 398 ....................................................................................................528 Clarkson v Whangamata Metal Supplies Ltd [2007] NZCA 590 ........................................ 1165 Classic Enterprises Ltd. v United Insurance Co. Ltd. (2016) 4 RLW 2631 ............543, 551, 579

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Claxton Engineering Services Ltd v TXM Olaj-​ÉS Gázkutató KFT (No. 2) [2011] EWHC 345 (Comm) .................................................................... 428, 471, 476–​478 Claymore Services Ltd v Nautilus Properties Ltd [2007] EWHC 805 (TCC) .......... 1155, 1159 Clegg v Dearden [1848] 12 QB 576 ......................................................................................... 1101 Clenae Pty Ltd v Australia and New Zealand Banking Group Ltd [1999] VSCA 35 ...........639

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Clorox Spain S.L. v Bolivarian Republic of Venezuela PCA Case No. 2015-​30 ................. 1407

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Cmdr S.P. Puri v Alankit Assignments Ltd. (2008) SCC OnLine Del 985 at para.9 ..................................................................................................... 1046, 1066

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CMS Energy SDN RHB v Poson Corp. [2008] MLJ 561, 562 (Malaysian High Court) ..........................................................................................................................448 CMS v Argentina, Award, 12 May 2005, at para. 273 ................................................. 1414, 1422

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Coast Lines Ltd v Hudig & Veder Chartering NV [1972] 2 QB 34 ...................................... 1383

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Coastal States Trading (UK) Ltd v Mebro Mineraloelhandelsgesellschaft GmbH [1986] 1 Lloyd’s Rep 465 .................................................................................................. 1149

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Codent Ltd v Lyson Ltd [2005] EWCA Civ 1835 .................................................................. 1244 College of Vocation Studies v S.S. Jaitley (1987) SCC OnLine Del 34, at para. 19 ............. 1066

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Collins (Contractors) Ltd v Baltic Quay Management (1994) Ltd [2004] EWCA Civ 1757, [2005] BLR 63, 349

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Collins v Collins [1858] 12 WLUK 63 .........................................................................................50 Collins v Cromie [1964] 1 WLR 633 ..........................................................................................320

E-

Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC192 ......................................................................................216, 235, 438, 480 Commerce & Indus Ins. Co. of Canada v Lloyd’s Underwriters at Lloyd’s of London [2002] 1 WLR 1323 .............................................................................................................979 Commerce Group Corporation & San Sebastian Gold Mines, Inc. v Republic of El Salvador ICSID Case No.ARB/​09/​17, Decision on El Salvador’s Application for Security for Costs (20 September 2012), at para.45-​47, 942 Commerce Insurance Co. v Lloyd’s Underwriters [2002] 1 WLR 1323 ..................................977

lxxxvii

Table of Cases

Commissioner of the Federal Capital v Insurance Company of North America [1968] 2 MLJ 143 FC ...........................................................................................................493 Commonwealth Coatings Corp v Continental Casualty Co 393 US 145, SC (US) ...............624 Commonwealth Development Corp (UK) v Montague [2000] QCA 2522 ............................728 Compagnie d’Armement Maritime SA v Compagnie Tunisienne de Navigation SA [1971] AC 572, HL ........................................................................................................... 1383

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Compagnie Europeene De Cereals SA v Tradax Export SA [1986] 2 Lloyd’s Rep. 301, [1986] 3 WLUK 248, 62, 478 ..............................................................................................546 Compagnie Financiere pour le Commerce Exterieur SA v OY Vehna AB [1963] 2 Lloyd’s Rep 178 .................................................................................................. 1054

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Compagnie Graniere SA v Fritz Kopp AG [1980] 1 Lloyd’s Rep 463 .......................... 164, 1105

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Compagnie Nationale Air France v Mbaye [2003] CanLII 35834, QC (CA) ........................261

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Compagnie Nouvelle France Navigation SA v Compagnie Navale Afrique du Nord, The Oranie and The Tunisie [1966] 1 Lloyd’s Rep 477 ........................................... 572, 660

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Compañía de Aguas del Aconquija S.A. and Vivendi Universal S.A. v Argentina ICSID Case No. ARB/​97/​3 ................................................................. 645, 1166, 1426–​1427

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Compania Sudamericana de Fletes SA v African Continental Bank Ltd, The Rosarina [1973] 1 Lloyd’s Rep 21, per Mocatta J .............................................................................304

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Compania Sud-​Americana de Vapores Sa v Nippon Yusen Kaisha 2009 EWHC 1606 .......907 Computers Unlimited v Xerox India Ltd (2014) (1) Arb LR 485 (SC) ................................ 1216

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Concord Line Co Ltd v The Owners of the Ship “Molly” [1998] 1 AMR 26 ...........................277

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Coneff Corp. Sdn Bhd v Vivocom Enter. Sdn Bhd [2019] MLJU 1666 ...................................981

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Congimex SARL (Lisbon) v Continental Grain Export Corp (New York) [1979] 2 Lloyd’s Rep 346 .......................................................................................... 768, 1312

re v

Conquer v Boot [1928] 2 KB 336 .................................................................................. 1101, 1103

E-

Conros Steels Pvt. Ltd. v LU Qin (Hong Kong) Company Ltd. AIR 2015 Bom 106 ..............404 Consolidated Engineering Enterprises v Principal Secretary, Irrigation Department (2008) 7 SCC 169 .............................................................................................................. 1285 Construction India v Secretary, Works Department, Government of Orissa (1998) 2 SCC 89 ................................................................................................................ 1297 Container Cooperation of India v Taxmaco Ltd. (2009) SCC Online Del 1594 ................ 1007 Continental Enterprises Ltd v Shandong Zhucheng Foreign Trade Group Co. [2005] EWHC 92 (Comm) .............................................................................................. 1288 Continental Sales Ltd v R Shipping Inc [2013] 4 NWLR (part 1343) 67 (Nigeria) ..... 516, 522

lxxxviii

Law, Practice and Procedure of Arbitration in India

Continental Telepower Industries Ltd. v Union of India (2009) SCC OnLine Del 1859 ......................................................................................... 1036 Contractor (European Country) v Owner (Middle Eastern Country and Others), Final Award in ICC Case No. 4629 ...................................................................................860 Convinio Shopping Nine 2 Nine v Olympia Opaline Owners Association 2019 SCC OnLine Mad 646 ...............................................................................................430

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Cook International Inc v BV Handelmaatschappij Jean Delvaux and Braat, Scott and Meadows [1985] 2 Lloyd’s Rep 225 .................................................. 574, 621, 640–​641 Coop International Pte Ltd v Ebel SA [1998] 1 SLR(R) 615 ....................................................398 Cooper v Ateliers de la Motobecane SA 442 NE 2d 1239 (NY1982) ......................................971

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Co-​operative Hindustan Bank v Bhola Nath Barooah AIR 1915 Cal 832 .............................641

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Cooperative Wholesale Society Ltd. v Birse Construction Ltd. [1997] TLR 454 ................................................................................................................. 1113

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Cope v Cope (1885) 52 LT 607 ...................................................................................................335

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Coppee Lavalin NV v Ken-​Ren Chemicals and Fertilisers Ltd. [1994] 2 Lloyd’s Rep 109 .....................................................................................................949

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Coppe-​Lavalin SA/​NV v Ken-​Ren Chemicals and Fertilizers Ltd (in liq) [1994] 2 All ER 449 .............................................................................................................943

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Corcoran v Ardra Insurance Co. Ltd. 842 F.2d 31 (2nd Cir. 1988) .........................................438 Coringa Oil Co. v Koegler, ILR (1876) 1 Cal 466 .....................................................................173

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Corn Products Co. (India) Ltd. v. Ayaz Ghadja AIR 1997 Bom 331 ......................................385

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Coromandel Land Trust Ltd v Milkt Investment Ltd [2009] NZHC 1753 .............................720

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Corporacion Mexicana De Mantenimiento Integral S. De R.L. De C.V. v Permex Exploracion Y Producionc 832 F.3d 92 (2nd Cir. 2016) ................................................ 1348

re v

Corrigan v Durkan [2010] IEHC 477 ........................................................................................737

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Cott UK Ltd. v FE Barber Ltd. [1997] 3 All ER 540, [1997] 1 WLUK 116 ............ 52, 116, 180 Cottle v Cottle [1939] 2 All ER 535 ............................................................................................643 Cottonex Antalt v Patriot Spinning Mills Ltd. [2013] EWHC 236 (Comm) ...................... 1312 Crampton and Holt v Ridley & Co (1887) 20 QBD 48 ................................................... 683, 692 Crane v Hegeman-​Harris Co Inc [1939] 4 All ER 68 ............................................................ 1105 Cravat Coal Export Company Inc v Taiwan Power Company, United States District Court for the Eastern District of Kentucky, Civil Action 90–​11 (5 March 1990) .........166 Crawshay v Collins (1818) 1 Swan 40 ........................................................................................573

lxxxix

Table of Cases

Cremer (Peter) GmbH & Co v Sugat Food Industries Ltd, The Rimon [1981] 2 Lloyd’s Rep 640 ............................................................................................ 523, 525 Cremer v Samanta and Samanta [1968] 1 Lloyd’s Rep. 205 ................................................ 1053 Crestar Ltd v Carr [1987] 2 FTLR 135 ......................................................................................245 Crestar Ltd v Carr (1987) 37 BLR 113 .................................................................................... 1116

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Crofton v Conner (1770) 1 Bro Parl Cas 530 ......................................................................... 1056 Crosbie v Holmes (1846) 3 Dow & L 566 ............................................................................... 1208 CRT Cap. Group v SLS Cap, S.A. 2014 WL 6807701 (SDNY 3 December 2014) ................475

Cruden Construction Ltd v Commission for the New Towns [1995] 2 Lloyd’s Rep 387 ....................................................................... 48–​49, 342, 345, 523

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Cruz City 1 Mauritius Holdings v Unitech Limited (2017) 239 DLT 649 ................................32

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Cruz City 1 Mauritius Holdings v Unitech Limited (2017) SCC OnLine Del 7810 ................32

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Cruz City 1 Mauritius Holdings v Unitech Limited (2017) SCC OnLine Del 7810 .......... 1104, 1107, 1341, 1346, 1350

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CRW Joint Operation v PT Perusahaan Gas Negara (Persero) TBK [2011] SGCA 33 ................................................................................................................ 1297

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CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 ..............................................413

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Cummins Sales & Services Ltd. v Cummins Middle E. FZE 2013 CLD 291 (High Court of Pakistan) ....................................................................................................449

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Cumper v Pothecary [1941] 2 KB 58, at p. 67, CA (Eng) ..................................................... 1243 Cursetji Jamshedji Ardaseer Wadia & Ors. v Dr. B.D. Shiralee AIR 1943 Bom 32 ................53

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Cutter v Powell (1795) 6 Term Rep 320 ....................................................................................696

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Cutts v Head [1984] 1 All ER 597 ................................................................................. 1227, 1230

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Cutts v Head [1984] 2 WLR 349 ............................................................................................. 1214 Cutts v Head [1984] Ch 290, [1984] 1 All ER 597 ...................................................... 1226, 1235

E-

CVP v CBS [2020] SGHC 23 ................................................................................................... 1292 Cytec Industries Pte Ltd v Asia Pulp & Paper Co Ltd [2009] 2 SLR(R) 806 ................. 528, 532 Czarina, L.L.C. v W.F. Poe Syndicate 358 F.3d 1286 (11th Cir. 2004) ................................ 1340 Czarnikow v Roth, Schmidt & Co [1922] 2 KB 478, 492 .........................................................712

D D Khosla & Co. v YN Rao (1994) SCC OnLine Del 496 at para. 7, 1146 D.C.M. Ltd. v Municipal Corporation of Delhi (1997) 7 SCC 123 ...................................... 1060

xc

Law, Practice and Procedure of Arbitration in India

D.L. Miller and Co. Ltd. v Daluram Goganmull AIR 1956 Cal 361, at para. 16 ...................771 D.M. Jawhar Merican v Engineers India Limited (2009) SCC OnLine Del 578, at para. 21 ........................................................................................................... 1086 Dacca Co-​operative Industrial Union Ltd. v Dacca Co-​operative Sankhya Silpa Samity 1937 SCC OnLine Cal 244 .....................................................................................344 Dadourian Group Int Inc v Simms [2006] EWCA Civ 399 .....................................................989

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Dadras International v Islamic Republic of Iran (1995) 31 Iran-​US CTR 127 ......................724 Daelim Corporation v Bonita Co. Ltd [2020] EWHC 697 (Comm) ......................................976

Daiichi Sankyo Co. Ltd. v Malvinder Mohan Singh and Ors (2018) SCC OnLine Del 6869 .......................................................................281, 1346, 1350

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Dakshin Haryana Bijli Vitran Nigam Limited v M/​s Navigant Technologies Pvt. Ltd. (2021) SCC OnLine SC 157 ............................................................................................ 1284

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Dalian Hualiang Enterprise Group Co Ltd v Louis Dreyfus Asia Pte Ltd [2005] 4 SLR(R) 646, [2005] SGHC 161, 426 Dalimpex Ltd v Janicki [2003] CanLII 34234 (ON CA) (Can) ..............................................167

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Dalimpex Ltd. v Janicki [2003] 228 DLR 4th 179 (Court of Appeal of Ontario) ................448

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Dallah Real Estate & Tourism Holding Co v Ministry of Religious Affairs, Government of Pakistan [2008] EWHC 1901 (Comm) .................................................284

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Dallah Real Estate & Tourism Holding Co v Ministry of Religious Affairs, Government of Pakistan [2011] 1 AC 763, [2009] EWCA Civ 755, 285

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Dallah Real Estate & Tourism Holding Co v Pakistan [2010] UKSC 46 .................. 1321, 1341

ie

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Dallah Real Estate & Tourism Holding Co. v Ministry of Religious Affairs, Pakistan [2010] UKSC 46 ...................................................................................................... 1288, 1333

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Dallah Real Estate and Tourism Holding Co v Ministry of Religious Affairs, Government of Pakistan [2011] 1 AC 763 ...............................................................................................266

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Dallah Real Estate and Tourism Holding Co v. Ministry of Religious Affairs, Government of Pakistan [2011] 1 All ER 485 ..................................................................273 Dallah Real Estate and Tourism Holding Co. v Ministry of Religious Affairs of the Government of Pakistan [2010] 3 WLR 1472, [2010] UKSC 46 .................469–​470, 1343 Dallal v Bank Mellat [1986] QB 441, [1986] 2 WLR 745 ..............................42, 97, 1105, 1320 Dalmia Cement (Bharat) Ltd. V Advance Commercial Co. Ltd. (1995) SCC OnLine Del 45 ............................................................................................. 1015 Dalmia Cement (Bharat) Ltd. v Advance Commercial Co. Ltd. 1995 (1) Arb. LR 278 (Del) ........................................................................................ 766, 816

xci

Table of Cases

Dalmia Dairy Industries Ltd v National Bank of Pakistan [1978] 2 Lloyd’s Rep 223 ..................................................................................233, 780, 1370 Dalpat Kumar v Prahlad Singh (1992) 1 SCC 719 ...................................................................455 Damond Lock Grabowski & Partners v Laing Investments (Bracknell) Ltd. (1992) 60 BLR 112 ...............................................................................................................647 Danisco A/​S v Novo Nordisk A/​S 2003 U.S. Dist. Lexis 1842, at para. 2 (S.D.N.Y) .............398

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Dans Energy Pvt. Ltd. v GE Power India Ltd. (2018) SCC OnLine Del 10617, at para. 25 ................................................................... 1252 Dardana Ltd. v Yokos Oil Co. [2002] 2 Lloyd’s Law Rep 326 .............................................. 1347 Daryao v State of Uttar Pradesh (1962) 1 SCR 574 .............................................................. 1100

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Datar Switchgears Ltd v Tata Finance Ltd (2000) 8 SCC 151 ................................563–​564, 604

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Dato’ Dr Muhammad Ridzuan bin Mohd Salleh v Syarikat Air Terengganu Sdn Bhd [2012] 3 MLJ 737 ...............................................................................627, 898, 1285

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Dato’ Samsudin Abu Hassan v Robert Kokshoorn [2003] 3 CLJ 1 ...................................... 1000

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Dato’ Teong Teck Kim v Dato’ Teong Teck Leng [1996] 1 MLJ 178, CA .................................354 Daunt v Lazard (1858) 27 LJ Ex 399 .........................................................................................304

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David A.R. Williams QC and Amokura Kawharu, Williams & Kawharu on Arbitration (2011) ................................................................................................................657

co

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David Taylor & Son Ltd v Barnett Trading Co [1953] 1 All ER 843, [1953] 1 WLR 562 ........................................................................................................ 63, 712 Davies (Graham H) (UK) Ltd v Marc Rich & Co Ltd [1985] 2 Lloyd’s Rep 423 ..................536

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Davies v Jones [2009] EWCA Civ 1164 .....................................................................................298

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Davies v Pratt (1855) 17 CB 183 ............................................................................................. 1056

re v

Davies, Middleton and Davies Ltd v Cardiff Corpn (1964) 62 LGR 134, CA (Eng) ............593 Davis v Witney UDC 15 TLR 275 .......................................................................................... 1193

E-

Dawdy and Hartcup’s Arbitration, Re (1885) 15 QBD 426, [1885] 7 WLUK 96 ....................51 Dawes v Treasure & Son Ltd [2010] EWHC 3218 (TCC) .................................................... 1012 Dawson v Lord Otho Fitzgerald (1876) 1 Ex D 257 .................................................................495 Day v Bonnin (1836) 3 Bing NC 219 ...................................................................................... 1056 Daya Singh Mangharam v Charandas Mathuradas AIR 1940 Sind 144 ...............................689 DDA v R.S. Sharma (2008) 13 SCC 80 .................................................................................. 1301 DDA v Uppal Engineering Construction Co. (1982) SCC OnLine Del 67 ............... 1046, 1066

xcii

Law, Practice and Procedure of Arbitration in India

Deacons (A Firm) v White & Case LLP [2003] 6 HKCFAR 322, CA (HK) ..........................635 Dean Witter Reynolds, Inc. v Byrd 470 U.S. 213, 218 (U.S. Supreme Court 1985) ..............448 Deccan Chronicle Holdings Limited v L&T Finance Limited (2013) SCC Online Bom1005 ............................................................................................978 Decon India Pvt. Ltd. v Union of India 2005 (2) Arb LR 361 (Calcutta) ..................... 378, 658

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Décor Ceilings Pty Ltd v Cox Constructions Pty Ltd [2006] SASC 85 ................................ 1227 Deepak Mitra v District Judge (1999) SCC OnLine All 609 at para. 10, 1000

Delhi Development Authority v M/​s Tara Chand Sumit Construction Company, OMP (Misc.) (Comm.) 236/​2019, High Court of Delhi (12 May 2020), at para. 29 ..............966

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Delhi Development Authority v M/​s. Krishna Construction Co. (2011) 183 DLT 331, at para. 15 ........................................................................................763

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Delhi Development Authority v Naveen Kumar 2017 SCC OnLine Del 10240 ................................................................................ 1018, 1082

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Delhi Development Authority v Sunder Lal Khatri & Sons (2009) SCC OnLine Del 127 ........................................................................................... 1043

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Delhi Development Authority v Uppal Engineering Construction Co. (1982) SCC OnLine Del 67 ................................................................................... 1043, 1051

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Delhi Jal Board v Reliable Diesel Eng (P) Ltd. & Ors. (2005) SCC OnLine Del 1360 ............................................................................... 1287, 1291

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Delhi Metro Rail Corporation Ltd. v Delhi Airport Metro Express Private Limited (2019) SCC OnLine Del 6562 ............................................................................... 1303, 1315

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Delhi Metro Rail Corporation Ltd. v Voestalpine Schine GMBH (2018) 250 DLT 239 .......................................................................................................... 1252

re v

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Delhi Urban Shelter Improvement Board v Lakhvinder Singh (2017) SCC OnLine Del 9810, at para. 24 ..................................................................... 1036

E-

Delta Construction Systems Ltd. v Narmada Cement Company Ltd. (2001) SCC OnLine Bom 630 ................................................................................... 978, 985 Delta Distilleries Limited v United Spirits Limited (2014) 1 SCC 113 ....................................................................... 771, 774, 820, 861, 982, 985 Demerara Distilleries (P) Ltd v Demerara Distillers Ltd. (2015) 13 SCC 610 ............. 183, 511 Demolition and Construction Co Ltd v Kent River Board [1963] 2 Lloyd’s Rep 7 .......................................................................1207–​1208, 1214, 1216 Den of Airlie SS Co Ltd v Mitsui & Co Ltd and British Oils and Cake Mills Ltd 17 Com Cas 116, CA (Eng) ................................................................................................655

xciii

Table of Cases

Denel (Proprietary Limited) v Govt. of India, Ministry of Defence (2012) 2 SCC 759 .................................................................................................................638 Denel Pty Ltd. v Ministry of Defence (2012) 2 SCC 759 ................................................. 571, 611 Dennehy v Bellamy 60 Ll L Rep 269 ..........................................................................................300 Department of Economics, Policy and Department of City of Moscow v Bankers Trust Co [2004] EWCA Civ 314, [2005] QB 207 ..................................... 124, 881

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Department of Environment for Northern Ireland v Farrans Construction Ltd, 19 BLR 1 ............................................................................................................................. 1171 Department of Irrigation v Abhaduta Jena, (1988) 1 SCC 418 ............................................ 1145 Derby v Weldon (No 9) [1990] TLR 712 ...................................................................................856

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Desbois v Industries AC Davie Inc. [1990] CanLII 3619 (QC CA) ........................................639

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Deutsche Schachtbau-​und Tiefbohrgesellschaft mbH v R’as Al Khaimah National Oil Co [1990] 1 AC 295, [1987] 2 All ER 769, CA (Eng) ............................................................713

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Deutsche Telekom AG v Republic of India PCA Case No. 2014-​10, 13 December 2017 ..................................................................................................1436–​1438

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Devas Employees Mauritius Private Limited and Telecom Devas Mauritius Limited v The Republic of India PCA Case No. 2013-​09 .....................................................1436–​1437 Devi Resources Limited v Ambo Exports Limited 2019 SCC OnLine Cal 7774 ........... 465, 476

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Devika Mehra v Ameeta Mehra (2004) 3 Arb LR 330 ...............................................................53

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Dexters Ltd vHill Crest Oil Co (Bradford) [1926] 1 KB 348 ................................................. 1306 Dhenkanal Minor Irrigation Division v N.C. Budharaj (2001) 2 SCC 721, at para. 26 .... 1144

ie

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Dholi Spintex Private Limited v Louis Dreyfus Company India Pvt. Ltd. (2020) SCC OnLine Del 1476 ................................................................................. 477, 1367

re v

Digby v General Accident Fire and Life Assurance Corporation Ltd [1940] 2 KB 226 .........300 Digicel (St Lucia) v Cable & Wireless plc [2010] EWHC 888 (Ch) ..................................... 1205

E-

Dillon v Mexico, IV R.I.A.A. 368, 371 (1952), Opinion of Commissioner Nielson of 3 October 1928 ..................................................................................................845 Dineen v Walpole [1969] 1 Lloyd’s Rep 261, CA (Eng) ......................... 1207, 1213, 1216, 1221 Dinesh Singh Thakur v Sonal Thakur [2018] 17 SCC 12, at para. 13 .....................................945 Director General of Fair-​Trading v The Proprietary Association of Great Britain (2001) 1 WLR 700 ...............................................................................................................377 Dixons Stores Group Ltd v Thames Television plc [1993] 1 All ER 349, at p. 351 ............. 1229 Dobbs v National Bank of Australasia Ltd (1935) 53 CLR 643 ................................... 492, 1003

xciv

Law, Practice and Procedure of Arbitration in India

Dobson and Sutton v Groves [1844] 6 QB 637 ...................................................................... 1292 Dobson and Sutton v Groves 14 LJQB 17 ............................................................................... 1305 Dodington v Hudson (1823) 1 Bing 384, (1823) 130 ER155 ..................................................779 Doe d Madkins v Horner (1838) 8 Ad & El 235 .................................................................... 1063 Doe d Stimpson v Emmerson (1847) 9 LTOS 199 ....................................................................712

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Doglemor Trade Ltd v Caledor Consulting Ltd [2020] EWHC 3342 (Comm) .................. 1276

Doleman & Sons v Osset Corp [1912] 3 KB 257 ........................................ 429, 618, 1291, 1319 Dolling-​Baker v Merrett [1991] 2 All ER 890 ........................................................................ 1112 Dolling-​Baker v Merrett 1990 1 WLR 1205 ..............................................................................114

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Dolphin Drilling Ltd. v ONGC Ltd. (2010) 3 SCC 267 ..............................................................65

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Donald Campbell and Co v Pollak [1927] AC 732 ............................................1198, 1200, 1207

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Dorsey James Michael v World Sport Group Pte Ltd [2014] 2 SLR 208, [2014] SGCA 4 .....................................................................................................................776 Doshion Ltd v Sembawang Engineers and Constructors Pte Ltd [2011] SGHC 46 ........... 1012

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ot

Dossett v Gingell, Administrator of the Estate and Effects of Allen, Deceased (1841) 2 Man & G 870 ........................................................................................................701

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Dovert et Tabourdeau v Confex (1992) Rev Arb No. 4, CA Paris, 7 February 1991, at pp. 625–​684 ........................................................................................807

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Dow Chemical Company v ISOVER Saint Gobain, ICC Award No. 4131, YCA 1984, Vol. IX ...............................................................................................................289

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Dowans Holding SA v Tanzania Electric Supply Co. Ltd. [2011] EWHC 1957 (Comm) ......................................................................................... 1334

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Dowell Leasing & Finance Ltd v Radheshyam B Khandelwal (2008) 1 Arb LR 512 ............144

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Downer Connect Ltd v Pot Hole People Ltd HC Christchurch CIV-​2003-​409-​2878, 19 May 2004 ................................................................................. 1219

E-

Downer Construction (New Zealand) Ltd v Silverfield Developments Ltd [2008] 2 NZLR 591 ..............................................................................................................273 Downing v Al Taneer Establishment [2002] 2 All ER (Comm) 545, [2002] EWCA Civ 721 ........................................................................................................426 Downing v Al Tameer Establishment [2002] EWCA Civ 721, [2002] All ER (D) 342 (May) .................................................................................... 427, 480 Doypack Systems Pvt. Ltd. v Union of India and Ors. (1988) 2 SCC 299 ..............................338 Dozco (India) (P) Ltd. v Doosan Infracore Co. Ltd. (2011) 6 SCC 179 ....................... 491, 1364

xcv

Table of Cases

Dr Bonham’s Case, Re [1608] 1 WLUK 4 .................................................................................898 Dr. Bina Modi v Lalit Kumar Modi RFA (OS) 21/​2020, CM APPL.9034/​2020 .....................59 Dr. G.L. Purohit v Dr. S.S. Agarwal [2011] 163 Comp Cas 205 (Delhi) ...............................278 Dr. Man Singh v The State of Himachal Pradesh and Ors. 2019 SCC OnLine HP 2410 ................................................................................................561

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Drake insurance Plc v Provident Insurance Plc. [2003] EWCA Civ 1834 .......................... 1113 Drane v Niccol (1885) 6 LR (NSW) 145 ....................................................................................691 Dream Valley Farms Private Ltd. & Anr. v Religare Finvest Ltd. & Ors. 2016 SCC OnLine Del 5584 ...............................................................................................628 Dreistern Werk v Crouzier [1991] Rev Arb 291 .......................................................................216

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irc

Dreymoor Fertilizers Overseas (P) Ltd. v Sterlite Industries (India) Ltd 2014 SCC OnLine Mad 993 ............................................................................................ 1348 Drummond v Hamer [1942] 1 KB 352, [1942] 1 All ER 398 ........................................ 563, 655

ot

fo

DSA Engineers (Bombay) v Housing and Urban Development Corporation (2008) 4 Arb LR 347 (DB), at para. 13 ........................................................................... 1153 Du Toit v Vale (1993) 9 WAR 138 (WASC) ..............................................................................666

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Duke Energy v Ecuador, Award, 18 August 2008, at para. 473 ........................................... 1427 Duke of Beaufort v Welch (1839) 10 Ad & E 527 .................................................................. 1056

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Duke of Buccleuch v Metropolitan Board of Works [1872] 4 WLUK 58 ............................. 1275

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Dunn v Warlters (1842) 9 M & W 293 ................................................................................... 1056 Durga Charan Rautray v State of Orissa (2012) 12 SCC 513 .............................................. 1304

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Durham (Gordon) & Co Ltd v Haden Young Ltd (1990) 52 BLR 61 .....................................315

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Duro Felguera S.A. v Gangavaram Port Limited (2017) 9 SCC 729 .............268, 557, 601, 610

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Durward v Sandifer, Evidence Before International Tribunals, Procedural Aspects of International Law Series, Vol. 13 (1975), p. 197 ..............................................................840

E-

Dyna Technologies Pvt. Ltd. v Crompton Greaves Ltd. (2019) 20 SCC 1 ........911, 1094, 1267, 1273, 1276, 1281–​1282, 1308, 1312–​1313 Dyna Technologies v Crompton Greaves (2019) SCC OnLine SC 1656 ..................1044–​1045, 1064–​1066

E E B Aaby’s Rederi A/​S v Union of India [1974] 2 Lloyd’s Rep 57, HL ....................................497 E Rotheray & Sons Ltd v Carlo Bedarida & Co [1961] 1 Lloyd’s Rep 220 ................. 936, 1029

xcvi

Law, Practice and Procedure of Arbitration in India

E Turner & Sons Ltd v Mathind Ltd (1985) 5 Const LJ 273 ...................................................226 E. Muralidharan v Venkataraman & Company & Ors. AIR 2009 Mad 40 ...........................535 E. Seaboard Constr. Co. v Gray Constr. Inc. 554 F.3d 1, 6 (1st Cir. 2008) ........................... 1088 E. Venkatakrishna v Indian Oil Corporation (2000) 7 SCC 764 ......................................... 1295 E.E. Cruz v Coastal Caisson Corp 346 F. App’x 717, p. 720 (2nd Cir. 2009) ..................... 1078

ul at io n

Eagle Star Insurance Co. v Yuval Insurance Co. [1978] 1 Lloyd’s Rep 357 ................... 432, 713 Eaglesham v Mcmaster [1920] 2 KB 169 .....................................................................................56

Eardley v Steer (1835) 4 Dowl. 423 4 LJ. Ex 293 ......................................................... 1062, 1064

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Earnest Business Services Private Limited v The Government of the State of Israel (2019) SCC OnLine Bom 1793 ................................................................................ 562, 1252

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East African Development Bank v Ziwa Horticultural Exporters Limited [2000] UGCommC 8 (Uganda) .........................................................................................444

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East and West India Dock Co v Kirk and Randall (1887) 12 App Cas 738, HL ...................663

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Eastcheap Dried Fruit Co v NV Gebroeders Catz Handelsvereeniging [1962] 1 Lloyd’s Rep 283 .................................................................................................. 1292

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Eastern Counties Railway Co v Eastern Union Railway Co (1863) 3 De G J & S 610 ..........854 Eastern Sugar v Czech Republic, Partial Award, 27 March 2007, at para. 374 .................. 1427

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EB Aaby’s Rederi A/​S v Union of India, The Evje [1974] 2 Lloyd’s Rep 57 ..................... 48, 345 Ebner v Official Trustee in Bankruptcy [2000] HCA 63, 205 CLR 337 .................................631

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ECE and PANTA v Czech Republic, Award, 19 September 2013, at para. 4.754 ............... 1415

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Ecohidrotechnika LLC v Black Sea and Azov Sea Production & Operating Administration of Shipping & Anr (2010) SCC OnLine Bom 277 ................................989

re v

ie

Econ Piling Pte Ltd and anor v Shanghai Tunnel Engineering Co Ltd. [2010] SGHC 253 ........................................................................................ 1019, 1081–​1082 Econet Wireless v Vee Networks Ltd. (2006) EWHC 1568 (Comm) ......................................977

E-

Ecopack India Paper Cup Pvt. Ltd. v Sphere International Bombay HC (2018) SCC OnLine Bom 540, at para. 4, 10 ................................................................. 1326 Ecuador v Occidental Exploration & Production Co [2007] EWCA Civ 656 .................... 1270 EDF (Services) Ltd. v Romania ICSID Case No. ARB/​05/​13, Award, 8 October 2009, 322 ......................................................................................................... 1425 Editions Chouette Inc. v Desputeaux 2003 SCC 17 ..................................................................442 Edward Lloyd Ltd v Sturgeon Falls Pump Co Ltd 85 LT 162 ..................................................768

xcvii

Table of Cases

Edward Pinkesz v Joel Wertzberger 139 A.D.3d 1071 (N.Y. App. Div. 2016) ..................... 1271 Edwards (Inspector of Taxes) v Bairstow [1956] AC 14, at para. 36 .......................................776 Edwards v Legalese Pty Ltd t/​a Peter Scragg & Associates (No 2) [2012] SADC 110 ....... 1187 Edwards v The Aberayron Mutual Ship Insurance Society Ltd (1875) 1 QBD 563 ...............495 EE &Brian Smith (1928) Ltd. v Wheatsheaf Mills [1939] 2 KB 302 ................................... 1101

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Eisenwerk Hensel Bayreuth GmbH v Australian Granites Ltd. [2001] 1 QDR 461 ..............433 Eitzen Bulk A/​S v Ashapura Minechem Ltd. [2016] 11 SCC 508 ...........................................561 El Paso Corporation v La Comision Ejecutiva Hidroelectrica Del Rio Lempa 341 Fed. Appx 31 (5th Cir. 2009) .................................................................. 965, 983

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El Paso Energy International Company v The Argentine Republic ICSID Case No. ARB/​03/​15, at para. 746 ................................................................................... 1427

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rC

Electra Air Conditioning B.V. v Seeley International Pty. Ltd, Federal Court, Australia, 8 October 2008, [2008] FCAFC 169, available at http://​www.aust​lii.edu.au/​au/​cases/​cth/​ FCAFC/​2008/​169.html .......................................................................................................580

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Electriciadad Argentina SA & EDF International SA v Argentine Republic ICSID Case No. ARB/​03/​22; EDF International SA, SAUR International SA & Leon Paricipaciones Argentinas SA v Argentine Republic ICSID Case No. ARB/​03/​23 ...................................639

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Electrosteel Castings Ltd. v Scan-​Trans Shipping and Chariering SDN BHD [2002] EWHC 1993 .............................................................................................................438

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Eleftheria Niki Compania Naviera SA v Eastern Mediterranean Ltd, The Eleftheria Niki [1980] 2 Lloyd’s Rep 252 ........................................................................ 1208

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Elektrim S.A. v Vivendi Universal S.A. (No. 2) [2007] EWHC 571 (Comm) ...................................................................................................... 439, 471, 476–​477

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Elektrim SA v Vivendi Universal SA [2007] EWHC 11 (Comm) ..........................................780

re v

Ellerine Brothers Ltd v Klinger [1982] 1 WLR 1375; [1982] 2 All ER 737, at p. 741, [1982] 1 WLR 1375, CA (Eng) .................................................................342, 347, 349, 354

E-

Ellingsen v Det Skandinaviske Compani [1919] 2 KB 567, CA(Eng) ................................. 1215 Elliott v Royal Exchange Assurance Co (1867) LR 2 Exch 237 ...............................................494 Ellis v Desilva (1881) 6 QBD 521, CA (Eng) ......................................................................... 1208 Ellison v Bray (1864) 9 LT 730 ...................................................................................................856 Emaar MGF Land Ltd. v Aftab Singh (2019) 12 SCC 751 ...................................428, 488, 1299 Emaar MGF Land Ltd. v Sunita OMP (Comm) No. 250/​2018 ................................. 1248, 1251 Emery v Wase (1801) 5 Ves 846, affd (1803) 8 Ves 505, at p. 517 ..........................................856

xcviii

Law, Practice and Procedure of Arbitration in India

Emery v Wase 32 ER 451 ............................................................................................................917 Emilio Agustín Maffezini v Spain, Decision of the Tribunal on the Objections of Jurisdiction, ICSID Case No. ARB/​97/​7, at para. 56 .......................................... 1420, 1444 Emilio v Sprint Spectrum L.O. No. 08-​CV-​7147 ............................ 2008 WL 4865050 (SDNY 6 November 2008), 807

ul at io n

Emirates Trading Agency LLC v Prime Mineral Exports Private Ltd [2014] EWHC 2104 ........................................................................... 180, 182, 184–​185, 506 Emirates Trading Agency LLC v Sociedade de Fomento Industrial Private Ltd [2015] EWHC 1452 (Comm) ........................................................... 1010, 1075 Emmot v Michael Wilson & Partners Ltd [2008] EWCA Civ 184 .........................................121

irc

Emmot v Michael Wilson & Partners Ltd 74(4) (2008) International Journal of Arbitration Mediation and Dispute Management 458 ...................................................130

rC

Emmott v Michael Wilson & Partners [2008] 1 Lloyd’s Law Rep. 616 ......................... 116, 919

fo

Emmott v Michael Wilson & Partners Ltd. [2009] EWHC 1 (Comm) .................................989 Emmott v Michael Wilson &Partners Ltd [2008] EWCA Civ 184 ................................ 123, 881

ot

Emmsons International Ltd. v Metal Distributors 2005 SCC OnLine Del 17 .......................188

-N

Empresa Exportadora de Azucar v Industria Azucarera Nacional SA, The Playa Larga and The Marble Islands [1983] 2 Lloyd’s Rep 171 .................................................326

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Empressa de Turismo Nacional & Internacional v Vacances sans frontiere Itée [1992] CanLII 3546 (QC CA) ............................................................................................190

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Emson Contractors Ltd v Protea Estates Ltd [1987] 13 Con LR, 39 BLR 126 .............. 510, 523

ie

w

Encyclopaedia Universalis SA (Luxembourg) v Encyclopaedia Britannica Inc. 2005 XXX, YBCA 1136 .................................................................................................... 1347 Encyclopaedia Universalis SA v Encyclopaedia Britannica, Inc. 403 F.3d 85 ........................545

E-

re v

Enercon (India) Limited & Others v Enercon (GMBH) & Anr. (2014) 5 SCC 1 .....................................................94–​96, 166–​167, 189, 191, 200, 240, 243, 491, 544, 579, 597, 951–​952, 1372 Enercon (India) Private Limited & Ors. v Enercon GmBH (2014) 5 SCC 1 ....................... 1376 Enercon GmbH v Enercon (India) Ltd. 2012 EWHC 689 (Comm) .......................................491 Energo Engineering Projects Ltd. v TRF Ltd. (2016) SCC OnLine Del 6560, at para. 28 ............................................................................................................961 Energy Sdn Bhd v Poscon Corp [2008] 6 MLJ 561 ...................................................................429 Engineered Medical Systems v Bregas AB [2003] EWHC 3287 ..............................................988 England and Wales Cricket Board v Kaneria 2013 EWHC 1074 (Comm) ...........................910

xcix

Table of Cases

England v Davison (1841) 9 Dowl1052; Pearson v Archbold (1843) 11 M & W 477 ...................................................................................................... 1208 Enka Insaat Ve Sanayi A.S. v OOO Insurance Company Chubb [2020] UKSC 38 ..............................................................................................248, 1288, 1373 Enka v Chubb [2020] UKSC 38 .................................................................................................236 Ennore Port Ltd. v Hindustan Construction Co. Ltd. AIR 2007 Mad 73 ...............................862

ul at io n

Enron Creditors Recovery Corp and Others v Argentine Republic, ICSID Case No. ARB/​01/​3, Decision on the Application for Annulment of the Argentine Republic, para. 188(2010) ...................................................................................................867

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Enterprise Insurance Co plc v U-​Drive Solutions (Gibraltar) Ltd. [2016] EWHC 1301 (QB) ................................................................................................ 1000 Enterra Pty Ltd v Adi Ltd [2002] NSWSC 700 .........................................................................656

rC

Environment for Northern Ireland v Farrans (Construction) Ltd, 19 BLR 1 ...................... 1138

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Epoux Rouny v Holding RC, 1996 Rev. Arb. 408 (Paris Cour d’Appel) ............................................................................................................897

ot

Equitas v Walsham 2013 EWHC 3264 ................................................................................... 1160

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Erbil Serter v French Republic ICSID Case No ARB/​13/​22 ................................................. 1444 Erith Contractors Ltd v Costain Civil Engineering Ltd [1994] ADRLJ 132 ...........................523

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Eros International Media v Telemax Links India Pvt. Ltd. (2016) SCC OnLine Bom 2179, at para. 18 ................................................................... 1127

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Escorts Limited v Universal Tractor Holding LLC (2013) 10 SCC 717, at para. 9 ............. 1347

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Eskosol S.p.A. in liquidazione v Italian Republic ICSID Case No. ARB/​15/​50, Procedural Order No. 3 ........................................................................................................................ 1424

re v

Essar Oilfields Services Limited v Norscott Rig Management Pvt. Ltd. [2016] EWHC 2361 (Comm) ......................................................................................... 1255

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Esso Australia Resources Ltd and Ors v The Honourable Sidney James Plowman and Ors (1995) HCA 19 ................................................... 113–​114, 121, 124, 126 Esso Australia Resources Ltd v The Honourable Sidney James Plowman (The Minister for Energy and Minerals) (1995) 128 ALR 391 ......................................881 Esso Australia v Plowman (reprinted in 1995), 11 Arbitration International 283, .... 113, 121 Etablissements Raymond Gosset v Frère Carapelli Spa, French International Arbitration Law Reports: 1963-​2007, Cour De Cassation, First Civil Chamber, 7 May 1963 .......................................................................................................................................825 Ethiopian Airlines v Ganesh Narain Saboo (2011) 8 SCC 539 ................................................285

c

Law, Practice and Procedure of Arbitration in India

Ethiopian Oilseeds and Pulses Export Corpn v Rio Del Mar FoodsInc [1990] 1 Lloyd’s Rep 86 .......................................................................................... 1105, 1125 Ethos Limited v Geofin Investment Pvt. Ltd. 2018 SCC OnLine Del 12514, at para. 15 ....................................................................................................... 1199 Ethos limited v Geofin Investment Pvt. Ltd. OMP (Comm) No. 249/​2018 decided by the Delhi High Court on 13 November 2018 ........................................... 1262

ul at io n

Etri Fans Ltd v NMB (UK) Ltd [1987] 2 All ER 763, CA ........................................................277 Ets Soules & Cie v International Trade Development Co Ltd [1979] 2 Lloyd’s Rep 122 at 138, affd [1980] 1 Lloyd’s Rep 129, CA (Eng) ...............................................536

rC

irc

EuroGas Inc and Belmont Resources Inc v Slovak Republic ICSID Case No ARB/​14/​14 (Transcript of the First Session and Hearing on Provisional Measures (17 March 2015) at p. 145), available at http://​ita​law.com/​sites/​defa​ult/​files/​case-​docume​nts/​ita​ law6​267.pdf, 703

Euroil Ltd. v Cameroon Offshore Petroleum Sarl [2014] EWHC 12 (Comm) ......................976

ot

fo

European Grain and Shipping Ltd, v Dansk Landbrugs Grovvareslskab [1986] 1 Lloyd’s Rep 163 .....................................................................................................536 European Grain and Shipping Ltd, v R & H Hall plc [1990] 2 Lloyd’s Rep 139 ....................536

-N

European Grain v Johnston [1982] 2 Lloyd’s Rep 550 .............................................................914

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European Gran and Shipping Ltd. v Johnson [1982] 3 All ER 989 ...................................... 1031 Eurosteel Ltd v Stinnes AG [2000] 1 All ER (Comm) 964 .......................................................297

w

co

Everglade Maritime Inc v Schiffahrtsgesellschaft Detlef von Appen GmbH The Maria [1993] QB 780 [1993] 3 All ER 748 ................................................ 1192, 1197, 1201, 1207, 1216, 1221, 1229, 1236, 1238

re v

ie

Evergreat Construction Co Pte Ltd. v Presscrete Engineering Pte Ltd. [2005] SGHC 224 ........................................................................................................... 54–​55

E-

Evmar Shipping Corp v Japan Line Ltd, The Emvar [1984] 2 Lloyd’s Rep 581 ..............................................................................1208, 1212, 1240 Ewan Robert Carr and Brookside Farm Trust Limited v Gallaway Cook Allan [2014] NZSC 75 ...................................................................................................................234 Ewart & Sons Ltd v Sun Insurance Office (1925) 21 Ll L Rep 282 ................................ 574, 621 Ex p Hughes (1822) 5 B & Ald 482 ............................................................................................308 Ex parte Young, Re Kitchin (1881) 17 Ch D 668 .............................................................303–​304 Excalibur Ventures LLC v Texas Keystone Inc. [2011] EWHC 1624 (Comm) ...........................................................................266, 476, 478

ci

Table of Cases

Excomm Ltd v Ahmed Abdul-​Qawi Bamaodah The St Raphael [1985] 1 Lloyd’s Rep 403, CA (Eng) ..................................................................................199 Excomm Ltd v Bamaodah, The St Raphael [1985] 1 Lloyd’s Rep 403, CA (Eng) .................201 Excomm Ltd v Guan Guan Shipping (Pte) Ltd, The Golden Bear [1987] 1 Lloyd’s Rep 330 ....................................................................................97, 480, 1105

ul at io n

Exfin Shipping (India) Ltd Mumbai v Tolani Shipping Co Ltd Mumbai [2006] EWHC 1090 (Comm) ............................................................................................348

Exmar BV v NationalIranian Tanker Co. [1992] 1 Lloyd’s Rep 169 .............. 1005, 1007–​1008 Exormisis Shipping SA v Oonsoo (No. 1) [1975] 1 Lloyd’s Rep. 432 ......................................973 Extrusion Processes Pvt. Ltd. v Kashibhai S. Patel (1976) 78 BomLR 661 ............................281

irc

F

rC

F & D Building Services Engineering Co Ltd v Chevalier (E & M Contracting) [2001] 3 HKCFI 824, 401 Pathak v Tourism Transport Ltd [2002] 3 NZLR 681 .......................401

ot

fo

F & D Buildings Services Engineering Co Ltd v Chevalier (E & M Contracting) Ltd [2001] HKCFI 824, [2001] 3 HKC 403 .............................................................................358 F & G Sykes (Wessex), Ltd. v Fine Fare Ltd. [1967] 1 Lloyd’s Rep. 53, p. 6 .............................47

-N

F G Minter Ltd v Welsh Health Technical Services Organisation (1980) 13 BLR 1 ........................................................................................... 1151–​1152, 1171

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F J Bloemen Pty Ltd v Gold Coast City Council [1973] AC 115 ................................ 1096, 1105

co

F&G Sykes Ltd. v Fine Fare Ltd. English Arbitration Act s. 82(1) .........................................351 Fabrica Lombarda di Acido Tartarico v Fuerst Bros Ltd (1921) 8 Ll L Rep 57 .................. 1063

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Faghirzadeh v Rudolph Wolff (SA) (Pty) Ltd [19771] Lloyd’s Rep 630 ............................... 1305

re v

ie

Fai Tak Engineering Co Ltd v Sui Chong Construction & Engineering Co Ltd [2009] HKDC 141 ...............................................................................................................348 Fairclough Building Ltd v Vale of Belvoir Superstore Ltd (1993) ADRLJ 12 ....................... 1056

E-

Fal Bunkering of Sharjah v Grecale Inc of Panama [1990] 1 Lloyd’s Rep 369 ......................943 Far East Consortium Ltd v Airedale Ltd, [1991] HKC 325 (HK) ...........................................298 Farid v MacKinnon Mackenzie & Co Ltd, The Sheba and Shamsan [1983] 2 Lloyd’s Rep 500 ................................................................................................ 85, 97 Farmers Fertilizer Co-​operative Ltd. v Bhadra Products (12.03.2019 –​ORIHC) .................507 Farrar v Cooper (1890) 44 Ch D 323 ................................................................................ 478, 563 Faruqi v Commonwealth Secretariat [2002] 3 WLUK 736 .....................................................951 Faubert & Watts v Temagami Mining Co Ltd (1959) 17 DLR (2d) 246 ................................713

cii

Law, Practice and Procedure of Arbitration in India

Faure Fairclough Ltd v Premier Oil and Cake Mills Ltd [1968] 1 Lloyd’s Rep 237 ............................................................................. 1298, 1304–​1305 Faze Three Exports Ltd. v Pankaj Trading Co. and Ors (2004) (2) Arb LR 163 (Bom) .........................................................................875, 906, 1069 FBD Insurance Plc v Connors and another [2011] IEHC 184 ....................................... 718, 720 FCA Canada Inc. v Reid-​Lamontagne (2019) ONSC 364 .......................................................274

ul at io n

FCA India Automobiles Pvt. Ltd. v Torque Motor Cars Pvt. Ltd. [2018] SCC OnLine Bom 4371, at para. 30 ......................................................................782 Fedax NV v Venezuela ICSID Case No. ARB/​96/​03, Award on Jurisdiction of 11 February 1997 ....................................................................................................1405–​1406

irc

Federal Commerce and Navigation Ltd v Xcan Grain (Europe) Ltd, The Ratna Vandana [1982] 1 Lloyd’s Rep 499 .....................................................................................................537

rC

Fehr Frank & Co v Kassim Jivraj & Co Ltd (1949) 82 L1 L Pep 673 ......................................202

fo

Feichtinger v Conant 893 P.2d1226 (Alaska1995) ..................................................................894

ot

Feldman v Mexico, Correction and Interpretation of the Award in ICSID Case No. ARB(AF)/​99/​1 (NAFTA) (13 June 2003) .................................1088–​1089

-N

Fence Gate Ltd v NEL Construction Ltd [2001] EWHC 456(TCC), [2001] All ER (D) 214 (Dec) ................................................................................. 1200, 1227

py

Fenceline Ltd v W J Simms, Sons & Cook Ltd (1972) 224 Estates Gazette 1041 ............... 1207 Fenton v Dimes (1840) 9LJQB 297 ......................................................................................... 1062

co

Ferguson Bros of St Thomas v Manyan Inc [1999] OJ No 1887 ..............................................204

ie

w

Fermenta Biotech Limited v K.R. Patel (High Court of Bombay), Arbitration Petition No. 545 of 2017 (11 October 2018) .................................................................. 1303

re v

Fernas Construction Co. Inc. v ONGC Petro Additions Ltd, 2019 SCC OnLine Del 8580 ..................................................................................................................305 Fernley v Branson (1851) 20 LJQB 178 .....................................................................................701

E-

Fetherstone v Cooper (1803) 9 Ves Jun 67 ....................................................... 720–​721, 856, 914 FF Ayriss & Co v Board of Industrial Relations of Alberta (1960) 23 DLR (2d) 584 .............50 FG Minter Ltd v Welsh Health Technical Services Organisation (1980) 13 BLR 1 ................................................................................................................ 1152 Fibreco Pulp Inc v The Star Dover [2000] CanLII 15323, FCA (Can) ...................................401 Fidelitas Shipping Co Ltd v V/​O Fidelitas Shipping Co Ltd v V/​O Exportchleb Exportchleb [1965] 2 All ER 4 .............................................................................................................. 1104

ciii

Table of Cases

Fidelitas Shipping Co Ltd v V/ O Exportchleb [1966] 1 QB 630 ...............................................65 Fidelitas Shipping Co. v V/​O Exportchleb [1965] 1 Lloyd’s Rep. 223 ......................................... 97, 231, 1074–​1075, 1097, 1100, 1107 Fidelitas Shipping v V/​O Exportchleb [1965] 2 All ER 4 ...................................................... 1105 Fidelity Management SA v Myriad International Holdings BV [2005] EWHC 1193 .......................................................................................................... 1055

ul at io n

Fillite (Runcorn) Ltd v Aqua-​Lift (a firm) (1989) 45 BLR 27 ..................................................176 Finelvet AG v Vinava Shipping Co Ltd, The Chrysalis [1983] 1 Lloyd’s Rep 503 .....1046–​1047 Finnegan (J F) Ltd v Sheffield City Council 141. (1988) 43 BLR 124 .....................................197

irc

Finzel, Berry & Co v Eastcheap Dried Fruit Co [1962] 2 Lloyd’s Rep 11, CA (Eng) ........................................................................... 554, 593

rC

Fiona Trost & Holding Corp v Yuri Privalov [2007] UKHL 40 ..................................... 111, 930 Fiona Trust & Holding Corp v Privalov [2007] 4 All ER 951 .................................................234

fo

Fiona Trust & Holding Corp v Privalov [2007] EWCA Civ 2 .................................................266

ot

Fiona Trust & Holding Corp. v Privalov [2007] EWCA Civ 20 ..............................................448

-N

Fiona Trust & Holding Corp. v Privalov [2007] UKHL 40 ....................................232, 236, 243

py

Fiona Trust & Holding Corporation v Privalov [2007] 4 All ER 951 ............................................................50, 211, 242, 244, 330, 335–​336, 338, 351, 363, 390, 429, 438

co

Fiona Trust and Holding Corporation & Ors. v Yuri Privalov & Ors. [2007] UKHL 40, [2007] Bus. L.R. 1719, 1721 ..................................................................................................58

ie

w

Firm Ashok Traders and Another v Gurumukh Das Saluja and Others (2004) 3 SCC 155 ..............................................................................................933, 991, 1116

re v

Firm Ashok Traders v Gurumukh Das Saluja (2004) 3 SCC 155 ...........................................278

E-

Firm Motharam Dowlatram v Firm Mayadas Dowlatram 1923 SCC OnLine Sind JC 36, AIR 1925 Sind 150 ...........................................................................................645 Firm Rajasthan Udyog and Others v Hindustan Engineering and Industries Ltd. (2020) 6 SCC 660 .............................................................................................................. 1121 Firma C-​Trade SA v Newcastle Protection and Indemnity Association, The Fanti [1989] 1 Lloyd’s Rep 239 ........................................................................................ 1136, 1151 Firooz Ghassabian v Fatollah Hematian 08 Civ. 4400 (SAS) (SDNY 27 August 2008), Yearbook Commercial Arbitration, 1224 XXXIII (2008) ..................................475 First Steamship Co Ltd v CTS Commodity Transport Shipping Schiffahrtsgesellschaft mbH, The Ever Splendor [1988] 1 Lloyd’s Rep 245 ................................................ 356, 535

civ

Law, Practice and Procedure of Arbitration in India

Fisher v PG Wellfair Ltd [1981] 2 Lloyd’s Rep 514, (1981) 19 BLR 52, CA (Eng) ...............856 Fit Tech Inc v Bally Total Fitness Holding Corp, 374 F.3d 1, 7 (1st Circuit 2004) .................189 Fittydent Int’l GmbH v Brawn Labs. Ltd 2010 SCC OnLine Del 1915 ..................................245 Fitwell Const. Pvt Ltd v Union of India 2016 (1) Arb LR 73 (Del) (DB) ...............................611 Fitzsimmons v Lord Mostyn [1904] AC 46, HL ..................................................................... 1194

ul at io n

FJ Bloemen Pty Ltd. v Council of City of the Gold Coast [1973] AC 115 ........................... 1098 Flaherty v National Greyhound Racing Club Ltd. [2005] EWCA Civ 1117 ................. 629, 631 Fleming & Wendeln GmbH v Sanofi SA/​AG [2003] EWHC 561 ...........................................257 Fleming and Moran v Space Homes Ltd 1985 58 AR 335 ..................................................... 1296

irc

Flemingo Duty Free Shop Pvt Ltd v The Republic of Poland PCA Case No. 2014-​11 ........ 1442

rC

Flemingo Duty Free v Poland, Award, 12 August 2016, at para. 530 .................................. 1414 Flender Werft AG v Aegean Maritime Ltd [1990] 2 Lloyd’s Rep 27 .......................................943

fo

Fletamentos Maritimos SA v Effjohn International BV (No 2) [1997] 2 Lloyd’s Rep 302 .......................................................................................... 641, 1305

ot

Fletcher v Robertson [1919] 56 SLR 305 ................................................................................. 1304

-N

Flughafen Zürich A.G. & Gestión e Ingenería IDCS.A. v Bolivarian Republic of Venezuela ICSID Case No. ARB/​10/​19, Award, 18 November 2014, at para. 989 ....................... 1425

py

FMC Corp. v Gov’t of the Islamic Republic of Iran 4 J. Int’l Arb. 147 .....................................524

co

Food Corp of India v Marastro Cia Naviera S.A, The Trade Fortitude (No. 1) [1986] 2 Lloyd’s Rep 209 .................................................................................................. 1082

w

Food Corpn of India v Antclizo Shipping Corpn, The Antclizo [1988] 2 All ER 513 ............480

ie

Food Corpn of India v Halcoussis, The Petros Hadjikyriakos [1988] 2 Lloyd’s Rep 56 .......................................................................................................526

re v

Food Corporation of India v A.M. Ahmed & Co. (2006) 13 SCC 779, at para. 25 ............ 1164

E-

Food Corporation of India v Antclizo Shipping Corporation, The Antclizo [1988] 2 All ER 513 [1988] 1 WLR 603, HL ....................................................................812 Food Corporation of India v Marastro Cia Naviera SA (The Trade Fortitude) [1986] 2 Lloyd’s Rep 209 .................................................................................................. 1018 Food Corporation of India v Marastro Naviera SA [1986] 2 Lloyd’s Rep 209, CA ............ 1080 Food Corporation of India v Mehta Plastic Industries AIR 1982 Del 160 ..............................612 Food Corporation of India v Shreekanth Transport (1999) 4 SCC 491 ............................... 1295 Food Corporation of India v Surendra, Devendra and Mohendra Transport Co. (1988) 1 SCC 547 .................................................................................................................258

cv

Table of Cases

Food Ingredients LLC v Pacific Inter-​Link Sdn Bhd [2012] 8 MLJ 585 ............................... 1340 Forasol v Oil and Natural Gas Commission (1984) Supp. SCC 263 ............... 1120–​1121, 1351 Forbes-​Smith v Forbes-​Smith and Chadwick [1901] P 258, at p. 271 .................................. 1215 Force Shipping Ltd. v Ashapura Minechem Ltd. (2003) SCC OnLine Bom 291 ................ 1338 Ford v Clarksons Holidays Ltd. [1971] 3 All ER 454 ...............................................................492

ul at io n

Forest Electricity Corporation v HCB Contractors 1995 WL 37586, *3 (ED Pa 1995) .........625 Foresta Romana SA v Georges Mabro (Owners) (1940) 66 LI L Rep 139 ..............................106 Forestry Corporation of New Zealand Ltd (In Receivership) v Attorney-​General [2003] 3 NZLR 328 ................................................................................................................52

irc

Forever Maritime Ltd. v State Unitary Enter, Foreign Trade Enter. Mashioimport, Case No. 3253/​04 (Russian Moscow Dist. Fed. Arb. Ct. 2003) ......................................................524

rC

Foster Yates and Thom Ltd v H W Edgehill Equipment Ltd. (1978) The Times .....................29 November 1978, 313

ot

fo

Fountain Head Developers v Maria Arcangela Sequeira (2007) SCC OnLine Bom 340, at para. 15 ............................................................................................................951 Fourie v Le Roux [2007] 1 WLR 320 .........................................................................................988

-N

Freedom Maritime Corpn v International Bulk Carriers, The Khian Captain (No 2) [1986] 1 Lloyd’s Rep 429, at p. 434 ................................................................................. 1158

co

py

French Government v Tsurushima Maru (Owners) (1921) 7 Ll L Rep 244, on appeal (1921) 8 Ll L Rep 403 .........................................................................................................572

w

French Government v Tsurushima Maru [1921] 7 WLUK 156; M Golodetz v Schrier [1947] 7 WLUK 78 ........................................................................................................... 1291

ie

Freshwater v Western Australian Assurance Co Ltd [1933] 1 KB 515 .......................... 300, 335

re v

Front Row Investment Holdings (Singapore) Pte Ltd v Daimler South East Asia Pte Ltd [2010] SGHC 80 ...................................................................................................................715

E-

Front Row Investment Holdings v Daimler South East Asia [2010] SGHC 80 ................... 1041 Frota Oceanica Brasiliera SA v Steamship Mutual Underwriting Association (Bermuda) Ltd, The Frotanorte [1995] 2 Lloyd’s Rep 254 ..............................................523 FSHC Holdings v Glas Trust Corporation Ltd [2019] EWCA Civ 1361 ............................. 1125 Fuerst Day Lawson Ltd v Jindal Global Exports Ltd (2011) 8 SCC 333, at para. 75..............................................................................89–​91, 1339 Fuerst Day Lawson Ltd. v Jindal Exports Ltd. (2001) 6SCC 356 ............................... 1330, 1338 Fulham Football Club (1987) Ltd. v Sir David Richards [2010] EWHC 3111 (Ch) ............................................................................ 1111–​1112, 1117

cvi

Law, Practice and Procedure of Arbitration in India

Fuller Austin Insulation Inc v Wellington Insurance Co [1995] CanLII 5752 (SK QB) (Can) ..................................................................................444 Fung Sang Trading Ltd v Kai Sun Sea Products & Food Co. Ltd. [1992] 1 HKLR 40 ..........156 Fung Sang Trading Ltd v Kai Sun Sea Products and Food Co Ltd. [1991] HKCFI 190 .......235 Furness Withy (Australia) Pty Ltd v Metal Distributors (UK), The Amazonia [1990] 1 Lloyd’s Rep 236 .................................................................................................. 1060

ul at io n

Fustar Chemicals Ltd v Sinochem Liaoning Hong Kong Ltd [1996] 2 HKC 407 ..........515–​516 Future Retail Ltd. v Amazon.com Investment Holdings LLC & Ors. 2020, SCC OnLine Del 1636 .....................................................................................455–​456

irc

Future Retail Ltd. v Amazon.Com Investment Holdings LLC & Ors. CS(COMM) 493/​2020 High Court of Delhi (21 December 2020) ................................955

fo

G

rC

Futuristics Offshore Services and Chemicals Ltd. v ONGC (2012) SCC OnLine Bom 1432 ............................................................................... 777, 1227

ot

G Hawkins & Sons Pty Ltd v Cable Belt (Aust) Pty Ltd (1986) 2BCL 246 ......................... 1229

-N

G.S. Jain & Associates v Indian Oil Corporation Ltd. (2006) SCC OnLine Del 1576 ......................................................................................... 1293 Gabbanelli Accordions & Imps, LLC v Gabbanelli 575 F.3d 693, 695 (7th Cir. 2009) ..........447

py

Gables India Pvt Ltd v State of Punjab (1994) SCC OnLine P&H 620, at para. 16 .......... 1039

co

Gabriel Resources Ltd. and Gabriel Resources (Jersey) v Romania ICSID Case No. ARB/​15/​31 ......................................................................................................... 1424

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Gabriel v Longton 26 LTOS 257 .............................................................................................. 1061

ie

GAIL (India) Ltd v Gangotri Enterprises Ltd 2014 (3) RAJ 538 (Del) ............................... 1197

re v

GAIL v Keti Constructions Ltd. (2007) 5 SCC 38, at para. 24 ....................................... 255, 766 Galloway v Keyworth (1854) 15 CB 228 .......................................................................... 701, 856

E-

Gammon Engineers and Contractors Pvt Ltd v National Highways Authority of India 2019 SCC OnLine SC 906 ........................................................................................681 Gammon India Ltd. V Sankaranarayana Construction (Bangalore) (P) Ltd. (2011) SCC OnLine Mad 2266 ....................................................................................... 1009 Gammon India Ltd. v Trenchless Engg. Services (P) Ltd. (2013) SCC OnLine Bom 1720, at para. 8-​9 ........................................................................................................943 Ganesh Benzoplast Ltd. v Saf Yeast Co. Ltd. [2007] (4) Arb LR 385 ......................................360 Gannet Shipping v Eastrade Commodities [2001] EWHC 483 (QB) ........................ 1079, 1271

cvii

Table of Cases

Gannet Shipping v Eastrade Commodities Inc. [2002] 1 Lloyd’s Rep 713 ............................................................................. 1018, 1081–​1082 Gapp v Elwes (1852) 20 LTOS 100 .......................................................................................... 1306 Garanti Koza v Turkmenistan, Decision on the Objection to Jurisdiction for Lack of Consent, 3 July 2013 ...................................................................................... 1420 Garden Finance Ltd. v Prakash Inds. Ltd. AIR 2002 Bom 8 ...................................................410

ul at io n

Garrick Shipping Co v Euro-​Frachtkontor GmbH, The World Agamemnon [1989] 2 Lloyd’s Rep 316 .....................................................................................................537 Garrity v Lyle Stuart Inc. 353 N.E.2d 793 (NY 1976) ........................................................... 1129

irc

Garware Marine Industries Limited v Integrated Finance Co. Ltd 2013 SCC OnLine Bom 1074 .............................................................................................337

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Garware Wall Ropes Limited v Coastal Marine Constructions and Engineering Limited. (2019) 9 SCC 209 ........................................................241, 268, 347, 393–​394, 610

fo

Gary B. Born, International Commercial Arbitration, Vol. 1: International Arbitration Agreements (3rd edn, Kluwer Law International, Wolters Kluwer 2020) .......... 447, 631

-N

ot

Gas & Fuel Corporation of Victoria v Wood Hall Ltd & Leonard Pipeline Contractors Ltd. [1978] VR 385 .........................................................................................726 Gas Authority of India Ltd. v Keti Constructions (I) Ltd. (2007) 5 SCC 38 ............... 262, 1297

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Gas Authority of India Ltd. v Spie Capag S.A. 1994 SCC OnLine Del 787 ...........................360

co

Gautam Construction & Fisheries Ltd. v National Bank for Agriculture and Rural Development (2000) 6 SCC 519 ...................................................................................... 1059

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Gautam Landscapes Private Limited v. Shailesh Shah 2019 (3) Mh.L.J .................................393

ie

Gay Construction Pty Ltd & Anor v Caledonian Techmore (Building) Ltd (Hanison Construction Co Ltd, Third Party) [1994] 2 HKC 562 ....................................................214

re v

Gazprom OAO v Lietuvos Respublika Case No. C-​536/​13, Court of Justice of the European Union, decided on 13 May 2015 ......................................................................417

E-

Gbangbola v Smith & Sheriff Ltd [1998] 3 All ER 730 ............................................... 1200, 1211 GD Midea Air Conditioning Equipment Co. Ltd. v Tornado Consumer Goods Ltd. [2017] SGHC 193 ............................................................................................................. 1344 Gebr van Weelde Scheepvaartkantor BV v Compania Naviera Sea Orient SA, The Agrabele [1987] 2 Lloyd’s Rep 233, CA (Eng) ...........................................................480 Gemplus S.A, SLP S.A, Gemplus Industrial S.A. de C.V. v Mexico ICSID Case No. ARB(AF)/​04/​3, at para. 16–​26 ............................................... 1425, 1427 Gen Re Life Corp. v Lincoln Nat’l Life Ins. Co. 909 F.3d 544 (2nd Cir. 2018) .1076, 1088, 1090

cviii

Law, Practice and Procedure of Arbitration in India

General Distributors Ltd v Casata Ltd. [2006] NZSC 8, [2006] 2 NZLR 721 ................... 1239 General Manager, National Highways and Infrastructure Development Corporation Ltd. v Prakash Chand Pradhan & Ors. (2018) SCC OnLine SC 3245, at para. 4 ...................957 General National Maritime Transport Company v Société Gotaverken Arendal A.B. Cour d’appel de Paris, F9224, 21 February 1980 ..................................................................... 1381

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General Petrochemicals Corp v The Islamic Republic of Iran Case No. 828, Award No. 522-​828-​1, p. 22 (21 October 1991) ..............................................................868 General Tire & Rubber Co v Firestone Tyre & Rubber Co Ltd. [1975] 2 All ER 173, at p. 192 .......................................................................................... 1158

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Geo Miller & Co. Ltd. v Chairman, Rajasthan Vidyut Utapadan Nigam Ltd. 2019 SCC OnLine SC 1137 ................................................................................................507 Geophysical Institute of Israel v Geoenpro Petroleum Ltd. (2009) 17 SCC 18 .......................608

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Gerald Metals SA v Timis [2016] EWHC 2327 (Ch) ...................................................... 973, 976

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Germany v Poland (Case Concerning the Factory at Chorzów) PCIJ Rep Series A No 9, 26 July 1927 .................................................................. 1411, 1420

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Getwick Engineers Ltd v Pilecon Engineering Ltd. [2002] HKCFI 189 ..................................348

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Ghirardosi v Minister of Highways for British Columbia 56 DLR (2d) 469 ...........................662 Giacome Costa Fu Andrea v British Italian Trading Co Ltd. [1963] 1 QB 201 .................. 1064

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Giacomo Costa Fu Andrea v British Italian Trading Co Ltd. [1961] 2 Lloyd’s Rep 392, affd [1963] 1 QB 201, [1962] 2 All ER 53, [1962] 1 Lloyd’s Rep 151, CA (Eng) ......................................................................... 856, 914

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Giacomo Costa Fu Andrea v British Italian Trading Co Ltd. [1962] 2 All ER 53 ............................................................................................................ 1064

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Gilbert and Wright (1904) 68 JP 143 .........................................................................................676

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Gillet v Thornton (1875) LR 19 Eq 599 ............................................................44 LJ Ch 398, 202

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Gillies v Secretary of State for Work and Pension [2006] 1 All ER 731, [2006] UKHL 2 ...................................................................................................633, 635–​636 Gillies v Secretary of State for Works and Pensions (Scotland) [2006] UKHL 2, [2006] 1 All ER 731 .............................................................................................................628 Ginder v Curtis (1863) 14 CB (NS) 723, (1863) 143 ER 628 .................................718, 720, 779 Giriraj Garg v Coal India Limited (2019) 5 SCC 192 .............................................208, 215, 338 Girish Mulchand Mehta & Anr. v Mahesh S. Mehta & Anr (2009) SCC OnLine Bom 1986 at para. 12, 961 Gisburne v Hart (1839) 5 M&W 50 ........................................................................................ 1056

cix

Table of Cases

GL Textiles v Union of India (2004) SCC OnLine Del 824 .................................................. 1292 Gladwin v Chilcote (1841) 9 Dowl 550 .....................................................................................721 Glafki Shipping Co SA v Pinios Shipping Co No 1, The Maria [1982] 1 Lloyd’s Rep 257 .....................................................................................................943 Glaister v Amalgamated Dairies Ltd. [2004] 2 NZLR 606, CA ........................................... 1216

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Glamis Gold, Ltd. v United States, Award, 8 June 2009 ........................................................ 1446 Glamorganshire Canal Navigation Co v Nixon’s Navigation Co Ltd (1901) 85 LT 53 .........663 Glass Molders, Pottery, Plastics & Allied Workers Int’l Union, AFL-​CIO, CLC, Local 182B v Excelsior Foundry Co. 56 F.3d 844, 845 (7th Circuit, 1995) ............... 1074

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Glen P Farrell v Subway International BV, 2011 wl 1085017 (SDNY 23 March 2011), No. 11 Civ. 08 (JFK) (SDNY 23 March 2011) .......................475

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Glencore Grain Ltd v Agros Trading Co Ltd [1999] 2 All ER (Comm) 288 ..........................348

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Glencore Grain Rotterdam B.V. v Shivnath Rai Harnarain (India) Co (2008) SCC OnLine Del 1271, at para. 34 ..................................................................... 1337

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Glencore Grain Rotterdam B.V. v Shivnath Rai Harnarain (India) Co. 2008 (4) Arb LR 497 (Del) ..................................................................................................869

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Glencore International A.G. v Beogradska Plovidba (The “AVALA”) [1996] 2 Lloyd’s Rep. 311 ....................................................................................... 1276, 1312

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Glencore International AG v Dalmia Cement (Bharat) Limited (2017) SCC OnLine Del 8932, at paras 25–​26 ............................................................. 1344

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Glencore International AG v Dalmia Cement (Bharat) Limited 2017 (4) ARB LR 228, at para. 38 ......................................................................................866

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Glencore International AG v Indian Potash Limited and Another 2019 SCC OnLine Del 9591, at para. 61, 930 ................................................................ 1350

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Global Aviation Services Private Limited v Airport Authority of India (2018) SCC Online Bom 233 .......................................................................................... 1308

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Global Mercantile (2021) 4 SCC 379 .........................................................................................395 Global Trading Resource Corp and Globex International, Inc v Ukraine ICSID Case No. ARB/​09/​11 ............................................................................................ 1407 Globe Transport Corpn. v Triveni Engg. Works (1983) 4 SCC 707 ........................................490 Glover v Barry 2 Lut App 1597 ................................................................................................ 1061 GMR Energy Limited v Doosan Power Systems India Private Limited & Ors. 2017 SCC OnLine Del 11625 ............................................................................157, 292, 294 GMR Energy Limited v Doosan Power Systems India Private Limited ......................... 113, 294

cx

Law, Practice and Procedure of Arbitration in India

Gobind Singh Pratap Singh v Pohumal Khushiram 1944 SCC OnLine Sind CC 13 ............677 Gobind Singh Pratap Singh v Pohumal Khushiram AIR 1945 Sind 71 ..................................689 Godan Namboothiripoad v Kerala Financial Corporation AIR 1988 Ker 31 ........................298 Goddard v Smith [1872] 12 WLUK 50 ................................................................................... 1314

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Godrej Properties & Investments Ltd. v Tripura Construction, Mumbai & Ors. (2003) SCC OnLine Bom 13 ..............................................................................................711 Gola Sports Ltd v General Sportcraft Co Ltd [1982] Com LR 51 ...........................................593 Gold Reserve Inc. v Venezuela Decision Regarding the Claimant’s and the Respondent’s Requests for Corrections in ICSID Case No. ARB(AF)/​09/​1 (15 December 2014), at para. 38 ........................................................................................... 1082

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Golden Ocean Group Ltd. v Humpuss Intermoda Transportasi Tbk Ltd. [2013] EWHC 1240 (Comm) ................................................................................. 427, 1112 Goldsack v Shore [1950] 1 KB 708 .............................................................................................144

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Gollin & Co Ltd v Karenlee Nominees Pty Ltd. (1983) 153 CLR 455 ....................................564

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Golodetz v Schrier (1947) 80 Ll L Rep 647 ................................................................................721

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Gomba Holdings (UK) Ltd v Minories Finance Ltd (No 2), [1993] Ch 171, [1992] 4 All ER 588, [1992] 3 WLR 723Golodetz v Schrier ......................................... 1258

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Good Challenger Navegante SA v Metal Export Import SA, The Good Challenger [2003] EWCA Civ 1668 ................................................................................................... 1108

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Goodman v Sayers 1820 2 Jac & W 249 ................................................................................. 1306 Goold v Evans & Co [1951] 2 TLR 1189, CA ...........................................................................723

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Gopinath Daulat Dalvi v State of Maharashtra and Ors. 2005 (2) Arb LR 224 ....................173

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Gordian Runoff Ltd. (formerly Gio Insurance Ltd.) v The Underwriting Members of Lloyd’s Syndicates, Supreme Court of New South Wales (Equity Division), Australia, 19 December 2002 (revised 5 February 2003), [2002] NSWSC 1260, available at http://​www.aust​lii.edu.au/​au/​cases/​nsw/​NSWSC/​ 2002/​1260.html ....................................................................................................................580 Gordon Durham & Co. Ltd. v Haden Young Ltd. 27 Con. LR 109 ...................................... 1102 Gordon v Whitehouse (1856)18 CB 747 ................................................................................. 1064 Gouriet v Union of Post Office Workers, [1978] AC 435, at para. 501 ................................ 1124 Government of Ceylon v Chandris [1963] 1 Lloyd’s Rep 214 .................................... 1292, 1304 Government of Ceylon v Chandris [1963] 2 All ER 1, at p. 3 ............................................... 1250 Government of Ceylon v Chandris [1963] 2 QB 327, [1963] 2 All ER 1, [1963] 1 Lloyd’s Rep 214 ........................................................................................ 1250, 1253

cxi

Table of Cases

Government of Ceylon v Chandris [1963] 2 QB 327, [1963] 2 All ER 1, [1963] 1 Lloyd’s Rep 214 .......................................................679, 683, 687, 702, 1188–​1189 Government of Gibraltar v Kenney [1956] 2 QB 410 ...............................................................337 Government of India v Acome & Ors. (2008) SCC OnLine Del 808, at para. 9 ....................1028, 1030 Government of India v Vedanta Limited and Anr. 2020 SCC OnLine SC 749 .....................249

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Government of India v Vedanta Ltd. (2020) 10 SCC 1 .....................................1315, 1331, 1350 Government of India, BSNL v Acome & Ors (2007) SCC OnLine Del 226, at para. 32 ... 1030 Government of M.P. v P.V. Vidyasagar (2004) 1 Arb LR 485 ..................................................144 Government of Malaysia v Nurhima Kiram Fornan & Ors. Originating Summons No. BKI-​24NCvC-​190/​12-​2019 (HC2) .............................................................................479

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Government of the Lao People’s Democratic Republic v Thai-​Lao Lignite Co Ltd (“TLL”), a Thai Co 20133 MLJ 409 ................................................................................. 1295

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Government of the Republic of the Philippines v Philippine International Air Terminals Co, Inc [2006] SGHC 206 ........................................................................ 1291

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Govett v Richmond [1834] 7 Sim 1 ......................................................................................... 1113

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Govid Prasad Sharma & Others v. Doon Valley Officers Cooperative Housing Society Limited (2018) 11 SCC501, at para. 4 ............................................................... 1227

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Govind Rubber Limited v Louis Dreyfus Commodities Asia (P) Ltd (2015) 13 SCC 477 ...............................................................................................................199

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Govt. of Ceylon v Chandris (1963) 2 QB 327 ...........................................................................678

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Govt. of NCT of Delhi v Ved Prakash Mehta (2005) SCC OnLine Del 948, at para. 6 ......................................................................... 1048

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Govt. of Orissa v G.C. Roy (1992) 1 SCC 508 ..............................................................1145–​1146

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GPF GP Sàrl v Pologne [2018] EWHC 1655 ............................................................................273 Grand Junction Canal v Dimes (1852) 3 HL Cas 759 ..............................................................639

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Grand Trunk Rly Co of Canada v R [1923] AC 150 ............................................................. 1292 Grandeur Electrical Co Ltd v Cheung Kee Fung Cheung Construction Co Ltd [2006] HKCA 305 ................................................................................................................190 Granville Shipping Co. v Pegasus Lines Ltd (TD) [TD] [1996] 2 FC 853 (Federal Court of Canada) .................................................................................................................433 Grasim Industries Ltd. v State of Kerala (2018) 14 SCC 265 ......................................... 507, 531 Gray v Wilson (1865) LR1 CP 50 ...............................................................................................856 Grazebrook v Davis (1826) 5 B & C 534 ...................................................................................779

cxii

Law, Practice and Procedure of Arbitration in India

Great Offshore Ltd v Iranian Offshore Engineering & Construction Company (2008) 14 SCC 240 ...............................................................................................................204 Great Ormond Street Hospital NHS Trust v Secretary of State for Health 56 ConLR 1. Cf. Re Morphett (1845) 2 Dow & L 967 .......................................................................................362 Great Ormond Street Hospital NHS Trust v The Secretary of State for Health and Wales Construction Ltd (1997) 56 ConLR 1 ............................................................ 523, 525

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Great Western Railway Company v Phillips & Co Limited [1908] AC 101, HL ...................144 GreCon Dimter Inc v J R Normand Inc [2005] SCC 46 (CanLII) (Can) ...............................401 GreCon Dinter Inc. v J.R. Normand Inc. [2005] SCC 46 (Canadian Supreme Court) ........448 Greenhalgh v Mallard [1947] 2 All ER 255 ............................................................................ 1105

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Grid Corporation of Orissa Ltd. v Balasore Technical School (2000) 9SCC 552 ............... 1059, 1294–​1295

Griggs v Petts [1939] 4 All ER 39 ............................................................................................ 1242

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Groupe Antoine Tabet v Republique du Congo (12 October 2011) Cass Civ 1 .....................995

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Groupe Chimique Tunisien SA v Southern Petrochemicals Industries Corpn. Ltd. AIR 2006 SC 2422 ..................................................................................................................60

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Guaracachi America, Inc and Rurelec PLC v The Plurinational State of Bolivia UNCITRAL, PCA Case No 2011-​17 .................................................................................560

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Guardcliffe Properties Ltd v City & St James Property Holdings [2003] 2 WLUK 128 ......................................................................................................... 1292

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Gueret v Auduoy (1893) 62 LJQB 633 .................................................................................... 1105

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Gujarat Bottling Co. Ltd. v Coca Cola Co. (1995) 5 SCC 545, AIR 1995 SC 2372 ...............454

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Gujarat State Co-​operative Land Development Ltd v P.R. Manded 1979 SCC (3) 123 .................................................................................................................354

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Gujarat State Fertilizers Co Ltd v TATA Motors Ltd (2015) (2) Arb LR 290 ..................... 1220

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Gujarat Urja Vikas Nigam Ltd. v Essar Power Ltd. (2008) 4 SCC 755, at para. 28 ..............957 Gujarat Water Supply and Sewerage Board v Unique Erectors (Gujarat) (P) Ltd. (1989) 1 SCC 532 ..................................................................................................... 1043,1051 Gujrat Industrial Development Corp. v SR Parmar and Co. 1995 (1) Arb LR 394, at para. 12 .................................................................................................... 1146 Gulf Air v Gulf Air Employees Association 2014 SCC OnLine Bom 1197 ..................... 49, 355 Gulf Canada Resources Ltd/​Ressources Gulf Canada Ltée v Arochem International Ltd. (1992) 66 BCLR (2d) 113 ....................................................................453

cxiii

Table of Cases

Gurcharan Singh Sahney v Harpreet Singh Chabbra (2016) SCC OnLine Hyd 90 ..............................................................................658, 939, 963 Guru Deshmukh Rice Mills v Punjab State Civil Supplies Corp. Ltd. (2005) 139 PLR 137 .767 Gurucharan Singh Sahney v Harpreet Singh Chabbra and Ors. (2016) 4 ALD 141 ................................................................................................................859 Gurunanak Foundation v Rattan Singh & Sons AIR 1981 SC 2075 ........................................21

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Gus Consulting GmbH v Leboeuf Lamb Greene & Macrae [2006] All ER 339 .....................988 Gyde v Boucher (1836) 5 Dowl 127 ........................................................................................ 1208

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H & H Marine Engine Service Ltd v Volvo Penta of the Americas Inc [2009] BCSC 1389 (CanLII) ...............................................................................................438

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H E Daniels Ltd v Carmel Exporters and Importers Ltd [1953] 2 QB 242 ............... 1103, 1105

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H Ford & Co Ltd v Compagnie Furness (France) [1922] 2 KB 797 ........................................497 H. Small Ltd v Goldroyce Garment Ltd. [1994] HKCFI 203 ...................................................203

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H. Srinivas Pai v H.V. Pai (2010) 12 SCC 521 ..........................................................................398

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H.M Tejani v Mrs. Kulsumbai M. Jetha (1965) SCC OnLine Bom 141 ................................991

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H.P Housing and Urban Development Authority v Kapil Constructions 2009 SCC OnLine HP 2928 ............................................................................................. 1085 H.P. SEB v R.J. Shah and Co. (1999) 4 SCC 214, at para. 26 ................................................ 1058

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H.R. Basavaraj v Canara Bank (2010) 12 SCC 458 .................................................................298

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Habas Sinai Ve Tibbi Gazlar Isthisal Endustri AS v Sometal (2010) EWHC 29 (Comm) ........................................................................................213–​214

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Habas Sinai Ve Tibbi Gazlar Isthisal Endustri AS v Sometal SAL [2010] 1 All ER (Comm) 1143 .................................................................................. 201, 438 Haigh v Haigh (1861) 31 LJ Ch 420 ..............................................................................1304–​1305

E-

Hainan Machinery Import & Export Corporation v Donald & McArthy Pte Ltd [1995] 3 SLR(R) 354 ............................................................................................................815 Hakam Singh v Gammon (India) Ltd. (1971) 1 SCC 286 .......................................................490 Haldiram (India) Pvt. Ltd. v Haldiram Bhujiawala (2009) ILR 5 Delhi 503, at para. 21 ...................................................................................864 Halifax Financial Services Ltd v Intuitive Systems Ltd [1999] 1 All ER (Comm) 303 ................................................................................................ 506, 511

cxiv

Law, Practice and Procedure of Arbitration in India

Halifax Overseas Freighters v Rasno Export Technopromonport and Polskie Linie Oceaniczne PPW, The Pine Hill [1958] 2 Lloyd’s Rep 146 .....................................320 Halki Shipping Corp v Sopex Oils Ltd. (1998) 1 Lloyd Rep 49 ...............................................347 Halki Shipping Corpn. v Sopex Oils Ltd. (1998) 1 WLR 726, Ellerine Bros. (Pty.) Ltd. v Klinger (1982) 1 WLR 1375 ..........................................................................351 Halki Shipping Corporation v Sopex Oils Ltd [1998] 1 WLR 726 ................................. 347, 359

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Hall and Tawse Construction Ltd v StrathclydeRegional Council 1990 SLT 774 ............... 1152

Halliburton Co. v Chubb Bermuda Insurance Ltd. [2020] UKSC 48 ....................901, 907, 910 Halliburton Company v Chubb Bermuda Insurance Ltd. [2020] UKSC 48 ..........................634 Halliburton v Chubb [2020] UKSC 48 ......................................................................................644

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Hamilton v Bankin (1850) 3 De G & Sm 782 ..................................................... 719, 1304–​1305

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Hamlyn & Co v Talisker Distillery [1894] 5 WLUK 31 .............................................................42

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Hamlyn & Co v Talisker Distillery [1894] AC 202 ...................................................................991 Hammond & Co v Bussey (1887) 20 QBD 79, CA (Eng) ..................................................... 1217

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Hammond and Waterton, Re (1890) 62 LT 808 .........................................................................51

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Hanak v Green [1958] 2 QB 9, [1958] 2 All ER 141, CA (Eng) .......................................... 1208 Hanak v Green [1958] 2 QB 9, at p. 27, per Sellers LJ .......................................................... 1216

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Hanil Era Textiles Ltd. v Puromatic Filters (P) Ltd. (2004) 4 SCC 671 ..................................490

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Hanno (Heinrich) & Co BV v Fairlight Shipping Co Ltd, The Kostas K [1985] 1 Lloyd’s Rep 231 .....................................................................................................318

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Hans Construction Co. v Delhi Development Authority (1994) SCC OnLine Del 483, at para. 9 ......................................................................... 1146

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Harbour and General Works Ltd. v Environment Agency 2000 1 WLR 950 .........................959

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Harbour and General Works v Environment Agency [2000] 1 Lloyd’s Rep 65 .....................529

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Harbour Assurance Co (UK) Ltd v Kansa General International Insurance Co Ltd. [1993] QB 701 ............................................................................................................. 233, 371 Harbour Assurance Co (UK) Ltd v Kansa General International Insurance Co Ltd. [1993] 1 Lloyd’s Rep 455 .....................................................................................................329 Harbour Assurance Co. v Kansa General International Insurance Co. [1993] 3 All ER 897 .............................................................................................................244 Harbour Assurance Ltd. v Kansa Ltd. (C.A.) QB 701 ..............................................................263 Harcourt v Ramsbottom (1820)1 Jac & W 505, at para. 512, (1820) 37 ER 460 ..................721

cxv

Table of Cases

Hardwick Game Farm v Suffolk Agricultural and Poultry Producers’ Association Ltd. [1964] 2 Lloyd’s Rep 227 .....................................................................................................495 Hardwick Game Farm v Suffolk Agricultural and Poultry Producers’ Association Ltd [1964] 2 Lloyd’s Rep 227 ............................................................................................ 495, 530 Hare v Fleay (1851) 11 CB 472 ............................................................................................... 1063 Harendra H. Mehta v Mukesh H. Mehta (1999) 5 SCC 108 ...................................... 1032, 1331

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Haresh Dayaram Thakur v State of Maharashtra (2000) 6 SCC 179 .......................................34

Harike Rice Mills v. State of Punjab 1997 (Supp) Arb LR 342 ................................................375 Harinarayan G. Bajaj v Sharedeal Financial Consultants Pvt. Ltd. & Anr. AIR 2003 Bom 206 ..............................................................................................................862

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Harinarayan G. Bajaj v Sharedeal Financial Consultants Pvt. Ltd. (2002) SCC OnLine Bom 1186 ........................................................................................... 998, 1001 Harita Finance Ltd. v ATV Projects India Ltd. 2003 (2) Arb LR 376 (Mad) .......................372

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Harji Engineering Works Pvt Ltd v Bharat Heavy Electricals Limited & Anr. 2008 SCC OnLine Del 1080 ...................................................................................... 655, 904

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Harjinder Pal v Harmesh Kumar Fc (2009) SCC Online Del 157 ...................................... 1289

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Harlow v Read (1845) 1 C.B. 733 ............................................................................................ 1039 Harmony Innovation Shipping Ltd. v Gupta Coal India Ltd. (2015) 9 SCC 172 ......... 491, 561

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Harris Adacom Corporation v Perkom Sdn Bhd [1994] 3 MLJ 504 .......................................721

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Harris International Telecommunications Inc v The Islamic Republic of Iran, Partial Award No. 323-​409-​1, in Albert Jan van den Berg (ed.), Yearbook Commercial Arbitration, Vol. XIV (1989) ..............................................................................................867

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Harris v Petherick (1879) 4 QBD 611, CA (Eng) ..............................................1208, 1213, 1241

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Harrison v Creswick (1853) 13 CB 399 ........................................................................ 1056, 1062 Harrison v Thompson [1989] 1 WLR 1325 ........................................................1190, 1203, 1237

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Harrison v UBS Holding Canada Ltd. (2014) 418 NBR (2d) 328 ..........................................453 Harsha Constructions v Union of India (2014) 9 SCC 246 ........................................ 1059, 1295 Harshad Chiman Lal Modi v DLF Universal Ltd. (2005) 7 SCC 791 .....................................490 Hart v Hart (1881) 18 Ch. D, 670, [1881] 6 WLUK 59 ............................................................58 Haryana Space Application Centre (HARSAC) & Anr. v Pan India Consultants Pvt. Ltd. 2021 SCC OnLine SC 33 ............................................................................630–​631 Haryana Telecom v Sterlite Industries (India) Ltd. (1999) 5 SCC 688 .......................... 59, 1117

cxvi

Law, Practice and Procedure of Arbitration in India

Haryana Vidyut Parsaran Nigam Ltd. v M/​S Arya Nirman 2009 SCC OnLine P&H 6051 ............................................................................................680 Hassneh Ins. Co. of Israel v Mew 1993 2 Lloyd’s Rep 243 ........................................................123 Hassneh Insurance Co of Israel v Mew [1993] 2 Lloyd’s Rep 243, at p. 247 .........113–​114, 881 Hassneh Insurance Co of Israel v StuartJ Mew [1993] 2 Lloyd’s Rep 234 ..............................919

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Havant Borough Council v South Coast Shipping Co. Ltd [1996] CILL 1146 .......................495 Hawkins v Benton [1846] 8 QB 479 ........................................................................................ 1113 Hawkins v Rigby (1860) 8 CB (NS) 271, (1860) 141 ER 1169 ................................................671 Hawkins v Rigby 29 LJCP 228 ................................................................................................. 1184

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Hawksworth v Brammall (1840) 5 My & Cr 281 .................................................................. 1055 Hay Group, Inc. v EBS Acquisition Corporation 360 F.3d 404(3rd Cir. 2004) ......................964

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Hayllar v Ellis (1829) 6 Bing 225 ............................................................................................ 1056

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Hayter v Nelson and Home Insurance Co [1990] 2 Lloyd’s Rep 265, 9, 355 .........................358

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HBC Hamburg Bulk Carriers GmbH & Co. KG v Tangshan Haixing Shipping Co. Ltd. [2006] EWHC 3250 .......................................................................................................... 1055

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HE Daniel Ltd v Carmel Exporters and Importers Ltd [1953] 2 Lloyd’s Rep 103 ................337 HE Daniels Ltd. v Carmel Exporters & Importers Ltd. [1953] 2 QB 242 ........................... 1106

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Heaven & Kesterton v Etablissements Francois Albiac et Cie [1956] 2 Lloyd’s Rep 316 .................................................................................................. 1206

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Heaven and Kesterton Ltd v Sven Widaeus A/​B [1958] 1 All ER 420, [1958] 1 WLR 248 ........................................................................................1202, 1213, 1216

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Heaven and Kesterton v Etablissements FrancoisAlbiac et Cie [1956] 2 Lloyd’s Rep 316 ........................................................................................ 1207, 1216

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Hebei Import & Export Corp v Polytek Engineering Co Ltd [1999] 1 HKLRD 665 .............728 Hedley Byrne & Co Ltd v Heller &Partners Ltd [1964] AC 465 .............................................926

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Hela Pharma AB v Hela Pharma Australasia Ltd [2005] NZCA 11, CA .............................295 Heligo Charters Private Limited v Aircon Feibars FZE (2018) SCC OnLine Bom 1388 ..........................................................................................967 Helow v Secretary of State for the Home Department, [2008] UKHL 62 ...............................909 Hema Khattar v Shiv Khera (2017) 7 SCC 716 ..........................................................................66 Hemant Jalan v Om Prakash Jalan(2008) SCC OnLine AP 549 ......................................... 1020 Henry Bath & Son Ltd v Birgby Products [1962] 1 Lloyd’s Rep 389 ............................. 715, 803

cxvii

Table of Cases

Henry Boot Construction Ltd v DF Mooney [1996] ADRLN 13 ............................... 1059, 1295 Henry Sotheran Ltd v Norwich Union Life Assurance Society [1992] ADRLJ 245 ...............................................................................................................731 Hermansson v AB Asfalbelaeggnigar 1976 NJA 125 ................................................................243 Hern v Dryden (1710) 11 Mod Rep 272 ................................................................................ 1112

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Herschel Engineering Ltd v Breen Property Ltd (2000) 70 ConLR 1 ......................................429 Hewitt v Hewitt [1841] 1 QB 110 ........................................................................................... 1062 Heyman v Darwins (1942) All ER 337 (HL) ................................................................... 233, 326

Heyman v Darwins Ltd [1942] AC 356, [1942] 1 All ER 337, HL ........................................... 233, 242, 321–​322, 333, 371, 429, 478

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Heyman v Darwins Ltd. [1942] AC 346 ....................................................................................233

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Heyworth v Hutchinson, (1867) LR 2 QB 447 ....................................................................... 1116

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Hick v Richardson (1797) 1 Bosanquet and Puller 93 .............................................................688 Hickman & Co v Roberts [1913] AC 229 ............................................................................... 1292

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Hickman v Kent or Romney Marsh Sheep-​Breeders’ Association [1915] 1 Ch 881 ..........................................................................................................200–​201 Hi-​Gene Ltd v Swisher Hygiene Franchise Corp [2010] NZCA 359, [2010] NZSC 132, CA .........................................................................................................722

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Hi-​Gene Ltd v Swisher Hygiene Franchise Corp [2010] NZSC 132 .......................................728

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Hi-​Gene Ltd v Swisher HygieneFranchise Corp [2010] NZCA 359 .................................... 1293 Higgins v Senior (1841) 8 M&W 834 .........................................................................................301

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Higgins v Willes 1828 3 M&R 382 ........................................................................................... 1063

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Higham v Havant and Waterloo UDC [1951] 2 KB 527, [1951] 2 All ER 178, CA (Eng) ....................................................................................... 1189 Higham v Havant and Waterloo UDC [1951] 2 TLR 87, at p. 90 ........................................ 1254

E-

Hill Court Shipping Co SA v Compagnie Continentale (France) SA, The Yperagia [1977] 1 Lloyd’s Rep 29 .................................................................................................... 1314 Hilmarton Ltd. v Omnium de Traitement et da Valorisation (OTV) 1994 RevArb 327 .............................................................................................................. 1348 Himachal Pradesh State Electricity Board v RJ Shah and Co. (1999) 4 SCC 214 ............. 1053, 1058, 1295 Himachal Sorang Power Private Limited v NCC Infrastructure Holdings Limited 2019 SCC OnLine Del 7575 ...............................................................................................477

cxviii

Law, Practice and Procedure of Arbitration in India

Himangni Enterprises v Kamaljeet Singh Ahluwalia (2017) 10 SCC 706 ............... 59, 332, 436 Himpurna Cal. Energy Ltd. v Indonesia, Interim Award in Ad Hoc Case of 26 September 1999, XXV Y.B. Comm. Arb. 112, para. 87 ..................................... 868, 919 Himpurna California Energy Ltd. v PT. (Persero) Perusahaan Listruik Negara UNCITRAL Ad Hoc-​Award of 4 May 1999, YCA XXV (2000) ......................................68

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Himpurna California Energy Ltd. v PT. (Persero) Perusahaan Listruik Negara Interim Award (26 September 1999), Final Award (16 October 1999) (2000) Yearbook Comm Arb’n XXV .................................................................................471 Hindustan Construction Co. Ltd. v NHPC Ltd. (2020) 4 SCC 310 ..................................... 1284 Hindustan Construction Co. Ltd. v State of J&K (1992) 4 SCC 217, at para. 7 ....... 1134, 1142

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Hindustan Construction Co.Ltd. v Union of India (2019) SCC OnLine SC 1520 ............. 1302

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Hindustan Construction Company Limited and Another v Union of India and Others 2019 SCC OnLine SC 1520 ........................................................................................... 32, 34

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Hindustan Construction Company Limited v. IRCON International Ltd. 2016 SCC OnLine Del 6073 ...............................................................................................377

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Hindustan Construction Company Ltd. & Anr. v Union of India & Ors. 2019 SCC OnLine 1520 ................................................................................................. 78–​79 Hindustan Construction Company Ltd. v NHPC Ltd. (2020) SCC OnLine SC 305 ............191

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Hindustan Construction Company Ltd. v Union of India (1967) 1 SCR 843 ..................... 1036 Hindustan Copper Ltd. v Nicco Corporation Ltd. (2009) 6 SCC 69 .................................... 1283

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Hindustan Petroleum Corpn. Ltd. v Pinkcity Midway Petroleums (2003) 6 SCC 503 ................................................................................................250, 400, 447

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Hindustan Petroleum Corporation Ltd. v Pinkcity Midway Petroleum (2003) 6 SCC 503, at para. 14 .............................................................................................953

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Hindustan Petroleum Corporation Ltd. v Pinkcity Midway Petroleum ............................ 9, 421

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Hindustan Petroleum Corporation Ltd. v Pinkcity Midway Petroleums (2003) 6 SCC 503 .................................................................................................................488 Hindustan Petroleum Corporation Ltd. v Sriman Narayan (2002) 5 SCC 760 .....................987 Hindustan Petroleum Corporation v Ashok Kumar Garg 2006 SCC OnLine Del 1056 ......984 Hindustan Shipyard Limited v Essar Oil Limited and Ors. 2005 (1) ALT 264 ......................865 Hindustan Steel Limited v M/​s D.C. Company (1969) 1 SCC 597 ...................................... 1328 Hindustan Steel Works Construction Limited v Bharat Spun Pipe Co. AIR 1975 Cal 8 .......295

cxix

Table of Cases

Hindustan Unilever Limited v Reckitt Benckiser India Limited (2014) SCC OnLine Del 490 ........................................................................................... 1128 Hindustan Wires Ltd. v R. Suresh (2013) SCC OnLine Bom 547 ....................................... 1305 Hindustan Zinc Ltd. v Ajmer Vidyut Vitran Nigam Ltd. (2019) 17 SCC 82 ...................... 1303 Hiscox v Outhwaite [1992] 1 AC 562 ..................................................................................... 1037

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Hitachi Shipbuilding and Engineering Co Ltd v Viafel Compania Naviera SA [1981] 2 Lloyd’s Rep 498, CA (Eng) ..................................................................................457 HKL Group Co Ltd v Rizq International Holdings Pte Ltd [2013] SGHCR 8 .......................167 HL Federal Bulk Carriers Inc v C Itoh & Co Ltd, The Federal Bulker [1989] 1 Lloyd’s Rep 103, CA (Eng) ..................................................................................438

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Hobbs Padgett & Co (Reinsurance) Ltd v J C Kirkland Ltd [1969] 2 Lloyd’s Rep 547 .........167

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Hobdell v Miller (1840) 6 Bing NC 292 .................................................................................. 1118 Hodgkinson v Fernie (1857) 3 CBNS 189 ..................................................................................712

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Hoegh (Leif) & Co A/​S v Petrolsea Inc, The World Era [1992] 1 Lloyd’s Rep 45 ..................509

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Hoggins v Gordon (1842) 3 QB 466 .................................................................................. 684, 691

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Holbeach Plant Hire Ltd v Anglian Water Authority (1988) 14 Con LR 101 ........... 1152, 1170 Holdsworth v Wilson (1863) 4 B & S 1 ......................................................................................916

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Home and Overseas Insurance Co Ltd v Mentor Insurance Co (UK) Ltd (in liq) [1989] 3 All ER 74, [1989] 1 Lloyd’s Rep 473, CA (Eng) ................................................713

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Home and Overseas Insurance Co. Ltd. v Mentor Insurance Co. (U.K.) Ltd. (in liquidation) [1989] 3 All ER 74, [1990] 1 WLR 153 ...................................................63

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Home Insurance Co and St Paul Fire and Marine Insurance Co v Administratia Asigurarilor de Stat [1983] 2 Lloyd’s Rep 674 ..........................................713

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Home of Homes Ltd. v Hammersmith and Fulham London Borough Council, 10 April 2003 ...................................................................................................... 1084

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Honeywell International Middle East Limited v Meydan Group LLC (Formerly Known as Meydan LLC) [2014] EWHC 1344 (TCC) ....................................................926 Hong Huat Development Co (Pte) Ltd v Hiap Hong & Co Pte Ltd [2000] 1 SLR(R) 510 ............................................................................................................655 Hong v A and R Brown Ltd [1948] 1 KB 515, at p. 522, [1948] 1 All ER 185, at p. 187, CA (Eng) ............................................................................................................... 1215 Hookway (F E) & Co Ltd v Alfred Isaacs & Sons [1954] 1 Lloyd’s Rep 491 ..........................621

cxx

Law, Practice and Procedure of Arbitration in India

Hooper Bailie Associated Ltd v President Master Builders Association of the ACT (1989) 8 ACLR 83 ................................................................................................................404 Hooper v Hooper (1860) 3 El. & El. 149, [1860] 4 WLUK 56 ...................................................58 Hooper v Pierce (1679) 12 Mod Rep 116 ..................................................................................361 Hoosac Tunnel Dock & Elevator Co. v O’Brien 137 Mass. 424 (Mass. 1884) ........................924

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Hopcraft v Hickman (1824) 2Sim & St 130 .................................................................... 856, 1063 Hope Plantations Ltd. v Taluk Land Board, Peermade (1999) 5 SCC 590 ...............................................................................1104, 1106–​1108, 1100 Hopper, Re [1867] 1 WLUK 38 ............................................................................................ 50–​51

Horizon Construction (Taupo) Ltd v Reitveld (unreported) (M 64/​2002) ............................651

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Hough v Regions Financial Corporation 672 F.3d 1224 (11th Cir 2012), CA .................... 1195

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Howett v Clements [1845] 1 CB 128 ....................................................................................... 1313

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HP State Electricity Board v RJ Shah (1994) 4 SCC 214 ...................................................... 1144 HRC-​Hainan Holding Co, LLC v Hu 2020 WL 906719 (N.D. Cal.) ......................................983

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HRD Corporation (Marcus Oil & Chemical Division) v GAIL (India) Ltd. (2018) 12 SCC 471 ................................................................................. 900, 964, 1303, 1366 HRD Corporation (Marcus Oil and Chemical Division) v Gail (India) Limited (Formerly Gas Authority of India Ltd.) (2018) 12 SCC 471 ...........................573, 612, 641

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HRD Corporation (Marcus Oil and Chemical Division) v Gail (India) Limited (2018) 5 SCC (Civ) 401 .......................................................................................................653

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HRD Corporation (Marcus Oil and Chemical Divisions) v GAIL (India) Limited 2018 (12) SCC 471 ...............................................................................................................613

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HRD Corporation v Gail (India) Limited (2018) 12 SCC 471 ................................................622

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Hrvatska Elektroprivreda dd v Slovenia, ICSID Case ARB/​05/​24, Tribunal’s Ruling Regarding the Participation of David Mildon QC in Further Stages of the Proceedings of 6 May 2008, available at http://​.ita​law.com/​docume​nts/​ Hrv​atsk​aOrd​erre​Coun​sel.pdf ............................................................................................644 Hrvatska Elektroprivreda v Republic of Slovenia, ICSID Case No. ARB/​05/​25, Tribunal’s Ruling regarding the participation of David Milton QC in further stages of the proceedings, 6 May 2008, at para. 26 ................................................................................878 Hrvatska Elektroprivreda v Slovenia, Tribunal’s Ruling in ICSID Case No. ARB/​05/​24 of 6 May 2008, at para. 23 .............................................................888 Hrvatska v Elektroprivreda, d.d. v Republic of Slovenia ICSID Case No. ARB/​05/​24, Order Concerning theParticipation of a Counsel (6 May 2008) ...................................946

cxxi

Table of Cases

HSBC PI Holdings (Mauritius) Ltd. v Avitel Post Studioz Ltd & Ors, Arbitration Petition No. 1062/​2012 dated22 January 2014 ............................................................. 1224 HSH Nordbank v. Goodwill Hospital and Research Centre Ltd. (2018) 210 Comp Cas 140 ......................................................................................................................382 HSMV Corp v ADI Ltd 72 F. Supp. 2d 1122 (C.D. Cal. 1999) ................................................626 HUDA v Raj Singh Rana (2009) 17 SCC 199, at para. 22 .................................................... 1161

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Hughes, Hooker & Co. v Am. S.S. Owners Mut. Protection & Indem. Ass’n, Inc. 2005 WL 138455 (S.D.N.Y) ................................................................................................448 Hugo Neu Corporation v Lloyds Steel Industry Ltd. (2009) SCC OnLine Bom 785, at para. 17 ......................................................................................................... 1336

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Hugo Neu Corporation v Lloyds Steel Industry Ltd. 2009 (4) Arb LR 298 (Bom) ................869

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Hulley Enterprises Limited (Cyprus) v The Russian Federation PCA Case No AA 226 .......916

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Hulley Enterprises Ltd (Cyprus) v The Russian Federation PCA Case No. 2005-​03/​AA226 ................................................................................................ 1446

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Hunter v Rice (1812) 15 East 100 (104 ER 782); Thorpe v Eyre (1834) 1 Ad & El 926 ........................................................................................................ 1097

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Huron Liberian Co v Rheinoel GmbH [1985] 2 Lloyd’s Rep 58 ............1229, 1235, 1242–​1243

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Hussein Nuaman Soufraki v United Arab Emirates ICSID CaseNo. ARB/​02/​7, Award, 7 July 2004, at para. 55 ................................................................................................................ 1403

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Hussman (Europe) Ltd v Al Ameen Development & Trade Co [2000] 2 Lloyd’s Rep 83 ......................................................................... 524, 854, 1041, 1304

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Hussman (Europe) Ltd. v Ahmed Pharaon [2003] EWCA Civ 266 .................................... 1093

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Huyton SA v Peter Cremer GmbH & Co [1999] 1 Lloyd’s Rep 620 .......................................478

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Hyder Consulting (UK) Ltd. v Governor, State of Orissa (2015) 2 SCC 189 ........... 1150, 1157, 1168–​1169

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Hygiene Franchise Corp v Hi-​Gene Ltd (2009) 20 PRNZ 292 ............................................. 1293

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Ian Keith Brown v CBS (Contractors) Ltd [1987] 1 Lloyd’s Rep 279 .................................. 1233 ICEA Lion Life Assurance Co. Ltd. v Jomo Kenyatta Univ. of Agric & Tech. Civil Suit No. 121/​2017 (High Court of Nairobi) ............................................................449 Icomm Tele Ltd v Punjab State Water Supply and Sewerage Board and Anor (2019) 4 SCC 401 .................................................................................................................186 ICS Inspection and Control Services Limited v Argentine Republic (UNCITRAL), Decision on Challenge to Mr. Stanimir A. Alexandrov, 17 December 2009 ...............643

cxxii

Law, Practice and Procedure of Arbitration in India

ICT Pty Ltd v Sea Containers Ltd [2002] NSWSC 77 .............................................................674 IFFCO Ltd. v Bhadra Products (2018) 2 SCC 534 ...........................256, 266, 1005, 1007–​1008 IMC Limited v Deendayal Port Trust 2018 SCC OnLine Guj 4580 .......................................294 Imperial Ethiopian Government v Baruch-​Foster Corp. 535 F.2d 334 (5th Cir. 1976) ..... 1340 Imperial Gas Light & Coke Co v Broadbent [1859] 7 HL Cas. 600 ........................... 1107, 1319

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Imperial Metal Industries (Kynoch) Ltd v Amalgamated Union of Engineering Workers [1979] 1 All ER 847 ..................................................................................... 143, 946 Imperial Tobacco Ltd v Attorney General [1981] AC 718 .................................................... 1123

Impex Corporation & Ors. v Elenjikal Aquamarine Exports Ltd. 2007 SCC OnLine Ker 125, (2008) 2 Arb LR 560 (DB) ...............................................645, 1015, 1291

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In Re an Arbitration between Autothreptic Steam Boiler Co Ltd and Townsend, Hook & Co (1888) 21 QBD 182 ...................................................................................... 1184

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In Re an Arbitration between Fraser & Co v Ehrensperger and Eckenstein (1883) 12 QBD 310, CA (Eng) ...........................................................................................618

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In re an Arbitration between Lyders v Fyfe & Cuming (1909) 28 NZLR 1000 ......................685

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In re Application by Rhodianyl SAS 2011 U.S. Dist. LEXIS 72918 (D.Kan, 25March 2011) ............................................................................................. 965, 983

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In re Consorcio Ecuatoriano de Telecommuniciaciones SA v JAS Forwarding Inc. 685 F.3d987 (11th Cir. 2012) ..................................................................965

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In re Enoch and Zaretzky, Bock & Co’s Arbitration [1910] 1 KB 327 ..................................780 In re Medicaments & Related Classes of Goods (No. 2) [2001] I WLR 700 ........................909

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In Re Mr. G, Mr “G”a Senior Advocate of the Supreme Court (1955) 1 SCR 490 ............... 1257

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In Re Qs Estate [1999] 1 Lloyd’s Rep 931 ..................................................................................976

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In Re Roz Trading Ltd. 469 F.Supp.2d 1221(ND Ga. 2006) ........................................... 965, 983

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In re The Owners of the Steamship Catalina & The Owners of the Motor Vessel Norma [1938] 61 Ll L Rep 360, (Eng) ............................................................................................636 In re: Cognizance for Extension of Limitation (2020) SCC OnLine SC 434 ....................... 1284 Indeen Bio Power Limited v M/​s EFS Facilities Service (India) Pvt. Ltd. (2019) 262 DLT 703, at paras 137 ......................................................................................763 Inder Sain Mittal v Housing Board, Haryana (2002) 3 SCC 175 ........................................ 1305 Indescon Ltd v Ogden [2004] All ER (D) 109 (Aug); [2004] EWHC 2326 ...........................481 India Household & Healthcare Ltd. v L.G. Household & Healthcase Ltd. (2007) 5 SCC 510 .................................................................................................................437

cxxiii

Table of Cases

India Infoline Ltd. v Sanjay Gupta (2014) SCC OnLine Del 1038 ...................................... 1367 India Internet Incubator Mauritius Ltd. v Infraline Technologies India (P) Ltd. & Anr. (2004) 13 SCC 354 ..............................................................................................552, 556, 591 Indian Farmers Fertilizer Cooperative Ltd. v Bhadra Products (2018) 2 SCC 534 .................................................................................................... 1273, 1281 Indian Hume Pipe Co Ltd v State of Rajasthan (2009) 10 SCC 187, at para. 21 ............... 1151

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Indian Institute of Technology v Creative Construction (2007) SCC OnLine Bom 252, at para. 12 ..................................................................... 1153 Indian Institute of Youth Welfare v Tribal Co-​operative Marketing Development Federation of India (2009) SCC OnLine Del 4086, at para. 3 ...................................... 1043

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Indian Oil Corp Ltd v Artson Engineering Ltd, Mumbai (2007) 2 RAJ 187: (2006) 6 Bom CR 465 ....................................................................... 1223

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Indian Oil Corp Ltd v Coastal (Bermuda) Ltd [1990] 2 Lloyd’s Rep 407, at p. 411 .............764

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Indian Oil Corp. Ltd. v Raja Transport Pvt. Ltd. (2009) 8 SCC 520 ............................ 551, 557, 591, 600, 611

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Indian Oil Corpn. Ltd. v Lloyds Steel Industries Ltd. (2007) SCC OnLine Del 1169, at para. 40 ..................................................................... 1164

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Indian Oil Corporation Ltd. v A.T.V. Projects India Ltd. 2004 (2) Arb LR 432 (Del) ..................................................................................................691

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Indian Oil Corporation Ltd. v Atv Projects India Ltd. [2004] (2) ARBLR 432 Delhi; 2004 SCC OnLine Del 483, (2004) 75 DRJ 630, at para. 11 ................................... 812, 823 Indian Oil Corporation Ltd. v Indian Carbon Ltd. (1988) 3 SCC 36 ........................ 1046, 1066

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Indian Oil Corporation Ltd. v Kvaerner Construction India Ltd. (1999) SCC OnLine Bom 788 ......................................................................................... 1306

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Indian Oil Corporation Ltd. v Raja Transport (P) Ltd. (2009) 8 SCC 520 ............................646 Indian Oil Corporation Ltd. v SPS Engineering Ltd. (2011) 3 SCC 507 ............................. 1103

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Indian Oil Corporation v Raja Transport (P) Ltd. (2009) 8 SCC 520 ................................. 1297 Indian Partnership Act (Act no. 9 of 1932), 1932, s. 19 ...........................................................301 Indtel Technical Services Pvt Ltd. v W.S. Atkins Rail Ltd. (2008) 10 SCC 308 ........................65 Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020) .................................................................................... 278, 297, 338, 599, 1262 Indus Mobile Distribution (P) Ltd. v Datawind Innovations (P) Ltd. (2017) 7 SCC 678 ......................................................................................191, 491, 969, 1284 IndusInd Bank Ltd. v Mulchand B. Jain & Ors. 2013 SCC OnLine Mad 555 ........... 526, 1291

cxxiv

Law, Practice and Procedure of Arbitration in India

Infineon Technologies(M) Sdn Bhd v Orisoft Technology Sdn Bhd [2011] 7 MLJ 539 ...................................................................................................... 814, 1290 Ingram v Milnes (1807) 8 East 445 ......................................................................................... 1056 Injazat Technology Capital Limited v Dr Hamid Najafi [2012] EWHC 4171 (Comm) .............................................................................................. 476, 1103

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Inkometal AG v Koksno HemijskiKombinat d d Lukavac CLOUT Case 1463 (31 July 2002) .................................................................................................................... 1053 Inland Revenue Commissioner v Hunter [1914] 3 KB 423 ................................................... 1085 Inox Wind Limited v Thermocables Limited (2018) 2 SCC 519 ..................................... 208, 214

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Inplayer Ltd (formerly Invideous Ltd) v Thorogood [2014] EWCA Civ 1511, at para. 55 ..................................................................................791

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Insigma Technology Co Ltd v Alstom Technology Ltd [2009] SGCA 24 ....................... 173, 221 Insigma Technology Co Ltd. v Alstom Technology Ltd. [2009] 1 SLR(R) 23 ...................... 1296

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Intel Corporation v Advanced Micro Devices Inc. 542 US 241 ....................................... 965, 983

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Inter Maritime Management SA (Switzerland) v Russin & Veechi (US) Yearbook Commercial Arbitration (Switzerland No. 28), Vol. XXII (1997), p. 789, \c 1 LT 391 ..................................................................................................869 Interact v McKay HC Wellington CP51/​03, 14 July 2003 ........................................................657

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Interbulk Ltd v Aiden Shipping Co Ltd [1986] 2 Lloyd’s Rep 75 ................................1312–​1313

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Interbulk Ltd v Aiden Shipping Co Ltd, The Vimeira (No 1A) [1985] 2 Lloyd’s Rep 410 .....................................................................................................768

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Interbulk Ltd v Ponte Dei Sospiri Shipping Co, The Standard Ardour [1988] 2 Lloyd’s Rep 159 ............................................................................................ 520, 526 Interglobe Aviation Limited v N. Satchidanand (2011) 7 SCC 463 ........................................491

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Intermare Transport GmbH v Naves Transoceanicas Armadora SA, The Aristokratis [1976] 1 Lloyd’s Rep 552 .....................................................................................................537

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Intermet FZCO v Ansol Limited [2007] EWHC 226 (Comm) ...................................... 471, 476 International Airports Authority of India v K.D. Bali & Anr. (1988) 2 SCC 360 ........ 635, 909 International Airports Authority of India v Mohinder Singh (1995) SCC OnLine Bom 274, at para. 12 ..................................................................... 1022 International Bulk Shipping & Services Ltd v Minerals & Metals Trading Corp of India [1996] 1 All ER 1017 ........................................................................................................ 1319 International Coal Pte Ltd. v Kristle Trading Ltd. and Another and another Suit [2008] SGHC 182 ....................................................................................................... 116, 919

cxxv

Table of Cases

International Investor KCSC Kuwait v Sanghi Polyesters Limited (2002) SCC OnLine AP 822 ............................................................................................ 1343 International Investor KCSC v Sanghi Polyesters Ltd. (2003) (1) ALT 36 .......................... 1104 International Minerals & Chemical Corpn v Karl O Helm AG [1986] 1 Lloyd’s Rep 81 ........... 1170 International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd and Anor [2013] SGCA 55; [2014] 1 SLR 130 ................................................. 180, 182, 184, 506, 512

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International Tank and Pipe SAK v Kuwait Aviation Fuelling Co KSC [1975] QB 224, [1975] 1 All ER 242, [1975] 1 Lloyd’s Rep 8 ................................................................535, 537, 725 International Thunderbird Gaming Corp v Mexico UNCITRAL, Award 26 January 2006, at para. 214 .......................................................................................... 1425

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Internaut Shipping GmbH v Fercometal Sarl [2003] EWCA Civ 812 ....................................524

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Interperformances Inc v RJ Lithuania No. 2016-​1, Interperformances Inc v R J Supreme Court of Lithuania, Civil Case No. 3K-​3-​483-​421/​2015 ............................................. 1118

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Interprods Limited v De La Rue International Limited [2014] EWHC 68 (Comm) ............331

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Intertoll ICS Cecons O&M Co. Pvt. Ltd. v National Highways Authority of India (2013) SCC OnLine Del 447 ................................................................................................................. 1006

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Ionian Shipping Ltd v Hugo Neu & Sons International Sales Corporation, Final Award, SMAAS, WL 1378378 (1987) .............................................................................................868

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IPCO (Nigeria) Ltd v Nigerian National Petroleum Corp [2008] EWCA Civ 1157 .......... 1337

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Iraqi Ministry of Defence & Others v Arcepey Shipping Co. S.A. And Gillespie Bros. & Co. Ltd. (Angel Bell) [1980] 1 Lloyds Rep. 632 ........................................................................458

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Ircon International Limited v Arvind Construction Company Ltd. (1999) SCC OnLine Del 551, at para. 11 ....................................................................... 1045

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Ircon International Ltd. v C.R. Sons Infra Projects Ltd. (2018) SCC OnLine Del 13155 .................................................................. 1221, 1250–​1251 Ircon International Ltd. v Vinay Heavy Equipments (2015) 13 SCC 680, at para. 9 ............299

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Irish Agricultural Wholesale Society Ltd v Partenreederei: MS Eurotrader, The Eurotrader [1987] 1 Lloyd’s Rep 418, CA (Eng) ..................................................................................537 Iron & Steel Co. Ltd. v Tiwari Road Lines (2007) 5 SCC 703 ................................566, 571, 621 Irrigation Deptt. State of Orissa v G.C. Roy (1992) 1 SCC 508, at para. 11 ....................... 1154 Iselin and Iselin v Sommer, Davis and Davis (1983) 2 ACLR 70, 572 Ismail v Polish Ocean Lines, The Ciechocinek (No 2) [1980] 1 Lloyd’s Rep 97 ........ 1208, 1213 Itex Shipping Pte Ltd v China Ocean Shipping Co, The Jing Hong Hai [1989] 2 Lloyd’s Rep 522 .....................................................................................................585

cxxvi

Law, Practice and Procedure of Arbitration in India

ITI Ltd. v Siemens Public Communications Network Ltd. (2002) 5 SCC 510 .......................406 ITI v Siemens Public Communication (2002) 5 SCC 510, at para. 10 ....................................978

J J & C Cabot v City of Keilor [1994] 1 VR 220; A-​G v Wentworth (1988) 14 NSWLR 481 ..................................................................................................... 1214

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J H Rayner (Mincing Lane) Ltd v Shaher Trading Co [1982] 1 Lloyd’s Rep 632 ............... 1066 J Jarvis & Sons Ltd v Blue Circle Dartford Estates Ltd [2007] EWHC 1262 (TCC) ....................................................................................... 471, 478 J T Mackley & Co Ltd v Gosport Marina Ltd [2002] EWHC 1315 (TCC), [2002] All ER (D) 39 (Jul) ..................................................................................................508

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J. Jarvis & Sons Ltd v Blue Circle Dartford Estates Ltd [2007] EWHC 1262 (TCC) ............476

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J. Kodanda Rami Reddy v State of AP and Ors. (2011) 1 SCC 197 ..................................... 1101

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J.C. Budhraja v Chairman, Orissa Mining Corporation Ltd. (2008) 2 SCC 444 ..... 1052, 1060 J.G. Engineers Pvt. Ltd. v Union of India (2011) 5 SCC 758 ............................1059, 1273, 1295

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J.S. Ocean Liner LLC v M.V. Golden Progress & Anr. 2007 SCC OnLine Bom 69, 2007 (2) Arb LR 104 (FB) ..................................................................................................453 Jackson v Jackson 65 ER 80, [1853] 3 WLUK 86 ........................................................................50

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Jagadhatri Bhandar & Jagadhatri Oil Mill v Commercial Union Assurance Company Ltd. AIR 1979 Cal 56 .....................................................................................................................58

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Jagdish Chander v Ramesh Chander (2007) 5 SCC 719 .................................179, 189, 334, 610 Jager v Tolme and Runge [1916] 1 KB 939 ............................................................................. 1059

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Jagjeet Singh Lyallpuri v Unitop Apartments & Builders Ltd. (2020) 2 SCC 279, at para. 12 .......................................................................................... 1290

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Jagmohan Singh Gujral of Indian v Satish Ashok Sabnis (2003) SCC Online Bom 335, at para. 20 ...................................................................... 1046

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Jai Singh v Delhi Development Authority (2008) 3 Arb LR 667 (Del) ................................ 1306 Jain Studios Ltd. v Maitry Exports Pvt. Ltd. (2007) 145 DLT 490 .........................................271 Jaiprakash Associates Ltd. v Tehri Hydro Development Corporation Ltd. (2019) SCC OnLine SC 143, at paras 13, 15–​17 .......................................................... 1153 Jajodia (Overseas) Pvt. Ltd. v Industrial Development Corporation of Orissa Ltd. (1993) 2 SCC 106, para. 8 ................................................................................................ 1042 Jamboo Kumar Jain v Tata Capital Financial Services Ltd. (2015) SCC OnLine Bom 3608 ....................................................................................... 1293

cxxvii

Table of Cases

James Allen (Liverpool) Ltd v London Export Corporation Ltd [1981] 2 Lloyd’s Rep 632 ..............................................................................1202, 1215, 1221 James Finlay & Co Ltd v Gurdayal Pahlajraj AIR 1924 Sind 91 ............................................561 James Laing & Son (M/​C) Ltd v Eastcheap Dried Fruit Co [1962] 2 Lloyd’s Rep 15 ........ 1296 James Scott & Sons Ltd. v R & N Del Sal (1923) 14 Ll. L. Rep. 65 .........................................478

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Jamna Bai v Vasant Rao AIR 1916 PC 2 ...................................................................................280 Janos Paczy v Hnadler & Naterman GmbH 1981 1 Lloyds Rep 302 .....................................247 Janvey v Alguire 647 F.3d 585 (5th Cir. 2011) ..........................................................................972 Japan Line Ltd v Aggeliki Charis Compania Maritime SA, The Angelic Grace [1980] 1 Lloyd’s Rep 288 .....................................................................................................943

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Jardine Lloyd Thompson Canada Inc. v SJO Catlin [2006] ABCA 18 .......................... 950, 964

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Jasa Keramat Sdn Bhd v Monatech (M) Sdn Bhd [1999] 4 MLJ 217 .....................................457

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Jaya Sudhir A/​L Jayaram v Nautical Supreme Sdn Bhd & Ors. [2019] 5 MLJ 1 ...................479

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Jayashree Patnaik v Urban Cooperative Bank, Bhubaneshwar 2003 SCC OnLine Ori 108, at para. 5 ...............................................................................936

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Jayaswal Ashoka Infrastructures Pvt. Ltd. v Pansare Lawad Sallagar (2019) SCC OnLine Bom 578 ...............................................................................1254–​1255 Jean Charboneau v Les Industries AC Davie Inc et al [1989] ......................................... 197, 641

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Jeeram v National Union of Plantation Workers [1993] 3 MLJ 104 .......................................911

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Jeevan Industries (P) Ltd. v Haji Bashiruddin Madhusudan AIR 1975 Del 215 .............. 1189, 1250, 1253

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Jeevan Industries Pvt. Ltd. v Haji Bashirrudin Madhusudhan Dayal 1974 SCC OnLine Del 200 ........................................................................................ 669, 683

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Jefford v Gee [1970] 2 QB 130 at p. 143, CA (Eng) ............................................................... 1155 Jeffries v Mut. Life Ins. Co. of N.Y. 110 U.S. 305 (1884) ..........................................................887

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Jet Holding Ltd v Cooper Cameron (Singapore) Pte Ltd [2006] SGHC 20 ......................... 1227 Jewell v Christie (1867) LR 2 CP 296 ...................................................................................... 1056 Jharkhand Bijli Vitran Nigam Ltd. v. IVRCL Ltd. 2018 SCC OnLine NCLAT 891 .............383 Jiangxi Provincial Metal & Mineral Import & Export Corp v Sulanser Co Ltd [1995] HKCF 449 ............................................................................................................. 1289 Jivraj v Hashwani [2011] UKSC 40, [2012] 1 All ER 629 ......................................546, 575, 894 Jiwani Engineering Works Pvt. Ltd. v Union of India AIR 1981 Cal 101, at para. 9 .......... 1146 John v Teo Hee Lai Building Constructions Pte Ltd. [2010] 2 SLR 625 ............................... 1205

cxxviii

Law, Practice and Procedure of Arbitration in India

Johnson Matthey plc v Eros Casting Ltd (1993) The Times, 7 December .......................... 1258 Johnson v Gore Wood [2002] 2 AC 1 ...................................................................................... 1107 Johnson v Johnson [2000] HCA 48, [2000] 5 LRC 223 (Aus) ............... 629, 635–​636, 647, 660 Johnson v Latham 19 LJQB 329 ........................................................................................ 854, 856 Johnson v Reed Corrugated Cases Ltd [1992] 1 All ER 169 ................................................. 1253

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Johnson v Warren (1730) 1 Barn KB 430 ..................................................................................361 Johnson v Wilson (1741) 125 ER 1156 ................................................................................... 1061 Johnson v Wilson (1741) Willes 248 ....................................................................................... 1063

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Joint Stock Company “Aeroflot Russian Airlines” v Berezovsky & Ors [2012] EWHC 1610 (Ch) per Floyd J ..............................................................................427

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Joint Stock Company Aeroflot Russian Airlines v Berezovsky [2013] EWCA Civ 784, [2013] All ER (D) 36 (Jul) ..................................................................................................427

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Jonas Woodhead & Sons (I) Ltd. v Consolidated Civil Construction (I) Ltd. 2016 SCC OnLine Mad 18284 ...........................................................................................661

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Jones Engineering Services Ltd v Balfour Beatty Building Ltd [1994] ADRLJ 133 ...............164

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Jones v Bradley (No 2) [2003] NSWCA 258, at para. 8 ........................................................ 1239 Jones v Cony [1839] 5 Bing NC 187 ...........................................................................................359

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Joseph Crosfield & Sons Ltd v Manchester Ship Canal Company [1905] AC 421, HL .........144 Jowett v Neath Rural District Council (1916) 80 JP Jo 207 .....................................................202

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Joy Mining Machinery Limited v Arab Republic of Egypt ICSID Case No ARB/​03/​11 ............................................................................................. 1407

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JSC BTA Bank v Ablyazov (2011) 2 Lloyd’s Rep 129 ...............................................................453

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JSC BTA Bank v Ablyazov (Recusal) [2012] EWCA Civ 1551 ...............................................648

re v

JSC Ispat Pvt. Ltd. v HDB Financial Services LTD. (2018) SCC OnLine Bom 538, at para. 13–​14 ................................................................................................. 1037

E-

JSCBTA Bank v Ablyazov & Ors. [2013] EWHC 867 ........................................................... 1172 JSW Steel Ltd v AI Ghuriar Iron & Steel LLC 2015 (2) Arb LR 373 ................................... 1200 JT Mackley & Co Ltd v Gosport Marina Ltd. [2002] EWHC 1315 ........................................524 Jugal Kishore Rameshwardas v. Mrs. Goolbai Hormusji, AIR 1955 SC 812 ..........................201 Juggilal Kamlapat v General Fiber Dealers Ltd AIR 1955 Cal 354 .........................................821 Juggilal Kamlapat v General Fibre Dealers Ltd. (1954) SCC OnLine Cal 53 ..................... 1015 Jugoslavenska Oceanska Plovidba v Castle Investment Co Inc [1974] QB 292 .................. 1351

cxxix

Table of Cases

Jugoslavenska Oceanska Plovidba v Castle Investment Co Inc, [1973] 2 Lloyd’s Rep 1, at p. 11, [1973] 3 All ER 498, at pp. 502–​503 ........................ 1351 Jugoslavenska Oceanska Plovidba v Castle Investment Co Inc: The Kozara [1973] 2 Lloyd’s Rep 1 .........................................................................................................714 Jugoslavenska Oceanska Plovidba v Castle Investments Co. Inc [1973] 3 All ER 498 ....... 1121

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Jung Science Information Technology Co. Ltd. v. Zte. Corporation, High Court—​Court of First Instance, Hong Kong Special Administrative Region of China [2008] HKCFI 606 ...............................................................................................................635 Jungheim, Hopkins & Co v Foukelmann [1909] 2 KB 948, 25 TLR 819, 621–​622

JVL Agro Industries Ltd. v Agritrade International Pte Ltd. [2016] SGHC 126 ................ 1344

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Jyoti Brothers v Shree Durga Mining Co. AIR 1996 Cal 280 ...................................................194

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K

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Jyoti Gupta v Kewalsons Arb. P. No. 599 of 2017 & I.A. No. 1357 of 2018, before the High Court of Judicature at New Delhi, decided on 19 March 2018 ............................381

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K. Appukuttan Panicker v A.K.R.A.K.R. Athappa Chettiar AIR 1966 Ker 303 ....................298 K. Kishan v. Vijay Nirman Company Pvt. Ltd. (2018) 17 SCC 662 .......................................384

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K.K. Modi v K.N. Modi & Ors. (1998) 3 SCC 573 .................................................... 45, 170, 321 K.L. Tripathi v State Bank of India 1984 (1) SCC 43 ...............................................................727

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K.S. Abdul Kader v MK Mohamed Ismail [1954] MLJ 231, CA .............................................737

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K.S. Oils Ltd. v. State Trade Corporation of India Ltd. (2018) 146 SCL 588, at para. 14 .........................................................................................383

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K.S.R.T.C. v M. Keshava Raju (2003) SCC OnLine Kar 459 ............................................... 1304

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K/​S A/​S Bani v Korea Shipbuilding and Engineering Corpn [1987] 2 Lloyd’s Rep 445 .....................................................................................................942 K/​S A/​S Bill Biakh v Hyundai Corp [1988] 1 Lloyd’s Rep 187 ...................................... 973, 319

E-

K/​S Norjarl A/​S v Hyundai Heavy Industries Co Ltd. [1991] 3 All ER 211, at p. 228, [1992] 1 QB 863, at p. 877 ........................................................655–​656, 672, 674, 694, 696 K/​s Norjarl A/​s v Hyundai Heavy Industries Co. Ltd. [1992] QB 863 .......................... 894, 905 Kabab-​Ji SAL (Lebanon) v Kout Food Group (Kuwait) [2020] EWCA Civ 6 at [66] ...........248 Kailash Rani Dang v Rakesh Bala Aneja (2009) 1 SCC 732, at para. 22 ............................ 1035 Kallang Shipping SA Panama v Axa Assurances Senegal [2008] EWHC 2761 (Comm) ............................................................................................496 Kalpana Kothari v Sudha Yadav & Ors, (2002) 1 SCC 203 ....................................................990

cxxx

Law, Practice and Procedure of Arbitration in India

Kalyan People’s Coop Bank Ltd v Dulhanbibi Aqual Aminsaheb Patil AIR 1966 SC 1072 ................................................................................................................665 Kalyan People’s Co-​op. Bank Ltd. v Dulhanbibi (1963) 2 SCR 348 ..................................... 1305 Kandla Export Corporation v OCI Corporation (2018) 14 SCC 715, at paras 20–​22, 27 ................................................................................................................ 1339 Kanoria and Ors v Guinness [2006] EWCA Civ 222 ............................................................ 1344

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Kanoria v Guinness [2006] 2 WLUK 493 .............................................................................. 1333 Kanoria v Guinness [2006] EWCA Civ 222 ........................................................................... 1287 Kapil Garg v Atul Agarwal (2020) SCC OnLine Bom 2494 ...................................................980

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Karaha Bodas Co. LLC v Pertamina Energy Trading Ltd. [2006] 1 SLR(R) 112 (Court of Appeal), [2005] SGCA 47 .............................................459

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Kardassopoulos and Fuch v Republic of Georgia, ICSID case no. ARB/​05/​18 and ARB/​07/​15 at para. 691, 3 March 2010 .......................................................................... 1255

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Karim Panahi v USA Decision no. DEC 108-​182-​2 (27 October 1992) 28 Iran-​US CTR 318, at para. 3 ....................................................................................... 1088

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Karkara Estate Ltd. v Savvy Vineyards Ltd. [2013] NZCA 101 .............................................298

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Karuppiah Mahalingam & Ors. v Kotak Mahindra Bank Ltd. (2017) SCC OnLine Bom 3953 ............................................................................. 1019, 1086

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Kashinathsa Yamosa Kabadi v Narsingsa Bhaskarsa Kabadi (1961) 3 SCR 792 .............................................................................................................. 1329

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Kastner v Jason [2004] EWHC 592 (Ch) ..................................................................... 1112, 1126

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Katra Holdings Ltd. v Corsair Investments Ltd. & Ors. (2018) SCC OnLine Bom 4031, at para. 28 ................................................................... 1044 Kaverit Steel Crane Ltd v Kone Corporation (1992) 87 DLR 94th) 129 ................................176

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Kazeminy v Siddiqi [2012] EWCA Civ 416 ........................................................................... 1245

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Kebab-​ji Sal v Kout Food Grou, [2020] EWCA Civ 6 ........................................................... 1372 Keen v Godwin (1728) Bunb 250 ...............................................................................................361 Keighley, Maxsted and Co v Durant [1901] AC 240 ................................................................301 Keir v Leeman and Pearson (1846) 9 QBR 371 ................................................................. 394, 57 Kelana Erat Sdn Bhd v Niche Properties Sdn Bhd [2012] 5 MLJ 809 .................................. 1085 Kemp (A B) Ltd v Tolland, [1956] 2 Lloyd’s Rep 681, at p. 691, per Devlin J .................... 1156 Kempinski Hotels SA v PT Prima International Development [2011] SGHC 171, [2011] 4 SLR 633, 715 ..................................................................... 1294

cxxxi

Table of Cases

Kendal v Symonds (1855) 3 CLR 322 ..................................................................................... 1063 Kent v Estob (1802) 3 East 18 .....................................................................................................712 Kerala State Electricity Board & Anr. v Kurien E. Kalathil & Anr, AIR 2000 SC 2573 .......368 Kerala State Electricity Board & Ors. v Kurien E. Kalathil & Ors. (2018) 4 SCC 793 ........................................................................................149, 227, 309, 428

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Khardah & Co. v Raymon & Co. AIR 1962 SC 1810 ...............................................................296 Khardah Co. Ltd. v Raymon & Co. (1963) 3 SCR 183 .............................................................298 Khoo Boo Gay v The Home Insurance Co Ltd [1936] 1 MLJ 190 ...........................................493 Khosla v Rajlakshmi (2006) 3 SCC 605, at para. 27 .............................................................. 1328

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Kieppe Participações e Administração Ltda v Graal Participações Ltda Nº 1.331.100 –​BA (2012/​0100301-​4) ...............................................................................179

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Kifayatullah Haji Gulam Rasool et al v Smt Bilkish Ismail Mehsania et al. AIR 2000 Bom 424, 2000 (4) BomCR 412, 2000 (4) MhLj 341 .....................................656

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Kilburn v Kilburn (1845) 13 M & W 671 ............................................................................... 1208

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Kill v Hollister (1746) 1 Wils 129 ...............................................................................................492

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Kin Shing (Leung’s) General Contractors Ltd v Chinese University of Hong Kong [2011] HKEC 284, [2011] HKCFI 138 ........................................................................... 1244

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Kinari Mullick & Ors. v Ghanshyam Das Damani, (2018) 11 SCC 328, at paras 15, 16 ............................................................................................. 1094

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King v Brandywine Reinsurance Co (UK) Ltd (formerly known as Cigna RE Co (UK) Ltd) [2004] EWHC 1033 (Comm), [2004] All ER (D) 108 (May) ......................189

ie

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King v Thomas McKenna & Co [1991] 2 QB 480, at pp. 492–​493, [1991] 1 All ER 653, at p. 662, CA (Eng) ....................................................................... 1235

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King v Thomas McKenna & Co, [1991] 2 QB 480, [1991] 1 All ER 653, CA (Eng) .....................................................................1081–​1218, 1236–​1237

E-

Kingfisher Airlines Limited v Prithvi Malhotra Instructor 2013 (7) Bom CR 738 ..................................................................................................... 57, 71 Kingwell v Elliott (1839) 7 Dowl 423 ...................................................................................... 1304 Kinnari Mulick v Ghanshyam Das Damani (2018) 11 SCC 328, at para. 16 ................................................................... 1310, 1312–​1313 Kinnari Mullick and Another v Ghanshyam Das Damani (2018) 11 SCC 328 ..........................................................................................969, 1098, 1276 Kinve Solar Power Co Ltd v Sun Value GmbH et al, No. 29, Landesgericht, Ried im Innkreis (24 June 2015) ..................................................................................... 1031

cxxxii

Law, Practice and Procedure of Arbitration in India

Kinve Solar Power Co, Ltd v Sun Value GmbH et al, Landesgericht, Ried Im Innkreis Case No. 6 R 80/​14b, 27 August 2014 ...............................................................522 Kiril Mischeff Ltd v Constant Smith &Co [1950] 2 KB 616 ................................................. 1275 Kirkawa Corp v Gatoil Overseas Inc, The Peter Kirk [1990] 1Lloyd’s Rep 154 .....................943 Kishan Chand, Engineers and Contractors v Union of India, (1998) 47 DRJ 391 ............. 1201

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Kitts v Moore & Co. [1895] 1 Q.B. 253, CA (Eng) .......................................................... 471, 478 Kockill v Witherell (1672) 2 Keb. 838 ..................................................................................... 1118 Kogta Financial India Limited v Jayesh Kishorilal Dawda (2011) 6 CTC 182 ......................300 Konkan Railway Corporation Ltd. v Mehul Construction Co. (2000) 7 SCC 201 ................604

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Konkan Railway Corporation v Rani Constructions (2002) 2 SCC 388 ................................604

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Konkola Copper Mines v Stewarts & Lloyds of India Ltd. (2013) SCC OnLine Bom 777 ........................................................................................................490

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Konsortium Oeconomicus v The Czech Republic, Decision for Termination of the Proceedings (5 December2011) ....................................................................................... 1183

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Korin v McInnes [1990] VR 723 .................................................................................................657

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Kotak Mahindra Bank Ltd. v Sundaram Brake Lining Ltd (2008) SCC OnLine Mad 519 .........................................................................................................232 Kotak Mahindra Bank v S. Nagabhushan & Ors. 2018 SCC OnLine Del 6832 ...................296

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Kraft Foods Group Brands LLC v Bega Cheese Ltd. [2018] 358 ALR 1 ..................................472

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Krishan Gopal v Parveen Rajput (2019) SCC OnLine Del 8330 at para. 20 ...................... 1127

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Krishna Bhagya Jala Nigam Ltd. v G. Harischandra Reddy (2007) 2 SCC 720 ...................262, 1164, 1223

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Krishnabhagwan Rajaram Sharma v Tata Motors Finance Ltd 2015 SCC OnLine Bom 479 ........................................................................................................821 Krishnaswamy Chetty v C. Thangavelu Chetty AIR 1955 Mad 430, CPC .............................311

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Kruidenier (H) (London) Ltd v Egyptian Navigation Co, The El Amria (No 2) [1980] 2 Lloyd’s Rep 166 .....................................................................................................537 Kruppa v Benedetti [2014] EWHC 1887 (Comm) ..................................................................191 Kruse v Questier & Co [1953] 1 Llyod’s Rep 310 .....................................................................337 KS Norjarl AS v Hyundai Heavy Indus Co. [1992] 1 QB 863 .................................................546 KTC Korea Co. Ltd. v Hobb International Private Ltd. (2004) SCC OnLine Cal 179 ...... 1346 Kuala Ibai Development Sdn Bhd v Kumpulan Perunding (1988) Sdn Bhd [1999] 5 MLJ 137 ......................................................................................647, 701, 917, 1292

cxxxiii

Table of Cases

Kuala Terengganu v Mae Perkayuan Sdn Bhd [1993] 2 MLJ 76 ......................................... 1128 Kumaon Mandal Vikas Nigam Ltd. v Girja Shankar Pant (2001) 1 SCC 182 ......................635 Kursell v Timber Operators and Contractors Ltd [1923] 2 KB 202 ........................................947 Kurup Engineers Co. Pvt. Ltd. v Bharat Heavy Electricals Ltd. 2008 SCC OnLine Del 550 .................................................................................................658

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Kuwait v The American Independent Oil Company Ad-​Hoc, 24 March 1982, 21 ILM 976 ............................................................................................ 1386 KV George v Secy. to Government, Water and Power Department, Trivandrum (1989) 4 SCC 595 .................................................................................................... 1103, 1100

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Kvaerner Cementation India Limited v Bajranglal Agarwal and Anr, (2012) 5 SCC 214, 828, 1287

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Kvaerner Cementation Ltd. v Bajranglal Agarwal (“Kvaerner Cementation”) (2012) 5 SCC 214 ........................................................................................................472–​473

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L

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Kwek Seow Kee [‘No: 2’] v K T Packaging Sdn Bhd [1998] MLJU 77 .....................................459

L E Cattan Ltd v A Michaelides & Co (a firm) [1958] 2 All ER 125 ................................... 1206

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L Figueiredo Navegacas SA v Reederei Richard Schroeder KG, The Erich Schroeder [1974] 1 Lloyd’s Rep 192 .................................................................................................. 1200

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L W Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd [2012] SGCA 57 ..............724

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La Donna v Wolford AG [2005] VSC 359 .................................................................................432

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La Société Pour La Recherche, La Production, Le Transport, La Transformation Et La Commercialisation Des Hydrocarbures S.P.A (“Sonatrach”) v Statoil Natural Gas LLC [2014] EWHC 875 (Comm) ................................................................916

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Labrador Co v Queen [1893] AC 104, PC (Can) .................................................................. 1136

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Labuan Wood Products Sdn Bhd v Malaysian National Insurance Sdn Bhd [1991] 3 CLJ Rep 113 ..........................................................................................................534 Lachman D. Chablani v Union of India (1973) SCC OnLine All 314, at para. 4 ........937–​938 Lackersteen v Jones (No 2) (1988) 93FLR 442 ....................................................................... 1215 Ladli Construction Company Private Limited v Punjab Police Housing Corporation Limited and Ors. (2012) 4 SCC 609 ..................................................................................700 Ladli Construction Company Pvt. Ltd. v Punjab Police Housing Corporation Ltd. and Ors. (2012) 4 SCC 609 .................................................................................................635 Lafarge (Aggregates) Ltd v Newham London Borough Council [2005] EWHC 1337 (Comm) 507

cxxxiv

Law, Practice and Procedure of Arbitration in India

Lafarge India Pvt. Ltd. v Emami Realty Ltd. 2016 SCC OnLine Cal 4964 ...........................476 Lalitkumar V. Sanghavi v Dharamdas V. Sanghavi (2014)7 SCC 255 ...................................964 Lambert & Krzysiak v British Commercial Overseas Co. [1923] 16 L1 LR 51 ................... 1057 Lan You Timber Co v United General Insurance Co Ltd [1968] 1 MLJ 181 ..........................492

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Lanco Infratech Ltd. v Hindustan Construction Co. Ltd. (2016) SCC OnLine Del 5365, at para. 14 ............................................................................................................932 Lanco-​Rani (JV) v National Highway Authority of India (2016) SCC OnLine Del 6267 ................................................................................................................................901 Landmark Ventures Inc. v Cohen 2014 WL 6784397 (SDNY) ...............................................924

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Lao Holdings N.V. v Lao People’s Democratic Republic ICSID Case No. ARB(AF)/​12/​6 .................................................................................................. 1424

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Larchin v Ellis (1863) 11 WR 281 ..............................................................................................780

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Larsen and Toubro Limited Scomi Engineering Bhd v Mumbai Metropolitan Region Development Authority (2019) 2 SCC 271 ........................................................................156

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Larsen Oil and Gas Pte Ltd. v Petroprod Ltd. [2011] SGCA 21, [2011] 3 SLR 414 ...... 60, 356 Lata Construction v Rameshchandra Ramniklal Shah (2000) 1 SCC 586 ....................298–​299

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Lauder v Czech Republic IIC 205 (2001) ................................................................................ 1412 Lauritzen Cool AB v Lady Navigation Inc. [2005] 2 Lloyd’s Rep. 63 .....................................988

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Law Debenture Trust Corporation plc v Elektrim Finance BV [2005] EWHC 1999 (Ch) ....................................................................................................188

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Law Debenture Trust Corporation plc v Elektrim Finance BV [2005] EWHC 1412 (Ch), [2005] 2 All ER (Comm) 476 ...................................... 186, 188

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Law v Garrett (1878) 8 Ch D 26, CA (Eng) .............................................................................457

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Lawrence v Hodgson (1826) 1 Y. & J. 16 ................................................................................. 1062 Laws v Australian Broadcasting Tribunal [1990] HCA 31 ......................................................635

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Laxmibai v Manek Patel (1942) SCC OnLine Bom 124, at paras 7–​10 ............................ 1069 Layen v London Passenger Transport Board [1944] 1 All ER 432 ..........................................513 LDK Solar Hi-​Tech (Suzuhou) Co. v Hindustan Cleanenergy Limited (formerly Moser Bear Clean Energy Limited), High Court of Delhi, New Delhi, EX. APPL. (OS) 192/​2017, 4 July 2018 .................................................................................................727 LE Cattan v A Michaelides & Co [1958] 2 All ER 125, [1958] 1 WLR 717, 1202 Lee Brothers Construction Co v Teh Teng Seng Realty Sdn Bhd [1988] 1 MLJ 459 ..............440 Lee v Elkins [1706] 1 WLUK 293 ............................................................................................ 1053

cxxxv

Table of Cases

Leela Hotels Ltd. v Housing and Urban Development Corporation Ltd. (2012) 1 SCC 302, at para. 45 .......................................................................................... 1325 Leeson v General Council of Medical Education and Registration [1889] 43 Ch. D. 366 ...........................................................................................................898 Legumbres SACIFIA v Central de Cooperativas de Productores do Rio Grande do Sul Ltda [1986] 1 Lloyd’s Rep 401, at 403, CA (Eng) ........................................ 572, 585

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Leichhardt Municipal Council v Green [2004] NSWCA 341, at para. 14 ........................... 1227 Leif Hoegh & Co A/​S v Maritime Mineral Carriers Ltd, The Marques de Bolarque [1982] 1 Lloyd’s Rep 68 .......................................................................................... 1221, 1207 Leif Hoegh & Co A/​S v Petrolsea Inc, The World Era [1992] 1 Lloyd’s Rep 45 .....................768

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Leigh v English Property Corpn Ltd. [1976] 2 Lloyd’s Rep. 298 ...............................................50

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Leighton India Contractors Pvt. Ltd. v DLF Ltd. and Ors. O.M.P. (I) (COMM) 109/​2020, High Court of Delhi(13 May 2020) para. 12 ...............................975

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Lendon v Keen [1916] 1 KB 994 .................................................................................................699 Lennon & Harvey Ltd v Murphy [2004] IEHC 402 .................................................................718

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Lesotho Highlands Development Authority v Impregilo SpA [2005] UKHL 43 .............................................................................................244, 1119, 1219

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Lesotho Highlands Development Authority v Impregilo SpA [2006] 1 AC 221 ................................................................................... 951, 1141, 1294, 1296 Lesser Design & Build v University of Surrey (1991) 56 BLR 57 .................................... 361, 523

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Leung Kwok Hung v Johnson Controls H.K. Ltd [2018] HKCFI 1500 (Court of First Instance) .....................................................................................................448

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Leung Kwok Tim T/​A Tim Yip Engineering Co v Builders Federal (Hong Kong) Ltd [2001] HKCFI 823, [2001] 3 HKC 527 .............................................................................348

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Lewin v Holbrook (1843) 11 M & W 110 ..................................................................................573 Lewis Emanuel & Son Ltd v Sammut [1959] 2 Lloyd’s Rep 629 ..................657, 819, 843, 1214

E-

Lewis v Haverfordwest RDC [1953] 2 All ER 1599, [1953] 1 WLR 1486 ...................................................... 1188, 1202, 1206, 1212, 1214, 1216 Lewis v Rossiter (1875) 44 LJ Ex 136 .........................................................................................362 LG & E Energy Corp, LG&E Capital Corp, and LG&E International, Inc .v Argentina, Award, ICSID Case No.ARB/​02/​1 .................................................................................. 1426 LG Caltex Gas Co Ltd v China National Petroleum Corp [2001] All ER (D) 198 (May) ..........................................................................................................164 Li v Rao [2019] BCCA 264 .........................................................................................................478

cxxxvi

Law, Practice and Procedure of Arbitration in India

Libananco Holdings Co. v Turkey, Decision on Preliminary Issues in ICSID Case No. ARB/​06/​8 of 23 June 2008, at paras. 78–​80 .........................................888 Liberian Shipping Corpn “Pegasus” v A King & Sons [1967] 2 QB 86, [1967] 1 All ER 934, [1967] 1 Lloyd’s Rep 302, CA (Eng) ..................................... 534, 536 Liberian Shipping Corporation “Pegasus” v A. King and Sons Ltd. [1967] 1 All ER 934 .............................................................................................................959

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Liberty Garden CHS Ltd. v K.T. Group (2020) SCC OnLine Bom 18 ................................ 1296 Liberty Seguros SA and Liberty Segurosde Vida SA v Arbitral Tribunal and Civil Chamber of the Bogotá Judicial Tribunal Constitutional Court of Colombia, Decision T-​186/​15 ...............................................................................................................769

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Libra Shipping and Trading Corpn Ltd v Northern Sales Ltd The Aspen Trader [1981] 1 Lloyd’s Rep 273, CA (Eng) ........................................................................................536–​537

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Libyan American Oil Co. v Socialist People’s Libyan Arab Yamahirya 1982 VII YBCA 382 ......................................................................................................... 1346

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LIC v Escorts Ltd. (1986) 1 SCC 264 ........................................................................................291

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Lidi GmbJ v Just Fitness Ltd. [2010] EWHC 39 .................................................................... 1107

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Life Receivables Trust v Syndicate 102 at Lloyd’s of London 549 F.3d 210 (2nd Cir. 2008) .....................................................................................................................964

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Lily ICOS LLC v Dylan Dupre (2006) Case No. D2006-​0331 ................................................122 Lin Jian Wei v Lim Eng Hock Peter [2011] SGCA 29 ............................................................ 1205

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Lin Jian Wei v Lim Eng Hock Peter, [2011] 3 SLR 1052, at paras 70–​71 ........................... 1187

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Linde Heavy Truck Division Ltd. v Container Corporation of India Ltd. (2012) 195 DLT 366 .............................................................................................................194

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Lindsay International Private Limited v Laxmi Niwas Mittal 2020 SCC OnLine Cal 1658 ...............................................................................................481 Ling Kong Henry v Tanglin Club [2018] SGHC 153 (High Court of Singapore) .................448

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Ling Yan Temple Ltd v Ng Yook Man (2010) HKEC 734 .........................................................453 Lingood v Eade (1742) 2 Atk 501 ..........................................................................856, 1061, 1063 Linnett v Halliwells LLP [2009] EWHC 319 (TCC) ................................................................684 Linpave Building Ltd v Gillingham FC [2003] 69 Arbitration 145 ...................................... 1239 Linpave v Gillingham FC [2003] 69 Arbitration 145 (unreported) .................................... 1227 Lion Engineering Consultants v State of Madhya Pradesh & Ors. (2018) 16 SCC 758 ...............................................................................................................263

cxxxvii

Table of Cases

Lipkin Gorman v Karpnale Ltd [1992] 4 All ER 409, [1989] 1 WLR 1340, CA (Eng) ....................................................................................... 1241 Lithuania v OAO Gazprom 22 June 2016 .............................................................................. 1189 Liversidge v Broadbent (1859) 4 H & N 603 .............................................................................299 Llandrindod Wells Water Co v Hawksley (1904) 68 JP 242, CA (Eng) .................................701

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Lloyd de Pacifico v Board of Trade 46 TLR 476 ......................................1197, 1200–​1201, 1221 Lloyd Del Pacifico v Board of Trade 35 Com Cas 325 at pp. 332 ................................. 334, 1216 Lloyd v Wright, Dawson v Wright [1983] QB 1065, [1983] 2 All ER 969, CA (Eng) ..........429 Lloyds Bank Ltd v Eastwood [1975] Ch 112, at p. 131, [1974] 3 All ER 603, at p. 608 .... 1253

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LMJ International Limited v Sleepwell Industries Co. Ltd. 2012 SCC OnLine Cal 10733, (2019) 5 SCC 302 .................................................................................................................474

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Lobb Partnership Ltd. v Aintree Racecourse Company Ltd. [2000] BLR 65 ..........................335

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Locabail (UK) Ltd v Bayfield Properties Ltd. [2000] QB 451, [2000] 1 All ER 65, CA (Eng) ............................................................................................652

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Locabail (UK) Ltd. v Bayfield Properties Ltd & Ors. [1999] 12 WLUK 638 ...........................62

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Local 1982, Int’l Longshoremen’s Ass’n v Midwest Terminals of Toledo Int’l, Inc. 694 F. App’x 985, 988 (6th Cir. 2017) ......................................................................................... 1076, 1088 Local Government Board v Arlidge [1915] AC 120 ..................................................................723

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Lock v Vulliamy (1833) 5 B. & Ad. 600 ........................................................................ 1062, 1064

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Logy Enterprises Ltd v Haikou City Bonded Area Wansen Products Trading Co. [1997] 2 HKC 481 ................................................................................................................639

ie

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Logy Enterprises Ltd. v Haikou City Bonded Area Wansen Products Trading Company [1997] HKCA 617 ............................................................................................................. 1346

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Lombard-​Knight (and another) v Rainstorm Pictures Inc [2014] EWCA Civ 356 ............ 1337 Lombard-​Knight v Rainstorm Pictures Inc [2014] EWCA Civ 356 ............................... 202, 204

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London & North Western & Great Western Joint Railway Co. v J.H. Billington Ltd. [1899] AC 79 (HL) ...................................................................................................... 47, 359 London and North Western Railway Company v Donellan [1898] 2 QB 7, CA (Eng) ........144 London Borough of Tower Hamlets v The London Borough of Bromley [2015] EWHC 2271 (Ch) ................................................................................................. 1209 London Export Corp Ltd v Jubilee Coffee Roasting Co Ltd [1958] 1 All ER 494, [1958] 1 WLR 271 ................................................................................. 728, 737, 1291–​1292 London Sack and Bag Co Ltd v Dixon & Lugton Ltd [1943] 2 All ER 763, CA (Eng) ........201

cxxxviii

Law, Practice and Procedure of Arbitration in India

London Steamship Owners Mutual Insurance Association Ltd v Bombay Trading Co Ltd, The Felice [1990] 2 Lloyd’s Rep 21 .........................................................298 London Underground Ltd v Citylink Telecommunications Ltd [2007] EWHC 1749 (TCC) ................................................................................................803 London, Chaltham & Dover Railway Co v South Eastern Railway Co [1893] AC 429, 1155, 1158

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Lorand Shipping Ltd v Davof Trading (Africa) BV (MV “Ocean Glory”) [2014] EWHC 3521 .............................................................................................................525 Lord Feversham v Emerson [1855] 11 Exch 385 ................................................................... 1101 Lord v Hawkins [1857] 5 WLUK 41 ....................................................................................... 1314

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Louis Dreyfus Armateurs SAS v India PCA Case No. 2014-​26, Award, 11 September 2018 ................................................................................................. 1437, 1440

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Louis Dreyfus Trading Ltd T/​A Louis Dreyfus Sugar v Bonarich International (Group) Ltd [1997] HKCFI 312; [1997] 3 HKC 597 .......................................................358

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Lovell Partnership (Northern) Ltd v AW ConstructionPlc (1996) 81 BLR (1996) 81 BLR 83 .................................................................................................................788

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Lownds v Home Office [2002] 1 WLR 2450 ........................................................................... 1205

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Loyal Profit International Development Ltd. v Travel Industry Council of Hong Kong [2016] HCMP 256/​2016 .......................................................................................................60

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Lucent Technologies Inc. v ICICI Bank Ltd. & Ors. 2009 (Suppl 1) Arb LR 441 (Delhi) .......................................................................... 437, 439 Lucent Technology v ICICI Bank 2009 SCC OnLine Del 3213 ...............................................188

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Lund v Hudson (1843) 1 Dow & L 236 .................................................................................. 1208

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Luzon Hydro Corp. v Transfield Philippines Inc, High Court, Singapore, 13 September 2004, [2004] SGHC 204 .............................................................................859

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Luzon Hydro Corporation v Baybayand Transfield Philippines Inc, Yearbook of Commercial Arbitration, Vol. XXXII (2007), 456 at p. 472 ........................................ 1209 Lyders v Residential College Committee (1910) 30 NZLR 72 ..................................................685

M M Willie & Co (Shipping) Ltd. v Ocean Laser Shipping Ltd. [1999] 1 Lloyd’s Rep 225 .......514 M Zanzi v J de Coninck & Ors, Cass Com, 22 February 1949 ...............................................265 M. Anusuya Devi v M. Manik Reddy (2003) 8 SCC 565 ............................................ 1032, 1328 M. Ashraf v Kasim VK (2018) SCC OnLine Ker 18078 at para. 8 .........................................961

cxxxix

Table of Cases

M. Chalamayya v M. Venkataratnam (1972) 3 SCC 799 .................................................... 1329 M. Moideen Kutty v Divisional Forest Officer Nilambar 1988 (2) Arb LR 37 ......................144 M. Nagabhushana v State of Karnataka (2011) 3 SCC 408 ................................................. 1100 M. Siddiq (Dead) v. Mahant Suresh Das & Others (2019) 4 SCC 659, at para. 6 .............. 1226 M. Sons Enterprises Pvt. Ltd. v Suresh Jagasia 2011 SCC OnLine Del 82 ............................474

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M. Vijaya Narayanan v M. Prabhakaran (2007) 1 Arb LR 1 .................................................409 M.B. Patel & Co. v ONGC (2008) 8SCC 251 ............................................................... 1059, 1295 M.C.I. Power Group L.C. & New Turbine, Inc. v Ecuador ICSID Case No. ARB/​03/​6, Award, at para. 372 ........................................................................................................... 1425

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M.K. Shah Engineers & Contractors v State of M.P (1999) 2 SCC 594 ............................................................................... 181, 498–​499, 506, 511

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M.R. Engineers & Contractors Private Limited v Som Datt Builders Limited (2009) 7 SCC 696 ................................................................................................207–​208, 217

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M/​.s. Simpark Infrastructure Pvt. Ltd. v Jaipur Municipal Corporation 2012 SCC OnLine Raj 2738 ................................................................................................539

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M/​S Addhar Mercantile Private Limited (Applicant) v Shree Jagadamba Agrico Exports Pvt. Ltd Bombay High Court Arbitration Application No 197 of 2014 along with Arbitration Petition No 910 of 2013 .................................................................................157

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M/​s Aka Logistics Pvt. Ltd. v Damodar Valley Corporation (2015) SCC OnLine Cal 6427 ............................................................................................939

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M/​s Auto Craft Engineers v Akshar Automobiles Agencies Private Limited (2016) SCC OnLine Bom 5185 ....................................................................................... 1293

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M/​s Canara Nidhi Ltd. v M. Shashikala & Ors. (2019) 9 SCC 462 ..................................... 1275

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M/​s Duro Felguera S.A. v M/​s Gangavaram Port Limited (2017) SCC OnLine SC 1233 .............................................................................................947 M/​s Emkay Global Financial Services Ltd. v Girdhar Sondhi (2018) 9 SCC 49 ................. 1286

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M/​s Hicare India Properties Pvt. v M/​s Adidas India Marketing Pvt, Arb. 370/​2009, decided on 27 March 2010 ......................................................................313 M/​s Hyder Consulting (UK) Ltd v Governor State Of Orissa through Chief Engineer (2015) 2 SCC 189, at para. 10 .......................................................................................... 1148 M/​s Indian Farmers Fertilizers Cooperative Ltd. v Bhadra Products (2018) 2 SCC 534 .............................................................................................................. 1009 M/​s Oval Investment Pvt. Ltd. & Ors. v M/​s Indiabulls Financial Services Ltd. & Ors. (2009) 112 DRJ 195 .............................................................................................................514

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Law, Practice and Procedure of Arbitration in India

M/​s P.K. Ramaiah and Company v Chairman & Managing Director, National Thermal Power Corpn. (1994) Supp 3 SCC 126 ........................................................................... 1012 M/​s Prime Telesystem Limited v Sasken Communication Technologies Ltd. & Ors. (2009) SCC OnLine Del 4138, at para. 19 ..................................................................... 1014 M/​s Rite Approach Group Ltd. v M/​s Rosoboron export Ltd (2007) SCC OnLine Del 435, at para. 6 ................................................................................................................990

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M/​s Sancorp Confectionary Pvt. Ltd. v M/​s Gumlink 2012 SCC OnLine Del 5507 .............474 M/​s Sree Kamatchi Amman Constructions v Divisional Railway Manager (Works) Palghat and Ors. (2010) 8SCC 767 .................................................................. 1134

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M/​s Sukumar Chand Jain & Another v Delhi Development Authority (2009) SCC OnLine Del 3656, at para. 6–​7 ................................................................... 1043 M/​s Teracom Ltd. v Uttar Haryana Bijli Vitran Nigam 2010 SCC Online P&H 2600 ........665

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M/​s Trojan and Co. v RMNN Nagappa Chettiar (1953) SCR 789 ...................................... 1128

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M/​S Uttam Singh Duggal and Co. Pvt. Ltd. v United States of America, Agency of International Development 1969 SCC OnLine Del 16 ...................................................285

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M/​s Ved Prakash Mithal and Sons v Union of India (2018) SCC OnLine SC 3181 .......... 1086

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M/​s Young Achievers v IMS Learning Resources Pvt. Ltd. 2013 (10) SCC 535 ............ 299, 297

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M/​s. Auto Craft Engineers v Akshar Automobiles Agencies Pvt. Ltd, Arbitration Petition Nos. 556 of 2014 ........................................................................................... 818, 843

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M/​s. Haldiram Manufacturing Company Pvt. Ltd v M/​s DLF Commercial Complexes Ltd. (2012) DLT 193 410 .................................................................................539

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M/​s. Lovely Benefit Chit Fund & Finance Pvt. Ltd. v Puran Dutt Sood & Others AIR 1983 Delhi 413 .............................................................................................................720

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M/​S. M.B. Patel & Co v Oil & Natural Gas Commission (2008) 8 SCC 251, at para. 6 ............................................................................................ 1153 M’Rae v M’Lean [1853] 11 WLUK 138 .................................................................................. 1314

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Macaulay v Polley [1897] 2 QB 122, Wright v Castle (1817) 3 Mer 12 .................................308 Mackender v Feldia AG [1966] 3 All ER 847 ............................................................................325 Mackintosh v Blyth [1823] 1 Bing 269; The Mello, The Nereus [1948] 2 WLUK 23 ........ 1314 Mackley & Co Ltd v Gosport Marina Ltd [2002] EWHC 1315 (TCC) .................................258 Maclean v Workers Union [1929] 1 Ch 602 ..............................................................................648 MacLeod Ross & Co Ltd v Cradock Manners Ltd [1954] 1 Lloyd’s Rep 258 .........................621 Madan Lal v Shyam Lal (2002) 1 SCC 535 ...............................................................................941

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Table of Cases

Madhav Structural Engineers Ltd. v MD Maharashtra State Road Dev. Corp. & Anr. 2016 SCC OnLine Bom 5322 .....................................................................................662 Madhu Mehra v Pritpal Singh (2010) SCC OnLine Del 2174, at para. 5 ........................... 1165 Madhya Pradesh Housing Board v Progressive Writers and Publishers (2009) 5 SCC 678 .............................................................................................................. 1282 Madnani Construction Corpn Ltd. v Union of India (2010) 1 SCC 549 ............................. 1295

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Maeda Construction Co Ltd v Building Design Team [1991] 3 MLJ 24, at p. 26 ............... 1197 Magama Leasing Ltd. v. Gujarat Composite Ltd. AIR 2006 Cal 288 .....................................819 Magic Eye Developers Pvt. Ltd. v. Green Edge Infra Pvt. Ltd. & Ors. 2020 SCC OnLine Del 597 .......................................................................................289–​290

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Magic Eye Developers Pvt. Ltd. v. Green Edge Infra Pvt. Ltd. & Ors. 2020 SCC OnLine Del 597 ........................................................................................389–​390

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Magma Leasing & Finance Ltd. v. Potluri Madhavilata (2009) 10 SCC 103 ...........................................................245, 379, 400, 423, 447, 488, 1289

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Magma Leasing Ltd. v Gujarat Composite Ltd. (2006) SCC OnLine Cal 235, at para. 14-​15 ............................................................................................................................938

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Mahanagar Telephone Nigam Ltd v Canara Bank Financial Services Limited 2019 SCC OnLine SC 995, at paras 10.2 to 10.5 ..............................................................829

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Mahanagar Telephone Nigam Ltd. v Canara Bank (2019) 10 SCC 32 ....................................65

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Mahanagar Telephone Nigam Ltd. v Siemens Public Communication Network Ltd. (2005) SCC OnLine Del 237 .......................................................................1027, 1030, 1297

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Maharashtra Industrial Development Corporation Ltd. v Govardhani Construction Co. 2008 SCC OnLine Bom 230 ........................................................................................................936

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Maharashtra State Electricity Board v Data Switchgear Ltd. (2002) SCC Online Bom 983 .............................................................................................772

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Maharashtra State Electricity Distribution Co. Ltd. v Datar Switchgear Ltd. (2018) 3 SCC 133, at para. 51 .......................................................................................... 1282 Maharashtra State Electricity Distribution Company Ltd. v Deltron Electronics (2016) SCC OnLine Bom 9521 ....................................................................................... 1030 Maharashtra State Electricity v A.S. Joshi and Anr 1990 (3) BomCR 140, Decision of Bombay High Court on 8 June 1990 ............................................................................679 Mahaveer Infoway Limited v Tech Mify Info Solutions LLP (2017) SCC OnLine Hyd 221, at para. 9 ...........................................................................978 Mahavirchand v Ashaykumar 2011 SCC OnLine Bom 794 .......................................... 859, 916

cxlii

Law, Practice and Procedure of Arbitration in India

Mahendra Kumar Poddar v Bansal Builders & Others (2000) SCC OnLine Cal 142 ........................................................................................... 1116 Mahesh Kumar Agarwal & Ors. v Suresh Chand Agarwal & Ors (2015) SCC OnLine All 6246 .......................................................................................... 1291 Majlis Perbandaran Petaling Jaya v J F Industrial Products & Supplies Sdn Bhd [1998] 1 MLJ 441, CA .........................................................................................................537

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Majlis Perbandaran Pulau Pinang v Syarikat Bekerjasama Serbaguna Sungai Gelugor dengan Tanggunggan [1999] 3 MLJ 1, [1999] 3 CLJ 65 ..................................................632

Major (Retd) Inder Singh Rekhi v Delhi Development Authority (1988) 2 SCC 338 ......................................................................................... 48, 343–​344, 352

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Malaysian Historical Salvors Sdn Bhd v The Government of Malaysia ICSID Case No ARB/​05/​10, available at: http://​www.ita​law.com/​sites/​defa​ult/​files/​case-​ docume​nts/​ita0​497.pdf .......................................................................................................549 Malaysian National Insurance Co Sdn Bhd v Meraslam [1982] 1 MLJ 274, PC ..................534

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Malaysian Newsprint Industries v Bechtel International [2008] 5 MLJ 254 at [20], dismissed on appeal in [2012] 4 MLJ 583 ...........................427

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Maldives Airports Co Ltd v GMR Malé International Airport Pte Ltd [2013] SGCA 16, [2013] 2 SLR 449 ...................................................................................413

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Maldives Airports Co. Ltd. & Anr. v GMR Male International Airport Pte Ltd. [2013] SGCA 16 ...................................................................................................................976

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Malicorp Limited v The Arab Republic of Egypt ICSID Case No ARB/​08/​18 .................... 1407 Malicorp Ltd. v Govt. of Arab Republic of Egypt [2015] EWHC 361 (Comm) ................. 1344

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Malini Ventura v Knight Capital Pte Ltd [2015] SGHC 225 ...................................................265

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Mamidoil-​Jetoil Greek Petroleum Co. SA v Okta Crude Oil Refinery AD [2001] 2 All ER (Comm) 193, [2001] EWCA Civ 406 ................................................. 1130

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Managing Director, Army Welfare Housing Organisation v Sumangal Services (P) Ltd. (2004) 9 SCC 619 .................................................................933, 940, 1006 Manak Lal v Dr. Prem Chand Singhvi, 1957 SCR 575 ................................................... 907, 909 Manalal Prabhudayal v Oriental Insurance Co. Ltd. (2009) 17 SCC 296 ...........16, 1161, 1164 Mangistaumunaigaz Oil Production Association v United World Trading Inc [1995] 1 Lloyd’s Rep 617 ............................................................................................ 167, 190 Manjit Johl v Dewan Modern Breweries Ltd. (1996) SCC OnLine Del 95, at para. 17 ..... 1145 Mankastu Impex Private Limited v Airvisual Limited (2020) SCC Online SC 301 .............................................................................................. 1034

cxliii

Table of Cases

Mannai Investment Co Ltd v Eagle Star Life Assurance Co [1997] AC 749, [1997] 3 All ER 352, [1997] 2 WLR 945 ..........................................................................523 Manohar Reddy & Bros. v Maharashtra Krishna Valley Development Corporation (2009) 2 SCC 494 .................................................................................................................240 Manoharan a/​l Malayalam v Menteri Dalam Negeri, Malaysia [2009] 2 MLJ 660 .......... 1104 Manser v Heaver (1832) 3 B & Ad 295 ............................................................................. 359, 361

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Mansfield v Robinson [1928] 2 KB 353 ........................................................................ 1194, 1254 Manuchar Steel Hong Kong Ltd v Star Pacific Line Pte Ltd [2014] 4 SLR 832 ......................290 Marc Rich & Co AG v Beogradska Plovidba, The Avala [1994] 2 Lloyd’s Rep 363 ........... 1189 Marek v Chesney 473 US 1 (1985) .......................................................................................... 1227

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Mareva Compania Naviera S.A. v Int’l Bulkcarriers S.A [1975] 2 Lloyds Rep. 509 .............457

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Mareva Compania Naviera SA v International Bulkcarriers SA, 1975 2 Lloyd’s Rep 509 ........................................................................................................989

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Marguiles Bros Ltd. v Dafnis Thomaides & Co. (UK) Ltd. [1958] 1 Lloyd’s Rep 250 ........ 1062

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Margulies Bros Ltd v Dafnis Thomaides & Co (UK) Ltd [1958] 1 All ER 777 ......... 1053, 1118

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Mariana Maritime SA v Stella Jones Inc [2002] FCA 215 (CanLII) ......................................438 Marine Contractors Inc v Shell Petroleum Development Company of Nigeria Ltd. [1984] 2 Lloyd’s Rep 77 .................................................................................................... 1098

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Maritime Insurance Co Ltd v Assecuranz-​Union Von 1865 (1935) 52 Ll Rep 16 .................712

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Maritime International Nominees Establishment (MINE) v Republic of Guinea ......... 130, 482

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Maritime Transport Overseas GmbH v Unitramp SA, The Antaios [1981] Lloyd’s Rep ............................................................................................................ 1191

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Marketing Federation of Indian Ltd. v R. Piyarelall Import and Export Ltd. (2015) SCC OnLine Cal 7198, at paras 25–​26 ............................................................. 1036 Marks v Marriot (1696) 1 Ld Raym 114 ................................................................................ 1105

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Marriot International Hotels Inc. v JNAH Development S.A. Paris Court of Appeal No. 09/​13550 ........................................................................................ 1109 Marriott v Minister of Health 105 LJKB 125 confirmed in appeal in [1937] 1 KB 128 CA, 723 Marsack v Webber (1860) 6 H & N 1 .........................................................................................692 Marsh v Wood (1829) 9 B & C 659 ............................................................................................382 Marshall v Capital Holdings Ltd (trading as Sunworld) [2006] IEHC 271 ...........................713 Martin v Thornton (1802) 4 Esp 180 ...................................................................................... 1055

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Law, Practice and Procedure of Arbitration in India

Maruna v Lopatka [2002] BCSC 1084, SC (BC) .................................................................. 1193 Marvin Feldman v Mexico ICSID Case No. ARB(AF)/​99/​1, Correction and Interpretation of the Award (13June 2003), at para. 9–​11 .......................................... 1021 Marvin Roy Feldman Karpa v United Mexican States Award, 16 December 2002, 7 ICSID Rep 318, at pp. 397–​398 ................................................. 1423

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Mascon Multiservices and Consultants Pvt. Ltd. v Bharat Oman Refineries Ltd. (2008) SCC OnLine Bom 723 ......................................................................................... 1305 Massachusetts B and Insurance Co. v US (1956) 352 US 128 .................................................335 Master Abhishek Mehra v. JLG Retails Ltd. 2018 ......................................................... 1226, 1230

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Mastrobuono v Shearson Lehman Hutton Inc [1988] 2 Lloyd’s Rep. 73, at para. 582 ............................................................................. 1129

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Matheson & Co Ltd v A Tabah & Sons [1963] 2 Lloyd’s Rep 270 ........................................................ 1200–​1201, 1213–​1214, 1220

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Mathuradas Maganlal v Maganlal Parbhudas, AIR 1934 Bom 79 ................................... 19–​20 Mathuradass Goverdhandass v Khusiram Benarshilal 1949 SCC OnLine Cal 295 ...............47

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Matson v Trower 1824 Ry. & M.17 .......................................................................................... 1062

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Mattapalli Chelamayya v Mattarpalli Venkataratnam (1972) 3 SCC 799 ......................... 1329 Matthew v Ollerton 4 Mod Rep 226 ..........................................................................................572

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Matthews v IRC [1914] 3 KB 192, CA(Eng); Cargey v Aitcheson (1823) 2 B & C 170 ........916

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Mauritius Commercial Bank Ltd v Hestia Holdings Ltd [2013] EWHC 1328 (Comm) ................................................................................................ 186, 188

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Mavani v Ralli Bros Ltd [1973] 1 WLR 468 .....................................................................943–​944

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May and Butcher, Limited v The King [1934] 2 KB 17 .............................................................355

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Mayavati Trading (P) Ltd. v Pradyuat Deb Burman (2019) 8 SCC 714 ...............557, 603, 610 Maybank Kim Eng Securities Pte Ltd v Lim Keng Yong (2016) SGHC 68 .............................407

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Mayer v Harte [1960] 2 All ER 840, at p. 846, [1960] 1 WLR 770, at p. 777, CA (Eng) ..................................................................................... 1215 Mayers v Dlugash [1994] 1 HKC 755 ..........................................................................................55 Mays v Cannell (1854) 15 CB 107 ........................................................................................... 1063 McCarthy v Keane [2004] IESC 104 ..........................................................................................731 McCreary Tire & Rubber Co. v CEAT, SpA 501 F.2d 1032 (3rd Cir. 1974) .................. 401, 971 McDermott InternationaI Inc. v Burn Standard Co. Ltd. (2006) 11 SCC 181 ...............................................................................................................271

cxlv

Table of Cases

McDermott International Inc v Burn Standard Co. Ltd. and Ors. (2006) 11 SCC 18 .................................................................................................................911 McDermott International Inc v Burn Standards Co. Ltd. (2006) 11 SCC 181 ....................................................................969, 1005, 1007, 1021, 1042, 1048, 1065, 1091, 1142, 1273–​1274, 1287, 1301, 1315

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McDermott International Inc. v Burn Standard Co. Ltd. & Ors. (2006) 11 SCC 181 ..........344 McDermott International Inc. v Burn Standard Coal Company 2006 (2) Arb LR 498 ..........30

McDonald’s India Pvt. Ltd. v Mr. Vikram Bakshi 2016 SCC OnLine Del 3949, (2016) 232 DLT 394 .............................................................................................................472

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McDonald’s India Pvt. Ltd. v Mr. Vikram Bakshi 2016 SCC OnLine Del 3949 ..................................................................... 474, 476–​477, 479

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McDonald’s India Pvt. Ltd. v. Vikram Bakshi & Co, 2016 SCC OnLine Del 3949 ...... 415, 440

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McDonald’s India Pvt. Ltd. v Vikram Bakshi & Ors. 2016 (4) Arb LR 250 (Delhi) .............439 MCI v Republic of Ecuador ICSID Case No. ARB/​03/​6, Award of 31 July 2007 ............... 1408

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MCIS Insurance Bhd v Associated Cover Sdn Bhd [2001] 2 MLJ 561 ......................... 996, 1017

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McKechnie v McKechnie [2005] BCCA 570 (CanLII) .......................................................... 1081 McLaughlin Gormley King Co. v Teminix Intl Co. L.P 105 F.3d 1192 (8th Cir. 1997) .........475

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MCM Bulk Shipping (M) Sdn Bhd v Raz Intan Industries Sdn Bhd [2012] MLJU 401 .......347

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MD, Army Welfare Housing Organization v Sumangal Services (P) Ltd. (2004) 9 SCC 619, para. 43 .............................................................................................. 1057

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Mediterranea Raffineria Siciliana Petroli SpA v Kuwait Oil Tanker Co SAK, The Al Faiha [1981] 2 Lloyd’s Rep 99, at 105, [1981] Com LR 81, 534, 537 Medov Lines SpA v Traelandsfos A/​S [1969] 2 Lloyd’s Rep 225 at p. 227, 593

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Meenakshi Saxena v ECGC Ltd. (2018) 7 SCC 479 .............................................................. 1121

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Meera Goyal v Priti Saraf (O.M.P. 2/​2020 –​High Court of Delhi) (Judgment dated 26 February 2020) .................................................................................260 Melanie Fialho v Malcolm Francis Pereira (1993) SCC OnLine Bom 115 ......................... 1306 Mellors v Gibson [1981] 1 All ER 233 ..................................................................................... 1242 Melton Medes Ltd. v Securities and Investments Board [1995] 3 All ER 880 ........................926 Mercury Oil Refining Co. v Oil Worker Intern Union CIO 187 F.2d 980, 1062 Messers Ltd v Heidner & Co (No 2) [1961] 1 Lloyd’s Rep 107 ........................................................1199, 1216, 1203, 1221, 1314,

cxlvi

Law, Practice and Procedure of Arbitration in India

Messrs Ltd v Heidner & Co (No 2) [1960] 1 Lloyd’s Rep 500 .............................................. 1216 Metal Corp Ltd v Khoon Seng Co. [1977] 2 Lloyd’s Rep 310 ..................................................731 Metal Scrap Trade Corpn Ltd v Kate Shipping Co Ltd, The Gladys [1990] 1 All ER 397, [1990] 1 WLR 115, [1990] 1 Lloyd’s Rep 297, HL .......................429 Metalclad v Mexico, Award, 30 August 2000 ......................................................................... 1422

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Metalform Asia Pte. Ltd. v. Holland Leedon Pte. Ltd. Court of Appeal, Singapore, [2007] 2 SLR 268 ......................................................................................................... 386, 738 Metalimpex Foreign Trade Corpn v Eugenie Maritime Co Ltd [1962] 1 Lloyd’s Rep 378 .....................................................................................................530 Metallgesellschaft AG v M/​V Capitan Constante 790 F.2d 280, 283 (2d Cir. 1996) .......... 1007

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Metalmeccanica Fracasso India Pvt. Ltd. v Prakash Industrial Infrastructure Pvt. Ltd. (2014) SCC OnLine Bom161, at para. 7 ........................................................................ 1081

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Methanex Corporation v United States of America, Final Award of the Tribunal on Jurisdiction and Merits, 3 August 2005 .................................................... 1005, 1425–​1426 Methanex Motonui Ltd v Spellman [2004] 1 NZLR 95 .... 50, 174–​175, 345, 1112, 1281, 1291

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Methanex Motunui Ltd v Spellman [2004] 1 NZLR 95, at para. 76, affirmed [2004] 3 NZLR 454, CA, 349 ..............................................................................................719 Metro-​Cammell Hong Kong Ltd v FKI Engineering plc (1996) 77 BLR 84 ......................... 1207

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Metropolitan Properties Co (F G C) Ltd v Lannon [1968] 3 All ER 304 ....................... 642, 652

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Meydan Group LLC v Alexis Mourre, Case No. 212/​2014 ......................................................924 Meydan Group LLC v Doug Jones, Case No. 284/​2015 ...........................................................924

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Michael v Aetna Life & Cas Ins Co, 107 Cal Rptr 2d 240, 251 (Cal App 2001) ....................644

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Michael Wilson & Partners Ltd v Emmott [2008] EWHC 2684 (Comm) ......................... 1037

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Michael Wilson v Emmott [2008] EWHC 2684 (Comm) .................................................... 1000 Michael Wilson v Thomas Sinclair [2012] EWHC 2560 ....................................................... 1113

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Micula v Romania ICSID Case No. ARB/​05/​20, Decision on Jurisdiction and Admissibility, 24 September 2008, at para. 86 .............................................................. 1403 Middle East Cement Shipping and Handling Co SA v Arab Republic of Egypt ICSID Case No ARB/​99/​6, Award, 12 April 2002 ........................................................ 1427 Middlemiss & Gould (a firm) v Hartlepool Corp [1973] 1 All ER 172 ..................... 1056, 1107 Middlemiss & Gould v Hartepool Corpn [1972] 1 WLR 1643 ............................................ 1062 Midex Overseas Ltd. v M/​s Dewas Soya Ltd. (2001) 2 MPLJ 391 ....................................... 1276 Midgulf International Ltd v Groupe Chimiche Tunisien [2009] EWHC 963 (Comm) ........413

cxlvii

Table of Cases

Midgulf International Ltd v Groupe Chimique Tunisien [2010] EWCA Civ 66 ...................211 Milan Nigeria Ltd v Angeliki B Maritime Company [2011] EWHC 892(Comm) ............ 1292 Miliangos v George Frank (Textiles) Ltd [1976] 1 Lloyd’s Rep 201 ..................................... 1351 Miliangos v George Frank (Textiles) Ltd [1976] AC 443 ...................................................... 1120 Milkfood Ltd v GMC Ice Cream (P) Ltd (2004) 7 SCC 288 .................. 505, 508, 513, 515, 527

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Miller v De Burgh 1850 4 Exch 809 ........................................................................................ 1061 Mills v Bowyer’s Society (1856) 3 K & J 66 ...................................................................1304–​1305 Millthorpe v The Spa Hydraulic Sluicing & Gold Mining Co (1893) 14 LR (NSW) 292 ....................................................................................................916

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Milner v Field [1850] 11 WLUK 115 ...........................................................................................56

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Minerals & Metals Trading Corporation of India Ltd v Encounter Bay Shipping Co. Ltd. (The Samos Glory) (No2) [1988] 1 Lloyd’s Rep 51 ........................ 1004

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Minermet SpA Milan v Luckyfield Shipping Corp SA [2004] EWHC 729 ............................257 Mines v Alpha Clay (2004) SCC OnLine Ker 79 ................................................................... 1057

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Minister of Finance (Inc) v International Petroleum Investment Co [2019] EWCA Civ. 2080 .....................................................................................................973

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Minister of Finance (Inc.) 1 Malaysia Development Berhad v International Petroleum Investment Company Aabar Investments PJS [2019] EWCA Civ 2080, [2019] EWHC 1151 (Comm) ............................................................................................476

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Ministry of Sound International Ltd. v Indus Renaissance Partners Entertainment Pvt. Ltd. 2009 SCC OnLine Del 11 ....................................................................................430

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Ministry of Youth Affairs and Sports v Swiss Timing Ltd. (2019) SCC OnLine Del 9390, at para. 26 ......................................................................................................... 1252

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Minmetals Germany GmbH v Ferco Steel Ltd [1999] 1 All ER (Comm) 315, 68 .............. 1344

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Minoutsi Shipping Corp v Trans Continental Shipping Services Pte Ltd [1971] 2 MLJ 5 ......................................................................................................... 561, 1383 MISC Berhad v Cockett Marine Oil (Asia) Pte Ltd (Admiralty in Personam No. WA-​27NCC-​46-​05/​2020) ...................................................................................................479 Mitchell Construction Kinnear Moodie Group v East Anglia Regional Hospital Board [1971] CLY 375 ................................................................................................................. 1112 Mitra Guha Builders (India) Co. v Oil and Natural Gas Corporation Ltd. (2020) 3 SCC 222 .................................................................................................... 1059, 1295 Mitsubishi Corpn v Castletown Navigation Ltd, The Castle Alpha [1989] 2 Lloyd’s Rep 383 .......................................................................................... 537, 1383

cxlviii

Law, Practice and Procedure of Arbitration in India

Mitsui Engineering & Shipbuilding Co. Ltd. v Easton Graham Rush and Anr. [2004] SGHC 26 .......................................................................................................... 469, 652 Mitsui Engineering and Shipbuilding Co Ltd v Easton Graham Rush and Another [2004] 2 SLR 14 ........................................................................................................... 475, 974 Mitsui OSK Lines Ltd. (Japan) v Orient Ship Agency Pvt. Ltd 2020 SCC OnLine Bom 217 ........................................................................................ 78, 293

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MJ Gleeson Group Plc v Wyatt of Snetterton Ltd (1995) 11 Const LJ 59, 42 ConLR 14, CA (Eng) ......................................................................................................164 MJ Gleeson Group v Wyatt of Snetterton Ltd. [1994] 72 BLR 15 (CA) .................................342

MKU Ltd. v Union of India (2016) SCC OnLine Del 6403 .................. 1019, 1080, 1083, 1271

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MMTC Ltd. v Karam Chand Thapar and Bros. (Coal Sales) Ltd. 2018 SCC OnLine Del 12295 ................................................................................ 1221, 1251

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MMTC Ltd. v Sterlite Industries (India) Pvt. Ltd. (1996) 6 SCC 716 ........................... 190, 584

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MMTC Ltd. v Vedanta Limited (2019) 4 SCC 163 .............................................968, 1053, 1294 MMTC v Vicnivass Agency (2008) SCC OnLine Mad 584 ........................................ 1094, 1313

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Mobikom Sdn Bhd v Inmiss Communications Sdn Bhd [2007] 3 MLJ 316 ...........................418

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Mobil Tel Ltd v Fellowes International Holdings Ltd [2005] EWHC 1314 (Comm) ............411

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Mobile Telecommunications Co. KSC v HRH Prince Hussam Bin Saud Bin Abdulaziz Al Saud [2019] EWHC 3109 (Comm) ........................................................ 1084

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Mobilox Innovations Private Ltd. v Kirusa Software Private Ltd. (2018) 1 SCC 353 ...........352 Modern Building Wales Ltd v Limmer & Trinidad Co Ltd 14 BLR 101

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Modern Engineering (Bristol) Ltd v C Miskin & Son Ltd. [1981] 1 Lloyd’s Rep 135 ...... 9, 803

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Modi Entertainment Network and Anr. v W.S.G. Cricket PTE. Ltd. (2003) 4 SCC 341 ................................................................................................412, 414, 484 Mohal Lal Mirpuri v Amarjit Singh Jass 1997 56 Con. L.R. 31 ..............................................907

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Mohammedhussain Abdullabhai v Shabbirbhai Abdullabhai (2017) SCC OnLine Bom 8823, at para. 29 ................................................................... 1012 Mohan Lal Gupta v AshaDevi Gupta (2003) 7 SCC 492 ...................................................... 1293 Mohd. Wahiduddin v Hakiman 1902 SCC OnLine Cal 224, (1902) ILR 29 Cal 278 ..........646 Mohesenuddin v Khabiruddin AIR 1921 Cal 818 ....................................................................281 Mohinder Pal Singh v Northern Railways 2007 SCC OnLine Del 1165, at para. 9 ........... 1144 Mohinder Singh & Co. v Board of Trustees of the Port of Bombay (2009) 4 SCC 86, at para. 5 .............................................................................................. 1151

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Table of Cases

Mohiri Bibi v Dharmodas Ghose (1903) 30 Cal 539 ................................................................280 Mohit Bhargava v Bharat Bhushan Bhargava (2007) 4 SCC 795 ...........................................459 Mohori Bibee v Dhurmodas Ghose (1903) 30 IA 114 ..............................................................280 Monmouth County Council v Costelloe and Kemple Ltd (1965) 63 LGR 429, (1995) 5 BLR 83 at p. 89, 48 ............................................................345

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Monmouthshire County Council v Costelloe & Kemple Ltd [1965] 63 LGR 131 ..................495 Monmouthshire County Council v Costelloe and Kemple Ltd. [1965] 5 BLR 85 (CA) ........342 Monmouthshire County Council v Newport Borough Council [1947] 1 All ER 900, [1947] AC 520, HL ........................................................................................................... 1149

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Montague v Common wealth Dev. Corp, XXVI Y.B. Comm. Arb. 744, p. 748 (Queensland Sup. Ct. 1999) (2001) ................................................................................ 1224

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Montana Developers Pvt. Ltd. v Aditya Developers (2016) SCC OnLineBom 5318 ..........................................................................979–​980, 985

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Montana Developers Pvt. Ltd. v Aditya Developers, Mumbai (2016) 6 MhLJ 660 ...............862

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Montedipe SpA v JTP-​RO Jugotanker, The Jordan Nicolov [1990] 2 Lloyd’s Rep 11 ...................................................................277, 295, 297–​298, 1292

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Montpelier Reinsurance Ltd. v Manufacturers Property & Casualty Ltd. (2008) SC (Bda) 27 Com (24 April 2008) para. 7 ............................................................950

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Montrose Canned Foods Ltd v Eric Wells (Merchants) Ltd [1965] 1 Lloyd’s Rep 597 ..................................................................................647, 719, 1118

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Moody v Ellis (1984) 26 BLR 39 .............................................................................................. 1117

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Moor & Bedell’s Case [1587] 145 ER 189, Jenk 264 .................................................................359

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Moran v Lloyd’s [1983] QB 542 ............................................................................................... 1066

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Morelite Construction Corp v NYC District Council Carpenters’ Benefit Funds 748 F.2d 79 (2d Cir 1984) ........................................................................................................................631

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Morepen Laboratories Ltd. v Morgan Securities & Credits Pvt. Ltd. (2008) SCC OnLine Del 940 ........................................................................................... 1012 Morgan Grenfell (Local Authority Finance) Ltd v Seven Seas Dredging Ltd (1990) 21 Con LR 122 ...................................................................................................... 1152 Morgan Phillips, Inc. v JAMS/​Endispute, LLC 140 Cal.App.4th795 (Cal. Ct. App. 2006) .............................................................................................................894 Morgan Securities & Credit Pvt. Ltd. v Modi Rubber Ltd. (2006) 12 SCC 642 .......... 951, 1325 Morgan v Mather (1792) 2 Ves Jun 15 ......................................................................................712 Morgan v Morgan 2 LJ Ex 56 ......................................................................................................641

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Law, Practice and Procedure of Arbitration in India

Morgan v William Harrison Ltd [1907] 2 Ch 137, CA (Eng) .................................................202 Morris v. Harris (1926) All ER Rep 15 ......................................................................................386 Morro v Crowie 1967 SASR 165; Re JRL, Ex parte CJL (1986) 161 CLR 342 ......................910 Mortgage Express v Countrywide Surveyors Ltd. [2016] EWHC 1830 ............................... 1172 Moschi v Lep Air Services Ltd [1973] AC 331 ...........................................................................305

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Moscow v/​o Exportkhleb v Helmville Ltd, “The Jocelyne” [1977] 2 Lloyd’s Rep 121 ........................................................................................................ 534, 536 Moseley v Simpson (1873) LR 16 Eq 226 ................................................................................ 1304 Moti v Sheroo Jal Vakil (2009) SCC OnLine Bom 604 ............................................... 1030, 1069

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Motor Vessel Tojo Maru v NV Bureau Wijsmuller (The “Tojo Maru”) [1972] AC 242 .......226 Mount Cook (Northland) Ltd v Swedish Motors Ltd. [1986] 1 NZLR 720 ............................308

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Mr. K. Dhanasekar v Union of India and Ors O.P. No. 4 of 2015 and O.A. No. 31 of 2015, available at http://​164.100.79.153/​judis/​chen​nai/​index.php/​cas​ esta​tus/​view​pdf/​489​701 ......................................................................................................658

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Ms Dyna Technologies Pvt. Ltd. v M/​s Crompton Greaves Ltd. (2019) SCC OnLine SC 1656, at para. 37 ................................................................................... 1046

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MSK Projects (I) (JV) Ltd. v State of Rajasthan (2011) 10 SCC 573, at para. 25 ............... 1161 MSK Projects (I) Ltd v State of Rajasthan (2008) 2 Arb LR 340 ......................................... 1223

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MSTC Ltd. v Omega Petro Products Pvt. Ltd. 2018 SCC OnLine Bom 487 .........................303

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MTD Equity Sdn Bhd and MTD Chile SA v Republic of Chile ICSID Case No. ARB/​01/​7, Award, 25 May 2004 .................................................1416, 1423, 1427

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MTD v Chile, Decision on Annulment, 21 March 2007 ...................................................... 1430

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MTNL v Canara Bank (2013) 1 SCC 641 ........................................................................ 290, 390

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Mugoya Construction & Engineering Ltd v National Social Security Fund Board of Trustees [2005] EKLR, Civil Suit 59 of 2005 (Kenya) ......................................401

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Muhammet Çap & Sehil Insaat Endustri ve Ticaret Ltd Sti v Turkmenistan ICSID Case No ARB/​12/​6 ..................................................................................................................... 560, 703 Muir v Commissioner of Inland Revenue [2007] 3 NZLR 495 ....................................... 623, 635 Mukesh Nanji Gala v Heritage Enterprises (2014) SCC OnLine Bom 1817, at para. 20 ................................................................... 1283 Mukundlal Pakrashi v Prakash Chandra Pakrashi 1939 SCC OnLine Cal 332, at para. 4 ............................................................................................................. 1031

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Table of Cases

Mulheim Pipecoatings GmbH v Welspun Fintrade Limited 2013 SCC OnLine Bom 1048 .............................................................................................246 Multiplex Constructions Pty Ltd v International Golf Services Pty Ltd [1988] 4 BCL 320 .............................................................................................................. 1054

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Mumbai International Airport Limited v Airports Authority of India & Anr. O.M.P. (I) (COMM.) 174/​2020 and I.A. 5430/​2020, I.A. 5467/​2020, and I.A. 5468/​2020 decided on 27 November 2020, 402, 405–​406 .................................................................975 Muni Lal v Oriental Fire & General Insurance Co. Ltd. (1996) 1 SCC 9 ...............................531 Municipal Corporation of Delhi v Eastland Switchgear (P) Ltd. (2007) SCC OnLine Del 120 ........................................................................................... 1304

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Municipal Corporation of Greater Mumbai & Anor. v Pratibha Industries Limited, 2017 SCC OnLine Bom 8427 .............................................................................................226

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Municipal Corporation of Greater Mumbai & Anr. v Pratibha Industries Limited 2019 3 SCC 203 ....................................................................................................................227

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Municipal Corporation of Greater Mumbai v Prestress Products (India) (2002) SCC OnLine Bom 798, at para. 16 ..................................................................... 1046

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Municipal Corporation of Greater Mumbai v PWT Projects Ltd. (2005) SCC OnLine Bom 141 ......................................................................................... 1298

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Munni Kumar v State of Bihar and Ors. Criminal Writ Jurisdiction Case No. 424/​2014, decided on 29 March 2016 (High Court of Patna) .........................................................887

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Murphy Exploration and Production Company International v Republic of Ecuador ICSID Case No. ARB/​08/​4 ............................................................................... 1223

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Murphy v Ecuador [II], Partial Final Award, 6 May 2016, at para. 208 ............................. 1415

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Musawi v R.E. International (UK) Ltd. 2007 EWHC 2981 Ch ........................................... 1038

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Musawi v RE International (UK) Ltd. [2012] EWHC 4076 ................................................ 1118

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Mutta International v Nandnadan Silk Mills Pvt. Ltd. (2007) SCC OnLine Bom 350, at para. 7 ........................................................................................................... 1044 Mutual Shipping Corp of New York v Bayshore Shipping Co of Monrovia, The Montan 1985 1 All ER 520 ......................................................... 1019, 1068, 1079–​1081, 1085, 1271 Myanma Yaung Chi Oo Co v Win Win Mu [2003] 2 SGHC 124 ...........................................124 Myron (Owners) v Tradax Export SA Panama City RP [1970] 1 QB 527, [1969] 2 All ER 1263 .................................................................................................. 621, 624 Mysore Cements Ltd. v Svedala Barmac Ltd. (2003) 10 SCC 375 ............................................34

clii

Law, Practice and Procedure of Arbitration in India

N N Khosla v Rajlakshmi (2006) 3 SCC 605 .............................................................................. 1032 N. Jayalaxmi v R. Veeraswamy (2003) 6 ALT 186, at paras. 24, 25 .......................................766 N. Jayalaxmi v R. Veeraswamy and Anr, 2004 (1) ARBLR 31, at para. 20 ...........................810 N. Radhakrishnan v Maestro Engineers (2010) 1 SCC 72, at para. 5 .....................................347

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N. Reg’l Health Auth. V. Derek Crouch Constr. Co. [1984] 1 QB 644 ....................................911 N.N. Global Mercantile Pvt. Ltd. v Indo Unique Flame Ltd. and Others (2021) SCC OnLine SC 13 ............................................................................................... 1289 N.N. Mercantile Pvt. Ltd. v Indo Unique Flame Ltd, Civil Appeal No. 3802-​3803/​2020 decided by judgment dated 11 January 2021, 240 ...........................................................610

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N.S. Nayak & Sons v State of Goa (2003) 6 SCC 56, at para. 14 ......................................... 1069

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N.V. International v State of Assam (2020) 2 SCC 109 ..............................................................34

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Naamlooze Vennootschap Handels-​en-​Transport Maatschappij “Vulcan” v A/​S J Ludwig Mowinckels Rederi [1938] 2 All ER 152 ......................................................................... 1103

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Nandram Hanutram v Raghunath and Sons Ltd. 1953 SCC OnLine Cal 219 .....................352

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Nanhai West Shipping Co. v Hong Kong United Dockyards Ltd. [1996] 2 HKC 639 (High Court of Hong Kong) .............................................................451

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Nanjing Cereals, Oils and Food Stuffs Import & Export Corporation v Luckmate Commodities Trading Ltd [1994] HKCFI 140 .................................................723, 819, 843

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Nanjing Tianshun Shipbuilding Co Ltd v Orchard Tankers PTE Ltd [2011] EWHC 164 (Comm) ...............................................................................................191

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Narayan Prasad Lohia v Nikunj Kumar Lohia & Ors. (2002) 3 SCC 572 ............262, 547, 591

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Narayan Prasad Lohia v Nikunj Kumar Lohia (2002) 3 SCC 572 ..........................................................................579, 584, 662, 1296–​1297, 1304–​1305

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Narayan Trading Co. v Abcom Trading Pvt. Ltd. (2012) SCC OnLine MP 8645, at para. 12 ..................................................................... 1330 Nares v Drury (1864) 10 LT 305 ....................................................................................... 718, 720 Nash Dredging Ltd v Kestrel Marine Ltd 1986 SLT 62 .......................................................... 1152 Nash v Inman [1908] 2 KB 1 ......................................................................................................280 Nathani Steels Ltd. v Associated Constructions (1995) Supp 3 SCC 324 .................... 343, 1012 National Ability SA v Tinna Oils & Chemicals Ltd [2009] EWCA Civ 1330 ......................................................................................... 1329, 1331

cliii

Table of Cases

National Agricultural Coop. Mktg. Federation India Ltd. v Gains Trading Ltd (2007) 5 SCC 692 ................................................................................................240, 245, 825 National Agricultural Cooperative Marketing Federation of India v Alimenta S.A. (2020) SCC OnLine SC 381 .................................................................................. 1350, 1352 National Aluminium Co. Ltd. v Protocol and Fabrications Pvt. Ltd. (2004) 1 SCC540, at para. 11 ........................................................................................... 1325

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National Aluminium Company Limited v Subhash Infra Engineers Pvt. Ltd. 2019 SCC OnLine SC 1091 .......................................................................................472–​473 National Aluminium Company v Pressteel & Fabrications Pvt. Ltd. (2004) 1 SCC 540 .............................................................................................................. 1283

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National Bank of Greece SA v Pinios Shipping Co. & George Dionysios Tsitsilianis (No. 3) [1990] 1 Lloyd’sRep. 225 ..................................................................................... 1149

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National Enterprises Ltd v Racal Communications Ltd. [1974] 3 All ER 1010 ....................593

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National Fire and General Insurance Co v UOI AIR 1956 Cal 11 ....................................... 1254

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National Highways Authority of India v Bumihiway DDB Ltd. (JV) & Ors. (2006) 10 SCC 763 ...................................................................................................... 549, 609

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National Highways Authority of India v Gammon Engineers and Contractor Pvt. Ltd. (2018) SCC OnLine Del10183, at para. 26 .................................................................... 1194

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National Highways Authority of India v Gayatri Jhansi Roadways Limited (2019) SCC OnLine SC 906 .....................................................................................................................411

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National Highways Authority of India v Gwalior-​Jhansi Expressway Limited 2018 8SCC 243 .....................................................................................................................999

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National Highways Authority of India v Hindustan Construction Co. Ltd. 2015 SCC OnLine Del 10086, at paras 15, 20 ............................................................... 1069

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National Highways Authority of India v ITD Cementation India Limited (2015) 14 SCC 21 .............................................................................................................. 1294

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National Highways Authority of India v K.K. Sarin 2009 SCC OnLine Del 764 ..................658 National Highways Authority of India v Oriental Structural Engineers Ltd. v Gammon India Ltd. (JV) (2012) SCC OnLine Del 4787, at para. 10.3 .........................984 National Highways Authority of India v Oriental Structural Engineers Ltd. Gammon India Ltd. (JV), AIR 2012 Del 67, at para. 10.3 ...............................................862 National Highways Authority of India v Pcl Sticco (Jv.) 2018 SCC OnLine Del 10169 ........679 National Highways Authority of India v Progressive Constructions Ltd. 2015 (5) Arb LR 71 (Del) ...................................................................................................509

cliv

Law, Practice and Procedure of Arbitration in India

National Highways Authority of India v Sheladia Associates Inc. (2009) SCC OnLine Del 2541 ............................................................................................964 National Highways Authority of India v. K. K. Sarin (2009) 159 DLT 314 .................... 76, 377 National Insurance Co. Ltd. v Boghara Polyfab (P) Ltd. (2009) 1 SCC 267 ............................................................................. 246, 267, 605, 957, 1297 National Insurance Co. Ltd. v Padma Tobacco Co. (2004) 2 Arb LR 345 ..............................410

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National Insurance Company Limited v M/​s SA Enterprises (2015) SCC OnLine Bom 5063, at para. 41 ............................................................. 982, 985 National Justice Compania Naviera SA v Prudential Assurance Co Ltd (The Ikarian Reefer) [1993] 2 Lloyd’s Rep 68, at pp. 81–​82 ...................................................................855

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National Projects Construction Corporation Limited v Interstate Construction Company, O.M.P. (COMM) 78 of 2021 ............................................................................................ 1165

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National Projects Construction Corporation Ltd. v Bundela Bandhu Constructions Company (2007) SCC OnLine Del 574, at paras 14–​15 .............................................. 1035 National Seeds Corprn. Ltd. v M. Madhusudhan Reddy (2012) 2 SCC 506 .........................488

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National Shipping Company of Saudi Arabia v Sentrans Industries Ltd. 2004 SCC OnLine Bom 25, at para. 10 .............................................................................978

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National Thermal Power Corporation Limited v Siemens Atiengesellschaft (2005) SCC OnLine Del 631, at para. 32 ....................................................................... 1005

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National Thermal Power Corporation Ltd. v Wig Brothers Builders and Engineers Ltd. 2009 SCC OnLine Del 911 ...................................................................................... 858, 1123 Naumann v Edward Nathan & Co Ltd (1930) 37 Ll L Rep 249 .................................... 728, 853

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Naval Gent Maritime Ltd. v Shivnath Rai Harnarain (I) Ltd. (2009) SCC OnLine Del 2961 ......................................................................................... 1331

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Naval Gent Maritime Ltd. v Shivnath Rai Harnarain Ltd. (2000) SCC OnLine Del 261 ........................................................................................... 1032

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Naviera Amazonica Peruana SA v Cia Internacional de Segurasdel Peru [1988] 1 Lloyd’s Rep. 116 ..........................................................1034, 725, 1364, 1366, 1372 Navigation Sonamar Inc v Algoma Steamships Limited CLOUT Case No. 10 (16 April 1987) ............................................................................................ 1064 Navigator Investment Services Ltd v Acclaim Insurance Brokers Pte Ltd [2010] 1 SLR 25 ........................................................................................................... 776, 982 Navigazione Alta Italia SpA v Concordia Maritime Chartering AB, The Stena Pacifica [1990] 2 Lloyd’s Rep 234 .....................................................................164, 186, 537

clv

Table of Cases

NB Three Shipping Ltd v Harebell Shipping Ltd [2004] EWHC 2001 (Comm), [2005] 1 Lloyd’s Rep 509 ............................................................................................186–​188 NBCC Ltd v JG Engineering Pvt Ltd (2010) 2 SCC 385 ..........................................................656 NCC International AB v Alliance Concrete Singapore Pte Ltd [2008] 2 SLR(R) 565 ...........974 NCC Ltd. v Union of India 2018 SCC OnLine Del 12699 ............................................. 782, 967

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Nea Agrex SA v Baltic Shipping Co Ltd and Intershipping Charter Co The Agios Lazaros [1976] QB 933, at 944–​945, [1976] 2 All ER 842, at 847, [1976] 2 Lloyd’s Rep 47, CA (Eng) ...................................................................521, 523, 526 Neale v Richardson [1938] 1 All ER 753 ...................................................................................917

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Neer v Mexico, Opinion, US–​Mexico General Claims Commission, 15 October 1926 (1927) 21 AJIL 555 ............................................................................. 1415

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Nehalchand v Shantilal AIR 1935 (Oudh.) 349 .......................................................................645 Network Rail Infrastructure Ltd v Handy [2015] EWHC 1460 (TCC) .............................. 1155

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Networth Stock Broking Ltd. v Subhasis Panda 2009 SCC OnLine Bom 1680 .....................711

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New Horizons Ltd. v Union of India (1995) 1 SCC 478 .................................................291–​292

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New India Civil Erectors (P) Ltd. v Oil and Natural Gas Corporation (1997) 11 SCC 75 .................................................................................................... 1059, 1295 New Moga Transport Co. v United India Insurance Co. Ltd. (2004) 4 SCC 677 ...................490

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New Sound Industries Ltd. v Meliga (HK) Ltd. [2005] 1 HKC 41, [2005] HKCU 66 ..................................................................................................................451 Newacres Sdn Bhd v Sri Alam Sdn Bhd [1991] 3 MLJ 474, SC .....................................492–​493

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Newage Fincorp (India) Ltd. v Asia Corp Securities Ltd. (2000) SCC OnLine Bom 281, at paras 33 ................................................................ 41, 987

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Newspeed International Limited v Citus trading Pte Ltd. [2001] SGHC 126 ..................... 1345 Newspeed International Ltd v Citus Trading Pte Ltd [2003] 3 SLR(R) 1 ............................ 1272

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Ng Chin Siau v How Kim Chuan [2007] 2 SLR(R) 789, [2007] SGHC 31 ............................769 Ngati Tahinga v Attorney-​General (2003), 16 PRNZ 878, CA ...............................................633 NGC Network India Pvt. Ltd. v Orangefish Entertainment Pvt. Ltd. (2018) SCC OnLine Del 11350, at para. 44 ......................................................................934 NHAI v DS Toll Road Ltd. 2015 SCC OnLine Del 7628 .........................................................682 NHAI v HCC Ltd (2014) SCC Online Del 3507, at para. 63 ............................................... 1170 NHAI v M/​S Backbone Projects Ltd. Delhi High Court, O.M.P. 687 of 2009 ........................531

clvi

Law, Practice and Procedure of Arbitration in India

NHAI v PCL Suncon (JV) (2014) SCC OnLine Del 91 ........................................................ 1160 NHAI v Sayedabad Tea Company Ltd. & Ors. (2019) SCC OnLine SC 1102, at para. 16–​20 .............................................................................................................957 NHPC Ltd. v HCC Ltd. (2018) SCC OnLine Del 11469, at para. 14 .....................................933 Nicholson v Little [1956] 2 All ER 699, [1956] 1 WLR 829, CA (Eng) .............................. 1208

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Nickalls v Warren [1844] 6 QB 615 ..............................................................................1312–​1313 Nicolene Ltd v Simmonds [1953] 1 QB 543, [1953] 1 All ER 822 ..........................................554 Nigel Peter Albon v Naza Motor Trading Sdn Bhd (No. 3) [2007] EWHC 327 (Ch) ...........264 Nikita v Nota, “International Arbitration: Some Reflections on Jurisdiction and Admissibility” (2010) 2Ukranian J. Bus. L. 31, p. 32 .................................................... 1109

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Nikko Hotels (UK) Ltd. v MEPC Plc (1991) 28 EG 86, [1991] 3 WLUK 330, 54

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Nilesh Ramanbhai Patel v Bhanubhai Ramanbhai Patel MANU/​GJ/​1549/​2018 .................782

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Nilima Ghosh v Harjeet Kaur AIR 2011 Del 104 .....................................................................280 Nils Heime Akt v Merel & Co. (1959) 2 Lloyd’s Rep 292 ...................................................... 1060

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Nimbus Communications Ltd. v Board of Control for Cricket in India (2012) SCC OnLine Bom 287, at para. 24 ........................................................................978 Nina Anil Shah v Kusum Bhaskarrao Gorule (2017) SCC OnLine Bom 2402, at para. 65-​66 ....................................................................................................943

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Nippon Yusen Kaisha v Karageorgis [1975] 2 Lloyds Rep. 187, [1975] 3 All ER 282 (CA) ..................................................................................................457 Nippon Yusen Kaisha v Pacifica Navegacion SA, The Ion [1980] 2 Lloyd’s Rep 245 ............538

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Nirman Sindia v Indal Electromelts 1999 SCC OnLine Ker 149 ............................................539

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Nirman Sindia v Indal Electromelts Ltd. Coimbatore & Ors. AIR 1999 Ker 440 .................512

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Nityananda Samantray v State of Orissa (1986) SCC OnLine Ori 55 ...........1134, 1142, 1148 Nivaran Solutions v Aura Thia Spa Services (P) Ltd. (2016) SCC OnLine Bom 5062 ........490

E-

NJ Construction v Ayursundra Health Care Pvt. Ltd. 2018 SCC OnLine Del 7009 .............491 NN Global Mercantile Pvt Ltd v Indo Unique Flame Ltd & Ors. (2021) 4 SCC 379 ............394 No Curfew Ltd. v Feiges Props Ltd. [2018] EWHC 744 (Ch) ...........................1018, 1079, 1271 Nobel Ventures v Romania, Award dated 12 October 2005 ................................................. 1400 Noble Assurance Co v Gerling-​Konzern General Insurance Co [2007] EWHC 253 (Comm) ..........................................................................944, 1103, 1104 Noble China Inc v Lei [1998] CanLII 14708 (ON SC) .................................42 OR (3d) 69, 723

clvii

Table of Cases

Noble Resources Ltd. v Twenty First Centure Wire Roads Ltd. (2015) SCC OnLine Bom 4677 ............................................................................1343–​1344 Noble Resources Pte Ltd v China Sea Grains and Oils Industry Co Ltd. [2006] HKCFI 334 ...............................................................................................................655 Noble Ventures, Inc v Romania ICSID case ARB/​01/​11 ....................................................... 1218

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Nomihold Securities Inc v Mobile Telesystems Finance SA [2012] EWHC 130 (Comm) ....................................................................471, 478, 926, 1100 Norbrook Laboratories Co v Tank [2006] EWHC 1055 (Comm) ............................... 911, 1292 Norbrook Laboratories Ltd v Challenger [2006] EWHC 1055 (Comm), [2006] 2 Lloyd’s Rep 485 ............................................................................................ 652, 741

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Norbrook Laboratories Ltd v Tank [2006] EWHC 1055 (Comm), [2006] 2 Lloyd’s Rep 485 ............................................................................................ 637, 647

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Norman Gabay v Iran Decision No. DEC 99-​77-​2 (24 September 1991) 27 Iran-​US CTR 194 ............................................................................................... 1087, 1271 Norris v Daniel (1834) 10 Bing 507 ........................................................................................ 1208

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Norske Atlas Insurance Co Ltd v London General Insurance Co Ltd. (1927) 28 Lloyd’s Rep 104 ................................................................................................ 1375 North Eastern Railways v Tripple Engg. Works (2014) 9 SCC 288 .........................................611

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Northern Railway v Pioneer Publicity Corporation Pvt. Ltd. (2017) 11 SCC 234 ............. 1285

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Northern Regional Health Authority v Derek Crouch Construction Co Ltd [1984] QB 644, [1984] 2 All ER 175, CA (Eng), per Donaldson MR ...........................736

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Norton v Counties Conservative Permanent Benefit Building Society [1895] 1 QB 246 ...................................................................................................................145

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Norwich Corporation v Norwich Electric Tramways Co [1906] 2 KB 119 CA (Eng) ...........144

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Nova (Jersey) Knit Ltd. v Kammgarn Spinnerei G.m.b.H. [1977] 1 WLR 713 ........................47

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Novel Granites Ltd. v Lakshmi General Finance Ltd. 2003 SCC OnLine Mad 365 ................................................... (2003) 3 RAJ 160 (Mad), 375, 662 Noy Vallesina Engineering SPA (now known as Noy Ambiente SPA) v Jindal Drugs Ltd. (2021) 1 SCC 382, at para. 25 .......................................................................................... 1281 NPCC Limited v Jyothi Sarup Mittal Engineers, Contractors and Builders 2007 (93) DRJ 379, at para. 20 ...........................................................................................834 NRP Projects (P) Ltd. v Hirak Mukhopadhyay (2012) SCC OnLine Cal 10496 ...................942 NRP Projects Pvt. Ltd. v Hirak Mukhapadhyay & Anr. 2013 (1) Cal LJ 621 ........................813

clviii

Law, Practice and Procedure of Arbitration in India

NTPC Ltd. v Marathon Electric Motors India Ltd (2012) SCC OnLine Del 3995, at para. 26, 1080 .............................................................................................. 1271 NTPC Ltd. v Wig Brothers (Builders & Engineers) Ltd. (2009) SCC OnLine Del 911 ........................................................................................... 1304 NTPC v. Reshmi Constructions, Builders & Contractors (2004) 2 SCC 663 .....................................................................1226, 1230–​1231, 1233, 1235

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NTT Docomo Inc. v Tata Sons Ltd. (2017) SCC OnLine Del 8078 .................................... 1350 Numaligarh Refinery Ltd. v Daelim Industrial Co. Ltd. (2007) 8 SCC466 ......................... 1294 Numero Uno International Ltd. v Prasar Bharti (2008) SCC OnLine Del 175 ................. 1009

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O

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NV Handels-​en-​Transport Maatschappij Vulcaan v J Ludwig Mowinckels Rederi A/​S [1938] 60 Ll. L. Rep. 217, [1938] 2 All ER 152 ...................................................................63

O’Callaghan v Coral Racing Ltd [1999] unreported ................................................................234

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O’Donnell Developments Ltd v Build Ability Ltd [2009] EWHC 3388 (TCC) ............................................................................................................ 1079–​1080, 1271 Oakland Metal Co Ltd v D Benaim & Co Ltd [1953] 2 Lloyd’s Rep 192 ....300, 718, 725, 1291

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Oakland Metal Co Ltd v D Benaim & Co Ltd [1953] 2 QB 261, [1953] 2 All ER 650 ............................................................................................570, 572, 621

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OAO Northern Shipping Company v Remolcadores de Marin Slp, The Remmar [2007] 2 Lloyd’s Rep 302, [2007] EWHC 1821 (Comm) ................................................724 Obaseki Brothers v Reif & Son Ltd [1952] 2Lloyd’s Rep 364 ............................................... 1056

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Obrascon Huarte Lain SA & Anor v Qatar Foundation for Education, Science and Community Development [2020] EWHC 1643 (Comm) ............................................ 1080

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Occidental Petroleum Corporation and Occidental Exploration and Production Co. v Ecuador, Decision on Provisional Measures, ICSID Case No. ARB/​06/​11 .............. 1122

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Ocean Bulk Shipping & Trading SA v TMT Asia Ltd and Others [2010] 3 WLR 1424 .......................................................................................................... 1232 Ocean Laser Shipping Ltd G Roussos Sons SA v Charles M Willie (Shipping) Ltd (The “Smaro”) [1999] 1 Lloyd’s Rep 225 ................................................................... 523, 762 Ocean Park Corporation v Proud Sky Co Ltd [2007] HKCFI 1221 (HK) .................... 401, 438 Oceanic Dehydrates Pvt. Ltd. v Union of India (2008) SCC OnLine Del 92 ...................... 1292 OCI Corporation v Kandla Export Corporation and Ors. Arbitration Petition No. 2 to 10 of 2017, Order dated8 August 2017 ...............................................869

clix

Table of Cases

Oddmund Grundstad v Joseph Ritt and American Arbitration Assn Inc (1997) 12 Mealey’s International Arbitration Report F1 ................................................304 OE1 & Anor v SC HCCT 66/​2019 ........................................................... 1079, 1082, 1090, 1272 Office & Prof ’l Employees Int’l Union v Brownsville Gen. Hosp. 186 F.3d 326 .................................................................................... 331 (3rd Cir. 1999), 1076

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Office and Industrial Cleaners Ltd v John Paul Construction Ltd, 21 February 2008 [2008] IEHC 38 ................................................................................. 1203 Official Assignee v Chartered Industries of Singapore [1978] 2 MLJ 99 ...................... 911, 1062 Ofulue v Bossert [2009] 2 WLR 749 ....................................................................................... 1231 Ogunwale v Syrian Arab Republic [2002] 9 NWLR (Part 771) 127, CA (Nigeria) ..............614

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Oil & Natural Gas Corporation Ltd. v Saw Pipes (2003) 5 SCC 705 .........627, 785, 787, 1027, 1054, 1298, 1300

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Oil & Natural Gas Corporation Ltd. v Schlumberger Asia Services Ltd. (2006) SCC OnLine Del 1072 ........................................................................................ 1068 Oil and Natural Gas Co. Ltd. v Western Geco Intl. (2014) 9 SCC 263 ............1054, 1293, 1301

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Oil and Natural Gas Corporation Ltd. v JV of Sai Rama Engineering Enterprises and Megha Engineering and Infrastructure (2019) SCC OnLine Del 10456 ..................... 1284

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Oil and Natural Gas Corporation Ltd. v Off-​Shore Enterprises Inc. (2011) 14 SCC 147 ............................................................................................................ 1294

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Oil and Natural Gas Corporation v Wig Brothers Builders and Engineers Pvt Ltd. (2010) 13 SCC 37 .................................................................................................................256

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OJSC Ukrnafta v Carpatsky Petroleum Corporation Case No. 3.09 MC 265 (JBA), 2009WL 2877156 (D. Conn, 27 August 2009) .....................................................965

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Oksuzoglu v Kay [1998] 2 All ER 361, CA (Eng) .................................................................. 1235

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Oleificio Zucchi SpA v Northern Sales [1965] 2 Lloyd’s Rep 496 ......................................... 1039 Olive Healthcare v Launctt Company Inc. (2012) 3 Bom CR 36 ..............................................62

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Olivine Capital Pte Ltd and another v Chia Chin Yan and Another Matter [2014] SGCA 19 ................................................................................................................ 1041 Olympus Superstructures (P) Ltd. v Meena Vijay Khetan (1999) 5 SCC 651 .......................................................................239, 1117, 1121, 1294, 1345 Om Prakash Satish Kumar Thapar v Union of India (1996-​2) 113 Pun LR 42 ....................144 Omprakash v Vijay Dwarkada Varma (2020) SCCOnLine Bom 796, at para. 30 ...............969 OMV Petrom SA v Glencore International AG [2014] EWHC 242 (Comm) .................... 1112

clx

Law, Practice and Procedure of Arbitration in India

ONGC Ltd v Saw Pipes Ltd (2003) 5 SCC 705 ...................................... 30, 730–​731, 851, 1047, 1117, 1296, 1302, 1366 ONGC Ltd. v Western Geco International Ltd. (2014) 9 SCC 263 .........................................792 ONGC Petro Additions Limited v Tecnimont S.P.A. and Another (2019) SCC OnLine Del 8976 ......................................................................................... 1001

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ONGC Petro Additions Ltd. v State of Gujarat, Special Civil Petition No. 7858 of 2020 .......................................................................................................................................144 ONGC v Anil Conts. Co. (2000) SCC OnLineGuj 93, at para. 17 ....................................... 1146 ONGC v Clelland Engineers S.A (1994) 4 SCC 327, at para. 4 ............................................ 1172 ONGC v Dolphin Offshore Enterprises (2011) (2) Arb LR 273 (Bom) ............................... 1249

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ONGC v Western Geco International Limited (2014) 9 SCC 263 ...........................................662

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Oonc Lines Ltd v Sino-​American Trade Advancement Co Ltd [1994] HKCFI 193 ..............204 OP Gupta v Shiv General Finance Pvt. Ltd. (1975) SCC Online Del 147 .......................... 1117

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OPBK Construction Pvt. Ltd. v Punjab Small Industries & Export Corporation Ltd. & Anr. 2008 (3) ArbLR 189 PH, 2008 SCC OnLine P&H 728 .............................630

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Opotiki Packaging & Coolstorage Ltd v Opotiki FruitgrowersCo-​operative Ltd (in receivership) 2003 1 NZLR 205 ................................................................................. 1097

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Orascom TMT Investments S.à r.l. v People’s Democratic Republic of Algeria ICSID Case No.ARB/​12/​35 ................................................................................................................... 1403

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Oricon Waren-​Handelgesellschaft MbH v Intergraan NV [1967] 2 Lloyd’s Rep 82, at p. 98 ..................................................................................... 1063

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Oricon Waren-​Handels GmbH v Intergraan NV [1967] 2 Lloyd’s Rep 82 ......................... 1118

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Oriental Insurance Co. Ltd. v Hyundai Engineering and Construction Company Limited (2018) 17 SCC 607 ...............................................................................................................268

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Oriental Insurance Co. Ltd. v Narbheram Power and Steel (P) Ltd. (2018) 6 SCC 534 ........................................................................................................ 268, 496

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Oriental Insurance Co. Ltd. v Shriram Transport Finance and Ors. 2018 SCC OnLine Mad 2204 .............................................................................................816 Oriental Insurance Co. Ltd. v Tejparas Associates & Exports Pvt. Ltd. (2019) 9SCC 435 ............................................................................................................... 1285 Oriental Insurance Company v M/​S Narbheram Power and Steel Pvt Ltd. (2018) 6 SCC 534 ........................................................................................................ 183, 506 Orion Compania Espanola de Seguros v Belfort Maatschappij voor Algemene Verzekgringeen [1962] 2 Lloyd’s Rep 257 ..........................................................................712

clxi

Table of Cases

Ormaa Impex Pvt. Ltd. v Nissai Asb Pte. Ltd. AIR 1998 Del 15 ................................. 1997, 426 Osprey Underwriting Agencies Ltd. & Ors v ONGC Ltd. & Ors AIR 1999 Bom 173 .............58 OT Africa Line Ltd v Magic Sportswear Corp [2005] EWCA Civ 710 ...................................989 Otech Pakistan Pvt. Ltd v Clough Engineering Ltd [2007] 1 SLR(R) 989, [2006] SGCA 46, at p. 36 ....................................................................................................703

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OTV v Hilmarton 1997 REV. ARB. 376 ....................................................................................339 Overseas Fortune Shipping Pte Ltd. v Great Eastern Shipping Co Ltd. 1987 1 Lloyd’s Rep 270 .....................................................................................803, 907, 1098 Overseas Union Insurance Ltd v AA Mutual International Insurance Co Ltd [1988] 2 Lloyd’s Rep 63 .......................................................................................................713

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Owners ofthe MV Myron v Tradax Export SA [1970] 1 QB 527 ............................................910

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Oxbridge Associates limited v. Mr. Atul Kumra 2019 SCC OnLine Del 10641 .................. 1233 Oxford Shipping Co. Ltd. v Nippon Yusen Kaisha [1984] 2 All ER 835 .................................919

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Oxford Shipping Co Ltd v Nippon Yusen Kaisha The Eastern Saga [1984] 2 Lloyd’s Rep 373 ............................................................................................ 116, 285

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Oxford Shipping Co Ltd v Nippon Yusen Kaisha, The Eastern Saga [1984] 3 All ER 835, [1984] 2 Lloyd’s Rep 373 ....................................................................................881, 919, 947

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Oxford Shipping Co Ltd v Nippon Yusen Kaisha, The Eastern Saga (No 2) [1984] 3 All ER 835 .............................................................................................................114

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P Radhabai v Ashok Kumar (2019) 13 SCC 445 ........................................................................33

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P Rosen & Co Ltd v Dowley & Selby [1943] 2 All ER 172 ...............................1187, 1202, 1209

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P T Budi Semestra Satria v Concordia Agritrading Pte Ltd [1998] SGHC 127 ................................................................................................................444 P v D [2017] EWHC 3273 (Comm) ..........................................................................................911

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P v Engineer/​seller A Final Award in ICC Case No. 7626 of 1995 .........................................839 P v Q [2018] EWHC 1399 (Comm) ..........................................................................................532 P. Anand Gajapathi Raju v P.V.G. Raju (2000) 4 SCC 539 .......... 250, 368, 402, 423, 428, 488, 951–​953, 1283 P. Anand Gajapathi Raju v P.V.G Raju (2003) 6 SCC 503 ......................................................421 P. Manohar Reddy & Bros. v Maharashtra Krishna Valley Dev. Corp. (2009) 2 SCC 494 .............................................................................................................. 1289 P. Radha Bai v P. Ashok Kumar (2019) 13 SCC 445 ...................................................1284–​1285

clxii

Law, Practice and Procedure of Arbitration in India

P.E.C. Ltd. v Austbulk Shipping Sdn Bhd (2019) 11 SCC620, at para. 20 ........................... 1333 P.R. Shah, Shares & Stock Brokers (P) Ltd. v B.H.H. Securities (P) Ltd. (2012) 1 SCC 594, at para. 21, 968, 1267 ....................................................................... 1274 Paal Wilson & Co A/​S v Partenreederei Hannah Blumenthal, The Hannah Blumenthal [1983] 1 All ER 34, [1983] 1 AC 854, HL .........................................................................812

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Paal Wilson & Co A/​S v Partenreederei Hannah Blumenthal, The Hannah Blumenthal [1983] 1 All ER 34 ...............................................................................................................233 Paal Wilson & Co A/​S v Partenreederei Hannah Blumenthal The Hannah Blumenthal [1983] 1 AC 854 ...................................................................................................................480 Paal Wilson & Co AS v Partenreederei Hannah Blumenthal [1983] 1 AC 854 ......................76

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Pacific & Orient Insurance Co Sdn Bhd v Woon Shee Min [1980] 1 MLJ 291, FC ...............712

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Pacific China Holdings Ltd v Grand Pacific Holdings Ltd. [2007] HKCFI 715 .....................647 Pacific Recreation Pte Ltd v S YTechnology Inc. [2008] 2 SLR(R) 491 ................................ 1055

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Pacol Ltd. v Joint stock Co Rossakhar [1999] 2 All ER (Comm) 778 .................................. 1060

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Page v Newman (1829) 9 B & C 378 ....................................................................................... 1138 Paklito Investment Limited v Klockner East Asia Ltd [1993] HKLR 39 ...................... 723, 1340

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Palacath Ltd v Flanagan [1985] 2 All ER 161, [1985] 2 WLUK 236 ................................ 53–​54 Palgrave Gold Mining Co v McMillan [1892] AC 460, at p. 470, PC .....................................594

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Palmco Shipping Inc v Continental Ore Corpn, The Captain George K, [1970] 2 Lloyd’s Rep 21 ......................................................................................561, 575, 621 Pam Developers Pvt. Ltd. v State of West Bengal (2019) 8 SCC 112, at para. 19–​20 ........ 1326

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Pam Developments Pvt. Ltd. v State of West Bengal (2019) 8 SCC 112 ................54, 283, 1326

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Pan African Builders & Contractors Ltd v National Social Security Fund Board of Trustees Civil Case 701 of 2005 .........................................................................................................615 Pan Atlantic Group Inc v Hassneh Insurance Co of Israel [1992] 1 Lloyd’s Rep. 120 ...........611

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Pan Atlantic Group Inc v Hassneh Insurance Co. of Israel [1992] 2 Lloyd’s Rep 120 ...........620 Panchaud Frères SA v Pagnan & Fratelli [1974] 1 Lloyd’s Rep 394, at 411 ....1143, 1148, 1156 Panchaud Frères SA v. Etablissements General Grain Co [1970] 1 Lloyd’s Rep 53, CA ......530 Panchu Gopal Bose v. Board of Trustees for Port of Calcutta AIR 1994 SC 1615 ........ 374, 527 Pancommerce SA v Veecheema BV [1983] 2 Lloyd’s Rep 304 .................................... 1018, 1081 Pandey & Co. Builders Pvt. Ltd. v State of Bihar (2007) 1 SCC 467 ......................................599 Pandit Construction Company v Delhi Development Authority (2007) 3 Arb LR 205 ........530

clxiii

Table of Cases

Pando Compania Naviera SA v Filmo SAS [1975] 2 All ER 515 ...........................560, 573, 576 Pando Compania Naviera SA v Filmo SAS [1975] QB 742 .....................................................621 Pannalal Paul v Padmabati Paul (1960) SCC OnLine Cal 136 ........................................... 1306 Pappa v Rose (1872) LR 7 CP 525 ..............................................................................................573 Par Advance v Kemas Construction [2002] 553 MLJU 1 (Malaysia High Court) ............ 1081

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Paramjeet Singh Patheja v ICDS Ltd. (2006) 13 SCC 322 ..........................40, 44, 84, 813, 1325 Parasramka Holdings Pvt Ltd. v Ambience Pvt. Ltd. & Anr. 2018 SCC Online Del 6573 ................................................................................................431 Parekh Industries Limited v Diamond India Ltd (2019) SCC OnLine Bom 851, at paras 31–​37 ....................................................................................................963

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Parsoli Motor Works Pvt. Ltd. v BMW India Pvt. Ltd. (2018) SCC OnLine Del 6556, at para. 36 ............................................................................................................988

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Parsvnath Developers Limited v Rail Land Development Authority, Arb. P. 710/​2019 decided on 19 May 2020 .......................................................................558

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PASL Wind Solutions Private Limited v GE Power Conversion India Private Limited (2021) SCC OnLine SC 331 ............................................163, 169, 270, 320, 379, 405, 506, 874, 1277, 1331, 1352–​1353 Patel Engineering v North Eastern Electric Power Corporation Ltd (2020) 7 SCC 167 ............. 1303

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Patel Engineering v North Eastern Electric Power Corporation Ltd. AIR 2020 SC 2488 ........... 1302

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Pathow v King (1733) 2 Barn KB 386 ..................................................................................... 1063 Patrick Mitchell v Democratic Republic of the Congo ICSID Case No ARB/​99/​7 ............. 1407

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Patroclos Shipping Co v Société Secopa [1980] 1 Lloyd’s Rep 405 ............................. 1202, 1207

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Paul Price v Ian Carter [2010] EWHC 1451 (TCC) ............................................................. 1097

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Paul Smith Ltd v H & S Int’l Holdings Inc. [1991] 2 Lloyd’s Rep. 127 ...................................245 Paull v Paull 1833 2 Cr & M .................................................................................................... 1039

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Payal Chawla Singh v The Coca-​Cola Co. & Anr. (2015) 13 SCC 699 ..................................189 PCCW Global Ltd v Interactive Communications Service Ltd [2006] HKCA 434, CA .......191 PCCW Global Ltd v Interactive Communications Service Ltd. (2007) 1 HKLRD 309 ........453 PCO (Nigeria) Ltd.v Nigerian National Petroleum Corp [2008] EWCA Civ 1157 ........... 1333 PEC Ltd.v Austbulk Shipping Sdn Bhd (2019) 11 SCC 620) ................................................ 1337 Pedley v Goddard (1796) 7 Term Rep 73 ............................................................................... 1061 Pegler v Railway Executive [1948] AC 332, [1948] 1 All ER 559, HL (Eng) ........................513

clxiv

Law, Practice and Procedure of Arbitration in India

Pena Cooper Mines Ltd v Rio Tinto Co. [1911-​13] All ER 209, at 212 (English Court of Appeals) ................................................................................................................415 Pena Copper Mines Ltd v Rio Tinto Co Ltd 105 LT 846 ..........................................................300 Penang Port Commission v Kanawangi s/​o Seperumaninam [1996] 3 MLJ 427 ............... 1128 Pennell v Walker (1856) 18 CB 651 ...........................................................................................382

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Penta-​Ocean Construction Co Ltd v Penang Development Corporation 2003 MLJU 11 ......................................................................................................................899 PepsiCo Inc v Iran Decision No. DEC 55-​18-​1 (18 December 1986) 13 Iran-​US CTR 328 .......................................................... 1087, 1271

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Perbadanan Kemajuan Negeri Perak v Asean Security Paper Mill Sdn Bhd [1991] 3 MLJ 309 ................................................................................................354, 359, 493

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Perkins Eastman Architects DPC & Another v HSCC (India) Limited (“Perkins”), 2019 SCC Online 1517 ...................................................................................565

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Perma Container (UK) Line Limited v 601 (2014) SCC Online Bom 575 ............................722

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Perma Container (UK) Line Limited v Perma Container Line India Pvt Ltd. (2014) SCC OnLine Bom 575, at para. 121 .........................................................1343–​1344

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Perry Kansagra v Smriti Madan Kansagra (2019) SCC OnLine SC 211 ................... 777, 1227 Perry v Mitchell (1844) 12 M & W 792 .................................................................................. 1063

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Perry v Stopher [1959] 1 All ER 713, [1959] 1 WLR 415, CA (Eng) ..............1220, 1213, 1241

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Persaud v Beynon [2005] EWHC 3073 (Comm) .................................................................. 1323 Persaud v Beynon [2005] EWHC 3073 .....................................................................................769

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Persimmon Homes (South Coast) Ltd v Hall Aggregates (South Coast) Ltd [2012] EWHC 2429 (TCC) ............................................................................................. 1159

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Perwira Bintang Holdings Sdn Bhd v Kerajaan Malaysia [2014] 11 MLJ561 .................... 1295 Peterson Farms Inc v C & M Farming Ltd [2004] EWHC 121 (Comm) ..............................290

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Petrobart Ltd v The Kyrgyz Republic Award II ...............................29 March 2005, p. 467, 1422 Petro-​Canada v Alberta Gas Ethylene 1992 ABCA 9 (CanLII) ..............................................656 Petrochemical Industries Company (K.S.C.) v Dow Chemical Company [2012] EWHC 2739 (Comm) .................................................................... 1041, 1054–​1056 Petromec Inc v Petroleo Brasileiro SA Petrobas [2005] EWCA Civ 891, [2006] 1 Lloyd’s Rep 121 .....................................................................................................511 PFS Shipping (India) Limited v V.K. Gupta (2016) SCC OnLine Bom 10048, at para. 9 ...............1326 Phaethon International Co. SA v Ispat Industries Ltd. [2010] EWHC 3446 (Comm) .........989

clxv

Table of Cases

Philip Monis Brand Sàrl et al. v Oriental Republic of Uruguay ICSID Case No. ARB/​10/​7 .......................................................................................................... 1407 Philip Morris Asia Limited (Hong Kong) v The Commonwealth of Australia UNCITRAL, PCA Case No 2012–​12 ..................................................................................................... 1444 Phillips Petroleum Co Iran v Iran (1989) 21 Iran-​US CTR 79, at para. 122 ...................... 1421 Phipps v Ingram [1835] 3 Dowl 669 ....................................................................................... 1298

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Phoenix Action Ltd v Czech Republic ICSID Case No. ARB/​06/​5 ............................ 1406, 1408 Picker Int’l Corp v Iran Decision No. DEC 48-​10173-​3 (8 October 1986) ........................ 1082 Pickthall v Methyr Tydvil Local Board [1886] 2 TLR 805 .......................................................641 Pierce v Dyke (1959) 2 WIR 30, [1959] 1 WLUK 328 ...............................................................51

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Ping An LifeInsurance Company of China, Limited and Ping an Insurance (Group) Company of China, Limited v Kingdomof Belgium ICSID Case No. ARB/​12/​29, 1444

Pini v Roncoroni [1892] 1 Ch 633 ..............................................................................................457

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Pinnock Bros v Lewis and Peat Ltd. [1923] 1 KB 690 ..............................................................530

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Pioneer Shipping Ltdv BTP Tioxide Ltd, The Nema [1981] 2 Lloyd’s Rep 239, [1982] AC 724 ......776

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Piper Double Glazing Ltd v DC Contracts (1992) Ltd [1994] 1 All ER 177, [1994] 1 WLR 777 .................................................................................................. 1184, 1254 Pirtek (UK) Ltd v Deanswood Ltd [2005] EWHC 2301 (Comm) ...................................... 1003

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Pitcher v Rigby (1821) 9 Price 79 ............................................................................99, 1099, 1319

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Pittalis v Sherefettin [1986] QB 868, [1986] 2 All ER 227, CA (Eng) ......... 186–​187, 188, 277 Plant v Plant [2002] EWHC 2283 (Ch) ....................................................................................189

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Planters Airways Pvt. Ltd. v Sterling General Insurance Co. Ltd. 1974 SCC OnLine Cal 4. 74. (1999) 2 SCC 594 .................................................................................498

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Platt v Hall (1837) 2 M & W 391 ............................................................................................ 1063 Plummer, Administratrix of M Thompson, Deceased v Lee (1837) 2 M & W 495 ............. 1064

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Point West London Ltd v Mivan Ltd [2012] EWHC 1223 (TCC), at para. 32 ................... 1245 Poliakoff v Stromwall [1921] 8 Lloyd’s Rep 388 .................................................................... 1056 Polivitte Ltd v Commercial Union Assurance Co Plc [1987] 1 Lloyd’s Rep379 .....................855 Polyflor Limited v A.N. Goenka and Ors, 2016 SCC OnLine Del 2333 ................................865 Ponsford v Swaine (1861) 1 John & H 433 ................................................................................689 Pooran Chand Nangia v National Fertilizers Ltd. (2003) 8 SCC 245 ................................. 1306 Pooran Chand Nangia v. National Fertilizers Ltd. (2003) 8 SCC 24 ................................... 1306

clxvi

Law, Practice and Procedure of Arbitration in India

Port of Kolkata v Louis Dreyfus Armatures SAS and Others 2014 SCC OnLine Cal 17695 .............................................................................................483 Port Sudan Cotton Co v Govindaswamy Chettiar & Sons [1977] 1 Lloyd’s Rep 166 ..........655, 698 Port Sudan Cotton Co v Govindaswamy Chettiar & Sons [1977] 2 Lloyd’s Rep 5, CA (Eng)) .....................................................................................655 Porter v Magill [2001] UKHL 67, [2002] 1 All ER 465, 632 ...................................................635

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Porter v Magill [2006] 1 All ER 731 ..........................................................................................637 Porterv Magill [2001] UKHL 67 ................................................................................................909 Portland Steamship Co Ltd v Charlton Steam Shipping Co [1925] 23 Ll L Rep 268, at p. 271 .................................................................................... 1206

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Powdered Milk Case [2000] (OLG Dresden) 2 U 1181/​00 .....................................................122

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Power Grid Corporation of India Ltd. v Jyoti Structures Ltd. (2017) SCC OnLine Del 12189, at para. 14 ................................................................... 1288

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Power Grid Corporation of India Ltd. v. Jyoti Structures (2018) 246 DLT 485 .............................................................................................................384

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Power Machines India Ltd. v State of MP (2017) 7 SCC 323, at para. 15 ........................... 1325

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Powertech Worldwide Ltd v Delvin International General Trading LLC (2012) 1 SCC 361 ........................................................................................................ 171, 194

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Prabhakar Jeyapathy v Akshaya Pvt. Ltd (2016) SCC OnLine Del 5874 ........................... 1291

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Prabhat Steel Traders Pvt. Ltd. v Excel Metal Processors Pvt. Ltd. (2018) SCC OnLine Bom 2347 ..........................................................................................933

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Pradyuman Kumar Sharma and Ors. v Jaysagar M. Sancheti and Ors 2013 (5) MhLJ 86, at para. 32 .............................................................................................866

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Pradyuman Kumar Sharma v Jays Agar M. Sancheti and Ors. 2013 SCC OnLine Bom 453, at para. 33 ...........................................................................838

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Pramod and Others v Union of India and Others (2019) SCC OnLine All 3720, at para. 9 .............................................................. 1090, 1272 Prasar Bharati v Maa Communications 2010 (1) Arb LR 551 ...............................................607 Prashant Hasmukh Manek v. Ramu Annamalai Ramasamy 2019 SCC OnLine Mad 5869 .............................................................................................417 Prasun Roy v Calcutta K.D. Authority (1987) 4 SCC 217 .................................................... 1305 Pratapsingh v Kishanprasad and Co. AIR 1932 Bombay 6 .....................................................718 Prathyusha Associates, Visakhapatnam v Rashtriya Ispat Nigam Limited, Visakhapatnam, Steel Plant 2006 (2) Arb LR 130 (AP) ................................................................ 47, 342, 355

clxvii

Table of Cases

Pratibha Industries Limited v Municipal Corporation of Greater Mumbai & Anr. 2018 SCC OnLine Bom 6156 .............................................................................................227 Prekons Insaat Sanayi AS v Rowlands Castle Contracting Group Ltd [2006] EWHC 1367 (Comm) ............................................................................................427 Mandaraka-​Sheppard, Modern Maritime Law: Volume 1: Risks and Jurisdiction: Jurisdiction and Risks (2013) ......................................................................427

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Prema Amarlal Gera v The Memon Co-​operative Bank Ltd. (2017) SCC OnLine Bom 72, at para. 73 ................................................................................... 1283 President of India v Jadranska Slobodna Plovidba [1992] 2 Lloyd’s Rep 274 ..................... 1045 President of India v La Pintada Compania Navigacion SA [1984] 2 All ER 773 (HL) ..........63

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President of India v La Pintada Compania Navigation SA (The La Pintada), [1985] AC 104, HL ........................................................................................................... 1138

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President of India v Lips Maritime Corpn, The Lips [1987] 1 Lloyd’s Rep 131, [1987] 1 All ER 957 .......................................................................................................... 1171

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Press Automation Technology Pte Ltd v Trans-​Link Exhibition Forwarding Pte Ltd [2003] 1 SLR(R) 712 ................................................................................................... 528, 532

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Press Metal Sarawak Sdn Bhd v Etiqa Takaful Bhd [2016] 5 MLJ 417 (Malaysian Federal Court) ......................................................................................................................448

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Prest v Petrodel Resources Ltd [2013] UKSC 34 at para. 35 ....................................................293 Price v Easton (1833) 4 B & Ad 433 ..........................................................................................286

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Price v Hollis (1813) 1 M & S 105 ........................................................................................... 1063

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Price v Popkin (1839)10 Ad & El 139 ........................................................................... 1039, 1063

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Pricol Limited v Johnson Controls Enterprise Limited and Others (2015) 4 SCC 177 ..........167 Priddle v Fisher & Sons [1968] 3 All ER 506 ............................................................................780

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Priddle v Fisher and Sons [1968] 1 WLR 1478 .........................................................................937

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Priknit Retails Ltd. v Aneja Agencies (2013) SCC OnLine Del 534 at para. 19 ....................963 Prima Paint Corp v Flood & Conklin Mfg Co. 388 US 395 ............................................232–​233 Prime Telesystem Ltd v Sasken Communications [2009] SCC Online Del 2138, at para. 19 ...........................................................................................................816 Primera Maritime (Hellas) Ltd v Jiangsu Eastern Heavy Industry Co Ltd [2013] EWHC 3066 (Comm) ............................................................................... 1056, 1267 Primus Build Ltd v Pompey Centre Ltd [2009] EWHC 1487 (TCC), [2009] All ER (D) 14 (Jul) ..................................................................................................516 Printing Machinery Co Ltd v Linotype and Machinery Ltd [1912] 1 Ch 566 .............. 300, 449

clxviii

Law, Practice and Procedure of Arbitration in India

Private Company “Triple V” Inc v Star (Universal) Co Ltd & Another (1995) 2 HKLR 62 ...............................................................................................................453 Private Company “Triple V” Inc v Star (Universal) Co Ltd and Sky Jade Enterprises Group Ltd [1995] 3 HKCA 617 .........................................................................................614 Privy Council in Associated Electric and Gas Insurance Services Ltd v European Reinsurance Co of Zurich (Aegis) [2003] 1 WLR 1041, [2003] WL 116937 ................115

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Process and Industrial Developments Ltd. v The Federal Republic of Nigeria [2019] EWHC 2241 (Comm) ............................................................................................491 Proctor v Williamson 141 ER 1215 ............................................................................................917

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Proddatur Cable TV Digi Services v SITI Cable Network Limited, O.M.P. (T) (COMM.) 109/​2019 ............................................................................................................542 Progen Engineering Pte Ltd v Winter Engineering (S) Pte Ltd [2006] SGHC 224 ............. 1188

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Progressive Career Academy Pvt. Ltd. v FIIT JEE Ltd. (2011) SCC OnLine Del 2271 ...............................................................................................................654, 950, 962 Proprietors of Strata Plan 3771 v Travmina Pty Ltd [1986] 4 BCL 91 ...................................989

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PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2006] SGCA 41 ..............................................................................................996, 1057, 1266 PT Central Investindo v Franciscus Wongso [2014] SGHC 190 .............................................633

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PT First Media TBK (formerly known as PT Broadband Multimedia TBK) v Astro Nusantara International BV [2013] SGCA 57 ..................................................................947

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PT First Media TBK v Astro Nausantara International B.V. [2013] SGCA 57 ................. 1321

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PT First Media TBK v Astro Nusantara Int’l BV 2014 1 SLR 372 ....................................... 1279

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PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation (Indonesia) [2015] SGCA 30 .......................................................................1005–​1007, 1016, 1074, 1097

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PT Pukuafu Indah v Newmont Indonesia Ltd [2012] SGHC 187 ..........................................989

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PT Reasuransi Umum Indonesia v Evanston Insurance Co. [1993] 8 International Arbitration Report (No. 1) B-​1 B-​4, Yearbook Commercial Arbitration, XIV-​1994, pp. 788–​791 ..........................................................................................................................909 PT Tri-​MG Intra Asia Airlines v Norse Air Charter Limited [2009] SGHC 13 .....................191 PT Tugu Pratama Indonesia v Magma Nusantara Ltd [2003] SGHC 204 ............................272 PT Tugu PratamaIndonesia v Magma Nusantara Ltd. [2003] SGHC 204, at para. 12 ............................................................................................950 Publicis Communications and Publicis S.A. v True North Communications Inc. 206 F.3d 725 (7th Cir. 2000), at para. 9 .............................................................................998

clxix

Table of Cases

Puneet Kumar Jain v MSTC Ltd & Ors. (2014) SCC OnLine Del 2909, at para. 15 ...........819 Puneet Solanki v Sapsi Electronics Pvt. Ltd. 2018 SCC OnLine Del 10619, at para. 5 ........782 Punj Lloyd v Petronet MHB Ltd. (2006) 2 SCC 638 at para. 5–​7 ...........................................604 Punjab State Civil Supplies Corporation Limited and Anr v Atwal Rice and General Mills (2017) 8 SCC 116 .................................................................................................... 1325

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Punjab State Electricity Board and Another v Punjab Pre-​Stressed Concrete Works (2002) 9SCC 740 ..................................................................................................... 1043, 1065 Punjab State Industrial Development Corporation Ltd. v Sunil K. Kansal (2013) 1 Arb LR 327 (P&H) (DB) ...................................................................................................................838 Pupuke Service Station Ltd. v Caltex Oil (N.Z.) Ltd. [1995] 11 WLUK 238 ...........................43

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Pure Helium India Pvt. Ltd. v Oil and Natural Gas Commission (2003) 8 SCC 593, at paras 27–​28, 42 ............................................................................ 1053 Pure Helium India Pvt. Ltd. v Oil Gas Commission (2003) 8 SCC 593 .................................335

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Purser & Co. (Hillingdon) Ltd. v Jackson [1976]3 All ER 641 ............................................. 1101

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Purslow v Baily (1704) 2 Ld Raym 1039 ................................................................................ 1105 Purslow v Baily [1704] 1 WLUK 36 ........................................................................................ 1319

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Purvankara Projects Limited & Ors. v Ranjani Venkatraman Ganesh & Ors (2018) SCC OnLine Mad 2345 ....................................................................................... 1303

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Pushraj Puranmal v Clive Mills Co. Ltd. (1959) SCC OnLine Cal 58 ................................ 1022

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Qatar Airways v Shapoorji Pallonji (2013) 2 BomCR 65 ........................................................285

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QBE Insurance Ltd v Hashim bin Abdul [1981] 2 MLJ 275 ....................................................493

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Qualiconsult v Groupe Lincoln, 1998 Rev. Arb. 121 ................................................................547

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Quiborax v Bolivia ICSID Case No. ARB/​06/​2, Decision on Jurisdiction, 27 September 2012 ......................................................................................................1406–​1407

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Quick Heal Technologies Limited v NCS Computech Private Limited and Ors. Arbitration Petition No.43 of 2018 decided by the Bombay High Court on 5 June 2020 ..............512 Quintette Coal Ltd v Nippon Steel Corp [1988] BCJ No 492, SC (British Columbia) .........614 Quintette Coal Ltd. v Nippon Steel Corp et al. 1990 BCJ No 2241 ...................................... 1294 Quippo Construction Equipment Limited v Janardan Nirman Pvt. Limited 2020 SCC OnLine SC 419 ..................................................................................................662 Quippo Construction Equipment Ltd. v Janardhan Nirman Pvt. Ltd. AIR 2020 SC 2038 ...................................................................................................1304–​1305

clxx

Law, Practice and Procedure of Arbitration in India

R R (Kingston) v Cork County JJ [1910] 2 IR 658 ........................................................................648 R (Murrey and Wortley) v Armagh County Justices (1915) 49 ILT 56 ...................................642 R (O’Donoghue) v Cork County JJ [1910] 1 IR 271 ..................................................................648 R Narayanan v India Infoline Securities (P) Ltd. (2013) 4 CTC 432, at para. 25 ..................765

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R v Barnsley County Borough Licensing Justices, ex p Barnsley and District Licensed Victuallers Association [1960] 2 All ER 703 .....................................................................623 R v Camborne Justices, ex p Pearce [1955] 1 QB 41, at p. 47, [1954] 2 All ER 850 ..............639 R v Cripps, Ex p Muldoon [1984] 2 All ER 705 (CA) Eng ................................................... 1079

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R v Disputes Committee of National Joint Council for Craft of Dental Technicians, ex p Neate [1953] 1 QB 704, [1953] 1 All ER 327 ...............................................................................619

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R v Gough [1993] 2 All ER 724 .................................................................................623, 632, 639

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R v Handley (1921) 61 DLR 656 ................................................................................................648 R v Hill (1819) 7 Price 636 ..........................................................................................................308

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R v Inner West London Coroner, ex p Dallaglio [1994] 4 All ER 139, CA (Eng), per Sir Thomas Bingham MR ................................................................................652 R v Rand (1866) LR 1 QB 230 ....................................................................................................639

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R v Smith and Harley; ex parte Crugnale 1970 WAR 43 ........................................................914 R v South Devon Rly Co (1850) 15 QB 1043 ............................................................................687

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R v South Devon Rly Co [1850] 15 QB 1043 ......................................................................... 1189

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R v Sussex Justice ex parte McCarthy [1923] All ER Rep 233 .................................................623

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R v Sussex Justices, ex p McCarthy [1924] 1 KB 256 ................................................................632

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R. Kathiravelu a/​l Ramasamy v American Home Assurance Co Malaysia [2009] 1 MLJ 572 .................................................................................................................191

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R. Narayanan v India Info Line Securitie Pvt. Ltd. and V. Natarajan (2013) SCC OnLine Mad 1744 ....................................................................................... 1287 R.C. Pillar & Sons v Edwards, 2001, unreported, in Robert Merkin, Arbitration Law (LLP 2004), p. 779, at para. 18.119 .................................................... 1084 R.K Aggarwal & Anr. v BPK Johri 1999 SCC OnLine Kar 469 .................................................... (2003) 4 RAJ 561 (Kar), 654 R.R. Hi Tech Engineering Pvt. Ltd. v Union of India (2010) SCC OnLine Bom 1349 ............................................................................. 1030, 1069 R.S. Amarnath Mehra v Union of India 1993 (27) DRJ 1 ........................................................300

clxxi

Table of Cases

R.S. Jiwani v Ircon International Ltd. (2009) SCC Online Bom 2021 ............1052, 1060, 1315 R.S.D.V. Finance Co. (P) Ltd. v Shree Vallabh Glass Works Ltd. (1993) 2 SCC 130 .................................................................................................................490 Racecourse Betting Control Board v Secretary of State for Air [1944] 1 All ER 60, CA .......................................................................................................407

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Radha Chemicals v Union of India Civil Appeal No. 10386/​2018 (10 October 2018) ............................................................................. 1094, 1098, 1276, 1313 Radha Chemicals v Union of India Civil Appeal No. 10386/​2018, 10 October 2018 ............66

Radha Kanta Dass v Baerlein Bros Ltd AIR 1929 Cal 97 (Cal) ..............................................199

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Raffineries de Petrole d’Homs et da Banias v Chambrede Commerce Internationale, 1985 Rev. Arb. 141 ....................................................................................898

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Raffles Design International India Private Limited & Ors. v Educomp Professional Education Limited & Ors O.M.P (I) (Comm.) 23/​2015 ............................................... 1224

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Raffles Design International India Pvt. Ltd. v Educomp Professional Education Limited & Ors. (2016) SCC OnLine Del 5521 .................................................................956–​956, 1127

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Raghubir Singh v Delhi Metro RailCorporation Ltd. (2007) 138 DLT 792, at para. 19 ..... 1366

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Rahcassi Shipping Co SA v Blue Star Line Ltd [1967] 3 All ER 301 .......................................575

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Rail India Technical and Economic Services Ltd. (“RITES”) v Ravi Constructions, (2002) 2 ICC 719 (DB) ........................................................................................................622 Rain CII Carbon LLC v Conoco Phillips Co. 674 F. 3d 469, p. 473(5th Cir. 2012) ............ 1078

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Rainforth v Hamer (1855) 25 L.T. (O.S.) 247 ........................................................................ 1062

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Rainproof and Another v Abhudya Co-​op Bank Ltd. (2020) SCC OnLine Bom 3836 ..... 1295

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Raipur Development Authority v Chokhamal Contractors (1989) 2 SCC 721, at para. 19 .......................................................................................... 1048

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Raj Behari Lal v Mahabir Prasad AIR 1956 All 310 ................................................................280

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Raj Kumar Shivhare v Asst. Director, Enforcement Directorate & Anr (2010) 4 SCC 772 .................................................................................................................354 Raja Lope & Tan Co v Malayan Flour Mills Bhd [2000] 6 MLJ 228 ................................... 1158 Rajasthan SEB v Universal Petrol Chemicals Ltd. (2009) 3 SCC 107 .....................................490 Rajasthan SRTC v Indag Rubber Ltd. (2006) 7 SCC 700, at para. 9 ................................... 1164 Rajasthan State Mines & Minerals Ltd. v Eastern Engineering Enterprises & Anr. (1999) 9 SCC 283 .................................................................................................................548 Rajender Jaina v Prem Bhatia 2014 SCC OnLine Del 7248 ...................................................554

clxxii

Law, Practice and Procedure of Arbitration in India

Rajesh Batra v Ranbir Singh Ahlawat [2011] (4) Arb LR 371 ..................................................61 Rajesh Gupta v Smt. Mohit Lata Sunda and Ors, Arbitration Petition No. 494 of 2019 decided on 27 May 2020 by the High Court of Delhi .....................................................609 Rajesh Pravinchandra Rajygor v Nitin Harjivandas Rajygor (2015) SCC OnLine Bom 4180 ....................................................................................... 1305 Rajinder Kishan Kumar v. Union of India (1998) 7 SCC 129 .................................... 1059, 1294

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Rajnaraian Misra v Union of India [1953] 91 CLJ 145 ........................................................ 1060 Rajni Sanghiv Western Indian State Motors Limited and Others (2015) 16 SCC 631 ....... 1227 Rajnikant B. Vora v Fincruise Credit Services Pvt. Ltd. (2015) SCC OnLine Bom 4179 .................................................................................................................. 711, 1292

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Rakesh Malhotra v Rajinder Kumar Malhotra (2015) 192 Comp Cas 516 .............................69

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Ram Ayodhya Prasad v Presiding Officer, Labour Court, Ghaziabad 2019 SCC OnLine All 3192 ......................................................................................... 49, 355

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Ram Chandra Rungta v Ram Swarup Rungta (2014) SCC OnLine Cal 19408 ................. 1305

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Ramac Costruction Co Ltd v J E Lesser (Properties) Ltd [1975] 2 Lloyd’s Rep 430 ..............345 Ramachandra Reddy & Co v. State of A.P. and Others (2001) 4 SCC 241, at para. 5 ....... 1241

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Raman Deep Singh Taneja v Crown Realtech Private Limited 2017 SCC OnLine Del 11966 .............................................................................................491

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Ramasamy Athappan v Secretariat of the Court, International Chambers of Commerce, 2008 SCC OnLine Mad 789 ...........................................................................441 Ramesh B. Desai and Ors. v Bipin Vadilal Mehta and Ors. (2006) 5 SCC 638 .....................260

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Ramesh Kumar & Ors v Furu Ram & Ors (2011) 8 SCC 613 ........................................... 68–​69

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Ramesh Patel v Prashant Patel (2012) SCC OnLine Bom 979 ............................................ 1292

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Ramesh Pratap Singh v Vimala Singh (2003) SCC OnLine MP 587, at para. 9 ................ 1036

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Ramji Dayawala and Sons (P) Limited v Invest Import (“Ramji Dayawala”) 1981 SCR (1) 899 ........................................................................................................ 298, 405 Ramnath Misra v Ramaranjan Misra (1922) SCC OnLineCal 151 .................................... 1069 Ramnik Mohanlal Chawda & Ors. v Suresh Gianchand Kumar (2018) SCC OnLine Bom 4013 ....................................................................................... 1287 Ramsahai Sheduram v Harishchandra Dullchandji (1962) SCC OnLine MP 36 ............. 1306 Rand v Readington 13 NH 72 (1842) ........................................................................................641 Ranger v Great Western Railway Co (1854) 5 HL Cas 72 .......................................................572 Ranjit Kumar Bose & Anr. v Anannya Chowdhury (2014) 11 SC 446 ......................... 327, 435

clxxiii

Table of Cases

Ranjit Singh Rana v H.P. Housing and Urban Development, 2009 SCC OnLine HP 253 ............1148 Ranjit Thakur v Union of India and Ors. (1987) 4 SCC 611 ........................................... 62, 634. Ranjiv Kumar v Sanjiv Kumar A.P. 679 of 2017 (13 February 2018, Calcutta High Court) ....................................................................................................... 1001 Ranko Group v Antarctic Maritime SA (12 June 1998) ........................................................ 1037

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Rashid Raza v Sadaf Akhtar (2019) 8 SCC 710 ...............................................59, 245, 957, 1299 Rashtriya Chemicals v Chowgule Brothers (2010) (8) SCC563, at paras 20–​25 ................ 1057 Rashtriya Ispat Nigam Ltd. v Dewan Chand Ram Saran (2012) 5 SCC 306 ..................... 1295

Rashtriya Ispat Nigam Ltd. v Verma Transport Co. (2006) 7 SCC 275 ................403, 430, 599

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Rasiklal Ratilal v Fancy Corporation Ltd. & Anr. (2007) SCC OnLine Bom 266 ................965

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Rational Intellectual Holdings Ltd. v Mr. Sunny Karira (2018) SCC OnLine Del 8341, at para. 27–​30 .................................................................907

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Rattan Lal Sharma v Purchattam Harit (1974) 1SCC 671 .................................................. 1328 Raukura Moana Fisheries Ltd v The Ship “Irina Zharkikh” [2001] 2 NZLR 801 ......... 58, 1117

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Ravee v Farmer (1791) 4 Term Rep 146 ................................................................................. 1106

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Raveechee & Co. v Union of India (2018) 7 SCC 664, at para. 11 ....................................... 1147 Raveechee & Co. v Union of India (2018) 7 SCC 664 ................................................. 1147, 1154

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Ravi Arya v Palmview Investments Overseas Limited 2019 SCC OnLine Bom 251 ............473 Ravi Prakash Goel v Chandra Prakash Goel (2008) 13 SCC 667 ............. 309, 381, 1102, 1112

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Ravinder Singh v Sukhbir Singh and Ors. (2013) 9 SCC 245 ............................................... 1102

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Ravindra and Associates v Union of India (2010) 1 SCC 80 ................................................ 1295

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Ravindra Kumar Verma v BPTP Limited (2015) 147 DRJ 175 ..............................................186

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Ravindra Kumar Verma v M/​s BPTP Ltd & Anr, 2014 SCC OnLine Del 6602 ...................539 Ray v Chafetz 236 F.Supp.3d 66 (D.D.C. 2017) ..................................................................... 1076

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Raymond Jones Fin. Servs. Inc. v Bishop 596 F.3d184, pp. 194–​195 (4th Cir. 2010) ......... 1088 Raymond Limited v Akshaypat Singhania (2019) SCC OnLine Bom 227 ......................... 1006 Razcom CI v Barry Callebaut Sourcing AG [2010] EWHC 2598 (QB) .............................. 1118 RC Pillar & Sons v Edwards [2001] 1 WLUK 621, at para. 58 ............................................ 1088 Re an arbitration between Becker, Shillan & Co and Barry Brothers [1921] 1 KB 391 ................................................................................1191, 1193–​1194, 1201 Re an Arbitration between Hainan Machinery Import & Export Corp and Donald & McArthy Pte Ltd. [1995] 3 SLR (R) 354 ................................................................. 906, 1291

clxxiv

Law, Practice and Procedure of Arbitration in India

Re an arbitration between Prebble and Robinson [1892] 2 QB 602, at p. 605 .................... 1193 Re an Arbitration between Walker & Son and Brown [1882] 9 QBD 434 ................ 1188, 1194 Re an arbitration between Williams and Stepney [1891] 2 QB 257, CA (Eng) ................. 1192 Re Arbitration between Mohamed Ibrahim and Koshi Mohamed [1963] MLJ 32 ................996 Re Astley and Tyldesley Coal and Salt Co and Tyldesley Coal Co. (1889) 68 LJ (QB) 252 ....63

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Re Badger (1819) 2 B & Ald 691, (1819) 106 ER 517 ..............................................................714 Re Baring Brothers & Co and Doulton & Co (1892) 61 LJQB 704 ................................ 642, 649 Re Barnett and Eccles Corp (1901) 65 JP 757 ........................................................................ 1212 Re Bird Precision Bellows [1985] 3 All ER 523 ...................................................................... 1158

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Re Blackhouse and Taylor (1851) LIQB 233, CA (Eng) ..........................................................572

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Re Brook, Delcomyn and Badart (1864) 16 CBNS 403, 1292

Re Brown and Croydon Canal Co (1839) 9 Ad & E 522 ............................................... 362, 1056

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Re Carlisle, Clegg v Clegg (1890) 44 Ch D 200 .........................................................................449 Re Carus-​Wilson and Greene’s Arbitration (1886) 18 QBD 7 ...................................................51

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Re Cognizance for Extension of Limitation 2020 SCC OnLine SC 343 .................................110

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Re Collyer-​Bristow & Co [1901] 2 KB 839 CA (Eng) ..............................................................701 Re Coombs and Freshfield and Fernley (1850) 4 Exch 839, at 841, 154 ER 1456, 692 .........701

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Re Corporación Transnacional de Inversiones, SA de CV v STET International, SpA [1999] CanLII 14819 (ON SC) .................................................................................. 728, 824

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Re Crighton and Law Car and General Insurance Corpn Ltd’s Arbitration [1910] 2 KB 738 ...................................................................................................................768

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Re Donkin and the Proprietors of the Leeds Canal (1893) 9 TLR 192 ...................................655

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Re Duke of Beaufort and Swansea Harbour Trustees (1860) 8 CBNS 146 ......................... 1056

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Re Elgindata Ltd (No 2) [1993] 1 All ER 232, at p. 237, [1992] 1 WLR 1207, at p. 1214, CA (Eng) ......................................................................................................... 1214 Re Enoch & Zaretzky, Bock & Co’s Arbitration [1910] 1 KB 327, CA (Eng) .........................647 Re Eyre and Leicester Corpn [1892] 1 QB 136 at p. 141, CA (Eng) .......................................561 Re Fearon and Flinn (1869) LR 5 CP 34 ................................................................................ 1213 Re Franklin and Swathling’s Arbitration [1929] 1 Ch 238 (nominee of deceased partner) .................................................................................................................................615 Re Gerard (Lord) and London & North Western Railway Co [1895] 1 QB 459 ................................................................. 11 TLR 170, CA (Eng), 655, 663

clxxv

Table of Cases

Re Gilbert v Wright 20 TLR 164 .............................................................................................. 1189 Re Goddard and Mansfield (1850) 1 L M & P 25 ................................................856, 1061, 1116 Re Green & Co and Balfour Williamson & Co. (1890) 62 LT 325 ............................. 1058, 1295 Re Gregson and Armstrong 70 LT 106 .......................................................................................723 Re Haddan and Roupell (1861) 9 CBNS 683.s .........................................................................563

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Re Hammond and Waterton (1890) 62 LT 808 ................................................................. 50, 202

Re Hare, Milne and Haswell (1839) 6 Bing NC 158, at p. 162 ................................................856 Re Harrington v Clare County Justices [1980] 2 IR 116 ..........................................................648 Re Hewitt and Portsmouth Waterworks Co (1862) 10 WR 780 .............................................721

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Re Hooper & Co and Balfour Williamson & Co. (1890) 62 LT 646 .......................... 1058, 1295

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Re Inchcape, Craigmyle v Inchcape [1942] Ch 394 ................................................................ 1082

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Re Insurance Australia Corp. Ltd. v Odyssey Re (Bermuda) Ltd. [2000] NSWSC 1118 ...........................................................................................................439

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Re Kenworth Engineering Ltd [2005] 2 HKLRD 97, at para. 44, per S. Kwan J ..................................................................................................... 1178

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Re Kitchin, Ex parte Young (1881) 17 Ch D 668 ................................................................... 1112 Re Lord and Lord (1855) 5 E & B 404 .......................................................................................594

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Re Marshall and Dreser (1843) 3 QB 878 .............................................................................. 1062

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Re Medicaments and Related Classes of Goods (No.2) [2001] 1 WLR 700, CA (Eng) .................................................................................... 634, 652

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Re Morphett (1845) 2 Dow & L 967 ............................................................................... 719, 1305

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Re Nossens’s Letter Patent [1969] 1 WLR 638, at pp. 643–​644 ............................................ 1186

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Re O’Conor and Whitlaw’s Arbitration (1919) 88 LJKB 1242 .................................... 1061, 1292

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Re Phoenix Timber Co Ltd’s Application [1958] 2 QB 1, [1958] 1 All ER 815, [1958] 1 Lloyd’s Rep 305, CA (Eng) ..................................................................................457 Re Plews and Middleton 1845 6 QB 845 ................................................................................ 1292 Re Poyser and Mills Arbitration [1964] 2 QB 467 ................................................................. 1043 Re Prebble and Robinson (1892) 2 QB 602 ............................................................677, 702, 1252 Re Rotheray & Sons Ltd v Carlo Bedarida & Co [1961] 1 Lloyd’s Rep 220 ..........................759 Re Salkeld and Slater and Harrison (1840) 12 Ad & El 767 ................................................ 1305 Re Shaw and Sims (1851) 17 LTOS 160 ....................................................................................554 Re Smith and Wilson 1848 2 Ex. 327 ...................................................................................... 1062

clxxvi

Law, Practice and Procedure of Arbitration in India

Re Stephens, Smith & Co and Liverpool and London and Globe Insurance Co’s Arbitration (1892) 36 Sol Jo 464 ........................................................................................702 Re Stephens, Smith & Co and Liverpool and London and Globe Insurance Co’s Arbitration (1892) 36 Sol Jo 464, per Smith J ................................................................ 1192 Re Tidswell (1863) 33 Beav 213 ..................................................................................... 1063, 1292 Re Tunno & Bird (1833) 5 B & Ad 488 .................................................................................. 1304

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Re Underwood and Bedford and Cambridge Rly Co (1861) 11 CBNS 442 .................. 856, 914 Re Unione Stearinerie Lanza and Weiner [1917] 2 KB 558 ....................................................947 Re United Railways of Havanna and Regla Warehouses Ltd [1960] Ch 52 at 84, 86, affirmed [1961] AC 1007, [1960] 2 All ER 332, HL ................299

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Re Westwood, Baillie & Co and Cape of Good Hope Govt (1886) 2 TLR 667 .......................670

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Re Westwood, Baillie & Co and Government of Cape of Good Hope (1886) 2TLR 667 ............................................................................................................... 1184

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Re Whitwam’s Trustees, etc and Wrexham, Mold and Connah’s Quay Rly Co (1895) 39 Sol Jo 692, 665 ....................................................................................................720

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Re Wilson & Son and Eastern Counties Navigation and Transport Co [1892] 1 QB 81 .....................................................................................................................594 Re wright and Cromford Canal Co. [1841] 1 QB 98 ............................................................. 1061

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Rebah Constr. CC v Renkie Bldg Contr. CC [2008] (3) SA 475 (T) (High Court of South Africa) ................................................................................... 815, 817

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Rederij Empire CV v Arrocerías Herba, S.A, No. 1148/​2002 ..................................................438

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Reed Executive Plc v Reed Business Information Ltd [2004] EWCA Civ 887, [2004] All ER (D) 233 (Jul) ................................................................................... 1229, 1235 Reena Sadh v Anjana Enterprises (2008) 12 SCC 589 at para. 23, 811

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Rees & Kirby v Swansea City Council (1985) 30 BLR 1, at p. 23, per Goff LJ .................... 1158

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Rees v Francis Waters (1847) 16 M & W 263 ........................................................................ 1055 Rees v Phelps (1689) 3 Mod Rep 264 ...................................................................................... 1106 Rees v Waters (1847) 16 M & W 263 ...................................................................................... 1059 Regency Hotels Pvt. Ltd. v Cherish Investments Pvt. Ltd. (2008) SCC OnLine Bom 650, at para. 18 .......................................................................................... 1294 Regina v Gough [1993] AC 646, [1993] 2 WLR 883 ..................................................................62 Rehmat Ali Baig v Minocher M Deboo 2012 (4) Arb LR 410 (Bom) ............................ 689, 691 Rehmat Ali Baig v Minocher M. Deboo (2012) SCC OnLine Bom 914, at para. 8 ...............943

clxxvii

Table of Cases

ReJenkins and Leggo (1841) 1 Dowl NS 276 .......................................................................... 1305 Reliance Cellulose Products Ltd. v ONGC Ltd. (2018) 9 SCC 266 ............................. 1153, 1164 Reliance Industries Limited and Ors. v Union of India (2014)7 SCC 603 ..................... 191, 249 Reliance Industries Ltd & Ors v Union of India 2014 SCC OnLine SC 279, paras. 71 ... 72, 93 Reliance Industries Ltd v Union of India (2014) 11 SCC 576 ..................................................567

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Reliance Industries Ltd. v Union of India (2014) 7 SCC 603 ...................................................491 Reliance Infrastructure Limited v. Haryana Power Generation Corporation 2016 (6) ARBLR 480 (P&H) ..............................................................................................377 Reliance Polycrete Ltd. v National Agricultural Cooperative Marketing Federation of India (2009) 156 DLT 224 ..................................................................................... 779, 862

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Reliance Polycrete Ltd. v National Agriculture Cooperative Marketing Federation of India (2008) SCCOnLine Del 837 ..................................................... 965, 984 Renusagar Case ......................................................................................................................... 1302

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Renusagar Power Co Ltd v General Electric Co Ltd. 1994 Supp (1) SCC 644 ............................1054, 1119, 1168, 1172, 1300, 1342, 1349, 1359 Renusagar Power Co. Ltd. v General Electric Co. 1994 Supp (1) SCC 644 .............................30

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Renusagar Power Co. Ltd. v General Electric Company and Anr. (1984) 4 SCC 679 .................................................................................................................338

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Republic of Ecuador v ChevronTexaco Corp, 376 F. Supp. 2d 344, 348-​49 (SDNY 2005) ........................................................................................................................475

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Republic of Ecuador v Occidental Exploration and Production Co [2005] EWCA Civ 1116, [2005] 2 All ER (Comm) 689 .................................................712

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Republic of Ghana v Telekom Malaysia Berhad (District Court of The Hague), Case No HA/​RK 2004, p. 667, reprinted in (2005) 23 ASA Bulletin 186 .....................643

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Republic of India v Vedanta Limited [2020] SGHC 208 ....................................................... 1445 Republic of Kazakhstan v Istil Group Inc (No. 2) [2007] EWHC 2729 (Comm) ..................477

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Republic of Liberia v Gulf Oceanic Inc [1985] 1 Lloyd’s Rep 539, CA (Eng) ........................429 Research in Motion UK Ltd v Visto Corporation [2008] EWHC 3026 (Pat) ..................... 1205 Reserve Bank of India v S.S. Investments and Others (1992) 4 SCC 671, at para. 17 ........ 1070 Residence Hotel and Resorts Sdn Bhd v Seri Pacific Corp Sdn Bhd [2014] 10 MLJ 413 ...............................................................................................................636 Reva Electric Car Company Pvt. Ltd. v. Green Mobil (2012) 2 SCC 93 ........................ 372, 379 Rex v Justices of Bodmin ex parte McEwen [1947] KB 321 .....................................................723

clxxviii

Law, Practice and Procedure of Arbitration in India

Rhiti Sports Management Pvt. Ltd. v Power Play Sports & Events Ltd. (2018) SCC OnLine Del 8678 ......................................................................................... 1001 Richard Clear & Co Ltd v Bloch [1922] 12 WLUK 40 .......................................................... 1314 Richardson v Mellish [1842] 2 Bing 229 ................................................................................. 1300 Richardson v Worsley 5 Exch 613, 155 ER268 ....................................................................... 1197

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Richco International Ltd v International Industrial Food Co SAL, The Fayrouz III [1989] 1 All ER 613, 986

Richmond Shipping Ltd v Agro Co of Canada Ltd, The Simonburn (No 2) [1973] 2 Lloyd’s Rep 145 ............................................................................................534–​535 Ridoat v Pye (1797) 1 Bos & Pul 91 ........................................................................................ 1304

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RIICO Ltd. Jaipur v Manoj Ajmera (2008) 2 ArbLR 388 ............................................... 505, 517

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Rikhabdass v Ballabhdass 1962 Supp (1) SCR 475, at para. 8–​9 ......................................... 1082 Rinehart v Hancock Prospecting [2019] HCA 13 (High Court of Australia) .......................448

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Ringland v Lowndes 33 LJCP 25 ................................................................................................585

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Rintin Corp SA v Domar Ltd 374 F.Supp. 2d 1165 (SD Fla. 2005) ........................................834

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Rishi Electricals (P) Ltd. v HP State Electricity Board 2006 SCC OnLine HP 55 .................654 Rishima SA Investments LLC (Mauritius) v Shristi Infrastructure Development Corporation Limited & Anr. O.M.P (EFA) (COMM) 5/​2019 Order dated 30 May 2019, 32

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Ritchie v W Jacks & Co (1922) 10 Ll L Rep 519 ......................................................712, 715, 725

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Ritchie v W Jacks & Co (1922) 10 Ll L Rep 519 ..........................................................1304–​1305 Rites Ltd. v Subrata Kumar Ghose 2019 SCC OnLine Del 8607 ............................................511

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Ritter v Godfrey [1920] 2 KB 47, CA (Eng) ................................................................. 1201, 1207

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River Plate Products Netherlands BV v Etablissement Coargrain [1982] 1 Lloyd’s Rep 628 ..............................................................................1053, 1062, 1118

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River Thames Insurance Co Ltd v Al Ahleia Insurance Co SAK [1973] 1 Lloyd’s Rep 2 .........................................................................................................180 Riverside Casino Ltd v Moxon [2001] 2 NZLR 78 CA, 629 RJ Reynolds Tobacco Co v Iran (1984) 7 Iran-​US CTR 181, at pp. 191–​192 ..................... 1166 Robertson (J F) & Co v A T James & Co (1923) 16 Ll L Rep 34 .............................................345 Robertson v Hatton (1857) 26 LJ Ex 293 ................................................................................ 1112 Robinson, Fleming & Co v Warner, Barnes & Co (1922) 10 Ll L Rep 331 ............................621 Roche Products Ltd v Freeman Process Systems Ltd [1996] 80 BLR 102 ...............................305

clxxix

Table of Cases

Roger Shashoua and Ors. v Mukesh Sharma [2009] EWHC 957 (Comm) ...........................................................................................................491, 1034, 1377 Roger Shashoua v Mukesh Sharma 2017 SCC OnLine 697 ................................................. 1372 Rohit Bhasin v Nandini Hotels 2013 SCC OnLine Del 2300 ..................................................491 Rolimpex Centrala Handlu Zagranicznego v Haji E Dossa & Sons Ltd [1971] 1 Lloyd’s Rep 380 ..................................................................................678, 680, 1189

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Rolland v Cassidy (1888) 13 App Cas 770 ....................................................................... 856, 911 Romak S.A. (Switzerland) v Uzbekistan PCA Case No. AA280, Award ............................ 1406 Rompetrol Group NV v Romania (ICSID Case No. Arb/​06/​3, at para. 18, 888

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Rondabosh International Ltd v China Ping An Insurance (Hong Kong) Co Ltd [2009] HKCFI 1198 (HK) ...................................................................................................401

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Ronly Holdings Ltd v JSC Zestafoni G. Nikoladze Ferroalloy Plant 2004 EWHC 1354 (Comm), at para. 37 ........................................................................ 1077

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Ronly Holdings v JSC Zestafoni G. Nikoladze Ferroalloy Plant [2004] EWHC 1354 ........................................................................................258, 1003, 1057

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Rosedale Developers (P) Ltd. v Aghore Bhattacharya (2018) 11 SCC 337 ............................488

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Rosen & Co v Dowley & Selby [1943] 2 All ER 172 ......................................... 1214, 1220–​1221 Roshan Lal Gupta v Parasram Holdings Pvt. Ltd. 2009 (1) ArbLR 304 (Delhi) ..................278

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Roshan Lal Gupta v Parasram Holdings Pvt. Ltd. & Anr. 2009 SCC OnLine Del 293 ........474

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Ross v Boards (1838) 8 Ad & El 290 ....................................................................................... 1059 Ross v Boards [1838] 5 WLUK 60 ........................................................................................... 1054

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Ross v Clifton (1841) 9 Dowl 357 ............................................................................................ 1116

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Rotary Club of Delhi Midtown v Sunil K. Jain (2007) SCC OnLine Del 664 at para. 26, 934

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Rotary Watches Ltd v Rotary Watches (USA) Inc [2004] EWHC 90038 (Costs) .............. 1249 Rotary Watches Ltd v Rotary Watches (USA) Inc [2004] WL 3200214 .............................. 1208

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Round v Hatton (1842) 10 M & W 660 ............................................................. 1063–​1064, 1116 Roussel-​Uclaf v. GD Searle & Co [1978] 1 Lloyd’s Rep 225 at p. 230 (U.K.) .........................407 Rowcliffe v Devon & Somerset Rly Co (1873) 21 WR 433 .......................................................678 Royal Borough of Kingston-​upon-​Thames v Amec Civil Engineering Ltd (1994) 10 Const LJ225 ...............................................................(1993) 35 Con LR 39, 1152 Royal Commission on Sugar Supply v Trading Society Kwik-​Hoo-​Tong Trading Society 38 TLR 684 .................................................................................................................................621

clxxx

Law, Practice and Procedure of Arbitration in India

Royston v Rydal (1605) Rolle Ab. Arb. H8 Com. Dig. Arb. E. 15 ....................................... 1118 RSM Production Corporation v Grenada ICSID Case No. ARB/​05/​14 .............................. 1255 RSM Production Corporation v Saint Lucia ICSID Case No ARB/​12/​10 (Decision on Claimant’s Proposal for the Disqualification of Dr Gavan Griffith, QC, 23 October 2014) ............................................................... 703, 942 Ruby Sales and Services Pvt. Ltd. v State of Maharashtra (1994) 1 SCC 681 ..................... 1245

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Rudramuni Devaru v Shrimad Maharaj Niranjan Jagadguru (2005) SCC OnLine Kar 173, at para. 21 ............................................................. 1053, 1069 Rukmanbai Gupta v Collector, Jabalpur (1980) 4 SCC 556 ....................................................144 Rule v Bryde 1 Exch 151; Hellaby v Brown (1857) 1 H & N 729 ......................................... 1208

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Rumeli v Kazakhstan, Award, 29 July 2008, at para. 610 ..................................................... 1414

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Rumput (Panama) SA and Belzetta Shipping Co SA v Islamic Republic of Iran Shipping Lines, The Leage [1984] 2 Lloyd’s Rep 259 ................................................296

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Rush & Tomkins Ltd v Greater London Council [1989] AC 1280, HL ............................... 1227

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Rush & Tompkins Ltd v GLC [1989] AC 1280 ...................................................................... 1231 Rushworth v Waddington (1859) 1 LT 69 .................................................................................718

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Russel v Duke of Norfolk [1949] 1 All ER 109, at para. 118, CA ............................................723 Russell v Russell (1880) 14 Ch D 471 ........................................................................58, 113, 1116

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Rustal Trading Ltd v Gill & Duffus SA [2000] 1 Lloyd’s Rep 14 ............................642, 652, 659

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RWJ Sutherland & Co. v Hannevig Bros Ltd. [1921] 1 KB 336 ........................................... 1018

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S & S Constructions Pty Ltd v Fulop [1996] VR 401 ............................................................ 1054

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S &T Oil Equipment and Machinery Ltd v Romania, ICSID Case No. ARB/​07/​13 ............643

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S N Kurkjian (Commodity Brokers) Ltd v Marketing Exchange for Africa Ltd (formerly T M Motiram (UK) Ltd) (No 2) [1986] 2 Lloyd’s Rep 618 ........................................................................... 680, 683, 701–​702 S. K. and Associates v Indian Farmers and Fertilizers 2010 SCC OnLine All 1620, at para. 17 .............................................................................................................812 S. P. Singla Constructions Pvt. Ltd. v State of Himachal Pradesh & Anr. (2019) 2 SCC 488 (2019) 1 SCC (Civ) ..................................................................... 748, 653 S.A. Elf Aquitaine and Total v Mattei, Lai Kamara and Reiner (6 January 2010) (Tribunal de Grande Instance, Paris), RG No. 09/​60539; Republic of Equatorial Guinea v

clxxxi

Table of Cases

Fitzpatrick Equatorial Guinea (29 March 2010) (Tribunal de Grande Instance, Paris) [2010] Revue de l’arbitrage ........................................................................................ 390, 476 S.A. Fasludeen & Ors. v Siyauddin & Ors (2017) SCC OnLine Mad 11917 ............ 1053, 1290 S.A.R.L. Blow Pack v Société Windmoller et Holscher KG (2013) 2 Rev. Arb. (Paris Court of Appeal) .........................................................................................................82 S.B.P. & Co. v Patel Engineering Ltd. & Anr (2005) 8 SCC 618 .................................... 951, 957

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S.K. Jain v State of Haryana (2009) 4 SCC 357 .......................................................182, 506, 512 S.N. Malhotra and Sons v Airport Authority of India (2008) SCC OnLine Del 442 ................................................................................... 362, 1305 S.N. Mukherjee v Union of India (1990) 4 SCC 594, at para. 5 ........................................... 1044

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S.N. Prasad v. Monnet Finance Ltd. & Ors. (2011) 1 SCC 320 ...................................... 278, 302

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S.P. Singla Constructions (P) Ltd. v State of H.P. (2019) 2 SCC 488, at para. 23-​25 ............941 S.P.S. Rana v M.T.N.L. & Ors. (2010) SCC OnLine Del 136 ............................................... 1019

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S.V. Chandra Pandian v S.V. Sivalinga Nadar (1993) 1 SCC 589 ....................................... 1329

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S.W. Palanitkar & Ors. v State of Bihar and Anr. (2002) 1 SCC 241 .......................... 380, 1117

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SAB Miller Africa v Tanzania Breweries Ltd [2009] EWCA Civ 1564 ..................................976 Saba Fakes v Republic of Turkey ICSID CaseNo. ARB/​07/​20, Award, T 110, 14 July 2010 ....................................................................................................................... 1406

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Sabah Gas Industries Sdn Bhd v Trans Samudera Lines (S) Sdn Bhd [1993] 2 MLJ 396 ...................................................................................................................60

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Sabah Medical Centre Sdn Bhd v Syarikat Neptune Enterprise Sdn Bhd [2010] MLJU 1486, at [8]‌....................................................................................................621

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Sabah Medical Centre Sdn Bhd v Sykt Neptune Enterprise Sdn Bhd [2012] 7 MLJ 28 ........632

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Sabah Shipyard (Pakistan) Ltd v Government of the Islamic Republic of Pakistan [2004] 3 SLR(R) 184 ......................................................................................................... 1185

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Sabbagh v Khoury [2018] EWHC 1330 (Comm) ....................................................................477 Sabbagh v Khoury [2019] EWCA Civ. 1219 .............................................................................479 Saberno Pty Ltd v De Groot (1992) 8 BCL 128 ........................................................................304 Sacheri v Robotto XVI YBCA 156 (1991) .................................................................................588 Sachin Gupta & Anr v K.S. Forge Metal Pvt. Ltd. (2013)10 SCC 540 ................................ 1291 Sachin Kelkar v Sole Arbitrator, 2018 SCC Online Bom 20312 .............................................691 Sachinandan Das v State of West Bengal & Ors. AIR 1991 Cal 224 ........................................62

clxxxii

Law, Practice and Procedure of Arbitration in India

Sacor Maritime SA v Repsol Petroleo SA [1998] 1 Lloyd’s Rep 518 .................................... 1112 Safety Insurance Company Sdn Bhd v Chow Soon Tat [1975] 1 MLJ 193, FC, 493 .............534 Sagar Warehousing Corporation v Pawan Hans Helicopters Ltd. (2008) SCC OnLine Del 927 ..............................................................................................986 Sahakari SakharKarkhana Ltd. v Gangapur Sahakari Sakhar Karkhana Ltd, (2017) SCC OnLine Bom 1669, at para. 21 ................................................................... 1092

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Sahyadri Earthmovers v L & T Finance Limited and Ors, (2011) 4 MhLJ 200 .....................865 SAIL v British Marine PLC (2016) SCC OnLine Del 5599, at para. 38 ........................ 962, 964

SAIL v Gupta Brothers Steel Tubes Ltd. (2009) 10 SCC 63, at para. 18 ..........1053, 1058. 1295 Sailendra Narayan Bhanja Deo v State of Orissa AIR 1956 SC 346 ................................... 1245

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Saipem SpA v The People’s Republic of Bangladesh ICSID Case No ARB/​05/​07 ....... 471, 1438

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Salar Jung Museum v Design Team Consultants Pvt. Ltd. (High Court of Delhi), O.M.P. (COMM) 44/​2017 (21 May 2020) .................................................................................. 1304

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Salecha Cables Pvt. Ltd. v HPSEB 1993 SCC OnLine HP 39 .................................................351

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Salem Advocate bar Association, (II) v UOI (2005) 6 SCC 344 ........................................... 1179

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Salem Bar Association, T.N. v Union of India (2003) 1 SCC 49, 150 Salenrederierna SA v Blue Star Line Ltd, The New York Star [1982] 1 Lloyd’s Rep 78 ........534

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Salini Costruttori S.P.A. (Italy) v The Federal Democratic Republic of Ethiopia, Addis Ababa Water and Sewerage Authority, at para. 121 ..............................................827

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Salini Costruttori SpA and Italstrade SpA v Kingdom of Morocco ICSID Case No ARB/​00/​4 .................................................................................................1405–​1406

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Salini Costruttori SPA v The Federal Democratic Republic of Ethiopia, Addis Ababa Water and Sewerage Authority, Partial Award in ICC Case No. 10623 (2003) 21 ASA Bull 59 ............................................................................................... 465, 471

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Saluka Investments BV v The Czech Republic UNCITRAL, Partial Award, 17March 2006 .................................................................................................................... 1403 Saluka v Czech Republic, Partial Award, 17 March 2006, at para. 291 ............................... 1415 Samant N. Balkrishna v George Fernandez (1969) 3 SCC 238, at para. 29 ........................ 1274 Sanderson v Blyth Theatre Co [1903] 2 KB 533, CA (Eng) .................................................. 1215 Sangram Singh v Election Tribunal, Kota AIR 1995 SC 425 ...................................................819 Sanjeev Kumar Jain v Raghubir Saran Charitable Trust (2012) 1 SCC 455, at paras 23.25 .................................................................................... 1251 Sanjeev Sharma v Gurdeep Singh (2006) SCC OnLine Del 126 .......................................... 1304

clxxxiii

Table of Cases

Sanko Steamship Co Ltd v Tradax Export SA [1979] 2 Lloyd’s Rep 273, CA (Eng) ............537 Sankofa v Football Association [2007] EWHC 78 ....................................................................976 Sans Souci Ltd v VRL Services Ltd [2012] UKPC 6 .............................................................. 1276 Sanshin Chemicals Industry v Oriental Carbons & Chemicals Ltd. (2001) 3 SCC 341 ............................................................................................995, 1001, 1007

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SAP India Private Limited v Cox & Kings Ltd. 2018 SCC OnLine Bom 5635 .....................665 Saraswathi Chemicals v Balmer Lawrie & Co. 2011 SCC OnLine Mad 442, (2011) 3 CTC 9 (DB), (2011) 2 LW634 (DB) ...................................................................821

Saraswati Construction Company v East Delhi Co-​Operative Group 57 (1995) DLT 343, ........................................................................................ 1994 RLR 458, 186

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Sardar Singh v Krishna Devi and Anr. (1994) 4 SCC 18, at para. 12 .................................. 1328

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Sarkar Enterprise v Garden Reach Shipbuilders and Engineers Ltd. (2001) SCC OnLine Cal 256 ........................................................................................... 1287

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Saroj Bala v Rajive Stock Brokers Ltd. (2005) SCC OnLine Del 339, at para. 6 ................ 1044

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Sarvesh Security Services Pvt Ltd v DSIIDC 2018 SCC OnLine Del 8500 ............................186

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Sasan Power Limited v Northern American Coal Corporation India Pvt. Ltd. 2015 SCC Online M.P. 7417 ...............................................................................................157 Sasan Power Ltd. v North American Coal Corporation 2015 OnLine MP 7417 ..................158

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Sasan Power Ltd. v North American Coal Corporation India Private Limited (2016) 10 SCC 813 ............................................................................................................ 1367

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Sathyanarayana Bros. (P) Ltd. v T.N. Water Supply & Drainage Board (2004)5 SCC 314 ..................................................................................................................836

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Satinder Narayan Singh v Indian Labour Co-​operative Society Ltd. (2008) 1 Arb LR 355, at para. 3 ..........................................................................................773

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Satinder Narayan Singh v Indian Labour Cooperative Society Ltd. (2007) SCC OnLine Del 1675, at para. 3 ..........................................................................980

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Satinderpal Singh Anand v Sharanpal Balmukund Chopra (2008) SCC OnLine Bom 473 ......................................................................................... 1122 Satish Kumar v Surinder Kumar (1969) 2 SCR 244 ............................................................. 1329 Satpal P. Malhotra v Puneet Malhotra (2013) SCC Online Bom 689, at para. 109 ............................................................................................. 1080, 1271 Satwant Singh Sodhi v State of Punjab (1999) 3 SCC 487 .....................1005–​1006, 1029, 1037 Satya Prakash & Bros. Pvt. Ltd. v State of U.P. 2010 SCC OnLine All 267, para. 15 ..........344

clxxxiv

Law, Practice and Procedure of Arbitration in India

Satyadhan Ghosal & Ors. v Deorajin Debi & Anr. (1960) 3 SCR 590 ................................ 1100 Satyanarayan Construction Co. v Union of India (2011) 15 SCC 101 ................................ 1295 Saudi Arabia v Arabian American Oil Co. (Aramco) (1963) 27 ILR 117 ........................... 1123 Save & Prosper Pensions Ltd. v Homebase Ltd. 2001 L&T Rev. 11 ........................................899 Saville J in Hayter v Nelson and Home Insurance Co. [1990] 2 Lloyd’s Rep 265 ..................355

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Sawarmal Gadodia v Tata Capital Financial Services Ltd. & Anr. 2019 SCC Online (Bom) 849 .............................................................................................646 Saxmere Company Limited v Wool Board [2009] NZSC 72 [2010] 1 NZLR 35 SC (NZ) ....................................................................................... 627, 631

Saxmere Company Ltd v Wool Board [2009] NZSC 72, [2010] 1 NZLR 35 ........631, 635, 642

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Sayeed Ahmed and Co. v State of UP (2009) 12 SCC 26, at para. 14 .................................. 1153

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SBC Advanced Solutions, Inc. v Commons Workers of Am, Dist. 6 794 F.3d 1020, p. 1031 (8th Cir. 2015) ............................................................... 1076

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SBP & Co. v Patel Engineering (2005) 8 SCC 618 ...........................................266, 294, 475, 604

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SBP & Co. v Patel Engineering Co. (2009) 10 SCC 293 ...........................................................539

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SBS Transit Ltd (formerly known as Singapore Bus Services Limited) v Koh Swee Ann [2004] 3 SLR(R) 365 ......................................................................................................... 1227

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SC Rolinay Sea Star Srl v The Bumbesti (owners) The Bumbesti [1999] All ER (D) 691 ...................................................................................................... 1111

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SC v OE1 & Anor HCCT 48/​2019 ........................................................... 1079, 1082, 1090, 1272 SC v OE1 and OE2 [2020] HKCFI 2065 ......................................................................1019–​1020

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Scarf v Jardine (1882) 7 App Cas 345 ........................................................................................298

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Schiff Food Products Inc v Naber Seed & Grain Co Ltd (1996) 149 Sask R 54 (QB) Schiff Food Products Inc v Naber Seed & Grain Co Ltd [1996] CanLII 7144 (SK QB) ........203

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Schiffahrtsgesellschaft Detler von Appen GmbH v Voest Alpine Intertrading GmbH [1997] 2 Lloyd’s Rep 279 .....................................................................................................295 Schofield v Allen (1904) 48 Sol Jo 176, 116 LT Jo 239, CA (Eng) ..........................................665 Scott v Avery [1843-​60] All ER Rep 1 .......................................................................... 9, 304, 348, Scott v Liverpool Corpn (1858) 3 De G & J 334 .......................................................................495 Scott v Van Sandau (1844) 6 QB 237 ........................................................................................721 SD Myers Inc v Government of Canada First Partial Award, 13 November 2000, 8 ICSID Rep 3, atp. 63 ................................................................... 1423

clxxxv

Table of Cases

SDV Transami Ltdv Agrimag Ltd. (Kampala High Court, Commercial Division, Uganda) HCT-​00-​CC-​AB-​0002-​2006 (18 June 2008) ................................................. 1288 Sea Containers Ltd v ICT Pty Ltd [2002] NSWCA 84 ................................................... 672, 694 Sea Trade Maritime Corp v Hellenic Mut. War Risks Ass’n (Bermuda) Ltd, The Athena [2006] EWHC 578(Comm) .........................................................................1018, 1079, 1271

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Sea Trade Maritime Corp v Hellenic Mutual War Risks Association (Bermuda) Ltd ............................................................................................................. 211, 213 Seabridge Shipping AB v AC Orsleff ’s Eftf ’s A/​S [2000] 1 All ER (Comm) 415 ...................516 Seabridge Shipping AB v AC Orsleff ’s Eftf ’s A/​S [2000] 1 All ER (Comm) 415 ...................522 Sebiro Holdings Sdn Bhd v Bhag Singh [2014] 11 MLJ 761 ............................................571–​572

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Sebiro Holdings Sdn Bhd v Bhag Singh & Anor [2015] 3 AMR 334, [2015] 4 CLJ 209 .......173

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Secretary of State for Defence v Turner Estate Solutions Ltd. [2014] EWHC 244 ............. 1055

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Secretary of State for Foreign and Commonwealth Affairs v Percy Thomas Partnership (a firm) and Kier International [1998] All ER (D) 13 ......................... 48, 345

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Secretary of State for Foreign and Commonwealth Affairs v Percy Thomas Partnership (a firm) 65 ConLR 11 .....................................................................................210

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Secretary of State for Transport v Birse-​Farr Joint Venture 9 Const LJ 213 ........................ 1152 Secretary of State v Lodna Colliery Co. Ltd. 164 Ind Cas 860 .............................................. 1207

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Secur Industries Ltd. v Godrej & Boyce MFG. Co. Ltd. and Anr. (2004) 3 SCC 447 ............522

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Seele Middle East FZE v Drake & Scull International SA Co. [2013] EWHC 4350 (TCC) ................................................................................................976

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SEF Construction Pte Ltd v Skoy Connected Pte Ltd [2009] SGHC 257 .................. 1041, 1066

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SEI Adhavan Power Private Ltd. & Anr. v Jinneng Clean Energy Technology Ltd & Ors. SCC Online Mad 13299 .....................................................................65–​66, 292

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Seidel v Telus Communications Inc 2009 Carswell BC 608, [2009] BCWLD 2020, CA (Can) ....................................................................................................438 Seidel v Telus Communications, Inc Supreme Court of Canada [2011] 1 SCR 531 ..............440 Selby v Russell (1697) 12 Mod Rep 139 .................................................................................. 1061 Selby v Whitbread & Co. [1917]1 KB 736 .................................................................... 1052, 1060 Sellar v Highland Railway Co. 1919 SC (HL) 19 ......................................................................639 Selvi v State of Karnataka 2013 SCC OnLine 1388 .................................................................777 Semco Salvage & Marine Pty Ltd v Lancer Navigation Co Ltd, The Nagasaki Spirit [1996] 1 Lloyd’s Rep 449 .................................................................................................. 1206

clxxxvi

Law, Practice and Procedure of Arbitration in India

Sempra Energy International v Argentine Republic ICSID Case No. ARB/​02/​16 ............. 1412 Sempra Metals Ltd (formerly Metalgesellschaft Ltd) v Inland Revenue Commissioners [2007] UKHL 34, at para. 41 ........................................................................................... 1165 Sempra Metals v Inland Revenue Commissioners (2008) 1 SC 561 (HL) (Eng.) ............... 1172 Sempra v Argentina Award, 28 September 2007 .........................................................1413–​1414

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Senbo Engineering Ltd. v State of Bihar and Ors. AIR 2004 Pat 33 ........................................811 Services Europe Atlantique Sud (SEAS) v Stockholms Rederiaktiebolag SVEA, The Folias [1978] 2 WLR 887, [1979] AC 685 .................................................. 1120 Seth Bhikraj v Union of India [1962] 2 SCR 880 ......................................................................283 Seth Thawardas Pherumal v Union of India [1955] 2 SCR 65, at para. 47 ......................... 1140

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SGS Société Générale de Surveillance S.A. v Islamic Republic of Pakistan, ICSID Case No. ARB/​01/​13, Procedural Order No. 2 (16 October 2002) ................................................482

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SH. Satinder Narayan Singh v Indian Labour Cooperative Society Ltd.and Ors, .............. 2008 (1) ARBLR 355 (High Court of Delhi), 863

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Shagang South-​Asia (Hong Kong) Trading Co. Ltd. v Daewoo Logistics [2015] EWHC 194 (Comm) ...............................................................................................491

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Shahi & Associates v State of UP (2019) 8 SCC 329 ............................................................. 1140 Shailesh Dhairyawan v Mohan Balkrishna Lulla (2016) 3 SCC 619 ............................ 150, 551

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Shakti Bhog Foods Limited v Kola Shipping Limited (2009) 2 SCC 134 ................................199

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Shakti Bhog Foods Ltd. v Kola Shipping Ltd & Anr. 2012 SCC OnLine Del 4300 ...............638 Shakti International v Excel (2017) SCC OnLine Bom321 ................................................. 1006

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Shambhu Dayal v Basdeo Sahai AIR 1970 All 525 ..................................................................670

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Shaminder Singh & Ors. v Motor and General Finance Ltd. 2007 SCC OnLine Del 772 ........................................................................................ 720, 938

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Shanghai Foreign Trade Corpn. (PR China) v Sigma Metallurgical Co. Pty. Ltd. (Australia) (1996) 11 International Arb Rep A-​1 reported in (1996) 11 International Arb Rep A-​1 reported in Yearbook Commercial Arbitration Vol. XXII-​1997 ............439 Shankar Lal Lachmi Narain v Jainey Bros AIR 1931 All 136 .................................................199 Shankar Lal v Jainey Bro (1931) AIR All 136 ...........................................................................202 Shankar Sitaram Sontakke v Balkrishna Sitaram Sontakke (1955) 1 SCR 99 .................... 1245 Shanmughasundaram and Ors. v Diravia Nadar and Anr. (2005) 10 SCC 728 ................ 1101 Shapoorji Pallonji & Co Pvt Ltd v Housing & Urban Development Corpn Ltd (2000) SCC OnLine Del 423 ........................................................................................... 1038

clxxxvii

Table of Cases

Sharma Enterprises v. National Buildings Construction Corporation Ltd. ILR (2009) 2 Del 93 ........................................................................................................... 375, 377 Sharp v Nowell (1848) 6 CB 253 ....................................................................................... 853, 916 Sharpe v San Paulo Railway Company (1873) LR 8 Ch App 597 ..........................................495 Shashou v Sharma [2009] EWHC 957 (Comm) ................................................................... 1195

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Shayler v Woolf [1946] Ch 320, [1946] 2 All ER 54, CA (Eng) ..................................... 277, 295 Shedumbrum Chotty v Keng Cheow & Co (1890) 4 Ky 587 ....................................................298 Shell China Co. Ltd. v Huili Hohhot Co. Ltd. [2019] Zhi Min Xia Zhong No. 47 ..................60

Shell Egypt West Manzala GmbH and Another v Dana Gas Egypt Limited [2009] EWHC 2097 (Comm) ............................................................................... 1060, 1265

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Shell International Petroleum Co Ltd v Coral Oil Co Ltd [1999] 1 Lloyd’s Rep 72 ..... 413, 480

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Shin Etsu Chemical Co. Ltd. v Aksh Optifibre Ltd. 2005 (7) SCC 234 ...................................448

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Shin-​Etsu Chemical Co. Ltd. v Akash Optifibre Ltd. & Anr. 62 ................................................27

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Shin-​Etsu Chemical Co. Ltd. v Aksh Optifibre Ltd. (2005) 7 SCC 234 ............................................................................... 403, 428, 451–​452, 954

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Shin-​Etsu Chemical Co. Ltd. v Vindhya Telelinks Ltd. (2009) 14 SCC 16, at para. 20 ...... 1339 Shin Satellite Public Co. Ltd v Jain Studios Limited (2006) 2 SCC 628 ......................... 173, 492

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Shipping Co v Stellar Chartering & Brokerage Inc, The Island Archon [1993] 2 Lloyd’s Rep 388 .....................................................................................................509

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Shipping SA v Nvorexa [2008] EWHC 213 (Comm), [2008] 1 Lloyd’s Rep 652 ..................413 Shiv Shankar Rice Mills Ors. v Punjab State Warehousing (2007) 4 PLR 399 .......................689

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Shoney Sanil v Coastal Foundations (P) Ltd. & Ors AIR 2006 Ker. 206, at para. 6 .............986

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Shree Chamundi Mopeds Ltd. v Church of South India Trust Association CSI Cinod Secretariat Madras (1992) 3 SCC (1) ..................................................................................98

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Shree Krishna Vanaspati Industries (P) Ltd. v Virgoz Oils & Fats Pte Ltd. 2009 SCC OnLine Del 1665 ...............................................................................................474 Shree Lal Mahal Ltd. v Progetto Grana SPA (2014) 2 SCC 433 ...........................30, 1054, 1301 Shree Subhlaxmi Fabrics (P) Ltd. v Chand Mal Baradia (2005) 10 SCC 704 .......................490 Shri Lal Mahal Ltd. v Progetto Grano Spa (2014) 2 SCC 433 .................................... 1342, 1349 Shri Vimal Kishor Shah v Mr. Jayesh Dinesh Shah (2016) 8 SCC 788 ............................ 59, 310 Shriram City Union Finance Corpn. Ltd. v Rama Mishra (2002) 9 SCC 613 .......................490 Shriram EPC Ltd. v Rioglass Solar SA (2018) 18 SCC 313 ........................................ 1032, 1330

clxxxviii

Law, Practice and Procedure of Arbitration in India

Shriram Transport Finance Co. Ltd. v Naduvacheri Balakrishnan (2017) SCC OnLine Ker 8983 ............................................................................................933 Shyam Telecom v ARM Ltd 2004 SCC OnLine Del 754 .....................(2004) 113 DLT 778, 547 Shyam Telecom Ltd. v ARM Ltd. 2004 SCC OnLine Del 754 .................................................658 Shyam Telecom Ltd. v ARM Ltd, 2004 SCC OnLine Del 754, (2004) 3 Arb LR 146 ............................................................................................................657

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Shyam Telecom Ltd. v. ARM Ltd. (2004) 3 Arb LR 146 ..........................................................376 Shyam Telecom Ltd. v A.R.M. Ltd. (2004) SCC OnLine Del 754 ............................... 963, 1305 Shyam Telecom Ltd. v Icomm Ltd. (2010) SCC OnLine Del 1234 .............................. 998, 1007

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Siddhi Real Estate Developers v Metro Cash and Carry India Pvt. Ltd. & Ors. [2014] 4 Mah LJ 283 ...........................................................................................549, 551, 578

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Siddhivinayak Realities Pvt. Ltd. v Tulip Hospitality Services Ltd. & Ors. (2007) 4 SCC 612 .................................................................................................................641

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Siemens A.G. v Argentina, Decision on Jurisdiction, ICSID Case No. ARB/​02/​8, at para.102 .............................................................................................................................. 1420

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Siemens A.G. v The Argentine Republic, Award, ICSID Case No. ARB/​02/​8, at para. 399, 1413, 1427

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Siemens AG and BKMI Industrienlagen GmBH v Dutco Construction Company Constr. Co, Casso. Civ.7 Jan. 1992 (French Cour de Cassation) ........................................................316 Siemens AG v Dutco Construction Co (Pvt) Ltd. (1992) 18 YB Com Arb 140 .....................618

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Siemens Limited v Jindal India Thermal Power 2018 SCC OnLine Del 7158 .......................186

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Siemens v Argentina, Award, 6 February 2007 ...................................................................... 1422

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Sierra Fishing Company v Farran [2015] EWHC 140 (Comm) .................................... 613, 643

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Sierra Fishing v Mohamed [2015] EWHC 140 .........................................................................899

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Siginon Maritime Ltd v Gitutho Associates Misc Civil Suit 719 of 2004 (Kenyan case) .................................................................................................................... 1297 Sikand Construction Co. v State Bank of India ILR 1979 Delhi 364 ......................................186 Sikkim Subba Associates v State of Sikkim (2001) 5 SCC 629 .................................................836 Siljestad v Hideca Trading Inc. 541 F. Supp. 58 (SDNY 1981) ............................................. 1076 Silor Associates v Bharat Heavy Electrical Limited (2014) 7 HCC (Del) 426: 2014 SCC OnLine Del 3407 ...............................................................................................774 Silverberg v Hooper [1990] J.E. 90-​437 (SC) .............................................................................786

clxxxix

Table of Cases

Simaan General Contracting Co v Pilkington Glass Ltd [1987] 1 All ER 345, [1987] 1 WLR 516 ..................................................................................................1232–​1233 Sime Darby Engineering Sdn. Bhd v Engineers India Ltd. (2009) 7 SCC 545 .......................582 Sime Darby Engineering SND. BHD v Engineers India Ltd. (2009) 7 SCC 545 .................................................................................................................862 Simmonds v Swaine (1809) 1 Taunt 549 ................................................................................ 1061

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Simon v Gavil (1703) 1 Salk 74 ..................................................................................................361

Simplex Infrastructure Ltd. v Union of India (2019) 2 SCC 455 ............................33, 969, 1285 Simplex Infrastructures Ltd. v National Highways Authority of India (2011) SCC OnLine Del 207 ..............................................................................................989

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Simpson v IRC [1914] 2 KB 842 .................................................................................................916

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Simpsons Motor Sales (London) Ltd v Hendon Corp (No 2) [1965] 1 WLR 112, at p. 118 ............................................................................................ 1187

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Sinclair v Woods of Winchester Ltd. [2005] EWHC 1631 (QB) .............................................660

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Sioux Inc v China Salvage Co, Kwangchow Branch sub nom The American Sioux [1980] 2 Lloyd’s Rep 224, CA (Eng) ..................................................................................345

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Siporex Trade SA v Comdel Commodities Ltd [1986] 2 Lloyd’s Rep 428 ........................... 1104

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Sir John Megaw in Aughton Ltd (formerly Aughton Group Ltd) v MF Kent Services Ltd (1991) 57 BLR 1, CA ...........................................................................................................209

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Sir Mark Wood, Bart v Edmund Griffith (1818) 1Swans 43, 1062 Sir William Baillie, Bart v The Edinburgh Oil Gas Light Company [1835] 1WLUK 306, 1053

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Sirius International Insurance Co (Publ) v FAI General Insurance Ltd [2004] UKHL 54 ..................................................................................................................336

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SJW Facades Ltd v Bowen Construction Ltd [2009] IEHC 49 ............................................. 1068 Skandia Int’l Ins. Co. v Al Amana Ins. & Reins. Co. XXIV Y.B. Comm. Arb. 615 ...............416

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Skipper v Grant (1861) 10 CBNS 237 ........................................................................... 1058, 1295 Skypak Couriers Ltd. v Tata Chemicals Ltd. (2000) 5 SCC 294 ..............................................488 Smart Systems Technology Inc v Domotique Secant Inc [2008] QJ No 1782 (Quebec) .............................................................................................728 Smeaton Hanscomb & Co Ltd v Sassoon I Setty, Son & Co (No 2) [1953] 2 All ER 1588, [1953] 1 WLR 1481 ................................................................1196, 1199, 1202, 1206–​1207, 1212, 1216, 1221

cxc

Law, Practice and Procedure of Arbitration in India

Smeaton Hanscomb & Co Ltd v Sassoon I Setty, Son & Co [1953] 2 All ER 1471 ..................................................................................................529–​530 Smith v Hartley (1851) 10 CB 800 .......................................................................................... 1056 Smith v Hartley (1851) 20 LJCP 169 ...................................................................................... 1062 Smith v Kvaerner Cementation Foundations Ltd (Bar Council intervening) [2006] EWCA Civ 242 ........................................................................................................662

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Smith v Pearl Assurance Co Ltd 63 Ll L Rep 1, [1939] 1 All ER 95 .......................................300 Smith v Pinder (1837) 6 LJ Ex 232 .......................................................................................... 1063 Smith v Sparrow (1847) 4 Dow & L 604 ......................................................................1304–​1305

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Smith v Transp. Workers union of Am, AFL-​CIO Air Transp. Local 556, 374 F.3d 372, p. 374 (5th Cir. 2004) ............................................................. 1078

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Smith, Coney & Barrett v Becker, Gray & Co [1916] 2 Ch 86, CA (Eng) .............................478 Smits v Roach [2006] HCA 36 ...........................................................................227 CLR 423, 631

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SMS Tea Estates Private Limited v. Chandmari Tea Company Private Limited (2011) 14 SCC 66 ....................................................................................... 241, 391, 393–​394

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SMS Tea Estates Pvt. Ltd. v M/​s. Chandmari Tea Co. Pvt. Ltd. 2021 SCC OnLine SC 13 .....................................................................................................333 Smt. Vinita Arora v M/​s Escorts Securities Ltd. 2010 SCC OnLine Del1629, at para. 23 ....763

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SN Kurkjian (Commodity Brokers) Ltd v Marketing Exchange for Africa Ltd (formerly T M Motiram (UK) Ltd) (No 1) [1986] 2 Lloyd’s Rep 614 ........................ 1250 Socadec SA v Pan Afric Impex Co. Ltd. [2003] EWHC 2086 (QB) ..................................... 1324

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Sociedad Ibericade Molturacion SA v Nidera Handelscompagnie BV [1990] 2 Lloyd’s Rep 240 .................................................................................................. 1292

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Societa Anonmina Lucchesse Olii E. Vini Lucca v Gorakhram Gogalchand (1965) 78 LW 68, at para. 69 ..............................................................................................777

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Societe Anonyme Pecheries Ostendaises v Merchants’ Marine Insurance Co Ltd [1928] 1 KB 750 ...................................................................................................... 1185, 1259 Societé Bomar Oil NV v Entreprise tunisienne d’activités pétrolières, New York Convention Guide, Bulletin No. 313, 1993 ............................................................................................216 Societe Commerciale de Reassurance v ERAS (International) Ltd (formerly Eras (UK)) [1992] 1 Lloyd’s Rep 570 .................................................................................................. 1116 Société Egyptian General Petroleum Corporation v Société National Gas Company, CA Paris, Pole 1 –​Ch. 1, 21 May 2019, No. 17/​19850 ....................................................827

cxci

Table of Cases

Societe Franco Tunisienne D’ Armement Tunis v Government of Ceylon, The Massalia [1959] 3 All ER 25 .................................................................................................. 1059, 1295 Societe Generale de Surveillance, SA v Raytheon European Management and Systems Co, 643 F. 2d. 863 (1st Cir 1981) ..................................................................475 Société Hilmarton Ldt v Société Omnium de traitement et de valorisation (OTV), France, Cour de cassation (French Court of Cassation) ............................................ 92-​15.137, 42

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Societe PT Putrabali Adyamulia v Societe Rena Holding et Societe Mnogutia Est Epices 2007 Rev Arb507 ............................................................................................. 1348

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Societe Qualiconsult v Groupe Lincoln [1998] 1 Rev. Arb. 121 (Paris Courd’Appel); Judgment of 17 November 2010, [2011] Rev. Arb. 943 (French Cour de Cassation Civ. 1) ..................................................................................................................894

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Socony Mobil Oil co Inc, Mobil Oil Co Ltd and Mobil Oil AG v West of England Ship Owners Mutual Insurance Association (London) Ltd, The Padre Island [1984] 2 Lloyd’s Rep 408 .....................................................................................................300

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Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR(R) 86 .................................................................................................... 724, 726

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Soh Beng Tee & Co. Pte Ltd. v Fairmount Development Pte Ltd. [2007] SGCA 28 .......... 1344

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Sohan Lal Gupta & Ors v Asha Devi Gupta & Ors (2003) 7 SCC 492 ............................... 1118 Sohan Lal Gupta (dead) through L.Rs. v Asha Devi Gupta (2003)7 SCC 492 ......................938

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Sohan Lal Gupta v Asha Devi Gupta (2003) 7 SCC 492 .............................................. 722, 1291

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Soilleux v Herbst (1801) 2 Bos. & P. 444, [1801] 5 WLUK 52 ..................................................58 Sokratis Rokopoulos v Esperia SpA, The Aros [1978] 1 Lloyd’s Rep 456 ............................ 1306

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Soleh Boneh International Ltd. v Government of the Republic of Uganda and National Housing Corporation [1993] 2 Lloyd’s Rep 208 ............................................................. 1348

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Soleimany v Soleimany [1998] 3 WLR 811 ...................................................................... 236, 437 Som Datt Builders Ltd. v State of Kerala (2009) 10 SCC 259 ...............1043–​1045, 1047, 1051

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Sopers Hole Corporation Ltd v Sandstorm Virgin Islands Ltd [1984] 34 WIR 110 ........................................................................................................... 1062 SOS Corporation Alimentaria SA & Anor v. Inerco Trade SA [2010] EWHC 16 .................532 Sotiminu v Ocean Steamship (Nig) Ltd (1992) 5 NWLR (PT.239) 1 .....................................458 South American Silver v Bolivia PCA Case No 2013-​15 .........................................................560 South Australian Superannuation Fund Investment Trust v Leighton Contractors Pty Ltd (1990) 55 SASR 327 ...............................................................................................764

cxcii

Law, Practice and Procedure of Arbitration in India

South Australian Superannuation Fund Investment Trust v Leighton Contractors (1996) 66 SASR 509 ......................................................................................................... 1223 South Carolina Insurance Co v Assurantie Maatschappij “de Zeven Procincien” NV [1987] AC 24, [1986] 3 All ER 487, 725 South East Asia Marine Engineering and Constructions v Oil India Limited (2020) 5 SCC 164, at paras 12–​13, 15 ............................................................................ 1274

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South Eastern Coalfields Ltd. and Ors. v Shri Balaji Metals and Minerals Arbitration Appeal No. 14 of 2017 ............................................................................ 579, 597 Sowdon v Mills (1861) 30LJQB 175 ........................................................................................ 1056 Sparta Navigation v Transocean America Inc, The Stephanos [1989] 1 Lloyd’s Rep 506 .....537

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Spentex Industries Ltd. v Dunavant SA 2009 SCC OnLine Del 1666 ....................................474

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Spentex Industries Ltd. v Louis Dreyfus Commodities India Pvt. Ltd. 2019 SCC OnLine Del 7257 ...............................................................................................491

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Spier v Tecnica 71F.Supp.2d 279 (SDNY 1999) ..................................................................... 1348 Spliethoff ’s Bevrachtingskantoor BV v Bank of China Ltd. [2015] EWHC 999 ................. 1126

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Splosna Plovba International Shipping and Chartering d.o.o. v Adria Orient Line Pte Ltd [1998] SGHC 289 ................................................................................................................411 Sprigens v T. Nash and H. Nash (1816) 5 M & S 193 ............................................................ 1039

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SPS Rana v MTNL (2010) SCC OnLine Del 136 ........................................................ 1083, 1086

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Sree Kamatchi Amman Constructions v Railways (2010) 8 SCC 767, at paras 11 ...... 19, 1153

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Srei Equipment Finance Limited v Ray Infra Services Private Limited (2016) SCC OnLine Cal 6765, at para. 6-​7 .......................................................................934

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SREI Infrastructure Finance Limited v Tuff Drilling Private Limited (2018) 22 SCC 470 ..................................................................................... 144, 812–​813, 942

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SREI International Finance Ltd. v Fair Growth Financial Services Ltd. (2005) 13 SCC 95, at para. 2 ...............................................................................................811

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Sri Kishan Lal v Mussamat Kashmiro & Ors. AIR 1916 PC 172 ..............................................68 Sri Sushanta Malik v SREI Equipment Finance Limited & Anr 2015 SCC OnLine Cal 10473 .............................................................................................964 Srikumar Textiles (P) Ltd. v Sundaram Finance Ltd. (2007) SCC OnLine Mad 458, at para. 24 ........................................................................974 Ssangyong Engg. & Construction Co. Ltd. v National Highway Authority of India (2019) 15 SCC 131 .................................................................................................................63 Ssangyong Engg. & Construction Co. Ltd. v NHAI (2019) SCC OnLine SC 677 .................710

cxciii

Table of Cases

Ssangyong Engineering & Construction Co. Ltd. v National Highways Authority of India 2019 (3) ArbLR 152 (SC) ....................................................................................................792 Ssangyong Engineering & Construction Co. Ltd. v National Highways Authority of India AIR 2019 SC 5041 ........................................................................................................................795 Ssangyong Engineering & Construction Co. Ltd. v National Highways Authority of India (2019) 15 SCC 131, at paras 51–​52 ............................................................1053, 1290, 1292

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Ssangyong Engineering & Construction Co Ltd v National Highways Authority of India (NHAI) (2019) SCC Online SC 67 ....................................................................................724 Ssangyong Engineering and Construction Co. Ltd. v NHAI (2019) 15 SCC 131 ..................548

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Ssangyong Engineering and Construction Company Limited v National Highways Authority of India (2018) SCC OnLine Del 10184, at para. 9 ........................................967

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Ssangyong Engineering v National Highways Authority of India (2019) SCC OnLine SC 677, at para. 58 ........................................................................ 1058

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Ssanyong Engg. & Construction Co. Ltd. v NHAI (2019) 15 SCC 131 ..........1266, 1292, 1294, 1296, 1302–​1303, 1315, 1345

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Ssanyong Engineering & Construction Co. Ltd. v National Highways Authority of India AIR 2019 SC 5041 ...................................................................1219–​1220

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SSIPL Lifestyle Pvt Ltd. v Vama Apparels (India) Pvt Ltd. High Court of Delhi, CS (COMM) 735/​2018, decided on 19 February 2020 ...................................................431

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ST Group Co. Ltd. v Sanum Inv. Ltd. [2019] SGCA 65 ........................................................ 1333

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Stafford v Minister of Health [1946] KB 621 .............................................................................723 Stains v Wild (1614) Cro Jac 352 ...............................................................................................359

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Standard Chartered Bank Malaysia Berhad v City Properties Sdn Bhd [2008] 1 MLJ 233 .................................................................................................................429

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Standard Corrosion Controls Pvt. Ltd. v Sarku Engineering Services Sdn Bhd (2009) 1 SCC 303 .................................................................................................................608

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Stanley v Phillips (1966) 115 CLR 470 ................................................................................... 1187 Stanley v Rawlinson [2011] EWCA Civ405; Jones v Kaney [2011] UKSC 13 .....................855 Star International Hong Kong (UK) Ltd. v Bergbau-​Handel GmbH [1966] 2 Lloyd’s Rep 16 ......................................................................................51, 715, 1305 Star Track Fasteners Pvt. Ltd. v Union of India (2019) SCC OnLine Bom 1453, at para. 21 ................................................................... 1315 Starett Housing Corporation v Iran, Iran-​US CTR 122, 269(1983) .................................... 1167 Stargas SpA v Petredec Ltd, The Sargasso [1994] 1 Lloyd’s Rep 412 ......................... 1105, 1113

cxciv

Law, Practice and Procedure of Arbitration in India

Starlight Shipping Co v Tai Ping Insurance Co Ltd; The Alexandros T [2007] EWHC 1893 (Comm) ............................................................................................989 State Bank of India v Ericsson India Private Limited & Ors (2018) 16 SCC 617 ............................................................................................933, 940, 1117 State Bank of India v Ram Das (1998) SCC OnLine AP 132 ....................................1043–​1044

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State Joint Stock Company (Uzbekistan) v State agency (India), Final Award, ICC Case No. 14667, 2011, in van den Berg (ed.), Yearbook Commercial Arbitration 2015 -​Volume XL (2015), pp. 51–​144 ..........................................................735 State of A.P. v United Indian Insurance Co. Ltd. (1998) 2 Andh LT 74 .................................531

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State of Arunachal Pradesh v Damani Construction Co. (2007) 10 SCC 742 ........................................................ 1007, 1018, 1079–​1080, 1271, 1284 State of Bihar & Ors. v Ram Pravesh Rai Estate Pvt. Ltd. AIR 2017 Pat 123 ........................860

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State of Bihar v Bihar Rajya Bhumi Vikas Bank Samiti (2018) 9 SCC 472 ........................ 1275

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State of Bihar v Kameshwar Prasad Singh (2000) 9 SCC 94 ...................................................941 State of Goa v Praveen Enterprises (2012) 12 SCC 581 .................................................. 507, 527

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State of Gujarat v Amber Builders (2020) 2 SCC 540 ................................................. 1002, 1006

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State of Gujarat v Amber Builders (2020) 2 SCC 540 ..............................................................456

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State of Haryana and Others v S.L. Arora and Company (2010) 3 SCC 690, at para. 14 .......................................................................................... 1168

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State of Himachal Pradesh v Himachal Techno Engineers (2010) 12 SCC 210 ........ 1036, 1284 State of J&K v Dev Dutt Pandit AIR 1999 SC 3196 .............................................................. 1220

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State of Jharkhand v Hindustan Construction Co. Ltd. (2018) 2 SCC 602 ..............................21

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State of Maharashtra & Ors. v ArkBuilders Pvt. Ltd. (2011) 4 SCC 616 ............................ 1284

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State of Maharashtra and Others v Ark Builders Private Limited (2011) 4 SCC 616, at paras 15, 17 ................................................................................... 1036

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State of Maharashtra v ARK Builders (P) Ltd. (2011) 4 SCC 616, at para. 17, 1036 State of Maharashtra v Hindustan Construction Co. Ltd. (2010) 4 SCC 518 ....................................................................................................1284–​1285 State of Maharashtra v Praful B. Desai (2003) 4SCC 601 .......................................................795 State of Orissa v Damodar Das (1996) 2 SCC 216 .......................................................... 507, 527 State of Orissa v S.B. Joshi AIR 1983 Ori 125 ...........................................................................695 State of Orissa v Sudhakar Das (2000) 3 SCC 27 .................................................................. 1059 State of Punjab v Dina Nath (2007) 5 SCC 28 ..........................................................................189

cxcv

Table of Cases

State of Punjab v Hardyal 1985 (2) SCC 629 ............................................................................658 State of Rajasthan v Nav Bharat Construction Co. (2006) 1 SCC 86 .................................. 1048 State of U.P. v Combined Chemicals Co. (P) Ltd, (2011) 2 SCC 151 ............................. 824, 938 State of Uttar Pradesh and Others v Combined Chemicals Company Private Limited (2011) 2 SCC 151 ............................................................................1043, 1046, 1065

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State of W.B. v Associates Contractors (2015) 1 SCC 32 ..........................................................961 State of West Bengal & Ors. v Shivananda Pathak & Ors. 1998 (5) SCC 513 .......................634 State of West Bengal and Anr. v Motilal Agarwala and Anr. (2016) SCCOnLine Cal 482, at paras 18–​19 ................................................................. 1036

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State of West Bengal v Afcons Pauling (India) Limited (2013) SCC OnLine Cal 16533 ....................................................................................... 1047

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State of West Bengal v Associated Contractors (2015) 1 SCC 32 ......................................... 1283 State of West Bengal v Shivanand Pathak, 1998 5 SCC 513, at para. 25–​26 .........................908

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State Trading Corporation of India Ltd. v Irano Hind Shipping Company 2010 SCC OnLine Del 1708 ............................................................................................ 1219

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State Trading Corporation of India v Toepfer International Asia Pte Ltd. (2014) SCC OnLine Del 3426, at paras 7–​9 .................................................................. 1310 State v Philip Morris USA, Inc. 2006 WL 3490937 (N.C. Supreme Court) ..........................448

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STCI Finance Ltd. v Shreyas Kirti Lal Doshi 2020 SCC OnLine Del 100 .............................303

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Stebbing v Liverpool and London and Globe Insurance Co Ltd. [1917] 2 KB 433 ...................................................................................................................337

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Steel Authority of India Ltd v Hind Metals Inc [1984] 1 Lloyd’s Rep 405 ........................... 1054

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Steel Authority of India Ltd. v J.C. Budharaja (1999) 8 SCC 122 ........................................ 1295

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Steel Authority of India Ltd. v Salzgitter Mannesmann International GmBH, 2012 (2) Arb LR 296 (Delhi) ...............................................837–​838

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Steel Authority of India v AMCI Pty Ltd. (2011) SCC OnLine Del 3689, at para. 45 ..........978 Steel Authority of India v J.C. Budharaja (1999) 8 SCC 122 ................................................ 1059 Steel Authority of India v Shyam Sundar Choudhury AIR 2005 Cal 305 ........................... 1220 Steel of Authority of India v RN Datta (1983) SCC OnLine Cal 48, at para. 13, 1146 Steff v Andrews (1816) 2 Madd 6 ...............................................................................................712 Stemcor (S.E.A.) Pte Limited & Ors. v Mideast Integrated Steels Limited & Ors. (2018) SCC OnLine Bom 1179 ..........................................................................................985 Sterling General Insurance Co. v Planters Airways Pvt. Ltd. (1975) 1 SCC 603 .......... 533, 959

cxcvi

Law, Practice and Procedure of Arbitration in India

Sterling General Insurance Co. v Planters Airways Pvt. Ltd. AIR 1975 SC 415 ....................534 Sternberg Reed Solicitors v Harrison [2019] EWHC 2065 ................................................... 1235 Stevenson v Watson (1879) 4 CPD 148 .......................................................................................50 Stewart (Lorne) Ltd v William Sindall plc and North West Thames Regional Health Authority 35 BLR 109 ..........................................................................................................315

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Stinnes Interoil GmbH v A Halcoussis & Co (The Yanxilas) [1982] 2 Lloyd’s Rep 445 ........................................................................................1046–​1047 Stokes Pension Fund v Western Power Distribution (South West) Plc [2005] EWCA Civ 854 ..................................................................................................... 1239

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Stoomv Maats De Maas NV v Nippon Yusen Kaisha, The Pendrecht [1980] 2 Lloyd’s Rep 56 .............................................................................................. 516, 522

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Stotesbury v Turner [1943] KB 370 ..........................................................1200–​1201, 1216, 1221 Stotesbury v Turner [1943] KB 370, at pp. 371–​372 ............................................................. 1201

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Structural Construction Co. Ltd. v International Islamic Relief, High Court, Nairobi, Kenya, 6 October 2006, Miscellaneous Case 596 of 2005 ..............................................882

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Sturges v Lord Curzon (1851) 21 LJ Ex 38, 7 Exch 17 .............................................................382

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Subhas Projects and Marketing Ltd. v Assam Urban Water Supply & Sewerage Board (2003) SCC OnLine Gau18, at para. 7 ........................................................................... 1038

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Subhash Chander Chachra v Ashwani Kumar Chachra (2007) SCC OnLine Del 149, at paras 30–​31 ...................................................................999

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Subraj & Co. v State of H.P. AIR 1982 NOC 115 .....................................................................763

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Succula and Pamona Shipping Co Ltd v Harland and Wolff Ltd [1980] 2 Lloyd’s Rep 381, at 388 ...............................................................................655–​656

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Sudhir Gopi v Indira Gandhi National Open University 2017 SCC OnLine Del 8345 ...............................................................................................294

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Suen Wah Ling t/​a Kong Luen Construction Engineering Co v China Harbour Engineering Co (Group) [2007] BLR 435, [2007] HKCA 320, CA (HK) ......................635 Suez v Argentina, Decision on Liability, 30 July 2010, at paras 196, 202 ............................ 1414 Suez, v Argentina, Decision on Jurisdiction, ICSID Case No. ARB/​03/​17, at para. 57 ..... 1420 Sui Southern GasCo Ltd v Habibullah Coastal Power Co (Pte) Ltd [2010] SGHC 62 ................................................................................................................ 1219 Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya (2003) 5 SCC 531 ............................. 403, 409 Sukhbir Singh v Hindustan Petroleum Corporation Ltd. 2020 (1) Arb LR 415 (Delhi), at para. 46 ..................................................................................................................................792

cxcvii

Table of Cases

Sulaikha Clay Mines v Alpha Clays (2004) SCC OnLine Ker 79 .............................. 1053, 1276 Sulamérica Cia Nacional De Seguros S.A. and others v Enesa Engenharia S.A. and Others [2012] EWCA Civ 638 ....................................................................................248 Sulamerica Cia Nacional De Seguros S.A. v Enesa Engenharia S.A. [2012] EWCA Civ 638 ............................................................................... 1364, 1371–​1372

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Sulamerica CIA Nacional De Seguros SA v Enesa Engenharia SA [2012] EWHC 42 (Comm) .................................................................................................191 Sulamerica CiaNational de Seguros SA v Enesa Engenharla SA [2012] EWCA Civ 638 ........................................................................................................944

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Sulekh Aggarwal v Shiv Astha Construction Co. Ltd. (2017) SCC OnLine Del 6524, at paras 14–​17 ...........................................................................................................................957 Sumito v Antig Investment Pte. Ltd [2009] SGCA 41 ................................................................76

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Summit Property Limited v Pitmans (a firm) [2001] EWCA Civ 2020 .............................. 1212

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Sumner & Makin v Costa Ltd. & D [2013] EWHC 4116 (Ch) ........................................... 1275 Sumukan Ltd. v Commonwealth Secretariat [2007] EWHC 188 (Comm) .................. 637, 909

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Sun Alliance Insurance v Jackson Russell Dignan Armstrong [1990] Land Valuation Cases 767 ......................................................................................575

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Sun Life Assurance Co. of Canada v Lincoln National Life Insurance Co. [2004] EWCA Civ 1660 ......................................................................................... 1108, 1112

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Sun Pharmaceutical Industries Ltd Mumbai v Falma Organics Limited Nigeria 2017 SCC OnLine SC 1200 ..................................................................................................87

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Sundaram Finance Limited and Another v T. Thankam (2015) 14 SCC 444 ........................488

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Sundaram Finance Ltd. v Abdul Samad & Anr. (2018) 3 SCC 622 .....................32, 970, 1099, 1324–​1325, 1327

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Sundaram Finance Ltd. v NEPC Ltd (1999) 2 SCC 479 ................................................. 458, 955 Sundaram Finance Ltd. v T. Thankam (2015) 14 SCC 444, at para. 13 ................................953

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Sunder Kukreja and others v Mohan Lal Kukreja and Another (2009) 4 SCC 585 ..............677 Sunderland Steamship P and I Association v Gatoil International Inc, The Lorenzo Halcoussi [1988] 1 Lloyd’s Rep 180 ...................................................................................981 Sundra Rajoo v Mohamed Abd Majed [2011] 6 CLJ 923 ..........................................................62 Sunil Nanda v L & T Finance Ltd. 2014 SCC OnLine Del 1057 ............................................302 Superintendent Central Excise v. Pratap Rai (1978) 3 SCC 113 .......................................... 1233 Superintendent (Tech. I) Central Excise, I.D.D. Jabalpur and Ors. v. Pratap Rai (1978) 3 SCC 113 .............................................................................................................. 1232

cxcviii

Law, Practice and Procedure of Arbitration in India

Supertrack Hotels Pvt. Ltd. v Friends Motels Pvt. Ltd. (2017) SCC OnLine Del 11662 ..........................................................................................978 Supreme Court of India in NTPC v Reshmi Constructions, Builders & Contractors (2004) 2 SCC 663, at para. 34 .......................................................................................... 1214 Surajmal Yadav v DSIIDC Ltd. 2018 SCC OnLine Del 9555 ...................................................55

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Suresh Prabhu v Bombay Mercantile Co-​op Bank Ltd. & Ors. (2007) SCC OnLine Bom 181 ............................................................................... 1094, 1313 Susaka Pvt. Ltd. v Union of India and Ors (2005) SCC OnLine Bom 159, at para. 6 ....................................................................... 1164

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Sushil Pandit v Adsert Web Solutions Pvt. Ltd. & Ors. (2011) SCC OnLine Del 3452 ...........................................................................................1021, 1088, 1271 Sutcliffe v Thackrah [1974] 1 All ER 859 ...................................................................................922

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Sutcliffe v Thackrah [1974] A.C. 727 ...........................................................................................50

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Sutherland and Co v Hannevig Brothers Ltd. [1921] 1 KB 336 ................................. 1018, 1079 Sutlej Construction Ltd. v Union Territory of Chandigarh (2018) 1 SCC 718 ........... 968, 1274

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Suzuki & Co Ltd v Burgett and Newsam [1922] 10 LlL Rep 223 ........................................ 1217

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Svenska Petroleum Exploration AB v Lithuania [2005] EWHC 243 .................................. 1371 Swallowfalls Ltd. v Monaco Yachting and Technologies SAM [2015] EWHC 2013 .......... 1103

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Swastik Gases (P) Ltd. v Indian Oil Corpn. Ltd. (2013) 9 SCC 32 .........................................490

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Sweeney v Mulcahy [1993] ILRM 289 .......................................................................................199

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Swift-​Fortune Ltd v Magnifica Marine SA [2007] 1 SLR(R) 629, [2006] SGCA 42 .......................................................................................................... 674, 696

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Swinford v Burn (1818) Gow 5 ..................................................................................................692

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Swisher Hygiene Franchise Corp v Hi-​Gene Ltd (2009) 20 PRNZ 292 ..................................722 Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17 ....................................................382

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Swiss Singapore Overseas Enterprises Pte. Ltd. v Sara International Pvt. Ltd. (2018) SCC OnLine Del7916, at paras 21–​22 ............................................................... 1350 Swiss Timing Ltd. v Commonwealth Games 2010 Organising Committee (2014) 6 SCC 677 ........................................................................................................ 601, 952 Swisslion DOO Skopje v The Former Yugoslav Republic of Macedonia (ICSID Case No. ARB/​09/​16), Award July 2012 at para. 258 ................................................... 1180 Sybray v White [1836] 1 M&W 435 ....................................................................................... 1101 Sykes (F and G) (Wessex) Ltd v Fine Fare Ltd. [1967] 1 Lloyd’s Rep 53 ................................355

cxcix

Table of Cases

System for International Agencies v Rahul Coach Builders Private Limited (2015) (13) SCC 436 ............................................................................................................192

T T. Co. Metals LLC v Dempsey Pipe & Supply 592 F.3d 329, p. 342 (2nd Cir. 2010) .......... 1078 T.M.L Financial Services ltd. v Vinod Kumar 2010 (2) Arb LR 560 (Kerala) .............. 327, 435

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T.N. Electricity Board v Bridge Tunnel Construction (1997) 4 SCC 121, at para. 33–​34 .........................................................................1043–​1044 T.V. & Radio Publicity Services v Union of India & Anr (2007) 4 MhLJ 315 ........................820 TA Ruf & Co Limited v Pauwels [1919] 1 KB 660 ................................................................. 1039

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Tackaberry v Phaidon Navegacion SA [1992] ADRLJ 112 .............................674, 684, 692, 696 TAG Wealth Management v West [2008] EWHC 1466 (Comm) ................................. 814, 940

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Tai Hing Cotton Mill Limited v Glencore Grain Rotterdam B V [1995] HKCA 626, CA (HK) .................................................................................... 401, 448 Tai Hing Cotton Mill Ltd v Glencore Grain Rotterdam BV [1996] 1 HKC 363 ........... 346, 358

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Tai Ping Insurance Co. v M/​V Warschau 731 F.2d 1141 (5th Cir. 1984) ...............................475

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Tai-​Ao Aluminium (Taishan) Co Ltd v Maze Aluminium Engineering Co Ltd [2006] HKCFI 220 ...............................................................................................................197

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Talbot v Earl of Shrewsbury (1873) LR 16 Eq 26 ......................................................................226

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Taman Bandar Baru Masai Sdn Bhd v Dinding Corporations Sdn Bhd [2009] MLJU 0793 ............................................................................................................ 1119 Tamari v Conrad 552 F.2d 778 (7th Cir. 1977) ........................................................................924

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Tame Shipping Ltd v Easy Navigation Ltd, The Easy Rider [2004] EWHC 1862 (Comm), [2004] 2 All ER (Comm) 521 .......................................................................................... 1068

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Tamil Nadu Electricity Board v Sumathi & Ors. (2000) 4 SCC 543 .......................................428

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Tan Kok Cheng & Sons Realty Co Sdn Bhd v Lim Ah Pat (t/​a Juta Bena) [1995] 3 MLJ 273 ........................................................................................................ 359, 427 Tan Poh Leng Stanley v Tang Boon Jek Jeffrey [2000] SGHC 260, [2000] 3 SLR(R) 847 .....262 Tan Sri Dato’ Professor Dr Lim Kok Wing v Thurai Das a/​l Thuraisingham [2011] 9 MLJ 640 .................................................................................................................651 Tan Toi Lan v Lai Kee Ying [1975] 1 MLJ 27 ............................................................................911 Tan Tong Meng (Pte) Ltd v Artic Builders & Co (Pte) Ltd [1986] 2 MLJ 241 .............. 726, 906 Tandav Film Entertainment Pvt. Ltd. v Four Frame Pictures & Anr. (2009) ILR 7 Delhi 795 .......................................................................................................403

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Law, Practice and Procedure of Arbitration in India

Tang Boon Jek Jeffrey v Tan Poh Leng Stanley [2001] 2 SLR(R) 237, CA (Sing) ............... 1193 Tankrederei Ahrenkeil GmbH v Frahuil SA, The Multitank Holsatia [1988] 2 Lloyd’s Rep 486 .....................................................................................................480 Tapan Kumar Paul v Krishna Kanta Paul (1979) SCC OnLine Cal 8 at para. 17, 1039 Tarapore and Co. v State of Madhya Pradesh (1994) 3 SCC 521 ......................................... 1289

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Tashi Delek Gaming Solutions Ltd. v State of Karnataka (2006) 1 SCC 442 .........................301 Tata Capital Finance Services Ltd. v M/​S Deccan Chronicle Holdings Ltd. (2013) 3 Bom CR 205 ......................................................................................................................308

Tata Capital Financial Services Limited v Deccan Chronicle Holdings Limited & Ors (2013) SCC OnLine Bom 307 ....................................................................978, 986, 990

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Tata Industries Ltd. v. Grasim Industries Ltd (2008) 10 SCC 187, at paras 28, 29 ............ 1231

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Tatem Steam Navigation Co v Anglo Canadian Shipping Co (1935)53 Ll L Rep 161 .............................................................................................. 877, 1055

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Tatlock v Harris (1789) 3 Term Rep 174 ...................................................................................299

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Tay Eng Chuan v Ace Insurance Ltd [2008] SGCA 26 .............................................................496 Tay Eng Chuan v United Overseas Ins. Ltd. [2009] SGHC 193 .........................656, 1019, 1082

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Taylor (David) & Son Ltd. v Barnett Trading Co. [1953] 1 WLR 562, 568, [1953] 1 All ER 843, 846 ............................................................63

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Taylor v Yielding (1912) 56 Sol Jo 253 ............................................................................50–​51, 54

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TBK v CRW Joint Operation 2015 SGCA 30, at paras 51–​53, 1003

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TDM Infrastructure Private Limited v UE Development India Private Limited (2008) 14 SCC 271 .................................................................................................... 157, 1367

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TDM Infrastructure Pvt Ltd v UE Development India Pvt Ltd [2008] INSC 931 ................713

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TDM Infrastructure Pvt. Ltd. v UE Development India Pvt. Ltd. (“TDM Case”) (2008) 14 SCC 271 ...............................................................................................................156

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Techno-​Impex v Gebr van Weelde Scheepvaartkantoor BV [1981] 2 All ER 669 ..................714 Techno-​Implex v Gebr Van Weelde Scheepvartkantoor BV [1981] QB 648, [1981] 2 WLR 821, CA (Eng) ................................................................................ 1138, 1149 Tecmed v Mexico, CASE No. ARB (AF)/​00/​2 Award, 29 May 2003 ................................... 1411 Tecmed v Mexico Award, 29 May 2003, at para. 154 ............................................................ 1415 Teekay Tankers Ltd v STX 2017 EWHC 253 (Comm) ............................................................124 Teen Morthi Financers v Nanak Chand AIR 1973 All 515 .....................................................689

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Table of Cases

Tehri Hydro Development Corporation Limited and Another v Jai Prakash Associates Limited; InduMalhotra, Commentary on the Law of Arbitration (4th edn, Wolters Kluwer 2020), p. 811 ......................................................................... 1134 Teinver SA, Transportes de Cercanias SA and Autobuses Urbanos del Sur SA v Argentina ISCID Case No. ARB/​09/​1, Decision on Jurisdiction 21 December 2012, 1196

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Teinver SA, Transportes de Cercanías SA and Autobuses Urbanos del Sur SA v The Argentine Republic ICSID Case No. ARB/​09/​1 (Decision on Jurisdiction, 21 December 2012, paras. 239–​259), available at: http://​ita​law. com/​sites/​default/​files/​case-​documents/​ italaw1090.pdf ......................................................................................................................703 Teja Singh v Union of India AIR 1955 Cal 666 .........................................................................689

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Tele-​Radio i Lysekil AB v Motorman Radio Sistemas y Aplicaciones, SL, Superior Court of Justice of Catalonia, Case No 16/​2014 ...............................................................................522

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Tele-​Radio i Lysekil AB v Motorman Radio Sistemas y Aplicaciones, Spain No. 2016-​1, Superior Court of Justice of Catalonia, Case No. 16/​2014, 19 February 2014 ......... 1010

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Television New Zealand Ltd v Langley Productions Ltd [2000] 2 NZLR 250 .......................124

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Telfair Shipping Corp v Inersea Carriers SA, The Caroline P [1983] 2 Lloyd’s Rep 351 ................................................................................359, 1103, 1105

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Telfair Shipping Corpn v Inersea Carriers SA, The Caroline P [1985] 1 All ER 243 .......................................................................................................... 1105

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Telia Sonera AB v Hilcourts (Docklands) Ltd. [2003] EWHC 3540 .................................... 1121

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Tennant Energy LLC v Canada, Communication to the Parties, PCA Case No. 2018-​54 (24 June 2019) .............................................................................119

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Tennant Energy LLC v Canada, Communication to the Parties, PCA Case No. 2018-​54 (24 June 2019) .............................................................................920

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Tennant Energy, LLC v Government of Canada, 36 .................................................................119

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Termarea SRL v Rederiaktiebolaget Sally [1979] 2 All ER 989, [1979] 2 Lloyd’s Rep 439 .....................................................................................................568 TermoRio S.A. E.S.P. (Colombia) v Electranta S.P. (Colombia) 487 F.3d 928 .......................339 TermoRio SA ESP v Electrificadora Del Atlantico SA ESP 421 F.Supp.2d 87(DDC 2006) ................................................................................................................................... 1348 Terna Bahrain Holding Co WLL v Al Shamsi [2012] EWHC 3283 (Comm), [2013] 1 All ER (Comm) 58, at para. 125 .........................................................................768 Terrawinds Resources Corp v ABB Inc 2009 QCCS 5820 ..................................................... 1001 Tesco (Ireland) Ltd v William Moffett et al. 2015 NIQB 68 .....................................................937

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Law, Practice and Procedure of Arbitration in India

Tew v Harris (1847) 11 QB 7 ............................................................................................. 563, 585 Thai-​Europe Tapioca Service Ltd v Seine Navigation Co Inc, The Maritime Winner [1989] 2 Lloyd’s Rep 506 ....................................................................................................480 Thai-​Lao Lignite Co Ltd & Hongsa Lignite Co Ltd v Government of the Lao People’s Democratic Republic [2014] 1 LNS 525, CA .................................................................. 1295

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Thakkar Vithalbhai Hargovind & Ors. v Kacchia Jagjivan Motilal & Ors. (1969) 10 GLR 288 ................................................................................................................68

Tharmalingam v Sambanthan [1961] 1 MLJ 63, CA ...............................................................493 The “Dong Moon” Trans Asia Shipping Co Ltd v “Dong Moon” Owners [1979] 1 MLJ 152 .................................................................................................................575

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The Board of Trustees of the Port of Kolkata v Louis Dreyfus Armatures SAS and Others, 2014 SCC OnLine Cal 17695 .............................................483

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The Bombay Gas Co. Ltd. v Parmeshwar Mittal & Others AIR 1998 Bom 118 ....................514

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The City of Prince George v. A.L. Sims & Sons Ltd. (1998) 23 YCA 223 ...............................390

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The Earl of Darnley v The Proprietors of the London, Chatham and Dover Railway (1867) LR 2 HL ....................................................................................................................538

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The Erich Schroeder [1974] 1 Lloyd’s Rep 192 ....................................................................... 1206 The Food Corporation of India v P.A. Ahamed Ibrahim (1988) SCC OnLine Ker 167 ........991

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The Food Corporation of India v The New India Assurance Co. Ltd. & Ors. AIR 1994 SC 1889 ................................................................................................................531

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The Government of Haryana PWD Haryana (B and R) Branch v M/​s G.F. Toll Road Pvt. Ltd. & Ors. (2019) 3 SCC 505 ................................................................................... 377, 634

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The Government of India v Cairn Energy India Pty Ltd [2014] 9 MLJ 149 ............. 1119, 1295

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The Government of Malaysia (JKR Sarawak) v Lau Tiong Ik Construction Sdn Bhd [2001] 5 MLJ J 629 ...................................................................................................... 567, 571

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The House of Lordsin London, Chatham & Dover Railway Co v South Eastern Railway Co. [1893] AC 429 .............................................................................................. 1137 The Incorporated Owners of Sincere House v Sincere Co Ltd [2005] HKLT 30, [2005] 2 HKC 424 ....................................................................................................... 348, 350 The Islamic Republic of Iran v United States of America Case Nos A3, A8, A9, A14 and B61, Procedural Order of 1 April 2005, para. 10 (2009) .................................868 The Loewen Group Inc. and Raymond L. Loewen v United States of America ICSID Case No. ARB (AF)/​98/​3 ..................................................................................... 1020 The Merak [1964] 2 Lloyds’ Rep 283 .........................................................................................209

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Table of Cases

The Midland Railway Company v Loseby & Carnley [1899] AC 133, HL ............................144 The Myron, Myron (Owners) v Tradax Export SA Panama City RP [1970] 1 QB 527, [1969] 2 All ER 1263, [1969] 1 Lloyd’s Rep 411 ..............................................................715 The North London Railway Company v The Great Northern Railway Company (1883) 11 QBD 30, CA (Eng) .............................................................................................478

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The Owners of the MV Myron v Tradax Export SA [1970] 1 QB 527, at p. 536, per Donaldson J ....................................................................................................................... 1156 The Queen v Blakemore (1850) 14 QBR 544 ..................................................................... 550, 57 The Queen v James Josiah Hardey (1850) 14 QBR 529 ..................................................... 541, 57

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The Rompetrol Group N.V. v The Republic of Romania ICSID Case No. ARB/​06/​3 .............................................................................................. 1446

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The Secretary of State for the Home Department v Raytheon [2015] EWHC 311 (TCC) ............................................................................................... 1093

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The Secretary of State for the Home Department v Raytheon Systems Ltd. [2014] EWHC 4375 (TCC) ............................................................................................. 1055

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The Secretary of State for Transport v Birse-​Farr Joint Venture 62 BLR 36 ........................ 1152

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The Sylph [1867] 12 WLUK 3, (1867-​69) LR 2 A & E 24 .........................................................58 The Union of India v E B Aaby’s Rederi A/​S [1975] AC 797 ...................................................574

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Thema International Fund plc v HSBC Institutional Trust Services (Ireland) Ltd [2011] IEHC 357 ..................................................................................................................703

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Then Kim Far v Mercantile Insurance Sdn Bhd [1993] 1 AMR 488, [1993] MLJU 538 .................................................................................................................537

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Thermistocles Navegacion SA v Langton, The Queen Frederica [1978] 2 Lloyd’s Rep 164 .....................................................................................................304

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Thiele v RML Realty Partners 14 Cal. App. 4th 1526 (Cal. Ct. App. 1993) ...........................897 Thiess Iviinecs India v NTPC Limited (2016) 229 DLT 721 ....................................................775

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Thiess Iviinecs Ltd. v NTPC Limited (2016) SCC OnLine Del 1819 ............ 980, 982, 984–​985 Thinne v Rigby (1612) Cro Jac 314 ...............................................................................1061–​1062 Third Chandris Shipping Corp. v Unimarine SA [1979] QB 645, at pp. 668–​669 ................458 Thomas Jackson v Henderson, Craig & Co. (1916) 115 LT 36 ............................................. 1113 Thomas v Atherton (1878) 10 ChD 185 ....................................................................................301 Thomas v Atherton [1877] 10 Ch D 185 ................................................................................ 1113 Thomas v Fredricks (1847) 10 QB 775 .............................................................................. 563, 585

cciv

Law, Practice and Procedure of Arbitration in India

Thomas v Morris (1867) 16 LT 398 ......................................................................................... 1304 Thompson v Charnock (1799) 8 Term Rep 139 ...............................................................492–​493 Thorburn v Barnes (1867) LR 2 CP 384 ....................................................................................337 Thorn Security (Hong Kong) Ltd v Cheung Kee Fung Cheung Construction Co Ltd. [2004] HKCA 217, [2005] 1 HKC 252 ................................................................................52

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Three Valleys Water Committee v Binnie & Partners (a firm) (1990) 52 BLR 42 .................732 Threeshipping Ltd. v Harebell Shipping Ltd. [2005] 1 All ER (Comm) 200 ..........................981 Threlfall v Fanshawe (1850) 1 LM & P 340 ...............................................................................856 Threlkeld & Co Inc v Metallgesellschaft Ltd (London) 214 (1991) 923 F 2d 245 ..................216

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Thursby v Halburt (1689) 1 Show 82 ...................................................................................... 1061 Thyssen (Great Britain) Ltd v Afan Borough Council (1978) 15 BLR 98, CA (Eng) ......... 1208

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Thyssen Canada Ltd v Mariana Maritime SA [2005] EWHC 219 (Comm), at para. 18, [2005] 1 Lloyd’s Rep 640 .....................................................................................660 Thyssen Inc v Calypso Shipping Corp SA [2000] 2 All ER (Comm) 97 ........................ 529, 533

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Thyssen Krupp Werkstoffe Gmbh v Steel Authority of India (2010) SCC Online Del 479 ...............................................................................................772 Thyssen Krupp Werkstoffe GmBH v Steel Authority of India (2011) SCC OnLine Del 1747, at para. 83 ........................................................................940

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Thyssen Stahlunion GMBH v Steel Authority of India Ltd. (1999) 9 SCC 334 .......... 505, 1330

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Tianjin Medicine & Health Products Import & Export Corporation v J A Moeller (Hong Kong) Limited [1994] HKCFI 351, SC ...................................................................190

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Tiki Village International Ltd v Riverfield Tiki Holdings [1994] 2 Qd R 674 ........................699

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Tilcon Ltd. v Land Investment Ltd. [1987] 1 WLR 46 .............................................................360

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Timmerman’s Graan-​en Maalhandel en Maalderij BV v Sachs [1980] 1 Lloyd’s Rep 194 .....................................................................................................535

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Timwin Construction Pty Ltd v Façade Innovations Pty Ltd [2005] NSWSC 548 ............ 1057 Ting Kang Chung John v Teo Hee Lai Building Constructions Pte Ltd [2010] 2 SLR 625, [2010] SGHC 20 ...................................................................................................................656 Tiong Very Sumito v Antig Investments [2009] 1 SLR 861 ......................................................353 Titi Latex Sdn Bhd v WRP Asia Pacific Sdn Bhd [2009] MLJU 1484 ....................................429 Tjong Very Sumito v Antig Investments Pte Ltd [2009] 4 SLR(R) 732, [2009] SGCA 41 .................................................................................347–​350, 358, 426–​427 Tjong Very Sumito v Antig Investments Pte Ltd [2009] SGCA 41 ..........................................350

ccv

Table of Cases

Tjong Very Sumito v Antig Investments Pte Ltd [2009] 1 SLR(R) 861, [2008] SGHC 202 ................................................................................................................358 Tjong Very Sumito v Antig Investments Pte Ltd [2009] 4 SLR(R) 732 ...................................346 TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd [2013] SGHC 186 ........................................................... 724, 1041, 1043, 1048, 1051, 1066 TN Small Industries Corporation v Southern Railway (2008) 7 (NOC) 1349 (Mad) ....... 1140

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TNB Fuel Services Sdn Bhd v China National Coal Group Corp [2013] 4 MLJ 857 .................................................................................................................429 Todd Petroleum Mining Co Ltd v Shell (Petroleum Mining) Co Ltd [2005] 2 NZCCLR 266 ..................................................................................................... 1059

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Todd Taranaki Ltd v Energy Infrastructure Ltd. HC Wellington CIV-​2007-​485-​2684 .............................................................................................................636

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Toepfer International GmbH v Societe Cargill France [1998] 1 Lloyd’s Rep 379 ..................413

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Toepfer v Cramer [1979] 2 Lloyd’s Rep. 179 .............................................................................558 Tokios Tokeles v Ukraine ICSID Case No. ARB/​02/​18 ............................................... 1403, 1412

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Tomlin v Fordwich Corporation (1836) 5 Ad & El 147 ................................................. 856, 1061

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Tomlin v Standard Telephone and Cables Ltd. [1969] 3 All ER 201 .......................... 1230, 1233 Tomolugen Holdings Ltd and Another v Silica Investors Ltd, 2015 SGCA 57 .......................826

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Tomolugen Holdings Ltd. v Silica Investors Ltd. (2015) SGCA 57 ................ 448, 451, 453–​454

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Tomolugen Holdings Ltd. v Silica Investors Ltd. (2016) 1 SLR 373 .........................................396 Tongyuan (USA) International Trading Group v Uni-​Clan Ltd [2001] WL 98036 ........... 1062

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Tonicstar Limited v Allianz Insurance and Sirius International Insurance Corporation [2017] EWHC 2753 .................................................................................................... 570, 622

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Torch Offshore LLC v Cable Shipping Inc.[2004] 2 All ER Comm 365 ..................... 1082, 1091

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Torch Offshore LLC v Cable Shipping Inc [2004] EWHC 787 (Comm) ....................................................................................1018, 1020, 1066, 1079, 1088 Total SA v Argentine Republic, Decision on Liability, ICSID CaseNo. ARB/​04/​1, para. 22 (2010) ....................................................................................................................................868 Total v Argentina, Decision on Liability, 27 December 2010, at paras 106–​109 .............. 1414 Tote Bookmakers Ltd v Development & Property Holding Co Ltd [1985] Ch 261, [1985] 2 All ER 555 .................................................................................................... 188, 555 Toto Costruzioni Generali SpA v Republic of Lebanon (ICSID Case No. ARB/​07/​12), Award June 2012 at para. 258 ...................................................................................................... 1180

ccvi

Law, Practice and Procedure of Arbitration in India

Town and City Properties (Development) v Wilthsier Southern & Gilbert (1988) 44 BLR 109 ........................................................................................................ 51, 714 Town Centre Securities Plc v Leeds City Council 34 [1992] ADRLJ 54 ..................................675 Toyota Tsusho Sugar Trading Ltd v Prolat SRL [2014] EWHC 3649 (Comm) .....................211 Trachsell & Clayton v Wilson (1865) 11 LT713 ........................................................................854

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Tracomin SA v Sudan Oil Seeds Co Ltd [1983] 1 All ER 404 ........................................ 443, 449 Tracomin SA v Sudan Oil Seeds Co Ltd [1983] 1 Lloyd’s Rep 560 .........................................199 Tradax Export SA v Volkswagenwerk AG [1969] 2 QB 599, [1969] 2 All ER 144, [1969] 1 Lloyd’s Rep 494, affd [1970] 1 QB 537, [1970] 1 All ER 420, [1970] 1 Lloyd’s Rep 62, CA (Eng) ....................................................................................585

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Tradax Export SA v Volkswagenwerk AG [1970] 1 QB 537, [1970] 1 All ER 420 .............................................................................................................563

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Tradax Hellas SA v Republic of Albania ICSID Case No. ARB/​94/​2, 5 ICSID Rep 43, Award. 29 April 1999 ............................................................................................... 834, 1425

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Tradax International SA v Cerrihougullari TAS, the M Eregli [1981] 3 All ER 344 ............................................................................................342, 347, 536

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Tradax SA Wolkswagonwerk AG [1970] 1 QB 537 ..................................................................558

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Tradex Hellas SA (Greece) v Republic of Albania ICSID No ARB/​94/​2 (Award on Jurisdiction, 24 December 1996) .......................................................................................505 Trafalgar House Construction (Regions) Ltd v Railtrack plc (1995) 75 BLR 55 ....................316

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Trammo AG v MMTC Limited 2019 SCC OnLine Del 7337 .............................................. 1121

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Trammo DMCC v Nagarjuna Fertilisers and Chemicals Ltd. (2017) SCC OnLine Bom 8676 ....................................................................................... 1338 Trammo DMCC v Nagarjuna Fertilisers and Chemicals Ltd. 2018 (1) ABR 1 .....................870

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Tramountana Armadora SA v Atlantic Shipping Co SA [1978] 2 All ER 870, [1978] 1 Lloyd’s Rep 391 ....................................................... 1206–​1208, 1213–​1214, 1229, 1233, 1236, 1238, 1241, 1243, 1245 Trans Chemical Ltd v China National Machinery Import and Export Corp 978 F.Supp 266, 307 (SD Tex. 1997) ..................................................................................868 Transcatalana De Commercio SA v Incobrasa Industrial E Commercial Brazileria SA [1995] 1 Lloyd’s Rep 215 ........................................................................................ 1045, 1047 Transfield Philippines Inc v Pacific Hydro Ltd [2006] VSC 175 ..............................................804 Transfield Projects (M) Sdn Bhd v Malaysian Airline System Bhd [2001] 2 MLJ 403 .............................................................................................................. 1062

ccvii

Table of Cases

Transition Feeds LLP v Itochu Europe Plc [2013] EWHC 3629 ........................................... 1055 Transmission Corporation of Andhra Pradesh Ltd. v Galada Power and Telecommunication Ltd. (2006) SCCOnLine AP 744 ................................................................ 1027, 1029–​1030 Transocean Offshore Gulf of Guinea VII Ltd. v Erin Energy Corp. Docket No.H-​17-​2623, 2018 U.S. Dist. LEXIS 39494 (S.D. Tex. 12 March 2018) .... 1013 Transocean Shipping Agency (P) Ltd. v Black Sea Shipping (1998) 2 SCC 281 .................. 1336

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Transpetrol Ltd v Ekali Shipping Co Ltd, The Aghia Marita [1989] 1 Lloyd’s Rep 62 ..........511, 537 Transportacion Maritima Mexicana SA v Société Alsthom (1988) Rev. Arb. 699 ................614 Transworld Finance & Real Estate Co. P. Ltd. v Union of India (2002) 2 RAJ 313 (Del) .....410 Traube v Perelman [2001] WL 1251816 ....................................................................................439

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Traynor v Panan Constructions Pty Ltd (1988) 7 ACLR 47 ...................................................700

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Trew v Burton 1833 1 Cr & M 533 .......................................................................................... 1039

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Trew v Burton [1833] 1 WLUK 212 ....................................................................................... 1039 Trewden v Holmes (1862) 1 H & C 72 .......................................................................................494

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TRF Limited v Energo Engineering Projects Limited (2017) 8 SCC 377 ....................... 376, 581

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TRF Limited v Energo Projects Limited (“TRF”) (2017) 8 SCC 377 ......................................565 TRF Ltd. v Energo Engineering Projects Ltd. (2017) 8 SCC 377 ...................................... 25, 551

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Triad India v Tribal Cooperative Marketing and Development Federation of India Ltd. 2007 SCC Online Del 233 .................................................................................271

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Trimex International Fze Ltd v Vedanta Aluminium Ltd II (2010) 3 SCC 1 ........................204

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Trisuns Chemical Industry Ltd. v Tata International Ltd. AIR 2004 Guj 274 .......................870

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Tritonia Shipping Inc v South Nelson Forest Products Corporation [1966] 1 Lloyd’s Rep 114 .....................................................................................................167

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Triumph Painters Ltd v Kerr McGee Refining Corp, in Albert Jan van den Berg (ed.), Yearbook Book of Commercial Arbitration, Vol. XVIII (The Hague: Kluwer Law International 1995), p. 120 ........................................................................ 1200 Triveni Engineering and Industries Ltd. v Nahar Industrial Enterprises (2018) SCC OnLine Del 9796 ......................................................................................... 1303 Tropic Shipping Co. Ltd. v Kothari Global Ltd. (2001) SCC OnLine Bom 889 ................. 1338 Trustees of Rotoaira Forest Trust v Attorney-​General [1999] 2 NZLR 452 .................. 723, 728 Tryer v Shaw (1858) 27 LJ Ex 320 ..............................................................................................721 Tucker LJ in Chandris v Isbrandtsen-​Moller Co Inc, [1951] 1 KB 240, at pp. 262–​263, [1950] 2 All ER 618, CA (Eng), per Tucker LJ .............................................................. 1138

ccviii

Law, Practice and Procedure of Arbitration in India

Tuckett v Isle of Thanet Electric Tramways and Lighting Co Ltd (1902) 46 Sol Jo 158 ........692 Tulip Hotels Pvt. Ltd. v Tradewings Ltd. 2010 (1) Mh LJ 73 ...................................................512 Tunbridge Wells Local Board v Ackroyd (1880) 5 Ex D 199 ................................................. 1112 Turner (E. Asia) Pte. Ltd. v Builders Fed (H.K.) Ltd. 5(3) J. Int’l Arb 139, at 146 (Singapore High Ct.1988) (1988) ......................................................................................879

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Turner (East Asia) Pte Ltd v Builders Federal (Hong Kong) (No 2) [1988] 2 MLJ 502 ........726 Turner v Stevenage Borough Council [1997] ADRLJ 409 ........................................................649

Turner v Stevenage Borough Council [1998] Ch 28 ................................................672, 686, 694 Turner v Swainson (1836) 1 M & W 572 ..................................................................... 1112, 1117

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Turner v United Steelworkers of Am Local 812 581 F. 3d 672 (8th Cir.2009) .................... 1088 Turner v. Grovit: C-​159/​02 [2004] 2 All ER (Comm) 381, [2004] ECR I-​03565 .................417

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TW Thomas & Co Ltd v Portsea Steamship Company [1912] AC 1 ......................................209

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Tweddle v Akinson Executor of Guy, Deceased (1861) 1 B & S 393 ......................................286

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U&M Mining Zambia Ltd. v Konkola Copper Mines Plc [2013] EWHC 260 (Comm) ......977

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U&M Mining Zambia Ltd. v Konkola Copper Mines plc [2014] EWHC 2374 (Comm) ......... 1061 uby Chemicals v Charabot Group, (2018) 17 SCC 232 ................................................................. 991

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Ultrasys, Inc. v Islamic Repub. of Iran Award in IUSCT Case No. 27-​84-​3 of 4 March 1983 ........................................................................................................................849

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Umesh Goel v Himachal Pradesh Cooperative Group Housing Society Limited (2016) 11 SCC 313, at para. 34 ........................................................................................ 1325

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Unglaube v Costa Rica, ICSID Case No. ARB/​08/​1 .............................................................. 1160

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Unidyne Corp. v Iran, Supplemental Opinion of Arangio Rulz and Allison, IUSCT Case No. 551-​368-​3 (17 November 1993), 29 Iran-​US CTR 349 .....................919

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Unimarine SA v Canadian Transport Co Ltd, The Catherine L [1982] 1 Lloyd’s Rep 484 ..............................................................................1214, 1217, 1221 Union Carbide Corpn. v Union ofIndia (1991) 4 SCC 584 .................................................. 1245 Union Construction Co. P. Ltd. v Chief Engineer Eastern Command AIR 1960 All 72 .......493 Union des consommateurs v Dell Computer Corp. (2007) 2 SCR 801 ...................................453 Union Marine Classification Services v The Government of the Union of Comoros [2015] EWHC 508 (Comm) ........................................................................1019, 1078, 1091 Union of India & Anr. v Bakshi Steel Ltd. (2005) SCC OnLine Del 806, at para. 17 ........ 1151

ccix

Table of Cases

Union of India & Ors. v Nav Bhart Nirman Company & Anr. 2003 SCC OnLine Del 837 ......................................................................... 1090–​1091, 1272 Union of India and Anr. v Sudhir Engineering Company (2009) SCC OnLine Del 2012 ............................................................................................................... 1030 Union of India v A.L. Rallia Ram (1964) 3 SCR 164, at para. 13 ........................................ 1274 Union of India v Airwide Express Cargo & Anr, 2015 SCC OnLine Bom 4917 ...................549

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Union of India v AL Rallia Ram 1963 AIR 1685, SC (India) ..................................................199 Union of India v Ambica Construction (2016) 6 SCC 36, at para. 34 ................................. 1153 Union of India v Bharat Battery Manufacturing Co. (P) Ltd. (2007) 7 SCC 684 ..................604 Union of India v Birla Cotton Spinning & Weaving Mills Ltd, AIR 1967 SC 688 ...................47

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Union of India v Birla Cotton Spinning and Weaving, 1964 SCR (2) 599 .............................352

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Union of India v Bright Power Projects (India) P. Ltd. (2015) 9 SCC 695 ................ 1059, 1153

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Union of India v Chitta Ranjan Maity (2009) SCC OnLine Cal 184, at para. 28 ............. 1146 Union of India v Col. J N Sinha (1970) 2 SCC 458 ..................................................................726

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Union of India v Competition Commission of India 2012 SCC OnLine Del 1114 ...............332

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Union of India v Dabhol Power Company IA. No. 6663/​2003 in Suit No. 1268/​2003 .........146

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Union of India v E B Aaby’s Rederi A/​S [1975] AC 797 at p. 807, [1974] 2 All ER 874 .............................................................................. 48, 337, 345, 497 610 Union of India v Firm, J.P. Sharma & Sons (1967) SCC OnLine Raj 44 ...............................911

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Union of India v Hardy Exploration & Production (India) Inc, (2019) 13 SCC 472 ......... 1377

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Union of India v K.P. Mandal 1958 SCC OnLine Cal 33, AIR 1958 Cal 415 .......................570

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Union of India v K.P. Traders & Ors 2015 SCC Online Bom 1509, at para. 42 ....................785

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Union of India v Khaitan Holdings (Mauritius) Limited, 2019 SCC OnLine Del 6755 .......484 Union of India v Khaitan Holdings (2019) SCC OnLine Del 2755 ..................................... 1441

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Union of India v Kishori Lal Gupta [1960] 1 SCR 493 ................................................... 299, 409 Union of India v Kishorilal Gupta and Bros. AIR 1959 SC 1362 ............................................233 Union of India v M/​s Baga Brothers 2017 SCC OnLine Del 8989 .........................................186 Union of India v M/​s Shree Jagannath Constructions Limited (2018) SCC OnLine Mad 2118 ....................................................................................... 1303 Union of India v McDonnel Douglas Corpn. (1993) 2 Lloyd’s Rep 48 ................................ 1034 Union of India v Mohan Lal Capoor (1973) 2 SCC 836, at para. 28 ................................... 1042 Union of India v Nav Bhart Nirman Co. & Anr. (2003) SCC OnLinedel 837 ................... 1020

ccx

Law, Practice and Procedure of Arbitration in India

Union of India v Pam Development (P) Ltd. 2005 SCC OnLine Cal 299 ..............................572 Union of India v Pam Development Pvt. Ltd. (2014) 11 SCC 366 ............................ 1297, 1304 Union of India v Parmar Construction Co. (2019) 15 SCC 682 .................................... 573, 611 Union of India v Parmar Construction Company, 2019 SCC OnLine SC 442 .....................557 Union of India v Popular Builders (2000) 8 SCC 1 ............................................................... 1295

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Union of India v Popular Construction (2001) 8 SCC 470 ........................................... 969, 1285 Union of India v Radha Krishna Seth (2005) SCC OnLine All 840, at para. 11 ................ 1035

Union of India v Reliance Industries 2015 10 SCC 213 ..........................................29, 491, 1107 Union of India v Reliance Industries Ltd. (2018) SCC OnLine Del 13018 ...........773, 982, 985

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Union of India v Royal Construction (2001) SCC OnLine Cal 476, at para. 20 ................ 1043

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Union of India v Saraswat Trading Agency & Ors. (2009) 16 SCC 504 .................... 1121, 1153 Union of India v Singh Builders Syndicate (2009) 4 SCC 523 .......................550, 593, 638,1248

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Union of India v Susaka (P) Ltd. (2018) 2 SCC 182 ................................................... 1155, 1304

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Union of India v Tecco Trichy Engineers and Contractors (2005) 4 SCC 239 ...............................................................................1034–​1035, 1083, 1284

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Union of India v U.P. State Bridge Corporation Ltd. (2015) 2 SCC 52 ............................................................................... 550, 709, 900, 963, 1274

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Union of India v Varindera Constructions Ltd (2020) 2 SCC 111 ............................................34 Union of India v Varindera Constructions Ltd. & Ors (2018) 7 SCC 794 ................ 1059, 1295

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Union of India v Vedanta Limited 2020 10 SCC 1 at para. 92.3 .......................................... 1364

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Union of India v Videocon Industries Ltd. 2012 SCC OnLine Del 1368 .................. 1103, 1107

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Union of India v Vodafone Group PLC (2018) SCC OnLine Del 8842 ..................... 1270, 1440

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Union of India v Vodafone Group PLC United Kingdom & Anr, 2018 SCC OnLine Del 8842 ......................................................................................483–​484

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Union of India v Vodafone Group Plc United Kingdom CS (OS) 383/​2017, Order dated 22 August 2017 ....................................................................................................... 1440 Union of India v Vodafone Group PLC, (2018) SCC OnLine Del 8842 .............................. 1441 Unionmutual Stock Life Ins. Co. of Am. v Beneficial Life Ins. Co. 774 F.2d 524, pp. 528–​529 (1st Cir. 1985) ................................................................................................245 Unipack Industries v Subhash Chand Jain & Ors. 2001 SCC OnLine Del 1210 ...................622 Uniprex SA v Grupo Radio Blanca, Case No 178/​2006—​4/​2004, CA, (Spain) ....................728

ccxi

Table of Cases

Unisys International Services Ltd v Eastern Counties Newspaper Ltd [1991] 1 Lloyd’s Rep 538 .....................................................................................................257 United Asian Bank Bhd v M/​V Fushi Hoshi Maru, Owners [1981] 2 MLJ ...........................333 United Discount Company Ltd v Robert Zoller [2001] EWCACiv 1755 ............................ 1222 United Group Rail Services Limited v Rail Corporation New South Wales (2009) 127 Con LR 202 .............................................................................................. 180, 182

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United India Insurance Co. Ltd. v Hyundai Engineering and Construction Co. Ltd. & Ors. (2018) 17 SCC 607 .........................................................................183, 496, 506 United India Insurance Company Ltd. v Antique Art Exports Pvt. Ltd. (2019) 5 SCC 362 .................................................................................................................246

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United Mexican States v Cargill Inc. 2011 ONCA 622 ............................................................274

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United Mine Workers of Am, Dist. 28 v Island Creek Coal Co. 630 F.Supp. 1278 (W.D.Va. 1986) .................................................................................... 1076

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United Overseas Land v Loke Hong Kee (S) Pte Ltd [1979] SGCA 10 ................................ 1116

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United Parcel Services of Am, Inc. v Gov’t of Canada Award on Jurisdiction of 22 November 2002 ....................................................................................................................520

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United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904, [1977] 2 All ER 62, HL ........................................................................................................564

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United Spirits Ltd. v Delta Distillery Ltd. (2012) 6 MhLJ 522 ................................................862 United States v The Panhandle Eastern Corporation 118 FRD 346 (D Del 1988) ................124

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Unitramp SA v Jenson & Nicholson (S) Pte Ltd ,The Baiona [1991] 2 Lloyd’s Rep 121, (1991) Financial Times, 1 March ......................................................................537

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Universal Land and Finance Company v Pearl Developers Pvt. Ltd. FAO (OS) No. 151/​2018 ................................................................................................... 1291

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University College, Oxford (Master and Fellows) v Durdy [1982] Ch 413, [1982] 1 All ER 1108, [1982] 3 WLR 94 ...........................................................................563

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University of Warwick v Sir Robert McAlpine (1988) 42 BLR1, at p. 22 ................................855 Unruh v Seeberger [2007] 2 HKLRD 414 .........................................................................887–​888 UOI v JP Sharma 1982 SCC OnLine Raj 18 .............................................................................670 UOI v P. Jeevanandam 2000 SCC OnLine AP 310 ..................................................................684 UP Co-​Op. Federation Ltd v Three Circles (2009) 10 SCC 374 ............................................ 1222 Urban Small Space Ltd v Burford Investment Co Ltd [1990] 2 EGLR 120 ............................780

ccxii

Law, Practice and Procedure of Arbitration in India

URS Corporation v Lebanese Company for the Development and Reconstruction of Beirut Central District SAL 512 F. Supp. 2d 199 (D Del. 2007), Yearbook Commercial Arbitration, 1024 XXXIII (2008) ................................................................475 Usaha Damai Sdn Bhd v Setiausaha Kerajaan Selangor [1997] 5 MLJ 601 ...................... 1062 Usahasama SPNB-​LTAT Sdn Bhd v ABI Construction Sdn Bhd [2016] 7 MLJ 275 .............273

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Ust-​Kamenogarsk Hydropower Plant JSC v AES Ust-​Kamenogarsk Hydropower Plant LLP [2013] UKSC 35 ................................................................................374, 397, 446 Ust-​Kamenogorsk Hydropower Plant JSC v AES Ust-​Kamenogorsk Hydropower Plant LLP [2013] UKSC 35, [2013] 2 Lloyd’s Rep 281 ....................................................400 Utkal Galvanizers Ltd. v PGCIL 2015 (1) Arb LR 80 (Del) ....................................................557

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Uttam ChandRakesh Kumar and Ors. v Derco Foods I.A. No. 6117/​2020 in CS (Comm) 248 of 2020, High Court of Delhi (9 November 2020) ..................................954

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Uttarakhand Purv Sainik Kalyan Nigam Ltd. v Northern Coal Field Ltd. 2020 (2) SCC 455 ...................................................................................................... 255, 1054

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V4 Infrastructure Private Limited v Jindal Biochem Private Limited FAO(OS) (COMM) 107/​2018 (Delhi High Court). Decided on 5 May 2020, at para. 24 .......................... 1164 V.K. Dewan & Co. v Delhi Jal Board (2010) 15 SCC 717 ........................................................899

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V.O. Tractoroexport, Moscow v Tarapore & Company (1969) 3 SCC 562 .............................472

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V.S. Ramanujachariar v Veena Avanna Mana Vatapathra Sayee Thathachariar (1942) SCC OnLine Mad 274 ......................................................................................... 1054

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V.S. Reddy v Shri M. Jayakumar & Anr. W.P. No. 35780/​2000 (8 December 2000) High Court of Karnataka ........................................................................................................... 1021

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Vadilal Chaturbhuj Gandhi v Thakorelal Chimanlal Munshaw & Ors, AIR 1954 Bom 121, para. 84 ................................................................................................53

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Vadilal Chaturbhuj Gandhi v Thakorelal Chimanlal Munshaw (1953) SCC OnLine Bom 48 ..............................................................................................995 Vakauta v Kelly (1989) 167 CLR 568 .........................................................................................649 Vakauta v Kelly [1989] HCA 44 .................................................................................................660 Value Advisory Services v M/​s ZTE Corporation (2009) SCC OnLine Del 1961 .................961 Value Advisory Services v ZTE Corporation (2017) SCC OnLine Del 8933 .............. 915, 1346 Van der Giessen-​De-​Noord Shipbuilding Division BV v Imtech Marine & Offshore BV [2008] EWHC 2904 .......................................................................................................... 1055

ccxiii

Table of Cases

Van Der Zijden Wildhandel (P J) NV v Tucker and Cross Ltd (No 1) [1975] 2 Lloyd’s Rep 240 .................................................................................................. 1116 Van Der Zijden Wildhandel (PJ) NV v Tucker and Cross (No 2) [1976] 1 Lloyd’s Rep 341 ........................................................................................ 1134, 1148 Vandana Gupta v Kuwait Airways Ltd & Ors (2015) 222 DLT 560 ......................................547 Vandervaere v Milan (Unreported NSW Sup Ct CA, 11 September 1992), at para. 6 .... 1136

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Vanol Far East Marketing Pte Ltd. v Hin Leong Trading Pte. Ltd. High Court Singapore (27 May 1996) ...................................................................................... 1082

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Vedanta Limited v Shenzhen Shandong Nuclear Power Construction Co. (2019) 11 SCC 465 ............................................................................1118–​1119, 1141, 1136, 1150–​1151, 1161–​1165, 1173 Vee Networks Ltd v Econet Wireless International Ltd [2004] EWHC 2909 (Comm) ........234

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Vee Networks Ltd. v Econet Wireless International Ltd. (2004) EWHC 2909 (QBD) ..........371

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Veena v Seth Industries Ltd. 2011 (2) MhLJ 226 ......................................................................517 Veena v Seth Industries Ltd. 2010 SCC OnLine Bom 1707 ....................................................505

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Vendort Traders Inc v Evrostroy GruppLLC [2016] UKPC 15 ............................................. 1275

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Venture Global Engg v Satyam Computer Services Ltd. (2008) 4 SCC 190, at para. 25 .......952 Venture Global Engg. LLC v Tech Mahindra Ltd. (2018) 1 SCC 656, at para. 124, 126 .... 1103

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Venture Global Engineering LLC and Ors. v Tech Mahindra Ltd. and Anr. (2018) 1 SCC 656, at para. 121 ...........................................................................................968

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Venture Global Engineering v Satyam Computer Services Ltd. (2008) 4 SCC 190 ........................................................................................................ 401, 989

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Veolia Water UK plc v Fingal County Council [2006] IEHC 240 ........................................ 1204

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Veritas Shipping Corpn v Anglo-​Canadian Cement Ltd [1966] 1 Lloyd’s Rep 76 ......................................................................................583, 629, 641

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Vertex Data Science Ltd. v Powergen Retail Ltd. [2006] EWHC 1340 ............................... 1126 Veteran Petroleum Limited (Cyprus) v TheRussian Federation PCA Case No AA 228 .........................................................................................................916 Veteran Petroleum Ltd (Cyprus) v The Russian Federation PCA Case No. 2005-​05/​AA228 ................................................................................................ 1446 Vibroflotation AG v Express Builders Co [1996] 2(3) MALQR in Albert Jan van den Berg (ed.), Yearbook Commercial Arbitration, Vol. XX (1995), p. 287 ................................864 Vickers v Vickers (1867) LR 4 Eq 529, [1867] 7 WLUK 87 .......................................................50

ccxiv

Law, Practice and Procedure of Arbitration in India

Victor Pey Casado and President Allende Found. v Republic of Chile ICSID Case No. ARB/​98/​2, 8 May 2008, Award, 232 .............................................................. 1406 Victoria Memorial Hall v Howrah Ganatantrik Nagrik Samity (2010) 3 SCC 732 ......................................................................................... 1043–​1044, 1051 Videocon Industries Ltd. v Union of India (2011) 6 SCC 161 .................................................491 Videocon Power Ltd. v Tamil Nadu Electricity Board (2004) SCC OnLine Mad 807 ....... 1347

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Videsh Sanchar Nigam Ltd. v Shapoorji Pallonji & Co. Ltd. (2007) SCC OnLine Cal 670 ........................................................................................... 1293

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Vidya Drolia and Ors. v Durga Trading Corporation Civil Appeal No. 2402 of 2019 decided on 14 December 2020 ......59, 241, 327–​328, 333, 367, 396, 428, 435–​436, 441, 557

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Vidya Drolia v Durga Trading Corporation (2020) SCC OnLine SC 1018 ...............................................................................269, 310, 332, 1299

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Vidya Drolia v Durga TradingCorporation (2021) 2 SCC 1, at para. 49 ............................ 1299 Vidyut Parsaran Nigam Ltd v M/​S Arya Nirman 2009 SCC OnLine P&H 6051 ................677

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Vijay Karia & Ors. v Prysmian Cavi E Sistemi SRL and Others (2020) SCC OnLine SC 177, at paras 85–​86 ................................................................. 1041

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Vijay Karia v Prysmian Cavi E Sistemi (2020) 11 SCC 1 ...............24, 1333, 1314, 1338–​1339, 1341–​1342, 1344–​1345, 1350 Vijay Karia v Prysmian Cavi E Sistemi SRL (2020) SCC OnLine SC 177 .........1066, 1219–​1220

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Vijay Karia v Prysmian Cavi E Sistemi SRL 2020 SCC OnLine SC 177 ........................ 32, 107

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Vijay Karia v Prysmian Cavi E Sistemi SRL [2020] 11 SCC 1 .............. 1341, 1344, 1350, 1352

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Vijay Kumar Sharma v Raghunandan Sharma (2010) 2 SCC 486 ............................... 327, 435

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Vikas Sales Corporation v Commissioner of Commercial Taxes (1996) 4 SCC 433 ........................................................................................................ 328, 436 Vikesh Chugh v B.L.B. Ltd. & Anr. 2008 SCC OnLine Del 1088 ...........................................661

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Villa Denizcilik Sanayi Ve Ticaret AS v Longen SA, The Villa [1998] 1 Lloyd’s Rep 195 ....523 Vimal Kishore Shah v Jayesh Dinesh Shah (2016) 8 SCC 788 ..............................488, 954, 1299 Vincor Shipping Co Ltd v Transatlantic Schiffahrtskontor GmbH [1987] HKLR 613 ...............................................................................................561, 571, 620 Vine v National Dock Labour Board [1957] AC 488 ............................................................ 1123 Viney v Bignolf (1887) 20 QBD 172 ...........................................................................................495 Vinod Kumar v Gangadhar (2015) 1 SCC 391 .........................................................................274

ccxv

Table of Cases

Vinod Seth v Devinder Bajaj (2010) 8 SCC 1 ........................................................................ 1314 Virani Ltd v Manuel Revert y CIA SA [2004] 2 Lloyd’s Rep 14 ........................................... 1120 Virany v Warne (1801) 4 Esp 47 ................................................................................................691 Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd (formerly Contour Aerospace Ltd) [2013] UKSC 46 ........................................................................... 1102, 1107

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Virgo Softech Ltd. v National Institute of Electronics and Information Technology 2018 SCC OnLine Del 12722 .........................................................................491

Visa International Limited v Continental Resources (USA) Limited (2009) 2 SCC 55 ................................................................................. 184, 186, 340, 343, 512 Visakhapatnam Port Trust v M/​s. Continental Construction Co. (2009) 4 SCC 546 ...........527

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Vishindas Bhagchand v Chairman Maharashtra State Electricity Board, Mumbai and Ors. (2002) 1 Bom CR 320 ..........................................................................527 Vishnu Kumar Gupta v Union of India 1999 SCC OnLine J&K 34 .................................... 1145

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Vito G Gallo v Government of Canada PCA Case No 55798, available at: http://​ita​law.com/​cases/​471 ...........................................................................................652

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Vitthalrao Shinde Sahakari Sakhar Karkhana Ltd. v Gangapur Sahakari Sakhar Karkhana Ltd. (2017) SCCOnLine Bom 1669 ................................................................................ 1091

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Vivendi SA & Ors. v Elektrim SA & Ors. Case No. 4A_​428/​2008, decided on 31 March 2009 .............................................................................................................385–​386 Vix Marketing Pte Ltd v Technogym SpA [2008] 4 SLR 256 ...................................................202

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Vodafone International Holdings B.V v Union of India (2012) 6 SCC 613 ..................291–​292

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Vodafone International Holdings BV (The Netherlands) v India PCA Case No. 2016-​35 ...............................................................................1413, 1436–​1437, 1439 Vodafone International Holdings BV v Union of India (2012) 6 SCC 613 .......................... 1439

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Voestalpine Gmbh v DMRC (2017) 4 SCC 665 ........................................................................573

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Voestalpine Schienen GmbH v Delhi Metro Rail Corporation Ltd. (2017) 4 SCC 665 ....................................................................... 378, 580, 630, 894, 898, 907 Vogelaar v Callaghan (1996) 1 IR 88 ...................................................................................... 1203 Voltas Ltd. v Rolta India Ltd. (2014) 4 SCC 516 ....................................................... 48, 344, 527 Vosnoc Ltd v Transgobal Projects Ltd [1998] 2 All ER 990, [1998] 1 WLR 101, 523 Vulcan Insurance Co. Ltd. v Maharaj Singh (1976) 1 SCC 943 ..............................................496 VV v VW [2008] 2 SLR(R) 929 ......................................................1187, 1193, 1204–​1205, 1250 Vytla Sitanna v Marivada Viranna, AIR 1934 PC 105 ..............................................................15

ccxvi

Law, Practice and Procedure of Arbitration in India

W W Ramsden & Co Ltd v Jacobs [1922] 1 KB 640 .................................................................. 1292 Waddle v Downman (1844) 12 M & W 562 .......................................................................... 1063 Wade Administrative Law (5th edn), pp. 472–​475 ..................................................................727 Wade-​Gery v Morrison (1877) 37 LT 270 .................................................................................335

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Wadsworth v Lydall, [1981] 2 All ER 401 .................................................................... 1171, 1138 Waguih Elie George Siag and Clorinda Vecchi v The Arab Republic of Egypt ICSID Case No. ARB/​05/​15 ............................................................................................ 1403 Wah (Aka Alan Tang) v Grant Thornton International Ltd [2013] 1 Lloyd’s Law Reports 11, [2013] 1 All ER (Comm) 1226 ........................ 180, 182

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Wah (Aka Alan Tang) & Anor v Grant Thornton International Ltd & Ors. [2012] EWHC 3198 (Ch) ....................................................................................................512 Wakefield v Llanelly Railway & Dock Co (1864) 34 Beav 245 ............................................. 1305

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Wakefield v Llanelly Railway and Dock Co (1864) 55 ER 629 ............................................. 1056

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Waleed Al-​Qaroani, et al. v Chevron Corporation, et al. No. C18-​03297 JSW, California Northern District Court ....................................................................................67

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Walker v Frobisher [1801] 6 Ves 70 ........................................................................................ 1292 Walker v Rome [1999] All ER (D) 1283 ................................................................................. 1149

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Walker v Wilsher (1889) 23 QBD 335 .......................................................................... 1230, 1233

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Waller v King (1723) 9 Mod Rep 63 ..........................................................................................721 Walmsley v White 1829 67 LT 433 .......................................................................................... 1116

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Wanbury Ltd. v Candid Drug Distributors 2015 SCC OnLine Bom 3810, at para. 38 .......766

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Wander Ltd. v Antox India Pvt. Ltd. (1990) Supp SCC 727, at para. 9 .................................987

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Ward v Shell-​Mex and BP Ltd [1952] 1 KB 280 .................................................................... 1275

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Ward v Uncorn (1631) Cro Car 216 ..........................................................................................359 Warinco AG v Andre & Cie SA [1979] 2 Lloyd’s Rep 298 .................................................... 1202 Warnes SA v Harvic International Ltd. [19940 ADRLJ, decided on 3 December 1993, US Federal District Court ..................................................................334 Waste Management, Inc v United Mexican States (‘Number 2’) (Award) (30 April 2004), ICSID Case No. ARB(AF)/​00/​3, 43 International Legal Materials, 967 .......................186 Waste Management, Inc. v United Mexican States, Case No. ARB/​AF/​003, 1416 Watson v Prager [1991] 3 All ER 487 ........................................................................................640 Watson v Watson (1648) Sty 28 ............................................................................................... 1061

ccxvii

Table of Cases

Wealands v CLC Contractors Ltd [1999] 2 Lloyd’s Rep 739 ................................................ 1126 Webb & Hay v R (1994) 181 CLR 41 .........................................................................................632 Webster v James Chapman & Co (a firm) [1989] All ER 939 .................................................779 Weddell v JA Pearce & Major [1988] Ch 26 ..............................................................................296 Weise v Wardle (1874) LR 19 Eq 171 ........................................................................................699

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Weissfich v Anthony Julius [2006] EWCA Civ 218 ..................................................................477 Weissfisch v Julius [2006] EWCA Civ 218 ................................................................................471 Weldon Plant Ltd. v Commission for the New Towns (2000) BLR 496, at paras 4–​5 ........ 1032 Wellesley Lake Trophy Lodge Inc v BLD Silviculture Ltd [2006] 10 WWR 82 ......................642

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Wellington Associates Ltd. v. Kirit Mehta (2000) 4 SCC 272 ......................................... 194, 334

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Welspun Infratech v Ashok Khurana (2014) SCC OnLine Bom 39, at para. 36 ...................990 Wena Hotels Ltd. v Egypt ICSID Case No. ARB/​98/​4 .......................................................... 1167

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Wessanen’s Koninklijke Fabrieken NVv Isaac Modiano Brother & Sons Ltd [1960] 3 All ER 617 .......................................................................................................... 1304

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West Bengal State Warehousing Corpn. v Sushil Kumar Kayan (2002) 5 SCC 679 ........... 1058

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West Haryana Highways Projects Pvt. Ltd. v National Highways Authority (2017) SCC OnLine Del 8378 ............................................................................................963

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West Haryana Highways Projects Pvt. Ltd. v National Highways Authority of India (2017) SCC OnLine Del 8378, at para. 24 ........................................................................964

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West of England Ship Owners Mutual Protection and Indemnity Association v Hellenic Industrial Development Bank SA, [1998] CLC 1431 .............................................. 518, 523

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West Tankers Inc v Ras Riunione Adriatica di Sicurta SpA, “The Front Comor” [2005] EWHC 454 (Comm), [2005] 2 All ER (Comm) 240 ..........................................300

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West Tankers Inc v RAS Riunione Adriatica di Sicurta SpA ,The Front Comor [2007] All ER (D) 249 (Feb), [2007] UKHL 4 .................................................................346

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West Tankers Inc v Ras Riunione Adriatica di Sicurta SpA, The Front Comor [2007] UKHL 4 ....................................................................................................................416 West Tankers Inc v Ras Riunione Adriatica Di Sicurta, “The Front Comor” [2005] EWHC 454 (Comm), [2005] 2 Lloyd’s Rep 257 ..................................................401 West Tankers Inc. v Allianz SpA [2012] EWCA Civ 27 ........................................................ 1324 West v Dowuman 1879 39 LT 666 .......................................................................................... 1113 West Wake Price & Co v Ching [1957] 1 WLR 45 ...................................................................356 Western Coalfields Ltd. v N. Kumar Construction Co. (2009) SCC OnLine Bom 1613, at para. 10 ..................................................................................................................... 1079, 1271

ccxviii

Law, Practice and Procedure of Arbitration in India

Westfal-​Larsen & Co A/​S v Ikerigi Compania Naviera SA, The Messiniaki Bergen [1983] 1 All ER 382, [1983] 1 Lloyd’s Rep 424 ...............................................186–​187, 191 Westfal-​Larsen and Co A/​S v Ikerigi Compania Naviera SA, The Messiniaki Bergen [1983] 1 All ER 382, [1983] 1 Lloyd’s Rep 423 ................................................................205 Westfield Design & Construction Pty Ltd v L R & M Constructions Pty Ltd; C S R Ltd (t/​a The Readymix Group) [1999] SASC 319 ..........................................................................523

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Westland Helicopters Ltd v Al-​Hejailan [2004] EWHC 1625 (Comm) .................... 1098, 1100 Westland Helicopters Ltd v Arab Organisation for Industrialisation [1994] 2 Lloyd’s Rep 608 .................................................................................................. 1341 Westland Helicopters Ltd v Sheikh Salah Al-​Hejailan [2004] EWHC 1625 (Comm) ..........261

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Westland Helicopters Ltd. v Arab Organisation for Industrialization, 80 ILR 622 (23 October 1987) ............................................................................................................ 1213

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Westwood v Secretary of State for India in Council 7 LT 736 .................................................495

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WH Holding Ltd & West Ham United Football Club Ltd v E20 Stadium LLP [2018] EWCA Civ 2652 ................................................................................................... 1229

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Wharton v King (1831) 2 B & Ad 528 .......................................................................... 1061, 1063

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Whatley v Morland 2 Dowl 249 .............................................................................39 RR 790, 877 Whincup v Hughes (1871) LR 6 CP 78 ......................................................................................696

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White Industries Australia Limited v The Republic of India (Award 2011) UNCITRAL .................................................................................................................77

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White Industries Australia Limited v The Republic of India, Final Award, 30 November 2011, available at https://​www.ita​law.com/​sites/​defa​ult/​files/​case-​ docume​nts/​ita0​906.pdf (accessed on 29 January 2021) .................................................146

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White Industries v The Republic of India 2011, IIC 529 .................................. 1420, 1436–​1438

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White v Kuzych [1951] AC 585 ..................................................................................................648 Whitehouse v Jordan [1981] 1 WLR 246, at 256 ......................................................................855

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Whitmore v Smith (1861) 7 H & N 509 ....................................................................................853 Wholecrop Marketing Ltd v Wolds Produce Ltd [2013] EWHC 2079 (Ch) ................. 191, 497 Wicketts and Sterndale v Brine Builders 2001 ....................................................................... 1011 Wicketts v Brine Builders & Anr [2001] CILL 1805, [2001] App LR 06/​08 .........619, 649, 699 Wicketts v Brine Builders & Siederer [2001] CILL 1805, [2001] App LR 06/​08 ..................................................................................590, 674, 690, 699 Wicks v Cox [1847] 11 Jur 542 ................................................................................................ 1112

ccxix

Table of Cases

Wilhelmsen v Canadian Transport Co, The Takamine [1980] 2 Lloyd’s Rep 204 ..............................................................................1191, 1207, 1215 Wilkinson v Page [1842] 1 WLUK 293 ................................................................................... 1056 Willcock v Pickfords Removals [1979] 1 Lloyd’s Rep 244 ........................................................257 Willday v Taylor (1977) 241 EG 83 ......................................................................................... 1100

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Willesford v Watson (1873) LR 8 Ch App 473 ..........................................................................457 William Brandt’s Sons and Co v Dunlop Rubber Co Ltd [1905] AC 454 ...............................296 William Park, “Arbitrator Integrity” (2009) 46 San Diego Law Review 629, ...................... 636

Williams and Mordey v W H Muller & Co (London) Ltd (1924) 18 Ll L Rep 50 ................497

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Williams v Thomas (1847) 8 LTOS 348 .....................................................................................718 Williams v Wallis and Cox [1914] 2 KB 478 .......................................................................... 1292

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Williams v Wilson (1853) 23 LJ Ex 17 ....................................................... 9 Exch 90, 1193, 1197

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Wills v Wakeley Bros. (1891) 7 TLR 604 ..................................................................682–​683, 692 Wilson v Wilson (1848) 1 H.L. Cas. 538, [1848] 5 WLUK 82 ..................................................58

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Winch v Sanders (1619) Cro Jac 584 ...................................................................................... 1061

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Windvale Ltd v Darlington Insulation Co Ltd (1983) The Times, 22 December .............. 1196 Winter v Lethbridge (1824) 13 Price 533 ............................................................................... 1116

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Winter v Munton [1818] 2 Moore CP 723 ............................................................................. 1054

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Wiseline Corp Ltd v Hockey HC Auckland M383-​IM02, 25 June 2002 .................................647 WK Webster & Co v American President Lines Ltd 32 F.3d 665 ............................................621

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WMC Resources Ltd v Leighton Contractors Pty Ltd (2000) 16 BCL 53 ............................ 1116

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Woh Hup (Pte) Ltd v Property Development Ltd [1991] 1SLR(R) 473 ..................... 1288, 1383

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Wohlenberg v Lageman (1815) 6 Taunt 251 .......................................................................... 1063 Wolf v Collis Removal Service [1948]1 KB 11 ...........................................................................350

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Wong Nget Thau v Tay Choo Foo [1994] 3 MLJ 723 ................................................................779 Wood v Griffith (1818) 1 Swanst 55 ........................................................................................ 1117 Wood v Leake (1806) 12 Ves 412, (1806) 33 ER 156 ...............................................................721 Wood v Thompson (1647) Rolle Ab Arb 523 ............................................................................301 Wood v Wilson (1835) 2 Cr M & R 241 ................................................................................. 1063 Woolcombers of India Ltd. v Workers Union (1974) 3 SCC 318 at para. 5 ......................... 1044 Woolf v Collis Removal Service [1947] 2 All ER 260 ...................................................... 326, 495

ccxx

Law, Practice and Procedure of Arbitration in India

Woolf v Collis Removal Service [1948] 1 KB 11 ........................................................................356 Woolf v Collis Removal Service [1948] 1 KB 11, [1947] 2 All ER 260, CA (Eng) ................................................................................. 186, 188 World Duty Free Co Ltd v The Republic of Kenya ICSID Case No. ARB/​00/​7 .......................68 World Pride Shipping v Daiichi Chuo Kisen Kaisha, The Golden Anne [1984] 2 Lloyd’s Rep 489 .....................................................................................................585

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World Sport Group (Mauritius) Ltd. v MSM Satellite (Singapore) PTE Limited (2014) 11 SCC 639 ...............................................................................................................173

World Sport Group (Mauritius) Ltd. v MSM Satellite (Singapore) Pte Ltd. (2014) 11 SCC 639 .................................................................24, 36, 437, 472, 474, 477–​478

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World Sport Group (Mauritius) Ltd. v MSM Satellite (Singapore) Pte. Ltd (2014) 11 SCC 639 .................................................................................................... 828, 1343

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World Trade Corp Ltd. v C. Czarnikow Sugar Ltd. [2004] EWHC 2332 ........................... 1055

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World Trade Corp Ltd v C Czarnikow Sugar Ltd [2005] 1 Lloyd’s Rep 422 ............ 1066, 1089 WPC III Inc v Benetech LLC 2012 U.S. Dist. LEXIS 110426 (E.D. La.) ................................972

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Wright v Bennett [1948] 1 All ER 410 .................................................................................... 1186

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Wrightson v Bywater (1838) 3 M & W 199 ............................................................................ 1064

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WSG Nimbus Pte Ltd v Bd of Control for Cricket in Sri Lanka [2002] 3 SLR 603 (Singapore High Court) ......................................................................................................416

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WSG Nimbus Pte Ltd v Board for Cricket in Sri Lanka [2002] 1 SLR(R) 1088 ....................989

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WSG Nimbus Pte Ltd v Board of Control for Cricket in Sri Lanka [2002] 1 SLR(R) 1088, [2002] SGHC 104 ....................................................................................................... 190, 455

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Wuzhou Port Foreign Trade Development Corp v New Chemic Ltd [2001] 3 HKC 395 ............................................................................................................. 1297

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X Ltd v Y Ltd [2005] EWHC 769 (TCC) ............................................................................... 1116 X v AY and BY, First Civil Law Court, Judgment of 27 February 2014, available at http://​swissa​rbit​rati​onde​cisi​ons.com/​arbi​trat​ion-​cla​use-​ survi​ves-​term​inat​ion-​its-​scope-​be-​inte​rpre​ted-​libera​lly ...............................................330 XAG v A Bank [1983] 2 All ER 464 ........................................................................................ 1383 XL Insurance Ltd v Owens Corning [2000] 2 Lloyd’s Rep 500 ...................................... 167, 257 Xstrata Coal Marketing AG v Dalmia Bharat (Cement) Ltd. (2016) SCC OnLine Del 5861 ......................................................................................... 1350

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Table of Cases

Xstrata Coal Queensland Pty Ltd. v Benxi Iron & Steel (Group) Int’l Econ. & Trading Co. Ltd. [2016] EWHC 2022 (Comm) ............................................................ 1084

Y Yamashita Shinnihon Steamship Co Ltd v Elios SpA, The Lily Prima [1976] 2 Lloyd’s Rep 487 .................................................................................................. 1055

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Yashvant Chunilal Mody v Yusuf Karmali Kerwala 2013 SCC OnLine Bom 1246 .............428 Yashwith Construction (P) Ltd v Simplex Concrete Piles India Ltd. (2006) 6 SCC 204 ................................................................................................378, 664–​665 Yashwitha Constructions (P) Ltd. v Simplex Concrete Piles India Ltd. 2008 SCC OnLine AP 826 ..................................................................................................628

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Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581 .............................. 97, 1105

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Yaung ChiOo Trading Pte Ltd v Government of the Union of Myanmar ASEAN ID Case No. ARB/​01/​1, Award, 31 March 2003 ................................................................. 1403

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Yeoman Credit Ltd v Latter [1961] 1 WLR 828 ........................................................................307

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Yingde Gases Investment Ltd v Shihlien China Holding Co Ltd [2014] HKCFI 68 ..............348

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Yograj Infrastructure Limited v Ssangyong Engineering and Construction Company Limited, (2011) 9 SCC 735 ............................................................................. 1374

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Yokogawa Engineering Asia Pte Ltd v Transtel Engineering Pte Ltd [2009] SGHC 1 .....................................................................................................................469

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Young v Ross Loos Med. Group Inc. 135 Cal. App.3d 669 (Cal Ct. App. 1982) ................. 1001

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Yukos Capital SARL v OJSC Rosneft Oil Company 2014 EWHC2188 (Comm) .........................................................................1096, 1103, 1348

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Yukos Oil Co. v Dardana Ltd. [2002] EWCA Civ 543 .......................................................... 1337

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Yukos Universal Ltd (Isle of Man) v The Russian Federation PCA Case No AA 227 ......................................................................................914, 916, 1427

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Yukos Universal Ltd (Isle of Man) v The Russian Federation PCA Case No. 2005-​04/​AA227 ............................................................................... 104, 1446

Z Zalinoff v Hammond [1898] 2 Ch 92 ........................................................................................457 Zambia Steel and Building Supplies Ltd v James Clark and Eaton Ltd [1986] 2 Lloyd’s Rep 225, CA (Eng) ..................................................................................201 ZCCM Investment Holdings Plc v Kansanshi Holdings Plc [2019] EWHC 1285 (Comm) ...............................................................................1000–​1001

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Law, Practice and Procedure of Arbitration in India

Zebra Industries v Waj Tong Paper Products Group Ltd. [2012] HKCU 1308 .................. 1041 Zee Telefilms Limited v Dolly Majumdar (2013) SCC OnLine Cal 10 ................................ 1367 Zermalt Holdings SA v Nu-​Life Upholstery Repair Ltd [1985] 2 EGLR 14 .............. 1048, 1066 Zhan Jiang E & T Dev Area Service Head Co v An Hau Company Limited [1994] 1 HKC 539 ................................................................................................................348

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Zhejiang Bonly Elevator Guide Rail Manufacture Co. Ltd v Jade Elevator Components (2018) 9 SCC 774 ...................................................................................................................65

Zuari Maroc Phosphate Ltd. v Union of India 2017 SCC OnLine Del 7968, at paras 41, 43 ................................................................. 1070

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Zublin Muhibbah Joint Venture v Government of Malaysia [1990] 3 MLJ 125, at p. 127 ................................................................................................881

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Zurich Australian Ins. Ltd. v Cognition Educ. Ltd [2014] NZSC 188 (Supreme Court of New Zealand) .....................................................................................449

246th Law Commission Report

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TABLE OF STATUTES Arbitration and Conciliation Act, 1996 Cl. 4(vi) ..... 23

s. 2(2) ..... 29

s. 2(1)(c) ..... 996

s. 29A ..... 781

s. 2(1)(e) ..... 955, 960, 967, 970

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para. 70 ..... 1249

s. 2(1)(e)(i) ..... 1283

ABA Model Rules of Professional Conduct, 2013

s. 2(1)(e)(ii) ..... 1283 s. 2(1)(h) ..... 1282

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r. 1.5 ..... 887

s. 2(2) ..... 36, 956, 977, 980, 1273, 1281, 1324

rr. 1.7, 1.8, 1.11 ..... 888

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Advocates Act, 1961 s. 32 ..... 879

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s. 59(1)(c) ..... 1256

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s. 49(1)(c) ..... 883, 1254

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s. 2(4) ..... 143

s. 5 ..... 1288

Airports Authority of India Act, 1994

s. 4 ..... 1304 s. 5 ..... 951, 974, 1273 s. 6 ..... 915 s. 7(3) ..... 1289 s. 8 ..... 945 s. 9 ..... 168, 955, 972, 974 s. 9(1)(i) ..... 975

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Alberta International Commercial Arbitration Act

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s. 3(2) ..... 1288

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s. 7 ..... 448

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American Arbitration Association (“AAA”) Commercial Arbitration Rules art. 20 ..... 756 art. 21 ..... 748 art. 31 ..... 809 Canon I, at para. 2 ..... 902 Canon II ..... 902 r. 48 ..... 1179

s. 9(1) ..... 960, 967, 974 s. 9(1)(ii)(a) ..... 975 s. 9(1)(ii)(b) ..... 975 s. 9(1)(ii)(b) ..... 985 s. 9(1)(ii)(d) ..... 987, 990 s. 9(2) ..... 955, 975 s. 9(3) ..... 934, 960 s. 10(2) ..... 190 s. 11(11) ..... 957

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Law, Practice and Procedure of Arbitration in India s. 24(3) ..... 1291

s. 11(12)(b) ..... 957

s. 25 ..... 941, 1014, 1325

s. 11(4)–​(6) ..... 957

s. 25(a) ..... 941

s. 11(6A) ..... 958

s. 25(b) ..... 941

s. 12 ..... 899, 907, 920

s. 25(c) ..... 938

s. 12(1)(a) ..... 900

s. 26 ..... 916, 938, 1070

s. 12(1)(b) ..... 900, 904

s. 27 ..... 916, 978

s. 12(2) ..... 901

s. 27(1) ..... 965, 980, 984

s. 12(5) ..... 900, 964, 1306

s. 27(2)(c)(ii) ..... 982

s. 13(5) ..... 962, 1282, 1297

s. 27(3) ..... 982, 984

s. 13(6) ..... 962

s. 27(4) ..... 984

s. 14 ..... 913

s. 27(5) ..... 966

s. 14(1)(a) ..... 963

s. 27(6) ..... 984

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s. 11(12)(a) ..... 957

s. 14(2) ..... 964

s. 28 ..... 912 s. 29(1) ..... 1066, 1069

s. 16(5) ..... 1290 s. 17 ..... 77, 932, 960

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s. 17(2) ..... 933

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s. 17(1) ..... 932–​933

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s. 16(6) ..... 1282, 1287

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s. 16 ..... 930, 1009, 1290

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s. 15(3) ..... 904

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s. 18 ..... 23, 879, 896, 906, 1020

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s. 19 ..... 23, 1015, 1290

s. 29(2) ..... 946, 998, 1070 s. 29A (3) ..... 903 s. 29A ..... 966 s. 29A(1) ..... 903 s. 29A(2) ..... 903 s. 29A(4) ..... 903, 966 s. 29A(5) ..... 966 s. 29A(6) ..... 966 s. 29A(8) ..... 966

s. 20(2) ..... 935

s. 29B ..... 8

s. 20(3) ..... 936

s. 30 ..... 1010, 1325

s. 22(1) ..... 1029

s. 30(2) ..... 1013

s. 22(2) ..... 936, 1029

s. 30(4) ..... 1012

s. 22(4) ..... 936, 1029

s. 31 ..... 1026–​1027

s. 23 ..... 936

s. 31 ..... 1064

s. 24 ..... 937

s. 31(1) ..... 1026, 1028–​1029

s. 24(1) ..... 904, 937

s. 31(2) ..... 1030, 1067

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s. 19(3) ..... 934

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Table of Statutes s. 34(3) ..... 1033, 1252, 1284

s. 31(3)(a) ..... 1027

s. 34(4) ..... 1057, 1276, 1311

s. 31(3)(b) ..... 1012

s. 34(6) ..... 1308

s. 31(4) ..... 1026, 1033–​1034

s. 35 ..... 995, 1021, 1319

s. 31(5) ..... 1035

s. 36 ..... 970, 1324–​1325

s. 31(6) ..... 1002, 1008, 1273

s. 36(3) ..... 1326

s. 31(7) ..... 1049

s. 37 ..... 1273

s. 31(8) ..... 1049

s. 37(1)(a) ..... 954, 1009

s. 32(1) ..... 1003

s. 37(2)(b) ..... 999

s. 32(2)(b) ..... 1013

s. 38(1) ..... 943

s. 32(3) ..... 1310

s. 38(2) ..... 943

s. 33 ..... 995, 1016–​1017, 1033, 1252

s. 39(2) ..... 1037

s. 33(1) ..... 1033, 1270–​1271

s. 40 ..... 1283

s. 33(1)(b) ..... 1021, 1064, 1066, 1271

s. 41 ..... 1283 s. 42-​B ..... 924

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s. 33(4) ..... 1004, 1020, 1057, 1270, 1272

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s. 31(3) ..... 23, 911, 1026, 1064–​1065

s. 42A ..... 125, 918, 1071

s. 34(2) ..... 897, 1252, 1275

s. 43(1) ..... 1329, 1331

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s. 34 ..... 11, 168, 921, 968, 1004, 1266, 1273, 1281

s. 43 ..... 969 s. 43(3) ..... 959

s. 34(2)(a)(i) ..... 1287

s. 43(A) ..... 139

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s. 34(2)(a) ..... 1282, 1286

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s. 34(2)(a)(ii) ..... 1288

s. 43(D)(2) ..... 139 s. 44 ..... 1335–​1336, 1338

s. 34(2)(a)(iii) ..... 907

s. 47 ..... 1336

s. 34(2)(a)(iv) ..... 1060

s. 48 ..... 1338, 1340–​1341

s. 34(2)(a)(iv) ..... 1293

s. 48(1)(a) ..... 1342

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s. 34(2)(a)(iii) ..... 1290

s. 34(2)(a)(iv) ..... 1294

s. 48(1)(b) ..... 1343

s. 34(2)(a)(v) ..... 1296

s. 48(1)(c) ..... 1345

s. 34(2)(b) ..... 1286, 1301

s. 48(1)(d) ..... 1346

s. 34(2)(b)(i) ..... 1298

s. 48(1)(e) ..... 1315, 1342, 1347

s. 34(2)(b)(ii) ..... 1299

s. 48(2)(a) ..... 1348

s. 34(2)(b), Explanation 2 ..... 1302

s. 48(2)(b) ..... 1349

s. 34(2A) ..... 1286, 1302

s. 48(3) ..... 1347

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Law, Practice and Procedure of Arbitration in India

s. 49 ..... 1338

s. 33(6)(b) ..... 1157

s. 50(1) ..... 1339

s. 35(1) ..... 1083, 1271

s. 50(1)(a) ..... 1338

s. 37(4) ..... 1285

s. 50(1)(b) ..... 1338

s. 47 ..... 923

s. 50(2) ..... 1339

Arbitration Act, 1940 art. VIII, Sch. II ..... 1249

s. 53 ..... 1358

Chapter II ..... 20

s. 56 ..... 1358

Chapter III ..... 20

s. 57(2)(a) ..... 1311

s. 2(1) ..... 996

s. 58 ..... 1359

s. 2(a) ..... 20

s. 66(3) ..... 1323

s. 5 ..... 374, 376

s. 33(2) ..... 1017

s. 6(1) ..... 380

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s. 52 ..... 1358

s. 11 ..... 374

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ss. 2(1)(c), 35 ..... 1005 ss. 2(2), 34

s. 16 ..... 093 s. 20 ..... 20

ss. 9, 17 ..... 1006 ss. 18, 22, 24 ..... 1290 ss. 47 and 49 ..... 168

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ss. 13(6), 29A(4) ..... 921

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ss. 8, 45 ..... 13

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Arbitration and Conciliation (Amendment) Act, 2015

s. 21 ..... 20 s. 28 ..... 780 s. 31 ..... 255 s. 31A(1) ..... 1222 s. 31(2) ..... 255 s. 34 ..... 403, 405, 420 s. 38(3) ..... 1249

s. 2(1) ..... 996

s. 39 ..... 20

s. 3 ..... 958

s. 41(b) ..... 932

ss. 3, 43-​I ..... 958

Sch. I, para. 6 ..... 773

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s. 2 ..... 1277, 1299, 1327

s. 4 ..... 934, 968

ss. 3 to 19 ..... 20

s. 5(2) ..... 27

ss. 8, 10, 11 ..... 21

s. 12 ..... 1339

ss. 16(2), (3) ..... 1094

s. 22 ..... 1349

ss. 21 to 25 ..... 20

s. 31(8) ..... 1190

ss. 26 to 38 ..... 20

s. 33 ..... 1026, 1167 s. 33(6)(a) ..... 1147

Arbitration Act, 1975 (UK) s. 1 ..... 407

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Table of Statutes Arbitration Act, 1889 (UK)

s. 31A ..... 768, 1185, 1189–​1190, 1204, 1221, 1230, 1241, 1262

s. 4. ..... 407

s. 31A(1) ..... 1253

Arbitration Act, 1996

s. 31A(2)(a) ..... 1204

s. 6 ..... 857

s. 31A(3) ..... 1197, 1248, 1251

s. 7 ..... 234

s. 31A(5) ..... 1194

s. 9 ..... 426–​427, 975, 977–​978, 987, 1127

s. 33(1)(a) ..... 1018

s. 8 ..... 381

s. 34 ..... 767, 785, 787, 813, 862, 985, 1007, 1219, 1251, 1273–​1274, 1277, 1282–​1284, 1286–​1287, 1289, 1296, 1307–​1308, 1315, 1325, 1327

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para. 4(viii) ..... 34

s. 33(4) ..... 1193

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s. 11 ..... 87 s. 11(4) ..... 87 s. 16(1) ..... 234

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s. 34(2) ..... 1274, 1282, 1287, 1307

s. 23 ..... 618

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s. 34(2)(a)(iv) ..... 1314

s. 24(1)(b) ..... 621

s. 34(2)(b) ..... 1315

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s. 28(1)(a) ..... 1277–​1278, 1365 s. 28(1)(b)(i) ..... 1365

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s. 28(1)(b) ..... 1365

s. 34(3) ..... 1325

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s. 28 ..... 1380

s. 28(1)(b)(iii) ..... 1382

s. 34(4) ..... 1312–​1313 s. 34(5) ..... 1275 s. 34(6) ..... 1308 s. 36 ..... 78, 876, 1325 s. 37(1)(a) ..... 1153

s. 29 ..... 926, 1140

s. 37(1)(b) ..... 1148, 1173

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s. 28(3) ..... 1365–​1366

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s. 29A ..... 781–​782, 815

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s. 29B ..... 787

s. 41 ..... 814 s. 42 ..... 1283 s. 43(4) ..... 1311

s. 30 ..... 23

s. 44 ..... 976–​977, 1332, 1352

s. 31(3) ..... 1048

s. 45 ..... 1332, 1338, 1342

s. 31(7) ..... 1140, 1150–​1151, 1161, 1168

s. 47 ..... 868–​869, 1338

s. 31(7)(1) ..... 1146

s. 47(2) ..... 869

s. 31(7)(a) ..... 1141, 1148, 1150, 1154

s. 48 ..... 970, 1306–​1307, 1338, 1342, 1359

s. 31(7)(b) ..... 1148, 1150, 1165, 1169–​1170, 1173

s. 49 ..... 1139, 1141, 1149

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s. 2F ..... 877

s. 31(8) ..... 1190, 1194, 1223

s. 50 ..... 1339 s. 50(1) ..... 1339

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Law, Practice and Procedure of Arbitration in India s. 29A(4) ..... 659

s. 57 ..... 1359

s. 29B ..... 24

s. 59(1) ..... 1253

s. 31(8) and 31A ..... 1249

s. 60 ..... 1195

s. 31-​A ..... 411

s. 66(2) ..... 1324

s. 36 ..... 78, 1325

s. 82(1) ..... 354

ss. 75 and 81 ..... 1349

ss. 27(3) and 27(4) ..... 862

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s. 56 ..... 870

Arbitration Act (2018 Amendment Act)

ss. 28(2) and 28(3) ..... 1366

art. 257 ..... 925

ss. 34 and 48 ..... 1307

Arbitration Act (2019 Amendment Act) s. 3 ..... 26, 614

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ss. 47 and 48 ..... 869 Arbitration Act (2015 Amendment Act)

s. 5 ..... 24

s. 5(2) ..... 27

s. 2 (II) ..... 29

s. 6 ..... 24

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s. 2(I)(A) ..... 29 s. 4 ..... 267

s. 9 ..... 35

s. 10 ..... 35

s. 7 ..... 30 s. 8 ..... 267, 277

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s. 8, Explanation 1 ..... 25

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s. 5(3) ..... 27

s. 11 ..... 26, 601, 958 s. 11(6A), (7) and (10) ..... 606 s. 11(7) ..... 614 s. 29A ..... 37

s. 11 ..... 26, 267, 957

s. 29A(1) ..... 558

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ss. 9 and 37 (1)(b) ..... 29

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s. 12 ..... 638, 721

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s. 12(5) ..... 558

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s. 13(8) ..... 571

s. 31(3) ..... 55 s. 34 ..... 30 s. 43J ..... 35, 87, 548 s. 43J101 ..... 35

s. 15 ..... 24

s. 45 ..... 26

s. 16(1) ..... 1148

s. 87 ..... 78

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s. 14 ..... 63

s. 17 ..... 932, 1204

Arbitration Act (2021 Amendment)

s. 18 (II) ..... 30

s. 3 ..... 548

s. 22 ..... 32

s. 4 ..... 548

s. 24(1) ..... 721

s. 36(3) ..... 31

s. 29A ..... 24 s. 29A(3) ..... 659

Arbitration Act art. 21 ..... 513

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Table of Statutes art. 142 ..... 1284

s. 8 ..... 25–​26, 66, 228, 251, 267, 269–​270, 278, 287, 369, 372–​374, 397, 400, 402–​404, 406, 408–​409, 420–​423, 428, 431, 446, 473, 606

Part 1A ..... 35, 606 Part II ..... 505, 759 s. 2 ..... 28

s. 8(1) ..... 257, 373, 386, 400, 410, 430–​ 431, 446–​447

s. 2(1)(a) ..... 39, 43

s. 8(2) ..... 410

s. 2(1)(b) ..... 368–​369

s. 9 ..... 27, 42, 101, 270, 278, 281, 395, 405–​406, 458, 472

s. 2(1)(e) ..... 489 s. 2(1)(e)(i) ..... 489

s. 10 ..... 60, 444, 450, 551, 578–​579, 583–​ 584, 587, 608, 658, 543

s. 2(1)(e)(ii) ..... 489

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s. 10(1) ..... 544, 547, 551, 578–​ 579, 584, 598

s.2(1)(f) ..... 156

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s. 2(1)(g) ..... 309, 380

s. 10(2) ..... 60, 225, 411, 582, 608 s. 11 ..... 26, 53, 61, 87, 138, 251, 266, 270, 294, 330, 391, 395, 411, 542, 544, 551, 557–​558, 563, 587, 590–​ 591, 598, 600–​607, 609–​610, 614–​ 616, 664

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s. 2(1)(h) ..... 276–​278, 299 s. 2(2) ..... 27

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s. 2(4) ..... 142

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s. 2(b) ..... 320 s. 3(1) ..... 513

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s. 3(2) ..... 513, 522

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s. 3 ..... 521

s. 3(3) ..... 711

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s. 2(1) ..... 28

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s. 4 ..... 254, 261, 661

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s. 5 ..... 398, 401, 406, 410, 473, 601, 605

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s. 6(A) ..... 600

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s. 7 ..... 65, 171–​172, 187, 198–​199, 204–​ 205, 278, 320, 368, 402, 699

s. 11(1) ..... 568, 574, 588, 602 s. 11(1) ..... 418, 574 s. 11(1) to 11(3) ..... 544 s. 11(1)(h) ..... 418 s. 11(2) ..... 520, 587, 592, 609 s. 11(12) ..... 591, 603 s. 11(3) ..... 418, 552, 556, 587, 591, 607 s. 11(3) or 11(5) ..... 600

s. 7(1) ..... 27, 173, 175–​176, 279, 342, 351, 369, 428

s. 11(3A) ..... 601, 603

s. 7(2) ..... 369, 372

s. 11(4) and 11(5) ..... 614

s. 7(3) ..... 226, 368–​369, 428

s. 11(4)(a) ..... 607

s. 7(4) ..... 198, 202–​203, 368

s. 11(4)(b) ..... 607

s. 7(4)(b) ..... 228

s. 11(5) ..... 556, 591–​592, 593, 600, 602, 608–​609

s. 7(5) ..... 198, 199, 207, 217, 369

s. 11(4) ..... 552, 556, 587, 591–​592, 607

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Law, Practice and Procedure of Arbitration in India

s. 11(6) ..... 266, 549, 562, 564, 576, 600, 602, 604, 609, 611

s. 14(1)(a) ..... 565, 653, 657

s. 11(6) or 11(9) ..... 562

s. 14(a) ..... 376

s. 11(6A) ..... 268–​ 269, 393, 557, 601, 603, 606

s. 15 ..... 61, 548, 623

s. 14(2) ..... 375, 659

s. 15(1) ..... 378

s. 11(6B) ..... 601, 603

s. 15(1)(a) ..... 664

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s. 11(7) ..... 614

s. 15(2) ..... 585

s. 11(8) ..... 571, 610, 612

s. 15(2) ..... 378, 664

s. 11(9) ..... 567, 583, 613

s. 15(3) ..... 379, 665

s. 12 ..... 61, 222, 572, 595, 622, 627, 700, 785

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s. 15(4) ..... 379, 665

s. 12(1)(a) ..... 627

s. 16 ..... 26, 238, 240, 248, 253, 255–​256, 258, 261, 263, 266, 268–​270, 275, 294, 371, 473, 605

s. 12(1)(b) ..... 627

s. 16(1) ..... 230, 240, 255

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s. 12(1) ..... 558, 612

s. 12(2) ..... 574, 627

s. 16(1)(a) and (b) ..... 239

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s. 12(3) ..... 62, 375 s. 12(3)(a) ..... 711 s. 12(3)(a) and (b) ..... 374

-N

s. 16(2) ..... 239, 260, 1223 s. 16(3) ..... 256, 258, 260–​261 s. 16(4) ..... 258, 261 s. 16(5) ..... 271

s. 12(4) ..... 572

s. 16(6) ..... 251

co

py

s. 12(3)(b) ..... 567, 621

s. 12(5) ..... 376, 565, 580, 612, 630, 639

s. 17 ..... 27, 456, 1127 s. 18 ..... 429, 665, 710, 714, 721, 711, 714, 838, 1386

s. 13 ..... 375, 652–​654, 659, 664, 711

s. 19 ..... 40, 64, 728, 743, 763, 772

s. 13(1) ..... 374, 572, 622, 652, 667

s. 19(1) ..... 64, 837, 865

s. 13(2) ..... 375, 572, 622, 652–​654, 661 s. 13(3) ..... 375, 653

s. 19(2) ..... 64, 708, 772, 783, 793, 837, 865, 872

s. 13(3) ..... 653

s. 19(3) ..... 64, 708, 730, 772, 793, 837, 872

s. 13(4) ..... 375

s. 19(4) ..... 772, 837

s. 13(5) ..... 375, 653–​654

s. 20 ..... 489

s. 13(6) ..... 61

s. 20(3) ..... 717

s. 14 ..... 135, 375–​376, 547, 623, 658–​659

s. 21 ..... 504, 508–​509, 513–​514, 516, 522, 525–​527, 529, 537–​538, 540, 747

E-

re v

ie

w

s. 12, Explanation 1 ..... 639

s. 14(1) ..... 657, 659

ccxxxi

Table of Statutes s. 29A(5) ..... 782

s. 23(1) ..... 764

s. 29A(6) ..... 782

s. 23(2) ..... 765, 838

s. 29A(8) ..... 783

s. 23(2A) ..... 767

s. 29A(9) ..... 782

s. 23(3) ..... 360, 768

s. 29B ..... 24, 152, 715, 787

s. 23(4) ..... 765

s. 29B(3)(a) ..... 715, 787

s. 24 ..... 711, 715, 789, 839

s. 29B(3)(b) ..... 787

s. 24(1) ..... 717, 785, 787, 835, 836

s. 29B(3)(c) ..... 715

s. 24(2) ..... 714, 718–​719, 801

s. 29B(3)(d) ..... 787

s. 24(3) ..... 710, 714, 839

s. 29B(4) ..... 787

s. 25 ..... 806–​808, 830

s. 29B(5) ..... 29A(3) 787

s. 25(3) ..... 881

s. 30 ..... 34, 46, 1226

s. 25(a) ..... 807, 808

s. 31(7) ..... 1118, 1140, 1151, 1153

fo

rC

irc

ul at io n

s. 22(4) ..... 759, 839

s. 25(b) ..... 350, 766, 808, 815

s. 31(7)(a) ..... 1144, 1153

-N

s. 26 ..... 55 s. 27 ..... 773–​774

py

s. 27(2) ..... 773

w

s. 27(6) ..... 773

co

s. 27(3) ..... 773 s. 27(4) ..... 773

s. 31(8) ..... 411, 1180, 1191, 1247, 1251

ot

s. 25(c) ..... 350, 720, 767, 808

s. 31(A)(1) ..... 1222 s. 31A ..... 105, 411, 670, 1184, 1192, 1247, 1251 s. 31A(2) ..... 1189, 1199 s. 31A(2)(a) ..... 1190 s. 31A(2)(b) ..... 1190, 1209 s. 31A(3) ..... 1249

s. 28(1)(a) ..... 63, 168–​169

s. 31A(5) ..... 1254

s. 28(1)(b)(i) ..... 63

s. 32 ..... 1097

E-

re v

ie

s. 28 ..... 63, 108, 157, 712, 1363, 1380, 1387

s. 31A(3)(d) ..... 1227, 1242

s. 28(1)(b)(ii) ..... 63, 1365

s. 33 ..... 66

s. 28(2) ..... 41, 63, 713, 1366

s. 33(1)(a) ..... 1077, 1085

s. 28(3) ..... 63, 1369

s. 33(1)(b) ..... 1085

s. 29A ..... 24, 157, 549, 658

s. 34 ..... 30–​34, 66, 157, 251, 259–​260, 262–​ 263, 269–​ 270, 274, 375, 384, 517, 538, 653–​654

s. 29A(1) ..... 558, 659 s. 29A(3) ..... 781 s. 29A(4) ..... 781, 783

s. 34(2)(a)(ii) ..... 719

ccxxxii

Law, Practice and Procedure of Arbitration in India s. 43(1) ..... 507, 527

s. 34(2)(b)(ii) ..... 627, 730

s. 43(2) ..... 509, 527

s. 34(2)(iii) ..... 522

s. 43(3) ..... 18, 507, 529–​531, 533–​535

s. 34(2)(v) ..... 654, 710

s. 43(4) ..... 528

s. 34(4) ..... 33, 66

s. 43B ..... 35

s. 35 ..... 33, 40, 64, 70, 277

s. 43C ..... 35

s. 36 ..... 31–​33, 260, 262

s. 43D ..... 35

s. 36(2) ..... 33

s. 43J ..... 35, 548, 569, 576, 611

s. 36(3) ..... 31

s. 43K ..... 125–​126

s. 37 ..... 34, 259, 262–​263, 271, 404

s. 44 ..... 177

s. 37(1)(a) ..... 404 s. 37(1)(b) ..... 262

s. 45 ..... 25, 27, 57, 228, 287, 386, 420–​ 421, 431, 437, 452–​453, 473

s. 37(2)(a) ..... 270–​272, 274

s. 48 ..... 26, 31–​32

s. 38 ..... 685, 690

s. 48(1) ..... 32

irc

rC

fo

s. 48(1)(a) ..... 279

s. 39(1) ..... 689

w

s. 39(4) ..... 689

co

s. 39(2) ..... 682, 689

py

s. 39 ..... 685, 692

s. 48(1)(d) ..... 729

-N

s. 38(2) ..... 119, 690–​692

ot

s. 38(1) ..... 682

s. 39(3) ..... 689

ul at io n

s. 34(2)(a)(iii) ..... 522, 711, 719

ie

s. 40 ..... 309, 381

s. 40(1) ..... 312, 380

s. 57 ..... 870 s. 62 ..... 34 s. 74 ..... 34 s. 87 ..... 78 s. 89 ..... 368 Schedule VI ..... 24 ss. 5 and 16 ..... 473 ss. 6 and 7 ..... 444

s. 40(3) ..... 311, 381

ss. 7(1) and 7(2) ..... 170–​171

s. 41(1) 382

ss. 7(3) to 7(5) ..... 171

s. 41(2) ..... 312, 382

ss. 8 and 11 ..... 606

s. 41(3) ..... 382

ss. 8, 11, ..... 29A, 33(3), 33(4), 34(3) and 37 526

E-

re v

s. 40(2) ..... 380

s. 42 ..... 489 s. 42A ..... 125–​126, 130, 132 s. 42B ..... 61, 222 s. 43 ..... 64, 507, 509, 513, 526

ss. 8 and 45 ..... 250, 277, 294, 443, 450, 474, 496 ss. 8 and 54 ..... 448

ccxxxiii

Table of Statutes art. 3(2) ..... 508

ss. 9, 27 ..... 26

art. 5 ..... 96

ss. 10(1) and 11(2) ..... 549

art. 30(1) ..... 813

ss. 11 (4), (5), (6), (8), and (9) ..... 606

r. 2 ..... 508, 510

ss. 11(1) to 11(8) ..... 599

r. 5 ..... 625

ss. 11(4) and 11(5) ..... 564

r. 6(g) ..... 1137

ss. 11(4), (5), (6) ..... 167

r. 12.2 ..... 656

ss. 11(4), 11(5), and 11(6) ..... 615

r. 14 ..... 687, 689

ss. 11(6) read with 11(12)(a) ..... 565

r. 32.9 ..... 1167, 1174

ss. 11(6A), 11(9) to 11(14) ..... 599

s. 5, Sch. II and Sch. III ..... 1224

ss. 13 and 14 ..... 378, 664

Sch. 1 ..... 673

ss. 13(6) ..... 61

Sch. 14.9 ..... 671

irc

rC

Australian Arbitration Act

fo

ss. 14 and 15 ..... 563 ss. 31-​A and 31(8) ..... 411

s. 25 ..... 1149

ss. 34(2)(b) ..... 57

co

ss. 38(1) ..... 682

-N

ss. 34 and 48 ..... 98

py

ss. 34 and 37 ..... 384

ss. 25 and 26 ..... 1167

ot

ss. 31(8) ..... 682 ss. 34 and 36 ..... 26

w

Arbitration Institute of the Stockholm Chamber of Commerce, 2017

ie

art. 25(1) ..... 1379

re v

r. 28 ..... 27

E-

Arbitration C the Court of Arbitration for Sport r. 47 ..... 1268

ASEAN Agreement for the Promotion and Protection of Investments art. I(2) ..... 1403 Asian International Arbitration Centre (“AIAC”) Arbitration Rules (2018) art. 3 ..... 510

ul at io n

ss. 9 and 17 ..... 456

Australian Centre for International Commercial Arbitration (“ACICA”) Arbitration Rules, 2016 art. 22(2) ..... 125 art. 30.1 ..... 793 art. 31.2 ..... 871 art. 44(e) ..... 1181 Australian International Arbitration Act art. 18A.,626 arts. 23D(5)–​23D(6) ..... 123 s. 16, Sch. 2 ..... 448 s. 29(2) ..... 94 ss. 22(2) ..... 1197 Austrian Code of Civil Procedure (ZPO) art. 589 ..... 651 s. 591(2) ..... 664 s. 594(3) ..... 94

ccxxxiv

Law, Practice and Procedure of Arbitration in India

B

Bureau of Indian Standards Act, 1986 s. 3 ..... 1288

Bangladesh Arbitration Act, 2001

C

s. 40 ..... 1271

Chartered Institute of Arbitrators, Drafting Arbitral Awards Part I-​General

Bar Council of India Rules, 1975 r. 20 ..... 1254

art. 4 ..... 1027

r. 20 ..... 887

ul at io n

s. 40 ..... 1083

China-​India Agreement for Promotion and Protection of Foreign Investments, 2006

Belgian Judicial Code art. 1676(3) ..... 282

art. 14 ..... 1442

irc

art. 1683 ..... 972

China International Economic and Trade Arbitration Commission (“CIETAC”) 2015 Arbitration Rules

art. 1684 ..... 579, 584

rC

art. 1713 ..... 1004 art. 1715 ..... 1077

fo

art. 11 ..... 510

art. 1684 ..... 598

art. 22 ..... 877

-N

ot

The Bombay High Court (Original Side) Rules, 1980 r. 803B ..... 1275

py

Brazil–​India Investment Cooperation and Facilitation Treaty (2020)

co

arts. 13 and 19 ..... 1448

w

Brazilian Arbitration Act

ie

art. 21(3) ..... 94

Brazilian Arbitration Act, 1996

re v

art. 27 ..... 1196

E-

art. 30 ..... 1083

Brazilian Arbitration Act, 2015 art. 30 ..... 1271

Bundesgesetz über das Internationale Privatrecht (IRPG), Federal Law on International Private Law art. 176-​94 (18 December 1987) ..... 1134, 1139

arts. 35(5) and 37(1) ..... 756

Chinese Arbitration Law art. 30 ..... 579, 584, 598 Civil Law (Amendment) Act, 2017 s. 2 ..... 1256 s. 3 ..... 1256 Civil Procedure Code by way of Order XXV r. 2 ..... 1256 Civil Procedure Code, 1908 art. 809 ..... 598 Order VI ..... 1274 r. 2, Order 6 ..... 763 r. 2, Order XXV ..... 1256 r. 5, Order 38 ..... 763 r. 5, Order 38 ..... 989 r. 14(3), Order 7 ..... 864

ccxxxv

Table of Statutes s. 9 ..... 828, 951

s. 279 ..... 385

s. 11 ..... 1103

ss. 230–​231 and 270–​365 382

s. 20 ..... 489

Constitution of India arts. 131–​136 ..... 951

s. 34 ..... 1140, 1145

art. 142 ..... 109

s. 89 ..... 1226

arts. 226 or 227 ..... 813

ss. 15–​20 ..... 489

art. 227 ..... 767

ss. 35, 35A, and 35B ..... 1251

art. 298 ..... 283, 1288

ss. 36–​74, Order XXI ..... 1325, 1327

art. 299(1) ..... 283

rr 1, 2, Order 39 ..... 977

art. 299(2) ..... 283

rr. 1 and 2, Order 39 ..... 989

art. 300(1) 283

irc

ul at io n

s. 31A, ..... 1251

Constitution of the Islamic Republic of Iran 1979

rC

Civil Procedure Rules r. 62.18(6) ..... 1323

fo

art. 139 ..... 826

Code of Civil Procedure (CPC), 1908

Contract Act, 1872

ot

s. 2(11) ..... ..... 309

s. 11 ..... 1287

-N

s. 9 ..... 404–​406 s. 34 ..... 1145

py

s. 35 ..... 411 s. 35B ..... 411

w

s. 86 ..... 285

co

s. 35A ..... 411

ie

s. 88 ..... 460

re v

s. 89 ..... 368

s. 115 ..... 406

E-

s. 151 ..... 404–​405 rr. 1 and 2 ..... 405

Colombia–​Switzerland BIT (2006) art. 1(2)(b) ..... 1403 Commercial Courts Act, 2015 s. 12A ..... 7 Companies Act, 2013

s. 23–​24 ..... 1289 s. 28 ..... 490, 493, 496 Contracts (Rights of Third Parties) Act, 1999 s. 1 ..... 287 s. 8 ..... 287 Contracts (Rights of Third Parties) Act, 2002 s. 2 ..... 287 s. 9 ..... 288 Convention on the Settlement of Investment Disputes between States and Nationals of Other States art. 48(4) ..... 1067 art. 52(1)(a) ..... 1269 arts. 50–​52 ..... 1269

ccxxxvi

Law, Practice and Procedure of Arbitration in India

art. 52(1)(b) ..... 1269

r. 36 ..... 917

art. 52(1)(c) ..... 1269

DIS-​Arbitration Rules 1998

art. 52(1)(d) ..... 1269

s. 35.2 ..... 105

E

art. 52(1)(e) ..... 1269 art. 52(3) ..... 1269

Egyptian Arbitration Laws

Council of Bars and Law Societies of Europe Code of Conduct for European Lawyers

ul at io n

art. 15(2) ..... 579, 584

English Arbitration Act, 1996 s. 1 ..... 950, 974

r. 3.2 ..... 888

s. 2(1) ..... 1281, 1323

CSID Rules of Procedure for Arbitration Proceedings (Arbitration Rules)

irc

s. 2(2)(b) ..... 1324 s. 2(3) ..... 979

r. 47(2) ..... 1029

s. 6(2) 1996 ..... 211

rC

r. 47(1)(e) ..... 1026

s. 9(3) and (4) 432 s. 9(4) ..... 448, 454

ot

Delhi High Court (Original Side) Rules, 2018, Chapter III

fo

s. 9 420, 444, 450, 454, 953

D

-N

r. 6 ..... 1275

co

art. 2.1(b) ..... 1004

py

Delhi International Arbitration Centre (Arbitration Proceedings) Rules, 2018

s. 12 ..... 532, 959 s. 12(1)(d) ..... 963 s. 12(3) ..... 959 s. 12(6) ..... 963 s. 13 528, 532 s. 13(1) 528, 532

art. 22 ..... 748

s. 14 528, 532

art. 30 ..... 1010

s. 15(2) ..... 585

re v

ie

w

art. 21.5 ..... 1014

s. 17(2) 563

r. 2.1 (b) ..... 996

s. 18 ..... 956

r. 7.1 ..... 902

s. 19(1) ..... 1041

r. 13 ..... 787

s. 19B(2) ..... 1017

r. 14 ..... 1224

s. 20 ..... 1070

r. 15 ..... 27

s. 21 ..... 1071

r. 23(2) ..... 795

s. 22(2) ..... 1066, 1069

r. 26 ..... 785

s. 24 ..... 920, 962

r. 35 ..... 61, 925

s. 24(1)(a) ..... 911

E-

art. 32.2 ..... 1002

ccxxxvii

Table of Statutes s. 41(3) ..... 481, 940

s. 24(1)(d) 657

s. 41(4) ..... 938

s. 24(2) 651

s. 41(7) ..... 939

s. 24(4) ..... 664, 666, 921

s. 42 ..... 940

s. 27(5) ..... 983

s. 43 ..... 965, 983

s. 28 ..... 674, 685

s. 43(1) ..... 981

s. 28(2) 679

s. 43(3) ..... 984

s. 29 ..... 61, 923

s. 44 ..... 496, 965, 972, 974–​975

s. 30 ..... 930, 1009

s. 44(1) ..... 975–​976

s. 31(4) ..... 930

s. 44(2) ..... 976

s. 33 ..... 896, 906

s. 44(2)(a) ..... 984

s. 33(1)(b) ..... 904

s. 44(2)(c) ..... 987

s. 34 ..... 1029

s. 44(2)(c), (d) ..... 986

fo

rC

irc

ul at io n

s. 24(1)(c) 564

s. 34(1) ..... 934

s. 44(2)(e) ..... 988, 990

s. 34(2)(d) ..... 939 s. 34(2)(e) ..... 939

co

s. 34(2)(f) ..... 939

-N

s. 34(2)(c) ..... 936

py

s. 34(2)(b) ..... 936, 1029

s. 44(3) ..... 955, 960, 976

ot

s. 34(2)(a) ..... 935–​936

s. 44(5) ..... 976 s. 46 ..... 912 s. 47 ..... 1002, 1004 s. 48 ..... 1116 s. 48(3) ..... 1123

s. 34(4) ..... 969

s. 48(4) ..... 1119

s. 36 ..... 94

s. 48(5) ..... 1126

s. 37 ..... 938, 1070

s. 48(5)(a) ..... 1122, 1126

s. 38(3) 689, 942

s. 48(5)(b) ..... 1121

s. 38(4) ..... 931

s. 48(5)(c) ..... 1124

s. 38(6) ..... 931

s. 49 ..... 1049, 1118, 1139, 1143, 1159

s. 39 ..... 1017

s. 49(3) ..... 1139

s. 39(2) ..... 931, 1017

s. 49(4) ..... 1147

s. 40 ..... 904, 940

s. 50(1) ..... 966

s. 41 ..... 1014

s. 50(2) ..... 966

E-

s. 34(2)(h) ..... 937

ie

s. 48(1) ..... 1115, 1129

re v

w

s. 34(2)(g) ..... 939

s. 44(4) ..... 976

ccxxxviii

Law, Practice and Procedure of Arbitration in India

s. 51(2) ..... 1013

s. 68(2)(d) ..... 1294

s. 51(3) ..... 1012

s. 68(2)(g) ..... 1117

s. 52 ..... 1026

s. 68(3) ..... 1057, 1093, 1276

s. 52(1) ..... 1027

s. 68(3)(a) ..... 1093

s. 52(3) ..... 1026, 1028–​1030, 1067

s. 69 ..... 1273

s. 52(4) ..... 1012, 1026, 1044, 1065

s. 70(2) ..... 1267

s. 52(5) ..... 1026, 1034

s. 70(3) ..... 1033, 1037, 1284

s. 54(2) ..... 1033

s. 72 ..... 1282

s. 55(2) ..... 1035

s. 79 ..... 1084

s. 56

s. 82(1) 351

s. 56(2) 689

s. 99 ..... 1330

s. 57 ..... 995, 1001, 1004, 1016–​ 1017, 1074–​1075, 1088, 1270

s. 100(1) ..... 1335

ul at io n

s. 51 ..... 1010

s. 68 ..... 1290, 1293, 1296, 1299

fo

rC

irc

s. 50(3) ..... 966

ot

s. 101(2) ..... 1337 s. 101(3) ..... 1337

-N

s. 57(3) ..... 1077–​1078, 1085

s. 102 ..... 1330, 1336

s. 57(3)(b) ..... 1020, 1057

s. 103 ..... 1330, 1337, 1340–​1341

py

s. 57(3)(a) ..... 1021, 1033, 1064, 1066, 1077

s. 103(2)(b) 284

s. 57(7) ..... 1017, 1078

s. 103(2)(c) ..... 1343

s. 58 ..... 1005, 1021, 1319

s. 103(2)(d) ..... 1345

w

co

s. 57(4) ..... 1083–​1084, 1271

s. 103(2)(e) ..... 1346

s. 58(2) ..... 1097

s. 103(3) ..... 1348–​1349

s. 59(1) 670

s. 103(4) ..... 1345

s. 61 ..... 1049

s. 103(5) ..... 1347

s. 63 ..... 1247

s. 104 ..... 1330

s. 63(4) ..... 1249

ss. 2(1), 67–​69 ..... 1280

s. 66 ..... 969, 1099

ss. 5(2)(c) and 5(4)

s. 66(1) ..... 1323

ss. 8, 45 ..... 953

s. 66(4) ..... 1351

ss. 8, 9, 11, 13, 14, 27, 29A, 34, 36, 37, 43, and 45 ..... 951

E-

re v

ie

s. 58(1) ..... 995, 1003, 1075, 1096, 1112, 1265

s. 67 ..... 1287–​1288, 1298

s. 103(2)(f) ..... 1347

ccxxxix

Table of Statutes ss. 9(1)(ii)(a), 9(1)(ii)(c) ..... 986

EU–​Vietnam Free Trade Agreement

ss. 24(1)(a), 33 ..... 907

art. 20 ..... 1446

F

ss. 31, 33–​36 ..... 998 ss. 34, 48 ..... 1053, 1062, 1280

Federal Arbitration Act, 1925

ss. 35, 46 ..... 1265

s. 7 ..... 939

ss. 36, 48 ..... 969

ss. 9–​10 ..... 1266

ss. 43(2), 44(3) ..... 979

ss. 9–​11 ..... 1076

ss. 44, 53 ..... 970

Federal Arbitration Act (USA)

ss. 47, 49 ..... 970

irc

s. 11 ..... 1019

ss. 48, 57 ..... 1330

Foreign Limitation Periods Act, 2012

ss. 49(3) and 49(4) ..... 1167

rC

s. 11(1) ..... 528

ss. 52, 57, 66–​69 ..... 998

fo

French Arbitration Law 2011

ss. 52(5), 54 ..... 1033

Article 1511 ..... 1382

py

ss. 57(1), 57(5) ..... 1084

-N

ss. 57(1), 57(3)(b) ..... 1090, 1272

ss. 61(1), 61(2), 62, 63(1), and 64(1) ..... 1196

co

ss. 67, 68 ..... 1053

w

ss. 67–​69 ..... 968, 1266, 1282

ie

ss. 100–​104 ..... 1330

re v

ss. 103(2)(a), 103(2)(b) ..... 1342 English Limitation Act, 1980

E-

s. 5 ..... 528, 533 s. 7 ..... 1329, 1331 s. 8 ..... 1329, 1331

European Convention on International Commercial Arbitration, 1961 arts. VI(1) and VI(3) ..... 826 EU–​Singapore Free Trade Agreement s. B, art. 9.22..... 1446

French Code of Civil Procedure

ot

ss. 57, 68(2)(h) ..... 1066

ss. 58(2), 70 ..... 1004

ul at io n

s. 11 ..... 1078, 1083

ss. 43, 44 ..... 978

art. 1451 ..... 579, 584, 598 art. 1445 ..... 265 art. 1448 ..... 264 art. 1448(1) ..... 449 art. 1465 ..... 264 art. 1485 ..... 1077 art. 1485(2) ..... 1088, 1090 art. 1522 ..... 493 arts 1475, 1476, (2) ..... 1075

G Geneva Convention on the Execution of Foreign Arbitral Awards, 1927 art. 1 ..... 1321 Geneva Convention on the Execution of Foreign Arbitral Awards, 1929 art. 1 ..... 1356 arts. 1–​4 ..... 1356

ccxl

Law, Practice and Procedure of Arbitration in India

art. 2 ..... 1311, 1357

Hong Kong Arbitration Ordinance, 2011

art. 3 ..... 1357

s. 4(1) ..... 528

Geneva Convention

s. 13(2) ..... 957 s. 14 ..... 528

art. 1(2)(d) ..... 545

s. 14(1) ..... 528

arts. 1 and 4(1) ..... 444–​446

s. 18(2)(a) ..... 123

art. 4 ..... 373, 400, 446

s. 20 ..... 420

art. 4(1) ..... 373

s. 20(1) ..... 448

art. IV ..... 870

s. 25(2) ..... 621 s. 26 ..... 651

irc

Geneva Protocol on Arbitration Clauses, 1923

ul at io n

art. 1 ..... 373, 445

s. 34(1)(3) ..... 930

art. 2 ..... 545, 1356

s. 34(4) ..... 271

art. 3 ..... 1356

s. 60 ..... 972

fo

rC

art. 1 ..... 1355–​1356

German Arbitration Act (1998)

s. 63 ..... 94 s. 68 ..... 1075

-N

German Code of Civil Procedure s. 1032(1) ..... 265

py

s. 1032(2) ..... 265 German Penal Code

w

co

ss. 331(2), 332(2), 336 ..... 921 German ZPO

ie

s. 1042 ..... 94

re v

s. 1058 ..... 1077

ss. 1058(1), 1058(2) ..... 1088

E-

s. 1058(1)(3) ..... 1090

The Grain and Feed Trade Association Arbitration Rules No. 125

s. 74(2) ..... 1227 s. 74(8) ..... 1195 s. 75 ..... 1219 s. 77 ..... 687 s. 78 ..... 685 s. 79 ..... 1139, 1159, 1167 s. 79(1) ..... 1149, 1157 s. 79(1)(a) ..... 1147 s. 104 ..... 923

Hong Kong International Arbitration Centre (“HKIAC”) Arbitration Rules, 2018 art. 11.4 ..... 625

rr. 10–​12 ..... 1268

H Hong Kong Arbitration (Amendment) Ordinance, 2017 Part 11A ..... 59

ot

s. 1037(3) ..... 651

art. 11.7 ..... 661 art. 13.6 ..... 877–​878 art. 15 ..... 795 art. 19 ..... 360

ccxli

Table of Statutes art. 4 ..... 872

art. 23(9) ..... 401

art. 4.2 ..... 844

art. 26 ..... 809

art. 4(7) ..... 847

art. 27.1 ..... 793

art. 5 ..... 872

art. 34 ..... 105, 1182

art. 6 ..... 872

art. 41 ..... 689

art. 7 ..... 872

art. 42 ..... 787

art. 8 ..... 872

arts. 6–​12 ..... 592

art. 9 ..... 872, 1228

r. 4.2 ..... 510

art. 9(2) ..... 1228

r. 12.3 ..... 664

art. 9(3) ..... 1228

rr. 11.7, 11.8, and 11.9 ..... 650

art. 9(3)(b) ..... 1228

Sch. 2 ..... 671, 685

art. 9(7) ..... 1211

Sch. 2, art. 10 ..... 695

Guideline 9 ..... 847

irc

rC

Guideline 24 ..... 848

ss. 44, 45, and 47 ..... 877

co

Principle 4.16 ..... 887

py

Hong Kong Solicitors Guide to Professional Conduct

-N

s. 64 ..... 887

w

Housing Grants, Construction and Regeneration Act, 1996

re v

ie

s. 108 ..... 56

I

E-

IBA Guidelines on Conflicts of Interest in International Arbitration, 2014

art. 2 ..... 872 art. 3 ..... 776 art. 3.1 ..... 841 art. 3.9 ..... 863

IBA Rules of Ethics for International Arbitrators 1987

ot

Hong Kong Legal Practitioners Ordinance

IBA Rules

fo

Sch. 4 ..... 1224

r. 6 ..... 630

ul at io n

art. 22 ..... 785

art. 5(4) ..... 912 art. 9 ..... 917 arts. 1, 7 ..... 904 IBA Rules on the Taking of Evidence in International Arbitration (2010) art. 3 ..... 872 art. 7 ..... 801 art. 9 ..... 776–​777 Insolvency and Bankruptcy Code (IBC), 2016 s. 5(1) ..... 312 s. 5(27) ..... 312 s. 7 ..... 382 s. 9 ..... 382 s. 9(5)(ii)(d) ..... 384 s. 13 ..... 382

ccxlii

Law, Practice and Procedure of Arbitration in India

s. 14 ..... 312, 314

Indian Council of Arbitration (“ICA”) Rules of Domestic Commercial Arbitration and Conciliation, 1996

s. 14(1) (a) ..... 313, 382, 384 s. 14(4) ..... 313, 383

r. 15 ..... 508, 510

s. 25(2)(b) ..... 312 s. 33(5) ..... 314

ul at io n

Indian Council of Arbitration (“ICA”) Rules of Domestic Commercial Arbitration and Conciliation, 2016

s. 33 ..... 314

r. 20 ..... 877

s. 35(1) ..... 314

r. 22(a) ..... 583

s. 53 ..... 314

r. 28 ..... 61

s. 238 ..... 383

r. 31 ..... 673

ss. 33–​54 and 59 ..... 382

r. 45 ..... 96

irc

s. 34(1) ..... 314

ILC Responsibility of States for Internationally Wrongful Acts 2001

rC

r. 79 ..... 61

fo

Indian Evidence Act, 1872 s. 1 ..... 777

arts. 36(1) and (2) ..... 1420

ot

s. 3 ..... 1041

Indian Arbitration Act, 1899

-N

s. 2(a) ..... 20 Section 2.3 ..... 20

py

India–​China BIT

co

Article 14 ..... 1441–​1442 Indian Contracts Act

w

s. 11 ..... 280, 564

ie

s. 12 280, 282

re v

s. 182 ..... 300 s. 186 ..... 300

E-

s. 28 ..... 173, 487, 498, 530–​531 s. 28(1)(a) ..... 1367 s. 28(b) ..... 531 s. 37 ..... 295 s. 62 298 s. 70 ..... 692, 698 s. 71 ..... 688

s. 45 ..... 55 s. 81 ..... 777 s. 104 ..... 849 s. 108 ..... 424, 850 s. 122 ..... 777 s. 123 ..... 777 s. 126 ..... 777–​778 ss. 135 to 166 ..... 845

Indian Partnership Act, 1932 s. 19 ..... 300–​301 Indian Stamp Act, 1899 art. 12 ..... 1032 s. 3, Sch. I, Entry 12 ..... 1327 s. 35 ..... 391, 1027, 1032, 1328 s. 35 or s.40 ..... 394 s. 38 ..... 392, 394 ss. 33, 35 ..... 1032

ccxliii

Table of Statutes Interest Act, 1978

art. 16(2) ..... 748

s. 1 ..... 1140

art. 24.1 ..... 793

s. 2 ..... 1161

art. 24(3) ..... 401

s. 3 ..... 1140, 1160, 1161

art. 30(3) ..... 118 art. 34 ..... 105, 1182 art. 37 ..... 117

arts. 11–​13 ..... 592

International Centre for Alternate Dispute Resolution (“ICADR”) Arbitration Rules, 1996, r. 3(2), 510

art. 1(1) ..... 1038

irc

International Arbitration Practice Guideline by CIArb art. 2(ii) ..... 693

r. 3 ..... 508, 510

rC

art. 2(ii)(c) ..... 693

International Centre for Settlement of Investment Disputes (“ICSID”) Administrative and Financial Regulations

fo

arts. 11 to 13 ..... 619

ot

International Arbitration Act, 2002

r. 25 ..... 1428

-N

art. 33 ..... 1271 art. 33(1)(b) ..... 1271

py

s. 6 ..... 953 s. 10 ..... 930

w

co

s. 12A ..... 955, 986–​987 s.18 ..... 1010

ul at io n

International Arbitration Practice Guideline, Drafting Arbitral Awards, Part I –​General, Chartered Institute of Arbitrators

ie

s. 19A ..... 1002

re v

s. 19B ..... 1005

s. 19B(1) ..... 995

E-

s. 25A ..... 923 s. 30 ..... 1336

ss. 2(1), 19A ..... 1004

International Centre for Settlement of Investment Disputes (“ICSID”) Arbitration Rules, 2006 art. 28(2) ..... 1218 r. 6(1) ..... 508 r. 15(2) ..... 1446 r. 39(5) ..... 1428 r. 42 ..... 809 rr. 31(1) and 31(2) ..... 765 International Centre for Settlement of Investment Disputes (“ICSID”) Convention

ss. 6 and 7 ..... 450

art. 25(1) ..... 1399, 1405, 1406

ss. 9A, 9B ..... 957

art. 25(a) AA ..... 823

International Centre for Dispute Resolution (“ICDR”) Arbitration Rules, 2014

art. 26 ..... 1429 arts. 28–​35 ..... 1408 art. 38 ..... 1428

ccxliv

Law, Practice and Procedure of Arbitration in India

art. 39 ..... 1429

rr. 47(1), 47(2) ..... 1026

art. 41(1) ..... 482

International Centre for Settlement of Investment Disputes (“ICSID”) and UNCITRAL Draft Code of Conduct for Adjudicators in Investor State Dispute Settlement, 2020

art. 42(1) ..... 1389 art. 47 ..... 1423 arts. 50–​52 ..... 1433

art. 4 ..... 909

art. 52 ..... 1430

art. 5 ..... 902

art. 52(1) ..... 1433

art. 8 ..... 904

art. 52(6) ..... 1433

art. 8(2) ..... 905

art. 53 ..... 1430, 1432, 1434

art. 9 ..... 917

irc

arts 53 and 54 ..... 1432

International Chamber of Commerce (“ICC”) Rules of Arbitration, 2012

rC

art. 54 ..... 1431, 1433 arts 54–​55 ..... 1431

fo

art. 4(2) ..... 508

arts. 60–​61 ..... 1430

art. 23(4) ..... 259

ot

art. 61(2) ..... 1425

art. 27 ..... 793

-N

arts. 18–​24 ..... 1429

w

r. 25 ..... 750

co

py

International Centre for Settlement of Investment Disputes (“ICSID”) Rules of Procedure for Arbitration Proceedings (Arbitration Rules) r. 6(1) ..... 510

ul at io n

arts. 50–​55 ..... 1430

art. 29(7) ..... 401 art. 37(4) ..... 1247 International Chamber of Commerce (“ICC”) Rules of Arbitration, 2017 app. I, art. 1.4 ..... 685 app. III, art. 3 ..... 673

r. 41(5) and (6) ..... 357

art. 1(2) ..... 221

r. 47 ..... 1026

art. 2(v) ..... 1002, 1004

r. 47(1)(c) ..... 1027

art. 2(v) ..... 996, 1002, 1004

r. 47(1)(g) ..... 1027

art. 3. ..... 751

r. 47(1)(h) ..... 1027

art. 4(2) ..... 510

r. 47(1)(i) ..... 1026

art. 6(5) ..... 1009

r. 47(1)(j) ..... 1027

art. 6(6), Appendix V ..... 1224

r. 47(1) ..... 1028

art. 11(1) ..... 907

r. 47(3) ..... 1067

art. 11(2) ..... 560, 625

E-

re v

ie

r. 27 ..... 661

ccxlv

Table of Statutes arts 6(3), 26(2) ..... 1014

art. 14(2) ..... 661

arts 36(1), 36(2) ..... 1017

art. 15(2) ..... 920

para. 119 ..... 920

art. 15.4 ..... 664

para. 120 ..... 920

art. 18(1) ..... 1034

para. 121 ..... 920

art. 18(2) ..... 1034

r. 22 ..... 721

art. 20 ..... 81, 1029

Sch. 37.2 ..... 671

International Chamber of Commerce (“ICC”) Rules, 2021

art. 21 ..... 912 art. 22(1) ..... 904

art. 1(1) ..... 1382

art. 22(3) ..... 113, 129, 117, 917

irc

art. 2(v) ..... 996

art. 23(1)(d) ..... 1041

art. 6(5) ..... 1009

rC

art. 24 ..... 748, 789

art. 11 ..... 560, 567, 902

art. 26(2) ..... 721

fo

art. 13.5 ..... 567

art. 27 ..... 1016

art. 18(1) ..... 1378

ot

art. 28(2) ..... 1128 art. 32(1) ..... 1069, 1071

py

art. 32(2) ..... 1026, 1044

-N

art. 18.1 ..... 935

art. 31 ..... 904

art. 32(3) ..... 1026, 1033, 1034

w

co

art. 33 ..... 1010, 1013, 1015 art. 34 ..... 1015

ul at io n

art. 14 ..... 650

ie

art. 35(1) ..... 1037

re v

art. 35(6) ..... 492, 1098 art. 36 ..... 1004, 1078

art. 18.2 ..... 936 art. 20 ..... 936 art. 22(3) ..... 919 art. 22(4) ..... 896 art. 24 ..... 756 art. 26(3) ..... 919 art. 26.4 ..... 877 art. 28 ..... 934 art. 28(2) ..... 960, 972

art. 36(3) ..... 1017, 1020, 1074, 1089, 1270

art. 29 ..... 934, 955 art. 35 ..... 1035

art. 36(4) ..... 1017, 1085

art. 35(6) ..... 1265

art. 38 ..... 105, 129, 1049

art. 36(2) ..... 1088

art. 38(3) ..... 1218

art. 37 ..... 943

art. 41 ..... 925

art. 38 ..... 1180

art. 42 ..... 1052

art. 38(1) ..... 1181

E-

art. 36(2) ..... 1021, 1074, 1084, 1270

ccxlvi

Law, Practice and Procedure of Arbitration in India

International Chamber of Commerce (“ICC”) Rules of Arbitration

art. 137 ..... 507, 1331 s. 3 ..... 527

art. 3(5) ..... 716

s. 5 ..... 1284

art. 4 ..... 514, 752

s. 14 ..... 1285

art. 23(1) ..... 728

s. 29(2) ..... 526

art. 23(3) ..... 728 art. 28(2) ..... 401 art. 30(1) ..... 656

art. 1 ..... 510

arts. 11–​13 ..... 592

art. 5 ..... 556

International Council for Commercial Arbitration (“ICCA”)

art. 5.1 ..... 556

irc

art. 5.3 ..... 907

art. 3 ..... 751

rC

art 5.4 ..... 625

Irish Arbitration Act, 2010

art. 9.13 ..... 960

s. 21(1) ..... 1195, 1196

fo

art. 9B ..... 934, 955, 1224

Italian Code of Civil Procedure

ot

art. 9B ..... 401

art. 809 ..... 584, 579

art. 10 ..... 650

-N

art. 816 ..... 917

J

py

art. 814 ..... 674, 685

w

co

Japanese Arbitration Law art. 47 ..... 674

ul at io n

London Court of International Arbitration (“LCIA”) Rules, 2014

ie

arts. 16–​22 ..... 664

re v

K

E-

KLRCA Fast Track Arbitration Rules (Revised 2013)

art. 10.3 ..... 661 art. 12 ..... 1071 art. 14 ..... 906 art. 14.1 ..... 896 art. 14.6 ..... 905, 907, 935 art. 14.7 ..... 946 art. 14A ..... 915 art. 15 ..... 765, 1041 art. 15.8 ..... 938

art. 9 ..... 707

KLRCA UNCITRAL Rules (Revised 2010) art. 41(1) ..... 702

art. 16.1 ..... 1034 art. 16.2 ..... 935

L Limitation Act, 1963

art. 10(2) ..... 920

art. 16.3 ..... 936, 1034 art. 17 ..... 1029

art. 4 ..... 110

art. 17(5) ..... 1029

art. 136 ..... 1329

art. 17.4 ..... 936

ccxlvii

Table of Statutes arts. 5.4, 5.5 ..... 902

art. 19 ..... 785, 939

arts. 10.1 and 10.4 ..... 650

art. 19(4) ..... 919

arts. 22(1)(iii) and 22(1)(iv) ..... 801

art. 21 ..... 938

arts. 22.3, 22.4 ..... 912

art. 22.1 ..... 947

r. 26.4 ..... 1137, 1174

art. 22.1(4) ..... 801

r. 28.4 ..... 1199, 1209

art. 23.1 ..... 930, 1009

r. 28.5 ..... 1195

ul at io n

art. 17.5 ..... 936

London Court of International Arbitration (“LCIA”) Rules, 2017

art. 24 ..... 943 art. 25 ..... 934 art. 26 ..... 1026

irc

para. 8 ..... 902

art. 26.1 ..... 1002, 1004

para. 10-​12 ..... 902, 905

py

-N

art. 26.6 ..... 1030, 1067 art. 26.8 ..... 1098, 1265 art. 26.9 ..... 1010, 1012

co

art. 27 ..... 1004, 1078, 1088

w

art. 27.1 ..... 1017, 1021, 1074, 1085

ie

art. 27.3 ..... 1020, 1074, 1089, 1270

re v

art. 27.5 ..... 1017 art. 30 ..... 1071

E-

art. 30(1) ..... 919 art. 30(2) ..... 917 art. 30A ..... 920 art. 31 ..... 925 art. 31.2 ..... 925 art. 32.2 ..... 1052 arts. 4.2, 15.1, 15.6, 15.7 ..... 936 arts. 5–​-​9 ..... 592

s. 1.3 ..... 799

London Court of International Arbitration (“LCIA”) Rules, 2020

ot

art. 26.5 ..... 1071 art. 26.7 ..... 1035, 1037

para. 19 ..... 910

fo

art. 26.4 ..... 1049, 1167

rC

art. 26.2 ..... 1026, 1028–​1029, 1031, 1033, 1034, 1044

art. 14.1(ii) ..... 904 art. 15.8 ..... 809 art. 17 ..... 1029 art. 18 ..... 877–​878 art. 19.4 ..... 881 art. 22(1)(v) ..... 801 art. 25.3 ..... 972 art. 26.5 ..... 1069 art. 26.9 ..... 1013 art. 27.1 ..... 1270 art. 28 ..... 1049 art. 28.2 ..... 1182 art. 28(3) ..... 1182 art. 28(4) ..... 105 art. 30 ..... 113 art. 30(2) ..... 116

ccxlviii

Law, Practice and Procedure of Arbitration in India

M

ss. 23(2), 24(1), and 24(3) ..... 841 ss. 30, 31A(3)(d) ..... 1227

Malaysian Arbitration Act, 2005

ss. 32, 33 ..... 1075

s. 6 ..... 781

ss. 33(2), 33(7) ..... 1078

s. 10 ..... 420

ss. 33(5), 33(6) ..... 1091

s. 10(1) ..... 448

ss. 34, 48 ..... 1097

ul at io n

s. 33 ..... 1077, 1092

ss. 35, 46 ..... 1096

s. 33(1) ..... 1074, 108

Malaysia–​China BIT

s. 33(2) ..... 1083

art. 7(4) ..... 1425

s. 33(3) ..... 1077, 1084

Mexican Commercial Code, Title IV Commercial Arbitration

irc

s. 33(4) ..... 1074, 1090 s. 33(6) ..... 1083

art. 1415 (IV) ..... 1181

rC

s. 34 ..... 1117

Model BIT in 2015 (“2015 Model BIT”)

s. 34(2)(a)(v) ..... 767

fo

annexure 1 and art. 33 1442

s. 34(2)(b)(ii) ..... 1117

art. 1.4 ..... 1408

s. 35(2) ..... 1088

py

s. 36 ..... 1099

w

s. 45 ..... 533

co

s. 38(3) ..... 943 s. 42(A) ..... 778

ie

s. 47 ..... 61, 869

re v

s. 47(1)(a) ..... 868

s. 47(1)(b) ..... 869

E-

s. 47(1)(c) ..... 869 s. 48(1)(e) ..... 1096 s. 56(1)(a) ..... 870 s. 56(1)(b) ..... 870 s. 56(1)(c) ..... 870 s. 56(2) ..... 870

art. 1.4(iii) ..... 1408

-N

s. 35 ..... 1112

ot

s. 34(4) ..... 1093

art. 1.5 ..... 1404 art. 2.4 ..... 1437 art. 2.4(ii) art. 2(4)(ii) ..... 1413, 1437 art. 3.1 ..... 1417 art. 5(1) ..... 1422 art. 5.1 ..... 1411 art. 5.3 ..... 1411 art. 5(3) ..... 1412 art. 5.3(a)(i) ..... 1412 art. 5.3(a)(ii) ..... 1412 arts. 5.4 and 5.5 ..... 1411 art. 11 ..... 1436–​1437 art. 11(iii) ..... 1437 art. 15 ..... 1429

ccxlix

Table of Statutes art. 15.1 ..... 1429

r. 23(2) ..... 795

art. 28 ..... 1426

r. 25.2(b) ..... 801

footnote 1 to art. 3.1 ..... 1417

r. 26 ..... 785

Mumbai Centre for International Arbitration (“MCIA”) Rules, 2016

r. 26.5 ..... 881 r. 29 ..... 1124 r. 30 ..... 1026

art. 16(2) ..... 813

r. 30.7 ..... 1044

art. 22 ..... 759

r. 30.11 ..... 1010

art. 23.1 ..... 1379

r. 33.8 ..... 1199

art. 30.12 ..... 492

rr. 16, 17 ..... 1041

irc

r. 3.3 ..... 508, 510

N

r. 6 ..... 902

rC

Nani Palkhiwala Arbitration Centre (“NPAC”) Rules

r. 6.2 ..... 560, 594

fo

r. 7.2 ..... 592

r. 10(B)(9) ..... 508, 510

r. 7.8 ..... 555, 592, 594

ot

r. 33(b) ..... 27

-N

r. 14 ..... 1224 r. 15 ..... 27

py

r. 16.2 ..... 766 r. 21(2) ..... 756

w

r. 34 ..... 61

co

r. 17.4 ..... 766

r. 34.1 ..... 925

ie

r. 34.2 ..... 925

re v

r. 35 ..... 116, 917

E-

Mumbai Centre for International Arbitration Rules (“MCIA”), 2017 art. 30.7 ..... 1033

ul at io n

art. 4 ..... 514

Netherlands Code of Civil procedure art. 1026(1) ..... 579, 584, 598 art. 1038(1)–​(2) ..... 94 art. 1039(2) ..... 917 art. 1049 ..... 1004 art. 1060 ..... 1077 New York Civil Practice Law Rules (NY CPLR), 2012 s. 7503(b) ..... 475 New York Convention on the Recognition and Enforcement of Foreign arbitral awards, 1958

r. 1.3 ..... 996

art. 1(3) ..... 1334

r. 12 ..... 787

art. 2 ..... 923

r. 20 ..... 804

art. 7(2) ..... 172

r. 21 ..... 789

art. I(1) ..... 999, 1280

ccl

Law, Practice and Procedure of Arbitration in India

art. I.2 ..... 996

art. 17 of Sch. 1 ..... 689

art. II ..... 373, 400, 446, 1076, 1087, 1334

art. 14C(b) ..... 121

art. II (1) ..... 172, 373, 445, 895

art. 31(5) ..... 1147

art. II(2) ..... 172, 198

s. 2(1) ..... 996

art. II(3) ..... 277, 373, 437, 398, 421, 444, 446, 586, 953, 971

s. 6(2)(b) ..... 1227

art. III ..... 1075, 1333–​1334

s. 12 ..... 1149

art. IV ..... 1334, 13336

s. 12(1)(b) ..... 1139

art. IV(2) ..... 81, 1028

s. 12(1)(b)(ii) ..... 1143

art. IV.1(a) ..... 1025, 1028

s. 13(2), Sch. 1 ..... 661

art. V ..... 32, 897, 1034, 1053, 1286, 1306, 1333, 1335, 1339, 1341

s. 24(4) ..... 94

irc

rC

ss. 14A–​14D ..... 121

art. V(1) ..... 1340

Nigerian Arbitration & Conciliation Act, 2004

fo

art. V(1)(a) ..... 279, 1342, 1370

s. 4 ..... 880

ot

art. V(1)(b) ..... 357, 522, 1343 art. V(1)(c) ..... 1345

-N

Nigerian Legal Practitioners Act

art. V(1)(d) ..... 545, 1346

py

art. V(1)(e) ..... 1266–​1267, 1280, 1315, 1347 art. V(2) ..... 32, 1340

ul at io n

s. 10 ..... 174–​175

s. 24 ..... 880 Norwegian Penal Code art. 114 ..... 921 Nouveau Code De Procédure Civile (N.C.P.)

art. V(2)(b) ..... 1349

art. 1442-​1507 (Fr.) ..... 1134, 1139

w

co

art. V(2)(a) ..... 1348 art. V(a) ..... 129

ie

O

re v

art. VI ..... 1335, 1347 art. VII ..... 1335

E-

art. VII(2) ..... 1321 arts. I to V ..... 1334 arts. II(1) and II(3) ..... 874 arts. II(1) and V(2)(a) ..... 433

New Zealand Arbitration Act, 1996 art. 8(1) ..... 449 art. 12(2) ..... 621

Ontario International Commercial Arbitration Act s. 9 ..... 448

P Pakistani Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act art. 4(1) ..... 449

ccli

Table of Statutes Permanent Court of Arbitration (PCA) Arbitration Rules 2012

art. 32(5) ..... 401 art. 44 ..... 105

art. 42(1) ..... 105

Scheme for Appointment of Arbitrators

Philippines Supreme Court Special Rules of Court on Alternative Dispute Resolution

r. 2 ..... 615–​616 Senior Courts Act 1981

ul at io n

r. 21 ..... 1209

s. 35A ..... 1149

Polish Code of Civil Procedure (fifth part)

Singapore International Arbitration Act (“SIAC”) Code of Ethics for an Arbitrator, 2015

art. 1188(1) 508 Portuguese law on Voluntary Arbitration

at para. 1.2 ..... 905

irc

art. 8(1) ..... 579, 584

Q

rC

at para. 2.2 ..... 902 at para. 4 ..... 910

Qatar’s Penal Code

at para. 7.1 ..... 917

fo

art. 160 ..... 921

Singapore International Arbitration Act (“SIAC”) (Cap 143A)

s. 17(1)(b) ..... 1328 s. 17(1)(e) ..... 1328

co

s. 49 ..... 391, 1329

-N

s. 17 ..... 1032

py

Registration Act, 1908

ot

R

w

Responsibilities of States for Internationally Wrongful Acts, 2001

ie

art. 3 ..... 1410

re v

art. 4 ..... 1443

s. 5A into the ..... 1256 s. 5B ..... 1256 s. 19A(1) ..... 1219 s. 21(1) ..... 1193, 1247

Singapore International Arbitration Act, 2002, First Schedule art. 32(3) ..... 1075 art. 33(1)(b) ..... 1088 art. 33 ..... 1083

art. 5 ..... 1443

art. 33(4) ..... 1090

E-

art. 31(1) ..... 1422

s. 12(5) ..... 1115

art. 36(1) ..... 1422

Singapore International Arbitration Act

art. 38 ..... 1426

S SCC Arbitration Rules

art. 14(3)(b) ..... 621 s. 6 ..... 420 s. 6(2) ..... 448

art. 8 ..... 510

s. 8A ..... 528

art. 20(2) ..... 795

s. 12 ..... 457

cclii

Law, Practice and Procedure of Arbitration in India r. 17 ..... 728, 920

s. 16(4) ..... 921

r. 18 ..... 664

s. 20 ..... 61, 1139, 1143, 1147, 1159

r. 19 ..... 934

s. 20(1) ..... 1157, 1167

r. 19.1 ..... 896, 904

s. 20(1)(a) ..... 1149

r. 19.1 ..... 904

s. 21(9) ..... 271

r. 19.5 ..... 946

s. 26(4) ..... 508

r. 20 ..... 936, 1041

s. 26B ..... 59

r. 21 ..... 1034

s. 40 ..... 674, 685, 687

r. 21.1 ..... 935

s. 52B ..... 59

r. 21.2 ..... 936, 1034

s. 59 ..... 923

r. 22.1 ..... 936, 1029

irc

r. 22.2 ..... 936, 1029

rC

Singapore International Arbitration Centre Rules (“SIAC”) 2016 (SIAC Rules)

fo

r. 23 ..... 877, 878 r. 23.1 ..... 96

art. 9 ..... 592

ot

r. 24 ..... 785, 787

art. 28.1 ..... 793

co

art. 28(2) ..... 259

py

art. 26(3) ..... 401

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art. 16(3) ..... 748 art. 19.3 ..... 756

art. 30.3 ..... 960

w

art. 32.10 ..... 1010

ie

art. 33 ..... 1004

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art. 33.1 ..... 1017

art. 39 ..... 116, 917

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r. 1.3 ..... 996, 1004 r. 5 ..... 716 r. 5.2(c) ..... 716 r. 13.4 ..... 907 r. 13.6 ..... 910 r. 15.1 ..... 661 r. 15.4 ..... 650

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s. 12(1) ..... 457

r. 24.1 ..... 919 r. 24.3 ..... 938, 1014 r. 24.4 ..... 881 r. 26 ..... 938 r. 27 ..... 948 r. 27(a) ..... 1124 r. 27(d) & (f) ..... 801 r. 28 ..... 253 r. 28.2 ..... 930, 1009 r. 30 ..... 934, 955 r. 30.2 ..... 934 r. 30.3 ..... 972 r. 31 ..... 912 r. 32 ..... 1026 r. 32.3 ..... 1015–​1016 r. 32.4 ..... 1026, 1028, 1044 r. 32.5 ..... 1002

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Table of Statutes r. 32.6 ..... 1071

Statute of the International Court of Justice, 1965

r. 32.7 ..... 1069, 1071

art. 64, 33 U.N.T.S. 9 ..... 1424

r. 32.8 ..... 1035, 1037

Swedish Arbitration Act

r. 32.9 ..... 1049, 1136, 1168, 1174

ss. 7–​18 ..... 664

r. 32.11 ..... 1098, 1265

s. 27 ..... 1075

r. 32.12 ..... 127

s. 42 ..... 1181

Swiss Procedure Code, 2008

r. 33 ..... 1078

art. 373(5) ..... 877

r. 33.1 ..... 1017, 1085

Swiss Code of Civil Procedure, 2011

r. 33.3 ..... 1020, 1074, 1089, 1270

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art. 388 ..... 1077

r. 33.4 ..... 1021, 1088

Swiss Federal Stature on Private International Law (PIL)

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r. 34 ..... 943 r. 34(1) ..... 689

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art. 180 ..... 661

r. 35 ..... 129, 1049

art. 192(1) ..... 493

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r. 36.1 ..... 1247

Swiss Private International Law Act, 1987

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r. 37 ..... 105 r. 39 ..... 117, 1071

w

r. 41.2 ..... 1052

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r. 39.1 ..... 123

py

r. 38 ..... 925

r. 39.2 ..... 117

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rr. 13.4, 13.5 ..... 902

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rr. 33.1, 33.2 ..... 1084 rr. 33.1, 33.4 ..... 1074, 1270

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Sch. 1 ..... 1224

Singapore Legal Profession Act s. 107(1) ..... 887 Singapore Limitation Act (Chapter 163)

art. 7 ..... 449 art. 183 ..... 129 art. 183, 185 ..... 972 art. 187(1) ..... 1382 art. 188 ..... 1004 art. 189 ..... 1026

Swiss Rules of International Arbitration, 2012 arts. 18(3) and 19(2) ..... 765 art. 38(e) ..... 1181 art. 40(1) ..... 105 art. 44(1) ..... 123 art. 44(3) ..... 127

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s. 6 ..... 528 Specific Relief Act s. 41 ..... 988

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r. 32.10 ..... 1013

Trade Unions Act, 1926 s. 13 ..... 1288

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Law, Practice and Procedure of Arbitration in India

Treaty Concerning the Union of South American States in respect of Procedural Law (11 January 1899)

UNCITRAL Arbitration Rules, 2013 art. 1(4) ..... 1432

arts. 5–​7 ..... 1354

art. 5 ..... 876

Tunisian Arbitration Code

art. 11 ..... 902

art. 55(1) ..... 579, 584, 598

art. 16 ..... 925 art. 17 ..... 906

UAE Civil Procedure Code, Federal Law No. (11) of 1992

art. 17(1) ..... 896, 904

art. 212(6) ..... 82

art. 17 ..... 934

UAE Federal Arbitration Law

irc

art. 18 ..... 1379

art. 41(3) ..... 1032

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art. 18.1 ..... 935

UK Arbitration Act of 1996

art. 18.2 ..... 936

s. 41 ..... 807

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art. 19(1) ..... 1029

UK Supreme Court Act, 1981

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art. 19(2) ..... 1029

s. 37 ..... 471

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art. 19.1 ..... 936

s. 37(1) ..... 457 art. 33(1) ..... 1382

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UNCITRAL Arbitration Rules, 1976

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UNCITRAL Arbitration Rules, 2010 art. 11 ..... 625

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art. 12(3) ..... 920

U

art. 19.2 ..... 936 art. 23(1) ..... 259, 930, 1009 art. 26 ..... 934 art. 26(9) ..... 960, 972, 1128 art. 27 ..... 873 art. 27(1) ..... 832, 849

art. 22 ..... 768

art. 28 ..... 937

art. 26 ..... 1423

art. 28(3) ..... 113, 919

art. 26(2) ..... 1423

art. 29 ..... 938, 938

art. 26(3) ..... 1423

art. 30 ..... 808, 941, 1014

art. 27.2 ..... 844

art. 33(1) ..... 1069

art. 29 ..... 857

art. 33(2) ..... 998, 1070

art. 31.1 ..... 793

art. 34 ..... 1026

art. 40(2)(e) ..... 1205

art. 34(1) ..... 1002, 1004

art. 42(1) ..... 105

art. 34(2) ..... 1098, 1265

art. 43(1) ..... 689

art. 34(3) ..... 1026, 1044

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art. 15 ..... 708

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Table of Statutes art. 34(4) ..... 1026, 1029–​1030, 1033–​ 1034, 1067

art. 26(9) ..... 401

art. 34(5) ..... 1071

art. 35(1) ..... 1389

art. 34(6) ..... 1035

arts. 12 and 13.1 ..... 650

art. 35 ..... 1380

art. 35 ..... 912

UNCITRAL Model Law on International Commercial Arbitration, 1985

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art. 36 ..... 1010 art. 36(1) ..... 1012–​1013

art. 12, at p. 116 para. 1 ..... 857, 858

art. 37 ..... 1021, 1088

UNCITRAL Model Law art. 1(1) ..... 174

art. 38(1) ..... 1085

art. 1(2) ..... 979, 1077

art. 38(3) ..... 1017

art. 1(3) ..... 1280

art. 39 ..... 1020, 1074, 1089, 1270

art. 2(a) ..... 43

art. 40 ..... 1184

art. 5 ..... 601, 950, 974, 1265, 1378

art. 42 ..... 1049

art. 6 ..... 956, 962

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art. 38 ..... 1017, 1078, 1080

art. 7 ..... 171–​172, 205

ot

art. 42(1) ..... 1206 arts. 20, 21 ..... 1041

py

arts. 22, 24, 25 ..... 936

art. 7(1) ..... 190, 354, 373, 445

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arts. 20(4) and 21(2) ..... 841

art. 7(2) ..... 198, 203 art. 8 ..... 401 art. 8 ..... 373, 397, 400, 437, 446, 953

arts. 37, 38 ..... 1074, 1270

art. 8(1) ..... 373, 400, 421, 424, 446–​447, 444, 446

co

arts. 34(2), 34(4) ..... 1026, 1028

w

arts. 37–​39 ..... 1004

arts. 38(1), 38(2) ..... 1084

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UNCITRAL Arbitration Rules

art. 9 ..... 955, 960, 972, 974, 987 art. 10 ..... 60, 515, 551, 579 art. 10(1) ..... 578, 587, 589

art. 3(4) ..... 520

art. 10(2) ..... 578, 587

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art. 3 ..... 505, 514, 519

art. 11 ..... 950, 956

art. 8 ..... 592

art. 11(1) ..... 574

art. 13 ..... 659

art. 11(3) ..... 614

art. 13(1) ..... 661

art. 11.1 ..... 93

art. 15 ..... 664

art. 11.5 ..... 93

art. 17(1) ..... 81

art. 12 ..... 895, 899, 907

art. 22 ..... 360

art. 13 ..... 950, 962

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art. 7(1) ..... 587, 589

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Law, Practice and Procedure of Arbitration in India

art. 13.3 ..... 651

art. 29 ..... 946, 998, 1069–​1070

art. 13(3) ..... 962

art. 30 ..... 1010

art. 14 ..... 376, 913, 962

art. 30(1) ..... 1013

art. 16 ..... 238, 255, 261, 264, 274, 293, 930, 950, 1009

art. 30(2) ..... 1012

art. 16(3) ..... 930, 997, 1009, 1287

art. 31(2) ..... 1012, 1026, 1044

art. 17 ..... 1004

art. 31(3) ..... 1026, 1033, 1034

art. 17A ..... 456

art. 32 ..... 1013

art. 17(1) ..... 931

art. 32(3) ..... 1075, 1097

art. 17(2) ..... 931, 960

art. 33 ..... 1004, 1017, 1075, 1083, 1271

art. 17A ..... 931

art. 33(1) ..... 1017, 1074, 1077, 1270

art. 18 ..... 714, 721, 879, 895–​896, 906

art. 33(1)(a) ..... 1077

art. 19 ..... 64, 934

art. 33(1)(b) ..... 1021, 1087, 1271

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ot

art. 33(3) ..... 1020, 1057, 1074, 1090, 1270, 1272

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art. 21 ..... 504, 513, 515

art. 23 ..... 764, 936

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art. 33(2) ..... 1077

art. 20(2) ..... 801, 936

art. 22(2) ..... 936, 1029

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fo

art. 20(1) ..... 794, 935

art. 22(1) ..... 936, 1029

art. 31(1) ..... 1026, 1029–​1030, 1067

art. 34 ..... 11, 261, 968, 1053, 1266, 1281, 1286, 1307 art. 34(2)(a) ..... 1282 art. 34(2)(a)(i) ..... 1287–​1288

art. 24(1) ..... 714–​715, 937

art. 34(2)(a)(ii) ..... 719, 907, 1290

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art. 24 ..... 715, 784, 832, 937

art. 34(2)(a)(iii) ..... 323, 1060, 1293–​1294

art. 25 ..... 766, 806, 808, 811, 824, 941, 1014

art. 34(2)(a)(iv) ..... 1296

art. 25(a) ..... 815

art. 34(2)(b)(i) ..... 1298

art. 25(c) ..... 824

art. 34(2)(b)(ii) ..... 1299

art. 26 ..... 832, 853, 857, 938

art. 34(4) ..... 1075, 1093, 1276

art. 27 ..... 863, 864, 850, 950, 965, 978, 980

art. 35 ..... 1319

art. 28 ..... 63, 895, 912, 1365, 1380

art. 35(1) ..... 1096, 1265, 1324

art. 28(2) ..... 1382

art. 35(2) ..... 1336

art. 28(3) ..... 713

art. 36 ..... 1306

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re v

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art. 24(2) ..... 801

art. 34(2)(b) ..... 57

cclvii

Table of Statutes art. 36(1)(a)(i) ..... 1371

art. 33 ..... 995, 1016

art. 36(1)(a)(iii) ..... 1345

art. 33(5) ..... 1078

art. 36 ..... 969, 1340–​1341

Chapter IVA ..... 27 UNIDROIT Principles of International Commercial Contracts (2016)

art. 36(1)(a)(i) ..... 1342 art. 36(1)(a)(ii) ..... 1343

UNIDROIT Principles of Transnational Civil Procedure 2000

art. 36(1)(a)(iv) ..... 1346 art. 36(1)(a)(v) ..... 1347

r. 24 ..... 1227

art. 36(1)(b)(i) ..... 1348

Uniform Arbitration Act, 2000

art. 36(1)(b)(ii) ..... 1349

irc

s. 21 ..... 1121

art. 36(2) ..... 1347

s. 21(a) ..... 1115

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arts. 1(2), 34–​36 ..... 1280

United States Revised Uniform Arbitration Act

arts 1(2), 34 ..... 1280

fo

s. 9(a) ..... 524

arts. 5, 34 ..... 1273

arts. 31, 33–​36 ..... 998

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arts. 31(2); paras 33–​34 ..... 1065

ot

s. 16 ..... 94

arts. 12, 13 ..... 920

py

arts. 34(2)(b)(i) and 36(1)(b)(i) ..... 433

co

arts. 34(2)(b)(ii) and 36(1)(b)(ii) ..... 730 arts. 35 and 36 261

w

arts. 34–​36 ..... 950

ie

arts. 35–​36 ..... 1329

re v

arts. 35–​36 ..... 1330

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UNCITRAL Model Law on International Commercial Arbitration, 1985 art. 13.,375 art. 29 ..... 1066 art. 31 ..... 1026 art. 31(1) ..... 1028 art. 31(2) ..... 1044 art. 32(1) ..... 1003

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art. 7.4.10 ..... 1141

art. 36(1)(a)(iii) ..... 1345

US Federal Rules of Civil Procedure r. 68 ..... 1227

V VIAC Rules, 2018 art. 38 ..... 1182 Vienna Convention of the Law of Treaties, 1969 (“VCLT”) art. 26 ..... 1398 art. 27 ..... 1410 art. 31 ..... 1399–​1400 art. 31(1) ..... 1399, 1413 art. 31(2) ..... 1400 art. 31(2)(b) ..... 1400 art. 31(3) ..... 1400 art. 31(4) ..... 1400

cclviii

Law, Practice and Procedure of Arbitration in India

art. 32 ..... 1400

World Intellectual Property Organisation (“WIPO”) Rules, 2020

arts. 31 and 32 of ..... 1399 World Intellectual Property Organisation (“WIPO”) Rules, 2016

art. 72 ..... 1205 art. 73 ..... 1182

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art. 74 ..... 1180

DIVISION 1

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INTRODUCTORY FRAMEWORK OF ARBITRATION

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Chapter 1 NATURE OF ARBITRATION [1.1] INTRODUCTION............................................................................................................................... 1 [1.2] DISPUTE RESOLUTION MECHANISMS...................................................................................... 5

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[1.3] ARBITRATION AS A VIABLE ALTERNATIVE TO LITIGATION............................................ 7 [1.4] THE PERCEIVED GLOBAL THREAT OF ARBITRATION..................................................... 10 [1.5] SCOPE OF THIS BOOK.................................................................................................................. 13

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[1.6] CONCLUSION.................................................................................................................................. 13

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[1.1] INTRODUCTION

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An extra-​judicial method like arbitration is now accepted as part of an alternative dispute resolution system. It has evolved as the viable and increasingly harmonised dispute resolution mechanism encompassing individuals and commercial entities serviced by practitioners speaking a common procedural language.1

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International commercial arbitration also transcends geographical borders and sovereign immunity. It enables trade disputes to be resolved against private entities and States through international commercial arbitration and investment treaty arbitration. There are now numerous arbitral institutions throughout the world which administer arbitrations using rules of arbitration.2

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In the formation of a contract or legal relationship, and by their own bargain, parties choose arbitration as the agreed method of dispute resolution. It provides for an ordered and efficacious dispute resolution mechanism, leading to an enforceable award. This has now become an essential underpinning of both domestic and global trade and commerce.

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Gary Born explains that businesses perceive international arbitration as providing a neutral, speedy, and expert dispute resolution process, largely subject to the parties’ 1. See Nigel Blackaby and others, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), para. 1.01. 2. Such arbitration centres are found in almost every continent, for example, the International Chamber of Commerce (“ICC”), the Asian African Legal Consultative Organisation’s (“AALCO”) arbitral centres in Asia and Africa, the China International Economic and Trade Arbitration Commission (“CIETAC”), the Hong Kong International Arbitration Centre (“HKIAC”), the Mumbai Centre for International Arbitration (“MCIA”), the London Court of International Arbitration (“LCIA”), the Singapore International Arbitration Centre (“SIAC”), etc.

4

Law, Practice and Procedure of Arbitration in India

control, in a single, centralised forum, with internationally enforceable dispute resolution agreements and decisions.3

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Arbitration in today’s world is characterised by features deemed necessary for smooth and timely resolution of disputes. Timeliness, independence of the panel, freedom of selection of arbitrator(s), and confidentiality are some of the appreciated features and advantages of arbitration. The overall objective is that it is conducted in a stable, predictable, and effective manner within a structured legal framework.

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Arbitration has undergone rapid refinement and caters to complex commercial disputes incorporating specialist features as well. Parties to commercial disputes, particularly across borders, increasingly favour and incorporate arbitration as a method to settle contractual disagreements. Such regimes have been progressively refined and improved with the express goal of facilitating commerce and investment.

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The practice and procedure of arbitration have evolved to account for the particularities of the parties, the demands of industries, and the safeguards for fairness and public interest. It is generally accepted that a large number of disputes never get anywhere near courts or arbitral tribunals.4

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It is a rational expectation that parties will try to nip disputes in the bud and continue with the job, rather than allow them to grow into protracted and expensive battles that require third party intervention.

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As a result, it is now common for commercial and government entities to evaluate risks and develop mechanisms for early dispute evaluation and prevention. In addition to arbitration, pre-​empting and preventing disputes has thus become a part of the overall framework of alternative dispute resolution, taking shape in various forms.

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Such dispute prevention and avoidance procedures derived from conflict management methods are now embedded in contracts to prevent and avoid disagreements from escalating into disputes and differences.5 They cover quality matters, procurement systems, as well as binding and non-​binding non-​escalation mechanisms.

3. Gary B. Born, International Commercial Arbitration (3rd edn, Kluwer Law International 2020), p. 71. 4. In 2013, in a PWC survey of 600 international respondents, it was reported that 57 per cent of international disputes were settled amicably through negotiation or mediation. See PwC, “Corporate Choices in International Arbitration” (2013), available at https://​www.pwc.com/​gx/​en/​arbitration-​dispute-​resolution/​ assets/​pwc-​international-​arbitration-​study.pdf (accessed on 17 November 2020). 5. See Sai-​On Cheung and Henry C.H. Suen, “A Multi-​Attribute Utility Model for Dispute Resolution Strategy Selection” (2002) 20(7) Constr. Manag. Econ., pp. 557–​568.

5

Chapter 1—​Nature of Arbitration

[1.2] DISPUTE RESOLUTION MECHANISMS The importance of dispute prevention and resolution provisions is no more a rhetorical question. While parties may spend significantly more time negotiating and drafting commercial terms of the contract, they may not apply the same diligence in formulating the dispute prevention and resolution provisions.

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For one, they may altogether fail to include dispute prevention and resolution provisions or when such provisions included, they are embedded at the end of contracts as a boiler plate term due to the pressure to complete and execute the contract.

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While parties in a commercial relationship would want the contract deliverables to be completed on time and at the agreed price, they may also be reluctant to acknowledge that there may be future problems arising during the currency of the contract.

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They may prevent disputes by identifying, investigating, anticipating, and settling problems at an early stage. This would save management time and costs while avoiding disruption to the contract. When all fails, parties may have to resort to litigation or arbitration to resolve the dispute. However, in international contracts, each party may be reluctant to be involved in the local courts of its opposing party.

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The procedures available for dispute resolution extend over a wide spectrum and can be broadly categorised as either “interest-​based” or “rights-​based”.6

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Parties can consider these two options; whether to resolve the dispute in a way that reflects the real interests of the parties, such as fairness and the maintenance of long-​ term relationships, or whether a more legalistic, rights-​based approach should be taken.

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In an interest-​based approach, parties can probe into the dispute and address the needs or issues highlighted by each of the parties. This approach is not merely an examination of the issues claimed by the parties followed by the application of the remedies available through the legal system.

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Does a corporate individual really want damages for past wrongs or are current cash flows, future business opportunities, and advantageous terms more important? Does an employee want damages for alleged discrimination or does he or she prefer a better job or another supervisor at the same organisation?

6. See William K. Roche and others (eds), The Oxford Handbook of Conflict Management in Organizations (Oxford University Press 2014), p. 251; see also William L. Ury and others, Getting Disputes Resolved: Designing Systems to cut the cost of Conflict (Wiley 1988).

6

Law, Practice and Procedure of Arbitration in India

There are many ways to structure a settlement as there are parties with individual needs and desires.7 These questions have little to do with contractual rights and obligations.

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Thus, there is recognition that there is no single method or “magic wand” for resolving disputes that is appropriate for all cases. The applicable factors to be considered include the size, scope, duration, and location the contract is performed, the jurisdictions where the parties are based, and whether there are multiple parties or multiple agreements involved. When there are disputes, parties are faced with three different types of conflict management and dispute resolution mechanisms:

(1) litigation in courts –​the traditional publicly funded statutory means of dispute resolution;



(2) arbitration before private tribunals –​designed to achieve a final and enforceable outcome; and



(3) other Alternative Dispute Resolution (“ADR”) mechanisms such as mandatory discussions at the senior management level, negotiation, assessment, early neutral evaluation, adjudication, conciliation, expert determination, mediation, mediation-​arbitration (med-​arb), mini-​trials /​executive tribunal, dispute review and resolution boards, and other perceptive ways to engage the intervention of a third party to achieve a settlement.

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All of these mechanisms resolve and settle mature disputes through the intervention of a third party with substantial formal or informal authority over the parties. They vary in the degree of formality, cost, and finality.

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The role of the third party varies in each of the mechanisms, and ranges from a binding decision maker (litigation, arbitration) to a provisional decision maker (adjudication), and to a facilitator of an agreement between the parties (mediation).

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In hybrid or multi-​tiered resolution processes, more than one third party, having a different role, may be involved progressively. This is the case in an arb-​med-​arb mechanism where arbitration is instituted but is temporarily suspended to enable parties to mediate, failing which the parties are referred back to arbitration. The nature and progression of these processes and their applicability to each type of dispute are different.

7. See H.J. Aibel, “Mediation Works: Opting for Interest-​Based Solutions to a Range of Business Needs” (1996) 5 DRJ 26.

7

Chapter 1—​Nature of Arbitration

The emphasis is on flexibility in allowing parties vide the neutral third party to resolve their problems quickly, spending less management time and money. The contract can proceed with minimal disruption to timely completion. The idea of resorting to a third party is also well established in the practice. Edward de Bono states that:

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“[t]‌hird party role is essential because parties in conflict are bogged down in the argument mode of thinking … the third party is not an addition or an aid but an integral part of the process …”.8

Furthermore, if an issue between the parties is one where an expert opinion is required –​such as where the parties have divergent views on a technical or legal issue, then an expert determination can be an appropriate way to settle or limit the dispute.

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Alternatively, if the parties wish to resolve the matter amicably, without a winner or loser, then mediation or conciliation would be the appropriate method. It is now quite common for parties to agree to first submit their dispute to a non-​binding ADR mechanism, with arbitration or litigation as a fallback in the event that ADR fails.9

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The judicial attitude in most jurisdictions is to uphold multi-​tiered resolution agreements whereby parties have contractually agreed to use some form of ADR as part of the staged process of resolving their disputes and differences. The parties are required to exhaust the particular stage of their dispute settlement (like mediation or dispute board review) before embarking on litigation or arbitration.

[1.3] ARBITRATION AS A VIABLE ALTERNATIVE TO LITIGATION

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Arbitration is distinguishable from other non-​binding ADR techniques. An arbitral tribunal’s function is not to decide how the dispute can most readily be resolved. It apportions responsibility for that dispute based on the evidence and applicable principles placed before it.10

8. See Bono Edward De, Conflicts: A Better Way to Resolve Them (Penguin Random House UK 1986), pp. 124–​ 125 quoted in Brown and Marriott, QC ADR Principles and Practice (3rd edn, 2011). 9. In India, this is the statutory position. Section 12A of the Commercial Courts Act, 2015 (Act No. 4 of 2016) provides: “Pre-​Institution Mediation and Settlement –​(1) A suit, which does not contemplate any urgent relief under this Act, shall not be instituted unless the plaintiff exhausts the remedy of pre-​institution mediation in accordance with such manner and procedure as may be prescribed by rules made by the Central Government …”. Further, in some jurisdictions, standard form clauses include a requirement for internal settlement attempts before allowing the commencement of arbitration. Some go even further –​see the Malaysian Construction Industry Development Board (“CIDB”) Standard form of Contract for Building Works (2000 edn), cl. 47.2(d) which makes mediation a condition precedent to arbitration, or the Malaysian Institute of Architect (“PAM”) Contract 2018, cl. 34.1 where adjudication is compulsory for employer set-​off disputes. 10. See Eileen P. Carroll and Giles Dixon, “Alternative Dispute Resolution Developments in London” (1990) 4 ICLR 436, at p. 437.

8

Law, Practice and Procedure of Arbitration in India

Williams and Kawharu state that, at its most basic level, arbitration is the submission of a dispute to an independent non-​governmental decision maker, selected by or for the parties, to render a binding decision resolving a dispute in accordance with neutral, adjudicatory procedures affording the parties an opportunity to be heard.11 It is a private and consensual dispute resolution mechanism.12

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The arbitral tribunal hears out the parties, considers the facts and the law, and makes an award. The award is final and binding on the parties. The award is generally enforceable subject to the provisions of the applicable arbitration legislation or lex arbitri to set aside, or refuse to recognise and enforce it.13

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Whilst disputes have to be settled rapidly, formal dispute resolution proceedings rarely align with that objective.14 The business world has long recognised the need to remove delays and other impediments to the settlement of commercial disputes.15 This has led to organised forms of arbitration through the creation of arbitration facilities within many business organisations, chambers of commerce, exchanges, and trade associations.16

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However, the commercial community retains its inclination towards arbitration over courts to settle their disputes because of the advantages that arbitration offers, that is, choice of forum, a neutral tribunal whose qualifications can be tailored to suit the dispute, confidentiality, and global enforceability.17

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11. See Williams QC and Kawharu, Williams & Kawharu on Arbitration (2011), para. 1.1.1; see also Gary B. Born, International Commercial Arbitration (3rd edn, Kluwer Law International 2020), pp. 71–​91; and Nigel Blackaby and others, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), para. 1.04. 12. See Dr Reinmar Wolff (ed.), New York Convention (2nd edn, Verlag C.H. Beck OHG 2019), p. 3. 13. Lex arbitri is the law which governs the actual arbitration proceedings being the applicable law of the seat of arbitration. 14. This includes wait time for trials, delays between legal teams, and the organizational challenges of finding a date that suits high-​profile arbitrators, two or more legal teams, clients, and witnesses. 15. This has resulted in institutions such as the Hong Kong International Arbitration Centre (“HKIAC”), Singapore International Arbitration Centre (“SIAC”), and Asian International Arbitration Centre providing expedited procedure rules and “Fast Track” rules for arbitrations, for the faster resolution of disputes in appropriate cases. Such rules may be used based on certain criteria like monetary threshold and application of timely procedures by a sole arbitrator. See also Arbitration and Conciliation Act, 1996, s. 29B on the fast-​ track procedure. 16. For example, arbitration mandated for resolution of Investor Disputes in accordance with the by-​laws of the Securities Exchange Board of India (“SEBI”) and arbitration facilities provided by the Indian Merchants’ Chambers. 17. See Carter James H. and Fellas John (eds), International Commercial Arbitration in New York (Oxford University Press 2010). In the foreword, Gerald Asken says of arbitration that “The procedure is popular because no one has yet figured out a better method of settling disputes in the context of international commercial relations with a modicum of confidentiality and an effective means of enforcing the resultant decision.”

9

Chapter 1—​Nature of Arbitration

Such universal enforceability is because the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (the New York Convention) which is accepted by over 170 countries.18 On the other hand, enforcement of court judgments overseas depends on mutual recognition treaties, for example, the Hague Conventions of 2005 (on choice of court agreements) and 2019.

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Rogers J in Beveridge v Dontan Pty Ltd.19 referred to arbitration as one of the several available options for the resolution of commercial disputes. He explained that:

“In the more enlightened climate of legal thinking today it should be accepted that there is not one exclusive method of dispute resolution that will lead to a just result.”20

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Arbitration represents an alternative to the judicial process. It is one of the methods appropriate for resolving complex disputes between the parties, particularly where points of law are involved.21

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Lord Denning MR in Modern Engineering (Bristol) Ltd v C Miskin & Son Ltd.22 acknowledged the importance of arbitration. He opined:

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“Arbitration is now one of the most important spheres of activity in the system of administering justice in this land.”23

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Originally, the courts frowned upon arbitration as it seemingly ousted the jurisdiction of the courts. However, the House of Lords in Scott v Avery24 stated otherwise and dispelled this notion.

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18. For a complete list of the signatories to the New York Convention, see https://​uncitral.un.org/​en/​texts/​ arbitration/​conventions/​foreign_​arbitral_​awards/​status2 (accessed on 29 January 2021). The New York Convention has become the de facto law to confer international recognition and enforcement upon the agreement to arbitrate. 19. See Beveridge v Dontan Pty Ltd. (1991) 24 ALD 196. 20. Ibid at p. 199. 21. Arbitration is considerably older than many forms of ADR; Cook & Songate’s case (1588) 4 Leon 31. Dispute resolution by way of arbitration has existed for as long as the common law. Holdsworth, History of English Law (1964) Vol. XIV at p 187 states, “The practice of arbitration there, comes, so to speak, naturally to primitive bodies of law; and after the courts have been established by the state and a recourse to them has become the natural method of settling disputes, the practice continues because the parties to a dispute want to settle them with less formality and expense than is involved in a recourse to the courts.” Arbitration was also known in classical Greek and Roman times: see Roebuck, Arbitration in Ancient Greece (The Arbitration Press, Holo Books, Oxford 2001). 22. Modern Engineering (Bristol) Ltd v C Miskin & Son Ltd. [1981] 1 Lloyd’s Rep 135. 23. Ibid at p. 138. 24. See Scott v Avery [1843-​60] All ER Rep 1; see also Hayter v Nelson and Home Insurance Co. [1990] 2 Lloyd’s Rep 265.

10

Law, Practice and Procedure of Arbitration in India

Arbitration has in fact been treated as a remedy for the “injustice” of delayed decision making due to the overburdened jurisdiction of courts in matters of commercial differences. The 20th Law Commission of India in its 246th Report proposed significant amendments to the Arbitration Act. The introduction to the Report highlights the issue of the overburdening caseload of the courts as follows:

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“Litigating in courts in India is a time-​consuming and expensive exercise, and justice usually eludes both parties to an action. The injustice is particularly egregious in commercial disputes, where cases remain pending for years. It is in this context that one must examine ‘arbitration’ as a method of dispute resolution that aims to provide an effective and efficient alternative to traditional dispute resolution through Court.”25

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In the 21st century, the courts are seen as powerful allies of arbitration rather than as jealous controllers of its power.26 This relationship plays an important role in facilitating international trade, foreign investment, and economic development.

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Arbitration is now a generally accepted method of resolving disputes in a variety of commercial transactions, in particular those in specialised or technical industries such as shipping,27 construction, energy, and financial services sectors.28

[1.4] THE PERCEIVED GLOBAL THREAT OF ARBITRATION

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The notion of courts acting as strong allies of arbitration had somewhat begun being displaced over the last decade. On 9 March 2016, Lord Thomas, the Lord Chief Justice

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25. See Law Commission, Amendments to the Arbitration and Conciliation Act 1996 (Law Com No 20, 2014), p. 8. 26. The defendant in an arbitration which was litigated in China Ocean Shipping Co Owners of the M/​V Fu Ning Hai v Whistler International Ltd, Charters of the M/​V Fu Ning Hai [1999] HKCFI 655 refused to disclose its address to avoid posting security for costs. The court intervened to support the arbitration by making the necessary orders. Saville J (as his Lordship then was) in his English Departmental Advisory Committee (“DAC”) Report on Arbitration Bill 1996, Chapter 2, No 22 held that “the courts nowadays generally only intervene in order to support rather than displace the arbitral process”. See also M. Hwang, “Commercial Courts and International Arbitration –​Competitors or Partners?” Arbitration International, 2015, 31, pp. 193–​212. 27. Lord Clarke of Stone-​cum Ebony in a paper on Arbitration and the Courts delivered in 2011, explained that: “One of the reasons why in the past England has been reasonably successful as a seat of arbitration ... is that many standard forms of charter party have an English arbitration clause”, available at http://​www.kehakiman. gov.my/​sites/​default/​files/​Shipping%20Law%20Conference%20Malaysia%20Osept%202011.pdf (accessed on 17 November 2020). 28. As of 2013, PWC reported that an average of 73 per cent of industry respondents agreed that arbitration was well suited to their industry, with rates of 84 per cent, 78 per cent, and 69 per cent in the construction, energy, and financial services sectors respectively. Arbitration was the most preferred method for resolving cross border disputes for 68 per cent of construction respondents –​“Corporate Choices in International Arbitration”, 2013 PWC.

11

Chapter 1—​Nature of Arbitration

of England and Wales, delivered a lecture on “Developing commercial law through the courts: rebalancing the relationship between the courts and arbitration.”29 In his speech, the Lord Chief Justice opined that arbitration is impeding the development of common law by allowing claims to be decided à huis clos (behind closed doors) without any right of appeal on the law.30

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He stated that this in turn causes a vast lacuna in developing precedence which is the basis for development of common law. Ultimately, Lord Thomas made out a case for the need for a rebalancing of the role of a court in the arbitration process.

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However, given that parties agree to arbitrate their disputes with the objective of obtaining fair and neutral procedures which are flexible, efficient, and capable of being tailored to the needs of their particular dispute31 the emphasis on development of common law jurisprudence may be misplaced. Development of precedent will perhaps be of no interest to parties trying to resolve a commercial dispute.

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This is not to undermine the need for legal accuracy in analysing a contractual relationship, but only to highlight that such accuracy may not always be desired or necessary or efficient for the resolution of commercial differences. When thought of philosophically, disputing parties are entitled to regulate their commercial affairs.

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Fitzgerald notes:

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Subject to mandatory rules of law and public policy,32 parties are thus very well entitled to agree to an inaccurate (or more common-​sensical and less legalistic) interpretation of their existing relationship.

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“We must not forget that the law which regulates people’s lives may well be the plain man’s misunderstanding of the official law.”33

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The courts have sufficient oversight over arbitral awards to check their deviation from the most fundamental rules of law such as impartiality, natural justice, illegality, and public policy.34 The very purpose of this oversight is to balance the freedom of parties to 29. The Bailli Lecture, “Developing Commercial Law through the Courts: Rebalancing the Relationship between the Courts and Arbitration”, 9 March 2016, at para. 22, available at https://​www.judiciary.uk/​wp-​content/​ uploads/​2016/​03/​lcj-​speech-​bailli-​lecture-​20160309.pdf (accessed on 17 November 2020). 30. Ibid. 31. See Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International 2014), p. 82. 32. These concerns being checked by most existing national arbitral laws. See, for instance, UNCITRAL Model Law, Article 34; Arbitration and Conciliation Act, 1996, s. 34. 33. See P.J. Fitzgerald, Salmond on Jurisprudence (12th edn, Sweet & Maxwell 1966), p. 43. 34. PWC in a 2013 survey reported that an average of 73 per cent of industry respondents agreed that arbitration was well suited to their industry, with rates of 84 per cent, 78 per cent, and 69 per cent in the construction,

12

Law, Practice and Procedure of Arbitration in India

ouster the jurisdiction of the court on the merits of the dispute with the potential risks of perverse awards –​thus adequately protecting larger societal and policy concerns.

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Most jurisdictions across the globe have focused on protecting arbitral awards from the general public and keeping them confidential. There are two aspects to confidentiality in arbitration, first, the confidentiality of the arbitration proceedings itself and second, confidentiality of the documents or evidence submitted before the arbitral tribunal.35

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Interviews conducted for the ICC Commission Report on Financial Institutions and International Arbitration supported the idea that one of the key perceived benefits of international arbitration in advisory matters relates to the existence of private hearings and the possibility of confidentiality.36

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This has been held to be especially true for companies as they get a chance to protect “commercially sensitive information”. It is also remarked that such an obligation prevents “trial by media”.37

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Arbitration is not perfect. Problems include multiparty arbitrations, issues of joinder and consolidation, non-​signatories who wish to join in or to be added in, conflicting awards arising from no system of binding precedent, increasing judicialisation arising from litigation-​like procedural intricacy and formality, escalating costs and delays.38

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Despite all its critiques, arbitration has been well accepted globally and is continuously evolving to cater to the needs of the parties. As such, the two systems (arbitration and litigation) ought indeed to be properly regarded as co-​ordinate rather than rival.39

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Arbitration procedures generally together with specific examples from around the globe have been covered in detail in various chapters of this book.

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energy, and financial services sectors respectively. Arbitration was the most preferred method for resolving cross border disputes for 68 per cent of construction respondents. See PWC, “Corporate Choices in International Arbitration” (2013), available at https://​www.pwc.com/​gx/​en/​arbitration-​dispute-​resolution/​ assets/​pwc-​international-​arbitration-​study.pdf (accessed on 17 November 2020). See Donggen Xu and Huiyuan Shi, “Dilemma of Confidentiality in International Commercial Arbitration” (2011) 6 Frontiers L. China 403, p. 417. See ICC, “Commission Report on Financial Institutions and International Arbitration” (2018), available at https://​iccwbo.org/​content/​uploads/​sites/​3/​2016/​11/​icc-​financial-​institutions-​and-​international-​ arbitration-​icc-​arbitration-​adr-​commission-​report.pdf (accessed on 4 April 2020). See Gary B. Born, International Commercial Arbitration, Vol. 2 (2nd edn, Kluwer Law International 2014), p. 2781. See Nigel Blackaby and others, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), paras. 1.108–​1.134. The Bailli Lecture, “Developing Commercial Law through the Courts: Rebalancing the Relationship between the Courts and Arbitration”, 9 March 2016, at para. 49, available at https://​www.judiciary.uk/​wp-​content/​ uploads/​2016/​03/​lcj-​speech-​bailli-​lecture-​20160309.pdf (accessed on 17 November 2020).

35. 36. 37. 38.

39.

13

Chapter 1—​Nature of Arbitration

[1.5] SCOPE OF THIS BOOK This book is concerned with the procedure of arbitration where disputes are settled by private arbitral tribunals chosen by the parties, and the reference of a dispute to arbitration.40 The awards issued by the arbitral tribunal are binding on the parties, have the force of law, and can be enforced in court, not only locally but also internationally.41

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Such arbitration arises from an arbitration agreement between the parties at the stage when a contract is formed, or by a subsequent agreement between the parties after a dispute has arisen, to submit the dispute to arbitration. It can also arise under a treaty obligation or statutory provision requiring the parties to resolve their dispute by arbitration.

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This publication covers three main areas:

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First, whether arbitration should be pursued in place of litigation and preserved by way of stays, injunctions, and ouster of jurisdiction;

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Secondly, the procedure and other practical matters such as the appointment, remuneration, powers and duties of the arbitral tribunal, and the commencement and conduct of an arbitration; and

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Thirdly, the award, the rights of enforcement, and the grounds to challenge an award.

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As an overview, this book is planned generally as a text and reference for domestic and international commercial arbitration from the perspective of a Model Law regime.

[1.6] CONCLUSION

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It has long been said that arbitration offers a cheaper, quicker means of dispute resolution than national courts.42 While there has been a significant deviation from this view in the last few years, in reality, both international arbitration and international litigation can involve significant expense and delay. It is unwise to make sweeping generalisations about which mechanism is necessarily quicker or cheaper in all cases.43 Indeed, this is the realistically sound view and it is not possible to generalise on dispute mechanism as being quicker, cheaper, and more efficient than the other. It is likely 40. See Arbitration and Conciliation Act, 1996, ss. 8, 45. These sections empower courts to refer parties to arbitration. 41. See Nigel Blackaby and others, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), para. 1.87. 42. See Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International 2014), p. 83. 43. Ibid, p. 84.

14

Law, Practice and Procedure of Arbitration in India

that due to the enforceability of arbitral awards in view of the New York Convention, arbitration will continue to remain as the preferred choice of parties in resolving cross-​ border disputes.

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This book captures the essence of the law, practice, and procedure of international arbitration, albeit with a special emphasis on the arbitration law of India. This book identifies the evolving global best practices. It relates them back to the Indian position. The overall objective is to arm arbitral practitioners and other interested persons with “one-​stop” text to navigate through applicable arbitral, principles, rules and how they work in practice and develop into applicable procedures.

Chapter 2 LEGISLATIVE DEVELOPMENT OF ARBITRATION [2.1] INTRODUCTION............................................................................................................................ 15

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[2.2] ARBITRATION IN THE WORLD................................................................................................. 16 [2.3] LEGAL FRAMEWORK FOR ARBITRATION............................................................................. 18 [2.4] THE EVOLUTION OF ARBITRATION IN INDIA.................................................................... 20 [2.5] THE ARBITRATION AND CONCILIATION ACT, 1996 AND SUBSEQUENT AMENDMENTS................................................................................................................................ 22

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[2.6] CONCLUSION.................................................................................................................................. 36

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[2.1] INTRODUCTION

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Dispute resolution methods have existed since people first established cohesive communities. However, a systematic process like arbitration, with distinct features, to resolve disputes out of court is a relatively recent manifestation. It is a means to an end.

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The concept of arbitration is not new for the Indian subcontinent. Hindu mythology provides early descriptions of arbitration.1 In ancient India, the affairs of the community were managed by the village council of five or more members namely –​“Panchas” or “Panchayat”.2

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The Privy Council, in dismissing a challenge to an award given by the panchayat, described this historical dispute resolution process, capable of producing a binding result, as follows:

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“Reference to a village panchayat is the time-​honoured method of deciding disputes of this kind, and has these advantages, that it is generally comparatively easy for the panchayatdars to ascertain the true facts, and that, as in this case, it avoids protracted litigation which, as observed by one of the witnesses, might have proved ruinous to the estate. Looking at the evidence as a whole their Lordships see no reason for doubting that the award was a fair and honest settlement of a doubtful claim based both on

1. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International 2021), p. 57. 2. Vytla Sitanna v Marivada Viranna, AIR 1934 PC 105.

16

Law, Practice and Procedure of Arbitration in India

legal and moral grounds, and are therefore of opinion that there are no grounds for interfering with it.”3

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Additionally, there has been an indigenous tradition of resolving disputes between individuals or groups of people by the village headman namely –​the “Sarpanch”. His decision is enforced by way of sanctions. For example, refusal to adhere to his decision may result in the offender from being excluded from all religious and social functions of the community. It may even result in ex-​communication from the village or community.4

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[2.2] ARBITRATION IN THE WORLD

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This system of dispute resolution continued into the medieval period. However, it underwent considerable change with the coming of the British Rule in India. Consequently, arbitration, as a legal mechanism for final and binding determination of disputes, began in the 18th century, with a formal legal framework subsequently appearing in the first Indian Code of Civil Procedure (“CPC”) in 1859.

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The use of arbitration as a means of resolving disputes has grown significantly, especially in Asia, in the last decade. Arbitration is becoming the usual means of settlement of commercial and investment disputes.

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The steady growth of arbitration has resulted in the emergence of new arbitration centres, ultimately contributing to the development of institutional arbitration. A number of organisations, located in different countries, provide institutional arbitration services, often tailored to particular commercial or other needs.5 A decade ago, institutional arbitration was more of an exception in India, where majority of arbitrations were conducted on an ad hoc basis.

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Institutions delivering arbitral services have existed in India since several decades. Many of these were linked to chambers of commerce, such as the Indian Council of Arbitration,6 while others were either set up by the High Courts (such as the Delhi International Arbitration Centre)7 or as private bodies (Nani Palkhivala Arbitration Centre).8 In 2017, the Mumbai Centre for International Arbitration (“MCIA”) was established in Mumbai. 3. Ibid at 107. 4. Fali S. Nariman, Harmony Amidst Disharmony: The Indian Framework (Hay House India, 2020). 5. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International 2021), p. 189. 6. See Indian Council of Arbitration, “About Us”, available at http://​www.icaindia.co.in/​htm/​about-​us.html (accessed on 17 November 2020). 7. See Delhi International Arbitration Centre, “About Us”, available at http://​ www.dacdelhi.org/​ topics. aspx?mid=1 (accessed on 17 November 2020). 8. See Nani Palkhivala Arbitration Centre, “About Us”, available at http://​www.nparbitration.com/​AboutUs/​ About (accessed on 17 November 2020).

17

Chapter 2—Legislative Development of Arbitration

Although the arbitration regime worldwide is morphing into towards institutional arbitration, it is yet to mature in such form in India. The history of this change dates back to 2001 when the Law Commission of India undertook a comprehensive review of the then existing arbitration regime and recommended amendments to it in the 176th Law Report.9 Some of those recommendations were furthered in the 246th Law Report issued 10 years later in August 2014.10

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In 2017, the Government of India set up a High-​Level Committee headed by Justice (Retd) B.N. Srikrishna, to review the institutionalisation of arbitration mechanism in India. The New Delhi International Arbitration Centre (“NDIAC”) has been established as India’s flagship arbitral institution based on the said High-​Level Committee recommendations. One of its objectives is to enhance India’s reputation as a globally conducive arbitration jurisdiction.

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In a similar fashion, Pakistan established the Centre for International Investment and Commercial Arbitration (“CIICA”), Bangladesh established the Bangladesh International Arbitration Centre (“BIAC”), all in just the last decade. The shift from ad hoc arbitration to institutional arbitration globally has increased competition and provided cross-​border businesses with a variety of options for resolving disputes.

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The growth of arbitration has also caused the legislature to support arbitral framework through legislative reforms to the existing arbitration laws. India has made amendments to its arbitration law twice in the last five years.11

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Several countries such as Russia,12 Malaysia,13 and South Korea14 have undertaken efforts to improve and modernise their arbitration laws by aligning national legislation with the UNCITRAL Model Law on International Commercial Arbitration (“UNCITRAL Model Law /​Model Law”).15

9. Law Commission of India, One Hundred and Seventy Sixth Report on the Arbitration and Conciliation (Amendment) Bill, 2001 (12 September 2001), available at https://​ lawcommissionofindia.nic.in/​ arb.pdf (accessed on 2 January 2020). 10. Law Commission of India, Report Mo. 246 Amendments to the Arbitration and Conciliation Act, 1996 (5 August 2014), available at https://​lawcommissionofindia.nic.in/​reports/​report246.pdf (accessed on 2 January 2021). 11. See Section 2.5 of this chapter for a detailed discussion on the amendments. 12. Russian Federation Law on International Commercial Arbitration, 1993. 13. Arbitration Act, 2005 (Amended 2011 and 2018). 14. Korean Arbitration Act, 2016. 15. UNCITRAL Model Law on International Commercial Arbitration, 1985 (with amendments as adopted in 2006).

18

Law, Practice and Procedure of Arbitration in India

Some countries such as Singapore and Hong Kong have also passed legislation to abolish the common law principles of champerty and maintenance.16 The legislation has been enacted in order to enable use of third-​party funding (TPF) by parties to pursue legitimate claims.

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Finally, the ability of most national courts all over the world to enforce an arbitral award under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (of 1958) (“New York Convention”) has been compelling in the choice of parties to resolve disputes through arbitration.

[2.3] LEGAL FRAMEWORK FOR ARBITRATION

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In theory, it is possible to arbitrate without the support or interference of the courts in the process. In reality, however, there are practical difficulties that make it necessary for the courts to play a crucial role in the arbitral process.

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Arbitration is a creature of consent. More often than not, parties end up having to resort to national courts for the enforcement of an arbitration agreement, appointment of arbitrators, or for interim relief.

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As such, it is necessary to have a well-​balanced legislative framework. The framework has to be designed to complement the arbitral process by providing for minimum interference but necessary court support of the arbitral process.

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The twin pillars of the modern system of international arbitration are the UNCITRAL Model Law and the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also popularly known as the New York Convention.

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The UNCITRAL Model Law remains the most important template instrument in the field of international commercial arbitration. It has been adopted either wholescale or has been enacted in a modified form in a growing number of jurisdictions.

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India adopted the UNCITRAL Model Law version of 1985, in 1996 by enacting the Arbitration and Conciliation Act, 1996. India became a signatory to the New York Convention on 10 June 1958 and ratified it on 13 July 1960.

Framework in India Although the Indian framework of arbitration was spread across different regulations, the first substantive law enacted for the purpose of making a reference of disputes to 16. Civil Law (Amendment) Act, 2017; Arbitration and Mediation Legislation (Third Party Funding) (Amendment) Ordinance, 2017, Division III, Part X-​A.

19

Chapter 2—Legislative Development of Arbitration

arbitration was the Indian Arbitration Act, 1899 (“1899 Act”),17 which was modelled on the provisions of the English Arbitration Act, 1899. However, this act was limited to “Presidency Towns”, and arbitration generally remained spread across various statutes, including the CPC of 1859 (and later, the CPC of 1908).

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Provisions for a comprehensive law on arbitration for the whole of British India were introduced in the Arbitration Act, 1940 (“1940 Act”).18 The 1940 Act was modelled on the provisions of the English Arbitration Act, 1934. British India was a signatory to the Geneva Protocol and the Geneva Convention for Execution of Foreign Arbitral Awards, 1927.

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India subsequently also signed the New York Convention. Implementing legislations were brought in for both these conventions in the form of the Arbitration (Protocol and Convention) Act, 1937 and the Foreign Awards (Recognition and Enforcement) Act, 1961, respectively.

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These three statutes, that is, the 1940 Act, the 1937 Act, and the 1961 Act constituted the framework of arbitration19 until enactment of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”).20 The Arbitration Act amended and consolidated the law relating to domestic and international arbitration, enforcement of foreign arbitral awards, and law relating to conciliation.21 The Arbitration Act substantially adopts the UNCITRAL Model Law, making India a Model Law jurisdiction.22

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The incorporation of the UNCITRAL Model Law has been widely implemented around the world, with legislations taking guidance and directions from UNCITRAL Model Law provisions. This has resulted in increase in harmonisation of arbitration laws across the world.

17. Indian Arbitration Act, 1899 (Act 9 of 1899). 18. Arbitration Act, 1940 (Act 10 of 1940). 19. See Mathuradas Maganlal v Maganlal Parbhudas, AIR 1934 Bom 79 for a discussion on enforcement of arbitral awards under “common law”; see also Republic of India XI Lok Sabha Debates Session II, Budget, Lok Sabha, 1 August 1996, Ramakant D. Khalap, available at https://​parliamentofindia.nic.in/​ls/​lsdeb/​ls11/​ ses2/​2201089601.htm (accessed on 17 November 2020). Whether arbitration agreements and awards can be enforced in common law after 1996 in India appears to be an interesting but perhaps moot point. The Law Minister of India, in his speech when introducing the Arbitration Bill in parliament, stated that the Act would be a “complete code” on arbitration. 20. Arbitration and Conciliation Act, 1996 (Act 26 of 1996). 21. Arbitration and Conciliation Act, 1996, Statement of Objects and Reasons. 22. Ibid.

20

Law, Practice and Procedure of Arbitration in India

[2.4] THE EVOLUTION OF ARBITRATION IN INDIA The 1899 Act The 1899 Act had been enacted by the Legislative Council of India, established in 1834. As stated in Section 2.3 above, the 1899 Act was the first substantive legislation on the law of arbitration in India.

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The 1899 Act, for the first time, allowed parties to refer “future” disputes to arbitration.23 The applicability of the provisions of the 1899 Act was restricted to the Presidency Towns of Bombay (now Mumbai), Madras (now Chennai), and Calcutta (now Kolkata).24

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The enactment of the 1899 Act enabled arbitration to become a mechanism to resolve disputes outside the court system, albeit only to a limited extent. The law of arbitration in India remained largely unorganised.

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The 1940 Act

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The 1940 Act repealed the 1899 Act and other provisions pertaining to arbitration, contained in the Code of Civil Procedure, 1908.25 The 1940 Act was enacted as a complete code on arbitration law in India. The provisions of the 1940 Act were largely based on the English Arbitration Act, 1934.

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The 1940 Act was divided into seven chapters. Arbitration agreement was defined in Section 2(a) as “a written agreement to submit present or future differences to arbitration, whether an arbitrator is named therein or not”. Sections 3 to 19 provided for arbitration without intervention of the court,26 while Section 20 provided for arbitration with the intervention of the court where no suit is pending.27

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Sections 21 to 25 dealt with arbitration in suits.28 The general provisions concerning the power of courts to set aside an award declare the existence of an arbitration agreement or stay proceedings and refer matters to arbitration were contained in Sections 26 to 38 of the 1940 Act. Provision for appeals was set out in Section 39. 23. 24. 25. 26.

Indian Arbitration Act, 1899, s. 2(a). Mathuradas Maganlal v Maganlal Parbhudas, AIR 1934 Bom 79. Code of Civil Procedure, 1908 (Act 5 of 1908). See the 1940 Act, Chapter II. Arbitration without the intervention of courts referred to matters wherein the agreement between the Parties provided for adjudication of disputes by arbitration. 27. See the 1940 Act, 1940, Chapter III. Arbitration with the intervention of courts referred to matters wherein the agreement between the parties did not provide for arbitration, but the parties chose to resolve the differences by arbitration. 28. See the 1940 Act, s. 21. Parties to a suit agree that any matter of difference between them in a suit shall be referred to arbitration.

21

Chapter 2—Legislative Development of Arbitration

The 1940 Act contained provisions for what was then known as the appointment of an “umpire”, where parties had agreed to refer the disputes to three or more arbitrators.29 The 1940 Act was designed to bring about a radical change in the arbitration law in India. However, there were difficulties with the arbitral process in India under the 1940 Act. The Supreme Court of India in Gurunanak Foundation v Rattan Singh & Sons30 explained that:

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“… the way in which the proceedings under the Act (1940 Act) are conducted and without an exception challenged in Courts, has made lawyers laugh and legal philosophers weep. Experience shows and law reports bear ample testimony that the proceedings under the Act have become highly technical accompanied by unending prolixity, at every stage providing a legal trap to the unwary. Informal forum chosen by the parties for expeditious disposal of their disputes has by the decisions of the Courts been clothed with ‘legalese’ of unforeseeable complexity. This case amply demonstrates the same.”31

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The Arbitration and Conciliation Act, 1996

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The 1940 Act failed to achieve its stated objective. It was not assisting the emerging Indian economy in dealing with conflicts and disputes efficiently. India became indebted to international institutions such as the World Bank and the International Monetary Fund for its developmental funding.

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As a result, India liberalised several previously government-​controlled industries in the early 1990s. It ramped up efforts towards attracting foreign investment. The requirements of the growing economy and business realities led to the enactment of the Arbitration and Conciliation Act 1996 (the Arbitration Act).

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The Arbitration Act departed from the provisions of the 1940 Act which was modelled on the English Arbitration Act, 1934. Instead, it adopted the UNCITRAL Model Law, bringing it in line with other Model law jurisdictions over the world.32 The Indian arbitral regime became part of the increasing harmonisation of arbitration laws across the world.

29. See the 1940 Act, ss. 8, 10, 11. 30. AIR 1981 SC 2075. 31. Ibid at para. 1. This decision has been overruled by the Supreme Court of India in 2018, in State of Jharkhand v Hindustan Construction Co. Ltd. (2018) 2 SCC 602. 32. See UNCITRAL, “Status: UNCITRAL Model Law on International Commercial Arbitration (1985), With Amendments as Adopted in 2006”, available at https://​ uncitral.un.org/​ en/​ texts/​ arbitration/​ modellaw/​ commercial_​arbitration/​status (accessed on 17 November 2020). The UNCITRAL Model Law has enjoyed wide acceptance and has been implemented in 84 States in a total of 111 jurisdictions.

22

Law, Practice and Procedure of Arbitration in India

[2.5] THE ARBITRATION AND CONCILIATION ACT, 1996 AND SUBSEQUENT AMENDMENTS

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The law prior to 1996 was spread across multiple statutes. One of the basic objectives of the Arbitration Act was to consolidate the law in one statute. Apart from this, the Arbitration and Conciliation (Amendment) Act, 2015 (“2015 Amendment”)33 and Arbitration and Conciliation (Amendment) Act, 2019 (“2019 Amendment”)34 address several fundamental themes aimed at creating a model arbitration framework addressing the following issues: (1) Fairness, Efficiency, and Flexibility of Procedure;



(2) Minimising supervisory jurisdiction of Courts; and



(3) Enforceability of the award. It is useful to examine abovementioned themes designed around them.

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Recently, the Arbitration and Conciliation (Amendment) Ordinance, 202035 (“Ordinance”) was promulgated by the President of India, with effect from 4 November 2020, when the Parliament was not in session.

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Subsequently, the Arbitration and Conciliation (Amendment) Bill, 202136 (“2021 Amendment”) received parliamentary assent on 10 March 2021. The provisions of the 2021 Amendment are discussed hereinbelow.

Fairness, Efficiency, and Flexibility of Procedure

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One of the foremost stated objectives of the Arbitration Act as stated in its “Statement of Objects and Reasons” was to:

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“make provision for an arbitral procedure which is fair, efficient and capable of meeting the needs of the specific arbitration”.37

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Several provisions in the Arbitration Act are modelled to achieve this objective. There is, however, a balancing act that is required in achieving flexibility as well as fairness. Thus, the requirement of giving of reasons by an arbitral tribunal was made an explicit requirement,38 unless the parties had agreed that no reasons were to be 33. 34. 35. 36. 37. 38.

Arbitration and Conciliation (Amendment) Act, 2015 (Act 3 of 2016). Arbitration and Conciliation (Amendment) Act, 2019 (Act 33 of 2019). The Arbitration and Conciliation (Amendment) Ordinance, 2020 (No. 14 of 2020). The Arbitration and Conciliation (Amendment) Bill, 2021 (Bill No. 16 of 2021). Arbitration and Conciliation Act, 1996, Statement of Objects and Reasons, Cl. 4(ii). Arbitration and Conciliation Act, 1996, Statement of Objects and Reasons, Cl. 4(iii).

23

Chapter 2—Legislative Development of Arbitration

given,39 with the aim that this would “introduce transparency in decision-​making and enhance the faith of the parties in the arbitration system.”40 Similarly, borrowing from the Model Law, the parties are to mandatorily be treated with equality and have a full opportunity to present their case,41 although they are generally “free to agree on the procedure to be followed by the arbitral tribunal in conducting” proceedings.42

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Going further with flexibility of procedures that are “capable of meeting the needs of the specific arbitration”, the Arbitration Act permits the use of mediation, conciliation, or other procedures during the arbitration,43 to resolve the dispute.

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Arbitral and dispute resolution procedures worldwide have been tailor-​made to account for specific needs of different classes of industries and contracts, for example, through a structured procedure providing for one or more dispute resolution stages prior to arbitration.

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Today, some innovative procedures also allow for mediation midway during the arbitration, to iron out unnecessary controversies and focus on the most important differences between parties.44

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Such agreements need to be enforceable under the Arbitration Act as arbitration agreements allow for such flexibility in dispute resolution mechanisms. Section 30 of the Arbitration Act appears to confirm this and protect the enforceability of an award that involves such procedures, by providing that:

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“It is not incompatible with an arbitration agreement for an arbitral tribunal to encourage settlement of the dispute and, with the agreement of the parties, the arbitral tribunal may use mediation, conciliation or other procedures at any time during the arbitral proceedings.”

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Parliament has made a 360-​degree shift since 1996 on time-​limits for completion of arbitral proceedings and issuance of awards. There was no mandatory time-​limit for passing an award under the Arbitration Act as it was originally introduced in 1996.

39. Arbitration and Conciliation Act, 1996, s. 31(3). 40. See Republic of India XI Lok Sabha Debates Session II, Budget, Lok Sabha, 1 August 1996, Ramakant D. Khalap, available at https://​parliamentofindia.nic.in/​ls/​lsdeb/​ls11/​ses2/​2201089601.htm (accessed on 17 November 2020). 41. Arbitration and Conciliation Act, 1996, s. 18. 42. Arbitration and Conciliation Act, 1996, s. 19. 43. Arbitration and Conciliation Act, 1996, Statement of Objects and Reasons, Cl. 4(vi). 44. See SIAC-​SIMC Arb-​Med-​Arb Model Clause; ICC ADR Rules; Cite Med-​Arb Rules from ICC, SIAC, Indian institutions, etc.

24

Law, Practice and Procedure of Arbitration in India

The then Law Minister specifically stated in parliament that: “There will be no rigid time-​limits for making an award. This will help in avoiding most of present litigation which consists in moving courts for extension of arbitrator’s time-​limits for making the award resulting in indefinite postponement of arbitral proceedings. Under the new law, the parties will be free to fix the time-​limit for making the award and to extend the same either before or after the expiration thereof.”45

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This approach evidently changed in the 2015 and 2019 amendments. A mandatory time-​limit was imposed on all arbitrations subject to extension by courts. Subsequently, this mandatory time-​limit was restricted to arbitrations involving Indian parties (arbitrations other than international commercial arbitration).

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Sections 29A and 29B were inserted into the Arbitration Act by the 2015 Amendment.46 It addresses the issue of long-​drawn duration of arbitration proceedings in India which was almost as time-​consuming as litigating in courts.

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Section 29A required an arbitral tribunal to make an award within a period of 12 months from the date on which the arbitral tribunal enters upon reference.47 The 2019 Amendment Act subsequently amended the timelines set out in Section 29A of the Arbitration Act, by providing that only in case of domestic arbitrations that are not “international commercial arbitrations”, the award is to be made by the arbitral tribunal within 12 months from the date of completion of pleadings.48

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Section 29B of the 2015 Amendment was inspired by the various institutional rules which provide for conducting arbitration proceedings on an expedited basis. It provides for a fast-​track procedure if the parties agree in writing, and a dispute can be decided without an oral hearing on a documents-​only basis.49

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An arbitral tribunal is required to disclose in writing, any circumstances which are likely to give rise to justifiable doubts as to its independence and impartiality, or is likely to affect its ability to devote sufficient time to the arbitration.50

45. See Republic of India XI Lok Sabha Debates Session II, Budget, Lok Sabha, 1 August 1996, Ramakant D. Khalap, available at https://​parliamentofindia.nic.in/​ls/​lsdeb/​ls11/​ses2/​2201089601.htm (accessed on 17 November 2020). 46. 2015 Amendment, s. 15. 47. This period can be extended by another period of six months with the consent of both parties. Any extension beyond a period of 18 months can only be done by making an application to the court for such extension. Section 29A has been amended in 2019. See the 2019 Amendment, s. 6. 48. See the 2019 Amendment, s. 5. The period of 12 months can be extended by another six months with the consent of the parties. 49. Arbitration Act, s. 29B. 50. The disclosure is required to be made in the form set out in Schedule VI of the 2015 Amendment. See Schedule VI of the Arbitration Act.

25

Chapter 2—Legislative Development of Arbitration

The grounds set out in the Fifth Schedule51 are to be used as guiding factors in determining whether justifiable doubts exist as to the independence of arbitrators (and appointing authorities).52

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It must be noted that the grounds set out in the Fifth Schedule and Seventh Schedule of the 2015 Amendment have been adopted from the IBA Guidelines on Conflict of Interest in International Arbitration.53 This makes India perhaps, one of the first jurisdictions to incorporate such soft law into its statutory arbitration law.

The Supervisory Jurisdiction of Courts

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Arbitrations have and will always have some interface with courts and the judicial system of a country. Arbitrators have no coercive powers. Thus, awards and procedural directions need to be endorsed and implemented using the coercive powers of the courts. The safe seat principles become important if it facilitates arbitration process and enforcement.54

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Delays in litigation do promote the use of arbitration. However, the courts’ role in ensuring fairness in arbitral proceedings, rejection of perverse awards, and compliance with arbitral decisions will always create tension between the role of courts and the role of arbitral tribunals in carrying out their functions.

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This intersection between the courts and arbitration was raised in the debates during the passing of the Arbitration Act when the then Law Minister stated that:

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“We cannot totally rule out the intervention of courts in any case. If the court is not required at the initial stages, it will be required at the ultimate stage when the award is given.”55

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The Arbitration Act thus provides for judicial assistance primarily at four stages. First, to refer a dispute filed in a court, which covered by an arbitration agreement, to arbitration;56 second, for the appointment of arbitrators when parties fail to agree on the

51. 2015 Amendment, Section 8, Explanation 1. 52. TRF Ltd. v Energo Engg. Projects Ltd. (2017) 8 SCC 377. 53. IBA (International Bar Association) Guidelines on Conflicts of Interest in International Arbitration, adopted by resolution of the IBA Council on 23 October 2014. 54. See “CIArb London Centenary Principles”, available at https://​www.ciarb.org/​media/​1263/​london-​centenary-​ principles.pdf (accessed on 17 November 2020). 55. See Republic of India XI Lok Sabha Debates Session II, Budget, Lok Sabha, 1 August 1996, Ramakant D. Khalap, available at https://​parliamentofindia.nic.in/​ls/​lsdeb/​ls11/​ses2/​2201089601.htm (accessed 17 November 2020). 56. Arbitration Act, s. 8 under Part I and s. 45 under Part II.

26

Law, Practice and Procedure of Arbitration in India

appointment;57 third, to secure interim reliefs and other interim measures;58 and fourth, to regulate enforceability and setting-​aside of the award.59 The arbitral tribunal exercising its powers under the first and the second stages may sometimes be confronted with the question on whether the arbitration agreement is valid. This then becomes an issue of jurisdiction.

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The opposing party may argue that such power cannot be exercised since an arbitration agreement was invalid or that the arbitral tribunal had no jurisdiction. The Arbitration Act incorporates the principle of Kompetenz-​Kompetenz which allows the arbitral tribunal to rule on matters concerning its jurisdiction.60

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Section 8 of the Arbitration Act, which empowers the courts to refer disputes to arbitration, was amended in 2015 to provide that the courts must refer parties to arbitration, “unless it finds that prima facie no arbitration agreement exists”.

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In the meanwhile, the arbitral proceedings can continue subject to any order to the contrary by a competent court. This avoids long drawn arguments at any other later stage of enforcement.

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Section 11 of the Arbitration Act empowers the relevant court to appoint arbitrators. It has undergone an amendment to resolve the diverging positions taken in several court decisions with respect to the issue of ruling on the validity or existence of the arbitration agreement.

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Section 11, as amended by the 2015 Amendment requires a court deciding an application for the appointment of arbitrator to “confine (itself) to the examination of the existence of an arbitration agreement”.

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Pursuant to the amendment of Section 11 in 2019, the Supreme Court of India and the High Court are empowered to designate arbitral institutions for the purpose of making appointments.61

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Similarly, the 2019 Amendment expressly sets out that in deciding an application under Section 45 (which applies to enforcement of arbitration agreements in foreign-​ seated arbitrations, and is similar to Section 8) of the Arbitration Act.

57. 58. 59. 60. 61.

Arbitration Act, s. 11. Arbitration Act, ss. 9, 27. Arbitration Act, ss. 34 and 36 under Part I and s. 48 under Part II. Arbitration Act, s. 16. 2019 Amendment, s. 3. This provision was not in force as on the date of publication of this book.

27

Chapter 2—Legislative Development of Arbitration

A judicial authority must only make a prima facie determination as to the existence of an arbitration agreement. This brings consistency between the standard of review at the stage of reference for arbitrations seated in India and foreign-​seated arbitrations. Prior to the amendment of Section 45, a judicial authority was empowered to take a final and determinative approach on the existence of an arbitration agreement.

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However, the Supreme Court of India in Shin-​Etsu Chemical Co. Ltd. v Akash Optifibre Ltd. & Anr.62 adopted the prima facie approach. The Arbitration Act now statutorily mandates the prima facie approach. This achieves expedition at the reference stage and fair opportunity to contest the award later.63

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Section 9 of the Arbitration Act allows for recourse to the courts for interim relief either prior to, during, or after an award is passed (but before it is enforced in accordance with the Arbitration Act).

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Under this provision, when an order of interim protection is passed by a court prior to the commencement of the arbitral proceedings, a party is required to commence arbitral proceedings within a period of 90 days from the date of such order.64

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This prevents parties from abusing this provision for interim relief when they may have no intention to actually initiate arbitration proceedings. Unless expressly agreed between the parties, a court is empowered to grant reliefs under Section 9 even when the seat of arbitration is outside India.65

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The 2015 Amendment also brought about a limit to the exercise of the court’s power under Section 9. The court is not allowed to entertain an application under this section unless it is of the view that the arbitral tribunal will be unable to provide the parties with an efficacious remedy.66

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As most institutional rules and the Arbitration Act itself provide for such powers to an arbitral tribunal,67 the ability to seek Section 9 remedies is limited when the arbitral tribunal already stands constituted.

62. (2005) 7 SCC 234 at para. 106. 63. See Emmanuel Gaillard and Yas Banifatemi, “Prima Facie Review of Existence, Validity of Arbitration Agreement” (2005) NYLJ 3, 7. 64. See Arbitration and Conciliation (Amendment) Act, 2015, s. 5(2). A party can commence arbitration proceedings beyond the period of 90 days, if the court granting the interim order so determines. 65. Arbitration Act, proviso to s. 2(2). 66. 2015 Amendment, s. 5(3). 67. Arbitration Act, s. 17; see ICC Arbitration Rules, 2017, r. 28; UNCITRAL Model Law, 1985, Chapter IVA; MCIA Rules, 2016, r. 15; DIAC (Arbitration Proceedings) Rules, 2018, r. 15; NPAC Rules, r. 33(b).

28

Law, Practice and Procedure of Arbitration in India

These powers are to assist the enforcement of arbitration agreements. The Arbitration Act is divided into four parts: Part I

applies to, and governs the procedure of arbitration and was originally restricted (in literal text) only to Indian seated arbitrations.68



Part II deals with enforcement of foreign seated arbitration agreements and awards.



Part III contains provisions for conciliation of disputes.



Part IV contains certain supplementary provisions, which were meant to smoothen the shift from the 1940 Act to the Arbitration Act.

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The supervisory powers discussed above are all placed in Part I which is applicable to India-​seated arbitrations, as provided in Section 2 of the Arbitration Act. Prior to the 2015 Amendment, there was uncertainty as to whether this meant that Part I would “only” apply to India-​seated arbitrations.

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This provision was interpreted to mean that Indian courts could not use its supervisory powers for appointment, obtaining interim relief etc. in aid of foreign-​ seated arbitrations.

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The Supreme Court of India, in Bhatia International v Interbulk Trading SA (Bhatia) (“Bhatia”),69 had laid down the foundation for the above approach. It held that only Part II of the Arbitration Act applied to foreign-​seated arbitrations.

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As such, it only provided a mechanism for enforcement of the arbitration agreement and the award. It did not include supervisory powers of courts to intervene (in aid of or against) an arbitration as it were available for India-​seated arbitrations (whether international or domestic) under Part I.

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The effect of this was that a court would effectively have to come to a finding that the seat in such cases was India or that Part I was also applicable to foreign-​seated arbitrations. However, the Court was of the view that simply holding the latter and allowing Indian courts to intervene in foreign-​seated arbitrations unfettered would clearly have been against the basic conception of the seat theory. As such, the Court went on to rule that Part I will also apply to arbitrations “conducted” outside India, unless specifically excluded by agreement of the parties.70

68. Arbitration Act, s. 2(1). 69. (2002) 4 SCC 105. 70. Ibid at para. 26.

29

Chapter 2—Legislative Development of Arbitration

Thus, parties to international contracts having a nexus with India had the onerous burden of having to, apart from generally designating a foreign seat (and thus a foreign supervisory jurisdiction) in their arbitration agreement further expressly agree or imply that they were specifically excluding the applicability of Indian supervisory jurisdiction (Part I).

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This ran counter to the ruling arbitral theory that the mere designation of a foreign seat should have been enough to indicate that Indian supervisory jurisdiction under Part I of the Indian Act was inapplicable.

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The Supreme Court of India’s judgment in Bhatia was subsequently overruled by a larger bench of the Supreme Court of India in Bharat Aluminium and Co. v Kaiser Aluminium and Co. (“BALCO”).71

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The Supreme Court of India in BALCO, it was held that Part I and Part II of the Arbitration Act are mutually exclusive. It further added that Part I does not apply to foreign-​seated arbitrations, thus clearly demarcating and recognising the distinction between a seat and a venue.72

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The 2015 Amendment has made this intent clear by the insertion of a new proviso to Section 2(2).73 It states that Sections 9 and 37 (1)(b) (dealing with interim measures) and Section 27 (court-​assistance in matters of evidence) apply even to foreign-​ seated arbitrations.

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However, the application of Part I is qualified, in that it is “subject to an agreement to the contrary”. Thus, parties to a foreign-​seated arbitration can also exclude this limited application of Part I by way of an agreement.74

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The supervisory jurisdiction of courts is now determined on the basis of the classification of an arbitration either as an “international commercial arbitration” or as an arbitration “other than an international commercial arbitration”.75

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71. (2012) 9 SCC 552. 72. Ibid at para. 196. The decision in BALCO was initially given prospective effect (i.e. from the date of that ruling), given that various courts and tribunals had applied the law as stated in Bhatia for a decade by the time the position was corrected in BALCO. As such, courts were a required to follow the position set out in Bhatia in relation to arbitration agreements that were executed prior to the decision in BALCO. Even this limited pre-​BALCO relevance of Bhatia was effectively nullified by the Supreme Court of India subsequently in Union of India v Reliance Industries 2015 10 SCC 213. 73. 2015 Amendment, s. 2 (II). 74. Although the Law Commission of India had in its 246th Report recommended that such an agreement to the contrary must be “express”, the term “express agreement” does not find a mention in the proviso to s. 2(2). See the 246th Report of the Law Commission of India dated 5 August 2014, available at https://​ lawcommissionofindia.nic.in/​reports/​report246.pdf at p. 39. 75. 2015 Amendment, s. 2(I)(A).

30

Law, Practice and Procedure of Arbitration in India

The High Court of ordinary original civil jurisdiction has supervisory jurisdiction over international commercial arbitrations within its jurisdiction. The Principal civil court of original jurisdiction or the High Court in its original jurisdiction has supervisory jurisdiction over an arbitration that is not an international commercial arbitration (i.e. a domestic arbitration).

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Enforceability of Awards Section 34 of the Arbitration Act lays down the procedure and grounds for challenging an award. These grounds broadly mirror the Model Law grounds for challenging an award. The grounds as stated in the section initially, were meant to be “clear and unambiguous”.76

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However, the judicial tension between enforcing awards and ensuring compliance with larger concerns such as public policy and perverse awards, led to several court interpretations of the grounds available for setting-​aside an award, which did not add to the clarity of the provisions. Such judgments are said to be ambiguous and inconsistent.77

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The 2015 Amendment made substantial changes to this provision.78 These amendments have narrowed down the grounds for challenging an award. It sought to legislate particular judgments of the Supreme Court of India which clarified and were supportive of the finality of arbitral awards in international commercial arbitration, into the statute.79

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Pursuant to the amendment of Section 34 of the Arbitration Act, the ground of “patent illegality” is only available to challenge awards arising out of arbitration other than international commercial arbitration, as opposed to awards in India-​seated international commercial arbitrations.80

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In an apparent attempt to avoid a full-​fledged retrial in setting-​aside proceedings, the 2019 Amendment provides that a party challenging an award is now required to

76. See Republic of India XI Lok Sabha Debates Session II, Budget, Lok Sabha, 1 August 1996, Ramakant D. Khalap, available at https://​parliamentofindia.nic.in/​ls/​lsdeb/​ls11/​ses2/​2201089601.htm (accessed on 17 November 2020). 77. The ground of public policy was given an expansive ambit by the courts in various cases prior to the 2015 Amendment coming into effect. See ONGC Ltd. v Saw Pipes (2003) 5 SCC 705; McDermott International Inc. v Burn Standard Coal Company 2006 (2) Arb LR 498. 78. See 2015 Amendment, s. 7. Section 34 has been amended further in 2019. 79. Renusagar Power Co. Ltd. v General Electric Co. 1994 Supp (1) SCC 644; Shri Lal Mahal Ltd. v Progetto Grano Spa (2014) 2 SCC 433; ONGC Ltd. v Saw Pipes Ltd. (2003) 5 SCC 705; see Law Commission, Amendments to the Arbitration and Conciliation Act, 1996 (Law Com No 246, 2014), pp. 54–​56. 80. 2015 Amendment, s. 18 (II).

31

Chapter 2—Legislative Development of Arbitration

establish its objections only “on the basis of the record” of the arbitral tribunal, as opposed to simply “furnishing proof ” of the same before the relevant court.

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Section 36 of the Arbitration Act dealing with enforcement of awards has been recently amended under the 2021 Amendment. A new proviso is sought to be inserted under Section 36(3) providing that the court shall stay the award “unconditionally” pending disposal of a challenge to an award under Section 34 of the Arbitration Act, if the court is satisfied that a prima facie case is made out that the arbitration agreement, underlying contract or making of the award “was induced or effected by fraud or corruption.”

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Moreover, the insertion of the new proviso is deemed to have retrospective effect from 23 October 2015 (the date when the 2015 Amendment came into effect). A clarificatory explanation is also sought to be inserted below the new proviso, stating that,

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“the above proviso shall apply to all court cases arising out of or in relation to arbitral proceedings, irrespective of whether the arbitral or court proceedings were commenced prior to or after the commencement of the Arbitration and Conciliation (Amendment) Act, 2015”.

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“In order to address the issue of corrupt practices in securing contracts or arbitral awards, a need was felt to ensure that all the stakeholder parties get an opportunity to seek unconditional stay of enforcement of arbitral awards, where the underlying arbitration agreement or contract or making of the arbitral award is induced by fraud or corruption.”

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However, it may be noted that the introduction of such a regime for unconditional stay on enforcement for an indefinite period pending challenge proceedings and based on a prima facie consideration, that too, with retrospective effect, appears to be myopic. It may encourage recalcitrant parties to “approach the courts with such requests and cause to delay the enforcement of arbitral awards.”81 The enforcement of an award arising out of a foreign-​seated arbitration can be resisted under Section 48 falling under Part II of the Arbitration Act. Section 48

81. A. Miglani and G. Singh, “Fraud in the Underlying Contract: A New Hurdle for Enforcement of India-​ Seated Arbitral Awards”, Oxford Business Law Blog (15 December 2020), available at https://​www.law.ox.ac. uk/​business-​law-​blog/​blog/​2020/​12/​f raud-​underlying-​contract-​new-​hurdle-​enforcement-​india-​seated (accessed on 15 February 2021).

32

Law, Practice and Procedure of Arbitration in India

reproduces the grounds under Article V of the New York Convention for resisting enforcement of a foreign award. The scope for resisting enforcement under Section 48 is narrower as it being a discretionary provision,82 than the scope for setting aside awards arising out of arbitrations seated in India under Section 34. For instance, the Supreme Court of India in Vijay Karia v Prysmian Cavi E Sistemi Srl held that the use of the word “may” in Section 48(1) conferred upon the courts a discretion to refuse enforcement of an award.84

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83

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Thus, it is not mandatory for courts to refuse enforcement even where grounds falling under Section 48 can be established by the party resisting enforcement. Foreign awards can be enforced even if a provision of the Foreign Exchange Management Act, 199985 is said to be violated.86 This provision has been clarified in the 2015 Amendment.87

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An award is deemed to be a judgment of the relevant Court upon satisfaction that a foreign award is enforceable under the Arbitration Act.88

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Prior to the amendment of the Arbitration Act, an application to set aside an arbitral award under Section 34, practically operated as an automatic stay on the enforcement of the award.89 This affected the enforceability and credibility of the arbitral

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82. The word “may” has been imported into the legislation from Article V(2) of the New York Convention. The word confers discretion on the courts to enforce an award even if a ground for refusal of enforcement is met. See Cruz City 1 Mauritius Holdings v Unitech Limited (2017) 239 DLT 649; Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), para. 11.59. 83. 2020 SCC OnLine SC 177. 84. The Supreme Court of India added that where grounds of challenge to jurisdiction of arbitral proceedings were made out, or grounds affecting the public policy of India were made out, the court will not have discretion in enforcing the award. However, where grounds affecting party interests are made out, the courts will have discretion to enforce the award despite grounds under s. 48 being made out. See Vijay Karia v Prysmian Cavi E Sistemi Srl, 2020 SCC OnLine SC 177 at paras. 84, 86. 85. Foreign Exchange Management Act, 1999 (Act 42 of 1999). 86. Vijay Karia v Prysmian Cavi E Sistemi Srl 2020 SCC OnLine SC 177 at paras. 91, 93; Affirming Cruz City 1 Mauritius Holdings v Unitech Limited (2017) SCC OnLine Del 7810. 87. 2015 Amendment, s. 22. 88. Arbitration Act, s. 36. An award holder can file a petition for enforcement before the Court in whose jurisdiction the assets of the judgment debtor are located. See Sundaram Finance Ltd. v Abdul Samad & Anr. (2018) 3 SCC 622. See also Rishima SA Investments LLC (Mauritius) v Shristi Infrastructure Development Corporation Limited & Anr. O.M.P (EFA) (COMM) 5/​2019, Order dated 30 May 2019. 89. However, the Supreme Court of India in a subsequent decision in Hindustan Construction Company Limited and Another v Union of India and Others 2019 SCC OnLine SC 1520, clarified that the filing of an application under s. 34 of the Arbitration Act did not amount to an automatic stay on the enforcement of such an award even prior to the amendment of s. 36: “26. To read Section 36 as inferring something negative, namely, that where the time for making an application under Section 34 has not expired and therefore, on such application being made within time, an automatic-​stay ensues is to read something into Section 36 which is not there at all. Also, this construction omits to read the rest of Section 36, which deals with applications under Section 34 that have been dismissed, which leads to an award being final and binding (when read with Section 35 of the

33

Chapter 2—Legislative Development of Arbitration

process. The 2015 Amendment did away with the problem arising out of this aspect of the statute. The Arbitration Act as amended in 2015 and 2019 specifies that an application to set aside an arbitral award will not by itself render an award unenforceable. A party is required to file a separate application to obtain a stay on the operation of the award.90 It now usually requires some security being deposited with the Court.

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An application for setting aside an award under Section 34 must be made within a strict time period. This cannot be beyond 120 days from the publication and communication of the award.91

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Section 35 provides that subject to the provisions set out in Chapter VIII of the Arbitration Act, an arbitral award is final and binding on parties, as well as persons claiming under them (i.e. third parties).

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Section 36 deals with the procedure for enforcement of an arbitral award. It provides that once an award attains finality, (i.e. once the time limit to file an application under Section 34 has elapsed, or the Section 34 has been dismissed), an award is final and binding on the parties like a binding decree of a court. It can be enforced under Section 36 in accordance with the provisions of the CPC.

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Finality means a challenge procedure has been resorted to, and either been dismissed or time period to make the challenge has elapsed. In any event, even if an award is set aside, the only consequence is that it cannot be enforced in terms of the Arbitration Act, but the merits or issues decided in the award cannot be reopened by the parties.

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The Supreme Court of India in P Radhabai v Ashok Kumar92 emphasised on the finality of the arbitral award and held that the phrase “but not thereafter” in Section 34(4) confirms the legislative intent of giving “finality” to the Arbitral Award by fixing an “outer boundary period” for challenging an award.

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The raison d’être for Section 36 is only to make it clear that when an arbitral award is not susceptible to challenge, either because the time for making an application to set it aside has expired, or such application having been made is refused, the award, being

Arbitration Act, 1996) which then becomes enforceable under the CPC, the award being treated as a decree for this purpose … 30. Thus, the reasoning of the judgments in NALCO (supra), and Fiza Developers and Intra-​ trade Pvt. Ltd. (supra) being per incuriam in not noticing Sections 9, 35 and the second part of Section 36 of the Arbitration Act, 1996 do not comment themselves to us and do not state the law correctly …”. 90. See the Arbitration Act, s. 36(2). 91. Simplex Infrastructure Ltd. v Union of India, (2019) 2 SCC 455 at para. 9. 92. (2019) 13 SCC 445 at para. 33.

34

Law, Practice and Procedure of Arbitration in India

final and binding, shall be enforced under the CPC as if it were a decree of the court, there being no recourse to grounds of challenge.93 Section 37 provides for a mechanism to appeal against orders passed under the Arbitration Act. In terms of Section 37, an appeal lies only against orders by a Court, refusing to refer parties to arbitration, granting or refusing to grant interim measures, setting aside or refusing to set aside an arbitral award.94

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Further, orders passed by an arbitral tribunal accepting a challenge to its jurisdiction (and thus ending the arbitration proceedings) or granting or refusing to grant interim relief are also appealable orders for the purpose of Section 37.

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Other Objectives

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The Arbitration Act not only caters to arbitrations but also deals with conciliation of disputes. Part III of the Arbitration Act applies to conciliation of disputes arising out of legal relationships. This part of the Arbitration Act deals with the process of conciliation, the role of a conciliator, and includes provisions related to administrative assistance, confidentiality, costs, and admissibility of evidences in other proceedings.

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Section 62 of the Act describes the procedure for commencement of conciliation proceedings. The commencement of conciliation proceedings requires the party initiating such conciliation to send an invitation in writing to the other party. The proceedings cannot commence unless the other party accepts such request in writing.

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Section 74 of the Act accords the status and effect of an arbitral award to a settlement agreement arrived at during conciliation proceedings (as is the case with settlement agreements arrived at during arbitration proceedings).95

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Not every agreement between parties during the pendency of conciliation or arbitration proceedings acquires the status of settlement agreement and the legal requisites prescribed, have to be satisfied.96 Giving a settlement arising out of conciliation the same force as a decree, was in fact one of the primary purposes of the Arbitration Act.97

93. Hindustan Construction Company Limited v Union of India 2019 SCC OnLine SC 1520 at para. 22. 94. An appeal against an order passed by the court under s. 34 of the Arbitration Act also has to be made within a period of 120 days from the date of that order. Courts cannot condone any delay in lodging an appeal against an order passed under s. 34 of the Arbitration Act. See Union of India v Varindera Constructions Ltd (2020) 2 SCC 111 at para. 3; N.V. International v State of Assam (2020) 2 SCC 109 at para. 4. 95. Arbitration Act, s. 30. 96. Mysore Cements Ltd. v Svedala Barmac Ltd. (2003) 10 SCC 375 at paras. 16, 17; Haresh Dayaram Thakur v State of Maharashtra (2000) 6 SCC 179 at para. 20. 97. See the Arbitration Act, 1996, Statement of Objects and Reasons, para. 4(viii).

35

Chapter 2—Legislative Development of Arbitration

The 2019 Amendment introduced provisions for confidentiality,98 and for immunity to arbitrator(s), for acts done or intended to be done in good faith.99

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The 2019 Amendment also lays down the statutory foundation for the establishment of the “Arbitration Council of India” (“ACI”).100 Section 43C as inserted into the Arbitration Act deals with the composition of the ACI, which is to comprise of a chairperson, an eminent arbitration practitioner, an eminent academician, and certain ex-​ officio members of the Government of India. Section 43D which has been inserted into the Arbitration Act, lays down the duties and functions of the ACI, including the ACI’s powers to review the grading of arbitral institutions and arbitrators.

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The Eight Schedule and Section 43J101 were inserted in the Arbitration Act by way of the 2019 Amendment, with the Schedule listing out the qualifications and experience required of an arbitrator. However, the Eighth Schedule is sought to be omitted in its entirety by way of the 2021 Amendment, while Section 43J is also sought to be amended. Under the amended text of Section 43J, the provision states that,

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“The qualifications, experience and norms for accreditation of arbitrators shall be such as may be specified by the regulations”.

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Thus, the provision of Section 43J coupled with the 2019 Amendment, now delegates the framing of regulations pertaining to the qualifications and experience of arbitrators to the ACI, as sought to be established under Part IA of the Arbitration Act.

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However, the Government of India is yet to notify the establishment of the ACI under section 43B of the Arbitration Act, and consequently, even the regulations on qualification and experience are pending to be issued.

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The Statement of Objects and Reasons in relation to the aforesaid omission of the Eighth Schedule and the amendment of Section 43J under the 2021 Amendment states that these provisions were being inserted, “ ‘to promote India as a hub of international commercial arbitration by attracting eminent arbitrators to the country.’ Indeed, this is a welcome development, as the

98. See the 2019 Amendment, s. 9. 99. Ibid. 100. See the 2019 Amendment, s. 10. 101. Arbitration Act, s. 43J previously stated that: “43J. Norms for accreditation. –​The qualifications, experience and norms for accreditation of arbitrators shall be such as specified in the Eighth Schedule: Provided that the Central Government may, after consultation with the Council, by notification in the Official Gazette, amend the Eighth Schedule and thereupon, the Eighth Schedule shall be deemed to have been amended accordingly.”

36

Law, Practice and Procedure of Arbitration in India

erstwhile provision of the Eight Schedule, ‘was understood effectively to exclude foreign nationals from acting as an arbitrator on arbitrations seated in India’”.102 This was the case because the Eighth Schedule mandated that a person was required to be an advocate, chartered accountant, cost accountant, or company secretary under Indian law, an officer of the Indian Legal Service, etc., to qualify as an arbitrator.

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The Arbitration Act aims to establish India as an arbitration friendly model law nation. The scheme of the Act is discussed in more detail in later chapters.

[2.6] CONCLUSION

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Some commentators have described the trajectory of arbitration law in India over the years as “one step forward, two steps back”.103 However, the trajectory is changing. The better characterisation is that it is “two steps forward, perhaps one step back”. The momentum is progressive. It will bear the desired results as intended by the policy makers in the long term.

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The Indian courts have acted together with the changing progressive statutory arbitration framework to complement the arbitral regime. The judicial approach has shifted from judicial interference towards support and assistance in arbitral proceedings.

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The ACI has been established as an independent body to foster the growth of arbitration, conciliation, mediation, and other forms of alternative dispute resolution mechanisms. It bears the responsibility of framing policies and introducing reforms in the current arbitration regime for promoting the focused growth of institutional arbitration in India.

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However, while there are some concerns regarding the composition of the ACI comprising mainly of government officials and persons appointed by the Central Government, it should be given an opportunity to conduct its work.

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The focus must be on the improvement of the arbitration regime to achieve the ambition of being an international arbitration hub. It may be suggested that results are the most important criteria of success.

102. Herbert Smith Freehills, “India Amends Arbitration Law Relating to Enforcement of Awards Tainted by Fraud and Arbitrator Qualifications”, Arbitration Notes (17 November 2020), available at https://​hsfnotes. com/​arbitration/​tag/​arbitration-​council-​of-​india/​ (accessed on 15 February 2021), 103. The phrase was first coined in the context of the Indian arbitration law by Prof. Martin Hunter and Ranamit Banerjee in 2013 in “Bhatia, BALCO and Beyond: One Step Forward, Two Steps Back?” National Law School of India Review (Vol. 24, No.2 2013). While the 2015 Amendment was lauded as a step forward in arbitration law in India, the 2019 Amendment was criticised for taking the Indian arbitration law two steps back.

37

Chapter 2—Legislative Development of Arbitration

Similarly, by virtue of the 2019 Amendment, Section 29A of the Arbitration Act provides for time limits for the completion of arbitral proceedings. It is mandatory only in cases of domestic arbitrations. However, these timelines are not binding on international commercial arbitrations.

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Many stakeholders believe that a prescribed statutory time limit for completion of arbitration proceedings has helped parties to choose India as the seat of arbitration. It is suggested that this amendment to Section 29A of the Arbitration Act might discourage foreign parties to opt for an India-​seated arbitration. Such concerns are anecdotal and not supported by evidence.

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The landscape of international commercial arbitration in India is at the cusp of a transformative change. The coming few years would be crucial to show if India becomes an attractive seat for both international and domestic arbitrations.

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The amendments’ effectiveness and success may depend on how the legislative changes are implemented and also, how they are interpreted by the judiciary. Success may be inferred by way of an increase of number of arbitrations seated in India.

Chapter 3 DEFINING AN ARBITRATION [3.1] INTRODUCTION............................................................................................................................ 38 [3.2] ARBITRATION DEFINED.............................................................................................................. 40

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[3.3] WHAT CONSITUTES ARBITRATION........................................................................................ 44 [3.4] DISPUTE OR DIFFERENCE........................................................................................................... 46 [3.5] VALUATION, EXPERT DETERMINATION, ADJUDICATION, AND CERTIFICATION.............................................................................................................................. 49 [3.6] MUTUAL LEGAL RIGHTS AND LIABILITIES CAPABLE OF BEING SETTLED THROUGH ARBITRATION.......................................................................................................... 56

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[3.7] ARBITRATON DETERMINED BY ONE OR MORE PERSONS.............................................. 60 [3.8] ARBITRATION DETERMINED JUDICIALLY........................................................................... 61

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[3.9] THE APPLICATION OF LAW....................................................................................................... 62 [3.10] BINDING EFFECT OF AN ARBITRATION AGREEMENT..................................................... 64

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[3.11] SHAM ARBITRATION AND DRESSING UP DISPUTES......................................................... 66

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[3.12] CONCLUSION.................................................................................................................................. 70

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[3.1] INTRODUCTION

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Redfern and Hunter answer the question of “What is arbitration”? as follows:

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“Arbitration is essentially a very simple method of resolving disputes. Disputants agree to submit their disputes to an individual whose judgment they are prepared to trust. Each puts its case to this decision maker, this private individual –​in a word, this ‘arbitrator’. He or she listens to the parties, considers the facts and the arguments, and makes a decision. That decision is final and binding on the parties –​and it is final and binding because the parties have agreed that it should be, rather than because of the coercive power of any state.”1

The practice of arbitrating disputes extends back to antiquity. It is the oldest method for the peaceful settlement of disputes.2 The role of arbitration as an

1. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 2, para. 1.04. 2. See Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International 2021), p. 8; see also, A. Stuyt, Survey of International Arbitrations, 1794–​1989 (3rd edn, Kluwer Academic Publishers 1990).

39

Chapter 3—​Defining an Arbitration

alternative to litigation in State-​controlled court system is now well-​recognised and well-​ established.3 Arbitration is now one of the most popular alternate systems of dispute resolution in many jurisdictions with over-​burdened courts.

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Arbitration is now the principal method of resolving international disputes involving States, individuals, and corporations as a consequence of the increased globalisation of world trade and investment.4

While there is no internationally recognised definition(s) of “arbitration”, it usually contains four core features:5 (1) a dispute;



(2) an arbitration agreement;



(3) reference of the dispute to a neutral independent party for adjudication; and



(4) an award by such neutral adjudicator which is binding on the parties to the award.

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In India, arbitration is governed by the Arbitration Act, which is based on the Model Law, New York Convention, and Geneva Convention. Section 2(1)(a) of the Arbitration Act, defines “arbitration” as:

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“means any arbitration whether or not administered by permanent arbitral institution”.6

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In English law, arbitration is a mechanism for the resolution of disputes.7 The process usually takes place in private and on a confidential basis, pursuant to an agreement between two or more parties.8 Under such an agreement, referred to as an “arbitration agreement”, the parties agree to be bound by the decision rendered by an arbitral tribunal in the form of an award.9

3. See Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 38. 4. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 1, para. 1.01. 5. See Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 39. 6. Arbitration Act, s. 2(1)(a). 7. John Tackaberry and Arthur Marriot, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Sweet & Maxwell 2003), p. 15, para. 2-​010. 8. Ibid, p. 15, para. 2-​010. 9. Ibid.

40

Law, Practice and Procedure of Arbitration in India

Litigation is distinct from arbitration. Litigation is a legal action in a court of law where judges are appointed by the State; whereas arbitration is the resolution of a dispute between two contracting parties by persons appointed by them to act as arbitrators.10 These persons need not be qualified judges or even lawyers.11

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A significant difference between litigation and arbitration is the rigidity of court procedure. Arbitration provides the parties to the arbitration agreement to determine the dispute resolution procedure to for the adjudication of their disputes.12 As Lord Mustill opined:

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“The great advantage of an arbitration is that it combines strength with flexibility. Strength because it yields enforceable decisions, and is backed by a judicial framework which in the last resort, can call upon the coercive powers of the state. Flexible because it allows the contestants to choose procedures which fit the nature of the dispute and the business context in which it occurs.”13

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The decision of the arbitral tribunal will be legally binding and enforceable between the parties.14

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[3.2] ARBITRATION DEFINED

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The practice of arbitrating disputes extends back to antiquity. It is the oldest method for the peaceful settlement of disputes.15 Arbitration was described as producing “pure, simple and pacific justice.”16

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S.A. Tiewal and F.A. Tsegah go further to suggest that arbitration antedates written history and establishment of the legal order.17 Early descriptions of arbitration are also provided for in the Ramayana.18

See Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 43. Paramjeet Singh Patheja v ICDS Ltd. (2006) 13 SCC 322. For example: Arbitration Act, s. 19. D. Mark Cato, Arbitration Practice and Procedure, 2nd edn, 1997, as per Lord Mustill’s Foreword. Arbitration Act, s. 35. See Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International 2021), p. 8; see also, A. Stuyt, Survey of International Arbitrations, 1794–​1989 (3rd edn, Kluwer Academic Publishers 1990). 16. See Gary Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International 2021), p. 38; see also, M. de Boisseson, Le droit francais de I’arbitrage interne et international (2nd edn, GLN-​éditions 1990). 17. See S.A. Tiewal and F.A. Tsegah, “Arbitration and the Settlement of Commercial Disputes” (1975) 24 ICLQ 393. 18. See Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International 2021), p. 57; see also, Paula Richman, Many Ramayanas: Diversity of a Narrative Tradition in South Asia (University of California Press 1991), p. 123.

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10. 11. 12. 13. 14. 15.

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Chapter 3—​Defining an Arbitration

Arbitration was common in ancient Greece.19 Plato referred to arbitration when he explained: “If a man fails to fulfil an agreed contract ... an action should be brought in the tribal courts if the parties have not previously been able to reconcile their differences before arbitrators (their neighbours that is).”20

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Aristotle, in referring to arbitration, said that:

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“It bids us remember benefits rather than injuries, and benefits received rather than benefits conferred; to be patient when we are wronged; to settle a dispute by negotiation and not by force; to prefer arbitration to litigation –​for an arbitrator goes by equity of a case, a judge by the law, and arbitration was invented with the express purpose of securing full power for equity.”21

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Arbitration was also practised amongst Phoenician traders and in Roman law. Horace, Tacitus, and Ovid all make reference in their works to arbitration.22 Ovid describes the myth where Paris was appointed as arbitrator in a dispute between Hera, Athene, and Aprhrodite. Paris’s award to Aprhrodite of the “apple of discord for the fairest” was the trigger for the Trojan War.23

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Arbitration has, thus, been an enduring feature of dispute resolution since the beginning of recorded history.24 Different societies from ancient Sumerian, Egyptian, Greek, Roman, Medieval, Islamic, Asian, and Latin American to the modern common law and civil law jurisdictions have applied arbitration to resolve their domestic and international disputes.

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Nevertheless, the ancient arbitral procedures were similar with some changes at some points of detail to that practised nowadays.25 As such, arbitration has been an enduring feature of dispute resolution.26

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19. See Derek Roebuck, Ancient Greek Arbitration (Holo Books: The Arbitration Press 2001), pp. 45–​46. 20. See Saunders. T, Plato: The Laws –​ Translated with an Introduction (Penguin Books 1970), p. 460. 21. See Jonathan Barnes, The Complete Works of Aristotle, Vol. 2 (Princeton University Press 1991); see also, Arbitration Act, s. 28(2). 22. See W.W. Buckland, A Text-​Book of Roman Law: From Augustus to Justinian (2nd edn, Cambridge University Press 1932), p. 531; see also, J.F. Philips, The History of Arbitration (1981), p. 16. 23. See Sundaresh Menon and Denis Brock, Arbitration in Singapore: A Practical Guide (Sweet & Maxwell Singapore 2014), at para. 1.001. 24. See Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International 2021), p. 66. 25. See Roebuck, D. and De Loynes de Fumichon, B, “Roman Arbitration” [2004] JLH 380, p. 382. 26. See Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International 2021), p. 66.

42

Law, Practice and Procedure of Arbitration in India

The world’s first modern arbitration legislation was the English Arbitration Act, 1698 whose purpose was described as: “promoting trade, and rendering the awards of arbitrators more effectual in all cases, for the final determination of controversies referred to them by merchants and traders, or others, concerning matters of account or trade; or other matters.”27

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This was eventually followed by the English Arbitration Act, 1889 which was also adopted in India.

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Subsequently, the Scottish House of Lords in Hamlyn & Co v Talisker Distillery28 held that arbitration agreements are fully enforceable. From then on, the characteristics and role of arbitration have expanded through legal philosophy and tradition of endorsing the arbitral process in commercial matters.

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The courts have become pro-​arbitration. They are prepared to displace their own jurisdiction in favour of arbitration and provide necessary interim support.29 Arbitration has now evolved into a dispute resolution mechanism for commercial and international disputes, distinct and different from court processes but supported by the courts and legislation.

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In its broadest sense, arbitration is a consensual method of resolving disputes by a third party.30 The parties agree to submit a dispute, arising out of a course of business dealings, to an independent private decision maker selected by or for the parties, rather than to the local courts.

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The arbitral tribunal then renders a binding decision (called an award) definitively resolving a dispute in accordance with neutral, adjudicatory procedures affording the parties an equal opportunity to be heard.31

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27. See Adam Samuel, “Arbitration Statutes in England and the USA” [1999] ADRLJ 2. 28. Hamlyn & Co v Talisker Distillery [1894] 5 WLUK 31. 29. Société Hilmarton Ldt v Société Omnium de traitement et de valorisation (OTV), France, Cour de cassation (French Court of Cassation), 92-​15.137 –​it was held that an arbitration award is supranational in nature. It accordingly enforced the arbitration award in France although it had been set aside in Switzerland; see also Arbitration Act, s. 9. 30. See Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 16; Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International 2021), p. 810; Dallal v Bank Mellat [1986] QB 441, [1986] 2 WLR 745; Afcons Infrastructure Ltd. v Cherian Varkey Construction Co. (P) Ltd. (2010) 8 SCC 24. An exception which does not require consent is statutory arbitration; where a statute refers disputes to an independent arbitral tribunal for a binding decision, it still amounts to arbitration. 31. See David A.R. Williams and Amokura Kawharu, Williams & Kawharu on Arbitration (LexisNexis New Zealand 2011), at para. 1.1.1; see also, John Tackaberry and Arthur Marriot QC, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Sweet & Maxwell 2003), at para. 2-​010 describes the process of arbitration as taking place “usually in private and on a confidential basis, pursuant to an agreement between two or more parties, who agree to be bound by the decision to be given by the arbitrator”.

43

Chapter 3—​Defining an Arbitration

Arbitration is generally understood as a contractual form of alternative dispute resolution method. Alternative dispute resolution (“ADR”) denotes a wide range of dispute resolution processes and techniques that act as a means for disagreeing parties to come to an agreement short of litigation.

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Parties agree to arbitration with the intention of avoiding litigation. The arbitral tribunal also derives its jurisdiction either from: (1) the consent of the parties; (2) from an order of the court; or (3) from the applicable statute.32 However, its award has an analogous effect to that of a court judgment.33 Sir Robert Raymond CJ stated:

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“An arbitrator is a private extraordinary judge between party and party, chosen by their mutual consent, to determine controversies between them. And arbitrators are so called because they have an arbitrary power; for if they observe the submission (arbitration agreement) and keep within due bounds, their sentences are definite from which there lies no appeal.”34

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The Court of Appeal of New Zealand in Pupuke Service Station Ltd. v Caltex Oil (N.Z.) Ltd.35 defined arbitration as:

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“a contractual method of resolving disputes. By their contract the parties agree to entrust the differences between them to the decision of an arbitrator or panel of arbitrators, to the exclusion of the courts, and they bind themselves to accept that decision, once made, whether or not they think it right.”

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Article 2(a) of the Model Law defines arbitration as “any arbitration whether or not administered by a permanent arbitral institution”. This confirms that the Model Law applies to both ad hoc and institutional arbitrations. As seen above, the Arbitration Act replicates this definition of “arbitration”.36

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However, Section 2(1)(a) of the Arbitration Act does not really define “arbitration”. It merely clarifies that it covers any arbitration “whether or not administered by

32. Although it is conducted judicially, arbitration is not an actual judicial suit and even if the parties select a judge as an arbitrator (as they often do) the decision remains an ordinary arbitration award, not a court judgment. 33. See Jean-​Francois Poudret, Sebastien Besson, Stephen Berti, and Annette Ponti, Comparative Law of International Arbitration (2nd edn, Sweet & Maxwell 2007), p. 3. 34. See Douglas S. Stephenson, Arbitration Practice in Construction Contracts (5th edn, Blackwell Science 2001), p. 1. 35. [1995] 11 WLUK 238. 36. Arbitration Act, s. 2(1)(a).

44

Law, Practice and Procedure of Arbitration in India

a permanent arbitral institution”. Thus, it covers a pure ad hoc arbitration, statutory arbitration, as well as any arbitration administered by an arbitral institution.37 The Supreme Court of India in Paramjeet Singh Patheja v ICDS Ltd.38 has encapsulated the idea of arbitration in these words:

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“That litigation is, therefore, very different from arbitration is clear. The former is a legal action in a court of law where judges are appointed by the State; the latter is the resolution of a dispute between two contracting parties by persons chosen by them to be arbitrators. These persons need not even necessarily be qualified trained judges or lawyers. This distinction is very old and was picturesquely expressed by Edmund Davies, J. in these words: ‘Many years ago, a top-​hatted gentleman used to parade outside these law courts carrying a placard which bore a stirring injunction “Arbitrate —​Don’t Litigate” ’.”39

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[3.3] WHAT CONSTITUES ARBITRATION

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Halsbury’s Laws of England40 sets out that arbitration is capable of being used in several senses. It may refer to a number of different concepts. Arbitration may refer to either a judicial process or to a non-​judicial process.

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(2) there must be, limited and appointed by award, some reciprocal act done by both parties;



(3) the arbitral tribunal must make a final decision, and so determine upon all the points and differences produced before them by specification or otherwise;

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(4) they do not award parties any unlawful thing prohibited and against the law;

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Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 42. (2006) 13 SCC 322. Ibid at para. 35. Hardinge Stanley Giffard Earl and Quintin Hogg Baron Hailsham, Halsbury’s Laws of England (4th edn, Butterworth 1973), p. 255. 41. See Andrew Tweeddale and Keren Tweeddale, Arbitration of Commercial Disputes: International and English Law and Practice (Oxford University Press 2005), p. 480. 37. 38. 39. 40.

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Chapter 3—​Defining an Arbitration



(5) they do not award anything against a decree, decision, sentence judicially given or anything which infringes or meddles with such decree, decision, or sentence.

Lord Wheatley in Arenson v Casson, Beckman, Rutley & Co.42 further held:

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“The indicia are as follows: (a) there is a dispute or a difference between the parties which has been formulated in some way or another; (b) the dispute or difference has been remitted by the parties to the person to resolve in such a manner that he is called upon to exercise a judicial function; (c) where appropriate, the parties must have been provided with an opportunity to present evidence and/​or submissions in support of their respective claims in the dispute; and (d) the parties have agreed to accept his decision.”43

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The Supreme Court of India in K.K. Modi v K.N. Modi & Ors.44 attempted to formulate the principles of arbitration by placing reliance on the following passages from Russell on Arbitration:45

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“This is a matter of construction of the contract, which involves an objective inquiry into the intentions of the parties. First, there are express words of the dispute’s clause. If specific words such as arbitrator, arbitral tribunal, arbitration, they are likely to be persuasive although not always conclusive …”46 “Therefore, our courts have laid emphasis on (1) existence of disputes as against intention to avoid future disputes; (2) the tribunal or forum so chosen is intended to act judicially after taking into account relevant evidence before it and the submissions made by the parties before it; and (3) the decision is intended to bind the parties. Nomenclature used by the parties may not be conclusive. One must examine the true intent and support of the agreement. There are, of course, the statutory requirements of a written agreement, existing or future disputes and an intention to refer them to arbitration.”47

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In comparison with other forms of dispute resolution, arbitration is distinctive because of several features: “Firstly, agreements to enter into arbitration will be enforced by courts whereas agreements to enter into other ADR process will not be;

42. 43. 44. 45. 46. 47.

[1977] AC 405 at p. 428. Ibid, p. 428. (1998) 3 SCC 573. Sutton, Gill, and Kendall, Russell on Arbitration (21st edn, Sweet & Maxwell 1997). Ibid at para. 19. Ibid at para. 21.

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Law, Practice and Procedure of Arbitration in India

Secondly, the objective of arbitration is to achieve a final and binding award. Whereas in other processes, it is not an automatic consequence; and Thirdly, arbitration processes are usually subject to greater statutory regimes than other methods such as mediation or negotiation.”48 ADR processes other than arbitration are also enforceable under the Arbitration Act, as long as there is ultimately an arbitration agreement which combines the ADR processes.

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Section 30 of the Arbitration Act provides that it is not inconsistent for an arbitration agreement to allow the use of other ADR procedures such as negotiation or mediation, either before or during an arbitration.

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The Arbitration Act also provides for conciliation proceedings. Indian courts have also recognised arbitration agreements providing for a second or appellate arbitration after the first arbitration. While this may be considered to produce a non-​binding result in the first instance, it would still qualify as an arbitration agreement.49

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The essence is that the parties choose a third party whose decision is binding on them. The said arbitral tribunal exercises a range of powers with greater flexibility in devising, usually with, but often without, the specific agreement of the parties, procedures for obtaining the fair and impartial resolution of disputes without unnecessary delay or expense. The submission to arbitration will sometimes, instead of being voluntary, be imposed by means of a statute.

[3.4] DISPUTE OR DIFFERENCE

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A dispute or difference must exist for a reference to arbitration. Arbitration is concerned with the determination of matters in dispute between the parties.

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It is a fundamental aspect of the arbitral process that only disputes or differences can be referred to arbitration. The process contemplates that the arbitral tribunal will make a decision upon a dispute or difference which exists at the time of the arbitral tribunal’s appointment. Where there is no dispute or difference that is capable of compromise by accord or by satisfaction, there can be no reference to arbitration. While a dispute is not the same thing as a failure to agree, a difference encompasses both a dispute and a failure to agree.50

48. See Henry Brown and Arthur Marriott, ADR: Principles and Practice (3rd edn, Sweet & Maxwell 2012), p. 121. 49. Centrotrade Metals Inc v Hindustan Copper Ltd. (2017) 2 SCC 228. 50. Attorney-​General v Barker Bros Ltd. [1976] 2 NZLR 495 (CA).

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Chapter 3—​Defining an Arbitration

Therefore, difference is of a wider scope than dispute.51 For example, when one party fully admits liability but has failed to pay,52 or where the court considers that the suggested defence advanced by the defendant is unarguable.53

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In India, Section 7(1) of the Arbitration Act uses the word “disputes” in contradistinction to the word “difference” used in the 1940 Act. Every “difference” cannot be treated as a “dispute”, and every “dispute” need not necessarily be treated as a “difference” which would lead to the invocation of arbitration,54 unless such dispute results in a material action.55

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The Supreme Court of India in Union of India v Birla Cotton Spinning & Weaving Mills Ltd.,56 under the 1940 Act, held that for enforcement of the arbitration clause there must exist a dispute. In the absence of a dispute between the parties to the arbitration agreement, there can be no reference.57

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The Arbitration Act limits the scope of enquiry by a court. A reference to arbitration only requires a prima facie valid arbitration agreement. Whether or not a dispute exists is, nevertheless, a necessary element of an enforceable agreement to arbitrate.

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The Supreme Court of India in Bihar State Mineral Development Corporation v Encon Builders (I) Pvt. Ltd.58 enlisted the following essential elements of an arbitration agreement: (1) There must be a present or a future difference in connection with some contemplated affair;



(2) The parties must intend to settle such difference by a private tribunal;



(3) The parties must agree in writing to be bound by the decision of such tribunal; and



(4) The parties must be ad idem.

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51. F & G Sykes (Wessex), Ltd. v Fine Fare Ltd. [1967] 1 Lloyd’s Rep. 53, p. 60. 52. London & North Western & Great Western Joint Railway Co. v J.H. Billington Ltd. [1899] AC 79 (HL); see also, Mathuradass Goverdhandass v Khusiram Benarshilal 1949 SCC OnLine Cal 295. 53. Nova (Jersey) Knit Ltd. v Kammgarn Spinnerei G.m.b.H. [1977] 1 WLR 713. 54. Ibid, p. 287. 55. Prathyusha Associates, Visakhapatnam v Rashtriya Ispat Nigam Limited, Visakhapatnam, Steel Plant 2006 (2) Arb LR 130 (AP), p. 156. 56. AIR 1967 SC 688. 57. Union of India v Birla Cotton Spinning & Weaving Mills Ltd. AIR 1967 SC 688 at para. 4. 58. (2003) 7 SCC 418.

48

Law, Practice and Procedure of Arbitration in India

The Supreme Court of India in Major (Retd) Inder Singh Rekhi v Delhi Development Authority,59 further explained that a dispute arises when one party makes a claim and the other refutes it or denies it. The Court explained:

ul at io n

“A dispute arises where there is a claim and a denial and repudiation of the claim. There should be a dispute and there can only be a dispute when a claim is asserted by one party and denied by the other on whatever grounds. Mere failure or inaction to pay does not lead to the inference of the existence of dispute.60 Dispute entails a positive element and assertion of denying, not merely inaction to accede to a claim or a request. Whether in a particular case a dispute has arisen or not has to be found out from the facts and circumstances of the case.61”62

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The Court of Appeal of England and Wales, in Amec Civil Engineering Ltd v Secretary of State for Transport,63 outlined seven propositions on the meaning of a dispute and when it comes into existence: (1) “The word ‘dispute’ should be given its ordinary meaning, not some special or unusual meaning conferred upon it by lawyers;



(2) There are no hard-​edged legal rules as to what is or is not a dispute;



(3) One party notifying the other of a claim does not automatically and immediately give rise to a dispute64 and a dispute does not arise unless and until it emerges that the claim is not admitted;65



(4) The circumstances from which it may emerge that a claim is not admitted are protean and include express rejection, objective inference from discussions between parties, prevarication and silence;

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59. Major (Retd) Inder Singh Rekhi v Delhi Development Authority (1988) 2 SCC 338 at para. 4. The case was based on the Arbitration Act, 1940; however, it is of precedential value and has been upheld by multiple judgments falling under the Arbitration and Conciliation Act, 1996 to understand meaning of the term “dispute”. 60. Major (Retd) Inder Singh Rekhi v Delhi Development Authority (1988) 2 SCC 338. 61. R.S. Bachawat, Law of Arbitration, 1st edn, p. 354; Voltas Ltd. v Rolta India Ltd. (2014) 4 SCC 516. 62. Major (Retd) Inder Singh Rekhi v Delhi Development Authority (1988) 2 SCC 338 at para. 4. 63. Amec Civil Engineering Ltd v Secretary of State for Transport [2004] EWHC 2339 (TCC) at para. 68, affirmed [2005] EWCA Civ 291. 64. Monmouth County Council v Costelloe and Kemple Ltd. (1965) 63 LGR 429, (1995) 5 BLR 83 at p. 89; Cruden Construction Ltd v Commission for the New Towns [1995] 2 Lloyd’s Rep 387 at p. 394; Union of India v E B Aaby’s Rederi A/​S [1975] AC 797 at p. 807, [1974] 2 All ER 874 at p. 879, sub nom EB Aaby’s Rederi A/​S v Union of India, The Evje [1974] 2 Lloyd’s Rep 57 at p. 61. 65. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, LexisNexis Butterworths 1989), p. 128, “... just as a claim is not necessary to the creation of a dispute, neither is it sufficient in itself”; quoted by Judge Bowsher QC in Secretary of State for Foreign and Commonwealth Affairs v Percy Thomas Partnership (a firm) and Kier International [1998] All ER (D) 13.

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Chapter 3—​Defining an Arbitration



(5) The period of silence from which a dispute can be inferred depends on the facts of the case;



(6) The passing of a deadline imposed for a response does not automatically crystallise a dispute; and

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(7) If the claim as presented by the claimant is so nebulous and ill-​defined that the respondent cannot sensibly respond to it, neither silence by the respondent nor even an express non-​admission is likely to give rise to a dispute.”66 Lord Denning stated that “a difference can exist long before the parties become locked in combat. It is not necessary that they should have come to blows. It is sufficient that they should be sparring for an opening”.67 This proposition has been relied on by Indian courts.68

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What constitutes a dispute and /​or a difference is discussed in further detail in Chapter 12.

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[3.5] VALUATION, EXPERT DETERMINATION, ADJUDICATION, AND CERTIFICATION

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Parties sometimes engage in other dispute resolution methods to settle disputes other than arbitration. Such methods and the agreements governing them are not stricto sensu arbitration.

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However, some of these agreements resemble arbitration agreements. The dividing line is not always perceptible. Oftentimes, relevant legal authorities are common to both arbitration and other alternative dispute resolution methods.

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But an arbitration agreement must be distinguished from an agreement for valuation, an agreement to certify that the works under a building contract have been properly done, and a condition for approval or satisfaction by a party or agent.

66. No details were given by the defendant to enable the plaintiff to make any kind of informed decision in relation to any of the matters which were being alleged by the housing association let alone how those allegations affected the plaintiff, thus asking for further information would not be sufficient to crystallise the dispute; Cruden Construction Ltd v Commission for the New Towns [1995] 2 Lloyd’s Rep 387 at p. 394. 67. Beetham v Trinidad Cement Ltd [1960] 1 All ER 274 at para. 279, per Lord Denning, PC. 68. For example: Gulf Air v Gulf Air Employees Association 2014 SCC OnLine Bom 1197 at para. 15; Ram Ayodhya Prasad v Presiding Officer, Labour Court, Ghaziabad 2019 SCC OnLine All 3192 at para. 17.

50

Law, Practice and Procedure of Arbitration in India

Valuation Agreements and Arbitration Agreements For example, an opinion, valuation or a recommendation as to future action,69 or a dispute resolved by some third person acting not as an arbitrator but as an expert, is not an arbitral process.70 The test is whether the intention of the parties is to avoid a dispute or resolve it with a final decision.

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A valuer is a professional engaged to make a valuation and, in a wider sense, to certify that certain works have been done. Valuers must act professionally, fairly and impartially between his employer and the other party. That however does not mean that valuer is an arbitrator.71

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Whether it is an arbitration agreement or an agreement for valuation ultimately depends on the words used in the agreement, and how they reflect the intention of the parties.

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An agreement to sell at a price or value to be fixed by a third person is ordinarily a valuation agreement and the use of the word “arbitrator” is not conclusive, as the object is to prevent the dispute from arising.72

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The distinction between a valuer and an arbitrator was highlighted in Re Hammond and Waterton73 where the reference was to two persons described as arbitrators in an agreement who were directed to appoint an umpire, in case of dispute or difference arising between them. The court refused to enforce the decision of the umpire as an award because, from the terms of reference, it did not appear that any judicial enquiry was intended.74

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An agreement to appoint an umpire for reference to two valuers does not necessarily show that the agreement is an arbitration agreement.75 Similarly, an umpire appointed under a provision for appointment of umpire in case of differences of opinion between “valuers” is not an arbitrator-​umpire even when he acts after such a difference arises.76

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69. FF Ayriss & Co v Board of Industrial Relations of Alberta (1960) 23 DLR (2d) 584. 70. Methanex Motonui Ltd v Spellman [2004] 1 NZLR 95 at para. 46. 71. Stevenson v Watson (1879) 4 CPD 148; Sutcliffe v Thackrah [1974] A.C. 727, p. 735 (HL); Taylor v Yielding (1912) 56 Sol Jo 253 (“you cannot make a valuer an arbitrator by calling him so, or vice versa”); see also, R.S. Bachawat, Law of Arbitration and Conciliation (6th edn, LexisNexis 2017), p. 8. 72. Vickers v Vickers (1867) LR 4 Eq 529, [1867] 7 WLUK 87; Collins v Collins [1858] 12 WLUK 63; Carus-​Wilson and Greene’s Arbitration, Re (1886) 18 QBD 7, [1886] 10 WLUK 12; Jackson v Jackson 65 ER 80, [1853] 3 WLUK 86; Leigh v English Property Corpn Ltd. [1976] 2 Lloyd’s Rep. 298. 73. (1890) 62 LT 808. 74. In Barclays Bank PLC v The Nylon Capital LLP [2011] EWCA Civ 826 –​the Court of Appeal held that the starting presumption in “Fiona Trust & Holding Corporation v Privalov [2007] UKHL 40”, that the parties intend for a single arbitral tribunal to decide all their disputes does not apply to expert evaluation agreements. 75. Vickers v Vickers (1867) LR 4 Eq 529, [1867] 7 WLUK 87. 76. Hopper, Re [1867] 1 WLUK 38.

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Chapter 3—​Defining an Arbitration

On the other hand, an agreement to appoint valuers or an umpire in pursuance of the provisions of a statute, such as the Arbitration Act would show that the agreement is an arbitration agreement.77 However, this will depend on the facts of each particular case. Courts in Canada, Australia, Singapore, and Hong Kong have focused on the extent to which a proceeding involves an adjudicative function where the parties’ submissions and evidence are heard and an impartial decision is rendered.

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Lord Esher in Re Carus-​Wilson and Greene’s Arbitration78 explained the tests to determine whether an arbitration agreement exists:

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“If it appears from the terms of the agreement by which a matter is submitted to a person’s decision that the intention of the parties was that he should hold an inquiry in the nature of judicial inquiry and hear the respective cases of the parties and decide upon evidence laid before him, then the case is one of an arbitration. The intention in such cases is that there shall be a judicial inquiry worked out in a judicial manner. On the other hand, there are cases in which a person is appointed to ascertain some matters for the purpose of preventing differences from arising, not for settling them when they have arisen and then the case is one not of an arbitration but of mere valuation. There may be cases of an intermediate kind, where, though a person is appointed to settle disputes that have arisen, still it is not intended that he shall be bound to hear evidence and arguments. In such cases it may be difficult to say whether he is intended to be an arbitrator or to exercise some function other than that of an arbitrator. Such cases must be determined, each according to its particular circumstances.”

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The test is that if a person appointed by the parties is required to hear, and to take evidence and decide in a judicial manner, even if he or she is a valuer, this person is also acting as an arbitrator.

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If no judicial enquiry is intended, the valuer is not an arbitrator.79 A person deciding a dispute by use of his own skill and knowledge without holding a judicial enquiry, may be a valuer.80

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The court in Town & City Properties (Development) Ltd v Wiltshire Southern Ltd and Gilbert Powell81 held that an arbitrator, who held meetings between himself and

77. Taylor v Yielding (1912) 56 Sol Jo 253; Hammond and Waterton, Re (1890) 62 LT 808; Dawdy and Hartcup’s Arbitration, Re (1885) 15 QBD 426, [1885] 7 WLUK 96. 78. (1886) 18 QBD 7, at p. 9. 79. Pierce v Dyke (1959) 2 WIR 30, [1959] 1 WLUK 328; Hopper, Re [1867] 1 WLUK 38; Carus-​Wilson and Greene’s Arbitration, Re (1886) 18 QBD 7, [1886] 10 WLUK 12; Star International Hong Kong (UK) v Bergbau-​ Handel, G.m.b.H. [1966] 2 Lloyd’s Rep. 16, [1966] 5 WLUK 18. 80. Carus-​Wilson and Greene’s Arbitration, Re (1886) 18 QBD 7, [1886] 10 WLUK 12. 81. (1988) 44 BLR 109 at p. 119.

52

Law, Practice and Procedure of Arbitration in India

the parties’ technical representatives instead of hearings involving oral evidence, cross-​ examination, and submissions, had adopted a procedure which was “really that of a valuation, rather than an arbitration”. The role of an arbitrator as opposed to a valuer or an adjudicator is quite different and was summarised by Chadwick LJ in Carillion Construction Ltd. v Devonport Royal Dockyard Ltd.:82

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“The task of the adjudicator is not to act as arbitrator or judge. The time constraints within which he is expected to operate are proof of that the task of the adjudicator is to find an interim solution which meets the needs of the case.”

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A contractual term providing for dispute resolution by an expert does not amount to an arbitration agreement. A useful example is the case of Cott UK Ltd. v FE Barber Ltd,83 where a contractual provision headed “ ‘Arbitration’ provided that any dispute arising from the construction or performance of the agreement should be referred to a person appointed by the Director General of the British Soft Drinks Association for a decision.”

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The provision also contained a contradictory statement that the independent consultant “shall act as an expert and not as an arbiter and his decision shall be final and binding on the parties”.

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The court held that notwithstanding the heading, this independent person was not an arbitrator.84 Thus. if the word arbitration is used, it will make the possibility of arguing the existence of an arbitration agreement persuasive, but not conclusive.85

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Position in India

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Whether the agreement is an arbitration agreement or valuation, ultimately depends upon the intention of the parties. The use of words like “arbitrator”, “adjudge” etc. are not conclusive.86

82. 83. 84. 85.

[2006] BLR 15, para. 86. [1997] 3 All ER 540, [1997] 1 WLUK 116. See also Forestry Corporation of New Zealand Ltd (In Receivership) v Attorney-​General [2003] 3 NZLR 328. Thorn Security (Hong Kong) Ltd v Cheung Kee Fung Cheung Construction Co Ltd. [2004] HKCA 217, [2005] 1 HKC 252 (“whenever the word ‘arbitration’ is mentioned in any provision, it necessarily has to be interpreted as meaning an arbitration agreement”), para. 16. 86. See R.S. Bachawat, Law of Arbitration and Conciliation (6th edn, LexisNexis 2017), p. 8.

53

Chapter 3—​Defining an Arbitration

The High Court of Delhi in Devika Mehra v Ameeta Mehra,87 while deciding a case concerning the immovable properties of the parties, came across a draft agreement where the grandfather of the parties (who were sisters) was appointed as the arbitrator.88 The draft agreement also stipulated that the arbitrator’s decision was to be binding on the parties and that the award could not be appealed or challenged. The court held that there was a valid arbitration agreement between the parties.

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It follows, therefore, that if no judicial enquiry is intended, the valuer is not an arbitrator.89

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The High Court of Bombay further elaborated on this point in Vadilal Chaturbhuj Gandhi v Thakorelal Chimanlal Munshaw & Ors.,90 wherein it was held that when a decision is the result of discretion and an absolute discretion exercised by a person, the decision is not an arbitral award.

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The Arbitration Act does not apply to valuations and valuation awards. Unlike an arbitral award, a valuation award does not have the status of a court decree for the purpose of enforcement under the Arbitration Act.91

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Further, the court does not have the power to appoint an umpire or person to resolve the disputes between two valuers under Section 11 of the Arbitration Act.92

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Distinction between Experts and Arbitrators

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Due to the judicial and binding nature of arbitration, it is necessary to be able to distinguish between arbitration and expert determination. Traditionally, the distinction arises from the expert applying his own expert opinion.93 On the other hand, an arbitrator acts judicially and applies the law.94

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87. (2004) 3 Arb LR 330. 88. Devika Mehra v Ameeta Mehra (2004) 3 Arb LR 330. (Although, the draft of the agreement was prepared by the lawyer of one of the parties and signed by only one party. The making of such an agreement, followed by the appointment of an arbitrator and various other communications were, nevertheless, noted by the court as a demonstration of existing disputes between the parties). 89. Bhagwan Devi v Chairman, Delhi Agricultural Marketing Board (2006) 2 Arb LR 374. 90. AIR 1954 Bom 121, para. 84. 91. Chooney Money Dussee v Ram Kinkar ILR (1901) 28 Cal 155. 92. Cursetji Jamshedji Ardaseer Wadia & Ors. v Dr. B.D. Shiralee AIR 1943 Bom 32. 93. Palacath Ltd v Flanagan [1985] 2 All ER 161, [1985] 2 WLUK 236. 94. See Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 4.003. (1997) 3 All ER 540, 545, [1997] 1 WLUK 116.

54

Law, Practice and Procedure of Arbitration in India

The court in Cott UK Ltd. v Fe Barber Ltd.95 dealt with an agreement where the disputes were to be referred to an independent consultant to act as an expert and not an arbitrator. The decision was supposed to be final and binding. It was held that there was no arbitration agreement but an expert determination.

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The High Court of Singapore has held that the single most significant distinction between expert determination and arbitration or litigation is that the parties to the latter have the “the right to be heard on all the issues that are to be determined” whereas in expert determination they do not.96

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An expert has to function according to the terms of the contract under which the matter is referred to him. There can be no appeal on a point of law or procedural irregularity from an expert determination unless the wrong law has been applied to the issue for determination.97

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An expert determination carries binding efficacy unless fraud or manipulation is proven. However, such a determination does not have the status of an arbitration award for the purposes of enforcement. An expert’s decision cannot be enforced as simply as an arbitration award.

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An expert can be held liable for negligence.98 Therefore the provisions of an agreement have to be given careful consideration.

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When interpreting contractual provisions, express words may strongly indicate the parties’ intention. Words such as “arbitrator”, “arbitral tribunal”, “arbitration”, or “as an expert and not as an arbitrator” will be persuasive,99 though not conclusive.100

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When there is express wording which is ambiguous, the court looks first at the other words in the document to resolve the ambiguity. Where there is no express wording, the court will refer to certain guidelines.

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The first of such guidelines is the judicial procedure in arbitration, versus the expert’s entitlement to solely use his own opinion in expert determination. The second is whether there was an issue between the parties that they had not taken up defined positions before the referral.

Ibid. Evergreat Construction Co Pte Ltd. v Presscrete Engineering Pte Ltd. [2005] SGHC 224, at para. 36. See John Kendall, Expert Determination (3rd edn, Sweet & Maxwell 2001), at para. 1.1.2. Arenson v Casson Beckman Rutley & Co. (1975) 3 WLR 815; Nikko Hotels (UK) Ltd. v MEPC Plc (1991) 28 EG 86, [1991] 3 WLUK 330; Palacath Ltd. v Flanagan [1985] 2 All ER 161, [1985] 2 WLUK 236. 99. Palacath Ltd v Flanagan [1985] 2 All ER 161, [1985] 2 WLUK 236. 1 00. Taylor v Yielding (1912) 56 Sol Jo 253. 95. 96. 97. 98.

55

Chapter 3—​Defining an Arbitration

This is somewhat superfluous as parties often reach defined positions or a formulated dispute before referring to an expert. However, this question would be applicable where the expert is to take an investigatory role.101 The final guideline is whether the parties agree to accept an expert’s decision as final. Whereas an arbitral tribunal’s award can be appealed, this has become less important due to the restrictions on appeals from arbitration awards.102

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Expert determination is therefore a means by which the parties to a contract jointly instruct a third party to decide an issue. The procedure is not arbitration. Expert determination is constrained by the terms of the clause referring the matter to the expert.

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Unless the contract or the accepted practice in disputes of that kind provides so, the third party appointed is under no obligation to receive evidence or submissions. The expert(s) appointed is entitled to arrive at this decision solely on the basis of their own expertise and investigations.

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Beyond requirements written into the expert’s contract, there is no obligation for the expert to give reasons for his decision,103 whereas it is clear that an arbitrator must provide reasons for their award.104

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The decision of an expert is final and binding. The opinion of the expert is treated as an admission by the parties making the reference.105 Thus expert valuation carries binding efficacy unless fraud or some manipulation is proved. Yet the expert determination does not have the status of a court decree for the purposes of enforcement.106

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The Arbitration Act creates a provision for expert determination.107 Expert can be appointed by the parties or by arbitration tribunal. Experts are generally appointed to decide the quantum of damages or to give their opinions on complex and technical issues.

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The arbitrator can appoint expert(s) to report to the tribunal on specific issues. The expert is required to submit a report after determination. He can be asked to appear in front of the tribunal for the purpose of oral examination.

101. Mayers v Dlugash [1994] 1 HKC 755 (an accountant determining how the assets of a business partnership would be divided was held to be an expert and not an arbitrator). 102. See Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 2.032. 103. Evergreat Construction Co Pte Ltd. v Presscrete Engineering Pte Ltd. [2005] SGHC 224, para. 45 (“An expert cannot be compelled to give reasons for the decision unless it is part of the remit. It is a matter determined by the terms of the expert’s contract”); see also, John Kendall, Expert Determination (3rd edn, Sweet & Maxwell 2001), at para. 16.7.12. 104. Arbitration Act, s. 31(3); see also, Surajmal Yadav v DSIIDC Ltd. 2018 SCC OnLine Del 9555. 105. Evidence Act, 1872, s. 45. 106. Cameron (A) Ltd. v Mowlem (John) & Co. Plc. [1990] 11 WLUK 310, 52 BLR 24. 107. Arbitration Act, s. 26.

56

Law, Practice and Procedure of Arbitration in India

Certification and Adjudication In England, Section 108 of the Housing Grants, Construction and Regeneration Act, 1996 has made statutory adjudication compulsory in building contracts and such adjudications are temporarily binding until a reference to arbitration is made.

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In building contracts, the certificate of the engineer or architect is often a condition precedent to payment of the dues of the contractor for the work done.108 The certificate is a condition precedent to such payment if the contract provides that no instalment shall be payable unless the contractor delivers a certificate of the engineer that the work was in all respects well and substantially performed.109

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Other construction contracts provide that before invoking the arbitration process, the dispute be referred to an architect or an engineer for certification. Such agreement neither bars nor restricts the scope to the subsequent arbitration.

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The parties are not limited in the arguments they can put to the arbitral tribunal by not having raised the same point with a certifier or engineer prior to the reference to arbitration, although they may be bound by a mandatory time limit to challenge the prior reference.110

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Sometimes the arbitration clause provides that the certificate of an architect or engineer shall be conclusive. Such certification is based on the architect or engineer’s knowledge, expertise, and experience.

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It is not based on evidence recorded in a judicial manner therefore even if the certificate is accepted as final or conclusive by the parties, the certifier does not become an arbitrator and the decision will not fall within the concept of arbitration.111

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[3.6] MUTUAL LEGAL RIGHTS AND LIABILITIES CAPABLE OF BEING SETTLED THROUGH ARBITRATION

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The arbitration agreement must contemplate that an arbitral tribunal will determine the substantive rights of the parties. While parties have almost complete autonomy in referring a dispute or difference in respect to arbitration, not all matters are arbitrable.112

108. 109. 110. 111. 112.

Eaglesham v Mcmaster [1920] 2 KB 169. Milner v Field [1850] 11 WLUK 115. See Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 2.034. Eaglesham v Mcmaster [1920] 2 KB 169. National Law may render a dispute non-​arbitrable, either through express legislation mandating that certain disputes must be resolved in local courts; see Gary B. Born, International Commercial Arbitration (3rd edn, Kluwer Law International 2020), p.1056.

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Chapter 3—​Defining an Arbitration

The dispute or difference must be capable of being decided in civil proceedings,113 Arbitrability can be found in the Model Law, which permits the courts of the seat to set aside an award on the ground that the subject matter is not arbitrable in the country where the seat is located.114 The Arbitration Act also sets out “non-​arbitrability” of the subject-​matter of a dispute, as a ground for setting an award aside.115

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The issue of non-​arbitrable disputes has been discussed at length by the Supreme Court of India in Booz Allen & Hamilton Inc. v SBI Home Finance Ltd. & Ors. (“Booz Allen”).116 Booz Allen sets out a distinction between disputes involving a “right in rem” and disputes involving a “right in personam”.

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The court held that this distinction would be relevant for a determination as to whether a dispute is arbitrable or not. Since actions “in rem” affect the world at large and involve public interest, it is not apt for them to be decided by private fora. Thus, generally, all disputes relating to “rights in rem” are considered non-​arbitrable, while dispute pertaining to “rights in personam” are arbitrable.117 In addition, Booz Allen also streamlined certain categories of non-​arbitrable disputes: (1) disputes determining rights and liabilities related to criminal offences;



(2) matrimonial disputes relating to divorce, judicial separation, child custody, and restitution of conjugal rights;



(3) guardianship matters;



(4) insolvency and winding up matters;



(5) testamentary matters; and



(6) eviction or tenancy matters governed by a special statute.118

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113. The Queen v Blakemore (1850) 14 QBR 544, 550; Keir v Leeman and Pearson (1846) 9 QBR 371, 394; The Queen v James Josiah Hardey (1850) 14 QBR 529, 541 (“Where a party injured has a remedy by action as well as by indictment, nothing can deter such party from referring the adjustment of the reparation which he is to receive to arbitration, although a criminal prosecution might have been commenced”). See Bac. Abr. Arbitrament and Award A. 114. Model Law, art. 34(2)(b). 115. Arbitration Act, ss. 34(2)(b) and 48(2). 116. (2011) 5 SCC 532. 117. Ibid at paras. 36–​38. (This rule, however, is not a rigid or inflexible rule. Disputes relating to subordinate rights in personam, arising from rights in rem have been considered to be arbitrable. Some disputes involving a “right in personam” may also be non-​arbitrable); Kingfisher Airlines Limited v Prithvi Malhotra Instructor 2013 (7) Bom CR 738, at para. 13 (if a matter has been reserved for resolution by a public forum as a matter of public policy, then it is non arbitrable even if it concerns a “right in personam”. Disputes would be considered non-​arbitrable only where a particular enactment creates special rights and obligations, and gives special powers to the tribunals that are not enjoyed by civil courts). 118. Ibid at para. 35.

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Law, Practice and Procedure of Arbitration in India

Excluded categories may, nevertheless, include issues which have a public interest element.119 Decisions which are the exclusive prevue of the State clearly lie outside the sphere of arbitration. That includes criminal trials,120 the granting of citizenship, an action in rem against a vessel,121 and granting divorces and custody of children.122

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Arbitrators cannot appropriate to themselves the powers of the court, and an award purporting to decide whether or not an offence has been committed is invalid. The Supreme Court of India in A. Ayyasamy v A. Paramasivam (“Ayyasamy”)123 listed out certain other disputes which are also generally non-​arbitrable, including patents, trademarks124, copyrights, bribery/​corruption, fraud, and criminal matters.125

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However, the Court while relying on Fiona Trust and Holding Corporation v Yuri Privalov126 held that disputes involving allegations of fraud may be arbitrable, unless there are “serious” allegations of fraud.127 It is not clear where the line between serious and trivial fraud will be drawn.

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119. See David A.R. Williams and Amokura Kawharu, Williams & Kawharu on Arbitration (1st edn, LexisNexis New Zealand 2011), at para. 7.3.16 (a general public interest in the subject matter of the arbitration must be weighed against the public interest of upholding arbitration agreements). 120. A. Ayyasamy v A. Paramasivam & Ors (2016) 10 SCC 386, AIR 2016 SC 4675, at para. 25. 121. Osprey Underwriting Agencies Ltd. & Ors v ONGC Ltd. & Ors AIR 1999 Bom 173, at para. 6; The Sylph [1867] 12 WLUK 3, (1867-​69) LR 2 A & E 24, at p. 29; Raukura Moana Fisheries Ltd. v The Ship “Irina Zharkikh” [2001] 2 NZLR 801. 122. A private agreement between divorcing parties relating to the division of assets would be arbitrable. See Soilleux v Herbst (1801) 2 Bos. & P. 444, [1801] 5 WLUK 52; Bateman v Countess of Ross (1813) 1 Dow 235, [1813] 1 WLUK 6; Hooper v Hooper (1860) 3 El. & El. 149, [1860] 4 WLUK 56; Wilson v Wilson (1848) 1 H.L. Cas. 538, [1848] 5 WLUK 82; Besant v Wood (1879) 12 Ch. D. 605, [1879] 3 WLUK 105; Hart v Hart (1881) 18 Ch. D, 670, [1881] 6 WLUK 59; Cahill v Cahill (1883) 8 App. Cas. 420 (HL), [1883] 5 WLUK 22; Jagadhatri Bhandar & Jagadhatri Oil Mill v Commercial Union Assurance Company Ltd. AIR 1979 Cal 56; Booz Allen & Hamilton Inc. v SBI Home Finance Ltd. (2011) 5 SCC 532. 123. A. Ayyasamy v A. Paramasivam & Ors (2016) 10 SCC 386, at paras. 16–​18 (this decision of the Supreme Court of India inter alia throws light on precedents on arbitrability of fraud); Abdul Kadir Shamsuddin Bubere v Madhav Prabhakar Oak & Anr AIR 1962 SC 406, at para. 13 (however, disputes involving serious allegations of fraud cannot be referred to arbitration); Russell v Russell [1880] 14 Ch. D 471, [1880] 2 WLUK 9, 481 (in cases of fraud, the dispute can generally not be referred to arbitration. If the objection is by a party alleging fraud, a prima facie case of fraud has to be proven); Fiona Trust and Holding Corporation & Ors. v Yuri Privalov & Ors. [2007] UKHL 40, [2007] Bus. L.R. 1719, 1721 (the disputes involving fraud can be referred to arbitration if they are covered under the arbitration agreement. If an arbitrator can decide the validity of a contract, he can decide on allegations of bribery also). 124. Prior to the decision of the Supreme Court of India in Ayyasamy, there was little clarity on the position of the arbitrability of disputes involving Intellectual Property. This case is often viewed in academic discourse, perhaps incorrectly, on account of a complete limitation on the arbitration of IPR disputes in India. 125. A. Ayyasamy v A. Paramasivam & Ors (2016) 10 SCC 386, at para. 14. 126. [2007] UKHL 40. 127. A. Ayyasamy v A. Paramasivam & Ors (2016) 10 SCC 386, at para. 25 (however, the Court did not set out any parameters for determining what distinguishes an allegation of “fraud” from an allegation of “serious fraud”); Ameet Lalchand Shah & Ors. v Rishabh Enterprises & Anr (2018) 15 SCC 678, at paras. 34, 37.

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However, the Supreme Court of India in Rashid Raza v Sadaf Akhtar128 deduced a two-​prong test to distinguish serious allegations from “simple” ones: (1) whether the plea permeates the entire contract including the arbitration agreement; and



(2) whether the allegations of fraud touched upon the internal affairs of the parties inter se having no effect in the public domain.129

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Generally, the issue of whether a trade mark or patent was validly registered by the State is not an arbitrable issue, but there is nothing to prevent a dispute about the use of registered intellectual property rights being arbitrated.130 As copyright is not a registrable right and does not hinge upon any grant by a State, it is undoubtedly arbitrable.131

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Several other disputes arising out of testamentary formulations, such as grant of a probate,132 trust disputes,133 lease disputes134 etc. are also non-​arbitrable. Central insolvency issues, such as a winding up or bankruptcy petition, are clearly outside the scope of arbitration.135 A dispute relating to the insolvency of a party to a commercial contract with an arbitration agreement can be brought to arbitration.136

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1 28. (2019) 9 SCC 710. 129. Ibid at para. 4. 130. Singapore Arbitration Act, 2001, s. 52B; Singapore International Arbitration Act, 1994, s. 26B; Hong Kong Arbitration (Amendment) ordinance, 2017, Part 11A. 131. A. Ayyasamy v A. Paramasivam & Ors (2016) 10 SCC 386 (upon the aforementioned subject-​matter the position in India is not clear, owing to the decision of the Supreme Court of India in A. Ayyasamy v A. Paramasivam & Ors). 132. Chiranjilal Shrilal Goenka v Jasjit Singh & Ors. (1993) 2 SCC 507. 133. Shri Vimal Kishor Shah v Mr. Jayesh Dinesh Shah (2016) 8 SCC 788. The High Court of Delhi in the decision Dr. Bina Modi v Lalit Kumar Modi RFA (OS) 21/​2020, CM APPL.9034/​2020 upheld the law laid down by Vimal Kishore Case held that issues under the Trusts Act cannot be the subject matter of arbitration since the same are excluded from the purview of the Arbitral Tribunal by necessary implication. 134. Himangni Enterprises v Kamaljeet Singh Ahluwalia (2017) 10 SCC 706, at para. 24 (this decision of the Supreme Court of India held that disputes arising out of lease deeds cannot be referred to arbitration, since such disputes are covered under the Transfer of Property Act, 1872 and under various other state rent control legislations. However, a subsequent judgment of the Supreme Court of India (Vidya Drolia v Durga Trading Corporation AIR 2019 SC 3498, at paras. 26, 36) held that disputes arising under the Transfer of Property Act, 1882 do not necessarily exclude arbitration as a forum for determination of the disagreement. Owing to the conflicting views, the said issue has been placed for determination before a bench of three judges). The Supreme Court of India in Vidya Drolia and others v Durga Trading Corporation, Civil Appeal No. 2402 of 2019 overruled the ratio laid down in Himangni Enterprises v Kamaljeet Singh Ahluwalia and held that the tenancy disputes are now arbitrable as the Transfer of Property Act, 1882 does not foreclose arbitration, save and except for those tenancy disputes which are governed by rent control legislations as specific forums have been given exclusive jurisdiction to decide the special rights and obligations of the parties. 135. Booz Allen & Hamilton Inc. v SBI Home Finance Ltd. & Ors (2011) 5 SCC 532, at para. 36; Haryana Telecom Ltd. v Sterlite Industries (India) Ltd. (1999) 5 SCC 688, at para. 5. 136. The issue of “dressing-​up” a purely commercial dispute as an oppression and mismanagement dispute to evade the arbitration agreement is discussed in Section 3.10 of this Chapter.

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In several Model Law jurisdictions, including China,137 Hong Kong,138 and Singapore,139 issues arising out of regulation of competition practices are also not arbitrable. A dispute arising from an alleged mistake made at the time the contract was entered into, or an allegation of misrepresentation or negligent misstatement is arbitrable.140

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In certain cases, when there are allegations of illegality of a contract, the doctrine of separability141 requires that there should be no reason why allegations of fraud, corruption, or bribery should result in an arbitral tribunal declining jurisdiction.142

[3.7] ARBITRATION DETERMINED BY ONE OR MORE PERSONS

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The arbitral tribunal must have been appointed by the parties themselves, or been constituted by a method to which the parties have consented. The arbitral tribunal may consist of one or more arbitrators, in practice normally one or three.143

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Under the Model Law, the default number of arbitrators is three, however, parties have a choice to decide the number of arbitrators.144

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137. Shell China Co. Ltd. v Huili Hohhot Co. Ltd. [2019] Zhi Min Xia Zhong No. 47 (by means of this judgment, the Chinese Supreme Court declared private anti-​trust action to be non-​arbitrable). 138. Loyal Profit International Development Ltd. v Travel Industry Council of Hong Kong [2016] HCMP 256/​2016 (the Hong Kong Court of first instance affirmed that no independent proceedings can be brought where there is a contravention of a conduct rule under the Competition Ordinance (Cap 619)). 139. Matters regulated under the Singapore Competition Act are not regarded as arbitrable as it would be contrary to public policy; see Larsen Oil and Gas Limited v Petroprod Ltd. [2011] 3 SLR 414. 140. Avitel Post Studioz Ltd & Ors. v HSBC PI Holdings (Mauritius) Ltd & Ors. 2020 SCC Online SC 656; Sabah Gas Industries Sdn Bhd v Trans Samudera Lines (S) Sdn Bhd [1993] 2 MLJ 396. 141. See Chapter 8. 142. See Richard H. Kreindler, “Public Policy and Corruption in International Arbitration: A perspective for Russian Related Disputes”, (2006) 72 Arbitration 236. For instance, the award arising out of the dispute between Daiichi Sankyo and the Singh Brothers of the Ranbaxy Group has been enforced in India, despite the issue of “fraud” being raised and decided against the Singh Brothers in accordance with the parameters laid down in the Indian Contract Act, 1872. The decision of the Supreme Court of India in A. Ayyasamy v A. Paramasivam & Ors (2016) 10 SCC 386 –​requiring that there must be an allegation of “serious fraud” paved way for such an outcome. However, it is to be noted that there is no clarity on parties’ ability to argue arbitrability of issues of bribery and corruption in India. 143. It is interesting to note that an odd number of arbitrators is comparatively a recent preference. For instance, see John Roche Dassent (ed.), Acts of the Privy Council of England Volume 9, 1575–​1577 (Her Majesty’s Stationery Office, 1894), “out of 59 arbitrations an even number of arbitrators were appointed 40 times”; see Derek Roebuck, “Odds or Evens: How Many Arbitrators?” [2014] 80(1) AIJAMDM 8, p. 15; see Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at paras. 4.22–​4.32; section 10 of the Arbitration Act empowers parties to determine the number of arbitrators to decide a dispute, provided such a number is not an “even” number. However, the Supreme Court of India has held section 10 to be a derogable provision. The Courts have also been proactive in appointing a third arbitrator in cases of a dispute between two appointed arbitrators. See Groupe Chimique Tunisien SA v Southern Petrochemicals Industries Corpn. Ltd. AIR 2006 SC 2422. 144. Model Law, art. 10; Under s. 10(2) of the Arbitration Act, the default position provides for the appointment of a single arbitrator.

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Chapter 3—​Defining an Arbitration

In some cases, each party will appoint an arbitrator, and the two arbitrators will themselves appoint a third to act as chairman or presiding arbitrator. The composition of the arbitral tribunal may be determined by the parties or a third person in accordance with the procedure in the arbitration agreement.

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In India, the procedure for appointment of arbitrators is contemplated under Section 11 of the Arbitration Act.145

[3.8] ARBITRATION DETERMINED JUDICIALLY

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When the arbitral tribunal acts in the course of an arbitration hearing, it is said to be acting judicially. Due to the judicial nature of their functions, arbitrators enjoy immunity from actions against them for negligence during their functions.

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The immunity of the arbitrators with respect to the liability of acts and omissions in discharge of their functions is a well-​recognised principle in international arbitration.146 Various national legislations over the world including Singapore,147 Malaysia,148 and United Kingdom149 incorporate this principle.

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Prior to the 2019 Amendment, the Arbitration Act did not confer immunity upon arbitrators,150 although various institutional arbitration rules addressed the same.151

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However, the Arbitration Act contains recourse available to parties to address the bias or negligence of an arbitrator. It provides for reduction of fee of the arbitrator,152 termination of mandate,153 disqualification of arbitrator,154 setting aside of the award subject to costs to the arbitrator,155 etc.

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145. See Chapter 22. 146. Justice B.N. Srikrishna, Report of the High-​Level Committee to Review the Institutionalisation of Arbitration Mechanism in India (2017), p. 70. 147. Singapore Arbitration Act, 2001, s. 20. 148. Malaysian Arbitration Act, 2005, s. 47. 149. English Arbitration Act, 1996, s. 29. 150. Arbitration Act, s. 42-​B. 151. Indian Council of Arbitration (“ICA”) Rules of Domestic Commercial Arbitration and Conciliation, 2016, r. 79; ICA Rules of International Commercial Arbitration, 2014, r. 28; MCIA Rules, 2016, r. 34; DIAC (Arbitration Proceedings) Rules, 2018, r. 35. 152. Arbitration Act, ss. 13(6) and 29A(4). 153. Arbitration Act, s. 15. 154. Arbitration Act, s. 12. 155. Arbitration Act, s. 13(6); in a challenge to arbitral award, the High Court of Delhi in Rajesh Batra v Ranbir Singh Ahlawat [2011] (4) Arb LR 371, imposed costs on the arbitrator and a party for colluding against the other party, when there was a challenge to the appointment of the arbitrator.

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Law, Practice and Procedure of Arbitration in India

The Supreme Court of India in Ranjit Thakur v Union of India156 laid down the test of likelihood of bias and held that the same would also be equally applicable to arbitrators. The test is different for various actions of the arbitrator.

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While a reasonable apprehension or likelihood of bias is sufficient for removal of the arbitrator,157 the degree of proof required for terminating the mandate158 or setting aside an award given by such arbitrator is much higher. The concept of bias has been discussed in subsequent chapters elaborating these provisions.

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The arbitral tribunal must also be impartial. If the arbitrator is not impartial, he should be disqualified and it does not matter whether his lack of impartiality arises out of his relationship or connection with one of the parties or the subject matter of the arbitration.159 An arbitrator can be perceived to be partial through his conduct or even his racial prejudice.160

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The applicable test in many countries has been framed as “real danger of bias”.161 Indian courts have not followed this test. Justice Indu Malhotra has explained that the applicable “test of likelihood of bias is whether a party could justifiably have a reasonable apprehension that there are circumstances likely to affect the decision of the arbitrator.”162

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[3.9] THE APPLICATION OF LAW

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The arbitral tribunal will impartially and judicially determine the parties’ rights and must do so in compliance with the principles of due process, natural justice, and common law.

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These principles are also embodied in statutory provisions. The arbitral tribunal is required to determine the dispute in accordance with the substantive law that may be applicable to the agreement between the parties.163

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1 56. (1987) 4 SCC 611. 157. Arbitration Act, s. 12(3); see R.S. Bachawat, Law of Arbitration and Conciliation (6th edn, LexisNexis 2017), p. 643. 158. Sachinandan Das v State of West Bengal & Ors. AIR 1991 Cal 224; see R.S. Bachawat, Law of Arbitration and Conciliation (6th edn, LexisNexis 2017), p. 643. 159. An arbitrator becomes a party to the arbitration contract by accepting his appointment, Compagnie Europeene De Cereals SA v Tradax Export SA [1986] 2 Lloyd’s Rep. 301, [1986] 3 WLUK 248. He may also be a fiduciary, and as such a co-​arbitrator has standing to apply to the court for an order that his co-​arbitrator disclose previous appointments where there is the suggestion of bias; Sundra Rajoo v Mohamed Abd Majed [2011] 6 CLJ 923. 160. Locabail (UK) Ltd. v Bayfield Properties Ltd & Ors. [1999] 12 WLUK 638, at para. 5. 161. Regina v Gough [1993] AC 646, [1993] 2 WLR 883; Andrews (t/​a BA Construction) v John H. Bradshaw, H Randell & Son Ltd [2000] BLR 6, [1999] 7 WLUK 641. 162. See Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 516. 163. Olive Healthcare v Launctt Company Inc. (2012) 3 Bom CR 36, at para. 25.

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Chapter 3—​Defining an Arbitration

LJ Singleton had in Taylor (David) & Son Ltd. v Barnett Trading Co. held that: “the duty of an arbitrator is to decide the questions submitted to him according to the legal rights of the parties and not according to what he may consider fair and reasonable under the circumstances.”164

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An agreement by the parties to the contrary effect is not a valid arbitration agreement and an equity or honourable engagement clause does not permit the arbitrators to depart from the law.165

The Arbitration Act, which is largely derived from the provisions of the Model Law, provides that the arbitral tribunal shall decide a dispute ex aequo et bono or as amiable compositeur, if the parties have authorised the tribunal to do so.166

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Section 28 of the Arbitration Act categorically provides that when the place of arbitration is situated in India, in a domestic arbitration, the arbitral tribunal must decide the dispute in accordance with the substantive law in force in India.167

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Where the arbitral tribunal is dealing with an international commercial arbitration, it is required to decide the dispute in accordance with the rules of law designated by the parties.168

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The 2015 Amendment provides that in deciding and making an award, the tribunal must take into account the terms of the contract and the relevant trade usages applicable to a transaction.169 This addition in Section 28(3) of the Arbitration Act applies to all arbitrations seated in India regardless of whether the substantive dispute is governed

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164. [1953] 1 WLR 562, 568, [1953] 1 All ER 843, 846; in Re Astley and Tyldesley Coal and Salt Co and Tyldesley Coal Co. (1889) 68 LJ (QB) 252, where the court held that the arbitrator is “bound to give effect to all legal defences”; Board of Trade v Cayzer, Irvine & Co Ltd [1927] AC 610; NV Handels-​en-​Transport Maatschappij Vulcaan v J Ludwig Mowinckels Rederi A/​S [1938] 60 Ll. L. Rep. 217, [1938] 2 All ER 152; David Taylor & Son Ltd. v Barnett Trading Co. [1953] 1 All ER 843, [1953] 1 WLR 562 (CA); President of India v La Pintada Compania Navigacion SA [1984] 2 All ER 773 (HL). 165. Home and Overseas Insurance Co. Ltd. v Mentor Insurance Co. (U.K.) Ltd. (in liquidation) [1989] 3 All ER 74, [1990] 1 WLR 153, p. 161 (CA). 166. Arbitration Act, s. 28(2). 167. Arbitration Act, s. 28(1)(a). 168. Arbitration Act, ss. 28(1)(b)(i) and 28(1)(b)(ii); section 28 of the Arbitration Act is modelled on art. 28 of the UNCITRAL Model Law which also empowers the parties to either designate a rule of law (such as the International Institute for the Unification of Private Law (“UNIDROIT”) Principles of International Commercial Contracts (“UPICC”) or the United Nations Convention on Contracts for the International Sale of Goods (“CISG”), or the law of any State. 169. Arbitration Act, s. 28; see also, 2015 Amendment, s. 14. The Supreme Court of India in Ssangyong Engg. & Construction Co. Ltd. v National Highway Authority of India [(2019) 15 SCC 131, at para. 40] remarked that s. 28(3) of the Arbitration Act is a reflection of the Supreme Court of India’s decision in Associate Builders v Delhi Development Authority (2015) 3 SCC 49.

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by Indian law or not; and yet appears to legislate a rule of interpretation of commercial transaction. This would appear inconsistent from a procedural point of view (i.e. a seat law interfering with the substantive law) and also, because this would imply that a contract, in India, would be interpreted on the basis of the Indian Contract Act layered with an additional lex specialis substantive rule.

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Article 19 of the Model Law establishes the autonomy of the parties and of the arbitrators in the procedural conduct of arbitration. Although an arbitral tribunal is not bound by the strict rules of evidence or procedure, it must give the parties an opportunity to put forward their evidence and contentions.

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Section 19 of the Arbitration Act which is based on Article 19 of the Model Law, makes it clear that since the parties are free to agree on the procedure to be followed by the tribunal, the arbitral tribunal will not be bound by the Code of Civil Procedure 1908 or the Indian Evidence Act, 1872.170

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Section 19 of the Arbitration Act also empowers the parties to agree on the procedure to be followed by the arbitral tribunal.171 In the absence of such an agreement between the parties, the arbitral tribunal may conduct the proceedings in the manner it considers appropriate.172

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The law relating to limitation of actions applicable to arbitrations is found only under Section 43 of the Arbitration Act (and not in the Model Law). Section 43 of the Arbitration Act provides for the application of the Limitation Act, 1963173 to arbitration proceedings in the same manner as it is to apply to proceedings before the court proceedings.

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[3.10] BINDING EFFECT OF AN ARBITRATION AGREEMENT

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The fundamental principle underlying arbitration as a means of ADR is that the decision of the arbitral tribunal will be legally binding and enforceable between the parties.174 A corollary of finality is that the dispute is said to be settled once and for all and the same claim cannot be brought before arbitration again, giving rise to the defence of

1 70. 171. 172. 173. 174.

Arbitration Act, s. 19(1). Arbitration Act, s. 19(2). Arbitration Act, s. 19(3). Limitation Act, 1963 [Act 36 of 1963]. Arbitration Act, s. 35.

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Chapter 3—​Defining an Arbitration

res judicata.175 However, the parties are not barred from invoking the same arbitration clause on more than one occasion to make further/​additional claims.176 Unless the parties agree otherwise, awards are deemed to be final and binding on the parties and persons claiming under them. Although it is a necessary condition that the award must be intended to be binding, this in itself is not a sufficient condition.

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An arbitration agreement is defined in Section 7 of the Arbitration Act.177 If the arbitration agreement provides that all disputes “shall” or “may only” be referred to arbitration, the intention of the parties is to be taken into account and such intention is to be given effect to by the courts.178

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Under the Arbitration Act, a two-​tier arbitration is not prohibited. Parties may choose to agree to a second or an appellate arbitration under Section 7 of the Arbitration Act. Such an arbitration clause would neither be in violation of any fundamental law nor in violation of public policy.179

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The binding nature of an “arbitration agreement” within the fold of Section 7 of the Arbitration Act has been extended to non-​signatories, through jurisprudence.180 The courts have held non-​signatories to comply with an arbitration agreement, by applying the group of companies doctrine (“Group of Companies Doctrine”), if and to the extent an intention to be bound by the arbitration agreement.

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This Group of Companies Doctrine was first applied by the Supreme Court of India in the case of Chloro Controls India (P) Ltd. v Severn Trent Water Purification Inc (“Chloro Controls”).181 However, it is critical to note that in extending an arbitration agreement to a non-​signatory member of the group of companies, the courts must be

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175. Fidelitas Shipping Co Ltd v V/​O Exportchleb [1966] 1 QB 630, p. 643 (the principle of “Res judicata” is applicable to arbitral tribunals). 176. Dolphin Drilling Ltd. v ONGC Ltd. (2010) 3 SCC 267, at para. 8. 177. Arbitration Act, s. 7. 178. Zhejiang Bonly Elevator Guide Rail Manufacture Co. Ltd v Jade Elevator Components. (2018) 9 SCC 774, at paras. 7, 9; Indtel Technical Services Pvt Ltd. v W.S. Atkins Rail Ltd. (2008) 10 SCC 308, at para. 38. 179. Centrotrade Minerals & Metal Inc. v Hindustan Copper Ltd. (2017) 2 SCC 228, at para. 20. 180. Ameet Lal Chand Shah v Rishabh Enterprises (2018) 15 SCC 678; Cheran Properties Ltd. v Kasturi & Sons Ltd. (2018) 16 SCC 413; Mahanagar Telephone Nigam Ltd. v Canara Bank (2019) 10 SCC 32; for detailed discussion, please refer to Chapter 13. 181. (2013) 1 SCC 641; SEI Adhavan Power Private Ltd. & Anr. v Jinneng Clean Energy Technology Ltd & Ors. SCC Online Mad 13299 (the High Court of Madras in the aforementioned case applied the decision of Chloro Controls and held that the appellant companies constituted a “Single Economic Entity”, that were intrinsically connected to each other. Hence, the arbitration agreement was also binding on the appellants’ non-​signatory affiliates).

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Law, Practice and Procedure of Arbitration in India

able to trace the intention of the parties to extend the arbitration agreement to the non-​signatories.182 Section 8 of the Arbitration Act deals with the power of the court to refer parties to arbitration where there is an arbitration agreement.

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The Supreme Court of India in Hema Khattar v Shiv Khera183 held that the termination of an agreement by mutual consent would not render the arbitration clause inoperative.

Once the arbitrator has made the final award, the arbitrator is functus officio as he or she has performed their duties. This prevents the re-​examination of the award by the arbitral tribunal and provides the parties with finality.184

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There are some exceptions to the functus officio principle, limited to requests by the parties to correct minor clerical errors, or interpretation of a particular part of the award or issue an additional award.185

[3.11] SHAM ARBITRATION AND DRESSING UP DISPUTES

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The machinery of arbitration, sitting outside direct judicial scrutiny, confidential and with a choice of venue, is attractive to sophisticated criminals. Such criminals use sham or fictitious arbitrations or dress up disputes to mislead arbitral tribunals and obtain erroneous awards. Consent awards become a rubber stamp for criminal conduct.

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Parties already engaged in criminal conduct use collusion, fabricated information, falsified evidence, and other improper methods to acquire illegitimate property rights and interests. Sham arbitration damages both public interests and third-​party property rights.

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Sham arbitrations are commenced for a collateral purpose in obtaining illegitimate interests or infringe on legitimate rights and/​or interest of third parties or the public.

182. Chloro Controls India (P) Ltd. v Severn Trent Water Purification Inc (2013) 1 SCC 641, at paras. 71, 72; SEI Adhavan Power Private Ltd. & Anr. v Jinneng Clean Energy Technology Ltd & Ors. SCC Online Mad 13299, at para. 27. 183. (2017) 7 SCC 716, at para. 35. 184. Under s. 34(4) of the Arbitration Act, the courts may upon a party’s request, keep the proceedings under s. 34 in abeyance in order to give the arbitral tribunal an opportunity to take such action that would in the opinion of the arbitral tribunal, eliminate the grounds for setting aside the award; Radha Chemicals v Union of India Civil Appeal No. 10386/​2018, 10 October 2018, at para. 5 (the Supreme Court of India clarified that this power cannot be used by a court to remand the matter back to the arbitral tribunal). 185. Arbitration Act, s. 33.

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Chapter 3—​Defining an Arbitration

The arbitration procedure has also been used to create a fictitious legal relationship or to void an existing legal relationship.

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The confidentiality and privacy protection of arbitration proceedings is used as a cover. Affected parties are also hampered by the principle that only parties to an arbitration agreement can partake in arbitration proceedings. It is likely that affected parties will not be aware of the illegal proceedings or are prevented by the apparent lack of locus to participate in the proceedings.186

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The arbitral tribunal, when deciding on the case is limited in its capacity to the facts presented in the proceedings. As such, the arbitral tribunal is misled into making an erroneous award which is final and is difficult to challenge. More-​so if the same is administered by an arbitral institution.

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Sham arbitration done through related institutional arrangements impairs the legitimate rights and interests of persons not involved in the arbitration. It compromises the credibility of arbitration as an ADR method.

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Sham arbitrations may be illegally used for a number of purposes including defeating or delaying creditors,187 tax evasion, or money laundering.188 In some jurisdictions sham arbitration may be used as a means for laundering money, evading payment, or re-​characterising a payment.189

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For instance, “A” wants to move money out of a highly regulated jurisdiction to a more forgiving one, and makes a false claim for loss of profits against “B”, who is in reality linked to or controlled by “A”. When “A” succeeds in the arbitration, “B” pays the award and the money is legitimised, or can be written off as a loss to reduce tax liabilities.

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Warning signs in such arbitrations can include the dispute being very obviously one-​sided, or one or both of the companies showing limited actual business activity. Sham arbitrations can be difficult to detect as they may be highly convoluted190 and every effort will be made to obscure or disguise corrupt conduct.191

186. Waleed Al-​Qaroani, et al. v Chevron Corporation, et al. No. C18-​03297 JSW, California Northern District Court; Al-​Nozha Misdemeanor Court in Cairo, Case No. 12648 of Judicial Year 2018, Cairo Court of Appeal, Appeal No. 695 of Judicial Year 2019 (East Cairo Appeals). 187. Akram-​Un-​Nissa Bibi & Ors. v Mustafa-​Un-​Nissa Bibi AIR 1929 All 238. 188. See Andrew McDougall, “International Arbitration and Money Laundering” [2005] 20(5) AUILR 1021, at p. 1054. 189. See Basel Institute of Governance, “Corruption and Money Laundering in International Arbitration” [2019] CCAC. 190. Ibid; Andrew McDougall, “International Arbitration and Money Laundering” [2005] 20(5) AUILR 1021, at p. 1054. 191. See Karen Mills, “Corruption and Other Illegality in the Formation and Performance of Contracts and in the Conduct of Arbitration Relating Thereto” [2002] 11 ICCA.

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If an arbitral tribunal suspects that the arbitration is a sham or there is corruption involved, difficult questions about the correct response arise. If the arbitral tribunal issues an award on the basis of findings of corruption made of its own accord, or sua sponte, where neither of the parties has alleged it, the award might be at risk of a challenge for being ultra petita, namely, beyond the reference to arbitration.192

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If the arbitral tribunal does nothing, it may be complicit in criminal activities. This fear is tempered by various decisions that support a general policy to rigorously oppose any attempt to use the arbitral process to give effect to contracts contaminated by corruption.193 An award cannot be supported if it is induced by undue influence.194 The courts have set aside awards made on sham disputes.195

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This also raises the question of the duty of the arbitrator in such circumstances and to what extent the duty is extended. Is there a duty on the arbitrator to investigate and/​or report? There is much debate on the role of the arbitrator and his authority to investigate a claim sua sponte.

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There is a school of thought that believes that the role of the arbitrator, and the legal platform from which he operates, gives the arbitrator legitimate tools to investigate and combat illegality.196 However, the arbitrator has to proceed with caution given the personal legal and civic responsibility versus the original mandate set out in the arbitration agreement.

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On the other hand, there are a number of cases that support investigative activity by arbitrators.197 So long as there is prima facie evidence and “arbitrators inform parties of the basis for their suspicions of corruption, and provide them with an opportunity to make submissions on the matter, arbitrators are entitled (indeed obliged) to inquire into corruption and compel the production of evidence or the submission of arguments if the parties refuse to be forthcoming, and make the relevant ruling on the basis of such inquiry”.198

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192. See Blackaby Nigel, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 121, para. 2.153. 193. World Duty Free Co Ltd v The Republic of Kenya ICSID Case No. ARB/​00/​7, at para. 173 (the arbitral tribunal expressed the view that corruption was “more odious than theft”); Himpurna California Energy Ltd. v PT. (Persero) Perusahaan Listruik Negara UNCITRAL Ad Hoc-​Award of 4 May 1999, YCA XXV (2000), at paras. 219, 220; see Mealey’s International Arbitration Report Vol. 14, No. 14 (December 1999). 194. Sri Kishan Lal v Mussamat Kashmiro & Ors. AIR 1916 PC 172. 195. Ramesh Kumar & Ors v Furu Ram & Ors (2011) 8 SCC 613; Thakkar Vithalbhai Hargovind & Ors. v Kacchia Jagjivan Motilal & Ors. (1969) 10 GLR 288. 196. See Richard H. Kreindler, “Public Policy and Corruption in International Arbitration: A perspective for Russian Related Disputes” (2006) 72 Arbitration 236. 197. Minmetals Germany GmbH v Ferco Steel Ltd [1999] 1 All ER (Comm) 315. 198. See Michael Hwang and Kevin Lim, “Corruption in Arbitration –​Law and Reality” (2011) HSF-​SMU Arbitration Lecture Series.

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Chapter 3—​Defining an Arbitration

In one case, the sole arbitrator had gathered evidence of corruption in the form of commission payment.199 Judge Lagergren stated that: “In the presence of a contract in dispute of the nature set out hereafter, condemned by public policy, decency and morality, I cannot in the interest of the administration of justice avoid examining the question of jurisdiction on my own motion.”200

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The Supreme Court of India in the case of Ramesh Kumar & Anr. v Furu Ram & Anr.201 has held that for an arbitration to be valid, there should be a dispute, an agreement to refer such dispute to arbitration, an actual reference of dispute to arbitration, and adjudication of such dispute after a proper hearing.

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The Supreme Court of India also held that, if the dispute had already been settled and the arbitration award was only a ruse to avoid payment of stamp duty and registration with respect to a sales deed, then the entire proceedings would be declared sham and bogus, and any decree passed in relation of such proceedings would be invalid.202

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Another facet of a sham arbitration, in the Indian context, is that of dressing up of disputes, either to evade arbitration or to evade the method of dispute resolution, mandated by statute.

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For instance, “A” who is a majority shareholder in company “Z” invokes arbitration proceedings under the underlying shareholder agreement in order to evade the jurisdiction of the National Company Law Tribunal on a dispute concerning the oppression and mismanagement of company “Z” and its minority shareholders.

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The High Court of Bombay considered a converse situation of “dressing up” of disputes in Rakesh Malhotra v Rajinder Kumar Malhotra.203 In this case, the court held that claims in relation to oppression and mismanagement could not be resolved by arbitration, as the relief which is sought in such claims could not be granted by an arbitral tribunal.204

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However, the Court carefully caveated the position. It held that in examining the nature of reliefs sought by the parties in a case brought before a court, tribunal, or other statutory judicial authority, such authority must be convinced that the dispute at hand

199. See J. Gillis Wetter, “Issues of Corruption before International Arbitral Tribunals: The Authentic Text and True Meaning of Judge Gunnar Lagergren’s 1963 Award in ICC Case No. 1110” [1994] 10(3) Arbitration International 277. 200. Ibid, p. 294. 201. (2011) 8 SCC 613. 202. Ibid at para. 48. 203. (2015) 192 Comp Cas 516. 204. Ibid.

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Law, Practice and Procedure of Arbitration in India

has not been dressed up in a manner that would enable the parties to evade the contractually binding arbitration agreement. Similarly, a dispute must not be dressed up in order to evade the statutory jurisdiction of courts, tribunals, or other judicial authorities, when the nature of final relief sought involves a right in rem and is incapable of being arbitrated.

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[3.12] CONCLUSION

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ADR procedures include arbitration, negotiations, mediation, conciliation, mini-​trials, and expert evaluation. A method like arbitration is a private and confidential rights-​ based adjudication of the dispute which is binding on the parties to the agreement through which the breach arises.

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Upon occurrence of any dispute, the dispute can be referred to as “arbitration” when: (1) the mechanism is a consensual means of resolving disputes;



(2) the arbitrator is appointed by, or for the parties;



(3) the decision of the arbitral tribunal is final and binding; and



(4) the mechanism involves the use of adjudicatory procedures.205

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The fundamental principle underlying arbitration as a means of ADR is that the decision of the arbitral tribunal will be legally binding and enforceable between the parties.206

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What can be determined from the aforesaid is even if a dispute exists, this may not be sufficient, as it must also be a dispute that “capable of settlement by arbitration”. The idea that a dispute may not be capable of settlement by arbitration is not meant as a criticism of arbitrators or of the arbitral process itself.

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While discussing arbitrability of disputes, Booz Allen sets out a distinction between disputes involving a “right in rem” and disputes involving a “right in personam”. This distinction would be relevant for a determination as to whether a dispute is arbitrable or not. Since actions “in rem” affect the world at large and involve public interest, it is not apt for them to be decided by private fora. Thus, generally, all disputes relating to “rights

205. See Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International 2021), p. 274. 206. Arbitration Act, s. 35.

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Chapter 3—​Defining an Arbitration

in rem” are considered non-​arbitrable, while dispute pertaining to “rights in personam” are arbitrable.207 For instance, a dispute over matrimonial status may be regarded by the national law of a particular State as not being “capable” of settlement by arbitration and only adjudicated by public courts.

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International commercial arbitration is a hybrid process. It begins as a private agreement between the parties. It continues as private proceedings. The wishes of the parties play a significant role in choosing the laws governing the agreement and appointment of the arbitral tribunal.

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This interrelationship between national law, international treaties, and conventions is the key to the effective operation of the mechanism from adjudication at a local level to resolution at a global level.

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Sham arbitrations are commenced for a collateral purpose in obtaining illegitimate interests or infringe on legitimate rights and/​or interest of third parties or the public. The arbitration procedure has also been used to create a fictitious legal relationship or to void an existing legal relationship.

207. (2011) 5 SCC 532, at paras. 36–​38. (This rule, however, is not a rigid or inflexible rule. Disputes relating to subordinate rights in personam, arising from rights in rem have been considered to be arbitrable. Some disputes involving a “right in personam” may also be non-​arbitrable.) Kingfisher Airlines Limited v Prithvi Malhotra Instructor 2013 (7) Bom CR 738, at para. 13 (if a matter has been reserved for resolution by a public forum as a matter of public policy, then it is non-​arbitrable even if it concerns a “right in personam”. Disputes would be considered non-​arbitrable only where a particular enactment creates special rights and obligations, and gives special powers to the tribunals that are not enjoyed by civil courts).

Chapter 4 RELEVANCE OF ARBITRATION IN RESOLVING DISPUTES [4.1] INTRODUCTION............................................................................................................................ 72

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[4.2] ADVANTAGES OF ARBITRATION OVER LITIGATION........................................................ 79 [4.3] THE COST FACTOR..................................................................................................................... 103 [4.4] THE DURABILITY OF ARBITRATION: IN THE PRE-​AND POST-​19 WORLD............. 108

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[4.5] CONCLUSION............................................................................................................................... 111

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[4.1] INTRODUCTION

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Arbitration is the natural mode of resolution for business and commercial disputes. The development of international trade and domestic economic activity in India has led to a significant increase in the number of the cases resolved by way of arbitration.

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Many foreign and Indian parties perceive arbitration as the natural mode for the resolution particularly of disputes from international commercial contracts.1

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Generally, the success of arbitration may arise from the fear of the native advantage on concerns regarding the ability of the national courts of most countries to decide the dispute without bias, serious delays, or partisan decision making.

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Even if the national courts may be open to commercial customs, practices, and realities, the fear is that they are likely to see the world through their cultural lenses.

1. Anecdotal evidence suggests that international commercial arbitration arising from commercial contracts have increased tremendously. Some major international arbitral institutions like ICC and SIAC reported that their caseload involving Indian parties have been growing steadily. In some cases, the numbers have increased dramatically. ICC’s dispute resolution statistical report for 2019 records an increase in the number of Indian parties, which has tripled and reached 147. Having ranked 15th in 2018 with just 47 parties, India now comes in second on the overall number of parties worldwide available at https://​iccwbo.org/​media-​wall/​ news-​speeches/​icc-​releases-​2019-​dispute-​resolution-​statistics/​ (accessed on 15 November 2020). SIAC’s Annual report records that in the year 2019 87 per cent of new cases filed with SIAC were international in nature. India was ranked as the top foreign user of SIAC, available at https://​www.siac.org.sg/​images/​ stories/​articles/​annual_​report/​SIAC%20AR_​FA-​Final-​Online%20(30%20June%202020).pdf (accessed on 15 November 2020).

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Chapter 4—​​​Relevance of Arbitration in Resolving Disputes

Essentially, the national courts may not be perceived as neutral when they decide disputes between locals and foreigners.2 It may be coupled with the fear that the court’s judgment might not be enforceable abroad. Although arbitration may not be perfect, it offers a more workable mechanism of dispute resolution as ability to remedy shortcomings and innovate as compared to litigation.3.

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However, parties incur costs when embarking on an arbitration. In addition to legal fees, they may have to pay the fees of the arbitral tribunal, the arbitral institution’s administrative fees (for institutional arbitration only) and the cost of the venue. On the other hand, while parties incur costs towards legal fees and court fees when litigating, they do not incur costs related to the tribunal or the arbitral institution.

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Despite these costs, there are several reasons for parties to arbitrate instead of litigating in the courts. Arbitration offers a fairer process in that the arbitral panel is neutral and parties are put on an equal footing.4

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The essential features of the arbitral process make it the most suitable mode of dispute resolution in this context: neutrality and independence of the adjudicators, seriousness and flexibility of the process, and higher prospects of enforceability of the decision in the majority of the global jurisdictions.5

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Arbitration promises a fair trial by an impartial arbitral tribunal. The parties can keep the details of their dispute private and confidential and out of the glare of public scrutiny. Arbitral proceedings and an arbitral award are generally confidential.6

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Parties can prevent the arbitral award from being published and also, prevent the disclosure of materials arising from the arbitral proceedings to the public at large.7

2. See Gilles Cuniberti, “Beyond Contract –​The Case for Default Arbitration in International Commercial Disputes” (2008) 32 Fordham Intl LJ 417, 423. 3. See Gary B. Born, International Commercial Arbitration, Vol. I (3rd edn, Wolters Kluwer Law & Business 2021), p. 84. 4. Emmanuel Gaillard and John Savage (eds), Fouchard, Gaillard, Goldman on International Commercial Arbitration (Kluwer Law International 1999), pp. 409–​430. 5. See Gilles Cuniberti, “Beyond Contract –​The Case for Default Arbitration in International Commercial Disputes” (2008) 32 Fordham Intl LJ 417, p. 423. 6. Prof. Dr. Klaus Peter Berger, “Principle XIII.5.1 –​Confidentiality” (Trans-​lex.org), available at https://​www. trans-​lex.org/​970500/​_​/​confidentiality/​ (accessed on 15 November 2020). 7. Mannvir Baljit Singh, “The Evolution of the Doctrine of Confidentiality in Arbitration and the Public Policy Argument” [2020] 3 MLJ xli.

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Law, Practice and Procedure of Arbitration in India

The parties have the freedom to consensually execute arbitration agreement in line with the principle of party autonomy.8 Party autonomy bestows certain contractual freedoms upon the disputing parties.9 They have the right to choose applicable substantive law and these laws when chosen shall govern the contractual relationship of the parties. The parties then can govern and mould the procedure of the arbitration as they deem expeditious.

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Parties can choose the arbitrator(s), the procedure, applicable rules, hearing times, and venue. For example, the arbitrator and the parties can select hearing or meeting venues outside of the place of arbitration. In many cases, arbitral tribunals conduct procedural case management hearings over video conference or even a teleconference.

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Parties can establish their own procedural rules. Arbitrations tend to be less formal than proceedings in court. The proceedings can take place in conference rooms, without robes or wigs, or virtually in these COVID-​19 times.

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It can provide a simplified process for the commencement of proceedings and service of process, neutrality and facilitate the taking of evidence. The courts play a supportive role in facilitating arbitral proceedings. Prima facie, it promises the possibility of relatively expedited proceedings.10

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Arbitration may be helpful where the dispute involves technical matters that require specialised knowledge, for example intellectual property or software disputes.

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It may be that scientific or mechanical principles are involved, as in heavy construction or engineering disputes.11 Parties, the arbitral institution, or the default

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8. See Sunday A Fagbemi, “The Doctrine of Party Autonomy in International Commercial Arbitration: Myth or Reality?” (2016) 6 J of Sust. Dev. Law & Policy 222, p. 224; See Abdulhay Sayed, Corruption in International Trade and Commercial Arbitration (Kluwer Law International 2004), p. 159, wherein it is stated that “party autonomy” is “the freedom of the parties to construct their contractual relationship in the way they see fit”. 9. Moses Oruaze Dickson, “Party Autonomy and Justice in International Commercial Arbitration” (2018) 60 Intl J of Law and Management 114. 10. See Trevor Cook and Alejandro García, Arbitration of Intellectual Property Disputes (Kluwer Law International 2010), p. 41, where it is suggested that “[i]‌f parties cooperate and set out a realistic yet expeditious time frames, a dispute can be resolved quickly, for instance in less than a year.” See also QMUL & White and Case, “2018 International Arbitration Survey: The Evolution of International Arbitration” (2020), available at https://​ www.whitecase.com/​sites/​whitecase/​f iles/​f iles/​download/​publications/​qmul-​international-​arbitration-​ survey-​2018-​19.pdf (accessed on 15 November 2020). According to McIlwrath and Savage, International Arbitration and Mediation: A Practical Guide (Kluwer Law International BV 2010), an arbitral tribunal tends to require one to two years to render an award in an international arbitration. Cost of arbitration along with the perceived “lack of speed” continues to be seen as some of the worst features of arbitration. 11. See Bulfracht (Cyprus) Ltd. v Boneset Shipping Co. Ltd. “The MV Pamphilos” [2002] EWHC 2292, where Colman J said “... In many cases, such as this, the arbitrators have been appointed because of their professional, legal, commercial or technical experience ...”; see also Pinsent Masons & QMUL, “International Arbitration Survey –​Driving Efficiency In International Construction Disputes” (2019), available at https://​www. pinsentmasons.com/​thinking/​special-​reports/​international-​arbitration-​survey (accessed on 15 November

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Chapter 4—​​​Relevance of Arbitration in Resolving Disputes

appointing authority can appoint arbitrators with an appropriate degree of expertise for such matters. By their very nature, such disputes are difficult for a non-​expert to understand. The arbitral process can be tailored to fit the issues, providing parties with greater confidence that the substance of their dispute is properly understood by those adjudicating its outcome.

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The general preference for arbitration in certain industries and international trade has nothing to do with the advantages of speed and cost-​saving, which are often emphasised in arbitration textbooks and conferences. It is rare for these factors to apply in modern commercial relationships.

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The main reason behind there being more arbitration clauses in commercial contracts is simply the unwillingness of the parties to litigate in court.12

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This comes with the caveat that the courts do have important supportive and supervisory roles in relation to arbitrations and parties revert to them when absolutely essential.

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Lord Mustill made out a case for arbitration when he said:

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“The great advantage of arbitration is that it combines strength with flexibility. There is strength because arbitration yields enforceable decisions, and is backed by a judicial framework which, as a last resort, can call upon the coercive powers of the state. Flexible because it allows the contestants to choose procedures which fit the nature of the dispute and the business context in which it occurs. A system of law which comes anywhere close to achieving these aims is likely to be intellectually difficult and hard to pin down in practical terms.”13

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The role of the arbitral tribunal is judgmental. Arbitration as a dispute resolution mechanism will thus always be needed where for one reason or another, a final and enforceable outcome is necessary.

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There are situations where one party needs an award, a final and binding solution imposed by a third party rather than a compromise or a consent award.

2020), in which “technical complexity” has been regarded as a defining feature of international construction arbitration by a large number of parties. 12. For example, the language of arbitration may be chosen in arbitral proceedings, whereas in litigation, the official language of the country of the competent court will be automatically applied. 13. D. Mark Cato, Arbitration Practice and Procedure (2nd edn, LLP 1997), as per Lord Mustill’s foreword.

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Law, Practice and Procedure of Arbitration in India

Often not just money is at stake. Sometimes, one party may go bankrupt if it does not achieve complete victory. Matters of principle or the positioning of a party in a long-​term relationship may also be an issue. In many cultures saving face may be an issue and the management of a party cannot afford to take the responsibility of being a party to a compromised settlement.

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In such cases, the party may need an official piece of paper, such as an arbitral award, before agreeing to pay money and accept some liability. The general view is that parties want an enforceable award. They are prepared to pay the costs of an experienced arbitrator or arbitral tribunal for the same.

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The prime concern of the parties is to get commercial justice. Parties also want a quick resolution of their disputes and for awards to be rendered within an acceptable time frame.

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Also, in most judicial systems, appeals on arbitral awards are limited. This maybe an advantage because it limits the duration of the dispute and any associated liability.

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In summary, the Court of Appeal of Singapore in Sumito v Antig Investment Pte. Ltd14 set out the reasons why commercial parties prefer arbitration:

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“There are myriad reasons why parties may choose to resolve disputes by arbitration rather than litigation … [A]‌n arbitral award, once made, is immediately enforceable both nationally and internationally in all treaty states. One would imagine that parties might be equally motivated to choose arbitration by other crucial considerations such as confidentiality, procedural flexibility and the choice of arbitrators with particular technical or legal expertise better suited to grasp the intricacies of the particular dispute or the choice of law. Another crucial factor that cannot be overlooked is the finality of the arbitral process. Arbitration is not viewed by commercial persons as simply the first step on the tiresome ladder of appeals. It is meant to be the first and only step.”15

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However, there are delays which exclusive to arbitration. For example, delays may occur as a result of the procedures in appointing the arbitral tribunal. Despite the positive duty on parties to co-​operate and not obstruct or delay the proceedings,16 arbitration remains vulnerable to delays, a problem arising at least partly

14. [2009] SGCA 41. 15. Sumito v Antig Investment Pte. Ltd [2009] SGCA 41, para. 29. 16. Paal Wilson & Co AS v Partenreederei Hannah Blumenthal [1983] 1 AC 854.

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Chapter 4—​​​Relevance of Arbitration in Resolving Disputes

out of the limited coercive powers of the arbitral tribunal.17 It is much more difficult to deliberately delay court proceedings in bad faith. In India, the position was more complex. Statutory loopholes allowed a party to delay the enforcement of an award. It would not be an overstatement to say that at one point, arbitration was a precursor to litigation.

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Applications for the enforcement of arbitral awards languished in courts for several years, rendering the parties’ recourse to arbitration almost futile. This difficulty faced by arbitral enforcement in India was demonstrated in the case of White Industries Australia Limited v The Republic of India,18 under the India-​Australia Bilateral Investment Treaty (“BIT”).

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On 27 May 2002, a Paris-​seated arbitral tribunal in an ICC arbitration awarded AUD$4.08 million arising from a reference to arbitration to White Industries Australia Ltd. against Coal India Ltd, a State-​owned mining utility.19

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On 6 September 2002, Coal India Ltd. successfully applied to the High Court of Calcutta to have the Award set aside.20 Unaware of this, on 11 September 2002, White Industries Australia Ltd. sought enforcement of the award in the High Court of New Delhi.21

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White Industries Australia Ltd. was unsuccessful in getting the set-​aside petition dismissed, and ultimately appealed to the Supreme Court of India on 31 July 2004.22

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In July 2010 after having spent almost eight years trying to enforce the ICC award through the Indian courts, White Industries Australia Ltd. commenced UNCITRAL arbitration proceedings against India under the India-​Australia BIT.

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The UNCITRAL tribunal ordered India to pay White the original amounts payable under the ICC award plus costs and interest.23

17. Under the Arbitration and Conciliation Act, 1996 arbitrators have the power to order interim measures under s. 17, but if a party does not comply, the only recourse is to apply to the High Court for the enforcement of the order. 18. White Industries Australia Limited v The Republic of India, UNCITRAL. 19. White Industries Australia Limited v The Republic of India (Award, 2011) UNCITRAL para. 3.2.33. 20. White Industries Australia Limited v The Republic of India (Award, 2011) UNCITRAL, para. 3.2.35. 21. White Industries Australia Limited v The Republic of India (Award, 2011) UNCITRAL, para. 3.2.36. 22. White Industries Australia Limited v The Republic of India (Award, 2011) UNCITRAL, para. 3.2.59. 23. White Industries Australia Limited v The Republic of India (Award, 2011) UNCITRAL, para. 16.1.1.

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Law, Practice and Procedure of Arbitration in India

Another instance is Centrotrade Minerals and Metals Inc. v Hindustan Copper Ltd.24 wherein the parties had seen two previous rounds of litigation before the Supreme Court of India enforced a foreign award, passed in 2001, after 19 years, in favour of the claimant.

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This was because prior to the 2015 Amendment, filing a challenge to an arbitral award resulted in an “automatic stay” on the enforcement of the award. The simple act of filing a challenge to an award under Section 34 was sufficient for the judgment debtor to derail the process of enforcement.

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The 2015 Amendment rectified this anomaly. Section 36 now provides that the mere filing of a challenge to an award cannot have any impact on the operation of the arbitral award.

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A judgment debtor is now required to file a separate application to obtain a stay on the operation of the arbitral award. Therefore, a judgment debtor can obtain a stay on the operation of an arbitral award only if the court deems it fit to grant such a stay.25

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When the 2015 Amendment was brought into force, the courts took divergent views of the issue of the applicability of the amended Section 36 to challenges that were filed prior to the 2015 Amendment coming into force on 23 October 2015.

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The Supreme Court of India in Board of Control for Cricket in India v Kochi Cricket Pvt. Ltd & Ors.26 categorically held that Section 36 would apply in its amended form, retrospectively. The Court reasoned that this was because the right to an automatic stay under the unamended Section 36 was not a vested right.27

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The Supreme Court of India in Hindustan Construction Company Ltd. & Anr. v Union of India & Ors.28 decided a constitutional challenge on Section 87 of the Arbitration Act.

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Section 87 sought to reintroduce the anomaly of “automatic stay” on awards arising out of those proceedings that were initiated prior to the commencement of the 2015 Amendment.

24. 25. 26. 27.

2020 SCC OnLine SC 479. See Arbitration Act, 1996, s. 36(3). [2018] 6 SCC 287. This position was statutorily overturned by the introduction of s. 87 in the 2019 Amendment. Section 87 as introduced by the 2019 Amendment provided that the 2015 Amendment would only apply to those arbitration and arbitration-​related court proceedings, instituted post the commencement of the 2015 Amendment on 23 October 2015. Subsequently, the Supreme Court of India in Hindustan Construction Company Ltd. & Anr. v Union of India & Ors. 2019 SCC OnLine 1520, struck down s. 87 for being arbitrary and unconstitutional. 28. 2019 SCC OnLine 1520.

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Chapter 4—​​​Relevance of Arbitration in Resolving Disputes

The Supreme Court of India struck down the impugned provision and held:

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“… the mischief of the misconstruction of Section 36 was corrected after a period of more than 19 years by legislative intervention in 2015, to now work in the reverse direction and bring back the aforesaid mischief itself results in manifest arbitrariness. The retrospective resurrection of an automatic-​stay not only turns the clock backwards contrary to the object of the Arbitration Act, 1996 and the 2015 Amendment Act, but also results in payments already made under the amended Section 36 to award-​holders in a situation of no-​stay or conditional-​stay now being reversed …”.29 The court’s tough stance is perhaps steering arbitration in the right direction in India.

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[4.2] ADVANTAGES OF ARBITRATION OVER LITIGATION

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The advantages of arbitration are best highlighted when compared to litigation. Litigation, unlike arbitration, does not require the consensus of the parties. It is the right of any citizen to bring an action in the courts for breach of contract or a tortious wrong.

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The Indian judiciary has been strained with overwhelming caseload for several years. The judicial caseload resulting in prolonged litigating periods had placed India fairly low on the Ease of Doing Business Index.30

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However, India has made up on lost ground in the last decade. As of 2020, India worked its rank up to 63 (from a low rank of 133 in 2010).31 The aspects contributing to this rise in ranks is attributable to the enforcement of contracts on account of the availability of enforcement through methods of alternate dispute resolution.32

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At present, arbitration may be considered the default mechanism for resolution of commercial disputes in India. Arbitration was initially preferred in India arising from the reluctance of foreign investors to submit disputes to Indian courts. However, now, arbitration is generally perceived as the simpler and quicker way of resolving disputes with international enforceability.

29. Hindustan Construction Company Ltd. & Anr. v Union of India & Ors. 2019 SCC OnLine 1520, para. 56. 30. See World Bank, Doing Business 2010: Reforming Through Difficult Times (2009), p. 5 where India was ranked 133 on the Ease of Doing Business Index in 2010. 31. World Bank, Doing Business 2020 (2019), p. 4. 32. See World Bank, ‘Doing Business 2020: Economy Profile India’ (2019), available at https://​www.doingbusiness. org/​content/​dam/​doingBusiness/​country/​i/​india/​IND.pdf (accessed on 16 November 2020); see also Bibek Debroy and Suparna Jain, “Strengthening Arbitration and Its Enforcement in India –​Resolve in India” (Niti Aayog 2017).

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Law, Practice and Procedure of Arbitration in India

Language

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Given the vast diversity and number of languages used throughout the world, it will be quite common for the national courts to use their national language in conducting their proceedings and delivering their judgments. As such, parties may also have to bear in mind the language skills of its legal counsel, depending on the court before which the matter may be placed. Although English is the preferred language for the conduct of proceedings before the Indian courts, due to the vast diversity and number of languages spoken in India, different courts have their own unofficial processes.

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While the occurrence of oral arguments being made in a language other than English is extremely low in the superior courts, lower courts do have a tendency to allow proceedings to be conducted in the relevant regional language.

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English is generally the lingua franca of international commerce for contracts between parties who use different languages in their everyday life. English is the common language of the parties in international commercial arbitration.

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Arbitration does away with such difficulties of logistics by allowing the parties to choose the language or languages in which the proceedings are to be conducted. In jurisdictions where English is not the language of the courts, arbitration, which allows the parties to choose the language of the proceedings, is generally preferred by foreign parties.

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The choice of language or languages is particularly significant in international commercial arbitration where parties may be of different nationalities and speak different languages. The objective will be to avoid problems of communication between the parties and arbitral tribunal and allow the smooth reception of evidence.

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Party autonomy allows parties to enter into arbitration agreements that expressly provide for the language to be used in the arbitration in which the arbitral procedure is conducted, and the procedural orders and award will be issued. The language provision that applies to the contract as a whole, which in the absence of a specific language provision for arbitration, in turn applies to the arbitration. The choice of language in arbitration becomes a relevant issue for parties, the arbitral tribunal, the annulment and enforcement courts.33

33. See Thomas H. Webster and Michael Bühler, Handbook of ICC Arbitration: Commentary, Precedents, Materials (4th edn, Sweet & Maxwell 2018), paras. 20.9, 20.10.

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Chapter 4—​​​Relevance of Arbitration in Resolving Disputes

Language of the arbitration affects parties when they want to engage their representation, select an arbitrator,34 make their written submissions, submit documentary evidence, and have witnesses testify and make oral arguments. Language becomes a relevant issue for the arbitral tribunal when conducting the hearing, receiving the parties’ submissions, deliberating on arbitral matters and rendering the award.

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For the annulment and enforcement courts, language becomes an issue whenever the language of the arbitration is not identical to the language of the courts requiring translations to be done.

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The New York Convention requires a foreign arbitral award to be accompanied with an officially certified translation into the language of the jurisdiction (which is not the language of the award) in which recognition or enforcement of the award is sought.35

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If the applicable language/​languages in arbitration proceedings is an issue, the arbitral tribunal would normally determine the language of the arbitration soon after its appointment at or shortly after the preliminary meeting or case management conference.36

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The arbitral tribunal may take a practical approach in arriving at its determination. It may consider the language of the arbitration clause in the contract documents,37 the language used in the parties’ correspondences, the parties’ language capabilities, and the costs arising for translations of hearing transcripts and written submissions.

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The determination of the language or languages may affect the party’s position in the proceedings, the expediency, and costs of the arbitration. The translation of the entire arbitration proceedings can be a costly affair.

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It may even adversely affect the party’s ability who requires it to defend itself. As a legal issue, the arbitral tribunal has to consider that the determination of the language

34. See Markus A. Peetsch and Eliseo Castineira, “The Language of the Arbitration: Reflections on the Selection of Arbitrators and Procedural Efficiency” (2006) 17(1) ICC Bulletin 33. 35. See Convention on the Recognition and Enforcement of Foreign Arbitral Award (adopted 10 June 1958, entered into force 7 June 1959) 330 UNTS 3 (New York Convention), art. IV(2). 36. For example, UNCITRAL Arbitration Rules, art. 17(1) provides that the arbitral tribunal shall determine the language of the arbitration “promptly after its appointment”; ICC Arbitration Rules 2021, art. 20 provides: “In the absence of an agreement by the parties, the arbitral tribunal shall determine the language or languages of the arbitration, due regard being given to all relevant circumstances, including the language of the contract.” 37. See Nigel Blackaby Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), para. 2.86.

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in which the factual background of the case and relevant legal arguments when presented to it affects parties’ fundamental right to be heard and to be treated equally.38 On the other hand, the arbitral tribunal is bound by the parties’ determination of the language to be used in the arbitration. The parties’ agreement on language prevails.

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Generally, the parties are not bound by any mandatory provisions at the seat of the arbitration that proceedings in the domestic courts must be conducted in the prescribed language of that country. However, there still remains a diminishing list of countries which require or presume that the indigenous language will be used in arbitration seated in those countries.39

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Expertise of Arbitral Tribunal

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The ability to select arbitrators with expertise is one of the important reasons why parties choose arbitration over litigation for the resolution of their disputes. In courts, judges are assigned without reference to the parties.

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Therefore, selection of arbitrators with the prerequisite expertise is one of the most important activities in arbitration. It is the first major procedural step in any arbitration. It is a strategic decision which has a continuing impact, for better or for worse, on the proceedings, from commencement through to a final award and even enforcement.

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The party in deciding who should be the arbitrator may draw up a short list of potential arbitrators. Such a short list may enumerate the potential arbitrators’ professional backgrounds, their legal training, and their expertise from formal and publicly available information websites, from published materials, and from other public sources.

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Information about the arbitrator’s case management skills and experience usually is obtained only though ad hoc individualised person-​to-​person sources like dispute resolution experts, lawyers, and parties.40

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Detailed information about how arbitrators actually decide cases is not readily available. Arbitration awards typically are confidential and not publicly available (or if they are made public, the names of the arbitrators have most often been removed).

38. S.A.R.L. Blow Pack v Société Windmoller et Holscher KG (2013) 2 Rev. Arb. (Paris Court of Appeal). 39. Law No. 27/​1994 art. 29 of Egypt provides for the presumption of use of Arabic unless agreement of the parties or decision to the contrary by the arbitral tribunal; see also The UAE Civil Procedure Code, Federal Law No. (11) of 1992, art. 212(6). 40. See Catherine Rogers, “A Window into the Soul of International Arbitration: Arbitrator Selection, Transparency and Stakeholder Interests” (2015) 46 Victoria U of Wellington L Rev 1179, p. 1180.

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Chapter 4—​​​Relevance of Arbitration in Resolving Disputes

However, some arbitral institutions have recently started to publish more data about the cases they handle in response to growing user demand for transparency.41 For example, starting from 2016, the International Chamber of Commerce published on its website the names of the arbitrators appointed to ICC cases, their nationality, their role within the tribunal, as well as whether the appointment was made by the International Court of Arbitration of the ICC or by the parties.42

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In the typical arbitration involving a three-​member panel arbitral tribunal, each party appoints an arbitrator. The two so-​called party appointed arbitrators select together, in one manner or another, the presiding arbitrator. In the event, they are unable to agree, the presiding arbitrator may be appointed by a designated appointing authority.

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Legal culture emphasises the lawyer’s role as a promoter of conflict and maximiser of parties’ interests. Lawyers are incentivised to perhaps exaggerate the facts and arguments that favour their client. In such situations, both parties’ original predisposition may be on the extreme side as it suits their interests.43

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Against such a background, the arbitral tribunal is called upon to determine the parties’ respective legal rights based on the facts and law.

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Redfern and Hunter state that the task of presiding over the conduct of arbitration “is no less skilled than that of a surgeon conducting an operation or a pilot flying an aircraft. It should not be entrusted to someone with no practical experience of it”.44

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Only a person with the necessary education, training, skill, and practical experience to deal with the subject-​matter of the arbitration should be appointed as an arbitrator. Sir Michael Kerr has opined:

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“The calibre, experience and industry of the tribunal, and the nature and quality of the procedure employed in individual cases, are of paramount importance.”45

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41. See QMUL & White and Case, “2015 International Arbitration Survey: Improvements and Innovations in International Arbitration” (2015) 22, available at http://​www.arbitration.qmul.ac.uk/​media/​arbitration/​docs/​ 2015_​International_​Arbitration_​Survey.pdf (accessed on 17 November 2020). 42. See “ICC Arbitral Tribunals –​ICC –​International Chamber of Commerce” (iccwbo), available at https://​ iccwbo.org/​dispute-​resolution-​services/​arbitration/​icc-​arbitral-​tribunals/​ (accessed on 17 November 2020). Other institutions are London Court of International Arbitration (“LCIA”), the Arbitration Institute of the Stockholm Chamber of Commerce (“SCC”) and the Singapore International Arbitration Centre (“SIAC”). 43. See André de A. Cavalcanti Abbud, “Criticism of Arbitration: How to Use it –​Kluwer Arbitration Blog” (Kluwer Arbitration Blog, 2016), available at http://​arbitrationblog.kluwerarbitration.com/​2016/​12/​20/​ criticism-​of-​arbitration-​how-​to-​use-​it/​ (accessed on 17 November 2020). 44. See Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), para. 4.33. 45. See Ronald Bernstein and Derek Wood, Handbook of Arbitration Practice (2nd edn, Sweet & Maxwell 1993), p. 5.

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As such, parties and their lawyers or representatives must discuss the pros and cons of selecting arbitrators for their dispute. Judges are appointed only after they have gained extensive experience as lawyers in practice or in the judicial service. However, there are no formal requirements on the experience or qualifications of an arbitrator. As a result, arbitrators without the requisite qualities can be, and sometimes are, inappropriately appointed by the parties or an appointing authority.

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Some professional bodies regard the role of appointment of arbitrators in disputes involving members as a matter of right. In such circumstances, the choice of arbitrator often appears to be as a sinecure and a reward for past service or in regard of his current relationship with the appointing party.

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It may miss the point that the basis for the choice of arbitrator should be the appropriateness of the person to decide the dispute and his ability to provide a high-​quality service to the parties. This may not necessarily be ensured on the sole basis of past service or present relationship to the professional body.

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Most reputable arbitration institutions in the region, such as MCIA, ICC, SIAC, AIAC, SCC, KCAB, CIETEC, BAC, HKIAC, and LCIA have high standards for admission of arbitrators on their lists.

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There is no requirement for arbitrators to be qualified lawyers or judges.46 While technical arbitrators may be unschooled in arbitration law and procedure, the reverse, a legally qualified arbitrator may have experience in many aspects of the law, but not be trained in matters involving technical issues. He may be baffled by the technical content of the dispute, and it is equally dangerous to the efficacy of the arbitration process.

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Both situations may be unsatisfactory.

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When the appointment of arbitrators is done right, it can dramatically improve the conduct of the arbitration. There are now many arbitrators with both technical/​industry and legal experience.

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They can help to narrow the issues in dispute, rein in expert witnesses, and reduce the need for evidence on industry practice. In multi-​arbitrator arbitrations, a balanced arbitral tribunal consisting of technical, legal, and industrial expertise can be assembled. The arbitrator pool in India is dominated by retired judges. Other arbitrators include lawyers, architects, and engineers.

46. See Paramjeet Singh Patheja v ICDS Ltd (2006) 13 SCC 322, as cited in Indu Malhotra, Commentary on the Law of Arbitration, Vol.1 (4th edn, Wolters Kluwer 2020), p. 43.

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Chapter 4—​​​Relevance of Arbitration in Resolving Disputes

Frequently, disputes arising from building and engineering contracts relate to delays and extension of time, non-​completion, late issue of drawings, variations etc. Thus, construction disputes are often technical in nature. As such, an experienced architect/​engineer would be well placed to understand and rule on such points. Hearings can be quicker because the technical knowledge of the arbitrator necessitates less explanation.

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Goff LJ has summarised that arbitration is appropriate in the following circumstances and for the following reasons:

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“Where the parties are from different countries and neither wish to submit to the jurisdiction of some foreign court; because the parties can exercise some degree of control over the constitution of the tribunal; because the tribunal can be expert in the relevant trade; because the matter is private and awards are not as a general rule published; because there is or can be some degree of informality (and, hopefully, of expedition).”47 Bingham J in Farid v MacKinnon Mackenzie & Co Ltd, The Sheba and Shamsan48 opined:

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“In electing to have disputes tried by the process of arbitration, litigants achieve various obvious advantages. For example, they invest themselves with the luxury of choosing their own tribunal and no doubt take advantage of that opportunity in order to select a tribunal fitted by experience and knowledge to solve the dispute in question. They can also protect themselves against the risk of a tribunal whose judgment is liable to be perverted by excessive legalism …”49

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The arbitral tribunal’s legal and technical expertise in arriving at its award is crucial to achieving a cost-​effective arbitration. Such expertise includes familiarity with industry and cultural nuances.

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This includes familiarity with the relevant law and/​or main legal traditions, the specific types of contracts and their interpretation, how disputes evolve, and how they are best resolved. Such expertise becomes more relevant when the subject matter of the dispute involves complex issues. While there is no need for each arbitrator to be a technical specialist, it is useful for arbitrators to be cross-​functional professionals possessing the ability to grasp, and willingness to understand, both technical and legal issues.

47. See Goff L.J., “Arbitration Today” (1987) 57 Journal of the Chartered Institute of Arbitrators 111, p. 112. 48. [1983] 2 Lloyd’s Rep 500. 49. Farid v MacKinnon Mackenzie & Co Ltd, The Sheba and Shamsan [1983] 2 Lloyd’s Rep 500.

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Law, Practice and Procedure of Arbitration in India

An arbitral tribunal with the appropriate legal and technical expertise, skills, and experience will ensure that the dispute is resolved by way of an enforceable award.

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For example, while experts can be appointed for technical expertise and experience in giving evidence in litigation, there is a real danger that an arbitrator without the requisite legal and technical expertise and experience may be influenced more by the confidence of the expert in his opinion, and the expert’s powers of persuasion than by the actual technical merits of the evidence.

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An arbitral tribunal with proven expertise and experience is able to carry through an arbitration from beginning to end. It will possess strong case management skills with sufficient familiarity with computers so as to manage materials, such as submissions, documents and other evidence, bundles and transcripts, which are stored and accessed electronically.

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fo

The arbitral tribunal’s case and counsel management skill together with its willingness to make difficult decisions on procedural issues dealing with party tactics and with large amounts of evidence will have a significant impact on the efficiency of an arbitration.

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The arbitral tribunal will have to act decisively to overcome any “due process paranoia” (namely, the reluctance to act decisively in certain situations for fear of the final award being challenged on the grounds of a party not having had the opportunity to fully present its case).

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The arbitral tribunal that applies a proactive and lawful approach will be able to issue an award within a reasonable time. It may even explore in its first case management conference agenda of possible settlement discussions and sealed offer procedures, if applicable, to facilitate settlement of the dispute.

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This is normally achieved by having a balanced tribunal, such that the arbitrators possess, at least between them, all the core qualities identified. Towards this end, parties are encouraged to appoint a technical expert as an arbitrator if the tribunal comprised three arbitrators or in order to balance other lawyers serving on the tribunal. As it stands, an arbitrator does not need to be licensed to practise in India. The law recognises that foreign qualified lawyers, technical professionals, and others can be appointed as arbitrators. Parties can agree on the arbitrators to be appointed to their arbitration and are free to determine their qualifications and nationality.

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Chapter 4—​​​Relevance of Arbitration in Resolving Disputes

Arbitrator Intelligence (“AI”), a platform established in 2015, enables parties and counsel involved in arbitration proceedings to anonymously take an objective survey in order to enable AI to create a database on arbitrator profiles.50

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The creation of this database is aimed at allowing parties and their legal counsel an opportunity to have full visibility on the profile, strengths, and expertise of an arbitrator. Its ultimate aim is to assist parties in selecting arbitrators. The availability of a database of arbitrators may be helpful to the parties in the long run.

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In India, the procedure for appointment of an arbitral tribunal is set out in Section 11 of the Arbitration Act. Section 11 applies when there is no agreement between the parties as to the appointment of the arbitral tribunal, or when the agreement on the appointment of the arbitral tribunal has failed or not been complied with.

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Prior to the 2015 amendment to the Arbitration Act, the Chief Justices of the relevant High Courts appointed arbitrators under Section 11.

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Pursuant to the amendment of the Arbitration Act through the 2015 Amendment, this task was assigned to the relevant Principal Court or High Court in the case of a domestic arbitration, and the Supreme Court of India in the case of an international commercial arbitration; or any institution designated by such court for the purpose of appointment of an arbitrator.51

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In addition, the 2019 Amendment has introduced a controversial provision for accreditation of arbitrators.52 The provision sets out that a person will not be qualified to be an arbitrator unless he is inter alia, an advocate within the meaning of the Advocates Act, 1961 having 10 years of practice experience as an advocate.

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This provision set out in Schedule VIII disqualifies a foreign-​qualified lawyer from acting as an arbitrator in arbitration proceedings where the seat is situated in India.

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These proposals have been severely criticised, including by sitting judges of the Supreme Court of India. These legislative changes are not yet in effect.

50. See Catherine A. Rogers, “Arbitrator Intelligence: The Basics” (Kluwer Arbitration Blog, 27 February 2018), available at http://​arbitrationblog.kluwerarbitration.com/​2018/​02/​27/​ai-​3/​ (accessed on 17 November 2020); see also Catherine A. Rogers and Fahira Brodlija, “Arbitrator Appointments in the Age of COVID-​19” (2020) Remote International Arbitration: The COVID-​19 Revolution, Kluwer Journal of International Arbitration, available at https://​dx.doi.org/​10.2139/​ssrn.3656620 (accessed on 17 November 2020) (forthcoming). 51. See the Arbitration Act, 1996, s. 11(4); see also Sun Pharmaceutical Industries Ltd Mumbai v Falma Organics Limited Nigeria 2017 SCC OnLine SC 1200, where the Supreme Court of India exercised its powers under amended s. 11 for the first time by directing the Mumbai Centre for International Arbitration (MCIA) to make an appointment in the matter. Section 11 of the Arbitration Act has been amended further in 2019. See Chapter 22. However, as on the date of publication of this book, s. 11 as amended by the 2019 Amendment is not in force. 52. The 2019 Amendment, s. 43J. The provision is not yet in force.

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Law, Practice and Procedure of Arbitration in India

Arbitral Institutions as Appointing Authorities Arbitration is characterised by ad hoc selection of arbitrators in each case. The identity of the arbitrators and in particular, the sole or presiding arbitrator, is seen as a key element in arbitration cases.

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An advantage which arbitration has over litigation comes from the unique and crucial role played by arbitration institution as appointing authorities in moulding the arbitral process based from the arbitration legislation and their arbitration rules.

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Disputing parties may negotiate over selection of the arbitrators when constituting the arbitral tribunal. Their failure to achieve agreement may lead to the so-​called BATNA (best alternative to a negotiated agreement) as follows:

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“[R]‌elative bargaining power stems entirely from the negotiator’s ability to, explicitly or implicitly, make a single threat credibly: ‘I will walk away from the negotiating table without agreeing to a deal if you do not give me what I demand.’ The source of the ability to make such a threat, and therefore the source of bargaining power, is the ability to project that he has a desirable alternative to reaching an agreement, often referred to as a ‘BATNA’ [Best Alternative to a Negotiated Agreement]. ... In litigation bargaining, a plaintiff and defendant who fail to reach agreement do not have the option of settling with different parties. Instead, both have the BATNA of submitting to adjudication of the dispute. Bargaining power depends on whether that BATNA is more desirable for the plaintiff or the defendant.”53

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In the polarised environment of dispute or difference, each party harbours suspicion about anyone suggested by the other side as arbitrator, the direct appointing authority role in selecting arbitrators has increased in recent years.

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Against this background, arbitration institutions as appointing authorities are in fierce competition to make themselves attractive for arbitration cases.

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Appointing authorities, particularly commercial arbitration institutions, play an important role in constituting an impartial, independent, and qualified arbitral tribunal (and in doing so, revoke any appointment already made and appoint or reappoint any of the arbitrators). Once a claim is filed for arbitration and each disputing party has chosen its co-​ arbitrator, the first major issue of negotiation between the parties is often over the chair of the tribunal.

53. Russell Korobkin, “Bargaining Power as Threat of Impasse” (2003–​2004) 87 Marq L Rev 867, 868–​869.

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Chapter 4—​​​Relevance of Arbitration in Resolving Disputes

The chair is generally chosen by the disputing parties if they reach an agreement and by the appointing authority if they do not. An appointing authority may also determine whether a party may be deprived of its right to appoint a substitute arbitrator. It may also authorise a truncated arbitral tribunal to proceed to issue an award and revise with binding effect, a tribunal decision on its fees.54

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As a general matter, where an appointing authority is asked to appoint a chair, it provides the parties with some form of list of potential candidates. The appointing authority generally has broad discretion in selecting candidates for their lists. In most cases, appointing authorities appoint from their panel of arbitrators.

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Lord Goldsmith, an arbitration practitioner and former Attorney-​General in the UK explains:

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“[t]‌he [arbitration] institutions operate in a competitive market place and therefore all seek to accommodate the parties’ and their counsels’ preferences.”55

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There is intense competition between arbitration institutions for commercial arbitration cases. They have expanded their staff to handle the increased case load.

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They are engaged in more outreach in seeking to expand their share of arbitration cases. Arbitration institutions closely follow the size, nature, and value of their caseloads.

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Arbitration institutions are also responding to the expanding number of arbitration cases and market pressures. They attend and sponsor arbitration events where their staff present recent developments to an audience of arbitration professionals and others. Their actions can resemble the marketing activity of law and commercial firms.

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They appeal to contracting parties, their counsels, future claimants, and future respondents. When parties enact an arbitration agreement in their contract, they can be expected to share a common interest that the arbitrators appointed are knowledgeable about both the procedure and substantive law. They may also agree to an appointing authority. However, it is normal for neither party to know at the time the appointing authority is selected in a contract on whether in a future dispute, it may be the claimant or the respondent or both.

54. See Sarah Grimmer, “The Expanded Role of the Appointing Authority under the UNCITRAL Arbitration Rules 2010” (2011) 28 J. Int’l Arb 501, p. 503. 55. The Rt Hon The Lord Goldsmith QC, “The Privatisation of Law: Has A World Court Finally Been Created by Modern International Arbitration?” (Barnard’s Inn Hall, London, 27 June 2013).

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At the later time when a claimant wants to file a claim, it may not have a choice of appointing authority as this choice has been made earlier in the arbitration agreement. When the dispute arises, the choice of appointing authority has generally already been made.

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Arbitral institutions as appointing authorities are adopting arbitration rules designed to attract cases. They have introduced various innovative procedural features in their institutional arbitration rules, such as emergency arbitrators, expedited arbitration, summary procedures consolidation, and joinder procedures which are designed to increase efficiency of arbitral proceedings.

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Arbitral institutions now offer tools to assist parties and arbitrators to customise their arbitration agreements, and also make appropriate case management decisions.

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Neutrality of the Arbitral Tribunal

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Their institutional rules contain provisions designed to ensure a proportionate arbitration procedure. All these are reinforcing the relevance of arbitration as an important dispute resolution mechanism over litigation.

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One of the key selling-​points of arbitration as an alternative to litigation is the ability of the parties to select a neutral arbitral tribunal.56 Arbitration offers a neutral forum detached from the parties and State authorities.57

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Parties expect the neutral arbitral tribunal to manage a fair process and ensure a just outcome. The neutrality, independence, and impartiality of the arbitral tribunal achieve fairness and justice.

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However, the neutrality of the arbitral tribunal goes beyond its independence and impartiality.58 Impartiality and independence reflect the unbiased quality that arbitrators are expected to possess.59

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56. See Paul E. Mason, “International Commercial Arbitration: A Corporate Counsel’s View” (1994) 49 Disp Resol J 22. 57. See Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Wolters Kluwer, Law & Business 2021), p. 71. 58. See Ronán Feehily, “Neutrality, Independence and Impartiality in International Commercial Arbitration, A Fine Balance in the Quest for Arbitral Justice” (2019) 7 Penn State Journal of Law & International Affairs 88, p. 89; see Giorgio Bernini, “Cultural Neutrality: A Prerequisite to Arbitral Justice” (1989) 10 Mich J Int’l L 39; Pierre Lalive, “On the Neutrality of the Arbitrator and of the Place of Arbitration” in International Council for Commercial Arbitration (ed.), Recueil de travaux suisses sur l’arbitrage international = Schweizer Beiträge zur internationalen Schiedsgerichtsbarkeit = Swiss essays on international arbitration (Schulthess 1984), p. 24. 59. See Ronán Feehily, “Neutrality, Independence and Impartiality in International Commercial Arbitration, A Fine Balance in the Quest for Arbitral Justice” (2019) 7 Penn State Journal of Law & International Affairs 88, p. 90.

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Chapter 4—​​​Relevance of Arbitration in Resolving Disputes

Impartiality is assessed subjectively while independence is tested objectively.60 Neutrality is the status of the arbitral tribunal assessed objectively of being intermediate and equidistant in thought and action throughout the arbitral process.61

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When parties are doing business in a jurisdiction that may not have a reputation for an impartial and independent judiciary, they may have doubts about whether or not litigation will produce a fair result. The local courts may be perceived to be subject to political, media, or other pressures.

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The belief arises perhaps to the fact that the judge owes his or her appointment to the home environment.62 This is particularly applicable when one of the parties to the contract is a State or government-​linked entity in wanting the forum to be the courts in the party’s principal area of business.

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It is normal for each party to look for the most favourable forum to resolve dispute in a familiar and convenient manner. It is likely that the counter-​party may be wary of the other’s most favourable forum as it may not see it in the same perspective.63

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It should not be assumed that such problems are limited to the developing world, as characteristics with the perceived bias, quality, speed, and cost of obtaining redress that make European and the United States courts unattractive to counter-​parties.64 Parties normally do not agree to resolve their disputes in local courts.

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The power of the parties to an arbitration agreement to draw their arbitrators from the four corners of the world enables the parties to avoid any national, political, religious, financial, or racial partiality that might be a concern.

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Therefore, neutrality in international commercial arbitration has two facets.65 The first is that parties choose arbitration as it offers a neutral forum, with neither party

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60. See Leon Trakman, “The Impartiality and Independence of Arbitrators Reconsidered” (2007) 10 Int’l Arb L Rev 999, pp. 1007–​1008. 61. Giorgio Bernini, “Cultural Neutrality: A Prerequisite to Arbitral Justice” (1989) 10 Mich J Int’l L 39. 62. See Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), para. 1.99; see Kevin M. Clermont and Theodore Eisenberg, “Xenophilia in American Courts” (1996) 109 Har L Rev 1120. 63. See Gary B Born, International Arbitration and Forum Selection Agreements: Drafting and Enforcing (5th edn, Kluwer Law International 2016), pp. 121–​128. 64. The EU countries include Greece, Italy, and Spain. See Tackaberry, Marriott, and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson Sweet & Maxwell 2003), para. 2-​017. 65. See Giorgio Bernini, “Cultural Neutrality: A Prerequisite to Arbitral Justice” (1989) 10 Mich J Int’l L 39, p. 40.

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Law, Practice and Procedure of Arbitration in India

having the advantage of their domestic court.66 The second relates to the nationality of the arbitrator. Nationality neutrality is to avoid actual or perceived bias arising from the arbitrator’s predisposition towards a party personally or to the party’s position.67

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This predisposition has generally been accepted as resulting from the nationality and culture the arbitrator and one-​party share.68 There are fears that a party-​ appointed arbitrator may be influenced by the particular appointing party’s desired outcome.69

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The link between neutrality and nationality is predicated on the assumption that an arbitrator who shares the same nationality, culture, and language as one of the parties will be susceptible or sympathetic to that party and to their position in the arbitration. This raises concerns for both the fairness of the process and ultimate award.70

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This is an assumption which may not be the practice in most cases. However, such concerns of bias, or the perception of bias, have led to the selection of sole arbitrators and presiding arbitrators that possess nationalities that are different from the nationalities of the parties to the arbitration.71

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Neutrality with nationality may not be an issue as any arbitrator, who is neutral regardless of nationality, should be sufficiently competent to adjudicate the case in favour of the party that makes the better case.72

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66. Margaret L. Moses, The Principles and Practice of International Commercial Arbitration (3rd edn, Cambridge University Press 2017), pp. 140–​141. 67. See Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), para. 4.99; see William W. Park, “Neutrality, Predictability and Economic Co-​Operation” (1995) 12(4) Journal of International Arbitration 99, p. 103; see Giorgio Bernini, “Cultural Neutrality: A Prerequisite to Arbitral Justice” (1989) 10 Mich J Int’l L 39; Pierre Lalive, “On the Neutrality of the Arbitrator and of the Place of Arbitration” in International Council for Commercial Arbitration (ed.), Recueil de travaux suisses sur l’arbitrage international = Schweizer Beiträge zur internationalen Schiedsgerichtsbarkeit = Swiss essays on international arbitration (Schulthess 1984), pp. 24–​25. 68. Ilhyung Lee, “Practice and Predicament: The Nationality of the International Arbitrator (With Survey Results)” [2007] 31 Fordham Intl L J 603, p. 613. 69. Ronán Feehily, “Neutrality, Independence and Impartiality in International Commercial Arbitration, A Fine Balance in the Quest for Arbitral Justice” (2019) 7 Penn State Journal of Law & International Affairs 88, p. 91; see Hans Smit, “Quo Vadis Arbitration? Sixty Years of Arbitration Practice, by Pieter Sanders”, (2000) 11 Am. Rev. Int’l Arb. 429; M. Scott Donahey, “The Independence and Neutrality of Arbitrators” (1992) 9 J Intl Arb 31, p. 39; Doak Bishop and Lucy Reed, “Practical Guidelines for Interviewing, Selecting and Challenging Party-​Appointed Arbitrators in International Commercial Arbitration” (1998) 14 Arb Intl 395. 70. See M. Scott Donahey, “The Independence and Neutrality of Arbitrators” (1992) 9 J Intl Arb 31, p. 32. 71. See Gary Born, International Arbitration: Law and Practice, Vol. 2 (3rd edn, Kluwer Law International 2021), p. 1950. 72. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 250.

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Chapter 4—​​​Relevance of Arbitration in Resolving Disputes

Neutrality seems connected with nationality with independence and impartiality.73 But neutrality is the perception of bias rather than actual bias. It adopts a subjective test.74 Consequently, it is different from impartiality that relates to actual bias. Various international arbitration rules reflect the requirement that an arbitrator’s nationality be different from that of the parties.75 The UNCITRAL Model Law on International Commercial Arbitration takes a different approach.

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Parties cannot preclude an arbitrator on the basis of nationality unless it is agreed mutually by them.76 On the other hand, the Model Law requires nationality should be considered where there is a sole or presiding arbitrator.77

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All these considerations in the selection of a neutral arbitral tribunal reinforce arbitration as a viable alternative to litigation. It contributes to relevance of arbitration in resolving disputes in international commerce.

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The Supreme Court of India in Reliance Industries Ltd. & Ors. v Union of India78 dealt with this issue for the appointment of an arbitrator in an international commercial arbitration.

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The judgment sets the rules applicable in India as that, firstly, to see what role nationality of arbitrators play when international commercial arbitration is seated in India with applicable law of the contract and curial law as India Law, secondly, for the effect of inclusion of UNCITRAL Rules in the contract, and thirdly, how relevant subject matter and convenience of the parties are.

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Even though the Supreme Court of India emphasised on the importance of the nationality for the purposes of neutrality, it did not accept it as a mandatory rule.79

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73. Ronán Feehily, “Neutrality, Independence and Impartiality in International Commercial Arbitration, A Fine Balance in the Quest for Arbitral Justice” (2019) 7 Penn State Journal of Law & International Affairs 88, p. 93; see Murray L. Smith, “Impartiality of the Party-​Appointed Arbitrator” (1992) 58 Arb Intl 30, pp. 31–​32. 74. Ronán Feehily, “Neutrality, Independence and Impartiality in International Commercial Arbitration, A Fine Balance in the Quest for Arbitral Justice” (2019) 7 Penn State Journal of Law & International Affairs 88, p. 93. See Bruno Manzanares Bastida, “The Independence and Impartiality of Arbitrators in International Commercial Arbitration” (2007) 6 Rev E-​Mercatoria 1, p. 5; see Stephen R. Bond, “The Selection Of ICC Arbitrators and the Requirement of Independence” (1988) 4 Arbitration International 300, p. 305; Stephen R. Bond, “The International Arbitrator: From the Perspective of the ICC International Court of Arbitration” (1991) 12 NW J Intl L & Bus 1, pp. 9–​12. 75. See M. Scott Donahey, “The Independence and Neutrality of Arbitrators” (1992) 9 J Intl Arb 31, p. 39. 76. See UNGA “Report of the United Nations Commission on International Trade Law on the Work of its Eighteenth Session” UNCITRAL Supp No 17 (1985) 40th Session UN Doc A/​40/​17, Annex I (“UNCITRAL Model Law”), art. 11.1. 77. UNCITRAL Model Law, art. 11.5. 78. 2014 SCC OnLine SC 279. 79. Reliance Industries Ltd & Ors v Union of India 2014 SCC OnLine SC 279, paras. 71, 72; Sonal Sharma, “Neutrality v. Nationality” (Kluwer Arbitration Blog, 8 April 2014), available at http://​arbitrationblog. kluwerarbitration.com/​2014/​04/​08/​neutrality-​v-​nationality/​ (accessed on 18 November 2020).

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Choice of Representatives Many jurisdictions are silent on the issue of who could be appointed as a representative of a party to an arbitration. The modern consensus in order to achieve safe seat status is for arbitration proceeding may be represented by any person or represent themselves (pro se parties)80 for smaller construction and specialised commodity disputes.

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Redfern and Hunter81 comment that:

“[a]‌party to an arbitration may, in theory, be represented by his plumber, dentist or anyone else of his choosing although the choice usually falls on a lawyer or specialist claims consultant in the relevant industry.”82

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Such representatives are not limited to those who are qualified legal practitioners.83 Such flexibility is necessary for commercial arbitrations.

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However, many jurisdictions have enacted provisions in their national arbitration laws to allow parties the right to choose their representation in arbitration proceedings.84

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Most national arbitration legislations and institutional arbitration rules based on party autonomy and good practice, allow the parties to select representatives of their choice. This right to choose its representation is considered as one of the advantages of arbitration over litigation.

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In most jurisdictions only local lawyers have rights of audience, meaning international parties must hire and work with unfamiliar counsel who do not have the same degree of familiarity with the client’s business that the client’s regular panel of lawyers may have.

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There are many reasons for parties to be unwilling to engage local lawyers. These reasons may not necessarily be based on quality.

80. Pro se legal representation comes from Latin pro se, meaning “for oneself ” or “on behalf of themselves”, which in modern law means to argue on one’s own behalf in a legal proceeding as a defendant or plaintiff in civil cases or a defendant in criminal cases. 81. Alan Redfern and Martin Hunter, Law and Practice of International Commercial Arbitration (4th edn, Sweet & Maxwell 2004), p. 318 at para. 3-​108. 82. Ibid. 83. See the Chartered Institute of Arbitrators “London Centenary Principles”, available at https://​www.ciarb.org/​ media/​4357/​london-​centenary-​principles.pdf (accessed on 18 November 2020). 84. See Austrian ZPO, s. 594(3); The English Arbitration Act 1996, s. 36; United States Revised Uniform Arbitration Act, s. 16; German ZPO, s. 1042; Netherlands Code of Civil Procedure, art. 1038(1)–​(2); Hong Kong Arbitration Ordinance, s. 63; Australian International Arbitration Act, 1974, s. 29(2); New Zealand Arbitration Act 1996, s. 24(4); Brazilian Arbitration Act, art. 21(3).

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Chapter 4—​​​Relevance of Arbitration in Resolving Disputes

A common reason is to avoid conflict of interest because in a jurisdiction with a relatively small pool of legal professionals, there is a strong likelihood that the top-​ranked counsel85 will have represented the resident respondent in some capacity. Therefore, such counsel would be off-​limits due to a conflict of interest. However, over the years, parties have resorted to the practice of engaging “co-​counsel” in their matters.

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The co-​counsel generally comprises the party’s general counsel along with an identified local counsel who fronts the party’s case before local courts.

By contrast, in arbitration the parties can select counsel from anywhere in the world86 and therefore have a much greater pool of expertise to choose from.

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For a foreign litigant, pursuing arbitration instead of court litigation in India helps avoid the uncertainties and technicalities of foreign litigation with potential enforcement problems overseas.

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Parties can even engage persons who are not qualified in law, but who possess technical or scientific knowledge, skill, training, and experience relevant to a case.

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The position on representation by foreign counsel is not clear in India. In an arbitration seated in India, a foreign entity cannot be represented by foreign counsel, in proceedings governed by Indian law.

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The Supreme Court of India in Bar Council of India v A.K. Balaji,87 (“A.K. Balaji”) held that foreign counsel can advise a non-​Indian client (i.e. a foreign client), only on foreign law, that too on a “fly in fly out basis”.

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This means that no foreign counsel can set up a permanent establishment in India, even for the purpose of advising on foreign law. From the decision in A.K. Balaji it also appears that a foreign counsel cannot advise a foreign client on foreign law “on a regular basis”.88

85. Or more accurately, the firm at which they practice. 86. In India, foreign counsel can only “advise” a foreign client on foreign law on a fly in and fly out basis. However, foreign counsel cannot represent a foreign entity in arbitration proceedings being conducted in India (see Bar Council of India v AK Balaji (2018) 5 SCC 379, para. 42). This is in stark difference with the position in other common law jurisdictions. For example, in Singapore, the Legal Profession Act (Ordinance 57 of 1966) specifically excludes the application of certain provisions of the Act that prevent an unauthorised person from acting as a solicitor or advocate in proceedings in Singapore, from applying to arbitration proceedings. 87. (2018) 5 SCC 379. 88. See Bar Council of India v A.K. Balaji and Ors. (2018) 5 SCC 379, para. 44 where the Court has held that a foreign lawyer that flies in and out of India to advise clients on a regular basis would be covered by the expression “practice of law” under the Advocates Act, 1961. What the Court has held is permissible in India is a “casual visit for giving advice”.

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Law, Practice and Procedure of Arbitration in India

The basis for arriving at such a conclusion is not clear. It is a matter of argument how a foreign counsel’s engagement in advisory or representation in matters of foreign law can be governed by the Advocates Act, 1961, simply for the reason that such advice or representation is rendered in the Indian territory.

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The lack of clarity remains as matters governed by rules of arbitral institutions are excluded by the observations of the Supreme Court of India in A.K. Balaji since it held that “… If a matter is governed by particular rules of an institution …, there is no bar to conduct such proceedings in prescribed manner”.89

Most arbitration rules specifically provide that a party may be represented by legal practitioners or any other authorised representatives.90

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Some domestic arbitral institutions provide that even though a party is entitled to appear through counsel, attorney, advocate, or a duly authorised representative or personally, where the dispute is of a purely commercial nature, the parties shall not have any right to be represented by lawyers.91

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Therefore, it can be said that foreign counsel may be able to represent a foreign entity in arbitration proceedings seated in India, if such an arbitration is an institutional arbitration.

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For instance, “X”, a foreign lawyer, will be able to represent “Y”, a foreign entity, in arbitration proceedings administered by SIAC in India, where the governing law is foreign law.

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Finality

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One of the great advantages of an arbitral award, as compared to litigation, is its finality. An arbitral tribunal’s award is final and binding on the parties. It is enforceable against the party against whom it is made.

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A final award effectively terminates the arbitration. It extinguishes the original cause of action. Finality is fundamental to the overarching nature of arbitration, in which the arbitral tribunal’s award will be final and legally binding and enforceable between the parties.

89. Bar Council of India v A.K. Balaji and Ors. (2018) 5 SCC 379, para. 45. 90. See Singapore International Arbitration Centre Rules, r. 23.1; see Asian International Arbitration Centre (AIAC) Rules, art. 5. 91. Indian Council of Arbitration (ICA) Rules, r. 45.

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Chapter 4—​​​Relevance of Arbitration in Resolving Disputes

Bingham J in Farid v MacKinnon Mackenzie & Co Ltd, The Sheba and Shamsan92 explained how arbitration provides a degree of finality that is not available in court litigation:

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“There are other advantages such as speed and the saving of expenses which may or may not be achieved depending upon the will of the parties and the arrangements which they choose to make. But those are additional advantages which are certainly capable of achievement as a result of the arbitration process. Those advantages are brought at a price and most obvious price which a litigant pay is that he loses the extensive powers of review which the appellate Courts enjoy over the factual and legal decisions of Judges sitting at first instance. I say that the avoidance of that review, which may be protracted and in itself expensive, is no doubt sometimes exactly what litigants are anxious to achieve. Be that as it may, the fact is that the Court’s powers of review in respect of arbitration proceedings are extremely limited.”

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However, the finality of the award is subject to statute and any applicable arbitration rules, which empower the arbitral tribunal to correct and interpret the award.93 The arbitral tribunal is further empowered to make an additional award as to the claims presented in the arbitration proceedings but omitted from the award.

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The rights of the successful party no longer lie in the original cause of action but in the right to enforce the award in its terms. A failure to enforce the award does not resurrect the original cause of action.94

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The doctrine goes as far as covering the disputes which the arbitral tribunal was asked to decide as well as such matters which are clearly part of the subject matter. It would be an abuse of process to allow new proceedings to be commenced in respect of them.95

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The unsuccessful party on the same cause of action cannot commence fresh court proceedings or arbitration.96 In such instances, the court would exercise its jurisdiction to strike out such a claim as an abuse of process or restrain the party from referring the matter to arbitration.97

92. 93. 94. 95. 96.

[1983] 2 Lloyd’s Rep 500. See Sundra Rajoo, Law, Practice, and Procedure of Arbitration (2nd edn, LexisNexis 2016), p. 634. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Butterworths 2015), at para. 6-​179. See Excomm Ltd v Guan Guan Shipping (Pte) Ltd, The Golden Bear [1987] 1 Lloyd’s Rep 330. See Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), para. 9.186. 97. Fidelitas Shipping Co Ltd v V/​O Exportchleb [1965] 1 Lloyd’s Rep 223; Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581; Dallal v Bank Mellat [1986] QB 441; Arnold v National Westminster Bank Plc (No.1) [1991] 2 WLR 1177.

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Law, Practice and Procedure of Arbitration in India

The decision is final, giving rise to issue estoppel with regard to the matters it has dealt with. It prevents a party from raising a defence, set-​off, or otherwise asserting or denying their existence or non-​existence against the other party in subsequent proceedings. The concept of issue estoppel prevents a re-​opening of the state of law or fact, which had earlier been established.98

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Such an award is also binding in the sense that it imposes on the party mandatory legal obligations, which are potentially recognisable in jurisdictions where enforcement is sought.99

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Therefore, the scope for a party to challenge an arbitral award was limited under the Arbitration Act, but the Arbitration Act (as amended in 2015 and 2019), along with the authoritative jurisprudence in India, has narrowed this even further.100

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A judgment debtor challenging an arbitral award can only seek a stay on its operation. A stay on the operation of the award is different from a stay on the award itself.

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Obtaining a stay on the operation of an award has no impact on the merits of the award. The contents of the award are final and binding, unless the Court finally finds otherwise when deciding on the challenge to the award.101

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Unlike certain jurisdictions such as England and Malaysia, the Arbitration Act does not contain a provision that allows an arbitral award to be challenged on “a Question of Law”. In India, an arbitral award can only be challenged on the grounds set out in Sections 34 and 48 of the Arbitration Act.102

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These grounds largely mirror the New York Convention grounds for challenge. In case of domestic arbitrations, an arbitral award can also be challenged on the ground of “patent illegality”.

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Despite this additional ground to challenge domestic arbitration awards, the finality advantage of arbitral award as compared to litigation still remains in India.

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98. See Sundra Rajoo, Law, Practice, and Procedure of Arbitration (2nd edn, LexisNexis 2016), p. 639. 99. See David D. Caron and Lee M. Caplan, The UNCITRAL Arbitration Rules: A Commentary (2nd edn, Oxford University Press 2013), p. 797. 100. See Chapter 45. 101. See Shree Chamundi Mopeds Ltd. v Church of South India Trust Association CSI Cinod Secretariat, Madras (1992) 3 SCC (1), para. 10 where the Supreme Court of India held that “… While considering the effect of an interim order staying the operation of the order under challenge, a distinction has to be made between quashing of an order and stay of operation of an order. Quashing of an order results in the restoration of the position as it stood on the date of the passing of the order which has been quashed. The stay of operation of an order does not, however lead to such a result. It only means that the order which has been stayed would not be operative from the date of the passing of the stay order and it does not mean that the said order has been wiped out from existence ...”. The same logic would apply to a stay on the operation of an award. 102. See Chapters 45 and 46.

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Chapter 4—​​​Relevance of Arbitration in Resolving Disputes

Universal Enforceability

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An arbitral award is not enforceable until it is registered and accepted as a judgment by leave of the High Court. Unlike an order of judgment of a court, an arbitral award does not immediately entitle the successful party to levy execution against the assets of the unsuccessful party. It is first necessary to convert the award into a judgment or order of the court. Only then can a successful party levy execution.103 An arbitration award extinguishes the cause of action in respect of which the arbitration proceedings were commenced.104 Enforcing courts play a major role in the process.

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One of the strongest features of arbitration compared to litigation, particularly in cross-​border disputes, is that an award can be enforced internationally by foreign courts using the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

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India being a signatory to the New York Convention observes the principal objective of the New York Convention to provide uniform procedures for the recognition and enforcement of arbitral awards in one Convention State which had been made in another Convention State.

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It is a treaty obligation of each Convention State to provide the machinery for the enforcement of its treaty obligations through its own domestic legislation.

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All contracting countries105 have been obliged to implement legislation to give effect to this convention, making it considerably easier to enforce a foreign arbitral award. The comparative ease of enforcement of an arbitral award as against a court judgment cannot be overstated.106

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103. See Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), p. 416. 104. Anna Mysyshyn, “Digital Reform as a Method of Acceleration of Recognition and Enforcement of International Judicial Decisions in Ukraine” (2019) 2 Visegrad Journal on Human Rights, available at https://​ journals.indexcopernicus.com/​ api/​ file/​ viewByFileId/​ 906270.pdf (accessed on 19 November 2020); see Maximilian Pika, Third-​Party Effects of Arbitral Awards: Res Judicata Against Privies, Non-​Mutual Preclusion and Factual Effects (1st edn, Kluwer Law International 2019), p. 61; Pitcher v Rigby (1821) 9 Price 79. 105. Full list of countries is available at http://​ www.newyorkconvention.org/​ countries. Many of the non-​ signatories are found in Africa. 106. The number of reciprocal enforcements of judgment treaties is small and usually regional; see Council Regulation (EC) 44/​2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (formerly the Brussels and Lugano Conventions). For other examples, see Nigel Blackaby and others, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), para 1.101; see also The Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters.

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Law, Practice and Procedure of Arbitration in India

An arbitral award rendered in India can be enforced in each of the contracting New York Convention States subject to the reservations made under the Convention by the contracting States. India has ratified the New York Convention with a reservation.

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The Indian courts will only enforce awards made in countries where it is satisfied that reciprocal provisions have been made for the enforcement of awards rendered in India. These territories, often known as Section 44 territories, are notified in the Official Gazette by the Indian Central Government.107

Control over Procedure

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The flexibility offered to parties to tailor the procedure of arbitral proceedings, in consultation with an arbitral tribunal is one of the most attractive features of arbitration.

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Conversely, litigation proceedings are mainly governed by the inflexible procedural rules which must be adhered in order for the matter to be heard and resolved by the courts.

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Party control in arbitration depends on the choice of the relevant procedure perhaps by the incorporation of arbitration rules, on the stage in the arbitral proceedings, the distinction between small and larger disputes and categorisation of disputes based on its complexity. This flexibility allows arbitrations to take a life of their own in line with the set procedure.

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It is the norm for the parties, representatives and arbitral tribunals to agree on the arbitral discretion in procedural matters and evidential matters subject only to the parties’ right to agree otherwise and procedural fairness.108

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A non-​exhaustive list of procedural matters includes language, the form of written statements of claim and defence, the extent of oral submissions, questions of document disclosure, and the application of rules of evidence.

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The procedural flexibility that allows parties to tailor-​make a procedure to suit their needs in each case allows the proceedings and the costs associated with such proceedings are more or less predictable. It also allows a party and the tribunal to have oversight over and mould the progression of the proceedings. In addition, an arbitral tribunal is not bound by national procedural laws. 107. At present, India has notified only 48 countries. See Dharmendra Rautray, “Enforcement of Foreign Awards in India” (2013) 9 Asian Intl Arb J 79, p. 85. 108. William W. Park, “Two Faces of Progress: Fairness and Flexibility in Arbitral Procedure” (2007) 23 Arbitration International 499.

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Chapter 4—​​​Relevance of Arbitration in Resolving Disputes

For instance, the Evidence Act, 1872 does not apply to arbitration.109 This gives a greater degree of flexibility to depart from the rigid rules of evidence, as opposed to court proceedings, where rules of evidence are applied strictly. This flexibility gives ample opportunity to the arbitrator to adopt suitable procedures to assess the evidence, particularly where the parties of different nationalities are involved and may be used to different evidential rules.

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In international commercial arbitration, it is common for arbitral tribunals to apply the IBA Rules on the Taking of Evidence in International Commercial Arbitration110 (“IBA Rules”), with the consent of the parties.

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Generally, the agreement on the application of the IBA Rules is recorded in the first procedural order issued by the arbitral tribunal. Requests for production of documents are generally directed to be made in the form of a Redfern Schedule.

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Parties are free to choose an arbitrator whose technical expertise and experience may resolve the dispute in its commercial context. This has the advantage that the arbitrator is already familiar with the subject matter of the dispute.

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With greater scope for reducing acrimony, disputing parties may be able to preserve their continuing business relationship and confine the dispute between them.

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Judges in the District Courts and High Courts hear a wide variety of cases and will not generally have the technical knowledge of a technical arbitrator. On the other hand, the legal knowledge of a technical expert arbitrator can ordinarily never equal that of a judge.

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Arbitration provides the opportunity for the best of both worlds by allowing parties to select an arbitral tribunal that has both, legal and technical/​industry expertise. In addition, there are now a large number of arbitrators who have both legal and technical expertise.

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This flexibility calls for the parties, their representatives, and arbitral tribunals’ joint commitment to efficient management to achieve an effective resolution of a dispute. Without this commitment, the very flexibility of arbitration can lead to increased laxity, extended time, and increased cost. As it stands, this flexibility offered to parties, representatives, and arbitral tribunals to tailor the procedure of arbitral proceedings is still a great advantage over litigation. It is a flexible option only if it is used as such.

1 09. Arbitration Act, s. 19. 110. International Bar Association Rules on the Taking of Evidence in International Arbitration, 29 May 2010.

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Law, Practice and Procedure of Arbitration in India

Displacing Home Jurisdiction Advantages The act of intentionally seeking an advantageous jurisdiction or forum shopping to file a lawsuit is a common and important practice in international commerce.

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Lawyers who represent businesses normally endeavour to keep the cost of potential disputes at a minimum. An important way to minimise expenses is to ensure that the party can bring a lawsuit or defend itself as close to home as possible. Litigating in a distant and non-​home forum maybe expensive and risky. Parties normally try to avoid it. However, when a lawsuit is commenced in the defendant’s home jurisdiction, it may create a host of problems for the parties involved in the litigation.

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In certain jurisdictions there may be concerns about the independence and impartiality of the judicial institutions and also, the process. These concerns may arise from problems of political appointments, government favours to compliant judges, and funding of the court system at a time of austerity in many countries.

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Normally, judgments of a national court may not be enforceable in other jurisdictions unless there are reciprocal agreements to do so.

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Brown and Marriot have also suggested that some uncertainties about litigating in a “foreign” court include whether the foreign court will assume jurisdiction to hear the case, the necessity for advice, and representation by lawyers of that jurisdiction.

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Other uncertainties will relate to the necessity for translation of documents and interpretation of evidence, exposure to technical and formal rules of procedure and evidence, and the risk of having the dispute resolved by inexperienced and unknowledgeable judges.111

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The court system in India is based on a common law system left by the British. To some certain extent, archaic procedural rules and laws are still applicable.112 Litigation in India is traditionally known to be slow and cumbersome.

111. See Shirley Shipman and others, Brown & Marriott’s ADR Principles and Practice (4th edn, Sweet & Maxwell 2018), pp. 68–​69. There are a number of local courts where the quality of judges is of international renown, such as in New York, London, and Singapore, but these remain a minority. 112. Commercial litigation involves an interplay of various central and state legislation, the primary legislation governing commercial disputes includes: the Indian Contract Act, 1872 governing contractual disputes; the Transfer of Property Act, 1882, which is the law dealing with immovable property; the Companies Act, 2013 (Companies Act) (formerly the Companies Act, 1956), which is the law relating to corporate entities; and the Insolvency and Bankruptcy Code, 2016 (Insolvency Code), which is the law relating to corporate insolvency and liquidation. In addition, like other common law countries, judicial pronouncements and precedents have played a significant role in the development and interpretation of different aspects of commercial law. In terms of the legal framework, commercial disputes go to different courts based on the value and locus of a dispute. New courts set up such as the Commercial Courts, Commercial Division, and Commercial Appellate

103

Chapter 4—​​​Relevance of Arbitration in Resolving Disputes

Like other common law countries, judicial precedents in India have played a significant role in the development and interpretation of different aspects of commercial law. On the other hand, an Indian party used to common law litigation may be forced to litigate in an unfamiliar civil law jurisdiction, for example, in the People’s Republic of China.

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Likewise, the semantics of court procedure and the language used in such foreign courts may be unfamiliar. The practicalities of the proceedings may be costly, for example, in a dispute between an Indian and an American party, travel time between the two countries exceeds 20 hours.

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This is not to say that litigating in a home jurisdiction gives a guaranteed advantage. US litigants lament on the far-​reaching and expensive document discovery process in their home jurisdiction,113 which a foreign plaintiff could exploit to procure a settlement.

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What the forum-​selection process of arbitration provides, in the words of Gary Born, is “the least unfavourable forum that the party can obtain in arm’s length negotiations”.114 Such forum selection clauses often gravitate towards arbitration in well-​known safe seats.

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Without arbitration as an alternative dispute resolution mechanism, these factors could dissuade parties from doing business, and in the long run, stifle international trade.

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[4.3] THE COST FACTOR

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One of arbitration’s presumed advantage over traditional court litigation is its lower cost compared to litigation’s tiered appeal process. However, many of those having gone through an arbitration procedure, and experiencing the process of enforcing awards in India, can attest that this is a myth.

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As suggested earlier in this chapter, arbitration appears to involve greater initial costs than litigation as they become more multi-​jurisdictional, more contentious, more culturally challenging, and ultimately costlier.

Division of High Courts Act, 2015 (Commercial Courts Act) under which specific courts in each state have been exclusively designated to adjudicate high-​value commercial disputes within specified timelines. 113. See Gary B. Born, International Commercial Arbitration, Vol. I (3rd edn, Kluwer Law International 2021), p. 72. 1 14. Ibid.

104

Law, Practice and Procedure of Arbitration in India

The disputes and differences to be resolved especially in international arbitration may involve substantial sums. The legal and other costs expended may also be significant sums given the legal and technical complexity of the cases. It may be tempting to take these at face-​value, as arbitrator and institutional fees can be high particularly when the arbitral tribunal consists of a panel of three arbitrators and involving a high-​value claim.115

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Arbitral tribunals are using expedited procedures for small claims and cost orders to ensure arbitration remains a financially viable and attractive alternative to litigation, and also dissuade disruptive tactics to promote time and cost efficiency.116

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Arbitration institutions have also issued guidelines to incentivise the arbitral tribunals to render their award expeditiously by lowering or increasing their fees depending on the delay or rapidity of their work.117

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Although arbitration aims to resolve disputes with maximum speed and at minimum cost by adopting best practices for awarding costs, there may still be delays and expenses.118

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This is particularly likely in complex cases which call the expeditiousness of arbitration into question. The arbitrators’ cost decision often becomes a significant factor

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115. Top arbitrators may command their own high fees, but even an ad valorem rate can be intimidating for the parties. Cost awards can amount to tens of millions in “big-​ticket” arbitrations. In the three parallel arbitrations brought by the former majority shareholders of Yukos Oil Company against the Russian Federation under the Energy Charter Treaty and the 1976 UNCITRAL Rules, the arbitral tribunal awarded to the claimants US$60 million as costs for legal representation and assistance out of an amount of approximately US$81.5 million claimed as costs. See Yukos Universal Limited (Isle of Man) v The Russian Federation UNCITRAL, PCA Case No. 2005-​04/​AA227. 116. See International Chamber of Commerce (ICC), “ICC Arbitration Commission Report On Techniques For Controlling Time And Costs In Arbitration” (2018), available at https://​iccwbo.org/​publication/​icc-​ arbitration-​commission-​report-​on-​techniques-​for-​controlling-​time-​and-​costs-​in-​arbitration/​ (accessed on 19 November 2020); see International Chamber of Commerce (ICC), “Effective Management of Arbitration –​A Guide for In-​House Counsel and Other Party Representatives” (2018), available at https://​ iccwbo.org/​publication/​effective-​management-​of-​arbitration-​a-​guide-​for-​in-​house-​counsel-​and-​other-​ party-​representatives/​(accessed on 19 November 2020); see Philipp Habegger, “Chapter 18, Part V: Saving Time And Costs In Arbitration”, in Manuel Arroyo (ed.) Arbitration in Switzerland: The Practitioner’s Guide (2nd edn, Kluwer Law International 2018), p. 2595; see David W. Rivkin and Samantha J. Rowe, “The Role Of The Tribunal In Controlling Arbitral Costs” (2015) 81(2) The International Journal of Arbitration, Mediation and Dispute Management 116. 117. See, for instance, International Chamber of Commerce (ICC), “Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration” (2019), available at https://​iccwbo.org/​publication/​note-​parties-​arbitral-​ tribunals-​conduct-​arbitration/​(accessed on 20 November 2020). 118. See International Chamber of Commerce (ICC), “Decisions on Costs in International Arbitration –​ICC Arbitration and ADR Commission Report” [2015] ICC Dispute Resolution Bulletin, available at https://​iccwbo. org/​publication/​decisions-​on-​costs-​in-​international-​arbitration-​icc-​arbitration-​and-​adr-​commission-​ report/​(accessed on 20 November 2020); see Eric A. Schwartz, “The ICC Arbitral Process, Part IV: The Costs of ICC Arbitration” (1993) 4 ICC International Court of Arbitration Bulletin 8–​23; see Chartered Institute of Arbitrators (CIArb), “Drafting Arbitral Awards Part III —​Costs” (2016), available at https://​www.ciarb.org/​ media/​4210/​guideline-​12-​drafting-​arbitral-​awards-​part-​iii-​costs-​2016.pdf (accessed on 20 November 2020).

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Chapter 4—​​​Relevance of Arbitration in Resolving Disputes

in the overall outcome of a case as parties do seek to recover such costs as part of the total compensation. Yet, a lack of uniformity as to the standards applied by arbitrators when deciding on costs impacts on predictability of the outcome and thus on the parties’ faculty to make an informed choice whether to invest in litigation or to settle.

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It is also sometimes argued that the arbitral process has become more complex, more legalistic, and more institutionalised with the attendant cost increases.119

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The main reason for this is the large number of legally qualified professionals who act as counsel and arbitrators and whose professional training in local court systems can create an inclination towards a more judicial approach to arbitrations. Empirical studies suggest that the party costs accounted for more than 80 per cent of the total costs of the arbitration.120

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The arbitral tribunal is required to conduct the arbitration proceedings in a judicial manner in accordance with the rules where such rules are applicable or in accordance with the rules of natural justice, including giving both parties an equal and reasonable opportunity to present their cases.

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The Arbitration Act expressly confers on the arbitral tribunal the power to decide on costs as to which party shall bear, and in what proportion, the procedural costs and, where claimed, the costs of the arbitration which includes party costs.121

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119. See Chartered Institute of Arbitrators (CIArb), “CIArb Costs of International Arbitration Survey 2011” (2011) 11, available at https://​www.international-​arbitration-​attorney.com/​wp-​content/​uploads/​2017/​ 01/​CIArb-​Cost-​of-​International-​Arbitration-​Survey.pdf (accessed on 20 November 2020), where it was found that almost 75 per cent of the costs in an international arbitration were made up of legal fees. Party costs (including lawyers’ fees and expenses), expenses related to witness and expert evidence, and other costs incurred by parties for the arbitration make up the bulk of the overall costs of the proceedings. These costs make up 83 per cent of the overall arbitration costs. See International Chamber of Commerce (ICC), “Decisions on Costs in International Arbitration –​ICC Arbitration and ADR Commission Report” [2015] ICC Dispute Resolution Bulletin, available at https://​iccwbo.org/​publication/​decisions-​on-​costs-​in-​ international-​arbitration-​icc-​arbitration-​and-​adr-​commission-​report/​ (accessed on 20 November 2020). 120. See International Chamber of Commerce (ICC), “Decisions on Costs in International Arbitration –​ICC Arbitration and ADR Commission Report” [2015] ICC Dispute Resolution Bulletin, para. 2, available at https://​iccwbo.org/​publication/​decisions-​on-​costs-​in-​international-​arbitration-​icc-​arbitration-​and-​adr-​ commission-​report/​(accessed on 20 November 2020). 121. See the Arbitration Act, s. 31A. Many international arbitration rules expressly provide for the costs of arbitration to be borne by the unsuccessful party subject to the discretion of the arbitral tribunal exercised judicially. See China International Economic and Trade Arbitration Commission CIETAC Arbitration Rules 2015, art. 52(2); DIS-​Arbitration Rules 1998, s. 35.2; LCIA Arbitration Rules 2020, art. 28.4; Permanent Court of Arbitration (PCA) Arbitration Rules 2012, art. 42(1); UNCITRAL Arbitration Rules 2010, art. 42(1); 2018 HKIAC Administered Arbitration Rules, art. 34; ICC Arbitration Rules 2021, art. 38; ICDR International Dispute Resolution Rules and Procedures 2014, art. 34; SCC Arbitration Rules 2010, art. 44; SIAC Rules 2016, r. 37; WIPO Arbitration Rules, art. 74; Swiss Rules of International Arbitration (Swiss Rules), art. 40(1). The rule in the United States is different in that each party is to bear its own legal costs and its own share of the arbitration costs. The arbitral tribunal is only empowered to shift party costs if so, provided by the arbitration agreement, the applicable arbitration rules or the (foreign) lex arbitri. See Thomas H. Webster and Michael

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Success fee arrangements and third-​party funding have added to the complexity and created problems to the allocation of costs in jurisdictions where the lex arbitri and ethical rules allow such practices.

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Although arbitration provides greater freedom compared to the courts of law, in the form of greater informality in the proceedings and tailoring the procedure suited to a particular dispute or to particular parties –​the costs of arbitration may not be less than those which may have been incurred in court proceedings.

An One-​Strike Proposition

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Costs and delays are exacerbated by the advocacy of opposing lawyers whose clients often have substantial stakes in the outcome of the litigation, and who may prefer to disrupt the expeditious conduct of the proceedings, rather than reaching a settled outcome.

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Even where both parties are engaging with the process, there is limited scope for appealing against an award, thus leaving very little room for error.

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The Chief Justice of Singapore, Sundaresh Menon, observed that arbitration has become an one-​strike proposition that has led to increased costs as “parties inevitably chase the best arbitrators and the best lawyers to give themselves the best chance of winning their case”.122

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Langton J in Foresta Romana SA v Georges Mabro (Owners)123 lamented:

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“It is no part of my duty to make any aversions on commercial arbitration, but I have had some experience of it, and the expression ‘ready and willing’ does not appear to me to connote that the parties must enter into dispute of this sort with any signs of pleasurable excitement. My experience of commercial arbitration is that it is seldom pleasurable, it is never exciting, it is always expensive and it is frequently disappointing.”

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In this context, Mustill LJ commented that arbitration has become a service industry and, referring to the English context, that “hotel bills alone may now surpass what would then (some 30 years ago) been the entire cost of an arbitration”.124 With international travel costs taken into account, this point remains relevant even today.

Bühler, Handbook of ICC Arbitration: Commentary, Precedents, Materials (3rd edn, Sweet & Maxwell 2018), paras. 37.82–​37.84. 122. Sundaresh Menon, ICCA 2012 Congress in Singapore Keynote Address (Singapore, 2012). The Chief Justice also suggested that delays can be caused when arbitrators are forced to hear protracted submissions “on every conceivable point” in giving the parties “full opportunity” to present their case. 1 23. (1940) 66 LI L Rep 139 at p. 141. 124. Michael John Mustill, “Arbitration: History and Background” (1989) 6 J Int Arb 43, p. 55.

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The lack of a backlog of cases in arbitration does not always guarantee that proceedings will move along swiftly. In large and complex disputes, counsel for the parties and the arbitrators themselves, being drawn from the top strata of their professions will have very busy professional schedules. This makes it difficult to find a hearing date when they can all be in the same room.125

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This is bound to cause delay in the proceedings, which can in turn result in greater expense than it would in litigation. Yet, arbitration provides the promise of predictability of costs and expenses.

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Particularly in India, where the courts are congested with lawsuits reaching up to the Supreme Court of India over the course of several years, resolution of disputes by litigation is rendered demonstrably more expensive and slower than arbitration.

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Arbitration may have initial costs that equal or perhaps exceed a first-​instance hearing in court. However, the lack of multiple appellate tiers provides significant savings in terms of both time and money.

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In India, arbitration used to be considered as a precursor to litigation. However, in recent times, courts have taken a tough stand against the unnecessary challenges to the enforcement of an award.

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The Supreme Court of India in Vijay Karia v Prysmian Cavi E Sistemi SRL126 (“Vijay Karia”) imposed heavy costs on the Appellant and held:

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“… we cannot help but be left with a feeling that the Appellants are indulging in a speculative litigation with the fond hope that by flinging mud on a foreign arbitral award, some of the mud so flung would stick … We have read, in detail, the four awards passed by the learned sole arbitrator and are satisfied that he has exhaustively discussed the evidence and arrived at detailed findings for each of the issues, claims and counter-​claims, and finally accepted the Respondent’s case and rejected the Appellants’… given the fact that this Court’s time has unnecessarily been taken by a case which has already been dealt with by four exhaustive awards on merits and also by the impugned judgment of the Bombay High court, we dismiss these appeals with costs of INR 50 lakhs, to be paid by the Appellant to Respondent No. 1 within 4 weeks from today.”127

125. See David A.R. Williams and Amokura Kawharu, Williams and Kawharu on Arbitration (1st edn, LexisNexis 2011), p. 9, at para. 1.15. 126. 2020 SCC OnLine SC 177. 127. Vijay Karia v Prysmian Cavi E Sistemi SRL 2020 SCC OnLine SC 177, para. 119.

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The decision of the Supreme Court of India in Vijay Karia128 may deter parties from pursuing unfounded challenges against an award. It is likely to delineate the difference between arbitration and litigation in India.

[4.4] THE DURABILITY OF ARBITRATION: IN THE PRE-​AND POST-​19 WORLD

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Essentially, arbitration has not radically changed from its historic origins. In domestic proceedings the choice between arbitration and litigation may hinge on issues of confidentiality and the neutrality of the arbitral tribunal.

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Depending on the circumstances, a decision may be finely balanced,129 particularly in jurisdictions where the local courts are highly respected.

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However, in international disputes, arbitration provides numerous decisive advantages that make it the preferred method to deal with commercial and technical disputes effectively.

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It must be emphasised that the Arbitration Act only provides the framework for arbitration and most of its provisions act as default positions that are applicable only in the absence of agreement by the parties.130

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However, with the assistance of the rules provided by arbitration institutions (either incorporated by reference or specifically agreed upon), the parties can establish a comprehensive framework that makes it possible to achieve a fair and just resolution to their dispute. Mustill LJ observes:

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“Arbitration has come to occupy an influential position in the conduct of international trade. It has a great deal more to contribute, and it can and should grasp the opportunities which stand before it. But there is no room for complacency.”131

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These words have become even more compelling since the outbreak of the COVID-​19 pandemic. The pandemic prompted the international arbitration community to come up with means and methods to cope with the situation.

128. Ibid. 129. See Alan Redfern and Martin Hunter, Law and Practice of International Commercial Arbitration (4th edn, Sweet & Maxwell 2004), para. 1.105. 130. However, mandatory provisions, such as the Arbitration Act, s. 28, which requires a tribunal to decide a domestic dispute in accordance with Indian laws only, cannot be superseded by an agreement of the parties. 131. Michael John Mustill, “Arbitration: History and Background” (1989) 6 J Int Arb 43, p. 56.

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One of the most attractive features of arbitration is the logistical and procedural advantages it offers despite the geographical placement of arbitrators, parties, and their respective counsel. In the COVID-​19 world, the restrictions on travel almost entirely diluted this benefit.

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At the same time, it pivoted a gradual shift to conducting proceedings virtually even for substantive hearings. While virtual hearings and videoconferencing were not unusual to arbitration, the compulsive desire of parties to be able to present their case in the best way possible, often led to the efficiency of virtual hearings being overlooked. Hotel bills in pre-​2020 arbitrations have surpassed the cost of an entire arbitration 30 years ago.

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The situation post COVID-​19 pandemic may certainly contribute towards rectifying this by doing away with the high international travel costs, unless it is absolutely necessary for the arbitrators, parties, and their counsel to be physically present for a hearing. It is true that some cases are significantly complex, for which a virtual hearing may not be conducive.

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The pandemic prompted courts to take a similar approach and devise technological means to be able to conduct hearings virtually. Unlike arbitration, videoconferencing and virtual hearings were alien to Indian courts.132

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The national lockdown which persisted for over three months between March and June, 2020, in India, caused the courts to function in a manner that did away with almost any requirement of physical attendance of parties or counsel.

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For instance, courts devised systems for the e-​filing of petitions and applications. The registries of various courts also did away with the requirement for notarisation of affidavits,133 to enable a party to move court facing as little hurdles as possible.

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On the other hand, e-​filing has always been the norm in international arbitration.

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Pursuant to the outbreak of COVID-​19, the Supreme Court of India in exercise of its powers under Article 142134 of the Constitution declared that:

132. However, some High Courts did conduct matrimonial and child custody matters over video conference in cases where the parties were too far placed from each other. 133. Such applications or petitions are often accompanied by an undertaking that a duly notarised version of the petition or application would be filed in Court, pursuant to the relaxation of the lockdown. 134. The Constitution of India, art. 142 empowers the Supreme Court of India in exercise of its jurisdiction to “… pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it, and any decree so passed or order so made shall be made enforceable throughout the territory of India …”.

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“… on account of COVID-​19 virus and resultant difficulties that may be faced by litigants across the country in filing their petitions/​applications/​suits/​appeals/​all other proceedings within the period of limitation prescribed under the general law of limitation or under Special laws (both Central and/​or State). To obviate such difficulties and to ensure that lawyers/​litigants do not have to come physically to file such proceedings in respective Courts/​Tribunals across the country … it is hereby ordered that a period of limitation prescribed under the general law or Special Laws whether condonable or not shall stand extended w.e.f. 15th March 2020 till further order/​s …”.135

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The absence of the term “suspension” in the order allows for two interpretations of the order. One way to look at the order would be to consider the period of lockdown as a period of closure of the court. In terms of Article 4 of the Limitation Act, 1963, this would mean that any suit, appeal, or application may be preferred or made on the day when the court reopens.

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The other way to interpret the order would be to take the period beginning 15 March 2020 until further orders passed by the Supreme Court of India, to have been excluded altogether in calculating limitation.

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Since the effect of the former interpretation would be that all litigants will be required to rush to court when the lockdown is lifted, which was presumably not the intention of the Supreme Court of India, the latter interpretation is likely to be the appropriate interpretation.

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Despite the advances in technology and conduct of court proceedings, it is less likely that arbitration will lose favour with parties. However, one factor to bear in mind would be that the uprooting of contractual relations in the COVID-​19 world may require an act of balancing of equities.

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While such a power is vested in the courts, such a power can only be exercised by arbitral tribunals when they are authorised to do so by a party.

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This issue may not go too far in dissuading a party from arbitrating a dispute since it is not entirely impossible for an arbitral tribunal to do complete justice while remaining within the contractual limits of its jurisdiction. Finally, arbitration may become more relevant and sought after in the post COVID-​ 19 world due to the availability of litigation funding, which would not be available to parties, if a dispute were to be resolved in Court. Given that the pandemic has displaced

135. Re Cognizance for Extension of Limitation 2020 SCC OnLine SC 343.

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the economies of almost every business, access to litigation funding may become crucial for parties.

[4.5] CONCLUSION

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There has been a never-​ending debate comparing arbitration versus litigation. However, it is safe to say that the opinion has moved strongly in favour of arbitration for resolution of disputes. While there is not an exhaustive list, but it appears that parties choose arbitration because of the flexibility and privacy being offered during the proceedings.

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Most importantly, in the modern world of cross-​border transactions, arbitration can provide elements of neutrality as regards location, governing law, and constitution of the tribunal, which make it an attractive proposition in international commerce.136

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While issues regarding costs and delays continue to exist, it is, however, important to concentrate on the bigger picture that the objective of arbitration is not to simply determine a dispute quickly and cheaply rather it is to arrive at a fair and reasoned decision on a dispute based on a proper evaluation of the relevant contract, facts, and the law.

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Furthermore, the issues presented by the current pandemic serve as a great opportunity for the arbitration practice to explore the use of Information Technology. The present developments possess may result in virtual arbitrations being the norm.

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What remains to be seen is how speedily the stakeholders in the system including counsels, parties, and tribunals acquaint themselves with the said developments.

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Going forward, virtual arbitrations may be the norm for arbitrations. Presently, the flexibility of procedures has imbued arbitration with the capacity to function effectively even under the adverse situations. Arbitration remains relevant and viable.

136. Fiona Trost & Holding Corp v Yuri Privalov [2007] UKHL 40, per Lord Hoffmann at para. 6.

Chapter 5 PRIVACY, CONFIDENTIALITY AND TRANSPARENCY IN ARBITRATION [5.1] INTRODUCTION......................................................................................................................... 112

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[5.2] PRIVACY......................................................................................................................................... 113 [5.3] CONFIDENTIALITY.................................................................................................................... 115 [5.4] PRIVACY AND CONFIDENTIALITY AS DISTINCT CONCEPTS..................................... 120 [5.5] DIMINISHING CONFIDENTIALITY AND NEED FOR TRANSPARENCY..................... 121 [5.6] LIMITATIONS ON CONFIDENTIALITY................................................................................ 123

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[5.7] POSITION IN INDIA.................................................................................................................... 124 [5.8] TRANSPARENCY IN INTERNATIONAL COMMERCIAL ARBITRATION..................... 126

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[5.9] DRAFTING ARBITRATION AGREEMENTS FOR CONFIDENTIALITY......................... 130

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[5.1] INTRODUCTION

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[5.10] CONCLUSION............................................................................................................................... 132

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Privacy and confidentiality are defining features of arbitration. They secure sensitive business information and instill confidence in the arbitral process. As such, they have been characterised amongst the marquee points of arbitration.1

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Arbitration is unlike litigation. The hearing and passing of judgment in litigation are done in public. Anyone can view a litigation.2 Arbitration allows parties to make arguments and submission that they would otherwise be reluctant to make in litigation.3

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1. In the 2010 Queen Mary University of London Survey, available at http://​www.arbitration.qmul.ac.uk/​media/​ arbitration/​docs/​2010_​InternationalArbitrationSurveyReport.pdf (accessed on 29 January 2021) confidentiality was listed as “very important” by 62 per cent respondents and another 24 per cent said that confidentiality was “quite important”. The 2015 survey, available at http://​www.arbitration.qmul.ac.uk/​media/​arbitration/​docs/​ 2015_​International_​Arbitration_​Survey.pdf (accessed on 29 January 2021)) conducted by the Queen Mary University of London, recorded “confidentiality and privacy” as the second most frequently listed valuable characteristic of international commercial arbitration for in house counsels. As of 2018, 87 per cent respondents were of the view that confidentiality in international commercial arbitration is of importance. See, Queen Mary University of London, 2018 International Arbitration Survey: The Evolution of International Arbitration (White and Case), available at http://​www.arbitration.qmul.ac.uk/​media/​arbitration/​docs/​2018-​International-​ Arbitration-​Survey-​-​-​The-​Evolution-​of-​International-​Arbitration-​(2).pdf (accessed on 11 November 2020). 2. Sundra Rajoo, “Privacy, Confidentiality and Disclosure of Information Relating to Arbitral Proceedings” [2021] 1 MLJ xiv. 3. See Florentino P Feliciano, “The Ordre Public Dimensions of Confidentiality and Transparency in International Arbitration: Examining Confidentiality in the Light of Governance Requirements in International Investment and Trade Arbitration” (2012) 87 Philadelphia LJ 1, p. 2.

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The terms “privacy” and “confidentiality” have been used in arbitration interchangeably. The common presumption is that arbitration proceedings are both private and confidential. This assumption is incorrect.4

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Privacy is concerned with the exclusive right of persons involved in the arbitration proceedings, such as the arbitral tribunal, parties and witnesses who attend meetings and hearings to know about the arbitration.5 It ensures that arbitration proceedings are not attended by the public and third parties to the arbitration.

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Confidentiality entails non-​disclosure of specific information to third parties and the public on account of the arbitration agreement or applicable arbitral rules.6 Whether the arbitration proceedings will be both private and confidential will depend upon the applicable law, terms of the arbitration agreement, and the applicable institutional arbitration rules.

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[5.2] PRIVACY

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The resulting opaque nature of arbitration arising from its private and confidential attributes has been criticised in modern times. There have been demands to increase public access, disclosure, and procedural transparency to make arbitration more accountable, democratic, and legitimate.7 Attempts aimed at providing for transparency in arbitration similar to that practised in investment treaty arbitration have ameliorated some of the fears.

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Privacy is one of the fundamental principles of arbitration.8 Most institutional arbitration rules universally recognise the privacy of arbitration proceedings.9

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4. See Esso Australia Resources Ltd and Ors v The Honourable Sidney James Plowman and Ors (1995) HCA 19; Kyriaki Noussia, Confidentiality in International Commercial Arbitration: A Comparative Analysis of the Position under English Law, US & German Law (Springer 2010), p. 32. 5. See Expert Report of Dr Julian Lew in Esso Australia v Plowman, (reprinted in 1995), 11 Arbitration International 283, p. 285, para. 16. 6. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Wolters Kluwer 2021), p. 3004. 7. Matthew Carmody, “Overturning the Presumption of Confidentiality: Should the UNCITRAL Rules on Transparency be applied to International Commercial Arbitration?” (2016) 19 International Trade & Business Review 96 at p. 104. 8. See Russell v Russell [1880] 14 Ch D 471 (Ch D), p. 474; Bibby Bulk Carriers Ltd v Cansulex Ltd [1989] QB 155 (QB), pp. 166–​167 (Hirst J) held, “I accept that the arbitration proceedings is a private one, but arises simply and solely as a result of the contract between the participants”; Hassneh Insurance Co. of Israel v Mew [1982] 2 Lloyd’s Rep 243 (QB) (“the informality attaching to a hearing held in private and the candour to which it may give rise is an essential ingredient of arbitration”); Gary B Born, International Arbitration: Cases and Materials (Kluwer Law International 2011), p. 793; also see S. Greenberg, C. Kee, R. Weeramantry, International Commercial Arbitration: An Asia-​Pacific Perspective (Cambridge University Press 2010), p. 372. 9. See UNCITRAL Arbitration Rules, 2013 art. 28(3) provides that “hearings shall be heard in camera unless the parties otherwise agree”; see also International Chambers of Commerce Arbitration Rules, 2017, art. 22(3); London Court of International Arbitration Rules, 2020, art. 30.

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Privacy refers to the inability of third parties or the public to attend and observe the hearings (since arbitration is not a “spectator sport”), if the disputant parties or the arbitral tribunal have not given their consent.10 Hence, arbitration provides parties with a forum where the dispute can be kept “away from the intrusiveness of the media and the prying eyes of their competitors.”11

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The privacy of arbitrations has never been in dispute. It is a presumption adopted over the world.12 However, there is no consensus on the extent to which the private nature of the arbitration places and imposes obligation on the parties and the arbitral tribunal involved in the arbitration.

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Though the general rule is that parties cannot disclose materials such as documents, evidence, witness statements etc. used in the arbitration,13 often disclosure may be mandatorily required under arbitration laws and other court rules to initiate court proceedings for enforcement of the award.

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10. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International 2021), p. 3003; see Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2007), at para. 1-​023. 11. A Poorooye, R Feehily, “Confidentiality and Transparency in International Commercial Arbitration: Finding the Right Balance” (2017) 22 Harvard Negotiation Law Review 275, p. 278. 12. See Hassneh Insurance Co of Israel v Mew, 1993 2 Lloyd’s Rep 243 (“If parties to an English law contract refer their disputes to arbitration, they are entitled to assume at the least that the hearing will be conducted in private. That assumption arises from a practice which has been universal in London for hundreds of years and is, I believe, undisputed. It is a practice which represents an important advantage of arbitration over the Courts as a means of dispute resolution. The informality attaching to a hearing held in private, and the candour to which it may give rise, is an essential ingredient of arbitration.”); Ali Shipping Corporation v Shipyard Trogir 1999 1 WLR 136; Oxford Shipping Co Ltd v Nippon Yusen Kaisha, The Eastern Saga (No 2) [1984] 3 All ER 835 (“… concept of private arbitrations derives simply from the fact that the parties have agreed to submit to arbitration particular disputes arising between them and only between them. It is implicit in this that strangers shall be excluded from the hearing and conduct of the arbitration and that neither the tribunal nor any of the parties can insist that the dispute shall be heard or determined concurrently with or even in consonance with another dispute, however convenient that course may be to the party seeking it and however closely associated the disputes in question may be.”); Esso Australia Resources Ltd and Ors v The Honourable Sidney James Plowman and Ors (1995) HCA 19 (“Subject to any manifestation of a contrary intention arising from the provisions or the nature of an agreement to submit a dispute to arbitration, the arbitration held pursuant to the agreement is private in the sense that it is not open to the public…The arbitrator will exclude strangers from the hearing unless the parties’ consent to attendance by a stranger. Persons whose presence is necessary for the proper conduct of the arbitration are not strangers in the relevant sense. Thus, persons claiming through or attending on behalf of parties, those assisting a party in the presentation of the case, and a shorthand writer to take notes may appear.”). 13. See Dolling-​Baker v Merrett 1990 1 WLR 1205 (“… although the proceedings are consensual and may thus be regarded as wholly voluntary, their very nature is such that there must, in my judgment, be some implied obligation on both parties not to disclose or use for any other purpose any documents prepared for and used in the arbitration or disclosed or produced in the course of the arbitration, or transcripts or notes of the evidence in the arbitration or the award –​and indeed not to disclose in any other way whatever evidence that has been given by any witness in the arbitration –​save with the consent of the other party or pursuant to an order or with leave of the court. That qualification is necessary, just as it is in the case of the implied obligation of secrecy between banker and customer.”); Esso Australia Resources Ltd and Ors v The Honourable Sidney James Plowman and Ors (1995) HCA 19 (“… efficacy of a private arbitration will be damaged, even defeated, if proceedings and documents in the arbitration are made public by the disclosure of documents relating to arbitration … and the same principle must apply to the arbitration as a whole, including the pleadings or statements of case, expert reports or witness proofs that have been exchanged, as well as to evidence given orally at a hearing.”).

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The Privy Council in Associated Electric and Gas Insurance Services Ltd v European Reinsurance Co of Zurich (Aegis)14 observed:

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“… different types of confidentiality which attach to different types of document … Commercial arbitrations are essentially private proceedings and unlike litigation in public courts do not place anything in the public domain. This may mean that the implied restrictions on the use of material obtained in arbitration proceedings may have a greater impact than those applying in litigation. But when it comes to the award, the same logic cannot be applied. An award may have to be referred to for accounting purposes or for the purpose of legal proceedings (as Aegis referred to it for the purposes of the present injunction proceedings) or for the purposes of enforcing the rights … Generalisations and the formulation of detailed implied terms are not appropriate.”

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[5.3] CONFIDENTIALITY

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Confidentiality is widely lauded as one of the major benefits of arbitration.15 This is because it:

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“is perceived as encouraging efficient, dispassionate dispute resolution, rather than emotive ‘trial by press release’ or efforts to gain extraneous leverage; reducing the risks of damaging disclosure of commercially-​sensitive information to competitors, customers and others; facilitating settlement by minimizing the role of public posturing; and complementing the parties’ obligations to resolve their disputes in good faith in a cooperative manner.”16

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However, while the privacy of arbitration proceedings is commonly accepted, the issue of confidentiality in arbitration has a more complex history in its development. Until recently, the issue of confidentiality had mostly been addressed in a cursory fashion because of the paucity of statutory enactments and case law authorities.

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The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) does not contain any provisions relating to confidentiality of arbitral proceedings. However, in as much as it makes it clear that the parties’ agreement must be given effect to,17 the New York Convention imposes an obligation on contracting States to recognise confidentiality, if contained within the arbitration agreement. 14. [2003] 1 WLR 1041, [2003] WL 116937. 15. See Bond, “Expert Report of Stephan Bond Esq in Esso Australia v Plowman)” (1995) 11 Arbitration International 273 stated that the adoption of a policy to publish awards would “constitute a significant deterrent to the use of ICC arbitration”. 16. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Wolters Kluwer 2021), p. 3003. 17. See Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958, art. II.

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The UNCITRAL Model Law on International Commercial Arbitration (“UNCITRAL Model Law”), too, is silent on the subject of confidentiality. It has left the same to the parties or the arbitration rules chosen by them.18 Hence, many national arbitration legislations that are based upon the UNCITRAL Model Law do not contain provisions relating to the confidentiality of arbitration proceedings.

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However, in England, despite there being no statutory provisions on confidentiality, the courts have held that the obligation of confidentiality is implied into the arbitration proceedings as a matter of law and “arises as an essential corollary of the privacy of arbitration proceedings.”19

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In Singapore too, there are no statutory provisions relating to confidentiality. But the court has held that the degree of confidentiality will have to be evaluated in the facts and circumstances of each case.20

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Confidentiality obligations may be derived from the party’s arbitration agreement or the applicable institutional arbitration rules.21

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As regards to arbitration agreements, parties have the autonomy to agree upon the confidentiality of arbitral proceedings to be limited.22 They can also decide that the confidentiality of arbitral proceedings will not bind third parties to the arbitration agreement such as witnesses.

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Confidentiality of the arbitral proceedings cannot conflict with mandatory law (mandatory disclosures may be required in case of a statutory duty to provide information to insurers, auditors, and public regulators etc.) or public policy.

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Failing the party’s agreement, the scope of confidentiality depends upon the applicable institutional rules. Institutional arbitration rules,23 ethical guidelines,24 and the

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18. Report of the Secretary-​General on Possible features of a Model Law on International Commercial Arbitration (1981) UN Doc/​CN/​9/​207 at p. 17. 19. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 5-​214. See Ali Shipping Corp v Shipyard Trogir 1998 2 All ER 136; Oxford Shipping Co Ltd v Nippon Yusen Kaisha, The Eastern Saga 1984 2 Lloyd’s Rep 373; Emmott v Michael Wilson & Partners 2008 1 Lloyd’s Law Rep. 616. 20. International Coal Pte Ltd. v Kristle Trading Ltd. and Another and another Suit, 2008 SGHC 182; AAY and Ors. v AAZ (AAY) 2011 1 SLR 1093. See Nigel Blackaby, Constantine Partasides QC, Alan Redfern, Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), para. 2.169. 21. See Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International 2021), p. 3010. 22. Ibid. 23. SIAC Rules, 2016, art. 39; LCIA Arbitration Rules, 2020, art. 30(2); Mumbai Centre for International Arbitration, Rules, 2016, r. 35; Delhi International Arbitration Centre (Arbitration Proceedings) Rules, 2018, r. 36. 24. ICSID and UNCITRAL Draft Code of Conduct for Adjudicators in Investor State Dispute Settlement, 2020, art. 9; IBA Rules of Ethics for International Arbitrators 1987, art. 9.

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provisions of the arbitration agreement often impose confidentiality obligations on the arbitrators. The ICC rules do not make confidentiality of arbitral proceedings mandatory. It only states that upon a request of any party, the arbitral tribunal may make orders concerning the confidentiality of the arbitration proceedings.25

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In comparison, the LCIA Rules provide for limited confidentiality with respect to the award and all documents produced by parties during the arbitration proceedings. They allow for disclosure where required by law, to protect or pursue a legal right or to enforce or challenge an award in legal proceedings.26 The said rules recognise confidentiality as one of the “underpinnings of arbitration” while balancing the ability of the parties to pursue a legitimate course of action.27

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The SIAC Arbitration Rules, too, impose a broad duty of confidentiality in all matters relating to arbitration proceedings, including the award and the deliberations of the tribunal.28 Disclosures without the consent of the parties are allowed in certain limited cases for the purposes of enforcing a legal claim.29 The SIAC rules also provide for the publication of redacted awards by SIAC, with the agreement of the parties and the arbitral tribunal.

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The Hong Kong International Arbitration Centre (“HKIAC”)’s Administered Arbitration Rules impose a duty of confidentiality on all the parties involved in the arbitration. They include the parties to the dispute, the arbitrators, experts, witnesses, or tribunal secretaries. The HKIAC rules provide for the protection of confidentiality in arbitral proceedings as well as court proceedings.

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The Stockholm Chamber of Commerce (“SCC”)’s arbitration rules only oblige the arbitrators and institution to maintain confidentiality of the award unless the parties have agreed otherwise.

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The International Centre for Dispute Resolution (“ICDR”) Arbitration Rules provide that: “‘confidential information disclosed during the arbitration shall not be divulged by an arbitrator or the Administrator.’30 Awards ‘may be made public only with the consent

25. 26. 27. 28. 29. 30.

ICC Arbitration Rules, 2021, art. 22(3). The London Court of International Arbitration Rules, 2020, art. 30. London Court of International Arbitration Notes to Parties, para. 101. Singapore International Arbitration Centre Rules, 2016, r 39. Singapore International Arbitration Centre Rules, 2016, r 39.2. International Centre for Dispute Resolution Arbitration Rules, 2014, art. 37.

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of all the parties as required by the law.’ ICDR awards when published must be ‘edited to conceal the names of the parties and other identifying details’.”31

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The UNCITRAL Arbitration Rules generally used in ad hoc arbitration proceedings deliberately do not include a specific provision on confidentiality. The Working Group II recognised that including such a provision would be counter-​productive to the emerging trend of moving towards transparency.32 Hence, the UNCITRAL Arbitration Rules leave confidentiality to the discretion of the parties and the arbitral tribunal to be decided on a case-​to-​case basis.

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In India, the Mumbai Centre for International Arbitration (“MCIA”) Rules provide that the parties and the tribunal shall at all times treat all matters relating to the proceedings, deliberations of the tribunal and the award as confidential.33

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The COVID-​ 19 pandemic has heightened concerns of confidentiality by the increased use of virtual meeting technology. Many arbitration hearings are increasingly conducted remotely. There are cyber-​security concerns among the parties, arbitral tribunal, and arbitral institutions.

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As such, arbitral institutions and parties now need to address these issues beforehand. Parties must ensure that they have secure internet connections, ensure that invitations to the hearings are not forwarded to third parties, conduct a check on the attendees at the time of the hearing, and ensure that those in attendance are indeed authorised to be at the virtual hearing.

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Further, copies of convenience bundles, pleadings, and any other arbitration related documents should be sent through flash drives or drop boxes, encrypted with a password.

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The representatives of the International Council for Commercial Arbitration, New York City Bar & Association and the International Institute for Conflict Prevention & Resolution have jointly developed the Cybersecurity Protocol for International Arbitration (2020).34 It is an useful tool for this purpose.

31. International Centre for Dispute Resolution Arbitration Rules, 2014, art. 30(3). 32. See UNCITRAL, “Report of the Working Group II (Arbitration and Conciliation) on the work of its Sixty-​Fourth Session” UN A/​CN.9/​867, available at https://​undocs.org/​en/​A/​CN.9/​867 (accessed on 14 November 2020). 33. MCIA Rules, r 35. 34. See ICCA, NYC Bar, CPR, “Protocol on Cybersecurity in International Arbitration, New York Arbitration Week Special Printing” (2020 Edition), available at https://​ www.arbitration-​ icca.org/​ media/​ 14/​ 76788479244143/​icca-​nyc_​bar-​cpr_​cybersecurity_​protocol_​for_​international_​arbitration_​-​_​print_​version. pdf (accessed on 15 November 2020).

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Data Protection in Arbitration The principle of confidentiality is gaining more prominence due to increasing role of data protection regulations.

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The EU General Data Protection Regulation (“GDPR”) came into effect in May 2018. It imposes data governance obligations on all individuals involved in the processing of personal data in the European Economic Area. This includes the arbitral tribunals and other participants in the arbitral process.35 However, an international arbitral tribunal in Tennant Energy, LLC v Government of Canada,36 recently questioned the applicability of the GDPR to arbitrations.

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Notwithstanding this decision, if the GDPR is found to be applicable to an arbitration, data processing will be prohibited unless one of the grounds in Article 6(1) of the GDPR is applicable. An example of such a ground will be as in Article 6(1)(f) which states that processing is necessary for legitimate interests of the data controller.

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There will also be restrictions on the transfer of personal data made outside EU. The arbitral tribunal will need to consider setting out the necessary safeguards in procedural order as to how the data transfer can be taken place and what are the measures.

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The IBA-​ICCA RoadMap to Data Protection in International Arbitration RoadMap 2019 (“RoadMap”) identifies the complicated task for arbitral tribunals to balance the obligations of data protection along with the fundamental objectives of arbitration. It explains:

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“Arbitration plays a major role in the administration of justice in cross-​border disputes. Moreover, the processing of personal data (by means of communication, as well as documentary and witness evidence) is an essential component of the arbitral process. The consensual nature of arbitration, the independence of arbitral decision-​ making and the secrecy of deliberations are fundamental tenets of the arbitration process. Applying the GDPR to arbitration therefore requires balancing the rights and obligations contained in the GDPR with the fundamental rights of defence and due process at stake in every arbitration.”37

The ICC in its Note to Parties on the Conduct of Arbitration requires the arbitral tribunal to:

35. Regulation (EU) 2016/​679, art. 1(1). See Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Wolters Kluwer 2021), p. 2157. 36. Tennant Energy LLC v Canada, Communication to the Parties, PCA Case No. 2018-​54 (24 June 2019). 37. IBA-​ICCA RoadMap to Data Protection in International Arbitration RoadMap 2019, art. 24.

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(1) remind the parties, witnesses, experts, and other individuals appearing before it of the applicability of the GDPR;38



(2) draw up a data protection protocol;39



(3) ensure that only personal data that is necessary and accurate for the arbitration is processed;40 and



(4) put in place technical and organisational measures to protect the data.41

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The LCIA Arbitration Rules, 2020 too require the arbitrators to “in consultation with the parties and where appropriate the LCIA” consider whether it is appropriate to adopt information security measures or means to address the processing of personal data, in light of applicable data protection legislation.42

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The International Council for Commercial Arbitration (“ICCA”) and the International Bar Association (“IBA”) have established a Joint Task Force on Data Protection in International Arbitration Proceedings to produce a comprehensive guide to data protection in international arbitration.

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Similarly, a working group of The Sedona Conference, a leading voice on electronic discovery and data privacy, is drafting a new commentary, “The Sedona Conference Arbitration Principles,” which will address data privacy and security issues in international arbitration.

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[5.4] PRIVACY AND CONFIDENTIALITY AS DISTINCT CONCEPTS

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Privacy and confidentiality may be considered as two different concepts. Though parties assume that the private nature of arbitration automatically guarantees confidentiality,43 this is not true.44

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38. ICC Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration (1 January 2021), para. 119. 39. Ibid. 40. ICC Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration (1 January 2021), para. 120. 41. ICC Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration (1 January 2021), para. 121. 42. LCIA Arbitration Rules, 2020, art. 30A. 43. See Bernardao M. Cremades and Rodrigo Cortes, “The Principle of Confidentiality in Arbitration: A Necessary Crisis” (2013) 23(3) Journal of Arbitration Studies 25, 28, available at https://​www.koreascience. or.kr/​article/​JAKO201330951777494.pdf (accessed on 15 November 2020). 44. See Kyriaki Noussia, Confidentiality in International Commercial Arbitration: A Comparative Analysis of the Position under English Law, US & German Law (Springer 2010), p. 32.

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Julian Lew explains:

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“Privacy is concerned with the right of persons other than the arbitrators, parties and their necessary representatives and witnesses, to attend the arbitration hearing and to know about the arbitration. Confidentiality, by contrast, is concerned with the obligation on the arbitrators and the parties not to divulge or give out information relating to the content of the proceedings, evidence and documents, addresses, transcripts of the hearings or the award.”45

Privacy and confidentiality are now universally recognised as distinct concepts.46 However, confusion arises as to what extent the private nature of arbitration will imply a duty of confidentiality.

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This confusion arises because of privacy and confidentiality being intrinsically linked to each other. There is no international or domestic consensus with respect to the scope of application of confidentiality, implied by the private nature of the arbitration.

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Different jurisdictions have taken varied stances. Some jurisdictions such as the UK, Singapore, France, Germany, and Switzerland have taken the view that there is an implicit duty to maintain confidentiality in arbitration proceedings.

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New Zealand has gone a step further by laying down a statutory legislation which provides that parties will not publish, disclose, or communicate any information relating to the proceedings or to the award issued by the arbitral tribunal.47

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The High Court of Australia has declined to imply a general duty of confidentiality.48

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[5.5] DIMINISHING CONFIDENTIALITY AND NEED FOR TRANSPARENCY

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The traditional view of the importance of confidentiality in arbitration has recently come under criticism, due to the plea for greater transparency in arbitration proceedings. It is argued that: (1) Disputes which affect countries, communities, and their citizens as a whole such as those relating to public health, corruption etc.49 should not be

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45. Expert Report of Dr Julian Lew in Esso Australia v Plowman, (reprinted in 1995), 11 Arbitration International 283, p. 285, para. 16; see also S Greenberg, C Kee, R Weeramantry, International Commercial Arbitration: An Asia-​Pacific Perspective (Cambridge University Press 2010), p. 371. 46. Emmot v Michael Wilson & Partners Ltd [2008] EWCA Civ 184; Esso Australia Resources Ltd and Ors v The Honourable Sidney James Plowman and Ors (1995) HCA 19. 47. New Zealand Arbitration Act, 1996, ss. 14A–​14D. 48. Esso Australia Resources Ltd and Ors v The Honourable Sidney James Plowman and Ors (1995) HCA 19. 49. See J Gillis Wetter, “Issues of Corruption before International Arbitral Tribunals: The Authentic Text and True Meaning of Judge Gunnar Lagergren’s 1963 Award in ICC Case No. 1110” (1994) 10(3) Arbitration

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shielded from public scrutiny. This is because publication of such decisions will allow people to take individual action to protect their own interests.50 (2) To reduce the risk of different interpretation by different arbitral tribunals which will result in inconsistent decisions and threaten the legitimacy of arbitrations, awards should be published.51



(3) Publication of arbitral awards increases the accountability of arbitral tribunals since it enables parties to judge the arbitrators in their role as fact-​finders and contract interpreters.52 Arbitral institutions and parties may then be able to make a more informed decision while nominating an arbitrator by reviewing his past performance and effectively assessing his expertise.53



(4) A database of arbitral awards may instil confidence of parties in the arbitral process since it will ensure that the arbitral tribunal conducts the proceedings in a fair, efficient, and expeditious manner.54 Further, access to information on how the arbitral tribunal deals with particular claims may result in reduction of frivolous and unnecessary claims.55



(5) There is a view that development of useful updated precedents by the courts are hindered by the popularity of arbitration where the awards are confidential and legal rules developed in such arbitration awards cannot be used as legal precedents.56

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International 277; Lily ICOS LLC v Dylan Dupre (2006) Case No. D2006-​0331, Administrative Panel Decision (WIPO Arbitration & Mediation Center); Powdered Milk Case [2000] (OLG Dresden) 2 U 1181/​00; See Mary Zhao, “Transparency in International Commercial Arbitration: Adopting a Balanced Approach” (2019) Virginia Journal of International Law 178, p. 193. See V Bhatia, C Candlin, R. Sharma, “Confidentiality and Integrity in International Commercial Arbitration Practice” (2009) 75(1) Arbitration 2. See Sir Bernad Rix, “Address at Jones Day Professorship in Commercial Law Lecture, Singapore: Confidentiality in International Arbitration: Virtue or Vice?” (2015), available at https://​law.smu.edu.sg/​sites/​default/​files/​ law/​CEBCLA/​Notes_​Confidentiality_​in_​International_​Arbitration.pdf (accessed on 15 November 2020). See Kimberley Chen Nobles, “Emerging Issues and Trends in International Arbitration” (2012) 43(1) California Western International LJ 77, available at https://​scholarlycommons.law.cwsl.edu/​cwilj/​vol43/​iss1/​ 5/​(accessed on 15 November 2020). See Cindy G. Buys, “The Tensions Between Confidentiality and Transparency in International Arbitration” (2003) 14 American Review International Arbitration 121, p. 136. See Cindy G Buys, “The Tensions Between Confidentiality and Transparency in International Arbitration” (2003) 14 American Review International Arbitration 121, p. 137; see also A Poorooye, R Feehily, “Confidentiality and Transparency in International Commercial Arbitration: Finding the Right Balance” (2017) 22 Harvard Negotiation Law Review 275, p. 314. The Bailli Lecture, Developing commercial law through the courts: rebalancing the relationship between the courts and arbitration, 9 March 2016, at para. 22, available at https://​www.judiciary.uk/​wp-​content/​uploads/​ 2016/​03/​lcj-​speech-​bailli-​lecture-​20160309.pdf (accessed on 17 November 2020).

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52. 53. 54. 55.

56.

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There is an increasing preference for transparency, instead of confidentiality of proceedings for the abovementioned reasons.

[5.6] LIMITATIONS ON CONFIDENTIALITY Confidentiality is not absolute. If it emanates from the arbitration agreement, it only binds parties to the agreement, not third parties.

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It will be subject to mandatory law or statutory provisions (e.g. reporting obligations imposed upon public held companies by national securities or stock exchange regulations,57 anti-​money laundering legislations, for the purposes of evidence in criminal cases, corruption, and national securities laws58).

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Disclosure of the award in enforcement proceedings cannot be prevented by imposing a confidentiality obligation.59 Most arbitral rules60 and national arbitration laws61 already provide for such disclosures.

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The subject matter of one arbitration proceeding might also require disclosure in another parallel or related court proceeding. This confidential information may be required to be disclosed by the parties as per the compulsory disclosure orders issued by a court of law.

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Additionally, the public may have a legitimate interest in the arbitration if the subject matter of the dispute is likely to affect them or involves the functioning of the State.62

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Disclosures in such cases will prevent “unsavoury corporate practices such as the exploitation of child labour, degradation of the environment or corporate perpetration of human right abuses”.63

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57. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Wolters Kluwer 2021), pp. 3013–​3014. 58. See Catherine A Rogers, “Transparency in International Commercial Arbitration” (2006) 54 University of Kansas LR 1301, p. 1328, available at https://​elibrary.law.psu.edu/​cgi/​viewcontent.cgi?article=1233&context=fac_​ works (accessed on 16 November 2020). 59. See Emmott v Michael Wilson & Partners Ltd. 2008 EWCA Civ 184 (“It is plain that there are limits to the obligation of confidentiality. An award may fall to be enforced or challenged in a court.”); Hassneh Ins. Co. of Israel v Mew 1993 2 Lloyd’s Rep 243 (“An arbitrating party may bring the award and reasons into court for the purposes of invoking the supervisory jurisdiction of the court over arbitration awards and for the purpose of enforcement of the award itself.”). 60. See Swiss Rules of International Arbitration Rules 2012, art. 44(1); London Centre for International Arbitration Rules 2020, art. 30(1); Australian Centre for International Commercial Arbitration Rules 2016, art. 22(2); Singapore International Arbitration Centre Rules 2016, r. 39.1. 61. See Australian International Arbitration Act, 1974, arts 23D(5)–​23D(6); New Zealand Arbitration Act 1996, art. 14C(b); Hong Kong Arbitration Ordinance 2011, s. 18(2)(a); Scottish Arbitration Act 2010, Sch. 1, r. 26(1)(d). 62. See Pryles and Moser, The Asian Leading Arbitrators’ Guide to International Arbitration (Chapter 19, Juris Net 2007), pp. 415, 423. 63. See Cindy G Buys, “The Tensions Between Confidentiality and Transparency in International Arbitration” (2003) 14 American Review International Arb 121 at p. 135.

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Institutional rules or the lex arbitri may delineate the scope of confidentiality.64 Further, courts have interpreted the confidentiality provisions and provided guidance on their scope.

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Courts have held that confidentiality cannot be absolute, and neither can it be an inherent or implied provision in the arbitration agreement.65 Disclosure in court proceedings is allowed if required by investors and stakeholders,66 if in the interests of justice.67 Some courts have even held that there will be an implied duty of confidentiality in the arbitration unless there is an express agreement between the parties to exclude confidentiality.68

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Redfern and Hunter state that the trend is towards the diminishing of default requirement of confidentiality.69

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There is a demand for mandated reforms to be introduced that make the system of arbitration more visible. Such reforms allow for more public access to increase the legitimacy of the arbitration.

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A system that recognises the obligation of confidentiality but that allows for specific exceptions for the disclosure of confidential information when necessary is the need of the hour.

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[5.7] POSITION IN INDIA

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Prior to the 2019 Amendment Act, the position on confidentiality in arbitration was unclear. Indian courts had not ruled on the issue of confidentiality in arbitration.

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64. See Kyriaki Noussia, Confidentiality in International Commercial Arbitration: A Comparative Analysis of the Position under English Law, US & German Law (Springer 2010), p. 32. 65. See Ali Shipping Corporation v Shipyard Trogir 1998 2 AII ER 136; Esso Australia Resources Ltd. v Plowman (1995) HCA 19; Associated Electric and Gas Insurance Services Ltd v European Reinsurance Co of Zurich [2003] UKPC 11; Television New Zealand Ltd v Langley Productions Ltd [2000] 2 NZLR 250; United States v The Panhandle Eastern Corporation 118 FRD 346 (D Del 1988) p. 351; Bulgarian Foreign Trade Bank Ltd v AI Trade Finance Inc NYH Juridiskt Arkiv [NJA] [Supreme Court] 2000 ref. T1881-​99; Myanma Yaung Chi Oo Co v Win Win Mu [2003] 2 SGHC 124. 66. Department of Economic Policy and Development of the City of Moscow v Bankers Trust Co., 2004 EWCA Civ 314. 67. See Teekay Tankers Ltd v STX 2017 EWHC 253 (Comm). 68. AAY and Others v AAZ [2011] 1 SLR 1093. 69. See Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 2.170.

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In practice, many parties generally incorporated confidentiality provisions into their contracts or placed reliance on the rules of the relevant arbitral institutions to preserve confidentiality of arbitration proceedings.

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Arbitral tribunals and parties generally complied with the confidentiality obligation as an implied duty, subject to an agreement to the contrary or the interests of justice. However, this is no longer a grey area since the insertion of Section 42A in the Arbitration Act.

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The Report of the High-​Level Committee, under the chairmanship of Justice B.N. Srikrishna, acted on the international recognition of confidentiality of arbitral proceedings by recommending the inclusion of a provision on confidentiality in the Arbitration Act.70

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Consequently, the 2019 Amendment Act enacted provisions mandating confidentiality of proceedings that cannot be excluded or derogated from.71

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Section 42A of the Arbitration Act provides that notwithstanding anything contained in any other law for the time being in force, the arbitral tribunal, the arbitral institution, and the parties to the arbitration agreement shall maintain the confidentiality of all arbitral proceedings except where the disclosure of an award is necessary for the purpose of implementation and enforcement of the award.

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The wording of the confidentiality provision in the Arbitration Act begins with a non-​obstante clause. It has the effect of overriding any other law in force. It may be because, at times, parties need to disclose information as required by law.72

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Further, Section 43K of the Arbitration Act enables the Arbitration Council of India to maintain an electronic depository of arbitral awards and such other awards in the manner as may be specified by regulation.

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The B.N. Sri Krishna High-​Level Committee recommended that only courts may be granted access to such a depository to ensure confidentiality of the proceedings

70. Justice B.N. Srikrishna, Report of the High-​Level Committee to Review the Institutionalisation of Arbitration Mechanism in India (30 July 2017) at pp. 6, 71 (“A new provision may be inserted in Part I of the ACA providing for confidentiality of arbitral proceedings unless disclosure is required by legal duty, to protect or enforce a legal right, or to enforce or challenge an award before a court or judicial authority.”). 71. Arbitration and Conciliation Act, 1996, s. 42A. 72. For instance, public listed companies are required to make disclosures by way of periodic filings, statements, reports, documents, and information reports under the SEBI laws. Similarly, under s. 134 of the Companies Act, 2013 a company is required to make certain disclosures before the National Company Law Tribunal (NCLT) such as the report of the board of directors, annual returns etc. Parties also may be required to make disclosures under the Right to Information Act, 2005 or may have to disclose the award in a separate proceeding to establish its legal right.

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and the award. However, the amended Arbitration Act did not enact any provisions to implement the recommendation.

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Section 42A of the Arbitration Act which provides for confidentiality of the award (except as required for the purpose of enforcement) seems to be in conflict with Section 43K which provides for maintaining a depository of awards. It is likely that it may be that only the court will have access to the depository of awards maintained by ACI.

[5.8] TRANSPARENCY IN INTERNATIONAL COMMERCIAL ARBITRATION

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Confidentiality and privacy are the hallmarks of international commercial arbitration. They enable parties settle disputes privately, instead of in the public eye.

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Parties are increasingly opting for arbitration since it helps increase public trust, reduces negative publicity, and protects market standing. Increasing number of commercial disputes are now getting resolved by arbitration, instead of litigation.73

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This has resulted in a reduction of litigation in particular sectors which prefer to use arbitration as their primary method of dispute resolution. It has been suggested that this development threatens the orderly development of law since arbitral awards, unlike judgments, are not published, thereby limiting development of precedents in certain areas of law.74

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On the other hand, it is important to balance party interest in confidentiality with the general interest of transparency to encourage development of law. Such an approach is consistent with the High Court of Australia in Esso Australia Resources Ltd. v Plowman,75 judgment. Perhaps, there is a need for greater transparency in international commercial arbitration.

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Over the last decade, States and arbitral institutions have made consistent attempts to achieve organised and desirable transparency in international commercial disputes. To achieve this end, arbitral institutions have started publishing sanitised and redacted arbitral awards, with the consent of parties.76

73. See the Bailli Lecture, Developing commercial law through the courts: rebalancing the relationship between the courts and arbitration (2016). 74. See Ank Santens and Romain Zamour, “Dreaded Dearth of Precedent in the Wake of International Arbitration -​Could the Cause also Bring the Cure?” (2015) 7 Year Book of Arbitration & Mediation 73. 75. (1995) HCA 19. 76. See ICC, Note to Parties and Arbitral Tribunals on the Conduct of Arbitration under the ICC Rules of Arbitration, p. 42 (1 January 2019) (awards can be published within two years of their notification, but any time before publication a party can object to the same or require that parts of the awards be redacted);

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Such publication inter alia helps make the work of arbitral tribunal and arbitral institutions more visible.77 It also increases scrutiny of the outcome, strengthens the legitimacy of the arbitral system. It consolidates the faith in arbitration by showing parties that there is uniformity, certainty, and consistency in the application of rules.

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Finally, it addressed the criticism of the lack of development of legal precedents by making available the dictas arising from the arbitral tribunal’s reasoning set out in the arbitration awards.78 Ultimately, it contributes to the development of law by enabling and showing how precedents are applied.79

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The publication of arbitral awards may have economic benefits. It enhances efficiency by promoting quicker resolution of disputes involving the same facts or even of similar facts and legal issues.

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This increased predictability may make more parties more cautious before initiating arbitration proceedings and possibly encourage more settlements, as they would now know better, of what to expect.

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However, the current method of publication by arbitral institutions and the databases has limitations: (1) Redacted awards are infrequently published. It is not a widespread practice. Also, it is also not done in a systematic manner. It varies from institutions and jurisdictions.



(2) Only selected awards are published.



(3) Only relevant passages which are considered important are published.

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A method of systemic publication may be useful for transparency. However, it must be only implemented with the consent of the parties, the arbitral tribunal, and the arbitral institutions involved.

SIAC Rules, 2016, r. 32.12; LCIA Arbitration Rules, 2020, art. 30.3; ICDR Rules, art. 32.12; Swiss Rules of Arbitration, art. 44(3); VIAC Rules, art. 30(3). 77. Kimberley Chen Nobles, “Emerging Issues and Trends in International Arbitration” (2012) 43 California Western International LJ 77. 78. Alexis C Brown, “Presumption Meets Reality: An Exploration of the Confidentiality Obligation in International Commercial Arbitration” (2001) 16(4) American University Intl LR 969, p. 1018, available at https://​digitalcommons.wcl.american.edu/​cgi/​viewcontent.cgi?article=1244&context=auilr (accessed on 16 November 2020). 79. Gabrielle Kaufmann-​Kohler, “Arbitral Precedent: Dream, Necessity or Excuse? The 2006 Freshfields Lecture” (2006) 23(3) Arbitration International 357.

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If the parties agree to the publication of the award, it may be published in its original form. If the parties do not agree to the publication of the award, the award should be published in a sanitised form with confidential information redacted. This may be achieved by: (1) Anonymising names of parties by replacing their names with “X/​Y” or “Claimant/​ Defendant”80 by redacting all names and personal details. However, in some cases this cannot be done. By way of an example, when a big corporation is involved in a dispute that is likely to affect the interests of a large number of people it will not be possible to hide the identity of the parties. In fact, it would be in public interest to disclose such details. Hence, the identification of parties would depend upon the nature of the dispute and parties involved; and



(2) drafting the award in parts (i.e. facts and evidence, legal and procedural issues, and reasoning of tribunal) to allow readers to understand the reasoning, while preserving the confidentiality of parties.81

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There also exist several databases such as the ICC Court Bulletin, the Collection of ICC Arbitral Awards, the Yearbook Commercial Arbitration, Law Journal of the Stockholm Chamber of Commerce, Kluwer Law International Publications, ITA Body of Reports, CLOUT, and Global Arbitration Review in which summaries of the award, with information about the nature of the dispute, parties involved, and conclusions of the tribunal are published, without naming the parties.

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ICC has started publishing additional information about its arbitrations. For ICC arbitrations registered after 1 January 2016, unless otherwise agreed by the parties, the court publishes, on the ICC website, the names of arbitrators, their nationalities, roles within the arbitral tribunal, method of appointment, and whether arbitration is pending or closed.

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However, the reference number of arbitrations, names of parties, and names of counsel are not published.82 For arbitrations registered after 1 July 2019, the ICC also publishes the sector of industry involved and names of parties’ counsels on its website.

80. See Milan Chamber of Arbitration, “Guidelines for the Anonymous Publication of Arbitral Awards”, Article 2.4. 81. Joshua Karton, “A Conflict of Interests: Seeking a Way Forward on Publication of International Arbitral Awards” (2012) 28 Arbitration International 447. 82. ICC, Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration, p. 35 (2019).

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Separately, the UNCITRAL Rules on Transparency, which apply to investment arbitrations, may be a useful roadmap for increasing transparency in commercial arbitrations. The right balance needs to be found between the competing values of confidentiality and transparency. It may be preferable for mandated transparency reforms to be enacted as statutory provisions in national arbitration legislations as opposed to the arbitral rules of institutions.

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This may develop into a uniform approach since transparency provisions would then be applicable, irrespective of whether the arbitration is ad hoc or institutional, and may also be made applicable to third parties to arbitration.83

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It may be necessary to provide for exceptions to the implied duty of confidentiality as the number of commercial disputes whose subject-​matter might affect public interest increase.84 Further, there may be a need to develop enforcement mechanisms (which are not a part of many arbitration legislations) to ensure compliance with the confidentiality obligations.

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If the parties have incorporated a confidentiality clause in their agreement, in case of its breach, they can argue that the arbitration agreement is invalid under the law applicable to it.85

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Further, a party can seek a confidentiality order from the arbitral tribunal in case of a breach of confidentiality. For instance, the UNCITRAL Model Law in Article 17(2)(b) empowers the arbitral tribunal to issue orders that will prevent an abuse of the arbitral process. Similar powers are provided under the ICC Rules,86 SIAC Rules,87 and the SCC Rules.88

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Another remedy for the breach of confidentiality would be damages. The arbitral tribunal when allocating costs to the parties may also take into account a breach of confidentiality by one of the parties.89 It can rule on the burden of paying the arbitration costs upon the party who abused the arbitration proceedings by breaching their obligation of confidentiality.

83. See Elza Reymond-​Eniaeva, Towards a Uniform Approach to Confidentiality of International Commercial Arbitration (Springer 2019) 7 EYIEL Monographs, p. 212. 84. See Bernardao M. Cremades and Rodrigo Cortes, “The Principle of Confidentiality in Arbitration: A Necessary Crisis” (2013) 23(3) Journal of Arbitration Studies 25, p. 27 https://​www.koreascience.or.kr/​article/​ JAKO201330951777494.pdf (accessed on 16 November 2020). 85. See New York Convention, 1958, art. V(a). 86. See International Chambers of Commerce Rules, 2021, art. 22(3). 87. See Singapore International Arbitration Centre Rules 2016, r. 35. 88. See Swiss Private International Law Act, 2020, art. 183. 89. See International Chambers of Commerce Rules, 2017, art. 38, “In making decisions as to costs, the arbitral tribunal may take into account such circumstances as it considers relevant, including the extent to which each party has conducted the arbitration in an expeditious and cost-​effective manner”.

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In this manner, the right balance may be achieved between transparency and confidentiality which will cater to both needs of the interested parties in the dispute and the general public.

[5.9] DRAFTING ARBITRATION AGREEMENTS FOR CONFIDENITALITY

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Most legal systems recognise party autonomy regarding the confidentiality of arbitral proceedings. Parties should bear in mind the High Court of Australia’s judgment in Esso Australia Resources while concluding arbitration agreements.90

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If the parties are concerned about confidentiality, they can expressly agree on a duty of confidentiality in their arbitration agreement. Parties can tailor the confidentiality clause according to their needs.

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The International Bar Association’s Guidelines for Drafting International Arbitration Clauses recommend that parties address the issue of confidentiality in their arbitration agreement. They may have to decide whether the confidentiality of the proceedings is important to them and whether they should address nature and scope of the confidentiality obligation in the arbitration agreement.

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However, given the mandatory nature of Section 42A, it remains to be seen whether the mandate of confidentiality can be overridden by an agreement of the parties. That is because Section 42A does not begin with the expression “unless the parties agree otherwise”.

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Any confidentiality clause will only bind parties to the arbitration agreement because of the doctrine of privity of contract. It may not be enforceable against third parties such as witnesses or experts.

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The Handbook of ICC Arbitration proposes the following language to be included as part of an express agreement on confidentiality:

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“Unless the parties expressly agree in writing to the contrary, the parties undertake to keep confidential all awards and orders in the present arbitration, together with all materials in the proceedings created for the purpose of the arbitration and all other documents produced by any party in the proceedings, save to the sole extent that disclosure may be required of a party by a legal duty, to protect or pursue a legal right, or

90. See Hew R. Dundas, “Confidentiality in English Arbitration: The Final Word? Emmot v Michael Wilson & Partners Ltd” 74(4) (2008) International Journal of Arbitration Mediation and Dispute Management 458.

Chapter 5—​​​Privacy, Confidentiality and Transparency in Arbitration

131

to enforce or challenge an award in bona fide legal proceedings before a State Court or other judicial authority.”91 The extent of confidentiality may depend on the grounds relied upon when asking for disclosure. The recognised exceptions to the rule are: (1) where disclosure is made by express or implied consent of a party;



(2) where disclosure is made mandatory by law, such as a court order;



(3) where it is in the public interest or interest of justice to disclose documents; and



(4) where disclosure is necessary for the establishment or protection of an arbitrating party’s legal rights vis-​à-​vis a third party.

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Parties may benefit by including an enhanced confidentiality provision in their agreement, demarcating the extent and nature of confidentiality obligations to apply in any future arbitration.

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The purpose of such enhanced provisions is to keep the dispute and sensitive information protected. It is also to ensure that the information disclosed in the arbitration cannot be relied upon in other legal proceedings.

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Primarily, parties may have to consider whether the confidentiality clause applies to them, the arbitrators, witnesses, the evidence, the pleadings, the proceedings, the documents, or the award, and/​or the very existence of the arbitration be kept confidential.

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The secondary question is whether such information may nevertheless be made public in specified circumstances in trying to protect the legitimate interests of an arbitrating party.

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Such circumstances may include, enforcement proceedings, court challenges in compliance with the law and regulations, disclosure requirements by the Stock Exchange regulations, or satisfying insurers, auditors, and other parties. With such an arbitration agreement in place, parties may request the arbitral tribunal to rule on an issue of confidentiality in the course of the arbitration, such as in respect to a particular document or trade practice adduced in evidence. Parties may also raise issues of confidentiality following the arbitration and initiate further arbitration or litigation.

91. Thomas Webster and Michael Buhler, Handbook on ICC Arbitration: Commentary, Precedents, Materials (3rd edn, Sweet and Maxwell 2014), p. 359.

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The arbitration agreement may also potentially address what sanctions should follow in the event of a breach of the confidentiality provision, since Section 42A of the Arbitration Act does not mention any consequence for a parties’ failure to comply with the confidentiality obligation.

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Another way to ensure the confidentiality of the proceedings may be by providing explicit instructions concerning the treatment of either all information or specific information received during and after arbitration.

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Such stipulations or orders may be provided for by agreement of the parties or at request of one party and direction of the arbitration. A party, who fails to comply with a confidentiality stipulation, may be held liable for breach of contract damages, or would be subject to an order of specific performance.92

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[5.10] CONCLUSION

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The privacy and confidentiality of arbitral proceedings continues to remains a key attraction to parties while opting for arbitration, especially in high-​value commercial disputes. The arbitral tribunal, the parties, and other related participants are obliged to maintain confidentiality. The efficacy of an arbitration would be defeated if the proceedings were made public. The exception is where the law mandates disclosure.

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In India, Section 42A of the Arbitration Act clarifies the issue of confidentiality. It prescribes the requirement for confidentiality of arbitrations in India, beyond the earlier implied common law duty of confidentiality. The Indian reforms on privacy, confidentiality, and transparency have taken a more nuanced approach.

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The exceptions to the rule of confidentiality include situations where, the parties, by implied or express consent, have excluded confidentiality, or whereby order of the court directs that such confidentiality shall be excepted, or where such disclosure is required in public interest. There is increasing pressure to make awards available to the public for reasons of transparency and development of case law.

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There seems to be a practical problem in implementing Section 42A of the Arbitration Act. The fact is that confidentiality is a non-​obstante clause. Arbitral awards are permitted to be disclosed for enforcement. There is no scope for voluntarily disclosure by parties of matters relating to the arbitral proceedings and award.

92. Baldwin, “Protecting Confidentiality and Proprietary Commercial Information in International Arbitration” (1996) 31 Texas International Law Journal 451, p. 458.

Chapter 6 TYPES OF ARBITRATIONS [6.1] INTRODUCTION......................................................................................................................... 133 [6.2] AD HOC ARBITRATION............................................................................................................. 134

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[6.3] INSTITUTIONAL ARBITRATION............................................................................................ 137 [6.4] STATUTORY ARBITRATION..................................................................................................... 141 [6.5] INVESTOR STATE ARBITRATION........................................................................................... 145 [6.6] TWO-​TIER AND MULTI-​TIER ARBITRATION CLAUSES................................................. 147 [6.8] [6.9]

COURT-​DIRECTED ARBITRATION........................................................................................ 149 “LOOK-​SNIFF” ARBITRATION................................................................................................. 150

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[6.7]

“FLIP-​FLOP” ARBITRATION..................................................................................................... 151

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[6.10] DOCUMENTS-​ONLY ARBITRATION..................................................................................... 151 [6.11] CHESS CLOCK ARBITRATION................................................................................................. 152

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[6.12] ICANN DOMAIN NAME ARBITRATION............................................................................... 153 [6.13] SPORTS ARBITRATION.............................................................................................................. 154

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[6.14] MARITIME ARBITRATION....................................................................................................... 154 [6.15] DOMESTIC AND INTERNATIONAL ARBITRATIONS....................................................... 156

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[6.16] RECENT TRENDS AND DEVELOPMENTS............................................................................ 158

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[6.17] CONCLUSION............................................................................................................................... 159

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[6.1] INTRODUCTION

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Parties negotiating arbitration agreement for the resolution of disputes or differences between them may choose from different kinds of arbitration.

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Some branches of trade or industry have established arbitration procedures within their professional bodies or chambers of commerce.1 Arbitration gives the parties wide latitude to agree upon whichever rules of procedure they deem appropriate. There are structural differences between the different types of arbitrations. Such differences are reflected in the manner by which cases are generally presented by the parties and apprehended by the arbitral tribunal.

1. For example: Indian Chamber of Commerce, Stockholm Chamber of Commerce, International Chamber of Commerce, etc.

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However, historically, the type of arbitration chosen by the parties was not so much a manifestation of their preference, but the result of an uninformed choice. However, this approach has changed over the years as parties have started to avail themselves of the various types of arbitration.

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There are intrinsic merits in each type of arbitration. Parties could agree to a more appropriate method. More often than not, that option evaporates once a dispute crystallises. The chosen method normally prevails by default. The arbitration decision emanating from the chosen method can be either binding or non-​binding. If it is binding, the award may be enforceable as a judgment of the court.

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[6.2]  AD HOC ARBITRATION

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Ad hoc arbitration refers to arbitration without the involvement of an arbitral institution in administrative matters. Ad hoc arbitration agreements often select an arbitrator or the arbitral tribunal to resolve the dispute without institutional supervision.2

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The parties and the arbitrator will conduct the arbitration according to a bespoke procedure agreed by the parties. In the absence of an agreement on the procedure, the procedure adopted is normally outlined by the arbitrator at a preliminary meeting, once the arbitration has begun.

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However, that may not be the only way to proceed. There are many sets of arbitration rules that are available to parties contemplating arbitration, including where appropriate, the rules of their trade associations. Alternatively, parties could also opt for the UNCITRAL Arbitration Rules.3

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The expression “ad hoc”, used in “ad hoc arbitration” and “ad hoc submission” is often wrongly used interchangeably. An ad hoc agreement or ad hoc submission is sometimes referred to submit an existing dispute to arbitration, as opposed to arbitration agreements that specify reference of future disputes to arbitration. This is different from “ad hoc arbitration” which is conducted without an arbitral institution administering it or without the rules of any particular arbitral institution.4

2. Gary B. Born, International Arbitration: Law and Practice, Vol. 1 (3rd edn, Wolters Kluwer 2021), p. 191. 3. United Nations Commission on International Trade Law, Arbitration Rules, 1976. These were amended in 2010 and 2013. The amendments brought about in the 2013 rules provide for transparency in treaty-​based Investor-​State Arbitration. In case the parties prefer a particular version of the UNCITRAL arbitration rules, the parties must specify that version of the UNCITRAL Arbitration Rules as being applicable to resolve the disputes. 4. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 2.006.

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“Ad hoc arbitration” is, arbitration agreed to and arranged by the parties themselves without assistance from, or recourse to, an arbitral institution. An ad hoc arbitration may be stipulated either in the “submission agreement” entered into after a dispute has already arisen or in an arbitration clause in an underlying contract in contemplation of future disputes.

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It broadly sets out the procedure for the constitution of an arbitral tribunal, the seat of arbitration, the governing law, and procedural or arbitration rules.5

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Although the primary distinguishing feature of ad hoc arbitration is that it is not administered by an arbitral institution, it does not entirely exclude the role of arbitral institutions. Parties retain the option of designating an appointing authority. In such a case, it will fall before the chosen institution to appoint the necessary arbitrators.

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An ad hoc arbitration may take place as per the rules of an arbitral institution, with the agreement of parties. It is clarified that mere choice of rules of an arbitral institution, does not take away the gloss of an ad hoc arbitration.

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It is open to the parties to agree to adopt the rules framed by a particular arbitral institution without submitting its disputes to such institution. Further, “Ad hoc arbitration” may encompass domestic or international commercial arbitration.6

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The advantage of ad hoc arbitration is that it may be designed according to the requirements of the parties. This is particularly the case where the stakes are large or where a State or Government agency is involved. The parties in an ad hoc arbitration are in a position to devise a procedure that is fair to both sides by devising suitable arbitration rules.

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The disadvantage of an ad hoc arbitration is that for full effectiveness, it depends upon the spirit of cooperation between the parties and their lawyers, backed up by an adequate legal system in the place of arbitration. This may not necessarily exist.

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The arbitral proceedings can easily be delayed7 by the refusal of either party to appoint an arbitrator or raising a challenge to either the jurisdiction or impartiality of

5. The UNCITRAL Arbitration Rules are the most commonly used arbitration rules in ad hoc arbitrations. In practice, it is also possible for parties to agree on the application of the rules of any other arbitral institution, without having the arbitral institution actually administer and oversee the proceedings. 6. See O.P. Malhotra, The Law and Practice of Arbitration and Conciliation (1st edn, LexisNexis 2002), pp. 75–​76. 7. See, for instance, Ariba India Private Ltd v M/​S Ispat Industries Ltd 2011 SCC OnLine Del 2653, the parties were constrained to seek court assistance since the arbitration had been delayed by the respondent and the respondent’s appointee arbitrator, to the extent that after four and a half years only one witness had been examined in the matter. The mandate of the arbitral tribunal was terminated in terms of Section 14 of the Arbitration Act, and in the interest of justice a sole arbitrator was appointed by the High Court of Delhi.

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the arbitral tribunal. In such a situation, the provisions of the arbitration law become crucial in terms of offering the necessary support.8 Ad hoc arbitrations can also suffer from a perceived lack of credibility. In certain jurisdictions such as China, ad hoc arbitrations with a Chinese seat are generally not recognised by the lex arbitri. As such, awards resulting from an ad hoc arbitration seated in China will not be enforced in China.9

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Ad hoc arbitration was the preferred form of arbitration in India at least until the last decade.10 However, ad hoc arbitration resulted in prolonged proceedings; perhaps contributed to by many participants and the lack of accountability, poor institutional support, and systemic structural inertia.

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The Government of India took several steps to encourage parties to opt for institutional arbitration. It recognised the need for a more organised means of resolving disputes. The ambition was to secure India’s place amongst the world’s arbitration hubs.11 The B.N. Srikrishna Committee Report noted that:

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“[t]he promotion of institutional arbitration in India by strengthening Indian arbitral institutions has also been identified as being critical to encouraging dispute resolution through arbitrations. Though various arbitral institutions have been set up in India, particularly in the last five years, they have not been preferred by the parties, who have leaned in favour of ad hoc arbitration or arbitrations administered by arbitral institutions located abroad…”.12

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This Report also specifically recorded that the preference for ad hoc arbitrations was not limited to arbitrations where the amounts in dispute are small. The construction sector predominantly has its disputes resolved through ad hoc arbitration.13

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8. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 1.145. 9. A. Hughes QC, Arbitrating in China, Azmi & Associates Litigation Bulletin, 3/​2013. According to Chinese Arbitration Laws, the parties are required to appoint an arbitral institution in their arbitration agreement. However, in fulfilment of China’s obligations under the New York Convention, the Chinese Supreme Court has stated that a foreign ad hoc arbitral award will be enforced. 10. A 2013 survey revealed the strong party preference for ad hoc arbitration, “Corporate Attitudes & Practices towards Arbitration in India”, PricewaterhouseCoopers (2013). This survey was referred to in the Srikrishna Committee Report at p. 14. 11. The Srikrishna Committee Report, Chapter: Comments and suggestions received on the Working paper at pp. 34 and 80. 12. See the Srikrishna Committee Report, Executive Summary at p. 3. 13. Ibid. See p. 15.

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[6.3] INSTITUTIONAL ARBITRATION

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Institutional arbitrations are administered by specialised arbitral institutions. Several organisations provide institutional arbitration services for international users, sometimes tailored to particular commercial or other needs.14 The parties may stipulate, in the arbitration agreement, to refer a dispute between them for its resolution to a particular institution. Examples of such arbitration institutions are the Mumbai Centre for International Arbitration (“MCIA”), Singapore International Arbitration Centre (“SIAC”), Hong Kong International Arbitration Centre (“HKIAC”), and Asian International Arbitration Centre (“AIAC”).

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Other leading international institutions are the International Chamber of Commerce (“ICC”), London Court of International Arbitration (“LCIA”), International Centre for Settlement of Investment Disputes (“ICSID”), China International Economic and Trade Arbitration Commission (“CIETAC”), American Arbitration Association (“AAA”), Stockholm Chamber of Commerce (“SCC”), and the World Intellectual Property Organisation (“WIPO”).

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In India, there are currently over 35 arbitral institutions including domestic arbitral institutions, arbitration facilities provided by various public-​sector undertakings, trade and merchant associations, and city-​specific chambers of commerce, and industry and arbitration facilities provided by various public sector undertakings.15

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The Delhi International Arbitration Centre (“DIAC”) was set up by the High Court of Delhi in 2009. The constitution of DIAC, the powers, functions, and duties of the Arbitration Centre, its Governing Board, Committees, and Officers are specified in the Delhi High Court Arbitration Centre (Internal Management) Rules.16

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The panel of arbitrators of DIAC consists of eminent legal personalities, Retired Judges of High Courts and the Supreme Court of India, Senior Advocates, Engineers, Architects, etc. The Centre has its own DIAC (Arbitration Proceedings) 2018, DIAC (Fee) Rules 2018, as well as a summary procedure.

14. Gary B. Born, International Arbitration: Law and Practice, Vol. 1 (3rd edn, Wolters Kluwer 2021), p. 189. 15. Working Paper on Institutional Arbitration Reforms in India, Indian Council of Arbitration, p. 8, available at http://​www.icaindia.co.in/​HLC-​Working-​Paper-​on-​Institutional-​Arbitration-​Reforms.pdf (accessed on 29 January 2021). See also the Srikrishna Committee Report at p. 13. 16. Delhi High Court Arbitration Centre (Internal Management) Rules, 2012.

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The MCIA17 is a joint initiative between domestic and international business communities and the Government of Maharashtra. It is a private, not-​for-​profit charitable entity registered in India in 2016. The main objective of the Centre is to bring the best international ADR practices with reduced costs. The MCIA Council comprises leading arbitration practitioners from all over the world.

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There are various other arbitral institutions successfully functioning in India including the Indian Council of Arbitration (“ICA”),18 International Centre for Alternate Dispute Resolution (“ICADR”),19 Nani Palkhiwala Arbitration Centre (“NPAC”),20 etc.

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The promotion of institutional arbitration has become important for enforcing a pro-​arbitration regime and in making India an arbitration-​friendly jurisdiction. The Srikrishna Committee Report discussed various challenges to the growth of institutional arbitration in India including management and administrative issues, perceptions of arbitrators, issues related to resources, and a lack of statutory backing.21

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The Srikrishna Committee recommended that institutional arbitration must be given statutory backing. It drafts an amendment to Section 11 of the Arbitration Act to provide for arbitral institutions for the appointment of arbitrators and not High Courts or the Supreme Court of India to appoint arbitrators.22

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It also recommended the setting up of an autonomous body called the “Arbitration Promotion Council of India” (“APCI”) with representation from selected stakeholders to review and supervise the workings of arbitral institutions.23

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The 2019 Amendment brought about the aforementioned recommendations into effect by making changes in the Arbitration Act.24 Part IA was inserted into the

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17. MCIA is the first arbitral institution in India to receive a request under Section 11 of the Arbitration Act to appoint an arbitral tribunal by the Supreme Court of India in a dispute between Sun Pharma and Falma Organics. See Chapter 21. 18. ICA was established jointly by the Indian Government and the FIICI. It has signed cooperation agreements with 46 major arbitration centres around the world. It is providing arbitration services in the area of international commercial and maritime arbitration. 19. ICADR is an autonomous body working under the aegis of the Ministry of Law and Justice, Government of India. It is headquartered in New Delhi and has regional centres in Hyderabad and Bengaluru. 20. NPAC, situated at Chennai and Delhi, is modelled on the lines of the International Council of Arbitration set up by the International Chamber of Commerce, Paris. 21. Srikrishna Committee Report at pp. 17–​29. 22. Ibid, p. 75. 23. Ibid, p. 77. 24. However, there are principle differences in the recommendation made in the Srikrishna Committee Report and the manner in which the recommendation has been finally adopted in the 2019 Amendment. For instance, the constitution of the ACI in the 2019 Amendment is not strictly in line with the recommendation contained in the Srikrishna Committee Report, available at https://​legalaffairs.gov.in/​sites/​default/​files/​ Report-​HLC.pdf (accessed on 29 January 2021).

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Arbitration Act, empowering the Central government to establish a council called the “Arbitration Council of India”25 to promote and encourage arbitration in India and other ADR mechanisms;26 and perform different functions including framing of policies for grading of arbitral institutions, recognition of institutes providing accreditation,27 etc.

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In the case of international commercial arbitrations, the Supreme Court of India has been given the power to designate arbitral institutions, graded by the Arbitration Council of India, for appointment of the arbitrators.28 In the case of domestic arbitration, the High Court has been given the same power.

Pros and Cons of Institutional Arbitrations

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The institutions operating in various fields of arbitration undertake to supervise or conduct the arbitration as per their rules. Though institutional arbitration may be more expensive, they provide a procedural framework, specialised expertise, and services.

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By and large, the rules of these institutions follow a similar pattern. However, they are expressly formulated for arbitrations that are to be administered by the concerned institution.

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The parties under an institutional arbitration have available to them a well-​tried and tested set of arbitral rules. The arbitration rules provide for the various factual situations which may arise in arbitration. The institutions have panels of experienced arbitrators specialising in various areas such as construction, maritime, contract, trade, and commodity.29

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Most institutions such as the MCIA, SIAC, and ICC also scrutinise draft awards. This is a clear advantage. There is a mechanism in the rules to challenge and if necessary, remove arbitrators.

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The disadvantage of institutional arbitration is that it can be less flexible than ad hoc arbitration.30 Institutional arbitration offers the advantages of providing a clear set of arbitration rules and timelines for the conduct of an arbitration, support from trained staff who administer various stages of the arbitration proceedings, a panel of

25. 26. 27. 28. 29.

Arbitration and Conciliation Act, 1996, s. 43(A). Arbitration and Conciliation Act, 1996, s. 43(D)(1). Arbitration and Conciliation Act, 1996, s. 43(D)(2). Arbitration and Conciliation (Amendment) Act, 2019, s. 3(i). See O.P. Malhotra, The Law and Practice of Arbitration and Conciliation (2nd edn, Butterworths 2006), pp. 117–​118. 30. Srikrishna Committee Report at p.15.

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arbitrators to choose from to decide the dispute, and in some cases, supervision in the form of scrutiny of awards.31 On the other hand, ad hoc arbitration gives parties greater control over the arbitration process, the flexibility to decide the procedure, and cost-​effectiveness where administration charges levied by an arbitral institution constitute a significant portion of the overall costs.32

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Institutional arbitrations arise for the most part, out of an institutional arbitration clause in agreements between the parties. For instance, the clause recommended by the Delhi International Arbitration Centre (“DIAC”), sets out:

The MCIA Model clause sets out the following:

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“Whereas certain disputes have arisen and are subsisting between the aforesaid parties in relation to… And Whereas the Parties agree to submit their dispute(s) for being resolved in accordance with the Rules of Delhi International Arbitration Centre.”33

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“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 in accordance with the Arbitration Rules of the Mumbai Centre for International Arbitration (‘MCIA Rules’), which rules are deemed to be incorporated by reference in this clause…”.

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Redfern and Hunter state that such a clause is useful. Even if, in the future, one party starts dragging its feet in the proceeding, the arbitration can nevertheless be commenced and proceeded with owing to the set of rules that have been specified. The rules will regulate the way in which the arbitral tribunal is to be appointed, the arbitration is to be administered and conducted.34

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Institutional arbitration rules are normally set out in a rule booklet as issued by the arbitration institution. They are also readily downloadable from the institution websites. Parties who agree to submit their dispute to arbitration in accordance with those rules effectively incorporate those rules into the arbitration agreement. The main perceived disadvantage of institutional arbitration is the cost, as the institution will charge an administrative fee on top of the fees payable to the arbitral

31. Sundra Rajoo, “Institutional and Ad hoc Arbitrations: Advantages and Disadvantages”, The Law Review (2010). 32. Ibid. 33. Model Arbitration Agreement, Delhi International Arbitration Centre. 34. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 1.148.

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tribunal. The institutional fees for arbitrations conducted under some institutions can be expensive. They have to be paid up-​front before the arbitral tribunal is constituted and allowed to commence its work.

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Practically, the bulk of the cost is the legal fees of counsel and other expenses associated with legal representation. It is said to be about 83 per cent of arbitration costs.35 As such, the institutional fees, as well as the arbitrator(s) fees, comprise of only 17 per cent of the total arbitration costs. This must be weighed against the potential to delay and derail ad hoc arbitration proceedings, which may substantially inflate the cost of arbitration by keeping the proceeding ongoing for a long period.

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[6.4] STATUTORY ARBITRATION

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A well-​staffed and efficient institution is likely to make the arbitration process more streamlined and reduce the scope for argument and delay between the parties.

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The reference to arbitration arises from the agreement of the parties. This is a fundamental characteristic that makes arbitration different from litigation. However, the dispute which may be the subject of an arbitration agreement need not necessarily arise out of a contract. They may also arise out of statutory provisions.

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A statutory arbitration is one referred from legislation instead of the parties’ arbitration agreement. A reference can be made under the provisions of an act. There are many Acts of Parliament that provide that any dispute about their provisions shall be settled by arbitration.36

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It functions as a form of compulsory arbitration customised to the needs of public policy doctrine. Mandatory arbitration has sometimes been used as an alternative term for statutory arbitration.37

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Statutory arbitration is used as a means of compromising the interests of public policy and those of the proponents of larger arbitrability. Statutes as legal imperatives form the basis of all statutory arbitration. It arises where the reference to arbitration arises from an Act independent of the Arbitration Act. The statutory arbitration procedure is intended to resolve the dispute using arbitration. A statutory procedure without arbitral elements cannot be considered

35. See Chapter 42. 36. Companies (Mediation and Conciliation) Rules 2016 were notified by government laying down procedure for disposal of disputes during the pendency of proceedings before the government, NCLT, or NCLAT. 37. Brekoulakis, Stavros L., Mistelis, Loukas A. 2009. Arbitrability: International and Comparative Perspectives. Alphen aan den Rijn: Kluwer Law International. Kluwer Arbitration e-​book.

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statutory arbitration, but rather a dispute resolution mechanism of its own. Statutory arbitrations differ from conventional arbitration by their own procedural rules and pre-​conditions.

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There is no need for an arbitration agreement as the reference to arbitration by the statute itself under the Arbitration Act is considered as an arbitration agreement.38 The court has no jurisdiction to try a dispute which is to be settled through statutory arbitration.

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When parties’ selected arbitrators make awards on disputes, such awards can never be regarded as those made by the arbitrators in exercise of the judicial power conferred upon them. However, when special arbitration tribunals constituted under a legislative enactment make reasoned awards, such awards are regarded as those made in exercise of the judicial power under legislative enactment.

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Over 25 Central legislations provide for a particular class of disputes or differences to be referred to arbitration including Section 43(l) of the Cooperative Societies Act, 1912,39 Section 7(b) of the Telegraph Act 1885,40 Chapter VI, Sections 29–​39 of the Defence of India Act 1962,41 Section 43(c) of the Indian Trusts Act 1882,42 Section 158 of the Electricity Act 2003,43 Section 23 of the Land Acquisition Act 1894,44 and Section 18 of the Micro, Small and Medium Enterprises Development Act, 2006.45 Various State legislations also provide for arbitration as a method of dispute resolution.

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Further, various stock exchanges including the National Stock Exchange (NSE),46 Bombay Stock Exchange (BSE),47 as well as the Securities and Exchange Board of India48 have formulated by-​laws for investor protection disputes to be referred to arbitration.

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Government contracts generally provide for compulsory arbitration of disputes. Normally a senior government official will be appointed to preside and decide such disputes. It is usual for public sector undertakings to follow such a procedure.

Arbitration Act, s. 2(4). Act No. 2 of 1912. Act No. 12 of 1885. Act No. 51 of 1962. Act No. 2 of 1882. Act No. 36 of 2003. Act No. 1 of 1894. Act No. 27 of 2006. By-​laws, National Stock Exchange of India Limited. Arbitration Mechanism as embodied in the Rules, By-​laws and Regulations of BSE, and duly approved by the Government of India & SEBI under the Securities Contracts (Regulation) Act, 1956. 48. SEBI Model By-​laws, 2003, Chapter 15.

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Earlier, the Supreme Court of India had directed the setting up of the Government of India’s Scheme to settle disputes between government departments and public enterprises. A standing committee of senior officers is required to examine the dispute to achieve an amicable settlement. No litigation can be commenced without clearance from this standing committee. The government departments involved in specific cases are also represented on the committee.49

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There are arbitrators empanelled by the Government of India to resolve commercial disputes between public sector undertakings and government departments. The resulting award is binding on the parties to the dispute. An aggrieved party may refer the award to the Secretary, Minister of Law, Justice and Company Affairs, Government of Indian to set aside or revise it. The decision of the Secretary is binding on the parties.

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Government Contracts generally provide for compulsory arbitration in respect of disputes between government entities and contractors. Further, there are special laws like M.P. Madhyastham Adhikaran Adhiniyam, 1983 which provide for statutory arbitration even in the absence of an arbitration agreement, in the case of a works contract.50

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Applicability of the Arbitration Act

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The procedure for a statutory arbitration will be derived from the statute giving rise to that particular arbitration,51 or from the default procedures of the Arbitration Act. The issue that normally arises is the extent to which the Arbitration Act applies to statutory arbitration, either generally or specifically.

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When such a situation arises, the arbitral tribunal constituted by statute has jurisdiction over such disputes.52 The Arbitration Act specifies that Part I (except Sections 40(1), 41, 43) shall apply to all arbitrations under other enactments so far as the provisions of Part I are not inconsistent with the procedure established under the enactment.53

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If however, the provisions of the statutory Act or any rules made under that Act are inconsistent with the provisions of Part I of the Arbitration Act, that Statutory Act will prevail over the Arbitration Act.

49. Mauro Rubino-​Sammartano, International Arbitration Law and Practice (3rd edn, Juris Publishing 2014). 50. The provisions provide for establishment of an Arbitration Tribunal to resolve disputes arising out of any works contract, having a valuation of more than Rs.50,000, between a private party and the State. 51. Indian Telegraph Act, s 7-​B(2) excludes the operation of s. 8 by the reason that such matters should be submitted for arbitration to a specified person. 52. See Imperial Metal Industries (Kynoch) Ltd v Amalgamated Union of Engineering Workers [1979] 1 All ER 847. 53. Arbitration and Conciliation Act, 1996, s. 2(4).

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Court Supervision in Statutory Arbitration Only the arbitrator, as appointed under a statute, can decide on the dispute. In such circumstances, the court cannot invoke its authority on the ground that the arbitrator has admitted inadmissible evidence.54

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A statutory provision as to the operation of a sub-​section does not deprive the court of jurisdiction to determine questions as to the applicability of the sub-​section as distinct from its operations.55 Further, a writ petition is maintainable in a statutory arbitration, where the challenge is not just to an order of the tribunal, but to the very rules under which it acquires jurisdiction.56

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The High Court of Gujarat in ONGC Petro Additions Ltd. v State of Gujarat57 dismissed the writ petition and held that any provisions inconsistent with provisions made under Micro, Small and Medium Enterprises Act, 2006 (“ the MSME Act”) the special statute would prevail over it.

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Likewise, a statutory arbitrator is authorised to arbitrate under the statute. The statutory arbitrator’s powers are circumscribed by the statute. However, it is implied that the statutory arbitrator has the power to do all things as are reasonably incidental and proper to decide and resolve the dispute.

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If the statutory arbitrator is discharging a public function, the court may interfere with its award by issuing prerogative writs.58 But such prerogative writs cannot be issued to an arbitrator acting under an arbitration agreement.59 Only statutory tribunals are amenable to the supervisory jurisdiction of High Courts.60 The court may issue a writ of mandamus to a public authority to appoint an arbitrator if there is a clear legal

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54. London and North Western Railway Company v Donellan [1898] 2 QB 7, CA (Eng); Norwich Corporation v Norwich Electric Tramways Co [1906] 2 KB 119, CA (Eng); The Midland Railway Company v Loseby & Carnley [1899] AC 133, HL; Joseph Crosfield & Sons Ltd v Manchester Ship Canal Company [1905] AC 421, HL; Great Western Railway Company v Phillips & Co Limited [1908] AC 101, HL. 55. Goldsack v Shore [1950] 1 KB 708 at p. 712. 56. Dowell Leasing & Finance Ltd v Radheshyam B Khandelwal (2008) 1 Arb LR 512. See also SREI Infrastructure Finance Limited v Tuff Drilling Private Limited (2018) 22 SCC 470, in which it has been held that an arbitral tribunal exercises quasi-​judicial powers and since there is no distinction between an arbitral tribunal on the one hand, and a statutory tribunal constituted under a statute or the Constitution of India, the courts have powers of procedural review. However, the issue of whether a court can exercise supervisory powers over an arbitral tribunal under Article 227 of the Constitution is not clear. 57. Special Civil Petition No. 7858 of 2020. 58. Balkishen Gulzari Lal v Pannal Lal Sud AIR 1973 Del 108; Om Prakash Satish Kumar Thapar v Union of India (1996-​2) 113 Pun LR 42. 59. Rukmanbai Gupta v Collector, Jabalpur (1980) 4 SCC 556; M. Moideen Kutty v Divisional Forest Officer Nilambar 1988 (2) Arb LR 37. 60. Government of M.P. v P.V. Vidyasagar (2004) 1 Arb LR 485.

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duty upon the authority to appoint one.61 The proper course is to apply for a writ of mandamus before bringing the action.62

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One disadvantage of statutory arbitration may be the difficulty of enforcing such awards internationally. The reason being that arbitration agreements are not part of statutory arbitration. The New York Convention, 1958 provides for the enforcement of international arbitration awards in its signatory States. However, the effects of the convention are only limited to arbitrations based on agreements.63

[6.5] INVESTOR STATE ARBITRATION

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Investment State arbitration has been described as “arbitration without privity”.64 The State’s consent to arbitrate may be found in the provisions of a bilateral or multilateral treaty. The investor’s consent is deemed to be provided when it institutes arbitration proceedings pursuant to the treaty. There is no direct arbitration agreement between the State and an investor who institutes arbitration against that State.

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Post the Liberalisation, Privatisation, and Globalisation reforms in 1991, India began concluding Bilateral Investment Treaties (“BITs”) to further its objective of globalisation. India signed its first BIT with the United Kingdom, which served as a template for the 2003 Model BIT.

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The 2003 Model BIT formed the base for conducting subsequent BIT negotiations between India and other countries.65 India signed 83 treaties during the period of 1994–​2015.66

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India’s BITs can be divided into three periods –​Pre-​White Industries, White Industries, and Post-​White Industries.

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Pre-​White Industries

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Between 1994 and 2010, India was only involved in one dispute which did not ultimately result in a treaty award. In the early 1990s, Dabhol Power Company (“DPC”) was formed as a joint venture for the generation of electrical power in Maharashtra. DPC

61. Norton v Counties Conservative Permanent Benefit Building Society [1895] 1 QB 246. 62. See Ace Pipeline Contracts (P) Ltd. v Bharat Petroleum Corporation Ltd. (2007) 5 SCC 304. 63. Tatu Johansson, Statutory Arbitration in the Context of Arbitrability –​New Possibilities for an Old Concept? M.L. Thesis, May 2019, University of Helsinki at p. 60. 64. J Paulsson, “Arbitration without Privity” (1995) 10(2) ICSID Review Foreign Investment Law Journal 232. 65. 260th Law Commission Report at p. 1. 66. Ibid. See Chapter 51.

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had entered a contract with Maharashtra State Electricity Board (“MSEB”). Arbitration proceedings were initiated by DPC.

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However, the Indian courts had issued an anti-​arbitration injunction.67 DPC then initiated treaty arbitration against India under the India-​Mauritius BIT for claims arising out of an alleged reversal in the energy policy of the local government of Maharashtra. Eventually, the parties settled the dispute.

White Industries

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White Industries Australia Ltd. (“WIAL”) had commenced arbitration proceedings against Coal India Ltd. (“Coal India”) under ICC Arbitration Rules (“ICC Arbitration”). The arbitral tribunal had awarded WIAL USD4.08 Million in the ICC Arbitration.

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Coal India applied in 2002, to the High Court of Calcutta to set aside the award passed in the ICC Arbitration. Separately, WIAL had applied to the High Court of Delhi for the execution of that award. Both the proceedings experienced significant delays. Finally, the High Court of Delhi granted a stay on the execution of the award. WIAL appealed against this decision before the Supreme Court of India, where the proceedings had remained pending for nine years.

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Aggrieved by the fact that it was unable to enforce the award against Coal India for over ten years, WIAL then invoked arbitration proceedings against India under the India-​Australia BIT. The treaty arbitration was commenced on the ground that India had failed as the Host State to provide WIAL, the investor, an “effective means of asserting claims” as guaranteed in the India-​Australia BIT. The Tribunal constituted under the BIT, finally awarded WIAL USD4.08 million along with interests and other costs in 2011.68

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Post-​White Industries

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The ramifications of the investment arbitration award in White Industries resulted in the reaction by the Indian Government who then undertook a review of the 2003 Model BIT. India then terminated several BITs.69

67. Union of India v Dabhol Power Company IA. No. 6663/​2003 in Suit No. 1268/​2003. 68. White Industries Australia Limited v The Republic of India, Final Award, 30 November 2011, available at https://​www.italaw.com/​sites/​default/​files/​case-​documents/​ita0906.pdf (accessed on 29 January 2021). 69. See the status of Bilateral Investment Treaties (BITs) /​Agreements concluded by India, Department of Economic Affairs, Ministry of Finance, available at dea.gov.in.

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The Law Commission through its 260th Report70 recommended various changes to the Model BIT, as a result of which the 2016 Model BIT was formulated.71 Investment treaty arbitrations are discussed in detail in Chapter 50.

[6.6] TWO-​TIER AND MULTI-​TIER ARBITRATION CLAUSES

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A two-​tier arbitration process provides the availability of an internal appeal within the arbitral process.72 This reflects a commercial desire to maintain control over the arbitral process by ensuring that errors are corrected by the second stage review, so as to reduce the supervisory jurisdiction of domestic courts.73

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The concept of two-​tier or appellate arbitration has gained ground in international arbitration institutions.74 Some institutions75 have incorporated an internal appeal in their rules, to correct errors of fact and law, which may have occurred in the award rendered in the first instance.76

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In India, even though the Arbitration Act does not refer to a two-​tier arbitration structure, nothing precludes the parties from entering into an agreement which provides for a two-​tier arbitration clause.

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The Supreme Court of India in Centrotrade Mineral & Metals Inc. v Hindustan Copper Ltd.77 adjudicated on the validity of a two-​tier arbitration clause. The arbitration agreement in the present case contained a hybrid clause, which provided that all disputes or differences arising between the parties shall be settled in the first instance by arbitration in India through a panel constituted by the Indian Council of Arbitration.78 The arbitration agreement also contained an appeal under the ICC Rules in London resulting in an international commercial arbitration and therefore a foreign award.79 The Supreme Court of India upheld the validity of this arbitration agreement.80

260th Law Commission Report at p. 6. For a detailed discussion, refer to Chapter 50. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 270. Ibid, p. 270. Ibid. Rules of the European Court of Arbitration, art. 28; Optional Appellate Arbitration Rules of the American Arbitration Association. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 270. (2017) 2 SCC 228. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 272. Ibid. Ibid.

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70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80.

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Parties may also decide that, prior to submitting any dispute to arbitration, the parties must attempt to arrive at an amicable settlement of the matter through direct negotiations or procedures such as mediation.81 Redfern and Hunter state that:

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“The advantage of such clauses is that they require the parties to explore fully the possibility of amicable settlement prior to the launch of often lengthy, expensive, and disruptive arbitral proceedings. The disadvantage is that if amicable settlement is possible, the parties are likely to explore the possibility in any event at the time that the dispute arises, and if it is not, the pre-​arbitral tiers simply delay and obstruct the launch of determinative proceedings. Views therefore vary as to the merits of such clauses, although there tends to be general agreement on at least one aspect: if an arbitration clause is going to begin by requiring amicable negotiations between the parties, it should require that such discussions necessarily involve members of senior management who have not been personally implicated in the underlying dispute.”82

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The SIAC and the Singapore International Mediation Centre (“SIMC”) have formalised their very own SIAC-​SIMC Arb-​Med-​Arb Protocol (“AMA Protocol”) to handle disputes in accordance with an “Arb-​Med-​Arb” clause.83

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The SIAC and SIMC have also provided a sample “Arb-​Med-​Arb” clause, which are subject to change depending on the agreement of parties:

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“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. The Tribunal shall consist of [Three] 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 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

81. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, 2015), p. 100, para. 2.88. 82. Ibid, p. 101, para. 2.89. 83. Sharon Lin and Daniel Cheong, Arb-​Med-​Arb: Connecting the Dots between Arbitration and Mediation, Mondaq, 18 August 2018.

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the mediation shall be referred to the arbitral tribunal appointed by [SIAC] and may be made a consent award on agreed terms.”84

[6.7] COURT-​DIRECTED ARBITRATION In India, the Code of Civil Procedure, 190885 envisages a procedure for settlement of disputes through alternative dispute resolution mechanisms as under:

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“(1) Where it appears to the court that there exist elements of a settlement which may be acceptable to the parties, the court shall formulate the terms of settlement and give them to the parties for their observations and after receiving the observations of the parties, the court may reformulate the terms of a possible settlement and refer the same for –​ (a) arbitration;

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(b) conciliation;

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(c) judicial settlement including settlement through Lok Adalat; or

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(d) mediation

(2) Where a dispute has been referred-​

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(a) for arbitration or conciliation, the provisions of the Arbitration and Conciliation Act, 1996 shall apply as if the proceedings for arbitration or conciliation were referred for settlement under the provisions of that Act.”

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The Supreme Court of India in Kerala SEB v Kurien E. Kalathil86 emphasised that under Section 89 of the Civil Procedure Code, referring the parties to arbitration could be done only when the parties agree for the settlement of the dispute through arbitration, either by a joint application or a joint affidavit before. The Court observed:

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“‘Even if there was no pre-​existing arbitration agreement, the parties to the suit can agree for arbitration when the choice of ADR processes is offered to them by the court under Section 89 of the Code. Such agreement can be by means of a joint memo or joint application or a joint affidavit before the court, or by record of the agreement by the court in the order-​sheet signed by the parties. Once there is such an agreement in writing signed by parties, the matter can be referred to arbitration under Section 89 of the Code; and on such reference, the provisions of the AC Act will apply to the

84. Ibid. 85. Code of Civil Procedure, 1908, Act No. 5 of 1908 at s. 89. 86. Kerala SEB v Kurien E. Kalathil (2018) 4 SCC 793.

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arbitration and as noticed in Salem Bar Association, T.N. v Union of India,87 the case will go outside the stream of the court permanently and will not come back to the court.”88

[6.8] “LOOK-​SNIFF” ARBITRATION

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There are many disputes, particularly in the commodity field, that are purely disputes of quality. The relevant question arising from the dispute is whether the commodity delivered complies with the quality specification or agreed sample.

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Some institutions specialise in these types of disputes with special rules to meet the specific requirements for the conduct of arbitration in their specialised areas, for example, the Cotton Association of India (“CAI”) is an arbitration centre to settle trade disputes arising out of contracts for the sale and supply of cotton. Some other institutions are the Grain and Feed Trade Association (“GAFTA”) and the International Cotton Association.

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Questions of quality are best resolved by experts in the field. “Look-​sniff arbitration” or “quality arbitration” is a combination of the arbitral process and expert opinion. The parties select the arbitrator based on their specialised knowledge, expertise, and experience in a particular area of business or trade. In such arbitration, the parties will disclose to the arbitrator the relevant documents setting out the required specification and may show him the agreed sample.

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If necessary, the arbitrator arranges to take inspection of the goods or commodities, which are the subject matter of the dispute. For taking such inspection, he need not make any further reference to the parties.

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Such inspection may even be done in the absence of the parties. There are no formal hearings for the taking of evidence or hearing oral submissions. The arbitrator is looking or sniffing, using his or her own experience and knowledge, to come to an award based on the evidence placed and gathered before the tribunal.

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This type of arbitration is an exception to the rule that an arbitrator should not normally take into account his own opinions unless he has explained these opinions to the parties and given them an opportunity to deal with them through evidence or submission.

87. Salem Bar Association, T.N. v Union of India (2003) 1 SCC 49. 88. Citing Afcons Infrastructure Ltd. and Anr. v Cherian Varkey Construction Co. (P) Ltd. and Ors. (2010) 8 SCC 24 at para. 37. See also Shailesh Dhairyawan v Mohan Balkrishna Lulla (2016) 3 SCC 619.

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The arbitrator has wide discretion to find the necessary evidence and information. Look-​sniff arbitrations are now considered to be quite rare and GAFTA conducts almost no look-​sniff arbitrations,89 with expert determination perhaps being a more appropriate method.

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The CAI conducts a considerable number of arbitrations under its rules of arbitration. The CAI also has empanelled arbitrators comprising experts and judges, in order to enable parties to constitute a well-​balanced tribunal.

[6.9] “FLIP-​FLOP” ARBITRATION

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Flip-​flop arbitration, also known as “pendulum”, “high-​low”, or “baseball-​style”90 arbitration is useful in quantum-​only disputes. This method is based on the assumption that parties being businessmen would approach their dispute pragmatically, and should be encouraged to be reasonable and realistic in the formulation of their cases. The parties in flip-​flop arbitration formulate their respective cases beforehand and present the arbitrator with a final figure.

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The arbitrator is then invited to choose one of the two. He or she cannot choose somewhere between the two. If one party over-​claims or offers an unreasonably low amount, the probability of the arbitrator choosing his formulation would be next to zero.

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This style of arbitration is intended to encourage the parties to make reasonable offers. Although this style of arbitration is suitable for tenant disputes it is unlikely to gain acceptance in larger complicated areas.91

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Another variant of “flip-​flop arbitration” is where the arbitrator decides a figure for the final settlement, regardless of what the parties have put forward. It may fall between the two rival figures put forth by the parties.

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Another variety is a “sealed bid” procedure. Each party puts in a figure to pay or receive in sealed envelopes, which is opened by a third party. If the bids fall within specified parameters, the difference is split.

[6.10] DOCUMENTS-​ONLY ARBITRATION

Some arbitration proceedings proceed based on the exchange of written documents only. Redfern and Hunter state that such arbitrations are commonplace in certain

89. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 5–​121. 90. This is a method used to negotiate salaries of baseball players in the USA, hence the name. 91. R. Bloore, Flip Flop Costs –​A Tonic to Revive Arbitration? (May 1995), available at SSRN: https://​ssrn.com/​ abstract=2601373 or http://​dx.doi.org/​10.2139/​ssrn.2601373 (accessed on 29 January 2021).

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categories of domestic arbitrations, notably concerning small claims cases involving, for example, complaints by holiday-​makers against tour operators and claims under insurance policies. In the international context, examples of “documents-​only” arbitrations are those conducted under the rules of the London Maritime Arbitrators Association in connection with disputes arising out of charter parties and related documents.92

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Documents-​only arbitration is useful where disputes involve relatively simple issues of facts and law and where limitation of costs is an overriding consideration, for example, in consumer disputes. A documents-​only arbitration may not work in disputes where there are conflicts of facts as the arbitrator does not have the benefit of observing cross-​examination of witnesses.

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The documents-​only arbitration as the name suggests does not involve any oral hearing and no witness testimony is allowed. It is based only on the claim statement and statement of defence and written reply by the claimant if any, and then principally decided on the documents submitted by the parties, such as the contract documents, letters, and receipts.

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The parties deliver written submissions and supporting documents in turn to the arbitrator. The written submissions may simply take the form of a letter to the arbitrator from the parties or his representatives or maybe a more formal document produced by lawyers.93

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Once these written submissions are complete, the arbitrator proceeds immediately to write the award based on the submissions and documents. If the arbitrator needs clarification on any point, he may write to the parties to seek this clarification. Generally, the arbitrator will make his decision without further reference to the parties.

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The Arbitration Act also contains a provision for conducting a “documents-​ only” arbitration. Parties opting for the fast-​track procedure under Section 29B of the Arbitration Act will have their dispute resolved on a “documents-​only” basis.

[6.11] CHESS CLOCK ARBITRATION

It is now common for tribunals to impose time controls or guillotine the arbitral proceedings to expedite proceedings and avoid open-​ended hearings. The complexity

92. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 6.155. 93. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 5.156.

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of chess clock arbitration can vary from simple equal time limits for each party to a detailed timetable allocating certain time to each stage of proceedings. Certain considerations must be taken into account when such time limits are imposed, such as the need for the tribunal to have a thorough knowledge of the documents and issues and recognise that there is a need for flexibility to prevail over rigid adherence to the clock.94

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Finally, where time limits are prescribed in detail, it is advisable for the tribunal to recognise the need to allow time for discourse between the tribunal and the parties, in order to avoid silencing the tribunal.95

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[6.12] ICANN DOMAIN NAME ARBITRATION

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All websites have unique domain names. Domain dispute process may arise when somebody else already owns and is using a domain for which another has the trademark. They may even be using it to inconvenience or disrupt business in some way. The other party may file a domain dispute which is an appeal process to an independent arbitrator using the Uniform Domain Name Dispute Resolution Policy (“UDRP”).96

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The goal of this policy is to help trademark holders claim domains that they have a right to use. A domain dispute occurs when multiple parties claim the right to use a particular generic top-​level domain name. This includes, for example, .com, .net, and .org.

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One example is when one party is using a domain that contains a trademark owned by the other party. This practice is commonly known as cybersquatting. In these cases, people buy domains that correspond to brands they are not affiliated with in order to steal away some of their traffic.

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Another practice is typosquatting, where a person purchases a domain similarly spelt with a slight variation. The main motivation for this practice is money. Such persons will try to sell the said domain name to the trademark owners at a higher price. There are also more malicious reasons where the similar named domain is used in bad faith to compete with a particular brand or even impersonate them through identity theft.

94. Tackaberry, Marriot QC and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Sweet & Maxwell 2003), at para. 2–​545. 95. Ibid at para. 2–​546. 96. See https://​www.icann.org/​resources/​pages/​help/​dndr/​udrp-​en (accessed on 29 January 2021).

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Law, Practice and Procedure of Arbitration in India

An independent arbitrator as accredited by Internet Corporation for Assigned Names and Numbers (“ICANN”) resolves such cases by using the Uniform Domain Name Dispute Resolution Policy (“UDRP”).

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Such arbitrators are appointed and administered by one of ICANN’s approved dispute resolution service providers, for example, World Intellectual Property Organization (“WIPO”) and Asian Domain Name Dispute Resolution Centre (an alliance of four arbitral institutions: HKIAC, AIAC, CEITEC, and KCAB).97

[6.13] SPORTS ARBITRATION

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Sports in the world has grown and progressed in size and stature over the decades into a multi-​million-​dollar industry. Sporting disputes can be categorised as sporting disputes themselves and sports business disputes.

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The main body for sports arbitration is the Court of Arbitration for Sports (“CAS”) based in Lausanne, Switzerland. CAS resolves sporting disputes where there is an arbitration agreement referring disputes to CAS between the parties. Rule 61 of the Olympic Charter requires all disputes in connection with the Olympic Games to be arbitrated by CAS.98

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All Olympic International Federations, Federation Internationale de Football Association (“FIFA”), and all signatories for the 2009 World Anti-​Doping Code recognised the jurisdictions of CAS over their disputes including for anti-​doping rule violations.99 Arbitration awards issued by CAS can be appealed to the Federal Supreme Court of Switzerland.100

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[6.14] MARITIME ARBITRATION

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A maritime arbitration is the arbitration of maritime commercial disputes relating to maritime navigation, industry, or trade.101 A maritime arbitration as a species of

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97. See https://​www.wipo.int/​amc/​en/​domains/​guide/​; https://​www.aiac.world/​Domain-​Name-​Complaints-​ ADNDRC (accessed on 29 January 2021). 98. International Olympic Committee, Olympic Charter. 99. World Anti-​Doping Agency, 2009 World Anti-​Doping Code. 100. Court of Arbitration for Sport: Media release 23 July 2012. 101. W. Tetley, Marine Cargo Claims, Cowansville, 2008, at p. 1417; J. Allsop, “International Maritime Arbitration: Legal and Policy Issues”, in Journal of International Maritime Law, 2007, at pp. 397–​415; C. Ambrose, K. Maxwell, A. Parry, London Maritime Arbitration, London, 2009; Bruce Harris, Maritime Arbitrations, in J. Tackaberry, A. Marriot (ed.) Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (Thomson Sweet & Maxwell 2003), pp. 741–​778; Bruce Harris, M. Summerskill, S. Cockerill, “London Maritime Arbitration”, in Arbitration International, 1993, at p. 275.

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international commercial arbitration in some way involves a ship.102 The arbitration agreement is usually included in standard form contracts drafted and periodically updated by maritime organisations such as the Baltic and International Maritime Council (“BIMCO”), the Association of Ship Brokers & Agents (“ASBA”), and the Japan Shipping Exchange (“JSE”).

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These contracts are, among others, time and voyage charter-​parties and other kind of contract for transport of goods (for example, bareboat charter agreements and contracts of affreightment), shipbuilding, ship repairing and ship scrapping contracts, and salvage agreements.

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The arbitration agreement may refer disputes to specialised international arbitral centres such as the London Maritime Arbitrators Associations (“LMAA”) based in London, the Society of Maritime Arbitrators of New York (“SMA”), the Chambre Arbitrale Maritime de Paris (“CAMP”), the Tokyo Maritime Arbitration Commission (“TOMAC”), the Singapore Chamber of Maritime Arbitration (“SCMA”), and China Maritime Arbitration Commission (“CMAC”).

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The maritime arbitration is conducted under institutional rules. Arbitral awards are based at least in part, on the lex maritima, a collection of rules and principles deriving their binding force from the constant use by the international maritime community, which represent an alternative to national and international sources of law and provide the shipping world with a juridical instrument endowed with a higher amount of flexibility.103 The arbitrators are selected from experienced commercial men and specialised lawyers as the disputes normally require knowledge of the maritime trade.104

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Most of the differences arise from charter-​parties involving the transfer of goods because of non-​fulfilment of obligations by the seller or by the carrier (for example, damage to transported goods or to the ship, laytime and demurrage issues, and non-​payment

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102. Bruce Harris, M. Summerskill, S. Cockerill, “London Maritime Arbitration”, in Arbitration International, 1993, at p. 275. 103. On the lex maritima, see W. Tetley, The general maritime law –​the lex maritima, cit.; R.J. Cortazzo, Development and Trends of the Lex Maritime from International Arbitration Jurisprudence, in Journal of Maritime Law and Commerce, 2012, pp. 255–​277; A. Fall, “Defence and Illustration of Lex Mercatoria in Maritime Arbitration”, in Journal of International Arbitration, 1998, pp. 83–​94; S. Campanale, “La lex mercatoria maritima (il diritto marittimo vivente)”, in Trasporti, 2010, pp. 17–​102. 104. Still today some charter-​party standard forms, such as NYPE (New York Produce Exchange Form), NORGRAIN 89 (North American Grain Charterparty), OREVOY (BIMCO Standard Ore Charter Party), ASBATIME Time Charter -​New York Produce Exchange Form or VOLCOA (BIMCO Standard Volume Contract of Affreightment for the Transportation of Bulk Dry Cargoes), require arbitrators to be “commercial men”.

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of hire); disputes may also deal with ship building, repairing and demolishing, bareboat chartering, insurance claims, salvage, or liability in tort (e.g. collision at sea).105

[6.15] DOMESTIC AND INTERNATIONAL ARBITRATIONS

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The Arbitration Act covers domestic as well as international arbitrations.106 However, it does not define “domestic arbitration”. All references to a domestic arbitration are references to “an arbitration other than an international commercial arbitration”.

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The definition of “international commercial arbitration” is contained in Section 2(1) (f) of the Arbitration Act. Unlike other jurisdictions in Asia, classification as an international commercial arbitration under the Arbitration Act is entirely dependent on the “nationality” of parties.

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Under the unamended Arbitration Act, an arbitration qualified as “international” if it involved any (i) individual who is a national of, or habitually resident in; (ii) a company or body corporate incorporated in; (iii) an association or body of individuals whose central management and control are exercised, in a country other than India, or the Government of a foreign country.

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The words “a company or” were omitted from the definition of “international commercial arbitration” under the 2015 Amendment,107 following the Supreme Court of India’s judgment in TDM Infrastructure Pvt. Ltd. v UE Development India Pvt. Ltd. (“TDM Case”).108

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The omission of the words “a company or” clarifies that a company incorporated in India is an Indian national, irrespective of where its central management and control lie. For the purpose of determining nationality, central management and control are to be taken into consideration only in the case of associations, or bodies of individuals and not companies.109

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105. Fabrizio Marrella, “Unity and Diversity in International Arbitration: The Case of Maritime Arbitration”, 20 Am. U. Int’l L. Rev. 1055, 1058 (2005) p. 1059. 106. UNCITRAL Model Law confines itself to international arbitrations: see Fung Sang Trading Ltd v Kai Sun Sea Products & Food Co. Ltd [1992] 1 HKLR 40. 107. Section 2(1)(f)(iii). Law Commission Report No. 246 of August 2014 set out that the words “a company or” were deleted since the same is already covered under s. 2(1)(f)(ii) and the intention is to determine the residence of a company based on its place of incorporation and not the place of central management /​ control. 108. (2008) 14 SCC 271 at para. 15. Sinha J. noted that “a Company incorporated in India can only have an Indian Nationality”. 109. See also Larsen and Toubro Limited Scomi Engineering Bhd v Mumbai Metropolitan Region Development Authority (2019) 2 SCC 271. In the case of a consortium comprising of a mix of foreign and domestic entities, if the central control and management of such a consortium is in India, then the arbitration will not be “international” for the purposes of s. 2(1)(f)(iii).

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It is important to recognise that the classification of an arbitration as domestic or international is only relevant where India is the seat of the arbitration and Part I of the Arbitration Act is applicable to the arbitral proceedings.

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The distinction between a domestic and an international arbitration is relevant for determining the applicability of the various provisions of Part I to each of these arbitrations. For instance, the ground of “patent illegality” is available as a ground for challenge under Section 34, only in the case of a domestic arbitration.110 Similarly, the time limits set out in Section 29A are not applicable to international commercial arbitrations.

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Another important distinction is that in the case of a domestic arbitration, an arbitral tribunal is required to decide the dispute in accordance with Indian substantive law as mandated under Section 28 of the Act. However, in the case of an international commercial arbitration, the tribunal will be required to decide the dispute in accordance with the law chosen by the parties.

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In the context of a “domestic” arbitration, one question that is yet to be definitively decided by the Indian courts is that of the Indian parties’ ability to choose a foreign seat. Neither the Arbitration Act nor the Indian Contract Act, 1872 prevents Indian parties from making such a choice.

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This right was first recognised by the Supreme Court of India in Atlas Export Industries v Kotak & Co,111 (“Atlas Exports”) albeit as obiter. Subsequently, the Supreme Court of India in the TDM Case remarked that:

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“The intention of the legislature appears to be clear that Indian nationals should not be permitted to derogate from Indian law. This is part of the public policy of the country.”112

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Given the Supreme Court of India’s two divergent positions, parties routinely challenge Indian parties’ choice of a foreign seat in the absence of a definitive pronouncement on the issue.113

110. 111. 112. 113.

See Chapter 45. (1997) 7 SCC 61. TDM (2008) 14 SCC 271 at para. 20. See M/​S Addhar Mercantile Private Limited (Applicant) v Shree Jagadamba Agrico Exports Pvt. Ltd Bombay High Court Arbitration Application No 197 of 2014 along with Arbitration Petition No 910 of 2013; Sasan Power Limited v Northern American Coal Corporation India Pvt. Ltd. 2015 SCC Online M.P. 7417; GMR Energy Limited v Doosan Power Systems India 2017 SCC OnLine Del 11625.

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The High Court of Madhya Pradesh in the case of Sasan Power Ltd. v North American Coal Corporation114 relied on the decision of the Supreme Court of India in Atlas Exports to hold that there is no bar on two Indian parties choosing to arbitrate outside India.

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On appeal, the decision was affirmed by the Supreme Court of India, albeit with an observation that the contract in question was a tripartite one –​involving a foreign party. As a result, the Supreme Court of India did not delve into the issue of the Indian parties’ right to choose a foreign seat.

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Upon reviewing the decisions in Atlas Exports and Sasan, along with the absence of any statutory bar on such a choice under the Contract Act as well as the Arbitration Act, any attempt to challenge to the ability of Indian parties to choose a foreign seat may be difficult to sustain.

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[6.16] RECENT TRENDS AND DEVELOPMENTS

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Generally, arbitrations contain five elements: the resolution of disputes, observance of natural justice rules, adjudicatory nature of the process, parties’ initiative in choosing the arbitrators, and the non-​governmental role of the arbitrators.

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There are different types of arbitrations evolving for different needs. There is now a global trend of parties opting for an institution to administer the arbitration instead of having the same administered on an ad-​hoc basis. Arbitration in India until now was primarily conducted on an ad-​hoc basis.115

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Initially, under the Arbitration Act, no provision was made for promoting institutional arbitration in India as was done in Hong Kong116 and Singapore.117 The Government of India set up the Srikrishna Committee in December 2016.

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The 2019 Amendment enacted many of the recommendations set out in the Srikrishna Committee Report. These recommendations and amendments brought about by the 2019 Amendment have already been discussed in Sections 6.2 and 6.3 above. There is also an increasing trend of parties to commercial arbitration desiring to obtain third party funding to provide for the costs and expenses involved in the conduct of arbitration proceedings.

1 14. 2015 OnLine MP 7417. 115. See Section 6.2. 116. In Singapore, the SIAC is the default appointing authority under the International Arbitration Act, 1994 (s. 9A(2) read along with ss. 2(1) and 8(2)). 117. In Hong Kong, the HKIAC has been designated as the appointing authority for arbitrators where parties cannot appoint arbitrators under the Arbitration Ordinance, 2011 (s. 24(3) and (4) read with s. 13(2)).

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Third party funding is permitted in Singapore, Hong Kong, England, Wales, and Australia. This concept will be discussed later as regards its legal implications. It remains to be seen if India will devise legislation to regulate third party funding.

[6.17] CONCLUSION

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The international conventions on arbitration, the Model Law, and the world-​wide recognition of the importance of arbitration in resolving disputes in trade, commerce, and investment have brought about the modernisation and harmonisation across the globe of the laws that govern the process of international arbitration.

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Even in the practice of arbitration globally, there is no uniform procedure. Arbitrators, parties, and counsel work together “to find some common ground” by devising a procedure that fits the dispute with which they are concerned. Looking forward, the parties must be prepared to accept that there are other systems of law that may, in some respects, be better than their own and which must, in any event, be taken into account.

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The best practices that have been established so far demonstrate that different legal systems can benefit from others and that it is possible to pick and choose what arbitrators believe will work best to guarantee an efficient procedure and a fair result.

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In India, the 2019 Amendment has brought about a positive change in the arbitration landscape of India by the introduction of Arbitration Council of India which would grade the arbitral institutions, provide accreditation to arbitration, create a special arbitration bar and bench, and make provision for governmental and legislative support for institutional arbitration.

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This Council may also identify roadblocks in the development of institutional arbitration and prepare a roadmap for making India a robust centre for international and domestic arbitration.

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DIVISION 2

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THE ARBITRATION AGREEMENT AND REFERENCE TO ARBITRATION

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Chapter 7 ARBITRATION AGREEMENTS [7.1] INTRODUCTION......................................................................................................................... 163 [7.2] DEFINITION OF ARBITRATION AGREEMENT................................................................... 170

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[7.3] ELEMENTS OF ARBITRATION AGREEMENTS.................................................................... 173 [7.4] FORM OF ARBITRATION AGREEMENTS............................................................................. 198 [7.5] INCORPORATION OF ARBITRATION CLAUSE BY REFERENCE................................... 205 [7.6] CHECKLIST FOR CONTENTS OF ARBITRATION AGREEMENT................................... 218 [7.7] ORAL ARBITRATION AGREEMENTS..................................................................................... 226

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[7.8] CONCLUSION............................................................................................................................... 229

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[7.1] INTRODUCTION

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Arbitration is a consensual mechanism based on party autonomy. There can be no arbitration without an agreement to arbitrate between the parties.1 An arbitration agreement forms the basis of the arbitral process. The primacy of party autonomy has been held to be the brooding and guiding spirit of arbitration.2

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It is the foundation of the arbitral tribunal’s jurisdiction to conduct proceedings and to render a final and binding award.3 In summary, the arbitration agreement plays a crucial role in the governance of the arbitration.4 As such, arbitration agreements must be drafted with care.

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It is normal for parties venturing into contract to optimistically downplay the possibility of disputes and differences arising from the contract. Parties unwilling to countenance the possibility of their contracts or business dealings failing, often pay insufficient thought and attention to the drafting of the arbitration agreement.

1. See Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Wolters Kluwer 2021), p. 96. 2. PASL Wind Solutions Private Limited v GE Power Conversion India Private Limited (2021) SCC OnLine SC 331 at para. 60. The Supreme Court of India held that Indian parties and Indian subsidiaries of foreign companies are allowed to use foreign-​seated arbitration to resolve disputes between them. In such a situation, the Indian courts will not have supervisory jurisdiction over the arbitral proceedings. The resultant award rendered will be subject of setting aside proceedings in India. 3. See Rhodes-​Vivour, “The Agreement to Arbitrate -​A Primary Tool for the Resolution of Maritime Disputes” delivered at the Practical Maritime Arbitration Conference organised by the Emirates International Law Centre and held in Dubai, 5–​7 April 2008. 4. Diana-​Loredana Hogas, “Considerations about Drafting Arbitration Clauses” (2015) Journal of Public Administration, Finance and Law, Special Issue 2, p. 125.

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It is compounded by the attitude of parties in hastening a quick closing of the business deal. As a result, parties deliberate on the need for, and contents of the, arbitration agreement on a cursory basis, only at the later stages of their negotiations. The arbitration agreement was regarded as an ancillary “midnight” clause of the contract.

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This complacency may lead to insufficient thought and attention being put into the drafting of the arbitration agreement in their contracts. Parties and transaction lawyers involved may also be distracted by the need to quickly conclude the business arrangement.

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At times, they turn a Nelsonian eye to, and only deliberate cursorily on the, contents of the arbitration agreement at the later stages of their negotiations. Sometimes, it is simply copied and pasted from one contract to another.5

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Arbitration agreements may be executed in three forms:

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The first form is when an agreement contains a clause to arbitrate any future dispute or differences to arbitration.

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The second form is where an arbitration agreement (submission agreement) seeks to refer an existing dispute to arbitration.6

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The third form is where arbitration is prescribed by statutory provisions.7

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These forms are not mutually exclusive. They can be ultimately contained as a clause in an underlying contract or assume the form of a separate agreement between the parties.

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They may be adopted successively, as and when the need arises.8 Parties may have agreed by way of an arbitration agreement to refer only certain categories of future disputes to arbitration. Therefore, in the event that a nascent dispute falls outside the scope of that preceding agreement, parties may, by way of a submission to arbitration agreement, refer that dispute to arbitration9 or alternatively, elect to resolve the dispute in court.

5. Irene Welser, “Pitfalls of Competence” in Australian Arbitration Yearbook 2007, Klausegger, et al (eds), p. 3. 6. See Navigazione Alta Italia SpA v Concordia Maritime Chartering AB, The Stena Pacifica [1990] 2 Lloyd’s Rep 234. 7. For example: Micro Small Medium Enterprises Development Act, 2006, s. 18. 8. Compagnie Graniere SA v Fritz Kopp AG [1980] 1 Lloyd’s Rep 463. 9. See Jones Engineering Services Ltd v Balfour Beatty Building Ltd [1994] ADRLJ 133; MJ Gleeson Group Plc v Wyatt of Snetterton Ltd (1995) 11 Const LJ 59, 42 ConLR 14, CA (Eng); LG Caltex Gas Co Ltd v China National Petroleum Corp [2001] All ER (D) 198 (May).

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In some cases, there may be no arbitration agreement between the parties at all. The parties could still opt to resolve the dispute by submission to arbitration once a dispute has arisen, instead of pursuing it in litigation.

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Such a situation is contemplated in the Arbitration Act. Section 7 of the Arbitration Act provides that an arbitration agreement is an agreement to submit disputes “which have arisen” or “which may arise” between the parties.

Drafting Arbitration Agreements

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Generally, parties agree on the mode of resolving disputes and turn to their legal representatives to capture that agreement. The transaction or corporate team dealing with the contract is often disconnected from the dispute resolution department of the law firm.

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In such a scenario, the transaction team may not have the foresight of the implications of the manner in which the arbitration agreement is being drafted.

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Often, the corporate teams are also unaware of the model arbitration clauses that are made available by various arbitral institutions. To the contrary, there is indiscriminate use of inappropriate precedents.

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This gives rise to the risk of inappropriate, defective, incomplete, and pathological arbitration clauses being included in contracts. If the arbitration agreement is poorly drafted, the brunt will be faced by the dispute resolution team handling the dispute when it arises, and ultimately the client.

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Normally, arbitration clauses are drafted to fit to the circumstances of the parties’ needs. Is there a perfect “miracle clause” that would be universally applicable to any situation? The immediate answer is no. It is axiomatic that there is yet to be a clause which can solve every problem which emerges out of an agreement.

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Stephen R. Bond explained the reasons for this: first, the drafting of an arbitration clause is capital; second, he opines that the other party may have very different ideas as to what constitutes an ideal clause.10 The contracting parties must know what is really important for them. Bond finally concludes that an all-​purpose clause may not, in fact, be “suitable for all situations”, in this sense, there is no “miracle clause”.11

10. Stephen R. Bond, “How to Draft an Arbitration Clause Revisited” (1989) Journal International Arbitration, Vol. 6, No. 2, pp. 14–​21. 11. Ibid.

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The transaction and dispute resolution lawyers may not be the same persons involved in drafting the arbitration agreement. As such, they may not be involved in resolving the disputes that arise from the contract. Ultimately, it is the parties who are affected by poorly drafted arbitration agreements.

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Problematic arbitration agreements may also come about from concessions made during the negotiation process. For example, parties agree to have a single arbitrator, failing which, each of them is to appoint a single arbitrator, with the third to be appointed by the arbitral institution.

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What was intended as a compromise between a party who wanted a sole arbitrator and the other that wanted a three-​arbitrator tribunal can turn into a mechanism for tripling the fees of the arbitral tribunal, incur additional institutional fees, and increase the scheduling difficulties of the arbitration, all in a single stroke.

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Parties in a low value dispute can potentially extract a tactical advantage in forcing an expensive process on an unwilling party for collateral reasons.

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The uncertainty arising from poorly worded arbitration agreements cannot be easily overcome. Such arbitration agreements may, for example, create doubts in respect of whether the parties had intended to refer their dispute to arbitration, to the exclusion of all other dispute resolution modes.12

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The Arbitration Act, modelled after the Model Law, provides the necessary framework for arbitration to fill in the gaps in an arbitration agreement.

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While there may be less pressure on the parties to craft an impeccable and unequivocal arbitration clause, they may expend unnecessary effort and resources in resolving issues in the arbitration agreement, even before the case is decided on merits.

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The Supreme Court of India in Enercon (India) Ltd. & Ors v Enercon GMBH & Ors explained: 13

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“In our opinion, the Courts have to adopt a pragmatic approach and not a pedantic or technical approach while interpreting or construing an arbitration agreement or arbitration clause. Therefore, when faced with a seemingly unworkable arbitration clause, it would be the duty of the Court to make the same workable within the permissible

12. See Cravat Coal Export Company Inc v Taiwan Power Company, United States District Court for the Eastern District of Kentucky, Civil Action 90–​11 (5 March 1990), where the clause “Any dispute of whatever nature arising out of or in any way relating to the Agreement or to its construction or fulfilments may be referred to arbitration” raised questions as to whether the parties had indeed intended to create a binding arbitration agreement. 13. (2014) 5 SCC 1.

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limits of the law, without stretching it beyond the boundaries of recognition. In other words, a common-​sense approach has to be adopted to give effect to the intention of the parties to arbitrate. In such a case, the court ought to adopt the attitude of a reasonable business person, having business common sense as well as being equipped with the knowledge that may be peculiar to the business venture.”14

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A clause as simple and lacking in detail as “arbitration to be settled in London” has been held to be sufficient and valid.15 This highlights the fact that an arbitration agreement need not be particularly complex or comprehensive. Where there is an obvious intention to arbitrate disputes, the courts will enforce them by granting a stay of its proceedings.

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Time, effort, and money will be saved by proper drafting of dispute resolution clauses in order to enable parties to take the full advantage of the arbitral process.

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It avoids situations where court assistance becomes necessary such as where the specified process for appointing an arbitrator appears to be unworkable16 or simply for the reference of disputes to arbitration.

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Moreover, it may also be that the institution chosen to run or be involved in the arbitration does not exist17 or has become defunct.18

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The Supreme Court of India in PASL Wind Solutions Private Limited v GE Power Conversion India Private Limited19 was faced with a dispute arising out of a settlement agreement where the parties had agreed that:

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14. Enercon (India) Ltd. & Ors v Enercon GMBH & Ors (2014) 5 SCC 1 at para. 83. 15. Tritonia Shipping Inc v South Nelson Forest Products Corporation [1966] 1 Lloyd’s Rep 114. See also Hobbs Padgett & Co (Reinsurance) Ltd v J C Kirkland Ltd [1969] 2 Lloyd’s Rep 547; Mangistaumunaigaz Oil Production Association v United World Trading Inc [1995] 1 Lloyd’s Rep 617; XL Insurance Ltd v Owens Corning [2000] 2 Lloyd’s Rep 500. 16. Enercon (India) Ltd v Enercon GMBH (2014) 5 SCC 1. Note that the Arbitration Act in ss. 11(4), (5), (6) can help resolve issues of “unworkable” appointment procedures by providing for judicial intervention. 17. See Pricol Limited v Johnson Controls Enterprise Limited and Others (2015) 4 SCC 177. In this case, the parties had agreed that upon the failure of the parties to appoint an arbitrator, the arbitrator would be appointed in accordance with the rules of the “Singapore Chamber of Commerce”. Invoking the clause, Johnson Controls approached SIAC for the appointment. The Supreme Court upheld the appointment made by the President of SIAC by construing the reference to Singapore Chamber of Commerce as a reference to SIAC. See also HKL Group Co Ltd v Rizq International Holdings Pte Ltd [2013] SGHCR 8, where much difficulty arose out of an agreement to resolve a dispute at the “Arbitration Committee at Singapore under the rules of The International Chamber of Commerce” in 5; see also Dalimpex Ltd v Janicki [2003] CanLII 34234 (ON CA) (Can); Chung Siu Hong Celment v Primequine Corporation Ltd [1999] HKCFI 1472 (HK). 18. See the split of Badan Arbitrase Nasional Indonesia (BANI) into BANI Mampang and BANI Pembaharuan and the uncertainty surrounding parties regarding which of the two split institutions is to administer disputes between them. 19. (2021) SCC OnLine SC 331. The facts of the case are that PASL Wind Solutions Pvt Ltd (“PASL”) and GE Power Conversion India Pvt Ltd (“GE India”) entered into a settlement agreement in relation to certain disputes arising out of a transaction for the supply of converters. Both companies are incorporated in India.

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“All disputes, controversies or differences shall be referred to and finally resolved by Arbitration in Zurich in the English language, in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce, which Rules are deemed to be incorporated by reference into this clause.”20

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The Respondent challenged the jurisdiction of the sole arbitrator on the ground that two Indian parties could not have chosen a foreign seat of arbitration. The Court held that there is no bar under Indian law to permit two India domiciled parties to choose a foreign seat of arbitration and/​or foreign substantive law governing the contract.

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While Section 28(1)(a) of the Arbitration Act does not appear to mandate the application of Indian substantive law in arbitrations with purely Indian parties, the Supreme Court of India held that this stipulation was made in the Act only in relation to Indian-​seated arbitrations between Indian parties.

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That is to say, where Indian parties choose a foreign seat, Section 28(1)(a) itself becomes inapplicable, thus allowing the parties the choice of foreign rules of law. This approach is a genuine recognition of party autonomy. If parties are free to choose a foreign seat, they may be also free to choose the substantive law applicable to them.

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Therefore, Indian parties arbitrating between themselves are entitled to elect a seat of arbitration outside India.21 Such foreign-​seated arbitrations will be able to obtain interim relief from the Indian courts. In doing so, the Supreme Court of India also rejected that the contention that Indian parties ought to be confined to arbitrations in India on public policy grounds.

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GE India is a 99 per cent subsidiary of General Electric Conversion International SAS (France), which in turn is a wholly-​owned subsidiary of the General Electric Company (United States). The arbitration clause in the settlement agreement (which was governed by Indian law) provided for arbitration in accordance with the ICC Rules and seated in Zurich. In 2017, PASL initiated arbitration proceedings on disputes arising from the settlement agreement against GE India. The arbitral tribunal ruled that the seat of the arbitration was Zurich. However, hearings were conducted in Mumbai. In 2019, the arbitral tribunal issued a final award dismissing PASL’s claims and awarded GE India damages and costs. GE India subsequently commenced enforcement proceedings before the Gujarat High Court under ss. 47 and 49 of the Indian Arbitration and Conciliation Act 1996 as in Part II of the Act, which applies to the enforcement of foreign awards. Part II of the Act gives effect to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”). GE India also sought interim relief from the Court under s. 9 of the Act to prevent PASL from dissipating its assets to avoid complying with the award. PASL argued that the award was not a foreign award capable of enforcement under ss. 47 and 49 of the Act. It contended that, under the closest connection test, which the Supreme Court of India had applied in prior cases to determine the arbitral seat,2 the arbitral seat was Mumbai, as it was, among other things, the place where the hearings took place. PASL thus sought to set aside the award under s. 34 of the Act, which applies to Indian-​seated arbitrations and awards. 20. Ibid at para. 4. 21. Ibid at paras. 49, 71. The Indian parties can now choose foreign arbitral seats like Singapore, Hong Kong, Dubai, Kuala Lumpur, London, Hague, and Paris in their arbitration agreement, even if the subject matter of their contracts and the other parties are entirely Indian or connected or situated in India.

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The limited policy concern that arises from this decision of the Supreme Court of India is of Indians “evading” Indian laws. This may be addressed (as it invariably is, in any arbitration) by the enforcing court in India, when it regulates the enforcement of the award and assesses the public policy exception under the Arbitration Act. The Supreme Court of India thus clarified that:

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“If, on the facts of a given case, it is found that two Indian nationals have circumvented a law which pertains to the fundamental policy of India, such foreign award may then not be enforced under section 48(2)(b) of the Arbitration Act.”22 While this is a positive step towards party autonomy and liberation of the arbitration framework, one concern may play out directly as a result of this judgment.

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If two Indian parties choose foreign substantive law and the resulting award has to withstand the scrutiny of Indian public policy, the arbitral tribunal while deciding in such disputes has a duty to consider mandatory aspects of Indian law, within the context of its general duty to render enforceable awards.

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Such an arbitration will thus involve both foreign substantive law as well as analysis of mandatory rules under Indian public policy. Judgments dealing with public policy are known to be notorious in their proclivity to elevate concepts within statutory law as public policy.

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This was the position even before the decision in PASL Wind Solutions Private Limited v GE Power Conversion India Private Limited.23 However, with this decision, awards between Indian parties in a foreign-​seated arbitration, involving foreign law, may in all likelihood be put to even greater scrutiny before Indian courts.

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As a result, even though Indian parties can choose foreign substantive law, Indian public policy may pose a tricky affair for any arbitral tribunal (and eventually courts) dealing with matters.

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It is suggested that Section 28(1)(a) of the Arbitration Act be amended to allow parties to a domestic arbitration with the autonomy to agree on a substantive law other than the Indian substantive law as the law applicable to the dispute between the parties. The proposed amended Section 28(1(a) may provide for this change as follows: “Where the place of arbitration is situated in India –​(a) Unless otherwise agreed by the parties, in an arbitration other than an international commercial arbitration, the 22. Ibid at para. 99. 23. (2021) SCC OnLine SC 331.

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arbitral tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India;”

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The proposed amendment will encourage Indian parties to use arbitrations with India as the seat of arbitration, boost party autonomy in Indian based arbitrations and uphold the freedom to contract. It will also promote the use of arbitration by parties in India who may wish to apply other rules of substantive law to facilitate their undertakings and contracts. A properly drafted arbitration agreement provides parties an efficient means of resolving disputes, facilitating international enforcement and avoids unnecessary ancillary litigation with its attendant costs.

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[7.2] DEFINITION OF ARBITRATION AGREEMENT

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“… an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.”

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(2) that the jurisdiction of the arbitral tribunal to decide the rights of parties must derive either from the consent of the parties or from an order of the court or from a statute, the terms of which make it clear that the process is to be an arbitration; (3) the agreement must contemplate that substantive rights of parties will be determined by the arbitral tribunal;

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(4) that the arbitral tribunal will determine the right of the parties in an impartial and judicial manner with the arbitral tribunal owing an equal obligation of fairness towards both sides;



(5) that the agreement of the parties to refer to their disputes to the decision of the arbitral tribunal must be intended to be enforceable in law and lastly;

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24. (1998) 3 SCC 573.

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(6) the agreement must contemplate that the tribunal will make a decision upon a dispute which is already formulated at the time when a reference is made to the arbitral tribunal.25

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Section 7 of the Arbitration Act sets out the characteristics of an agreement as an arbitration agreement. It lays down the requirements for an agreement to qualify as a valid arbitration agreement. An agreement is essential to any arbitration, in the absence of which disputes can only be resolved through the courts.26 An arbitration agreement is not only necessary to initiate arbitration, but also to enforce the eventual award.

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Sections 7(1) and 7(2) of the Arbitration Act discuss what constitutes an agreement to arbitrate; the distinction between pre-​dispute and post-​dispute arbitration agreements; the range of legal or written instruments in which an agreement to arbitration may be incorporated; and the range of disputes that may be submitted to arbitration.27

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Sections 7(3) to (5) of the Arbitration Act provide specific guidance on the rules constituting the formal validity of an agreement. Nonetheless, not all agreements that refer disputes to a third party can be classified as arbitration agreements.

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It is still necessary to look outside the Arbitration Act, to case law and other legal and persuasive authorities, for guidelines on what constitutes a reference to arbitration.

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This would include matters relating to the essential ingredients that make an arbitration agreement, common issues that may arise from an arbitration agreement, and all such matters that parties may wish to provide for in an agreement to arbitrate.

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Article 7 of the Model Law

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Section 7 of the Arbitration Act more or less replicates Article 7 of the Model Law with minor deviations. Article 7 of the Model Law sets out the “Definition and form of arbitration agreement”. The Model Law provided two options at the time of amending Article 7 in 2006. These options reflect two different approaches to the question of definition and form of arbitration agreements.

25. KK Modi at para. 17. 26. Powertech Worldwide Ltd v Delvin International General Trading LLC (2012) 1 SCC 361. 27. Ilias Bantekas, Pietro Ortolani, Shahla Ali, Manual Gomez, and Michael Polkinghorn, UNCITRAL Model Law on International Commercial Arbitration, A Commentary, (Cambridge University Press 2020), p. 116.

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The first option is based to a large extent on Article II(1) of the New York Convention.28 The first option of Article 7(1) of the Model Law sets out the conditions under which an agreement will be characterised as an arbitration agreement.

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Article 7(2), which is modelled after Article II(2) of the New York Convention, deals with formal requirements of validity, namely that of the writing which is of general application. The other situations are where, instead of including an arbitration clause in their contract, the parties include a reference to a document containing an arbitration clause.

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Article 7 of the UNCITRAL Model Law was amended in 2006 to include the second option in order to respond to the view that the formal requirements set out in the original version of Article 7 should be amended to better conform to international contract practices.29

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The second option aims to eliminate any standard of formal requirement for arbitration agreements. It is premised on the presumption that there could be situations where the drafting of a written document was impossible or impractical. In such cases, where the intention of the parties to arbitrate was not in question, the validity of the arbitration agreement ought to be recognised.

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If the parties have agreed to arbitrate but have entered into the arbitration agreement in a manner that does not meet the formal requirement, any party may have grounds to object to the jurisdiction of the arbitral tribunal.

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The UNCITRAL Working Group did not express preference in favour of either of the options, both of which are offered for enacting States to consider, depending on their particular needs –​by reference to the legal context in which the UNCITRAL Model Law is enacted, including the general contract law of the enacting State. Section 7 of the Arbitration Act follows Option I of Article 7 of the UNCITRAL Model Law.

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The courts have always recognised that arbitration is a creature of contract. For example, it was held that:

28. Article II(1) of the New York Convention 1958 reads as follows: “Each Contracting State shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration.” 29. Explanatory Note by the UNCITRAL Secretariat on the Model Law on International Commercial Arbitration, in UNCITRAL Model Law on International Commercial Arbitration 1985, with amendments as adopted in 2006, United Nations Publication.

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“Arbitration is a matter of contract and the court must rigorously enforce arbitration agreement according to their terms, including terms that specify the appointment of an arbitrator that will arbitrate their disputes.”30

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The definition of an arbitration agreement has been interpreted fairly broadly. While an agreement to refer disputes to arbitration must be clear and unequivocal, where there is a clear intent to arbitrate, effect will be afforded to the agreement even if the clause could be incomplete or lacking formalities.31

[7.3] ELEMENTS OF ARBITRATION AGREEMENTS

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As stated earlier, there are four essential elements that form the basis of an arbitration clause:32 (1) The first, which is common to all agreements, is to produce mandatory consequences for the parties;



(2) The second is to exclude the intervention of State courts in the settlement of the disputes, although in many jurisdictions the court retains inherent powers to intervene and assist, at least before the issuance of the award;



(3) The third is to give powers to the arbitrators to resolve the disputes likely to arise between the parties; and



(4) The fourth is to permit the putting into place a procedure leading to the rendering of an award that is capable of judicial enforcement. An arbitration agreement does not oust the court’s jurisdiction. Therefore, an arbitration agreement is not void on this ground.33

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Defined Legal Relationship

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Section 7(1) does not require a dispute referred to arbitration to have arisen out of a contractual relationship. But there must exist at least a “defined legal relationship”.

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Gary Born considers the precise meaning of these words to be of “very limited practical importance”.34 Redfern and Hunter state that there has to be some contractual 30. Sebiro Holdings Sdn Bhd v Bhag Singh & Anor [2015] 3 AMR 334, [2015] 4 CLJ 209. 31. Insigma Technology Co Ltd v Alstom Technology Ltd [2009] SGCA 24. 32. Eisemann, La clause d’arbitrage pathologique, in Commercial Arbitration: Essays in Memoriam Eugenio Minoli (Torino: Unione Tipografico editrice Torinese, 1974). 33. See the Exception to s. 28 of the Indian Contract Act. See also Coringa Oil Co. v Koegler, ILR (1876) 1 Cal 466; Shin Satellite Public Co. Ltd v Jain Studios Limited (2006) 2 SCC 628; World Sport Group (Mauritius) Ltd. v MSM Satellite (Singapore) PTE Limited (2014) 11 SCC 639; Gopinath Daulat Dalvi v State of Maharashtra and Ors. 2005 (2) Arb LR 224; Borneo Samudera Sdn Bhd v Siti Rahfizah bt Milhaldin & Ors [2008] 6 MLJ 817. 34. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Wolters Kluwer 2021), p. 321.

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relationship (real or implied) between the parties since there must be an arbitration agreement to form the basis of the arbitral proceedings. As such, there has to be some contractual relationship, real or implied.35 Mustill and Boyd state:

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“It is unusual to find an agreement to refer future disputes to arbitration completely isolated from any other contractual relationship. The agreement almost always forms part of or is at least ancillary to, some underlying contract.”36

However, the phrase “whether contractual or not” qualifying the phrase “defined legal relationship” in the Arbitration Act indicates that its sweep will cover tortious and delictual relationships as well.37

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These non-​contractual relations may arise out of statutory relationships. For instance, arbitration proceedings mandated under the By-​Laws of the National Stock Exchange arise not strictly from contractual relationships, but statutory relationships.

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The Arbitration Act eschews the express commercial wording of Article 1(1) of the UNCITRAL Model Law. The applicability of the Arbitration Act is not limited to arbitrations arising out of commercial relationships.

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The section of the Arbitration Act dealing with the recognition and enforcement of awards does not contain the words “commercial nature of the dispute”. This expands the scope of the kind of awards that can be enforced. As such, the commercial or non-​ commercial nature of the dispute does not seem to be a determining factor.

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The New Zealand Court of Appeal in Methanex Motunui Ltd v Spellman38 held that the phrase “defined legal relationship” should be given a broad meaning because of the express inclusion of non-​contractual relationships.

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Section 10 of New Zealand’s Arbitration Act 1996 supports the decision as it provides that any dispute which parties have agreed to submit to arbitration under an arbitration agreement may be determined by arbitration, unless the arbitration agreement is contrary to public policy, or the subject matter of the dispute is not capable of determination by arbitration under any other law.39

35. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 79, at para. 2.25. 36. Mustill and Boyd, Commercial Arbitration (2nd edn, Butterworths 1989), p. 105. 37. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 289. 38. [2004] 3 NZLR 454 at para. 61, CA (NZ). 39. Note that s. 10 of New Zealand’s Arbitration Act 1996 was amended on March 1 2017. Section 10(2) reads: “The fact that an enactment confers jurisdiction in respect of any matter on the High Court or the District

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The New Zealand Court of Appeal in Bidois v Leef,40 widely interpreted the phrase in a case where one of the key issues arose out of the words “in respect of a defined legal relationship” as appearing in the definition of arbitration agreement in Article 7 of the UNCITRAL Model Law.

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The Court added that the lack of authority worldwide with respect to the meaning of the words “defined legal relationship” implied that a permissive interpretation was warranted. It was further noted that an arbitration need not determine all issues between the parties.

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The Court in Methanex Motunui Ltd v Spellman41 resolved the issue of whether Section 10 of New Zealand’s Arbitration Act 1996 could give rights to an interested party who is not an actual party to the agreement when it held:

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“In our view the definition must be read as a whole. What is required is that there be a dispute in respect of a defined legal relationship and it is only the parties between whom that dispute has arisen or may arise who can submit the dispute to arbitration. This leads us to differ from Fisher J as to the extent of the definition. We believe that, in the context of the Act as a whole, a person is a party to an arbitration agreement only if that person is one of the persons which had submitted the dispute to arbitration and the arbitration is in respect of a defined legal relationship which involves that person.”

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The travaux préparatoires indicate that this expression “should be given a wide interpretation so as to cover all non-​contractual commercial cases occurring in practice (e.g., third-​party interfering with contractual relations; infringement of trademark or other unfair competition).”42

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Whether Contractual or Not

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Section 7(1) of the Arbitration Act clarifies that an arbitration agreement may include references which arise from a relationship “whether contractual or not”. As such, the notion of an arbitration agreement is not restricted to an agreement relating to the resolution of contractual disputes.

Court but does not refer to the determination of that matter by arbitration does not, of itself, indicate that a dispute about that matter is not capable of determination by arbitration.” 40. [2015] NZCA 176. 41. [2004] 3 NZLR 454 at para. 47. 42. A/​CN.9/​264, Analytical Commentary on Draft Text of a Model Law on International Commercial Arbitration, under art. 7 at para. 4.

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Claims in tort can be the subject of a reference to arbitration as Section 7(1) makes it clear that claims are not limited to claims in contract. Whether or not a claim in tort can be brought to arbitration proceedings entirely depends upon the scope of the arbitration agreement.

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An English Court in Ashville Investments Ltd. v Elmer Contractors Ltd.43 held that tortious claims were covered where the arbitration agreement extended to “any matter or thing of whatsoever nature arising thereunder or in connection with” the particular contract. In New Zealand, it is suggested that although the vast majority of disputes arise from defined legal relationships which are contractual, “the relationship can also involve statutory claims and claims in tort”.44

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On the other hand, the English Court in Fillite (Runcorn) Ltd v Aqua-​Lift (a firm)45 held that tortious claims were excluded where the arbitration agreement stipulated “any dispute or differences arising under these heads of agreement”. It would seem that it is the use of the phrase “in connection therewith” which has widened the scope of an arbitration agreement.

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The Canadian court in Kaverit Steel Crane Ltd v Kone Corporation46 rejected the respondent’s objection that some of the issues were non-​arbitrable, including an allegation of conspiracy to harm all the plaintiffs. It held that the New York Convention and the Canadian International Commercial Arbitration Act covered both contractual and non-​contractual commercial relationships.

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It was also held that that liability in tort was an arbitrable matter, provided that the relationship that created that liability was of a “commercial” nature. The court held that the respondent’s claim for conspiracy to harm by unlawful acts, to the extent the unlawful acts constituted a breach of contract, was arbitrable and had to be referred to arbitration.

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Practically speaking, almost any sufficiently clear arbitration clause between two parties would, and has been held to, satisfy the defined legal relationship requirement.

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However, caution has to be exercised as certain jurisdictions require the defined legal relationship to be of a commercial nature.

43. 44. 45. 46.

[1988] 3 WLR 867. David A.R. Williams and Amokura Kawharu, Williams & Kawharu on Arbitration (Lexis Nexis NZ 2011). (1989) 45 BLR 27. (1992) 87 DLR 94th) 129.

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This was expressly permitted by the New York Convention. Many States, including India, have declared that they would only enforce arbitral awards arising out of commercial relationships.47

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However, as stated earlier, the Arbitration Act avoids the express commercial wording of Article 1(1) of the Model Law. If parties find themselves in a situation of arbitrating a dispute that appears to arise from a non-​commercial relationship, it would be prudent to check the local law of the country where enforcement is likely to be sought, to ascertain whether awards rendered in respect of non-​commercial disputes will be enforced.48

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In India, Section 44 of the Arbitration Act which deals with the recognition and enforcement of New York Convention awards, sets out:

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“In this Chapter ‘foreign award’ means an arbitral award on differences relating to matters considered as commercial under the law in force in India …”.

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Thus, the commercial nature of the dispute is a relevant factor for the enforcement of an award in India. However, the term “commercial” appearing in the Arbitration Act is not defined and it is unclear how a court would approach an objection that the difference relating to the matter submitted to arbitration is not “commercial” for the purposes of Section 44.

(1) Ordinary transactions of merchants, bankers, financiers, and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents; (2) export or import of merchandise or services;

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A potential guiding factor to ascertain “legal relationships of a commercial nature” may be found in the Commercial Courts Act, 201549 which defines a commercial dispute as a dispute arising out of the following relationships:

(3) issues relating to admiralty and maritime law;



(4) transactions relating to aircraft, aircraft engines, aircraft equipment, and helicopters, including sales, leasing, and financing of the same;



(5) carriage of goods;

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47. The full list of countries is available at http://​www.newyorkconvention.org/​countries. 48. See for an in-​depth analysis of the definition of “commercial” under the New York Convention; Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Wolters Kluwer 2021), p. 323. 49. Act No. 4 of 2016.

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(6) construction and infrastructure contracts, including tenders;



(7) agreements relating to immovable property used exclusively in trade or commerce;



(8) franchising agreements;



(9) distribution and licensing agreements; (10) management and consultancy agreements;



(11) joint venture agreements;



(12) shareholders agreements;



(13) subscription and investment agreements pertaining to the services industry including outsourcing services and financial services;



(14) mercantile agency and mercantile usage;



(15) partnership agreements;



(16) technology development agreements;



(17) intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications, and semiconductor integrated circuits;



(18) agreements for sale of goods or provision of services;



(19) exploitation of oil and gas reserves or other natural resources including electromagnetic spectrum;



(20) insurance and re-​insurance;



(21) contracts of agency relating to any of the above; and

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(22) such other commercial disputes as may be notified by the Central Government.

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Parties intending to take to arbitration a dispute that is likely to be enforced in India could use the above factors for guidance as to a “commercial” relationship.

Pre-​arbitration Procedures A clause can be an arbitration agreement even though it does not provide for immediate reference to arbitration when a dispute arises.

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Chapter 7—​​​Arbitration Agreements

However, the arbitration agreement must be a genuine agreement to arbitrate and not merely a contemplation that arbitration may be used.50 The latter situation means that there is no binding agreement to arbitrate.51 Parties sometimes prefer to include various pre-​arbitral steps to be followed by the parties as part of the dispute resolution clause before invocation of arbitration.

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In multi-​tier dispute resolution clauses (also known as escalation clauses, filter clauses, multi-​step clauses, or ADR first clauses), the parties agree to follow distinct stages comprising various ADR techniques prior to going to arbitration.52

The parties then have an opportunity to resolve the disputes between in a non-​ adversarial manner or by way of adjudicatory ADR method.

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This preliminary brisk skirmish may allow each side to gauge the strength of the other’s case and the stomach each has for the final fight in arbitration. The case may settle in order to avoid delays, save costs, and maintain the parties’ business relationship. If it does on better informed terms than otherwise have been the case.53

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Nowadays, multi-​tiered dispute resolution clauses usually contain provisions that require parties to take certain pre-​arbitration steps as a sequence for invoking the arbitration agreement.

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It is a recurrent feature in dispute resolution clauses and includes time-​bound mediations, amicable settlements, cooling-​off periods, and other forms of non-​binding determinations. Such pre-​arbitration procedures are now common in international contracts as well as domestic contracts.

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In the first approach, pre-​arbitration procedure can create a condition precedent to arbitration.54 However, pre-​arbitration procedures that are drafted vaguely can create jurisdictional problems for an arbitral tribunal on whether to proceed with the

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50. Ilias Bantekas, Pietro Ortolani, Shahla Ali, Manual Gomez, and Michael Polkinghorn, UNCITRAL Model Law on International Commercial Arbitration, A Commentary, 2020, Cambridge University Press, p. 116. 51. Jagdish Chander v Ramesh Chander and Others (2007) 5 SCC 719, SC. 52. An example of the multi-​tier clause is as follows: “All disputes arising out of or in connection with this Agreement shall be resolved by mutual discussions between the parties within 15 days of the said disputes arising, failing which, such disputes shall be referred to conciliation. If the conciliation proceedings fail to resolve the disputes, then the disputes will be referred for Arbitration to a sole arbitration being a retired judge of the Supreme Court of India. The procedure of arbitration shall be as per the Arbitration & Conciliation Act, 1996. This Agreement shall be subject to the jurisdiction of Court at New Delhi and the venue of arbitration shall be at New Delhi.” 53. Adrian Briggs, The Conflict of Laws (4th edn, Oxford University Press 2019), p. 103. 54. See Kieppe Participações e Administração Ltda v Graal Participações Ltda Nº 1.331.100 –​BA (2012/​0100301-​ 4), 22 February 2016. The Brazilian Court decided on the issue of whether a clause foreseeing mediation or arbitration binds the parties to arbitrate or if it merely sets forth the alternatives in the event of a dispute.

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Law, Practice and Procedure of Arbitration in India

arbitration. Therefore, the pre-​arbitration procedure should be sufficiently defined in the dispute resolution clause so as to provide a mutual obligation between the parties. A requirement to negotiate can be a condition precedent to a reference to arbitration.55

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Such a requirement raises issues of compliance with the condition, such as the minimum level of participation in the negotiation or discussions,56 between whom the negotiations are to take place, what (if any) grounds there are for withdrawing from the process and ascertaining the time frame or period within which negotiations can be said to have failed, so as to entitle a party to invoke arbitration.

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For example, the relevant clause in the case of River Thames Insurance Co Ltd v Al Ahleia Insurance Co SAK57 provided for other machinery to be exhausted before there would be a dispute or difference between the employer and the contractor under the arbitration clause.

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The issue before the Court was whether the clause was an arbitration clause. The matter was to be referred first, to a panel of three independent experts who were specifically stated to act as experts and not arbitrators. This led to an appeal from the panel’s decision to three arbitrators under the ICC Arbitration Rules.

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The Court held that the clause was an arbitration agreement. The practical and legal impossibility of monitoring and enforcing an undefined process means that the courts require clear and definite guidelines, such as a submission to an ADR process recommended by a named institution, before such a clause will become a condition precedent to arbitration.

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In contrast, the dispute resolution clause in Cott UK Ltd v F E Barber Ltd58 was titled as “Arbitration” and provided that any dispute or difference was to be referred to an independent consultant who “shall act as an expert and not an arbiter and his decision shall be final and binding on the parties”.

55. See the contrasting approaches to requirements to negotiate in good faith in the UK in Wah (Aka Alan Tang) v Grant Thornton International Ltd [2013] 1 Lloyd’s Law Reports 11 at para. 57, [2013] 1 All ER (Comm) 1226 at para. 54; in Australia in United Group Rail Services Limited v Rail Corporation New South Wales (2009) 127 Con LR 202, and in Singapore in International Research Corporation PLC v Lufthansa Systems Asia Pacific Pte Ltd [2014] 1 SLR 130. 56. A requirement for discussions, which did not result in a resolution of the matter within four continuous weeks would entitle the parties to commence arbitration, caused difficulties in Emirates Trading Agency LLC v Prime Mineral Exports Private Ltd [2014] EWHC 2104 –​when one party (unsuccessfully) sought to argue that this required four continuous weeks of negotiations. 57. [1973] 1 Lloyd’s Rep 2. 58. [1997] 3 All ER 540.

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Chapter 7—​​​Arbitration Agreements

The court held that the heading of the clause was to be disregarded. The effect of the agreement was to provide for expert determination rather than arbitration. As a result, judicial proceedings in breach of the clause did not have to be stayed automatically.

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The Indian courts have addressed pre-​ arbitration procedures in two buckets depending on the nature of the pre-​conditions to arbitration. The first bucket involves the majority of the court rulings which have held that pre-​arbitration procedures are mandatory and affect the jurisdiction of the arbitral tribunal. The second approach is where the courts have regarded pre-​arbitration steps as optional and non-​mandatory.

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The Supreme Court of India in M.K. Shah Engineers & Contractors v State of M.P.59 considered whether an award could be set aside if certain procedural pre-​requisites were not achieved. The arbitration clause in this case required the parties to initially submit their disputes to the Superintending Engineer, and thereafter to arbitration in the event a party was dissatisfied with the decision of the Superintending Engineer.

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The issue was formulated as:

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“[T]‌he principal issue for decision is what is the effect of absence of decision by the Superintending Engineer proceeding the demand for reference and commencement of the arbitration proceedings”.

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The Court held that such conditions were “essential” and necessarily had to be observed. However, on the facts that court held that the parties had, by conduct, waived this procedural pre-​condition.

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The Court stated as follows:

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“The steps preceding the coming into operation of the arbitration clause though essential are capable of being waived and if one party has by its own conduct or the conduct of its officials disabled such preceding steps being taken, it will be deemed that the procedural pre-​requisites were waived. The party at fault cannot be permitted to set up the bar of non-​performance of pre-​requisites obligation so as to exclude the applicability and operation of the arbitration clause.”

The Supreme Court of India’s position supports a deviation from the pre-​condition to arbitration on account of “futility” of complying with such pre-​condition. Where the relationship between the parties is extremely acrimonious, there may be no room for mediation, negotiation, or any friendly discussions. Therefore, a party could directly proceed to initiate arbitration proceedings without having to exhaust the pre-​condition to arbitration. 59. (1999) 2 SCC 594.

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Law, Practice and Procedure of Arbitration in India

On the other hand, the English Court in Channel Tunnel Group Ltd. v Balfour Beatty Construction Ltd.60 took a different view. Upholding the sanctity of such a contract, Mustill J opined:

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“Those who make agreements for the resolution of disputes must show good cause for departing from them… Having promised to take their complaints to the experts and if necessary, to the arbitrators, this is where the appellants should go. The fact that the appellants now find their chosen method too slow to suit their purposes is to my way of thinking quite beside the point.”

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The Supreme Court of India followed this approach in S.K. Jain v State of Haryana & Anor61 when it agreed with the arbitral tribunal that refused to continue with the arbitration on the basis that the appellant had not complied with certain “mandatory requirements”. The court dismissed the appeal against the tribunal’s decision on the basis that the language of the arbitration clause required prior satisfaction of certain conditions.

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Multi-​ tier arbitration clauses must be drafted as precisely as possible. Pre-​ arbitration procedures that are drafted vaguely, can create jurisdictional problems for an arbitral tribunal. Therefore, the procedure should be sufficiently defined so as to provide a mutual obligation between the parties.

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A requirement to negotiate can be a condition precedent to a reference to arbitration.62 However, without clarifying details, such a requirement raises issues of compliance with the condition, such as the minimum level of participation in the negotiation or discussions,63 between whom the negotiations are to take place, what (if any) grounds there are for withdrawing from the process, and ascertaining the date on which negotiations can be said to have failed, so as to entitle a party to invoke arbitration.

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The IBA Guideline for Drafting International Arbitration Clause is useful to follow when drafting a multi-​tier dispute resolution clause.64 In particular, it suggests the following: 60. [1993] AC 334. 61. (2009) 4 SCC 357. 62. See the contrasting approaches to requirements to negotiate in good faith in the UK in Wah (Aka Alan Tang) v Grant Thornton International Ltd [2013] 1 Lloyd’s Law Reports 11 at para. 57, [2013] 1 All ER (Comm) 1226 at para. 54; in Australia in United Group Rail Services Limited v Rail Corporation New South Wales (2009) 127 Con LR 202, and in Singapore in International Research Corporation PLC v Lufthansa Systems Asia Pacific Pte Ltd [2014] 1 SLR 130. 63. A requirement for discussions, which did not result in a resolution of the matter within four continuous weeks would entitle the parties to commence arbitration, caused difficulties in Emirates Trading Agency LLC v Prime Mineral Exports Private Ltd [2014] EWHC 2104 –​when one party (unsuccessfully) sought to argue that this required four continuous weeks of negotiations. 64. International Bar Association, 7 October 2010.

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Chapter 7—​​​Arbitration Agreements

(1) The clause should specify a period of time for negotiation or mediation, triggered by a defined and undisputable event (i.e. a written request), after which either party can resort to arbitration.



(2) The clause should avoid rendering the arbitration clause permissive.



(3) The clause should define the disputes to be submitted to negotiation or mediation and to arbitration in identical terms.

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The Supreme Court of India in its decision in Oriental Insurance Company v M/​S Narbheram Power and Steel Pvt Ltd65 held that arbitration clauses need to be construed strictly. A pre-​condition to arbitration must be complied with.

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In this case, the dispute arose out of an insurance claim. The arbitration clause stipulated that disputes could not be referred to arbitration if the insurance company disputed its liability under the applicable policy.

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The Supreme Court of India held that the dispute resolution clause provided that once the insurer disputes the liability under or in respect of the policy, there can be no reference to the arbitrator.66

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The Supreme Court of India in a subsequent judgment on similar facts in United India Insurance Co. Ltd. v Hyundai Engineering and Construction Co. Ltd. & Ors67 (the “United India Insurance Case”) held that the arbitration agreement was “hedged with a conditionality” and the non-​fulfilment of the “pre-​condition” rendered the dispute “non-​arbitrable”.68

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These cases were distinct on their facts. The pre-​conditions referred in these cases went to the root of the issue between the parties. The pre-​condition was not of such a nature that the parties were required to engage in friendly discussions or negotiations prior to initiating arbitration proceedings.

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The Supreme Court of India in Demerara Distilleries (P) Ltd v Demerara Distillers Ltd69 took a different view on a pre-​condition clause which required parties to engage in mutual discussions, followed by mediation prior to initiating arbitration. The Court held that objections relating to the application for the appointment of an arbitrator being “premature” did not merit any serious consideration. 65. (2018) 6 SCC 534. Affirmed by the Supreme Court of India in United India Insurance Co. Ltd. v Hyundai Engineering and Construction Co. Ltd. & Ors (the “United India Insurance Case”) (2018) 17 SCC 607. 66. Oriental Insurance Company v M/​S Narbheram Power and Steel Pvt Ltd at para. 18. 67. (2018) 17 SCC 607. 68. The United India Insurance Case at para. 15. 69. (2015) 13 SCC 610.

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Law, Practice and Procedure of Arbitration in India

The Court held that based on the correspondence exchanged between the parties that any mutual discussions or mediation would be an empty formality. Hence, the party could invoke arbitration prior to the completion of the time period for discussions and mediation having elapsed.

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This approach is termed as the “substantial compliance” approach. A party may be allowed to initiate arbitration upon having substantially complied with the pre-​ condition to arbitrate.70 Similarly, the Supreme Court of India in VISA International Ltd. v Continental Resources (USA) Ltd.71 held upon a perusal of the correspondence exchanged between the parties as follows:

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“… [I]‌t is clear that there was no scope for amicable settlement, for both the parties have taken rigid stand (sic) making allegations against each other. … The exchange of letters between the parties undoubtedly discloses that attempts were made for an amicable settlement but without any result leaving no option but to invoke arbitration clause.”72

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The Court of Appeal of Singapore in International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd and Anor73 took a different approach when it held that:

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“Where the parties have clearly contracted for a specific set of dispute resolution procedures as preconditions for arbitration, those preconditions must be fulfilled. In the case before us, it could not be said that the parties intended that some meetings between some people in their respective organisations discussing some variety of matters would be sufficient to constitute compliance with the preconditions for arbitration. This can be seen from, among others, the decision of the United States Court of Appeals for the Seventh Circuit in DeValk Lincoln Mercury, Inc, Harold G DeValk and John M Fitzgerald v. Ford Motor Company and Ford Leasing Development Company 811 F 2d 326 (7th Cir, 1987) (more commonly cited as ‘DeValk Lincoln Mercury, Inc v Ford Motor Company’). That was a case involving a motion by the defendants for summary judgment upon the plaintiffs’ failure to comply with a pre-​ litigation mediation clause. The court rejected the plaintiffs’ argument that they had

70. See also the decision of the Supreme Court of India in Visa International Limited v Continental Resources (USA) Limited (2009) 2 SCC 55. However, substantial compliance is not recognised and is unacceptable in certain jurisdictions. See the position in Singapore in International Research Corporation PLC v Lufthansa Systems Asia Pacific Pte Ltd [2014] 1 SLR 130; and in England, Emirates Trading Agency LLC v Prime Mineral Exports Private Ltd [2014] EWHC 2104. 71. 2009 2 SCC 55. 72. Ibid at para. 38. 73. [2013] SGCA 55.

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Chapter 7—​​​Arbitration Agreements

substantially complied with the clause on the basis that they had met the purpose of that clause, which, it was argued, was to give the defendants notice of a potential claim and to allow the defendants to attempt to settle the claim prior to litigation. The reasoning in that case is consistent with our own view that where a specific procedure has been prescribed as a condition precedent to arbitration or litigation, then absent any question of waiver, it must be shown to have been complied with.”74

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The Court of Appeal of Singapore’s approach in Lufthansa was subsequently followed by the Commercial Court of England in Emirates Trading LLC v Prime Mineral Exports Private Ltd (“Emirates Trading”).75

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The English Court in upholding the parties’ agreement requiring friendly discussions prior to invoking arbitration held that:

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“… The agreement is not incomplete; no term is missing. Nor is it uncertain; an obligation to seek to resolve a dispute by friendly discussions in good faith has an identifiable standard, namely, fair, honest and genuine discussions aimed at resolving a dispute. Difficulty of proving a breach in some cases should not be confused with a suggestion that the clause lacks certainty. In the context of a dispute resolution clause pursuant to which the parties have voluntarily accepted a restriction on their freedom not to negotiate it is not appropriate to suggest that the obligation is inconsistent with the position of a negotiating party. Enforcement of such an agreement when found as part of a dispute resolution clause is in the public interest, first, because commercial men expect the court to enforce obligations which they have freely undertaken and, second, because the object of the agreement is to avoid what might otherwise be an expensive and time-​consuming arbitration.”76

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Therefore, in Singapore and England, tiered dispute resolution clauses are enforceable so long as they are clear, definite, and drafted in a manner that would enable a court to adjudicate the issue of whether it has been breached.

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The Commercial Court in Emirates Trading also categorically stated that if a clause requires friendly discussions to last for four weeks, then if the discussions last for less than four weeks “a party must wait for a period of four continuous weeks to elapse before he may commence arbitration”.77

74. 75. 76. 77.

Ibid at para. 62. [2014] EWHC 2104 (Comm). Ibid at para. 64. Ibid at para. 26.

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That approach was different from that taken by the Indian courts in VISA International78 and Demerara Distilleries.79 The Supreme Court of India in Icomm Tele Ltd v Punjab State Water Supply and Sewerage Board and Anor80 dealt with slightly different facts. It struck down a pre-​condition which required a party initiating arbitration to make a pre-​deposit of 10 per cent of the claim amount, for being arbitrary as well as a “clog” on the party’s right to initiate arbitration.

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Ultimately, the question is whether failure to adhere to pre-​arbitration procedures that are not stated to be conditions precedent will operate as an absolute bar to arbitrating a dispute.81 The failure to adhere to the pre-​arbitration procedure in one dispute would not prevent the commencement of a new or different dispute, while complying with the procedures, unless of course the limitation period has expired.82

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The courts have also taken the second approach where pre-​arbitration steps are regarded as optional and non-​mandatory, albeit less often. The High Court of Delhi in Ravindra Kumar Verma v BPTP Limited83 held that prior requirements before referring a dispute to arbitration are only directory and not mandatory.84

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Unilateral or Asymmetric Arbitration Agreements

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(2009) 2 SCC 55. (2015) 13 SCC 610. (2019) 4 SCC 401. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Wolters Kluwer 2021), p. 305; Lord Salmon in Bremer Handelsgesellschaft mbH v Vanden Avenne-​Izegem PVBA [1978] 2 Lloyd’s Rep 109, HL held that to be a condition precedent, the clause must state the consequences of failure to comply in the context of claims for additional loss and expenses. This rule may be applicable as regards to compliance with pre-​arbitration procedures. Waste Management, Inc v United Mexican States (‘Number 2’) (Award) (30 April 2004), ICSID Case No. ARB(AF)/​00/​3, 43 International Legal Materials, 967; “Chapter 2: Legal Framework for International Arbitration Agreements” in G Born, International Commercial Arbitration (2nd edn, 2014), p. 941. (2015) 147 DRJ 175. The decision followed the earlier Delhi High Court cases in Sikand Construction Co. v State Bank of India ILR 1979 Delhi 364 and Saraswati Construction Company v East Delhi Co-​Operative Group 57 (1995) DLT 343, 1994 RLR 458. The approach was affirmed in Union of India v M/​s Baga Brothers 2017 SCC OnLine Del 8989, Siemens Limited v Jindal India Thermal Power 2018 SCC OnLine Del 7158, and Sarvesh Security Services Pvt Ltd v DSIIDC 2018 SCC OnLine Del 8500 where the Courts held that pre-​arbitration procedures are not mandatory. Pittalis v Sherefettin [1986] QB 868, [1986] 2 All ER 227, CA (Eng); Woolf v Collis Removal Service [1948] 1 KB 11, [1947] 2 All ER 260, CA (Eng); NB Three Shipping Ltd v Harebell Shipping Ltd [2004] EWHC 2001 (Comm), [2005] 1 Lloyd’s Rep 509; Law Debenture Trust Corporation plc v Elektrim Finance BV [2005] EWHC 1412 (Ch); Mauritius Commercial Bank Ltd v Hestia Holdings Ltd [2013] EWHC 1328 (Comm). Westfal-​Larsen & Co A/​S v Ikerigi Compania Naviera SA, The Messiniaki Bergen [1983] 1 All ER 382, [1983] 1 Lloyd’s Rep 424; Navigazione Alta Italia SpA v Concordia Maritime Chartering AB, The Stena Pacifica [1990] 2 Lloyd’s Rep 234.

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78. 79. 80. 81.

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Usually, arbitration clauses provide either party the right to refer a dispute to arbitration. However, an arbitration agreement may validly confer the right to commence arbitration on only one party.85 Such a clause would become a binding arbitration agreement upon such election.86

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82.

83. 84. 85.

86.

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The English Courts have granted stays of court proceedings where the party with the right to refer a dispute to arbitration exercises that right even after litigation was commenced.87 The exercise of the option by one party necessarily creates an obligation to arbitrate upon the other.

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The option to arbitrate itself is the creation of an agreement to refer an existing dispute to arbitration. Both the framework of the optional agreement and the exercise of the option have to be in writing to satisfy the writing requirement.88

Fox LJ in Pittalis v Sherefettin89 observed that:

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Unilateral agreements have been criticised for lacking mutuality. However, what is really criticised is the lack of consideration, not a lack of mutuality. The unequal operation of a unilateral clause does not divest it of the character of an arbitration agreement.

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“[a]‌n agreement to arbitrate in future if a party so elects can, in my opinion, correctly be described as an agreement to refer a future dispute to arbitration; if there is an election both parties are bound.”

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However, unilateral arbitration clauses are useful in situations where a creditor does not want all disputes to be resolved in local courts, but wishes to retain the option to sue in the debtor’s local jurisdiction (i.e. the place where his assets are located).90

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Outside of these circumstances, such clauses are often problematic because conferring the right to arbitrate on only one party does not necessarily correspondingly remove the right of the other party to litigate.

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This can result in parties attempting to outmanoeuvre one another by filing lawsuits resulting in an increase in associated expense and delay of stay applications. In some countries, such as Russia, unilateral arbitration agreements may not be recognised as being valid.91

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The definition of an arbitration agreement in Section 7 of the Arbitration Act refers to “an agreement by the parties to submit to arbitration”. A plain reading of this would mean that all the parties agree to submit disputes to arbitration.

87. NB Three Shipping Ltd v Harebell Shipping Ltd [2004] EWHC 2001 (Comm), [2005] 1 Lloyd’s Rep 509; the rationale of the decision being to prevent one party circumventing the rights of the other to arbitrate by commencing proceedings in court first. 88. Westfal-​Larsen & Co A/​S v Ikerigi Compania Naviera SA, The Messiniaki Bergen [1983] 1 All ER 382, [1983] 1 Lloyd’s Rep 424. 89. [1986] QB 868 at p. 874. 90. Professor Fentiman “Universal Jurisdiction Agreements in Europe” (2013) CLJ 72 (1) 24–​27. 91. The Russian the Presidium of the Supreme Arbitrazh Court of the Russian Federation in case no. A40-​49223/​ 11-​112-​401 stated that a unilateral arbitration clause would be invalid.

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In practice, arbitration agreements normally give each party to the agreement the mutual right to refer matters to arbitration. Such a practice is consonant with the definitions set out in statutes. It is consistent with the principle of mutuality which is as an essential ingredient in an arbitration agreement.

Davis LJ in Baron v Sunderland Corp93 explained that:

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Indian courts have invalidated asymmetric arbitration agreements.92 The main grounds upon which unilateral clauses have been successfully challenged are lack of mutuality, public policy, and restraint of a party’s right to legal proceedings.

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“It is necessary in an arbitration clause that each party shall agree to refer disputes to arbitration; and it is an essential ingredient of an arbitration clause that either party may, in the event of a dispute arising, refer it in the provided manner to arbitration. In other words, the clause must give bilateral rights of reference.”

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However, the validity of unilateral or asymmetric arbitration agreements has been recognised in several other jurisdictions.94 The election to arbitrate may even be made after litigation proceedings have been commenced.95

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The Courts in Law Debenture Trust Corporation plc v Elektrim Finance BV96 and NB Three Shipping Ltd v Harebell Shipping Ltd.97 have upheld unilateral clauses. They highlighted that contract provisions commonly give one party an advantage over the other, and there was commercial sense behind these clauses.

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The Court in Mauritius Commercial Bank Ltd v Hestia Holdings Ltd98 dealt with an agreement which contained a dispute resolution clause that provided for the exclusive

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92. Bhartia Cutler Hammer v AVN Tubes 1991 SCC OnLine Del 322, Emmsons International Ltd. v Metal Distributors 2005 SCC OnLine Del 17, Lucent Technology v ICICI Bank 2009 SCC OnLine Del 3213. However, there is no definitive decision on this by the Supreme Court of India. As such, the High Court of Madras in Castrol India Ltd. v Apex Tooling Solutions, 2015 SCC OnLine Mad 20195 took a different view and upheld the validity of a unilateral arbitration by taking the general position that arbitration clauses need not necessarily have mutuality. 93. [1966] 2 QB 56 at p. 64, [1966] 1 All ER 349 at 351, CA (Eng). See also Tote Bookmakers Ltd v Development & Property Holding Co Ltd [1985] Ch 261, [1985] 2 All ER 555. 94. Pittalis v Sherefettin [1986] QB 868, [1986] 2 All ER 227, CA (Eng); Woolf v Collis Removal Service [1948] 1 KB 11, [1947] 2 All ER 260, CA (Eng); NB Three Shipping Ltd v Harebell Shipping Ltd [2004] EWHC 2001 (Comm), [2005] 1 Lloyd’s Rep 509; Law Debenture Trust Corporation plc v Elektrim Finance BV [2005] EWHC 1412 (Ch), [2005] 2 All ER (Comm) 476; Mauritius Commercial Bank Ltd v Hestia Holdings Ltd [2013] EWHC 1328 (Comm). 95. NB Three Shipping Ltd v Harebell Shipping Ltd [2004] EWHC 2001 (Comm), [2005] 1 Lloyd’s Rep 509; the rationale of the decision being to prevent one party circumventing the rights of the other to arbitrate by commencing proceedings in court first. 96. [2005] EWHC 1999 (Ch). 97. [2004] EWHC 2001 (Comm), [2005] 1 Lloyds Rep 509. 98. [2013] EWHC 1328 (Comm).

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jurisdiction of the English courts. The agreement also stated that the claimant bank must not “be prevented from taking proceedings related to a dispute in any other courts in any jurisdiction”.

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Thereafter, the claimant instituted proceedings against the defendant in English Courts. The defendant challenged the validity of the unilateral clause on the ground that it was “incompatible with the fundamental principle of equal access to justice”. The Court rejected this argument. It stated that “such asymmetric provisions have regularly been enforced by the court”.

Arbitration Agreement Interpreted Broadly

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So far, the Supreme Court of India has not pronounced determinatively on this issue, they generally remain sceptical to uphold such clauses.99

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An agreement to refer disputes to arbitration is essential and the intention to arbitrate must be clear and unequivocal.100 No specific terms or form, or even the word arbitration is required to constitute an arbitration agreement.101 Where there is a clear intention to arbitrate, effect will be given to the agreement, even if the clause is incomplete or lacks certain particulars.102

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The words used in the agreement should disclose a determination and obligation to go to arbitration and not merely contemplate the possibility of going for arbitration.103

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The Supreme Court of India in Enercon (India) Ltd. v Enercon Gmbh104 held that the arbitration agreement should disclose the moral imperative act of the parties to go for

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99. Unilateral Option Clauses –​2017 Survey, Clifford Chance, at p. 4. 100. See King v Brandywine Reinsurance Co (UK) Ltd (formerly known as Cigna RE Co (UK) Ltd) [2004] EWHC 1033 (Comm), [2004] All ER (D) 108 (May) where an arbitration clause provided that “such difference may, upon the agreement of the parties ... be referred” to arbitration and as an agreement to agree to refer disputes to arbitration was not unequivocal and was therefore unenforceable. See Jagdish Chander v Ramesh Chander (2007) 5 SCC 719. 101. Jagdish Chander v Ramesh Chander (2007) 5 SCC 719; State of Punjab v Dina Nath (2007) 5 SCC 28; Plant v Plant [2002] EWHC 2283 (Ch); Fit Tech Inc v Bally Total Fitness Holding Corp, 374 F.3d 1, 7 (1st Circuit 2004), US, where the dispute resolution procedure was “arbitration in everything but name” (at para. 26); Benson Pump Co v South Cent Pool Supply Inc, 325 F.Supp.2d 1152, p. 1156 (D Nev 2004), US where “arbitrate” was not considered to be a necessary “magic word”; Gary B. Born, International Commercial Arbitration, Vol. 1: International Commercial Arbitration (3rd edn, Wolters Kluwer 2020), p. 68. 102. The Supreme Court of India in Enercon (India) Limited and Others v Enercon GMBH and Another (2014) 5 SCC 1 held that “[T]‌he courts have to adopt a pragmatic approach and not a pedantic or technical approach while interpreting or construing an arbitration agreement or arbitration clause. Therefore, when working with a seemingly unworkable arbitration clause. It would be the duty of the court to make the same workable within the permissible limits of the law, without stretching it beyond the boundaries of recognition. In other words, a common-​sense approach has to be adopted to give effect to the intention of the parties to arbitrate …”, at para. 88. 103. Jagdish Chander v Ramesh Chander (2007) 5 SCC 719 at para. 8. Also see Payal Chawla Singh v The Coca-​Cola Co. & Anr. (2015) 13 SCC 699 where the Supreme Court of India held that a clause giving the employee an option to refer disputes to arbitration was not a valid arbitration agreement. 104. (2014) 5 SCC 1 at paras 94–​96.

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dispute settlement through the means of arbitration. The arbitration agreement should not just refer to the possibility to go for arbitration. It should reflect the will of the parties to choose arbitration as a means of dispute settlement mechanism.

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Parties are at liberty to decide on how to word the arbitration agreement. The important point is that it has to be clear and certain. For example, the arbitration agreement in the case of Mangistaumunaigaz Oil Production Association v United World Trade Inc105 simply provided, “[A]‌rbitration, if any, by ICC rules in London”.

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The Court rejected the argument that the phrase “if any” rendered the arbitration agreement too vague. The Court held that the phrase could be taken as meaningless and could be ignored, or alternatively it could be construed as a reference to arbitration in the event any dispute arises.

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Either way, the Court held that the arbitration clause was not uncertain. It is not necessary that the number of arbitrators be specified.106 This is dealt by the Arbitration Act which provides for a sole arbitrator in the absence of a prior agreement by the parties.107

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An arbitration agreement is an agreement like any other contract. Therefore, it can be void for uncertainty if it is ambiguous. It cannot be construed to give the agreement certainty. Arbitration clauses which are defective, vague, or unworkable are called pathological clauses.

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One example of a problem caused by drafting is where the arbitration agreement appears to be permissive or provides a choice between arbitration and litigation. The use of the words “may” in an arbitration clause may be construed to constitute an impediment to intention to arbitrate in India.

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However, in other jurisdictions, it has not been considered to be uncertain as it provides an option to litigate.108 A clause that expressly provides a choice between arbitrating and litigating, in certain courts, has been held to be defective.109

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1 05. [1995] 1 Lloyd’s Rep 617. 106. See MMTC Limited v Sterlite Industries (India) Ltd (1996) 6 SCC 716 where the Supreme Court of India found that nothing in art. 7(1) of the Model Law requires the number of arbitrators to be stated. 107. Arbitration and Conciliation Act, 1996, s. 10(2). 108. Grandeur Electrical Co Ltd v Cheung Kee Fung Cheung Construction Co Ltd [2006] HKCA 305, on the basis that granting a choice between arbitration and litigation must be clearly spelt out; Canadian National Railway Company v Lovat Tunnel Equipment Inc [1999] CanLII 3751 (ON CA); Tianjin Medicine & Health Products Import & Export Corporation v J A Moeller (Hong Kong) Limited [1994] HKCFI 351, SC; China State Construction Engineering Corporation, Guangdong Branch v Madiford Limited [1992] HKCFI 160; Campbell et al v Murphy [1993] CanLII 5460 (ON SC); WSG Nimbus Pte Ltd v Board of Control for Cricket in Sri Lanka [2002] 1 SLR(R) 1088, [2002] SGHC 104. Contrast with CCIC Consultech International v Silverman [1991] CanLII 2868 (QC CA); Aitken v Ishimaru Ltd [2007] NZHC 1133, NZ. 109. Empressa de Turismo Nacional & Internacional v Vacances sans frontiere Itée [1992] CanLII 3546 (QC CA).

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Chapter 7—​​​Arbitration Agreements

An arbitration clause provided that the parties would endeavour to resolve the matter by Swiss arbitration, failing which the English courts had jurisdiction. The Court held that there was no arbitration agreement.110 The use of the word “may” in Westfal-​Larsen v Ikerigi Compania Naviera, The Messiniaki Bergen111 did not force the parties to arbitrate, but once one party had elected to do so, the arbitration agreement was binding.

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The Court in Wholecrop Marketing Ltd v Wolds Produce Ltd112 held that where parties specify a time limit for commencing arbitration, the parties did not intend that upon the expiry of the time limit, the matter must be referred to litigation.

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There are contracts that include both, an arbitration agreement as well as an exclusive jurisdiction clause.113 Although this may appear to demonstrate ambiguity about the intention to arbitrate, courts have supported parties in their intention to arbitrate. It has been held that these forum selection clauses apply to situations where a party seeks the court’s intervention or support in relation to the arbitration.114

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The Supreme Court of India in Indus Mobile Distribution Private Limited v Datawind Innovations Private Limited and Ors.115 dealt with the question of jurisdiction where the parties include an exclusive jurisdiction clause in an arbitration agreement, designating a particular place as the seat of the arbitration.

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It held that the court in whose jurisdiction the seat of the arbitration falls would have sole jurisdiction to entertain petitions irrespective of non-​arbitrable issues arising out of the agreement, to the exclusion of any other court.116

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110. Kruppa v Benedetti [2014] EWHC 1887 (Comm). 111. [1983] 1 Lloyd’s Rep 424. 112. [2013] EWHC 2079 (Ch); Nanjing Tianshun Shipbuilding Co Ltd v Orchard Tankers PTE Ltd [2011] EWHC 164 (Comm); see also China Merchants Heavy Industry Co Ltd v JGC Corporation [2000] HKCFI 544. 113. For example, in the JKR PWD 203A (Rev 2007) Standard Form with quantities, arbitration is mandated at clause 65, but under clause 72 the parties “irrevocably submit to the exclusive jurisdiction of the courts of Malaysia”. A similar situation was found in an insurance policy in R. Kathiravelu a/​l Ramasamy v American Home Assurance Co Malaysia [2009] 1 MLJ 572. The Court of Appeal held that the jurisdiction clause was only intended to make Malaysian law the law of the policy and exclude the jurisdiction of non-​Malaysian courts from interpreting it. 114. This includes contracts containing forum selection clauses and arbitration agreements. PT Tri-​MG Intra Asia Airlines v Norse Air Charter Limited [2009] SGHC 13; PCCW Global Ltd v Interactive Communications Service Ltd [2006] HKCA 434, CA; Bundesgerichtshof SchiedsVZ 2007, 273, VII ZR 105/​06; Sulamerica CIA Nacional De Seguros SA v Enesa Engenharia SA [2012] EWHC 42 (Comm) at para. 48. 115. (2017) 7 SCC 678. 116. BALCO (2012) 9 SCC 552; Enercon (India) Ltd. & Others v Enercon Gmbh & Another (2014) 5 SCC 1; Reliance Industries Ltd. v Union of India (2014) 7 SCC 603 –​Referring to these judgments the Court observed that it has time and again been reiterated that once the seat of arbitration has been fixed, it would be in the nature of an exclusive jurisdiction clause as to the courts which exercise supervisory powers over the arbitration. See also the seminal decision of the Supreme Court of India on this issue in BGS SGS Soma JV v NHPC Ltd. (2019) SCC OnLine 1585; Hindustan Construction Company Ltd. v NHPC Ltd. (2020) SCC OnLine SC 305.

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Law, Practice and Procedure of Arbitration in India

Pathological and Failed Arbitration Agreements

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However, caution should be exercised against taking such an approach given the contemporary notions of amiability towards arbitration.117 In principle, where parties include a jurisdiction clause in a contract (at least where it is exclusive or mandatory in effect) as well as an arbitration clause, then the process for determining which of the clauses be given priority must be neutral and even handed. It should rely on the interpretation of the parties’ wording as far as possible. It cannot amount to simply upholding the arbitration clause based on some vague notion of superiority of the arbitral process.118

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Parties have considerable freedom in the drafting of their arbitration agreement whether the arbitration is institutional or ad hoc. They can draft short, long, or tailor-​made arbitration clauses depending on their needs. Drafting mistakes and limitations peculiar to the arbitration itself may create ambiguous arbitration clauses. The consequences may vary based on the kind and degree of the error.

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For example, some pathological arbitration agreements are so vague or unworkable that the courts are unable to find that the parties intended to arbitrate. The major mistakes that can be made in drafting arbitration agreements are equivocation, inattention, omission, over-​specificity, unrealistic expectations, litigation envy, overreaching etc.119

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An example is where the arbitration agreement provided for arbitration to be conducted in accordance with the by-​laws of the Companies Act 1956.120 However, no by-​laws existed under the Companies Act 1956. The Supreme Court of India held the clause to be invalid as it was vague and unworkable.

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Pathological arbitration agreements may be ambiguous, negligently drafted, without the essential elements of an arbitration agreement, over-​elaborated, with discrepancies on crucial matters, set unrealistic expectations, copy court procedures, and abusive in favouring one party over the other.

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An ambiguous arbitration clause is one that does not refer to arbitration if there is a dispute between the parties. There is no arbitration agreement as there

117. R. Garnett, “Coexisting and Conflicting Jurisdiction and Arbitration Clauses”, Journal of Private International Law, Vol. 9 No. 3, p. 362. 118. R. Garnett, ibid at p. 362, relying on S. Brekoulakis, “The Notion of Superiority of Arbitration Agreements over Jurisdiction Agreements” (2007) 37 Hong Kong law Journal 161, pp. 176–​178. 119. Diana-​Loredana Hogas, “Considerations about Drafting Arbitration Clauses” (2015) Journal of Public Administration, Finance and Law, Special Issue 2, p. 125. 120. System for International Agencies v Rahul Coach Builders Private Limited (2015) (13) SCC 436.

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Chapter 7—​​​Arbitration Agreements

is no explicit referral to arbitrate.121 An example of such an ambiguous clause is as follows: “Any controversy arising out of the performance of the present contract shall necessary be submitted to arbitration under the rules of …; in case of disagreement between the arbitrators chosen by the parties, it is agreed that the dispute shall be submitted to State Courts.”122

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The ambiguity arises from what would be the kind of disagreements between the arbitrators that will result in the dispute to be submitted to the courts. What happens if two of the panel of three arbitrators have agreed on an issue? The point to ascertain is whether the parties are providing for their dispute or difference to be resolved by arbitration or litigation.

irc

Another example of an ambiguous clause where the arbitral tribunal will have difficulty of proceeding with the arbitration is:

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“In case of dispute, the parties undertake to submit to arbitration but in case of litigation the Tribunal de la Seine shall have exclusive jurisdiction.”123

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Another example of a clause which results in litigation over the arbitration clause is set out below:

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“All disputes between the parties concerning the interpretation or enforcement of any rights or obligations under this agreement … may be resolved by final and binding arbitration pursuant to the voluntary arbitration rules of the AAA.”

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The plaintiff submitted that the phrase “may be resolved by final and binding arbitration” made the arbitration optional and not mandatory. As such, the matter was to be resolved by the court. The Supreme Court of New York held that the phrase “may be resolved” gave the parties an option of going to arbitration or not doing anything else. It was not an option of going to court and not to arbitration.124

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Even if the arbitral tribunal is able to proceed and eventually publish an award, there is no certainty that the arbitral award can survive the annulment procedure or be enforced.125

121. John Townsend, “Arbitration Clauses: Avoiding the Seven Deadly Sins” (2003) Dispute Resolution Journal, Vol. 58, Issue 1, February/​April, p. 30. 122. International Trade Centre UNCTAD/​WTO, Arbitration and Alternative Dispute Resolution: How to Settle International Business Disputes, 2001, The Centre, Geneva. 123. Tribunal de la Grande Instance of Paris, Rev Arb. 97, 1 February 1979. 124. Robert Miletsky, “How to Make Sure Your Arbitration Clauses Do Exactly What You Want Them to Do” (2005) Contractor’s Business Management Report, pp. 1, 6–​7. 125. Michael Ball, “Structuring the Arbitration in Advance: the Arbitration Clause in an International Development Agreement” in Julian Lew (ed.), Contemporary Problems in International Arbitration (Dordrecht: Martinus Nijhoff Publishers 1987), p. 299.

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Law, Practice and Procedure of Arbitration in India

However, Indian courts do not adopt this view. They have consistently held that arbitration agreements that qualify the choice of arbitration by use of words such as “can” or “may” are not valid agreements. They would require fresh consent to arbitrate.126

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The arbitration clause can be said to be negligently drafted also when the designated arbitration institution is wrongly named or defunct and the address is geographically incorrect.127 The institution must be correctly named together with the applicable version of its arbitration rules. An example of referring the disputes to a non-​existent institution is as follows: “Any dispute or contravention to the present contract shall be submitted to the French Chamber of Commerce of Sao Paulo.”128

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There is no French Chamber of Commerce in Sao Paulo, Brazil.

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A bare arbitration clause with essential elements missing as set out as follows may lead a disruption to the process:

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“All disputes arising out of the present contract shall be settles (sic) by way of arbitration.”129

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While it is a valid clause, it is shorn of essential details as to how the arbitral tribunal is to be constituted, the applicable substantive law, and the place of arbitration.130 It gives rise to several repercussions. For instance, the place of the arbitration affects the enforcement of the award under the New York Convention. It may even affect the selection of arbitrators. The applicable substantive law determines the parties’ respective rights and obligations to fill gaps in contractual provisions to avoid uncertainty.

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Parties normally choose their own national law as the substantive law applicable to the contract as they are familiar with it. However, it may not necessarily be advantageous to do so:

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“A party’s own national law may favour them in certain ways, but not in others. French law, for instance, does not allow the ‘theory of unforeseen circumstances’ which

126. Linde Heavy Truck Division Ltd. v Container Corporation of India Ltd. (2012) 195 DLT 366 at paras. 12, 13; Wellington Associates Ltd. v. Kirit Mehta (2000) 4 SCC 272 at paras. 17–​19; Jyoti Brothers v Shree Durga Mining Co. AIR 1996 Cal 280 at para. 3. See also Powertech World Wide Limited v Delvin International General Trading LLC (2012) 1 SCC 361 at paras. 16, 26. Use of the word “shall” be evidence of finality and validity of an arbitration agreement. 127. John Townsend, “Arbitration Clauses: Avoiding the Seven Deadly Sins” (2003) Dispute Resolution Journal, Vol. 58, Issue 1, February/​April, p. 31. 128. International Trade Centre UNCTAD/​WTO. 2001. Arbitration and Alternative Dispute Resolution: How to Settle International Business Disputes, The Centre, Geneva at p.150. 129. Ibid. 130. Friedland, Paul, Arbitration Clauses for International Contracts (New York: Juris 2000), p. 79.

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enables the contractual provisions to be adapted in the event that major changes occur to the circumstances as they prevail at the time the contract was concluded. Non-​allowance of the ‘theory of unforeseen circumstances’ may go against the seller’s interest when the price of the good is rising as oppose to failing. A French seller therefore may be inclined to accept the law of the buyer’s country.”131

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As such, it may be good form that when drafting arbitration clauses, the consequences of choosing the place of arbitration, applicable substantive law, language, the number of arbitrators and method of selection, and the qualifications of the arbitrators be carefully deliberated upon.

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Some of the escalation clauses have tended to be over-​elaborated starting with negotiation or mediation, dispute boards/​adjudication and followed by arbitration. The main purpose is to maintain good working relationships and avoid suspension of work during the currency of the contract. Such over-​elaboration may at times lead to difficulties.132

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An example of such a clause is:

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“(1) Any dispute arising out of or in connection with this contract shall be settled in good faith through mutual discussions between the parties.

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(2) In the event that the parties are unable to resolve a dispute in accordance with section 1 above, then either party, in accordance with this Section 2, may refer the dispute to an expert for consideration of the dispute.

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(3) Any dispute arising out of or in connection with Agreement and not resolved following the procedures described in Sections 1 and 2 above shall, except as hereafter provided, be settled by arbitration in accordance with the Rules of procedure for Arbitration Proceedings.”133

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The above example by the use of the word “shall” in (1) makes it mandatory for the parties to go through all the ADR methods before the dispute can be arbitrated. Thereafter, under (2) parties are given a choice to do so by the words “may refer” on whether they want to the ADR methods. This is a recipe for delay if any of the parties do decide to exploit the permissible referral by refusing it.134

131. International Trade Centre UNCTAD/​WTO. 2001. Arbitration and alternative dispute resolution: How to settle international business disputes, The Centre, Geneva, at p.138. 132. Klaus Berger, “Law and Practice of Escalation Clauses” (2006) Arbitration International, LCIA, Vol. 22, No. 1, p.1. 133. ICC Award No. 10256, 2003, ICC International Court of Arbitration, Bulletin No. 82. 134. Klaus Berger, “Law and Practice of Escalation Clauses” (2006) Arbitration International, LCIA, Vol. 22, No. 1, p.15; Reisman, Merton et al, International Commercial Arbitration-​Cases, Material and Notes on the Resolution of International Business Disputes (New York: the Foundation Press Inc.), pp. 165–​166, at p. 169.

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Another example of an over-​elaborated clause is: “All disputes in relation to the present contract shall be carried out by arbitrators appointed by the International Chamber of Commerce sitting in Geneva, in accordance with the arbitration procedure set forth in the Civil Code of France and the Civil Code of Venezuela, with due regard for the law of the place of arbitration.”135

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The difficulty is having two applicable municipal laws which may cause problems if they are not same when applied to the subject matter of the dispute which will invite intervention by the courts. It is prudent to use standard and tested arbitration agreements.

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An example of inconsistency which can affect the validity and enforceability of arbitration clauses can be seen from the definition of writing. Article 7(2) of the UNCITRAL Model Law 2006 provides:

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“The arbitration agreement shall be in writing. An agreement is in writing if it contained in a document signed by the parties or in an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement, or in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by another. The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement provided that the contract is in writing and the reference is such as to make that clause part of the contract.”

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Whereas Article 11(2) of the New York Convention 1958 provides:

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“‘The term agreement in writing’ shall include an arbitral clause in a contract or an arbitration agreement, sign by the parties or contained in an exchange of letter or telegrams.”

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Given the above difference, the drafters of the arbitration clause may wish to consider how the requirements are interpreted by the country where the arbitration is held; how the requirements will be regarded in a country where a stay of legal proceedings might be sought would view them; and how the country of enforcement would uphold the award.136 Unrealistic expectations may arise when the arbitration clause segments the proceeding into a series of short timed steps. The problem of performing the various steps

1 35. ICC Award No. 2321/​1974, ICC International Court of Arbitration, Paris. 136. Richard Garnett et al. A Practical Guide to International Commercial Arbitration (New York: Oceana Publications Inc. 2000), p. 45.

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within the short period of time arises.137 The arbitral tribunal’s discretion to conduct the proceedings is constrained by the express provision of the clause.138 An example of an arbitration clause with unrealistic expectations is as follows:

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“The claimant will name its arbitrator when it commences the proceeding. The respondent will then name its arbitrator within seven (7) days, and the two so named will name the third arbitrator, who will act as chair, within seven (7) days of the selection of the second arbitrator. Hearings will commence within fifteen (15) days of the selection of the third arbitrator, and will conclude no more than three days later. The arbitrator will issue their award within seven (7) days of the conclusion of the hearings.”139

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One such clause stated that the “arbitration power of this contract belongs to the court(s) of the place where the seller is situated”. Such a clause was rejected as an invalid arbitration clause.140

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The Court in Finnegan (J F) Ltd v Sheffield City Council141 dealt with a clause in the contract that placed the issue of dispute resolution through arbitration as a matter for “further discussion”. The Court held the clause to be too vague to form a valid arbitration agreement.

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A contract involving the French Minister of Agriculture as a party to the agreement also contemplated the appointment of the said Minister as the arbitrator in the event of a dispute. The Court ruled that this represented an obvious breach of the rule of natural justice nemo judex in causa sua (“no one should be a judge in their own cause”). It rendered the arbitration agreement inoperative.142

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Redfern and Hunter cite another example of an unworkable arbitration clause as one which states that “the arbitrator shall be a well-​known Chamber of Commerce (like the ICC)”, would fail for lack of certainty.

137. John Townsend, “Arbitration Clauses: Avoiding the Seven Deadly Sins” (2003) Dispute Resolution Journal, Vol. 58, Issue No. 1, February/​April, pp. 32–​33. 138. Gary Born, International Arbitration and Forum Selection Agreements: Planning, Drafting and Enforcing (Kluwer Law International 1999), p. 84. 139. John Townsend, “Arbitration Clauses: Avoiding the Seven Deadly Sins” (2003) Dispute Resolution Journal, Vol. 58, Issue No. 1, February/​April, p. 32. 140. Tai-​Ao Aluminium (Taishan) Co Ltd v Maze Aluminium Engineering Co Ltd [2006] HKCFI 220. 141. (1988) 43 BLR 124. 142. Jean Charbonneau v Les Industries AC Davie Inc et al, published in French, Recueil de Jurisprudence du Québec 1989, p. 1255. Similar clauses have been held to be invalid by Indian courts on the ground of bias.

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Caution should be exercised in naming a specific arbitrator in the agreement. The spectrum of disputes that could arise in a commercial arrangement may lead to a situation where the named arbitrator is not suitable for some of the disputes. There is also the possibility of the individual arbitrator being unwilling, incapable, or unable to act at the time the disputes arise.

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It is rare that an individual is named as the appointing body. Such a clause also runs the risk of the individual appointing body being unwilling or unable to act when disputes arise. It is prudent to name an appointing authority, such as a professional trade body or an arbitral institution.

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Further, the qualifications of the arbitrator should not be stated too specifically because a failure to find such an arbitrator could render the agreement void: “It would be tempting the devil to require that the arbitrator be an English-​speaking Italian, with a French law degree and a familiarity with Mid-​East construction contracts”.143

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[7.4] FORM OF ARBITRATION AGREEMENTS

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Section 7 of the Arbitration Act makes it plain that the arbitration agreement must be in writing. Section 7(4) deems an arbitration agreement to be in writing if it is contained in: (a) a document signed by the parties;



(b) an exchange of letters, telex, facsimile, or other means of communication (including electronic communication) which provide a record of the agreement; or



(c) an exchange of statement of claim and defence in which the existence of an agreement is alleged by one party and not denied by the other.

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Section 7(5) also regards a reference in a contract to a document containing an arbitration clause as an arbitration agreement, if the contract is in writing and the reference is such as to make that arbitration clause part of the contract. This mirrors the wording of Article 7(2) of the Model Law, which requires the arbitration agreement to be in writing. Article II(2) of the New York Convention also provides that an arbitration agreement must be in writing. This makes the requirement for a written arbitration clause relevant from the perspective of enforcement of an award.

143. W. Park, “Arbitration of International Contract Disputes” (1984) 39 Bus Lawyer 1783, p. 1786.

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Arbitrations are almost always based on a written agreement to arbitrate. As explained earlier in this chapter, they may be made before or after the dispute arises.

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Arbitration clauses are commonly found in standard forms of building contracts, in articles of association to cover disputes involving shareholders, in partnership deeds, and in commercial contracts. In building and engineering contracts, arbitration clauses referring future disputes to arbitration are the norm.

What Constitutes Writing?

The writing requirement is satisfied when there is a document which incorporates or confirms the existence of an agreement to arbitrate.144

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The reference in an agreement to a written form of arbitration clause constitutes an arbitration agreement if the reference is such as to make the arbitration clause part of the agreement. The documents need not be signed by either party and the assent of the parties to the arbitration term may be given orally or by conduct.145

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The definition of “in writing” is expansive. Section 7 of the Arbitration Act includes not only the typical document written by parties. It goes on to include “an exchange of letters, telex, facsimile or other means of communication (including email) which provides a record of the agreement”.

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Therefore, the arbitration may arise through an exchange of communications in writing such as letters and faxes, or evidence in writing as in a memorandum, or recorded by one of the parties or a third party with the authority of the parties to the agreement.

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An electronic communication can embody an arbitration agreement. This is now reflected in the Model Law. The reason behind requiring the agreement to be in writing is to ensure that the existence of the agreement is clearly established.

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A valid agreement to arbitrate excludes the jurisdiction of the courts and means that any dispute between parties must be resolved by a private method of dispute resolution, that is, arbitration.

144. Section 7(5) of the Arbitration Act; Radha Kanta Dass v Baerlein Bros Ltd AIR 1929 Cal 97 (Cal); Union of India v AL Rallia Ram 1963 AIR 1685, SC (India); Shankar Lal Lachmi Narain v Jainey Bros AIR 1931 All 136. See also Anglo-​Newfoundland and Development Corporation v R [1920] 2 KB 214; Caerleon Tinplate Co v Hughes (1891) 60 LJQB 640; Tracomin SA v Sudan Oil Seeds Co Ltd [1983] 1 Lloyd’s Rep 560; Excomm Ltd v Ahmed Abdul-​Qawi Bamaodah, The St Raphael [1985] 1 Lloyd’s Rep 403, CA (Eng); Sweeney v Mulcahy [1993] ILRM 289; Bauer (M) Sdn Bhd v Daewoo Corp [1999] 4 MLJ 545 at p. 565, CA. 145. Shakti Bhog Foods Limited v Kola Shipping Limited (2009) 2 SCC 134; Govind Rubber Limited v Louis Dreyfus Commodities Asia (P) Ltd (2015) 13 SCC 477; Birse Construction Ltd v St David Ltd [1999] BLR 194.

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The requirement that an arbitration agreement be in writing (“writing requirement”) under Article 7(2) of the UNCITRAL Model Law, as adopted in 1985, seeks “to ensure that parties do not get forced into arbitration unless it is clear beyond doubt that they have agreed to it”.

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Although “writing” has been made a requirement under the Arbitration Act, it has been universally accepted through judicial interpretations that the requirement for signature is not necessary provided the arbitration agreement is in writing.

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Redfern and Hunter reinforce that the general view is that the document containing the arbitration clause need not be signed, so long as the agreement is in writing. Neither the Model Law, nor the New York Convention, makes signature a mandatory requirement.146

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The Canadian Court in Schiff Food Products Inc v Naber Seed & Grain Co Ltd147 favoured this position and opined that under Article 7(2) it is not required that arbitration agreements be signed by all parties.

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The English Court in Baker v Yorkshire Fire and Life Assurance Co148 ruled on the requirement of written agreement. It disregarded the need for signature when it held that the assured was bound by the arbitration agreement and was estopped from asserting that he had not assented to an arbitration clause. However, the court recognised that he was not estopped from asserting that he had not signed the arbitration clause.

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The Court relied on the Hickman v Kent or Romney Marsh Sheep-​Breeders’ Association149 in holding that when a submission is in writing and is binding on both parties as their agreement or as the equivalent in law to an agreement between them, the statute is satisfied.150

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146. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 2.13. See also Enercon (India) Limited & Others v Enercon (GMBH) & Anr. (2014) 5 SCC 1, where the Supreme Court of India held that the fact that the underlying contract was not signed and concluded by the parties had no impact on the arbitration clause contained therein, which was in writing and sufficiently indicated the parties’ indication to arbitrate. 147. (1996) 149 Sask R 54 (QB). 148. [1892] 1 QB 144. 149. [1915] 1 Ch 881. 150. Astbury J in Hickman’s case laid down the law in these terms which were afterwards accepted by the Court of Appeal in the Anglo Newfoundland Development Co’s v Regem [1920] 2 KB 214.

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It is not necessary that both parties should have signed the written agreement. If a person has accepted the written agreement and acted upon it, he is bound for this purpose although he may not have set his hand to the document. The Supreme Court of India in Caravel Shipping Services v Premier Sea Foods Exim151 held that:

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“In addition, we may indicate that the law in this behalf, in Jugal Kishore Rameshwardas v. Mrs. Goolbai Hormusji, AIR 1955 SC 812, is that an arbitration agreement needs to be in writing though it need not be signed. The fact that the arbitration agreement shall be in writing is continued in the 1996 Act in Section 7(3) thereof. Section 7(4) only further adds that an arbitration agreement would be found in the circumstances mentioned in the three sub-​clauses that make up Section 7(4). This does not mean that in all cases an arbitration agreement needs to be signed. The only pre-​requisite is that it be in writing, as has been pointed out in Section 7(3).”

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The breadth of the definition of “in writing” can be seen from the following examples: (1) An assured affirmed his contract by suing on the policy, and so was held by the court to be bound by an arbitration clause, although he had not signed the policy;152



(2) The articles of association of limited companies providing for arbitration were sufficient submissions in writing;153



(3) The indorsements signed by each counsel on his own brief constituted together a valid submission since the indorsements were in identical terms;154



(4) The buyer was bound by the arbitration clause printed on the reverse of the seller’s quotation;155

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(5) The buyer was bound by the arbitration clause in the standard form of commodity contract referred to in the broker’s note sent to the buyer;156

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1 51. (2019) 11 SCC 461 at para. 8. 152. Baker v Yorkshire Fire and Life Assurance Co [1892] 1 QB 144. See also Hickman v Kent or Romney Marsh Sheep-​breeders Association [1915] 1 Ch 881; Beattie v E & F Beattie Ltd [1938] Ch 708, [1938] 3 All ER 214, CA (Eng). 153. London Sack and Bag Co Ltd v Dixon & Lugton Ltd [1943] 2 All ER 763, CA (Eng). 154. Aitken v Bachelor (1893) 62 LJQB 193, 68 LT 530. See also Excomm Ltd v Bamaodah, The St Raphael [1985] 1 Lloyd’s Rep 403, CA (Eng). 155. Zambia Steel and Building Supplies Ltd v James Clark and Eaton Ltd [1986] 2 Lloyd’s Rep 225, CA (Eng). 156. Excomm Ltd v Bamaodah, The St Raphael [1985] 1 Lloyd’s Rep 403, CA (Eng).

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(6) An arbitration agreement was deduced from correspondence between the parties;157



(7) A cable recognising the contract was held to satisfy the requirements of writing;158



(8) A clause in a specification referring all differences to the engineer with or without formal reference or notice to the parties was not a submission to arbitration;159



(9) An arbitration clause in a partnership agreement for one year, which was continued by verbal agreement, was a sufficient written agreement even after a lapse of six years;160



(10) For a submission to arbitration, there must be an intention of holding a judicial inquiry in a judicial manner to settle differences which have arisen or will arise, as distinct from a mere valuation or appraisement for the purpose of preventing differences from arising;161 and



(11) An arbitration agreement will often be contained, validly, in an exchange of emails.162

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The High Court of Allahabad in Shankar Lal v Jainey Bro163 remarked that the authorities in England and in India are clear that the terms of a written agreement may be collected from a series of documents. A “written agreement” does not mean that each party has to sign a document containing the terms. The plain acceptance of a document containing all the terms was sufficient.

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The position in Singapore on the requirement of signature in determining the validity of an arbitration agreement is also similar. The Court of Appeal of Singapore court in Vix Marketing Pte Ltd v Technogym SpA164 decided that the requirement of signature on every page was not necessary.

Morgan v William Harrison Ltd [1907] 2 Ch 137, CA (Eng). Fehr Frank & Co v Kassim Jivraj & Co Ltd (1949) 82 L1 L Pep 673. Jowett v Neath Rural District Council (1916) 80 JP Jo 207. Gillet v Thornton (1875) LR 19 Eq 599, 44 LJ Ch 398. Re Hammond and Waterton (1890) 62 LT 808 (Eng). The Arbitration Act was amended to include “electronic communication” in s. 7(4). See also the English case of Lombard-​Knight v Rainstorm Pictures Inc [2014] EWCA Civ 356. 163. (1931) AIR All 136 at p. 138. 1 64. [2008] 4 SLR 256. 157. 158. 159. 160. 161. 162.

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However, the courts’ approach in disregarding the importance of signature raises a key question in connection with the writing requirement which is whether consent not expressed in writing may suffice where the content of the agreement is recorded in a document, or whether consent must always be expressed in writing albeit not necessarily in a written document containing the parties’ signature.

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This question is of significant practical importance in cases where the parties engaged in a contractual relationship further to a written contractual offer containing an arbitration clause that was never responded to in writing.

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The Hong Kong High Court dealt with the above position in H. Small Ltd v Goldroyce Garment Ltd.165 It refused to find that the writing requirement had been met by pointing out that Article 7 “cannot be complied with unless there is a record whereby the party against whom the agreement is invoked has in writing assented to the agreement to arbitrate.”

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However, the Queen’s Bench Division has interpreted the requirement differently. It found, on similar facts, that “in this age of electronic international business transactions, a liberal interpretation should be given” to Article 7(2) of the UNCITRAL Model Law; tacit consent to an arbitration agreement set out in writing is sufficient.166

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An arbitration agreement concluded by fax was held to meet the requirements of Article 7(2) of the UNCITRAL Model Law. The Malaysian Federal Court in AJWA for Food Industries Co (MIGOP), Egypt v Pacific Inter Link Sdn Bhd & Another Appeal provides guidance on how an equivalent of Section 7(4) of the Arbitration Act is to be interpreted.167

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The facts are that the respondent had issued and faxed four sales contracts to the appellant, which incorporated by reference the respondent’s Standard Terms of Contract (“STC”); although the STC itself was not sent to the appellant.

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The STC did, however, contain a PORAM arbitration clause. The sales contracts were never signed. In these circumstances, the appellant claimed that since it never signed the sales contracts, it was not bound by the arbitration clause.

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The Federal Court held that, although the sales contracts had not been signed, a contract had on established principles of the law of contract and on the conduct of the parties come into existence on the terms of the unsigned sales contracts, incorporating

1 65. [1994] HKCFI 203. 166. Schiff Food Products Inc v Naber Seed & Grain Co Ltd [1996] CanLII 7144 (SK QB). 167. AJWA for Food Industries Co (MIGOP), Egypt v Pacific Inter Link Sdn Bhd [2013] 4 AMR 789, [2013] 5 MLJ 625, [2013] 7 CLJ 18.

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the STC which in turn incorporated the arbitration clause. As a result, the Court held that there was sufficient compliance with the equivalent section, notwithstanding that neither the sales contract nor the STC had been signed by the appellant.

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The High Court of Hong Kong in Oonc Lines Ltd v Sino-​American Trade Advancement Co Ltd168 confirmed the existence of an arbitration agreement that was in a rider to which the defendant had not signed. The Court decided that the number of communications exchanged between the parties served as sufficient record in writing of their agreement to arbitrate.

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The Ontario Superior Court of Justice in Ferguson Bros of St Thomas v Manyan Inc169 held that a cheque referring to an invoice amounted to a record of the issuer’s consent to an arbitration clause inserted in a contractual offer to which the issuer had heretofore not replied in writing.

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The English Court in Lombard-​Knight v Rainstorm Pictures Inc170 held that in the modern age, an arbitration agreement would often be contained, validly, in an exchange of emails.

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The Supreme Court of India in Great Offshore Ltd v Iranian Offshore Engineering & Construction Company171 ruled that in light of the principle of party autonomy and the “need to minimise the supervisory role of courts in the arbitral process”, the court should refrain from adding formal requirements of validity of arbitration agreements that are not enumerated in Article 7(2) of the UNCITRAL Model Law.

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Similarly, the Supreme Court of India in Trimex International Fze Ltd v Vedanta Aluminium Ltd II172 also made it clear that in the absence of any signed agreement between the parties, it would be possible to infer an agreement from various documents duly approved and signed by the parties in the form of exchange of emails, letter, telex, telegrams, and other means of telecommunication.

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Therefore, arbitrations may arise through an exchange of communications in writing such as letters, faxes, or evidence in writing in a memorandum or recorded by one of the parties or a third party with the authority of the parties to the agreement. The agreement to which Section 7 refers may be gathered from either a single document or a series of documents. A party may be estopped from asserting that there is

1 68. 169. 170. 171. 172.

[1994] HKCFI 193. [1999] OJ No 1887. [2014] EWCA Civ 356. (2008) 14 SCC 240. (2010) 3 SCC 1.

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Chapter 7—​​​Arbitration Agreements

no agreement. In the case of an agreement conferring an option to elect for arbitration, the statutory requirement of a written agreement is satisfied when both the option agreement and the exercise of the option are in writing.173 Any variations to arbitration agreements would also have to be in writing.174

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[7.5] INCORPORATION OF ARBITRATION CLAUSE BY REFERENCE Whether the arbitration agreement is in writing will rarely pose a problem in a contract containing an express arbitration clause, or an exchange of letters that clearly encompass the terms of the arbitration agreement.

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Disputes revolving around the requisite form of the arbitration agreement can arise when the arbitration agreement is contained in a document that is separate from the main contract and one party argues that it was incorporated into the main contract by reference and the other party disagrees.

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Parties involved in commercial transactions normally adopt the standard forms of contracts containing arbitration clauses. It is settled law that an arbitration clause may be incorporated by a reference to a standard form of contract or the particular terms of another contract in which the clause is set out. Lord Diplock in A Schroeder Music Publishing Co v Macaulay175 stated:

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“The standard clauses in these contracts have been settled over the years by negotiation by representatives of the commercial interests involved and have been widely adopted because experience has shown that they facilitate the conduct of trade. Contracts of these kinds affect not only the actual parties to them but also others who may have a commercial interest in the transactions to which they relate, as buyers or sellers, charterers or shipowners, insurers or bankers.”

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Section 7(5) of the Arbitration Act provides the statutory foundation for incorporation by reference. However, such a reference must be to make that arbitration clause part of the contract. Section 7(5) reflects Article 7 of the Model Law. The travaux préparatoires of the Model Law clarifies that “[a]‌s the text clearly states, the reference need only be to the document; thus, no explicit reference to the arbitration clause contained therein is required”.

173. Westfal-​Larsen and Co A/​S v Ikerigi Compania Naviera SA, The Messiniaki Bergen [1983] 1 All ER 382, [1983] 1 Lloyd’s Rep 423. 174. Altco Ltd v Sutherland [1971] 2 Lloyd’s Rep 515. 175. [1974] 3 All ER 616 at p. 624, HL.

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Law, Practice and Procedure of Arbitration in India

Mustill and Boyd concur with this proposition and state that in principle: “An arbitration clause may be incorporated by a reference to a standard form of contract or the particular terms of another contract in which the clause is set out, even without express reference to the clause. But it must be clear that the parties intended the arbitration clause to apply.”176

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Russell on Arbitration states: “The key question is [if] the reference in an agreement to a written form of arbitration clause or to a document containing an arbitration clause constitute an arbitration agreement? It does have that effect if the reference is such as to make that clause part of the agreement.”177

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Merkin and Flannery explain that incorporation of arbitration clauses occurs in either single contract or two contract situations:178

(1) The first is where there is a single contract and during the formation, either (or both) the parties refer to their standard terms and conditions, which include an arbitration clause. The other situation is where there are two contracts, such as a contract between A and B, and one between B and C, where the latter makes reference to the terms of the former.



(2) This second situation is common in construction, shipping, and reinsurance contracts where, in order to achieve consistency between layers of contracts, the terms of one contract are incorporated into other contracts in the chain. For instance, in construction, the terms of the main contract may be incorporated into various subcontracts. Similarly, in shipping, the terms of the charter party may be incorporated into the bills of lading issued by the charterer on behalf of the ship-​owner.

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O.P. Malhotra states that an arbitration clause contained in some other document will be binding and operative only if four requirements are fulfilled, namely:179 (1) There is an express or implied reference in the main contract under which the dispute has arisen to the other document containing the arbitration clause;

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1 76. 177. 178. 179.

Mustill and Boyd, Commercial Arbitration (2nd edn, Butterworths 1989), p. 106. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 2-​045. Robert Merkin and Flannery, Arbitration Act 1996 (6th edn, Informa Law from Routledge 2014). G.I. Zekios, International Commercial and Marine Arbitration (2011), p. 212, fn 46.

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(2) Any words of incorporation are appropriate to encompass the arbitration clause;



(3) The terms of the arbitration clause are appropriate to disputes arising under the contract into which it has been incorporated; and



(4) The arbitration clause is not repugnant to the main contract.

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Indian courts have upheld the validity of arbitration agreements incorporated by reference.

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The Supreme Court of India in Alimenta S.A. v National Agriculture Co-​ op 180 Marketing Foundation of India Ltd. held that the arbitration clause in an earlier contract can be validly incorporated into a later contract, provided that it is not repugnant to or inconsistent with the terms of the contract in which it is incorporated.

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The Supreme Court of India in M.R. Engineers and Contractors Pvt. Ltd. v Som Datt Builders181 set out the essentials of incorporation by reference to arbitration as under:

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“(i) An arbitration clause in another document, would get incorporated into a contract by reference, if the following conditions are fulfilled:

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(1) The contract should contain a clear reference to the documents containing arbitration clause,

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(2) The reference to the other document should clearly indicate an intention to incorporate the arbitration clause into the contract,

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(3) The arbitration clause should be appropriate, that is capable of application in respect of disputes under the contract and should not be repugnant to any term of the contract …”.182

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The Court concluded that reference should be such as to display the intention of the parties to incorporate the arbitration clause into the relevant contract. It held that Section 7(5) of the Arbitration Act requires a conscious acceptance of the arbitration clause from another document before such arbitration clause could be read as a part of the contract between the parties.183 Given that the Arbitration Act had not laid down any guidelines as to the conditions to be fulfilled before a reference to an arbitration clause can be construed as

1 80. 181. 182. 183.

(1987) 1 SCC 615. (2009) 7 SCC 696. M.R. Engineers and Contractors Pvt. Ltd. v Som Datt Builders (2009) 7 SCC 696 at para. 24. M.R. Engineers & Contractors Private Limited v Som Datt Builders Limited (2009) 7 SCC 696 at para. 15.

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incorporation of that clause, the Court held the applicable rule in the construction of contracts:184 “A general reference to another contract will not be sufficient to incorporate the arbitration clause from the referred contract into the contract under consideration. There should be a special reference indicating a mutual intention to incorporate the arbitration clause from another document into the contract.”

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The Court also examined the language that is used for incorporation of contracts. It observed that there were instances where the contracts often incorporate other contracts in their entirety by using language along the lines of ‘all the terms and conditions …’. The arbitration clause is also deemed to have been incorporated.

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If the incorporating clause refers to a specific aspect of another contract, the presumption is that the arbitration clause was not intended to be incorporated. The Court concluded that it could be inferred that there was no intention to incorporate the arbitration clause between the parties and therefore, there was no valid arbitration agreement between the parties.

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Therefore, a reference to an arbitration agreement must be a specific reference and not a general reference.185

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Express Reference or General Incorporation of All Terms to the Arbitration

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Section 7(5) of the Arbitration Act allows for an incorporation by reference and does not require an explicit reference to the arbitration clause itself.

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It reflects Article 7 of the UNCITRAL Model Law. An agreement between the parties that refer to disputes being settled in accordance with the rules of a particular arbitral institution or industry body falls within this category of agreement to arbitrate.

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Standardisation of documents has incentivised parties involved in commercial transactions to adopt the standard forms of contracts containing arbitration clauses. It is settled law that an arbitration clause may be incorporated by a reference to a standard form of contract or the particular terms of another contract in which the clause is set out.186 184. M.R. Engineers & Contractors Private Limited v Som Datt Builders Limited (2009) 7 SCC 696 at paras. 15 and 19. 185. The only exception to the requirement that there must be specific reference to an arbitration agreement is in the case of a consensual standard document where even a general reference may be construed as incorporation by reference. See Inox Wind Ltd. v Thermocables Ltd (2018) 2 SCC 519 at para. 18. See also Giriraj Garg v Coal India Ltd (2019) 5 SCC 192 at paras. 5 and 7. 186. See Sundra Rajoo, Law, Practice and Procedure of Arbitration (2nd edn, LexisNexis 2016), p. 94.

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However, there are conflicting authorities on the degree of specificity required to properly incorporate an arbitration clause. The issue is whether or not the arbitration clause in another document must be expressly mentioned in all cases, or whether words incorporating all the terms of that other document are sufficient.

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In the cases of charter parties and bills of lading, the requirement for direct reference has generally been strict. There is confusion over whether the same standard applies to other forms of contracts as seen from the following authorities:

(1) The House of Lords in TW Thomas & Co Ltd v Portsea Steamship Company Ltd187 held that the incorporation in a bill of lading of all the “conditions” or “terms and conditions” of a charter party does not extend to the arbitration clause in the charter party.



(2) The Court in The Merak188 held that the arbitration clause was expressed to apply to disputes under both the charter party and any bill of lading.



(3) The Court in United Asian Bank Bhd v M/​V Fushi Hoshi Maru, Owners189 said that:

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“I hold therefore as a matter of interpretation that the general provision in the bill of lading stipulating that the shipment was carried under and pursuant to the terms of the charter party did not incorporate the arbitration clause of the charter party.”

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(4) Buckley LJ in Modern Building Wales Ltd v Limmer & Trinidad Co Ltd190 stated:

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“Where parties by an agreement import the terms of some other document as part of their agreement, those terms must be imported in their entirety ... but subject to this that if any of the imported terms in any way conflicts with the expressly agreed terms, the latter must prevail over what would otherwise be imported.”

(5) Sir John Megaw in Aughton Ltd (formerly Aughton Group Ltd) v MF Kent Services Ltd191 opined:

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“If this self-​contained contract is to be incorporated, it must be expressly referred to in the document which is relied on as the incorporating 1 87. 188. 189. 190. 191.

[1912] AC 1. [1964] 2 Lloyds’ Rep 283. [1981] 2 MLJ 333. 14 BLR 101. (1991) 57 BLR 1, CA.

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writing. It is not incorporated by mere reference to the terms of the conditions of contract to which the arbitration clause constitutes a collateral contract. He adopted a strict approach on the grounds that arbitration agreements are to be treated differently from the other terms of a standard form contract.” The basis of this decision was that the arbitration agreement is separable from the contract in which it is contained and therefore does not fall under a general reference to the contract. A number of English decisions have taken a narrow approach on the incorporation of arbitration clauses by reference, holding that general words of incorporation of a document containing an arbitration clause are not sufficient unless there is a specific reference to incorporation of the arbitration clause itself.192

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This does raise some issues.

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The doctrine of separability was developed to support arbitration in cases of invalid contracts, not for the purpose of requiring more specific reference to arbitration in agreements. A requirement of special clarity in arbitration agreements goes against the grain of commercial attitudes towards arbitration.

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The fact that Ralph Gibson LJ and Sir John Megaw reached different conclusions on the requirements of specific reference to the arbitration clause in this case has also raised some difficulties.

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The Court in Ben Barrett and Son (Brickwork) Ltd v Henry Boot Management Ltd. held that the arbitration agreement was not incorporated. However, the Court in Secretary of State for Foreign and Commonwealth Affairs v Percy Thomas Partnership (a firm)194 ruled that:

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“Depending always on the words used in the individual transaction under consideration, an arbitration clause can validly be incorporated into an agreement by express reference in that agreement to a set of conditions which contains the arbitration clause in question, but without express mention of the arbitration clause itself ... where the arbitration clause is one of a set of standard conditions written especially for the purpose of incorporation in contracts of a certain type, general words in a contract of that type incorporating those terms as a whole will usually bring the clause into that contract so as to make the arbitration clause applicable to disputes under that contract.”

192. Alfred McAlpine Construction Ltd v RMG Electrical [1998] ADRLJ 53 and Ben Barrett and Sons (Brickwork) Ltd v Henry Boot Management Ltd [1995] CILL 1026. 193. [1995] CILL 1026. 194. 65 ConLR 11 at paras. 55 and 75.

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The approach seems to be towards a more lenient perspective that even a general wording of incorporation would be sufficient, at least when the question arises in the context of dealings between experienced players on a well-​known market.

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The English Court in Sea Trade Maritime Corp v Hellenic Mutual War Risks Association (Bermuda) Ltd (“The Athena”)195 disagreed with the applicability of “The Federal Bulker”.196 It held that it was only applicable to insurance-​reinsurance and charter party-​bill of lading cases. The reason for this rule is that the other party may not have any ready means of knowing the relevant terms in the secondary contract.

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England has not adopted the UNCITRAL Model Law. But Section 6(2) of the English Arbitration Act 1996 accepts incorporation of standard terms by the use of general words. In particular, where the terms are readily available and the question arises in the context of dealings between established players in a well-​known market.197

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Also, the English Arbitration Act, 1996 provides a wide definition of what constitutes “written form”. It includes an oral agreement to arbitrate “recorded by one of the parties, or by a third party with the authority of the parties to the agreement”, in terms of Sections 5(2)(c) and 5(4) of the English Arbitration Act.198

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The House of Lords in Fiona Trust & Holding Corporation v Privalov199 ruled on the issue of an arbitration clause incorporated by reference. It observed that:

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“[13] … Construction of an arbitration clause should start from the assumption that the parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered or purported to enter to be decided by the same tribunal. The clause should be construed in accordance with this presumption unless the language makes it clear that certain questions were intended to be excluded from the arbitrator’s jurisdiction … if any businessman did want to exclude disputes about the validity of a contract, it would be comparatively easy to say so.

1 95. [2006] EWHC 2530 (Comm). 196. [1989] 1 Lloyd’s Rep 103, CA (a “two-​contract case” in which the two contracts in question were the charter party and the bills of lading and the arbitration clause from the charter party was deemed not incorporated in to the bills). 197. This provision states: “The reference in an agreement to a written form of arbitration clause or to a document containing an arbitration clause constitutes an arbitration clause if the reference is such as to make that clause part of the agreement.” 198. See Toyota Tsusho Sugar Trading Ltd v Prolat SRL [2014] EWHC 3649 (Comm) and Midgulf International Ltd v Groupe Chimique Tunisien [2010] EWCA Civ 66 on the wide scope of written arbitration agreements and the validity of oral arbitration agreements respectively. 199. [2007] 4 All ER 951 at paras. 13–​14.

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[14] This appears to be the approach adopted in Germany: see Schlosser ‘The Decision of 27 February 1970 of the Federal Supreme Court of the Federal Republic of Germany (Bundesgerichtshof)’ Arbitration Int 1990, 6(1) p 79: ‘There is every reason to presume that reasonable parties will wish to have the relationships created by their contract and the claims arising therefrom, irrespective of whether their contract is effective or not, decided by the same tribunal and not by two different tribunals’.”

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Emergence of Clarity

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The Court in Habas Sinai Ve Tibbi Gazlar Isthisal Endustri AS v Sometal SAL200 considered what constituted a reference. It answered in the affirmative to the question whether general words used in a contract are capable of incorporating an arbitration clause contained in another contract between the parties.

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The contract in dispute did not expressly refer to an arbitration clause but ended with the words: “All the rest will be same as our previous contracts”. The parties had entered into 14 previous contracts, some (but not all) of which contained clauses providing for arbitration in London.

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The judgment abated the confusion by outlining four general categories as examples. Issues of incorporation by reference arise when: (1) A and B make a contract in which they incorporate standard terms;



(2) A and B make a contract incorporating terms previously agreed between A and B in another contract or contracts to which they were both parties;



(3) A and B make a contract incorporating terms agreed between A (or B) and C;



(4) A and B make a contract incorporating terms agreed between C and D.

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Clarke J said that there is “a material distinction between categories (1) and (2) on the one hand and categories (3) and (4) on the other”. He opined that a less restrictive approach should be adopted for incorporation for categories (1) and (2). Parties in category (1) would be familiar with the standard terms, have full opportunity to examine them, and would know that arbitration was intended. The Court explained:201

2 00. [2010] 1 All ER (Comm) 1143. 201. Ibid at pp. 1159–​1160.

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“A businessman who had agreed with his counterparty a contract with 10 specific terms under various headings and then agreed with the same counterparty terms 1-​5 under the same headings as before and, as to the rest, that all the terms of the previous contract should apply, would, I think, be surprised to find that ‘all’ should be interpreted so as to mean ‘all but the arbitration clause’.”

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Langley J in The Athena (No 2)202 as cited in Habas Sinai Ve Tibbi Gazlar Isthisal Endustri AS v Sometal SAL, said that:

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“English law accepts incorporation of standard terms by the use of general words and, I would add, particularly so when the terms are readily available and the question arises in the context of dealings between established players in a well-​known market. The principle, as the dictum makes clear, does not distinguish between a term which is an arbitration clause and one which addresses other issues. In contrast, and for the very reason that it concerns other parties, a ‘stricter rule’ is applied in charter party/​ bills of lading cases. The reason given is that the other party may have neither knowledge nor ready means of knowledge of the relevant terms. Further, as the authorities illustrate, the terms of an arbitration clause may require adjustment if they are to be made to apply to the parties to a different contract.”

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In categories (3) and (4), which relate to charter party/​bills of lading, re-​insurance, and construction contracts, English authorities have been quite consistent in holding that general wording is not sufficient.

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The reasoning behind these decisions is not uniform. Arbitration clauses are not germane to the main contract. Arbitration clauses are ancillary provisions by way of dispute resolution. Specific reference is needed when it ousts the jurisdiction of courts.

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The terms of a charter party may not be applicable to disputes between the bill of lading holder and the ship owner if not incorporated by general reference. Generally, the courts will carefully examine the context of the contract before interpreting a general reference to a contract as importing an arbitration clause.

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The Court in Habas Sinai Ve Tibbi Gazlar Isthisal Endustri AS v Sometal SAL203 ruled that there is no strict requirement of express reference to an arbitration clause in the first two categories. However, it added that a stricter approach is taken in the latter two.

202. Sea Trade Maritime Corp v Hellenic Mutual War Risks Association (Bermuda) Ltd; (The Athena) [2006] EWHC 2530 (Comm) at para. 65. 203. [2010] EWHC 29 (Comm).

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Langley J in The Athena (No 2) applying the principle of restrictive incorporation in categories (3) and (4) to categories (1) and (2) would “involve the exception swallowing the rule”.

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The High Court of Hong Kong in Astel-​Peiniger Joint Venture v Argos Engineering and Heavy Industries Co Ltd204 construed Article 7(2) of the UNCITRAL Model Law as irreconcilable with the narrow English approach. This decision was affirmed in Gay Construction Pty Ltd & Anor v Caledonian Techmore (Building) Ltd (Hanison Construction Co Ltd, Third Party).205

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The Singapore Court of Appeal in International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd206 followed the approach in Habas Sinai Ve Tibbi Gazlar Isthisal Endustri AS v Sometal SAL.207 It took a similar approach to the above-​mentioned Hong Kong decisions.

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The Court upheld the requirement for an express reference to the arbitration clause. It opined that the strict rule has been overextended impermissibly from its original application in the context of bill of lading and charter parties. “It clearly should not be taken as a rule of general application”.208 This judgment is of particular importance in stressing the broader Model Law approach.

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Taking note of the change in English Law on incorporation by reference and its concomitant effect on the MR Engineers Case, the Supreme Court of India in Inox Wind Limited v Thermocables Limited209 observed:

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“The development of law regarding incorporation after the judgment in M.R. Engineers requires careful consideration. It has been held in Habas Sinai Ve Tibbi Gazlar Isthisal Endustri AS v Sometal that a standard form of one party is also recognized as a ‘single contract’ case. In the said case, it was also held that in single contract

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2 04. [1994] 3 HKC 328. 205. [1994] 2 HKC 562. The Hong Kong cases cited in this paragraph were decided at a time when English law had not fully developed on the requirement for a specific reference to the incorporation of an arbitration clause, especially in the context of bills of lading. The Hong Kong High Court, in Astel-​Peiniger Joint Venture (A Joint Venture Partnership) v Argos Engineering & Heavy Industries Co Ltd [1995] 1 HKLR 300, made obiter remarks to the effect that general words of incorporation in a bill of lading are insufficient to incorporate an arbitration clause contained in a charter party. What is required is an express mention of the arbitration clause in the bill of lading’s incorporation clause to incorporate the arbitration clause into the bill of lading. The Hong Kong High Court, however, did point out that this decision should be distinguished from English decisions on the same issue given that the matter before that Court was a construction dispute as opposed to a shipping dispute. Nevertheless, Hong Kong’s position has become that if a bill of lading does not expressly refer to an arbitration clause by incorporation, it would be regarded as not effective. 206. [2014] 1 SLR 130, [2013] SGCA 55. 207. [2010] EWHC 29 (Comm). 208. [2014] 1 SLR 130, [2013] SGCA 55 at para. 34. 209. (2018) 2 SCC 519.

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cases general reference is enough for incorporation of an arbitration clause from a standard form of contract. There is no distinction that is drawn between standard forms by recognized trade associations or professional institutions on one hand and standard terms of one party on the other. Russell on Arbitration 24th Edition (2015) also takes note of the Habas’s case.”210

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The Court concluded that while a general reference to an earlier contract would not be enough to incorporate an arbitration clause in a later contract, a general reference to the standard form would be sufficient for the incorporation of an arbitration clause. With this decision, there was a broad shift in jurisprudence from a general/​special reference regime to a single contract/​two contract reference regime.

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The Supreme Court of India in Giriraj Garg v Coal India Limited211 determined whether there was an incorporation by reference, where the arbitration clause was contained in the standard terms and conditions referred to in the main contract between the parties.

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The Court relied on the principles set forth in the MR Engineers Case. It held that an arbitration clause could be incorporated by reference either from a parent agreement or by a reference to a standard form of contract. While expounding on the theory of incorporation by reference in a “single contract case” and “two contract case”, Justice Malhotra observed:

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“Recently, the courts appear to have extended the ‘single contract’ principle applicable to standard form contracts, where general words of incorporation will suffice, to other types of contract where the same rationale can be said to apply. Thus, if the document sought to be incorporated is a bespoke contract between the same parties, the courts have accepted this as a ‘single contract’ case where general words of incorporation will suffice, even though the other contract is not on standard terms and constitutes an entirely separate agreement. The rationale for this approach is that the parties have already contracted on the terms said to be incorporated and are therefore even more likely to be familiar with the term relied on than a party resisting incorporation of a standard term.”212

The United States Supreme Court in AT&T Technologies Inc v Communications Workers of America213 held that in the absence of any express provision excluding a particular

2 10. 211. 212. 213.

(2010) EWHC 29 (Comm). (2019) 5 SCC 192. Giriraj Garg v Coal India Limited (2019) 5 SCC 192 at para. 16. (1986) 475 US 643 at p. 650.

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grievance from arbitration, only the most forceful evidence of a purpose to exclude the claim from arbitration could prevail. The United States Court in Threlkeld & Co Inc v Metallgesellschaft Ltd (London)214 held that the national arbitration policy required that any doubts concerning the scope of arbitral issues should be resolved in favour of arbitration and in that regards, arbitration clauses needed to be construed as broadly as possible.

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The Federal Court of Australia in Comandate Marine Corp v Pan Australia Shipping Pty Ltd215 considered that if a liberal approach to the words chosen by the parties, this would be underpinned by the sensible commercial presumption that the parties did not intend the inconvenience of having any potential possible disputes from their transaction heard in two places, particularly when they were operating in a truly international market.

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This approach to the issue of construction is now firmly embedded as part of the law of international commerce. However, there remains some ambiguity arising from the cases on whether a reference to an arbitration clause in a separate document also constitutes an arbitration agreement.

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The Cassation Commerciale Court in the French case, Dreistern Werk v Crouzier,216 held that when the contract globally refers to standard terms and conditions containing an arbitration clause, enforcement thereof is not prevented in itself. It is rather a matter of investigating whether or not both parties had actual knowledge of the arbitration clause in question and intended to accept it, even tacitly.

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The French Cour de Cassation in Societé Bomar Oil NV v Entreprise tunisienne d’activités pétrolières217 contemplated a similar position relating to a sale and purchase contract referring to “other conditions” of the “standard contract” used by the seller, which included an International Chamber of Commerce (“ICC”) arbitration agreement.

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The Cour de Cassation upheld the decision. It found that an arbitration agreement by reference to a document such as a general condition form is valid, even in the absence of any mention thereto in the main contract, provided that the party challenging the arbitration agreement was aware of the content of the document at the time the contract was entered into.

2 14. 215. 216. 217.

(1991) 923 F 2d 245 at p. 248. [2006] FCAFC 192 at para. 165. [1991] Rev Arb 291. New York Convention Guide, Bulletin No. 313, 1993, p. 218.

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Therefore, the express reference to an arbitration clause in another document is not a standard requirement. It would seem that in cases involving bills of lading and re-​ insurance contracts, the strict rules of reference are the exception, not the rule.

Limiting the Scope of an Arbitration

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The wording of a clause can limit the scope of the arbitration agreement and process by using words such as “All disputes arising out of this contract”, or the scope of arbitration can be broadened or narrowed by the words “Any dispute regarding warranty of service” or “All disputes arising under this agreement except disputes arising solely in regard to fees”.

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As set out above, Section 7(5) of the Arbitration Act statutorily provides for incorporation by reference.

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The Supreme Court of India in M.R. Engineers & Contractors Private Limited v Som Datt Builders Limited had to determine whether an arbitration clause contained in a main contract could be considered to have been incorporated into a sub-​contract where the sub-​contract provided that it had to be carried out on the terms and conditions as applicable in the main contract.218 The Court concluded that reference should be such as to display the intention of the parties to incorporate the arbitration clause into the relevant contract.

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This is because Section 7(5) of the Arbitration Act requires a conscious acceptance of the arbitration clause from another document before such arbitration clause could be read as a part of the contract between the parties.219

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The Court further held that given that the Arbitration Act had not laid down any guidelines as to the conditions to be fulfilled before a reference to an arbitration clause can be construed as incorporation of that clause, the rule followed for construction of contracts will have to be followed.220

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The Court held that: “A general reference to another contract will not be sufficient to incorporate the arbitration clause from the referred contract into the contract under consideration. There should be a special reference indicating a mutual intention to incorporate the arbitration clause from another document into the contract.”

2 18. (2009) 7 SCC 696. 219. Ibid at para. 15. 220. Ibid at para. 15.

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It also emphasised on the language that is used for incorporation of contracts. There were instances where the contracts often incorporate other contracts in their entirety by using language along the lines of “all the terms and conditions…”.221 In such cases, the arbitration clause is also deemed to have been incorporated.

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If the incorporating clause refers to a specific aspect of another contract, the presumption is that the arbitration clause was not intended to be incorporated. The Court concluded that it could be inferred that there was no intention to incorporate the arbitration clause between the parties and therefore, there was no valid arbitration agreement between the parties.

Determining Incorporation

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Whether there is a need for express reference to a clause, and whether there has been incorporation, will depend on the particular contract and circumstances. In some circumstances, it may not make commercial sense to incorporate an arbitration agreement from one instrument into another, whatever category the agreement falls under.

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The incorporation would include the arbitration clause where the reference to another document clearly adopted all the terms of the documents referred to. Words in a recital lack legal consequence and will not be sufficient to incorporate by reference an arbitration agreement which is consistent with their usual nature.

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The extent of the judicial consideration of the issue of incorporation by reference should be made clear to contracting parties and that it must be taken seriously. Careful drafting that clearly and unambiguously expresses the intention of the parties to bring about incorporation can avoid the disputes mentioned above.

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Accordingly, if parties desire to incorporate the terms of one agreement into another and be relatively assured of its success, simply appending words similar to “including terms dictating the resolution of disputes by arbitration” to the incorporating phrase is to be recommended.

[7.6] CHECKLIST FOR CONTENTS OF ARBITRATION AGREEMENT

A clear and effective arbitration agreement is essential to the success of any arbitral proceedings arises from a clear and effective arbitration agreement. It provides the arbitral

221. Ibid at paras. 16–​18.

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tribunal with authority to conduct the proceedings. Its award can then be enforced under the New York Convention. While a well-​drafted arbitration clause does not guarantee that the arbitration will be successful, a poorly drafted arbitration agreement may cause arbitral and litigation proceedings arising thereof to be protracted and expensive. Finally, if the result is an unenforceable award, all the costs will be thrown away.

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Occasions when the parties and their legal advisors have not given sufficient thought or effort to drafting the arbitration agreement are sizeable, especially in light of the relatively low threshold required for a valid arbitration agreement.

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At best, a poorly drafted arbitration agreement can detract from the potential advantages of arbitration in otherwise saving time and money by enhancing efficiency. On the other hand, a poorly drafted arbitration agreement can also turn out be ambiguous or equivocal.

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A party wishing to undermine or derail the arbitration can use such ambiguity and equivocation by challenging the process and protracting the process through the courts. This is best exemplified by the (in)famous “arbitration to be settled in London” clause which was ultimately held to be valid as cited in Russell on Arbitration.222 The fact remains that the litigation that was required to obtain a ruling that the arbitration agreement was valid, consumed time, energy, and expense.

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Ultimately, it calls for parties to think of the detail and specificity in concluding an arbitration agreement. The arbitration agreement should state in clear and unambiguous language such relevant details evincing the parties’ intention to refer their dispute to arbitration.

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When drafting arbitration agreements, one must detach oneself from the heat of the negotiation and carefully examine the circumambient environment of both, the contract and the project for which arbitration has been chosen as the mode of settling the spectrum of possible disputes.223

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What then is an effective arbitration agreement? A well-​drafted arbitration agreement will thus encompass both the agreement to arbitrate disputes and an effective procedure by which this can be done.224 No single or uniform clause will be appropriate for all situations. What must an effective arbitration agreement contain?

2 22. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 2–​064. 223. See Gelinas, “Report: Arbitration Clauses: Achieving Effectiveness”, in van den Berg (ed.) Improving the Efficiency of Arbitration Agreements and Awards: 40 years of Application of the New York Convention (ICCA Congress Series No. 9) (1999); see also Stephen R. Bond, “How to Draft an Arbitration Clause, Revisited” (1989) Journal International Arbitration, Vol. 6, No. 2, pp. 14–​21. 224. Tackaberry, Marriot QC and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson Sweet & Maxwell 2003), at para. 2–​110.

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It may not be useful to follow precedents blindly without paying heed to the particular facts of a commercial arrangement. Conversely, at the other extreme, trying to provide for every eventuality in an arbitration agreement should also be avoided. Due to the fact that an institution’s rules will almost always be more comprehensive than any arbitration clause the parties draft, incorporating institutional rules will in most cases produce a better result than the ad hoc rules devised by the parties.

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For example, the MCIA recommends the following clause:

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“Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to an finally resolved by arbitration in accordance with the Arbitration Rules of the Mumbai Centre for International Arbitration (‘MCIA Rules’), which rules are deemed to be incorporated by reference in this clause. The seat of the arbitration shall be _​_​_​_​_​_​_​_​_​. The Tribunal shall consist of [one/​three] arbitrator(s). The language of the arbitration shall be _​_​_​_​_​_​_​_​_​_​. The law governing this arbitration agreement shall be _​_​_​_​_​_​_​_​_​. The law governing the contract shall be _​_​_​_​_​_​_​_​_​. ”

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Parties are advised to largely adopt the model clauses of the arbitral institution of their choice and only modify the said model clause to the extent that is absolutely necessary for the parties, after having determined the specific requirements of the contract.

(1) A clear statement of any pre-​arbitration procedure such as negotiation, mediation or adjudication, specifying between whom such negotiation, mediation or adjudication must take place and the relevant time limits for achieving an outcome. However, parties must put in some thought as to whether such a pre-​condition is really required. This is because a pre-​ condition gives the unwilling party a basis to impede the jurisdiction of the tribunal and derail the arbitral process to an extent. Therefore, if the parties see no real benefit of including such a pre-​condition, parties must refrain from including such a condition into the arbitration clause;

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In any event, the following factors must be considered when drafting arbitration agreements where standard form arbitration clauses and accompanying rules cannot fulfil the parties’ requirements or where the parties wish to conduct an ad hoc arbitration without reference to defined or predetermined rules:



(2) A statement of the consequences of failure to adhere to the pre-​ arbitration procedure;

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(3) There should be a clear, unequivocal statement of the parties’ intention to refer disputes to arbitration;



(4) A clear statement as to what disputes the arbitration agreement will cover and whether this will include disputes as to the existence or validity of the contract. It is advisable for parties to adopt the language provided in the model clauses of various arbitral institutions;



(5) A statement that the decision of the arbitral tribunal will be final and binding;



(6) The seat of the arbitration should be specified;



(7) If different from the seat, the venue of the arbitration. Although it must be noted that there is no requirement to specify the venue of the arbitration;



(8) The law governing the main contract should be specified;



(9) The law governing the arbitration agreement should be specified. This is extremely critical as it is the specification of this law that is often omitted by the parties. A determination of the law applicable to the arbitration clause consumes considerable amount of time and resources in the arbitration proceedings at a very early stage;



(10) If institutional arbitration is desired, which arbitral institution is to conduct the arbitration;



(11) Ensure the institution named exists and will be willing to fulfil its mandate. For example, the ICC may refuse to administer arbitrations where it considers fundamental rules to have been modified or where parties agree to have SIAC administer the dispute under the ICC Rules;225



(12) Examine whether the applicable rules cover discovery, consolidation, and joinder of third parties;

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(13) The number of members of the arbitral tribunal and the procedure for constitution of the tribunal;

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(14) Any specific requirements for the arbitral tribunal including qualifications and nationality, if the nature of the contract is such that it would be

225. See Insigma Technology Co. Ltd. v Alstom Technology Ltd. [2009] SGCA 24. Pursuant to this decision, the ICC modified its Arbitration Rules to provide that “… [T]‌he Court is the only body authorised to administer arbitrations under the Rules, including the scrutiny and approval of awards rendered in accordance with the Rules …”. See the ICC Arbitration Rules, 2017, art. 1(2).

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prudent to specify this. Such a specification is generally not required in arbitration agreements;

(15) The language of the arbitration; and



(16) Privacy and confidentiality.

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For an arbitration seated in India, the statute mandates confidentiality and the parties’ agreement, either to the contrary or otherwise, may not be relevant. It may be advisable to avoid including in an arbitration agreement the following: (1) Naming a particular individual as an arbitrator;



(2) Being too specific in the qualifications or qualities of the arbitrator;



(3) Setting unrealistically short deadlines for the parties, the arbitrator, and the proceedings as a whole; and



(4) Merging multiple procedural rules into a single hybrid procedure.

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Other miscellaneous items to be considered when drafting or selecting an arbitration clause are: (1) Requiring a declaration from the arbitrators that they can act impartially. This is now statutorily mandated under the Arbitration Act;226



(2) A statement on the privacy and confidentiality of the arbitration proceedings and award. This is now statutorily mandated under the Arbitration Act;227



(3) If two parties are entering into a number of contracts (such as multiple construction projects) it may be that a dispute will arise in all of them, therefore a provision allowing the court or arbitrator to consolidate the disputes into a single arbitration may save considerable time and expenses.

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Mustill and Boyd228 have listed some of the attributes which must be present for an agreement to be considered as an arbitration agreement as follows:

(1) The arbitration agreement must contemplate that the decision of the arbitral tribunal must be binding on the parties to the agreement;

226. Section 12. 227. Section 42B. 228. See Mustill and Boyd, Commercial Arbitration (2nd edn, Butterworths 1989), pp. 41–​42.

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(2) The jurisdiction of the arbitral tribunal to decide the rights of the parties must derive either from the consent of the parties or from an order of the court or from a statute, the terms of which make it clear that the process is to be an arbitration;



(3) The agreement must contemplate that the substantive rights of the parties will be determined by the arbitral tribunal;



(4) The arbitral tribunal will determine the rights of the parties in an impartial and judicial manner with the arbitral tribunal owing an equal obligation of fairness towards both sides;



(5) The agreement of the parties to refer their disputes to the decision of the arbitral tribunal must be intended to be enforceable in law; and



(6) The agreement must contemplate that the arbitral tribunal will make a decision upon a dispute which is already formulated at the time when a reference is made to the arbitral tribunal.

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Other considerations include that the agreement must contemplate that the arbitral tribunal will receive evidence from both sides and hear their contentions or at least, give the parties an opportunity to put them forward. The wording of the agreement must be consistent with the parties’ intention to arbitrate in this way. The agreement must require the arbitral tribunal to decide the dispute according to law.

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Based on the above, drafting a comprehensive arbitration agreement requires skill, time, and consideration. A well-​drafted arbitration agreement will ensure that the parties will get the full benefit of the arbitral process.

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One or Three Arbitrators

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The decision to have one or three arbitrators is important; the reason being that the number of arbitrators constituting an arbitral tribunal has impact on the timelines, dynamics, and costs of the arbitration. Parties normally agree to a three-​arbitrator panel tribunal particularly where the economics of the contract will support it. The parties also can appoint a co-​arbitrator of their choice on the arbitral tribunal in the usual scheme of constituting the arbitral tribunal. The common belief is that a three-​member arbitral tribunal is likely to produce a better reasoned, higher quality award than a single arbitrator. Also, there is less risk that such an arbitral tribunal be unduly influenced as there are more minds on the arbitral tribunal to fully consider all of the parties’ arguments. Parties may also believe that

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their appointed co-​arbitrator will act as a cultural and legal interpreter and even ensure that its submissions are fully considered by the larger tribunal. It cannot be said whether there are significant differences between the quality of the awards and the conduct of the proceeding by a single and three arbitrators panel tribunals. Perhaps, the qualitative advantages of a larger arbitral tribunal may be overstated.

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Indeed, many of the problems in arbitrations arise out of honest mistakes (such as misunderstanding procedural rules, misapplying law, or acting as amiable compositeur without mandate), which may occur equally between one and three arbitrators panel tribunals. However, a multi-​arbitrators panel tribunal can help to prevent rogue acts that sometimes occur with sole arbitrators.

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Perhaps the most significant reason behind parties’ preference for a three-​arbitrator tribunal is to have an arbitrator nominated by them on the panel. However, the significance of having one’s arbitrator on the panel may be overestimated by parties, as most party-​ appointed arbitrators act neutrally and it is the presiding arbitrator or chairperson who has the third vote in the decision making by the arbitral tribunal.

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Normally, the presiding arbitrator or chairperson and co-​arbitrators are experienced practitioners who can quickly recognise a partisan co-​arbitrator. They may place less weight on (or entirely disregard) that co-​arbitrator’s opinion by way of a majority decision.

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The downside of having one’s own arbitrator is that the other side has precisely the same advantage and may use it unscrupulously. A recalcitrant respondent may appoint an arbitrator who will disrupt the process through bouts of illness or unavailability at crucial dates and long delays in responding, signing documents or drafting directions. Although over the years, this concern may have become redundant as arbitrators are well aware of their duties and are conscious of upholding or building their reputation as an arbitrator.

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Notwithstanding the potential downsides, a three-​arbitrator tribunal gives the parties greater confidence in the process. This is important given that the limited scope for review and setting aside of arbitral awards makes arbitration a one-​strike proposition. Three arbitrator tribunals may be useful in document-​heavy, factually complex disputes and in highly technical cases. A technical co-​arbitrator may add value by assisting the other members to manage the structure of the arbitration itself, for example, in terms of the evidence of experts. The mix of talent of both technically and legally qualified and experienced arbitrators may ensure that all the relevant facts and legal arguments are fully considered.

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A party-​appointed arbitrator may also be useful where an issue at hand is the subject matter of divergence of schools of thought on contractual interpretation. It is legitimate for a party appointing an arbitrator who favours a strict literal approach, in anticipation of the other party putting forward a purposive interpretation of the contract.

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It is restrictive to prescribe a one-​size fits all arbitral tribunal based on the value of the contract or based on whether it is a domestic or international arbitration. One and three arbitrator tribunals each have their own advantages and disadvantages. Under the Arbitration Act, unless the parties agree otherwise, the default position is for the appointment of a sole arbitrator.229

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If parties are entering into what they consider to be a high-​value contract, they may well want three arbitrators. But not all disputes that arise under that contract will actually be for such an amount. Should a dispute concerning a relatively small claim arise, the fee for a three-​arbitrator tribunal could be disproportionately high.

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The fear of paying substantial costs may then either prevent meritorious claims from being pursued or allow a claimant to bully a respondent into settling. On the other hand, a dispute in a lower-​value contract providing for a single arbitrator may end up being a complex conflict or involve a breach that caused damages that exceeded the value of the contract.

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In either case, flexibility as to the number of arbitrators would allow a more appropriate or cost-​effective arbitral tribunal to be constituted. Agreements such as the ICC standard form provide flexibility for the parties or the institution to decide on the appropriate number of arbitrators in a given dispute.

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Parties could potentially specify that disputes under a certain claim value will be dealt with in one way and disputes over that amount will be dealt with in another. Ideally, arbitral tribunals decide by consensus when making decisions. However, that is not always possible in light of disagreements between the arbitral tribunal members. Sometimes, such decision making may take considerable time. Parties may not desire such delays when seeking an expeditious resolution to their dispute. For the sake of efficiency of the arbitral proceedings, the “ideal of unanimity has to be somewhat watered down, although it should never be fully abandoned”.230 It has also been suggested that perhaps only one arbitrator (the presiding arbitrator or an umpire)

2 29. Arbitration Act, s. 10(2). 230. Alan Uzelac, “Number of Arbitrators and Decisions of Arbitral Tribunals” (2007) Arbitration International, Vol. 23, Issue 4, 1 December, pp. 573–​592.

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should be able to take the final decision when there is no unanimity. As a general rule, the majority decision of judicial tribunals is accepted as the rule in arbitration.

[7.7] ORAL ARBITRATION AGREEMENTS

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An oral agreement to arbitrate that is not reduced to writing is rare.231 Just as a contract concluded orally can be binding, an agreement to refer a dispute to arbitration can be made orally under the common law and is not automatically invalid.232

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The consequence of an arbitration agreement not being in writing in India is that it would not constitute a valid arbitration agreement under Section 7(3) of the Arbitration Act. Where there is no written agreement to arbitrate and the whole of the contract, including the agreement to arbitrate, is oral, the existence and validity of that contract are also likely to be in doubt.233

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The parole evidence rule would make it considerably difficult for parties to argue that at the time of entering into a written contract, they orally agreed to arbitrate, particularly when the written contract provides for the exclusive jurisdiction of a court.

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However, parties may orally agree to arbitrate an existing dispute. Such an agreement is called a submission to arbitration or an ad hoc agreement to arbitrate. For such an agreement to be valid and complete there must be an existing dispute as well as actual reference of the dispute and appointment of the particular arbitrator.

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An oral agreement to arbitrate remains so and must be treated as such even if the award is in writing or indeed under seal.234 If the parties have an oral arbitration agreement, and it is followed by a completed arbitration agreement, it can be the foundation of an enforceable award.

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There was a clear agreement against arbitration between the parties in Municipal Corporation of Greater Mumbai & Anor. v Pratibha Industries Limited235 Despite such an agreement, the Respondent expressed its willingness to resolve some disputes which had arisen between the parties by way of arbitration. The Petitioner’s representative stated that it had no objection to such a proposal. 231. They sometimes emerge in salvage operations where a vessel at sea enters a salvage contract orally. Even this can be reduced to writing, however, as the courts have held that an oral agreement that refers to terms in writing (such as a Lloyd’s standard form of salvage agreement) is an agreement in writing. The Owners of the Motor Vessel Tojo Maru v NV Bureau Wijsmuller (The “Tojo Maru”) [1972] AC 242; see also Sutton, Gill, and Gearing, Russell on Arbitration (23rd edn, Sweet & Maxwell 2007), at para. 2–​045. 232. See Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 2–​015. 233. Sutton, Gill, and Gearing, Russell on Arbitration (23rd edn, Sweet & Maxwell 2007), at para. 2-​015; See E Turner & Sons Ltd v Mathind Ltd (1985) 5 Const LJ 273. 234. Talbot v Earl of Shrewsbury (1873) LR 16 Eq 26. 235. 2017 SCC OnLine Bom 8427.

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Given such a consensus on arbitration, the High Court of Bombay referred the parties to arbitration. It appointed the arbitrator proposed by the Respondent, as the sole arbitrator. Later, the Petitioner claimed that its representative was not authorised to enter into such an agreement. The Court then recalled its previous order referring parties to arbitration.

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On appeal, the Division Bench set aside the recall order.236 On further appeal, the Supreme Court of India set aside the order of the Division Bench and held that given that parties had entered into an undisputed agreement against arbitration, an oral agreement in contravention of such an agreement could not be arrived at.237

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The Supreme Court of India in Kerala State Electricity Board and Anr. v Kurien E. Kathilal and Anr.238 determined whether the High Court of Kerala was correct in referring parties to arbitration based on oral consent given by the counsel, without any written instructions from the party.

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In terms of Section 89 of the Code of Civil Procedure, 1908, reference of a dispute to arbitration can only be done when the parties to the dispute have agreed to settle such a dispute through arbitration. Oral consent given by counsel without a written memorandum of instructions would not fulfil the requirements under the Code.

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Disadvantages of an Oral Arbitration Agreement

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An oral arbitration agreement and the arbitration proceedings that may follow will not fall under the jurisdiction of the Arbitration Act. This presents practical difficulties in terms of the organisation and conduct of the arbitration itself and in terms of the enforcement of the award.

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An arbitration procedure arising from oral arbitration agreements is normally unsatisfactory as it relies on the good faith of the parties and there is plenty scope for a recalcitrant party to obstruct and delay proceedings, not least by challenging the very existence of the arbitration agreement itself.

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Unless the oral agreement is comprehensive, should the arbitrator abdicate or pass away during the proceedings, appointing a replacement may be problematic. For parties seeking to benefit from the many advantages of the arbitration process, particularly procedural simplicity, these deficiencies could be intolerable.

236. Pratibha Industries Limited v Municipal Corporation of Greater Mumbai & Anr. 2018 SCC OnLine Bom 6156. 237. Municipal Corporation of Greater Mumbai & Anr. v Pratibha Industries Limited 2019 3 SCC 203. 238. (2018) 4 SCC 793.

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However, what may initially appear to be an oral arbitration agreement may actually fall under the scope of a written agreement. This is because the policy of facilitating arbitration to the fullest extent possible has led to very broad statutory definitions of “in writing”. Minutes of a meeting where an oral arbitration agreement was made have been held to constitute an agreement in writing.

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Section 7(4)(b) of the Arbitration Act provides that in addition to the traditional signed document category, “an exchange of letters, telex, facsimile or other means of communication, including electronic communication such as emails, which provide a record of the agreement” will constitute an agreement in writing. This suggests that, even a recorded telephone call could be said to constitute a written agreement.

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It would be difficult to enforce an arbitration award predicated on an oral arbitration agreement. Under Section 47 of the Arbitration Act, a party applying for the enforcement of a foreign award is required to produce before the court, “the original agreement for arbitration” or a duly certified copy of the same. The party could perhaps present the certified copy of the court order referring the parties to arbitration for satisfying this requirement.

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A party making an application to refer parties to arbitration under Section 8 of the Arbitration Act is required to submit the original arbitration agreement or a duly certified copy of it along with such an application. In such a case, it would be easy for the recalcitrant party to assert the non-​existence of an arbitration agreement and pray that the court decline jurisdiction to refer parties to arbitration.

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The only potential option of commencing action in such a case may be to commence a fresh action for breach of covenant. This is done in a similar way as a breach of a settlement agreement entered between parties, after a court issues a judgment.

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This poses the risk that the court will delve into the merits of the case or may even entertain arguments that the agreement to exclude the jurisdiction of the court, outside the context of the Arbitration Act, is contrary to public policy. This may possibly undermine the finality of the arbitration award issued under an oral arbitration agreement. Oral arbitration agreements are rarely used under Common Law, given these weaknesses and the consequent failure to meet the demands of modern business practices. Russell on Arbitration states that the broad statutory definition of “in writing” makes “it difficult to participate in arbitration proceedings arising out of an arbitration

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agreement which is alleged to be oral without it being construed as an agreement in writing”.239

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The New York Convention sets out a comparatively narrow definition of “in writing” in the context of an international arbitration. As such, an oral arbitration agreement would also fall outside the scope of the New York Convention. An award premised on an oral arbitration agreement may not be enforced, even if it satisfies in principle, the “in writing” requirement under the Arbitration Act or the Model Law. As such, it may be an unacceptable risk to enter into an oral arbitration agreement. Therefore, arbitration agreements should be reduced to writing to minimise disputes and ensure enforceability.

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[7.8] CONCLUSION

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An arbitration agreement has several repercussions. It must be drafted carefully, with precision and clarity. A well drafted arbitration clause would streamline the resolution of disputes, prevent unnecessarily delays, and prevent the inflation of costs. It would enable the parties to take full advantage of the arbitral process and minimises confusion and additional costs.

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While an arbitration agreement can arise out of an exchange of communications in writing, it would be prudent to include a well-​drafted arbitration clause in the main agreement. The level of details and specificity in the arbitration agreement is a matter which requires sincere consideration on the basis of the requirements of where the arbitration is held, the requirements of enforcing jurisdiction, and the arbitral procedure the parties wish to adopt.

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However, including too many details runs the risk of rendering the arbitration agreement unworkable. Although there is no “miracle clause”, it is advisable to follow the model arbitration clauses recommended by the arbitral institution of the parties’ choice. Agreements for ad hoc agreements could also take guidance from such model law clauses that are readily available to parties and lawyers.

239. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 2–​043.

Chapter 8 SEPARABILITY OF ARBITRATION CLAUSE [8.1] INTRODUCTION......................................................................................................................... 230 [8.2] THE DOCTRINE OF SEPARABILITY....................................................................................... 231

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[8.3] THE STATUTORY PROVISIONS ON SEPARABILITY.......................................................... 238 [8.4] APPLICATION OF THE SEPARABILITY DOCTRINE.......................................................... 241 [8.5] SPECIFIC ENFORCEMENT OF THE ARBITRATION AGREEMENT............................... 249

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[8.6] CONCLUSION............................................................................................................................... 250

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[8.1] INTRODUCTION

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Arbitration is the result of parties’ agreement. The arbitral tribunal derives its jurisdiction from this agreement.

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The doctrine of the separability is the ability of the arbitration agreement to survive and continue to operate separately and independent of the substantive contract in which it is embedded.

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The arbitration clause has been said to be indestructible due to the separability doctrine.1

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Section 16(1) of the Arbitration Act2 provides for a statutory basis for separability which the 1940 Arbitration Act3 lacked. It recognises the independent nature of the arbitration agreement and allows the arbitral tribunal to rule on its own jurisdiction.

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The issue arises when the arbitration agreement is embedded within a contract, rather than a submission agreement which is a physically separate contract. The latter is uncommon, as arbitration agreements usually take the form of a clause within a contract.

1. Pierre Mayer, “The Limits of Severability of the Arbitration Clause”, in Albert Jan Van den Berg (ed.), Improving the Efficiency of Arbitration Agreements and Awards: 40 Years of Application of the New York Convention, ICCA Congress Series, Vol. 9 (Kluwer 1999), pp. 261–​267. 2. Act 26 of 1996. 3. Act 10 of 1940 (repealed).

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Separability raises the question of whether arbitration agreement clauses must follow the destiny of the contract to which it belongs or it has an independent life of its own. The arbitration agreement is autonomous and has a life of its own. It is not affected even if the contract is a nullity.

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[8.2] THE DOCTRINE OF SEPARABILITY

The doctrine of separability is regarded as a “conceptual and practical cornerstone of international arbitration”.4

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It refers to the independence of the arbitration agreement from the main contract of which it forms part. As such, the arbitration agreement is presumed to survive the termination, breach, and invalidity of that contract.

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The arbitration agreement and the underlying contract are treated as two distinct contracts. The contract impinges on the commercial obligations of the parties while the arbitration agreement provides for the resolution of any dispute arising from the commercial relationship by arbitration.

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Thus, the party alleging invalidity of the main contract must separately demonstrate that this invalidity affects the arbitration agreement. Separability applies in cases where the main contract is rendered void due to repudiation, fundamental breach, or frustration.

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A party who wishes to avoid its obligation to arbitrate may justify its position that since the contract is invalid or has been terminated, the arbitration agreement cannot be enforced.

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Such an argument will be sustainable if arbitration agreements were not independent of the contracts to which they related, then their legality could suffer the same alleged illegality that the main agreement suffered.5

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Therefore, if the party’s argument prevails, arbitration as the selected default dispute resolution mechanism in the contract cannot be used.

4. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Wolters Kluwer 2021), p. 376. 5. Anthony Daimsis, “How Heuristics Misshape Reasoning and Lead to Increased Costs in Arbitration”, in Sherlin Tung, Fabricio Fortese et al. (eds), Finances in International Arbitration: Liber Amicorum Patricia Shaughnessy (Kluwer Law International 2019), pp. 91–​106.

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The doctrine of separability overcomes this proposition by providing a shield by deeming the arbitration agreement to be “presumptively ‘separable’ or ‘severable’ ” from the underlying contract within which it is found. Separability is equated with the black box of an airplane.6 The black box survives notwithstanding the damage caused to the aircraft in any mishap.

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By analogy, separability allows an arbitration clause to function as the black box of the agreement to arbitrate between the parties. It survives despite the underlying contract failing or being void. Justice Ramasubramanian in Kotak Mahindra Bank Ltd. v Sundaram Brake Lining Ltd7 explained:

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“… (iii) the Doctrine of separability incorporated in Section 16 with a power for the Arbitrator to adjudicate even the question of nullity and voidity (iv) the deviation made in Section 16 from Article 16 of the Model Law, … and the developments that have taken place worldwide, are all pointers to the fact that the arbitration clause, contained in a contract to which Part-​I of the 1996 Act would apply, is to act as a black box in an aircraft. The crash of the contract (like that of the aircraft), its reasons, implications and consequences are to be ascertained only by invoking the arbitration clause …”

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When parties enter a contract containing an arbitration agreement, they conclude not one but two agreements, “the arbitral twin of which survives any birth defect or acquired disability of the principal agreement”.8

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As a result, an arbitration agreement can be void or voidable “only on the grounds which relate directly to the arbitration clause and not the grounds that challenge the existence and validity of the main agreement.”9

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Emergence of Separability

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The International Chamber of Commerce was the first institution to recognise separability of the arbitration agreements in 1955. The UNCITRAL Model Rules followed suit in 1976. 6. See the decision of Justice Ramasubramanian in Kotak Mahindra Bank Ltd. v Sundaram Brake Lining Ltd. (2008) SCC OnLine Mad 519. 7. (2008) SCC OnLine Mad 519. 8. S. Schwebel, International Arbitration: Three Salient Problems (Grotius 1987), pp. 2–​3. 9. Fiona Trust & Holding Corp. v Privalov [2007] UKHL 40. Also see similar position taken by the US Supreme Court in Prima Paint Co. v Flood Conklin Manufacturing Corp 388 US 395 (1967); Buckeye Check Cashing Inc. v Cardegna 126 S Ct 1204 (2006).

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Today, all major arbitral institutions and Model law countries recognise this principle of separability. It has become a universally accepted principle.10 Common law jurisdictions like England11 and the United States12 have historically referred to this concept as “separability” or “severability” doctrine.

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The terminology reflects the contractual origins of the doctrine and the view that an arbitration clause is an agreement that is “severable” from the parties’ related contract. In England, this principle is now codified under the law. It had its common law origins in Heyman v Darwins Ltd.13 where it was accepted that the repudiation of a contract would not affect the effectiveness of the arbitration clause contained within it.

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Lord Macmillan in Heyman v Darwins14 held:

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“I venture to think that not enough attention has been directed to the true nature and function of an arbitration clause in a contract. It is quite distinct from other clauses. The other clauses set out the obligations which the parties undertake towards each other, but the arbitration clause does not impose on one of the parties an obligation in favour of the other. It embodies the agreement of both parties that, if any dispute arises with regard to the obligations which the one party has undertaken to the other, such dispute shall be settled by a tribunal of their own constitution”.

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The English Court of Appeal in Harbour Assurance Co (UK) Ltd v Kansa General International Insurance Co Ltd. went on to hold that separability does enable an arbitral tribunal to decide whether a contract is void ab initio for reasons including initial illegality as there could be categories of illegality which render contracts void, with the result that there could be nothing to arbitrate.15

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This approach and the alteration to the applicability of the separability principle is a must as there may be contracts which plainly will have no effect, for example, contracts which are illegal and contrary to public policy.

10. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 565; Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corp Ltd, The Bremer Vulkan [1981] 1 Lloyd’s Rep 253, [1981] 1 All ER 289 at 297; Paal Wilson & Co A/​S v Partenreederei Hannah Blumenthal, The Hannah Blumenthal [1983] 1 All ER 34; Harbour Assurance Co (UK) Ltd v Kansa General International Insurance Co Ltd [1993] QB 701; Dalmia Dairy Industries v National Bank of Pakistan [1978] 2 Lloyd’s Rep 223. 11. The Arbitration Act, 1996, s.7. 12. Prima Paint Corp v Flood & Conklin Mfg Co. 388 US 395, p. 409 (1967). 13. [1942] AC 346 at p. 374. 14. (1942) All ER 337 (HL). 15. [1993] QB 701. Also see Union of India v Kishorilal Gupta and Bros. AIR 1959 SC 1362.

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The court in O’Callaghan v Coral Racing Ltd16 held that a wagering contract rendered illegal was simply non-​existent and the arbitration clause in it simply had no effect. As opposed to this, the House of Lords in Fiona Trust & Holding Corp v Privalov17 pointed out that businessmen frequently want the question of whether their contract was valid, or came into existence, or has become ineffective, submitted to arbitration and that the law should not place conceptual obstacles in their way.

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The House of Lords in Fiona Trust explained that Section 7 of the Arbitration Act 1996 (UK) was to be interpreted so that the main agreement and the arbitration agreement had to be treated as having been separately concluded; the arbitration agreement could be invalidated only on a ground which related to the arbitration agreement.

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It was not merely a consequence of the invalidity of the main contract. The doctrine of separability required direct impeachment of the arbitration agreement before it could be set aside.

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The result of all these decisions is that an arbitration clause can be void or voidable only on the grounds that relate directly to the clause and not on the basis of the validity of the contract in which it is contained.

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Even before the Fiona Trust case, the English High Court in Vee Networks Ltd v Econet Wireless International Ltd18 had held that the principle of separability empowered the arbitrator to decide whether or not a contract of supply was void for ultra vires against the customer.

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In New Zealand, the separability principle appears in Article 16(1) of Schedule 1 to the Arbitration Act 1996 to support the exercise of the arbitral tribunal’s power to rule on its jurisdiction.

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The Supreme Court of New Zealand held in Ewan Robert Carr and Brookside Farm Trust Limited v Gallaway Cook Allan19 that the incorporation of this principle ensures that the arbitration clause has an independent existence, thereby giving the arbitrator jurisdiction to determine the illegality or validity of the principal contract. The courts in Canada have also adopted a similar position.20

16. 17. 18. 19. 20.

[1999] unreported. [2007] 4 All ER 951. [2004] EWHC 2909 (Comm). Ewan Robert Carr and Brookside Farm Trust Limited v Gallaway Cook Allan [2014] NZSC 75 at para. 43. Cecrop Co v Kinetic Sciences Inc [2001] BCSC 532 (CAnLII).

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The courts in Hong Kong have also adopted and extensively applied the principle of separability. The court in Fung Sang Trading Ltd v Kai Sun Sea Products and Food Co Ltd. rejected the proposition that termination of the contract would affect the validity of the arbitration clause contained therein and upheld the jurisdiction of the arbitral tribunal pursuant to the arbitration clause.21

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The Australian Federal Court of Appeal in Comandate Marine Corp v Pan Australia Shipping Pty Ltd22 relied on the separability principle to dismiss objections to arbitral jurisdiction asserting that the main contract had been entered into through deceit.

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In civil law jurisdictions, the doctrine is recognised as “autonomie de la clause compromissoire”23 or “Selbstständigkeit”,24 that is, “autonomy” or “independence” of the arbitration clause. It reflects a greater focus on the external legal regime applicable to international arbitration agreements.

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It also implies a greater degree of separation or legal distance between an arbitration agreement and the parties’ underlying contract than the “separability doctrine” connotes.25

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In summary, the arbitration agreement is accepted as separate from the underlying agreement, a concept defined as the separability principle. This principle prevents the validity of one agreement from being affected by the other one even in the case of the latter being void, voidable, or invalid.

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This principle effectively establishes the full autonomy of an arbitration agreement and the integrity of the arbitral process. The case laws above from different jurisdictions show that courts have uniformly employed the principle in favour of arbitration, upholding the intent of the parties to arbitrate.

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The doctrine has also been criticised. One argument is that as a legal fiction, separability undermines credibility and has unwelcome effects.

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The core problem as a legal fiction is that if a contract is void ab initio then as a matter of law, it never had any effect; necessarily implying that the arbitration agreement never had any legal effect.26

21. 22. 23. 24. 25. 26.

[1991] HKCFI 190. [2006] FCAFC192. Code of Civil Procedure (CCP), s. 1447. Code of Civil Procedure (CCP), s. 1040(1). Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Wolters Kluwer 2021), p. 378. S. Greenberg, C. Kee, and R. Weeramantry, International Commercial Arbitration (Cambridge University Press 2011), p. 156.

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The doctrine extends the scope of the arbitration agreement to issues ancillary to the formation of the contract. It may be incorrect to classify the doctrine of separability as one of legal fiction. The doctrine is more of an application of commercial practicality and common sense to the operation of legal rules.

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It gives effect to the parties’ agreement of having their disputes resolved by arbitration. In the absence of the doctrine of separability, any recalcitrant party would be able to renege from its obligation to arbitrate, by impeaching the contract between the parties. This militates against the parties’ initial agreement to have disputes resolved by arbitration.

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Despite its wide acceptance, the uncertainties surrounding the basis, content, and effect still persist. The separability principle has not been upheld in all situations.27

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The defects in the main contract may affect the validity of the arbitration agreement in certain situations such as allegations of forgery of signature, the main contract not being concluded etc.28

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Therefore, in circumstances where the validity of an arbitration clause is challenged, it becomes necessary to identify the law (or laws) that should govern the question of separability.

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“170…

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The United Kingdom Supreme Court in Enka v Chubb29 summarised the principles which govern the determination of the law applicable to the arbitration agreement in cases where the arbitration clause did not expressly provide the law governing the arbitration agreement and the governing law of the contract. These principles are as follows:

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(i) Where a contract contains an agreement to resolve disputes arising from it by arbitration, the law applicable to the arbitration agreement may not be the same as the law applicable to the other parts of the contract and is to be determined by applying English common law rules for resolving conflicts of laws rather than the provisions of the Rome I Regulation. (ii) According to these rules, the law applicable to the arbitration agreement will be (a) the law chosen by the parties to govern it or (b) in the absence

27. See, for example, Soleimany v Soleimany [1998] 3 WLR 811 where the Court held the arbitration clause to be void as the making of the main contract itself was an illegal act. 28. Fiona Trust & Holding Corp. v Privalov [2007] UKHL 40 at para. 17. 29. Enka v Chubb [2020] UKSC 38.

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of such a choice, the system of law with which the arbitration agreement is most closely connected. (iii) Whether the parties have agreed on a choice of law to govern the arbitration agreement is ascertained by construing the arbitration agreement and the contract containing it, as a whole, applying the rules of contractual interpretation of English law as the law of the forum.

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(iv) Where the law applicable to the arbitration agreement is not specified, a choice of governing law for the contract will generally apply to an arbitration agreement which forms part of the contract.

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(v) The choice of a different country as the seat of the arbitration is not, without more, sufficient to negate an inference that a choice of law to govern the contract was intended to apply to the arbitration agreement.

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(vi) Additional factors which may, however, negate such an inference and may in some cases imply that the arbitration agreement was intended to be governed by the law of the seat are: (a) any provision of the law of the seat which indicates that, where an arbitration is subject to that law, the arbitration will also be treated as governed by that country’s law; or (b) the existence of a serious risk that, if governed by the same law as the main contract, the arbitration agreement would be ineffective. Either factor may be reinforced by circumstances indicating that the seat was deliberately chosen as a neutral forum for the arbitration.

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(vii) Where there is no express choice of law to govern the contract, a clause providing for arbitration in a particular place will not by itself justify an inference that the contract (or the arbitration agreement) is intended to be governed by the law of that place.

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(viii) In the absence of any choice of law to govern the arbitration agreement, the arbitration agreement is governed by the law with which it is most closely connected. Where the parties have chosen a seat of arbitration, this will generally be the law of the seat, even if this differs from the law applicable to the parties’ substantive contractual obligations. (ix) The fact that the contract requires the parties to attempt to resolve a dispute through good faith negotiation, mediation or any other procedure before referring it to arbitration will not generally provide a reason to displace the law of the seat of arbitration as the law applicable to the arbitration agreement by default in the absence of a choice of law to govern it.

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Law, Practice and Procedure of Arbitration in India

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171. Applying these principles, we have concluded that the contract from which a dispute has arisen in this case contains no choice of the law that is intended to govern the contract or the arbitration agreement within it. In these circumstances the validity and scope of the arbitration agreement (and in our opinion the rest of the dispute resolution clause containing that agreement) is governed by the law of the chosen seat of arbitration, as the law with which the dispute resolution clause is most closely connected. We would therefore affirm –​albeit for different reasons –​the Court of Appeal’s conclusion that the law applicable to the arbitration agreement is English law.”30

[8.3] THE STATUTORY PROVISIONS ON SEPARABILITY

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The 1940 Arbitration Act did not recognise the doctrine of separability. This changed with the introduction of the Arbitration Act in 1996.

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Section 16 of the Arbitration Act mirrors Article 16 of the UNCITRAL Model Law and recognises the doctrine of separability. It reads as follows:

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“(1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose—​

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(a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and

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(b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.”

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(1) It addresses the arbitral tribunal’s power to make a determination as to its own jurisdiction to deal with the substantive claim in dispute, known as the competence-​competence principle. This is discussed in the next chapter.

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Section 16 addresses three issues that may arise when the parties disagree as to whether their dispute ought to be resolved by the arbitral tribunal:

(2) It addresses the separability principle, pursuant to which an arbitration clause forming part of a contract is to be treated as an independent and separate contract.



(3) It addresses the procedure for making jurisdictional objections before an arbitral tribunal.

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30. Ibid at paras 170 and 171.

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Section 16(2) deals with the separability of the arbitration clause from the rest of the contract. Where parties have entered into a contract which incorporates by reference a written arbitration clause, that clause will constitute an arbitration agreement.

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However, where an arbitration clause is embedded in a contract rather than a submission agreement, which is a physically separate contract, the question which arises is whether the arbitration clause must follow the destiny of the contract to which it belongs or whether it can have an independent life. If the arbitration clause lacks autonomy, then there is no reason why it should not follow the rest of the contract. On the other hand, if the arbitration clause is autonomous, it would have a life of its own.

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Therefore, it will not automatically be affected by the possible nullity of the contract to which it belongs. Section 16(2) of the Arbitration Act settles this debate by providing for the application of the doctrine of separability.

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Separability means that an arbitration clause in a contract is to be considered a separate agreement, detached from the main contract, and therefore to be treated as an agreement independent of the other terms of the contract.31

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The validity of the arbitration clause does not depend on the validity of the contract as a whole. The arbitration clause by surviving the demise of the main contract then constitutes the necessary agreement of the parties that any disputes between them should be referred to arbitration.

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Section 16(1)(a) and (b) uphold the separability principle. It is fortified on account of the wording of Section 16(1)(b) which sets out that the arbitral tribunal’s decision that a contract is null and void shall not ipso facto render the arbitration clause contained in such a contract invalid.

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Thus, Section 16 statutorily ensures that an arbitration clause cannot be parasitically impugned on the basis of a challenge to the underlying contract. The doctrine, therefore, seeks to preserve the arbitral process. The Indian courts have consistently recognised the principle.

The Supreme Court of India in Olympus Superstructures Pvt. Ltd. v Meena Vijay Khetan and Ors.32 held:

31. See Dr. Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010), p. 144 at para. 4.009. 32. Olympus Superstructures Pvt. Ltd. v Meena Vijay Khetan and Ors. (1999) 5 SCC 651.

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“… the arbitration clause which forms part of the contract shall be treated as an agreement independent of other terms of the contract and any decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure affect the validity of the arbitration clause. This is clear from Sub-​clause (b) of Section 16(1) which states that a decision by the arbitral tribunal that the main contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.”

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Similarly, the Supreme Court of India in Manohar Reddy & Bros. v Maharashtra Krishna Valley Development Corporation33 held:

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“… An arbitration clause, as is well known, is a part of the contract. It being a collateral term need not, in all situations, perish with coming to an end of the contract. It may survive. This concept of separability of the arbitration clause is now widely accepted …”34

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An arbitration agreement has been held to be a collateral term in the contract, which relates to dispute resolution, and not the performance of the contract, thus surviving the end of the contract through repudiation, frustration, or breach.35

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The Supreme Court of India in Enercon (India) Pvt. Ltd. v Enercon GmBH emphasised on the intent behind the doctrine of separability. It held that it is a necessity to ensure that intention of parties to arbitrate does not evaporate away with every challenge to the underlying contract.36

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The independence of an arbitration agreement from the underlying contract is interlinked with the competence of an arbitral tribunal to decide on its jurisdiction.

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As such, Section 16(1) of the Arbitration Act provides that an arbitral tribunal “may” rule on its own jurisdiction, including objections to the validity of an arbitration agreement.

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The provision goes on to provide that for the purpose of the tribunal’s determination of the validity of the arbitration agreement, an arbitration clause forming part of an agreement shall be treated as being an independent agreement. This question again came up for the consideration of the Supreme Court of India in N.N. Mercantile Pvt. Ltd. v Indo Unique Flame Ltd.37 The court disagreed with the two

33. 34. 35. 36. 37.

(2009) 2 SCC 494. Manohar Reddy & Bros. v Maharashtra Krishna Valley Development Corporation (2009) 2 SCC 494. National Agricultural Coop. Marketing Federation India Ltd. v Gains Trading Ltd. (2007) 5 SCC 692. Enercon (India) Ltd. v Enercon GmBH (2014) 5 SCC 1. Civil Appeal No. 3802-​3803/​2020 decided by judgment dated 11 January 2021.

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judgments, SMS Tea Estates Pvt. Ltd. v M/​s Chandmari Tea Co. Pvt. Ltd.38 and Garware Wall Ropes Limited v Coastal Marine Constructions and Engineering Limited.39 The Supreme Court of India held that an arbitration agreement would not be enforceable till the stamp duty on the substantive contract is paid. The Supreme Court of India held as follows:

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“In our view, there is no legal impediment to the enforceability of the arbitration agreement, pending payment of Stamp Duty on the substantive contract. The adjudication of the rights and obligations under the Work Order or the substantive commercial contract would however not proceed before complying with the mandatory provisions of the Stamp Act.”40

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After holding as above, the Supreme Court of India also referred the findings of a coordinate bench in the judgment of Vidya Drolia & Ors. v Durga Trading Corporation41 to a constitution bench of five judges, for an authoritative decision on the following question:

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“Whether the statutory bar contained in Section 35 of the Indian Stamp Act, 1899 applicable to instruments chargeable to Stamp Duty under Section 3 read with the Schedule to the Act, would also render the arbitration agreement contained in such an instrument, which is not chargeable to payment of stamp duty, as being non-​existent, unenforceable, or invalid, pending payment of stamp duty on the substantive contract/​instrument?”

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[8.4] APPLICATION OF THE SEPARABILITY DOCTRINE

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The issue of separability tends to arise either in applications for stay of court proceedings where a party to an arbitration agreement attempts to commence court proceedings on the basis that the arbitration agreement is invalid, or does not wish to participate in arbitration proceedings.

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This gives rise to important consequences for conducting an efficient arbitral process. It is this very practical utility that ensures that the doctrine of separability is relevant and firmly rooted in arbitral law and practice internationally and, by virtue of the Arbitration Act.

38. 39. 40. 41.

(2011) 14 SCC 66. (2019) 9 SCC 209. Civil Appeal No. 3802-​3803/​2020, para. 6.6. Civil Appeal No. 2402/​2009 decided by judgment dated 14 February 2020.

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Law, Practice and Procedure of Arbitration in India

The consequences of the presumption of separability can be examined in the following examples: (1) validity of arbitration agreement despite the non-​ existence of the main agreement;



(2) validity of arbitration agreement despite the invalidity/​illegality of the main agreement;



(3) validity/​survival of the arbitration agreement despite the termination/​performance of the main agreement;



(4) possibility of different laws governing the arbitration agreement and the main agreement.

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Example 1: The Non-​existence of the Main Agreement Does Not Affect the Arbitration Agreement

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The international position on whether an arbitration agreement will be valid in cases where the agreements alleged never to have existed has varied. Some jurisdictions have interpreted the doctrine of separability differently.

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In England, the validity of an arbitration clause has been upheld in cases where the main agreement has not been concluded. Earlier in 1942, the position was not the same when the House of Lords rejected the applicability of the doctrine of separability where the main agreement was never concluded by observing:

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“If the dispute is whether the contract which contains the clause has ever been entered into at all, that issue cannot go to arbitration under the clause, for the party who denies that he has ever entered into the contract is thereby denying that he has ever joined in the submission [to arbitration].”42

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However, Lord Hoffman in Fiona Trust & Holding Corporation v Privalov stated that:43

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“Even if the allegation is that there was no concluded agreement (for example, that terms of the main agreement remained to be agreed) that is not necessarily an attack on the arbitration agreement. If the arbitration clause has been agreed, the parties will be presumed to have intended the question of whether there was a concluded main agreement to be decided by arbitration.”

42. Heyman v Darwins Ltd [1942] AC 356, p. 366. 43. [2007] 4 All ER 951 at para. 18.

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Chapter 8—​​​Separability of Arbitration Clause

On appeal, the House of Lords44 upheld the separability presumption but recognised that some challenges to the main contract could impeach the arbitration agreement as well. It stated:

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“there may be cases in which the ground upon which the main agreement is identical with the ground upon which the arbitration agreement is invalid. For example, if the main agreement and the arbitration agreement are contained in the same document and one of the parties claims that he never agreed to anything in the document and that his signature was forged, that will be an attack on the validity of the arbitration agreement. But the ground of attack is not that the main agreement was invalid. It is that the signature to the arbitration agreement, as a ‘distinct agreement,’ was forged.”

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Sweden being an important arbitration seat for the west-​east especially for Chinese related arbitrations, adopted a broader interpretation of the separability doctrine.

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The Supreme Court of Sweden in Hermansson45 held the arbitration clause to be valid and binding regardless of whether the document could otherwise be enforced.

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The Supreme Court of India in Enercon (India) Ltd. & Ors. v Enercon GMBH & Ors46 adopted a similar position when it upheld the arbitration clause, even though the underlying agreement had not been concluded. It explained its pro-​arbitration approach as follows:

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“In the face of this, the question of the concluded contract becomes irrelevant, for the purposes of making the reference to the Arbitral Tribunal. It must be clarified that the doubt raised by the Appellant is that there is no concluded IPLA, i.e. the substantive contract. But this can have no effect on the existence of a binding Arbitration Agreement in view of Clause 3. The parties have irrevocably agreed to resolve all the disputes through Arbitration. Parties cannot be permitted to avoid arbitration, without satisfying the Court that it would be just and in the interest of all the parties not to proceed with arbitration. Furthermore, in arbitration proceedings, courts are required to aid and support the arbitral process, and not to bring it to a grinding halt.”

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In practice, these decisions may not have as much widespread impact as to affect the doctrine of separability. It may be argued in other parts of the world that if the parties have not agreed on the main contract, it will almost invariably be true that the arbitration clause will have suffered the same fate.

44. Fiona Trust & Holding Corp. v Privalov [2007] UKHL 40 at paras 17 and 34. 45. Hermansson v AB Asfalbelaeggnigar 1976 NJA 125. 46. (2014) 5 SCC 1.

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Law, Practice and Procedure of Arbitration in India

However, the Supreme Court of India’s decision in Enercon tilts away from this proposition by ascertaining the intention of the parties to arbitrate from the drafts of the contract intended to be executed, but was never finally executed. Therefore, it can be concluded that in India, separability as a principle is not dependent on the factum of the conclusion of the main contract.

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Accordingly, it will be safe to conclude that that the failure of a condition precedent to the existence of the contract will have no effect on the agreement to arbitrate.47

Example 2: Invalidity or Illegality of the Main Agreement Does Not Affect the Agreement

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The principle that the invalidity of the underlying contract does not invalidate the arbitration agreement and that the arbitral tribunal can decide issues of the validity of the underlying contract is now accepted as part of the law of international commerce.

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The English Court of Appeal held in Harbour Assurance Co. v Kansa General International Insurance Co.48 that the illegality of the main contract did not necessarily affect the legality or validity of an arbitration clause contained in that contract.

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Lord Steyn in Lesotho Highlands Development Authority v Impregilo SpA49 stated that separability is now “part of the very alphabet of arbitration law”.

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The Court in Beijing Jianlong Heavy Industry Group v Golden Ocean Group50 considered the validity of arbitration clauses contained in guarantees that were “unenforceable because of illegality”. Mackie QC J upheld the doctrine of separability and said that:

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“… an arbitration agreement may be rendered void or unenforceable if it is directly impeached on grounds which relate to the arbitration agreement itself and are not merely a consequence of the invalidity of the underlying contract.”51

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Hoffman LJ explained the core argument underlying it as follows:

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“In every case, it seems to me that the logical question is not whether the issue goes to the validity of the contract but whether it goes to the validity of the arbitration clause. The one may entail the other, but, as we have seen, it may not.”52

47. Samuel, “Separability of Arbitration Clauses –​Some Awkward Questions about the Law on Contracts, Conflict of Laws and the Administration of Justice” [2000] ADRLJ 36. 48. [1993] 3 All ER 897. 49. [2005] UKHL 43. 50. [2013] EWHC 1063 (Comm), [2013] 2 All ER (Comm) 436. 51. [2013] EWHC 1063 (Comm) at para. 23. See also Fiona Trust & Holding Corporation v Privalov [2007] 4 All ER 951. 52. Ibid.

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Chapter 8—​​​Separability of Arbitration Clause

The Indian courts have generally held that the impeachment of an arbitration agreement will not occur merely because the principal agreement is declared invalid.53 The Supreme Court of India in A. Ayyasamy v A. Paramasivam & Ors.54 while examining the issue of arbitrability of allegations of fraud, held that

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“The arbitration agreement survives for determining whether the contract in which the arbitration clause is embodied is null and void, which would include voidability on the ground of fraud.”

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Therefore, mere invalidity or illegality of the underlying contract does not take away the jurisdiction of the arbitral tribunal to address issues of the validity of the underlying contract.

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Example 3: Termination/​Performance of the Main Contract Does Not Affect the Arbitration Agreement

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The English courts have repeatedly upheld the validity of international arbitration agreements despite the termination of the main agreement with which they were associated.55 The Courts in the United States have also adopted the same view.56

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It is a settled position in India that an arbitration clause is a collateral term in the contract, which relates to the resolution of disputes, and not performance.

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Under Indian law, as under most systems of law, an arbitration clause constitutes a separate and autonomous agreement between the parties which survives any termination of the main agreement in which it is contained.57

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However, the Supreme Court of India has taken a different view where the facts of the case conclusively showed that the contract stood fully performed and finally discharged and there was no arbitral dispute.

53. Firm Ashok Traders v Gurumukh Das Saluja (2004) 3 SCC 155 at para. 13; Fittydent Int’l GmbH v Brawn Labs. Ltd 2010 SCC OnLine Del 1915. 54. (2016) 10 SCC 386 (confirmed in Rashid Raza v Sadaf Akhtar (2019) 8 SCC 710; Avitel Post Studioz v HSBC PI Holdings (Mauritius) 2020 SCC OnLine SC 656. 55. Crestar Ltd v Carr [1987] 2 FTLR 135; Paul Smith Ltd v H & S Int’l Holdings Inc. [1991] 2 Lloyd’s Rep. 127; Cecrop Co. v Kinetic Sciences Inc. [2001] BCSC 532. 56. ACE Capital Re Overseas, Ltd v Cent. United Life Ins. Co. 307 F.3d 24 (2d Cir. 2002); Unionmutual Stock Life Ins. Co. of Am. v Beneficial Life Ins. Co. 774 F.2d 524, pp. 528–​529 (1st Cir. 1985). 57. Magma Leasing & Finance Ltd. v Potluri Madhavilata (2009) 10 SCC 103; National Agricultural Coop. Mktg. Federation (India) Ltd. v Gains Trading Ltd. (2007) 5 SCC 692.

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Law, Practice and Procedure of Arbitration in India

The Supreme Court of India in National Insurance Co. Ltd. v Boghara Polyfab Pvt. Ltd.58 examined “whether a dispute raised by an insured, after giving a full and final discharge voucher to the insurer, could be referred to arbitration”. It held that:

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“29. It is thus clear that the arbitration agreement contained in a contract cannot be invoked to seek reference of any dispute to arbitration, in the following circumstances, when the contract is discharged on account of performance, or accord and satisfaction, or mutual agreement, and the same is reduced to writing (and signed by both parties or by the party seeking arbitration):

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(a) Where the obligations under a contract are fully performed and discharge of the contract by performance is acknowledged by a full and final discharge voucher/​receipt. Nothing survives in regard to such discharged contract.

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(b) Where the parties to the contract, by mutual agreement, accept performance of altered, modified and substituted obligations and confirm in writing the discharge of contract by performance of the altered, modified or substituted obligations.

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(c) Where the parties to a contract, by mutual agreement, absolve each other from performance of their respective obligations (either on account of frustration or otherwise) and consequently cancel the agreement and confirm that there is no outstanding claims or disputes.”59

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Similarly, the Supreme Court of India held in United India Insurance Company Ltd. v Antique Art Exports Pvt. Ltd.60 held that an arbitrator cannot be appointed in cases of full and final satisfaction of claims and the absence of material to demonstrate the existence of an arbitral dispute.

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The High Court of Bombay in Mulheim Pipecoatings GmbH v Welspun Fintrade Ltd distinguished between two situations: 61

(1) When the further performance of the contract containing the arbitration, agreement is brought to an end; and

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(2) when the existence of the contract itself is brought to an end. In the former, the arbitral agreement will survive, while it will not survive in the latter.

The Court also set out the essential features of the doctrine of separability as: 58. 59. 60. 61.

(2009) 1 SCC 267. Ibid at para. 29. (2019) 5 SCC 362. Mulheim Pipecoatings GmbH v Welspun Fintrade Limited 2013 SCC OnLine Bom 1048.

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Chapter 8—​​​Separability of Arbitration Clause

(1) Upon the termination of the main contract, the arbitration agreement does not ipso facto or necessarily come to an end and would depend upon the nature of the controversy and its effect upon the existence or survival of the contract itself;



(2) If the nature of the controversy is such that the main contract would itself be treated as if it never came into existence or was void, the arbitration clause could not operate, for along with the original contract, the arbitration agreement would also be void;



(3) Similarly, when the contract was validly executed but parties put an end to it, as if it had never existed, and substitute it with new contract solely governing their rights and liabilities thereunder, the arbitration clause forming a part of the old contract would perish with it;



(4) But where only the future performance of the contract has come to an end and the contract is not put to an end for all purposes because there may be rights and obligations which had arisen earlier when it had not come to an end, the contract subsists for those purposes and the arbitration clause would operate for those purposes; and



(5) The doctrine of separability requires, for the arbitration agreement to be null and void, inoperative or incapable of performance, a direct impeachment of the arbitration agreement62 and not simply a parasitical impeachment based on a challenge to the validity or enforceability of the main agreement.

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Example 4: Applicability of Different National Laws to the Arbitration Agreement and the Main Agreement

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The separability doctrine suggests that an arbitration agreement may be governed by a different law than the law applicable to the substantive contract.63

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A contrary view is that the doctrine has a limited scope and its purpose is not to treat the arbitration agreement distinct from the main agreement generally, including to determine the law governing the arbitration agreement.64

62. Courts have held that if one party cannot afford to arbitrate, the arbitration agreement will not become incapable of performance and only in a situation where both parties were incapable of financing proceedings, would an arbitration agreement be incapable of performance. See Janos Paczy v Hnadler & Naterman GmbH 1981 1 Lloyds Rep 302. 63. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Wolters Kluwer 2021), p. 498. 64. Anthony Daimsis, “How Heuristics Misshape Reasoning and Lead to Increased Costs in Arbitration”, in Sherlin Tung, Fabricio Fortese et al. (eds), Finances in International Arbitration: Liber Amicorum Patricia Shaughnessy (Kluwer Law International 2019), pp. 91–​106.

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Law, Practice and Procedure of Arbitration in India

The English Court of Appeal in Sulamérica65 observed while determining the law governing the arbitration agreement that the only purpose of the doctrine of separability is to give legal effect to the parties’ intention of resolving disputes through arbitration. It does not operate to insulate the arbitration agreement from the substantive contract for all purposes.

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However, the UK Supreme Court clarified in Enka Insaat ve Sanayi AS v OOO Insurance Company Chubb66 that the separability doctrine is a “powerful indication” that the arbitration agreement had to be construed separately for the purposes of determining its governing law as well.

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Therefore, a search for an implied choice of proper law to govern the arbitration agreement may lead to the conclusion that the parties intended the arbitration agreement to be governed by the same system of law as the substantive contract.

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However, this may not be applicable if there are other factors present which point to a different conclusion.

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The courts in Singapore have held that the separability doctrine is narrow in scope.67 It can only be resorted to when the validity of the arbitration agreement itself is under challenge.68

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A party cannot avoid the obligation to submit a dispute to arbitration by merely denying the existence of the underlying contract. However, that does not mean that the parties intended to enter into an arbitration agreement independent of the underlying contract.69

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In India, the separability presumption enshrined in the Arbitration Act is of similar application like that under the English Arbitration Act 1996 and the Model Law. The arbitration agreement is independent of the other terms of the contract.

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However, this independence is limited to the arbitral tribunal’s jurisdiction to consider challenges to its own jurisdiction. The usage of the words “for that purpose” in Section 16 has to be stressed upon which makes the purpose and intent of the separability doctrine clear.

65. Sulamérica Cia Nacional De Seguros S.A. and others v Enesa Engenharia S.A. and others [2012] EWCA Civ 638. 66. [2020] UKSC 38. However, also see, Kabab-​Ji SAL (Lebanon) v Kout Food Group (Kuwait) [2020] EWCA Civ 6 at [66] where the UK Court of Appeal endorsed the narrow import of the doctrine. 67. BCY v BCZ [2016] 2 Lloyd’s Rep 583. 68. BCY v BCZ [2016] 2 Lloyd’s Rep 583 at para. 60. 69. BCY v BCZ [2016] 2 Lloyd’s Rep 583 at para. 61.

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Chapter 8—​​​Separability of Arbitration Clause

Despite the limited scope of the separability presumption in the Arbitration Act, the Supreme Court of India has upheld the doctrine of separability in determining the law governing the arbitration agreement. The Supreme Court of India in Reliance Industries Limited and Others v Union of India held:70

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“This principle of separability permits the parties to agree: that law of one country would govern to the substantive contract and laws of another country would apply to the arbitration agreement. The parties can also agree that even the conduct of the reference would be governed by the law of another country. This would be rare, as it would lead to extremely complex problems. It is expected that reasonable businessman do not intend absurd results. In the present case, the parties had by agreement provided that the substantive contract (PSC) will be governed by the laws of India. In contradistinction, it was provided that the arbitration agreement will be governed by laws of England. Therefore, there was no scope for any confusion of the law governing the PSC with the law governing the arbitration agreement. This principle of severability is also accepted specifically under Article 33.10 of the PSC, which is as under:-​‘The right to arbitrate disputes and claims under this Contract shall survive the termination of this contract’.”

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[8.5] SPECIFIC ENFORCEMENT OF THE ARBITRATION AGREEMENT

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Article II of the New York Convention imposes a mandatory obligation on the courts to recognise valid arbitration agreements.71 This recognition takes place irrespective of an implementing domestic law.72

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However, given the scope of the Convention’s applicability, the arbitration agreements at the pre-​award stage can be recognised under Article II only if the subsequent award will fall under the Convention’s scope.73

70. Reliance Industries Limited and Ors. v Union of India (2014)7 SCC 603 at para. 65. See also Government of India v Vedanta Limited and Anr. 2020 SCC OnLine SC 749 at para. c(iv)(b), where the Supreme Court of India held that law governing the arbitration agreement must be determined separately from the law governing the substantive contract. 71. Marike Paulsson, The 1958 New York Convention in Action (Wolters Kluwer 2016), p. 64; Reinmar Wolff (ed.), New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958 (2nd edn, 2019), p. 155, at para. 180. 72. Reinmar Wolff (ed.), New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958 (2nd edn, 2019), p. 156, at para. 180. 73. Reinmar Wolff (ed.), New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958 (2nd edn, 2019), p. 102, at para. 35.

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Law, Practice and Procedure of Arbitration in India

In India, prior to the 2018 amendment to the Specific Relief Act 196374 (“SRA”), Section 14(2) of the SRA stated that no contract to refer present or future differences to arbitration shall be specifically enforced except as provided in the Arbitration Act 1940.

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However, with the 2018 amendment, the express provision relating to the non-​ enforcement of arbitration agreement was removed. The absence of such a provision is conspicuous in the now standing SRA. Therefore, there is no legal impediment to specifically enforcing an arbitration clause in India.

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However, any inability to specifically enforce an arbitration agreement is not an obstacle and is the very reason why the Arbitration Act gives the court discretion to dispose of a suit in respect of any dispute which the parties have, by writing, agreed to refer to arbitration.75

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As soon as the matter before any judicial authority is referred to arbitration, the suit/​legal proceedings pending before it stands disposed of, without a question of stay.76

[8.6] CONCLUSION

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The issue of the enforceability of arbitration agreements bears some relation to contemporary discourse on the availability and validity of so-​called passive remedies against the enforcement of arbitral awards, a topic which will be explored in detail in subsequent chapters.

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An arbitral tribunal is empowered to decide issues relating to its jurisdiction.

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Such issues may include determining whether the arbitral tribunal is properly constituted, validity of the arbitration agreement, the scope of the arbitral tribunal’s reference, and whether necessary preliminary procedural steps have been taken to trigger the arbitral process.

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The Arbitration Act recognises this competence-​competence principle. It empowers the arbitral tribunal to rule on its own jurisdiction. There is both a positive and negative effect. Firstly, it imposes a positive obligation on the arbitral tribunal to decide its own jurisdiction without need for support from the court. Secondly, it sets out a negative

74. Act No. 47 of 1963. 75. Arbitration Act, ss. 8 and 45; See also Hindustan Petroleum Corpn. Ltd. v Pinkcity Midway Petroleums (2003) 6 SCC 503. 76. P. Anand Gajapati Raju v P.V.G. Raju (2000) 4 SCC 539. For a detailed discussion on court proceedings and arbitration, refer to Chapter 34.

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obligation on the court discouraging it from determining jurisdictional objections before the arbitral tribunal has decided it. The competence-​competence principle does not prevent parties to resorting to a court for determination of the jurisdiction of an arbitral tribunal. Such situations may happen when a party disputes the validity of the arbitration agreement itself during proceedings under Sections 8 and 11 of the Arbitration Act.

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The courts may allow the arbitral tribunal to decide on its own jurisdiction in the first instance except in cases under Section 8 or Section 11 of the Arbitration Act where the arbitration agreement is invalid or non-​existent.

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The courts may interfere in rare circumstances at the Section 8 or Section 11 stage where it is manifestly certain that the arbitration agreement is non-​existent, invalid, or that the disputes are non-​arbitrable.

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However, they invariably leave the factual issues relating to contract formation, existence, validity, and non-​arbitrability for the arbitral tribunal to decide.

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In any event, the arbitral tribunal’s power to decide its own jurisdiction is subject to review under Section 16(6) and Section 34 of the Arbitration Act by the courts.

Chapter 9 JURISDICTION OF THE ARBITRAL TRIBUNAL [9.1] INTRODUCTION......................................................................................................................... 252 [9.2] ENTITLEMENT TO MAKE ENQUIRIES ON JURISDICTION............................................ 252

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[9.3] PROCEDURE FOR A CHALLENGE TO JURISDICTION..................................................... 255 [9.4] INTERIM CONSIDERATION OF JURISDICTIONAL OBJECTIONS................................. 263 [9.5] REVIEW OF THE ARBITRAL TRIBUNAL’S DECISION ON JURISDICTION................. 270

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[9.6] CONCLUSION............................................................................................................................... 275

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[9.1] INTRODUCTION

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An arbitration agreement’s independent and autonomous nature allows an arbitral tribunal to decide on a challenge to the existence, validity, and legality of the main agreement.

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Thus, the autonomous arbitration agreement gives the arbitral tribunal the basis to decide on its own jurisdiction. Such power exists even if it is alleged that the main contract has been terminated by performance or by some intervening event.

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[9.2] ENTITLEMENT TO MAKE ENQUIRIES ON JURISDICTION

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The arbitral tribunal’s competence to consider and decide its own jurisdiction is a universally recognised principle of arbitration.1 This is known as the doctrine of “competence to determine jurisdiction”.

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It is based on the German concept of “Kompetenz-​Kompetenz”. Its French equivalent is “compétence de la compétence”. All terms can be used interchangeably to mean that the arbitral tribunal can rule on its own jurisdiction. Article 16(1) of the UNCITRAL Model Law incorporates the principle by the following provision: “The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. For that purpose, an arbitration clause which forms part of a contract shall be treated as an agreement

1. G. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Wolters Kluwer 2021), p. 1144.

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independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.” Section 16 of the Arbitration Act as well as other Model Law jurisdictions mirror the provision of this article in their arbitration laws. Rules of most arbitral institutions also contain similarly worded provisions on jurisdiction.

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In essence, the arbitral tribunal is empowered to decide on issues of jurisdiction if any party objects to the existence or validity of the arbitration agreement.2

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The arbitral tribunal’s jurisdiction refers to its authority, mandate, or competence to decide the dispute between the parties. This mandate is of crucial importance to the arbitral process. Jurisdiction is consensual and is entirely delineated by the arbitration agreement. It is the parties that confer the authority on the arbitral tribunal to decide disputes between them.

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Indeed, there is no other source for the arbitral tribunal’s jurisdiction. A subsequent agreement can also cure the lack of jurisdiction. In effect, the doctrine reduces the ability of one party to delay the proceedings by taking the matter to court and claiming want of jurisdiction.3

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The Kompetenz-​Kompetenz principle has two aspects –​the positive and negative effect of the competence principle.4 It can be explained as follows: Firstly, it imposes a positive obligation on the arbitral tribunal to decide its own jurisdiction without need for support from the court. Secondly, it sets out a negative obligation on the court discouraging it from determining jurisdictional objections before the arbitral tribunal has decided it.

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The principle is related to rules regarding the allocation of jurisdictional competence between arbitral tribunals and national courts, and to rules concerning the nature and timing of judicial consideration of challenges to an arbitral tribunal’s jurisdiction.

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Sua sponte Decisions on Jurisdiction There is no basis for an arbitral tribunal to sua sponte declare that it lacks jurisdiction or the arbitration agreement is invalid except in rare circumstances.5 2. See the MCIA Rules (r. 20), the SIAC Rules (r. 28), the AIAC Rules (art. 23), and the HKIAC Rules (art. 19). 3. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 562; Howard M. Holtzmann et al., A Guide to the UNCITRAL Model Law on International Commercial Arbitration: Legislative History and Commentary (Wolters Kluwer 2015), p. 479. 4. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Wolters Kluwer 2021), p. 1162. 5. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Wolters Kluwer 2021), p. 1343.

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This is also apparent from the manner in which Article 16 of the Model Law has been crafted to provide that a plea that the arbitral tribunal does not have jurisdiction must be raised no later than the submission of the statement of defence.

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The UNCITRAL Working Group also opined that the failure to raise a plea of jurisdiction should operate as a waiver by the party.6 This is naturally subject to rare exceptions –​such as those relating to public policy or mandatory and non-​derogable provisions of national law. Gary Born states that:

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“It is only where the arbitration agreement might conflict with mandatory national law or in a default proceeding does the arbitral tribunal have any obligation to raise possible jurisdictional defects ex officio”.7

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A party’s failure or decision not to challenge the jurisdiction of an arbitral tribunal is to be construed as a waiver of such a jurisdictional objection.8 An arbitral tribunal ought not to override such a waiver, the exception being unless the arbitral tribunal would be duty bound to do so on account of the fact that the arbitration agreement is in conflict with mandatory national law.

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However, the travaux préparatoires for the Model Law had set out that Article 16 is “not intended to limit the Komeptenz-​Kompetenz of the arbitral tribunal to those cases where a party raised an objection”. It explains that:

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“It was ultimately for each State, when adopting the Model Law, to decide whether it wished to accept the principle and, if so, possibly to express in the text that parties could exclude or limit that power”.9

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In practice, no such known reservation has been made by any of the Model Law countries. Therefore, it is possible that a spontaneous ruling on jurisdiction by an arbitrator would be legitimate and within the scope of the Model Law.

6. Howard M. Holtzmann et. al., A Guide to the UNCITRAL Model Law on International Commercial Arbitration: Legislative History and Commentary (Wolters Kluwer 2015), p. 479. 7. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Wolters Kluwer 2020), p. 1344. 8. Such a position would be tenable in terms of s. 4 of the Arbitration Act which provides that “A party who knows that –​(a) any provision of this Part from which the parties may derogate, or (b) any requirement under the arbitration agreement, has not been complied with and yet proceeds with the arbitration without stating his objection to such non-​compliance without undue delay or, if a time limit is provided for stating that objection, within that period of time, shall be deemed to have waived his right to so object”. Therefore, the scope for an arbitral tribunal to decline exercising jurisdiction sua sponte is low. 9. Howard M. Holtzmann et al., A Guide to the UNCITRAL Model Law on International Commercial Arbitration: Legislative History and Commentary (Wolters Kluwer 2015), p. 526.

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In India, there is no known instance of an arbitral tribunal having sua sponte declined to exercise its jurisdiction in an arbitral proceeding.

[9.3] PROCEDURE FOR A CHALLENGE TO JURISDICTION The 1940 Act did not empower an arbitral tribunal to rule on its own jurisdiction. This jurisdiction was allocated to the courts under Section 31 of the 1940 Act.10

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Section 16(1) of the Arbitration Act in adopting Article 16 of the Model Law, expressly provides that an arbitral tribunal can rule on its own jurisdiction. Thus, the doctrine of Kompetenz-​Kompetenz is codified into Indian law.

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irc

It reduces the need for the Indian courts to support the arbitral process. In essence, it also limits the opportunity for the courts to intervene into the arbitral process thereby undermining its efficacy.

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The independence of an arbitration agreement from the underlying contract is interlinked with the competence of an arbitral tribunal to decide on its jurisdiction. As such, Section 16(1) of the Arbitration Act provides that an arbitral tribunal “may” rule on its own jurisdiction, including objections to the validity of an arbitration agreement.

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It provides for the purpose of the tribunal’s determination of the validity of the arbitration agreement as an independent agreement, forming part of the agreement.

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Section 16 of the Arbitration Act is not only confined to the width of the tribunal’s jurisdiction but goes to the very root of its jurisdiction.11 It is an inclusive provision. It includes within its ambit, all preliminary issues touching upon its jurisdiction.12

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Based on the above provision, it is now axiomatic that, an arbitral tribunal has the jurisdiction to decide on the validity of the arbitration clause. This power is related to the arbitral tribunal’s competence to determine jurisdiction.

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Many other jurisdictions have adopted similar statutory framework like Section 16(1) where the arbitral tribunal can decide its jurisdiction and determine the validity of the arbitration agreement separate from the contract.

10. Section 31(2) of the 1940 Act, provided “Notwithstanding anything contained in any other law for the time being in force and save as otherwise provided in this Act, all questions regarding the validity, effect or existence of an award or an arbitration agreement between the parties to the ‘agreement or persons claiming under them’ shall be decided by the Court in which the award under the agreement has been, or may be, filed, and by no other Court”. 11. GAIL v. Keti Construction (I) Ltd. (2007) 5 SCC 38. 12. Uttarakhand Purv Sainik Kalyan Nigam Ltd. v Northern Coal Field Ltd. 2020 (2) SCC 455.

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The arbitral tribunal’s jurisdiction refers to its authority, mandate, or competence. The arbitration agreement delineates it. The parties by agreement confer the authority on the arbitral tribunal to decide disputes between them. Indeed, there is no other source for the arbitral tribunal’s jurisdiction. Lack of jurisdiction may be cured by a subsequent agreement.

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The Supreme Court of India held in IFFCO Ltd. v Bhadra Products13 that jurisdiction under Section 16 of the Arbitration Act refers to three things: (1) whether there is the existence of a valid arbitration agreement;



(2) whether the arbitral tribunal is properly constituted; and



(3) matters submitted to arbitration should be in accordance with the arbitration agreement.

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The arbitral tribunal must stay within the limits authorised by the agreement and confine itself to the disputes contemplated and falling within the terms of submission to arbitration. The resulting award cannot travel beyond the scope of the submission to arbitration.14 Section 16(3) of the Arbitration Act provides that a plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority during the arbitral proceedings.

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Redfern and Hunter explain that:

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“The rule to this effect is expressed in several different ways. Sometimes it is said that an arbitral tribunal must conform to the mission entrusted to it; or that it must not exceed its mandate; or that it must stay within its terms of reference, competence or authority.”15

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A jurisdictional challenge may be made on many grounds including on the basis of the validity of the arbitration agreement, the constitution of the arbitral tribunal, compliance with pre-​arbitration procedures, waiver of the right to arbitrate, joinder of non-​ signatories and/​or arbitrability of the dispute. A challenge to the arbitrator’s jurisdiction can be either partial or total. A partial challenge arises when it is submitted that certain claims or counterclaims do not fall within the jurisdiction of the arbitrator.

13. (2018) 2 SCC 534. 14. Oil and Natural Gas Corporation v Wig Brothers Builders and Engineers Pvt Ltd. (2010) 13 SCC 37. 15. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 335.

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A total challenge occurs when it is contended that the arbitrator has no jurisdiction to determine any of the claims or counterclaims which have been submitted to it. In cases where the jurisdiction of an arbitral tribunal is challenged on the basis of a waiver of the agreement to arbitrate, the party alleging a waiver must be able to show a waiver of the agreement to arbitrate either in express terms or through acquiescence.

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Parties’ choice of having disputes resolved through arbitration must be respected until such a choice is abandoned on account of express abandonment or waiver or acquiescence.

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A case for waiver of the arbitration agreement may be made out in the event a party fails to make an application under Section 8 of the Arbitration Act, to obtain a direction that the action before the judicial authority is the subject matter of an arbitration agreement.

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Such an application must be brought before the court no later than the date of submitting the first statement on the substance of the dispute.16

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A party that willingly participates in suit proceedings and subjects itself to the jurisdiction of the court cannot subsequently request for reference of the disputes to arbitration.17 In an Egyptian case, the Court held that:

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“The waiver of the right to arbitrate under an arbitration clause may not be presumed. It has to be clear and unequivocal in expressing the party’s intention to waive its contractual right to have the dispute settled by arbitration.”18

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Jurisdictional questions may include: whether there is a valid arbitration agreement;19 whether the arbitral tribunal is properly constituted;20 what matters have been submitted to arbitration in accordance with the arbitration agreement;21 and

16. Arbitration Act, s. 8(1). Such a stipulation is absent in Arbitration Act, s. 45. 17. See D. Rautray, Principles of Arbitration Law in India (1st edn, Wolters Kluwer 2019). 18. Case 780: MAL 4 –​Egypt: Cairo Regional Center for International Commercial Arbitration, No. 312/​ 2002 (28 November 2004), available at http://​ www.gjpi.org/​ wp-​ content/​ uploads/​ uncitral-​arbitral-​award-​abstracts-​en.pdf. 19. See Willcock v Pickfords Removals [1979] 1 Lloyd’s Rep 244; XL Insurance Ltd v Owens Corning [2000] 2 Lloyd’s Rep 500; ABB Lummus Global Ltd v Keppel Fels Ltd [1999] 2 Lloyd’s Rep 24; Azov Shipping Co v Baltic Shipping Co (No 3) [1999] 2 Lloyd’s Rep 159. 20. See Minermet SpA Milan v Luckyfield Shipping Corp SA [2004] EWHC 729. 21. See Unisys International Services Ltd v Eastern Counties Newspaper Ltd [1991] 1 Lloyd’s Rep 538; Al-​Naimi v Islamic Press Agency Inc [2000] 1 Lloyd’s Rep 522; Fleming & Wendeln GmbH v Sanofi SA/​AG [2003] EWHC

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whether a necessary preliminary procedural step has been taken to trigger the arbitral process.22

ul at io n

However, an allegation that a contract is voidable does not give rise to a jurisdictional challenge. Such an issue relates to the contract and not the arbitration clause. Section 16 of the Arbitration Act is concerned only with the validity and operation of the arbitration clause, scope of the subject matter of the dispute with respect to the arbitration agreement, and the jurisdictional challenges that arise from them. Typically, the challenges mentioned above would occur in the early stages of the proceedings, but a challenge can also arise when the arbitrator hears arguments on a matter that falls outside the reference to arbitration during the proceedings.

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Whenever there is a jurisdictional challenge, an arbitral tribunal which can decide on its own jurisdiction has three alternative courses of action: (1) It may determine that it has no jurisdiction at all, particularly where the lack of jurisdiction is evident, in which event the arbitral proceedings will terminate in the absence of a court order to the contrary;



(2) it may determine that it has jurisdiction and issue an interim award, in which event either party or both parties may challenge the award in the manner provided for under the relevant legislation or rules and seek a pronouncement from a competent court or authority as to the jurisdictional issue; and



(3) it may continue with the arbitration without adopting either of the courses above until stopped by an order from a competent court.

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Two Types of Pleas

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Section 16(3) to (4) of the Arbitration Act deal with two types of pleas of the arbitral tribunal’s lack of jurisdiction. The first type of plea concerns the non-​existence of the arbitral tribunal’s jurisdiction. The second type of plea is that the arbitral tribunal is exceeding the scope of its existing authority. The fact that a party has participated in the appointment of the arbitral tribunal does not preclude that party from raising a plea that the arbitral tribunal does not have jurisdiction.

561; Food Corporation of India v Surendra, Devendra and Mohendra Transport Co. (1988) 1 SCC 547; Ronly Holdings v JSC Zestafoni G Nikoladze Ferroalloy Plant [2004] EWHC 1354. 22. See Mackley & Co Ltd v Gosport Marina Ltd [2002] EWHC 1315 (TCC).

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Thus, subject to subsections 16(2) and 16(3) of the Arbitration Act, a party need not make any reservation of its objection and can proceed to constitute the arbitral tribunal, which would eventually rule on its objection.

ul at io n

The failure to raise a plea as to the arbitral tribunal exceeding the scope of its mandate would not necessarily preclude the raising of such a plea in setting aside or in recognition and enforcement proceedings. This is because subparagraph 34(2)(a)(iv) of the Arbitration Act permits the setting aside of the award on this ground.

irc

Several arbitral institutions set out the procedure for challenging the jurisdiction of an arbitral tribunal.23 In practice, it is possible to request for a bifurcation of the arbitration proceedings, with the arbitral tribunal deciding on the issue of jurisdiction before proceeding to the merits. However, this is a matter of the arbitral tribunal’s discretion.

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Section 16(5) to (6) of the Arbitration Act describes the procedure that has to be followed when raising one of the two types of pleas of non-​existence of jurisdiction or exceeding the scope of the jurisdiction.

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The party alleging such a plea has to raise it with the arbitral tribunal. The arbitral tribunal can then rule on it either as a preliminary question or in an award on the merits of the case.

py

Under Section 16, two principal courses of action are available to an arbitral tribunal when a jurisdictional objection is raised: (1) An arbitral tribunal may decide that it has jurisdiction in the matter, proceed with the arbitral proceedings and issue an award;



(2) the arbitral tribunal may uphold the objections to its jurisdiction and dismiss the arbitral proceedings.

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In terms of Section 16(6), the former course of action can only be challenged in an application filed under Section 34 for having the award set aside. However, the latter course of action is appealable. It can be brought before the courts under Section 37 of the Arbitration Act. In practice, it is prudent for the arbitral tribunal to rule on jurisdictional issues as a separate decision to obviate possible waste of time and money, particularly when such jurisdictional issues are antecedent and go to the very foundation of the arbitration.

23. MCIA Rules 2016, r. 20(2), SIAC Rules 2016, art. 28(2), ICC Rules 2017, art. 6(3)), and UNCITRAL Arbitration Rules, 2013, art. 23(1).

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Law, Practice and Procedure of Arbitration in India

However, the arbitral tribunal is entitled to combine its jurisdictional ruling with a partial or complete decision on the merits of the case.24 The latter course prevents possible dilatory tactics and abuse of any immediate right of appeal.

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In India, arbitral tribunals follow the practice of reserving the order for jurisdiction along with the final award on merits. Such an approach runs the risk of costs being incurred for the rest of the arbitration proceedings, when the tribunal could ultimately hold that it lacked jurisdiction in the matter. However, in practice, an arbitral tribunal would ordinarily take a call to defer the decision on jurisdiction if it is convinced at least on a prima facie basis that it has jurisdiction in the matter.

fo

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irc

A party challenging the jurisdiction of an arbitral tribunal should, as a matter of prudence, request for a bifurcation of the proceedings along with the reasons for making such a request in order to assist the tribunal in exercising its discretion to decide the issue of jurisdiction first.

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If the arbitral tribunal decides to postpone the decision until the award stage, then Section 34 of the Arbitration Act which addresses an application for setting aside and Section 36 which addresses the grounds for refusing recognition or enforcement would apply to the issue.

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Final judicial control on the issue of the arbitral tribunal’s jurisdiction is of manifest importance because this is the only way of undermining the fraudulent acquisition of an arbitral tribunal’s power.25

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Time Limit for Raising an Objection to Jurisdiction

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Section 16(2) and 16(3) of the Arbitration Act establishes two different time limits for raising the pleas to ensure that objections are raised without delay.

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Under Section 16(2) of the Arbitration Act, objection to an arbitral tribunal’s jurisdiction must be raised no later than the filing of the statement of defence, where the objection is founded on the premise that an arbitral tribunal is exceeding its authority under the arbitration agreement.

24. Azov Shipping Co v Baltic Shipping Co (No 2) [1999] 1 All ER (Comm) 716; Ramesh B. Desai and Ors. v Bipin Vadilal Mehta and Ors. (2006) 5 SCC 638; Meera Goyal v Priti Saraf (O.M.P. 2/​2020 –​High Court of Delhi) (Judgment dated 26 February 2020). 25. See Dr Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions (3rd edn, Sweet & Maxwell 2010), p.148, at para. 4.020.

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Chapter 9—​Jurisdiction of the Arbitral Tribunal

Such an objection must be raised as soon as the matter that is alleged to be beyond the scope of the arbitration agreement arises.26 However, Section 16(4) provides an arbitral tribunal with some discretion to admit such a plea even beyond the period prescribed, if such a delay is justified.

ul at io n

With respect to a counterclaim, the relevant cut-​off point would be the time at which the claimant submits its reply. A plea that the arbitral tribunal had exceeded the scope of its authority has to be raised as soon as the matter, which is alleged to exceed this authority, is dealt with in the arbitral proceedings. However, the applicant party must include in its application all of the grounds of jurisdictional challenge known to it.27

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irc

Section 16 of the Arbitration Act does not state the consequences for failing to raise a jurisdiction objection. Section 4 of the Arbitration Act deals with waiver of the right to object. It generally does not apply to jurisdictional issues as Section 16 of the Arbitration Act is not a provision from which the parties may derogate.28

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A party’s failure to raise a jurisdictional objection in a timely manner would generally preclude it from challenging the validity of the arbitration agreement in subsequent setting aside (Article 34 of the UNCITRAL Model Law) or recognition and enforcement (Articles 35 and 36 of the UNCITRAL Model Law) proceedings.

py

The exception to that would be instances where the arbitral tribunal’s jurisdiction is challenged on public policy grounds relating to the arbitrability of the dispute.29

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The Singapore High Court in Astro Nusantara International BV & Ors v PT Ayunda Prima Mitra & Ors.30 held that on the failure of a party to appeal to the court pursuant to an award by the arbitral tribunal on jurisdiction, such an award attains finality as regards the matter between the parties.

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However, the Court of Appeal of Quebec, Canada, in Compagnie Nationale Air France v Mbaye31 held that paragraph 3 of Article 16 of the UNCITRAL Model Law was not mandatory. The parties had validly excluded immediate court intervention based on that provision by agreeing that the arbitral procedure would be governed by the

26. Arbitration Act, s. 16(3). 27. See Westland Helicopters Ltd v Sheikh Salah Al-​Hejailan [2004] EWHC 1625 (Comm). 28. Sundra Rajoo and WSW Davidson, The Arbitration Act 2005: UNCITRAL Model Law as Applied in Malaysia (Sweet & Maxwell Asia 2007), p. 24. 29. United Nations General Assembly, Analytical Commentary on Draft Text of a Model Law on International Commercial Arbitration: Report of the Secretary-​General (dated 25 March 1985) UN Doc A/​CN.9/​264. 30. [2016] SGHC 34. 31. [2003] CanLII 35834, QC (CA).

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Law, Practice and Procedure of Arbitration in India

arbitration rules which did not provide for immediate court intervention in relation to interim jurisdictional rulings.

ul at io n

The Singapore Court in Tan Poh Leng Stanley v Tang Boon Jek Jeffrey32 took a different position. It considered the position of a party who had failed to seek the judicial review of an interim decision of the arbitral tribunal dismissing an objection to its jurisdiction. It held that the party could nevertheless raise the point later in the context of an application to set aside the award on jurisdictional grounds.

irc

Section 34 of the Arbitration Act relates to the application to set aside an award. Section 36 deals with the grounds for refusing recognition or enforcement. The latter provision remains applicable where the party had raised a plea within time limits but without success or in the case where a party did not participate in the proceedings at all.

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A violation of public policy or the lack of arbitrability can be raised at any time during the arbitration proceedings or afterwards in setting aside procedures without being precluded by the time limits. However, it is not clear whether a party can be allowed to raise jurisdictional objections for the first time at the Section 34 or Section 37 stage.

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The Supreme Court of India in Narayan Prasad Lohia v Nikunj Kumar Lohia & Ors. (“Lohia”) held that a jurisdictional objection relating to composition of the arbitral tribunal had to be first raised before the tribunal.33

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Similarly, the Supreme Court of India in Krishna Bhagya Jala Nigam Ltd. v G. Harischandra Reddy34 held that objections relating to validity of the arbitration agreement could not be raised for the first time in the appeal filed under Section 37(1)(b) of the Arbitration Act.

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The Supreme Court of India appears to have diluted the principle in Gas Authority of India Ltd. v Keti Constructions (I) Ltd. where it held that:

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“[i]‌f a plea of jurisdiction is not taken before the arbitrator as provided under Section 16 of the Act, such a plea cannot be permitted to be raised in proceedings under Section 34 of the Act for setting aside the award, unless good reasons are shown.”35

However, this judgment may not have considered the judgment in Lohia. Subsequently, the Supreme Court of India in Lion Engineering Consultants v State of Madhya Pradesh & Ors. held that there is no bar to raising an objection to the 32. 33. 34. 35.

[2000] SGHC 260, [2000] 3 SLR(R) 847. (2002) 3 SCC 572. (2007) 2 SCC 720. (2007) 5 SCC 38.

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Chapter 9—​Jurisdiction of the Arbitral Tribunal

jurisdiction of the arbitral tribunal under Section 34 of the Arbitration Act, even if such an objection was not raised under Section 16.36 However, this apparent departure must be considered in the light of the fact that the objection in this case related to the statutory exclusion of the jurisdiction of the arbitral tribunal.

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Again, this judgment was also decided without considering the judgment in Lohia. Therefore, it is not clear whether the Indian courts will allow a party to raise jurisdictional objections for the first time at the Section 34 or Section 37 stage.

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[9.4] INTERIM CONSIDERATION OF JURISDICTIONAL OBJECTIONS

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The basic principle that the tribunal can decide on its own jurisdiction in the context of most modern statutory frameworks and certainly under the Arbitration Act is uncontroversial.

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The key area of contention is whether the Kompetenz-​Kompetenz doctrine totally excludes the jurisdiction of the court.

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The principle of Kompetenz-​Kompetenz does not eliminate the possibility of resorting to a court for determination of the jurisdiction of an arbitral tribunal. This is likely to happen when a party disputes the validity of the arbitration agreement itself and does not wish to participate in the proceedings at all.

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When the validity of an arbitration agreement is challenged on the basis of a challenge to the validity, existence, legality, and termination of the underlying agreement in a parasitical manner, there is often a dispute over which forum the issue must be brought up before, that is, court or arbitral tribunal.

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The separability provision makes it clear that the arbitral tribunal will decide any challenge to the validity of the main agreement in which an arbitration clause is contained. However, this is not always the case when the validity of an arbitration agreement is challenged. Where a party impeaches the validity of the arbitration clause itself, it is possible that a court may decide the issue. It may never reach the arbitral tribunal.37

36. (2018) 16 SCC 758, at para. 4. 37. See Harbour Assurance Ltd. v Kansa Ltd. (C.A.) QB 701.

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Law, Practice and Procedure of Arbitration in India

The arbitrator’s jurisdiction is of vital importance because it determines whether the parties are bound by the resulting award. The arbitrator’s jurisdiction to conduct the arbitration depends inter alia on the existence of a valid arbitration agreement. Therefore, when the validity of the arbitration agreement is itself impeached by a party, it may be more appropriate for a court to decide the issue of jurisdiction of the arbitral tribunal.

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However, this is an exception to the universally accepted principle of the tribunal’s ability to determine its own jurisdiction. It is to account for such scenarios that Article 16 of the Model Law and Section 16(1) of the Arbitration Act provide that the arbitral tribunal may rule on its own jurisdiction.

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irc

This may be of particular importance in cases where the arbitration agreement and the main agreement are contained in the same document and one party claims his signature was forged,38 or the agent had no authority to conclude any agreement (including an arbitration agreement).

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The latter would be an attack on the arbitration agreement because the contract, as well as the arbitration agreement, will be considered to be void ab initio. In such a circumstance, it may be more appropriate for the courts to carry out this exercise.

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However, so long as the existence and validity of the arbitration agreement is not also impugned by the challenge raised, the arbitral tribunal would be the appropriate body to continue to determine the claim.

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There is diversity in how different jurisdictions have handled this issue.

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Under French Law, the arbitral tribunal has exclusive jurisdiction to rule on its own jurisdiction.39 When a dispute subject to an arbitration agreement is brought before a French court, such court shall decline jurisdiction.

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The exception being if an arbitral tribunal has not yet been seized of the dispute and if the arbitration agreement is manifestly void or manifestly not applicable.40 38. Nigel Peter Albon v Naza Motor Trading Sdn Bhd (No. 3) [2007] EWHC 327 (Ch). 39. French Code of Civil Procedure, art. 1465. 40. French Code of Civil Procedure, art. 1448; The French Cour de cassation has repeatedly and emphatically affirmed that proposition; Société Spa Tagliavini, Cour de cassation [Cass.] [supreme court for judicial matters] Com., 25 November 2008, Bull. civ. IV, No. 197; Société Ocea c. M. Bouet, Cour de cassation [Cass.] [Supreme Court for judicial matters] 1e civ., 9 July 2008, 2008 REV. ARB. 680, 681; Société Nat’l Broadcasting Co. (NBC) c. M. Bernadaux, Cour de cassation [Cass.] [Supreme Court for judicial matters] 1e civ., 11 July 2006, Bull. civ. I, No. 364; Société Prodim c. époux Mohimont, Cour de cassation [Cass.] [Supreme Court for judicial matters] 1e civ., 4 July 2006, Bull. Civ. I No. 338; Société Quarto Children’s Books Ltd. c. Société Éditions du Seuil, Cour de cassation [Cass.] [Supreme Court for judicial matters] 1e civ., 16 October 2001, Bull. civ. I, No. 254; Société American Bureau of Shipping c. Copropriétaire Maritime Jules Verne, Cour de

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Chapter 9—​Jurisdiction of the Arbitral Tribunal

The Cour de cassation in Société Spa Tagliavini held that: “The only circumstance in which a French court is permitted to question arbitral jurisdiction is one in which no arbitral tribunal has yet been constituted and the agreement to arbitrate is, for one reason or another, manifestly ineffective or unenforceable”.41

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Therefore, the French courts accord priority to the arbitral tribunals to decide issues of jurisdiction unless the arbitration agreement is “manifestly void or manifestly not applicable”.

irc

Accordingly, even in cases of appointment of arbitrator, the French courts only make a prima facie inquiry into the existence of the arbitration agreement, thus reserving the authority of the arbitral tribunal to finally determine the validity and related issues.42

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Similarly, the Singaporean courts have held that it is the arbitral tribunal which has primacy over the court in the determination of whether the arbitration agreement is valid and confers jurisdiction upon the arbitral tribunal.43

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In a departure from the French law, the German law allows a party to seek a full judicial determination on the issue of jurisdiction prior to the constitution of the arbitral tribunal.44 The party must demonstrate that the arbitration agreement is null and void, inoperative or incapable of being performed to prevail on the jurisdictional issue.45

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The provision further allows a party, against whom arbitration has been instituted, to seek a ruling directly from an intermediate appellate court on the admissibility or inadmissibility of arbitration.

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The court is not required to wait for the arbitral tribunal’s jurisdictional decision before deciding the objection under §1032 (1) ZPO.46 Therefore, the court has the last say on the issues of jurisdiction.

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cassation [Cass.] [Supreme Court for judicial matters] 1e civ., 26 June 2001, Bull. civ. I, No. 183; Société Métu System France c. Société Sulzer Infra, Cour de cassation [Cass.] [Supreme Court for judicial matters] 1e civ., 1 December 1999, Bull. civ. I, No. 325; Emmanuel Gaillard, Note–​Cour de cassation (1re Ch. civile), 2001 Rev. Arb. 529; Judgment of 25 March 2015, Pourvoi No. 13-​17372 (French Cour de Cassation Civ. 1); Cour de cassation, Case No 41: Cass 1re civ, 5 January 1999, M Zanzi v J de Coninck & Ors; Cass Com, 22 February 1949, Cailliez, JCP 1949 II 4899, note H Motulsky; our de cassation, Civ I, 26 June 2001, Rev. Arb. 2001 at p. 529, American Bureau of Shipping v Copropriété Maritime Jules Verne. [Cass.] [supreme court for judicial matters] Com., Nov. 25, 2008, Bull. civ. IV, No. 197 at para. 17. French Code of Civil Procedure, art. 1455. Malini Ventura v Knight Capital Pte Ltd [2015] SGHC 225. Zivilprozessordnung –​German Code of Civil Procedure, s. 1032(2). Zivilprozessordnung –​German Code of Civil Procedure, s. 1032(1). Patricia Nacimiento, Stefan Michael Kroll, et al. (eds), Arbitration in Germany: The Model Law in Practice (2nd edn, Kluwer Law International 2015), p. 117 at para. 35.

41. 42. 43. 44. 45. 46.

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The English approach reflects the intermediate position on this issue. The jurisdictional objections relating to the underlying contract are ordinarily to be decided by the arbitral tribunal.47 However, if the jurisdictional challenge directly impeaches the arbitration agreement and is not bound up with the issues relating to the merits of the parties’ disputes, the English courts can conclusively decide these issues at the referral stage.48

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The overarching principle followed by the English courts is to find “the most economical way to decide where the real dispute should be resolved”.49 The English Supreme Court in Dallah Real Estate and Tourism Holding Co v Ministry of Religious Affairs, Government of Pakistan50 held as follows:

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“84. So also, the principle that a tribunal in an International Commercial Arbitration has the power to consider its own jurisdiction is no doubt a general principle of law. It is a principle which is connected with, but not dependent upon, the principle that the arbitration agreement is separate from the contract of which it normally forms a part. But it does not follow that the tribunal has the exclusive power to determine its own jurisdiction, nor does it follow that the court of the seat may not determine whether the tribunal has jurisdiction before the tribunal has ruled on it. Nor does it follow that the question of jurisdiction may not be re-​examined by the supervisory court of the seat in a challenge to the tribunal’s ruling on jurisdiction. Still less does it mean that when the award comes to be enforced in another country, the foreign court may not re-​examine the jurisdiction of the tribunal.”

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The Indian approach has slowly started to mirror the English approach. A Seven-​Judge Bench of the Supreme Court of India in SBP & Co. v Patel Engineering Ltd. and Anr.51 (“SBP Case”) held in the context of powers exercised by a court under Section 11 of the Arbitration Act that Section 16 comes into full play only when an arbitral tribunal is constituted without intervention under Section 11(6) of the Act.52

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Although the Court made its observation in the context of an application made under Section 11 of the Arbitration Act, it is still applicable to Section 16 when the Court held:

47. Fiona Trust & Holding Corp v Privalov [2007] EWCA Civ 2; G. Born, International Commercial Arbitration (3rd edn, Wolters Kluwer 2020), pp. 1304–​1307. 48. Excalibure Ventures LLC v Texas Keystone Inc. [2011] EWHC 1624; G. Born, International Commercial Arbitration (3rd edn, Wolters Kluwer 2020), pp. 1304–​1307. 49. Excalibure Ventures LLC v Texas Keystone Inc. [2011] EWHC 1624. 50. [2011] 1 AC 763. 51. (2005) 8 SCC 618. 52. Ibid. See para. 12 (followed in IFFCO Ltd. v Bhadra Products (2018) 2 SCC 534).

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“… The fact that the Arbitral Tribunal has the competence to rule on its own jurisdiction and to define the contours of its jurisdiction, only means that when such issues arise before it, the Tribunal can, and possibly, ought to decide them. This can happen when the parties have gone to the Arbitral Tribunal without recourse to Section 8 or 11 of the Act. But where jurisdiction issues are decided under these sections, before a reference is made, Section 16 cannot be held to empower the Arbitral Tribunal to ignore the decision given by the judicial authority or the Chief Justice before the reference to it was made …” (Emphasis supplied)

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Therefore, the Supreme Court of India held in SBP Case that a court could conclusively determine jurisdictional issues at Section 8 and Section 11 stage. However, if the tribunal was constituted without a court order, the arbitral tribunal had the primacy to decide such objections.

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The principles of the SBP Case were crystallised by the Supreme Court of India in Boghara Polyfab.53 The Court classified the issues arising for a court’s determination in three categories. It held that the court had to mandatorily decide whether there was an arbitration agreement and whether the party making the application under Section 11 of the Arbitration Act was a party to such an agreement.

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It could also decide or leave to the decision of the arbitral tribunal the issue of whether the claim was a dead (or time barred) or a live claim and whether there was accord or satisfaction between the parties. However, the Supreme Court of India clarified that whether a claim fell within the scope of arbitration clause was to be left exclusively to the arbitral tribunal.

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Subsequently, the 2015 Amendment amended Section 8 and Section 11 to legislatively overrule the SBP case. The amended Section 8 now provides that a judicial authority before which an action is brought which is the subject matter of an arbitration agreement must refer the parties to arbitration, unless it finds that prima facie no valid arbitration agreement exists.

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Therefore, mandatory for a court to refer the dispute to arbitration unless the court finds prima facie that no valid arbitration agreement exists.54 The 2015 Amendment limited the scope of court’s inquiry into the validity of the arbitration to a “prima facie” inquiry and gave wider powers to the arbitration tribunal to decide on its own jurisdiction based on the validity of the arbitration agreement.55

53. National Insurance Co. Ltd. v Boghara Polyfab (P) Ltd. (2009) 1 SCC 267. 54. 2015 Amendment, s. 4. 55. A. Ayyasamy v Paramasivam (2016) 10 SCC 386.

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The Supreme Court of India in Duro Felguera S.A. v Gangavaram Port Limited56 held that Section 11(6A) made it clear that the courts should only look into one aspect –​ the existence of the arbitration agreement –​nothing more and nothing less. In essence, the Court understood the SBP Case to have been statutorily overridden.

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However, the Supreme Court of India also held on two separate occasions in Oriental Insurance Co. Ltd. v Hyundai Engineering and Construction Company Limited57 and Oriental Insurance Company Limited v Narbheram Power and Steel Private Limited58 that the issue of whether the dispute was governed by the arbitration clause could be examined by the courts at the reference stage and need not be left to be decided by the arbitral tribunal.

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These judgments quoted with approval by the Supreme Court of India in Garware Wall Ropes Limited v Coastal Marine Constructions and Engineering Limited59 relied on the SBP Case. It iterated that Section 16 of the Arbitration Act has full play only if the arbitral tribunal is constituted without the intervention of the Court under Section 11.60

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However, this judgment has limited applicability as these observations were made in the context of arbitration clauses contained in documents for which the stamp duty61 (a legal requirement for enforceability of documents) has not been paid.

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However, the Supreme Court of India in A. Ayyasamy v A. Paramasivam62 appeared to endorse a different view when it held that:

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“Even if the other party has objection to initiation of such arbitration proceedings on the ground that there is no arbitration agreement or validity of the arbitration clause or the competence of the Arbitral Tribunal is challenged, Section 16, in clear terms, stipulates that such objections are to be raised before the Arbitral Tribunal itself which is to decide, in the first instance, whether there is any substance in questioning the validity of the arbitration proceedings on any of the aforesaid grounds. It follows that the party is not allowed to rush to the Court for an adjudication. Even after the Arbitral Tribunal rules on its jurisdiction and decides that arbitration clause is valid or the Arbitral Tribunal is legally constituted, the aggrieved party has to wait till the final award is pronounced and only at that stage the aggrieved party is allowed

56. 57. 58. 59. 60. 61. 62.

(2017) 9 SCC 729. (2018) 17 SCC 607. (2018) 6 SCC 534. (2019) 9 SCC 209. Ibid at para. 18. Stamp duty is a levy/​tax paid to the government to register a document. (2016) 10 SCC 386, at para. 12.2.

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to raise such objection before the Court in proceedings under Section 34 of the Act while challenging the arbitral award.” A special bench of the Supreme Court of India in Vidya Drolia v Durga Trading Corporation63 settled the legal position. The Court surveyed the international jurisprudence and stated the following principles: (1) The Arbitration Act recognises the principles of severability and competence-​competence.



(2) The arbitral tribunal is the preferred first authority to determine issues of non-​arbitrability. The court has the power to “second look” on aspects of non-​arbitrability post-​award under Section 34 of the Act.



(3) The court may interfere in rare circumstances at the Section 8 or Section 11 stage where it is manifestly and ex-​facie certain that the arbitration agreement is non-​existent, invalid, or that the disputes are non-​arbitrable. In such cases, the applicable test will be prima facie test. The second and third categories of issues as classified in Boghara Polyfab are presumptively for the arbitrator to decide except in exceptional circumstances. Therefore, factual issues relating to contract formation, existence, validity, and non-​ arbitrability are for the arbitral tribunal to decide.



(4) The nature of non-​arbitrability would, to some extent, determine the level and nature of judicial scrutiny. The objective of the judicial scrutiny is to protect parties from being forced to arbitrate when the issue is demonstrably “non-​arbitrable”.



(5) The court by default would refer the issue to arbitration when contentions relating to non-​arbitrability are plainly arguable; when consideration in summary proceedings would be insufficient and inconclusive; when facts are contested; when the party opposing arbitration adopts delaying tactics or impairs conduct of arbitration proceedings.

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Therefore, it cannot be stated as a matter of rule that Section 16 precludes the courts’ power to determine the question of an arbitral tribunal’s jurisdiction in cases under Section 8 and Section 11 of the Arbitration Act. However, it is undisputed that where no party has approached the court on the issue of the arbitral tribunal’s jurisdiction, the arbitral tribunal alone decides a party’s objections to its jurisdiction.

63. 2020 SCC Online 1018.

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However, where a party has approached a court challenging the jurisdiction of an arbitral tribunal, certain complications could arise. Ordinarily, it would be open to a party to raise the jurisdictional issues raised by it before a court, before the arbitral tribunal under Section 16 as well. This would be practically possible if the court has not taken a definitive view on the jurisdiction of the arbitral tribunal and simply referred the parties to arbitration.

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However, in the event the court has made findings on the jurisdiction of the tribunal without clarifying that those findings are of a prima facie nature, it may well be argued that the decision of the court on the tribunal’s jurisdiction is final and binding on the parties. Such a position will be even more tenable to take if the finding of the court is such that an arbitral tribunal cannot ignore it or go behind it.

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Therefore, when the issue of a lack of the tribunal’s jurisdiction is raised before the court in matters under Section 8 and Section 11 of the Arbitration Act, it is intended to be subsequently raised before the arbitral tribunal.

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Then, it would be advisable to obtain an express declaration from the court that the findings in the order are prima facie in nature. Alternatively, a party could seek liberty to raise the same jurisdictional issues before the arbitral tribunal.

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The Supreme Court of India in PASL Wind Solutions Private Limited v GE Power Conversion India Private Limited64 held that in international commercial arbitrations situated outside India, even if there are no foreign parties, reliefs under Section 9 of the Arbitration Act ordinarily remain available (subject to an agreement to the contrary).

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[9.5] REVIEW OF THE ARBITRAL TRIBUNAL’S DECISION ON JURISDICTION

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Even though the Kompetenz-​Kompetenz doctrine allows the arbitral tribunal to decide on its own jurisdiction, ultimately, it is the court which has the last word on the arbitral tribunal’s ruling on jurisdiction.65 Such judicial control is important as it remains the main way of preventing the arbitral tribunal from acquiring power which it does not possess. In so doing, the court has to deal with the tension between preventing dilatory tactics and subjecting a party to unlawful proceedings. 64. (2021) SCC OnLine SC 331. 65. When an arbitral tribunal upholds objections to its jurisdiction and declines to act in a matter before it, such an order is appealable before the court under s. 37(2)(a) of the Arbitration Act. In cases where a party is aggrieved by an arbitral tribunal’s order wrongly accepting jurisdiction over the matter, the award culminating out of the proceedings arising out of such reference can be challenged under s. 34 of the Arbitration Act.

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A party that is dissatisfied with the arbitral tribunal’s decision on jurisdiction is allowed to appeal against that decision under Section 37(2)(a) of the Arbitration Act only if the arbitral tribunal accepts the plea that it does not have jurisdiction. Therefore, when an arbitral tribunal accepts jurisdiction or upholds the validity of an arbitration agreement, a party would have recourse against that decision only when an arbitral award is passed.

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A comparable provision does not feature in the Model Law.66 The wording of Section 37 of the Arbitration Act reflects an intention to balance the role of courts in the arbitral process.

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The High Court of Delhi in Jain Studios Ltd. v Maitry Exports Pvt. Ltd.67 summarised the object of this provision:

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“The object of the [Arbitration] Act is that the arbitral proceedings must continue unless an order is made which is subject to appeal under Section 37 of the said Act. Section 37(2) of the [Arbitration] Act specially takes care of a situation where a plea of lack of jurisdiction is accepted and the object is clear i.e. where the arbitral proceedings would come to an end as a consequence of the said adjudication, an appeal must be provided for. However, if the [tribunal] comes to the conclusion that it has jurisdiction to proceed further in the matter, no such appeal is provided and the remedy would lie only under Section 34 of the said Act”.

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The Arbitration Ordinance of Hong Kong approaches it differently by providing that a “ruling of the arbitral tribunal that it does not have jurisdiction to decide a dispute is not subject to appeal”.68

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On the other hand, the Singapore Arbitration Act 2001 allows a party to appeal the arbitral tribunal’s decision if the tribunal (a) holds as preliminary issue that it has jurisdiction, or (b) holds at any stage that it does not have jurisdiction.69

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The English approach is in stark contrast to other jurisdictions. It allows the parties to jointly apply to court for seeking final determination of substantive jurisdictional issues.70 Such an application can also be made unilaterally with the arbitral tribunal’s permission and if the court is satisfied that:

66. Arbitration Act, s. 16(5). McDermott InternationaI Inc. v Burn Standard Co. Ltd. (2006) 11 SCC 181; Triad India v Tribal Cooperative Marketing and Development Federation of India Ltd. 2007 SCC Online Del 233. 67. (2007) 145 DLT 490. 68. (Cap 609), Part 5, s. 34(4). 69. Singapore Arbitration Act 2001, s. 21(9). 70. UK Arbitration Act 1996, s. 32.

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(1) The determination of the question is likely to produce substantial savings in costs;



(2) the application was made without delay; and



(3) there is good reason why the matter should be decided by the court.

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While it may be correct to say that a court may have the final say on the jurisdiction of an arbitral tribunal, the real question is whether the said court should determine this question before an arbitral tribunal does.

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The Arbitration Act sufficiently resolves this conflict between the jurisdiction of an arbitral tribunal and the courts, by disallowing an appeal against any positive determination of jurisdiction by an arbitral tribunal.

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Extent of Judicial Review

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Another question that arises for consideration is whether the court may review the decision of the arbitral tribunal or limit its review to a prima facie standard once it is seized with the task of re-​examining the arbitral tribunal’s ruling on jurisdiction on appeal under Section 37(2)(a) of the Arbitration Act.

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The Courts in most UNCITRAL Model Law jurisdictions have adopted a de novo review standard for examining the arbitral tribunals’ decision on jurisdictional objections.71

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This means that the parties are free to put forward new arguments. They are not restricted by the material they submitted during the hearing at the arbitral tribunal stage, and the courts are not bound by the opinion and interpretations held by the arbitral tribunal.

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The Singapore Court in PT Tugu Pratama Indonesia v Magma Nusantara Ltd.72 noted that a hearing under paragraph 3 of Article 16 of the UNCITRAL Model Law is not by way of appeal and that the parties were, therefore, free to put forward new arguments. Furthermore, it added that a court intervening pursuant to paragraph 3 of Article 16 of the UNCITRAL Model Law was free to “make […] an independent determination of the issue of jurisdiction and is not constrained in any way by the findings or the reasoning of the tribunal”.

71. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Wolters Kluwer 2021), pp. 1198–​1200. 72. [2003] SGHC 204.

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Similarly, an application pursuant to Section 16(6) of the Malaysian Arbitration Act 2005 is a “re-​hearing” of all issues, not merely a review of the arbitral tribunal’s decision.73 The New Zealand High Court in Downer Construction (New Zealand) Ltd v Silverfield Developments Ltd74 considered an application under Article 16(3) of the UNCITRAL Model Law where the plaintiff argued that the defendant’s counterclaim fell outside the terms of the submission to arbitration.

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The arbitral tribunal ruled in a preliminary decision that it did have jurisdiction to determine the counterclaim, leading to the plaintiff ’s application under paragraph 3 of Article 16 of the UNCITRAL Model Law.

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The Court held that the correct approach is to reconsider the issue of jurisdiction de novo rather than by way of appeal from the arbitral tribunal’s ruling, because the terms of paragraph 3 of Article 16(3) of the UNCITRAL Model Law characterise the application as a request to the court to decide the matter, and because it deals with the threshold issue of jurisdiction.

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Although its finding is contrary to the thrust of the rule’s drafting history, the point was not argued since counsel also accepted that a de novo hearing was required. The Court went on to interpret the scope of the submission to arbitration afresh, without any reference to the arbitral tribunal’s decision.75

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The French approach in this respect can be summarised as follows:

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“For a complaint relating to the jurisdiction of the arbitral tribunal, all the facts and the law may be retried by the Court again and there should be nothing to prevent this investigation from being carried out further and may concern both the elements retained by the arbitrator as well as those which have been submitted to it or elements known after the award of the award.”76

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The English law also envisages that judicial review of the arbitral tribunal’s jurisdictional decisions is a “complete rehearing”.77 The Supreme Court of England in Dallah Real Estate and Tourism Holding Co v. Ministry of Religious Affairs, Government of Pakistan78 held that a tribunal’s decision on jurisdiction is always open to “a full judicial determination on evidence of an issue of jurisdiction before the English court”.

73. 74. 75. 76. 77. 78.

Usahasama SPNB-​LTAT Sdn Bhd v ABI Construction Sdn Bhd [2016] 7 MLJ 275. [2008] 2 NZLR 591. See also Amokura Kawharu, Arbitral Jurisdiction, Vol. 23, New Zealand Universities Law Review, 2008, p. 263. Jacques Pellerin, Rôles et Fonctions de la Cour d’Appel, Revue de l’arbitrage Vol. 2018 Issue 1, p. 37, at para. 24. A v B [2010] EWHC 3302, at para. 25; GPF GP Sàrl v Pologne [2018] EWHC 1655, at para. 25. [2011] 1 All ER 485, at para. 26.

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However, under Swiss law, judicial review of the arbitral tribunal’s decisions is limited to matters of law and not factual findings.79 Similarly, the Canadian approach on this issue favours a hands-​off approach and avoiding a review on merits.80

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The Canadian Court in Ace Bermuda Insurance Ltd v Allianz Insurance Company of Canada81 considered a party’s objection to the jurisdiction of the arbitral tribunal on the basis that the parties had agreed in a clause that the arbitration would be seated in a different jurisdiction to that where it was commenced. The objecting party subsequently made an application under Article 16(3) to seek a court ruling.

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The Court relied on the fact that courts “are generally reluctant to interfere with decisions of a commercial arbitral tribunal, particularly in a matter involving an international commercial arbitration”.

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It also relied on a line of cases standing for the proposition that parties objecting to an arbitral tribunal’s jurisdiction must overcome a “powerful presumption” that the arbitral tribunal acted within its powers.

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In light of these matters, the Court concluded that the standard of review applicable under paragraph 3 of Article 16 of the UNCITRAL Model Law “ought to be […] one of reasonableness, deference [and] respect”.

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This approach is grounded on the basis that the courts are generally reluctant to interfere with decisions of a commercial arbitral tribunal. An objection to an arbitral tribunal’s decision on jurisdiction has to overcome a powerful presumption that the arbitral tribunal acted within its powers.

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The challenge to an arbitral award under Section 34 of the Arbitration Act, based on the lack of an arbitral tribunal’s jurisdiction has been discussed elsewhere in this book.82

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However, it is clear from the wording of Section 37(2)(a) of the Arbitration Act that on appeal against an arbitral tribunal’s jurisdiction the court will be empowered to undertake a full review of the decision. An appellate court in India is empowered to re-​hear a case on both questions of fact and law.83

79. Mladen Stojiljković, “Arbitral Jurisdiction and Court Review: Three Swiss Federal Supreme Court decisions to Reconsider” (2016) ASA Bulletin, Vol. 34, Issue 4, p. 897. 80. United Mexican States v Cargill Inc. 2011 ONCA 622; FCA Canada Inc. v Reid-​Lamontagne 2019 ONSC 364. 81. [2005] ABQB 975. 82. See Chapter 45. 83. Vinod Kumar v Gangadhar, (2015) 1 SCC 391.

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[9.6] CONCLUSION The separability doctrine is important for it makes the arbitration agreements functional and operable. Its independent nature allows adjudication of all disputes between the parties. These include disputes relating to the existence and validity of the main contract.

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Section 16 of the Arbitration Act incorporates the separability doctrine. It recognises the independent nature of the arbitration agreement. As a result, an arbitration agreement can be void or voidable under the Indian law only on the grounds which relate directly to the arbitration clause.

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It cannot be based on the grounds that challenge the existence and validity of the main agreement. As such, the arbitration agreement is presumed to survive the termination, breach, and invalidity of the main agreement.

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The applicable rationale behind the doctrine is that the contract impinges on the commercial obligations of the parties. The arbitration agreement provides for the resolution of any dispute arising from the commercial relationship by arbitration.

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Thus, the party alleging invalidity of the main contract must separately demonstrate that this invalidity affects the arbitration agreement. This also implies that the arbitral tribunal can decide issues of the validity of the underlying contract. Additionally, the parties can choose a different law to govern their arbitration agreements.

Chapter 10 WHO MAY REFER MATTERS TO ARBITRATION? [10.1]

INTRODUCTION....................................................................................................................... 276

[10.2] CAPACITY OF A PARTY.......................................................................................................... 279 [10.4] [10.5]

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[10.3] CAPACITY OF STATE AND STATE ENTITIES................................................................... 282 FOREIGN SOVEREIGNS.......................................................................................................... 284 THIRD PARTIES......................................................................................................................... 285

[10.6] GROUP OF COMPANIES DOCTRINE.................................................................................. 288 [10.7] LIFTING THE CORPORATE VEIL......................................................................................... 290 [10.9]

ASSIGNMENT............................................................................................................................. 295

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[10.8]

NOVATION.................................................................................................................................. 298

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[10.10] AGENTS....................................................................................................................................... 300 [10.11] ESTOPPEL.................................................................................................................................... 302

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[10.12] GUARANTOR, SURETY, AND INDEMNIFIER................................................................... 302 [10.13] MORTGAGEE............................................................................................................................. 307

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[10.14] LAWYERS..................................................................................................................................... 308 [10.15] LEGAL REPRESENTATIVES AND TRUSTEES.................................................................... 309

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[10.16] OFFICIAL ASSIGNEE................................................................................................................ 311 [10.17] LIQUIDATOR, ADMINISTRATOR, OR RECEIVER........................................................... 313

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[10.18] SUB-​CONTRACTORS............................................................................................................... 315 [10.19] MULTIPLE PARTIES.................................................................................................................. 316

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[10.20] CONCLUSION............................................................................................................................ 318

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[10.1] INTRODUCTION

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An arbitration agreement is a contract, based on the consent of the parties. A “party” means “a party to the arbitration agreement” under the Arbitration Act.1 The term “party” as defined under Section 2(1)(h) of the Arbitration Act is an amalgam of the definition of “legal representative” and “party” under the English Arbitration Act.2

1. Arbitration Act, s. 2(1)(h). 2. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 138.

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Chapter 10—​​​Who May Refer Matters to Arbitration?

Generally, non-​parties or strangers to the arbitration agreement have no rights under such an arbitration agreement. In certain cases, persons claiming through or under a party may be bound by an arbitration agreement.3

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A party who is not a party to an arbitration agreement, or a person seeking through or under such party, cannot be joined or seek to be joined to an arbitration proceeding.4 An arbitration award is final and binding on the parties to the arbitration agreement and persons claiming under them.5

The Arbitration Act expands the scope of the term “parties” to include “parties or any person claiming through or under him” despite India’s ratification of the New York Convention which simply used the term “parties” under Article II(3).

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Section 2(1)(h) of the Arbitration Act restricts the definition of “party” to a party to the arbitration agreement.6 The Law Commission of India in its 246th Law Commission Report recommended that the expression “a person claiming through or under such party” should be introduced to the definition of a “party” under the Arbitration Act.7

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This recommendation was not taken up in the subsequent amendments to the Arbitration Act.

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However, the expression “parties or any person claiming through or under him” can be found in Sections 8 and 45 of the Arbitration Act.8

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It covers circumstances where the interest of a party in an arbitration agreement has passed to some other derivative person through death, bankruptcy, voluntary assignment, or agency law.9

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“Parties to the Arbitration Agreement –​an arbitration agreement will bind not only the actual parties to it, but also an ‘assignee’ of a contract containing it, the personal

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3. See ss. 8 and 45 of the Arbitration Act, each of which feature the expression “any person claiming through or under him”; See also Concord Line Co Ltd v The Owners of the Ship “Molly” [1998] 1 AMR 26; Pittalis v Sherefettin [1986] QB 868, [1986] 2 All ER 227, CA (Eng). 4. Etri Fans Ltd v NMB (UK) Ltd [1987] 2 All ER 763, CA. 5. Arbitration Act, s. 35. See also Cheran Properties Ltd. v Kasturi and Sons Ltd. (2018) 16 SCC 41. 6. This may be interpreted to argue that the issue of subjecting a party claiming through or under a party to an arbitration is a function entrusted only to a judicial authority. 7. Law Commission of India, Report No. 246, Amendments to the Arbitration and Conciliation Act 1996, available at https://​lawcommissionofindia.nic.in/​reports/​report246.pdf (accessed on 3 February 2021). 8. The expression was inserted in s. 8 of the Arbitration Act through the 2015 Amendment pursuant to the recommendation of the Law Commission. 9. Shayler v Woolf [1946] Ch 320, [1946] 2 All ER 54, CA (Eng); Montedipe SpA v JTP-​RO Jugotanker, The Jordan Nicolov [1990] 2 Lloyd’s Rep 11.

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representative of a deceased party, a trustee in bankruptcy who adopts a contract containing it, and generally all person claiming under a party to it but not [a]‌stranger to the agreement.”10 For example, an entity that does not execute an arbitration agreement may become a party thereto by way of legal succession.11 The most common means of such succession is by a company’s merger or combination with the original party to an agreement.12

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However, over the years there has been an evolution of the term “party” to an arbitration agreement. The concept of being a party to an arbitration agreement is now beyond the traditional notion of being a signatory to the arbitration agreement.

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A detailed legal evaluation of the position of non-​signatories to an arbitration agreement is discussed later in Section 10.5 of this chapter.

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A party under Section 7 of the Arbitration Act must also fall within the purview of Section 2(1)(h) of the Arbitration Act.13

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The Supreme Court of India in S.N. Prasad v. Monnet Finance Ltd. & Ors.14 held that a person who is not a party to an arbitration agreement under Section 7 of the Arbitration Act read with Section 2(1)(h) of the Arbitration Act cannot be impleaded in an arbitration proceeding.15

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The use of the term “party” under Section of the Arbitration Act is distinct from the term “party” under Section 2(1)(h) of the Arbitration Act. The word “party” is used in Section 8 of the Arbitration Act in relation to an action brought before the judicial authority and not in the context of a party to an arbitration.16

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The Supreme Court of India in Firm Ashok Traders v Gurumukh Das Saluja17 held that the right conferred under Section 9 of the Arbitration Act belongs to a party to an arbitration agreement as defined under Section 2(1)(h) of the Arbitration Act.

10. See Sutton, Gill, and Kendall, Russell on Arbitration (21st edn, Sweet & Maxwell 1997). 11. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International 2021), p. 1576. 12. Ibid. 13. Dr. G.L. Purohit v Dr. S.S. Agarwal [2011] 163 Comp Cas 205 (Delhi); Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 138. 14. (2011) 1 SCC 320. 15. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 138. 16. Roshan Lal Gupta v Parasram Holdings Pvt. Ltd. 2009 (1) ArbLR 304 (Delhi). 17. (2004) 3 SCC 155.

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[10.2] CAPACITY OF A PARTY A party’s capacity to make a submission to arbitration is co-​extensive with its capacity to contract. A natural or legal person who has the legal capacity to enter into a valid contract, also has the capacity to enter into an arbitration agreement.18

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Any disability that affects the party’s right to contract will equally affect its right to enter into an arbitration agreement.19

The New York Convention and the Model Law state that the parties to an arbitration agreement must have the capacity to enter into that agreement “under the law applicable to them”.20

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The capacity of a natural or legal person to enter into a contract primarily depends on its place of domicile or its place of incorporation, respectively. However, in an international context, the law governing the contract may also have to be taken into consideration.

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Section 7(1) of the Arbitration Act envisages an arbitration agreement as an agreement to submit disputes to arbitration. Hence, there is an implied requirement that the parties must be competent to contract. The capacity of a party to enter into an arbitration agreement is governed by the Indian Contract Act, 1872.21

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In case a party who does not have the capacity enters into an arbitration agreement, the provisions of the New York Convention or the Model Law may be initiated either at the beginning of the proceedings22 or at the time of the enforcement of the award.23

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Section 48(1)(a) of the Arbitration Act is modelled on Article V(1)(a) of the New York Convention and accounts for incapacity of parties, or invalidity of the contract as per the law chosen by the parties as a ground for challenging the award.

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Under Indian law, the following persons are not competent to enter into contracts:

18. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015). 19. See Com Dig Arb D 2: Bac Ab Arb C. Section 34 of Arbitration Act terms invalidity of a contract as a ground for setting the award aside. 20. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015). 21. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 143. 22. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015). 23. Ibid.

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(1) Minors or infants;24



(2) Persons of unsound mind, insanity, or infirmity due to disease;25 and



(3) Persons who are disqualified from contracting by any law to which they are subject.26

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All persons, including individuals, corporate bodies, partnerships, and public authorities are bound by the contracts they enter into. The exceptions are minors and mentally ill persons who only have qualified capacity.27 Such exceptions would apply equally with respect to arbitration agreements.

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Every person who is of the age of majority according to the law to which he or she is subject, and who is of sound mind and is not disqualified from contracting by any law to he is subject, has the capacity to enter into a contract.28

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Minors

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A minor is incapable of entering into a contract,29 including an arbitration agreement, except into a contract for necessities.30 Any person domiciled in India attains majority on completion of 18 years of age.

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A contract with a minor is void ab initio.31 A joint contract between a minor party and a major party is not binding on the minor although it is binding on the major party.32

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However, steps that are necessary for the proper realisation, protection, and benefit of the minor’s estate can be taken by the minor’s guardian.

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24. Indian Contract Act, 1872, s. 11. “The issue of whether a person is a minor or not would be decided based on the law to which he is subject. Therefore, every person domiciled in India will have attained the age of majority only when he or she has completed the age of eighteen years.” 25. In terms of s. 12 of the Indian Contract Act, 1872, a person is said to be of a sound mind if at the time of making a contract, he is capable of forming a rational judgement as to its effects upon his interests. Therefore, a person who would be incapable of forming a rational judgement as to the effects of the contract upon his interests would be considered to be of unsound mind for the purposes of determining that person’s contracting capacity. 26. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 143. 27. A contract with a minor is void ab initio, see Mohiri Bibi v Dharmodas Ghose (1903) 30 Cal 539; Boughton and Marston v Knight (1873) LR 3 PD 64; Amina Bibi v Saiyid Yusuf ILR (1922) 44 All 748; Nilima Ghosh v Harjeet Kaur AIR 2011 Del 104. 28. Indian Contract Act, 1872, s. 11. 29. Ibid. 30. Nash v Inman [1908] 2 KB 1; Raj Behari Lal v Mahabir Prasad AIR 1956 All 310. 31. Mohori Bibee v Dhurmodas Ghose (1903) 30 IA 114. 32. Jamna Bai v Vasant Rao AIR 1916 PC 2.

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For instance, the guardian of a Hindu minor would be the father of the child in his capacity as the “Karta” of the coparcenary to which the minor belongs. Similarly, under Mahommedan law, a father is the natural guardian of the minor although the mother is the de facto guardian of a minor.33

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It is also possible for a minor to be subject to arbitration proceedings through its natural guardian, and an award arising out of such an arbitration proceeding will not be set aside only because the guardian was not appointed under Section 9 of the Arbitration Act or any other provision of the law.34

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The High Court of Delhi in Daiichi Sankyo Company Ltd. v Malvinder Mohan Singh35 refused to enforce the award insofar as it held liable five minors for fraud committed by their fathers in their capacity as the minors’ natural guardians. It held that protection of minors is a “substantial principle” on which the fundamental policy of Indian law was formulated.

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The holding that the minors were guilty of fraud through their agent would be contrary to the statutory position laid down under the Indian Contract Act and the Hindu Minority and Guardianship Act, 1956.36

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A contract entered into by the natural guardian of the minor, on behalf of the minor, is not void, but merely voidable, which cannot bind the minor if he chooses to set it aside, when he attains the age of majority.37

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Justice Indu Malhotra38 summarises the position under English law as follows:

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“Under English law, a contract by a minor is voidable, not void. Therefore, ‘an agreement by a minor to arbitrate will be binding only if related to the supply of necessaries, or to a contract of service. All other contracts where one party is a minor, are voidable at the option of the minor but binding on the other party (if not also a minor); an ‘arbitration agreement’ would follow this rule’.”39

33. 34. 35. 36. 37. 38. 39.

Mohesenuddin v Khabiruddin AIR 1921 Cal 818. Daiichi Sankyo Company Ltd. v Malvinder Mohan Singh 2018 SCC OnLine Del 6869 at para. 153. Ibid. Ibid at para. 124. Extrusion Processes Pvt. Ltd. v Kashibhai S. Patel (1976) 78 BomLR 661. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 145. English Sale of Goods Act, 1979, s. 3; Sutton, Gill, and Kendall, Russell on Arbitration (23rd edn, Sweet & Maxwell 2007), p. 94, at para. 3-​005.

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Persons of Unsound Mind This principle ensures that every person entering into a contract is aware of the repercussions of entering into such a contract. Section 12 of the Indian Contract Act, 1872 clarifies that a person who is usually of sound mind but occasionally of unsound mind.

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For example, this may arise on account of being intoxicated or delirious, the person can still enter into a contract when such person is not in a state of intoxication or delirium. An incapacity covered under this ground is rare in commercial practice.

Persons Disqualified by Law

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Certain persons may be disqualified under certain enactments from entering into contracts. For instance, the law prohibits an insolvent from entering into an agreement, albeit after insolvency proceedings have been commenced against such a person.

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However, there is no law that prevents an insolvent person from selling his or her property even after the initiation of insolvency proceedings against the insolvent.40 Such an incapacity is rare in commercial practice.

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An English barrister enrolled as an advocate in India is not a person “disqualified from contracting by any law to which he is subject”.41

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[10.3] CAPACITY OF STATE AND STATE ENTITIES

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Certain States place constitutional or legislative restrictions on the ability of the State to enter into arbitration agreements. For instance, the United States of America,42 Iran,43 and Belgium44 cannot enter into arbitration agreements with private parties.

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Various other nations have abolished restrictions on the capacity of States and State entities to enter into arbitration agreements.45 Despite the removal of restrictions, certain States require mandatory approvals by State or State entities before entering into an arbitration agreement.46

40. 41. 42. 43. 44. 45. 46.

Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 146. Ibid. BV Bureau Wijsmuller v USA 1976 AMC 2514 (SDNY 1976). Constitution of Islamic Republic of Iran, art. 139. Belgian Judicial Code, art. 1676(3). For example: England, Algeria, Colombia, Morocco, Greece, and Uruguay. Venezuela Commercial Arbitration Act, 1998, s. 4; Saudi Arabian Law of Arbitration, s. 10.

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Chapter 10—​​​Who May Refer Matters to Arbitration?

In India, no general rule of law limits the capacity of State, its entities, or public authorities to enter into arbitration agreements, unlike the position under civil law jurisdictions.47

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Under Indian laws, the executive power of the Union or State legislature to enter into contracts is subject to legislations by the Union or State legislature.48 Thus, the State’s capacity to enter into an arbitration agreement could be limited by legislation, for example, requiring the approval of a Minister before the State can be bound by any arbitration agreement.49

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The Constitution of India mandates that all contracts made in exercise of executive powers of the Union or a State should be expressly made by the President of India (in case of the Union) and the Governor of a State (in case of a State).50 A contract which does not comply with these requirements is void and unenforceable against the government.51

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However, neither the President nor the Governor of a State can be held personally liable in respect of any contract made or executed in exercise of executive power.52 Such contracts made in the exercise of executive powers of the Union or a particular State may or may not contain an arbitration clause.

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Most government entities and public sector undertakings include arbitration clauses in their standard form contracts and are regularly parties to arbitrations. Certain statutes mandate arbitration as a dispute resolution method for contracts with government entities.53

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The Supreme Court of India in Pam Developments Pvt. Ltd. v State of West Bengal,54 held that while the CPC may provide for differential treatment of the government in certain cases, the Arbitration Act is a special act which mandates that parties to an arbitration are to be treated equally. No special treatment can be given to the government when considering an application for stay of an award.55

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47. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 163; Sutton, Gill, and Kendal, Russell on Arbitration (23rd edn, Sweet & Maxwell 2007), pp. 105–​106, at para. 3-​035. 48. Constitution of India, art. 298. 49. Constitution of India, art. 298. The executive power of the Union Government and State Government with respect to making contracts is subject to the legislation by Union or State legislature. 50. Constitution of India, art. 299(1). 51. Seth Bhikraj v Union of India [1962] 2 SCR 880; Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 162. 52. Constitution of India, art. 299(2); Constitution of India, art. 300(1). 53. “Arbitration Procedures and Practice in India: Overview”, UK Global Practical Law –​Arbitration Guide, Thomson Reuters. 54. Pam Developments Pvt. Ltd. v State of West Bengal (2019) 8 SCC 112. 55. Pam Developments Pvt. Ltd. v State of West Bengal (2019) 8 SCC 112 at para. 27.

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Law, Practice and Procedure of Arbitration in India

The High Court of the England and Wales in Dallah Real Estate & Tourism Holding Co v Ministry of Religious Affairs, Government of Pakistan56 (“Dallah”) has taken a distinct approach on this issue.

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The Court refused to enforce an award rendered by an ICC Tribunal in Paris. This position was taken on the ground that the Government of Pakistan, against whom the award had been rendered, had not signed the arbitration agreement and therefore was not a party to it.

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The Court in Dallah held that in terms of Section 103(2)(b) of the English Arbitration Act, an award may not be enforced if the arbitration agreement itself was invalid under the law to which the parties were subject to. If no law was specified, then this issue was to be decided under the law of the country where the award was made.

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The Court proceeded to apply French law to the arbitration agreement after establishing that the parties had not decided on a governing law. This was done on the basis that the award was rendered in France.

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Although no known instance of a similar legal issue to that in Dallah has been raised involving the Indian government, one can conclude that it is plainly unsatisfactory for a State or State agency to be entitled to rely on its own law to defeat an agreement that it has freely entered into.57

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Therefore, prior to entering into a contract with a State or State Entity, it is advisable to check that the necessary permissions and procedures have been obtained and complied with.58

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[10.4] FOREIGN SOVEREIGNS

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A sovereign entity can include a monarch, a nation State, a government agency, and a sovereign wealth fund. A sovereign entity can claim immunity from suits and their enforcement. Sovereign or State immunity is an important consideration, particularly in international arbitrations. A sovereign can enter into an arbitration agreement and submit to the jurisdiction of the arbitral tribunal. However, an agreement by a foreign sovereign with a company for the settlement of disputes by arbitration does not import a waiver of the right of the

56. Dallah Real Estate & Tourism Holding Co v Ministry of Religious Affairs, Government of Pakistan [2008] EWHC 1901 (Comm). 57. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), pp. 83–​84, at paras 2.37–​2.39. 58. Ibid, p. 84, at para. 2.38.

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Chapter 10—​​​Who May Refer Matters to Arbitration?

sovereign to refuse to submit to the jurisdiction of the court on an application by the other party to the agreement for leave to enforce the award.59 In India, no foreign State may be sued in any court without prior consent of the Central Government.60 Despite India being a signatory to the United Nations Convention on the Jurisdictional Immunities of the States and their Property, the Convention remains to be ratified.

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However, sovereign immunity is qualified and not absolute. Sovereigns may not be afforded immunity where the dispute is related solely to commercial activities only.

irc

The Supreme Court of India in Ethiopian Airlines v Ganesh Narain Saboo61 held that Ethiopian Airlines was not entitled to sovereign immunity since the operation of the airline was purely a commercial transaction.

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Therefore, in cases where a sovereign is a party to a commercial contract that contains an arbitration clause, the sovereign cannot claim immunity and seek to renege on its obligation to arbitrate.

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Whilst the average company is unlikely to enter into many contracts with a monarch or a nation State, an investing sovereign wealth fund is potentially more likely to be a business partner.

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Given that successful enforcement of arbitration agreements against States and sovereigns appears to remain the exception rather than the rule, it would be prudent for a party contracting with one to request an express waiver of immunity to the recognition and enforcement of the arbitral award.

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[10.5] THIRD PARTIES

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Arbitration is consensual in nature and takes place between persons that are parties to the arbitration agreement. The inclusion of “third parties” or non-​signatories to arbitration proceedings is a controversial issue in international commercial arbitration.62

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The doctrine of privity of contracts dictates that persons who are not parties to an arbitration agreement must be excluded from arbitral proceedings.63

59. See M/​S Uttam Singh Duggal and Co. Pvt. Ltd. v United States of America, Agency of International Development 1969 SCC OnLine Del 16. 60. CPC, s. 86. 61. (2011) 8 SCC 539. See also Qatar Airways v Shapoorji Pallonji (2013) 2 BomCR 65. 62. See Lord Collins’ speech in Dallah Real Estate & Tourism Holding Co v Ministry of Religious Affairs, Government of Pakistan [2011] 1 AC 763, [2009] EWCA Civ 755 at para. 105. 63. Oxford Shipping Co Ltd v Nippon Yusen Kaisha, The Eastern Saga [1984] 2 Lloyd’s Rep 373.

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Law, Practice and Procedure of Arbitration in India

There are two aspects to the doctrine of privity of contracts:

(1) Only a party to a contract can acquire rights under it; and



(2) Only a party can be subjected to liabilities under the contract.64

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Generally, only a party named in the underlying contract which contains the arbitration clause or in the arbitration agreement can be a party to the arbitration. There are, however, exceptions to the rule that parties that are not named in the agreement must be excluded from arbitration proceedings. A third party may be introduced to an arbitration through contract law and general principles of corporate law, such as:65 (1) Agency and representation;66



(2) Assignment and transfer of a contract or contract containing an arbitration clause;67



(3) Incorporation of an arbitration clause by reference;68



(4) Third party beneficiary.69

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There is no statutory recognition of rights of third parties to a contract in India. However, Indian jurisprudence on subjecting “non-​signatories” to arbitration is clear. A “non-​signatory” has been held to be bound by an arbitration agreement on two situations: (1) Implied consent:

(2) Operation of Law:

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This theory includes third party beneficiaries, guarantors, assignment, group of companies’ doctrine and other transfer mechanisms of contractual rights. This theory relies on the discernible intentions of the parties and on the good faith principle.70

64. 65. 66. 67. 68. 69. 70.

This theory includes the legal doctrines of agent–​principal relations, apparent authority, piercing of veil (also called “alter ego”), joint venture relations,

Price v Easton (1833) 4 B & Ad 433; Tweddle v Akinson, Executor of Guy, Deceased (1861) 1 B & S 393. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 152. Ibid. Ibid. Ibid. Ibid. Chloro Controls (India) Pvt. Ltd. v Severn Trent Water Purification Inc (2013) 1 SCC 641 at para.103.1.

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Chapter 10—​​​Who May Refer Matters to Arbitration?

succession, and estoppel. These concepts do not rely on the parties’ intention but rather on the force of the applicable law.71 Sections 8 and 45 of the Arbitration Act use the phrase “party or any person claiming through or under him” to extend the application of the arbitration agreement beyond the signatory parties.

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The Supreme Court of India in Chloro Controls (India) Pvt. Ltd. v Severn Trent Water Purification Inc72 (“Chloro”) held that:

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“Normally, arbitration takes place between the persons who have, from the outset, been parties to both the arbitration agreement as well as the substantive contract underlining that agreement. But it does occasionally happen that the claim is made against or by someone who is not originally named as a party. These may create some difficult situations, but certainly, they are not absolute obstructions to law/​the arbitration agreement. Arbitration, thus, could be possible between a signatory to an arbitration agreement and a third party. Of course, heavy onus lies on that party to show that, in fact and in law, it is claiming ‘through’ or ‘under’ the signatory party as contemplated under Section 45 of the 1996 Act. Just to deal with such situations illustratively, reference can be made to the following examples in Law and Practice of Commercial Arbitration in England (Second Edn.) by Sir Michael J. Mustill:

2. The claimant has succeeded by operation of law to the rights of the named party.

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‘1. The claimant was in reality always a party to the contract, although not named in it.

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3. The claimant has become a part to the contract in substitution for the named party by virtue of a statutory or consensual novation.

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4. The original party has assigned to the claimant either the underlying contract, together with the agreement to arbitrate which it incorporates, or the benefit of a claim which has already come into existence’.”73

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In England, a person who is not a party to a contract (a third party) may enforce in its own right a contract, if the contract expressly provides that it may do so or if the contract purports to confer a benefit on such a party.74 A similar right is recognised in Singapore.75

71. 72. 73. 74. 75.

Ibid, at para. 103.2. (2013) 1 SCC 641. Ibid, at para. 65. Contracts (Rights of Third Parties) Act, 1999, s. 1. Contracts (Rights of Third Parties) Act, 2002, s. 2.

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Law, Practice and Procedure of Arbitration in India

Further, where the enforcement of a substantive term of such a contract is subject to an arbitration agreement (which is in writing), the third party is treated as a party to the arbitration agreement.76 Therefore, the court’s question is whether a non-​signatory is in reality, substance, and spirit, a party to the agreement and ought to be bound by the terms of such an agreement.

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Occasionally, it may happen that a third party not originally named as a party is involved in the arbitration proceedings. For example, a third party may be a person claiming under or through a party to an agreement; the contract may have been novated to a third party; the third party may be a guarantor or the arbitration may involve multiple parties.

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In such cases those third parties may wish to claim the benefit of the arbitration agreement, or a plaintiff may wish to enjoin them to the arbitration proceedings.

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Therefore, there are two means of arriving at a conclusion on whether a person is a party to an arbitration agreement: (1) Ascertain the discernible intentions of the parties to bind the non-​signatory third party to the arbitration agreement; and



(2) ascertain whether the third party blended into the named or signatory party, by the operation of law.

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As such, a “third party” will only be bound to an arbitration agreement when it is judicially determined to be a “party” to the arbitration agreement upon an examination undertaken on the basis of the aforementioned theories.

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[10.6] GROUP OF COMPANIES DOCTRINE

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There may be transactions within a group of companies. The circumstances surrounding the transactions may reflect an intention to bind both signatory and non-​signatory entities within the same group.77 An arbitration entered into by a company within a group of companies can bind its non-​signatory affiliates, if the circumstances demonstrate that the mutual intention of the parties was to bind both signatories and non-​signatories.78

76. Contracts (Rights of Third Parties) Act, 1999, s. 8; Contracts (Rights of Third Parties) Act, 2002, s. 9. 77. Chetan Properties Limited v. Kasturi & Sons Limited (2018) 16 SCC 413, at para. 23. 78. Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc. (2013) 1 SCC 641, at para. 105.

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Chapter 10—​​​Who May Refer Matters to Arbitration?

In holding a non-​ signatory bound by an arbitration agreement, the court approaches the matter by attributing to the transactions a meaning consistent with the intended business sense ascribed to the transaction.79 Therefore, factors such as80: (1) Relationship between a non-​signatory and a signatory to the arbitration agreement;



(2) Commonality of subject matter; and



(3) Composite nature of transaction,

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are weighed in balance while deciding the applicability of an arbitration agreement on non-​signatories to that agreement. The courts intend to find the true essence of the business arrangements and to unravel layered commercial arrangements.81

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The group of companies doctrine (“Doctrine”) was developed in the arbitral award arising from Dow Chemical Company v ISOVER Saint Gobain.82 In this case, the arbitral tribunal and the Court of Appeal in Paris both confirmed the existence of the mutual intention to bind the non-​signatories. The non-​signatories were deemed to have impliedly consented to the disputed contracts.

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Gary B. Born explains the Doctrine as follows:

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“The doctrine provides that a non-​signatory may be bound by an arbitration agreement where a group of companies exists and the parties have engaged in conduct (such as negotiation or performance of the relevant contract) or made statements indicating the intention assessed objectively and in good faith, that the non-​signatory be bound and benefited by the relevant contracts.”83

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The Doctrine is akin to principles of agency or implied consent. The corporate affiliations among distinct legal entities provide the foundation for concluding that they were intended to be parties to an agreement, notwithstanding their formal status as non-​signatories.84

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The Supreme Court of India in Chloro85 recognised the Doctrine. It held that:

Chetan Properties Limited v. Kasturi & Sons Limited (2018) 16 SCC 413, at para. 23. Ibid. Ibid. ICC Award No. 4131, YCA 1984, Vol. IX. Gary B. Born, International Commercial Arbitration, Vol. 2 (2nd edn, Kluwer Law International, Wolters Kluwer 2014), pp. 1448–​1449. 84. Gary B. Born, International Commercial Arbitration, Vol. 2 (2nd edn, Kluwer Law International, Wolters Kluwer 2014), p. 1450; Magic Eye Developers Pvt. Ltd. v. Green Edge Infra Pvt. Ltd. & Ors. 2020 SCC OnLine Del 597, at para. 23. 85. (2013) 1 SCC 641. 79. 80. 81. 82. 83.

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Law, Practice and Procedure of Arbitration in India

“… a non-​signatory party could be subjected to arbitration provided [the] transactions were with group of companies and there was a clear intention of the parties to bind both, the signatory as well as the non-​signatory parties. In other words, ‘intention of the parties’ is a very significant feature which must be established before the scope of arbitration can be said to include the signatory as well as the non-​signatory parties”.86

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The Supreme Court of India in Cheran Properties Limited v Kasturi and Sons Limited and Others87 followed through to hold that the Doctrine facilitates the fulfilment of a mutually held intention between the parties.

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It explained that the effort must be to be find the “true essence of the business arrangement and to unravel from a layered structure of commercial arrangements, an intention to bind someone who is not formally a signatory but has assumed the obligation to be bound by the actions of a signatory.”

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The Supreme Court of India in MTNL v Canara Bank88 held that the Doctrine is invoked in cases where there is a tight group structure with strong organisational and financial links, so as to constitute a single economic unit, or a single economic reality. In such a situation, signatories and non-​signatories have been bound together under the arbitration agreement.

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The High Court of Delhi in Magic Eye Developers Pvt. Ltd v Green Edge Infra Pvt. Ltd.89 applied the Doctrine and held that the signatories and non-​signatories being “one and the same economic reality” were bound by the arbitration agreement.

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However, the Group of Companies doctrine has been expressly rejected in Singapore and England.90 The English Court in Peterson Farms Inc v C & M Farming Ltd91 held that the doctrine of group of companies is not a part of English law.

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[10.7] LIFTING THE CORPORATE VEIL

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Corporate bodies can be bound by contracts even where the purpose of the contract is outside the company’s memorandum of association. It means that any person who deals with the company in good faith can enforce the arbitration clause against it.

Ibid, at para. 73. (2018) 16 SCC 413. (2013) 1 SCC 641. CS(COMM) 1290/​2018. See Manuchar Steel Hong Kong Ltd v Star Pacific Line Pte Ltd [2014] 4 SLR 832; Peterson Farms Inc v C & M Farming Ltd [2004] EWHC 121 (Comm). 91. [2004] EWHC 121 (Comm). 86. 87. 88. 89. 90.

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Chapter 10—​​​Who May Refer Matters to Arbitration?

It is perfectly acceptable for companies entering into new business ventures to incorporate a subsidiary company for the purpose of that venture. Most advanced legal systems recognise separate corporate legal personality and, as a result, their separate legal liabilities.

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When a dispute arises against a subsidiary, claimants often seek to make the parent or holding company a party to the arbitration. The practical reason to do so is that the parent company has more substantial assets than its subsidiary. The notion of separate legal personalities of companies has its limits. It can be disregarded in certain limited and rare circumstances.

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This is called “lifting the corporate veil”. It is typically done in cases where the corporate personality is being used as a façade to avoid contractual liabilities or obligations. Such an exercise of “lifting the corporate veil” may use the “alter-​ego” theory.

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Gary B. Born, in explaining the application of the alter ego principle in arbitration, notes:

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“Authorities from virtually all jurisdictions hold that a party who has not assented to a contract containing an arbitration clause may nonetheless be bound by the clause if that party is an ‘alter ego’ of an entity that did execute, or was otherwise a party to, the agreement. This is a significant, but exceptional, departure from the fundamental principle … that each company in a group of companies (a relatively modern concept) is a separate legal entity possessed of separate rights and liabilities”.92

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Indian courts have applied the doctrine of “piercing the corporate veil”. Legislative enactments and judicial pronouncements93 have assisted in developing the doctrine in various ways.

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The Supreme Court of India in LIC v Escorts Ltd.94 held that the corporate veil can be lifted in the following circumstances:95 (1) A statute itself contemplates lifting the veil.



(2) Fraud or improper conduct is intended to be prevented.



(3) A taxing statute is sought to be evaded.

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92. Gary B. Born, International Commercial Arbitration, Vol. 1 (2nd edn, Kluwer Law International, Wolters Kluwer 2014), p. 1432. 93. LIC v Escorts Ltd. (1986) 1 SCC 264; Vodafone International Holdings B.V v Union of India (2012) 6 SCC 613; New Horizons Ltd. v Union of India (1995) 1 SCC 478. 94. LIC v Escorts Ltd. (1986) 1 SCC 264. 95. Ibid, at para. 90.

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(4) Associated companies are inextricably connected as to be a part of one concern in reality.

Further, it is suggested that it is undesirable and unnecessary to enumerate the classes of cases where lifting of veil is permissible.96 It is dependent upon the relevant statutory provisions, object sought to be achieved, impugned conduct, public interest, and effect on parties who may be affected.97

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The Supreme Court of India in Vodafone International Holdings B.V. v Union of India98 (“Vodafone”) dealt with lifting of corporate veil with respect to tax evasion matters.

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The court can always lift the corporate veil and examine the substance of the transaction once such transaction is shown to be fraudulent, a sham, circuitous, or one designed to defeat the interests of stakeholders.99

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The corporate veil can also be lifted in cases of holding company–​subsidiary relationships where it is found the companies have indulged in dubious methods of tax evasion.100

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The Supreme Court of India in New Horizons Ltd. v Union of India101 held that the corporate veil can also be lifted when the principle of corporate personality is flagrantly opposed to justice, convenience, or interests of revenue.102

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The decisions of the High Court of Madras103 and the High Court of Delhi104 specify that in order to establish that one entity is the alter ego of another, the facts must reveal that in reality, the two entities are a single economic entity.

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For example, facts which reveal that there is a single point of control over both the entities, the entities share common official addresses, have access to joint common pools of funds, and so on.

Ibid. Ibid. Vodafone International Holdings B.V. v Union of India (2012) 6 SCC 613. Ibid, at para. 277. Vodafone International Holdings B.V. v Union of India (2012) 6 SCC 613, at para. 280. New Horizons Ltd. v Union of India (1995) 1 SCC 478. Ibid, at para. 27. SEI Adhavan Power Private Limited v Jinneng Clean Energy Technology Limited and Anr. 2018 SCC OnLine Mad 13299. 1 04. GMR Energy Limited v Doosan Power Systems India Private Limited & Ors. 2017 SCC OnLine Del 11625. 96. 97. 98. 99. 100. 101. 102. 103.

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The Supreme Court of the United Kingdom in Prest v Petrodel Resources Ltd105 suggested that a restrictive view of lifting the corporate veil prevails under English law and observed:

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“… there is a limited principle of English law which applies when a person is under an existing legal obligation or liability or subject to an existing legal restriction which he deliberately evades or whose enforcement he deliberately frustrates by interposing a company under his control. The court may then pierce the corporate veil for the purpose, and only for the purpose, of depriving the company or its controller of the advantage that they would otherwise have obtained by the company’s separate legal personality.”106

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Who Has the Power to Bind Non-​signatories to an Arbitration Agreement?

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Non-​signatories may be bound by an arbitration agreement in certain circumstances. Generally, the power to determine whether a non-​signatory is bound by an arbitration agreement lies with courts and arbitral tribunals.

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This approach is consistent with the “Kompetenz-​Kompetenz” doctrine.107

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Arbitral tribunals have the authority to consider whether certain entities are bound by an arbitration agreement under Article 16 of the Model Law and other equivalent provisions.108

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In practice, arbitral tribunals frequently hear evidence and arguments to consider and resolve claims regarding non-​signatories being subjected to an arbitration agreement.109

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However, in India, the position remains unclear. Some Indian courts have held that an arbitral tribunal does not have the power to join non-​signatories to arbitration.

1 05. [2013] UKSC 34 at para. 35. 106. Prest v Petrodel Resources Ltd [2013] UKSC 34 at para. 35. See also Mitsui OSK Lines Ltd. (Japan) v Orient Ship Agency Pvt. Ltd 2020 SCC OnLine Bom 217, at paras. 77, 78. The Court relied on the decision in Prest v Petrodel Resources Ltd. to discuss the concealment and evasion principle. The High Court of Bombay disregarded the concealment principle since the petitioner was trying to impose personal liability regardless of the fact that the respondents were not a party to the foreign award. Further, it was held that the concealment principle does not involve piercing the corporate veil at all. 107. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1616. 108. Ibid. 109. Ibid.

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Therefore, in cases where the arbitration agreement is governed by the Arbitration Act, it may be possible to argue the arbitral tribunal may lack the power to bind a non-​ signatory to an arbitration agreement. The tussle between the concurrent jurisdiction of courts and tribunals on the issue is complicated.

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The Supreme Court of India in SBP & Co. v Patel Engineering Ltd. & Anr.110 held that Section 16 of the Arbitration Act comes into play only when an arbitral tribunal is constituted without intervention of the court under Section 11 of the Arbitration Act.

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In practice, this decision has often been used to undermine the jurisdiction of an arbitral tribunal, especially where the arbitral tribunal has not been constituted without any involvement of the court.

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Moreover, the power to entertain an application filed by a “party to the arbitration agreement or any person claiming through or under him” under Sections 8 and 45 of the Arbitration Act has only been conferred on a “judicial authority”.

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The High Court of Delhi in Sudhir Gopi v Indira Gandhi National Open University111 held that mere failure to fulfil a contractual obligation is not a ground for lifting of the corporate veil by an arbitral tribunal.112 It is the courts that retain the power to determine whether in a given case the corporate veil should be pierced or not.

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On the other hand, the High Court of Delhi, in GMR Energy Limited v Doosan Power Systems India Private Limited,113 took a different view. It held that an arbitral tribunal was equally competent to pierce the corporate veil and could hold non-​signatories bound by an arbitration agreement.114

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Similarly, the High Court of Gujarat in IMC Limited v Deendayal Port Trust115 held that an arbitral tribunal has the power to determine the issues arising under an agreement including its jurisdiction and objections on the issue of joinder by the “alter ego” doctrine or by lifting of the corporate veil.116

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It maybe that both the courts and arbitral tribunals are empowered to analyse to reveal the true identity of all the parties to the arbitration agreement. This approach will

1 10. 111. 112. 113. 114. 115. 116.

(2005) 8 SCC 618. Sudhir Gopi v Indira Gandhi National Open University 2017 SCC OnLine Del 8345. Ibid, at para. 41. GMR Energy Limited v Doosan Power Systems India Private Limited 2017 SCC OnLine Del 11625. Ibid, at para. 76. IMC Limited v Deendayal Port Trust 2018 SCC OnLine Guj 4580. Ibid, at para. 54.

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be in line with best practices. It also respects the competence-​competence principle. However, as it stands now, this position is not clear under Indian law.

[10.8] ASSIGNMENT

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Arbitration agreements and agreements containing arbitration clauses are capable of assignment.117 A party to a contract containing an arbitration clause can assign its rights under the contract to a third party, that is, an assignee of those rights.

An assignment is when the original party to a contract, which contains an arbitration clause, transfers its substantive claims, rights, and/​or obligations to another person.118 An assignment may occur in two ways: (1) by operation of law; or



(2) by the party to the contract passing its rights to a third party by a contractual assignment.

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An assignment by law occurs, for example, on the death of a party to a contract. A contract binds the representatives of the promisor in case of the death of the promisor before performance, unless a contrary intention appears from the contract.119

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A contractual assignment occurs when rights under a contract are assigned to another party. A valid assignment will allow the third party to sue under the contract in respect of the rights assigned to it.

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Generally, the assignment of contracts is valid in law. The High Court of Calcutta in Hindustan Steel Works Construction Limited v Bharat Spun Pipe Co.120 held that a contract can be assigned depending on the nature of the contract. A contract in the nature of a personal covenant cannot not be assigned.121

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The presence of an arbitration clause in an agreement does not affect the assignability of a contract.122 The intention regarding assignability of a contract depends upon the terms and language used in the contract.123

117. Shayler v Woolf [1946] Ch 320; Montedipe SpA v JTP-​RO Jugotanker, The Jordan Nicolov [1990] 2 Lloyd’s Rep 11; Schiffahrtsgesellschaft Detler von Appen GmbH v Voest Alpine Intertrading GmbH [1997] 2 Lloyd’s Rep 279; Hela Pharma AB v Hela Pharma Australasia Ltd [2005] NZCA 11, CA. 118. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 151. 119. Indian Contract Act, 1872, s. 37. 120. AIR 1975 Cal 8. 121. Ibid, at para. 5. 122. Ibid. 123. Ibid.

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The High Court of Delhi in Bestech India Private Limited v GF Developments Ltd.124 held that if a contract is assignable, the arbitration clause will follow the assignment of the contract.125 While the rights under a contact can be assigned, the obligations under a contract cannot be lawfully assigned.

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The High Court of Delhi in Kotak Mahindra Bank v S. Nagabhushan & Ors.126 was deciding on the validity of the assignment of an arbitration agreement. It was held that since the rights under the main contract were assignable, the rights under the arbitration agreement would be equally assignable being in the nature of a remedy for enforcement of such rights.

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Legal and Equitable Assignment

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Once a party has accepted the assignment of a contract and has insisted for compliance of rights and obligations from the assignee, assignee steps into the shoes of the assignor and is entitled to all the rights and benefits which form a part of the assigned contract, including the arbitration agreement.

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An assignment may be legal or equitable. A legal assignment is one made in accordance with a statute. It may be limited to a particular right or claim arising under the contract.127

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An assignment that fails to comply with statutory requirements is not necessarily invalid and may still be enforced as a good “equitable” assignment.128

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If the assignment is equitable, then the assignee must sue in the assignor’s name. Alternatively, if the assignor refuses to be joined as a claimant, the assignor must be added as a respondent.129 On the other hand, a statutory assignee can sue without joining the assignor as a party to the action.130

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If the contract includes an effective non-​assignment clause, the assignee is not bound by an arbitration clause.131

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1 24. (2009) 161 DLT 282. 125. Bestech India Private Limited v GF Developments Ltd. (2009) 161 DLT 282 relying on Khardah & Co. v Raymon & Co. AIR 1962 SC 1810. 126. 2018 SCC OnLine Del 6832. 127. See Rumput (Panama) SA and Belzetta Shipping Co SA v Islamic Republic of Iran Shipping Lines, The Leage [1984] 2 Lloyd’s Rep 259. 128. Statutory assignments under Indian law are recognised under the provisions of the Transfer of Property Act, 1882. 129. William Brandt’s Sons and Co v Dunlop Rubber Co Ltd [1905] AC 454; Weddell v JA Pearce & Major [1988] Ch 26. 130. See Chitty on Contracts (33rd edn, Sweet and Maxwell), at paras 19-​004–​19-​005. 131. Bawejem Ltd v MC Fabrications Ltd [1999] 1 All ER (Comm) 377.

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Additionally, where an agreement is novated and the new agreement does not contain an arbitration clause, parties to the novated contract cannot refer the matter to arbitration.132

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The difference between a legal and equitable assignment is a matter of procedure. An equitable assignment gives an assignee a title which is recognised and protected in equity but is not cognisable at law. If the equitable assignee sues in his own name without joining the assignor as a party, then the proceedings will be a nullity.133

Assignment in the Course of Ongoing Arbitration Proceedings

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An assignment that is executed during ongoing arbitration proceedings does not bring the arbitration proceedings to an end.

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However, it would be necessary to inform the counterparty and the arbitral tribunal of such an assignment, especially where the assignee is desirous of becoming a party to the arbitration proceedings.

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An English Court, in Baytur SA v Finagro Holdings SA,134 held:

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“An assignee does not automatically become a party to a pending arbitration on the assignment taking place in equity. Something more is required. He must at least give notice to the other side, and submit to the jurisdiction of the arbitrator.”

(2) The second step is that it must give notice to the arbitrators.

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(1) The first step is that it has to give notice to the other side; and

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The Court in Montedipe SpA v JTP-​RO Jugotanker, The Jordan Nicolov135 crystallised the above finding. It held that a legal assignee has to take two steps before it can become a party to a pending arbitration:

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The approach ensures that a party does not attempt to escape liability and the obligation to arbitrate by assigning rights to another party.

132. M/​S Young Achievers v IMS Learning Resources Pvt. Ltd. 2013 (10) SCC 535, p. 6; Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer), p. 342. 133. See Chitty on Contracts (33rd edn, Sweet and Maxwell), at paras. 19-​004–​19-​005. 134. [1991] 4 All ER 129. 135. [1990] 2 Lloyd’s Rep 11 at p. 18; Longmore J in Eurosteel Ltd v Stinnes AG [2000] 1 All ER (Comm) 964.

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Hobhouse J in Montedipe SpA v JTP-​RO Jugotanker, The Jordan Nicolov136 held that the assignor would remain liable for costs already incurred in the arbitration. If the assignor ceased to exist, then the burden of costs will fall solely on the assignee. This conflicts with the rule that an assignor cannot transfer the burden of a contract to an assignee.

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The Indian courts have not ruled on this issue. However, Indian courts may refer to the English law on the subject.

[10.9] NOVATION

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A novation occurs when an agreement between two original parties consensually converts into an agreement between one original party and another third party.137 Novation is statutorily recognised under the Indian Contract Act, 1872.138

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Novation ends the original contract and creates a new contract. It differs from an assignment where benefits under the contract are transferred to a third party.139 All parties must consent to the novation. The new party is required to provide consideration for the new contract.

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When the contract is novated, liability shifts from one party to another. The new agreement, however, retains equities and protective rights under the statute of limitation which were already accruing at the time of transfer.140 For example, the new party can take the benefit of any period of limitation that had accrued to the advantage of the original party.141

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136. [1990] 2 Lloyd’s Rep 11. See also London Steamship Owners Mutual Insurance Association Ltd v Bombay Trading Co Ltd, The Felice [1990] 2 Lloyd’s Rep 21, at p. 27 (though opposed to the reasoning in Montedipe SpA v JTP-​RO Jugotanker, The Jordan Nicolov [1990] 2 Lloyd’s Rep 11 supra). 137. See Far East Consortium Ltd v Airedale Ltd [1991] HKC 325 (HK); Shedumbrum Chotty v Keng Cheow & Co (1890) 4 Ky 587; Scarf v Jardine (1882) 7 App Cas 345, at p. 351, per Lord Selborne; K. Appukuttan Panicker v A.K.R.A.K.R. Athappa Chettiar AIR 1966 Ker 303; Godan Namboothiripoad v Kerala Financial Corporation AIR 1988 Ker 31; Calcutta Insurance Madras v Thirumalai Animal AIR 1982 Mad 83 at para. 10. One of the requisites of novation is that there must be an agreement of all the parties to the new contract on principles generally applicable to formation of contracts; H.R. Basavaraj v Canara Bank (2010) 12 SCC 458, at paras. 18–​21. The basic principle behind the concept of novation is substitution of a contract by a new one only through the consent of both the parties. 138. Indian Contract Act (Act No. 9 of 1872), s. 62. If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract, need not be performed; Khardah Co. Ltd. v Raymon & Co. (1963) 3 SCR 183; Ramji Dayawala & Sons (P) Ltd. v Imvest Import 1981 (1) SCR 899; Lata Construction v Rameshchandra Ramniklal Shah (2000) 1 SCC 586, at paras. 9, 10. 139. Davies v Jones [2009] EWCA Civ 1164. Assignments are used where the benefit of a contract is transferred to a third party. A novation is appropriate where the original contracting party wants the obligations under the contract to rest with a third party. Karkara Estate Ltd. v Savvy Vineyards Ltd. [2013] NZCA 101; Khardah Co. Ltd. v Raymon & Co. (1963) 3 SCR 183, at para. 7. 140. Chatsworth Investments Ltd v Cussins (Contractors) Ltd [1969] 1 All ER 143, at paras. 7F, 7G. 141. Chatsworth Investments Ltd v Cussins (Contractors) Ltd [1969] 1 All ER 143, [1969] 1 WLR 1, CA (Eng).

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Buller J in Tatlock v Harris142 explained: “Suppose A owes B £100 and B owes C £100, and the three meet, and it is agreed between them that A shall pay C the £100; B’s debt is extinguished, and C may recover the sum against A.”143

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The Supreme Court of India in Lata Construction v Rameshchandra Ramniklal Shah144 held that:

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“One of the essential requirements of ‘Novation’; as contemplated by Section 62, is that there should be complete substitution of a new contract in place of the old. It is in that situation that the original contract need not be performed. Substitution of a new contract in place of the old contract which would have the effect of rescinding or completely altering the terms of the original contract, has to be by agreement between the parties. A substituted contract should rescind or alter or extinguish the previous contract. But if the terms of the two contracts are inconsistent and they cannot stand together, the subsequent contract cannot be said to be in substitution of the earlier contract.”145

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The original party may, depending on the terms of the new contract, cease to have any rights or may be released from further performance of the original contract. The two original parties and the third party enter a tripartite contract.146

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The third party, substituted for one of the original parties, now falls within the definition of the term “party” under Section 2(1)(h) of the Arbitration Act. The Supreme Court of India in Chloro Controls147 acknowledged such a scenario when it held:

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“The general principle is that if a contract is novated and superseded with another contract, the arbitration clause, being a part of the earlier contract, remains valid. However, if the new contract does not contain the arbitration clause, the new party cannot be compelled to go for arbitration.”148

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The Supreme Court of India in M/​s Young Achievers v IMS Learning Resources Pvt. Ltd.149 took a similar view when it held:

1 42. (1789) 3 Term Rep 174, at p. 180. 143. See also Liversidge v Broadbent (1859) 4 H & N 603; Re United Railways of Havanna and Regla Warehouses Ltd [1960] Ch 52 at 84, 86, affirmed [1961] AC 1007, [1960] 2 All ER 332, HL. 144. Lata Construction v Rameshchandra Ramniklal Shah (2000) 1 SCC 586. 145. Lata Construction v Rameshchandra Ramniklal Shah (2000) 1 SCC 586, at paras. 9, 10. 146. Ircon International Ltd. v Vinay Heavy Equipments (2015) 13 SCC 680, at para. 9. A bilateral agreement between two parties cannot fasten liability on a third party in absence of a tripartite agreement between them. 147. Chloro Controls India Private Limited v Severn Trent Water Purification Inc. (2013) 1 SCC 641, at para. 70. 148. Union of India v Kishorilal Gupta 1960 (1) SCR 493, at para. 10. 149. 2013 (10) SCC 535.

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“An arbitration clause in an agreement cannot survive if the agreement containing arbitration clause (sic) has been superseded /​novated by a later agreement.”150 The new party is treated the same as if it was a party to the contract from the outset.151 The original party is no longer bound by the arbitration clause. It cannot be a party to the arbitration proceedings as it no longer has any status in the contractual relationship.

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[10.10] AGENTS

An agent is a person employed to do any act for another, or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented, is called the “principal”.152

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An agent may enter into an arbitration agreement on behalf of its principal so long as the agent is empowered to do so under the terms of the agency. Whether the agent has validly entered into the agreement on behalf of the principal depends on the applicable laws.

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It may be the law of arbitration agreement or the law of the principal’s registered office. The arbitral tribunal has the powers to make that determination.

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The agency agreement between an agent and principal may be express or implied. However, there need not always be a contract between the agent and principal.153 In some situations, the agent–​principal relationship may arise by reason of the conduct of the parties or by the operation of law.

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For instance, a partner of a firm is an agent of the firm for the purposes of its business. The firm is bound by any act of a partner which is done to carry on, in the usual way, business of the kind carried on by the firm.154

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150. Ibid, at para. 5. 151. Smith v Pearl Assurance Co Ltd 63 Ll L Rep 1, [1939] 1 All ER 95; Dennehy v Bellamy 60 Ll L Rep 269. The case was also followed by the High Court of Madras in Kogta Financial India Limited v Jayesh Kishorilal Dawda (2011) 6 CTC 182; Freshwater v Western Australian Assurance Co Ltd [1933] 1 KB 515; Digby v General Accident Fire and Life Assurance Corporation Ltd [1940] 2 KB 226; Pena Copper Mines Ltd v Rio Tinto Co Ltd 105 LT 846; Printing Machinery Co Ltd v Linotype and Machinery Ltd [1912] 1 Ch 566; Oakland Metal Co Ltd v D Benaim & Co Ltd [1953] 2 Lloyd’s Rep 192, [1953] 2 QB 261; Socony Mobil Oil co Inc, Mobil Oil Co Ltd and Mobil Oil AG v West of England Ship Owners Mutual Insurance Association (London) Ltd, The Padre Island [1984] 2 Lloyd’s Rep 408; West Tankers Inc v Ras Riunione Adriatica di Sicurta SpA, “The Front Comor” [2005] EWHC 454 (Comm), [2005] 2 All ER (Comm) 240; R.S. Amarnath Mehra v Union of India 1993 (27) DRJ 1, at paras. 16, 17. A novation substitutes a new party and discharges the original party. 152. Indian Contract Act, 1872, s. 182. 153. Indian Contract Act, 1872, s. 186. 154. Indian Partnership Act, 1932 (Act No. 9 of 1932), s. 19.

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Where a firm enters into contracts containing an arbitration clause, the whole partnership is bound by such a clause. In other words, if any partner enters a contract which provides for arbitration on behalf of the firm, the firm is bound by the action of the partner.155

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A partner can only enter into an arbitration agreement to refer a future dispute to arbitration. The other partners must expressly agree or agree by conduct to arbitrate an existing dispute in order to refer an existing dispute to arbitration.156

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When an agent enters into a contract on behalf of its principal with a third party, the contract is between the principal and third party. An agent cannot personally enforce contracts entered into by him or her on behalf of his principal, nor is he or she personally bound by them.157

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Therefore, the agent cannot be a party to the arbitral proceedings where an arbitration agreement is embedded within the contract.

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There are certain exceptions to the proposition that an agent is not personally liable for their acts. These exceptions are invoked when: (1) The agent acts for an undisclosed principal;



(2) the agent acts for a disclosed principal, although such principal cannot be sued;



(3) the agent has an economic interest in the agreement.158

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Therefore, where any of the circumstances alluded to above are established, an agent can be made party to an arbitration agreement in its personal capacity.

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The third party must elect whether to proceed against the principal or the agent where the principal and agent are both potentially liable under a contract. The third party may elect to arbitrate either against the principal or agent in such a situation.159 The third party loses the right to proceed against the other once it has elected as such.

155. Wood v Thompson (1647) Rolle Ab Arb 523; Ball v Dunsterville (1791) 4 TR 313; Adams v Bankart (1835) 15 Cr M & R 681; Indian Partnership Act (Act no. 9 of 1932), 1932, s. 19. 156. Antram v Chace (1812) 15 East 209; Thomas v Atherton (1878) 10 ChD 185. 157. Contract Act, s. 230. However, where there is an agreement to the contrary to hold the agent personally liable, the benefit of s. 230 is not available to an agent. 158. Pollock and Mulla, Indian Contract Act and the Specific Relief Act (14th edn), p. 1797. See also the decision of the Supreme Court of India in Tashi Delek Gaming Solutions Ltd. v State of Karnataka (2006) 1 SCC 442. 159. See Higgins v Senior (1841) 8 M&W 834; cf. Keighley, Maxsted and Co v Durant [1901] AC 240, at p. 261.

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[10.11] ESTOPPEL Estoppel is a common law principle. It prevents a party who knowingly accepts the benefits of a contract containing an arbitration agreement from avoiding the obligation to arbitrate. In addition to common law jurisdictions, some civil jurisdictions such as France also recognise this rule.

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Two legal rules under estoppel have been recognised for holding a party to be bound by an arbitration agreement:

(1) A non-​signatory who knowingly accepts the direct benefits of a contract containing an arbitration agreement can be compelled to arbitrate by a signatory. The non-​signatory party is estopped from denying that it is a party to the arbitration clause.



(2) A non-​signatory can compel arbitration with a signatory when the issues the non-​signatory is seeking to resolve are inextricably intertwined with the agreement and the non-​signatory is closely related to the signatory.160

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In essence, the estoppel rule prevents fraud and injustice and prevents a party from reneging on its earlier representations.

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[10.12] GUARANTOR, SURETY, AND INDEMNIFIER

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A party to a contract containing an arbitration clause may have entered into a separate contract of guarantee, surety, or indemnity. In normal practice, the guarantor guarantees the liability of the party to the contract.

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As such, the guarantor may incur liabilities which are secondary to the primary liabilities contained in the contract. The guarantor’s liability is usually contingent upon the ascertainment of the liability under the primary contract and also upon the terms of the arbitration agreement.

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Mustill and Boyd explain that where the guarantee and the arbitration agreement are in the ordinary form, the liability of the guarantor arises simultaneously with that of the principal debtor.161 The other party may at once bring an action against the guarantor in court. The Supreme Court of India in S.N. Prasad v Monnet Finance Ltd. (“SN Prasad”)162 considered the applicability of an arbitral award against a guarantor and held:

160. MS Dealer Serv v Franklin. 161. Mustill and Boyd, Commercial Arbitration (2nd edn, Butterworths 1989), p. 139. 162. S.N. Prasad v Monnet Finance Ltd (2011) 1 SCC 320; Sunil Nanda v L & T Finance Ltd. 2014 SCC OnLine Del 1057, at paras. 13, 14.

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“An arbitration agreement between the lender on the one hand and the borrower and one of the guarantors on the other, cannot be deemed or construed to be an arbitration agreement in respect of another guarantor who was not a party to the arbitration agreement.”163 The Court also ruled that if there was no arbitration agreement between the guarantor and the lender, the guarantor could not be involved in the arbitration proceedings.164

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However, the decision of the Supreme Court of India in SN Prasad pre-​dates its decision in Chloro Controls.

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The Supreme Court of India, in Cheran Properties Limited v Kasturi Sons Limited165 clarified that the position established in SN Prasad was legally modified in light of the decision in Chloro Controls.166

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A guarantor who may not be a signatory to the Arbitration Agreement may be made bound by the arbitration agreement if circumstances for coming to such a conclusion exist.

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In this context, the court in Chloro Controls discussed that parties that may not be signatories to an arbitration agreement can be referred to arbitration if the transaction is of a composite nature.

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It applies where the performance of the principal agreement may not be feasible without the aid, execution, and performance of supplementary agreement or ancillary agreements for achieving the common object. It must collectively have a bearing on the dispute.167

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As such, in practice, it is possible to distinguish the law laid down in Chloro Controls.168 In order to join a non-​signatory guarantor to an arbitration, an inextricable nexus to the contract containing the arbitration agreement must be shown.

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The Chancery Division of the High Court in England and Wales in Ex Parte Young, Re Kitchin169 set out an example of how a guarantee will be worded:

S.N. Prasad, at para. 10. Ibid, at paras. 25–​30. Cheran Properties Limited v Kasturi Sons Limited (2018) 16 SCC 413. Ibid, at para. 20. Chloro Controls India Private Limited v Severn Trent Water Purification Inc. (2013) 1 SCC 641, at paras. 75, 76. See STCI Finance Ltd. v Shreyas Kirti Lal Doshi 2020 SCC OnLine Del 100; MSTC Ltd. v Omega Petro Products Pvt. Ltd. 2018 SCC OnLine Bom 487. Court held that a mere reference to the guarantee agreement is not sufficient to bind the guarantor when he is not a party to the arbitration agreement. 169. (1881) 17 ChD 668. 163. 164. 165. 166. 167. 168.

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“I undertake and guarantee that all wines supplied to them by you shall be duly paid for ... I undertake and guarantee that the agreement shall be otherwise duly performed in all respects.”170 The exception arises where there is a Scott v Avery171 clause providing for an arbitration award as a condition precedent to litigation. In such a scenario, the guarantor becomes liable only when there is an arbitration award against the party to the contract.

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Such an award would not bind the guarantor in the absence of a specific agreement by the guarantor to be bound by the arbitral award made against the principal debtors.

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This means that the other party to the contract may not be able to arbitrate directly against the guarantor as the latter is not a party to the arbitration agreement. It follows that the arbitration award against the principal will usually not be binding on the guarantor.172

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The Court of Appeal of the England and Wales in Bruns v Colocotronis, The Vasso173 held that, general words were insufficient to bind a guarantor to an agreement. Such a position may lead to a serious injustice. For example, an award as a result of an admission of liability by the principal debtor without the authority of the guarantor.

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However, an arbitral award is binding on the guarantor where the guarantee contains an obligation to honour it. A guarantee of “due fulfilment of any obligation” in respect of the contract includes a guarantee of the obligation to discharge an award.174

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Clear words imposing that liability must be in either the arbitration agreement or in the guarantee in order to bind the guarantor to an award against the principal debtor. Lush J in Ex parte Young, Re Kitchin175 explained:

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“You must find explicit words to make a person liable to pay any amount which may be awarded against a third person.”

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The other party cannot use the arbitration award as evidence in an action against the guarantor unless there are clear words to the effect that the guarantor unconditionally

170. Ibid, at p. 669. 171. [1843-​60] All ER Rep 1. 172. Daunt v Lazard (1858) 27 LJ Ex 399; Ex parte Young, Re Kitchin (1881) 17 Ch D 668; Thermistocles Navegacion SA v Langton, The Queen Frederica [1978] 2 Lloyd’s Rep 164; Saberno Pty Ltd v De Groot (1992) 8 BCL 128; Alfred McApline Construction v Unex Corp [1994] NPC 16; Oddmund Grundstad v Joseph Ritt and American Arbitration Assn Inc (1997) 12 Mealey’s International Arbitration Report F1. 173. [1979] 2 Lloyd’s Rep 412. 174. Compania Sudamericana de Fletes SA v African Continental Bank Ltd, The Rosarina [1973] 1 Lloyd’s Rep 21, per Mocatta J. 175. Compania Sudamericana de Fletes SA v African Continental Bank Ltd, The Rosarina [1973] 1 Lloyd’s Rep 21, per Mocatta J., n 46 at p. 674.

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agreed to honour the arbitral award. Liability must be proved against the guarantor in the same way as the principal debtor. Lord Diplock in Moschi v Lep Air Services Ltd176 summed up the rule as:

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“Whenever the debtor has failed voluntarily to perform an obligation which is the subject of the guarantee the creditor can recover from the guarantor as damages for breach of his contract of guarantee whatever sum the creditor could have recovered from the debtor himself as a consequence of that failure. The debtor’s liability to the creditor is also the measure of the guarantor’s.”177 Consequently, the creditor may have to bring two claims in order to have a binding arbitral award against the principal debtor and a judgment against the guarantor.

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In turn, this raises the possibility of inconsistent results emerging from parallel proceedings. This is owing to the fact that findings of law or fact in one set of proceedings may be irrelevant to the other set of proceedings.

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A way to overcome this problem of inconsistent outcomes is for the guarantor to agree to be bound by the findings of the arbitral tribunal.178 In practice, the guarantor will only do so if it is in its interest.

Parent Company Guarantees

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A Parent Company Guarantee is a guarantee given by the holding company of a company that is a party to a contract, in favour of the other contracting party to secure the performance of the holding company’s obligations under the contract.

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This type of guarantee is usually given to bolster the financial credibility of subsidiary companies. Parent company guarantees are available only in respect of companies which are part of a group of companies.179

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The High Court of Delhi in Fernas Construction Co. Inc. v ONGC Petro Additions Ltd.,180 (“Fernas Construction”) held the parent company of a subsidiary which was a signatory to the contract to be bound by the arbitration clause in the contract. The parent company guaranteed that they shall be jointly and severally responsible for the satisfactory performance of its subsidiary.181 1 76. 177. 178. 179. 180. 181.

[1973] AC 331. Ibid, at p. 349. Roche Products Ltd v Freeman Process Systems Ltd [1996] 80 BLR 102. Jane Stubbs and Hamish Lal, Manual of Construction Agreements (LexisNexis 2000), p. 162. 2019 SCC OnLine Del 8580. Ibid, at para. 22.

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The Court explained that:

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“22. It clearly follows from perusal of the aforenoted terms of the guarantee issued by the plaintiff that the plaintiff is a guarantor for its wholly owned subsidiary. It falls within the ‘group of companies’ doctrine. The plaintiff has a direct relationship with the party signatory to the arbitration agreement. There is a commonality of the subject matter and the Agreement is a composite transaction. The plaintiff and FCIPL were to perform jointly various aspects of the contract. It is manifest that plaintiff and FCIPL had a close working relationship to perform the contract between FCIPL and the defendant. The plaintiff was more than just a guarantor. It was providing full financial and technical support and help to FCIPL to help FCIPL perform the contract. The plaintiff though not a signatory to the contract, the intent was to bind the plaintiff to various terms of the contract dated 19.4.2011 including the Arbitration clause.182 23. In my opinion, … [t]‌he plaintiff is bound by the arbitration clause.”183

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The Court of Appeal of the England and Wales in Roche Products Ltd v Freeman Process Systems Ltd184 held that the guarantor having offered to be bound by the findings of the arbitral tribunal remains bound by such finding.

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The Court of Appeal of the England and Wales in Alfred McAlpine Construction Ltd v Unex Corporation Ltd.185 held that the parent company’s right and obligations are separate and distinct from the rights and obligations of the original contract. The parent company’s liability is primary. It is not contingent on the liability of the subsidiary company.

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Therefore, a contract of a guarantee was strictly an undertaking by a surety to be responsible for the performance of another giving rise to a secondary liability. The guarantor (surety) only became liable if the principal failed to perform his obligations.

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By contrast, an indemnity is simply an obligation by the person to make good a loss suffered by another which was a primary liability. Where the parent company does not make or offer a formal admission of liability under the parent company guarantee, it could raise new matters in court not canvassed in the arbitration. If the principal debtor applies for a stay to the court in which the claim was issued, that court would be obliged to stay the litigation against the principal debtor.

182. 183. 184. 185.

Ibid. Ibid, at para. 23. (1996) 80 BLR 102. (1994) 17 BLR 26.

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This is subject to the exception where the arbitration agreement was shown to be null and void, inoperative, or incapable of being performed. Once again, the creditor would have to succeed in two sets of proceedings. Therefore, a distinction should be made between a guarantee and an indemnity.

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An indemnifier is said to have a primary obligation. A guarantor is said to have a secondary obligation. The distinction between a primary and secondary obligation is this: where there is a primary liability, an action may proceed against the indemnifier even though the creditor has no enforceable rights against the principal debtor. Where there is a secondary liability and the principal debtor is not liable, the guarantor will not be liable either.

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The distinction between primary and secondary obligations has been criticised for having “raised many hair-​splitting distinctions of exactly that kind which brings the law into hatred, ridicule and contempt by the public”.186

Intended Beneficiary

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The “intended beneficiary” doctrine is an American legal concept which provides that where a third party is intended to be a beneficiary of the contract, that third party may be entitled to the benefit of (or alternatively is estopped from denying) the arbitration agreement. This doctrine has been conferred statutory recognition in England and Singapore.

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While there has been no definitive instance in which a third-​party beneficiary has been held to be bound by an arbitration agreement in India, there is a possibility of making an affirmative argument on this proposition.

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The Supreme Court of India has in the Chloro Controls case, expressly acknowledged “third party beneficiaries” under the implied consent theory.187

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[10.13] MORTGAGEE

A mortgagee is a creditor having a lien or charge for his debt with or without the right of possession.188 The High Court of the England and Wales court in Bonnin v Neame189 held

186. 187. 188. 189.

Yeoman Credit Ltd v Latter [1961] 1 WLR 828, at 835. Chloro Controls (India) Pvt. Ltd. v Severn Trent Water Purification Inc (2013) 1 SCC 641, at paras. 73, 75, 76. P Ramanatha Aiyar, The Law Lexicon (1992), p. 834. [1910] 1 Ch 732.

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that a mortgagee of a partner’s share was not a person claiming under the partnership and was not bound by an arbitration clause in the partnership deed. Under Indian law, there is a bar on arbitration of disputes in which enforcement of a mortgage is sought.190 However, there is no bar against a mortgagee claiming through a party for money claims.191

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The High Court of Wellington (New Zealand) in Mount Cook (Northland) Ltd v Swedish Motors Ltd192 considered a dispute where a tour operator brought proceedings based on negligent misrepresentation against a supplier of machinery.

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The supplier joined the manufacturer as a third party. The manufacturer alleged that the supplier was claiming “through or under” a related company with whom the manufacturer had a distributorship agreement, and that under the distributorship agreement the dispute should go to arbitration and be governed by Swedish law. The court explained:

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“To come within the expression, the person claiming this [to be referred to arbitration] must be doing it ‘through or under’ the party to the arbitration agreement. So, the relationship between them must be an essential ingredient of the claim.”193

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But if the claim is brought independently of being a party to the agreement, so that any relationship between them is irrelevant to the grounds advanced in support of the claim, then the claim is not brought through or under the party to the agreement.

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[10.14] LAWYERS

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A lawyer has no implied authority to bind his client by a submission to arbitration.194 The lawyer will be personally liable if he does engage in a binding submission.195 It will be in breach of the lawyer’s mandate.

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However, once a dispute has been referred, the lawyer has implied authority to bind his client in matters relating to the conduct of the arbitration proceedings.196

190. Booz Allen & Hamilton Inc v SBI Home Finance Ltd. (2011) 5 SCC 532, at para. 53. 191. Tata Capital Finance Services Ltd. v M/​S Deccan Chronicle Holdings Ltd. (2013) 3 Bom CR 205, at paras. 35, 41; The High Court of Bombay has in this case held that bringing a money claim with respect to a mortgage is not barred. 192. [1986] 1 NZLR 720. 193. Ibid, at p. 725. 194. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 3-​038; Macaulay v Polley [1897] 2 QB 122, Wright v Castle (1817) 3 Mer 12. 195. Ex p Hughes (1822) 5 B & Ald 482; Burrell v Jones (1819) 3 B & Ald 47. 196. R v Hill (1819) 7 Price 636.

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In India, courts have consistently held that the lawyers cannot bind a party to an arbitration proceeding without specific instructions from their client(s). A lawyer does not have the authority to refer a case or any part of the case for which he has not been instructed to arbitration.

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The Supreme Court of India in Kerala State Electricity Board and Anr. v Kurien E. Kalathil and Anr.197 refused to uphold parties’ consent to arbitration based on oral consent given by the counsels of the parties without any written instructions from the parties themselves. A lawyer can never be a party to an arbitration proceeding arising out of a contract between its client and another counterparty.

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[10.15] LEGAL REPRESENTATIVES AND TRUSTEES

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The term “legal representatives” has not been defined under the Model Law. In India, the Arbitration Act borrows the definition of the term legal representative from Section 2(11) of the CPC.

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The definition of a legal representative in the Arbitration Act is based on the definition of legal representative as set out in Section 2(11) of the CPC. A legal representative under Section 2(11) of the CPC is defined as a person who in law represents the estate of a deceased person.

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It includes any person who intermeddles with the estate of the deceased. Where a party sues or is sued in a representative character the person on whom the estate devolves on the death of the party suing or being sued.198

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An arbitration agreement would not be discharged by the death of any party to it.199 It would be enforceable by or against the legal representative of the deceased.

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However, no action can be continued by or against a legal representative of a deceased person under Section 40 of the Arbitration Act, if by operation of law the right of action is extinguished by the death of the person.200 Bringing a cause of action or obligation to an end on death does not apply to arbitrations.

1 97. 198. 199. 200.

(2018) SCC 4 793. Arbitration Act, s. 2(1)(g); CPC, s. 2(11). See Chapter 13.4. See also Ravi Prakash Goel v Chandra Prakash Goel & Anr. (2008) 13 SCC 667.

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Law, Practice and Procedure of Arbitration in India

Upon the demise of any party to an arbitration, it is the duty of the arbitral tribunal to serve notice on the legal representatives of the deceased parties calling upon them to appear before it and continue with the reference.201

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On the death of a party to the arbitration, the arbitral tribunal may stay the proceedings pending the appointment of a legal representative. Where arbitral proceedings had concluded prior to the death of a party, the arbitral award would be binding on the legal representatives of the party.202

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The Black’s Law Dictionary defines a trustee as one who holds the legal title to property for the benefit of another. Broadly, the term is sometimes applied to anyone standing in a fiduciary or confidential relation to another such as agent, attorney, bailee etc.203

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Under the Indian Trusts Act, 1882 (the “Trusts Act”), a trustee is defined as “the person who accepts the confidence [in the trust property]”.204

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“Under Indian law, arbitration proceedings can be continued by or against a party’s legal representative, provided the cause of action has not been extinguished with the demise of a party. However, a trustee is not authorised to be a party to arbitration proceedings or execute arbitration agreements on behalf of the estate.”

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The Supreme Court of India in Shri Vimal Kishore Shah & Ors v Mr Jayesh Dinesh Shah & Ors.205 held that the scheme of the Trusts Act makes it clear that civil courts have been conferred with exclusive jurisdiction to decide trust disputes throughout India.

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However, the Trusts Act does not affect rules of Muhammadan law regarding waqf, or the mutual relations of the members of an undivided family as determined by any customary or personal law.206

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The Supreme Court of India in Vidya Drolia v Durga Trading Corporation207 made it clear that private trusts that are subject to the Trusts Act cannot be subjected to arbitration and held:

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“Under Section 34 of the Indian Trusts Act, a trustee may, without instituting a suit, apply by petition to a principal Civil Court of original jurisdiction for its opinion,

201. 202. 203. 204. 205. 206. 207.

Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), p. 1052. Beni Datt & Ors. v Bajinath AIR 1938 Oudh 125. Byran A Garner, Black’s Law Dictionary (11th edn, Thomson Reuters), p. 1684. Trusts Act, s. 3. (2016) 8 SCC 788. Trusts Act, s. 1. 2020 SCC OnLine SC 1018, at para. 30.

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advice, or direction on any present questions respecting management or administration of trust property, subject to other conditions laid down in the Section. Obviously, an arbitrator cannot possibly give such opinion, advice, or direction. Under Section 46, a trustee who has accepted the trust, cannot afterward renounce it, except, inter alia, with the permission of a principal Civil Court of original jurisdiction. This again cannot be the subject matter of arbitration. Equally, under Section 49 of the Indian Trusts Act, where a discretionary power conferred on a trustee is not exercised reasonably and in good faith, only a principal Civil Court of original jurisdiction can control such power, again making it clear that a private consensual adjudicator has no part in the scheme of this Act. Under Section 53, no trustee may, without the permission of a principal Civil Court of original jurisdiction, buy or become mortgagee or lessee of the trust property or any part thereof. Here again, such permission can only be given by an arm of the State, namely, the principal Civil Court of original jurisdiction. Under Section 74 of the Indian Trusts Act, under certain circumstances, a beneficiary may apply by petition to a principal Civil Court of original jurisdiction for the appointment of a trustee or a new trustee, and the Court may appoint such trustee accordingly. Here again, such an appointment cannot possibly be by a consensual adjudicator. It can only be done by a petition to a principal Civil Court of original jurisdiction. Also, it is important to note that it is not any civil court that has jurisdiction, but only one designated court, namely, a principal Civil Court of original jurisdiction. All this goes to show that by necessary implication, disputes arising under the Indian Trusts Act cannot possibly be referred to arbitration.”208

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[10.16] OFFICIAL ASSIGNEE

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Under the Arbitration Act, an official assignee is included under the expression “receiver”.209

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Kerr defines a “receiver” as:

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“A receiver in an action is an impartial person appointed by the Court to collect and receive, pending the proceedings, the rents, issues and profits of land, or personal estate, which it does not seem reasonable to the Court that cither party should collect or receive, or for enabling the same to be distributed among the persons entitled.”210

208. Ibid, at para. 30. 209. Arbitration Act, s. 40(3). 210. Kerr on the Law and Practice as to Receivers appointed by the High Courts of Justice or order of Court (12th edn, Walton and Sarson) Special Edition for India, N. M. Tripathi & Co. (1932) P. L; Krishnaswamy Chetty v C. Thangavelu Chetty AIR 1955 Mad 430; Order XV Rule 1, CPC.

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Law, Practice and Procedure of Arbitration in India

Where an insolvent party to a contract faces disputes arising under it to be submitted to arbitration, the arbitration agreement would be enforceable by or against such receiver if the receiver adopts the contract.211

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If the contract is not adopted by the receiver, then the receiver or any other party to the contract may apply to a judicial authority having jurisdiction over the insolvency proceedings for an order directing that the matter be submitted to arbitration.

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The National Company Law Tribunal (“NCLT”) is the judicial authority having jurisdiction over the insolvency proceedings.212 Insolvency proceedings include those involving companies, limited liability partnerships, and other persons incorporated with limited liability.213

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The Insolvency and Bankruptcy Code, 2016 (“IBC”) provides for the management of the affairs of the corporate debtor to vest with a “resolution professional”. This would crystallise upon the admission and commencement of the insolvency resolution process of an entity.

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A resolution professional (including an interim resolution professional) is an insolvency professional appointed to conduct the corporate insolvency resolution process.214 He has the duty to preserve and protect the assets of the corporate debtor, including continuing its business operations.

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As such, the resolution professional is empowered to “represent and act on behalf of the corporate debtor with third parties, exercise rights for the benefit of the corporate debtor in judicial, quasi-​judicial or arbitration proceedings”.215

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However, the powers of a receiver or official assignee are limited in view of Section 14 of the IBC. Section 14 of the IBC provides that on the date of commencement of the insolvency, a moratorium for prohibiting the institution of suits or continuation of pending suits or proceedings against the corporate debtor.

2 11. Arbitration Act, s. 40(1). 212. Insolvency and Bankruptcy Code, 2016, s. 5(1). 213. The NCLT would be the judicial authority for the purposes of s. 41(2) of the Arbitration Act. See Indu Malhotra, Commentary on the Law of Arbitration in Law, Vol. 2 (4th edn, Wolters Kluwer 2020), p. 1055. 214. IBC, s. 5(27). 215. IBC, s. 25(2)(b).

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Chapter 10—​​​Who May Refer Matters to Arbitration?

The moratorium covers the execution of any judgment, decree, or order in any court of law, tribunal, arbitration panel, or other authority.216 The moratorium remains in place until the completion of the insolvency resolution process.217

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The Supreme Court of India in Alchemist Asset Reconstruction Company Ltd. v M/​ s. Hotel Gaudavan Pvt. Ltd.218 held that arbitration proceedings commenced against a corporate debtor pursuant to the commencement of the insolvency resolution process (when the moratorium is imposed) would be bad in law. Arbitration proceedings commenced prior to the commencement of the insolvency resolution process cannot be continued against the corporate debtor.

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The moratorium does not apply to arbitration proceedings initiated by and on behalf of the corporate debtor. This means that a resolution professional can pursue claims on behalf of the corporate debtor where the corporate debtor is a claimant.

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The moratorium applies only to proceedings against the corporate debtor to prevent financial liabilities from being imposed on the corporate debtor during its rehabilitation process.

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[10.17] LIQUIDATOR, ADMINISTRATOR, OR RECEIVER

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Once a company has ceased to exist, any arbitration agreement or arbitral proceedings to which it is a party come to an end.219 Lloyd LJ in Baytur SA v Finagro Holding SA220 explained the rationale that, “an arbitration requires two or more parties. There cannot be a valid arbitration when one of the parties has ceased to exist”.221

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Megaw LJ in Foster Yates and Thom Ltd v H W Edgehill Equipment Ltd222 held,

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“when a corporate body is dissolved as a result of winding up, any action which is pending at the date of dissolution ceases, not temporarily and provisionally, but absolutely and for all time ...”223

2 16. IBC, s. 14(1)(a). 217. IBC, s. 14(4). The moratorium would also cease to have effect from the date on which a resolution plan is approved by the NCLT under s. 31 or the NCLT passes a liquidation order under s. 33. 218. (2018) 16 SCC 94. 219. Baytur SA v Finagro Holding SA [1992] QB 610. Relied upon by the Indian courts in M/​s Hicare India Properties Pvt. v M/​s Adidas India Marketing Pvt, Arb. 370/​2009, decided on 27 March 2010. 220. [1992] QB 610. 221. Ibid, p. 619. 222. (1978) The Times, 29 November 1978. 223. [1927] AC 252.

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Law, Practice and Procedure of Arbitration in India

The dissolution of a company should not be confused with the scheme of arrangement of a company. Where there is a scheme of arrangement proposed between the company and its creditors, the court may restrain further proceedings in any action against the company except by leave of court, and subject to such terms as the court may impose.

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Arbitral proceedings are included in matters that may be restrained by the court. When a company is undergoing a corporate insolvency resolution process, the judicial proceedings against it are temporarily suspended.224

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Where a company is being wound up, the liquidator may bring or defend proceedings. The liquidator may disclaim any onerous property by giving notice and thereby disclaim any arbitration agreements within them.

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The IBC provides that liquidation may be resorted to only if the corporate insolvency resolution process of an entity has failed.225

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Upon the passage of an order of liquidation under Section 33 of the IBC, the resolution professional originally responsible for overseeing the corporate insolvency resolution process is appointed as the liquidator for the purpose of liquidation.226

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The moratorium imposed on initiating proceedings against the corporate debtor is lifted on the date on which the liquidation order is passed.227 The liquidator is empowered to defend or institute a suit or legal proceedings on behalf of the corporate debtor.228

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However, once a liquidation order is passed, a new embargo is imposed on instituting any suit or other legal proceeding by or against the corporate debtor.229

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However, in proceedings that were pending against the corporate debtor, the plaintiff or claimant will be unable to continue the proceedings (including arbitral proceedings) against the liquidated entity and will only have recourse to present its claims for the liquidator to consider.

224. See Chapter 10.16. 225. IBC, s. 33. “An order requiring the corporate debtor to be liquidated is passed if i) before the expiry of the insolvency resolution process period or the maximum period permitted for completion of the process, the resolution professional does not receive a resolution plan; or ii) the resolution plan is rejected for non-​compliance with the requirements of the IBC.” 226. IBC, s. 34(1). “However, the resolution professional may be replaced by the Adjudicating Authority under certain circumstances, ss. 34(4) to 34(9).” 227. IBC, proviso to s. 14. 228. IBC, s. 35(1). 229. IBC, s. 33(5). “A suit or legal proceeding may be instituted by the liquidator only with the prior approval of the Adjudicating authority. This limitation is also subject to the rights of a secured creditor to its security interest as set out in s. 53 of the IBC.”

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Chapter 10—​​​Who May Refer Matters to Arbitration?

Thus, a liquidator acts on behalf of the liquidated or wound-​up entity, in circumstances where it is necessary.

[10.18] SUB-​CONTRACTORS As set out in Section 10.5 of this chapter, the doctrine of privity of contract disallows non-​parties to a contract to sue or be sued under such a contract.

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In the construction industry several contracts are entered into with sub-​contractors. The arbitration agreement in the main construction contract is between the main contractor and the employer.

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In practice, the main contractor assigns some of the work under the construction contract to a sub-​contractor. The sub-​contractor is assigned work under a separate sub-​ contract executed between itself and the main contractor. As such, there is no privity of contract between the employer and sub-​contractor.

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Often, the arbitration agreement contained in the main construction contract refers to the sub-​contract between the sub-​contractor and the main contractor. In such a scenario, the employer may be able to initiate and maintain arbitration proceedings against the main contractor as well as the sub-​contractor and vice versa.230

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Further, it is possible for a sub-​contractor to seek recourse against the employer through “name borrowing”. Name borrowing is an arrangement where a party to an arbitration agreement permits a non-​signatory to use its name in arbitration proceedings.

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This is common in situations where a sub-​contractor wishes to bring a claim against the employer, despite having a contract only with the main contractor. However, name borrowing must be permitted under the sub-​contract. This would allow the sub-​ contractor to obtain contractual privity and pursue its claim in the borrowed name.

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A mere name borrowing arbitration is viewed as the conduit for disputes solely concerning the employer and the subcontractor. The right of the subcontractor to being such an action would be limited to matters identified in the subcontract. A “name borrowing” arbitration must be distinguished from a “rights and benefits arbitration”. The former is instituted and controlled by the sub-​contractor. The latter is an arbitration conducted by the sub-​contractor with the express and specific authority of the main contractor. The main contractor would be bound by the award.231

230. See also Section 10.19 on Multiple Parties to an Arbitration. 231. Durham (Gordon) & Co Ltd v Haden Young Ltd (1990) 52 BLR 61; Stewart (Lorne) Ltd v William Sindall plc and North West Thames Regional Health Authority 35 BLR 109.

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Law, Practice and Procedure of Arbitration in India

The main contract can also be incorporated into the sub-​contract by reference for name borrowing to materialise. The English Court in Trafalgar House Construction (Regions) Ltd v Railtrack plc232 held that although a main contract and a sub-​contract are legally separate, the contracts in question were “plainly connected with each other both commercially and in their terms”.233

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A similar position has been taken by the Supreme Court of India in Chloro Controls234 and Ameet Lalchand.235 The Indian courts have not analysed the concept of name borrowing. However, sub-​contractors and employers may be able to rely on the principles laid down in the cases of Chloro Controls and Ameet Lalchand in order to maintain claims against each other in relevant arbitration proceedings.

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[10.19] MULTIPLE PARTIES

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Arbitration agreements are essentially bilateral agreements which take effect between two parties. When a dispute arises, it is the two parties to the contract who are necessarily involved. However, there are several situations in which arbitration proceedings involve more than two parties.

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International disputes often involve multiple parties. Multi-​party disputes present difficult questions for the international arbitral process regarding non-​signatories, consolidation, intervention, and joinder of parties.236

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Multi-​party arbitration arising out of a non-​signatory issue can be differentiated from arbitrations where the issue pertains to the joinder or consolidation of parties. Issues pertaining to a non-​signatory partaking in an arbitration go to the root of the arbitral tribunal’s jurisdiction.

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The issue regarding joinder of parties to a contract is largely procedural. They are usually resolved with the consent of the parties involved or under the rules which bind the arbitral tribunal.

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Two of the entities in a multi-​party joint venture may commence separate arbitration proceedings against a third party belonging to the venture.237 However, this would

2 32. (1995) 75 BLR 55, at p. 79. 233. Ibid, p. 79. 234. (2013) 1 SCC 641. 235. (2018) 15 SCC 678. 236. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2759. 237. Siemens AG and BKMI Industrienlagen GmBH v Dutco Construction Company Constr. Co., Casso. Civ.7 Jan. 1992 (French Cour de Cassation).

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Chapter 10—​​​Who May Refer Matters to Arbitration?

be an issue of consolidation and not a non-​signatory issue since all parties would be signatories to the arbitration agreement contained in the joint venture agreement. Parallel arbitration proceedings may arise in a construction contract where an employer may have a claim against a contractor as well as the sub-​contractor.

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Where the employer is unable to establish any test to reveal that the sub-​contractor was indeed a party to the agreement between the employer and the contractor in spirit and substance, the contractor will not be able to plead that the sub-​contractor is bound by the arbitration agreement.

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In such a scenario, the employer may seek the procedural remedy of consolidating the two arbitration proceedings between the employer and contractor and the contractor and the sub-​contractor.

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The Supreme Court of India in Chloro Controls succinctly captured the position on subjecting non-​signatories to an arbitration agreement in the multi-​party context as under:

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“A non-​signatory or third party could be subjected to arbitration without their prior consent, but this would only be in exceptional cases. The court will examine these exceptions from the touchstone of direct relationship to the signatory to the arbitration agreement, direct commonality of the subject-​matter and the agreement between the parties being a composite transaction. The transaction should be of a composite nature where performance of the mother agreement may not be feasible without aid, execution and performance of the supplementary or ancillary agreements, for achieving the common object and collectively having bearing on the dispute. Besides all this, the court would have to examine whether the composite reference of such parties would serve the ends of justice. Once this exercise is completed and the court answers the same in the affirmative, the reference of even non-​signatory parties would fall within the exception afore-​discussed.”238 “In a case like the present one, where origin and end of all is with the mother or principal agreement, the fact that a party was non-​signatory to one or other agreement may not be of much significance. The performance of any one of such agreements may be quire irrelevant without the performance and fulfilment of the principal or the mother agreement … In cases involving execution of such multiple agreements, two essential features exist; firstly, all ancillary agreements are relatable to the mother agreement and secondly, performance of one is so intrinsically linked with the other agreements that they are incapable of being beneficially performed without performance of the others or severed from the rest …”239

238. Chloro Controls, at para. 73. 239. Ibid, at para. 74.

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Law, Practice and Procedure of Arbitration in India

Subsequently, the Supreme Court of India in Ameet Lalchand Shah v Rishabh Enterprises240 held that non-​signatories are bound by arbitration clauses where the agreements were interconnected and were for a common commercial purpose.241 The Court explained:

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“24. … in a multi-​party scenario where several agreements are executed between different parties, towards the execution of one composite commercial transaction, all parties to such transaction are likely to be bound by the arbitration agreement.”242

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In all situations involving multiple parties, the courts have highlighted the danger of inconsistent findings from parallel arbitrations on similar facts. Such scenarios can have significant consequences to the ultimate reliefs awarded to the parties.243

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[10.20] CONCLUSION

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The issues of consolidation of arbitration proceedings and joinder of additional parties to an arbitration are separate from the issue of binding non-​signatory parties to a multi-​party transaction. Consolidation and joinder are discussed in this book.244

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Parties to a contract must have the legal capacity to enter into that contract; otherwise, the contract is invalid. The general rule is that any natural or legal person who has the capacity to enter into a valid contract has the capacity to enter into an arbitration agreement.

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It is a basic principle of contract that parties incur liability only when they breach terms of the contract. Similarly, in international arbitration, parties should only bound by those contracts to which they have consented to.

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However, situations may arise where a non-​signatory becomes bound by an arbitration agreement. For example, obligations arising from its actions or involvement in precontractual negotiations.

Ameet Lalchand Shah v Rishabh Enterprises (2018) 15 SCC 678. Ibid, at para. 24. Ibid. See Halifax Overseas Freighters v Rasno Export Technopromonport and Polskie Linie Oceaniczne PPW, The Pine Hill [1958] 2 Lloyd’s Rep 146; Collins v Cromie [1964] 1 WLR 633; Bulk Oil (Zug) AG v Trans-​Asiatic Oil Ltd SA [1973] 1 Lloyd’s Rep 129; Abu Dhabi Gas Liquefaction Co Ltd v Eastern Bechtel Corpn and Chemichal Engineering & Construction Co Ltd [1982] 2 Lloyd’s Rep 425; cf. Hanno (Heinrich) & Co BV v Fairlight Shipping Co Ltd, The Kostas K [1985] 1 Lloyd’s Rep 231. 244. For a detailed discussion on consolidation and joinder, see Chapter 32. 240. 241. 242. 243.

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Chapter 10—​​​Who May Refer Matters to Arbitration?

The common rules that bind a non-​signatory to an arbitration agreement are the mutual intention of the signatories and non-​signatories to be bound by the same arbitration agreement.

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The courts have been careful when extending the arbitration agreement to non-​ signatories. It has been based on the factual matrix and specific circumstances which prove the intention of the non-​signatories to be bound by the arbitration agreement. Such intention arises from the collective performance of the transaction by the signatory and non-​signatory.

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India has reinforced a pragmatic approach towards arbitration by binding non-​ signatories to arbitration. Internationally, uptake of the Doctrine to bind non-​signatories is rare. Many jurisdictions continue to prefer “traditional” devices such as piercing the corporate veil, agency, and estoppel to decide on non-​signatory obligations.

Chapter 11 SCOPE OF ARBITRATION AGREEMENT [11.1] INTRODUCTION......................................................................................................................... 320 [11.2] SCOPE AND VALIDITY.............................................................................................................. 320

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[11.3] NATURE AND ARBITRABILITY OF A DISPUTE................................................................. 323 [11.4] FORM OF WORDS AND PHRASES EMPLOYED.................................................................. 333

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[11.5] CONCLUSION............................................................................................................................... 339

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[11.1] INTRODUCTION

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The Arbitration Act1 defines an “arbitration agreement” as an agreement by the parties to submit to arbitration certain types of existing or future disputes between them.

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An agreement which does not disclose the intention of the parties to submit disputes to arbitration is not an arbitration agreement.2 No arbitration is possible without its very basis, the arbitration agreement.3

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An arbitration agreement forms the basis of the arbitral process. Party autonomy has been held to be the brooding and guiding spirit of arbitration.4

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[11.2] SCOPE AND VALIDITY

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The scope, validity, and interpretation of domestic and international arbitration agreements substantially depend on the legal framework of international conventions and national laws.5

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An arbitration agreement confers a mandate upon an arbitral tribunal to decide any and all of the disputes that come within the ambit of the arbitration agreement.6 It is important for arbitrator(s) to limit themselves to the mandate and not travel beyond it.7

1. Arbitration Act, s. 2(b) read with s. 7. 2. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 56. 3. A. van den Berg, The New York Arbitration Convention of 1958 (1981), pp. 144–​145. 4. PASL Wind Solutions Private Limited v GE Power Conversion India Private Limited (2021) SCC OnLine SC 331, at para. 60. 5. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 255. 6. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 92, at para. 2.63. 7. Ibid.

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Chapter 11—​​​Scope of Arbitration Agreement

Whether a particular dispute falls within the scope of an arbitration agreement depends primarily upon the wording of the arbitration agreement.8 Each case must be considered in light of the particular clause pursuant to which a claim is presented.9 Subject to national legislations, globally, there are three general categories of claims that potentially fall within the scope of an arbitration agreement:10 (1) Contractual claims (including claims incidental to the contract, such as quantum meruit);11



(2) Claims in tort;12 and/​or



(3) Statutory claims.13

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Whether a particular dispute falls within the scope of an arbitration agreement is a question of construction of the form of words of the arbitration clause, giving the words their natural and proper meaning in all the circumstances of the case.

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The Supreme Court of India in K.K. Modi v K.N. Modi14 discussed the scope and essential attributes of a valid arbitration agreement as follows:

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“(1) The arbitration agreement must contemplate that the decision of the tribunal will be binding on the parties to the agreement,

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(2) that the jurisdiction of the tribunal to decide the rights of parties must derive either from the consent of the parties or from an order of the court or from a statute, the terms of which make it clear that the process is to be an arbitration,

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(3) the agreement must contemplate that substantive rights of parties will be determined by the agreed tribunal,

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(4) that the tribunal will determine the rights of the parties in an impartial and judicial manner with the tribunal owing an equal obligation of fairness towards both sides,

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(5) that the agreement of the parties to refer their disputes to the decision of the tribunal must be intended to be enforceable in law and lastly,

8. Heyman v Darwins Ltd [1942] AC 356, at p. 392. 9. Sir Michael J. Mustill and Stewart C. Boyd, Commercial Arbitration (2nd edn, Butterworths 1989), p. 108. 10. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), pp. 92, 93, at para. 2.64. 11. Ibid, p. 92, at para. 2.64. 12. Ibid, p. 93, at para. 2.64. 13. Ibid. 14. (1998) 3 SCC 573.

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Law, Practice and Procedure of Arbitration in India

(6) the agreement must contemplate that the tribunal will make a decision upon a dispute which is already formulated at the time when a reference is made to the tribunal.15 18. The other factors which are relevant include, whether the agreement contemplates that the tribunal will receive evidence from both sides and hear their contentions or at least give the parties an opportunity to put them forward; whether the wording of the agreement is consistent or inconsistent with the view that the process was intended to be an arbitration, and whether the agreement requires the tribunal to decide the dispute according to law.”16

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An arbitration agreement does not cover agreements which provide for an “expert determination”, for example by an engineer, in the case of a dispute.17 Such clauses are usually prevalent in standard form contracts used by government entities.18

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The scope of an arbitration agreement remains unaffected even where the parent contract in which the arbitration clause is present, is rendered invalid. This is owing to the concept of separability of an arbitration agreement.19

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This means that an arbitration clause in a contract is separate from the main contract which it forms part of and survives the termination of that contract.20 The doctrine of separability is endorsed by institutional and international rules of arbitration.21

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Separability ensures that if one party claims that there has been a total breach of the contract by the other, the contract is not destroyed for all purposes.22 Instead:

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“It survives for the purpose of measuring the claims arising out of the breach, and the arbitration clause survives for determining the mode of their settlement. The purposes of the contract have failed, but the arbitration clause is not one of the purposes of the contract.”23

15. 16. 17. 18. 19. 20. 21. 22. 23.

Ibid, at para. 17. Ibid, at para. 18. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 60. Ibid. Blackaby and Partasides with Redfern and Hunter, Redfern and Hunter on International Arbitration (6th edn, 2015), p. 104, at para. 2.101. Ibid, p. 104, at para. 2.101. Ibid, p. 104, at para. 2.104. Ibid, p. 104, at para. 2.102. Heyman v Darwins Ltd [1942] AC 356, at p. 394.

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Chapter 11—​​​Scope of Arbitration Agreement

It is essential to determine the scope of an arbitration agreement to avoid the risk of refusal of recognition and enforcement of an award under Article V(1)(c) of the New York Convention.24 The Model Law contains a similar provision wherein:

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“An award may be set aside by the competent court, as well as refused recognition and enforcement, if it ‘deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration or contains decisions on matters beyond the scope of the submission to arbitration”.25

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The scope of an arbitration agreement may extend to third parties and group companies in certain scenarios. This has been dealt with in detail in Chapter 13.

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[11.3] NATURE AND ARBITRABILITY OF A DISPUTE

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Arbitration is a consensual process. It is vital that any dispute referred to arbitration falls within the scope of the arbitration agreement. It has been suggested that:

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“[T]‌he written form requirement does not mandatorily mean that the contractual intention must be expressed in one document signed by both parties. It is therefore undisputedly allowed, and relevant here, that the intention to refer to arbitration may also be expressed by means of a reference to a separate document in which the arbitration clause is contained”.26

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If the arbitral tribunal decides on a dispute outside the jurisdiction conferred upon it by the arbitration agreement, it will be acting without proper mandate and the award may be set aside.

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Arbitrability refers to the ability of a dispute to be referred to the arbitration, that is, whether the dispute is arbitrable or not.27 Arbitrability involves determining the types of dispute that may be resolved by arbitration and the others which belong exclusively within the domain of the courts.28

24. Article V(1)(c), New York Convention, 1956, “The competent authority may refuse recognition and enforcement of an award: ‘If the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or if it contains decisions on matters beyond the scope of the submission to arbitration’.” 25. UNCITRAL Model law, art. 34(2)(a)(iii). 26. Final Award, CAM Case No. 7211, 24 September 2013 in A. J. van den Berg (ed.), Yearbook Commercial Arbitration, Vol. XXXIX (2014), pp. 275–​276. 27. William W. Park, “Arbitrability and Tax” in L.A. Mistelis and S. Brekoulakis (eds), Arbitrability: International and Comparative Perspective 179 (2008). 28. Assimakis P. Komninos, “Arbitration and EU Competition Law” (2009) 7 Univ. Coll. London, Dep’t of Law, pp. 1–​49. See also Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 110, at para. 2.124.

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Law, Practice and Procedure of Arbitration in India

The concept of “arbitrability” of a dispute is dependent upon the national laws of the enforcing or supervising jurisdiction as well as the scope of the agreement between parties. Russell explains that a dispute will not be arbitrable if, for example, it is inherently unsuitable for arbitration or concerns matters over which the courts have exclusive jurisdiction for public policy reasons.29

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Justice Indu Malhotra states:

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“Traditionally, disputes relating to rights in rem are required to be adjudicated by courts and public tribunals, being unsuited for private arbitration.30 A right in rem is a right exercisable against the world at large, as against a right in personam, which is an interest directed against specific individuals. Actions in rem refer to actions which create a legal status such as citizenship, divorce, testamentary and probate issues, which are exercisable against the world at large. … The broad categories of disputes which are resolved by the legislature to be decided by courts of law as a matter of public policy pertain to the class actions which operate in rem. Apart from this category of actions, the legislature has by special enactments conferred exclusive jurisdiction on specialized tribunals or courts. These disputes are excluded from the purview of arbitration, as public policy requires that parties cannot be permitted to contract out of the legislative mandate which confers exclusive jurisdiction on certain courts, tribunals or quasi-​judicial authorities under special enactments.”31

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India has witnessed some reservations of disputes under the control of the State courts.32 The Supreme Court of India in Booz Allen and Hamilton Inc. v SBI Home Finance Ltd.33 pointed out the three facets of arbitrability. These are:

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“1. Whether the disputes, having regard to their nature, could be resolved by a private forum chosen by the parties? 2. Whether the disputes are covered by the arbitration agreement?

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3. Whether parties have referred the disputes to arbitration?”34

29. 30. 31. 32. 33. 34.

Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 2-​080. Booz Allen & Hamilton Inc. v SBI Home Finance Ltd. (2011) 5 SCC 532. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 332. M. Sornarajah, “The UNICITRAL Model Law: A Third World Viewpoint” (1989) 6 J. Int’l Arb. 7, at p. 10. Booz Allen & Hamilton Inc. v SBI Home Finance Ltd. (2011) 5 SCC 532. Ibid, at para. 21.

325

Chapter 11—​​​Scope of Arbitration Agreement

In contrast, common law jurisdictions like Canada, Australia, the United States of America, and New Zealand have adopted a liberalised approach towards arbitrability by limiting the scope of non-​arbitrable matters.35 The United States of America which is known to have the broadest interpretation of “arbitrability” depends on its courts to constantly define what matters are “capable of settlement by arbitration”.

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Similarly, in the absence of an exhaustive list of matters recognised as “capable of settlement by arbitration”, Indian courts have defined the matters “capable of settlement by arbitration”.

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Subject to national legislations, globally, the following types of dispute have been considered capable of falling within the scope of a suitably drafted arbitration agreement:

(1) Whether there has been a repudiation of the contract by one party and, if so, whether that repudiation has been accepted by the other party. However, repudiation by one party which is accepted by the other party does not put the contract out of existence but rather it survives for the purpose of measuring the claims arising out of the breach.



(2) Whether the contract has been frustrated. It is immaterial whether the contract is partly executed or wholly executory. If the contract has been frustrated, the arbitrator has power to grant relief in respect of quasi-​contractual claims based on quantum meruit.



(3) Whether the making of the contract was induced by misrepresentation. An arbitrator can rescind the contract or award damages in lieu of rescission.



(4) Whether the contract is voidable on the ground of non-​disclosure. Lord Denning MR in Mackender v Feldia AG36 stated, “where a contract is avoided on the ground of nondisclosure, it is not avoided from the beginning but only from the moment of avoidance”.

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(5) Whether the contract is binding on the parties despite the failure of a condition precedent to the contract.



(6) Whether one party is able to escape liability under the contract by relying on a termination provision in the contract.

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35. V. Reddy, V. Nagaraj, “Arbitrability: The Indian Perspective” (2002) 19 J. Int’l Arb. 2, at p.123. 36. [1966] 3 All ER 847.

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Law, Practice and Procedure of Arbitration in India

(7) Whether the parties entered into the contract under a mistake giving rise to a claim for rectification of the contract. But Lords MacMillan and Wright in Heyman v Darwins Ltd37 suggested the view that a dispute as to mistake is not within the scope of an arbitration agreement.



(8) Whether the contract is unenforceable for illegality.



(9) Whether the contract is void ab initio, including for reasons of bribery or illegality.

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(10) Whether the contract is voidable on the ground of fraud.



(11) Whether the contract has been varied or replaced by a new contract.



(12) A claim as to the existence of a trade custom affecting the rights and obligations of the parties to the contract.



(13) A claim that the contract contained an implied term or that there was a collateral contract.



(14) A claim for damages for breach of the arbitration agreement itself.



(15) A claim for a general average contribution.



(16) A claim in tort where the tortious claim has a sufficiently close connection with the contractual claim. The court in Woolf v Collis Removal Service38 held that a claim in negligence had a sufficiently close connection with the alternative claim under the contract as the contractual claim was founded on the obligation of diligence in the contract and the tortious claim was founded on the non-​contractual obligation.



(17) A claim for conversion in Empresa Exportadora de Azucar v Industria Azucarera Nacional SA, The Playa Larga and The Marble Islands39 had a sufficiently close connection with the claims under the contract.

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(18) A claim for damages for negligent misstatement in Ashville Investments Ltd v Elmer Contractors Ltd40 was within the scope of the arbitration agreement. A claim of wrongful arrest of a ship in Astro Vencedor Compania Naviera SA of Panama v Mabanaft GmbH, The Damianos41 was within the scope of the arbitration agreement.

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37. 38. 39. 40. 41.

[1942] 1 All ER 337. [1947] 2 All ER 260. [1983] 2 Lloyd’s Rep 171. [1988] 2 Lloyd’s Rep 73. [1971] 2 QB 588.

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Chapter 11—​​​Scope of Arbitration Agreement

(19) An undisputable claim, to the extent that it has not been unequivocally admitted.



(20) In the construction context, tortious disputes, sufficiently closely connected with the contract, can be dealt with through arbitration. A respondent can be concurrently liable in contract and tort, which is relevant in construction because there are often issues with limitation in construction cases due to the difficulty in discovery that a breach of contract has occurred. A claim in tort can therefore be more advantageous compared to a contractual claim.

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The Supreme Court of India in Vidya Drolia and Ors. v Durga Trading Corporation made a distinction between the non-​arbitrability of a claim and the non-​arbitrability of a subject matter.

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It held that non-​arbitrability of a claim the former arises on account of scope of the arbitration agreement when the claim is not capable of being resolved through arbitration. It further held that the non-​arbitrability of a subject matter relates to non-​ arbitrability in law.42

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Justice Indu Malhotra lists the broad categories of disputes which are considered to be beyond the scope of an arbitration agreement under Indian laws:43 (1) Criminal offences of a public nature, and disputes arising out of illegal agreements;44



(2) Bribery and/​or corruption;



(3) Matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody, and guardianship which pertain to the status of a person, are adjudicated by Family Courts;



(4) Testamentary matters (disputes relating to the validity of a Will,45 grant of probate,46 letters of administration, and succession certificate) also pertain to the status of a person, and are adjudicated by civil courts;

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(5) Eviction and tenancy matters are governed by special statutes, which confer exclusive jurisdiction on specialised tribunals;47

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42. 43. 44. 45. 46. 47.

Civil Appeal No. 2402 of 2019, decided on 14 December 2020, para. 17. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 332. T.M.L Financial Services ltd. v Vinod Kumar 2010 (2) Arb LR 560 (Kerala). Vijay Kumar Sharma v Raghunandan Sharma (2010) 2 SCC 486, at para. 20. Refer to Chiranjilal Shrilal Goenka v Jasjit Singh & Ors. (1993) 2 SCC 507. Ranjit Kumar Bose & Anr. v Anannya Chowdhury (2014) 11 SC 446.

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Law, Practice and Procedure of Arbitration in India

(6) Competition laws are adjudicated by a specialised tribunal, that is, the Competition Commission of India;



(7) Disputes relating to trusts, trustees, and beneficiaries are governed by the Indian Trusts Act, 1882 and adjudicated by civil courts under the special act;



(8) Consumer disputes in most jurisdiction are considered to be non-​arbitrable. In India, these disputes are adjudicated by a hierarchy of consumer fora set up under the Consumer Protection Act, 1986;



(9) Insolvency and Bankruptcy issues are decided by the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code, 2016;



(10) Intellectual Property Rights, Patents, and Copyright are rights in rem which are decided by civil courts;48



(11) Oppression and Mismanagement and Winding-​up of a company are decided by the NCLT under the Companies Act, 2013.

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The Supreme Court of India in Vidya Drolia and Ors. v Durga Trading Corporation49 laid down a “four-​fold test” to be considered while ruling on the arbitrability of a dispute:

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“(1) when cause of action and subject matter of the dispute relates to actions in rem, that do not pertain to subordinate rights in personam that arise from rights in rem.

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(2) when cause of action and subject matter of the dispute affects third party rights; have erga omnes effect; require centralized adjudication, and mutual adjudication would not be appropriate and enforceable;

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(3) when cause of action and subject matter of the dispute relates to inalienable sovereign and public interest functions of the State and hence mutual adjudication would be unenforceable; and

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(4) when the subject-​matter of the dispute is expressly or by necessary implication non-​arbitrable as per mandatory statute(s).”

Disputes as to the Existence and Validity of the Contract An arbitration agreement must contain a clear indication of the parties’ mutual intention to refer disputes to arbitration.50

48. Vikas Sales Corporation v Commissioner of Commercial Taxes (1996) 4 SCC 433, at para. 22. 49. Civil Appeal No. 2402 of 2019, decided on 14 December 2020. 50. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 57.

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Chapter 11—​​​Scope of Arbitration Agreement

Arbitral tribunals can decide whether a contract is void, such as for being ultra vires the powers of the company, or for initial illegality. Briefly, in the past, the arbitral tribunal could not decide whether a contract was valid, and whether a dispute could fell within the scope of an arbitration agreement.

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However, the evolution of the doctrine of separability has enabled arbitrators to decide whether or not there was ever a binding contract if the scope of the arbitration agreement is wide enough.

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The Supreme Court of India in Jagdish Chander v Ramesh Chander51 clarified that there is no prescribed form for an arbitration agreement. However, if the agreement is ambiguous and open-​ended for the parties to decide on referring disputes to arbitration, it would not qualify as an arbitration agreement under the Arbitration Act.

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The Supreme Court of India in Bihar State Mineral Development Corporation v Encon Builders (I) (P) Ltd.52 enlisted the following essential elements for considering the validity of an arbitration agreement:53 (1) There must be a present or future difference in connection with some contemplated affair;54



(2) There must be the intention of the parties to settle such difference by a private tribunal;55



(3) The parties must agree in writing to be bound by the decision of such a tribunal;56 and



(4) The parties must be ad idem.57

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Steyn J in Harbour Assurance Co (UK) Ltd v Kansa General International Insurance Co Ltd58 explained that:

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“Once it became accepted that the arbitration clause is a separate agreement, ancillary to the contract, the logical impediment to referring an issue of the invalidity of the contract to arbitration disappears. Provided that the arbitration clause itself is not directly impeached (e.g. by a non est factum plea), the arbitration agreement

51. 52. 53. 54. 55. 56. 57. 58.

(2007) 5 SCC 719. (2003) 7 SCC 418. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 57. Ibid. Ibid. Ibid. Ibid. [1993] 1 Lloyd’s Rep 455.

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Law, Practice and Procedure of Arbitration in India

is as a matter of principled legal theory capable of surviving the invalidity of the contract.” Lord Hoffman in Fiona Trust & Holding v Privalov59 explained the reasoning that parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered or purported to enter to be decided by the same tribunal.

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The arbitration clause should be construed in accordance with this presumption, unless the language makes it clear that certain questions were intended to be excluded from the arbitral tribunal’s jurisdiction. As Longmore LJ in Fiona Trust & Holding v Privalov stated:60

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“If any business man did want to exclude disputes about the validity of a contract, it would be comparatively easy to say so.”

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Many model arbitration clauses make it clear that the agreement includes the reference of any question regarding the contract’s existence, validity, or termination.

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It is only in cases where the arbitration agreement itself is directly impeached, such as where one party alleges that it never signed the contract containing the arbitration clause, that the arbitral tribunal would be prevented by the court from deciding the issue.

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However, the generally accepted principle of interpretation of arbitration agreements is to uphold its validity and legal effect.61 Furthermore, as it was held in X v AY and BY, “once the existence of an arbitration agreement has been found, its scope must be interpreted liberally”.62

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The Supreme Court of India in Arasmeta Captive Power Company Private Limited v Lafarge India Private Limited also supported this pro-​arbitration trend in its decision. It did so by restricting the extent to “which courts could interfere and scrutinize the scope of the arbitration agreement when appointing an arbitrator under Section 11 of the Arbitration Act”.63

59. [2007] 4 All ER 951, [2007] UKHL 40. 60. [2007] 1 All ER (Comm) 891, at para. 17. 61. Final award in ICC case no. 14581 in A. J. van den Berg (ed.), Yearbook Commercial Arbitration, volume XXXVII (2012), pp. 81–​82. 62. First Civil Law Court, Judgment of 27 February 2014, available at http://​swissarbitrationdecisions.com/​ arbitration-​clause-​survives-​termination-​its-​scope-​be-​interpreted-​liberally. 63. Herbert Smith Freehills LLP, “Supreme Court confirms that scope of an arbitration agreement should be determined by arbitral tribunals” (2014) 5 February, available at http://​lexology.com/​library/​detail. aspx?g=d737f655-​f861-​42a0-​b1bd-​6af726d85862.

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Chapter 11—​​​Scope of Arbitration Agreement

Circumstances where the allegation will directly impeach the arbitration agreement are where the contract containing an arbitration agreement was: (1) void ab initio for illegality;



(2) never had any consideration;



(3) was uncertain;



(4) was to be treated as having never existed under agreement by the parties; or



(5) was replaced by a subsequent contract which was an “accord and satisfaction” substituting wholly new rights and obligations for those under the original contract.

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There is no unified approach as to whether allegations of criminal activity may be covered by an arbitration clause. For example, the Commercial Court in Interprods Limited v De La Rue International Limited,64 held that:

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“it would seriously restrict the ambit of arbitration clauses, … the allegation of criminal conduct to be sufficient to deprive the arbitral tribunal of jurisdiction to determine contractual rights and obligations in light of that criminal conduct.”65

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However, if the arbitration agreement was, for example, contained in a separate document that was not impeached by any of the allegations listed above, the doctrine of separability would allow the arbitral tribunal to decide a dispute on the validity of the main contract.

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Finally, when considering the scope of the arbitration agreement, and in addition to the form of words used, the parties, by their conduct, may be taken as impliedly agreeing to confer on the arbitrator’s jurisdiction beyond that which would have existed pursuant to the arbitration clause.66

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Anti-​trust Disputes

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Anti-​trust or competition law disputes have significantly contributed to the discussion on arbitrability. There are an increasing number of anti-​trust disputes where the possibility of arbitration is being challenged.

64. Interprods Limited v De La Rue International Limited [2014] EWHC 68 (Comm), at para. 7. 65. B Fletcher, “Is your Arbitration clause wide enough to catch dispute based upon criminal conduct? (Interprods v De La Rue)”, (2014) 5 February, available at http://​blogs.lexisnexis.co.uk/​dr/​arbitration-​clause-​ wide-​enough-​to-​catch-​dispute-​based-​upon-​criminal-​conduct-​interprods-​v-​de-​la-​rue/​. 66. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 95, at para. 2.69.

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While certain countries have responded in the favour of an arbitral tribunal’s jurisdiction over such disputes, others have been conservative not allowing arbitration of anti-​trust disputes. Since the dispute involving competition laws pertain to rights in rem, they are not amenable to arbitration in India.67 These disputes exclusively fall under the jurisdiction of the Competition Commission of India (the “CCI”).

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The High Court of Delhi in Union of India v Competition Commission of India68 found that the agreement between the parties included an arbitration clause. Simultaneously, claims relating to abuse of dominant position arose and the matter was taken up by the CCI.

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One of the parties approached the Court asking for a stay on the CCI proceedings in lieu of the on-​going arbitration. The Court categorically refused the stay of CCI proceedings holding that the scope and focus of investigations would be very different from that of the tribunal.69

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Tenancy Disputes

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In contrast, EU Member States have held that the EU competition law and national law do not prevent competition laws claims from being submitted to an international arbitration tribunal.70

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The parties in tenancy disputes have been more frequently able to challenge the arbitrability of the tenancy dispute.

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The courts in India have declared that eviction and tenancy matters as governed by the special statute, that is, the Transfer of Property Act, 1882 and therefore are non-​arbitrable.71

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The Supreme Court of India in the case of Vidya Drolia and others v Durga Trading Corporation72 has overruled the judgment in Himangni Enterprises v Kamaljeet Singh Ahluwalia73 and held that the tenancy disputes are now arbitrable.

Booz Allen & Hamilton Inc. v SBI Home Finance Ltd. (2011) 5 SCC 532, at para. 23. 2012 SCC OnLine Del 1114. Ibid, at para. 16. In France, arbitrability of competition law disputes was allowed in Mors/​Labinal case in 1993; Identically, the Swiss Federal Tribunal allowed arbitrability of competition law disputes in 1992; see Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), pp. 113–​114, at para. 2.134. 71. For example: Himangni Enterprises v Kamaljeet Singh Ahluwalia (2017) 10 SCC 706, at para. 23. 72. 2020 SCC OnLine SC 1018, para. 49 [Referred to the Constitution Bench]. 73. (2017) 10 SCC 706.

67. 68. 69. 70.

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The reason being, the Transfer of Property Act, 1882 does not foreclose arbitration, save and except for those tenancy disputes which are governed by rent control legislation, for which specific forums have been established. The Supreme Court of India held:

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“Landlord-​tenant disputes governed by the Transfer of Property Act are arbitrable as they are not actions in rem but pertain to subordinate rights in personam that arise from rights in rem. Such actions normally would not affect third-​party rights or have erga omnes affect or require centralized adjudication. An award passed deciding landlord-​tenant disputes can be executed and enforced like a decree of the civil court. Landlord-​tenant disputes do not relate to inalienable and sovereign functions of the State. The provisions of the Transfer of Property Act do not expressly or by necessary implication bar arbitration. Transfer of Property Act, like all other Acts, has a public purpose, that is, to regulate landlord-​tenant relationships and the arbitrator would be bound by the provisions, including provisions which ensure and protect the tenants.”74

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This decision has been further referred to the constitution bench of five-​judge owing to the difference of opinion with another co-​ordinate bench of the Supreme Court of India.75

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[11.4] FORM OF WORDS AND PHRASES EMPLOYED

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Whether a particular dispute falls within the scope of an arbitration agreement depends primarily upon the wording of the arbitration agreement.76 Each case must be considered in light of the particular clause pursuant to which a claim is presented.77

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Arbitration agreements “differ in language; and the interpretation of the parties’ intentions as to the scope of their agreement is not always an easy exercise”.78

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A decision regarding the meaning of a particular form of words may be of persuasive authority in a later case involving the construction of the same form of words. The

74. Vidya Drolia and others v Durga Trading Corporation 2019 SCC OnLine SC 358, at para. 48. 75. SMS Tea Estates Pvt. Ltd. v M/​s. Chandmari Tea Co. Pvt. Ltd. 2021 SCC OnLine SC 13, at para. 87. 76. Heyman v Darwins Ltd [1942] AC 356, at p. 392. 77. Sir Michael J. Mustill and Stewart C. Boyd, Commercial Arbitration (2nd edn, Butterworths 1989), p. 108. 78. H. E. Kjos, “Applicable Law in Investor-​ State Arbitration: The Interplay Between National and International Law” (2013), p. 112, available at http://​ oxfordscholarship.com/​ view/​ 10.1093/​ acprof:oso/​ 9780199656950.001.0001/​acprof-​9780199656950-​chapter-​4; see C. Schreuer, “Consent to Arbitration” in P. Muchlinski et al (eds), Oxford Handbook of International Investment Law (2008), pp. 830, 866; A. Reinisch, “How Narrow are Narrow Dispute Settlement Clauses in Investment Treaties?” (2011) J. Int’l Disp. Settlement 2(1), p. 115.

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extent to which an earlier decision may be persuasive will depend upon the similarity between the contracts and the surrounding circumstances in the two cases. General words like “claim”, “difference”, and “dispute” confer the widest possible jurisdiction. They must, however, be construed by reference to the subject matter of the contract and the arbitration clause in which they are included.

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These general words are often used in the model clauses of many leading institutions aiming “at capturing most potential disputes arising from an agreement (for example: ICC, LCIA, SCC and WIPO)”.79

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The courts have expended considerable judicial energy examining the semantic differences in the wording of arbitration agreements and the species of disputes which they could remit to arbitration. The various findings of courts as to the meanings of such words are not invalid but doubt has been case on their utility.

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While construing an arbitration agreement, the term “arbitration” is not required to be specifically mentioned therein.80 However, the arbitration agreement must contain a broad consensus between the parties that the disputes and differences amongst them should be resolved through arbitration.81

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While there is no prescribed form for an arbitration agreement, it should be drafted so as to expressly state that resolution of disputes through arbitration is a right and an obligation of parties.82 If the agreement is ambiguous it would not qualify as an arbitration agreement under the Arbitration Act.83

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Most national courts regard arbitration as an appropriate way of resolving international commercial disputes, and accordingly seek to give effect to arbitration agreements wherever possible.84

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In situations where an issue does arise regarding the scope of an arbitrator’s jurisdiction, Redfern and Hunter explain:

79. A. Garcia, “Scope of arbitration clauses and carve-​out clauses: erring on the side of caution or on the side of daring?”, (2012) Kluwer Arbitration Blog 25 May, available at http://​kluwerarbitrationblog.com/​2012/​05/​25/​ scope-​of-​arbitration-​clauses-​and-​carve-​out-​clauses-​erring-​on-​the-​side-​of-​caution-​or-​on-​the-​side-​of-​daring/​. 80. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 57. 81. Ibid. 82. Wellington Associates Ltd. v Mr. Kirit Mehta (2000) 4 SCC 272; Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 93, at para. 2.65. 83. Jagdish Chander v Ramesh Chander (2007) 5 SCC 719. 84. Warnes SA v Harvic International Ltd. [19940 ADRLJ, decided on 3 December 1993, US Federal District Court; Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 93, at para. 2.66.

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“… the issue may fall to be determined by the arbitrator (possibly at the outset of the arbitration) or by a competent court (for example where enforcement of the award is sought).”85 When faced with jurisdictional issues, the courts generally confine themselves to considering whether the dispute in question falls within the company of the words used in the arbitration agreement.86

Sir Michael J. Mustill and Stewart C. Boyd further state:

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The courts have not embarked upon a general exposition of the scope of any particular form of words, since there is often more than one formula used in the same agreement.87

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“Each arbitration clause must be construed in the context of the contract as a whole, and the meaning of a particular formula may be broader or narrower depending on the nature of the transaction, the circumstances in which the arbitration clause came into existence, and the other provisions of the contract. A decision on a particular form of words in one contract is no sure guide to its meaning in another.”88

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The Supreme Court of India in Pure Helium India Pvt. Ltd. v Oil Gas Commission89 held that there is no surer way to misread a document than to read it literally.

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The court will uphold the arbitration agreement even in the absence of mandatory language requiring disputes to be submitted to arbitration if the agreement’s language reasonably and clearly shows that the parties intended to submit all their disputes to arbitration.90

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The House of Lords in Fiona Trust & Holding v Privalov91 explained:

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“notwithstanding that it may be a great disappointment to the judges who explained so carefully the effects of the various linguistic nuances, the time had come to ‘draw a line under the authorities to date and make a fresh start’ and that ‘parties, as rational

85. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 94, at para. 2.67. 86. Mustill and Boyd, Commercial Arbitration (2nd edn, Butterworths 1989), p. 117, at para. 11. 87. Wade-​Gery v Morrison (1877) 37 LT 270; Cope v Cope (1885) 52 LT 607; Freshwater v Western Australian Assurance Co Ltd [1933] 1 KB 515; Sir Michael J. Mustill and Stewart C. Boyd, Commercial Arbitration (2nd edn, Butterworths 1989), p. 117, at para. 11. 88. Mustill and Boyd, Commercial Arbitration (2nd edn, Butterworths 1989), p. 118, at para. 11. 89. (2003) 8 SCC 593. In arriving at this conclusion, the Supreme Court of India placed reliance on Massachusetts B and Insurance Co. v US (1956) 352 US 128. 90. Lobb Partnership Ltd. v Aintree Racecourse Company Ltd. [2000] BLR 65. 91. [2007] 4 All ER 951.

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businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered or purported to enter to be decided by the same tribunal.’ The clause should be construed in accordance with this presumption unless the language makes it clear that certain questions were intended to be excluded from the arbitrator’s jurisdiction.” Faux J described the effect of Fiona Trust & Holdings v Privalov92 as follows:93

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“The fine distinctions drawn between different wordings in clauses such as ‘arising out of ’ or ‘arising under’ or ‘in connection with’ in numerous earlier decisions of the English Courts have been swept away.”

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Following this approach of the courts, words such as “arising out of ” or “arising under” have been said to cover all disputes except for questions as to the validity or existence of the contract itself.

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Often, arbitration agreements presumptively extend to questions regarding the existence, validity, and termination of the underlying contract. This will further the shift from literal methods of interpretation towards a more commercial approach.94 This means that the tendency should therefore generally speaking be against literalism.95

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Terminological differences are less important as a result of Fiona Trust & Holding v Privalov.96 However, semantic distinctions may become relevant where parties have provided for some disputes to be litigated and others arbitrated.

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The Meaning of the Words of the Arbitration Agreement

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The scope of an arbitration clause should be defined broadly and in inclusionary terms rather than leaving certain matters to the jurisdiction of the national courts.97

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Parties must draft broadly worded arbitration clauses unless there is a compelling reason to exclude certain issues from the purview of arbitration.

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Expressions such as “arising out of ” or “in respect of ” or “in connection with” or “in relation to” or “in consequence of ” or “concerning” or “relating to” the contract is

92. 93. 94. 95. 96. 97.

Ibid. R. Aikens, R. Lord, and M. Bools, Bills of Lading (2006), at Chapter 14, para. 14.47. Sirius International Insurance Co (Publ) v FAI General Insurance Ltd [2004] UKHL 54. Ibid. [2007] 4 All ER 951. Final Report of the Working Group on the ICC Arbitration Clause, ICC Doc. No. 420/​218, 21 October 1991.

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Chapter 11—​​​Scope of Arbitration Agreement

of the widest amplitude and content and include even questions as to the existence, validity, and effect (scope) of the arbitration agreement.98 This is evident from the fact that model arbitration clauses of numerous arbitral institutions use the words “arising out of ” or “in connection with” and provide that these words include disputes as to the validity of the contract.99

This form of words has been held to cover disputes as to:

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The words “arising out of the contract” have always been given a wide meaning. Reference of disputes “arising out of the contract” have been held to be widely drafted and said to cover every dispute except a dispute as to whether there was ever a binding contract.100

(1) mistake,



(2) frustration,101



(3) termination,



(4) construction,102



(5) nondisclosure,103



(6) the variation or replacement of the contract,



(7) the existence of a trade custom affecting the rights and obligations of the parties to the contract,



(8) damages for breach of the arbitration agreement itself,



(9) general average contribution,



(10) meeting conditions precedent,



(11) termination and conversion.

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The terms “arising out of ” was held to be wider in its scope than one which provides for the reference of disputes “arising under” the contract. Although in Union of India v EB Aaby’s Rederi A/​S104 the Court expressed difficulty in differentiating between the

98. Garware Marine Industries Limited v Integrated Finance Co. Ltd 2013 SCC OnLine Bom 1074, at para. 22. 99. SIAC Model Clause; LCIA recommended clauses; Standard ICC Arbitration Clause. 100. HE Daniel Ltd v Carmel Exporters and Importers Ltd [1953] 2 Lloyd’s Rep 103; Government of Gibraltar v Kenney [1956] 2 QB 410, at p. 421. 101. Kruse v Questier & Co [1953] 1 Llyod’s Rep 310. 102. Thorburn v Barnes (1867) LR 2 CP 384. 103. Stebbing v Liverpool and London and Globe Insurance Co Ltd. [1917] 2 KB 433. 104. [1975] AC 797.

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Law, Practice and Procedure of Arbitration in India

two forms of wording. This position has now been settled by Fiona Trust & Holding v Privalov.105 Russell states that the words “arising under”: “were at one time given a restrictive interpretation, but are now well established as having a broad meaning.”106

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Disputes as to repudiation, frustration, non-​disclosure, illegality rendering the contract unenforceable, failure to meeting a condition precedent, and general average contribution were all held to be disputes “arising under” the contract.107

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An arbitration agreement which provides for the reference of disputes “in connection with” the contract has been held to cover disputes as to misrepresentation, negligent misstatement, and mistake giving rise to a claim for rectification.

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The words “in respect of ” have been held to be capable of covering disputes as to repudiation, frustration, rectification, and claims that the contract contained an implied term or that there was a collateral contract.

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The words “with regard to” have been considered capable of covering disputes as to repudiation and frustration.

(1) Expressions such as –​“arising out of ”, or “in respect of ”, or “in connection with”, or “in relation to” the contract are of the widest amplitude and would cover all present and future disputes by the arbitration clause.108



(2) Expressions such as –​“pertaining to”, “in relation to”, and “arising out of ”, are used in the expansive sense, and must be constructed accordingly.109



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Similarly, in the Indian context:

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(3) The words “in relation thereto” used in arbitration clause would include all transactions which took place under the parent contract, and the arbitration clause would be applicable to all the disputes arising out of transactions under the parent contract.110

1 05. 106. 107. 108.

[2007] 4 All ER 951. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at paras 2–​102. Ibid. Renusagar Power Co. Ltd. v General Electric Company and Anr. (1984) 4 SCC 679; Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 289. 109. Doypack Systems Pvt. Ltd. v Union of India and Ors. (1988) 2 SCC 299; Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 289. 1 10. Giriraj Garg v Coal India Ltd. and Ors. (2019) 5 SCC 192; Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 289.

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Chapter 11—​​​Scope of Arbitration Agreement

The Supreme Court of India in BGS SGS Soma JV v NHPC111 held that:

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“An agreement that the arbitration is ‘to be held in Hong Kong’ would ordinarily carry with it an implied choice of Hong Kong as the seat of the arbitration and of the application of Hong Kong law as the curial law. Clear words or ‘significant contrary indicia’ are necessary to establish that some other seat or curial law has been agreed.”112

[11.5] CONCLUSION

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The scope of the arbitration agreement is an important aspect of arbitration. The basic principle which must guide judicial decision making is that arbitration is essentially a voluntary assumption of an obligation by contracting parties to resolve their disputes through a private tribunal.113

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Justice D.Y. Chandrachud in in A. Ayyasamy v A. Paramasivam114 further held:

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“The intent of the parties is expressed in the terms of their agreement. Where commercial entities and persons of business enter into dealings, they do so with the knowledge of the efficacy of the arbitral process. The commercial understanding is reflected in the terms of the agreement between the parties. The duty of the courts is to impart to that commercial understanding a sense of business efficacy.”115

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Further on the flip side, there is a risk that, even after an annulment, the court at the place of enforcement place still upholds the award, in which case a non-​signatory may bear the unnecessary consequences.116

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Arbitrability is a dynamic topic in arbitration. Like the changing definition of public policy, the definition of arbitrability has been changing over time. Some countries are becoming more arbitration-​friendly and opening more type of disputes to arbitration.

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Arbitrability refers to the ability of a dispute to be referred to the arbitration, that is, whether the dispute is arbitrable or not.117 Arbitrability involves determining the types

1 11. (2020) 4 SCC 234. 112. Ibid, at para. 67. 113. A. Ayyasamy v A. Paramasivam (2016) 10 SCC 368, at para. 83. 114. (2016) 10 SCC 368. 115. Ibid, at para. 83. 116. Cass. 1e civ., 10 June 1997, OTV v Hilmarton 1997 REV. ARB. 376; TermoRio S.A. E.S.P. (Colombia) v Electranta S.P. (Colombia) 487 F.3d 928. 117. William W. Park, “Arbitrability and Tax” in L.A. Mistelis and S. Brekoulakis (eds), Arbitrability: International and Comparative Perspective 179 (2008).

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Law, Practice and Procedure of Arbitration in India

of dispute that may be resolved by arbitration and the others which belong exclusively within the domain of the courts.118 Gary B. Born proposes that every dispute can be referred to arbitration.119

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Turning to the form of an arbitration clause; No party can be allowed to take advantage of inartistic drafting of an arbitration clause, so long as the intention of the parties to have their dispute resolved through arbitration is evident from the terms of the agreement, materials on record, and surrounding circumstances.120

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As long as an arbitration agreement is broadly worded so as to encompass all disputes that may arise between the parties, the disputes would be within the scope of the arbitration agreement. Effectively, an arbitral tribunal would validly exercise jurisdiction over the parties to such an agreement.

118. Assimakis P. Komninos, “Arbitration and EU Competition Law” (2009) 7 Univ. Coll. London, Dep’t of Law, pp. 1–​49. See also Blackaby and Partasides with Redfern and Hunter, Redfern and Hunter on International Arbitration (6th edn, 2015), p. 110, at para. 2.124. 119. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1035. 120. Visa International Limited v. Continental Resources (USA) Ltd. (2009) 2 SCC 55.

Chapter 12 EXISTENCE OF DISPUTES OR DIFFERENCES [12.1] INTRODUCTION......................................................................................................................... 341 [12.2] EXISTENCE OF A DISPUTE....................................................................................................... 342

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[12.3] DISPUTE, DIFFERENCE, OR CLAIM....................................................................................... 350 [12.4] INDISPUTABLE CLAIMS............................................................................................................ 357 [12.5] JURISDICTION OVER THE POST-​REFERENCE DISPUTES.............................................. 359

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[12.6] CONCLUSION............................................................................................................................... 362

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[12.1] INTRODUCTION

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The existence of a dispute or difference is highly relevant. It is a fundamental aspect of the arbitral process. Only matters in issue between the parties can be referred to arbitration. A dispute acts as a nucleus to the entire mechanism of arbitration.

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Therefore, if there is no dispute or difference in existence, there can be no submission to arbitration. For instance, Article 25(1) of the ICSID Convention on the Settlement of Investment Disputes between States and Nationals of Other States mentions existence of a legal dispute as a pre-​requisite to establish jurisdiction of ICSID.

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A great deal of litigation has been generated over the existence of disputes despite the simplicity of the term “dispute”.

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Arbitration is a method1 of resolving disputes.2 The procedural consequences of an arbitration cannot follow in the absence of a dispute.3 If an arbitral tribunal is appointed or purportedly appointed in a no-​dispute scenario, any award will be open to challenge on the basis that the arbitral tribunal had no jurisdiction.4

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Some national legislations mandate that, if no dispute exists between the parties, the national arbitration legislations are inapplicable.5 Further, such legislations will prevent the commencement of an arbitration.6 1. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 1-​001. 2. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 2, at para. 1.04. 3. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), p. 12. 4. Peter Sheridan, Construction and Engineering Disputes (Sweet & Maxwell 1999), at para. 1.01. 5. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1009. 6. Ibid.

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[12.2] EXISTENCE OF A DISPUTE An issue arising under some international arbitration conventions, national arbitration laws, and institutional arbitration rules is whether there is a “dispute” between the parties.7

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Numerous authorities have held that particular arbitration clauses apply only in the case of an existence of a dispute.8 An arbitral tribunal will lack jurisdictions under the arbitration agreement if this requirement is not satisfied.9 Further, the dispute must be covered by the arbitration clause to enable the arbitral tribunal to assume jurisdiction.10

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The existence of a dispute forms the basic elements to refer a party to the arbitration. A dispute exists when there is an assertion of a right by one party and the other party repudiates or denies the same.11

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Repudiation is not always express; it can also be implied. For example, failure to comply with the terms of the contract, failure to execute the contract, and failure to pay under the contract are all forms of implied repudiation.

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A dispute also arises when one party to a contract claims something from another party in terms of the contract, and the other party knows what is alleged against it,12 and rejects,13 ignores,14 prevaricates, or repudiates15 the claim.16

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Section 7(1) of the Arbitration Act uses the word “disputes” in contradistinction to the word “difference” used in the 1940 Act. Every “difference” cannot be treated as a “dispute”. Every “dispute” need not necessarily be treated as a “difference” which would lead to the invocation of arbitration,17 unless such dispute results in a material action.18

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7. Ibid. 8. Ibid. 9. Ibid. 10. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 287. 11. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths1989), p. 128. 12. Cruden Construction Ltd. v Commission for the New Towns [1995] 2 Lloyd’s Rep 387. 13. Monmouthshire County Council v Costelloe and Kemple Ltd. [1965] 5 BLR 85 (CA); MJ Gleeson Group v Wyatt of Snetterton Ltd. [1994] 72 BLR 15 (CA). 14. Tradax International SA v Cerrihougullari TAS, the M Eregli [1981] 3 All ER 344. 15. Ellerine Brothers (Pvt.) Ltd. v Klinger [1982] 1 WLR 1375 (CA). 16. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 288. 17. Ibid, p. 287. 18. Prathyusha Associates, Visakhapatnam v Rashtriya Ispat Nigam Limited, Visakhapatnam, Steel Plant 2006 (2) Arb LR 130 (AP), p. 156.

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Chapter 12—​​​Existence of Disputes or Differences

If an existing dispute is resolved by the parties by way of a full and final settlement, it is no longer an existing dispute. Consequently, nothing would then remain to be arbitrated.19

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The Supreme Court of India in Nathani Steels Ltd. v Associated Constructions20 held that the disputes were finally settled, and payments were made pursuant to the settlement. The Court held that it was not open to the respondent to treat the settlement as non est and proceed to invoke the arbitration clause.21 Indian courts have been proactive in ascertaining the existence of dispute for arbitration to proceed forward.

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For example, the Supreme Court of India in Visa International Ltd. v Continental Resources (USA) Ltd.22 held that the application for arbitration can be made only when a dispute arises between the parties to the arbitration agreement. Further, such a dispute gives rise to a live issue.

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The Court relied on the authority of Mustill and Boyd23 when it held:

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“A dispute means that there may be a difference of opinion as to the future performance of a contract. For example, one party may be denying that any further performance is due, on the ground that the contract has been discharged by repudiation or frustration; or it may be a common ground that the contract is subsisting, but the parties may be in a dispute about whether a particular act would constitute a valid performance, or whether one party is entitled to give a particular order or exercise an option in a particular way. If the parties stand their ground in such a situation, a time will come when it is too late for the right view to prevail; one party will irremediably in the wrong, and serious financial loss is likely to ensue. All this can be prevented if the parties can mount arbitration with sufficient speed to enable them to know the true position under the contract before the time for performance has finally expired.”24

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The Supreme Court of India in Major (Retd) Inder Singh Rekhi v Delhi Development Authority,25 further explained that a dispute arises when one party makes a claim and the other refutes it or denies it. 19. 20. 21. 22. 23. 24. 25.

Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 289. 1995 Supp (3) SCC 324. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 289. (2009) 2 SCC 55. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989). Ibid, at para. 37. Major (Retd) Inder Singh Rekhi v Delhi Development Authority (1988) 2 SCC 338, para. 4. The case was based on the Arbitration Act, 1940; however, it is of precedential value and has been upheld by multiple judgments falling under the Arbitration and Conciliation Act, 1996 to understand meaning of the term “dispute”.

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Law, Practice and Procedure of Arbitration in India

The Court explained:26

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“A dispute arises where there is a claim and a denial and repudiation of the claim. There should be a dispute and there can only be a dispute when a claim is asserted by one party and denied by the other on whatever grounds. Mere failure or inaction to pay does not lead to the inference of the existence of dispute.27 Dispute entails a positive element and assertion of denying, not merely inaction to accede to a claim or a request. Whether in a particular case a dispute has arisen or not has to be found out from the facts and circumstances of the case.”28

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In cases where pleadings of the parties reveal prima facie claims against each other, an arbitral dispute between the parties cannot be doubted.29 The mere existence of an arbitration clause does not equate to the existence of a dispute. A dispute occurs when a matter is capable of being tried by a competent court of law. However, the claim need not be valid or sustainable in a court of law30.

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The Supreme Court of India in McDermott International Inc. v Burn Standard Co. Ltd. & Ors.31 held that a claim need not necessarily be followed by a denial of that claim in order to provide jurisdiction to the arbitral tribunal.

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If a matter is referred to arbitration, the party invoking the arbitration clause may proceed on the basis that the other party to the claim has denied or disputed the claim or is not interested in referring the dispute to the arbitrator.32

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(2) There are no hard-​edged legal rules as to what is or is not a dispute;

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(1) “The word ‘dispute’ should be given its ordinary meaning, not some special or unusual meaning conferred upon it by lawyers;

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The Court of Appeal of England and Wales in Amec Civil Engineering Ltd v Secretary of State for Transport33 outlined seven propositions on the meaning of a dispute and when it comes into existence:

R.S. Bachawat, Law of Arbitration (1st edn), p. 354; Voltas Ltd. v Rolta India Ltd. (2014) 4 SCC. Major (Retd) Inder Singh Rekhi v Delhi Development Authority (1988) 2 SCC 338. Major (Retd) Inder Singh Rekhi v Delhi Development Authority (1988) 2 SCC 338, at para. 4. Satya Prakash & Bros. Pvt. Ltd. v State of U.P. 2010 SCC OnLine All 267, para. 15. Dacca Co-​operative Industrial Union Ltd. v Dacca Co-​operative Sankhya Silpa Samity 1937 SCC OnLine Cal 244. 31. (2006) 11 SCC 181. 32. Ibid, at paras 117, 118. 33. Amec Civil Engineering Ltd v Secretary of State for Transport [2004] EWHC 2339 (TCC), at para. 68, affirmed [2005] EWCA Civ 291. 26. 27. 28. 29. 30.

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(3) One party notifying the other of a claim does not automatically and immediately give rise to a dispute34 and a dispute does not arise unless and until it emerges that the claim is not admitted;35



(4) The circumstances from which it may emerge that a claim is not admitted are protean and include express rejection, objective inference from discussions between parties, prevarication and silence;



(5) The period of silence from which a dispute can be inferred depends on the facts of the case;



(6) The passing of a deadline imposed for a response does not automatically crystallise a dispute; and



(7) If the claim as presented by the claimant is so nebulous and ill-​defined that the respondent cannot sensibly respond to it, neither silence by the respondent nor even an express non-​admission is likely to give rise to a dispute.”36

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Thus, a dispute or difference arises where there is disagreement about central issues: no claim needs to be formulated, and the cause of action need not be fully constituted.37 There is a dispute or difference if the amount of damages remains in issue although liability is not contested.38

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The New Zealand Court of Appeal in Methanex Motunui v Spellman39 held that a dispute was said to exist “where two or more individuals express and maintain, in

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34. Monmouth County Council v Costelloe and Kemple Ltd (1965) 63 LGR 429, (1995) 5 BLR 83 at p. 89; Cruden Construction Ltd v Commission for the New Towns [1995] 2 Lloyd’s Rep 387 at p. 394; Union of India v E B Aaby’s Rederi A/​S [1975] AC 797 at p. 807, [1974] 2 All ER 874 at p. 879, sub nom EB Aaby’s Rederi A/​S v Union of India, The Evje [1974] 2 Lloyd’s Rep 57 at p. 61. 35. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), p. 128, “... just as a claim is not necessary to the creation of a dispute, neither is it sufficient in itself”; quoted by Judge Bowsher QC in Secretary of State for Foreign and Commonwealth Affairs v Percy Thomas Partnership (a firm) and Kier International [1998] All ER (D) 13. 36. No details were given by the defendant to enable the plaintiff to make any kind of informed decision in relation to any of the matters which were being alleged by the housing association let alone how those allegations affected the plaintiff, thus asking for further information would not be sufficient to crystallise the dispute; Cruden Construction Ltd v Commission for the New Towns [1995] 2 Lloyd’s Rep 387 at para. 394. 37. Robertson (J F) & Co v A T James & Co (1923) 16 Ll L Rep 34, at para. 36; Ramac Costruction Co Ltd v J E Lesser (Properties) Ltd [1975] 2 Lloyd’s Rep 430. Cf. Brightside Kilpatrick Engineering Services v Mitchell Construction (1973) Ltd [1975] 2 Lloyd’s Rep 493, CA (Eng); Sioux Inc v China Salvage Co, Kwangchow Branch sub nom The American Sioux [1980] 2 Lloyd’s Rep 224, CA (Eng); Union of India v EB Aaby’s Rederi A/​S [1975] AC 797, [1974] 2 All ER 874, sub nom EB Aaby’s Rederi A/​S v Union of India, The Evje [1974] 2 Lloyd’s Rep 57, HL. 38. Associated Bulk Carriers Ltd v Koch Shipping Inc, The Fuohsan Maru [1978] 2 All ER 254, [1978] 1 Lloyd’s Rep 24, CA (Eng). 39. Methanex Motunui Ltd v Spellman [2004] 3 NZLR 454, CA.

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relation to each other, conflicting views or positions, the resolution of which will or may be of legal consequence, or where there are questions which may give rise to a dispute if left unresolved”.40

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The High Court of Singapore in Tjong Very Sumito v Antig Investments Pte Ltd41 laid down the following test to consider the existence of the dispute. The High Court stated that “a dispute exists unless the defendant has unequivocally admitted that the claim is due and payable.”42 Whether or not a dispute actually exists in substance is therefore an issue for the arbitrators to decide as part of the exercise of their Kompetenz-​Kompetenz powers.43

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The is consistent with the finding of the Hong Kong Court of Appeal in Tai Hing Cotton Mill Ltd v Glencore Grain Rotterdam BV.44 The Court explained that:

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“Under Art 8(1) of the Model Law, the court is not concerned with investigating whether the defendant had an arguable basis for disputing the claim. If a claim was made against him in a matter which was the subject of an arbitration agreement and he did not admit the claim, then there was a dispute within the meaning of the article. And if he seeks a stay of the action, the court must grant a stay unless the plaintiff could show that the arbitration agreement was null and void, inoperative or incapable of being performed.”

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This position is in tandem with the decision of the House of Lords in West Tankers RAS Riunione45 that arbitration is a consensual mechanism outside any court structure. It is subject to no more than limited supervision by the courts of the place of arbitration.

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Under Rule 41(5) of the ICSID Rules of Procedure for Arbitration Proceedings (Arbitration Rules),46 the arbitral tribunal has the power to summarily dismiss a case on the basis that it is “manifestly without legal merit”.

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This provides a useful way for spurious arbitration claims to be dealt with and increase the efficiency of arbitration proceedings. However, ICSID arbitrations operate Ibid, at para. 59. [2009] 4 SLR(R) 732. Ibid, at para. 69. David A.R., Williams and Amokura Kawharu, Williams & Kawharu on Arbitration (LexisNexis 2011), at para. 8.3.3. 44. [1996] 1 HKC 363. 45. West Tankers Inc v RAS Riunione Adriatica di Sicurta SpA, The Front Comor [2007] All ER (D) 249 (Feb), [2007] UKHL 4, at para. 29. 46. Came into force in 1966 (as amended in 2006), available at https://​icsid.worldbank.org/​ICSID/​StaticFiles/​ basicdoc/​partF.htm. 40. 41. 42. 43.

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Chapter 12—​​​Existence of Disputes or Differences

under the 1965 Convention on the Settlement of Investment Disputes between States and Nationals of Other States.47 If the agreement provides for the arbitration of “disputes” or “differences”, then the subject matter would fall outside the proceedings if there was no “dispute” or “difference”.48

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Even when such a submission is raised, cases such as Halki Shipping Corporation v Sopex Oils Ltd49 support the proposition that the courts would respect party autonomy and would not delve into the merits any further, apart from seeing if there had been an unequivocal admission. Therefore, the mere allegation of a dispute would be sufficient to warrant a stay.

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The question of whether there exists a dispute or merely a claim may arise where a party wishes to include the claim within the terms of an existing reference to arbitration covering other disputed issues. Legal authorities suggest that a broad view be taken of what constitutes a dispute in such situations.50

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Effect of an Admission

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It is an established rule that there is a dispute until the defendant admits that the sum is due and payable.51 Where a claim is made but the defendants have done nothing about it, silence did not mean they admitted the claim, because until the defendant admits that a sum is due and payable, a dispute will exist within the meaning of the arbitration clause.52

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The Supreme Court of India in Garware Wall Ropers Ltd v Coastal Marine Constructions53 took a similar view that:

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“… an arbitration clause will get activated or kindled only if the dispute between the parties is limited to the quantum to be paid under the policy. The liability should be

47. 1965 Convention on the Settlement of Investment Disputes between States and Nationals of Other States, 18 March 1965, Washington, USA, available at https://​icsid.worldbank.org/​ICSID/​StaticFiles/​basicdoc/​partA. htm. 48. Tjong Very Sumito v Antig Investments Pte Ltd [2009] SGCA 41, [2009] 4 SLR(R) 732, [2010] 2 All ER (Comm) 366, at paras. 22, 23. 49. Halki Shipping Corporation v Sopex Oils Ltd [1998] 1 WLR 726. 50. N. Radhakrishnan v Maestro Engineers (2010) 1 SCC 72, at para. 5. 51. Ellerime v Klinger (1982) I WLR 1375; Amex Civil Engineering Ltd v Secretary of State for Transport [2005] EWCA CIV 291; Halki Shipping Corp v Sopex Oils Ltd. (1998) 1 Lloyd Rep 49; Clarke J: [1998] 1 Lloyd’s Rep 465 (CA); MCM Bulk Shipping (M) Sdn Bhd v Raz Intan Industries Sdn Bhd [2012] MLJU 401. 52. Tradax Internacional SA v Cerrahogullari TAS, The M Eregli [1981] 3 All ER 344, [1981] 2 Lloyd’s Rep 169. 53. (2019) 9 SCC 209.

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Law, Practice and Procedure of Arbitration in India

unequivocally admitted by the insurer. That is the precondition and sine qua non for triggering the arbitration clause.”54 An admission must be unequivocal, and courts require liability and quantum to be admitted. The Court in Zhan Jiang E & T Dev Area Service Head Co v An Hau Company Limited55 explained that until “both liability and quantum of compensation payable was admitted, the parties were in dispute”.

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An admission of liability but not quantum would be sufficient for a dispute to exist.56 Even a “disputed allegation of non-​denial” has been held to constitute a dispute. Payment of a cheque could be sufficient to admit liability and quantum.57 A Final Account by itself would not.58

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The Singapore Court of Appeal in Tjong Very Sumito v Antig Investments59 considered a situation where the respondent prevaricates and after making admissions, rescinds it or refuses to pay. The Court stated that it is settled that “refusal to make payment after an admission of liability remains a dispute for the purpose of an arbitration clause”.60

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The Court considered the effect of a Scott v Avery clause61 in a case of admitted liability followed by a refusal to pay, holding that the Scott v Avery clause still made an arbitration award a condition precedent for enforcement in the courts.62

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Effect of Silence

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That is, when a Respondent is simply unable to pay but admits liability, the arbitral tribunal may rule on its jurisdiction and issue a summary award which may be enforced by courts.

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The repudiation of a claim may be express or tacit. It is inferred from the conduct of the party or the surrounding circumstances. Failure to reply or indefinite silence would

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54. Ibid, at para. 14. 55. [1994] 1 HKC 539. 56. See Leung Kwok Tim T/​A Tim Yip Engineering Co v Builders Federal (Hong Kong) Ltd [2001] HKCFI 823, [2001] 3 HKC 527; The Incorporated Owners of Sincere House v Sincere Co Ltd [2005] HKLT 30, [2005] 2 HKC 424; Yingde Gases Investment Ltd v Shihlien China Holding Co Ltd [2014] HKCFI 68. 57. Getwick Engineers Ltd v Pilecon Engineering Ltd [2002] HKCFI 189. 58. Fai Tak Engineering Co Ltd v Sui Chong Construction & Engineering Co Ltd [2009] HKDC 141, para. 56. 59. Tjong Very Sumito v Antig Investments Pte Ltd [2009] SGCA 41, [2010] 2 All ER (Comm) 366, para. 62. 60. Robert Merkin, Arbitration Law (LLP 2008), at para. 8.42.2. See also Exfin Shipping (India) Ltd Mumbai v Tolani Shipping Co Ltd Mumbai [2006] EWHC 1090 (Comm); Glencore Grain Ltd v Agros Trading Co Ltd [1999] 2 All ER (Comm) 288. 61. A Scott v Avery clause is one which puts forth a restriction on parties to ensure that a dispute is arbitrated upon before taking the dispute to court. 62. Tjong Very Sumito v Antig Investments Pte Ltd [2009] SGCA 41, [2009] 4 SLR(R) 732, [2010] 2 All ER (Comm) 366, at para. 62, citing Glencore Grain Ltd v Agros Trading Co Ltd [1999] 2 All ER (Comm) 288.

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Chapter 12—​​​Existence of Disputes or Differences

constitute rejection of the claim. Disputes may well arise when one party is articulate and the other stands mute when called upon to plead.63 The English Courts in Ellerine Brothers (Pty) Ltd v Klinger64 and Chandanmull v Donald Campbell65 held as under on the issue of silence:

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“A dispute may perfectly well arise when only one disputant is articulate and the other stands mute when called upon to plead. One party should affirm and the other should deny, and conduct can do this as well as words.”

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The High Court of England and Wales in Amec Civil Engineering v Secretary of State for Transport66 held that silence can give rise to the inference that the claim is not admitted. Further, the period for which a respondent may remain silent before a dispute is inferred depends on the facts of the case and the contractual structure.67

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For example, a respondent may need to seek independent or expert advice before it can respond in a technical dispute. The imposition of a deadline by a claimant would therefore not automatically curtail what would otherwise be a reasonable time for responding.68

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Williams and Kawharu rely on Methanex Motunui Ltd v Spellman69 as a decision in support of the proposition that silence can be equated with a dispute. They cited Fisher J’s statement that: “when two or more individuals express or maintain in relation to each other conflicting views or positions”. The inference presumably being that silence can constitute the maintenance of a conflicting position.70

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The Singapore Court of Appeal in Tjong Very Sumito v Antig Investments71 accepted that there may be cases where a claim is so preposterous that “silent treatment” is

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63. P.C. Markanda, Law Relation to Arbitration and Conciliation (10th edn, 2020), p. 274. 64. [1982] 1 WLR 1375 (EWCA) para. 1383; supra, including a statement that that pursuing “a policy of masterly inactivity” does not mean that there is no dispute. 65. (1916) 23 CWN 707, PC, per Lord Sumner. 66. Amec Civil Engineering Ltd v Secretary of State for Transport [2004] EWHC 2339 (TCC), at para. 68, affirmed by [2005] EWCA Civ 291. 67. See Beck Interiors Ltd v UK Flooring Contractors Ltd [2012] EWHC 1808 (TCC), [2012] BLR 417 where it was held that “silence over a public holiday weekend was insufficient to infer a dispute”. 68. The seven propositions set out in Amec Civil Engineering Ltd v Secretary of State for Transport [2004] EWHC 2339 (TCC) were expressly approved by the Court of Appeal on appeal and in Collins (Contractors) Ltd v Baltic Quay Management (1994) Ltd [2004] EWCA Civ 1757, [2005] BLR 63; cited by the Singapore Court of Appeal in Tjong Very Sumito v Antig Investments Pte Ltd [2009] SGCA 41, [2009] 4 SLR(R) 732, [2010] 2 All ER (Comm) 366, at para. 61. 69. Methanex Motunui Ltd v Spellman [2004] 1 NZLR 95, at para. 76, affirmed [2004] 3 NZLR 454, CA, at para. 59. 70. David A.R. Williams and Amokura Kawharu, Williams & Kawharu on Arbitration (LexisNexis 2011), at para. 8.3.2. 71. Tjong Very Sumito v Antig Investments Pte Ltd [2009] SGCA 41, [2009] 4 SLR(R) 732, [2010] 2 All ER (Comm) 366, at paras. 61, 62.

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Law, Practice and Procedure of Arbitration in India

perceived to be the most appropriate response and that in certain cultures a non-​ confrontational approach is preferred. It is for the arbitral tribunal, not the court, to decide whether any defence raised by the respondent is genuine or a sham. If the claimant has a claim against the respondent and the respondent fails to respond to the claim, the respondent’s silence is not to be construed as an admission of liability. There remains a dispute between the parties.72

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Section 25(c) of the Arbitration Act empowers the arbitrator to continue with the hearing and make an award if the claimant fails to appear at a hearing or produce documentary evidence and make an award.

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Section 25(b) of the Arbitration Act requires the respondent to submit the statement of defence within the time fixed by the arbitral tribunal. Should the respondent fail to do so, Section 25(b) of the Arbitration Act provides that the arbitral tribunal shall continue proceedings, without treating this as an admission of any allegation.

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Further, the arbitral tribunal shall have the discretion to treat the respondent’s right to file such statement of defence as having been forfeited.73

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[12.3] DISPUTE, DIFFERENCE, OR CLAIM In practice, the terms “claim”, “difference”, and “dispute” are used interchangeably.

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Gary B. Born states that “these formulations encompass any sort of disagreement, dispute, difference, or claim that may be asserted in arbitral proceedings”.74

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These words confer the widest possible jurisdiction.75 Arbitration clauses usually define dispute as both a “dispute” and a “difference”.76 The words “claim”, “dispute”, and “difference” must be construed in accordance with the subject matter of the contract in which they are included.77

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Before passing of the English Arbitration Act, 1996, there was a doubt as to whether the disputes or differences covered the same ground.78 In some case, no distinction was drawn.

72. The Incorporated Owners of Sincere House v Sincere Co Ltd [2005] HKLT 30, [2005] 2 HKC 424. 73. Arbitration Act, s. 25(b). 74. Gary Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1347; Tjong Very Sumito v Antig Investments Pte Ltd [2009] SGCA 41, at para. 50. 75. Wolf v Collis Removal Service [1948]1 KB 11, at para. 18. 76. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), p. 122. 77. Ibid, p. 118. 78. Robert Merkin, Arbitration Law (Service Issue No. 22, 1998), at para. 4.5.

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Chapter 12—​​​Existence of Disputes or Differences

The Court in Danckwerts LJ in F&G Sykes Ltd. v Fine Fare Ltd. suggested that a failure to agree was a difference but not a dispute. The English Arbitration Act, 1996 now clarifies that a dispute in all circumstances would be covered by the term difference.79

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Semantic differences have occupied a great deal of judicial time. These have become less relevant post the decision of the House of Lords in Fiona Trust & Holding v Privalov.80 Here, the Court held that “parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered or purported to enter to be decided by the same tribunal”.81

The 1940 Act used the word “difference” instead of using “dispute”. It was only in the Arbitration Act that the word “dispute” was used.

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Dispute

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A dispute in respect of a matter which under an arbitration agreement is to be referred to arbitration should be given its ordinary meaning.82 It includes any claim which the other party refuses to admit or does not pay. Such inclusion is irrespective of whether there was an answer to the claim in fact or law, or not.83

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Though most disputes arise from the claim, the claim is neither necessary nor sufficient for the dispute to come into existence.84 There might be certain instances, where the financial implication of a dispute may never be explored until a claim form has been served.85

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Whether or not a dispute exists in substance is, therefore, an issue for the arbitral tribunal to decide as part of the exercise of their Kompetenz-​Kompetenz powers.86

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Section 7(1) of the Arbitration Act deals envisages “all or certain disputes which have arisen or may arise between them in respect of a defined legal relationship, whether contractual or not”. A dispute involves a situation where one party has a claim and for some reasons, the party says that this is not a claim.87

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79. English Arbitration Act, s. 82(1), which states that a dispute includes a difference. 80. [2007] UKHL 40, [2007] 4 All ER 951. 81. Fiona Trust & Holding Corporation v Privalov [2007] UKHL 40, [2007] 4 All ER 951, at para. 13, relied on by A. Ayyasamy v A. Paramasivam (2016) 10 SCC 386, at para. 46. 82. Agri Gold Exims Ltd. v Sri Lakshmi Knits & Wovens (2007) 3 SCC 686, at para. 19. 83. Halki Shipping Corpn. v Sopex Oils Ltd. (1998) 1 WLR 726, Ellerine Bros. (Pty.) Ltd. v Klinger (1982) 1 WLR 1375. 84. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), p. 127. 85. Viscount Dilhorne in The Evje at p. 65. 86. David A.R. Williams and Amokura Kawharu, Williams & Kawharu on Arbitration (LexisNexis 2011), at para. 8.3.3. 87. Salecha Cables Pvt. Ltd. v HPSEB 1993 SCC OnLine HP 39, at para. 25.

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Law, Practice and Procedure of Arbitration in India

The Supreme Court of India in Union of India v Birla Cotton Spinning and Weaving88 ruled that for enforcement of the arbitration clause there must exist a dispute between the parties to the arbitration agreement. In the absence of such dispute, there can be no reference to arbitration. A dispute entails a positive assertion and an element of denying. A “dispute” is not merely inaction to accede to a claim or a request.89

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The High Court of Calcutta in the case of Nandram Hanutram v Raghunath and Sons Ltd.90 has held that the cause of action of dispute may arise even if the repudiation by the other party is implied which may be either by words or by conduct.91

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The Supreme Court of India in Mobilox Innovations Private Ltd. v Kirusa Software Private Ltd.92 interpreted the definition of a “dispute” under the IBC as follows:

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“(i) The adjudicating authority must examine whether the notice of dispute raises a genuine dispute. However, the adjudicating authority does not have any power to verify the adequacy of the dispute.

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(ii) The definition of ‘dispute’ under Section 5(6) of the Code is inclusive and not exhaustive. It must be given wide meaning. The ‘dispute’ is not limited only to a pending suit or a pending arbitration.

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(iii) The expression in Section 8(2) where the words used are ‘existence of a dispute, if any’ is disjunctive from ‘record of proceedings of pendency of the suit or arbitration proceedings’. Therefore, the interpretation of the term ‘disputes’, applies to all kinds of disputes, in relation to debt and default. However, a dispute in a pending suit or arbitration must be relatable to the three conditions under Section 5(6) i.e. existence of the amount of debt, the quality of goods or services and the breach of representation or warranty.

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(iv) ‘Dispute’ includes disputes pending before every judicial authority including mediation, conciliation, etc. if the disputes are as to existence of debt or default. The following would also count as disputes:

88. 1964 SCR (2) 599. The case is under the Arbitration Act, 1940; however, the ratio has been upheld by the courts post the change in legislation by way of the Arbitration Act. 89. Major (Retd) Inder Singh Rekhi v Delhi Development Authority (1988) 2 SCC 338, at para. 4. The decision in this case is based on the 1940 Act. However, this decision remains of value and the definition of dispute has been upheld by multiple cases post the change in legislation. 90. Nandram Hanutram v Raghunath and Sons Ltd. 1953 SCC OnLine Cal 219. 91. Ibid, at paras 7, 8. 92. (2018)1 SCC 353.

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Chapter 12—​​​Existence of Disputes or Differences

(a) if the operational creditor has issued a notice under the Code of Civil Procedure, 1908 which is disputed by the corporate debtor, or (b) dispute by a labourer or an employee with the State Government to a notice issued under Section 59 of the Sale of Goods Act, 1930, (c) dispute pending before Labour Court

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(d) if the corporate debtor raises a dispute about ‘quality’ and brings to notice of the operational creditor to take appropriate steps.”

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The Singapore Court of Appeal in Tiong Very Sumito v Antig Investments93 has set down the parameters of what would constitute a dispute under an arbitration agreement. This also forms the broad canvas for application seeking a stay of proceedings is evaluated on the subject of the existence of “dispute”.

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The parameters are as follows:94

(1) If the arbitration agreement provides for arbitration only if “disputes” or “differences” or “controversies” exist, then the subject matter of the proceedings would fall outside the terms of the arbitration agreement if there is no “dispute”, “difference”, or “controversy” or if the alleged “dispute” is unrelated to the contract which contains the arbitration agreement.



(2) In line with the prevailing philosophy of judicial non-​intervention in arbitration, the court will interpret the word “dispute” broadly. A dispute exists unless the defendant has unequivocally admitted that the claim is due and payable.



(3) The court will not assess the merits of a “dispute” since these matters should properly be left for assessment by the arbitrator.



(4) An unequivocal admission must be one extending to both liability and quantum to exclude the existence of a “dispute”. Where a defendant makes a clear and unequivocal admission as to liability but not to quantum then there is a dispute referable to arbitration.

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(5) In addition to an express denial or rejection of the claim, the court can also infer that the claim is not admitted from the previous inconclusive discussions between the parties, prevarication, or even silence. In the case of prevarications, where a defendant unequivocally admits the claim, but then

93. [2009] 1 SLR 861. 94. Ibid, at para. 34.

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Law, Practice and Procedure of Arbitration in India

later purports to deny the claim, there may well be a “dispute” and the matter should ordinarily be referred to arbitration. Silence is also insufficient to constitute the clear and unequivocal admission necessary to exclude the existence of a “dispute”.

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Under English Law, the term “dispute” bears different meanings in different contexts. The word “dispute” in an arbitration clause encompasses all situations where a claim is not admitted, so that mere refusal to admit to the plaintiff ’s claim brings the arbitration clause into play.95

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The Court in Ellerine Bros (Pty) Ltd v Klinger96 held that a mere denial can constitute a dispute. There is a dispute until the applicant admits that a sum is due and payable.

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Templeman J explained that a dispute arises once a claim is made which is either ignored or met with prevarication:

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Difference

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“... if letters are written by the plaintiff making some request or some demand and the defendant does not reply, then there is a dispute. It is not necessary, for a dispute to arise, that the defendant should write back and say ‘I don’t agree’. If, on analysis, what the plaintiff is asking or demanding involves a matter on which agreement has not been reached and which falls fairly and squarely within the terms of the agreement, then the applicant is entitled to insist on arbitration instead of litigation.”97

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The distinction between “dispute” and “difference” has previously been an important one.98 Generally, the word “dispute” would mean “a controversy” having both positive and negative aspects.

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It also postulates the asserting of a claim by one party and its denial by the other.99 However, for modern practical purposes, a “dispute” and a “difference” are the same, notwithstanding that “difference” has been held to have a wider meaning.

95. Ellerine Brothers Ltd v Klinger [1982] 1 WLR 1375. 96. [1982] 2 All ER 737, at p. 741, [1982] 1 WLR 1375, at p. 1381, CA (Eng), relied on by Raj Kumar Shivhare v Asst. Director, Enforcement Directorate & Anr (2010) 4 SCC 772. 97. Ibid, at para. 22. 98. In England, the distinction between a “dispute” and “difference” is no longer as important as s. 82(1) of the Arbitration Act 1996 proves that a dispute “includes any difference”, following the definition used in art. 7(1) of the UNCITRAL Model Law. 99. Gujarat State Co-​operative Land Development Ltd v P.R. Manded 1979 SCC (3) 123, para. 22; Dato’ Teong Teck Kim v Dato’ Teong Teck Leng [1996] 1 MLJ 178, CA; Perbadanan Kemajuan Negeri Perak v Asean Security Paper Mill Sdn Bhd [1991] 3 MLJ 309, SC.

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Chapter 12—​​​Existence of Disputes or Differences

Lord Denning stated that “a difference can exist long before the parties become locked in combat. It is not necessary that they should have come to blows. It is sufficient that they should be sparring for an opening”.100 The Indian courts have approved this proposition.101

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There is an authority that this word is wider than the word “dispute”, although there is no known case where the distinction has been decisive on the grounds of jurisdiction.102 The High Court of Andhra Pradesh in Pratyusha Associates, Vishakhapatnam v Rashtriya Ispat Nigam Limited,103 in an anomalous ruling, distinguished between the terms, “dispute” and “difference”. It held:

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“Every difference, cannot be treated as a dispute and every dispute cannot be treated as a difference which would lead to the invocation of arbitration until and unless such disputes result in material action”.104

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However, Indian courts continue to adopt the global approach where a uniform interpretation is given to these words without any further differentiation.

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The Court in Sykes (F and G) (Wessex) Ltd v Fine Fare Ltd105 explained that the word “differences” is apt for a case where the parties are in disagreement.106 Viscount Dunedin in May and Butcher, Limited v The King107 stated:

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“... a failure to agree ... is a very different thing from a ‘dispute’. But it seems to me that the word ‘difference’ is particularly apt to describe that situation”.108

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However, Saville J in Hayter v Nelson and Home Insurance Co said that in practice, a dispute was assumed to be the same thing as a difference.109

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The English Arbitration Act mentions the word difference multiple times throughout the legislation interchangeably with the word “dispute”.110 100. Beetham v Trinidad Cement Ltd [1960] 1 All ER 274, at para. 279, per Lord Denning, PC. 101. For example: Gulf Air v Gulf Air Employees Association 2014 SCC OnLine Bom 1197, at para. 15; Ram Ayodhya Prasad v Presiding Officer, Labour Court, Ghaziabad 2019 SCC OnLine All 3192, at para. 17. 102. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), p. 128. 103. 2006 (2) Arb LR 130. 104. Ibid, at para. 65. 105. [1967] 1 Lloyd’s Rep 53. 106. [1967] 1 Lloyd’s Rep 53, at para. 60. 107. [1934] 2 KB 17. 108. Ibid, at para. 22. 109. [1990] 2 Lloyd’s Rep 265, at para. 267. 110. R.S. Bachawat, Law of Arbitration (1st edn), p. 355.

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The words “dispute” or “difference” in arbitration clauses, therefore, is given a generous meaning, in line with the principle of construing arbitration clauses broadly to give effect to the commercial intentions of parties.111

Claim

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A claim is the demand or assertion of a right which may arise out of a contract or tort. A claim differs from the cause of action, by how the claim is supported or on the grounds on which it may be based.112

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The courts have not drawn any distinction between arbitration clauses covering “all claims” and clauses dealing with “disputes” or “differences”.113 A claim in tort is within an “all disputes” arbitration clause whether or not the claimant had a parallel claim in contract.114

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Summary Disposal Procedures

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National courts in several jurisdictions routinely adopt summary disposal procedures. They are able to make dispositive rulings on clearly meritorious or unmeritorious cases, often based on a more limited hearing.115

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However, there are no specific summary procedures within the Arbitration Act. Indian courts are yet to take recourse to a summary procedure in cases where they doubt the existence of the dispute.

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Article 8(1) of the New Zealand Arbitration Act 1996 is out of the ordinary. It states that:

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“A court before which proceedings are brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting that party’s first statement on the substance of the dispute, stay those proceedings and refer the parties to arbitration unless it finds that the agreement is null and void, inoperative, or incapable of being performed, or that there is not in fact any dispute between the parties with regard to the matters agreed to be referred.”

111. See Larsen Oil and Gas Pte Ltd. v Petroprod Ltd. (in official liquidation in the Cayman Islands and in compulsory liquidation in Singapore) [2011] SGCA 21, [2011] 3 SLR 414. 112. West Wake Price & Co v Ching [1957] 1 WLR 45. 113. Woolf v Collis Removal Service [1948] 1 KB 11; First Steamship Co Ltd v CTS Commodity Transport Shipping Schiffahrtsgesellschaft mbH, The Ever Splendor [1988] 1 Lloyd’s Rep 245. 114. Astro Vencedor Compania Naviera Sa of Panama v Mabanaft GmbH [1971] 2 All ER 1301. 115. J. Gill, “Applications for the Early Disposition of Claims”, in A. J. van den Berg (ed.), 50 Years of the New York Convention: ICCA International Arbitration Conference, ICCA Congress Series, Vol. 14, 2009, p. 516.

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In Singapore, a summary procedure in a normal arbitration could result in a challenge to the award on the basis that the losing party was unable to present its case.116 By contrast, claims and defences in international arbitration, no matter how manifestly deserving or undeserving, often proceed without differentiation solely based on merit.

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Expedited arbitration procedures may speed up arbitral proceedings, but these mechanisms tend to be limited in scope to disputes below a particular size and are not sensitive to the relative merits of claims and defences.117

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ICSID adopted its summary disposition rules in 2006.118 It was in response to recurring complaints that it was impossible to dispose of claims that were legally defective before the final hearing.119

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[12.4] INDISPUTABLE CLAIMS

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It is important to differentiate between the questions as to the existence of a dispute and an indisputable claim. The former may involve a question of fact and law, while the latter may arise from the subjective opinions of the parties.

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When the claimant, the arbitrator, or the court is of the opinion that, prima facie the claim cannot be defended the claim can be termed as indisputable. Redfern and Hunter define such scenarios as “open and shut” cases to which there is no real defence.120

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Abraham Mathew states that:

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“The proposition must therefore be that if a claim between parties is indisputable then it cannot form the subject of a ‘dispute’ or ‘difference’ within the meaning of an arbitration clause. If this is so, then it must follow that a claimant cannot refer an indisputable claim to arbitration under such a clause; and that an arbitrator purporting to make an award in favour of a claimant advancing an indisputable claim would have no jurisdiction to do so. It must further follow that a claim to which there is an indisputably good defence

1 16. New York Convention, art. V(1)(b). 117. See Y. Banifatemi, Chapter 1: Expedited Proceedings in International Arbitration, relied on by L. Levy and M. Polkinghorne (eds), Expedited Procedures in International Arbitration Dossier of the ICC Institute of World Business Law, Vol. 16, 2017, pp. 9–​13. 118. International Centre for Settlement of Investment Disputes Rules and Regulations 2006, r. 41(5) and (6). 119. Antonio R Parra, “The Development of the Regulations and Rules of the International Centre for Settlement of Investment Disputes” (Spring 2007), 41. 120. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 1.60.

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cannot be validly referred to arbitration since, on the same reasoning, there would again be no issue or difference referable to arbitration.”121 A party may be tempted to approach the court to seek a summary judgment out of urgency rather than incurring an elongated process of appointing an arbitrator and starting the entire process of arbitration. It would be cheaper and faster for the creditor to seek summary judgment for an indisputable claim than to go through the entire arbitral process.122

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However, this would defeat the purpose of including a previously agreed arbitration clause in the contract. Lord Saville has argued that this is no justification for parties or courts to abandon the arbitration agreement in the following words:

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“If the parties have agreed to arbitrate their disputes, why should a Court ignore that bargain, merely because with hindsight one party realises that he might be able to enforce his rights faster if he goes to Court?”123

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He rejected the proposition that an indisputable claim could not form the subject of a “dispute” or “difference” when he said:

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“I know of no general principle of English law to suggest that because a bargain afterwards appears to provide a less satisfactory outcome to one party than would have been the case had it not been made or had it been made differently.”124

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The Singapore Court of Appeal in Tjong Very Sumito v Antig Investments Pte Ltd125 held that in the absence of a compelling legal basis not allowing the parties to unilaterally rewrite their agreement to arbitrate, they should be held to their arbitration agreement.126

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In contrast, the Hong Kong Courts have held that the fact that the claim is indisputable has been held to be insufficient to bar the granting of a stay of court proceedings when interpreting Article 8 of the UNCITRAL Model Law.127

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121. Abraham Mathew, “The Philosophy of Arbitration”, International Journal of Business, Economics and Law, Vol. 8, Issue 4 (December), p. 106, at para. 3.1. 122. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 1.60. 123. Lord Saville, “Arbitration and the Courts”, The Denning Lecture 1995, at p. 13, cited in Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 1.61. 124. Hayter v Nelson and Home Insurance Co [1990] 2 Lloyd’s Rep 265, at p. 269. 125. [2009] 1 SLR(R) 861, [2008] SGHC 202. 126. Tjong Very Sumito v Antig Investments Pte Ltd [2009] SGCA 41, [2009] 4 SLR(R) 732, [2010] 2 All ER (Comm) 366, at para. 45. 127. F & D Buildings Services Engineering Co Ltd v Chevalier (E & M Contracting) Ltd [2001] HKCFI 824, [2001] 3 HKC 403; Tai Hing Cotton Mill Ltd v Glencore Grain Rotterdam BV [1996] 1 HKC 363 para. 373H; Louis Dreyfus Trading Ltd T/​A Louis Dreyfus Sugar v Bonarich International (Group) Ltd [1997] HKCFI 312; [1997] 3 HKC 597.

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The Malaysian Courts have followed the suit. The Federal Court in Tan Kok Cheng & Sons Realty Co Sdn Bhd v Lim Ah Pat (t/​a Juta Bena)128 held that whilst a dispute need not be bona fide:

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“in plain and obvious cases, where a reasonable tribunal, without undertaking a meticulous examination of the merits, is bound to hold that the issues raised by a defendant are frivolous or vexatious, that a court may be justified in refusing a stay”.129 The issue of an indisputable claim arose in Halki Shipping Corporation v Sopex Oils Ltd.130 The Court held that the arbitral tribunal (and not the Court) should decide whether the defence was genuine or not and whether a dispute existed. It held that:

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“There is a dispute once money is claimed unless and until the defendants admit that the sum is due and payable. An indisputable claim is still a dispute.”131

[12.5] JURISDICTION OVER THE POST-​REFERENCE DISPUTES

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A reference to arbitration normally implies that only those disputes, differences, or claims which have accrued at the date of the reference are to be determined by the arbitral tribunal.132 In practice, this means that arbitrator cannot have jurisdiction over the disputes which were not in existence when he was appointed.133 For instance, ICC Rules of Arbitration explicitly state that:

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“[a]‌fter the Terms of Reference have been signed or approved by the Court, no party shall make new claims which fall outside the limits of the Terms of Reference unless it has been authorized to do so by the arbitral tribunal, which shall consider the nature of such new claims, the stage of the arbitration and other relevant circumstances.”134

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1 28. [1995] 3 MLJ 273, [1996] 1 CLJ 231. 129. Tan Kok Cheng & Sons Realty Co Sdn Bhd v Lim Ah Pat (t/​a Juta Bena) [1995] 3 MLJ 273, at para. 281, FC; Perbadanan Kemajuan Negeri Perak v Asean Security Paper Mill Sdn Bhd [1991] 3 MLJ 309, at para. 314 where the Supreme Court said “the fact that there is apparent weakness in the respondent’s case should not be taken as an excuse to brush aside an arbitration clause to which the appellant was a party and which was being insisted on by the respondent.” 130. [1998] 1 WLR 726, at p. 761. 131. Halki Shipping Corporation v Sopex Oils Ltd [1998] 1 WLR 726, at p. 761, per Henry LJ. 132. Moor & Bedell’s Case [1587] 145 ER 189, Jenk 264; Barnes v Greenwell (1600) Cro Eliz 858; Stains v Wild (1614) Cro Jac 352; Ward v Uncorn (1631) Cro Car 216; Banfill v Leigh (1800) 8 Term Rep 571; Manser v Heaver (1832) 3 B & Ad 295; Jones v Cony [1839] 5 Bing NC 187; London and North Western and Great-​ Western Joint Railway Co’s v Billington [1899] AC 79; Telfair Shipping Corporation v Inersea Carriers SA, The Caroline P [1983] 2 Lloyd’s Rep 351; Cathiship SA v Allanasons Ltd, The Catherine Helen [1998] 3 All ER 714; Alfred McAlpine Construction Ltd v RMG Electrical Ltd [1998] ADRLJ 53. 133. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), p. 122. 134. ICC Rules of Arbitration (2012), art. 23(4), available at http://​iccwbo.org/​products-​and-​services/​arbitration-​ and-​adr/​arbitration/​icc-​rules-​of-​arbitration/​.

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UNCIRTAL Arbitration Rules and HKIAC Arbitration Rules explore the amending and supplementing of the claim, defence, or even a counterclaim subject to arbitral tribunal’s discretion.135 The arbitral tribunal may decline such belated supplementation of claim or defence if that would prejudice the other party.

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Bringing new claims after the date of reference to arbitration may go beyond the dispute or difference referred to the arbitration already commenced and thereby require the commencement of a new arbitration.136

The introduction of new claims causes tension in arbitration. The late introduction of new allegations or arguments may be disruptive for arbitral proceedings.137

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Section 23(3) of the Arbitration Act permits parties to amend or supplement their pleadings during the course of the arbitral proceedings, except in there in an agreement to the contrary.

Justice Indu Malhotra explains:

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However, the “amendment” means correct of an error.138 If the amendment is not fraudulent or intended to over-​reach, the arbitral tribunal may permit it, if it can be done without injustice to the other party.139

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“It cannot be said that the scope of arbitration would always remain restricted to the claims initially referred to. On the contrary, it can be modified if the opposite party does not object to it, or is affected by the amendment.”140

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However, precedent in India is scant when it comes squarely to the jurisdiction of the arbitrator on post-​reference disputes.

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The High Court of Delhi in Gas Authority of India Ltd. v Spie Capag S.A.141 discussing such a reference held that:

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“The [ICC] Terms of Reference thus is an important step to crystalise the dispute into its essential elements. That is the reason in Article 13(1) at the time of formulating

1 35. UNCITRAL Arbitration Rules, art. 22; HKIAC Arbitration Rules, art. 19. 136. M. Pryles and J. Waincymer, “Multiple Claims in Arbitrations Between the Same Parties”, p. 37, available at http://​www.arbitration-​icca.org/​media/​4/​63529655901040/​media012223886747020multiple_​claims_​in_​ arbitrations_​between_​the_​same_​parties.pdf. 137. Thomas H. Webster and Michael W. Buhler, Handbook on ICC Arbitration (4th edn, Sweet & Maxwell 2018), at paras. 23–​83. 138. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 687. 139. Ibid, p. 687; Tilcon Ltd. v Land Investment Ltd. [1987] 1 WLR 46. 140. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 687; Ganesh Benzoplast Ltd. v Saf Yeast Co. Ltd. 2007 (4) Arb LR 385. 141. Gas Authority of India Ltd. v Spie Capag S.A. 1994 SCC OnLine Del 787.

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Chapter 12—​​​Existence of Disputes or Differences

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the document of reference the arbitrator is to take into account the latest submissions meaning thereby the disputes which the parties may like to file by way of summary of their respective claims because from the date of Request for Arbitration and till the time of drawing up of the Terms of Reference, parties had opportunity to appreciate the full extent of their respective disputes.”142 … “This court has already held that the matters which are not covered by the arbitration clause cannot be referred to the arbitrator [at any stage]”.143 Recently, the High Court of Delhi in CDR. S.P. Puri (Retd.) Sole Proprietor Spiral Services v Agricultural Produce Market Committee144 took the aid of rules of Delhi Arbitration Centre to present the opposite stand.145

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The Delhi Arbitration Centre Arbitration Rules, Rule 10 states that:

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“Additional Claims or Counter-​Claims-​After the Terms of Reference have been signed or approved by the Arbitral Tribunal, no party shall make any Additional Claims or Counter Claims which falls outside the limit of the terms of the reference unless it is obtained the authority to do so from the Arbitral Tribunal, which shall consider the nature of such new Claims or Counter Claims, the stage of the arbitration and other relevant circumstances and thereafter issued necessary orders.”

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The Court in Manser v Heaver146 struck down that part of the award (which was severable in this respect)147 in which the arbitral tribunal had reserved to itself the power to decide upon any future disputes or differences which might arise between the parties.

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The Court in Lesser Design & Build v University of Surrey148 construed a letter referring disputes to arbitration as confined to disputes existing at the date of the letter. The jurisdiction of the arbitrator may extend to post-​reference disputes if the parties have by an ad hoc submission expressly or impliedly agreed that such matters should be considered by the arbitrator.

Ibid, at para. 33. Ibid, at para. 49. 2019 SCC OnLine Del 9861. Ibid, at para. 26. (1832) 3 B & Ad 295. Hooper v Pierce (1679) 12 Mod Rep 116; Simon v Gavil (1703) 1 Salk 74; Barnardiston v Fowler (1714) Gilb 125, 10 Mod Rep 204; Keen v Godwin (1728) Bunb 250; Johnson v Warren (1730) 1 Barn KB 430. 148. (1991) 56 BLR 57. 142. 143. 144. 145. 146. 147.

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Such express agreement may arise during the hearing, or it may be founded in the terms of reference for the arbitrator.149 Implied extensions of jurisdiction will often rest upon the conduct of the parties.

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The question in Hayter v Nelson and Home Insurance Co150 was whether the arbitrator had jurisdiction over a claim by a reinsured against a reinsurer for expenses incurred in the administration of the reinsurance agreement. After the reference to arbitration the issue of the defendant’s liabilities for charges, being distinct from expenses, was raised.

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If a new claim or dispute is allowed to be added by the arbitrators during proceedings of arbitration after the disputed claims have been decided, it may be contended that the tribunal is exceeding the scope of its authority.151

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The plea that the arbitral tribunal is exceeding its jurisdiction must be raised at the threshold when a new claim beyond the scope of the tribunal is added.152 The plea cannot be raised at a subsequent stage in the hearing.153

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[12.6] CONCLUSION

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The existence of a dispute forms the basic elements to refer a party to the arbitration. A dispute exists when there is an assertion of a right by one party and the other party repudiates or denies the same.154

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The dispute marks the first step of the arbitration process. Arbitration like any other dispute resolution gets its identity from resolving such dispute.

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Whether or not a dispute exists in substance is an issue for the arbitral tribunal to decide as part of the exercise of their Kompetenz-​Kompetenz powers.155

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For enforcement of the arbitration clause there must exist a dispute between the parties to the arbitration agreement. In the absence of such dispute, there can be no reference to arbitration.

149. Lewis v Rossiter (1875) 44 LJ Ex 136; Brown v Watson (1839) 6 Bing NC 118; Great Ormond Street Hospital NHS Trust v Secretary of State for Health 56 ConLR 1. Cf. Re Morphett (1845) 2 Dow & L 967. 150. [1990] 2 Lloyd’s Rep 265. See also Re Brown & Croydon Canal Co (1839) 9 Ad & El 522. 151. S.N. Malhotra and Sons v The Airport Authority of India 2008 SCC OnLine Del 442, at ¶137. 152. Ibid. 153. Ibid. 154. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), p. 128. 155. David A.R. Williams and Amokura Kawharu, Williams & Kawharu on Arbitration (LexisNexis 2011), at para. 8.3.3.

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General words such as “claims”, “differences”, and “disputes” have been held to encompass a wide jurisdiction in the context of the particular agreement in question. Semantic differences that have occupied a great deal of the time of courts are much less relevant. Parties, as rational businessmen, are likely to have intended that any dispute arising out of their relationship must be decided by the same tribunal.156

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Ordinarily, if an indisputable claim, one where there is no arguable defence, is made against a respondent, a plaintiff can apply to the court for summary judgment. In almost every case it would be cheaper and faster for the creditor to seek summary judgment for an indisputable claim than to go through the arbitral process.157

156. Fiona Trust & Holding Corporation v Privalov [2007] UKHL 40, [2007] 4 All ER 951, at para. 13 relied on by A. Ayyasamy v A. Paramasivam (2016) 10 SCC 386, at para. 46. 157. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 1.60.

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DIVISION 3

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EFFECT OF THE ARBITRATION AGREEMENT

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Chapter 13 EFFECT OF ARBITRATION AGREEMENT [13.1] INTRODUCTION......................................................................................................................... 367 [13.2] ELEMENTS OF AN ARBITRATION AGREEMENT.............................................................. 368

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[13.3] IRREVOCABILITY AND BINDING NATURE OF ARBITRATION AGREEMENTS...... 372 [13.4] DEATH OF A PARTY................................................................................................................... 380 [13.5] INSOLVENCY AND COMPANIES WINDING-​UP................................................................ 382 [13.6] EFFECT ON THIRD PARTIES AND GROUP COMPANIES................................................ 386 [13.7] UNREGISTERED AND UNSTAMPED AGREEMENTS........................................................ 391

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[13.8] CONCLUSION............................................................................................................................... 395

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[13.1] INTRODUCTION

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Arbitration is the reference of dispute or difference between not less than two parties for determination, after hearing both sides in a judicial manner, by a person or persons other than a court of competent jurisdiction.1

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The formal agreement (a written one) between two or more parties to settle a dispute or difference by arbitration is an arbitration agreement. It gives contractual authority to the arbitral tribunal to adjudicate the disputes and bind the parties.2 It is, therefore, a formal understanding to validate an “agreement to arbitrate”.

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Arbitration agreements are of two basic types.3

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First is an arbitration clause which is part of a larger, main contract, relating to disputes that may arise in the future.

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Second is an arbitration agreement or a separate, submission agreement relating to disputes already arisen and which are to be submitted to arbitration. The Arbitration Act defines an “arbitration agreement” as:

1. Halsbury’s Laws of England, Vol. 2 (4th edn). 2. Vidya Drolia and Ors. v Durga Trading Corporation, Civil Appeal no. 2402 of 2019, decided on 14 December 2020, at para. 10. 3. Thomas H. Webster and Michael W. Buhler, Handbook of ICC Arbitration (4th edn, Sweet & Maxwell 2018), p. 106.

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Law, Practice and Procedure of Arbitration in India

“An agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not”.4 The Arbitration Act further requires the arbitration agreement to be in writing.5 However, the 2015 Amendment has added that a record of such an agreement as contained in communication through electronic means is also acceptable.6

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The conditions which a court in India needs to be satisfied of for reference of a dispute to arbitration are: (1) There is an arbitration agreement;



(2) A party to the agreement brings an action in the court against the other party;



(3) The subject matter of the action is the same as the subject matter of the arbitration agreement; and



(4) The other party moves the court for referring the parties to arbitration.7

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The Supreme Court of India in Kerala State Electricity Board & Anr. v Kurien E. Kalathil & Anr.8 observed that an arbitration agreement between parties is a “jurisdictional pre-​ condition” for reference of a dispute between them to arbitration.9

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Therefore, in the absence of an arbitration agreement, the parties’ consent needs to be recorded in writing to fulfil the conditions of Section 7 of the Arbitration Act as well as Section 8910 of the CPC. An oral agreement is insufficient.

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[13.2] ELEMENTS OF AN ARBITRATION AGREEMENT

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A fundamental element of any international arbitration agreement is the parties’ undertaking that all disputes shall be finally resolved by arbitration.11

4. Arbitration Act, s. 2(1)(b) read with s. 7. 5. Arbitration Act, s. 7(3). 6. Arbitration Act, s. 7(4). 7. P. Anand Gajapathi Raju v P.V.G. Raju AIR 2000 SC 1886. 8. AIR 2000 SC 2573. 9. Civil Appeal Nos. 3164-​3165 of 2017, decided on 9 March 2018. 10. Section 89 of the Code of Civil Procedure empowers the court (if acceptable to the parties) to refer a dispute between parties for settlement through alternative dispute resolution method such as arbitration, mediation, conciliation, or Lok Adalat. 11. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 230.

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Chapter 13—​​​Effect of Arbitration Agreement

An “arbitration agreement”12 means an agreement by the parties to submit to arbitration all or certain disputes which have arisen, or which may arise between them in respect of a defined legal relationship, whether contractual or not.13 An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.14 However, it must be in writing.15

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The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.16

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A judicial authority has the power to refer the parties to arbitration in case of a dispute where there exists a prima facie valid arbitration agreement between the parties.17

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Redfern and Hunter on International Arbitration18 states that the requirement of an agreement to arbitrate in writing is an elucidation of the principle that the existence of such an agreement should be clearly established. It is important since its effect is to exclude the authority of national courts adjudicate upon disputes.19

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The Supreme Court of India in Bihar State Mineral Development Corporation v Encon Builders (I) Pvt. Ltd.20 set out the following four essential elements of an arbitration agreement: (1) There must be a present or a future difference in connection with some contemplated affair;



(2) The parties must intend to settle such difference by a private tribunal;



(3) The parties must agree in writing to be bound by the decision of such tribunal; and



(4) The parties must be ad idem.

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12. 13. 14. 15. 16. 17. 18.

Arbitration Act, s. 2(1)(b). Arbitration Act, s. 7(1). Arbitration Act, s. 7(2). Arbitration Act, s. 7(3). Arbitration Act, s. 7(5). Arbitration Act, s. 8. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015). 19. Ibid, at 5th edn, 2.13, pp. 89–​90. 20. (2003) 7 SCC 418.

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Law, Practice and Procedure of Arbitration in India

An integral element of a valid arbitration agreement is that the parties should agree to a binding resolution by the arbitral tribunal.21 In construction contracts, the agreements often contain a clause where the decision of a named officer shall be final, conclusive, and binding on all questions relating to the specification, drawing, design, instructions, quality of workmanship, or materials used on the work, which shall bind the contractor.22

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The Indian courts have consistently held that the arbitration clause must be interpreted to give effect to the intention of the parties to have their disputes resolved through arbitration.23 If the object of an arbitral decision is to avoid disputes, rather than decide disputes in a quasi-​judicial manner, it would not be a valid arbitration clause.24

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The Supreme Court of India in A. Ayyasamy v A. Paramasivam25 summarised the approach of courts in the construction and effect of an arbitration agreement in the following manner:

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“The basic principle which must guide judicial decision-​making is that arbitration is essentially a voluntary assumption of an obligation by contracting parties to resolve their disputes through a private tribunal. The intent of the parties is expressed in the terms of their agreement. Where commercial entities and persons of business enter into such dealings, they do so with a knowledge of the efficacy of the arbitral process. The commercial understanding is reflected in the terms of the agreement between the parties. The duty of the court is to impart to that commercial understanding a sense of business efficacy.”26

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Another relevant aspect of an arbitration agreement is the choice of institutional rules governing the procedure of the proceedings.

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The language of the arbitral proceedings, number of arbitrators, and appointment of arbitrators, inter alia are either determined by the express language of the arbitration clause itself, or the procedural rules chosen to be applicable by the parties.

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For example, Article 21(1) of the ICC Rules of Arbitration (2017) states that the parties shall be free to agree upon the rules of law to be applied by the arbitral tribunal

21. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 267. 22. Ibid. 23. Cheran Properties Ltd. v Kasturi & Sons Ltd. & Ors. (2018) 16 SCC 413; Ameet Lalchand Shah & Ors. v Rishabh Enterprises & Anr. (2015) 15 SCC 678. 24. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 267. 25. (2016) 10 SCC 368. 26. Ibid, at para. 48.

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Chapter 13—​​​Effect of Arbitration Agreement

to the merits of the dispute. In the absence of any such agreement, the arbitral tribunal shall apply the rules of law which it determines to be appropriate. A well-​drafted arbitration agreement will encompass both the agreement to arbitrate disputes, and an effective procedure by which this can be done. Increasingly, requirement for the effective procedure is done by incorporation of arbitral institutional rules.27

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The concept of the separability of the arbitration clause28 is both interesting in theory and useful in practice.29 The arbitration clause in a contract is considered to be separate from the main contract of which it forms part. As such, it survives the termination of that contract.

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Indeed, it would be entirely self-​defeating if a breach of contract or a claim that the contract was voidable were sufficient to terminate the arbitration clause as well; this is one of the situations in which the arbitration clause is most needed.30

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The French Cour de Cassation in the Gosset31 judgment recognised the doctrine of separability broadly as follows:

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“In international arbitration, the agreement to arbitrate, whether concluded separately or included in the contract to which it relates, is always save in exceptional circumstances … completely autonomous in law, which excludes the possibility of it being affected by the possible invalidity of the main contract.”

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The essence of the doctrine of separability is that it insulates the parties’ agreement to arbitrate. The arbitration agreement is not rendered void or invalid or avoided solely because the principal contract is void or invalid or has been avoided.32

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Section 16 of the Arbitration Act gives statutory recognition to the doctrine of separability of the arbitration clause as being legally distinct. The arbitration agreement has

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27. John Tackaberry and Arthur Marriott, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice, Vol. 1 (Thomson Sweet & Maxwell 2003), p. 48. 28. This concept is known in some systems of law as the autonomy of the arbitration clause (l’autonomie de la clause compromissoire); Nigel Blackaby, Constantine Partasides, Alan Redfern and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 104, at para. 2.101. 29. Paulsson, “Separability Demystified”, in The Idea of Arbitration (Oxford University Press 2013), Chapter 3, s. 1(c); Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 104, at para. 2.101. 30. Heyman v Darwins Ltd [1942] AC 356, at p. 374; Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 104, at para. 2.101. 31. Cour de Cassation, 1st Chamber, 7 May 1963, Dalloz, at p. 545. 32. Harbour Assurance Co. (U.K.) Ltd. v Kansa General International Insurance Co. Ltd. [1993] QB 701; Vee Networks Ltd. v Econet Wireless International Ltd. (2004) EWHC 2909 (QBD).

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an existence independent of the substantive contract which governs the commercial rights and obligations of the parties. Justice Indu Malhotra explains:

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“The doctrine of separability of the arbitration agreement implies that the invalidity or termination of the main contract, will not usually affect the validity of the arbitration agreement. The severability of the arbitration clause/​agreement from the underlying contract is necessary to ensure that the intention of the parties to resolve the disputes by arbitration does not cease to have effect with the termination of the underlying substantive contract; or with any challenge to the legality, validity, finality or breach of the underlying contract. It survives annulment or termination of the main contract. Section 16(1)(b) states that the arbitration agreement shall remain valid and enforceable, notwithstanding a declaration of the contract being null and void.”33

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[13.3] IRREVOCABILITY AND BINDING NATURE OF ARBITRATION AGREEMENTS

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The Arbitration Act34 provides that the arbitration agreement may be contained in the form of an arbitration clause in the substantive contract which creates the rights and obligations of the parties35 or may be in the form of a separate agreement.

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Where there exists a prima facie valid arbitration agreement between the parties, a judicial authority has the power to refer the parties to arbitration in case of a dispute.36

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The requirement of an agreement to arbitrate in writing is an elucidation of the principle that the existence of such an agreement should be clearly established.37 Its effect is to exclude the authority of national courts adjudicate upon disputes.38

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Valid arbitration agreements produce important legal effects for the parties to the agreement as well as for national courts the arbitral tribunals.39 These effects are usually referred to as positive effects and negative effects (or obligations).

33. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 296; Reva Electric Car Co. Pvt. Ltd. v Green Mobil (2012) 2 SCC 93, at para. 54. 34. Arbitration Act, s. 7(2). 35. Harita Finance Ltd. v ATV Projects India Ltd. 2003 (2) Arb LR 376 (Mad). 36. Arbitration Act, s. 8. 37. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (5th edn, Oxford University Press 2009). 38. Ibid at 5th edn, 2.13, pp. 89–​90. 39. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1349.

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Gary Born summarises the obligations of parties under positive and negative effects as: “[T]‌he positive effects include the obligation to participate and cooperate in good faith in the arbitration of disputes pursuant to the parties’ arbitration agreement, while the negative effects include the obligation not to obstruct the resolution of disputes that are subject to arbitration by the arbitral tribunal or to seek the resolution of such disputes in national courts or other legal forums”40

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The positive effect obliges parties to participate cooperatively, diligently, and in good faith in the resolution of their disputes pursuant to an arbitration agreement.

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The positive effect finds its roots in the New York Convention,41 the Geneva Convention,42 and Model Law.43 These instruments oblige the parties to submit their disputes under an agreement to arbitration, where such a clause exists.

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The New York Convention,44 the Geneva Convention,45 and Model Law46 also oblige courts to refer the parties to arbitration, where possible. This resulted in the positive obligations of parties finding a way into national statutes, including in India. Section 8(1) of the Arbitration Act, which is based on Article 8(1) of the Model Law reads:

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“A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall … refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.”47

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A negative effect often mirrors the positive effect under the arbitration agreement.48 A negative effect entails the obligation not to litigate arbitrable disputes.49

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Similar to the positive effects, negative effects under an arbitration agreement also form black letter law under the New York Convention,50 the Geneva Convention,51 Model Law,52 and the Arbitration Act53.

Ibid. New York Convention, art. II(1). Geneva Convention, art. 1. Model Law, art. 7(1). New York Convention, art. II(3). Geneva Convention, art. 4(1). Model Law, art. 8(1). Arbitration Act, s. 8(1). Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1366. Ibid. New York Convention, art. II. Geneva Convention, art. 4. Model Law, art. 8. Arbitration Act, s. 8.

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40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53.

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Law, Practice and Procedure of Arbitration in India

The agreement by parties to submit disputes to arbitration recognises and enforces the negative effects of that agreement, by requiring a stay or dismissal of national court proceedings where disputes are arbitrable.54 In addition to the recognition of the negative effect in India,55 the Supreme Court of the United Kingdom, in Ust-​Kamenogarsk Hydropower Plant JSC v AES Ust-​ Kamenogarsk Hydropower Plant LLP,56 applied the English Arbitration Act. It held:

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“An agreement to arbitrate disputes have positive and negative aspects. A party seeking relief within the scope of the arbitration agreement undertakes to do so in arbitration in whatever forum is prescribed. The (often silent) concomitant is that neither party will seek such relief in any other forum. If the other forum is the English court, the remedy for the party aggrieved is to apply for a stay under section 9 of the Arbitration Act 1996.”57

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The 1940 Act contained a provision stating that the authority of the arbitrator was irrevocable except by the leave of the court.58 It also conferred on courts the power to remove an arbitrator in certain circumstances.

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Section 11 of the 1940 Act enables a party could apply to a court to remove an arbitrator in cases where the arbitrator, firstly, failed to use all reasonable dispatch in entering on and proceeding with a reference and making an award; or secondly, misconducted himself or the proceedings.59

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This is no longer the case.

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The Arbitration Act only allows parties to agree on the procedure for challenging the appointment of an arbitrator60 where firstly, circumstances exist that give rise to justifiable doubts as to the arbitrator’s impartiality or independence; or secondly, the arbitrator does not possess the requisite qualifications agreed to by the parties.61

54. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1366. 55. Arbitration Act, s. 8. 56. [2013] UKSC 35; Gary B. Born, International Commercial Arbitration, Vol. 1: International Arbitration Agreements (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1368. 57. Ibid, at para. 1. 58. Arbitration Act, 1940, s. 5; Panchu Gopal Bose v. Board of Trustees for Port of Calcutta AIR 1994 SC 1615; Bhuwalka Bros Ltd. v. Fatehchand Murlidhar ILR (1951) 2 Cal 115, at p. 116. 59. Arbitration Act, 1940, s. 11. 60. Arbitration Act, s. 13(1); see Chapter 23 on the removal of arbitrators. 61. Arbitration Act, s. 12(3)(a) and (b).

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If the parties fail to agree on the procedure for challenge, then the procedure will be governed by Section 13 of the Arbitration Act. Section 13(2) of the Arbitration Act prescribes a strict time frame for challenging an arbitrator.

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The parties must mount the challenge within 15 days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in Section 12(3) of the Arbitration Act.62 Moreover, the party must then submit a written statement of the reasons for the challenge to the arbitral tribunal.63

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The challenge procedure in the Arbitration Act has its antecedents in Article 13 of the UNCITRAL Model Law. However, a notable exception is that the Arbitration Act has not imported that part of the provision of Article 13 of the UNCITRAL Model Law to appeal an unsuccessful challenge before a court.64

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Section 13(3) of the Arbitration Act envisages two situations when arbitral tribunals are faced with a challenge: First, the challenged arbitrator may withdraw from office; second, if the arbitrator does not withdraw from office, the arbitral tribunal shall decide the challenge.

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If challenge fails, the arbitral tribunal shall continue with the arbitral proceedings until it publishes its arbitral award.65 However, in such a circumstance, the decision of the arbitral tribunal on the challenge may be used as a ground for setting aside the arbitral award based on Section 34 of the Arbitration Act.66

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Section 14 of the Arbitration Act deals for situations where an arbitrator becomes de jure or de facto unable to perform his duties or fails to act without undue delay. It provides for the arbitrator’s mandate to terminate if he withdraws from his office. Alternatively, parties may also agree to the termination of the arbitrator’s mandate.

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However, if the parties do not reach an agreement, and a controversy regarding the inability of the arbitrator remains, any party may apply to the court to decide on the termination of the arbitrator’s mandate.67

62. Novel Granites Ltd. v. Lakshmi General Finance Ltd. (2003) 3 CTC 148, at para. 8; Aoki India Ltd. v. Mira International (2006) 3 CTC 476, at paras 8, 10. 63. Arbitration Act, s. 13(2). 64. UNCITRAL Model Law, 1985, art. 13. 65. Arbitration Act, s. 13(4). 66. Arbitration Act, s. 13(5); Harike Rice Mills v. State of Punjab 1997 (Supp) Arb LR 342, at para. 5. 67. Arbitration Act, s. 14(2); Sharma Enterprises v. National Buildings Construction Corporation Ltd. ILR (2009) 2 Del 93, at para. 14. The power to terminate the mandate of the arbitrator on grounds of de jure or de facto impossibility must be exercised sparingly and with great caution.

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Law, Practice and Procedure of Arbitration in India

Section 14 of the Arbitration Act corresponds to Article 14 of the UNCITRAL Model Law. An arbitrator becomes de jure or de facto unable to perform his functions or fails to act without undue delay. His mandate terminates if he withdraws from his office, or if the parties agree on the termination.

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A de jure impossibility referred to in Section 14(a) of the Arbitration Act is the impossibility which occurs due to factors personal to the arbitrator. It refers to an arbitrator’s legal incapacity to perform his functions under the law.

It also relates to circumstances under which the arbitrator is, by law, barred from continuing in office. This may include various instances like incapacity, bankruptcy conviction for a criminal offence, etc.68

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The Supreme Court of India in Bharat Broadband Network Ltd. v. United Telecoms Ltd.69 held that an arbitrator becomes de jure unable to perform his functions if he falls within any of the categories mentioned in Section 12(5) read with the Seventh Schedule of the Arbitration Act.70

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Once the arbitrator has become ineligible by operation of law, he cannot nominate another person as an arbitrator.71 The underlying principle being, once the person loses the identity of an arbitrator, he has no power to nominate someone else as an arbitrator.72

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De facto impossibility, on the other hand, relates to factual inability. The arbitrator is physically unable to perform his functions, for instance, due to continuous ill-​health, etc.73

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The last situation in Section 14(a) of the Arbitration Act, namely, the failure to act without undue delay, is an expiry provision according to which an arbitrator’s mandate shall terminate if for other reasons he fails to act without undue delay.74

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The Courts have held that Section 5 of the 1940 Act resides in Section 14 of the Arbitration Act, to include the following grounds of challenge:

68. Shyam Telecom Ltd. v. ARM Ltd. (2004) 3 Arb LR 146 at paras. 12, 13. 69. Bharat Broadband Network Ltd. v. United Telecoms Ltd. (2019) 5 SCC 755. 70. Arbitration Act, s. 12(5) provides that any person whose relationship with the parties, the counsel, or the subject-​matter of the dispute, falls under any of the categories mentioned in the Seventh Schedule, shall be ineligible to be appointed as an arbitrator. 71. TRF Limited v Energo Engineering Projects Limited (2017) 8 SCC 377, at para. 54. 72. Ibid. 73. Shyam Telecom Ltd. v. ARM Ltd. (2004) 3 Arb LR 146, at paras. 12, 13. 74. Ibid, at para. 12.

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(1) Excess or refusal of jurisdiction by arbitrator.



(2) Misconduct of arbitrator.



(3) Disqualification of arbitrator by reason of bias.



(4) Charges of fraud.



(5) Exceptional cases.75

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Moreover, a clear case for termination has to be made by the party posing challenge against the arbitrator enabling the court to adjudicate the challenge without a detailed enquiry.

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The High Court of Delhi, in National Highways Authority of India v. K. K. Sarin,76 stated that:

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“… The court when so approached under S. 14 of the Act will have to decide whether the case can be decided in a ‘summary fashion’ … in cases where the court is unable to decide the question summarily, the court would still dismiss the petition reserving the right of the petitioner to take the requisite plea under S. 34 of the Act.”77

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The United Kingdom Court of Appeal in Director General of Fair-​Trading v. The Proprietary Association of Great Britain78 drew a distinction between “actual bias” and “apparent bias”.

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The Court of Appeal held that “actual bias” denotes a demonstrable situation where a judge has been influenced by partiality or prejudice in reaching his decision.79 Whereas, “apparent bias” denotes existence of a reasonable apprehension that the judge may have been, or may be, biased.80

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Judicial precedent81 leading up to the 246th Report of the Law Commission of India82 were in tandem with the Law Commission’s views. It focused on “circumstances

75. Sharma Enterprises v. National Buildings Construction Corporation Ltd. ILR (2009) 2 Del 93, at para. 24; National Highways Authority of India v. K. K. Sarin (2009) 159 DLT 314, at paras. 27,28. 76. National Highways Authority of India v. K. K. Sarin (2009) 159 DLT 314. 77. Ibid, at para. 34. 78. Director General of Fair-​Trading v The Proprietary Association of Great Britain (2001) 1 WLR 700. 79. Ibid, at paras. 37, 38, 39. 80. Ibid, at paras. 38, 39. 81. The Government of Haryana PWD Haryana (B and R) Branch v. M/​s G.F. Toll Road Pvt. Ltd. & Ors. (2019) 3 SCC 505; Hindustan Construction Company Limited v. IRCON International Ltd. 2016 SCC OnLine Del 6073; Reliance Infrastructure Limited v. Haryana Power Generation Corporation 2016 (6) ARBLR 480 (P&H). 82. Law Commission of India, Report No. 246, Amendments to the Arbitration and Conciliation Act, 1996, August 2014.

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Law, Practice and Procedure of Arbitration in India

exist that give rise to justifiable doubts as to independence or impartiality” of the arbitrator rather than an “apprehension of bias”.83 There is a gradual shift in judicial precedents84 from considering “circumstances that give rise to justifiable doubts as to independence or impartiality exist” to considering an “apprehension of bias”.

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The Courts in Hong Kong have found that the “justifiable doubts as to the arbitrator’s impartiality or independence” test is identical to the common law test applicable to judges.

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It amounts to considering whether, on the basis of the circumstances invoked by the party bringing the challenge including the relevant legal traditions and cultures, there exists a real possibility that the arbitral tribunal was biased.85

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The test is not whether the particular litigant thinks or feels that the arbitrator has been or may be biased. What rather matters is the viewpoint of the hypothetical fair-​ minded and informed observer.

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The applicable test is whether this hypothetical fair-​minded and informed observer will consider whether the challenged arbitrator might not bring an impartial and unprejudiced mind to the resolution of the dispute.86 The test is not whether it would be better for another arbitrator to hear the matter.

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In addition to the circumstances mentioned in Sections 13 and 14 of the Arbitration Act, an arbitrator’s mandate also terminates where he withdraws from office for any reason; or pursuant to agreement between the parties.87

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Where an arbitrator’s mandate terminates, he shall be replaced with a substitute arbitrator. The substitute arbitrator will be appointed according to the rules applicable to the appointment of the previous arbitrator,88 following the original agreement or the applicable provision on the appointment of the arbitrator at the initial stage.89

83. Ibid, p. 29, at para. 55. 84. Voestalpine Schienen GMBH v. Delhi Metro Rail Corporation (2017) 4 SCC 665; Afcons Infrastructure Limited v. Ircon International Limited High Court of Delhi Arbitration Petition No. 21 of 2017. 85. UNCITRAL 2012 Digest of Case Law on the Model Law on International Commercial Arbitration, Article 12, pr. 11, p. 66. 86. Ibid Article 12, pr. 11, p. 66; Jung Science Information Technology Co. Ltd. v. Zte. Corporation, High Court—​ Court of First Instance, Hong Kong Special Administrative Region of China [2008] HKCFI 606. 87. Arbitration Act, s. 15(1). 88. Arbitration Act, s. 15(2). 89. Yashrith Constructions Pvt. Ltd. v. Simplex Concrete Piles Pvt. Ltd. (2006) 6 SCC 204, at para. 4; Decon India Pvt. Ltd. v. Union of India 2005 2 Arb LR 361, at para. 15.

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Chapter 13—​​​Effect of Arbitration Agreement

In circumstances where a substitute arbitrator has been appointed, any previous hearings may be repeated at the discretion of the tribunal, unless otherwise agreed by parties.90 Moreover, any order or ruling made by the old tribunal shall not be invalid solely on the ground of change in the tribunal, unless otherwise agreed by parties.91

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Merely because the contract has come to an end by its termination due to breach, the arbitration clause does not get perished nor is rendered inoperative; rather it survives for resolution of disputes arising “in respect of ” or “with regard to” or “under” the contract.92

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The Supreme Court of India in Ashapura Mine-​Chem Limited v. Gujarat Mineral Development Corporation93 considered the effect of an arbitration agreement in a Memorandum of Understanding. The question was whether the arbitration clause contained in a Memorandum of Understanding is a standalone agreement or not.

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It held that the arbitration clause was an independent arbitration agreement and continued to remain even upon the termination of the Memorandum of Understanding.94

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Further, the party wishing to invoke arbitration and seek an appointment of an arbitrator was entitled to do so.95

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The Supreme Court of India in PASL Wind Solutions Private Limited v GE Power Conversion India Private Limited96 was faced with a dispute arising out of a settlement agreement where the parties had agreed that:

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“All disputes, controversies or differences shall be referred to and finally resolved by Arbitration in Zurich in the English language, in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce, which Rules are deemed to be incorporated by reference into this clause.”97

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The Respondent challenged the jurisdiction of the sole arbitrator on the ground that two Indian parties could not have chosen a foreign seat of arbitration.

90. Arbitration Act, s. 15(3). 91. Arbitration Act, s. 15(4). 92. Magma Leasing & Finance Ltd. v. Potluri Madhavilata (2009) 10 SCC 103, at para. 14; Bharat Petroleum Corporation. Ltd. v. Great Eastern Shipping Co. Ltd. (2008) 1 SCC 503, at para. 23; Reva Electric Car Company Pvt. Ltd. v. Green Mobil (2012) 2 SCC 93, at paras. 48, 49. 93. Ashapura Mine-​Chem Limited v. Gujarat Mineral Development Corporation (2015) 8 SCC 193. 94. Ibid, at para. 17. 95. Ibid, at para. 32. 96. (2021) SCC OnLine SC 331. 97. Ibid, at para. 4.

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Law, Practice and Procedure of Arbitration in India

The Court held that there is no bar under Indian law to permit two India domiciled parties to choose a foreign seat of arbitration. In other words, two Indian parties are entitled to elect a seat of arbitration outside India.98 The Court also reiterated that party-​autonomy is the guiding spirit of arbitration.

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The mere presence of an arbitration clause in the agreement cannot prevent criminal prosecution against the accused if an act constituting a criminal offence is made out even prima facie.99

[13.4] DEATH OF A PARTY

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The 1940 Act100 and the Arbitration Act101 provide(d) that an arbitration agreement is not discharged by the death of any of the parties, either in respect of the deceased or in respect of the other party:

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“[i]‌t is generally recognised that the universal successor is bound by the arbitration clause concluded by the person whom he succeeds, under the reservation of an agreement to the contrary, particularly where such clause had a strictly personal character.”102

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Even if a party to the arbitration dies, the arbitration agreement survives. The existing proceedings are not automatically terminated. The arbitrator’s mandate, when he has been duly appointed and has taken up the reference, is not affected by the death of any of the parties. It includes that of the party by whom he was appointed.103

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The Supreme Court of India in ACC Ltd. v Global Cements Ltd104 upheld the validity of the arbitration agreement despite the death of the two arbitrators who had specifically been named in the arbitration agreement.

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In the event of the death of a party, the arbitration agreement is enforceable by or against the legal representative of the deceased.105 Section 2(1)(g) of the Arbitration Act defines the term “legal representative”.106

Ibid, at paras. 49, 71. S.W. Palanitkar v. State of Bihar (2002) 1 SCC 241, at para. 22. 1940 Act, s. 6(1). Arbitration Act, s. 40(1). J. F. Poudret, S. Besson, Comparative Law of International Arbitration (2nd edn, Thomson Sweet & Maxwell 2007), p. 252. Arbitration Act, s. 40(2). (2012) 7 SCC 71. Arbitration Act, s. 40(1). Section 2(1)(g) of Arbitration Act defines “legal representative” to mean a person who in law represents the estate of a deceased person, and includes a person who intermeddles with the estate of the deceased, and where, a party acts in a representative character, the person on whom the estate devolves on the death of the party so acting.

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98. 99. 100. 101. 102. 1 03. 104. 105. 106.

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Chapter 13—​​​Effect of Arbitration Agreement

The legal representatives of a deceased partner in a company are also allowed to invoke, pursue, and enforce arbitral proceedings and awards. It has been held that whilst the legal heirs of a partner do not necessarily inherit the deceased partner’s rights within a company, the same does not apply to an arbitration agreement in line with Section 40 of the Arbitration Act.107

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The Supreme Court of India in Ravi Prakash Goel v. Chandra Prakash Goel108 held that an arbitration agreement remains enforceable by or against the legal representatives of the deceased, and persons claiming under the rights of a deceased person have the right to enforce an award and are also bound by it.109

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It also interpreted the term “legal representative” to mean a person who has the right to represent the estate of the deceased person. It allowed an application for appointment of an arbitrator by the legal representative of a deceased partner, under the arbitration clause of a partnership deed.110

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This, however, does not affect the operation of any written law or rule of law by virtue of which any right of action is extinguished by the death of a person,111 for example, a person libelled or slandered in a defamation suit.

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There is a similar provision under English law. An arbitration agreement is not discharged by the death of a party. It may be enforced by or against the personal representatives of the party, unless otherwise agreed by the parties.112 Similarly, an arbitrator’s authority is not revoked by the death of a party that appointed the arbitrator.113

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There is a difference between the position of law in England and India. Under English law, parties have to agree in an arbitration agreement that the arbitration agreement will stand extinguished in case of death of either of the parties.

107. Jyoti Gupta v Kewalsons Arb. P. No. 599 of 2017 & I.A. No. 1357 of 2018, before the High Court of Judicature at New Delhi, decided on 19 March 2018. 108. Ravi Prakash Goel v. Chandra Prakash Goel (2008) 13 SCC 667. 109. Ibid, at paras 18, 20. 110. Ibid, at para. 20. 111. Arbitration Act, s. 40(3). 112. Section 8 of the English Arbitration Act (1996) which states: (1) Unless otherwise agreed by the parties, an arbitration agreement is not discharged by the death of a party and may be enforced by or against the personal representatives of that party. (2) Subsection (1) does not affect the operation of any enactment or rule of law by virtue of which a substantive right or obligation is extinguished by death. 113. English Arbitration Act (1996), s. 26.

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Law, Practice and Procedure of Arbitration in India

[13.5] INSOLVENCY AND COMPANIES WINDING-​UP In India, a party to an arbitration agreement, who is held to be insolvent, may commence or defend an arbitration, if the person having jurisdiction to administer the property adopts the contract.114

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If the person having jurisdiction to administer the property does not adopt the agreement, then the matter needs to be determined in connection with insolvency proceedings. Any party to the agreement, or the receiver of the insolvent’s estate, may apply to the court having jurisdiction over the insolvency proceedings (namely, the NCLT), for leave to refer the matter to arbitration in accordance with the agreement.115

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The term “receiver” includes an official assignee who can make applications to the court for directions.116

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The IBC117 and the Companies Act118 lay down the insolvency regime in India. Under the IBC, creditors are classified as operational; or financial; depending on the type of debt owed by the corporate debtor.

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The IBC also contains distinct provisions for initiation of corporate insolvency resolution process by financial creditors119 and operational creditors.120 Insolvency and winding up proceedings are by nature proceedings in rem, and non-​arbitrable.121 NCLT is the judicial authority having jurisdiction over insolvency proceedings.

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If the NCLT admits an application for initiation of corporate insolvency resolution process, it shall declare a moratorium following the provisions of Section 13 of the IBC.

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Upon declaration of moratorium, the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel, or other authority is prohibited.122

114. Arbitration Act, s. 41(1); Marsh v Wood (1829) 9 B & C 659; Sturges v Lord Curzon (1851) 21 LJ Ex 38, 7 Exch 17; Pennell v Walker (1856) 18 CB 651. 115. Arbitration Act, s. 41(2). 116. Arbitration Act, s. 41(3). 117. Insolvency and Bankruptcy Code, 2016 (Act no. 31 of 2016), ss. 33–​54 and 59. 118. Companies Act, 2013 (Act No.18 of 2013), ss. 230–​231 and 270–​365. 119. IBC, s. 7. 120. IBC, s. 9. 121. Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17; Booz Allen and Hamilton INC v. SBI Home Finance Ltd. (2011) 5 SCC 532, at para. 36; HSH Nordbank v. Goodwill Hospital and Research Centre Ltd. (2018) 210 Comp Cas 140, at para. 13. 122. IBC, s. 14(1)(a).

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Chapter 13—​​​Effect of Arbitration Agreement

This moratorium shall have effect till the completion of the corporate insolvency resolution process.123 The Courts have interpreted the aforesaid position of law in various cases.

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The Supreme Court of India in Alchemist Asset Reconstruction Company Ltd. v. Hotel Goudavan Pvt. Ltd.124 was faced with a situation where arbitration proceedings were initiated after imposition of moratorium. The Supreme Court of India held that the proceedings were non est in law.125

The moratorium expressly interdicts institution or continuation of proceedings against corporate debtors.126 This decision expressly bars the institution of arbitration against corporate debtors after commencement of the moratorium.

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A similar question arose in insolvency proceedings before the National Company Law Appellate Tribunal (“NCLAT”) in K.S. Oils Ltd. v. State Trade Corporation of India Ltd.127 where the arbitration proceedings had commenced prior to the imposition of the moratorium.

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The Court held that in terms of Section 238 of the IBC, the provisions of the IBC would override those of the Arbitration Act. The arbitration could not proceed during the moratorium period.128 However, the parties were allowed to file their claims and counterclaims (if any) before the resolution professional.129

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The NCLAT took a slightly different approach in Jharkhand Bijli Vitran Nigam Ltd. v. IVRCL Ltd.130 The question before the NCLAT was whether a counterclaim against the corporate debtor could proceed during the moratorium period.

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The NCLAT found that the claim of the corporate debtor could be determined only after determining the counterclaim in the very same arbitration proceeding.

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Hence, the counterclaim against the corporate debtor was allowed to proceed.131 However, a caveat placed by the NCLAT was that, if on determination it was found that

1 23. 124. 125. 126. 127. 128. 129. 130. 131.

IBC, s. 14(4). Alchemist Asset Reconstruction Company Ltd. v. Hotel Goudavan Pvt. Ltd. AIR 2017 SC 5124. Ibid, at para. 5. Ibid, at para. 4. K.S. Oils Ltd. v. State Trade Corporation of India Ltd. (2018) 146 SCL 588, at para. 14. Ibid, at para. 14. Ibid, at para. 15. Jharkhand Bijli Vitran Nigam Ltd. v. IVRCL Ltd. 2018 SCC OnLine NCLAT 891. Ibid, at para. 3.

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the corporate debtor was liable to pay the creditor, no recovery could be made during the moratorium period.132 The underlying objective of the moratorium period is to provide relief to the corporate debtor through this period during which its assets remain protected from dissipation, to enable it to strengthen its financial position.

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The Courts and arbitral tribunals have adopted this approach while deciding petitions under Section 34 of the Arbitration Act against awards involving parties undergoing insolvency proceedings.

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The High Court of Delhi in Power Grid Corporation of India Ltd. v. Jyoti Structures133 considered the question of whether set aside proceedings under Section 34 of the Arbitration Act needed to be stayed as per Section 14(1)(a) of the IBC.

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The High Court of Delhi held that the term “proceedings” under Section 14(1) (a) of the IBC does not mean all proceedings, and continuation of proceedings under Section 34 of the Arbitration Act which do not result in endangering, diminishing, dissipating, or adversely impacting the assets of the corporate debtor are not prohibited by the IBC.

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The Supreme Court of India in K. Kishan v. Vijay Nirman Company Pvt. Ltd.134 faced with a situation where the IBC was sought to be invoked, pending set aside proceedings under Section 34 of the Arbitration Act.

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The question before the Supreme Court of India was whether the IBC could be invoked in respect of an operational debt where an arbitral award had been passed against an operational debtor, but had not yet been finally adjudicated upon.

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The Supreme Court of India emphasised that as regards operational debts, all that needs to be seen is whether the said debt can be said to be disputed.135

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The filing of a petition under Section 34 of the Arbitration Act is indicative of a pre-​existing dispute which culminates at the first stage of the arbitration in the form of an award. It continues even after the award, at least until the final adjudication under Sections 34 and 37 of the Arbitration Act.

132. 133. 134. 135.

Ibid, at para. 4. Power Grid Corporation of India Ltd. v. Jyoti Structures (2018) 246 DLT 485. K. Kishan v. Vijay Nirman Company Pvt. Ltd. (2018) 17 SCC 662. See IBC, s. 9(5)(ii)(d).

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Chapter 13—​​​Effect of Arbitration Agreement

The mere fact that a party to an arbitration agreement applies for winding up does not have the effect of such a party abandoning the arbitration agreement.136 Further, when a winding-​up order has been passed or a provisional liquidator has been appointed, and before a winding-​up order has been made, no suit or other legal proceeding can be commenced.

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If pending at the date of the winding up order, the action can be proceeded with, by or against the company, except with the leave of the NCLT and subject to such terms as the NLCT may impose.137

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The effects of bankruptcy on arbitration from an international perspective remain unclear. They differ from jurisdiction to jurisdiction.138 For instance, under Polish law, an arbitration agreement stands concluded on the date of bankruptcy.

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Pending legal proceedings against the party (including arbitral proceedings) should be discontinued. The position under the Swedish law is to the opposite effect. An arbitration agreement remains valid despite bankruptcy.

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The interplay of these two legal standpoints was considered in Advanis S.A. v Royal Unibrew A/​S.139

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The Svea Court of Appeal (Stockholm) concluded that choice of Stockholm as the place of arbitration indicated Swedish law as to be applicable to the arbitration agreement. Consequently, the Svea Court did not find any provision under which the arbitration agreement should cease to exist in given circumstances, and it found it to be valid.140

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The Supreme Court of Switzerland in Vivendi SA & Ors. v Elektrim SA & Ors.141 held the insolvency of the Polish company to have rendered the arbitration agreement between the parties as ineffective.

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136. Corn Products Co. (India) Ltd. v. Ayaz Ghadja AIR 1997 Bom 331; Justice R.S. Bachawat’s Law of Arbitration & Conciliation, Vol. 2 (6th edn), Sec. 41, Syn. 2, p. 2563. 137. Companies Act, 2013, s. 279. 138. Patricia Zivkovic, “The Effects of Bankruptcy on Arbitration: An Unresolved Issue of Characterization and Applicable Law”, Kluwer Arbitration Blog, 14 September 2015, available at http://​arbitrationblog. kluwerarbitration.com/​2015/​09/​14/​the-​effects-​of-​bankruptcy-​on-​arbitration-​an-​unresolved-​issue-​of-​ characterization-​and-​applicable-​law/​. 139. Case No. T 8043-​13, decided on 20 March 2015. 140. Patricia Zivkovic, “The Effects of Bankruptcy on Arbitration: An Unresolved Issue of Characterization and Applicable Law”, Kluwer Arbitration Blog, 14 September 2015, available at http://​arbitrationblog. kluwerarbitration.com/​2015/​09/​14/​the-​effects-​of-​bankruptcy-​on-​arbitration-​an-​unresolved-​issue-​of-​ characterization-​and-​applicable-​law/​. 141. Case No. 4A_​428/​2008, decided on 31 March 2009.

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Law, Practice and Procedure of Arbitration in India

The Supreme Court of Switzerland has since held that the decision in Vivendi v Elektrim should not be seen as a general precedent. Generally, foreign insolvency laws will not affect a party’s rights under an arbitration seated in Switzerland. Under German and French law, while the rights and remedies directly related to the insolvency are not arbitrable, arbitral proceedings may continue with modified request for relief after the claim has been filed with the insolvency arbitrator.142

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However, the Court of Appeal, Singapore in Metalform Asia Pte. Ltd. v. Holland Leedon Pte. Ltd. adopted an interesting approach. This case involved a liquidation petition filed by a respondent in an arbitration. The Court of Appeal, Singapore granted an injunction against the winding-​up proceedings until after the disputes between the parties had been decided in arbitration.143

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Where an award is made against a company after the company has been dissolved, the award and those proceedings are null, for they are taken against a company which is not in existence.144 Further, no subsequent validity to the award can be given by declaring the dissolution to be void under the appropriate section of the Companies Act.145

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[13.6] EFFECT ON THIRD PARTIES AND GROUP COMPANIES

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As the law has evolved, it recognised that modern business transactions are often effectuated through multiple layers and agreements.146 Section 8(1) of the Arbitration Act entitles persons claiming through or under a party to the arbitration agreement to seek an arbitral reference, notwithstanding any judicial precedent.

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Similarly, Section 45 of the Arbitration Act (under Part II) also entitles persons claiming through or under a party to the arbitration agreement to seek an arbitral reference, the exceptions being unless the agreement is null and void, inoperative, or incapable of being performed.

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The Supreme Court of India in Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc.147 dealt with the expression “at the request of one of the parties or any person claiming through or under him” and held:

142. Anne-​Catherine Hahn, “The Effects of Insolvency on International Arbitration Proceedings”, available at https://​www.biicl.org/​files/​5808_​hahn_​09-​11-​11_​biicl.pdf. 143. Metalform Asia Pte. Ltd. v. Holland Leedon Pte. Ltd. Court of Appeal, Singapore, [2007] 2 SLR 268; UNCITRAL 2012 Digest of Case Law on the Model Law on International Commercial Arbitration, p. 11. 144. Morris v. Harris (1926) All ER Rep 15, at pp. 18, 19; R.S. Bachawat, Anirudh Wadhwa, Anirudh Krishnan, Justice R.S. Bachawat’s Law of Arbitration & Conciliation, Vol. 2 (6th edn, LexisNexis), Sec. 41, Syn. 2, p. 2563. 145. Morris v Harris (1926) All ER Rep 15, pp. 18, 19. 146. Chetan Properties Limited v. Kasturi & Sons Limited (2018) 16 SCC 413, at para. 23. 147. Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc. (2013) 1 SCC 641.

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Chapter 13—​​​Effect of Arbitration Agreement

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“73. A non-​signatory or third party could be subjected to arbitration without their prior consent, but this would only be in exceptional cases. The court will examine these exceptions from the touchstone of direct relationship to the party signatory to the arbitration agreement, direct commonality of the subject-​matter and the agreement between the parties being a composite transaction. The transaction should be of a composite nature where performance of the mother agreement may not be feasible without aid, execution and performance of the supplementary or ancillary agreements, for achieving the common object and collectively having bearing on the dispute. Besides all this, the court would have to examine whether a composite reference of such parties would serve the ends of justice. Once this exercise is completed and the court answers the same in the affirmative, the reference of even non-​signatory parties would fall within the exception afore-​discussed.”148

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Various legal bases may be applied to bind a non-​signatory to an arbitration agreement:149

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The first theory relies on the discernible intentions of the parties and the principle of good faith and applies to public and private legal entities.150

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Gary B. Born states that:

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The second theory includes the legal doctrines of principal–​agent relations, apparent authority, piercing of the veil, joint venture relations, succession, and estoppel.151

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“The principal legal bases for holding that a nonsignatory is bound (and benefited) by an arbitration agreement … include both purely consensual theories (e.g., agency, assumption, assignment) and nonconsensual theories (e.g. estoppel, alter ego)”.152

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He explains the application of the alter ego principle in arbitration as follows:

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“Authorities from virtually all jurisdictions hold that a party who has not assented to a contract containing an arbitration clause may nonetheless be bound by the clause if that party is an ‘alter ego’ of an entity that did execute, or was otherwise a party to, the agreement. This is a significant, but exceptional, departure from the fundamental principle … that each company in a group of companies (a relatively modern concept) is a separate legal entity possessed of separate rights and liabilities.”153

148. Ibid, at para. 73. 149. Ibid, at para. 103. 150. Ibid, at para. 103.1. The first theory is that of “implied consent, third-​party beneficiary, guarantors, assignment and other transfer mechanisms of contractual rights”. 151. Ibid, at para. 103.2. The second theory relies on the force of the applicable law rather than the intention of the parties. 152. Gary B. Born, International Commercial Arbitration, Vo1. 1 (2nd edn, Wolter Khuwers Law and Business 2014), p. 1418. 153. Ibid, p. 1432.

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Law, Practice and Procedure of Arbitration in India

There may be transactions within a group of companies. The circumstances surrounding the transactions may reflect an intention to bind both signatory and non-​signatory entities within the same group.154 An arbitration entered into by a company within a group of companies can bind its non-​signatory affiliates, if the circumstances demonstrate that the mutual intention of the parties was to bind both signatories and non-​signatories.155

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The court in holding a non-​ signatory bound by an arbitration agreement, approaches the matter by attributing to the transactions a meaning consistent with the intended business sense ascribed to the transaction.156 Therefore, factors such as:157 (1) Relationship between a non-​signatory and a signatory to the arbitration agreement;



(2) Commonality of subject matter; and



(3) Composite nature of transaction

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are weighed in balance while deciding the applicability of an arbitration agreement on non-​signatories to that agreement. The courts intend to find the true essence of the business arrangements and to unravel layered commercial arrangements.158 Gary B. Born explains the “group companies doctrine”:

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“the doctrine provides that a non-​signatory may be bound by an arbitration agreement where a group of companies exists and the parties have engaged in conduct (such as negotiation or performance of the relevant contract) or made statements indicating the intention assessed objectively and in good faith, that the non-​signatory be bound and benefited by the relevant contracts.”159

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Redfern and Hunter160 explain the theoretical foundation of an arbitration agreement binding third parties and group companies as follows:

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“… The requirement of a signed agreement in writing, however, does not altogether exclude the possibility of an arbitration agreement concluded in proper form between

154. Chetan Properties Limited v. Kasturi & Sons Limited (2018) 16 SCC 413, at para. 23. 155. Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc. (2013) 1 SCC 641, at para. 105. 156. Chetan Properties Limited v. Kasturi & Sons Limited (2018) 16 SCC 413, at para. 23. 157. Ibid. 158. Ibid. 159. Gary B. Born, International Commercial Arbitration, Vol. 1 (2nd edn, Wolter Khuwers Law and Business 2014), pp. 1448–​1449. 160. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (5th edn, Oxford University Press 2009).

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Chapter 13—​​​Effect of Arbitration Agreement

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two or more parties also binding other parties. Third parties to an arbitration agreement have been held to be bound by (or entitled to rely on) such an agreement in a variety of ways: first, by operation of the ‘group of companies’ doctrine pursuant to which the benefits and duties arising from an arbitration agreement may in certain circumstances be extended to other members of the same group of companies; and, secondly, by operation of general rules of private law, principally on assignment, agency, and succession …”161 “The group of companies doctrine has been applied to pierce the corporate veil to locate the ‘true’ party in interest. More significantly, it has been also used to target the creditworthy member of a group of companies.”162 Redfern and Hunter state that:

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“Though the extension of this doctrine is met with resistance on the basis of the legal imputation of corporate personality, the application of the doctrine turns on a construction of the arbitration agreement and the circumstances relating to the entry into and performance of the underlying contract.”163

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Russell164 formulates the principle of the effect of an arbitration agreement on third parties as thus:

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“Arbitration is usually limited to parties who have consented to the process, either by agreeing in their contract to refer any disputes arising in the future between them to arbitration or by submitting to arbitration when a dispute arises. A party who has not so consented, often referred to as a third party or a non-​signatory to the arbitration agreement, is usually excluded from the arbitration. There are however some occasions when such a third party may be bound by the agreement to arbitrate. For example, …, assignees and representatives may become a party to the arbitration agreement in place of the original signatory on the basis that they are successors to that party’s interest and claim ‘through or under’ the original party. The third party can then be compelled to arbitrate any dispute that arises.”165

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The Group of Companies doctrine is akin to principles of agency or implied consent. The corporate affiliations among distinct legal entities provide the foundation for concluding that they were intended to be parties to an agreement, notwithstanding their formal status as non-​signatories.166 161. Ibid, p. 99, at para. 2.13. 162. Ibid, p. 100, at para. 2.40. 163. Ibid, p. 100, at para. 2.41. 164. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015). 165. Ibid, pp. 110–​111, para. 3-​025. 166. Gary B. Born, International Commercial Arbitration, Vol. 1 (2nd edn, Wolter Khuwers Law and Business 2014), p. 1450; Magic Eye Developers Pvt. Ltd. v. Green Edge Infra Pvt. Ltd. & Ors. 2020 SCC OnLine Del 597, at para. 23.

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Law, Practice and Procedure of Arbitration in India

The Supreme Court of India in MTNL v Canara Bank167 invoked the Group of Companies doctrine where there was a wholly owned subsidiary of the respondents in the pending arbitration proceedings.

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It held that the Group of Companies doctrine will apply in cases where there is a tight group structure with strong organisational and financial links, so as to constitute a single economic unit, or a single economic reality. In such a situation, signatories and non-​signatories have been bound together under the arbitration agreement.

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The Supreme Court of India in Ameet Lalchand Shah & Ors. v. Rishabh Enterprises & Anr.168 adjudicated a dispute on the present proposition. In this case, four parties executed a total of four contemporaneous agreements for the purpose of commissioning a photovoltaic solar plant in Uttar Pradesh, India. Three of these four interconnected agreements contained an arbitration clause.169

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The Supreme Court of India held that the arbitration clauses in three of the four interconnected agreements were an integral part of the principal agreement.170 The Supreme Court of India applied the principles laid down in Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc.171 while arriving at this conclusion.172

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The Court of Appeal for British Columbia, Canada in The City of Prince George v. A.L. Sims & Sons Ltd.173 took the view that an arbitration agreement is neither inoperative nor incapable of being performed if a multi-​party dispute arises and not all parties are bound by the arbitration agreement.

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The parties bound by the arbitration agreement are to be referred to arbitration and court proceedings may continue with respect to the other parties, even if this creates a risk of conflicting decisions.

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As Lord Hoffman has remarked in the United Kingdom House of Lords decision in Fiona Trusts v. Primalov,174 the construction of an arbitration clause should start with the assumption that parties, as rational businessmen, are likely to have intended that any dispute arising out of their commercial relationship should be decided by the same tribunal.

1 67. 168. 169. 170. 171. 172. 173.

(2013) 1 SCC 641. Ameet Lalchand Shah & Ors. v. Rishabh Enterprises & Anr. (2018) 15 SCC 678. Ibid, at paras. 2, 3, 4. Ibid, at para. 26. Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc. (2013) 1 SCC 641. Ibid, at para. 23. The City of Prince George v. A.L. Sims & Sons Ltd. (1998) 23 YCA 223 and Magic Eye Developers Pvt. Ltd. v. Green Edge Infra Pvt. Ltd. & Ors. 2020 SCC OnLine Del 597, at para. 22. 1 74. Fiona Trusts v Primalov [2007] UKHL 40.

391

Chapter 13—​​​Effect of Arbitration Agreement

[13.7] UNREGISTERED AND UNSTAMPED AGREEMENTS This section deals with the effect of an arbitration clause in an unstamped and/​or unregistered agreement. In India, the Indian Registration Act, 1908 (“Registration Act”) and the Indian Stamp Act, 1899 (“Stamp Act”) respectively govern the registration and stamping of instruments.

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Section 49 of the Registration Act provides that an instrument is compulsorily registrable. If they are not registered, such instruments cannot be received as evidence of any transaction, except for two limited purposes.

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The Supreme Court of India in SMS Tea Estates Private Limited v. Chandmari Tea Company Private Limited175 (“SMS Tea Estates”) while deciding an application under Section 11 of the Arbitration Act considered the following questions:

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“(i) Whether an arbitration agreement contained in a compulsorily registrable document but which was not registered, is valid and enforceable?

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(ii) Whether an arbitration agreement in a document compulsorily required to be stamped which is unregistered and/​or which is not duly stamped, is valid and enforceable?”176 The Supreme Court of India answered question “(i)” as follows:

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“An arbitration agreement does not require registration under the Registration Act. Even if it is found as one of the clauses in a contract or instrument, it is an independent agreement to refer the disputes to arbitration, which is independent of the main contract or instrument. Therefore, having regard to the proviso to section 49 of Registration Act read with section 16(1)(a) of the [Arbitration] Act, an arbitration agreement in an unregistered but compulsorily registrable document can be acted upon and enforced for the purpose of dispute resolution by arbitration.”177

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However, the Supreme Court of India while dealing with question “(ii)” above, distinguished between Section 49 of the Registration Act and Section 35 of the Stamp Act.178 It was held that unless the stamp duty and penalty due in respect of the instrument is paid, a court cannot act upon the instrument or the arbitration agreement which is

175. 176. 177. 178.

SMS Tea Estates Private Limited v. Chandmari Tea Company Private Limited (2011) 14 SCC 66. Ibid, at para. 9. Ibid, at para. 16. Ibid, at para. 19.

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Law, Practice and Procedure of Arbitration in India

part of the instrument.179 The court should consider at the outset, whether the instrument containing the arbitration agreement is properly stamped.180 If a court comes to a conclusion that the instrument is not properly stamped, the court should impound the instruments and deal with it according to Section 38 of the Stamp Act.181 The court cannot act upon such a document or the arbitration clause therein.182

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The Supreme Court of India summarised the procedure to be adopted when the arbitration clause is contained in a document which is not registered and not duly stamped as follows:183

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“(i) The court should, before admitting any document into evidence or acting upon such document, examine whether the instrument/​document is duly stamped and whether it is an instrument which is compulsorily registrable.”184

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“(ii) If the document is found to be not duly stamped, Section 35 of Stamp Act bars the said document being acted upon. Consequently, even the arbitration clause therein cannot be acted upon. The court should then proceed to impound the document under section 33 of the Stamp Act and follow the procedure under section 35 and 38 of the Stamp Act.”185

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“(iii) If the document is found to be duly stamped, or if the deficit stamp duty and penalty is paid, either before the Court or before the Collector (as contemplated in section 35 or 40 of the Stamp Act), and the defect with reference to deficit stamp is cured, the court may treat the document as duly stamped.”186

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“(iv) Once the document is found to be duly stamped, the court shall proceed to consider whether the document is compulsorily registrable. If the document is found to be not compulsorily registrable, the court can act upon the arbitration agreement, without any impediment.”187

179. 180. 181. 182. 183. 184. 185. 186. 187.

Ibid, at para. 19. Ibid, at para. 21. Ibid, at para. 21. Ibid, at para. 21. Ibid, at para. 22. Ibid, at para. 22(1). Ibid, at para. 22(2). Ibid, at para. 22(3). Ibid, at para. 22(4).

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Chapter 13—​​​Effect of Arbitration Agreement

“(v) Once the document is found to be duly stamped, the court shall proceed to consider whether the document is compulsorily registrable. If the document is found to be not compulsorily registrable, the court can act upon the arbitration agreement, without any impediment.”188

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“(vi) Where the document is compulsorily registrable, but is not registered, but the arbitration agreement is valid and separable, what is required to be borne in mind is that the Arbitrator appointed in such a matter cannot rely upon the unregistered instrument except for two purposes, that is (a) as evidence of contract in a claim for specific performance and (b) as evidence of any collateral transaction which does not require registration.”189

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The High Court of Bombay in Gautam Landscapes Private Limited v. Shailesh Shah190 distinguished the judgment of the Supreme Court of India in SMS Tea Estates Private Limited v. Chandmari Tea Company Private Limited191 and held:

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“A court can entertain and grant any interim or ad-​interim relief in an application under Section 9 of the Arbitration Act even where the document containing an arbitration clause is unstamped or insufficiently stamped.”192

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In case of a document containing an arbitration agreement being unstamped or insufficiently stamped, it is not necessary for a court to await the adjudication by the stamp authorities while considering and passing orders in an application under Section 11(6A) of the Arbitration Act.193

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However, the Supreme Court of India in Garware Wall Ropes Limited v. Coastal Marine Constructions and Engineering Limited194 (“Garware Wall Ropes”) partly overruled195 the judgment of the High Court of Bombay in Gautam Landscapes Private Limited v. Shailesh Shah196.

Ibid, at para. 22(5). Ibid, at para. 22(6). Gautam Landscapes Private Limited v. Shailesh Shah 2019 (3) Mh.L.J., p. 231. SMS Tea Estates Private Limited v. Chandmari Tea Company Private Limited (2011) 14 SCC 66. Gautam Landscapes Private Limited v. Shailesh Shah 2019 (3) Mh.L.J., p. 231, at para. 120. Ibid, at para. 120. Garware Wall Ropes Limited v. Coastal Marine Constructions and Engineering Limited (2019) 9 SCC 2019. Ibid, at para. 30, The decision of the High Court of Bombay on “Whether, inter alia, in view of Section 11 (6A) of the Arbitration and Conciliation Act, 1996, inserted by Arbitration and Conciliation (Amendment) Act, 2016, it would be necessary for the Court before considering and passing final order on an application under Section 11(6) of the Act to await the adjudication by the stamp authorities, in a case where the document objected to, is not adequately stamped? Answer: In the negative” was overruled. 1 96. Gautam Landscapes Private Limited v. Shailesh Shah 2019 (3) Mh.L.J., p. 231.

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188. 189. 190. 191. 192. 193. 194. 195.

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Law, Practice and Procedure of Arbitration in India

In this case, the Supreme Court of India was faced with the question as to the effect of an arbitration clause contained in a contract which requires to be stamped.197 The Supreme Court of India relied on its earlier decision in SMS Tea Estates Private Limited v. Chandmari Tea Company Private Limited.198 It inter alia held:

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“An arbitration agreement does not require registration. Even if it is found as one of the clauses in a contract or instrument which is compulsorily registrable, it is an independent agreement to refer disputes to arbitration, which is independent of the main contract or instrument.”199

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On the other hand, if a document or instrument is not properly stamped, the court must impound the same and deal with it in terms of Section 38 of the Indian Stamp Act, 1899. The court cannot act upon such a document or the arbitration clause therein. However, if the stamp duty along with the penalty is paid in the appropriate manner,200 the document or instrument can be acted upon or admitted in evidence.201

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The Supreme Court of India focused on the objective of a speedy resolution through arbitration. It was held that the stamp authorities must decide the issues qua payment of stamp duty and penalty (if any) as expeditiously as possible, and preferably within a period of 45 days from the date of receipt of the instrument.202

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The Supreme Court of India in NN Global Mercantile Pvt Ltd v Indo Unique Flame Ltd & Ors.203 (“Global Mercantile”) overruled its decisions in SMS Tea Estates and Garware Wall Ropes.

(2) not chargeable as per the stamping statutes, the non-​payment of duty on the contract did not prevent the parties from relying upon the arbitration agreement contained in the contract.

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(1) an independent agreement; and

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It held that non-​stamping and insufficient stamping is curable. Further, since the arbitration agreement is:

197. Garware Wall Ropes Limited v. Coastal Marine Constructions and Engineering Limited (2019) 9 SCC 2019, at para. 3. 198. SMS Tea Estates Private Limited v. Chandmari Tea Company Private Limited (2011) 14 SCC 66. 199. Garware Wall Ropes Limited v. Coastal Marine Constructions and Engineering Limited (2019) 9 SCC 2019, at paras. 16, 18, 19. 200. Indian Stamp Act, 1899, s. 35 or s. 40. 201. Ibid, at paras. 17, 18, 19. 202. Ibid, at para. 37. 203. (2021) 4 SCC 379.

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Chapter 13—​​​Effect of Arbitration Agreement

However, the Supreme Court of India has referred the case of Global Mercantile to a larger bench of the Supreme Court.204 The latter larger Supreme Court bench then set guidelines on how courts and arbitral tribunals should deal with an objection regarding non-​stamping or insufficient stamping as follows: (1) They should impound the document and direct the parties to pay the stamp duty along with any penalty to the satisfaction of the collector;



(2) Based on the Arbitration Act, the court should refer the matter to arbitration, but it will not impound the document and rather direct the parties to stamp the document before the arbitral tribunal adjudicates upon the dispute;



(3) Under Section 9 of the Arbitration Act which deals with interim relief, the Court may grant relief to safeguard the subject matter of the arbitration, but it will then impound the document and direct the parties to pay the stamp duty; and



(4) Under Section 11 (appointment of an arbitrator), the Court should appoint an arbitral tribunal, but will direct the parties to stamp the document before the Tribunal can adjudicate upon the dispute.

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[13.8] CONCLUSION

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The effectiveness and efficacy of arbitration agreements depend upon a number of factors. Most pertinently, the national and domestic laws of a country put down specific rules to determine the validity and invalidity of arbitration agreements.

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In fact, courts and/​or statutory provisions in some jurisdictions provide that, if there is no genuine dispute, then there is no basis for commencing an arbitration and/​ or that national arbitration legislation is inapplicable.206 These laws are affected by the procedures laid down in international conventions. Globally, court and judicial bodies endeavour to give effect to arbitration agreements and facilitate arbitral proceedings.

204. Decision Pending. 205. (2021) 4 SCC 379, at para. 39.3 206. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 942.

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Law, Practice and Procedure of Arbitration in India

The Court of Appeal of Singapore in Tomolugen Holdings Ltd. v Silica Investors Ltd.207 held that the principles governing the construction of an arbitration clause are well settled. The court does not adopt a technical approach, but construes the clause based on the presumed intentions of the parties as rational commercial parties.

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The Supreme Court of India has held208 that the scope of judicial enquiry and interference into disputes which are clearly the subject matter of an arbitration agreement between them is very narrow and courts must exercise due caution in this regard. It was further held that the court should attempt, to the best of it ability, to give effect to an arbitration agreement that fulfils all prima facie mandates of validity.

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The arbitration jurisprudence in India (as in many jurisdictions around the world), with respect to arbitration, has changed phenomenally. It is continuing to evolve mostly in tandem with the fluid growth of arbitration jurisprudence globally.

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Designed to be in consonance with the New York Convention and the UNCITRAL Model Law, the Arbitration Act and its latest amendments to it has attempted to encompass the internationally upheld rules for arbitration agreements and their recognition as well as enforcement.

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The arbitrability and enforceability of an arbitration agreement depend most primarily on a valid arbitration agreement under Indian law. The effectiveness of an arbitration agreement is the cardinal notion that the parties’ ability to arbitrate rests upon.

2 07. (2016) 1 SLR 373, at para. 124. 208. Vidya Drolia and Ors. v Durga Trading Corporation Civil Appeal No. 2402 of 2019, decided on 14 December 2020, at para. 75.

Chapter 14 STAY OF CONCURRENT PROCEEDINGS IN COURT [14.1] INTRODUCTION......................................................................................................................... 397

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[14.2] STATUTORY JURISDICTION ON STAY PROCEEDINGS.................................................... 399 [14.3] STAY UNDER INHERENT JURISDICTION............................................................................ 404 [14.4] PROCEDURE AND COSTS FOR STAY..................................................................................... 408 [14.5] ANTI-​SUIT INJUNCTIONS........................................................................................................ 412

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[14.6] CONCLUSION............................................................................................................................... 418

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[14.1] INTRODUCTION

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An arbitration agreement imposes a negative obligation on the parties to avoid litigation and resolve their disputes through arbitration.1 The agreement to arbitrate, once entered, becomes binding upon the parties for all disputes submitted under the agreement.

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Some national courts historically refused to stay litigation of arbitrable disputes, on the grounds that the arbitration agreements were revocable or not specifically enforceable.2

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In contrast, under virtually all contemporary national legal systems, the principal remedies for breach of an international arbitration agreement’s negative obligation not to litigate arbitration disputes are either a mandatory stay of the improperly commenced litigation or dismissal of that litigation.3

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In India, Section 8 of the Arbitration Act mirrors Article 8 of the UNCITRAL Model Law. It places a similar obligation on the national courts to honour arbitration

1. Ust-​Kamenogorsk Hydropower Plant JSC v. AES Ust-​Kamenogorsk Hydropower Plant LLP [2013] UKSC 35. This case has been cited with approval by the High Court of Calcutta in Board of Trustees of the Port of Kolkata v. Louis Dreyfus Armatures SAS, G.A. 1997 of 2014 and C.S. No. 220 of 2014; see also Born, International Commercial Arbitration (2nd edn, 2014), p. 1285. 2. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1278; Robert Merkin, Arbitration Law, 1991 (Updated in 2013), at paras 8.43 to 8.68. 3. Ibid, p. 1278.

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Law, Practice and Procedure of Arbitration in India

agreements. The Arbitration Act prevents judicial intervention in arbitral proceedings except as provided under Part I of the Arbitration Act.4 Article 8(1) of the Model Law contains an implied obligation for national courts not to entertain a dispute on merits if the parties have agreed to arbitrate it, and instead requires that the parties be referred to arbitration.5

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The Supreme Court of India in H. Srinivas Pai v H.V. Pai6 held that the nature of the dispute does not have a bearing on the reference to arbitration.

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The High Court of Singapore, for instance, in Coop International Pte Ltd v Ebel SA,7 has held that Article 8 of the Model Law requires a mandatory stay of proceedings unless the arbitration agreement is not valid and capable of being performed.

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Article II(3) of the New York Convention provides for the stay or dismissal of national court proceedings brought in breach of an arbitration agreement. Further, it does not provide national courts with any discretion to deny a stay or dismissal of such judicial proceedings where the arbitration agreement is enforceable under the New York Convention.8

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The US court has succinctly explained the approach:

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“A district court must stay proceedings if is demonstrated that the parties have agreed in writing to arbitrate the issues underlying the district court proceeding. … The Act ‘leaves no room for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to an arbitration on issues as to which an arbitration agreement has been signed.’”.9

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This chapter discusses the court’s intervention through the imposition of a stay on concurrent litigation proceedings with a view to enforcing valid arbitration agreements.

4. Arbitration Act, s. 5. 5. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1368. 6. (2010) 12 SCC 521. 7. [1998] 1 SLR(R) 615. 8. New York Convention, art. II(3). 9. Danisco A/​S v Novo Nordisk A/​S 2003 U.S. Dist. Lexis 1842, at para. 2 (S.D.N.Y); see also Amizola v Dolphin Shipowner, SA 354 F.Supp.2d 689, p. 697 (E.D. La. 2004); Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1281.

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Chapter 14—​​​Stay of Concurrent Proceedings in Court

[14.2] STATUTORY JURISDICTION ON STAY PROCEEDINGS The court’s intervention may be necessary in at least three situations at the beginning of an arbitration.10 The three situations are: (1) the enforcement of the arbitration agreement;



(2) the establishment of the arbitral tribunal; and



(3) challenges to jurisdiction.

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Valid arbitration agreements produce important legal effects for the parties to the agreement, as well as for national courts and the arbitral tribunals.11 These effects are usually referred to as positive effects and negative effects (or obligations).

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Gary B. Born summarises the obligations of parties under positive and negative effects as follows:

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“[T]‌he positive effects include the obligation to participate and cooperate in good faith in the arbitration of disputes pursuant to the parties’ arbitration agreement, while the negative effects include the obligation not to obstruct the resolution of disputes that are subject to arbitration by the arbitral tribunal or to seek the resolution of such disputes in national courts or other legal forums.”12

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If there is a partnership between arbitrators and national courts, it is one in which each have a different role to play at different times.13 Lord Mustill has compared this relationship to a relay race:14

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“Ideally, the handling of arbitral disputes should resemble a relay race. In the initial stages, before the arbitrators are seized of the dispute, the baton is in the grasp of the court; for at that stage there is no other organisation which could take steps to prevent the arbitration agreement from being ineffectual. When the arbitrators take charge, they take over the baton and retain it until they have made an award. At this point, having no longer a function to fulfil, the arbitrators hand back the baton so

10. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 419, at para.7.09. 11. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1349. 12. Ibid. 13. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 418, at para. 7.07. 14. Ibid.

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Law, Practice and Procedure of Arbitration in India

that the court can in case of need lend its coercive powers to the enforcement of the award.”15 An arbitration agreement imposes a negative obligation on the parties to avoid litigation. The arbitration agreement enjoins the parties to resolve their disputes through arbitration.16

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However, where one party is of the view that the arbitration agreement is inapplicable, or that resolution of a dispute by ordinary litigation would be preferable, then the party may commence an action in their local courts.17 A negative effect often mirrors the positive effect under the arbitration agreement.18 A negative effect entails the obligation not to litigate arbitrable disputes.19

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Similar to the positive effects, negative effects under an arbitration agreement may also form black letter law under the New York Convention,20 the Geneva Convention,21 Model Law,22 and the Arbitration Act23 as implemented in India.

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The parties’ agreement to submit disputes to arbitration recognises and enforces the negative effects of that agreement. It requires a stay or dismissal of court proceedings where disputes are arbitrable.24

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Section 8(1) of the Arbitration Act is a mandatory provision.25 The Supreme Court of India26 has ruled that once the pre-​requisite conditions of Section 8 are satisfied, the judicial authority is obligated to refer the parties to arbitration.27

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Also, A. Broches categorically states that in cases where the conditions for the application of Article 8(1) of the Model Law are fulfilled, the court has no discretion,

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15. Lord Mustill, “Comments and conclusions”, in International Chamber of Commerce (ICC) (ed.) Conservatory Provisional Measures in International Arbitration: 9th Joint Colloquium (ICC 1993), p. 118. 16. Ust-​Kamenogorsk Hydropower Plant JSC v AES Ust-​Kamenogorsk Hydropower Plant LLP [2013] UKSC 35, [2013] 2 Lloyd’s Rep 281; see also Born, International Commercial Arbitration (2nd edn, 2014), p. 1285. 17. See Chapter 12, Section 12.5 on indisputable claims as a situation where a claimant might seek a summary judgment. 18. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1366. 19. Ibid. 20. New York Convention, art. II. 21. Geneva Convention, art. 4. 22. Model Law, art. 8. 23. Arbitration Act, s. 8. 24. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1366. 25. Hindustan Petroleum Corpn. Ltd. v Pinkcity Midway Petroleums (2003) 6 SCC 503; BPL Communications Ltd. v Punj Lloyd Ltd. AIR 2010 SC 488, at para. 14. Section 8(1) is pari materia with art. 8(1) of the Model Law. 26. Magma Leasing and Finance Ltd. v Potluri Madhavi Lata (2009) 10 SCC 103. 27. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer), p. 317.

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Chapter 14—​​​Stay of Concurrent Proceedings in Court

but to refer the parties to arbitration.28 Such a reference is usually done through a stay on the court proceedings. This absence of discretion is consistent with the general interpretation of Article II (3) of the New York Convention29 and the jurisprudence of other Commonwealth countries.30

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Section 5 of the Arbitration Act enunciates the principle of minimal judicial interference with respect to arbitration matters.31

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The Supreme Court of India in Venture Global Engineering v Satyam Computer Services Ltd.32 held that the principle of minimal judicial interference postulated in Section 5 of the Arbitration Act applies to domestic and international arbitrations.

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It appears to be consigned to history.33 Most arbitration rules explicitly confirm that an application for interim relief from a court is not incompatible with an arbitration agreement.34

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Nevertheless, where an application is made to a national court for interim measures, the court may be reluctant to decide in a manner that risks prejudicing the outcome of the arbitration.

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28. A. Broches, The UNCITRAL Model Law on International Commercial Arbitration (1990), art. 8, para. 3; Bantekas, “Arbitration Agreement and Substantive Claim Before Court”, in I. Bantekas, UNCITRAL Model Law on International Commercial Arbitration: A Commentary (2020), p. 145. 29. West Tankers Inc v Ras Riunione Adriatica Di Sicurta, “The Front Comor” [2005] EWHC 454 (Comm), [2005] 2 Lloyd’s Rep 257 at para. 57, though note that the European Court of Justice has held an injunction restraining court action in breach of an arbitration agreement in another European Member State is incompatible with Council Regulation (EC) No 44/​2001 of 22 December 2000 in Allianz SpA v West Tankers Inc, West Tankers Inc v RAS Riunione Adriatica di Sicurta SpA [2009] All ER (D) 82 (Feb). See also Samuels, ‘Jurisdictional Problems in International Commercial Arbitration’ A Study of Belgian, Dutch, English, French, Swedish, US and West German Law (1989), p. 195; McCreary Tire & Rubber Co v CEAT SpA 501 F.2d 1032, 1037 (3rd Circ. 1974). 30. GreCon Dimter Inc v J R Normand Inc [2005] SCC 46 (CanLII) (Can); Fibreco Pulp Inc v The Star Dover [2000] CanLII 15323, FCA (Can); Tai Hing Cotton Mill Limited v Glencore Grain Rotterdam B V [1995] HKCA 626, CA (HK); F & D Building Services Engineering Co Ltd v Chevalier (E & M Contracting) [2001] 3 HKCFI 824; Pathak v Tourism Transport Ltd [2002] 3 NZLR 681; Mugoya Construction & Engineering Ltd v National Social Security Fund Board of Trustees [2005] EKLR, Civil Suit 59 of 2005 (Kenya); Ocean Park Corporation v Proud Sky Co Ltd [2007] HKCFI 1221 (HK); Rondabosh International Ltd v China Ping An Insurance (Hong Kong) Co Ltd [2009] HKCFI 1198 (HK). 31. Section 5 of the Arbitration Act reads: “Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.” 32. (2008) 4 SCC 190. 33. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 424, at para. 7.24. 34. ICC Rules, art. 28(2); UNCITRAL Rules, art. 26(9); ICDR Rules, art. 24(3); SCC Rules, art. 32(5); ICC Rules, art. 29(7); SIAC Rules, art. 26(3); HKIAC Rules, art. 23(9); LCIA Rules, art. 9B, at para. 9.12.

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Law, Practice and Procedure of Arbitration in India

The House of Lords of England in the Channel Tunnel Group Ltd. v Balfour Beatty Construction Ltd.35 stated:

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“There is always a tension when the court is asked to order, by way of interim relief in support of an arbitration, a remedy of the same kind as will ultimately be sought from the arbitrators: between, on the one hand, the need for the court to make a tentative assessment of the merits in order to decide whether the plaintiff ’s claim is strong enough to merit protection, and on the other the duty of the court to respect the choice of the tribunal which both parties have made, and not to take out of the hands of the arbitrators (or other decision makers) a power of decision which the parties have entrusted to them alone. In the present instance I consider that the latter consideration must prevail … If the court now itself orders an interlocutory mandatory injunction, there will be very little left for the arbitrators to decide.”36

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Section 8 of the Arbitration Act is peremptory in nature and provides for a judicial authority to refer a dispute to arbitration if there exists a valid arbitration agreement between the parties in terms of Section 7 of the Arbitration Act.37

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The High Court of Delhi in Mumbai International Airport Limited v Airports Authority of India Ltd. & Anr.38 summarised the rules governing applications under Section 8 of the Arbitration Act as follows:

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“Once an arbitrable dispute exists, the parties to the dispute are entitled, as of right, conferred by the arbitration agreement between them read with the [Arbitration Act], to have the dispute resolved by arbitration. The Court is proscribed, completely, from usurping this jurisdiction, of the arbitrator, or the Arbitral Tribunal, as the case may be. Fostering of arbitration, as a viable alternate dispute resolution mechanism, and providing for all steps in the aid of the arbitral process, constitutes the very raison d’être of the [Arbitration Act].”39

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The Supreme Court of India in P. Anand Gajapathi Raju v. P. V. G. Raju,40 (“P. Anand Gajapathi Raju”) laid down certain pre-​conditions which must be satisfied for a court to exercise its powers under Section 8 of the Arbitration Act as follows:41

35. 36. 37. 38.

[1993] AC 334. Ibid, pp. 367, 368. P. Anand Gajapathi Raju v. P. V. G. Raju (Dead) (2000) 4 SCC 539, at para. 8. O.M.P. (I) (COMM.) 174/​2020 & I.A. 5430/​2020, I.A. 5467/​2020 and I.A. 5468/​2020 decided on 27 November 2020. 39. Ibid, at para. 14. 40. (2000) 4 SCC 539. 41. (2000) 4 SCC 539, at para. 5.

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Chapter 14—​​​Stay of Concurrent Proceedings in Court

(1) There exists an arbitration agreement;



(2) A party to the agreement brings an action in the Court against the other party;



(3) Subject matter of the action is the same as the subject matter of the arbitration agreement; and



(4) The other party moves the Court for referring the parties to arbitration before it submits his first statement on the substance of the dispute.

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The Supreme Court of India in Shin-​Etsu Chemical Co. Ltd v. Aksh Optifibre Ltd.42 held that the legislature’s use of the word “shall” (in contrast to the word “may” used in Section 34 of the 1940 Act), reveals that the judicial authority does not have a vested discretion in staying concurrent court proceedings. The reference to arbitration is mandatory. A matter is not required to be referred to arbitration if:

(1) no application under Section 8 of the Arbitration Act has been filed by the parties; or



(2) in case of a pending suit, an application was not filed before submitting the first statement on the substance of dispute; or



(3) if an application is not accompanied by the original arbitration agreement or a certified copy thereof.43

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The Supreme Court of India in Rashtriya Ispat Nigam Ltd. v Verma Transport Co.44 clarified that “what is necessary is disclosure of the entire substance in the main proceeding itself and not taking part in the supplemental proceeding”.

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Accordingly, a party’s response opposing the prayer for interim injunction is not a “submission of the first statement” for the purposes of Section 8 of the Arbitration Act.

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However, an order passed under Section 8 of the Arbitration Act by a “judicial authority” making the reference to arbitration is a final order. There is no appeal provided by the Arbitration Act to challenge such an order.45

42. 43. 44. 45.

(2005) 7 SCC 234, at paras. 11, 12. Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya (2003) 5 SCC 531, at para. 12. (2006) 7 SCC 275, paras. 38, 39, 40. Tandav Film Entertainment Pvt. Ltd. v Four Frame Pictures & Anr. (2009) ILR 7 Delhi 795; Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer), p. 320.

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Law, Practice and Procedure of Arbitration in India

A full bench of the High Court of Bombay in Conros Steels Pvt. Ltd. v LU Qin (Hong Kong) Company Ltd.46 held that the embargo contained in Section 37 of the Arbitration Act is absolute and express. The Arbitration Act being a special statute limits judicial intervention.

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Section 37 consciously takes away the right to appeal against order, except those specified in the said section. It also exempts orders made under Section 8 of the Arbitration Act referring parties to arbitration from being appealable.

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The 2015 Amendment amended Section 37 of the Arbitration Act, whereby an appeal is now provided under Section 37(1)(a) from an order refusing to refer parties to arbitration under Section 8 of the Arbitration Act. Conversely, there is no appeal provided from an order passed by a court making referring parties to arbitration.47

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[14.3] STAY UNDER INHERENT JURISDICTION

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In addition to the statutory provisions governing the extent of interference by means of grant of a stay on proceedings, the legislature accords to courts certain inherent powers.

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This inherent jurisdiction of judicial authorities, vested in them through practice as well as procedure, often permits actions beyond the ambit of statutory powers. A court’s power to grant stay of proceedings with respect to arbitrations, therefore, also depends on the inherent jurisdiction it possesses for the same.

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In principle, insofar as an arbitral tribunal possesses jurisdiction to decide disputes regarding its own jurisdiction (competence-​competence). The national courts may be divested of power to decide such disputes, save for their defined roles in reviewing the eventual arbitral award.48

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In India, Section 9 of the Code of Civil Procedure, 1908 (“CPC”) empowers civil courts to entertain civil suits. Section 151 of the CPC49 encompasses the “inherent powers” of the court.

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The legislative intent behind these provisions is to ensure that a party is not left remedy-​less. It is to further ensure that the courts were not left without any legal sanctions to meet the ends of justice.

46. 47. 48. 49.

AIR 2015 Bom 106. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 321. Gary B. Born, International Commercial Arbitration, Vol. I (3rd edn, Kluwer Law International 2021), p. 1374. Section 151 of the Code of Civil Procedure, 1908 reads: “Nothing in this code shall be deemed to limit or otherwise affect the inherent powers of the court to make such orders as may be necessary for the ends of the justice or to prevent abuse of the process of the court.”

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Chapter 14—​​​Stay of Concurrent Proceedings in Court

The Supreme Court of India in Ramji Dayawala and Sons (P) Limited v Invest Import (“Ramji Dayawala”)50 held that staying a suit, which has been commenced despite the presence of an arbitration agreement, was within the discretion of the court.51 Further, the Supreme Court recognised two modes of obtaining such stays: (1) a prayer under Section 151 of the CPC urging the court to exercise its inherent jurisdiction over the matter; or



(2) an application under Section 34 of the 1940 Act where the court’s approach would be to ensure that people are held to their bargain.

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The Supreme Court of India in Ramji Dayawala also held that if a party to a valid and subsisting arbitration agreement approached the court in violation of such agreement, the court would not lend assistance to such party.

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It will compel such litigant to honour its contractual obligation to refer the dispute to arbitral proceedings.52 The Court further emphasised that its discretionary power to grant such stays falls under the umbrella of its inherent powers.53

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The prevailing judicial decisions reveal that the principles governing Order XXXIX Rules 1 and 2 of the CPC54 also govern the grant of interim protection under Section 9 of the Arbitration Act.

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The Supreme Court of India in PASL Wind Solutions Private Limited v GE Power Conversion India Private Limited55 while upholding the right of two Indian parties to choose a foreign seat of arbitration also held that an application for interim reliefs under Section 9 of the Arbitration Act is maintainable in such cases.

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In parallel, while the principles governing Order XXXIX also apply to Section 9 of the Arbitration Act, the court must not regard itself as a court granting interim relief under Order XXXIX of the CPC.56

50. 51. 52. 53. 54.

1981 SCR (1) 899. Ibid, at para. 29. Ibid, at para. 19. Ibid, at para. 32. Order XXXIX, rr. 1 and 2 of the CPC are concerned with the court’s power to grant an injunction in ongoing dispute; r. 1 provides for grounds for a “temporary injunction” and r. 2 is concerned with injunctions to restrain continuance of breach by one or more parties to a dispute. 55. (2021) SCC OnLine SC 331. 56. Mumbai International Airport Limited v Airports Authority of India & Anr. O.M.P. (I) (COMM.) 174/​2020 and I.A. 5430/​2020, I.A. 5467/​2020 and I.A. 5468/​2020 decided on 27 November 2020, at para. 15.

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Law, Practice and Procedure of Arbitration in India

The arbitral tribunal is distinct and independent. It has the jurisdiction to grant interim relief, protecting the subject matter of arbitration, during the arbitral proceedings. The arbitral tribunal’s powers are arising from its inherent jurisdiction under the Arbitration Act.57

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Under Section 9 of the Arbitration Act, a court is concerned more with the necessity to preserve the status quo. Its focus is to facilitate the arbitral process initiated by the parties. Therefore, the court when deciding an application under Section 9 of the Arbitration Act can require the party benefiting from its interim protection orders, to institute arbitral proceedings within a specified time frame.58

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The Supreme Court of India in ITI Ltd. v Siemens Public Communications Network Ltd.59 has also held that in the absence of any express exclusion of the CPC, no inference could be drawn that the provisions of the CPC would not apply to proceedings before the courts arising under the Arbitration Act.

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It was held that the remedy of filing a civil revision application under Section 115 of the CPC was not barred under Section 5 of the Arbitration Act.

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The High Court of Delhi in Mumbai International Airport Limited v Airports Authority of India,60 has gone beyond the principle of minimal judicial interference. The Court held that it should foster and facilitate the arbitral process to be initiated by the parties.

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The Supreme Court of India in Chloro Controls India Private Limited v. Severn Trent Water Purification Inc.61 held that the obligation effected by Section 8 of the Arbitration Act cannot be misconstrued as a violation of the principles of the CPC.

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It ruled that while it was true that Section 9 of the CPC empowered the courts to have jurisdiction to try all suits of civil nature, such jurisdiction or the right of a party to approach a civil court was not an absolute right as there were inbuilt restrictions.62

Ibid. Ibid. (2002) 5 SCC 510. O.M.P. (I) (COMM.) 174/​2020 & I.A. 5430/​2020, I.A. 5467/​2020 and I.A. 5468/​2020, decided on 27 November 2020. 61. (2013) 1 SCC 641. 62. Ibid, at para. 155. 57. 58. 59. 60.

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Chapter 14—​​​Stay of Concurrent Proceedings in Court

The court’s inherent power to order a stay of the concurrent proceedings is available in all the matters relating to arbitration.63 The House of Lords of the United Kingdom in Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd64 explained:

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“... it must surely be legitimate to use the same powers to enforce a dispute resolution agreement which is nearly an immediately effective agreement to arbitrate, albeit not quite. I would therefore hold that irrespective of whether clause 67 falls within [the Arbitration Act 1975 (UK)] s. 1, the court has jurisdiction to stay the present action.”65 The Court of Appeal of England and Wales in Racecourse Betting Control Board v Secretary of State for Air66 stated that:

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“… it is rather unfortunate that the power and duty of the court to stay the action was said to be under the Arbitration Act 1889 [(UK)] s. 4. In truth, the power and duty arose under a wider general principle, namely, that the court makes people abide by their contracts, and, therefore, will restrain a plaintiff from bringing an action which he is doing in breach of his agreement with the defendant that any dispute between them shall be otherwise determined.”67

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In Singapore, a court has inherent powers to stay proceedings brought before it in breach of an agreement to resolve disputes by an alternative method or by its inherent powers of case management.68

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The court may also order at its discretion, a stay of the action even if some of the parties may not be a party to the arbitration agreement or where some claims fall within the scope of the arbitration agreement.

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The High Court of Singapore in Maybank Kim Eng Securities Pte Ltd v Lim Keng Yong69 held that the fact that only some of the claims fall within the scope of the arbitration agreement, is not a “sufficient reason” for the court to exercise its discretion and deny the grant of a stay on concurrent court proceedings.

63. Roussel-​Uclaf v. GD Searle & Co [1978] 1 Lloyd’s Rep 225 at p. 230 (U.K.). This decision has been cited with approval by the Supreme Court of India in Chloro Controls India Private Limited v Severn Trent Water Purification Inc. (2013) 1 SCC 641. 64. [1993] 1 All ER 664. 65. Ibid, p. 678. 66. [1944] 1 All ER 60, CA. Also see Accounting Publication Sdn Bhd v. Ho Soo Furniture Sdn Bhd [1998] 4 MLJ 497 and Brian McGowan v. Summit at Lloyds 2002 Scot (D) 14/​6. 67. Ibid, p. 65. 68. Halsbury’s Laws of Singapore, Arbitration (Volume 1(2)), [20.030] Inherent jurisdiction to order stay, para. 20, Arbitration, December 2020. 69. (2016) SGHC 68.

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Law, Practice and Procedure of Arbitration in India

[14.4] PROCEDURE AND COSTS FOR STAY Procedure An application under Section 8 of the Arbitration Act must be clear and a written statement requesting the court to grant the relief based on averred facts, and not just an oral pleading.

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The prayer under Section 8 must necessarily and unambiguously ask for “reference to arbitration” and not merely to “dismiss” the suit in the view of the “arbitration clause”.70

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The burden to establish that proceedings deserve to be stayed will be on the person who seeks stay and establishes the arbitration agreement.71

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The High Court of Delhi in BPL Communications Ltd. v Punj Lloyd Ltd.72 set out the requirements for the exercise of jurisdiction under Section 8 of the Arbitration Act as follows: “(1) The provision of Section 8 is peremptory in nature, and is mandatory;

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(2) The mandate of Section 8 can be invoked by a party to an action before a judicial authority by filing an application;

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(3) The application invoking Section 8 may be filed in any action, not necessarily civil suits brought before ‘judicial authority’, which does not necessarily imply a Civil Court established under the Civil Procedure Code, and a ‘court’ as defined by clause (e) of Section 2 of the [Arbitration] Act;

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(4) The application for referring the disputes to an arbitrator may be made by a party ‘not later than when submitting his first statement on the substance of the dispute’. Before invoking the powers of the judicial authority under Section 8, the party applying, must not have submitted the statement on the substance of the dispute, in the proceeding in which application is filed, or in a proceeding between the parties to arbitration agreement before a court or judicial authority prior to the present action; (5) Reference to an arbitrator under this provision can be made if the action before the judicial authority is a matter, which is the ‘subject-​matter of

70. Bal Kishan Bansal v Pramit Bansal (2007) 1 Arb LR 47, at paras. 52, 53. 71. Markanda, Law Relating to Arbitration & Conciliation, Chapter II Arbitration Agreement, 2009. 72. 2004 (1) Arb LR 46 (Delhi).

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Chapter 14—​​​Stay of Concurrent Proceedings in Court

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an arbitration agreement’. The subject-​matter before a judicial authority must completely identify with the subject of the arbitration agreement. Reference of part of the subject-​matter of an action before the judicial authority to arbitration to which arbitration agreement applies, is not contemplated. If the requirements of the ingredients of sub-​section (1) of Section 8 are satisfied, the court has no option or discretion, but it is mandatory for it to make reference of the subject-​matter of the action before it to arbitration in accordance with the arbitration agreement; (6) Parties to the action before judicial authority and the arbitration agreement should be the same;

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(7) The application shall be accompanied by the original arbitration agreement or a duly certified copy thereof;

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(8) The judicial authority will not refuse making a reference under Section 8, merely on the ground that a dispute about existence and validity of the arbitration agreement or jurisdiction of the Arbitrator has been raised since the Arbitrator would have jurisdiction to decide these objections under Section 16 of the Act. The judicial authority before making reference would have to be satisfied that the subject-​matter of the action before it and the subject of the arbitration agreement are identical, and may examine the arbitration agreement and the subject-​matter of the action before it for giving a finding in this regard;

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(9) Unless the judicial authority before whom the application under Section 8 has been filed is a ‘court’, as defined within the meaning of Section 42 read with clause (e) of Section 2 of the Act, the judicial authority shall not entertain subsequent proceedings arising under the arbitration agreement by virtue of Section 42 of the Act;

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(10) After a reference of the subject of arbitration made by the judicial authority to an arbitration under Section 8, nothing remains to be decided in the action.”73 The High Court of Kerala in M. Vijaya Narayanan v M. Prabhakaran74 explained the scope of Section 8 of the Arbitration Act as follows:

73. Ibid, at para. 14; Union of India v Kishori Lal Gupta [1960] 1 SCR 493; Sukanya Holdings Pvt. Ltd. v Jayesh H Pandya (2003) 5 SCC 531; Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), pp. 315–​316. 74. (2007) 1 Arb LR 1.

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“When an application is filed under S. 8, the court has to decide whether there exists a valid arbitration agreement. If there is a valid arbitration agreement, it has to further decide whether the dispute that is sought to be raised before it is covered by the arbitration clause. If these aspects are found in favour of the applicant and the party had applied under S. 8 before submitting his first statement on the substance of the dispute before the court, the court is bound to refer the parties to arbitration. It is not for the court to appoint an arbitrator. The court cannot also stay the proceedings till the arbitration proceedings conclude. All the rights and obligations and remedies of the parties including the right to challenge the award are governed by the provisions of the 1996 Act. Once it is found that subject matter of the action before it is the subject matter of an arbitration agreement and an order is passed referring the parties to arbitration, the proceedings of the suit have necessarily to end.”75

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An application for stay of proceedings under Section 8(1) of the Arbitration Act must be made before the judicial authority. If no application is made under this provision, then Section 5 of the Arbitration Act76 would not come into play so as to bar the jurisdiction of the court.77

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However, the mere existence of an arbitration agreement does not impose any kind of obligation on the judicial authority to stay the suit.78 An arbitration agreement does not pose an express bar to the Civil Court’s jurisdiction nor is it an express bar for filing a suit.

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Costs

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Section 8(2) of the Arbitration Act stipulates that an application for stay is not to be entertained unless it is accompanied by the original arbitration agreement or its duly certified copy. The original agreement itself, or a certified copy thereof, serves as primary and secondary evidence respectively, under Indian law.79

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The 246th Law Commission Report80 led to the 2015 Amendment in the Arbitration Act.

75. Ibid, at paras. 9, 10. 76. Section 5 of the Arbitration Act mandates minimum judicial interference in the arbitral process except where so provided under the Act. 77. Garden Finance Ltd. v Prakash Inds. Ltd. AIR 2002 Bom 8, at para. 9; Transworld Finance & Real Estate Co. P. Ltd. v Union of India (2002) 2 RAJ 313 (Del). 78. National Insurance Co. Ltd. v Padma Tobacco Co. (2004) 2 Arb LR 345, at para. 24. 79. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 364. 80. Law Commission of India, Report No. 246, Amendments to the Arbitration and Conciliation Act 1996, August 2014.

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Chapter 14—​​​Stay of Concurrent Proceedings in Court

The 2015 Amendment also resulted in the addition of Section 31-​ A to the Arbitration Act which provides a regime of costs not just for arbitration proceedings before arbitral tribunals, but also related to litigation proceedings before courts.81 Under Section 31-​A of the Arbitration Act, the court or the tribunal, notwithstanding anything contained in the CPC, has the discretion to determine: (1) whether or not costs are payable from one party to another;



(2) the amount of costs payable; and



(3) the time by which such costs must be paid.

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Section 31-​A of the Arbitration Act clarifies that (notwithstanding the provisions of the CPC82) “costs” include fees and expenses pertaining to arbitrators, courts, witnesses, legal fees, expenses, administrative fees, and any other expenses incurred in connection with the arbitral or court proceedings.

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However, the Supreme Court of India held that nothing contained in Sections 31-​ A and 31(8) of the Arbitration Act83 can obstruct or preclude parties to an arbitration agreement from agreeing upon a fee structure to govern their arbitral proceedings.84

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The changes made pursuant to the 2015 Amendment gives considerable freedom to the courts and arbitral tribunals to determine and fix costs in accordance with particular details of each dispute. Pertinently, the provisions of Section 31-​A of the Arbitration Act only apply to awards made after 23 October 2015.

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In Singapore, the court “may impose any conditions as it deems fit” including imposition of costs on either party under Section 10(2) of its Arbitration Act. This preserves the common law power of the courts as to awarding costs in a motion to stay proceedings.85

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The High Court of England and Wales in A v B (No 2)86 held that costs for an application for a stay of proceedings brought in breach of an arbitration agreement should 81. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 844. 82. Section 35 of the CPC prescribes that the court shall have discretionary powers with respect to determination, allocation, and award of costs of, and incident to, all suits. Section 35A, CPC, empowers the court to award costs against a party guilty of putting forward pleadings/​submissions that are false or vexatious to its knowledge. Section 35B of the CPC further empowers the court to order a party causing delay, to pay costs which are reasonably sufficient to reimburse the other party. 83. Section 31(8) of the Arbitration Act provides that costs related to an arbitration will be determined in accordance with s. 31-​A. 84. National Highways Authority of India v Gayatri Jhansi Roadways Limited (2019) SCC OnLine SC 906. 85. Splosna Plovba International Shipping and Chartering d.o.o. v Adria Orient Line Pte Ltd [1998] SGHC 289. 86. [2007] EWHC 54 (Comm), [2007] 1 Lloyds Rep 358; also see Kyrgyz Mobil Tel Ltd v Fellowes International Holdings Ltd [2005] EWHC 1314 (Comm).

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Law, Practice and Procedure of Arbitration in India

normally be made on an indemnity basis. As a result, attempting to litigate in breach of an arbitration agreement carries a greater financial risk.

[14.5] ANTI-​SUIT INJUNCTIONS

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There is a risk that parties, when facing an international commercial dispute, may ignore the arbitration agreement, and commence court proceedings in a country other than the seat of the arbitration. This can happen for a number of reasons including when a party supposes that its claim is indisputable or is confident that it would be more successful in overseas proceedings than in arbitration.

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Gary B. Born opines:

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“… a party’s ability to obtain a stay of litigation is not always sufficient to effectively enforce an arbitration agreement in the international context. That is because a party may be able to pursue litigation of the underlying dispute in a national court which does not honor, or fully honor, its undertakings pursuant to the New York Convention. In that event, a stay of the underlying litigation in one (or several) national courts, which do honor the [New York] Convention, may be only a partial, and ultimately ineffective remedy for enforcing the international arbitration agreement.”87

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The courts in India like the courts in England are courts of both law and equity.88 The principles governing grant of injunction which is an equitable relief by a court will also govern grant of anti-​suit injunction which is but a species of injunction.89

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When a court restrains a party to a suit or proceedings before it from instituting or prosecuting a case in another court including a foreign court, it is called anti-​suit injunction.90

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The courts in India have power to issue anti-​suit injunction to a party over whom it has personal jurisdiction, in an appropriate case. This is because courts of equity exercise jurisdiction in personam.91

87. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1291. 88. Modi Entertainment Network v W.S.G. Cricket Pte. Ltd. (2003) 4 SCC 341, at para. 10. 89. Ibid. 90. Ibid. 91. Ibid.

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Chapter 14—​​​Stay of Concurrent Proceedings in Court

However, having regard to the rule of comity, the courts normally exercise this power sparingly, because such an injunction though directed against a person, in effect causes interference in the exercise of jurisdiction by another court.92

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The necessary test applied to obtain an anti-​suit injunction is higher than an ordinary injunction.93 It requires an applicant to show a high degree of probability94 that the court has jurisdiction and the case against the respondent is right.95 An application for an anti-​suit injunction must be issued promptly before the foreign proceedings are too far advanced.96

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This approach arises from the degree of unwillingness of States to interfere in the court proceedings of one another. More so, where the other State has implemented the New York Convention or UNCITRAL Model Law which means that the aggrieved party ought to be able to deal with the breach of an arbitration agreement in that court.97

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Some States permit additional means of enforcement of the negative obligation to refrain from litigating disputes that are subject to arbitration.98

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These remedies are characteristically available only in common law jurisdictions, where national courts may be prepared to issue anti-​suit injunctions to prohibit the filing or prosecution of litigation in a foreign forum.99

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Anti-​suit orders are directed against the parties to foreign litigation (and not foreign courts itself). They are intended to have the effect of precluding the litigation from proceeding in the foreign court.100

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92. Ibid. 93. See Maldives Airports Co Ltd v GMR Malé International Airport Pte Ltd [2013] SGCA 16, [2013] 2 SLR 449; Ashlock William Grover v SetClear Pte Ltd [2012] SGCA 20, [2012] 2 SLR 625; CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345. 94. Colman J in Bankers Trust Co v PT Mayora Indah (20 January 1999, unreported) said that “This is not merely an American Cyanamid test ([1975] 1 All ER 504, [1975] AC 396); it goes beyond that because the injunctions which the plaintiff seeks are intended to continue until after the hearing of any arbitration pursuant to the arbitration clause and therefore have the effect of enforcing that arbitration agreement as distinct from preserving the status quo pending a trial prior to the arbitration going any further”. 95. Midgulf International Ltd v Groupe Chimiche Tunisien [2009] EWHC 963 (Comm). 96. Bankers Trust Co v PT Jakarta International Hotels and Development [1999] 1 All ER (Comm) 785, at p. 789. 97. Toepfer International GmbH v Societe Cargill France [1998] 1 Lloyd’s Rep 379, at p. 386; Shell International Petroleum Co Ltd v Coral Oil Co Ltd [1999] 1 Lloyd’s Rep 72; Verity Shipping SA v Nvorexa [2008] EWHC 213 (Comm), [2008] 1 Lloyd’s Rep 652. 98. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1291. 99. Gary B. Born & P. Rutledge, International Civil Litigation in United States Courts (5th edn, 2011), p. 567; L. Collins et al. (eds), Dicey, Morris and Collins on The Conflict of Laws paras. 12-​090 to 12-​092 (15th edn, 2012); Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1291. 100. Gary B. Born and P. Rutledge, International Civil Litigation in United States Courts (5th edn, 2011), p. 567; Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1291.

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Law, Practice and Procedure of Arbitration in India

In India, the Supreme Court of India in Modi Entertainment Network and Anr. v W.S.G. Cricket PTE. Ltd.101 has set out the principles for grant of anti-​suit injunctions as follows: “(1) In exercising discretion to grant an anti-​suit injunction the court must be satisfied of the following aspects:

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(a) the defendant, against whom injunction is sought, is amenable to the personal jurisdiction of the court;

(b) if the injunction is declined, the ends of justice will be defeated and injustice will be perpetuated; and

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(c) the principle of comity, respect for the court in which the commencement or continuance of action/​proceeding is sought to be restrained, must be borne in mind.

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(2) In a case where more forums than one are available, the court in exercise of its discretion to grant anti-​suit injunction will examine as to which is the appropriate forum (forum conveniens) having regard to the convenience of the parties and may grant anti-​suit injunction in regard to proceedings which are oppressive or vexatious or in a forum non-​conveniens.

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(3) Where jurisdiction of a court is invoked on the basis of jurisdiction clause in a contract, the recitals therein in regard to exclusive or non-​exclusive jurisdiction of the court of choice of the parties are not determinative but are relevant factors and when a question arises as to the nature of jurisdiction agreed to between the parties the court has to decide the same on a true interpretation of the contract on the facts and in the circumstances of each case.

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(4) A court of natural jurisdiction will not normally grant anti-​suit injunction against a defendant before it where parties have agreed to submit to the exclusive jurisdiction of a court including a foreign court, a forum of their choice in regard to the commencement or continuance of proceedings in the court of choice, save in an exceptional case for good and sufficient reasons, with a view to prevent injustice in circumstances such as which permit a contracting party to be relieved of the burden of the contract; or since the date of the contract the circumstances or subsequent events have made it impossible for the party seeking injunction to prosecute the case in the court of choice because the essence of the jurisdiction of the court does not exist or because of a vis major or force majeure and the like.

101. (2003) 4 SCC 341.

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Chapter 14—​​​Stay of Concurrent Proceedings in Court

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(5) Where parties have agreed, under a non-​exclusive jurisdiction clause, to approach a neutral foreign forum and be governed by the law applicable to it for the resolution of their disputes arising under the contract, ordinarily no anti-​suit injunction will be granted in regard to proceedings in such a forum conveniens and favoured forum as it shall be presumed that the parties have thought over their convenience and all other relevant factors before submitting to the non-​exclusive jurisdiction of the court of their choice which cannot be treated just as an alternative forum.

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(6) A party to the contract containing jurisdiction clause cannot normally be prevented from approaching the court of choice of the parties as it would amount to aiding breach of the contract; yet when one of the parties to the jurisdiction clause approaches the court of choice in which exclusive or non-​exclusive jurisdiction is created, the proceedings in that court cannot per se be treated as vexatious or oppressive nor can the court be said to be forum non-​conveniens.

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(7) The burden of establishing that the forum of choice is a forum non-​conveniens or the proceedings therein are oppressive or vexatious would be on the party so contending to aver and prove the same.”102

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However, the High Court of Delhi in McDonalds India Private Limited v Vikram Bakshi and Ors.103 held that the principles governing an anti-​suit injunction would not be applicable to arbitrations because of the principles of autonomy of arbitration and kompetenz-​kompetenz principle.

(1) the English forum has a sufficient interest in, or connection with, the matter in question;

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The English courts have long exercised the power to enjoin foreign litigations which are brought in violation of an arbitration agreement under English law.104 For the English courts to grant of anti-​suit injunctions under English law, it must be established that:105

(2) the foreign proceeding causes sufficient prejudice to the applicant; and

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(3) the anti-​suit injunction would not unjustly deprive the claimant in the foreign court of a legitimate advantage.

102. Ibid, at para. 24. 103. 2016 SCC OnLine Del 3949. 104. Pena Cooper Mines Ltd v Rio Tinto Co. [1911-​13] All ER 209, at 212 (English Court of Appeals); Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1291. 105. Airbus Indus. GIE v Patel [1998] 1 Lloyd’s Rep. 631 (House of Lords).

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Law, Practice and Procedure of Arbitration in India

The English courts have regularly exercised this power to grant injunctions to restrain parties to an arbitration agreement from instituting or continuing proceedings in the courts of other countries.106 Other common law jurisdictions such as Singapore, Canada, and Australia, have also issued anti-​suit injunctions to enforce the negative obligations of an arbitration agreement.107

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The High Court of Singapore explained the rationale for anti-​suit orders as follows:

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“[An antisuit injunction] is entirely consistent with the principle that parties be made to abide by their agreement to arbitrate. Furthermore, the New York Arbitration Convention obliges state parties to uphold arbitration agreements and awards. Such an agreement is often contravened by a party commencing an action in its home courts. Once this Court is satisfied that there is an arbitration agreement, it has a duty to uphold that agreement and prevent and breach of it.”108

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As opposed to the common law jurisdictions, civil law jurisdictions have generally refused to grant anti-​suit orders, including to enforce arbitration agreement.109

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Gary B. Born states that:

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“[I]‌n most instances, civil law courts are not even requested to order anti-​suit injunctive relief because it is clear that no such remedy is available.”110

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An example of this conflict between common law and civil law jurisdictions can be seen from a German court’s ruling.111 It declared an English anti-​suit injunction, aimed at restraining proceedings brought in Germany in violation of an arbitration clause, was in violation of German public policy:

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106. West Tankers Inc v Ras Riunione Adriatica di Sicurta SpA, The Front Comor [2007] UKHL 4, at p. 8. 107. WSG Nimbus Pte Ltd v Bd of Control for Cricket in Sri Lanka [2002] 3 SLR 603 (Singapore High Court); Skandia Int’l Ins. Co. v Al Amana Ins. & Reins. Co. XXIV Y.B. Comm. Arb. 615, at p. 615 (Bermuda S. Ct, 1994) (1999); Gary B. Born, International Commercial Arbitration, Vol. 1: International Arbitration Agreements (3rd edn, Kluwer Law International, Wolters Kluwer 2020), p. 1293. 108. WSG Nimbus Pte Ltd v Bd of Control for Cricket in Sri Lanka [2002] 3 SLR 603, at p. 637 (Singapore High Court). 109. Gaillard, II est interdit d’interdire: reflexions sur I’utilisation des anti-​ suit injuctions dans l’arbitrage commercial international, 2004 Rev. arb. 47; Hausmaninger, in H.W. Fasching & A. Konecny (eds), Kommentar zu den Zivilprozessgesetzen ss. 585, para. 33 et seq., ss. 593 para. 45 et seq. (2d edn, 2007); Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1297. 110. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1297. 111. Judgment of 10 January 1996, Re the Enforcement of An English Anti-​Suit Injunction, 3 VA 11/​95, [1997] I.L.Pr. 320 (Oberlandesgericht Dusseldorf).

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Chapter 14—​​​Stay of Concurrent Proceedings in Court

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“Such injunctions constitute an infringement of the jurisdiction of Germany because the German courts alone decide, in accordance with the procedural laws governing them and in accordance with existing international agreements, whether they are competent to adjudicate on a matter or whether they must respect the jurisdiction of another domestic or a foreign court (including arbitration courts). … These rights are safeguarded by the Germany procedural codes and, in many aspects, by the [German Constitution]. The courts must give effect to these rights. Instructions from foreign courts to the parties concerning the manner in which the proceedings are to be conducted and their subject-​ matter are likely to impede the German courts in fulfilling this task.”112

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At times, the consideration in anti-​suit injunctions also stems from conventions and treaties governing the relationship between Member States. The Court of Justice of the European Justice (“CJEU”)113 in Turner v. Grovit114 limited the use of anti-​suit injunctions.

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The European Court of Justice held that an anti-​suit injunction prohibiting a party from bringing proceedings to an EU Member State Court was an unjustifiable interference with that court’s jurisdiction.

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The CJEU, while deliberating over anti-​suit injunction awarded in the Front Comor dispute, did agree with the English courts in the view that a party’s right to arbitrate its disputes ought to be protected.

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However, it went on to hold that the anti-​suit injunction so granted by the English courts, against a suit before a court in Italy, was a breach of the Brussels Convention governing commitments between Member States of the European Union.

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The laws of the European Union also recognise and uphold anti-​suit injunctions granted by an arbitral tribunal and to be enforced in a Member State under the New York Convention.115

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The requirement for anti-​suit injunctions in the United States of America is the determination of “irreparable harm”. The courts also take into consideration the stage of the foreign proceedings, as well as the parties’ expectation to litigate in that particular court.116

112. Ibid, at para. 320. 113. Formerly known as the European Court of Justice or ECJ. 114. Turner v. Grovit: C-​159/​02 [2004] 2 All ER (Comm) 381, [2004] ECR I-​03565. The decision has been cited with approval in Prashant Hasmukh Manek v. Ramu Annamalai Ramasamy 2019 SCC OnLine Mad 5869. 115. Gazprom OAO v Lietuvos Respublika Case No. C-​536/​13, Court of Justice of the European Union, decided on 13 May 2015. 116. Julian D M Lew, Loukas A Mistelis, Stefan M Kröll, Comparative International Commercial Arbitration (Kluwer Law International 2003), p. 366.

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Law, Practice and Procedure of Arbitration in India

In Malaysia, under the Arbitration Act 2005, the High Court also has the power to issue such an injunction. Section 11(1) allows a party to make an application to the High Court for interim measures “before or during arbitral proceedings”, which under Section 11(1)(h) includes an interim injunction. In any event, the power of Malaysian courts to issue anti-​suit injunctions is inherent.117

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The Arbitration (Amendment) Act 2011 brings the Malaysian arbitral regime in line with UNCITRAL Model Law.

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It has remedied the confusion about whether the Section 11 powers are also applicable in respect of an international arbitration where the seat of arbitration is not in Malaysia (wording which was lacking in the original version of the Arbitration Act 2005), by expressly providing for this in Section 11(3).118

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[14.6] CONCLUSION

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The court or the arbitral tribunal, in providing injunctive relief to parties, plays a crucial role in forwarding the terms of the arbitration agreement.

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The arbitral tribunal needs mechanisms of protection of its jurisdiction in order to enforce an arbitration agreement effectively, against possible risks threatening the integrity of the arbitral proceedings.119

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A cardinal purpose of entering into an arbitration agreement is the resolution of the parties’ disputes before one final forum. As such, it is difficult to see how arbitral proceedings could accomplish their basic objective of finally resolving the parties’ dispute if parallel litigation of the same dispute were permitted.120

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A stay or dismissal of litigation is akin to an order of injunctive relief granting specific performance of the obligations imposed by arbitration agreements, and particularly, the negative obligation.121 Frederic Bachand states that:

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“The analysis of Model law’ travaux preparatoires, basic structure and underlying principles reveals that the drafts considered the prevention of dilatory jurisdictional

117. Fisher, “Anti-​suit Injunctions to Restrain Foreign Proceedings in Breach of an Arbitration Agreement” [2010] 22 Bond Law Review 1, at p. 25. 118. Mobikom Sdn Bhd v Inmiss Communications Sdn Bhd [2007] 3 MLJ 316. 119. Olga Vishnevskaya, “Anti-​suit injunctions from Arbitral Tribunals in International Commercial Arbitration: A Necessary Evil?” (2015) Journal of International Arbitration, Vol. 32, Issue 2, pp. 173–​214. 120. Gary B. Born, International Commercial Arbitration, Vol. I (3rd edn, Kluwer Law International 2021), p. 1372. 121. Ibid, p. 1381.

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Chapter 14—​​​Stay of Concurrent Proceedings in Court

objections to be a more important objective and, consequently, that Article 8(1) [of the Model Law] ought to be interpreted as requiring courts seised of referral applications to apply prima facie standard while reviewing the tribunal’s jurisdiction.”122

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Protections are accorded through statutory provisions, or inherent powers of the courts of a particular jurisdiction. The courts also have certain discretionary powers which can be utilised in the advancement of a pro-​arbitration jurisprudence. This is in addition to the powers under their statutory and inherent jurisdiction.

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Equally important is the protection of the powers of an arbitral tribunal to independently and without impediment, adjudicate upon the dispute. Such powers include the determination of jurisdiction, grant of interim protection, and assessment of costs.

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In this circumstance, an injunction against the unfair and often damaging interference of courts and judicial authorities is a crucial requirement for successful resolution of disputes through the arbitral process.

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While sovereign States still feel the need to protect their public policy by rejecting anti-​suit injunctions, there is growing recognition and acceptance of the need for independence and autonomy of the arbitral tribunal.

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Traditionally, anti-​suit injunctions, a well-​known device in common law systems, are issued upon the request of a party that the other party be enjoined from initiating or from proceeding with a legal action in a different jurisdiction.

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The Courts in civil law countries are increasingly willing, in certain circumstances, to enjoin a party to suspend or terminate an action brought in another country.

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The introduction of anti-​suit injunctions into international arbitration is a recent trend. They are directed at arbitral proceedings or at court proceedings surrounding an international arbitration. They vary in their form. They are requested either to disrupt the arbitral process or, to the contrary, to try to protect it.123

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It really emphasises the need for arbitral and related legislations globally to evolve continually in order to accommodate the changing landscapes. There must be a genuine endeavour to provide arbitration-​friendly mechanisms to parties.

122. Frederic Bachand, “Does Article 8 of the Model Call for Full or Prima Facie Review of the Arbitral Tribunal’s Jurisdiction?” (2006) Arbitration International, Vol. 22, No. 3, LCIA, p. 476. 123. Emmanuel Gaillard, “Chapter 10: Reflections on the Use of Anti-​suit Injunctions in International Arbitration”, in Loukas A. Mistelis and Julian D. M. Lew, Pervasive Problems in International Arbitration, Kluwer Law International, 2006.

Chapter 15 CONDITIONS FOR OBTAINING A STAY [15.1] INTRODUCTION......................................................................................................................... 420

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[15.2] CONDITIONS FOR THE EXERCISE OF JURISDICTION UNDER SECTION 8 OF THE ARBITRATION ACT........................................................................................................... 421 [15.3] BURDEN OF PROOF AND STANDARD OF PROOF............................................................ 424 [15.4] ARBITRATION AGREEMENT................................................................................................... 428 [15.5] PROCEEDINGS, TIME LIMITS, AND WAIVER..................................................................... 430 [15.6] ARBITRABILITY OF DISPUTES................................................................................................ 433

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[15.7] AGREEMENTS THAT ARE: NULL AND VOID, INOPERATIVE, OR INCAPABLE OF BEING PERFORMED............................................................................................................. 436

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[15.1] INTRODUCTION

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[15.8] CONCLUSION............................................................................................................................... 441

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The Arbitration Act does not contain any express provision for staying of court proceedings in favour of arbitration as was provided under Section 34 of the 1940 Act.

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This is in contrast with arbitration legislations in other jurisdictions. For example, the English Arbitration Act,1 the Singapore Arbitration Act,2 Malaysian Arbitration Act,3 and the Hong Kong Arbitration Ordinance4 have express provisions for staying of legal proceedings in favour of arbitration.

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There is still other recourse available under the Arbitration Act in a situation where a defiant party initiates court proceeding. Particularly, when there is a binding and valid arbitration agreement.

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The parties can avail themselves to enforce the arbitration agreement pursuant to Section 8 where the place of arbitration is in India or based on Section 45 when the place of arbitration is located elsewhere.



1. 2. 3. 4.

English Arbitration Act, 1996, s. 9. Singapore Arbitration Act (Ch. 10), 2001, s. 6. Malaysian Arbitration Act 2005, s. 10. Hong Kong Arbitration Ordinance (Cap. 609), 2011, s. 20.

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Chapter 15—​​​Conditions for Obtaining a Stay

Sections 8 and 45 of the Arbitration Act incorporate the operative provisions of Article II(3) of the New York Convention.5 This principle of “presumptive validity” of arbitration agreements is also reflected in Article 8 of the Model Law.6

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Under Section 8 of the Arbitration Act, a court can refuse reference in the absence of a valid arbitration agreement between the parties. Whereas, under Section 45 of the Arbitration Act, a court can do so if the arbitration agreement is null and void, inoperative, or incapable of being performed.

[15.2] CONDITIONS FOR THE EXERCISE OF JURISDICTION UNDER SECTION 8 OF THE ARBITRATION ACT

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Section 8 requires the judicial authority to refer parties to arbitration if the dispute which arises falls within a valid arbitration agreement.7 This provision is not subject to party autonomy.8

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The Supreme Court of India in Hindustan Petroleum Corporation Ltd. v Pinkcity Midway Petroleum,9 while explaining the scope of an application under Section 8 of the Arbitration Act, held:

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“14. [The Supreme Court of India] in P. Anand Gajapathi Raju v P.V.G Raju has held that the language of Section 8 is peremptory in nature. Therefore, in cases where there is an arbitration clause in the agreement, it is obligatory for the court to refer the parties to arbitration in terms of their arbitration agreement and nothing remains to be decided in the original action after such an application is made except to refer the dispute to an arbitrator. Therefore, it is clear that if, as contended by a party in an agreement between the parties before the civil court, there is a cause for arbitration, it is mandatory for the civil court to refer the dispute to an arbitrator.”10

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5. Article II(3) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (New York Convention) states that “each Contracting State shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration.” 6. Article 8 of the UNCITRAL Model Law on International Commercial Arbitration states that “a court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is real and void, inoperative or incapable of being performed.” 7. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 315. 8. Ibid. 9. (2003) 6 SCC 503. 10. Ibid, at para. 14.

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Law, Practice and Procedure of Arbitration in India

An application for reference to arbitration is required to be made not later than the submission of the first statement on the substance of the dispute, which would be like filing the written statement in a suit.11 The High Court of Delhi in BPL Communications Ltd. v Punj Lloyd Ltd.12 laid down the conditions for the exercise of jurisdiction under Section 8 of the Arbitration Act as follows:

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“1. The provision of Section 8 is pre-​emptory in nature and is mandatory.

2. The mandate of Section 8 can be invoked by a party to an action before a judicial authority by filing an application.

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3. The application invoking Section 8 may be filed in any action, not necessarily the civil suits, which is brought before ‘a judicial authority’, which does not necessarily imply a Civil Court established under the Civil Procedure Code and a Court as defined by clause (e) of Section 2 of the Act.

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4. The application for referring the disputes to an Arbitrator may be made by a party ‘not later than when submitting his first statement on the substance of the dispute’. Before invoking the powers of the judicial authority under Section 8, the party applying, must not have submitted the statement on the substance of the dispute, in the proceeding in which application is filed, or in a proceeding between the parties to the arbitration agreement before a Court or judicial authority prior to the present action.

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5. Reference to an Arbitrator under this provision can be made if the action before the judicial authority is a matter, which is ‘the subject matter of an arbitration agreement’. The subject matter before a judicial authority must completely identify with the subject of the arbitration agreement. Reference of part of the subject matter of an action before the judicial authority to arbitration to which arbitration agreement applies, is not contemplated. If requirements of the ingredients of Sub-​section (1) of Section 8 are satisfied, the Court has no option or discretion, but it is mandatory for it to make reference of the subject matter of the action before it to arbitration in accordance with the arbitration agreement. 6. Parties to the action before judicial authority and the arbitration agreement should be the same.

11. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 315. 12. 2003 SCC OnLine Del 1032.

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7. The application shall be accompanied by the original arbitration agreement or a duly certified copy thereon.

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8. The judicial authority will not refuse making a reference under Section 8, merely on the ground that a dispute about existence and validity of the arbitration agreement or jurisdiction of the Arbitrator has been raised since the Arbitrator would have jurisdiction to decide these objections under Section 16 of the Act. The judicial authority before making reference would have to be satisfied that the subject matter of the action before it and the subject of the arbitration agreement are identical and may examine the arbitration agreement and the subject matter of the action before it for giving a finding in this regard.

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9. Unless the judicial authority before whom the application under Section 8 has been filed is a Court, as defined within the meaning of Section 42 read with clause (e) of Section 2 of the Act, the judicial authority shall not entertain subsequent proceedings arising under the arbitration agreement by virtue of Section 42 of the Act. 10. After a reference of the subject of arbitration made by the judicial authority to an arbitration under Section 8, nothing remains to be decided in the action.”13

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The Supreme Court of India in P. Anand Gajapathi Raju v. P. V. G. Raju,14 (“P. Anand Gajapathi Raju”) held that the following pre-​conditions be satisfied before the court exercises its powers under Section 8 of the Arbitration Act:15 (1) there exists an arbitration agreement;



(2) a party to the agreement brings an action in the court against the other party;



(3) subject matter of the action is the same as the subject matter of the arbitration agreement;

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(4) the other party moves the court for referring the parties to arbitration before it submits his first statement on the substance of the dispute.

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The courts are obliged to refer parties to arbitration once the Section 8 pre-​conditions are satisfied.16

13. 14. 15. 16.

Ibid, at para. 14. (2000) 4 SCC 539. Ibid, at para. 5. Magma Leasing and Finance Ltd. v Potluri Madhavi Lata (2009) 10 SCC 103.

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Law, Practice and Procedure of Arbitration in India

A. Broches explains that in cases where the conditions for the application of Article 8(1) of the Model Law are fulfilled, the court has no discretion, but to refer the parties to arbitration.17 Usually, a stay of the court proceedings will pave the way of enforcing the arbitration agreement.

[15.3] BURDEN OF PROOF AND STANDARD OF PROOF

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The burden of proof issues frequently arises in international arbitration, as in domestic litigation.18 The UNCITRAL Rules provide that “[e]‌ach party shall have the burden of proving the facts relied on to support its claim or defence.”19

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It is consistent with the general rule of actori incumbit probation that each party bears the burden of proving that facts relied on in support of its case.20

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The Evidence Act in India placed the burden of proof on the party who wishes to adduce evidence which it relies upon.21 Section 108 of the Evidence Act (and Article 27 of the UNCITRAL Rules) provides that when any fact is especially in the knowledge of any person, the burden of proving the fact is upon such person.

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The Supreme Court of India in Anil Rishi v Gurbaksh Singh22 distinguished between what is the “burden of proof ” and “onus of proof ” as follows:

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“19. There is another aspect of the matter which should be borne in mind. A distinction exists between a burden of proof and onus of proof. The right to begin follows onus probandi. It assumes importance in the early stage of a case. The question of onus of proof has greater force, where the question is which party is to begin. Burden of proof is used in three ways: (i) to indicate the duty of bringing forward evidence in support of a proposition at the beginning or later; (ii) to make that of establishing a proposition as against all counter evidence; and (iii) an indiscriminate use in which it may mean either or both of the others. The elementary rule is Section 101 [Evidence Act] is inflexible. In terms of Section 102 [Evidence Act] the initial onus is always on the plaintiff and if he discharges that onus and makes out a case which entitles him

17. A. Broches, The UNCITRAL Model Law on International Commercial Arbitration, (1990), art. 8, para. 3; Bantekas, “Arbitration Agreement and Substantive Claim Before Court”, in I. Bantekas UNCITRAL Model Law on International Commercial Arbitration: A Commentary (2020), p. 145. 18. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn. Wolters Kluwer 2021), p. 2487. 19. Ibid, p. 2487; UNCITRAL Rules, art. 27(1); Bell Aerospace Co. v Local 516, Int’l Union, United Auto., Aerospace & Agric. Implement Workers of Am. (UAW) 500 F.2d 921, p. 923 (2d. Cir. 1974). 20. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn. Wolters Kluwer 2021), p. 2487; Pietrowski, “Evidence in International Arbitration” (2006) 22 Arb. Int’l, pp. 373, 374, 379. 21. Evidence Act, s. 104. 22. (2006) 5 SCC 558.

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to a relief, the onus shifts to the defendant to prove those circumstances, if any, which would disentitle the plaintiff to the same.”23 Nathan D. O’Malley24 opines on standard of proof:

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“7.27 The standard of proof is used to determine whether the evidence a party has produced in support of its factual allegations is sufficient to establish the facts in question. The standard may be determined by the relevant substantive law, but in some instances, tribunals will appeal to customary practice to devise the threshold standard of proof. … 7.30 It is generally conceded that a tribunal may take note of the substantive nature of a charge brought against a party when fashioning the applicable standard of proof as a matter of international evidentiary procedure.25 For those allegations of particular gravity, a tribunal may find it necessary to apply a higher standard of proof.”26

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The New York Convention does not expressly address the issue of burden of proof with respect to an arbitration agreement.27

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Article 24(1) of the UNCITRAL Arbitration Rules, however, does provide that each party shall have the burden of proving the facts relied on to support his claim or defence. It is universally accepted in international arbitration that the burden of proof lies on the party asserting the claim or counterclaim.

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The High Court of England and Wales in Aeroflot-​Russian Airlines v Berezovsky28 held that the party applying for a stay of judicial proceedings in alleged breach of the arbitration agreement must satisfy the court of the existence of an arbitration agreement.

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Section 8 provides that an application can be made without an original or a certified copy of the arbitration agreement. However, such original or certified copy must be brought on record when the matter is being considered by the court.29

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The burden of proof, for a grant of stay of judicial proceedings in breach of the arbitration agreement is, therefore, on the party invoking the recognition and enforcement of the arbitration agreement. The court must be satisfied of the existence of a valid

23. Ibid, at para. 19. 24. See Nathan D. O’Malley, Rules of Evidence in International Arbitration: An Annotated Guide (Informa Law from Routledge 2012). 25. Ibid, p. 207, at para. 7.27. 26. Ibid, p. 207, at para. 7.30; Bosnia and Herzegovina v Serbia and Montenegro ICJ Case No. 91, 26 February 2007. 27. Todd J. Fox and Stephan Wilske, “Article II Recognition of Arbitration Agreements”, in Rienmar Wolff, New York Convention Article-​by-​Article Commentary (2nd edn, Bloomsbury Publishing Plc 2019), p. 185. 28. (2013) EWHC Civ 748. 29. Ananthesh Bhakta v Nayana S. Bhakta (2017) 5 SCC 185, at para. 28.

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Law, Practice and Procedure of Arbitration in India

arbitration agreement between the parties. The party seeking the stay has the onus of proof in satisfying the court. When a party disputes the binding nature of the signed document, it is for that party to prove the terms of the contract or the circumstances in which he came to sign the documents.

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The High Court of Delhi in Ormaa Impex Pvt. Ltd. v Nissai Asb Pte. Ltd.30 held:

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“The … [c]‌ontract in the present case contains its … terms and conditions and it cannot be believed that without knowing the aforesaid terms and conditions including the terms of the arbitration agreement, the plaintiff has opted to enter into the contract. A signatory to the contract, … normally cannot argue that the contents of the agreement have not been communicated or that these were not read or not explained.”

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The courts have generally held that the standard of proof that an applicant has to meet before a stay is granted is relatively low. In so doing, the courts have examined arbitration agreements to determine the choice of forum, and other substantive issues such as the jurisdiction of the court have not been disputed.

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The Singapore Court of Appeal in Tjong Very Sumito v Antig Investments Pte Ltd31 opined that “if it was at least arguable that the matter is the subject of the arbitration agreement, then a stay of proceedings should be ordered and that only in the clearest of cases” should the court make a ruling on the applicability of the arbitration agreement.

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On the other hand, the English courts have adopted a stricter approach. For example, the Court in Albon v Naza Motor Trading32 held that the fact that:

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“A party invoking an arbitration clause need only raise an arguable case of the validity of an arbitration agreement to entitle himself to a stay in no way militates against the existence of the requirement under s. 9(1) of establishing the conclusion (and not merely the arguable conclusion) of an arbitration agreement.”33

30. AIR 1998 Del 15, 1997, at para. 9. 31. Tjong Very Sumito v Antig Investments Pte Ltd [2009] 4 SLR(R) 732, [2009] SGCA 41 at para. 24; see also Dalian Hualiang Enterprise Group Co Ltd v Louis Dreyfus Asia Pte Ltd [2005] 4 SLR(R) 646, [2005] SGHC 161. 32. Albon (trading as N A Carriage Co) v Naza Motor Trading Sdn Bhd (No 3) [2007] EWHC 665 Ch, [2007] 2 All ER 1075 at para. 22; see also A v B [2006] EWHC 2006 (Comm), [2007] 1 All ER (Comm) 591. 33. Although, see the earlier English Court of Appeal decision in Downing v Al Taneer Establishment [2002] 2 All ER (Comm) 545, [2002] EWCA Civ 721 at para. 20 where the Court held that if an applicant “can raise an arguable case in favour of validity” a stay should be granted.

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Chapter 15—​​​Conditions for Obtaining a Stay

The England and Wales Court of Appeal subsequently affirmed this approach.34 Notwithstanding the same, however, it is likely in Malaysia that the Court will lean towards arbitration.35

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The Court in Malaysian Newsprint Industries v Bechtel International36 stated categorically that the Courts in Malaysia will rule in favour of an arbitration unless exceptional reasons exist to disallow such a ruling. In the same vein, Tackaberry and Marriot argue that if courts are too ready to interfere in arbitrations it may encourage parties to bypass the arbitrator’s jurisdictional powers, ultimately increasing delays and costs.37

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Once the applicant seeking a stay has demonstrated that he is a party to an arbitration agreement and that the current action involves a matter that is governed by the arbitration agreement.

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The evidential burden thereafter shifts to the respondent to prove that the arbitration agreement is “null and void, inoperative, or incapable of being performed”.38

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Some ambiguity persists in respect of whether the standards of proof to which an applicant and a respondent are respectively subject are in substance the same. In the first instance, to speak of it as being “arguable” that the matter is the subject of an arbitration agreement.

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It would suggest that the standard of proof applicable to an applicant is one that is less exacting than the balance of probabilities.

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Conversely, with regards to the respondent’s own evidential burden, disparate authorities collectively evince that the standard of proof to be applied paradoxically constitutes one that neither falls below the balance of probabilities,39 nor above it.40

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34. Joint Stock Company Aeroflot Russian Airlines v Berezovsky [2013] EWCA Civ 784, [2013] All ER (D) 36 (Jul) and Golden Ocean Group Ltd v Humpuss Intermoda Transportasi Tbk Ltd [2013] EWHC 1240 (Comm), at p. 54 where Popplewell J emphasised that if the court can itself resolve the issue of whether the arbitration agreement is “null and void” (or “inoperative”), then a “merely arguable case” that the arbitration agreement is a valid one will not suffice to obtain a stay under s. 9 [Arbitration Act 1996 (Eng)]; it only does so if the court cannot decide or it cannot or will not direct an issue to be tried. 35. Tan Kok Cheng & Sons Realty Co Sdn Bhd v Lim Ah Pat (t/​a Juta Bena) [1995] 3 MLJ 273, at p. 282. 36. Malaysian Newsprint Industries v Bechtel International [2008] 5 MLJ 254 at [20], dismissed on appeal in [2012] 4 MLJ 583. 37. Tackaberry, Marriott QC and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson Sweet & Maxwell 2003), at para. 2-​192. 38. Tjong Very Sumito v Antig Investments Pte Ltd [2009] 4 SLR(R) 732, [2009] SGCA 41; Downing v Al Tameer Establishment [2002] EWCA Civ 721, [2002] All ER (D) 342 (May); Prekons Insaat Sanayi AS v Rowlands Castle Contracting Group Ltd [2006] EWHC 1367 (Comm); Mandaraka-​ Sheppard, Modern Maritime Law: Volume 1: Risks and Jurisdiction: Jurisdiction and Risks (2013), p. 241. 39. Robert Merkin and Flannery, Arbitration Act 1996 (5th edn, 2014), p. 52. 40. Joint Stock Company “Aeroflot Russian Airlines” v Berezovsky & Ors [2012] EWHC 1610 (Ch) per Floyd J, at p. 77.

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Law, Practice and Procedure of Arbitration in India

[15.4] ARBITRATION AGREEMENT A valid arbitration agreement is at the very heart of arbitration upon which the entire edifice of the arbitral process is structured. The Arbitration Act requires the arbitration agreement to be in writing41 and to refer either existing or future disputes to arbitration.42

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An arbitration agreement can also be entered into by the parties during the pendency of proceedings in the court.43

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The Arbitration Act, however, does not contemplate an oral account of a document to be an arbitration agreement.44 The Supreme Court of India in Kerala State Electricity Board & Ors. v Kurien E. Kalathil & Ors.45 has explained that:

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“Since referring the parties to arbitration has serious consequences of taking them away from the stream of civil courts and subject them to the rigour of arbitration proceedings, in the absence of arbitration agreement, the court can refer them to arbitration only with written consent of parties either by way of joint memo or joint application.”

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Once the court is satisfied that prima facie a valid arbitration agreement exists, then it shall refer the dispute to arbitration. It will leave the adjudication on the existence of the arbitration agreement to be determined by the arbitral tribunal.46

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The Supreme Court of India in Vidya Drolia and Ors. v Durga Trading Corporation47 has held that the parties’ express intention must be given due regard. The court should stay judicial proceedings.

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It should refer the matter to arbitration if the validity of the arbitration agreement cannot be determined on a prima facie basis, as laid down above, on the basis that “when in doubt, do refer”.

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Ultimately, the court is entitled to decide the threshold question of whether or not an arbitration agreement exists.48 However, it may also wish to leave the question to an

41. Arbitration Act, s. 7(3). 42. Arbitration Act, s. 7(1). 43. Tamil Nadu Electricity Board v Sumathi & Ors. (2000) 4 SCC 543, at para. 9; see also, P. Anand Gajapathi Raju v P.V.G. Raju (2000) 4 SCC 539. 44. Yashvant Chunilal Mody v Yusuf Karmali Kerwala 2013 SCC OnLine Bom 1246, at para. 7. 45. (2018) 4 SCC 793, at para. 36. 46. Arbitration Act, s. 8 –​Emaar MGF Land Ltd. v Aftab Singh (2019) 12 SCC 751, at ¶56; Arbitration Act, s. 45 –​ Shin-​Etsu Chemical Co. Ltd. v Aksh Optifibre Ltd. (2005) 7 SCC 234, at para. 111. 47. Civil Appeal No. 2402 of 2019, decided on 14 December 2020, at para. 75. 48. Ahmad Al-​Naimi (T/​A Buildmaster Construction Services) v Islamic Press Services Inc [2000] APP LR 01/​28, [2000] 1 Lloyd’s Rep 522; Claxton Engineering Services Ltd v TXM Olaj-​Es Gazkutato Kft [2010] EWHC 2567 (Comm), [2011] 2 All ER (Comm) 38.

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Chapter 15—​​​Conditions for Obtaining a Stay

arbitral tribunal, depending on the circumstances of the case.49 The court is entitled to do so. A party who repudiates the arbitration clause, either directly or as a corollary of denying the existence ab initio of the contract containing the clause, is precluded from advancing that the submission to arbitration entitles him to a stay.50

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The party can however contend that the agreement has come to an end owing to, for example, an accepted repudiation. If the latter circumstances are established, the arbitration agreement would still be effective. A stay must be granted.51

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In the event that the respondent does deny the existence or validity of the substantive contract ab initio, with the result that the arbitration clause incorporated therein is ostensibly negated, the court would most likely determine that issue at an interlocutory stage.

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The arbitral tribunal is fully empowered to render a decision on whether the arbitration agreement is “null and void, inoperative, or incapable of being performed”52 under the doctrine of separability. However, in this context the wording provides for the court to be “satisfied” as to the conditions. It implies that the decision is solely a matter for the court’s deliberation.53

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Where an action has been brought in breach of an arbitration agreement, if no application for a stay has been made, or if the application has been refused, the matter before the court cannot be arbitrated.

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The exception is unless the parties have, after the commencement of the proceedings, agreed de novo to refer the matter to arbitration. If the arbitration has already been commenced but litigation is pursued, the arbitrator becomes functus officio.54

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In essence, the court will not refuse to allow the subject matter of an action already begun to be referred to arbitration if the parties so agree, making concurrent proceedings possible.55

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49. Ahmad Al-​Naimi (t/​a Buildmaster Construction Services) v Islamic Press Services Inc [2000] APP LR 01/​28, [2000] 2 Lloyd’s Rep 1; Birse Construction Limited v St David Limited [1999] BLR 194. 50. Republic of Liberia v Gulf Oceanic Inc [1985] 1 Lloyd’s Rep 539, CA (Eng); Metal Scrap Trade Corpn Ltd v Kate Shipping Co Ltd, The Gladys [1990] 1 All ER 397, [1990] 1 WLR 115, [1990] 1 Lloyd’s Rep 297, HL; see also Fiona Trust & Holding Corporation v Privalov [2007] UKHL 40, [2007] 4 All ER 951 at para. 26. 51. Heyman v Darwins Ltd [1942] AC 356, [1942] 1 All ER 337, HL. 52. Arbitration Act, 2005, s. 18; CMS Energy Sdn Bhd v Poscon Corp [2008] 6 MLJ 561; TNB Fuel Services Sdn Bhd v China National Coal Group Corp [2013] 4 MLJ 857; Standard Chartered Bank Malaysia Berhad v City Properties Sdn Bhd [2008] 1 MLJ 233. 53. Robert Merkin and Flannery, Arbitration Act 1996 (5th edn, LLP 2014), p. 52. 54. Doleman & Sons v Ossett Corp [1912] 3 KB 257, CA (Eng); Herschel Engineering Ltd v Breen Property Ltd (2000) 70 ConLR 1. 55. Lloyd v Wright, Dawson v Wright [1983] QB 1065, [1983] 2 All ER 969, CA (Eng); Titi Latex Sdn Bhd v WRP Asia Pacific Sdn Bhd [2009] MLJU 1484; Chase Perdana Berhad v Pekeliling Triangle Sdn Bhd [2001] MLJU 389.

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Law, Practice and Procedure of Arbitration in India

However, an arbitration agreement does not oust the jurisdiction of the court and the court retains its inherent jurisdiction to grant a stay of proceedings.

[15.5] PROCEEDINGS, TIME LIMITS, AND WAIVER

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It is mandatory for the courts to refer parties to arbitration when a valid arbitration agreement exists. However, a court cannot suo moto return or reject a suit on the ground that the parties to the suit have agreed to refer all their disputes to arbitration.56

A party may lose its right to arbitrate if there is a lengthy delay in the prosecution of its claims.57

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In case of judicial proceedings being commenced where a dispute is the subject matter of an arbitration, the other party must move quickly to defend its rights under the arbitration agreement.

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A failure to do so may amount to a waiver of those rights. It can be held that the defendant in the case has indicated its tacit acceptance of the plaintiff ’s choice of referring the dispute to the court.58

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Once parties have consented to the judicial proceedings to continue, they cannot subsequently invoke the arbitration clause. They cannot make a dead clause alive after the same has been abandoned and not invoked.59

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Thus, when a party willingly participates in judicial proceedings and subjects itself to the jurisdiction of the court, it cannot in due course turn around and say that the parties should be referred to arbitration in view of the existence of an arbitration agreement.60

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In India, such a plea has to be made no later than the date of submitting the party’s first statement on substance of the dispute.61 The expression “first statement on substance of the dispute” contained in Section 8(1) of the Arbitration Act implies the party’s submission to the jurisdiction of the judicial authority.62

56. Convinio Shopping Nine 2 Nine v Olympia Opaline Owners Association 2019 SCC OnLine Mad 646, at para. 19. 57. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 141, at para. 2.211. 58. Todd J. Fox and Stephan Wilske, Article II Recognition of Arbitration Agreements, New York Convention Article-​by-​Article Commentary (2nd edn, 2019), pp. 182–​183. 59. Ministry of Sound International Ltd. v Indus Renaissance Partners Entertainment Pvt. Ltd. 2009 SCC OnLine Del 11, at para. 23. 60. Booz Allen & Hamilton Inc. v SBI Home Finance Ltd (2011) 5 SCC 532, at para. 29. 61. Arbitration Act, s. 8(1). 62. Rashtriya Ispat Nigam Ltd. v Verma Transport Co. (2006) 7 SCC 275, at para. 36.

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Chapter 15—​​​Conditions for Obtaining a Stay

Prior to the 2015 Amendment, an action pursuant to Section 8(1) of the Arbitration Act had to be brought no later than when submitting the party’s first statement on substance of the dispute. This difference in language between the pre-​amended section and the amended section regarding a time-​limit is observed from the phrase “not later than when submitting” and “not later than the date of submitting”.

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Prior to the 2015 Amendment, there was no limitation period specified under Section 8 of the Arbitration Act for filing of an application. Such an application was, nevertheless, to be made at its earliest.63

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The 2015 Amendment introduced various time limits within which the arbitration proceedings should be commenced and concluded. This change in the language of Section 8 of the Arbitration Act from “when” to “the date of” is key to determining the time limit for making an application for reference to arbitration.

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The High Court of Delhi in SSIPL Lifestyle Pvt Ltd. v Vama Apparels (India) Pvt Ltd. has held that: 64

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“the words ‘not later than the date of submitting’ means that the date of submitting the statement on the substance of the dispute i.e. the written statement in a civil suit, is the outer limit for filing of a Section 8. Hence, in effect, there is a limitation period which is prescribed.”65

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The amended language of Section 8 of the Arbitration Act brought the outer limit of ninety (90) days for filing of the written statement in civil suits under the Code of Civil Procedure 1908 and that of one-​hundred and twenty (120) days for filing of written statements in commercial suits under the Commercial Courts Act, 2015 to be applicable for filing of an application under the section.

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The party which invokes the arbitration clause does not have to file a formal application seeking a specific prayer for reference of the dispute to arbitration. It just has to raise an objection in the written statement that the suit is not maintainable in view of the arbitration clause in the agreement.66 Section 45 of the Arbitration Act contains no such limitation for referring parties to arbitration. This does not mean that a party can make an application pursuant to Section 45 pursuant to an inordinate delay.

63. 64. 65. 66.

Booz Allen & Hamilton Inc. v SBI Home Finance Ltd. (2011) 5 SCC 532, at para. 29. High Court of Delhi, CS (COMM) 735/​2018, decided on 19 February 2020. Ibid, at para. 27. Parasramka Holdings Pvt Ltd. v Ambience Pvt. Ltd. & Anr. 2018 SCC Online Del 6573, at para. 34.

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Law, Practice and Procedure of Arbitration in India

Such obstruction to the arbitration agreement would amount to abandonment or waiver which would fall within the expression of “inoperative” prescribed or referred under the section.67

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Under Section 9(3) and (4) of the English Arbitration Act, a party wishing to stay court proceedings brought in breach of an arbitration agreement must make its application before taking any step in those proceedings in answer to the other party’s substantive claim.68

The English House of Lords (now the Supreme Court) in Eagle Star Insurance Co. v Yuval Insurance Co.69 summarised the position as follows:

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“[I]‌n order to deprive a defendant of his recourse to arbitration a ‘step in the proceedings’ must be one which impliedly affirms the correctness of the proceedings and the willingness of the defendant to go along with a determination by the Courts of law instead of arbitration.”70

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Similarly, in Australia, the courts require proof that a party has “unequivocally abandoned” its right to arbitrate by taking steps that are wholly inconsistent with an intention to have the dispute finally settled by arbitration.71

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The Supreme Court of Victoria in La Donna v Wolford72 found that a party had waived its right to arbitrate by applying for security for costs in court proceedings.73 The Court reasoned as follows:

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“[The party] sought an advantage, or at least sought to impose upon La Donna a burden, which was based upon the proposition that the litigation would proceed in this Court, that the defendant would take steps, and that the defendant would incur costs in taking those steps, in that litigation in this Court. This step was an unequivocal abandonment of the alternative course, being an application for a stay and a consequent arbitration.”74

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In certain cases, parties may retain its right to arbitrate while taking substantive steps in court proceedings, for example, by expressly reserving its rights under the arbitration agreement.

67. Bottero S.P.A v Euro Glass Ltd. 2017 SCC OnLine Bom 9250, at para. 32. 68. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 139, at para. 2.206. 69. [1978] 1 Lloyd’s Rep 357 (a case decided under the English Arbitration Act, 1950). 70. Ibid, p. 361. 71. ACD Tridon Inc. v Tridon Australia Pty Ltd [2002] NSWSC 896, at para. 75. 72. La Donna v Wolford AG [2005] VSC 359. 73. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 140, at para. 2.207. 74. Ibid, at para. 26.

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Chapter 15—​​​Conditions for Obtaining a Stay

A party in Eisenwerk Hensel Bayreuth GmbH v Australian Granites Ltd75 filed a defence in court proceedings. The Australian courts held that there had been no waiver, noting that the party was faced with the immediate threat of a default judgment and had filed a cover letter with its defence, confirming that it had no intention of discontinuing the arbitration proceedings that it had already instituted.76

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In Canada, a party may waive its right to arbitrate if it files a defence or counterclaim in court proceedings.77 The US courts have traditionally been reluctant to find that a party has waived its right to arbitrate, unless78: (1) the party had knowledge of its right to arbitrate;



(2) the party acted inconsistently with that right, and



(3) the inconsistency caused prejudice.79

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[15.6] ARBITRABILITY OF DISPUTES

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The dispute must be “capable of settlement by arbitration” for it to be resolved through arbitration.80 The relevant question to ask is whether the dispute is “arbitrable”. In other words, the dispute is capable of settlement by arbitration.81

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It is, therefore, crucial to know which disputes are “arbitrable” and which are not. Both the UNCITRAL Model Law and New York Convention are limited to disputes that are “capable of settlement by arbitration”.82

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The party which claims the enforcement of such an agreement has the onus to establish that the matter in dispute in the judicial proceedings is within the scope of the arbitration agreement.

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75. [2001] 1 QDR 461. 76. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 140, at para. 2.208. 77. See Granville Shipping Co. v Pegasus Lines Ltd (TD) [TD] [1996] 2 FC 853 (Federal Court of Canada); Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 140, at para. 2.209. 78. Nigel Blackaby Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), pp. 140–​141, at para. 2.210. 79. Airbus SAS v Aviation Partners Inc. No. C12-​1228JLR, United States District Court by its decision dated 25 October 2012. 80. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 19, at para. 1.64. 81. Ibid, p. 80, at para. 2.29. 82. UNCITRAL Model Law, arts 34(2)(b)(i) and 36(1)(b)(i); New York Convention, arts II(1) and V(2)(a).

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Law, Practice and Procedure of Arbitration in India

Theoretically, any civil dispute should be capable of being resolved by arbitration, which is a private proceeding with public consequences.83 Article 16(3) of the UNCITRAL Model Law provides that where an arbitral tribunal rules on its own jurisdiction with respect to the arbitrability of disputes, the decision may be challenged before the national court within 30 days. The issue of arbitrability goes to the very root of jurisdiction of arbitration.

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Even in India, the Arbitration Act does not expressly exclude any category of disputes from being non-​arbitrable. Ordinarily, every civil or commercial dispute, either contractual or non-​contractual, which can be decided by a civil court, is in principle capable of being resolved by arbitration.84

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There are, however, public policy restrictions upon arbitration as a mode of dispute resolution.85 Justice Indu Malhotra states:

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“Traditionally, disputes relating to rights in rem are required to be adjudicated by courts and public tribunals, being unsuited for private arbitration.86 A right in rem is a right exercisable against the world at large, as against a right in personam, which is an interest directed against specific individuals. Actions in rem refer to actions which create a legal status such as citizenship, divorce, testamentary and probate issues, which are exercisable against the world at large.… The broad categories of disputes which are resolved by the legislature to be decided by courts of law as a matter of public policy pertain to the class actions which operate in rem. Apart from this category of actions, the legislature has by special enactments conferred exclusive jurisdiction on specialized tribunals or courts. These disputes are excluded from the purview of arbitration, as public policy requires that parties cannot be permitted to contract out of the legislative mandate which confers exclusive jurisdiction on certain courts, tribunals or quasi-​judicial authorities under special enactments.”87

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The concept of “arbitrability” of a dispute is dependent upon the national laws of the enforcing or supervising jurisdiction as well as the agreement between parties. There is a fine line distinguishing non-​arbitrability of a dispute, from the substantive invalidity of an arbitration agreement.88

83. 84. 85. 86. 87. 88.

Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 330. Ibid, p. 331. Ibid, p. 330. Booz Allen & Hamilton Inc. v SBI Home Finance Ltd. (2011) 5 SCC 532. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 332. Gary B. Born, International Commercial Arbitration, Vol. I (3rd edn, Kluwer Law International 2021), p. 896.

435

Chapter 15—​​​Conditions for Obtaining a Stay

In fact, the Supreme Court of India has made a distinction between the non-​ arbitrability of a claim and the non-​arbitrability of a subject matter. It held that the former may arise on account of scope of the arbitration agreement and when the claim is not capable of being resolved through arbitration. The latter would relate to non-​ arbitrability in law.89

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Justice Indu Malhotra lists the broad categories of disputes which are considered to be non-​arbitrable under Indian laws as follows:90

(1) Criminal offences of a public nature, and disputes arising out of illegal agreements;91



(2) Bribery and/​or corruption;



(3) Matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody, and guardianship which pertain to the status of a person, are adjudicated by Family Courts;



(4) Testamentary matters (disputes relating to the validity of a Will,92 grant of probate,93 letters of administration, and succession certificate) also pertain to the status of a person, and are adjudicated by civil courts;



(5) Eviction and tenancy matters are governed by special statutes, which confer exclusive jurisdiction on specialised tribunals;94



(6) Competition laws are adjudicated by a specialised tribunal, that is, the Competition Commission of India;



(7) Disputes relating to trusts, trustees, and beneficiaries are governed by the Indian Trusts Act, 1882 and adjudicated by civil courts under the special act;



(8) Consumer disputes in most jurisdictions are considered to be non-​arbitrable. In India, these disputes are adjudicated by a hierarchy of consumer fora set up under the Consumer Protection Act, 1986;

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(9) Insolvency and Bankruptcy issues are decided by the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code, 2016;

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89. Vidya Drolia and Ors. v Durga Trading Corporation Civil Appeal No. 2402 of 2019, decided on 14 December 2020, at para. 17. 90. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 332. 91. T.M.L. Financial Services Ltd. v Vinod Kumar 2010 (2) Arb LR 560 (Kerala). 92. Vijay Kumar Sharma v Raghunandan Sharma (2010) 2 SCC 486, at para. 20. 93. Refer to Chiranjilal Shrilal Goenka v Jasjit Singh & Ors. (1993) 2 SCC 507. 94. Ranjit Kumar Bose & Anr. v Anannya Chowdhury (2014) 11 SC 446.

436

Law, Practice and Procedure of Arbitration in India



(10) Intellectual Property Rights, Patents, and Copyright are rights in rem which are decided by civil courts;95



(11) Oppression and Mismanagement, or Winding-​up of a company, are decided by the NCLT under the Companies Act, 2013.

The Supreme Court of India in A. Ayyasamy v A. Paramasivam96 has explained that:

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“All disputes relating to rights in personam are considered to be amenable to arbitration while rights in rem are required to be adjudicated by courts and public tribunals.”97

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The Supreme Court of India in Vidya Drolia and Ors. v Durga Trading Corporation98 emphasised on the “four-​fold test” that an authority must consider the following before ruling that a particular dispute is non-​arbitrable:

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“(1) when cause of action and subject matter of the dispute relates to actions in rem, that do not pertain to subordinate rights in personam that arise from rights in rem.

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(2) when cause of action and subject matter of the dispute affects third party rights; have erga omnes effect; require centralized adjudication, and mutual adjudication would not be appropriate and enforceable;

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(3) when cause of action and subject matter of the dispute relates to inalienable sovereign and public interest functions of the State and hence mutual adjudication would be unenforceable; and

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(4) when the subject-​matter of the dispute is expressly or by necessary implication non-​arbitrable as per mandatory statute(s).”

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Applying the above test, the Supreme Court of India overruled its previous decision in Himangni Enterprises v Kamaljeet Singh Ahluwalia.99 It held that landlord-​tenant disputes, while governed by the Transfer of Property Act, are arbitrable under Indian law.

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[15.7] AGREEMENTS THAT ARE: NULL AND VOID, INOPERATIVE, OR INCAPABLE OF BEING PERFORMED

The words “null and void, inoperative or incapable of being performed” appear in Section 45 of the Arbitration Act.

95. 96. 97. 98. 99.

Vikas Sales Corporation v Commissioner of Commercial Taxes (1996) 4 SCC 433, at para. 22. (2016) 10 SCC 386. Ibid, at para. 35. Civil Appeal No. 2402 of 2019, decided on 14 December 2020. (2017) 10 SCC 706.

437

Chapter 15—​​​Conditions for Obtaining a Stay

It embodies the ethos of Article II (3) of the New York Convention as well as Article 8 of the Model Law. These words carve out the express exception accorded to courts, in view of which a court can refuse the reference of a dispute to arbitration.

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Since the words “null and void, inoperative or incapable of being performed” contained in Section 45 have been adopted from the New York Convention. The same has to be given a meaning which is attributed to them in international context.100

Null and Void

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The words “null and void” may be interpreted as referring to those cases where the arbitration agreement is affected by some invalidity right from the beginning or devoid of any legal effect, such as lack of consent due to misrepresentation, duress, fraud, or undue influence.101 The definition of “null and void” is based on the law governing the contract.102

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Justice Indu Malhotra lists downs situations where an arbitration clause may be null and void:103 (1) The arbitration agreement is fabricated and forged;



(2) The underlying contract may not have been concluded;104



(3) The agreement is uncertain, or its meaning is so ambiguous, so as to be incapable of being construed, to give the agreement certainty;



(4) One of the contracting parties under the applicable law is not legally competent to enter into an arbitration agreement;



(5) The arbitration agreement lacks consent of a party;



(6) The agreement is in breach of the public policy in India;



(7) It is a case of “palpable illegality” of the contract, and the arbitration clause itself is tainted with the illegality of the underlying substantive agreement;105

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(8) There is an allegation of fraud in the execution of the substantive contract, in which the arbitration clause is embedded, or in the arbitration agreement which is separately executed;106

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100. World Sport Group (Mauritius) Ltd. v MSM Satellite (Singapore) Pte. Ltd. (2014) 11 SCC 639. 101. Albert Jan Van Den Berg, The New York Convention of 1958: An Overview, p. 11. 102. Di Petro D. and Platte M., Enforcement of International Arbitration Awards: the New York Convention of 1958, p. 108. 103. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), pp. 1126–​1127. 104. Lucent Technologies Inc. v ICICI Bank Ltd. & Ors. 2009 (Suppl 1) Arb LR 441 (Delhi). 105. Soleimany v Soleimany [1998] 3 WLR 811, at p. 828. 106. India Household & Healthcare Ltd. v L.G. Household & Healthcase Ltd. (2007) 5 SCC 510.

438



Law, Practice and Procedure of Arbitration in India

(9) An agent may have been agreed to enter into an arbitration agreement which is outside the scope of his authority, in which case it would not bind the principal;107 (10) Where the parties have made a mutual fundamental mistake of fact.108

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An arbitration agreement could be null and void because it was procured through bribery or fraud109 or made with a lack of capacity,110 or a party may simply claim that he never entered into the agreement in the first place.111

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An attempt to incorporate by reference an arbitration clause into a charter party or bill of lading without express reference to the arbitration clause will render the agreement null and void.112

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An agreement to arbitrate non-​arbitrable subject matter, such as a criminal charge or the granting of a patent by the State, would also render the agreement null and void.

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The Supreme Court of Canada in Seidel v TELUS Communications Inc113 held an arbitration agreement to be null and void where it attempted to waive a person’s statutory right (especially when the statute in question clearly states as void any agreement attempting to do so).

Inoperative

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The word “inoperative” covers those cases where the arbitration agreement has seized to have an effect,114 such as revocation of the arbitration agreement by the parties115 or where the parties waive their rights to arbitrate.116

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107. Electrosteel Castings Ltd. v Scan-​Trans Shipping and Chariering SDN BHD [2002] EWHC 1993. 108. Altco Ltd. v Sutherland [1971] 2 Lloyd’s Rep 516. 109. Fiona Trust & Holding Corporation v Privalov [2007] UKHL 40, [2007] 4 All ER 951; Comandate Marine Corpn v Pan Australia Shipping Pty Ltd, The Comandate [2006] FCAFC 192. 110. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 2.31. 111. Mariana Maritime SA v Stella Jones Inc [2002] FCA 215 (CanLII); H & H Marine Engine Service Ltd v Volvo Penta of the Americas Inc [2009] BCSC 1389 (CanLII); Ocean Park Corporation v Proud Sky Co Ltd [2007] HKCFI 1221; APC Logistics Pty Ltd v CJ Nutracon Pty Ltd [2007] FCA 136 (Aus). 112. TW Thomas & Co Ltd v Portsea Steamship Company [1912] AC 1, HL Federal Bulk Carriers Inc v C Itoh & Co Ltd, The Federal Bulker [1989] 1 Lloyd’s Rep 103, CA (Eng); Habas Sinai v Sometal SAL [2010] EWHC 29 (Comm), [2010] 1 All ER (Comm) 1143. 113. Seidel v Telus Communications Inc 2009 Carswell BC 608, [2009] BCWLD 2020, CA (Can). 114. Albert Jan Van Den Berg, The New York Convention of 1958: An Overview, p. 11; see also, Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 138. 115. Corcoran v Ardra Insurance Co. Ltd. 842 F.2d 31 (2nd Cir. 1988). 116. Rederij Empire CV v Arrocerías Herba, S.A., No. 1148/​2002.

439

Chapter 15—​​​Conditions for Obtaining a Stay

Justice Indu Malhotra lists downs situations where an arbitration agreement, even though it is valid, may cease to be operative in certain circumstances, for instance:117 (1) If the arbitration proceedings are brought against a wrong party;



(2) The dispute may not fall within the scope of the agreement to arbitrate on its proper construction;



(3) The agreement may be inoperative if the dispute is not capable of being resolved by arbitration;118



(4) If the arbitration agreement has been revoked or abandoned;119



(5) If the agreement ceases to have effect since a court decision has a res judicata effect with respect to the same subject matter and parties;120



(6) Where arbitration proceedings are brought against a party who is not a signatory to the agreement;



(7) Where the arbitration agreement has been repudiated by one party, and the repudiation is accepted by the other party;121



(8) If it contains an inherent contradiction, which cannot be given effect to, such as in the case of pathological arbitration clauses;122



(9) If the dispute has already been resolved by the parties through mutual negotiation, or by any other alternative dispute resolution mechanism;123

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(10) “excepted matters” under the contract;124



(11) Where the parties have entered into multi-​tier arbitration agreement, which contracts various alternative dispute resolution modes, like mediation, etc., which are required to be first exhausted before the reference to arbitration can be made.125

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Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), pp. 1127–​1128. Re Insurance Australia Corp. Ltd. v Odyssey Re (Bermuda) Ltd. [2000] NSWSC 1118. Elektrim v Vivendi Universal [2007] EWHC 11, at p. 123. McDonald’s India Pvt. Ltd. v Vikram Bakshi & Ors. 2016 (4) Arb LR 250 (Delhi). Traube v Perelman [2001] WL 1251816. Lucent Technologies v ICICI Bank Ltd., & Ors. 2009 (Supp. 1) Arb LR 441 (Delhi). Shanghai Foreign Trade Corpn. (PR China) v Sigma Metallurgical Co. Pty. Ltd. (Australia) (1996) 11 International Arb Rep A-​1 reported in (1996) 11 International Arb Rep A-​1 reported in Yearbook Commercial Arbitration, Vol. XXII-​1997, at p. 609. 124. Al-​Naimi v Islamic Press Agency, [2000] 1 Lloyd’s Rep 522. 1 25. Di Petro D. and Platte M., Enforcement of International Arbitration Awards: the New York Convention of 1958, p. 113. 117. 118. 119. 120. 121. 122. 123.

440

Law, Practice and Procedure of Arbitration in India

If there is no dispute between the parties, the arbitration agreement would at that time be inoperative. The court when faced with an application for summary judgment by the plaintiffs as well as for stay of proceedings by the defendants should not embark on an examination of the validity of the dispute. It is not an application for summary judgment.

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The High Court of Delhi in McDonald’s India Pvt. Ltd. v. Vikram Bakshi & Co.126 held that:

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“the word ‘inoperative’ is said to cover those cases where the arbitration agreement has ceased to have effect, such as the case of revocation by the parties. Another instance of the agreement having become inoperative is where it ceases to have effect because an arbitral award has already been made or there is a court decision with res judicata effect concerning the same subject matter and parties. Importantly, it has been expressed that the mere existence of multiple proceedings is not sufficient to render the arbitration agreement inoperative.”

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In a situation where the court is faced with an application for a stay and an explanation for summary judgment, it should first consider the application for a stay. The court should only proceed with the application for summary judgment if a stay is not ordered.127

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Incapable of Being Performed

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The words “incapable of being performed” covers those cases where the arbitration cannot be effectively set into motion. This may happen when for some reason it is impossible to establish the arbitral tribunal128 or where the arbitration clause is too vaguely worded, or other terms of the contract contradict the parties’ intention to arbitrate.129

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Incapability of an arbitration agreement depends on the practical aspects of the prospective arbitral proceedings.130

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It connotes something more than mere difficulty or inconvenience or delay in performing the arbitration. Examples include where the mechanism for constituting the

1 26. 2016 SCC OnLine Del 3949, at para. 55. 127. Lee Brothers Construction Co v Teh Teng Seng Realty Sdn Bhd [1988] 1 MLJ 459. 128. Seidel v Telus Communications Inc., Supreme Court of Canada, [2011] 1 SCR 531. 129. Albert Jan Van Den Berg, The New York Convention of 1958: An Overview, p. 11; see also, Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 138. 130. Todd J. Fox and Stephan Wilske, Article II Recognition of Arbitration Agreements, New York Convention Article-​by-​Article Commentary (2nd edn, 2019), p. 194.

441

Chapter 15—​​​Conditions for Obtaining a Stay

tribunal breaks down in a way which the court has no ability to repair, or where a sole arbitrator named in the agreement cannot or will not act.131 The High Court of Madras in Ramasamy Athappan v Secretariat of the Court, International Chambers of Commerce,132 has explained that the phrase “incapable of being performed” signifies, in effect, frustration and its consequent discharge.

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Legislation in England, the Netherlands, Belgium, Japan, Hong Kong, and Singapore, all of which assume that the substantive validity of arbitration agreements may be challenged, but do not expressly so provide, much less specify the bases for doing so.

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Accordingly, virtually all authority addressing the circumstances in which international arbitration agreements will be substantively invalid has been developed by national courts, arbitral tribunals, or commentators in the absence of detailed statutory guidance.133

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The Supreme Court of India in ACC Ltd. v Global Cements Ltd.134 upheld the validity of an arbitration agreement even though the arbitrator specifically named in the agreement had expired by the time dispute proceedings were initiated between parties. The Court’s decision in this case was guided by the willingness of the parties to arbitrate under the otherwise operable agreement.

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Further, the Supreme Court of India in BSNL v Telephone Cables Ltd.135 held that the arbitration agreement would only be applicable once the bidding process between the parties was complete and, as such, was inapplicable at the time when the parties’ approached to the Court.

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[15.8] CONCLUSION

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Arbitration agreements give contractual authority to the arbitral tribunal to adjudicate the disputes and bind the parties.136 The contractual agreement binding the parties is provided sustenance in grant of a stay against judicial proceedings in favour of arbitration.

1 31. 132. 133. 134. 135. 136.

Mustill and Boyd, Commercial Arbitration (2nd edn, Butterworths 1981), p. 465. 2008 SCC OnLine Mad 789, at para. 22. Gary B. Born, International Commercial Arbitration (2nd edn, Wolters Kluwer 2014), p. 845. (2012) 7 SCC 71. (2010) 5 SCC 213. Vidya Drolia and Ors. v Durga Trading Corporation Civil Appeal No. 2402 of 2019, decided on 14 December 2020, at para. 10.

442

Law, Practice and Procedure of Arbitration in India

The standard of proof of substantive invalidity of an arbitration agreement is a relatively demanding one. The presumption is that the agreement is valid and binding, rather than invalid.137 In fact, the historical development of international conventions such as the New York Convention shows that it made international arbitration agreements more easily and consistently enforceable.

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Therefore, it is equitable and just that the parties resisting enforcement of the arbitration agreement that indisputably exists should bear the onerous burden of proof for invalidating such an agreement.

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Recently, development laws and legislation around the globe are on the rise to accommodate fair and functional effectiveness of arbitration agreements. One such concept that has seen growth is the arbitrability of disputes. For instance, the arbitrability of disputes with respect to intellectual property rights has seen a positive evolution in the Indian context.

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The position in India has been settled by Shin-​Etsu. The Supreme Court of India held courts must take a prima facie approach based on the material produced as to whether the arbitration agreement is “null and void”, “inoperative”, or “incapable of being performed”.138

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Similarly, the Supreme Court of Canada in Editions Chouette Inc. v Desputeaux139 held that in the absence of an express legislative language to that end, disputes regarding copyright matters cannot be held to be non-​arbitrable.

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Courts and judicial authorities around the world are moving in support of a more arbitration-​friendly regime in their jurisdictions. The increasingly positive steps taken by these bodies lend support to the processes of international arbitration practice and uphold that which is at the very root of arbitration: party autonomy.

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The grant of stay against proceedings which are in their essence, contrary to what the parties have agreed and chosen, is a significantly crucial step in this direction.

1 37. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International 2021), p. 895. 138. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), pp. 1122–​1123. 139. 2003 SCC 17.

Chapter 16 EFFECT AND TERMS OF A STAY [16.1] INTRODUCTION......................................................................................................................... 443 [16.2] OBJECT AND CIRCUMSTANCES LEADING TO STAYS..................................................... 445

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[16.3] GRANT, EFFECT, AND TERMS OF THE STAY...................................................................... 450 [16.4] PROVISIONAL AND ANCILLARY RELIEF............................................................................. 456

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[16.5] CONCLUSION............................................................................................................................... 460

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[16.1] INTRODUCTION

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A stay of an action brought in breach of an arbitration agreement is permanent.1 The court may refuse to recognise the foreign judgment if litigation in a foreign court continues in breach of the arbitration agreement.2

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Traditionally, parties when before a court of law can avail themselves of four types of remedies when seeking to refer a dispute to arbitration:3 (1) They may request a stay or dismissal of the judicial proceedings;



(2) They may request another court to issue an anti-​suit injunction;4



(3) They may seek indemnity to recover costs or other harm caused by litigation; and



(4) They may request that the judgment issued by the court in contravention of the parties’ arbitration clause not be recognised or enforced.

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The Arbitration Act does not provide for any specific provision giving courts the power to stay litigation in breach of arbitration agreements. The Courts in India are provided the power to refer parties to Arbitration where there is a valid arbitration agreement.5

1. Robert Merkin and Flannery, Arbitration Act 1996 (5th edn, Informa Law from Routledge 2014), p. 55. 2. Tracomin SA v Sudan Oil Seeds Co Ltd [1983] 1 All ER 404. 3. Ilias Bantekas, et al., “Article 8: Arbitration Agreement and Substantive Claim before Court”, UNCITRAL Model Law on International Commercial Arbitration –​A Commentary (Cambridge University Press 2020), p. 146. 4. Under English law, where a party seeks an anti-​suit injunction against court proceedings in a foreign jurisdiction, it has been traditionally held that courts in England must provide such an injunction provided that the foreign proceedings have not advanced too far. See Aggeliki Charis Compania Maritima SA v Pagnan SpA (The “Angelic Grace”), (1995) 1 Lloyd’s Rep 87. 5. Arbitration Act, ss. 8 and 45.

444

Law, Practice and Procedure of Arbitration in India

In the United Kingdom, the statutory provisions to stay legal proceedings in favour of arbitration are embodied in Section 9 of the English Arbitration Act, 1996. The Malaysian6 and Singaporean7 legislation explicitly confer powers to the Courts to stay proceedings in breach of an arbitration agreement.

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While the court’s power maybe unfettered, such power ought to be limited to the costs and the imposition of the condition that the party seeking the stay should proceed with the arbitration,8 rather than the imposition of conditions which may stifle the arbitral process.9

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Valid arbitration agreements produce important legal effects for the parties to the agreement, as well as for national courts and arbitral tribunals.10 These effects are usually referred to as positive effects and negative effects (or obligations).

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The New York Convention,11 the Geneva Convention,12 and Model Law13 also oblige courts to refer the parties to arbitration, where possible. Such positive obligations of parties have been enacted into national statutes, including India.

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A negative effect often mirrors the positive effect under the arbitration agreement.14 A negative effect entails the obligation not to litigate arbitrable disputes.15

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This chapter also discusses which of the two approaches must be adopted while deciding applications under national provisions similar to Article 8 of the Model Law. They are:

(1) A full Merits Approach or Full Review Approach; or



(2) A Prima Facie Approach.

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6. Arbitration Act, 2005 (Act 646), s. 10. 7. Arbitration Act (Ch. 10) (Act 37 of 2001), ss. 6 and 7. 8. Fuller Austin Insulation Inc v Wellington Insurance Co [1995] CanLII 5752 (SK QB) (Can); East African Development Bank v Ziwa Horticultural Exporters Limited [2000] UGCommC 8 (Uganda); security for the arbitration: P T Budi Semestra Satria v Concordia Agritrading Pte Ltd [1998] SGHC 127. 9. Sundra Rajoo and W.S.W Davidson, The Arbitration Act 2005 –​UNCITRAL Model Law as applied in Malaysia (Sweet & Maxwell 2007), at 10.11. 10. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1349. 11. New York Convention, art. II(3). 12. Geneva Convention, arts 1 and 4(1). 13. Model Law, art. 8(1). 14. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1366. 15. Ibid.

445

Chapter 16—​​​Effect and Terms of a Stay

[16.2] OBJECT AND CIRCUMSTANCES LEADING TO STAYS Valid arbitration agreements produce important legal effects for the parties to the agreement, as well as for national courts and arbitral tribunals.16 These effects are usually referred to as positive effects and negative effects (or obligations).

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Parties seeking to enforce such positive and negative obligations approach the courts inter alia seeking: (1) Stay of court proceedings;17



(2) Orders compelling arbitration;18



(3) Anti-​suit injunctions;19 and

(4) Non-​recognition of judgments which are obtained in breach of a valid arbitration agreement.20

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Gary B. Born summarises the obligations of parties under positive and negative effects as:

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“[T]‌he positive effects include the obligation to participate and cooperate in good faith in the arbitration of disputes pursuant to the parties’ arbitration agreement, while the negative effects include the obligation not to obstruct the resolution of disputes that are subject to arbitration by the arbitral tribunal or to seek the resolution of such disputes in national courts or other legal forums.”21

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The positive effect obliges parties to participate cooperatively, diligently, and in good faith in the resolution of their disputes pursuant to an arbitration agreement.

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The positive effect has its roots in the New York Convention,22 the Geneva Convention,23 and Model Law.24 They oblige the parties to submit their disputes under an agreement to arbitration, where such a clause exists.

16. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1349. 17. Ibid, p. 1350. 18. Ibid, p. 1350. 19. Ibid, p. 1350. 20. Ibid, p. 1350. 21. Ibid, p. 1349. 22. New York Convention, art. II(1). 23. Geneva Convention, art. 1. 24. Model Law, art. 7(1).

446

Law, Practice and Procedure of Arbitration in India

The New York Convention,25 the Geneva Convention,26 and Model Law27 also oblige courts to refer the parties to arbitration, where possible. Such positive obligations of parties have been enacted into national statutes, including India. Section 8(1) of the Arbitration Act, which is based on Article 8(1) of the Model Law provides:

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“A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall … refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.”28 A negative effect often mirrors the positive effect under the arbitration agreement.29 A negative effect entails the obligation not to litigate arbitrable disputes.30

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Similar to the positive effects, negative effects under an arbitration agreement also form black letter law under the New York Convention,31 the Geneva Convention,32 Model Law,33 and the Arbitration Act.34

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The agreement by parties to submit disputes to arbitration recognises and enforces the negative effects of that agreement, by requiring a stay or dismissal of national court proceedings where disputes are arbitrable.35 The Arbitration Act recognised the negative effect in India.36

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The Supreme Court of the United Kingdom, in Ust-​Kamenogorsk Hydropower Plant JSC v AES Ust-​Kamenogorsk Hydropower Plant LLP,37 applied the English Arbitration Act, 1996. It held:

New York Convention, art. II(3). Geneva Convention, arts 1 and 4(1). Model Law, art. 8(1). Arbitration Act, s. 8(1). Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1366. Ibid. New York Convention, art. II. Geneva Convention, art. 4. Model Law, art. 8. Arbitration Act, s. 8. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1366. Arbitration Act, s. 8. [2013] UKSC 35; Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1368.

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25. 26. 27. 28. 29.

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“An agreement to arbitrate disputes have positive and negative aspects. A party seeking relief within the scope of the arbitration agreement undertakes to do so in arbitration in whatever forum is prescribed. The (often silent) concomitant is that

30. 31. 32. 33. 34. 35. 36. 37.

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neither party will seek such relief in any other forum. If the other forum is the English court, the remedy for the party aggrieved is to apply for a stay under section 9 of the Arbitration Act 1996.”38 The recognition and implementation of the parties’ right to arbitrate, in turn, extends to the recognition and enforcement of the negative obligations under an arbitration agreement.

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Once the existence and validity of an arbitration agreement is established in a court proceeding, the negative effects of an arbitration agreement forbid litigation with respect to a dispute which is the subject matter of an arbitration agreement.

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Therefore, the most fundamental negative obligation of an arbitration agreement is the commitment not to litigate disputes that are subject to arbitration. Under the Arbitration Act, the courts must acknowledge and appreciate agreements to arbitrate which expressly or impliedly require that all arbitrable disputes be resolved in, and only in, arbitral proceedings.39

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Section 8(1) of the Arbitration Act, like Article 8(1) of the Model Law is a mandatory provision.40 The Supreme Court of India41 has held that once the pre-​requisite conditions of Section 8 are satisfied, the judicial authority is obligated to refer the parties to arbitration.42

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A. Broches also categorically states that in cases where the conditions for the application of Article 8(1) of the Model Law are fulfilled, the court has no discretion, but to refer the parties to arbitration.43 Such a reference is usually affected through a stay on the court proceedings.

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Commencement of court or litigation proceedings by a party which is subject to an arbitration agreement is therefore a breach of that agreement and, particularly, its negative obligations.44

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38. Ibid, at para. 1. 39. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International Wolters Kluwer 2021), p. 1368. 40. Hindustan Petroleum Corpn. Ltd. v Pinkcity Midway Petroleums (2003) 6 SCC 503; BPL Communications Ltd. v Punj Lloyd Ltd. 2003 SCC OnLine Del 1032, at para. 14. 41. Magma Leasing and Finance Ltd. v Potluri Madhavi Lata (2009) 10 SCC 103, at para. 18. 42. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 317. 43. A. Broches, The UNCITRAL Model Law on International Commercial Arbitration, (1990); Bantekas, “Article 8: Arbitration Agreement and Substantive Claim Before Court”, in I. Bantekas, UNCITRAL Model Law on International Commercial Arbitration: A Commentary (2020), p. 145. 44. Gabbanelli Accordions & Imps., LLC v Gabbanelli 575 F.3d 693, 695 (7th Cir. 2009); Gary B. Born, International Commercial Arbitration, Vol. 1: International Arbitration Agreements (3rd edn, Kluwer Law International, Wolters Kluwer 2020), p. 1372.

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Gary B. Born opines that: “That breach, like other violations of contractual obligations, entitles the non-​breaching party to relief, which under contemporary international arbitration convention and national legislation includes specific enforcement through a stay or dismissal of the litigation, and exposes the breaching party to contractual liability.”45

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Courts stay a litigation to remedy the breach of the negative obligation, namely, not to litigate arbitrable disputes.46 The mandatory stay of litigation is also encapsulated in Article II(3) of the New York Convention. It is the foremost remedy used to enforce the negative obligation of parties to an arbitration agreement.

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Article II(3) of the New York Convention does not leave national courts with any discretion to deny a dismissal or stay of local judicial proceedings where an arbitration agreement is enforceable.47

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In fact, it mandatorily requires that the national court “shall” refer parties to arbitration.48 This obligation also applies to arbitration agreements where the seat is located abroad.49

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All the leading common law jurisdictions, including India,50 the United States,51 England,52 Canada,53 Singapore,54 Hong Kong,55 Malaysia,56 Australia,57

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45. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International Wolters Kluwer 2021), pp. 1372–​1373. 46. Ibid, p. 1376. 47. Ibid. 48. Ibid. 49. J. P. McMahon, “Implementation of the United Nations Convention on Foreign Arbitral Awards in the United States” (1971) 2 J. Mar. L. & Comm. 735, at pp. 748–​749. 50. Arbitration Act, ss. 8 and 54; Shin Etsu Chemical Co. Ltd. v Aksh Optifibre Ltd. 2005 (7) SCC 234. 51. Dean Witter Reynolds, Inc. v Byrd 470 U.S. 213, 218 (U.S. Supreme Court 1985); Hughes, Hooker & Co. v Am. S.S. Owners Mut. Protection & Indem. Ass’n, Inc. 2005 WL 138455 (S.D.N.Y), at para. 4; State v Philip Morris USA, Inc. 2006 WL 3490937 (N.C. Supreme Court). 52. English Arbitration Act, 1996, s. 9(4); Fiona Trust & Holding Corp. v Privalov [2007] EWCA Civ 20, at para. 37 (affirmed by the House of Lords [2007] UKHL 40 (House of Lords)). 53. Alberta International Commercial Arbitration Act, s. 7; Ontario International Commercial Arbitration Act, s. 9; GreCon Dinter Inc. v J.R. Normand Inc. [2005] SCC 46 (Canadian Supreme Court); Dalimpex Ltd. v Janicki [2003] 228 DLR 4th 179 (Court of Appeal of Ontario). 54. Singapore International Arbitration Act, s. 6(2); Tomolugen Holdings Ltd. v Silica Investors Ltd. (2015) SGCA 57; Ling Kong Henry v Tanglin Club [2018] SGHC 153 (High Court of Singapore). 55. Hong Kong Arbitration Ordinance, s. 20(1); Tai Hing Cotton Mill Ltd. v Glencore Grain Rotterdam BV [1995] HKCA 626 (Court of Appeal); Leung Kwok Hung v Johnson Controls H.K. Ltd [2018] HKCFI 1500 (Court of First Instance). 56. Malaysian Arbitration Act, s. 10(1); Press Metal Sarawak Sdn Bhd v Etiqa Takaful Bhd [2016] 5 MLJ 417 (Malaysian Federal Court); CMS Energy SDN RHB v Poson Corp. [2008] MLJ 561, 562 (Malaysian High Court). 57. Australian International Arbitration Act, s. 16, Sch. 2; Rinehart v Hancock Prospecting [2019] HCA 13 (High Court of Australia).

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New Zealand,58 Kenya,59 and Pakistan60 provide for a stay of litigation brought in violation of a valid arbitration agreement61 either through statue or precedent, or both.

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In civil law jurisdictions such as France62 and Switzerland63, amongst others, the legislation requires the national courts to decline jurisdiction over arbitrable disputes.64 Accordingly, the courts do not merely stay pending litigations, but dismiss them entirely.65

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A stay of an action brought in breach of an arbitration agreement is permanent.66 If litigation in a foreign court continues in breach of the arbitration agreement, the court may refuse to recognise the foreign judgment.67 The court probably has power to vary or discharge a stay, though it is prudent to provide for this by the inclusion in the order of the liberty to apply.68

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This enables the court not only to remove the stay but also to amend the terms on which the stay is granted, and to grant ancillary relief. Similarly, the refusal of a stay does not preclude the subsequent referral of issues to arbitration after the court has decided points of law.69

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In addition to the above, the Federal Court of Australia in Casaceli v Natuzzi S.p.A.70 aptly summarised circumstances in which discretionary powers to grant a stay can be exercised by courts.

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58. New Zealand Arbitration Act, art. 8(1); Zurich Australian Ins. Ltd. v Cognition Educ. Ltd [2014] NZSC 188 (Supreme Court of New Zealand). 59. Kenyan Arbitration Act, art. 6(1); ICEA Lion Life Assurance Co. Ltd. v Jomo Kenyatta Univ. of Agric & Tech. Civil Suit No. 121/​2017 (High Court of Nairobi). 60. Pakistani Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, art. 4(1); Cummins Sales & Services Ltd. v Cummins Middle E. FZE 2013 CLD 291 (High Court of Pakistan). 61. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 1377–​1379. 62. French Code of Civil Procedure, art. 1448(1); Fouchard, Gaillard, Goldman on International Commercial Arbitration, 1999, at para. 666. 63. Swiss Law on Private International Law, art. 7; Judgement of 6 August 2012, DFT 4A_​119/​2012, para. 3.2 (Swiss Federal Tribunal). 64. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1380. 65. Ibid. 66. Robert Merkin and Flannery, Arbitration Act 1996 (5th edn, 2014), p. 55. 67. Tracomin SA v Sudan Oil Seeds Co Ltd. [1983] 1 All ER 404. 68. See: Cie du Sénégal et de la Côte Occidentale d’Afrique v Smith & Co and Woods & Co. (1883) 53 LJ Ch 166, at p. 169. 69. Printing Machinery Co Ltd v Linotype and Machinery Ltd. [1912] 1 Ch 566, at p. 574; Re Carlisle, Clegg v Clegg (1890) 44 Ch D 200. 70. [2012] FCA 691.

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Law, Practice and Procedure of Arbitration in India

They are as follows: (1) when a proceeding includes matters that are not capable of being referred to arbitration, but the determination of which is dependent upon the determination of the matters required to be submitted to arbitration, the court may stay the whole proceeding;71



(2) the court may also exercise its discretion to impose certain terms. For instance, if the arbitration does not proceed prior to the determination of the curial proceeding where the claims in the arbitration are seen to be subsidiary to or significantly less substantial than, but overlapping with, the claims in the curial proceeding;72 and



(3) the court may also exercise its discretion to stay the curial proceeding where the claims in the curial proceeding are the ancillary claims.73

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[16.3] GRANT, EFFECT, AND TERMS OF THE STAY

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The Arbitration Act does not contain any specific provision giving Indian courts the power to stay court proceedings in favour of arbitration. The Indian jurisprudence under Sections 8 and 45 of the Arbitration Act is to refer parties to arbitration where there is a valid arbitration agreement.

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This position under Indian law stands in contrast with other common law jurisdictions such as the UK,74 Malaysia,75 and Singapore,76 where the respective arbitration legislations expressly provide courts the power to stay court proceedings in favour of arbitral proceedings.

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However, jurisdictions around the world differ on the extent of review to be undertaken by a court while deciding whether pre-​requisite conditions have been met to stay the litigation and refer parties to arbitration.77

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Frederic Bachand summarises that:

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“[T]‌he debates concerns whether the court can perform a full review of the arbitration agreement’s validity and applicability –​in which case the claim could only be referred

71. Darius Chan, Stay of proceedings in favour of arbitration under the court’s inherent jurisdiction, 15 August 2012, available at http://​arbitrationblog.kluwerarbitration.com/​2012/​08/​15/​stay-​ofproceedings-​in-​favour-​ of-​arbitration-​under-​the-​courts-​inherentjurisdiction/​. 72. Ibid. 73. Ibid. 74. English Arbitration Act, s. 9. 75. Arbitration Act 2005 (Act 646), s. 10. 76. International Arbitration Act (Act 37 of 2001), ss. 6 and 7. 77. Frederic Bachand, “Does Article 8 of the Model Call for Full or Prima Facie Review of the Arbitral Tribunal’s Jurisdiction?” (2006) Arbitration International, Vol. 22, No. 3, LCIA.

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to arbitration upon a finding that the claimant actually acted in breach of an undertaking to arbitrate –​or whether the court should rather apply a prima facie standard and refer to arbitration upon finding that there is a reasonable likelihood that the claimant acted in breach of a duty to arbitrate.”78

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Therefore, the debate is primarily between which of the following two approaches must be taken while deciding applications under provisions similar to Article 8 of the Model Law:

(1) A Full Merits Approach or Full Review Approach; and



(2) A Prima Facie Approach.

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This debate is of significant relevance. In practice, the courts’ decisions have direct consequences on the cost, duration, and complexity of the dispute.

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Historically, in several jurisdictions, courts took the full merits approach. They reviewed the validity and applicability of arbitration agreements when the arbitral tribunal’s jurisdiction was challenged.79

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However, more recently, jurisdictions globally have explicitly adopted the prima facie approach while dealing with such challenges. These jurisdictions include India,80 Hong Kong,81 and Singapore.82

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Emmanuel Gaillard championed the prima facie approach.83 He emphasised that the prima facie approach gives priority to preventing dilatory tactics to ensure efficiency of domestic and international commercial arbitrations.84

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It allows the arbitral tribunal’s opportunity to make the first jurisdictional ruling while preserving the court’s power to immediately assert jurisdiction over a claim that is manifestly not subject to arbitration.85

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In other words, the prima facie approach creates a harmony between Article 16 and Article 8 of the Model Law. The internal coherence of the Model Law would be 78. 79. 80. 81. 82. 83. 84. 85.

Ibid, p. 463. Ibid, p. 464. Shin-​Etsu Chemical Co. Ltd. v Aksh Optifibre Ltd. 2005 (7) SCC 234. Nanhai West Shipping Co. v Hong Kong United Dockyards Ltd. [1996] 2 HKC 639 (High Court of Hong Kong); New Sound Industries Ltd. v Meliga (HK) Ltd. [2005] 1 HKC 41, [2005] HKCU 66. Tomolugen Holdings Ltd. v Silica Investors Ltd. (2015) SGCA 57. Fouchard, Gaillard, Goldman on International Commercial Arbitration (Kluwer, The Hague, 1999), pp. 401 and 406, at paras 660, 671; E. Gaillard, “The Negative Effect of Competence-​Competence” (2002) Mealey’s Int. Arb. Rep 17(1), p. 27. Frederic Bachand, “Does Article 8 of the Model Call for Full or Prima Facie Review of the Arbitral Tribunal’s Jurisdiction?” (2006) Arbitration International, Vol. 22, No. 3, LCIA, p. 466. Ibid, p. 467.

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Law, Practice and Procedure of Arbitration in India

seriously imperilled, were the full merits approach to be applied instead of the prima facie approach. It also allows Article 16 of the Model Law to provide and recognise the arbitral tribunal’s priority over jurisdictional rulings. A full merits approach under Article 8 would deny such a statutory priority.86

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Frederic Bachand explores the exceptions to applying the prima facie approach and states that:

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“Comparative analysis reveals at least one possible exception to the prima facie approach, and it concerns situations where the agreement invoked in support of a referral application makes no mention of the seat of arbitration, or provides for a seat located in a foreign jurisdiction.”87

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There may be some instances wherein a court may refuse to grant injunctive relief in the form of a stay of litigation proceedings despite the existence of a valid arbitration agreement. In such a circumstance, the courts may be guided by the “intertwining doctrine”.

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Then, it may be more efficient for all the merits of the dispute to be decided within one proceeding, which would be litigation in case all the disputes are not arbitrable under the arbitration agreement.88

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Even with the existence of such an approach, the general practice is to acknowledge the parties’ decision to arbitrate and to facilitate the execution of the same through injunctive reliefs and anti-​suit reliefs.

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The Supreme Court of India in Shin-​Etsu Chemical Co. Ltd. v Aksh Optifibre Ltd.89 (“Shin-​Etsu”) considered the scope of judicial review under Section 45 of the Arbitration Act. The question in Shin-​Etsu was framed as follows:

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“[S]‌hould the judicial authority while exercising power under Section 45 decide the objection on a prima facie view of the matter and render a prima facie finding or a final finding on merits on affording parties such opportunity as the justice of the case may demand having regard to facts of the case?”90

86. Ibid, p. 473. 87. Ibid, p. 474. 88. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1384. 89. 2005 (7) SCC 234; see also: Chloro Controls India Pvt. Ltd. & Ors. v Severn Trent Water Purification Inc (2013) 1 SCC 641. 90. Ibid, at para. 3.

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Chapter 16—​​​Effect and Terms of a Stay

The question simply put amounts to whether a judicial authority should follow the prima facie approach or the full merits approach under Section 45 of the Arbitration Act. The Supreme Court of India in Shin-​Etsu held that the finding of the judicial authority under Section 45 of the Arbitration Act should be based on a prima facie examination of the documents and materials on record, including the arbitration agreement.91

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The Supreme Court of India mandated that the court take a prima facie approach based on the material produced as to whether the arbitration agreement is “null and void”, “inoperative”, or “incapable of being performed”.92

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The High Court of Bombay in J.S. Ocean Liner LLC v M.V. Golden Progress & Anr.93 has held that if on a prima facie view, the judicial authority finds that the arbitration agreement is valid, operative, and capable of being performed, such a judicial authority shall have no discretion but to refer the parties to arbitration under the arbitration agreement.94

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The Court of Appeal of Singapore in Tomolugen Holdings Ltd. v Silica Investors Ltd.,95 while placing reliance on the decisions of Courts in England and Wales,96 Canada,97 and courts in Hong Kong98 held that the prima facie approach coheres better with Singapore International Arbitration Act.

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For a court to undertake a full determination of an arbitral tribunal’s jurisdiction in a stay application could significantly hollow the kompetenz-​kompetenz principle. Further, the use of the word “satisfied” under the relevant provisions cannot suggest that the court is required to conduct a full merits review.

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In light of these findings, the Court of Appeal of Singapore held that there are three options available to the courts when faced with these issues:

Ibid, at paras 106, 107. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), pp. 1122–​1123. 2007 SCC OnLine Bom 69, 2007 (2) Arb LR 104 (FB), at para. 71. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer), p. 1123. (2015) SGCA 57. JSC BTA Bank v Ablyazov (2011) 2 Lloyd’s Rep 129; Aeroflot Russian Airlines v Berezovsky (2013) 2 Lloyd’s Rep 242; Ahmad Al-​Naimi (T/​A Buildmaster Construction Services) v Islamic Press Agency Inc. (2000) 1 Lloyd’s Rep 522. 97. See: Union des consommateurs v Dell Computer Corp. (2007) 2 SCR 801; Gulf Canada Resources Ltd/​Ressources Gulf Canada Ltée v Arochem International Ltd. (1992) 66 BCLR (2d) 113; Harrison v UBS Holding Canada Ltd. (2014) 418 NBR (2d) 328. 98. Private Company “Triple V” Inc v Star (Universal) Co Ltd & Another (1995) 2 HKLR 62; PCCW Global Ltd v Interactive Communications Service Ltd. (2007) 1 HKLRD 309; Ling Yan Temple Ltd v Ng Yook Man (2010) HKEC 734.

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91. 92. 93. 94. 95. 96.

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Law, Practice and Procedure of Arbitration in India

“(a) stay the whole of the court proceedings pending the resolution of the putative arbitration (i.e., resolve the arbitration first); (b) stay the court proceedings only to the extent that is required … the IAA, but on the condition that the putative arbitration proceed only after the resolution of the remaining court proceedings (i.e., resolve that part of the court proceedings which falls outside s. 6 first); or

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(c) stay the court proceedings only to the extent that is required under s 6 of the IAA and allow the putative arbitration and the remaining court proceedings to run in parallel (i.e., concurrent resolution of the arbitration and that part of the court proceedings which falls outside s 6).”99

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In England, the statutory provisions to stay legal proceedings in favour of arbitration are embodied in Section 9 of the English Arbitration Act, 1996. The crux, however, is in Section 9(4) of the English Arbitration Act. Section 9(4) stipulates the mandatory duty imposed on the court to stay an action brought in breach of a valid arbitration agreement.100

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Section 9 of the English Arbitration Act (1996) applies to domestic as well international arbitrations. Moreover, under the present laws, a stay may no longer be refused on the grounds that there is not in fact, any dispute between the parties, as was the case under the old law.101

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In India, a temporary or permanent injunction is granted under the Specific Relief Act, 1963 (“Specific Relief Act”). A stay of court proceedings in favour of arbitral proceedings is generally in the nature of a temporary injunction.

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Although the Arbitration Act is a complete code by itself, arbitrations seated in India or between Indian parties may also be governed by other relevant laws in India.

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The Supreme Court of India in Gujarat Bottling Co. Ltd. v Coca Cola Co.102 held that an applicant seeking a temporary injunction shall establish a prima facie case in its favour. Additionally, the court will also examine the balance of convenience. In other words, the court will consider the balance of comparative loss caused to the applicant and the respondent in the case of not passing the order of injunction.

99. Tomolugen Holdings Ltd. v Silica Investors Ltd. (2015) SGCA 57, at para. 139. 100. Lord Mustill and Stewart C. Boyd, Commercial Arbitration (2nd edn, Butterworths 2001), Companion Volume to the Second Edition, 2001, at p. 268. 101. Ibid, p. 269. 102. (1995) 5 SCC 545, AIR 1995 SC 2372.

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Chapter 16—​​​Effect and Terms of a Stay

A party’s ability to obtain a stay of litigation is not always sufficient to effectively enforce an arbitration agreement in the international context.103 Such a situation may arise where a party pursues litigation of the underlying dispute in a national court which does not fully honour its international obligations under the New York Convention.104 Accordingly, some common law jurisdictions may be prepared to issue “anti-​suit injunctions” to prohibit the filing of litigation proceedings before a foreign forum.105

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The High Court of Singapore in WSG Nimbus Pte Ltd. v Board of Control of Cricket in Sri Lanka106 explains the rationale of anti-​suit orders as follows:

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“Furthermore, the New York Arbitration Convention obliges state parties to uphold arbitration agreements and awards. Such agreement is often contravened by a party commencing an action in its home courts. Once this Court is satisfied that there is an arbitration agreement, it has a duty to uphold that agreement and prevent any breach of it. Accordingly, I am of the opinion that the anti-​suit injunction should be continued until further order.”107

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In India, the High Court of Delhi’s recent decision in Future Retail Ltd. v Amazon.com Investment Holdings LLC & Ors.108 reflected on the parameters to be considered for an injunction order.

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The High Court referred to the Supreme Court of India’s judgment in Dalpat Kumar v Prahlad Singh.109 It held that the grant of an injunction is a “discretionary relief ”. The court accordingly observed:

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“Thus, the trinity of the principles for grant of interim injunction i.e. prima facie case, irreparable loss and balance of convenience are required to be tested in terms of principles as noted above ... this Court finds that FRL has made out a prima facie case in its favour for grant of interim injunction. However, the main tests in the present case are in respect of ‘balance of convenience’ and ‘irreparable loss’. Even if a prima facie case is made out by FRL, the balance of convenience lies both in favour of FRL and Amazon … Consequently, the present application is disposed of, declining the grant of interim injunction as prayed for by FRL, however, the Statutory Authorities/​

103. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1392. 104. Ibid, p. 1392. 105. Ibid, p. 1392; Gary Born & P. Rutledge, International Civil Litigation in United States Courts (6th edn, 2018), p. 551 et seq. 106. [2002] 3 SLR 603, [2002] SGHC 104. 107. Ibid, at para. 91. 108. 2020 SCC OnLine Del 1636. 109. (1992) 1 SCC 719.

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Law, Practice and Procedure of Arbitration in India

Regulators are directed to take the decision on the applications/​objections in accordance with the law.”110

[16.4] PROVISIONAL AND ANCILLARY RELIEF

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While discussed in greater detail in various chapters,111 it is appropriate to examine the provisional and ancillary reliefs granted by courts or arbitral tribunals regarding arbitral proceedings.

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It is essential that an adjudicative body possesses broad powers to safeguard the parties’ rights and its own remedial authority during the pendency of the dispute resolution proceedings.112 This allows the dispute resolution process to function in a fair and effective manner.

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To this end, both national laws and international conventions provide for provisional protective measures in the nature of ancillary or interim reliefs either before or during the pendency of arbitral proceedings.

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In India,113 these reliefs typically include freezing of financial accounts, custody of goods, preservation against sale of a property that is the subject matter of the arbitration, or appointment of a receiver. Therefore, interim or ancillary relief is an order to safeguard the rights and properties of the parties to a dispute, during the arbitral proceedings.

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Sections 9 and 17 of the Arbitration Act provide the courts and the arbitral tribunal, respectively, the power to grant interim reliefs in disputes which are a subject matter of arbitration. The measures of protection listed under Sections 9 and 17 of the Arbitration Act are alike.

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The Supreme Court of India in State of Gujarat v Amber Builders114 confirmed, based on Section 9(3) of the Arbitration Act, that once an arbitral tribunal is constituted, the court shall not entertain an application for interim measures unless the remedy under Section 17 is inefficacious. Article 17A of the Model Law prescribes that the party seeking interim measures must satisfy the arbitral tribunal of the conditions for granting interim measures. 110. Future Retail Ltd. v Amazon.com Investment Holdings LLC & Ors. 2020 SCC Online Del 1636, at paras. 192, 193. 111. See: Chapters 17, 18, 32, 34, 45, and 46. 112. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2604. 113. Arbitration Act, ss. 9 and 17. 114. (2020) 2 SCC 540, at para. 18.

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Chapter 16—​​​Effect and Terms of a Stay

These conditions include irreparable harm if the interim measure is not awarded; a reasonable possibility that the party seeking interim measures is going to succeed on merits (balance of convenience); and the discretion of the arbitral tribunal on the urgency of the protection.

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Section 12 of the Singapore International Arbitration Act (IIA) provides illustrations of the interim measures that an arbitral tribunal can grant to parties during the subsistence of arbitral proceedings.

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These include security for costs; discovery of documents and interrogatories; preservation, interim custody, or sale of any property that is the subject matter of the dispute; preservation of evidence; and any other injunction or interim measure that the arbitral tribunal may think fit.115

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Mareva Injunctions

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When granting a stay or at any time thereafter116 a competent court may grant any relief which would not be obtainable from the arbitral tribunal, such as the appointment of a receiver117 or an injunction,118 including a Mareva injunction.119

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A Mareva Injunction is also known as a freezing injunction and is in a form of ad-​personam120 interim relief. It is usually sought during the pendency of court or arbitration proceedings. It may also be sought once the proceedings are completed and a verdict is rendered, but before the judgment/​award is enforced and e xecuted.

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The Mareva injunction can be traced back to 1975 when the English Courts121 departed from the pre-​1975122 rule of not seizing assets of a defendant in advance of judgment.

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1 15. Singapore International Arbitration Act, s. 12(1). 116. Zalinoff v Hammond [1898] 2 Ch 92, at para. 95. 117. Law v Garrett (1878) 8 Ch D 26, CA (Eng); Pini v Roncoroni [1892] 1 Ch 633; Cie du Sénégal et de la Côte Occidentale d’Afrique v Smith & Co and Woods & Co (1883) 53 LJ Ch 166. 118. Brighton Marine Palace and Pier Ltd v Woodhouse [1893] 2 Ch 486; Willesford v Watson (1873) LR 8 Ch App 473; Re Phoenix Timber Co Ltd’s Application [1958] 2 QB 1, [1958] 1 All ER 815, [1958] 1 Lloyd’s Rep 305, CA (Eng). 119. Jasa Keramat Sdn Bhd v Monatech (M) Sdn Bhd [1999] 4 MLJ 217; Hitachi Shipbuilding and Engineering Co Ltd v Viafel Compania Naviera SA [1981] 2 Lloyd’s Rep 498, CA (Eng). 120. Gemot Biehler, Procedures in International Law (2008), p. 98. 121. Nippon Yusen Kaisha v Karageorgis [1975] 2 Lloyds Rep. 187, [1975] 3 All ER 282 (CA); Mareva Compania Naviera S.A. v Int’l Bulkcarriers S.A [1975] 2 Lloyds Rep. 509. 122. Prior to 1975, s. 45 of the UK Supreme Court of Judicature (Consolidation) Act, 1925 in pari materia with s. 37(1) of the UK Supreme Court Act, 1981 vested in the High Court, the power to grant injunction or mandamus in all deserving cases.

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Law, Practice and Procedure of Arbitration in India

While departing from this rule, the English Courts took the view that it was in the interest of justice to issue preservatory orders. The impact was to prevent foreign defendants from removing assets outside the reach of the English Courts thereby thwarting the benefit of the judgment obtained against such defendants.123 The Mareva injunction is a discretionary, interlocutory injunction awarded without the defendant being heard, either before or during the course of the trial.124

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Unlike a regular injunction, a freezing injunction covers even those assets which are not necessarily a part of the subject-​matter in dispute or those in which the claimant does not claim any direct right.125

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Moreover, a Mareva injunction does not create a lien or any proprietary right. It gives the claimant no security or priority over the assets frozen by the injunction.

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A Mareva injunction may be granted under Section 9 of the Arbitration Act unless parties to an arbitration choose a foreign seat of arbitration (thereby excluding Part I of the Arbitration Act).

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The Supreme Court of India in Sundaram Finance Ltd. v NEPC Ltd.126 held that an injunction may be granted before the commencement of arbitral proceedings, provided, there exists a valid and binding arbitration agreement and that a dispute must have arisen which is referable to the arbitral tribunal.127

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The High Court of Calcutta in Abheya Realtors Pvt Ltd. v SSIPL Retail Ltd.128 held that the preconditions to a Mareva injunction being granted are that: (a) the claimant must have a good arguable case;



(b) must establish that the asset(s) in question were unlikely to remain within jurisdiction at the time of the judgment being delivered; and



(c) the claimant would have no means to satisfy the decree.129

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123. Goff J. in the Iraqi Ministry of Defence & Others v Arcepey Shipping Co. S.A. And Gillespie Bros. & Co. Ltd. (Angel Bell) [1980] 1 Lloyds Rep. 632, at p. 635; Third Chandris Shipping Corp. v Unimarine SA [1979] QB 645, at pp. 668–​669. 124. Catherine Colston, Principles of Intellectual Property Law (1999), p. 422; see also Sotiminu v Ocean Steamship (Nig) Ltd (1992) 5 NWLR (PT.239) 1, at p. 25. 125. Mahasweta Muthusubbarayan, “The Mareva Injunction and its Story of Expanding Horizons”, Kluwer Arbitration Blog, May 2019, available at http://​ arbitrationblog.kluwerarbitration.com/​ 2019/​ 05/​ 20/​ the-​ mareva-​injunction-​and-​its-​story-​of-​expanding-​horizons/​. 126. (1999) 2 SCC 479. 127. Ibid, at para. 19. 128. (2009) SCC OnLine Cal 2656. 129. Ibid, at para. 11.

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Chapter 16—​​​Effect and Terms of a Stay

The Supreme Court of India in Mohit Bhargava v Bharat Bhushan Bhargava130 confirmed the court’s power to grant relief in the form of a “freezing order” or “Mareva Injunction” and held that:

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“[T]‌hese two orders are certainly within the jurisdiction of the court which passes the decree since they are only orders of restraint being issued to a person from handing over a property in his possession to the judgment-​debtor along with the documents concerned and keeping the documents in safe custody. They are in the nature of a ‘freezing order’ or a ‘Mareva injunction’ and an order akin to an Anton Piller order, orders that can be issued even if the property or the person concerned is outside the jurisdiction of the court.”131

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In Singapore,132 for instance, the court must be satisfied of three pre-​requisite conditions for the grant of a Mareva injunction: (1) the Singapore court must have in personam jurisdiction over the defendant;



(2) the court must have the power to grant the injunction; and



(3) the court must decide that an injunction is appropriate on the specific facts of the case.

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The High Court of Malaysia in Kwek Seow Kee [‘No: 2’] v K T Packaging Sdn Bhd133 elaborated the circumstances in which a Mareva injunction can be granted, as follows:

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“(a) To aid and assist the execution of an order for costs.

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(b) Against a defendant ordinarily resident within the court’s jurisdiction.

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(c) Being an ancillary relief, its availability is dependent on there being a pre-​existing cause of action. The jurisdiction to grant Mareva injunction extends to cases where there is a danger that the assets will be dissipated within the court’s jurisdiction and it even extends to cases where there is a danger of removal of assets out of jurisdiction.

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(d) It can even be given to prevent dissipation of assets outside the court’s jurisdiction. (e) It may be granted and extended to arbitration proceedings just like it would be to proceedings in court.” 1 30. (2007) 4 SCC 795. 131. Ibid, at para. 10. 132. Karaha Bodas Co. LLC v Pertamina Energy Trading Ltd. [2006] 1 SLR(R) 112 (Court of Appeal), [2005] SGCA 47. 133. [1998] MLJU 77.

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Law, Practice and Procedure of Arbitration in India

Interpleader Halsbury’s Laws of England state:

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“Where a person is under liability in respect of a debt or in respect of any money, goods or chattels and he is, or expects to be sued for or in respect of the debt or money or those goods or chattels, by two or more persons making adverse claims thereto, he may apply to the court for relief by way of interpleader”.134

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The grant of interpleader relief is an order of the court made on the application of a person against whom two or more conflicting claims are brought by other persons, leaving the rival claims to be heard by the court as between the claimants without any further participation by him.135

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In India, Section 88 of the Code of Civil Procedure 1908 (“CPC”) provides that:

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“Where two or more persons claim adversely to one another the same debt, sum of money or other property, which maybe movable or immovable, from another person, who claims no interest therein other than for charges or costs and who is ready to pay or deliver it to the rightful claimant, such other person may institute a suit of interpleader against all the claimants with the aim of obtaining a decision as to determine the person to whom the payment or delivery shall be made and of obtaining indemnity for himself.”

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Whilst a provision for interpleader relief is missing under the Arbitration Act, an arbitration agreement governed by the laws of India could be effectuated for interpleader relief in line with the provisions of the CPC.

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[16.5] CONCLUSION

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The court or the tribunal, in providing injunctive relief to parties, plays a crucial role in forwarding the terms of the arbitration agreement. The cardinal positive effect (or obligation) of an arbitration agreement is the obligation that parties must engage in resolution of the disputes through arbitration.

134. Ibid, at para. 264. 135. Lord Mustill and Stewart C. Boyd, Commercial Arbitration (2nd edn, Butterworths, 2001 Companion Volume to the Second Edition, 2001), p. 272.

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Chapter 16—​​​Effect and Terms of a Stay

The so-​called negative effect (or obligation) of an arbitration agreement is that courts must recognise the arbitration agreement. The courts must refrain from deliberating over disputes that are clearly under the jurisdiction of an arbitral tribunal. In such circumstances, courts must stay the litigation and refer the parties to arbitration under the agreement.

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A stay or dismissal of litigation is akin to an order of injunctive relief granting specific performance of the obligations imposed by arbitration agreements, and particularly, the negative obligation.136

While considering an application for stay of court proceedings in favour of arbitrations, courts have the choice of following one out of the following two approaches, namely: (1) A Full Merits Approach or Full Review Approach; and



(2) A Prima Facie Approach.

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Frederic Bachand states that:

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“The analysis of Model law travaux preparatoires, basic structure and underlying principles reveals that the drafts considered the prevention of dilatory jurisdictional objections to be a more important objective and, consequently, that Article 8(1) [of the Model Law] ought to be interpreted as requiring courts seised of referral applications to apply a prima facie standard while reviewing the tribunal’s jurisdiction”137

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Shin-​Etsu has settled the position in India. The Supreme Court of India has held courts must take a prima facie approach based on the material produced as to whether the arbitration agreement is “null and void”, “inoperative”, or “incapable of being performed”.138

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Traditionally, anti-​suit injunctions, a well-​known device in common law systems, are issued upon the request of a party that the other party be enjoined from initiating or from proceeding with a legal action in a different jurisdiction.

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Courts in civil law countries are increasingly willing, in certain circumstances, to enjoin a party to suspend or terminate an action brought in another country.

136. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1381. 137. Frederic Bachand, “Does Article 8 of the Model Call for Full or Prima Facie Review of the Arbitral Tribunal’s Jurisdiction?” (2006) Arbitration International, Vol. 22, No. 3, LCIA, p. 476. 138. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), pp. 1122–​1123.

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Law, Practice and Procedure of Arbitration in India

The introduction of anti-​suit injunctions into international arbitration is a recent trend. Directed at arbitral proceedings or at court proceedings surrounding an international arbitration, they vary in their form and are requested either to disrupt the arbitral process or, to the contrary, to try to protect it.139

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Legislations globally must continue to evolve in order to accommodate the changing landscapes in their genuine endeavour to provide arbitration-​friendly mechanisms to parties.

139. Emmanuel Gaillard, “Chapter 10: Reflections on the Use of Anti-​suit Injunctions in International Arbitration”, in Loukas A. Mistelis and Julian D. M. Lew, Pervasive Problems in International Arbitration (Kluwer Law International 2006).

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DIVISION 4

ROLE OF THE COURTS

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Chapter 17 INJUNCTIONS RESTRAINING ARBITRATION PROCEEDINGS [17.1] INTRODUCTION......................................................................................................................... 465

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[17.2] ANTI-​ARBITRATION INJUNCTIONS VIS-​À-​VIS THE NEW YORK CONVENTION AND UNCITRAL MODEL LAW.................................................................. 468 [17.3] ANTI-​ARBITRATION INJUNCTIONS IN INTERNATIONAL COMMERCIAL ARBITRATIONS............................................................................................................................ 471 [17.4] ANTI-​ARBITRATION INJUNCTIONS IN INVESTMENT TREATY DISPUTES............. 481

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[17.5] CONCLUSION............................................................................................................................... 485

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[17.1] INTRODUCTION

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An anti-​arbitration injunction restrains a party from commencing or continuing with arbitration proceedings.1 It may be issued when the jurisdiction of the arbitral tribunal has been wrongly invoked by going beyond the terms of the arbitration agreement.2 It is intended to prevent the arbitration proceedings.

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A party can apply for such an injunction at any stage of the arbitration from a court. It may be issued against the party and/​or the arbitral tribunal.3 Such intervention by curial intervention in arbitration proceedings by issuing such an anti-​arbitration injunction is highly controversial and contentious.4

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1. S. R. Subramaniam, “Anti-​Arbitration Injunctions and their compatibility with the New York Convention and the Indian Law of Arbitration: Future directions for Indian law and policy” (June 2018) Arbitration International, Vol. 34, Issue 2, p. 185. 2. Nicholas Poon, “The Use and Abuse of Anti-​Arbitration Injunctions” (2013) 25 SacLJ 244, Singapore Academy of Law Journal, at p. 250. 3. Nicholas Poon, “The Use and Abuse of Anti-​Arbitration Injunctions” (2013) 25 SacLJ 244, Singapore Academy of Law Journal, at p. 246. See: Salini Costruttori SPA v The Federal Democratic Republic of Ethiopia, Addis Ababa Water and Sewerage Authority, Partial Award in ICC Case No. 10623 (2003) 21 ASA Bull 59, p. 99; Devi Resources Limited v Ambo Exports Limited 2019 SCC OnLine Cal 7774, at para. 4 (“… the injunction should be in personam and issued against a party amenable to the jurisdiction of the court issuing the injunction and not issued against a foreign court or a foreign arbitral tribunal.”). 4. Ting Wei-​Chang, “Anti-​Arbitration Injunctions in Investment Arbitration: Lessons learnt from the India v. Vodafone Case” (30 November 2018) Contemporary Asia Arbitration Journal, Vol. 11, No. 2, pp. 251–​275, at p. 252.

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Law, Practice and Procedure of Arbitration in India

On the one hand, anti-​arbitration injunctions are viewed as: (1) Threats to the principle of kompetenz-​kompetenz, that is, it strips the power of the arbitral tribunal to adjudicate any objections to its jurisdiction;5



(2) Inconsistent with the legal framework for conduct of an international arbitration (where interference of courts is restricted to certain limited scenarios);6 and



(3) Tools used by State entities to get the dispute adjudicated upon by national courts rather than the neutral arbitration forum.7 For this reason, they have often been criticised as frustrating arbitration by engaging in judicial protectionism of local companies and governmental entities.8



(4) Judicial intervention procured by unscrupulous parties to evade or delay the agreed arbitration mechanism.

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The general view is that anti-​arbitration injunction increases the level of court interference in the arbitral process. It leads to the abuse of the arbitral process. It derails party autonomy where parties have freely entered and executed arbitration agreements.

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The courts should not aid parties to retract from their contractual agreement regarding jurisdiction and dispute resolution. Such curial interference should be kept to a minimum in accordance to the settled jurisprudence in international commercial arbitration.

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Stephen Schwebel states that anti-​arbitration injunctions “violate conventional and customary international law, international public policy and the accepted principles of international arbitration”.9

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Doak Bishop terms them as “arbitral terrorism”.10 Emmanuel Gaillard suggests that anti-​arbitration injunctions should be prohibited altogether.11

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5. S. R. Subramaniam, “Anti-​Arbitration Injunctions and Their Compatibility with the New York Convention and the Indian Law of Arbitration: Future Directions for Indian Law and Policy” (June 2018) Arbitration International, Vol. 34, Issue 2, p. 2; Sharad Bansal, Divyanshu Agrawal, “Are Anti-​arbitration Injunctions a Malaise? An Analysis in the Context of Indian Law” (1 December 2015) Arbitration International, Vol. 31, Issue 4, pp. 613–​629, at p. 618. 6. Romesh Weeramantry, “Anti-​Arbitration Injunctions: The Core Concepts”, available at https://​cil.nus.edu.sg/​ wp-​content/​uploads/​2014/​06/​Note-​on-​anti-​arbitration-​injunctions.pdf. 7. Sharad Bansal, Divyanshu Agrawal, “Are Anti-​arbitration Injunctions a Malaise? An Analysis in the Context of Indian Law” (1 December 2015) Arbitration International, Vol. 31, Issue 4, pp. 613–​629, at p. 614. 8. Hakeem Seriki, Injunctive Relief and International Arbitration, CRC Press (25 July 2014), at para. 7.02. 9. Stephen Schwebel, “Anti-​suit Injunctions in International Arbitration –​An Overview” in Gaillard (ed.), Anti-​ suit Injunctions in International Arbitration (Juris Publishing 2005), p. 5. 10. Doak Bishop, “Combating Arbitral Terrorism: Anti-​ Arbitration Injunctions Increasingly Threaten to Frustrate the International Arbitral System”. King & Spalding, Houston. 11. Sharad Bansal, Divyanshu Agrawal, “Are Anti-​arbitration Injunctions a Malaise? An Analysis in the Context of Indian Law” (1 December 2015) Arbitration International, Vol. 31, Issue 4, pp. 613–​629, at p. 618.

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Chapter 17—​​​Injunctions Restraining Arbitration Proceedings

Gary Born, too, makes his distaste for such injunctions known by stating that they are “deliberately obstructionist tactics, typically pursued in sympathetic local courts, aimed at disrupting the parties’ agreed arbitral mechanism.”12

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He argues that in international cases, subject to the review of the national courts of the seat of arbitration, an anti-​arbitration injunction should virtually never be issued due to the risk of interfering with the arbitral tribunal’s assessment of its own jurisdiction.13

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On the other hand, anti-​arbitration injunctions do have their benefits. When the validity of the arbitration agreement is being contested, if the issue is not dealt with by the court at the outset it may be raised by the party at the time of challenge of the award.14

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There will be tremendous wastage of time, cost, and effort if at that stage the award is found to be unenforceable. Therefore, it may be more efficient for courts to deal with these issues whenever raised by the parties, by issuing an anti-​arbitration injunction.15 Nicholas Poon explains:

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“While the court is deliberating the issue, it is only sensible that the arbitration not be permitted to commence (if it has not been commenced) or continue (if it has been commenced). In the absence of any consensus between the parties or an order of the arbitral tribunal to voluntarily stay the arbitration, an anti-​arbitration injunction is the best way to ensure that the court’s ruling on jurisdiction would not be rendered nugatory by the time it is issued. This may occur if an award is rendered within the time the court takes to decide the issue.”16 … “The arguments from principle and policy establish a strong foundation for the issuing of anti-​arbitration injunctions. There is mounting acceptance for the idea that early determination of issues concerning the jurisdiction of the arbitral tribunal is in

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12. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1410. 13. Gary B. Born, International Commercial Arbitration, Vol. 1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1419. 14. Nicholas Poon, “The Use and Abuse of Anti-​Arbitration Injunctions” (2013) 25 SacLJ 244, Singapore Academy of Law Journal, at p. 262. 15. S. R. Subramaniam, “Anti-​Arbitration Injunctions and Their Compatibility with the New York Convention and the Indian Law of Arbitration: Future Directions for Indian Law and Policy” (June 2018) Arbitration International, Vol. 34, Issue 2, p. 2; Adrian Briggs, “Anti-​Suit Injunctions and Utopian Ideals” (2004) 120 LQR 529, at p. 530 (“(a)s an antidote to jurisdictional shenanigans” the usefulness of anti-​arbitration injunctions is “second to none”). 16. Nicholas Poon, “The Use and Abuse of Anti-​Arbitration Injunctions” (2013) 25 SacLJ 244, Singapore Academy of Law Journal, at p. 262.

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Law, Practice and Procedure of Arbitration in India

the best interests of the parties and the arbitral process … the recognition of the anti-​ arbitration injunction is desirable.”17 For the above-​mentioned reasons, courts need to ensure that certain competing claims are balanced when deciding whether to grant an anti-​arbitration injunction. These are: (1) Sanctity of the arbitration process;



(2) Costs suffered by a party forced to participate in the arbitration; and



(3) Possibility that it will have to adjudicate upon the validity of the arbitration agreement post rendering of the award.18

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It follows, naturally, from the pro-​arbitration attitudes of courts associated with most successful arbitration centres in accordance to safe seat principles, that injunctions to stay arbitrations will only be used sparingly, if at all.19

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While an anti-​arbitration injunction cannot take away the right of a party to pursue its substantive remedies, a failure to comply with it can amount to contempt of court.20 It may also result in the court refusing to enforce the arbitral award.21

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[17.2] ANTI-​ARBITRATION INJUNCTIONS VIS-​À-​VIS THE NEW YORK CONVENTION AND UNCITRAL MODEL LAW

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There is no express provision in the New York Convention on the Recognition and Enforcement of Arbitral Awards, 1958 (“New York Convention”)22 or the UNCITRAL Model Law on International Commercial Arbitration (“UNCITRAL Model Law”)23 that authorises or bars the issuance of an anti-​arbitration injunction.

17. Ibid, at pp. 265–​266. 18. Sharad Bansal, Divyanshu Agrawal, “Are Anti-​arbitration Injunctions a Malaise? An Analysis in the Context of Indian Law” (1 December 2015) Arbitration International, Vol. 31, Issue 4, pp. 613–​629. 19. J Lew, “Does National Court Involvement Undermine the International Arbitration Processes?”, (2009) 24 3 American University International Law Review, p. 499; Shearer and Jaynel, “Anti-​suit and Anti-​Arbitration Injunctions in International Arbitration: A Swiss Perspective” (2009) Int ALR. 20. Nicholas Poon, “The Use and Abuse of Anti-​Arbitration Injunctions” (2013) 25 SacLJ 244, Singapore Academy of Law Journal, at p. 246. 21. Ibid. 22. Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958). 23. UNCITRAL Model Law on International Commercial Arbitration, 1985 (with amendments as adopted in 2006).

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Chapter 17—​​​Injunctions Restraining Arbitration Proceedings

However, under the New York Convention a Contracting State is obligated to give recognition to an arbitration agreement.24 Further, the UNCITRAL Model Law gives supremacy to the principle of kompetenz-​kompetenz25 and limits court intervention.26 Hence it is often argued that any attempt to injunct arbitrations subject to the New York Convention will be contrary to its basic legal framework.27

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Indeed, Singapore adopted this particular construction of the law in Mitsui Engineering & Shipbuilding Co. Ltd. v Easton Graham Rush and Anr.28

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The Court held that it did not have the residual power to stay an arbitration; rather, it was for the arbitral tribunal to decide whether the arbitration should be stayed, with supervisory recourse to the courts being available once such a decision had been rendered.29

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In contrast, it may be argued that the principle of kompetenz-​kompetenz cannot be interpreted to absolutely limit the powers of the court.

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Lord Collins in Dallah Real Estate and Tourism Holding Co. v Ministry of Religious Affairs of the Government of Pakistan30 explained the approach:

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“… the principle that a tribunal in an international commercial arbitration has the power to consider its own jurisdiction is no doubt a general principle of law … But it does not follow that the tribunal has the exclusive power to determine its own jurisdiction, nor does it follow that the court of the seat may not determine whether the tribunal has jurisdiction before the tribunal has ruled on it. Nor does it follow that the question of jurisdiction may not be re-​examined by the supervisory court of the

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24. New York Convention, Article II.1 reads: “Each Contracting State shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration.” 25. UNCITRAL Model Law, Article 16(1) (“The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement …”). 26. UNCITRAL Model Law, Article 5 (“In matters governed by this Law, no court shall intervene except where so provided in this Law.”). 27. Gary B. Born, International Commercial Arbitration, Vol.1 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1418 (“… all Contracting States have mutual obligations to recognize and enforce arbitration agreements, that argues cogently against the issuance of anti-​arbitration injunctions enjoining international arbitral proceedings and award enforcement, even though such injunctions might well be permissible and sensible in domestic matters”). 28. [2004] SGHC 26. Also see: Air (PTY) Ltd v International Air Transport Association, Tribunal de Premiere Instance (2 May 2005) Case No. C/​1043/​2005-​15SP (Switzerland), translated in (2005) 23 A.S.A Bull. 739. 29. See: Yokogawa Engineering Asia Pte Ltd v Transtel Engineering Pte Ltd [2009] SGHC 1. In this particular case, arbitration was commenced but under the wrong institution and the other party sought a stay of arbitration. The Court did not touch on the issue of residual jurisdiction and dismissed the application based on estoppel arising out of conduct. 30. [2010] 3 WLR 1472, [2010] UKSC 46.

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Law, Practice and Procedure of Arbitration in India

seat in a challenge to the tribunal’s ruling on jurisdiction. Still less does it mean that when the award comes to be enforced in another country, the foreign court may not re-​examine the jurisdiction of the tribunal.”31 In fact, certain provisions of the New York Convention32 and UNCITRAL Model Law33 appear to impliedly permit the issuance of an anti-​arbitration injunctions.

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These provisions indicate that national courts are only obligated to refer a dispute to arbitration after determining that the arbitration agreement does not suffer from any of the specified infirmities, namely, it is not null and void, inoperative, or incapable of being performed.

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If such infirmities are present, the national court is under no obligation to refer the dispute to arbitration.34 Hence, the court can impliedly injunct or prevent the arbitration proceeding under certain circumstances.

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Separately, Article 5 of the UNCITRAL Model Law only limits the intervention of the court in “matters governed by this Law”. Since the Model Law is silent on anti-​ arbitration injunctions, it is arguable that court intervention on that aspect is not limited.35

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In summary, a determination of whether grant of an anti-​arbitration injunction is opposed to the New York Convention and UNCITRAL Model Law will depend upon the importance given to the principle of kompetenz-​kompetenz:

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31. Dallah Real Estate and Tourism Holding Co. v Ministry of Religious Affairs of the Government of Pakistan [2010] 3 WLR 1472, at para. 84. 32. New York Convention, Article II.3 (“The Court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.”). 33. UNCITRAL Model Law, Article 8(1) (“A court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.”). 34. Sharad Bansal, Divyanshu Agrawal, “Are Anti-​arbitration Injunctions a Malaise? An Analysis in the Context of Indian Law” (1 December 2015) Arbitration International, Vol. 31, Issue 4, pp. 613–​629, at p. 620 (“… surely arbitration cannot be seen as a process that arbitrarily seeks to force a party to appear before and/​or challenge the jurisdiction of a tribunal that it never consented to …”). 35. Nicholas Poon, “The Use and Abuse of Anti-​Arbitration Injunctions” (2013) 25 SacLJ 244, Singapore Academy of Law Journal, at pp. 268–​270 (“The court’s power to grant injunctive relief is only restricted by Art 5 if the intervention related to ‘matters governed by this Law’”). See S. R. Subramaniam, “Anti-​Arbitration Injunctions and Their Compatibility with the New York Convention and the Indian Law of Arbitration: Future Directions for Indian Law and Policy” (June 2018) Arbitration International, Vol. 34, Issue 2, p. 6 (“no provision exists within the framework of the Model Law to address cases in which it is alleged that no valid and real arbitration agreement exists between the parties, the arbitration of a certain issue is barred by res judicata or the arbitration is contemplated on a matter that is clearly not subject to arbitration … if the national court exercises jurisdiction in any such scenario, it would not come within the scope of the expression ‘in matters governed by this law’…”).

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Chapter 17—​​​Injunctions Restraining Arbitration Proceedings

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“Either we consider the principle of kompetenz-​kompetenz to be inflexible and absolute or consider it to be relatively flexible. In the case of the former, the national court should not be deciding on the question of invalidity and instead defer it to the arbitral tribunal to be constituted later. Conversely, in the case of the latter, we may recognize the role of the national court in the arbitral process and its potential contributions in the protection of innocent parties, in which case, it may be allowed to rule on the validity of the agreement. Needless to say, the existence of the anti-​arbitration injunction will be a possibility only in the latter option.”36

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However, notwithstanding the fact that issuance of such injunctions may find support in international law and issued by national courts, arbitral tribunals may refuse to recognise the same.37 This position differs in different countries.

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[17.3] ANTI-​ARBITRATION INJUNCTIONS IN INTERNATIONAL COMMERCIAL ARBITRATIONS

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Courts in England, both prior to,38 and post39 the promulgation of the English Arbitration Act, 1996, have consistently held that they possess the jurisdiction to restrain arbitral proceedings. They derive their power to issue anti-​arbitration injunctions from Section 37 of the Supreme Court Act, 1981.40

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36. S. R. Subramaniam, “Anti-​Arbitration Injunctions and Their Compatibility with the New York Convention and the Indian Law of Arbitration: Future Directions for Indian Law and Policy” (June 2018) Arbitration International, Vol. 34, Issue 2, p. 5. 37. Salini Costruttori SPA v The Federal Democratic Republic of Ethiopia, Addis Ababa Water and Sewerage Authority ICC Case No. 10623/​AER/​ACS, Award (7 December 2001), para. 177 (“The Arbitral Tribunal accords great respect to the Ethiopian courts, both in their own right and as the courts of the seat. Nevertheless, in this case, we are of the view that it would be improper, in light of our primary duty to the parties, to observe the injunctions issued by those courts, which have already significantly delayed these proceedings, given that they have the effect of frustrating the parties’ agreement to submit disputes to international arbitration.”); Saipem S.p.A. v The People’s Republic of Bangladesh ICSID Case No. ARB/​05/​07, Award (30 June 2009), para. 167 (“… generally acknowledged that the issuance of an anti-​arbitration injunction can amount to a violation of the principle embedded in Article II of the New York Convention … Technically, the courts of Bangladesh did not target the arbitration or the arbitration agreement in itself, but revoked the authority of the arbitrators. However, it is the Tribunal’s opinion that a decision to revoke the arbitrators’ authority can amount to a violation of Article II of the New York Convention whenever it de facto ‘prevents or immobilizes the arbitration that seeks to implement that [arbitration] agreement’ thus completely frustrating if not the wording at least the spirit of the Convention”); Himpurna California Energy Ltd. v PT. (Persero) Perusahaan Listruik Negara Interim Award (26 September 1999), Final Award (16 October 1999) (2000) Yearbook Comm Arb’n XXV, p. 109. 38. Kitts v Moore & Co. [1895] 1 Q.B. 253, CA (Eng). 39. Claxton Engineering Services Ltd v TXM Olaj-​Es Gazkutato KFT (No. 2) [2011] EWHC 345 (Comm); Nomihold Securities Inc v Mobile Telesystems Finance SA [2012] EWHC 130 (Comm); Intermet FZCO v Ansol Ltd [2007] EWHC 226 (Comm); Weissfisch v Julius [2006] EWCA Civ 218. 40. J Jarvis & Sons Ltd v Blue Circle Dartford Estates Ltd [2007] EWHC 1262 (TCC); Elektrim S.A. v Vivendi Universal S.A. 2007 EWHC 571 (Comm), at p. 242.

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Law, Practice and Procedure of Arbitration in India

Justification of this approach includes the contention that, contrary to some authorities, the English Arbitration Act, 1996 does not occupy the whole ground and as such, leaves room for an inherent jurisdiction to restrain arbitration proceedings.41 In Australia, too, courts have upheld their power to grant anti-​arbitration injunctions, even in case of foreign-​seated arbitrations.42

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In India, the situation is not as simple. The Supreme Court of India in V.O. Tractoroexport, Moscow v Tarapore & Company43 restrained a Russian firm from proceeding with an arbitration in Moscow, during the pendency of the suit before it.44

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However, this case arose under the Arbitration Act, 1940 and so questions relating to the power of the court to issue anti-​arbitration injunctions did not arise.

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Thereafter, the Arbitration Act was promulgated, taking into consideration the UNCITRAL Model Law and UNCITRAL Rules.45 Though under Section 9 of the Arbitration Act, courts have the power to grant interim relief, this does not include the power to issue anti-​arbitration injunctions.46

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While some courts have taken the view that anti-​arbitration injunctions cannot be granted under any circumstance,47 others have opted for a more moderate approach whereunder these injunctions can be granted as long as certain exceptional circumstances are satisfied.48

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The High Court of Calcutta, for instance, in Board of Trustees of the Port of Kolkata v Louis Dreyfus Armatures SAS,49 held that an anti-​arbitration injunction can

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41. AES Ust-​Kamenogorsk Hydropower Plant LLP v Ust-​Kamenogorsk Hydropower Plant JSC [2011] EWCA Civ 647, affirmed [2013] UKSC 35, SC. 42. Kraft Foods Group Brands LLC v Bega Cheese Ltd. [2018] 358 ALR 1; Caratti v Caratti [No. 2] [2014] WASC 65. 43. (1969) 3 SCC 562. 44. V.O. Tractoroexport, Moscow v Tarapore & Company (1969) 3 SCC 562, paras 27, 28. 45. The Arbitration Act, Preamble. 46. Bhatia International v Bulk Trading S.A. (2002) 4 SCC 105, para. 29 (“… there cannot be any applications under Section 9 for stay of arbitral proceedings …”). 47. Kvaerner Cementation Ltd. v Bajranglal Agarwal (2012) 5 SCC 214; National Aluminium Company Limited v Subhash Infra Engineers Pvt. Ltd. 2019 SCC OnLine SC 1091, para. 14; Chatterjee Petrochem Company and Anr. v Haldia Petrochemicals Ltd. and Ors. (2014) 14 SCC 574. 48. World Sport Group (Mauritius) Ltd. v MSM Satellite (Singapore) Pte Ltd. (2014) 11 SCC 639, paras 23, 24, 36; McDonald’s India Pvt. Ltd. v Mr. Vikram Bakshi 2016 SCC OnLine Del 3949, (2016) 232 DLT 394 (The Supreme Court of India dismissed a special leave petition appealing against this judgment on 30 August 2016 in SLP(C) No. 24914/​2016); Bina Modi & Ors. v Lalit Modi & Ors. 2020 SCC OnLine Del 1678, paras 77, 86, 87. 49. 2014 SCC OnLine Cal 17695.

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Chapter 17—​​​Injunctions Restraining Arbitration Proceedings

be granted if the continuation of foreign arbitration proceedings might be oppressive or unconscionable. An analysis of the provisions of the Arbitration Act is necessary to understand the conflicting rationale given by Indian courts when dealing with their powers to issue anti-​arbitration injunctions.

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Like the UNCITRAL Model Law, the Arbitration Act enshrines the principle of kompetenz-​kompetenz50 and limits court intervention in arbitral proceedings.51 Further, in arbitrations governed by Part I of the Arbitration Act, that is, arbitrations seated in India, a court is not bound to refer the parties to arbitration if it finds that a valid arbitration agreement does not exist.52

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In a similar vein, in arbitrations governed by Part II of the Arbitration Act, that is, foreign-​seated arbitrations, Section 45 provides that a court is not bound to refer the parties to arbitration if it finds that the said agreement is null and void, inoperative, or incapable of being performed.

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Importantly, Section 45 is not limited by anything contained in Part I of the Arbitration Act.53 Hence, it is not limited by Sections 5 and 16 that limit court intervention in arbitral proceedings and enshrine the principle of kompetenz-​ kompetenz, respectively.

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The Supreme Court of India in Kvaerner Cementation Ltd. v Bajranglal Agarwal (“Kvaerner Cementation”),54 relying primarily on Sections 5 and 16 of the Arbitration Act, held that in view of these sections, only the arbitral tribunal has the power to rule on its own jurisdiction and no civil court can pass any injunction to restrain arbitral proceedings.55

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The Supreme Court of India in National Aluminium Company Limited v Subhash Infra Engineers Pvt. Ltd56 reiterated this approach.

50. The Arbitration Act, s. 16. 51. The Arbitration Act, s. 5 (“Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.”). 52. The Arbitration Act, s. 8. 53. Section 45 of the Arbitration Act begins with a non obstante clause: “Notwithstanding anything contained in Part I …”. 54. (2012) 5 SCC 214. 55. Also, see: Ravi Arya v Palmview Investments Overseas Limited 2019 SCC OnLine Bom 251 (The Supreme Court of India dismissed a special leave petition appealing against this judgment on 11 March 2019 in SLP(C) No. 6424/​2019). 56. 2019 SCC OnLine SC 1091.

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Law, Practice and Procedure of Arbitration in India

In case of foreign awards falling under Part II of the Arbitration Act, it has been held that the challenge mechanism can only be at the country where the award was passed. Curial interference in India can only be at the stage of enforcement of the foreign award, and not before.57

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Hence, if this approach is applicable, a suit for an anti-​arbitration injunction will not be maintainable.58 An objection to the jurisdiction of the arbitral tribunal or the validity of the arbitration agreement can only be examined by the arbitral tribunal itself. Only when substantive action is brought before the court and a plea of Sections 8 or 45 of the Arbitration Act is taken, can the court examine the arbitration agreement prior to referring the parties to arbitration.59

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Contrary to the above position, the Supreme Court of India in Chatterjee Petrochem Company and Anr. v Haldia Petrochemicals Ltd. and Ors.60 held that civil courts do possess the power to grant anti-​arbitration injunctions since their power to refer a dispute to arbitration is not absolute and is limited by Sections 8 and 45 of the Arbitration Act.61

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Further, the Supreme Court of India in World Sport Group (Mauritius) Ltd. v MSM Satellite (Singapore) Pte Ltd.62 held that Indian courts possess jurisdiction to entertain an anti-​arbitration injunction even in foreign-​seated arbitrations because:

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“… under Section 9 CPC, the courts in India have jurisdiction to try all suits of a civil nature excepting suits of which cognizance is either expressly or impliedly barred”.63

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The High Court of Calcutta in Balasore Alloys Ltd. v Medima LIC64 has reiterated the powers of civil courts to grant anti-​arbitration injunctions.

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Further, in this case, it was held that the judgment of the Supreme Court of India in Kvaerner Cementation has been overruled by the Constitution Bench decision in SBP

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57. LMJ International Limited v Sleepwell Industries Co. Ltd. 2012 SCC OnLine Cal 10733, (2019) 5 SCC 302, at para. 19; M/​s Sancorp Confectionary Pvt. Ltd. v M/​s Gumlink 2012 SCC OnLine Del 5507. 58. Roshan Lal Gupta v Parasram Holdings Pvt. Ltd. & Anr. 2009 SCC OnLine Del 293, para. 26; Spentex Industries Ltd. v Dunavant SA 2009 SCC OnLine Del 1666; Shree Krishna Vanaspati Industries (P) Ltd. v Virgoz Oils & Fats Pte Ltd. 2009 SCC OnLine Del 1665; M. Sons Enterprises Pvt. Ltd. v Suresh Jagasia 2011 SCC OnLine Del 82; Ashok Kalra v Akash Paper Board Pvt. Ltd. 2013 SCC OnLine Del 3299. 59. Bina Modi & Ors. v Lalit Modi & Ors. 2020 SCC OnLine Del 901, at para. 30. 60. (2014) 14 SCC 574. 61. Also, see McDonald’s India Pvt. Ltd. v Mr. Vikram Bakshi 2016 SCC OnLine Del 3949. 62. (2014) 11 SCC 639. 63. World Sport Group (Mauritius) Ltd. v MSM Satellite (Singapore) Pte Ltd. (2014) 11 SCC 639, at para. 23. 64. GA No. 871 of 2020 (12 August 2020) (An appeal against this order was dismissed by a Division Bench of the High Court of Calcutta; see: Balasore Alloys Ltd. v Medima LIC 2020 SCC OnLine Cal 1698. An appeal has also been dismissed by the Supreme Court of India on 16 September 2020 in SLP(C) No. 10264/​2020.).

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Chapter 17—​​​Injunctions Restraining Arbitration Proceedings

& Co. v Patel Engineering.65 So all the decisions relying upon Kvaerner Cementation to argue that anti-​arbitration injunctions are not maintainable are without basis.66 In the United States of America, the Federal Arbitration Act, 1925 governs international commercial arbitrations and inter-​State arbitrations. In addition, most States have their own arbitration statutes several of which contain provisions relating to the grant of anti-​arbitration injunctions.67

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There is a divergence of opinion among Federal District Courts on whether anti-​ arbitration injunctions are permitted in international arbitrations. Some courts have taken the stand that issuance of such an injunction will be inconsistent with the New York Convention.68

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Others are of the view that issuance of an anti-​arbitration injunction when the parties have not entered into a valid and binding arbitration agreement will not violate the Federal Arbitration Act. Neither does it violate the principles of the New York Convention and, in fact, furthers the goals of arbitration.69

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Contrary to the above approaches, Courts in Singapore have narrowly interpreted the UNCITRAL Model Law and held that grant of anti-​arbitration injunction would contravene the Model Law.70 An approach similar to Singapore has been taken by Courts in Switzerland and France.

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The Swiss Court of First Instance has ruled that anti-​arbitration injunctions can neither be issued nor enforced since they are contrary to the principle of kompetenz-​ kompetenz and the Swiss legal regime.71

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65. (2005) 8 SCC 618. 66. Balasore Alloys Ltd. v Medima LIC GA No. 871 of 2020 (12 August 2020), at para. 10. 67. See: NY CPLR (New York Civil Practice Law Rules), 2012, s. 7503(b) (“… a party who has not participated in the arbitration and who has not made or been served with an application to compel arbitration may apply to stay arbitration on the ground that a valid agreement was not made or has not been complied with or that the claim sought to be arbitrated is barred by limitation under subdivision (b) of section 7502.”). 68. URS Corporation v Lebanese Company for the Development and Reconstruction of Beirut Central District SAL 512 F. Supp. 2d 199 (D Del. 2007), Yearbook Commercial Arbitration, 1024 XXXIII (2008); Firooz Ghassabian v Fatollah Hematian 08 Civ. 4400 (SAS) (SDNY 27 August 2008), Yearbook Commercial Arbitration, 1224 XXXIII (2008); Republic of Ecuador v ChevronTexaco Corp., 376 F. Supp. 2d 344, 348-​49 (SDNY 2005); Tai Ping Insurance Co. v M/​V Warschau 731 F.2d 1141 (5th Cir. 1984). 69. Societe Generale de Surveillance, SA v Raytheon European Management and Systems Co., 643 F. 2d. 863 (1st Cir 1981); Glen P Farrell v Subway International BV, 2011 wl 1085017 (SDNY 23 March 2011), No. 11 Civ. 08 (JFK) (SDNY 23 March 2011); Anderson v Beland (In re Am. Exp. Fin. Advisors Secs. Litig.) 672 F.3d 113, 140 (2d Cir. 2011); McLaughlin Gormley King Co. v Teminix Intl Co. L.P 105 F.3d 1192 (8th Cir. 1997); CRT Cap. Group v SLS Cap., S.A. 2014 WL 6807701 (SDNY 3 December 2014); Citigroup Glob. Markets Inc. v Al Children’s Hosp., Inc. 5 F. Supp. 3d 537. 542 (SDNY 2014). 70. Mitsui Engineering & Shipbuilding Co Ltd v Easton Graham Rush and Another [2004] SGHC 26, [2004] 2 SLR(R) 14. 71. Air (PTY) Ltd v International Air Transport Association Tribunal de Premiere Instance (2 May 2005) Case No C/​1043/​2005-​15SP (Switzerland), translated in (2005) 23 A.S.A Bull. 739.

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Law, Practice and Procedure of Arbitration in India

Similarly, in France, courts have ruled that they do not possess any authority to restrain the arbitral proceedings once the tribunal has been constituted.72

Tests for Grant of Anti-​arbitration Injunctions Though courts in most common law jurisdictions assert that they possess the power to grant anti-​arbitration injunctions, they exercise this power with caution,73 vigilance,74 and frugality.75

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The High Court of Calcutta in Devi Resources Limited v Ambo Exports Limited76 explained:

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“54. … In every case, it is the duty of the court to exercise extreme caution and circumspection before issuing an anti-​suit or anti-​arbitration injunction … 55. Just as the legal trinity of justice, equity and good conscience casts a duty on a court to see that a party before it is not unfairly prejudiced, the principles of comity, the respect for the sovereignty of a friendly nation and the need for self-​restraint should guide a court to issue an injunction of such nature only in the most extreme and gross situations and not for the mere asking …”

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Hence, courts tend to exercise such injunctions only in exceptional circumstances when the proceedings are an infringement of a legal or equitable right of a party,77 or they are vexatious and unconscionable in nature.78

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Further, unless there is demonstrable injustice or harassment or the arbitration agreement is not valid, the courts will not grant an anti-​arbitration injunction.79

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However, the mere existence of multiple proceedings will not in itself amount to oppressive or vexatious action justifying the grant of an anti-​arbitration injunction.

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Only if the court is satisfied that continuation of the arbitration will lead to unnecessary duplication of work,80 or threaten legal remedies,81 will such an anti-​arbitration injunction be granted.

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72. S.A. Elf Aquitaine and Total v Mattei, Lai Kamara and Reiner (6 January 2010) (Tribunal de Grande Instance, Paris), RG No. 09/​60539; Republic of Equatorial Guinea v Fitzpatrick Equatorial Guinea (29 March 2010) (Tribunal de Grande Instance, Paris) [2010] Revue de l’arbitrage 390. 73. Intermet FZCO v Ansol Ltd [2007] EWHC 226 (Comm). 74. British Caribbean Bank Ltd v The Attorney General [2013] CCJ 4 (AJ), at para. 37. 75. J. Jarvis & Sons Ltd v Blue Circle Dartford Estates Ltd [2007] EWHC 1262 (TCC); Injazat Technology Capital Limited v Dr Hamid Najafi [2012] EWHC 4171 (Comm). 76. 2019 SCC OnLine Cal 7774, at paras 54–​55. 77. Elektrim S.A. v Vivendi Universal S.A. (No. 2) [2007] EWHC 571 (Comm), at para. 56. 78. Excalibur Ventures LLC v Texas Keystone Inc. [2011] EWHC 1624 (Comm), at paras 56–​57. 79. Lafarge India Pvt. Ltd. v Emami Realty Ltd. 2016 SCC OnLine Cal 4964, at para. 59; McDonald’s India Pvt. Ltd. v Mr. Vikram Bakshi 2016 SCC OnLine Del 3949, at para. 63. 80. Intermet FZCO v Ansol Limited [2007] EWHC 226 (Comm), at paras 30–​31; Claxton Engineering Services Ltd v TXM Olaj-​Es Gazkutato KTF (Claxton) [2011] EWHC 345 (Comm), at para. 36. 81. Minister of Finance (Inc.) 1 Malaysia Development Berhad v International Petroleum Investment Company Aabar Investments PJS [2019] EWCA Civ 2080, [2019] EWHC 1151 (Comm).

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Chapter 17—​​​Injunctions Restraining Arbitration Proceedings

Similarly, the mere existence of proceedings before a national court will not render the arbitration agreement inoperative and justify the grant of an anti-​arbitration injunction.82 The onus will be on the party requesting for an anti-​arbitration injunction to establish that the arbitration agreement is inoperative or proceedings are oppressive and vexatious.83

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The test for granting an anti-​arbitration injunction should not be the same as that for granting an anti-​suit injunction which are intended to prevent.84 Anti-​arbitration injunctions must only be granted in the following circumstances:85 (1) When the arbitration proceedings are vexatious or oppressive;



(2) On grounds of res judicata or constructive res judicata;



(3) When a prima facie determination is possible and trial of issues isn’t required;

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Further, foreign-​seated arbitrations must be only injuncted under exceptional circumstances, since the court of the seat should ordinarily have supervisory jurisdiction over the arbitration.86

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The Supreme Court of India in World Sport Group (Mauritius) Ltd. v MSM Satellite (Singapore) Pte Ltd.87 held that foreign arbitral proceedings may only be restrained if the arbitration agreement is inoperative or incapable of being performed.88

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A prima facie determination must be undertaken to determine whether the arbitration agreement is valid or null, void, inoperative, or incapable of being performed.89

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82. McDonald’s India Pvt. Ltd. v Mr. Vikram Bakshi 2016 SCC OnLine Del 3949; Balasore Alloys Ltd. v Medima LIC GA No. 871 of 2020 (12 August 2020), at para. 35(f). 83. McDonald’s India Pvt. Ltd. v Mr. Vikram Bakshi 2016 SCC OnLine Del 3949; Balasore Alloys Ltd. v Medima LIC GA No. 871 of 2020 (12 August 2020), at para. 35(d). 84. McDonald’s India Pvt. Ltd. v Mr. Vikram Bakshi 2016 SCC OnLine Del 3949; Elektrim S.A. v Vivendi Universal S.A. 2007 EWHC 571 (Comm). 85. Himachal Sorang Power Private Limited v NCC Infrastructure Holdings Limited 2019 SCC OnLine Del 7575, at para. 127. 86. Weissfich v Anthony Julius [2006] EWCA Civ 218. See: Sabbagh v Khoury [2018] EWHC 1330 (Comm); Claxton Engineering Services Ltd v TXM Olaj-​Es Gazkutato KTF (Claxton) [2011] EWHC 345 (Comm); Republic of Kazakhstan v Istil Group Inc (No. 2) [2007] EWHC 2729 (Comm). 87. (2014) 11 SCC 639. 88. World Sport Group (Mauritius) Ltd. v MSM Satellite (Singapore) Pte Ltd. (2014) 11 SCC 639, at paras 33–​35. 89. Dholi Spintex Pvt. Ltd. v Louis Dreyfus Company India Pvt. Ltd. 2020 SCC OnLine Del 1476, at para. 64.

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Law, Practice and Procedure of Arbitration in India

An arbitration agreement does not become inoperative or incapable of being performed when allegations of fraud are to be inquired into.90 Some of the circumstances warranting the grant of an anti-​arbitration injunction are: (1) the arbitration agreement appears to be void/​voidable;91



(2) the claimant’s claim is time-​barred;92



(3) there has been breach of an agreement to not arbitrate;93



(4) there is arbitration of an issue that was res judicata;94



(5) an exclusive jurisdiction agreement has been breached;95



(6) arbitration has been commenced against a third party who was not a party to the arbitration agreement.96

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However, any delay is likely to be fatal to an anti-​arbitration injunction application.97 An anti-​arbitration injunction will not be granted where: (1) the underlying contract is terminated by repudiation;98



(2) where performance of the contract becomes impossible;99



(3) where the contract has debatably come to an end;100



(4) where no injury will be caused to the party requesting for an injunction;101 and



(5) where it appears that the arbitrator is exceeding his jurisdiction.102

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90. World Sport Group (Mauritius) Ltd. v MSM Satellite (Singapore) Pte Ltd. (2014) 11 SCC 639, at para. 36. 91. Kitts v Moore [1895] 1 QB 253, CA (Eng); Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corporation Ltd. [1981] AC 909; Albon v Naza Motor Training SDN BHD [2008] 1 All ER (Comm) 351, [2008] 1 Lloyd’s Rep 1, CA. 92. Compagnie Europenne de Cereales S.A. v Tradax Export SA [1986] 2 Lloyd’s Rep 301. 93. Li v Rao [2019] BCCA 264; Huyton SA v Peter Cremer GmbH & Co [1999] 1 Lloyd’s Rep 620. 94. Nomihold Securities Inc. v Mobile Telesystems Finance SA [2012] EWHC 130 (Comm). 95. Claxton Engineering Services Ltd v TXM Olaj-​ÉS Gázkutató KFT (No. 2) [2011] EWHC 345 (Comm). 96. Excalibur Ventures LLC v Texas Keystone Inc. [2011] EWHC 1624 (Comm). 97. J Jarvis & Sons Ltd v Blue Circle Dartford Estates Ltd [2007] EWHC 1262 (TCC), at para. 40. 98. Heyman v Darwins Ltd. [1942] AC 356. 99. Smith, Coney & Barrett v Becker, Gray & Co [1916] 2 Ch 86, CA (Eng). 100. James Scott & Sons Ltd. v R & N Del Sal (1923) 14 Ll. L. Rep. 65. 101. Farrar v Cooper [1890] 44 Ch.D. 323. 102. The North London Railway Company v The Great Northern Railway Company (1883) 11 QBD 30, CA (Eng).

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Chapter 17—​​​Injunctions Restraining Arbitration Proceedings

The High Court of Delhi in McDonald’s India Pvt. Ltd. v Mr. Vikram Bakshi103 held that the seat of arbitration cannot be viewed as forum non conveniens and used to justify issuance of an anti-​arbitration injunction.104 Recently, courts have taken a more liberal approach when granting anti-​ arbitration injunctions.

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The Court of Appeal in Sabbagh v Khoury105 restrained parties from participating in the Lebanon-​seated arbitration on the grounds that the party who had been joined in the arbitration had earlier obtained a ruling from the English Court that she was not bound by the arbitration agreement:

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“Where it is clear that the dispute is within the terms of a valid arbitration agreement, then the courts should not interfere. When the converse is true, ‘either because it is common ground between the parties or because of a previous determination’ (per Andrew Smith J in Amtrust Europe v Trust risk Group at [25]), the court may grant an anti-​arbitration injunction but only if the circumstances of the case require it.”106

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The Federal Court of Malaysia in Jaya Sudhir A/​L Jayaram v Nautical Supreme Sdn Bhd & Ors.107 restrained parties to an agreement from participating in an arbitration, at the request of a stranger who is a non-​party to the arbitration agreement, so as to allow him to enforce his rights through litigation.108

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2016 SCC OnLine Del 3949. McDonald’s India Pvt. Ltd. v Mr. Vikram Bakshi 2016 SCC OnLine Del 3949. [2019] EWCA Civ. 1219. Sabbagh v Khoury [2019] EWCA Civ. 1219, at paras 110–​115. [2019] 5 MLJ 1. See also, MISC Berhad v Cockett Marine Oil (Asia) Pte Ltd (Admiralty in Personam No. WA-​ 27NCC-​46-​05/​2020) where the Malaysian High Court issued an anti-​arbitration injunction against a London arbitration and rejected a parallel application to stay court proceedings. 108. While it is uncommon for a party (or an alleged party) to arbitration agreement to apply to the local courts for anti-​arbitration injunction, it is unheard of that a stranger, namely, a non-​p arty to the arbitration agreement to be given an anti-​arbitration injunction to restrain arbitral proceedings. This decision may be contrary to the rule in the Malaysian Arbitration Act, 2005 based on the Model Law that only parties to an arbitration agreement can partake or resist arbitration proceedings in the absence of any consent to a joinder by either the arbitration agreement or by the applicable arbitral institution rules. 109. Government of Malaysia v Nurhima Kiram Fornan & Ors. Originating Summons No. BKI-​24NCvC-​190/​12-​ 2019 (HC2).

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1 03. 104. 105. 106. 107.

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The High Court of Malaysia has also allowed an anti-​arbitration injunction on the basis of sovereign immunity.109

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Law, Practice and Procedure of Arbitration in India

Termination of the Reference by Agreement or Conduct An arbitration agreement may be terminated by unequivocal agreement.110 Though a reference cannot be repudiated or frustrated merely by inordinate delay in the prosecution of the proceedings,111 a long period of inactivity by both parties may give rise to an implied agreement to terminate the reference.

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Such an inference was drawn in Andre et Cie SA v Marine Transocean Ltd, The Splendid Sun112 where there was an eight-​year delay during which one of the arbitrators died and was not replaced.

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The Court in the Australian case of Comandate Marine Corp v Pan Australia Shipping Pty Ltd113 held that there must be an intention to elect to abandon arbitration.

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The Court in Tankrederei Ahrenkeil GmbH v Frahuil SA, The Multitank Holsatia114 held that it will be slow to infer termination and will only do so in very limited circumstances: (1) The clear inference to be drawn from the claimant’s inactivity was that he did not wish to proceed provided that the respondent also agreed not to proceed;



(2) the clear inference to be drawn from the respondent’s inactivity was that he consented to the abandonment; and



(3) these inferences did not conflict with the respondent’s actual understanding of the position.115

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The court in considering an application for an injunction restraining the arbitration proceedings will consider the termination issue on its merits and will grant an injunction if it finds that the reference has been terminated.

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110. Downing v Al Tameer Establishment [2002] EWCA Civ 721; BEA Hotels NV v Bellway LLC [2007] EWHC 1363 (Comm). 111. Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corpn Ltd [1981] AC 909; Paal Wilson & Co A/​S v Partenreederei Hannah Blumenthal, The Hannah Blumenthal [1983] 1 AC 854. 112. [1981] QB 694. See Paal Wilson & Co A/​S v Partenreederei Hannah Blumenthal, The Hannah Blumenthal [1983] 1 AC 854; Excomm Ltd v Guan Guan Shipping (Pte) Ltd, The Golden Bear [1987] 1 Lloyd’s Rep 330; Tankrederei Ahrenkeil GmbH v Frahuil SA, The Multitank Holsatia [1988] 2 Lloyd’s Rep 486; Cf. Allied Marine Transport Ltd v Vale do Rio Doce Navegacao SA, The Leonidas D [1985] 2 All ER 796; Gebr van Weelde Scheepvaartkantor BV v Compania Naviera Sea Orient SA, The Agrabele [1987] 2 Lloyd’s Rep 233, CA (Eng); Food Corpn of India v Antclizo Shipping Corpn, The Antclizo [1988] 2 All ER 513. 113. [2006] FCAFC 192. 114. [1988] 2 Lloyd’s Rep 486. 115. See Shell International Petroleum Co Ltd v Coral Oil Co Ltd (No 1) [1999] 1 Lloyd’s Rep 72; Thai-​Europe Tapioca Service Ltd v Seine Navigation Co Inc, The Maritime Winner [1989] 2 Lloyd’s Rep 506.

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Chapter 17—​​​Injunctions Restraining Arbitration Proceedings

The Court in Indescon Ltd v Ogden116 refused to grant an anti-​arbitration injunction, notwithstanding that over eight years had passed since the issue of the notice to arbitrate, because there was no factual evidence of abandonment.117 The Arbitration Act contains no provision relating to striking out proceedings if there has been “inordinate and inexcusable delay” as is the case with the English Act.118

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However, the High Court of Calcutta in Lindsay International Private Limited v Laxmi Niwas Mittal119 stayed an arbitration initiated three years after the filing of the defence in court proceedings, on the grounds that the arbitration clause had been waived by the parties.

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[17.4] ANTI-​ARBITRATION INJUNCTIONS IN INVESTMENT TREATY DISPUTES

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Investment arbitration is a procedure to resolve disputes that arise between foreign investors and the host State. The arbitral tribunal resolving investment treaty disputes derives its jurisdiction from a sui generis arbitration agreement contained in a bilateral or multilateral treaty, to which the investor’s home State is also a contracting party.120

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In an investment arbitration, there is often more than one forum (i.e. since there are several legal entities involved, the same claim can be advanced under different treaties) available to the investor for resolution of disputes.121 Investors tend to initiate parallel proceedings under different treaties so as to put pressure on the State.122 In these circumstances, anti-​arbitration injunctions are often sought by States to avoid parallel proceedings.123

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However, such injunctions are not commonly granted in investment arbitrations. This is because, by consenting to arbitrate under the Convention on the Settlement of Investor

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1 16. [2004] All ER (D) 109 (Aug); [2004] EWHC 2326. 117. See: Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), para. 2-​139. 118. (English) Arbitration Act, 1996, s. 41(3). 119. 2020 SCC OnLine Cal 1658, at para. 53. 120. Jan Paulson, “Arbitration without Privity” (1995) ICSID Review-​Foreign Investment Law Journal 10(2), p. 232. 121. Ting Wei-​Chang, “Anti-​Arbitration Injunctions in Investment Arbitration: Lessons Learnt from the India v. Vodafone Case” (30 November 2018) Contemporary Asia Arbitration Journal, Vol. 11, No. 2, pp. 251–​275, at p. 260. 122. Nadja Erk-​Kubat, “Jurisdictional Disputes in Parallel Proceedings: A Comparative European Perspective on Parallel Proceedings Before National Courts and Arbitral Tribunals”, pp. 12–​ 14 (23 October 2013) (unpublished Ph.D. dissertation, University of St. Gallen); Emmanuel Gaillard, “Abuse of Process in International Arbitration” (2017) 32 ICSID REV. 17, pp. 24–​25. 123. Ting Wei-​Chang, “Anti-​Arbitration Injunctions in Investment Arbitration: Lessons Learnt from the India v. Vodafone Case” (30 November 2018) Contemporary Asia Arbitration Journal, Vol. 11, No. 2, pp. 251–​275, at p. 260.

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Law, Practice and Procedure of Arbitration in India

Disputes between States and Nationals of Other States (“ICSID Convention”),124 parties lose their right to approach national forums for relief.125 Further, the principle of kompetenz-​kompetenz has been incorporated into the ICSID Convention. As such, an arbitral tribunal preserves the power to decide any objections to its own jurisdiction.126

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Separately, a party to a bilateral investment treaty (“BIT”) is bound by the Vienna Convention on the Law of Treaties (“Vienna Convention”) to perform it in good faith.127 Therefore, when a party to a BIT approaches a national court for an anti-​arbitration injunction, despite promising that all disputes will be submitted to arbitration, it is acting in breach of its treaty obligations and in violation of international law.128

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By way of an example, the High Court of New Zealand in Attorney General v Mobil Oil NZ Ltd.129 stayed the suit initiated by the New Zealand government seeking an interim injunction restraining ICSID arbitration proceedings.

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Similarly, the Swiss Federal Tribunal, in Maritime International Nominees Establishment (MINE) v Republic of Guinea,130 acknowledged the exclusivity of arbitration proceedings under the ICSID Convention.

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The Court in British Caribbean Bank Ltd. v The Government of Belize131 too cautioned against the issuance of anti-​arbitration injunctions in investment treaty disputes.

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However, national courts do not always pay deference to Article 26 of the ICSID Convention.

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The Supreme Court of Pakistan in SGS Société Générale de Surveillance S.A. v Islamic Republic of Pakistan132 suspended the ICSID arbitration proceedings at the request of the Government of Pakistan.

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124. Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, 18 March 1965. 125. ICSID Convention, Article 26: “Consent of the parties to arbitration under this Convention shall, unless otherwise stated, be deemed consent to such arbitration to the exclusion of any other remedy. A Contracting State may require the exhaustion of local administrative or judicial remedies as a condition of its consent to arbitration under this Convention”; Abhilasha Vij, “The Notorious Case of Anti-​Arbitration Injunctions in Investor-​State Dispute Settlement” (15 August 2020) Investment and Commercial Arbitration Review (ICAR). 126. ICSID Convention, art. 41(1). 127. Vienna Convention on the Law of Treaties (23 May 1969), Article 27: “A party may not invoke the provisions of its internal law as justification for its failure to perform a treaty”. 128. Dhriti Mehta, “Distilling the Concerns of Granting Anti-​Arbitration Injunction in International Commercial Arbitration” (9 August 2020) RMLNLU Arbitration Law Blog. 129. [1989] 2 NZLR 649, 1 July 1987, 4 ICSID Reports 117. 130. ASA Bulletin (1987) 26, 4 ICSID Reports 39. 131. [2013] CCJ 3 (AJ). 132. ICSID Case No. ARB/​01/​13, Procedural Order No. 2 (16 October 2002).

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Chapter 17—​​​Injunctions Restraining Arbitration Proceedings

However, the ICSID tribunal refused to be bound by this order. It directed the Government of Pakistan not to initiate any action against the claimant for contempt before its local courts. In case of non-​ICSID investment arbitrations, however, national courts may presume jurisdiction to grant anti-​arbitration injunctions.133 Courts in India have been quick to presume the jurisdiction to grant such injunctions.134

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The High Court of Calcutta in The Board of Trustees of the Port of Kolkata v Louis Dreyfus Armatures SAS and Others135 was the first to grant an anti-​arbitration injunction in an investment treaty arbitration.136 The Court listed the circumstances when such an injunction can be granted:

(1) If an issue is raised whether there is any valid arbitration agreement between the parties and the Court is of the view that no agreement exists between the parties;



(2) If the arbitration agreement is null and void, inoperative, or incapable of being performed; and



(3) if the continuation of foreign arbitration proceeding might be oppressive or vexatious or unconscionable.137

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Thereafter, in Union of India v Vodafone Group PLC United Kingdom & Anr.138 the Union of India sought an injunction against Vodafone on the grounds that the latter’s initiation of two parallel arbitration proceedings under the India-​Netherlands BIPA139 and India-​UK BIPA140 constitutes abuse of process.

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133. Out of the 193 Member States of the United Nations, 40 have not signed or ratified the ICSID Convention. See: Database of ICSID Member States, available at https://​icsid.worldbank.org/​about/​member-​states/​database-​ of-​member-​states. Ting Wei-​Chang, “Anti-​Arbitration Injunctions in Investment Arbitration: Lessons Learnt from the India v. Vodafone Case” (30 November 2018) Contemporary Asia Arbitration Journal, Vol. 11, No. 2, pp. 251–​275, at p. 261; Union of India v. Vodafone Group PLC United Kingdom & Anr. 2018 SCC OnLine Del 8842. 134. Union of India v Vodafone Group PLC United Kingdom & Anr. 2018 SCC OnLine Del 8842. 135. 2014 SCC OnLine Cal 17695. 136. The High Court of Calcutta restrained the continuation of arbitration proceedings against one of the defendants to the arbitration. 137. Port of Kolkata v Louis Dreyfus Armatures SAS and Others 2014 SCC OnLine Cal 17695. 138. 2018 SCC OnLine Del 8842. 139. Agreement Between the Republic of India and the Kingdom of the Netherlands for the Promotion and Protection of Investments (6 November 1995). 140. Agreement Between the Government of the Republic of India and the Government of the United Kingdom of Great Britain and Northern Ireland for the Promotion and Protection of Investments (14 March 1994).

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Law, Practice and Procedure of Arbitration in India

The High Court of Delhi ruled on the question of whether it has the jurisdiction to pass an anti-​arbitration injunction. It held that: (1) It has jurisdiction over Vodafone in personam as well as jurisdiction over the subject matter of the dispute;141



(2) Applying the dicta of the Supreme Court of India in Modi Entertainment Network v W.S.G. Cricket Pte Ltd.,142 it has the power to issue injunctions to a party over whom it has jurisdiction;



(3) The jurisdiction of national courts has not been explicitly or implicitly ousted in investment arbitrations. This is because:



(a) the Indian Parliament has not passed any legislation to give effect to BITs;143 and



(b) India has not signed the ICSID Convention for the main reason that it negates the role of national courts.144

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The High Court of Delhi, however, being cognisant of the fact that an order passed by a court could lead to an investment claim under a BIT, went on to opine that:

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“The jurisdiction to grant an anti-​arbitration injunction must be exercised with caution and granted only if the arbitral proceedings are vexatious or oppressive or inequitable or abuse of process … 145 and only with extreme hesitation.”146

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Eventually, it was held that filing multiple claims by the same entity with regard to the same measure, under different treaties is not per se an abuse of the legal process, or vexatious, and would therefore not justify the grant of an anti-​arbitration injunction.147

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Thereafter, the High Court of Delhi in Union of India v Khaitan Holdings (Mauritius) Limited148 once again confirmed that courts possess the power to grant an anti-​arbitration injunction in “compelling circumstances” and “rare cases”.149

141. Union of India v Vodafone Group PLC United Kingdom & Anr. 2018 SCC OnLine Del 8842, at paras 72–​74. 142. (2003) 4 SCC 341; Union of India v Vodafone Group PLC United Kingdom & Anr. 2018 SCC OnLine Del 8842, at para. 75. 143. Union of India v Vodafone Group PLC United Kingdom & Anr. 2018 SCC OnLine Del 8842, at para. 77. 144. Ibid, at para. 78. 145. Ibid, at paras 114, 119. 146. Ibid, at para. 115. 147. Ibid, at paras 120, 122–​123, 128, 138–​139. 148. 2019 SCC OnLine Del 6755. 149. Ibid, at para. 1.

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Chapter 17—​​​Injunctions Restraining Arbitration Proceedings

The Court observed that the BIT is governed by the UNCITRAL Rules which gives the arbitral tribunal the power to rule on any objections to its jurisdiction.150 Further, the continuance of arbitration proceedings should be the “rule and not the exception” since under a BIT, a State makes a “solemn commitment” to resolve all disputes by arbitration.151

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Accordingly, the Court refused to grant an anti-​arbitration injunction. It held that:

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“54. All the above grounds, are those that can be that with and decided by the Arbitral Tribunal. The arbitration having been invoked in 2013 and the Tribunal having been constituted and being seized of the dispute, it is not for this Court to adjudicate on these issues. The above issues ought to be raised by the Republic of India before the Arbitral Tribunal, which under Article 21, would rule upon the same. The proceedings which are already underway cannot be termed as being oppressive, vexatious or an abuse of process at this stage.”

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Hence, while courts in India have assumed jurisdiction to grant anti-​arbitration injunctions in investment treaty arbitrations, they do so only in exceptional circumstances.

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Evidently, obtaining an anti-​arbitration injunction in an investment treaty dispute will be difficult. It remains to be seen what specific circumstances would justify granting the same.

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[17.5] CONCLUSION

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Though attacks to the legitimacy of anti-​arbitration injunctions are numerous, it seems that they are here to stay. Even though these injunctions are prima facie inconsistent with the principle of kompetenz-​kompetenz.

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They increase the court’s interference in the arbitral proceedings. Parties wanting to delay or stop the arbitration favour such applications as they hold the arbitration process in abeyance.

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In international commercial arbitrations, national courts of most common law countries entertain applications for such injunctions. Courts have repeatedly held that they possess the jurisdiction to restrain arbitral proceedings. To maintain the sanctity of the arbitration process, however, courts have formulated strict tests for interference. Hence, these injunctions are not normally issued

150. Ibid, at para. 45. 151. Ibid, at para. 47.

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Law, Practice and Procedure of Arbitration in India

unless the continuance of arbitration proceedings will be oppressive or vexatious or unconscionable. In contrast, courts in civil law countries have refused to interfere in the arbitration proceedings and have held suits for anti-​arbitration injunctions to be non-​maintainable.

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Interestingly, in India, the High Court of Calcutta and the High Court of Delhi have recently taken largely contrasting stances on whether a court possesses the jurisdiction to issue an anti-​arbitration injunction. Hence, this question needs to be finally determined by the Supreme Court of India. In investment treaty arbitrations, the courts exercise a greater level of restraint when faced with the issuance of such an injunction.

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However, in the face of a recent shift towards granting anti-​arbitration injunctions, it remains to be seen how arbitral tribunals will deal with them and what the corresponding impact on the enforcement of an arbitral award will be.

Chapter 18 OUSTING THE JURISDICTION OF THE COURT [18.1] INTRODUCTION......................................................................................................................... 487 [18.2] VALIDITY OF EXCLUSIVE JURISDICTION AGREEMENTS.............................................. 489

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[18.3] OUSTING THE JURISDICTION OF COURTS TO HEAR APPEALS FROM AN AWARD............................................................................................................................................ 492 [18.4] SCOTT V AVERY CLAUSES......................................................................................................... 493 [18.5] ATLANTIC SHIPPING CLAUSES.............................................................................................. 497

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[18.6] CONCLUSION............................................................................................................................... 499

[18.1] INTRODUCTION

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Section 28 of the Indian Contract Act, 1872 (“Contract Act”) makes all agreements that are in restraint of legal proceedings void.1 The section, however, is subject to certain exceptions. For instance, a contract to refer: (1) disputes that may arise;2 and



(2) disputes that have already arisen3 to arbitration are not viewed as one in restraint of legal proceedings.

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Therefore, a contract containing an arbitration clause mandating reference of the dispute to arbitration will not be viewed as void in terms of Section 28 of the Contract Act, 1872, even though it ousts the jurisdiction of a court to adjudicate the dispute.

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1. Contract Act, 1872, s. 28 (“28. Agreements in restraint of legal proceedings void): –​Every agreement, –​ (a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or (b) which extinguishes the rights of any party thereto, or discharges any party thereto from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to that extent.”). 2. See: Contract Act, 1872, s. 28, Exception 1 (“This section shall not render illegal a contract, by which two or more persons agree that any dispute which may arise between them in respect of any subject or class of subjects shall be referred to arbitration, and that only the amount awarded in such arbitration shall be recoverable in respect of the dispute so referred.”). 3. See: Contract Act, 1872, s. 28, Exception 2 (“Nor shall this section render illegal any contract in writing by which two or more persons agree to refer to arbitration any question between them which has already arisen, or affect any provision of any law in force for the time being as to references of arbitration.”).

488

Law, Practice and Procedure of Arbitration in India

For this reason, whenever a contract contains an arbitration clause the court must accept that its jurisdiction has been ousted and refer the dispute to arbitration.4 In such a situation, instead of examining whether it could have jurisdiction, the court must limit itself to examining whether the ouster of jurisdiction complies with the procedure under the Arbitration Act.5

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Notwithstanding the above position, the Supreme Court of India has held that in case of disputes that are not arbitrable, the presence of an arbitration clause will not oust the jurisdiction of a court.6

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Disputes relating to rights in rem such as matrimonial disputes, insolvency matters, testamentary matters, criminal matters etc. are not arbitrable.7 Neither are disputes relating to affairs and management of a trust, trustees, and beneficiaries arising out of the trust deed.8

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The Supreme Court of India in Emaar MGF Land Ltd. v Aftab Singh9 held that an arbitration clause will not oust the jurisdiction of consumer courts.10 However, if the aggrieved party opts for arbitration instead of the statutory remedy under the Consumer Protection Act, then there is no inhibition in disputes being proceeded in arbitration.11

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4. P. Anand Gajapathi Raju v P.V.G. Raju (2000) 4 SCC 539 (it is obligatory for the court to refer the parties to arbitration); Hindustan Petroleum Corporation Ltd. v Pinkcity Midway Petroleums (2003) 6 SCC 503, at para. 14 (“… the existence of the arbitration clause is admitted. If that be so, in view of the mandatory language of Section 8 of the Act, the courts below ought to have referred the dispute to arbitration.”); Magma Leasing and Finance Ltd. v Potluri Madhavilata (2009) 10 SCC 103. 5. Sundaram Finance Limited and Another v T. Thankam (2015) 14 SCC 444, at para. 13 (“… the approach of the civil court should be not to see whether the court has jurisdiction. It should be to see whether its jurisdiction has been ousted … once it is brought to the notice of the court that its jurisdiction has been taken away in terms of the procedure prescribed under a special statute, the civil court should first see whether there is ouster of jurisdiction in terms or compliance with the procedure under the special statute. The general law should yield to the special law… approach shall not be to see whether there is still jurisdiction in the civil court under the general law. Such approaches would only delay the resolution of disputes and complicate the redressal of grievance and of course unnecessarily increase the pendency in the court.”) 6. Booz Allen & Hamilton Inc. v SBI Home Finance Ltd. (2011) 5 SCC 532; A. Ayyasamy v A. Paramasivam (2016) 10 SCC 386. 7. Booz Allen & Hamilton Inc. v SBI Home Finance Ltd. (2011) 5 SCC 532, at paras 35–​36, 38; A. Ayyasamy v A. Paramasivam (2016) 10 SCC 386, at para. 14. 8. Vimal Kishor Shah v Jayesh Dinesh Shah (2016) 8 SCC 788, at para. 53. 9. (2019) 12 SCC 751. 10. Ibid, at para. 29. Also see: Skypak Couriers Ltd. v Tata Chemicals Ltd. (2000) 5 SCC 294; National Seeds Corprn. Ltd. v M. Madhusudhan Reddy (2012) 2 SCC 506; Rosedale Developers (P) Ltd. v Aghore Bhattacharya (2018) 11 SCC 337. 11. Emaar MGF Land Ltd. v Aftab Singh (2019) 12 SCC 751, at para. 63.

489

Chapter 18—​​​Ousting the Jurisdiction of the Court

[18.2] VALIDITY OF EXCLUSIVE JURISDICTION AGREEMENTS The Civil Procedure Code, 1908 (“CPC”) contains provisions dealing with the jurisdiction of courts.12 The principle of territorial jurisdiction is contained in Section 20 of the CPC.

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Under Section 20, the court within the local limits of whose jurisdiction the defendant resides or the cause of action has arisen will have jurisdiction to adjudicate the dispute.13

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The position slightly differs when it comes to arbitrations. Section 2(1)(e) of the Arbitration Act defines “court”. As per that section, in case of a domestic arbitration “court” means:

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“The principal civil court of original jurisdiction in a district and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject matter of the arbitration if the same had been the subject-​matter of a suit, but does not include any civil court of a grade inferior to such principal civil court, or any Court of Small Causes.”14

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In the case of an international commercial arbitration, “court” has been defined to mean:

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“The High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-​matter of the arbitration if the same had been the subject-​matter of a suit, and in other cases, a High Court having jurisdiction to hear appeals from decrees of Courts subordinate to that High Court.”15

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Further, the Arbitration Act permits the parties to agree upon the seat of the arbitration.16 Section 42 of the Arbitration Act ensures that there is no conflict of jurisdiction when it states:

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“Notwithstanding anything contained elsewhere in this Part or in any other law for the time being in force, where with respect to an arbitration agreement any

12. See: Civil Procedure Code, 1908, ss. 15–​20. 13. Civil Procedure Code, 1908, s. 20 (“Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction -​(a)the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or (b) any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or (c) the cause of action, wholly or in part, arises…”.) 14. Arbitration Act, s. 2(1)(e)(i). 15. Arbitration Act, s. 2(1)(e)(ii). 16. Arbitration Act, s. 20.

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Law, Practice and Procedure of Arbitration in India

application under this Part has been made in a Court, that Court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other Court.”17

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The Supreme Court of India in Bharat Aluminium Company v Kaiser Aluminium Technical Services Inc.18 held that under the Arbitration Act the legislature has given jurisdiction to two courts, namely, the court having territorial jurisdiction and the court where the arbitration takes place.

It observed that this has been done since on many occasions the agreement may provide for a seat of arbitration at a place that is neutral for both parties.19

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Indian courts have also adopted the principle of concurrent jurisdiction in arbitrations. The High Court of Delhi in Antrix Corporation Ltd. v Devas Multimedia P. Ltd.20 held that the express selection of a seat does not warrant jurisdiction.

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In other words, the mere designation of a seat would not mean that the seat court will have exclusive jurisdiction over all applications filed under the Arbitration Act. Even courts where the cause of action arises would have jurisdiction.21 This approach has now been overruled as being incorrect.22

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Indian courts permit exclusive jurisdiction to a particular court when more than one court has territorial jurisdiction to try a dispute.23 It has been held that such exclusive jurisdiction clauses do not violate Section 28 of the Contract Act since they do not absolutely oust a court’s jurisdiction.24

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See: AAA Landmark Ltd. v Akme Projects Ltd. (2018) SCC OnLine Del 7586. (2012) 9 SCC 552. Bharat Aluminium Company v Kaiser Aluminium Technical Services Inc. (2012) 9 SCC 552, at para. 96. (2018) SCC OnLine Del 9338. Antrix Corporation Ltd. v Devas Multimedia P. Ltd. para. 58, 59. See: Nivaran Solutions v Aura Thia Spa Services (P) Ltd. (2016) SCC OnLine Bom 5062; Konkola Copper Mines v Stewarts & Lloyds of India Ltd. (2013) SCC OnLine Bom 777. 22. See: BGS SGS Soma JV v NHPC Limited (2020) 4 SCC 234, at paras. 54, 57–​59. 23. Hakam Singh v Gammon (India) Ltd. (1971) 1 SCC 286; Globe Transport Corpn. v Triveni Engg. Works (1983) 4 SCC 707; B.E. Simoese Von Staraburg Niedenthal v Chattisgarh Investment Ltd. (2015) 12 SCC 225, at paras. 11–​12. 24. Swastik Gases (P) Ltd. v Indian Oil Corpn. Ltd. (2013) 9 SCC 32, at para. 32; A.B.C. Laminart (P) Ltd. v A.P. Agencies (1989) 2 SCC 163, at paras. 21–​22. Also, see: R.S.D.V. Finance Co. (P) Ltd. v Shree Vallabh Glass Works Ltd. (1993) 2 SCC 130, at para. 9; Angile Insulations v Davy Ashmore India Ltd. (1995) 4 SCC 153; Shriram City Union Finance Corpn. Ltd. v Rama Mishra (2002) 9 SCC 613, at para. 9; Hanil Era Textiles Ltd. v Puromatic Filters (P) Ltd. (2004) 4 SCC 671, at para. 9; New Moga Transport Co. v United India Insurance Co. Ltd. (2004) 4 SCC 677, at para. 19; Shree Subhlaxmi Fabrics (P) Ltd. v Chand Mal Baradia (2005) 10 SCC 704, at para. 18, 20; Harshad Chiman Lal Modi v DLF Universal Ltd. (2005) 7 SCC 791; Rajasthan SEB v Universal Petrol Chemicals Ltd. (2009) 3 SCC 107, at paras. 27, 28, 35; Balaji Coke Industry (P) Ltd. v Maa Bhagwati Coke Gujarat (P) Ltd. (2009) 9 SCC 403, at para. 30. 17. 18. 19. 20. 21.

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Chapter 18—​​​Ousting the Jurisdiction of the Court

Clauses that oust the jurisdiction of courts having jurisdiction and confer jurisdiction on another court not having jurisdiction are invalid.25 In case of an arbitration agreement, however, parties can choose a neutral seat of arbitration. In this way, jurisdiction can be conferred on a court that would not ordinarily have jurisdiction.26

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Further, courts have also held that selecting the seat of arbitration tantamount to an exclusive jurisdiction clause. This is true, since only seat courts can regulate the conduct of the arbitration and deal with challenges to an award.27

Designation of a seat will even oust the jurisdiction of courts that would ordinarily have jurisdiction under the CPC.28

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Therefore, to determine if the arbitration clause in a case would oust the jurisdiction of a particular court, courts first assess whether the arbitration agreement identifies the seat of arbitration.29

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In case of designation of the seat, the seat court is considered to have exclusive jurisdiction over the arbitral proceedings, to the exclusion of all other courts.30

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Further, if an agreement contains an exclusive jurisdiction clause but designates a different seat of arbitration, any dispute relating to invocation of the arbitration can only be resolved by the seat court.31

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25. Interglobe Aviation Limited v N. Satchidanand (2011) 7 SCC 463; Aarka Sports Management Pvt. Ltd. v Kalsi Buildcon Pvt. Ltd. Arb. P. 662/​2019 (decided on 06 July 2020), at paras. 27, 29, 30, 31–​33. 26. Indus Mobile Distribution (P) Ltd. v Datawind Innovations (P) Ltd. (2017) 7 SCC 678; Aarka Sports Management Pvt. Ltd. v Kalsi Buildcon Pvt. Ltd. Arb. P. 662/​2019 (decided on 06 July 2020), at para. 23. 27. Bharat Aluminium Company v Kaiser Aluminium Technical Services Inc. (2012) 9 SCC 552, at para. 123. See: Enercon (India) Ltd. v Enercon GmbH (2014) 5 SCC 1, at para. 138; Reliance Industries Ltd. v Union of India (2014) 7 SCC 603, at paras. 36, 41, 45–​60, 76.1, 76.2; Harmony Innovation Shipping Ltd. v Gupta Coal India Ltd. (2015) 9 SCC 172, at para. 45, 48; Union of India v Reliance Industries Ltd. (2015) 10 SCC 213. 28. Indus Mobile Distribution (P) Ltd. v Datawind Innovations (P) Ltd. (2017) 7 SCC 678, at paras. 19, 20. 29. Indian and English courts have laid down tests to determine whether the designation of a place in the arbitration agreement amounts to a seat or venue. See: Dozco (India) (P) Ltd. v Doosan Infracore Co. Ltd. (2011) 6 SCC 179, at paras. 18–​20; Videocon Industries Ltd. v Union of India (2011) 6 SCC 161, at paras. 20–​21; Harmony Innovation Shipping Ltd. v Gupta Coal India Ltd. (2015) 9 SCC 172, at para. 48; Roger Shashoua v Mukesh Sharma [2009] EWHC 957 (Comm), at para. 34, and (2017) 14 SCC 722; Enercon GmbH v Enercon (India) Ltd. 2012 EWHC 689 (Comm), at paras. 63–​64; Shagang South-​Asia (Hong Kong) Trading Co. Ltd. v Daewoo Logistics [2015] EWHC 194 (Comm), at para. 38; Process and Industrial Developments Ltd. v The Federal Republic of Nigeria [2019] EWHC 2241 (Comm), at para. 85. 30. BGS SGS Soma JV v NHPC Limited (2020) 4 SCC 234, at paras. 97–​98; Brahmani River Pellets Ltd. v Kamachi Industries Ltd. (2020) 5 SCC 462, at para. 18–​19; NJ Construction v Ayursundra Health Care Pvt. Ltd. 2018 SCC OnLine Del 7009; Spentex Industries Ltd. v Louis Dreyfus Commodities India Pvt. Ltd. 2019 SCC OnLine Del 7257, at para. 21; Virgo Softech Ltd. v National Institute of Electronics and Information Technology 2018 SCC OnLine Del 12722, at paras. 15–​16. 31. Raman Deep Singh Taneja v Crown Realtech Private Limited 2017 SCC OnLine Del 11966, at para. 9; Rohit Bhasin v Nandini Hotels 2013 SCC OnLine Del 2300, at paras. 14–​15.

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Law, Practice and Procedure of Arbitration in India

[18.3] OUSTING THE JURISDICTION OF COURTS TO HEAR APPEALS FROM AN AWARD Several institutional arbitration rules have provisions that require a party to waive its right to contest the arbitral award.32 These rules, however, are subject to applicable national law. Therefore, if the national law does not permit the waiver of these rights, then the parties will not be bound by the terms of such rules.33

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In India, the arbitration laws are modelled on the UNCITRAL Model Law on International Commercial Arbitration. Therefore, parties only have the freedom to decide the procedure for the conduct of proceedings by the arbitral tribunal and not the procedure followed by national courts.34

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The normal rule is that parties to an arbitration agreement cannot oust the court’s jurisdiction.35 Any agreement which purports to do so is illegal and void as being contrary to public policy.36

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Courts have held that the standard phrase that an arbitrator’s award will be “final and binding” will not oust the court’s jurisdiction.37

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Further, the Supreme Court of India in Shin Satellite Public Co. Ltd. v Jain Studios Ltd. held that an arbitration clause which makes the arbitrator’s determination final

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32. See: ICC Rules of Arbitration, 2017, art. 35(6) (“every award shall be binding on the parties. By submitting the dispute to arbitration under the Rules, the parties undertake to carry out any award without delay and shall be deemed to have waived their right to any form of recourse insofar as such waiver can validly be made.”); LCIA Arbitration Rules, 2020, Article 26.8 (“every award (including reasons for such award) shall be final and binding on the parties… parties also waive irrevocably their right to any form of appeal, review or recourse to any state court or other legal authority, insofar as such waiver shall not be prohibited under any applicable law.”); SIAC Rules 2016, Rule 32.11 (“… the parties agree that any Award shall be final and binding on the parties from the date it is made … parties also irrevocably waive their rights to any form of appeal, review or recourse to any State court or other judicial authority with respect to such Award insofar as such waiver may be validly made.”); Mumbai Centre for International Arbitration (MCIA) Rules, 2016, art. 30.12 (“… the parties undertake to carry out the Award immediately and without delay, and they also irrevocably waive their rights to any form of appeal, review or recourse to any state court or other judicial authority insofar as such waiver may be validly made and the parties further agree that an Award shall be final and binding on the parties from the date it is made.”). 33. Harshad Pathak, “A Principled Enquiry into the Waiver of Annulment Proceedings” (April 2019) Nalsar Student Law Review 13(1), p. 100, at pp. 103–​104. 34. Ibid, at pp. 104–​105. 35. See: Dobbs v The National Bank of Australasia Ltd. [1935] ALR 360 (Aust); Newacres Sdn Bhd v Sri Alam Sdn Bhd [1991] 3 MLJ 474, SC; Chai Ming v The Overseas Assce Corpn Ltd [1962] MLJ 282; Lan You Timber Co v United General Insurance Co Ltd [1968] 1 MLJ 181. 36. See Thompson v Charnock (1799) 8 Term Rep 139; Alexander Scott v George Avery (1856) 5 HL Cas 811; Kill v Hollister (1746) 1 Wils 129; Czarnikow v Roth, Schmidt & Co [1922] 2 KB 478. 37. Ford v Clarksons Holidays Ltd. [1971] 3 All ER 454. 38. (2006) 2 SCC 628, at para. 26.

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Chapter 18—​​​Ousting the Jurisdiction of the Court

and binding on the parties, and where the parties have waived their right to appeal, will be inconsistent with Section 28 of the Contract Act, 1872. Therefore, in this case, the Court held that the parties’ agreement to refer the dispute to arbitration was valid. However, the restraint on approaching the court was inconsistent and thereby severable. As such, a clause of this nature will be considered to be violative of public policy.39

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On the other hand, in civil law countries like Switzerland40 and France,41 parties have complete autonomy, which includes the freedom to waive the right to oppose enforcement of the arbitral award.

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[18.4]  SCOTT V AVERY CLAUSES

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In the middle of the 19th century there was a reluctance on the part of courts to honour an arbitration agreement by referring parties to arbitration, unless a judge considered it an equitable course.42

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In the absence of a codified arbitration law, courts permitted a claimant to ignore the arbitration clause and opt for litigation instead, applying the principle that a party cannot oust the jurisdiction of a court.43

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The House of Lords in Alexander Scott v George Avery44 upheld the enforceability of an arbitration clause and held that the same did not offend public policy.

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39. See: BSNL v Motorola India (P) Ltd. (2009) 2 SCC 337, at paras. 34, 38 (“The provision under Clause 16.2 that quantification of the liquidated damages shall be final and cannot be challenged by the supplier Motorola is clearly in restraint of the legal proceedings under Section 28 of the Contract Act. So, the provision to this effect has to be held bad.”); Union Construction Co. P. Ltd. v Chief Engineer Eastern Command AIR 1960 All 72. 40. Harshad Pathak, “A Principled Enquiry into the Waiver of Annulment Proceedings” (April 2019) Nalsar Student Law Review 13(1), p. 100, at pp. 106–​107; See: Swiss Federal Statute on Private International Law, art. 192(1) (“if none of the parties have their domicile, their habitual residence, or a business establishment in Switzerland, they may, by an express statement in the arbitration agreement or by a subsequent written agreement, waive fully the action for annulment …”). 41. Code of Civil Procedure in France (as reformed in 2011), art. 1522 (“by way of a specific agreement the parties may, at any time, expressly waive their right to bring an action to set aside”). 42. Andrew Tweeddale and Keren Tweeddale, “Scott v Avery Clauses: O’er Judges’ Fingers, Who Straight Dream on Fees” (2011) 77 Arbitration 423–​427, Chartered Institute of Arbitrators, at p. 423. Alternate citation: Andrew Tweeddale and Keren Tweeddale, “Scott v Avery Clauses: O’er Judges’ Fingers, Who Straight Dream on Fees” (2011) Arbitration: The International Journal of Arbitration, Mediation and Dispute Management, Vol. 77, Issue 4, p. 423. 43. Thompson v Charnock (1799) 8 Term Rep 139; 101 Eng. Rep. R. 1310. 44. (1856) 5 HL Cas 811. This case gave rise to the usage of the term “Scott v Avery” clauses. Also, see: Khoo Boo Gay v The Home Insurance Co Ltd [1936] 1 MLJ 190; Commissioner of the Federal Capital v Insurance Company of North America [1968] 2 MLJ 143, FC; Tharmalingam v Sambanthan [1961] 1 MLJ 63, CA; Perbadanan Kemajuan Negeri Perak v Asean Security Paper Mill Sdn Bhd [1991] 3 MLJ 309, SC; Newacres Sdn Bhd v Sri Alam Sdn Bhd [1991] 3 MLJ 474, SC; QBE Insurance Ltd v Hashim bin Abdul [1981] 2 MLJ 275; Safety Insurance Company Sdn Bhd v Chow Soon Tat [1975] 1 MLJ 193, FC.

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The Court distinguished between a clause that ousts the jurisdiction of a court when the cause of action has already arisen, and a clause where the jurisdiction is not ousted because the cause of action is yet to arise.

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The Court held that the arbitration clause in the present case fell in the latter category. It did not oust the jurisdiction of a court, because in an arbitration the cause of action will only accrue after an award is made.45 Further, the efficacy of arbitration clauses was emphasised in the following terms:

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“[W]‌hat pretence can there be for saying that there is anything contrary to public policy in allowing parties to contract that they shall not be liable to any action until their liability has been ascertained by a domestic and private tribunal, upon which they themselves agree! Can the public be injured by it? It seems to me that it would be a most inexpedient encroachment upon the liberty of the subject if he were not allowed to enter into such a contract ... Is there anything contrary to public policy in saying that the company shall not be harassed by actions, the costs of which might be ruinous, but that any dispute that arises shall be referred to a domestic tribunal, which may speedily and economically determine the dispute? I can see not the slightest ill consequences that can flow from such an agreement, and I see great advantage from it.”46

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Hence, the Scott v Avery principle emerged at a time when there was still significant hostility towards the notion of arbitration ousting the jurisdiction of the court. It enforced binding agreements to arbitrate without encroaching on the jurisdiction of the judiciary. The clause has been described as follows:

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“The parties to a contract may agree that no action shall be brought upon it until an arbitration award has been made, or (what amounts to the same thing) may agree that the only obligation arising out of a particular term of the contract shall be to pay whatever sum a tribunal may award ... It does not prevent litigation being initiated on a contract containing a clause of this type, but the condition precedent is a defence to the action.”47

45. Alexander Scott v George Avery (1856) 5 HL Cas 811, at pp. 5–​6. 46. Alexander Scott v George Avery (1856) 5 HL Cas 811, at fff 852–​853. See: Braunstein v Accidental Death Insurance Co (1861) 1 B & S 782; Elliott v Royal Exchange Assurance Co (1867) LR 2 Exch 237; Trewden v Holmes (1862) 1 H & C 72. 47. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 2-​023.

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Chapter 18—​​​Ousting the Jurisdiction of the Court

Such clauses were relatively rare in most commercial contracts, but common in the commodity sector (the Grain and Feed Trade Association and Federation of Oilseeds and Fats Association, for instance, contain such clauses).48 A Scott v Avery clause has the effect of: (1) creating an obligation to arbitrate;



(2) creating a condition precedent to a claimant’s right of action before a court, that is, the claimant must have previously arbitrated the dispute.49

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A party loses the benefit of relying on the Scott v Avery clause by reason of his breach or waiver. This can happen in two ways:

(1) where the respondent has expressly or impliedly submitted to the jurisdiction of the court, for example, by defending judicial proceedings;50 or,



(2) where the respondent has broken the terms of the arbitration agreement, for example, by refusing the claimant the right to be heard prior to a submission to arbitration.51

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Whether an arbitration clause operated in Scott v Avery fashion was held to be a matter of construction52 and the Court was slow to imply a Scott v Avery arbitration clause into an agreement.53 Such a clause was held to be enforceable even if only one of the parties is subject to the condition precedent of arbitration.54

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The principle has also been extended to construction contracts which preclude access to the courts until the employer’s engineer has issued a certificate.55 A Scott v Avery clause

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48. Andrew Tweeddale and Keren Tweeddale, “Scott v Avery Clauses: O’er Judges’ Fingers, Who Straight Dream on Fees” (2011) Arbitration 77, pp. 423–​427, Chartered Institute of Arbitrators, at p. 423. Alternate citation: Andrew Tweeddale and Keren Tweeddale, “Scott v Avery Clauses: O’er Judges’ Fingers, Who Straight Dream on Fees” (2011) Arbitration: The International Journal of Arbitration, Mediation and Dispute Management, Vol. 77, Issue 4, p. 423. 49. Andrew Tweeddale and Keren Tweeddale, “Scott v Avery Clauses: O’er Judges’ Fingers, Who Straight Dream on Fees”, (2011) Arbitration 77, pp. 423–​427, Chartered Institute of Arbitrators, at p. 423. 50. Hardwick Game Farm v Suffolk Agricultural and Poultry Producers’ Association Ltd. [1964] 2 Lloyd’s Rep 227. 51. Edwards v The Aberayron Mutual Ship Insurance Society Ltd (1875) 1 QBD 563. 52. Dawson v Lord Otho Fitzgerald (1876) 1 Ex D 257; Viney v Bignolf (1887) 20 QBD 172. 53. Hardwick Game Farm v Suffolk Agricultural and Poultry Producers’ Association Ltd [1964] 2 Lloyd’s Rep 227. 54. Woolf v Collis Removal Service [1947] 2 All ER 260. 55. Havant Borough Council v South Coast Shipping Co. Ltd [1996] CILL 1146; Christiani & Nielsen Ltd v Birmingham City Council [1994] CILL 1015; Monmouthshire County Council v Costelloe & Kemple Ltd [1965] 63 LGR 131; Scott v Liverpool Corpn (1858) 3 De G & J 334; Westwood v Secretary of State for India in Council 7 LT 736; Sharpe v San Paulo Railway Company (1873) LR 8 Ch App 597.

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should be contained in a single clause and may not be broken up into different components and spread throughout the contract.56 The Supreme Court of India in Vulcan Insurance Co. Ltd. v Maharaj Singh57 approved the validity of such clauses in the Indian context.58 However, it was noted that:

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“If a dispute crops up which cannot be referred to arbitration as being not covered by the clause, then Scott v Avery clause is rendered inoperative and cannot be pleaded as a bar to the maintainability of the legal action or suit for determination of the dispute which was outside the arbitration clause.”59

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Hence, essentially, a Scott v Avery arbitration clause operates to postpone the bringing of any action in court until an arbitral award has been issued. It acts as, and provides, a defence against any claim that is referable to arbitration, from being brought to court.

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However, now most arbitration legislations give effect to party autonomy and limit court interference in arbitrations. Statutorily courts are obligated to honour an arbitration clause and refer a matter to arbitration.60 Further presence of an arbitration clause is not considered to be opposed to public policy.61

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Section 44 of the English Arbitration Act (1996) governs the powers of the court to grant interim measures. This power can however be curbed, as evident from the proviso to this section unless otherwise agreed by the parties.

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In such a situation, the parties can be said to have “otherwise agreed” and therefore lose the right to interlocutory support from the court.62 In these circumstances, inclusion of a Scott v Avery clause in a contract may limit the ability of courts to grant interim relief in arbitrations.

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56. Tay Eng Chuan v Ace Insurance Ltd [2008] SGCA 26. 57. (1976) 1 SCC 943. 58. Vulcan Insurance Co. Ltd. v Maharaj Singh (1976) 1 SCC 943, at para. 14 (“it has been found that if the arbitration clause is couched in a comprehensive language taking within its ambit any kind of dispute arising under the policy, then obtaining of an award by arbitration is a condition precedent to the starting of any other legal proceedings. A clause like Scott v Avery has repeatedly been held to be a valid one.”). 59. Vulcan Insurance Co. Ltd., v Maharaj Singh (1976) 1 SCC 943, at para. 22. See: Oriental Insurance Co. Ltd. v Narbheram Power and Steel (P) Ltd. (2018) 6 SCC 534, at para. 25; United India Insurance Co. Ltd. v Hyundai Engg. & Construction Co. Ltd. (2018) 17 SCC 607, at paras. 12, 14, 15. 60. Arbitration Act, ss. 8, 45. 61. Contract Act, 1872, s. 28. 62. Usually, a Scott v Avery clause means that the parties have agreed on not bringing any action or proceedings before a court, until the arbitral award has been issued. The proviso to s. 44 of the English Arbitration Act (1996) allows for a situation where the parties have agreed otherwise. See: Kallang Shipping SA Panama v Axa Assurances Senegal [2008] EWHC 2761 (Comm).

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Chapter 18—​​​Ousting the Jurisdiction of the Court

The Court of Appeal in B. v S63 held that the presence of a Scott v Avery clause would limit the ability of the court to pass interim orders, since such a clause means that the parties have agreed to limit the power of the court to intervene until the issuance of the award.

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Presently therefore, there does not seem to be any benefit in including a clause of this nature in a contract. In view of the statutory regime, courts will refer a dispute to arbitration. Inclusion of such a clause will instead strip away the power of the court to support the arbitration process.64

[18.5] ATLANTIC SHIPPING CLAUSES

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An Atlantic Shipping clause65 makes the reference to arbitration a time bound practice, that is, a party is obligated to refer the dispute to arbitration within a specified period of time. If the reference is not made in the said time, the party is deemed to have waived his right to arbitration.66

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The House of Lords in Atlantic Shipping and Trading Co. Ltd. v Louis Dreyfus Co.67 held that a contractual clause requiring a party to appoint an arbitrator within a period of three months from final discharge of the contract failing which the claim would be barred would not vitiate the claim in totality on expiry of the said time period.

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If there has been a breach of the terms of the contract, since the party can still litigate its claim before a court of law.68 The courts also have the statutory power to extend time so as to avoid undue hardship and to achieve justice.69

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Later, the Court of Appeal in Wholecrop Marketing Ltd. v Wolds Produce Ltd.70 held that once the parties have agreed to a time stipulation, a failure to comply with the stipulated time period will result in the parties losing recourse to both arbitration as well as the court.

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63. [2011] EWHC 691 (Comm). 64. Andrew Tweeddale and Keren Tweeddale, “Scott v Avery Clauses: O’er Judges’ Fingers, Who Straight Dream on Fees” (2011) Arbitration 77, pp. 423–​427, Chartered Institute of Arbitrators, at p. 427. 65. The clause takes its name from Atlantic Shipping and Trading Co. Ltd. v Louis Dreyfus Co. [1922] 2 AC 250, HL. 66. Aniruddha Bhattacharya and Arnab Roy, “The Origins and Legitimacy of Atlantic Shipping Clauses” (2015) RFMLR 3.1, p. 33, at p. 34. 67. [1922] 2 AC 250. 68. Also see: H. Ford Co. Ltd. v Compagnie Furness, [1922] 2 KB 797. 69. Atlantic Shipping and Trading Co Ltd v Louis Dreyfus & Co [1922] 2 AC 250, HL; Williams and Mordey v W H Muller & Co (London) Ltd (1924) 18 Ll L Rep 50; Union of India v E. B. Aaby’s Rederi A/​S [1975] AC 797, [1974] 2 All ER 874, sub nom E B Aaby’s Rederi A/​S v Union of India [1974] 2 Lloyd’s Rep 57, HL. Cf. H Ford & Co Ltd v Compagnie Furness (France) [1922] 2 KB 797. 70. [2013] EWHC 2079 (Ch), at para. 26.

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Law, Practice and Procedure of Arbitration in India

All remedies will get barred once the party fixes a time limit on availing its remedy and does not comply with the same. Hence, the English courts give importance to party autonomy and:

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“… seem to think that because the parties had decided amongst themselves to fix arbitration as a remedy within a specified amount of time therefore it is the duty of the court to respect and extend the same obligation on the party with regard to litigation. In the eye of the court the effect an Atlantic Shipping Clause would have on a contract is not only restrict the limitation period with regard to arbitration but also reduce the limitation period with regard to litigation i.e., the clause would supersede the legislation regarding the limitation.”71

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In contrast, in India, the law establishes that a bar to claim could only be applied to an arbitration proceeding.72 Litigation timelines are regulated by the Limitation Act, 1963, which expressly stipulates a time-​limit before which a suit can be filed with respect to a claim.

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Thus, in India, Atlantic Shipping clauses can only bar the remedy of arbitration. Further, courts have held that the time specified in such a clause can be extended in certain circumstances.

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The High Court of Calcutta in Planters Airways Pvt. Ltd. v Sterling General Insurance Co. Ltd.73 held that the time specified in the Atlantic Shipping clause can be extended if the reason for the delay in commencement of the arbitration proceedings can be attributed to the party against whom arbitration is sought.

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The Supreme Court of India in M.K. Shah Engineers & Contractors v State of M.P.74 held that:

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“The arbitration agreements may contain a clause which requires a certain act to be completed within a specified period and which provides that if that act is not done, either the claim or the ability to commence an arbitration will be barred. Such clauses are sometimes known as ‘Atlantic Shipping’ clauses. The consequences of the expiry of a contractual limitation period before the completion of the specific act may however be avoided in three circumstances:

(i) if the court exercises its discretion statutorily conferred on it, to extend the period to avoid undue hardship;

71. Aniruddha Bhattacharya and Arnab Roy, “The Origins and Legitimacy of Atlantic Shipping Clauses” (2015) RFMLR 3.1, p. 33, at p. 40. 72. Section 28 (read with Exception 1) of the Indian Contract Act, 1872. 73. 1974 SCC OnLine Cal 4. 74. (1999) 2 SCC 594.

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Chapter 18—​​​Ousting the Jurisdiction of the Court

(ii) if the arbitration clause confers a discretion on the arbitrator to extend the period and he exercises it; (iii) if the conduct of either party precludes his relying on the time-​bar against the claimant.”75

[18.6] CONCLUSION

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The Contract Act makes agreements in restraint of legal proceedings void. The said Act also makes void, any contract that limits the time within which a party can enforce his rights. However, in both cases, an exception has been carved out for arbitrations.

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An arbitration clause is not viewed as an agreement which is in restraint of legal proceedings, and so, parties are not restricted from referring their disputes to arbitration. Reference of disputes to arbitration will oust the jurisdiction of courts to adjudicate the dispute, and is permitted.

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However, notwithstanding the above, courts have identified certain categories of disputes as non-​arbitrable. These non-​arbitrable disputes cannot be arbitrated upon, even if the contract contains an arbitration clause. Hence, in case of non-​arbitrable disputes no ouster of jurisdiction of courts is permitted.

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Separately, a perusal of jurisprudence will indicate that parties are free to choose a neutral seat of arbitration. Such seat, when chosen, will amount to an exclusive jurisdiction clause, thereby giving the courts of the seat jurisdiction over all arbitration related matters, to the exclusion of all other courts that may have ordinarily had jurisdiction.

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Parties cannot, however, limit the jurisdiction of a court in any manner-​any contractual clause pertaining to waiver of a right of appeal will not be upheld. Therefore, ouster of a court’s jurisdiction is permitted, to a limited extent, in arbitrations.

75. M.K. Shah Engineers & Contractors v State of M.P (1999) 2 SCC 594, at para. 14.

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DIVISION 5

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COMMENCEMENT OF ARBITRATION AND CONSTITUTION OF THE ARBITRAL TRIBUNAL

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Chapter 19 COMMENCEMENT OF ARBITRATION [19.1]

INTRODUCTION....................................................................................................................... 503

[19.2] IMPORTANCE OF THE DATE OF COMMENCEMENT................................................... 507

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[19.3] METHODS OF COMMENCEMENT AND CONDITIONS PRECEDENT...................... 509 [19.4] DATE OF COMMENCEMENT OF ARBITRAL PROCEEDINGS..................................... 513 [19.5] REQUEST NOTICE: FORM, CONTENTS, AND SERVICE................................................ 514 [19.6] SUBMISSION TO NAMED PARTY......................................................................................... 524 [19.7] REQUIREMENTS OF THE NOTICE...................................................................................... 525 LIMITATION ACT..................................................................................................................... 526

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[19.8]

[19.9] CONTRACTUAL TIME LIMITATION................................................................................... 529

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[19.10] EXTENSION OF TIME.............................................................................................................. 533 [19.11] DISCRETION UNDER SECTION 43(3) OF THE ARBITRATION ACT.......................... 533

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[19.12] COMPLETION OF THE SPECIFIED ACT............................................................................ 537 [19.13] CONDUCT OF PARTY.............................................................................................................. 538

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[19.14] MULTI-​TIERED ARBITRATION CLAUSE........................................................................... 538

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[19.15] CONCLUSION............................................................................................................................ 540

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[19.1] INTRODUCTION

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The first formal step taken by a claimant in any arbitration proceeding is its commencement. It is effectively also one of the most important steps undertaken for a variety of reasons. Any arbitration, ad hoc or institutional, incorporates a reference to commencement of an arbitration.

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The arbitration commences once the request for reference of the dispute to arbitration is received by the respondent.1 The notice invoking arbitral proceedings is a written communication thereby initiating arbitration proceedings.2 In an institutional arbitration, the notice is usually given to the relevant arbitration institution in the form of a “request for arbitration” of a similarly styled document.3 The institution thereafter notifies the respondent(s).

1. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 665. 2. Ibid. 3. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 20, at para. 1.69.

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Law, Practice and Procedure of Arbitration in India

The commencement of an arbitration is a significant step in terms of compliance with limitation periods under national legislations for the presentation of claims.4 Blackaby and Partasides with Redfern and Hunter summarise the issues regarding the commencement of an arbitration under institutional rules as follows: “• Institutional rules providing for the date on which an arbitration shall be deemed to commence are valid for the purposes of the institution concerned.

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• Institutional rules may also mark the ‘commencement of an arbitration’ for the purpose of any time limit contained in the contract, where the contract refers disputes to arbitration in accordance with the rules of that particular institution.

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• Institutional rules may mark the ‘commencement of an arbitration’ for the purpose of statutory time limits, but only if the provisions of the relevant legislation permit the parties to override the statutory limits or coincide with the rules of the institution.

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• If there is any conflict between the institutional rules and the relevant legislation, the latter determines the ‘date of commencement of the arbitration’ for the purpose of any statutory time limits that must be observed.”5

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“It may be necessary to:

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• to send a notice of arbitration to the opposing party, briefly describing the dispute, nominating an arbitrator, and requiring the opposing party to nominate its own arbitrator within a given time period; or6

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• to commence the procedure for designation of the arbitral tribunal, as provided in the arbitration agreement; or

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• to require the opposing party to appoint or to concur in the appointment of an arbitrator.”7 Section 21 of the Arbitration Act governs the commencement of arbitration in India. Section 21 of the Arbitration Act replicates Article 21 of the Model Law. Section 21 reads:

4. Ibid, p. 231, at para. 4.04. 5. Ibid, p. 232, at para. 4.10. 6. Model Law, art. 21. 7. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 233, at para. 4.11.

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Chapter 19—​​​Commencement of Arbitration

“Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent.”8 However, there is no corresponding provision under Part II of the Arbitration Act regarding the commencement of arbitral proceedings under the New York Convention and the Geneva Convention.9

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The date of service of notice and issuance of request for appointment of an arbitrator is regarded as the date of commencement of arbitration.10 Section 21, is however, subject to party autonomy.

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Whether a claim is time barred will turn on the contractual terms and the law governing the contract.11 A respondent cannot evade an arbitration by refusing to respond to the request for arbitration.12

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The Arbitration Act does not specify contents or form of the notice to commence an arbitration. However, the arbitration agreement can prescribe the invocation to be done in a particular manner.13

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A communication claiming a disputed amount and contemplating arbitration in the alternative is sufficient notice of a request for arbitration.14 The request for arbitration must identify the disputes which have arisen for arbitration and must not contain a mere intention of initiating arbitral proceedings at a later stage.15

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Article 3 of the UNCITRAL Rules provide that the notice of arbitration must include the names of the parties and their addresses, the clause stipulating the reference to arbitration, the contract under which the claimant is commencing arbitration, and general nature of the claim. Article 3 of the UNCITRAL Rules is considered instructive and not compulsory.16

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8. Arbitration Act, s. 21. 9. Thyssen Stahlunion GMBH v Steel Authority of India Ltd. (1999) 9 SCC 334; Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 664. 10. A.P. Power Coordination Committee v Lanco Kondapalli Power Ltd. (2016) 3 SCC 468, at para. 34. 11. M McIlwrath and J Savage, International Arbitration and Mediation a Practical Guide (Wolters Kluwer Law & Business 2010), p. 119, at para. 3-​004. 12. Tradex Hellas SA (Greece) v Republic of Albania ICSID No ARB/​ 94/​ 2 (Award on Jurisdiction, 24 December 1996). 13. Veena v Seth Industries Ltd. 2010 SCC OnLine Bom 1707, at para. 18. 14. RIICO Ltd. Jaipur v Manoj Ajmera (2008) 2 ArbLR 388, at para. 9; Milkfood Ltd. v GMC Ice Cream (P) Ltd. (2004) 7 SCC 288. 15. United Nations General Assembly “Analytical Commentary on Draft Text of a Model Law on International Commercial Arbitration” A/​CN.9/​264, Art. 21, at para. 2, available at https://​undocs.org/​pdf?symbol=en/​A/​ CN.9/​264 (accessed on 8 December 2020). 16. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer), p. 663.

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Law, Practice and Procedure of Arbitration in India

It is important to determine whether an arbitration is a mandatory or an optional procedure.17 Usually, the compliance of the parties with any escalation clauses prior to taking the correct procedural steps towards a valid commencement of the arbitration proceedings are also considered.18

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The Supreme Court of India in PASL Wind Solutions Private Limited v GE Power Conversion India Private Limited19 was faced with a dispute arising out of a settlement agreement where the parties had agreed that:

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“All disputes, controversies or differences shall be referred to and finally resolved by Arbitration in Zurich in the English language, in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce, which Rules are deemed to be incorporated by reference into this clause.”20

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The Respondent challenged the jurisdiction of the sole arbitrator on the ground that two Indian parties could not have chosen a foreign seat of arbitration.

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The Court held that there is no bar under Indian law to permit two India-​domiciled parties to choose a foreign seat of arbitration. In other words, two Indian parties are entitled to elect a seat of arbitration outside India.21

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While this is a positive recognition of party autonomy and liberation of the arbitration framework, one concern may play out directly as a result of this decision, if two Indian parties choose foreign substantive law and the resulting award has to withstand the scrutiny of Indian public policy.

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The arbitral tribunal while deciding in such disputes may have a duty to consider mandatory aspects of Indian law, within the context of its general duty to render enforceable awards.

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17. Halifax Financial Services Ltd v Intuitive Systems Ltd [1999] 1 All ER (Comm) 303. 18. M.K. Shah Engineers and Contractors v State of Madhya Pradesh (1999) 2 SCC 594, at para. 17. Procedural pre-​requisite to refer the dispute to a Superintending Engineer was held to be essential, unless the parties had waived the condition expressly or by conduct; S.K. Jain v State of Haryana (2009) 4 SCC 357, at para. 12; Oriental Insurance Company v M/​s Narbheram Power and Steel Pvt. Ltd. (2018) 6 SCC 534, at paras. 8–​10; United India Insurance Co. Ltd. v Hyundai Engineering and Construction Co. Ltd. (2018) 17 SCC 607, at para. 10. Arbitration clauses must be construed strictly, therefore requiring completion of the pre-​conditions to arbitration; International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd [2013] SGCA 55 at 62, CA: “[w]‌here the parties have clearly contracted for a specific set of dispute resolution procedures as preconditions for arbitration, those preconditions must be fulfilled”; Emirates Trading Agency LLC v Prime Mineral Exports Private Ltd [2014] EWHC 2104 (Comm): an arbitration clause providing for friendly discussions in good faith and within a limited period of time before the dispute could be referred to arbitration was found enforceable as a matter of English law. 19. (2021) SCC OnLine SC 331. 20. Ibid, at para. 4. 21. Ibid, at paras 49, 71.

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Chapter 19—​​​Commencement of Arbitration

The Supreme Court of India thus clarified that: “If, on the facts of a given case, it is found that two Indian nationals have circumvented a law which pertains to the fundamental policy of India, such foreign award may then not be enforced under section 48(2)(b) of the Arbitration Act.”22

[19.2] IMPORTANCE OF THE DATE OF COMMENCEMENT

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The date on which arbitration commences must be ascertained as it has significance in relation to any contractual or statutory limitation period applicable to the action.23

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National arbitration legislations governing limitation apply to arbitrations in the same way as they apply to other civil actions; meaning, the date on which the arbitration commences is of significance for prescribing time limits for the arbitral proceedings.

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In India, Section 43(1) of the Arbitration Act provides that the Limitation Act, 1963 (“Limitation Act”) shall apply to arbitrations as it applies to court proceedings.24

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However, the court may, in the interests of justice, condone delayed invocation of arbitration. The court exercises this power in circumstances where undue hardship will be caused to the party seeking condonation of delay, if such delay is not condoned.25

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The limitation period starts to run against a claim from the date on which the cause of action arises. Therefore, the claimant must commence the arbitration within the limits prescribed by the Limitation Act, failing which the right to commence arbitration is barred.26

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The limitation period for reference of a dispute to arbitration is three years from the date on which the cause of action or the claim, which is sought to be arbitrated, first arises.27

22. Ibid at para. 99. 23. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 5-​005; Indian Farmers Fertilizer Co-​operative Ltd. v Bhadra Products (12.03.2019 –​ORIHC); see Lafarge (Aggregates) Ltd v Newham London Borough Council [2005] EWHC 1337 (Comm). 24. Arbitration Act, s. 43. 25. Arbitration Act, s. 43(3). 26. State of Goa v Praveen Enterprises (2012) 12 SCC 581, at paras. 15–​17. 27. Limitation Act, 1963, art. 137, Sch. I; State of Orissa v Damodar Das (1996) 2 SCC 216; Grasim Industries Ltd. v State of Kerala (2018) 14 SCC 265, at paras. 9–​13; Geo Miller & Co. Ltd. v Chairman, Rajasthan Vidyut Utapadan Nigam Ltd. 2019 SCC OnLine SC 1137, at para. 20.

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Law, Practice and Procedure of Arbitration in India

Questions as to what causes an arbitration to commence:

(1) whether it is the date of receipt of a notice of arbitration;28 or



(2) whether it is the filing of a notice with the arbitration institution;29 or



(3) whether it is the time when the arbitrators have been appointed, significantly impact the period of limitation.30

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Bernstein31 highlights the importance of the date of commencement and identifies the effects caused due to the non-​compliance of time limits as follows: (1) Barring of the claim itself;32 or



(2) barring the right to assert the claim in an arbitration;33 or



(3) barring the right to assert the claim whether in arbitration or litigation.34

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Section 21 of the Arbitration Act expressly provides that parties are free to agree on what is to be regarded as the commencement of arbitral proceedings. Therefore, the parties may contract the time period within which an arbitration must be commenced. The failure to do so may make the claim itself, time barred.35

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The Supreme Court of India in Milkfood Ltd. v GMC Ice Cream (P) Ltd.36 held that the date of commencement of the arbitration proceedings for the purpose of applicability of the provisions of the Limitation Act is of great significance.37

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28. For example, Arbitration Act, s. 21; Indian Council of Arbitration (Rules of Domestic Commercial Arbitration and Conciliation), 1996, r. 15; International Centre for Alternative Dispute Resolution 1996, r. 3; Nani Palkhivala Arbitration Centre Rules, r. 10(B)(9); AIAC UNCITRAL Rules (Revised 2013), art. 3(2) provides that the arbitration is commenced on the date the notice is received by the respondent. Similar provisions are also contained in Singapore International Arbitration Act (Cap 143A), s. 26(4); Fifth Part of the Polish Code of Civil Procedure, art. 1188(1); and Arbitration and Conciliation Act, 1988 (Laws of the Federation of Nigeria 2010, Cap A18), s. 17. 29. For example, Mumbai Centre for International Arbitration, r. 3.3; AIAC Arbitration Rules (2018), r. 2; International Chamber of Commerce (ICC) Rules of Arbitration (2012), art. 4(2); Bell Canada v The Plan Group [2009] ONCA 548 (CanLII). 30. For example, see r. 6(1), International Centre for Settlement of Investment Disputes (ICSID) Rules of Procedure for Arbitration Proceedings (Arbitration Rules) (as amended in 2006) provides “The Tribunal shall be deemed to be constituted and the proceeding to have begun on the date the Secretary-​General notifies the parties that all the arbitrators have accepted their appointment.” 31. John Tackaberry QC and Arthur Marriott QC, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice, Vol. 1 (4th edn, Thomson Sweet & Maxwell 2003). 32. Ibid, p. 82, at para. 2-​203. 33. Ibid. 34. Ibid. 35. J T Mackley & Co Ltd v Gosport Marina Ltd [2002] EWHC 1315 (TCC), [2002] All ER (D) 39 (Jul). 36. (2004) 7 SCC 288. 37. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 669.

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Chapter 19—​​​Commencement of Arbitration

Section 43(2) of the Arbitration Act further provides that for the purposes of Section 43 of the Arbitration Act, and the Limitation Act, an arbitration is deemed to have commenced on the date referred to under Section 21 of the Arbitration Act.38

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Finally, it may also be noted that institutional arbitrations provide for their own mechanism for commencement of arbitration proceedings. The various time limitations prescribed within the institutional rules are all calculated on the basis of the date of commencement of arbitration proceedings. Once arbitration is commenced, time stops running and there can be no question about the time limit subsequently expiring with regard to the causes of action.39

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[19.3] METHODS OF COMMENCEMENT AND CONDITIONS PRECEDENT

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In view of the principle of party autonomy, parties are free to agree on what is to be regarded as commencing arbitral proceedings.40 If there is no such agreement, then there are specific requirements under national legislations.41

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Occasionally, the arbitration clause may stipulate the performance of a condition precedent for the commencement of arbitration.42 In such cases, an arbitration may not be deemed to have commenced until the condition precedent is fulfilled.43

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A court may find that an arbitration was commenced prematurely in cases where arbitral proceedings were invoked without the compliance of the condition precedent.44

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The potential first steps for commencing an arbitration may include, the making of a claim, the appointment of an arbitrator, the notification of such an appointment to the other party, sending such notice to the other party requiring them to agree to the appointment of an arbitrator, or service of a request for arbitration.45

38. Ibid. 39. Hoegh (Leif) & Co A/​S v Petrolsea Inc, The World Era [1992] 1 Lloyd’s Rep 45; Triad Shipping Co v Stellar Chartering & Brokerage Inc, The Island Archon [1993] 2 Lloyd’s Rep 388. 40. Arbitration Act, s. 21. 41. John Tackaberry QC and Arthur Marriott QC, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice, Vol. 1 (4th edn, Thomson Sweet & Maxwell 2003), p.80, at para. 2-​196. 42. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 666. 43. National Highways Authority of India v Progressive Constructions Ltd. 2015 (5) Arb LR 71 (Del); Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 666. 44. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 666. 45. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 5-​017.

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Law, Practice and Procedure of Arbitration in India

In ad hoc arbitrations, the notice of invocation will be served upon the respondent.46 Commencement of arbitration would be marked by what parties have agreed as the first steps for initiating arbitration.47 In arbitral proceedings governed by institutional arbitration rules, usually the notice is to be given to the relevant institution in the form of a “request for arbitration” or similar document.48

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For example, Mumbai Centre for International Arbitration (“MCIA”),49 Asian International Arbitration Centre (“AIAC”),50 Stockholm Chamber of Commerce (“SCC”),51 China International Economic and Trade Arbitration Commission (“CIETAC”),52 London Court of International Arbitration (“LCIA”),53 or the International Chamber of Commerce (“ICC”)54 arbitration rules provide for such a notice.

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The date when the request is received by the institution is deemed to be the date of the commencement of the arbitral proceedings.55

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However, some arbitral institutions like Nani Palkhivala Arbitration Centre (“NPAC”),56 International Centre for Alternative Dispute Resolution (“ICADR”),57 Indian Council of Arbitration (“ICA”),58 and AIAC (UNCITRAL Rules),59 provide for the commencement of arbitration to be on the date of receipt of notice by the respondent.

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ICSID arbitrations are deemed to have been commenced when the “Secretary-​ General notifies the parties that all arbitrators have accepted their appointment.”60

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46. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 20, at para. 1.66. 47. Emson Contractors Ltd v Protea Estates Ltd. [1987] 39 BLR 126. 48. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 20, at para. 1.69. 49. MCIA Rules, 2016, r. 3.3, provides “The date of receipt of the complete Request for Arbitration by the Registrar shall be deemed the date of commencement of the arbitration”. 50. AIAC Rules, 2018, r. 2. 51. SCC Arbitration Rules, 2017, art. 8. 52. CIETAC Arbitration Rules, 2015, art. 11. 53. LCIA Arbitration Rules, 2014, art. 1. 54. ICC Arbitration Rules, 2021, art. 4(2) provides “The date on which the Request is received by the Secretariat shall, for all purposes, be deemed to be the date of the commencement of the arbitration”. 55. Hong Kong International Arbitration Centre, 2013 (Revised 2018), r. 4.2. 56. NPAC Rules, r. 10(B)(9). 57. ICADR Arbitration Rules, 1996, r. 3(2). 58. ICA (Rules of Domestic Commercial Arbitration and Conciliation), 1996, r. 15. 59. AIAC UNCITRAL Rules (Revised 2013), art. 3. 60. Lew, Mistelis, and Stefan, Comparative International Commercial Arbitration (2003), pp. 20–​28; ICSID Arbitration Rules, 2003, r. 6(1).

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Chapter 19—​​​Commencement of Arbitration

The precise formulation may reflect the type of arbitration or constitution of the tribunal. Where there is an agreed procedure, either in the arbitration agreement or contractual rules, it must be followed for the arbitration to commence.61 However, a reference to the arbitration rules of an arbitral institution may cause difficulty if the rules of that institution are varied at the time of the making of the agreement and at the time of the commencement of the arbitration.

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In the absence of any indication in the contract as to whether present or future rules are referred to, the courts will generally assume that the parties intended to incorporate the rules as they stand when the arbitration is commenced.62

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Multi-​Tiered Dispute Resolution Clauses

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In a multi-​tiered dispute resolution process, the arbitration clause may include a condition precedent for the commencement of the arbitration.

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Such a condition precedent may, for example, include adjudication,63 expert determination, mandatory mediation,64 or attempts at negotiation or conciliation.65 The dispute escalates to the next stage only if it cannot be finally resolved at the former stage. In practice, these are also known as water-​fall clauses.

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The Supreme Court of India in M.K. Shah Engineers v State of Madhya Pradesh66 considered an arbitration clause which required the dispute to be first referred to a Superintending Engineer and thereafter to arbitration if the parties were dissatisfied with the decision of the Superintending Engineer.

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61. See Transpetrol Ltd v Ekali Shipping Co Ltd, The Aghia Marita [1989] 1 Lloyd’s Rep 62, at pp. 65–​66. 62. For instance, MCIA Rules, 2016, art. 1.1 provides that the MCIA Rules in effect at the time of commencement of arbitration proceedings will apply to the proceedings conducted by MCIA. 63. Rites Ltd. v Subrata Kumar Ghose 2019 SCC OnLine Del 8607, at paras. 10–​11. The Petitioner took the objection that the Respondent should have first raised the dispute with the Engineer-​in-​Chief for adjudication. Thereafter, if the Respondent was aggrieved by the decision of the Engineer-​in-​Chief, he could have approached the Appellate Authority. If the Respondent was not satisfied with the decision of the Appellate Authority, only then he could have approached the arbitrator for adjudication of the disputes. It was held that Petitioner was well within his rights to compel the Respondent to undergo the pre-​arbitration process. However, it did not do so and appointed the arbitrator asking him to give his award in respect of each claim supported by reasons. Therefore, at this stage after the completion of the arbitration proceedings this objection of the Petitioner is untenable and is liable to be rejected. 64. Demerara Distilleries Private Limited v Demerara Distillers Limited (2015) 13 SCC 610. However, in this case the Supreme Court of India finally concluded that various correspondences exchanged between the parties indicated that any mutual discussions or mediation would be an “empty formality”. 65. Petromec Inc v Petroleo Brasileiro SA Petrobas [2005] EWCA Civ 891, [2006] 1 Lloyd’s Rep 121; Halifax Financial Services Ltd v Intuitive Systems Ltd [1999] 1 All ER (Comm) 303. 66. M.K. Shah Engineers and Contractors v State of Madhya Pradesh (1999) 2 SCC 594.

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Law, Practice and Procedure of Arbitration in India

It was held that such condition was essential and was necessary to be fulfilled.67 However, eventually it was found that the parties had, by conduct, waived this procedural pre-​condition.68 The High Court of Kerala in Nirman Sindia v Indal Electromelts Ltd. Coimbatore & Ors. observed that since the antecedent steps prior to initiating arbitration were not complied with the request for appointment of arbitrator was held to be premature. 69

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If there is no scope for an amicable settlement between the parties, the invocation of arbitration without complying with pre-​arbitration mediation clause was not fatal.70

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The Singapore Court of Appeal in International Research Corp PLC v Lufthansa Systems71 took the view that there must be actual compliance with the preconditions to commence arbitration.

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The Court observed that if the pre-​conditions are defined with sufficient clarity and specificity, they are mandatory in nature. Mere substantial compliance with such clauses was not sufficient to discharge the obligations under the multi-​tier dispute resolution clauses.

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The High Court of England and Wales in Wah (Aka Alan Tang) & Anor v Grant Thornton International Ltd & Ors.72 held that for any multi-​tiered dispute resolution clause to be enforceable, it must: (1) be a sufficiently certain and unequivocal commitment to commence a process;



(2) set out, with sufficient clarity, what steps each party is required to take to put the process in place;



(3) set out a sufficiently clearly defined process to enable the Court to determine objectively:

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(i) what, under that process, is the minimum required of the parties to the dispute in terms of their participation in it; and

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(ii) when or how the process will be exhausted or properly terminable without breach.

Ibid, at para. 17. However, it was noticed that the parties had waived the pre-​condition by conduct. S.K. Jain v State of Haryana (2009) 4 SCC 357, at para. 12. AIR 1999 Ker 440; Tulip Hotels Pvt. Ltd. v Tradewings Ltd. 2010 (1) Mh LJ 73. Visa International Limited v Continental Resorts (USA) Limited (2009) 2 SCC 55; Quick Heal Technologies Limited v NCS Computech Private Limited and Ors. Arbitration Petition No.43 of 2018 decided by the Bombay High Court on 5 June 2020. 71. International Research Corp PLC v Lufthansa Systems Asia Pacific Pte Ltd [2013] SGCA 55, at p. 62. 72. [2012] EWHC 3198 (Ch). 67. 68. 69. 70.

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Chapter 19—​​​Commencement of Arbitration

Only after the steps have taken place to fulfil the condition precedent may a party commence the arbitration. In relation to a statutory arbitration, references to an arbitration agreement must be read as references to such provisions of the Act or of any order, scheme, rules, regulations, or by-​laws made thereunder to arbitration.73

[19.4] DATE OF COMMENCEMENT OF ARBITRAL PROCEEDINGS

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Section 21 of the Arbitration Act, mirroring Article 21 of the UNCITRAL Model Law, provides that the arbitral proceedings commence on the date on which the request for reference of disputes to arbitration is received by the respondent.74

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Section 3(1) of the Arbitration Act stipulates that, unless otherwise agreed by the parties, any written communication is deemed to have been received if it is delivered to the addressee personally, or at his place of business, habitual residence or mailing address.

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Section 3(2) of the Arbitration Act provides that the communication is deemed to have been received on the day it is so delivered.

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The High Court of Delhi in Alupro Building Systems Pvt. Ltd. v Ozone Overseas Pvt. Ltd. dealt with a factual matrix where statement of claim was filed before an arbitrator without any formal invocation of arbitration. The Court highlighted the mandate of Section 21 and explained its purpose as follows:

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“Section 21 performs an important function of forging such consensus on several aspects viz. the scope of the disputes, the determination of which disputes remain unresolved; of which disputes are time-​barred; of identification of the claims and counter-​claims and most importantly, on the choice of arbitrator. Thus, the inescapable conclusion on a proper interpretation of Section 21 of the Act is that in the absence of an agreement to the contrary, the notice under Section 21 of the Act by the claimant invoking the arbitration clause, preceding the reference of disputes to arbitration, is mandatory. In other words, without such notice, the arbitration proceedings that are commenced would be unsustainable in law.”76

The date of service of notice is considered for the purpose of computing limitation for the claim.77

73. As to the determination of the commencement of causes of arbitration arising under statute, see Pegler v Railway Executive [1948] AC 332, [1948] 1 All ER 559, HL (Eng); Layen v London Passenger Transport Board [1944] 1 All ER 432. 74. Arbitration Act, art. 21; Milkfood Ltd v GMC Ice Cream (P) Ltd (2004) 7 SCC 288. 75. Alupro Building Systems Pvt. Ltd. v Ozone Overseas Pvt. Ltd. 2017 SCC OnLine Del 7228. 76. Ibid, at para. 30. 77. Arbitration Act, s. 43.

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Law, Practice and Procedure of Arbitration in India

Where the arbitration agreement is silent on the steps to be taken, the commencement of arbitration tends to go hand in hand with the establishment of the arbitral tribunal.

[19.5] REQUEST NOTICE: FORM, CONTENTS, AND SERVICE The first procedural step in almost every arbitration is the filing and service of a “request for arbitration” or “notice of arbitration” (referred to collectively as “request-​notice”).78

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The request-​notice contemplated by Section 21 of the Arbitration Act is a written communication which initiates the arbitration proceedings.79 Apart from being in writing, and unless the contract provides otherwise, there are no specific requirements as to the form of the notice.80 It is often simply in the form of a letter from the proposed claimant to the proposed respondent.81

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The issuance of a notice to the respondent for reference of the disputes to arbitration is a pre-​requisite for the commencement of proceedings under Section 21 of the Arbitration Act.82 Justice Indu Malhotra opines:

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Gary B. Born85 states:

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“Unless otherwise agreed between parties, the ‘request’ or ‘notice’ or ‘demand’ under Section 21 of the [Arbitration] Act is a mandatory requirement, without which the arbitral proceedings cannot commence.83 The notice ensures that the procedure agreement between the parties for appointment of an arbitrator /​tribunal, is followed.”84

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“The request for arbitration (or notice of arbitration) usually serves the same basic functions as a civil complaint or writ under national litigation rules –​that is, the

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78. Gary B. Born, International Commercial Arbitration, Vol. 2 (2nd edn, Kluwer Law International, Wolters Kluwer 2014), p. 2213; UNCITRAL Rules, art. 3; ICC Rules, art. 4. 79. ABB ABL Ltd. v Cement Corporation of India (1999) 49 DRJ 131, at para. 10. Section 21 does not require that request should be made expressly in writing. The case involved a request by conduct of the parties. The Court held that had it been essential that request should be in writing, the word “written” should have found place in s. 21 before the word “request”. 80. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 5-​025. 81. Blackpool Borough Council v F Parkinson Ltd (1991) 58 BLR 85. The notice can also be in the form of e-​ mail: Bernuth Lines Ltd v High Seas Shipping Ltd [2005] EWHC 3020; Charles M Willie & Co (Shipping) Ltd. v Ocean Laser Shipping Ltd. [1999] 1 Lloyd’s Rep 225. It was held as possible to show that arbitration had commenced by way of a telex. 82. The Bombay Gas Co. Ltd. v Parmeshwar Mittal & Others AIR 1998 Bom 118; Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer), p. 667. 83. M/​s Oval Investment Pvt. Ltd. & Ors. v M/​s Indiabulls Financial Services Ltd. & Ors. (2009) 112 DRJ 195. 84. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 667. 85. Gary B. Born, International Commercial Arbitration, Vol. 2 (2nd edn, Kluwer Law International, Wolters Kluwer 2014), p. 2213.

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Chapter 19—​​​Commencement of Arbitration

purpose of the notice of arbitration is ‘to inform the respondent … that arbitral proceedings have been started and that a particular claim will be submitted for arbitration,’ to ‘apprise the respondent of the general context of the claim asserted against him,’ and ‘to enable him to decide on his future court of action’.”86

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A claimant’s letter informing the respondent that the claimant had appointed an arbitrator, and inviting the respondent to appoint its arbitrator, was considered to constitute a request for the dispute to be referred to arbitration within the meaning of Article 21 of the Model Law.87

The arbitral proceedings were considered to have commenced upon receipt of such letter by the respondent.88

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Similarly, the receipt by the respondent of the claimant’s request to appoint an arbitrator would commence arbitral proceedings; although, a mere inquiry into the respondent’s position regarding arbitration would not constitute commencement.89

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Form

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The request-​notice can take a wide variety of forms. It need not be in any particular form unless otherwise prescribed by institutional arbitration rules,90 national arbitration legislation,91 or the arbitration agreement.92 It can be called “request”, “notice”, “application”, or “statement of claim”.

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86. See also, UNCITRAL, Report of the Secretary-​General on the Preliminary Draft Set of Arbitration Rules for Optional Use in Ad Hoc Arbitration Relating to International Trade, Eighth Session, U.N. Doc. A/​CN.9/​97, VI UNCITRAL.Y.B. 163, at p. 167 (1975). 87. CLOUT Case No. 20 [Fung Sang Trading Limited v Kai Sun Sea Products and Food Company Limited, High Court –​Court of First Instance, Hong Kong, 29 October 1991], available at http://​www.hklii.hk/​eng/​hk/​ cases/​hkcfi/​1991/​190.html, [1991] HKCFI 190; Milkfood Ltd v GMC Ice Cream (P) Ltd (2004) 7 SCC 288; UNCITRAL 2012 Digest of Case Law on the Model Law on International Commercial Arbitration. 88. Ibid. 89. CLOUT Case No. 706 [Fustar Chemicals Ltd. v Sinochem Liaoning Hong Kong Ltd., High Court –​Court of First Instance, Hong Kong, 5 June 1996], [1996] 2 HKC 407; UNCITRAL 2012 Digest of Case Law on the Model Law on International Commercial Arbitration. 90. UNCITRAL Rules, art. 3; ICC Rules, art. 4; HKIAC Rules, art. 4(3). 91. See Gary B. Born, International Commercial Arbitration, Vol. 2 (2nd edn, Kluwer Law International, Wolters Kluwer 2014), pp. 2213–​2214, “National arbitration legislation not frequently not infrequently imposes requirements on the contents of a request or notice of arbitration (typically, subject to the parties’ contrary agreement)…”; Arbitration Act, s. 21; English Arbitration Act, ss. 14(3) to 14(5); German ZPO, s. 1044; Chinese Arbitration Law, art. 23; Japanese Arbitration Law, art. 29(1). 92. Arbitration agreements generally do not impose requirements for the contents of a request for arbitration. Occasionally, an arbitration agreement will require that the request for arbitration nominate a co-​arbitrator or (less frequently) identify the alleged dispute and the exhaustion of contractual alternate dispute resolution procedures; Gary B. Born, International Commercial Arbitration, Vol. 2 (2nd edn, Kluwer Law International, Wolters Kluwer 2014), pp. 2213–​2214.

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Law, Practice and Procedure of Arbitration in India

Parties are free to decide on the form of the request-​notice, or such other document which determines the commencement of arbitration.93 There must be some kind of writing evidencing the formulation of the request.94 The normal method is by letter.95 A request-​notice by facsimile or e-​mail will also be treated as good service.96

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The request-​notice should identify the arbitration agreement by clause number or other appropriate reference. It should also identify by reference to other documents, or in terms, the nature of the dispute to be submitted to arbitration. While placing reliance on Section 21 of the Arbitration Act, Justice Indu Malhotra states:

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“The [Arbitration] Act does not require the notice invoking arbitration to identify and state all the claims proposed to be referred for arbitration. The request for arbitration must broadly identify the disputes which have arisen for arbitration and not just contain a mere intention of initiating arbitral proceedings at a later stage.”97

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The request-​notice must be clear that arbitration proceedings are being commenced and not merely threaten them.98

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It can also express an intention to commence later,99 or enquire into the respondent’s position regarding arbitration.100 This need not be in great detail.

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93. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 667. 94. Ibid. 95. Unless circumstances prohibit it, sending a notice by letter is generally considered best practice; see Baster et al. (eds), Construction Law Handbook (2000), at pp. 2.3. 96. Bernuth Lines Ltd v High Seas Shipping Ltd [2005] EWHC 3020 (Comm), [2005] All ER (D) 332 (Dec); Stoomv Maats De Maas NV v Nippon Yusen Kaisha, The Pendrecht [1980] 2 Lloyd’s Rep 56; Continental Sales Ltd v R Shipping Inc [2013] 4 NWLR (part 1343), p. 67 (Nigeria); see also, Seabridge Shipping AB v AC Orsleff ’s Eftf ’s A/​S [2000] 1 All ER (Comm) 415 where a request-​notice was sent by fax and this was argued to be invalid, the Court rejected an overly technical approach and took the view that where a notice was “objectively clear in requesting the [respondent] to appoint an arbitrator” it would be validly served. 97. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 667. 98. Atlanska Plovidba v Consignaciones Asturianas SA, The Lapad [2004] EWHC 1273 (Comm), [2004] 2 Lloyds Rep 109; Primus Build Ltd v Pompey Centre Ltd [2009] EWHC 1487 (TCC), [2009] All ER (D) 14 (Jul): Mr Justice Coulson rejected the submission that a notice of adjudication had not been served in accordance with the requirements of the contract. But he did point out that, if the service had been invalid, it would have deprived the adjudicator of jurisdiction. It is therefore vital to ensure that a notice is validly served. He also held that there had been a breach of the rules of natural justice in that the adjudicator had based his decision on a point which both parties had agreed was irrelevant and he had failed to give to the parties an opportunity to make submissions on the approach which he proposed to adopt. The adjudicator therefore had no jurisdiction to reach the decision which he had reached and his decision was not enforced. 99. See the “Travaux Préparatoires” A/​CN.9/​264, Analytical commentary on draft text of a model law on international commercial arbitration, (Article 21), available at: http://​ www.uncitral.org/​ uncitral/​ en/​ commission/​sessions/​18th.html. 100. Fustar Chemicals Ltd v Sinochem Liaoning Hong Kong Ltd [1996] 2 HKC 407.

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Chapter 19—​​​Commencement of Arbitration

The recipient of the notice should be in a position to understand what is alleged against him.101 The High Court of Bombay in Veena v Seth Industries Ltd.102 held that a notice indicating that disputes have arisen between the parties which require to be resolved through arbitration would suffice; unless, it is a requirement in the arbitration agreement itself which requires invocation in a particular manner.

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The High Court of Delhi, in Badri Singh Vinimay Pvt. Ltd. v MMTC Ltd.,103 considered the following correspondence as a valid request-​notice and dismissed a petition under Section 34 challenging the award:

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“Under the facts and circumstances stated herein above, I by way of this notice to pay a sum of Rs.88,08,932/​-​alongwith interest @ 18% p.a. w.e.f. 05.10.2011 till the date of payment/​realization; to my client within a period of 15 days from the receipt of this notice, failing which my client shall be constrained to initiate appropriate legal action against you for recovery of the said amounts and interest thereon including initiation of arbitration proceedings entirely at your risk, costs and consequences.”104

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The High Court of Delhi held that the notice included the facts leading to dispute, nature of claim, and legal recourse for initiation of arbitration proceedings. It was therefore, in the form of a valid notice.105

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A communication claiming a disputed amount and contemplating arbitration in the alternative has been held to be a sufficient notice for commencing arbitration.106

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The Court in Allianz Versicherungs Aktiengesellschaft v Fortuna Co Inc, The Baltic Universal107 considered that the notice commencing arbitration proceedings did not have to call expressly on the respondent to appoint his arbitrator or seek agreement to refer disputes to a sole arbitrator.

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Rix J in Charles M Willie & Co (Shipping) Ltd v Ocean Laser Shipping Ltd & George Roussos Sons SA, The Smaro108 also regarded the judgment of the Court of Appeal in The

Chuan Hup Agencies Pte Ltd v Global Minerals (Sarawak) Sdn Bhd [1990] 1 MLJ 305. 2011 (2) MhLJ 226. Badri Singh Vinimay Pvt. Ltd. v MMTC Ltd. 2020 SCC OnLine Del 106. Ibid, at para. 11. Ibid, at para. 13. RIICO Ltd., Jaipur v Manoj Ajmera (2008) 2 Arb LR 388, at para. 9. The Rajasthan High Court noticed that the Contractor in the arbitration notice to Employer stated that it demands justice from the Employer and requests for totally reviewing the contract in its final determination, by paying them all their claim amount and in the event of their non-​discharge of the Contractor’s legitimate claim in 30 days of receipt of the notice, they shall be compelled to seek arbitration and upheld the notice. 107. [1999] 1 Lloyd’s Rep 497. 1 08. [1999] 1 Lloyd’s Rep 225. 101. 102. 103. 104. 105. 106.

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Law, Practice and Procedure of Arbitration in India

Agios Lazaros as binding authority. The Court held that an arbitration is commenced when one party appoints its own arbitrator and that there are strong policy considerations for treating an implied request as being sufficient.109

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The Court in West of England Ship Owners Mutual Protection and Indemnity Association v Hellenic Industrial Development Bank SA110 applied a prima facie test for commencement and left the merits of the question for the arbitrator to decide.

Contents

The minimum contents of a notice of arbitration “vary depending on the parties’ arbitration agreement, any applicable institutional rules and applicable national law”.111

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Non-​compliance with the required minimum contents may result in invalidity of a notice of arbitration.

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The initiating document must inform the other parties unambiguously that a specific dispute is being referred to arbitration regardless of which rule or law is applicable.

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The respondent should be given sufficient information to make an informed choice on whether or not to arbitrate the dispute. Therefore, he must be able to determine the nature of the dispute and not merely that there is a dispute.112

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Most arbitration rules provide for the minimum contents of a notice of arbitration. For example, Rule 3.1 of the MCIA Rules requires the following to be included in the notice: (1) demand that the dispute be referred to arbitration;



(2) the full terms of the arbitration clause or the separate arbitration agreement that is invoked;



(3) a reference to the contract(s) (or other instrument(s)) out of or in relation to which the dispute arises;

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(4) the full names and contact details (including postal address(es), telephone number(s), facsimile number(s), and electronic mail address(es), to the extent known) of the parties to the arbitration and their legal representatives, if any;

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(5) a statement briefly describing the nature and circumstances of the dispute and the claims advanced by the Claimant against any other party to the

109. See Mustill & Boyd, Commercial Arbitration, Companion Volume to the Second Edition (Butterworths 2001), p. 162. 110. [1998] CLC 1431. 111. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2379. 112. Lew, Mistelis, and Stefan, Comparative International Commercial Arbitration (2003), pp. 20–​33.

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Chapter 19—​​​Commencement of Arbitration

arbitration specifying the relief claimed, including the amounts of any quantified claims and, to the extent possible, an estimate of the monetary value of any other claims; (6) a statement of any matters which the parties have previously agreed as to the conduct of the arbitration or with respect to which the Claimant wishes to make a proposal (such as the number of arbitrator(s), the applicable rules of law, the language(s) of the arbitration, and the seat of arbitration);



(7) unless the parties have agreed otherwise, the nomination of an arbitrator, if the arbitration agreement provides for three arbitrators, or a proposal for a sole arbitrator if the arbitration agreement provides for a sole arbitrator;



(8) confirmation that copies of the request for arbitration and any exhibits have been or are being served simultaneously on all other parties, specifying the mode of service employed and the date of service, to be supported then or as soon as possible thereafter by documentary proof satisfactory to the Registrar of actual delivery; and



(9) confirmation that the requisite filing fee has been paid (without which the request for arbitration shall be treated as not having been received by the Registrar and the arbitration as not having been commenced).

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Similarly, Article 3 of the UNCITRAL Rules illustrates the requirements for a short-​ form request, requiring the notice of arbitration to include the following:

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“(a) A demand that the dispute be referred to arbitration; (b) The names and contact details of the parties;

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(c) Identification of the arbitration agreement that is invoked;

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(d) Identification of any contract or other legal instrument out of or in relation to which the dispute arises or, in the absence of such contract or instrument, a brief description of the relevant relationship;

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(e) A brief description of the claim and an indication of the amount involved, if any; (f) The relief or remedy sought; (g) A proposal as to the number of arbitrators, language and place of arbitration, if the parties have not previously agreed thereon.”113

113. UNCITRAL Rules, art. 3(3); Gary B. Born, International Commercial Arbitration, Vol. 2 (2nd edn, Kluwer Law International, Wolters Kluwer), pp. 2215–​2216; D. Caron & L. Caplan, The UNCITRAL Arbitration Rules: A Commentary (2nd edn, 2013), pp. 363–​364; T. Webster, Handbook of UNCITRAL Arbitration, 2010, at para. 3.3.

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Law, Practice and Procedure of Arbitration in India

Article 3(4) of the UNCITRAL Rules specifies that the request-​notice may also include: “(a) A proposal for the designation of an appointing authority; (b) A proposal for the appointment of a sole arbitrator; and (c) Notification of the appointment of an arbitrator.”114

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In contrast, the ICC Rules contemplate a single document, namely, the Request for Arbitration that contains a somewhat more complete treatment of a claim and requested relief.115

Gary B. Born comments on the appearance and content of a request-​notice under ICC Rules and a statement of claim under the UNCITRAL Rules as follows:116

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“[these] should describe the relevant facts, agreements and claims in language accessible to readers from diverse jurisdictions. The request should also append the basic documents in the case (together with translations, where necessary). In addition, a thorough request will often set forth the claimant’s legal theory, albeit often in relatively skeletal form, and request particular relief … [D]‌etailed argument and factual development is usually left to subsequent briefs or memorials. … Even if a request or notice of arbitration is extraordinarily skeletal, it will virtually never be dismissed by an arbitral institution or tribunal on the grounds of providing inadequate notice to the respondent.”117

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The governing law will apply in the absence of such requirements in the institutional rules, for example, in an ad hoc arbitration that is not administered by an institution. The nature of the dispute must be communicated to the other party.

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The Court in Interbulk Ltd v Ponte Dei Sospiri Shipping Co, The Standard Ardour118 held that a notice must also clearly specify the disputes to be referred to arbitration as:

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“it is not sufficient for a party privately to seek to invest his arbitrator with power to determine a particular claim unless this is also made clear to the other party.”119

1 14. UNCITRAL Rules, art. 3(4). 115. Gary B. Born, International Commercial Arbitration, Vol. 2 (2nd edn, Kluwer Law International, Wolters Kluwer 2014), p. 2216; ICC Rules, art. 4. 116. Gary B. Born, International Commercial Arbitration, Vol. 2 (2nd edn, Kluwer Law International, Wolters Kluwer 2014), p. 2217. 117. See also United Parcel Services of Am., Inc. v Gov’t of Canada Award on Jurisdiction of 22 November 2002, paras. 123–​133. 118. [1988] 2 Lloyd’s Rep 159, at p. 162. 119. Ibid.

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A request for the other party to identify the arbitrator was held to be sufficient demand. Lord Denning in Nea Agrex SA v Baltic Shipping Co Ltd and Intershipping Charter Co, The Agios Lazaros120 explained the principle:

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“In order to commence the arbitration, there must be, I think, be a notice in writing served by one party to do one or other of two things: either (1) ‘to appoint an arbitrator’ or (2) ‘to agree to the appointment of an arbitrator’. The first alternative (1) is appropriate in a case where the reference is to two arbitrators, one to be appointed by each party. In such a case the arbitration is deemed to commence when the one party, expressly or by implication, requires the other party to appoint his arbitrator. If he simply says: ‘I require the difference to be submitted to arbitration in accordance with our agreement’, that is sufficient to commence the arbitration; because it is by implication a request to the other to appoint his arbitrator. The second alternative (2) is appropriate when the reference is to be to a single arbitrator. In such a case, the arbitration is deemed to commence when one party, expressly or by implication, says: ‘The time has come when we must submit the difference to arbitration in accordance with our agreement, I must ask you to agree to the appointment of an arbitrator.’ Now he cannot compel the other party to agree, or even to reply to the requirement. It seems to me that a notice which says: ‘I require the difference between us to be submitted to arbitration’ is sufficient to commence the arbitration; because it is by implication a request to agree to the appointment of an arbitrator. So, in any case a simple notice in writing requiring the difference to be submitted to arbitration is deemed to be a commencement of the arbitration.”121

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The respondent’s service of the request-​notice will be valid, only if effected in accordance with contractual requirements, or the institutional rules under which the arbitration is to be conducted.122

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Section 3 of the Arbitration Act pertains to receipt of written communications. It stipulates that any written communication is deemed to have been received if it is delivered to the addressee personally, or at his place of business, habitual residence, or mailing address, unless otherwise agreed by the parties.123

1 20. 121. 122. 123.

[1976] QB 933, at 944–​945, [1976] 2 All ER 842, at 847, [1976] 2 Lloyd’s Rep 47, CA (Eng). [1976] QB 933, at pp. 944–​945. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 668. Ibid.

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Law, Practice and Procedure of Arbitration in India

The normal method is by letter124 though a request-​notice by facsimile or e-​mail will also be treated as good service.125 The request-​notice should identify the arbitration agreement by clause number or other appropriate reference. It should also identify by reference to other documents, or in terms, the nature of the dispute to be submitted to arbitration.

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The determination of the question as to whether a notice has been satisfactorily served under Section 21 of the Arbitration Act and whether the giving or notice was a condition precedent to the exercise of jurisdiction by the arbitral tribunal are matters to be decided by the arbitral tribunal itself.126

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Section 3(2) read with Section 21 of the Arbitration Act makes it evident that the request for reference of disputes to arbitration is deemed to have been delivered to the respondent on the day it is delivered to the addresses, or at the place of business, of habitual residence or mailing address.127

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Proper notification of the request for arbitration is a crucial element for the valid commencement of arbitral proceedings, and it excludes the risk of annulment and non-​ recognition of awards under Article V(1)(b) of the New York Convention.128

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Section 34(2)(a)(iii) recognises improper notice of commencement of arbitration proceedings as a ground to set aside the award.129

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124. Unless circumstances prohibit it, sending a notice by letter is generally considered best practice; see Baster et al. (eds), Construction Law Handbook (2000), at para. 2.3. 125. Bernuth Lines Ltd v High Seas Shipping Ltd [2005] EWHC 3020 (Comm), [2005] All ER (D) 332 (Dec); Stoomv Maats De Maas NV v Nippon Yusen Kaisha, The Pendrecht [1980] 2 Lloyd’s Rep 56; Continental Sales Ltd v R Shipping Inc [2013] 4 NWLR (part 1343) 67 (Nigeria); In Seabridge Shipping AB v AC Orsleff ’s Eftf ’s A/​S [2000] 1 All ER (Comm) 415, where a request-​notice was sent by fax and this was argued to be invalid, the Court rejected an overly technical approach and took the view that where a notice was “objectively clear in requesting the [respondent] to appoint an arbitrator” it would be validly served. Charles M Willie & Co (Shipping) Ltd. v Ocean Laser Shipping Ltd. [1999] 1 Lloyd’s Rep 225. It is possible to show that arbitration had been commenced by means other than a notice requiring appointment or agreement of an arbitrator, that is, by way of telex. 126. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 668; Secur Industries Ltd. v Godrej & Boyce MFG. Co. Ltd. and Anr. (2004) 3 SCC 447. 127. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 668. 128. On 18 February 2015, the Supreme Court of Austria reversed the decision of the Court of Appeal of Ried im Innkreis holding “that the appellate court erred in referring to the Austrian law requirements for recognition rather than to the requirements set by the 1958 New York Convention, which solely applied.” Austria No 2016-​1, Kinve Solar Power Co, Ltd v Sun Value GmbH et al., Landesgericht, Ried Im Innkreis Case No. 6 R 80/​ 14b, 27 August 2014 in Jan van den Berg (ed.), Yearbook Commercial Arbitration 2016 –​Volume XLI, 2016), p. 1. Spain No 2016-​1, Tele-​Radio i Lysekil AB v Motorman Radio Sistemas y Aplicaciones, SL, Superior Court of Justice of Catalonia, Case No 16/​2014, 19 February 2014 in Jan van den Berg (ed.), Yearbook Commercial Arbitration 2016 –​Volume XLI, 2016), pp. 1–​9: The Superior Court of Spain granted enforcement of a Swedish award because the defendant’s due process and public policy objections failed (including failure to prove a lack of proper notice). 129. Arbitration Act, s. 34(2)(iii).

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Situations in practice are not always straightforward. Therefore, a different interpretation as to what actions are considered as service of a request-​notice can be given: (1) Goff J in Nea Agrex SA v Baltic Shipping Co Ltd and Intershipping Charter Co, The Agios Lazaros130 held that an exchange of telexes which constituted “an intimation by one party to the other that they were requiring the dispute … to be decided by the arbitrators’ was sufficient for service of notice when coupled with the fact that the notifying party proceeded immediately to appoint its own arbitrator;



(2) Longmore J in Frota Oceanica Brasiliera SA v Steamship Mutual Underwriting Association (Bermuda) Ltd, The Frotanorte131 held that the call for the provision of suitable names for appointment as a sole arbitrator was sufficient for service of notice; and



(3) Mance J in Villa Denizcilik Sanayi Ve Ticaret AS v Longen SA, The Villa132 held where notice was served on solicitors stating that their clients had failed to erect buildings of adequate construction and asking whether the solicitors were authorised to accept service of a notice of the commencement of arbitration proceedings was sufficient for service of notice.

Gary B. Born133 states:

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“Parties should nonetheless ensure that mechanisms of service or notification of the request for arbitration (or other documents) comply with mandatory due process requirements in the arbitral seat and states where enforcement of an award may need

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130. [1976] QB 933, at p. 945, [1976] 2 All ER 842, [1976] 2 Lloyd’s Rep 47, CA (Eng). Lord Denning held, obiter, that a notice requiring differences to be submitted to arbitration implied a request to appoint an arbitrator. See also Cremer (Peter) GmbH & Co v Sugat Food Industries Ltd, The Rimon [1981] 2 Lloyd’s Rep 640. 131. [1995] 2 Lloyd’s Rep 254, at p. 261. See also Cathiship SA v Allanasons Ltd, The Catherine Helen [1998] 3 All ER 714 at p. 721(a)–​(e), [1998] 2 Lloyd’s Rep 511. 132. [1998] 1 Lloyd’s Rep 195, at p. 196. See also Erith Contractors Ltd v Costain Civil Engineering Ltd [1994] ADRLJ 132; Cruden Construction Ltd v Commission for the New Towns [1995] 2 Lloyd’s Rep 387, 75 BLR 134; Ocean Laser Shipping Ltd G Roussos Sons SA v Charles M Willie (Shipping) Ltd (The “Smaro”) [1999] 1 Lloyd’s Rep 225, at p. 238, per Rix J; Mannai Investment Co Ltd v Eagle Star Life Assurance Co [1997] AC 749, [1997] 3 All ER 352, [1997] 2 WLR 945, at p. 964, per Lord Steyn; West of England Ship Owners Mutual Protection and Indemnity Association (Luxembourg) v Hellenic Industrial Development Bank SA [1998] CLC 1431; Great Ormond Street Hospital NHS Trust v The Secretary of State for Health and Wales Construction Ltd (1997) 56 ConLR 1; Westfield Design & Construction Pty Ltd v L R & M Constructions Pty Ltd; C S R Ltd (t/​a The Readymix Group) [1999] SASC 319; cf. Vosnoc Ltd v Transgobal Projects Ltd [1998] 2 All ER 990, [1998] 1 WLR 101; Allianz Versicherungsaktiengesellschaft v Fortuna Co Inc, The Baltic Universal [1999] 2 All ER 625, [1999] 1 WLR 2117; Emson Contractors Ltd v Protea Estates Ltd [1987] 13 Con LR, 39 BLR 126; Lesser Design and Build Ltd v University of Surrey (1991) 56 BLR 57; Blackpool Borough Council v F Parkinson Ltd (1991) 58 BLR 85. 133. Gary B. Born, International Commercial Arbitration, Vol. 2 (2nd edn, Kluwer Law International, Wolters Kluwer 2014), p. 2219.

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Law, Practice and Procedure of Arbitration in India

to be sought. These requirements generally demand a means of service reasonably calculated to provide the respondent with notice of the claims against it.134 A commercial party will be found not to have received notice, transmitted by customary means of communications such as email, fax, or courier, only in unusual cases.”135

[19.6] SUBMISSION TO NAMED PARTY

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Where the arbitration agreement names or designates a party (parties) to be notified about commencement of arbitration, the arbitration is deemed to have commenced when the initiating party complies with this requirement, that is, properly notifies the party (parties) so named or designated.

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Failure to do so or naming parties not all of whom are party to the arbitration agreement can have potentially serious consequences in respect of the jurisdiction of the tribunal.136

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For example, the High Court of England and Wales, in JT Mackley & Co Ltd v Gosport Marina Ltd.,137 held that a notice to refer disputes to arbitration was invalid as it was an attempt to commence tripartite arbitration proceedings when one of the parties was not party to the arbitration agreement.

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However, a more balanced view is that the notice of arbitration shall be valid against the party to the arbitration agreement and not against the third party.138

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Occasionally, national law imposes an obligation to submit a request for arbitration to all parties to the arbitration agreement irrespective of “whether or not they are identified in the request for arbitration as parties to the arbitration”.139

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134. Most courts have rejected claims that a commercial party did not receive adequate notice of an arbitration because of a failure to translate (or translate fully) the notification. For exceptions, see Bankhaus Wolbern v China Constr. Bank Corp. [2012] EWHC 3285, at paras. 23–​24 (Comm) (England and Wales High Court); Forever Maritime Ltd. v State Unitary Enter, Foreign Trade Enter. Mashioimport, Case No. 3253/​04 (Russian Moscow Dist. Fed. Arb. Ct. 2003). 135. See, for example, Award of 12 February 1987 in IUSCT Case No. 353 (292-​353-​2), FMC Corp. v Gov’t of the Islamic Republic of Iran 4 J. Int;l Arb. 147, at para. 28 (1987) (although contractually agreed form of communication was delivery in person, notice was adequate by telex, due to change in surrounding circumstances during 1979 in Iran.) 136. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 5-​026; Internaut Shipping GmbH v Fercometal Sarl [2003] EWCA Civ 812; Hussman (Europe) Ltd. v Al Ameen Development & Trade Co [2000] 2 Lloyd’s Rep. 83. 137. [2002] EWHC 1315. 138. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 5-​026. 139. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2383; for instance, United States Uniform Arbitration Act, s. 9(a), available at http://​ www.uniformlaws.org/​shared/​docs/​arbitration/​arbitration_​final_​00.pdf) explicitly requires that notice of initiation of an arbitration proceeding be given to all parties to the arbitration agreement and not just to the party against whom a person files an arbitration claim.

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Chapter 19—​​​Commencement of Arbitration

Actual receipt of the request for arbitration is a relevant issue that may raise questions such as whether the mere acknowledgement of receipt constitutes evidence of knowledge of its content,140 or whether the arbitral tribunal has a duty to investigate accuracy of the address indicated in the agreement.141

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The High Court of Delhi, in Active Media v Divisional Commercial Manager, Northern Railway,142 observed that the sending an arbitration invocation notice to the incorrect address of the counter-​party would fall afoul of the mandatory pre-​requisite of Section 21 of the Arbitration Act. It would therefore mean that there would be no effective commencement of the arbitration proceedings.

[19.7] REQUIREMENTS OF THE NOTICE

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The notice must not be premature because the commencement of arbitration is contingent on the existence of a dispute.

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A notice is sufficient if it contains a request for the dispute to be referred to arbitration and calls on the other party to take appropriate steps, such as requesting the identification of an arbitrator, even if it leaves open the possibility of an amicable settlement.

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The Court in Cremer (Peter) GmbH & Co v Sugat Food Industries Ltd, The Rimon143 held that a telex reading which stated,

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“in case of difference we already now claim arbitration ... we already now hold you responsible for any possible default in the execution of this contract.”

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to be a simply a precautionary appointment and there was no current dispute. As such, a pre-​emptive reference did not constitute a notice to appoint an arbitrator and commence arbitration.144

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140. UNICTRAL 2012 Digest of Case Law on the Model Law on International Commercial Arbitration, at para. 3, p. 17, available at http://​www.uncitral.org/​pdf/​english/​clout/​MAL-​digest-​2012-​e.pdf; CLOUT Case No 967 (Madrid Provincial High Court, Spain, Section 19, Case No 225/​2006, 12 September 2006); CLOUT Case No 969 (Madrid Provincial High Court, Spain, Section 21, Case No 208/​2006, 18 April 2006); CLOUT Case No 971 (Constitutional Court, Spain, Case No 2771/​2005, 5 July 2005). 141. UNICTRAL 2012 Digest of Case Law on the Model Law on International Commercial Arbitration, p. 17, at para. 4, available at http://​www.uncitral.org/​pdf/​english/​clout/​MAL-​digest-​2012-​e.pdf; CLOUT Case No 870 (Oberlandesgericht Dresden, Germany, 11 Sch 19/​05, 15 March 2005), available at http://​www.dis-​arb.de/​en/​ 47/​datenbanken/​rspr/​olg-​dresden-​case-​no-​11-​sch-​19-​05-​date-​2005-​03-​15-​id531; Uganda Telecom Limited v Hi-​Tech Telecom Pty Ltd [2011] FCA 131, FC (Aus), available at http://​www.austlii.edu.au/​au/​cases/​cth/​FCA/​ 2011/​131.html. 142. Judgment dated 4 March 2020 in ARB. P. 694/​2019. 143. [1981] 2 Lloyd’s Rep 640, at p. 643. 144. Great Ormond Street Hospital NHS Trust v Secretary of State for Health [1997] 56 Con. L.R. 1; Lorand Shipping Ltd v Davof Trading (Africa) BV (MV “Ocean Glory”), [2014] EWHC 3521.

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Law, Practice and Procedure of Arbitration in India

In some cases, a notice has been strictly construed. Lord Steyn in Food Corpn of India v Halcoussis, The Petros Hadjikyriakos145 considered a letter of appointment containing no reference to one of the issues that had been decided by an umpire. The Court held that as a letter of appointment had to be strictly construed, the umpire had, in the circumstances, exceeded his jurisdiction and the award was pro tanto bad.

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The above decision is to be compared with Lord Denning opinion in The Agios Lazaros146 where he said:

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“In a commercial dispute, a letter suggesting an arbitration should not be construed too strictly. The writer should not be impaled on a time bar because he writes in polite and courteous terms, or because he leaves open the possibility of settlement by agreement.”

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[19.8] LIMITATION ACT

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The Court suggested that in the notice, the phrase “please advise your proposals in order to settle this matter, or name your arbitrators” was sufficient, even though the agreement provided for a sole arbitrator.

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Section 43 of the Arbitration Act states that the Limitation Act, 1963 shall apply to arbitrations as it applies to proceedings in court. In parallel, Section 29(2) of the Limitation Act states that if any other period has been prescribed in a special enactment, then such provisions would prevail over the provisions of the Limitation Act.

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The Arbitration Act is a special enactment governing. Hence, the Limitation Act shall not be applicable to cases which have been expressly excluded147 by the Arbitration Act.

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Section 21 read with Section 43(2) of the Arbitration Act clarifies the position that an arbitration is deemed to have commenced on the date on which the request for the dispute to be referred to arbitration is received by the Respondent.148

145. [1988] 2 Lloyd’s Rep 56. See also Casillo Grani v Napier Shipping Co, The World Ares [1984] 2 Lloyd’s Rep 481; Interbulk Ltd v Ponte Dei Sospiri Shipping Co, The Standard Ardour [1988] 2 Lloyd’s Rep 159, at p. 162, per Savill J. 146. Nea Agrex SA v Baltic Shipping Co Ltd and Intershipping Charter Co, The Agios Lazaros [1976] QB 933, at p. 945, [1976] 2 All ER 842, at 848, [1976] 2 Lloyd’s Rep 47, CA (Eng). 147. The Arbitration Act provides for specific periods of limitation under ss. 8, 11, 29A, 33(3), 33(4), 34(3) and 37. 148. IndusInd Bank Ltd. v Mulchand B. Jain & Ors. 2013 SCC OnLine Mad 555.

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Chapter 19—​​​Commencement of Arbitration

However, if the parties have agreed to another event for commencement of the arbitration, that would take effect. The date of entering upon reference by the arbitrators is distinct from the date of commencement of the arbitration.149 The date of commencement of arbitration determines whether a claim is barred by limitation. A time-​barred claim in arbitration is treated in the same way as a time-​ barred prayer in a suit, covered by Section 3 of the Limitation Act.150

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Article 137 of Schedule I to the Limitation Act stipulates that any claim to which an arbitration agreement applies is to be invoked within the period of three years from the date on which the cause of action accrues.151

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In other words, the period of limitation for commencing arbitration runs from the date on which the cause of arbitration accrues, that is, from the date when the claimant first acquired either a right of action or a right to require that arbitration takes place upon the dispute concerned.

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In situations where further claims are sought to be added by an amendment to the statement of claim, the date for determining limitation would be the date of amendment.152

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The Supreme Court of India in Milkfood Ltd. v GMC Ice Cream (P) Ltd.153 held that the date of commencement of the arbitration proceedings for the purpose of applicability of the Limitation Act is of great significance.

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Section 43(1) of the Arbitration Act provides that the Limitation Act shall apply to arbitrations, as it applies to proceedings in court.154

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Section 43(2) of the Arbitration Act provides that for the purposes of the Limitation Act, an arbitration shall be deemed to have commenced on the date referred to in Section 21 of the Arbitration Act.

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Regarding a counter-​claim, the limitation period is to be computed as on the date of service of notice of such claim by the respondent to the claimant.155

149. Visakhapatnam Port Trust v M/​s. Continental Construction Co. (2009) 4 SCC 546. 150. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), p. 1091. 151. State of Orissa v Damodar Das AIR 1996 SC 942; Panchu Gopal Bose v Board of Trustees for Port of Calcutta AIR 1994 SC 1615; Vishindas Bhagchand v Chairman Maharashtra State Electricity Board, Mumbai and Ors. (2002) 1 Bom CR 320. 152. State of Goa v Praveen Enterprises (2012) 12 SCC 581. 153. (2004) 7 SCC 288. 154. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 669. 155. State of Goa v Praveen Enterprises (2012) 12 SCC 581, at para. 20. Subsequently followed by the Supreme Court of India in Voltas Ltd. v Rolta India Ltd. (2014) 4 SCC 516, at para. 28.

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Law, Practice and Procedure of Arbitration in India

Section 43(4) of the Arbitration Act states that where an arbitral award is set aside by an order of the court, the period from the date of the commencement of the arbitration, till the date of the order of the court, shall be excluded in computing the time prescribed by the Limitation Act.

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In England, the English Limitation Act applies to arbitrations in the same way as it applies to court proceedings.156 Section 13 of the English Arbitration Act provides that the limitation period for invocation of claims is six years for the date of the cause of action accrued.157

The English Arbitration Act allows the parties to agree when the arbitration proceedings are to be commenced.158

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In Singapore, the Singapore Limitation Act (Cap. 163)159 and the Foreign Limitation Periods Act, 2012160 apply to arbitrations in the same way as they apply to court proceedings.

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By the virtue of Section 8A of the Singapore International Arbitration Act, the limitation period for invocation of claims is six years from the date of the cause of action.161 The parties, however, have the autonomy to contract out of the application of the Limitation Act and thereby be deprived of pleading and relying on limitation defence.162

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Moreover, parties have the autonomy to be bound by a shorter limitation period than they would otherwise be subjected to.163

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In Hong Kong, the Hong Kong Limitation Ordinance (Cap. 347) is applicable to arbitrations in the same way as it applies to court proceedings.164 By the virtue of Section 14 of the Hong Kong Arbitration Ordinance, the limitation period for invocation of claims is six years for the date of the cause of action.165

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The Hong Kong Court of First Instance has held that, the time limit for the enforcement of an arbitration award in Hong Kong starts running for a period of six years from the time the award debtor fails to honor the promise.166

1 56. 157. 158. 159. 160. 161. 162. 163. 164. 165. 166.

English Arbitration Act, 1996, s. 13(1). English Limitation Act, 1980, s. 5. English Arbitration Act, 1996, s. 14. Singapore International Arbitration Act (Chapter 143A), s. 8A. Foreign Limitation Periods Act, 2012, s. 11(1). Singapore Limitation Act (Chapter 163), s. 6. Cytec Industries Pte Ltd v Asia Pulp & Paper Co Ltd [2009] 2 SLR(R) 806. Press Automation Technology Pte Ltd v Trans-​Link Exhibition Forwarding Pte Ltd [2003] 1 SLR(R) 712. Hong Kong Arbitration Ordinance (Cap. 609), s. 14(1). Hong Kong Limitation Ordinance (Cap. 347), s. 4(1). CL v. SCG [2019] HKCFI 398.

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Chapter 19—​​​Commencement of Arbitration

[19.9] CONTRACTUAL TIME LIMITATION Section 21 of the Arbitration Act confers autonomy on the parties to determine the date of commencement of arbitral proceedings.167 Section 21 of the Arbitration Act states that arbitral proceedings will commence on the date on which a request for reference to arbitration is received by the respondent in the absence of an agreement.168

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Arbitration contracts, particularly construction contracts, insurance contracts, and the like, often contain a time limit for the commencement of the arbitration.169 This time period is usually shorter than what is prescribed under the Limitation Act.170

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If the request for arbitration is not made within the period specified in the contract, the claim would be deemed to have been waived and barred.171 Consequently, the respondent shall stand discharged and released of all liabilities under the contract.172

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Arbitration agreements may also contain clauses where the claim is barred unless the claim is made and an arbitrator is appointed within a specified limited period. In practice, such clauses are referred to as “Atlantic Shipping” clauses173 or time bar clauses174

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The principle of party autonomy enables parties to provide time limits within which some steps to commence arbitral proceedings must be taken. Section 43(3) of the Arbitration Act recognises that arbitration agreements may bar claims, unless the steps mentioned in the agreement to commence arbitral proceedings are initiated within the time fixed.175

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A clause barring all claims, unless a claim was made in writing and an arbitrator appointed within a specified period, was binding and did not oust the jurisdiction of the court. Commercial contracts often provide such clauses, and these are considered to be valid in common law jurisdictions.176

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A party in fundamental breach cannot rely on an exemption clause, and for this purpose Atlantic Shipping clauses are to be treated as exemption clauses.177 The effect

167. 168. 169. 170. 171. 172. 173. 174. 175. 176. 177.

Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), p. 1092. Ibid. Ibid. Ibid. Ibid, pp. 1092–​1093. Ibid, p. 1093. Atlantic Shipping and Trading Co Ltd v Louis Dreyfus & Co [1922] 2 AC 250, [1922] All ER Rep 559, HL (Eng). See also Harbour and General Works v Environment Agency [2000] 1 Lloyd’s Rep 65, at p. 81; Thyssen Inc v Calypso Shipping Corp SA [2000] 2 All ER (Comm) 97. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), p. 1093. Ibid, p. 1093. Ibid, p. 1093; Mustill and Boyd, Commercial Arbitration (2nd edn, Butterworths 1989), pp. 200–​215. Smeaton Hanscomb & Co Ltd v Sassoon I Setty, Son & Co [1953] 2 All ER 1471, at p. 1473.

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Law, Practice and Procedure of Arbitration in India

of the particular clause is a matter of construction. Some clauses may be both claim-​ barring and remedy-​barring.178

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“Claim-​barring clause”,179 which bars the claim, operates in the same way as a statutory time-​bar. If the act required by the clause is not done, the claimant cannot succeed on his substantive claim. He could still commence an arbitration, but the award would necessarily be against him. An action would fail in the same way that a claim barred by statute would fail.

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“Remedy-​barring clauses”180 which bar the ability to commence an arbitration, do not have the effect of barring the substantive claim. The claimant may still pursue that claim through other avenues, such as in the court, but may not commence an arbitration.

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There exists a divergence of views amongst High Courts in India with regarding the enforceability of time-​bar clauses under Section 43(3) of the Arbitration Act.181

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Section 43(3) of the Arbitration Act recognises the validity of such time-​barred clauses or clauses which put a cap on the amount awarded.182 These arbitral agreements incorporating the time-​barred clauses are covered by the Exceptions to Section 28 of the Contract Act.183

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In some cases, the agreement does not seek to curtail the time for enforcement of the right. But it provides for the forfeiture or waiver of the right itself if no action is commenced within the period stipulated by the agreement. Such a clause in the agreement would not fall within the mischief sought to be addressed by Section 28 of the Contract Act.184

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Section 28 of the Indian Contract Act (“Contract Act”) renders two kinds of agreements void, namely:

178. Metalimpex Foreign Trade Corpn v Eugenie Maritime Co Ltd [1962] 1 Lloyd’s Rep 378; Pinnock Bros v Lewis and Peat Ltd. [1923] 1 KB 690. 179. Panchaud Frères SA v. Etablissements General Grain Co [1970] 1 Lloyd’s Rep 53, CA; Alma Shipping Corpn v Union of India, The Astraea [1971] 2 Lloyd’s Rep 494; Ayscough v Sheed, Thomson & Co (1924) 93 LJKB 94, 19 Ll L Rep 104; Smeaton Hanscomb v Sassoon I Setty Son & Co. [1953] 2 All ER 1471, [1953] 1 WLR 1468, [1953] 2 Lloyd’s Rep 580. 180. Hardwick Game Farm v Suffolk Agricultural and Poultry Producers’ Association [1964] 2 Lloyd’s Rep 227, at 274. 181. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), p. 1093. 182. Pandit Construction Company v Delhi Development Authority (2007) 3 Arb LR 205, at pp. 211–​212. 183. Ibid. 184. Ibid.

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Chapter 19—​​​Commencement of Arbitration



(1) An agreement by which a party is restricted absolutely from enforcing his legal rights arising under a contract by the usual legal proceedings in the ordinary tribunals; and



(2) An agreement which limits the time within which the contractual rights may be enforced.

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Any agreement by which an attempt is made to restrict the time limit within which an action may be brought so as to make it shorter than that prescribed by law of limitation is void.185

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Under the Limitation Act, any claim for a breach of contract maybe brought within a period of three years from the date of such breach. If a clause in an agreement provides that no action can be initiated after a period of 12 months from the date of the cause of action, such a clause would be void.186

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In other words, if an arbitration agreement prescribes a period which is less than the stipulated period under the Limitation Act, and if such a period is held to be mandatory, the same would be unreasonable and opposed to public policy. Therefore, it would be hit by Section 28 of the Contract Act.187

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Certain arbitration agreements like those under insurance contracts and construction contracts, nevertheless, stipulate a time-​limit for the commencement of arbitration which is shorter than the statutory period prescribed under the Limitation Act.

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Although the validity of such arbitration agreements is recognised by Section 43(3) of the Arbitration Act, the Courts in India have often ruled otherwise rendering such agreements void.188

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Moreover, Section 28(b) of the Contract Act unequally provides that an agreement which extinguishes the right of a party on the expiry of a specified period would be void. Thus, even if a restricted period for raising an arbitral dispute had actually been provided for the same would have to be treated as void.189

185. Muni Lal v Oriental Fire & General Insurance Co. Ltd. (1996) 1 SCC 9; See also, Law of Contract and Specific Relief, Avtar Singh, Eastern Book Company, 6th edn; Dr Anupam Kurlwal, “Applicability of Limitation Act to Arbitration Proceedings: A Critical Study” (March 2018) International Journal of Law, Vol. 4, Issue 2, pp. 185–​187. 186. Muni Lal v Oriental Fire & General Insurance Co. Ltd. (1996) 1 SCC 9; The Food Corporation of India v The New India Assurance Co. Ltd. & Ors. AIR 1994 SC 1889; State of A.P. v United Indian Insurance Co. Ltd. (1998) 2 Andh LT 74; Dr Anupam Kurlwal, “Applicability of Limitation Act to Arbitration Proceedings: A Critical Study” (March 2018) International Journal of Law, Vol. 4, Issue 2, pp. 185–​187. 187. NHAI v M/​S Backbone Projects Ltd. Delhi High Court, O.M.P. 687 of 2009, at para. 9. 188. Grasim Industries Ltd. v The State of Kerala (2018) 14 SCC 265. 189. Ibid.

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Law, Practice and Procedure of Arbitration in India

In England, Section 13 of the English Arbitration Act provides that the English Limitation Act applies to arbitrations in the same way as it applies to court proceedings.190

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The English Arbitration Act also allows the parties to stipulate the time-​limit within which the arbitration proceedings are to be commenced.191 Failing to commence the arbitration within this time-​limit bars the right to commence arbitration. However, Section 12 of the English Arbitration Act confers on the court the discretion to extend the time available under exceptional circumstances.

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The High Court of England and Wales in SOS Corporation Alimentaria SA & Anor v. Inerco Trade SA192 has enumerated the following factors that would be taken into consideration by the Court while exercising its discretion to extend the time-​limit under Section 12 of the Arbitration Act: (1) It would consider whether there were circumstances beyond the parties’ reasonable contemplation and, if so, had the same been contemplated by the parties; and



(2) It is to be considered whether such circumstances contributed towards the non-​observance of the time limit.

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Furthermore, the Court had also held that if the circumstance was “not unlikely” or “prone to” occur, or “not unusual”, the test would probably not be satisfied.

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Similarly, in Singapore, the Parties have the autonomy to decide when the arbitral proceedings are to be commenced thereby allowing the parties to contract out of the application of the Singapore Limitation Act.193

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Moreover, as discussed above, the parties also have the authority to enter into an agreement binding them to a shorter limitation period than they would otherwise be subjected to.194

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When the parties provide for a contractual time limit it becomes essential that a literal meaning is given to the wording of such clause, as the parties mutually take the risk of initiating necessary proceedings within the stipulated time period.195

1 90. 191. 192. 193. 194. 195.

English Arbitration Act, 1996, s. 13(1). English Arbitration Act, 1996, s. 14. [2010] EWHC 16. Cytec Industries Pte Ltd v Asia Pulp & Paper Co Ltd [2009] 2 SLR(R) 806. Press Automation Technology Pte Ltd v Trans-​Link Exhibition Forwarding Pte Ltd [2003] 1 SLR(R) 712. P v. Q [2018] EWHC 1399 (Comm).

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Chapter 19—​​​Commencement of Arbitration

[19.10] EXTENSION OF TIME Section 43(3) of the Arbitration Act empowers the court to extend the period for commencing arbitral proceedings within the time period fixed by the agreement if it is of the opinion that in the circumstance of the case, undue hardship would be caused to the claimant.

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Moreover, for the purpose of extension of the time limit, the principles laid down in the construction and application of Section 5 of the Limitation Act are to be applied.196

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The Supreme Court of India in Sterling General Insurance Co. v Planters Airways Pvt. Ltd.197 held that the term “undue hardship” should be construed liberally. “Undue” must mean something which is not merited by the conduct of the claimant or is very much disproportionate to it.198

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In Malaysia, the consequences of the expiry of a contractual limitation period before the completion of the specified act may, however, be avoided in the following circumstances: (1) if the court, pursuant to section 45 of the Malaysia Arbitration Act 2005, exercises its discretion to extend the period to avoid “undue hardship”;



(2) if the arbitration clause confers a discretion on the arbitrator to extend the period and he exercises it; and



(3) if the conduct of the other party precludes his relying on the time bar against the claimant.199

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[19.11] DISCRETION UNDER SECTION 43(3) OF THE ARBITRATION ACT

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The courts may, on the grounds that undue hardship may be caused, extend the contractual time limited for commencement of arbitration.

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Section 43(3) of the Arbitration Act provides that: “Where an arbitration agreement to submit future disputes to arbitration provides that any claim to which the agreement applies shall be barred unless some step to

196. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), p. 1095. 197. (1975) 1 SCC 603. 198. Dr Anupam Kurlwal, “Applicability of Limitation Act to Arbitration Proceedings: A Critical Study” (March 2018) International Journal of Law, Vol. 4, Issue 2, pp. 185–​187. 199. Thyssen Inc v Calypso Shipping Corp SA [2000] 2 All ER (Comm) 97.

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Law, Practice and Procedure of Arbitration in India

commence arbitral proceedings is taken within a time fixed by the agreement, and a dispute arises to which the agreement applies, the Court, if it is of opinion that in the circumstances of the case undue hardship would otherwise be caused, and notwithstanding that the time so fixed has expired, may on such terms, if any, as the justice of the case may require, extend the time for such period as it thinks proper.”

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Meaning of the Term “Undue Hardship” Undue hardship means greater hardship than the circumstances warrant or hardship greater than that which, in justice, the applicant would be called to bear.200

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If there is no claim, then there will be no hardship. The court will not, however, look beyond the prima facie position into the substance of the claim.201

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Lord Denning has defined the term “undue” as simply meaning excessive, that is, greater hardship than the circumstances warrant.202

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The term “undue hardship” used under Section 43(3) of the Arbitration Act has been interpreted to mean something which is not permitted by the conduct of the claimant or is very much disproportionate to it.203

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An English Court in Moscow v/​o Exportkhleb v Helmville Ltd, “The Jocelyne”204 framed the following rules for exercising judicial discretion:205 (1) the words “undue hardship” should not be construed narrowly;



(2) undue hardship means excessive hardship. Where the hardship is due to the fault of the claimant, it means hardship, the consequences of which are out of proportion to such a fault;



(3) in deciding whether to extend time, the court should look at all relevant circumstances;

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(4) the following matters should specifically be considered:

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200. Malaysian National Insurance Co Sdn Bhd v Meraslam [1982] 1 MLJ 274, PC; Safety Insurance Company Sdn Bhd v Chow Soon Tat [1975] 1 MLJ 193, PC; Labuan Wood Products Sdn Bhd v Malaysian National Insurance Sdn Bhd [1991] 3 CLJ Rep 113. 201. The Cunard Carrier, Eleranta and Martha [1977] 2 Lloyd’s Rep 261; Mediterranea Raffineria Siciliana Petroli SpA v Kuwait Oil Tanker Co SAK, The Al Faiha [1981] 2 Lloyd’s Rep 99, at 105, [1981] Com LR 81; Salenrederierna SA v Blue Star Line Ltd, The New York Star [1982] 1 Lloyd’s Rep 78. Undue hardship does not involve any concept of law: Richmond Shipping Ltd v Agro Co of Canada Ltd, The Simonburn (No 2) [1973] 2 Lloyd’s Rep 145, at p. 150. 202. Liberian Shipping Corp “Pegasus” v A King & Sons Ltd [1967] 1 All ER 934, at 938. 203. Sterling General Insurance Co. v Planters Airways Pvt. Ltd. AIR 1975 SC 415. 204. [1977] 2 Lloyd’s Rep 121. 205. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), pp. 1095–​1096.

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Chapter 19—​​​Commencement of Arbitration

(i) length of the delay;



(ii) the amount at stake;



(iii) whether the delay was due to the fault of the claimant, or to circumstances outside his control;



(iv) if caused due to fault of the claimant, the degree of such fault;



(v) whether the claimant was misled by the other party; and



(vi) whether the other party has been prejudiced by the delay and if so, the degree of such prejudice.206

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Application before the Court

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An application for extension of time under Section 43(3) of the Arbitration Act can be made even if time stipulated under agreement to refer matter for arbitration was over.

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However, the filing of such application should be before taking any steps to commence arbitral proceedings and not thereafter.207

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The claimant must therefore take all reasonable steps to get his application for an extension before the court as soon as possible and cannot deliberately delay.208

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The court’s power is also not affected by the existence of another agreed procedure for consideration of possible time extensions. This power is, however, limited to extensions of contractual time limits and not statutory time limits.

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The court may conclude that undue hardship exists, yet in the exercise of its discretion still refuse to grant an extension.

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Common Law Jurisprudence and Undue Hardship

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By way of example, the courts have considered factors as set out below in deciding whether “undue” hardship would be caused if an extension was refused:

206. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), pp. 1095–​1096. 207. E. Muralidharan v Venkataraman & Company & Ors. AIR 2009 Mad 40, at para. 15. 208. First Steamship Co Ltd v CTS Commodity Transport Shipping Schiffahrtsgesellschaft mbH, The Ever Splendor [1988] 1 Lloyd’s Rep 245; A/​S Det Dansk-​Franske Dampskibsselskab A/​S v Compagnie Financière d’Investissements Transatlantiques SA (Compafina), The Himmerland [1965] 2 Lloyd’s Rep 353, at p. 361; Timmerman’s Graan-​en Maalhandel en Maalderij BV v Sachs [1980] 1 Lloyd’s Rep 194, at p. 209; Richmond Shipping Ltd v Agro Co of Canada Ltd, The Simonburn (No 2) [1973] 2 Lloyd’s Rep 145, at 150; International Tank and Pipe SAK v Kuwait Aviation Fuelling Co KSC [1975] QB 224.

536

Law, Practice and Procedure of Arbitration in India

(1) Excusable mistake by the claimant, disproportionate loss likely to be suffered by the claimant in comparison to the degree of its fault in allowing the claim to become time-​barred, the extent to which the claimant was late in carrying out the necessary steps, claimant’s mistake shared by or contributed to by the other party, parties negotiating during the limitation period, and the fact that another claim which was not time-​barred depended on the same facts as the claim that was;209



(2) Whether the other party would face difficulties in amassing evidence or in claiming an indemnity from a third party;210



(3) An extension of time always prejudices the other party in that the other party loses the benefit of an accrued limitation defence, but unless the other party could point to an additional detriment as a result of the extension, there was no reason weighing against giving an extension;211



(4) The fact that the possibility of a claim was not apparent until after the expiry of the limitation period was a factor which indicated that an extension should be given;212



(5) The claim being admitted or almost certain to succeed was an indication that an extension should be given;213



(6) Where the claimant could pursue a claim against another party this was a factor indicating that an extension should not be given;214



(7) The arbitrator had rejected an invitation to exercise a discretion to extend conferred on him by the arbitration agreement was a factor indicating that an extension should not be given by the court, but the existence of the discretion in the arbitrator, and even his refusal to extend, did not mean that the court could not give an extension if it felt that it was appropriate to do so;215

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209. Liberian Shipping Corpn “Pegasus” v A King & Sons [1967] 2 QB 86, [1967] 1 All ER 934, [1967] 1 Lloyd’s Rep 302, CA (Eng). 210. Moscow v/​o Exportkhleb v Helmville Ltd, The Jocelyne [1977] 2 Lloyd’s Rep 121. 211. Davies (Graham H) (UK) Ltd v Marc Rich & Co Ltd [1985] 2 Lloyd’s Rep 423, at p. 426, CA (Eng). See also Libra Shipping and Trading Corpn Ltd v Northern Sales Ltd, The Aspen Trader [1981] 1 Lloyd’s Rep 273, CA (Eng) for general considerations. 212. Ets Soules & Cie v International Trade Development Co Ltd [1979] 2 Lloyd’s Rep 122, at 138, affd [1980] 1 Lloyd’s Rep 129, CA (Eng). 213. Tradax Internacional SA v Cerrahogullari TAS, The M Eregli [1981] 3 All ER 344, [1981] 2 Lloyd’s Rep 169. 214. The Cunard Carrier, Eleranta and Martha [1977] 2 Lloyd’s Rep 261. 215. European Grain and Shipping Ltd v Dansk Landbrugs Grovvareslskab [1986] 1 Lloyd’s Rep 163. See also European Grain and Shipping Ltd v R & H Hall plc [1990] 2 Lloyd’s Rep 139.

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Chapter 19—​​​Commencement of Arbitration

(8) “Hardship” was said to be caused when a justiciable claim was barred and “undue hardship” was caused when such hardship was not warranted by the circumstances;216 and



(9) Where an applicant for an extension of time has been guilty of inordinate and inexcusable delay, the court would be reluctant to grant the extension as this might cause undue hardship to the opposing party.217

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[19.12] COMPLETION OF THE SPECIFIED ACT

The arbitration is deemed to have commenced on the date of which the respondent receives such notice from the claimant, unless otherwise is agreed by the parties.218

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The High Court of Delhi in the case of Alupro Building Systems Pvt. Ltd. v Ozone Overseas Pvt. Ltd.219 dealt with the issue of the requirement of a notice for arbitration under Section 21 of the Arbitration Act. It held that:

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“30. Considering that the running theme of the Act is the consent or agreement between the parties at every stage, Section 21 performs an important function of forging such consensus on several aspects viz. the scope of the disputes, the determination of which disputes remain unresolved; of which disputes are time-​barred; of identification of the claims and counter-​claims and most importantly, on the choice of arbitrator. Thus, the inescapable conclusion on a proper interpretation of Section 21 of the Act is that in the absence of an agreement to the contrary, the notice under Section 21 of the Act by the claimant invoking the arbitration clause, preceding the reference of

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216. Tote Bookmakers Ltd v Development and Property Holding Co Ltd [1985] Ch 261, [1985] 2 All ER 555. See also Unitramp SA v Jenson & Nicholson (S) Pte Ltd, The Baiona [1991] 2 Lloyd’s Rep 121, (1991) Financial Times, 1 March; Navigazione Alta Italia SpA v Concordia Maritime Chartering AB, The Stena Pacifica [1990] 2 Lloyd’s Rep 234; Mitsubishi Corpn v Castletown Navigation Ltd, The Castle Alpha [1989] 2 Lloyd’s Rep 383; Garrick Shipping Co v Euro-​Frachtkontor GmbH, The World Agamemnon [1989] 2 Lloyd’s Rep 316; Sparta Navigation v Transocean America Inc, The Stephanos [1989] 1 Lloyd’s Rep 506; Transpetrol Ltd v Ekali Shipping Co Ltd, The Aghia Marina [1989] 1 Lloyd’s Rep 62; Irish Agricultural Wholesale Society Ltd v Partenreederei: MS Eurotrader, The Eurotrader [1987] 1 Lloyd’s Rep 418, CA (Eng); Casillo Grani v Napier Shipping Co, The World Ares [1984] 2 Lloyd’s Rep 481; Federal Commerce and Navigation Ltd v Xcan Grain (Europe) Ltd, The Ratna Vandana [1982] 1 Lloyd’s Rep 499; Mediterranea Raffineria Siciliana Petroli SpA v Kuwait Oil Tanker Co SAK, The Al Faiha [1981] 2 Lloyd’s Rep 99; Libra Shipping and Trading Corpn Ltd v Northern Sales Ltd, The Aspen Trader [1981] 1 Lloyd’s Rep 273, CA (Eng); Kruidenier (H) (London) Ltd v Egyptian Navigation Co, The El Amria (No 2) [1980] 2 Lloyd’s Rep 166; Cast Shipping Ltd v Tradax Export SA, The Hellas in Eternity [1979] 2 Lloyd’s Rep 280, CA (Eng); Sanko Steamship Co Ltd v Tradax Export SA [1979] 2 Lloyd’s Rep 273, CA (Eng); Atlantic Shipping Co SA v Tradax Internacional SA, The Bratislava [1977] 2 Lloyd’s Rep 269; Intermare Transport GmbH v Naves Transoceanicas Armadora SA, The Aristokratis [1976] 1 Lloyd’s Rep 552. 217. International Tank and Pipe SAK v Kuwait Aviation Fuelling Co KSC [1975] QB 224, [1975] 1 All ER 242, [1975] 1 Lloyd’s Rep 8. See Then Kim Far v Mercantile Insurance Sdn Bhd [1993] 1 AMR 488, [1993] MLJU 538; Majlis Perbandaran Petaling Jaya v J F Industrial Products & Supplies Sdn Bhd [1998] 1 MLJ 441, CA. 218. Arbitration Act, s. 21. 219. 2017 SCC OnLine Del 7228.

538

Law, Practice and Procedure of Arbitration in India

disputes to arbitration, is mandatory. In other words, without such notice, the arbitration proceedings that are commenced would be unsustainable in law.”220 A notice in consonance with Section 21 of the Arbitration Act must be sent to the other party. In its absence, the entire arbitral proceedings would be deemed to be void. Any resultant award would be liable to be set-​aside under Section 34 of the Arbitration Act.

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[19.13] CONDUCT OF PARTY221

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The other party’s conduct may amount to a waiver of that party’s right to rely on the time-​bar or may give rise to an estoppel.222 It must be an intentional act with knowledge and the party must have clear knowledge of the material circumstances upon which the objection is founded.223

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Once the validity of the arbitration agreement has been established along with fulfillment of the conditions required therein, the burden thereafter lies heavily on a party which avoids compliance with the obligation assumed by it to submit disputes to arbitration to establish the dispute is not arbitrable under the law for the time being in force.224

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[19.14] MULTI-​TIERED ARBITRATION CLAUSE

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Parties agree to have their disputes resolved through negotiation, mediation, or conciliation prior to the commencement of arbitration by means of a multi-​tiered arbitration clause (“MTAC”).

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Under such an arbitration clause, dispute escalates to the next stage only if it cannot be finally resolved at the former stage.225

(1) Neg-​Arb Clause: Under this clause, the parties are required to amicably settle their disputes by means of negotiations to reach an amicable settlement. Only when such negotiations do not render any result can the parties proceed with the commencement of the arbitration proceedings.

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The most common types of MTAC in arbitration proceedings are:

220. Ibid, at para. 30. 221. For detailed discussion, see Chapter 28. 222. See generally Nippon Yusen Kaisha v Pacifica Navegacion SA, The Ion [1980] 2 Lloyd’s Rep 245; Alma Shipping Corpn v Union of India, The Astraea [1971] 2 Lloyd’s Rep 494, at p. 502. 223. The Earl of Darnley v The Proprietors of the London, Chatham and Dover Railway (1867) LR 2 HL; Alex Miller (Merchants) Ltd v AC Runo Aktiebolag 59 Cal WN 61, at p. 67. 224. A. Ayyasamy v A. Paramasivam & Ors. AIR 2016 SC 4675, at para. 14. 225. For a detailed discussion on this issue, see Section [19.3].

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Chapter 19—​​​Commencement of Arbitration

(2) Med-​Arb Clause: Under this clause, the parties are required to have their disputes settled by means of appointing a mediator. In case no result is achieved parties may commence arbitration proceedings.



(3) Conciliation-​Arb Clause: Under this clause, the parties are required to have their disputes settled by means of appointing a conciliator. If the parties reach a settlement in such conciliation proceedings it becomes binding upon them. Provisions for resolving disputes through conciliation have been made under Part III of the Arbitration Act.

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There has been a divergence of jurisprudence in India as to whether parties can ignore one of the tiers of a MTAC and the consequences of such non-​compliance.

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The High Court of Kerala has held that without resorting to the first tier in the agreed dispute resolution mechanism, the parties cannot jump to the second step or to the final step to settle the disputes between them.226

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The High Court of Rajasthan after relying on the judgment of the Supreme Court of India in SBP & Co. v Patel Engineering Co.227 has held that where an agreed procedure of dispute resolution has been made a condition precedent for invoking the arbitration clause, the same is required to be followed.228

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The High Court of Delhi, in M/​s. Haldiram Manufacturing Company Pvt. Ltd v M/​ s DLF Commercial Complexes Ltd, adopted a similar approach.229

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However, the High Court of Delhi, in Ravindra Kumar Verma v M/​s BPTP Ltd & Anr., decided differently that a prior requirement under an MTAC is only directory and not mandatory.230

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The Court explained that:

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“5 … if the arbitration clause is read in a mandatory manner with respect to prior requirement to be complied with before invoking arbitration, the same can result in serious and grave prejudice to a party who is seeking to invoke arbitration because the time consumed in conciliation proceedings before seeking invocation of arbitration is not exempted from limitation under any of the provisions of the Limitation Act, 1963.”231

226. 227. 228. 229. 230. 231.

Nirman Sindia v Indal Electromelts 1999 SCC OnLine Ker 149, at para. 6. (2009) 10 SCC 293. M/​.s. Simpark Infrastructure Pvt. Ltd. v Jaipur Municipal Corporation 2012 SCC OnLine Raj 2738, at para. 30. (2012) DLT 193 410. 2014 SCC OnLine Del 6602. Ibid, at para. 5.

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Law, Practice and Procedure of Arbitration in India

[19.15] CONCLUSION Section 21 read with Section 43(2) of the Arbitration Act clarifies the position that an arbitration is deemed to have commenced on the date on which the request for the dispute to be referred to arbitration is received by the respondent.

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A formal notice of arbitration begins the arbitral proceedings. However, the Arbitration Act does not specify the contents or form of notice to commence an arbitration. An exception to this could be a requirement in the arbitration agreement itself which requires the invocation in a particular manner.

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Before commencing arbitration, the parties should make efforts to comply with the pre-​arbitration procedural requirements, if any. The courts in India have taken a divergent view on the issue of mandatory or directory nature of the terms laid down in a multi-​tiered dispute resolution clause.

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The date on which the arbitration commences is significant for determining any contractual or statutory limitation period applicable to the action. Article 137 of Schedule I to the Limitation Act provides that any claim to which an arbitration agreement applies is to be invoked within the period of three years from the date on which the cause of action accrues.

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Further, there are certain provisions in the Arbitration Act itself which provides for specific periods of limitation, thereby excluding the applicability of the Limitation Act to that extent. Moreover, the institutional arbitrations provide for their own mechanism for commencement of arbitration proceedings.

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Therefore, it is imperative for the parties to a dispute to pay attention to the form, nature, and contents of the notice and the date of the commencement of the arbitration. It is advisable and helpful to ward off any subsequent challenges to the jurisdiction of the arbitral tribunal.

Chapter 20 APPOINTMENT OF AN ARBITRAL TRIBUNAL UNDER THE ARBITRATION AGREEMENT [20.1]

INTRODUCTION....................................................................................................................... 541

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[20.2] AGREEMENT BETWEEN THE PARTIES............................................................................. 544 [20.3] CONTRACT BETWEEN THE ARBITRATOR AND THE PARTIES................................ 545 [20.4] PROCEDURE OF APPOINTING AN ARBITRATOR......................................................... 549 [20.5] ACCEPTANCE BY ARBITRATOR.......................................................................................... 560 [20.6] NOMINATION VERSUS APPOINTMENT OF ARBITRATOR......................................... 561

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[20.7] CAPACITY OF THE ARBITRATOR....................................................................................... 564

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[20.8] AGREED PROCEDURE PROVIDING UNILATERAL RIGHT TO APPOINT TO ONE PARTY................................................................................................................................. 565 [20.9] SELECTION OF ARBITRATOR............................................................................................... 566

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[20.10] QUALIFICATIONS OF AN ARBITRATOR........................................................................... 569 [20.11] CONSTRUING QUALIFICATION REQUIREMENTS........................................................ 571

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[20.12] ATTRIBUTES OF AN ARBITRATOR..................................................................................... 573

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[20.13] CONCLUSION............................................................................................................................ 576

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[20.1] INTRODUCTION

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The process of selecting an arbitral tribunal offers unique opportunities to the parties, which is a distinct feature of arbitration.1

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One of the main reasons that parties choose arbitration over litigation is that they expect a tailor-​made tribunal and arbitral process to resolve their disputes more proficiently, economically, and expeditiously than a court.

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In most arbitration systems, any natural person may be chosen to act as an ­arbitrator.2 The only general requirement being that the person chosen must have legal capacity3 and the appointment shall comply with the domestic legislation.

1. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1766. 2. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 246, at para. 4.49. 3. Ibid.

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Law, Practice and Procedure of Arbitration in India

In most cases, the arbitrator(s) are nominated and appointed once a dispute has arisen. In such cases, if there is a deadlock, delay, or failure to appoint the arbitrator(s) as per the arbitration agreement, then a party can approach the court for their appointment.4

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An arbitrator may be identified prior to the arbitration agreement and named in the agreement. This is bad practice and should generally be avoided.5 A named arbitrator’s refusal to act could render the arbitration agreement inoperative or incapable of being performed.6

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The High Court of Delhi in Proddatur Cable TV Digi Services v SITI Cable Network Limited7 held that the unilateral appointment of an arbitrator by an authority which is interested in the outcome or decision of the dispute is impermissible in law.

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The key to a successful arbitration lies in the choice of the arbitral tribunal. The composition of the arbitral tribunal and the choice of the arbitrators are essential for the smooth working of the arbitral process.8 Lalive, on commenting on the selection of arbitrators, states:

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Gary B. Born states that:

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“[arbitral tribunal] is an important choice, not only for the parties to the particular dispute, but also for the reputation and standing of the arbitral process itself. It is, above all, the quality of the arbitral tribunal that makes or breaks the process.”9

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“… international arbitration conventions, national arbitration legislation and institutional arbitration rules all accord parties broad autonomy to agree directly upon the identities of the arbitrators in ‘their’ arbitration and to agree on indirect procedural

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4. Arbitration Act, s. 11. 5. The arbitrator may be unwilling or unable to act, or be unsuitable for the dispute (e.g. a technical sole arbitrator having to decide a question of law or vice versa). However, Tackaberry, Marriott, and Bernstein, in Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson Sweet & Maxwell 2003), at para. 2-​225 suggest that pre-​dispute nomination may be possible in construction disputes, where the likelihood of a technical dispute is high and the need for speed is manifest, because a pre-​appointed arbitrator will have the opportunity to familiarise himself with the contract documents and may be able to render a decision quickly. 6. J. Poudret and S. Besson, Comparative Law of International Arbitration (2nd edn, 2007), p. 365. 7. O.M.P. (T) (COMM.) 109/​2019. 8. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 428. 9. Lalive, “Requirements of International Arbitration: The Selection of Arbitrators”; Lalive, “On the Neutrality of Arbitrators and The Place of Arbitration” in Swiss Essays on International Arbitration (Zurich, 1984), pp. 23–​33 referred to in Redfern and Hunter, Law and Practice of International Commercial Arbitration (5th edn, 2009), p. 246, at para. 4.14, and Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 428.

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mechanisms for selecting such arbitrators. This autonomy is subject to only a few restrictions, directed at ensuring an impartial and independent tribunal and safeguarding a limited number if similarly, important public policies.”10 Redfern and Hunter enumerate the various methods used internationally for the appointment of arbitrator(s) as follows:11 (1) By agreement of parties;



(2) By an arbitral institution;



(3) By means of a list system;



(4) By means of the co-​arbitrators appointing a presiding arbitrator;



(5) By a professional institution or a trade association; or



(6) By a national court.

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Article 10 of the Model Law provides that:

(1) The parties are free to determine the number of arbitrators.12



(2) Failing such determination, the number of arbitrators shall be three.13

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Section 10 of the Arbitration Act is based on Article 10 of the Model Law. However, Section 10 of the Arbitration Act departs from the Model Law in two respects: (1) It provides that the number of arbitrators constituting the arbitral tribunal shall not be an even number;14 and



(2) In the absence of an agreement between the parties, a sole arbitrator would constitute the arbitral tribunal.15

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Further, Section 11(2) of the Arbitration Act confers autonomy on the parties to agree on any procedure for appointment of the arbitrator(s) either through the arbitration clause or the submissions agreement.16

10. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1760. 11. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 240, at para. 4.33. 12. Model Law, art. 10(1). 13. Model Law, art. 10(2). 14. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 429. 15. Classic Enterprises Ltd. v United Insurance Co. Ltd. (2016) 4 RLW 2631; Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 429. 16. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 462.

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Law, Practice and Procedure of Arbitration in India

Party autonomy can be exercised with respect to the number of arbitrators to be appointed, provided it is not an even number;17 so also, the procedure of appointment of the arbitrator(s), including the presiding arbitrator.18

[20.2] AGREEMENT BETWEEN THE PARTIES

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A major attraction of arbitration is that parties are allowed to submit a dispute to judges of their own choice rather than requiring that choice to be exercised by a third party on their behalf.19

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The formation of the arbitral tribunal and the manner in which it is to be constituted depends upon the agreement between the parties.20 In most cases, contracts have developed standard structures and procedures, which are settled by the parties, to suit the circumstances of the particular agreement.21

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Redfern and Hunter state that:

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“Sometimes, a party seeking to undermine an arbitration will refuse to appoint an arbitrator, or a party-​appointed arbitrator will refuse to agree on a third arbitrator. This situation can best be avoided by a provision in the arbitration agreement, or in the applicable arbitration rules, that allows an experienced institution to intervene and make the appointment in the event of default. In an ad hoc arbitration, it is often necessary to fall back on the lex arbitri, which normally provides for the appointment to be made by the court of the seat of the arbitration. Although most national courts will make an appointment in such a situation, relying on national courts inevitably leads to greater delay and relative uncertainty. Furthermore, national courts may not have a sufficiently international perspective to make a suitable appointment in an international case. It is therefore wise to ensure that there is a fallback position in the clause, by choosing either an institutional arbitration or, in the case of an ad hoc arbitration, an appointing authority that will take responsibility for the appointment of the remaining arbitrators.”22

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In India, the object of Section 11 of the Arbitration Act is to prevent a party to an arbitration agreement from thwarting the arbitration agreement.23 17. Arbitration Act, s. 10(1). 18. Arbitration Act, s. 11(1) to 11(3); Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 462. 19. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 240, at para. 4.34. 20. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 462. 21. Ibid. 22. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 240, at para. 4.35. 23. Enercon (India) Ltd. v Enercon Gmbh (2014) 5 SCC 1, at para. 94.

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Article 2 of the Geneva Protocol provided that “the constitution of the arbitral tribunal, shall be governed by the will of the parties and by the law of the country in whose territory the arbitration takes place.”24 Similarly, Article 1(2)(d) of the Geneva Convention, which indirectly required the arbitral tribunal to have been constituted “in the manner agreed upon by the parties and in conformity with the law governing the arbitral procedure.”25

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Several provisions of the New York Convention are relevant to the selection of the arbitral tribunal. Most specifically, Article V(1)(d) of the New York Convention provides that recognition of an award may be refused:26

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“the composition of the arbitral authority … was not in accordance with the agreement of the parties, failing such agreement was not in accordance with the law of the country where the arbitration took place.”27

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The terms of Article V(1)(d) underscore the importance of the selection of the arbitrators to the arbitral process:28

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“… the issue of how the third arbitrator was to be appointed is more than a trivial matter of form. Article V(1)(d) of the New York Convention itself suggests the importance of arbitral composition, as failure to comport with an agreement’s requirements for how arbitrators are selected is one of only seven grounds for refusing to enforce an arbitral award.”29

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[20.3] CONTRACT BETWEEN THE ARBITRATOR AND THE PARTIES

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The appointment of an arbitrator is a special type of contract between the arbitrator and the parties for arbitrating upon the dispute between the parties. Nonetheless, the arbitrator must always remain neutral and unbiased.

24. Geneva Protocol, art. 2; Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2020), p. 1768. 25. Geneva Convention, art. 1(2)(d); Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1768. 26. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1769. 27. New York Convention, art. V(1)(d). 28. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1769. 29. Encyclopaedia Universalis SA v Encyclopaedia Britannica, Inc. 403 F.3d 85, at p. 91 (2d Cir. 2005); Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1769.

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Law, Practice and Procedure of Arbitration in India

In the late 1980s, Mustill and Boyd suggested that it may be wrong to define the relationship between the parties and the arbitrator in contractual terms. They referred to the “status”, arising out of the quasi-​judicial nature of the arbitrator’s role.30 It is generally accepted that the relationship between an arbitrator and the parties is contractual.31 Gary B. Born argues that it is necessary “that the arbitrator’s contract be regarded as sui generis” as a result of the unique nature of the arbitrator’s role.32

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The Supreme Court of the United Kingdom in Jivraj v Hashwani33 rejected the argument that an arbitrator was an employee.34 The Court reasoned:

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“Although an arbitrator may be providing services for the purposes of VAT and he of course receives fees for his work, and although he renders personal services which he cannot delegate, he does not perform those services or earn his for and under the direction of the parties as contemplated [by authorities defining the nature of an employment relationship]. He is rather in the category of an independent provider of services who is not in a relationship of subordination with the parties who receive services.”35

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Hobhouse J in Compagnie Europeene de Cereals SA v Tradax Export SA36 held:

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Gary B. Born states that:

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“It is the arbitration contract which the arbitrators become party to by accepting appointments under it.”

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“There is disagreement concerning the nature of the arbitrator’s contract. Some authorities have characterized the contract as a trilegal one, in which the arbitrator is joined as a party to the original bilateral arbitration agreement between the parties.37

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30. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), pp. 222, 223, 226. 31. Mustill & Boyd, Commercial Arbitration, Companion Volume to the Second Edition (Butterworths 2001), p 166; or a conjunction of contract and status, as per Quentin Loh J in Anwar Siraj v Teo Hee Lai Building Construction Pte Ltd [2014] 1 SLR 52, [2013] SGHC 200, at para. 26. 32. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 2119–​2120. 33. [2011] UKSC 40, [2012] 1 All ER 629. 34. [2011] UKSC 40, [2012] 1 All ER at para. 76, Lord Mance cited the German Reichsgericht 1904 (RGZ 59, 247), which noted the special character of the arbitrator’s office and rejected treating the arbitrator as an employee. 35. Ibid, at para. 77. 36. [1986] 2 Lloyd’s Rep 301, at p. 306. 37. KS Norjarl AS v Hyundai Heavy Indus Co. [1992] 1 QB 863 (“[T]‌he arbitration agreement is a bilateral agreement between the parties to the main contract. On appointment the arbitrator becomes a third party to the arbitration agreement which becomes a trilateral contract”); Compagnie Europeenne de Cereales SA v Tradex Exp. SA. [1986] 2 Lloyd’s Rep. 301 (QB); A. El-​Ahdab, Arbitration with the Arab Countries 348, p. 755 (2d edn, 1999); R Schutze, D Tscherning, and W. Wais, Handbuch des Schiedsverfahrens (2nd edn, 1990), at para. 174.

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Others have treated the arbitrator’s contract as a separate agreement, distinct from the parties’ arbitration agreement, arising between the arbitrators and the parties and defining their respective rights and obligations vis-​à-​vis one another.38 … The latter analysis that of a separate arbitrator’s contract, is more consistent with the nature of the agreement in question.”39

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It is open to the parties to an arbitration agreement to agree upon the form of an arbitral tribunal and to appoint arbitrators of their choice.

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Section 10(1) of the Arbitration Act carves out an exception to the rule of party-​ autonomy and provides that the parties cannot appoint an even number of arbitrators. This is done to avoid any deadlock in the decision-​making process by the arbitral tribunal.

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The Supreme Court of India in Narayan Prasad Lohia v Nikunj Kumar Lohia,40 in a still debated judgment, held that Section 10(1) of the Arbitration Act can be derogated from and is non-​mandatory in nature. This decision has met with criticism for being expressly contrary to Section 10 of the Arbitration Act.41

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An arbitral tribunal is held to be the creation of an arbitration agreement.42 Under Section 14 of the Arbitration Act, the mandate of the arbitrator terminates if: (1) he becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay;



(2) he withdraws from his office;



(3) the parties mutually agree to the termination of his mandate; or



(4) ordered by the court.

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Further, the mandate of an arbitrator is personal and automatically terminates on his death or physical incapacity to proceed with the mandate.43 The resulting vacancy is

38. See, for example, Judgment of 19 December 1996, Qualiconsult v Groupe Lincoln, 1998 Rev. Arb. 121 (Paris Cour d’Appel) (parties’ and arbitrators’ obligations are defined by “arbitration contract”). See also Gouchard, “Relationships between the Arbitrator and the Parties and the Arbitral Institution”, in ICC, The Status of the Arbitrator 12 (1995); E. Onyema, International Commercial Arbitration and the Arbitrator’s Contract (2010), pp. 76–​83. 39. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2118. 40. (2002) 3 SCC 572. 41. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 432. 42. Vandana Gupta v Kuwait Airways Ltd & Ors (2015) 222 DLT 560, at para. 29. 43. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 4-​164; Vandana Gupta v Kuwait Airways Ltd & Ors (2015) 222 DLT 560, at para. 28; Shyam Telecom v ARM Ltd 2004 SCC OnLine Del 754, (2004) 113 DLT 778, at para. 12.

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Law, Practice and Procedure of Arbitration in India

to be filled as per the same appointment procedure as was applicable for the arbitrator being replaced.44 Section 43J of the 2019 Amendment provided that the qualifications, experience, and norms for accreditation of arbitrators shall be in accordance with the Eighth Schedule.

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Pertinently, the Arbitration and Conciliation (Amendment) Act, 20212021 Amendment (“2021 Amendment2021 Amendment”)45 was promulgated on 4 November 2020. Section 4 of the 2021 Amendment omits the Eighth Schedule to the Arbitration Act.

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Section 3 of the 2021 Amendment substitutes Section 43J of the Arbitration Act by laying down that the qualification, experience, and norms for accreditation of arbitrators which may be prescribed by regulations.

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Subsequently, to replace the 2021 Amendment, the Arbitration and Conciliation (Amendment) Bill, 202146 (“2020 Amendment”) was introduced in the Lower House, that is, the Lok Sabha on 4 February 2021 and was passed on 12 February 2021.47 The Rajya Sabha (the Upper House of the Parliament) passed the 2020 Amendment on 10 March 2021.

Arbitrator Bound to Act Within the Mandate

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Arbitrator(s) are appointed as per the arbitration agreement with a particular mandate. The arbitrator must act within the limits of the mandate. The arbitrator can neither exceed the mandate (ultra petita) nor neglect it (infra petita).48

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The Supreme Court of India in Rajasthan State Mines & Minerals Ltd. v Eastern Engineering Enterprises & Anr.49 laid down the principles to determine whether the arbitrator(s) had exceeded the scope of their mandate.

Arbitration Act, s. 15. Act No.14 of 2020. The Arbitration and Conciliation (Amendment) Bill, 2021 (Bill No. 16 of 2021). PRS Legislative Research, The Arbitration and Conciliation (Amendment) Bill, 2021, available at https://​www.prsindia.org/​billtrack/​arbitration-​and-​conciliation-​amendment-​bill-​2021 (accessed on 14 February 2021). 48. Alessi, “Enforcing Arbitrator’s Obligations: Rethinking International Commercial Arbitrators’ Liability” (2014) Journal of International Arbitration 31(6), p. 763; J.D. Lew, L. Mistelis, and S. Kroll, Comparative International Commercial Arbitration (Kluwer Law International 2003), p. 280; Also see, Albert Jan Van Den Berg, Arbitration Advocacy in Changing Times: The Effective use of Legal Resources (Kluwer Law International 2011), p. 212; Ssangyong Engineering and Construction Co. Ltd. v NHAI (2019) 15 SCC 131. 49. (1999) 9 SCC 283, at para. 22.

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44. 45. 46. 47.

Chapter 20—​​​Appointment of an Arbitral Tribunal under the Arbitration Agreement

549

The Court observed that an arbitrator cannot ignore the express terms of the agreement. Consequently, the arbitrator cannot travel beyond his jurisdiction as their existence depends upon the agreement. Further, the arbitral tribunal’s function is to act within the limits of the agreement. A deliberate departure from the contract amounting to disregard of the authority and misconduct on the part of the arbitral tribunal may be tantamount to a mala fide action.

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The High Court of Bombay in Union of India v Airwide Express Cargo & Anr.50 held that where an arbitrator sought to rewrite the contract between the parties, such an attempt was beyond the scope of the mandate.

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Moreover, arbitrators should also act in conformity with the applicable rules and procedures defined by the parties in the arbitration agreement.

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For instance, the Court in Malaysian Historical Salvors Sdn Bhd v The Government of Malaysia51 held that the arbitral tribunal exceeded its powers by failing to exercise the jurisdiction which it was endowed by the terms of the Agreement and the ICSID Convention.

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[20.4] PROCEDURE OF APPOINTING AN ARBITRATOR

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The parties to an arbitration agreement have full autonomy to choose their arbitrator, to decide the number of arbitrators, and the procedure for their appointment.52

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The arbitration agreement however remains subject to the default procedure under Section 11(6) of the Arbitration Act in the event of a deadlock, delay, or failure of the parties to appoint an arbitrator.53

(1) the proposed arbitrator is informed of the proposal for appointment;

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It is essential for a valid appointment of an arbitrator that: (2) he should have expressed willingness to act, along with a declaration of no conflict of interest and availability of time for completing the proceedings within the stipulated time period laid down in Section 29A of the Arbitration Act; and

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(3) the issues which are to be referred to arbitration are broadly identified.54

50. 2015 SCC OnLine Bom 4917, at para. 29. 51. Malaysian Historical Salvors Sdn Bhd v The Government of Malaysia ICSID Case No ARB/​05/​10, available at: http://​www.italaw.com/​sites/​default/​files/​case-​documents/​ita0497.pdf 52. Arbitration Act, ss. 10(1) and 11(2); Siddhi Real Estate Developers v Metro Cash and Carry India Pvt. Ltd. & Ors. [2014] 4 Mah LJ 283. 53. National Highways Authority of India v Bumihiway DDB Ltd. (JV) (2006) 10 SCC 763. 54. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 463.

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Law, Practice and Procedure of Arbitration in India

Naming Arbitrator(s) in the Arbitration Agreement In most cases, arbitrator(s) will have to be nominated and appointed once a dispute has arisen. However, an arbitrator may also be identified prior to the arbitration agreement and named in the agreement. Although this is considered bad practice and should generally55 be avoided.

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It is difficult to choose the qualification of an arbitrator before the dispute has arisen. For selecting an arbitrator, it is important to determine whether the claim amount is small or large and whether the dispute centres around facts or law.56

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In India, many government contracts provide for employees as arbitrators. These employees are generally high ranked officials who are unconnected with the work or contract which forms a part of the dispute. Such agreements are valid and enforceable.57

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However, the Supreme Court of India in Union of India v U.P. State Bridge Corpn. Ltd. held that Government contracts have broadly two kinds of arbitration clauses. First, where a named officer acts as the sole arbitrator. Second, where a senior officer nominates a designated officer to act as the sole arbitrator. Such clauses are valid in nature.

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However, such clauses also cast a duty upon the persons nominating such arbitrators, to appoint individuals who function independently and impartially. Further, it must be ensured that the arbitrator(s) are in a position to devote adequate time in conducting the arbitration.

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The Supreme Court of India in Union of India v Singh Builders Syndicate59 observed that a provision for serving officers of one party being appointed as an arbitrator brings out considerable resistance from the other party.

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Therefore, to ensure independence and impartiality in the arbitral process, government, statutory authorities, and government companies should think of phasing out arbitration clauses that provide for serving officers acting as arbitrators.

55. The arbitrator may be unwilling or unable to act, or be unsuitable for the dispute (e.g. a technical sole arbitrator having to decide a question of law or vice versa). However, Tackaberry, Marriott, and Bernstein, in Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson Sweet & Maxwell 2003), at para. 2-​225 suggest that pre-​dispute nomination may be possible in construction disputes, where the likelihood of a technical dispute is high and the need for speed is manifest, because a pre-​appointed arbitrator will have the opportunity to familiarise himself with the contract documents and may be able to render a decision quickly. 56. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 4.15. 57. ACE Pipeline Contracts (P) Ltd. v Bharat Petroleum Corpn. Ltd. (2007) 5 SCC 304, at para. 20. 58. (2015) 2 SCC 52. 59. Ibid, at para. 25.

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551

This must be done with the intention to encourage professionalism in arbitration by referring a person unconnected with either party.60 Naming arbitrators in the arbitration agreement carries the risk that in the interregnum the named arbitrator may have died or become incapable of accepting or be unwilling to accept the appointment.

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In such cases, the arbitration agreement would not be rendered inoperative or incapable of being performed; unless such an intent is clearly expressed in the arbitration clause.61

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If the arbitration agreement provides a procedure for the appointment of the replacement to the named arbitrator, then that is to be followed; otherwise, the appointment will be as per Section 11 of the Arbitration Act.

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Number of Arbitrator(s) in the Arbitral Tribunal

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Section 10 of the Arbitration Act is based on Article 10 of the Model Law. However, Section 10 of the Arbitration Act departs from the Model Law in two respects: (1) It provides that the number of arbitrators constituting the arbitral tribunal shall not be an even number;62 and



(2) In the absence of an agreement between the parties, a sole arbitrator would constitute the arbitral tribunal.63

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The parties are at liberty to choose a tribunal of any number so long as it is not an even number.64 The parties may opt for a sole arbitrator; they may agree to a three-​person or even a five-​person65 tribunal.

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The sole arbitrator should not be biased or owe allegiance to one of the parties to maintain the sanctity of the arbitral process. In circumstances where parties cannot agree on the identity of a sole arbitrator, an arbitral tribunal shall be appointed by the national court or a designated appointing authority.66 60. Indian Oil Corpn. Ltd. v Raja Transport (P) Ltd. (2009) 8 SCC 520, at paras 38–​39. 61. ACC Ltd. v Global Cements Ltd. (2012) 7 SCC 71; Shailesh Dhairyawan v Mohan Balkrishna Lulla (2016) 3 SCC 619; TRF Ltd. v Energo Engineering Projects Ltd. (2017) 8 SCC 377. 62. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 429; art. 10 of the Model Law provides that in the absence of a determination by the parties, the arbitral tribunal shall consist of three arbitrators. 63. Classic Enterprises Ltd. v United Insurance Co. Ltd. (2016) 4 RLW 2631; Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 429. 64. Arbitration Act, s. 10(1). 65. Siddhi Real Estate Developers v Metro Cash and Carry India Pvt. Ltd. & Ors. [2014] 4 Mah LJ 283. 66. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 4.26.

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Law, Practice and Procedure of Arbitration in India

A sole arbitrator is a complete arbitral tribunal. Such an arrangement is often preferred for domestic arbitrations. Proceedings involving a sole arbitrator are more cost-​ effective and are conducted far more expeditiously.67 A sole arbitrator does not own allegiance to any one party and renders the award regardless of the parties.68

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However, it is of utmost importance that the appointment of the sole arbitrator is consensual; and not an imposition by one party who has superior bargaining power over the other. This is necessary to maintain the integrity of the arbitral proceedings.69 In cases where the sole arbitrator is appointed by one of the parties owing to the default by the other party in nominating an arbitrator, the sole arbitrator:

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“has the same duty to act judicially, fairly and impartially as an unbiased single arbitrator, although he has been appointed by one of the parties, rather than both parties”.70

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Section 11(3) of the Arbitration Act provides that in the absence of an agreement between the parties on the procedure for appointing the arbitral tribunal, the third arbitrator shall be appointed by the two arbitrators nominated by the parties.71 The third arbitrator will act as the presiding arbitrator.72

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Section 11(4) of the Arbitration Act provides a default procedure that comes into play for the appointment of the presiding arbitrator by making an application before the appointing authority.73

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The position of the third arbitrator is not different from the position of the other two arbitrators. Except that the presiding arbitrator presides over the proceedings of the arbitral tribunal.74

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In a three-​member arbitral tribunal, it is possible to have a combination of legal and technical expertise within the tribunal.75 Preferably, the presiding arbitrator could belong to the legal background, while the two party-​appointed arbitrators could have the necessary technical expertise.76 67. 68. 69. 70. 71. 72. 73. 74. 75. 76.

Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 432. Ibid. Ibid. Sutton, Gill, and Kendall, Russell on Arbitration (23rd edn, Sweet & Maxwell 2007), pp. 171–​172, at para. 4-​ 145; Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 432. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 433. Ibid. India Internet Incubator Mauritius Ltd. v Infraline Technologies India (P) Ltd. & Anr. (2004) 13 SCC 354. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 433. Ibid, p. 434. Ibid, p. 434.

Chapter 20—​​​Appointment of an Arbitral Tribunal under the Arbitration Agreement

553

Article 5(8) of the LCIA Arbitration Rules, 2020 provides that a sole arbitrator shall be appointed unless the parties have agreed otherwise in writing or if the LCIA Court deems a three-​member arbitral tribunal to be more appropriate in the circumstances of the case (or in exceptional circumstances, arbitral tribunal comprising of more than three members).77

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Similarly, Article 12(2) of the ICC Rules, 2021 provide for the appointment of a sole arbitrator by the ICC Court where the parties have not agreed upon the number of arbitrators. This is subject to a situation where the dispute warrants the appointment of three arbitrators.

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Certain commercial agreements provide for the submission of disputes to a two-​ member arbitral tribunal. In case the two arbitrators cannot reach a consensus, a subsequent reference may be made to an umpire.78 However, this practice is not prevalent in international commercial arbitrations. Most of the international disputes are resolved by a three-​member arbitral tribunal.

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This is important because in addition to the matters formally in issue, there may be differences of language, tradition, and culture between the parties and the members of the arbitral tribunal.

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A party-​appointed arbitrator will better understand the case of the appointing party, thereby performing a useful role in ensuring due process for the party, without stepping outside the bounds of independence and impartiality.79

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Appointment of Arbitrator(s) by Mutual Consent of the Parties

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The first step of a consensual appointment of an arbitrator is to agree on the identity of the arbitrator. An arbitration agreement may contain the name or method of appointment of an arbitrator; if so, that designation or method should be followed.80

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At this stage, the parties and their advisers will have to focus their thinking on the type of arbitrator required for the dispute: Is the dispute a technical or legal one, or is there a mix of issues? To what extent is commercial experience appropriate or required? Will there be plenty of documents adduced in the arbitration proceedings?

77. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 4.23. 78. Ibid, at para. 4.30. 79. Ibid, at para. 4.30. 80. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1778.

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A commonly adopted procedure is for the claimant to submit to the respondent a name or list of prospective arbitrators indicating their experience and qualifications. If the respondent agrees with the choice, the parties will send the arbitrator a written invitation to accept the reference. The respondent may supply its list of prospective arbitrators, one of whom may be chosen by the claimant.

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A modified procedure is known as a list system where each party compiles a list of three or four prospective arbitrators which they simultaneously exchange, to reach an agreement on the identity of the arbitrators.

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There is some possibility that the list may contain a common name, although this may be unlikely in international commercial disputes. Nonetheless, the lists may contain the names of acceptable individuals.

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An arbitral tribunal can then be formed through an iterative process of exchanges. Such person who appears on both lists, or is acceptable to the parties may be appointed as arbitrator by the agreement of the parties.81

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The High Court of Delhi in Rajender Jaina v Prem Bhatia held that where the consent of both parties is needed to appoint an arbitrator that consent cannot be presumed if a party fails to respond to the nomination or suggestion of the other party.82

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Any departure from the agreed procedure will render an appointment void unless the court is able to construe the disregarded provisions as mere surplusage.83

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Thus, the Court in Re Shaw and Sims84 upheld an agreement to appoint an arbitrator by lottery. However, arbitrators may not appoint a third arbitrator by such means because their choice must involve some discretion, unless otherwise expressly authorised by the parties.

Appointment of Arbitrator(s) by an Appointing Authority

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The parties are free to authorise any third person to determine an issue that otherwise falls within the sphere of party autonomy.

81. Nigel Blackaby. Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 4.34; Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 4-​022. 82. Rajender Jaina v Prem Bhatia 2014 SCC OnLine Del 7248. 83. Finzel, Berry & Co v Eastcheap Dried Fruit Co [1962] 2 Lloyd’s Rep 11, CA (Eng); Nicolene Ltd v Simmonds [1953] 1 QB 543, [1953] 1 All ER 822. 84. (1851) 17 LTOS 160.

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Occasionally, the parties, to benefit from the experience of certain persons or arbitration institutions, entrust the appointment of arbitrator(s) to such persons or institutions.

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Therefore, the arbitration agreement provides for the appointment of arbitrators by appointing authorities, which includes professional institutions, trade associations, or specialist arbitral institutions. Such institutions are nominated as the appointing authority by virtue of the arbitration agreements providing for the dispute resolution clause.

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Further, arbitration institutions derive their powers from the incorporation of the arbitral rules of the relevant institution in the arbitration agreement. In the absence of an agreement or where a party has failed to make a nomination/​appointment, the selection of arbitrators shall be done in accordance with the rules of the concerned arbitral institution.

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In ad-​hoc arbitrations conducted under the UNCITRAL Rules, the Secretary-​ General of the Permanent Court of Arbitration is authorised to appoint an appointing authority, unless the parties have agreed to another mechanism.85

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Examples of such institutions in India are Mumbai Centre for International Arbitration (“MCIA”), Indian Council of Arbitration (“ICA”), and Nani Palkhivala Arbitration Centre (“NPAC”).

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Globally, the five most preferred arbitration institutions are the International Chamber of Commerce (“ICC”), Singapore International Arbitration Centre (“SIAC”), Hong Kong International Arbitration Centre (“HKIAC”), Stockholm Chamber of Commerce (“SCC”), and London Court of International Arbitration (“LCIA”).86

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Interestingly, Rule 7.8 of the MCIA Rules provides the MCIA the power to appoint an arbitrator even in ad-​hoc arbitrations. It reads:

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“Nothing in these Rules shall prevent parties to a dispute or arbitration agreement from naming the MCIA as the appointing authority in an ad hoc arbitration (conducted under the UNCITRAL Arbitration Rules or otherwise outside the terms of Rule 1.1 above), without subjecting the arbitration to the provisions contained in these Rules. In such circumstances, the Council may, in its discretion, act as appointing authority in accordance with the parties’ agreement. The party requesting the

85. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 4-​023. 86. 2018 International Arbitration Survey: The Evolution of International Arbitration by White & Case LLP and Queen Mary University of London.

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appointment shall pay the appointment fee in accordance with the Schedule of Fees in force at the time of the request.” The selection of a person or arbitration institution as the appointing authority is usually more expedient and cost-​effective vis-​à-​vis the parties attempting to reach consent on an arbitrator.87

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The appointing authority also assumes the responsibility for obtaining the consent of the arbitrator and for seeking declarations regarding independence and impartiality.88

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In the case of an arbitration institution, the arbitrator is usually appointed from the roster of arbitrators maintained by such an institution. The appointment of arbitrator(s) by an arbitration institution is not impeded by any controversy between the parties regarding the sufficiency of the request for arbitration or response thereto.89

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Appointment of Arbitrator(s) by a National Court

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The parties are free to agree on a procedure for appointment of an arbitrator or arbitrators. In an arbitration with three arbitrators, each party will be entitled to appoint one arbitrator failing any agreement on the appointment of the arbitrators.

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The two appointed arbitrators shall appoint a third arbitrator. The third arbitrator shall act as the presiding arbitrator.90

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Section 11(4) of the Arbitration Act provides a default procedure that comes into play for the appointment of the presiding arbitrator by making an application before the appointing authority.91

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In an arbitration with a sole arbitrator, where the agreement does not specify the procedure for appointment, in the event the parties fail to agree on the arbitrator within thirty (30) days from the receipt of a request, the appointment an arbitrator shall be made under Section 11(5) of the Arbitration Act, upon request of a party.

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The application was required to be made to the Chief Justice of India in the case of international commercial arbitrations. For other arbitrations, an application would lie to the Chief Justice of the High Court or his designate.

87. Increased Efficiency and Lower Cost in Arbitration: Sole Member Tribunals by Michael Dunmore, 4 IJAL (2015) 26. 88. ICC Rules of Arbitration, 2021, art. 11; LCIA Arbitration Rules, 2020, art. 5. 89. LCIA Arbitration Rules, 2020, art. 5.1. 90. Arbitration Act, s. 11(3). 91. India Internet Incubator Mauritius Ltd. v Infraline Technologies India (P) Ltd. & Anr. (2004) 13 SCC 354.

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The courts while appointing the arbitrator in exercise of powers under Section 11 of the Arbitration Act endeavour to give effect to the appointment procedure contemplated by the arbitration agreement as far as possible.92 The High Court of Calcutta in Union of India v Parmar Construction Company93 held that:

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“To fulfil the object with terms and conditions which are cumulative in nature, it is advisable for the Court to ensure that the remedy provided as agreed between the parties in terms of the contract is first exhausted.”94

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The Supreme Court of India in Duro Felguera S.A. v Gangavaram Port Ltd. (“Duro Felguera, SA”)95 held that at the Section 11(6A) stage, the court has to prima facie examine the existence of a valid arbitration agreement and not its validity.

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“59. The scope of the power under Section 11 (6) of the 1996 Act was considerably wide in view of the decisions in SBP and Co. and Boghara Polyfab (supra). This position continued till the amendment brought about in 2015. After the amendment, all that the Courts need to see is whether an arbitration agreement exists -​nothing more, nothing less. The legislative policy and purpose are essentially to minimize the Court’s intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11 (6A) ought to be respected.”96

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The Supreme Court of India in Mayavati Trading (P) Ltd. v Pradyuat Deb Burman97 held that Section 11(6A) of the Arbitration Act had been omitted as per the 2019 Amendment. This is because the appointment of arbitrators was now supposed to be done institutionally.

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In this case, the Supreme Court of India or the various High Courts were no longer required to appoint arbitrators and consequently to determine whether an arbitration agreement exists.98

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The Court further observed that Section 11(6A) would continue to apply and guide the courts on its scope of jurisdiction at the pre-​arbitration stage. Therefore, the courts should be confined to the examination of the existence of an arbitration agreement.99 92. 93. 94. 95. 96. 97. 98. 99.

Indian Oil Corporation Ltd. & Ors. v Raja Transport Pvt. Ltd. (2009) 8 SCC 520. 2019 SCC OnLine SC 442; Utkal Galvanizers Ltd. v PGCIL 2015 (1) Arb LR 80 (Del). Ibid, at para. 39. 2017 (9) SCC 729. Ibid, at para. 59. (2019) 8 SCC 714. Ibid, at para. 6. Vidya Drolia and Others v Durga Trading Corporation Civil Appeal No.2402 of 2019.

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Law, Practice and Procedure of Arbitration in India

The High Court of Delhi in Parsvnath Developers Limited v Rail Land Development Authority100 while deciding upon the scope of Section 11 of the Arbitration Act noted that the scope and power are restricted only to examining the existence of an arbitration agreement and nothing more, not even its validity.

Other Procedural Aspects regarding Appointment of an Arbitrator

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A prospective arbitrator(s) response to the party offering them an appointment will ideally set out the basis on which they are prepared to accept the appointment. Subsequently, after the acceptance of the nomination by the arbitrator, the name and appointment should be intimated to the opposite party.101

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A prospective arbitrator is required to make the following two disclosures under Section 12(1) of the Arbitration Act: (1) the existence of any direct or indirect, present or past relationship, or interest in any of the parties; or, in relation to the subject matter of the dispute, whether financial, business, professional, or another kind which is likely to give rise to justifiable doubts as to his independence and impartiality; and



(2) circumstances that are likely to affect their ability to devote sufficient time to arbitration which may refrain them from completing the arbitration within a period of twelve (12) months102. However, the 2019 Amendment had changed the time period for concluding the arbitration to twelve (12) months from the date of completion of pleadings.103 Moreover, the 2019 Amendment has amended Section 29A (1) to exclude international commercial arbitrations from the purview of the timelines provided in the section.

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Further, the 2015 Amendment has also introduced Section 12(5) which provides for ineligibility of person to act as an arbitrator, in the categories listed in the Seventh Schedule.

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These are similar to the entries listed in the Red List of the International Bar Association (IBA) Guidelines on Conflicts of Interest (2014) (“2014 IBA Guidelines on the Conflict of Interest”). An arbitrator’s assessment of whether certain circumstances might give rise to doubts as to an arbitrator’s impartiality or independence are likely to differ from person

1 00. 101. 102. 103.

Arb. P. 710/​2019 decided on 19 May 2020. Tradax SA Wolkswagonwerk AG [1970] 1 QB 537; Toepfer v Cramer [1979] 2 Lloyd’s Rep. 179. Arbitration Act, s. 29A(1). Arbitration Act, s. 29A (1).

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to person. The IBA introduced its 2014 IBA Guidelines on Conflicts of Interest in International Commercial Arbitration to counter such subjectivity. The IBA Guidelines categorise situations that may occur in the following lists:104 (1) The Red List consists of two parts “a Non-​Waivable Red List” and “a Waivable Red List”. These lists are non-​exhaustive and detail specific situations that, depending on the facts of a given case, give rise to justifiable doubts as to the arbitrator’s impartiality and independence. That is, in these circumstances, an objective conflict of interest exists from the point of view of a reasonable third person having knowledge of the relevant facts and circumstances. The Non-​Waivable Red List includes situations deriving from the overriding principle that no person can be his or her own judge. The Waivable Red List covers situations that are serious but not as severe.



(2) The Orange List is a non-​exhaustive list of specific situations that, depending on the facts of a given case, may, in the eyes of the parties, give rise to doubts as to the arbitrator’s impartiality or independence. Disclosure does not imply the existence of a conflict of interest; nor should it by itself result either in a disqualification of the arbitrator, or in a presumption regarding disqualification. The purpose of the disclosure is to inform the parties of a situation that they may wish to explore further in order to determine whether objectively that is, from the point of view of a reasonable third person knowing the relevant facts and circumstances that there are justifiable doubts as to the arbitrator’s impartiality or independence.



(3) The Green List is a non-​exhaustive list of specific situations where no appearance and no actual conflict of interest exists from an objective point of view. Thus, the arbitrator has no duty to disclose situations falling within the Green List.

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Disclosures by Arbitrators in the Context of Third-​Party Funding

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Third-​Party Funding (“TPF”) envisages a scenario where a third party, external to the parties and not involved in the legal relationship between them, agrees to cover the costs of a legal proceeding. This may include costs such as costs of lawyers, experts, outside counsels, any other relevant costs in exchange for return of a share from the proceeds if the claim becomes successful.

104. IBA Guidelines on Conflicts of Interest in International Arbitration, adopted by resolution of the IBA Council on Thursday, 23 October 2014, Part II: Practical Application of the General Standards, pp. 17–​19.

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Law, Practice and Procedure of Arbitration in India

The frequency of repeated appointments is seen as a concern for arbitrator’s independence and impartiality. Early disclosure of the presence of TPF is therefore worthwhile as a means of eliminating the costly and adverse consequences in the form of removal of the arbitrator or challenge to the arbitral award.105

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Due to the global rise in demand for TPF, arbitrators should evaluate whether they have any relationships with entities acting as third-​party funders and, if so, disclose such relationships. The importance of disclosing the identity of the source of third-​party funding has been confirmed in numerous procedural decisions made by investment arbitration tribunals.106

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General Standard 6(b) of the 2014 IBA Guidelines on Conflicts of Interest clarifies that if one of the parties is a legal entity, any legal or physical person having a controlling influence on the legal entity, or a direct economic interest in, or a duty to indemnify a party for, the award to be rendered in the arbitration, may be considered to bear the identity of such party.

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Since a funder may have a direct economic interest in the award, it may be considered an equivalent of the party.107

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However, TPF has not yet gained traction in India and India does not have rules or laws regulating or dealing with third party funding. It is relevant to note that such funding is also not prohibited by any laws prevalent in India.108

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[20.5] ACCEPTANCE BY ARBITRATOR

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When appointed by the parties or an arbitration institution, the arbitrator would normally then accept the appointment in writing.109 Although it is good practice, it is not essential for the arbitrator to formally notify parties of his acceptance.

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Many appointing authorities in their rules require a written acceptance of appointment by the arbitrator.110 The acceptance may also be inferred by the

1 05. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 1-​048. 106. Guaracachi America, Inc and Rurelec PLC v The Plurinational State of Bolivia UNCITRAL, PCA Case No 2011-​17; Muhammet Çap & Sehil Insaat Endustri ve Ticaret Ltd Sti v Turkmenistan ICSID Case No ARB/​12/​ 6; South American Silver v Bolivia PCA Case No 2013-​15. 107. IBA Guidelines on Conflicts of Interest in International Arbitration, adopted by resolution of the IBA Council on Thursday, 23 October 2014, Explanation to General Standard 6(b) and 7(a), pp. 14–​15. 108. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), p. 1538. 109. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), p. 175. 110. MCIA Rules 2016, r. 6.2; Clause 4, Annexure-​I, Guidelines for Arbitrators and the Parties for Expeditious Conduct of Arbitration Proceedings, Rules of Domestic Commercial Arbitration and Conciliation of the Indian Council of Arbitration; ICC Arbitration Rules, 2021, art. 11(2).

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conduct of the parties and the arbitrator, for example, by entering into the reference to arbitration.111 Acceptance of the office by the arbitrator appears to be necessary to perfect his appointment. An appointment should not be considered effective until the person appointed has agreed either expressly or tacitly to exercise the function of the office.112

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The High Court of Himachal Pradesh in Dr. Man Singh v The State of Himachal Pradesh and Ors.113 recently laid down two principles: (1) that acceptance of the person appointed is necessary to perfect their appointment as an arbitrator; and



(2) that the appointment should not be effective until the person appointed has agreed to exercise the function of the office against which appointed.114

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[20.6] NOMINATION VERSUS APPOINTMENT OF AN ARBITRATOR

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The terms “nomination” and “appointment” are generally used interchangeably. There is an important distinction between the two.

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When the arbitrator is to be selected by both the parties then the initial act of exchanging selected, shortlisted, potential arbitrators is simply the act of nominating for the other’s concurrence.

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The word “appoint”, however, means concur in appointing.115 Sometimes an arbitration agreement will call for the appointment of “commercial men”116 or “shipping men”117 and an agreement could specify any conceivable category of person.

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Once the parties agree on the nomination, there is an appointment. It should be noted that an appointing authority does not nominate, it appoints the arbitrator. It is open to the parties as to whom they concur to appoint.118

111. James Finlay & Co Ltd v Gurdayal Pahlajraj AIR 1924 Sind 91; see also Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2123. 112. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 4-​032. 113. 2019 SCC OnLine HP 2410. 114. Ibid, at para. 16. 115. Re Eyre and Leicester Corpn [1892] 1 QB 136 at p. 141, CA (Eng). 116. Harmony Innovation Shipping Ltd. v Gupta Coal India Ltd. [2015] 9 SCC 172; Anr Pando Compania Naviera SA v Filmo SAS [1975] QB 742, [1975] 2 All ER 515; Vincor Shipping Co Ltd v Transatlantic Schiffahrtskontor GmbH [1987] HKLR 613 it was held that this term was not too wide so as to be invalid. 117. Eitzen Bulk A/​S v Ashapura Minechem Ltd. [2016] 11 SCC 508; Palmco Shipping v Continental Ore Corp, The Captain George K [1970] 2 Lloyd’s Rep 21. 118. Minoutsi Shipping Corporation v Trans Continental Shipping Services (Pte) Ltd [1971] 2 MLJ 5.

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Law, Practice and Procedure of Arbitration in India

Russell119 states that:

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“In circumstances where the parties are to agree on the selection of the sole arbitrator or the chairman, a procedure may be agreed whereby the parties exchange nominations. Usually this is done by a simultaneous exchange of lists whereby each party puts forward a list of names proposed for appointment as arbitrator. Parties exchange and compare each other’s lists to see if any of the names appear on both lists. The same nominee(s) appearing on both lists may (if that is the parties’ agreement) be selected. If not, there are various systems which may be adopted in order to reach agreement on a candidate.”120

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The High Court of Bombay in Earnest Business Services Pvt Ltd v the Government of the State of Israel121 allowed the parties to mutually appoint a sole arbitrator during proceedings under Section 11(6) of the Arbitration Act.

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The Court held that the parties can agree on appointment of an arbitrator in any proceedings in court without applying under Section 11(6) or 11(9) of the Arbitration Act.

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Whether the party has nominated or appointed an arbitrator will depend on the applicable rules of arbitration. For instance, Article 5.7 of the LCIA Arbitration Rules, 2020 provides that no party or third person can appoint an arbitrator under the arbitration agreement and the LCIA Court alone is empowered to appoint arbitrators.

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However, the LCIA may consider stipulations made by the parties in the written agreement or nomination made by the parties.

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Article 9 of the UNCITRAL Arbitration Rules, 2010 provide that the parties can themselves appoint arbitrators.

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Ingredients of Appointment

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An appointment takes effect when: (a) it has been made by the authorised person; (b) the arbitral tribunal knows of the appointment and assents to it; and (c) the other party is notified of it and the matters referred to arbitration. Once these formalities are completed, the appointment is perfected. Thereafter, the arbitrator’s authority can only be revoked, and the mandate terminated through the agreement of the parties, or when ordered by the court.

1 19. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 4-​022. 120. For a detailed discussion on this issue, see Section 20.4. 121. (2019) SCC OnLine BOM 1793.

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This may occur through:

(1) the withdrawal of the arbitrator; or



(2) if the arbitrator becomes de jure or de facto unable to perform his functions; or



(3) for other reasons fails to act without undue delay.122

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Edmund Davis LJ in Tradax Export SA v Volkswagenwerk AG123 explained that the appointment of an arbitrator involves the concepts both of knowledge and assent.

Lord Denman in Thomas v Fredricks124 stated that neither party can be said to have chosen an arbitrator until it lets the other party know the object of its choice.

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Under the statutory framework in England, the name of the arbitrator and the fact of the appointment must be communicated to the other party;125 otherwise, the provisions relating to a failure to appoint will apply.126

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The proper view of the effect of this provision may be that the failure to inform the other party of the selection triggers the right to recourse to the court.

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A recalcitrant party should not be able to wait until the time and expense of an external appointment has been incurred before revealing that it had already appointed an arbitrator but failed to inform the other party.

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The position may be the same in a statutory arbitration where the arbitrator is appointed by a prescribed official.127

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It is the prerogative of the parties to nominate their respective nominee as the arbitrator in accordance with the agreement.

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As discussed earlier, in India, Section 11 of the Arbitration Act confers the default power on the court, to: (1) act in aid of the arbitral process by making the appointment of arbitrators; or



(2) upon the failure of the parties to comply with the agreed procedure.128

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1 22. 123. 124. 125.

Arbitration Act, ss. 14 and 15. [1970] 1 QB 537, [1970] 1 All ER 420. (1847) 10 QB 775, per Lord Denman; Re Haddan and Roupell (1861) 9 CBNS 683.s Tew v Harris (1847) 11 QB 7; Farrar v Cooper (1890) 44 Ch D 323; Drummond v Hamer [1942] 1 KB 352, [1942] 1 All ER 398. 126. English Arbitration Act, 1996, s. 17(2). 1 27. University College, Oxford (Master and Fellows) v Durdy [1982] Ch 413, [1982] 1 All ER 1108, [1982] 3 WLR 94. 1 28. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 442; Datar Switchgears Ltd v Tata Finance Ltd (2000) 8 SCC 151.

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Law, Practice and Procedure of Arbitration in India

If time is not of the essence, the appointment of an arbitrator outside the time stipulated in an arbitration agreement is not fatal to the arbitration.129 Ormiston J in Gollin & Co Ltd v Karenlee Nominees Pty Ltd130 held that a term prescribing fourteen (14) days within which an appointment of an arbitrator was to be made was merely directory and not an essential term of the arbitration contract.

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The Indian position differs. The period of thirty (30) days to appoint an arbitrator under Sections 11(4) and 11(5) of the Arbitration Act requires strict compliance. But Section 11(6) of the Arbitration Act does not mention any time limit for cases where a procedure has been set in place by parties.

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The Supreme Court of India in Datar Switchgears v Tata Finance Ltd131 held that:

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“In cases arising under Section 11(6), if the opposite party has not made an appointment within 30 days of demand, the right to make appointment is not forfeited but continues, but an appointment has to be made before the former files application under Section 11 seeking appointment of an arbitrator.”132

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[20.7] CAPACITY OF THE ARBITRATOR

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There is no express provision in the Arbitration Act barring persons who are not of full legal capacity, for instance infants and persons of unsound mind, from being able to discharge the functions as arbitrators. However, the same is barred under the Indian Contract Act.133

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Further, as the relationship between the arbitrator and the parties is now widely considered as being contractual, albeit a sui generis contract, persons not of full legal capacity may be considered barred from entering such a contractual relationship.

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The English law provides for the removal of an arbitrator who is “mentally incapable” of conducting the proceedings.134

129. Alliance Petroleum Australia NL v Australian Gas Light Co (1985) 39 SASR 84; United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904, [1977] 2 All ER 62, HL. 130. (1983) 153 CLR 455, at p. 458. 131. (2000) 8 SCC 151. 132. (2000) 8 SCC 551, at para. 19; Bhaskar Wires Private Limited v Union of India 2002 SCC OnLine Del 1378, (2003) 102 DLT 870, at para. 5. 133. Indian Contract Act, 1872, s. 11, “… persons who are able to enter into a contract are to be dependent on three aspects; attaining the age of majority, being of sound mind, and not disqualified from entering into a contract by any law that he is subject to.” 134. English Arbitration Act, 1996, s. 24(1)(c).

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In India, Section 14(1)(a) of the Arbitration Act introduced by the 2015 Amendment now provides for termination of the mandate of arbitrator(s) if they become de jure or de facto unable to perform their function. This can reasonably be assumed to include a minor and a person of unsound mind.

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The High Court of Calcutta in Board of Trustees for the Port of Calcutta v Batliboi & Co. Ltd.135 rejected the argument that the arbitrator allowing a claim without considering the petitioner’s objections could lead to reservations about the arbitrator’s mental capacity. Further, the Court ruled that if the petitioner was serious about its claims, vis-​à-​vis the arbitrator’s mental capacity, then it should have immediately approached the court rather than approaching after the final award.

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In some large value arbitrations, both parties, acting jointly, insure the arbitrators for their health and lives.136

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In international arbitrations, this ensures that if an arbitrator dies or becomes incapacitated, the proceeds from the insurance policy covers at least a part of the expenses involved in adjourning the hearing, reconstituting the arbitral tribunal, reconvening the hearing, and re-​treading the ground already covered.

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[20.8] AGREED PROCEDURE PROVIDING UNILATERAL RIGHT TO APPOINT TO ONE PARTY

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The Supreme Court of India in TRF Limited v Energo Projects Limited (“TRF”)137 examined a clause that empowered the Managing Director of a party to be nominated as the sole arbitrator.

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Alternatively, the said clause empowered the Managing Director to nominate another person to act as the sole arbitrator. The Managing Director, as per Section 12(5) of the Arbitration Act, became ineligible to act as an arbitrator.

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Therefore, the Court had held that once the identity of the Managing Director as the sole arbitrator was lost, the power to nominate someone else by him was also obliterated. The Supreme Court of India in Perkins Eastman Architects DPC & Another v HSCC (India) Limited (“Perkins”)138 was dealing with Sections 11(6) read with 11(12)(a) of the Arbitration Act. 1 35. 2007 SCC OnLine Cal 686. 136. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 4.167. 137. (2017) 8 SCC 377. 138. 2019 SCC Online 1517.

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Law, Practice and Procedure of Arbitration in India

The Court held that a person who has an interest in the outcome or decision of the disputes must not have the power to appoint a sole arbitrator. The Court observed that where only one party has a right to appoint a sole arbitrator, its choice will always have an element of exclusivity in determining or charting the course for dispute resolution.

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Like in TRF, parties in Perkins also intended arbitration by a sole arbitrator. But while in TRF, a party’s Managing Director or his nominee was to act as the sole arbitrator, in Perkins, the Chairman & Managing Director (CMD) of the respondent merely had the right to nominate the arbitrator and not himself be the arbitrator.

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Nevertheless, the Court in Perkins held that the logic of TRF would apply, and the appointment by the CMD would be invalid. The reason for ineligibility was the connection of the appointing authority with the dispute itself, that is, the interest that he would have in the outcome of the decision by virtue of being the CMD of one of the parties.

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Therefore, from the above decisions it can be inferred that the unilateral appointment of arbitrators remains invalid as per the Perkins dictum, but a unilateral selection of a panel of arbitrators from which the opposite party can choose an arbitrator is valid.139

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[20.9] SELECTION OF ARBITRATOR

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The usual course is to agree upon industry professionals with some reputation and experience in arbitration and whose qualifications and experience are suited to the nature of the dispute.

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Parties may often select an arbitral tribunal which includes experts in a particular substantive discipline (for example: insurance practitioners, construction lawyers, maritime lawyers, or commodities practitioner) or arbitrators with specific language, technical, cultural, and other abilities or experience.140

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Where the dispute entirely or largely turns on a question of law, a retired judge, lawyer, or dual qualified professionals are often chosen. Arbitration clauses that provide for settling the dispute with arbitrators having certain qualifications or specific qualities are normally adhered to by the courts and not departed with unless there are strong grounds for doing so.141 139. Central Organization for Railway Electrification v M/​s ECI-​SPIC-​SMO-​MCML (JV) A Joint Venture Company 2019 SCC OnLine SC 1635. 140. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p.1766. 141. Iron & Steel Co. Ltd. v Tiwari Road Lines (2007) 5 SCC 703, at para. 10.

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In India, Section 12(3)(b) of the Arbitration Act provides that the appointment of an arbitrator may be challenged by a party on the ground that the arbitrator does not possess the necessary qualification agreed to by the parties. Certain institutions require the chairman of the tribunal to be of a different nationality to the parties.142

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Section 11(9) of the Arbitration Act allows the court, in international commercial arbitration, to appoint the sole arbitrator or a third arbitrator whose nationality is separate from that of the parties. It is although not a mandatory provision.143 The Court in The Government of Malaysia (JKR Sarawak) v Lau Tiong Ik Construction Sdn Bhd144 referred to the comment of Mustill and Boyd145 as follows:

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“The parties must be taken to have foreseen, which they agreed to have their disputes resolved by arbitration, that the disputes might involve question of law as well as of facts; and a skilled arbitrator might be just as successful in resolving a dispute involving both types of issues as a judge of the High Court. Therefore, it is advisable for parties to choose the arbitrator with legal qualifications if they had foreseen their disputes involved a difficult question of law.”146

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Particularly, arbitration of certain types of disputes such as construction, engineering, commodity trade, complex legal problems, technology transfer, intellectual property, maritime, etc., may require special professional qualifications, skill, and experience.

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The parties are aware of the risk that if they cannot agree on an arbitrator, a less suitable arbitrator might be appointed by the appointing authority. It is advisable that parties look objectively at each other’s nominations and try to overcome the suspicions in their minds.

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Moreover, the involvement of the parties in selecting the tribunal enhances the predictability of the arbitral process, since parties would know reasonably well what to expect in terms of procedure and philosophy from the arbitrators they choose. The parties’ selection of the tribunal also invests the arbitrators with a sense of responsibility to the parties for honouring the trust that was confided in them.147

1 42. 143. 144. 145.

For example: ICC Rules of Arbitration, 2021, art. 13.5. Reliance Industries Ltd v Union of India (2014) 11 SCC 576. [2001] 5 MLJ J 629. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), p. 477. 146. [2001] 5 MLJ J 629, at pp. 635–​636. 147. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1766.

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In addition to considerations of knowledge and experience, “soft skills” possessed by the arbitrator such as cultural background and attitude should also be considered. An English barrister is likely to have a certain attitude towards the interpretation of contracts but is also likely to have a particular view as to what constitutes, for example, good faith in business dealings. A civil lawyer may have a different view of “good faith” obligations.

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An arbitrator who has lived and worked around the world may have a more global perspective and understanding of cultural relativism than one who has not. It is for this reason that the nationality of an arbitrator must be considered carefully.148

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Given that each arbitrator must adjudicate upon the whole of the dispute, the constitution of the arbitral tribunal must remain the same throughout.

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The parties are free to determine the number of arbitrators149 and will usually choose a single arbitrator or a tribunal of three. One view is that a three-​member tribunal may be more adept at analysing and addressing in-​depth complex issues.

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On the other hand, a sole arbitrator would certainly be more cost-​efficient and swifter.150 More unusually the parties may agree to single or two arbitrators,151 or even more rarely a larger number of persons.

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Some exceptional cases, like a multi-​ party international commercial arbitration involving two or more States, may call for the appointment of five,152 seven, or more arbitrators.

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For example, practical considerations in the case of the Iran-​United States Claims’ tribunal led to the appointment of an arbitral tribunal of nine members, three appointed by each party and three from other countries.153

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148. See also David A.R. Williams QC and Amokura Kawharu, Williams & Kawharu on Arbitration (LexisNexis, 2011), at para. 5.5.3, citing J Lew et al., Comparative International Commercial Arbitration (2003), p. 228. 149. Arbitration Act, s. 11(1). 150. Increased Efficiency and Lower Cost in Arbitration: Sole Member Tribunals by Michael Dunmore, 4 IJAL (2015) 26. 151. Chung and Wong v CM Lee [1934] MLJ 153; two arbitrator panels are commonly found in shipping, commodity, and insurance arbitrations; see Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, 2015), at para. 4-​022; although even-​number tribunals are not usually used for arbitrations outside these spheres, awards rendered by such tribunals are fully enforceable, see Termarea SRL v Rederiaktiebolaget Sally [1979] 2 All ER 989, [1979] 2 Lloyd’s Rep 439, where an even number of arbitrators is agreed on and there is a deadlock, there is a risk that no award would be rendered. 152. The 2009 arbitration between the Government of Sudan and the Sudan People’s Liberation Movement/​Army over the Abyie area involved of a five-​arbitrator tribunal. 153. See O.P. Malhotra, The Law and Practice of Arbitration and Conciliation: The Arbitration and Conciliation Act 1996 (1st edn, LexisNexis 2002), p. 349.

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The mode of nomination and appointment of arbitrators in arbitration with more than three arbitrators is almost invariably prescribed by the contract.154 The greater the number of arbitrators appointed, the greater the delay and expenses likely to be incurred in the proceedings.

[20.10] QUALIFICATIONS OF AN ARBITRATOR

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Globally, an arbitrator is not required to have special qualifications except those which the parties may contractually stipulate.

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Arbitrators can be of any nationality and need not be legally trained unless the arbitration agreement or institutional rules specify otherwise. There are no statutory restrictions or qualifications on the persons who can be appointed as arbitrators.

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The 2019 Amendment had introduced Eighth Schedule155 which specified qualifications and experience along with general norms which were necessary to be appointed as the arbitrator.

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However, before the Eighth Schedule could be notified and brought in force it was deleted by the 2021 Amendment. Further, the 2021 Amendment has omitted Section 43J of the Arbitration Act, to specify that the qualifications, experience. and norms for accreditation of arbitrators shall be such as maybe prescribed by the “regulations”.156

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Mustill and Boyd157 state that:

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“An arbitrator cannot be validly appointed unless he possesses the qualifications required by the common law and by the arbitration agreement. Consequently -​

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1. He must have the capacity which the law requires of every person who assumes the office of arbitrator.

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2. He must possess all the qualifications, and none of the disqualifications, prescribed by the arbitration agreement.

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3. He must be free from any such connection with the parties, or with the subject matter of the dispute, as would make him, or appear to make him, incapable of acting in an impartial manner.”158

154. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), pp. 174, 189. 155. Schedule 8 is issued in accordance with s. 43J of the Arbitration Act. 156. For a detailed discussion on this issue, see Section [20.3]. 157. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), p. 247. 158. See also Alcove Industries v Oriental Structural Engineers 2007 SCC OnLine Del 1709, ILR (2008) 1 Del 1113, at para. 46.

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Law, Practice and Procedure of Arbitration in India

The parties may decide upon certain qualifications required of the arbitrator which may be relevant and necessary to the subject matter of the dispute. Such qualifications may be expressly specified in the arbitration clause or submission agreement. The qualifications may also be included in the arbitration agreement by incorporation of the rules of some arbitral institutions.

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If the parties wish to have an arbitrator with specific qualifications, such qualifications must be specified in the arbitration agreement. The appointing authority, or in default the court, will thus clearly know the intention of the parties. Such specificity will provide clarity in cases where the parties are unable to agree upon a specific individual.159

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Where the parties have agreed that the arbitration is to be before a person(s) having special qualifications (e.g. by being members of a trade association), the award of non-​qualified persons will be void, unless the party impeaching the award is estopped from disputing their lack of qualifications160 or has waived the right to do so.161

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However, being too specific in qualification requirements limits the pool of possible candidates.162 Those that remain may nonetheless be busy, providing a reluctant respondent with room to argue against the appointed arbitrator on the basis that qualification requirements have not been fulfilled.163

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The High Court of England and Wales in Tonicstar Ltd and Others v Allianz Insurance164 accepted an application for removal of the arbitrator who was albeit qualified as a legal person with knowledge of insurance disputes but did not possess the experience in the insurance business itself.

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Parties drafting the arbitration agreement should define carefully and clearly the required qualifications of the arbitral tribunal; particularly, where the anticipated disputes are expected to be highly technical in nature, for example, those arising out of

159. Bernstein, Tackaberry, and Marriott, Handbook of Arbitration Practice (3rd edn, Sweet & Maxwell 1998), p. 38. 160. Union of India v K.P. Mandal 1958 SCC OnLine Cal 33, AIR 1958 Cal 415. 161. Oakland Metal Co Ltd v D Benaim & Co Ltd [1953] 2 QB 261, [1953] 2 All ER 650, at p. 652. 162. The “English-​speaking Italian, with a French law degree and a familiarity with Mid-​East construction contracts” postulated by Park, “Arbitration of International Contract Disputes” (1984) Bus Law 39(4), p. 1783, at p. 1784 is an example of the potential for over-​specification in the agreement. 163. Tackaberry, Marriott and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson Sweet & Maxwell 2003), at para. 2-​228. 164. [2017] EWHC 2753 (Comm).

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construction contracts, architecture, commodity trade, medical negligence, maritime contracts, and intellectual property.165 Other common requirements include membership of professional bodies and minimum numbers of years of admission as a lawyer.166

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In the absence of any express agreement between the parties as to the qualifications of an arbitrator, there is no basis for terminating the mandate of an arbitrator who does not possess the qualifications anticipated by one of the parties.167

There is an increasing expectation by parties and professionals involved in arbitration that arbitrators will have some training in the law and the conduct of arbitration.

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Institutions or professional bodies who are called upon to make appointments will normally do so from a panel of arbitrators maintained by them.168 They can, therefore, set the standards required for panel membership.

[20.11] CONSTRUING QUALIFICATION REQUIREMENTS

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The principle that the courts and arbitration institutions shall pay due regard to the qualification requirements specified in the arbitration agreement is enshrined in Section 11(8) of the Arbitration Act.169

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The courts have also upheld this principle of giving due regard to the qualifications in the arbitration agreement unless there are strong grounds for departure.170

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The general principle is that the qualification requirements will be construed liberally and practically by the courts in order not to narrow the field of available arbitrators.171 The agreed qualifications of the arbitral tribunal refer to its jurisdiction to

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165. See Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), pp. 248–​249. 166. Robert Merkin and Flannery, Arbitration Act 1996 (5th edn, 2014), p. 89. 167. A, a party to a Sarawak arbitration in Sebiro Holdings Sdn Bhd v Bhag Singh [2014] 11 MLJ 761, challenged the appointment of a non-​Sarawakian arbitrator appointed by the Director of the KLRCA on the grounds that he did not have “knowledge of the locality of the place of performance”, but the High Court held that there was no agreement by the parties that the arbitrator should possess such a quality as per Arbitration Act 2005, s. 13(8) and the application was consequently dismissed. 168. The Government of Malaysia (JKR Sarawak) v Lau Tiong Ik Construction Sdn Bhd [2001] 5 MLJ 629, at pp. 635–​636, per Zakaria Sam J. 169. Denel Pty Ltd. v Ministry of Defence (2012) 2 SCC 759. 170. Iron & Steel Co. Ltd. v Tiwari Road Lines (2007) 5 SCC 703, at para. 11. 171. Vincor Shipping Co Ltd v Transatlantic Schiffahrtskontor GmbH [1987] HKLR 613, at p. 617, per Nazareth J.

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Law, Practice and Procedure of Arbitration in India

act.172 The court will not imply qualification requirements into an agreement where none exist.173 It is within the scope of the parties’ autonomy to agree to a procedure for challenging an arbitrator’s appointment and continuation.174 Unless there is an agreed procedure: (1) a written statement of the challenge must be sent to the arbitral tribunal within 15 days of the constitution thereof; or



(2) of becoming aware that the arbitrator does not possess the qualifications agreed to by the parties.175

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Section 12 of the Arbitration Act recognises the principle of waiver vis-​à-​vis challenging the arbitrator for lacking qualifications agreed by the parties. A party cannot challenge the arbitrator appointed by itself for lacking qualifications, based on facts known to it prior to the appointment.

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The party can only do so based on facts of which it became aware after the appointment had been made.176 This restriction applies not only in the case of party-​ appointed arbitrators but also for an arbitrator in whose appointment a party may have participated.

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Express assent to a particular arbitrator will negative any complaint by the dissatisfied party that the arbitrator had some personal interest in the outcome of the dispute if that interest has not been deliberately concealed.177

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Participation in the arbitration proceedings might constitute a waiver of the right to object to an arbitrator’s lack of the agreed qualifications.178 A party who asserts that he has appointed an arbitrator cannot afterwards be heard to say that he has not, if the other party has acted in reliance upon that assertion.179

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172. Re Blackhouse and Taylor (1851) LIQB 233, CA (Eng); French Government v Tsurushima Maru (Owners) (1921) 7 Ll L Rep 244, on appeal (1921) 8 Ll L Rep 403. 173. Sebiro Holdings Sdn Bhd v Bhag Singh [2014] 11 MLJ 761. 174. Arbitration Act, s. 13(1). 175. Arbitration Act, s. 13(2). 176. Arbitration Act, s. 12(4). 177. Oakland Metal Co Ltd v D Benaim & Co Ltd [1953] 2 QB 261, [1953] 2 All ER 650. 178. Aravalli Power Co. Pvt. Ltd. v Era Infra Engineering Ltd. (2017) 15 SCC 32; Union of India v Pam Development (P) Ltd. 2005 SCC OnLine Cal 299; Iselin and Iselin v Sommer, Davis and Davis (1983) 2 ACLR 70; cf. Compagnie Nouvelle France Navigation SA v Compagnie Navale Afrique du Nord, The Oranie and The Tunisie [1966] 1 Lloyd’s Rep 477, at p. 478. 179. Legumbres SACIFIA v Central de Cooperatives de Productores do Rio Grande do Sul Ltda [1986] 1 Lloyd’s Rep 401, CA (Eng). See also Matthew v Ollerton 4 Mod Rep 226; Ranger v Great Western Railway Co (1854) 5 HL Cas 72.

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573

A person who is appointed arbitrator is not bound to make an award.180 The Arbitration Act does not specifically require an award to be made, but it has been argued that the arbitrator is obligated to complete the mandate which he accepts.181 And, the arbitrator may bind himself to issue an award in accordance with that mandate.182

[20.12] ATTRIBUTES OF AN ARBITRATOR

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The arbitration agreement in Pando Compania Naviera SA v Filmo SAS183 required the arbitrator to be a commercial man. An ex-​solicitor, who was a full-​time maritime arbitrator and non-​executive director of shipping companies, conducted the arbitration. It was held that he fell within the definition of a commercial man for the purposes of the arbitration.

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The parties are at liberty to demand certain attributes of the arbitrator in the arbitration agreement. Attributes of the arbitrator can be expressed either positively or negatively.

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Expertise and Accreditation Requirements

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Arbitration agreements often impose requirements that arbitrators have the expertise, experience, and/​or qualification in specific fields. This helps in achieving the core objective of arbitration, which is being able to provide a tribunal that has specific commercial and other expertise for resolving the disputes efficiently and effectively.184

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Independence and Impartiality

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Indian courts in multiple cases have stressed upon the attributes of impartiality and neutrality in arbitrators.185 Due regard has been given to the qualifications of the parties and specificities of the arbitration clause.

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Due regard has also been given to the independence of the arbitral tribunal. But where this independence is in doubt, it may be necessary to make a fresh appointment to the arbitral tribunal.186

180. Lewin v Holbrook (1843) 11 M & W 110; Crawshay v Collins (1818) 1 Swan 40. 181. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 2154–​2157. 182. Pappa v Rose (1872) LR 7 CP 525, at p. 527. 183. [1975] QB 742, [1975] 2 All ER 515, [1975] 1 Lloyd’s Rep 560. 184. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1884. 185. Alcove Industries v Oriental Structural Engineers 2007 SCC OnLine Del 1709, ILR (2008) 1 Del 1113; Voestalpine Gmbh v DMRC (2017) 4 SCC 665; HRD Corporation v GAIL (2018) 12 SCC 471; Ashiana v Adani 2018 SCC OnLine Del 9110; Union of India v Parmar Construction Co. (2019) 15 SCC 682. 186. Union of India v Parmar Construction Co. (2019) 15 SCC 682, at para. 41.

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Law, Practice and Procedure of Arbitration in India

Requirements of independence and impartiality can also be contractually imposed, otherwise applicable under national law.187 Negative attributes are characteristics which the arbitrator should not possess, for example, no person who has an interest in the goods or in the transaction can act as an arbitrator.

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The Court in Cook International Inc v Handelmaatschappij Jean Delvaux and Braat, Scott and Meadows188 held that an arbitrator did not have an interest in the transaction merely because he was employed by a subsidiary of a creditor of one of the parties.

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The Court in Ewart & Sons Ltd v Sun Insurance Office189 held that assessors appointed as arbitrators in an insurance dispute were not disqualified for having previously acted for the respondents.

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The above are all circumstances which could arguably “give rise to justifiable doubts as to that person’s impartiality or independence”.190

Nationality Limitations

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Positive attributes can be specified by reference to, for example, background, participation, or membership in a trade association.191

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Section 11(1) of the Arbitration Act expressly specifies that a person of any nationality may be the arbitrator unless the parties have agreed otherwise.192 Parties incorporate rules imposing either absolute or presumptive requirements, designed to ensure the neutrality of the arbitral process.

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Religion Requirements

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Some religious communities use arbitral mechanisms to resolve disputes among community members, especially before an arbitrator with religious or quasi-​ religious status.193 There can be instances where the arbitration agreement provides

187. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p.1886. 188. [1985] 2 Lloyd’s Rep 225. 189. (1925) 21 Ll L Rep 282. 190. Arbitration Act, s. 12(2). 191. The Union of India v E B Aaby’s Rederi A/​S [1975] AC 797, HL; a lawyer may not be appointed where the arbitration agreement calls for a doctor, as per Oberlandesgericht München, Germany, 34 SchH 11/​09, 29 January 2010. 192. Arbitration Act, s. 11(1); see also Model Law, art. 11(1). 193. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International Wolters Kluwer 2021), p. 1887.

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575

that the disputes must be referred to any person(s) from a particular community or country.194

Language Requirements Many international arbitration agreements impose requirements, either directly or indirectly, concerning the linguistic abilities of the arbitrators.

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Several agreements include a provision specifying the language of the arbitration, though it does not imply that the arbitrator should mandatorily have the requisite skills or proficiency in the said language. However, it is an advantage to appoint an arbitrator taking language proficiency into account as it would ensure efficiency of the arbitral process.195

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“Commercial Men” Requirements

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Legal Qualification Requirements

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The Court in Palmco Shipping Inc v Continental Ore Corpn, The Captain George K196 emphasised that a commercial person must necessarily have practical experience.

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On the other hand, it is not uncommon to appoint practising lawyers of high repute and competence as arbitrators in arbitrations.197 A legally trained arbitrator may be preferable where the issues in dispute are predominantly legal; also, in cases where the strained relationship between the parties is likely to make proceedings adversarial.198

Prohibition against Legal Qualification

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Likewise, a contract may provide that the arbitrator “shall not be a lawyer”.199 Mustill and Boyd suggest that in such circumstances what the parties wish to avoid is a

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194. See The “Dong Moon” Trans Asia Shipping Co Ltd v “Dong Moon” Owners [1979] 1 MLJ 152; the English Supreme Court in Jivraj v Hashwani [2011] UKSC 40, [2012] 1 All ER 629 upheld a requirement that an arbitrator be part of the Ismaili community even in the face of anti-​discrimination legislation, on the grounds that an arbitrator is not an employee. 195. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p.1883. 196. [1970] 2 Lloyd’s Rep 21, at p. 25. 197. In Sun Alliance Insurance v Jackson Russell Dignan Armstrong [1990] Land Valuation Cases 767, it was noted that retired judges and leading barristers are able to resolve issues of competing technical evidence; see David A.R. Williams QC and Amokura Kawharu, Williams & Kawharu on Arbitration (LexisNexis, 2011), at para. 5.5.2. 198. David A.R. Williams QC and Amokura Kawharu, Williams & Kawharu on Arbitration (LexisNexis, 2011), at para. 5.5.2. 199. See Rahcassi Shipping Co SA v Blue Star Line Ltd [1967] 3 All ER 301.

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Law, Practice and Procedure of Arbitration in India

legalistic attitude of mind which comes from the practice of law and not from a legal qualification.200 The Court in Pando Compania Naviera SA v Filmo SAS201 stated that the lawyer here presumably means a practising lawyer who is sought to be excluded from being appointed as an arbitrator.

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[20.13] CONCLUSION

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Arbitrator(s) resolves the disputes referred to them in accordance with the law chosen by the parties and the terms of the agreement. The Indian arbitration regime permits the parties to an arbitration agreement to have full autonomy to choose their arbitrator, to decide the number of arbitrators, and the procedure for their appointment.

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In certain circumstances the arbitration agreement provides for the appointment of arbitrators by appointing authorities, which includes professional institutions, trade associations, or specialist arbitral institutions.

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However, in the event of a deadlock, delay, or failure to appoint the arbitrator, the arbitration agreement remains subject to the default procedure under Section 11(6) of the Arbitration Act for appointing the arbitrator(s).

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The parties are at liberty to demand certain attributes of the arbitrator in the arbitration agreement. This chapter captures the position that globally an arbitrator is not required to possess any legal, technical, or other qualifications except those which the parties may contractually stipulate.

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However, in India the 2019 Amendment had introduced the Eighth Schedule which specified qualifications and experience along with general norms which were necessary to be appointed as the arbitrator.

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But, before being brought in force, it was deleted by the 2021 Amendment which amended Section 43J of the Arbitration Act to state that the qualifications, experience, and norms for accreditation of arbitrators will be prescribed by regulations. It will be important to understand what regulations are framed for accreditation of arbitrators and monitor the progress of these developments.

200. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), p. 249. 201. [1975] 2 All ER 515.

Chapter 21 COMPOSITION OF ARBITRAL TRIBUNALS [21.1] [21.2]

INTRODUCTION....................................................................................................................... 577 SOLE ARBITRATOR.................................................................................................................. 582

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[21.3] TWO OR EVEN NUMBER OF ARBITRATORS................................................................... 583 [21.4] REFERENCE TO THREE OR MORE ODD NUMBER OF ARBITRATORS.................... 586 [21.5] MULTIPLE ARBITRATORS IN INTERNATIONAL ARBITRATION............................... 588 [21.6] APPOINTMENT OF ARBITRATOR UNDER THE ARBITRATION ACT...................... 590 [21.7] DESIGNATED APPOINTING AUTHORITY........................................................................ 592 [21.9]

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[21.8] DUTY OF APPOINTING AUTHORITY................................................................................ 594 PRE-​APPOINTMENT INTERVIEWS..................................................................................... 594

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[21.1] INTRODUCTION

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[21.10] CONCLUSION............................................................................................................................ 597

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The composition of the arbitral tribunal and the choice of the individual arbitrators are essential for the smooth working of the arbitral process.1 It has been aptly remarked that “an arbitration is as good as the arbitrators are”2. In most arbitration systems, any natural person may be chosen to act as an arbitrator. The only general requirement being that the person chosen must have legal capacity4 and the appointment shall comply with the domestic legislation.

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One of the main reasons that parties choose arbitration over litigation is that they expect a tailor-​made arbitral tribunal and arbitral process to resolve their disputes more proficiently, economically, and expeditiously than a court.

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Lalive, while commenting on the selection of arbitrators, states: “[arbitral tribunal] is an important choice, not only for the parties to the particular dispute, but also for the reputation and standing of the arbitral process

1. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 428. 2. T Clay, L’arbitre, Dalloz, 2000, p.10; Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 428. 3. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 246, at para. 4.49. 4. Ibid.

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Law, Practice and Procedure of Arbitration in India

itself. It is, above all, the quality of the arbitral tribunal that makes or breaks the process.”5 Justice Indu Malhotra opines:

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“The choice of the members of the arbitral tribunal, who are able to perform their duties responsibly, master the facts of the case, and assess the legal evidence adduced by the parties, and faithfully perform the adjudicatory task, to arrive at a fair, effective, and commercial sound ruling. This is a fundamental aspect of the arbitral process.”6

The parties may agree to resolve their differences in accordance with the nature of the disputes by establishing a tribunal comprising of:7 (1) a sole arbitrator appointed by a joint agreement of the parties or otherwise;8



(2) two arbitrators (however, in India, parties are at liberty to choose a tribunal of any number so long as it is not an even number.9 The parties may opt for a sole arbitrator, they may agree to a three-​person or even a five-​person10 tribunal);11



(3) an umpire;12



(4) three arbitrators (i.e. where the party-​appointed arbitrators shall be sitting as a member of the tribunal and the third arbitrator would be acting as the “president” or “chairman”);13 or



(5) multiple arbitrators having a higher odd number of members than three.14

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Article 10 of the Model Law provides that: (1) The parties are free to determine the number of arbitrators.15



(2) Failing such determination, the number of arbitrators shall be three.16

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5. Lalive, Requirements of International Arbitration, The selection of Arbitrators; Lalive, “On the Neutrality of Arbitrators and The Place of Arbitration” in Swiss Essays on International Arbitration (Zurich, 1984), pp. 23–​ 33 referred to in Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (5th edn, Oxford University Press 2009), p. 246, at para. 4.14, and Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 428. 6. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 428. 7. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 4-​004. 8. Ibid. 9. Arbitration Act, s. 10(1). 10. Siddhi Real Estate Developers v Metro Cash and Carry India Pvt. Ltd. & Ors. [2014] 4 Mah LJ 283. 11. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 4-​004; In India however, s. 10 of the Arbitration Act mandates that the number of arbitrators shall not be an even number. 12. Ibid, at para. 4-​004. 13. Ibid. 14. Ibid. 15. Model Law, art. 10(1). 16. Model Law, art. 10(2).

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Chapter 21—​​​Composition of Arbitral Tribunals

Justice Indu Malhotra summarises the law in India with respect to the composition of an arbitral tribunal as follows:17

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“Section 10 confers autonomy on the parties to make a choice of the individual arbitrators and decide on the number of arbitrators that would constitute a tribunal to adjudicate the dispute. Under sub-​section (1) of Section 10, the parties by agreement can appoint any number of arbitrators, provided that such number shall not be an even number of arbitrators. In the absence of an agreement between the parties, the arbitral tribunal shall consist of a sole arbitrator in terms of sub-​section (2) of Section 10. The object of making provision for an off number is to avoid a deadlock in the decision-​making process by the tribunal.18 The provision is mandatory and non-​derogable in nature.”19

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Section 10 of the Arbitration Act is based on Article 10 of the Model Law. However, Section 10 of the Arbitration Act departs from the Model Law in two respects: (1) It provides that the number of arbitrators constituting the arbitral tribunal shall not be an even number;20 and



(2) In the absence of an agreement between the parties, a sole arbitrator would constitute the arbitral tribunal.21

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Controversially, the Supreme Court of India in Narayan Prasad Lohia v Nikunj Kumar Lohia,22 held that Section 10(1) of the Arbitration Act can be derogated from and is non-​mandatory. This decision has met with heavy criticism for being expressly contrary to Section 10 of the Arbitration Act.23

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Internationally, there exists a difference in position regarding the legality of arbitral tribunals comprising an even number of arbitrators.

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Countries such as France (in domestic arbitrations), the Netherlands, Belgium, Italy, Portugal, Egypt, and Tunisia prohibit an arbitral tribunal consisting of an even number of arbitrators.24

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17. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 430. 18. Enercon (India) Ltd. v Enercon Gmbh (2014) 5 SCC 1. 19. The Chhattisgarh High Court on 14 December 2017, in South Eastern Coalfields Ltd. and Ors. v Shri Balaji Metals and Minerals Arbitration Appeal No. 14 of 2017, confirmed the same. 20. Ibid, p. 429. 21. Classic Enterprises Ltd. v United Insurance Co. Ltd. (2016) 4 RLW 2631; Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer), p. 429. 22. (2002) 3 SCC 572. 23. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer), p. 432. 24. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 1789–​1790; French Code of Civil Procedure, art. 1451; Belgian Judicial Code, art. 1684; Netherlands Code of Civil Procedure, art. 1026(1); Chinese Arbitration Law, art. 30; Italian Code of Civil Procedure, art. 809; Portuguese law on Voluntary Arbitration, art. 8(1); Egyptian Arbitration Laws, art. 15(2); Tunisian Arbitration Code, art. 55(1).

580

Law, Practice and Procedure of Arbitration in India

However, in countries such as the United States of America and England, tribunals with an even number of arbitrators are permitted, even if very unusual.25 Parties are free to agree on the procedure for the appointment of an arbitral tribunal.26 In cases where the parties have not specified the manner of appointment of arbitrators, they may incorporate arbitration rules by reference in their agreement.

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As a result, the parties authorise an appointing authority to make the appointment by default. Further, in the absence of an agreement between the parties for the application of the arbitral rules, the statutory procedure would be applicable.27

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Hence, once a decision to refer a dispute to arbitration is made, appointing the right arbitral tribunal is critical to the success of the arbitral process.28 It is imperative for the tribunal to comply with the appointment procedure agreed by the parties as any deviation from the same may make the award ineffective and unenforceable.

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The 2015 Amendment introduced Section 12(5) to the Arbitration Act. Section 12(5) provides that, notwithstanding any prior agreement to the contrary, any person whose relationship with the parties or counsel or the subject-​matter of the dispute falls under any of the categories specified in the Seventh Schedule, such a person is ineligible to be appointed as an arbitrator

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This would include cases where the arbitrator is an employee, consultant, advisor, or has any other past or present business relationship with a party. They shall be ineligible to be appointed as an arbitrator.29 Section 12(5) further provides that such condition can only be waived by an express agreement in writing between the parties.

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The Supreme Court of India in Voestalpine Schienen GMBH v Delhi Metro Rail Corporation30 held that:

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“25. Section 12 has been amended with the objective to induce neutrality of arbitrators viz. their independence and impartiality. The amended provision is

25. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1791. 26. Electra Air Conditioning B.V. v Seeley International Pty. Ltd., Federal Court, Australia, 8 October 2008, [2008] FCAFC 169, available at http://​www.austlii.edu.au/​au/​cases/​cth/​FCAFC/​2008/​169.html; Gordian Runoff Ltd. (formerly Gio Insurance Ltd.) v The Underwriting Members of Lloyd’s Syndicates, Supreme Court of New South Wales (Equity Division), Australia, 19 December 2002 (revised 5 February 2003), [2002] NSWSC 1260, available at http://​www.austlii.edu.au/​au/​cases/​nsw/​ NSWSC/​2002/​1260.html. 27. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 4-​022. 28. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 4.13. 29. Arbitration Act, s. 12(5) read with Seventh Schedule. 30. (2017) 4 SCC 665.

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Chapter 21—​​​Composition of Arbitral Tribunals

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enacted to identify the ‘circumstances’ which give rise to ‘justifiable doubts’ about the independence or impartiality of the arbitrator. If any of those circumstances as mentioned therein exists, it will give rise to justifiable apprehension of bias. The Fifth Schedule to the Act enumerates the grounds which may give rise to justifiable doubts of this nature. Likewise, the Seventh Schedule mentions those circumstances which would attract the provisions of sub-​section (5) of Section 12 and nullify any prior agreement to the contrary. In the context of this case, it is relevant to mention that only if an arbitrator is an employee, a consultant, an advisor or has any past or present business relationship with a party, he is rendered ineligible to act as an arbitrator. Likewise, that person is treated as incompetent to perform the role of arbitrator, who is a manager, director or part of the management or has a single controlling influence in an affiliate of one of the parties if the affiliate is directly involved in the matters in dispute in the arbitration. Likewise, persons who regularly advised the appointing party or affiliate of the appointing party are incapacitated.”31

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The Supreme Court of India in TRF Limited v Energo Engineering Projects Limited32 ruled on the legality of an ineligible arbitrator nominating an individual to act as an arbitrator where it held:

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“54. In such a context, the fulcrum of the controversy would be, can an ineligible arbitrator, like the Managing Director, nominate an arbitrator, who may be otherwise eligible and a respectable person. As stated earlier, we are neither concerned with the objectivity nor the individual respectability. We are only concerned with the authority or the power of the Managing Director. By our analysis, we are obligated to arrive at the conclusion that once the arbitrator has become ineligible by operation of law, he cannot nominate another as an arbitrator. The arbitrator becomes ineligible as per prescription contained in Section 12(5) of the Act. It is inconceivable in law that person who is statutorily ineligible can nominate a person. Needless to say, once the infrastructure collapses, the superstructure is bound to collapse. One cannot have a building without the plinth. Or to put it differently, once the identity of the Managing Director as the sole arbitrator is lost, the power to nominate someone else as an arbitrator is obliterated. Therefore, the view expressed by the High Court is not sustainable and we say so.”33

31. Ibid, at para. 25. 32. (2017) 8 SCC 377. 33. Ibid, at para. 54.

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Law, Practice and Procedure of Arbitration in India

[21.2] SOLE ARBITRATOR A sole arbitrator is a complete tribunal and is often preferred for domestic arbitrations. Proceedings involving a sole arbitrator are more cost-​effective and are conducted far more expeditiously.34 A sole arbitrator does not own allegiance to any one party and renders the award regardless of the parties.35

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However, it is of utmost importance that the appointment of the sole arbitrator is consensual; and not an imposition by one party who has superior bargaining power over the other. This is necessary to maintain the integrity of the arbitral proceedings.36

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In cases where the sole arbitrator is appointed by one of the parties owing to the default by the other party regarding the nomination of the other arbitrator, the sole arbitrator:

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“has the same duty to act judicially, fairly and impartially as an unbiased single arbitrator, although he has been appointed by one of the parties, rather than both parties”.37

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The main factors for preferring a sole arbitrator is the speed and cost, while the main reason for preferring a three-​member arbitral tribunal is the concern about relying on the judgment of one person who the counsel or the parties may or may not be familiar with.38

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Practically, in international arbitrations, multiple arbitrators find it difficult to coordinate calendars and schedule hearings and conclude deliberations, leading to significant delays.39

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Where the parties have not agreed on the number of arbitrators, the arbitral tribunal is presumed as comprising of a sole arbitrator.40

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The Supreme Court of India in Sime Darby Engineering Sdn. Bhd v Engineers India Ltd.41 held the arbitral tribunal shall consist of a sole arbitrator as the arbitration

34. 35. 36. 37.

38. 39. 40. 41.

Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 432. Ibid. Ibid. Sutton, Gill, and Kendall, Russell on Arbitration (23rd edn, Sweet & Maxwell 2007), pp. 171–​172, at para. 4-​ 145; Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 432. Michael Bühler and Thoman Webster, Handbook of ICC Arbitration: Commentary and Materials (4th edn, Sweet & Maxwell 2018), at paras 12–​13 to 12–​14. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1793. Arbitration Act, s. 10(2). (2009) 7 SCC 545.

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Chapter 21—​​​Composition of Arbitral Tribunals

agreement was silent on the number of arbitrators. It rejected the argument that a reference to “arbitrator(s)” therein be construed as a reference to a tribunal of three arbitrators. The managing director of a company (which was a party to the dispute) in Veritas Shipping Corporation v Anglo-​Canadian Cement Ltd.42 appointed himself as the arbitrator. His appointment was annulled owing to his failure to act judicially and impartially.

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The Indian Council of Arbitration states that where a claim including the determination of interest does not exceed INR one (1) crore and there is no specific reference to the appointment of three arbitrators, the reference shall be deemed to be to a sole arbitrator.43

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In cases of an appointment of a sole arbitrator in international commercial arbitrations, the Courts or the appointing authority may appoint an arbitrator of a nationality other than the nationalities of the parties where the parties belong to different nationalities.44

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Article 5(8) of the LCIA Arbitration Rules, 2020 provides that a sole arbitrator shall be appointed unless the parties have agreed in writing otherwise or if the LCIA Court determines that for deciding the dispute a three-​member tribunal is appropriate (or in exceptional circumstances, tribunal comprising of more than three members).45

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Similarly, Article 12(2) of the ICC Rules, 2021 provides for the appointment of a sole arbitrator by the ICC Court where the parties have not agreed upon the number of arbitrators unless the dispute warrants the appointment of three arbitrators.

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[21.3] TWO OR EVEN NUMBER OF ARBITRATORS

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Certain trades and specialized markets require the parties to submit their disputes to a two-​member arbitral tribunal, with a subsequent reference to an umpire if the two-​ party nominated arbitrators cannot agree between themselves.46 However, this practice is not generally prevalent in international arbitrations.47

42. [1966] 1 Lloyd’s Rep 76-​77. 43. Rules of Domestic Commercial Arbitration and Conciliation of the Indian Council of Arbitration, 2016, r. 22(a). 44. Arbitration Act, s. 11(9). 45. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 4.23. 46. Ibid, at para. 4.28. 47. Ibid.

584

Law, Practice and Procedure of Arbitration in India

In India, the Arbitration Act forbids even-​numbered arbitral tribunals in explicit terms.48 Parties are at liberty to choose a tribunal of any number so long as it is not an even number.49

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However, certain decisions of the Supreme Court of India have resulted in controversial judicial precedent. The Supreme Court of India in Narayan Prasad Lohia v Nikunj Kumar Lohia and Others50 held that the statutory provision barring a two-​member tribunal is a derogable provision. It would not invalidate the arbitration agreement.

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The Court further held that it would be open to the two arbitrators to agree to and appoint a third arbitrator either at the beginning of the arbitration or subsequently in the event of a deadlock.51

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A similar view was taken by the Supreme Court of India in MMTC Ltd. v Sterlite Industries (India) Pvt. Ltd.,52 where it held that the validity of the arbitration agreement would not depend on the number of arbitrators specified in Section 10.

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The foregoing decisions of the Supreme Court of India on the issue of an even number of arbitrators have met with heavy criticism for being contrary to the expressly contrary to Section 10 of the Arbitration Act.53

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Justice Indu Malhotra54 has stated that Section 10 of the Arbitration Act, which prohibits arbitral tribunals comprising an even number of arbitrators is “mandatory and non-​derogable in nature”.55

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Internationally, there exists a difference in position regarding the legality of arbitral tribunals comprising an even number of arbitrators. Countries such as France (in domestic arbitrations), the Netherlands, Belgium, Italy, Portugal, Egypt, and Tunisia prohibit an arbitral tribunal consisting of an even number of arbitrators.56

Arbitration Act, s. 10(1). Arbitration Act, s. 10(1). (2002) 3 SCC 572. Ibid, at para. 34. (1996) 6 SCC 716. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 432. Indu Malhotra, Commentary on the Law of Arbitration (4th edn, Wolters Kluwer 2020). Ibid, p. 430. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 1789–​1790; French Code of Civil Procedure, art. 1451; Belgian Judicial Code, art. 1684; Netherlands Code of Civil Procedure, art. 1026(1); Chinese Arbitration Law, art. 30; Italian Code of Civil Procedure, art. 809; Portuguese law on Voluntary Arbitration, art. 8(1); Egyptian Arbitration Laws, art. 15(2); Tunisian Arbitration Code, art. 55(1).

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48. 49. 50. 51. 52. 53. 54. 55. 56.

585

Chapter 21—​​​Composition of Arbitral Tribunals

However, in countries such as the United States of America and England, tribunals with an even number of arbitrators are permitted, even if very unusual.57 In jurisdictions where the appointment of an even number of arbitrators to the arbitral tribunal is permitted (one by each party),58 the following three conditions must usually be fulfilled for the appointments to be valid: (1) the arbitrator must be notified of the appointment;



(2) he must consent to act;59 and



(3) his name and the fact of his appointment must be communicated to the other party.60

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National arbitration law prohibitions against an even number of arbitrators are in tension with Articles II(3) and V(1)(d) of the New York Convention, which usually requires giving effect to the parties’ agreement concerning the composition of the arbitral tribunal.61

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An enlightened legislative approach upholding party autonomy that contains outright prohibitions against an even number of arbitrators is adopted by the English Arbitration Act.62 Section 15(2) states:

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“[u]‌nless otherwise agreed by the parties, an agreement that the number of arbitrators shall be two or any other even number shall be understood as requiring the appointment of an additional arbitrator as chairman or the tribunal.”63

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Gary B. Born summarises the approaches that can be taken in the event of a deadlock when the tribunal comprises of an even number of arbitrators:

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57. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1791. 58. As to where both parties appoint both arbitrators by agreement, see Itex Shipping Pte Ltd v China Ocean Shipping Co, The Jing Hong Hai [1989] 2 Lloyd’s Rep 522. 59. Ringland v Lowndes 33 LJCP 25. 60. Tew v Harris (1847) 11 QB 7; Thomas v Fredricks (1847) 10 QB 775; Tradax Export SA v Volkswagenwerk AG [1969] 2 QB 599, [1969] 2 All ER 144, [1969] 1 Lloyd’s Rep 494, affd [1970] 1 QB 537, [1970] 1 All ER 420, [1970] 1 Lloyd’s Rep 62, CA (Eng). As to the circumstances under which a party will be estopped from denying that an arbitrator has been validly appointed, see Legumbres SACIFIA v Central de Cooperativas de Productores do Rio Grande do Sul Ltda [1986] 1 Lloyd’s Rep 401, at 403, CA (Eng). As to waiver of the right to appoint an arbitrator, and when the right revives, see World Pride Shipping v Daiichi Chuo Kisen Kaisha, The Golden Anne [1984] 2 Lloyd’s Rep 489. 61. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1792. 62. Ibid, p. 1792. 63. Ibid, p. 1792; English Arbitration Act, s. 15(2); Robert Merkin, Arbitration Law (1991 & Update March 2019), at para. 11.17.

586

Law, Practice and Procedure of Arbitration in India

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“If a tribunal with an even number of arbitrators deadlocks, then the parties’ agreement to finally resolve their disputes by arbitration will arguable be frustrated, ‘inoperative’, or ‘incapable of being performed’,64 leaving either party free to litigate the unresolved dispute. Alternatively, statutory (or common law) rules providing for default appointment of a third arbitrator to resolve the deadlock at this stage could also be applied (on the theory that the parties impliedly contemplated such a default solution). In effect, this is what the English and U.S. ‘umpire’ system provides. The choice between these alternatives depends on the parties’ intentions in particular cases.”65

[21.4] REFERENCE TO THREE OR MORE ODD NUMBER OF ARBITRATORS

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In cases where the parties decide to have more than one arbitrator, the usual recourse is to an arbitral tribunal of three arbitrators.

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Particularly, in international commercial arbitrations where large sums of money are at stake or there are complex problems peculiar to specific types of disputes. In India, due to the bar on even-​numbered arbitral tribunals, three-​member arbitral tribunals are popular in high-​stake disputes.

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In a three-​member tribunal, it is possible to have a combination of legal and technical expertise within the tribunal.66 Preferably, the presiding arbitrator could belong to the legal background, while the two party-​appointed arbitrators could have the necessary technical expertise.67

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For example, in complex engineering, construction, maritime, and trading disputes, a sole arbitrator may not be suitable. In these cases, it is more effective to appoint an arbitral tribunal of three, even if it involves more expense and delay. It may prove more satisfactory and acceptable to the parties.68

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A three-​member tribunal makes it easier for the parties to accept the jurisdiction and authority of the tribunal and may assist them in the exercise of bringing themselves to comply with and even cooperate with the arbitral process.69

64. New York Convention, art. II(3). 65. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1792. 66. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th Edn, Wolters Kluwer 2021), p. 434. 67. Ibid. 68. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 1793–​1794. 69. Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Sweet & Maxwell 2003), at para. 2-​235.

587

Chapter 21—​​​Composition of Arbitral Tribunals

Where a State or a State agency is a party, the concept of each party nominating an arbitrator (who must act impartially) presided over by a third arbitrator is more acceptable.70 Normally there is no reasonable justification for appointing an arbitral tribunal comprising of more than three arbitrators except in State-​to-​State arbitrations.71

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Article 10 of the Model Law provides that:

(1) The parties are free to determine the number of arbitrators.72



(2) Failing such determination, the number of arbitrators shall be three.73

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In India, the Arbitration Act provides that in the absence of an agreement between the parties, a sole arbitrator would constitute the arbitral tribunal.74

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Ordinarily, when the arbitration agreement mandates a three-​member arbitral tribunal, both parties appoint an arbitrator each. Both these arbitrators then appoint a third arbitrator who acts as the presiding arbitrator. This is the default procedure stipulated in Section 11(3) of the Arbitration Act.75

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Nonetheless, it is open to the parties to provide for an alternate procedure for the appointment of the third arbitrator (the presiding arbitrator).76

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Section 11(4) of the Arbitration Act provides for an alternate default procedure for the appointment of the presiding arbitrator, which includes making an application before the appointing authority under Section 11 of the Arbitration Act.

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Practically, however, the party and its appointed arbitrator are likely to closely cooperate on the issue of selecting the presiding arbitrator. Moreover, the party-​appointed arbitrators are likely to be better aware of the potential presiding arbitrators and their competence and impartiality.77

70. UNCITRAL Model Law, art. 10(1), which provides for default presumption, that is, if the parties fail to determine the number of arbitrators, the number shall be limited to three; and UNCITRAL Arbitration Rules, art. 7(1) (as revised in 2010). 71. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 1797–​1798. 72. Model Law, art. 10(1). 73. Model Law, art. 10(2). 74. Arbitration Act, s. 10. 75. Arbitration Act, s. 11(3). 76. Arbitration Act, s. 11(2). 77. Ugo Draetta, “Cooperation among Arbitrators in International Arbitration” (2016) 5 IJAL 107.

588

Law, Practice and Procedure of Arbitration in India

The presiding arbitrator is in charge of the conduct of the arbitral proceedings. If authorised by the parties, or all the members of the arbitral tribunal, questions of procedure may be left to the presiding arbitrator.78 The Italian Supreme Court in Sacheri v Robotto79 highlights the risk involved in appointing a tribunal without a legally trained person. In this case, a three-​member arbitral tribunal was appointed where none of the members were legally trained.80

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The function of drawing up the award was delegated to a lawyer who had been appointed as an expert since the arbitrators considered themselves unable to perform this task owing to their lack of knowledge of the law.81

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The Court annulled the award, as it was not permissible to delegate the essential decision-​making power to a third party.82

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[21.5] MULTIPLE ARBITRATORS IN INTERNATIONAL ARBITRATION

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The appointment of multiple arbitrators is more commonplace in the case of international commercial arbitrations because the parties are of different nationalities and may not even share a common language. Accordingly, they may wish for their appointed arbitrator to act as a sympathetic cultural ambassador in the proceedings.83

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This is consistent with the aspirations of the international arbitral process to provide an internationally neutral dispute resolution mechanism, with a tribunal capable of understanding the procedural and other submissions of the parties.84

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In India, Section 11(1) of the Arbitration Act allows a person of any nationality to become an arbitrator. This allows parties to enlist the international experts in arbitrations involving and requiring expertise in certain subjects.

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While appointing a sole or a third-​arbitrator in case of international commercial arbitrations, the courts or the appointing authority may appoint an arbitrator of a nationality other than the nationalities of the parties.85 Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020,), p. 433. Corte di cassazione, 7 June 1989, Sacheri v Robotto XVI YBCA 156 (1991). Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 434. Ibid. Ibid. Bishop and Reed, “Practical Guidelines for Interviewing, Selecting and Challenging Party-​Appointed Arbitrators in International Commercial Arbitration” (1998) 14 Arb. Int’l 395, says that some parties consider their nomination of an arbitrator to be “the single most determinative step in the arbitration”. 84. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1793. 85. Arbitration Act, s. 11(9). 78. 79. 80. 81. 82. 83.

589

Chapter 21—​​​Composition of Arbitral Tribunals

Where a State or a State agency is a party, the concept of each party nominating an arbitrator (who must act impartially) presided over by a third arbitrator is more acceptable.86 Normally, there is no reasonable justification for appointing an arbitral tribunal comprising of more than three arbitrators except in State-​ to-​ State arbitrations.87

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An arbitral panel of multiple arbitrators may be required because of the size of the dispute, the number of technical issues, or the complex questions of technical facts and law involved.

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In certain jurisdictions, parties may even consider appointing a technically qualified arbitrator supported by a legal assessor rather than multiple arbitrators.

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However, a larger panel provides the benefit of discussions arising from the collegiality between the arbitrators.88 It may reduce the risk of evidence being overlooked or given insufficient attention. Further, a three-​member tribunal allows the parties in selecting the chairman of the tribunal.

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The work of a sole arbitrator can be lonely. It may lead to mistakes as there is no possibility of oversight unless there is a scrutiny of award by the arbitration institution.89

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Gary B. Born90 records that in around 80 per cent of all ICC cases, the parties cannot agree upon the sole arbitrator. In contrast, in approximately 65 per cent of all the ICC cases, the parties or the co-​arbitrators are able to agree upon the presiding arbitrator.

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Therefore, considering the advantage of parties being able to participate in the selection of the arbitral tribunal to the maximum extent possible, there is a strong bias in favour of selecting three-​member tribunals.91

86. Model Law, art. 10(1), which provides for default presumption, that is, if the parties fail to determine the number of arbitrators the number shall be limited to three; UNCITRAL Arbitration Rules, art. 7(1). 87. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 1797–​1798. Additionally, it is noted that “a five-​arbitrator tribunal as usually cumbersome and unnecessary”. 88. D Caron et al., The UNCITRAL Arbitration Rules: A Commentary (Oxford Commentaries on International Law, 2006). 89. Tackaberry, Marriot QC, and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Sweet & Maxwell 2003), at para. 2–​235; see also Gary B. Born, International Commercial Arbitration, Vol. 2 (2nd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1674. 90. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021). 91. Ibid, p. 1795.

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Law, Practice and Procedure of Arbitration in India

Redfern and Hunter suggest that if parties in an international commercial arbitration are able to agree upon the appointment of a sole arbitrator in whom they have confidence, it is advisable for them to do so.92

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It should be noted, however, that a multi-​arbitrator tribunal can help to prevent the rogue acts that sometimes occur with single arbitrators.93 Therefore, parties must consider for themselves whether the increased confidence in the tribunal that may be derived from a three-​member tribunal is worth the additional costs.

In rare scenarios, parties agree to appoint five-​person tribunals or a tribunal with a larger number of arbitrators.

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For example, the Iran-​U.S. Claims Tribunal had a full tribunal of nine members or the India-​Pakistan Indus Waters arbitration agreement provided for a seven-​member tribunal. Such large tribunals are generally used in inter-​State arbitrations.94

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[21.6] APPOINTMENT OF ARBITRATOR UNDER THE ARBITRATION ACT

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In India, the parties are free to agree on a procedure for the appointment of an arbitrator or arbitrators. In the absence of an agreed procedure, or failure of one of the parties to act, this power, by default, would pass on to the appointing authority under Section 11 of the Arbitration Act.95

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A request could be made to the appointing authority under Section 11 of the Arbitration Act for the appointment of an arbitrator in the following circumstances: (1) A party fails to act as per the agreed procedure;96



(2) The parties or the two appointed arbitrators fail to reach an agreement for the appointment of the third arbitrator under the agreed procedure;97 or

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(3) A person, including an institution, fails to perform any function entrusted under the agreed procedure.98

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92. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 4.25. 93. For example, a largely unprompted order by a sole arbitrator that each party provide as security for costs 100 per cent of his anticipated fees, effectively doubly securing himself, in Wicketts v Brine Builders & Siederer [2001] CILL 1805, [2001] App LR 06/​08. 94. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 1797–​1798. 95. Indu Malhotra, Commentary on the Law of Arbitration, Vol.1 (4th Edn, Wolters Kluwer 2020), p. 442. 96. Ibid, p. 483. 97. Ibid. 98. Ibid.

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Chapter 21—​​​Composition of Arbitral Tribunals

In an arbitration with a sole arbitrator and in the absence of agreement as to the procedure for appointment, if the parties fail to agree on the arbitrator within thirty (30) days from the receipt of a request by one party, then the appointment under Section 11(5) of the Arbitration Act shall be made, upon request of a party, by the Chief Justice or his designate.

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In an arbitration with three arbitrators, failing any agreement between the parties, each party will be entitled to appoint one arbitrator. The two appointed arbitrators shall then appoint a third arbitrator who shall act as the presiding arbitrator.99

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Section 11(4) of the Arbitration Act provides a default procedure for the appointment of the presiding arbitrator. It involves making an application before the appointing authority under Section 11 of the Arbitration Act.100

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The position of the third arbitrator is equal to the position of the other two arbitrators, except that the presiding arbitrator presides over the proceedings of the tribunal.101

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When seeking court intervention for the constitution of the arbitral tribunal, Section 11(12) of the Arbitration Act requires the applicant to approach the Supreme Court of India in the case of an international commercial arbitration and to approach the concerned High Court in other arbitrations.

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The Courts while appointing the arbitrator in the exercise of powers under Section 11 of the Arbitration Act endeavour to give effect to the appointment procedure contemplated by the arbitration agreement as far as possible.102

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The Supreme Court of India in Narayan Prasad Lohia v Nikunj Kumar Lohia & Ors.103 held that although a reading of Section 11 of the Arbitration Act would show that it only applies to cases where there are only one or three arbitrators, the parties may by agreement provide for the appointment of five or seven arbitrators.104

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Accordingly, the procedure provided in Section 11 will mutatis mutandis apply for the appointment of five, or seven, or more arbitrators.105

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A detailed discussion on the appointment arbitrator(s) under the Arbitration Act is dealt with in Chapter 22.

99. 100. 101. 102. 103. 104. 105.

Arbitration Act, s. 11(3). India Internet Incubator Mauritius Ltd. v Infraline Technologies India (P) Ltd. & Anr. (2004) 13 SCC 354. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 433. Indian Oil Corporation Ltd. & Ors. v Raja Transport Pvt. Ltd. (2009) 8 SCC 520. (2002) 3 SCC 572. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 477. Ibid.

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[21.7] DESIGNATED APPOINTING AUTHORITY National arbitration statutes and judicial decisions confirm and give effect to the parties’ autonomy to agree to the decision of an appointing authority to select arbitrators.106

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Further, all leading arbitral institutions are prepared to act as appointing authorities when the parties agree to arbitrate under their rules. Many have established rules or procedures governing the exercise of their responsibilities in such cases.107

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In India, parties are free to agree upon any procedure for appointing the arbitral tribunal.108 Moreover, the parties also have the autonomy to authorise any person or institution to determine any issue which they themselves are allowed to decide.

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Therefore, either party may, if the agreement provides, request a third party, such as an arbitration institution, to appoint the arbitrator.109

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Most arbitration agreements incorporate a method of appointing a sole arbitrator,110 or third arbitrators,111 in the event the parties are unable to agree.

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The MCIA allows for itself to be named as the appointing authority for an ad hoc arbitration. In such cases, the MCIA acts as the appointing authority with the agreement of the parties.112

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On the other hand, for arbitrations administered by the MCIA, it reserves the right to appoint arbitrators and even appointments made by the two arbitrators and the parties are subject to the discretion of the Council.113

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Article 6.1 of the UNCITRAL Rules provides that unless the parties have already agreed on the choice of an appointing authority, a party may propose the name or names of one or more institutions or persons, including the Secretary-​General of the Permanent Court of Arbitration at The Hague (“PCA”), one of whom would serve as appointing authority.

106. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1832. 107. ICC Rules, arts 11–​13; UNCITRAL Rules, 2013, art. 8; ICDR Rules, arts 11–​13; SIAC Rules, 2016, art. 9; LCIA Rules, 2020, arts 5–​9; HKIAC Rules, 2018, arts 6–​12; Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1831. 108. Arbitration Act, s. 11(2). 109. MCIA Rules, 2016, r. 7.8. 110. Arbitration Act, s. 11(5). 111. Arbitration Act, s. 11(4). 112. MCIA Rules, 2016, r. 7.8. 113. MCIA Rules, 2016, r. 7.2.

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Chapter 21—​​​Composition of Arbitral Tribunals

The Malaysian Arbitration Act, 2005 (“Malaysian Arbitration Act”) provides for the Director of the Asian International Arbitration Centre to be the default appointing authority similar to other jurisdictions like Singapore (SIAC) and Hong Kong (HKIAC). This departs from the Indian position which provides that for the courts as the default appointing authority.

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It is advisable for the parties to carefully consider their choice of appointing authority and avoid those that have developed a reputation for appointing incompetent or inappropriate arbitrators. The choice of the appointing authority in the arbitration agreement is crucial to the effectiveness of the arbitration procedure.

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It may be too late to reconsider the appointment of the arbitrator once it is made and accepted. Cairns LJ in National Enterprises Ltd v Racal Communications Ltd114 held that if “an arbitrator has already been appointed ... and he is willing and able to accept the reference, the court clearly cannot be asked to appoint a rival arbitrator.”115

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Donaldson J in Medov Lines SpA v Traelandsfos A/​S116 stated that arbitrators may be appointed by a third party, or even by a court with the consent of the parties.

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The court will adopt the literal wording of the arbitration agreement to arrive at an effective procedure if the method of nomination described in the agreement cannot be applied exactly to a particular case.117

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However, the Supreme Court of India has held that the procedure in the arbitration agreement may be abandoned if several attempts to constitute a tribunal under it have failed.118

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The Court in Davies, Middleton and Davies Ltd v Cardiff Corpn119 held that the President of the Royal Institute of British Architects should nominate an arbitrator where an arbitration agreement for future differences left blank space, where a single arbitrator’s name was to be entered and provided “in the event of his death or unwillingness or inability to act”.

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If parties fail to appoint the sole arbitrator, it will be necessary to make an application to the court under Section 11(5) of the Arbitration Act. If the third party or

1 14. 115. 116. 117.

[1974] 3 All ER 1010. Ibid, p. 1014. [1969] 2 Lloyd’s Rep 225, at p. 227. Finzel, Berry & Co v Eastcheap Dried Fruit Co [1962] 2 Lloyd’s Rep 11, CA (Eng). See also Gola Sports Ltd v General Sportcraft Co Ltd [1982] Com LR 51. 118. Union of India v Singh Builders Syndicate (2009) 4 SCC 523. 1 19. Davies, Middleton and Davies Ltd v Cardiff Corpn (1964) 62 LGR 134, CA (Eng).

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appointing authority chooses a single arbitrator but that arbitrator refuses to act, the claimant should invite the third party or appointing authority to choose another.120

[21.8] DUTY OF APPOINTING AUTHORITY

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The duties of a third party, including an arbitration institution, when acting solely as the appointing authority may differ from those when it is also administering the arbitration under its rules.

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The MCIA Rules allow it to act as the appointing authority in ad hoc arbitrations not administered under MCIA Rules in consideration for its applicable fees.121 The MCIA Rules require prospective arbitrators to sign a declaration regarding their acceptance, availability, independence, and impartiality.122

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With the consent of parties, the LCIA also acts as an appointing authority in arbitrations which are conducted under the UNCITRAL Arbitration Rules.

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It has been suggested in Hooper Bailie Associated Ltd v President Master Builders Association of the ACT123 that the third party must observe the rules of procedural fairness and natural justice (in relation to administrative decisions) when exercising the power of appointment as this power is not a mere or bare power but that imposed with a duty on its exercise and the manner thereof.

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However, Hobhouse LJ in Palgrave Gold Mining Co v McMillan124 stated:

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“It is very common in England to invest responsible public officials with the duty of appointing arbitrators under given circumstances. Such appointments should be made with integrity and impartiality; but it is new to their Lordships to hear them called judicial acts, and it is certainly not the practice to give notice or to invite discussion in any way before making such appointment, though the appointer might in some cases think fit to do so.”125

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[21.9] PRE-​APPOINTMENT INTERVIEWS

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It is difficult to obtain information about an arbitrator’s performance. Experienced arbitration lawyers may exchange notes on suitable arbitrators.

120. 121. 122. 123. 124. 125.

Re Wilson & Son and Eastern Counties Navigation and Transport Co [1892] 1 QB 81, at p. 84. MCIA Rules, 2016, r. 7.8. MCIA Rules, 2016, r. 6.2. (1989) 8 ACLR 83; Re Lord and Lord (1855) 5 E & B 404. [1892] AC 460, at p. 470, PC. Ibid, p. 470; the designation of officials/​institutions who do not normally deal with arbitrations as appointing authorities is cautioned against by Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1831.

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Chapter 21—​​​Composition of Arbitral Tribunals

Other sources may include examining publicly available lists of arbitrators as enlisted in arbitration institutional panels or looking at the formal arbitral qualifications and accreditation such as that bestowed by the Asian Institute of Alternative Dispute Resolution or the Chartered Institute of Arbitrators.126

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On the other hand, parties may wish to interview prospective arbitrators to help determine their suitability. These pre-​appointment meetings can serve as a useful quality-​control function, particularly in assessing the arbitrator’s ability to conduct proceedings judicially.127 Interviewing of prospective arbitrators is not common in Asia where it is traditionally viewed with suspicion by both arbitrators and counsels.128

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However, many factors can and do only come to light in a face-​to-​face meeting. A pre-​appointment interview also gives the arbitrator the opportunity to consider whether they know of any circumstances that would warrant disclosure under Section 12 of the Arbitration Act. The arbitrator may also be asked about their availability to conduct the case.

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It is a form of due diligence that is conducted by the parties on the arbitrator to ensure that there is no conflict of interest. It is not prohibited but must be kept within ethical limits.

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The discussion must be kept at a very general level such as the nature of the dispute, size, time or duration of the arbitration, familiarity with the governing law, and the remuneration that will be on offer. Particulars of the cases must not be discussed.129

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There can be no objection to the interview when it is conducted in presence of both parties. However, a unilateral interview may lead to conflicts and might lead to challenges on the grounds of independence and impartiality of the appointed arbitrator.

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The IBA Guidelines on Conflicts of Interest in International Arbitration (2014) provide the following advice under the green list:

126. M. McIlwrath and J. Savage, International Arbitration and Mediation: A Practical Guide, (Wolters Kluwer Law & Business 2010), pp. 253–​254, at paras 5-​077–​5-​079. 127. It is been taken a step further with the creation of data bases of potential arbitrators. For example, GAR Arbitrator Research Tool (ART) which provides information on (1) Each arbitrator’s approach and procedural preferences; (2) Persons to contact who have seen the arbitrator in action recently; and the arbitrator’s CVs, speeches and other materials, available at https://​globalarbitrationreview.com/​tools/​arbitrator-​research-​tool. 128. M. McIlwrath and J. Savage, International Arbitration and Mediation: A Practical Guide (Wolters Kluwer Law & Business 2010), p. 255, at paras 5-​077–​5-​083. 129. Greenberg, Kee, and Weeramantry, International Commercial Arbitration: An Asian-​Pacific perspective (Cambridge, 2011), p. 265.

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Law, Practice and Procedure of Arbitration in India

“The arbitrator has had initial contact with the appointing party or an affiliate of the appointing party (or the respective counsels) prior to the appointment, if this contact is limited to the arbitrator’s availability and qualifications to serve or to the names of possible candidates for a chairperson and did not address the merits or the procedural aspects of the case.”

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In 2007, the Chartered Institute of Arbitrators has also issued ‘Practical Guidelines 16: The Interviewing of Prospective Arbitrators’ (“CIArb Guideline 16”) which permits the following areas to be discussed: (1) The names of the parties in dispute and any third parties involved or likely to be involved.



(2) Prospective arbitrators should disclose to the parties, any circumstances they are aware of that may give rise to justifiable concerns as to their impartiality or independence.



(3) Prospective arbitrators may discuss with the interviewing party their knowledge and understanding of arbitration law, practice, and procedure. For these purposes, prospective arbitrators may provide details of their past experience to demonstrate that they possess the necessary knowledge and understanding, subject always to the duty of confidentiality owed to the parties involved in any previous arbitrations.



(4) The general nature of the dispute.



(5) Sufficient detail, but no more necessary, of the project to enable both interviewer and interviewee to assess the latter’s suitability for the appointment.



(6) The expected timetable of the proceedings.



(7) The language, governing law, seat of and rules applicable to the proceedings if agreed, or the fact that some or all of these are not agreed.

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(8) The interviewee’s specific legal and/​or technical knowledge, experience and/​ or qualifications, expertise, and availability.

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(9) In ad hoc arbitrations, the candidates’ reasonable fees and other terms of appointment may be discussed at the interview, provided that such a discussion is not prohibited or limited under any applicable law(s) and/​or rules.

The real difficulty is that parties may not limit themselves to interviewing one prospective arbitrator about his availability but interview several candidates with the objective of appointing one who is most likely to decide in their favour.

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Chapter 21—​​​Composition of Arbitral Tribunals

It is recommended that if a unilateral interview is conducted, it should be relatively short (e.g. 30 minutes) and the primary focus should be the arbitrator’s experience and interest in being appointed in the matter. The case should be discussed as neutrally as possible and the fact and nature of the discussion should be recorded in writing and given to the other party if the arbitrator is appointed.130

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Gary B. Born recommends that common-​sense steps such as holding discussions at the arbitrator’s residence or who pays for the meals, hospitality or other financial contributions, or inducement provided by either the interviewing party or the arbitrator, should be followed to ensure and preserve impartiality and independence of the arbitrator.131

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[21.10] CONCLUSION

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An efficient arbitration is often characterised by a good choice of the arbitral tribunal. The parties should be encouraged to reach an agreement on the appointment of the arbitral tribunal rather than leaving the onus of appointment on an appointing authority or the national courts.

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Justice Indu Malhotra summarises the law in India with respect to the composition of an arbitral tribunal as follows:132

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“Section 10 confers autonomy on the parties to make a choice of the individual arbitrators and decide on the number of arbitrators that would constitute a tribunal to adjudicate the dispute. Under sub-​section (1) of Section 10, the parties by agreement can appoint any number of arbitrators, provided that such number shall not be an even number of arbitrators. In the absence of an agreement between the parties, the arbitral tribunal shall consist of a sole arbitrator in terms of sub-​section (2) of Section 10. The object of making provision for an off number is to avoid a deadlock in the decision-​making process by the tribunal.133 The provision is mandatory and non-​ derogable in nature.”134

130. Tackaberry, Marriot QC, and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Sweet & Maxwell 2003), at para. 2-​246. 131. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 1815–​1816; see also Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 4.73. 132. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 430. 133. Enercon (India) Ltd. v Enercon Gmbh (2014) 5 SCC 1. 134. South Eastern Coalfeilds Ltd. and Ors. v Shri Balaji Metals and Minerals Arbitration Appeal No. 14 of 2017, decided by the Chhattisgarh High Court on 14 December 2017.

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Law, Practice and Procedure of Arbitration in India

In India, the Arbitration Act forbids even-​numbered arbitral tribunals in explicit terms.135 Parties are at liberty to choose an arbitral tribunal of any number so long as it is not an even number.136 However, certain decisions of the Supreme Court of India have resulted in a judicial precedent which has been viewed with some concern. Internationally, there exists a difference in position regarding the legality of arbitral tribunals comprising an even number of arbitrators.

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Countries such as France (in domestic arbitrations), the Netherlands, Belgium, Italy, Portugal, Egypt, and Tunisia prohibit an arbitral tribunal consisting of an even number of arbitrators.137 However, in countries such as the United States of America and England, tribunals with an even number of arbitrators are permitted, even if very unusual.138

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If the parties fail to adopt the procedure agreed upon in the arbitration agreement for the appointment of an arbitral tribunal, then the default powers under Section 11 of the Arbitration Act can be invoked as the last resort.

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This chapter also discusses the parties’ interest in interviewing prospective arbitrators. Such interviews can be useful in minimising the risks of the challenges to the impartiality and independence of the arbitrators and/​or their awards at a later stage.

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However, parties should ensure that this practice is not objectionable in principle thereby avoiding unilateral communications with arbitrators and appropriately restricting the scope of these discussions.139

1 35. Arbitration Act, s. 10(1). 136. Ibid. 137. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 1789–​1790; French Code of Civil Procedure, art. 1451; Belgian Judicial Code, art. 1684; Netherlands Code of Civil Procedure, art. 1026(1); Chinese Arbitration Law, art. 30; Italian Code of Civil Procedure, art. 809; Portuguese law on Voluntary Arbitration, art. 8(1); Egyptian Arbitration Laws, art. 15(2); Tunisian Arbitration Code, art. 55(1). 138. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1791. 139. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 4.72.

Chapter 22 APPOINTMENT OF ARBITRAL TRIBUNAL UNDER THE ARBITRATION ACT [22.1]

INTRODUCTION....................................................................................................................... 599

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[22.2] APPOINTMENT OF ARBITRATOR BY THE COURT OR THE DESIGNATED APPOINTING AUTHORITY................................................................................................... 601 [22.3] NATURE OF THE POWER....................................................................................................... 604 [22.4] APPOINTMENT UNDER SECTION 11(4) OF THE ARBITRATION ACT.................... 606 [22.5] APPOINTMENT UNDER SECTION 11(5) OF THE ARBITRATION ACT.................... 608

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[22.6] APPOINTMENT UNDER SECTION 11(6) OF THE ARBITRATION ACT.................... 609

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[22.7] FACTORS TO BE TAKEN INTO ACCOUNT BY SUPREME COURT OF INDIA, HIGH COURT, OR THE INSTITUTION DESIGNATED BY SUCH COURTS....................................................................................................................................... 610

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[22.8] DECISION OF THE SUPREME COURT OF INDIA, HIGH COURT, OR THE INSTITUTION DESIGNATED BY SUCH COURTS NOT SUBJECT TO APPEAL........ 614 [22.9] MODE OF APPLICATION TO HIGH COURT..................................................................... 615

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[22.10] CONCLUSION............................................................................................................................ 616

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[22.1] INTRODUCTION

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The Arbitration Act substantially adopts the Model Law albeit with a few modifications.1 Sections 11(1) to 11(8) of the Arbitration Act adopt the substance of the five clauses of Article 11 of the Model Law.2 Sections 11(6A), 11(9) to 11(14) of the Arbitration Act are not based on any provision of the Model Law.3

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In India, the parties are free to agree on a procedure for appointment of an arbitrator or arbitrators. In the absence of an agreed procedure, or failure of one of the parties to act, this power, by default, would pass on to the appointing authority under Section 11 of the Arbitration Act.4

1. Pandey & Co. Builders Pvt. Ltd. v State of Bihar (2007) 1 SCC 467; Rashtriya Ispat Nigam Ltd. v Verma Transport Co. (2006) 7 SCC 275; Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 441. 2. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 441. 3. Ibid, p. 441. 4. Ibid, p. 442.

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Law, Practice and Procedure of Arbitration in India

The courts while appointing the arbitrator in exercise of powers under Section 11 of the Arbitration Act endeavour to give effect to the appointment procedure contemplated by the arbitration agreement as far as possible.5

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Under Section 11 of the Arbitration Act, a party can approach the court for the appointment of either a sole arbitrator, the other party’s nominated arbitrator or the presiding arbitrator. Before a party can approach the court, either a period of thirty (30) days must have lapsed6 (in the case of a sole arbitrator) or there must have been a failure of the agreed procedure in the arbitration agreement7 (in other cases of arbitral appointment).

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Prior to the 2015 Amendment, the Chief Justice, or any person or institution designated by him had the power to appoint an arbitrator in the following manner: (1) The parties have not agreed on a procedure for the appointment of arbitrator(s) and the default appointment procedure under Section 11(3) or Section 11(5) of the Arbitration Act fails; or



(2) the parties have agreed upon an appointment procedure and such agreed procedure has not been followed.

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By the 2015 Amendment, the Arbitration Act aimed to facilitate the speedy disposal of applications under Section 11 of the Arbitration Act by: (1) enabling the designation of any person or institution as an appointing authority for arbitrators in addition to the High Court or Supreme Court of India under Section 11 of the Arbitration Act;



(2) limiting challenges to the decision made by the appointing authority; and



(3) requiring the expeditious disposal of applications under Section 11 of the Arbitration Act, preferably within the prescribed sixty (60) days’ time period.

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The 2015 Amendment also introduced Section 6(A) to the Arbitration Act which reads: “(6-​A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-​section (4) or sub-​section (5) or sub-​section (6), shall,

5. Indian Oil Corporation Ltd. & Ors. v Raja Transport Pvt. Ltd. (2009) 8 SCC 520. 6. Arbitration Act, s. 11(5). 7. Arbitration Act, s. 11(6).

Chapter 22—​​​Appointment of Arbitral Tribunal under the Arbitration Act

601

notwithstanding any judgment, decree or order of any court, confine to the examination of the existence of arbitration agreement.” The Supreme Court of India in Duro Felguera S.A. v Gangavaram Port Ltd.8 clarified that a court’s role in an application under Section 11(6A) of the Arbitration Act is to prima facie examine the existence of a valid arbitration agreement and not its validity. The Court held:

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“The scope of the power under Section 11 (6) of the 1996 Act was considerably wide ... This position continued till the amendment brought about in 2015. After the amendment, all that the Courts need to see is whether an arbitration agreement exists –​nothing more, nothing less. The legislative policy and purpose is essentially to minimize the Court’s intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11 (6A) ought to be respected.”

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However, the 2019 Amendment deleted Section 11(6A) of the Arbitration Act.9 The Supreme Court of India and the High Courts have been given the power to designate arbitral institutions, graded by the Arbitration Council of India, to discharge the functions under Section 11 of the Arbitration Act.10

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The 2019 Amendment Act clarifies that this would not be considered as a delegation of judicial powers to such arbitral institution(s) by the Supreme Court of India or by any of the High Courts.11

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[22.2] APPOINTMENT OF ARBITRATOR BY THE COURT OR THE DESIGNATED APPOINTING AUTHORITY

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The expeditious resolution of disputes by arbitration means keeping matters, as far as possible, out of the courts. The objective of minimal interference by the courts12 resulted in the Model Law13 and the Arbitration Act14 providing for the resolution of

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8. (2017) 9 SCC 764. 9. The enforcement of the 2019 Amendment to s. 11 has not been brought into force so far as the Arbitration Council of India is yet to be set up. Till such time that s.11 is brought into force, subs. (6A) will continue to remain in force. 10. Arbitration Act, s. 11(3A). 11. Arbitration Act, s. 11(6B). 12. Swiss Timing Ltd. v Commonwealth Games 2010 Organising Committee (2014) 6 SCC 677; Capping Corp Ltd v Aquawalk Sdn Bhd [2013] 6 MLJ 579; AV Asia Sdn Bhd v Pengarah Kuala Lumpur Regional Centre for Arbitration [2013] MLJU 183, at paras 11 and 13. 13. Model Law, art. 5. 14. Arbitration Act, s. 5.

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Law, Practice and Procedure of Arbitration in India

problems relating to the appointment of arbitrators without allowing parties to immediately resort to the courts. Lord Mustill15 described the relationship between courts and arbitrators as follows:

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“Ideally, the handling of arbitral disputes should resemble a relay race. In the initial stages, before the arbitrators are seized of the dispute, the baton is in the grasp of the court; for at that stage there is no other organization which could take steps to prevent the arbitration agreement from being ineffectual. When the arbitrators take charge, they take over the baton and retain it until they have made an award. At this point, having no longer a function to fulfil, the arbitrators hand back the baton so that the court can in case of need lend its coercive powers to the enforcement of the award.”16

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In India, Section 11 of the Arbitration Act confers the default power on the court, to act in aid of the arbitral process by making the appointment of the arbitrators, on the failure of the parties to comply with the procedures agreed under the arbitration agreement.17 This is intended to prevent the arbitral process from being thwarted at the outset by any of the parties.18

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Under Section 11 of the Arbitration Act, a party can approach the court for the appointment of: (1) a sole arbitrator;



(2) the other party’s nominated arbitrator; or



(3) the presiding arbitrator.

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Before a party can approach the court, either a period of thirty (30) days must have lapsed19 (in the case of a sole arbitrator) or there must have been a failure of the agreed procedure in the arbitration agreement20 (in other cases of arbitral appointment).

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Section 11(1) of the Arbitration Act provides that a person of any nationality can be appointed as an arbitrator, unless there is an arbitration to the contrary.21

15. Adhunik Steels Ltd. v Orissa Manganese and Minerals (P) Ltd. (2007) 7 SCC 125; “Conservatory and Provisional Measures in International Arbitration”, 9th Joint Colloquium in “Comments and Conclusions”. 16. Adhunik Steels Ltd. v Orissa Manganese and Minerals (P) Ltd. (2007) 7 SCC 125. 17. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 442. 18. Ibid. 19. Arbitration Act, s. 11(5). 20. Arbitration Act, s. 11(6). 21. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 461.

Chapter 22—​​​Appointment of Arbitral Tribunal under the Arbitration Act

603

The 2015 Amendment and the 2019 Amendment to the Arbitration Act prevent the court or the arbitration institutions from examining any preliminary issues beyond the existence of the arbitration agreement. It is no longer upon the courts to determine preliminary questions such as whether a claim is stale.22 The courts should now only decide whether there is an arbitration agreement or not, nothing more, nothing less.

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Similarly, the High Court of Delhi in Parsvnath Developers Limited v Rail Land Development Authority23 while deciding upon the scope of Section 11 of the Arbitration Act noted that the scope and power is restricted only to examining the existence of an arbitration agreement and nothing more, not even its validity.

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Appointing Authority under Section 11 of the Arbitration Act

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Section 11(12) of the Arbitration Act requires a party seeking the constitution of the tribunal to approach the Supreme Court of India in an international commercial arbitration. In case of other arbitrations, such a party is required to approach the concerned High Court.

-N

ot

The 2019 Amendment modified the aforementioned position by assigning the function of appointment of arbitrator to designated arbitral institutions. The statute clarifies that this would not be considered as a delegation of judicial powers to such arbitral institution by the Supreme Court of India or by any of the High Courts.24

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The Supreme Court of India and the High Courts have been given the power to designate arbitral institutions, graded by the Arbitration Council of India, to discharge the functions under Section 11 of the Arbitration Act.25

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The Supreme Court of India in Mayavati Trading (P) Ltd. v Pradyuat Deb Burman26 held that Section 11(6A) of the Arbitration Act had been omitted as per the 2019 Amendment. This is because the appointment of arbitrators was now supposed to be done institutionally.

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In such situations, the Supreme Court of India or the various High Courts were no longer required to appoint arbitrators and consequently to determine whether an arbitration agreement exists.27

22. 23. 24. 25. 26. 27.

Mayavati Trading Pvt. Ltd. v Pradyuat Deb Burman (2019) 8 SCC 714, at para. 7. Arbitration Petition No. 710 of 2019 decided on 19 May 2020 by the High Court of Delhi. Arbitration Act, s. 11(6B). Arbitration Act, s. 11(3A). (2019) 8 SCC 714. Ibid, at para. 6.

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Law, Practice and Procedure of Arbitration in India

Forfeiture of the Right to Appoint an Arbitrator Usually, a deadlock or failure to agree arises in cases of appointing a sole arbitrator or the presiding arbitrator.

ul at io n

The Supreme Court of India in Datar Switchgears Ltd. v Tata Finance Ltd. (“Datar Switchgears”)28 held that when the parties have agreed upon a procedure for appointment of an arbitrator/​s, the appointing authority must give due importance to such procedure.

irc

However, if one party calls upon the other party to appoint an arbitrator under Section 11(6) of the Arbitration Act, and the opposite party does not make an appointment within thirty (30) days of the request, the right to make the appointment does not automatically get forfeited after the expiry of such period.

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The forfeiture of such right occurs after an application is filed under Section 11 of the Arbitration Act by one of the parties to fill the vacancy. It is at that point when the right of the party to nominate stands forfeited.29

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The decision in Datar Switchgears was further affirmed by the Supreme Court of India in Punj Lloyd v Petronet MHB Ltd.30 and subsequently in Union of India v Bharat Battery Manufacturing Co. (P) Ltd.31

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[22.3] NATURE OF THE POWER

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The Supreme Court of India in Konkan Railway Corporation Ltd. v Mehul Construction Co.32 held that the powers of the Chief Justice under Section 11(6) of the Arbitration Act are administrative in nature. This decision was confirmed by a five-​judge bench of the Supreme Court of India in Konkan Railway Corporation v Rani Constructions.33

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However, a seven-​judge bench of the Supreme Court of India in SBP & Co. v Patel Engineering Ltd.34 (“Patel Engineering”) overruled this view and held that the power to appoint an arbitrator under Section 11 of the Arbitration Act is judicial and not administrative, which could only be delegated to another judge, and not to any other institution.

28. 29. 30. 31. 32. 33. 34.

(2000) 8 SCC 151. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 473. (2006) 2 SCC 638, at para. 5–​7. (2007) 7 SCC 684. (2000) 7 SCC 201. (2002) 2 SCC 388. (2005) 8 SCC 618.

Chapter 22—​​​Appointment of Arbitral Tribunal under the Arbitration Act

605

The decision of Patel Engineering ushered criticism on the ground that it had undermined the principle of kompetenz-​kompetenz enshrined in Section 16 of the Arbitration Act. It was also seen to be contrary to the principle of judicial minimalism present in Section 5 of the Arbitration Act.35

ul at io n

Later, the Supreme Court of India in National Insurance Co. Ltd. v Boghara Polyfab36 (“Boghara Polyfab”) relied on Patel Engineering and categorised the issues which could or could not be decided by the court while appointing an arbitrator, into three categories: “22.1. The issues (first category) which Chief Justice/​his designate will have to decide are:

irc

(a) Whether the party making the application has approached the appropriate High Court?

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(b) Whether there is an arbitration agreement and whether the party who has applied under Section 11 of the Act, is a party to such an agreement?

-N

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22.2. The issues (second category) which the Chief Justice/​his designate may choose to decide are: (a) Whether the claim is a dead (long barred) claim or a live claim.

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(b) Whether the parties have concluded the contract/​transaction by recording satisfaction of their mutual rights and obligation or by receiving the final payment without objection.

w

22.3. The issues (third category) which the Chief Justice/​his designate should leave exclusively to the arbitral tribunal are:

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(a) Whether a claim made falls within the arbitration clause (as for example, a matter which is reserved for final decision of a departmental authority and excepted or excluded from arbitration)?

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(b) Merits or any claim involved in the arbitration.”37 The 2015 Amendment restricted the scope of examination by the court under Section 11 of the Arbitration Act and legislatively overruled the judgments rendered in Patel Engineering and Boghara Polyfab.

35. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 446. 36. (2009) 1 SCC 267. 37. Ibid, at para. 22.

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Law, Practice and Procedure of Arbitration in India

It introduced Section 11(6A) in the Arbitration Act which provides that the courts while exercising the default power of under Section 11 should confine to the examination of the existence of the arbitration agreement.38 The Supreme Court of India in Booz Allen and Hamilton Inc. v SBI Home Finance Ltd. (“Booz Allen”) drew a distinction between powers under Sections 8 and 11 of the Arbitration Act. 39

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The Court held that the Chief Justice or his designates, in an application under Section 11 of the Arbitration Act cannot decide on the issue of arbitrability of disputes. It must be left to the determination of the arbitral tribunal.

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irc

However, in the case of courts exercising power under Section 8 of the Arbitration Act, all aspects of arbitrability of the dispute sought to be referred to arbitration would be decided by the court seized of the suit.

fo

The 2019 Amendment has deleted sub-​sections (6A), (7), and (10) of Section 11 of the Arbitration Act since these provisions would become redundant owing to the default power of appointment having shifted to the designated arbitral institutions.

-N

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The provisions of sub-​sections (4), (5), (6), (8), and (9) of Section 11 of the Arbitration Act have been amended to substitute the appointing authority from the Supreme Court of India or the High Court, to arbitral institutions designated by the courts.

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The 2019 Amendment has been brought into force with effect from 30 August 2019. However, the provisions of Part 1A of the Arbitration have not been brought into force at present.

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[22.4] APPOINTMENT UNDER SECTION 11(4) OF THE ARBITRATION ACT

re v

Section 11(4) of the Arbitration Act contains the default procedure for appointment of an arbitrator, where a party fails to comply with the procedure agreed upon in the contract.

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The pre-​conditions for applicability of Section 11(4) are:



(1) the arbitration agreement provides for an arbitral tribunal of three arbitrators; and



(2) the arbitration agreement itself prescribes the procedure for appointment of the arbitrators.

38. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 450. 39. (2011) 5 SCC 532.

Chapter 22—​​​Appointment of Arbitral Tribunal under the Arbitration Act

607

The High Court of Delhi in Prasar Bharati v Maa Communications40 held that a party is not entitled to approach the court straightaway under Section 11 of the Arbitration Act without first issuing of a notice to the other party with the names of the proposed arbitrators. It is only upon the failure of consensus between the parties, that the default power under Section 11 can be invoked.

ul at io n

The term “any person” used in Section 11(4) of the Arbitration Act is of wide amplitude and includes a sitting judge of the Supreme Court of India of the High Courts.41 The only requirement of law is that in appointing an arbitrator, courts of their designate would account for the qualifications, independence, and impartiality of the person to be appointed as an arbitrator.42

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irc

The two instances in which a party may resort to Section 11(4) of the Arbitration Act are: (a) default in appointment of arbitrator by a party; and (b) default in appointment of the presiding arbitrator by the two party-​appointed arbitrators.

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Default in Appointment of Arbitrator by a Party [Section 11(4)(a)]

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The standard procedure under Section 11(3) of the Arbitration Act requires each party to the arbitration agreement to appoint an arbitrator. Section 11(4)(a) of the Arbitration Act allows a party to approach the court if the other party has failed to appoint its arbitrator within a period of thirty (30) days from the receipt of request to do so.

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The court can appoint an arbitrator only if the parties fail to appoint an arbitrator in accordance with the agreed procedure under the said Section 11(3).

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The thirty (30) day limit brings certainty and precludes arguments over whether a default has indeed occurred, barring questions of the time of service and disputes over the point at which an arbitrator is appointed.

Default in Appointment of the Presiding Arbitrator [Section 11(4)(b)]

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Section 11(4)(b) of the Arbitration Act allows either party to the arbitration agreement to approach the court if the two party-​appointed arbitrators have failed to appoint the presiding arbitrator within a period of 30 days from the date of their appointment.

40. 2010 (1) Arb LR 551. 41. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 479. 42. Ibid, p. 479.

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Law, Practice and Procedure of Arbitration in India

[22.5] APPOINTMENT UNDER SECTION 11(5) OF THE ARBITRATION ACT If the arbitration agreement provides for a sole arbitrator to be appointed and no consensus has been reached regarding the appointment, then either party can apply to the court to appoint the sole arbitrator.43

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The filing of an application under Section 11(5) of the Arbitration Act is subject only to the expiry of 30 days from the date when the request for appointment was received by one party from the other.44 This provision provides the mechanism to resolve the deadlock or impasse which parties face in agreeing on a sole arbitrator.

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Often the parties may wish to jointly approach the court under Section 11(5) of the Arbitration Act for appointment of the sole arbitrator as was the case before the Supreme Court of India in Catherine Anderson v Ashwani Bhatia.45

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When the arbitration agreement provides that a sole arbitrator is to be appointed by an appointing authority, a party cannot file an application under Section 11(5) of the Arbitration Act before first approaching the appointing authority.46

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In certain circumstances when the agreement is silent on the number of arbitrators, the court can make a deviation from the rule that failing any determination on the number of arbitrators, the arbitral tribunal shall consist of a sole arbitrator.47

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The Supreme Court of India in Geophysical Institute of Israel v Geoenpro Petroleum Ltd.48 was dealing with an application under Section 11(5) of the Arbitration Act where the arbitration agreement was silent on the number of arbitrators.

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The Court passed an order constituting a three-​member tribunal. The Court appointed the presiding arbitrator while each party appointed one arbitrator. However, the Court, as per Section 10(2) of the Arbitration Act, ought to have appointed a sole arbitrator.

43. 44. 45. 46. 47. 48.

Arbitration Act, s. 11(5). Able Associates and Anr. v K.S. Ramakrishna Rao 2007 (4) ArbLR 219 AP, at para. 16. (2019) 11 SCC 299. Standard Corrosion Controls Pvt. Ltd. v Sarku Engineering Services Sdn Bhd (2009) 1 SCC 303. Arbitration Act, s. 10. (2009) 17 SCC 18.

Chapter 22—​​​Appointment of Arbitral Tribunal under the Arbitration Act

609

In this case, the Court relied on the fact that the subject-​matter of the dispute was complex and that both the parties had jointly requested for constitution of a three-​ member arbitral tribunal.

[22.6] APPOINTMENT UNDER SECTION 11(6) OF THE ARBITRATION ACT

ul at io n

Section 11(2) of the Arbitration Act provides for parties to agree on a procedure for appointment of the arbitrator(s). Failing an agreement, the appointment would be made by the court, or any person, or institution, designated by the court.

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A request could be made to the appointing authority under Section 11 of the Arbitration Act for the appointment of an arbitrator in the following circumstances: (1) A party fails to act as per the agreed procedure;49



(2) The parties, or the two appointed arbitrators, fail to reach an agreement for appointment of the third arbitrator under the agreed procedure;50 or



(3) A person, including an institution, fails to perform any function entrusted under the agreed procedure.51

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The Supreme Court of India in National Highways Authority of India v Bumihiway DDB Ltd. (JV) & Ors.52 held that unless the mechanism for appointment of the substitute arbitrator fails, or the procedure is not exhausted, the Court would not exercise its default power under Section 11(6) of the Arbitration Act.

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The High Court of Delhi in Rajesh Gupta v Smt. Mohit Lata Sunda and Ors.53 decided the issue of whether a petition under Section 11(5) of the Arbitration Act is only maintainable against a party to an arbitration agreement, or does it cover within its ambit the assignee of the party to the arbitration agreement?

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The Court held that the assignee has stepped into the shoes of the assignor. Accordingly, the arbitration agreement between the petitioner and the assignor would also bind the assignee, who is a third-​party to the agreement. Therefore, the Court permitted the appointment of an arbitrator under Section 11(6) of the Arbitration Act.

49. 50. 51. 52. 53.

Ibid, p. 483. Ibid. Ibid. (2006) 10 SCC 763. Arbitration Petition No. 494 of 2019 decided on 27 May 2020 by the High Court of Delhi.

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Law, Practice and Procedure of Arbitration in India

[22.7] FACTORS TO BE TAKEN INTO ACCOUNT BY SUPREME COURT OF INDIA, HIGH COURT, OR THE INSTITUTION DESIGNATED BY SUCH COURTS Existence of an Arbitration Agreement

ul at io n

The existence of an arbitration agreement is a necessary pre-​condition to the exercise of powers under Section 11 of the Arbitration Act. It is not permissible to appoint an arbitrator in the absence of an arbitration agreement or mutual consent to arbitrate.54 Since the 2015 and 2019 Amendments, the courts or arbitration institution are prevented from examining preliminary issues55 beyond the existence of the arbitration agreement when exercising powers under Section 11 of the Arbitration Act.56

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The Supreme Court of India in Garware Wall Ropes Ltd. v Coastal Marine Constructions and Engineering Ltd.57 held that the courts could examine whether the document which contained the arbitration clause is properly stamped. The Supreme Court of India in N.N. Mercantile Pvt. Ltd. v Indo Unique Flame Ltd.58 held that the finding in Garware Wall Ropes Ltd. that the non-​payment of stamp duty on the commercial contract would invalidate even the arbitration agreement, and render it non-​existent in law, and un-​enforceable, is not the correct position in law.

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In the event of the document not being stamped or being insufficiently stamped, the court would impound such document till deficit stamp duty, penalty, etc. are paid. Thereafter, the court will proceed to determine expeditiously the application under Section 11 of the Arbitration Act.

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Qualifications Specified in the Arbitration Agreement

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Courts are mandated to seek disclosure from prospective arbitrators regarding their qualifications to ensure whether they meet the requirements specified under the arbitration agreement.59 This embodies the primacy of the arbitration agreement which must be followed.60

54. Jagdish Chander v Ramesh Chander (2007) 5 SCC 719. 55. For example, issues such as limitation, accord, and satisfaction. 56. Mayavati Trading Pvt. Ltd. v Pradyuat Deb Burman (2019) 8 SCC 714; Duro Felguera, SA v Gangavaram Port Ltd. (2017) 9 SCC 729. 57. (2019) 9 SCC 209. 58. Civil Appeal No. 3802-​3803/​2020 decided by judgment dated 11 January 2021. 59. Arbitration Act, s. 11(8). 60. Union of India v E B Aaby’s Rederi A/​S [1975] AC 797, HL.

Chapter 22—​​​Appointment of Arbitral Tribunal under the Arbitration Act

611

Where the parties have not prescribed any qualifications, it is the sole discretion of the persona designata to appoint an arbitrator of their choice.61 The Supreme Court of India in Indian Oil Corp. Ltd. v Raja Transport Pvt. Ltd.62 emphasised that courts shall make the appointment in terms of the procedure agreed by the parties. If the court deviates from the same, it must provide reasons.

ul at io n

It is largely in the decisions from before the 2015 Amendment that the Courts have departed from the qualification requirements mentioned in arbitration agreements to ensure the impartiality and independence of the arbitrators.63

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The Supreme Court of India in North Eastern Railways v Tripple Engg. Works64 held that even if the agreement specifically provides for any particular qualification for an arbitrator, in appropriate cases, courts are not powerless to appoint an arbitrator under Section 11(6) of the Arbitration Act.

fo

The 2020 Ordinance amended Section 43J of the Arbitration Act to allow the Arbitration Council of India to specify the qualifications, experience, and norms for accreditation of arbitrators through regulations.65

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The Arbitration Council of India is intended to be an independent body for the purpose of grading arbitral institutions and accreditation of arbitrators. The statutory framework for the Arbitration Council of India was set up by the 2019 Amendment.

w

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However, it has not yet been notified or operationalised. Once established, it is expected to stipulate minimum qualifications, experience, and norms for accreditation of arbitrators.

ie

The Court in Pan Atlantic Group Inc v Hassneh Insurance Co of Israel66 observed that the person to be appointed as an arbitrator must: (1) have the capacity which the law requires of every person to possess;



(2) possess the qualifications which the arbitration agreement prescribes and must have none of the disqualifications which the arbitration agreement prohibits; and

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61. Fitwell Const. Pvt Ltd v Union of India 2016 (1) Arb LR 73 (Del) (DB). 62. Indian Oil Corp. Ltd. v Raja Transport Pvt. Ltd. (2009) 8 SCC 520. 63. Union of India v Parmar Construction Co. (2019) 15 SCC 682; Denel Pty Ltd. v Ministry of Defence (2012) 2 SCC 759; Indian Oil Corporation Ltd. & Ors. v Raja Transport Pvt. Ltd. (2009) 8 SCC 520. 64. (2014) 9 SCC 288. 65. For a detailed discussion on this issue, see Chapter 20. 66. [1992] 1 Lloyd’s Rep. 120.

612

Law, Practice and Procedure of Arbitration in India

(3) not have any interest in the subject matter or closeness with the parties as would make him or appear to make him incapable of acting in an impartial manner.

Independence and Impartiality of the Arbitrator

ul at io n

Section 11(8) read with Section 12(1) of the Arbitration Act mandates the court to seek disclosure from prospective arbitrators and consider factors which may give rise to justifiable doubts, including independence or impartiality. The circumstances which may be considered as giving rise to justifiable doubts are enumerated in the Fifth Schedule of the Arbitration Act.67

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On the other hand, if an arbitrator falls within any of the categories specified in the Seventh Schedule of the Arbitration Act then he would be ineligible to be appointed as an arbitrator. This bar is irrespective of any prior agreement to the contrary.

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The only way that a person falling within any of the categories specified in the Seventh Schedule can be appointed as an arbitrator is if the parties, after disputes between them have arisen, waive the applicability of Section 12(5) by an express agreement in writing.68

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There is a critical difference between when an arbitrator falls within a category under the Fifth Schedule or under the Seventh Schedule. Under the Seventh Schedule, he becomes ineligible and de jure, unable to perform any functions.

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However, if an arbitrator falls within the Fifth Schedule, he retains jurisdiction to determine the justifiable doubts over his independence and impartiality. The challenge to his appointment can only be made under Section 13 of the Arbitration Act to the arbitral tribunal itself.69

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The High Court of Delhi in Food Corporation of India v Mehta Plastic Industries70 held:

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“No doubt that the parties are as a matter of rule entitled to expect from an arbitrator complete impartiality and indifference and an objection may be taken that the arbitrator lacks the qualifications essential in any tribunal i.e. impartiality and disinterest.”71

67. 68. 69. 70. 71.

Arbitration Act, explanation 1 to s. 12(1). Arbitration Act, s. 12(5). HRD Corporation (Marcus Oil and Chemical Division) v GAIL (India) Ltd. (2018) 12 SCC 471. AIR 1982 Del 160. Food Corporation of India v Mehta Plastic Industries AIR 1982 Del 160, at para. 5.

Chapter 22—​​​Appointment of Arbitral Tribunal under the Arbitration Act

613

Further, the Supreme Court of India in HRD Corporation (Marcus Oil and Chemical Divisions) v GAIL (India) Limited72 observed that while a challenge based on the grounds mentioned in the Seventh Schedule can be made directly to the court, the appointment of an arbitrator based on circumstances under the Fifth Schedule can be questioned only post the award, that is, at the setting aside stage.

ul at io n

The IBA Guidelines on Conflicts of Interest in International Arbitration also provide useful guidance. The said Guidelines highlight what may constitute a conflict of interest. They provide a traffic light system of circumstances which might indicate a lack of independence or impartiality:

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“The ‘red list’ includes circumstances where the arbitrator has a significant financial interest in one of the parties or the outcome of the case, is a legal representative of a party, or has a senior position within one of the parties and so on. The severity of the potential conflict decreases through the ‘orange list’ which includes circumstances such as the arbitrator having previously served as counsel for one of the parties but having no ongoing relationship, and the arbitrators being lawyers in the same firm or chambers, to the ‘green list’ such as an insignificant shareholding in one of the parties or the arbitrator and one of the party’s counsel having previously served as co-​arbitrators. These guidelines are by their nature non-​binding but are a useful starting point for assessing whether an arbitrator may be unsuitable for the appointment.”73

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Nationality of the Parties and the Arbitrator

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Another factor applicable in international arbitrations is the nationality of the arbitrators and the parties. Where the court or its designate has been called upon to appoint an arbitrator, consideration will also be given to the nationality of the party-​appointed arbitrators.74

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There is an expectation of neutrality in international arbitration.75 For example, it was therefore considered inappropriate for a Canadian court to appoint a Canadian

72. 2018 (12) SCC 471. 73. The Court in Sierra Fishing Company v Farran [2015] EWHC 140 (Comm), at para. 58 derived assistance from these guidelines. 74. Section 11(9) of the Arbitration Act. 75. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1882; the insistence on a neutral nationality arbitrator is criticised by Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 4.61 as sometimes precluding logical appointments, the example given being a contract between Swiss and French parties, governed by Swiss law with the seat in Switzerland, but where a Swiss lawyer would be excluded.

614

Law, Practice and Procedure of Arbitration in India

national as the chairman in a Canadian–​Japanese dispute.76 This is based on the grounds that it would be inconvenient and unfair to the parties and to the arbitrator. In another case between French and Mexican parties, a French national was appointed despite arguments that the arbitrator should be of a neutral nationality.77

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The law governing the contract and the prospective arbitrators’ familiarity with that law should be taken into account and an arbitrator of neutral nationality may nonetheless be unsuitable if he is from an adversarial common law background and both parties are from civil law jurisdictions.

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Nationality is tangentially related to the linguistic requirements of the arbitration. The considerations that arise from language may include the need for translation and interpreters. In the end, the process can add significant expense and delay, and interfere with the conduct of the hearing.78

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[22.8] DECISION OF THE SUPREME COURT OF INDIA, HIGH COURT, OR THE INSTITUTION DESIGNATED BY SUCH COURTS NOT SUBJECT TO APPEAL

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The Arbitration Act does not provide for a review of the power conferred upon the Chief Justice of its designate under Section 11 of the Arbitration Act.79 Section 11(7) of the Arbitration Act expressly states that there is no right to appeal the decision of the court or its designated arbitral institution in the matter of appointment.

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However, the 2019 Amendment has omitted Section 11(7)80 since the power of appointment was passed on to designate institutions. It also supports the principles of non-​intervention and kompetenz-​kompetenz.

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The Private Company in Private Company “Triple V” Inc v Star (Universal) Co Ltd and Sky Jade Enterprises Group Ltd81 argued that the Court of Appeal did not have jurisdiction to hear the appeal since the decision of the Court of First Instance dealt with a matter falling under the scope of Article 11(3) of the UNCITRAL Model Law (equivalent to Section 11(4) and 11(5) of the Arbitration Act).

76. Quintette Coal Ltd v Nippon Steel Corp [1988] BCJ No 492, SC (British Columbia). 77. Transportacion Maritima Mexicana SA v Société Alsthom (1988) Rev. Arb. 699. 78. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1883. 79. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 502. 80. Section 3 of the 2019 Amendment. 81. Private Company “Triple V” Inc v Star (Universal) Co Ltd and Sky Jade Enterprises Group Ltd [1995] 3 HKCA 617, at para. 25; see also Bendex Eng v Efficient Pet (Nig) [2001] 8 NWLR (Part 715) 333, CA (Nigeria); Ogunwale v Syrian Arab Republic [2002] 9 NWLR (Part 771) 127, CA (Nigeria).

Chapter 22—​​​Appointment of Arbitral Tribunal under the Arbitration Act

615

The Court of Appeal of Hong Kong dismissed this argument and held that Article 11(3) applied to cases where the failure to agree on the appointment of an arbitrator was due to the parties failing to agree on a procedure for the appointment of an arbitrator and not on whether there should be an arbitration at all or whether the arbitration should involve a particular party.

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Naturally, if the issue of the jurisdiction of the arbitral tribunal has previously been raised in court, the court may not accept the same argument in opposing an application for appointment of an arbitrator.82

[22.9] MODE OF APPLICATION TO HIGH COURT

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The parties to the arbitration agreement may make the application.83 Different courts in India have varied procedures for accepting applications for appointment of the arbitrator. Therefore, it would be prudent to review the rules laid down by the concerned court before filing the application under Section 11 of the Arbitration Act.

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As a rule of the thumb, a request under Sections 11(4), 11(5), and 11(6) of the Arbitration Act shall be made in writing, signed, verified, and accompanied by:84 (1) the original arbitration agreement or a duly certified copy thereof;



(2) the names and addresses of the parties to the arbitration agreement;



(3) the names and addresses of the arbitrators, if any already appointed;



(4) the name and address of the person or institution, if any, to whom or which any function has been entrusted by the parties to the arbitration agreement under the appointment procedure agreed upon by them;



(5) the qualifications required, if any, of the arbitrators by the agreement of the parties;



(6) a brief written statement describing the general nature of the dispute and the points at issue;



(7) the relief or remedy sought; and



(8) an affidavit, supported by the relevant documents to the effect that the condition to be satisfied under sub-​section (4) or sub-​section (5) or sub-​section

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82. Pan African Builders & Contractors Ltd v National Social Security Fund Board of Trustees Civil Case 701 of 2005. 83. Re Franklin and Swathling’s Arbitration [1929] 1 Ch 238 (nominee of deceased partner). 84. See r. 2 of the Scheme for Appointment of Arbitrators by The Chief Justice of Madhya Pradesh High Court, 1996 published vide Notification No. C-​6010-​2-​15-​28-​41, dated 20 November 1996.

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Law, Practice and Procedure of Arbitration in India

(6) of Section 11 of the Arbitration Act, as the case may be, before making the request has been satisfied and how it has been so satisfied.

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Further, in case the party making the request does not have the original arbitration agreement or a copy thereof, it shall file an affidavit giving relevant facts in this regard and request that the opposite party may be directed to produce the original agreement or a copy thereof.85

[22.10] CONCLUSION

irc

Section 11 of the Arbitration Act permits the judicial appointment of arbitrators by the national courts or the arbitration institutions, as a default procedure. This is limited to cases where the parties have not agreed upon the procedure for selecting the tribunal or where the agreed procedure has failed to function successfully.

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Since arbitration thrives on the principle of party autonomy, any action by the parties which results in eviscerating or even reducing such autonomy has to be avoided strictly.

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Therefore, only if the party defaults in complying with the procedure stipulated in the agreement for appointment of arbitrators does the autonomy of the parties become imperilled and the recourse to courts can be undertaken by either party.

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The availability of judicial appointment of arbitrators as a default mechanism ensures that the arbitral proceedings can be pursued, even in the face of what would otherwise be insurmountable difficulties in constituting the tribunal.86

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Interestingly, the 2019 Amendment has made sea-​changes in the appointment procedure by ensuring that all appointments would be required to be made by the arbitral institutions and not by the courts, thereby changing the arbitration landscape in India.

85. See r. 2 of the Scheme for Appointment of Arbitrators, 1996 notified vide Notification No.16/​Rules dated 29 January1996 by the High Court of Delhi. 86. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1840.

Chapter 23 CHALLENGE OF AUTHORITY AND REMOVAL OF ARBITRATOR [23.1] INTRODUCTION......................................................................................................................... 617

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[23.2] AT COMMON LAW...................................................................................................................... 618 [23.3] NOT QUALIFIED AS REQUIRED IN THE CONTRACT...................................................... 620 [23.4] JUSTIFIABLE DOUBTS AS TO THE ARBITRATOR’S INDEPENDENCE OR IMPARTIALITY............................................................................................................................. 623 [23.5] THE CHALLENGE PROCEDURE.............................................................................................. 649

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[23.6] FAILURE OR IMPOSSIBILITY TO ACT AND FAILURE TO ACT WITHOUT UNDUE DELAY............................................................................................................................. 654

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[23.7] WAIVER OF THE RIGHT TO OBJECT..................................................................................... 659 [23.8] PRACTICE AND EFFECT OF ORDER REMOVING THE ARBITRATOR........................ 663

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[23.1] INTRODUCTION

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[23.9] CONCLUSION............................................................................................................................... 666

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Arbitrators were rarely challenged in the past. Arbitrator replacement normally occurred in the case of death or resignation of the arbitrator.1 This has changed in the past decade or so. It is not uncommon now to read about challenges to the appointment of arbitrators now and then.2

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It is still considered an exceptional event for a party to succeed in its challenge as the law of challenging the arbitral tribunal is now well established.

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Normally, it happens where the party in hindsight has reasonable doubts about the impartiality and the independence of the arbitrator. Other grounds for challenge are that: the arbitrator lacks stipulated qualifications, failure or impossibility to act, the arbitrator refuses to act, or resigns from the appointment.

1. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 4.89. 2. Challenges to the appointment of an arbitrator have become more common in recent years in international arbitration; See: Leon Trakman, “The Impartiality and Independence of Arbitrators Reconsidered” (2007) Int’l Arb. L. Rev. 999 (“new tactical challenges to arbitrators, a malign practice that appears to be increasing everywhere”).

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Any arbitrator can be challenged, be it appointed by the institution, by courts, or by the challenging party itself. It may be that the procedure of challenging arbitrators is incorporated in the contracts of appointment of the arbitral tribunal by way of institutional arbitral rules or by the applicable lex arbitri itself.3

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The procedure to challenge an arbitrator, as set out in the arbitration institution rules, may vary from the challenge procedure set out in the national arbitration legislation.

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While some arbitrator challenges are well-​grounded, others may arise by a party using the challenge to gain a tactical advantage. The challenge process itself may cause delay and add to the expense of the proceedings. If the party is successful in challenging the arbitrator, the process of replacing the arbitrator may further affect the arbitration cycle.

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[23.2] AT COMMON LAW

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At common law, the arbitral tribunal’s authority is revocable. The modern view is that the arbitrator’s relationship with the parties is contractual,4 notwithstanding the special nature of the appointment.5

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Since arbitration itself is premised on an agreement between the parties, it is permissible for the parties themselves, by agreement, to revoke the mandate of the arbitral tribunal. There is also no provision in the Arbitration Act preventing them from doing so.

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Likewise, neither party can unilaterally revoke the authority of one or more arbitrators, or even his appointee, unless the same is provided for by the arbitration agreement.6 Therefore, parties are prevented from frustrating the arbitral proceedings by unilaterally revoking the authority of an arbitrator and forcing the other party to commence proceedings for breach of the agreement.7

3. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2054. 4. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), pp. 321–​322, at paras 5.50–​5.52; Mustill and Boyd, Commercial Arbitration, Companion Volume to the Second Edition (Butterworths 2001), p. 166. 5. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 2110–​2112. 6. Arbitration Act, 1996 (England, Wales and Northern Ireland), s. 23. 7. In Re an Arbitration between Fraser & Co v Ehrensperger and Eckenstein (1883) 12 QBD 310, CA (Eng). See also Siemens AG v Dutco Construction Co (Pvt) Ltd. (1992) 18 YB Com Arb 140; Doleman & Sons v Ossett Corp [1912] 3 KB 257, at para. 262.

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Chapter 23—​​​Challenge of Authority and Removal of Arbitrator

The arbitration process has evolved. Opportunities for appeal on the arbitral process itself have diminished. On the other hand, the numbers and value of disputes referred have increased, given the popularity of international commercial arbitration in most jurisdictions.

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International commercial arbitrations, especially those involving international parties have become a “one-​strike proposition”.8 Parties seek the best practitioners in the field and attempt to maximise their tactical advantages, or at least minimise any disadvantages.

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Parties are increasingly sensitive to the prospect of a partial, negligent, or otherwise unsuitable arbitrator, and hence the increase in challenges. This is not necessarily a negative development. It is now accepted that arbitration may no longer offer significant advantages in terms of speed and economy over many modern courts.

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However, the arbitral process can still provide a level playing field and genuine procedural fairness for parties from very different backgrounds, as well as expert tribunals. This advantage coupled with the universal enforceability of the arbitral award allows the arbitral mechanism its sustenance.

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In the past, it was uncommon for cases to reach the courts as many arbitrators would simply resign if challenged.9 Perhaps, they do so to avoid the potential damage to their reputation that may occur in a protracted removal dispute.10

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The court has no power to direct the issue of orders of certiorari or prohibition, addressed to an arbitrator directing that his decision is quashed or that he is prohibited from proceeding in arbitration.11 Thus, if a party wishes to challenge the arbitrator, the party may apply to the court to revoke the arbitrator’s authority.

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Criticisms and challenges are an occupational hazard for an arbitrator.12 As such, arbitrators should take such challenges in their stride and examine if there is some valid reason for such a challenge.

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8. Sundaresh Menon, International Arbitration: The Coming of a New Age for Asia (and Elsewhere), ICCA Congress in Singapore, 2012, Open Plenary Session, Keynote Address, available at https://​cdn.arbitration-​ icca.org/​s3fs-​public/​document/​media_​document/​ags_​opening_​speech_​icca_​congress_​2012.pdf. 9. Margaret L. Moses, The Principles and Practice of International Commercial Arbitration (Cambridge University Press 2008), p. 141. 10. The arbitrator in Wicketts v Brine Builders & Anr [2001] CILL 1805, [2001] App LR 06/​08 was described by the Court as having a “pitifully inadequate comprehension of the nature of his function as arbitrator” and the terms of an order he had given as “quite the most outrageous that I have ever seen given in any arbitration proceedings”. 11. R v Disputes Committee of National Joint Council for Craft of Dental Technicians, ex p Neate [1953] 1 QB 704, [1953] 1 All ER 327. 12. Tackaberry, Marriot QC, and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Sweet & Maxwell 2003), at para. 2–​301; see also: CIArb Arbitration Rules, 2015, arts 11 to 13.

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A spurious challenge to the arbitrator’s integrity, particularly that of an experienced and highly esteemed arbitrator of impeccable integrity, is unlikely to succeed. It may only serve to alienate the arbitrator and the other members of the tribunal.

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A prospective challenger should consider that whilst 70 per cent of pre-​appointment objections are accepted, challenges made after the tribunal has been constituted succeed in only 10 per cent of cases.13

[23.3] NOT QUALIFIED AS REQUIRED IN THE CONTRACT

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The court may remove the arbitrator where the arbitrator does not have the qualifications required by the parties’ contract.14 If the requirement of contractual qualification is not met, the person appointed is not an arbitrator at all. He has no power to make a binding award.15 In other words, it makes the appointment of the arbitrator and the resulting award by him, if any, a nullity. It is liable to be set aside.

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The issue in Pan Atlantic Group Inc v Hassneh Insurance Co. of Israel16 was whether the qualification required by the agreement must be held throughout the reference or only when the arbitrator is appointed. The Court held that the only relevant time is when the arbitrator is appointed.

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The UNCITRAL Report on the adoption of Model Law discusses the inclusion of qualification criteria as a ground for challenging the arbitrator as follows:

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“It was noted that the parties sometimes agreed that arbitrators had to have certain professional or trade qualifications and it was proposed that the Model Law should

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13. ICC International Court of Arbitration Bulletin, Statistical Reports (1996–​2005); see also Mark Baker and Lucy Greenwood, “Are Challenges Overused in International Arbitration?”, (2013) Journal of International Arbitration, 30, no. 2, pp. 101–​112. 14. Sabah Medical Centre Sdn Bhd v Syarikat Neptune Enterprise Sdn Bhd [2010] MLJU 1486, at [8]‌; T. Grant, “What the Arbitrator Should Not Do!” [2003] NZLJ 10, pp. 107–​108; see also: Oakland Metal Co Ltd v D Benaim & Co Ltd [1953] 2 QB 261, [1953] 2 All ER 650; Jungheim, Hopkins & Co v Foukelmann [1909] 2 KB 948, 25 TLR 819; MacLeod Ross & Co Ltd v Cradock Manners Ltd [1954] 1 Lloyd’s Rep 258; Myron (Owners) v Tradax Export, SA Panama City RP [1970] 1 QB 527, [1969] 2 All ER 1263; Royal Commission on Sugar Supply v Trading Society Kwik-​Hoo-​Tong Trading Society 38 TLR 684; Pando Compania Naviera SA v Filmo SAS [1975] QB 742, [1975] 2 All ER 515; Aramco Servsco v EAC Bulk Transport Inc (1993) WL 405996 [MDFLA 25 January 1993]; WK Webster & Co v American President Lines Ltd 32 F.3d 665; Palmco Shipping Inc v Continental Ore Corpn, The Captain George K [1970] 2 Lloyd’s Rep 21, at p. 25; Robinson, Fleming & Co v Warner, Barnes & Co (1922) 10 Ll L Rep 331; Hookway (F E) & Co Ltd v Alfred Isaacs & Sons [1954] 1 Lloyd’s Rep 491; Cook International Inc v BV Handelmaatschappij Jean Delvaux and Braat, Scott and Meadows [1985] 2 Lloyd’s Rep 225; Ewart & Sons Ltd v Sun Insurance Office (1925) 21 Ll L Rep 282; Vincor Shipping Co Ltd v Transatlantic Schiffahrtskontor GmbH [1987] HKLR 613, at para. 617, per Nazareth J. 15. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), p. 247. 16. [1992] 2 Lloyd’s Rep 120, as mentioned in Mustill and Boyd in Companion Volume to the Second Edition (Butterworths 2001), Commercial Arbitration, p. 171.

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Chapter 23—​​​Challenge of Authority and Removal of Arbitrator

respect that aspect of party autonomy by including in paragraph (2) a reference to any additional grounds for challenge on which the parties might agree.” Article 12(2) of the UNCITRAL Model Law retained the stipulation of having the required qualification to resist the challenge.

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The Arbitration Act, 199617 allows the court power to remove an arbitrator if he does not possess the qualifications required by the arbitration agreement.18 Following the footsteps of UNICTRAL Model Law, Singapore Arbitration Act19 and the Hong Kong Arbitration Ordinance20 are among the national arbitration legislations which stipulate qualification as a ground for challenging the authority of the arbitrator.21

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The arbitration agreement may stipulate that the arbitrator should be a “commercial man”. Donaldson J in Pando Compania Naviera SA v Filmo SAS22 explained the arbitration agreement which required the arbitrator to be a “commercial man” as follows:

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“(c). Practising members of the legal profession do not qualify: while they serve the commercial world, they are not part of it. (b). The fact that the arbitrator has been a full-​time lawyer will not disqualify him if he has moved to the commercial world subsequently; (e). A professional arbitrator specializing in contracts of the type in question is ‘commercial man’ engaged in that trade.”23

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Russell states that among the first duties that an arbitrator has to comply with is to ensure that he has the qualification stipulated in the arbitration agreement. The prospective arbitrator should make sure that either he complies with the requirement or his failure to comply is notified to both parties for their decision.24

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Section 12(3)(b) of the Arbitration Act provides that if an arbitrator does not possess qualifications as agreed to by the parties, it is a ground to challenge his appointment.

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An arbitration agreement providing for the arbitral tribunal to have certain qualifications or to be constituted in a certain agreed manner must be adhered to. It must not depart from the arbitration agreement unless there are strong grounds for doing so.25

17. 18. 19. 20. 21. 22. 23. 24. 25.

Arbitration Act, 1996 (England, Wales and Northern Ireland). Arbitration Act, 1996 (England, Wales and Northern Ireland), s. 24(1)(b). Singapore Arbitration Act (2001), art. 14(3)(b). Hong Kong Arbitration Ordinance (2011), s. 25(2). See also New Zealand Arbitration Act (1996), art. 12(2) of Schedule 1. [1975] QB 742. Robert Merkin, Arbitration Law (LLP 2004), p. 371. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), p. 183. Iron & Steel Co. Ltd. v Tiwari Road Lines (2007) 5 SCC 703, at para. 11.

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Law, Practice and Procedure of Arbitration in India

A party has been entitled under the Arbitration Act to object to the appointment of an arbitrator who does not possess the qualifications agreed by the parties.26 The High Court of Bombay in Anup Equipment Pvt. Ltd. v Ganapati Co-​op Housing Society Ltd.27 held that the arbitral tribunal should consist of duly qualified arbitrators. The arbitral tribunal would be without jurisdiction if it did not meet this requirement.

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The Arbitration Act acknowledges that parties are free to agree on a procedure for challenging an arbitrator.28 However, in the absence of such an agreement, parties must challenge the appointment of the arbitrator within specific time limits.29

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If a party proceeds with the arbitration after the appointment of an arbitrator, it represents to the other party that the qualifications of the chosen arbitrator are in order.

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As such, it is estopped from later raising the issue that the arbitration is invalid. A failure to object, therefore, will be deemed as a waiver of the right to object to the appointment of the arbitrator.30

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Removal of the Arbitrator and Statutory Termination of the Mandate

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Where an arbitrator makes a disclosure, which might give rise to justifiable doubts as to his impartiality and independence, his appointment may be challenged by the parties. They may apply to the court to have him removed.

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In contrast, where the arbitrator, as a matter of law becomes unable to perform his functions, his mandate terminates. He can be replaced by another arbitrator. The parties can apply to the court to replace the arbitrator.31

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A challenge under the Fifth Schedule and Section 12 of the Arbitration Act involves parties’ action to end the mandate of the arbitrator. Parties may proactively initiate actions where there are grounds that give rise to justifiable doubts as to independence and impartiality of the arbitrator.32

26. Unipack Industries v Subhash Chand Jain & Ors. 2001 SCC OnLine Del 1210, at para. 9. Also see: Tonicstar Limited v Allianz Insurance and Sirius International Insurance Corporation [2017] EWHC 2753. 27. AIR 1999 Bom 219 paras. 17–​18. 28. Arbitration Act, s. 13(1). 29. Arbitration Act, s. 13(2). 30. Rail India Technical and Economic Services Ltd. (“RITES”) v Ravi Constructions, (2002) 2 ICC 719 (DB); Jungheim, Hopkins & Co. v Foukelmann [1909] 2 KB 948. 31. P.C. Markanda, Law Relation to Arbitration and Conciliation (10th edn, LexisNexis 2020), p. 568. 32. HRD Corporation v Gail (India) Limited (2018) 12 SCC 471.

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The other circumstances are contained under Section 14 Arbitration Act, where an arbitrator in law or fact becomes unable to perform the functions of that office. In such a case, the mandate extinguishes by itself due to the statutory provisions. Section 15 of the Arbitration Act further provides that the mandate of an arbitrator shall terminate if the arbitrator withdraws from office for any reason, or according to the agreement of the parties.

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Whenever the arbitrator resigns from the office, he becomes functus officio. Section 15 directs that his term at the office be accordingly terminated.

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Parties may even agree upon specific conditions which set out when the arbitrator’s term may come to an end. Such conditions in the agreement between the parties when it crystallises may end the arbitrator’s tenure.

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[23.4] JUSTIFIABLE DOUBTS AS TO THE ARBITRATOR’S INDEPENDENCE OR IMPARTIALITY

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The impartiality and independence of the arbitral tribunal can be considered an integral part of the foundation of arbitration. The concept dates back to arbitration in ancient Greece.33 The word for the arbitrator then was “Koinos”, which meant an impartial third party common to both sides.34

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Even though an arbitrator may, in good faith, believe that he was acting impartially, his mind may unconsciously be affected by other factors.35 He may be predisposed to decide for or against one party without proper regard to the true merits of the dispute.

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The proceedings before the arbitrator and the resulting award will consequently be tainted. The moment an arbitrator becomes partially inclined towards a party he loses his judicial character.

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The perception of impartiality is important.36 Lord Hewart CJ in R v Sussex Justice ex parte McCarthy37 stated that it is “of fundamental importance, that justice should both be done and be manifestly seen to be done.”38 33. D. Roebuck, Arbitration in Ancient Greece (Holo Books: The Arbitration Press 2001), pp. 164, 349. 34. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1891. See also D. Roebuck, Ancient Greek Arbitration (Holo Books: The Arbitration Press 2001), pp. 164, 349. 35. See R v Gough [1993] 2 All ER 724, at p. 728, per Lord Goff based on R v Barnsley County Borough Licensing Justices, ex p Barnsley and District Licensed Victuallers Association [1960] 2 All ER 703, at p. 715, per Devlin U. 36. Muir v Commissioner of Inland Revenue [2007] 3 NZLR 495. 37. [1923] All ER Rep 233, at para. 234. 38. Although this was without giving currency to “the erroneous impression that it is more important that justice should appear to be done than that it should in fact be done”.

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Law, Practice and Procedure of Arbitration in India

This often-​cited dictum applies to the disqualification of arbitrators or other legal adjudicators as part of the overriding public interest that there should be confidence in the integrity of the administration of justice. However, there are difficulties.

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The first being that unlike judges, who must give up directorships and other appointments in business upon their elevation to the bench, arbitrators “have mainly both their feet planted in business, commerce and profession”. They may derive only a portion of their income from tribunal work.39 It is more likely that an arbitrator will have relationships, interests, and connections with a dispute.

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The second difficulty arises in the context of a co-​arbitrator who has been chosen and appointed by one of the parties. The process of choice itself naturally provides the opportunity for the appearance of bias.

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Gary B. Born describes the reality faced by party-​appointed co-​arbitrators:

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“The co-​arbitrator is presumptively required to be impartial and independent, but he or she is required to do so in a context in which two co-​arbitrators have been selected precisely to act as guarantors of each of the two parties’ respective rights to present their cases and have them fully understood and considered.”40

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A party-​appointed arbitrator is not allowed to accept instructions from his appointer.41 However, it may not be the reality of arbitral appointments42 to require a co-​arbitrator to exhibit the same level of detachment required of a sole or presiding arbitrator, where tolerances are much stricter.43

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Thus, it is expected that a co-​arbitrator will pay special attention to the case of the party by whom he was nominated. It is to ensure that the parties are heard. But the co-​ arbitrator should not act as an advocate for that party during deliberations.44

39. Commonwealth Coatings Corp v Continental Casualty Co 393 US 145, SC (US). 40. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1945. 41. Myron (Owners) v Tradax Export SA Panama City RP [1970] 1 QB 527, [1969] 2 All ER 1263. 42. Gary B. Born points out that party-​appointed arbitrators never dissent from awards favouring their appointer but do dissent from those against them. That said, the majority of arbitration awards are unanimous so this should not be overemphasised; see Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1946. 43. Bishop and Reed, “Practical Guidelines for Interviewing, Selecting and Challenging Party-​ Appointed Arbitrators in International Commercial Arbitration” (1998) 14 4 Arb Int’l 395, at p. 403. 44. Y. Derains, “The Deliberation and the Arbitral Tribunal -​‘Retour au delibere arbitral’ ”, in Wirth (ed.), The Resolution of the Dispute –​From the Hearing to the Award ASA Special Series No 29 (2007), p. 15.

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Chapter 23—​​​Challenge of Authority and Removal of Arbitrator

Duty to Disclose The arbitrator has the duty to disclose all facts which could give any ground for disqualification. This is to avoid any allegations on his part, of violating the requirements of impartiality and independence.45 A timely and complete performance of that duty to disclose is crucial for the integrity of the arbitral process.46

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Arbitrators are required to err on the side of broader disclosure. A failure to disclose can, by itself, give rise to justifiable doubts as to impartiality.47 The costs of erring on the side of too much disclosure are much lower than the potential for disqualifications due to non-​disclosure later on.48

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Such duty to disclose appears under both institutional rules and national arbitration laws. The UNCITRAL Arbitration Rules provide that when a person is approached in connection with a possible appointment as an arbitrator, he shall disclose any circumstances likely to give rise to justifiable doubts as to his impartiality or independence.49

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Arbitral institutes such as HKIAC50 and LCIA51 impose a similar duty of disclosure on the arbitrator at the time of his appointment.

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ICC takes a step further and imposes a more onerous duty of disclosure. The arbitrator is required to sign a statement regarding his impartiality and independence. It imposes a duty to disclose in writing to the secretariat, any facts or circumstances which might be of such nature as to call into question the independence of the arbitrator.52

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The duty to disclose is a continuous one. The arbitrator should disclose any facts or circumstances as and when they arise, even if they occur during the arbitration proceedings.

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45. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 255, at para. 4.79. 46. Catherine A. Rogers, “Regulating International Arbitrators: A Functional Approach to Developing Standards of Conduct” (2005) 41 Stanford Journal of International Law 53, p. 118. 47. Forest Electricity Corporation v HCB Contractors 1995 WL 37586, *3 (ED Pa 1995); however, cf. AT & T Corpn v Saudi Cable Co [2000] 2 Lloyd’s Rep 127, CA (Eng) where an undisclosed (disqualifying) non-​ executive directorship of a competitor of one of the parties was not accepted as ground for setting award aside, given that the arbitrator was an experienced lawyer and arbitrator, and the risk of bias was considered remote. However, this case was decided before the acceptance of the objective test and a different result would be likely today; see also Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, 2015), at para. 4­124. 48. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2050. 49. UNCITRAL Arbitration Rules (as revised in 2010), art. 11. 50. HKIAC Arbitration Rules (2018), art. 11.4; see also AIAC Arbitration Rules (2018), r. 5. 51. LCIA Arbitration Rules, art. 5.4. 52. ICC Arbitration Rules (2021), art. 11(2).

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Law, Practice and Procedure of Arbitration in India

There is even a suggestion that larger organisations from which the arbitrators may be appointed will require a system that ensures that the arbitrator has no connection with either party and/​or organisation. He has to confirm that the party/​organisation has not been instructed on work that might influence his decision. As such, any relevant relationship must be declared at the outset.53

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The UNCITRAL Model Law is pari materia with UNCITRAL Arbitration Rules when it comes to the duty of disclosure under Article 11. However, the duty of disclosure has been treated differently in various jurisdictions.

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For example, the English Arbitration Act 1996 does not provide for such a duty of disclosure. Swiss PIL shadows the English approach. It does not make any express mention of such duty.54

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On the opposite end of the spectrum are jurisdictions that explicitly impose such an obligation on the arbitrators. Singapore and Hong Kong follow the Model Law to require such a duty of disclosure. Article 18A of the Australian International Arbitration Act aligns with Article 12 of the Model Law. It provides for a challenge to the appointment of a person as arbitrator if there is “real danger of bias”.55

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It is not clear to what extent such duty to disclose implies an obligation on the arbitrator to conduct investigations.56

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Schwartz further explains the importance of checking for conflicts of interest and holds that:

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“Conducting a conflict check at the outset of the arbitration can be often a complex undertaking, not only because of the magnitude of a large law firm’s relationship but also because complete and accurate data are not necessarily entered into the database that serves as a basis for the check.”57

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The practical significance of a failure to disclose is that an award may be liable to be set aside. The setting aside of the award will be premised on the note that a breach of

53. Mark D Cato, Arbitration Practice and Procedure: Interlocutory and Hearing Problems (3rd edn, LLP 2002), p. 184. 54. See judgment of 14 March 1985 DFT 111 Ia 72, p. 74 (Swiss Federal Tribunal). (However, the Swiss Federal tribunal has held otherwise. They pronounced that such duty exists from contract and precontractual relationship between the parties.). 55. Australian International Arbitration Act (1974), art. 18A. 56. HSMV Corp v ADI Ltd 72 F. Supp. 2d 1122 (C.D. Cal. 1999). 57. See: Eric A. Schwartz, “Challenging Awards for Arbitrator Bias: Two recent U.S. Cases”, Les Cahiers de l’Arbitrage (2013) 3 Paris Journal of International Law 609.

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natural justice has occurred.58 The reason is that the arbitrator is a judge in his own cause. Even a consent award can be set aside when tainted by such impropriety.59 IBA Guidelines on Conflict of Interest provide that, “To comply with General Standard 7(a), a party shall perform reasonable enquiries and provide any relevant information available to it”.60

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Before the amendments in 2015, the Arbitration Act did not impose any positive disclosure obligations on an arbitrator to ensure that impartiality and independence of his award were maintained. Further, the Act did not list the grounds on which an arbitrator could be rendered ineligible or have a possibility of bias.

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The 2015 Amendment brought the Arbitration Act in line with international standards. Section 12 of the Arbitration Act was amended to impose a positive obligation on arbitrators to disclose, at the time of appointment, any circumstances likely to give rise to justifiable doubts as to their independence or impartiality.

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Section 12(1)(a) of the Arbitration Act obliges an arbitrator to disclose any circumstances likely to give rise to justifiable doubts as to his impartiality or independence right from the stage of being approached regarding an appointment as an arbitrator.61

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Section 12(1)(b) of the Arbitration Act requires the arbitrator to disclose circumstances that would act as an impediment to the timely completion of the arbitral proceedings, that is, 12 months.

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Section 12(2) of the Arbitration Act provides that there is a continuing duty to disclose that extends till the conclusion of the arbitration proceedings.62 Thus a conflict of interests that is acquired after appointment must, nonetheless, be disclosed.

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The High Court of Andhra Pradesh has rightly put down this principle while discussing the duty to disclose. It held that:

58. Arbitration Act, s. 34(2)(b)(ii); see also, Oil & Natural Gas Corporation Ltd. v Saw Pipes Ltd. (2003) 5 SCC 705, AIR 2003 SC 2629, which defined the scope of public policy as a ground to challenge an award, to include natural justice. 59. As occurred in Dato’ Dr Muhammad Ridzuan bin Mohd Salleh v Syarikat Air Terengganu Sdn Bhd [2012] 3 MLJ 737. 60. IBA Guidelines on Conflicts of Interest in International Arbitration, 2014, General Standard 7(c). 61. See also: Saxmere Company Limited v Wool Board [2009] NZSC 72, [2010] 1 NZLR 35, at para. 48, SC (NZ). 62. See, Report of the Secretary-​General: Preliminary Draft Set of Arbitration Rules for Optional Use in Ad Hoc Arbitration Relating to International Trade (UNCITRAL Arbitration Rules), 8th Session UNCITRAL (1975) A/​CN.9/​97, at p. 171.

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Law, Practice and Procedure of Arbitration in India

“Section 12 casts a solemn duty on an arbitrator, who is put in a position of a judge, to disclose to the parties his interest … the object of Section 12(1) is that the person, appointed as an arbitrator should ever be above reproach.”63 This duty to disclose permeates the entire arbitral process throughout.64

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The Supreme Court of India in Dream Valley Farms Private Ltd. & Anr. v Religare Finvest Ltd. & Ors.65 held that a misleading declaration at the very outset by the arbitrator is tantamount to withholding the true information about his appointment in several matters by the same party.

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Such conduct by an arbitrator defeats the very purpose of the Act. The Court held that the arbitrator’s conduct was unbecoming of a person who is expected to be impartial and independent.

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Independence and Impartiality

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Baroness Hale of Richmond in Gillies v Secretary of State for Works and Pensions (Scotland)66 opined:

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“Impartiality is not the same as independence, although the two are closely linked. Impartiality is the tribunal’s approach to deciding the cases before it. Independence is the structural or institutional framework which secures this impartiality, not only in the minds of the tribunal members but also the perception of the public.”

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Independence relates to the relationship (current or prior), between the arbitrator and the parties, whether professional, financial, business, or otherwise.67

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There can be a lack of independence under two categories: the arbitrator himself has a direct or indirect interest in the result of the arbitration, or the arbitrator himself does not have an interest but has a relationship with a person who has such an interest.68

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Impartiality arises from the relation between the arbitrator and the subject matter of the dispute. It requires the arbitrator to decide the dispute without any previous pre-​disposition.

Yashwitha Constructions (P) Ltd. v Simplex Concrete Piles India Ltd. 2008 SCC OnLine AP 826, at para. 14. P.C. Markanda, Law Relation to Arbitration and Conciliation (10th edn, LexisNexis 2020), p. 517. 2016 SCC OnLine Del 5584, at para. 18. [2006] UKHL 2, [2006] 1 All ER 731, at para. 38. W.M. Tupman, “Challenge and Disqualification of Arbitrators in International Commercial Arbitration” (1989) The International and Comparative Law Quarterly, Vol. 38, No. 1. 68. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 522. 63. 64. 65. 66. 67.

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For example, where an arbitrator has expressed a firm opinion in a professional journal on the subject matter in dispute, this may imply a lack of impartiality.69 The English Arbitration statute only requires an arbitrator to be impartial. It makes no mention of independence. Merkin discusses, how the Departmental Advisory Committee at the drafting stage of the English Arbitration Act (1996), almost included the word “independence”.

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However, at that time, the fear that was debated in the Departmental Advisory Committee was whether including the word “independence” into the draft bill would result in complex and unnecessary arguments about how independent the arbitrator should be. In the end, the said Committee retained only the impartiality requirement in the English Arbitration Act, 1996.70

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More simply, independence relates to an absence of improper connections and impartiality to prejudgment or “a predisposition or prejudice against one party’s case or evidence on an issue for reasons unconnected with the merits of the issue”.71

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Although impartiality in the arbitrator can exist despite independence, a lack of independence does not always equate to an absence of impartiality. Gary B. Born argues that the distinction between impartiality and independence has been given undue importance.72

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On a semantic level, impartiality is almost always a subjective inquiry. On the other hand, independence is an objective assessment of connections, relations, or dealings.

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Practically, unless the arbitrator makes a statement showing partiality,73 impartiality is almost always established through enquiry into external objective facts and circumstances.

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Some jurisdictions such as England have dispensed with the requirement of “independence” because this created the opportunity for weak challenges.74 It enabled the continuation of the practice of self-​employed barristers sitting on the arbitral tribunals in arbitrations where another member of chambers may appear as counsel.75 Craig, Park, and Paulsson, International Chamber of Commerce Arbitration, at para. 13-​03. Robert Merkin, Arbitration Law (LLP, 2004), p. 376. Flaherty v National Greyhound Racing Club Ltd. [2005] EWCA Civ 1117, at para. 28. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1910. 73. As was the case in Johnson v Johnson [2000] HCA 48, [2000] 5 LRC 223 (Aus); Catalina (Owners) v Norma (Owners) 82 Sol Jo 698; Veritas Shipping Corpn v Anglo-​Canadian Cement Ltd [1966] 1 Lloyd’s Rep 76. 74. English Departmental Advisory Committee on Arbitration (DAC) Report on Arbitration Bill, 1996. 75. Due to the fused legal system of Singapore and Malaysia it was decided that the removal of the “independence” criterion was inappropriate; Halsbury’s Laws of Singapore—​Arbitration at para. 20.056; Gary Born argues that the use of independence and impartiality is the better legislative approach, but that the same results should apply even where only one is used; see: Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Wolters Kluwer 2021), pp. 1908–​1910 and Riverside Casino Ltd v Moxon [2001] 2 NZLR 78, CA.

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69. 70. 71. 72.

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Law, Practice and Procedure of Arbitration in India

Where an arbitrator is a barrister from a set of chambers, a recalcitrant party may try to defeat his appointment by instructing another barrister from those chambers as counsel.76 These kinds of challenges may be avoided by giving the arbitral tribunal express power to veto changes of counsel.77

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Gary B. Born argues that a lack of independence is only a concern because it can lead to a lack of impartiality.78 It can also undermine the appearance of justice being delivered.

Williams and Kawharu79 report that there is a paucity of spurious challenges against independence. Such statistics demonstrate that the Departmental Advisory Committee’s concerns in England have not materialised elsewhere in the Commonwealth.

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The Supreme Court of India in Voestalpine Schienen GmbH v Delhi Metro Rail Corporation Ltd.80 explained the difference between the two terms “Independence” and “impartiality” as:

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“Independence and impartiality are two different concepts. An arbitrator may be independent and yet, lack impartiality, or vice versa. Impartiality, as is well accepted, is a more subjective concept as compared to independence. Independence, which is more an objective concept, may, thus, be more straightforwardly ascertained by the parties at the outset of the arbitration proceedings in light of the circumstances disclosed by the arbitrator, while partiality will more likely surface during the arbitration proceedings.”

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The Supreme Court of India in Haryana Space Application Centre (HARSAC) & Anr. v Pan India Consultants Pvt. Ltd.81 ruled on the importance of impartiality and independence.

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The Court held that the appointment of the Principal Secretary of the Government of Haryana was invalid under Section 12(5) read with the Seventh Schedule of the Arbitration Act. Since HARSAC is the nodal agency of the Government of Haryana State, his implied association with the State government renders him invalid to act as arbitrator.

76. IBA Guidelines on Conflicts of Interest in International Arbitration, 2014, r. 6. 77. Although Professor D. Mark Cato shares an incident where the arbitrator and the counsel to a party was appointed from the same chambers and the party sought the removal of the arbitrator. Professor D. Mark Cato, Arbitration Practice and Procedure: Interlocutory and Hearing Problems (3rd edn, LLP 2002), pp. 194–​195. 78. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1910. 79. David A. R. Williams QC and Amokura Kawharu, Williams & Kawharu on Arbitration (2011), at para. 5.7.1. 80. (2017) 4 SCC 665, at para. 22; see also: OPBK Construction Pvt. Ltd. v Punjab Small Industries & Export Corporation Ltd. & Anr. 2008 (3) ArbLR 189 PH, 2008 SCC OnLine P&H 728, at para. 20. 81. 2021 SCC OnLine SC 33.

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The Court observed:

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“Section 12(5) read with the Seventh Schedule is a mandatory and nonderogable provision of the Act. In the facts of the present case, the Principal Secretary to the Government of Haryana would be ineligible to be appointed as an arbitrator, since he would have a controlling influence on the Appellant Company being a nodal agency of the State.”82

The Test for Justifiable Doubts

Jurisdictions adopting the UNCITRAL Model Law were free to determine the test for justifiable doubts as to impartiality or independence.83

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It is necessary to strike a balance between allowing partial tribunals and setting unrealistically high ethical standards. Both such extremes would undermine the arbitral process.

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There are two steps to the test: the first is to identify what is said that might lead the decision maker to decide other than on the merits; and the second is the logical connection between the matter and the feared deviation from the course of deciding the case on the merits.84

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It is not necessary to prove that an arbitrator lacks impartiality or independence.85 The latter is related to external objective facts such as shareholdings or employment relationships, which can be proven. However, it is easy to imagine many situations where it would be difficult to obtain such evidence of partiality.

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The exception would be when the arbitrator clearly shows that he is partial towards one party or expressly against the other.86 Therefore, a lower standard of justifiable doubts is imposed to prove the arbitrator’s impartiality.87

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Three principal tests are in use in countries around the world:

82. Haryana Space Application Centre (HARSAC) & Anr. v Pan India Consultants Pvt. Ltd. 2021 SCC OnLine SC 33, at para. 22. 83. Holtzmann and J. Neuhaus, A Guide to the UNCITRAL Model Law on International Commercial Arbitration: Legislative History and Commentary (Kluwer and Taxation Publishers 1989), p. 388. 84. Saxmere Company Ltd v Wool Board [2009] NZSC 72, [2010] 1 NZLR 35 following the Australian decision in Ebner v Official Trustee in Bankruptcy [2000] HCA 63, 205 CLR 337; Smits v Roach [2006] HCA 36, 227 CLR 423, at pp. 464–​465; Flaherty v National Greyhound Racing Club Ltd [2005] EWCA Civ 1117. 85. Kammergericht Berlin, Germany, 28 Sch 24/​99, 22 March 2000. 86. Per Morelite Construction Corp v NYC District Council Carpenters’ Benefit Funds 748 F.2d 79 (2d Cir 1984). 87. See Saxmere Company Ltd v Wool Board [2009] NZSC 72, [2010] 1 NZLR 35, at [41]; Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 1910–​1911.

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Law, Practice and Procedure of Arbitration in India

(1) The “reasonable apprehension” test arises from the Sussex Justices88 case. This requires that a fair-​minded and informed observer would have a reasonable apprehension that the arbitrator was biased. This is the easiest test to satisfy.



(2) On another end of the spectrum is the “real danger” test as enunciated by the House of Lords in R v Gough.89 This test requires the court itself to find a “real danger” of bias which is a much higher threshold than a “reasonable apprehension”.



(3) Finally, there is the “real possibility” test. The House of Lords in Porter v Magill90 explained that this test superseded the “real danger” test in England. This test required that a fair-​minded and informed observer would feel there was a real possibility of bias.

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The decision in R v Gough has been subject to modification in two respects. The House of Lord in Porter v Magill acknowledged that the Australian High Court91 has criticised the “real danger” test on the basis that it emphasises the court’s view of the facts. It is coupled with “inadequate emphasis on the public perception of the irregular incident”.

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Lord Goff of Chieveley in R v Gough rejected the suggestion that the court should “look at the matter through the eyes of a reasonable man because the court in cases such as these personifies the reasonable man”.92

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Lord Hope of Craighead in Porter v Magill accepted the modest adjustment made by the English Court of Appeal to the test. The Court of Appeal had explained the adjustment:

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“When the Strasbourg jurisprudence is taken into account, we believe that a modest adjustment of the test in R v Gough is called for, which makes it plain that it is, in effect, no different from the test applied in most of the Commonwealth and Scotland.”93

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The court must first ascertain all the circumstances which have a bearing on the suggestion that the arbitrator was biased. It must then ask whether those circumstances would

88. R v Sussex Justices, ex p McCarthy [1924] 1 KB 256. 89. [1993] 2 All ER 724, at pp. 737–​738, HL; Sabah Medical Centre Sdn Bhd v Sykt Neptune Enterprise Sdn Bhd [2012] 7 MLJ 28; Majlis Perbandaran Pulau Pinang v Syarikat Bekerjasama Serbaguna Sungai Gelugor dengan Tanggunggan [1999] 3 MLJ 1, [1999] 3 CLJ 65. 90. [2001] UKHL 67, [2002] 1 All ER 465, at paras. 100–​103, HL, per Lord Hope of Craighead. 91. Webb & Hay v R (1994) 181 CLR 41, at p. 50, per Mason CJ and McHugh J. 92. [1993] 2 All ER 724, at para. 737, HL. 93. [2001] UKHL 67, [2002] 1 All ER 465, at para. 102.

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lead a fair-​minded and informed observer to conclude that there was a real possibility or a real danger, the two being the same, that the arbitrator was biased. The second modification by Lord Hope of Craighead went even further. He explained that he would “delete from it the reference to ‘a real danger’ ”. Those words no longer serve a useful purpose here, and they are not used in the jurisprudence of the Strasbourg Court.

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The question is whether the fair-​minded and informed observer, having considered the facts, would conclude that there was a real possibility that the arbitral tribunal was biased.94

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The House of Lords in Gillies v Secretary of State for Work and Pension95 subsequently endorsed the Porter v Magill test.

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The Court of Appeal in New Zealand departed from the R v Gough test. It proposed a revised test based on the objective perception of bias as follows:

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“Would the reasonably informed observer think that the impartiality of the adjudicator might be/​might have been affected?”96

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The High Court of Singapore in PT Central Investindo v Franciscus Wongso and others and another matter97 dealt with a challenge to an arbitrator for apparent bias. The Court propounded the “reasonable suspicion” test.

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The test entails two stages of inquiry: (1) First, the applicant party has to establish the factual circumstances behind the suggestion that the arbitral tribunal was or might be seen as partial.



(2) The second inquiry is to then ask whether a hypothetical fair-​minded and informed observer would view those circumstances as bearing on the tribunal’s impartiality in the resolution of the dispute before it.

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94. Ibid, at para. 103 (All ER). 95. [2006] 1 All ER 731, [2006] UKHL 2, at para. 3, per Lord Hope of Craighead and at [38], per Baroness Hale of Richmond. At the time of writing, the English Courts confirm the approach to claims of arbitrator bias via the Porter v Magill test. Please see Lee and Kilich, “The English Courts Confirm the Approach to Claims of Arbitrator Bias” (2016) Global Arbitration News, 16 June, available at http://​globalarbitrationnews.com/​ the-​english-​courts-​confirm-​the-​approach-​to-​claims-​of-​arbitrator-​bias-​20160527. 96. Ngati Tahinga v Attorney-​General (2003), 16 PRNZ 878, CA, at para. 15–​16. Although David A.R. Williams and Amokura Kawharu, in Williams & Kawharu on Arbitration (LexisNexis 2011), p. 149, opine that this test is nothing but a close variation of the test announced in Porter v Magill. 97. [2014] SGHC 190.

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Law, Practice and Procedure of Arbitration in India

The Supreme Court of the United Kingdom in Halliburton Company v Chubb Bermuda Insurance Ltd.98 ruled on arbitrator bias. The issue revolved around the arbitrator’s duty to disclose his earlier appointments by the same party in different arbitrations. The Court dealt with the test of bias and observed:

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“In considering an allegation of apparent bias in an English-​seated arbitration, the Court will apply the objective test of whether a fair-​minded and informed observer, having regard to the particular characteristics of international arbitration, would conclude that there was a real possibility that the tribunal was biased.”99

irc

Courts in India started with the real apprehension test following the lead from English courts. In one of the earliest cases, the Supreme Court of India explained the test as should be applied in the likelihood of bias. The Court explained as follows:

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“As to the tests of the likelihood of bias what is relevant is the reasonableness of the apprehension in that regard in the mind of the party. The proper approach for the judge is not to look at his own mind and ask himself, however, honestly. ‘Am I biased?’ but to look at the mind of the party before him.”100

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The Supreme Court of India in The Government of Haryana PWD Haryana (B and R) Branch v M/​s. G.F. Toll Road Pvt. Ltd. & Ors.101 used the “real danger test”.102 The case revolved around the issue of whether there were justifiable doubts to the independence and impartiality of a former employee when acting as an arbitrator.

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The Court relied on the “real danger” test for bias used by the Court of Appeal of England in Porter v Magill and subsequently reiterated in Re Medicaments and Related Classes of Goods (No.2).103

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Indian courts may now apply the “real possibility” test to determine “justifiable doubts” regarding an arbitrator’s independence and impartiality. This test is also derived from the House of Lords’ decision in Porter v Magill.

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The House of Lords had held therein that a decision should be set aside on account of bias where a:

98. [2020] UKSC 48. 99. Halliburton Company v Chubb Bermuda Insurance Ltd. [2020] UKSC 48, at para. 69. 100. Ranjit Thakur v Union of India and Ors. (1987) 4 SCC 611, at para. 17. See also: State of West Bengal & Ors. v Shivananda Pathak & Ors. 1998 (5) SCC 513, for further examining of the test by the Supreme Court of India. 101. (2019) 3 SCC 505. 102. The Government of Haryana PWD Haryana (B and R) Branch v M/​s G.F. Toll Road Pvt. Ltd. & Ors. (2019) 3 SCC 505, at para. 20–​21. 103. [2001] 1 WLR 700, CA (Eng).

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Chapter 23—​​​Challenge of Authority and Removal of Arbitrator

“fair-​minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased”.104 It is the same test that is also applicable to judges.

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The Supreme Court of India in Kumaon Mandal Vikas Nigam Ltd. v Girja Shankar Pant105 held that the determination of bias should be decided on the particular facts and circumstances of each case. It asserted that where there was a real danger of bias, the administrative action of the case ought to be set aside. The standard of proof to prove bias is based on the availability of cogent evidence. Mere imaginary grounds cannot be an excuse for apprehending bias.106

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Nature of the Third-​party Observer

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If the R v Gough test, as modified by Porter v Magill, is used elsewhere in the world,107 and the “real danger” test is modified to include the perspective of a notional fair-​ minded and informed observer,108 the nature and characteristics of this observer will impact on whether a challenge succeeds or fails.

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The emphasis is on the hypothetical third-​party observer in almost every jurisdiction.109 The bystander would be a gender-​neutral person; who persistently waits before giving the judgment until arguments have been heard arguments from all sides.110

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It is impossible, and indeed undesirable, to be overly prescriptive as to the characteristics of the third-​party observer. He has been described as being a “fair-​minded lay observer”,111 neither overly complacent nor suspicious,112 with

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104. Porter v Magill [2002] HRLR 16, [2002] 1 All ER 465 (UK HL), at para. 103. 105. (2001) 1 SCC 182. 106. Ladli Construction Company Pvt. Ltd. v Punjab Police Housing Corporation Ltd. and Ors. (2012) 4 SCC 609, at para. 29. See also: International Airports Authority of India v K.D. Bali & Anr. (1988) 2 SCC 360. 107. The Porter v Magill formulation was followed by the Hong Kong Court of Appeal in Suen Wah Ling t/​a Kong Luen Construction Engineering Co v China Harbour Engineering Co (Group) [2007] BLR 435, [2007] HKCA 320, CA (HK); Deacons (A Firm) v White & Case LLP [2003] 6 HKCFAR 322, CA (HK); Jung Science Information Technology Co Ltd v Zte Corporation [2008] HKCFI 606; Muir v Commissioner of Inland Revenue [2007] 3 NZLR 495, CA (NZ). 108. Gillies v Secretary of State for Work and Pensions [2006] 1 All ER 731, [2006] UKHL 2, at para. 39; see also: In re Medicaments and Related Classes of Goods (No 2) [2001] 1 WLR 700, at para. 35, cited in Porter v Magill [2001] UKHL 67, [2002] 1 All ER 465, at para. 102. 109. See: for example, “fair minded and informed fictitious observer test applied in Hong Kong”. Pacific China Holdings Ltd. v Grand Pacific Holdings Ltd. [2007] HKCFI 715. 110. Russell on Arbitration (24th edn, 2015), p. 171, at para. 4-​114. 111. Saxmere Company Ltd v Wool Board [2009] NZSC 72, [2010] 1 NZLR 35, at [5]‌; Laws v Australian Broadcasting Tribunal [1990] HCA 31. 112. Johnson v Johnson [2000] HCA 48, [2000] 5 LRC 223, at para. 53.

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Law, Practice and Procedure of Arbitration in India

an understanding of the arbitration and ordinary judicial practice, though not a lawyer or arbitrator.113 This last point is crucial. One of the strongest criticisms of the use of an observer is that a lay observer would not have “specialised dispute resolution procedures conducted in accordance with the standards of a close professional community”.

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Therefore, it would be hopelessly, and deliberately, impaired.114 The observer is not in the position of the complaining party, nor does he necessarily identify with that party’s interests.115

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At times, the circumstances purportedly giving rise to justifiable doubts are comments made by an arbitrator during proceedings. The context and any subsequent explanations or clarifications should be taken into account in such situations.

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Inevitably, certain comments would always give rise to justifiable doubts.116 In the majority of cases, the nuanced nature of language should be taken into consideration.117

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An objective approach to reasonable justification is manageable in a domestic context. In international commercial arbitrations, with “stubbornly heterogeneous legal cultures”,118 each person has their own view of proper ethical conduct. The attitudes of the “reasonable man” can vary. What may be considered bad faith dealings in one country are not necessarily the same elsewhere.

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The Australian High Court has acknowledged the historically homogenous pool from which arbitrators are drawn.119 It cautioned that “the fictitious bystander is not necessarily a man nor necessarily of European ethnicity or other majority traits”.120

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113. Ibid, at para. 13 (LRC); the courts must be cautious of imputing the knowledge of a legal professional on this bystander; see: Belize Bank Ltd v Attorney General of Belize [2011] UKPC 36, at para. 38; Gillies v Secretary of State for Work and Pensions [2006] UKHL 2, [2006] 1 All ER 731, at para. 39. 114. S. Luttrell, Bias Challenges in International Arbitration: The Need for a “Real Danger” Test (2009), p. 286. 115. Todd Taranaki Ltd v Energy Infrastructure Ltd. HC Wellington CIV-​2007-​485-​2684, at para. 21; A v B [2011] EWHC 2345 (Comm), at paras. 23–​28. 116. The infamous comments regarding the propensity for untruthfulness in Italian and Portuguese litigants being obvious examples of statements that could not be saved by any contextual analysis; see: In re The Owners of the Steamship Catalina & The Owners of the Motor Vessel Norma [1938] 61 Ll L Rep 360, (Eng). 117. Residence Hotel and Resorts Sdn Bhd v Seri Pacific Corp Sdn Bhd [2014] 10 MLJ 413. 118. William Park, “Arbitrator Integrity” (2009) 46 San Diego Law Review 629, at p. 633. 119. J. Mamounas, Does “Male, Pale, and Stale” Threaten the Legitimacy of International Arbitration? Perhaps, but There’s No Clear Path to Change (2014) ICCA Miami Conference. 120. Johnson v Johnson [2000] HCA 48, [2000] 5 LRC 223, at para. 52; cf. ASM Shipping Ltd of India v TTMI Ltd of England [2005] EWHC 2238 (Comm), at para. 39 where it was said that “the interpolation of the observer does, I think, make it unnecessary to give special regard to foreigners”.

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Chapter 23—​​​Challenge of Authority and Removal of Arbitrator

Both the type of arbitration and the type of arbitrator will be taken into account. A highly experienced arbitrator with impeccable credentials is expected to have a lower propensity for, or better control over, biased thinking than someone more junior.121 Likewise, a technical arbitrator may not follow “the kind of management regime that would be imposed by a Queen’s Counsel fulfilling the same function”.122

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The English High Court in A v B123 held that three characteristics could be kept in mind while satisfying the test:

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Avoiding Uncertainty by Selecting the Test

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First, the test should not depend on the nationality of the observer; second is that the third-​party observer is “fair-​minded” and “well-​informed”; and the third aspect is that the observer is expected to know how the legal profession operates in practice as in legal tradition and culture of the particular jurisdiction.

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A party may waive its right to challenge circumstances giving rise to justifiable doubts as to impartiality or independence. Therefore, parties can also agree to the applicable standard for justifiable doubts as to impartiality or independence at the stage of drafting their arbitration agreement.124

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Perhaps, parties may consider using the following clause. They can delete as appropriate, selecting either the R v Gough or the Porter v Magill test:125

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“The parties agree that any allegations that an arbitrator appears to lack impartiality or independence, at whatever stage and in whatever jurisdiction they are made, be finally determined by the relevant authority asking [itself whether there was or is, in the relevant authorities eyes]/​[whether a fair-​minded and informed observer would conclude that there was or is] a [real danger]/​[real possibility] that the arbitrator was (or is) biased.”

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Examples of Justifiable Doubts as to Independence or Impartiality

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Circumstances giving rise to justifiable doubts can be divided into three broad categories:

121. Sumukan Ltd v Commonwealth Secretariat [2007] EWHC 188 (Comm), at para. 71; see: Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, 2015), at para. 4-​110. 122. Norbrook Laboratories Ltd v Tank [2006] EWHC 1055 (Comm), [2006] 2 Lloyd’s Rep 485, at para. 153. 123. [2011] EWHC 2345 (Comm), at para. 23–​28. The Court also referred to Porter v Magill [2006] 1 All ER 731. 124. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 1947–​1948. 125. Sam Luttrell, Bias Challenges in International Arbitration: The Need for a “Real Danger” Test (Wolters Kluwer Law & Business 2009), p. 283.

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Law, Practice and Procedure of Arbitration in India



(1) the relationship between the arbitrator and the dispute;



(2) the relationship between the arbitrator and one or both of the parties; and



(3) other circumstances including any conduct showing prejudgment.

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The Supreme Court of India in ACE Pipeline Contracts (P) Ltd. v Bharat Petroleum Corpn Ltd.126 ruled on the possibility of bias in the arbitration of disputes concerning government contracts. It was held that the appointment of an arbitrator who is also an employee of the contracting corporation does not create a presumption of bias, partiality, or lack of independence on the arbitrator’s part once the party has entered into such a contract “with eyes wide open”.127

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However, the Court later recommended that the government should phase out arbitration clauses that nominate an employee as the arbitrator.128

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The Indian Courts have changed their approach in apprehending what is bias in such situations.

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For example, the Supreme Court of India in Denel (Proprietary Limited) v Govt. of India, Ministry of Defence129 held that if the situation so warrants, the court is entitled to ignore the procedure of appointment of arbitrator under the contract.

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Instead, the Court nominated its own independent arbitrator. The claimant argued that there is an apprehension of bias arising from the arbitration agreement which stipulated the reference to a specified official.

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The High Court of Delhi has acknowledged the application of the IBA Guidelines. It set aside an award when an arbitrator failed to disclose that he had previously served as a co-​arbitrator in a related dispute involving the respondent.

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The Court found that the arbitrator’s failure to disclose those facts raised justifiable doubts as to his independence and impartiality.130 The Court held that it fell under the “Orange List” of the IBA guidelines. It was held that such information must be disclosed to the parties in an arbitration proceeding.

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The 2015 Amendment enacts the requirement of neutrality on part of the arbitrator. The insertion of the Fifth Schedule under Section 12 ensures disclosure and declaration of impartiality and independence of the arbitrator.

1 26. 127. 128. 129. 130.

(2007) 5 SCC 304. ACE Pipeline Contracts (P) Ltd. v Bharat Petroleum Corpn Ltd. (2007) 5 SCC 304, at paras. 20–​22. Union of India v Singh Builders Syndicate (2009) 4 SCC 523, at paras. 20–​25. (2012) 2 SCC 759, at para. 21. Shakti Bhog Foods Ltd. v Kola Shipping Ltd & Anr. 2012 SCC OnLine Del 4300, at para. 86.

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Chapter 23—​​​Challenge of Authority and Removal of Arbitrator

These amendments appear to have been influenced by the IBA Guidelines. Many of the situations described in both the schedules mirror those instances in Part II of the IBA Guidelines. The grounds in the Fifth Schedule list the circumstances which give rise to justifiable doubts as to the independence or impartiality of an arbitrator.131

Relationship between the Arbitrator and the Dispute

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The Seventh Schedule lists circumstances and specific categories of relationships, which render a person ineligible from acting as an arbitrator.132

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Perhaps the most obvious situation where justifiable doubts arise is where the arbitrator has a financial interest in the outcome of proceedings.133 For example, such a situation may arise where the arbitrator owns shares in one of the parties.134

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In ICSID proceedings against Argentina,135 an arbitrator was a non-​executive director of UBS, a shareholder of the claimant companies, and received some remuneration in UBS stock options. This effectively made her an indirect shareholder of the claimants.

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This challenge was dismissed, as the arbitrator was a passive portfolio investor. Also, the outcome of the dispute would have little or no impact on the share price of UBS.

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An arbitrator who is a party to the contract in dispute would also clearly lack independence.136 Similarly, an arbitrator with significant business dealings with one of the parties is likely to be seen as partial, particularly if the arbitration could result in the ruination of the company.

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1 31. Arbitration Act, s. 12, Explanation 1. 132. Arbitration Act, s. 12(5). 133. IBA Guidelines on Conflicts of Interest in International Arbitration (2014), Non-​Waivable Red list 1.2–​ 1.4; see also: Grand Junction Canal v Dimes (1852) 3 HL Cas 759, at pp. 793–​794, per Lord Campbell; Sellar v Highland Railway Co. 1919, SC (HL) 19; R v Rand (1866) LR 1 QB 230, at p. 232, per Blackburn J; R v Camborne Justices, ex p Pearce [1955] 1 QB 41, at p. 47, [1954] 2 All ER 850, at p. 855, per Slade J; R v Gough [1993] 2 All ER 724, at p. 730, per Lord Goff of Chieveley, HL; Clenae Pty Ltd v Australia and New Zealand Banking Group Ltd [1999] VSCA 35, at para. 59, per Charles JA, and at para. 3, per Winneke P; De Smith et al., De Smith, Woolf and Jowell, Judicial Review of Administrative Action (5th edn, 1995), p. 528. 134. Sellar v Highland Rly Co. 1919 SC (HL) 19. 135. Electriciadad Argentina SA & EDF International SA v Argentine Republic ICSID Case No. ARB/​03/​22; EDF International SA, SAUR International SA & Leon Paricipaciones Argentinas SA v Argentine Republic ICSID Case No. ARB/​03/​23. 136. Desbois v Industries AC Davie Inc. [1990] CanLII 3619 (QC CA); Logy Enterprises Ltd v Haikou City Bonded Area Wansen Products Trading Co. [1997] 2 HKC 481.

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An arbitrator does not have an interest in the dispute, however, merely because he was employed by a subsidiary of a creditor of one of the parties.137 There might be circumstances where the arbitrator may be responsible for the dispute. A professional boxer in Watson v Prager138 alleges his contract with the manager was in restraint of trade and involved a conflict of interest between his role as a promoter and manager.

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The dispute involved the application of the boxing board regulations. However, the management contract provided for the boxing board to be the arbitrator. The Court held that the board had significant interest involved and could therefore not act as the arbitrator.

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The IBA Guidelines on Conflicts of Interest in International Arbitration provide a useful compilation of circumstances that might raise doubts, in order of decreasing severity, through a traffic light system.

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For example, holding an “insignificant number of shares in one of the parties” falls under the green list where no actual or apparent conflict of interest exists, and there is no duty to disclose.139

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The Fifth Schedule to the Arbitration Act provides, under items 15 and 16, that if the arbitrator has given legal advice or provided an expert opinion on the dispute to a party or an affiliate of one of the parties, or has had previous involvement in the case, it may give rise to justifiable doubts.

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Items 17, 18, and 19 refer to the arbitrator’s direct or indirect interest in the dispute:

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“17. The arbitrator holds shares, either directly or indirectly, in one of the parties or an affiliate of one of the parties that are privately held. 18. A close family member of the arbitrator has a significant financial interest in the outcome of the dispute. 19. The arbitrator or a close family member of the arbitrator has a close relationship with a third party who may be liable to recourse on the part of the unsuccessful party in the dispute.”140

137. Cook International Inc v BV Handelmaatschappij Jean Delvaux and Braat, Scott and Meadows [1985] 2 Lloyd’s Rep 225. 138. [1991] 3 All ER 487, as mentioned in Robert Merkin, Arbitration Law (LLP, 2004), p. 383. 139. IBA Guidelines on Conflicts of Interest in International Arbitration, Part II No. 4 (Green List) Point 4.4.2. 140. The grounds stated in the Fifth Schedule are only to provide a guidance and are by no means exhaustive. There could be other instances which are outside the scope of the mentioned grounds but would still raise justifiable doubts as to impartiality based on the particular circumstances of the dispute.

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The Supreme Court of India has clarified that an arbitrator’s alleged “previous involvement” must be with respect to the very dispute at hand.141 Additionally, a professional opinion, not coming through a business relationship, which is not directly related to the dispute at hand, cannot be considered as a ground for disqualification under item 15 of the Fifth Schedule.142

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Similarly, an arbitrator who is the shareholder in a limited company that is a party to the reference is disqualified, unless his interest is insignificant or is known, or must be presumed to be known to the other party.143

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The arbitrator cannot by any means be a witness to the dispute. It would be like the judge can be a witness and appear before himself to be examined.144

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Relationship between the Arbitrator and the Party or His Legal Representatives

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The arbitrator being employed by one of the parties145 or a rival146 would be a clear ground for a challenge, particularly as a director.147

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However, some arbitration contracts will provide for the contract administrator, such as the architect, engineer, or project manager in a building contract, to act as the arbitrator. In such cases, the parties should be taken to have accepted this.148

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Similarly, the arbitrator being indebted to one of the parties or vice versa would indicate a lack of independence.149

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141. HRD Corporation (Marcus Oil and Chemical Division) v Gail (India) Limited (Formerly Gas Authority of India Ltd.) (2018) 12 SCC 471, at para. 24. 142. Ibid, at para. 22. 143. Co-​operative Hindustan Bank v Bhola Nath Barooah AIR 1915 Cal 832. 144. Siddhivinayak Realities Pvt. Ltd. v Tulip Hospitality Services Ltd. & Ors. (2007) 4 SCC 612, at paras. 36–​38, (Atlamas Kabir J held that the party cannot be called upon to decide the dispute in which he himself becomes a party, in violation of the maxim “Nemo judex in causa sua” which means that a person cannot be a judge in his own cause). 145. Veritas Shipping Corpn v Anglo-​Canadian Cement Ltd. [1966] 1 Lloyd’s Rep 76; Pickthall v Methyr Tydvil Local Board [1886] 2 TLR 805. Cf. Blackwell (R W) & Co Ltd v Derby Corporation (1909) 75 JP 129; Bremer Handelsgesellschaft mbH v Ets Soules & Cie and Scott [1985] 2 Lloyd’s Rep 199. 146. Though, see the decisions of the Taizhou Intermediate People’s Court, PRC [2012] ZTZC No. 26 and [2013] ZTZC No. 17 where one party was an insurance company, the Court rejected arguments that several members of the tribunal being employed by insurance created an actual conflict of interest or endangered a fair trial. 147. Veritas Shipping Corp v Anglo-​Canadian Cement Ltd [1966] 1 Lloyd’s Rep 76; Burkett Sharp & Co v Eastcheap Dried Fruit Co and Perera [1962] 1 Lloyd’s Rep 267, CA (Eng). 148. Cf. Jean Charboneau v Les Industries AC Davie Inc et al [1989] Recueil de Jurisprudence du Quebec 1255, SC (Quebec), where a government minister was a party to the arbitration but was also named as the arbitrator in the agreement, rendering the agreement inoperative as a breach of natural justice. 149. Cook International Inc v BV Handelsmaatschappij Jean Delavaux and Braat, Scott and Meadows [1985] 2 Lloyd’s Rep 225; Rand v Readington 13 NH 72 (1842); although in Morgan v Morgan 2 LJ Ex 56, an award was not set aside because the arbitrator was indebted to a party, it is suggested that a different result would be reached today.

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Unconnected pending litigation between the arbitrator and one of the parties has historically been held not to give rise to an inference of bias.150 However, it would almost certainly create justifiable doubts in a modern arbitration. However, an arbitrator cannot be said to be biased because he has agreed to give evidence against the solicitors to one of the parties in unconnected legal proceedings.151

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A close family relationship of the arbitrator with any of the parties to the proceedings before him will disqualify him.152 In one case, a challenge was rejected where the arbitrator’s goddaughter was employed by the legal representatives of one of the parties.153

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Whilst that relationship may have been too distant, it is likely that an arbitrator’s spouse, parent, or child being employed by or having a significant financial interest in one of the parties would be grounds for challenge.154

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When an arbitrator is appointed, he must commit to that appointment and ensure that his diary is booked accordingly. Since disputes may settle, this can mean the loss of other professional opportunities for the arbitrator. Therefore, many arbitrators will request a retainer or a commitment fee.

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Further, there would be justifiable doubts raised if a retainer was paid to an arbitrator by one party and this was not disclosed to the other side.155

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Given that many lawyers are involved in arbitration, both as counsel and as arbitrators, and the relatively small pool of active participants in certain esoteric practice areas, means that challenges based on these relationships frequently arise.

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In many legal systems, judges are drawn from the legal profession. There will naturally be friendships and professional associations between judges and counsel.

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The general view is that these should not be considered to give rise to a reasonable apprehension of bias.156 In one case, a party was the chairman of a bank that gave

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150. Re Baring Brothers & Co and Doulton & Co (1892) 61 LJQB 704; Belcher v Roedean School Site and Building Ltd (1901) 85 LT 468. 151. Fletamentos Maritimos SA v Effjohn International BV (No. 2) [1997] 2 Lloyd’s Rep 302. See also: Rustal Trading v Gill & Duffus SA [2000] 1 Lloyd’s Rep 14. 152. Bridgman v Holt [1693] 1 Show PC 111; R (Murrey and Wortley) v Armagh County Justices (1915) 49 ILT 56; Metropolitan Properties Co (F G C) Ltd v Lannon [1968] 3 All ER 304. 153. Oberlandesgericht München, Germany, 34 SchH 05/​06, 5 July 2006. 154. IBA Guidelines on Conflicts of Interest in International Arbitration, Waivable Red list 2.2.2–​2.2.3. 155. L. F. Ebb, “A Tale of Three Cities: Arbitrator Misconduct by Abuse of Retainer and Commitment Fee Arrangements” (1992) 3 Am Rev Int’l Arb 177, at pp. 181–​190. 156. Saxmere Company Ltd v Wool Board [2009] NZSC 72, [2010] 1 NZLR 35, at para. 106, observing the British Columbia Court of Appeal decision in Wellesley Lake Trophy Lodge Inc v BLD Silviculture Ltd [2006] 10 WWR 82, at para. 18.

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significant work to a law firm. The arbitrator, accordingly, had a financial interest in the law firm. The Court held that the impartiality of the arbitrator was in doubt.157 There is hardly any authority on bias arising from personal friendship. This type of bias is rarely alleged.158 A romantic relationship between counsel and an arbitrator would clearly be grounds for removal.159

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In a Chinese case, the Court upheld a challenge to an arbitrator with whom counsel for one of the parties had previously acted as co-​arbitrator because the relationship might influence the independence of the arbitrator. For an appointing institution to appoint a director of that institution as an arbitrator would raise justifiable doubts.160

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Many arbitrators do not derive all their income from arbitration work. They remain in inactive practice, either as a partner or associate in a law firm, or barristers’ chambers.

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This can result in an arbitrator hearing a dispute whilst he or his firm is concurrently in a position adverse to one of the parties161 or even directly acting for or against one of the parties in a separate dispute.162

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One of the arbitrators in Republic of Ghana v Telekom Malaysia163 was concurrently acting as counsel in an attempt to set aside an award on which one of the parties sought to rely. The Hague District Court upheld the challenge and stated that even if the arbitrator could sufficiently delineate his roles as counsel arguing for setting aside and as an open-​ minded arbitrator, there would nonetheless be the appearance of a lack of impartiality.164

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A lawyer-​arbitrator may have previously acted for one of the parties; whether this will constitute a ground for a challenge will depend on the facts of the case. An unrelated matter some years prior, where no continuing relationship exists, should not raise justifiable doubts.165 On the other hand, a lawyer-​arbitrator who has previously given legal advice on the dispute would.166

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157. Sierra Fishing Company v Farran [2015] EWHC 140 (Comm), at para. 57. 158. See Cottle v Cottle [1939] 2 All ER 535. 159. William Park, “Arbitrator Integrity” (2009) 46 San Diego Law Review 629, at p. 641. 160. Case Law on UNCITRAL Texts [CLOUT] Case 900, [Centre for Arbitration and Dispute Resolution (CADER), Uganda, 15 July 2004], Cause No 10/​04. 161. ICS Inspection and Control Services Limited v Argentine Republic (UNCITRAL), Decision on Challenge to Mr. Stanimir A. Alexandrov, 17 December 2009. 162. As was the case in S &T Oil Equipment and Machinery Ltd v Romania, ICSID Case No. ARB/​07/​13. 163. (District Court of The Hague) Case No HA/​RK 2004,667 and Case No HA/​RK/​2004/​778, reprinted in (2005) 23 ASA Bulletin 186, 192. 164. Republic of Ghana v Telekom Malaysia Berhad (District Court of The Hague), Case No HA/​RK 2004, p. 667, reprinted in (2005) 23 ASA Bulletin 186, p. 192. 165. BOC NZ Ltd v TransTasman Properties Ltd (1996) 10 PRNZ 199, at p. 206, CA; Bright v River Plate Construction Co Ltd [1990] 2 Ch 835; Hanseatisches Oberlandesgericht Hamburg, Germany, 9 SchH 01/​05, 12 July 2005. 166. IBA Guidelines on Conflicts of Interest in International Arbitration, Waivable Red list 2.1.1.

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Parties’ secretive conduct may lead to the removal of an arbitrator.167 The courts will not intervene merely because the arbitrator has appointed as his solicitor a member of a firm advising one of the parties.168

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One potential cause for concern is the repeated appointment of an arbitrator,169 either by a party or as chairman by a co-​arbitrator. It is certainly possible to envision situations where a party has repeatedly appointed an arbitrator and obtained favourable decisions generating doubts as to impartiality. The IBA Guidelines on Conflict of Interest being appointed as arbitrator on two occasions by one of the parties or affiliates falls under the Orange List.

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On the other hand, courts have generally rejected challenges of this nature.170 Repeated appointments are more likely to arise as a result of the quality of the arbitrator.171

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The Court held that:

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The Supreme Court of the United Kingdom in Halliburton v Chubb172 dealt with the disclosure obligations when the same arbitrator is appointed by the party in different arbitrations. Another concern raised was if the lack of disclosure in such cases sufficient for revoking the arbitrator’s authority.

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“Arbitrators risk being seen as biased and having their appointment to arbitral tribunals revoked by courts in England and Wales if they fail to notify businesses involved in arbitral proceedings of their appointment to other tribunals tasked with considering the related subject matter and involving a common party.”

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William Park accepts that arbitrators may want to see cases decided in favour of the party that appointed them. However, he argues that there is a stronger incentive in the form of personal reputation, which arbitrators care deeply about:

167. See: Hrvatska Elektroprivreda dd v Slovenia; ICSID Case ARB/​05/​24, Tribunal’s Ruling Regarding the Participation of David Mildon QC in Further Stages of the Proceedings of 6 May 2008, available at http://​ .italaw.com/​documents/​HrvatskaOrderreCounsel.pdf. 168. Bunten and Lancaster (Produce) Ltd v Kiril Mischeff Ltd [1964] 1 Lloyd’s Rep 386. 169. F.Z. Slaoui, “The Rising Issue of ‘Repeat Arbitrators’: A Call for Clarification” (2009) 25 Arb. Int’l 103. 170. See: ASM Shipping Ltd of India v TTMI Ltd of England [2005] EWHC 2238 (Comm), where appointment 10 times over 11 years was not considered objectionable in the context of the arbitrator having undertaken some 400 total appointments during that time; Andros Compania Maritime SA v Marc Rich & Co AG 579 F.2d 691; Michael v Aetna Life & Cas Ins Co, 107 Cal Rptr 2d 240, 251 (Cal App 2001). 171. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2019. 172. [2020] UKSC 48.

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“Few enticements to good behaviour are stronger for those who sit regularly as arbitrators than a colleague’s appreciation of one’s ability and integrity”.173 That is something an arbitrator who appears to be “bought and paid for” will not receive.

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There are arguments that “arbitrators and counsel should be required to decide to be one or the other”. It may ensure that “an arbitrator will not be tempted, consciously or unconsciously, to seek to obtain a result in an arbitral decision that might advance the interests of a client in a case he or she is handling as counsel”.174

The likelihood of such a situation arising in commercial arbitration is so small that such a restrictive requirement would be impractical and undesirable.175

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Items 1 to 14 of the Fifth Schedule of the Arbitration Act lay down examples of relationships between the arbitrator and parties or the counsel which may give rise to justifiable doubts. These items are guidelines, alerting the party of instances that may give rise to justifiable doubts as to impartiality and independence.176

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A relationship with a party has been categorically held to be a ground for raising justifiable doubts. It can also be a ground for disqualification.177 If such a relationship does not give rise to any bias on the part of the arbitrator, then it might not prove to be ground for disqualification.178

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Where the arbitrator is clearly biased towards one of the parties, and/​or also has a personal interest in the subject matter of the award, he is not a proper person to be appointed as the arbitrator.179

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Similar to the situation of the English Chambers, the High Court of Kerala in Impex Corporation & Ors. v Elenjikal Aquamarine Exports Ltd.180 held that where the lawyer

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173. W. Park, “Arbitrator Integrity: The Transient and the Permanent” (2009) 46 San Diego Law Review 629, at p. 653. 174. T. Buergenthal, “The Proliferation of Disputes, Dispute Settlement Procedures and Respect for the Rule of Law” (2006) 3(5) Transnational Dispute Management. 175. That being said, it did happen in Compañia de Aguas del Aconquija SA and Vivendi Universal SA v Argentine Republic (ICSID Case No ARB/​97/​3), Award 20 August 2007; investment treaty arbitration may be more vulnerable to such problems, given that the interpretation of the same instruments is a feature of these cases. 176. For instance, Item 3 refers to a situation wherein the arbitrator is “a lawyer in the same law firm which is representing one of the parties”. Similarly, Item 9 envisages a situation where the arbitrator has “a close family relationship with one of the parties”. 177. Firm Motharam Dowlatram v Firm Mayadas Dowlatram 1923 SCC OnLine Sind JC 36, AIR 1925 Sind 150, at para. 9. 178. Nehalchand v Shantilal AIR 1935 (Oudh.) 349, as mentioned in R.S. Bachawat, Law of Arbitration and Conciliation (6th edn, 2017), p. 980. 179. B.K. Dhar (Private) Ltd. v Union of India 1964 SCC OnLine Cal 146, AIR 1965 Cal 424, at para. 11. 180. 2007 SCC OnLine Ker 125, (2008) 2 Arb LR 560 (DB), at para. 3.

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Law, Practice and Procedure of Arbitration in India

for one of the parties was a former junior in the chambers of the arbitrator, it did not give any reason to suspect the impartiality of the arbitrator. Appointing an employee or an officer of one of the parties as an arbitrator has been an issue in Indian arbitration jurisprudence for some time now. The Supreme Court of India in Indian Oil Corporation Ltd. v Raja Transport (P) Ltd.181 settled the matter when it pronounced that,

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“The fact that the named arbitrator is an employee of one of the parties is not ipso facto a ground to raise a presumption of bias or partiality of lack of independence on his part. There can, however, be justifiable apprehension about the independence or impartiality of employee arbitrator, if such person was controlling or dealing in regard to the subject matter of the contract or if he is a direct subordinate to the officer whose decision is the subject matter of the dispute.”

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There are other grounds that are indirectly linked to the relationship between the party and the arbitrator but has been omitted from the list. These include when the arbitrator becomes indebted to the party,182 when the arbitrator has retained the pleader of the party, or when the arbitrator is the agent of the party. In such cases, there is a valid ground for revocation of the authority of the arbitrator.183

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The High Court of Bombay, in Sawarmal Gadodia v Tata Capital Financial Services Ltd. & Anr.184 ruled on the issue of a vague and ambiguous disclosure made by the arbitral tribunal. The appointed arbitrator did not follow the scheme of the Arbitration Act.

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The arbitrator did not disclose the fact that he had been appointed as arbitrator in a number of ongoing arbitration proceedings by the same party. The arbitrator even had a fixed arrangement of payment with the said party.

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The Court ordered the respondent company to ensure compliance of the procedure set out under the Arbitration Act and for the arbitrator to disclose to the other party, the exact number of ongoing arbitrations he is a part of.

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Other Circumstances including Conduct Suggesting Prejudgment The circumstances discussed above are generally related to external facts. A reasonable ground for challenge is also found in the actions of the arbitrator in conducting the arbitration. 1 81. 182. 183. 184.

(2009) 8 SCC 520, at para. 34. Mohd. Wahiduddin v Hakiman 1902 SCC OnLine Cal 224, (1902) ILR 29 Cal 278, at para. 10. Ibid. 2019 SCC Online (Bom) 849, at para. 6.

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Firstly, unilateral communication between the arbitrator and one of the parties, counsel, or witnesses185 would provide clear grounds for justifiable doubts as to impartiality.186 Arbitrators must avoid initiating this kind of contact. They must disclose any that occur. Inevitably, the party who was not included in the discussion will have grave concerns about the impartiality of the arbitrator. Undisclosed communication is presumptively improper.187

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The refusal of the arbitrators to disclose non-​substantive discussions relating to the proposed appointment of the third arbitrator did not give rise to justifiable doubts.188

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The arbitrator’s behaviour during the arbitral proceedings can demonstrate impartiality; for example, an arbitrator pointing the finger at the applicants and repeatedly accusing them in the court’s judgment, unfairly, of deliberate delay.189

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Parties and their counsel must be wary, however, of making a challenge because the arbitral tribunal makes an unfavourable procedural ruling. It will not constitute justifiable doubts as to impartiality.190

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In order to succeed, the parties must show that the procedural ruling had the effect of breaching the statutory requirements to treat the parties with equality and provide them with a reasonable opportunity of presenting their case.191

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It has been suggested that “the fact that an arbitrator seems to be constantly ruling in favour of one party is equally consistent with the merits being on that party’s side”.192

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As such, notwithstanding the more relaxed setting of an arbitration hearing room as compared to a court, arbitrators must be circumspect in their comments during proceedings.

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The High Court of Australia in Johnson v Johnson193 held that the judge stated that he would be “looking to the independent people and independent documents in

185. Re Enoch & Zaretzky, Bock & Co’s Arbitration [1910] 1 KB 327, CA (Eng). 186. See: Professor Mark D Cato, Arbitration Practice and Procedure, Interlocutory and Hearing Problems (3rd edn, 2002) pp. 190–​191; Norbrook Laboratories Ltd v Tank, [2006] EWHC 1055 (Comm), [2006] 2 Lloyd’s Rep 485; Kuala Ibai Development Sdn Bhd v Kumpulan Perunding (1988) Sdn Bhd [1999] 5 MLJ 137, at para. 149. 187. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 2011–​2012. 188. Pacific China Holdings Ltd v Grand Pacific Holdings Ltd. [2007] HKCFI 715. 189. Damond Lock Grabowski & Partners v Laing Investments (Bracknell) Ltd. (1992) 60 BLR 112. 190. Wiseline Corp Ltd v Hockey HC Auckland M383-​IM02, 25 June 2002. 191. Montrose Canned Foods Ltd v Eric Wells (Merchants) Ltd. [1965] 1 Lloyd’s Rep 597. 192. Anwar Siraj v Ting Kang Chung [2003] 2 SLR(R) 287, at para. 43. 193. [2000] HCA 48, [2000] 5 LRC 223, at para. 5.

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Law, Practice and Procedure of Arbitration in India

the search for the truth in this matter”, a position which he reiterated subsequently. The applicant argued that this was a negative assumption as to the creditworthiness of the parties.

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The High Court further held that the comments of the judge were reasonable in the circumstances, particularly in the context of the submissions made by counsel preceding the statement. Likewise, a contextual, not micro-​level, analysis approach must be taken in assessing any statements made by the arbitrator.

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An arbitrator demonstrating animosity towards a party, either through expressions of negative stereotypes194 or strong words of enmity195 or his refusal to act in the arbitration could potentially be construed as demonstrating impartiality. However, such conduct must favour the respondent by preventing the claimant from obtaining justice.

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Academic writing is a necessity in many fields, particularly in the competitive marketplace of arbitration appointments. If a legal issue arises during the arbitration on which the arbitrator has previously expressed a view, an applicant may attempt to use that as justification for removal.

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These kinds of expressions of opinion are normally irrelevant to independence or impartiality196. The IBA Guidelines on Conflicts of Interest in International Arbitration enumerates such expressions of opinion as being on the Green List.197

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It is possible, however, to imagine situations where there could be justifiable doubts as to impartiality, such as an arbitrator having written several strongly worded articles on a particular subject198 or made a prior commitment to a particular point of view as an expert.199

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194. In Catalina SS (Owners) v Norma (Owners) [1938] 61 Ll L Rep 360; R v Handley (1921) 61 DLR 656; Maclean v Workers Union [1929] 1 Ch 602. Cf White v Kuzych [1951] AC 585. 195. R (O’Donoghue) v Cork County JJ [1910] 1 IR 271; R (Kingston) v Cork County JJ [1910] 2 IR 658; Re Harrington v Clare County Justices [1980] 2 IR 116. 196. See: Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2026; Bishop & Reed, “Practical Guidance for Interviewing, Selecting and Challenging Party-​Appointed Arbitrators in International Commercial Arbitration” (1998) 14 Arb Int’l 395, at p. 411. 197. IBA Guidelines on Conflicts of Interest in International Arbitration, Green List 4.1.1. 198. See Locabail (UK) Ltd v Bayfield Properties Ltd; Locabail (UK) Ltd v Waldorf Investment Corp; Timmins v Gormley; Williams v HM Inspector of Taxes; R v Bristol Betting and Gaming Licensing Committee, ex parte O’Callaghan [2000] 1 All ER 65, at paras 71–​97, cited in JSC BTA Bank v Ablyazov (Recusal) [2012] EWCA Civ 1551, at para. 50. 199. Tackaberry, Marriot QC, and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Sweet & Maxwell 2003), at para. 2-​278.

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Chapter 23—​​​Challenge of Authority and Removal of Arbitrator

Thus, there is an ill-​defined line that could conceivably be crossed in expressions of opinion.200 Public comment on the case itself could naturally create justifiable doubts as to the impartiality. It should therefore be avoided altogether. Fees are a common cause for complaint, given that they are often paid directly to the arbitrator by parties.

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The Court in Turner v Stevenage Borough Council201 ruled that an arbitrator who had sought an interim payment from both parties was not guilty of wrongful conduct in accepting payment from one party and in seeking to negotiate payment through genuine and open discussions with the other, who alleged that there had been a demand for payment at an unreasonable time.

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The Court in Wicketts v Brine Builders & Anr.202 removed the arbitrator for, amongst other reasons, making a largely unrequested order that both parties paid 100 per cent of his fees as security for costs, effectively giving him double security.

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The Fifth Schedule of the Arbitration Act refers to such other circumstances which might also raise any justifiable doubts as to the independence and impartiality of the arbitrator.

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These include arbitrator holding any shares, either directly or indirectly, which by reason of number or denomination constitute a material holding capacity in one of the parties or an affiliate of one of the parties that are publicly listed.203

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Another reasonable ground is where the arbitrator holds a position in an arbitration institution with appointing authority over the dispute.204

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Where there was active litigation with one of the parties, the court could give leave to revoke the authority of the arbitrator, if there is pending litigation between the arbitrator and one of the parties.205

[23.5] THE CHALLENGE PROCEDURE

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The procedure for challenging the arbitrator may be provided for in the arbitration agreement between the parties. Normally, this is done by inserting the

200. 201. 202. 203. 204. 205.

Vakauta v Kelly (1989) 167 CLR 568, at pp. 570–​571. [1997] ADRLJ 409. [2001] CILL 1805, [2001] App LR 06/​08. Fifth Schedule, Item 32, of the Arbitration Act. Fifth Schedule, Item 33 of the Arbitration Act. Re Baring Bros & Co. and Doulton & Co. (1892) 61 LJQB 704.

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Law, Practice and Procedure of Arbitration in India

institutional arbitration rules into the agreement. Where there is ad-​hoc arbitration, the procedure may be provided in the arbitration law at the place/​s eat of the arbitration.

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Most institutional arbitration rules contain a robust mechanism for challenging the arbitrator.206 The parties may incorporate these procedures word for word into their agreements, or they can resolve to amend such procedures for their convenience consonant with party autonomy.

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As a starting point, the UNCITRAL Arbitration Rules offer the party an opportunity to raise a challenge with the arbitrator or the panel of arbitrators, when there is a challenge premised on justifiable doubts regarding the arbitrator’s independence and impartiality.207

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The notice of challenge needs to be given to all the stakeholders involved in the arbitration, be it an opposite party, the arbitral tribunal, and the institution administering the arbitration. The choice of going to the court rather than the arbitrator has not been provided in the Rules.

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Most arbitration institutional rules shadow this set procedure only to the extent of allowing notice to be sent to the institution or registry or secretariat of the institution along with the reasons for a challenge, usually within 15 days.

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This limitation starts to run from the appointment or confirmation of the arbitrator, or within 15 days from the date when the party making the challenge was informed of the facts and circumstances on which the challenge is based.

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HKIAC Arbitration Rules do not suspend the arbitration proceedings while the challenge is being heard.208 The SIAC Arbitration Rules209 allow for the suspension of proceedings, pending the decision on the challenge of the arbitrator.

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The ICC Arbitration rules210 as well as the LCIA Rules211 do not make any mention of suspension in proceedings. However, the LCIA Rules do provide for the possibility of the revocation of the arbitrator’s appointment upon a challenge.212

206. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 264, at para. 4.106. 207. UNCITRAL Arbitration Rules, arts. 12 and 13.1. 208. HKIAC Arbitration Rules, 2018, rr. 11.7, 11.8, and 11.9. 209. SIAC Arbitration Rules, 2016, r. 15.4. 210. ICC Arbitration Rules, 2021, art. 14. 211. LCIA Arbitration Rules 2014, art. 10. 212. LCIA Arbitration Rules 2014, arts. 10.1 and 10.4.

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The arbitration institutions will normally decide on the challenge by issuing a written decision. The parties will be requested to submit on the challenge and the challenged arbitrator will also be given a reasonable opportunity to comment. Normally the arbitration institution decision is not amenable to appeal.

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National laws allow for an interlocutory judicial challenge as the means of removing an arbitrator for lack of independence or impartiality. There is some diversity among the arbitration statutes when it comes to the challenge procedure. The UNCITRAL Model law allows a two-​tier approach in the challenge procedure. It allows the party to take notice of the challenge with the arbitrator in the first place. The aggrieved party can then appeal the arbitrator’s decision before the designated court.213

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Such an approach where the party is allowed to have a second bite of the cherry is showcased in other jurisdictions as well. The English Arbitration Act (1996) follows a similar procedure.

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However, the court does ensure that the party has first exhausted its option to challenge with the institution or arbitral tribunal.214 Germany215, Austria,216 and Hong Kong217 who have adopted the Model Law have also retained this dual challenge mechanism.

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The US FAA stands out in terms of granting a uniquely designed challenge procedure. It provides a very narrow possibility of challenging the arbitrator initially. Instead, it allows all challenges to be made at the end with annulment actions.218

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A party-​appointed arbitrator who has been challenged may consult with his appointing party. Only in rare circumstances where a lack of independence or impartiality is clear, should he resign with the consent of his appointer.219

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Once a challenge has been made the arbitral tribunal must issue a decision on the challenge unless he resigns or the other party agrees to his removal.220

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2 13. UNCITRAL Model Law, art. 13.3. 214. English Arbitration Act (1996), s. 24(2). 215. German Arbitration Act (1998), s. 1037(3). 216. Austrian Code of Civil Procedure (1983) –​Fourth Chapter: Arbitration Procedure, art. 589. 217. Hong Kong Arbitration Ordinance, s. 26. 218. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2065. 219. Tackaberry, Marriot QC, and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Sweet & Maxwell 2003), at para. 2-​296. 220. Tan Sri Dato’ Professor Dr Lim Kok Wing v Thurai Das a/​l Thuraisingham [2011] 9 MLJ 640, at para. 22; Horizon Construction (Taupo) Ltd v Reitveld (unreported) (M 64/​2002); Auckland Co-​operative Taxi Society Ltd v Perfacci Ltd (unreported) HC Auckland CIV 2003-​404-​5495; Banks v Grey District Council [2004] 2 NZLR 19, CA (NZ).

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Where a second application to the court is permitted, the court will apply the objective test of whether circumstances give rise to justifiable doubts as to the impartiality or independence of the arbitrator in the eyes of a third-​party observer. The court is not concerned with whether the arbitrator did or did not allow his mind to be affected by those circumstances, but whether on an objective basis, a reasonable apprehension that there could be a lack of impartiality or independence existed.221

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The court will take a pragmatic approach. It will not remove an arbitrator where the potential effect of any apparent personal interest, the arbitrator may have, is so small or de minimis as to be incapable of affecting his decision one way or the other.222

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The assertions by the impugned arbitrator that he had an open mind may be accorded little or no evidential weight.223 It is unlikely, however, that the court would refuse to allow an arbitrator permission to make submissions in the application.224

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Once justifiable doubts have been established, it is not necessary to additionally demonstrate that substantial injustice will be caused; this is to be automatically inferred, since “there can be no more serious or substantial injustice than having a tribunal which was not, ex hypothesi, impartial, determine the parties’ rights”.225

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The High Court of Singapore in Mitsui Engineering & Shipbuilding v Easton Graham Rush226 rejected an application for an injunction preventing the arbitral tribunal from continuing with the proceedings pending disposal of the application for removal of the arbitrator.

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It held that otherwise “every dissatisfied arbitrator would seek an interlocutory injunction pending the determination of the setting aside application, contrary to the overall scheme of minimum court intervention”.

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The Arbitration Act follows in the footsteps of the US FAA concerning the challenge procedure. Section 13 of the Arbitration Act stipulates the procedure to challenge an arbitrator. The provision allows the parties to set their own challenge procedure.227 The procedure laid down in Section 13(2) is applicable in the absence of such an agreement. 221. Rustal Trading Ltd v Gill & Duffus SA [2000] 1 Lloyd’s Rep 14, at para. 18. 222. See: R v Inner West London Coroner, ex p Dallaglio [1994] 4 All ER 139, at para. 162, CA (Eng), per Sir Thomas Bingham MR; Locabail (UK) Ltd v Bayfield Properties Ltd. [2000] QB 451, [2000] 1 All ER 65, CA (Eng); Metropolitan Properties Co (F G C) Ltd v Lannon [1968] 3 All ER 304; although cf. even de minimis advice to a third party can be sufficient to create an apprehension of bias in Vito G Gallo v Government of Canada PCA Case No 55798, available at: http://​italaw.com/​cases/​471. 223. Re Medicaments & Related Classes of Goods (No 2) [2001] 1 WLR 700, CA (Eng). 224. J. B. Casey, Arbitration Law of Canada: Practice and Procedure (2nd edn, 2012), at para. 4.12. 225. ASM Shipping Ltd of India v TTMI Ltd of England [2005] EWHC 2238 (Comm), at [39]; see also Norbrook Laboratories Ltd v Challenger [2006] EWHC 1055 (Comm), [2006] 2 Lloyd’s Rep 485; ASM Shipping Limited v Bruce Harris [2007] EWHC 1513 (Comm), at para. 32. 226. [2004] 2 SLR(R) 14; [2004] SGHC 26, at para. 40. 227. Arbitration Act, s. 13(1).

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If the parties are unable to reach an agreement for the challenge, the party which wishes to challenge an arbitrator shall send a written statement of reasons for the challenge to the arbitral tribunal. This must be done within 15 days of the constitution of the arbitral tribunal or after becoming aware of circumstances that give rise to justifiable doubts regarding the independence or impartiality or lack of qualification as agreed by the parties.228

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The arbitral tribunal decides on the challenge if the arbitrator does not withdraw from office, or if the other party does not agree with the challenge.229 Written particulars of the challenge should be provided to the arbitrator to enable him to properly make a decision regarding whether or not to resign.

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The Arbitration Act does not, however, provide a period of time within which the arbitrator must issue this decision. This omission may provide scope for an arbitrator who is employing dilatory tactics or is simply unable to work quickly to delay the progress of the arbitration proceeding.

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If no decision is forthcoming, it appears that the party would have to make an application to the court under Section 14(1)(a) of the Act, on the ground that the arbitrator is unable to act without undue delay.

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If the challenging party is unsuccessful in its challenge, it is entitled to seek court intervention after the award is made. It will be in the form of an application to set aside the award in accordance with Section 34 of the Act.230

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The Supreme Court of India has clarified that a decision of the arbitral tribunal dismissing an arbitrator challenge decision is not an interim award. Thus, it is not amenable to a challenge under Section 34 of the Act.231

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The Arbitration Act departs from the UNCITRAL Model Law in this respect. The UNCITRAL Report on Model Law explains the reason for including the ultimate judicial control in Section 13. Mainly, it is to put an end to an undesirable situation of having the challenged arbitrator participate in the proceedings.232 However, the Arbitration Act provides that the party unsuccessful in the challenge before the arbitrator would have to sit through the arbitration, only to challenge the 2 28. Arbitration Act, s. 13(2). 229. Arbitration Act, s. 13(3). 230. Arbitration Act, s. 13(5); see: S. P. Singla Constructions Pvt. Ltd. v State of Himachal Pradesh & Anr. (2019) 2 SCC 488, (2019) 1 SCC (Civ) 748. 231. HRD Corporation (Marcus Oil and Chemical Division) v Gail (India) Limited (2018) 5 SCC (Civ) 401, at para. 19. 232. R.S. Bachawat, Law of Arbitration and Conciliation Law (6th edn, LexisNexis 2017), p. 1006. It would also be a waste of time and expense if the court sustains the challenge at the end.

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award at the end.233 In a way, parties have to be careful when raising a challenge to be sure of the grounds supporting such a challenge. The Arbitration Act deviates from the Model Law to minimise interference by the courts in the arbitration proceedings.234 It is also been litigated that Section 13 fails to provide a fair remedy since no appeal is allowed from the decision of the arbitrator.

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The High Court of Karnataka in R.K. Aggarwal & Anr. v BPK Johri, while upholding the constitutionality of Section 13 of the Arbitration Act, held that the right of appeal is only postponed to a particular stage and frequent recourse to appeal would have destroyed the idea of the arbitration being a speedy mechanism.235

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It is only the arbitrator or arbitral tribunal that is authorised to decide the challenge under Section 13(2). They cannot delegate such powers in any situation. If the arbitrator delegates this decision making to the appointing authority, the award rendered subsequently would be liable to be set aside.236

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A party whose challenge has been rejected can continue with the arbitration under dissent. The parties can have recourse against the decision of the arbitrator in a challenge under Section 34 of the Arbitration Act. Section 34(2)(v) provides that an award may be challenged if the procedure followed was not in accordance with Part I of the Arbitration Act.237

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[23.6] FAILURE OR IMPOSSIBILITY TO ACT AND FAILURE TO ACT WITHOUT UNDUE DELAY

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The arbitrator, without demonstrating any partiality may employ dilatory tactics, or simply demonstrate incompetence through bouts of illness or unavailability at crucial dates and long delays in signing documents or drafting directions.238

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The first ground may relate to the arbitrator being unable, in fact, or in law, to perform the duties of his office. This includes illness239 or mental incapacity240 as well as 2 33. Arbitration Act, s. 13(5). 234. Progressive Career Academy Pvt. Ltd. v FIIT JEE Ltd. 2011 SCC OnLine Del 2271, 2011 (2) ArbLR 323 (DB), at para. 20. 235. R.K Aggarwal & Anr. v BPK Johri 1999 SCC OnLine Kar 469, (2003) 4 RAJ 561 (Kar), at para. 7. See also: BHEL v C.N. Garg & Ors. 2000 SCC OnLine Del 773, 2000 (3) Arb LR 674. 236. Rishi Electricals (P) Ltd. v HP State Electricity Board 2006 SCC OnLine HP 55, at para. 9. 237. Alcove Industries Ltd v Oriental Structural Engineers Ltd. 2007 SCC OnLine Del 1709, 2008 (1) Arb LR 393, at para. 29. 238. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 4-​161; C Newmark and R Hill, “The Appointment of Arbitrators in International Arbitration” (2004) 7 Int’l Arb L Rev 73. 239. Oberlandesgericht Köln, Germany, 9 SchH 27/​02, 11 April 2003. 240. David A.R. Williams QC and Amokura Kawharu, Williams & Kawharu on Arbitration (LexisNexis NZ 2011), at para. 5.9.5.

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a physical impossibility, for example, where an arbitrator is arrested and detained in a foreign jurisdiction.241 It is a moot point if an arbitrator is unwilling to conduct an arbitration or issue an award,242 those being his duties as an arbitrator, then he is unable to perform the functions of that office.

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Parties have a legitimate expectation that arbitrators will have the ability to function efficiently and expeditiously.243 Arbitrators have a duty to conduct proceedings diligently.244

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To constitute a refusal to act, the arbitrator’s conduct must be of a seriousness sufficient enough to put the arbitrator out of action, as far as proceedings are concerned.245 This includes a refusal to sign an award that did not contain the arbitrator’s dissenting opinion.246

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This rationale may be extended to encompass circumstances where the conduct of the arbitration proceeding, whilst not suggesting a lack of impartiality or independence, nonetheless falls below the standard expected of a competent arbitrator.

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Another common reason for initiating replacement proceedings is when the arbitrator is causing unacceptable delays or is not responding to correspondence from the parties, or there are extensive delays in rendering awards.247 Before any application is made to the court, the dilatory arbitrator or umpire should first be called upon to proceed.248

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Whether or not there has been undue delay will depend on the facts of each case.249 Factors to be considered will be the nature of the action that was supposed to have been

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241. Noble Resources Pte Ltd v China Sea Grains and Oils Industry Co Ltd. [2006] HKCFI 334. 242. Harji Engineering Works Pvt Ltd v Bharat Heavy Electricals Limited & Anr. 2008 SCC OnLine Del 1080, at para. 13. 243. A/​CN.9/​264 –​Analytical commentary on draft text of a model law on international commercial arbitration, Article 14, para. 4. 244. K/​S Norjarl A/​S v Hyundai Heavy Industries Co Ltd. [1991] 3 All ER 211, at p. 228, [1992] 1 QB 863, at p. 877. 245. Succula and Pamona Shipping Co Ltd v Harland and Wolff Ltd [1980] 2 Lloyd’s Rep 381, at 388; see also Re Gerard (Lord) and London & North Western Railway Co [1895] 1 QB 459, 11 TLR 170, CA (Eng); Den of Airlie SS Co Ltd v Mitsui & Co Ltd and British Oils and Cake Mills Ltd 17 Com Cas 116, CA (Eng); Re Donkin and the Proprietors of the Leeds Canal (1893) 9 TLR 192. 246. Cargill International SA Antigua (Geneva Branch) v Sociedad Iberica De Molturacion SA, The Times 12 November 1997. 247. Hong Huat Development Co (Pte) Ltd v Hiap Hong & Co Pte Ltd [2000] 1 SLR(R) 510, at para. 57, CA. 248. Drummond v Hamer [1942] 1 KB 352, [1942] 1 All ER 398. See also Port Sudan Cotton Co v Govindaswamy Chettiar & Sons [1977] 1 Lloyd’s Rep 166, at p. 178, per Donaldson J (judgment was reversed in the Court of Appeal on other grounds: see Port Sudan Cotton Co v Govindaswamy Chettiar & Sons [1977] 2 Lloyd’s Rep 5, CA (Eng)). 249. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 7-​127.

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done, the cause of the delay, and whether either of the parties has issued any kind of reminder to the arbitrator.250 An arbitrator is not obliged to make particular dates available for hearings regardless of whether they are reasonable or not.251 Parties appointing respected and busy arbitrators must accept that there may be scheduling difficulties.252

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Additionally, they must also accept that the arbitral tribunal when distilling complex facts and lengthy submissions into an award may take a reasonable time to issue the award. O.P. Malhotra states that in determining delay, the following considerations may be relevant:

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“Which action was expected or required of him in the light of the arbitration agreement and the specific procedural situation? If he has not done anything in this regard, has the delay been so inordinate as to be unacceptable in the light of the circumstances, including technical difficulties and the complexity of the case? Did his conduct fall clearly below the standard of what may reasonably be expected from an arbitrator? The factors influencing the level of expectations are the ability to function efficiently and expeditiously and any special competence or other qualifications of the arbitrator by the agreement of the parties. There may be other reasons affecting propriety, expediency or impossibility.”253

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The practical difficulty in determining whether there has been undue delay254 has made it increasingly common for time-​conscious parties to provide a set time limit within which an arbitrator must render the award.255

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The arbitral tribunals’ mandates have been validly terminated for failure to issue an award within those limits.256

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250. See: Succula and Pomona Shipping Co Ltd v Harland and Wolff Ltd [1980] 2 Lloyd’s Rep 381; Enterra Pty Ltd v Adi Ltd [2002] NSWSC 700. 251. K/​S Norjarl A/​S v Hyundai Heavy Industries Co Ltd. [1991] 3 All ER 211, at para. 223, [1992] 1 QB 863. 252. David A.R. Williams QC and Amokura Kawharu, Williams & Kawharu on Arbitration (LexisNexis 2011), at para. 5.9.6. 253. See: OP Malhotra, The Law and Practice of Arbitration and Conciliation: The Arbitration and Conciliation Act 1996 (LexisNexis 2002), pp. 450–​451. 254. Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration (Wolters Kluwer Law & Business 2003), pp. 13–​49. 255. AIAC Arbitration Rules, r. 12.2 provides that an award shall be issued within three months of the closing of the final oral/​written submissions; ICC Rules of Arbitration, art. 30(1). 256. Kifayatullah Haji Gulam Rasool et al v Smt Bilkish Ismail Mehsania et al. AIR 2000 Bom 424, 2000 (4) BomCR 412, 2000 (4) MhLj 341; Petro-​Canada v Alberta Gas Ethylene 1992 ABCA 9 (CanLII); NBCC Ltd v JG Engineering Pvt Ltd (2010) 2 SCC 385; see also Ting Kang Chung John v Teo Hee Lai Building Constructions Pte Ltd [2010] 2 SLR 625, [2010] SGHC 20; Tay Eng Chuan v United Overseas Insurance Ltd [2009] 4 SLR(R) 1043, [2009] SGHC 193.

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Parties should be cautious in specifying mandatory time limits for the completion of the entire arbitration proceedings. Over-​optimistic periods agreed before a dispute crystallises can force the arbitral tribunal to cut corners to deliver an award in time. It may even end up invalidating an award because parties were not given a reasonable opportunity to present their cases.257

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A reasonable time limit purely for issuing the award, could, however, be validly employed. Before the arbitrator is removed for the delay in issuing an award, there should ordinarily be prejudice caused by the delay.258 Alternatively, the delay should lead to a justifiable lack of confidence in the arbitrator being able to complete his task.259

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It has been held in New Zealand that the matter must be raised with the other parties to the arbitration. It would be insufficient to simply write a letter to the arbitrator requesting that he resign. If he does not, parties can apply to the court.260

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Section 14(1) of the Arbitration Act provides the means through which an arbitrator can be removed for reasons other than a lack of qualifications, impartiality, or independence. Section 14(1)(a) expressly provides for removal where an arbitrator refuses to act or fails to properly conduct the proceedings.261

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It is important to query whether a refusal to act falls within the ambit of being “de jure or de facto unable to perform his functions”. Section 14(1)(b) provides for removal where an arbitrator fails to act without undue delay.

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In Section 14(1)(a) the Arbitration Act refers to de jure and de facto impossibility for the arbitrator. The de jure impossibility is the one, which occurs due to the factors personal to the arbitrator, while the de facto impossibility occurs due to factors beyond the control of the arbitrator.262

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The de jure impossibility involves all such situations where the arbitrator cannot perform his function under the law. He is barred from continuing his office under the law, arising, for example, from bankruptcy or criminal conviction.

257. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.165. 258. Boncorp Pty Limited v Thames Water Asia/​Pacific Pty Limited (1996) 12 BCL 139. 259. See also: Lewis Emanuel & Son Ltd v Sammut [1959] 2 Lloyd’s Rep 629; Korin v McInnes [1990] VR 723. 260. Interact v McKay HC Wellington CP51/​03, 14 July 2003, at para. 26; see also David A.R. Williams QC and Amokura Kawharu, Williams & Kawharu on Arbitration (2011), at para. 5.9.3. 261. This may be contrasting with English Arbitration Act 1996, s. 24(1)(d), which provides for removal where a failure to properly conduct the hearing and this has or would cause substantial injustice. 262. Shyam Telecom Ltd. v ARM Ltd., 2004 SCC OnLine Del 754, (2004) 3 Arb LR 146, at para. 13.

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Law, Practice and Procedure of Arbitration in India

On the other hand, de facto incapability refers to such situations where an arbitrator is physically unable to perform his functions, for instance, due to ill-​health.263 For example, if the arbitral tribunal is constituted contrary to Section 10 of the Act, it would not have jurisdiction. Hence, the arbitrators de jure will not be able to perform functions.

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The parties can by agreement fix a time limit under the provisions of the act for rendering the award. The mandate of the arbitrator should end with the time fixed. He would be de jure incapable of continuing with the proceedings.264

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The Indian Courts have provided a very expansive meaning to the terms of de jure and de facto impossibility to act. Such scope of enquiry under Section 14 may include, excess or refusal of jurisdiction, misconduct of arbitrator, charges of fraud, disqualification of the arbitrator by reason of bias, an error of law, and exceptional cases.265

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Section 14 also emphasises the words “undue delay”. Indian Courts have agreed that an award should be passed within a reasonable period. Additionally, any undue delay should be explained.266 The Hyderabad High Court elucidated “undue delay” to mean, unjustified, unwarranted, unreasonable, excessive, or inordinate delay.267

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If the arbitrator does not act for a long time, he is clearly neglecting to act.268 In one case, the arbitrator did not hold any proceedings for two years, till the date of filing of his petition.

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Such a delay was held to be an undue delay on the part of the arbitrator.269 Inordinate delay in passing an arbitral award has been held to be against the public policy of India. It is liable to be set aside.270

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Section 29A of the Arbitration Act provides that an award is to be passed within 12 months of the arbitral tribunal entering upon the reference.271 The Arbitration Act itself clarifies that an arbitral tribunal shall be deemed to have entered upon the

P.C. Markanda, Law Relation to Arbitration and Conciliation (10th edn, LexisNexis 2020), p. 574. See Shyam Telecom Ltd. v ARM Ltd. 2004 SCC OnLine Del 754, at para. 15. National Highways Authority of India v K.K. Sarin 2009 SCC OnLine Del 764, at para. 27. State of Punjab v Hardyal 1985 (2) SCC 629, at para. 14. Gurcharan Singh Sahney v Harpreet Singh Chhabra 2016 SCC OnLine Hyd 90, at para. 123. See Decon India Pvt. Ltd. v Union of India 2005 (2) Arb LR 361 (Calcutta), where the arbitrator failed to act without undue delay despite an order from the High Court to act expeditiously, and resultantly his mandate was terminated. Assudomal Dwarakadas v Jessmal Jethanand AIR 1933 Sind 115, mentioned in P.C. Markanda, Law Relation to Arbitration and Conciliation (10th edn, LexisNexis 2020), p. 577. Kurup Engineers Co. Pvt. Ltd. v Bharat Heavy Electricals Ltd. 2008 SCC OnLine Del 550, at para. 10. See also: Cinevistaas Ltd. v Prasar Bharti 2008 SCC OnLine Del 1173 (wherein the arbitrator did not take any steps for a period of five years since his appointment, and therefore, his appointment was terminated). Mr. K. Dhanasekar v Union of India and Ors O.P. No. 4 of 2015 and O.A. No. 31 of 2015, at para. 12, available at http://​164.100.79.153/​judis/​chennai/​index.php/​casestatus/​viewpdf/​489701. Inserted by the 2015 Amendment.

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263. 264. 265. 266. 267. 268. 269. 270.

271.

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reference on the date on which the arbitrator or all the arbitrators have received notice of their appointment.272 The aforementioned period can be extended by another six months with the consent of both parties.273 If the arbitral award is not passed within the time frame, the mandate of the arbitrators terminates unless a court of competent jurisdiction grants a further extension.274

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Removal of an arbitrator under Section 14 of the Arbitration Act is not based on the same procedure as for removal due to lack of qualifications or a lack of impartiality or independence under Section 13 of the Arbitration Act. There is no express requirement to raise the challenge to the arbitrator. The right to apply to the court is triggered when there is a controversy concerning the grounds laid out in Section 14(1).275

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[23.7] WAIVER OF THE RIGHT TO OBJECT

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Most arbitration laws and rules require the parties to raise their objections to the arbitrator based on perceived lack of independence or impartiality, as soon as possible.276 The prompt action on the part of the party is motivated by the attempt to prevent the abuse of such a process.

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The parties should not wait until the arbitration is over to object on a secret ground against the adjudicators. A challenge with respect to alleged bias should be made promptly. A United States’ Court remarked in this context that, “Heads I win, tails you lose” approach is unfair.277

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The consequence of the failure to meet the time dedicated for challenging the arbitrator denies the party an opportunity to use this mechanism and have the arbitrator removed. It is based on the presumption that the party has waived its right to do so.

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A failure to act within that time limit would bar an application to the court. The rule is derived from the principles of fairness and justice.278 The High Court of England and Wales has held that a party cannot:

2 72. 273. 274. 275. 276.

Proviso to s. 29-​A(1), read with s. 23(4) of the Arbitration Act. The 2015 Amendment, s. 29A(3). The 2015 Amendment, s. 29A(4). Arbitration Act, s. 14(2). See UNCITRAL Arbitration Rules, art. 13; IBA Guidelines on Conflicts of Interest in International Arbitration (2014), Part I, General Standard 4(a). 277. AAOT Foreign Economic Ass’n (VO) Technostroyexport v Int’l Dev & Trade Services Inc. 139 F.3d 980 (2d Cir. 1998) (Where a party has knowledge of facts and possible indicating bias or partiality on the part of the arbitrator, he cannot remain silent and later object to the award of the arbitrator on that ground. His silence amounts to waiver of the objection.) 2 78. Rustal Trading Ltd v Gill & Duffus SA [2000] 1 Lloyd’s Rep 14, at para. 20–​21.

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Law, Practice and Procedure of Arbitration in India

“participate in proceedings which it believes to be irregular only to take advantage of any decision in its favour whilst keeping up its sleeve an objection to an irregularity which it will only raise in the event of an unfavourable decision.”279 The delay in objecting to the arbitrator is also a relevant factor for the court to consider when assessing the strength and authenticity of the party’s application.280

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The High Court of Australia has held that: “There is no reason why, in authority or principle, a litigant who is fully aware of the circumstances from which ostensible bias might be inferred, should not be capable of waiving the right later to object to the judge continuing to hear and dispose of the case.”281

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More generally, case law from England suggests that having knowledge of the grounds of a challenge but waiting until after the award before raising them is likely to be fatal.282 If a specific reservation of the right to continue with proceedings (without prejudice to any subsequent challenge) is made and accepted, there may not be a waiver.283

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The difficulty arises in determining the exact point in time when the parties came to know about the lack of independence and impartiality.

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Gary B. Born suggests, that to resolve this predicament, the enquiry should be made subjective, that is, “constructive knowledge”. The enquiry for the court is not when a party knew of the circumstances giving rise to the challenge, but when it should have known of these circumstances.284

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A distinction can be made when it comes to parties’ waiver of the objections against the arbitrator. Some waivers may be given under the institutional rules. Others are given under the lex loci arbitri (law of the seat of the arbitration).

279. Thyssen Canada Ltd v Mariana Maritime SA [2005] EWHC 219 (Comm), at para. 18, [2005] 1 Lloyd’s Rep 640. 280. David A.R. Williams QC and Amokura Kawharu, Williams & Kawharu on Arbitration (2011), p. 156, at para. 5.8.6. 281. Vakauta v Kelly [1989] HCA 44, per Toohey J at para. 16, cited in Johnson v Johnson, [2000] HCA 48, at para. 78. 282. ASM Shipping Ltd of India v TTMI Ltd of England [2005] EWHC 2238 (Comm), [2006] 1 Lloyd’s Rep 375; Sinclair v Woods of Winchester Ltd. [2005] EWHC 1631 (QB). 283. Compagnie Nouvelle France Navigation SA v Compagnie Navale Afrique du Nord, The Oranie and The Tunisie [1966] 1 Lloyd’s Rep 477, CA (Eng). 284. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2060.

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ICDSID Arbitration Rules set the tone for all other arbitral institutions, by explicitly mentioning in their rules that, a party who fails to object promptly to an alleged violation of a relevant rule is deemed to have waived its right to object.285

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UNCITRAL Arbitration Rules grant merely 15 days to the party for challenging the arbitrator after the appointment. Alternatively, 15 days are granted from the time or the party came to know of the circumstances indicating impartiality or lack of independence.286

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While ICC Arbitration Rules287 stand out to provide 30 days for the challenge of arbitrators, most arbitration institutions288 generally follow in the footsteps of UNCITRAL Arbitration rules allowing only 15 days for a challenge to the arbitrators.

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Analogous to the institutional rules, national arbitration laws impliedly provide for a waiver by permitting a limited time for the challenge to the arbitrators.

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The New Zealand Arbitration Act (1996) provides for 15 days for a challenge after the party becomes aware of the constitution of the arbitral tribunal.289 Swiss PIL does not provide a definite time limit for the challenge. It states the challenge should be made without any delay.290

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Section 4 of the Arbitration Act provides that where a qualification requirement is set out in the arbitration agreement, a failure to object to an arbitrator’s lack of this qualification will constitute a waiver.

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Section 13(2) of the Arbitration Act uses mandatory language requiring a party to issue a notice of challenge within 15 days of becoming aware of the constitution of the arbitral tribunal, or of the lack of qualification, or circumstances giving rise to justifiable doubts as to impartiality or independence. If the said period has expired, any objection raised has been held to be of no consequence.291

2 85. ICSID Convention Arbitration Rules, Ch. III, r. 27. 286. UNCITRAL Arbitration Rules, art. 13.1. (Also implied in the time limitation is the waiver to object which would prevail post the 15 days period.) ASA Rule. 287. ICC Arbitration Rules, 2021, art. 14(2). 288. SIAC Arbitration Rules, 2016, r. 15.1; HKIAC Administered Arbitration Rules, 2018, art. 11.7; LCIA Arbitration Rules, 2014, art. 10.3. 289. See: New Zealand Arbitration Act, 1996, s. 13(2), Sch. 1. 290. Swiss Federal Stature on Private International Law (PIL), art. 180. 291. See: Vikesh Chugh v B.L.B. Ltd. & Anr. 2008 SCC OnLine Del 1088, at para. 5; see also: Jonas Woodhead & Sons (I) Ltd. v Consolidated Civil Construction (I) Ltd. 2016 SCC OnLine Mad 18284, at paras. 10, 11.

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Rule 10(2)(c) of the Scottish Arbitration Rules under the Arbitration (Scotland) Act 2010 states that an objection is competent only if made within 14 days of the objector becoming aware of the facts. No challenge was allowed in Novel Granites Ltd. v Lakshmi General Finance Ltd.292 where no steps taken before the expiry of 15 days after the petitioner came to know about the bias of the arbitrator.293

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The Supreme Court of India in Quippo Construction Equipment Limited v Janardan Nirman Pvt. Limited294 held that non-​participation in arbitral proceedings and/​or failure to raise objections at the relevant stage before the arbitrator will preclude a party from raising such objections after the arbitral award has been passed.295

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To what extent can a party waive the right to object to a lack of impartiality or independence? Where an objection to relatively minor circumstances (such as an arbitrator’s goddaughter being an employee of one of the law firms representing a party) appears readily waivable.

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An award should not be set aside if the circumstances alleged to disqualify an arbitrator were known to both parties and they proceeded without objection.296

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Can a party also surrender the right to complain about the fact that the arbitrator was a major shareholder of one of the parties? In England, there do not appear to be any non-​waivable grounds.297 The principle that a party cannot participate in proceedings and save an objection to a conflict in case there is an unfavourable award should mean that any conflict which is known and not acted on should be waivable.

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An award made in breach of a fundamental principle of natural justice ought to be considered contrary to the public policy of India. Therefore, it is a ground for removal, or the setting aside or resisting enforcement of an award under 34(2)(b)(ii) or 48(2)(b) of the Arbitration Act.298

2 92. 2003 SCC OnLine Mad 365, (2003) 3 RAJ 160 (Mad), at para. 8; 293. The High Court of Delhi upheld a similar view in Alcove Industries Ltd. v Oriental Structural Engineers 2007 SCC OnLine Del 1709, at para. 29; The Court held a similar view that if the challenge is not made in a timely manner, the same may fail as having been condoned and waived on the ground of his acquiescence in the holding of further proceedings. 294. 2020 SCC OnLine SC 419, at para. 19; see also: Madhav Structural Engineers Ltd. v MD Maharashtra State Road Dev. Corp. & Anr. 2016 SCC OnLine Bom 5322, at para. 35. 295. Quippo Construction Equipment Limited v Janardan Nirman Pvt. Limited 2020 SCC OnLine SC 419, at para. 23; Narayan Prasad Lohia v Nikunj Kumar Lohia and Ors. (2002) 3 SCC 572, at paras. 16, 20. 296. Ghirardosi v Minister of Highways for British Columbia 56 DLR (2d) 469, at paras. 473–​474. 297. Smith v Kvaerner Cementation Foundations Ltd (Bar Council intervening) [2006] EWCA Civ 242. 298. See: ONGC v Western Geco International Limited (2014) 9 SCC 263, at para. 28.

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Chapter 23—​​​Challenge of Authority and Removal of Arbitrator

The lack of impartiality or independence constituting a breach of natural justice by a single arbitrator may be sufficient to render an award invalid, even in a three-​ arbitrator tribunal.299

[23.8] PRACTICE AND EFFECT OF ORDER REMOVING THE ARBITRATOR

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The removal of an arbitrator does not terminate the arbitration. Parties should in no way contemplate that a challenge to the arbitral tribunal could be used as a means of escaping the arbitration agreement.

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The exception to the above is when the individual is specifically named in the arbitration agreement. The removal of the arbitrator in such a situation could render the arbitration agreement inoperative.300 Nor is there any authority to support the proposition that the removal of a presiding arbitrator requires the removal of the co-​arbitrators.301

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A replacement arbitrator will be appointed in accordance with the Arbitration Act. The principle of party autonomy for the original appointment of an arbitrator shall be applied with equal force to the procedure of appointing the substitute arbitrator.

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An area of concern where a fresh arbitrator is brought into proceedings that are already underway is the extent to which previously held hearings should be repeated. This is a provision that may cause inefficiency.302 It allows the parties to reopen all previous procedural orders or rulings. It may gravely delay the subsequent arbitration proceedings.

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There is justification for a more moderate approach. Perhaps, it is only in circumstances where procedural fairness is at stake, where witness credibility is important, or where the replacement arbitrator has important questions that otherwise cannot be addressed, that hearings should be repeated.303

299. See also: City Centre Properties (ITC Pensions) Ltd v Tersons Ltd (or Matthew Hall & Co Ltd (sued in name of Tersons Ltd)) [1969] 2 All ER 1121, [1969] 1 WLR 772, CA (Eng). For examples where there exists a serious breach of the rules of natural justice: East and West India Dock Co v Kirk and Randall (1887) 12 App Cas 738, HL; Re Gerard (Lord) and London & North Western Railway Co [1895] 1 QB 459, 11 TLR 170, CA (Eng); Glamorganshire Canal Navigation Co v Nixon’s Navigation Co Ltd (1901) 85 LT 53. 300. J. Poudret, S. Besson et al., Comparative Law of International Arbitration (2nd edn, 2007), p. 365. 301. ASM Shipping Ltd of India v TTMI Ltd of England [2007] EWHC 927 (Comm). 302. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2094. 303. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2097.

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Law, Practice and Procedure of Arbitration in India

It is pertinent to mention UNCITRAL Arbitration Rules here which state as follows: “If an arbitrator is replaced, the proceedings shall resume at the stage where the arbitrator who was replace ceased to perform his or her functions, unless the arbitral tribunal decides otherwise”.304

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HKIAC305 Arbitration Rules provide for a similar provision like the one under UNCITRAL Arbitration Rules. The SIAC306 and ICC307 Arbitration Rules have their own provisions on this point.

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The UNCITRAL Model Law is silent. It does not specify whether there is to be a repetition of the entire arbitral proceedings already conducted before the previous arbitrator. The Swedish Arbitration Act308 and Japanese Arbitration law309 are also silent on this point taking their cue from the Model Law.

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The English Arbitration Act devolved this decision to the arbitral tribunal or the agreement between the parties.310 Similarly, the Austrian Arbitration Law311 as well as the Chinese Arbitration Law312 allow the arbitral tribunal to decide this issue.

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Section 15(2) of the Arbitration Act specifies that in case the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that applied to the appointment of the arbitrator being replaced.

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Section 13 refers to the rules that applied to the appointment of the arbitrator being replaced. Therefore, any agreement by the parties as to appointment which would be valid under Section 11 would apply to selecting a replacement of the arbitrator.313

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In a multi-​party tribunal where each party appoints a co-​arbitrator and one party’s co-​arbitrator is removed or voluntarily resigns,314 that party will still have the right to

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3 04. UNCITRAL Arbitration Rules, art. 15. 305. HKIAC Administered Arbitration Rules, r. 12.3. 306. SIAC Arbitration Rules, r. 18 (“If the sole or presiding arbitrator is replaced in accordance with the procedure in Rule 15 to Rule 17, any hearings held previously shall be repeated unless otherwise agreed by the parties. If any other arbitrator is replaced, any hearings held previously may be repeated at the discretion of the Tribunal after consulting with the parties. If the Tribunal has issued an interim or partial Award, any hearings relating solely to that Award shall not be repeated, and the Award shall remain in effect.”). 307. ICC Arbitration Rules, art. 15.4 (“… the arbitral tribunal shall determine if and to what extent prior proceedings shall be repeated before the reconstituted arbitral tribunal”). 308. The Swedish Arbitration Act (1999), ss. 7–​18. 309. Japanese Arbitration Law (2003), arts. 16–​22. 310. English Arbitration Act (1996), s. 27(4). 311. Austrian Code of Civil Procedure (ZPO), Arbitration Law, s. 591(2). 312. Chinese Arbitration Law, Chapter IV, art. 37. 313. Yashwith Construction (P) Ltd v Simplex Concrete Piles India Ltd. (2006) 6 SCC 204, at para. 4. 314. Arbitration Act, s. 15(1)(a) appears to permit an arbitrator to withdraw from office for reasons other than a challenge under ss. 13 or 14.

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Chapter 23—​​​Challenge of Authority and Removal of Arbitrator

appoint a replacement.315 The appointment is to be done according to the terms of the original agreement.316 For example, if the party does not make an appointment within the stipulated time of 30 days, the right to appoint an arbitrator is waived. The court or the designated arbitral institution will then make the appointment.317

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Unless otherwise agreed by the parties, Section 15(3) provides that where a sole arbitrator is replaced, all previously held hearings must be repeated. Where a co-​ arbitrator is replaced, the decision to repeat any previously held hearings is made at the discretion of the arbitral tribunal.318

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The decision to repeat will depend on the nature of the hearings; case management conferences and procedural hearings are likely to be unnecessary. However, it is likely that oral testimony from witnesses and experts, and submissions from counsel may have to be repeated.

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Section 15(4) of the Arbitration Act provides that unless otherwise agreed by the parties, no order or ruling of the tribunal made prior to the appointment of the substitute arbitrator shall be rendered invalid by the change in the composition of the tribunal.

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Therefore, the removal or resignation of an arbitrator cannot be employed as a tactical manoeuvre to annul unfavourable procedural or interim orders.319

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Where an arbitrator is removed, the issue of the arbitrator’s fees may arise.

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The arbitrator may want payment for the services rendered up to the point of removal.

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On the other hand, it is likely the parties may wish to claw back any payments already made to the arbitrator, depending on the degree of fault leading to removal.320

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315. This is a very significant right, and one which if denied, would create a very undesirable incentive for parties to launch challenges; see: Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Wolters Kluwer 2021), p. 2063. 316. See: Yashwith Constructions (P) Ltd. v Simplex Concrete Piles India Ltd. & Anr. (2006) 6 SCC 204. 317. See: M/​s Teracom Ltd. v Uttar Haryana Bijli Vitran Nigam 2010 SCC Online P&H 2600; SAP India Private Limited v Cox & Kings Ltd. 2018 SCC OnLine Bom 5635, at para. 34, 35. 318. The decision is not subject to challenge unless it occasions a breach of s. 18 of the Arbitration Act or some other rule of natural justice; see: Kalyan People’s Coop Bank Ltd v Dulhanbibi Aqual Aminsaheb Patil AIR 1966 SC 1072. 319. For example, refusing to grant an extension of time or starting hearings early; see Re Whitwham Trustees etc and Wrexham, Mold & Connah’s Quah Rly Co (1895) 39 Sol Jo 692; Schofield v Allen (1904) 48 Sol Jo 176, 116 LT Jo 239, CA (Eng). 320. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 7-​136.

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Law, Practice and Procedure of Arbitration in India

Unlike the English Arbitration Act 1996,321 both the Malaysian Arbitration Act 2005 and the New Zealand Arbitration Act 1996322 contain no provisions for the court to make orders as to an arbitrator’s costs in the event of removal.

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Unless otherwise agreed upon, if the arbitrator is removed, his remuneration will be based on normal contract principles; if he is terminated without fault, such as an innocent but disqualifying conflict of interest, he ought to be entitled to his accrued fees.323 However, where the arbitrator is more culpable, for example, he has failed to disclose a material financial interest in one of the parties, he may be required to repay any fees received prior to removal.324

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[23.9] CONCLUSION

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Many nations have started looking inward after a spree of globalisation for the better part of two decades. Protectionism and regulation of the local markets have led to uncertain legal regimes and judicial precedents.

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The commercial courts too are burdened with heavy dockets of litigation. In such a state of affairs, international arbitration seems to come to the rescue of international parties. With this backdrop in mind, international arbitration must retain its image as a non-​partisan and sacrosanct process.

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Independence and impartiality of the arbitrator is a decisive element in keeping up with the image of international arbitration. At all times in an arbitration, due importance should be given by all stakeholders, be it parties, arbitrators, or institutions, to ensure that a strict standard of impartiality and independence is adhered to.

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Where there are doubts as to the independence and impartiality of the arbitrator, the assistance of the court is called for. Otherwise, a challenge to the arbitrator, alleging his bias to be decided by himself, would be a self-​defeating process.

321. See: English Arbitration Act 1996, s. 24(4) which provides “Where the court removes an arbitrator, it may make such order as it thinks fit with respect to his entitlement (if any) to fees or expenses, or the repayment of any fees or expenses already paid”. 322. David A.R. Williams QC and Amokura Kawharu, Williams & Kawharu on Arbitration (2011), at para. 5.10. 323. If the arbitrator’s contract does not provide for such compensation, Contracts Act, 1950 (Act 136), s. 71, the statutory codification of the quantum meruit principle, would be applicable. 324. The arbitrator in Wicketts v Brine Builders & Anr. [2001] CILL 1805, [2001] App LR 06/​08 was subjected to stinging rebuke by the Court for, amongst others, ordering both parties to pay 100 per cent of his incurred fees as security for costs; he received only £10,000 of the £26,000 worth of fees incurred at the time of removal and was to pay the costs of the removal application; see also: Du Toit v Vale (1993) 9 WAR 138 (WASC).

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Chapter 23—​​​Challenge of Authority and Removal of Arbitrator

However, it is important to reduce court intervention to a necessary minimum. Too much judicial interference might affect the benefit of arbitration as an efficacious private dispute resolution mechanism. Most arbitration rules and arbitral legislation have a workable arbitrator challenge procedure.

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The Arbitration Act allows the agreement by the parties to prevail (except where the clause provides for unilateral appointment of the arbitrator) over any other provision in the statute, in line with party autonomy.325 As such, it is best, if the parties include in their arbitration agreement, the entire scheme of challenging the appointment of the arbitrator. Otherwise, they may wish to incorporate institutional arbitration rules to govern the arbitration.

325. Arbitration Act, s. 13(1).

Chapter 24 REMUNERATION OF THE ARBITRATOR [24.1]

INTRODUCTION....................................................................................................................... 668

[24.2] THE ARBITRATOR’S REMUNERATION.............................................................................. 669 [24.4]

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[24.3] THE ARBITRATOR’S EXPENSES............................................................................................ 670 FIXING REMUNERATION...................................................................................................... 672

[24.5] THE ARBITRATOR’S ENTITLEMENT IN CONTRACT.................................................... 674 [24.6] THE ARBITRATOR CAN DECIDE HIS RENUMERATION.............................................. 676 [24.7] REMUNERATION FIXED BY THE COURT......................................................................... 679

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[24.8] ENTITLEMENT TO REASONABLE RENUMERATION.................................................... 681 [24.9] PARTIES’ LIABILITY FOR ARBITRATOR’S FEES AND EXPENSES................................ 684

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[24.10] LIEN ON AWARD....................................................................................................................... 687 [24.11] SECURITY FOR ARBITRATOR’S FEES................................................................................. 689

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[24.12] ACTION BY ARBITRATOR TO OBTAIN PAYMENT OF REMUNERATION............... 691 [24.13] COMMITMENT OR CANCELLATION FEES...................................................................... 693

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[24.14] FEE FOR EARLY SETTLEMENT............................................................................................. 695 [24.15] NO AWARD ARISING FROM THE ARBITRATOR’S OWN CONDUCT........................ 696

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[24.16] REMUNERATION IF NOT INCLUDED IN THE AWARD................................................ 701 [24.17] RECOVERY OF EXCESS REMUNERATION........................................................................ 701

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[24.18] REMUNERATION AND THIRD-​PARTY FUNDING......................................................... 702

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[24.19] CONCLUSION............................................................................................................................ 704

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[24.1] INTRODUCTION

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Costs of the arbitration is an important factor to be considered before one decides whether to go for arbitration. The costs of bringing or defending a claim in arbitration can be considerably higher than doing the same in court.1 Despite this disparity, arbitral proceedings that are not limited by the rigid formalities of court proceedings can be as cost-​effective as litigation. In many cases, it may be more so.

1. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 4.202.

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Chapter 24—​​​Remuneration of the Arbitrator

Michael J. Moser explains: “The efficiency of international arbitrations can be greatly enhanced by the adoption of various simple and straightforward techniques. Among these are the initial procedural order, the Redfern Schedule, the costs schedule, the joint expert witness procedure and others.”2

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The costs of arbitration may be analysed into two categories: first is the fees related to the arbitration proceedings itself (including administrative costs of the arbitration institution and arbitrator’s fees); and second is the costs related to the representation of the party in an arbitration.3

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The arbitrator has the right to be paid his fees and the expenses for arbitrating the disputes between the parties. It is usual for an arbitrator to respond to persons asking for his appointment with the basis on which he is prepared to accept the appointment.

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This includes amongst others, the arbitrator’s remuneration, basis of its calculation, whether any deposit is required, whether stage payments be made progressively and, there is a commitment fee payable for the period set aside for the arbitration.

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These terms are governed by the appointment letter containing the terms of appointment and terms of remuneration.4 Such letter sets the stage for the appointment of the arbitrator as part of a contractual arrangement.

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It avoids the situation involving the allegations of impropriety. The best course for an arbitrator is to put it on the record his arrangement and within the knowledge of both the parties. His failure to do so may result that he may be defending himself against the allegation of misconduct.5

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[24.2] THE ARBITRATOR’S REMUNERATION

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The arbitrator’s remuneration consists of sums due to him in respect of his professional fees and expenses.6 This may include the fees and expenses of the arbitral institution

2. Michael Moser, “The ‘Pre-​Hearing Checklist’ –​A Technique for Enhancing Efficiency in International Arbitral Proceedings” (2013) 30 Journal of International Arbitration, p. 155. 3. P.C. Markanda, Law Relation to Arbitration and Conciliation (10th edn, LexisNexis 2020), p. 968. 4. See Terms of Appointment including remuneration by CIArb, available at https://​www.ciarb.org/​media/​ 4190/​guideline-​2-​terms-​of-​appointment-​including-​remuneration-​2015. 5. Jeevan Industries Pvt. Ltd. v Haji Bashiruddin Madhusudan Dayal 1974 SCC OnLine Del 200, at para. 10. 6. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2167.

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Law, Practice and Procedure of Arbitration in India

where the arbitration is administered by the institution. Normally, such administrative fees are usually kept separate from arbitrator’s remuneration. It is generally not possible to predict the time and input that an arbitrator would be required to spend on the arbitration. The Allahabad High Court held that the arbitrator is entitled to reasonable remuneration for all the effort that he put in the arbitration proceedings.7

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Although the costs of the reference and the award which includes the fees of the arbitration are within the discretion of the arbitrator, they cannot in any circumstance be excessive and exorbitant.8

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The remuneration is also known as the costs of the award, that is the fees and expenses of the arbitrator or umpire, which must be distinguished from the costs of the reference, that is the legal costs incurred by the parties.9

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The “costs of reference” encompass expenses incurred by the parties in the course of the arbitration before the arbitral tribunal.10 It involves the costs properly and reasonably incurred by either party in preparation and putting their case in the arbitration.11

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The “costs of award”, on the other hand, includes the expenses specially incurred by the parties or has been incurred by the arbitral tribunal with the consent of the parties; these are arbitral tribunal fees and expenses, fees of any arbitral institution, cost of hiring a room, or costs of an expert hired by the arbitral tribunal.12

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[24.3] THE ARBITRATOR’S EXPENSES

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The arbitrator will normally keep a detailed record of his expenses including airfares, local travel, subsistence, and accommodation expenses. It may cover the hearing attended and hiring of a suitable venue.

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Unless the arbitral institution is entrusted to collect monies from the parties and reimburse the arbitrator’s expenses, such expenses will have to be negotiated and settled by the parties directly with the arbitrator.

7. Shambhu Dayal v Basdeo Sahai AIR 1970 All 525, at para. 11. 8. UOI v JP Sharma 1982 SCC OnLine Raj 18, at para. 9. 9. Re Westwood, Baillie & Co and Cape of Good Hope Govt (1886) 2 TLR 667. 10. P.C. Markanda, Law Relation to Arbitration and Conciliation (10th edn, LexisNexis 2020), p. 969. 11. See Arbitration Act, s. 31A. 12. Anthony Walton and Mary Vitoria, Russell on Arbitration (20th edn, Stevens & Sons 1982), p. 333. See also English Arbitration Act, 1996, s. 59(1).

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Chapter 24—​​​Remuneration of the Arbitrator

Parties and the arbitrator may agree that the expenses of the arbitrator would be reimbursed on a recurring basis.13 This would avoid the situation where the arbitrator will be financing that portion of the arbitral process.

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Parties may also concur with the arbitrator on an alternative method where parties are to pay a daily or per diem rate to cover his expenses for subsistence and accommodation. It would be efficacious for the parties and the arbitrator to agree on the class of travel where travelling expenses are concerned.14 An experienced arbitrator will ensure that, so far as possible, the parties’ contract directly with suppliers for other expenses, such as the hiring of suitable accommodation for the hearing.15

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Where the arbitrator is empowered to employ a person, for example, an expert, legal advisor, or assessor to assist with the reference, the expenses paid to such person will be allowed as costs of the reference.16

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The arbitral institutions delineate separate provisions dedicated solely towards the collection of expenses and their redistribution to their fellow arbitrator to ensure the reimbursement of expenses to the arbitrator.

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For example, the ICC Arbitration Rules, Schedule 37.2 states that:

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“As soon as practicable, the Court shall fix the advance on costs in an amount likely to cover the fees and expenses of the arbitrators, the ICC administrative expenses and any other expenses incurred by ICC related to the arbitration for the claims which have been referred to it by the parties.”17

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Although there are no guidelines provided as to the arbitrator’s process while determining his own expenses, he must endeavour to keep the charges and expenses reasonable and commensurate with the nature of the services rendered by him.

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The Court in Appleton v Norwich Union Fire Insurance Society Ltd18 allowed an umpire’s fees to be included in a joint award. The fees of a legal assessor sitting with the arbitrator without the consent of the parties will be disallowed. 13. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 4.215. 14. Ibid. 15. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 4-​052. 16. Hawkins v Rigby (1860) 8 CB (NS) 271, (1860) 141 ER 1169. However, it is quite normal for the arbitrator to absorb the costs of a tribunal secretary as such administrative work is part of the arbitrator’s remit. 17. ICC Arbitration Rules, Sch. 37.2; see also AIAC Arbitration Rules, Sch. 14.9; HKIAC Arbitration Rules, Sch. 2. 18. (1922) 13 Ll L Rep 345.

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Law, Practice and Procedure of Arbitration in India

[24.4] FIXING REMUNERATION Fees of the arbitrators are an important consideration when parties are contemplating arbitrating a dispute. In the majority of cases, the amount to be paid to the arbitrators, or at least the machinery in establishing the amount, is usually pre-​agreed.

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Otherwise, it is settled before or at the first preliminary meeting between the parties and the arbitrators. If it is not pre-​agreed, it is sensible for the arbitral tribunal to include this on its agenda for the preliminary meeting.

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Parties and arbitrators should negotiate and agree on all the terms of the arbitrators’ remuneration and conditions of appointment at or before their acceptance of appointment and the commencement of the arbitration process.19

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This protects the parties from liability for unexpectedly high levels of fees of the arbitrator. It also ensures the arbitrator is paid for his services. The fees can also be estimated with reasonable certainty at the outset of the arbitration. It will also relieve the possibility of the arbitrator encountering difficulties if his fees are not agreed upon appointment.

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The case of K/​S Norjarl A/​S v Hyundai Heavy Industries Co Ltd.20 is instructive. After accepting appointment on terms which did not include provision for stage payments or commitment fees, two of the three arbitrators proposed that they should receive commitment fees by instalments in advance of a lengthy hearing.

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One party was willing to agree to the terms for such payments, but the other party objected. The Court held that failing the concurrence of both parties, the arbitrators should proceed on the basis agreed at the time of their appointment and there is no implied right to a commitment or cancellation fee.21

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Tackaberry and Marriott have summarised the result of this decision as follows:22

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“(1) An arbitrator who accepts appointment with or without any stipulation as to fees thereby enters into a trilateral agreement with the parties.23

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(2) By that agreement the arbitrator assumes the status of a quasi-​judicial adjudicator with all the duties and disabilities inherent in that status.

19. Sea Containers Ltd v ICT Pty Ltd [2002] NSWCA 84; K/​S Norjarl A/​S v Hyundai Heavy Industries Co Ltd [1991] 3 All ER 211, [1992] 1 QB 863, CA (Eng); Turner v Stevenage Borough Council [1998] Ch 28. 20. [1991] 3 All ER 211, [1992] 1 QB 863, CA (Eng). 21. See also Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 4.213. 22. Tackaberry, Marriot QC, and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson Sweet & Maxwell 2003), at para. 2-​358. 23. See also Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 4-​060.

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Chapter 24—​​​Remuneration of the Arbitrator

(3) Amongst those disabilities is an inability to deal unilaterally with one person for a personal benefit.

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(4) It follows that an arbitrator who has accepted the appointment on a particular basis as to the amount and payment of his fees, which may include a stipulation as to payment in advance or a commitment fee, cannot, thereafter, alter the basis of his remuneration unless all parties agree.

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(5) An arbitrator who has accepted appointment without stipulation as to fees is entitled to a reasonable fee to be taxed, by him or by the court, at the conclusion of the arbitration, and cannot thereafter make any special agreement or arrangement about his fees unless all parties to the reference concur in it.

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(6) So, the arbitrator may not enter into any fee agreement or arrangement with a party to which any other party objects.

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(7) These propositions apply to a sole arbitrator, a party-​appointed arbitrator, an umpire, a chairman or a third arbitrator.”

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Many institutions which offer arbitration appointment services have also generated their own system of deciding the arbitrator’s remuneration. Some of the institutions have devised a scale of fees which are applicable and these may, for example, be based on the quantum of the dispute.24

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In institutional arbitrations such as the ICC, SIAC, and AIAC it may be stipulated that the presiding arbitrator receives a higher fee fixed at 40 per cent while co-​arbitrators receive the same remuneration of 30 per cent each of the total fees.25

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In contrast, the LCIA has empowered the Registrar to decide Arbitral Tribunal’s fees in reference to work done by its members in connection with the arbitration and rates charged will be appropriate to the particular circumstances of the case.26

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In such a situation, the parties don’t need to engage in any direct negotiation with the arbitrator. Such institutional oversight safeguards parties from any kind of exploitation in the negotiation of the fees with the arbitrator.

24. See the SIAC Arbitration Rules, Sch. of Fees; Indian Council of Arbitration, r. 31; see also ICC Arbitration Rules, Appendix III, art. 3; AIAC Arbitration Rules, Sch. 1, Sch. of Fees. 25. Michael McIlwrath and John Savage, International Arbitration and Mediation: A Practical Guide (Wolters Kluwer, Law & Business 2010), p. 267, at para. 5-​112. 26. See LCIA Arbitration Rules, Schedule of Arbitration Costs.

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Law, Practice and Procedure of Arbitration in India

It is common in ad hoc arbitration proceedings for the arbitral tribunal to fix its own fees.27 In ad hoc arbitrations it is necessary for the lawyers or representatives for the parties to negotiate openly or by way of correspondence with the potential arbitrator as to the fees to be charged.

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Any such negotiation should be carried out openly between the arbitrator and all the parties to prevent allegations of impropriety. This should be done at an early stage to avoid later disagreements or embarrassment.28 Most experienced and qualified arbitrators will charge what they consider the market will bear for their services. Experienced and qualified arbitrators are accustomed to receiving fees at least equivalent to the upper end of the fees charged for their profession in their home jurisdictions.29

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If the fees structure is too low, it may be difficult to procure the services of appropriately qualified arbitrators. Even if they do, they may not be willing to dedicate the amount of time required to resolve the case.

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In some locales the party-​appointed arbitrators may have separate remuneration contracts with their appointing party.30 An arbitrator appointed by agreement of the parties may circumvent difficulties in recovering his fees because he can negotiate the arrangements before accepting the appointment.

[24.5] THE ARBITRATOR’S ENTITLEMENT IN CONTRACT

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The English and Singaporean arbitration legislation expressly provide for the arbitrator’s right to remuneration.31 Upon appointment, the arbitrator enters into a legal relationship with the parties.

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This carries an implied undertaking by the parties to compensate him for his work and expenses, whether or not an award is issued.32 However, parties and the arbitral

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27. Michael McIlwrath and John Savage, International Arbitration and Mediation: A Practical Guide (Wolters Kluwer, Law & Business 2010), p. 267, at para. 5-​112. 28. Tackaberry, Marriot QC, and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Sweet & Maxwell 2003), at para. 2-​339; ICT Pty Ltd v Sea Containers Ltd [2002] NSWSC 77; Wicketts v Brine Builders & Siederer [2001] CILL 1805, [2001] App LR 06/​08. 29. Greenberg, Kee, and Weeramantry, International Commercial Arbitration: An Asian-​Pacific Perspective (Cambridge University Press 2011), p. 408. 30. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1967. 31. English Arbitration Act, 1996, s. 28; Singapore Arbitration Act (Cap 10), s. 40. See also Italian Code of Civil Procedure, art. 814 and Japanese Arbitration Law, art. 47. 32. Brown v Llandovery Terra Cotta Co Ltd (1909) 25 TLR 625; K/​S/​Norjarl A/​S v Hyundai Heavy Industries Ltd [1991] 3 All ER 211, [1992] 1 QB 863; Tackaberry v Phaidon Navegacion SA [1992] ADRLJ 112; Swift-​Fortune Ltd v Magnifica Marine SA [2007] 1 SLR(R) 629, [2006] SGCA 42.

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Chapter 24—​​​Remuneration of the Arbitrator

tribunal should ensure that such arrangement avoids giving rise to an inference of a lack of independence. Therefore, an arbitrator’s entitlement to payment of his fees and expenses is normally a matter of contractual arrangement between the arbitrator and the parties. Arbitrators will invariably send out proposed terms and conditions to the parties at the outset. The terms are then either accepted or negotiated at an early stage.

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In the case of such express agreement made with both parties, the sum or method of calculation specified in the agreement is binding on the parties and the arbitrator is entitled to sue for his fees and expenses. If an agreement cannot be reached, the parties must make another appointment.

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Types of Remuneration Agreements

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(1) A fixed fee to be agreed upon by the parties and the arbitrator to cover all the work done by the arbitrator on the case, including time spent at the hearing, however long it may last. This is not normally used for arbitrations with complex issues where it may be difficult to ascertain at the outset the amount of time the arbitration may take.

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In general, the agreement as to the amount can be of the types set out below:

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It is used in small arbitrations where a fixed fee is agreed upon on the basis that the arbitration will be resolved within a fixed time. If the agreed fee is fixed and the arbitrator underestimates the time the arbitration actually takes, he is bound and cannot subsequently insist on a new fixed fee.33

(2) The “time spent” method is the most common type; a fee based on an hourly or daily rate of the time spent on meetings, hearing, and working on the case.35 This rate covers not only the work during the hearings but also the work done outside the hearings.36

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The Court in Town Centre Securities Plc v Leeds City Council34 held that: “where the parties have agreed a fixed fee, and there are changed circumstance, the arbitrator could not insist on a new fixed fee”.

33. Town Centre Securities plc v Leeds City Council [1992] ADRLJ 54. This type of arrangement is more prevalent in ad hoc arbitration. 34. [1992] ADRLJ 54. 35. See Murray L. Smith, “Contractual Obligations Owed by and to Arbitrators: Model Terms of Appointment” (1 March 1992) Arbitration International, Vol. 8, Issue 1. 36. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 4.207.

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Law, Practice and Procedure of Arbitration in India

For example, LCIA provides for the ceiling hourly rates that may be charged.37 In some ad hoc arbitrations, the arbitral tribunal may identify the highest hourly rate among its members and extend it to the entire arbitral tribunal to ensure parity in compensation.38 (3) The third type is to agree on Brief fees plus daily refresher, both of which would vary according to the subject matter, complexity, quantum claimed, and period of arbitration. The Brief fees are the minimum fees to be paid to the arbitrator.

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For example, if the parties settle the case at a very early stage after the appointment of an arbitrator and would cover the writing of the award. This method is popular with lawyers and retired judge arbitrators.

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(4) The ad valorem method where the arbitrator’s fees are assessed as a percentage of the total amount in dispute (including any counterclaim), for example, as provided in the ICC Court of Arbitration Rules39, SIAC Arbitration Rules40 AIAC Arbitration Rules,41and Mumbai Centre for Arbitration (MCIA) Rules.42 It is easy to use and capable of uniform application as it is only necessary to know the total amount in dispute and the percentage figure to be applied.

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The parties can compute what fees they are likely to incur if their dispute is taken to arbitration.43 The main difficulty with this fee structure is that two cases with the same amount in dispute can have very different levels of complexity, entailing very different levels of work for arbitrators, but incur the same fee.

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[24.6] THE ARBITRATOR CAN DECIDE HIS RENUMERATION

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In the absence of an agreement by the parties to the contrary, the fees and expenses of the arbitrator have to be determined by the arbitrator himself. If he does so, he should distinguish between his remuneration and expenses.44

37. See LCIA Arbitration Rules, Schedule of Arbitration Costs. 38. Michael McIlwrath and John Savage, International Arbitration and Mediation a Practical Guide (Wolters Kluwer, Law & Business 2010), p. 266, at para 5-​110. 39. ICC Court of Arbitration Rules, Appendix III –​Arbitration Costs and Fees, art. 3: Scales of Administrative Expenses and Arbitrator’s Fees. 40. SIAC Arbitration Rules, r. 34. 41. AIAC Arbitration Rules, Sch. 1. 42. MCIA Arbitration Rules, Schedule of Fees. 43. Blackaby and Partasides with Redfern and Hunter, Redfern and Hunter on International Arbitration (6th edn, 2015), at para. 4.205. 44. See Re Gilbert and Wright (1904) 68 JP 143.

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Chapter 24—​​​Remuneration of the Arbitrator

The Swiss Rules of Arbitration does not allow such freedom to the arbitrators. The Swiss Federal Supreme Court in a judgment on arbitrators’ fees, ruled that arbitral tribunals do not have the power under the Swiss Rules of Arbitration to issue binding awards on how much they should be paid.45

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In contrast, the Italian Civil Procedure Code provides that the arbitrators themselves fix the amount of the expenses and the fee, but their decision shall not be binding upon the parties if they do not accept it.46

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The Arbitration Act does not prohibit the arbitrators from deciding their fees. The arbitral tribunal has been given the option to fix a reasonable fee and such decision shall be binding on the parties.47 Unless there is any contrary intention expressed by the parties, the arbitrator has the freedom to fix his fees.48 Thereafter, he may include the same in his award.49

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The Punjab and Haryana High Court in Vidyut Parsaran Nigam Ltd v M/​S Arya Nirman50 held that “[t]‌he entitlement of the Arbitrator to fix his fee is authorized by the provisions of the Arbitration and Conciliation Act, 1996 itself.”

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The Arbitration Act has also done away with the position of the umpire in arbitral tribunals. Instead, the umpire is replaced by a presiding arbitrator appointed by the arbitrators who, in turn, have been appointed by the parties.

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The Arbitration Act does not empower the presiding arbitrator with any special power. The presiding arbitrator does have the power to decide the procedure to be followed by the arbitral tribunal if he is so empowered by the arbitral tribunal or the parties.

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The presiding arbitrator has no power to decide the remuneration of the other members of the arbitral tribunal. The arbitral tribunal is bound by the Fourth Schedule under the Arbitration Act which applies if there isn’t an agreement regarding the remuneration and the Arbitration Agreement if there is one in place.

45. Swiss Supreme Court rules on arbitrators’ fees, available at https://​ globalarbitrationreview.com/​ swiss-​supreme-​court-​rules-​arbitrators-​fees. 46. Italian Code of Civil Procedure, art. 814. See also, Polish Code of Civil Procedure, art. 1179. 47. P.C. Markanda, Law Relation to Arbitration and Conciliation (10th edn, LexisNexis 2020), p. 1371. 48. Gobind Singh Pratap Singh v Pohumal Khushiram 1944 SCC OnLine Sind CC 13, at para. 7. 49. Re Prebble and Robinson (1892) 2 QB 602. 50. 2009 SCC OnLine P&H 6051, at para. 5; see also Sunder Kukreja and others v Mohan Lal Kukreja and Another (2009) 4 SCC 585, wherein the Court identified that there is all the justification for the Arbitrator to fix his own fee.

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Law, Practice and Procedure of Arbitration in India

Factors to Consider When Assessing Fees Arbitrators assessing their fees must take into account the interests of those who will have to pay them. They have to also consider the nature of the dispute upon they have been called to adjudicate.51 The arbitrator has to apply his mind and judgment to arrive at a figure reflecting his remuneration.

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The arbitrator has to apply an independent mind and judgment to arrive at the reasonable assessment of his fees. It also calls for an objective detachment and reflects upon his integrity. When called upon to do it, he is able to explain the parameters and the criteria based on which his fee is calculated.52

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As the arbitrator occupies a position of trust in respect of the parties, he must endeavour to keep the charges and expenses reasonable and commensurate with the nature of the services rendered by him. Legal or other expert assistance may be sought in determining a fair amount of costs.53

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The Court in Rolimpex Centrala Handlu Zagranicznego v Haji E Dossa & Sons Ltd54 observed in determining the arbitrator’s costs that:

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“It must be exercised with independence and proper regard for the interests not only of those who will receive the costs but also of those who will have to pay them. The exercise of this power in relation to the tribunal’s own remuneration is obviously as difficult as it is invidious, at least if there are no scale fees applicable.”

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Can the Arbitral Tribunal Revise Its Fees?

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The arbitral tribunal retains the discretion to revise its fees based changed circumstances of the case. Such a situation could arise where the claimants and/​or the respondents revise their claims and counterclaims. It may also apply when the nature of the complexity of the dispute was not known at the time the fees was fixed.

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The amount in dispute and the complexity of the case may only become apparent when the arbitration proceedings commence. The arbitral tribunal may then be able to request a variation of agreed fees with the disputing parties and their

51. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), p. 236. 52. Govt. of Ceylon v Chandris (1963) 2 QB 327. 53. Rowcliffe v Devon & Somerset Rly Co (1873) 21 WR 433. 54. [1971] 1 Lloyd’s Rep 380, at 384, per Donaldson J.

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Chapter 24—​​​Remuneration of the Arbitrator

lawyers. Such adjustments are more prevalent in the ad valorem method of fee calculation.55 The High Court of Bombay clarified this position in Maharashtra State Electricity v A.S. Joshi and Anr56 stating:

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“12. It is clear that if the arbitrator seeks a revision of fees that cannot be considered as legal misconduct at all. It is true, normally, the arbitrator fixes his fees and that scale of fees should last till the end of the arbitration. The original idea of the Arbitration Act was that the arbitration proceedings would be over normally within four months and such a question of revision of fees would not normally arise. It is our experience today that arbitrations last for years together despite the best of efforts on the part of the arbitrators. In such circumstances, if an arbitrator seeks reasonable revision of fees, there can be no fault in that”.

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Recently, the High Court of Delhi allowed the arbitral tribunal’s right to do so when it held:

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“In the absence of any agreement between the parties to the contrary, there is nothing in the Act which precludes the AT from revising the fees. Although it is expected that such fees would be ‘reasonable’, an order passed by the AT revising the fee of its members is not per se amenable to judicial review within the scope of Section 34 of the Act.”57

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[24.7] REMUNERATION FIXED BY THE COURT

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The arbitral tribunal normally explains the basis upon which its fees and expenses are calculated. It fixes its own costs in the award itself.

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If the arbitral tribunal does not do so, it may be inferred that the arbitral tribunal has not applied its mind properly to the calculation.58 The court is then justified in intervening into the matter.

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The English Arbitration Act allows the party to make an application to the court which may order that the amount of the arbitrator’s fee is shall be considered and adjusted by such means and upon such terms, as it may direct.59

55. Where a rate is payable per hour, greater complexity means the arbitrator will spend more hours on the case. Where there is no prior agreement limiting the maximum number of hours to be spent on the reference, a variation may not be necessary. However, a variation of the rate may be applied to take account of the complex nature of the arbitration. 56. 1990 (3) BomCR 140, Decision of Bombay High Court on 8 June 1990, at para. 12. 57. National Highways Authority of India v Pcl Sticco (Jv.) 2018 SCC OnLine Del 10169, at para. 28. 58. Government of Ceylon v Chandris [1963] 2 QB 327, [1963] 2 All ER 1, [1963] 1 Lloyd’s Rep 214. 59. English Arbitration Act, s. 28(2).

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Law, Practice and Procedure of Arbitration in India

Even under the UNCITRAL Arbitration Rules, the appointing authority has the power to adjust the fees of the tribunal if they are manifestly excessive.60 The Arbitration Act does not give jurisdiction to the court to fix fees of the arbitral tribunal.61 It also does not envisage terminating the mandate of the arbitrator on the basis that the fees fixed by him is unreasonable.

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The court does not have the power to terminate the arbitrator’s mandate for the reason that the fees fixed by him are higher than the norms fixed by the petitioner.62

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If the arbitrator or umpire exercises his lien and refuses to deliver his award except on payment of fees demanded by him, the court may, on an application for the purpose, order the arbitrator or umpire to deliver the award to the applicant under such conditions as the court thinks appropriate.63

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A pre-​requisite for the interference by the court under Section 39(2) is that there shouldn’t have been any written fee agreement between the parties and the arbitrator.

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In other words, where the parties have agreed to the fees of the arbitral tribunal, the agreement cannot be reviewed by the court.64

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However, the court may intervene if the complaining party has been ignorant about fixing a fee with the arbitrator. It is unable to secure the delivery of the award without paying arbitrator’s fees.

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The court has no jurisdiction to hear an application in fixing the arbitrator’s costs if he had released his award without demanding prepayment.

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A winning party who had paid the arbitrator’s fees and taken up the award can demand from the losing party the fees paid to the arbitrator. The losing party has no right to seek taxation of the arbitrator’s costs.65

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Fourth Schedule as Guidance Scale in Domestic Arbitrations

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The Law Commission of India in its 246th Law Commission Report commented that arbitral tribunal fees structures were arbitrary especially in the ad-​hoc arbitration: 60. 61. 62. 63. 64. 65.

UNCIRTAL Arbitration Rules, art. 41(4). P.C. Markanda, Law Relation to Arbitration and Conciliation (10th edn, LexisNexis 2020), p. 958. Haryana Vidyut Parsaran Nigam Ltd. v M/​S Arya Nirman 2009 SCC OnLine P&H 6051. Arbitration Act, s. 39(2). Indu Malhotra, Commentary on the Law of Arbitration, Vo1. 2 (4th edn, Wolters Kluwer 2020), p. 1048. Rolimpex Centrala Handlu Zagranicznego v Haji E Dossa & Sons Ltd [1971] 1 Lloyd’s Rep 380, at p. 384, per Donaldson J; S N Kurkjian (CommodityBrokers) Ltd v Marketing Exchange for Africa Ltd (formerly T M Motiram (UK) Ltd) (No 2) [1986] 2 Lloyd’s Rep 618.

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Chapter 24—​​​Remuneration of the Arbitrator

“One of the main complaints against arbitration in India, especially ad-​hoc arbitration, is the high costs associated with the same-​including the arbitrary, unilateral and disproportionate fixation of fees by several arbitrators. The Commission believes that if arbitration is really to become a cost-​effective solution for the dispute resolution in the domestic context, there should be some mechanism to rationalise the fee structure for the arbitrations.”

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The Fourth Schedule to the Arbitration Act has been added by way of an amendment by insertion of new sub-​sections 11(3A) and 11(4) in 2015 to address this issue.66 These amendments mandate that the appointed arbitrators’ fees have to follow the rates specified in the model Schedule of Fees set out in the Fourth Schedule.

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The Explanation appended to sub-​section 11(4) clarifies that it would not apply to the international commercial arbitration or the institutional arbitration which have their mechanism for fixing fees.

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The amendment is aimed of preventing the arbitral tribunal from fixing unreasonably high fees in the ad hoc arbitrations in India.

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The Supreme Court of India in Gammon Engineers and Contractors Pvt Ltd v National Highways Authority of India67 had to resolve the conflict between the agreement between the parties and the arbitrator in regards to remuneration in accordance to the fees set out in the Fourth Schedule.

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It held that if the parties to an arbitration have agreed to an arbitrators’ fee schedule, the arbitrators must charge their fees under this agreed schedule. They need not follow the Fourth Schedule of the Arbitration (Amendment) Act 2015.

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[24.8] ENTITLEMENT TO REASONABLE RENUMERATION

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What is reasonable remuneration is a question of fact to be determined in the light of all the circumstances of each case.

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Where the arbitrator is a professional or a former judge, the reasonableness of the remuneration might be determined by considerations such as the amount that persons of that standing would ordinarily charge for the services rendered.68

66. The Arbitration (Amendment) Act, 2019. 67. 2019 SCC OnLine SC 906, at para. 19. 68. Generally, parties agree with the arbitrator, what is to be paid in the arbitrator’s fees. If they do not agree on the remuneration in advance, the arbitrator or umpire is ordinarily entitled to reasonable remuneration on a quantum meruit basis for the value of work done. See Moser and Cheng, Hong Kong Arbitration: A User’s Guide (2004), at 5.5.6.

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Law, Practice and Procedure of Arbitration in India

Where the arbitrator is a member of a trade association which employs a prescribed scale of fees for arbitrations held under its auspices, a term may be implied that that scale of fees applies. It may lead to an unsatisfactory result as an arbitrator may be paid less for a long and difficult hearing than for one which is straightforward although involving a larger sum.69

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As a practical point, when each party has appointed an arbitrator and negotiated their fees outside any institutional scale, if one party has agreed to unreasonably high fees for “their” arbitrator. Then the other party can insist on paying only the portion of the fees which is reasonable.70

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In absence of such agreement between the parties and the arbitrator, parties owe a reasonable remuneration to the arbitrator.71

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The entitlement to reasonable remuneration is enshrined in some national arbitration statues as well. The English Arbitration Act makes the parties liable for reasonable expenses and fees of the arbitrator as are appropriate in the circumstances.72 Similar terms, Sri Lankan Arbitration Act, provides for a party to responsible for paying reasonable compensation to the arbitrators constituting the arbitral tribunal, for their work and disbursements.73

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Under Section 39(2) of the Arbitration Act, the court has been empowered to ensure that a reasonable sum is paid to the arbitrator. The court has powers to ultimately decide reasonable fee in the event of an application made under Section 38(1) of the Act.

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Sub-​section (8) of Section 31 provides that the fees are fixed by the arbitral tribunal must be reasonable. The Delhi High Court held that if the arbitral tribunal fixes its fees as per the rules of Indian Council of Arbitration (ICA), such fees is presumed to be reasonable.74

69. See Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), p. 236. 70. Robert Merkin and Louis Flannery, Arbitration Act 1996 (5th edn, Informa Law from Routledge 2014), p. 98. 71. Brown v Llvandory Tevra Cotton Co (1909) 25 TLR 25; Wills v Wakeley Bros. (1891) 7 TLR 604. 72. English Arbitration Act, s. 28(1). 73. Sri Lankan Arbitration Act, art. 29(1). 74. NHAI v DS Toll Road Ltd. 2015 SCC OnLine Del 7628, at para. 13.

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Chapter 24—​​​Remuneration of the Arbitrator

In the event, the arbitral tribunal fees are exorbitant and the arbitrator takes the fees from only one of the parties, that action will amount to misconduct. The award is liable to be set aside.75

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The arbitrator should avoid the assertion of bias arising from such pecuniary inducement. He should avoid demanding exorbitant fees which do not match the quantity of the work done.76

Factors to Be Considered to Assess the Reasonableness

Mustill and Boyd have listed the factors to be considered in determining reasonable remuneration as follows:77

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“(1) The complexity of the dispute and the difficulty or novelty of the questions involved;

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(2) The skill, specialised knowledge and responsibility required of the arbitrator;

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(3) The number and importance of the documents studied;

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(4) The place and circumstances in which the reference takes place;

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(5) The importance of the dispute to the parties; and (6) The value of the property involved, or the amount of the sum in the issue.”

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The Court in S N Kurkjian (Commodity Brokers) Ltd v Marketing Exchange for Africa Ltd (formerly T M Motiram (UK) Ltd) (No 2)78 discussed applicable criteria in assessing what is reasonable fees.79

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The arbitral tribunal should take count of the time spent, hourly rates, the complexity of the case, level of skills engaged in the light of the complexity and the duration of the case, as well as the amount in dispute when determining a reasonable fee due to it.80

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75. Ardeshar Irani v State of M.P. 1974 SCC OnLine MP 48, at para. 21. 76. Jeevan Industries Pvt. Ltd. v Haji Bashirrudin Madhusudhan Dayal 1974 SCC OnLine Del 200, at para. 10. 77. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), p. 237. 78. [1986] 2 Lloyd’s Rep 618. 79. See also Agrimex Ltd v Tradigrain SA [2003] EWHC 1656 (Comm); Crampton and Holt v Ridley & Co (1887) 20 QBD 48; Willis v Wakeley Bros (1891) 7 TLR 604; Brown v Llandovery Terra Cotta Co Ltd (1909) 25 TLR 625. As to the distinction, if any, between lay and legal arbitrators, see also Government of Ceylon v Chandris [1963] 2 QB 327, [1963] 2 All ER 1, [1963] 1 Lloyd’s Rep 214. 80. Costs in International Arbitration Damages, Micha Bühler, Walder Wyss Ltd, available at https://​ www.lexology.com/​library/​detail.aspx?g=0537f158-​18da-​4fbc-​b232-​e737f6232ad5#:~:text=When%20 assessing%20their%20reasonableness%2C%20the,as%20the%20amount%20in%20dispute’.

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Law, Practice and Procedure of Arbitration in India

[24.9] PARTIES’ LIABILITY FOR ARBITRATOR’S FEES AND EXPENSES The parties are jointly liable for the arbitrator’s fees and expenses81 unless they agree to the contrary.82 Such liability is not only joint but joint and several.83

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Each party is liable individually. If one party fails to pay or is incapable of paying, then the other party will be liable for the whole of the arbitrator’s fees. This is irrespective of whichever party is ordered to bear those fees in the arbitrator’s award.84

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The parties may not reprobate from paying the agreed fees after duly consenting for such payment.85 This liability, whether only joint or joint and several (in the absence of any express or implied agreement to the contrary), is for the fees and expenses of the entire arbitral tribunal. It is not limited to the fees of the party appointed arbitrator.

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Parties would normally agree on the terms with the arbitrator whereby the parties pay his fees and expenses on an interim basis in equal instalments. In due course, when the successful party is awarded costs of the arbitration, it can then recover its share of such payment made.

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However, if one party fails to pay the arbitrator’s fees and expenses, whether or not on an interim basis, for example, because of insolvency, the arbitrator is entitled to recover all fees and expenses due from the other party. Expenses such as accommodation and travel are normally to be reimbursed at the time that they are incurred.86

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The contractual right to be paid means that any disagreement on arbitrator’s fees will be adjudicated based on contract law.87 If the parties renege on their agreements, the arbitrator initiate an action to recover the remuneration due.88

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81. Brown v Llandovery Terra Cotta Co Ltd (1909) 25 TLR 625, following Crampton and Holt v Ridley & Co (1887) 20 QBD 48, at p. 54. 82. Carter (t/​a Michael Carter Partnership) v Harold Simpson Associates (Architects) Ltd (Jamaica) [2004] APPLR 06/​14, [2004] 2 Lloyd’s Rep 512, PC. 83. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, 1989), p. 235, at note 13; Tackaberry v Phaidon Navegacion SA [1992] ADRLJ 112; Linnett v Halliwells LLP [2009] EWHC 319 (TCC), at para. 55. 84. David A.R. Williams QC and Amokura Kawharu, Williams & Kawharu on Arbitration (LexisNexis 2011), at para. 16.3. 85. P.C. Markanda, Law Relation to Arbitration and Conciliation (10th edn, LexisNexis 2020), p. 959; see also UOI v P. Jeevanandam 2000 SCC OnLine AP 310, at para. 17, where the party’s application to remove the arbitrator was rejected on the ground that party did not want to pay the arbitrator’s fee anymore. 86. Tackaberry, Marriot QC, and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Sweet & Maxwell 2003), at para. 2-​387. 87. David A.R. Williams QC and Amokura Kawharu, Williams & Kawharu on Arbitration (LexisNexis 2011), p. 444. 88. Hoggins v Gordon (1842) 3 QB 466.

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Chapter 24—​​​Remuneration of the Arbitrator

An arbitrator does not waive his right to claim reasonable remuneration against both parties jointly by directing in an award that the costs of the arbitration be paid by one party.89 Where an award has been set aside after a party has paid the costs of the award, one half of such may be recovered from the other party.90

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Many national arbitration statutes provide for the parties to pay to compensate for the arbitrator fees and expenses. For instance, the Singapore Arbitration Act, Section 40 states that:

“The parties are jointly and severally liable to pay to the arbitrator’s such reasonable fees and expenses as are appropriate in the circumstances.”

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The same is provided in the English Arbitration Act91, the Italian Code of Civil Procedure,92 and Hong Kong Arbitrator Ordinance.93

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However, the Arbitration Act does not explicitly have a provision making the parties liable for the fees and expenses of the arbitrator. However, the Act does have certain provisions which through which the arbitrator can hold the parties accountable for payment of their fees and expenses.94

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Stakeholders

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A designated arbitral institution may hold security in the capacity of the stakeholder.95 Out of these deposits, the arbitrator is remunerated for the fees and the expenses incurred in the course of the arbitration.

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The involvement of the institution brings a level of transparency in the process of fixing remuneration in balancing the bargaining power between the party and the arbitrator.

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The arbitral institution as the skate holder also provides a sense of security to the arbitrator. The arbitral tribunal is assured that their fees and expenses would be collected and paid by the arbitral institutions. The failure of a stakeholder to adhere to the arbitrator’s and parties’ instructions may affect the arbitral process.

See In re an Arbitration between Lyders v Fyfe & Cuming (1909) 28 NZLR 1000. Lyders v Residential College Committee (1910) 30 NZLR 72. English Arbitration Act, s. 28. Italian Code of Civil Procedure, art. 814. Hong Kong Arbitrator Ordinance, s. 78. Arbitration Act, s. 38, requiring deposits from the parties; Arbitration Act, s. 39, the arbitrator conferred with the power to have lien over the award. These rights will be dealt in detail in Section [24.10]. 95. ICC Arbitration Rules Appendix III: Arbitration Costs and Fees, art. 1.4; see also AIAC Arbitration Rules, r. 14.9; HKIAC Arbitration Rules, Sch. 2. 89. 90. 91. 92. 93. 94.

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Law, Practice and Procedure of Arbitration in India

In ad hoc arbitrations, a stakeholder may be liable depending on the construction of the agreement of appointment, particularly where the third-​party stakeholder interferes or exercises an overview of drawings made by the arbitrator.

Interim Payments

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Payment is only due to the arbitrator when the work is completed, that is when an award is made. Arbitrators normally stipulate interim payments particularly when they are of the view that the arbitration proceedings may to go over an extended period.

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If an arbitrator has not agreed on the interim payments with the parties, he may nevertheless be able to charge on an interim basis based on an implied term allowing him to do so.

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When an institution administers proceedings and collects deposits from the parties, it can disburse interim payments to arbitrators as compared to ad hoc arrangements where the parties make such payments.

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The Court in Turner v Stevenage Borough Council96 stated that:

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“The arbitrator expected the arbitration to be conducted in three months or so. Instead of that, he was involved in a long series of preliminary meetings. Was he expected to work for no present reward for as long as the parties required him to do so? Did they have a free hand to demand of his time and indeed of his expense? Was it necessary for him to incur an expense for so long as they pleased, provided only that at the end of the day when he eventually made an award he would then have a right to reimbursement? That does not seem to me to be good law or good sense. In my judgment, on the true construction of this contract and in the light of the surrounding circumstances which prevailed when it was made -​or, as some people like to say, the factual matrix –​it was an implied term that the arbitrator might request an interim payment towards his fees and expenses provided that that was done at a reasonable time, either once or oftener, and provided also that it was not made after the parties were so committed to his services at a hearing that they would be in an inferior bargaining position to refuse. Subject only to that, I would say that the arbitrator is entitled to make a reasonable demand for interim payment and to enforce it with the sanction of resignation if it is not complied with.”

96. [1998] Ch 28, at p. 36, [1997] 3 WLR 309, at p. 316, CA (Eng), per Staugton J. Cf. views of Pill J.

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[24.10] LIEN ON AWARD When an arbitral tribunal has completed its award, the parties may be asked to pay the tribunal’s fees before the award is released. The arbitral tribunal has leverage of the award to secure the payment of its fees. In such a situation, the arbitrator will notify the parties that the award is ready for collection.

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The arbitrator will not deliver the award to the parties until his fees are paid exercising a lien over the award.97 This right of a lien over the award entitles the arbitrator to retain the award.

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The award will be released upon payment of the arbitrator’s costs or by an order of the court.98 Either or both parties may then take up the award on payment of the fees. The arbitrator need not be concerned with which party pays the fees.

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This is a power which is routinely exercised. It is an effective and practical means of ensuring prompt and proper payment of the arbitrator’s fees and expenses.99 In addition, the lien can be also exercised for all the expenses including out of pocket expenses.

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In practice, the arbitrator would calculate and set out his fees and expenses. He would then notify the parties that his award is ready for collection upon payment of the sum so determined. He will retain possession of the award until the charges have been paid.100

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The arbitrator must give a clear direction in the award as to who should pay the costs of the award. It be supplemented with a further direction that if the successful party has paid to take up the award, the other party shall forthwith reimburse him for any costs for which the other party is liable under the award.

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A party who does not agree with the quantum of arbitrator’s fees and expense may appeal under the Arbitration Act for review by the court. However, if the other party pays and collects the award, the appeal application will be rendered moot and academic.

97. This right can be identified in number of different countries’ national arbitration statutes. For example, Singapore Arbitration Act, s. 40 recognises Power to withhold award in case of non-​payment; see also English Arbitration Act, s. 56; Hong Kong Arbitration Ordinance, s. 77. (Only HKIAC is one of the many institutions which provide for lien over award). 98. See also R v South Devon Rly Co (1850) 15 QB 1043; Government of Ceylon v Chandris [1963] 2 QB 327, [1963] 2 All ER 1, [1963] 1 Lloyd’s Rep 214. 99. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), p. 1046. 100. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), pp. 234–​235.

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Law, Practice and Procedure of Arbitration in India

When the award is ready and the parties have been notified to take up the award upon payment of the arbitral tribunal’s fees. The lien is preserved. If neither party takes up the award disputing the arbitrator’s fees and expenses, either party can apply to the court for the fees and expenses to be reviewed.

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Consequently, in situations where the award is being withheld, the party who takes up the award will pay the arbitrator’s fees and expenses. In practice, the parties may share the costs and take up the award together.

The parties’ joint and several liability to pay the arbitral tribunal’s fees and expense. Each party is liable for entire unpaid costs of the arbitration, not merely of the fees and expenses of the arbitrator appointed by it.101

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Otherwise, if the winning party takes up the award, he can seek to recover it from the losing party in accordance with the award itself.102

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Commonly, the award would contain a further direction that if the successful party has paid to take up the award, the other party shall reimburse him for any costs for which such other party is liable under the award.103

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The losing party may take up the award if it believes that there are grounds to challenge the award. Most court rules have a time limit of when the setting aside application will be filed in court after the award is published. When neither party takes up the award, the lien is valueless.104

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In such a situation, the arbitrator has to enforce directly by action based on the agreement between him and the parties on the amount of fees and how they are to be paid.

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In the absence of an agreement, the arbitrators are entitled to be paid reasonable remuneration either on an implied term or a quantum meruit basis.105

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Any rights the arbitrator may have over the award do not extend to documents submitted to the arbitrator in the course of the reference. The parties can recover

101. O.P. Malhotra and I. Malhotra, The Law and Practice of Arbitration and Conciliation (2nd edn, LexisNexis, 2006), p. 1286. 102. Hick v Richardson (1797) 1 Bosanquet and Puller 93. 103. O.P. Malhotra and I. Malhotra, The Law and Practice of Arbitration and Conciliation (2nd edn, LexisNexis 2006), p. 1286. 104. Robert Merkin, Arbitration Law (LLP 2004), p. 405. 105. Robert Merkin, Arbitration Law (LLP 2004), p. 401. See Indian Contract Act, 1950, s. 71.

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Chapter 24—​​​Remuneration of the Arbitrator

such documents from the arbitrator unless there is a contrary provision in their agreement.106 Section 39(1) of the Arbitration Act provides for the arbitrator’s right to a lien over the award. The arbitrator need not proceed with the arbitration if his fees is not being paid.107

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The Bombay High Court in Rehmat Ali Baig v Minocher M Deboo108 held that the arbitrator can suspend his work on the arbitration if he is not paid.

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Section 39(2) of the Arbitration Act allows a party to make an application to the court for getting the award released. The court has a wide discretion to make the order subject to whatever conditions it thinks fit.109 An application under this section becomes ineffective if the fees have already been paid and award delivered.110

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The Section also works to secure the arbitrator’s fees and expenses. The court in considering such an application may order the parties to deposit an amount to cover arbitrator fees and expenses into the court out. The court cannot compel the arbitrator to deliver the award until his fees are paid.111

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[24.11] SECURITY FOR ARBITRATOR’S FEES

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The arbitrator has the discretion to make parties pay advance payment to secure arbitrator’s fees and future expenses.112 Such adequate security is important to ensure the arbitrator is paid for his work in the arbitration.

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If it is an administered arbitration, the arbitral institution will collect sufficient deposits in respect of the arbitrator’s fees and expenses and the arbitrator is relieved of that function.113 In any other case, it is left to the arbitrator to arrange with the parties to make sufficient security deposits in respect of his fees and expenses.

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106. Ponsford v Swaine (1861) 1 John & H 433. 107. Teja Singh v Union of India AIR 1955 Cal 666, at para. 3; see also Teen Morthi Financers v Nanak Chand AIR 1973 All 515; Shiv Shankar Rice Mills Ors. v Punjab State Warehousing (2007) 4 PLR 399. 108. 2012 (4) Arb LR 410 (Bom). 109. See Arbitration Act, s. 39(4); Assam State Weaving & Manufacturing Co Ltd v Vinny Engg Enterprises Pvt. Ltd. 2010 (4) AJ 609 (Cal). Arbitration Act, s. 39(2) follows English Arbitration Act, s. 56(2). 110. See Arbitration Act, s. 39(3); see also Gobind Singh Pratap Singh v Pohumal Khushiram AIR 1945 Sind 71. 111. Daya Singh Mangharam v Charandas Mathuradas AIR 1940 Sind 144. 112. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2173; English Arbitration Act, s. 38(3), New Zeeland Arbitration Act, art. 17 of Sch. 1. 113. See, for example, the AIAC Arbitration Rules (Revised 2018), r. 14; 2010 UNCITRAL Arbitration Rules, art. 43(1); SIAC Arbitration Rules, r. 34(1); HKIAC Arbitration Rules, art. 41.

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Law, Practice and Procedure of Arbitration in India

Where the parties have agreed to the terms and conditions of the arbitrator’s appointment, and signed the appointment letter, the arbitrator has the discretion in appropriate circumstances to request security for costs from the parties.114

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The arbitral tribunal may order security for costs upon the application by any party unless stated as part of the terms of acceptance of appointment or the arbitration agreement itself.115 There is no provision for an arbitrator to unilaterally make an order for security for his costs. If he does so, it may affect the smooth running of the arbitration proceedings.116

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The arbitrator’s terms of engagement may contain a term which requires the fees and expenses due to be placed in a designated account. Such payment may be ordered in advance before the arbitrator earns those fees.

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The arrangement assists to keep the fees and expenses transparent to all involved as the arbitration case proceeds. In practice, it is easier to collect payments from the parties whilst the arbitration is in progress than when the proceedings are over.117 The arbitrator may then be paid from the secured funds.

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The benefit to the parties is that the fees are readily available when the awards are published and, so long as the monies held on the account are sufficient and do not need topping up, no delay will occur in the payment of fees to obtain the award.

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Parties can be required to deposit monies in respect of the cost of arbitration. Section 38 of the Arbitration Act provides the arbitral tribunal to fix its remuneration and expenses.

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The parties can then be asked to make an advance of deposits on the cost. Such deposits are to be lodged within a reasonable amount of time. The arbitral tribunal can adjust the deposits payable at the end of the arbitration proceedings.118

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If the parties have been directed to make a deposit, and fail to do so, the arbitral tribunal may terminate the arbitration proceedings using Section 38(2)119 of the

1 14. Mark D. Cato, Arbitration Practice and Procedure (3rd edn, LLP 2002), p. 960. 115. In one arbitration the arbitrator ordered, without application by the parties, each party to pay a deposit of 100 per cent of his fees, effectively doubly securing himself; see the illustrative judgment in Wicketts v Brine Builders & Siederer [2001] CILL 1805, [2001] App LR 06/​08. 116. Ibid. 117. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 4.221. 118. P.C. Markanda, Law Relation to Arbitration and Conciliation (10th edn, LexisNexis 2020), p. 1373. 119. This sub-​section enables the arbitrator to suspend the proceedings where a party does not pay his share of costs.

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Chapter 24—​​​Remuneration of the Arbitrator

Arbitration Act.120 Alternatively, the arbitral tribunal may suspend the arbitration proceedings while the parties arrange the pay the deposits. The High Court of Delhi in Indian Oil Corporation Ltd. v A.T.V. Projects India Ltd.121 has recognised that:

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“14. A reading of the said provision does make it clear that where the deposit in respect of a claim or counter-​claim is not made, the arbitral tribunal may suspend or terminate the arbitral proceedings in respect of such claim or counter-​claim, as the case may be.”

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The Supreme Court of India in Sachin Kelkar v Sole Arbitrator held that if the proceeding has been terminated under Section 38(2), the same cannot be challenged in the court.122

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[24.12] ACTION BY ARBITRATOR TO OBTAIN PAYMENT OF REMUNERATION

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Where there is an express agreement by the parties that they will pay the arbitrator, the arbitrator can maintain an action to recover reasonable remuneration.123

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Earlier, it was suggested that there was no implied promise by the parties to a submission that they would pay the arbitrator for his services.

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This gave rise to doubts as to whether an arbitrator is entitled to any remuneration in the absence of an express agreement.124 For example, in Burroughes v Clarke125 the Court held that an arbitrator could not sue for his fees and that the office of the arbitrator was honorary.

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If the parties settle and do not require a consent award, then the arbitrator is only left with the option to sue.126 The arbitrator is entitled to be paid the agreed amount if he completes the reference and makes a valid award. Where there is an express agreement by the parties that they will pay the arbitrator, the arbitrator can maintain an action to recover the remuneration.127

120. Arbitration Act, s. 38(2); Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), p.1042. 121. 2004 (2) Arb LR 432 (Del). See also Rehmat Ali Baig v Minocher M Deboo 2012 (4) Arb LR 410 (BOM). 122. 2018 SCC Online Bom 20312, at para. 14. 123. Hoggins v Gordon (1842) 3 QB 466. 124. Virany v Warne (1801) 4 Esp 47; Drane v Niccol (1885) 6 LR (NSW) 145. 125. (1831) 1 Dowl 48. 126. Mark D Cato, Arbitration Practice and Procedure (3rd edn, LLP 2002), pp. 190–​942. 127. Hoggins v Gordon (1842) 3 QB 466.

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Law, Practice and Procedure of Arbitration in India

While an arbitrator can commence an action against parties for the payment of fees, in practice, this is a rare occurrence.128 Arbitrators may abhor the idea of the loss of earnings and expenses after completing the work. However, they may be reluctant to sue for their fees and expenses as they are normally wary of negative publicity that might accompany a court case.

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However, the exception being that the arbitrator may sue if the outstanding fees owed to him is substantial especially if there is non-​compliance with it order to pay the monies.

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Arbitrators normally use the lien of the award to get any of their unpaid costs under Section 39 of the Arbitration Act. However, the tribunal is not vested with any power to make peremptory orders.

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While costs and deposits are to be shared equally by the parties, according to Section 38(2) of the Act, if a party defaults in such payment the arbitral tribunal may call upon the other party to make good that payment. The party paying up the arbitral tribunal retains its right to recover the share of the other party through a suit.

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However, if both parties fail to clear the dues, the arbitral tribunal may suspend or dismiss the claim or counterclaim in respect of which the dues remain unpaid if so allowed by the arbitration rules or the arbitration agreement.

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However, in rare cases, where the arbitrator is acting as a friend, and there is no expectation of payment, there may be an implied term that the arbitrator will not charge for his services. There is no entitlement to payment under Section 70 of the Indian Contracts Act 1872.

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This no longer appears to be the law where the reference is to lay (rather than professional) arbitrators.129 The Court in Marsack v Webber130 held that where one party pays the arbitrator’s fees to take up the award, if neither party is entitled to costs, the party who has paid the fees can recover half from the other.

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If a lay arbitrator may bring an action on an implied promise by the parties that they would pay him reasonable remuneration for his services, there would seem to be no sound reason why a legal arbitrator should not also be entitled to do so.

128. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 4.220. 129. Tackaberry v Phaidon Navegacion SA [1992] ADRLJ 112; Willis v Wakeley Bros (1891) 7 TLR 604; Crampton and Holt v Ridley & Co (1887) 20 QBD 48, at p. 53; Re Coombs and Freshfield and Fernley (1850) 4 Exch 839, at 841, 154 ER 1456, at p. 1457; Tuckett v Isle of Thanet Electric Tramways and Lighting Co Ltd (1902) 46 Sol Jo 158; Swinford v Burn (1818) Gow 5, at p. 8; Brown v Llandovery Terra Cotta Co Ltd (1909) 25 TLR 625. 130. (1860) 6 H & N 1; cf. Bates v Townley 2 Exch 152.

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Chapter 24—​​​Remuneration of the Arbitrator

It makes no difference whether the dispute is of a mercantile nature or whether the arbitrator is a member of the legal profession. Where no fee is fixed, either in the award or by prior agreement, the arbitrator is still entitled to reasonable remuneration.

[24.13] COMMITMENT OR CANCELLATION FEES

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The arbitrator has the right to ask for commitment and cancellation fees based on his time which has been reserved exclusively for the parties.131

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Although there is no implied right for the arbitrator to charge a commitment or cancellation fees, he can do so if there is a term to such effect in his appointment terms of engagement.132

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The Chartered Institute of Arbitrator in their International Arbitration Practice Guideline provides further clarification as to the difference between the cancellation and the commitment fee as follows:133

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“A commitment fee, also known as a booking fee, is payable at the time a booking is made. It is a non-​refundable payment on account of the estimated fees for each arbitrator for the period booked.”134

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An arbitrator may ask for a non-​returnable commitment fees equivalent to certain number of hours at his hourly rates. Such fees is to cover the costs of dealing with the appointment, reading basic notes, setting up files, arranging and attending preliminary meetings and delivering order for directions or when the reference to arbitration is settled early.135

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The Chartered Institute of Arbitrator in their International Arbitration Practice Guideline explains cancellation fee as:

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“A cancellation fee is a fee payable if a hearing is cancelled or adjourned. The amount of a cancellation fee will usually be fixed by reference to (1) the arbitrators’ agreed rate of compensation; (2) the amount of time reserved; and (3) the length of notice the arbitrators are given of the need for cancellation or adjournment.”136

131. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2173. 132. R. Fisher, “How Arbitrators get paid”, available at www. Robertfisher.co.nz. 133. International Arbitration Practice Guideline by CIArb, art. 2(ii). 134. Ibid, art. 2(ii)(b). 135. Mark D. Cato, Arbitration Practice and Procedure (3rd edn, LLP 2002), p. 914. 136. International Arbitration Practice Guideline by CIArb, art. 2(ii)(c).

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Law, Practice and Procedure of Arbitration in India

A complex arbitration may result in protracted proceedings with the arbitrators being asked to reserve weeks or even months for hearings. In such circumstances, arbitrators may have to refuse other remunerative work during these reserved periods.

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It is usual for arbitrators to ask and agree on the payment in advance of a non-​ refundable commitment or cancellation fee, to protect themselves against the possibility of the arbitration not taking place arising from a settlement or for time being lost from vacation and postponement of hearings.

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This fee is payable to an arbitrator in any event, even if the arbitration does not take place. It is compensation for lost income when the arbitration is unable to proceed on previously agreed dates consented by the parties and for which the arbitrators had made themselves available.137

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The purpose of such a fee, when properly imposed, is to provide recompense for an arbitrator who has set aside a period for a hearing and is in the event unable during that time to obtain equally remunerative work.

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The proper time for the arbitrator wishing to insist on payment of a commitment fee is before the appointment. After the appointment, it is too late to insist upon a cancellation fee, since the imposition of such a fee at that stage would constitute a variation of the arbitration agreement, which would require the consent of the parties.

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Arbitrators must take care to ensure that every aspect and condition of their appointment is agreed to at or before their acceptance of the appointment. It would be an irregularity to insist on being paid a cancellation fee in the absence of an agreement by the parties.138

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The parties in K/​S Norjarl A/​S v Hyundai Heavy Industries Co Ltd139 appointed arbitrators and asked them to reserve 12-​week period two years in the future for the hearing. The arbitrators accepted the appointment but stipulated that they should receive a proportion of their costs in advance as a “commitment fee”.

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One of the parties refused to contribute to such a fee and applied to the Court for removal of the arbitrators for their misconduct in asking for it. The other party cross-​ applied for a declaration that it could pay the entire commitment fee itself without giving rise to any imputation of bias against the arbitrators.

137. K/​S Norjarl A/​S v Hyundai Heavy Industries Co Ltd [1991] 3 All ER 211, [1991] 1 Lloyd’s Rep 524, CA (Eng); Turner v Stevenage Borough Council [1998] Ch 28. 138. Sea Containers Ltd v ICT Pty Ltd [2002] NSWCA 84, per Mason P, Meagher and Sheller JA. 139. [1991] 3 All ER 211, [1991] 1 Lloyd’s Rep 524, CA (Eng), per Leggatt J.

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Chapter 24—​​​Remuneration of the Arbitrator

At first instance the Court dismissed both applications: it had not been improper for the arbitrators to ask for the commitment fee in the circumstances of the case, but it would not have been appropriate for the fee to have been paid by one party alone.

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The Court stressed that all fee negotiation should take place before the appointment to avoid similar problems. The arbitrators should only accept an appointment if it was absolutely clear that all the parties were aware of and agreed on the basis of remuneration.

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The Court of Appeal dismissed both parties’ appeals, holding firstly, that an arbitrator is entitled to negotiate before the appointment a commencement fee, but not to insist upon such a fee after he has been appointed; and secondly, that an arbitrator acts properly if he declines to agree on a fee with one party to which the other objects. The better and only effective practice is for fees to be stipulated as conditions of appointment.140

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Redfern and Hunter141 report that commitment or cancellation fees may be acceptable in some cultural environments but not in others.142

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Where they are used, they tend not to represent the full fee that an arbitrator could have worked on the lost days, but rather a proportion; therefore, commitment fees of 50 to 75 per cent may be common unless an alternative calculation is clearly set out in the terms of appointment.

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Whilst there is no provision in the Arbitration Act giving legibility to commitment or cancellation fees demanded by the arbitrator, the Courts in India have recognised the right of the arbitrator to ask for an advance fee.

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The Orissa High Court in State of Orissa v S.B. Joshi stated that the arbitrator holds the freedom not to proceed with the arbitration in case he requires an advance before starting of the proceedings.143

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[24.14] FEE FOR EARLY SETTLEMENT

Most of the arbitration statutes do not address the situation in which the parties settled their dispute at an early stage. 140. Tackaberry, Marriot QC, and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Sweet & Maxwell 2003), at para. 2-​348. 141. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 4.214. 142. Hong Kong International Arbitration Centre is the only arbitral institute which provides for cancellation fees in its rules. See HKIAC Arbitration Rules, Sch. 2, art. 10. 143. AIR 1983 Ori 125.

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Law, Practice and Procedure of Arbitration in India

Merkin explains that there are two heads under which the arbitrator may claim fee in cases of early settlement. These are: time actually spent on the reference, and time set aside for the hearing which is not used up.144 For practical purposes, an early settlement would have the same effect as a cancellation. It may therefore be appropriate for an arbitrator to include an express agreement whereby some of his fees will be payable on early settlement.

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Such fees payable on the early settlement are dependent on the agreement between the parties and arbitrator. It may range from fees calculated on time spent by the arbitrator to irrecoverable lump sum fees paid in advance.

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In the latter case, where the arbitrator has put in some work, such sums are irrecoverable from the arbitrator because of the application of the principle that nothing else than a total failure of consideration permits restitution.145

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If such fees are not paid in advance, there is a dichotomy in the law. The arbitrator can only claim if there is substantial performance on his part.146

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If the parties do manage to settle without going through a full arbitration, they should ask the arbitrator to issue a consent award, in much the same way as a court can issue a consent judgment.

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This enables to parties to retain the many enforcement benefits of an arbitration award, which will be lost if a settlement is reduced to a mere contract between the parties.

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[24.15] NO AWARD ARISING FROM THE ARBITRATOR’S OWN CONDUCT

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An arbitrator’s conduct may result in no award being made by him. This may happen when the court removes the arbitrator or where the arbitrator had unjustifiably resigned from the arbitration. In both these situations, the arbitrator will not be in a position to make an award.

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Notwithstanding that, it is implied into the agreement between the parties and the arbitrator that the arbitrator is entitled to payment even if an award is not issued.147

144. 145. 146. 147.

Robert Merkin, Arbitration Law (LLP 2004), p. 407. Whincup v Hughes (1871) LR 6 CP 78. Cutter v Powell (1795) 6 Term Rep 320. Brown v Llandovery Terra Cotta and Co Ltd (1909) 25 TLR 625; K/​S/​Norjarl A/​S v Hyundai Heavy Industries Ltd [1991] 3 All ER 211; Tackaberry v Phaidon Navegacion SA [1992] ADRLJ 112; Swift Fortune Ltd v Magnifica Marine SA [2007] 1 SLR(R) 629, [2006] SGCA 42.

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Chapter 24—​​​Remuneration of the Arbitrator

It is generally accepted that an arbitrator who wrongfully fails to make his award is not entitled to claim any remuneration for the arbitration, there being no express statutory provision allowing him to do so.

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Parties may find it unacceptable if an arbitrator were able to abandon his mandate after hearings, necessitating the repeat of the entire arbitration before a different tribunal, but could still claim payment. In the absence of an award, there is no issue of a possible lien on the award.

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The exception to this is if the arbitrator dies before making the award, in which case his successors, heirs, or estate may recover the arbitrator’s fees and expenses up to the time of his death by court action. An arbitrator who resigns for legitimate reasons, such as ill-​ health or a conflict subsequently arising for which he is not responsible, should still be entitled to payment.

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Arbitrators may enforce their claims for fees and expenses through court action. Generally, they may not wish to go to the trouble and expense of doing so.148

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The courts when removing arbitrators may consider the extent of the arbitrator’s faults which led to his removal or whether his resignation was reasonable in all the circumstances. It will then allow the determination whether an arbitrator can claim remuneration up to the time of his resignation or removal.

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Due to many delays in issuing the final awards, arbitration institutions have introduced new measures to encourage arbitrators to submit awards on time.

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For instance, according to the new guidelines introduced by the ICC at the beginning of 2016, arbitrators’ fees can be reduced by 5 per cent to 20 per cent or higher, depending on the length of their delay (applicable after 1 January 2016).149

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Furthermore, the ICC also started to implement a rule requiring arbitrators to make detailed disclosures regarding their availability. Such information includes the number of pending cases in which they are involved together with any other commitments that might prevent them from dedicating time to the case in which they wish to serve. This helps “to ensure that all arbitrators have the time and expertise to run their cases efficiently”.150 148. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at paras 4.212–​4.214. 149. ICC Court announces new policies to foster transparency and ensure greater efficiency, 5 January 2016, available at http://​www.iccwbo.org/​News/​Articles/​2016/​ICC-​Court-​announces-​new-​policies-​to-​foster-​ transparency-​and-​ensure-​greater-​efficiency/​. 150. Kirby, “Efficiency in International Arbitration: Whose Duty Is It?” (2015) 6 Journal of International Arbitration, p. 692.

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Law, Practice and Procedure of Arbitration in India

Reasonable Fees in the Absence of Fault In the absence of fault, an arbitrator is entitled to reasonable fees and expenses based on the construction of the express or implied terms of reference to arbitration. Even where there is no jurisdiction, an arbitrator may still be entitled to look to the persons who purportedly appointed him for reasonable remuneration.

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He is entitled to remuneration where even if his incorrect decision leads to the nullity of the award. The arbitrator is entitled to be paid his remuneration unless there is proof of misconduct against him. The Court in Port Sudan Cotton Co v Govindasamy Chettiar & Sons151 explained:

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“There is a distinction between error and misconduct. To err in fact or law is not only human but an occupational hazard. Unless it is so often repeated as to give rise to some suggestion of incompetence it happily involves absolutely no reflection upon the person concerned, whether judge, umpire or arbitrator.”

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The possibility of errors are inherent in the quasi-​judicial process of arbitration. Differently constituted tribunals may arrive at different conclusions in respect of the same dispute on an identical set of facts.

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The contractual relationship between the arbitrator and the parties entitles him to remuneration under the quantum meruit principle codified in Section 70 of the Indian Contract Act, 1872.

(1) The point is taken that the arbitrator has no jurisdiction. The court then upholds the position of no jurisdiction. As there cannot be a valid award from a lack of jurisdiction, it follows that the arbitrator cannot tax and settle his fees and expenses by an award. He may not entitle to recover his fees.152

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Some examples where the reference to arbitration terminates through no fault of the arbitrator as follows:

(2) There is a settlement of the dispute. The Indian Council of Arbitration (ICA) recognises that parties may enter into a settlement pending arbitration. Rule 62 provides that should the parties arrive at a settlement of the dispute by

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151. [1977] 1 Lloyd’s Rep 166, at 178, cited in Campus and Stadium Ireland Development Ltd v Dublin Waterworld Ltd [2005] IEHC 334. 152. Burkett Sharp & Co v Eastcheap Dried Fruit Co and Perera [1961] 2 Lloyd’s Rep 80, affd [1962] 1 Lloyd’s Rep 267, CA (Eng); Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), p. 244.

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Chapter 24—​​​Remuneration of the Arbitrator

common agreement, the arbitral tribunal shall render an award as per the agreement of the parties. Any valid and pending fees of the arbitrators can be claimed in such an award. Rule 68 of the ICA Rules makes the availability of the true copy of the award to the parties contingent on them clearing the costs associated with the arbitral proceedings.

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Similarly, Rule 30.11 of the Mumbai Centre for International Arbitration (MCIA) provides that in case parties settle, they can apply for a consent award where the institution may reflect its valid outstanding dues. This rule also clarifies that in case the parties do not require a consent award, the arbitration shall stand concluded only on payment of any outstanding costs of arbitration. (3) A court makes an order terminating the arbitration proceedings.



(4) A court grants an injunction against the arbitration proceedings.



(5) The arbitrator is removed on the ground that without any fault it is found that the appointment is unsuitable.



(6) The arbitrator resigns due to ill health.



(7) The arbitrator resigns due to a conflict of interest arising part-​way through proceedings.



(8) The agreement relied on by the parties does not constitute a written agreement within the definition of Section 7 of the Arbitration Act.

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No Remuneration If There Is Actual Misconduct

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An arbitrator will not be entitled to remuneration if the arbitration terminates due to his actual bad conduct.153

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Examples of actual misconduct would include the acceptance of a bribe, lack of impartiality, bias, corruption, having an undisclosed interest in the subject matter of the dispute, being employed by one of the parties to the reference, or acting unconscionably with regard to fees resulting in the entire award being set aside.

153. Weise v Wardle (1874) LR 19 Eq 171; Lendon v Keen [1916] 1 KB 994; Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, 1989), p. 232; Bithrey Construction Ltd v Edmunds [1996] 35 BLISS 1 (where the arbitrator was ordered to pay the costs of the motion for his removal); Wicketts v Brine Builders & Siederer [2001] CILL 1805 [2001] App LR 06/​08 (where the arbitrator did face financial sanctions for conduct necessitating his removal); see also Tiki Village International Ltd v Riverfield Tiki Holdings [1994] 2 Qd R 674.

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Law, Practice and Procedure of Arbitration in India

The Supreme Court of India has held that while there may be bias in a variety of situations, each case where such bias has been alleged has to be seen in the context and a fanciful apprehension of bias is not enough.154

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Therefore, there is actual misconduct where the arbitrator acts in bad faith, knowingly exceeds his jurisdiction, conducts the reference or decides the matter in a manner which, objectively tested, is alien to nature of the dispute or the submissions made by the contending parties.

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Another situation is where before or at the time of his appointment, the arbitrator fails to disclose his lack of qualifications (including the qualifications expected of him) or the existence of the circumstances giving rise to justifiable doubts as to his independence or impartiality.155

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His appointment may be void ab initio. He forfeits his remuneration because the award will be liable to be set aside on account of his default in making the required disclosures. The court may require the arbitrator to refund fees already paid where the award is set aside because of actual misconduct.156

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However, if the arbitrator loses his independence or his impartiality after the commencement of the arbitration proceedings, he must disclose it to the parties and if it is a arbitral panel, also, to other members of the arbitral tribunal.

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Failure to do so will invalidate the award and disentitle the arbitrator from claiming remuneration. However, if he resigns at the time, he loses his impartiality or independence, he may be entitled to claim remuneration up to the time of his resignation.

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The question may arise on whether party can seek to reduce the fees claimed on the basis of the alleged or dilatory performances of the arbitrator.

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A simple objection of this sort by a party would not carry as much weight as compared to the situation where all the parties object. The latter situation would mean that the matter is considered to be serious by the parties and will carry considerable weight.157 Thus, whether an arbitrator may be financially penalised depends upon the nature of the conduct leading to his removal, including whether his conduct was in bad faith.

154. Ladli Construction Company Private Limited v Punjab Police Housing Corporation Limited and Ors. (2012) 4 SCC 609, at para. 22. 155. Arbitration Act, s. 12. 156. Traynor v Panan Constructions Pty Ltd (1988) 7 ACLR 47. 157. Tackaberry, Marriot QC, and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson Sweet & Maxwell 2003), at para. 2-​379.

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Chapter 24—​​​Remuneration of the Arbitrator

A failure to disclose a conflict of interest, for example, could be innocent or malicious. The court may examine all the circumstances of the conduct leading to removal when deciding this issue.

[24.16] REMUNERATION IF NOT INCLUDED IN THE AWARD

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The Court in Re Collyer-​Bristow & Co158 considered the charges fixed by the arbitrator who included a sum paid by him to his solicitors for preparing his award. It held that the party liable to pay those charges was entitled to tax the solicitor’s bill. However, the Court in Kuala Ibai Development Sdn Bhd v Kumpulan Perunding (1988) Sdn Bhd159 did not allow the arbitrator to add his solicitor’s bill to his fees.

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[24.17] RECOVERY OF EXCESS REMUNERATION

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What options are available to the parties if they find the arbitral tribunal fees excessive either in terms of the rate or the time spent on the case?

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How can parties attempt to regulate the costs of the arbitral tribunal which is periodically assessing its fees especially that the parties are normally jointly and severally liable for the fees?160

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A party who has paid exorbitant charges to obtain the delivery of the award may recover the excess beyond what is reasonable through an action against the arbitrator.161

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However, if the arbitrator fixes his remuneration at an unreasonable and excessive amount, a party who has paid such amount to take up the award can bring an action to recover the sum by which such charges exceed what is fair and reasonable.

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The exception is unless the amount is included in the award itself. Then the affected party’s remedy is to set aside the award or that portion which relates to the arbitrator’s remuneration.162

1 58. [1901] 2 KB 839, CA (Eng). 159. [1999] 5 MLJ 137. See also Galloway v Keyworth (1854) 15 CB 228. 160. Michael McIlwrath and John Savage, International Arbitration and Mediation: A Practical Guide (Wolters Kluwer Law & Business 2010), p. 267, at para. 5-​112. 161. P.C. Markanda, Law Relation to Arbitration and Conciliation (10th edn, LexisNexis 2020), p. 1388. 162. Llandrindod Wells Water Co v Hawksley (1904) 68 JP 242, CA (Eng); Fernley v Branson (1851) 20 LJQB 178; Barnes v Hayward (1857) 1 H & N 742, at p. 743; Re Coombs and Freshfield and Fernley (1850) 4 Exch 839, at p. 841, (1850) 154 ER 1456; and cf. Dossett v Gingell, Administrator of the Estate and Effects of Allen, Deceased (1841) 2 Man & G 870. As to the factors relevant in assessing what amount is reasonable, see S N Kurkjian (Commodity Brokers) Ltd v Marketing Exchange for Africa Ltd (formerly T M Motiram (UK) Ltd) (No 2) [1986] 2 Lloyd’s Rep 618.

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Law, Practice and Procedure of Arbitration in India

Since an arbitrator is only entitled to reasonable remuneration,163 an extravagant fee would constitute a breach of the agreement between the arbitral tribunal and the parties. It may be subject to correction.

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In practice, most parties are reluctant to formally protest the reasonableness of the arbitral tribunal’s remuneration. Instead, they would not pay the arbitral tribunal’s fees hoping that the other party will absorb such costs under its joint and several liability binding the parties for them.164 The court will not intervene unless the fees are extravagant or the arbitrator has seriously misunderstood his duty with regard to the assessment of his fees.

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Such misunderstanding may be inferred, in the absence of adequate information, where the fees appear to be disproportionate to the work involved.165

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Parties may even allege that the arbitrator has been guilty of misconduct by failing to act judicially.166 This becomes a question of fact; relevant matters include the status of the arbitrators.

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For example, the Court in Appleton v Norwich Union Fire Insurance Society Ltd167 held that it was justifiable for a King’s Counsel acting as an umpire to receive a larger fee than the other two arbitrators, a junior counsel and surveyor.

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Also, the Court in S N Kurkjian (Community Brokers) Ltd v Marketing Exchange for Africa Ltd (formerly T M Motiram (UK) Ltd) (No 2)168 held that the size of the amount at stake was immaterial if the work involved was complex.

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[24.18] REMUNERATION AND THIRD-​PARTY FUNDING

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Despite the many advantages of third-​party funding in arbitration, where a dispute is financed by a company or persons other than the claimant or the respondent, this may raise a problem of independence or impartiality of an arbitrator in certain circumstances.

163. See, for example, the KLRCA UNCITRAL Rules (Revised 2010), art. 41(1). 164. Michael McIlwrath and John Savage, International Arbitration and Mediation a Practical Guide (Wolters Kluwer Law & Business 2010), p. 267, at para. 5-​112. 165. Government of Ceylon v Chandris [1963] 2 QB 327, [1963] 2 All ER 1, [1963] 1 Lloyd’s Rep 214, at p. 227, per Megaw J. 166. Re Stephens, Smith & Co and Liverpool and London and Globe Insurance Co’s Arbitration (1892) 36 Sol Jo 464; Re Prebble and Robinson [1892] 2 QB 602; Appleton v Norwich Union Fire Insurance Society Ltd (1922) 13 Ll L Rep 345; Government of Ceylon v Chandris [1963] 2 QB 327, [1963] 2 All ER 1, [1963] 1 Lloyd’s Rep 214, at p. 227; S N Kurkjian (Community Brokers) Ltd v Marketing Exchange for Africa Ltd (formerly T M Motiram (UK) Ltd) (No 2) [1986] 2 Lloyd’s Rep 618. 167. (1922) 13 Ll L Rep 345. 168. [1986] 2 Lloyd’s Rep 618.

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Chapter 24—​​​Remuneration of the Arbitrator

For instance, the involvement of the same third-​party funder in two or more cases with the same lawyer acting or double hatting in different capacities (counsel, arbitrator, etc.) may lead to the conflict of interest.169 Therefore, there is mandatory requirement for the involvement of third-​party funders to be disclosed either before or at the beginning of an arbitration (at least partly).170

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The arbitral tribunal in EuroGas Inc and Belmont Resources Inc v Slovak Republic171 ordered the claimant which had previously made it public that it was funded by a Luxembourg third-​party funder to divulge the identity of the third party, for the arbitrators to check that they did not have a conflict of interest. However, it did not appear that further disclosure of terms was required.

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The arbitral tribunal in Muhammet Çap & Sehil Ins¸aat Endustri ve Ticaret Ltd Sti v Turkmenistan172 ordered the claimants, two Turkish construction companies, to disclose whether they were the recipients of third-​party funding; and if they were, to disclose the names and details of the funder and some terms upon which the funding had been provided.

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No bias was found in RSM Production Corporation v Saint Lucia173 where an arbitrator had been challenged because of his opinion and language in his assessing opinion.

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Third-​party funding in international arbitration is growing; however, some jurisdictions such as Ireland,174 Malaysia,175 and Singapore,176 still consider third-​party funding to be illegal. In civil law jurisdictions such as France and Belgium, third-​party funding falls within a grey area as it seems that the law is reluctant to accept such practice.

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Checks can be put in place to ensure that third-​party funding does not tarnish the image of the arbitration mechanism. For example, the latest proposal of the European

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169. EuroGas Inc and Belmont Resources Inc v Slovak Republic ICSID Case No ARB/​14/​14 (Transcript of the First Session and Hearing on Provisional Measures (17 March 2015) at p. 145), available at http://​italaw.com/​sites/​ default/​files/​case-​documents/​italaw6267.pdf. 170. Teinver SA, Transportes de Cercanías SA and Autobuses Urbanos del Sur SA v The Argentine Republic ICSID Case No. ARB/​09/​1 (Decision on Jurisdiction, 21 December 2012, paras. 239–​259), available at: http://​italaw. com/​sites/​default/​files/​case-​documents/​italaw1090.pdf. 171. ICSID Case No. ARB/​14/​14. 172. Muhammet Çap & Sehil Ins¸aat Endustrive Ticaret Ltd Sti v Turkmenistan ICSID Case No. ARB/​12/​6, available at http://​italaw.com/​cases/​2036. 173. RSM Production Corporation v Saint Lucia ICSID Case No ARB/​12/​10 (Decision on Claimant’s Proposal for the Disqualification of Dr Gavan Griffith, QC, 23 October 2014), available at http://​italaw.com/​sites/​default/​ files/​case-​documents/​italaw4062.pdf. 174. Thema International Fund plc v HSBC Institutional Trust Services (Ireland) Ltd [2011] IEHC 357. 175. Christopher Leong, Dispute Resolution in Malaysia (2015), p. 6. 176. Otech Pakistan Pvt. Ltd v Clough Engineering Ltd [2007] 1 SLR(R) 989, [2006] SGCA 46, at p. 36.

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Law, Practice and Procedure of Arbitration in India

Union for the Transatlantic Trade and Investment Partnership contains an express rule on disclosure of third-​party funding.

[24.19] CONCLUSION

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The arbitrator’s fees constitute as part of the costs of arbitration. It is vital, both for parties and the arbitrator, that it is determined objectively. The arbitrator provides a service as a professional who should be paid adequately for the services rendered.

With the ever-​increasing cost of arbitration, all the negotiations related to the fees and expenses of the arbitrator should be done before the appointment.

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This will result in removing any possibility of complaint or dissatisfaction at the later stages during the arbitral process. Early negotiation at the commencement of the arbitration will provide a fair idea to the parties on the arbitral tribunal’s expected expenses.

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Parties have to bear normally in equal share the arbitral tribunal’s fees and expenses. A staggered or stage payment schedule based on the work done by the arbitral tribunal will ensure transparency and reduce the burden on any party. It ensures that the arbitrator does not indirectly finance the arbitration during the course of the arbitral proceedings.

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Most of the complications in case of remuneration arise in ad hoc arbitrations where there are no set terms for remuneration. The situation is more streamlined in cases of institutional arbitration where there is an institutional oversight and tariff fee scales prescribed by the arbitration rules.

DIVISION 6

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CONDUCT OF THE ARBITRATION

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Chapter 25 CONDUCT OF THE ARBITRATION [25.1] [25.2]

INTRODUCTION....................................................................................................................... 707 PARTY AUTONOMY................................................................................................................. 708

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[25.3] ARBITRATION CONDUCTED IN ACCORDANCE WITH LEGAL PRINCIPLES....... 710 [25.4] CONSEQUENCES WITH REGARD TO THE CONDUCT OF THE ARBITRATION........................................................................................................................... 714 [25.5]

ORAL HEARING........................................................................................................................ 715

[25.6] NOTIFICATION OF HEARING.............................................................................................. 717 [25.7] OPPORTUNITY TO ATTEND THE HEARING.................................................................. 719

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[25.8] REASONABLE OPPORTUNITY TO PRESENT THE CASE.............................................. 721

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[25.9] APPLICABILITY OF THE RULES OF NATURAL JUSTICE.............................................. 726 [25.10] PROCEDURE IN ARBITRATION........................................................................................... 727

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[25.11] THE ARBITRAL TRIBUNAL IS THE MASTER OF PROCEDURE.................................. 730 [25.12] CHOICE OF ARBITRATION RULES...................................................................................... 732

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[25.13] THE ADVERSARIAL APPROACH......................................................................................... 737 [25.14] THE INQUISITORIAL APPROACH....................................................................................... 740

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[25.15] BALANCING THE ADVERSARIAL AND INQUISITORIAL PROCEDURE.................. 743

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[25.16] CONCLUSION............................................................................................................................ 745

[25.1] INTRODUCTION

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Parties have the autonomy and flexibility in the arbitration to adopt a procedure by which they prefer to resolve their dispute. The flexibility of the procedure is one of the recognised advantages of international commercial arbitration.1

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This procedure or conduct of arbitration from the start to finish of the arbitral proceedings plays a crucial role in bringing about a successful arbitration. The conduct of arbitration looks at the different issues that arise and steps taken in an arbitration. It is wide enough to cover, amongst others, areas on how the arbitral tribunal is to be formed, the timelines of the proceedings, choice of the seat of arbitration, the rules that will be applicable to the procedure are documents-​only procedure.2

1. L. Mistelis, “International Arbitration -​Corporate Attitudes and Practices. 12 Perceptions Tested: Myths, Data and Analysis Research Report” (2004) 15 Am Rev Int’l Arb 525, at p. 527. 2. For example, KLRCA Fast Track Arbitration Rules (Revised 2013), art. 9.

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Law, Practice and Procedure of Arbitration in India

The other variables are the parties, their lawyers, the arbitral institution, and nature of the dispute which will influence the conduct of the case. There is also the practice of truly international arbitrations by the growing group of international dispute resolution professionals as compared to local international arbitration and domestic arbitrations which follow specific practices, often based on local practice.3

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The overarching principle of the equality of parties is ever-​present when conducting the arbitration proceeding.4 This principle means that all the parties have the right to have an equal opportunity to present their case, to attend the hearing and to be duly notified about it to be properly prepared.

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Even if the procedure has been altered, the principle of equality has to be exercised by all involved to avoid the possibility of the award being set aside.

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The arbitral procedure has significantly evolved away from the traditional procedures adopted by the courts. The arbitral tribunal and parties are also actively involved in determining and shaping the procedure.

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Therefore, the arbitral tribunal has to balance the parties’ interests and issue an enforceable award. Any arbitration must be conducted in keeping with the rule of law and in accordance with the applicable legal principles and the law governing the arbitration.

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This is applicable irrespective of whether the arbitration is ad hoc or institutional.

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[25.2] PARTY AUTONOMY

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The principle of party autonomy allows parties the freedom to choose the procedure to be applicable in their arbitration. Section 19(2) of the Arbitration Act provides:

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“Subject to this Part, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings. Failing such an agreement as aforementioned, the tribunal reserves the right conduct the proceedings in the manner it considers appropriate.”5

The principle of party autonomy permits parties to select the law governing the arbitration agreement among other crucial aspects of the arbitral proceedings. This is based on the principle of freedom to contract of parties.

3. Michael McIlwrath and John Savage, International Arbitration and Mediation a Practical Guide (Wolters Kluwer Law & Business 2010), p. 225 at para. 5-​001. 4. UNCITRAL Arbitration Rules (Revised 2010), art. 15. 5. Arbitration Act, s. 19(3).

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Chapter 25—​​​Conduct of the Arbitration

The Supreme Court of India in Union of India v U.P. State Bridge Corporation Limited,6 while highlighting the four pillars of the Arbitration Act, held that one such pillar was party autonomy in the choice of procedure which holds that the agreed procedure between the parties has to be adhered to by the arbitral tribunal.7

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A three-​judge bench of the Supreme Court of India has held that parties to an arbitration agreement have the autonomy to decide on procedural as well as substantive law to be followed by the tribunal.8

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Institutional arbitration also holds party autonomy as to procedure in high stead. The International Chamber of Commerce arbitration rules allow parties to agree upon the rules of law to be applied by the arbitral tribunal to the merits of the dispute at hand and the absence of such an agreement, the arbitral tribunal has been empowered to apply the rules to the proceedings which it deems to be appropriate.9

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The Indian Council of Arbitration Rules for International Commercial Arbitration mandates the arbitral tribunal to apply the Rules of Law designated as applicable by the parties to the substance of the dispute.10 Failing such designation, the arbitral tribunal reserves the discretion to apply such law as it deems applicable.11

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However, in terms of procedural laws, the applicable laws are the laws of India and the parties are deemed to have submitted to the jurisdiction of the Courts of India.12

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The Mumbai Centre for International Arbitration mandates the arbitral tribunal to follow the rules and laws designated as applicable to the dispute by the parties failing which the tribunal reserves the right to apply rules and laws it deems fit to be applied to the dispute.13

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The principle of party autonomy is further confirmed in Article V(1)(d) of the New York Convention which empowers a court to refuse enforcement or set aside an award if the party resisting enforcement establishes that “the arbitral procedure was not in accordance with the agreement of the parties”. Further under the Indian Act, an

6. (2015) 2 SCC 52. 7. Ibid, at para. 17. 8. Centrotrade Minerals and Metal Inc. v Hindustan Copper Limited (2017) 2 SCC 228, at para. 42. 9. Rules of Arbitration of the International Chamber of Commerce, 2017, art. 21(1). 10. Rules of International Commercial Arbitration, 2014, r. 25(1). 11. Rules of International Commercial Arbitration, 2014, r. 25(1). 12. Rules of International Commercial Arbitration, 2014, r. 25(3). 13. MCIA Rules, 2016, r. 24.1.

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Law, Practice and Procedure of Arbitration in India

arbitral award can be set aside if the arbitral procedure is not in accordance with the agreement between the parties.14 However, there are limits to party autonomy controlled or limited by law.15

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The constraints on party autonomy can be summarised as premised on parties’ failure to agree, mandatory natural justice principles, mandatory procedural laws, institutional requirements, third parties, arbitral tribunal discretion, and the role of the courts.16

[25.3] ARBITRATION CONDUCTED IN ACCORDANCE WITH LEGAL PRINCIPLES

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International commercial arbitration is carried out within confines of the Rule of Law. Its practice when properly done also contributes to the Rule of Law. It is, therefore, guided by the principles of natural justice and other considerations such as public policy.

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However, the ground to challenge an award based on the violation of public policy or the “most basic notions of justice” can be attracted in very exceptional circumstances where the conscience of the Court is shocked by “infraction of fundamental notions or principles of justice”.17 Arbitration upholds the fundamental tenets of the Rule of Law while ensuring that there is ample flexibility for procedural issues.

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The two major pillars of principles of natural justice in India are nemo judex in causa sua or the rule against bias and audi alteram partem or that both sides to a dispute must be heard.

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Section 18 of the Arbitration Act embodies the principle of audi alteram partem in that it tasks the arbitral tribunal with treating both sides equally and providing both sides with a full opportunity to be heard.

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Further, under Section 24(3) of the Arbitration Act, all statements, and documents and other information supplied by one party to the arbitral tribunal is to be communicated to the other party. In addition, the Arbitration Act allows any of the parties to request access to any evidence relied on by an expert to prepare his report and put questions to such an expert.18

14. Arbitration Act, s. 34(2)(v). 15. M. Pryles, “Limits to Party Autonomy in Arbitral Procedure” (2007) 24 (3) Journal of International Arbitration 327. 16. S. Greenberg, C. Kee, and J. R. Weeramantry, International Commercial Arbitration: An Asian-​Pacific perspective (Cambridge University Press 2011), pp. 308–​310. 17. Ssangyong Engg. & Construction Co. Ltd. v NHAI (2019) SCC OnLine SC 677, at para. 76. 18. Section of the Arbitration Act, s. 26.

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Chapter 25—​​​Conduct of the Arbitration

The High Court of Delhi set aside an award where an arbitrator relied upon a circular which was not filed before the arbitrator thereby clearly denying the other party to scrutinise the document.19

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If arbitral proceedings are conducted in a fashion where information or arguments are admitted behind one of the parties’ back, the award would become amenable to a challenge under Section 34(2)(a)(iii) of the Arbitration Act which allows a party to challenge an award if the party was unable to present its case. The High Court of Bombay has held that Section 18 of the Arbitration Act cannot by itself become a ground for the challenge of an award.20

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However, the High Court of Bombay in another case set aside the award where the arbitrator did not give an opportunity to the parties to make added submissions of documents which it had submitted before the tribunal.21

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The Court held that the denial of such an opportunity to the parties amounted to the violation of the principles of natural justice or amiable compositeur.22

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In a case where the arbitrator relied on a statement of claims and affidavit of evidence which were not served upon the petitioner, the High Court of Bombay set aside the award citing gross violation of the principles of natural justice as the Court held that the petitioner was successful in making out the case that he could not present his arguments before the tribunal, thereby violating Section 24 of the Arbitration Act.23

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The rule against bias can be said to be embedded in Section 12(3)(a) of the Arbitration Act which states that an arbitrator may be challenged if there arise circumstances that give rise to justifiable doubts as to his independence or impartiality.

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However, a glaring problem which subsists that unless the arbitrator challenged under Section 13 withdraws on his own accord, he remains a part of the tribunal and even the part of the proceeding where the challenge against him is discussed and determined.24

. 19. Bharat Sanchar Nigam Limited and Anr. v Vindhya Telelinks Limited 2006 SCC OnLine Del 415, at para. 16. 20. Godrej Properties & Investments Ltd. v Tripura Construction, Mumbai & Ors. (2003) SCC OnLine Bom 13, at para. 8. 21. Networth Stock Broking Ltd. v Subhasis Panda 2009 SCC OnLine Bom 1680. 22. Networth Stock Broking Ltd. v Subhasis Panda 2009 SCC OnLine Bom 1680, at para. 6. 23. Rajnikant B. Vora v Fincruise Credit Services Pvt. Ltd. 2015 SCC OnLine Bom 4179. 24. Arbitration Act, s. 3(3).

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Law, Practice and Procedure of Arbitration in India

It is a trite law that an arbitrator must act in accordance with the law of the land.25 Other case authorities reinforce this ruling stating that: “There is no doubt that an arbitrator is bound by the rules of law like every other Judge, and if it appears on the face of the record that the arbitrator has acted contrary to law his award may be set aside.”26

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The arbitral tribunal must decide dispute and differences referred according to the prevailing principles of law. Lord Denning in David Taylor & Son Ltd v Barnett Trading Co27 emphasised: “There is not one law for arbitrators and another for the court. There is one law for all. Therefore, arbitration is conducted in accordance with legal principles.”28

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The Court in Orion Compania Espanola de Seguros v Belfort Maatschappij voor Algemene Verzekgringeen29 extracted the following principles applicable to the conduct of arbitration proceedings as paraphrased below.

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Arbitrators must, in general, apply a fixed and recognised:

(1) System of law; they cannot be allowed to apply different criteria such as their individual view or mere abstract or equitable principles as an amiable compositeur;30



(2) The reference to arbitration can validly provide for the arbitration tribunal to determine the matter in accordance with some foreign legal system or event on the basis of the principles of international law;31



(3) The parties may by their contract, either in the arbitration clause itself or in the rest of the contract, provide that certain incidents of the law which would otherwise apply should not apply, for example, the exclusion of some

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25. (1948) 82 Ll L Rep 705. 26. Aubert v Maze (1801) 2 Bos & Pul 371. See also Morgan v Mather (1792) 2 Ves Jun 15; Kent v Estob (1802) 3 East 18; Blennerhassett v Day (1812) 2 Ball & B 104; Steff v Andrews (1816) 2 Madd 6; Ames v Milward (1818) 8 Taunt 637; Doe d Stimpson v Emmerson (1847) 9 LTOS 199; Hodgkinson v Fernie (1857) 3 CBNS 189; British Westinghouse Electric and Manufacturing Company, Limited v Underground Electric Railway Company of London, Limited [1912] AC 673; Attorney-​General for the Province of Manitoba v Thomas Kelly Ltd [1922] 1 AC 268. 27. (1953) 1 WLR 562, at para. 570. 28. Ritchie v W Jacks & Co (1922) 10 Ll L Rep 519, at para. 520, CA (Eng), per Lord Sterndale MR; Czarnikow v Roth, Schmidt & Co [1922] 2 KB 478; Maritime Insurance Co Ltd v Assecuranz-​Union Von 1865 (1935) 52 Ll Rep 16; David Taylor & Son Ltd v Barnett Trading Co [1953] 1 All ER 843, [1953] 1 WLR 562. See also Pacific & Orient Insurance Co Sdn Bhd v Woon Shee Min [1980] 1 MLJ 291, FC. 29. [1962] 2 Lloyd’s Rep 257. 30. Arbitration Act, s. 28. 31. See Republic of Ecuador v Occidental Exploration and Production Co [2005] EWCA Civ 1116, [2005] 2 All ER (Comm) 689, at para. 13.

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Chapter 25—​​​Conduct of the Arbitration

statutory provision such as the statutory period of limitation, provided there is no violation of public policy; and (4) Where an arbitration agreement provides that the arbitrators are to apply some other criterion such as what the arbitrators consider to be fair and reasonable, whether or not in accordance with the law, there is no valid contract. Therefore, there cannot be a legally binding arbitration agreement and where any award was made in pursuance of such a submission it would not be enforceable without a valid contract.

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The arbitral tribunal must apply a fixed and recognisable system of law, which primarily and normally would be the governing law of the contract. It cannot apply some other criteria such as its subjective view of the individual arbitrator or some abstract principle not based on the law.

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The court is not prepared to allow an arbitral tribunal any leeway in deciding a matter other than following legal principles. Even where there is an equity clause (otherwise known as “honourable engagement” or “amiable compositeur”) which purports expressly to dispense the arbitrator from applying the law either wholly or in part, the arbitrator is still obliged to apply the law.32

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Article 28(3) of the UNCITRAL Model Law as mirrored in Section 28(2) allows an arbitral tribunal to decide an issue on an equitable basis only if the parties have expressly authorised it to do so. This position is in line with the other arbitration jurisdictions such as Singapore and Ireland.33

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Whereas, the Canadian Court in Faubert & Watts v Temagami Mining Co Ltd34 stated that:

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“It is the duty of an arbitrator, in the absence of express provision in the submission to the contrary, to decide the question submitted to him according to the legal rights of the parties, and not according to what he may consider fair and reasonable under the circumstances.”

32. Overseas Union Insurance Ltd v AA Mutual International Insurance Co Ltd [1988] 2 Lloyd’s Rep 63, at para. 72, per Evans J. Although equity clauses remain a subject of contention, there has been a shift of emphasis from the firm view of Megaw J: see Eagle Star Insurance Co Ltd v Yuval Insurance Co Ltd [1978] 1 Lloyd’s Rep 357, CA (Eng); Home Insurance Co and St Paul Fire and Marine Insurance Co v Administratia Asigurarilor de Stat [1983] 2 Lloyd’s Rep 674; Deutsche Schachtbau-​und Tiefbohrgesellschaft mbH v R’as Al Khaimah National Oil Co [1990] 1 AC 295, [1987] 2 All ER 769, CA (Eng); Home and Overseas Insurance Co Ltd v Mentor Insurance Co (UK) Ltd (in liq) [1989] 3 All ER 74, [1989] 1 Lloyd’s Rep 473, CA (Eng). 33. See Astro Nusantara International BV v PT Ayunda Prima Mitra [2012] SGHC 212, [2013] 1 SLR 636, at para. 84. Similar regimes can be found in Ireland, see Marshall v Capital Holdings Ltd (trading as Sunworld) [2006] IEHC 271, and in India, see TDM Infrastructure Pvt Ltd v UE Development India Pvt Ltd [2008] INSC 931. 34. (1959) 17 DLR (2d) 246, at p. 256, per Laidlaw JA.

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However, this general rule does not extend as to require the arbitral tribunal to adhere to rigid rules of practice as adopted by the courts.35 A counsel for a party cannot insist on the application of court rules in the conduct of the arbitration.36

[25.4] CONSEQUENCES WITH REGARD TO THE CONDUCT OF THE ARBITRATION

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One of the fundamental goals of arbitration, particularly in the international context, is to provide a neutral procedure that puts parties from different backgrounds and nationalities on equal footing.37

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In the well-​known decision of Sir William Stabb in Town and City Properties Development Ltd. v Wiltshier Southern and Gilbert Powell,38 it was observed that while conducting an arbitration three general principles must be observed: (1) Each party must have a full opportunity to present his case to the tribunal.



(2) Each party must be aware of his opponent’s case and must be given a full opportunity to test and rebut it.



(3) The parties must be treated alike. Each must have the same opportunity to put forward his case, and to test that of his opponent.

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The three principles enumerated above are also embodied in the Indian arbitration law. Section 24(2) mandates each party must be given sufficient advance notice of any hearing or any meeting of the arbitral tribunal for inspection.39

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Section 24(3) states that all statements or documents or other information provided by one party shall be made available to the other party by the tribunal.40 Section 18 states each party must be treated with equality and be given full opportunity to present his case.41

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35. Re Badger (1819) 2 B & Ald 691, (1819) 106 ER 517; Jugoslavenska Oceanska Plovidba v Castle Investment Co Inc: The Kozara [1973] 2 Lloyd’s Rep 1; Techno-​Impex v Gebr van Weelde Scheepvaartkantoor BV [1981] 2 All ER 669. 36. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 6.02. 37. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2287. 38. Mustill and Boyd, Commercial Arbitration (2nd edn, Butterworths 1989), p. 302 and Mustill and Boyd, Commercial Arbitration: Companion Volume (Butterworths 2001), p. 187; see also Town and City Properties (Development) v Wilthsier Southern & Gilbert (1988) 44 BLR 109. 39. Arbitration Act, s. 24(2). 40. Arbitration Act, s. 24(3). 41. Arbitration Act, s. 18.

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Chapter 25—​​​Conduct of the Arbitration

Failure to conduct the arbitration in accordance with the above-​mentioned principles may constitute grounds for a challenge to the award as per the Arbitration Act.42

[25.5] ORAL HEARING Previously, unless the parties agreed to the contrary, arbitration would have to be conducted by way of oral hearings.43 This is no longer the case.

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Similar to the UNCITRAL Model Law,44 Section 24 of the Arbitration Act provides the arbitral tribunal itself with the power to decide whether or not to have oral hearings for the presentation of evidence and oral argument.45 The reason underlying this rule is that a case turning only on documents and could otherwise be dealt with expeditiously, could be delayed unnecessarily if an oral hearing was required.

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However, the first proviso to Section 24 of the Arbitration Act provides that either party can request an oral hearing to be held at “an appropriate stage”46 of the proceedings and that such hearing shall take place unless the parties have agreed that no oral hearings will be held. This provides the flexibility of procedure, although there is some risk of dilatory tactics.47

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An arbitral tribunal can dispense with the hearing if it makes an award on documentary evidence only. This procedure must be agreed upon by the parties or be in the arbitration agreement or provided for by applicable arbitration rules.

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The 2015 amendment introduced the fast-​ track procedure prescribed under Section 29B of the Arbitration Act. The fast-​track procedure dispenses with the practice of oral proceedings48 unless a party makes a request for the same or the tribunal considers it necessary for clarifying certain issues.49

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42. Front Row Investment Holdings (Singapore) Pte Ltd v Daimler South East Asia Pte Ltd [2010] SGHC 80. 43. Ritchie v W Jacks & Co (1922) 10 Ll L Rep 519, CA (Eng); Star International Hong Kong (UK) Ltd v Bergbau-​ Handel, GmbH [1966] 2 Lloyd’s Rep 16; The Myron, Myron (Owners) v Tradax Export SA Panama City RP [1970] 1 QB 527, at para. 532–​533, [1969] 2 All ER 1263, at para. 1265, [1969] 1 Lloyd’s Rep 411, at para. 415, per Donaldson J. See also Henry Bath & Son Ltd v Birgby Products [1962] 1 Lloyd’s Rep 389; Altco Ltd v Sutherland [1971] 2 Lloyd’s Rep 515; Ritchie v W Jacks & Co (1922) 10 Ll L Rep 519, at para. 520, CA (Eng), per Lord Sterndale MR. 44. UNCITRAL Model Law, art. 24(1). 45. Unless parties otherwise agree. 46. See UNCITRAL Model Law, art. 24; there is limited case law on this kind of application but in Kempinski Hotels SA v PT Prima International Development [2011] SGHC 171, [2011] 4 SLR 633 an applicant challenged the refusal of the tribunal to allow a second round of cross-​examination on the basis of art. 24. 47. Even if the arbitrator takes the view that an oral hearing was unnecessary, he should not ignore it; see Attorney-​General v Tozer (No 3) 2 September 2003, M1528-​IM02 CP607/​97 (Auckland). 48. Arbitration Act, s. 29B(3)(a). 49. Arbitration Act, s. 29B(3)(c).

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A procedure without a hearing would usually provide in the arbitration agreement or the applicable rules for the parties to serve statements of claim, defence, counterclaim, reply to the defence, defence to counterclaim, and reply to defence to the counterclaim.

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With these statements, the parties are required to submit a list of relevant documents and a copy of any document on which they seek to rely. The arbitral tribunal then makes an award based on the documentary evidence before it. If appropriate, the arbitral tribunal may also inspect the site or the subject matter of the dispute.

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Savings costs such as renting the hearing room, daily attendance fees of the lawyers and arbitrators, the loss of earnings by the parties, and the witnesses can be achieved by avoiding a full hearing. Being a truncated procedure, documents-​only arbitrations are less popular in construction arbitrations.

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Construction disputes normally require the arbitrator to find and determine a lot of facts, so documents-​only procedures are not usually appropriate. Documents-​only arbitrations are popular in small consumer disputes, in shipping and often in civil law countries. In common law jurisdictions, the preference is for oral hearings.

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The ICC Rules of Arbitration, in force as of 1 March 2017, offer an expedited procedure providing for a streamlined arbitration. When a hearing is to be held, the arbitral tribunal may conduct it by videoconference, telephone, or similar means of communication.50

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In the framework of expedited procedure, the arbitral tribunal may, after consulting the parties, decide the dispute solely based on the documents submitted by the parties, with no hearing and no examination of witnesses or experts.

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Further, under the SIAC Rules, 2016, unless the parties have agreed on a documents-​ only arbitration, the arbitral tribunal shall, if either party so requests or the arbitral tribunal so decides, hold a hearing for the presentation of evidence and/​or for oral submissions on the merits of the dispute, including any issue as to jurisdiction.51

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Similar is the case with SIAC Expedited Procedure52 wherein the Tribunal may, in consultation with the parties, decide if the dispute is to be decided based on documentary evidence only, or if a hearing is required for the examination of any witness and expert witness as well as for any oral argument.53

50. 51. 52. 53.

ICC Arbitration Rules, Appendix VI-​Expedited Procedure Rules, art. 3(5). SIAC Rules, 2016, r. 24.1. SIAC Rules, 2016, r. 5. SIAC Rules, 2016, r. 5.2(c).

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Chapter 25—​​​Conduct of the Arbitration

The Mumbai International Arbitration Rules, 2016 are also in line with the SIAC Rules, 2016 in this regard. The recent outbreak of COVID-​19 (Coronavirus) in several countries, including India, has necessitated the immediate adoption of measures to ensure social distancing to prevent the transmission of the virus.54 Accordingly, the same has also impacted the conduct of hearings in arbitration.

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As a result of the pandemic, arbitral institutions have made provisions for conducting virtual hearings instead of physical hearings. Under certain national arbitration laws, like the Swedish Arbitration Act, the parties have the right to a hearing.

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However, this does not mean that the parties have the right to a physical hearing. The arguments that are exchanged orally and simultaneously over video link enjoy the same legal acceptance.

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Moreover, as the case is under Article 24(1) of the Model Law and Section 24(1) of the Arbitration Act, the arbitral tribunals are afforded the power to decide whether to hold oral hearings for the presentation of evidence or oral arguments.

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This power also includes when and where a hearing is to be held and whether this hearing can be done remotely.

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Moreover, this interpretation is also supported by Section 20(3) of the Arbitration Act wherein the arbitral tribunal may meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts, or the parties, or for inspection of documents, goods, or other property.

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Such reforms undertaken by the arbitral institutions are in view of conducting arbitrations expeditiously while ensuring the right to equal treatments and the right to be heard.

[25.6] NOTIFICATION OF HEARING

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Section 18 of the Arbitration Act mirrors Article 18 of the Model Law which requires the arbitral tribunal to treat both the parties to the arbitral proceedings with equality and to provide them with a full opportunity to present their cases. Certain jurisdictions like the United Kingdom, Malaysia, and Australia have replaced the word “full” with “reasonable”. Accordingly, in these jurisdictions, the

54. Suo Motu Writ (Civil) No. 5 of 2020 in Re: Guidelines for Court Functioning Through Video Conferencing During COVID-​19 Pandemic.

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Law, Practice and Procedure of Arbitration in India

arbitral tribunal is under a duty to provide parties with a reasonable opportunity to present their case. While the arbitral tribunal should do its best to meet the convenience of the parties, it is not an inflexible rule. The arbitral tribunal retains discretion over the matter subject to the rules of natural justice.55

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Further, the national arbitration law of India mirrors Article 24(2) of the Model Law, which states that each party must be given sufficient advance notice of any hearing or any meeting of the arbitral tribunal for inspection of documents, goods, or other property.56

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A sufficiently advanced57 warning ought to be given to the parties to enable them to effectively prepare their case, to answer the case of the opponent (if any), appear at the hearing, and make their representation; if this is not done the notice is of no value.58

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It is very rare that an arbitral tribunal deliberately omits to give notice to one party which has given to the other. More often than not, if it does happen, it may result from a lack of communication or simple misunderstanding.59

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For example, the party in Oakland Metal Co Ltd v D Benaim & Co Ltd knew that there was arbitration and that there was to be a hearing but as a result of some misunderstanding he had not been told when and where it was to take place.60

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The arbitral tribunal was held to have a duty to see that such misunderstandings do not occur. It may be that where no particular mode of notice has been prescribed, the failure to give such notice would not vitiate the award unless it has resulted in prejudice to the parties’ case.

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An arbitral tribunal should always be cautious to ensure that the party has the opportunity to present its case. If a party is not aware that a hearing of the arbitration is going to take place, the arbitral proceedings cannot be properly conducted and the resulting award is liable to be set aside.61

55. Williams v Thomas (1847) 8 LTOS 348; Chandmull Moolchand & Co v Weis & Co Ltd (1921) 9 Ll L Rep 412; Rushworth v Waddington (1859) 1 LT 69; Nares v Drury (1864) 10 LT 305; Ginder v Curtis (1863) 14 CB (NS) 723, (1863) 143 ER 628; British Oil and Coke Mills Ltd v Horace Battin & Co Ltd (1922) 13 Ll Rep 443. 56. Arbitration Act, s. 24(2). 57. Atul R Shah v M/​S V Vrijlal Lalloobhai and Co AIR 1999 Bom 67, 1998 (4) BomCR 867; Pratapsingh v Kishanprasad and Co. AIR 1932 Bombay 6. 58. See Mustill and Boyd, Commercial Arbitration (2nd edn, Butterworths 1989), p. 303, cited in FBD Insurance plc v Connors [2011] IEHC 184. 59. Lennon & Harvey Ltd v Murphy [2004] IEHC 402. 60. [1953] 2 Lloyd’s Rep 192, at para. 193. 61. Methanex Motunui Ltd v Spellman [2004] 1 NZLR 99, affirmed [2004] 3 NZLR 454, CA.

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Chapter 25—​​​Conduct of the Arbitration

Under Article 34(2)(a)(ii) of the Model law as captured in Section 34(2)(a)(iii) of the Arbitration Act, not giving proper notice as per Section 24(2) can be ground for the challenge of the award. Section 34(2)(a)(ii) of the Arbitration Act states that an award may be set aside if a party can furnish proof that it was not given proper notice of the appointment of an arbitrator or the arbitral proceedings or was otherwise unable to present his case.

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An arbitral tribunal cannot presume to dispense with the notice merely because, as often happens, when one party ignores or refuses to participate in the arbitration.62 It has to give notice even if a party has stated that it will not appear at the hearing.63

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If a meeting takes place before the oral hearing of the reference and one party is not given notice of the meeting and so fails to attend, the award will not be invalidated, provided that nothing material was done at the meeting.64

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If the proceedings are postponed for any reason, the arbitral tribunal should communicate the date and time of the resumed hearing to all parties and not leave it for one party to notify the other.65

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[25.7] OPPORTUNITY TO ATTEND THE HEARING

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Unless the parties agree to the contrary66 each party must be given a reasonable opportunity to attend the hearing. It is implicit in the nature of private arbitration that a person is entitled to attend the arbitration proceedings to which he is a party.

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This is independent of the requirement that the parties must be notified of the hearing, since a party may be notified of the hearing but unable to attend because of the time and place fixed for the hearing. If a party is unable to present his case, the notice of hearing will be futile.

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A Spanish Court set aside an award where one party’s lawyer had not been able to attend but the arbitrator continued with the hearing.67 An arbitral tribunal should

62. Montrose Canned Foods Ltd v Eric Wells (Merchants) Ltd [1965] 1 Lloyd’s Rep 597. 63. Tackaberry, Marriot QC, and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson Sweet & Maxwell 2003), at para. 2-​424; there is always the possibility that the party will change his mind or the refusal is just a bluff. 64. Re Morphett (1845) 2 Dow & L 967. 65. The Warwick (1890) 15 PD 189. As to waiver of irregularities, see Bignall v Gale (1841) 9 Dowl 631; Hamilton v Bankin (1850) 3 De G & SM 782. 66. AA Amram Ltd v Bremar Co Ltd [1966] 1 Lloyd’s Rep 494. 67. CLOUT case No 968 [A Coruña Provincial High Court, Spain, Section 6, Case No. 241/​2006, 27 June 2006].

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Law, Practice and Procedure of Arbitration in India

certainly not unilaterally change the date of the hearing at short notice because of the scheduling conflicts this can create.68 The arbitral tribunal, therefore, should make such arrangements that a party has a reasonable opportunity to be present in a person with his legal advisors and witnesses who he wishes to bring with him. It should ensure that the date of hearing is not so close that the case cannot be properly prepared and presented.

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Likewise, the arbitral tribunal should accommodate a party who is unable to attend the hearings on account of any unavoidable circumstances and should not deprive a party of the opportunity to be heard because of a genuine mistake, especially on the part of his legal advisors.69

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The appellants in Shaminder Singh & Ors. v Motor and General Finance Ltd.70 had not appeared before the arbitral tribunal despite receiving service. The arbitrator had passed an ex parte award. The Court took a sympathetic view of the appellants. It held that the arbitrator should have given another notice to the appellant specifying the intention to proceed ex parte against him regarding the evidence against him.71

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In another case, the High Court of Delhi held that an arbitrator ought not to proceed ex-​parte against a party if he has failed to appear at one of the sittings. The arbitrator should fix another date for hearing and give notice to the defaulting party, of his intention to proceed ex-​parte on a specified date, time, and place.72

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However, a party does not have an absolute right to insist on its convenience being consulted in every respect. In such a situation the arbitral tribunal has to take a realistic and judicial approach in exercising its discretion and avoid playing into dilatory tactics by a party. The arbitral tribunal may continue with the proceedings and make an award if a party fails to appear at an oral hearing.73

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Fixing a hearing is a matter within the arbitral tribunal’s discretion. The courts are reluctant to interfere with this discretion provided that the arbitral tribunal has acted reasonably in fixing the hearing.74 It should not unilaterally fix the hearing date in the face of requests for adjournments if that means a party will be unable to attend.75 68. FBD Insurance Plc v Connors and another [2011] IEHC 184. 69. Tackaberry, Marriot QC, and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson Sweet & Maxwell 2003) at para. 2-​425. 70. 2007 SCC OnLine Del 772. 71. Shaminder Singh & Ors. v Motor and General Finance Ltd. 2007 SCC OnLine Del 772, at para. 10. 72. M/​s. Lovely Benefit Chit Fund & Finance Pvt. Ltd. v Puran Dutt Sood & others AIR 1983 Delhi 413. 73. Arbitration Act, s. 25(c). 74. See Fetherstone v Cooper (1803) 9 Ves Jun 67; Ginder v Curtis (1863) 14 CBNS 723; Nares v Drury (1864) 10 LT 305; Re Whitwam’s Trustees, etc and Wrexham, Mold and Connah’s Quay Rly Co (1895) 39 Sol Jo 692. 75. Coromandel Land Trust Ltd v Milkt Investment Ltd [2009] NZHC 1753.

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Chapter 25—​​​Conduct of the Arbitration

When a party fails to attend the hearing having been given due notice and having had a reasonable opportunity to attend, the arbitral tribunal can proceed with the hearing.76 The arbitral tribunal cannot be faulted in taking this step.

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The International Chamber of Commerce allows the arbitral tribunal to proceed with a hearing if a party which has been duly summoned fails to appear without a valid excuse.77 Similarly, the Indian Council of Arbitration allows the tribunal to continue the proceedings and declare an award if a party fails to appear at an oral hearing without showing sufficient cause.78

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The 2015 amendment to the Arbitration Act added a proviso to Section 24(1) stating that an arbitral tribunal shall, as far as possible, hold oral hearings for the presentation of evidence or oral argument on a day-​to-​day basis, and not grant any adjournments unless sufficient cause is made out, and may impose costs including exemplary costs on the party seeking adjournment without any sufficient cause.79

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However, if there is reason to think that the absence is unintentional, the arbitral tribunal should adjourn for a short time to allow investigations to be carried out.80 If a reasonable excuse for a party’s failure to attend is shown, an award made pursuant to such a hearing will be set aside.81

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[25.8] REASONABLE OPPORTUNITY TO PRESENT THE CASE

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Section 18 of the Arbitration Act provides that:

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“The parties shall be treated with equality and each party shall be given a full opportunity to present his case.”82

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It is a core procedural right that each party must be given a reasonable opportunity to present its case which overlaps with the right to be treated equally. Derains and Schwartz suggests that:

76. Harris Adacom Corporation v Perkom Sdn Bhd [1994] 3 MLJ 504; Waller v King (1723) 9 Mod Rep 63; Fetherstone v Cooper (1803) 9 Ves Jun 67; Wood v Leake (1806) 12 Ves 412, (1806) 33 ER 156; Harcourt v Ramsbottom (1820)1 Jac & W 505, at para. 512, (1820) 37 ER 460; Scott v Van Sandau (1844) 6 QB 237; Tryer v Shaw (1858) 27 LJ Ex 320; Angus v Smythies; Smythies v Angus (1861) 2 F & F 381, (1861) 175 ER 1106; Re Hewitt and Portsmouth Waterworks Co (1862) 10 WR 780; Baroness Wenlock v River Dee Co (1883) 36 Ch D 675; Golodetz v Schrier (1947) 80 Ll L Rep 647. 77. Rules of Arbitration of the International Chamber of Commerce, 2017, art. 26(2). 78. Ibid, r. 22. 79. Inserted by Act 3 of 2016, s. 12 (w.r.e.f. 23 October 2015). 80. Mustill and Boyd, Commercial Arbitration (2nd edn, Butterworths 1989), p. 346. 81. Gladwin v Chilcote (1841) 9 Dowl 550. 82. It repeats the provision in UNCITRAL Model Law, art. 18.

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Law, Practice and Procedure of Arbitration in India

“In some cases, treating the parties in precisely the same manner may lead to unfair results.”83 The right to be treated equally in the sense of justice and fairness is sometimes recast as the right to present one’s case.84

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The Supreme Court of India in Sohan Lal Gupta v Asha Devi Gupta85 laid down the ingredients of a fair hearing as follows: “For constituting a reasonable opportunity, the following conditions are required to be observed: 1. Each party must have notice that the hearing is to take place.

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2. Each party must have a reasonable opportunity to be present at the hearing, together with his advisers and witnesses.

3. Each party must have the opportunity to be present throughout the hearing.

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4. Each party must have a reasonable opportunity to present evidence and argument in support of his own case.

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5. Each party must have a reasonable opportunity to test his opponent’s case by cross-​examining his witnesses, presenting rebutting evidence and addressing oral argument.

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6. The hearing must, unless the contrary is expressly agreed, be the occasion on which the parties present the whole of their evidence and argument.”

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An award will not be set aside on grounds that a party did not have a reasonable opportunity to present its case when the party has simply refused to participate in proceedings.86

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Accordingly, the High Court of Bombay held that where a party has been provided with several opportunities to defend itself and yet “refused to avail itself of such opportunity and made their stand clear consciously not to participate any further in the arbitration proceedings”, there can be no due process breach.87

83. Y. Derains and E. Schwartz, A Guide to the ICC Rules of Arbitration (2nd edn, Kluwer Law International 2005), p. 229. 84. D. Caron, L. Caplan and M. Pellonpaa, The UNCITRAL Arbitration Rules: A Commentary (Oxford University Press 2006), p. 29. 85. (2003) 7 SCC 492. 86. Swisher Hygiene Franchise Corp v Hi-​Gene Ltd (2009) 20 PRNZ 292, affirmed in Hi-​Gene Ltd v Swisher Hygiene Franchise Corp [2010] NZCA 359, [2010] NZSC 132, CA. 87. Perma Container (UK) Line Limited v 601 (2014) SCC Online Bom 575.

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Chapter 25—​​​Conduct of the Arbitration

If a party was not given an expert report relied upon by the arbitral tribunal, the award is liable to be set aside.88 However, if a party has ample opportunity to present evidence upon a particular issue in the case but fails to do so, it cannot dispute the award based on not having been able to present its case.89 The Court in Russel v Duke of Norfolk stated:

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“Whatever standard is adopted; one essential is that the person concerned should have a reasonable opportunity of presenting his case.”90

De Smith, Woolf, and Jowell explain that though concepts of a fair hearing in accordance with rules of natural justice will vary significantly in different contexts, the audi alteram partem rule sets minimum standards of fairness in adjudication.91

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What opportunity may be regarded as reasonable would depend on the practical necessity of the situation.92 A party should have the opportunity of adducing all relevant evidence on which he relies and the evidence of the opponent should be taken in his presence.93

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The party should be given the opportunity of cross-​examining the witnesses examined by the other party, and that no materials should be relied on against it without it being given an opportunity of explaining them.

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A reasonable opportunity to present a case goes beyond simply having time to speak at a hearing. The arbitral tribunal must consider the parties’ submissions.94

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In a Canadian case, an award was set aside where the arbitral tribunal allowed one party to develop a case different to its pleadings and adduce evidence that the other party had not been expecting. It was held that the arbitral tribunal had breached the rules of natural justice by allowing these “surprise tactics”.95

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88. Paklito Investment Limited v Klockner East Asia Ltd [1993] HKLR 39, at paras 57–​58. 89. Nanjing Cereals, Oils and Food Stuffs Import & Export Corporation v Luckmate Commodities Trading Ltd [1994] HKCFI 140. 90. [1949] 1 All ER 109, at para. 118, CA. 91. De Smith, Woolf, and Jowell, Judicial Review of Administrative Action (5th edn, Sweet & Maxwell 1995), pp. 431–​432. 92. Arthur John Spackman v Plumstead District Board of Works (1885) 10 App Cas 229; Re Gregson and Armstrong 70 LT 106; Board of Education v Rice [1911] AC 179, at para. 182, per Lord Loreburn; Local Government Board v Arlidge [1915] AC 120; Stafford v Minister of Health [1946] KB 621; Rex v Justices of Bodmin ex parte McEwen [1947] KB 321; Goold v Evans & Co [1951] 2 TLR 1189, CA; Marriott v Minister of Health 105 LJKB 125 confirmed in appeal in [1937] 1 KB 128, CA. 93. Trustees of Rotoaira Forest Trust v Attorney-​General [1999] 2 NZLR 452. 94. AKM v AKN [2014] SGHC 148. 95. Noble China Inc v Lei [1998] CanLII 14708 (ON SC), 42 OR (3d) 69.

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Law, Practice and Procedure of Arbitration in India

Similarly, the Supreme Court of India set aside a majority award on the ground, inter alia, that the arbitral tribunal in its award relied on new evidence that it raised sua sponte without granting the parties the prior opportunity to acquaint themselves with, and comment on, such evidence.96

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The English Court of Appeal has ruled that parties must be given the opportunity to present arguments on all the “essential building blocks” of the arbitral tribunal’s conclusion.97 The Singapore Court of Appeal in L W Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd98 set aside an additional award by the arbitral tribunal which did not hear the submissions of a party on whether the arbitral tribunal had such jurisdiction.

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Article 18 of the UNCITRAL Model Law gives the parties full opportunity to present their case. It has been suggested that the high standard inherent in the word “full” may lead to abuse by parties in calling an excessive number of witnesses or make unreasonably lengthy legal arguments.99

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However, the rule giving the parties full opportunity to present their case is not unrestricted. Chamber Three of the Iran-​US Claims Tribunal explained:

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“The Tribunal is unpersuaded that any party can credibly claim that it has been denied a ‘full opportunity of present [its] case’ given the procedural history of these Cases. The keyword is ‘opportunity’: The Tribunal is obliged to provide the framework within which the parties may present their cases, but is by no means obliged to acquiesce in a party’s desire for a particular sequence of proceedings or to permit repetitious proceedings.”100

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The parties cannot press whatever evidence they choose on the arbitral tribunal. The provision does not require the arbitral tribunal to keep hearing the matter ad nauseum.

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The arbitral tribunal is not obliged to allow an equal number of witnesses or an equal amount of time.101 It is also not required to receive evidence which is irrelevant to the issues in dispute. 96. Ssangyong Engineering & Construction Co Ltd v National Highways Authority of India (NHAI) (2019) SCC Online SC 67. 97. OAO Northern Shipping Company v Remolcadores de Marin Slp, The Remmar [2007] 2 Lloyd’s Rep 302, [2007] EWHC 1821 (Comm), at para. 22; ABB AG v Hochtief Airport GmbH [2006] 2 Lloyd’s Rep 1, at para. 70, adopted in TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd [2013] SGHC 186, at para. 63; see also Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] SGCA 28, [2007] 3 SLR(R) 86. 98. [2012] SGCA 57. 99. T. Sawada, “Conduct of the Hearings”, in M. Pryles and M. Moser (eds), The Asian Leading Arbitrators’ Guide to International Arbitration (Jurisnet 2007), p. 299. 100. Dadras International v Islamic Republic of Iran (1995) 31 Iran-​US CTR 127, at para. 144. 101. T. Sawada, “Conduct of the Hearings”, in M. Pryles and M. Moser (eds), The Asian Leading Arbitrators’ Guide to International Arbitration (Jurisnet 2007), p. 297.

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Chapter 25—​​​Conduct of the Arbitration

It may have to provide parties with some latitude in presenting their evidence, but if reasonable notice and a reasonable opportunity have been given, the arbitral tribunal should not shy away from preventing parties from derailing what would otherwise be a speedy process.

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The procedure operates to present two alternative versions of the truth. It is not the function of the arbitral tribunal to seek out the truth by indulging in speculation, its ideas, or pursuing enquiries or calling for and examining witnesses. The arbitral tribunal has to choose between two alternative versions of the truth, presented by the parties. It is for it to assess the correctness or otherwise of what is submitted and has the discretion to accept or reject the argument.

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The parties have an option to decide whether to hold oral hearings for the presentation of evidence and oral argument or whether the proceedings shall be conducted based on the documents and other material. The mode and manner of adducing documentary and oral evidence can be agreed upon by the parties.

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The parties by an express and irrevocable agreement can validly exclude their right to adduce any evidence at all on some or all of the disputed issues. However, it should be indicated in very cogent and clear words that they intend to give up their right to adduce evidence.102

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The arbitration hearing procedure is similar to that in a court hearing, that is, the claimant will make his claim and defend the counterclaim by the respondent, calling his witnesses and presenting his case. The respondent then follows, opening his defence, putting down his counterclaim, and calling his witnesses.

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Where the circumstances are such that a party is entitled to tender oral evidence, it has the right to adduce it in the normal way, namely by asking questions of the witness.103 The law governing the agreement to arbitrate will determine all matters of substance whereas the law relating to the procedure will govern procedural matters.104

102. Ritchie v W Jacks & Co Ltd (1922) 10 Ll L Rep 519, at para. 524, CA; Oakland Metal Co Ltd v D Benaim & Co Ltd [1953] 2 Lloyd’s Rep 192, at para. 199. 103. The trend in civil litigation for a witness statement to stand as that person’s evidence in chief, with only supplemental questions asked, considerably reduces the length of hearings. 104. Naviera Amazonica Peruana SA v Cia Internacional de Seguros del Peru [1988] 1 Lloyd’s Rep 116, at para. 119, CA (Eng), per Kerr LJ; South Carolina Insurance Co v Assurantie Maatschappij “de Zeven Procincien” NV [1987] AC 24, [1986] 3 All ER 487; International Tank and Pipe SAK v Kuwait Aviation Fuelling Co KSC [1975] QB 224, [1975] 1 All ER 242.

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[25.9] APPLICABILITY OF THE RULES OF NATURAL JUSTICE

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The two pillars of natural justice are encapsulated in the maxims nemo judex in causa sua and audi alteram partem.105 The powers of the arbitral tribunal are subject to the overriding rules of natural justice.106 The principle of natural justice is the foundation of any modern judicial system and its essence is fair trial by an impartial tribunal. An arbitration award may be challenged if it is made in breach of natural justice.107

In Gas & Fuel Corporation of Victoria v Wood Hall Ltd & Leonard Pipeline Contractors Ltd,108 Marks J helpfully distilled the essence of the two pillars of natural justice in the following terms:

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“The first is that an adjudicator must be disinterested and unbiased. This is expressed in the Latin maxim –​the nemo judex in causa sua. The second principle is that the parties must be given adequate notice and opportunity to be heard. This in turn is expressed in the familiar Latin maxim –​audi alteram partem. In considering the evidence in this case, it is important to bear in mind that each of the two principles may be said to have sub-​branches or amplifications. One amplification of the first rule is that justice must not only be done but appear to be done. Sub-​branches of the second principle are that each party must be given a fair hearing and a fair opportunity to present its case. Transcending both principles are the notions of fairness and judgment only after a full and fair hearing given to all parties.”

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These and many other rules are merely extensions or refinements of these two main principles which are the essential characteristics of natural justice and are the twin pillars supporting it.

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The Supreme Court of India has stated:

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“The aim of the rules of natural justice is to secure justice, or to put it negatively, to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. That is, they do not supplant the law of the land but supplement it.”109

105. Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR(R) 86. 106. Turner (East Asia) Pte Ltd v Builders Federal (Hong Kong) (No 2) [1988] 2 MLJ 502; Tan Tong Meng (Pte) Ltd v Artic Builders & Co (Pte) Ltd [1986] 2 MLJ 241, PC. 107. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 5-​036. 108. [1978] VR 385, at para. 396. 109. Union of India v Col. J N Sinha (1970) 2 SCC 458, at para. 8.

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However, the requirements of natural justice must depend on the facts and circumstances of each case, nature of the inquiry, the rules under which the arbitral tribunal is acting, the subject matter to be dealt with, and so forth.110

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There are certain guidelines to determine a breach of natural justice. The test requires courts to closely examine the merits of each award in terms of evidence and hearing rules. These elements ought to be present in every judgment or arbitral award.111

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The Court in Castel Electronics Pty Ltd v TCL Air Conditioner (Zhongshan) Co Ltd explained that in international arbitration, “real practical unfairness and injustice to the party resisting enforcement must be shown to refuse enforcement of an award by reason of a breach of the rules of natural justice”.112

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The Court of Appeal confirmed in Aircraft Support Industries Pty Ltd v William Hare UAE LLC113 that the Abu Dhabi award was enforced in part even though it had found a breach of natural justice in the other part of the award (because the arbitrators awarded the winning party a claim that had been initially made but not included in the statement of claim). The Court of Appeal held that partially void awards are generally not void altogether if the void portion is separate and divisible.

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[25.10] PROCEDURE IN ARBITRATION

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Parties are as free to include idiosyncratic terms of arbitration as they are in a contract short of authorising “trial by battle or ordeal, or, more doubtfully, by a panel of three monkeys”.114

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The parties to an arbitration agreement are also given the widest discretion to agree on any procedure that they prefer, either in advance or during the arbitration in line with the notion of party autonomy.

110. LDK Solar Hi-​Tech (Suzuhou) Co. v Hindustan Cleanenergy Limited (formerly Moser Bear Clean Energy Limited), High Court of Delhi, New Delhi, EX. APPL. (OS) 192/​2017, 4 July 2018; In Chairman, Board of Mining Examination and Chief Inspector of Mines & Anr. v Ramjee, (1977) SCC 2 256; K.L. Tripathi v State Bank of India 1984(1) SCC 43; Wade Administrative Law (5th edn), pp. 472–​475. 111. Castel Electronics Pty Ltd v TCL Air Conditioner (Zhongshan) Co Ltd (No 2) [2012] FCA 1214; see S. Suresh, “Application of Natural Justice in Arbitration: An Irreconcilable Legal Proposition”, available at http://​pulj.org/​t he-​roundtable/​application-​of-​natural-​justice-​i n-​arbitration-​an-​i rreconcilable-​l egal-​ proposition. 112. [2012] FCA 1214. 113. [2015] NSWCA 229. 114. Ahmad Baravati v Josepthal, Lyon & Ross Incorporated and Peter Sheib 28 F.3d 704 (7th Cir 1994), at para. 709.

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Such an agreement will be enforced unless it is so contrary to fundamental principles that it is treated as contrary to public policy,115 for example, an agreement on a procedure denying one or both of the parties the right to be heard.116

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Section 19 of the Arbitration Act provides that the parties are free to agree on the procedure to be followed, but failing such agreement the tribunal may, subject to the provisions of the Arbitration Act, conduct the proceedings in such manner as it considers appropriate.

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The arbitral tribunal has to follow a variety of procedures in conducting the arbitration which may include, for example, time and place of any proceedings including the hearing, pleadings or written statements of claim and defence, discovery of documents, costs, and time limits for the taking of evidence.

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The principle of party autonomy is the starting point governing the procedures to be followed and the choice of procedural rules is a key point of attraction for arbitration.117

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The procedure agreed upon by the parties must be consistent with the public policy of India. This allows the parties to design the procedural rules according to their specific needs and wishes. They may expressly or impliedly opt for a procedure to be adopted at the reference or delegate the decision to the arbitrator.

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For example, if the ICC Arbitration Rules are selected, the arbitral tribunal will have to draw up “terms of reference” which include a summary of the parties’ claims and particulars of the applicable procedural rules when it receives the file from the ICC Secretariat.118

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The terms of reference will also include a list of issues to be determined and are to be signed by the arbitral tribunal as well as the parties which reinforce the referral to arbitration.119 There is a procedural default when a party refuses to sign the terms of reference.120

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115. Naumann v Edward Nathan & Co Ltd (1930) 37 Ll L Rep 249, at para. 252, CA (Eng); London Export Corp Ltd v Jubilee Coffee Roasting Co Ltd [1958] 1 All ER 494, [1958] 1 WLR 271, affd [1958] 2 All ER 411, [1958] 1 WLR 661, CA (Eng); Trustees of Rotoaira Forest Trust v Attorney-​General [1999] 2 NZLR 452; Hi-​Gene Ltd v Swisher Hygiene Franchise Corp [2010] NZSC 132; Hebei Import & Export Corp v Polytek Engineering Co Ltd [1999] 1 HKLRD 665; Re Corporación Transnacional de Inversiones, SA de CV v STET International, SpA [1999] CanLII 14819 (ON SC); Uniprex SA v Grupo Radio Blanca, Case No 178/​2006—​4/​2004, CA, (Spain); Smart Systems Technology Inc v Domotique Secant Inc [2008] QJ No 1782 (Quebec). 116. Oberlandesgericht München, Germany, 34 Sch 26/​08, 22 June 2009. 117. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015) at para. 5-​057. 118. ICC Rules of Arbitration, art. 23(1). A similar procedure for a “memorandum of issues” was set up in the 2007 Singapore International Arbitration Centre (SIAC) Rules, r. 17. This provision has been omitted by the subsequent SIAC Rules. 119. Commonwealth Development Corp (UK) v Montague [2000] QCA 2522. 120. ICC Rules of Arbitration, art. 23(3).

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In ad hoc arbitrations, the parties may do so by preparing their own individual set of rules or, by adopting some standard arbitration rules of some arbitral institution. These arbitration rules may impose restrictions on party autonomy. For example, the AIAC Arbitration Rules (Revised 2018) incorporate the UNCITRAL Arbitration Rules, which provide:

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“Article 17(1): The parties must be treated with equality, and each party must be given a full opportunity of presenting his case; Article 29: If the arbitral tribunal appoints an expert, it must give the parties the opportunity to examine any document upon which the expert relied in producing his report, cross-​examine the expert at a hearing, and be given an opportunity to present their own expert witness on the points at issue.”121

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Otherwise, the parties can adopt a formal or informal procedure. It is for the parties to confer a narrow or wide jurisdiction on the arbitrator who must give effect to their agreement.

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In matters of substance as well of the procedure, the parties cannot validly adopt a procedure empowering the arbitrator that directly affects third parties who are not parties to the arbitration. For example, the arbitrator may direct the parties (or others under their control) to produce documents or to submit to examination.

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The arbitral tribunal does not have power to compel third parties that are not parties to the arbitration, or subject to the reference to arbitration, to pay damages or perform a particular action even if the parties have purported to confer such a power.122

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An Indian court may set aside an arbitral award if the arbitral procedure was not in accordance with the agreement of the parties unless such agreement is against the provisions of the Arbitration Act from which the parties cannot derogate.

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Under Section 48(1)(d), Indian courts may also refuse recognition and enforcement if “the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place”.123

121. See Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at paras 6.133–​6134. 122. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at paras 6.17–​6.18. 123. Arbitration Act, s. 48(1)(d).

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Further, an award conflicts with public policy particularly if it is induced by fraud or corruption may be set aside, or enforcement refused.124 The Supreme Court of India in ONGC Ltd v Saw Pipe125 held that in exercising jurisdiction, the arbitral tribunal cannot act in breach of some provisions of substantive law or the provision of the Arbitration Act.

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The composition of the arbitral tribunal should be in accordance with the agreement. The procedure which is required to be followed by the arbitrator should also be in accordance with the agreement. If there is no such agreement then it should be in accordance with the procedure prescribed in the Arbitration Act.

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[25.11] THE ARBITRAL TRIBUNAL IS THE MASTER OF PROCEDURE

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Arbitration has been likened to a ship, which may be owned by the parties. Just as a ship is owned by ship-​owners, the ship is under the day-​to-​day command of the captain. In the case of an arbitration, it is the arbitral tribunal who is in command.

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While the parties can always mutually agree to terminate the mandate of a particular arbitral tribunal and agree on its replacement, there will always be an arbitral tribunal in command with ultimate control.126

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Gary Born states that there may be rare occasions where an agreed procedure is fundamentally unfair and the arbitral tribunal’s duty is then to refuse to put it into effect,127 but without fundamental unfairness, the arbitral tribunal is bound to follow the wishes of the parties.128

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When the parties do not agree on the procedure themselves, the arbitral tribunal becomes the master of procedure129 subject to the rules of natural justice.130 This confers a wide range of powers on the arbitral tribunal to conduct the arbitral proceedings based on party autonomy, due process, and equality of treatment and avoiding delay and disruption.131

1 24. Arbitration Act, s. 34(2)(b)(ii); UNCITRAL Model Law, arts 34(2)(b)(ii) and 36(1)(b)(ii). 125. (2003) 5 SCC 705. 126. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 6.03. 127. G. Born, International Commercial Arbitration (3rd edn, 2020), p. 2306. 128. Williams QC, A. Kawharu, Williams & Kawharu on Arbitration (2011), at para. 11.15. 129. Arbitration Act, s. 19(3), subject to the other provisions of the Act. 130. See Tackaberry, Marriot QC, and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, 2003), at para. 2-​470; Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, 2015), at para. 5-​036; Williams QC, A. Kawharu, Williams & Kawharu on Arbitration (2011), at para. 11.3. 131. R. Rana and M. Sanson, International Commercial Arbitration (2011), p. 177.

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The Court in Amalgamated Metal Corp Ltd v Khoon Seng Co stated:

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“By appointing a sole arbitrator pursuant to a private arbitration agreement which does not specify expressly or by reference any particular procedural rules, the parties make the arbitrator the master of the procedure to be followed in the arbitration ... he has complete discretion to determine how the arbitration is to be conducted from the time of his appointment to the time of the award, so long as the procedure he adopts does not offend the rules of natural justice.”132 The Court in Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corp Ltd opined that:

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“... generally speaking, an arbitrator is the master of his own procedure. The courts, in my own experience –​and no authority has been cited to me otherwise –​do not ordinarily attempt to control the procedure in an arbitration. They do not ordinarily give directions to arbitrators and generally speaking, courts do not interfere with procedural orders made in the course of hearing of arbitration. It might of course be different if an arbitrator failed in his duty to act fairly, though normally one would expect such a matter to come before the court on the basis that there had been misconduct.”133

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The view that the arbitral tribunal is master of the procedure subject only to the provisions of substantive law or the provision of the Arbitration Act was adopted in ONGC Ltd v Saw Pipe.134

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In ad hoc submissions, parties often spell out the procedure for the appointment of the arbitral tribunal, the rules to be adopted, issues of costs and deposits, etc.

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An arbitral tribunal may find itself objecting to the procedure agreed upon by the parties. For example, in particularly acrimonious proceedings where both parties appear to agree to lengthy, expensive, and hostile procedures (such as excessive disclosure) that are not necessary to fairly resolve the dispute and which an arbitral tribunal could prevent by simply refusing to allow them.135 After being informed of the general nature of the issues, the arbitral tribunal must act judicially in adopting the procedure that it considers appropriate.136 1 32. [1977] 2 Lloyd’s Rep 310, at p. 317, per Lord Fraser of Tullybelton. 133. [1981] AC 909, at para. 985, HL, per Lord Diplock. See also Carlisle Place Investments Ltd v Wimpey Construction (UK) Ltd (1980) 15 BLR 109, at para. 116, per Goff J; McCarthy v Keane [2004] IESC 104. 134. (2003) 5 SCC 705. 135. J. Carter, “The Rights and Duties of the Arbitrator: Six Aspects of the Rule of Reasonableness, in ICC, The Status of the Arbitrator” (1995) 24 ICC Ct Bull Spec Supp, p. 31. 136. Henry Sotheran Ltd v Norwich Union Life Assurance Society [1992] ADRLJ 245.

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Law, Practice and Procedure of Arbitration in India

Lord Saville of Newdigate suggests that arbitrators “need to be aware not only of the procedures usual in their particular field or expertise but also of the general range of procedure available”.137 Unless there is misconduct or irregularity, the court will not interfere with the arbitral tribunal’s discretion in dealing with procedure and evidentiary matters during the arbitral proceedings on the basis that another arbitral tribunal might have done things differently.138

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The arbitral tribunal as master of its procedure has the discretion to design the procedure in accordance with the exigencies of the subject matter of the arbitration.

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The arbitral tribunal should try and tailor the procedure to the requirements of the specific dispute, rather than use one designed to cater to widely differing situations, as litigation procedures must.139 The arbitral tribunal has to be as flexible in catering for the wishes of the parties.

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[25.12] CHOICE OF ARBITRATION RULES

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Parties can use the procedural law at the seat of the arbitration or formulate their own procedural rules. They may, but are not required to, agree on a set of institutional140 or ad hoc rules141 to apply to their arbitration.142 None will be applicable if there is no agreement.

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Institutional arbitration rules empower the arbitration institution in getting the arbitration started, with a suitable arbitral tribunal constituted usually from its panel of arbitrators to preside over the dispute, assist the arbitral tribunal to keep the arbitration running without any hitches and thereafter, ensure timeliness and maintain quality control. The overall objective is to achieve an effective resolution of the parties’ dispute.143

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137. Lord Saville of Newdigate in “Introduction” to Bernstein, Tackaberry, and Marriott, Handbook of Arbitration (3rd edn, 1998), p. 9, at para. 1.20. 138. Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corpn Ltd [1981] 1 All ER 289; Bill Biakh K/​S A/​S and Bill Biali v Hyundai Corpn [1988] 1 Lloyd’s Rep 187; Three Valleys Water Committee v Binnie & Partners (a firm) (1990) 52 BLR 42. 139. Tackaberry, Marriott, and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson, Sweet & Maxwell 2003), at para. 2-​463. 140. Examples of Institutional Rules include The KLRCA Arbitration Rules, Singapore International Arbitration Centre (“SIAC”) Arbitration Rules, Hong Kong International Arbitration Centre (“HKIAC”) Administered Arbitration Rules, Korean Commercial Arbitration Board (“KCAB”), China International Economic and Trade Arbitration Commission (“CIETAC”), Beijing Arbitration Commission (“BAC”), The Japan Commercial Arbitration Association (“JCAA”), and Australian Centre for International Commercial Arbitration (“ACICA”). 141. Example of ad hoc rules is the UNCITRAL Arbitration Rules. 142. S. Greenberg, C. Kee, and J R Weeramantry, International Commercial Arbitration: An Asian-​ Pacific Perspective (Cambridge University Press 2011), p. 308. 143. M. McIlwrath and J. Savage, International Arbitration and Mediation: A Practical Guide (Wolters Kluwer Law & Business, 2010), p. 39, at para. 1-​070.

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Chapter 25—​​​Conduct of the Arbitration

Arbitration institutions worldwide keep abreast of the most recent developments in arbitration and perform useful administrative functions by employing skilled legal counsels who advise the arbitral tribunal and parties on administrative issues of arbitration practice. In administered cases, they often vet draft awards. They assist to minimise disruption by way of party misconduct and the non-​performing arbitral tribunal.

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Progressive arbitration institutions update their rules accordingly.144 The rules govern arbitration procedure unless the parties agree otherwise and normally empower the institution to administer the arbitral proceedings held under its auspices. Many have more than one set of rules which are designed for the particular speciality including expedited or fast track rules146 and short-​form rules for smaller claims.

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145

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Arbitration rules are generally simpler and more flexible than court rules. As a result, they are relatively easy to understand for parties of different nationalities, the proceedings are more easily focused on the substantive issues, and the parties can adapt the dispute resolution process to suit their relationship and the nature of their disputes.

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If no specific rules are indicated but the reference is made to an arbitration institution only, the reference generally implies that the parties have agreed on the rules of that institution.

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The reverse also applies. The presumption is that the arbitral institution will administer the arbitration if the parties have chosen that set of institutional arbitration rules.147

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When the arbitration rules are amended or revised between the time when the arbitration agreement is made to the time when the arbitration is commenced, the question that arises is which is the applicable version of the rules to the arbitration.

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144. The new Arbitration Rules of the American Chamber of Commerce for Brazil came into force on 9 October 2014; The new Arbitration Rules of the BAC came into force on 1 April 2015; HKIAC Updated Procedures for the Administration of Arbitration under the UNCITRAL Arbitration Rules became effective on 1 January 2015; New Arbitration Rules of the Netherlands Arbitration Institute came into force on 1 January 2015; The CIArb issued new Arbitration Rules, in force as of 1 December 2015; New SIAC Arbitration Rules in force as of 1 August 2016. A number of new arbitration institutions have been established in recent years: The National Commercial Arbitration Centre (Cambodia) was established in 2006; The Perth Centre for Energy and Resources Arbitration (PCERA) was launched in November 2014; the newly established Istanbul Chamber of Commerce Arbitration Centre launched in May 2015. 145. For example, the AIAC i-​arbitration Rules which are able to deal with disputes involving Shariah law. 146. For example, the AIAC Fast Track Arbitration Rules which contain an expedited procedure and are able to deal with normal and documents-​only arbitrations. 147. S. Greenberg, C. Kee, and J. R. Weeramantry, International Commercial Arbitration: An Asian-​Pacific Perspective (Cambridge University Press 2011), pp. 308–​309.

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Law, Practice and Procedure of Arbitration in India

The presumption is in favour of the latest or the most appropriate set of arbitration rules. The party which seeks the application of the earlier or the less appropriate version of the arbitration rules has the burden of proving its applicability.148 It is usual for parties to indicate expressly or implicitly what procedural rules will apply to their arbitration. If there is no such agreement, then the law of the seat of the arbitration will govern the arbitration proceedings.

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Most arbitration legislation particularly that based on the UNCITRAL Model Law provides for various fall-​back procedural provisions. Otherwise, the provisions of the domestic arbitral legislation will apply even if there are no fall-​back provisions.

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In ad hoc arbitrations, the procedure is usually in the hands of the parties. However, parties may agree to certain procedural matters which are not dealt with in the national arbitration laws at all by agreeing on the use of procedural or institutional rules. In such a situation, control sometimes passes early on to the arbitral tribunal.149

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Ad hoc arbitrations tend to be more flexible procedurally as they are not constrained by requirements set by arbitral institutions.

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Sutton explains that whether it is administered or not:

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“Arbitration under different rules is intended to provide a procedural framework for the conduct of the reference. They do not provide an exhaustive code designed to cover all points that might arise in the course of the arbitration, but rather set out the powers, duties and obligations of the tribunal and the parties so that they know what can and cannot be done, and by whom, in determining the procedure to be adopted in the particular reference. However, arbitration rules will normally provide a more complete code, for example by specifying time limits for the service of pleadings and appointment of the tribunal.”150

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Joachim Knoll adds as follows:151

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“Derogations from the agreed arbitration rules … do not pose a problem in the case of ad hoc arbitrations. They may, however, be viewed with a sceptical eye by institutions that may not accept to administer proceedings in accordance with a revised version of

148. Black and Veatch Singapore Pte Ltd v Jurong Engineering Ltd [2004] SGCA 30. 149. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 6.05. 150. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 5-​116. 151. J. Knoll, “Commentary on Chapter 12 PILS, Article 182 [Procedure: principle]” in M. Arroyo (ed.), Arbitration in Switzerland: The Practitioner’s Guide (2013), p. 102.

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Chapter 25—​​​Conduct of the Arbitration

their rules, at least to the extent that the revision touches upon essential parts of the procedure provided for by the institutional rules.” However, there may be situations where the chosen arbitration rules may not cover all the procedural issues that may arise.

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Gary Born adds that when the rules are not detailed enough or the parties cannot subsequently agree on the procedural details then the “arbitrators’ discretion determines the arbitral procedure … is another foundation of the international arbitral process”.152

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If a particular set of arbitration rules is chosen, it will be expressed in the arbitration agreement between the parties or the submission agreement made before or during the arbitral proceedings. An incorrect reference to the applicable arbitration rules may have an impact on the validity of the arbitration clause.

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However, some jurisdictions do not require a designation of an arbitral institution or its rules for an arbitration agreement to be valid.

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For instance, the arbitral tribunal in State Joint Stock Company (Uzbekistan) v State agency (India)153 found that “the parties did not make a mutual mistake by choosing an allegedly non-​existing institution, the International Chamber of Commerce, Geneva”.

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These words do not necessarily have to be read together and rather indicate an agreement for ICC arbitration in Geneva. The reference to “Reconciliatory and Arbitration Regulations” was harmless since the correct indication of arbitration rules is not a pre-​requisite for validity under Swiss law.

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Also, this designation was close to the official name of the ICC Rules in force between 1 January 1988 and 31 December 1997: “Rules of Conciliation and Arbitration”.154 The designation of an arbitral institution or its rules is not necessary under Swiss law for the validity of an arbitration agreement.

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The purpose of such rules is to maximise the powers given to arbitral tribunal and to set timetables for procedural steps in the arbitration in order to ensure rapid, efficient, and cost-​effective disposal of the dispute.

152. “Chapter 8: Procedural Issues in International Arbitration” in G Born, International Arbitration: Law and Practice (2nd edn, Wolters Kluwer 2015), at §8.03(7). 153. State Joint Stock Company (Uzbekistan) v State agency (India), Final Award, ICC Case No. 14667, 2011, in van den Berg (ed.), Yearbook Commercial Arbitration 2015 -​Volume XL (2015), pp. 51–​144. 154. Ibid, at para. 52.

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Law, Practice and Procedure of Arbitration in India

It is patently inadvisable for parties to arbitration proceedings to adopt any rules of court for the conduct of the arbitration as the rules relating to court proceedings are drafted for the court process, not the arbitral process. Doing so often leads to parties getting caught up in disagreements over procedural matters which inevitably stall the arbitration proceedings and undermine the advantages that arbitration was intended to provide in the first place.

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There are a plethora of arbitration rules including those like that of MCIA, ICC, SIAC, HKIAC, LCIA, and AIAC. They provide for institutional administration of the arbitrations, in which all of the early steps of the arbitration are carried out through the arbitral institution.

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This is in line with the concept of party autonomy, namely, that the parties are free to agree on how their disputes are resolved to subject to such safeguards for the public interest.

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Parties adopting arbitration rules for the conduct of the arbitration must nonetheless be careful that these rules do not contradict any provisions of the Arbitration Act unless the provision allows the parties to make their agreement. Also, parties must consider if such rules contribute towards the efficacy of the arbitral process and not contain seeds of potential pitfalls.

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While the ability to tailor procedures to individual disputes and to depart from court procedures has always been a feature of arbitration, it is important to recognise the fundamental similarities between arbitration and litigation.

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It has been held that arbitration is usually no more and no less than litigation in the private sector. The arbitral tribunal is called upon to find the facts, apply the law, and grant relief to one or other or both of the parties.155

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The arbitral tribunal may treat a party’s failure to comply with an applicable procedural rule as a waiver on the part of the defaulting party.156

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However, when parties do not expressly agree on a complete code of procedure, the procedure to be followed must be implied from the language of the arbitration

155. Northern Regional Health Authority v Derek Crouch Construction Co Ltd [1984] QB 644, [1984] 2 All ER 175, CA (Eng), per Donaldson MR. 156. J.R. Weeramantry, “Estoppel and the Iran-​United States Claims Tribunal” (1996) 27 Netherlands Yearbook of International Law 113, at pp. 114–​117.

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Chapter 25—​​​Conduct of the Arbitration

agreement, the surrounding circumstances of the reference and any custom or trade practice which is incorporated into the arbitration agreement.157 An award made by the arbitral tribunal in breach of the agreed procedure may be set aside on the basis that the parties have not agreed to be bound by an award made by the procedure adopted.158

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Where the arbitration agreement does not prescribe the procedure for the arbitration, the arbitral tribunal may determine the procedure to be followed for the conduct of the arbitration proceedings. In practice, the arbitral tribunal will advise the parties about the suitable procedures if they have not already agreed on the procedure they wish to adopt.

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A skilled arbitral tribunal will endeavour to make parties appreciate the available possibilities, and if those parties are reasonably open to suggestion, it may achieve an appropriate balance.

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In some complex construction disputes, detailed and lengthy procedures may be essential to achieve an accurate and just outcome. They may be inappropriate in the case of a simple dispute involving a relatively small sum of money.

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Frequently, in the heat of the dispute, parties, perhaps encouraged by their advisors, demand protracted and detailed proceedings under the impression that otherwise, they may not be able to present their case fully.

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Sadly, there is practically little that an arbitral tribunal can do to keep the proceedings short and simple in the face of the parties’ joint request for something the contrary. Agreeing on procedural matters and rules in advance may avoid this problem.

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[25.13] THE ADVERSARIAL APPROACH

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India being a common law jurisdiction (e.g. United States, Philippines, England and the former Commonwealth countries like Malaysia, Singapore, Australia, Brunei, Hong Kong, India, Pakistan, New Zealand, Sri Lanka, Nigeria, Tanzania, and South Africa)

157. London Export Corp Ltd v Jubilee Coffee Roasting Co Ltd [1958] 1 All ER 494, at para. 498, [1958] 1 WLR 271, at para. 278, per Diplock J. 158. K.S. Abdul Kader v MK Mohamed Ismail [1954] MLJ 231, CA; London Export Corp Ltd v Jubilee Coffee Roasting Co Ltd [1958] 1 All ER 494, at para. 497, [1958] 1 WLR 271, at para. 277, per Diplock J, cited in Corrigan v Durkan [2010] IEHC 477, at para. 20.

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Law, Practice and Procedure of Arbitration in India

typically adopts “adversarial” procedures, whereby each party has the opportunity to present its version of facts and law.159 Arbitration under the adversarial procedure160 which has been called “litigation without wigs”161 leaves the presentation of the case to the parties.

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The parties exchange formal pleadings which include the claim, the defence, and counterclaim, disclose documents in their power, possession, and control, call witnesses to present evidence orally who are then cross-​examined.

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The adversarial process will be familiar to Indian practitioners, as well as those from other common law jurisdictions. The parties then address arguments in support of their respective cases. In large disputes, this process can run up to 12 months or more.162

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It is generally accepted, even in civil law countries with inquisitorial procedures, that the adversarial approach guarantees a high quality of adjudication where there is a conflict of facts.163 The arbitral tribunal’s role is to decide on the parties’ case based on the facts and the law placed before it.

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However, the arbitral tribunal is allowed to intervene in the course of the hearing, for example, to put questions to the witness. However, it must be careful to ensure that the parties are given an opportunity to deal with any issue upon which it intends to base its findings.164

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The arbitral tribunal does not have the freedom to take on a fully inquisitorial role without the consent of the parties, a distinction that has been held to form one of the key differences between arbitrators and experts.165

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Simon Greenberg, Christopher Kee, and J. Romesh Weeramantry166 have usefully set out the common law adversarial procedure in resolving disputes as follows:

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159. “Chapter 8: Procedural Issues in International Arbitration”, in G. Born, International Arbitration: Law and Practice (2nd edn, 2015), pp. 155–​184. 160. Hyun Song Shin, “Adversarial and Inquisitorial Procedures in Arbitration”, available at https://​www.nuffield. ox.ac.uk/​users/​Shin/​PDF/​adv.pdf. 161. Lord Saville of Newdigate in “Introduction” to Bernstein, Tackaberry, and Marriott, Handbook of Arbitration (3rd edn, Thomson Sweet & Maxwell 1998), p. 9, at para. 1.21. 162. Subject to the provisions of the Arbitration Act. 163. J. Tackaberry and A. Marriot and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson Sweet & Maxwell 2003), at para. 2-​537. 164. D. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 5-​109. 165. Metalform Asia Pte Ltd v Holland Leedon Pte Ltd [2007] 2 SLR 268, CA. 166. S. Greenberg, C. Kee, and J. R. Weeramantry, International Commercial Arbitration: An Asian-​Pacific Perspective (Cambridge University Press 2011), pp. 319–​322.

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Chapter 25—​​​Conduct of the Arbitration

(1) Written submissions or pleadings –​contain a summary of the material facts, with no evidence and very little law. Generally, a consecutive filing of the statement of claim by the claimant, defence by the respondent, and a reply by the claimant.



(2) Witness statements –​witness statements are written in the name of the person and sworn by them to be true constitute prominent documents that are filed with the arbitral tribunal and provided to the other party. In witness statements, usually, key witnesses make a statement as to their knowledge or belief in relation to relevant facts or relation to the meaning and context of key documents. Statements of witnesses are typically filed at a later stage of the written process after both sides have exchanged pleadings setting out their claims and the facts alleged to support the claims.



(3) Documentary evidence –​documents are tendered as evidence through witnesses. This is done mainly through witness statement in which the deponent exhibits the document and states from his or her knowledge how the document came into existence, for example, the witness drafted it. Documents may also be tendered as evidence through witnesses giving oral evidence.



(4) Document requests –​request for broad and voluminous categories of documents may be granted. Frequently, if one party requests, the arbitral tribunal will order the other party to set out a list of relevant documents which it has in its possession –​whether or not they support or weaken the disclosing party’s case. The requesting party may then inspect and take copies of those documents. This process is often referred to as document discovery.



(5) Hearings –​a hearing would normally consist of opening statements, witness testimony (and cross-​examination) and closing arguments. Oral evidence is considered highly important. In most cases, witnesses appear at hearings and give evidence. The hearing is of critical importance because this is where the main legal arguments are submitted (and often won or lost) and where the witness evidence on the facts could make or break a case (usually depending on the arbitral tribunal’s assessment as to the credibility of the witness and his testimony). It is uncommon for hearings to take several weeks, months, and occasionally even years in a complex case.

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(6) Post-​hearing –​once the hearing is over, ordinarily no more exchanges with the arbitral tribunal take place until the award is delivered.



(7) Expert witnesses –​the arbitral tribunal do not usually appoint experts. It is up to a party to retain its expert witness to give an opinion as to, for

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Law, Practice and Procedure of Arbitration in India

example, a medical, scientific or technical issue that might be in dispute. Expert witnesses appear at the oral hearing to give evidence, are cross-​ examined by representatives of the opposing side and perhaps questioned by the arbitral tribunal.

[25.14] THE INQUISITORIAL APPROACH

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In an inquisitorial procedure, more familiar in civil law jurisdictions in Continental Europe, China, Japan, South Korea, Indonesia, Taiwan, Thailand, and Vietnam, the arbitral tribunal plays a more active role in investigating the case and conducting its own inquiries into the factual and legal issues with the assistance of the parties and their lawyers.

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The arbitral tribunal is less dependent upon the arguments put forward by the parties. It then arrives at its conclusion.

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With the inquisitorial approach, Gary Born states that there is “less scope for adversarial procedures –​such as party-​initiated discovery, depositions, lengthy oral hearings, counsel-​controlled witness examination and the like –​than is familiar to common law lawyers”.167

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The inquisitorial role of the arbitral tribunal becomes particularly apparent in oral hearings. It is quite common for the arbitral tribunal to commence by summarising the issues, and then to ask further questions of the parties in respect of facts, evidence, and possibly also the law.

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It is then up to the parties or their legal representatives to give further explanations and nominate further evidence, but this is not done in the form of opening and closing speeches as under the accusatorial system.

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Normally the arbitral tribunal, rather than the parties, or their legal representatives, is the primary questioner of the witnesses and expert witnesses. The parties and their lawyers merely put supplementary questions. It is up to the arbitral tribunal to see the proper minutes of the hearings are taken. Oral evidence is only very seldom taken down verbatim in the minutes. It is the arbitral tribunal who summarises the oral evidence for the minutes.168

167. “Chapter 8: Procedural Issues in International Arbitration”, in G. Born, International Arbitration: Law and Practice (2nd edn, Wolters Kluwer 2015), pp. 155–​184. See also G. Born, International Commercial Arbitration (2nd edn, Wolters Kluwer Law & Business 2014), pp. 2367–​2375. 168. See Dr Volker Triebel, “An Outline of the Swiss/​German Rules of Civil Procedure and Practice Relating to Evidence” (1982) 47 3 The Journal of the Chartered Institute of Arbitrators, p. 22.

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Chapter 25—​​​Conduct of the Arbitration

Principally, Phillipe Gastombide explains that:

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“The parties (and, obviously their counsel) must not interrupt, interpolate, try to influence obtaining evidence, is played by the judge or arbitrators. If the hearing take place in a friendly atmosphere, counsel usually obtain from arbitrators that they themselves will ask the witnesses specific questions –​but the arbitral tribunal is free to accept or reject the proposal made by counsel to indulge in such a practice.”169 An arbitral tribunal in an inquisitorial procedure will have much greater contact with witnesses, but should not contact actual or potential witnesses in the absence of counsel for both parties.170

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However, it’s been stated that this approach favours the arbitral tribunal initiating and perusing its theories and ideas about the case rather than allowing the parties to put forward their cases.171

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It is rare for an inquisitorial procedure is used in India and must be expressly agreed to by the parties either in the arbitration agreement or in the subsequent submission to arbitration.

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Simon Greenberg, Christopher Kee, and J Romesh Weeramantry172 have usefully set out the civil law inquisitorial procedure in resolving disputes as follows: (1) Written submissions or pleadings –​contain legal and factual arguments that are to be proved by the documents or witness statements and authorities attached to the pleadings. Generally, a consecutive filing of the statement of claim, a defence, and a reply.



(2) Witness statements –​factual witness statements are of limited probative value, and are usually brief. In France, for example, there are generally few witness testimonies in civil and commercial cases. When witnesses give testimony they ordinarily submit an attestation as to facts witnesses, which under Article 202 of the French Code of Civil Procedure must contain their

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169. See P. Gastombide, “Arbitration and a Recent French Decree (May 1980)” (1981) 47 1 The Journal of the Chartered Institute of Arbitrators, pp. 51–​52. 170. Norbrook Laboratories Ltd v Challenger [2006] EWHC 1055 (Comm). 171. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 5-​110; there is a trend towards this kind of approach in international commercial arbitrations; see Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 6.1691. 172. S. Greenberg, C. Kee, and J. R. Weeramantry, International Commercial Arbitration: An Asian-​Pacific Perspective (Cambridge University Press 2011), pp. 319–​322.

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Law, Practice and Procedure of Arbitration in India

name, their relationship with the parties and must be handwritten. There is, however, no specific sanction when these requirements are not satisfied. Under Article 202, witnesses must also state they are aware that any false statement is punishable by criminal sanctions. (3) Documentary evidence –​contemporaneous documentary evidence is usually attached to written pleadings and is considered as the most important evidence. Documents do not need to be confirmed by a witness. However, the court must be convinced of the document’s probity. If in doubt, it might ask for a document to be confirmed by a witness or expert.



(4) Document request –​a party’s obligation is to produce only documents on which that party relies. If a party requires documents held by the other party, it may ask the arbitral tribunal to order the other party to produce it. Requests for specific documents are regularly ordered, but general discovery requests are not. A party can, for example, request an arbitral tribunal to order the other parties to produce certain documents on which the outcome of a potential dispute might depend.



(5) Hearings –​a hearing may take place without witness testimony but this depends on the evidence submitted by the parties. If there is insufficient documentary evidence, the arbitral tribunal may call a witness. Or if a party has a strong desire to bring a witness, the arbitral tribunal may agree. The parties restate the arguments developed in their written submissions. Oral testimony is considered secondary to documentary evidence. The oral hearing would rarely exceed one or two days. Hearings are not always necessary and parties may agree that the arbitral tribunal will decide on the basis of the parties’ documents and written submissions.



(6) Post-​hearing –​for post-​hearing activity by the arbitral tribunal, see the item below on expert witnesses. Post-​hearing briefs are possible only at the request of the arbitral tribunal for additional information if needed to make a decision. Post-​hearing briefs may not be permitted simply because the parties want to file them.

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(7) Expert witnesses –​the arbitral tribunal may (on its motion or at the request of one of the parties) request the advice of one or more technical experts appointed by the arbitral tribunal during or after the hearing. The arbitral tribunal’s appointment is frequent in practice. The arbitral tribunal would draft the terms of reference of the experts. The arbitral tribunal is not bound by the expert’s report. Parties may hire their experts to dispute the findings of the arbitral tribunal appointed expert. Experts must respect the due process rights of the parties.

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Chapter 25—​​​Conduct of the Arbitration

[25.15] BALANCING THE ADVERSARIAL AND INQUISITORIAL PROCEDURE The adversarial approach of the common law system, as opposed to the inquisitorial approach of the civil law system, is normally preferred for the conduct of domestic arbitration proceedings.

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Mustill and Boyd state that certain types of disputes:

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“Such as those arising out of engineering and building contracts, are commonly conducted in a manner comparable to proceedings in the High Court. An arbitrator seized of such a dispute could not properly apply an informal procedure of the type recognised in shipping and commodity arbitrations, without first warning, and obtaining the consent of, the parties.”173

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An arbitral tribunal who takes the initiative and conducts an “inquisitorial” rather than an “adversarial” arbitration, for example, in conducting the examination of witness itself, runs the risk of being challenged for misconduct.174

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The inquisitional approach is something worth considering in arbitrations involving consumers where one party may be acting as a litigant in person and the arbitral tribunal may have to take a more hands-​on role in guiding proceedings.

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The parties, by submitting to arbitration under Section 19 of the Arbitration Act which provides the arbitral tribunal discretion to determine the procedure to be followed, except that the arbitral tribunal may adopt adversarial or inquisitorial procedures or such mixture as it thinks fit.

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It must be noted that these two approaches are not necessarily antithetical. Civil law procedures are frequently no less “adversarial” than common law procedures, while common law arbitral tribunals are often at least as “inquisitorial” as their civil law counterparts (e.g. in questioning witnesses or counsel).175

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International commercial arbitration often involves two or more parties based either in civil law or common law jurisdictions. Often opposing parties may be from different legal traditions, for example, the claimant may be from a civil law jurisdiction while the respondent is from a common-​law jurisdiction. Likewise, the arbitral tribunal may be composed of arbitrators both from civil law and common law jurisdictions.

1 73. Mustill and Boyd, Commercial Arbitration (2nd edn, Butterworths 1989), p. 287. 174. Ibid, pp. 306–​308. 175. “Chapter 8: Procedural Issues in International Arbitration”, in G. Born, International Arbitration: Law and Practice (2nd edn, Wolters Kluwer 2015), pp. 155–​184.

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Law, Practice and Procedure of Arbitration in India

The key advantage of international commercial arbitration is its ability to strike an appropriate balance in terms of procedure between the two legal traditions. When the arbitral tribunal comprises of both civil law and common law jurisdictions, there is a tendency for the arbitral tribunal to adopt the hybrid practices by taking appropriate aspects from each tradition.

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There have also been attempts to harmonise the two approaches for uniformity in international practice. This is reflected in the IBA Rules on the Taking of Evidence in International Arbitration 2010 and the IBA Guidelines on Conflicts of Interest in International Arbitration. Ultimately, each case needs its dynamic procedural approach which allows for the best and most efficient way to resolve the dispute, as is one of the aims of arbitration.176

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Simon Greenberg, Christopher Kee, and J Romesh Weeramantry177 have usefully set out the common hybrid approach in international arbitration procedure in resolving disputes as follows:

(1) Written submissions or pleadings –​contain facts, law, documentary evidence, witness statements, and expert reports on which the parties rely. Typically, two rounds of a consecutive exchange of such submissions. Simultaneous exchanges are also sometimes made.



(2) Witness statements –​witness statements are often attached to written briefs. Where international arbitration involves predominately common law lawyers and arbitrators, witness statements may be exchanged at a later stage rather than with the briefs. Article 4(5) of the IBA Rules of Taking Evidence requires witnesses to affirm the truth of the statement.



(3) Documents are attached to the written briefs of the parties or to witness statements or both. Documentary evidence (particularly if contemporaneous with the events in dispute) is given considerable weight and may be considered as the most important evidence.

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(4) Document requests –​orders to produce documents are increasingly being granted, most often in the limited manner as prescribed in Article 3 of the IBA Rules of Taking Evidence in International Arbitration 2010 (i.e. the requesting party must identify the document or narrow category of documents and explain why it is relevant). Broad requests are usually refused.

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176. “Chapter 8: Procedural Issues in International Arbitration”, in G. Born, International Arbitration: Law and Practice (2nd edn, Wolters Kluwer 2015), pp. 155–​184. 177. S. Greenberg, C. Kee, and J. R. Weeramantry, International Commercial Arbitration: An Asian-​Pacific Perspective (Cambridge University Press 2011), pp. 319–​322.

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Chapter 25—​​​Conduct of the Arbitration

(5) Hearings –​unless the case is relatively simple or the amount at issue does not justify the expense, a hearing is usually held. Arbitral institutions may have special rules for documents only or expedited arbitrations. Documentary evidence is generally given more weight than oral evidence from witnesses. The length of a hearing depends on the case but hearings are generally much shorter in duration in comparison with common law courts. A hearing of more than a week or two is considered long. Witnesses are usually cross-​examined.



(6) Post-​hearing –​It is quite common for the arbitral tribunal to accept post-​ hearing written briefs that comment on the evidence or issues that were raised at the hearing. These briefs may also recapitulate a party’s arguments generally.



(7) Expert witnesses –​the parties are free to appoint their expert witnesses. Experts are usually required to file written statements, give testimony at a hearing, and be subjected to cross-​examination. The arbitral tribunal sometimes appoints one or more independent experts to report to the arbitral tribunal. If so, any such report will normally be provided to the parties who may also request an opportunity to cross-​examine the expert. See, for example, Article 6 of the IBA Rules of Taking Evidence in International Arbitration 2010.

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International commercial arbitration is a mixed process amalgamating both the common and civil law using both adversarial and inquisitorial techniques.

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[25.16] CONCLUSION

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As discussed above, in arbitration, parties have the autonomy and flexibility to adopt a procedure by which they prefer to resolve their dispute. This flexibility is not absolute and is subject to the mandatory rules of the law applicable.

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In such a case, the discretion is with the arbitral tribunal to conduct the arbitration most effectively. Any failure to conduct the arbitration in accordance with the terms of the contract and the law applicable may constitute to ground for a challenge to the award. However, the Indian courts have taken an arbitration-​friendly approach and have been reluctant to set aside the award on minor procedural irregularities. Nevertheless, the tribunal must be cautious even when making a procedural decision by providing reasonable opportunity to attend hearings, opportunity to present their case and by adhering to the rules of natural justice.

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Law, Practice and Procedure of Arbitration in India

Moreover, keeping in mind the international character of the arbitration, the arbitral tribunal has to be sensitive to the cultural differences between the parties and counsels.

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There have been cases where the arbitral tribunal has to balance the common law and civil law approach while conducting the arbitration. This is usually done by the arbitrators to inculcate maximum agreement of the parties on procedural issues.

Chapter 26 PROCEDURE PRIOR TO THE HEARING [26.2] [26.3]

INTRODUCTION....................................................................................................................... 747 PRELIMINARY STEPS............................................................................................................... 749 ARBITRAL SECRETARY........................................................................................................... 750

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[26.1]

[26.4] NATURE OF THE CASE MANAGEMENT MEETING....................................................... 755 [26.5] NOTICE OF THE CASE MANAGEMENT MEETING........................................................ 757 [26.6] THE CASE MANAGEMENT MEETING................................................................................ 758 [26.7]

PROCEDURAL DIRECTIONS................................................................................................. 761

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[26.8] PLEADINGS IN ARBITRATION PROCEEDINGS............................................................... 762 [26.9] FORMAL REQUIREMENTS OF PLEADINGS..................................................................... 764

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[26.10] AMENDMENT TO PLEADINGS............................................................................................ 767 [26.11] ORDER OF WRITTEN STATEMENTS.................................................................................. 771

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[26.12] DISCOVERY................................................................................................................................ 771 [26.13] RESTRICTIONS ON DISCOVERY.......................................................................................... 776

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[26.14] INSPECTION............................................................................................................................... 779 [26.15] APPLICATION FOR ADJOURNMENTS............................................................................... 780

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[26.16] CONCLUSION............................................................................................................................ 783

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[26.1] INTRODUCTION

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The arbitration will commence as soon as the request for reference of the dispute to arbitration is received by the respondent unless the parties agree otherwise.1 The notice invoking arbitration is a written communication which initiates the arbitration proceedings.2

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Preliminary meetings at an early stage of a dispute are not customary in some countries.3 Nevertheless, especially where the parties and their representatives come from different legal systems or different cultural backgrounds, it is sensible for the arbitral tribunal to convene a meeting with the parties as early as possible in the proceedings.4

1. Arbitration Act, s. 21. 2. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 665. 3. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 366, at para. 6.41. 4. Ibid.

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Law, Practice and Procedure of Arbitration in India

Some institutional rules expressly provide for the convening of a “preliminary meeting”,5 or “case management conference”,6 whilst others7 provide for such a meeting to be convened at the discretion of the tribunal.8

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In modern practice, after the formation of the arbitral tribunal, the parties or their representatives are required to attend a preliminary hearing, or a case management conference is fixed by the tribunal.9 There is a growing trend to conduct these preliminary hearings over teleconference or video conference.10 If the dispute is of a kind that can be determined on the basis of documents only, that is, fast track arbitration, the tribunal may issue provisional directions.11

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In ad hoc arbitrations, issues such as the fees and expenses of the arbitrators are normally dealt with at this stage. In the preliminary hearing, the arbitral tribunal is given a brief overview of the dispute. The arbitral tribunal then proceeds to fix the calendar of the hearing within which the parties are required to exchange pleadings, lead evidence, and address submissions.12

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Section 24(2) of the Arbitration Act requires parties to serve an advance notice of hearing or meeting of the arbitral tribunal to the other party for the purposes of inspection of documents, goods, or other property.

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Redfern and Hunter outline that, whether an arbitration is ad hoc or institutional, the procedure and schedule for the following items is usually addressed during a preliminary meeting/​hearing:13

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“• preliminary issues –​such as jurisdictional objections, interim relief applications, and/​or bifurcation;

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• written submissions –​including number of rounds, their timing, structure, and length, and whether they are to be accompanied by documentary and witness evidence; SIAC Rules, art. 16(3); DIAC Rules, art. 22. ICC Rules, art. 24; see also Appendix IV (Case Management Techniques), ICC Rules. AAA Rules, art. 21; ICDR Rules, art. 16(2). Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 366, at para. 6.42. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 666. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 366, at para. 6.41. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 666. Ibid. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 366, at para. 6.47; Böckstiegel, Party autonomy and case management: Experiences and suggestions of an arbitration [2013] SchiedsVZ 1.

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5. 6. 7. 8. 9. 10. 11. 12. 13.

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Chapter 26—​Procedure Prior to the Hearing

• document production; • witnesses –​including their number, the timing of submission of witness statements or expert reports, and any use of tribunal-​appointed experts; • the pre-​hearing conference –​including the venue and timing; • the evidentiary hearing –​including its venue and timing; and

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• other procedural and administrative matters –​such as the role of the IBA Rules on the Taking of Evidence in International Arbitration, the chairman’s power to make procedural orders alone, the appointment.”14

[26.2] PRELIMINARY STEPS

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The appointment of the arbitral tribunal represents a crucial move in the arbitral process. Where proceedings are likely to culminate in a hearing, the arbitral tribunal will notify the parties of its appointment and call for a preliminary meeting to initiate a preliminary dialogue with the parties.15

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Preliminary meetings need not be carried out in person, with advances in video conferencing technology and telephone conferencing making such meetings possible without the inconvenience and expense of assembling the parties in a single location.

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The preliminary meeting should not take place until the arbitral tribunal has accepted the appointment. Otherwise, its appointment is not complete and it would have no jurisdiction to convene the preliminary meeting.

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The meeting is likely to help establish a framework for the arbitration proceedings. It may also enable the arbitral tribunal to ascertain from the terms of appointment as to whether the dispute is to be determined by documents only.

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It is usual for the representatives of the parties to discuss beforehand and present an agreed position to the arbitral tribunal on the question of its fees and expenses to avoid any possible embarrassment, but if no agreement can be made, parties must not shy away from discussing the issue with the arbitral tribunal.16

14. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 366, at para. 6.47. 15. Tackaberry, Marriot QC, and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomas Sweet & Maxwell 2003), at para. 2-​656. 16. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 4.203.

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Law, Practice and Procedure of Arbitration in India

[26.3] ARBITRAL SECRETARY The arbitral tribunal has no automatic entitlement to an arbitral secretary. Under most arbitration rules, if the arbitral tribunal wants one, it has to propose the appointment for the agreement of the parties. Inevitably, parties may agree as they may feel that they have no choice but to accept the arbitral tribunal’s request.

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The appointment of an arbitral secretary who may be a junior lawyer normally from the firm of the chair of the arbitral tribunal may be one of the preliminary steps taken with the consent of the parties. The arbitral secretary’s role and functions have their limits. In practice, his role usually is limited to providing procedural support.17

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It is now common in large arbitrations such as in ad hoc investment treaty arbitrations for an arbitral secretary to be appointed to provide administrative support in managing the arbitration.

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This is more likely to be the case in ad hoc arbitrations where no arbitral institutions are carrying out the administrative tasks. However, appointing an arbitral secretary is not a common practice in India, especially in domestic arbitrations.

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As the arbitral secretary, the person will conduct all communication with the parties and also, make logistic arrangements for the arbitration and attend the hearing but may not attend the deliberations of the arbitral tribunal unless the arbitral tribunal decides otherwise.

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Likewise, a member of the secretariat of the Permanent Court of Arbitration (“PCA”) will act as secretary to the tribunal in arbitrations administered by the PCA.

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Ad hoc arbitrations involving disputes of large sums or complexity which are not administered also regularly employ arbitral secretaries. They are tasked to handling the many of the administrative tasks.

17. C. Partasides, “The Fourth Arbitrator? The Role of Secretaries to Tribunals in International Arbitration” (2002) 18 2 Arbitration International, p. 147; ICC, Introduction of revised Note on the Appointment, Duties and Remuneration of Administrative Secretaries, 1 August 2012, available at http://​iccwbo.org/​products-​ and-​services/​arbitration-​and-​adr/​flash-​news/​introduction-​of-​revised-​note-​on-​the-​appointment,-​duties-​ and-​remuneration-​of-​administrative-​secretaries/​. 18. (Amended 2006); C. H. Schreuer et al., The ICSID Convention –​A Commentary (2nd edn, Cambridge University Press 2009), pp. 824 and 1210.

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The arbitral secretary will normally arrange, collect, and distribute the arbitral tribunal fees and expenses and also, send out communications on behalf of the arbitral tribunal. Such tasks are normally undertaken by the arbitral institution in an administered arbitration.

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These arbitral secretaries as the proverbial sorcerer’s apprentice may often devote considerable attention as well to assisting the arbitral tribunal in fully summarising the descriptions of the steps in the arbitration, the factual evidence, and the positions of the parties on matters at issue in the proceedings. The ICC issues guidelines19 on the appointment of arbitral secretaries as follows:

“(1) Prior to the appointment of the arbitral secretary, the arbitral tribunal must advise the parties of the person whom it wishes to appoint as arbitral secretary after having verified that such person satisfies the same requirements of independence as laid down in the rules for the arbitral tribunal.

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(2) The arbitral tribunal should inform the ICC Secretariat and the parties as early as possible of the estimated cost of the arbitral secretary so that this may be taken into account when the ICC Court fixes the advance on costs for the arbitration.

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(3) The duties of the arbitral secretary must be strictly limited to administrative tasks, and he must not influence in any manner whatsoever the decisions of the arbitral tribunal.”

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Also, Article 3 of the “Best Practices” for arbitral secretaries in the ICCA Reports No. 1: Young International Council for Commercial Arbitration (“ICCA”) Guide on Arbitral Secretaries (2014)20 states as follows:

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“Article 3. Role of the Arbitral Secretary

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(1) With appropriate direction and supervision by the arbitral tribunal, an arbitral secretary’s role may legitimately go beyond the purely administrative. (2) On this basis, the arbitral secretary’s tasks may involve all or some of the following:

19. “Appendix 4d: Note Concerning the Appointment of Administrative Secretaries by Arbitral Tribunals”, in Derains and E. Schwartz, Guide to the ICC Rules of Arbitration (2nd edn, 2005), pp. 421–​422. 20. Young ICCA GUIDE on Arbitral Secretaries, available at https://​pca-​cpa.org/​wp-​content/​uploads/​sites/​175/​ 2016/​01/​ICCA-​Reports-​No.-​1_​Young-​ICCA-​Guide-​on-​Arbitral-​Secretaries.pdf.

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Law, Practice and Procedure of Arbitration in India

(a) Undertaking administrative matters as necessary in the absence of an institution; (b) Communicating with the arbitral institution and parties; (c) Organizing meetings and hearings with the parties;



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(d) Handling and organizing correspondence, submissions and evidence on behalf of the arbitral tribunal; (e) Researching questions of law;

(f) Researching discrete questions relating to factual evidence and witness testimony; (g) Drafting procedural orders and similar documents;

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(h) Reviewing the parties’ submissions and evidence, and drafting factual chronologies and memoranda summarizing the parties’ submissions and evidence; (i) Attending the arbitral tribunal’s deliberations; and

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Article 4. Costs

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(j) Drafting appropriate parts of the award

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(1) As a general principle, the use of an arbitral secretary should reduce rather than increase the overall costs of the arbitration.

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(2) The remuneration of the arbitral secretary should be reasonable and proportionate to the circumstances of the case and should be transparent from the commencement of the arbitration.

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(3) Unless otherwise determined by the arbitration institution or agreed upon by the parties, the remuneration and reasonable expenses of the arbitral secretary should be paid:

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(i) out of the arbitral tribunal’s fees where the arbitral tribunal is paid on the basis of the amount in dispute; or (ii) by the parties where the arbitral tribunal is paid on an hourly basis.”

Michael Feit and Chloé Terrapon Chassot add that: “Some voice concerns that arbitral secretaries who perform substantive legal work may eventually act as the ‘fourth arbitrator’, a term often used when describing

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Chapter 26—​Procedure Prior to the Hearing

the improper influence an arbitral secretary may have on the decision-​making process.”21 It is of legitimate concern that an arbitral secretary may in fact exert a more substantive role when interacting with the arbitral tribunal given the scope of the work.

Nigel Rawding, Gregory Fullelove, et al. explain that:

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There is the real risk that the arbitral secretary becomes the de facto fourth arbitrator, perhaps unwittingly in exerting undue influence on the arbitral tribunal arising from his familiarity with the facts and opinions on the merit of the case.

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“The fees of the administrative secretary may be fixed by the parties, and paid directly by them as a cost in the arbitration, or drawn from the fees of the arbitrator(s). Importantly, the administrative secretary should provide support to the arbitral tribunal but not usurp its substantive functions.”22

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The former shareholders of Yukos Oil Company against the Russian Federation, the Ministry of Finance of the Russian Federation argued, amongst others, that:

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“‘The assistant to the arbitrators, who the tribunal had previously stated would be responsible only for administrative tasks, in fact billed the parties for more hours than did any of the arbitrators’, and that ‘the tribunal must therefore have impermissibly delegated to the assistant certain of the arbitrators’ personal responsibilities, including analysing the evidence and applicable law, participating in deliberations, and preparing the arbitral awards’.”23

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The Swiss Federal Supreme Court24 in May 2015 dealt with the proper use of the arbitral secretary and held as follows:

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21. M. Feit and C.T. Chassot, “The Swiss Federal Supreme Court Provides Guidance on the Proper Use of Arbitral Secretaries and Arbitrator Consultants under the Swiss lex arbitri: Case Note on DFC 4A_​709/​2014 dated 21 May 2015” (2015) 33 4 ASA Bulletin, p. 898; cf. M. Polkinghorne and C. B. Rosenberg, “The Role of the Tribunal Secretary in International Arbitration: A Call for a Uniform Standard” (2014) 8 2 Dispute Resolution International, p. 107; Kyriaki Karadelis, “The Role of the Tribunal Secretary” (2011) Global Arbitration Review, 21 December. 22. N. Rawding, G. Fullelove, et al., “Chapter 18: International Arbitration in England: A Procedural Overview” in J. D. M. Lew, H. Bor, et al. (eds), Arbitration in England, With Chapters on Scotland and Ireland (2013), pp. 18–​26. 23. Press release by the Ministry of Finance of the Russian Federation dated 6 February 2015, available at http://​ old.minfin.ru/​en/​news/​index.php?id_​4=24358. 24. M. Feit and C. T. Chassot, “The Swiss Federal Supreme Court Provides Guidance on the Proper Use of Arbitral Secretaries and Arbitrator Consultants under the Swiss lex arbitri: Case Note on DFC 4A_​709/​2014 dated 21 May 2015” (2015) 33 4 ASA Bulletin, pp. 897–​917.

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Law, Practice and Procedure of Arbitration in India

“(1) The prohibition to delegate the arbitral tribunal’s task does not necessarily exclude the possibility to retain assistance, such as by the arbitral secretary or the consultant; (2) the parties can exclude the possibility of the appointment of an arbitral secretary either in the arbitration agreement or in a later agreement;

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(3) it is generally accepted that in an international arbitration the arbitral tribunal can appoint an arbitral secretary, even though Chapter 12 of the Swiss Private International Law Statute does not expressly mention this possibility;

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(4) As regards the arbitral secretary’s duties, they are similar to the court clerk’s duties in state court proceedings, such as organising the exchange of submissions, preparing the hearings, taking minutes of the hearings, preparing accounts of the costs and related work. It is not excluded that the arbitral secretary provides a certain assistance in the drafting of the award under the control of and in accordance with the directions of the arbitral tribunal (or, if the decision is not unanimous, with the majority of the arbitral tribunal), which requires that the arbitral secretary assists at the hearings and the deliberations of the arbitral tribunal. Without a corresponding agreement by the parties, the arbitral secretary must however refrain from exercising any judicial function, which remains to be the privilege of the arbitrators.”25

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ICCA Reports No. 1: Young ICCA Guide on Arbitral Secretaries (2014) sets out the boundaries on the use of arbitral secretary as follows:

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“In order to minimize the risk of diluting the arbitrators’ personal mandate, however, tribunals must closely instruct and supervise the arbitral secretary. Ultimately, it should be left to the discretion of the tribunal to determine what duties and responsibilities can appropriately be entrusted to the arbitral secretary, taking into account the circumstances of the case and the arbitral secretary’s level of experience and expertise. If an arbitrator exercises poor judgment in determining what tasks to assign to the arbitral secretary, it reflects badly on the institution of arbitral secretaries.”26

In summary, the arbitral secretary does not play a substantive role in the work of the arbitral tribunal. The arbitral secretary cannot take part in the questioning of counsel or witnesses at the hearing.

25. Ibid, p. 901. 26. “Section 2: Best Practices for the Appointment and Use of Arbitral Secretaries” in ICCA Reports No. 1: Young ICCA Guide on Arbitral Secretaries, Vol. 1 (2014), pp. 10–​11.

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Chapter 26—​Procedure Prior to the Hearing

The arbitral secretary is not a member of the arbitral tribunal. Thus, he is not involved in the deliberations of the arbitral tribunal to determine the dispute. It is only natural that the arbitral secretary is also obligated to provide the same level of disclosure of possible conflicts as that provided by the arbitral tribunal.

[26.4] NATURE OF THE CASE MANAGEMENT MEETING

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Case management or preliminary meetings are generally not legally required. However, it is the first meeting the arbitral tribunal will hold with the parties or their representatives.

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Its effectiveness stems from the fact that the arbitral tribunal, parties, and their lawyers have face-​to-​face discussions, including remote contact either through a virtual conference or telephone conference.27

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The case management or preliminary meeting is part of the reference. Its main purpose is to set the parameters of the arbitration. It can offer all who are concerned, a valuable opportunity to negotiate as they may have different expectations as to how the proceedings should be conducted. It is not far-​fetched to say that this meeting forms the basis of most successful arbitrations.28

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Occasionally, the arbitral tribunal may be attracted to the idea of proceeding directly to the hearing proper. It is advisable that such an approach is considered only in cases with limited factual disputes, or for smaller disputes where attempts to reduce costs must be made then a preliminary meeting may be dispensed with together.

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The parties can provide summaries or statements of the case at this early stage so that the arbitral tribunal is informed about the nature of the dispute. This allows the arbitral tribunal to assess the appropriate procedure for it to adopt.

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This can serve to make the case management meeting much more productive and in practical terms would be eminently workable if the arbitral tribunal is clear that it will not hold a party to its original case summary.29

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A case management meeting also serves to satisfy the arbitral tribunal that it is properly appointed and consider submissions from the parties as to the procedures required to be completed before it can make the award and the timetable for those procedures.

27. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 5-​126. 28. D. A. Davis, “A View of the London Maritime Arbitration” (1986) 52 Arbitration 150; Howard Holtzman, “What an Arbitrator can do to Overcome Delays in International Arbitration” (1986) 52 Arbitration 169. 29. Avoiding concerns about pleadings, waiver and so on; Tackaberry, Marriot QC, and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson Sweet & Maxwell 2003), at para. 2-​660.

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Law, Practice and Procedure of Arbitration in India

A. W. Shilston states that in considering what procedure to be adopted for the case management meeting, it must be seen:

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“Whether based on an exchange of informal ad hoc statements, or pursuant solely to oral discussion at the meeting, through tactful questioning, the arbitrator should endeavour to estimate the nature of the business problem to be solved, and the order of the money claim in dispute. It is usually far better if lawyers have not set the scene for the arbitration through formal documentary exchanges before the arbitrator appears on the scene. Opportunity should be given for a procedure to be devised by the arbitrator, after full discussion, which is likely to be timely and economical in the engagement of human resources.”30

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Some institutional rules explicitly include provisions for case management meeting or preliminary meetings now.

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For example, Article 19.3 of the Arbitration Rules of the Singapore International Arbitration Centre (“SIAC”) 2016 provides for the convening of a “preliminary meeting”, Article 24 of International Chamber of Commerce (ICC) Rules of Arbitration 2021 provides for a “case management conference”.

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Others, such as Article 20 of American Arbitration Association (“AAA”) International Arbitration Rule and Article 20(2) of International Centre for Dispute Resolution (“ICDR”) International Arbitration Rules states that a meeting to can be convened at the discretion of the tribunal.31

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Articles 35(5) and 37(1) of the CIETAC Arbitration Rules 2015 provide:

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“‘that the arbitral tribunal may if it considers it necessary, … hold pre-​hearing conferences.’ It also requires that that ‘parties shall be notified of the date of the first oral hearing at least twenty (20) days in advance of the oral hearing’”.

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Amongst Indian arbitral institutions, only the Mumbai Centre for International Arbitration Rules, 2016 provides for a preliminary meeting.32

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In practice, case management meetings proceed through various stages. The arbitral tribunal in certain cases arranges to meet privately before meeting the parties.33

30. A. W. Shilston, “The Evolution of Modern Commercial Arbitration” (1987) 4 2 Journal of International Arbitration, pp. 45–​76. 31. “Chapter 8: Procedural Issues in International Arbitration” in G. Born, International Arbitration: Law and Practice (2nd edn, Wolters Kluwer Law & Business 2015), pp. 155–​184, at para. 6.42. 32. Mumbai International Arbitration Centre Rules, 2016, r. 21(2). 33. “Chapter 6. Conduct of the Proceedings” in Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), pp. 353–​414, at para. 6.43.

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Chapter 26—​Procedure Prior to the Hearing

The intention is for the arbitral tribunal to issue an order for directions immediately following such a meeting that will assist in the efficient and timely completion of the various tasks that need to be undertaken before the award can be made.

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However, in some cases, the arbitral tribunal may wish to proceed directly to ordering parties to outline their cases in written submissions. In other cases, the arbitral tribunal may request a summary of each party’s case before the commencement of this preliminary meeting.

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When the parties or their representatives have a reasonable understanding of arbitration procedures, they should be invited to contribute to how the arbitration should be conducted. Parties may agree among themselves on the procedure and deadlines subject to the arbitral tribunal’s approval.

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At this stage of the proceedings, they should know more about the dispute and differences than the arbitrator. A preliminary meeting may nevertheless be useful in eliminating possible future misunderstanding about the scope of the reference and the manner in which the arbitration is to be conducted.

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[26.5] NOTICE OF THE CASE MANAGEMENT MEETING

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The arbitral tribunal will write to the parties calling for a case management meeting. The notice convening the case management meeting requires careful drafting and would normally enclose an agenda and a draft procedural order.

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The notice would require the parties to attend the case management meeting either in person or by a representative to address the arbitral tribunal.

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Relevant items in the agenda include any objection to the composition of the arbitral tribunal or its jurisdiction, setting time limits for pleadings, discovery and inspection of documents, fixing of a time and place for the hearing, filing and exchange of expert reports, and preparation of an agreed bundle of documents.

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It may also consider ways and means of curtailing the proceedings by, inter alia, admitting issues, whether or not there will be a transcript of the record and, if so, the arrangement of payments for it, desirability of exchanging witness statements in advance and opening and closing submissions.34

34. “Chapter 6. Conduct of the Proceedings” in Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), pp. 353–​ 414, at para. 6.164; see M. Moser, “The ‘Pre-​Hearing Checklist’: A Technique for Enhancing Efficiency in International Arbitral Proceedings” (2013) 30 J Intl Arb 155.

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Law, Practice and Procedure of Arbitration in India

[26.6] THE CASE MANAGEMENT MEETING The procedure and schedule for the case management meeting may include the following:35 (1) Preliminary issues such as jurisdictional objections, interim relief applications, and/​or bifurcation;



(2) Preparation of the “terms of reference” if the ICC arbitration rules are applicable;



(3) Written submissions including the number of rounds, their timing, structure, and length, and whether they are to be accompanied by documentary and witness evidence;



(4) Document production;



(5) Witnesses including their number, the timing of submission of witness statements or expert reports, and any use of tribunal-​appointed experts;



(6) The pre-​hearing conference including the venue and timing;



(7) The evidentiary hearing including its venue, dates, and sitting hours;



(8) Other procedural and administrative matters such as the role of the International Bar Association (“IBA”) Rules on the Taking of Evidence in International Arbitration 2010, the chairman’s power to make procedural orders alone, the appointment of an arbitral secretary, and the means of communication with the tribunal; and



(9) Parties may also consult the UNCITRAL notes on Organizing Arbitral Proceedings for further guidance.36 These notes contain a list of matters that the parties and tribunal can consider when establishing procedural rules for their arbitration.

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Unlike the local courts in India, there is no requirement to use the national languages or any other language in arbitrations. It is usual that English (unless any other language is preferred by the parties) is used in arbitration proceedings for the delivery of pleadings of the parties, the hearings, and any award decision or communication by the arbitrator.

35. “Chapter 6. Conduct of the Proceedings” in Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), pp. 353–​414, at para. 6–​47. 36. UNCITRAL Notes on Organizing Arbitral Proceeding, United Nations, New York 2016. Initially adopted by UNCITRAL in 1996 and updated in 2016, the Notes are designed to assist arbitration practitioners by providing an annotated list of matters on which an arbitral tribunal may wish to formulate decisions during the course of arbitral proceedings, available at https://​ uncitral.un.org/​ sites/​ uncitral.un.org/​ files/​ media-​ documents/​uncitral/​en/​arb-​notes-​2016-​e.pdf.

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Chapter 26—​Procedure Prior to the Hearing

The parties are free to agree on the language of the arbitration, failing which Section 22 of the Arbitration Act empowers the arbitrator to decide on the language. Article 22 of the MCIA Rules provide that “subject to an agreement by the parties, upon the formation of the tribunal and unless the parties have agreed otherwise, the tribunal shall determine the language(s) to be used in the proceedings.”

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An arbitration can therefore be conducted, and an award made entirely in the language the parties agree on.37 Testimony can be given in the National Language or even vernacular languages.38

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In the case of the latter, translations can be arranged as part of the proceedings. The arbitral tribunal is empowered to demand proof of authenticity of translation if the matter is in doubt.39

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Language can be an issue in some international commercial arbitrations especially if they involve parties speaking different languages. The importance of language means that parties should be proactive in reaching some agreement on the language or languages of the arbitral proceedings.40

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In domestic arbitration, a typical agenda for a preliminary meeting will include such matters as identification of the parties and their representatives, confirmation of the arbitration agreement, and applicable arbitration rules (if any).

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It also includes the determination of the interlocutory and procedural powers available, delivery of pleadings, agreement on documents, witnesses and expert witnesses, hearing dates for the reception of evidence, the determination whether a reasoned award is required, general issues relating to the arbitration, venue, and arbitral tribunal’s fees.

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Some of the matters require decisions which can be the subject of the agreement between the parties or, in the absence of agreement, determined by the arbitrator.

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After the actual issues have been identified in the meeting, written preparation of claims and defences can then begin. The programme of the arbitration can be

37. Arbitration Act, Part II. If an award is issued otherwise than in English, it has to be translated and certified correct by a diplomatic or consular agent of the country to which the party who seeks to rely upon the award belongs or by a sworn translator of the country where the award is sought to be relied upon. 38. Arbitration Act, s. 22(4). The arbitral tribunal may order that any documentary evidence shall be accompanied by a translation into the language agreed. 39. E Rotheray & Sons Ltd v Carlo Bedarida & Co [1961] 1 Lloyd’s Rep 220. 40. MCIA Arbitration Rules, 2016, art. 22.

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Law, Practice and Procedure of Arbitration in India

monitored and adjusted with further interlocutory meetings, as necessary, prior to the actual hearing. The arbitral tribunal, by maximising the advantages of interlocutory activity and the overall economy in the conduct of the arbitration, may be able to minimise the length of the oral hearing and enter right into the substance of the case.

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The principal purpose of preliminary meetings is to give the arbitral tribunal an opportunity to evaluate the arbitral problem and, as an adviser on the procedure, ensure that the problem-​solving function is carried out in an economical and timely fashion with the use of appropriate resources.41

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The meeting is certainly not an opportunity for the parties to present evidence or to make speeches. The parties should not bring large numbers of persons to attend the preliminary meeting, However, the arbitral tribunal may not be able to prevent their attendance.

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Third parties or their representatives should not attend the preliminary meeting. The exception is when with the permission of the parties, a junior arbitrator may attend as an observer for educational purposes.

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The preliminary meeting itself will be attended by the lawyer or representative with, perhaps, one or two from the party who instructs him. The person representing the parties should have sufficient authority and knowledge of the case to take on the spot decisions.

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The meeting is not the occasion for arguing the substantive disagreements between the parties other than to explain the subject matter of the dispute. It may also be the first occasion on which the parties have met for some time.

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As the seriousness of the position they have reached and the length and expense of the arbitration stretching before them becomes apparent during the meeting, they may wish to consider settling their differences shortly after the meeting, and the arbitral tribunal may wish to make provisions for a short discussion between the parties if it seems appropriate. Preliminary meetings can be held anywhere where it is convenient. The venue should be located where there will be no interruption and where there is sufficient space for all attendees since privacy is important.

41. A. W. Shilston, “The Evolution of Modern Commercial Arbitration” (1987) 4 Journal of International Arbitration 45, at pp. 65–​66.

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Chapter 26—​Procedure Prior to the Hearing

It can even be held at the arbitration centre, the arbitrator’s office, the lawyers’ offices, and hotels. All this is subject to the agreement of the parties and the arbitral tribunal. Usually, preliminary meetings conclude in a couple of hours or at the maximum take half a day. Therefore, a reasonable care must be taken to ensure parties and the arbitrators do not have to stay overnight. This should be done for more time and cost-​ efficient conduct of the proceedings.

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The arbitral tribunal will then work through the agenda item by item. The arbitral tribunal would have forwarded the agenda to the two parties or their representatives in advance, and each party is given the opportunity to address it on those items and, wherever possible, an agreement be obtained.

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It is common for parties to have a large measure of agreement on most of the items. Sometimes the parties’ representatives are in contact with each other upon receipt of the agenda and will have agreed on the timetable for the arbitration proceedings. The parties are free to agree on what they can and the arbitrator is bound by such agreements.

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The arbitral tribunal must decide if the parties disagree on any matter under consideration at the preliminary meeting. However, it must only do so after hearing both parties. It is normal for the arbitral tribunal to give the decision then and there.

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All the decision with or without the agreement of the parties is recorded in an “Order for Directions” following the preliminary meeting. However, the members of the arbitral tribunal must be careful (especially the presiding arbitrator) not be to make any rulings at the preliminary stage affecting a party which may amount to unfair treatment.

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In complex disputes, it is common to convene more than one preliminary meeting. There will be times when one party has not kept to the programme.

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There will be submissions from that party for an extension of time. This submission may be heard at a further meeting when the other party is given the opportunity to oppose or agree with the particular submission. Other problems may also arise during the preparation for the hearing. It will be necessary for a further meeting so submissions can be received from the parties. After hearing submissions, the arbitral tribunal will make a determination and give directions to the parties.

[26.7] PROCEDURAL DIRECTIONS Following the case management meeting, the arbitral tribunal will normally issue procedural directions or a provisional timetable for the general conduct of the arbitration,

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Law, Practice and Procedure of Arbitration in India

including an initial timetable, the form which the arbitration is to assume, rules of evidence, and whether proceedings are to be oral, documents only, or in the form of an inspection.

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Sometimes a formal document is issued with the heading of “Order for Directions” or “Procedural Order No. 1”. In certain cases, the arbitral tribunal might send a draft procedural order before the case management meeting to give a structure of things to be discussed during the meeting.

Subsequently, the arbitral tribunal may issue other interlocutory orders in the course of the arbitration. There is no appeal procedure for a party against the order for directions.

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The arbitral tribunal’s decision on these matters is final.42 An arbitral tribunal is not obliged to give reasons for interlocutory decisions and generally should not do so.

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The Court in Bill Biakh K/​S A/​S and Bill Biali K/​S A/​S v Hyundai Corporation held that it had no inherent jurisdiction to correct procedural errors.43 There is only power for an award to be remitted and not a pre-​award ruling.

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[26.8] PLEADINGS IN ARBITRATION PROCEEDINGS

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Once the procedure to be followed in the arbitration is established, usually, the first step is to exchange of pleadings between the parties.

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The claimant is normally the first party to file pleadings which may take the form of a statement of the case, memorial, claims submissions, or points of claim. Usually, pursuant to the submission of the claimant, the respondent gets its turn to file the statement of defence.

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Philip Yang refers to the first three terms as informal pleadings which include the factual and legal arguments as well as documentary evidence.44

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On the other hand, formal pleadings are a term used for the documents such as the points of claim, points of defence and counterclaim (if any), and points of reply, in which the parties set out their claims and the facts which they intend to prove and on which they will rely upon.

42. Ocean Laser Shipping Ltd v Charles M Willie & Co (Shipping) Ltd, The Smaro [1999] 1 Lloyd’s Rep 225, per Rix J. 43. [1988] 1 Lloyd’s Rep 187. 44. Philip Yang, “The Organisation of International Arbitration Proceedings” in M. Pryles and M. Moser (eds), The Asian Leading Arbitrators’ Guide to International Arbitration (Jurisnet 2007), p. 187.

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Chapter 26—​Procedure Prior to the Hearing

Pleadings must state all of the facts relied on in support of the party’s case and the remedies sought with as much particularity as will alert the other party to the case they have to meet.45 Pleadings do not state or summarise the evidence that will be called in support of the allegations, nor do they state points of law which will be relied on or argued.

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In summary, pleadings should state facts and not plead law, avoid a recitation of evidence, contain material facts and material facts only; and be in as concise a form as possible.46

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These will be familiar to litigators as they essentially reflect the pleadings in court. They are brief in style and refer to the type of written statements required in court proceedings which set out all the matters claimed.

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The Civil Procedure Code47 mandates pleadings to state material facts and particulars (when necessary) of the dispute between the parties.48

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Although strict rules of pleadings envisaged by the Civil Procedure Code do not apply to arbitral proceedings,49 the principles have general applicability to all pleadings.50

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“(a) First. To define with clarity and precision the issues or questions which are in dispute between the parties and fall to be determined by the court … (b) Secondly. To require each party to give fair and proper notice to his opponent of the case he has to meet to enable him to frame and prepare his own case for trial. (c) Thirdly. To inform the court what are the precise matters in issue between the parties which alone the court may determine, since they set the limits of the action which may not be extended without due amendment properly made … (d) Fourthly. To provide a brief summary of the case of each party, which is readily available for reference, and from which the nature of the claim and defence may be easily apprehended, and to constitute a

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45. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 5-​133; Subraj & Co. v State of H.P. AIR 1982 NOC 115. 46. Mustill and Boyd, Commercial Arbitration (2nd edn, Butterworths 1989), p. 319. 47. Code of Civil Procedure, 1908 (Act No. 5 of 1908). 48. Code of Civil Procedure, 1908, Order 6, r. 2 (requires pleadings to contain a statement in a concise form of the material facts on which the party pleading relies for its claim or defence and as per r. 4 thereof, whenever necessary, material particulars in relation to material facts have also to be pleaded). 49. Arbitration Act, s. 19 (the arbitral tribunal is not bound by the provisions of the Code of Civil Procedure); Indeen Bio Power Limited v M/​s EFS Facilities Service (India) Pvt. Ltd. (2019) 262 DLT 703, at paras 137, 138 (the Court held that rigid rules of pleadings are applicable to a suit action and “form” cannot trump “substance” in arbitral proceedings); Smt. Vinita Arora v M/​s Escorts Securities Ltd. 2010 SCC OnLine Del 1629, at para. 23. 50. Delhi Development Authority v M/​s. Krishna Construction Co. (2011) 183 DLT 331, at para. 15.

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permanent record of the issues and questions raised in the action and decided therein so as to prevent future litigation upon the matters already adjudicated upon the litigants or those privy to them.”51 In the absence of an agreement to the contrary, pleadings are usually required in arbitration.52

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The Court in Indian Oil Corp Ltd v Coastal (Bermuda) Ltd53 observed that pleadings in arbitration will have the same status as in commercial litigation as follows:

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“Though with the reservation that in my view arbitrators should be more ready to emphasise the practical advantages of pleadings, in terms of notifying the opposite party (and the tribunal) of the factual matters which will be relied upon, rather than what may be called the negative function of preventing a party from raising issues which he has not pleaded.”

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[26.9] FORMAL REQUIREMENTS OF PLEADINGS

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Section 23 of the Arbitration Act mirrors the corresponding provision in UNCITRAL Model Law.54 It requires a claimant to provide a statement of the claim including the following points: (1) the facts supporting its claim;



(2) the points at issue; and



(3) the relief or remedy sought.

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The respondent must also state its defence in reply. Whilst the provision of a statement of claim and defence is mandatory, the parties are free to agree on the required elements of those statements.55

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The claimant states its claim as “Statement of Claim” and the respondent answers the claim in the “Statement of Defence”. If there is, in addition, a counterclaim, the document will be referred to as the “Statement of Defence and Counterclaim”.

51. Sir Jack Jacob and Ian S. Goldrein, Pleadings: Principles and Practice (Sweet & Maxwell 1990), pp. 2–​3. 52. See South Australian Superannuation Fund Investment Trust v Leighton Contractors Pty Ltd (1990) 55 SASR 327. 53. [1990] 2 Lloyd’s Rep 407, at p. 411. 54. UNCITRAL Model Law, art. 23. 55. See also the Report of the United Nations Commission on International Trade Law on the work of its eighteenth session (Official Records of the General Assembly, Fortieth Session, Supplement No. 17 (A/​40/​ 17)) at para. 196; Arbitration Act, s. 23(1) envisages the principle of party autonomy and gives an option to the parties to agree on the elements of statement of claim and/​or defence.

765

Chapter 26—​Procedure Prior to the Hearing

The claimant may respond with a “Reply to Statement of Defence”, which are further allegations in response to the defence and, where there is a counterclaim, a “Defence to Counterclaim”. Finally, the respondent may submit a “Reply to the Defence to the Counterclaim”. Occasionally, further pleadings may be delivered.

ul at io n

Parties may submit all documents they consider to be relevant along with pleadings.56 Alternatively, they can add a reference to documents that they will submit while filing pleadings and it is erroneous to not add such reference.57 The parties or the arbitral tribunal determine the period of time within which they will submit their Statement of Claim and Defence.

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However, the 2019 Amendment puts a time cap for completion of the pleadings of six months from the date the arbitral tribunal receives the notice of appointment.58 The provision has been introduced to address the dilatory tactics used by parties to delay the arbitration proceedings.

ot

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The London Court of International Arbitration (“LCIA”) Arbitration Rules (2014) state that written pleadings consist of a “statement of case”, “statement of defence”, and “statement of reply” and have to follow each other within prescribed time limits.59

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The Swiss Rules of International Arbitration (2012) also require a party’s submissions to be accompanied with “all documents and other evidence on which it relies”.60

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The ICSID Arbitration Rules61 entitle the documents that are to be filed by the parties as a “memorial” and a “counter-​memorial”, followed, if necessary, by a reply and a rejoinder. These Rules also allow for the simultaneous exchange of written submissions, if the request for arbitration was made jointly.

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A memorial should contain a statement of the relevant facts, a statement of the law, and submissions, and that the counter-​memorial, reply, or rejoinder should respond to these statements and submissions, and add any additional facts, statements of law, or submissions of its own.62

56. 57. 58. 59. 60. 61. 62.

Arbitration Act, s. 23(2). Arbitration Act, s. 23(2); R Narayanan v India Infoline Securities (P) Ltd. (2013) 4 CTC 432, at para. 25. Arbitration Act, s. 23(4). LCIA Arbitration Rules, 2014, art. 15. Swiss Rules of International Arbitration, 2012, arts. 18(3) and 19(2). ICSID Arbitration Rules, 2006, rr. 31(1) and 31(2). “Chapter 6. Conduct of the Proceedings” in Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), pp. 353–​414, at para. 6.69.

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Law, Practice and Procedure of Arbitration in India

Rules 16 to 19 of the MCIA Rules, 2016 provide for the procedure for pleadings. Under the said Rules, if the claimant fails within the time specified to submit its statement of claim, the arbitral tribunal may issue an order for the termination of the arbitral proceedings.

ul at io n

The arbitral tribunal may also give such other directions as may be appropriate, unless a respondent has brought a counterclaim and wishes the arbitration to continue.63 Also, If the respondent fails to submit a statement of defence, the arbitral tribunal may nevertheless proceed with the arbitration.64

irc

Moreover, Section 25 of the Arbitration Act, which mirrors Article 25 of the UNCITRAL Model Law, contemplates a situation where the claimant or the defendant had failed to file the statement of claim or defence with the tribunal.

ot

The position is explained as follows:66

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The arbitral tribunal also has ample power to grant an extension for filing statement of claim after condonation of delay for sufficient cause.65 Such extension of time by the arbitral tribunal to enable a party to file pleadings, particularly where the default was not motivated, is not a ground for setting aside the award.

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“An arbitrator should be impartial and give a reasonable opportunity to each party to present his case. Even in the matter of imposing limits as to time, the arbitrator is competent to allow some gratitude to the party having regard to the principles of fairness … if during the conduct of reference, the arbitral tribunal extends time suo motu either for filing pleadings or for leading further evidence or for filing counter claim, the same cannot be held to be contrary to any substantive law, which will suffer invalidation in the hands of the Court.”

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Similarly, if the respondent has failed to communicate his statement of defence well within time, the arbitral tribunal is empowered to continue the proceedings without treating it as an admission.67

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The arbitral tribunal can further foreclose the respondent’s right to file such statement of defence, if it is not satisfied with respect to the cause shown by the respondent.68 63. Mumbai Centre for International Arbitration Rules, 2016, r. 16.2. 64. Mumbai Centre for International Arbitration Rules, 2016, r. 17.4. 65. Wanbury Ltd. v Candid Drug Distributors 2015 SCC OnLine Bom 3810, at para. 38; GAIL v Keti Constructions Ltd. (2007) 5 SCC 38, at para. 24; Dalmia Cement (Bharat) Ltd. v Advance Commissioner Co. Ltd. 1995 (1) Arb LR 278, at para. 7. 66. N. Jayalaxmi v R. Veeraswamy (2003) 6 ALT 186, at paras. 24, 25. 67. Arbitration Act, s. 25(b). 68. Arbitration Act, s. 25(b).

767

Chapter 26—​Procedure Prior to the Hearing

If a party does not appear before the tribunal at an oral hearing or fails to produce documentary evidence, the tribunal can proceed ex-​parte and make the award on the basis of the evidence before it.69

ul at io n

The respondent can submit a counterclaim or plead setoff within the terms of the arbitration agreement.70 A counterclaim differs from a statement of defence. In a counterclaim, the respondent raises its claims based on new issue and steps in the shoes of the Claimant only with respect to the counterclaim.

irc

For example, if an employer claims for defective work the respondent may, in the reply, claim that the work is not defective. This would be a defence. The respondent may further claim direct loss and/​or expense due to delays caused by the employer. This would be a counterclaim.

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The arbitral tribunal will usually read through the pleadings when they are delivered. It may draw the parties’ attention to any errors or discrepancies that it may find.

fo

When pleadings are complex and confused, the arbitral tribunal may ask for a list of issues to be agreed by the parties, setting out the points which it is to decide.

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If necessary, a further preliminary meeting may be necessary to settle the matter between the parties. It can be helpful for the arbitral tribunal to indicate the nature of the written submissions it expects.

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Insufficient detail can delay proceedings and very thorough pleadings can unnecessarily increase costs if detailed oral hearings are to take place.71

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[26.10] AMENDMENT TO PLEADINGS

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The court has no power to allow or disallow an amendment. The legislature has expressly given this power to an arbitral tribunal.

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The arbitral tribunal’s order for allowing or disallowing cannot be challenged under Article 227 of the Indian Constitution.72 However, the award can be challenged on this ground under Section 34 of the Arbitration Act.73 Section 23(3) of the Arbitration Act allows a party to amend or supplement its claim or defence unless the arbitrator considers it inappropriate. 69. Arbitration Act, s. 25(c); Anil Jain v Madhunam Appliances P. Ltd. (1997) 2 Arb LR 325, at para. 9. 70. Arbitration Act, s. 23(2A). 71. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 6.74. 72. Guru Deshmukh Rice Mills v Punjab State Civil Supplies Corp. Ltd. (2005) 139 PLR 137, at para. 12. 73. Arbitration Act, s. 34(2)(a)(v); Guru Deshmukh Rice Mills v Punjab State Civil Supplies Corp. Ltd. (2005) 139 PLR 137, at para. 13.

768

Law, Practice and Procedure of Arbitration in India

Factors for the arbitral tribunal to consider include delay and any prejudice to the other parties. The usual rule is that the costs of making an application to amend pleadings are borne by the amending party. New claims cannot be raised later by one party without the other party’s or the arbitral tribunal’s agreement.74 If they are raised, the arbitral tribunal must be sure that they are within its jurisdiction under the reference to arbitration.

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A party may realise that the evidence adduced at either the interlocutory stage or even at the hearing itself will not support part of his case as pleaded without modification or the evidence supports another cause of action which has not been pleaded at all.

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In such a situation, the party concerned would apply to the arbitral tribunal for leave to amend its case with a copy to the other party. The application will be accompanied by a draft of the proposed amendment with the redundant text struck out and the new text underlined for identification.

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The proposed amendment should be fully particularised so as not to attract an additional application for further and better particulars.

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The arbitral tribunal will consider representations from both sides to see the prejudice caused to the other party if the proposed amendments are allowed.

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Generally, amendments are allowed if it is possible for the arbitral tribunal to adequately compensate the other party for the prejudice it will suffer by costs order against the party wishing to amend.75

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If the arbitral tribunal directs so, the pleadings may be amended to include new claims and defences. The arbitral tribunal may grant a party leave to amend pleadings at any stage and normally will allow all amendments which are necessary to ascertain the real questions between the parties.

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However, the arbitral tribunal has no discretion if the amendment or supplement exceeds the scope of the arbitration agreement.76 The arbitral tribunal’s jurisdiction is defined by the issues that have been referred to arbitration.

74. See Terna Bahrain Holding Co WLL v Al Shamsi [2012] EWHC 3283 (Comm), [2013] 1 All ER (Comm) 58, at para. 125. 75. The arbitral tribunal may impose costs based on a party’s conduct according to Section 31A of the Arbitration Act; Congimex SARL (Lisbon) v Continental Grain Export Corpn (New York) [1979] 2 Lloyd’s Rep 346; Edward Lloyd Ltd v Sturgeon Falls Pump Co Ltd 85 LT 162; Re Crighton and Law Car and General Insurance Corpn Ltd’s Arbitration [1910] 2 KB 738. 76. Arbitration Act, s. 23(3); See Leif Hoegh & Co A/​S v Petrolsea Inc, The World Era [1992] 1 Lloyd’s Rep 45; Interbulk Ltd v Aiden Shipping Co Ltd, The Vimeira (No 1A) [1985] 2 Lloyd’s Rep 410; UNCITRAL Arbitration Rules (Revised 2010), art. 22.

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Chapter 26—​Procedure Prior to the Hearing

The jurisdiction cannot be enlarged by subsequent amendment of the pleadings by the parties without the agreement of both the parties and the arbitral tribunal. The proposed amendment, cannot, without agreement from both parties and arbitral tribunal, extend the issues beyond the scope of what has been submitted to arbitration.77

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The exceptions may be, for example, where the proposed amendment is not particularised. If it is allowed, the hearing will have to be vacated, as the proposed amendment, being a new cause of action, can be commenced under a new arbitration notice and be heard at a later date. The proposed amendment is a new cause of action which could be time-​barred.

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The arbitral tribunal may feel that the party has acted in bad faith, or that by an earlier error the party had done some injury to the other party which cannot be compensated by costs.

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If the proposed amendment means that the other party has wasted time and money dealing with the original pleading, the arbitral tribunal may allow the amendment but with the costs to be borne by the amending party in any event.

py

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If the arbitral tribunal thinks that either party has not pleaded its case properly and needs to amend its pleadings, it should indicate its concerns and allow amendments.78 Naturally, this should not extend to the arbitral tribunal providing advice to one party on how to conduct its case, suggesting defences and so on.

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If a party cannot deliver a pleading on time, he should seek the other party’s agreement to an extension, and inform the arbitral tribunal of the outcome. If this is not forthcoming, the party will have to apply to the arbitral tribunal for an extension of time.

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As a fundamental rule embodied by Section 18 of the Arbitration Act, the arbitral tribunal should not make up its mind when dealing with matters which require a decision until it has considered submissions from both parties because this would not be treating the parties equally.

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Such submissions are usually in writing unless they have been made in an interlocutory meeting to the arbitral tribunal. It is usual, upon application, to give one short extension unless there are compelling reasons not to do so. 77. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 5-​138; see Persaud v Beynon [2005] EWHC 3073 (Comm. Eduardo Zuleta Jaramillo, Liberty Seguros SA and Liberty Seguros de Vida SA v Arbitral Tribunal and Civil Chamber of the Bogotá Judicial Tribunal Constitutional Court of Colombia, Decision T-​186/​15, Case Date 17 April 2015, a contribution by the ITA Board of Reporters, Kluwer Law International. 78. Alenco Inc v Niska Gas Storage US [2009] AWLD 2128; Ng Chin Siau v How Kim Chuan [2007] 2 SLR(R) 789, [2007] SGHC 31.

770

Law, Practice and Procedure of Arbitration in India

Mindful of the issues of fairness, delay and expense, the arbitral tribunal will scrutinise closely further requests for extension. It is fair to say that an arbitral tribunal should not be dogmatic and the circumstances of a case will govern the proper course of action with regard to procedural extensions of time.

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The purpose of a pleading is to fully alert the other party as to the case which it has to meet. The other party then has the full opportunity to bring evidence so as to rebut all of the allegations which it denies. Each party must have a full understanding of the other’s case. Each party is also entitled to know all of the facts and matters relied upon.

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If a pleading is vague or does not give sufficient detail or is not precise of the case it requires to be met, the party in receipt of it may not be able to confirm with his witnesses as to whether the allegation is true or not. Full and detailed pleadings facilitate more efficient and cost-​effective conduct of dispute resolution.

ot

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Occasionally, the requests for further and better particulars are merely time-​wasting exercises. Entertaining each request will run up expense and cause delay to the arbitration proceedings. In such a circumstance, the arbitral tribunal has to be vigilant to prevent misuse of the procedure.

-N

J. Tackaberry and Arthur Marriot explain:

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“Tactically, requests for particulars are unfortunately often abused. For example, where a respondent has the funds claimed and can abuse the power of the purse strings to strangle the claimant’s liquidity, costs and even interest will not always be sufficient compensation. Apart from anything else, they may be too late. Provided the principles above are satisfied, the arbitrator may have to draw the line before allowing an opponent pedantically to procrastinate instead of proceeding expeditiously with the arbitration. If the parties are not themselves able to resolve a trial of strength between them about whether particulars are sufficient, the arbitrator will need to be a bold spirit rather than a timorous soul. The parties have an obligation and the arbitrator has the power ...”79

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The other party is not obliged to reply unless the arbitral tribunal makes an order to that effect. Either party may seek further and better particulars from the other, by way of a request to the arbitral tribunal for directions to that effect. However, the arbitral tribunal should generally avoid giving such directions and seek to find other ways to compel a party to unambiguously state its case, such as through amending the particulars or early disclosure of a witness statement.80

79. J. Sharkey and J. Dorter, Commercial Arbitration (1986). 80. J. Tackaberry, A. Marriot, and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson Sweet & Maxwell 2003), at para. 2-​675.

771

Chapter 26—​Procedure Prior to the Hearing

Further particulars may sometimes be asked for in the form of interrogatories. These are a series of questions, for which there is perhaps little documentary evidence available, to be put to the other party and answered on oath. Interrogatories are rarely required in arbitration.

[26.11] ORDER OF WRITTEN STATEMENTS

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Once the arbitral tribunal orders the further and better particulars, the other party must supply the answers in writing within the time frame set by the arbitral tribunal.

irc

The claimant will serve the statement of claim, which may set out the dispute in a full narrative form or be in the style of litigation pleadings, which are relatively concise.

fo

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The contractual provisions that relied upon specific heads of claim, factual evidence supporting the claims, and relief or remedy sought are set out usually in summary form. The statements must be sufficiently full to enable the other party to fully understand the case it has to meet.

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The respondent will then serve a statement of defence together with a statement of the counterclaim if there is a counterclaim. This will be followed by the claimant’s statement of reply and defence to the counterclaim. Each party may then serve a reply to the respective statements of defence.

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Exceptionally, the arbitral tribunal may direct the parties to submit their respective submissions simultaneously. However, this is not a preferred practice as the difficulty the arrangement raised has been described as “ships passing in the night”.81

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[26.12] DISCOVERY

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The purpose of the hearing is to ascertain the facts in the case82 and in the interests of justice a tribunal should have all the relevant evidence before it.83 The concealment of evidence is not acceptable. The process of discovery is distinct from the pleadings. It involves two elements, namely, discovery and inspection. The parties may have no difficulty in producing the

81. “Chapter 6: Conduct of the Proceedings” in Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), pp. 353–​414, at para. 6.70. 82. M. Kurkela and H. Snellman, Due Process in International Commercial Arbitration (2nd edn, Oxford University Press 2005), p. 123. 83. D.L. Miller and Co. Ltd. v Daluram Goganmull AIR 1956 Cal 361, at para. 16; Delta Distilleries Limited v United Spirits Limited (2014) 1 SCC 113, at para. 8.

772

Law, Practice and Procedure of Arbitration in India

documents underlying the contract such as correspondence leading up the dispute together with other documents exchanged between the parties and their lawyers. The real difficulty arises from the production of documents that are in the possession of one party but not communicated to the other. Such documents may be letters exchanged between the other party and third party, or internal documents passing between the various departments within an organisation.

ul at io n

An arbitral tribunal is not bound by the Indian Evidence Act, 1872 and the Code of Civil Procedure, 1908.84 Chandrachud, J., in Maharashtra State Electricity Board v Data Switchgear Ltd.,85 stated:

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“These are words of amplitude and not of restriction … these words liberate ‘the Tribunal from being bound, as would a Civil Court, by the requirement of observing the provisions of the Code and the law relating to evidence with all its rigour’. Rather than being a prohibition, these words encourage the Arbitral Tribunal to draw ‘sustenance from the fundamental principles underlying the Civil Procedure Code or Evidence Act’.”86

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Adopting the UNCITRAL Model Law, Section 19 of the Arbitration Act preserves the consensual nature of the arbitral proceedings enabling the parties to agree on the procedure to be followed by the arbitral tribunal.87

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Failing such agreement, the tribunal is free to conduct the proceedings in the manner it considers appropriate.88 Such power includes the power to determine “admissibility, relevance, materiality, and weight of any evidence”.89

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The provisions enabling parties or the tribunal to choose the procedure governing arbitration are not unfettered and the exercise of such powers has to be qualified in accordance with the Arbitration Act.90 The parties or tribunal cannot deviate from the mandatory provisions of the Act.91

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The Arbitration Act 1940 contained a provision requiring the parties to reference and persons claiming under them to produce before the arbitrator or umpire all books,

84. Arbitration Act, s. 19. 85. Maharashtra State Electricity Board v Data Switchgear Ltd. 2002 SCC OnLine Bom 983. 86. Maharashtra State Electricity Board v Data Switchgear Ltd. 2002 SCC OnLine Bom 983, at para. 41; see also Thyssen Krupp Werkstoffe Gmbh v Steel Authority of India (2010) SCC Online Del 479. 87. Arbitration Act, s. 19(2). 88. Arbitration Act, s. 19(3). 89. Arbitration Act, s. 19(4). 90. Arbitration Act, s. 19 mentions “subject to Part I of the Act” in the enabling sub-​sections; Maharashtra State Electricity Board v Data Switchgear Ltd. (2002) SCC Online Bom 983, at para. 41. 91. Maharashtra State Electricity Board v Data Switchgear Ltd. (2002) SCC Online Bom 983, at para. 44.

773

Chapter 26—​Procedure Prior to the Hearing

deeds, papers, accounts, writings, and documents within their possession or power, which may be required or called for.92 However, the 1996 Act that repealed the 1940 Act does not contain any specific provision dealing with the discovery and production of documents. The power to order discovery, however, has been read into Section 19 of the Arbitration Act by the Court.93

ul at io n

The Arbitration Act is silent on the procedure of taking evidence. However, it enables a party or the tribunal to apply to the court for assistance in taking evidence.94 Such assistance includes summoning of witnesses, production of documents, or inspection of a property.95

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The court, while making an order, may execute the request by ordering that the evidence be provided directly to the tribunal.96 The same processes to witness as applicable to suits tried before courts are exercised by the court while making such orders.97 Such processes include a summons to produce documents before the tribunal.98

fo

In a domestic arbitration where all the parties, arbitrators, and representatives are Indian, they will be familiar with the discovery regime present in litigation.

py

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In international arbitration, however, where there can be many nationalities present, different preconceptions about the nature and extent of the disclosure can arise. An obvious example of a contrasting disclosure culture is the notoriously wide-​ranging and expensive discovery process in the USA.

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When entering an arbitration agreement, parties should never assume that their discovery expectations will be mirrored by the other side and by the arbitral tribunal. The arbitral tribunal itself is also likely to have a significant impact on the way any disclosure application will be dealt with.99

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The arbitral tribunal can decide the documents or classes of documents that should be disclosed by the parties and the stage in the arbitral proceedings when this should be done. 92. Arbitration Act, 1940, Sch. I, para. 6. 93. Union of India v Reliance Industries Ltd. 2018 SCC OnLine Del 13018, at para. 71. 94. Arbitration Act, s. 27 (modelled in consonance with the UNCITRAL Model Law, art. 27); Satinder Narayan Singh v Indian Labour Co-​operative Society Ltd. (2008) 1 Arb LR 355, at para. 3. It is necessary for the parties to seek permission from the arbitral tribunal before filing an application under s. 27 before the court. 95. Arbitration Act, s. 27(2). 96. Arbitration Act, s. 27(3). 97. Arbitration Act, s. 27(4). 98. Arbitration Act, s. 27(6). 99. Gary B. Born, International Arbitration and Forum Selection Agreements: Drafting and Enforcing (Wolters Kluwer Law & Business 2010), p. 88.

774

Law, Practice and Procedure of Arbitration in India

The arbitral tribunal has the power to order a party to disclose any documents but ultimately either party will have to apply to the court for assistance to enforce this order if it is not obeyed.100

ul at io n

As the authority of the arbitral tribunal derives from the agreement between the parties to the arbitrator agreement, the arbitral tribunal has no power to order third parties to produce documents in their possession, however pertinent they may be relevant to the matter in issue.101 As third-​party evidence can sometimes be crucial to a claim or defence,102 the assistance of the court should be sought to obtain such evidence.103

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A situation where a third party may be giving evidence upon request of one of the parties but may refuse to produce relevant documents upon being questioned by the other party.104

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In addition to third parties, the court can also order the rendering of evidence by the parties in the arbitration proceedings. The term “any person” under Section 27 (2) (c) of Arbitration Act is not just limited to the witnesses but also covers the parties.105

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The High Court of Delhi in Silor Associates v Bharat Heavy Electrical Limited106 held that the tribunal is empowered by its own to direct the parties to produce the documents without taking assistance from the court.107

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Upon failure to comply with the directions of the arbitral tribunal to produce the documents, the aggrieved party may draw an adverse inference against the defaulting party or may require the arbitral tribunal to enforce the same direction with the assistance of the court under Section 27.108

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Discovery is a procedure to enable each party to be fully aware of all documents in the other party’s possession, custody, or power on the matter that is actually in issue in

1 00. Arbitration Act, s. 27. 101. BNP Paribas v Deloitte and Touche LLP [2004] 1 Lloyd’s Rep 233. 102. S. P. Caplow, “Through a Glass Darkly: Non-​Party Discovery Under the US Federal Arbitration Act” (2012) 78 Arbitration 3, p. 256. 103. Arbitration Act, s. 27. 104. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 6.130. 105. Delta Distilleries Limited v United Spirits Limited (2014) 1 SCC 113, at para. 25.1–​25.4. 106. Silor Associates v Bharat Heavy Electrical Limited (2014) 7 HCC (Del) 426: 2014 SCC OnLine Del 3407. 107. Ibid, at para. 39. 108. Silor Associates v Bharat Heavy Electrical Limited (2014) 7 HCC (Del) 426, 2014 SCC OnLine Del 3407, at para. 40.

775

Chapter 26—​Procedure Prior to the Hearing

the case. It allows one party to see adverse information or admissions in their adversary’s documents which may be helpful to establish their version of the case. Any document that may reasonably be supposed to contain information that either enables a party to advance its case or to damage that of its opponent, including any document which may fairly lead him to a train of enquiry with either of these consequences, must be disclosed.

ul at io n

Traditional discovery is given by listing every disclosable document, including those already possessed by the other side and those which the disclosing party once had but no longer possess.

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The list is in three parts: the first part is those documents which the parties have in their possession, custody, or power and in respect of which they do not claim privilege; the second part is those documents which the parties once had but no longer have it in their custody, power, or possession and in respect of which they do not claim privilege; and the third part is those documents which the parties claim privilege.

ot

Specific discovery is available where a party has reason to believe that the other party has not fully complied with his obligation as regards to discovery.

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The complaining party usually identifies the documents or classes of documents which are allegedly missing and his reasons for believing that they are relevant and that they must be, or have been, in the possession, custody, or power of the other party.109

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Further, the parties can also use the Redfern schedule.110 It is a collaborative document used for international arbitrations to create records for the requests for production of documents and responses between both parties. Claimant’s Request

Claimant’s Reason for Request

Respondent’s Objection

Claimant’s Comments/​Reply

Tribunal’s Decision

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S.No.

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Nowadays, 90 per cent of documents, correspondence, and other information generated are in electronic form. It is therefore pertinent to decide how such information may be used in commercial litigation and arbitration. Many arbitral tribunals will today be guided in the exercise of their discretion by the IBA Rules on the Taking of Evidence in International Arbitration (2010) which defines the term “document” as “a writing, communication, picture, drawing, program

1 09. Mustill and Boyd, Commercial Arbitration (2nd edn, Butterworths 1989), pp. 323–​324. 110. Thiess Iviinecs India v NTPC Limited (2016) 229 DLT 721.

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Law, Practice and Procedure of Arbitration in India

or data of any kind, whether recorded or maintained on paper or by electronic, audio, visual or any other means”.111 Article 3 of the IBA Rules makes no distinction in principle between hard copy documents and soft copy documents. Ultimately it is for the arbitral tribunal to determine whether it should order discovery of certain kinds of documents while considering the “materiality of the outcome” versus “proportionality”.112

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[26.13] RESTRICTIONS ON DISCOVERY

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However, it has been argued that the IBA rules are dominated by the Common Law practice of taking evidence. This gave rise to the proposal of a different set of rules based on Civil Law practice. The Inquisitorial Rules on the Taking of Evidence in International Arbitration are commonly known as “The Prague Rules”.113

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The extent of the discovery process in arbitration will largely depend on its nature and the wishes of the parties.114 Unless the parties provide otherwise there is no automatic right of discovery.115

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Discovery cannot, for example, be used as a “fishing expedition” or be allowed when it is being used strategically to thwart or delay the arbitration.116

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Discovery may be restricted where the right to privacy and the interests of the State as contained in privileged materials outride the general interest in disclosure.

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Privileged materials fall into three categories: privilege in respect to affairs of State, legal professional privilege, and communications for the compromise of a dispute.

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The Indian Evidence Act,117 largely importing the English common law principles of evidence, has certain provisions for exclusion of documents for production and renders them inadmissible.

1 11. IBA Rules on the Taking of Evidence in International Arbitration (2010) Definitions. 112. IBA Rules on the Taking of Evidence in International Arbitration (2010), art. 9. 113. Launched in December 2018, available at https://​ www.praguerules.com/​ upload/​ medialibrary/​ 9dc/​ 9dc31ba7799e26473d92961d926948c9.pdf. 114. See Edwards (Inspector of Taxes) v Bairstow [1956] AC 14, at para. 36, per Lord Radcliffe; Pioneer Shipping Ltd v BTP Tioxide Ltd, The Nema [1981] 2 Lloyd’s Rep 239, [1982] AC 724, per Lord Roskill. 115. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2520. 116. Navigator Investment Services Ltd v Acclaim Insurance Brokers Pte Ltd [2010] 1 SLR 25 para. 67, CA, recognising, however, that discovery can aid arbitration; see also Dorsey James Michael v World Sport Group Pte Ltd [2014] 2 SLR 208, [2014] SGCA 4. 117. Indian Evidence Act, 1872 (Act No. 1 of 1872).

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Chapter 26—​Procedure Prior to the Hearing

The Indian Evidence Act bars communications between a lawyer and client from being disclosed.118 However, an exception to this is when the client gives express consent to do the same.

ul at io n

Further, importing from various other legislations, confidential information given to a conciliator,119 private conversations between husband and wife,120 doctors and patients,121 and mediator and parties to a divorce122 are inadmissible in court. The Arbitration Act bars comments made by a conciliator to be given as evidence in court.123

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The Evidence Act, however, expressly does not apply to proceedings before an arbitral tribunal, which raises the question of whether certain categories of documents can be disclosed in arbitrations.124

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The proper view is that the statutory rules of disclosure applicable to litigation do not apply to arbitration, but the rules of natural justice must be obeyed125 and any disclosure contrary to these principles should be rejected.

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The IBA Rules126 allows an arbitral tribunal to exclude evidence on grounds including relevance and materiality; legal or ethical privilege; unreasonable burden in production; commercial or technical confidentiality; political sensitivity; and considerations of fairness and equality of parties.127

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Section 123 of the Indian Evidence Act provides that:

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“No one shall be permitted to give any evidence derived from unpublished official records relating to any affairs of State, except with the permission of the officer at the head of the department concerned, who shall give or withhold such permission as he thinks fit.”

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The documents covered by Section 123 are unpublished official records related to affairs of the State. However, it is difficult to see how the discovery of this class of documents would breach the rules of natural justice. 1 18. Indian Evidence Act, 1872, s. 126. 119. Futuristics Offshore Services and Chemicals Ltd. v ONGC (2012) SCC OnLine Bom 1432. 120. Indian Evidence Act, 1872, s. 122. 121. Selvi v State of Karnataka 2013 SCC OnLine 1388. 122. Perry Kansagra v Smriti Madan Kansagra (2019) SCC OnLine SC 211. 123. Indian Evidence Act, 1872, s. 81. 124. Indian Evidence Act, 1872, s. 1. 125. Societa Anonmina Lucchesse Olii E. Vini Lucca v Gorakhram Gogalchand (1965) 78 LW 68, at para. 69. 126. IBA Rules on the Taking of Evidence in International Arbitration (2010), art. 9. 127. Mian Samiud-​ Din, “International Commercial Arbitration: Developments in the Practice of Taking Evidence” (2013) 79 Arbitration 1, p. 19.

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Law, Practice and Procedure of Arbitration in India

The better explanation is that it could be politically sensitive. Also, it may be the case that a court would set aside or refuse enforcement of an award founded on the evidence of this nature as being contrary to public policy.

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The prohibition in Section 126 of the Indian Evidence Act whereby a lawyer may not, without the express consent of his clients, disclose at any time any communication made to him in the course of and for his professional engagement, would certainly fall within the rules of natural justice and such privileged documents should not be admissible in arbitrations.

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This privilege applies to any legal advice and communication passing between a party and his lawyers at the time when the arbitration or litigation was contemplated or pending. Privilege also extends to documents obtained by the lawyers for the arbitration or litigation.128

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For example, this could be documents of experts or consultants if those documents came into existence for the sole or primary purpose of the arbitration when such proceedings were being contemplated or after the commencement of the arbitration.129

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In a domestic arbitration where all counsels are local and consequently familiar with the Indian Evidence Act, these may provide a “comfort blanket” of standard procedures the participants are familiar with. However, these are rules designed to cover the whole gamut of litigation proceedings and will not necessarily be the most practical set of rules to use in commercial arbitration.

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Counsel and arbitral tribunals should aim to be innovative in procedural terms to reduce time and costs in proceeding and there is no justification at all for conducting modern arbitrations in accordance with rigid litigation principles.130

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As set out in Section 26.11, it is increasingly common for parties to arbitrations to turn to the IBA Rules on the taking of Evidence in International Arbitration (2010) which are a set of evidential rules tailored to arbitration.

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Unlike the courts, parties in arbitration may be represented by any persons of their choice, who need not necessarily be lawyers. The designation of a particular representative may affect the type of privilege, if any, which may attach to communication between the party and his designated representative.

1 28. Arbitration Act, s. 42(A). 129. Tackaberry, Marriot, and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson Sweet & Maxwell 2003), at paras. 2.701–​2.703. 130. Tackaberry, Marriot, and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson Sweet & Maxwell 2003), at para. 2-​787.

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Chapter 26—​Procedure Prior to the Hearing

While the law allows parties to an arbitration to be represented by non-​lawyers, it does not state explicitly that privilege extended to non-​lawyer representatives. The privilege may extend to documents which came into existence in a genuine attempt to compromise or settle the issue. Documents produced in the course of settlement negotiations are usually marked “without prejudice”.

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These words do not in themselves clothe a document with privilege unless the document is the first or subsequent attempt to settle. The fact that a document is not marked “without prejudice” does not prevent it from being privileged.131

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Also, no privilege attaches to confidential documents. However, such documents remain confidential within the arbitration and cannot be disclosed or copied outside the reference to arbitration.

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The Court in Webster v James Chapman & Co (a firm)132 held in the interest of justice that a party is permitted to use a privileged document which had come into his possession without any fraud or other improper conduct.

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Therefore, the privilege may be lost if there is inadvertent disclosure of a privileged document. If the document was obtained by fraud or by a trick, its use will be restrained.133

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Normally in the interest of fairness and justice, the Indian courts allow the application filed under Section 27 of the Arbitration Act for court assistance in taking evidence. However, there are situations where the Court has rejected the application. The High Court of Delhi had rejected a request for issuing summons to foreign witnesses.134

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[26.14] INSPECTION

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Inspection is the exercise of looking at the documents which are not privileged that the opposing party has disclosed unless privileged has been waived. Each party is entitled to look at the original documents in the other party’s list of every disclosable document and to make copies of them.

131. Wong Nget Thau v Tay Choo Foo [1994] 3 MLJ 723. 132. [1989] All ER 939. 133. Tackaberry, Marriot, and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson Sweet & Maxwell 2003), at para. 2-​703. 134. Reliance Polycrete Ltd. v National Agricultural Co-​operative Marketing Federation of India (2009) 156 DLT 224, at para. 11; Ginder v Curtis (1863) 14 CBNS 723; Dodington v Hudson (1823) 1 Bing 384, (1823) 130 ER 155; Grazebrook v Davis (1826) 5 B & C 534.

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Law, Practice and Procedure of Arbitration in India

The Court in Urban Small Space Ltd v Burford Investment Co Ltd135 held that the purpose of the inspection is not limited to documents which would be admissible in evidence.

[26.15] APPLICATION FOR ADJOURNMENTS

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Following this, a bundle of agreed documents is prepared, that is, those documents whose validity is accepted by both parties. The parties will also prepare their bundles which will be used to present their case in the arbitration. If a party is suspected of concealing a document, the arbitral tribunal may ask him to prepare a fresh list in the form of a statutory declaration.136

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One of the duties of the arbitral tribunal is to do nothing to prevent a party from calling his evidence, where one or the other party is not able to adhere to the schedule and seeks adjournment.

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If it appears that the application for adjournment is not intended to cause delay and seems genuinely needed, the arbitral tribunal should allow it, or risk breaching the rules of natural justice.137

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The Court in Larchin v Ellis138 stated:

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“It was by no means obligatory upon the arbitrators to allow of any delay that was asked for within the time during which they were bound to make their award. It was for them to judge, in the first place, whether the application for further time was bona fide, or only for delay. And even supposing it to be bona fide, still they were to judge whether it was reasonable.”

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An arbitral tribunal may refuse to adjourn the case at the instance of a party absenting deliberately and without sufficient cause. An arbitral tribunal’s refusal to grant an adjournment to enable the applicant to rebut the evidence of a witness on a material point would be clear ground for challenge.139

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Rule 3 of First Schedule under the old Act also prescribed a time limit of four months from the date of reference to render the award. The court was empowered to extend this time limit and no upper limit for the same had been specified.140

1 35. [1990] 2 EGLR 120. 136. See Elektrim SA v Vivendi Universal SA [2007] EWHC 11 (Comm) for an example of arbitration where allegations of concealment were made. 137. Priddle v Fisher & Sons [1968] 3 All ER 506. 138. (1863) 11 WR 281; see also Dalmia Dairy Industries Ltd v National Bank of Pakistan Ltd [1978] 2 Lloyd’s Rep 223. 139. In re Enoch and Zaretzky, Bock & Co’s Arbitration [1910] 1 KB 327. 140. Arbitration Act, 1940, s. 28.

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Chapter 26—​Procedure Prior to the Hearing

The 176th Law Commission Report also threw light upon the growing delays in the arbitration process. It also provided guidance as to the factors which the courts ought to take into account while deciding costs for delays and future procedure of arbitration. The factors are enumerated as follows:141 (1) extent of work already done;



(2) reasons for the delay;



(3) the conduct of the parties or of any person representing the parties;



(4) the manner in which proceedings were conducted by the arbitral tribunal;



(5) further work involved;



(6) amount of money already spent by the parties towards fee and expenses of the arbitration; and



(7) any other relevant circumstances.

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Accordingly, Section 29A was inserted through the 2015 Amendment Act.142 The section, prior to the 2019 Amendment Act, required an arbitral tribunal to render an award within 12 months of the date of reference to the arbitrator.

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The 2019 Amendment Act has amended this provision and changed the point from which the 12 months period starts to the date of completion of pleadings according to Section 23(4) of the Arbitration Act.143

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This period of 12 months can be further extended by the consent of both parties for six months.144 However, upon failure to render the arbitral award within this period, the mandate of the arbitral tribunal would terminate. It would be unable to proceed further with the matter irrespective of the stage the proceedings would be at.145

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The 2019 Amendment Act brought some relaxation in this aspect and added a proviso stating where an application under sub-​section (5) is pending, the mandate of the arbitrator shall continue till the disposal of the said application.146

1 41. 176th LC Report, p. 127. 142. While the amendment was a consequence of the 246th Law Commission Report, the amendment of inclusion of s. 29A was not discussed by the Law Commission in the report. 143. Arbitration Act, s. 6. 144. Arbitration Act, s. 29A(3). 145. Arbitration Act, s. 29A(4). 146. Arbitration Act, s. 29A(3) proviso.

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Law, Practice and Procedure of Arbitration in India

After the expiry of 12 months (in absence of extension by mutual consent) or 18 months, one of the parties can apply to the court to seek a further extension. Such application must be disposed of by the court, as expeditiously as possible, ideally within 60 days from the date of service of notice on the opposite party.147

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An extension is granted by the court only when sufficient cause is shown by the court.148 The courts have been interpreting the term “sufficient cause” restrictively by interlinking it with the element of delay alone.

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The High Court of Delhi, in NCC Ltd. v Union of India,149 held that Section 29A was included in the Arbitration Act to counter the delays in the conclusion of proceedings and it cannot be sought to be utilised for the achievement of other objectives alien to the said purpose150 and stated:

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“Section 29A of the Act is intended to sensitize the parties as also the Arbitral Tribunal to aim for culmination of the arbitration proceedings expeditiously. It is with this legislative intent, Section 29A was introduced in the Act by way of the Arbitration and Conciliation (Amendment) Act, 2015. This provision is not intended for a party to seek substitution of an Arbitrator only because the party has apprehension about the conduct of the arbitration proceedings by the said Arbitrator. The only ground for removal of the Arbitrator under Section 29A of the Act can be the failure of the Arbitrator to proceed expeditiously in the adjudication process.”151

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The scope of enquiry of the court while deciding an application under Section 29A of the Arbitration Act is restricted to the matters provided in the section itself.152 The provision cannot be used for alleging bias or impartiality of the tribunal153 or challenging the orders of the tribunal relating to fixation of fees.154

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The court may put additional terms and conditions while passing an order for an extension. Such additional terms may include an order for substituting one or all the arbitrators and appointing another arbitrator for the remaining proceedings,155

1 47. 148. 149. 150. 151. 152.

Arbitration Act, s. 29A(9). Arbitration Act, s. 29A(5). NCC Ltd. v Union of India 2018 SCC OnLine Del 12699. Ibid, at para. 15. Ibid, at para. 11. Nilesh Ramanbhai Patel v Bhanubhai Ramanbhai Patel MANU/​GJ/​1549/​2018. The Court observed that s. 29A of the Arbitration Act is a complete code in itself. 153. Puneet Solanki v Sapsi Electronics Pvt. Ltd. 2018 SCC OnLine Del 10619, at para. 5; Angelique International Limited v SSJV Projects Pvt. Ltd. 2018 SCC OnLine Del 8287, at paras. 28, 29. 1 54. FCA India Automobiles Pvt. Ltd. v Torque Motor Cars Pvt. Ltd. 2018 SCC OnLine Bom 4371, at para. 30. 155. Arbitration Act, s. 29A(6).

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Chapter 26—​Procedure Prior to the Hearing

reducing the fee of the arbitrator,156 or imposing actual/​exemplary costs on the parties.157

[26.16] CONCLUSION

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Section 19 of the Arbitration Act in adopting the UNCITRAL Model Law, preserves the consensual nature of the arbitral proceedings. It enables the parties to agree on the procedure to be followed by the arbitral tribunal.158 Once the procedure to be followed in the arbitration is established, usually, the first step is to exchange of pleadings between the parties.

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The case management conference is likely to help establish a framework for the arbitration proceedings. It may also enable the arbitral tribunal to ascertain from the terms of appointment as to whether the dispute is to be determined by documents only.

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In practice, case management meetings need not be carried out in person, with advances in video conferencing technology and telephone conferencing. Such meetings are now possible without the inconvenience and expense of assembling the parties in a single location.

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The goal of an arbitral tribunal is to render an enforceable award. It is also upon the tribunal to minimise the scope of challenge to an award to produce an effective award or challenges on procedural grounds.

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Although the procedural orders are not challengeable, a procedural irregularity in conducting the arbitral proceedings amounting to a breach of natural justice may render an award unenforceable. Such irregularities can also be used as dilatory tactics, resulting in failure of arbitration as a preferred dispute resolution mechanism.

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Moreover, it is also upon the arbitral tribunal to render an award in a timely manner. The preliminary steps and developing a proper procedure prior to the hearing has a considerable impact on the efficient and timely disposal of arbitration proceedings.

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It permits an arbitral tribunal to be actively involved in streamlining of procedures. The active involvement on part of the arbitral tribunal time well in deciding procedural issues can be very effective in fulfilling arbitration’s promise as a tailored and efficient process.

1 56. Arbitration Act, s. 29A(4) proviso. 157. Arbitration Act, s. 29A(8). 158. Arbitration Act, s. 19(2).

Chapter 27 PROCEDURE AT THE HEARING [27.1]

INTRODUCTION....................................................................................................................... 784

[27.2] PROCEEDING WITHOUT A HEARING.............................................................................. 786 [27.4]

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[27.3] PREPARATION FOR THE HEARING.................................................................................... 788 THE HEARING........................................................................................................................... 791

[27.5] TIME AND PLACE OF THE HEARING................................................................................ 794 [27.6] PROCEDURE AT THE HEARING.......................................................................................... 796 [27.7] TRANSCRIPTS OF THE HEARING....................................................................................... 799

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[27.8] INSPECTION OF THE SUBJECT MATTER OF THE DISPUTE....................................... 800 [27.9] FINAL SUBMISSIONS BY THE PARTIES.............................................................................. 802

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[27.10] SPLITTING THE PROCEDURE INTO PHASES.................................................................. 804

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[27.1] INTRODUCTION

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[27.11] CONCLUSION............................................................................................................................ 804

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Article 24 of the Model Law makes provisions concerning hearings and written proceedings. This Article establishes the following two rules: (1) The arbitral tribunal must grant a hearing if the same has been requested by a party; and



(2) If no such request is made by either of the parties, it is for the arbitral tribunal to decide whether to hold a hearing or to not.

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During the drafting of the Model Law, a proposal had been made that the right to a hearing under Article 24(1) should be restricted to substantive issues (viz. hearings in relation to the “substance of the dispute”) thereby excluding procedural issues. However, the said proposal was rejected, establishing that the parties have a right to a hearing which extends to all issues.1 Provisions in relation to hearings and written proceedings are contained under Section 24 of the Arbitration Act which has been adopted from Article 24 of the Model Law.

1. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2430.

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Chapter 27—​​​Procedure at the Hearing

Section 24 of the Arbitration Act by means of the 2015 Amendment Act2 additionally provides that “The arbitral tribunal shall, as far as possible, hold oral hearings for the presentation of evidence or for oral argument on a day-​to-​day basis, and not grant any adjournments unless sufficient cause is made out, and may impose costs including exemplary costs on the party seeking adjournment without any sufficient cause.”3

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This amendment has been introduced for speeding-​up arbitration.4

The term “hearing” refers to the gathering of the parties at dispute, their lawyers, advisers, and witnesses in a degree of formality, although less so than in a court.

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At such hearings, the representatives of the parties at dispute have an opportunity to make oral submissions to the arbitral tribunal, and the arbitral tribunal also has an opportunity to seek clarification for matters contained in the written submissions and the written evidence of the witnesses.5

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In the absence of an agreement by the parties to the contrary, the arbitral tribunal can decide whether to conduct the arbitration by way of an oral hearing.6 However, at the request by a party the arbitral tribunal shall hold oral hearings at an appropriate stage of the proceedings unless the parties have agreed that no oral hearing shall be held.7

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Furthermore, if the arbitral tribunal renders an award without giving an opportunity of hearing to the parties (unless agreed by the parties) as provided under Section 24 of the Arbitration Act such an award would be against the statutory provisions and would be liable to be set aside under Section 34 of the Arbitration Act on the grounds of being “patently illegal”.8

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Much like the Arbitration Act, most institutional rules provide for a hearing to take place at the request of either party unless the parties have expressly waived or excluded the possibility of an oral hearing.9

2. Act 3 of 2016. 3. Arbitration Act, s. 12. 4. See also, Fali S. Nariman, Harmony Amidst Disharmony –​The Indian Framework (Hay House 2020), p. 121. 5. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 401. 6. Arbitration Act, s. 24(1). 7. Arbitration Act, s. 24(1). See also Union of India v K.P. Traders & Ors 2015 SCC Online Bom 1509, at para. 42. 8. Oil & Natural Gas Corporation Ltd. v Saw Pipes (2003) 5 SCC 705, at para. 22. 9. MCIA Rules, 2016, r. 26; DIAC (Arbitration Proceedings) Rules, 2018, r. 26; SIAC Rules, 2016, r. 24; HKIAC Rules, 2018, art. 22; LCIA Rules, 2014, art. 19.

786

Law, Practice and Procedure of Arbitration in India

Although it is unlikely and unusual in most commercial arbitrations with the exception of shipping and commodities arbitrations,10 if the parties have expressly agreed, the arbitral tribunal should proceed to make his award without a hearing.11 There are many conceivable situations outside of typical commercial disputes where no oral hearing should take place, such as in very small consumer arbitrations.

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In arbitral proceedings, the participants, as far as possible, should prefer to shorten the oral stage of the proceedings, in relation to the taking of evidence of witnesses.

irc

In a case where investigation involves complex and disputed facts, witnesses must give oral testimony which is often followed by cross-​examination. Such evidence is useful and, in many cases, invaluable. In such a situation, it is usual for the arbitral tribunal to hear the evidence of witnesses at a formal hearing of the case.

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The parties and the arbitral tribunal have the option of adopting an accelerated procedure by focusing on essential issues and by forcing counsels for the parties to focus on the real areas of contention, an arbitral tribunal can shorten proceedings considerably.

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Once issues are identified, the arbitral tribunal, subject to the parties’ agreement, can narrow the issues in the claim and cut out irrelevancies, which can sharply reduce the need for disclosure.

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Identifying the issues that are genuinely in dispute shortens any oral hearing that takes place by reducing the need for arguments from counsel and minimising the time for witness attendance.

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[27.2] PROCEEDING WITHOUT A HEARING

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A documents-​only hearing does not infringe either party’s fundamental right to present its case, principles of natural justice, or the audi alteram partem rule.12

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Most statutes and rules generally give either a party or the arbitral tribunal the right to call for a hearing. Accordingly, the parties and the arbitral tribunal should give consideration to whether an oral hearing is necessary or conversely if the arbitration can be conducted by documents alone.13

10. Arbitration under the Rules of the London Maritime Arbitrators Association. 11. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 6.155. 12. See, for example, the Supreme Court of Québec case of Silverberg v Hooper [1990] J.E. 90-​437 (SC). 13. “Part II: The Process of an Arbitration, Chapter 9: Hearings”, in Jeffrey Maurice Waincymer, Procedure and Evidence in International Arbitration (Kluwer Law International 2012), pp. 717–​741.

787

Chapter 27—​​​Procedure at the Hearing

Section 29B, which contains provisions relating to the fast-​track procedure, was added to the Arbitration Act by means of the Amendment Act 3 of 2016. By the virtue of Section 29B, parties to an arbitration agreement are permitted to agree in writing to have their dispute resolved by the fast-​track procedure. Such agreement is to be made by the parties either before or at the time of appointment of the arbitral tribunal.14

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In a fast-​track procedure, the dispute is to be decided by a sole arbitrator (to be appointed mutually by the parties)15 on the basis of written pleadings, documents, and submissions without any oral hearing16 with the arbitral tribunal having the power to call for further information or clarification.17

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Section 29B allows for an oral hearing only upon the request of the parties at dispute or if the tribunal itself considers it necessary to have an oral hearing.18

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The award under the fast-​track procedure is to be made within six months from the date on which the arbitral tribunal enters upon the reference.19 However, if the award is not rendered within the stipulated period, then the parties, by consent, may extend the period not exceeding six months.20

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Similarly, even in normal arbitration proceedings, the Arbitration Act allows the arbitral tribunal to issue an award based on documents-​only without holding a hearing.21

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Apart from the Arbitration Act, many arbitral institutions have made provisions for expedited procedures, wherein the award is rendered primarily based on documents and written submissions made by the parties.22

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It is to be noted that if a party requests for oral hearings under Section 24(1) of the Arbitration Act the arbitral tribunal has to afford such hearing and if it fails to do so the award rendered by the arbitral tribunal would be liable to be set aside under Section 34 of the Arbitration Act on the grounds of being “patently illegal”.23

14. 15. 16. 17. 18. 19. 20. 21. 22.

Arbitration Act, s. 29B(2). Arbitration Act, s. 29B(2). Arbitration Act, s. 29B(3)(a). Arbitration Act, s. 29B(3)(b). Arbitration Act, s. 29B(3)(d). Arbitration Act, s. 29B(4). Arbitration Act, s. 29B(5) r/​w s. 29A(3). Arbitration Act, s. 24(1). MCIA Rules, 2016, r. 12; DIAC (Arbitration Proceedings) Rules, 2018, r. 13; SIAC Rules, 2016, r. 24; HKIAC Rules, 2018, art. 42; SCC, Rules for Expedited Arbitrations of the Stockholm Chamber of Commerce. 23. Oil & Natural Gas Corporation Ltd. v Saw Pipes (2003) 5 SCC 705, at para. 22.

788

Law, Practice and Procedure of Arbitration in India

Similarly, the arbitrator in Lovell Partnership (Northern) Ltd v AW Construction Plc24 was removed for misconduct and one of the reasons was that he had proceeded on a documents-​only basis, despite the fact that one party had made it clear in correspondences that oral evidence and probably discovery were necessary for the proper resolution of some of the issues. The undue emphasis on speed caused a disservice to the parties.

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As far as the economics of conducting arbitration proceedings are concerned, a document-​ only arbitration requires significantly less investment and resources. Contemporaneous documents simply need to be presented and not created.

irc

On the other hand, oral hearings collect all of the parties together with the tribunal which involves booking of conference rooms, travel arrangement for the parties, counsels, and the arbitrators, and in certain cases arranging for overnight stays.

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Moreover, documents-​ only arbitration also makes the process time effective. However, care must be taken not to overlook due process in the process of making the arbitration cost and time effective.

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[27.3] PREPARATION FOR THE HEARING

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In arbitration, it becomes necessary that the proceedings are planned. This is because there is no particular set of applicable procedural rules in arbitration. The exception being unless the arbitration is being governed by the rules of an arbitral institution as for instance the MCIA Rules, 2016 or the SIAC Rules, 2016. Planning further enables the parties to better prepare for their submissions on different aspects of their case.25

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Both the arbitral tribunal and the parties are expected to understand the nature of the arbitration proceedings before the hearing commences. The arbitral tribunal will normally ensure that the proceedings will be conducted in accordance with the arbitration agreement and any supplementary agreement.

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The arbitral tribunal will invite the parties to agree on a proposed hearing timetable and may convene a telephonic or a virtual video conference in the weeks preceding the hearing to finalise the schedule and procedure at the hearing.26

24. (1996) 81 BLR 83. 25. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2402. 26. Michael McIlwrath and John Savage, International Arbitration and Mediation: A Practical Guide (Wolters Kluwer Law & Business 2010), p. 308, at para. 5-​229; see also Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2402.

789

Chapter 27—​​​Procedure at the Hearing

The discussions may also include the manner in which the hearings are to be organised (viz. the logistics and the time-​table) and the submissions which are to be made to the arbitral tribunal (viz. on the disputed issues).27 The arbitral tribunal in Aminoil28 case, at the close of the written stage of the proceedings, convened a meeting with the parties and their counsel to consider various procedural matters relating to the forthcoming oral hearing.

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The arbitral tribunal then made an order fixing the hearing date in Paris. It specified, among other things, seven items for the parties to consider including the order in which they would be taken, and which side should speak first on each issue.

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The conduct of the hearing is, nevertheless, left to the agreement of the parties and the discretion of the arbitral tribunal.29 Certain institutional rules like that of the MCIA30 and the ICC31 require a mandatory initial procedural conference to establish a timetable for the conduct of the arbitration.

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The arbitral tribunal is expected to read the pleadings and witness statements and note areas where it may need further explanation. It should also scrutinise the issues that have been agreed upon by the parties to see whether they reflect the issues in the pleadings.

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After reading the pleadings, the arbitral tribunal will be able to follow the strategy adopted by the parties in presenting their case. Most arbitral tribunals have a checklist of items they would require for the hearing. This includes a notebook for taking notes, pens of different colours (for recording and listing exhibits), oaths and affirmation texts, etc.

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It is usual for the parties to make arrangements for the hearing room which is usually at the place of the arbitration. The parties may also require to break out rooms where they can convene privately after hearing hours and during the breaks, a separate break room should also be provided for the convenience of the tribunal. In the case of institutional arbitrations, these issues are taken care of by the institution administering the arbitration.

27. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2438. 28. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 6.62. 29. Arbitration Act, s. 24. 30. MCIA Rules, 2016, r. 21. 31. ICC Rules, effective 1 January 2020, art. 24.

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Law, Practice and Procedure of Arbitration in India

Such hearing will take place in a conference or hearing room, mostly in an arbitration institution like the Mumbai Centre for International Arbitration in Mumbai or the Singapore International Arbitration Centre in Singapore.

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The hearings can even take place at the premises of any professional body or any particular club or even at the arbitrator’s office, the lawyers’ offices, and hotels. All this is subject to the agreement of the parties and the arbitral tribunal and in accordance with the affordability and the convenience of the parties, their representatives, and the arbitrators.

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Recently, owing to the COVID-​19 pandemic, arbitration hearings are happening virtually. For a virtual hearing, the parties are required to make the necessary logistical and technological arrangements such as the number of participants, time-​zone difference, guiding protocols, any data privacy concerns, and the choice of online platform, that is, Zoom, VidyoCloud, or Microsoft Teams.

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In the case of institutional arbitrations, these arrangements are taken care of by the arbitral institutions. Major arbitral institutions32 around the world have issued certain guidelines for virtual arbitrations proceedings and the mechanism laid out therein is now being employed at pace in international arbitrations.

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Conditions of comfort are important, particularly in long and complex hearings. If the room is uncomfortable, it will affect the alertness of the participants. The furniture of the hearing room is normally arranged to set a degree of formality in separating the two parties with the arbitral tribunal sitting at the head. The setting is much more intimate than a courtroom and is more akin to a hearing in a judge’s chambers.

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In almost all international commercial arbitration cases it will be helpful for the parties to provide an overview or roadmap of the arguments for the arbitral tribunal by way of opening written submissions or skeleton arguments. Modern commercial cases produce great quantities of documentation.

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This is partly because the task of selecting documentation for the case is usually delegated to very junior members of the legal team, who will always exercise abundant caution and include every document that could potentially be relevant. This creates a huge amount of reading material for the arbitral tribunal.

32. ICC issued ICC Guidance Note on Possible Measures Aimed at Mitigating the Effects of the COVID-​19 Pandemic, available at https://​iccwbo.org/​publication/​icc-​guidance-​note-​on-​possible-​measures-​aimed-​at-​ mitigating-​the-​effects-​of-​the-​covid-​19-​pandemic/​; SIAC President issued a letter, dated 28 April 2020, available at https://​www.siac.org.sg/​images/​stories/​press_​release/​2020/​[Open%20Letter%20from%20SIAC%20 Court%20President]%20Arbitration%20at%20SIAC%20during%20%20COVID-​19.pdf.

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It should be remembered that while counsel and parties may have lived and breathed a case for months or years before reaching the hearing, the arbitral tribunal will be a relative newcomer and has to wade through the documentation for the first time. Written submissions exceeding hundreds of pages from two or more parties can exacerbate the problem.

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A good opening or skeleton argument that outlines the points to be argued clearly and concisely, with cross-​references to relevant documents and authorities in the bundles, is a real aid to an arbitral tribunal when they are pre-​reading the (usually voluminous) bundles and during the hearing itself.33

[27.4] THE HEARING

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The general practice in arbitration, which has also been recognised by national statutes and institutional rules, is for the arbitral tribunal to make provisions for oral hearings. At such hearings, the counsels can make their legal submissions and witnesses can be examined by the opposing counsels and also by the tribunal.34

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The hearings typically commence with an introductory and an organisational statement from the arbitral tribunal. This will usually be followed by an opening statement made by the counsels of the parties (first the claimant and then the respondent, however, not always), followed by the examination of the witnesses and a closing statement wherever the same is appropriate.35

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However, there are certain cases where the respondent has challenged the jurisdiction of the arbitral tribunal, In such cases, the tribunal may allow the respondent to argue the issue of jurisdiction followed by the claimant only to the issue of jurisdiction.

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The arbitral tribunal at all times needs to show judicial temperament, ability, and capacity. It is during the hearing period where the parties may notice any deficiencies of the arbitral tribunal particularly not understanding the case or displaying bias.

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During the actual hearing, the arbitral tribunal must ensure that evidence is received in the presence of the parties concerned. It may decide to accept evidence by oral testimony or witness statements, provided there is no contrary intention by the parties.

33. Inplayer Ltd (formerly Invideous Ltd) v Thorogood [2014] EWCA Civ 1511, at para. 55, per Jackson LJ. 34. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2430. 35. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2441.

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Law, Practice and Procedure of Arbitration in India

Such evidence will include evidence by witnesses, expert witnesses, cross-​ examination of any such witnesses, testimony, and cross-​examination of a party. In the absence of an express or implied agreement to the contrary, parties are entitled to cross-​examine the other party’s witnesses.

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Section 18 of the Arbitration Act imposes on the arbitral tribunal to treat the parties equally. Section 18 also ensures that the parties are afforded a full opportunity to present their case. Therefore, the arbitral tribunal is bound by the principles of natural justice which forms a part of the fundamental policy of the Indian law.36

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Thus, although the parties have an opportunity to lead evidence and conduct cross-​ examination this does not mean that Section 24 of the Arbitration Act allows countenance and unending cross-​examination or oral arguments.

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Moreover, the length and the scope of the hearings are always open for the arbitral tribunal to determine which would necessarily depend upon the facts and circumstances of each case.37

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The arbitral tribunal is also entitled to ask questions to the witnesses during the examination or after the parties have completed their questioning. There may be occasions when the arbitral tribunal needs to intervene in the counsel’s examination of a witness but it is necessary to do so at the right instance.

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It should be noted that certain legal traditions view questioning or other active intervention by the arbitral tribunal as “possible indicators of prejudgment or lack of neutrality”.38

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The general approach is to allow both counsels to complete their examination of the witness before the arbitral tribunal directs questions to the witness. In this way, the counsel can progress through the examination of a witness in the way he has planned. After cross-​examination by the other side, the counsel may re-​examine the witness to clarify or explain any issues raised during the cross-​examination.

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An experienced arbitral tribunal will rarely intervene in the cross-​examination by competent counsel.39 The interruption itself can be very useful for counsel because it

36. ONGC Ltd. v Western Geco International Ltd. (2014) 9 SCC 263; Associate Builders v Delhi Development Authority (2015) 3 SCC 49; Ssangyong Engineering & Construction Co. Ltd. v National Highways Authority of India 2019 (3) ArbLR 152 (SC). 37. Sukhbir Singh v Hindustan Petroleum Corporation Ltd. 2020 (1) ArbLR 415 (Delhi), at para. 46. 38. Mark Kantor, Valuation for Arbitration (Alphen aan den Rijn: Kluwer Law International 2008), p. 279, n. 791. 39. Tackaberry, Marriot QC, and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson Sweet & Maxwell 2003), at para. 2-​798.

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provides them with an indication of the issues at the forefront of the mind of the tribunal or the way the tribunal is interpreting a particular contractual or statutory provision. After the arbitral tribunal has asked any questions of the witness, the counsel should be allowed to re-​examine the witness within the range of questions asked by the arbitral tribunal. The order in which this is done is the same as for the previous examination of the witness by way of examination-​in-​chief, cross-​examination, and re-​examination.

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The arbitral tribunal must be cautious that it does not take a lead in questioning the witnesses by adopting an inquisitorial approach to such an extent that could lead to the imputation of bias.

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Section 19 of the Arbitration Act allows the parties to agree on the procedure to be followed by the arbitral tribunal in the conduct of its proceedings.40 In the absence of any such agreement, the arbitral tribunal has the authority to determine the applicable procedure of the arbitration.41

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Constant interruptions and interference by the arbitral tribunal can prevent a case from being put fairly. Unless used wisely, such interruptions may not reduce the length of the arbitration. In many instances, this may prolong the period of hearings. The arbitral tribunal has to maintain a balance and keep counsel or representatives focused on relevant matters without preventing the parties from putting their cases.

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The difficulty is likely to be more acute in the rare situations where one party to arbitration appears in person without the benefit of legal representation or is absent altogether.

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In such a situation an arbitral tribunal is likely to take a more active role in the proceedings. Considerable care should be taken not to overstep the boundaries of the appearance of partiality by acting as an advocate for the unrepresented or absent party.

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Post cross-​examination, the counsel of parties deliver their closing arguments in the same order as the opening statements, that is, first the claimant followed by the respondent. Once the hearing is concluded it is appropriate for the tribunal to make a declaration to that effect.42 It is customary for a tribunal to ask the parties prior to the

40. Arbitration Act, s. 19(2). 41. Arbitration Act, s. 19(3). 42. For example, ICC Rules, 2012, art. 27; HKIAC Rules, art. 27.1; SIAC Rules, art. 28.1. Under other rules, it is expressed in a permissive manner. See UNCITRAL Rules, 2010, art. 31.1; ICDR Rules, art. 24.1; ACICA Rules, art. 30.1.

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Law, Practice and Procedure of Arbitration in India

close of the hearing whether they have any comments to make as to the conduct of the proceedings.43 This is the result of “due process paranoia” commonly suffered by the arbitral tribunal.

[27.5] TIME AND PLACE OF THE HEARING

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Lastly, the demeanour of the participants in an arbitral proceeding is less formal than the one seen in a court proceeding. Nevertheless, due care much is observed and the proceedings must be conducted seriously and professionally rather than informal.44

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Article 20 of the Model Law provides that the parties are free to agree on the place of arbitration, failing to arrive upon such an agreement the place of arbitration is to be determined by the arbitral tribunal.45

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Section 20 of the Arbitration Act has been adopted from Article 20 of the Model Law which reads as under:

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“20. Place of arbitration.

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(1) The parties are free to agree on the place of arbitration.

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(2) Failing any agreement referred to in sub-​section (1), the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties.

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(3) Notwithstanding sub-​section (1) or sub-​section (2), the arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of documents, goods or other property.”

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While clarifying the doctrine of seat and venue under the 1996 Act, the Supreme Court of India in BALCO, stated that the term “place of arbitration” used in Sections 20(1) and (2) would connote “seat” and the term “place” used in Section 20(3) would connote “venue”. Accordingly, as per the Arbitration Act party autonomy is paramount in choosing both the seat of arbitration and venue of the hearing, although many rules give the tribunal power to choose the venue for hearing and only require consultation with the

43. ‘Part II: The Process of an Arbitration, Chapter 9: Hearings’, in Jeffrey Maurice Waincymer, Procedure and Evidence in International Arbitration (Kluwer Law International 2012), pp. 717–​741. 44. Ibid. 45. UNCITRAL Model Law, art. 20(1).

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Chapter 27—​​​Procedure at the Hearing

parties.46 Such is the case with the Mumbai International Arbitration Centre Rules, 201647 and the Delhi International Arbitration Centre Rules, 2018.48 While the venue can be anywhere, the seat of arbitration is specific. However, a venue of arbitration will become the seat of arbitration in the absence of any contrary intention.49

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Although the idea of virtual arbitration is not new, the COVID pandemic has made choosing of a venue for conducting physical hearing less practical. Moreover, the Supreme Court of India has time and again allowed the use of virtual video conferences for conducting hearings.50

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The High Court of Delhi has done the same when it allowed the partial resumption of the functioning of the Delhi International Arbitration Centre for hearings only using video conferences.51

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Unlike court proceedings, an arbitration hearing may only take place after all interlocutory preparations are completed, the submissions have been made, discovery procedures complied with, and witness statements, if any, have been made and exchanged.

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An important issue that generally arises is that in relation to allocation of time between the parties. On one hand, the arbitral tribunal has to ensure that those parties are given sufficient opportunity to present their case; on the other hand, the arbitral tribunal also has to make sure that both the parties are equally treated.

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It is incumbent upon the arbitral tribunal to give sufficient advance notice52 to the parties of the time and place, of any hearing and also of any meeting for the purposes of inspection of documents, goods, or other property.

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This requirement is fundamental as it enables the parties to participate effectively in the proceedings and to prepare and present their case. If a party has not been given proper notice of the arbitral proceedings, the resulting award is liable to be set aside.53

SCC Rules, art. 20(2). See also HKIAC Rules, art. 15. MCIA Rules, 2016, r. 23(2). DIAC Rules, 2018, r. 23(2). BGS SGS Soma JV v NHPC Ltd. 2019 SCC Online SC 1585, at para. 84. IN RE: Guidelines for Court Functioning Through Video Conferencing During COVID-​19 Pandemic, Suo Motu Writ (Civil) No.5/​2020, Supreme Court of India; State of Maharashtra v Praful B. Desai (2003) 4 SCC 601. 51. Notification –​Partial resumption of functioning of Delhi International Arbitration Centre, 5 June 2020. 52. Atul R Shah v M/​S V Vrijlal Lalloobhai & Co AIR 1999 Bom 67, 1998 (4) BomCR 867 (Bombay). 53. Ssangyong Engineering & Construction Co. Ltd. v National Highways Authority of India AIR 2019 SC 5041. 46. 47. 48. 49. 50.

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Law, Practice and Procedure of Arbitration in India

Therefore, it is essential that the arbitral tribunal, before it proceeds with the arbitration ensures that the parties have been given due notice of the hearing. If it has any doubts about whether a party’s absence is inadvertent, it should adjourn the hearing and make inquiries.

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A party should never deliberately refuse to attend a hearing hoping to gain a tactical advantage54 and should use every possible endeavour to attend a hearing unless it is genuinely too proximate to the time of notice or attendance is genuinely impossible.

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The hearing itself can be held anywhere convenient to the parties and arbitral tribunal in a suitable hearing room able to accommodate all the participants and their documents. The length of the hearing will normally be fixed by the arbitral tribunal after consulting the parties about the time required by them to present their witnesses.

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An example of a one-​day hearing may be in the following manner:55

1 Hour Maximum 1 Hour Maximum 1:00 PM 2:00 PM 1 Hour Maximum 1 Hour Maximum

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Claimants Opening Statements Respondents Opening Statements Lunch Break Questions by Arbitrator Witness Examination by Claimant Witness Examination by Respondent

10:00 AM

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Introduction by the Arbitral Tribunal

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[27.6] PROCEDURE AT THE HEARING

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There is a general tendency in arbitration proceedings by the arbitral tribunal to encourage parties to produce, present, and rely on relevant contemporaneous documentary evidence. This is a vital step which can contribute towards shorter hearings in the interest of saving time.

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It saves costs as well which include fees that are to be paid to the arbitrators, the lawyers, the experts who may be appointed, and other participants operating away from their home bases.56

54. If properly notified of the hearing, non-​attendance is not a ground for a party to appeal an interim or final award and consequently such conduct is ill-​advised; Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 5.121. 55. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2443. 56. Ibid, pp. 2438–2439.

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Chapter 27—​​​Procedure at the Hearing

There is no fixed procedure which is adopted at hearings. However, the UNCITRAL Notes on Organizing Arbitral Proceedings explain the intent and approach taken in having hearings as follows:

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“Arbitration rules typically give broad latitude to the arbitral tribunal to determine the order of presentations at the hearings. Within that latitude, practices differ, for example, as to whether opening or closing statements are heard and their level of detail; the sequence in which the claimant and the respondent present their opening statements, arguments, witnesses and other evidence; and whether the respondent or the claimant has the last word. In view of such differences, or when no arbitration rules apply, it may foster efficiency of the proceedings if the arbitral tribunal clarifies to the parties, in advance of the hearings, the manner in which it will conduct the hearings, at least in broad lines.”

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In the backdrop of what has been stated above the following is the manner in which procedure at hearings has emerged in arbitration proceedings.

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The first point to note is that court procedures do not have to be (and perhaps should not be) mimicked in arbitration.57 However, in a typical arbitration at the beginning of each hearing day, the arbitral tribunal will call the proceedings to order. It will circulate an attendance sheet and request those present to list their names and status on it.

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The arbitration normally starts by settling administrative matters, for instance, compliance with previous directions, need for an adjournment, the interposing of another witness, or change of hearing hours for the convenience of the witness or parties before moving on the arbitration proper.

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The practice in some jurisdictions of counsel making opening statements to appraise the arbitrator of the positions of the parties is based on their pleadings and evidence.

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Sutton in Russell on Arbitration describes and advises as follows:

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“The proceedings will usually begin with an opening statement from the claimant, and then possibly a short opening statement from the respondent, although this is often dispensed with. Opening statements will usually address specifically the key documents and evidence relied upon, and set out the party’s arguments and the case it will seek to establish in the course of the reference. However, lengthy opening statements and reading aloud large numbers of documents should very much be discouraged.”58

57. Sutton, Gill and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 5-​192. 58. Ibid, at para. 5-​203.

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Law, Practice and Procedure of Arbitration in India

N. Kaplan QC states that: “Most experienced arbitrators in the construction field would no longer tolerate long, oral opening speeches by Counsel on both sides.” He adds:

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“Opening statements should be prepared by both parties and these statements should be served upon the arbitrator prior to the commencement of the hearing. He can then read them at his leisure without the parties being present, with the result that time and money are saved and with the further result that when he enters the hearing room, he knows precisely what the case is all about.”59

irc

Otherwise, Tackaberry and Marriott state that the usual order of events at the hearing is as follows:60 (1) The claimant opens his case by referring to the statement of claims.



(2) Evidence-​in-​chief of the claimant’s first witness.



(3) Cross-​examination of the said witness by the respondent.



(4) Re-​examination of the said witness by the claimant. Procedures in 2, 3, and 4 are repeated for each successive witness.



(5) The respondent opens his case by referring to the statement of the counterclaim.



(6) Evidence-​in-​chief of the respondent’s first witness.



(7) Cross-​examination of the said witness by the claimant.



(8) Re-​examination of the said witness by the respondent. Procedures in 6, 7, and 8 are repeated for each successive witness.

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(9) Closing submissions by the respondent.

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(10) Closing submissions by the claimant.

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If the arbitral tribunal does not intend to enter a dialogue with counsel during their closing submissions it will be much more cost-​effective for closing submissions to be delivered in writing, possibly with a short subsequent hearing fixed for any questions

59. N. Kaplan QC, “Modern Commercial Arbitration” (1997) 53 Arbitration 225, at p. 226. 60. Tackaberry, Marriot QC, and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson Sweet & Maxwell 2003), at para. 2-​792 onwards.

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the arbitral tribunal may have arising out of these.61 At the close of the hearing, the arbitral tribunal should make it clear to the parties that the proceedings are at an end. Leading arbitrators have coined the phrase the “Böckstiegel Method” to describe the prevailing practice of Karl-​Heinz Böckstiegel in many of the arbitrations he has chaired.62 It is otherwise described as the chess clock method. Böckstiegel himself has made it clear that “(t)here is no one ‘best’ way to conduct a hearing”.63

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The method is described as follows:

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“From the gross time available for the hearing one deducts estimated time for coffee and lunch breaks, procedural discussions and questions by the arbitrators, so as to arrive at net time available for the parties. This time will normally be divided by two between the two parties and each party will be free to use its time as it prefers for introduction and examination of witnesses presented by itself or the other party. This method seeks, on the one hand, to ensure equality between the parties and, on the other hand, to give each party the freedom to use its time for what it considers most important in the hearing.”64

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[27.7] TRANSCRIPTS OF THE HEARING

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For small and domestic arbitrations, the arbitral tribunal makes notes during the hearing when there is no recording or transcript being made by the parties.

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Since the arbitrator is writing down the evidence, the witnesses should be told to speak clearly and at a speed commensurate with the arbitrator’s writing hand. Certain arbitral institutions like the LCIA also assist the arbitral tribunal in making arrangements for the transcripts of the hearings.65

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Most arbitrators use a lined foolscap notebook where they record the witness, date, and number of each day’s hearing, time of commencement and finishing time for each hearing day, times of commencement and resumption of any adjournment during the day. 61. Tackaberry, Marriot QC, and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson Sweet & Maxwell 2003), at para. 2-​801. 62. Jan Paulsson, “The Timely Arbitrator: Reflections on the Böckstiegel Method” (2006) Arbitration International 22, No. 1:19. 63. Karl-​Heinz Böckstiegel, “Case Management by Arbitrators: Experiences and Suggestions”, in Gerald Aksen et al. (eds) Global Reflections on International Law, Commerce and Dispute Resolution: Liber Amicorum in Honour of Robert Briner (Paris: ICC Publishing 2005), p. 123. 64. Karl-​Heinz Böckstiegel, “Case Management by Arbitrators: Experiences and Suggestions”, in Gerald Aksen et al. (eds) Global Reflections on International Law, Commerce and Dispute Resolution: Liber Amicorum in Honour of Robert Briner (Paris: ICC Publishing 2005), p. 123. 65. LCIA Notes for Arbitrators, s. 1.3.

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Law, Practice and Procedure of Arbitration in India

The arbitrator may record his opinion of the witness or other comments which may be useful when his award is being written. As professionals have become more familiar with technology and both price and utility have improved, it is increasingly common also for the tribunal to take notes on a laptop.

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In recording his notes, the arbitrator stays focused on what is occurring in the arbitration. He has to endure a period of concentration during the hearing. He has to be alert in taking notes, receiving and recording exhibits, making rulings, and giving directions from time to time.

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The notes should include the specific wording of an objection by counsel and the arbitral tribunal’s ruling or direction on it. Its rulings and directions may affect the whole outcome of the arbitration.

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The arbitrator’s notes, in conjunction with the relevant documentary evidence and what is hoped, will be useful written submissions from the parties, will form the basis of the award, therefore great care must be taken with all these elements.

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The arbitral tribunal should be aware that parties and their representatives may feel some consternation if the arbitral tribunal does not appear to be taking any notes during proceedings.

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Another arrangement is to have a junior lawyer or a professional stenographer type the notes of evidence which is projected onto a screen during the hearing. All present in the hearing room are, therefore, able to view the question and answers. The final transcript is emailed by the end of the hearing day to all involved. This is also known as real-​time transcription.

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Hearings in most international arbitrations are recorded by a transcription service which can appear in real-​time on computer screens. Alternatively, the transcript of the hearing will be generated overnight or sometime after the hearing for the parties to use in the course of the hearing, in preparing post-​hearing submissions.

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The arbitral tribunal will use the transcript when deliberating and writing up its award. Given its expense, it may not be suitable for small value disputes or where there are few or no witnesses or experts.66

[27.8] INSPECTION OF THE SUBJECT MATTER OF THE DISPUTE The arbitral tribunal’s on-​site inspection is a see, touch, and smell exercise to provide an impression of the place or subject matter to facilitate a fuller understanding of the 66. Michael McIlwrath and John Savage, International Arbitration and Mediation a Practical Guide (Wolters Kluwer Law & Business 2010), p. 309, at para. 5-​234.

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Chapter 27—​​​Procedure at the Hearing

factual issues in dispute. Most arbitral legislation and rules empower the arbitral tribunal to conduct on-​site inspections.67 In some types of disputes, for example, in commodity trades or building contracts, the arbitral tribunal may inspect the subject matter of the dispute before or after the parties have adduced their documentary and oral evidence.

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The arbitral tribunal may also require parties to allow inspection of “any site, property, machinery or any other goods or process, or documents”.68 However, parties must be given sufficient advance notice of the inspection as part of the application of the due process principles.69

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Section 24 of the Arbitration Act provides that the arbitral tribunal shall give sufficient advance notice to the parties for inspection of documents, goods, or other property.70 Similar provisions can also be found under the Model Law71 and various institutional rules.72

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Among leading institutional rules, the LCIA Rules are most explicit. Articles 22(1) (iii) and 22(1)(iv) of the LCIA Rules empower the tribunal

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“to conduct such enquiries as may appear to the Arbitral Tribunal to be necessary or expedient … and to order any party to make any documents, goods, samples, property, site or thing under its control available for inspection by the Arbitral Tribunal, any other party, any expert to such party, and any expert to the Tribunal.”

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Article 22(1)(v) goes on to provide the tribunal with specific powers to order the disclosure of documents, including: “to order any party to produce to the Arbitral Tribunal, and to the other parties, for inspection, and to supply copies of, any documents or classes of documents in their possession, custody or power which the Arbitral Tribunal decides to be relevant.”73

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Redfern and Hunter state that such inspection by the arbitral tribunal can be particularly important if the disputes relate to the quality or quantity of the material, but in practice, arbitral tribunals rarely conduct site inspections because the cost of such a visit is likely to outweigh the advantages.74

67. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at paras 6.146–​148. 68. IBA Rules on the Taking of Evidence in International Arbitration (2010), art. 7. 69. UNCITRAL Model Law, art. 20(2). 70. Arbitration Act, s. 24(2). 71. UNCITRAL Model Law, art. 24(2). 72. MCIA Rules, 2016, r. 25.2(b); SIAC Rules, 2016, r. 27(d) & (f); LCIA Rules, 2014, art. 22.1(4). 73. “Chapter 9: Disclosure and Evidence-​Taking in International Arbitration”, in Gary B. Born, International Arbitration: Law and Practice (2nd edn, Kluwer Law International 2015), pp. 185–​200. 74. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 6.148.

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Law, Practice and Procedure of Arbitration in India

The reason why site inspections rarely take place in international commercial arbitration is for logistical reasons: arranging for the arbitrators, parties, counsel, and perhaps witnesses and experts –​who are often from different parts of the world –​to visit a site will be an expensive and time-​consuming process.75

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It is now easy, affordable, and effective to provide an arbitral tribunal with digital photographs and high-​definition video, meaning physical site visits are unlikely in most cases.

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If the parties consider that the inspection will serve no useful purpose and incur an unnecessary expense, they can by agreement prevent the arbitral tribunal from inspecting the subject matter of the site of dispute. Such power of the arbitral tribunal is discretionary to inspect the site or subject matter unless both parties agree to the contrary.

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It is very much left to the arbitral tribunal to decide why, when, and how an on-​ site inspection should be conducted. However, it must do so in the presence of all the parties or their representatives who have the right to attend any on-​site inspection in accordance to principles of equal treatment and reasonable opportunity to present one’s case.

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At the inspection, the arbitral tribunal will not directly pose questions concerning the case to workers on site unless the counsel for the parties also has the right to ask further questions of those workers. The parties’ representatives’ comments and statements made at the site inspection should not be treated as evidence in the arbitral proceedings. The parties can also agree on whether the arbitrator can inspect the site unaccompanied by anyone.76

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[27.9] FINAL SUBMISSIONS BY THE PARTIES

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The type, number, and sequence of written submissions in arbitration vary. In small arbitrations, submissions may be done orally or dispensed together for reasons of speed and economics. The arbitral tribunal in a documents-​only arbitration may decide the dispute based on submitted documents, written submissions, and witness statement.77

75. Michael McIlwrath and John Savage, International Arbitration and Mediation: A Practical Guide (Wolters Kluwer Law & Business 2010), p. 307, at para. 5-​226. 76. Tackaberry, Marriot QC, and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson Sweet & Maxwell 2003), at para. 6.176. 77. Philip Yang, “The Organisation of International Arbitration Proceedings” in Pryles and Moser (eds), The Asian Leading Arbitrators’ Guide to International Arbitration (Jurisnet 2007), pp. 171–​172.

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Chapter 27—​​​Procedure at the Hearing

Generally, at the last stage, each party must be given a reasonable opportunity to make their arguments and submissions on the facts of the matter and on any legal issue which may arise.78 If there are no applicable arbitral institutional rules fixing time durations for submissions, the arbitral tribunal will normally set deadlines in consultation with the parties. The timelines would vary with the complexity of the factual and legal issues in dispute.

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The basic object of the whole exercise in conducting the arbitral proceedings is that each party should be able to present his case and rebut that of his opponent. Such oral or written submissions can cover arguments not only on the substance of the dispute but also on procedural issues. These will not raise new arguments but will summarise those made in the proceedings.

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It is now quite common for there to be an exchange of written post-​hearing submissions which replace oral submissions together.79 Such submissions are normally done consecutively rather than simultaneously. If necessary, the arbitral tribunal can also reserve the right to call any of the parties back for oral amplification.

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However, it has been held that if a particular finding would be well within the pleadings, evidence, and submissions in the case, there is no requirement that the arbitral tribunal invites further submissions on that issue.80

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What is reasonable would depend upon all the facts, including an agreement incorporated by the rules of a trade association setting time limits.81

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In the circumstances, the arbitral tribunal must balance a party’s right to a reasonable time to meet the case against him against the injustice to the other party, which may result from unreasonable delay. The arbitral tribunal is not obliged to allow every application for further time or to make further submissions.82

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It must be remembered that the final written submissions from the parties will often form the basis of the arbitral award, or will be highly relevant for the arbitral tribunal when this is drafted. Parties should avoid overwhelming the tribunal with unnecessarily lengthy final submissions and be thorough but relevant.

78. Carey and Brown v Henderson and Liddell (1920) 2 Ll L Rep 479; Altco Ltd v Sutherland [1971] 2 Lloyd’s Rep 515, at 518; Modern Engineering (Bristol) Ltd v C Miskin & Son Ltd [1981] 1 Lloyd’s Rep 135. 79. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 5-​209; the perception in ICSID arbitrations is that closing written submissions have become “universal practice”; see A. J. van de Berg, Arbitration Advocacy in Changing Times (2011), p. 226. 80. London Underground Ltd v Citylink Telecommunications Ltd [2007] EWHC 1749 (TCC). 81. Henry Bath & Son Ltd v Birgby Products [1962] 1 Lloyd’s Rep 389, at p. 397. 82. Mustill and Boyd, Commercial Arbitration (2nd edn, Butterworths 1989), p. 305. See also Overseas Fortune Shipping Pte Ltd v Great Eastern Shipping Co Ltd, The Singapore Fortune [1987] 1 Lloyd’s Rep 270.

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Law, Practice and Procedure of Arbitration in India

[27.10] SPLITTING THE PROCEDURE INTO PHASES The procedure in arbitration proceedings is generally split into phases particularly in cases with a large and complex question of law in dispute. This would help to increase efficiency, and reduce costs and time.83

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Examples include one dealing with jurisdictional issues,84 one dealing with liability, and the final one dealing with quantum of damages. It is known as bifurcation and trifurcation. Partial awards may be issued for each phase before the other phase commences.

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Provisions for such bifurcation are made in institutional rules and the tribunal has such jurisdiction to bifurcate jurisdictional issues. This is provided under the MCIA Rules, 2016, Rule 20; LCIA Rules, Article 23; SIAC Rules, 2016, Rule 28. A similar provision has also been made under Section 16 of the Arbitration Act.

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A finding by the arbitral tribunal that it lacks jurisdiction will dispense with the need to proceed to the next phase of dealing with the merits thus saving expense, time, and effort by the parties. Likewise, if the case fails on liability, there will be no need to arbitrate on the quantification of damages. Parties may also be prompted to settle the dispute upon considering the arbitral tribunal’s partial award at that particular phase.85

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This practice was adopted by the arbitral tribunal in Aminoil86 case has been discussed earlier in this chapter.

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[27.11] CONCLUSION

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A key challenge faced by the arbitral tribunal while conducting hearings is to conclude the arbitration with minimum time and cost. The time limits should be as short as possible, but still guarantee due process.

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Moreover, it is also important to understand the psychological aspects of dispute settlement. Parties will better respect the outcome if they respect the process.87

83. S. Greenberg, C. Kee, and J. R. Weeramantry, International Commercial Arbitration: An Asian-​Pacific perspective (Cambridge University Press 2011), p. 330. 84. Transfield Philippines Inc v Pacific Hydro Ltd [2006] VSC 175. 85. H Heilbron, “Assessing Damages in International Arbitration: Practical Considerations” in L.W. Newman and R. D. Hill (eds), The Leading Arbitrator’s Guide to International Arbitration (2nd edn, Jurisnet 2008), p. 445. 86. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 6.62. 87. “Part II: The Process of an Arbitration, Chapter 9: Hearings”, in Jeffrey Maurice Waincymer, Procedure and Evidence in International Arbitration (Kluwer Law International 2012), pp. 717–​741.

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Chapter 27—​​​Procedure at the Hearing

Ideally, if the procedural framework has been sensibly managed, then the hearing itself should be able to be conducted with the utmost efficiency. This includes minimal surprise, minimal attempts to add new procedural rulings or items of evidence, and concern for efficiency. Jan Paulsson sums up:

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“The purpose of hearings is to help the tribunal resolve the dispute. Counsel are to be given a reasonable opportunity to put in their evidence, and to persuade the arbitrator; but it is for the tribunal, not counsel, to determine what is reasonable.”88

88. Jan Paulsson, “The Timely Arbitrator: Reflections on the Böckstiegel Method” (2006) Arbitration International 22, No. 1:20.

Chapter 28 CONSEQUENCES OF DEFAULT BY PARTIES [28.1] INTRODUCTION......................................................................................................................... 806 [28.2] TYPES OF DEFAULTS.................................................................................................................. 807

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[28.3] MEANING OF “UNLESS OTHERWISE AGREED BY THE PARTIES” AND “SUFFICIENT CAUSE”................................................................................................................. 809 [28.4] DEFAULT OF THE CLAIMANT................................................................................................. 811 [28.5] DEFAULT OF THE RESPONDENT........................................................................................... 815 [28.6] DEFAULT OF A PARTY TO APPEAR OR PRODUCE EVIDENCE..................................... 818

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[28.7] PROCEDURE IN EX PARTE HEARINGS AND PASSING AN EX PARTE AWARD......... 819 [28.8] OTHER GUERILLA TACTICS USED BY PARTIES TO DISRUPT ARBITRATION PROCEEDINGS............................................................................................................................. 824

[28.1] INTRODUCTION

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[28.9] CONCLUSION............................................................................................................................... 829

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Circumstances may mean that one or, less commonly, both parties are unenthusiastic about the arbitration proceedings. Most frequently, a respondent hopes to frustrate the arbitral process by refusing to participate or operating at a glacial pace.

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The eagerness and animosity to “have it out” at the pre-​arbitration stage is tempered by the reality of the costs and effort of conducting an arbitration. A change in a party’s board of directors or the overarching poor economic climate can make arbitral proceedings less attractive. A reference to arbitration may be made with the expectation that the respondent would cave and settle, rather than the genuine intention to arbitrate.

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All these situations can give rise to defaults. The issue of procedural breach of duty or default on the part of a party to an arbitration is commonplace in any legal proceeding. Such breach of duty can arise from a refusal or failure to comply with an order made or a party’s failure to discharge their responsibility. Section 25 of the Arbitration Act, based on Article 25 of the Model Law, confers default powers upon arbitral tribunals in cases where the parties fail to comply with its directions without sufficient cause.1

1. Arbitration Act, s. 25.

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Chapter 28—​​​Consequences of Default by Parties

Russell explains: “If the tribunal were not able to proceed in the absence of a party, it would be possible for that party to circumvent the arbitration agreement by simply refusing or failing to participate in the reference.”2

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Therefore, determination of default is of obvious importance for the smoothness of the arbitration proceedings. This area of arbitration law is relatively undeveloped as compared to the default powers of court. Consequently, arbitral tribunals are rather cautious when exercising such powers as they fear challenge. Arbitration rules make provisions for the problems of delay and non-​cooperation and parties are well advised to be familiar with the rules if they are applicable to the arbitration proceedings.

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The arbitral tribunal must balance the parties’ right to a fair trial against obstructionist tactics. Particularly, it must be careful in committing mistakes of procedure by being overhasty. Its failure to do so may result in new delays and disruption and provide grounds for setting aside or refusal of enforcement of the award.

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Defaults may be committed by the claimant3 or the respondent4 or both parties.

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The arbitration law of India,5 France,6 Switzerland,7 the United States of America,8 England,9 and the Model Law10 countries generally permit arbitral tribunals to continue proceedings despite the default of a party.11

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However, if a party defaults due to a court order in the place of arbitration, then the tribunal will have to decide whether it should proceed.12

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[28.2] TYPES OF DEFAULTS

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Default usually occurs where: (1) The claimant or respondent fails to deliver a pleading within the agreed or stipulated time;

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Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 5-​195. Arbitration Act, s. 25(a). Section 25(b), Arbitration Act. Arbitration Act, s. 25. For example, Dovert et Tabourdeau v Confex (1992) Rev Arb No. 4, CA Paris, 7 February 1991, at pp. 625–​ 684; Fouchard, Gaillard, and Goldman, op. cit., para. 1224. 7. For example, Swiss Federal Tribunal, SJ 1982, o. 613, at p. 621, c14b. 8. Emilio v Sprint Spectrum L.O. No. 08-​CV-​7147, 2008 WL 4865050 (SDNY 6 November 2008). 9. UK Arbitration Act of 1996, s. 41. 10. Model Law, art. 25. 11. Thomas H. Webster, Handbook of UNCITRAL Arbitration (Sweet & Maxwell 2010), p. 424, at para. 30-​6. 12. Ibid.

2. 3. 4. 5. 6.

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Law, Practice and Procedure of Arbitration in India



(2) a party fails to appear at a hearing without sufficient cause;



(3) a party ignores a direction of the arbitrator to produce a document or take some step, within the time stipulated; or



(4) a party refuses to make advance deposits for the costs of the arbitration.

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Section 25 of the Arbitration Act mirrors Article 25 of the Model Law and confers default powers upon arbitral tribunals in cases where the parties fail to comply with its directions without sufficient cause.13 These powers for defaults by the parties include:

(1) Terminating the proceeding for the default of the claimant to file the statement of claim;14 or



(2) forfeiting the right of the respondent for a default on its part to file a statement of defence;15 or



(3) continuing with the arbitral proceedings and making an award based on available evidence where a party fails to appear at an oral hearing or produce documentary evidence.16

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The object of Section 25 of the Arbitration Act is to ensure that arbitral proceedings are conducted without unnecessary and unwarranted delays.17 Highlighting the vitality of default powers, the UNCITRAL Secretariat in its Explanatory Note of the Model Law wrote:

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“If any of the parties refuses or fails to take part in the arbitration or any stage thereof, the arbitration shall proceed notwithstanding such refusal or failure. … If any of the parties, although duly summoned, fails to appear without valid excuse, the arbitral tribunal shall have the power to proceed with the hearing.”18

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Provisions pertaining to the consequences of default by the parties to an arbitration have global acceptance. Amongst others, the UNCITRAL Rules,19 the American Arbitration

13. 14. 15. 16. 17. 18.

Arbitration Act, s. 25. Arbitration Act, s. 25(a). Arbitration Act, s. 25(b). Arbitration Act, s. 25(c). Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 703. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2470; UNCITRAL, Explanatory Note on the Model Law on 1985 International Commercial Arbitration, as amended in 2006, U.N. Doc.A/​CN/​9/​264, at para. 38 (2007). 19. UNCITRAL Rules, art. 30.

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Chapter 28—​​​Consequences of Default by Parties

Association,20 ICSID,21 the London Court of International Arbitration,22 and Hong Kong International Arbitration Centre23 have incorporated default clauses in their rules to uniformly deal with defaulting parties in international commercial arbitrations. Justice Indu Malhotra enlists two basic principles which govern arbitral proceedings under Section 25 of the Arbitration Act:24

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“First, the default does not constitute admission of liability. The arbitral tribunal must examine the merits of the claim. The second governing principle is that the default by a party must not paralyse or stall the arbitral proceedings.”

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Arbitral tribunals proceeding ex parte present two challenges. First, what constitutes a “refusal” to participate25 and the second, how the arbitral tribunal should proceed in such circumstances.26 This chapter covers these challenges in detail.

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Professor Dr Szasz has stated that:

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“It is a wise arbitration tribunal which itself is willing to fight obstruction, and has the skill to recognize where the demarcation line is between observing the parties’ justified rights and the need to fight obstruction.”27

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Gary B. Born observes that:

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“A sensible alternative to defaulting in an arbitration, in most cases, is to proceed under protest while expressly recording objections to the tribunal’s jurisdiction (including its competence-​competence) and/​or seeking immediate judicial recourse.”28

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[28.3] MEANING OF “UNLESS OTHERWISE AGREED BY THE PARTIES” AND “SUFFICIENT CAUSE”

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Parties have the autonomy to decide the procedures applicable to an arbitration by agreeing to them in the arbitration agreement. The preface to Section 25 of the Arbitration

Commercial Arbitration Rules and Mediation Procedures, American Arbitration Association, art. 31. ICSID Rules, r. 42. London Court of International Arbitration Rules, art. 15.8. Hong Kong International Arbitration Centre Rules, art. 26. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 704. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 410, at para. 6.192. 26. Ibid. 27. Professor Dr I. Szasz, “Preventing Delay or Disruption of Arbitration, Arbitration Rules and Practice of Institutions”, paper presented at Xth International Council of Commercial Arbitration Congress, Stockholm, 28–​31 May 1990, at pp. 5–​6. 28. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2469.

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20. 21. 22. 23. 24. 25.

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Law, Practice and Procedure of Arbitration in India

Act incorporates this basic principle through the phrase “unless otherwise agreed by the parties”. Therefore, if the arbitration agreement stipulates procedures which are contrary to Section 25 of the Arbitration, or the arbitration is conducted by an arbitral institution, the respective arbitration agreement of the institutional rules would take precedence.29

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The High Court of Andhra Pradesh in N. Jayalaxmi v R. Veeraswamy and Anr.,30 while commenting on the applicability of Section 25 of the Arbitration Act, held:

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“If, in a given case, the parties have agreed on the procedure to be followed by the arbitral tribunal including time schedule under Section 19(2) and such procedure enables the arbitrator to condone the delay in filing the statement of facts for sufficient cause, Section 25(a) has no application. In yet another given case, where the party has not agreed to a procedure to be followed by the arbitral tribunal, but, under Sub-​section (3) of Section 19 read with Section 23(1), the arbitral tribunal has laid down the procedure for the arbitral proceedings including the power to permit the parties to file statement of facts or claim petition beyond the period agreed, Section 25(a) has no application. In either of the situations, it is well within the jurisdiction of the arbitrator to extend the time for filing the claim statement.”

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The phrase “sufficient cause” implies the presence of legal and adequate reasons. This provision gives sufficient discretion to the arbitral tribunal to apply the law in a judicious manner, while assuring that the purpose behind Section 25 of the Arbitration Act does not get frustrated.31

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The High Court of Delhi in Awasthi Construction Co. v State (NCT of Delhi)32 held:

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“17. … Section 25, has not provided for termination of proceedings automatically on default by a party but has vested the discretion in the Arbitral Tribunal to, on sufficient cause being shown condone such default. We are of the view that no distinction ought to be drawn between showing such sufficient cause before the proceedings are terminated and after the proceedings are terminated. If the Arbitral Tribunal is empowered to condone default on sufficient cause being shown, it matters not when the same is shown. It may well-​nigh be possible that the sufficient cause itself is such which prevented the party concerned from showing it before the proceedings terminated. It would be a pedantic reading of the provision to hold that the Arbitral Tribunal in

29. 30. 31. 32.

Indu Malhotra, Commentary on the Law of Arbitration (4th edn, Wolters Kluwer 2020), p. 704. 2004 (1) ARBLR 31, at para. 20. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 705. 2012 SCC OnLine Del 544, at para. 173.

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Chapter 28—​​​Consequences of Default by Parties

such cases also stands denuded. Once the legislature has vested the Arbitral Tribunal with such power, an order of termination cannot be allowed to come in the way of exercise thereof.”

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The Supreme Court of India in Balwant Singh v Jagdish Singh33 laid down that the test to check whether a cause is sufficient or not is to see whether it could be avoided by the party through the exercise of due care and attention. The consequences envisaged in Section 25 of the Arbitration Act can be invoked if sufficient cause for the non-​compliance of sub-​sections (a), (b), or (c) is not made out.34

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[28.4] DEFAULT OF THE CLAIMANT

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An arbitral tribunal must be mindful of the object of doing substantial justice to all the parties to an arbitration in arriving at its decision whether there exists sufficient cause. Technicalities should not prevent the arbitral tribunal from doing away with the default committed by a party.35

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The claimant may have commenced arbitration proceedings as a protective measure to avoid being affected by statutory and contractual limitation periods. In the face of difficulties in formulating the grounds of the claim or obtaining the necessary witnesses to support the case, the claimant may fail to or delay in delivering the statement of claim to the arbitral tribunal without a specified period.

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The statement of claim consists of pleadings which set forth the facts supporting the claim, points in issue, and the relief(s) sought. Usually, the claimant submits it within the time agreed by the parties or set by the arbitrator. If the claimant fails to do so, the arbitration cannot proceed.

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As discussed earlier, the Section 25 of the Arbitration Act is based on Article 25 of the Model Law. Section 25(a) of the Arbitration Act requires the arbitral tribunal to terminate the proceedings if, without sufficient cause, claimant fails to communicate its statement of claim within the period agreed by the parties or the arbitral tribunal. This is a directory provision, though it is subject to the agreement of the parties. This represents a considerable departure from the previous legislation, which gave the

33. (2010) 8 SCC 685. 34. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 706; Senbo Engineering Ltd. v State of Bihar and Ors. AIR 2004 Pat 33. 35. Reena Sadh v Anjana Enterprises (2008) 12 SCC 589, at para. 23; SREI International Finance Ltd. v Fair Growth Financial Services Ltd. (2005) 13 SCC 95, at para. 2.

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Law, Practice and Procedure of Arbitration in India

arbitrator no power to terminate proceedings if the claimant refuses to deliver its statement of claim.36

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Section 25 of the Arbitration Act has no application where parties have agreed to a procedure prescribed by the arbitral tribunal, including the time-​schedule framed under Section 19(2) of the Arbitration Act.37 Such procedures will enable the arbitrator to condone the delay in filing the statement of facts for sufficient cause.38 It is well within the jurisdiction of the arbitrator to extend the time for filing the statement of claim.39

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The object of Section 25 of the Arbitration Act clearly indicated that on sufficient cause being shown, the statement of claim may be permitted to be filed even after passing the order for terminating the proceedings, by accepting the explanation.40

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The Supreme Court of India in SREI Infrastructure Finance Limited v Tuff Drilling Private Limited41 (“SREI Infrastructure”) held that the arbitral tribunal has the power to recall its order terminating the proceeding under Section 25(a) of the Arbitration Act. It is only when the arbitral tribunal finds that the continuation of proceedings is impossible for non-​filing of the statement of claim, within the time provided, or extended time, that the proceedings may be terminated.42

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Section 25(c) of the Arbitration Act empowers the arbitrator to continue with the hearing and make an award if the claimant fails to appear at a hearing or produce documentary evidence and make an award.

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Section 25 of the Arbitration Act only requires a demonstration that the failure of the claimant is without sufficient cause, which is a matter to be decided by the arbitral tribunal.43 The power of the arbitral tribunal to continue or terminate the proceedings is a discretionary one and exercisable if the arbitral tribunal is satisfied that the defaulting party has not shown “sufficient cause” for its failure.44

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36. S. K. and Associates v Indian Farmers and Fertilizers 2010 SCC OnLine All 1620, at para. 17; Bremer Vulkan Schifbau Und Maschinenfabrik v South India Shipping Corporation, The Bremer Vulkan [1981] AC 909, [1981] 1 All ER 289, HL; Paal Wilson & Co A/​S v Partenreederei Hannah Blumenthal, The Hannah Blumenthal [1983] 1 All ER 34, [1983] 1 AC 854, HL; Food Corporation of India v Antclizo Shipping Corporation, The Antclizo [1988] 2 All ER 513 [1988] 1 WLR 603, HL. 37. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 707. 38. Ibid, p. 707. 39. Ibid, p. 704. 40. Ibid, p. 704. 41. [2018] 11 SCC 470. 42. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 707. 43. Indian Oil Corporation Ltd v Atv Projects India Ltd 2004 SCC OnLine Del 483, at para. 11. 44. Ibid.

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Chapter 28—​​​Consequences of Default by Parties

This requirement also carries with it the implication that the arbitral tribunal should give a reasonable opportunity to the defaulting party to explain its failure to comply. The sufficiency or insufficiency of the reasons is a matter to be determined by the arbitral tribunal and not by the court.45 The arbitral tribunal will have to determine what constitutes sufficient cause, which will depend on the facts of the case and the justification of the defaulting party.46

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Ordinarily, even the default termination order under Section 25(a) would be an award, with the remedy to approach the arbitral tribunal with sufficient cause for setting aside of the default termination order.47 Until 2018, various High Courts in India contradicted on:

(1) Whether an order terminating the arbitral proceedings would be deemed as an “award”; and



(2) further whether it will be amenable to a challenge under Section 34 of the Arbitration Act of under the writ jurisdiction of courts.

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The High Court of Delhi48, High Court of Calcutta,49 and High Court of Madras50 have held that the arbitrator’s award under Section 25(a) of the Arbitration Act is not amenable to the writ jurisdiction of the High Courts under Articles 226 or 227 of the Constitution of India.

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The Supreme Court of India set aside the controversy in SREI Infrastructure51 by affirming these decisions of the High Court of Delhi, High Court of Calcutta, and High Court of Madras. The Arbitration Act, being a self-​contained act, the remedy needs to be found within its bounds.52

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Article 16(2) of the Mumbai Centre for International Arbitration Rules, 2016 are similar to Article 30(1) of the Asian International Arbitration Centre Arbitration Rules (Revised 2018) which provide that if the claimant fails, without sufficient cause, to communicate its statement of claim in accordance to the relevant time limit, the arbitral

Ibid. Bharat Heavy Electricals Limited v M/​s. Jyothi Turbopower Services (2016) SCC OnLine Mad 4029, at para. 25. Paramjeet Singh Patheja v ICDS Ltd. (2006) 13 SCC 322. Awasthi Construction Co. v Government NCT of Delhi 2012 SCC OnLine Del 5443, at para. 15. NRP Projects Pvt. Ltd. v Hirak Mukhapadhyay & Anr. 2013 (1) Cal LJ 621. Bharat Heavy Electricals Ltd. v Jyothi Turbopower Services Pvt. Ltd. & Anr. 2017 (1) Arb LR 289 (Madras) (DB). 51. [2018] 11 SCC 470. 52. SREI Infrastructure Finance Limited v Tuff Drilling Private Limited, at para. 39. 45. 46. 47. 48. 49. 50.

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Law, Practice and Procedure of Arbitration in India

tribunal shall terminate the proceedings “unless the Respondent brings a counter claim and wishes the arbitration to continue”. Malaysian Legislation53 differs from the Arbitration Act such that it goes beyond the text of the Model Law. Section 27(d) of the Malaysian Arbitration Act, 2005 allows the arbitral tribunal to issue an award dismissing the claim if the claimant fails to proceed with it.54

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The arbitral tribunal’s powers do not extend as far as the powers under Section 41 of the English Arbitration Act 2005 because the award is restricted to dismissal, rather than an adverse award against the claimant.

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Section 25(a) of the Arbitration Act deals with the scenario where a default on behalf of the claimants in submitting their statement of claim within the time prescribed by the arbitral tribunal. However, it does not deal with the effect of such a termination on the rights of the parties.

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From the object of the Arbitration Act, it appears that termination of the proceedings under Section 25(a) shall have the effect as if the claimant had withdrawn the claim in the early stages of the proceedings.55

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An order passed under Section 25(a) is not an ex parte award on the merits of the case.56 These are rather different to Section 41 of the English Arbitration Act 1996 where the arbitral tribunal has the power to issue an award if there has been an inordinate and inexcusable delay.

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There the threshold is high57 because the arbitral tribunal is empowered to make any award, that is, one that like Frankenstein’s monster is prepared to turn on its creator.58

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The arbitral tribunal may consider suspending the arbitration or hold the arbitral proceedings in abeyance. It has a duty then to notify the claimant had factually failed to deliver the statement of claim on the date fixed for that and require explanation of the cause for failure to put forward point of claim and show cause why the arbitral proceedings should not be suspended. 53. Arbitration Act, 2005 (Act 646). 54. See Infineon Technologies (M) Sdn Bhd v Orisoft Technology Sdn Bhd (previously known as Orisoft Technology Bhd) [2011] 7 MLJ 539. 55. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 710. 56. Ibid, p. 707. 57. For example, delay is not to be regarded as inordinate where the limitation period has not expired, given that the claimant could restart proceedings with that time; see TAG Wealth Management v West [2008] EWHC 1466 (Comm). 58. Robert Merkin and Louis Flannery, Arbitration Act 1996 (5th edn, Informa Law from Routledge 2014), p. 161.

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Chapter 28—​​​Consequences of Default by Parties

However, this may not be feasible in view of the time-​limits prescribed under Section 29A of the Arbitration Act. Internationally, consistent with the language of Article 25(a) of the UNCITRAL Model Law, Courts have held that the arbitral tribunal was obligated to terminate the proceedings in case of a default by the claimant.59

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[28.5] DEFAULT OF THE RESPONDENT

Subject to an agreement between the parties, Section 25(b) of the Arbitration Act requires the respondent to submit the statement of defence within the time fixed by the arbitral tribunal.

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Should the respondent fail to do so, Section 25(b) of the Arbitration Act provides that the arbitral tribunal shall continue proceedings, without treating this as an admission of any allegation. Further, the arbitral tribunal shall have the discretion to treat the right of the respondent to file such statement of defence as having been forfeited.60

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Following the recommendation of the 246th Report of the Law Commission of India,61 Section 25(b) of the Arbitration Act was amended to incorporate a clarificatory provision which confers a discretionary power of the arbitral tribunal to forfeit the right to file the statement of defence in case of a default.62

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The amendment aims at the expeditious disposal of arbitrations and to deter the recalcitrant party from dragging the proceedings by resorting to dilatory tactics.63

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If a party defaults, the arbitral tribunal should proceed on an ex parte basis, first attempting to obtain the defaulting party’s participation and thereafter, by ensuring regular notice to the defaulting party of the ongoing proceedings.64 This statutory provision also helps to prevent proceedings being delayed by arguments over setting aside of default awards.65

59. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2472. 60. Arbitration Act, s. 25(b). 61. 246th Report of the Law Commission of India on “Amendment to the Arbitration and Conciliation Act, 1996”, August 2014. 62. 246th Report of the Law Commission of India on “Amendment to the Arbitration and Conciliation Act, 1996”, August 2014, at para. 75. 63. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 712. 64. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2470; Rebah Constr. CC v Renkie Bldg Contr. CC [2008] (3) SA 475 (T) (High Court of South Africa). 65. Hainan Machinery Import & Export Corporation v Donald & McArthy Pte Ltd [1995] 3 SLR(R) 354.

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Law, Practice and Procedure of Arbitration in India

Even though the arbitrator is not bound by technical rules of procedure, basic principles of natural justice enshrined in Section 18 of the Arbitration Act cannot be disregarded.66 Sufficient advance notice must be given regarding dates of oral hearing, inspection of document, and the exchange of pleadings by the parties.67

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If a party fails to attend a hearing on the due date and time, the arbitrator must give notice to proceed ex parte. If the party remains absent, the arbitrator may proceed ex parte on account of continued absence.68 The order to proceed ex parte must be communicated to all parties.69

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The High Court of Delhi in Prime Telesystem ltd v Sasken Communications70 held, where the respondent does not file any response to the claim of the claimant, the claim should not be immediately allowed by the arbitral tribunal.

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The arbitral must go into the merits of the claim irrespective of whether a response has been filed. Further the arbitral tribunal shall not consider the failure to file response as an admission to the allegations of claimant.

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Thus, whilst a defendant frustrates or evades arbitral proceedings by refusing to file a statement of defence, neither can a claimant seek victory based on technicalities or the late service of a statement of defence.

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An arbitral tribunal is entitled to draw an adverse inference from the deliberate failure to file any response.71 Nonetheless, Gary B. Born states that:

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“[a]‌tribunal should generally resist drawing adverse inference from a party’s default, which can be due to factors other than the strength of its case”.72

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The High Court of Madras73 has held that if the respondent fails to submit the statement of defence within the period granted by the arbitral tribunal or the extended period, it should not be construed to be an admission of the allegations of claims made by the claimant.

66. Ibid. 67. Ibid, pp. 354–​359. 68. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 712; Dalmia Cement (Bharat) Ltd. v Advance Commercial Co. Ltd. 1995 (1) Arb. LR 278 (Del) 69. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 712. 70. [2009] SCC OnLine Del 2138, at para. 19. 71. Prime Telesystem Ltd v Sasken Communications [2009] SCC Online Del 2138, at para. 19. 72. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2471. 73. Oriental Insurance Co. Ltd. v Shriram Transport Finance and Ors. 2018 SCC OnLine Mad 2204.

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Chapter 28—​​​Consequences of Default by Parties

The arbitral tribunal must consider the merits of the claim, irrespective of whether the statement of defence has been filed or not. It cannot consider the failure to file the response as an admission of the claims made by the claimant.

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The arbitral tribunal should not be overly quick to penalise a party for a default and should provide reasonable opportunity for it to be remedied.74 Proceedings should be continued by the arbitral tribunal in a fair manner to their culmination with the issue of an award, satisfying the arbitral tribunal’s duty to fulfil its mandate.

Both parties must be provided with an equal opportunity to present their case, examine or cross examine witnesses, and advance arguments through the arbitral proceedings.

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Arbitration therefore differs considerably from litigation in that there is no procedure for an award in default of a defence. Redfern and Hunter75 explain:

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“Accordingly, the arbitral tribunal is not given equivalent powers to that of the court to issue a ‘default’ judgment in favour of the claimant. It must make determination on the claims presented in the arbitration, and incorporate those determinations into the award. The ICSID Arbitration Rules set out default procedures in useful detail.”

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The High Court of Delhi in Awasthi Construction Co. v State (NCT of Delhi)76 held:

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“18. … If it were to be held that such power of review/​recall is not available to an Arbitral Tribunal, the Arbitral Tribunal would not be competent to set aside an order under Section 25(b) also, compelling the respondent against whom proceedings have been continued, to file a writ petition, making the continuation of proceedings before the Arbitral Tribunal a useless exercise.”

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In circumstances where both parties fail to appear, Mustill and Boyd77 opine:

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“If neither party appears, and if the arbitrator already has before him written submissions and evidence there is no reason in principle why he should not decide the case then and there on the material before him. But he should not do so unless he is satisfied that each party knows what material the other has placed before the arbitrator and has had an opportunity to deal with it. If in doubt the arbitrator should simply make an order adjourning the hearing to a date to be fixed: adding, if he thinks fit, that his fees for the wasted hearing should be borne by the parties equally.”

74. Rebah Construction CC v Renkie Building Construction CC [2008] ZAGPHC 34 (South Africa). 75. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 411, at para. 6.196. 76. 2012 SCC OnLine Del 5443, at para. 18. 77. Mustill and Boyd, Commercial Arbitration (2nd edn, Butterworths 1989), p. 346.

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Law, Practice and Procedure of Arbitration in India

[28.6] DEFAULT OF A PARTY TO APPEAR OR PRODUCE EVIDENCE

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Section 25(c) of the Arbitration Act specifically deals with the circumstances where a party fails to appear for an oral hearing or to produce evidence. In the event a party to the arbitral proceedings, without showing sufficient cause, fails to appear at an oral hearing, or produce documentary evidence, Section 25(c) of the Arbitration Act empowers the arbitral tribunal to continue with the proceedings, and the award on the basis of the evidence before it.78 Indu Malhotra79 states:

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“The arbitrator must go ahead with the proceedings, despite the absence of the defaulting party. If the defaulting party has been duly notified, and an opportunity has been given to present its case, the requirement of due process would be complied with. If the respondent fails to appear despite full opportunity being given, an ex parte award may be passed. However, the arbitrator must inform the parties before proceeding ex parte.”80

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This is necessary because it is likely that a party who boycotts an international arbitration intends to resist enforcement of any award ultimately rendered.

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Since it is a legitimate ground for refusal of recognition or enforcement of an award, whether under the New York Convention or otherwise, that a party has not had a reasonable opportunity to present its case, it is desirable that the award should itself show, on its face, the circumstances in which the respondent did not participate.81

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The Libyan government stated at the outset that it refused to take any part in the proceedings in the Libyan oil nationalisation cases82 on the grounds that the arbitral tribunals, in each case, had no jurisdiction.

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It will also be clear if a respondent expressly refuses to reply to correspondence from the arbitral tribunal, or to comply with any procedural directions as to the submission of written pleadings, and so forth.83

78. M/​s. Auto Craft Engineers v Akshar Automobiles Agencies Pvt. Ltd., Arbitration Petition Nos. 556 of 2014, decided by the Bombay High Court on 29 July 2016. 79. Indu Malhotra, Commentary on the Law of Arbitration, Vol.1 (4th edn, Wolters Kluwer 2020). 80. Ibid, p. 704. 81. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 410, at para. 6.192. 82. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015). 83. Ibid, p. 410, at para. 6.193.

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Chapter 28—​​​Consequences of Default by Parties

The provisions of this Section 25(c) of the Arbitration Act are significant because it enables the arbitral proceedings to continue even where a respondent tends to disrupt or thwart the proceedings by absenting itself from the proceedings. Section 25(c) of the Arbitration Act must be read in conjunction with Section 18 of the Arbitration Act which provides that an arbitral tribunal must give equal opportunity to each party to present their case.

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Section 25(c) of the Arbitration Act is not mandatory in nature and it is left on the arbitral tribunal to decide whether they may continue or terminate proceedings.84

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If a party does not adduce evidence but has no sufficient cause for this failure, it cannot argue that it has not been given a reasonable opportunity to present its case if the arbitral tribunal proceeds to make an award based on the evidence before it.85

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The arbitral tribunal should consider any evidence the absent party has adduced previously.86 The arbitral tribunal is not bound to accept the unchallenged evidence of the other party and can find that it is insufficient to prove that party’s case.87

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[28.7] PROCEDURE IN EX PARTE HEARINGS AND PASSING AN EX PARTE AWARD

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An ex parte award simply means an award passed in the absence of the other party.88 In an ex parte proceeding, the arbitral tribunal can proceed with the case, if the respondent remains absent on successive dates without sufficient cause, and despite notice by the arbitral tribunal.89

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The arbitral tribunal must exercise its discretion with circumspection and not unjustifiably proceed ex parte; otherwise the award will become vulnerable to a challenge on the ground of bias, or lack of equal opportunity to present one’s case.90 An arbitral tribunal must not exercise its default powers in cases where there is a single default.91

84. Puneet Kumar Jain v MSTC Ltd & Ors. (2014) SCC OnLine Del 2909, at para. 15. 85. Nanjing Cereals, Oils and Foodstuffs Import & Export Corp v Luckmate Commodities Trading Ltd [1994] HKCFI 140. 86. Sutton, Gill and Gearing, Russell on Arbitration (24th edn, Butterworths 2015), at para. 5-​198. 87. Lewis Emanuel & Son Ltd v Sammut [1959] 2 Lloyd’s Rep 629. 88. Sangram Singh v Election Tribunal, Kota AIR 1995 SC 425. 89. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 714. 90. Ibid. 91. Magama Leasing Ltd. v. Gujarat Composite Ltd. AIR 2006 Cal 288.

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Law, Practice and Procedure of Arbitration in India

An arbitral tribunal must not put unreasonable conditions for participation in future arbitration proceedings, for example, levy payment of heavy costs.92 The mere fact that the arbitration proceeds ex parte does not mean that the arbitral tribunal must accept the version of the claimant without question, not is it the duty of the arbitral tribunal to protect the non-​attending party.93

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In such cases, the arbitral tribunal should proceed with the hearing and issue its award, making sure that the precise circumstances in which the proceedings have taken place are specified in the award itself.94 The Supreme Court of India in Delta Distilleries Ltd. v United Spirits Ltd.95 held:

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“21. As seen from these two sections, Section 25(c) provides that in the event a party fails to appear at an oral hearing or to produce documentary evidence, the Arbitral Tribunal may continue the proceedings, and make the arbitral award on the evidence before it. This evidence can be sought either from any third person or from a party to the proceeding itself.”

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The High Court of Bombay in T.V. & Radio Publicity Services v Union of India & Anr.96 held that the absenting party was not only served with notice of the hearings, but at the conclusion of the hearings, the entire record of the arbitration was sent to the party. Despite the party being kept informed at all times by the arbitral tribunal, the party did not participate in the arbitral proceedings.

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The High Court of Bombay held that the party could not later seek undue advantage of its own failure to appear before the arbitrator. Further, in such cases, the party cannot be permitted to contend that he had no knowledge of the proceedings. The arbitrator would be justified in proceeding ex parte in the absence of such a party.

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The questions that arise in this regard are what constitutes a refusal to participate by the defaulting party and how the arbitral tribunal should proceed in such circumstances.

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Redfern and Hunter97 state that in some cases the situation is clear and “it will also be clear where the respondent expressly refuses to reply to correspondence from the 92. M/​s. Auto Craft Engineers v Akshar Automobiles Agencies Pvt. Ltd., Arbitration Petition Nos. 556 of 2014, decided by the High Court of Bombay on 29 July 2016. 93. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 715. 94. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 409, at para. 6.191. 95. (2014) 1 SCC 113 96. (2007) 4 MhLJ 315. 97. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015).

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Chapter 28—​​​Consequences of Default by Parties

arbitral tribunal or to comply with any procedural directions as to the submission of written pleadings and so forth”.98 The arbitral tribunal has to use its own judgment and be satisfied that service has been properly done, taking into account the continued absence of the respondent from consecutive hearings, or non-​compliance with directions.99

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The Court has held that is it the duty of the arbitrator to inform the absent party about its intention to proceed. It is only after which if a party continues to remain absent is when the arbitral tribunal is at a liberty to proceed ex parte.100

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A hearing cannot be declared to be ex parte without issuing notice.101 Accordingly, the arbitral tribunal must consider the merits and make a determination of the substance of the dispute.102

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The High Court of Calcutta in Juggilal Kamlapat v General Fiber Dealers Ltd.103 (“Juggilal Kamlapat”) observed that:

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“The procedural rule applicable to arbitration proceedings is more tolerant than the rule followed in courts of law. Broadly stated, the principles governing the arbitrator’s right to proceed ex parte.”

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The High Court of Bombay in Atul R. Shah v Vrijlal Lalloobhai and Co.104 was faced with a situation where the absenting party was given notice of the draft award and the date of passing of the final award.

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The absenting party continued to remain absent and did not communicate any reasons for non-​appearance, despite having appeared before the arbitral tribunal on previous occasions.

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The High Court of Bombay, relying on the decision of the High Court of Calcutta in Juggilal Kamlapat held that the plea of the absenting party that it was not provided a sufficient opportunity to present its case was not acceptable.

98. Ibid, p. 410, at para. 6.192. 99. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 716. 100. Saraswathi Chemicals v Balmer Lawrie & Co. 2011 SCC OnLine Mad 442, (2011) 3 CTC 9 (DB), (2011) 2 LW 634 (DB). 101. Krishnabhagwan Rajaram Sharma v Tata Motors Finance Ltd 2015 SCC OnLine Bom 479. 102. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 411, at para. 6.196. 103. AIR 1955 Cal 354. 104. 1998 SCC OnLine Bom 403.

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Law, Practice and Procedure of Arbitration in India

The other situations include where a party does not inform the arbitrator of its unwillingness to attend the hearing or more rarely where a party renders the conduct of arbitral proceedings impossible by deliberate disruption which is tantamount to refusal to participate in the proceedings.105 According to Redfern and Hunter with respect to the procedure in ex parte hearings:106

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“6.196 Unlike a court, an arbitral tribunal has no authority to issue an award akin to a default judgment. Its task is to make a determination of the disputes submitted to it. Accordingly, even if a party fails to present its case, the arbitral tribunal must consider the merits and make a determination of the substance of the dispute. Where it is clear from the beginning that a party (usually the respondent) does not propose to take part, the arbitral tribunal usually ensures that all notifications of hearings and correspondence continue to be sent to the defaulting party, and that all of the participating party’s submissions and evidence are placed before the defaulting party in written form. The tribunal will then be justified in holding only a brief hearing, on an ex parte basis, to review the claims and raise any questions. 6.197 A reliable guideline as to how such a proceeding should take place is that the party who is taking part must prove its case to the satisfaction of the arbitral tribunal. The arbitral tribunal has no duty to act as advocate for a party who has elected not to appear, but it must examine the merits of the arguments of law and fact put to it by the participating party, so as to satisfy itself that these are well founded. It must then make a reasoned determination of the issues. 6.198 The practice of arbitral tribunals varies as regards hearings in such situations. Much will depend on the form in which the written stages of the arbitration have taken place. If the written stages have been comprehensive, the arbitral tribunal may feel justified in holding a brief and purely formal hearing prior to issuing its award. If, on the other hand, the written pleadings have been skeletal, formal documents in which only the issues have been defined and no documentary or witness evidence has been submitted in writing, the arbitral tribunal would probably consider it necessary to hear oral evidence before being satisfied that the participating party has discharged the burden of proof in relation to its claims (or defences).”

105. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 410, at para. 6.194. 106. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015).

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Chapter 28—​​​Consequences of Default by Parties

Redfern and Hunter add at the stage of passing of an ex parte award that:107

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“9.31 If the arbitral tribunal makes an award in favour of the active party in the proceedings, it will wish to ensure that the award is effective. To this end, it should ensure, in particular, that the award recites in considerable detail the procedure followed by the arbitral tribunal and the efforts made by the arbitral tribunal to communicate the active party’s case to the defaulting party, so as to give that party every opportunity to present its own arguments and evidence. Further, the motivation, or reasons, given in the award should (without necessarily being lengthy) reflect the fact that the arbitral tribunal has genuinely addressed the merits of the case, in order to show that a reasoned determination has been made. 9.32 The award should also deal with any questions of jurisdiction that appear to the arbitral tribunal to be relevant, whether or not such issues have been raised by one or other of the parties. In this context, the Arbitration Rules of the International Centre for the Settlement of Investment Disputes (ICSID), which contain detailed provisions for default proceedings, expressly stipulate, at Rule 42(4), that ‘[t]‌he Tribunal shall examine the jurisdiction of the Centre and its own competence in the dispute and, if it is satisfied, decide whether the submissions made are well-​founded in fact and in law’. If the arbitral tribunal follows these guidelines, there is less risk of the money spent by the active party in obtaining the award being wasted as a result of a subsequent decision by national courts that the award is unenforceable.”

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The High Court of Delhi in Indian Oil Corporation Ltd. v Atv Projects India Ltd.108 was dealing with a situation where the arbitrator terminated only the proceedings which related to the defaulting party without affecting the rights of the other party in the counterclaim.

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The High Court of Delhi found that the claimant’s case having been terminated, the other party might still proceed with its counterclaim. An arbitral tribunal in terminating the proceedings must consider the interest of the other parties (co-​claimant or respondent) before terminating the entire proceedings. If the arbitral tribunal terminates the proceedings pursuant to Article 25(a), the mandate of the arbitral tribunal shall also terminate co-​extensively.109

107. Ibid. 108. 2004 SCC OnLine Del 483. 109. Indian Oil Corporation Ltd. v Atv Projects India Ltd. [2004] (2) ARBLR 432 Delhi; 2004 SCC OnLine Del 483, (2004) 75 DRJ 630, at para. 11.

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Law, Practice and Procedure of Arbitration in India

The Supreme Court of India in State of U.P. v Combined Chemicals Co. (P) Ltd.110 was faced with a situation where a party had sought an adjournment from the arbitral tribunal. The grounds for seeking the adjournment were that proceedings pertaining to the maintainability of the arbitration under Section 20 of the Arbitration Act remained pending. Owing to the party’s failure to seek a stay on the arbitral proceedings, the arbitrator proceeded with the arbitration and passed an ex parte award.

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In the circumstances, the Supreme Court of India held that the arbitrator was justified in proceeding with the hearing and passing an ex parte award. Further, it observed that the party failed to appear before the arbitral tribunal and could not later complain that it was denied a reasonable opportunity to be heard.111

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The Ontario Supreme Court of Justice, in an action112 for the setting aside of an arbitral award, relied on Article 25(c) of the Model Law and found that the arbitral tribunal was justified in continuing the proceedings and making an award on the evidence before it, where one of the parties to the arbitration withdrew from participation in the arbitral proceedings.113

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Further, where the arbitral tribunal had acted in accordance with Article 25, the lack of participation by a party did not constitute a ground for setting aside an award.114

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However, the arbitral tribunal must provide the defaulting party a sufficient advance notice so that the parties would then “be able to take part directly or by means of representatives.”115

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[28.8] OTHER GUERILLA TACTICS USED BY PARTIES TO DISRUPT ARBITRATION PROCEEDINGS

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Professor Emmanuel Gaillard116 has described “dirty tricks” that parties use to disrupt arbitral proceedings and how arbitrators and courts should respond to prevent recalcitrant behaviour from infecting the system.117

1 10. (2011) 2 SCC 151. 111. State of U.P. v Combined Chemicals Co. (P) Ltd (2011) 2 SCC 151, at para. 29. 112. Re Corporación Transnacional de Inversiones, S.A. de C.V. et al. v STET International, S.p.A. et al. [1999] CanLII 14819 (ON SC). 113. CLOUT case No. 391 [Re Corporación Transnacional de Inversiones, S.A. de C.V. et al. v STET International, S.p.A. et al. Ontario Superior Court of Justice, Canada, 22 September 1999], [1999] CanLII 14819 (ON SC). 114. Ibid. 115. CLOUT case No. 968 [A Coruña Provincial High Court, Spain, Section 6, Case No. 241/​2006, 27 June 2006]. 116. See Professor Emmanuel Gaillard, “Seven dirty tricks to disrupt arbitral proceedings and the responses of international arbitration law”, 2020 Annual International Commercial Arbitration Lecture, Washington College of Law, 24 September 2020, available at https://​www.youtube.com/​watch?v=l8RF9Xq_​MQY. 117. Gaillard on seven dirty tricks to disrupt an arbitration, Marija Šobat and Elena Ritchie, Global Arbitration Review, published on 15 October 2020.

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Chapter 28—​​​Consequences of Default by Parties

The recalcitrant party may argue that the underlying contract is void and, as a result, the arbitration clause contained in the underlying contract is also void. The intention of the party which advances these submissions is to contend that the arbitral tribunal has no jurisdiction over the disputes and the disputes must be submitted before the national courts.

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This trick can be overcome using the principle settled in the case of Etablissements Raymond Gosset v Frère Carapelli Spa118 of the autonomy of an arbitration agreement. According to this principle, the arbitration agreement is legally independent from the main contract and therefore exists despite the status of the underlying contract.

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Judge Stephen Schwebel of the International Court of Justice has opined that:

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“The very concept and phrase ‘arbitration agreement’ itself imports the existence of a separate or at any rate separable agreement, which is or can be divorced from the body of the principal agreement if need be.”119

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In India, the position regarding the separability of the arbitration agreement from the underlying contract is well-​settled.

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The Supreme Court of India in National Agricultural Coop. Mktg. Federation India Ltd. v Gains Trading Ltd.120 held that even if the performance of the contract comes to an end on account of repudiation, frustration, or breach of contract, the arbitration agreement would survive for the purpose of resolution of disputes arising under or in connection with the contract.121

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Discouraged by the substantive rule of autonomy of the arbitration agreement, the recalcitrant party may attempt to directly attack the existence, validity, or scope of the arbitration agreement before the arbitral tribunal.

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In such cases, Galliard suggests122 that the arbitral tribunal must follow the kompetenz-​kompetenz principle; following which, the arbitrators must continue with

118. French International Arbitration Law Reports: 1963-​2007, Cour De Cassation, First Civil Chamber, 7 May 1963. 119. Schwebel Stephen, International Arbitration: Three Salient Problems (Grotius Publications Ltd, Cambridge, 1987), pp. 21–​22. 120. (2007) 5 SCC 692. 121. Ibid. 122. See Professor Emmanuel Gaillard, “Seven dirty tricks to disrupt arbitral proceedings and the responses of international arbitration law”, 2020 Annual International Commercial Arbitration Lecture, Washington College of Law, 24 September 2020, available at https://​www.youtube.com/​watch?v=l8RF9Xq_​MQY; Gaillard on seven dirty tricks to disrupt an arbitration, Marija Šobat and Elena Ritchie, Global Arbitration Review, published on 15 October 2020.

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Law, Practice and Procedure of Arbitration in India

the proceedings and rule on their own jurisdiction, even in the cases where the arbitration agreement itself is challenged.123 In 2019, an arbitral tribunal124 comprised under the International Chamber of Commerce proceeded with hearing the parties on the issue of its own jurisdiction and ultimately held the arbitral tribunal did not have jurisdiction. In India, Section 16 of the Arbitration Act incorporates the kompetenz-​kompetenz principle.

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The recalcitrant party may try to disrupt an arbitration by asking national courts to determine the existence and validity of an arbitration agreement. This invoked the “negative effect” of the kompetenz-​kompetenz principle.

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Accordingly, in the existence of a prima facie agreement, the national courts must refrain from deciding on the issue until the arbitrators themselves have had an opportunity to do so.125 The decision of the Singapore Court of Appeal in Tomolugen Holdings Ltd and another v Silica Investors Ltd126 termed this as the “prima facie approach”.

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In countries such as Iran, Syria, Egypt, and/​or Venezuela, the validity of the arbitration agreements where the State (or State-​owned entity) is a party is conditioned on obtaining certain prior authorisations from the State.127 In Iran, Article 139 of the Constitution of the Islamic Republic of Iran 1979 incorporates such conditions and that has led to State-​owned entities attempting to avoid arbitration agreement.128

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The solution to this hindrance can be found in Article VI(1) and VI(3) of the 1961 European Convention on International Commercial Arbitration which states:

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123. See Professor Emmanuel Gaillard, “Seven dirty tricks to disrupt arbitral proceedings and the responses of international arbitration law”, 2020 Annual International Commercial Arbitration Lecture, Washington College of Law, 24 September 2020, available at https://​www.youtube.com/​watch?v=l8RF9Xq_​MQY; Gaillard on seven dirty tricks to disrupt an arbitration, Marija Šobat and Elena Ritchie, Global Arbitration Review, published on 15 October 2020. 124. Final Award in Case No. 17818 of 2019. 125. See Professor Emmanuel Gaillard, “Seven dirty tricks to disrupt arbitral proceedings and the responses of international arbitration law”, 2020 Annual International Commercial Arbitration Lecture, Washington College of Law, 24 September 2020, available at https://​www.youtube.com/​watch?v=l8RF9Xq_​MQY; Gaillard on seven dirty tricks to disrupt an arbitration, Marija Šobat and Elena Ritchie, Global Arbitration Review, published on 15 October 2020. 126. 2015 SGCA 57. 127. See Professor Emmanuel Gaillard, “Seven dirty tricks to disrupt arbitral proceedings and the responses of international arbitration law”, 2020 Annual International Commercial Arbitration Lecture, Washington College of Law, 24 September 2020, available at https://​www.youtube.com/​watch?v=l8RF9Xq_​MQY; Gaillard on seven dirty tricks to disrupt an arbitration, Marija Šobat and Elena Ritchie, Global Arbitration Review, published on 15 October 2020. 128. See Professor Emmanuel Gaillard, “Seven dirty tricks to disrupt arbitral proceedings and the responses of international arbitration law”, 2020 Annual International Commercial Arbitration Lecture, Washington College of Law, 24 September 2020, available at https://​www.youtube.com/​watch?v=l8RF9Xq_​MQY; Gaillard on seven dirty tricks to disrupt an arbitration, Marija Šobat and Elena Ritchie, Global Arbitration Review, published on 15 October 2020.

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Chapter 28—​​​Consequences of Default by Parties

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“1. A plea as to the jurisdiction of the court made before the court seized by either party to the arbitration agreement, on the basis of the fact that an arbitration agreement exists shall, under penalty of estoppel, be presented by the respondent before or at the same time as the presentation of its substantial defence, depending upon whether the law of the court seized regards this plea as one of procedure or of substance.” … “3. Where either party to an arbitration agreement has initiated arbitration proceedings before any resort is had to a court, courts of Contracting States subsequently asked to deal with the same subject-​matter between the same parties or with the question whether the arbitration agreement was non-​existent or null and void or had lapsed, shall stay their ruling on the arbitrator’s jurisdiction until the arbitral award is made, unless they have good and substantial reasons to the contrary.”

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Gaillard notes that, keeping in mind the rule of party autonomy, the rule prohibiting States (or State-​owned entities) from relying on domestic laws to challenge the validity of an arbitration agreement has largely obtained the status of a substantive rule.

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The Paris Court of Appeal in Société Egyptian General Petroleum Corporation v Société National Gas Company129 held that Egyptian public policy cannot prevent the enforcement of an arbitral award in France.

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Parties seeking to disrupt international arbitrations are increasingly seeking anti-​ arbitration injunctions from national courts with an aim to stall the arbitral proceedings.130

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In the leading case before the ICC, Salini Costruttori S.P.A. (Italy) v The Federal Democratic Republic of Ethiopia, Addis Ababa Water and Sewerage Authority131 the arbitral tribunal was faced with a situation where the Federal Supreme Court had issued an anti-​arbitration injunction.132

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In the circumstances, the arbitral tribunal, placed reliance on the principle that “a state cannot unilaterally set aside the access of the other party to the system envisaged by the parties in their agreement for the settlement of disputes”,133 held:

1 29. CA Paris, Pole 1 –​Ch. 1, 21 May 2019, No. 17/​19850. 130. See Professor Emmanuel Gaillard, “Seven dirty tricks to disrupt arbitral proceedings and the responses of international arbitration law”, 2020 Annual International Commercial Arbitration Lecture, Washington College of Law, 24 September 2020, available at https://​www.youtube.com/​watch?v=l8RF9Xq_​MQY; Gaillard on seven dirty tricks to disrupt an arbitration, Marija Šobat and Elena Ritchie, Global Arbitration Review, published on 15 October 2020. 131. ICC Arbitration No. 10623/​AER/​ACS, decision dated 7 December 2001. 132. Salini Costruttori S.P.A. (Italy) v The Federal Democratic Republic of Ethiopia, Addis Ababa Water and Sewerage Authority, at para. 121. 133. Ibid, at para. 168.

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Law, Practice and Procedure of Arbitration in India

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“174. The principle that equates the organs of a state with the state itself reinforces our conclusion that we should proceed with our own duties to determine whether or not we have jurisdiction in this case. The Respondent should not be permitted to renege upon an agreement to submit disputes to international arbitration by the device of resorting illegitimately to its own courts, just as it should not be permitted to do so by resorting to its own law.”134 … “177. The Arbitral Tribunal accords great respect to the Ethiopian courts, both in their own right and as the courts of the seat. Nevertheless, in this case, we are of the view that it would be improper, in light of our primary duty to the parties, to observe the injunctions issued by those courts, which have already significantly delayed these proceedings, given that they have the effect of frustrating the parties’ agreement to submit disputes to international arbitration.”135

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In India, the position of law regarding the legality of anti-​arbitration injunctions is unsettled with diverging views in various judgments of the Supreme Court of India.

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The Supreme Court of India in Chatterjee Petrochem Company and Anr. v Haldia Petrochemicals Limited and Ors.136 and World Sport Group (Mauritius) Ltd. v MSM Satellite (Singapore) Pte. Ltd.137 has held that at a civil court in India has inherent jurisdiction under Section 9 of the Code of Civil Procedure, 1908 to grant injunctions in restraint of arbitration.

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However, in the Supreme Court of India in Kvaerner Cementation India Limited v Bajranglal Agarwal and Anr.138 has held that a civil court did not have jurisdiction to entertain suits to declare invalidity of an arbitration agreement or injunct arbitral proceedings. Therefore, the position in India remains to be settled.

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A party seeking to disrupt arbitration proceedings enrols its affiliated or group companies to the arbitration. Capitalising on the privity of the arbitration agreement, usually the respondent uses its affiliates as a cover to torpedo the proceedings.139

134. 135. 136. 137. 138. 139.

Ibid, at para. 174. Ibid, at para. 177. (2014) 14 SCC 574. (2014) 11 SCC 639. (2012) 5 SCC 214. See Professor Emmanuel Gaillard, “Seven dirty tricks to disrupt arbitral proceedings and the responses of international arbitration law”, 2020 Annual International Commercial Arbitration Lecture, Washington College of Law, 24 September 2020, available at https://​www.youtube.com/​watch?v=l8RF9Xq_​MQY; Gaillard on seven dirty tricks to disrupt an arbitration, Marija Šobat and Elena Ritchie, Global Arbitration Review, published on 15 October 2020.

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Chapter 28—​​​Consequences of Default by Parties

This issue has been effectively dealt with what is now called the “group of companies” doctrine. Where the parent company or a member of the group of companies is a signatory to the Agreement, the non-​signatory group company can be made a party to the arbitration. Provided, however, the non-​signatory has:140 negotiated the contract; or performed the contract; or indicated, in some manner, its intention to be bound by the contract.

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The Doctrine originated from the principle that group companies are a “single economic reality”.141 The Doctrine pierces the corporate veil, locates the interested party, and targets the creditworthy group company142—​ensuring liability can be pointed.

[28.9] CONCLUSION

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Common forms of defaults include where:

(1) The claimant or respondent fails to deliver a pleading within the agreed or stipulated time;



(2) A party fails to appear at a hearing without sufficient cause;



(3) A party ignores a direction of the arbitrator to produce a document or take some step, within the time stipulated; or



(4) A party refuses to make advance deposits for the costs of the arbitration.

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Apart from these common forms of defaults, parties also resort to “guerrilla tactics” to disrupt arbitral proceedings. Therefore, modern arbitral tribunals are required to be vary of statutory defaults as well as other tactics resorted to by parties.

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Simply put, where a party fails to appear, Redfern and Hunter143 opine that:

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“A reliable guideline as to how such a proceeding should take place is that the party who is taking part must prove its case to the satisfaction of the arbitral tribunal. The arbitral tribunal has no duty to act as advocate for a party who has elected not to appear, but it must examine the merits of the arguments of law and fact put to it by the participating party, so as to satisfy itself that these are well founded. It must then make a reasoned determination of the issues.”144

140. Mahanagar Telephone Nigam Ltd v Canara Bank Financial Services Limited 2019 SCC OnLine SC 995, at paras 10.2 to 10.5. 141. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 100, at para. 2.43. 142. Id at para. 2.40, p. 100. 143. Ibid. 144. Ibid, p. 411, at para. 6.196.

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Law, Practice and Procedure of Arbitration in India

Additionally, the UNCITRAL Model Law contains provisions which empower the arbitral tribunal to continue the proceedings and make an award where a party(s) fail to comply with the requirements of the procedure agreed by the parties or established by the arbitral tribunal.145

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Similar provisions146 are to be found in the Arbitration Act and other institutional rules. An arbitral tribunal in exercising its powers, must inter alia proceed with caution, serve notice where appropriate, and bear in mind the principles of natural justice.

145. Ibid, p. 412, at para. 6.199. 146. Arbitration Act, s. 25.

Chapter 29 EVIDENCE IN ARBITRATION [29.1]

INTRODUCTION....................................................................................................................... 831

[29.2] RULES OF EVIDENCE.............................................................................................................. 833

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[29.3] APPLICABILITY OF THE INDIAN EVIDENCE ACT, 1872.............................................. 837 [29.4] TYPES OF EVIDENCE.............................................................................................................. 840 [29.5] BURDEN OF PROOF AND STANDARD OF PROOF......................................................... 849 [29.6]

EXPERT WITNESSES................................................................................................................ 852

[29.7] COURT ASSISTANCE IN TAKING EVIDENCE.................................................................. 861

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[29.8] EVIDENCE AT BELATED STAGES IN AN ARBITRATION.............................................. 864

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[29.9] EVIDENCE TO BE FILED FOR THE ENFORCEMENT OF FOREIGN AWARDS UNDER THE NEW YORK CONVENTION, 1958................................................................ 868

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[29.10] EVIDENCE TO BE FILED FOR THE ENFORCEMENT OF FOREIGN AWARDS UNDER THE GENEVA CONVENTION OF 1927................................................................ 869 [29.11] INTERNATIONAL BAR ASSOCIATION RULES ON THE TAKING OF EVIDENCE IN INTERNATIONAL ARBITRATION............................................................ 871

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[29.12] CONCLUSION............................................................................................................................ 872

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[29.1] INTRODUCTION

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Evidence plays a vital role in establishing a case. It is the most important basis for a just and fair award. Facts which are in issue in any legal proceedings are proved by means of evidence.

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Evidence is the body of testimony a party puts forward to obtain a desired finding from the arbitral tribunal. The purpose of adducing evidence is to assist the arbitral tribunal in deciding the disputed issues of fact or issues of opinion presented by experts.

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It is a universal principle of justice that, unless otherwise provided, the burden of proving any fact is on the person who asserts that fact and wishes the court to accept it. Particularly, when any fact is especially within the knowledge of any person, the burden of proving that fact is upon him. The standard of proof is on the balance of probability. In the end, the arbitral tribunal decides judicially its award based on proven facts and legitimate inferences. There are four methods of adducing evidence for discharging the burden of proof before the arbitral tribunal. They are:

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Law, Practice and Procedure of Arbitration in India



(1) Production of relevant documents;



(2) Oral or written evidence of witnesses of facts;



(3) Oral or written opinions of expert witnesses; and



(4) Inspection of the subject-​matter of the dispute.

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The methods used will vary with the factual situation of each case.

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Normally, facts are proven by direct testimony of witnesses. A witness in his oral evidence would adduce to documentary evidence. Documents made at the time of the events giving rise to the dispute would generally contain evidence on issues of fact. It is normally easier and more expeditious to present documents, which are a cogent contemporaneous record.

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In commercial cases and those where events took place some years ago, the exigencies of precisely identifying the truth and the inherent weakness of the human memory mean that the evidentiary weight of contemporaneous documentary evidence is more substantial than oral evidence. This is particularly so where there is a lack of skill or time available to test the witnesses’ evidence by cross-​examination.1

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In India, Section 24 of the Arbitration Act discusses procedure and evidence in arbitrations. The provisions of Section 24 of the Arbitration Act are largely identical to Article 24 of the Model Law, which in turn is based on the various provisions of the UNCITRAL Arbitration Rules.2

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Section 26 of the Arbitration Act and Article 26 of the Model Law provides that, apart from party-​appointed experts, the arbitral tribunal may also on its own motion initiate the appointment of experts to report to it on specific issues to be determined in the arbitration.3

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Issues of burden of proof frequently arise in international arbitration, as in domestic litigation.4 The UNCITRAL Rules provide that: “[e]‌ach party shall have the burden of proving the facts relied on to support its claim or defence.”5

1. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 6.90. 2. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 690. 3. UNCITRAL 2012 Digest of Case Law on the Model Law on International Commercial Arbitration, art. 12, at p. 116 para. 1. 4. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2487. 5. Ibid, p. 2487; UNCITRAL Rules, art. 27(1); Bell Aerospace Co. v Local 516, Int’l Union, United Auto., Aerospace & Agric. Implement Workers of Am. (UAW) 500 F.2d 921, 923 (2d. Cir. 1974)

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Chapter 29—​​​Evidence in Arbitration

This is consistent with the general rule of actori incumbit probation: each party bears the burden of proving that facts relied on in support of its case.6 Gary B. Born7 explains the international practice regarding rules of evidence:

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“In practice, international arbitral tribunals typically do not apply strict rules of evidence, particularly rules of evidence applicable in domestic litigations. … one of the hallmarks of arbitration is the freedom that it offers from technical disputes over admissibility of evidence and other procedural matters, which are often designed for particular national litigation procedures. Accordingly, technical rules of evidence are usually not observed in arbitration, and the tribunal will err substantially on the side of permitting presentation of the facts that a party desires.”

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A set of rules for the taking of evidence that has proven extremely effective in practice8 is the 2010 edition of the IBA Rules on the Taking of Evidence in International Arbitrations (2010) (“IBA Rules”).

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However, an arbitral tribunal may have the discretion to reject evidence, even if it is relevant and admissible. Four relevant scenarios are:9 (1) where, in view of the law, the evidence is immaterial;10



(2) where the evidence would merely serve to reinforce a view of the facts which the arbitrator has already formed;



(3) where the evidence relates to a matter upon which the arbitrator has expert knowledge; and



(4) where the volume of evidence is disproportionate to the importance of the issue on which it is adduced.11

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[29.2] RULES OF EVIDENCE

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The phrase “rules of evidence” poses two conceptual challenges when applied to international arbitration.12 The first is one of perception that arbitration is a process free of 6. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2487; Pietrowski, “Evidence in International Arbitration” (2006) 22 Arb. Int’l, pp. 373, 374, 379. 7. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2484. 8. P. Yuen and J. Choong, “Is Arbitration Value for Money? Assessing Some Common Complaints about the Costs in International Arbitration” (2008) Asian Dispute Review 76. 9. Mustill and Boyd, Commercial Arbitration (2nd edn, Butterworths 1989), pp. 306–​308. 10. Plainly this is a situation that could be fraught with danger, particularly for a non-​lawyer arbitrator. 11. This could include the earlier example of a construction dispute where hundreds of small events cause the delay out of which proceedings arise and evidence on every single event would be disproportionate. 12. Nathan D. O’Malley, Rules of Evidence in International Arbitration: An Annotated Guide (Informa Law from Routledge 2021), p. 1, at para. 1.01.

834

Law, Practice and Procedure of Arbitration in India

rules of procedure and evidence.13 The second is a definition challenge namely, if rules were to apply, what are the rules of evidence in arbitrations?14 These challenges are answered sufficiently by establishing that arbitration does lend itself to rules of evidentiary procedure. Such rules are more than merely the ad hoc solutions adopted at the whim of various arbitrators.15

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Nathan D. O’Malley18 categorically notes that:

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Historically, it was frequently said or assumed that the arbitral tribunal is required to apply the domestic procedural rules applicable in national courts in the arbitral seat. For the most part, it is now widely accepted that the domestic procedural rules of local courts are not applicable, mandatorily or otherwise, in international arbitrations seated on local territory.16 In other words, an arbitral tribunal is not bound by the technical rules of evidence as observed by the courts.17

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Ibid, p. 1, at para. 1.01. Ibid, p. 1, at para. 1.01. Ibid, p. 1, at para. 1.03. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2856. NPCC Limited v Jyothi Sarup Mittal Engineers, Contractors and Builders 2007 (93) DRJ 379, at para. 20. See Nathan D. O’Malley, Rules of Evidence in International Arbitration: An Annotated Guide (Informa Law from Routledge 2012). Rintin Corp SA v Domar Ltd 374 F.Supp. 2d 1165 (SD Fla. 2005); Chantiers de l’Atlantique SA v Gaztransport & Technigaz SAS [2011] EWHC 3383 (Comm). ICC Case No. 12124; ICC Bulletin, 2010 Special Supplement: Decisions on ICC Arbitration Procedure, (2010), p. 32. Tradex Hellas SA v Republic of Albania Decision on Jurisdiction of 24 December 1996 and Award of 29 April 1999, Case No. ARB/​94/​2, YB Com Arb, Vol. XXV (2000). Nathan D. O’Malley, Rules of Evidence in International Arbitration: An Annotated Guide (Informa Law from Routledge 2012), pp. 6–​7, at para. 1.18. Nathan D. O’Malley, Rules of Evidence in International Arbitration: An Annotated Guide (Informa Law from Routledge 2012), p. 7, at para. 1.19.

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13. 14. 15. 16.

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“… even if reference to local evidentiary procedure practice is to be had it is in a voluntary and non-​binding sense. It has been established at virtually all levels of arbitration that the local rules of evidentiary procedure at the seat of the arbitration, or the domestic practices of the parties to the arbitration, do not apply directly to an international arbitration. This includes affirmation of this point by reviewing courts,19 international commercial arbitral tribunals20 and investor–​state arbitral tribunals.21 Naturally, this principle will be modified where the parties have agreed to the direct application of local rules.”22 “… application of the IBA Rules of Evidence is also voluntary. Most arbitration rules and laws will afford the arbitrators wide discretion on this issue. Thus, the question of which source should supply the rules of evidence is one of determining which rules are best suited to the needs of the case.”23

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17. 18. 19.

20. 21. 22. 23.

835

Chapter 29—​​​Evidence in Arbitration

Each party to an arbitration should be given an opportunity to present both evidence and arguments.24 The Arbitration Act gives the choice to the parties to decide whether to hold oral hearings or present documents (or both) for the presentation of evidence.25

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The parties are also free to decide the mode and manner of adducing documentary and oral evidence.26 Through an express and irrevocable agreement with cogent and clear wordings, parties can validly exclude the right to adduce evidence at all.27

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One of the most significant functions of an arbitral tribunal is fact-​finding. It is a function that all arbitral tribunals must take seriously.28 Article 19(2) of the Model Law provides that “[t]‌he powers conferenced upon the arbitral tribunal includes the power to determine the admissibility, relevance, materiality and weight of any evidence”.29

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On the other hand, if an arbitral tribunal deems it appropriate, it is also free to apply evidentiary rules applicable in national courts (subject to general due process constraints).30

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Institutional rules also typically contain either general provisions confirming that the arbitral tribunal has control over the arbitral procedure or that the arbitral tribunal has the power to determine the admissibility and weight of evidence.31

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In India, Section 24 of the Arbitration Act discusses procedure and evidence in arbitrations. The provisions of Section 24 of the Arbitration Act are largely identical to Article 24 of the Model Law, which in turn is based on the various provisions of the UNCITRAL Arbitration Rules.32

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Section 24 of the Arbitration Act provides:

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“Unless otherwise agreed by the parties, the arbitral tribunal shall decide whether to hold oral hearings for the presentation of evidence or for oral argument, or

Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 607. Arbitration Act, s. 24(1). Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 607. Ibid. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 376, at para. 6.76. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2481; D. Caron and L. Caplan, The UNCITRAL Arbitration Rules: A Commentary (2nd edn, 2013), p. 572. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2382. Ibid, p. 2383. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 690.

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24. 25. 26. 27. 28. 29. 30. 31. 32.

836

Law, Practice and Procedure of Arbitration in India

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whether the proceedings shall be conducted on the basis of documents and other materials:33 … Provided further that the arbitral tribunal shall, as far as possible, hold oral hearings for the presentation of evidence or for oral argument on day-​to-​day basis, and not grant any adjournments unless sufficient cause is made out, and may impose costs including exemplary costs on the party seeking adjournment without any sufficient cause.”34 Each party has the right to fully adduce evidence before the arbitral tribunal.35 If the arbitral tribunal shuts out relevant evidence, or deprives a party from addressing arguments, it may result in remission or annulment of the resultant award.36

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Accordingly, the opposite party must be provided with an opportunity to controvert the evidence presented by the other party, for example, through cross examination.37

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However, it has to be established that prejudice has been caused to a party by the procedure followed in order to sustain a complaint of violation of principles of natural justice on the ground of absence of opportunity to cross-​examine.38

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Gary B. Born39 explains the international practice regarding rules of evidence:

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“In practice, international arbitral tribunals typically do not apply strict rules of evidence, particularly rules of evidence applicable in domestic litigations. … one of the hallmarks of arbitration is the freedom that it offers from technical disputes over admissibility of evidence and other procedural matters, which are often designed for particular national litigation procedures. Accordingly, technical rules of evidence are usually not observed in arbitration, and the tribunal will err substantially on the side of permitting presentation of the facts that a party desires.”

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An award ignoring the very material and relevant documents throwing light on the controversy to have a just and fair decision would vitiate the award as it amounts to misconduct on the part of the arbitrator.40

33. 34. 35. 36. 37. 38. 39.

Arbitration Act, s. 24(1). Arbitration Act, s. 24(1), second proviso. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 607. Ibid, p. 607. Ibid, p. 607. Ibid, pp. 607–​608. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2484. 40. Sikkim Subba Associates v State of Sikkim (2001) 5 SCC 629; Bharat Coking Coal Limited v M/​s. Annapurna Construction 2003 (7) SCALE 20; Sathyanarayana Bros. (P) Ltd. v T.N. Water Supply & Drainage Board (2004) 5 SCC 314.

837

Chapter 29—​​​Evidence in Arbitration

However, an arbitral tribunal has the discretion to reject evidence, even if it is relevant and admissible. Four relevant scenarios are:41 (1) view of the law that the evidence is immaterial;42



(2) where the evidence would merely serve to reinforce a view of the facts which the arbitral tribunal has already formed;



(3) where the evidence relates to a matter upon which the arbitrator has expert knowledge; and



(4) where the volume of evidence is disproportionate to the importance of the issue on which it is adduced.43

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[29.3] APPLICABILITY OF THE INDIAN EVIDENCE ACT, 1872

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It is now widely accepted that the domestic procedural rules of local courts are not applicable, mandatorily or otherwise, in arbitrations.44 Naturally, this principle will be modified where the parties have agreed to the direct application of local rules.45

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Section 19 of the Arbitration Act expressly provides that the arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872 (“Evidence Act”).46 The parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings.47

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Failing any agreement between the parties, the arbitral tribunal may conduct the proceedings in the manner it considers appropriate.48 This power of the arbitral tribunal includes the power to determine the admissibility, relevance, materiality, and weight of any evidence.49

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Justice Indu Malhotra50 cited the case of Steel Authority of India Ltd. v Salzgitter Mannesmann International GmBH51 to explain the applicable principles:

41. Mustill and Boyd, Commercial Arbitration (2nd edn, Butterworths 1989), pp. 306–​308. 42. Plainly, this is a situation that could be fraught with danger, particularly for a non-​lawyer arbitrator. 43. For example, in a construction dispute where hundreds of small events cause the delay out of which proceedings arise and evidence on every single event would be disproportionate. 44. Gary B. Born, International Commercial Arbitration: Cases and Materials (Wolters Kluwer 2011), p. 715. 45. Nathan D. O’Malley, Rules of Evidence in International Arbitration: An Annotated Guide (Informa Law from Routledge 2012), p. 7, at para. 1.18. 46. Arbitration Act, s. 19(1). 47. Arbitration Act, s. 19(2). 48. Arbitration Act, s. 19(3). 49. Arbitration Act, s. 19(4). 50. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020). 51. 2012 (2) Arb LR 296 (Delhi).

838

Law, Practice and Procedure of Arbitration in India

“Even though the arbitral tribunal is not bound by the provisions of the Evidence Act, the tribunal is required to follow the principles judicially evolved and settled. If there is no agreement between the parties as to the procedure to be followed, it is for the arbitral tribunal to determine whether to apply strict rules of evidence (or any other rules) as to the admissibility, relevance, materiality and weight of any evidence.”52

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Similarly, the High Court of Bombay in Pradyuman Kumar Sharma v Jays Agar M. Sancheti and Ors.53 held that although the arbitral tribunal is not bound by the provisions of the Evidence Act, the principles of the Evidence Act are applicable even to arbitration proceedings.

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A disputed document was at issue in this case and the Court held that a document which is disputed by a party cannot be considered by an arbitral tribunal if it is not proven54 and if such an unproven document is taken on record, it would be in violation of principles of natural justice.

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The High Court of Punjab and Haryana in Punjab State Industrial Development Corporation Ltd. v Sunil K. Kansal55 has held that a tribunal can adopt a procedure which is fair, equitable, and reasonable as it may consider appropriate.

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If, according to the tribunal, evidence is required on certain questions of fact, or of mixed questions of fact and law, it shall permit the parties to furnish evidence by affidavits, and if demanded, permit the deponents of such affidavits to be cross-​examined.56

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Even though the Evidence Act may not be strictly applicable, the tribunal will be justified in requiring the petitioner to satisfy that the witnesses were conversant with the records of the case and would be competent to depose about the documents with certainty.57

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In alternative to the Evidence Act, the Arbitration Act mandates that both parties are to be treated equally and be given a full opportunity to make their case.58 The parties are free to submit with their statements and all relevant documents.59

Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 621. 2013 SCC OnLine Bom 453, at para. 33. Pradyuman Kumar Sharma v Jays Agar M. Sancheti and Ors. 2013 SCC OnLine Bom 453, at para. 33. (2013) 1 Arb LR 327 (P&H) (DB). Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), pp. 621–​622. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 623; Steel Authority of India Ltd. v Salzgitter Mannesmann International GmBH 2012 (2) Arb LR 296 (Delhi). 58. Arbitration Act, s. 18. 59. Arbitration Act, s. 23(2). 52. 53. 54. 55. 56. 57.

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Chapter 29—​​​Evidence in Arbitration

Further, both parties are entitled to advance notice of any hearing or meeting of the tribunal for the inspection of any evidence on record.60 The arbitral tribunal must supply all statements, documents, and other information including expert report or evidentiary document on which it plans to rely to both the parties.61

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To uphold the principle of audi alteram partem and present a party with the opportunity to present meaningful arguments, the tribunal has been empowered to order a party submitting documentary evidence to accompany the same with a translation in a language agreed upon by the parties or determined by the tribunal.62

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The Arbitration Act also contains a provision for the parties to request the tribunal to hold oral proceedings for the presentation of evidence63 although the discretion for holding the same lies with the tribunal.

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Nathan D. O’Malley64 discusses the principles applied by ICC arbitral tribunals regarding the admissibility of evidence as seen in the final award in P v Engineer/​ seller A:65

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“This is an international arbitration procedure. The strict rules of evidence, as they apply in England where the Tribunal is sitting, or in India, do not apply. In accordance with the power given to the arbitrators in the Terms of Reference, and under the ICC Rules, the Tribunal has the right to determine whether and what evidence shall be admitted. The Tribunal considers that the diary notes of Dr. Y and Dr. V are admissible. They were used as an aide memoire by Dr. Y as to what occurred and were explained to the Tribunal. P had the opportunity to cross-​examine him on that evidence. It is up to the Tribunal to give to those diary notes whatever credence and weight it considers appropriate. The notes are not in themselves proof of what was discussed, but do indicate and support the evidence given by Dr. Y. Furthermore, and in any event, the Tribunal does not consider that the Indian Evidence Act has any relevance to the conduct of and the admission of evidence in this arbitration.”66

60. 61. 62. 63. 64.

Arbitration Act, s. 24. Arbitration Act, s. 24(3). Arbitration Act, s. 22(4). Arbitration Act, s. 24. See Nathan D. O’Malley, Rules of Evidence in International Arbitration: An Annotated Guide (Informa Law from Routledge 2012). 65. P v Engineer/​seller A Final Award in ICC Case No. 7626 of 1995, in Albert Jan van den Berg (ed.), Yearbook Commercial Arbitration (1997). 66. P v Engineer/​seller A Final Award in ICC Case No. 7626 of 1995, in Albert Jan van den Berg (ed.), Yearbook Commercial Arbitration, Vol. XXII (1997), p. 132.

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Law, Practice and Procedure of Arbitration in India

[29.4] TYPES OF EVIDENCE

(1) Production of relevant documents;68



(2) Oral or written evidence of fact by witnesses;69



(3) Oral or written opinions of expert witnesses;70 and



(4) Inspection of the subject-​matter of the dispute.71

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Broadly, there are four methods of adducing evidence before the arbitral tribunal,67 namely:

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The arbitral tribunal may adopt the approach it considers best suited to the case under reference.72 For example, oral testimony of a witness(es) in cases involving complex facts is not only useful but also invaluable.73

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Documents

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As a general rule, documentary evidence is often afforded the highest level of credibility internationally (within international arbitrations).74 As early as in 1975, Durward v Sandifer summarised this practice by stating that:

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“probably the most outstanding characteristic of international judicial procedure is the extent to which reliance is placed upon its written word, both in the manner of pleadings, and of evidence, but especially the latter.”75

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This stands in marked contrast to the traditions followed in common law jurisdictions, which often regard oral witness testimony as indispensable.76

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Documentary evidence in those jurisdictions is often introduced only after a foundation establishing its reliability has been laid using oral witness testimony.77 The Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 694. Ibid, p. 694. Ibid, p. 694. Ibid, p. 694. Ibid, p. 694. Ibid, p. 695. Ibid, p. 695. Nathan D. O’Malley, Rules of Evidence in International Arbitration: An Annotated Guide (Informa Law from Routledge 2012), p. 23, at para. 3.01; Jean-​François Poudret and Sébastien Besson, Comparative Law of International Arbitration (2nd edn, 2007), p. 554, at para. 649. 75. Nathan D. O’Malley, Rules of Evidence in International Arbitration: An Annotated Guide, (Informa Law from Routledge, 2012), p. 23, at para. 3.01; Durward V. Sandifer, Evidence Before International Tribunals, Procedural Aspects of International Law Series, Vol. 13 (1975), p. 197. 76. Nathan D. O’Malley, Rules of Evidence in International Arbitration: An Annotated Guide (Informa Law from Routledge 2021), p. 23, at para. 3.02. 77. Ibid, p. 23, at para. 3.02.

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67. 68. 69. 70. 71. 72. 73. 74.

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practice is starkly different in civil law countries where witness testimony is supplemental to documental evidence, which is given greater weight.78 The UNCITRAL Rules,79 Arbitration Act,80 and IBA Rules on the Taking of Evidence81 (“IBA Rules”) contain provisions summarising the general considerations regarding production of documentary evidence in India or internationally. The relevant rules are reproduced below:

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The UNCITRAL Rules:

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“20(4). The statement of claim should, as far as possible, be accompanied by all documents and other evidence relied upon by the claimant, or contain references to them.” “21(2). The statement of defence shall reply to the particulars (b) to (e) of the statement of claim (article 20, paragraph 2). The statement of defence should, as far as possible, be accompanied by all documents and other evidence relied upon by the respondent, or contain references to them.” The Arbitration Act:

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“23(2). The parties may submit with their statements all documents they consider to be relevant or may add a reference to the documents or other evidence they will submit.” “24(1). Unless otherwise agreed by the parties, the arbitral tribunal shall decide whether to hold oral hearings for the presentation of evidence or for oral argument, or whether the proceedings shall be conducted on the basis of documents and other materials: … [Provided further that the arbitral tribunal shall, as far as possible, hold oral hearings for the presentation of evidence or for oral argument on day-​to-​day basis, and not grant any adjournments unless sufficient cause is made out, and may impose costs including exemplary costs on the party seeking adjournment without any sufficient cause.]” “24(3). All statements, documents or other information supplied to, or applications made to the arbitral tribunal by one party shall be communicated to the other party, and any expert report or evidentiary document on which the arbitral tribunal may rely in making its decision shall be communicated to the parties.”

78. 79. 80. 81.

Ibid, pp. 23–​24, at para. 3.02. UNCITRAL Rules, arts. 20(4) and 21(2). Arbitration Act, ss. 23(2), 24(1), and 24(3). IBA Rules, art. 3.1.

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Law, Practice and Procedure of Arbitration in India

The IBA Rules: “3.1 Within the time ordered by the Arbitral Tribunal, each Party shall submit to the Arbitral Tribunal and to the other Parties all Documents available to it on which it relies, including public Documents and those in the public domain, except for any Documents that have already been submitted by another Party.”

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The practice in domestic and international arbitrations indicates that evidence on issues of fact is almost invariably contained in documents.82 Thus, presentation of documents is considered easier and more expeditious as compared to oral testimony.83

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Usually, parties lay-​out their case in the first pleadings.84 As a result, the bulk of the evidence supporting their respective contentions will be annexed to the statement of claim and/​or defence.85 This approach helps both the arbitral tribunal, and the parties. It allows the procedure to develop according to the needs of each case.86

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Further, it permits the arbitrators to identify early in the matter what issues will likely require additional procedural consideration by affording them a full view of the primary evidence (for example: requests for document production and organising oral witness testimony).87

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An increasingly common formatting tool for organising and presenting the process of document request, objection, and decision is the “Redfern schedule”.88 The Redfern schedule is formulated as follows:

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“… a schedule with at least four columns is drawn up. Each column of the schedule is intended to be completed as briefly as possible by the parties’ lawyers.

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• In the first column, the ‘requesting party’ sets out (a) a brief description of the requested document in sufficient detail to identify it, or (b) a description in sufficient detail to identify a narrow and specific category of documents that are reasonably believed to exist.

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• In the second column, the requesting party states why the requested document(s) are both relevant to the case and material to its outcome, as

82. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 695. 83. Ibid. 84. Nathan D. O’Malley, Rules of Evidence in International Arbitration: An Annotated Guide (Informa Law from Routledge 2012), p. 28, at para. 3.10. 85. Ibid. 86. Ibid. 87. Ibid. 88. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 383, at para. 6.100.

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well as the statements required by Article 3(3)(c)(i) and (ii) of the IBA Rules. • In the third column, the requested party states the extent to which, if at all, it is prepared to accede to the request, and if it objects, the grounds on which it does so.

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• The fourth column is left blank for the arbitral tribunal’s decision. If the tribunal considers that the schedule as it stands does not contain sufficient information for it to make a properly informed decision, the arbitral tribunal will either (a) call for additional information, or (b) exceptionally, arrange a meeting with the parties to consider the disputed requests in more detail.”89

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Section 25(c) of the Arbitration Act specifically deals with the circumstances where a party fails to appear for an oral hearing or to produce evidence. In the event a party to the arbitral proceedings, without showing sufficient cause, fails to appear at an oral hearing, or produce documentary evidence.

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Section 25(c) of the Arbitration Act then empowers the arbitral tribunal to continue with the proceedings, and the award on the basis of the evidence before it.90

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If a party does not adduce evidence but has no sufficient cause for this failure. It then cannot argue that it has not been given a reasonable opportunity to present its case. The arbitral tribunal is entitled to proceed to make an award based on the evidence before it.91

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The arbitral tribunal should consider any evidence the absent party has adduced previously.92 The arbitral tribunal is not bound to accept the unchallenged evidence of the other party and can find that it is insufficient to prove that party’s case.93

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Justice Indu Malhotra summarised the practice regarding the translation of documents as follows:

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“If documents are not in the language of the arbitration, it is usually necessary to provide translations of such documents. As far as possible, the parties should submit

89. Ibid, p. 384, at para. 6.102. 90. M/​s. Auto Craft Engineers v Akshar Automobiles Agencies Pvt. Ltd. Arbitration Petition Nos. 556 of 2014, decided by the High Court of Bombay on 29 July 2016. 91. Nanjing Cereals, Oils and Foodstuffs Import & Export Corp v Luckmate Commodities Trading Ltd [1994] HKCFI 140. 92. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 5198. 93. Lewis Emanuel & Son Ltd v Sammut [1959] 2 Lloyd’s Rep 629.

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such translations to the arbitral tribunal jointly as ‘agreed translations’. The most convenient practice is that in the first instance, the document in the original language is included, along with the translation in the language of the arbitration. If the correctness of the translation is disputed, then each party’s version may be produced with the original documents.”94

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Witnesses Witnesses can be divided into: (1) witnesses of fact;



(2) party-​appointed expert witnesses; and



(3) tribunal-​appointed expert witnesses.

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Party-​appointed and tribunal-​appointed expert witnesses are considered in Section 29.5 below. The present section discusses the general rules of evidence adduced by witnesses in international and domestic arbitrations.

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It is important for parties to ascertain who may be a witness. In this regard, the UNCITRAL Rules and the IBA Rules may be considered. Article 27.2 of the UNCITRAL Rules reads:

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“Witnesses, including expert witnesses, who are presented by the parties to testify to the arbitral tribunal on any issue of fact or expertise may be any individual, notwithstanding that the individual is a party to the arbitration or in any way related to a party. Unless otherwise directed by the arbitral tribunal, statements by witnesses, including expert witnesses, may be presented in writing and signed by them.”

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Similarly, Article 4.2 of the IBA Rules provides that:

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“Any person may present evidence as a witness, including a Party or a Party’s officer, employee or other representative.”

Notwithstanding documentary evidence, fact witnesses are often relied on as a means of presenting evidence.95 Nathan D. O’Malley explains that the modern practice for taking witness testimony follows three basic assumptions:96

94. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 695. 95. Nathan D. O’Malley, Rules of Evidence in International Arbitration: An Annotated Guide (Informa Law from Routledge 2012), p. 105, at para. 4.01. 96. Ibid.

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“(1) a party has the right to be given notice of the identity of a witness and the subject matter of their testimony-​in-​chief before a hearing; (2) a witness who has provided testimony should be available to answer questions of the opposing party and/​or the tribunal based upon that testimony; and (3) a tribunal’s right to freely consider and weigh the evidence before it means that there are very few restrictions on who may offer testimony as a witness.” The arbitral tribunal in Dillon v Mexico97 observed that:

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“Unimpeached testimony of a person who may be the best-​informed person regarding transactions and occurrences under consideration cannot properly be disregarded because such a person is interested in a case. No principle of domestic or international law would sanction such an arbitrary disregard of evidence.”98

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The evidence of witnesses is usually taken in the presence of, and under the personal direction and superintendence of the arbitral tribunal.99 Parties also resort to filing affidavits on oath by their respective witnesses in order to save time.100 When a witness is sworn in or affirmed, the witness is first examined by the party who called the witness, known as examination-​in-​chief.101

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Pertinently, the witness must testify on the facts and not render opinions, inferences, or beliefs.102 The object of the examination is to get from the witness all the material facts within the witnesses’ knowledge relating to the case.103

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The practice in India, in both international and domestic arbitrations has seen arbitral tribunals following the rules set out in Chapter X, that is, Sections 135 to 166 of the Evidence Act.104 Section 135 of the Evidence Act contemplates the order of production and examination of witnesses. Section 137 of the Evidence Act stipulates that the witnesses may be subjected to:105 (1) examination-​in-​chief;

(2) cross-​examination; and



(3) re-​examination, in that order.106

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97. IV R.I.A.A. 368, 371 (1952), Opinion of Commissioner Nielson of 3 October 1928. 98. Ibid, at para. 371; Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2447. 99. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 695. 100. Ibid, p. 695. 101. Ibid, p. 695. 102. Ibid, p. 695. 103. Ibid, p. 695. 104. Ibid, p. 696. 105. Ibid, p. 696. 106. Ibid, p. 696.

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Law, Practice and Procedure of Arbitration in India

The process for hearing fact witnesses usually starts with them first being examined by counsel of the party that is presenting the witness. Then they are cross-​examined by the opposing counsel and re-​examined by the first counsel if necessary. The arbitral tribunal may allow additional cross-​examination.107

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Objections may be made to direct and redirect examination on the basis of them being “leading” or “closed”. Opposing counsel conducting cross-​examination may ask any type of question as long as it is fair and relevant.108 Sarkar on Evidence109 summarises the purpose behind cross-​examinations as: (1) Undermine the credibility of the witness;110



(2) Controvert the facts to which the witness had deposed to in chief, including the cross-​examiner’s version thereof;111 and



(3) Attempt to get answers to facts which the witness has not deposed, but to which the cross-​examiner thinks he should be able to depose.112

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Interrogatories may be used to obtain the answers to contentious or disputatious matters where it is unlikely that the answer will be obtained by way of cross-​examination from witnesses who are likely to be called.113

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Interrogatories are written questions put by one party to the other party who is required to answer the questions in writing and upon oath or affirmation.114 Interrogatories are rare in modern international commercial arbitration.115

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Fact witnesses are not allowed to discuss the case with “lawyers or other witnesses presented by the same party, during overnight or refreshment breaks whilst they are under examination”. This is to ensure the witness is not prepared beforehand on how to answer questions during examination and cross-​examination.116

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107. Nigel Blackaby, Constantine Partasides, Alan Redfern and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), pp. 406–​407, at para. 6.177. 108. Ibid, p. 407, at para. 6.178. 109. Sarkar on Evidence, Vol. II (15th edn, 2004), pp. 2162–​2163; Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 696. 110. Sarkar on Evidence, Vol. II (15th edn, 2004), pp. 2162–​2163. 111. Ibid. 112. Ibid. 113. J. Tackaberry and A. Marriot and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson Sweet & Maxwell 2003), at para. 2-​712. 114. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 5-​159. 115. J. Tackaberry and A. Marriot and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson Sweet & Maxwell 2003), at para. 2-​712. 116. J. Tackaberry and A. Marriot and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson Sweet & Maxwell 2003), p. 407, at para. 6.179.

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As discussed above, parties will frequently submit written statements which are attached to respective affidavits, setting forth the direct testimony of the witness on whom they rely.117 If a witness who has submitted an affidavit refuses to testify at the oral hearing, the arbitral tribunal may, and usually will, disregard the witness statement or affidavit.118

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This is also expressly provided for in the IBA Rules and is common practice. In some cases where the witness may have a compelling excuse (for example, a serious illness), then the arbitral tribunal may choose not to disregard the witness statement –​ although its credibility will be affected by the lack of cross-​examination.119

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In cases where events took place some years ago, there may be difficulties and exigencies of precisely identifying the truth. It may be exacerbated by the inherent weakness of the human memory.

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In such a situation, the evidentiary weight of contemporaneous documentary evidence is more compelling than oral evidence. This is particularly so where there is a lack of skill or time available to test the witnesses’ evidence by cross-​examination.120

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Subject to an agreement between the parties, Section 19 of the Arbitration Act reserves to the arbitrator to decide whether questions should be put to, and answered by the respective parties, and the manner and form which this should be done.121

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A question arises as to what extent is it permissible for a party, its employees, or counsel to interview and prepare the witness whose testimony is intended to be presented to the tribunal.122

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The IBA Guidelines on Party Representation in International Arbitration, 2013 (“IBA Guidelines”) provide some guidance on witness interviews and reparation. Guideline 9 of the IBA Guidelines provides that:

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“[a]‌Party Representative may assist Witnesses in the preparation of Witness Statements and Experts in the preparation of Expert Reports”.

117. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2423. 118. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 2284–​2285; IBA Rules, art. 4(7). 119. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2285. 120. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 380, at para. 6.90. 121. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), pp. 696–​697. 122. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 391, at para. 6.123.

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Law, Practice and Procedure of Arbitration in India

Further, Guideline 24 of the IBA Guidelines provides that: “[a]‌Party Representative may meet or interact with witnesses and experts in order to discuss and prepare their prospective testimony”.

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It is important for counsel, and the arbitral tribunal, to be aware of differing ethical rules and expectations prior to establishing the procedures for evidence taking123 owing to the differences between common law124 and civil law systems.125 Gary B. Born, in respect of oral testimonies and perjury, states:

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“Before providing oral testimony at the hearing, witnesses are often required to swear an oath or make an affirmation that they will testify truthfully.126 In some jurisdictions (particularly common law states), arbitrators are permitted by local law to administer an oath, which often has the consequence of subjecting false testimony to criminal penalties. … Even if no oath is administered, a tribunal should admonish witnesses as to the importance of testifying truthfully and warn them about the consequences of giving false testimony.”127

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As such, a party or a witness in arbitration proceedings, after having taken the oath or affirmation, gives evidence which he knows to be false or does not believe it to be true, he is liable to be criminally prosecuted.

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Sutton, Gill, and Gearing explain:

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“It is a criminal offence to interfere with the course of justice by manufacturing false evidence intended to deceive and mislead a tribunal, even if the evidence is never actually used.”128

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123. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2861. 124. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2859: “a lawyer may not prepare, or assist in preparing, testimony that he or she knows, or ought to know, is false or misleading. So long as this prohibition is not transgressed, a lawyer may properly suggest language as well as the substance of testimony, and may –​indeed, should –​do whatever is feasible to prepare his or her witnesses for examination.” 125. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2860: “In Contrast, in some civil law jurisdictions, it is unethical (and in some cases potentially criminal) to either contact or attempt to affect a witness’s testimony in local judicial proceedings.”; Damaska, “Presentation of Evidence and Factfinding Precision”, 123 U. Pa. L. Rev. 1083, at pp. 1088–​1089. 126. M. Kurkela and S. Tutumen, Due Process in International Commercial Arbitration (2nd edn, Oxford University Press 2010), pp. 164–​165. 127. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 2460–​2461. 128. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 5-​159.

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Inspection An arbitral tribunal may inspect the subject matter of the dispute; and it may require the parties to produce the subject matter of the dispute for examination.129

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In situations where the arbitral tribunal is in doubt, it may, in accordance with the provisions of Section 27 of the Arbitration Act, apply to the court for assistance in taking evidence in relation to the subject matter of the dispute.130

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In building and construction disputes, arbitral tribunals may inspect the site where the contract was executed, or the site where the events relating to the dispute occurred.131 Similarly in trade contracts, the tribunal may inspect the cargo or consignment.132

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[29.5] BURDEN OF PROOF AND STANDARD OF PROOF

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Issues of burden of proof frequently arise in international arbitration, as in domestic litigation.133

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The UNCITRAL Rules provide that “[e]‌ach party shall have the burden of proving the facts relied on to support its claim or defence.”134 This is consistent with the general rule of actori incumbit probation: each party bears the burden of proving that facts relied on in support of its case.135

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Practically, most arbitral when evaluating the evidence may apply the adverse inference rule that:

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“[w]‌hen a party … has access to relevant evidence, the tribunal is authorised to draw adverse inferences from the failure of that party to produce such evidence.”136

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The Evidence Act in India specifies that the burden of proof is on the party who wishes to adduce such evidence.137

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129. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), pp. 697–​698. 130. Ibid, p. 698. 131. Ibid, p. 698. 132. Ibid, p. 698. 133. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2487. 134. Ibid, p. 2487; UNCITRAL Rules, art. 27(1); Bell Aerospace Co. v Local 516, Int’l Union, United Auto., Aerospace & Agric. Implement Workers of Am. (UAW) 500 F.2d 921, 923 (2d. Cir. 1974). 135. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2487; Pietrowski, “Evidence in International Arbitration” (2006) 22 Arb. Int’l, pp. 373, 374, 379. 136. Ultrasys., Inc. v Islamic Repub. of Iran Award in IUSCT Case No. 27-​84-​3 of 4 March 1983. 137. Evidence Act, s. 104.

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Law, Practice and Procedure of Arbitration in India

Section 108 of the Evidence Act and Article 27 of the UNCITRAL Rules provide that when any fact is especially in the knowledge of any person, the burden of proving the fact is upon such person. The Supreme Court of India in Anil Rishi v Gurbaksh Singh,138 distinguished between the “burden of proof ” and “onus of proof ” as follows:

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“19. There is another aspect of the matter which should be borne in mind. A distinction exists between a burden of proof and onus of proof. The right to begin follows onus probandi. It assumes importance in the early stage of a case. The question of onus of proof has greater force, where the question is which party is to begin. Burden of proof is used in three ways: (i) to indicate the duty of bringing forward evidence in support of a proposition at the beginning or later; (ii) to make that of establishing a proposition as against all counter evidence; and (iii) an indiscriminate use in which it may mean either or both of the others. The elementary rule is Section 101 [Evidence Act] is inflexible. In terms of Section 102 [Evidence Act] the initial onus is always on the plaintiff and if he discharges that onus and makes out a case which entitles him to a relief, the onus shifts to the defendant to prove those circumstances, if any, which would disentitle the plaintiff to the same.”139

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“… [T]‌he tribunal should allocate the burden of proof in light of its assessment of the applicable substantive law and procedures adopted in the arbitration. In doing so, the tribunal need not apply the burden of proof rules of any specific jurisdiction, but can instead fashion specialised rules in light of the particular substantive issues and procedures at issue in a specific instance.”

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The arbitral tribunal adheres to the “balance of probabilities” as the standard of proof. This is in contradistinction with the standard applicable to criminal cases where guilt is required to be proved “beyond all reasonable doubt”.141

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The practitioner should therefore make an evaluation of the degree of proof in deciding what evidence to produce and the means by which it should be presented. The main objective is to satisfy the arbitral tribunal to make the finding of fact in support of the party’s case.142

1 38. (2006) 5 SCC 558. 139. Anil Rishi v Gurbaksh Singh (2006) 5 SCC 558, at para. 19. 140. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2491. 141. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 698. 142. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 379, at para. 6.88.

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Chapter 29—​​​Evidence in Arbitration

Nathan D. O’Malley explains the standard of proof as:143

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“7.27 The standard of proof is used to determine whether the evidence a party has produced in support of its factual allegations is sufficient to establish the facts in question. The standard may be determined by the relevant substantive law, but in some instances, tribunals will appeal to customary practice to devise the threshold standard of proof. … “7.30 It is generally conceded that a tribunal may take note of the substantive nature of a charge brought against a party when fashioning the applicable standard of proof as a matter of international evidentiary procedure.144 For those allegations of particular gravity, a tribunal may find it necessary to apply a higher standard of proof.”145

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An arbitral tribunal is the sole judge of the quantity and quality of evidence. It has the power to determine the admissibility, relevance, materiality, and weight of the evidence. It is required to exercise a certain amount of propriety in admitting evidence.

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Although parties are free to determine the applicable procedure for the arbitral proceedings, the arbitral tribunal is empowered to determine the admissibility, relevance, materiality, and weight of any evidence submitted before it.146

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The Supreme Court of India in ONGC v Saw Pipes147 held that the arbitral tribunal must act in an honest and just manner. If it decides erroneously whether the evidence is admissible or not, that in itself is not misconduct. If it deliberately accepts evidence which is obviously inadmissible, its award may be called into question.

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An arbitral tribunal which rejects the rules of evidence completely may be guilty of misconduct. An award which is contravention of the basic notions of morality and justice or is in contravention with the fundamental policy of Indian laws would be amenable to challenge.

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It would be set aside if the allegations regarding such violations are found to be true. Therefore, the application of mind becomes extremely crucial and the application of mind is best demonstrated by recording reasons in support of a decision.148

143. See Nathan D. O’Malley, Rules of Evidence in International Arbitration: An Annotated Guide (Informa Law from Routledge 2012). 144. Ibid, p. 207, at para. 7.27. 145. Ibid, p. 207, at para. 7.30; Bosnia and Herzegovina v Serbia and Montenegro ICJ Case No. 91, 26 February 2007. 146. Section 19(4). 147. (2003) 5 SCC 705. 148. ONGC v Saw Pipes (2003) 5 SCC 705, at para. 38.

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Law, Practice and Procedure of Arbitration in India

[29.6] EXPERT WITNESSES As discussed earlier, witnesses can be divided into witnesses of fact; party-​appointed expert witnesses; and tribunal-​ appointed expert witnesses. This section discusses party-​appointed expert witnesses and tribunal-​appointed expert witnesses.

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The parties use party-​appointed experts in commercial arbitrations to substantiate their respective cases.149 When the arbitral tribunal is faced with conflicting views of party-​appointed experts, it is empowered to appoint an independent expert to assist in the resolution of disputes.150

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In 1996, Woolf Report151 as applied in England became instrumental over time in bringing about a cultural change within the judicial and arbitral culture in international commercial arbitration.152

(1) No expert evidence should be given on a subject unless it would be of assistance to the court;153



(2) No expert evidence should be adduced without the leave of the court;154



(3) The scope of expert evidence should be limited by means of directions by the court as to the issues upon which expert evidence can be led;155



(4) The practice of ordering joint conferences of experts should be continued, and experts should be required to produce a joint report detailing issues agreed and not agreed upon;156



(5) Expert reports, in recognition of the paramount duty of the expert to the court should be addressed to the court and not to the appointing party;157 and



(6) Single experts (jointly appointed by the parties, or appointed by the court) shall be used, wherever possible.158

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149. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 717. 150. Ibid. 151. Access to justice, Final Report. The Right Honourable the Lord Woolf. Available at https://​webarchive. nationalarchives.gov.uk/​+/​http://​www.dca.gov.uk/​civil/​final/​contents.htm. 152. Ibid, p. 717. 153. Ibid, p. 717. 154. Ibid, p. 717. 155. Ibid, p. 718. 156. Ibid, p. 718. 157. Ibid, p. 718. 158. Ibid, p. 718.

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Section 26 of the Arbitration Act (based on Article 26 of the Model Law), which governs “experts appointed by arbitral tribunal” reads: “(1) Unless otherwise agreed by the parties, the arbitral tribunal may –​ (a) appoint one or more experts to report to it on specific issues to be determined by the arbitral tribunal, and

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(b) require a party to give the expert any relevant information or to produce, or to provide access to, any relevant documents, goods or other property for his inspection.

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(2) Unless otherwise agreed by the parties, if a party so requests or if the arbitral tribunal considers it necessary, the expert shall, after delivery of his written or oral report, participate in an oral hearing where the parties have the opportunity to put questions to him and to present expert witnesses in order to testify on the points at issue.

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(3) Unless otherwise agreed by the parties, the expert shall, on the request of a party, make available to that party for examination all documents, goods or other property in the possession of the expert with which he was provided in order to prepare his report.”

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Expert witnesses advise, assist, and educate the tribunal on specialist issues in a fair and impartial manner. The specialist expertise may be technical, forensic, legal, or accountancy, as relevant to the dispute. The members of the arbitral tribunal have not to be fully conversant nor have such expertise.159

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The arbitral tribunal should consider that the complexity of the disputed issue is not necessarily directly related to the amount of the dispute.

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“It is helpful to start with a presumption that expert evidence will not be required. Depart from this presumption only if expert evidence is needed to inform the arbitral tribunal on key issues in dispute.”160

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The expert is appointed merely for his technical assistance or expert advice in order to understand complex technical matters, for arriving at a proper decision.161 The expert

159. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 408, at para. 6.183. 160. ICC Arbitration Commission Report on Techniques for Controlling Time and Costs in Arbitration 2012, para. 62, available at http://​www.iccwbo.org/​Advocacy-​Codes-​and-​Rules/​Document-​centre/​2012/​ICC-​ Arbitration-​Commission-​Report-​on-​Techniques-​for-​Controlling-​Time-​and-​Costs-​in-​Arbitration/​. 161. See Sharp v Nowell (1848) 6 CB 253; Baker v Cotterill 18 LJQB 345; Whitmore v Smith (1861) 7 H & N 509; Naumann v Nathan (1930) 37 LI LR 249.

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can be proposed and appointed by the institution.162 He is not a part of the arbitral tribunal. The arbitral tribunal must exercise its own judgment about the advice given to it by the expert. The expert’s function is confined to giving impartial advice to the arbitrator on matters within his expertise.

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The arbitral tribunal must also act judicially and cannot delegate its decision-​ making function to the expert, that is, delegates non potest delegare. It must exercise its own judgment in deciding the issues.163 It must form its own opinion and decide on the admissibility, relevance, material, and weight of any expert evidence.164

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The usual practice is to let each party, as opposed to the arbitral tribunal, adduce their own expert evidence. The practice is to allow examination of the expert witness after exchange of the reports and possibly “without prejudice meeting with the other party’s expert”.165

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A party can be required to give such expert any relevant information or to produce or to provide access to, any relevant document, goods or other property for his inspection. Mustill and Boyd advise:

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“A tribunal should act cautiously before appointing its own expert particularly if the parties are not to be allowed to present their own evidence. Great care should be taken in drawing up the expert’s terms of reference, and the tribunal should take pains to avoid the impression that the case is to be decided on the basis of advice given privately by the tribunal’s own expert or, worse, that it is to be decided by the expert himself.”166

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Expert evidence may conflict on matters of complex technical points. The arbitral tribunal should not meet the experts to discuss their evidence without the presence of the parties.167

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162. See the ICC Rules for the Appointment of Experts and Neutrals 2015, available at http://​www.iccwbo.org/​ Products-​and-​Services/​Arbitration-​and-​ADR/​Experts/​Appointment-​of-​Experts-​and-​Neutrals/​ICC-​Rules-​ for-​the-​Appointment-​of-​Experts-​and-​Neutrals/​. 163. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​074; see also Agrimex Ltd v Tradigrain SA [2003] EWHC 1656 (Comm), where a tribunal used a draftsman, whose function was to set out was he had been told, to provide and refine the tribunal’s analysis and legal reasoning. 164. Anon (1648) Jenk 128; R v Humphryes (1649) Sty 154; Johnson v Latham 19 LJQB 329; Eastern Counties Railway Co v Eastern Union Railway Co (1863) 3 De G J & S 610; Trachsell & Clayton v Wilson (1865) 11 LT 713; Chin Sen Wah v Public Prosecutor [1958] MLJ 154. 165. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 5-​152. 166. Mustill and Boyd, Commercial Arbitration: Companion Volume to 2nd Edition (Butterworths 2001), p. 311. 167. Hussman (Europe) Ltd v Al Ameen Development & Trade Co [2000] 2 Lloyd’s Rep 83.

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Dato’ Mahadev Shanker advises that expert evidence should be treated with an open mind and the arbitrator should evaluate the expert’s testimony and apply the following criteria:168 (1) Is there a recognised field of expertise in the issue involved?



(2) Is the expert qualified in that field by training or experience?



(3) Has the expert been faithful to the accepted standards of the methodology or techniques applicable to the resolution of the problem at hand?



(4) Is his opinion based on identified facts proved by the evidence and consistent with any relevant theory and most important was his finding the product of valid deductive reasoning?



(5) Where his evidence has been impugned, has it been shown that his creditworthiness been impaired by proof of other facts which negate the foundation on which his conclusions are based?



(6) Is his conclusion consistent with the totality of the evidence before the tribunal?

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In England, the rules relating to expert evidence adduced in court are equally applicable to arbitrations. Creswell J in National Justice Compania Naviera SA v Prudential Assurance Co Ltd (The Ikarian Reefer)169 laid down the following guidelines: (1) Expert evidence presented to the court should be, and should be seen to be, the independent product of the expert uninfluenced as to form or content by the exigencies of litigation (Whitehouse v Jordan [1981] 1 WLR 246, at 256, per Lord Wilberforce).



(2) An expert witness should provide independent assistance to the court by way of objective unbiased opinion in relation to matters within his expertise (see Polivitte Ltd v Commercial Union Assurance Co Plc [1987] 1 Lloyd’s Rep 379, per Garland J; Re J [1990] FCR 193, per Cazalet J). An expert witness should never assume the role of an advocate.

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168. Dato’ Mahadev Shanker, “Expert Evidence in Court –​The Legal Perspective”, Paper presented at the 2nd National Medical-​Legal Conference, Kuala Lumpur, (2000) April. 169. [1993] 2 Lloyd’s Rep 68, at pp. 81–​82. See also University of Warwick v Sir Robert McAlpine (1988) 42 BLR 1, at p. 22, per Garland J; Cala Homes (South) Ltd v Alfred McAlpine Homes East Ltd (1995) CILL 1083, at p. 1086, [1995] EWHC 7 (Ch), [1995] FSR 818; Abbey National Mortgages PLC v Key Surveyors Nationalwide Ltd [1996] 3 All ER 184, [1996] 1 WLR 1534, at p. 1542, CA (Eng); Stanley v Rawlinson [2011] EWCA Civ 405; Jones v Kaney [2011] UKSC 13.

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Law, Practice and Procedure of Arbitration in India

(3) An expert witness should state the facts or assumptions upon which his opinion is based. He should not omit to consider material facts which could detract from his concluded opinion (Re J [1990] FCR 193).



(4) An expert witness should make it clear when a particular question or issue falls outside his expertise.



(5) If an expert’s opinion in not properly researched because he considers that insufficient data is available, then this must be stated with an indication that the opinion is no more than a provisional one (Re J [1990] FCR 193, per Cazalet J). In cases where an expert witness who has prepared a report could not assert that the report contained the truth, the whole truth and nothing but the truth without some qualification, that qualification should be stated in the report (Derby v Weldon (No 9) [1990] TLR 712, per Staughton LJ).



(6) If, after exchange of reports, an expert witness changes his view on a material matter having read the other side’s expert report or for any other reason, such change of view should be communicated (through legal representatives) to the other side without delay and when appropriate to the court.



(7) Where expert evidence refers to photographs, plans, calculations, analyses, measurements, survey reports, or other similar documents, these must be provided to the opposite party at the same time as the exchange of reports.

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However, an arbitral tribunal should not use its knowledge and experience to refute the expert evidence adduced by one party unless it gives that party an opportunity to challenge its preferred view.170

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An arbitral tribunal may for its own guidance consult a third party with expert knowledge on an issue in the arbitration, although it must form his own judgment on every issue referred to it.171 An arbitrator may obtain legal assistance in framing his award172 but not to its contents.173 170. Fox v PG Wellfair Ltd (in liq), Fisher v PG Wellfair Ltd [1981] 2 Lloyd’s Rep 514, (1981) 19 BLR 52, CA (Eng); Burne v Young (29 May 1991, CP 68/​89) (unreported), NZ; Checkpoint Ltd v Strathclyde Pension Fund [2003] EWCA Civ 84, [2003] All ER (D) 56 (Feb). 171. Emery v Wase (1801) 5 Ves 846, affd (1803) 8 Ves 505, at p. 517; Hopcraft v Hickman (1824) 2 Sim & St 130; Anderson v Wallace (1835) 3 Cl & Fin 26; Caledonian Rly Co v Lockhart 3 Macq 808; Gray v Wilson (1865) LR 1 CP 50; Re Hare, Milne and Haswell (1839) 6 Bing NC 158, at p. 162; Johnson v Latham 19 LJQB 329. 172. Fetherstone v Cooper (1803) 9 Ves 67; Baker v Cotterill (1849) 7 Dow & L 20; Behren v Bremer (1854) 3 CLR 40; Rolland v Cassidy (1888) 13 App Cas 770, at pp. 776–​777, PC; Threlfall v Fanshawe (1850) 1 LM & P 340; Galloway v Keyworth (1854) 15 CB 228; Re Underwood and Bedford and Cambridge Rly Co (1861) 11 CBNS 442; Giacomo Costa Fu Andrea v British Italian Trading Co Ltd [1961] 2 Lloyd’s Rep 392, affd [1963] 1 QB 201, [1962] 2 All ER 53, [1962] 1 Lloyd’s Rep 151, CA (Eng). 173. Lingood v Eade (1742) 2 Atk 501; Tomlin v Fordwich Corporation (1836) 5 Ad & El 147; Re Goddard and Mansfield (1850) 1 L M & P 25; Ellison v Bray (1864) 9 LT 730.

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Party-​appointed Experts

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Noticeably, Section 26 of the Arbitration Act does not provide for appointment of experts by parties. For party-​appointed experts, Section 6 of the Arbitration Act provides that “to facilitate the conduct of arbitral proceedings, the parties may arrange for administrative assistance either by institution or person. Under this provision, an appointment can be sought by parties.”174 However, Justice Indu Malhotra points out that two problems arise in the case of party-​appointed experts:

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“Firstly, there is a tendency for experts to view themselves (and to be viewed) as being within the ‘camp’ of the party which has appointed them and paid their remuneration. This gives rise to the risk that they will give partisan evidence as a ‘hired gun’, which does nothing to assist the tribunal. Secondly, parties with a hope to strengthen a weak case, may call multiple experts where one would suffice, or call an expert where none was need. This leads to unnecessary delay and cost, which may result in an unjust outcome.”175

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Tribunal-​appointed Experts

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Section 26 of the Arbitration Act and Article 26 of the Model Law provides that, apart from party-​appointed experts, the arbitral tribunal may also on its own motion initiate the appointment of experts to report to it on specific issues to be determined in the arbitration.176 This is a power granted to the arbitral tribunal. It is not a requirement or an obligation for the arbitral tribunal to appoint an expert in all cases.177

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Article 29 of the UNCITRAL Rules, to be read together with Article 26 of the Model Law stipulate the rules regarding appointment of an expert witness by the Tribunal. Article 29 of the UNCITRAL Rules reads:

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“Article 29

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1. After consultation with the parties, the arbitral tribunal may appoint one or more independent experts to report to it, in writing, on specific issues to be determined by the arbitral tribunal. A copy of the expert’s terms of reference, established by the arbitral tribunal, shall be communicated to the parties.

174. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 720. 175. Ibid. 176. UNCITRAL 2012 Digest of Case Law on the Model Law on International Commercial Arbitration, art. 12, at p. 116 para. 1. 177. Ibid.

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Law, Practice and Procedure of Arbitration in India

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2. The expert shall, in principle before accepting appointment, submit to the arbitral tribunal and to the parties a description of his or her qualifications and a statement of his or her impartiality and independence. Within the time ordered by the arbitral tribunal, the parties shall inform the arbitral tribunal whether they have any objections as to the expert’s qualifications, impartiality or independence. The arbitral tribunal shall decide promptly whether to accept any such objections. After an expert’s appointment, a party may object to the expert’s qualifications, impartiality or independence only if the objection is for reasons of which the party becomes aware after the appointment has been made. The arbitral tribunal shall decide promptly what, if any, action to take.

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3. The parties shall give the expert any relevant information or produce for his or her inspection any relevant documents or goods that he or she may require of them. Any dispute between a party and such expert as to the relevance of the required information or production shall be referred to the arbitral tribunal for decision.

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4. Upon receipt of the expert’s report, the arbitral tribunal shall communicate a copy of the report to the parties, which shall be given the opportunity to express, in writing, their opinion on the report. A party shall be entitled to examine any document on which the expert has relied in his or her report.

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5. At the request of any party, the expert, after delivery of the report, may be heard at a hearing where the parties shall have the opportunity to be present and to interrogate the expert. At this hearing, any party may present expert witnesses in order to testify on the points at issue. The provisions of article 28 shall be applicable to such proceedings.”

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The High Court of Delhi confirms the non-​mandatory nature of Section 26 of the Arbitration Act. The Court clarified that it is not an obligation for the arbitral tribunal to call for expert evidence, particularly in cases where the arbitrators themselves are experts in the field.178 When appointing a tribunal expert, it is advisable that the role and scope of the expert’s duty in arbitral proceedings be clearly defined.179 The High Court of Singapore faced an issue where a party attempted to set aside an arbitral award on the ground that 178. National Thermal Power Corporation Ltd. v Wig Brothers Builders and Engineers Ltd. 2009 SCC OnLine Del 911. 179. UNCITRAL 2012 Digest of Case Law on the Model Law on International Commercial Arbitration, art. 12, at p. 117 para. 2.

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the expert’s involvement in the case went beyond what had been agreed upon.180 The applicant submitted that the expert performed tasks, which ought to have been carried out by the arbitral tribunal.181 The Court refused this argument and held that “unless there was strong and unambiguous evidence of irregularity in the manner in which the arbitration was conducted, the integrity of the tribunal should not be questioned”.182

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The Court emphasised that it would not permit parties to “mount what appeared to be a ‘back-​door’ appeal by attacking the manner in which the tribunal had made use of [the expert] when there was no evidence but only speculation that [the expert] had overstepped his bounds.”183

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An arbitral tribunal may obtain expert opinion on a variety of issues despite being experts themselves.184 Arbitral tribunals often call expert witnesses on issues of architecture, engineering, shipping, commodity trade, accountancy, foreign law and forensic matters, etc.185

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The High Court of Kerala in Biju Xavier and Anr. v Christiy Fernandez186 held that an expert can be appointed under Section 26 of the Arbitration Act to facilitate the conduct of arbitral proceedings. It can appoint a commissioner for local inspection, an accountant to inspect the accounts, a fingerprint or handwriting expert, an engineer, an architect etc.187

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An expert who is appointed by the tribunal does not take over the adjudicatory role, or jurisdiction of the arbitral tribunal.188

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The High Court of Allahabad in Gurucharan Singh Sahney v Harpreet Singh Chabbra and Ors.189 was faced with an issue where the tribunal appointed an expert to assess damages, even though neither of the parties had sought damages. Further, the expert attended all hearings and actively assisted the tribunal is deciding issues on merits.190

180. 181. 182. 183. 184. 185. 186. 187. 188. 189. 190.

Ibid. Ibid. Ibid. Luzon Hydro Corp. v Transfield Philippines Inc, High Court, Singapore, 13 September 2004, [2004] SGHC 204. Mahavirchand v Ashaykumar 2011 SCC OnLine Bom 794. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 723. (2010) 3 KLJ 774. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 723. Ibid. (2016) 4 ALD 141. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 723.

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Law, Practice and Procedure of Arbitration in India

The High Court of Allahabad held that an expert could not be appointed without the consent of the parties. An expert witness appointed to assess damages could not travel beyond the scope and assist the tribunal in determining other issues.191 Such delegation of the tribunal’s authority would invalidate the award.192

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An arbitral tribunal had exercised powers under Section 26 of the Arbitration Act in a construction dispute for the purpose of measurement and evaluation of work done by a contractor.193 The arbitral tribunal made an assessment of the claims and counterclaims made by the parties based on the expert’s report.194

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An international arbitral tribunal would customary determine first whether an expert’s report will truly assist its function if prima facie evidence has established a substantive dispute between the parties on a point of fact.195 An ICC arbitral tribunal usefully summarised the practice to be followed:

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“The arbitrators are at liberty to decide whether such an appointment is necessary for the solution of the case. Such an expert may be useful or even necessary for technical questions. In the present situation, such utility is in no way established. On the contrary, the questions which are typically in the field of activity of an expert have already been covered by the [first expert’s] report. This report describes the work done by the defendant party and is necessary for the determination of the payment claimed by the claimants. Other questions such as the ones quoted by respondent are to be resolved by the arbitrators. Moreover, it is their duty to interpret the contractual documents and evidences fi led by the parties. To appoint a second expert would lead to a replacement of the arbitrators by an expert.”196

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Justice Indu Malhotra differentiated the two types of expert witnesses when she explained:

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“The difference between the two types of experts is that the fee of the tribunal-​ appointed expert is considered part of the procedural costs of the arbitration; while the fee of the expert witness appointed by either party is borne by the party who produces the expert witness.”197

Ibid. Ibid. State of Bihar & Ors. v Ram Pravesh Rai Estate Pvt. Ltd. AIR 2017 Pat 123. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 723. Nathan D. O’Malley, Rules of Evidence in International Arbitration: An Annotated Guide (Informa Law from Routledge 2012), p. 161, at para. 6.09. 196. Contractor (European Country) v Owner (Middle Eastern Country and Others), Final Award in ICC Case No. 4629, in Albert Jan van den Berg (ed.), Yearbook Commercial Arbitration, Vol. XVIII (1993), p. 14. 1 97. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 728. 191. 192. 193. 194. 195.

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Chapter 29—​​​Evidence in Arbitration

[29.7] COURT ASSISTANCE IN TAKING EVIDENCE Based on the Model Law, Section 27 of the Arbitration Act provides for court assistance in taking evidence. An arbitral tribunal on its own motion, or a party with the approval of the tribunal, may request the court for assistance in taking evidence.198

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The power under Section 27 is usually invoked in respect of third parties who could be witnesses in relation to:

(1) fact in issue; and/​or



(2) possession and knowledge of relevant documents.199

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Justice Indu Malhotra summarises Section 27 of the Arbitration Act as follows:

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“Section 27 enables an arbitral tribunal, or a party to an arbitration proceeding, to apply to the competent court for aid and assistance in taking evidence. Such assistance may be requested either by the arbitral tribunal itself, or a party with the approval of the tribunal. The scheme of the section is: sub-​section (1) empowers the tribunal, or a party with the approval of the tribunal, to apply to the court for assistance in obtaining evidence; sub-​section (2) provides that the application which is made to the court for assistance in taking evidence, must specify the details as per clauses (a) to (c) including sub-​paras (i) and (ii) of clause (c); sub-​section (3) provides that the competent court may direct that the evidence be provided directly to the arbitral tribunal; the court is not mandated to comply with the request made by the tribunal or party; sub-​section (4) states that the court is competent to issue the same processes to the witnesses, as it would issue in a suit being tried before it. Sub-​section (5) provides the consequence if a person fails to comply with the process issued or makes a default of refuses to give evidence. Sub-​section (6) clarifies that the expression process includes issuance of summons and commissions, for the examination of witnesses and summons to produce documents.”

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The Supreme Court of India in Delta Distilleries Ltd. v United Spirits Ltd.200 considered the phrase “any person” under Section 27(2) of the Arbitration Act. It held that the term “any person” is wide enough to cover not merely a party to the proceedings, but also includes a third party.201

198. 199. 200. 201.

Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 730. Ibid. (2014) 1 SCC 113. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 733.

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Law, Practice and Procedure of Arbitration in India

The word “may” in sub-​sections (3) and (4) of the Section 27 of the Arbitration Act indicates the discretionary power which would be exercised by the court while examining a request under Section 27.202 Despite an arbitral tribunal’s prima facie view on the relevancy of the evidence, the court has the option to consider and reject a request under Section 27 of the Arbitration Act.203

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Since the arbitral tribunal cannot compel a party, or a witness, to give evidence or produce a document before it, Section 27 of the Arbitration Act aids arbitral tribunals in obtaining or adduce relevant evidence.204 Section 27 of the Arbitration Act is not an adjudicatory power.205

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An interim order rejecting an application made by a party under Section 27 of the Arbitration Act is not an award, and therefore not amenable to a challenge under Section 34 of the Arbitration Act.206

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The High Court of Delhi in National Highways Authority of India v Oriental Structural Engineers Ltd. Gammon India Ltd. (JV)207 while considering an order under sub-​sections (3) and (4) of Section 27 of the Arbitration Act, held:

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“10.3. Under sub-​section (4), the Court while making an order for provision of evidence under sub-​section (3) is empowered to issue the same processes as it may to witnesses before it in a Suit being tried before the Court. Upon failure of persons to attend in accordance with such processes being issued to them or committing a default or refusing to give evidence or even being guilty of contempt of the Arbitral Tribunal, they would be subject to such like disadvantages, penalties and punishments, which the Court may impose by its order on a representation of the Arbitral Tribunal as it can do in Suits being tried before it.”

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The High Court of Delhi in Reliance Polycrete Ltd. v National Agricultural Cooperative Marketing Federation of India208 was faced with an application for the issuance of summons to witnesses who were residents of Singapore, Hong Kong, Macau, and different cities in India. It was held that the Court was devoid of any power to issue process to foreign witnesses. The Court rejected the application.

202. 203. 204. 205. 206. 207. 208.

Sime Darby Engineering SND. BHD v Engineers India Ltd. (2009) 7 SCC 545. Ennore Port Ltd. v Hindustan Construction Co. Ltd. AIR 2007 Mad 73. United Spirits Ltd. v Delta Distillery Ltd. (2012) 6 MhLJ 522. Montana Developers Pvt. Ltd. v Aditya Developers, Mumbai (2016) 6 MhLJ 660. Harinarayan G. Bajaj v Sharedeal Financial Consultants Pvt. Ltd. & Anr. AIR 2003 Bom 206. AIR 2012 Del 67, at para. 10.3. (2009) 156 DLT 224.

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Chapter 29—​​​Evidence in Arbitration

The Court in SH. Satinder Narayan Singh v Indian Labour Cooperative Society Ltd. and Ors.209 refused the party’s application to seek court’s assistance in taking evidence on the ground that a party did not obtain the approval of the arbitral tribunal. Section 27(5) of the Arbitration Act has been enacted to give teeth to the interim orders passed by arbitral tribunals.210

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Any person failing to comply with the order of the arbitral tribunal under Section 27 of the Arbitration Act would be deemed to be “making any other default” or “guilty of any contempt to the Arbitral Tribunal during the conduct of the proceedings” under Section 27(5) of the Arbitration Act.211

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The aggrieved party can avail itself of the remedy to apply to the arbitral tribunal for making a representation to the court to mete out appropriate punishment.212 Once the arbitral tribunal makes such a representation to the court, the court will be competent to deal with such party in default as if it is in contempt of an order of the court.213

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Article 3.9 of the IBA Rules stipulate the evidentiary rule that compliments lex arbitri provisions, such as Article 27 of the Model Law, or other national laws that authorise a court assistance in securing documentary evidence.214

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While Article 3.9 of the IBA Rules generally seen as a rule which empowers a tribunal to act, it has also been interpreted as having a restrictive function in limiting a party’s freedom to approach a court for assistance in obtaining evidence. The party must first seek the approval of the arbitral tribunal before the court can step in to assist the arbitration proceedings.215

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Finally, it should also be noted that Article 3.9 is concerned with the taking of evidence from non-​parties and therefore does not apply to a tribunal’s right to petition a court for assistance in taking evidence from a party in the arbitration.216

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Once it is shown that a party is unable to obtain documents through its own efforts, and a court is available to provide the required assistance, the arbitral tribunal must be

2 09. 210. 211. 212. 213. 214.

2008 (1) ARBLR 355 (High Court of Delhi). Alka Chandewar v Shamshul Ishrar Khan (2017) 16 SCC 119, at para. 6. Ibid. Ibid. Ibid. Nathan D. O’Malley, Rules of Evidence in International Arbitration: An Annotated Guide (Informa Law from Routledge 2012), pp. 63–​64, at para. 3.90. 215. Ibid, pp. 63–​64, at para. 3.90. 2 16. Ibid, pp. 63–​64, at para. 3.90.

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Law, Practice and Procedure of Arbitration in India

further convinced that the evidence that is sought could be a subject of a disclosure order within the arbitration.217 Nathan D. O’Malley examines the level of assistance under Article 27 of the Model Law. He explains that it will vary according to the jurisdiction:

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“Some courts may interpret their domestic legislation, which is similar to article 27, as not permitting court assistance to secure documentary evidence,218 while others make provision for only limited assistance, expressly prohibiting pre-​hearing disclosure to be ordered on behalf of an arbitral tribunal,219 whereas others have accepted a more liberal interpretation.”220

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[29.8] EVIDENCE AT BELATED STAGES IN AN ARBITRATION

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The arbitral tribunal is the sole judge of quantity and quality of evidence. The moot question is whether the arbitrator can allow additional evidence to be submitted at a later stage of the arbitration. It is now settled that “[t]‌he powers conferenced upon the arbitral tribunal includes the power to determine the admissibility, relevance, materiality and weight of any evidence”.221

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“A document which ought to be produced in Court by the plaintiff when the plaint is presented, or to be entered in the list to be added or annexed to the plaint but is not produced or entered accordingly, shall not, without the leave of the Court, be received in evidence on his behalf at the hearing of the suit.”

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While discussing the circumstances under which this power should be exercised, it has been held that this power has to be exercised sparingly and for some overpowering reason and not as a matter of routine.222

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217. Ibid, pp. 65–​66, at para. 3.94. 218. See the discussion by the tribunal in ICC Case No. 6401 concerning the non-​availability of assistance in obtaining document disclosure from a third-​party from local courts in Switzerland. ICC Case No. 6401, supra n. 127. 219. As an example of the English view, see: BNP Paribas v Deloitte & Touche, supra n. 50, p. 236: “This clause [art. 27] is dealing with the taking of evidence and not the disclosure process. The taking of evidence is assisted by the issuing of a subpoena to produce, for introduction into the evidence, particular documents. Thus art. 43 gives effect to this Article. There is nothing in the model law which suggests that the court should assist with the process of disclosure.” Hong Kong Courts have also adopted this view in the past. See Vibroflotation AG v Express Builders Co [1996] 2(3) MALQR in Albert Jan van den Berg (ed.), Yearbook Commercial Arbitration, Vol. XX (1995), p. 287. 220. Nathan D. O’Malley, Rules of Evidence in International Arbitration: An Annotated Guide (Informa Law from Routledge 2012), p. 67, at para. 3.94. 221. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 2447–​2452. 222. Haldiram (India) Pvt. Ltd. v Haldiram Bhujiawala (2009) ILR 5 Delhi 503, at para. 21.

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The High Court of Delhi in Polyflor Limited v A.N. Goenka and Ors.223 held while deciding admissibility of evidence under Order 7 Rule 14(3) of the CPC that:

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“To grant leave to, and permit the plaintiff to file and lead in evidence additional documents at this stage would mean that the defendants would be put to serious prejudice. The defendants have not had the occasion to deal with the said documents. Had the documents now sought to be produced, been produced at the relevant time, i.e. at the stage of filing of the suit, or at least at the time when the issues were framed, the defendants would have had the occasion to deal with the same by making appropriate pleadings and filing its own documents to counter the reliance placed by the plaintiff on the documents in question.”

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Importantly, the Arbitration Act specifically excludes an arbitral tribunal from being bound by the CPC.224 It gives the parties the freedom to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings.225 When such procedure is not fixed, the arbitral tribunal has to follow the statutory procedure. It has to weigh the entire evidence on record properly and has to come to a just conclusion within the parameters of the dispute.226

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The High Court of Bombay in Sahyadri Earthmovers v L & T Finance Limited and Ors.227 held:

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“The principles of natural justice, fair play, equal opportunity to both the parties and to pass order, interim or final, based upon the material/​evidence placed by the parties on the record and after due analysis and/​or appreciation of the same by giving proper and correct interpretation to the terms of the contract, subject to the provisions of law, just cannot be overlooked.”

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The Supreme Court of India in Bareilly Electricity Supply Co. Ltd. v The Workmen and Ors.228 ruled in the context of admissibility of evidence at a belated stage in proceedings that:

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“The application of principles of natural justice does not imply that what is not evidence can be acted upon. On the other hand, what it means is that no materials can be relied upon to establish a contested fact which are not spoken to by persons who are competent to speak about them and are subjected to cross-​examination by the party against whom they are sought to be used. When a document is produced in a Court

2 23. 224. 225. 226. 227. 228.

2016 SCC OnLine Del 2333. Arbitration Act, s. 19(1). Arbitration Act, s. 19(2). Hindustan Shipyard Limited v Essar Oil Limited and Ors. 2005 (1) ALT 264. (2011) 4 MhLJ 200. AIR 1972 SC 330.

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Law, Practice and Procedure of Arbitration in India

or a Tribunal the question that naturally arises is, is it a genuine document, what are its contents and are the statements contained therein true.”229 An arbitral tribunal ought not to hear or receive evidence from one party in the absence of the other party without giving the affected party the opportunity of dealing with such evidence.230 The High Court of Bombay in Pradyuman Kumar Sharma and Ors. v Jaysagar M. Sancheti and Ors.231 held on admissibility of additional evidence that:

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“… In my view, though arbitrator is not bound by the provisions of Code of Civil Procedure or Evidence Act, principles of Evidence Act and Code of Civil Procedure are applicable even to arbitration proceedings. A document which is disputed by a party and if not proved, cannot be considered even by the arbitrator to be on record or as a piece of evidence. Taking into consideration an unproved document by an arbitrator, on the contrary would be in violation of principles of natural justice. In my view, arbitrator was not bound to refer the alleged document to an expert witness suo moto.”232

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If after production of such additional documents, the other party has been provided with full opportunity to contest the veracity and evidentiary value of such additional documents, there will be no infirmity with the procedure adopted by the arbitral tribunal.233 A party cannot win battles by springing evidence in the form of surprises.234

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An arbitral tribunal is free to call for additional evidence at a belated stage of the arbitral proceedings as long as it does not cause prejudice to the other party.235 It would be unfair if parties are permitted to plead and prove at variance.236 An award cannot be vitiated on the ground that the arbitral tribunal refused to take the evidence into consideration on account of belated filing of the same.237

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Nathan O’Malley238 discusses the “common sense” approach used by the tribunal in the Italy-​Venezuela Claims Commission of 1903 in international arbitrations that:

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“Applying its mandate, the umpire of the tribunal noted in reaction to a question over evidence submitted belatedly, that the tribunal had no ability to impose any restriction on the parties as to when they would submit their evidence, because of its duty to receive ‘all’

229. Bareilly Electricity Supply Co. Ltd. v The Workmen and Ors. AIR 1972 SC 330, at para. 21. 230. Banwari Lal v Jagannath Prasad and Anr. AIR 1958 All 717, at para. 6. 231. 2013 (5) MhLJ 86. 232. Pradyuman Kumar Sharma and Ors. v Jaysagar M. Sancheti and Ors 2013 (5) MhLJ 86, at para. 32. 233. Glencore International AG v Dalmia Cement (Bharat) Limited 2017 (4) ARB LR 228, at para. 38. 234. Divya Kashyap, “Production of Evidence at Belated Stage in Arbitral Proceedings”, Indian Legal Impetus, Manupatra, Chapter 3, at p. 10. 235. Ibid. 236. Ibid. 237. Ibid. 238. Nathan D. O’Malley, Rules of Evidence in International Arbitration: An Annotated Guide (Informa Law from Routledge 2012).

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evidence. Nevertheless, recognising that time limits of some nature were warranted as a means of maintaining order, the tribunal found that it had the ability to set limits on the time frame for submitting claims which permitted it to close the record to new evidence. Such rules were recognised by the tribunal as common sense, as the umpire found that ‘all things must come to an end.’”239

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An ICC arbitral tribunal provided examples of some factors which have to be weighed when confronted with a late submission of evidence:240

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“The arbitrators have a duty to take into account the fundamental right of each party to present its case properly, but they also have a duty to ensure that the arbitration progresses at a reasonable pace and to avoid unwarranted or deliberate delays. If a party which has had ample opportunity to prepare its case or to submit requests to the arbitral tribunal at an earlier stage of the proceedings, applies to a tribunal, belatedly and without giving legitimate reasons for its tardiness, with requests which are liable to cause substantial delays, it may well be the duty of the arbitrators to continue the arbitration without accepting the request of the tardy party.”241

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An international arbitral tribunal may, however, exercise its discretion to admit expert evidence even after the deadline where it considers it appropriate to do so.242 Equally, it may reject an expert report that is filed late if the circumstances would warrant it.243 The Iran-​US Claims Tribunal panel ruled on late submission of evidence. It held:

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“In determining whether to admit a late submission, the Tribunal has frequently referred to these fundamental requirements of equality between, and fairness to, the Parties, and the possible prejudice to either party. Further, the orderly conduct of the proceedings also requires that time limits be established and enforced. In applying these principles to the specific facts of a case, however, the Tribunal considers the character and contents of late filed documents and the length and cause of the delay. These factors affect the probability of prejudice, the equality of treatment of the Parties, and the disruption of the arbitral process by the delay.”244

239. Ibid, p. 3, at para. 1.08; Mixed Claims Commission (Italy–​Venezuela), 10 RIAA, at p. 482. 240. Ibid, pp. 26–​27, at para. 3.06. 241. Nathan D. O’Malley, Rules of Evidence in International Arbitration: An Annotated Guide (Informa Law from Routledge 2012), pp. 26–​27, at para. 3.06; ICC Case No. 6465, 121 JDI Clunet 1088, pp. 1093–​1095 (1994). 242. Nathan D. O’Malley, Rules of Evidence in International Arbitration: An Annotated Guide (Informa Law from Routledge 2012), pp. 142–​143, at para. 5.09; Enron Creditors Recovery Corp and Others v Argentine Republic, ICSID Case No. ARB/​01/​3, Decision on the Application for Annulment of the Argentine Republic, para. 188 (2010). 243. ICC Case No. 12761, ICC Bulletin, 2010 Special Supplement: Decisions on ICC Arbitration Procedure, p. 74. 244. Nathan D. O’Malley, Rules of Evidence in International Arbitration: An Annotated Guide (Informa Law from Routledge, 2012), p. 316, at para. 9.111; Harris International Telecommunications Inc v The Islamic Republic of Iran, Partial Award No. 323-​409-​1, in Albert Jan van den Berg (ed.), Yearbook Commercial Arbitration, Vol. XIV (1989), at para. 61.

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Law, Practice and Procedure of Arbitration in India

In summary, international arbitral tribunals have laid down valuable considerations when faced with issues pertaining to late submissions of evidence:245 (1) the probative value or character of the evidence on offer;246



(2) the prejudice to the adverse party that would be caused by admitting the evidence (which includes a consideration of the general disruption to the procedure which would result);247 and



(3) the cause of the delay,248 in particular whether it was legitimately incurred and reasonable given the circumstances.249

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[29.9] EVIDENCE TO BE FILED FOR THE ENFORCEMENT OF FOREIGN AWARDS UNDER THE NEW YORK CONVENTION, 1958

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Part II of the Arbitration Act deals with the enforcement of certain foreign awards. Chapter I of Part II of the Arbitration Act specifically deals with “New York Convention Awards”. For the purposes of this chapter, we will limit the discussion to the evidentiary requirement for the enforcement of a foreign award under the New York Convention (“New York Convention”) in India.

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(1) The original award or a duly authenticated copy thereof;250

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Section 47 of the Arbitration Act specifies the mandatory evidentiary requirements for the enforcement of a New York Convention foreign award. At the time of the application, the party applying for the enforcement of foreign award shall produce before the court:

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245. Ibid, p. 316, at para. 9.112. 246. Nathan D. O’Malley, Rules of Evidence in International Arbitration: An Annotated Guide (Informa Law from Routledge 2012), pp. 316–​317, at para. 9.112; Total SA v Argentine Republic, Decision on Liability, ICSID Case No. ARB/​04/​1, para. 22 (2010); Ionian Shipping Ltd v Hugo Neu & Sons International Sales Corporation, Final Award, SMAAS, WL 1378378 (1987); The Islamic Republic of Iran v United States of America Case Nos A3, A8, A9, A14 and B61, Procedural Order of 1 April 2005, para. 10 (2009). 247. Nathan D. O’Malley, Rules of Evidence in International Arbitration: An Annotated Guide (Informa Law from Routledge 2012), pp. 316–​317, at para. 9.112; General Petrochemicals Corp v The Islamic Republic of Iran Case No. 828, Award No. 522-​828-​1, p. 22 (21 October 1991); ICC Case No. 12944, Order of 23 November 2004, ICC Bulletin, 2010 Special Supplement: Decisions on ICC Arbitration Procedure, p. 82; Trans Chemical Ltd v China National Machinery Import and Export Corp 978 F.Supp 266, 307 (SD Tex. 1997). 248. Nathan D. O’Malley, Rules of Evidence in International Arbitration: An Annotated Guide (Informa Law from Routledge 2012), p. 317, at para. 9.112; Himpurna California Energy Ltd v Republic of Indonesia, Interim Award of 26 September 1999 and Final Award of 16 October 1999, in Albert Jan van den Berg (ed.), Yearbook Commercial Arbitration, Vol. XXV (2000), p. 135. 249. Nathan D. O’Malley, Rules of Evidence in International Arbitration: An Annotated Guide (Informa Law from Routledge 2012), pp. 317–​318, at para. 9.112; ICC Case No. 5082, Procedural Order No. 1, Dominique Hascher (ed.), Collection of Procedural Decisions in ICC Arbitration 1993-​1996 (2nd edn, 1998), pp. 43, 44. 250. Arbitration Act, s. 47(1)(a).

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(2) the original arbitration agreement or a duly certified copy thereof;251 and



(3) any evidence required to establish that the award is a foreign award.252

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These documents constitute prima facie evidence of a foreign award253 and the applicant is not required to produce any further evidence.254 Further, the High Court of Bombay255 and the High Court of Gujarat256 have confirmed that where a duly authenticated copy of the award is filed, the respective requirement under Section 47 of the Arbitration Act is met.

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Section 47(2) of the Arbitration Act requires that where the “arbitral award” or “arbitration agreement” is in a foreign language, the party seeking enforcement of the award must produce a translation in English, certified as correct by a diplomatic or consular agent of the country to which the party belongs, or certified as correct in such other manner as may be sufficient according to the laws in force in India.

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A foreign award under Sections 47 and 48 of the Arbitration Act cannot be held to be non-​enforceable on the ground that it is not registered or duly stamped.257 “Court” under Section 47 of the Arbitration Act would be a High Court having jurisdiction on the subject-​matter of the arbitral award.258

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[29.10] EVIDENCE TO BE FILED FOR THE ENFORCEMENT OF FOREIGN AWARDS UNDER THE GENEVA CONVENTION OF 1927

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Chapter II of Part II of the Arbitration Act deals with the “Geneva Convention Awards”. For the purposes of this chapter, we will limit the discussion to the evidentiary requirement for the enforcement of a foreign award under the Geneva Convention on the Execution of Foreign Arbitral Awards of 1927 (“Geneva Convention”) in India.

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2 51. Arbitration Act, s. 47(1)(b). 252. Arbitration Act, s. 47(1)(c). 253. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 1149; Austbulk Shipping SDN BHD v PEC Ltd. (2005) 2 Arb LR 6 (Del); Glencore Grain Rotterdam B.V. v Shivnath Rai Harnarain (India) Co. 2008 (4) Arb LR 497 (Del). 254. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 1149; Cetaco SA v. Bombay Export International (2000) 3 Arb LR 69 (Bom). 255. Hugo Neu Corporation v Lloyds Steel Industry Ltd. 2009 (4) Arb LR 298 (Bom). 256. OCI Corporation v Kandla Export Corporation and Ors. Arbitration Petition No. 2 to 10 of 2017, Order dated 8 August 2017. 257. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 1153; Inter Maritime Management SA (Switzerland) v Russin & Veechi (US) Yearbook Commercial Arbitration (Switzerland No. 28), Vol. XXII (1997), p. 789, \c 1 LT 391. 258. Arbitration Act, s. 47.

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Law, Practice and Procedure of Arbitration in India

Section 56 of the Arbitration Act provides for the evidentiary requirements that must be fulfilled by a party seeking enforcement of an award passed under the Geneva Convention. Section 56 of the Arbitration Act, with minor variations, re-​enacts Section 8 of the Arbitration (Protocol and Convention) Act, 1937, which in turn is based on Article IV of the Geneva Convention.

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At the time of the application, the party applying for the enforcement of foreign award shall produce before the court: (1) The original award or a copy thereof duly authenticated in the manner required by the law of the country in which it was made;259



(2) evidence proving that the award has become final;260 and



(3) such evidence as may be necessary to prove that the conditions mentioned in clauses (a) and (c) of sub-​section (1) of section 57 are satisfied.261

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Where any document requiring to be produced under sub-​section (1) is in a foreign language, the party seeking to enforce the award shall produce a translation into English certified as correct by a diplomatic or consular agent of the country to which that party belongs or certified as correct in such other manner as may be sufficient according to the law in force in India.262

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The term “court” as defined in Section 56 of the Arbitration Act is distinct from the term “court” defined in Section(1)(e) of the Arbitration Act. “Court” under Section 56 of the Arbitration Act would be a High Court having jurisdiction on the subject-​matter of the arbitral award.263

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Justice Indu Malhotra264 states:

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“The subject-​matter of the award would refer to the final relief granted by the arbitral tribunal, whether it is in the form of a money decree,265 specific performance, or the like. A foreign award is enforceable as a deemed decree. It can be enforced by the court having jurisdiction over the assets and properties of the award-​debtor.”266

2 59. 260. 261. 262. 263. 264. 265. 266.

Arbitration Act, s. 56(1)(a). Arbitration Act, s. 56(1)(b). Arbitration Act, s. 56(1)(c). Arbitration Act, s. 56(2). Trammo DMCC v Nagarjuna Fertilisers and Chemicals Ltd. 2018 (1) ABR 1. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020). Trisuns Chemical Industry Ltd. v Tata International Ltd. AIR 2004 Guj 274. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), p. 1233.

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Chapter 29—​​​Evidence in Arbitration

[29.11] INTERNATIONAL BAR ASSOCIATION RULES ON THE TAKING OF EVIDENCE IN INTERNATIONAL ARBITRATION A set of rules for the taking of evidence that has proven extremely effective in practice267 is the 2010 edition of the IBA Rules.

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These rules synthesise and supplement the common law and civil law practice in relation to presenting and taking of evidence. A 2012 survey revealed that the IBA Rules were used in 60 per cent of international arbitrations, with 85 per cent of respondents believing they are useful.268

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Another survey conducted by the IBA Arbitration Guidelines and Rules Subcommittee showed that the IBA Rules are referred to in 33 per cent of arbitrations known to the respondents of the survey in India.269 The survey further found that the IBA Rules were considered binding in 50 per cent of cases in India.270

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The IBA Rules are not binding but are increasingly accepted in Asia even when parties have not pre-​agreed that they should apply.271 In some circumstances, the facts of the case will not fit within any of the examples in the guidelines. Nonetheless, they provide useful guidance.272 It is now common practice for arbitral tribunals and institutional arbitration rules to refer to them.273

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These rules have gone some way to harmonise in the inherently flexible and pragmatic context of arbitration proceedings, the generally applicable practice for taking evidence in arbitrations.

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The rules are reasonably well-​formulated and provide a predictable set of basic procedures for the taking of evidence. At the very least, they provide useful guidance for parties and arbitral tribunals.274 If the parties agree to use the rules as

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267. P. Yuen and J. Choong, “Is Arbitration Value for Money? Assessing Some Common Complaints about the Costs in International Arbitration” (2008) Asian Dispute Review 76. 268. Fifty-​three per cent of respondents use them as guidelines and 7 per cent as binding rules; see the White & Case LLP, 2012 International Arbitration Survey: Current and Preferred Practices in the Arbitral Process, p. 11. 269. The IBA Arbitration Guidelines and Rules Subcommittee, Report on the reception of the IVA Arbitration soft law products, September 2016. 270. Ibid. 271. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 66, at para. 1.235. 272. ASM Shipping Ltd of India v TTMI Ltd of England [2005] EWHC 2238 (Comm). 273. For example, Australian Centre for International Commercial Arbitration (“ACICA”) Arbitration Rules, 2016, art. 31.2. 274. G. Born, International Commercial Arbitration (2nd edn, 2014), p. 2347.

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Law, Practice and Procedure of Arbitration in India

guidelines, they become an element of the agreed procedure and may not be casually ignored.275

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The IBA Rules consisting of only nine articles deals with the arbitral tribunal consulting with the parties to help select the most appropriate procedure for the claim276 the production of documents that are relevant to the case and material to its outcome,277 their inspection,278 witness evidence,279 party-​appointed280 and tribunal-​ appointed 281 282 283 expert, the hearings, and the admissibility and assessment of evidence.

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In India, the parties to an arbitral proceeding have the discretion to agree upon the procedure to be followed by the arbitral tribunal in conducting proceedings.284 This power rests with the arbitral tribunal if the parties fail to reach an agreement as to the procedure to be followed.285

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The IBA Rules on the Taking of Evidence in International Arbitration (2010) continue to provide a balance between common law and civil law practice as the predecessor, the 1999 IBA Rules. Georg von Segesser comments that:

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“From the start, one of the main objectives of the IBA Rules on the taking of evidence was to provide the international arbitration community with a useful harmonization of the procedures commonly applied in international arbitration, representing an amalgamation of procedures initially developed in the civil law and the common law systems with regard to issues related to the taking of evidence.”286

[29.12] CONCLUSION

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Arbitration is a consensual mode of dispute resolution. Generally, the arbitral tribunal owes its mandate based on the contract between the parties. This autonomy also applies to rules of procedure and evidence in an arbitral proceeding. Professor Goode states

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275. David A.R. Williams, Amakura Kawharu, Williams & Kawharu on Arbitration (LexisNexis 2011), at para. 11.16; see also ALC v ALF [2010] SGHC 231. 276. IBA Rules, art. 2. 277. Under IBA Rules on the Taking of Evidence in International Arbitrations (2010), art. 3, a party requesting production must include a statement as to why that document is relevant to the case and material to its outcome. 278. IBA Rules, art. 7. 279. IBA Rules, art. 4. 280. IBA Rules, art. 5. 281. IBA Rules, art. 6. 282. IBA Rules, art. 8. 283. IBA Rules, art. 9. 284. Arbitration Act, s. 19(2). 285. Arbitration Act, s. 19(3). 286. G. von Segesser, “The IBA Rules on the Taking of Evidence in International Arbitration” (2010) 28 ASA Bulletin 4, at p. 735.

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Chapter 29—​​​Evidence in Arbitration

that “the only rule of evidence should be that the arbitrator acts fairly and in conformity with the rules of natural justice.”287

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The leading national arbitration statutes, institutional rules, and ad hoc arbitration rules often give little more than cursory guidance concerning evidentiary procedure. However, there exist evidentiary rules that are commonly understood and applied despite the paucity of direct references to them.288 The basic principles include due process, natural justice, and equal opportunity to present one’s case. In India, Section 19 of the Arbitration Act expressly provides that the arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 or the Evidence Act.

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It is a universal principle of justice that, unless otherwise provided, the burden of proving any fact is on the person who asserts that fact and wishes the court to accept it.289 Particularly, when any fact is especially within the knowledge of any person, the burden of proving that fact is upon him.

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The standard of proof is on the balance of probability. In the end, the arbitral tribunal decides judicially its award based on proven facts and legitimate inferences.

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Normally facts are proven by documentary evidence and direct testimony of witnesses. A witness in his oral evidence would adduce documentary evidence. Documents made at the time of the events giving rise to the dispute would generally contain evidence on issues of fact. It is normally easier and more expeditious to present documents, which are a cogent contemporaneous record.

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In commercial cases and those where events took place some years ago, the exigencies of precisely identifying the truth and the inherent weakness of the human memory mean that the evidentiary weight of contemporaneous documentary evidence is more substantial than oral evidence.

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The approach to evidentiary procedure may be taken from the jurisdiction where a tribunal is seated, or other domestic laws known to the parties.290 Most arbitration rules and laws will afford the arbitrators wide discretion on this issue. Thus, the question of which source should supply the rules of evidence is one of determining which rules are best suited to the needs of the case.291 287. “The Adaptation of English Law to International Commercial Arbitration”, 8 Arbitration International, p. 1, at p. 6; Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 610. 288. Nathan D. O’Malley, Rules of Evidence in International Arbitration: An Annotated Guide (Informa Law from Routledge 2012), p. 4, at para. 1.11. 289. UNCITRAL Rules, art. 27. 290. Nathan D. O’Malley, Rules of Evidence in International Arbitration: An Annotated Guide (Informa Law from Routledge 2012), p. 6, at para. 1.19. 291. Ibid, p. 7, at para. 1.19.

Chapter 30 REPRESENTATION IN ARBITRATIONS [30.1] INTRODUCTION......................................................................................................................... 874 [30.2] CHOICE OF REPRESENTATION............................................................................................... 874

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[30.3] EXCLUSION OF FOREIGN LAWYERS IN INDIA.................................................................. 878 [30.4] PERSONS WHO CAN ATTEND ARBITRATION PROCEEDINGS.................................... 880 [30.5] ETHICS AND REPRESENTATIVES........................................................................................... 883

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[30.6] CONCLUSION............................................................................................................................... 889

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[30.1] INTRODUCTION

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Parties have relied on legal counsel, agents, and other representation of their choice in arbitrations since the beginning of recorded history.1 The mechanism of arbitration operates on the principle of party autonomy2 and procedural flexibility.

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The parties are allowed to agree upon the procedural and substantive law that would be applicable to arbitration.3 As such, the parties are able to organise many aspects of their proceedings including the fundamental right to select their desired legal representatives.4

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[30.2] CHOICE OF REPRESENTATION

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However, neither the Geneva Convention nor the New York Convention makes any express references to representation of parties. Despite this, Articles II(1) and II(3) of the New York Convention combined with institutional rules provide the freedom to select legal representation.

1. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3066; ILC, Memorandum on Arbitral Procedure, Prepared by the Secretariat, U.N. Doc. A/​CN.4/​35, II Y.B. LL.C. 157, at p. 171 (1950). 2. PASL Wind Solutions Private Limited v GE Power Conversion India Private Limited (2021) SCC OnLine SC 331. 3. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021). 4. Blackaby and Partasides with Redfern and Hunter, Redfern and Hunter on International Arbitration (6th edn, 2015), p. 355, at para. 6.07.

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Chapter 30—​​​Representation in Arbitrations

It is impliedly guaranteed that the parties have the right to representation to parties, unless agreed otherwise.5 For example, the High Court of Bombay in Faze Three Exports Ltd. v Pankaj Trading Co. and Ors.6 has held that: “Even in arbitration proceedings, parties are entitled to be represented by a legal practitioner if they so desire unless they have agreed in writing that none of the parties shall be represented by a lawyer.”7

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The parties’ right to choose their own representation ensures that they are afforded the proper, reasonable, and full opportunity in some situations to represent their case.

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In most commercial arbitrations, the parties will be represented usually by a team which may include lawyers, counsels, and experts. The team is expected to be familiar with the parties’ business and transactions in order to effectively represent the parties’ case in the arbitration proceedings.

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However, such representation of the parties can extend to the use of non-​lawyers, that is, by engineers, architects, quantity surveyors, technical, or commercial persons as representatives in the proceedings before the arbitral tribunal.

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It is also not uncommon for such technical professionals to be part of the team of lawyers representing a party at a hearing where a case involves technical issues. However, it is usual for such technical experts to be called as witnesses in order that their opinions and submissions may be tested by cross-​examination.8

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In India, the Arbitration Act does not expressly address the parties’ right to representation. Therefore, guidance has to be sought from the Advocates Act of 1961 (“Advocates Act”).9

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The scheme contained in Chapter IV of the Advocates Act makes it clear that only those who are enrolled with the Bar Council of India are entitled to practice law, unless otherwise provided in any other law.

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All others who are not enrolled with the Bar Council of India can only appear with the permission of the court, authority, or person before whom the proceedings are

5. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3067. 6. 2004 (2) Arb LR 163 (Bom). 7. Ibid, at para. 10. 8. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 408, at para. 6.183. 9. Act 25 of 1961 (as amended).

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Law, Practice and Procedure of Arbitration in India

pending. This mechanism for the conduct of advocates also applies to non-​litigation work (thereby covering arbitration).10 Therefore, under the Arbitration Act parties are free to choose the representatives of their own choice. However, if such representative is not enrolled with the Bar Council of India the prior approval of the arbitral tribunal would become mandatory.11

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However, Article 5 of the UNCITRAL Rules, framed in addition to the Model Law, provide for the representation and assistance of parties as follows:

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“Each party may be represented or assisted by persons chosen by it. The names and addresses of such persons must be communicated to all parties and to the arbitral tribunal. Such communication must specify whether the appointment is being made for purposes of representation or assistance. Where a person is to act as a representative of a party, the arbitral tribunal, on its own initiative or at the request of any party, may at any time require proof of authority granted to the representative in such a form as the arbitral tribunal may determine.”

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The basic principle in international arbitration is that a party may choose the person to represent or assist it.12 The UNCITRAL Rules do not require the person to have any particular qualifications, such as that the person be admitted as a lawyer. The person may be an employee of the party or independent.13

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The right of a person to appear before a tribunal may be affected by the law of the seat of arbitration.14 Although there were restrictions in the past in certain jurisdictions, these restrictions have diminished over time.15

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For example, the right of a party to choose a foreign qualified lawyer or any other person as representative in arbitration proceedings in Singapore, Hong Kong, Malaysia, and other jurisdictions in Asia was granted in the last decade.16

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Section 36 of the English Arbitration Act, 1996 provides that a party to arbitral proceedings may be represented in the proceedings by a lawyer or other person chosen by the party, unless otherwise agreed to by the parties.

10. 11. 12. 13. 14. 15. 16.

Bar Council of India v A.K. Balaji (2018) 5 SCC 379, at para. 43. Bar Council of India v A.K. Balaji (2018) 5 SCC 379. Thomas H. Webster, Handbook on UNCITRAL Arbitration (Sweet & Maxwell 2010), p. 94, at para. 5-​4. Ibid, p. 94, at para. 5-​4. Ibid, p. 95, at para. 5-​8. Ibid, p. 95, at para. 5-​8. Polkinghorne, “More Changes in Singapore: Appearance Rights of Foreign Counsel” (2005) J Intl Arb, Vol. 22 No. 1, pp. 75–​79.

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The English Arbitration Act, thereby, provides complete freedom to the parties to choose their own representative. There is no requirement for such representative to be a qualified lawyer. In a matter before the King’s Bench, an arbitrator was held to have misconducted himself when he did not adjourn a case to enable a party to obtain representation by counsel when the other party had, unexpectedly, been represented by counsel.17

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Under the Hong Kong Arbitration Ordinance, there is no bar on a non-​lawyer to represent a party in arbitration if the party so chooses, provided such arbitration in seated in Hong Kong.18

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The freedom of choice in relation to choosing legal representatives is well accepted in Switzerland under Article 373(5) of the Swiss Procedure Code, 2008.19 The same applies in Australia under Section 29(2) of the Australian International Arbitration Act.20

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This freedom of representation of the parties is also contained under the rules of various arbitral institutions. For instance –​The Indian Council of Arbitration (“ICA”) under Rule 20 provides that:

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“A party shall be entitled to appear through Attorney, Advocate or a duly authorized Advisor or Representative or in person, subject to such proof of authority to the satisfaction of the Registrar or the Tribunal.”21

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Similar provisions are contained under the 2020 LCIA Rules,22 the 2016 SIAC Rules,23 the 2018 HKIAC Rules,24 the 2021 ICC Arbitration Rules,25 and the 2015 CIETAC Arbitration Rules.26

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17. Whatley v Morland 2 Dowl 249, 39 RR 790; Tatem Steam Navigation Co v Anglo Canadian Shipping Co (1935) 53 Ll L Rep 161. 18. Applicability of Sections 44, 45, and 47 of the Hong Kong Legal Practitioner’s Ordinance is restricted by Section 2F of the Hong Kong Arbitration Ordinance; see also Neil Kaplan, HKIAC’s Perspective on Arbitration and Conciliation Concerning China, Albert Jan Van den Berg, New Horizons in International Commercial Arbitration and Beyond, ICCA Congress Series, Vol. 12, p. 59. 19. “[E]‌ach party may act through a representative”. 20. “A party may appear in person before an arbitral tribunal and may be represented: (i.) by himself or herself; (ii.) by a duly qualified legal practitioner from any legal jurisdiction of that party’s choice; or (iii.) by any other person of that party’s choice.” 21. ICA Rules of International Commercial Arbitration, 2016, r. 20. 22. Article 18. 23. Rule 23. 24. Article 13.6. 25. Article 26.4. 26. Article 22.

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Law, Practice and Procedure of Arbitration in India

The arbitral tribunal in Hrvatska Elektroprivreda v Republic of Slovenia27 excluded a barrister after an objection was raised where the lawyer who appeared was a barrister from the same chambers as the chairman of the tribunal. The arbitral tribunal explained its reasons for doing so as follows:

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“26. To be concrete: although the Respondent in this case was free to select its legal team as it saw fit prior to the constitution of the Tribunal, it was not entitled to subsequently amend the composition of its legal team in such a fashion to imperil the Tribunal’s status or legitimacy.” Gary B. Born refers to a situation where the right to legal representation is not expressly guaranteed and states:

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“Even in states where legislation does not expressly guarantee the parties’ right to select their representatives, recognition of this right is generally implied: … this freedom has historically been recognized in the arbitral process, is an inherent aspect of the arbitral process, is based on each party’s internationally guaranteed opportunity to present its case and is what commercial parties expect when agreeing to arbitrate.”28

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[30.3] EXCLUSION OF FOREIGN LAWYERS IN INDIA

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Since the very beginning of resolution of disputes through arbitration, parties have appointed lawyers of their choice to represent them in arbitral proceedings. Most jurisdictions recognise the fundamental character of arbitration is based on the principle of party autonomy.

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They allow parties to choose their legal representatives from anywhere in the world irrespective of their nationality, domicile, or qualification.29 Many arbitration legislations and rules recognise the right of the parties at dispute to choose the representatives of their own choice.30

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This norm is also reflected the in International Bar Association (“IBA”) Guidelines on Party Representation in International Arbitration. These guidelines set out by the

27. ICSID Case No. ARB/​05/​25, Tribunal’s Ruling regarding the participation of David Milton QC in further stages of the proceedings, 6 May 2008, at para. 26. 28. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021). 29. Emmanuel Gaillard & John Savage, Fouchard Gaillard Goldman on International Commercial Arbitration (Kluwer Law International 1999), p. 677. 30. SIAC Rules, 2016, r. 23; LCIA Rules, 2020, art. 18; HKIAC Rules, 2018, art. 13.6.

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Chapter 30—​​​Representation in Arbitrations

IBA permit any person to be a representative of the party whether or not such person is admitted to the domestic bar.31 The UNCITRAL Model Law upon which the Arbitration Act is based does not make any express provision with respect to the choice of the parties to choose their own representatives.

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It merely provides that a party should be given a full opportunity of presenting his case.32 Similarly, the Arbitration Act merely makes a provision for equal treatment of parties without commenting on the freedom of the parties to choose their own legal representative.33

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In India, the Advocates Act excludes foreign lawyers from practising in India. The Scheme of Chapter IV of the Advocates Act makes it clear that only those who are enrolled with the Bar Council are entitled to practise law in India.34

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Apart from India, various countries like Japan, China, Singapore, Turkey, Portugal, and Thailand at various times have all forbidden foreign lawyers from appearing in arbitrations sited locally even in international arbitrations.35

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These restrictions are defended on the grounds that there exist aspects of local bar regulations, aimed at ensuring integrity and quality of legal advice, domestically.36 The Supreme Court of India in Bar Council of India v A.K. Balaji37 was faced with the issue:

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“[W]‌hether there is no bar to foreign law firms and lawyers from conduction arbitration proceedings and disputes arising out of contracts relating to international commercial arbitration”.

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It held:

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“45. It is not possible to hold that there is absolutely no bar to a foreign lawyer for conducting arbitrations in India. If the matter is governed by particular rules of an institution or if the matter otherwise falls under Section 32 or 33 [of the Advocates

31. 32. 33. 34. 35.

Guidelines on Party Representation in International Arbitration, p. 4. UNCITRAL Model Law, art. 18. Arbitration & Conciliation Act, 1996, s. 18. Advocates Act, 1961, s. 32. S. Greenberg, C. Kee, and J. Weeramantry, International Commercial Arbitration: An Asia-​Pacific Perspective (Cambridge University Press 2011), at para. 7.55; Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd Edn, Kluwer Law International, Wolters Kluwer 2021), p. 3070. 36. Turner (E. Asia) Pte. Ltd. v Builders Fed (H.K.) Ltd. 5(3) J. Int’l Arb 139, at 146 (Singapore High Ct. 1988) (1988); Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3070. 37. (2018) 5 SCC 379.

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Law, Practice and Procedure of Arbitration in India

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Act], there is no bar to conduct such proceedings in prescribed manner. If the matter is governed by an international commercial arbitration agreement, conduct of proceedings may fall under Section 32 or 33 [of the Advocates Act] read with the provisions of the Arbitration Act. Even in such cases, Code of Conduct, if any, applicable to the legal profession in India has to be followed. It is for the Bar Council of India or the Central Government to make a specific provision in this regard, if considered appropriate. 48. … We hold that there is no absolute right of the foreign lawyer to conduct arbitration proceedings in respect of disputes arising out of a contract relating to international commercial arbitration. If the Rules of Institutional Arbitration apply or the matter is covered by the provisions of the Arbitration Act, foreign lawyers may not be debarred from conducting arbitration proceedings arising out of international commercial arbitration in view of Sections 32 and 33 of the Advocates Act. However, they will be governed by the code of conduct applicable to the legal profession in India. The Bar Council of India or the Union of India are at liberty to frame rules in this regard.”

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Similarly, several jurisdictions restrict the freedom of parties to choose their legal representatives by prohibiting foreign lawyers from conducting arbitrations seated in their jurisdictions.

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For instance, in Nigeria, the local law prohibits a foreign lawyer or a foreign law-​ firm from conducting arbitration proceedings seated within its territory.38 However, such prohibition is regarded as going against the arbitral safe seat principles.39

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Even if the arbitration rules are silent, Lew and Mistelis state that “it should not be read as a tacit exclusion of non-​lawyers.”40 However, Simon Greenberg, Christopher Kee, and J. Romesh Weeramantry41 suggest the recourse to international commercial arbitration with its concomitant requirement for cross-​border legal services may pose a problem.

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[30.4] PERSONS WHO CAN ATTEND ARBITRATION PROCEEDINGS

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Since an arbitral forum is not a court of justice but a private tribunal and the arbitration is a private process between the parties and arbitrator42 members of the public are not

38. Nigerian Arbitration & Conciliation Act, 2004, s. 4, read with s. 24 of the Nigerian Legal Practitioners Act. 39. See A framework for evaluating the best arbitral seats, available at https://​www.ciarb.org/​resources/​features/​ a-​framework-​for-​evaluating-​the-​best-​arbitral seats/​ (accessed on 29 December 2020). 40. J. Lew, L. Mistelis, et al., Comparative International Commercial Arbitration (Kluwer Law International 2003), pp. 21–​67. 41. S. Greenberg, C. Kee, and J. R. Weeramantry, International Commercial Arbitration: An Asian-​Pacific Perspective (Cambridge University Press 2011), p. 325. 42. Bibby Bulk Carriers Ltd v Cansulex Ltd [1989] QB 155, at pp. 166–​167.

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allowed to be present.43 Accordingly hearings are held in camera and outsiders are only present if the parties agree.44

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In addition to the arbitrators, parties, and lawyers, any person who assists a party in presenting his case may attend the arbitration proceeding, for example, a shorthand writer, an assessor, an engineer, or an architect, and such parties should not be excluded without good grounds when their presence are desired by a party or the award of the arbitrator may be set aside.45

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The arbitral tribunal has the authority to continue with the oral hearings and make an award ex-​parte where a party so disrupts the course of the hearing as to make it impossible for the arbitrator to conduct the proceedings in an orderly manner.46 The arbitral tribunal is, however, required to inform the other party of its intention to proceed ex parte failing which any such award which may be rendered is liable to be set-​aside.

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Mustill and Boyd states that the rule is:

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“The arbitrator cannot properly exclude one party from a portion of the proceedings, without his consent. This rule is, we suggest, subject to the exception in the case where the behaviour of one party or his representative is such as to make it impossible to conduct the arbitration in a fair manner unless one or all of them are excluded. This is plainly a power which should be exercised in the most exceptional circumstances. … If there is any suspicion that the arbitrator may have acted over-​hastily, the award will be set aside …”47

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This is not a free-​standing power. It is a power to decide who is entitled to attend, having regard to the provisions of the relevant contract between the parties.48 The proper course is to treat the disruptive party as being unwilling to participate in the hearing, thus enabling the arbitration to proceed ex parte.49

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43. Oxford Shipping Co Ltd v Nippon Yusen Kaisha, The Eastern Saga [1984] 3 All ER 835, [1984] 2 Lloyd’s Rep 373; Hassneh Insurance Co of Israel v Mew [1993] 2 Lloyd’s Rep 243, at p. 247; Ali Shipping Corporation v Shipyard Trogir [1998] 2 All ER 136, [1999] 1 WLR 136; Department of Economics, Policy and Department of City of Moscow v Bankers Trust Co [2004] EWCA Civ 314, [2005] QB 207; Emmott v Michael Wilson & Partners Ltd [2008] EWCA Civ 184. 44. MCIA Rules, 2016, r. 26.5; LCIA Rules, 2020, art. 19.4; SIAC Rules, 2016, r. 24.4. 45. Zublin Muhibbah Joint Venture v Government of Malaysia [1990] 3 MLJ 125, at p. 127. 46. Arbitration Act, s. 25(3). 47. Mustill and Boyd, Commercial Arbitration (2nd edn, Butterworths 1989), p. 304. 48. Esso Australia Resources Ltd v The Honourable Sidney James Plowman (The Minister for Energy and Minerals) (1995) 128 ALR 391. 49. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 410, at para. 6.194.

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Law, Practice and Procedure of Arbitration in India

Due to the rising popularity of third-​party funding, an issue whether a third-​party funder can be allowed to participate in the hearings or its participation is irrelevant and against the private nature of arbitration. Zhang Xi suggests that:

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“Considering such confidentiality of arbitration, the party who accepts TPF is of course not able to disclose the merits or the proceedings of an arbitration case with the funder unless otherwise agreed by the parties. However, will the funder lose control of the arbitration’s progress if he/​she is excluded from the proceedings and the arbitral awards? Will the additional risks incurred by such exclusion affect the funder’s willingness to invest? These are interesting questions worth exploring further.”50

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The arbitral tribunal must exercise these powers with great care and caution and in the most exceptional situations because there is every possibility that party excluded from attending the proceedings will challenge this exclusion before the court.

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Each party should be represented by persons with sufficient authority and knowledge of the case to take “on the spot” decisions to maximise the benefit from a preliminary hearing before the arbitral tribunal.51 This is both in discussion with the other party’s representatives and during the course of the meeting with the arbitral tribunal itself.52

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In case there is any doubt that the arbitral tribunal has acted over-​hastily, there is the risk that the award will be annulled, with obvious consequences of wasted time and costs for the innocent party. It will therefore be apposite for the arbitral tribunal to play safe and be patient, and have the fortitude to carry the proceedings through to a conclusion.53

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Consequently, a Nigerian Court considered that a lack of participation by the legal representatives which is due to unclear instructions by the parties. It interpreted the Model Law and held that unclear instructions leading to non-​participation is not sufficient to constitute violation of due process.54

50. Zhang Xi, “Third Party Funding Dilemma for International Arbitration” (2016) China Business Journal, 28 February, available at http://​www.vantageasia.com/​third-​party-​funding-​dilemma-​for-​international-​ arbitration/​. 51. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 367, at para. 6.45. 52. Ibid. 53. Mustill and Boyd, Commercial Arbitration (2nd edn, Butterworths 1989), p. 304. 54. Structural Construction Co. Ltd. v International Islamic Relief, High Court, Nairobi, Kenya, 6 October 2006, Miscellaneous Case 596 of 2005.

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Chapter 30—​​​Representation in Arbitrations

[30.5] ETHICS AND REPRESENTATIVES A party representatives’ ethical behaviour in arbitrations is key to the overall success of proceedings. The flexible tailoring of procedure to reduce delay and expense depends on representatives not pursuing obstructionist tactics.

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Arbitration is a process that sits outside the courts. Indeed, where representatives in arbitration proceedings need not even be lawyers, ethics has been an area of some debate. Lawyers, domestic and foreign, are governed by their own strict codes of conduct. They have an overriding duty to the court when conducting proceedings.

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Despite this, specialist arbitration practitioners have an arsenal of tactical maneuvers that they can employ to try and gain the upper hand in arbitration. Given the “one shot” nature of arbitration proceedings, this is unsurprising. However, it is fundamentally important that playing to win does not degenerate into misleading the arbitral tribunal or other unethical conduct.

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The rules governing the ethical conduct of advocates and solicitors should be applied equally vigorously to arbitrations conducted in India. The representatives of the parties are also required to observe necessary standards of professional conduct and etiquettes provided for by the Bar Council of India.55

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There is no “arbitration exception” or “international arbitration exception” in most national statutes /​rules of profession conduct: a lawyer is subject to the same ethical regulations in arbitration as in his or her other professional endeavours.56

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Gary B. Born states:

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“Like national court litigation, international arbitration raises issues of professional conduct by legal representatives during the arbitral proceedings including conflicts of interest and obligations of competence, zealousness and integrity. In national court proceedings, the rules of ethics and professional conduct for legal representatives are ordinarily prescribed by local statutes or regulation and are ordinarily enforced by the local judiciary, local regulatory authority, or local professional body (such as a bar association or barreau).”57

55. Advocates Act, 1961, s. 49(1)(c). 56. Gary B. Born, International Commercial Arbitration, Vol. 2: Legal Representation and Professional Conduct in International Arbitration (3rd edn, Wolters Kluwer 2020), pp. 3085–​3086. 57. Gary B. Born, International Commercial Arbitration, Vol. 2 (2nd edn, Wolters Kluwer), p. 2850.

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Law, Practice and Procedure of Arbitration in India

A lawyer appearing in a court action before his or her own local courts will clearly be subject to the rules of professional ethics of his or her local bar.58 Until recently, there was only little alternative for lawyers participating in arbitral proceedings, other than to ascertain themselves by answering the following questions:59 (1) “Am I subject to my professional bar rules when I am acting in an arbitration, and even when I am acting in an arbitration abroad?”60



(2) “If I am practising abroad, am I also subject to the professional ethical rules of the jurisdiction in which I am practising?”61



(3) “If the seat of the arbitration is in a third jurisdiction, am I also subject to the ethical rules of a third bar?”62

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Some commentators have for some time posited the possibility of a harmonisation of professional bar rules to the extent that they apply to practitioners in international arbitration.63 The idea is attractive, particularly for those concerned to ensure that the playing field for the participants in international arbitration is level.64

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The IBA Guidelines provide practical assistance in dealing with ethical issues that arise in international arbitration, the Guidelines provide situational guidance in relation to the most frequent issues encountered by practitioners.65

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Redfern and Hunter suggest that the LCIA has been bolder when it comes to the question of ethics:66

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“More boldly, the LCIA provides, in Article 18 of its Rules, certain provisions governing a party’s legal representatives. These include, at Article 18(5), a provision that each party ‘shall ensure that all its legal representatives appearing by name before the Arbitral Tribunal have agreed to comply with the general guidelines contained in the Annex to the LCIA Rules, as a condition of such representation’. The general guidelines in the Annex are designed to promote ‘the good and equal conduct of the parties’

58. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 225, at para. 3.221. 59. Ibid, p. 226, at para. 3.223. 60. Ibid, p. 226, at para. 3.223(1). 61. Ibid, p. 226, at para. 3.223(2). 62. Ibid, p. 226, at para. 3.223(3). 63. Ibid, p. 226, at para. 3.224. 64. Ibid, p. 226, at para. 3.224. 65. Ibid, p. 226, at para. 3.224. 66. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015).

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Chapter 30—​​​Representation in Arbitrations

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legal representatives appearing by name within the arbitration’, and they provide, by way of example, that a legal representative should not knowingly make any false statement to the arbitral tribunal, should not conceal or assist in the concealment of any document of which production is ordered, and should not initiate any undisclosed contact with an arbitrator. Notably, Article 18(6) of the LCIA Rules also now endows an arbitral tribunal with the power to order sanctions for the violation of the guidelines, including (broadly) the taking of any measure ‘necessary to fulfil within the arbitration the general duties required of the Arbitral Tribunal’, as defined elsewhere in the Rules.”67

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The challenge in the context of international arbitrations is that ethical codes and obligations of lawyers vary between jurisdictions. Rules regarding fee arrangements, conflicts of interest, and particularly levels of contact with witnesses can all have an impact on the neutrality of procedure, the “equality of arms” between the parties and the ultimate outcome of the arbitration.68

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With many new players from a diverse range of legal traditions becoming involved in arbitration, transparency and regularisation of conduct is beneficial. The IBA has attempted to provide guidance with the IBA Guidelines on Party Representation in International Arbitration, 2013 (“IBA Guidelines”).

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The IBA Guidelines are useful and include ex parte communications with the tribunal, honesty and candour, the preservation and exchange of documents and the use of witnesses and expert witnesses. The guidelines also provide for sanctions in the event of breach by counsel. They include: (1) admonishing the party representative;



(2) drawing appropriate inferences in assessing the evidence relied upon, or the legal arguments advanced by, the party representative;



(3) considering the party representative’s misconduct in apportioning the costs of the arbitration, indicating, if appropriate, how and in what amount the party representative’s misconduct leads the arbitral tribunal to a different apportionment of costs; and

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(4) taking any other appropriate measure in order to preserve the fairness and integrity of the proceedings.69

67. Ibid, p. 227, at para. 3.228. 68. Peter Ashford, Handbook on Commercial Arbitration (2nd edn, Juris 2014), p. 118. 69. IBA Guidelines on Party Representation in International Arbitration guidelines, pp. 26–​27.

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Law, Practice and Procedure of Arbitration in India

The IBA Guidelines are non-​binding but provide useful assistance to a tribunal facing a situation where some form of sanction against party representatives seems necessary to the arbitral tribunal. More specifically, Guideline 1 and Guideline 3 of the IBA Guidelines provide an overview of the applicability of the IBA Guidelines and the general norms for the professional conduct of lawyers:

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“1. The Guidelines shall apply where and to the extent that the Parties have so agreed, or the Arbitral Tribunal, after consultation with the Parties, wishes to rely upon them after having determined that it has the authority to rule on matters of Party representation to ensure the integrity and fairness of the arbitral proceedings. … 3. The Guidelines are not intended to displace otherwise applicable mandatory laws, professional or disciplinary rules, or agreed arbitration rules, in matters of Party representation. The Guidelines are also not intended to derogate from the arbitration agreement or to undermine either a Party representative’s primary duty of loyalty to the party whom he or she represents or a Party representative’s paramount obligation to present such Party’s case to the Arbitral Tribunal.”

(1) Candour and Honesty:70

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Some of ethical issues that frequently arise during the conduct of arbitral proceedings can be detailed as follows:

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A representative of a party should not make any knowingly false submission of fact to the tribunal.71 Lawyers owe obligations of candor and honesty not just to the tribunal but also to the other parties to the arbitral proceedings.72 The IBA Guidelines provide that the tribunal may draw adverse inference, impose costs, and take other (unspecified) steps in cases involving dishonestly by counsels73 or other representatives.

(2) Witness Interviews and Preparation:74

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The IBA Guidelines provide some guidance on the issue. Guideline 9 of the IBA Guidelines provides that “[a]‌Party Representative may assist

70. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 3089–​3091. 71. IBA Guidelines, Guideline 9. 72. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 3089–​3091. 73. IBA Guidelines, Guidelines 26 and 27. 74. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 3091–​3096.

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Chapter 30—​​​Representation in Arbitrations



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Witnesses in the preparation of Witness Statements and Experts in the preparation of Expert Reports”. Further, Guideline 24 of the IBA Guidelines provides that [a] Party Representative may meet or interact with witnesses and experts in order to discuss and prepare their prospective testimony. It is important for counsel, and the tribunal, to be aware of differing ethical rules and expectations prior to establishing the procedures for evidence taking75 owing to the differences between common law76 and civil law systems.77 (3) Contingent Fee Arrangements:78

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Under contingent fee arrangements, a lawyer is compensated if he or she is successful in obtaining a recovery for their client. The permissibility and terms of contingent fee arrangements continues to give rise to issues in arbitrations. In some jurisdictions, contingent fees are permitted, such as the United States of America.79 In contrast, in several other jurisdictions, such agreements are either prohibited or subject to stringent regulations.80 Some jurisdictions have proposed to relax the stringent regulations but contingent fee arrangements continue to remain unlawful in most jurisdictions.81 Such restrictions also impact international arbitrations.82

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75. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3091. 76. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3092: “a lawyer may not prepare, or assist in preparing, testimony that he or she knows, or ought to know, is false or misleading. So long as this prohibition is not transgressed, a lawyer may properly suggest language as well as the substance of testimony, and may –​indeed, should –​do whatever is feasible to prepare his or her witnesses for examination.” 77. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3093: “In Contrast, in some civil law jurisdictions, it is unethical (and in some cases potentially criminal) to either contact or attempt to affect a witness’s testimony in local judicial proceedings.”; Damaska, “Presentation of Evidence and Factfinding Precision”, 123 U. Pa. L. Rev. 1083, at pp. 1088–​1089. 78. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 3097–​3099. 79. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 3097–​3098; see ABA Model Rules of Professional Conduct, 2013, r. 1.5; Jeffries v Mut. Life Ins. Co. of N.Y. 110 U.S. 305 (1884); Maurer, Thomas, and DeBooth, “Attorney Fee Arrangements: The U.S. and Western European Perspectives” (1999) 19 Nw. J. Int’l L. & Bus. 272. 80. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3098; for example: Standards of Professional Conduct and Etiquette, Bar Council of India Rules, r. 20; Most. Munni Kumar v State of Bihar and Ors. Criminal Writ Jurisdiction Case No. 424/​2014, decided on 29 March 2016 (High Court of Patna); Council of Bars and Law Societies of Europe Code of Conduct for European Lawyers, at paras 3.3.1, 3.3.2 and 3.3.3. 81. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3098; Singapore Legal Profession Act, s. 107(1); Hong Kong Legal Practitioners Ordinance, s. 64; Hong Kong Solicitors Guide to Professional Conduct, Principle 4.16. 82. Unruh v Seeberger [2007] 2 HKLRD 414 (HK Ct. Fin. App.)

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Law, Practice and Procedure of Arbitration in India

(4) Conflict of Interest:83

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Gary B. Born states that “[M]‌ost national rules of professional responsibility contains provisions regarding conflicts of interest, which preclude lawyers from representing clients in certain matters because of their responsibilities to other parties or their personal responsibilities”.84 The IBA Guidelines generally leave the national laws to decide on issues of conflicts of interest. However, in Guideline 5, they do provide that “[O]nce the Arbitral Tribunal has been constituted, a person should not accept representation of a Party in the arbitration when a relationship exists between the person and an Arbitrator that would create a conflict of interest, uncles none of the Parties objects after proper disclosure.”

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Arbitral tribunals under the ICSID Rules have upheld their authority to disqualify counsel, observing that:85

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“it seems unacceptable for the solution to reside in the individual national bodies which regulate the work of professional service providers, because that might lead to inconsistent or indeed arbitrary outcomes depending on the attitudes of such bodies, or the content (or lack of relevant content) of their rules. It would moreover be disruptive to interrupt international cases to ascertain the position taken by such bodies.”86

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Another ICISID Tribunal in Libananco Holdings Co. v Turkey87 suggested that it would consider disqualifying counsel in cases of misconduct.88 Particularly, arbitral tribunal declared that “if instructions [to counsel] have been given with the benefit of improperly obtained privileged or confidential information, severe prejudice may result.”

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If that event arises, the Tribunal may consider other remedies available apart from exclusion of improperly obtained evidence or information.”89 Further, the tribunal did

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83. Unruh v Seeberger [2007] 2 HKLRD 414, at p. 3099. 84. Unruh v Seeberger [2007] 2 HKLRD 414, at p. 3099; for example: ABA Model Rules of Professional Conduct, 2013, rr. 1.7, 1.8, 1.11; Council of Bars and Law Societies of Europe Code of Conduct for European Lawyers, r. 3.2. 85. Unruh v Seeberger [2007] 2 HKLRD 414, at p. 3123; however, note: a different conclusion was reached in Rompetrol Group NV v Romania (ICSID Case No. Arb/​06/​3, at para. 18 of the Final Award. 86. Hrvatska Elektroprivreda v Slovenia, Tribunal’s Ruling in ICSID Case No. ARB/​05/​24 of 6 May 2008, at para. 23. 87. ICSID Case No. ARB/​06/​8. 88. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3123. 89. Libananco Holdings Co. v Turkey, Decision on Preliminary Issues in ICSID Case No. ARB/​06/​8 of 23 June 2008, at paras. 78–​80.

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Chapter 30—​​​Representation in Arbitrations

not “doubt for a moment that, like any other international tribunal, it must be regarded as endowed with the inherent powers required to preserve the integrity of its own process.”90

[30.6] CONCLUSION

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Historically, Mustill and Boyd91 summarise the position regarding representation in arbitral proceedings as follows:

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“The right to attend the hearing, and indeed the right to participate in the interlocutory stages of the reference and, belong only to the parties to the reference. But the right need not be exercised in person. It may, and in the case of corporations and other artificial persons, must be exercised through agents. Representation by lawyers is usually in the more elaborate commercial arbitrations, but it is quite legitimate for a party to appoint a person who is not a lawyer to present his case. … The arbitrator cannot properly exclude one party from a portion of the proceedings, without his consent.”

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The evolving principles of party autonomy and procedural flexibility allow the parties to agree upon the law that would be applicable to arbitration.92 Based on these tenets, parties organise many aspects of their proceedings including the right to select their desired legal representatives.93

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Regarding ethics, Gary B. Born opines that:

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“[T]‌he inadequacy of the existing legal regime for the conduct of legal representatives in international arbitration argues strongly for an international code of conduct, with appropriate supervisory authority, for lawyers engaged in international commercial arbitration. An international code of conduct would help safeguard the integrity and fairness of the arbitral process against abuses by counsel by providing objective, neutral standards to guide counsel’s conduct and for the tribunal to apply. As increasing number of new ‘players’ are involved in international arbitration, from diverse legal

90. Ibid. 91. Mustill and Boyd, Commercial Arbitration (2nd edn, Butterworths 1989), pp. 303–​304. 92. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021). 93. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 355, at para. 6.07.

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traditions, the development of objective, transparent standards of conduct becomes even more important.”94

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An increasing number of international arbitration rules are requiring the parties to identify their representatives and authorising the tribunal to dismiss counsel from the case if the tribunal considers this necessary to maintain the integrity of the proceedings.95

94. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3130. 95. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 274, at para. 4.131.

DIVISION 7

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POWERS, DUTIES AND JURISDICTION OF THE ARBITRAL TRIBUNAL AND COURT

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Chapter 31 POWERS, DUTIES AND LIABILITIES OF THE ARBITRAL TRIBUNAL [31.1] INTRODUCTION......................................................................................................................... 893

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[31.2] FUNCTIONS OF THE ARBITRATOR....................................................................................... 896 [31.3] DUTIES OF THE ARBITRAL TRIBUNAL TOWARDS THE PARTIES............................... 897 [31.3.1] DUTY OF THE ARBITRATOR TO BE INDEPENDENT AND DISCLOSE CONFLICTS OF INTEREST........................................................................................ 898 [31.3.2] DUTY TO ACT WITH DILIGENCE.......................................................................... 903

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[31.3.3] DUTY TO ACT FAIRLY AND IMPARTIALLY........................................................ 906 [31.3.4] DUTY TO DECIDE ALL ISSUES................................................................................ 911

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[31.3.5] DUTY TO APPLY LAW................................................................................................ 912 [31.3.6] DUTY WITH RESPECT TO ARBITRATOR MISCONDUCT............................... 912

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[31.3.7] DUTY TO COMPLETE MANDATE.......................................................................... 913 [31.3.8] DUTY TO NOT DELEGATE DECISION MAKING POWERS............................. 914

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[31.3.9] DUTY TO KEEP ARBITRATION PROCEEDINGS CONFIDENTIAL................ 917

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[31.4] LIABILITY OF THE ARBITRAL TRIBUNAL........................................................................... 920 [31.5] IMMUNITY OF THE ARBITRAL TRIBUNAL AND APPOINTING AUTHORITY........ 922

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[31.6] CONCLUSION............................................................................................................................... 927

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[31.1] INTRODUCTION

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Arbitrators owe various duties to the parties. Redfern and Hunter categorise these duties into three types,1 namely: (1) duties imposed upon the arbitral tribunal by parties –​this may be before the appointment of the arbitrator (e.g. in the arbitration agreement)2 or during the course of arbitration (e.g. parties may decide that they want the tribunal to carry out certain actions);3

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1. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 5.43. 2. Ibid, at para. 5.44. 3. Ibid, at para. 5.45.

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(2) duties imposed upon the arbitral tribunal by law (e.g. the duty to treat parties fairly and impartially, decide all procedural matters etc.);4 and



(3) ethical duties (e.g. duty to decline appointment if sufficient time/​attention cannot be given to a case).5

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Notably, the extent of duties owed to the parties would depend upon the status of the arbitrator’s relationship vis-​à-​vis the parties. There are two theories that define the arbitrator’s relationship with the parties:

(1) The relationship between the arbitrator and the parties is a contractual one where the arbitrator undertakes to perform certain functions in return for “remuneration, cooperation and defined immunities”6 (it is important to note that the arbitrator’s contract is not recorded in a single document and may be reflected in a series of communications);7



(2) The relationship between the arbitrator and the parties is quasi-​judicial, with the arbitrator’s obligations being conferred by national law “in a manner analogous to that of state court judges.”8

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Most commentators9 and national courts (of India,10 England,11 France,12 and the US13) agree that the first theory is correct, that is, the relationship between arbitrators and parties is a contractual one.

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4. Ibid, at para. 5.47. 5. Ibid, at para. 5.75. 6. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2110. 7. See Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2122. 8. Ibid, p. 2111. 9. Ibid, p. 2111 (“The weight of national court authority and academic commentary concludes that the arbitrators’ status, rights and obligations are principally the result of contractual relations with the parties.”). 10. Voestalpine Schienen GmbH v Delhi Metro Rail Corporation Ltd. (2017) 4 SCC 665, at para. 20 (“… relationship between the parties to the arbitration and the arbitrators themselves are contractual in nature and the source of an arbitrator’s appointment is deduced from the agreement entered into between the parties …”). 11. K/​s Norjarl A/​s v Hyundai Heavy Industries Co. Ltd. [1992] QB 863 (“On appointment, the arbitrator becomes a third party to that arbitration agreement, which becomes a trilateral contract.”); Jivraj v Hashwani [2011] UKSC 40 (held that though an arbitrator provides services in exchange for a fee he is not an employee and is “an independent provider of services who is not in a relationship of subordination with the person who receives the services.”). 12. See Judgment of 19 December 1996, Societe Qualiconsult v Groupe Lincoln [1998] 1 Rev. Arb. 121 (Paris Cour d’Appel); Judgment of 17 November 2010, [2011] Rev. Arb. 943 (French Cour de Cassation Civ. 1). 13. Morgan Phillips, Inc. v JAMS/​Endispute, LLC 140 Cal.App.4th795 (Cal. Ct. App. 2006) (“California common law has recognized a narrow exception to arbitral immunity: the immunity does not apply to the arbitrator’s breach of contract by failing to make any decision at all”); Feichtinger v Conant 893 P.2d1226 (Alaska 1995) (“Some courts have held that arbitral immunity does not apply where the arbitrator breaches his contract by failing to issue a timely decision”).

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It follows that the arbitrator is contractually obligated to inter alia resolve the parties’ dispute in return for remuneration and immunities. A failure to comply with this obligation may result in the arbitrator becoming liable to the parties. Gary Born explains:

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“In most jurisdictions, the arbitrator’s contract is treated as giving rise to a number of important legal obligations … These include the obligations to resolve the parties’ dispute in an adjudicatory manner … to conduct the arbitration in accordance with the parties’ arbitration agreement, to maintain the confidentiality … to fulfill the arbitrator’s mandate. These obligations are enforced through a variety of mechanisms, including civil liability, loss of entitlement to remuneration, termination of the arbitrator’s mandate, removal of the arbitrator and prohibitions against further appointments …”14

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The terms of the arbitration agreement, provisions of applicable law, and institutional rules also play a key role in determining the obligations owed by the arbitrator to the parties.

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The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) does not define or discuss the obligations of an arbitrator.

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However, the New York Convention imposes an obligation upon Contracting States to recognise and enforce an arbitration agreement that may contain provisions imposing a duty on the arbitrator.15

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The UNCITRAL Model Law on International Commercial Arbitration (“Model Law”) too is silent on the obligations owed by an arbitrator to the parties.

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Though the Model Law does require the arbitrator to disclose any circumstances “likely to give rise to justifiable doubts as to his impartiality or independence”,16 treat the parties equally and give each party “full opportunity” to present its case.17

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The arbitrator has to also apply the law chosen by the parties when adjudicating the dispute.18 The focus of these provisions is on the rights of the parties vis-​à-​vis one another, and not “on the arbitrator’s own rights and obligations.”19

14. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2107. 15. See Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958, art. II (1) (“Each Contracting State shall recognize an agreement in writing under which the parties undertake to submit to arbitration …”). 16. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 12. 17. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 18. 18. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 28. 19. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2108; (Drafting history of the Model Law indicates that it “does not deal with the legal responsibility of an arbitrator or other issues pertaining to the contractual party-​arbitrator relationship.”).

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Law, Practice and Procedure of Arbitration in India

Similarly, most national statutes20 and institutional rules21 only address the obligations of arbitrators to disclose conflicts, ensure independence/​impartiality in the context of constitution of the tribunal and do not deal with the arbitrator’s duties or relationship with the parties in a more “systematic fashion”.22

[31.2] FUNCTIONS OF THE ARBITRATOR

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However, arbitral institutions often adopt non-​binding codes of conduct or ethics that set out the arbitrator’s obligations.23 Sanctions may be imposed on arbitrators who carry out their functions in a careless and improper way.24

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The primary function of the arbitrator is to resolve the dispute between the parties in an adjudicatory, fair and impartial manner, after giving both parties the opportunity to present their case.25

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This adjudicatory nature of arbitration is what distinguishes it from mediation/​ conciliation, where the mediator or conciliator is not empowered to decide the issue. They can only discuss and negotiate with the parties, in an attempt to persuade them to consensually settle their dispute.26

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National arbitration statutes27 and institutional rules28 prescribe certain mandatory procedural requirements with regard to the conduct of proceedings. Arbitration also gives parties the autonomy to agree upon certain additional procedures.

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20. See national arbitration statutes of India, England, Singapore, and the US. 21. See UNCITRAL Rules, 2013; SIAC Rules, 2016; LCIA Arbitration Rules, 2020; ICC Rules of Arbitration, 2021. 22. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 2109–​2110. 23. See ICC Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration (1 January 2021); SIAC Code of Ethics for an Arbitrator, 2015; LCIA Notes for Arbitrators (26 October 2017); American Arbitration Association, The Code of Ethics for Arbitrators in Commercial Disputes (1 March 2004); ICSID and UNCITRAL, Draft Code of Conduct for Adjudicators in Investor State Dispute Settlement, 2020; IBA Guidelines on Conflicts of Interest in International Arbitration (23 October 2014); IBA Rules of Ethics for International Arbitrators, 1987. 24. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 5.03. 25. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2113. 26. Ibid, p. 298. 27. Arbitration and Conciliation Act, 1996, s. 18 (“The parties shall be treated with equality and each party shall be given a full opportunity to present his case.”); English Arbitration Act, 1996, s. 33 (“The tribunal shall (a) act fairly and impartially … giving each party a reasonable opportunity of putting his case and dealing with that of his opponent, and (b) adopt procedures suitable … avoiding unnecessary delay or expense …”); UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 18 (“The parties shall be treated with equality and each party shall be given a full opportunity of presenting his case.”). 28. UNCITRAL Rules, 2013, art. 17(1); ICC Rules of Arbitration, 2021, art. 22(4); SIAC Rules, 2016, r. 19.1; LCIA Arbitration Rules, 2020, art. 14.1.

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The arbitrators must conduct the arbitration in accordance with party agreement, by applying the specified procedural rules and substantive terms.29 A deliberate departure from, or conscious disregard of the arbitration agreement can invalidate the award.30

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Lastly, courts have held that arbitration is an adjudicatory process like a judicial process31 and so the arbitrator is subject to the same duties as a judge.32

[31.3] DUTIES OF THE ARBITRAL TRIBUNAL TOWARDS THE PARTIES

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An arbitrator owes several duties to the parties to the arbitration.33 These duties are derived from the applicable law, institutional rules, or non-​binding codes of conduct that may have been adopted.

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The duties of the arbitrator can be varied. It must not be confused with the powers of the arbitral tribunal. While the duties set the minimum requirements that the arbitrator must meet, the powers denote the maximum limits of his/​her jurisdiction.

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Often the arbitral tribunal discharges its duties by exercising its powers. For example, the arbitral tribunal discharges the duty to act judicially by exercising its power under Section 19(4) of the Arbitration Act to determine admissibility, relevance, materiality, and weight of the evidence.

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The duties of an arbitrator include the duty to be independent and disclose conflicts of interest, duty to act with diligence, duty to act fairly and impartially, duty to decide all issues referred to arbitration, and duty to adjudicate the dispute by application of law.

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Other additional duties include the duty to report arbitrator misconduct, duty to propose settlement, duty to complete the mandate, duty to not delegate its decision-​ making functions, and the duty to keep the arbitration proceedings confidential. Each of these duties has been dealt with, separately, below.

29. Gary B. Born, International Commercial Arbitration, Vol. II (3rd edn, Wolters Kluwer), p. 2124. 30. See Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1985, art. V; Arbitration and Conciliation Act, 1996, s. 34(2). 31. Thiele v RML Realty Partners 14 Cal.App.4th1526 (Cal. Ct. App. 1993) (“… although arbitration is a proceeding different from a court proceeding and the functions performed by the arbitrator are somewhat different from those of a judge, arbitration is as much an adjudicatory process as the judicial process.”). 32. Judgment of 29 May 1992, Epoux Rouny v Holding RC, 1996 Rev. Arb. 408 (Paris Cour d’Appel) (“On accepting his functions, the arbitrator assumes the status of a judge, as a result of the contract appointing him. He therefore enjoys the same rights and is subject to the same duties as a judge.”). 33. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2136.

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Law, Practice and Procedure of Arbitration in India

[31.3.1] Duty of the Arbitrator to Be Independent and Disclose Conflicts of Interest The King’s Bench in Dr Bonham’s Case34 stated, “Judges, like Caesar’s wife, should be above suspicion”. This adage applies equally to arbitral tribunals.35 Partiality by any member of the tribunal would render him ineligible to conduct the arbitration.36

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In fact, irrespective of whether the arbitrator is a party-​appointed arbitrator or the presiding arbitrator, he must be independent.37 This is because a party-​appointed arbitrator is also appointed on behalf of both parties to the arbitration and is not the party’s advocate on the tribunal.38

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Indu Malhotra explains that being independent is not the same as being impartial as follows: (1) Independence is a situation of fact or law that is “capable of objective verification” while impartiality is a “mental state which will necessarily be subjective”. For example, if an arbitrator does not have a pecuniary or other relationship with any of the parties he is independent, yet may still have some pre-​dispositions and opinions that make him not impartial;



(2) For the arbitrator to be independent there should not be a “close, substantial, recent and proven relationship” with a party; and



(3) If the arbitrator has a direct or indirect interest in the outcome of the case or has a relationship with a person having such an interest, he will not be considered independent.39

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By way of an example, an arbitrator is not independent if: (1) he has a direct pecuniary interest in one of the parties;40 (2) he has recently appeared against one of the parties

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34. Dr Bonham’s Case, Re [1608] 1 WLUK 4; Leeson v General Council of Medical Education and Registration [1889] 43 Ch. D. 366. 35. Dato’ Dr Muhammad Ridzuan bin Mohd Salleh v Syarikat Air Terengganu Sdn Bhd [2012] 3 MLJ 737. 36. See Voestalpine Schienen GmbH v Delhi Metro Rail Corporation Ltd. (2017) 4 SCC 665. 37. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2132 (“… obligation of independence which requires the arbitrator to be free of personal, contractual, institutional or other relationships that would compromise his or her independence.”). 38. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2123; Judgment of 28 March 1984, Raffineries de Petrole d’Homs et da Banias v Chambre de Commerce Internationale, 1985 Rev. Arb. 141 (Paris Tribunal de Grande Instance) (“an arbitrator –​who is a judge, not a representative of the party that appointed him –​must derive his judicial power from a single, common manifestation of the intentions of the parties to the proceedings, even though his appointment may have been initiated by one party alone.”). 39. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 521. See Voestalpine Schienen GmbH v Delhi Metro Rail Corporation Ltd. (2017) 4 SCC 665, at para. 22. 40. See AT&T Corp v Saudi Cable [2000] 2 All ER (Comm) 625.

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899

to the arbitration;41 or; (3) there is a close connection between the arbitrator’s law firm and one of the parties.42 National laws43 require arbitrators to make disclosures regarding possible conflicts of interest, and update such disclosures, if circumstances change, during the course of the arbitration.44 The purpose of these disclosures is to ascertain whether the arbitrator is independent.

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At the pre-​appointment stage, as soon as a party approaches a prospective arbitrator, he should disclose in writing to that party, any circumstances likely to give rise to justifiable doubts as to his independence or impartiality.

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If the party upon receipt of the disclosed information is of the view that it does not give rise to any justifiable doubts with respect to the person’s independence and impartiality, he may nominate him to be arbitrator.

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On being nominated, the prospective arbitrator should formally disclose the circumstances warranting disclosure in writing to the other party to the arbitration. Thereafter, if at any time from his appointment till the end of the arbitral proceedings, he loses his independence, impartiality, or neutrality, he must disclose this fact to the parties in writing.

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The duty to disclose covers a wide range of things. It permeates45 the arbitral process from beginning to end and is a continuing duty imposed upon the arbitral tribunal.46

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The objective is to ascertain whether the arbitrators satisfy standards of independence, and to enable a challenge to their appointment if the standards are not satisfied.47 Any challenge, however, must be made immediately.48

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41. ASM Shipping Ltd. of India v TTMI Ltd. of England [2005] EWHC 2238 (Comm). 42. Save & Prosper Pensions Ltd. v Homebase Ltd. 2001 L&T Rev. 11; Sierra Fishing v Mohamed [2015] EWHC 140. 43. See Arbitration and Conciliation Act, 1996, s. 12; UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 12. 44. See V.K. Dewan & Co. v Delhi Jal Board (2010) 15 SCC 717. 45. Penta-​Ocean Construction Co Ltd v Penang Development Corporation 2003 MLJU 11; See Nigel Blackaby, Constantine Partasides QC, Alan Redfern, J. Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 4.80. 46. Arbitration and Conciliation Act, 1996, s. 12; Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 4.81. 47. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2135; M. S. Kurkela, S. Turunen, Due Process in International Commercial Arbitration (2nd edn, Oxford University Press 2010), p. 120. 48. M. Scherer, “Introduction to the Case Law Section” (2016) 34 ASA Bulletin 1, pp. 126–​133.

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Law, Practice and Procedure of Arbitration in India

The Arbitration Act follows the Model Law approach on arbitral tribunal disclosures. The Arbitration Act requires the following disclosures49 to be made, in writing, by the arbitrator, when he is approached in connection with his appointment: (1) disclosure of direct/​indirect existence of any “past or present relationship with or interest in any of the parties or in relation to the subject matter in dispute, whether financial, business, professional or other kind, which is likely to give rise to justifiable doubts” as to independence/​impartiality;50 and



(2) disclosure of circumstances that will affect the arbitrator’s ability to devote time to the arbitration and ability to complete the same within 12 months.51

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(1) Non-​Waivable Red List:

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This includes situations that give rise to justifiable doubts as to the arbitrator’s independence and cannot be waived by a party.57

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49. For the format of disclosures, see the Sixth Schedule to the Arbitration and Conciliation Act, 1996. 50. Arbitration and Conciliation Act, 1996, s. 12(1)(a). 51. Arbitration and Conciliation Act, 1996, s. 12(1)(b). See Union of India v U.P. State Bridge Corporation Ltd. (2015) 2 SCC 52. 52. The Fifth Schedule of the Arbitration and Conciliation Act, 1996, lists grounds that give rise to “justifiable doubts as to the independence” of arbitrators. These grounds include whether the arbitrator has within the past three years served as counsel for or against either of the parties, whether the arbitrator’s law firm is acting adverse to one of the parties etc. 53. These grounds include whether the arbitrator has had a past/​present business relationship with a party, has given an expert opinion on the dispute to a party, has previous involvement in the case, holds shares, directly or indirectly, in one of the parties etc. 54. See HRD Corporation (Marcus Oil and Chemical Division) v GAIL (India) Limited (2018) 12 SCC 471, at para. 12. 55. Arbitration and Conciliation Act, 1996, s. 12(5). See Bharat Broadband Network Ltd. v United Telecoms Ltd. (2019) 5 SCC 755. 56. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1974. 57. IBA Guidelines on Conflicts of Interest in International Arbitration (23 October 2014), p. 17.

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(2) Waivable Red List: This includes situations that give rise to justifiable doubts as to the arbitrator’s independence but can be waived, that is, the parties, being aware of the conflict of interest, can expressly state their willingness to have such person act as arbitrator.58 (3) Orange List:

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This includes situations that the arbitrator has a duty to disclose; however, if no objections are received the parties will be deemed to have accepted the arbitrator.59

(4) Green List:

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This includes situations that do not require disclosure by the arbitrator.60

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The arbitral tribunal must make disclosures when conflicts arise, throughout the course of the arbitration.61 Any failure to make disclosures may result in the appointment of the arbitrator and the award becoming susceptible to challenge, if it leads to justifiable doubts as to the arbitrator’s independence.62

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However, the UK Supreme Court in Halliburton v Chubb recognised the importance of disclosure and observed that:

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“Unless there is disclosure, the parties may often be unaware of matters which could give rise to justifiable doubts about an arbitrator’s impartiality and entitle them to a remedy from the court under section 24 of the 1996 Act.”64

Ibid. IBA Guidelines on Conflicts of Interest in International Arbitration (23 October 2014), p. 18. IBA Guidelines on Conflicts of Interest in International Arbitration (23 October 2014), p. 19. Arbitration and Conciliation Act, 1996, s. 12(2). See Lanco-​Rani (JV) v National Highway Authority of India (2016) SCC OnLine Del 6267. The Rt Hon. Lord Justice Saville, “1996 Report on the Arbitration Bill”, Departmental Advisory Committee on Arbitration Law (February 1996), at para. 101. 64. Halliburton Co. v Chubb Bermuda Insurance Ltd. [2020] UKSC 48. 58. 59. 60. 61. 62. 63.

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Law, Practice and Procedure of Arbitration in India

Most institutional rules require arbitrators to make disclosures that may call his independence into question.65 Similar is the case with ethical codes.66 For example, the SIAC Code of Ethics for an Arbitrator requires the arbitrator to disclose to the Registrar of the SIAC, as well as any party:

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“(a) any past or present close personal relationship or business relationship, whether direct or indirect, with any party to the dispute, or any representative of a party, or any person known to be a potentially important witness in the arbitration; (b) the extent of any prior knowledge he may have of the dispute.”67

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In a similar vein, the LCIA Notes for Arbitrators advise that when filling in their statement of independence, arbitrators take into account,

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“amongst other things, the existence and nature of any past or present relationships, direct or indirect, with any of the parties or their counsel. Any doubt as to whether a relationship should be disclosed must be resolved in favour of disclosure.”68

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They must confirm that they are in a position to fulfill their mandate without delay.69

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“After accepting appointment and while serving as an arbitrator, a person should avoid entering into any business, professional, or personal relationship, or acquiring any financial or personal interest, which is likely to affect impartiality or which might reasonably create the appearance of partiality. For a reasonable period of time after the decision of a case, persons who have served as arbitrators should avoid entering into any such relationship, or acquiring any such interest, in circumstances which might reasonably create the appearance that they had been influenced in the arbitration by the anticipation or expectation of the relationship or interest …”70

65. ICC Rules of Arbitration, 2021, art. 11; SIAC Rules, 2016, rr. 13.4, 13.5; LCIA Arbitration Rules, 2020, arts 5.4, 5.5; UNCITRAL Arbitration Rules, art. 11; Mumbai Centre for International Arbitration Rules, 2016, r. 6; Delhi International Arbitration Centre (Arbitration Proceedings) Rules, 2018, r. 7.1. 66. See American Arbitration Association, The Code of Ethics for Arbitrators in Commercial Disputes (1 March 2004) Canon II; ICSID and UNCITRAL Draft Code of Conduct for Adjudicators in Investor State Dispute Settlement, 2020, art. 5. 67. SIAC Code of Ethics for an Arbitrator, 2015, at para. 2.2. 68. LCIA Notes for Arbitrators (26 October 2017), at para. 8. 69. LCIA Notes for Arbitrators (26 October 2017), at para. 10, 11. 70. American Arbitration Association, The Code of Ethics for Arbitrators in Commercial Disputes (1 March 2004) Canon I, at para. 2.

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The ICC publishes, on its website, the names of sitting arbitrators, their nationality, as well as whether the appointment was made by the ICC or the parties to promote transparency in international arbitration.71

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The Arbitrator Intelligence Project is a similar initiative that makes information about prospective arbitrators easily available. Other platforms have also started to provide information on arbitrators to help parties make an informed decision as to appointment.72

[31.3.2] Duty to Act with Diligence

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Arbitration is preferred to judicial proceedings because it helps save time and enables speedy resolution of the dispute.73 To this end, arbitrators are required to carry out their functions with diligence to avoid unnecessary delay, costs, and expenses.74

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This means that arbitrators should make themselves available for deliberations and participate in deliberations75 with other members of the tribunal so as to not delay the arbitral process.76

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The Arbitration Act was amended in 2019 so as to include a requirement for the tribunal to deliver its award within a period of 12 months from the date of completion of pleadings, in case of domestic arbitrations with this duty in mind.77

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Even for international commercial arbitrations, arbitrators are obligated to make the award “as expeditiously as possible” and endeavour to do so within 12 months from the completion of pleadings.78 This period may be extended only with party consent.79

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A failure to comply with these timelines may result in the termination of the mandate of the arbitrator80 or reduction of his/​her fees.81 However, a delay in issuing the

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71. ICC, “ICC begins publishing arbitrator information in drive for improved transparency” (27 June 2016), available at https://​iccwbo.org/​media-​wall/​news-​speeches/​icc-​begins-​publishing-​arbitrator-​information-​in-​ drive-​for-​improved-​transparency/​. 72. See Jus Mundi’s “directory of arbitrators”. 73. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2138. 74. P. Yang, “The Organisation of International Arbitration Proceedings” in M. Pryles and M. Moser (eds), The Asian Leading Arbitrators’ Guide to International Arbitration (JurisNet 2007), pp. 173–​174. 75. For a detailed discussion on arbitrator participation in the making of an award, see Section 37.8 in Chapter 37. 76. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2137. 77. Arbitration and Conciliation Act, 1996, s. 29A(1). 78. Arbitration and Conciliation Act, 1996, s. 29A(2). 79. Arbitration and Conciliation Act, 1996, s. 29A (3). 80. See Arbitration and Conciliation Act, 1996, s. 29A(4); Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 5.67. 81. See Arbitration and Conciliation Act, 1996, s. 29A(4). See Michael McIlwrath, “ICC To Name Sitting Arbitrators And Penalize Delay In Issuing Awards”, (6 January 2016) Kluwer Arbitration Blog.

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award may not in itself be a basis for setting it aside, unless the party has suffered serious injustice.82 In a situation where the arbitral tribunal fails to issue the award within a reasonable period of time, it may not be pragmatic or economical to seek its removal because doing so will just increase the costs of arbitration.83

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Often the arbitrator’s duty to act with diligence may conflict with the duty to abide by the parties’ wishes, especially if a party is resorting to dilatory tactics. To combat this, arbitral legislation may impose a general obligation on parties’ to “do all things necessary for the proper and expeditious conduct of the arbitral proceedings.”84

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The Arbitration Act, too, empowers the tribunal to refuse adjournment requests unless sufficient cause is made out, and to impose costs on the party seeking adjournment without any sufficient cause.85

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National statutes,86 institutional rules,87 and ethical codes88 encourage the arbitral tribunal to use procedures for expeditious conduct of the arbitral proceedings.

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The ICC Rules, in particular, require the arbitral tribunal to render its award within six months from the date of the last signature by the tribunal or the parties of the terms of reference.89

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Apart from the above, an arbitrator is obligated to decline to take up an appointment if he feels that he will be unable to make the award expeditiously.90

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The Arbitration Act requires the arbitrator to disclose circumstances that would affect his ability to devote time to the arbitration and complete it within 12 months.91 Hence, a party can take an objection to the arbitrator’s appointment, if it feels that the arbitrator will not be able to timely complete the proceedings.

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82. BV Scheepswerf Damen Gorinchem v Marine Institute [2015] EWHC 1810 (Comm); Harji Engineering Works Pvt. Ltd. v Bharat Heavy Electricals Limited & Anr. (2008) SCC OnLine Del 1080, at para. 20. 83. See Arbitration and Conciliation Act, 1996, s. 15(3) (replacement of arbitration may lead to “… hearings previously held” being repeated). 84. See English Arbitration Act, 1996, s. 40. 85. Arbitration and Conciliation Act, 1996, s. 24(1). 86. See English Arbitration Act, 1996, s. 33(1)(b). 87. ICC Arbitration Rules, 2021, art. 22(1); SIAC Rules, 2016, r. 19.1; LCIA Rules, 2020, art. 14.1(ii); UNCITRAL Arbitration Rules, 2013, art. 17(1). 88. ICSID and UNCITRAL Draft Code of Conduct for Adjudicators in Investor State Dispute Settlement, 2020, art. 8; IBA Rules of Ethics for International Arbitrators, 1987, arts. 1, 7. 89. ICC Arbitration Rules, 2021, art. 31. 90. See ICSID and UNCITRAL Draft Code of Conduct for Adjudicators in Investor State Dispute Settlement, 2020, art. 8; IBA Rules of Ethics for International Arbitrators, 1987, arts. 1, 7. 91. See Arbitration and Conciliation Act, 1996, s. 12(1)(b).

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In a similar vein, the ICC requires the arbitrator to confirm that he can “devote the time necessary” to conduct the arbitration entirely, in accordance with the time limits specified in the Rules and provide details of all pending cases in which he/​she is involved.92

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The LCIA requires arbitrators to “confirm that he/​she is ready, willing and able to devote sufficient time, diligence and industry to ensure the expeditious and efficient conduct of the arbitration.” They have to complete a form of availability, providing details of the number of hearings, outstanding awards, and all pre-​existing commitments that may impact his/​her ability to devote time to the arbitration.93

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The SIAC requires a prospective arbitrator to disclose all time constraints to the Registrar of the SIAC, who can refuse appointment if of the view that the arbitrator will not be able to discharge duties due to these potential time constraints.94

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The Draft Code of Conduct for Adjudicators in Investor State Dispute Settlement contains a provision that would restrict an arbitrator from serving in more than a particular number of pending arbitrations, at the same time.95

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However, pertinently, the duty of the arbitrator to act with diligence and ensure availability does not mean that he is obligated to make particular dates available. This obligation is only limited to “sit on such dates as may reasonably be required of them having regard to all the circumstances including the exigencies of their own practices”.96

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Further, in a scenario where the arbitration turns on a single issue of law it would not be appropriate for the arbitral tribunal to hold a complete trial. Instead, the arbitral tribunal should eliminate the hearing and make a decision based on just the written submissions.97

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The LCIA Arbitration Rules explicitly allow the arbitral tribunal to do so by expediting the proceedings by limiting the length of dispensing with a written statement, limiting oral/​written testimony of witnesses, dispensing with a hearing etc.98

See ICC Arbitrator Statement Acceptance, Availability, impartiality and Independence. See LCIA Notes for Arbitrators (26 October 2017), at para. 10-​12. SIAC Code of Ethics for an Arbitrator, 2015, para. 1.2. ICSID and UNCITRAL Draft Code of Conduct for Adjudicators in Investor State Dispute Settlement, 2020, art. 8(2). 96. K/​s Norjarl A/​s v Hyundai Heavy Industries Co. Ltd. [1992] QB 863. 97. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 4-​134. 98. LCIA Arbitration Rules, 2020, art. 14.6. 92. 93. 94. 95.

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Law, Practice and Procedure of Arbitration in India

Gary Born summarises: “The obligations of diligence and expedition are sometimes regarded as little more than platitudes-​perhaps because of past experiences with cases settling or parties failing to complain. This attitude is unacceptable and constitutes a breach of an arbitrator’s professional and contractual obligations to the parties.”99

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[31.3.3] Duty to Act Fairly and Impartially

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The Arbitral Tribunal Is Obligated to Act Fairly The arbitral tribunal is under a duty to act fairly. This includes ensuring that parties are given an opportunity to present their case, to adopt procedures necessary to avoid unnecessary delay and expense100 and to ensure that the parties are represented by legal counsel, if they so desire.101

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Further, the arbitral tribunal should:

(1) keep detailed notes of everything material stated by the witnesses (but are under no duty to supply copies of its notes to the parties);102



(2) provide notice of hearings to both parties;103



(3) accommodate requests of parties when fixing the date of the hearing; and



(4) hear evidence and arguments only in the present of both parties, unless the other party chooses to be absent, despite proper notice.104

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Notably, England105 only statutorily requires parties to be given a “reasonable opportunity” to present their case. This is distinct from the provisions of the Model Law106 and position in India107 where a party must be given a “full opportunity”.

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99. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2140. 100. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 4-​110. See Arbitration and Conciliation Act, 1996, s. 18; English Arbitration Act, 1996, s. 33; LCIA Arbitration Rules, 2020, art. 14; UNCITRAL Arbitration Rules, 2013, art. 17. 101. Faze Three Exports Ltd. v Pankaj Trading Co. & Ors. (2003) SCC OnLine Bom 1024. 102. See Tan Tong Meng (Pte) Ltd v Artic Builders & Co (Pte) Ltd [1986] 2 MLJ 241 (“… under no duty to supply copies of his notes. However, the fact that he misunderstood his entitlement to show the parties his notes, does not of itself result in any unfairness or in any failure to observe the rules of natural justice, this being the basis of the misconduct asserted. He had already provided the parties with a note of what he viewed as the most important aspect of what had occurred before him when the arbitration took place … The balance of the notes he had withheld not merely from the appellants but from both parties. He had thus acted even-​handedly.”). 103. See Re an Arbitration between Hainan Machinery Import & Export Corp and Donald & McArthy Pte Ltd. [1995] 3 SLR (R) 354; Oakland Metal Co Ltd v D Benaim & Co Ltd. [1953] 2 Lloyd’s Rep 192. 104. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn. Wolters Kluwer 2020), p. 604. 105. English Arbitration Act, 1996, s. 33. 106. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 18. 107. Arbitration and Conciliation Act, 1996, s. 18.

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This means that in England, a party does not have an unfettered right to present its case or a right to a hearing and the tribunal has ultimate authority to determine the procedure, in the interest of efficacy of time and costs.108

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Pertinently, the responsibility to ensure that the parties have been given an opportunity to address all evidence submitted in the arbitration lies solely on the arbitrator.109 Even if a party fails to request documents, the arbitrator remains obligated to ensure that all relevant information is provided to it.110

The arbitral tribunal’s failure to do so may amount to a breach of natural justice or the rule of audi alteram partem which justifies the setting aside of the award.111

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Arbitrator Is Obligated to Remain Impartial

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Most institutional rules112 and national laws113 obligate the arbitral tribunal to remain impartial. The arbitrators are under a duty to ensure that their behaviour does not create a conflict of interest. Also, their decision is not influenced by any extraneous considerations.114

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The Supreme Court of India in Manak Lal v Dr. Prem Chand Singhvi held:115

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“… every member of a tribunal that is called upon to try issues in judicial or quasi-​ judicial proceedings must be able to act judicially; and it is of the essence of judicial decisions and judicial administration that judges should be able to act impartially, objectively and without any bias.”116

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Impartiality is a subjective and abstract concept,117 involving the arbitrator’s state of mind that “addresses the actual or apparent inclination of an arbitrator with respect to the issues in dispute.”118

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108. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at paras 5-​040–​5-​044. See Overseas Fortune Shipping Pte Ltd. v Great Eastern Shipping Co Ltd. 1987 1 Lloyd’s Rep 270; LCIA Arbitration Rules, 2020, art. 14.6. 109. Compania Sud-​Americana de Vapores Sa v Nippon Yusen Kaisha 2009 EWHC 1606. 110. Mohal Lal Mirpuri v Amarjit Singh Jass 1997 56 Con. L.R. 31. 111. Arbitration and Conciliation Act, 1996, s. 34(2)(a)(iii); UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 34(2)(a)(ii). See Rational Intellectual Holdings Ltd. v Mr. Sunny Karira (2018) SCC OnLine Del 8341, at para. 27–​30. 112. ICC Arbitration Rules, 2021, art. 11(1); SIAC Rules, 2016, r. 13.4; LCIA Arbitration Rules, 2020, art. 5.3. 113. Arbitration and Conciliation Act, 1996, s. 12; English Arbitration Act, 1996, ss. 24(1)(a), 33; UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 12. See Voestalpine Schienen Gmbh v Delhi Metro Rail Corporation Limited (2017) 4 SCC 665, at para. 20. 114. See ICC, Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration (1 January 2021), at para. 66. 115. 1957 SCR 575, at para. 4. 116. See Halliburton Co. v Chubb Bermuda Insurance Ltd. [2020] UKSC 48. 117. Voestalpine Schienen Gmbh v Delhi Metro Rail Corporation Limited [2017] 4 SCC 665, at para. 22. 118. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 522.

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Law, Practice and Procedure of Arbitration in India

For an arbitrator to be impartial he must be able to adjudicate the issues involved in the dispute without any pre-​conceived notions.119 The arbitrator will be biased if the decision is influenced by partiality and prejudice.120 The Supreme Court of India in State of West Bengal v Shivanand Pathak held:121

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Arbitrator bias may arise in several ways namely:122

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“Bias may be defined as a pre-​conceived opinion or a pre-​disposition or a pre-​determination to decide a case or an issue in a particular manner, so much so that such pre-​disposition does not leave the mind open to conviction. It is in fact, a condition of mind, which sways judgments and renders the judge unable to exercise impartiality in a particular case … Bias has many forms. It may be pecuniary bias, personal bias, bias as to subject matter in dispute, or policy bias, etc.”

(1) economic dependence;



(2) emotional ties that may be friendly (family ties and friendship) or unfriendly (competitive and hostility);



(3) prior involvement or knowledge about the matter;



(4) personal interests in common with a party; or



(5) prior position taken as to the particular issue in dispute.

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The Draft Code of Conduct for Adjudicators in Investor State Dispute Settlement, 2020, being prepared by the ICSID and UNCITRAL provides that to be impartial, the arbitrator should not:

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“(a) Be influenced by self-​ interest, outside pressure, political considerations, public clamour, loyalty to a party to the proceedings, or fear of criticism;

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(b) Allow any past or ongoing financial, business, professional, family or social relationships to influence their conduct or judgement; (c) Take action that creates the impression that others are in a position to influence their conduct or judgement;

119. Ibid, p. 522. 120. Bihar State Mineral Development Corporation and another v Encon Builders (I)(P) Limited 2003 7 SCC 418. See SIAC Code of Ethics for an Arbitrator, 2015, at para. 3. 121. 1998 5 SCC 513, at para. 25–​26. 122. M. S. Kurkela, S. Turunen, Due Process in International Commercial Arbitration (2nd edn, Oxford University Press 2010), pp. 118–​119.

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(d) Use their position to advance any personal or private interests; or (e) Directly or indirectly, incur an obligation or accept a benefit that would interfere, or appear to interfere, with the performance of their duties.”123

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The court applies the test of the “fair and informed observer” to determine whether the arbitrator is impartial or biased. The court examines whether the circumstances surrounding the allegation of partiality would lead “a fair-​minded and informed observer to conclude that there was a real possibility … that the tribunal was biased.”124 The House of Lords in Helow v Secretary of State for the Home Department125 held that a fair-​minded observer is one who does not reach a judgment on any point, before acquiring a full understanding of both sides of the argument.

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Any issue of bias or impartiality will have to be seen in context, as its meaning, perspective, and impact will vary from case to case, jurisdiction, and culture. The question is not what effect a misconduct on part of the arbitrator has upon the result of the proceedings, but what effect “it might possibly have produced.”126

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Pecuniary interest in the outcome of a case may disqualify an arbitrator, when it comes to a prejudice. However, the court will have to examine whether it is “likely to produce” in the minds of the public “reasonable doubt” about the “fairness of the administration of justice”.127

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Therefore, the court places itself in the position of a reasonable man, having knowledge of all relevant facts, and takes into account the professional standing of the arbitrator to determine if bias exists.128

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An experienced arbitrator having impeccable credentials is assumed to have a lower propensity for bias than someone with lesser experience.129 Further, developing an opinion about the case at an early stage of the proceeding would not in itself constitute a case of partiality/​bias.130

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123. ICSID and UNCITRAL Draft Code of Conduct for Adjudicators in Investor State Dispute Settlement, 2020, art. 4. 124. Manak Lal v Prem Chand Singhvi (1957) SCR 575, at para. 4 (“… test always is and must be whether a litigant could reasonably apprehend that a bias attributable to a member of the tribunal might have operated against him in the final decision …”); In re Medicaments & Related Classes of Goods (No. 2) [2001] I WLR 700; Porter v Magill [2001] UKHL 67. 125. [2008] UKHL 62. 126. International Airport Authority of India v K.D. Bali [1988] 2 SCC 360. 127. Manak Lal v Prem Chand Singhvi [1957] SCR 575. 128. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 4-​114. 129. Sumukan Ltd. v Commonwealth Secretariat [2007] EWHC 188 (Comm). 130. PT Reasuransi Umum Indonesia v Evanston Insurance Co. [1993] 8 International Arbitration Report (No. 1) B-​ 1 B-​4, Yearbook Commercial Arbitration, XIV-​1994, pp. 788–​791.

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Law, Practice and Procedure of Arbitration in India

Even though party-​appointed arbitrators are appointed by one of the parties to the arbitration, they too are obligated to act fairly and impartially in the same manner as the presiding arbitrator or chairman.131 John Tackaberry and Arthur Marriot explain that:

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“A bad arbitrator may fear that making a decision that is strongly opposed by a party will mean that that party will never agree to his being arbitrator again. But timidity –​shrinking from decision –​is a hallmark of a bad arbitrator, just as firmness, when accompanied by fairness and courtesy, is the hallmark of a good one.”132 However, when sitting with an umpire, after the umpire enters upon the reference, the party-​appointed arbitrators can “act as advocates for the party who appointed them.”133

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To ensure the appearance of fairness and impartiality an arbitrator is normally prohibited from engaging in ex parte communications with a party unless:134

(1) the communication is prior to his appointment to demonstrate his expertise and availability to act as an arbitrator; or



(2) the communication relates to selection of the president of the arbitral tribunal.

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Russell on Arbitration observed:135

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“… no one with judicial responsibility may receive evidence, documentary or otherwise, from one party without the other party knowing that the evidence is being tendered and being offered an opportunity to consider it, object to it, or make submissions on it. No custom or practice may over-​ride that basic principle.”

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However, it has been held that there is no bias or misconduct where the arbitrator apologises to one of the parties for being late in the absence of the other party136 or

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131. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 4-​149 (“… arbitrators so selected (i.e. one by each side) are not to consider themselves the agents or advocates of the party who appoints them. When once nominated, they are to perform the duty of deciding impartially between the parties, and they will be looked on as acting corruptly if they act as agents or take instructions from either side.”); Halliburton Co. v Chubb Bermuda Insurance Ltd. [2020] UKSC 48 (“the party-​appointed arbitrator in English law is expected to come up to precisely the same high standards of fairness and impartiality as the person chairing the tribunal.”). 132. J. Tackaberry and A. Marriot and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson Sweet & Maxwell 2003), at para. 2-​473. 133. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 4-​150; Owners of the MV Myron v Tradax Export SA [1970] 1 QB 527. 134. ICC Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration (1 January 2021), at para. 68; SIAC Rules, 2016, r. 13.6; SIAC Code of Ethics for an Arbitrator, 2015, at para. 4; LCIA Notes for Arbitrators (26 October 2017), at para. 19. See England and Wales Cricket Board v Kaneria 2013 EWHC 1074 (Comm) (“It is a fundamental requirement of an arbitration that the arbitrators do not receive unilateral communications from the parties and disclose all communications with one party to the other party.”). 135. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 5.048. 136. Morro v Crowie 1967 SASR 165; Re JRL, Ex parte CJL (1986) 161 CLR 342.

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consulted a lawyer as to certain points of law outside the presence of other arbitrators and parties.137 It is prudent that the arbitrator informs parties that he may take advice on a procedural point, and for him to give full disclosure of the nature of the advice sought and given to ensure there are no challenges.138

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If unilateral discussions are frequent, go beyond administrative matters, and are not promptly disclosed to the other party,139 the arbitrator may be removed for apprehension of bias.140

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Lastly, the Supreme Court of India has held that despite limiting the interference of courts in arbitral proceedings, the Arbitration Act allows courts to play a supervisory role in case of bias of arbitrators or the violation of natural justice.141

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[31.3.4] Duty to Decide All Issues

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Arbitrators are obligated to decide all issues that are referred to them,142 failing which the award may become susceptible to challenge.143

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Unlike a judge, an arbitral tribunal has no liberty to pick and choose which of the issues it wishes to answer. In accepting the office, the arbitral tribunal accepts the burden of considering all the matters in dispute and to make decisions thereon. Hence, the arbitrators can neither decide some issues while ignoring others, nor determine issues that are beyond the scope of reference.144

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Additionally, unless agreed between the parties that no reasons are to be given, the arbitral tribunal has a duty to pass a reasoned award.145 The Supreme Court of India in Dyna Technologies Pvt. Ltd. v M/​s. Crompton Greaves Ltd. held that the reasoning must be intelligible and adequate.146

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137. Rolland v Cassidy (1888) 13 App Cas 770. 138. J. Tackaberry and A. Marriot and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson Sweet & Maxwell 2003), at para. 2-​522. 139. Norbrook Laboratories Ltd. v Tank [2006] EWHC 1055. 140. English Arbitration Act, 1996, s. 24(1)(a). 141. McDermott International Inc v Burn Standard Co. Ltd. and Ors. (2006) 11 SCC 18, at para. 52. 142. N. Reg’l Health Auth. V. Derek Crouch Constr. Co. [1984] 1 QB 644 (“The primary duty of an arbitrator is to decide all issues referred to him.”). 143. Gary B. Born, International Commercial Arbitration, Vol. II (3rd edn, Wolters Kluwer), p. 2137; Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 4-​139. See P v D [2017] EWHC 3273 (Comm); Tan Toi Lan v Lai Kee Ying [1975] 1 MLJ 27; Jeeram v National Union of Plantation Workers [1993] 3 MLJ 104; Official Assignee v Chartered Industries of Singapore [1978] 2 MLJ 99; Union of India v Firm, J.P. Sharma & Sons (1967) SCC OnLine Raj 44. 144. For a detailed discussion on this, see Sections [37.3] and [37.4] in Chapter 37. 145. Arbitration and Conciliation Act, 1996, s. 31(3). For a detailed discussion on the requirement of reasons in an award, see Section [37.7] in Chapter 37. 146. (2019) 20 SCC 1, at para. 34-​35.

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[31.3.5] Duty to Apply Law

Institutional Rules and national laws too provide that:149

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The arbitrator is not a conciliator. He cannot ignore the law in order to do what he thinks is just and reasonable. He has to decide the dispute and issue an award in accordance with the law,147 rather than what he considers to be fair and reasonable, unless there is a specific agreement to the contrary.148

(1) the arbitrators are obligated to decide the dispute in accordance with the law chosen by the parties;



(2) failing party designation, the arbitrators should apply the law determined by the applicable conflict of law rules; and



(3) only if expressly authorised can the arbitrators decide the dispute ex aequo et bono or as amiable compositeur.

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[31.3.6] Duty with Respect to Arbitrator Misconduct

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When an arbitrator becomes aware of apparent misconduct by another member of the arbitral tribunal, he has an obligation to bring this to the notice of the other members of the tribunal as well as the appointing institution and the parties to the arbitration.150

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As provided in the IBA Rules of Ethics:

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“If an arbitrator becomes aware that a fellow arbitrator has been in improper communication with a party, he may inform the remaining arbitrators and they should together determine what action should be taken. Normally the appropriate initial course of action is for the offending arbitrator to be requested to refrain from making any further improper communications with the party. Where the offending arbitrator fails or refuses to refrain from improper communications, the remaining arbitrators may inform the innocent party in order that he may consider what action he should take. An arbitrator may act unilaterally to inform a party of the conduct of another arbitrator in order to allow the said party to consider a challenge of the offending arbitrator only in extreme circumstances, and after communicating his intention to his fellow arbitrators in writing.”151

147. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2141. 148. Sutton, Gill, and Gearing, Russel on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 4-​146. 149. See Arbitration and Conciliation Act, 1996, s. 28; UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 28; English Arbitration Act, 1996, s. 46; ICC Arbitration Rules, 2021, art. 21; SIAC Rules, 2016, r. 31; LCIA Arbitration Rules, 2020, arts. 22.3, 22.4; UNCITRAL Arbitration Rules, 2013, art. 35. 150. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2142. 151. See IBA Rules of Ethics for International Arbitrators, 1987, art. 5(4).

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[31.3.7] Duty to Complete Mandate An arbitrator is obligated to complete his mandate and issue an enforceable award and, so, must not resign during the course of arbitration, without good cause.152 The Arbitration Act153 adopts the Model Law154 position by recognising that the mandate of an arbitrator can terminate if: (1) he becomes “de jure or de facto” unable to perform his functions;



(2) fails to act without undue delay;



(3) withdraws from his office; or



(4) parties terminate his mandate.

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However, national laws and institutional rules are silent on the circumstances in which the arbitrator can properly withdraw and his/​her liability in case of withdrawal without justified reasons. Sanders observed in the context of the UNCITRAL Arbitration Rules:

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“The Rules do not give any indication as to the circumstances in which a resignation may be justified, and, indeed, they could hardly be expected to do so. Once the arbitrator has agreed to function, he should fulfill his task. Exceptionally there may be good reasons for not continuing, such as a heart attack. If not, an arbitrator who resigns may possible be sued for damages (costs) consequent upon his resignation.”155

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The significant impact that withdrawal can have on the parties and the arbitral proceedings means that an arbitrator should not resign unless the circumstances are justified.

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An arbitrator’s resignation may be justified in case of material changes in personal circumstances beyond his control, illness, conflict of interest arising after commencement of arbitration due to a change in the ownership structure of parties etc.156 However, resignation will not be justified if it is to accept some other work.157

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152. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2154. 153. See Arbitration and Conciliation Act, 1996, s. 14. 154. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 14. 155. Sanders, “Commentary on UNCITRAL Arbitration Rules” (1997) II Y.B. Comm. Arb. 172, at p. 191. 156. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 14; Thomas H. Webster, Michael W. Buhler, Handbook of ICC Arbitration (4th edn, Sweet & Maxwell 2018), p. 285 (“An arbitrator’s resignation presupposes a change in circumstances from those that prevailed on the date on which the arbitrator accepted the nomination or appointment that cause the arbitrator to consider that his resignation is appropriate … Frequently they relate to health, family or professional problems …”). 157. Thomas H. Webster, Michael W. Buhler, Handbook of ICC Arbitration (4th edn, Sweet & Maxwell 2018), p. 285 (“An arbitrator should not resign so that the arbitrator or their law firm can undertake work for one of the parties. This would amount to the arbitrator rejecting the commitment to the current arbitration to benefit from the additional work and would generally be viewed as questionable.”).

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[31.3.8] Duty to Not Delegate Decision Making Powers Deciding the case, attending hearings, evaluating parties’ submissions, and analysing evidence are the functions of arbitrators and cannot be delegated by them.158 Every member of the arbitral tribunal must participate in the decision-​making process, even if the result is not unanimous.159

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This is because arbitrators exercise judicial functions, which by their very nature are “incapable of being delegated.”160 Hence, the maxim delegatus non potest delegare applies and an award seeking to delegate the decision to a third party will not be valid.161

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although arbitrators may obtain legal assistance to frame the award,162 they cannot obtain the assistance of the lawyer of one of the parties to the arbitration to do so.163 Further, though arbitrators may seek a legal opinion, they should do so only with respect to the general area of law, and not on the specific question of law in dispute in the arbitration.164

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Exceptions to the Principle of Non-​delegation

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The arbitral tribunal has the responsibility for decision making. However, it becomes difficult to perform its duties if it were expected to handle all the administrative work that accompanies an arbitration.

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It is common for arbitrators to obtain clerical and administrative assistance, to ensure that the arbitral proceedings run smoothly, by appointing a tribunal secretary.165

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158. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2144; Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 4-​144. 159. European Grain v Johnston [1982] 2 Lloyd’s Rep 550. 160. Barnard v National Dock Labour Board [1953] 2 QB 18 (“… judicial function is one which from its very nature is incapable of being delegated. No one has heard of an arbitrator who has been agreed on between the parties to a dispute being allowed to appoint someone to act in his place, because it is of the very essence of his office that he himself is the person who has to deal with the dispute referred to him.”). 161. Delegation of substantive obligations by the arbitral tribunal may result into challenge of the award on that ground. For instance, among others, one of the grounds in the challenge to the award in Yukos Universal Ltd (Isle of Man) v The Russian Federation PCA Case No AA 227 was that the arbitrators did not fulfil their mandate personally because the tribunal’s assistant played a significant role in analysing the evidence and legal arguments and in drafting of the award. 162. Fetherstone v Cooper (1803) 9 Ves 67; Giacomo Costa Fu Andrea v British Italian Trading Co Ltd [1961] 2 Lloyd’s Rep 392. 163. Re Underwood and Bedford and Cambridge Rly Co (1861) 11 CBNS 442; Behren v Bremer (1854) 3 CLR 40; Anderson v Wallace (1835) 3 Cl & Fin 26. 164. R v Smith and Harley; ex parte Crugnale 1970 WAR 43; Giacomo Costa Fu Andrea v British Italian Trading Co Ltd [1961] 2 Lloyd’s Rep 392. 165. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2144.

Chapter 31—​​​Powers, Duties and Liabilities of the Arbitral Tribunal

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The tribunal secretary is also permitted to assist in the drafting of communications and procedural orders subject to significant monitoring and review by the arbitrators.166 The Commercial Court, Queen’s Bench Division in P v Q167 held appointing a tribunal secretary must not result in the arbitrator “abrogating or impairing his non-​delegable and personal decision-​making function” and “care must be taken to ensure that the decision making is indeed that of the tribunal members alone.”

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The Arbitration Act168 as well as institutional rules,169 allow arbitrators to obtain administrative assistance, with the consent of parties, to facilitate the conduct of arbitral proceedings.

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In addition, while arbitral institutions provide administrative assistance, they reserve the right to refuse to provide such assistance in arbitrations conducted under the rules of some other arbitral institution.170

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Further, arbitral institutions may restrict the duties of the secretary,171 compulsorily require permission of parties to be taken prior to any such appointment.172 It may not make an appointment if objected to by the parties.173

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166. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2146 (“… there is no per se prohibition on secretaries or junior lawyers performing such tasks, provided that the members of the tribunal carefully review and make appropriate use of any preparatory work. Vastly different are instances where an arbitrator sends a delegate to attend a hearing in his or her place, or merely signs an award drafted by another. Such actions are breaches of the arbitrator’s duties of non-​delegation, as well as likely grounds for challenging the resulting award.”). 167. [2017] EWHC 194 (Comm). 168. See Arbitration and Conciliation Act, 1996, s. 6. 169. See LCIA Arbitration Rules, 2020, art. 14A. 170. See Value Advisory Services v ZTE Corporation (2017) SCC OnLine Del 8933. 171. ICC Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration (1 January 2021), at para. 223 (“Under no circumstances may the arbitral tribunal delegate its decision-​making functions to an administrative secretary or rely on an administrative secretary to perform on its behalf any of the essential duties of an arbitrator. Likewise, the tasks entrusted to an administrative secretary, such as the preparation of written notes or memoranda, will not release the arbitral tribunal from its duty to personally review the file and/​or draft itself any arbitral tribunal’s decision.”); LCIA Notes for Arbitrators (26 October 2017), at para. 69. 172. See ICC Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration (1 January 2021), at para. 220 (“… before any steps are taken to appoint an administrative secretary, the arbitral tribunal must inform the parties of its intention to do so … tribunal must submit to the parties the proposed administrative secretary’s curriculum vitae, together with a declaration of independence and impartiality, an undertaking on the part of the administrative secretary to act in accordance with the present Note and an undertaking on the part of the arbitral tribunal to ensure that this obligation on the part of the administrative secretary are met.”); LCIA Notes for Arbitrators (26 October 2017), at para. 74. 173. See ICC Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration (1 January 2021), at para. 221 (“… an administrative secretary shall not be appointed if a party has raised such an objection.”); LCIA Notes for Arbitrators (26 October 2017), at para. 70, 75.

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Law, Practice and Procedure of Arbitration in India

Administrative secretaries may only be appointed to perform tasks relating to:174 (1) transmission of documents;



(2) organising and locating files;



(3) organising hearings and liaising with parties;



(4) drafting correspondences;



(5) preparing drafts of procedural orders, subject to review by the arbitral tribunal;



(6) attending hearings and taking notes;



(7) conducting legal research; and



(8) proofreading procedural orders and awards etc.

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Hence, an arbitral tribunal is entitled to:

(1) take administrative assistance of an accountant in making calculations;175



(2) appoint an auditor to verify accounts;176



(3) engage a draftsman to draft the award, as long as the draftsman is not refining the tribunal’s analysis and legal reasoning;177



(4) seek a valuation or survey report from a third party, as evidence;178



(5) delegate to a proper officer of the court the ascertainment of the amount of cost;179



(6) apply for the court’s assistance in taking evidence;180 and



(7) appoint experts in specific issues.181

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The award will not be struck down in case of any such assistance being taken by an arbitral tribunal as enumerated above.182

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174. ICC Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration (1 January 2021), at para. 224; LCIA Notes for Arbitrators (26 October 2017), at para. 71. 175. Millthorpe v The Spa Hydraulic Sluicing & Gold Mining Co (1893) 14 LR (NSW) 292. 176. Mahavirchand v Ashay Kumar (2011) SCC OnLine Bom 794. 177. Agrimex Ltd v Tradigrain SA [2003] EWHC 1656. 178. See Sharp v Nowell (1848) 6 CB 253. 179. Holdsworth v Wilson (1863) 4 B & S 1; Simpson v IRC [1914] 2 KB 842; Matthews v IRC [1914] 3 KB 192, CA (Eng); Cargey v Aitcheson (1823) 2 B & C 170. 180. See Arbitration and Conciliation Act, 1996, s. 27. 181. See Arbitration and Conciliation Act, 1996, s. 26. 182. See Yukos Universal Ltd (Isle of Man) v The Russian Federation PCA Case No AA 227; Hulley Enterprises Limited (Cyprus) v The Russian Federation PCA Case No AA 226; Veteran Petroleum Limited (Cyprus) v The Russian Federation PCA Case No AA 228; La Société Pour La Recherche, La Production, Le Transport, La Transformation Et La Commercialisation Des Hydrocarbures S.P.A (“Sonatrach”) v Statoil Natural Gas LLC [2014] EWHC 875 (Comm).

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917

In a few jurisdictions, national arbitration statutes authorise a multi-​person arbitral tribunal to delegate the task of taking evidence to one of its members.183 Similarly, sometimes the presiding arbitrator is delegated authority, by the arbitral tribunal, collectively, to preside alone in hearings on procedural matters and render decisions on procedural issues.184

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However, notwithstanding this, the fact remains that the arbitral tribunal cannot appoint another person to adjudicate the dispute185 or seek legal assistance to regulate the arbitration.186

[31.3.9] Duty to Keep Arbitration Proceedings Confidential

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Confidentiality of the arbitral proceedings is one of the key advantages of opting for arbitration. Institutional arbitration rules,187 ethical guidelines,188 and the provisions of the arbitration agreement often impose confidentiality obligations on the arbitrators.

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However, the ICC rules do not make confidentiality of arbitral proceedings mandatory. It only states that upon a request of any party, the arbitral tribunal may make orders concerning the confidentiality of the arbitration proceedings.189

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The SIAC Code of Ethics for an Arbitrator state that an arbitrator should never “use confidential information acquired during the course of the proceedings to gain personal advantage or advantage for others or to affect adversely the interest of another” since he is in a relationship of trust with the parties.190

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183. Netherlands Code of Civil procedure, art. 1039(2) (“The arbitral tribunal shall have the power to designate one of its members to hear witnesses or experts or to conduct an on-​site examination or viewing, unless the parties have agreed otherwise”.); Italian Code of Civil Procedure, art. 816 (“The taking of evidence may be delegated by the arbitrators to one member of the panel.”). 184. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2146. 185. Neale v Richardson [1938] 1 All ER 753; Kuala Ibai Development Sdn Bhd v Kumpulan Perunding, 1988 Sdn Bhd [1999] 5 MLJ 137. 186. Proctor v Williamson 141 ER 1215 (“When the parties agreed to have their dispute settled by a lay arbitrator, I think either of them had just ground for remonstrance when they found that a legal gentleman was to be present throughout the proceedings for the purpose of regulating the conduct of the arbitration.”); Kuala Ibai Development Sdn Bhd v Kumpulan Perunding (1988) Sdn Bhd 1999 5 MLJ 137 (“... the arbitrator referred the very issue which forms the subject matter of the applicant’s application before him to the independent legal counsel for the opinion. Certainly, this amounts to a delegation of the arbitrator’s power and duty, and therefore, a misconduct of the proceedings. If the arbitrator is not confident in his ability to decide the issue of the applicant’s application, he could have resorted to the provision of s. 22 in the form of a special case for the decision of the High Court. This he never did.”). Emery v Wase 32 ER 451; Anderson v Wallace 6 ER 1347, HL. 187. SIAC Rules, 2016, art. 39; LCIA Arbitration Rules, 2020, art. 30(2); Mumbai Centre for International Arbitration Rules, 2016, r. 35; Delhi International Arbitration Centre (Arbitration Proceedings) Rules, 2018, r. 36. 188. ICSID and UNCITRAL Draft Code of Conduct for Adjudicators in Investor State Dispute Settlement, 2020, art. 9; IBA Rules of Ethics for International Arbitrators 1987, art. 9. 189. ICC Arbitration Rules, 2021, art. 22(3). 190. SIAC Code of Ethics for an Arbitrator, 2015, at para. 7.1.

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Law, Practice and Procedure of Arbitration in India

Hence, arbitrators are bound to maintain confidentiality by virtue of their adjudicative function.191 However, if the obligations of confidentiality conflict with the mandatory national law, the arbitrator must ensure compliance with the latter.192 Further, the scope of confidentiality is not absolute and is often subject to implementation and enforcement of the award. Maintaining confidentiality helps: (1) ensure that third parties cannot attend/​participate in the arbitral proceedings;



(2) prevent exposure and leakage of sensitive information to competitors or the public; and



(3) prevent parties from facing unwarranted media scrutiny.193

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The Model Law is silent on the confidentiality of arbitration proceedings.194

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Prior to the 2019 Amendment Act, the position on confidentiality was unclear. B. N. Srikrishna’s High-​Level Committee Report upon noting the international recognition of confidentiality of arbitral proceedings recommended the inclusion of a provision on confidentiality in the Arbitration Act.195

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Consequently, the 2019 Amendment Act brought in provisions mandating confidentiality of proceedings that cannot be excluded or derogated from.196 However, the statute acknowledges that disclosure of the award may be required for the purpose of its implementation and enforcement.197

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In England, despite there being no statutory provisions on confidentiality, courts have held that the obligation of confidentiality is implied into the arbitration

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191. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2149. 192. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2151 (e.g. s. 39 of the Singapore Corruption, Drug Trafficking and other Serious Crimes (Confiscation of Benefits) Act obligates disclosure of criminal conduct and provides that such disclosure will not be treated as breach of any restriction upon disclosure imposed by law). 193. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), p. 1075. 194. Report of the Secretary-​General on Possible Features of a Model Law on International Commercial Arbitration, Yearbook of the United Nations Commission on International Trade Law (Vol. XII, 1981), at para. 101 (“It may be doubted whether the Model Law should deal with the question whether an award may be published. Although it is controversial, since there are good reasons for and against such publication, the decision may be left to the agreement of the parties or the arbitration rules chosen by them.”). 195. Justice B.N. Srikrishna, Report of the High-​Level Committee to Review the Institutionalisation of Arbitration Mechanism in India (30 July 2017), at pp. 6, 71 (“A new provision may be inserted in Part I of the ACA providing for confidentiality of arbitral proceedings unless disclosure is required by legal duty, to protect or enforce a legal right, or to enforce or challenge an award before a court or judicial authority.”). 196. Arbitration and Conciliation Act, 1996, s. 42A. 197. Ibid.

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919

proceedings as a matter of law and “arises as an essential corollary of the privacy of arbitration proceedings.”198 In Singapore too, there are no statutory provisions relating to confidentiality, but the Court has held that the degree of confidentiality will have to be evaluated in the facts and circumstances of each case.199

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Apart from the confidentiality of written, oral submissions, evidence, hearings,200 and the award,201 even tribunal’s deliberations are confidential.202 A party-​appointed arbitrator should not jeopardise the deliberation process by revealing the opinions of other members of the arbitral tribunal to his appointer as the proceedings progress.203 As observed by the tribunal in Himpurna Cal. Energy Ltd. v Indonesia:204

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“It is improper for any party to probe the secrecy of deliberations. That confidentiality, a fundamental element of the arbitral process, is intended to ensure that each arbitrator is able to exercise his or her independent judgment in a collegial context free of any outside influence.”

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Data Protection in Arbitration

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Arbitrators have often issued statements of censure and disapproval when a co-​arbitrator has violated the confidentiality of deliberations.205

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In addition to ensuring confidentiality, arbitrators have the obligation to comply with data protection regulations. The EU General Data Protection Regulation (“GDPR”) imposes

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198. Sutton, Gill, and Gearing, Russel on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 5-​214. See Ali Shipping Corp v Shipyard Trogir [1998] 2 All ER 136; Oxford Shipping Co Ltd v Nippon Yusen Kaisha, The Eastern Saga [1984] 2 Lloyd’s Rep 373; Emmott v Michael Wilson & Partners [2008] 1 Lloyd’s Law Rep. 616. 199. International Coal Pte Ltd. v Kristle Trading Ltd. and Another and another Suit [2008] SGHC 182; AAY and Ors. v AAZ (AAY) [2011] 1 SLR 1093. See Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 2.169. 200. Oxford Shipping Co. ltd. v Nippon Yusen Kaisha [1984] 2 All ER 835; Hassneh Insurance Co of Israel v Stuart J Mew [1993] 2 Lloyd’s Rep 234. See UNCITRAL Rules, 2013, art. 28(3); ICC Rules of Arbitration, 2021, art. 26(3); SIAC Rules, 2016, r. 24.1; LCIA Arbitration Rules, 2020, art. 19(4). 201. ICC Rules of Arbitration, 2021, art. 22(3); LCIA Arbitration Rules, 2020, art. 30(1). 202. Challenge Decision of the Appointing Authority, Sir Robert Jennings, on the Challenge of Judge Bengt Broms, ISUCT Case of 7 May 2001, 38 Iran-​US CTR 386 (2001) (“… secrecy of deliberations is essential if the deliberation is to produce a true discussion and argument and not become a mere exchange of cautiously expressed and selected views.”). 203. Y. Derains, “The Deliberation and the Arbitral Tribunal in the Resolution of the Dispute –​from the Hearing to the Award” (2007) ASA Special Series No 29 at p. 16. 204. Interim Award in Ad Hoc Case of 26 September 1999, XXV Y.B. Comm. Arb. 112, para. 87. 205. Statement of the President Krzystof Skubiszewski in full Tribunal in Case No. A/​28 (21 December 2000), at pp. 1–​2; Unidyne Corp. v Iran, Supplemental Opinion of Arangio Rulz and Allison, IUSCT Case No. 551-​368-​ 3 (17 November 1993), 29 Iran-​US CTR 349.

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Law, Practice and Procedure of Arbitration in India

data governance obligations on all individuals involved in the processing of personal data in the European Economic Area.206 Since arbitrators record and store personal information of parties, it is arguable that they will be bound by the GDPR.207 However, a NAFTA Tribunal has held the GDPR to be inapplicable to arbitrators.208

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The ICC in its Note to Parties on the Conduct of Arbitration requires arbitrators to: (1) remind the parties, witnesses, experts, and other individuals appearing before it of the applicability of the GDPR;209



(2) draw up a data protection protocol;210



(3) ensure that only personal data that is necessary and accurate for the arbitration is processed;211 and



(4) put in place technical and organisational measures to protect the data.212

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The LCIA Arbitration Rules, 2020 too require the arbitrators to “in consultation with the parties and where appropriate the LCIA” consider whether it is appropriate to adopt information security measures or means to address the processing of personal data, in light of applicable data protection legislation.213

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[31.4] LIABILITY OF THE ARBITRAL TRIBUNAL

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As stated above, arbitrators have certain obligations and duties towards the parties. A failure to comply with these obligations can give rise to several consequences.

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National laws214 and institutional rules215 often allow a party to challenge the appointment of the arbitrator and seek his removal. Doing so is merely an exercise

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2 06. Regulation (EU) 2016/​679, art. 1(1). 207. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2157. 208. Tennant Energy LLC v Canada, Communication to the Parties, PCA Case No. 2018-​54 (24 June 2019). 209. ICC Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration (1 January 2021), at para. 119. 210. Ibid. 211. ICC Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration (1 January 2021), at para. 120. 212. ICC Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration (1 January 2021), at para. 121. 213. LCIA Arbitration Rules, 2020, art. 30A. 214. Arbitration and Conciliation Act, 1996, s. 12; English Arbitration Act, 1996, s. 24; UNCITRAL Model Law on International Commercial Arbitration, 1985, arts. 12, 13. 215. ICC Arbitration Rules, 2021, art. 15(2); SIAC Rules, 2016, r. 17; LCIA Arbitration Rules, 2020, art. 10(2); UNCITRAL Arbitration Rules, 2013, art. 12(3).

Chapter 31—​​​Powers, Duties and Liabilities of the Arbitral Tribunal

921

of a party’s procedural rights and not a remedy for breach of obligations by the arbitrator.216 A breach of obligations, in certain circumstances, may result in a reduction/​forfeiture of the arbitrator’s fee.217 Alternately, it may result in termination of the arbitrator’s mandate and consequent remission or setting aside of the award.218

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Pertinently, a breach of obligations by the arbitrator may also give rise to civil liability, subject to the arbitrator’s immunities under law.219 However, as noted by Gary Born:

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“… the possibility of civil liability is ordinarily not the first (or even second or third) line of defense against unsatisfactory arbitral conduct. Although arbitrators may give some consideration to this possibility, concerns regarding professional and ethical duties and reputation typically command far higher levels of attention and effort. Arbitrators are almost always selected because of their personal standing and reputation and it is the loss of such reputation, through parties’ complaints, removal of the arbitrator, or annulment of an award that is by far the most effective deterrent against unsatisfactory performance.”220

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Lastly, arbitrators may be held criminally liable in certain jurisdictions in money laundering and corruption cases.221 Criminal charges against arbitrators have succeeded in particular jurisdictions.

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In 2018, three arbitrators were sentenced to imprisonment for violating Article 160 of Qatar’s Penal Code;222 while, more recently, arbitrators in Peru have been charged for complicity in the odebrecht corruption scandal.223

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However, generally criminal sanctions against arbitrators are not favoured. Such proceedings must be applied with great restraint so as not to compromise their impartiality and independence.224

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216. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2164. 217. See Arbitration and Conciliation Act, 1996, ss. 13(6), 29A(4); English Arbitration Act, 1996, s. 24(4); Singapore Arbitration Act, s. 16(4). 218. Arbitration and Conciliation Act, 1996, s. 34. 219. For a detailed discussion on the immunities of the arbitrator, see Section [31.5] below. 220. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2160. 221. See German Penal Code, ss. 331(2), 332(2), 336; Norwegian Penal Code, art. 114. 222. Judgment of 31 October 2018, Case No. 1650/​2018, 11 (1) Int’l J. Arab Arb. 201 (Doha Crim. Ct.) (2019). 223. Carlos Rios Pizarro, Mixing Righteous and Sinners: Summary of the Odebrecht Corruption Scandal and the Peruvian Jailed Arbitrators (10 December 2019) Kluwer Arbitration Blog. 224. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2166.

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Law, Practice and Procedure of Arbitration in India

[31.5] IMMUNITY OF THE ARBITRAL TRIBUNAL AND APPOINTING AUTHORITY Judicial immunity is based upon three considerations, namely: (1) the need for the independence of the judiciary;



(2) the need to avoid threats to judicial decision making; and



(3) the avoidance of rehearing of actions, which follows inevitably from an allegation of negligence.225

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Arbitrators exercise judicial functions, and so are similarly entitled to immunities from civil claims by parties for any actions/​decisions taken by them while performing such functions.226 However, such immunity is not available to a “quasi-​arbitrator” such as an expert valuer or certifier.227

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Arbitrator immunity helps promote arbitration as a viable dispute resolution mechanism because: (1) it helps ensure the finality of the award, by preventing an unsuccessful party from suing the arbitrator;



(2) ensures that skilled persons are not averse to taking up arbitral appointments (by reducing their risk of incurring liability);228 and



(3) ensures that arbitrators having no interest in the outcome of the dispute are not be compelled to become a party to it.229

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Conversely, there are a number of arguments against immunity as well namely, that “immunity may encourage carelessness; the finality of the decision is given priority over

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2 25. Robert Merkin, L. Flannery, Arbitration Act 1996 (5th edn, LLP 2014), p. 100. 226. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 5.54. See Sutcliffe v Thackrah [1974] 1 All ER 859 (“arbitrators are in much the same position as judges, in that they carry out more or less the same functions, the law has for generations recognised that public policy requires that they too shall be accorded the immunity …”); Arenson v Casson Beckman Rutley & Co. [1975] 3 All ER 901 (“The mere fact that the arbitral tribunal’s functions are judicial is enough to confer immunity.”). 227. Sutcliffe v Thackrah [1974] 1 All ER 859, HL. 228. See Arenson v Casson Beckman Rutley & Co. [1975] 3 All ER 901 (“without such immunity, the arbitral tribunal would be harassed by actions which would have little chance of success; this may in turn lead the arbitral tribunal to be influenced in its ultimate decision.”). 229. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), p. 1080; Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 5.57; Robert Merkin, L. Flannery, Arbitration Act 1996 (5th edn, 2014), p. 101.

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individual justice; disciplinary remedies are generally unavailable against arbitrators; and alternative remedies, such as vacatur of the award and withholding of fees, may be inadequate.”230 The scope of immunity depends upon the terms of the arbitration agreement, institutional rules, and national law.231

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The New York Convention is silent on arbitrator immunity. However, it requires Contracting States to recognise the arbitration agreement of parties, which may contain contractual provisions regarding immunity.232 The UNCITRAL Model Law, too, is silent on the concept of immunity.233 Other national arbitration statutes either address the subject of immunity:234 (1) negatively, namely, by granting arbitrators specified immunities; or



(2) positively, namely, by providing that claims may be asserted against arbitrators only in specified cases.

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In England, arbitrators are not liable for anything done or omitted “in the discharge or purported discharge” of their functions, unless the “act or omission is shown to have been in bad faith.”235

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Hence, it is not possible to succeed in an action against the arbitrator unless bad faith is proven. Similar provisions are found in the arbitration legislations of Singapore, Malaysia, and Hong Kong.236

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Prior to the 2019 Amendment Act, the law did not contain any provision on arbitrator immunity. The B. N. Srikrishna’s High-​Level Committee Report noted this that:

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230. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 5.58. 231. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2175. 232. Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958), art. 2. 233. UNCITRAL, Report of the Secretary-​General on Possible Features of a Model Law on International Commercial Arbitration, U.N. Doc. A/​CN.9/​207, at para. 70 (1981) (“In view of the fact that the liability problem is not widely regulated and remains highly controversial, it may seem doubtful whether the model law could provide a satisfactory solution.”). 234. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2178. 235. English Arbitration Act, 1996, s. 29. 236. Singapore Arbitration Act, s. 59; International Arbitration Act, 2002, s. 25A; Malaysian Arbitration Act, 2005, s. 47; Hong Kong Arbitration Ordinance, s. 104.

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Law, Practice and Procedure of Arbitration in India



(1) immunity of arbitrators is a well-​recognised principle internationally; and



(2) in the absence of any provisions on arbitral immunity in the Arbitration Act, arbitrators have to mostly rely on institutional rules, not all of which have provisions on arbitral immunity.237

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Hence, the Report recommended that “a new provision may be inserted to provide for immunity for arbitrators for acts or omissions in the discharge or purported discharge of his functions as arbitrator except in case of bad faith.”238

This recommendation was accepted. Arbitral immunity was introduced in the Arbitration Act through the 2019 Amendment Act.239

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Even where no statutory provision exists, such as in the US, national courts have recognised broad arbitral immunity.240

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In Dubai, Courts have held that arbitrators are only responsible for fundamental errors, and not unintentional errors.241

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In 2016, controversy was raised over an amendment brought in the UAE Penal Code, which introduced criminal liability (including imprisonment) for arbitrators acting in contravention of their duty of neutrality and integrity.242

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237. Justice B.N. Srikrishna, Report of the High-​Level Committee to Review the Institutionalisation of Arbitration Mechanism in India (30 July 2017), p. 70. 238. Justice B.N. Srikrishna, Report of the High-​Level Committee to Review the Institutionalisation of Arbitration Mechanism in India (30 July 2017), p. 6. 239. See Arbitration and Conciliation Act, 1996, s. 42-​B (“No suit or other legal proceedings shall lie against the arbitrator for anything which is in good faith done or intended to be done under this Act or the rules or regulations made thereunder.”). 240. Hoosac Tunnel Dock & Elevator Co. v O’Brien 137 Mass. 424 (Mass. 1884) (“An arbitrator is a quasi-​judicial officer … exercising judicial functions. There is as much reason in his case for protecting and insuring his impartiality, independence, and freedom from undue influence, as in the case of a judge or juror.”); Tamari v Conrad 552 F.2d 778 (7th Cir. 1977) (“If their decisions can thereafter be questioned in suits brought against them by either party, there is a real possibility that their decisions will be governed more by fear of such suits than by their own unfettered judgment as to the merits of the matter they must decide.”); Landmark Ventures Inc. v Cohen 2014 WL 6784397 (SDNY) (“it is important that arbitrators and arbitral organizations have the ability to perform their arbitral function without the fear of being sued by disappointed parties.”). 241. Case No. 212/​2014 –​ Meydan Group LLC v Alexis Mourre, ruling of the Dubai Court of Cassation of 8 October 2015 (“[On the basis of those provisions] the arbitrator is not responsible for any unintentional error … based on authorities provided under the prevailing laws, according to which the power to judge is left to the arbitrator’s discretion. This means that the arbitrator enjoys the protection of the law in the exercise of his duties unless the arbitrator commits a fundamental error. A fundamental error is defined as a failure to comply with unambiguous legal principles or ignore clear-​cut facts while the judgment is left to the arbitrator’s own consideration.”); Case No. 284/​2015 –​ Meydan Group LLC v Doug Jones, ruling of the Dubai Court of Cassation of 17 December 2015. 242. Federal Law No. 7 which amended Article 257 of Federal Law No. 3 of 1987 to read: “Anyone who issues a decision, expresses an opinion, submits a report, presents a case or proves an incident in favour of or against a person, in contravention of the requirements of the duty of neutrality and integrity, while acting in his capacity as an arbitrator, expert, translator or fact finder appointed by an administrative or judicial authority or selected by the parties, shall be punished by temporary imprisonment. The aforesaid categories of persons shall be barred assuming once again the responsibilities with which they were tasked in the first instance, and shall be subject to the provisions of Article 255 of this law” (unofficial translation).

Chapter 31—​​​Powers, Duties and Liabilities of the Arbitral Tribunal

925

This amendment threatened the entire regime of arbitration and UAE’s efforts to establish itself as an arbitration-​friendly jurisdiction. Later this amendment was clarified to not cover arbitrators, arbitration experts, and arbitration proceedings due to criticism from the international arbitration community.243 Coming to immunity provisions in institutional rules, mostly all rules provide for the institution’s immunity in relation to any act or omission.

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The ICC Rules provide absolute immunity to arbitrators and members of the ICC Court. The immunity is only limited to the extent that it is “prohibited by applicable law.”244

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The SIAC Rules provide immunity on similar terms and also state that the arbitrator or members of the SIAC will not be under any “obligation to make any statement” in connection with arbitration or act as a witness.245

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In comparison, the LCIA and UNCITRAL Rules take a more restricted approach to immunity by providing the exception of intentional wrongdoing to immunity.246

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The MCIA Rules waive liability for its members, directors, officers, or arbitrators for any act of negligence or omission in connection with an arbitration.247 Hence, liability would exist only when the act or omission can be shown to be conscious or deliberate.248

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Further, there is no obligation to make any statement regarding an arbitral proceeding or act as a witness in any legal proceeding in connection with the arbitral proceeding.249

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Similarly, the DIAC Rules exempt an arbitrator or any committee or sub-​committee from any liability on grounds of negligence, act, or omission in connection with any arbitration conducted under the rules of the centre.250

243. 2018 Amendment to art. 257 of Federal Law No. 3 of 1987. 244. See ICC Arbitration Rules, 2021, art. 41 (“The arbitrators, any person appointed by the arbitral tribunal, the emergency arbitrator, the Court and its members, ICC and its employees, and the ICC National Committees and Groups and their employees and representatives shall not be liable to any person for any act or omission in connection with the arbitration, except to the extent such limitation of liability is prohibited by applicable law.”). 245. SIAC Rules, 2016, r. 38. See LCIA Arbitration Rules, art. 31.2. 246. See LCIA Arbitration Rules, 2020, art. 31; UNCITRAL Arbitration Rules, 2013, art. 16. 247. Mumbai Centre for International Arbitration Rules, 2016, r. 34.1. 248. Ibid. 249. Mumbai Centre for International Arbitration Rules, 2016, r. 34.2. 250. Delhi International Arbitration Centre (Arbitration Proceedings) Rules, 2018, r. 35.

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Law, Practice and Procedure of Arbitration in India

The Bad Faith Exception The bad faith exception follows Section 29 of the English Arbitration Act, 1996, which provides for immunity to the arbitrators, unless the act or omission is shown to be done in “bad faith”.

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Bad faith has not been statutorily defined in England; however, in the case of judges and regulatory authorities it has been held to mean: “(a) malice in the sense of personal spite or desire to injure for improper reasons, or (b) knowledge of absence of power to make the decision in question”.251

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This would include taking a bribe.252 Edoardo Marcenaro explains that:

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“An award that overlooks corruption is certainly contrary to both national and international public policy, a state court will be obliged to set aside or refuse to enforce the award.”253

Effect of Negligence

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However, the downside is that parties may raise accusations of bribery against each other to discredit opposite parties. Alternatively, such an accusation can be raised to resist enforcement of the arbitral award on the national level.254

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While a professional would normally face contractual and tortious255 liability for negligence, when that professional acts as an arbitrator it would appear that they will not be similarly liable, unless bad faith or malice is shown.

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It may be possible to factually argue that negligence constituted acting in bad faith, for example where an arbitral tribunal knew that it did not have the power to make a certain decision (such as awarding interest).

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However, the burden of proof would be on the party making the assertion that the arbitral tribunal knew that it did not have such a power. This would be a very difficult hurdle to overcome for any party. 251. Melton Medes Ltd. v Securities and Investments Board [1995] 3 All ER 880. 252. J. Lew, “Immunity of Arbitrators under English Law” in J. Lew (ed.) Immunity of Arbitrators (LLP 1990), p. 27. 253. E. Marcenaro, “Chapter 9: Arbitrators’ Investigative and Reporting Rights and Duties on Corruption” in D. Baizeau and R. H. Kreindler (eds) Addressing Issues of Corruption in Commercial and Investment Arbitration, Dossiers of the ICC Institute of World Business Law, (Vol. 13, 2016), p. 144. 254. Nomihold Securities Inc v Mobile Telesystems Finance SA [2012] EWHC 130 (Comm); Honeywell International Middle East Limited v Meydan Group LLC (Formerly Known as Meydan LLC) [2014] EWHC 1344 (TCC). 255. Bolam v Friern Hospital Management Committee [1957] 1 WLR 582; Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465.

Chapter 31—​​​Powers, Duties and Liabilities of the Arbitral Tribunal

927

There are no reported cases on professional negligence of the arbitrators.256 It is, however, worth noting that there have been cases where, even in the absence of bad faith, arbitrators have been financially punished for their conduct.

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While there is plainly a limit to the level of financial liability an arbitrator is exposed to without bad faith, he is not totally immune and may find himself penalised by way of reduction in his entitlement to fees.

[31.6] CONCLUSION

In summary, the arbitral tribunal has a duty to comply with principles of natural justice, terms of the arbitration agreement, institutional rules, and provisions of national law.

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It may be also useful for arbitrators to consider the practice guidelines and protocols produced by the Practice and Standards Committee of the Chartered Institute of Arbitrators.

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These guidelines identify the best practice of international commercial arbitration and cover all aspects of the arbitration such as, interviewing prospective arbitrators; jurisdictional challenges; application for interim measures; applications for security for costs; documents-​only arbitrations, etc.257

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On a similar footing are the “Guidelines for Arbitrators and the Parties for Expeditious Conduct of Arbitration Proceedings” issued up by the Indian Council of Arbitration to ensure economic and expeditious disposal of arbitration cases.258

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A perusal of ethical guidelines, institutional rules, and national law suggest that the arbitrators are primarily obligated to be impartial and independent. They must also inter alia act fairly and impartially, with diligence, disclose conflicts of interest, decide all issues, and pass an enforceable award.

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Any breach of the duties may make the arbitrators liable to the parties, subject to the scope of their immunity. The immunity granted to arbitrators and the arbitral institutions should not be absolute and in case of bad faith or intentional wrongdoing or criminal conduct, liability should exist.

2 56. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 4-​159. 257. All CIArb Guidelines are available at and can be downloaded from their website, that is, https://​www.ciarb. org. 258. ICA Rules of Domestic Commercial Arbitration, Annexure 1-​Guidelines for Arbitrators and the Parties for Expeditious Conduct of Arbitration Proceedings.

Chapter 32 POWERS OF THE ARBITRAL TRIBUNAL [32.1]

INTRODUCTION....................................................................................................................... 928

[32.2] POWER TO DETERMINE ITS OWN JURISDICTION....................................................... 930

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[32.3] POWER TO GRANT INTERIM RELIEF................................................................................ 931 [32.4] PROCEDURAL AND EVIDENTIARY POWERS................................................................. 934 [32.5] POWER TO STRIKE OUT ARBITRATION PROCEEDINGS............................................ 940 [32.6] POWER TO ORDER SECURITY FOR COSTS...................................................................... 942 [32.7] POWER TO ISSUE ANTI-​SUIT INJUNCTIONS.................................................................. 944

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[32.8] POWERS OF THE PRESIDING ARBITRATOR.................................................................... 945 [32.9] INHERENT AND IMPLIED POWERS................................................................................... 946

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[32.10] ADDITIONAL POWERS UNDER THE ARBITRATION AGREEMENT......................... 947 [32.11] POWERS UNDER ARBITRATION RULES........................................................................... 947

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[32.1] INTRODUCTION

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[32.12] CONCLUSION............................................................................................................................ 948

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The powers of an arbitral tribunal are different from those possessed by judges. Judges “sit in a legal environment that clearly defines the extent of their powers and duties”.1

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On the other hand, the arbitral tribunal’s powers are determined on the basis of the “will of the parties, the law governing the arbitration agreement, the law of the place of arbitration, and the law of the place in which recognition or enforcement of the award may be sought.”2

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Hence, the primary source of the arbitral tribunal’s powers is the arbitration agreement, applicable institutional rules, and the applicable law.3 The arbitral tribunal may also have inherent power to conduct the arbitral proceedings as it deems fit.

1. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at paras 5.01–​5.02. 2. Ibid. 3. Sutton, Gill, and Gearing, Russel on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 4-​067; Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 5.06.

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Chapter 32—​Powers of the Arbitral Tribunal

The parties can confer power upon the arbitral tribunals directly4 or indirectly.5 They can only do so within the limits of applicable law. Any power granted beyond the applicable law will be invalid.6 Redfern and Hunter explain:

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“… the best approach when considering the powers of an arbitral tribunal is to look first at the arbitration agreement (including any applicable rules), then at the law governing the arbitration agreement, and finally at the law governing the arbitration (if different) … arbitration agreement should be considered to establish what powers the parties themselves have agreed to confer on the arbitral tribunal … law governing the arbitration agreement should then be considered to identify how those powers may have been supplemented or restricted. Finally, if different, the law governing the arbitration itself, the lex arbitri, should be similarly considered … a mandatory provision of … the law governing the arbitration, would override the express or implied provisions of the arbitration agreement.”7

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There is a distinction between the arbitral tribunal’s powers and its jurisdiction. If the arbitral tribunal lacks jurisdiction it cannot adjudicate the dispute at all.

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However, if the arbitral tribunal possesses jurisdiction, an evaluation of the extent of its powers will help determine how it should conduct the reference.8

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Further, the arbitral tribunal’s powers are interlinked with its duties.9 Its duties are discharged by way of exercise of powers.10

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Lastly, courts do not have any inherent powers to control the arbitral tribunal’s activities.11 However, since arbitral tribunals do not possess coercive powers, most systems of law authorise national courts to exercise certain powers.12

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4. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 5.09 (“A ‘direct’ conferment of powers takes place when the parties agree expressly upon the powers that they wish the arbitrators to exercise, possibly by setting them out in the terms of appointment or a submission agreement.”). 5. Nigel Blackaby, Constantine Partasides, Alan Redfern and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 5.10 (“An ‘indirect’ conferment of powers takes place when the parties have agreed that the arbitration is to be conducted according to pre-​established rules of arbitration that set out the powers of the tribunal.”). 6. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 5.08. 7. Ibid, at para. 5.14. 8. Sutton, Gill, and Gearing, Russel on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 4-​070. 9. For a detailed discussion of the duties of the arbitral tribunal, see Chapter 31. 10. Sutton, Gill, and Gearing, Russel on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 4-​066. 11. For a detailed discussion on the court’s lack of inherent jurisdiction to supervise the arbitration proceedings, see Section [34.2] in Chapter 34. 12. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 5.11.

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Law, Practice and Procedure of Arbitration in India

[32.2] POWER TO DETERMINE ITS OWN JURISDICTION13 The doctrine of kompetenz-​kompetenz implies that an arbitral tribunal has the power to rule on its own jurisdiction. Therefore, it can determine any objection with respect to the existence or validity of the arbitration agreement.14

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The intention of the doctrine is to ensure that the arbitral process is not thwarted, at the threshold, merely because one of the parties has raised a challenge to the arbitral tribunal’s competence.15

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Hence, the arbitral tribunal should determine its jurisdiction unless parties have agreed to the contrary.16 Most national arbitration laws expressly allow the arbitral tribunal to determine its own jurisdiction.17 It is similar under most institutional arbitration rules.18

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While the UNCITRAL Model Law on International Commercial Arbitration, 1985 (“UNCITRAL Model Law”)19 and certain national arbitration legislations20 permit the arbitral tribunal to decide a challenge to jurisdiction either as a preliminary question or in the award on merits, in India, the Arbitration Act is silent on this aspect.21 However, the courts have recognised that the arbitral tribunal has the discretion to decide the question of jurisdiction preliminarily, or along with the merits of the dispute.22

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Even if neither party raises an objection to the arbitral tribunal’s jurisdiction, the arbitral tribunal is free to independently examine the existence and extent of its jurisdiction. It can satisfy itself that the reference to arbitration is bona fide.23

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13. For a detailed discussion on the power of the tribunal to rule on its own jurisdiction, see Chapter 9. 14. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 562. 15. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015). 16. Fiona Trust & Holding Corp v Privalov 2007 UKHL 40. 17. Arbitration and Conciliation Act, 1996, s. 16; UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 16; English Arbitration Act, 1996, s. 30. 18. LCIA Arbitration Rules, 2020, art. 23.1; UNCITRAL Arbitration Rules, 2013, art. 23.1; SIAC Rules, 2016, r. 28.2. 19. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 16(3). 20. See English Arbitration Act, 1996, s. 31(4); International Arbitration Act, 2002, s. 10; Hong Kong Arbitration Ordinance, s. 34(1)(3). 21. See Arbitration and Conciliation Act, 1996, s. 16. 22. Glencore International AG v Indian Potash Limited and Another 2019 SCC OnLine Del 9591, at para. 61 (“… no such fundamental policy in Indian law that adjudicating authorities should mandatorily render decision on jurisdictional issues before hearing the matter on merits. The discretion in this behalf lies with the adjudicating authority.”). 23. See Christopher Brown Ltd. v Genossenschaft Oesterreicher Waldbesitzer R GmbH 1954 1 QB 8.

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Chapter 32—​Powers of the Arbitral Tribunal

Even though the arbitral tribunal can investigate and rule on its own jurisdiction based on the circumstances, it may be more appropriate to continue with the reference to arbitration unless a party raises a timely objection to its jurisdiction.24

[32.3] POWER TO GRANT INTERIM RELIEF

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The arbitral tribunal’s power to grant interim relief is central to the efficacy of the arbitration process. It enables parties to directly approach the arbitral tribunal with a request for relief. This avoids the need to seek the court’s judicial intervention in requesting for such relief.25 However, the arbitral tribunal must be cautious when granting interim relief. It must ensure that it does not pre-​judge the dispute or render irrelevant, its final award.26

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The UNCITRAL Model Law recognises the arbitral tribunal’s powers to grant interim relief and provides that such relief may be granted, “unless otherwise agreed by the parties”.27

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Such relief includes:

(1) an order directing the parties to maintain or restore the status quo, pending determination of the dispute;



(2) an order directing the parties to take action/​refrain from taking action that is likely to cause “current or imminent harm or prejudice to the arbitral process”;



(3) an order directing the preservation of assets out of which a subsequent award may be satisfied; or



(4) an order directing preservation of “relevant and material” evidence.28

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The UNCITRAL Model Law also provides the conditions for grant of interim measures.29

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In England, too, the arbitral tribunal has the power to grant interim relief that includes giving directions in relation to any property,30 directing that evidence be preserved,31 and ordering provisional payment of money/​disposition of property.32

24. Sutton, Gill, and Gearing, Russel on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 4-​073. 25. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 576. 26. David William, “Interim Measures”, in M. Pryles, M. Moser, The Asian Leading Arbitrator’s Guide to International Arbitration (JurisNet 2007), p. 246. 27. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 17(1). 28. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 17(2). 29. See UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 17A. 30. English Arbitration Act, 1996, s. 38(4). 31. English Arbitration Act, 1996, s. 38(6). 32. English Arbitration Act, 1996, s. 39(2).

932

Law, Practice and Procedure of Arbitration in India

In India, while the 1940 Arbitration Act did not confer any power on the arbitral tribunal to issue interim measures,33 the Arbitration Act altered radically the position.

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The Arbitration Act (prior to the 2015 Amendment Act) conferred powers on the arbitral tribunal to issue interim measures of protection.34 However, the parties were also allowed to approach the courts for interim relief, even while arbitration proceedings were going on.35 There were no specific powers to grant interim relief. The arbitral tribunal was only given the broad power to grant interim protection in respect of the subject matter of the dispute, if requested by a party.36

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Thereafter, further to the 2015 Amendment Act, Section 17 was amended37 to bring it in line with the UNCITRAL Model Law. It gives the arbitral tribunal “the same power for making orders, as the court has for the purpose of, and in relation to, any proceedings before it.”38 Now an arbitral tribunal has:

(1) the power to appoint a guardian for a minor for the purposes of arbitral proceedings;



(2) pass an interim order for preservation, interim custody, or sale of goods that are the subject matter of an arbitration agreement;



(3) pass an interim order to secure the amount in dispute;39

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33. See Arbitration Act, 1940, s. 41(b), Second Schedule. 34. Arbitration and Conciliation Act, 1996, s. 17 (“Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order a party to take any interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject-​matter of the dispute.”). 35. See s. 9 of the unamended Arbitration and Conciliation Act, 1996. 36. See s. 17(1) of the unamended Arbitration and Conciliation Act, 1996. 37. See Law Commission of India, Report No. 246: Amendments to the Arbitration and Conciliation Act, 1996 (August 2014), pp. 26–​27. 38. Arbitration and Conciliation Act, 1996, s. 17(1). 39. See Baker Hughes Singapore Pte v Shiv-​Vani Oil & Gas Exploration Services Ltd. (2014) SCC OnLine Bom 1663, at para. 51 (“… the arbitral tribunal has also power to grant interim measures so as to secure the claim which is subject matter of the dispute before the arbitral tribunal if such case is made out by the applicant. The provisions under sections 9 and 17 of the Arbitration and Conciliation Act are meant for the purpose of protecting the subject matter of the dispute till the arbitration proceedings culminates into an award.”); Lanco Infratech Ltd. v Hindustan Construction Co. Ltd. (2016) SCC OnLine Del 5365, at para. 14 (“… while under the unamended Section 17 of the Act, there was no specific power for the AT to order interim measures to secure the amount in dispute, that power has been expressly provided under the amended Section 17(1)(ii)(b) of the Act.”).

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Chapter 32—​Powers of the Arbitral Tribunal

(4) pass an interim order for the detention, preservation, or inspection of property which is the subject matter of the dispute;



(5) issue an interim injunction (this does not include the power to issue a permanent prohibitory or mandatory injunction or a degree of declaration of title of immovable property, or a declaration on the status of a person);40



(6) appoint a receiver;41 or



(7) make any other order that is just and convenient.42

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The arbitral tribunal’s order will be enforceable in the same manner as if it were a court’s order.43

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However, such powers are only effective until the issuance of the final award.44 They are confined to the subject matter of the dispute.45 Further these powers are not unfettered.

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The arbitral tribunal has to exercise in accordance with the parties’ arbitration agreement.46 It has no jurisdiction to pass interim orders affecting the rights of third parties to the arbitration.47

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See Shriram Transport Finance Co. Ltd. v Naduvacheri Balakrishnan (2017) SCC OnLine Ker 8983. See Prabhat Steel Traders Pvt. Ltd. v Excel Metal Processors Pvt. Ltd. (2018) SCC OnLine Bom 2347. Arbitration and Conciliation Act, 1996, s. 17(1). Arbitration and Conciliation Act, 1996, s. 17(2). See Alka Chandewar v Shamshul Ishrar Khan (2017) 16 SCC 119, at para. 9 (“… sub-​section (2) to Section 17 was added by the 2015 Amendment Act, so that the cumbersome procedure of an Arbitral Tribunal having to apply every time to the High Court for contempt of its orders would no longer be necessary. Such orders would now be deemed to be orders of the court for all purposes and would be enforced under the Civil Procedure Code, 1908 in the same manner as if they were orders of the court.”). Firm Ashok Traders v Gurumukh Das Saluja (2004) 3 SCC 155, at para. 18. NHPC Ltd. v HCC Ltd. (2018) SCC OnLine Del 11469, at para. 14 (“… unable to agree with the submission made by the learned senior counsel for the respondent that with the amendment in Section 17 of the Act, the jurisdiction of the Arbitral Tribunal has been widened to such a great extent that it can pass interim orders of protection even where the dispute is not a subject matter of reference before it. A reading of the amended Section 17 of the Act also shows that the interim measure of protection has to be confined to the subject matter of the dispute which is being adjudicated by the Arbitral Tribunal. The Arbitral Tribunal cannot travel beyond its own terms of reference.”). Managing Director, Army Welfare Housing Organisation v Sumangal Services (P) Ltd. (2004) 9 SCC 619, at paras. 43, 69. State Bank of India v Ericsson (India) (P) Ltd. (2018) 16 SCC 617, at para. 2-​5 (“… the Arbitral Tribunal has no jurisdiction to affect the rights and remedies of the third party-​secured creditors in the course of determining disputes pending before it.”).

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40. 41. 42. 43.

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Additionally, now, once the arbitral tribunal is constituted courts cannot grant interim relief unless “circumstances exist which may not render the remedy provided

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46. 47.

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Law, Practice and Procedure of Arbitration in India

under section 17 efficacious.”48 However, the arbitral tribunal has no power to grant interim measures after issuing its arbitral award on the matter.49

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Lastly, most institutional arbitration rules allow for the appointment of emergency arbitrators who have the power to grant interim relief or direct the maintenance of the status quo, prior to constitution of the arbitral tribunal.50 Separately, institutional arbitration rules also explicitly grant arbitral tribunals the power to make interim measures of protection.51

[32.4] PROCEDURAL AND EVIDENTIARY POWERS

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Ordinarily, parties have the power to agree upon the procedure that the arbitral tribunal has to adhere to when conducting arbitration proceedings. Failing such agreement, the arbitral tribunal has the power to conduct the arbitration in any manner it sees fit. It can decide all related procedural and evidential matters.52

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The arbitral tribunal has the power to adopt a procedure that would suit the exigencies of the case.53 It is the “master of the procedure”54 to be followed in arbitration.55

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48. See Arbitration and Conciliation Act, 1996, s. 9(3). See Srei Equipment Finance Limited v Ray Infra Services Private Limited (2016) SCC OnLine Cal 6765, at para. 6-​7 (“… After the enactment of the Arbitration and Conciliation (Amendment) Act of 2015 with effect from 23rd October, 2015, the Court is not to entertain an application under Section 9(1) of the Arbitration and Conciliation Act, 1996, once the Arbitral Tribunal has been constituted, unless the Court finds that circumstances exist, which may not render the remedy provided under Section 17 efficacious … considering the lethargic manner in which the learned Arbitrator has been proceeding the remedy of the Appellant under Section 17 of the Arbitration and Conciliation Act, 1996 does not appear to be efficacious.”); NGC Network India Pvt. Ltd. v Orangefish Entertainment Pvt. Ltd. (2018) SCC OnLine Del 11350, at para. 44. For a detailed discussion on the jurisdiction of courts to order interim measures during the arbitration, see Section [33.3] in Chapter 33. 49. Arbitration and Conciliation (Amendment) Act, 2019, s. 4. See Justice B.N. Srikrishna, Report of the High-​ Level Committee to Review the Institutionalisation of Arbitration Mechanism in India, p. 62 (“once the arbitral tribunal becomes functus officio, after the final arbitral award is rendered, no application can be made for grant of interim measures under section 17(1).”). 50. LCIA Arbitration Rules, 2020, art. 9B; SIAC Rules, 2016, r. 30.2; ICC Rules of Arbitration, 2021, art. 29. 51. LCIA Arbitration Rules, 2020, art. 25; UNCITRAL Arbitration Rules, 2013, art. 26; SIAC Rules, 2016, r. 30; ICC Rules of Arbitration, 2021, art. 28. 52. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 19; English Arbitration Act, 1996, s. 34(1); Arbitration and Conciliation Act, 1996, s. 19(3); UNCITRAL Arbitration Rules, 2013, art. 17; SIAC Rules, 2016, r. 19. 53. See Rotary Club of Delhi Midtown v Sunil K. Jain (2007) SCC OnLine Del 664, at para. 26. 54. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 614. 55. See Carlisle Place investments v Wimpey Construction UK Ltd. [1981] 1 WLUK 60 (“I know of no requirement that an arbitrator must allow each party to call all the evidence which he wishes to call. It must depend on the circumstances of the particular case whether or not the arbitrator decides, in the exercise of his discretion, to conduct the arbitration in a particular way.”).

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Chapter 32—​Powers of the Arbitral Tribunal

The arbitral tribunal has the power to decide the materiality and weightage to be given to the evidence.56 It can appoint a commissioner for local inspection, accountant to inspect accounts, fingerprint and handwriting expert etc.57

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Additionally, the LCIA Arbitration Rules give the arbitral tribunal the power to make procedural orders to expedite the procedure to be adopted in the arbitration by inter alia limiting the length of the written statement, limiting written and oral testimony, dispensing with a hearing etc.58

The arbitral tribunal’s specific procedural and evidentiary powers is detailed below. Each of these powers must be exercised in furtherance of the tribunal’s duty to treat parties equally and give them both a full opportunity to present their case.59

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Power to Determine the Seat of Arbitration and Venue of Hearing

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The arbitral tribunal has the power to determine the seat of arbitration in the event that the parties to arbitration fail to select a seat.60 However, under the ICC Rules, it is the ICC Court that has the power to choose the seat of arbitration, and not the tribunal.61

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In contrast, under the LCIA Arbitration Rules, if the parties have failed to designate a seat of arbitration, London is considered to be the default seat.

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The exception being is unless the arbitral tribunal is of the view that “in view of the circumstances and after having given the parties a reasonable opportunity to make written comments”, another seat is more appropriate.62

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The arbitral tribunal has to exercise its power judicially to determine the seat of arbitration. It should take into account the circumstances of the case, convenience of parties, expenses involved etc.63

Akbarally’s & Ors v Indian Oil Corporation (2015) SCC OnLine Bom 705, at para. 17. Biju Xavier v Christiy Fernandez (2010) SCC OnLine Ker 4945, at para. 6-​9. LCIA Arbitration Rules, 2020, art. 14.6. For a detailed discussion on the arbitrator’s duty to act fairly and impartially, see Section [31.3.3] in Chapter 31. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 20(1); English Arbitration Act, 1996, s. 34(2)(a); Arbitration and Conciliation Act, 1996, s. 20(2); UNCITRAL Arbitration Rules, 2013, art. 18.1; SIAC Rules, 2016, r. 21.1. ICC Rules of Arbitration, 2021, art. 18.1. LCIA Arbitration Rules, 2020, art. 16.2. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 643.

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56. 57. 58. 59. 60. 61. 62. 63.

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Law, Practice and Procedure of Arbitration in India

The arbitral tribunal also has the power to hold the arbitration meetings and hearings at different venues, should it find it convenient to do so.64

Power to Decide the Language of the Arbitration

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The arbitral tribunal can decide what language will be used in the event that the parties to arbitration fail to agree upon the language to be used in the arbitral proceedings.65 The arbitral tribunal, when exercising this power, must take into consideration the language of both the parties. The primary objective is to that the parties will be able to follow and understand the arbitration proceedings.66

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The arbitral tribunal also has the power to order that translations of evidence be provided to it,67 and, in case of doubt as to the authenticity of the translation, can call for proof of authenticity.68

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Power to Decide Form of Written Statements, Evidence, and Manner of Hearing

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The arbitral tribunal has the power to determine whether written statements of claim and defence are required, what form they should be submitted in, when they should be submitted and, whether they can later be amended.69

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Further, the arbitral tribunal has the power to allow amendment of the pleadings, as long as such amendment will not prejudice the opposite party.70

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64. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 20(2); English Arbitration Act, 1996, s. 34(2)(a); Arbitration and Conciliation Act, 1996, s. 20(3); LCIA Arbitration Rules, 2020, art. 16.3; UNCITRAL Arbitration Rules, 2013, art. 18.2; SIAC Rules, 2016, r. 21.2; ICC Rules of Arbitration, 2021, art. 18.2. 65. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 22(1); English Arbitration Act, 1996, s. 34(2)(b); Arbitration and Conciliation Act, 1996, s. 22(2); UNCITRAL Arbitration Rules, 2013, art. 19.1; LCIA Arbitration Rules, 2020, art. 17.4; SIAC Rules, 2016, r. 22.1; ICC Rules of Arbitration, 2021, art. 20. See Balmukund Pandey v V.K. Singh AIR 2010 MP 117, at para. 7. 66. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 676. 67. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 22(2); English Arbitration Act, 1996, s. 34(2)(b); Arbitration and Conciliation Act, 1996, s. 22(4); LCIA Arbitration Rules, 2020, art. 17.5; UNCITRAL Arbitration Rules, 2013, art. 19.2; SIAC Rules, 2016, r. 22.2. 68. E Rotheray and Sons Ltd. v Carlo Bedarida and Co. [1961] 1 Lloyd’s Rep 220. 69. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 23; English Arbitration Act, 1996, s. 34(2)(c); Arbitration and Conciliation Act, 1996, s. 23; LCIA Arbitration Rules, 2020, arts. 4.2, 15.1, 15.6, 15.7; UNCITRAL Arbitration Rules, 2013, arts. 22, 24, 25; SIAC Rules, 2016, r. 20. 70. See Jayashree Patnaik v Urban Cooperative Bank, Bhubaneshwar 2003 SCC OnLine Ori 108, at para. 5; Maharashtra Industrial Development Corporation Ltd. v Govardhani Construction Co. 2008 SCC OnLine Bom 230. The Special Leave Petition filed against this judgment was dismissed by the Supreme Court of India vide order dated 25 April 2008, in SLP(C) 10007/​2008.

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Chapter 32—​Powers of the Arbitral Tribunal

The arbitral tribunal can also decide whether evidence should be oral or written and whether or not to hold an oral hearing.71 In England, the arbitral tribunal has the sole power to determine whether an oral hearing is required.72 This is distinct from the position under the UNCITRAL Model Law73 and in India74 where the arbitral tribunal is obligated to hold a hearing, if so requested by a party.

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Even under most institutional arbitration rules, the arbitral tribunal has complete power to conduct the hearing, in any manner it sees fit.75

Power to Grant an Adjournment

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In India, the arbitral tribunal is obligated to, “as far as possible”, hold oral hearings on a day-​to-​day basis and not grant adjournments unless sufficient cause is made out.76

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In case a party is seeking an adjournment in the absence of a sufficient cause, the arbitral tribunal has the power to impose exemplary costs.77

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The failure of the arbitral tribunal, which is under a duty to act judicially, to grant an adjournment may constitute a breach of its obligation to ensure that each party has full opportunity to present its case, even though the party in question has not expressly sought an adjournment.78

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Hence, as a matter of practice, the arbitral tribunal must adopt a balanced approach when deciding whether to grant an adjournment.

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Adjourning proceedings for the purpose of obtaining relatively unimportant evidence would be bad practice. Whereas the unavoidable absence of counsel may justify adjourning if another hearing date can be fixed within a reasonably short time

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71. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 24; English Arbitration Act, 1996, s. 34(2)(h); Arbitration and Conciliation Act, 1996, s. 24. 72. English Arbitration Act, 1996, s. 34(2)(h). 73. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 24(1). 74. Arbitration and Conciliation Act, 1996, s. 24(1). 75. LCIA Arbitration Rules, 2020, art. 19; UNCITRAL Arbitration Rules, 2013, art. 28. 76. Arbitration and Conciliation Act, 1996, s. 24(1). See Tesco (Ireland) Ltd v William Moffett et al. 2015 NIQB 68; Lachman D. Chablani v Union of India (1973) SCC OnLine All 314, at para. 4 (“… granting of an adjournment to a party is within the discretion of an arbitrator. The discretion should however be exercised in a reasonable manner upon proper material and after considering a party’s conduct in the case. The arbitrator should consider whether the party concerned had shown a sufficient cause for adjournment. What is sufficient cause will depend upon the facts and circumstances of each case. Dilatory conduct of a party to the case and want of due diligence on his part may in a particular case be not sufficient cause for adjournment.”). 77. Arbitration and Conciliation Act, 1996, s. 24(1). 78. Priddle v Fisher and Sons [1968] 1 WLR 1478.

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Law, Practice and Procedure of Arbitration in India

Power to Proceed with the Hearing Ex Parte The arbitral tribunal has the power to continue with the proceedings, ex parte, if a party “fails to appear at an oral hearing or to produce documentary evidence.”79

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The arbitral tribunal must exercise such power with restraint. It must only proceed ex parte if there is a successive failure of the defaulting party to appear. It cannot be a mere or single default.80 The arbitral tribunal must inform the parties, by way of notice before proceeding ex parte. If it fails to do so, its award is liable to be set aside.81

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Power to Appoint an Expert

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Parties to arbitration generally present expert reports from independent experts, when questions of technical expertise require determination. The arbitral tribunal then has to weigh and compare the expert testimony to arrive at a conclusion.

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Often, such evidence may be technically complex. It may not be easy to decipher. In such a situation, the arbitral tribunal itself may require the assistance of an independent expert to assist in understanding and evaluating the technical evidence.82

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Hence, the arbitral tribunal has the power to appoint experts and legal advisors to report to it and provide assistance on technical matters, unless otherwise agreed by the parties.83

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79. Arbitration and Conciliation Act, 1996, s. 25(c). See English Arbitration Act, 1996, s. 41(4). See LCIA Arbitration Rules, 2020, art. 15.8; SIAC Rules, 2016, r. 24.3. For a detailed discussion on the making of a default award by the tribunal, see Section [35.3.4] in Chapter 35. 80. State of U.P. v Combined Chemicals Co. (P) Ltd. (2011) 2 SCC 151, at para. 29; Magma Leasing Ltd. v Gujarat Composite Ltd. (2006) SCC OnLine Cal 235, at para. 14-​15 (“… the respondent defaulted only on one day … there is no successive failure on the part of the respondent …”); Lachman D. Chablani v Union of India (1973) SCC OnLine All 314, at para. 4. 81. Lachman D. Chablani v Union of India (1973) SCC OnLine All 314, at para. 4; Magma Leasing Ltd. v Gujarat Composite Ltd. (2006) SCC OnLine Cal 235; Shaminder Singh v Motor and General Finance Ltd. (2007) SCC OnLine Del 772, at para. 10; Sohan Lal Gupta (dead) through L.Rs. v Asha Devi Gupta (2003) 7 SCC 492. 82. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 5.23. 83. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 26; English Arbitration Act, 1996, s. 37; Arbitration and Conciliation Act, 1996, s. 26; UNCITRAL Arbitration Rules, 2013, art. 29; LCIA Arbitration Rules, 2020, art. 21; UNCITRAL Arbitration Rules, 2013, art. 29; SIAC Rules, 2016, r. 26. See Biju Xavier v Christiy Fernandez (2010) SCC OnLine Ker 4945, at para. 6-​9.

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Chapter 32—​Powers of the Arbitral Tribunal

However, the arbitral tribunal must carefully frame the terms of reference on which the opinion of the expert is sought.84 It cannot rely on the expert’s opinion to determine other issues.85

Power to Take Evidence In England, the arbitral tribunal has the power to decide: (1) whether any documents should be disclosed, and at what stage;86



(2) whether questions should be put to the parties, and the form for such questions;87



(3) the rules of evidence that should apply;88 and



(4) whether the tribunal should take the initiative to ascertain the facts and law.89

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The arbitral tribunal has the power to order production when a party has requested disclosure of a specific document and the other party has raised objections.90

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However, the arbitral tribunal has no power to force production if the document is not produced. It only possesses the power to draw an adverse inference.91 The same rule applies in the case where a witness does not appear.92

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National arbitration laws of some jurisdictions empower the courts to assist the arbitral tribunal in taking evidence.93 For example, in the US, an arbitral tribunal can issue a subpoena requiring a person present within its jurisdiction to produce documents or make himself present as a witness.94

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84. M/​s Aka Logistics Pvt. Ltd. v Damodar Valley Corporation (2015) SCC OnLine Cal 6427. 85. Gurcharan Singh Sahney v Harpreet Singh Chabbra (2016) SCC OnLine Hyd 90, at para. 96 (“It is only on a specific issue, required to be determined by him, can the arbitrator call for a report from an expert unless agreed to by the parties.”). 86. English Arbitration Act, 1996, s. 34(2)(d). 87. English Arbitration Act, 1996, s. 34(2)(e). 88. English Arbitration Act, 1996, s. 34(2)(f). 89. English Arbitration Act, 1996, s. 34(2)(g). 90. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 5.18. 91. Ibid, at para. 5.18. See English Arbitration Act, 1996, s. 41(7). 92. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 5.20. 93. For a detailed discussion on the court’s power to assist in taking evidence, see Section [34.4] in Chapter 34. 94. Federal Arbitration Act, 1925, s. 7.

940

Law, Practice and Procedure of Arbitration in India

Similarly, in England, a peremptory order made by the arbitral tribunal can be enforced with the court’s assistance.95 In India, the Arbitration Act does not have a specific provision enabling the arbitral tribunal to order discovery of documents. However, the courts have held that under Section 19, the arbitral tribunal possess such power of ordering discovery and inspection of documents.

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The arbitral tribunal to conduct the arbitral proceedings in the manner it considers appropriate.96 However, these powers of the arbitral tribunal are limited to parties to the arbitration. It cannot be exercised against third parties.97

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The aggrieved party, in the case of non-​compliance of any order of the arbitral tribunal, may apply to the arbitral tribunal to draw an adverse inference. In the alternative, it may use the arbitral tribunal’s order and seek assistance from the court under Section 27 of the Arbitration Act, to direct production from the unwilling party.98

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[32.5] POWER TO STRIKE OUT ARBITRATION PROCEEDINGS

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Parties are obligated to do all things necessary for the expeditious conduct of the arbitration, which includes complying with directions of the tribunal.99

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In England, the arbitral tribunal has the power to dismiss the claim if: (1) there has been “inordinate and inexcusable delay” on part of the claimant in pursuing the claim;



(2) the delay has given rise to a “substantial risk” that fair resolution of issues would not be possible; or



(3) the delay has caused/​will cause “serious prejudice” to the respondent.100

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95. English Arbitration Act, 1996, s. 42. 96. Thyssen Krupp Werkstoffe GmBH v Steel Authority of India (2011) SCC OnLine Del 1747, at para. 83 (“… there is no specific provision in the Act, 1996 which specifically confers power on the Arbitrator to direct discovery, the Arbitrator has absolute power and flexibility by virtue of Section 19 of Act, 1996 to conduct the proceedings in the manner it considers appropriate … This inherent power of discovery, in my view, is found in Section 19(3) of Act, 1996.”); Bharat Heavy Electrical Ltd. v Silor Associates (2014) SCC OnLine Del 4442. 97. Managing Director, Army Welfare Housing Organisation v Sumangal Services (P) Ltd. (2004) 9 SCC 619; State Bank of India v Ericsson (India) (P) Ltd. (2018) 16 SCC 617, at para. 2-​5; Bharat Heavy Electrical Ltd. v Silor Associates (2014) SCC OnLine Del 4442. See also Indu Malhotra, Commentary on the Law of Arbitration (4th edn, 2020), pp. 590–​591. 98. For a detailed discussion on courts power to provide assistance in taking evidence, see Section [34.4] in Chapter 34. 99. See English Arbitration Act, 1996, s. 40. 100. English Arbitration Act, 1996, s. 41(3). See TAG Wealth Management v West [2008] EWHC 1466 (Comm).

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Chapter 32—​Powers of the Arbitral Tribunal

In India, the arbitral tribunal has the power to take action in case of default of the party, unless the parties have otherwise agreed.101 The position is the same under the UNCITRAL Model Law.102 If the parties have agreed to the contrary or the institutional arbitral rules provide a different process, that process would take precedence.103 The arbitral tribunal has the following powers: (1) if without showing “sufficient cause” the claimant fails to file his statement of claim the tribunal has the power to terminate the proceedings;104 or



(2) if without showing “sufficient cause” the respondent fails to file his statement of defence, the tribunal has the discretionary power to treat the right of the respondent to file the defence as “having been forfeited.”105

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Hence, the arbitral tribunal has the power to condone delay in communication of statement of claim if there is a sufficient cause for the delay. Also, such justifiable delay will not lead to termination not proceedings.106

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The test to determine whether a cause is sufficient is whether it could have been avoided by exercising due care and attention.107

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The arbitral tribunal should only make an award dismissing the claim where the delay is inordinate, when it is likely to make it impossible to fairly resolve the dispute, or is likely to cause serious prejudice to the respondent.108

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Technicalities of law should not prevent the arbitral tribunal from doing away with the default committed so as to ensure substantial justice.109

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1 01. Arbitration and Conciliation Act, 1996, s. 25. 102. See UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 25; UNCITRAL Arbitration Rules, 2013, art. 30. 103. See Atul R. Shah v M/​s V. Vrijlal Lalloobhai & Co. (1998) SCC OnLine Bom 403, at para. 13 (“… in the beginning of the section it is contemplated that parties can agree to a different procedure in which event that will be the procedure and not the procedure set out under section 25.”). 104. Arbitration and Conciliation Act, 1996, s. 25(a) (“… the arbitral tribunal shall terminate the proceedings.”). Despite the use of the word “shall”, s. 25(a) is not mandatory. See Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 708. 105. Arbitration and Conciliation Act, 1996, s. 25(b). 106. See S.P. Singla Constructions (P) Ltd. v State of H.P. (2019) 2 SCC 488, at para. 23-​25. 107. Balwant Singh v Jagdish Singh (2010) 8 SCC 685, para. 35 (“The expression ‘sufficient cause’ implies the presence of legal and adequate reasons. The word ‘sufficient’ means adequate enough, as much as may be necessary to answer the purpose intended. It embraces no more than that which provides a plentitude which, when done, suffices to accomplish the purpose intended in the light of existing circumstances and when viewed from the reasonable standard of practical and cautious men. The sufficient cause should be such as it would persuade the court, in exercise of its judicial discretion, to treat the delay as an excusable one.”). See Arjun Singh v Mohinder Kumar (1964) 5 SCR 946. 108. Sutton, Gill, and Gearing, Russel on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 5-​229. 109. State of Bihar v Kameshwar Prasad Singh (2000) 9 SCC 94; Madan Lal v Shyam Lal (2002) 1 SCC 535.

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Law, Practice and Procedure of Arbitration in India

The arbitral tribunal’s order dismissing the claim under Section 25(a) of the Arbitration Act cannot be challenged by way of writ.110 The arbitral tribunal, however, can recall the order terminating the arbitral proceedings.111

[32.6] POWER TO ORDER SECURITY FOR COSTS

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The arbitral tribunal has the power to order security for costs. It “make the right of a claimant or counter-​claimant to proceed on his claim conditional on the raising of a bank guarantee or other forms of surety to guarantee, in the case of an unsuccessful claim, any eventual award of legal fees assessed against the claimant or counter-​claimant by the arbitral tribunal.”112

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Such security for costs orders are generally granted to cover the fees and expenses of legal representation, experts, arbitration institutional costs, etc.

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The cost of making or defending an arbitral claim can entail the expenditure of large sums of money. The arbitral tribunal prior to ordering a party to provide security for costs, should,

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“weigh the costs to a respondent of defending a claim in which there is a possibility of not recovering those costs even if successful against the risk of stifling a genuine claim by a claimant who is short of funds, possibly because of the very conduct of the respondent that has given rise to the arbitration.”113

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The power to order security for costs should be exercised “only in extreme circumstances, for example, where abuse or serious misconduct has been evidenced.”114

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Such an order may also be made when the proceedings are expensive and where the claimant’s financial situation is precarious115 or when the claimant has a history of failing to pay cost advances.116

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In England, it is common for the arbitral tribunal to secure the costs of the arbitration by requesting parties to make initial deposits.117 However, the discretion to order

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110. NRP Projects (P) Ltd. v Hirak Mukhopadhyay (2012) SCC OnLine Cal 10496. 111. Srei Infrastructure Finance Ltd. v Tuff Drilling (P) Ltd. (2018) 11 SCC 470, at para. 20-​21. 112. G Weixia, “Security for Costs in International Commercial Arbitration” (2005) 22 Journal of International Arbitration 3, p. 167. 113. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 5.35. 114. Commerce Group Corporation & San Sebastian Gold Mines, Inc. v Republic of El Salvador ICSID Case No. ARB/​09/​17, Decision on El Salvador’s Application for Security for Costs (20 September 2012), at para. 45-​47. 115. See K/​S A/​S Bani v Korea Shipbuilding and Engineering Corpn [1987] 2 Lloyd’s Rep 445. 116. RSM Production Corporation v Saint Lucia ICSID Case No. ARB/​12/​10, Decision on Saint Lucia’s Request for Security for Costs (13 August 2014), at paras. 82, 86. 117. English Arbitration Act, 1996, s. 38(3).

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Chapter 32—​Powers of the Arbitral Tribunal

security for costs is not to be exercised merely on the ground that the claimant is an individual or corporation resident or incorporated outside the United Kingdom.118 There must be more substantive grounds for making an order for security for costs.119 Institutional arbitration rules, too, provide the tribunal with the power to make an order to secure its fee and expenses.120

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In India, the arbitral tribunal can fix the amount of deposit as an advance for costs, on the basis of its estimate of expenses that will be incurred.121 Further, the arbitral tribunal can fix a separate amount of deposit for the claim and counterclaim.122

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The deposit is to be paid equally by both the parties.123 The other party may be required to pay that share upon the failure of one party to make payment.124 The arbitral tribunal can suspend or terminate the arbitral proceedings if the said party does not pay the outstanding fees.125

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The arbitral tribunal “shall render an accounting … of the deposits received and shall return any unexpended balance to the party or parties” at the end of the arbitration proceedings.126

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Security for costs is not normally ordered in documents-​only arbitrations.127

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The High Court of New Zealand in Badger Chiyoda v CBI NZ Ltd128 held that the arbitral tribunal must consider the following in determining whether to grant security for costs:

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118. Ibid. 119. See Coppe-​Lavalin SA/​NV v Ken-​Ren Chemicals and Fertilizers Ltd (in liq) [1994] 2 All ER 449; Bank Mellat v Helliniki Techniki SA [1983] 3 All ER 428; Flender Werft AG v Aegean Maritime Ltd [1990] 2 Lloyd’s Rep 27; Fal Bunkering of Sharjah v Grecale Inc of Panama [1990] 1 Lloyd’s Rep 369; Japan Line Ltd v Aggeliki Charis Compania Maritime SA, The Angelic Grace [1980] 1 Lloyd’s Rep 288; Glafki Shipping Co SA v Pinios Shipping Co No 1, The Maria [1982] 1 Lloyd’s Rep 257; Kirkawa Corp v Gatoil Overseas Inc, The Peter Kirk [1990] 1 Lloyd’s Rep 154. 120. SIAC Rules, 2016, r. 34; LCIA Arbitration Rules, 2020, art. 24; ICC Rules of Arbitration, 2021, art. 37. 121. Arbitration and Conciliation Act, 1996, s. 38(1). 122. Arbitration and Conciliation Act, 1996, s. 38(1); Rehmat Ali Baig v Minocher M. Deboo (2012) SCC OnLine Bom 914, at para. 8; Gammon India Ltd. v Trenchless Engg. Services (P) Ltd. (2013) SCC OnLine Bom 1720, at para. 8-​9. 123. Arbitration and Conciliation Act, 1996, s. 38(2). 124. Bhandari Engineering and Builders Pvt. Ltd. v You One Maharia 2011 SCC OnLine Del 4947, at para. 20 (“… no basis whatsoever in the allegation that merely because the Tribunal required BEBPL to pay MR-​JV’s and YOM-​JV’s share and fees of the Tribunal members, the Tribunal was biased. This is permissible under Section 38(2) of the Act.”). A Special Leave Petition, SLP(C) No. 35124-​35125/​2013 filed against this judgment was dismissed by the Supreme Court of India. See Nina Anil Shah v Kusum Bhaskarrao Gorule (2017) SCC OnLine Bom 2402, at para. 65-​66. 125. Arbitration and Conciliation Act, 1996, s. 38(2). 126. Arbitration Act, s. 38(3). 127. Mavani v Ralli Bros Ltd [1973] 1 WLR 468. 128. [1986] 2 NZLR 599.

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Law, Practice and Procedure of Arbitration in India

(1) Whether the plaintiff ’s case is bona fide?



(2) Whether the plaintiff has reasonably good prospects of success on his part of the claim?



(3) Whether there has been an admission, formal or informal, in the course of the proceedings, of some part of the plaintiff ’s claim?



(4) Whether there has been a paying into court or its equivalent in arbitration proceedings, of a substantial sum that indicates that the plaintiff ’s claim is not merely a nuisance value claim?



(5) Whether there are any grounds for thinking that the defendants are using the application to prevent the plaintiff ’s case from coming before an adjudicating tribunal?



(6) Whether an order for security might enable a defendant to defeat a claim on the grounds of the plaintiff ’s impecuniosity that the defendant has himself caused?



(7) Whether the defendant has been guilty of delay in making an application for security?

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The court’s power to order security for costs cannot be ousted by an express contrary agreement between the parties.129

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[32.7] POWER TO ISSUE ANTI-​SUIT INJUNCTIONS

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A party facing court action, brought in breach of an agreement to arbitrate, can apply to the arbitral tribunal for an anti-​suit injunction, if the court proceedings are undermining the arbitration.130

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Such injunctions are usually requested when proceedings are commenced in another country, in the early stage of arbitration; but they can also be used when proceedings to challenge the award have been commenced in another jurisdiction.131

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Anti-​arbitration injunctions are usually directed at the party to the suit proceedings, and not the foreign court. They are requested when “the party is unsure of the reception it will receive in that foreign court.”132 The jurisdiction of the arbitral tribunal

129. Mavani v Ralli Bros Ltd [1973] 1 WLR 468. 130. David St. John Sutton, Judith Gill, Matthew Gearing, Russel on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 7-​043. 131. Noble Assurance Co. v Gerling-​Konzen General Insurance Co-​UK Branch [2007] EWHC 253; Sulamerica Cia National de Seguros SA v Enesa Engenharla SA [2012] EWCA Civ 638. 132. Sutton, Gill, and Matthew Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 7-​043.

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Chapter 32—​Powers of the Arbitral Tribunal

to issue such injunctions emanates from its power to “sanction violations of the arbitration agreement and the power to take any measure necessary to avoid the aggravation of the dispute or to protect the effectiveness of the final award.”133 In principle, the source of this power is Article 17 of the UNCITRAL Model Law.134 In India, anti-​suit injunctions from arbitral tribunals are not very common, which perhaps explains the lack of jurisprudence on the subject.

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However, under the Arbitration Act, parties can file an application in court to restrain a suit on the subject matter covered by the arbitration agreement.135 This is the favoured option by a party wishing to restrain the other party from approaching the court, in breach of the arbitration agreement.

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Despite the availability of the power to grant an anti-​suit injunction, the arbitral tribunal should be cautious when granting such injunctions.136 Arbitrators must ensure that such an injunction does not violate the party’s fundamental right to approach national courts and that circumstances justifying the grant of such an order exist.137

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In a three-​member arbitral tribunal, one of the arbitrators (often chosen by the party-​ appointed arbitrators or the arbitration institution) is designated as the presiding arbitrator. The presiding arbitrator acts as a chairman of the arbitral tribunal.

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The presiding arbitrator’s powers include taking charge of the deliberations of the arbitral tribunals, conducting meetings and hearings, fixing the date of the hearing, ensuring that the arbitral proceedings run smoothly and efficiently etc.138

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Further, it is the role of the presiding arbitrator to reconcile any differences that may arise in the arbitral tribunal’s deliberations.139

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133. Emmanuel Gaillard, Anti-​suit Injunctions Issued by Arbitrators, International Arbitration 2006: Back to Basics? (ICCA), p. 237. 134. R. Rana and M. Sanson, International Commercial Arbitration (2011), p. 226. 135. Arbitration and Conciliation Act, 1996, s. 8. 136. See Dinesh Singh Thakur v Sonal Thakur [2018] 17 SCC 12, at para. 13 (“It is a well-​settled law that the courts in India have power to issue anti-​suit injunction to a party over whom it has personal jurisdiction, in an appropriate case. However, before passing the order of anti-​suit injunction, courts should be very cautious and careful, and it should be granted sparingly and not as a matter of routine as such orders involve a court impinging on the jurisdiction of another court, which is not entertained very easily specially when the it restrains the parties from instituting or continuing a case in a foreign court.”). 137. See Laurent Levy, “Anti-​Suit Injunctions Issued by Arbitrators”, IAI International Arbitration Series No. 2 on Anti-​Suit Injunction in International Arbitration, p. 124. 138. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 4.190, 4.173. 139. Ibid, at para. 1.84.

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Law, Practice and Procedure of Arbitration in India

The UNCITRAL Model Law permits questions of procedure to be exclusively decided by the presiding arbitrator, if he is so “authorized by the parties or all members of the arbitral tribunal.”140 The position under some institutional arbitration rules141 and in India is similar.142

[32.9] INHERENT AND IMPLIED POWERS

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However, despite the presiding arbitrator’s enlarged role and function, he does not have the power to decide the case alone. The arbitral tribunal also cannot delegate its responsibility of hearing evidence to him alone.143

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The Arbitration Act and majority of institutional arbitration rules contain codified provisions as to the arbitral tribunal’s powers. As such, the arbitral tribunal’s implied powers have become less applicable or relevant in the modern arbitration arena.

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However, in case of arbitration agreements falling beyond the ambit of national arbitration statutes, the arbitral tribunal’s inherent and implied powers may need to be considered.144

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There is a distinction between the arbitral tribunal’s implied and inherent powers. While the former stems from the arbitration agreement, institutional arbitration rules, or discretionary powers granted to arbitrators, the latter are derived from the nature of arbitration, arbitral tribunal’s function, and its mandate.145

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Such powers are generally invoked by arbitrators to deal “not with routine matters of procedure” but with “challenging and unforeseen circumstances that implicate the integrity of the arbitral process itself.”146

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They have been used to exclude counsel chosen by a party from appearing at a hearing147 and to impose costs of arbitration on a party acting in bad faith, even if the arbitration agreement provided for the sharing of costs.148

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1 40. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 29. 141. LCIA Arbitration Rules, 2020, art. 14.7; SIAC Rules, 2016, r. 19.5. 142. Arbitration and Conciliation Act, 1996, s. 29(2). 143. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2192. 144. For example, an oral agreement to arbitrate would not fall within the ambit of the Arbitration Act. See Imperial Metal Industries (Kynoch) Ltd v Amalgamated Union of Engineering Workers [1979] All ER 847; Mustill and Boyd, Commercial Arbitration (2nd edn, 1989), p. 6. 145. Leon Kopecky, Victoria Pernt, “A Bid for Strong Arbitrators”, Kluwer Arbitration Blog (15 April 2016). 146. ILA, Report on the Inherent Powers of Arbitrators in International Commercial Arbitration (Washington D.C. 2014), p. 3. 147. Hrvatska v Elektroprivreda, d.d. v Republic of Slovenia ICSID Case No. ARB/​05/​24, Order Concerning the Participation of a Counsel (6 May 2008). 148. ILA, Report on the Inherent Powers of Arbitrators in International Commercial Arbitration (Washington D.C. 2014), p. 3.

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Chapter 32—​Powers of the Arbitral Tribunal

However, the arbitral tribunal has no power to order consolidation of separate disputes under different arbitration agreements, unless all parties involved agree.149

[32.10] ADDITIONAL POWERS UNDER THE ARBITRATION AGREEMENT

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The arbitration agreement is an important source of the arbitral tribunal’s powers. Since the arbitral tribunal derives its jurisdiction from the arbitration agreement, it can neither reject the agreement, nor disregard any limitations placed on its authority, except where such a limitation would be in contravention of the mandatory provisions of the arbitration statute.

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The parties can confer on the arbitral tribunal additional powers by way of the arbitration agreement. However, they cannot confer on the arbitral tribunal powers “which only a judge can use”150 such as the power to issue contempt or a writ of habeas corpus.151

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Specialised contracts may also provide powers to the arbitral tribunal. For instance, the draft Arbitration Rules for Contract for Hydro-​Power Projects, formed by Central Electricity Authority, gives the arbitral tribunal the power to inter alia extend time limits, conduct inquiries, order a party to make property available for inspection, order production, give directions for interrogatories etc.

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As a matter of practice, arbitrators should go through the arbitration agreement to get acquainted with the additional powers or procedures that the parties may have agreed to before accepting their appointments.

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[32.11] POWERS UNDER ARBITRATION RULES

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Rules of arbitral institutions generally deal with the powers of the arbitral tribunal more comprehensively than a statute.

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For example, the LCIA Arbitration Rules, confer several additional powers on the arbitral tribunal including the power to extend or abridge time limits, conduct relevant enquiries, allow joinder of third parties, order the discontinuance of the arbitration etc.152

149. See M/​s Duro Felguera S.A. v M/​s Gangavaram Port Limited (2017) SCC OnLine SC 1233; PT First Media TBK (formerly known as PT Broadband Multimedia TBK) v Astro Nusantara International BV [2013] SGCA 57; Oxford Shipping Co Ltd v Nippon Yusen Kaisha, The Eastern Saga [1984] 2 Lloyd’s Rep 373. 150. Kursell v Timber Operators and Contractors Ltd [1923] 2 KB 202. 151. Re Unione Stearinerie Lanza and Weiner [1917] 2 KB 558. 152. LCIA Arbitration Rules, 2020, art. 22.1.

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Law, Practice and Procedure of Arbitration in India

The SIAC Rules also impose additional powers on the arbitral tribunal such as the power to order rectification of the contract, issue an order for reimbursement of unpaid deposits, direct a party to give evidence, determine the law applicable to the arbitral proceedings, conduct enquiries etc., unless otherwise agreed by the parties or prohibited by the mandatory law applicable to the arbitration.153

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[32.12] CONCLUSION The arbitral tribunal, like the captain of a ship, is the master of the arbitration proceedings. It derives its powers from the arbitration agreement, arbitration legislation (of the seat), and the applicable institutional arbitration rules.

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It is important that the arbitral tribunal knows when and how to take charge of the proceedings and duly understand its role and powers for an effective and smooth running of the arbitration proceedings.

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The parties can by agreement enlarge or curtail the scope of the arbitral tribunal’s powers and it is therefore important for the arbitral tribunal to be aware about the available powers.

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Apart from the express powers available to the arbitral tribunal under the arbitration agreement, arbitration legislation, or the applicable arbitral rules, the arbitral tribunal also has some inherent or implied powers which must be used for proper and smooth conduct of the arbitration proceedings.

153. SIAC Rules, 2016, r. 27.

Chapter 33 JURISDICTION OF THE HIGH COURT [33.1] INTRODUCTION......................................................................................................................... 949 [33.2] COURT’S JURISDICTION AT THE PRE-​ARBITRATION STAGE...................................... 952

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[33.3] COURTS’ JURISDICTION DURING ARBITRATION........................................................... 959 [33.4] COURTS’ JURISDICTION POST AWARD............................................................................... 967

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[33.5] CONCLUSION............................................................................................................................... 970

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[33.1] INTRODUCTION

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Arbitration is based on party autonomy. It is a dispute resolution process that is independent of courts. However, most national laws permit limited court intervention in the arbitral process, even when parties submit their disputes to arbitration.

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Such intervention is required so as to ensure the arbitral process is not in “danger of foundering”.1 For example, Belgium had sought to make arbitration completely independent by preventing local courts from reviewing the award. It was later discovered that this was dissuading parties from opting for arbitration, and so supervisory control of courts had to be reintroduced.2 Redfern and Hunter explain:

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“The relationship between national courts and arbitral tribunals swings between forced cohabitation and true partnership. Arbitration is dependent on the underlying support of the courts, which alone have the power to rescue the system when one party seeks to sabotage it.”3

1. Coppee Lavalin NV v Ken-​Ren Chemicals and Fertilisers Ltd. [1994] 2 Lloyd’s Rep 109 (“On the one hand the concept of arbitration as a consensual process, reinforced by the ideal of transnationalism, leans against the involvement of the mechanisms of state through the medium of a municipal court. On the other side there is the plain fact, palatable or not, that it is only a court possessing coercive powers which can rescue the arbitration if it is in danger of foundering ...”). 2. See Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 7.05. 3. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 7.01.

950

Law, Practice and Procedure of Arbitration in India

Hence, even though arbitration is an independent dispute resolution process, courts need to be given jurisdiction over certain aspects of the arbitration so as to ensure that it proceeds smoothly and effectively. The UNCITRAL Model Law on International Commercial Arbitration, 1985 (“Model Law”) recognises the need to give court’s jurisdiction over certain aspects of the arbitral process.4

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For example, the Model Law acknowledges the need for assistance of courts in constitution of the tribunal,5 deciding a challenge to an arbitrator,6 reviewing the decision of an arbitral tribunal on jurisdiction,7 taking evidence,8 recognising/​enforcing the arbitral award9 etc.

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In England, the arbitration statute recognises the principle of party autonomy and limits the court’s role in arbitration.10 Unlike the Model Law, which provides that courts “shall” not intervene, the English Arbitration Act states that courts “should” not intervene which demonstrates that there is a “need for caution” prior to any exercise of jurisdiction by the court.11

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4. See UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 5 (“In matters governed by this Law, no court shall intervene except where so provided in this Law.”). 5. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 11. See Montpelier Reinsurance Ltd. v Manufacturers Property & Casualty Ltd. (2008) SC (Bda) 27 Com (24 April 2008) para. 7 (“Article 11(4) of the Model Law requires the Court to help constitute an arbitration panel … Court’s primary statutory duty is to ensure that the parties can resolve their dispute before an independent and impartial arbitral tribunal without delay. This overriding policy consideration trumps deference to the particular contractual procedure which appears to have broken down.”). 6. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 13. See Progressive Career Academy Pvt. Ltd. v FIIT JEE Ltd. (2011) SCC OnLine Del 2271, at para. 20 (“The UNCITRAL Model Law, in Article 13(3) explicitly enables the party challenging the decision of the Arbitral Tribunal to approach the Court …”). 7. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 16. See PT Tugu Pratama Indonesia v Magma Nusantara Ltd. [2003] SGHC 204, at para. 12 (“The Model Law, when it comes to questions relating to the jurisdiction of the arbitral tribunal, gives a party who is questioning such jurisdiction two opportunities to challenge the jurisdiction. The first is before the appointed arbitral tribunal itself. The second opportunity, which can only be taken after the first challenge before the tribunal has failed … is an application to the High Court to decide on the matter. This is the right given to parties to an arbitration by Art 16(3) … ”). 8. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 27. See Jardine Lloyd Thompson Canada Inc. v SJO Catlin [2006] ABCA 18, at para. 25 (“… parties to the arbitration … cannot, without more, exercise powers over third persons. The Legislature has seen fit, however, to empower tribunals to request the court’s assistance in taking evidence … Article 27 can be used to obtain the evidence of third persons at the arbitration hearing.”). 9. UNCITRAL Model Law on International Commercial Arbitration, 1985, arts. 34–​36. 10. English Arbitration Act, 1996, s. 1 (“The provisions of this Part are founded on the following principles … (c) in matters governed by this Part the court should not intervene except as provided by this Part.”). 11. AES Ust-​Kamenogorsk Hydropower Plant LLP v Ust-​Kamenogorsk Hydropower Plant JSC [2013] UKSC 35 (“The use of the word ‘should’ in section 1(c) was also a deliberate departure from the more prescriptive ‘shall’ appearing in article 5 of the UNCITRAL Model Law … Even in matters which might be regarded as falling within Part 1, it is clear that section 1(c) implies a need for caution, rather than an absolute prohibition, before any court intervention.”).

951

Chapter 33—​Jurisdiction of the High Court

Thus, the English courts can only exercise jurisdiction over the arbitral process if there is a provision in the English Arbitration Act entitling them to do so.12 Further, courts can only exercise jurisdiction to assist the arbitral process13 and not to “usurp or interfere with it.”14

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The Indian courts derive civil jurisdiction from the Constitution of India15 and the Code of Civil Procedure, 1908.16 However, in arbitrations, India adopts the Model Law and gives jurisdiction to “judicial authorities” over certain aspects of the arbitral process only.17

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Unlike the Model Law that gives such jurisdiction to only “courts” the Arbitration Act allows for exercise of jurisdiction by “judicial authorities”, which has a much wider ambit and includes “authorities which perform judicial functions or quasi-​ judicial functions”.18

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In India, the success of the arbitration is dependent upon the support of the court for assistance at various stages of the proceedings.19 Hence, courts have jurisdiction at various stages of the arbitration proceedings.20

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12. See Lesotho Highlands v Impreglio SpA [2006] 1 AC 221. 13. To this end, courts have the inherent jurisdiction to grant anti-​suit injunctions or anti-​arbitration injunctions. See AES Ust-​Kamenogorsk Hydropower Plant LLP v Ust-​Kamenogorsk Hydropower Plant JSC [2013] UKSC 35; Faruqi v Commonwealth Secretariat [2002] 3 WLUK 736. 14. Cetelem SA v Roust Holdings Ltd. [2005] 1 WLR 3555. 15. See The Constitution of India, arts. 131–​136. 16. See The Code of Civil Procedure, 1908, s. 9. 17. Arbitration and Conciliation Act, 1996, s. 5 (“Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.”). See P. Anand Gajapathi Raju v P.V.G. Raju (2000) 4 SCC 539, at para. 4 (“… Section 5 brings out clearly the object of the new Act, namely, that of encouraging resolution of disputes expeditiously and less expensively and when there is an arbitration agreement, the court’s intervention should be minimal.”). 18. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 245. See Morgan Securities & Credit Pvt. Ltd. v Modi Rubber Ltd. (2006) 12 SCC 642, at para. 52 (“… ‘judicial authority’ would comprehend a court defined under the Act but also courts which would either be a civil court or other authorities which perform judicial functions or quasi-​judicial functions.”); S.B.P. & Co. v Patel Engineering Ltd. (2005) 8 SCC 618, at para. 19 (“… judicial authority as such is not defined in the Act. It would certainly include the court as defined in Section 2(e) of the Act and would also, in our opinion, include other courts and may even include a special tribunal like the Consumer Forum …”); Fountain Head Developers v Maria Arcangela Sequeira (2007) SCC OnLine Bom 340, at para. 15 (“… expression ‘Judicial Authority’ is a term of wider import and does not restrict itself to the principal Civil Court of original jurisdiction in a district.”). 19. See Adhunik Steels Ltd. v Orissa Manganese & Minerals Pvt. Ltd. (2007) 7 SCC 125, at para. 12 (“… process of arbitration is dependent on the underlying support of the courts who alone have the power to rescue the system when one party seeks to sabotage it.”); Enercon (India) Ltd. v Enercon Gmbh (2014) 5 SCC 1, at para. 90 (“… the courts play a supportive role in encouraging the arbitration to proceed rather than letting it come to a grinding halt.”). 20. See Arbitration and Conciliation Act, 1996, ss. 8, 9, 11, 13, 14, 27, 29A, 34, 36, 37, 43, and 45.

952

Law, Practice and Procedure of Arbitration in India

The legislative policy, however, is to provide for minimal judicial intervention21 so as to encourage speedy resolution of disputes.22 This principle of minimal judicial intervention applies to all parts of the Act, not just Part I.23 The relationship between courts and arbitral tribunals has often been compared to a relay race, that is:

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“… the handling of arbitral disputes should resemble a relay race. In the initial stages, before the arbitrators are seized of the dispute, the baton is in the grasp of the court; for at that stage there is no other organisation which could take steps to prevent the arbitration agreement from being ineffectual. When the arbitrators take charge, they take over the baton and retain it until they have made an award. At this point, having no longer a function to fulfill, the arbitrators hand back the baton so that the court can in case of need lend its coercive powers to the enforcement of the award … In real life the position is not so clear-​cut. Very few commentators would now assert that the legitimate functions of the Court entirely cease when the arbitrators receive the file …”24

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Hence, normally:

(1) in the beginning of the arbitration, national courts must enforce the agreement to arbitrate;



(2) during arbitration, the arbitral tribunal takes all procedural and substantive decisions and makes the award; and



(3) post arbitration, national courts must enforce the award.25

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The circumstances in which the court can exercise its jurisdiction pre-​arbitration, during arbitration, and post arbitration are detailed below.

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[33.2] COURT’S JURISDICTION AT THE PRE-​ARBITRATION STAGE

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At the pre-​arbitration stage, courts may be required to exercise jurisdiction in four circumstances, that is:

21. Swiss Timing Ltd. v Commonwealth Games 2010 Organising Committee (2014) 6 SCC 677, at para. 25 (“… policy of least interference in arbitration proceedings recognizes the general principle that the function of courts in matters relating to arbitration is to support arbitration process.”); Enercon (India) Ltd. v Enercon Gmbh (2014) 5 SCC 1, at para. 90. 22. P. Anand Gajapathi Raju v P.V.G. Raju (2000) 4 SCC 539, at para. 4. 23. See Venture Global Engg v Satyam Computer Services Ltd. (2008) 4 SCC 190, at para. 25. 24. Lord Mustill, “Comments and Conclusions”, in International Chamber of Commerce (ICC) (ed.) Conservatory Provisional Measures in International Arbitration: 9th Joint Colloquium (ICC 1993), p. 118. 25. Nigel Blackaby, Constantine Partasides QC, Alan Redfern, J. Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 7.07.

953

Chapter 33—​Jurisdiction of the High Court

(1) to enforce the arbitration agreement;



(2) to grant interim relief;



(3) to constitute the arbitral tribunal; and



(4) to extend the time for commencement of arbitral proceedings.

Jurisdiction to Enforce the Arbitration Agreement

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Often, despite the presence of an arbitration clause, a party may approach a court for resolution of the dispute. If the other party does not object, the arbitration agreement is deemed waived and court proceedings can continue. However, if the other party insists on having the dispute resolved by arbitration, courts will have to intervene.26

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In such circumstances, national courts are obligated under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) and Model Law to enforce the agreement to arbitrate and refer the parties to arbitration.27

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The English Arbitration Act contains similar provisions to the Model Law inasmuch as it gives the court jurisdiction to stay court proceedings, “in respect of a matter which under the agreement is to be referred to arbitration” unless the arbitration agreement is “null and void, inoperative, or incapable of being performed.”28 The position in Singapore29 is similar.

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The Arbitration Act obligates judicial authorities to refer parties to arbitration if the dispute is covered by a valid arbitration agreement,30 significant departures from the Model Law have been made, in as much as:

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26. See Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 7.10. 27. See Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958, art. II(3) (“The court of a Contracting state, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.”); UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 8 (“A court before which an action is brought in a matter which is the subject matter of an arbitration agreement shall, if the party so requests not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.”). For a detailed discussion on the stay of court proceedings and reference of dispute to arbitration, see Chapters 14, 15, and 16. 28. English Arbitration Act, 1996, s. 9. 29. International Arbitration Act, 2002, s. 6. 30. Arbitration and Conciliation Act, 1996, ss. 8, 45. See Hindustan Petroleum Corporation Ltd. v Pinkcity Midway Petroleum (2003) 6 SCC 503, at para. 14 (“… in cases where there is an arbitration clause in the agreement, it is obligatory for the court to refer the parties to arbitration in terms of their arbitration agreement and nothing remains to be decided in the original action after such an application is made …”); Sundaram Finance Ltd. v T. Thankam (2015) 14 SCC 444, at para. 13 (“… approach of the civil court should be not to see whether the court has jurisdiction. It should be to see whether its jurisdiction has been ousted.”); P. Anand Gajapati Raju v P.V.G. Raju (2000) 4 SCC 539, at para. 8 (“… The language of Section 8 is peremptory. It is, therefore, obligatory for the Court to refer the parties to arbitration …”).

954

Law, Practice and Procedure of Arbitration in India

(1) the Arbitration Act gives a “judicial authority”, and not “court” the jurisdiction to refer parties to arbitration;



(2) in domestic arbitrations, pursuant to the 2015 Amendment Act,31 the judicial authority is obligated to refer the dispute to arbitration unless “prima facie no valid arbitration agreement exists”;32 and



(3) in international commercial arbitrations, pursuant to the 2019 Amendment Act,33 the judicial authority is obligated to refer the dispute to arbitration unless it “prima facie finds that the said agreement is null and void, inoperative or incapable of being performed.”34

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Hence, though the jurisdiction to refer parties to arbitration, at the pre-​arbitral stage, can be exercised by judicial authorities, not just courts, the scope of enquiry at the pre-​ arbitral stage has been limited to a prima facie determination.35

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This is because the legislative intent was to vest jurisdiction to decide all objections with the arbitral tribunal.36 However, a court may decline to refer parties to arbitration if it finds that the dispute is non-​arbitrable37 or in case of serious allegations of fraud that go to the validity of the arbitration agreement.38

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Pertinently, in case of a domestic arbitration, if the court concludes that prima facie there is no arbitration agreement, the court’s decision will be subject to appeal before another court.39

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31. See Report No. 246: Amendments to the Arbitration and Conciliation Act 1996, Law Commission of India, Government of India (August 2014), at para. 33. 32. This is different from the Model Law that states that courts must refer parties to arbitration unless “the agreement is null and void, inoperative or incapable of being performed.” 33. See Report of the High-​Level Committee to Review the Institutionalisation of Arbitration Mechanism in India, Justice B.N. Srikrishna (30 July 2017), pp. 66–​67. 34. This is distinct from the Model Law in as much as the determination can only be prima facie. 35. See Shin Etsu Chemicals Co. Ltd. v Akash Optifibre Ltd. (2005) 7 SCC 234, at para. 106–​107; Uttam Chand Rakesh Kumar and Ors. v Derco Foods I.A. No. 6117/​2020 in CS (Comm) 248 of 2020, High Court of Delhi (9 November 2020). 36. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 315. See Report No. 246: Amendments to the Arbitration and Conciliation Act 1996, Law Commission of India, Government of India (August 2014), at para. 33. 37. See Booz Allen and Hamilton Inc. v SBI Home Finance Ltd. and Ors (2011) 5 SCC 532; Vimal Kishor Shah and Ors v Jayesh Dinesh Shah and Ors (2016) 8 SCC 788. 38. See A. Ayyasamy v A. Paramasivam & Ors. (2016) 10 SCC 386, at paras 18, 25 (“… mere allegation of fraud simpliciter may not be a ground to nullify the effect of arbitration agreement … It is only in those cases where the court, while dealing with Section 8 of the Act, finds that there are very serious allegations of fraud which make a virtual case of criminal offence or where allegations of fraud are so complicated that it becomes absolutely essential that such complex issues can be decided only by the civil court on the appreciation of the voluminous evidence that needs to be produced, the court can sidetrack the agreement by dismissing the application under Section 8 and proceed with the suit on merits.”); Ameet Lalchand Shah & Ors. v Rishabh Enterprises & Anr (2018) 15 SCC 678, at paras 34–​37. 39. See Arbitration and Conciliation Act, 1996, s. 37(1)(a).

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Chapter 33—​Jurisdiction of the High Court

Jurisdiction to Grant Interim Relief Though an arbitral tribunal has the power to grant interim relief, the respondent may take steps to dissipate its assets during the time it takes to constitute the tribunal.40

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Even though, for situations like this, institutional rules contain provisions for appointment of an emergency arbitrator,41 national laws of all States may not contain provisions for enforcement/​recognition of the order of the emergency arbitrator.42

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Further, in India, where majority of arbitrations are ad hoc, the option of approaching an emergency arbitrator for interim measures before the commencement of arbitral proceedings is not available. In such circumstances, involvement of the court becomes necessary to protect the interests of parties before constitution of the tribunal.43

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The Model Law permits parties to request national courts to grant interim measures even before the commencement of arbitral proceedings.44 The position in England45 and Singapore46 is similar.

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Under the Arbitration Act, a court47 has the jurisdiction to make an order for interim measures before the commencement of arbitral proceedings.48

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Though the court can grant interim relief even if no notice invoking arbitration has been issued, the court should only exercise jurisdiction if there is a manifest intention on part of the appellant to initiate arbitration proceedings.49

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This is why the Arbitration Act requires that, in such a situation, arbitral proceedings be commenced within “a period of ninety days from the date of such order or within such further time as the Court may determine.”50

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40. Such a situation arises where one party fears that waiting for the appointment of the tribunal that can take some time (especially when the other party refuses to participate in the appointment process, or commences proceedings in a court in breach of the arbitration agreement) may jeopardise its rights in the arbitration. 41. LCIA Arbitration Rules, 2020, art. 9B; ICC Rules of Arbitration, 2021, art. 29; SIAC Rules, 2016, r. 30. 42. See Raffles Design International India Pvt. Ltd. v Educomp Professional Education Limited & Ors. (2016) SCC OnLine Del 5521, at para. 104; Future Retail Ltd. v Amazon.Com Investment Holdings LLC & Ors. CS (COMM) 493/​2020, High Court of Delhi (21 December 2020). 43. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 7.17. For a detailed discussion on the power of courts to grant interim measures, see Chapter 33. 44. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 9. 45. English Arbitration Act, 1996, s. 44(3). See Channel Tunnel Group Ltd. v Balfour Beatty Construction Ltd. 1993 1 All ER 664 (“… the purpose of interim measures of protection … is not to encroach on the procedural powers of the arbitrators but to reinforce them …”). 46. International Arbitration Act, 2002, s. 12A. 47. Arbitration and Conciliation Act, 1996, s. 2(1)(e). 48. Arbitration and Conciliation Act, 1996, s. 9. 49. Sundaram Finance Ltd. v N.E.P.C. India Ltd. (1999) 2 SCC 479. 50. Arbitration and Conciliation Act, 1996, s. 9(2).

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Law, Practice and Procedure of Arbitration in India

Pursuant to the 2015 Amendment Act, Indian courts have the jurisdiction to grant interim relief, prior to commencement of even international commercial arbitrations, seated outside India.51 Courts have shown their willingness to allow parties to seek interim measures in foreign-​seated arbitrations even where similar measures were obtained from the arbitral tribunal before approaching the court.52

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However, the High Court of Delhi, in Ashwani Minda and Jay Ushin Limited v U-​shin Limited and Minebea Mitsumi Inc.,53 refused to grant interim measures, on inter alia the ground that equally efficacious remedy was available to the parties from the arbitral tribunal under the Japan Commercial Arbitration Association (JCAA) Rules.

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Appointment of Arbitrator

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If parties have failed to make adequate provisions for constitution of the tribunal, and there are no applicable institutional rules, national courts will have the jurisdiction to intervene and constitute the tribunal.54

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The Model Law provides that a court or other competent authority55 will have the jurisdiction to appoint any arbitrator if: (1) a party fails to act, as required within the requisite time periods;



(2) the parties are unable to reach an agreement;



(3) the two arbitrators are unable to agree upon the third arbitrator; or



(4) a third party, including an institution fails to perform any function entrusted to it.56

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In England, the statute gives the court jurisdiction to make appointment of the arbitrator in case of any failure of the appointment procedure.57 In contrast, in Singapore

51. Arbitration and Conciliation Act, 1996, s. 2(2). 52. Raffles Design International India Pvt. Ltd. v Educomp Professional Education Limited & Ors. (2016) SCC OnLine Del 5521. 53. (2020) SCC OnLine Del 721. (A special leave petition against the decision of the High Court of Delhi was dismissed by the Supreme Court of India on 31 July 2020 (Special Leave to Appeal (C) No(s). 9003/​2020).) 54. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 7.11. For a detailed discussion on the appointment of arbitrators, see Chapters 20 and 22. 55. See UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 6. 56. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 11. 57. English Arbitration Act, 1996, s. 18.

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and Hong Kong, the appointing authority that is usually an arbitral institution has the jurisdiction to make such appointment.58 In India, the power to appoint an arbitrator has been held to be a judicial power, and not an administrative one.59 This means that the court cannot delegate this power to an institution.

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Post the 2015 Amendment Act, Section 11 confers a default power on the Supreme Court of India, in an international commercial arbitration,60 and the High Court, in a domestic arbitration,61 or “any person or institution designated by such Court” to act in aid of the arbitral process by making appointment of arbitrators, on failure of the parties or party-​appointed arbitrators to comply with the procedure.62

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However, the court would have no jurisdiction to make such an appointment in case of serious allegation of fraud going to the validity of the arbitration agreement63 or in case of a serious dispute between parties on the genuineness of the arbitration agreement.64

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Further, the court has no jurisdiction to appoint an arbitrator in statutory arbitrations under special enactments.65 Neither does the court have jurisdiction where the parties have agreed that the arbitration will be conducted in accordance with institutional rules.66

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In case where there is more than one request to appoint an arbitrator, to different High Courts, the High Court to which the request was first made alone has the jurisdiction to hear such request.67

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58. International Arbitration Act, 2002, ss. 9A, 9B; Hong Kong Arbitration Ordinance, s. 13(2). 59. See S.B.P. & Co. v Patel Engineering Ltd. & Anr (2005) 8 SCC 618, at para. 47; National Insurance Co. Ltd. v Boghara Polyfab Pvt. Ltd. (2009) 1 SCC 267. 60. Arbitration and Conciliation Act, 1996, s. 11(12)(a). 61. Arbitration and Conciliation Act, 1996, s. 11(12)(b). 62. Arbitration and Conciliation Act, 1996, s. 11(4)–​(6). 63. Rashid Raza v Sadaf Akthar 2019 8 SCC 710, at para. 4-​6. 64. Sulekh Aggarwal v Shiv Astha Construction Co. Ltd. (2017) SCC OnLine Del 6524, at paras 14–​17. 65. See Gujarat Urja Vikas Nigam Ltd. v Essar Power Ltd. (2008) 4 SCC 755, at para. 28 (“Section 86(1)(f) is a special provision and hence will override the general provision in Section 11 …”); General Manager, National Highways and Infrastructure Development Corporation Ltd. v Prakash Chand Pradhan & Ors. (2018) SCC OnLine SC 3245, at para. 4 (“… a Section 11 application under the 1996 Act cannot be made as the Central Government alone is to determine who is to be an arbitrator under Section 3-​G (5) of the National Highways Act.”); NHAI v Sayedabad Tea Company Ltd. & Ors. (2019) SCC OnLine SC 1102, at para. 16–​20. 66. See Antrix Devas Ltd. v Devas Multimedia (P) Ltd. (2014) 11 SCC 560, at paras 34–​35. 67. Arbitration and Conciliation Act, 1996, s. 11(11).

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Law, Practice and Procedure of Arbitration in India

The High-​Level Committee observed that even though the 2015 Amendment Act has streamlined the procedure for appointment of an arbitrator, the court was still required to examine the existence of an arbitration agreement68 that was resulting in delays in initiation of arbitration.69 The High-​Level Committee also noted that the procedure for appointment of arbitrators in other jurisdictions does not require extensive court involvement.70

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Hence, it recommended that the practice followed in other jurisdictions, namely, Singapore and Hong Kong, be adopted, so as to give a boost to the growth of institutional arbitration.

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The 2019 Amendment Act amended Section 11 by taking this recommendation into consideration. As it now stand after post amendment, the court has no jurisdiction to appoint the arbitrator(s).

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Instead, the arbitrator is to be appointed by the arbitral institution designated by the Supreme Court of India, in case of international commercial arbitrations, and the High Court, in case of domestic arbitrations.71

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The institutions that may act as appointing authority under Section 11 are those designated by the Supreme Court of India or High Court, on the basis of grading given by the Arbitration Promotion Council of India (“APCI”).72

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However, the APCI has not been constituted. This amendment also has not operational as to date.73

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68. See Arbitration and Conciliation Act, 1996, s. 11(6A). 69. See Report of the High-​Level Committee to Review the Institutionalisation of Arbitration Mechanism in India, Justice B.N. Srikrishna (30 July 2017), p. 74 (“While these amendments no doubt facilitate the speedy disposal of section 11 applications to a large extent, they do not go all the way in limiting court interference. Pursuant to the amendments, the appointment of arbitrators under section 11 may be done: (a) by the Supreme Court or the High Court; or (b) by a person or institution designated by such court in exercise of an administrative power following section 11(6B). In either case, the amendments still require the Supreme Court /​the High Court to examine whether an arbitration agreement exists, which can lead to delays in the arbitral process as extensive evidence and arguments may be led on the same.”). 70. See Report of the High Level Committee to Review the Institutionalisation of Arbitration Mechanism in India, Justice B.N. Srikrishna (30 July 2017), p. 74 (“… in Singapore, the relevant provision of the IAA provides that where the parties fail to agree on the appointment of the third arbitrator … the appointment shall be made by the appointing authority (the President of the SIAC) … arbitration legislation of Hong Kong incorporates Article 11 of the UNCITRAL Model Law … appointment of arbitrator(s) is done by the HKIAC …”). 71. The Arbitration and Conciliation (Amendment) Act, 2019, s. 3. 72. The Arbitration and Conciliation (Amendment) Act, 2019, ss. 3, 43-​I. See Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 452. 73. See Notification (S.O. 3154(E) (30 August 2019), Department of Legal Affairs, Ministry of Law and Justice.

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Chapter 33—​Jurisdiction of the High Court

Jurisdiction to Extend the Time to Commence Arbitral Proceedings Both in England74 and India,75 the courts have the jurisdiction to extend contractually agreed timelines to commence arbitral proceedings subject to time bar clauses. An English court can do so if it is satisfied that: (1) the circumstances were outside the “reasonable contemplation of parties” when they agreed to the time limit;



(2) the extension of time would be just; or



(3) the conduct of one party makes it unjust to hold the other to the strict time limits.76

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Further, the court must examine all relevant circumstances of the case prior to making its decision.77

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The Indian court has the jurisdiction to extend the time if it is of the opinion that “undue hardship”78 will be caused.79

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The court will examine the following factors namely, the conduct of the party, bona fides, reasonableness of the claim, amount at stake, reasons for delay in commencement of arbitration, possibility of material prejudice being caused by extension of time, when determining whether there is any undue hardship.80

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[33.3] COURTS’ JURISDICTION DURING ARBITRATION

(1) to grant interim relief;

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During arbitration, courts may be required to exercise jurisdiction in limited circumstances, namely:

See English Arbitration Act, 1996, s. 12. Arbitration and Conciliation Act, 1996, s. 43(3). See English Arbitration Act, 1996, s. 12(3). Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 7-​704. See Harbour and General Works Ltd. v Environment Agency 2000 1 WLR 950 (“… section is concerned not to allow the court to interfere with a contractual bargain unless the circumstances are such that if they had been drawn to the attention of the parties when they agreed the provision, the parties would at the very least have contemplated that the time bar might not apply –​it then being for the court finally to rule as to whether justice required an extension of time to be given.”). 78. Liberian Shipping Corporation “Pegasus” v A. King and Sons Ltd. [1967] 1 All ER 934 (“It means greater hardship than the circumstances warrant. Even though a claimant has been at fault himself, it is an undue hardship on him if the consequences are out of proportion to his fault.”). 79. Arbitration and Conciliation Act, 1996, s. 43(3). 80. Sterling General Insurance Co. v Planters Airways Pvt. Ltd. (1975) 1 SCC 603, at para. 14 (“‘Undue’ must mean something which is not merited by the conduct of the claimant, or is very much disproportionate to it.”).

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74. 75. 76. 77.

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Law, Practice and Procedure of Arbitration in India



(2) to decide challenges to the arbitrator;



(3) to decide whether the arbitrator’s mandate must be terminated;



(4) to assist in taking evidence; and



(5) to extend the time for making an award.

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Jurisdiction to Grant Interim Measures during the Arbitral Proceedings

Ordinarily, during the course of the arbitral proceedings the power to issue interim measures lies with the arbitral tribunal. However, the powers of the tribunal are limited to the parties to the arbitration.81

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Since only courts can issue third party orders, it becomes necessary to grant national courts the jurisdiction to grant interim relief, even during the course of arbitration proceedings.82 An application to the court for interim relief is not considered to be a waiver of the arbitration clause.83

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The UNCITRAL Model Law permits a party to approach the court for interim relief.84 In England, too, the court can grant interim relief in case of urgency.85

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The Arbitration Act permits a party to approach the court86 “during arbitral proceedings” for interim relief.87 However, since an arbitral tribunal has the same power to grant interim relief as a court,88 the court will not have the jurisdiction to grant interim relief unless it finds that “circumstances exist which may not render the remedy provided under section 17 efficacious.”89

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81. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 17(2). 82. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 7.18. For a detailed discussion on the power of the courts to grant interim relief, see Chapter 33. 83. UNCITRAL Arbitration Rules, 2013, art. 26(9); LCIA Arbitration Rules, 2020, art. 9.13; ICC Rules of Arbitration, 2021, art. 28(2); SIAC Rules, 2016, art. 30.3. 84. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 9. 85. English Arbitration Act, 1996, s. 44(3). 86. Arbitration and Conciliation Act, 1996, s. 2(1)(e). 87. Arbitration and Conciliation Act, 1996, s. 9(1). 88. Arbitration and Conciliation Act, 1996, s. 17. 89. Arbitration and Conciliation Act, 1996, s. 9(3). See Ashwani Minda and Jay Ushin Limited v U-​shin Limited and Minebea Mitsumi Inc. (2020) SCC OnLine Del 721, at para. 34 (“Section 9(3) of the Act reflects that understanding, and manifests a legislative preference that the grant of interim measures ought to be considered by the arbitral tribunal, once constituted, rather than by the courts. It is only when the remedy before the tribunal lacks efficacy, that a party can seek interim measures from the court under Section 9.”).

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Chapter 33—​Jurisdiction of the High Court

This in no way means that the jurisdiction of the court to grant relief during the course of the arbitration proceedings has been reduced/​curbed.90 The court can exercise such jurisdiction if circumstances exist where the remedy under Section 17 of the Arbitration Act is not equally efficacious.

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If the arbitral tribunal is not functional for a short duration of time, the court will have jurisdiction to grant interim relief.91 Further, as stated above, since an arbitral tribunal cannot pass directions against third parties, the court may be approached during the arbitration proceedings, to seek directions against a third party.92

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Lastly, if the arbitration agreement confers exclusive jurisdiction on a particular court, all applications, including the application for interim relief can only be filed before that court.93 Further, if an application for interim relief is moved before one of the courts of competent jurisdiction, only that court will have the jurisdiction to decide all subsequent applications.94

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90. See Benara Bearings and Pistons Ltd. v Mahle Engine Components India Pvt. Ltd. (2017) SCC OnLine Del 7226, at para. 24 (“… Section 9(3) does not operate as an ouster clause insofar as the courts’ powers are concerned … if the argument of the appellant were to be accepted that the moment an Arbitral Tribunal is constituted, the Court which is seized of a Section 9 application, becomes coram non judice, would create a serious vacuum as there is no provision for dealing with pending matters. All the powers of the Court to grant interim measures before, during the arbitral proceedings or at any time after the making of the arbitral award but prior to its enforcement in accordance with Section 36 are intact (and, have not been altered by the amendment) as contained in Section 9(1) of the said Act. Furthermore, it is not as if upon the very fact that an Arbitral Tribunal had been constituted, the Court cannot deal with an application under sub-​section (1) of Section 9 of the said Act. Section 9(3) itself provides that the Court can entertain an application under Section 9(1) if it finds that circumstances exist which may not render the remedy provided under Section 17 efficacious.”); M. Ashraf v Kasim VK (2018) SCC OnLine Ker 18078, at para. 8 (“… there is no absolute bar under Section 9(3) of the Act against entertainment of an application under Section 9(1)(ii) of the Act by the Court after the constitution of the Arbitral Tribunal.”). 91. See Energo Engineering Projects Ltd. v TRF Ltd. (2016) SCC OnLine Del 6560, at para. 28 (“When there is an application for interim relief under Section 9, the Court is required to examine if the applicant has an efficacious remedy under Section 17 of getting immediate interim relief from the Arbitral Tribunal. Once the court finds that circumstances exist, which may not render the remedy provided under Section 17 of the 1996 Act efficacious, the Court has the discretion to entertain an application for interim relief. Even if an Arbitral Tribunal is non functional for a brief period of time, an application for urgent interim relief has to be entertained by the Court under Section 9 …”). 92. See Value Advisory Services v M/​s ZTE Corporation (2009) SCC OnLine Del 1961; Girish Mulchand Mehta & Anr. v Mahesh S. Mehta & Anr (2009) SCC OnLine Bom 1986, at para. 12 (“Section 9, however, does not limit the jurisdiction of the Court to pass order of interim measures only against party to an Arbitration Agreement or Arbitration Proceedings … The fact that the order would affect the person who is not party to the Arbitration Agreement or Arbitration Proceedings does not affect the jurisdiction of the Court under section 9 of the Act which is intended to pass interim measures of protection or preservation of the subject-​matter of the Arbitration Agreement.”). 93. See B.E. Simoese Von Staraburg Niedenthal v Chhattisgarh Investment Ltd (2015) 12 SCC 225, at paras 10–​12. 94. State of W.B. v Associates Contractors (2015) 1 SCC 32.

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Law, Practice and Procedure of Arbitration in India

Jurisdiction to Decide Challenges to the Arbitrator The Model Law grants courts, or any other competent authority,95 the jurisdiction to decide challenges to the impartiality and independence of the arbitrator, on appeal, if the challenge before the arbitral tribunal is not successful.96

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As per the Model Law, such decision of the court will be final and not subject to further appeal.97 Further, the Model Law provides that during the pendency of a challenge before a court, the arbitral tribunal “may continue the arbitral proceedings and make an award.”98

The position in England is similar. Courts have the power to remove an arbitrator, inter alia, if there are justifiable doubts as to his impartiality.99

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The position in India differs from that of the Model Law. The power to decide any challenge to the arbitrator lies with the arbitral tribunal. The courts do not have the jurisdiction to hear an appeal from the arbitrator’s ruling on the challenge.

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The award made, pursuant to dismissal of challenge to the arbitrator, can only be challenged in setting aside proceedings, post completion of the arbitration.100

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Hence, in contrast with the Model Law, the Arbitration Act did not give courts the jurisdiction to intervene at the intermediate stage. However, if the award is set-​aside on this basis, the court has the jurisdiction to decide any entitlement of the arbitrator as to fee.101

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Jurisdiction to Decide whether the Arbitrator’s Mandate Must Be Terminated

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The Model Law grants courts, or any other competent authority,102 the jurisdiction to decide on the termination of the mandate of the arbitrator, if he/​she becomes “de jure or de facto unable to perform his functions or … fails to act without undue delay”.103

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95. See UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 6. 96. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 13. For a detailed discussion on the removal of an arbitrator, see Chapter 23. 97. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 13(3). 98. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 13(3). 99. English Arbitration Act, 1996, s. 24. 100. Arbitration and Conciliation Act, 1996, s. 13(5). See Progressive Career Academy Pvt. Ltd. v FIIT JEE Ltd. (2011) SCC OnLine Del 2271, at para. 20 (“… the Indian Parliament did not want curial interference at an interlocutory stage of the arbitral proceedings on perceived grounds of alleged bias … a challenge on this score is possible in the form of Objections to the Final Award under Section 34 of the A&C Act. Indeed, this is a significant and sufficient indicator of Parliament’s resolve not to brook any interference by the Court till after the publication of the Award.”); SAIL v British Marine PLC (2016) SCC OnLine Del 5599, at para. 38. 101. Arbitration and Conciliation Act, 1996, s. 13(6). 102. See UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 6. 103. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 14.

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Chapter 33—​Jurisdiction of the High Court

Any such decision of the court will be final and not subject to an appeal. The position in England is similar,104 save that the court’s decision can be appealed, with leave of the court.105 Section 14 of the Arbitration Act adopts the Model Law position. It states that the mandate of an arbitrator “shall terminate” if:106 (1) he becomes “de jure or de facto” unable to perform his/​her functions (A de jure inability relates to the arbitrator’s inability to function, as a matter of law or fact. For example, an expiry of the prescribed period for making the award,107 apprehension with regard to fairness of the arbitral proceedings,108 appointment contrary to the mandatory provision of Section 12(5) of the Arbitration Act,109 all would render the arbitrator de jure unable to continue with the proceedings. On the other hand, a de facto inability refers to the arbitrator’s inability to function due to reasons beyond his control, such as ill health, death etc.110); or



(2) he fails to act without undue delay.111

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See English Arbitration Act, 1996, s. 12(1)(d). English Arbitration Act, 1996, s. 12(6). Arbitration and Conciliation Act 1996, s. 14(1)(a). Shyam Telecom Ltd. v A.R.M. Ltd. (2004) SCC OnLine Del 754, at para. 15 (“… the terms of Arbitration Agreement must operate in full. The consequence of the Arbitrator not concluding the proceedings and rendering the Award within the period prescribed under the Arbitration Agreement as in the present cases would uncloth the arbitrator of his legal authority to continue with the proceedings unless the parties agree to extend the period of making the Award or a party waives his right to such an objection. It must, therefore, be held that expiry of the prescribed period for making the award, would render the Arbitrator ‘de jure’ unable to continue with the proceedings …”). Parekh Industries Limited v Diamond India Ltd (2019) SCC OnLine Bom 851, at paras 31–​37 (“… in the context of Section 14(1)(a) of the ACA, to ascertain as to whether an arbitral tribunal is de jure unable to perform its functions, would take within its ambit due consideration to the fact as to whether the arbitral tribunal is functioning without any bias and confidence of the parties, which is very fundamental to such adjudication process. This more particularly for the reasons that an arbitral tribunal has all traits of a judicial dispensation involving vital elements of a fair and just adjudication of disputes, which include procedural fairness to the expectation of the parties who have reposed such confidence in the arbitral tribunal.”). West Haryana Highways Projects Pvt. Ltd. v National Highways Authority (2017) SCC OnLine Del 8378, at para. 24 (... If an arbitrator is appointed contrary to Section 12(5) read with the Seventh Schedule, he is de jure ineligible to perform his functions and the mandate of such an arbitrator can be terminated by the court under Section 14(2) of the Act. Section 13(3) and 13(5) would have no application in such circumstances.”). Priknit Retails Ltd. v Aneja Agencies (2013) SCC OnLine Del 534, at para. 19 (“… the de facto inability to function should be such which by the very occurrence of the fact itself implies that the arbitrator cannot function without any further enquiry. The example of the same would be death of the arbitrator or health problem of the arbitrator etc.”); Shyam Telecom Ltd. v A.R.M. Ltd. (2004) SCC OnLine Del 754, at para. 13. Union of India v UP State Bridge Corp. (2015) 2 SCC 52; Gurcharan Singh Sahney v Harpreet Singh Chabbra (2016) SCC OnLine Hyd 90, at para. 123 (“… undue delay, and not mere delay, would alone justify the court declaring that the mandate of the arbitrator stands terminated. The word ‘undue’ means unjustified, unwarranted, unreasonable, excessive, inordinate … the Court must be satisfied that the delay, on the part of the arbitrator, is unjustified, inordinate or unwarranted … to declare that the mandate of the arbitrator stands terminated, the petitioner was not only required to plead but also to prove that the arbitrator had failed to act without undue delay. The word ‘fail’ means neglect, go wrong or fall short of what is expected …”).

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108.

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104. 105. 106. 107.

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110.

111.

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Law, Practice and Procedure of Arbitration in India

The court will have the jurisdiction to decide on the termination of the arbitrator’s mandate in case of any controversy concerning these grounds, on application of a party.112 Hence, if these grounds are made out there is no need to approach the arbitral tribunal since the Arbitration Act provides a direct recourse to courts during the course of arbitration proceedings itself.113

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However, if a party has already adopted the challenge procedure under Section 13 of the Arbitration Act it cannot “invoke Section 13 of the Act but will have to wait for the pronouncement of the Award.”114

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In a case where the arbitrator is ineligible to be appointed115 or where the arbitrator fails to act in terms of the agreement116, the court possesses the jurisdiction to terminate his/​her mandate.

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The court possessing jurisdiction to terminate the mandate of the arbitrator is the highest civil court in the district, or a High Court, exercising original civil jurisdiction to decide the subject matter of arbitration, as if it had been the subject matter of a suit, as well as pecuniary jurisdiction.117

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Jurisdiction to Assist in Taking Evidence

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Ordinarily, an arbitral tribunal does not have the power to compel the attendance of witnesses, third parties to the arbitration or direct disclosure of documents in the hands of third parties.118 It thus becomes necessary to take the assistance of courts.119

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112. Arbitration and Conciliation Act, 1996, s. 14(2). See Lalitkumar V. Sanghavi v Dharamdas V. Sanghavi (2014) 7 SCC 255. 113. See HRD Corporation (Marcus Oil & Chemical Division) v GAIL (India) Ltd. (2018) 12 SCC 471. 114. SAIL v British Marine PLC (2016) SCC OnLine Del 5599, at para. 38. 115. See Arbitration and Conciliation Act, 1996, s. 12(5), Seventh Schedule. West Haryana Highways Projects Pvt. Ltd. v National Highways Authority of India (2017) SCC OnLine Del 8378, at para. 24. 116. See National Highways Authority of India v Sheladia Associates Inc. (2009) SCC OnLine Del 2541, at para. 37 (“… the de jure or de facto inability of the arbitrator to perform his functions or failure of the arbitrator to act without undue delay has to be seen in the context of the agreement between the parties. If the agreement of the parties is for the arbitration proceedings to be held at Delhi and the arbitrator continues to hold arbitration proceedings at Bhubaneswar, as in the present case, it would, in my opinion, amount to the arbitrator being unable to perform his functions or for other reasons failing to act in terms of the agreement without undue delay … Section 14 becomes attracted and the mandate of the arbitrator would stand terminated. However, since the petitioner is persisting that the arbitrator continues, a controversy within the meaning of Section 14 (2) remains on this ground and the petitioner is entitled to apply to the court to decide on the said termination.”). 117. Sri Sushanta Malik v SREI Equipment Finance Limited & Anr 2015 SCC OnLine Cal 10473. 118. See Jardine Lloyd Thompson Canada Inc. v SJO Catlin [2006] ABCA 18; Life Receivables Trust v Syndicate 102 at Lloyd’s of London 549 F.3d 210 (2nd Cir. 2008); Hay Group, Inc. v EBS Acquisition Corporation 360 F.3d 404 (3rd Cir. 2004). 119. See Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 7.32.

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Chapter 33—​Jurisdiction of the High Court

In the US, particularly, courts have the jurisdiction to order a person who resides/​ is found in the district, to give testimony or produce documents “for use in a foreign or international tribunal … upon application of any interested persons.”120 Further, courts have held that an arbitral tribunal is a “foreign or international tribunal” for the purpose of exercise of this power.121

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The Model Law permits the arbitral tribunal/​a party with the approval of the tribunal to request the court’s assistance in taking evidence.122 In England, too, courts have the jurisdiction to inter alia pass orders in relation to taking and preserving evidence, so as to support the arbitral proceedings123 and also secure the attendance of a witness.124

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In India a court has the jurisdiction to assist in taking evidence, at the request of the tribunal or a party, with the approval of the tribunal.125 Indu Malhotra explains that such jurisdiction is important because:

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“Where a witness is called by a party or the tribunal but is unwilling to appear before the tribunal to give evidence, the tribunal has no power to compel his attendance, even though that witness is within the control of one of the parties … tribunal lacks the coercive powers of state courts to enforce procedural orders/​directions with respect to taking evidence, particularly which are in the possession of a third party … The tribunal, or a party, may invoke the assistance of the court under this provision to compel the witness to attend the hearing … such assistance, although not frequently sought in practice, is considered useful since the arbitral tribunal does not possess the imperium of compulsion to enforce its directions.”126

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Hence, the court has the jurisdiction to compel attendance of witnesses residing within the territorial limits of its jurisdiction127 and pass necessary orders for production of documents.128

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1 20. 28 US Code, s. 1782. 121. Intel Corporation v Advanced Micro Devices Inc. 542 US 241; In Re Roz Trading Ltd. 469 F.Supp.2d 1221 (ND Ga. 2006); In re Consorcio Ecuatoriano de Telecommuniciaciones SA v JAS Forwarding Inc. 685 F.3d 987 (11th Cir. 2012); OJSC Ukrnafta v Carpatsky Petroleum Corporation Case No. 3.09 MC 265 (JBA), 2009 WL 2877156 (D. Conn., 27 August 2009). For judgments where courts have held that an arbitral tribunal is not a foreign or international tribunal, for the purpose of exercise of this power, see, El Paso Corporation v La Comision Ejecutiva Hidroelectrica Del Rio Lempa 341 Fed. Appx 31 (5th Cir. 2009); In re Application by Rhodianyl SAS 2011 U.S. Dist. LEXIS 72918 (D.Kan., 25 March 2011). 122. UNCITRAL Model Law on International Commercial Arbitration, art. 27. 123. English Arbitration Act, 1996, s. 44. 124. English Arbitration Act, 1996, s. 43. 125. Arbitration and Conciliation Act, 1996, s. 27(1). 126. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 731. 127. Reliance Polycrete Ltd. v National Agricultural Cooperative Marketing Federation of India (2008) SCC OnLine Del 837, at para. 11–​12. 128. Rasiklal Ratilal v Fancy Corporation Ltd. & Anr. (2007) SCC OnLine Bom 266.

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Law, Practice and Procedure of Arbitration in India

Additionally, if a party acts in contempt of any order passed by the arbitral tribunal, the court has jurisdiction to punish them as if such contempt was a contempt of court.129

Jurisdiction to Extend Time Limits for Making of an Award

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The Model Law is silent on the jurisdiction of the court to extend the time limits for making the award. However, in England, courts have the power to extend any time for making the award, “unless otherwise agreed by the parties”.130 The jurisdiction of the court only arises:

(1) after the arbitral process for obtaining an extension of time has been exhausted;131 and



(2) if substantial injustice will be caused.132

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The Arbitration Act provides a statutory time limit for making an arbitral award.133 However, if the award is not made within the prescribed period, the court has the jurisdiction to “either prior to or after the expiry of the period”, extend the same,134 if requested to do so by any of the parties to arbitration.135

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When extending the time, the court also has the jurisdiction to order a reduction of fees of the arbitrator, for each month of the delay, if it arrives at a finding that the delay is attributable to the arbitral tribunal.136 Further, the court may also impose actual/​exemplary costs upon any of the parties137 or substitute one or all of the arbitrators.138

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The High Court of Delhi in Delhi Development Authority v M/​s Tara Chand Sumit Construction Company139 held that the competent court to grant requests for extension would be the court having jurisdiction to appoint an arbitrator under Section 11 of the Arbitration Act.

1 29. 130. 131. 132. 133. 134. 135. 136. 137. 138. 139.

Arbitration and Conciliation Act, 1996, s. 27(5). See Alka Chandewar v Shamshul Ishrar (2017) 16 SCC 119. English Arbitration Act, 1996, s. 50(1). English Arbitration Act, 1996, s. 50(2). English Arbitration Act, 1996, s. 50(3). Arbitration and Conciliation Act, 1996, s. 29A. Arbitration and Conciliation Act, 1996, s. 29A(4). Arbitration and Conciliation Act, 1996, s. 29A(5). Arbitration and Conciliation Act, 1996, s. 29A(4). Arbitration and Conciliation Act, 1996, s. 29A(8). Arbitration and Conciliation Act, 1996, s. 29A(6). OMP (Misc.) (Comm.) 236/​2019, High Court of Delhi (12 May 2020), at para. 29.

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Chapter 33—​Jurisdiction of the High Court

However, while the court has the jurisdiction to grant an extension of time, it does not have the jurisdiction to delve into other issues that may be raised with respect to the conduct of the arbitration proceedings.140

[33.4] COURTS’ JURISDICTION POST AWARD

(1) issuance of interim measures;



(2) determination of challenges to the award; and



(3) enforcement of the award.

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On completion of the arbitration and making of the award, the court’s jurisdiction is limited to:

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Jurisdiction to Grant Interim Measures after the Issuance of the Arbitral Award

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As stated above, the Model Law gives courts the jurisdiction to grant interim relief prior to the commencement of arbitration and during the arbitral proceedings.

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The Arbitration Act goes a step further inasmuch as it gives courts141 the jurisdiction to grant interim relief even after the making of the arbitral award “but before it is enforced”.142 Such relief can be granted even in relation to a foreign award.143

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The objective of allowing courts to grant interim relief post the award is to safeguard the subject matter of the award, until enforcement takes place, so that the award is not reduced to a paper award.144

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Further, the court’s jurisdiction to grant interim measures after the making of the award becomes even more relevant in light of the amendments made to Section 17 by

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140. Ssangyong Engineering and Construction Company Limited v National Highways Authority of India (2018) SCC OnLine Del 10184, at para. 9; NCC Ltd. v Union of India (2018) SCC OnLine Del 12699, at para. 11 (“Section 29A of the Act is intended to sensitize the parties as also the Arbitral Tribunal to aim for culmination of the arbitration proceedings expeditiously. It is with this legislative intent, Section 29A was introduced in the Act by way of the Arbitration and Conciliation (Amendment) Act, 2015. This provision is not intended for a party to seek substitution of an Arbitrator only because the party has apprehension about the conduct of the arbitration proceedings by the said Arbitrator. The only ground for removal of the Arbitrator under Section 29A of the Act can be the failure of the Arbitrator to proceed expeditiously in the adjudication process.”). 141. Arbitration and Conciliation Act, 1996, s. 2(1)(e). 142. Arbitration and Conciliation Act, 1996, s. 9(1). 143. See Heligo Charters Private Limited v Aircon Feibars FZE (2018) SCC OnLine Bom 1388. 144. Indu Malhotra, Commentary on the Law of Arbitration, Vo1. 1 (4th edn, Wolters Kluwer 2020), p. 378.

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Law, Practice and Procedure of Arbitration in India

the 2019 Amendment Act, as per which the arbitral tribunal now has no powers to grant interim measures after making of the award.145

Jurisdiction to Determine Any Challenge to the Arbitral Award

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Once an arbitral award has been made it can only be challenged by filing an application for setting aside before a court. Courts have the jurisdiction to set aside the arbitral award only if certain specified grounds are satisfied.146

In India, the Arbitration Act lists limited grounds on which the court can set aside an award arising out of a domestic arbitration.147 These are in line with the grounds provided under Model Law.148

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The jurisdiction of courts to intervene in the award is limited. The jurisdiction is only of supervisory nature and limited to ensuring that the award is not vitiated by “procedural irregularities, lack of due process, jurisdictional errors, or is not contrary to the public policy of India”.149

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The court cannot review the merits of the dispute and its jurisdiction is limited to situations where the findings of the arbitrator are arbitrary, capricious, perverse etc.150 Hence, the court does not have the jurisdiction to correct the errors of arbitrators.

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1 45. The Arbitration and Conciliation (Amendment) Act, 2019, s. 4. 146. See UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 34; English Arbitration Act, 1996, ss. 67–​69; Arbitration and Conciliation Act, 1996, s. 34. 147. Arbitration and Conciliation Act, 1996, s. 34. See Associate Builders v Delhi Development Authority (2015) 3 SCC 49, at para. 15 (“… an arbitration award … can be set aside only on grounds mentioned under Sections 34(2) and (3) and not otherwise.”). For a detailed discussion on the setting aside of an arbitral award, see Chapter 45. 148. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 34. 149. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 869. 150. See MMTC Ltd. v Vedanta Ltd. (2019) 4 SCC 163, at para. 11–​12 (“… the position is well-​settled by now that the Court does not sit in appeal over the arbitral award and may interfere on merits on the limited ground provided under Section 34(2)(b)(ii) … such interference does not entail a review of the merits of the dispute, and is limited to situations where the findings of the arbitrator are arbitrary, capricious or perverse, or when the conscience of the Court is shocked, or when the illegality is not trivial but goes to the root of the matter.”); Sutlej Construction Ltd. v Union Territory of Chandigarh (2018) 1 SCC 718, at para. 9–​13 (“… when it comes to setting aside of an award under the public policy ground, it would mean that the award should shock the conscience of the Court and would not include what the Court thinks is unjust on the facts of the case seeking to substitute its view for that of the arbitrators to do what it considers to be ‘justice’.”); P.R. Shah, Shares & Stock Brokers (P) Ltd. v B.H.H. Securities (P) Ltd. (2012) 1 SCC 594, at para. 21 (“A court does not sit in appeal over the award of an Arbitral Tribunal by reassessing or reappreciating the evidence. An award can be challenged only under the grounds mentioned in Section 34(2) of the Act …”); Venture Global Engineering LLC and Ors. v Tech Mahindra Ltd. and Anr. (2018) 1 SCC 656, at para. 121 (“The award of an Arbitral Tribunal can be set aside only on the grounds specified in Section 34 of the AAC Act and on no other ground. The Court cannot act as an appellate court to examine the legality of award nor can it examine the merits of claim by entering in factual arena like an appellate court.”).

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Chapter 33—​Jurisdiction of the High Court

The court can only set aside the award, leaving the parties free to commence arbitration again, if they so desire.151 Neither does the court have suo moto jurisdiction to remand the dispute back to the arbitral tribunal once it decides to set aside the award.152

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Further, courts at the seat of arbitration exercise exclusive jurisdiction for the purposes of supervising arbitral proceedings.153 Hence, it is the court at the seat that has the jurisdiction to set aside the award.154

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Jurisdiction to Enforce the Arbitral Award

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Lastly, a court hearing a challenge to the award has to ensure that the challenge is brought within the statutory time limit provided under the Arbitration Act155 and does not have the jurisdiction to extend the statutory time limit.156 The position in Singapore is identical.157

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The jurisdiction to enforce the award lies with courts and can only be refused in certain limited circumstances.158

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151. McDermott International Inc. v Burn Standard Co. Ltd. & Ors (2006) 11 SCC 181, at para. 52 (“The 1996 Act makes provision for the supervisory role of courts, for the review of the arbitral award only to ensure fairness. Intervention of the court is envisaged in few circumstances only, like, in case of fraud or bias by the arbitrators, violation of natural justice, etc. The court cannot correct errors of the arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired. So, the scheme of the provision aims at keeping the supervisory role of the court at minimum level and this can be justified as parties to the agreement make a conscious decision to exclude the court’s jurisdiction by opting for arbitration as they prefer the expediency and finality offered by it.”). 152. Arbitration and Conciliation Act, s. 34(4). See Kinnari Mullick and Anr. v Ghanshyam Das Damani (2018) 11 SCC 328, at paras 15–​16 (“No power has been invested by Parliament in the Court to remand the matter to the Arbitral Tribunal except to adjourn the proceedings for the limited purpose mentioned in sub-​section (4) of Section 34 … the Court cannot exercise this limited power of deferring the proceedings before it suo motu. Moreover, before formally setting aside the award, if the party to the arbitration proceedings fails to request the Court to defer the proceedings pending before it, then it is not open to the party to move an application under Section 34(4) of the Act.”). 153. Indus Mobile Distribution Private Limited v Datawind Innovations Private Limited & Ors (2017) 7 SCC 678; Bharat Aluminum and Co. v Kaiser Aluminium and Co (2012) 9 SCC 552. 154. BGS SGS Soma JV v NHPC Limited (2020) 4 SCC 234; Omprakash v Vijay Dwarkada Varma (2020) SCC OnLine Bom 796, at para. 30. 155. Arbitration and Conciliation Act, 1996, s. 43. 156. Union of India v Popular Construction Company (2001) 8 SCC 470, at para. 12–​16 (“As far as the language of Section 34 of the 1996 Act is concerned, the crucial words are ‘but not thereafter’ used in the proviso to sub-​section (3). In our opinion, this phrase would amount to an express exclusion within the meaning of Section 29(2) of the Limitation Act, and would therefore bar the application of Section 5 of that Act. Parliament did not need to go further. To hold that the court could entertain an application to set aside the award beyond the extended period under the proviso, would render the phrase ‘but not thereafter’ wholly otiose. No principle of interpretation would justify such a result … the time-​limit prescribed under Section 34 to challenge an award is absolute and unextendible by court under Section 5 of the Limitation Act.”); Simplex Infrastructure Ltd. v Union of India (2019) 2 SCC 455. 157. BXS v. BXT [2019] SGHC (I) 10. 158. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 36; English Arbitration Act, 1996, s. 66; Arbitration and Conciliation Act, 1996, ss. 36, 48. For a detailed discussion on enforcement of arbitral awards, see Chapter 48.

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Law, Practice and Procedure of Arbitration in India

In India, once the domestic award has been passed and the court is satisfied that the grounds for setting aside the award are not made out, the court159 possesses the jurisdiction to enforce the award as a deemed decree of the court.160

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The Supreme Court of India in Sundaram Finance Ltd. v Abdul Samad and Anr.161 ruled on the appropriate court for filing enforcement proceedings. It held that any court in India where the assets of the award debtor are located will have the jurisdiction to enforce the award.162

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Enforcement of a foreign award may be refused if any of the grounds set out in Section 48 of the Arbitration Act are satisfied.163 Further, the High Court having original jurisdiction to decide the questions forming the subject matter of the arbitral award will have jurisdiction to enforce the foreign award.164

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[33.5] CONCLUSION

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Hence, in certain circumstances, recourse to courts, even when there is an arbitration agreement, is essential to properly serve the aims of justice.165 In fact:

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“it is increasingly realised in international arbitration circles that the intervention of the courts is not necessarily disruptive of the arbitration. It may equally be definitely supportive …”166

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The law attempts to balance the right of the court to supervise arbitrations, and the right of parties to solicit the court’s assistance in times of need.167

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As stated in this chapter, national laws often regulate the scope of interference by courts and contain provisions explicitly defining the court’s jurisdiction before, during, and after the arbitration proceedings. Further, at all times it is hoped that the court’s role is supportive and not interfering.

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1 59. Arbitration and Conciliation Act, 1996, s. 2(1)(e). 160. Arbitration and Conciliation Act, 1996, s. 36. 161. (2018) 3 SCC 622, at para. 20 (“… the enforcement of an award through its execution can be filed anywhere in the country where such decree can be executed and there is no requirement for obtaining a transfer of the decree from the court, which would have jurisdiction over the arbitral proceedings.”). 162. See Cheran Properties Limited v Kasturie and Sons Limited (2018) 16 SCC 413. 163. Arbitration and Conciliation Act, 1996, ss. 44, 53. 164. Arbitration and Conciliation Act, 1996, ss. 47, 49. 165. See Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 7.63. 166. Reymond, “The Channel Tunnel case and the Law of International Arbitration” (1993) 109 LQR 337. 167. See Nigel Blackaby Constantine, Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 7.64.

Chapter 34 POWERS OF A HIGH COURT [34.1] INTRODUCTION......................................................................................................................... 971 [34.2] NO INHERENT JURISDICTION TO SUPERVISE.................................................................. 973

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[34.3] SPECIFIC INTERLOCUTORY POWERS OF THE COURT.................................................. 974 [34.4] ASSISTANCE IN TAKING EVIDENCE..................................................................................... 978 [34.5] POWER TO SECURE THE AMOUNT IN DISPUTE.............................................................. 985 [34.6] POWER TO ORDER DETENTION, PRESERVATION, AND SALE OF PROPERTY/​ GOODS............................................................................................................................................ 986

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[34.7] POWER TO ISSUE INTERIM INJUNCTIONS AND ORDER APPOINTMENT OF RECEIVER...................................................................................................................................... 987 [34.8] RELIEF FROM ABORTIVE ARBITRATION............................................................................ 991

[34.1] INTRODUCTION

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[34.9] CONCLUSION............................................................................................................................... 992

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Minimum judicial intervention and maximum judicial support in arbitration is a hallmark of all developed safe seats for arbitration. Court support for and intervention in arbitration is a symbiotic relationship which cannot be eliminated altogether.

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The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (“New York Convention”) is silent on the powers of a court to grant interim relief in arbitration. Some courts have held that in view of Article II (3)1 of the New York Convention there is no power to do so.2 However, the ruling view is that courts do possess such powers.3

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1. Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958, Article II(3) (“The court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.”). 2. See McCreary Tire & Rubber Co. v CEAT, SpA 501 F.2d 1032 (3rd Cir. 1974) (“… attachment may be available for the enforcement of an arbitration award. This complaint does not seek to enforce an arbitration award by foreign attachment. It seeks to bypass the agreed upon method of settling disputes. Such a bypass is prohibited by the Convention … The Convention forbids the courts of a contracting state from entertaining a suit which violates an agreement to arbitrate …”); Cooper v Ateliers de la Motobecane SA 442 NE 2d 1239 (NY1982) (“The essence of arbitration is resolving disputes without the interference of the judicial process … The purpose and policy of the UN Convention will be best carried out by restricting prearbitration judicial action to determining whether arbitration should be compelled.”). 3. Carolina Power & Light Co. v Uranex 451 F.Supp. 1044 (ND Cal. 1977) (“This court … does not find the reasoning of McCreary convincing … nothing in the text of the New York Convention itself suggests that it precludes prejudgment attachment.”); Channel Tunnel Group Ltd. v Balfour Beatty Construction Ltd. [1993] AC 334 (“I am unable to agree with those decisions in the United States … These decisions are to the effect that interim measures must necessarily be in conflict with the obligations assumed by the subscribing nations to the New York Convention … I prefer the view that when properly used such measures serve to reinforce the agreed method, not bypass it.”).

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Law, Practice and Procedure of Arbitration in India

Both national arbitration legislation4 and institutional rules5 recognise these powers. Even when the arbitration statute and the arbitration agreement are silent6, the courts have held that they have the jurisdiction to grant provisional and interim measures so as to protect the parties and the arbitral process.7 Gary Born states:

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“… it is clearly wrong to interpret the Convention as generally prohibiting any court-​ordered provisional measures … it is equally wrong to interpret the Convention as permitting all court-​ordered provisional measures. There are circumstances in which applications for court-​ ordered provisional measures constitute an effort to evade or frustrate a party’s obligation to arbitrate, contrary to both its arbitration agreement and Article II (3) of the Convention …”8

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Although courts do possess powers to grant relief notwithstanding the commencement of arbitration, such powers should be exercised sparingly, only to ensure that:

(1) the parties are not left remediless until constitution of the arbitral tribunal and appointment of emergency arbitrator;



(2) the parties are not left remediless in ad hoc arbitrations, where there is no provision for appointment of an emergency arbitrator;



(3) the parties are able to obtain relief against third parties to the arbitration, should the need arise; and



(4) the arbitration process is supported.9

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4. See UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 9; Arbitration and Conciliation Act, 1996, s. 9; English Arbitration Act, 1996, s. 44; Hong Kong Arbitration Ordinance, s. 60; Swiss Law on Private International Law, arts 183, 185; Belgian Judicial Code, art. 1683. 5. UNCITRAL Rules, 2013, art. 26(9); ICC Rules of Arbitration, 2021, art. 28(2); LCIA Arbitration Rules, 2020, art. 25.3; SIAC Rules, 2016, r. 30.3. 6. See Federal Arbitration Act (9 U.S.C.). 7. Benihana Inc. v Benihana of Tokyo LLC 784 F.3d 887 (2nd Cir. 2015) (“Where the parties have agreed to arbitrate a dispute, a district court has jurisdiction to issue a preliminary injunction to preserve the status quo pending arbitration”); Janvey v Alguire 647 F.3d 585 (5th Cir. 2011) (“district court can grant injunctive relief in an arbitrable dispute pending arbitration”); WPC III Inc, v Benetech LLC 2012 U.S. Dist. LEXIS 110426 (E.D. La.) (“Court’s authority to grant provisional relief is not inconsistent with arbitration, as arbitrators usually do not have the power to order or enforce provisional remedies, and parties in arbitration have the look to the courts for such orders.”). 8. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2714. 9. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2712; Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 240. See Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] 1 All ER 664 (“The purpose of interim measures of protection, by contrast, is not to encroach on the procedural powers of the arbitrators but to reinforce them, and to render more effective the decision at which the arbitrators will ultimately arrive on the substance of the dispute. Provided that this and no more is what such measures aim to do, there is nothing in them contrary to the spirit of international arbitration.”); Cetelem SA v Roust Holdings Ltd [2005] EWCA Civ 618 (“The whole purpose of giving the court power to make such orders is to assist the arbitral process in cases of urgency … Of course, in any case where the court is called upon to exercise the power, it must take great care not to usurp the arbitral process and to ensure, by exacting appropriate undertakings from the claimant, that the substantive questions are reserved for the arbitrator or arbitrators.”).

973

Chapter 34—​Powers of a High Court

Additionally, Redfern and Hunter have identified five situations where courts can exercise their powers: (1) when the arbitral tribunal does not have the power to grant interim relief;



(2) when urgent interim relief is required prior to constitution of the arbitral tribunal;



(3) when there is a need to enforce an order against a third party (as the arbitral tribunal’s powers only apply to parties to the arbitration agreement);



(4) when the application for an interim measure has to be made at the court of the place of execution; and/​or



(5) when there is a need for an ex parte interim measure to restrain the conduct of another party, which an arbitral tribunal cannot grant.10

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Courts have frequently dismissed applications for interim relief if there is an alternative remedy11 or if exceptional circumstances justifying the grant of such relief are not made out.

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[34.2] NO INHERENT JURISDICTION TO SUPERVISE

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Therefore, the scope for judicial intervention in arbitration is limited. Courts have no inherent jurisdiction to supervise the arbitral proceedings,12 but need to be given jurisdiction over certain aspects of the arbitration to ensure that it proceeds smoothly.13

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Parties agree to the court’s limited supervisory jurisdiction, to the extent permitted under the national legislation of the seat by agreeing to a seat of arbitration.14

10. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), paras 7.16–​7.21. 11. See Gerald Metals SA v Timis 2016 EWHC 2327 (Ch). 12. See Exormisis Shipping SA v Oonsoo (No. 1) [1975] 1 Lloyd’s Rep. 432; Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corp Ltd [1981] AC 909; K/​S A/​S Bill Biakh v Hyundai Corp [1988] 1 Lloyd’s Rep 187. 13. O.P. Malhotra, Law and Practice of Arbitration (1st edn, LexisNexis 2002) (“… even the most enthusiastic proponents of party autonomy are bound to recognise that they must rely on the judicial arm of the state to ensure that the agreement to arbitrate is given at least some degree of effect. It is no good complaining that judges should keep right out of arbitration, for arbitration cannot flourish unless they are ready and waiting at the door, if only rarely allowed into the room.”). For a detailed discussion on the jurisdiction of courts in arbitration proceedings, see Section [33.1] in Chapter 33. 14. Minister of Finance (Inc) v International Petroleum Investment Co [2019] EWCA Civ. 2080.

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Law, Practice and Procedure of Arbitration in India

The principle of non-​intervention of courts, save where provided, is recognised under the UNCITRAL Model Law on International Commercial Arbitration, 1985 (“Model Law”)15 as well as in England,16 India,17 and Singapore.18

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It is also reflected in the New York Convention (a reading of Articles II, III, and V reveals that the court’s involvement is required to support the arbitral process, and for recognition and enforcement of arbitration agreements and awards, but nothing else).19 The intent is to ensure a harmonious balance between the courts’ duty to put right injustice, (whenever it finds one), and the voluntary and autonomous nature of arbitration based on party autonomy and the principle of equality and due process.20

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[34.3] SPECIFIC INTERLOCUTORY POWERS OF THE COURT

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The UNCITRAL Model Law21 and national arbitration statutes22 contain explicit provisions on the exact scope of interlocutory powers of courts.

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The courts can exercise these powers prior to commencement of the arbitration, during arbitral proceedings, and post the making of the award, but before it is enforced.23 Further, the Arbitration Act provides that a court shall have the same interlocutory powers as it has “for the purpose of, and in relation to, any proceedings before it.”24

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15. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 5 (“In matters governed by this Law, no court shall intervene except where so provided in this Law.”). 16. English Arbitration Act, 1996, s. 1 (“The provisions of this Part are founded on the following principles …(c) in matters governed by this Part the court should not intervene except as provided by this Part.”). 17. Arbitration and Conciliation Act, 1996, s. 5 (“Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.”). 18. International Arbitration Act, 2002, First Schedule. See ALC v ALF [2010] SGHC 231; Mitsui Engineering and Shipbuilding Co Ltd v Easton Graham Rush and Another [2004] 2 SLR 14; NCC International AB v Alliance Concrete Singapore Pte Ltd [2008] 2 SLR(R) 565. 19. Julian D. M. Lew, “Does National Court Involvement Undermine the International Arbitration Process?” (2009) American University International Law Review, Vol. 24, Issue 3, p. 494. 20. O.P. Malhotra, Law and Practice of Arbitration (1st edn, LexisNexis 2002) (“… equally important that the balance is maintained by a recognition by the courts that just as arbitration exists only to serve the interests of the community, so also their own powers are conferred only to support, not supplant, the extra-​judicial process which the parties have chosen to adopt.”). 21. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 9. 22. English Arbitration Act, 1996, s. 44; Arbitration and Conciliation Act, 1996, s. 9. 23. For a detailed discussion on the jurisdiction of the court to grant interim relief at different stages of the arbitration, see Chapter 33. 24. Arbitration and Conciliation Act, 1996, s. 9(1). See Srikumar Textiles (P) Ltd. v Sundaram Finance Ltd. (2007) SCC OnLine Mad 458, at para. 24.

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Chapter 34—​Powers of a High Court

Hence, the scope of the court’s power is very wide.25 It includes inter alia the power to: (1) make orders for the appointment of a guardian for a minor/​person with unsound mind;26



(2) grant an interim measure of protection to preserve goods that are the subject matter of proceedings;27



(3) secure the amount in dispute;28



(4) pass an interim injunction; and



(5) appoint a receiver etc.29

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However, despite the wide powers available to courts under Section 9 of the Arbitration Act, the courts have respected the arbitral tribunal’s jurisdiction to grant interim relief. The courts do not interfere, unless absolutely necessary, so as to facilitate the arbitration.30

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The English Arbitration Act, 1996 confers specific interlocutory powers on courts to preserve assets and evidence for arbitration.31 The court has the same power “as it has for the purposes of and in relation to legal proceedings.”32

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The English Arbitration Act, 1996 empowers the English courts to inter alia issue orders on the (1) taking evidence of witnesses;



(2) preserving evidence;



(3) relating to property;



(4) on the sale of goods that are the subject of proceedings;

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25. Leighton India Contractors Pvt. Ltd. v DLF Ltd. and Ors. O.M.P. (I) (COMM) 109/​2020, High Court of Delhi (13 May 2020) para. 12 (“… scope of Section 9 of the Act is very broad. The Court is empowered to grant various ‘interim measures of protection’ … This is thus an expansive provision and does not curtail the powers of the court.”). 26. See Arbitration and Conciliation Act, 1996, s. 9(1)(i). 27. See Arbitration and Conciliation Act, 1996, s. 9(1)(ii)(a). 28. See Arbitration and Conciliation Act, 1996, s. 9(1)(ii)(b). 29. See Arbitration and Conciliation Act, 1996, s. 9(2). 30. Mumbai International Airport Limited v Airport Authority of India & Anr. O.M.P. (I) (COMM.) 174/​2020, High Court of Delhi (27 November 2020), at para. 15 (“… the Section 9 court is concerned more with the necessity to preserve the status quo, so as to facilitate the arbitral process, to be initiated by the parties.”). 31. English Arbitration Act, 1996, s. 44. 32. English Arbitration Act, 1996, s. 44(1).

976

Law, Practice and Procedure of Arbitration in India



(5) granting an interim injunction and



(6) appointing a receiver.33

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The courts are given such powers so that they are able to assist the arbitral tribunal in cases of urgency.34 However, when exercising such power, the court is obligated to “take great care not to usurp the arbitral process and to ensure, by exacting appropriate undertakings from the claimant, that the substantive questions are reserved for the arbitrator or arbitrators.”35

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Hence, the court should only act if the arbitral tribunal “has no power or is unable for the time being to act effectively.”36 For this reason, courts have refused to grant interim measures,37 when timely and effective relief could have been granted by an emergency arbitrator, under the institutional arbitration rules.38

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Additionally, as per the arbitration statute, the courts can only make orders to preserve evidence or assets on applications made with the permission of the arbitral tribunal or written agreement of both parties,39 unless the case is one of urgency.40

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It is now easy for a party to justify an urgent application under Section 44 just to protect its contractual rights; even if no other tangible assets can be identified by broadly construing “assets” to include not only tangible assets but also contractual rights.41 42

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The Singapore Court of Appeal has cautioned against such a broad construction of assets, and observed that this would open the floodgates to applications.43

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Pertinently, in England parties can exclude the court’s jurisdiction to make interlocutory orders.44 The Court of Appeal in SAB Miller Africa v Tanzania Breweries Ltd.45 held that for Section 44 to be excluded there must be a “very clear” express agreement.

English Arbitration Act, 1996, s. 44(2). Cetelem SA v Roust Holdings Ltd. [2005] 1 WLR 3555. Ibid. See English Arbitration Act, 1996, s. 44(5). Daelim Corporation v Bonita Co. Ltd [2020] EWHC 697 (Comm). Gerald Metals SA v Timis [2016] EWHC 2327 (Ch); Seele Middle East FZE v Drake & Scull International SA Co. [2013] EWHC 4350 (TCC). English Arbitration Act, 1996, s. 44(4). English Arbitration Act, 1996, s. 44(3). AB v CD [2014] EWHC 1 QB; Euroil Ltd. v Cameroon Offshore Petroleum Sarl [2014] EWHC 12 (Comm). Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 7-​194. Maldives Airports Co. Ltd. & Anr. v GMR Male International Airport Pte Ltd. [2013] SGCA 16. English Arbitration Act, 1996, s. 44(1). See In Re Qs Estate [1999] 1 Lloyd’s Rep 931; Sankofa v Football Association [2007] EWHC 78. [2009] EWCA Civ 1564.

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33. 34. 35. 36. 37. 38.

39. 40. 41. 42. 43. 44. 45.

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Chapter 34—​Powers of a High Court

However, the Commercial Court, Queen’s Bench Division, in B v S46 held that even a Scott v Avery clause, not containing an express reference to Section 44, would oust the jurisdiction of the court under Section 44.

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This is distinct from the position in India where the wording of Section 9 of the Arbitration Act does not allow for exclusion of the court’s power to grant interim measures in domestic arbitrations. In case of foreign-​seated arbitrations, however, the power of the court may be excluded.47

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Standards for Grant of Interim Relief in India

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Lastly, like India, courts in England possess interlocutory powers even if the seat of arbitration is abroad; however, the courts must only exercise these powers if there is a good reason to do so.48 Hence, a court can refuse to exercise interlocutory powers in foreign-​seated arbitrations if it would be “inappropriate to do so”.49

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The Arbitration Act is silent on the standards applicable for the grant of interim relief by courts in exercise of their powers under Section 9.50 The Code of Civil Procedure, 1908 (“CPC”)51 contains the standards applicable to courts in exercise of interim powers in ordinary civil proceedings.

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Whether the CPC would apply to proceedings under Section 9 of the Arbitration Act is uncertain52 since there is a divergence of opinion on whether the standards laid down in the CPC would restrict the powers of the court to grant interim relief in arbitration proceedings.

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46. [2011] EWHC 691 (Comm). 47. Arbitration and Conciliation Act, 1996, s. 2(2); Ashwani Minda and Jay Ushin Limited v U-​shin Limited and Minebea Mitsumi Inc. (2020) SCC OnLine Del 721. 48. English Arbitration Act, 1996, s. 2(3). See Econet Wireless v Vee Networks Ltd. (2006) EWHC 1568 (Comm) (“the natural court for the granting of interim injunctive relief must be the court of the country of the seat of arbitration, especially where the curial law of the arbitration is that of the same country.”); U&M Mining Zambia Ltd. v Konkola Copper Mines Plc [2013] EWHC 260 (Comm) (“a party may exceptionally be entitled to seek interim relief in some court other than that of the seat, if for practical reasons the application can only sensibly be made there, provided that the proceedings are not a disguised attempt to outflank the arbitration agreement.”). 49. Commerce Insurance Co. v Lloyd’s Underwriters [2002] 1 WLR 1323. 50. Arvind Constructions v Kalinga Mining Corporation and Others 2007 6 SCC 798, at para. 15 (“… power under Section 9 is conferred on the District Court. No special procedure is prescribed by the Act in that behalf.”). 51. Code of Civil Procedure, 1908, Order 38 r. 5, Order 39 rr 1, 2. 52. Arvind Constructions v Kalinga Mining Corporation and Others (2007) 6 SCC 798, at para. 15 (“… Prima facie, it appears that the general rules that governed the court while considering the grant of an interim injunction at the threshold are attracted even while dealing with an application under Section 9 of the Act … a view that exercise of power under Section 9 of the Act is not controlled by the Specific Relief Act has been taken by the Madhya Pradesh High Court … how far these decisions are correct, requires to be considered in an appropriate case … we are not inclined to answer that question finally … we may indicate that we are prima facie inclined to the view that exercise of power under Section 9 of the Act must be based on well-​recognised principles governing the grant of interim injunctions ...”).

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Law, Practice and Procedure of Arbitration in India

Certain courts have held that the standards in the CPC would not strictly apply when considering whether to grant interim measures under Section 9. Only the guiding principles of the CPC will have to be kept in mind when granting interim reliefs.53

[34.4] ASSISTANCE IN TAKING EVIDENCE

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However, other courts have held that the standards contained in the CPC would strictly apply to the grant of interim measures.54

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The Model Law,55 as well as national arbitration legislation,56 normally allows the arbitral tribunal or a party to the arbitration to request the national court for assistance in taking evidence.

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53. Delta Construction Systems Ltd. v M/​s Narmada Cement Company Ltd., Mumbai (2001) SCC OnLine Bom 630, at para. 12 (“… power of the court to secure the amount in dispute under arbitration is not hedged by the predicates as set out in Order 38. All that the court must be satisfied is that an interim measure is required. In other words, the party coming to the court must show that if it is not secured, the Award which it may obtain would result in a paper decree or a decree which cannot be enforced on account of acts of a party pending arbitral process … substantive provisions of granting interim relief as provided for in the Code of Civil Procedure therefore, cannot be read into section 9. There are independent provisions in the Act itself. The exercise of the power must be construed, bearing in mind the object of the Act and the need to dispose of the matter as expeditiously and not hedged in, by the provisions of the Code of Civil Procedure.”); National Shipping Company of Saudi Arabia v Sentrans Industries Ltd. 2004 SCC OnLine Bom 25, at para. 10 (“… the guiding factor for exercise of power by the Court under section 9(ii)(b) has to be whether such order deserves to be passed for justice to the cause. The provisions of Order 38, Rule 5, Civil Procedure Code cannot be read into the said provision as it is nor can power of the Court in passing an order of interim measure under section 9(ii)(b) be made subject to the stringent provision of Order 38, Rule 5.”); Steel Authority of India v AMCI Pty Ltd. (2011) SCC OnLine Del 3689, at para. 45 (“In proceedings under Section 9 of the Act, at the highest what could be said is that the provisions of Order 38 Rule 5 CPC would serve as the guiding principle for the Court to exercise its discretion while dealing with a petition requiring the respondent to furnish security for the amount in dispute. Since the letter of the law per se is not applicable, the requirements set out in Order 38 Rule 5 CPC need not strictly be satisfied, and so long as the ingredients of the said provision are generally present, the Court would not be unjustified in exercising its jurisdiction to require the respondent to furnish security.”); Deccan Chronicle Holdings Limited v L&T Finance Limited (2013) SCC Online Bom 1005; Nimbus Communications Ltd. v Board of Control for Cricket in India (2012) SCC OnLine Bom 287, at para. 24 (“Just as on the one hand the exercise of the power under section 9 cannot be carried out in an uncharted territory ignoring the basic principles of procedural law contained in the Code of Civil Procedure 1908, the rigors of every procedural provision in the Code of Civil Procedure 1908 cannot be put into place to defeat the grant of relief which would subserve the paramount interests of justice.”); Adhunik Steels Ltd. v Orissa Manganese and Minerals Pvt. Ltd. (2007) 7 SCC 125; Supertrack Hotels Pvt. Ltd. v Friends Motels Pvt. Ltd. (2017) SCC OnLine Del 11662. 54. ITI v Siemens Public Communication (2002) 5 SCC 510, at para. 10 (“It is true in the present Act application of the Code is not specifically provided for but what is to be noted is: is there an express prohibition against the application of the Code to a proceeding arising out of the Act before a civil court? We find no such specific exclusion of the Code in the present Act. When there is no express exclusion, we cannot by inference hold that the Code is not applicable.”); C.V. Rao v Strategic Port Investments KPC Ltd. (2014) SCC OnLine Del 4441, at para. 42; TATA Capital Financial Services v Deccan Chronicle Holdings Ltd. (2013) SCC OnLine Bom 307, at para. 40-​44; Mahaveer Infoway Limited v Tech Mify Info Solutions LLP (2017) SCC OnLine Hyd 221, at para. 9. 55. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 27. 56. Arbitration and Conciliation Act, 1996, s. 27; English Arbitration Act, 1996, ss. 43, 44.

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Institutional arbitration rules too, do not exclude the possibility of judicial assistance in evidence taking. The purpose of this is to ensure that a limitation on the arbitral tribunal’s powers in evidentiary matters does not prevent it from “considering evidence relevant to the issues in dispute.”57

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Under the UNCITRAL Model Law, a party cannot seek the court’s assistance in taking evidence unless it has obtained approval from the arbitral tribunal.58 Further, the court cannot “second-​guess a tribunal’s evidentiary determination and request for assistance”59 since its role is limited to “exercise for the arbitral tribunal the compulsion power which the arbitral tribunal may not have.”60

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In addition, UNCITRAL Model Law only allows a court to exercise powers of assistance in locally seated arbitrations, and not foreign-​seated arbitrations.61 Gary Born states that this territorial limitation under the UNCITRAL Model Law is “ill-​considered” as it “unduly restricts judicial support for the international arbitral process.”62

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In contrast to the UNCITRAL Model Law, in England, court assistance can be sought by agreement of parties even in the absence of tribunal permission.63 Further, the English Arbitration Act, 1996 allows for the possibility of judicial assistance even in foreign-​seated arbitrations.64

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57. UNCITRAL, Digest of Case Law on the Model Law on International Commercial Arbitration 118 (2012) (“In order to ensure that these limitations on arbitral tribunal’s powers will not prevent them from considering evidence relevant to the issues in dispute, Article 27 … allows courts to provide assistance in relation to evidentiary matters. Such assistance may be requested either by the arbitral tribunal itself, or by a party with the approval of the arbitral tribunal.”). See Montana Developers Pvt. Ltd. v Aditya Developers (2016) SCC OnLine Bom 5318, at para. 16 (“… the said provision provides a procedure for providing assistance to a party in whose favour the learned arbitrator has opined that the production of documents or witness was warranted in the facts of his case … If the learned arbitrator is satisfied on the application made by any of the party that production of witness or documents which is not being produced in spite of the attempts made by a party, the arbitral tribunal can grant permission to such a party to take the assistance of this Court under section 27 of the Arbitration Act. In my view, merely because a party has filed the arbitration proceedings in view of the agreement between the parties, he cannot be put to disadvantage in view of the powers of summoning a witness not having been provided to the arbitrator under the provisions of the Arbitration Act.”). 58. See ALC v ALF [2010] SGHC 231, at para. 49 (“… compelling the attendance … without seeking prior directions of the … was, in my view, a direct circumvention and usurpation of the Arbitrator’s control of the procedure of the Arbitration. The Arbitrator’s discretion encompassed the ability to determine the relevance, admissibility, materiality of evidence and the appearance of witnesses. The application to issue a subpoena … was, to my mind, premature and improperly obtained and in my view, constituted an abuse of the court’s process.”). 59. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2573. 60. Jardine Lloyd Thompson Canada Inc. [2006] ABQB 933 (Alberta Q.B.). 61. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 1(2). 62. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2572. 63. See English Arbitration Act, 1996, ss. 43(2), 44(3). 64. English Arbitration Act, 1996, s. 2(3). See Commerce & Indus Ins. Co. of Canada v Lloyd’s Underwriters at Lloyd’s of London [2002] 1 WLR 1323; A and B v C, D [2020] EWCA Civ. 409.

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Law, Practice and Procedure of Arbitration in India

In India, the position is similar to the UNCITRAL Model Law in as much as a party cannot request the court for assistance in taking evidence without the approval of the arbitral tribunal.65 However, the Arbitration Act departs from the UNCITRAL Model Law as it allows the court to exercise powers of assistance even in foreign-​seated arbitrations “subject to an agreement to the contrary”.66

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Importantly, in India, courts do not possess the adjudicatory powers to go behind the decision of the arbitral tribunal. The courts are duty bound to execute the arbitral tribunal’s request without examining the merits of the evidence.67

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The court’s assistance is normally invoked in respect of third parties who could be witnesses or persons who are in possession of relevant documents, the production of which is necessary to determine a fact in issue in the arbitration.68

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Court’s Power to Order Discovery

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Discovery is a process by which a party can obtain compulsory disclosure of documents and other relevant information, from the other party, in advance of the hearing.69

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An arbitral tribunal does not have the power to compel production of documents and can only draw an adverse inference in case of non-​production of a document.70 Hence, parties may require assistance from courts when production of documents is essential to determine certain issues.71

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The UNCITRAL Model law is silent on whether the court’s assistance may be taken when it comes to disclosure, and only allows for court’s assistance in taking evidence.72

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65. Arbitration and Conciliation Act, 1996, s. 27(1). See Satinder Narayan Singh v Indian Labour Cooperative Society Ltd. (2007) SCC OnLine Del 1675, at para. 3 (“In the present case, the petitioner has not obtained the approval of the arbitral tribunal before moving the court seeking its assistance for taking evidence by invocation of section 27 of the Act. Therefore, the application as filed is not sustainable.”). 66. Arbitration and Conciliation Act, 1996, s. 2(2). See Kapil Garg v Atul Agarwal (2020) SCC OnLine Bom 2494. 67. See Thiess Iviinecs Ltd. v NTPC Limited (2016) SCC OnLine Del 1819. 68. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 730. See Montana Developers Pvt. Ltd. v Aditya Developers (2016) SCC OnLine Bom 5318, para. 16 (“… the arbitral tribunal is thus not empowered to issue any witness summons itself or to compel a party to produce any documents under the provisions of the Arbitration Act. If the learned arbitrator is satisfied on the application parties that production of witness or documents which is not being produced in spite of the attempts made by a party, the arbitral tribunal can grant permission to such a party to take the assistance of this Court under section 27 of the Arbitration Act ...”). 69. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer, 2020), p. 735. 70. Ibid. 71. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2570. 72. See UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 27.

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Chapter 34—​Powers of a High Court

The Commercial Court, Queen’s Bench Division in BNP Paribas v Deloitte & Touche LLP interpreted the provisions of the UNCITRAL Model Law. It held that the Model Law does not permit the court to assist with the process of disclosure.73 However, Gary Born complains that such an interpretation is incorrect since:

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“‘… evidence’ taken during the arbitration … includes materials that do not ultimately prove decisive or even relevant to resolution of the parties’ dispute from an evidentiary perspective … Model Law authorizes arbitrators to request, and national courts to provide, judicial assistance in connection with all phases of the arbitral process, including pre-​hearing disclosure –​where the materiality of documents will inevitably be uncertain … it makes no sense to distinguish sharply between ‘disclosure’ and ‘evidence-​taking’, particularly given the requirement … that documents … be relevant and material to resolution of the parties’ dispute in order for disclosures to be ordered.”74

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In England, the arbitration statute permits a party to arbitration to “use the same court procedures as are available in relation to legal proceedings” to “produce documents or other material evidence.”75

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However, while courts have recognised the power to make an order for discovery of documents in arbitration, they have held that such power should not be exercised unless exceptional circumstances permit.76

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In certain cases, courts have directed a non-​party to disclose a document if it can be shown that a question in relation to that particular document has arisen in the arbitration.77

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However, when the request for discovery is plainly an attempt to use the court’s coercive powers to procure discovery against a third party with a view to

73. [2003] EWHC 2874 (Comm) (“This clause is dealing with the taking of evidence and not with the disclosure process … There is nothing in the Model Law which suggests that the Court should assist with the process of disclosure.”). 74. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 2572. See Coneff Corp. Sdn Bhd v Vivocom Enter. Sdn Bhd [2019] MLJU 1666 (Malaysian High Court) (upholding subpoena against witness to produce relevant and material documents for purpose of arbitration under Malaysia’s version of art. 27). 75. English Arbitration Act, 1996, s. 43(1). 76. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 7-​199. See Three shipping Ltd. v Harebell Shipping Ltd. [2005] 1 All ER (Comm) 200; Sunderland Steamship P and I Association v Gatoil International Inc., The Lorenzo Halcoussi [1988] 1 Lloyd’s Rep 180. 77. Assimina Maritime Ltd. v Pakistan National Shipping Corp. [2005] 1 Lloyd’s Rep. 525.

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Law, Practice and Procedure of Arbitration in India

establishing a claim against that party, or to thwart the arbitration, courts have denied discovery.78 The Arbitration Act provides that an application to the court for assistance in taking evidence must include “the description of any document to be produced”.79

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On receipt of such an application, the court “may … execute the request by ordering that the evidence be provided directly to the arbitral tribunal.”80 The court cannot, however, examine the merits of the tribunal’s order directing production.81 Neither can the court examine an appeal against such an order.82

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The High Court of Delhi in Bharat Heavy Electricals Ltd. v Silor Associates S.A.83 held that the arbitral tribunal has the power to direct production of a document from a party to the arbitration and need not take assistance of the court, unless such production is from a third party.

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If a party does not produce the documents, the arbitral tribunal’s powers are limited to drawing an adverse inference.84

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Navigator Investment Services Ltd v Acclaim Insurance Brokers Pte Ltd. [2010] SLR 25 (CA). Arbitration and Conciliation Act, 1996, s. 27(2)(c)(ii). Arbitration and Conciliation Act, 1996, s. 27(3). Thiess Iviinecs Ltd. v NTPC Limited (2016) SCC OnLine Del 1819, at paras 23, 25 (“the remedy to challenge the order of the Tribunal directing production of the documents would be, after the Award is passed … There is nothing in Section 27, where the Court can determine the admissibility, relevancy, materiality and weight of any evidence. The only requirement for the Court is to ensure that it is within its competence and according to its Rules on taking evidence. The nature of power exercised is to execute the request as the Tribunal on its own cannot do it, in view of the inapplicability of the provisions of the Code of Civil Procedure, 1908. Such a request presupposes a direction of the Tribunal to produce the documents, which has not been complied with.”). Union of India v Reliance Industries Ltd. (2018) SCC OnLine Del 13018, at para. 75 (“a remedy of appeal ought not to be provided against an order passed by the Arbitral Tribunal directing discovery of documents. The legislative policy seems to be to not impede the smooth conduct of arbitration proceedings by interdicting procedural orders passed by the Arbitral Tribunal in furtherance of the adjudicatory process.”). (2014) SCC OnLine Del 4442, at paras 17, 19. Delta Distilleries Ltd. v United Spirits Limited 2014 1 SCC 113, at para. 23. Ibid. National Insurance Company Limited v M/​s SA Enterprises (2015) SCC OnLine Bom 5063, at para. 41 (“Court is empowered to issue direction to a party or even third party to produce documents or witnesses by summoning the party or even third party if the arbitral tribunal has granted permission and is of the opinion that production of such documents or evidence of such party including third party would be necessary for proper and effective adjudication of the dispute before it.”).

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78. 79. 80. 81.

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However, the affected party can apply to the court for assistance under Section 27 of the Arbitration Act if the documents not produced are required to arrive at a decision on the claim.85 Importantly, the power to direct production under Section 27 extends to even third parties to the arbitration.86

82.

83. 84. 85. 86.

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Chapter 34—​Powers of a High Court

In the US, Section 1782 of Title 2887 allows for court-​ordered discovery in arbitrations, at the request of one of the parties to the arbitration.88

Court’s Power to Issue Interrogatories Interrogatories refer to:

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“a series of questions drawn up for the purposes of being addressed to a party, witness or other person having information in the case … if the information relates to documents in the possession of the other party, the disclosure of the documents is called discovery of documents.”89

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The UNCITRAL Model Law and national arbitration statutes are silent on the court’s powers to issue interrogatories.

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Court’s Power to Compel the Attendance of Witnesses

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To ensure fair and efficient adjudication of a dispute, witnesses may be required to give factual/​expert evidence. There may be occasions where witnesses refuse to give evidence.

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Alternately, where the witness is beyond the territorial jurisdiction of the tribunal,90 or is a third party to the arbitration,91 it may not be possible for the arbitral tribunal to secure his attendance. In such a situation, the assistance of the court may become essential in bringing witnesses before the arbitral tribunal.92

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87. 28 USC, S. (1782) (“The district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal. … The order may be made pursuant to a letter rogatory issues, or request made, by a foreign or international tribunal or upon the application of any interested person and may direct that the testimony or statement be given, or the document or other thing be produced, before a person appointed by the court.”). 88. Intel Corporation v Advanced Micro Devices Inc. 542 US 241; In Re Roz Trading Ltd. 469 F.Supp.2d 1221 (ND Ga. 2006); Abdul Latif Jameel Transp. Co. Ltd. v FedEx Corp. 989 F. 3d 710 (6th Cir. 2019) (“… the text, context and structure of S.1782(a) provide no reason to doubt that the word ‘tribunal’ includes private commercial arbitral panels established pursuant to contract and having the authority to issue decisions that bind the parties. Therefore, we need to look no further to hold that the DIFC-​LCIA Arbitration panel is a ‘foreign or international tribunal’ and reverse the district court’s judgment.”); HRC-​Hainan Holding Co., LLC v Hu 2020 WL 906719 (N.D. Cal.) (“Section 1782(a) applies to private arbitral tribunals”). However, Courts in the Fifth and Second Circuit have taken a contrary view and held that 1782 does not apply to arbitral tribunals. See El Paso Corporation v La Comision Ejecutiva Hidroelectrica Del Rio Lempa 341 Fed. Appx 31 (5th Cir. 2009); In re Application by Rhodianyl SAS 2011 U.S. Dist. LEXIS 72918 (D.Kan., 25 March 2011). 89. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 736. 90. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 7-​198. 91. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 7.32. 92. Arbitration and Conciliation Act, 1996. s. 27(5); English Arbitration Act, 1996, s. 43.

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Law, Practice and Procedure of Arbitration in India

In England, court procedures to secure the attendance of witnesses can be used if the witness is in the United Kingdom, or the arbitral proceedings are being conducted in England.93 Even if the witness is situated abroad, the court can order issuance to a foreign court of a commission or request examination of the witness.94

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The Arbitration Act allows for the arbitral tribunal or a party (with the approval of the arbitral tribunal) to seek assistance of the court in taking evidence.95 On receipt of such an application, the court “may … execute the request by ordering that the evidence be provided directly to the arbitral tribunal”.96

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The use of the word “may” confer discretionary power upon the court and a court is, therefore, not expected to automatically pass an order for taking evidence upon such request being made.97 A request may be declined if it is not within the competence of the court, or not in accordance with the rules of the court on taking evidence.98

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If the court decides to assist in taking evidence it can “issue the same processes99 to witnesses as it may issue in suits tried before it.”100 This entails exercising powers in accordance with Order XVI of the CPC.101

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In case the person fails to attend in accordance with the processes issued to them, “they would be subject to such like disadvantages, penalties and punishments, which the Court may impose by its order on a representation of the Arbitral Tribunal as it can do in Suits being tried before it.”102

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Pertinently, the court can only compel the attendance of a witness who is within the territorial limits of its jurisdiction.103

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93. English Arbitration Act, 1996, s. 43(3). 94. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 7-​198. See English Arbitration Act, 1996, s. 44(2)(a). 95. Arbitration and Conciliation Act, 1996, s. 27(1). 96. Arbitration and Conciliation Act, 1996, s. 27(3). 97. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 733. 98. Thiess Iviinecs Ltd. v NTPC Limited 2016 SCC OnLine Del 1819, at paras 23, 25 (“There is nothing in Section 27, where the Court can determine the admissibility, relevancy, materiality and weight of any evidence. The only requirement for the Court is to ensure that it is within its competence and according to its Rules on taking evidence.”). 99. See Arbitration and Conciliation Act, 1996, s. 27(6). 100. Arbitration and Conciliation Act, 1996, s. 27(4). 101. See Hindustan Petroleum Corporation v Ashok Kumar Garg 2006 SCC OnLine Del 1056. 102. National Highways Authority of India v Oriental Structural Engineers Ltd. v Gammon India Ltd. (JV) (2012) SCC OnLine Del 4787, at para. 10.3. 103. See Reliance Polycrete Ltd. v National Agriculture Cooperative Marketing Federation of India (2008) SCC OnLine Del 837.

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Chapter 34—​Powers of a High Court

However, the High Court of Bombay, in Stemcor (S.E.A.) Pte Limited and Anr. v Mideast Integrated Steels Limited,104 exercised its powers under Section 27 of the Arbitration Act appointed a court commissioner to travel to Singapore to record the evidence of the arbitrator. It also issued a letter of request to the High Court of Singapore to issue directions on witness testimony.

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Further, an application requesting for court assistance should specify the name and address “of any person to be heard as witness or expert witness and a statement of the subject-​matter of the testimony required.” The Supreme Court of India in Delta Distilleries v United Spirits Ltd. held that the term “any person” is wide enough to even cover a third party to the arbitration.105

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The court’s power exercisable under Section 27 of the Arbitration Act is not adjudicatory in nature. So, the courts cannot examine the merits of the arbitral tribunal’s order.106

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However, the court does retain discretionary power to decline the arbitral tribunal’s request if such request is beyond the competence of the court. Examples of such situations are like summoning foreign witnesses, not in accordance with the rules of the court for taking evidence, documents sought are confidential etc.

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If a party is aggrieved by an order of the arbitral tribunal that permits filing of an application under Section 27 of the Arbitration Act, the party cannot request the court to review such order, and can only challenge the order, along with the award under Section 34 of the Arbitration Act.107

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[34.5] POWER TO SECURE THE AMOUNT IN DISPUTE

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Under the Arbitration Act, the courts have the power to secure the amount in dispute in the arbitration,108 including by way of directing furnishing of bank guarantees by the other party.109

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1 04. (2018) SCC OnLine Bom 1179. 105. (2014) 1 SCC 113, at para. 21 (“… evidence can be sought either from any third person or from a party to the proceeding itself …”). See National Insurance Company Ltd. v S.A Enterprises (2015) SCC Online Bom 5063, para. 41 (“… Court is empowered to issue direction to a party or even third party to produce documents or witnesses by summoning the party or even third party if the arbitral tribunal has granted permission and is of the opinion that production of such documents or evidence of such party including third party would be necessary for proper and effective adjudication of the dispute before it.”). 106. Montana Developers Pvt. Ltd. v Aditya Developers (2016) SCC OnLine Bom 5318; Thiess Iviinecs Ltd. v NTPC Limited (2016) SCC OnLine Del 1819. 107. Stemcor (S.E.A.) Pte Limited & Ors. v Mideast Integrated Steels Limited & Ors. (2018) SCC OnLine Bom 1179; Thiess Iviinecs Ltd. v NTPC Limited (2016) SCC OnLine Del 1819; Union of India v Reliance Industries Ltd. (2018) SCC OnLine Del 13018. 108. Arbitration and Conciliation Act, 1996, s. 9(1)(ii)(b). 109. Delta Construction Systems Ltd. v Narmada Cement Company Ltd. (2001) SCC OnLine Bom 630, at para. 15 (“The language used in section 9(ii) is an interim measure of protection, if it is money then to secure the amount in dispute … respondents will have to be called upon to secure the petitioner by furnishing a bank guarantee.”).

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The court is guided by principles analogous to those in the CPC and must consider every case on its individual facts and circumstances when determining whether to grant such relief.110

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Arbitration legislations of other countries also provide courts with such powers. For instance, in Singapore courts can pass an order to secure the amount in dispute.111 Similarly, in England, the courts have the authority to stay the arbitration proceedings in the event of a failure by a party to comply with an order to pay the amount in dispute into court.112

[34.6] POWER TO ORDER DETENTION, PRESERVATION, AND SALE OF PROPERTY/​GOODS

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Courts have powers to order the detention, preservation, or sale of any goods and property that is the subject matter of arbitration.113

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Such powers must be exercised to ensure that evidence is not destroyed before a proper record can be made of it.114 It helps protect the goods from damage, deterioration, destruction, or misappropriation.115

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For example, when goods are of perishable nature or are likely to deteriorate, the court must order sale of the goods while they “are in a merchantable state, and direct the sale proceeds to be deposited in the court, or appropriated or applied as it deems fit.”116

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For a detailed discussion on the standards applicable to the grant of interim relief, see Section [33.3]. See International Arbitration Act, 2002, s. 12A. Richco International Ltd v International Industrial Food Co SAL, The Fayrouz III [1989] 1 All ER 613. See Arbitration and Conciliation Act, 1996, ss. 9(1)(ii)(a), 9(1)(ii)(c); English Arbitration Act, 1996, s. 44(2) (c), (d). Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 392. See Sagar Warehousing Corporation v Pawan Hans Helicopters Ltd. (2008) SCC OnLine Del 927. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 384. Shoney Sanil v Coastal Foundations (P) Ltd. & Ors AIR 2006 Ker. 206, at para. 6 (“… reading of the said provision would show that the orders under Section 9(ii)(c) can be passed only in relation to the subject-​matter of the dispute in arbitration which may be in the possession of any party since it is not the intention of the Act or any arbitration proceedings as conceived by the law of arbitration, to interfere with or interpolate third party rights”); Tata Capital Financial Services Limited v Deccan Chronicle Holdings Limited & Ors (2013) SCC OnLine Bom 307, at para. 41. Bharat Catering Corporation v Indian Railway Catering and Tourism Corporation Limited & Anr (2009) SCC OnLine Del 3434, at para. 17 (“… if the petitioner is aggrieved by the letter of termination of the contract and is advised to challenge the validity thereof, the petitioner can always invoke the arbitration clause to claim damages, if any, suffered by the petitioner. It is not open to this Court to restore the contract under Section 9, which is meant only for the sole purpose of preserving and maintaining the property in dispute and cannot be used to enforce specific performance of a contract as such.”).

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1 10. 111. 112. 113.

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Interim orders for detention, preservation, or inspection can only be passed in respect of property that is the subject matter of the arbitration.117 Further the powers can only be exercised to preserve/​maintain the disputed property and not to enforce specific performance of the contract.118

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114. 115. 116. 117.

118.

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Courts in England119 and Singapore120 possess similar powers.

[34.7] POWER TO ISSUE INTERIM INJUNCTIONS AND ORDER APPOINTMENT OF RECEIVER Power to Issue an Interim Injunction

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An interim/​interlocutory injunction is one that:

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“is limited so as to apply only until the final hearing or final determination by the court of the rights of the parties; and accordingly it issues in a form that requires that, in the absence of a subsequent order to the contrary, it should continue up to but not beyond the final hearing of the proceedings. The two matters with which the court is concerned in granting an injunction of this kind are, first the maintenance of a position that will most easily enable justice to be done when its final order is made, and secondly, an interim regulation of the acts of the parties that is, in other respects, the most just and convenient in all the circumstances.”121

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Its purpose is to regulate the position of parties, pending a trial, while avoiding a decision on issues that can only be resolved at the trial.122

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Section 9 of the Arbitration Act, derived from Article 9 of the Model Law, provides for the issuance of interim injunctions, by a court both before and during the arbitration proceedings and after the rendering of the final award.123

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Such power is to be exercised based on the well-​recognised principles applicable to the general power to grant injunctions under the CPC and the Specific Relief Act, 1936.124

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The party must show that it has a prima facie case to obtain an interim injunction. The test being that it will suffer irreparable injury if the interim relief is not granted, damages are not adequate compensation, and the balance of convenience lies in its favour. In addition, there is a need to immediately protect the interest, which will otherwise be seriously injured and impaired.125

1 19. English Arbitration Act, 1996, s. 44(2)(c). 120. International Arbitration Act, 2002, s. 12A. 121. The Principles of Equitable Remedies (6th edn, LBC Information Services 2001), p. 446 cited in Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 394. 122. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 394. See Wander Ltd. v Antox India Pvt. Ltd. (1990) Supp SCC 727, at para. 9 (“the interlocutory remedy is intended to preserve in status quo, the rights of parties which may appear on a prima facie case …”). 123. See Arbitration and Conciliation Act, 1996, s. 9(1)(ii)(d). For a detailed discussed on the jurisdiction of the court to grant interim relief in arbitrations, see Chapter 33. 124. For a detailed discussion on the standards to be applied when granting such injunctions, see Section [33.3]. 125. Newage Fincorp (India) Ltd. v Asia Corp Securities Ltd. (2000) SCC OnLine Bom 281, at paras 33, 41. See Hindustan Petroleum Corporation Ltd. v Sriman Narayan (2002) 5 SCC 760.

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Further, courts will decline to grant interim relief if the contract was of nature that no injunction could be granted under Section 41 of the Specific Relief Act.126 Courts in England, too, have the power to issue interim injunctions127 so as to protect a party’s substantive right pending completion of the arbitration proceedings.128

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The Court of Appeal in Cetelem SA v Roust Holdings Ltd.129 held that the statutory powers to issue an interim extension are broad. It would for example include: (1) a mandatory injunction;



(2) a freezing injunction;



(3) an order for delivery up of documents required to satisfy a condition precedent in a share purchase transaction; and



(4) an order for the vendor to deliver to the seller a share certificate, in case of imminent completion of a share purchase transaction etc.

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Hence, an injunction can be granted in each of the following circumstances: (1) to restrain a law firm from appearing in the arbitration if that firm has previously acted for the applicant and possesses confidential information relevant to it;130



(2) to restrain ship owners, on an interim basis, from allowing two vessels to be employed inconsistently with the terms of two time charters pending the resolution of arbitration;131



(3) to require a party to continue to supply a particular component to the other, on interim basis;132

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126. Parsoli Motor Works Pvt. Ltd. v BMW India Pvt. Ltd. (2018) SCC OnLine Del 6556, at para. 36 (“power to grant injunctive relief, under Section 9 of the 1996 Act, has to abide by the provisions of the Specific Relief Act. Injunction which cannot be granted under Section 41 of the Specific Relief Act, cannot be granted under Section 9 of the 1996 Act, either … if it appears that the party who suffers as a result of such termination could be adequately compensated in terms of money at the stage of final adjudication of the dispute, no injunctive relief, under Section 9 of the 1996 Act, would be granted.”). 127. English Arbitration Act, 1996, s. 44(2)(e). 128. AES Ust-​Kamenogorsk v Ust-​Kamenogorsk JSC [2013] UKSC 35; Fourie v Le Roux [2007] 1 WLR 320 (“An interlocutory injunction, like any other interim order, is intended to be of temporary duration, dependent on the institution and progress of some proceedings for substantive relief … the judge, if otherwise minded to make the order, should, as a matter of good practice, pay careful attention to the substantive relief that is, or will be, sought … injunction … should not place a greater burden on the respondent than is necessary.”). 129. [2005] 1 WLR 3555. 130. Gus Consulting GmbH v Leboeuf Lamb Greene & Macrae [2006] All ER 339. 131. Lauritzen Cool AB v Lady Navigation Inc. [2005] 2 Lloyd’s Rep. 63. 132. Engineered Medical Systems v Bregas AB [2003] EWHC 3287.

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(4) to require steps to be taken to release a vessel from arrest;133



(5) to restrain foreign proceedings commenced in breach of arbitration agreements.134

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However, the court does not have the power to issue such an injunction when doing so will pre-​empt the decision of the arbitrators.135 Neither can a court issue an order to adjourn indefinitely the proceedings before the arbitral tribunal.136

Mareva Injunctions

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The court’s powers extend to granting a Mareva injunction or Freezing Injunction to prevent the respondent from dealing with specified assets137 and could include a worldwide freezing injunction.138

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Such an injunction is ordered when there is evidence that the assets will be dissipated/​removed from the jurisdiction of the court, so as to defeat the claim of the plaintiff.139

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The Court in Mareva Compania Naviera SA v International Bulkcarriers SA140 held that “if it appears that the debt is due and owing –​and there is a danger that the debtor may dispose of his assets so as to defeat it before judgment –​the court has jurisdiction, in a proper case, to grant an interlocutory injunction so as to prevent him from disposing of those assets.”

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These principles of the Mareva case have been followed in India while granting ex parte injunctions.141

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The court must bear in mind the fundamental principles of Order 38 Rule 5 of the CPC and Order 39 Rules 1 and 2 of the CPC When deciding an application for grant

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133. Phaethon International Co. SA v Ispat Industries Ltd. [2010] EWHC 3446 (Comm). 134. For a detailed discussion on anti-​arbitration injunctions, see Chapter 17. See OT Africa Line Ltd v Magic Sportswear Corp [2005] EWCA Civ 710; Starlight Shipping Co v Tai Ping Insurance Co Ltd; The Alexandros T [2007] EWHC 1893 (Comm); WSG Nimbus Pte Ltd v Board for Cricket in Sri Lanka [2002] 1 SLR(R) 1088; PT Pukuafu Indah v Newmont Indonesia Ltd [2012] SGHC 187. 135. Channel Tunnel Group Ltd. v Balfour Beatty Construction Ltd. [1993] AC 334. 136. Proprietors of Strata Plan 3771 v Travmina Pty Ltd [1986] 4 BCL 91. 137. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 7-​202. See Aiglon Ltd. and L’Aiglon SA v Gau Shan Co. Ltd. [1993] 1 Lloyd’s Rep 164; Emmott v Michael Wilson & Partners Ltd. [2009] EWHC 1 (Comm). 138. Dadourian Group Int Inc v Simms [2006] EWCA Civ 399. 139. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 411. 140. 1975 2 Lloyd’s Rep 509. 141. Venture Global Engineering v Satyam Computer Services Ltd. (2008) 4 SCC 190; Ecohidrotechnika LLC v Black Sea and Azov Sea Production & Operating Administration of Shipping & Anr (2010) SCC OnLine Bom 277; Simplex Infrastructures Ltd. v National Highways Authority of India (2011) SCC OnLine Del 207.

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of such an injunction. It can mould the relief on a case-​by-​case basis to secure the ends of justice.142 The High Court of Delhi in M/​s Rite Approach Group Ltd. v M/​s Rosoboronexport Ltd.143 held that such an injunction can only be granted when there is evidence to show that debtor is acting in a manner to frustrate the decree.

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Appointment of a Receiver

Both in England144 and India145 the court is statutorily empowered to appoint a receiver. The receiver so appointed is an officer of the court. His appointment is an interim measure of protection.146

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His duty is “to take possession of and deal impartially with the property … pending the outcome of proceedings, in circumstances where the court considers that the property should not come into possession of either party until the dispute has been resolved.”147

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The court may also appoint receivers to take possession of property not being the subject matter of the dispute.148

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The Supreme Court of India in Kalpana Kothari v Sudha Yadav & Ors149 held that when determining whether to appoint a receiver, the court must balance the interests of both parties and consider the feasibility of carrying on the day-​to-​day business activities of the company.

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1 42. For a detailed discussion on the standards to be applied when granting such injunctions, see Section [33.3]. 143. (2007) SCC OnLine Del 435, at para. 6 (“Mareva or freezing injunction is passed when there is evidence or material to show that the debtor is acting in a manner or is likely to act in a manner to frustrate subsequent order/​decree of the Court or tribunal. The Court therefore freezes the assets of the debtor to prevent the assets from being dissipated, to prevent irreparable harm to the creditor. It prevents a foreign defendant from removing his assets from the jurisdiction of the Court. It is like and akin to ‘attachment before judgment’ and conditions mentioned in the said provision should be satisfied before freezing injunction order is passed. … The respondent Company is owned by Russian Government and there is no such allegation that the respondent company is trying to defeat and play a fraud by moving/​transferring its assets.”). 144. English Arbitration Act, 1996, s. 44(2)(e). 145. Arbitration and Conciliation Act, 1996, s. 9(1)(ii)(d). 146. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 415. 147. Mustill and Boyd, Commercial Arbitration (2nd edn, Butterworths 1989), p. 330. 148. Welspun Infratech v Ashok Khurana (2014) SCC OnLine Bom 39, at para. 36 (“This court in my view has ample power under section 9 of the Arbitration and Conciliation Act, 1996 to grant interim measures even in respect of the properties which are not subject matter of the dispute in arbitration.”); Tata Capital Financial Services Limited v Deccan Chronicle Holdings Limited 2013 SCC OnLine Bom 307, at para. 41 (“… the Court can grant interim measures under sub section 2(b), (d) and (e) even if the property or things are not subject matter of the dispute in arbitration.”). 149. (2002) 1 SCC 203.

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Further, the Supreme Court of India in Firm Ashok Traders v Gurumukh Das Saluja held that the “most basic principle governing the discretion of the Court in appointing a receiver is whether it is ‘just and convenient’ to do so.”150

[34.8] RELIEF FROM ABORTIVE ARBITRATION

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Despite its advantages over litigation,151 an arbitration may become abortive if the other party (or its lawyer) refuses to participate, or adopts procedural devices and maneuvers known as guerilla tactics in arbitration or litigation.152 Such tactics are used to delay or disrupt the arbitral proceedings.

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Unfettered guerrilla tactics run the risk of seriously threatening the integrity of the arbitral process. In this backdrop, it becomes imperative for the courts to step in when the arbitral tribunal is unable to effectively rein in the use of guerrilla tactics.

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As an attempt to deal with this problem mostly all arbitration rules and national legislations provide the courts with supportive powers in aid of arbitration where the court can order a party to comply with the peremptory order made by the arbitral tribunal.153

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The Privy Council in Cameron v Cuddy154 held:

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“When an arbitration for any reason becomes abortive, it is the duty of a Court of law, in working out a contract of which such an arbitration is part of the practical machinery, to supply the defect which has occurred. It is the privilege of a Court in such circumstances and it is its duty to come to the assistance of parties by the removal of the impasse and the extrication of their rights.”

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For example, the Supreme Court of India in Ruby Chemicals v Charabot Group155 refused to entertain an application for appointment of an arbitrator on the grounds that the arbitration before the ICC Court had become abortive. It permitted the parties to pursue a suit before the high court instead. 1 50. (2004) 3 SCC 155, at para. 15. 151. For detailed discussion on the advantages of arbitration over litigation, see Chapter 4. 152. Michael Hwang SC, Selected Essays on International Arbitration (SIAC, 2013), p. 21 (guerilla tactics aim “to exploit the procedural rules for their own advantage, seeking to delay the hearing and (if they get any opportunity) ultimately to derail the arbitration to that it becomes abortive or ineffective)”). 153. Nigel Blackaby, Constantine Partasides QC, Alan Redfern J. Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 5.42. 154. 1914 AC 651. See The Food Corporation of India v P.A. Ahamed Ibrahim (1988) SCC OnLine Ker 167; H.M Tejani v Mrs. Kulsumbai M. Jetha (1965) SCC OnLine Bom 141; Hamlyn & Co v Talisker Distillery [1894] AC 202. 155. (2018) 17 SCC 232.

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[34.9] CONCLUSION The courts have been given powers to intervene in arbitrations by way of issuing interim relief, in certain circumstances, and assist in the taking of evidence. However, the courts have to maintain a fine balance when exercising these powers.

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The endeavour should always be to support the arbitration process. In certain circumstances, the court’s powers, if exercised correctly, can prove to be extremely helpful in the smooth functioning of the arbitral process; the objective being to protect the interest of the parties in the arbitration.

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Certain powers such as assisting in taking evidence can give teeth to the arbitral tribunal’s orders, especially given the lack of powers of the arbitral tribunal to compel parties to adhere to such orders.

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Finally, the courts’ powers can also help in the proper functioning of the arbitration machinery, which can otherwise become abortive or ineffective, in certain circumstances.

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DIVISION 8

THE AWARD

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Chapter 35 TYPES OF AWARD [35.1]

INTRODUCTION....................................................................................................................... 995

[35.2] DIFFERENCE BETWEEN AWARDS AND ORDERS........................................................... 998

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[35.3] TYPES OF AWARDS................................................................................................................ 1002 [35.4]

FINAL AWARD......................................................................................................................... 1002

[35.6]

CONSENT AWARD.................................................................................................................. 1010

[35.5] INTERIM AND PARTIAL AWARD....................................................................................... 1004

[35.8] [35.9]

DEFAULT AWARD................................................................................................................... 1013 DRAFT AWARD........................................................................................................................ 1015

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[35.7]

PROVISIONAL AWARD.......................................................................................................... 1016

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[35.10] CORRECTIVE AWARD........................................................................................................... 1017 [35.11] ADDITIONAL AND SUPPLEMENTARY AWARDS.......................................................... 1020

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[35.12] INTERPRETATIVE AWARD.................................................................................................. 1021 [35.13] SUCCESSIVE AWARD............................................................................................................. 1022

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[35.14] INSTITUTIONAL AWARD..................................................................................................... 1022

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[35.15] CONCLUSION.......................................................................................................................... 1023

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[35.1] INTRODUCTION

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Arbitration proceedings usually culminate in an arbitral award, unless there is a settlement between the parties. Typically, an arbitral award is a judicial decision rendered by an arbitral tribunal.1 It determines all the issues referred to arbitration.2 It is final and binding on all the matters it deals with.3

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The arbitral tribunal becomes functus officio upon rendering the award. It cannot subsequently modify the award. This rule is subject to certain exceptions.4 1. Sanshin Chemicals Industry v Oriental Carbon & Chemicals Ltd. and Others 2001 3 SCC 341, at para. 6 (“… conclusion of the Joint Committee is a conclusion on the guidelines contained in the second part of clause 8.4 of the agreement and is not a judicial determination … the said conclusion would not amount to an award.”); Vadilal Chaturbhuj Gandhi v Thakorelal Chimanlal Munshaw (1953) SCC OnLine Bom 48 (“… if a matter is referred to a person and he is not called upon either to hold a judicial inquiry or to give a judicial decision, but it is permissible to him to rely on his own skill, knowledge or experience in order to arrive at a particular decision, then the decision would not be an award.”). 2. Halsbury’s Laws of England, Vol. 2 (4th edn, 2003), at para. 610. 3. Arbitration and Conciliation Act, 1996, s. 35; English Arbitration Act, 1996, s. 58(1); International Arbitration Act, 2002, s. 19B(1). See Groupe Antoine Tabet v Republique du Congo (12 October 2011) Cass Civ 1 (“… resolve in a definitive manner all or part of the dispute that is submitted to them on the merits, jurisdiction or a procedural matter which leads them to put an end to the proceedings”). 4. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​006. See Arbitration and Conciliation Act, 1996, s. 33; English Arbitration Act, 1996, s. 57; UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 33.

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Any decision on the questions referred to the arbitral tribunal will be an award.5 There is no need to include any “technical expression” to make the decision an award.6 However, the mere labelling of a document as an “award” will not make it one.7 The ICC Commission on Arbitration’s report states that:

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“An award is generally a decision about rights and obligations of the parties in the relationship, normally contractual, that gave rise to the dispute and to the arbitration. It is not about the rights and obligations of the parties under the procedure resulting from the arbitration agreement …”8

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Surprisingly, despite dealing with the recognition and enforcement of awards, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (“New York Convention”) does not define an “award”.

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The New York Convention only states that an arbitral award “shall include not only awards made by arbitrators appointed for each case but also those made by permanent arbitral bodies to which the parties have submitted.”9

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Additionally, seldom do national legislations10 or institutional rules11 expressly define exactly what an “award” constitutes.12

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5. MCIS Insurance Bhd v Associated Cover Sdn Bhd [2001] 2 MLJ 561 (“… any form of words amounting to a decision of the questions referred to will be good as an award.”). 6. Re Arbitration between Mohamed Ibrahim and Koshi Mohamed [1963] MLJ 32. 7. PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA. [2006] SGCA 41, at para. 70 (“… even where the order is titled as an ‘Award’, as is the case here, but does not relate to the substance of the dispute, it would not be an award …”). 8. Hermab Verbist, Humphrey Lloyd, Marco Darmon, Jean-​Pierre Ancel, Lord Dervaird, and Christoph Liebscher Liebscher, ‘ “Drafting Awards in ICC Arbitrations”, (2005) 16(2) The ICC International Court of Arbitration Bulletin, pp.19-​–​40, at p. 25. 9. Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958), art. I.2. 10. See Arbitration and Conciliation Act, 1996, s. 2(1)(c) (“‘arbitral award’ includes an interim award”); International Arbitration Act, 2002, s. 2(1) (“‘award’ means a decision of the arbitral tribunal on the substance of the dispute and includes any interim, interlocutory or partial award but excludes any orders or directions made under section 12”); New Zealand Arbitration Act, 1996, s. 2(1) (“award means a decision of the arbitral tribunal on the substance of the dispute and includes any interim, interlocutory or partial award”); Malaysian Arbitration Act, 2005, s. 2(1) (“‘award’ means a decision of the arbitral tribunal on the substance of the dispute and includes any final, interim or partial award and any award on costs or interest but does not include interlocutory orders”). 11. See SIAC Rules, 2016, r. 1.3 (“‘award’ includes a partial, interim or final award and an award of an Emergency Arbitrator”); ICC Rules of Arbitration, 2017, art. 2(v) (“‘award’ includes, inter alia, an interim, partial or final award”); ICC Rules of Arbitration, 2021, art. 2(v) (“‘award’ includes, inter alia, an interim, partial, final, or additional award”); Mumbai Centre for International Arbitration Rules, 2017, r. 1.3 (“‘award’ includes a partial or final award and an award of an Emergency Arbitrator”); The Delhi International Arbitration Centre (Arbitration Proceedings) Rules, 2018, r. 2.1 (b) (“‘arbitral award’ includes an interim, partial and final award”). 12. See Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 3165–​3167; Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.05.

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The drafters of the UNCITRAL Model Law on International Commercial Arbitration, 1985 (“Model Law”) had considered defining an “award” as: “… a final award which disposes of all issues submitted to the arbitral tribunal and any other decision of the arbitral tribunal which finally determine any question of substance or the question of its competence or any other question of procedure but, in the latter case, only if the arbitral tribunal terms its decision an award.”13

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However, they could not agree upon whether jurisdictional and procedural decisions should be treated as an award. Therefore, no definition was included in the Model Law.14 Notwithstanding the lack of a definition, the Model Law recognises that there may be more than one award, during the course of an arbitration.15

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The lack of a definition of “award” in the New York Convention has led to the view that it would be “appropriate to distill the notion of what constitutes an arbitral award from what is generally understood by arbitration in the national legal systems”.16

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“Despite the absence of an express definition, the Convention should be interpreted as imposing international limitations on the definition of an ‘arbitral award’ … the Convention would not permit a Contracting State to impose discriminatory or idiosyncratic definitions of an ‘award,’ with the consequence of nullifying or vitiating the state’s ratification of the Convention.”17 There are three basic conditions in conjunction with the concept of an “arbitral award”: (1) The award “must result from a putative agreement to “arbitrate”;



(2) The award must contain certain “minimal formal characteristics”; and



(3) The award must finally resolve a substantive issue, not a procedural matter.18

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13. UNCITRAL, “Report of the Working Group on International Contract Practices on the Work of its Seventh Session”, U.N. Doc. A/​CN.9/​246 (6–​17 February 1984), p. 46, at para. 192. 14. UNCITRAL, “Report of the Working Group on International Contract Practices on the Work of its Seventh Session”, U.N. Doc. A/​CN.9/​246 (6–​17 February 1984), p. 46, at paras 193–​194. See Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3166; Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.06. 15. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 16(3). 16. A.J. van den Berg, The New York Arbitration Convention of 1958: Towards a Uniform Judicial Interpretation (Kluwer, Deventer 1981), p. 44. 17. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3167. 18. Ibid, p. 3168.

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[35.2] DIFFERENCE BETWEEN AWARDS AND ORDERS An arbitral tribunal may make numerous decisions during the arbitration proceedings. Many decisions relate to administrative or logistical matters such as scheduling hearings and setting disclosure requirements.19 Those that determine miscellaneous procedural and preliminary issues are categorised as procedural orders.20

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In contrast to awards, the presiding arbitrator can be given the power to issue procedural orders. In such a situation, such procedural orders do not require agreement by a majority of the arbitral tribunal.21 Only the decisions relating to substantive legal issues are “awards”.22

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A procedural order described as an award will not make it one.23 On the contrary, even if a decision is categorised as a procedural order, it will be considered as an award if it makes a final determination of a substantive issue between the parties.24

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A useful indicator of determining whether a decision is an award is to test whether it determines an issue on which the arbitral tribunal may make a final award.25

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The provisions of the New York Convention only apply to “awards”. Provisions relating to annulment, recognition, enforcement, correction, and formal requirements in national statutes, too, only apply to arbitral awards and no other decisions of an arbitral tribunal.26

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19. Ibid, p. 3173. 20. Thomas H. Webster, Handbook of UNCITRAL Arbitration: Commentary, Precedents and Materials for UNCITRAL based Arbitration Rules (Sweet & Maxwell 2010), p. 477; Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.08. 21. See Arbitration and Conciliation Act, 1996, s. 29(2); UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 29; UNCITRAL Arbitration Rules, 2013, art. 33(2). 22. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3173 (“… an arbitral award is a written instrument … stating the tribunal’s final decision on particular claims or disputes and granting (or rejecting) the relief requested by the parties … an award is not a … communication concerning purely logistical or procedural matters …”). 23. L. Reed, E. Schwartz, and J Sutcliffe, The Award, Practitioner’s Handbook on International Arbitration and Mediation (2nd edn, Juris 2007), pp. 14–​18. 24. Braspetro Oil Services Co. v The Management and Implementation Authority of the Great Man-​Made River Project, Court of Appeal of Paris (1 July 1999) XXIV Y.B. COM. ARB. 296 (1999) (“… qualification of award does not depend on the terms used by the arbitrators or by the parties.”); Publicis Communications and Publicis S.A. v True North Communications Inc. 206 F.3d 725 (7th Cir. 2000), at para. 9 (“… content of a decision-​not its nomenclature-​determines finality”); Asian Electronics Ltd. v M.P. State Electricity Board (2007) SCC OnLine MP 179, at para. 18 (“Nomenclature is not the real governing factor. The nature and the tenor of the order has to be appositely and soundly understood.”). 25. Harinarayan G. Bajaj v Sharedeal Financial Consultants Pvt. Ltd. (2002) SCC OnLine Bom 1186, at para. 7; Shyam Telecom Ltd. v Icomm Ltd. (2010) SCC OnLine Del 1234, at para. 2. 26. See Arbitration and Conciliation Act, 1996, ss. 31, 33–​36; English Arbitration Act, 1996, ss. 52, 57, 66–​69; UNCITRAL Model Law on International Commercial Arbitration, 1985, arts 31, 33–​36.

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Chapter 35—​Types of Award

Only an arbitral award:

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“… (a) has res judicata or other preclusive effect; (b) is subject to being annulled pursuant to national arbitration legislation; (c) is capable of being recognized and enforced under international arbitration conventions and most national arbitration legislation; (d) satisfies requirements in some national arbitration legislation that a final arbitral decision resolving the parties’ claims in the arbitration be made within a specified time period; and (e) is required to satisfy form requirements or procedural steps imposed by some arbitration statutes or institutional arbitration rules.”27 Therefore, the New York Convention does not apply to procedural orders passed by the arbitral tribunal.28

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The court has limited scope to interfere in an arbitral tribunal’s procedural order or direction.29 These orders cannot normally be set aside. Only certain orders of an arbitral tribunal are appealable.30

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Hence, whether a document can be described as an award is of practical importance because an accurate classification helps determine: (1) whether the decision is enforceable by a domestic/​foreign court;



(2) whether the decision is susceptible to appeal or other intervention by a court, and if so by what means;



(3) whether the decision is binding on the parties and the arbitral tribunal; and



(4) whether and to what extent an arbitral tribunal can validly recall or vary its decision.31

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For this reason, it is important to know whether a particular decision of the arbitral tribunal amounts to an award or not.

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The distinction between an award and a procedural decision is a very fine one.

27. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3164. 28. Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958), art. I(1). 29. Subhash Chander Chachra v Ashwani Kumar Chachra (2007) SCC OnLine Del 149, at paras 30–​31. 30. Arbitration and Conciliation Act, 1996, s. 37(2)(b); Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 70 (“… only an award can be challenged under Section 34(2) … an interim order or direction in itself cannot be challenged, except for interim order appealable under Section 37(2) of the Act … orders and directions help to move the arbitration forward, and deal with evidence, and the conduct of the proceedings. They do not have the status of awards, because they do not decide the issues in question …”). See National Highways Authority of India v Gwalior-​Jhansi Expressway Limited 2018 8 SCC 243. 31. Mustill and Boyd, Commercial Arbitration (Companion Volume to 2nd edn, Butterworths 2001), p. 105.

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Law, Practice and Procedure of Arbitration in India

J. D. M. Lew, L. A. Mistelis, and S. M. Kroll state that: “While all awards are decisions of the tribunal not all decisions are awards. The term ‘decision’ is generic and refers to the result of any conclusion or resolution reached after consideration while an ‘award’ is a decision affecting the rights between the parties and which is generally capable, for instance, under the New York Convention.”32

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Courts are generally reluctant to categorise a decision as an award so as to avoid judicial intrusion into arbitration proceedings.33 The decision will be termed as an arbitral award if only a substantive issue is directly addressed and resolved.34 Arbitral decisions that do not decide the dispute are not awards.35

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The Commercial Court (Queen’s Bench Division) in ZCCM Investment Holdings Plc. v Kansanshi Holdings Plc.36 stated that to determine whether a decision is an award:

(1) weight must be given to the substance, and not just the form of the decision;



(2) one must consider whether all issues are finally disposed of and the arbitral tribunal is rendered functus officio;



(3) examine whether the decision deals with the substantive rights/​liabilities of parties; and



(4) the arbitral tribunal’s description of the decision, formality of language, level of reasoning, whether the decision complies with the formal requirements of an award must be taken note of.37

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32. J. Lew, L. Mistelis et al., Comparative International Arbitration (Kluwer Law International 2003), at para. 24-​3. 33. Charles M Willie & Co. (Shipping) Ltd v Ocean Laser Shipping Ltd [1999] 1 Lloyd’s Rep 225 (“… arbitrators always have a discretion to render a decision, whatever its nature, in the form of an interim award … I am generally sceptical that interlocutory, procedural or discretionary decisions can properly be treated as though they are the subject matter of an interim award … cannot imagine that arbitrators or the courts would contemplate that interim awards on such interlocutory matters should, save in the exceptional case, be made the means by which the courts should supervise the conduct of a reference …”); Dato’ Samsudin Abu Hassan v Robert Kokshoorn [2003] 3 CLJ 1 (“To allow every such ruling to be referred to court and remitted back to the arbitrator would seriously delay the proceedings before the arbitrator … purpose of arbitration is to … save time and costs and also to enable a more flexible procedure to be followed, unlike in a court of law. … That is why there is no right of appeal from a decision, order or judgment of an arbitral tribunal. That is why the law provides that only in specific matters that applications may be made to court in respect of an arbitration proceeding.”). 34. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3176; Deepak Mitra v District Judge (1999) SCC OnLine All 609, at para. 10 (“A distinction has always to be kept in view with regard to the orders and directions which address the procedural mechanism to be adopted in the arbitration proceedings. … Final or interim arbitral award pre-​supposes the determination of a substantive right of the parties. It has to be contrasted with interim orders or directions.”). 35. E. Gaillard and J. Savage (eds), Fouchard Gaillard Goldman on International Commercial Arbitration (Kluwer Law International 1999), at para. 1355 (“Measures taken by arbitrators which do not decide the dispute either wholly or in part are not awards. This is true of orders for the hearing of witnesses and document production, for example, which are only procedural steps and as such are incapable of being subject to an action to set aside.”). 36. [2019] EWHC 1285 (Comm). 37. See Michael Wilson v Emmott [2008] EWHC 2684 (Comm); Enterprise Insurance Co plc v U-​Drive Solutions (Gibraltar) Ltd. [2016] EWHC 1301 (QB).

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Chapter 35—​Types of Award

The Court finally held that:

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“While it is not at all akin to the kinds of decisions which will be set out in a basic procedural order –​dealing with timetables, disclosure, form of statements and so on, and it is final to its subject matter, the Ruling does not decide an issue of substance relating to the claim. It is not a final decision on the merits of any of the claims. It is a decision on a procedural issue (a derivative claim being itself a procedural device, and this being a decision on leave to bring that form of claim) which has a discretionary element. The bottom line is that the arbitration is not over and the Tribunal is not functus …”38

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The Commercial Court (Queen’s Bench Division) in K v S39 followed and applied the above approach. The Court held that the most important determinant of whether a decision is an award is whether it deals with a substantive point in the arbitration. Furthermore, while an arbitral tribunal can vary or rescind an order,40 an award can only be altered to make corrections.41

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Others include the admissibility of documents,42 placing additional documents on record,43 examinations on discovery,44 decision as to the venue of arbitration,45 order rejecting an application under Section 27 of the Arbitration Act46 etc. will be categorised as a procedural order and not as an arbitral award.

ZCCM Investment Holdings Plc v Kansanshi Holdings Plc [2019] EWHC 1285 (Comm), p. 784. [2019] EWHC 2386 (Comm). See Charles M Willie & Co. (Shipping) Ltd v Ocean Laser Shipping Ltd [1999] 1 Lloyd’s Rep 225. See English Arbitration Act, 1996, s. 57. Ranjiv Kumar v Sanjiv Kumar A.P. 679 of 2017 (13 February 2018, Calcutta High Court). ONGC Petro Additions Limited v Tecnimont S.P.A. and Another (2019) SCC OnLine Del 8976; Rhiti Sports Management Pvt. Ltd. v Power Play Sports & Events Ltd. (2018) SCC OnLine Del 8678. Terrawinds Resources Corp v ABB Inc 2009 QCCS 5820. Sanshin Chemicals Ltd. v Oriental Carbons & Chemicals Ltd (2001) 3 SCC 341. Harinarayan G. Bajaj v Sharedeal Financial Consultants Pvt. Ltd. (2002) SCC OnLine Bom 1186. Young v Ross Loos Med. Group Inc. 135 Cal. App.3d 669 (Cal Ct. App. 1982). Judgment of 10 November 2010, DFT 4A_​399/​2010, at para. 4.1 (Swiss Fed. Trib.). Braspetro Oil Services Co. v The Management and Implementation Authority of the Great Man-​Made River Project, Court of Appeal of Paris (1 July 1999) XXIV Y.B. COM. ARB. 296 (1999). Alcatel Space SA v Loral Space Communications 02 Civ. 2674 (SAS) (SDNY, 25 June 2002). Cinevistaas Ltd. v Prasar Bharti (2019) SCC OnLine Del 7071. Asian Electronics Ltd v M.P. State Electricity Board (2007) SCC OnLine MP 179.

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38. 39. 40. 41. 42. 43.

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A decision dismissing an arbitration,47 partial ruling on disputed issues concerning the merits of the dispute,48 denial of request to review an earlier partial award,49 interim award directing document production,50 order rejecting amendment of the claim,51 and order granting a party’s claim52 may be categorised as an award, and not an order.

44. 45. 46. 47. 48. 49. 50. 51. 52.

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Law, Practice and Procedure of Arbitration in India

Section 17 of the Arbitration Act allows the arbitral tribunal to order interim measures. Such orders can be enforced with the assistance of the courts.53 This is a statutory provision which expressly provides that absent contrary agreement by the parties, such orders shall be deemed to be an order of the Court and be enforceable under the Code of Civil Procedure, 1908 as if it were an order of the Court.

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[35.3] TYPES OF AWARDS

A number of different awards may be issued in the course of arbitration. Arbitration legislations54 and arbitration rules55 generally allow the arbitral tribunal to make more than one award.

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Such awards may be an order for payment of monies, a declaration resolving a particular issue, injunctive namely, to do or refrain from doing some specified thing, rectificatory that is, to put right or an order for performance of some contractual obligation, failing which damages is payable.

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The types of arbitral awards are final, interim, partial, consent, default, draft, provisional, corrective, additional, interpretative, successive, and institutional awards.

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[35.4] FINAL AWARD

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Each of these awards is dealt with in the following sections.

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The term “final award” may have different meanings. Gary Born explains:

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“First … all rulings by arbitral tribunals which qualify as arbitral ‘awards’ can be regarded as ‘final’, in the sense that all arbitral awards finally resolve a particular claim or matter with preclusive effect … a ‘partial’ award that decides and grants relief on (only) one of several claims in an arbitration will be regarded as ‘final’ in this sense, notwithstanding the fact that further decisions by the tribunal are required to fully resolve the parties’ dispute … Second … some international arbitration conventions and national arbitration statutes provide for the recognition of only ‘final’ awards, and not of other, ‘non-​final’ rulings by arbitral tribunals. Used in this sense, a ‘final’ award refers only to those decisions that have achieved a sufficient degree of finality in the arbitral seat … or that are no longer subject to appeal or annulment …

53. State of Gujarat v Amber Builders (2020) 2 SCC 540. 54. See Arbitration and Conciliation Act, 1996, s. 31(6); English Arbitration Act, 1996, s. 47; International Arbitration Act, 2002, s. 19A. 55. See SIAC Rules, 2016, r. 32.5; UNCITRAL Arbitration Rules, 2013, art. 34(1); ICC Rules of Arbitration, 2017, art. 2(v); ICC Arbitration Rules, 2021, art. 2(v); LCIA Arbitration Rules, 2020, art. 26.1; The Delhi International Arbitration Centre (Arbitration Proceedings) Rules, 2018, art. 32.2.

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Chapter 35—​Types of Award

Third … the term ‘final award’ also refers to the last award in an arbitration, which disposes of all (or all remaining) claims in the arbitration and terminates the arbitrator’s mandate …”56 Notwithstanding the varied uses of the term “final”, a final award is generally used to describe the last award in the arbitration that disposes of all the parties’ claims. The arbitral tribunal is rendered functus officio.57

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The final award terminates the arbitral proceedings.58 Such an award is like a final judgment of a court and extinguishes the original cause of action.59

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The applicable test is to determine whether the matter in question has been disposed of, finally. If the parties can return to the arbitral tribunal for a further award of unresolved issues, the earlier award will not be final award.60

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Once the final award has been issued, the decision is res judicata and cannot be revisited. However, it is subject to issues of interpretation and correction of the award or the possibility of rendering a further award.61

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For this reason, an arbitral tribunal must not issue the final award until it is satisfied that it has adequately resolved all issues referred to it.62

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An arbitral tribunal can (and should) indicate, when the final award on the substantive issues in the arbitration is issued, whether the award deals with costs or whether a subsequent award on costs will be made, that is a “Final Award (Save as to costs)”.

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The Commercial Court (Queen’s Bench Division) in Pirtek (UK) Ltd v Deanswood Ltd prevented an arbitral tribunal from issuing an award on interest subsequent to a final award on quantum.

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63

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56. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3261; See PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation 2015 SGCA 30, at paras 51–​53 (“The term ‘final’ award can be understood in a number of ways. First, it can refer to an award which resolves a claim or matter in an arbitration with preclusive effect … Second, it can refer to awards that have achieved a sufficient degree of finality in the arbitral seat … Third, it can refer to the last award made in an arbitration which disposes of all remaining claims.”). 57. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3262; Toolkit for Award Writing, IBA Arb40 Subcommittee (21 September 2016), p. 16. 58. Arbitration and Conciliation Act, 1996, s. 32(1); English Arbitration Act, 1996, s. 58(1); UNCITRAL Model Law, art. 32(1). 59. Dobbs v National Bank of Australasia Ltd (1935) 53 CLR 643. 60. Ronly Holdings v JSC Zestafoni G. Nikoladze Ferroalloy Plant [2004] EWHC 1354 (Comm). 61. Thomas H. Webster, Handbook of UNCITRAL Arbitration: Commentary, Precedents and Materials for UNCITRAL Based Arbitration Rules (Sweet & Maxwell 2010), p. 478. 62. See Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.18. 63. Pirtek (UK) Ltd v Deanswood Ltd [2005] EWHC 2301 (Comm).

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Law, Practice and Procedure of Arbitration in India

However, institutional arbitration rules64 and national arbitration laws65 permit a party to request an additional award, even after issuance of a final award, in certain circumstances. Lastly, the final award may be challenged in courts in proceedings to set aside the award.66

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[35.5] INTERIM AND PARTIAL AWARD Difference between Interim and Partial Awards

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Many institutional arbitration rules67 and national arbitration legislations68 include interim and partial awards in their definition of “arbitral award”. They allow arbitral tribunals to issue such awards subject to any contrary agreement by the parties.69

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The term “interim” is used, narrowly, to refer to an award that:

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“… does not dispose finally of a particular claim (e.g., one of several claims for damages arising from several alleged breaches of contract, but instead only decides a preliminary issue relevant to disposing of such claims in the future (e.g., choice of law, liability, construction of a particular contractual provision), without granting (or denying) relief on that claim … a decision is ‘interim’ because it is a step towards disposing of a portion of the parties’ claims, but does not itself make a final decision either granting or rejecting any of those claims.”70

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Such an award brings the case “closer to a solution”, is binding71 and limits the scope of a dispute.72 An interim award need not contain reasons and may be issued orally.73

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64. SIAC Rules, 2016, art. 33; UNCITRAL Arbitration Rules, 2013, arts. 37–​39; ICC Rules of Arbitration, 2017, art. 36; ICC Arbitration Rules, 2021, art. 36; LCIA Arbitration Rules, 2020, art. 27. 65. Arbitration and Conciliation Act, 1996, s. 33(4); English Arbitration Act, 1996, s. 57; UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 33. 66. Arbitration and Conciliation Act, 1996, s. 34; English Arbitration Act, 1996, ss. 58(2), 70. 67. SIAC Rules, 2016, r. 1.3; UNCITRAL Arbitration Rules, 2013, art. 34(1); ICC Rules of Arbitration, 2017, art. 2(v); ICC Arbitration Rules, 2021, art. 2(v); LCIA Arbitration Rules, 2020, art. 26.1; The Delhi International Arbitration Centre (Arbitration Proceedings) Rules, 2018, art. 2.1(b). 68. Arbitration and Conciliation Act,1996, ss. 2(1)(c), 31(6); English Arbitration Act, 1996, s. 47; UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 17; International Arbitration Act, 2002, ss. 2(1), 19A; Swiss Law on Private International Law, art. 188; Belgian Judicial Code, art. 1713; Netherlands Code of Civil Procedure, art. 1049. 69. Minerals & Metals Trading Corporation of India Ltd v Encounter Bay Shipping Co. Ltd. (The Samos Glory) (No 2) [1988] 1 Lloyd’s Rep 51. 70. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3269. 71. An interim award binds the arbitral tribunal insofar as the tribunal’s final award must not conflict with the interim award that has previously been made. 72. Toolkit for Award Writing, IBA Arb40 Subcommittee (21 September 2016), p. 18. 73. Ibid.

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Chapter 35—​Types of Award

On the other hand, a partial award is a decision that “finally disposes of part, but not all, of the parties’ claims in an arbitration, leaving some claims for further consideration and resolution in future proceedings in the arbitration”.74 The partial award differs from an interim award in that it decides and disposes of a particular claim. An interim award only decides an issue relevant to disposing the claim, and not the claim itself.75

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Hence, a “partial award” is a final decision on an issue that can be separated from the rest of a dispute.76 It is not akin to a preliminary decree, since it is final in all respects.77 Partial awards also differ from interim awards in as much as they have a more immediate monetary impact.78

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A partial award is final and binding as to the issue it decides and so cannot be re-​ considered by the tribunal at a later stage of the arbitration proceedings.79 However, a partial award does not leave the tribunal functus officio.80

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In practice, however, the terms “interim” and “partial” are often used interchangeably, to refer to all those awards that are made at an interim stage in the arbitration.81

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The Supreme Court of India in Satwant Singh Sodhi v State of Punjab82 held that interim award may have two effects:

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“If the interim award is intended to have effect only so long as the final award is not delivered it will have the force of the interim award and it will cease to have effect after

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74. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3263. 75. Ibid. 76. Toolkit for Award Writing, IBA Arb40 Subcommittee (21 September 2016), p. 17; Exmar BV v National Iranian Tanker Co. [1992] 1 Lloyd’s Rep 169. 77. McDermott International Inc. v Burn Standard Co. Ltd. (2006) 11 SCC 181, at para. 70. 78. National Thermal Power Corporation Limited v Siemens Atiengesellschaft (2005) SCC OnLine Del 631, at para. 32. 79. Methanex Corporation v United States of America, Final Award (3 August 2005), at para. 27 (“… the Tribunal decides that its Partial Award was an award which was final and binding upon the Disputing Parties; and that, as such, the tribunal has no jurisdiction to reconsider the Partial Award …”); PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation (Indonesia) [2015] SGCA 30, at para. 105–​106. See Arbitration and Conciliation Act, 1996, ss. 2(1)(c), 35; English Arbitration Act, 1996, s. 58; International Arbitration Act, 2002, s. 19B. 80. A partial award will not render the tribunal functus officio unless there is an express agreement between the parties to give the partial award the effect of a final award. See PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation (Indonesia) [2015] SGCA 30; Am. Int’l Specialty Lines Ins. Co. v Allied Capital Corp. 35 N.Y.3d 64 (2020). 81. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3268; IFFCO Ltd. v Bhadra Products 2018 2 SCC 534, at para. 9; McDermott International Inc. v Burn Standard Co. Ltd. (2006) 11 SCC 181, at para. 70; National Thermal Power Corporation Limited v Siemens Atiengesellschaft (2005) SCC OnLine Del 631, at para. 32. 82. (1999) 3 SCC 487.

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Law, Practice and Procedure of Arbitration in India

the final award is made. If, on the other hand, the interim award is intended to finally determine the rights of the parties it will have the force of a complete award and will have effect even after the final award is delivered.”83 In view of the above, parties to arbitration should request the tribunal to expressly set out the intended application of any interim award within the award itself to avoid conflict.84

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Before the 2015 amendment, there was a distinction between the powers of the court and arbitral tribunal to make interim orders. The scope of interim relief that could be granted by the arbitral tribunal was limited, as compared to courts.85

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However, after introduction of the 2015 Amendment, the powers of the arbitral tribunal to grant interim relief have been brought in tandem with that of courts.86

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Categorisation of Partial and Interim Awards

The High Court of Bombay in Aero Club v Solar Creations Pvt. Ltd.87 held that: (1) not all orders, decisions at an interim stage of the arbitration proceedings will constitute an “arbitral award”;



(2) even if the decision is titled as a “partial award” or “interim award” it may not be an arbitral award;



(3) whether a decision is a partial or interim award is a question of fact;



(4) a partial and interim award will be treated as an arbitral award only if “it satisfies the tests of the form and contents of an award under sub-​sections (1), (2) and (3) of section 31 … it is in relation to ‘any matter’ with respect to which a final arbitral award can be made …”; and 5. the “nature, extent and intendment” of the order/​decision will also play a vital role in determining whether it is indeed a partial/​interim award.

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83. Satwant Singh Sodhi v State of Punjab (1999) 3 SCC 487, at para. 6. 84. See PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation (Indonesia) [2015] SGCA 30. 85. See Arbitration and Conciliation Act, 1996 (un-​amended), ss. 9, 17. See Managing Director, Army Welfare Housing Organisation v Sumangal Services (P) Ltd. (2004) 9 SCC 619; Intertoll ICS Cecons O&M Co. Pvt. Ltd. v National Highways Authority of India (2013) SCC OnLine Del 447. 86. See State of Gujarat v Amber Builders 2020 2 SCC 540; Shakti International v Excel (2017) SCC OnLine Bom 321; Raymond Limited v Akshaypat Singhania (2019) SCC OnLine Bom 227. 87. (2020) SCC OnLine Bom 472, at para. 21.

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Chapter 35—​Types of Award

The decision of the tribunal to not issue a partial or an interim award is an interim award, and not a procedural order.88 An award deciding the issue of limitation is an interim award and is susceptible to challenge.89 Where in the arbitration agreement the parties agree to let a joint arbitration committee take a decision with regard to the venue of arbitration, such decision is not an interim award.90

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An order rejecting amendment of claims, as being barred by limitation, is a final adjudication, and so, an interim award.91 However, if the amendment was moved at a belated stage, an order dismissing the application for amendment will not be an interim award.92

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An order will only be an interim award if it is in the nature of a part decree.93

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Interim awards that dispose of requests for relief are capable of recognition, enforcement, and challenge, like other awards.94 However, arbitral awards for injunctive interim measures are not final and, so, cannot be enforced.95

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An interim award can be challenged within the time limits specified under Section 34 of the Arbitration Act.96 The Supreme Court of India had recommended that the Parliament “consolidate all interim awards together with the final arbitral award” so that only one challenge can be made after delivery of the final arbitral award, so as to avoid “piecemeal challenges” which led to “unnecessary delay and additional expense”.97

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88. See Exmar BV v National Iranian Tanker Co (The Trade Fortitude) [1992] 1 Lloyd’s Rep. 169. 89. IFFCO Ltd. v Bhadra Products (2018) 2 SCC 534, at para. 15 (“… as the learned arbitrator has disposed of one matter between the parties i.e., the issue of limitation finally, the award dated 23-​7-​2015 is an ‘interim award’ within the meaning of Section 2(1)(c) of the Act and being subsumed within the expression ‘arbitral award’ could, therefore, have been challenged under Section 34 of the Act.”). 90. Sanshin Chemicals Industry v Oriental Carbons & Chemicals Ltd. (2001) 3 SCC 341, at para. 6. 91. Cinevistaas Ltd. v Prasar Bharti (2019) SCC OnLine Del 7071, at paras 22, 36–​37 (“… this is a final adjudication. There is a finality attached to the award and there is nothing in the final award that would be dealing with these claims. It is not just an interim award, but a rejection of the additional claims/​amounts finally.”). 92. Container Cooperation of India v Taxmaco Ltd. (2009) SCC Online Del 1594, at para. 6. 93. Shyam Telecom Ltd. v Icomm Ltd. (2010) SCC OnLine Del 1234. 94. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3270. See PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation (Indonesia) [2015] SCGA 30; McDermott International Inc. v Burn Standard Co. Ltd. and Ors. (2006) 11 SCC 181. 95. Al Raha Grp. for Tech. Servs. v PKL Servs., Inc. No. 1:18-​cv-​04194, 2019 U.S. Dist. LEXIS 156249 (N.D. Ga. 6 September 2019); Banco de Seguros del Estado v Mut. Marine Offices, Inc. 230 F.Supp.2d 362, 367-​68 (SDNY 2002); Metallgesellschaft AG v M/​V Capitan Constante 790 F.2d 280, 283 (2d Cir. 1996). 96. State of Arunachal Pradesh v Damani Construction Co. (2007) 10 SCC 742. 97. IFFCO Ltd. v Bhadra Products (2018) 2 SCC 534, at para. 30.

1008

Law, Practice and Procedure of Arbitration in India

An arbitral tribunal has the jurisdiction to issue an interim award on any matter.98 However, time and cost considerations must be evaluated when deciding whether to issue such awards.99

Practical Application

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Partial awards are normally issued when there are distinct quantum and liability issues, there is a challenge to the jurisdiction of the tribunal, or when preliminary points of law are raised.100

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A partial award is particularly useful in situations where cash flow issues and changing interest rates could adversely affect the claimant’s claim.101 Issuing a partial award helps the tribunal to decide a complex case, in steps, which helps to improve efficiency and speed.102

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Redfern and Hunter explain that partial awards are useful in the following circumstances: (1) Disputes over jurisdiction –​a partial award on jurisdiction will help simplify the arbitration proceedings and save time and money.103



(2) Disputes over the applicable law –​until there is a determination on the law that applies to the dispute, parties may be arguing using different systems of law, therefore a partial award on this issue can be very useful;104



(3) Separation of quantum and liability –​an early determination of liability can render the expensive and time-​consuming process of obtaining expert evidence on quantum unnecessary, and a finding of liability can often motivate a settlement.105

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98. Arbitration and Conciliation Act, 1996, s. 31(6). 99. IFFCO Ltd. v Bhadra Products (2018) 2 SCC 534, at para. 8 (“by dealing with the matter in a piecemeal fashion, what must be borne in mind is that the resolution of the dispute as a whole will be delayed and parties will be put to additional expense. The Arbitral Tribunal should, therefore, consider whether there is any real advantage in delivering interim awards or in proceeding with the matter as a whole and delivering one final award, bearing in mind the avoidance of delay and additional expense.”). 100. Robert Merkin, Arbitration Law (LLP, London, Singapore 2004), p. 691. 101. Exmar BV v National Iranian Tanker Co. (The Trade Fortitude) [1992] 1 Lloyd’s Rep 169. 102. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3265. 103. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.19. 104. Ibid, at para. 9.25. 105. Ibid, at para. 9.26.

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A court may also pass an interim award where claims have been admitted by the opposite party and do not require determination of other disputes.106 The arbitral tribunal may also deal with the issue of limitation in a partial award. There is no point in proceeding with the arbitration if the limitation period has expired.107

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Ordinarily, if set off is raised as a defence. The arbitral tribunal must hold a proper hearing. It may, however, make a partial award, without a hearing on set off, in exceptional circumstances. Only where the arbitral tribunal is not satisfied that the claim for set off is made in good faith or on reasonable grounds.108

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However, the disadvantage of a partial award is that it creates a further avenue for judicial review, thereby increasing the possibility of delays.109

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Special Category: Jurisdiction

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Most modern arbitral legislations have incorporated the principle of kompetenz-​ kompetenz. The arbitral tribunal has power to rule on its own jurisdiction.110 Such power to rule on jurisdiction allows the arbitral tribunal to decide questions relating to the existence and validity of the arbitration agreement.

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If the arbitral tribunal finds that it has no jurisdiction, it will not proceed further with the arbitration. It terminates the arbitration proceedings.

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However, if the arbitral tribunal rejects the plea of lack of jurisdiction, it will continue with the arbitral proceedings and make an arbitral award. Such preliminary decision of the tribunal is known as a jurisdictional award.

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There is uncertainty on whether jurisdictional rulings will be categorised as an award or a procedural order. In some States, jurisdictional rulings passed by the arbitral tribunal are subject to special judicial review.111

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106. Numero Uno International Ltd. v Prasar Bharti (2008) SCC OnLine Del 175; Gammon India Ltd. v Sankaranarayana Construction (Bangalore) (P) Ltd. (2011) SCC OnLine Mad 2266. 107. See M/​s Indian Farmers Fertilizers Cooperative Ltd. v Bhadra Products (2018) 2 SCC 534. Also See BBA and others v BAZ and another [2020] SGCA 53, where the Singapore Court of Appeal held that issues of time bar go towards admissibility, and not jurisdiction, and so cannot be reviewed by the seat court. 108. Robert Merkin, Arbitration Law (LLP 2004), p. 696. 109. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.24. 110. Arbitration and Conciliation Act, 1996, s. 16; English Arbitration Act, 1996, s. 30; UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 16. Also See SIAC Rules, 2016, r. 28.2; UNCITRAL Arbitration Rules, 2013, art. 23(1); ICC Rules of Arbitration, 2017, art. 6(5); ICC Arbitration Rules, 2021, art. 6(5); LCIA Arbitration Rules, 2020, art. 23.1. 111. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3267; Arbitration and Conciliation Act, 1996, s. 37(2)(a); UNCITRAL Model law, art. 16(3).

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However, Gary Born states that:

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“Absent express statutory direction, the better view is that negative jurisdictional decisions should be categorized in the same manner as positive jurisdictional rulings … as awards, subject to annulment, recognition and enforcement, like other arbitral awards … these rulings involve paradigmatic exercises of adjudicative power, applying legal rules to facts to make highly significant decisions regarding the parties’ rights. Decisions of this nature are virtually indistinguishable from other types of awards and should be subject to both judicial review and recognition like other awards.”112

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An arbitral tribunal having jurisdiction issues a partial award to that effect, the said arbitral tribunal, or a subsequently reconstituted arbitral tribunal cannot reopen the question of jurisdiction unless the parties agree otherwise.113

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Further, the limitation period for challenging the award on jurisdiction will start running from the date of the partial award on jurisdiction.114

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The challenging party has the onus of proving the arbitral tribunal’s lack of jurisdiction at the enforcement stage. For instance, the respondent in Tele-​Radio i Lysekil AB v Motorman Radio Sistemas y Aplicaciones115 failed to prove that the arbitral tribunal lacked jurisdiction.

[35.6] CONSENT AWARD

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Most arbitration rules permit parties to resolve their dispute, by consent, at any time during the arbitration proceedings.116 National arbitration regimes, too, recognise the desirability of encouraging parties to settle their disputes referred to arbitration.117

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In one case, the arbitral tribunal even allowed the parties to reopen hearings, after they had closed, for the purpose of recording terms of a settlement agreement in the form of an arbitral award.118

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112. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3267. 113. Emirates Trading Agency LLC v Sociedade de Fomento Industrial Private Ltd [2015] EWHC 1452 (Comm). 114. Emirates Trading Agency LLC v Sociedade de Fomento Industrial Private Limited [2015] EWHC 1452 (Comm). 115. Spain No. 2016-​1, Superior Court of Justice of Catalonia, Case No. 16/​2014, 19 February 2014 in A. J. van den Berg (ed.), Yearbook Commercial Arbitration 2016, Volume XLI (2016), pp. 1–​9. 116. SIAC Rules, 2016, art. 32.10; UNCITRAL Arbitration Rules, 2013, art. 36; ICC Rules of Arbitration, 2017, art. 33; ICC Arbitration Rules 2021, art. 33; LCIA Arbitration Rules, 2020, art. 26.9; The Delhi International Arbitration Centre (Arbitration Proceedings) Rules, 2018, art. 30; Mumbai Centre for International Arbitration Rules, 2017, r. 30.11. 117. Arbitration and Conciliation Act, 1996, s. 30; English Arbitration Act, 1996, s. 51; UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 30; International Arbitration Act, 2002, s.18. 118. Egypt: Ad hoc arbitration hosted by the Cairo Regional Center for International Commercial Arbitration, No. 497/​2006 (17 February 2006), Case Law on UNCITRAL texts (“CLOUT”) Case 779.

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Chapter 35—​Types of Award

If the dispute is resolved, during the course of arbitration, parties have two options:119

(1) they can terminate the arbitration proceedings after recording the terms of their settlement in an agreement; or



(2) they may obtain a consent award.

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A consent award embodies the settlement arrived at between the parties.120

If a consent award is not made, it will be necessary for a party wishing to enforce the settlement agreement to bring an action on it. Alternatively, the enforcing party will have to plead it as a defence, in proceedings brought against him, by the other party.

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Hence, in comparison to a settlement agreement, a consent award is more advantageous: (1) It shows a measure of approval by an arbitral tribunal;121



(2) it provides a greater degree of certainty and enforceability;122



(3) it can be enforced as an award under the New York Convention123 and national legislation, rather than requiring a suit for breach of contract;124 and



(4) it raises an issue estoppel against subsequent litigation/​arbitration;125

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Despite the benefits of a consent award, parties may at times be reluctant to request for the arbitral tribunal to issue a consent award incorporating the settlement into the

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119. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3270. 120. J. F. Poudret, S. Besson, Comparative Law of International Commercial Arbitration (2nd edn, 2007), p. 648; Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.34. 121. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.35. 122. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3270. 123. Nigel Blackaby, Constantine Partasides QC, Alan Redfern, J. Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.35; ALBtelecom SHA v UNIFI Commc’ns, Inc. 16 Civ. 9001 (PAE) (SDNY 30 May 2017). 124. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3270; Toolkit for Award Writing, IBA Arb40 Subcommittee (21 September 2016), pp.19–​ 20; Thomas H. Webster, Handbook of UNCITRAL Arbitration: Commentary, Precedents and Materials for UNCITRAL Based Arbitration Rules (Sweet & Maxwell 2010), p. 539. 125. Robert Merkin, Arbitration Law (LLP, London, Singapore 2004), p. 697; Thomas H. Webster, Handbook of UNCITRAL Arbitration: Commentary, Precedents and Materials for UNCITRAL Based Arbitration Rules (Sweet & Maxwell 2010), p. 539; Wicketts and Sterndale v Brine Builders 2001, Unreported (“It will be necessary for a party wishing to enforce the settlement agreement to bring an action on it, or at least to plead it as a defence in proceedings brought against him by the other. By contrast, where the settlement agreement is embodied in an award, it may be enforced by the summary mechanisms provided by the Arbitration Act 1996 and will amount to a complete defence to legal proceedings brought in contravention of it by the other party.”).

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Law, Practice and Procedure of Arbitration in India

award. Such reluctance may arise from an apprehension that in requesting the arbitral tribunal to do so will increase the costs of the arbitration.126 However, the parties should inform the arbitral tribunal and the arbitral institution of any settlement agreement reached between them. This ensures that the tribunal will not proceed anymore with the arbitration thereby not incurring further costs other than cancellation fees.

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The arbitral tribunal and the arbitral institution, in turn, must ensure that any notification of settlement or the consent award is expressly agreed to by an authorised representative of both parties.127

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Further, a written settlement implies a request to record the settlement, and so, the tribunal can record the settlement even if only some of the parties request it to do so.128

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A consent award differs from an ordinary award in that it need not contain reasons.129 However, it is treated the same as an ordinary award.130

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The consent award should contain the terms of the settlement agreement to be enforceable. It should not merely record the existence and fact of settlement.131

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Any dispute as to the existence of a settlement agreement or in respect of costs will fall within the jurisdiction of the arbitral tribunal.132 However, where receipt of the settlement amount has been acknowledged in writing, there is no arbitrable dispute.133 Neither can the arbitration clause be invoked to resolve any mistake in the settlement.134

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The arbitral tribunal is normally obligated to record the terms of the parties’ settlement and issue a consent award, if requested to do so.135

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126. Thomas H. Webster, Michael W. Buhler, Handbook of ICC Arbitration (4th edn, Sweet & Maxwell 2018), p. 540 (the ICC Court may award full fees to the tribunal, even if a consent award is issued, depending on the timing of such award). 127. R. W. Turner, Arbitration Awards: A Practical Approach (Oxford: Blackwell Publishing 2005), p. 24. 128. Mohammedhussain Abdullabhai v Shabbirbhai Abdullabhai (2017) SCC OnLine Bom 8823, at para. 29. 129. Arbitration and Conciliation Act, 1996, s. 31(3)(b); English Arbitration Act, 1996, s. 52(4); UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 31(2); UNCITRAL Arbitration Rules, 2013, art. 36(1); LCIA Arbitration Rules, 2020, art. 26.9. 130. Arbitration and Conciliation Act, 1996, s. 30(4); English Arbitration Act, s. 51(3); UNCITRAL Model Law, art. 30(2). See Morepen Laboratories Ltd. v Morgan Securities & Credits Pvt. Ltd. (2008) SCC OnLine Del 940. 131. Oberlandesgericht Frankfurt a.M., Germany, 3 Sch. 01/​99, 28 June 1999. 132. Doshion Ltd v Sembawang Engineers and Constructors Pte Ltd [2011] SGHC 46; Dawes v Treasure & Son Ltd [2010] EWHC 3218 (TCC). 133. M/​s P.K. Ramaiah and Company v Chairman & Managing Director, National Thermal Power Corpn. (1994) Supp 3 SCC 126. 134. Nathani Steels Ltd. v Associated Constructions (1995) Supp 3 SCC 324. 135. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3274.

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Chapter 35—​Types of Award

The arbitral tribunal, however, may refuse136 to issue a consent award if “the arbitrators are of the view that the agreement constituted part of an elaborate tax fraud by the parties, or where there is some overriding public policy reason for refusing to make the award”137 or that the settlement agreement will affect the rights of third parties or the public interest.138

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The arbitral tribunal may also refuse to make a consent award in case of fraud, illegality, or unfairness.139 In case of refusal, the arbitral tribunal makes an order terminating the arbitration, without issuing an award.140 A refusal on part of the tribunal to issue a consent award may result in the parties’ refusing to pay the arbitrators’ fee.141

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Lastly, it is not necessary for terms of reference to have been signed before issuance of a consent award.142 However, a consent award can only be made if the parties had already commenced an arbitration. If the arbitration is commenced post settling the dispute, no consent award can be made.143

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[35.7] DEFAULT AWARD

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Sometimes the respondent refuses to appear and participate in the arbitration proceedings. The respondent may also, after having participated, withdraw from the proceedings.

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136. Arbitration and Conciliation Act, 1996, s. 30(2) (“… if requested by the parties and not objected to by the arbitral tribunal …”). See English Arbitration Act, 1996, s. 51(2); UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 30(1); SIAC Rules, 2016, r. 32.10 (“… if the parties so request, the Tribunal may make a consent Award …”); UNCITRAL Arbitration Rules, 2013, art. 36(1) (“… if requested by the parties and accepted by the arbitral tribunal …”); ICC Rules of Arbitration, 2017, art. 33; LCIA Arbitration Rules, 2020, art. 26.9. 137. Robert Merkin, Arbitration Law (LLP 2004), p. 697. 138. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3273. 139. UNCITRAL, Report of the Secretary General: Analytical Commentary on Draft Text of a Model Law on International Commercial Arbitration, U.N. Doc. A/​CN.9/​264, at p. 65 (“… the arbitral tribunal, although it would normally accede to such a request, should not be compelled to do so in all circumstances (e.g. in case of suspected fraud, illicit or utterly unfair settlement terms).”); ILC, Report of the International Law Commission on the Work of its Fourth Session, 4 June-​8 August 1952, A/​CN.4/​59 at p. 65 (“… use of the word ‘may’ in article 22 is important, as it leaves the tribunal free to embody the settlement reached in an award or not. It is, in fact, necessary that the tribunal should be able to verify the legality and effective scope of the agreement. It cannot be compelled, even by an agreement between the parties to give binding force to an illegal or a purely fictitious settlement.”). 140. Arbitration and Conciliation Act, 1996, s. 32(2)(b); English Arbitration Act, 1996, s. 51(2); UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 32. 141. Robert Merkel, Arbitration Law (LLP 2004), p. 697. 142. The Secretariat’s Guide to ICC Arbitration, 2012, para. 3-​1171. 143. Thomas H. Webster, Michael W. Buhler, Handbook of ICC Arbitration (4th edn, Sweet & Maxwell 2018), p. 537; Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3272; Transocean Offshore Gulf of Guinea VII Ltd. v Erin Energy Corp. Docket No. H-​17-​2623, 2018 U.S. Dist. LEXIS 39494 (S.D. Tex. 12 March 2018); Castro v Tri Marine Fish Co. LLC 921 F.3d 766 (9th Cir. 2019).

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Law, Practice and Procedure of Arbitration in India

This does not prevent the arbitral tribunal from proceeding with the arbitration ex-​parte.144 In such a situation, the award that is made is known as a default award.145 Default awards are permitted under various arbitral rules.146 National arbitration statutes also recognise the possibility of a default award, subject to an agreement to the contrary.147

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In default proceedings, the tribunal cannot accept the non-​defaulting party’s claims without independently reviewing them.148 The arbitral tribunal has to take upon itself the burden of testing each of the assertions made by the participating party.149

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Hence, unlike the summary judgment procedure in the courts, the participating party still needs to prove its case to the satisfaction of the arbitral tribunal.150

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Since the burden upon the party to prove its case in default proceedings is the same as that in normal arbitration proceedings, a default award has the same legal status as an award.151

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Furthermore, to ensure that the award is effective, and reduce the likelihood of challenge, the award should contain, in detail, the procedure followed by tribunal to notify the absent party and give it the opportunity to defend its case.152

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144. Nigel Blackaby, Constantine Partasides, Alan Redfern and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.30; Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3276. 145. Toolkit for Award Writing, IBA Arb40 Subcommittee (21 September 2016), p. 20. 146. SIAC Rules, 2016, r. 24.3; UNCITRAL Arbitration Rules, 2013, art. 30; ICC Rules of Arbitration, 2017, arts 6(3), 26(2); ICC Arbitration Rules, 2021, arts 6(3), 26(2); The Delhi International Arbitration Centre (Arbitration Proceedings) Rules, 2018, art. 21.5. 147. Arbitration and Conciliation Act, 1996, s. 25; English Arbitration Act, 1996, s. 41; UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 25. See Atul R. Shah v M/​s V. Vrijlal Lalloobhai and Co. (1998) SCC OnLine Bom 403. 148. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3277. 149. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.30 (“The arbitral tribunal is compelled to take a more positive role in these circumstances, making its task more difficult. The task of an arbitral tribunal is not to ‘rubber stamp’ claims that are presented to it; rather it must make a determination of these claims, so the tribunal must take upon itself the burden of testing the assertions made by the active party, and it must call for such evidence and legal argument as it may require for this purpose.”). 150. The issuance of summary judgments by courts is almost automatic. See M/​s Prime Telesystem Limited v Sasken Communication Technologies Ltd. & Ors. (2009) SCC OnLine Del 4138, at para. 19. 151. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3277. 152. Nigel Blackaby Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.31; Toolkit for Award Writing, IBA Arb40 Subcommittee (21 September 2016), p. 20.

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Chapter 35—​Types of Award

Even though there is no requirement to do so, the tribunal should give the non-​ participating party notice of its intention to proceed ex parte153 and issue a default award.154 Further, even if one party is declared ex parte, they can still appear in subsequent proceedings and should be informed of future hearings.155 The arbitral tribunal has to carefully write default awards. It must render a reasoned award156 since the award is likely to be scrutinised by the arbitral institution or courts.

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The default award is similar to a final award complete with the recitals, procedural history, reasons, and determination arising thereof. The object of the exercise is to ensure that the court is convinced that due process has been satisfied.157 Also, that a party by refusing to participate cannot unilaterally obstruct the arbitration proceedings.158

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[35.8] DRAFT AWARD

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Draft awards do not normally give rise to legal consequences.159 This is because they are not statutorily recognised.160 Their main purpose is to show the parties the tribunal’s conclusions and reasons, in advance of the publication of the final award.161

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This is to enable the parties to provide comments, correct points of fact and clarify ambiguities, so that the final award can be modified accordingly.162

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Draft awards are normally reviewed by the arbitral tribunal. However, some arbitration rules provide for review by the arbitral institution.163

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153. Juggilal Kamlapat v General Fibre Dealers Ltd. (1954) SCC OnLine Cal 53; Dalmia Cement (Bharat) Ltd. v Advance Commercial Co. Ltd. (1995) SCC OnLine Del 45. 154. Chartered Institute of Arbitrators, Guideline 10 Drafting Arbitral Awards Part I-​General-​2016, available at https://​www.ciarb.org/​media/​4206/​guideline-​10-​drafting-​arbitral-​awards-​part-​i-​general-​2016.pdf (“Even where there is no formal obligation on arbitrators to warn a non-​participating party of their intention to consider issuing a default award, it is a sensible precaution against potential challenges to give a non-​participating party reasonable notice that arbitrators may be making a default award in their absence unless they participate within the period specified”). 155. Impex Corporation & Ors. v Elenjikal Aquamarine Exports Ltd. (2007) SCC OnLine Ker 125. 156. Toolkit for Award Writing, IBA Arb40 Subcommittee (21 September 2016), p. 20. 157. Chartered Institute of Arbitrators, Guideline 10 Drafting Arbitral Awards Part I-​General-​2016, available at https://​www.ciarb.org/​media/​4206/​guideline-​10-​drafting-​arbitral-​awards-​part-​i-​general-​2016.pdf. 158. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3276. 159. Robert Merkin, Arbitration Law (LLP 2004), p. 690. See Julio-​Cesar Betancourt, Is an Arbitral Tribunal’s Draft Award Susceptible to Judicial Review? (18 June 2020), available at http://​arbitrationblog.kluwerarbitration. com/​2020/​06/​18/​is-​an-​arbitral-​tribunals-​draft-​award-​susceptible-​to-​judicial-​review/​ (The Venezuelan Supreme Court in Polar v Modexel issued an anti-​arbitration injunction, at the request of a party dissatisfied with a draft award.). 160. The arbitrator, in exercise of his powers to determine procedure, may decide to circulate a draft award. See Arbitration and Conciliation Act, 1996, s. 19. 161. Robert Merkin, Arbitration Law (LLP 2004), p. 699. 162. Ibid. 163. SIAC Rules, 2016, r. 32.3; ICC Rules of Arbitration, 2017, art. 34; ICC Arbitration Rules 2021, art. 34.

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Law, Practice and Procedure of Arbitration in India

In view of provisions that permit corrections in an award,164 a draft award may now not be required. If the arbitral tribunal is still minded to circulate a draft award, it should do so with very strict controls on the procedure for any comments and the ambit of those comments.165

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Further, the tribunal must provide the parties with an approximate date for submission of the draft award.166 Under the SIAC Rules, 2016, the tribunal is expected to submit the draft award to the Registrar, within a period of 45 days from the closure of proceedings.167

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In arbitrations administered by the ICC, sole arbitrators are expected to submit the draft award within two months from the last substantive hearing/​f iling of last written submissions, while a three-​member tribunal must do so within three months,168 although there are no sanctions for failing to submit an award within the time indicated. However, the ICC Court has started financially penalising arbitrators who delay submission of the draft award.169 But, the arbitral tribunal will not be penalised if the delay is due to circumstances beyond its control.170

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[35.9] PROVISIONAL AWARD

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A provisional award is an award that is subject to the final determination of the arbitration. It “anticipates the ultimate finding of the arbitrators and makes an order on account of that finding”.171

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The purpose of such an award is to grant interim financial relief when cash flow is an issue.172 Hence, such awards protect a party from damage during the course of the arbitration.173

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164. Arbitration and Conciliation Act, 1996, s. 33; English Arbitration Act, 1996, s. 57; UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 33. 165. J. Tackaberry and A. Marriot and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson Sweet & Maxwell 2003), at para. 2-​443. 166. See ICC Rules of Arbitration, 2017, art. 27. 167. SIAC Rules, 2016, r. 32.3. 168. ICC, Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration (1 January 2019), at para. 119. 169. Thomas H. Webster, Michael W. Buhler, Handbook of ICC Arbitration (4th edn, Sweet & Maxwell 2018), p. 444; ICC, Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration (1 January 2019), at para. 121. 170. ICC, Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration (1 January 2019), at para. 121. 171. Robert Merkin, Arbitration Law (LLP 2004), p. 694. 172. Departmental Advisory Committee Report on the Arbitration Bill (February 1996), at para. 201. 173. PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation [2015] SGCA 30.

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Chapter 35—​Types of Award

Provisional awards are statutorily recognised in England. However, the arbitral tribunal does not, by default, have the power to make a provisional award, and needs to be given this power, in writing.174 The power to issue a provisional award includes:175 (1) issuance of a provisional order for the payment of money/​disposition of property; and



(2) order to make an interim payment towards arbitral tribunal’s costs.

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The arbitral tribunal cannot grant a freezing injunction/​search order, on the application of one party, by way of a provisional award.176

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The Malaysian Court in in MCIS Insurance Bhd v Associated Cover Sdn Bhd177 explained:

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“If an agreement does not prohibit an interim award from being made or if the agreement to refer a matter to arbitrator in fact specifically provides for an award to be made on a particular controversy (and calls it an interim award) and another award on the other controversy, if the interim award is made and it has made a decision on the controversy, the interim award then, never mind the label, is final.”

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Hence, unless the arbitration agreement specifically provides for the making of provisional awards, it seems likely that, in spite of any label used, a provisional award in a Malaysian arbitration is likely to be final.

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Lastly, in practice, it may be difficult to challenge a provisional award.178

[35.10] CORRECTIVE AWARD

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Many national arbitration statutes179 and institutional rules180 allow for the correction of an arbitral award. These corrections form a part of the award,181 and so become capable of annulment, recognition, and enforcement. English Arbitration Act, 1996, s. 39. English Arbitration Act, 1996, s. 39(2). Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​020. [2001] 2 MLJ 561. BMBF (No. 12) Ltd v Harland and Wolff Shipbuilding and Heavy Industries Ltd. [2001] 2 Lloyd’s Rep 227. Arbitration and Conciliation Act, 1996, s. 33; English Arbitration Act, 1996, s. 57; UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 33; International Arbitration Act, 2002, UNCITRAL Model Law, art. 33; English Arbitration Act, 1996, s. 19B(2). 180. SIAC Rules, 2016, r. 33.1; UNCITRAL Arbitration Rules, 2013, art. 38; ICC Rules of Arbitration, 2017, arts 36(1), 36(2); ICC Arbitration Rules, 2021, arts 36(1), 36(2); LCIA Arbitration Rules, 2020, art. 27.1. 1 81. Arbitration and Conciliation Act, 1996, s.33(2) (“… the interpretation shall form part of the arbitral award”); English Arbitration Act, 1996, s. 57(7); UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 33(1); SIAC Rules, 2016, art. 33.1; UNCITRAL Arbitration Rules, 2013, art. 38(3); ICC Rules of Arbitration, 2017, art. 36(3); ICC Arbitration Rules, 2021, art. 36(4); LCIA Arbitration Rules, 2020, art. 27.5.

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1 74. 175. 176. 177. 178. 179.

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Law, Practice and Procedure of Arbitration in India

Section 33(1)(a) of the Arbitration and Conciliation Act permits correction of: (1) computation errors, that is, errors in computing, numbering, or estimating;



(2) clerical/​typographical errors, that is, any mechanical/​administrative mistake by the arbitrator/​clerk in drawing the award; and



(3) other errors of a similar nature, that is, other, similar, accidental slips by the arbitrator/​ parties/​counsel.182

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The Supreme Court of India in State of Arunachal Pradesh v Damani Construction Co.183 held that the arbitral tribunal has limited powers to rectify and correct the award.

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For the arbitral tribunal to correct or rectify the award, such mistake must have resulted from an accidental slip or an omission.184

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The Court of Appeal in Food Corporation of India v Marastro Cia Naviera SA (The Trade Fortitude)185 explained what constitutes an accidental slip. It held that:

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“In one sense, of course, all errors are accidental. You do not make a mistake on purpose … But, in general, an error must … be an error affecting the expression of the tribunal’s thought, not an error in the thought process itself … the fact that the error … was an elementary error is not sufficient to make it accidental …”186

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The award will be final and incapable of correction if the arbitral tribunal had not “included any additional words or omitted any necessary words”.187

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Only errors in transcription can be modified.188 The arbitral tribunal cannot, under the guise of making a correction, reconsider the award189 or reappraise the evidence.190

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182. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), pp. 859–​860. 183. (2007) 10 SCC 742. See Delhi Development Authority v Naveen Kumar 2017 SCC OnLine Del 10240; Chandni Construction Company Ltd. v Executive Engineer & Ors. (2013) SCC OnLine P&H 10419. 184. Robert Merkin, Arbitration Law (LLP 2004), p. 777; See Sea Trade Maritime Corp. v Hellenic Mutual War Risks Association (Bermuda) Ltd (The Athena) [2006] EWHC 578 (Comm); No Curfew Ltd. v Feiges Properties Ltd. [2018] EWHC 744 (Ch); Gannet Shipping v Eastrade Commodities Inc. [2002] 1 Lloyd’s Rep 713. 185. [1986] 2 Lloyd’s Rep 209. 186. See Sutherland and Co v Hannevig Brothers Ltd. [1921] 1 KB 336. 187. Robert Merkin, Arbitration Law (LLP 2004), p. 777. 188. Benabu & Co. v Produce Brokers Co. (1921) 7 Ll. L. Rep 45; Pancommerce SA v Veecheema BV [1983] 2 Lloyd’s Rep 304; Al Hadha Trading Co v Tradigrain SA [2002] 2 Lloyd’s Rep 512. 189. Thomas H. Webster, Handbook of UNCITRAL Arbitration: Commentary, Precedents and Materials for UNCITRAL Based Arbitration Rules (Sweet & Maxwell 2010), p. 554; RWJ Sutherland & Co. v Hannevig Bros Ltd. [1921] 1 KB 336. 190. Torch Offshore LLC v Cable Shipping Inc. [2004] EWHC 787 (Comm); Al Hadha Trading Co. v Tradigrain SA [2002] 2 Lloyd’s Rep. 512.

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Chapter 35—​Types of Award

However, if the arbitral tribunal has transposed the parties or incorrectly computed the amount payable, then the award can be corrected.191 The lack of reasons or absence of reasons can be rectified by way of a correction to the award.192

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Any application to correct the award must be made within the requisite time limit, failing which the arbitral tribunal will not be able to make any corrections, by virtue of being functus officio.193 A correction made by the arbitral tribunal beyond expiry of the stipulated period will have no force of law.194

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The Commercial Court (Queen’s Bench Division) in Union Marine Classification Service v The Government of the Union of Comoros195 held that when correcting an error in the award, the arbitral tribunal is entitled to amend the dispositive portions of the award to reflect the correction.196

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The Hong Kong Court of First Instance in SC v OE1 and OE2197 held that: (1) corrections and interpretations of the award should only be permitted in certain limited circumstances;



(2) only those errors that stem from a mental lapse and a slip of the pen such as typographical errors and computation errors can be corrected;



(3) errors of judgment and mistakes in the arbitral tribunal’s thought process cannot be corrected, even if accidental;

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In Singapore, the arbitral tribunal’s power to correct an award has been narrowly interpreted. The arbitral tribunal is not permitted to correct mistakes of fact and law.198

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In Switzerland, though there is no statutory provision permitting correction of an arbitral award, the arbitral tribunal is empowered to correct its award. However, the scope of corrections is also quite narrow.199

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In the US, however, the courts, and not the arbitral tribunal, have been given the power to correct the award.200 Mutual Shipping Corpn. v Bayshore Shipping Co. [1985] 1 All ER 520. Robert Merkin, Arbitration Law (LLP 2004), p. 778. MKU Ltd. v Union of India (2016) SCC OnLine Del 6403; S.P.S. Rana v M.T.N.L. & Ors. (2010) SCC OnLine Del 136. Karuppiah Mahalingam & Ors. v Kotak Mahindra Bank Ltd. (2017) SCC OnLine Bom 3953. [2015] EWHC 508 (Comm). The section of the award declaring whether the parties’ counterclaims and claims succeed or fail. [2020] HKCFI 2065. Tay Eng Chuan v United Overseas Insurance Ltd. [2009] SGHC 193; Econ Piling Pte Ltd v Shanghai Tunnel Engineering Co Ltd. [2010] SGHC 253. 199. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3387. 200. The Federal Arbitration Act (USA), s. 11; Gary B. Born, International Commercial Arbitration, Vol. III (3rd edn, Wolters Kluwer), p. 3389. 191. 192. 193. 194. 195. 196. 197. 198.

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Law, Practice and Procedure of Arbitration in India

[35.11] ADDITIONAL AND SUPPLEMENTARY AWARDS Once the arbitral tribunal has issued the final award, it is considered to have terminated its mandate and will be functus officio. However, national arbitration laws201 and institutional arbitration rules202 permit the parties to request the tribunal to make an additional award.

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The parties may request an additional award on the claims that were raised in the arbitration proceedings but omitted from the final award.203 In such a situation, the arbitral tribunal may give the parties another opportunity to make further submissions.204

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Hence, an additional/​supplementary award is made, at the request of a party, “when a tribunal’s final award mistakenly fails to dispose of a claim that had previously been asserted in the arbitration”.205

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As long as an award dismisses all claims “in their entirety” there will be no need for an additional/​supplementary award, even if a particular claim has not been dealt with, in detail.206

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Further, an additional award can only be requested if the arbitral tribunal has failed to deal with a claim, and not if it has not addressed an issue within the claim.207 The whole of the award must be considered and read in its proper context to determine whether a claim has been dealt with in the award.208

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The arbitral tribunal can make an additional award provided that:

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“1. there is no contrary agreement between the parties to the reference;

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2. a party to the reference, with notice to the other party to the reference, requests the Arbitral Tribunal to make the additional award;

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201. Arbitration and Conciliation Act, 1996, s. 33(4); English Arbitration Act, 1996, s. 57(3)(b); UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 33(3). 202. SIAC Rules, 2016, r. 33.3; UNCITRAL Arbitration Rules, 2013, art. 39; ICC Arbitration Rules, 2021, art. 36(3); LCIA Arbitration Rules, 2020, art. 27.3. 203. Thomas H. Webster, Handbook of UNCITRAL Arbitration: Commentary, Precedents and Materials for UNCITRAL Based Arbitration Rules (Sweet & Maxwell 2010), p. 562; Toolkit for Award Writing, IBA Arb40 Subcommittee (21 September 2016), p. 17; Union of India v Nav Bhart Nirman Co. & Anr. (2003) SCC OnLine del 837. 204. Arbitration and Conciliation Act, 1996, s. 18. 205. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3278. 206. The Loewen Group Inc. and Raymond L. Loewen v United States of America ICSID Case No. ARB(AF)/​98/​3, Decision on Respondent’s Request for a Supplementary Decision (6 September 2004), at paras 19–​21. 207. Torch Offshore LLC v Cable Shipping Inc [2004] EWHC 787 (Comm). See Hemant Jalan v Om Prakash Jalan (2008) SCC OnLine AP 549. 208. SC v OE1 and OE2 [2020] HKCFI 2065.

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Chapter 35—​Types of Award

3. such request is made within thirty days from the receipt of the arbitral award; 4. the Arbitral Tribunal considers the request so made justified; and 5. additional arbitral award is made within sixty days from the receipt of such request by the Arbitral Tribunal.”209

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The additional award will be final and binding on all the parties and persons claiming under them.210

[35.12] INTERPRETATIVE AWARD

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The arbitral tribunal may provide further clarification or interpretation if any aspect of the arbitral award is vague, uncertain, or ambiguous.211 This is permitted under various institutional arbitration rules as well.212

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Any ambiguity in the award may give rise to a request for interpretation.213 In India, an application for interpretation of the award can only be made if agreed upon by the parties.214

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Interpretation may only be requested when the “meaning of some specific statement in the Decision is unclear and requires clarification in order that the Decision should be properly applied … Re-​argument of the case is not permitted … interpretation … may serve to explain, but may not change, what the Court already settled with binding force as res judicata.”215

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Hence, a party to the arbitration cannot demand a new decision altogether by way of a request for interpretation.216

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Further, any interpretation given by the tribunal will form a part of the award.217 Any request for interpretation, filed after the time limit, cannot be entertained.218

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209. McDermott International Inc. v Burn Standard Co. Ltd. (2006) 11 SCC 181, at para. 71. 210. Arbitration and Conciliation Act, 1996, s. 35; English Arbitration Act, 1996, s. 58. 211. Arbitration and Conciliation Act, 1996, s. 33(1)(b); English Arbitration Act, 1996, s. 57(3)(a); UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 33(1)(b). 212. SIAC Rules, 206, r. 33.4; UNCITRAL Arbitration Rules, 2013, art. 37; ICC Rules of Arbitration, 2017, art. 36(2); ICC Arbitration Rules, 2021, art. 36(2); LCIA Arbitration Rules, 2020, art. 27.1. 213. V.S. Reddy v Shri M. Jayakumar & Anr. W.P. No. 35780/​2000 (8 December 2000) High Court of Karnataka. 214. See Arbitration and Conciliation Act, 1996, s. 33(1)(b); Sushil Pandit v Adsert Web Solutions Pvt. Ltd. & Ors. (2011) SCC OnLine Del 3452. 215. Eritrea-​Ethiopia Boundary Commission, Decision Regarding the “Request for Interpretation, Correction and Consultation” submitted by the Federal Democratic Republic of Ethiopia (24 June 2002), at para. 16. 216. Marvin Feldman v Mexico ICSID Case No. ARB(AF)/​99/​1, Correction and Interpretation of the Award (13 June 2003), at para. 9–​11 (“… this does not concern a request of interpretation … the Respondent, by asking the Tribunal in its request to explain five different points … effectively is seeking a new decision.”). 217. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), p. 861. 218. Thomas H. Webster, Handbook of UNCITRAL Arbitration: Commentary, Precedents and Materials for UNCITRAL Based Arbitration Rules (Sweet & Maxwell 2010), p. 549.

1022

Law, Practice and Procedure of Arbitration in India

[35.13] SUCCESSIVE AWARD Successive references of various disputes arising, from time to time, between the parties can be referred to arbitration. It be made the subject matter of successive awards.219 However, the same dispute cannot be decided over and over again by different awards.220

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[35.14] INSTITUTIONAL AWARD Any award that is passed by an arbitral institution amounts to an institutional award. The arbitral tribunal is obliged to comply with any requirements relating to awards under such rules. An example of such requirement is scrutiny of the award by the arbitral institution before it is published to the parties.

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An institutional award also includes an award passed by an emergency arbitrator in terms of the institutional rules applicable to the arbitration.

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In the Indian context, the Supreme Court of India in Amazon.Com NV Investment Holdings LLC v Future Coupons Private Limited & Ors.221 was faced with two issues: (1) as to whether an “award” delivered by an Emergency Arbitrator under the Arbitration Rules of the Singapore International Arbitration Centre [“SIAC Rules”] can be said to be an order under the Arbitration Act and further under Section 17(1) of the Arbitration Act; and



(2) as to whether an order passed under Section 17(2) of the Arbitration Act in enforcement of the award of an Emergency Arbitrator by a learned Single Judge of the High Court is appealable.

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On issue (1) above, the Court held that Emergency Arbitrator's orders, if provided for under institutional rules, would be covered by the Arbitration Act.222 The Court further held

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“62. An Emergency Arbitrator's “award”, i.e., order, would undoubtedly be an order which furthers these very objectives, i.e., to decongest the court system and to give the parties urgent interim relief in cases which deserve such relief. Given the fact that party autonomy is respected by the Act and that there is otherwise no interdict against an Emergency Arbitrator being appointed, as has been held by us hereinabove, it is clear that an Emergency Arbitrator's order, which is exactly like an order of an

219. 220. 221. 222.

International Airports Authority of India v Mohinder Singh (1995) SCC OnLine Bom 274, at para. 12. Pushraj Puranmal v Clive Mills Co. Ltd. (1959) SCC OnLine Cal 58. 2021 SCC OnLine SC 557. Id at ¶35.

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Chapter 35—​Types of Award

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With respect to issue (2) above, the Court held:

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arbitral tribunal once properly constituted, in that parties have to be heard and reasons are to be given, would fall within the institutional rules to which the parties have agreed, and would consequently be covered by Section 17(1), when read with the other provisions of the Act, as delineated above. 63. A party cannot be heard to say, after it participates in an Emergency Award proceeding, having agreed to institutional rules made in that regard, that thereafter it will not be bound by an Emergency Arbitrator's ruling. 68. We, therefore, answer the first question by declaring that full party autonomy is given by the Arbitration Act to have a dispute decided in accordance with institutional rules which can include Emergency Arbitrators delivering interim orders, described as “awards”. Such orders are an important step in aid of decongesting the civil courts and affording expeditious interim relief to the parties. Such orders are referable to and are made under Section 17(1) of the Arbitration Act.”

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“125 … no appeal lies under Section 37 of the Arbitration Act against an order of enforcement of an Emergency Arbitrator's order made under Section 17(2) of the Act.”

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This judgment of the Supreme Court of India has wide ranging effects on the arbitration landscape in India, including recognising and enforcing awards passed by emergency arbitrators under institutional arbitral rules.

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It takes India a step further towards being an internationally favoured business destination given that parties can now seek urgent reliefs through emergency arbitration proceedings without facing the inherent delays that come with litigation.

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[35.15] CONCLUSION

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To conclude, an arbitral award is a judicial decision rendered by the arbitral tribunal. Unlike other decisions passed by the arbitral tribunal, it must satisfy certain basic formal requirements. Further, it must deal with and resolve a substantive issue, not a procedural one. Only the award can be challenged, enforced, and annulled, and so it becomes important to apply tests to determine whether a decision of the tribunal constitutes an award. That apart, an award can be classified into several categories. Classification depends on factors such as the timing of issuance, what the award deals with etc. The effect of the

1024

Law, Practice and Procedure of Arbitration in India

award on the arbitral proceedings would depend on its type. For example, while a final award would render the tribunal functus officio an interim award would not.

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National legislations acknowledge the possibility of a tribunal issuing more than one award during the course of the arbitral proceedings. Further, most institutional rules too, recognise the different types of awards that can be issued, and provide the circumstances and process for their issuance.

Chapter 36 MAKING OF THE AWARD [36.1]

INTRODUCTION..................................................................................................................... 1025

[36.2] AWARD IN WRITING............................................................................................................. 1028

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[36.3] LANGUAGE OF THE AWARD.............................................................................................. 1028 [36.4] SIGNING THE AWARD.......................................................................................................... 1029 [36.5] DATE OF THE AWARD.......................................................................................................... 1033 [36.6] PLACE OF ARBITRATION..................................................................................................... 1034 [36.7] DELIVERY OF THE AWARD................................................................................................. 1034

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[36.8] FORMAT OF THE AWARD.................................................................................................... 1037 [36.9] DETERMINATION OF ISSUES.............................................................................................. 1041

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[36.10] REASONS AND FINDINGS................................................................................................... 1042 [36.11] THE DECISION........................................................................................................................ 1049

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[36.1] INTRODUCTION

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[36.12] CONCLUSION.......................................................................................................................... 1050

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Form and content requirements pertain to the manner in which the arbitral award is to be made, authenticated, and communicated to the parties.1

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International arbitration conventions do not generally impose form requirements on an arbitral award.2 The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) only presupposes that the award will be written.

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It requires that authenticated original and certified copies to be submitted when applying for recognition/​enforcement of the award.3

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For this reason, Gary Born argues that States cannot refuse to recognise a foreign award if form requirements are not met. He states that: “… the New York Convention does not permit Contracting States to impose form requirements on foreign awards as a requirement for recognition … Article V includes no exception to the obligation of Contracting States to recognize awards … states have … virtually 1. Nakul Dewan and A Team of Expert Contributors, Enforcing Arbitral Awards in India (LexisNexis 2017), at para. 1.04. 2. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3281. 3. Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958), art. IV.1(a).

1026

Law, Practice and Procedure of Arbitration in India

never invoked the form requirements of the arbitral seat (or of the judicial enforcement forum) as grounds for denying recognition to foreign arbitral awards … potential exception involves the requirement that arbitral awards be reasoned …”4

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There is no requirement to comply with the form requirements imposed by a country’s domestic law, “unless the parties had expressly advised the tribunal of this circumstance, which should rightly have been taken into account when the arbitral award was drawn up.”5

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Thus, it becomes necessary to determine whether the arbitration agreement specifies any formalities for the award, either by designation of the lex fori or by selection of institutional rules.6 The arbitral tribunal must comply with any such requirements as to form and content, when drafting its award.7

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Several national arbitration statutes8 and institutional arbitration rules9 provide detailed requirements as to the format of the award. Most common is for the award to: (1) be in writing and be signed;10



(2) contain reasons;11 and



(3) refer to the date and seat of the arbitration.12

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4. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3281. 5. Bernando M. Cremades, “The arbitral award” in Lawrence W. Newman, Richard D. Hill, The Leading Arbitrators’ Guide to International Arbitration (2nd edn, Juris 2008), p. 500. 6. Nigel Blackaby, Constantine Partasides QC, Alan Redfern, J. Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.143. 7. Chartered Institute of Arbitrators, Drafting Arbitral Awards Part I-​General, art. 4 (“Arbitrators should comply with any requirements as to form and content set out in the arbitration agreement, including any arbitration rules and/​or the lex arbitri.”). 8. Arbitration and Conciliation Act, 1996, s. 31; English Arbitration Act, 1996, s. 52; UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 31; Swiss law on Private International Law, art. 189; Malaysian Arbitration Act, 2005, s. 33. 9. SIAC Rules, 2016, r. 32; UNCITRAL Arbitration Rules, 2013, art. 34; LCIA Arbitration Rules, 2020, art. 26; ICSID Rules of Procedure for Arbitration Proceedings (Arbitration Rules), r. 47; Mumbai Centre for International Arbitration Rules, 2017, r. 30. 10. Arbitration and Conciliation Act, 1996, s. 31(1); English Arbitration Act, 1996, s. 52(3); UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 31(1); SIAC Rules, 2016, r. 32.4; UNCITRAL Arbitration Rules, 2013, arts. 34(2), 34(4); LCIA Arbitration Rules, 2020, art. 26.2; ICSID Rules of Procedure for Arbitration Proceedings (Arbitration Rules), rr. 47(1), 47(2). 11. Arbitration and Conciliation Act, 1996, s. 31(3); English Arbitration Act, 1996, s. 52(4); UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 31(2); SIAC Rules, 2016, r. 32.4; UNCITRAL Arbitration Rules, 2013, art. 34(3); ICC Rules of Arbitration, 2017, art. 32(2); LCIA Arbitration Rules, 2020, art. 26.2; ICSID Rules of Procedure for Arbitration Proceedings (Arbitration Rules), r. 47(1)(i). 12. Arbitration and Conciliation Act, 1996, s. 31(4); English Arbitration Act, 1996, s. 52(5); UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 31(3); UNCITRAL Arbitration Rules, 2013, art. 34(4); ICC Rules of Arbitration, 2017, art. 32(3); LCIA Arbitration Rules, 2020, art. 26.2; ICSID Rules of Procedure for Arbitration Proceedings (Arbitration Rules), r. 47(1)(e).

1027

Chapter 36—​Making of the Award

If the seat of arbitration is in India, then there is also a requirement to ensure that the award is affixed with appropriately valued stamp paper.13 The Guidelines on Drafting Arbitral Awards, issued by the Chartered Institute of Arbitrators, require the award to:14 (1) be signed and in writing;



(2) contain reasons;



(3) state the date and place of arbitration;



(4) contain the names and addresses of the parties, arbitrators, and legal representatives;



(5) contain the terms of the arbitration agreement, summary of facts, summary of issues, and positions of the parties; and



(6) contain an analysis of the findings and the final decision.

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Often the statutory requirements as to content of the award are non-​mandatory and subject to the agreement between the parties.15

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Parties cannot derogate from the minimum statutory requirements as to form that are contained in the Arbitration Act.16 However, in England, parties can depart from the statutory requirements as to form of the award.17

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In addition, investor State arbitration rules require the award to mention the names of members of the arbitral tribunal,18 the details of the claim,19 facts,20 and how the costs are to be allocated.21

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The arbitral tribunal must comply with these statutory requirements, else the award will become susceptible to challenge.22 It may not be enforceable.23

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13. See Stamp Act, 1899, s. 35. 14. Chartered Institute of Arbitrators, Drafting Arbitral Awards Part I-​General, art. 4. 15. Nakul Dewan and A Team of Expert Contributors, Enforcing Arbitral Awards in India (LexisNexis 2017), at para. 1.06. See Arbitration and Conciliation Act, 1996, s. 31(3)(a). 16. Arbitration and Conciliation Act, 1996, s. 31; Mahanagar Telephone Nigam Ltd. v Siemens Public Communication Network Ltd. 2005 SCC OnLine Del 237; Transmission Corporation of Andhra Pradesh Ltd. v Galada Power and Telecommunication Ltd. (2006) SCC OnLine AP 744, at para. 31–​32. 17. English Arbitration Act, 1996, s. 52(1). 18. ICSID Rules of Procedure for Arbitration Proceedings (Arbitration Rules), r. 47(1)(c). 19. ICSID Rules of Procedure for Arbitration Proceedings (Arbitration Rules), r. 47(1)(h). 20. ICSID Rules of Procedure for Arbitration Proceedings (Arbitration Rules), r. 47(1)(g). 21. ICSID Rules of Procedure for Arbitration Proceedings (Arbitration Rules), r. 47(1)(j). 22. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 788; Sutton, Gill, and Gearing QC, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​046. 23. Oil & Natural Gas Corporation Ltd. v Saw Pipes Ltd. (2003) 5 SCC 705, at para. 13; Mahanagar Telephone Nigam Ltd. v Siemens Public Communication Network Ltd. (2005) SCC OnLine Del 237.

1028

Law, Practice and Procedure of Arbitration in India

[36.2] AWARD IN WRITING One of the most basic form requirements is that an arbitral award must be in writing. The New York Convention,24 national arbitration statutes,25 and institutional rules26 all require the arbitral award to be in writing.

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It is generally mandatory for the award to be in writing so that there is certainty about what ruling has been made, and on what basis.27 Parties cannot dispense with the requirement for a written arbitral award.

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The Arbitration Act imposes the minimum standard which cannot be derogated from.28 If the award is not made in writing it cannot be enforced, and is likely to be set aside, or form the basis for a reference on a question of law.

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No arbitral tribunal will render an oral award in the style of the court rendering its decision orally or reading out its judgment. In the case of a sole arbitrator, a valid award is made when he expresses his decision in writing and signs it.

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In the case of an arbitral tribunal of more than one arbitrator, the award is made when the arbitrators acting together finally make up their minds and express their decision in writing, authenticated by their signatures.29

[36.3] LANGUAGE OF THE AWARD

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An award is normally rendered in the language of the arbitration. Occasionally, it can be made either in the language which is the arbitral tribunal’s de facto working language, or in the language that is most convenient for the parties.30

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The New York Convention requires the award to be accompanied by its certified translation, if it is not made in the official language of the country where it is sought to be enforced.31

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24. Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958), art. IV.1(a) implies that the award should be in written form. 25. Arbitration and Conciliation Act, 1996, s. 31(1); English Arbitration Act, 1996, s. 52(3); UNCITRAL Model law on International Commercial Arbitration, 1985, art. 31(1). 26. SIAC Rules, 2016, r. 32.4; UNCITRAL Arbitration Rules, 2013, arts. 34(2), 34(4); LCIA Arbitration Rules, 2020, art. 26.2; ICSID Rules of Procedure for Arbitration Proceedings (Arbitration Rules), r. 47(1). 27. Sutton, Gill, and Gearing QC, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​048. 28. Government of India v M/​s Acome & Ors. 2008 SCC OnLine Del 808, at para. 9 (“… an oral award is unknown to the 1996 Act …”). 29. See s. [36.4] below. 30. Nigel Blackaby, Constantine Partasides QC, Alan Redfern, J. Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.150. 31. Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958), art. IV.2.

1029

Chapter 36—​Making of the Award

The language of the award may be the subject matter of agreement between the parties.32 Failing such agreement, the arbitral tribunal shall specify the language of the award in its terms of reference.33 The arbitral tribunal should ensure that the award is being made in a language that is understood by it.34

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The arbitral tribunal may require the parties to submit a translation of all those documents that are not in the official language of the arbitration.35 If the translations are not provided to the tribunal and the award is made without getting the evidence translated, it may be set aside.36

[36.4] SIGNING THE AWARD

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Most arbitration statutes37 and institutional arbitration rules38 require the award to be signed so as to give it legal effect. The requirement that the award be signed is not subject to party autonomy. It cannot be derogated from.39

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The document signed by all the arbitrators will be construed to be the award.40 The act of signing express “endorsement of the content”. The general principle is that all arbitrators should sign the award.41 Hence, the award will be final and complete only once it has been signed by the arbitrators.42

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32. Arbitration and Conciliation Act, 1996, s. 22(1); English Arbitration Act, 1996, s. 34; UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 22(1); SIAC Rules, 2016, r. 22.1; UNCITRAL Arbitration Rules, 2013, art. 19(1); ICC Rules of Arbitration, 2017, art. 20; LCIA Arbitration Rules, 2020, art. 17. 33. Arbitration and Conciliation Act, 1996, s. 22(2); English Arbitration Act, 1996, s. 34; UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 22(1); SIAC Rules, 2016, r. 22.1; UNCITRAL Arbitration Rules, 2013, art. 19(1); ICC Rules of Arbitration, 2017, art. 20; LCIA Arbitration Rules, 2020, art. 17. See Balmukund Pandey v V.K. Singh (2009) SCC OnLine MP 30. 34. Toolkit for Award Writing, IBA Arb40 Subcommittee (21 September 2016), pp. 23–​24. 35. Arbitration and Conciliation Act, 1996, s. 22(4); English Arbitration Act, 1996, s. 34(2)(b); UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 22(2); SIAC Rules, 2016, r. 22.2; UNCITRAL Arbitration Rules, 2013, art. 19(2); LCIA Arbitration Rules, 2020, art. 17(5). 36. E Rotheray & Sons Ltd v Carlo Bedarida & Co [1961] 1 Lloyd’s Rep 220. 37. Arbitration and Conciliation Act, 1996, s. 31(1); English Arbitration Act, 1996, s. 52(3); UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 31(1). 38. UNCITRAL Arbitration Rules, 2013, art. 34(4); LCIA Arbitration Rules, 2020, art. 26.2; ICSID Rules of Procedure for Arbitration Proceedings (Arbitration Rules), r. 47(2). 39. Transmission Corporation of Andhra Pradesh Ltd. v Galada Power and Telecommunication Ltd. (2006) SCC OnLine AP 744, at paras 31–​32 (“… obligatory on the part of each of the members of the Arbitral Tribunal to sign the award to make it as a valid one or in the absence of any of them necessarily it contemplates to state the specific reason for such absence.”). 40. Bfil Finance Ltd. v G. Tech Stone Ltd. (2002) SCC OnLine Bom 734, at para. 16. 41. International Arbitration Practice Guideline, Drafting Arbitral Awards, Part I –​General, Chartered Institute of Arbitrators, p. 17. 42. Satwant Singh Sodhi v State of Punjab (1999) 3 SCC 487, at para. 7 (“… mere writing of the award would not amount to making of an award. There can be no finality in the award except when it is signed because signing of the award gives legal effect to it and gives validity to an award …”).

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Law, Practice and Procedure of Arbitration in India

However, the signature of all arbitrators is not mandatorily required for the award to be valid.43 Omission of the dissenting arbitrator’s signature is permitted.44 This is because requiring the signature of all arbitrators, for the award to be valid, would enable a dissenting arbitrator to easily frustrate the arbitration, by refusing to sign.45

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An arbitrator may also become physically unable to sign due to death or on account of difficulties. The signature of such an arbitrator can only be dispensed with if he participated in the making of the award, prior to his death or difficulty.46 Reasons have to be provided for the absence of an arbitrator’s signature,47 failing which the award will be unenforceable.48 Such reasons must be adequate and germane and justifiably explain the lack of signature.49

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Pertinently, though the requirement of signature of all the arbitrators has been dispensed with, subject to reasons being provided, the statute does not dispense with the requirement of participation by all the members of the arbitral tribunal.50

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Copies of the award are normally printed out and signed and then circulated, by courier, to the remaining arbitrators for signature. The signed awards are couriered back either to the presiding arbitrator, arbitral secretary, or the arbitral institution.

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43. See Arbitration and Conciliation Act, 1996, s. 31(2); English Arbitration Act, 1996, s. 52(3); UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 31(1); UNCITRAL Arbitration Rules, 2013, art. 34(4); LCIA Arbitration Rules, 2020, art. 26.6. Despite this, it may be prudent for all members of the arbitral tribunal to sign the award to reduce the chances of any disgruntled party persuading the court to set aside the award. 44. Axios Navigation Co. Ltd. v Indian Oil Corporation Ltd. (2012) SCC OnLine Bom 4, at para. 11; Government of India v Acome & Ors. (2008) SCC OnLine Del 808, at para. 9 (“… signatures of majority of the members of the arbitral tribunal are sufficient so long as reasons for omission of the signatures of the minority arbitrator are contained in the majority award itself.”); Union of India and Anr. v Sudhir Engineering Company (2009) SCC OnLine Del 2012. 45. Nigel Blackaby, Constantine Partasides QC, Alan Redfern, J. Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.148; Government of India, BSNL v Acome & Ors (2007) SCC OnLine Del 226, at para. 32 (affirmed in Government of India v Acome & Ors. (2008) SCC OnLine Del 808). 46. R.R. Hi Tech Engineering Pvt. Ltd. v Union of India (2010) SCC OnLine Bom 1349, at para. 6; Moti v Sheroo Jal Vakil (2009) SCC OnLine Bom 604, at para. 16. 47. See Arbitration and Conciliation Act, 1996, s. 31(2). 48. Transmission Corporation of Andhra Pradesh Ltd. v Galada Power and Telecommunication Ltd. (2006) SCC OnLine AP 744; Mahanagar Telephone Nigam Ltd. v Siemens Public Communication Network Ltd. (2005) SCC OnLine Del 237. 49. Maharashtra State Electricity Distribution Company Ltd. v Deltron Electronics (2016) SCC OnLine Bom 9521, at para. 6 (“… such reason must be adequate and germane for fulfillment of the requirement of the law… justifiable reason may be absence or unavailability of the arbitrator/​s at the time of signing (which is merely a ministerial act) or his/​their refusal on the ground of any dissention or disagreement with the majority or the like.”). 50. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 795. See Maharashtra State Electricity Distribution Company Ltd. v Deltron Electronics (2016) SCC OnLine Bom 9521; R.R. Hi Tech Engineering Pvt. Ltd. v Union of India (2010) SCC OnLine Bom 1349; Moti v Sheroo Jal Vakil (2009) SCC OnLine Bom 604.

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The date of the final signature is deemed to the date of the award, unless otherwise agreed by the parties.51 The New York Convention is silent on whether awards can be e-​signed.52 The CIArb’s Guidance Note on Remote Dispute Resolution indicates that there is a preference for signing arbitral awards by hand.53 However, the 2020 LCIA Rules provides for e-​signature of the arbitral awards, unless the parties agree otherwise.54

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There is no legal requirement for the signatures of the arbitral tribunal to be attested by a witness. However, this may be done in practice so that there is evidence of the signature.55

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The Austrian Supreme Court has held that confirmation of authenticity of the signatures of the arbitrators should be duly proved.56

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There is also no requirement of contemporaneous signatures.57 Further, there is no requirement for the majority arbitrators to meet the minority to try and change their mind before signing of the award.58

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This seems to be an appropriate approach, especially in international arbitrations where members of the tribunal may be from different parts of the world. Requiring the arbitral tribunal to meet at one location just to sign the award would lead to logistical difficulties and increased costs.

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51. Robert Merkin and Louis Flannery, Merkin and Flannery on Arbitration Act 1996 (6th edn, Informa Law from Routledge 2019), p. 230. 52. Felipe Volio Soley, Signing the Arbitral Award in Wet Ink: Resistance to Technological Change or a Reasonable Precaution? (6 November 2020), available at http://​arbitrationblog.kluwerarbitration.com/​ 2020/​11/​06/​signing-​the-​arbitral-​award-​in-​wet-​ink-​resistance-​to-​technological-​change-​or-​a-​reasonable-​ precaution/​. 53. CIArb, Guidance Note on Remote Dispute Resolution Proceedings, p. 7, at para. 7.4 (“even though digital technology is rapidly becoming a widely accepted business and legal tool, it is advisable to keep key procedural documents in both soft and hard copies, containing signatures of participants where necessary. The same applies to arbitral awards … as some national courts may reject enforcement if such documents were produced solely via digital means.”). 54. LCIA Arbitration Rules, 2020, art. 26.2. 55. Sutton, Gill, and Gearing QC, Russel on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​050. 56. Kinve Solar Power Co Ltd v Sun Value GmbH et al, No. 29, Landesgericht, Ried im Innkreis (24 June 2015) in A. J. van den Berg (ed.), Yearbook Commercial Arbitration 2016, Vol. XLI (2016), pp. 1–​7. 57. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 794; European Gran and Shipping Ltd. v Johnson [1982] 3 All ER 989 (“I have myself been party to cases where the arbitrators were in different countries and took many important decisions by correspondence or by telephone. This would be in the interests of all parties in saving costs … I do not regard the coincidence in time and place for the purely formal purposes of signing the award as something which is essential, unless it is prescribed by rules which govern the arbitrations.”); Mukundlal Pakrashi v Prakash Chandra Pakrashi 1939 SCC OnLine Cal 332, at para. 4 (“… decision of the arbitrators was arrived at after joint deliberation … the mere fact that one of the arbitrators signed one day later cannot make the award illegal.”). 58. Bank Mellat v GAA Development and Construction Co. Ltd [1988] 2 Lloyd’s Rep 44.

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Law, Practice and Procedure of Arbitration in India

Moreover, in the wake of the Covid-​19 pandemic, virtual arbitrations are being not only encouraged, but accepted globally,59 further dispensing with the requirement for the arbitrators to sign the award at the same time and place. The United Arab Emirates (UAE) is known for its strict approach to the signing of arbitral awards. The Dubai Court of Cassation has held that both the reasoning and dispositive portions of the award are to be signed by the arbitrators.60

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Even though the law has now been amended,61 in its recent judgment of 14 June 2020, the Dubai Court of Cassation has upheld these signature requirements. Therefore, arbitrators sitting in arbitration proceedings in the UAE normally sign every page of the award.62

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Importantly, an unsigned award can always be signed by the tribunal later. Hence, the lack of a signature can be remedied. It will not in itself make the award invalid.63

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In India, there is the additional requirement to ensure that the domestic award is stamped, for it to be enforceable.64 A domestic arbitral award is to be stamped under Article 12 of Schedule I of the Indian Stamp Act, 1899. Stamping should be done at the time of making of the award.65 If the award has not been stamped, it may be impounded and not admissible in evidence.66

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A domestic award is also compulsorily registrable under the Registration Act, 1908, if it creates, declares, assigns, limits, or extinguishes any right, title, or interest in immovable property.67

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However, a foreign award does not need to be stamped for it to be enforceable in India.68 Neither does a foreign award need to be registered.69

See for reference to Virtual Arbitration, Chapter 27. Case No. 233/​2007 (13 January 2008); Case No. 156/​2009 (27 October 2009). UAE Federal Arbitration Law, Article 41(3) (entered into force on 16 June 2018). Nigel Blackaby, Constantine Partasides QC, Alan Redfern, Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.148. Weldon Plant Ltd. v Commission for the New Towns (2000) BLR 496, at paras 4–​5. Stamp Act, 1899, s. 35. See M. Anusuya Devi v M. Manik Reddy (2003) 8 SCC 565. Nakul Dewan and A Team of Expert Contributors, Enforcing Arbitral Awards in India (LexisNexis 2017), at para. 1.47. Stamp Act, 1899, ss. 33, 35. Registration Act, 1908, s. 17. See N Khosla v Rajlakshmi (2006) 3 SCC 605. Shriram EPC Ltd. v Rioglass Solar SA (2018) 18 SCC 313. Harendra H. Mehta v Mukesh H. Mehta (1999) 5 SCC 108; Naval Gent Maritime Ltd. v Shivnath Rai Harnarain Ltd. (2000) SCC OnLine Del 261.

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59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69.

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Chapter 36—​Making of the Award

[36.5] DATE OF THE AWARD It is mandatory for the award to state the date on which it is made under the Arbitration Act. This is provided under most institutional arbitration rules70 and national arbitration statutes.71

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However, the UNCITRAL Working Group was of the view that failure to expressly state the date of the award should not render the award invalid.72

The date of the award is relevant to calculate the interest due on the award and in determining whether a contractual time limit for making the award has been complied with.73 In India, the date of the award serves no other purpose.

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For correction or interpretation of award,74 or for challenging the award of the arbitral tribunal,75 the time period is computed from the date of receipt of the award, and not from the date of the award. However, in England, the time limits for challenging the award run from the date of the award.76

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If the arbitral tribunal does not fix the date of the award, it may be the date when it is signed by the sole arbitrator or the final member of the tribunal.77 If the arbitration rules require scrutiny of the award by the arbitral institution, the award should be dated after the institution has reviewed the award.78

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The absence of a date will give rise to ambiguity that an arbitral tribunal can be asked to address.79 Alternately the award may be challenged and remitted to the tribunal for clarification on the date.80

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70. UNCITRAL Arbitration Rules, 2013, art. 34(4); ICC Rules of Arbitration, 2017, art. 32(3); LCIA Arbitration Rules, 2020, art. 26.2; Mumbai Centre for International Arbitration Rules, 2017, art. 30.7. 71. Arbitration and Conciliation Act, 1996, s. 31(4); English Arbitration Act, 1996, ss. 52(5), 54; UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 31(3). 72. UNCITRAL, Report of the Working Group on International Contract Practices on the Work of its Third Session (New York, 16–​26 February 1982), UN Doc A/​CN.9/​216, at para. 79 (“… if the date and place of the award was not stated therein, however, the prevailing view was that the model law should not on that account declare the award invalid …”). 73. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​054. 74. Arbitration and Conciliation Act, 1996, s. 33(1). 75. Arbitration and Conciliation Act, 1996, s. 34(3). 76. English Arbitration Act, 1996, s. 70(3). 77. English Arbitration Act, 1996, s. 54(2); Sutton, Gill, and Gearing QC, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​054; International Arbitration Practice Guideline, Drafting Arbitral Awards, Part I –​General, Chartered Institute of Arbitrators, p. 17. 78. International Arbitration Practice Guideline, Drafting Arbitral Awards, Part I –​General, Chartered Institute of Arbitrators, p. 17. 79. Arbitration and Conciliation Act, 1996, s. 33; English Arbitration Act, 1996, s. 57(3)(a). 80. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​054.

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Law, Practice and Procedure of Arbitration in India

[36.6] PLACE OF ARBITRATION It is mandatory to state the place of arbitration when making the award.81 This is because the law of the seat of arbitration, that is, lex arbitri plays a fundamental role in the arbitration proceedings.82 The courts of the seat have jurisdiction to pass interim orders and determine challenges to the award.83

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The terms “place” and “seat” are often used interchangeably. For instance, the Model Law84 and the New York Convention85 use the term “place” whereas the term “seat” is used in various institutional rules.86

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Pertinently, even if the seat of arbitration has been designated, the arbitration proceedings can be conducted at any other location and venues, as per the convenience of the parties and the arbitrator involved.87

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The Court of Appeal in Naviera Amazonica Peruana SA v. Compania Internacional de Seguros del Peru88 held that it is permissible in law for the parties to provide for a curial law, which is different from that of the seat of arbitration.

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The parties may choose the seat of arbitration in the arbitration agreement, failing which the tribunal shall determine the seat.89 When neither the parties nor the arbitral tribunal determines the place of arbitration, the venue of the arbitration proceedings shall be designated as the seat.90 However agreement as to the place of the arbitration will not in itself equate to a selection of seat.91

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[36.7] DELIVERY OF THE AWARD

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The delivery of an arbitral award is not a mere formality, but is a matter of substance.92 This is because:

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81. Arbitration and Conciliation Act, 1996, s. 31(4); English Arbitration Act, 1996, s. 52(5); UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 31(3); UNCITRAL Arbitration Rules, 2013, art. 34(4); ICC Rules of Arbitration, 2017, art. 32(3); LCIA Arbitration Rules, 2020, art. 26.2. 82. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 805; Bharat Aluminium Company v Kaiser Aluminium Technical Services Ltd (2012) 9 SCC 552. 83. See BGS SGS Soma JV v NHPC Ltd. (2020) 4 SCC 234. 84. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 31(3). 85. Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958), art. V. 86. See SIAC Rules, 2016; LCIA Arbitration Rules, 2020; Mumbai Centre for International Arbitration Rules, 2017. 87. SIAC Rules, 2016, r. 21.2; ICC Rules of Arbitration, 2017, art. 18(2); LCIA Arbitration Rules, 2020, art. 16.3. 88. 19881 Lloyd’s Rep 116. See Union of India v McDonnel Douglas Corpn. (1993) 2 Lloyd’s Rep 48. 89. SIAC Rules, 2016, r. 21; ICC Rules of Arbitration, 2017, art. 18(1); LCIA Arbitration Rules, art. 16.1. 90. BGS SGS Soma JV v NHPC Ltd. (2019) SCC Online SC 1585; Roger Shashoua and Ors. v Mukesh Sharma [2009] EWHC 957 (Comm). 91. Mankastu Impex Private Limited v Airvisual Limited (2020) SCC Online SC 301. See Quippo Construction Equipment Ltd. v Janardan Nirman Pvt. Ltd. (2020) SCC OnLine SC 419. 92. Union of India v Tecco Trichy Engineers and Contractors (2005) 4 SCC 239.

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Chapter 36—​Making of the Award

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“Delivery by the Arbitral Tribunal and receipt by the party of the award sets in motion several periods of limitation such as an application for correction and interpretation of an award … an application for making an additional award … and an application for setting aside an award … delivery of the copy of award has the effect of conferring certain rights on the party as also bringing to an end the right to exercise those rights on expiry of the prescribed period of limitation which would be calculated from that date …”93 Generally, institutional arbitration rules do not impose time limits within which the award is to be delivered to the parties.94 However, the arbitration agreement may require the award to be delivered by a specific date.95

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Delivery requires signed copies of the award to be served on the parties.96 The High Court of Allahabad in Union of India v Radha Krishna Seth97 held that a signed copy means, “an authenticated copy duly signed to certify the genuineness of the document”, that is, a certified copy.98

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For valid delivery the award must be delivered to the party itself, and not its advocate.99 Delivery should be made to the person who has knowledge of the proceedings, and can best appreciate and understand the award. He is also in a position to take a decision as to whether the award should be challenged.100

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If the award is delivered to the party, personally, at his place of business, it will be deemed to have been received by him on the day it was delivered.101

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93. Union of India v Tecco Trichy Engineers and Contractors (2005) 4 SCC 239, at para. 8. 94. See SIAC Rules, 2016, r. 32.8; UNCITRAL Arbitration Rules, 2013, art. 34(6); ICC Rules of Arbitration, 2017, art. 35; LCIA Arbitration Rules, 2020, art. 26.7. 95. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​067. 96. Arbitration and Conciliation Act, 1996, s. 31(5); English Arbitration Act, 1996, s. 55(2). See Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 804. 97. (2005) SCC OnLine All 840. 98. Union of India v Radha Krishna Seth (2005) SCC OnLine All 840, at para. 11. 99. Benarsi Krishna Committee v Karmyogi Shelters (P) Ltd. (2012) 9 SCC 496, at para. 15 (“It is one thing for an advocate to act and plead on behalf of a party in a proceeding and it is another for an advocate to act as the party himself. The expression ‘party’, as defined in Section 2(1)(h) of the 1996 Act, clearly indicates a person who is a party to an arbitration agreement. The said definition is not qualified in any way so as to include the agent of the party to such agreement. Any reference, therefore, made in Section 31(5) and Section 34(2) of the 1996 Act can only mean the party himself and not his or her agent, or advocate empowered to act on the basis of a vakalatnama … proper compliance with Section 31(5) would mean delivery of a signed copy of the arbitral award on the party himself and not on his advocate, which gives the party concerned the right to proceed under Section 34(3) of the aforesaid Act.”). 100. Union of India v Tecco Trichy Engineers and Contractors (2005) 4 SCC 239, at para. 9 (“… the copy of the award has to be received by the person who has knowledge of the proceedings and who would be the best person to understand and appreciate the arbitral award and also to take a decision in the matter of moving an application under sub-​section (1) or (5) of Section 33 or under sub-​section (1) of Section 34.”). See National Projects Construction Corporation Ltd. v Bundela Bandhu Constructions Company (2007) SCC OnLine Del 574, at paras 14–​15. 101. Kailash Rani Dang v Rakesh Bala Aneja (2009) 1 SCC 732, at para. 22.

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Law, Practice and Procedure of Arbitration in India

The arbitral tribunal should provide the party with a signed copy of the award.102 However, there is no need to share the original signed copy with the parties. An authenticated photocopy of the award is valid service.103 However, if the photocopy of the award is unsigned it will not be considered a valid delivery.104

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If one of the parties to the arbitration has accepted the award on behalf of himself and all other parties, then individual delivery to all the parties is not required.105

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There should not be undue delays in delivery of the award.106 The Supreme Court of India in State of Himachal Pradesh v Himachal Techno Engineers107 held that if one of the parties to arbitration is a government or a statutory body having notified holidays, and the award is delivered to it on a holiday. The next working day will be considered as the date of receipt of the award.108

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Importantly, the date of receipt of award is the date when the arbitrator sends the signed copy of the award to the party. Even if the party has previously obtained a copy of the award, by other means, that date will not be taken as the date of receipt of the award.109

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102. State of Maharashtra and Others v Ark Builders Private Limited (2011) 4 SCC 616, at paras 15, 17. See Hindustan Construction Company Ltd. v Union of India (1967) 1 SCR 843. 103. Delhi Urban Shelter Improvement Board v Lakhvinder Singh (2017) SCC OnLine Del 9810, at para. 24 (“… mere technicality that it is not in the handwriting of the arbitrator will not disqualify it from the meaning of a ‘signed copy’. The legislative intent behind the Section is to ensure authenticity of the award and from the facts of the present case, the impugned award satisfies such intent.”); National Agricultural Co-​operative Marketing Federation of Indian Ltd. v R. Piyarelall Import and Export Ltd. (2015) SCC OnLine Cal 7198, at paras 25–​26 (“… not the intention of legislature that all the copies of the award … would have to be separately signed … certified photocopy of the original award along with the signatures of the members of the Arbitral Tribunal would suffice.”); Continental Telepower Industries Ltd. v Union of India (2009) SCC OnLine Del 1859, at para. 9 (“… the requirement in Section 31(5) of the Act is not for delivering an ink signed copy of the award …”); State of West Bengal and Anr. v Motilal Agarwala and Anr. (2016) SCC OnLine Cal 482, at paras 18–​19. 104. Ramesh Pratap Singh v Vimala Singh (2003) SCC OnLine MP 587, at para. 9. 105. Anilkumar Jinabhai Patel v Pravinchandra Jinabhai Patel and Ors. (2018) 15 SCC 178, at para. 24 (“Award dated 7-​7-​1996 was received by Anilkumar Patel for himself and on behalf of his family members … Anilkumar Patel, being the head of his family, was a person directly connected with and involved in the proceeding and was also in control of the proceeding. Being head of the family, Anilkumar Patel would have been the best person to understand and appreciate the arbitral award and take a decision as to whether an application under Section 34 of the Act was required to be filed or not. In such facts and circumstances, in our considered view, service of arbitral award on Anilkumar Patel amounts to service on the other Appellants …”) 106. Anilkumar Jinabhai Patel v Pravinchandra Jinabhai Patel and Ors. (2018) 15 SCC 178; Benarsi Krishna Committee v Karmyogi Shelters Private Limited (2012) 9 SCC 496. 107. (2010) 12 SCC 210. 108. State of H.P. v Himachal Techno Engineers (2010) 12 SCC 210, at para. 10. 109. State of Maharashtra v ARK Builders (P) Ltd. (2011) 4 SCC 616, at para. 17 (“… what Section 31(5) contemplates is not merely the delivery of any kind of a copy of the award but a copy of the award that is duly signed by the members of the Arbitral Tribunal.”).

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Chapter 36—​Making of the Award

The records maintained by the arbitral tribunal must show that it has sent a copy of the signed award to the parties; else it will be held that the award has not been delivered.110 The award will be valid even if it has not been delivered contemporaneously with the pronouncement of the award.111

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An arbitration agreement may also require the arbitral award to be made and published to the parties. The award will be “published” when it has been signed by the arbitral tribunal and parties have been notified that it is ready.112 In such a situation, delivery of the award may not be required.

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In England, the time limits for challenging the award start running from the date of the award, and not the date of delivery of the award.113 Often the arbitral tribunal may refuse to deliver the award, pending payment of its fees.

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In such a situation, the party should pay the outstanding fees to secure delivery of the award, so that it’s right to challenge the award does not become time barred.114

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Alternately, the party can apply to the court for an order that the arbitral tribunal release the award, subject to payment of unpaid fees into the Court.115 One party may also pay the defaulting party’s share and recover the same later.116

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Arbitral institutions may have their own requirements as regards of the number of signed copies required. The secretariat of the arbitral institution normally undertakes the delivery of the award to the parties once all the costs of the arbitration have been paid.117

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[36.8] FORMAT OF THE AWARD

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There is no prescribed structure or layout for an award. Even a letter written to the parties can be an award.118 The arbitral tribunal has the freedom to word and format the 110. JSC Ispat Pvt. Ltd. v HDB Financial Services LTD. (2018) SCC OnLine Bom 538, at para. 13–​14. 111. Satwant Singh Sodhi v State of Punjab (1999) 3 SCC 487. 112. Brooke v Mitchell (1840) 9 L.J. Ex. 269; Bulk Transport Corp v Sissy Steamship Co. Ltd. [1979] 2 Lloyd’s Rep 289; Hiscox v Outhwaite [1992] 1 AC 562. 113. See English Arbitration Act, 1996, s. 70(3). 114. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​070. 115. See Arbitration and Conciliation Act, 1996, s. 39(2). 116. Assam State Weaving & Manufacturing Co Ltd. v Vinny Engineering Enterprise (P.) Ltd. & Anr. (2009) SCC OnLine Cal 2464. 117. See SIAC Rules, 2016, r. 32.8; ICC Rules of Arbitration, 2017, art. 35(1); LCIA Arbitration Rules, 2020, art. 26.7. 118. Ranko Group v Antarctic Maritime SA (12 June 1998), unreported, but referred in Michael Wilson & Partners Ltd v Emmott [2008] EWHC 2684 (Comm).

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Law, Practice and Procedure of Arbitration in India

award, as per choice.119 All that is necessary is that the decision on the dispute be clear and unambiguous.120 The Practice Guidelines on Drafting Arbitral Awards, issued by the Chartered Institute of Arbitrators suggest that: (1) The arbitral tribunal should include the word “award” in the title, to make it clear that a decision is an award;121



(2) The arbitral tribunal should express its decision “in a clear, concise and unambiguous manner”;122



(3) The award should be written as a “flowing narrative dealing with the evidence as it arises” or on an “issue-​by-​issue basis” where the evidence and argument for each issue is dealt with separately, to make it easier to read and understand;123 and



(4) The arbitral tribunal should use short sentences, headings, sub-​headings, plain and simple language, and numbered paragraphs.124

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Normally, the cover page of the award should contain a title or heading, setting out (1) the Act under which the arbitration is being conducted;



(2) whether it is a final, interim, or partial award;



(3) names of the arbitrators, parties, and identification as claimant/​respondent;



(4) case number; and



(5) the applicable arbitration rules.

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Though there is no statutory requirement to identify the parties to arbitration125 to ensure certainty, it is important that the parties are named in the award.126

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119. Shapoorji Pallonji & Co Pvt Ltd v Housing & Urban Development Corpn Ltd (2000) SCC OnLine Del 423. 120. Subhas Projects and Marketing Ltd. v Assam Urban Water Supply & Sewerage Board (2003) SCC OnLine Gau 18, at para. 7 (“… the Act does not prescribe any particular form or manner of passing an award … as long as the manifestation of the decision on the dispute raised is clear and un-​ambiguous, it will not be correct to hold an award invalid merely because it does not subscribe to a particular format.”). 121. International Arbitration Practice Guideline, Drafting Arbitral Awards, Part I –​General, Chartered Institute of Arbitrators, art. 1(1). 122. International Arbitration Practice Guideline, Drafting Arbitral Awards, Part I –​General, Chartered Institute of Arbitrators, art. 1(2). 123. International Arbitration Practice Guideline, Drafting Arbitral Awards, Part I –​General, Chartered Institute of Arbitrators, p. 3. 124. Ibid. 125. Musawi v R.E. International (UK) Ltd. 2007 EWHC 2981 Ch. 126. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​045; Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 789.

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Chapter 36—​Making of the Award

This may be followed by a table of contents so as to enable the parties to understand the structure of the award. Thereafter, the award should contain an introductory section, with a summary of the facts related to the arbitration and dispute, relief claimed etc.127 Russell states:128

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“… the tribunal can use recitals to set out the circumstances leading to the award, so that for example they will record the contractual relationship between the parties, the matters giving rise to the dispute, the appointment of the tribunal and its authority to decide the dispute (i.e. the arbitration agreement), and, if applicable, the hearings which have taken place …”129

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Recitals are not essential.130 They are used to show that the arbitral tribunal has authority to determine the dispute. Inaccurate recitals do not affect the validity of the award as they do not form a substantive or essential part of it.131 Hence courts have often refused to set aside an award for inaccuracies in the recitals.132

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Recitals differ from the reasons of the award.133 Nowadays, the information which might have once been contained in the recitals is often set out in the body of an award, instead.134

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It has been suggested that the format and contents of an award should be organised to include a narrative and a determination.135 The Practice Guidelines prepared by the Chartered Institute of Arbitrators suggest that:

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“It is a good practice to start preparing and regularly update as the arbitration develops the narrative paragraphs of an award … so as to set out the basic information including the names and addresses of the arbitrators, the parties and their

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127. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.147. 128. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​055. 129. See Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 789. 130. Tapan Kumar Paul v Krishna Kanta Paul (1979) SCC OnLine Cal 8, at para. 17 (“… these mistakes are in the recitals and on the non-​essential parts of the award.”); Gables India Pvt Ltd v State of Punjab (1994) SCC OnLine P&H 620, at para. 16. 131. Trew v Burton [1833] 1 WLUK 212. 132. Paull v Paull 1833 2 Cr & M; Price v Popkin 1839 10 Ad. & El. 139; Trew v Burton 1833 1 Cr & M 533; Harlow v Read (1845) 1 C.B. 733; Sprigens v T. Nash and H. Nash (1816) 5 M & S 193; TA Ruf & Co Limited v Pauwels [1919] 1 KB 660. 133. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 789. 134. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​055. 135. Oleificio Zucchi SpA v Northern Sales [1965] 2 Lloyd’s Rep 496.

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Law, Practice and Procedure of Arbitration in India

representatives, the chronology of the facts, the respective positions of the parties and any agreed matters … process by which the arbitrators have been appointed … basis for their jurisdiction … brief procedural history of the main stages …”136 John Tackaberry and Arthur Marriot suggest the following structure for a short commercial arbitration award:137 (1) A heading;



(2) The arbitration agreement: date and parties.



(3) Date and method of appointment of the arbitral tribunal.



(4) Seat of the arbitration.



(5) Procedure adopted, including hearing dates or documents-​only.



(6) Any recitals, such as a statement that the arbitral tribunal finds it has jurisdiction to determine the dispute.138



(7) The issues, which are then dealt with sequentially.



(8) First issue of fact: for example, I find as a fact that because of XYZ, I preferred the evidence of the claimant.



(9) First issue of law: for example, Argument for claimant; Argument for respondent; I prefer the case for the claimant because; I therefore find for claimant on this issue.



(10) I therefore determine and award [RM] with interest at [Y]‌percent from [date to date].



(11) This award is final as to all matters except costs.

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This is a useful structured way of drafting an award that ensures the arbitral tribunal includes all the relevant components needed to reduce challenges and ensure enforceability.

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Lastly, arbitration institutions such as the ICC provide the arbitrators with an award checklist to aid in the drafting of an award.139 Even, the International Bar Association has prepared a useful toolkit on award writing to provide practical advice on how to write an award.140 136. International Arbitration Practice Guideline, Drafting Arbitral Awards, Part I –​General, Chartered Institute of Arbitrators, p. 18. 137. J. Tackaberry and A. Marriot and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, 2003), at para. 2-​884. 138. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​055. 139. ICC Award Checklist (1998, 2012 and 2017 ICC Arbitration Rules), available at https://​ iccwbo.org/​ publication/​icc-​award-​checklist-​1998-​2012-​icc-​arbitration-​rules/​. 140. Toolkit for Award Writing, IBA Arb40 Subcommittee (21 September 2016).

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Chapter 36—​Making of the Award

[36.9] DETERMINATION OF ISSUES For an award to be valid it must contain a decision on all issues of fact141 and law142 that have been referred to the arbitration.143

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Most arbitration rules144 require parties to submit pleadings where they clearly state their claim, defence, counter-​claims, and set-​offs. Issues are framed on the basis of these pleadings. Further, it is common in arbitrations, for the parties to provide the arbitral tribunal with an agreed list of issues. Normally, the arbitral tribunal does not act beyond the terms of its mandate if the issues are clearly set out at an early stage of the arbitration.145

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There is a distinction between an issue and an argument made or point advanced by either of the parties.146 An arbitral tribunal does not have to “set out each step by which they reach their conclusion or deal with each point made by a party to an arbitration” to have addressed all issues.147

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Instead, the award should deal with all essential issues.148 A failure to deal with all issues pleaded in the arbitration is a breach of natural justice149 and may result in the award being set aside.150

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141. Evidence Act, 1872, s. 3 (“… any fact from which, either by itself or in connection with other facts, the existence, non-​existence, nature or extent of any right, liability or disability asserted or denied in any suit or proceeding, necessarily follows”.). See Arbitration and Conciliation Act, s. 19(1). Though the provisions of the Evidence Act do not bind the arbitral tribunal, this definition reflects usual standards of practice. 142. An issue of law may relate to the interpretation or application of any law, including the jurisdiction of the arbitrator, and provisions of the Arbitration Act. 143. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.152; Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 790. 144. SIAC Rules, 2016, r. 20; UNCITRAL Rules 2013, arts. 20, 21; ICC Rules of Arbitration, 2017, art. 23(1)(d); LCIA Arbitration Rules, 2020, art. 15; Mumbai Centre for International Arbitration Rules, 2017, rr. 16, 17. 145. See Olivine Capital Pte Ltd and another v Chia Chin Yan and another matter [2014] SGCA 19. 146. Petrochemical Industries Co v Dow Chemical Co [2012] EWHC 2739 (Comm). 147. Hussman (Europe) Ltd v Al Ameen Development and Trade Co [2000] 2 Lloyd’s Rep 83. See SEF Construction Pte Ltd v Skoy Connected Pte Ltd [2009] SGHC 257. 148. TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd [2013] SGHC 186; Ascot Commodities NV v Olam International Ltd (2002) CLC 277; A v B [2015] 3 HKLRD 586; Zebra Industries v Waj Tong Paper Products Group Ltd. [2012] HKCU 1308; Front Row Investment Holdings v Daimler South East Asia [2010] SGHC 80; TMM Division Maritime SA v Pacific Richfield Marine Pte Ltd. [2013] SGHC 186. 149. AKN v ALC [2015] SGCA 18; BAZ v BBA [2018] SGHC 275. 150. See Vijay Karia & Ors. v Prysmian Cavi E Sistemi SRL and Others (2020) SCC OnLine SC 177, at paras 85–​86 (“All the cases cited … are judgments based on the language of the particular statute reflected in each of them –​ for example Section 68 of the Arbitration Act, 1996 (U.K), Section 23(2) of the Hong Kong Old Arbitration Ordinance (Cap 391), Section 24(b) of the International Arbitration Act (Singapore) and Section 48(1)(a)(vii) of the Arbitration Act, 2002 (Singapore), all of which are differently worded from Section 48(1)(b) … it is not possible to hold that failure to consider a material issue would fall within the rubric of Section 48(1)(b) … if a foreign award fails to determine a material issue … the award may shock the conscience of the Court and may be set aside … on the ground of violation of the public policy of India …”); Campos Brothers Farms v Matru Bhumi Supply Chain Pvt. Ltd. (2019) SCC OnLine Del 8350.

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Law, Practice and Procedure of Arbitration in India

Mustill and Boyd propose four different procedures for determining issues: (1) To order full pleadings, containing only assertions of fact, not the arguments, evidence or propositions of law;



(2) To order each party to deliver a full written statement of its case, which includes the arguments and evidence, as well as bare allegations of fact;



(3) To order the delivery of brief informal letters setting out the parties’ respective cases; or



(4) To find out what are the issues are, by means of an oral discussion at a preliminary hearing, followed by the making of a written record of the issues as so determined.151

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These procedures should be adopted at an early stage in the proceedings.152

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Though the arbitral tribunal can take the assistance of legal experts when drafting the award, it cannot delegate its decision-​making function to a third party.153 The arbitral tribunal must make an independent assessment of all the issues raised before it.154

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[36.10] REASONS AND FINDINGS

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Reasons are the “links between the materials on which certain conclusions are based and the actual conclusions”.155 They are the grounds for a course of action taken by the arbitral tribunal.156 A reasoned award is one that provides the rationale for the conclusions arrived at.157

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151. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), p. 318. 152. J. Tackaberry and A. Marriot and Bernstein, Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, Thomson Sweet & Maxwell 2003), at para. 2-​665. 153. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 790. See Agrimex Ltd v Tradigrain, SA [2003] EWHC 1656 (Comm) (“… if an arbitrator employs a draftsman, the function of that draftsman is limited; it is the function of the tribunal itself to decide on the findings of fact, to evaluate and analyse the submissions of law and to arrive at their own reasons for their decisions. The arbitral tribunal must reach its own decision on these matters and must communicate those decisions in sufficient detail to the draftsman bearing in mind his function is limited to setting out what he has been told …”); Bhuwalka Brothers Ltd. v Fatehchand Murlidhar (1950) SCC OnLine Cal 35. 154. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 790. 155. Union of India v Mohan Lal Capoor (1973) 2 SCC 836, at para. 28. 156. Bharat Engineering Enterprises v Delhi Development Authority (2006) SCC OnLine Del 1376. See McDermott International Inc v Burn Standard Co. Ltd. (2006) 11 SCC 181, at para. 55–​57. 157. Jajodia (Overseas) Pvt. Ltd. v Industrial Development Corporation of Orissa Ltd. (1993) 2 SCC 106, para. 8 (“… reasoned award is one which discusses or sets out the reasons which led the arbitrator to make the award. Setting out the conclusions upon the questions or issues that arise in the arbitration proceedings without discussing the reasons for coming to these conclusions does not make an award a reasoned or speaking award.”).

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Chapter 36—​Making of the Award

It is compulsory for the arbitral tribunal to give reasons for arriving at its decision.158 Even though an arbitral tribunal is not held to the same standard as a court, it must explain its decision by way of reasons.159 A mere statement by the arbitral tribunal that it has accepted the evidence of one party and rejected the evidence of the other, without any reasons for the same, is not enough.160

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For an award to be reasoned the arbitral tribunal is not expected to analyse the law. It just has to explain how it reached its conclusion.161 General statements and conclusions are not reasons.162

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The rationale behind the requirement for reasons in an award is to enable persons whose interests are being affected to know the reasons for the decision being against them.163 This enables them to order their future affairs to avoid a repetition of the dispute, where possible.

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In addition, the giving of reasons by the arbitral tribunal also helps minimise unfairness and arbitrariness and maximise transparency and accountability in arriving at its decision.

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158. International Arbitration Practice Guideline, Drafting Arbitral Awards, Part I –​General, Chartered Institute of Arbitrators, p. 16; T.N. Electricity Board v Bridge Tunnel Constructions and Others (1997) 4 SCC 121, at para. 33–​34; State of Uttar Pradesh and Others v Combined Chemicals Company Private Limited (2011) 2 SCC 151, at para. 31; Punjab State Electricity Board and Another v Punjab Pre-​Stressed Concrete Works (2002) 9 SCC 740. 159. Som Datt Builders v State of Kerala (2009) 10 SCC 259, at para. 25 (“… requirement of reasons … is not an empty formality. It guarantees fair and legitimate consideration … the Arbitral Tribunal is not expected to write a judgment like a court nor is it expected to give elaborate and detailed reasons … mere noticing the submissions of the parties … is no substitute for reasons which the Arbitral Tribunal is obliged to give …”). See Victoria Memorial Hall v Howrah Ganatantrik Nagrik Samity 2010 3 SCC 732 para. 42 (“… recording of reasons is a principle of natural justice …”); TMM Division Maritime SA de CV v Pacific Richfield Marine Pte Ltd. [2013] SGHC 186, at paras 103–​106; Anant Raj Agencies v Delhi Development Authority (1998( SCC OnLine Del 610, at para. 11; Delhi Development Authority v Uppal Engineering Construction Co. (1982) SCC OnLine Del 67, at para. 8. 160. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.157. 161. Bremer Handelsgesellschaft mbH v Westzucker GmbH (No 2) [1981] 2 Lloyd’s Rep 130; Gujarat Water Supply and Sewerage Board v Unique Erectors (Gujarat) (P) Ltd. (1989) 1 SCC 532, at para. 9; Delhi Development Authority v Sunder Lal Khatri & Sons (2009) SCC OnLine Del 127; Union of India v Royal Construction (2001) SCC OnLine Cal 476, at para. 20. 162. Indian Institute of Youth Welfare v Tribal Co-​operative Marketing Development Federation of India (2009) SCC OnLine Del 4086, at para. 3 (“… an Arbitrator need not give detailed reasons, however the reasons have definitely to be intelligible … General statements cannot be said to be reasons and nor can conclusions be said to be reasons …”); M/​s Sukumar Chand Jain & Another v Delhi Development Authority (2009) SCC OnLine Del 3656, at para. 6–​7; Bata India v Sagar Roy (2014) SCC OnLine Cal 17998; State Bank of India v Ram Das (1998) SCC OnLine AP 132. 163. Re Poyser and Mills Arbitration [1964] 2 QB 467; Victoria Memorial Hall v Howrah Ganatantrik Nagrik Samity (2010) 3 SCC 732, at para. 42.

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Law, Practice and Procedure of Arbitration in India

The Supreme Court of India in Woolcombers of India Ltd. v Workers Union164 held that:

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“… search for reasons will put the authority on the alert and minimise the chances of unconscious infiltration of personal bias or unfairness in the conclusion. … justice should not only be done but should also appear to be done. Unreasoned conclusions may be just but they may not appear to be just to those who read them. Reasoned conclusions, on the other hand, will have also the appearance of justice. … appeal generally lies from the decisions of judicial and quasi-​judicial authorities to this Court by special leave granted under Article 136. A judgment which does not disclose the reasons, will be of little assistance to the Court...”165

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Hence, reasons “(i) guarantee consideration by the authority; (ii) introduce clarity in the decisions; and (iii) minimise chances of arbitrariness in decision-​making.”166

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National arbitration statutes167 and institutional arbitration rules168 require the award to be well reasoned, failing which it is considered to be defective169 in form. It may have to be remitted to the arbitral tribunal for amendment.170 Reasons establish that the arbitral tribunal had applied its mental faculties to the matter before it.171

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(1974) 3 SCC 318. Woolcombers of India Ltd. v Workers Union (1974) 3 SCC 318, at para. 5. S.N. Mukherjee v Union of India (1990) 4 SCC 594, at para. 5. Arbitration and Conciliation Act, 1996, s. 31(3); English Arbitration Act, 1996, s. 52(4); UNCITRAL Model law on International Commercial Arbitration, 1985, art. 31(2). 168. SIAC Rules, 2016, r. 32.4; UNCITRAL Arbitration Rules, 2013, art. 34(3); ICC Rules of Arbitration, 2017, art. 32(2); LCIA Arbitration Rules, 2020, art. 26.2; Mumbai Centre for International Arbitration Rules, 2017, r. 30.7. 169. Victoria Memorial Hall v Howrah Ganatantrik Nagrik Samity (2010) 3 SCC 732, at para. 41; State Bank of India v Ram Das (1998) SCC OnLine AP 132. 170. Dyna Technologies v Crompton Greaves (2019) SCC OnLine SC 1656, at paras 36–​37 (“… when there is complete perversity in the reasoning then only it can be challenged … power vested … to cure defects can be utilised in cases where the arbitral award does not provide any reasoning or if the award has some gap in the reasoning or otherwise and that can be cured so as to avoid a challenge based on the aforesaid curable defects …”); Som Datt Builders Ltd. v State of Kerala (2009) 10 SCC 259; Anand Brothers v Union of India (2014) 9 SCC 212. 171. Saroj Bala v Rajive Stock Brokers Ltd. (2005) SCC OnLine Del 339, at para. 6. 172. T.N. Electricity Board v Bridge Tunnel Construction (1997) 4 SCC 121, at para. 33–​34; Abhijeet Saraswat v Nalamaty Doraiah (2003) SCC OnLine Bom 1117, at para. 18; Mutta International v Nandnadan Silk Mills Pvt. Ltd. (2007) SCC OnLine Bom 350, at para. 7; Katra Holdings Ltd. v Corsair Investments Ltd. & Ors. (2018) SCC OnLine Bom 4031, at para. 28. 173. Arbitration and Conciliation Act, 1996, s. 31(3); English Arbitration Act, 1996, s. 52(4); UNCITRAL Model law on International Commercial Arbitration, 1985, art. 31(2).

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1 64. 165. 166. 167.

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However, if the award is a consent award, or the parties have dispensed with the requirement for reasons172, the award need not contain reasons.173

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Chapter 36—​Making of the Award

The requirement of reasons does not mean that the tribunal has to issue a lengthy award.174 A short award is not necessarily inadequately reasoned. Redfern and Hunter elaborate that:

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“… what is needed is an intelligible decision, rather than a legal dissertation. The object should be to keep the reasons for a decision as concise as possible, according to the nature of the dispute. The parties want to read the essential reasoning underlying the decision, not a lesson in the law.”175 The courts in various judgments have opined on the manner in which reasons are to be provided.

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A reasoned award176 should enable parties to “understand the facts and general reasoning” and “consider the position with respect to an appeal”, for which reason it would be “unhelpful, to recite at great length messages exchanged or submissions made containing assertions of fact or law: the arbitrators’ findings and brief reasoning upon them are what matters.”177

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The Supreme Court of India in Som Datt Builders Ltd. v State of Kerala178 confirmed that there is no requirement for an arbitral tribunal to give a detailed judgment like a court. It was further held that:

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“merely noticing the submissions of the parties or reference to documents is no substitute for reasons which the Arbitral Tribunal is obliged to give. Howsoever brief these may be, reasons must be indicated in the award as that would reflect the thought process leading to a particular conclusion …”179

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174. Dyna Technologies v Crompton Greaves (2019) SCC OnLine SC 1656, at para. 34 (“… mandate … is to have reasoning which is intelligible and adequate and, which can in appropriate cases be even implied by the court … does not require an elaborate judgment to be passed by the arbitrators having regarding to the speedy resolution of dispute.”). 175. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.161. 176. Dyna Technologies v Crompton Greaves 2019 SCC OnLine SC 1656, at para. 35 (“… three characteristics of a reasoned order can be fathomed. They are: proper, intelligible and adequate …”). 177. Transcatalana De Commercio SA v Incobrasa Industrial E Commercial Brazileria SA [1995] 1 Lloyd’s Rep 215. See President of India v Jadranska Slobodna Plovidba [1992] 2 Lloyd’s Rep 274 (“function of a reasoned award is not simply to identify and determine a point which the arbitral tribunal ultimately considered to be decisive. It also enables the parties and the court firstly, to understand the facts and general reasoning which lead the arbitral tribunal to conclude that this was the decisive point and secondly, to understand the facts, and so consider the position with respect to an appeal on any other issues which arose before the arbitral tribunal.”); Cefetra BV v Alfred C Toepfer International GmbH [1994] 1 Lloyd’s Rep 93. 178. (2009) 10 SCC 259, at para. 25. 179. Also See Ircon International Limited v Arvind Construction Company Ltd. (1999) SCC OnLine Del 551, at para. 11 (“… arbitrator is not expected to write judgment like a Court of law but has only to state as to how he has come to the finding arrived at by him. No particular form is required for giving reasons. The arbitrator is not expected to record at great length the communications exchanged or submissions made by the parties nor he is expected to analyse the law and the authorities. It is sufficient for him to explain what his findings are and how he reached at the conclusions.”).

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Law, Practice and Procedure of Arbitration in India

In a similar vein, the High Court of Bombay in Municipal Corporation of Greater Mumbai v Prestress Products (India)180 held that:

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“… it will be unrealistic to expect that the arbitrator must give detailed reasons relating to every minute aspect … arbitrator is expected only to record reasons which would be indicative of his approach and the basis of the decision. The expectation that a ‘technical’ arbitrator must formulate his award much in the nature of the judgment of the Court is unrealistic … adequacy of reasons has … to be assessed by the reviewing Court having regard to the nature of the arbitral dispute. There can be no absolute rule … approach of the Court has to be to sustain the award unless a specific ground as contemplated by the Act has been established for the interference of the Court.”181

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Hence, it is unnecessary for an award to be lengthy. The arbitral tribunal should just identify the issues. It then explains the thought process underlying its decision for each issue.182

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It is not necessary for the arbitral tribunal to set out lists of rival submissions and factual propositions and to set out reasons for choosing between them.183 It is enough if the award demonstrates why the arbitral tribunal found for one party rather than the other.184

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Reasons are to be given after considering all the evidence on record.185 Non-​ consideration of material by the arbitral tribunal, which an ordinary man would have considered, is an indicator of an unreasoned award.186

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A mere recital of the evidence and arguments would not amount to reasons.187 The arbitral tribunal’s reasoning must be intelligible and adequate.188 It must be in the

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1 80. (2002) SCC OnLine Bom 798. 181. Municipal Corporation of Greater Mumbai v Prestress Products (India) (2002) SCC OnLine Bom 798, at para. 16. 182. DDA v Uppal Engineering Construction Co. (1982) SCC OnLine Del 67; Indian Oil Corporation Ltd. v Indian Carbon Ltd. (1988) 3 SCC 36; Cmdr S.P. Puri v Alankit Assignments Ltd. (2008) SCC OnLine Del 985, at para. 9. 183. Finelvet AG v Vinava Shipping Co Ltd. (The Chrysalis) (1983) 1 Lloyd’s Rep 503; Avi Coach Builders v Union of India (2009) SCC OnLine Del 100, at para. 13. 184. Stinnes Interoil GmbH v A Halcoussis & Co, (The Yanxilas) [1982] 2 Lloyd’s Rep 445; Cefetra BV v Alfred C Toepfer International GmbH [1994] 1 Lloyd’s Rep 93. 185. State of Uttar Pradesh v Combined Chemicals Pvt. Ltd. (2011) 2 SCC 151; Jagmohan Singh Gujral of Indian v Satish Ashok Sabnis (2003) SCC Online Bom 335, at para. 20. 186. Caprihans India Ltd. v Hindoostan Mills Ltd. (2019) SCC OnLine Bom 906, at para. 32. 187. Avi Coach Builders v Union of India (2009) SCC OnLine Del 100. 188. Bachawat’s Law of Arbitration and Conciliation (4th edn), pp. 855–​856 (“…‘proper, adequate reasons’. Such reasons shall not only be intelligible but shall be a reason connected with the case which the court can see is proper. Contradictory reasons are equal to lack of reasons.”); Ms Dyna Technologies Pvt. Ltd. v M/​s Crompton Greaves Ltd. (2019) SCC OnLine SC 1656, at para. 37.

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Chapter 36—​Making of the Award

nature of an explanation. It must shed light on the approach and conclusions it has reached.189 Further, it must show application of its mind.190 Hence, all that is required of the arbitral tribunal is to demonstrate why it found for one party instead of the other.191 The arbitral tribunal should also indicate its findings and reasoning on issues argued before it not considered decisive.192

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The Court (Queen’s Bench Division) in Finelvet AG v Vinava Shipping Co Ltd, The Chrysalis193 held that an arbitral tribunal’s reasoning can be divided into three stages:

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“(1) The arbitrator ascertains the facts. This process includes the making of findings on any facts which are in dispute.

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(2) The arbitrator ascertains the law. This process comprises not only the identification of all material rules of statute and common law, but also the identification and interpretation of the relevant parts of the contract, and the identification of those facts which must be taken into account when the decision is reached.

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(3) In the light of the facts and the law so ascertained, the arbitrator reaches his decision.”

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A failure to give reasons goes against the basic concept of justice, and makes the award invalid and unenforceable.194 The High Court of Delhi in Blue Horizon IT Solutions Pvt. Ltd. and Ors. v Anuj Bairathi and Ors.195 held:

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“… if the Arbitrator does not give any reason by ignoring the issue and come to conclusion involved, which speaks otherwise on the face of the record and the findings are perverse, irrational and the reasons are illogical, then the award is to be treated in contravention of Section 31(3) of the Act and liable to be set aside.”196

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189. Som Datt Builders v State of Kerala (2009) 10 SCC 259. 190. State of West Bengal v Afcons Pauling (India) Limited (2013) SCC OnLine Cal 16533 (“… the interpretation given by the arbitrators would have to be a reasonable and/​or plausible interpretation, based on application of mind and not an absurd interpretation that smacks of total non-​application of mind.”). 191. Stinnes Interoil GmbH v A Halcoussis & Co, (The Yanxilas) [1982] 2 Lloyd’s Rep 445; Cefetra BV v Alfred C Toepfer International GmbH [1994] 1 Lloyd’s Rep 93. 192. Transcatalana De Commercio SA v Incobrasa Industrial E Commercial Brazileria SA [1995] 1 Lloyd’s Rep 215. 193. [1983] 1 Lloyd’s Rep 503. 194. Associate Builders v Delhi Development Authority (2015) 3 SCC 49, at para. 36; ONGC Ltd. v Saw Pipes Ltd. (2003) 5 SCC 705. 195. (2016) SCC OnLine Del 4647. 196. Blue Horizon IT Solutions Pvt. Ltd. and Ors. v Anuj Bairathi and Ors. (2016) SCC OnLine Del 4647, at para. 23.

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Law, Practice and Procedure of Arbitration in India

Under the Arbitration Act, 1940 the arbitral tribunal was not required to give reasons in the award, unless explicitly required to do so under the contract.197 However, this position was reversed by the introduction of Section 31(3) in the Arbitration Act. Now, reasons in support of the award are required.198 The Supreme Court of India in Anand Brothers v Union of India199 held that:

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“… In the case of a finding on a legal issue the Arbitrator may on facts that are proved or admitted explore his options and lay bare the process by which he arrives at any such finding. It is only when the conclusion is supported by reasons on which it is based that one can logically describe the process as tantamount to recording a finding. It is immaterial whether the reasons given in support of the conclusion are sound or erroneous. That is because a conclusion supported by reasons would constitute a ‘finding’ no matter the conclusion or the reasons in support of the same may themselves be erroneous in facts or in law. It may then be an erroneous finding but it would nonetheless be a finding. What is important is that a finding presupposes application of mind. Application of mind is best demonstrated by disclosure of the mind; mind in turn is best disclosed by recording reasons.”200

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Therefore, awards are expected to be the products of a high standard emanating from trained, skilled, sophisticated, and experienced arbitral tribunals. However, they need not be as exhaustively detailed as some commercial judgments.

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They only need only deal with issues in a reasonable and commercial way.201 The arbitral tribunal must just make it clear that the contentions of the parties have been considered. There nexus between the pleaded facts and the conclusion drawn be stated explicitly.202

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197. State of Rajasthan v Nav Bharat Construction Co. (2006) 1 SCC 86; Raipur Development Authority v Chokhamal Contractors (1989) 2 SCC 721, at para. 19 (“The arbitrator or umpire is under no obligation to give reasons in support of the decision reached by him unless under the arbitration agreement or in the deed of submission he is required to give such reasons ...”). 198. McDermott International Inc. v Burn Standard Co. Ltd. (2006) 11 SCC 181, at para. 55 (“Another important change which has been made by reason of the provisions of the 1996 Act is that unlike the 1940 Act, the arbitrator is required to assign reasons in support of the award.”); Centrotrade Minerals & Metals Inc. v Hindustan Copper Ltd. (2006) 11 SCC 245, at para. 45 (“In the 1940 Act, no reason was required to be stated in the award unless otherwise agreed upon. In the 1996 Act, reasons are required to be stated unless agreed to otherwise by the parties.”). 199. (2014) 9 SCC 212. See Abhijeet Saraswat v Nalamaty Doraiah 2003 SCC OnLine Bom 1117. 200. Anand Brothers v Union of India (2014) 9 SCC 212, at para. 14. 201. Zermalt Holdings SA v Nu-​Life Upholstery Repair Ltd [1985] 2 EGLR 14; TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd [2013] SGHC 186. 202. Govt. of NCT of Delhi v Ved Prakash Mehta (2005) SCC OnLine Del 948, at para. 6.

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Chapter 36—​Making of the Award

[36.11] THE DECISION Reasons are followed by a summary of the arbitral tribunal’s decision on each of the issues. The decision resolves the disputes and determines if the parties’ claims and counterclaims are allowed, and, to what extent.

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This determination is usually prefaced by the statement: “I therefore find and hold as follows ...” and contains, in short and precise terms, the arbitrator’s determination on each of the questions in issue.

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For example, if the arbitral tribunal is asked, “In the circumstances, is the claimant entitled to a period of 30 working days or any other and if so, any extensions of time to complete the works by reason of encountering rock during the excavation?”

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The arbitral tribunal’s determination would be something like, “Yes; the claimant is entitled to an extension of time of 17 working days whereby the extended date for practical completion of the works was 23rd August 2020”.

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An award must be dispositive, that is, “it must constitute an effective determination of the issues in dispute. It is not sufficient for the arbitral tribunal to issue a vague expression of opinion. The award must be formulated in an imperative tone: ‘we award’, ‘we direct’, ‘we order’ or the equivalent … an award should not direct the parties to perform an illegal act or require the parties to do anything that may be considered contrary to public policy, nor may the award contain any directions that are outside the scope of authority of the arbitral tribunal.”203

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Setting out the outcome of the arbitration in simple terms enables the enforcing court to give effect to the award without difficulty.204

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It is generally prefaced with a statement that the outcome has been reached after considering the pleadings, evidence tendered, legal authorities submitted, submissions made, and issues identified.

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The final award should also deal with payment of interest205 and the costs of arbitration.206

203. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.154. 204. Herman Verbist, Humphrey Lloyd, Marco Darmon, Jean-​ Pierre Ancel, Lord Dervaid and Christoph Leibscher, “Drafting Awards in ICC Arbitrations” (2005) ICC International Court of Arbitration Bulletin 16(2), pp. 19–​40. 205. Arbitration and Conciliation Act, 1996, s. 31(7); English Arbitration Act, 1996, s. 49; SIAC Rules, 2016, r. 32.9; LCIA Arbitration Rules, 2020, art. 26.4. 206. Arbitration and Conciliation Act, 1996, s. 31(8); English Arbitration Act, 1996, s. 61; SIAC Rules, 2016, r. 35; UNCITRAL Arbitration Rules, 2013, art. 42; ICC Rules of Arbitration, 2017, art. 38; LCIA Arbitration Rules, 2020, art. 28.

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Law, Practice and Procedure of Arbitration in India

[36.12] CONCLUSION Institutional arbitration rules as well as national statutes generally contain certain requirements as to the form in which the arbitral award must be made.

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There is no set structure for the award. The arbitral tribunal is free to draft the award as it likes. However, the award must necessarily be in writing for it to be recognised as an arbitral award under most national arbitration statutes. Generally, the award is made in a language that is commonly understood by the parties and the arbitral tribunal. Further, for the arbitral award to be valid it must be signed by all members of the tribunal. Reasons must be provided for any missing signature.

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An award must contain certain essential information. These are the date on which it is made and place of arbitration.

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Additionally, for ease of reading, it is suggested that the arbitral award contain a table of contents, summary of facts, and summary of each parties’ contentions, followed by the list of issues and decision on each issue.

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Once the award is made it has to be delivered to the parties. The responsibility to deliver the award may be on the tribunal or the arbitral institution. Time limits for limitation do not start running until valid delivery of the award has been made.

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A failure to comply with any of these requirements may result in the award being remitted to the arbitral tribunal so that the defects can be remedied. Hence, the arbitral tribunal must ensure that its award satisfies all form requirements at the time of making it.

Chapter 37 SUBSTANTIVE REQUIREMENTS OF AN AWARD [37.1] INTRODUCTION....................................................................................................................... 1051 [37.2] ENFORCEABLE AWARD........................................................................................................... 1052

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[37.3] RESOLVING ALL ISSUES REFERRED.................................................................................... 1054 [37.4] ISSUES BEYOND THE SCOPE OF THE REFERENCE........................................................ 1057 [37.5] AWARD TO BE FINAL AND CONCLUSIVE......................................................................... 1060 [37.6] AWARD TO BE CERTAIN AND CAPABLE OF PERFORMANCE.................................... 1062 [37.7] REASONS FOR THE AWARD................................................................................................... 1065

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[37.8] PARTICIPATION IN MAKING OF THE AWARD................................................................ 1069

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[37.9] CONCLUSION............................................................................................................................. 1071

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[37.1] INTRODUCTION

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Arbitration law and practice has transformed over the last 20 years. The modern arbitrator is expected to be a highly trained, skilled, sophisticated, and experienced professional.

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In fact, arbitrators are frequently either retired judges, highly qualified lawyers, or professionals like architects, engineers, quantity surveyors, and accountants.

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All arbitrators irrespective of their training and background are expected to produce meticulous and precise arbitral award in all of their arbitrations. They need not write an elaborate and detailed judgment like a court does when delivering its award.1

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However, for the award to be binding, safeguards need to be put in place to ensure it is a fair and just determination of the dispute. These safeguards depict the requirements to be satisfied for it to be binding and enforceable. Most authorities explain that the requirements that ensure the award is valid and enforceable come under two heads, namely, the formal and the substantive. This

1. Som Datt Builders v State of Kerala (2009) 10 SCC 259; Victoria Memorial Hall v Howrah Ganatantrik Nagrik Samity (2010) 3 SCC 732; TMM Division Maritime SA de CV v Pacific Richfield Marine Pte Ltd. [2013] SGHC 186; Anant Raj Agencies v Delhi Development Authority (1998) SCC OnLine Del 610; Delhi Development Authority v Uppal Engineering Construction Co. (1982) SCC OnLine Del 67; Gujarat Water Supply and Sewerage Board v Unique Erectors (Gujarat) (P) Ltd. (1989) 1 SCC 532.

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Law, Practice and Procedure of Arbitration in India

chapter deals primarily with the substantive requirements of an award, which ensures its enforceability. These substantive requirements have not been codified in any statute per se, and are found in common law.2 They require that the award: (1) resolve all issues referred to arbitration;



(2) not deal with issues beyond the scope of the arbitration;



(3) be final and unconditional;



(4) be certain and capable of performance;



(5) contain reasons and be capable of enforcement; and



(6) be a result of deliberations of all arbitrators.

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[37.2] ENFORCEABLE AWARD

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An award that does not comply with these substantive requirements, may be enforced to the extent it is valid.3

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The arbitral tribunal cannot guarantee that its award will be enforceable in “whatever country the winner chooses to enforce it.”4 However, the arbitral tribunal must do its best to pass an award that is enforceable.5

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This is easier said than done. The award may be fully compliant with the procedural rules and law governing the arbitration, but fail to comply with a “special requirement” of the “law of the place of enforcement” thereby making it unenforceable.6 Hence, it may be said that:

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“… a duty to render an enforceable award is in practice close to impossible to police. Determining what constitutes an ‘enforceable award’ is an impossible task, as an

2. Robert Merkin, Arbitration Law (LLP 2004), at para. 18.33. 3. Abrathut v Brandon [1713] 1 WLUK 39; Auriol v Smith [1823] 3 WLUK 13; Selby v Whitbread & Co. [1917] 1 KB 736; J.C. Budhraja v Chairman, Orissa Mining Corporation Ltd. (2008) 2 SCC 444; R.S. Jiwani v Ircon International Ltd. (2009) SCC OnLine Bom 2021. 4. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.14. 5. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.14. See SIAC Rules, 2016, r. 41.2; ICC Rules of Arbitration, 2017, art. 42; ICC Arbitration Rules, 2021, art. 42; LCIA Arbitration Rules, 2020, art. 32.2. 6. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.17.

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Chapter 37—​Substantive Requirements of an Award

arbitral tribunal cannot conceivably ensure universal enforceability. Nor can it anticipate all potential places in which enforcement may occur in practice, as now more than ever parties often have a presence or relevant assets in a number of jurisdictions and readily and easily move those assets around …”7

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The New York Convention8 and national arbitration statutes9 provide the circumstances in which enforcement of the award can be refused and the award set aside. As a natural corollary, it follows, that for an award to be enforceable it should not fulfil any of the circumstances justifying setting aside.

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In general, for an award to be enforceable, it must be unconditional, non-​ contradictory, unambiguous,10 certain,11 capable of performance,12 should take into account all relevant material and evidence,13 and should not be against justice or morality.14

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All addressed matters should be arbitrable and not within the exclusive jurisdiction of State courts.15 Further, the award should only deal with issues falling within the terms of the reference to arbitration.16

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If one of the parties to the arbitration is not given proper notice of the appointment of the arbitral tribunal or an opportunity to present its case, the award will not be enforceable.17

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7. Christopher Boog, “The Lazy Myth of the Arbitral Tribunal’s Duty to Render an Enforceable Award” (28 January 2013, Kluwer Blog), available at http://​arbitrationblog.kluwerarbitration.com/​2013/​01/​28/​the-​lazy-​ myth-​of-​the-​arbitral-​tribunals-​duty-​to-​render-​an-​enforceable-​award/​. 8. Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958), art. V. 9. See Arbitration and Conciliation Act, 1996, ss. 34, 48; English Arbitration Act, 1996, ss. 67, 68; UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 34. 10. Mustill and Boyd’s Commercial Arbitration (2nd edn, Butterworths 1989), p. 384. 11. Margulies Bros Ltd v Dafnis Thomaides & Co (UK) Ltd [1958] 1 All ER 777; Cremer v Samanta and Samanta [1968] 1 Lloyd’s Rep. 205; River Plate Products Netherlands BV v Establissement Coargrain [1982] 1 Lloyd’s Rep 628. 12. Lee v Elkins [1706] 1 WLUK 293; Sir William Baillie, Bart v The Edinburgh Oil Gas Light Company [1835] 1 WLUK 306. 13. Associate Builders v. DDA (2015) 3 SCC 49, at para. 31. 14. Ibid, at para. 36–​37, 39. 15. Booz Allen & Hamilton Inc. v. SBI Home Finance & Ors. (2011) 5 SCC 532; Inkometal AG v Koksno Hemijski Kombinat d d Lukavac CLOUT Case 1463 (31 July 2002). 16. MMTC Ltd. v Vedanta Limited (2019) 4 SCC 163, at paras 15, 26; Himachal Pradesh State Electricity Board v RJ Shah & Co. (1999) 4 SCC 214, at para. 26; Pure Helium India Pvt. Ltd. v Oil and Natural Gas Commission (2003) 8 SCC 593, at paras 27–​28, 42; Associated Engineering Co. v Government of Andhra Pradesh (1991) 4 SCC 93, at paras 24–​25; SAIL v Gupta Brothers Steel Tubes Ltd. (2009) 10 SCC 63, at para. 18. 17. Ssangyong Engineering & Construction Co. Ltd. v National Highways Authority of India (2019) 15 SCC 131, at paras 51–​52; S.A. Fasludeen & Ors. v Siyauddin & Ors. (2017) SCC Online Mad 11917, at paras 26–​30; Rudramuni Devaru v Shrimad Maharaj Niranjan Jagadguru (2005) SCC OnLine Kar 173, at para. 21; Sulaikha Clay Mines v Alpha Clay (2004) SCC OnLine Ker 79, at para. 4.

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Law, Practice and Procedure of Arbitration in India

If the arbitral award is in conflict with the public policy of the country where it is being enforced, it will not be enforceable.18 It should be noted, however, that an award is not necessarily invalid merely because it is unenforceable. For example, an arbitral award arising out of a gambling agreement might be unenforceable in India but does not become invalid as a result.

[37.3] RESOLVING ALL ISSUES REFERRED

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The fact that an award is unenforceable does not prevent the award from giving rise to other enforceable legal obligations, breach of which entitles the claimant to a remedy in damages.

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For an award to be valid, the arbitral tribunal must resolve all issues that have been referred to arbitration.19 The arbitral tribunal cannot choose to answer some issues and ignore others20 or embark on its enquiry without regard to the pleaded case.21

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Resolution of issues is a two-​step process. It involves a proposition and a conclusion. A mere narration of the facts and issues, without any determination, would not constitute resolution.22

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Resolution of issues can be done by issuing a single award,23 or, by issuing multiple partial awards.24 James H. Carter suggests that:

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“The arbitral tribunal is to resolve all issues of fact and law that shall arise from the claims and counterclaims and pleadings as duly submitted by the parties, including, but not limited to, the following issues, as well as any additional issues of fact or law which the arbitral tribunal, in its own discretion, may deem necessary to decide upon for the purpose of rendering any arbitral award in the present arbitration.”25

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18. See Renusagar Power Plant Co. Ltd. v General Electric Co. (1994) Supp 1 SCC 644; Oil and Natural Gas Corporation v Saw Pipes Ltd. (2003) 5 SCC 705; Shree Lal Mahal Ltd. v Progetto Grana SPA (2014) 2 SCC 433; Oil and Natural Gas Co. Ltd. v Western Geco Intl. (2014) 9 SCC 263. 19. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​072. See Uttarakhand Purv Sainik Kalyan Nigam Limited v Northern Coal Field Ltd. (2020) 2 SCC 455, at para. 7.12. 20. Bowes v Fernie [1838] 12 WLUK 94; Ross v Boards [1838] 5 WLUK 60; Steel Authority of India Ltd v Hind Metals Inc [1984] 1 Lloyd’s Rep 405. 21. Multiplex Constructions Pty Ltd v International Golf Services Pty Ltd [1988] 4 BCL 320; S & S Constructions Pty Ltd v Fulop [1996] VR 401. 22. See Sections [36.9], [36.10] in Chapter 36. 23. Compagnie Financiere pour le Commerce Exterieur SA v OY Vehna AB [1963] 2 Lloyd’s Rep 178; Petrochemical Industries Company (K.S.C.) v The Dow Chemical Company [2012] EWHC 2739 (Comm). 24. Winter v Munton [1818] 2 Moore CP 723; V.S. Ramanujachariar v Veena Avanna Mana Vatapathra Sayee Thathachariar (1942) SCC OnLine Mad 274. 25. James H. Carter, J. Waincymer, “International Arbitration and the Duty to Know the Law” (2011) Journal of International Arbitration, New York, Volume 28, Issue 3.

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Chapter 37—​Substantive Requirements of an Award

If the arbitral tribunal fails to resolve all the issues raised the award becomes susceptible to challenge.26 However, such a challenge will only succeed if the issue omitted is an important one.27 The award need not deal with issues that become unnecessary to resolve.28 Further, an objection cannot be made if the award deals with all issues raised before the tribunal, though there may be other matters that were not specifically raised.29

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Lastly, the tribunal can reserve an issue for subsequent determination.30

Determining whether the Arbitral Tribunal Has Dealt with All Issues

(1) Was the question an issue?

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Russell on Arbitration states that determination of whether an issue has been dealt with by the arbitral tribunal entails a three-​stage enquiry:31

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To evaluate whether a particular question is an issue, the court must not confine itself to the list of issues prepared by the parties.32 “Issue” must be accorded its natural and ordinary meaning. (2) Was the issue put to the tribunal?

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To determine this, one must examine how the parties formulated their case, and their submissions on the case.33

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(3) Did the arbitral tribunal deal with the issue?

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26. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​079. 27. Fidelity Management SA v Myriad International Holdings BV [2005] EWHC 1193; World Trade Corp Ltd. v C. Czarnikow Sugar Ltd. [2004] EWHC 2332; Checkpoint Ltd. v Strathclyde Pension Fund [2003] EWCA Civ 84; Abuja International Hotels Ltd. v Meridien SAS [2012] EWHC 87; The Secretary of State for the Home Department v Raytheon Systems Ltd. [2014] EWHC 4375 (TCC). 28. HBC Hamburg Bulk Carriers GmbH & Co. KG v Tangshan Haixing Shipping Co. Ltd. [2006] EWHC 3250; Secretary of State for Defence v Turner Estate Solutions Ltd. [2014] EWHC 244. 29. Sutton, Gill, and Gearing QC, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​081; Rees v Francis Waters (1847) 16 M & W 263; Hawksworth v Brammall (1840) 5 My & Cr 281; Yamashita Shinnihon Steamship Co Ltd v Elios SpA, The Lily Prima [1976] 2 Lloyd’s Rep 487; Pacific Recreation Pte Ltd v S Y Technology Inc. [2008] 2 SLR(R) 491; Martin v Thornton (1802) 4 Esp 180; Rees v Francis Waters (1847) 16 M & W 263; Tatem Steam Navigation Co v Anglo-​Canadian Shipping Co [1935] 53 Lloyd’s Rep 161. 30. Van der Giessen-​De-​Noord Shipbuilding Division BV v Imtech Marine & Offshore BV [2008] EWHC 2904; Transition Feeds LLP v Itochu Europe Plc [2013] EWHC 3629; The Secretary of State for the Home Department v Raytheon Systems Ltd. [2014] EWHC 4375 (TCC). 31. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​079. 32. Petrochemical Industries Company (K.S.C.) v Dow Chemical Company [2012] EWHC 2739 (Comm). 33. Petrochemical Industries Company (K.S.C.) v Dow Chemical Company [2012] EWHC 2739 (Comm); Cadogan Maritime Inc. v Turner Shipping Inc. [2013] EWHC 138 (Comm) (“… no particular formality is required. Provided that the claim is before the tribunal and would reasonably be expected to be determined it does not matter how the claim has been placed before the tribunal ...”).

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Law, Practice and Procedure of Arbitration in India

To evaluate this, it is important to examine the language in the award and the reasons provided.34 There is no need to assess whether the issue has been dealt with in a proper manner.35 Arbitral tribunals can help avoid disputes over whether or not all issues have been dealt with by clearly stating whether the award is partial or final.

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The party who seeks to impeach the award bears the burden of proving that the arbitral tribunal has failed to address all issues referred to it.36 It is a rebuttable presumption, in favour of the validity of the award, that the arbitral tribunal has taken account of all the issues argued before it,37 particularly where the award so states.38

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Evidence will be admitted to determine whether the award decides all matters submitted to the arbitral tribunal including evidence as to the scope of the submission39 and a statement by the arbitral tribunal as to what it took into account.40

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The Court (Queen’s Bench Division) in Blackford & Sons (Calne) Ltd v. Christchurch Corp41 requested documents to see exactly what was submitted to the arbitral tribunal for decision.

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Nowadays, arbitrations are recorded and a transcript of proceedings can be obtained. In conjunction with other documentary evidence such as pleadings and counsel’s notes, this will show whether or not an issue was raised during the hearing.

Procedure Where an Arbitral Tribunal Has Failed to Address All Issues

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In the past, an arbitral award that failed to deal with all issues would have been void.42 Now, if either party feels that the tribunal has omitted to address an issue,

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34. Petrochemical Industries Company (K.S.C.) v Dow Chemical Company [2012] EWHC 2739 (Comm). 35. Primera Maritime (Hellas) Ltd. v Jiangsu Eastern Heavy Industry Co. Ltd. [2013] EWHC 3066 (Comm) (“… Provided the tribunal has dealt with it, it does not matter whether it has done so well, badly or indifferently.”). 36. Jewell v Christie 1867 LR 2 CP 296; Davies v Pratt (1855) 17 CB 183; Harrison v Creswick (1853) 13 CB 399; Obaseki Bros v Reif & Son Ltd [1952] 2 Lloyd’s Rep 364. 37. Crofton v Conner (1770) 1 Bro Parl Cas 530; Ingram v Milnes (1807) 8 East 445; Middlemiss & Gould (a firm) v Hartlepool Corp [1973] 1 All ER 172; Fairclough Building Ltd v Vale of Belvoir Superstore Ltd 1993 ADRLJ 12. 38. Hayllar v Ellis (1829) 6 Bing 225; Day v Bonnin (1836) 3 Bing NC 219; Re Brown and Croydon Canal Co (1839) 9 Ad & E 522; Dunn v Warlters (1842) 9 M & W 293; Jewell v Christie (1867) LR 2 CP 296; Re Duke of Beaufort and Swansea Harbour Trustees (1860) 8 CBNS 146; Obaseki Brothers v Reif & Son Ltd [1952] 2 Lloyd’s Rep 364. 39. Duke of Beaufort v Welch (1839) 10 Ad & E 527; Smith v Hartley (1851) 10 CB 800. 40. Aitcheson v Cargey (1824) 2 Bing 199, at 204; Jewell v Christie (1867) LR 2 CP 296; Day v Bonnin (1836) 3 Bing NC 219; Re Brown and The Croydon Canal Co (1839) 9 Ad & E 522; Poliakoff v Stromwall [1921] 8 Lloyd’s Rep 388. 41. [1962] 1 Lloyd’s Rep 349. 42. Wilkinson v Page [1842] 1 WLUK 293; Bhear v Harradine [1852] 1 WLUK 241; Sowdon v Mills (1861) 30 LJQB 175; Wakefield v Llanelly Railway and Dock Co (1864) 55 ER 629; Bowes v Gernie (1838) 4 My & Cr 150; Gisburne v Hart (1839) 5 M&W 50.

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Chapter 37—​Substantive Requirements of an Award

they can request the arbitral tribunal to make an additional award as to those issues.43 If the parties fail to make a request for an additional award and the award is then sought to be set aside on the grounds that it does not address a material issue, the court may remit the award to the arbitral tribunal.44

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The New South Wales Court of Appeal in Aircraft Support Industries Pty Ltd v. William Hare UAE LLC45 dealt with the suggestion that the failure to resolve all issues was a breach of natural justice. It held that practical unfairness and injustice to the party resisting enforcement must be shown to deny enforcement on the ground of the breach of natural justice.

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[37.4] ISSUES BEYOND THE SCOPE OF THE REFERENCE

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An award must not determine issues that are beyond the scope of arbitration.46 This means that:47 (1) The award cannot deal with “a dispute not contemplated, or not falling within the terms of the arbitration agreement, where the tribunal acts outside its jurisdiction, or without jurisdiction”, that is, extra petita (excess of jurisdiction); and



(2) the award cannot decide matters “beyond the scope of the arbitration agreement”, that is, ultra petita (lack of jurisdiction).

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This is because an arbitral tribunal being a creature of contract cannot travel beyond the terms of the contract.48

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The arbitral tribunal is obliged to deal with the issues the parties refer to it.49 It does not have the jurisdiction to decide any issue not referred.50

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43. See Arbitration and Conciliation Act, 1996, s. 33(4); English Arbitration Act, 1996, s. 57(3)(b); UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 33(3). 44. Arbitration and Conciliation Act, 1996, s. 34(4); English Arbitration Act, 1996, s. 68(3). See Sulaikha Clay Mines v Alpha Clay (2004) SCC OnLine Ker 79; Ronly Holdings v JSC Zestafoni G. Nikoladze Ferroalloy Plant [2004] EWHC 1354 (Comm); Lambert & Krzysiak v British Commercial Overseas Co. [1923] 16 L1 LR 51; Ascot Commodities NV v Olam International Ltd. [2002] CLC 777. 45. [2015] NSWCA 229. 46. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​072; Robert Merkin, Arbitration Law (LLP 2004), at para. 18.36. 47. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), p. 908. 48. MD, Army Welfare Housing Organization v Sumangal Services (P) Ltd. (2004) 9 SCC 619, para. 43 (“… jurisdiction of the arbitrator being confined to the four corners of the agreement, he can only pass such an order which may be the subject-​matter of reference.”). See Rashtriya Chemicals v Chowgule Brothers (2010) (8) SCC 563, at paras 20–​25. 49. Timwin Construction Pty Ltd v Façade Innovations Pty Ltd [2005] NSWSC 548; Brodyn Pty Ltd t/​as Time Cost and Quality v Davenport [2004] NSWCA 394. 50. PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2006] SGCA 41.

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Law, Practice and Procedure of Arbitration in India

Pertinently, there is a difference between the arbitral tribunal acting without jurisdiction and the tribunal making a mistake of law within jurisdiction.51 Only the former provides a ground to challenge the award.52

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It is necessary to evaluate whether the claim could be raised before an arbitral tribunal in order to determine whether it has acted in excess of its jurisdiction. If the dispute is not arbitrable or there is a contractual bar to raise the claim, then the award would be in excess of jurisdiction.53

Illustrative Cases

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If the arbitral tribunal is required to adjudicate a single issue concerning the performance of a contract, it is acting beyond its jurisdiction by seeking to rewrite the contract.54

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For example, when the issue was whether correct goods have been delivered, an award that the goods should be accepted subject to price abatement is an excess of jurisdiction.55

Examples of this include:

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(1) Where the arbitral tribunal held that the insurers were entitled to salvage by taking into account the value of claims which were not in issue in the arbitration;57

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If all outstanding issues are not referred to arbitration but the award deals with the entire dispute, then the award becomes susceptible to challenge.56

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51. Misinterpretation of a contract is a mistake of law that does not go to jurisdiction. See Robert Merkin, Arbitration Law (LLP 2004), at para. 18.37. See H.P. SEB v R.J. Shah and Co. (1999) 4 SCC 214, at para. 26 (“… what has to be seen is whether the claimant could raise a particular dispute or claim before an arbitrator. If the answer is in the affirmative then it is clear that the arbitrator would have the jurisdiction to deal with such a claim. On the other hand if the arbitration clause or a specific term in the contract or the law does not permit or give the arbitrator the power to decide or to adjudicate on a dispute raised by the claimant or there is a specific bar to the raising of a particular dispute or claim then any decision given by the arbitrator in respect thereof would clearly be in excess of jurisdiction ...”); SAIL v Gupta Brothers Steel Tubes Ltd. (2009) 10 SCC 63, para. 18; Ssangyong Engineering v National Highways Authority of India (2019) SCC OnLine SC 677, at para. 58. 52. Associated Engineering Company v Government of Andhra Pradesh (1991) 4 SCC 93, at paras 26–​28. 53. Himachal Pradesh State Electricity Board v RJ Shah and Co. (1999) 4 SCC 214; West Bengal State Warehousing Corpn. v Sushil Kumar Kayan (2002) 5 SCC 679. 54. Robert Merkin, Arbitration Law (LLP, London, Singapore 2004), at para. 18.37. 55. Re Hooper & Co. and Balfour Williamson & Co. (1890) 62 LT 646. See Re Green & Co and Balfour Williamson & Co. (1890) 62 LT 325. 56. Robert Merkin, Arbitration Law (LLP 2004), at para. 18.37. 57. Skipper v Grant (1861) 10 CBNS 237.

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Chapter 37—​Substantive Requirements of an Award



(2) where the umpire was asked only to resolve a demurrage dispute but instead also dealt with dispatch money;58 and



(3) where the award covered items appearing in the claimant’s final account, but not in the agreed list of disputed issues.59

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The fact that the arbitral tribunal thinks certain matters should have been referred to arbitration, does not allow it to deal with them in the award.60 The arbitral tribunal cannot make a finding on an issue of fiduciary obligations if neither party has made submissions on this.61

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An award cannot deal with excepted matters, that is, those that have been made non-​arbitrable by agreement.62 The arbitral tribunal cannot award interest,63 liquidated damages,64 or escalation,65 if award of such amounts is prohibited by the terms of the agreement.66

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The award cannot stipulate a remedy that goes beyond the issue the arbitrators have been requested to determine.67 For example, an arbitral tribunal empowered to determine title to land could not order the vendor to provide an indemnity if the purchaser’s title was successfully challenged.68

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The Supreme Court of India in Rajinder Kishan Kumar v. Union of India69 observed that an award of compensation which is outside the scope of reference made to the tribunal is liable to set aside.

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Societe Franco Tunisienne D’ Armement Tunis v Government of Ceylon, The Massalia [1959] 3 All ER 25. Henry Boot Construction Ltd. v DF Mooney (1996) ADRLN 13. Jager v Tolme and Runge [1916] 1 KB 939. Todd Petroleum Mining Co Ltd v Shell (Petroleum Mining) Co Ltd [2005] 2 NZCCLR 266. J.G. Engineers Pvt. Ltd. v Union of India (2011) 5 SCC 758; Grid Corporation of Orissa Ltd. v Balasore Technical School (2000) 9 SCC 552; Harsha Constructions v Union of India (2014) 9 SCC 246. Union of India v Bright Power Projects (I) P. Ltd. (2015) 9 SCC 695; M.B. Patel & Co. v ONGC (2008) 8 SCC 251. BSNL v Motorola India Pvt. Ltd. (2009) 2 SCC 337; Mitra Guha Builders (India) Co. v Oil and Natural Gas Corporation Ltd. (2020) 3 SCC 222. State of Orissa v Sudhakar Das (2000) 3 SCC 27; New India Civil Erectors (P) Ltd. v Oil and Natural Gas Corporation (1997) 11 SCC 75; Union of India v Varindera Constructions Ltd. (2018) 7 SCC 794. C.H. Ramalinga Reddy v Superintending Engineer & Anr (1999) 9 SCC 610; Steel Authority of India v J.C. Budharaja (1999) 8 SCC 122. Robert Merkin, Arbitration Law (LLP 2004), at para. 18.37. Ross v Boards (1838) 8 Ad & El 290. (1998) 7 SCC 129. See Gautam Construction & Fisheries Ltd. v National Bank for Agriculture and Rural Development (2000) 6 SCC 519. Rees v Waters (1847) 16 M & W 263.

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58. 59. 60. 61. 62.

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An award specifying the time and place for satisfaction is an excess of jurisdiction.70

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63. 64. 65. 66.

67. 68. 69. 70.

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Law, Practice and Procedure of Arbitration in India

Lastly, an award cannot regulate the future conduct of the parties in respect of anticipated disputes, yet to arise.71

Consequences of an Excess of Jurisdiction

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In case of a lack and excess of jurisdiction, the arbitral award can be challenged,72 unless it can be demonstrated that the parties entered into an express/​implied agreement to extend the arbitral tribunal’s jurisdiction.73 Even if the excess of jurisdiction was an honest mistake, the award cannot be upheld.74

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Pertinently, if the offending part of the award is severable then the remaining award can be enforced.75 However, if the award is not severable then the entire award may be set aside/​remitted for dealing with issues beyond the scope of reference.76

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An award should be final,77 that is, it should:

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[37.5] AWARD TO BE FINAL AND CONCLUSIVE

(1) be a complete decision on all matters requiring determination;78



(2) complete all proceedings and settle all claims between the parties;79 and



(3) have res judicata effect.80

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For the award to be final, the arbitral tribunal cannot leave matters to be resolved, by other means, at a future date, unless otherwise agreed by the parties.81

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71. Nils Heime Akt v Merel & Co. (1959) 2 Lloyd’s Rep 292. 72. See Arbitration and Conciliation Act, 1996, s. 34(2)(a)(iv); UNCITRAL Model Law, art. 34(2)(a)(iii). 73. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​072; Robert Merkin, Arbitration Law (LLP 2000), at para. 18.36; Furness Withy (Australia) Pty Ltd v Metal Distributors (UK), The Amazonia [1990] 1 Lloyd’s Rep 236. 74. Rajnaraian Misra v Union of India [1953] 91 CLJ 145. 75. Abrathut v Brandon [1713] 1 WLUK 39; Auriol v Smith [1823] 3 WLUK 13; Selby v Whitbread & Co. [1917] 1 KB 736; J.C. Budhraja v Chairman, Orissa Mining Corporation Ltd. (2008) 2 SCC 444; R.S. Jiwani v Ircon International Ltd. (2009) SCC OnLine Bom 2021. 76. Bigney v Johnson (2002) Sask DJ 709; Pacol Ltd. v Joint stock Co Rossakhar [1999] 2 All ER (Comm) 778; D.C.M. Ltd. v Municipal Corporation of Delhi (1997) 7 SCC 123. 77. See Chapter 35 for a detailed discussion on types of awards. 78. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​072. 79. Julian D Lew, Loukas Mistelis, and Stefan Kroll, Comparative International Commercial Arbitration (Kluwer Law International 2003), p. 632. 80. Shell Egypt West Manzala GmbH and Another v Dana Gas Egypt Limited [2009] EWHC 2097 (Comm). 81. Robert Merkin, Arbitration Law (LLP 2004), at para. 18.38. See Chiswell Shipping Ltd. v State Bank of India, The World Symphony (No 2) [1987] 1 Lloyd’s Rep 157.

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Chapter 37—​Substantive Requirements of an Award

The final award renders the arbitral tribunal functus officio.82 The arbitral tribunal cannot make an award that requires exercise of a future power.83 Neither can the award be made conditional upon a ruling/​some other action of a court.84 However, if the issue delegated to the court is formal,85 or if the condition can be severed without it affecting the intelligibility of the award,86 it will be valid.

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An award that amounts to delegation of judicial discretion to a third-​party expert will have to be set aside/​remitted.87 In such cases, the court will sever the offending condition and determine if the remainder of the award is sufficiently complete to be enforced.88

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Further, an award will not be final if it gives the parties the right to avoid its terms or discretion as to whether the terms should be carried out.89

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However, the award may provide for alternative methods of performance. For instance, an award may provide, in alternative, payment of a sum of money or provision of satisfactory security90 and delivery of goods or the payment of damages.91

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If one of the alternatives is incapable of performance, either as a matter of law, or practicality, that alternative may be severed and the award saved.92

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An award will not be final if it fails to give necessary directions.93 However, an award that provides for conditional, specific relief is final and conclusive.94

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Hence, an award is final in the sense that, whether wrong or right, it is reached fairly, after giving adequate opportunity to the parties to present their case.95

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82. See Section [38.1] in Chapter 38 for more discussion. 83. Re O’Connor and Whitlaw (1919) 88 LJKB 1242; Thinne v Rigby (1612) Cro Jac 314; Winch v Sanders (1619) Cro Jac 584; Selby v Russell (1697) 12 Mod Rep 139. 84. Robert Merkin, Arbitration Law (LLP 2004), at para. 18.40. 85. Lingood v Eade (1742) 2 Atk 501. 86. Barton v Ranson (1838) 3 M & W 322; Re wright and Cromford Canal Co. [1841] 1 QB 98. 87. Tomlin v Fordwich Corporation (1836) 5 Ad & El 147; Re Goddard and Mansfield (1850) 1 LM & P 25. 88. Re Goddard and Mansfield (1850) 1 L M & P 25. 89. Baillie v Edinburgh Oil Gas Light Co. (1835) 3 CI & Fin 639; Miller v De Burgh 1850 4 Exch 809; Watson v Watson (1648) Sty 28; Thursby v Halburt (1689) 1 Show 82; Glover v Barry 2 Lut App 1597; Pedley v Goddard (1796) 7 Term Rep 73. 90. Simmonds v Swaine (1809) 1 Taunt 549. 91. Gabriel v Longton 26 LTOS 257. 92. Wharton v King (1831) 2 B & Ad 528. 93. Johnson v Wilson (1741) 125 ER 1156. 94. U&M Mining Zambia Ltd. v Konkola Copper Mines plc [2014] EWHC 2374 (Comm). 95. A.K. Patel and Company, Surat and Anr. v Tata Finance Limited and Anr. (1996) SCC OnLine Bom 387, at para. 9.

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Law, Practice and Procedure of Arbitration in India

A final award can be interfered with, only in limited circumstances, by the court.96 The court cannot exercise appellate jurisdiction over an award passed by the arbitral tribunal.

[37.6] AWARD TO BE CERTAIN AND CAPABLE OF PERFORMANCE

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For an award to be valid, it must be certain.97 No technical expressions are required,98 but the award should be in clear and unambiguous terms,99 internally consistent,100 and capable of performance.101 It must impose an obligation and not take the form of a recommendation.102

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An award should be expressed such that no reasonable doubt can arise on its face.103 If the award is uncertain or ambiguous, it will become susceptible to challenge.104 A losing party can immediately object to an ambiguous award on grounds that it is unclear as to what has been decided.

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Hence, when providing relief, the award must set forth the duties imposed on the parties in clear terms.105 The award should clearly state what amount is to be paid,106 by whom and to whom,107 what is required to be done and which party is required to do it,108 and the form of security to be provided.109

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96. See Arbitration and Conciliation Act, 1996, ss. 34, 48. 97. Mercury Oil Refining Co. v Oil Worker Intern, Union CIO 187 F.2d 980. 98. Eardley v Steer (1835) 4 Dowl. 423 4 LJ. Ex 293. 99. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​073. See Transfield Projects (M) Sdn Bhd v Malaysian Airline System Bhd [2001] 2 MLJ 403; Tongyuan (USA) International Trading Group v Uni-​Clan Ltd [2001] WL 98036; Usaha Damai Sdn Bhd v Setiausaha Kerajaan Selangor [1997] 5 MLJ 601; Sopers Hole Corporation Ltd v Sandstorm Virgin Islands Ltd [1984] 34 WIR 110. 100. Transfield Projects (M) Sdn Bhd v Malaysian Airline System Bhd [2001] 2 MLJ 403; Fenton v Dimes (1840) 9 LJQB 297. 101. Robert Merkin, Arbitration Law (LLP 2004), at para. 18.44. 102. Robert Merkin, Arbitration Law (LLP 2004), at para. 18.44. See Matson v Trower 1824 Ry. & M.17; Lock v Vulliamy 1833 5 B&Ad 600. 103. Matson v Trower 1824 Ry. & M. 17 (“I am of opinion that A is entitled to claim of B £134 for non-​performance of his contract” will constitute an award); Smith v Hartley (1851) 20 LJCP 169 (a request was held to be equivalent to a direction to pay); Lock v Vulliamy (1833) 5 B. & Ad. 600 (held not to be an award because it did not express a decision that A was entitled to the money and only recommended that a sum be paid). 104. Official Assignee v Chartered Industries of Singapore [1978] 2 MLJ 99; Middlemiss & Gouldv Hartepool Corpn [1972] 1 WLR 1643; Harrison v Creswick (1853) 13 CB 399; Sir Mark Wood, Bart v Edmund Griffith (1818) 1 Swans 43; Re Marshall and Dreser (1843) 3 QB 878. 105. Sutton, Gill, and Matthew Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​089. 106. Marguiles Bros Ltd. v Dafnis Thomaides & Co. (UK) Ltd. [1958] 1 Lloyd’s Rep 250; River Plate Products Netherlands BV v Establissement Coargrain [1982] 1 Lloyd’s Rep. 628; Hewitt v Hewitt [1841] 1 QB 110. 107. Tidswell (1863) 33 Beav 213. 108. Lawrence v Hodgson (1826) 1 Y. & J. 16; Re Smith and Wilson 1848 2 Ex. 327; Rainforth v Hamer (1855) 25 L.T. (O.S.) 247. 109. Thinne v Rigby (1612) Cro Jac 314.

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Chapter 37—​Substantive Requirements of an Award

Even if the person who is to receive payment as a result of the award is not named, the person must be sufficiently identified for the award to be certain.110 The award should also provide an exact description of the subject matter affected by the award.111

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The award will be certain even if it does not state the amount to be paid, as long as it sets out the method for calculation of the amount, such that all that is required to determine the actual amount is simple arithmetic.112 This extends to a situation in which an uncertain sum is to be ascertained by clear criteria or is to be divided in fixed proportions between the parties.113 An example of this principle is a proviso that costs be taxed.114

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Further, an award will be certain even if it does not impose a time limit for compliance115 or is in the alternative.116

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The Court of Chancery in Hopcraft v. Hickman117 held an award that provided for a price increase or decrease according to the acreage of a certain estate to be bad for uncertainty.

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An award which stipulated that there should be a partition between the parties, but gave no directions on making the partition effectual, is uncertain and invalid.118

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Where a sum of money was claimed but the award referred to goods being invoiced at a certain price, the award was held to be bad.119 However, a recommendation, which does not form part of the award, will not invalidate the whole award.120

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110. Hare v Fleay (1851) 11 CB 472; Re Tidswell (1863) 33 Beav 213; Bailey v Curling 20 LJQB 235. 111. Pathow v King (1733) 2 Barn KB 386; Doe d Madkins v Horner (1838) 8 Ad & El 235; Price v Popkin (1839) 10 Ad & El 139; Mays v Cannell (1854) 15 CB 107; Kendal v Symonds (1855) 3 CLR 322. Cf. Round v Hatton (1842) 10 M & W 660; Smith v Pinder (1837) 6 LJ Ex 232. 112. Higgins v Willes 1828 3 M&R 382; Hopcraft v Hichman (1824) 2 S&S 130. 113. Lingood v Eade (1742) 2 Atk 501; Wohlenberg v Lageman (1815) 6 Taunt 251; Hopcraft v Hickman (1824) 2 Sim & St 130; Wood v Wilson (1835) 2 Cr M & R 241; Platt v Hall (1837) 2 M & W 391; Waddle v Downman (1844) 12 M & W 562; Perry v Mitchell (1844) 12 M & W 792; Fabrica Lombarda di Acido Tartarico v Fuerst Bros Ltd (1921) 8 Ll L Rep 57. 114. Cargey v Aitcheson (1823) 2 B & C 170. 115. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​093. 116. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​094. See Wharton v King (1832) 2 B & Ad. 528. 117. (1824) 2 Sim & St 130. 118. Johnson v Wilson (1741) Willes 248. 119. Oricon Waren-​Handelgesellschaft MbH v Intergraan NV [1967] 2 Lloyd’s Rep 82, at p. 98. 120. Price v Hollis (1813) 1 M & S 105.

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Law, Practice and Procedure of Arbitration in India

The Arbitration Act does not impose an obligation on the arbitral tribunal to issue a clear and unambiguous award.121 However, the Arbitration Act empowers the arbitral tribunal to interpret any aspect of the award, if requested by the parties.122 This prevents an award from being invalidated and the arbitration proceedings rendered void because of poor drafting by the arbitral tribunal.123

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On Drafting Awards124

The arbitral tribunal may express the award in such language as it thinks fit, provided it is certain.125 Expressing the award in commercial terms rather than legal ones is entirely acceptable.126

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Indeed, a non-​lawyer arbitrator should be wary of the use of legal terms and maxims. He runs the risk of getting the principles right but can easily obscure his meaning through inappropriate legalese.

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The award should be drafted to prevent any reasonable doubts as to its meaning.127 Plain and simple language should be the rule, not the exception. Jargon is to be avoided. Short sentences are invariably better than long sentences. Short words are better than long ones. Emotive language should be avoided.

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The award must stand alone in that it should be possible for an outsider to the case to understand the decision and how the arbitrator arrived at the same. It should not require reference to anything else to be sure of its meaning. A good award has much in common with a good expert report.

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Therefore, the award is good as long as its meaning is clear.128 In determining whether an award is sufficiently certain, the court can refer to the submission or admit extraneous evidence to resolve ambiguity and determine what was actually in dispute.129

121. 122. 123. 124. 125. 126. 127. 128. 129.

See Arbitration and Conciliation Act, 1996, s. 31. Arbitration and Conciliation Act, 1996, s. 33(1)(b). See English Arbitration Act, 1996, s. 57(3)(a). For more discussion, see Section [38.7] in Chapter 38. See also Section [36.8] in Chapter 36. Giacomo Costa Fu Andrea v British Italian Trading Co Ltd [1962] 2 All ER 53; Lock v Vulliamy (1833) 5 B & Ad 600. Navigation Sonamar Inc v Algoma Steamships Limited CLOUT Case No. 10 (16 April 1987). Dyna Technologies v Crompton Greaves (2019) SCC OnLine SC 1656. Eardley v Steer 4 LJ Ex 293; Giacome Costa Fu Andrea v British Italian Trading Co Ltd [1963] 1 QB 201. Plummer, Administratrix of M Thompson, Deceased v Lee (1837) 2 M & W 495; Gordon v Whitehouse (1856) 18 CB 747; Round v Hatton (1842) 10 M & W 660; Wrightson v Bywater (1838) 3 M & W 199.

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Chapter 37—​Substantive Requirements of an Award

The International Arbitration Practice Guideline as prepared by the Chartered Institute of Arbitrators provides useful pointers to be considered while drafting an arbitration award: “(a) … The award should describe the process by which the arbitrators have been appointed and basis for their jurisdiction to resolve the dispute. It should also contain a brief procedural history of the main stages in the arbitration, referring to preliminary conferences, exchanges of documents, hearing and post-​hearing exchanges …



(b) … It is good practice to request the parties to provide a list, preferably agreed between them, and/​or ask them to comment on the list prepared by the arbitrators in order to make sure that all of the disputed issues have been included and that all matters fall within the arbitrators’ jurisdiction …



(c) … arbitrators should include a description of all claims and counterclaims, if any …”.130

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[37.7] REASONS FOR THE AWARD131

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Earlier, awards made by technical arbitrators were very brief. They were normally only two to three pages long. They did little more than identify the parties, describe the dispute, recite how the arbitrator came to be appointed, and provided a bare decision on the substantive matter and costs.

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Such awards are now outdated. There is a strong demand, and an increasing expectation, that the arbitral tribunal will give detailed reasons at the time of issuing its award.132 Further, now arbitral awards must compulsorily contain reasons to be valid.133

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While the arbitral tribunal is not obligated to deal with every argument put forward by the parties,134 it must, by way of reasons, show the evidential route by

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130. International Arbitration Practice Guideline, Drafting Arbitral Awards, Part I –​General, Chartered Institute of Arbitrators, pp. 18–​19. 131. For a detailed discussion on what constitutes “reasons”, the rationale behind the requirement of reasons. and how an award should deal with reasons, kindly refer to Section [36.10] in Chapter 36. 132. See Justice Bingham, “Reasons and Reasons for Reasons: Differences Between a Court Judgment and an Arbitration Award” (April 1988) Arbitration International, Vol. 4, Issue 2, 1, at pp. 141–​154. 133. Arbitration and Conciliation Act, 1996, s. 31(3); English Arbitration Act, 1996, s. 52(4); UNCITRAL Model law on International Commercial Arbitration, 1985, arts 31(2); paras 33–​34; State of Uttar Pradesh and Others v Combined Chemicals Company Private Limited (2011) 2 SCC 151, at para. 31; Punjab State Electricity Board and Another v Punjab Pre-​Stressed Concrete Works (2002) 9 SCC 740; Dyna Technologies v Crompton Greaves (2019) SCC OnLine SC 1656, at paras 28, 35; McDermott International Inc. v Burn Standard Co. Ltd. (2006) 11 SCC 181, at paras 55–​57. 134. Checkpoint Ltd v Strathclyde Pension Fund [2003] EWCA Civ 84.

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Law, Practice and Procedure of Arbitration in India

which it arrived at its conclusion.135 This is so that the base of its conclusion136 can be ascertained.137 Uncertainty of reasoning does not necessarily result in an award being set aside.138 Even if the award is an unreasoned one, the court should, as far as possible, construe it in such a way as to make it valid, rather than invalid.139

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This is because, “as a matter of general approach, courts strive to uphold arbitration awards” and do not “approach them with a meticulous legal eye endeavoring to pick holes, inconsistencies and faults” to frustrate the arbitral proceedings.140

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Hence, even if the award contains insufficient facts to enable the court to determine whether the arbitrator’s conclusion is justified, there is a presumption in favour of validity of the award.141

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Concurring and Dissenting Awards

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If a party receives an unreasoned award, it may apply to the court for reasons.142 The potential difficulty is that this requires the agreement of both parties, at a point in proceedings where the parties may not be willing to cooperate.143

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All decisions are to be made by a majority of the arbitral tribunal.144 An arbitrator who “agrees with the result of the arbitration”, but does not agree with “the reasoning” or “the way in which the award is formulated” can issue a separate opinion known as a concurring opinion.145

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135. DDA v Uppal Engineering Construction Co. (1982) SCC OnLine Del 67; Indian Oil Corporation Ltd. v Indian Carbon Ltd. (1988) 3 SCC 36; Cmdr S.P. Puri v Alankit Assignments Ltd. (2008) SCC OnLine Del 985, at para. 9; College of Vocation Studies v S.S. Jaitley (1987) SCC OnLine Del 34, at para. 19. 136. SEF Construction Pte Ltd v Skoy Connected Pte Ltd [2009] SGHC 257, at para. 60. 137. World Trade Corp Ltd v C Czarnikow Sugar Ltd [2005] 1 Lloyd’s Rep 422. 138. Moran v Lloyd’s [1983] QB 542. 139. J H Rayner (Mincing Lane) Ltd v Shaher Trading Co [1982] 1 Lloyd’s Rep 632. 140. Zermalt Holdings SA v Nu-​Life Upholstery Repairs Ltd [1985] 2 EGLR 14; TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd [2013] SGHC 186; Vijay Karia v Prysmian Cavi E Sistemi SRL 2020 SCC OnLine SC 177. 141. Dyna Technologies v Crompton Greaves (2019) SCC OnLine SC 1656, at para. 24 (“… arbitral awards should not be interfered with in a casual and cavalier manner, unless the Court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award …”). 142. Arbitration and Conciliation Act, 1996, s. 33(1)(b); English Arbitration Act, 1996, ss. 57, 68(2)(h). 143. This is to be contrasted with the power under English Arbitration Act 1996, s. 57(3)(a), which can be applied for unilaterally and has been held to include seeking reasons; see Torch Offshore LLC v Cable Shipping Inc [2004] EWHC 787 (Comm). 144. Arbitration and Conciliation Act, 1996, s. 29(1); English Arbitration Act, 1996, s. 22(2); UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 29. 145. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.128.

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Chapter 37—​Substantive Requirements of an Award

Alternately, if the arbitrator does not agree with the decision of the majority, he may refuse to sign the award,146 or, explain the reasons for his dissent in a separate dissenting opinion.147 Issuance of such separate dissenting opinions is rare in international commercial arbitration.148

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Dissenting or concurring opinions do not form a part of the award. They do not have any of the legal consequences of an award.149 Most national arbitration statutes and institutional arbitration rules do not specifically address dissenting and concurring opinions.150 Only the ICSID Rules expressly acknowledge the right of an arbitrator to issue a dissenting opinion.151

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One may well have their doubt as to why the dissenting opinion should be allowed. Russell suggests that dissenting opinions in arbitration are not useful since:

(1) There is “no appeal from the award of an arbitral tribunal” and “there exists no system of stare decisis in international arbitration” and so dissenting opinions do not contribute to the development of law;152



(2) such opinions may “endanger the efficacy of the process by threatening the validity and enforceability of the award”153 since they create an opportunity for the losing party to challenge the award; and



(3) they raise doubts as to the impartiality/​independence of arbitrators.154

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146. This does not prevent the award from becoming final. See Arbitration and Conciliation Act, 1996, s. 31(2); English Arbitration Act, 1996, s. 52(3); UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 31(1); UNCITRAL Arbitration Rules, 2013, art. 34(4); LCIA Arbitration Rules, 2020, art. 26.6. 147. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3304. 148. Ibid, p. 3305. 149. B v A [2010] EWHC 1626. 150. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3306. However, the right of an arbitrator to issue a dissenting opinion has been recognised by courts. See Axios Navigation Co. Ltd. v Indian Oil Corporation Ltd. (2012) SCC Online Bom 4, at para. 15 (“… every arbitrator … is entitled to express his opinion … to say that the dissenting arbitrator should not express his opinion and/​or should not sign even the award, considering the scheme and purpose of the Arbitration Act, and/​or the principle of fair and equitable justice, will cause hardship and injustice will hamper the scheme of the Arbitration Act, where the parties are entitled to choose their private judge and also entitled to know the view or opinion on the dispute raised.”); Bank Mellat v GAA Development Construction Co. [1988] 2 Lloyd’s Rep 44. 151. Convention on the Settlement of Investment Disputes between States and Nationals of Other States, art. 48(4); ICSID Rules of Procedure for Arbitration Proceedings (Arbitration Rules), r. 47(3). 152. Nigel Blackaby, Constantine Partasides, Alan Redfern and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.136. 153. Ibid, at para. 9.137. 154. Ibid, at para. 9.138 (“… when a dissenting arbitrator disagrees with the majority and does so in terms that favour the party that appointed him or her, it may cause some concern: does the dissent arise from an honest difference of opinion, or is it influenced by a desire to keep favour with the party that appointed the dissenting arbitrator?”).

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Law, Practice and Procedure of Arbitration in India

Notwithstanding the above, the right to provide a dissenting or concurring opinion is “an appropriate concomitant of the arbitrator’s adjudicative function and the tribunal’s related obligation to make a reasoned award.”155 Further a court when deciding objections to the majority award can examine the dissenting opinion.156

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Reasons not Forming Part of the Award

Earlier there was no statutory requirement to issue reasoned awards.157 The award did not generally contain reasons to avoid interference of courts.158

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It was then common practice for the arbitral tribunal to make an unreasoned award, and then provide the parties with a separate, confidential document containing reasons.159 When this was done, since the reasons were not part of the award, they were not available to the court for examination.160

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The Commercial Court (Queen’s Bench) in Atlantic Lines & Navigation Co Inc v. Italmare SpA, The Apollon161 held that the separate document containing reasons could not be relied upon by the Court to challenge the award. However, they were relevant to determine whether the proceedings had been conducted in an irregular fashion.

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However, this practice has floundered after the decision in The Montan,162 where the court made it clear that they would consider such “external” reasons.

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Further, the Court (Queen’s Bench Division) in BP Chemicals Ltd v. Kingdom Engineering (Fife) Ltd163 held that a separate document containing reasons and sent by the arbitral tribunal to the parties with the award constituted a reasoned award. This was despite the arbitral tribunal’s later communication which stressed that the document was confidential.

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Hence, parties should either agree that the award will not contain reasons, or accept that any reasons may enter the public domain if the award is challenged.

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155. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3307. 156. Axios Navigation Co. Ltd. v Indian Oil Corporation Ltd. (2012) SCC Online Bom 4; Oil & Natural Gas Corporation Ltd. v Schlumberger Asia Services Ltd. (2006) SCC OnLine Del 1072. 157. The requirement to give reasons was introduced in the Arbitration and Conciliation Act, 1996 and English Arbitration Act, 1996. 158. Robert Merkin, Arbitration Law (LLP 2004), at para. 18.45. 159. Ibid. 160. Ibid. 161. [1985] 1 Lloyd’s Rep 597. 162. Mutual Shipping Corp v Bayshore Shipping Co, The Montan [1985] 1 All ER 520. See Tame Shipping Ltd v Easy Navigation Ltd, The Easy Rider [2004] EWHC 1862 (Comm), [2004] 2 All ER (Comm) 521; SJW Facades Ltd v Bowen Construction Ltd [2009] IEHC 49. 163. [1994] 2 Lloyd’s Rep 373.

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Chapter 37—​Substantive Requirements of an Award

[37.8] PARTICIPATION IN MAKING OF THE AWARD Normally, national arbitration legislations and institutional arbitration rules provide that decisions164 of the arbitral tribunal shall be made by a majority of its members,165 unless the parties have agreed to the contrary.166

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Importantly, a dissenting arbitrator is not to be excluded from the decision-​ making process.167 It is essential for the entire arbitral tribunal to participate in the decision-​making process168 by way of joint deliberation169, failing which the award may be vitiated.

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However, a party to the arbitration can waive the requirement of participation of all members of the tribunal at every hearing, and in case of such waiver, the award will not be invalid for reason of lack of joint participation.170

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164. See National Highways Authority of India v Hindustan Construction Co. Ltd. 2015 SCC OnLine Del 10086, at paras 15, 20 (“… could even include a decision on the place of arbitration.”). 165. Arbitration and Conciliation Act, 1996, s. 29(1); English Arbitration Act, 1996, s. 22(2); UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 29; SIAC Rules, 2016, r. 32.7; UNCITRAL Arbitration Rules, 2013, art. 33(1); ICC Rules of Arbitration, 2017, art. 32(1); LCIA Arbitration Rules, 2020, art. 26.5. See Moti v Sheroo Jal Vakil (2009) SCC OnLine Bom 604. 166. See N.S. Nayak & Sons v State of Goa (2003) 6 SCC 56, at para. 14 (“… right is given to the parties to decide their own procedure. So if there is an agreement between the parties with regard to the procedure to be followed by the arbitrator, the arbitrator is required to follow the said procedure …”). 167. Chandok Machineries v S.N. Sunderson (2018) SCC Online Del 12782, at para. 10–​11 (“… general rule of Section 31(1) and the requirement in Section 31(2) that reasons be given for the absence of the signature of any member of the tribunal, are more in the nature of procedural safeguards to ensure that all members of the tribunal had the opportunity to participate in the decision-​making process.”). 168. Robert Merkin, Arbitration Law (LLP 2004), at para. 18.53. R.R. Hi-​Tech Engineering Pvt. Ltd. v Union of India (2010) SCC OnLine Bom 1349, at para. 5 (“… it is necessary that they all participate in the making of the award ... An award cannot be made or even be said to be finalised unless all the members of the arbitral tribunal are parties thereto. The only formality dispensed with by section 31(2) is the requirement of the signature of the minority members … the participation of the members of the arbitral tribunal whose signature is not appended to the award in the making of the award is mandatory.”). 169. Abu Hamid Zahiea Ala v Golam Sarwar (1916) SCC OnLine Cal 183 (“… parties to the submission have the right to the presence and effect of the arguments, experience and judgment of each arbitrator at every stage of the proceedings, so that by conference they may mutually assist each other in arriving at a just conclusion, it is essential that there should be unanimous participation by the arbitrators in consulting and deliberating upon the award to be made; the operation of this rule is in no way affected by the fact that authority is conferred upon the arbitrators to make a majority award; even where less than the whole number of arbitrators may make a valid award, they cannot do so without consulting the other arbitrators.”); Rudramuni Devaru v Shrimad Maharaj Niranjan Jagadguru (2005) SCC OnLine Kar 173, at para. 20 (“… what was of importance and need was the joint deliberation from amongst all the members of the arbitral tribunal. There is a sound rationale behind the insistence that in a multimember body all the members should participate on all the material dates of enquiry. That insistence helps the members of the arbitral tribunal to influence/​pursue each other, to appreciate each other’s view-​point and ultimately to arrive at a conscious and unanimous opinion, if that is possible or to accept the opinion of the majority with respect and perfect understanding. The arbitral tribunal in this case is deprived of the essence of deliberations from amongst all the members of the arbitral tribunal …”); Faze Three Exports Ltd. v Pankaj Trading Co. (2003) SCC OnLine Bom 1024, at para. 17. 170. Bajjuri Ramakistam v Bhoopati Somalingam (1962) SCC OnLine AP 4, at paras 12–​15; Laxmibai v Manek Patel (1942) SCC OnLine Bom 124, at paras 7–​10; Ramnath Misra v Ramaranjan Misra (1922) SCC OnLine Cal 151.

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Further, if one of the arbitrators withdraws from the proceedings before pronouncement of the award, the award will still be valid.171 “Joint deliberation” does not mean that the arbitrators have to meet in person, post the hearings, to discuss the matter.172 The former President of the LCIA, on the process of deliberation, explained that:

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“While it is important for the chairman not to rush his fellow arbitrators into reaching a definitive decision on all outstanding issues –​indeed, it is incumbent on the chairman to remind the members of the tribunal that their work is only just beginning and that any opinions expressed will be considered to be provisional … No member of the tribunal must exert any pressure on his colleagues during this first session. This initial session should provide an opportunity for all arbitrators to engage in a relaxed dialogue with one another. Each arbitrator must feel that he is allowed to ‘think out loud’ in this informal setting.”173

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Separately, the presiding arbitrator may be given the discretion to decide questions of procedure, by himself.174

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Although the arbitral tribunal may take the assistance of experts175 when drafting the award, it cannot delegate its decision-​making power to a third party.176

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In England, the statute draws a distinction between decision making in arbitral tribunals headed by a chairman and umpire. In the former case, in the absence of party agreement to the contrary, “decisions, orders and awards” are to be made by a majority of the arbitrators. The view of the chairman prevails only when there is “neither unanimity nor a majority”.177

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171. CIMMCO Ltd. v Union of India (2019) SCC OnLine Del 7655, at paras 88–​90. 172. Reserve Bank of India v S.S. Investments and Others (1992) 4 SCC 671, at para. 17 (“… Discussions do ordinarily take place during the course of the arguments between counsel and the Judges or arbitrators … Discussions also, ordinarily, take place between the judge or arbitrators inter se during the course of the hearings and immediately before or after the same. It is not, therefore imperative that arbitrators should meet upon the conclusion of the hearings to discuss the matter…”); Zuari Maroc Phosphate Ltd. v Union of India 2017 SCC OnLine Del 7968, at paras 41, 43. 173. Fortier, “The Tribunal’s Deliberations’ in Newman and Hill (eds), The Leading Arbitrators’ Guide to International Arbitration (2nd edn, Juris 2008), pp. 479–​480. 174. Arbitration and Conciliation Act, 1996, s. 29(2); UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 29; UNCITRAL Arbitration Rules, 2013, art. 33(2). 175. See Arbitration and Conciliation Act, 1996, s. 26; English Arbitration Act, 1996, s 37. 176. Agrimex Ltd v Tradigrain, SA, [2003] EWHC 1656 (Comm) (“… if an arbitrator employs a draftsman, the function of that draftsman is limited; it is the function of the tribunal itself to decide on the findings of fact, to evaluate and analyse the submissions of law and to arrive at their own reasons for their decisions. The arbitral tribunal must reach its own decision on these matters and must communicate those decisions in sufficient detail to the draftsman bearing in mind his function is limited to setting out what he has been told …”); Bhuwalka Brothers Ltd. v Fatehchand Murlidhar (1950) SCC OnLine Cal 35. 177. English Arbitration Act, 1996, s. 20.

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Chapter 37—​Substantive Requirements of an Award

This is similar to the position under the SIAC Rules, 2016,178 ICC Rules, 2017,179 ICC Rules, 2021,180 and LCIA Rules, 2020,181 where failing a majority, the “presiding arbitrator alone” makes the award. In the latter case, in the absence of party agreement to the contrary, all “decisions, orders and awards” are to be made by the other arbitrators. Only if they are not able to decide will the umpire have the power to make decisions as if he were the sole arbitrator.182

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A failure on part of one arbitrator to cooperate in the making of the award, despite having been given a “reasonable opportunity” to do so, will not preclude the others from proceeding with the arbitration under the SIAC arbitration rules.183 However, the remaining arbitrators must:184

(1) give written notice of failure or refusal of the arbitrator to the registrar; and



(2) explain the reasons for proceeding without the absent arbitrator, in the award.

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Similar is the position for an arbitration conducted under the auspice of the LCIA.185

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[37.9] CONCLUSION

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Lastly, the arbitral tribunal, arbitral institution, and parties are bound to maintain confidentiality of arbitration proceedings, save where disclosure is required for the implementation and enforcement of the arbitral award.186

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The arbitral tribunal’s duty to ensure that its award is reasoned and enforceable. Though ensuring universal enforceability is difficult, in general, the arbitral tribunal should strive to ensure that certain basic substantive requirements are satisfied. This reduces the scope for challenges to an award.

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The award must be final and conclusive as to all the issues that it determines. Further, it must be expressed in clear and certain terms. Any ambiguity provides a ground to challenge the award.

178. 179. 180. 181. 182. 183. 184. 185. 186.

See SIAC Rules, 2016, r. 32.7. ICC Rules of Arbitration, 2017, art. 32(1). ICC Arbitration Rules, 2021, art. 32(1). LCIA Arbitration Rules, 2020, art. 26.5. English Arbitration Act, 1996, s. 21. SIAC Rules, 2016, r. 32.6. SIAC Rules, 2016, r. 32.6. LCIA Arbitration Rules, 2020, art. 12. Arbitration and Conciliation Act, 1996, s. 42A; SIAC Rules, 2016, r. 39; UNCITRAL Arbitration Rules, 2013, art. 34(5); LCIA Arbitration Rules, 2020, art. 30.

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Law, Practice and Procedure of Arbitration in India

The award must also be well reasoned. All the issues referred to arbitration must be finally determined, and accompanied with the reason for such determination. Importantly, the entire arbitral tribunal must participate in the decision-​making process for the award to be valid. Though dissent is permitted, presence of all arbitrators during the proceedings is essential.

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Certain institutional rules allow the arbitral tribunal to proceed with the arbitration, if an arbitrator refuses to participate. However, the arbitral tribunal must ensure that its decision making complies with the procedure set out in the applicable rules.

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Lastly, it is important for the arbitral tribunal to ensure that it is not exceeding its jurisdiction by adjudicating issues that are not arbitrable or that have not been referred to it.

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Since the arbitral tribunal is a creature of contract, it is bound by the arbitration agreement and so, any excess of jurisdiction will make the award susceptible to challenge.

Chapter 38 MISTAKES OR OMISSIONS IN THE AWARD [38.1] INTRODUCTION....................................................................................................................... 1073 [38.2] ARBITRAL TRIBUNAL BECOMES FUNCTUS OFFICIO.................................................... 1074

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[38.3] CORRECTION OF THE AWARD............................................................................................. 1076 [38.4] INTERPRETATION OF THE AWARD.................................................................................... 1087 [38.5] MAKING OF AN ADDITIONAL AWARD............................................................................. 1089 [38.6] REMISSION OF THE AWARD.................................................................................................. 1092

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[38.7] CONCLUSION............................................................................................................................. 1095

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[38.1] INTRODUCTION

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Gary Born states:

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Arbitration saves time and costs associated with resolving a dispute. As opposed to litigation, the arbitral tribunal normally becomes functus officio upon making the final award. An arbitral tribunal does not have any power to review and supplement its own award.

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“Human fallibility guarantees that all arbitral awards, like all national court judgments … will have mistakes, omissions or ambiguities … there are cases where an award contains very serious, but manifest, errors or ambiguities that directly affect one party’s rights … an award’s damages calculation may contain arithmetic mistakes, or an undisputed fact relevant to a damages award may be erroneously recorded … or may have ordered relief that is hopelessly ambiguous or unintelligible … the tribunal may simply have failed to address one of the claims …”.1

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A party may wish to seek correction and interpretation of the award so that the errors may be rectified. If allowed, such correction and interpretation of the final award may affect the finality of the award. Notwithstanding this, most legal systems permit corrections of errors. It is to ensure that the award is not susceptible to annulment or non-​recognition. The approach avoids even further delays and additional costs in the arbitral process.2

1. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3369. 2. Ibid, p. 3370.

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Law, Practice and Procedure of Arbitration in India

Most national statutes and institutional rules permit a party to seek corrections and interpretation of the final award for the abovementioned reason.3 Parties can request an additional award on matters submitted to but not decided by the arbitral tribunal.4

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However, the circumstances in which these changes may be requested are limited. It cannot be misused to review the award as a whole or re-​analyse the reasoning of the arbitral tribunal.

[38.2] ARBITRAL TRIBUNAL BECOMES FUNCTUS OFFICIO

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The Latin term “functus officio” means the “office performed”.5 The arbitral tribunal loses its capacity to act. It cannot further revise, reconsider, supplement, or correct any award upon it issuing it.6

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The arbitral tribunal’s mandate concludes upon resolution of the dispute submitted to it. An arbitral tribunal, a private body “not subject to the discipline and training of a national judiciary” does not have a “continuing power” to make “unreviewable decisions”.7

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The arbitral tribunal becomes functus officio upon passing the final award in the arbitration.8 Until then, both parties can make any applications to the arbitral tribunal. The arbitral tribunal, still having jurisdiction, has to deal with the same.9

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Hence, functus officio refers to the arbitral tribunal’s completion of its mandate by making an award having res judicata effect.10 It marks the end of the arbitration.

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3. Arbitration Act, s. 33(1); English Arbitration Act, 1996, s. 57; UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 33(1); SIAC Rules, 2016, rr. 33.1, 33.4; UNCITRAL Arbitration Rules, 2013, arts 37, 38; ICC Arbitration Rules, 2021, art. 36(2); LCIA Arbitration Rules, 2020, art. 27.1. 4. Arbitration Act, s. 33(4); English Arbitration Act, 1996, s. 57; UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 33(3); SIAC Rules, 2016, r. 33.3; UNCITRAL Arbitration Rules, 2013, art. 39; ICC Arbitration Rules, 2021, art. 36(3); LCIA Arbitration Rules, 2020, art. 27.3. 5. Glass Molders, Pottery, Plastics & Allied Workers Int’l Union, AFL-​CIO, CLC, Local 182B v Excelsior Foundry Co. 56 F.3d 844, 845 (7th Circuit, 1995). 6. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3370. See: Fidelitas Shipping Co. v V/​O Exportchleb [1965] 1 Lloyd’s Rep. 223, 231 (“once his final award is made … the arbitrator himself becomes functus officio as respects all issues between the parties unless his jurisdiction is revived by the court’s exercise of its power to remit the award to him for his reconsideration”); Glass Molders, Pottery, Plastics & Allied Workers Int’l Union, AFL-​CIO, CLC, Local 182B v Excelsior Foundry Co. 56 F.3d 844, 845 (7th Circuit, 1995). 7. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3380. 8. A partial award will not render the tribunal functus officio unless there is an express agreement between the parties to give the partial award the effect of a final award. See: PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation (Indonesia) [2015] SGCA 30; Am. Int’l Specialty Lines Ins. Co. v Allied Capital Corp. 35 N.Y.3d 64 (2020), 149 N.E.3d 33 (N.Y.2020). 9. P.C. Markanda, Law relating to Arbitration and Conciliation (9th edn), p. 983. 10. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 3371–​3372.

1075

Chapter 38—​Mistakes or Omissions in the Award

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (“New York Convention”) does not contain any provisions relating to the termination of the arbitral tribunal’s mandate such as the functus officio doctrine. The New York Convention only provides for recognition to be given to binding awards,11 which indicates that subsequent alteration of an award may not be permitted.12

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The UNCITRAL Model Law on International Commercial Arbitration, 1985 (“Model Law”), in comparison, explicitly provides that the tribunal will become functus officio upon rendering the final award.

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The Model Law, however, goes on to give certain exceptions to this principle,13 the arbitral tribunal may make corrections to the award, interpret the award, and pass an additional award after the final award is published.14

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The court may even remit the award to the arbitral tribunal for the arbitral tribunal to “eliminate the grounds for setting aside” in setting aside proceedings.15 Several jurisdictions have followed the Model Law approach in their national arbitration legislations.16

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The English Arbitration Act 1996 does not provide for termination of the arbitral tribunal’s mandate upon issuance of its final award.17 The doctrine of functus officio is settled as a common law rule.18 However, the arbitral tribunal has statutory power to make corrections limited to clerical and typo slips in its award.19

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11. Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958, art. III. 12. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3372. 13. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 32(3) (“The mandate of the arbitral tribunal terminates with the termination of the arbitral proceedings, subject to the provisions of articles 33 and 34(4)”). 14. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 33. 15. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 34(4). 16. See: Arbitration Act, ss. 32, 33; Singapore International Arbitration Act, 2002, First Schedule, art. 32(3); Hong Kong Arbitration Ordinance, s. 68; French Code of Civil Procedure, arts 1475, 1476, (2); Swedish Arbitration Act, s. 27. 17. English Arbitration Act, 1996, s. 58(1) only provides that an award is final and binding. 18. Fidelitas Shipping Co. v V/​O Exportchleb 1965 1 Lloyd’s Rep. 223, 231 (“once his final award is made … the arbitrator himself becomes functus officio as respects all the issues between the parties unless his jurisdiction is revived by the court’s exercise of its power to remit the award to him for his reconsideration”.); Emirates Trading Agency LLC v Sociedade de Fomento Industrial Pvt. Ltd. 2015 EWHC 1452 (Comm) (“Absent agreement of the parties, the tribunal may only reconsider or review its decision if the matter is remitted following a successful challenge to the award in court, or pursuant to the express powers of correction or reconsideration conferred by S. 57 of the Act or by the arbitral rules which the parties have agreed to govern the reference. Otherwise the tribunal has no authority or power to do so.”). 19. English Arbitration Act, 1996, s. 57.

1076

Law, Practice and Procedure of Arbitration in India

Similarly, in the US, the Federal Arbitration Act does not expressly provide for the functus officio doctrine. It only states that arbitral awards must be confirmed, subject to limited grounds for judicial correction or modification.20

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However, the courts have affirmed the functus officio doctrine.21 The arbitral tribunal loses the authority to grant further relief upon issuance of the final award.22 The doctrine is subject to common law exceptions. The arbitral tribunal can make corrections, clarify ambiguities,23 or issue an additional award.24

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[38.3] CORRECTION OF THE AWARD

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As such, most modern legal systems recognise the doctrine of functus officio. However, they have enacted certain exceptions to this rule. These exceptions enable the arbitral tribunal to correct or interpret its award, or make an additional award in limited and specified scenarios.

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Even though the arbitral tribunal becomes functus officio on issuing the final award, national legislations and institutional rules permit the tribunal to make corrections to the award.

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For example, the New York Convention, too, does not forbid corrections to the award. It leaves the extension of such provision to be enacted in national arbitration law or for the parties’ agreement.25 Correction of the award is an exception to the functus officio doctrine.

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20. See: Federal Arbitration Act, ss. 9–​11. 21. Office & Prof ’l Employees Int’l Union v Brownsville Gen. Hosp. 186 F.3d 326, 331 (3rd Cir. 1999) (“Functus officio … is a shorthand term for a common-​law doctrine barring an arbitrator from revisiting the merits of an award once it has issued.”); Gen Re Life Corp v Lincoln Nat’l Life Ins. Co. 909 F.3d 544, p. 548 (2nd Cir. 2018); SBC Advanced Solutions, Inc. v Commons Workers of Am., Dist. 6 794 F.3d 1020, p. 1031 (8th Cir. 2015). 22. Ray v Chafetz 236 F.Supp.3d 66 (D.D.C. 2017) (“once an arbitrator has made and published a final award, his authority is exhausted and he … can do nothing more in regard to the subject matter of the arbitration”); United Mine Workers of Am., Dist. 28 v Island Creek Coal Co. 630 F.Supp. 1278 (W.D.Va. 1986) (“Once an arbitrator has issued his final … award, then he becomes functus officio and lacks power to reconsider or amend.”). 23. Gen Re Life Corp v Lincoln Nat’l Life Ins. Co. 909 F.3d 544, p. 548 (2nd Cir. 2018); Local 1982, Int’l Longshoremen’s Ass’n v Midwest Terminals of Toledo Int’l, Inc. 694 F. App’x 985, 988 (6th Cir. 2017). 24. Apex Towing Co. v Trading Corp. of Pakistan 1986 WL 10713 (SDNY); Siljestad v Hideca Trading Inc. 541 F. Supp. 58 (SDNY 1981). 25. Article II of the New York Convention requires Contracting States to give effect to arbitration agreements, which would include an obligation to give effect to provisions regarding corrections.

1077

Chapter 38—​Mistakes or Omissions in the Award

The arbitral tribunal’s power to correct the award is governed by the law of the seat.26 Corrections may be made at the request of a party27, or by the arbitral tribunal, at its own initiative.28

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Under the Model Law, to prevent disputes after making of the award, corrections may only be made for limited reasons. As such, the arbitral tribunal can only correct “errors in computation, any clerical or typographical errors or any errors of similar nature”.29 Several jurisdictions,30 including India,31 have adopted a similar position as that in the Model Law.

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The position in England, however, differs from that of the Model Law. The English Arbitration Act 1996 permits correction of an award even where the language used did not reflect the arbitral tribunal’s original intention.32

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In England, only the arbitral tribunal, and not a court, can exercise the power to correct the award. An application to the court requesting a correction, after being rejected by the arbitral tribunal, would face “insuperable jurisdictional difficulties”.33

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Pertinently, in Switzerland, though the arbitral tribunal has the power to correct all typographical and arithmetic errors in domestic arbitrations,34 the Swiss Law on Private International Law does not provide for the correction of awards in international arbitrations.35

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26. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3382. See UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 1(2). 27. Arbitration Act, s. 33(1)(a); English Arbitration Act, 1996, s. 57(3); UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 33(1); 28. Arbitration Act, s. 33(3); English Arbitration Act, 1996, s. 57(3); UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 33(2). See: Thomas H. Webster, Michael W. Buhler, Handbook of ICC Arbitration (4th edn, Sweet & Maxwell 2018), p. 577 (“… correction must be submitted by the Tribunal, either unanimously, at the majority or even by the president alone …”). 29. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 33(1)(a). 30. See: French Code of Civil Procedure, art. 1485; German ZPO, s. 1058; Belgium Judicial Code, art. 1715; Netherlands Code of Civil Procedure, art. 1060. 31. Arbitration Act, s. 33. See: Centrotrade Minerals & Metals Inc. v Hindustan Copper Ltd. (2006) 11 SCC 245, at para. 49 (“Section 33 of the 1996 Act clearly postulates that the arbitrator has the jurisdiction to correct and interpret an award in terms whereof, he may amend his core award.”). 32. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3386. See: English Arbitration Act, 1996, s. 57(3)(a) (“… so as to remove any clerical mistake or error arising from an accidental slip or omission …”). 33. Ronly Holdings Ltd v JSC Zestafoni G. Nikoladze Ferroalloy Plant 2004 EWHC 1354 (Comm), at para. 37. 34. Swiss Code of Civil Procedure, 2011, art. 388. 35. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3387.

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Law, Practice and Procedure of Arbitration in India

Notwithstanding this, there have been occasions where arbitral tribunals have corrected awards issued for international arbitrations seated in Switzerland.36 However, the scope of such corrections is narrow.37

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In contrast, in the US, courts and not the arbitral tribunal are statutorily empowered to make corrections to an arbitral award.38 Notwithstanding this, courts have upheld the validity of agreements granting the authority to arbitral tribunals to correct its awards.39 The US courts have also recognised the arbitral tribunal’s inherent authority to make corrections to the award.40

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Institutional arbitration rules, too, empower the arbitral tribunals to correct their awards.41 Under the ICC Arbitration Rules, the arbitral tribunal issues corrections to the award in the form of an addendum. It issues a decision, with reasons, if it is rejecting the request to correct the award.42

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The former may be subject to further correction, since it is a part of the award. The latter does not modify the award. So correction of it may not be sought.43

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Prior to making the correction, the arbitral tribunal must hear objections to the correction application, if any.44 Further, any correction must satisfy the formal requirements of an award. It forms a part of the award.45

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36. See: Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021). Judgment of 6 October 2015 DFT 4A_​34/​215 (Swiss Fed. Trib.) (allowing correction of a lapsus calami in the award reasoning); Judgment of 12 January 2005 DFT 131 III 164, p. 167 (Swiss Fed. Trib.) (allowing correction of computational mistake of 30 million USD); Judgment of 9 December 2003 DFT 130 III 125, 127 (Swiss Fed. Trib.) (arbitrator corrected awarded where he granted USD 45000 and POUND 15000 to “German family” instead of referring to the members of the family who had appeared as claimants). 37. Judgment of 12 January 2005 DFT 131 III 164, p. 168 (Swiss Fed. Trib.). 38. Federal Arbitration Act, s. 11. 39. T. Co. Metals LLC v Dempsey Pipe & Supply 592 F.3d 329, p. 342 (2nd Cir. 2010); Smith v Transp. Workers union of Am., AFL-​CIO Air Transp. Local 556, 374 F.3d 372, p. 374 (5th Cir. 2004) (giving effect to arbitration agreement that provided: “The arbitrators sua sponte may amend or correct their award within three business days after the award, but the parties shall not have a right to seek correction of the award”). 40. T.Co Metals LLC v Dempsey Pipe & Supply 592 F.3D 329, p. 342 (2nd Cir. 2010) (“an arbitrator is not rendered powerless by the completion of his duties … even after becoming functus officio, ‘an arbitrator retains limited authority to “correct a mistake which is apparent on the face of the award”.’ … This inherent authority applies narrowly to ‘clerical mistakes or obvious errors in arithmetic computation’.”); Alcatel Space SA v Loral Space & Commc’ns Ltd. 2002 WL 1391819 (SDNY); Rain CII Carbon LLC v Conoco Phillips Co. 674 F. 3d 469, p. 473 (5th Cir. 2012); E.E. Cruz v Coastal Caisson Corp 346 F. App’x 717, p. 720 (2nd Cir. 2009). 41. SIAC Rules, 2016, r. 33; UNCITRAL Arbitration Rules, 2013, art. 38; ICC Arbitration Rules, 2021, art. 36; LCIA Arbitration Rules, 2020, art. 27. 42. See: Thomas H. Webster, Michael W. Buhler, Handbook of ICC Arbitration (4th edn, Sweet & Maxwell 2018), p. 581. 43. Ibid, p. 582. 44. H. Holtzmann and J. Neuhas, A Guide to the UNCITRAL Model Law on International Commercial Arbitration: Legislative History and Commentary (1989) at pp. 889–​890 (according to working Party responsible for text of Article 33, “the arbitral tribunal should allow sufficient time for a reply”; general provisions of art. 18 applicable throughout arbitration, including art. 33). See: English Arbitration Act, 1996, s. 57(3). 45. Arbitration Act, ss. 33(2), 33(7); English Arbitration Act, 1996, s. 57(7); UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 33(5). See: Union Marine Classification Services v The Government of the Union of Comoros [2015] EWHC 508 (Comm).

1079

Chapter 38—​Mistakes or Omissions in the Award

The Model Law or other national laws do not provide a remedy if the arbitral tribunal refuses to correct its award. However, if the arbitral tribunal refuses to correct the award, the party can seek to annul it on the grounds that the arbitral tribunal did not comply with the agreement to arbitrate.46

Scope of Corrections and the Slip Rule

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The scope of corrections to the award is limited. The arbitral tribunal cannot, under the garb of correction, review the award.47 Further, the arbitral tribunal cannot re-​examine evidence on any the determined issues.48

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The normal rule is that the arbitral tribunal can only make corrections arising from accidental slips and omissions.49 It cannot reappraise the evidence or arguments.50 The arbitral tribunal is only allowed to correct any slips of the pen,51 a mental lapse, or a mechanical clerical mistake.52

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If the arbitral tribunal has written what it intended to write and has not included or omitted any necessary words, the award is final and cannot be modified.53 Such a rule is known as the “slip rule”. Its purpose is to make the “order properly reflect the actual decision”.54

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46. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3384. 47. State of Arunachal Pradesh v Damani Construction Co. 2007 10 SCC 742, at para. 8. 48. O’Donnell Developments Ltd v Build Ability Ltd 2009 EWHC 3388 (TCC); Mutual Shipping Corp of New York v Bayshore Shipping Co of Monrovia, The Montan [1985] 1 All ER 520. 49. Sea Trade Maritime Corp v Hellenic Mut. War Risks Ass’n (Bermuda) Ltd., The Athena [2006] EWHC 578 (Comm), at para. 20 (“The purpose of section 57 is to avoid the situation that used to arise where an arbitrator could not, in respect of his final award … correct an obvious mistake, nor deal with something which he had left out, because he was functus officio, so that the affected party was compelled to go to the court in order to obtain relief.”); No Curfew Ltd. v Feiges Props Ltd. [2018] EWHC 744 (Ch); Gannet Shipping v Eastrade Commodities [2001] EWHC 483 (QB). 50. Torch Offshore LLC v Cable Shipping Inc. [2004] EWHC 787 (Comm); Al Hadha Trading Co. v Tradigrain SA [2002] 2 Lloyd’s Rep 512 (QB). 51. See: Western Coalfields Ltd. v N. Kumar Construction Co. (2009) SCC OnLine Bom 1613, at para. 10 (“… the Arbitrator shall have the power to correct in the award any clerical mistake or error arising from an accidental slip or omission/​It/​is an admitted fact that the clarifications, which were made to the award, do not in any way affect the monetary claim of the Respondent, nor does it after the basic award passed by the Arbitrator. The Arbitrator has done nothing more than in corporation of the portions omitted by the typist through mistake while typing from the manuscript.”). 52. See: SC v OE1 & Anr HCCT 48/​2019; OE1 & Anr v SC HCCT 66/​2019. 53. Robert Merkin, Arbitration Law (LLP 2004), p. 777, at para. 18.118. See: Sutherland & Co. v Hannevig Brothers Ltd. [1921] 1 KB 336 (“An accidental slip occurs when something is wrongly put in by accident, and an accidental omission occurs when something is left out by accident. What is an accident in this connection, an accident affecting the expression of man’s thought? It is a very difficult thing to define, but I am of the opinion that this was not an accident within the meaning of the clause. I cannot pretend to give a formula which will cover every case, but in this case, there was nothing omitted by accident: the arbitrator wrote down exactly what he intended to write down, though it is doubtful what that really meant when considered from a legal point of view ...”). 54. R v Cripps, Ex p Muldoon [1984] 2 All ER 705 (CA) Eng.

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Explaining the meaning of “accidental slip”, the Court of Appeal in Food Corporation of India v Marastro Naviera SA, The Trade Fortitude (No 1)55 held that:

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“… In one sense, of course, all errors are accidental. You do not make a mistake on purpose. But here the words take their colour from their context … But, in general, an error must … be an error affecting the expression of the arbitrator’s thought, not an error in the thought process itself … The fact that the error … was an elementary error is not sufficient to make it accidental.” Article 38 of the UNCITRAL Arbitration Rules, 2013 provides:

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“The clerical or typographical errors that can occur can be simple grammatical mistakes (the omission of a ‘not’, for example); a mistaken reference to a party (‘Claimant’ for ‘Respondent’ for example) or a mistaken cross reference. Article 38(1) also permits remedying omissions. This insertion was made by the Working Group to deal with situations where an arbitrator failed to insert a date or place of arbitration or otherwise omitted an element that was intended to be in the Award. The reference to errors or omissions ‘of a similar nature’ was intended to permit other corrections that are required to make the Award correspond to the intent of the Tribunal …”56

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Hence, only computation or clerical mistakes may be corrected.57 Correction is an opportunity for the arbitral tribunal to give true effect to its final thoughts and decisions.58 Indu Malhotra explains:

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“A ‘clerical mistake’ refers to any mechanical or administrative mistake in drawing up the award, whether it is by the arbitrator himself, or a mistake by the clerk or secretary in drawing up the award … something like a slip of a pen … may be a mistake of a copyist in copying, mistake in transcribing a written instrument, the mistake of a clerk in writing, or an error made by a clerk or a transcriber.”59

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55. [1986] 2 Lloyd’s Rep 209, CA. 56. Thomas H. Webster, Handbook of UNCITRAL Arbitration: Commentary, Precedents and Materials for UNCITRAL based Arbitration Rules (Sweet & Maxwell 2010), p. 557. See Thomas H. Webster, Michael W. Buhler, Handbook of ICC Arbitration (4th edn, Sweet & Maxwell 2018), p. 577 (“The classic type of problem is when there has been a failure to inset a ‘not’ before a verb. Other examples are where from the context it is evident that it should read claimant instead of respondent or where the figures awarded by the Tribunal either do not add up or do not correspond to those in the discussion part of the Award. The reference to errors of a ‘similar nature’ appears to be intended to cover mechanical errors as well.”); Obrascon Huarte Lain SA & Anor v Qatar Foundation for Education, Science and Community Development [2020] EWHC 1643 (Comm). 57. Satpal P. Malhotra v Puneet Malhotra (2013) SCC Online Bom 689, at para. 109; State of Arunachal Pradesh v Damani Construction (2007) 10 SCC 742, at para. 8; NTPC Ltd. v Marathon Electric Motors India Ltd (2012) SCC OnLine Del 3995, at para. 26; MKU Ltd. v Union of India (2016) SCC OnLine Del 6403, at para. 29. 58. Mutual Shipping Corp of New York v Bayshore Shipping Co of Monrovia, The Montan 1985 1 All ER 520; O’Donnell Developments Ltd v Build Ability Ltd 2009 EWHC 3388 (TCC). 59. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), p. 859.

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There must be a prima facie case that the error was accidental for it to be corrected.60 The arbitral tribunal can also correct an award where the amounts inserted under different heads were interchanged,61 the umpire wrongly described himself as an arbitrator,62 award is in the favour of the wrong party,63 a fundamental part of the award has been omitted,64 there has been a mistake in computation,65 or the words do not reflect the tribunal’s intention.66

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The failure to award interest may be corrected.67 However, the Court did not allow a correction under the slip rule where the arbitral tribunal has awarded compound interest, instead of simple interest.68

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An arbitral tribunal may also correct errors arising from accidental slips.69 For example, if it has made a mistake as to the amount of damages awarded, and based on the damages, awarded wrong costs, it can correct the cost award as well. This is because:

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“… it would be most unfortunate if there was no power in an arbitrator to address ancillary cost orders which might have been decided otherwise had a mistake within S. 57 not been made. To take an extreme case, the amount of an award might be reduced from £1m to £1 under the slip rule. If such a power did not exist the only available route to correct a costs award would be … under S. 68 of the 1996 Act… even if successful it is a potentially expensive route to achieving

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60. Mutual Shipping Corp of New York v Bayshore Shipping Co of Monrovia, The Montan [1985] 1 All ER 520. 61. Metalmeccanica Fracasso India Pvt. Ltd. v Prakash Industrial Infrastructure Pvt. Ltd. (2014) SCC OnLine Bom 161, at para. 7. 62. Benabu & Co. v Produce Brokers Co. [1921] 4 WLUK 42. 63. Mutual Shipping Corp of New York v Bayshore Shipping Co of Monrovia, The Montan [1985] 1 All ER 520. 64. Pancommerce SA v Veecheema BV [1983] 2 Lloyd’s Rep 304, CA (Eng). 65. B.R. Arora & Associates (P) Ltd. v Airport Authority of India (2015) SCC OnLine Del 8155, at para. 9; Par Advance v Kemas Construction [2002] 553 MLJU 1 (Malaysia High Court); Econ Piling Pte Ltd (both formerly trading as Econ-​NCC Joint Venture) v Shanghai Tunnel Engineering Co Ltd [2010] SGHC 253. 66. King v Thomas McKenna Ltd. [1991] 2 QB 480; Bloor Construction UK Ltd. v Bowmer & Kirkland (London) Ltd. [2000] BLR 314; Mutual Shipping Corp of New York v Bayshore Shipping Co of Monrovia, The Montan [1985] 1 All ER 520. See Robert Merkin, Arbitration Law (LLP, London, Singapore 2004), p. 777, at para. 18.118 (“… distinction to be drawn is between a variation of the words used in order to correct a misleading impression, rather than a change of the words to reflect a reconsideration of the legal position and a subsequent change of mind as to the outcome.”). 67. Pancommerce SA v Veecheema BV [1983] 2 Lloyd’s Rep 304. 68. McKechnie v McKechnie [2005] BCCA 570 (CanLII). 69. Gannet Shipping Ltd. v Eastrade Commodities Inc [2002] 1 Lloyd’s Rep 713 (“… when the arbitrator’s decision on a particular point, in this case liability for costs, is based on an admitted mistake, then surely as a matter of common sense the arbitrator must have power to review his decision in the light of that mistake.”).

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nothing if the arbitrator has not expressed his view on the merits of changing his order…”.70 Additionally, the mistake need not be directly attributable to the arbitral tribunal, for it to warrant correction. Errors and omissions attributable to the parties’ counsels can also be corrected.71

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Errors in the arbitral tribunal’s reasoning are not subject to correction.72 The arbitral tribunal cannot rewrite or review its orders already issued under the disguise of correction.73

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An omission to give an award on the counterclaim74 and an omission to stamp the award75 do not come within the scope of a clerical mistake. An arbitral tribunal cannot correct the award on grounds that it misunderstood the evidence.76 It also cannot make corrections to an award on the grounds that it has failed to address types of relief which had been claimed.77

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Hence, the slip rule is confined to transcription errors and cannot be used to correct errors by the arbitral tribunal in forming the intention to write down what it did.78 It must, therefore, reject all those requests for corrections that challenge the substance of the award.79

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70. Gannet Shipping Ltd. v Eastrade Commodities Inc [2002] 1 Lloyd’s Rep 713. 71. Chessum & Sons v Gordon [1901] 1 KB 694, CA (Eng); Re Inchcape, Craigmyle v Inchcape [1942] Ch 394. 72. Tay Eng Chuan v United Overseas Ins. Ltd. [2009] SGHC 193; Econ Piling Pte Ltd and anor v Shanghai Tunnel Engineering Co Ltd. [2010] SGHC 253 (“… mistakes or errors of judgment, whether of law or fact cannot be corrected by the invocation of this rule.”); CLOUT Case No. 208 (Vanol Far East Marketing Pte Ltd. v Hin Leong Trading Pte. Ltd. High Court Singapore (27 May 1996) (“the expression ‘errors in computation’ includes, inter alia, miscalculations, the use of incorrect data in calculations, and the omission of data in calculations.”). 73. Delhi Development Authority v Naveen Kumar (2017) SCC OnLine Del 10240, at para. 9-​11. 74. Chung and Wong v CM Lee [1934] MLJ 153. 75. Rikhabdass v Ballabhdass 1962 Supp (1) SCR 475, at para. 8–​9 76. Al Hadha Trading Co. v TradigraIn SA [2002] 2 Lloyd’s Rep 512; Torch Offshore LLC v Cable Shipping Inc. [2004] 2 All ER Comm 365. 77. See SC v OE1 & Anor HCCT 48/​2019; OE1 & Anor v SC HCCT 66/​2019. 78. Food Corp of India v Marastro Cia Naviera S.A., The Trade Fortitude (No. 1) [1986] 2 Lloyd’s Rep 209. 79. Picker Int’l Corp v Iran Decision No. DEC 48-​10173-​3 (8 October 1986), (“The Tribunal finds that the wording used in the Award … exactly reproduces the language of Article III, para 3 of the Claims Settlement Declaration and therefore is more appropriate than the formulation proposed by the Agent … for the foregoing reasons, the Tribunal determines that no correction or interpretation of the Award is warranted and denies the Request.”); Gold Reserve Inc. v Venezuela Decision Regarding the Claimant’s and the Respondent’s Requests for Corrections in ICSID Case No. ARB(AF)/​09/​1 (15 December 2014), at para. 38 (“The purpose of the correction exception to the functus officio principle is to correct obvious omissions or mistakes and avoid a consequence where a party finds itself bound by an award that orders relief the tribunal did not intend to grant. The purpose is therefore to ensure that the true intensions of the tribunal are given effect in the award, but not to alter those intentions, amend the legal analysis, modify reasoning or alter findings … any purported correcting that goes beyond the scope of the Tribunal’s limited mandate in this regard is likely to be subject to challenge.”).

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Chapter 38—​Mistakes or Omissions in the Award

Procedure for Corrections Under most national arbitration statutes and institutional arbitration rules, corrections may only be requested and made within a limited period of time. The statutory timelines to request a correction of the award are normally quite short.80

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This is because a longer limitation for correction of awards has the potential to create an endless and prolonged cycle which would result in further costs and delays.

An exception is the US where an application for correction of the award can be filed up to three months after the award is made. There is no time within which the arbitral tribunal is bound to correct the award.81

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In India, a request for correction of the award must be made within “thirty days from the receipt of the arbitral award.”82 This time period cannot be extended unless the parties consent to it. The arbitral tribunal does not have any jurisdiction to decide an application for correction made beyond the period of 30 days.83

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When a party has made an application for correction and posted the same to the arbitral tribunal. It is presumed to have reached the arbitral tribunal “at a proper time according to the regular course of business”.84

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Any corrections are to be made within “thirty days from the receipt of the request”.85 However, the arbitral tribunal may extend this period if necessary.86 Alternately, the

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80. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 33 (within 30 days from receipt of the award); English Arbitration Act, 1996, s. 57(4) (28 days from the date of the award); Arbitration Act, s. 33(1) (within 30 days from the receipt of the award); Malaysian Arbitration Act, 2005, s. 35(1) (within 30 days from the receipt of the award), Singapore International Arbitration Act, 2002, First Schedule, art. 33 (within 30 days from the receipt of the award); Bangladesh Arbitration Act, 2001, s. 40 (within 14 days from the receipt of the award); Brazilian Arbitration Act, 2015, art. 30 (within 5 days from the receipt of an award). 81. Federal Arbitration Act, s. 11. 82. Arbitration Act, s. 33(1). See: Union of India v Tecco Trichy Engineers & Contractors (2005) 4 SCC 239, at para. 8 (“delivery by the Arbitral Tribunal and receipt by the party of the award sets in motion several periods of limitation such as an application for correction and interpretation of an award within 30 days under Section 33(1) … the delivery of the copy of award by the Tribunal and the receipt thereof by each party constitutes an important stage in the arbitral proceedings.”). 83. See: MKU Ltd. v Union of India (2016) SCC OnLine Del 6403, at para. 24 (“… the time for filing the application provided under the Section is inflexible. An application for correcting errors under Section 33 of the Act can be made only within a period of 30 days from receipt of the arbitral award subject to the parties agreeing otherwise … the Arbitrator did not have the jurisdiction to entertain an application under Section 33 of the Act beyond the period of thirty days …”); SPS Rana v MTNL & Ors. (2010) SCC OnLine Del 136, at para. 9 (“… unless an application/​petition under Section 33(1) of the Act is preferred within 30 days of the making of the award, the mandate of the Arbitral Tribunal terminates. Once the mandate of the Arbitral Tribunal terminates, it is not possible to file the application/​petition under Section 33 of the Act.”). 84. Budhiraja Mining v Ircon International Ltd. (2012) SCC OnLine Del 2568, at para. 17. 85. Arbitration Act, s. 33(2). 86. Arbitration Act, s. 33(6).

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tribunal can “on its own initiative” correct any errors in the award within 30 days from the date of the award.87 In England, the statute requires a request for correction to be made within a period of 28 days from the date of the award.88 However, requests beyond 28 days will not be time barred if they are in the nature of responses to the original request for correction.89

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The arbitral tribunal must make the corrections within 28 days from “the date the application was received”.90 If the arbitral tribunal is making corrections at its own initiative, it must do so within 28 days from the date of the award.91

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The parties are free to modify these timelines.92 Further, the court too can extend any of the timelines93 to avoid substantial injustice to the party seeking the extension.94

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The timelines within which a party is to seek correction of the award may also be dependent upon the institutional rules chosen by the parties in their arbitration agreement.

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The SIAC Rules, 2016,95 UNCITRAL Arbitration Rules, 2013,96 and the ICC Arbitration Rules, 2021,97 all provide for a 30-​day time period within which a party must request correction of clerical and typographical errors. The LCIA Arbitration

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87. Arbitration Act, s. 33(3). 88. English Arbitration Act, 1996, s. 57(4). 89. See R.C. Pillar & Sons v Edwards, 2001, unreported, in Robert Merkin, Arbitration Law (LLP 2004), p. 779, at para. 18.119. 90. Ibid, p. 780, at para. 18.120. 91. English Arbitration Act, 1996, s. 57(5). 92. English Arbitration Act, 1996, ss. 57(1), 57(5). See Home of Homes Ltd. v Hammersmith and Fulham London Borough Council, 10 April 2003, unreported (it had been agreed that application under slip rule would be dealt with in the final award, when it was published) in Robert Merkin, Arbitration Law (LLP 2004), p. 780, at para. 18.120. 93. See English Arbitration Act, 1996, s. 79. 94. Mobile Telecommunications Co. KSC v HRH Prince Hussam Bin Saud Bin Abdulaziz Al Saud [2019] EWHC 3109 (Comm) (High Court of England and Wales) (granting extension of time where, after expiry of time to seek correction, award was refused enforcement in Saudi Arabia, for stating that winning party was “Entitled to payment” instead of imposing an “explicit obligation” to pay the awarded sum); Xstrata Coal Queensland Pty Ltd. v Benxi Iron & Steel (Group) Int’l Econ. & Trading Co. Ltd. [2016] EWHC 2022 (Comm) (granting extension of time where after expiry of time to seek correction, enforcement was refused in China with respect to a company which had not been clearly identified as a party in award). 95. SIAC Rules, 2016, rr. 33.1, 33.2. 96. UNCITRAL Arbitration Rules, 2013, arts 38(1), 38(2). 97. ICC Arbitration Rules, 2021, art. 36(2).

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Chapter 38—​Mistakes or Omissions in the Award

Rules, in comparison, provide the parties with 28 days’ time to seek correction of the award.98 However, while the SIAC Rules99 require the arbitral tribunal to make the correction within a period of 30 days, from the receipt of the request, the UNCITRAL Rules100 and LCIA Rules101 provide the arbitral tribunal with 45 days and 28 days, respectively, to make a correction.

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In contrast, under the ICC Rules, the arbitral tribunal has to grant the other party a short time limit, not exceeding 30 days, to respond to the request for correction. Thereafter, within a period of “30 days from expiry of the time limit for the receipt of any comments from the other party”, the arbitral tribunal must make its decision on corrections.102

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A party cannot seek a unilateral correction of the award. It must give the other party notice of the request made by it.103 This enables the other party to make representations before the arbitral tribunal, if it so desires.104

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The arbitral tribunal is also obliged to give the other party the opportunity to make representations.105 If the arbitral tribunal decides to not hear the party prior to making the correction, the award may not be upheld.106

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The courts are wary of parties trying to unilaterally obtain clarifications, under the guise of the slip rule, without obtaining the agreement of the other party.107

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LCIA Arbitration Rules, 2020, art. 27.1. SIAC Rules, 2016, r. 33.1. UNCITRAL Arbitration Rules, 2013, art. 38(1). LCIA Arbitration Rules, 2020, art. 27.1. ICC Arbitration Rules, 2021, art. 36(4). Arbitration Act, s. 33(1)(a); English Arbitration Act, 1996, s. 57(3). P.C. Markanda, Law Relating to Arbitration and Conciliation (9th edn, LexisNexis 2016), p. 987. Mutual Shipping Corp of New York v Bayshore Shipping Co of Monrovia, The Montan [1985] 1 All ER 520; Inland Revenue Commissioner v Hunter [1914] 3 KB 423 (“It is clear … that a referee, having once issued his award, cannot issue another without the consent of both parties. If an error is to be corrected, unless the parties assent, it can only be done by the Court on proper evidence, and with proper procedure … it is of great importance that the referees should exercise their important duties in the future … with strict observance of all rules of judicial procedure.”). 106. H.P Housing and Urban Development Authority v Kapil Constructions 2009 SCC OnLine HP 2928. 1 07. Kelana Erat Sdn Bhd v Niche Properties Sdn Bhd [2012] 5 MLJ 809.

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98. 99. 100. 101. 102. 103. 104. 105.

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The limitation period for filing an application to set aside the award only starts running from the date on which the corrections are made. It is not the date of the original

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award.108 However, this will not be the case if the request for correction is made beyond the statutorily mandated timeline.109 Merely because a request for correction has been filed, the limitation period for filing an application to set aside the award will not be extended.

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For the extension to apply, the request must “constitute an application to request the arbitral tribunal to correct any computation errors, any clerical or typographical errors or any other errors of a similar nature occurring in the award.”110 The Singapore Court of Appeal, in BRS v BRQ & ANOTHER,111 held as follows:

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“If, however, the tribunal has not decided on the request under Art 33 within the initial time limit in Art 34(3), then the setting-​aside application under Art 34 should be filed as a matter of caution before the expiry of the initial time limit”.

Costs for Correction of the Award

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The general rule is that the arbitral tribunal cannot claim additional remuneration for the work done in correcting its own award. The need for correction always arises from the arbitral tribunal’s own lack of care.112

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For example, the ICC under its arbitration rules will retain some portion of the arbitral tribunal’s fees, until the time limit for seeking a correction of the award has lapsed. This is to ensure that the arbitral tribunal will address promptly any request for correction is made.113

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108. M/​s Ved Prakash Mithal and Sons v Union of India (2018) SCC OnLine SC 3181 (“… Section 34(3) specifically speaks of the date on which a request under Section 33 has been ‘disposed of ’ by the Arbitral Tribunal … a ‘disposal’ of the application can either be allowing it or dismissing it.”); Blackdale Ltd. v McLean Homes South East Ltd. [2001] All ER (D) 55 (Nov.). See: Robert Merkin, Arbitration Law (LLP 2204), p. 781, at para. 18.121; Al Hadha Trading Co. v TradigraIn SA [2002] 2 Llyod’s Rep 512. 109. SPS Rana v MTNL (2010) SCC OnLine Del 136, at para. 11 (“… petitioner is thus not entitled to the benefit of the part of Section 34(3) providing for commencement of the period of three months for applying for setting aside of the order from the date of disposal of the application under Section 33; as such disposal has to be on an application preferred within 30 days provided under Section 33 (1) of the Act. If the application under Section 33 is preferred after 30 days, the order of the Arbitral Tribunal to the effect that it cannot entertain the application, being functus officio, is not a ‘disposal’ from which a fresh period of limitation would accrue.”); Karuppiah Mahalingam v Kotak Mahindra Bank (2017) SCC OnLine Bom 3953, at para. 11. 110. D.M. Jawhar Merican v Engineers India Limited (2009) SCC OnLine Del 578, at para. 21. 111. [2020] SGCA 108, at para. 68. 112. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3397. 113. Thomas H. Webster, Michael W. Buhler, Handbook of ICC Arbitration (4th edn, Sweet & Maxwell 2018), p. 582.

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Chapter 38—​Mistakes or Omissions in the Award

[38.4] INTERPRETATION OF THE AWARD Most national arbitration statutes, and institutional arbitration rules, permit the arbitral tribunal to interpret the award. Interpretation of the award is the second exception to the principle of functus officio. Gary Born opines that interpretation differs from correction in as much as it:

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“does not alter the previous award’s statements or calculations, but instead more clearly explains what such statements were intended to mean, without altering them.”114

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As in the case of correction, the arbitral tribunal’s power to interpret the award is governed by the law of the seat and the applicable institutional arbitration rules.115

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Although the New York Convention is silent on the arbitral tribunal’s power to interpret the award, it permits parties to agree upon the arbitral tribunal’s powers of interpretation. Any national arbitration law that does not give effect to the arbitration agreement will violate the New York Convention.116

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The UNCITRAL Model Law is more limited in its treatment of interpretation as compared to correction of an award. It permits interpretation of an award only when the parties agree that such a request may be made to the arbitral tribunal.117

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Further, the UNCITRAL Model Law limits interpretation only to a “specific point or part of the award”.118 It does not permit the arbitral tribunal to review its overall rationale or reliefs set out in the award.119 Requests for interpretation will only be allowed if the party is able to demonstrate that the award is ambiguous. Also, it cannot be effectively executed, unless clarified.120

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114. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 3398–​3399. 115. Thomas H. Webster, Handbook of UNCITRAL Arbitration: Commentary, Precedents and Materials for UNCITRAL based Arbitration Rules (Sweet & Maxwell 2010), p. 546. 116. The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958, art. II. 117. See UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 33(1)(b). 118. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 33(1)(b). 119. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3401. 120. PepsiCo, Inc. v Iran Decision No. DEC 55-​18-​1 (19 December 1986) 13 Iran-​US CTR 328, 329-​30 (1996); Norman Gabay v Iran Decision No. DEC 99-​77-​2 (24 September 1991) 27 Iran-​US CTR 194, 195 (1991).

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Law, Practice and Procedure of Arbitration in India

Several jurisdictions have adopted provisions similar to that of the Model Law on the arbitral tribunal’s power to interpret an award.121 They provide that a request for interpretation cannot be made without the express consent of all parties concerned.122 Other States such as England123, the US,124 and Switzerland125 do not contain explicit provisions on the interpretation of the awards. However, the legal system still allows an ambiguous award to be referred to the arbitral tribunal to remove or clarify ambiguities.

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Similarly, in the same vein as correction, institutional arbitration rules allow the arbitral tribunal to interpret its awards. However, in contrast to correction, an arbitral tribunal cannot do so at its own initiative. Parties must make the request to the arbitral tribunal to do so.126

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A request for interpretation can be made only to clarify “the purpose of the award and the resultant obligations and rights of the parties”.127 It cannot be used to challenge the arbitral tribunal’s reasoning.128

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121. See Singapore International Arbitration Act, 2002, First Schedule, art. 33(1)(b); Arbitration Act, s. 33(1)(b); Malaysian Arbitration Act, 2005, s. 35(2); French Code of Civil Procedure, art. 1485(2); German ZPO, ss. 1058(1), 1058(2). See: Centrotrade Minerals & Metals Inc. v Hindustan Copper Ltd. (2006) 11 SCC 245, at para. 49. 122. See Sushil Pandit v Adsert Web Solutions Pvt. Ltd. 2011 SCC OnLine Del 3452, at para. 3. 123. See English Arbitration Act, 1996, s. 57 (“The tribunal may on its own initiative or on the application of a party … remove any ambiguity in the award”); Torch Offshore LLC v Cable Shipping Inc. [2004] EWHC 787, at para. 28 (Comm) (“It seems to me that section 57(3)(a) can be used to request further reasons from the arbitrator or reasons where none exist”); RC Pillar & Sons v Edwards [2001] 1 WLUK 621, at para. 58 (“once the arbitrator had been asked to make corrections to his award … it was incumbent on him to consider all possible accidental slips, omissions or ambiguities in the award.”). 124. E. Seaboard Constr. Co. v Gray Constr. Inc. 554 F.3d 1, 6 (1st Cir. 2008) (arbitrator did not exceed authority by revisiting initial award and clarifying amount of award); Raymond Jones Fin. Servs. Inc. v Bishop 596 F.3d 184, pp. 194–​195 (4th Cir. 2010) (“Given the evident incoherence of the explanation that was volunteered by the arbitration panel in this instance, we do not fault the district court in its commendable efforts to seek guidance through a remand.”); Gen Re Life Corp. v Lincoln Nat’l Life Ins. Co. 909 F.3d 544 (2nd Cir. 2018) (“well settled rule in this Circuit that when asked to confirm an ambiguous award, the district court should instead remand to the arbitrators for clarification.”); Turner v United Steelworkers of Am., Local 812 581 F. 3d 672 (8th Cir. 2009) (“Without question, a reviewing court may ask the arbitrator to clarify an award”); Local 1982, Int’l Longshoremen’s Ass’n v Midwest Terminals of Toledo Int’l Inc. 694 F.App’x 985 (6th Cir. 2017) (“remand to the arbitration panel is both justified and appropriate in light of the ambiguous award”); Brown v Witco Corp. 340 F.3d 209, 219 (5th Cir. 2003) (“An arbitrator can … clarify or construe an arbitration award that seems complete but proves to be ambiguous in its scope and implementation.”). 125. See Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Wolters Kluwer), p. 3402 (art. 190 on Swiss Law of Private International Law does not provide for interpretation, but Swiss Courts have held that interpretation is possible even in the absence of a statutory basis. Judgment of 2 November 2000, DFT 126 iii 524, p. 527 (Swiss Fed. Tribunal)). 126. SIAC Rules, 2016, r. 33.4; UNCITRAL Arbitration Rules, 2013, art. 37; ICC Arbitration Rules, 2021, art. 36(2); LCIA Arbitration Rules, 2020, art. 27. 127. Y. Derains, E. Schwartz, A Guide to the ICC Rules of Arbitration (2nd edn, Kluwer Law International 2005), p. 301. 128. Feldman v Mexico, Correction and Interpretation of the Award in ICSID Case No. ARB(AF)/​99/​1 (NAFTA) (13 June 2003) (“… does not concern a question of interpretation … Rather, the Respondent by asking the Tribunal in its request to explain five different points … effectively is seeking a new decision.”); Karim Panahi v USA Decision no. DEC 108-​182-​2 (27 October 1992) 28 Iran-​US CTR 318, at para. 3 (“… there is no basis … for the Tribunal to review its own awards when a party seeks to reargue the case or disagrees with the conclusions reached by the Tribunal”).

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Chapter 38—​Mistakes or Omissions in the Award

UNCTAD states: “The interpretation must be of the award, not of the reasoning. The arbitral tribunal must be careful not to allow a request for interpretation to become an opportunity for a party to present new arguments in regard to matters that were already settled in the award.”129

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Hence, interpretation can only be sought if the operative part of the award is unclear as to the meaning of a certain provision. Alternatively, it can be sought if the reasons are unclear, thereby making it difficult to determine the scope of res judicata.130

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The Commercial Court of England and Wales in World Trade Corporation Ltd v Czarnikow Sugar Ltd.131 held that a request for interpretation can only be made where the award “is so opaque that it cannot be ascertained from reading it by what evidential route they arrived at their conclusion.”

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Therefore, interpretation is rarely requested in international arbitration. It is even less frequently, considered to be justified by arbitral tribunals.132

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[38.5] MAKING OF AN ADDITIONAL AWARD

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The arbitration award becomes prone to challenge if the arbitral tribunal has failed to address all the issues that were put to it. National arbitration statutes and institutional arbitration rules133 permit the arbitral tribunal to issue an additional award to address the issues that were omitted in its earlier award to avoid such a scenario.134

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129. UNCTAD, Making the Award and Termination of Proceedings (2005), p. 13. 130. Thomas H. Webster, Handbook of UNCITRAL Arbitration: Commentary, Precedents and Materials for UNCITRAL based Arbitration Rules (Sweet & Maxwell 2010), p. 546. See: Eritrea-​Ethiopia Boundary Commission, Decision regarding the “Request for Interpretation, Correction and Consultation” submitted by the Federal Democratic Republic of Ethiopia on 13 May 2002 (decision on 24 June 2002), at para. 16 (“facility accorded to the Parties in Article 28(1) to request the Commission to give an interpretation of the Decision may only be invoked where the meaning of some specific statement in the Decision is unclear and requires clarification in order that the Decision should be properly applied. The concept of interpretation does not open up the possibility of appeal against a decision or the reopening of matters clearly settled by a decision …”. “Interpretation is a process that is merely auxiliary, and may serve to explain, but may not change, what the Court already settled with binding force as res judicata.”); Feldman v Mexico, Correction and Interpretation of the Award in ICSID Case No. ARB(AF)/​99/​1 (13 June 2003), at para. 10, 11 (“… does not concern a question of interpretation … Rather, the Respondent by asking the Tribunal in its request to explain five different points … effectively is seeking a new decision.”). 131. World Trade Corporation Ltd v Czarnikow Sugar Ltd [2005] 1 Lloyd’s Rep 422, at para. 8. 132. David A.R. Williams and Amokura Kawharu, Williams & Kawharu on Arbitration (2011), p. 421, at para. 15.3.2. 133. See: SIAC Rules, 2016, r. 33.3; UNCITRAL Arbitration Rules, 2013, art. 39; ICC Arbitration Rules, 2021, art. 36(3); LCIA Arbitration Rules, 2020, art. 27.3. 134. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 575, at para. 10.19.

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Law, Practice and Procedure of Arbitration in India

Issuance of an additional award is the third exception to the principle of functus officio. UNCTAD explains that:

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“… some national laws permit the arbitral tribunal to make the additional award on its own initiative. Other national arbitration laws do not permit additional awards or may restrict them to limited issues, such as a decision on costs. Some national arbitration laws may permit a court to remit an award to the arbitral tribunal to complete it in regard to a claim that was not decided in the award, but this is not the general rule.”135 The Model Law provides for the arbitral tribunal’s power to issue an additional award, subject to an agreement to the contrary between the parties.136

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Therefore, if under the arbitration agreement the arbitral tribunal has been barred from making an additional award, it will not be able to do so. The legal position in India137 and England138 is identical to that of the Model Law.

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Other legal regimes have also incorporated statutory provisions enabling the arbitral tribunal to issue an additional award.139 In the US, too, courts have recognised the power of the arbitral tribunal to issue an additional award when it has failed to address all issues submitted to its jurisdiction.140

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The making of an additional award is confined to claims that were advanced during the arbitration, but not decided in the award.141 An additional award can only be

UNCTAD, Making the Award and Termination of Proceedings (2005), pp. 12–​13. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 33(3). Arbitration Act, s. 33(4). English Arbitration Act, 1996, ss. 57(1), 57(3)(b). See: Singapore International Arbitration Act, 2002, First Schedule, art. 33(4); French Code of Civil Procedure, art. 1485(2); German ZPO, s. 1058(1)(3). 140. Gen Re Life Corp. v Lincoln Nat’l Life Ins. Co. 909 F.3d 544 (2nd Cir. 2018); Brown v Witco Corp. 340 F.3d 209 (5th Cir. 2003) (“… there are a number of well-​recognized exceptions to the functus officio rule. An arbitrator can … decide an issue which has been submitted but which has not been completely adjudicated by the original award …”). 141. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3409; Thomas H. Webster, Handbook of UNCITRAL Arbitration: Commentary, Precedents and Materials for UNCITRAL based Arbitration Rules (Sweet & Maxwell 2010), p. 562. See: Pramod and Others v Union of India and Others 2019 SCC OnLine All 3720, at para. 9 (“The scope of Section 33(4) is thus limited to a case where certain claims have been presented in the arbitral proceedings, but they have been omitted from the arbitral award. The powers under Section 33(4), cannot be invoked for raising fresh claims or seeking an appeal against the arbitral award. The powers of the Arbitral Tribunal in these proceedings are restricted to making an award for such claims which formed a matter for adjudication and on which the parties had led arguments but the Arbitral Tribunal inadvertently omitted to make an award in respect of those claims.”); Union of India & Ors. v Nav Bhart Nirman Company 2003 SCC OnLine Del 837, at para. 8 (“the arbitrator is empowered to make additional award in respect of any item of claim on which the arbitrator had omitted to consider and give an award in the original award. It is not the case of the petitioner-​Union of India that the extra item No. 42/​23 and 43/​24 i.e. fire retarded paint and flame proofing respectively, and the claim of interest as per Clause C-​18 were not the subject matter of the original claim filed by the respondent-​contractor before the Arbitrator. No specific amount was awarded against these items of work and, therefore, in the opinion of this court even on merits the petitioner are not entitled to challenge the additional award of the arbitrator and the additional award made by the arbitrator is not liable to be set aside.”); SC v OE1 & Anor HCCT 48/​2019; OE1 & Anor v SC HCCT 66/​2019.

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135. 136. 137. 138. 139.

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Chapter 38—​Mistakes or Omissions in the Award

made for “inadvertent omissions”. It is not for those claims that were consciously not dealt with.142 Further, the arbitral tribunal cannot entertain a new claim that was not advanced in the arbitration proceedings. The arbitral tribunal can only make an additional award for claims that can be arbitrated.143 It becomes important to draw a distinction between a “claim” and “issue” to determine whether an additional award can be made.144

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The Supreme Court of India in McDermott International Inc. v Burn Standard Co. Ltd.145 held that the tribunal may make an additional arbitral award provided that: “1. there is no contrary agreement between the parties to the reference;

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2. a party to the reference, with notice to the other party to the reference, requests the Arbitral Tribunal to make the additional award;

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3. such request is made within thirty days from the receipt of the arbitral award;

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4. the Arbitral Tribunal considers the request so made justified; and

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5. additional arbitral award is made within sixty days from the receipt of such request by the Arbitral Tribunal.”

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An additional award does not merge with the original award. Thus, it is subject to separate annulment and/​or enforcement proceedings.146

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In India, the arbitral tribunal has to make an additional award within 60 days from the date of request. The arbitral tribunal is also empowered to extend the time for doing so, if required.147

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An extension may be necessary, for instance, in multi-​arbitration tribunals where consultation is required, or where it is felt that additional hearings and evidence to be adduced would be desirable.

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The consent of the parties is critical. A party cannot unilaterally apply for an additional award.148

142. Blanalko v Lysaght Building Solutions Pty Ltd. [2017] VSC 97 (Supreme Court of Victoria), at para. 19, 20. 143. Vitthalrao Shinde Sahakari Sakhar Karkhana Ltd. v Gangapur Sahakari Sakhar Karkhana Ltd. (2017) SCC OnLine Bom 1669. 144. See Torch Offshore LLC v Cable Shipping Inc. [2004] 2 All ER (Comm) 365. 145. (2006) 11 SCC 181, at para. 71. 146. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3409. See Union of India & Ors. v Nav Bhart Nirman Company & Anr. 2003 SCC OnLine Del 837; Union Marine Classification Services v The Government of the Union of Comoros 2015 [EWHC] 508 (Comm). 147. Arbitration Act, ss. 33(5), 33(6). 148. Amit Suryakant Lunavat v Kotak Securities 2010 SCC OnLine Bom 1434, at para. 9.

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Law, Practice and Procedure of Arbitration in India

However, the High Court of Bombay in Vitthalrao Shinde Sahakari Sakhar Karkhana Ltd. v Gangapur Sahakari Sakhar Karkhana Ltd.149 held that:

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“… the purpose behind this notice is only to give an opportunity to other side to have its say and contest the matter raised before the Arbitral Tribunal. Thus, it cannot be said that the consent of other side who will be benefited due to such omission is necessary for application under section 33(4) of the Act. If such interpretation of provision of section 33(4) is done, then this provision will be become otiose.”

The High Court of Delhi in Anita Mantri v Karvy Stock Broking Ltd.150 commented on the importance of giving the other party notice, and held that:

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“In view of Section 18, it cannot be disputed that quasi judicial proceedings such as before the Arbitrator have to be conducted in accordance with the principles of natural justice. It was necessary that before any additional Award was passed by the Arbitrator giving an additional relief that notice ought to have been issued … Since no notice for hearing was given or no response was called for from the appellant by the Arbitrator before passing the additional Award … have fallen into an error of law …”151

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There is no explicit provision in the Arbitration Act requiring the court to remit the award back to the arbitral tribunal to make an additional award. An application for an additional award must be made to the arbitral tribunal.

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For example, if the arbitral tribunal has not dealt with costs in its award, the parties should apply to it and request such an award.152 The arbitral tribunal’s improper refusal to make an additional award may constitute a ground to apply for setting aside of the award.153

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[38.6] REMISSION OF THE AWARD

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National laws provide domestic courts at the seat of arbitration with the power to remit and send back disputes, requiring the arbitral tribunal to revisit some, or all of its findings.154

1 49. (2017) SCC OnLine Bom 1669, at para. 21. 150. (2011) SCC OnLine Del 3799. 151. Anita Mantri v Karvy Stock Broking Ltd. (2011) SCC OnLine Del 3799, at para. 6. 152. Arbitration Act, s. 33. 153. David A.R. Williams, Amokura Kawharu, Williams & Kawharu on Arbitration (2011), p. 423, at para. 15.3.3. 154. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 576, at para. 10.21.

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Chapter 38—​Mistakes or Omissions in the Award

It is suggested that:

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“… national arbitration laws vary widely regarding the scope of the courts’ power of remission. Many take their cue from the UNCITRAL Model Law by linking remission to setting-​aside proceedings and thereby limiting the scope of grounds for remission to the narrow grounds available for setting aside … power to remit is essentially a means to ‘cure’ awards that might otherwise need to be set aside. By contrast, some national laws afford adopt a more flexible approach –​such as the United States, the courts of which do not necessarily limit remission to situations in which the only alternative is to vacate (that is, set aside) the award.”155

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The UNCITRAL Model Law156 as well as the arbitration statutes in England,157 and India,158 allow for remission in the context of a party’s application to the court to set aside the award.

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In England, in particular, while the court can remit the matter to an arbitral tribunal in case of a challenge based on serious irregularity,159 there is no power to remit in case of a challenge to the substantive jurisdiction of the award.160 Further, the courts are reluctant to remit the matter to the original tribunal where there has been a serious miscarriage of justice.161

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In India, under the erstwhile 1940 Act, the court had the power to remit the award to the tribunal, for reconsideration when:

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“(a) … the award has left undetermined any of the matters referred to arbitration, or where it determines any matter not referred to arbitration and such matter cannot be separated without affecting the determination of the matters referred; or

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(b) where the award is so indefinite as to be incapable of execution; or

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(c) where an objection to the legality of the award is apparent upon the face of it.”162

155. 156. 157. 158. 159. 160. 161. 162.

Ibid, pp. 576–​577, at para. 10.23. UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 34(4). English Arbitration Act, 1996, s. 68(3). Arbitration Act, s. 34(4). English Arbitration Act, 1996, s. 68(3)(a). See: Hussman (Europe) Ltd. v Ahmed Pharaon [2003] EWCA Civ 266. See: The Secretary of State for the Home Department v Raytheon [2015] EWHC 311 (TCC). Arbitration Act, 1940, s. 16.

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Law, Practice and Procedure of Arbitration in India

Further, the court also had the power to fix the time within which the tribunal was to reconsider the award. If the arbitral tribunal failed to reconsider within the specified time, the award would be rendered void.163

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Subsequent to the enactment of the Arbitration Act, the legal position on remission is aligned with that under the Model Law. The court now does not have the power to remit the award to the arbitral tribunal for a fresh decision. Its powers of remission are limited in scope.164

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The court must remit only those awards to the arbitral tribunal, that it believes to be correct, save for the curable defect. The court can adjourn the proceedings to give the arbitral tribunal an opportunity to resume the arbitral proceedings and eliminate a ground for setting aside the award.

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The Supreme Court of India in Kinari Mullick & Ors. v Ghanshyam Das Damani165 held that: (1) a party can only request remission before the setting aside of the award;



(2) an application for remission must be in writing; and



(3) the power to remit cannot be exercised by the court suo moto.

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The court can remit the award in a scenario where:

(1) it does not provide any reasoning for its decision,166



(2) the arbitral tribunal has failed to consider an objection to its jurisdiction;167 or



(3) a party was denied the chance to present its case.168

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The Court of Appeal of Singapore has held that the award must be remitted to the original tribunal that heard the matter, before approaching the court.169 If following remission, the defects in the award are cured, the application for setting aside should not be allowed.170 However, once the award has been set aside, it cannot be remitted.171

1 63. Arbitration Act, 1940, ss. 16(2), (3). 164. Radha Chemicals v Union of India Civil Appeal No. 10386 of 2018 (decided on 10 October 2018); MMTC v Vicnivass Agency (2008) SCC OnLine Mad 584, at para. 22. 165. (2018) 11 SCC 328, at paras 15, 16. 166. Dyna Technologies Pvt. Ltd. v Crompton Greaves Ltd., (2019) 20 SCC 1, (2019) SCC OnLine SC 1656. 167. Suresh Prabhu v Bombay Mercantile Co-​op Bank Ltd. & Ors. (2007) SCC OnLine Bom 181. 168. MMTC v Vicnivass Agency (2008) SCC OnLine Mad 584. 169. BLC and Ors v BLB and Anr. [2014] SGCA 40. 170. BSM v BSN & Ors. [2019] SGHC 185. 171. AKN v ALC [2015] SGCA 63.

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Chapter 38—​Mistakes or Omissions in the Award

[38.7] CONCLUSION The normal rule is that the arbitral tribunal becomes functus officio once it has rendered its final award. Once the final award is passed, the tribunal is not permitted to revise or reconsider the award in any way.

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However, most modern legal systems permit exceptions to this rule, so as to allow the arbitral tribunal to make modifications and corrections to the award. Firstly, the arbitral tribunal is permitted to make corrections to the award, even after issuance of the final award. Such corrections can be made by the tribunal on its own, or at the request of a party.

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The scope of corrections is limited to only clerical and typographical errors arising from accidental slips or omissions can be rectified. The “slip rule” is applicable to determine whether a particular correction can be made.

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Most arbitration statutes and international arbitration rules provide short time periods within which corrections are to be requested and made. This is to ensure certainty in the award process.

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Additionally, since the need for correction normally arises due to some mistake or shortfall on part of the arbitral tribunal, the arbitral tribunal cannot charge an additional fee for undertaking correction work.

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Secondly, the arbitral tribunal is permitted to interpret the award, even after issuance of the final award. Interpretation differs from correction since: (1) it does not alter the original award’s statements and only more clearly explains the rationale behind the same; and



(2) normally consent of all parties is required for the arbitral tribunal to make an interpretation.

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Lastly, the arbitral tribunal is permitted to issue an additional award, subsequent to the final award, to address those issues that were raised before it but not dealt with. Importantly, an additional award cannot be made for claims that were intentionally and consciously not dealt with. Apart from the above, most national courts also have the power to remit the award to the arbitral tribunal to allow it to correct any mistakes or omissions. This is done so that the arbitral tribunal can eliminate the grounds for setting aside the award.

Chapter 39 EFFECTS OF A VALID AWARD [39.1] INTRODUCTION....................................................................................................................... 1096 [39.2] EFFECT ON THE ARBITRAL TRIBUNAL............................................................................. 1097

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[39.3] EFFECT ON THE ARBITRATION AGREEMENT................................................................ 1098 [39.4] EFFECT ON THE PARTIES....................................................................................................... 1099 [39.5] EFFECT ON RIGHTS IN REM.................................................................................................. 1111 [39.6] EFFECT ON THIRD PARTIES.................................................................................................. 1112

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[39.7] CONCLUSION............................................................................................................................. 1113

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[39.1] INTRODUCTION

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The main objective of arbitration is achieving final adjudication of a dispute by making a valid and enforceable award.1 The award so made is final and binding upon the parties, and all persons claiming through or under them.2

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Only a valid award which is one that determines all the claims that were referred to arbitration, and which complies with all form and content requirements3 will be final and binding.4

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An award that is not valid is a nullity and is of no effect.5 However, an award that is voidable has all the effects of a valid award until it has been set aside or refused enforcement.6

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1. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), p. 975. 2. Arbitration Act, ss. 35, 46 (a domestic award is binding on the parties and all persons claiming under them. In contrast, a foreign award is binding upon the persons between whom it was made); Cheran Properties Limited v Kasturi and Sons Limited and Ors. (2018) 16 SCC 413, at para. 29 (“The expression ‘persons claiming under them’ in Section 35 widens the net of those whom the arbitral award binds. It does so by reaching out not only to the parties but to those who claim under them, as well. The expression ‘persons claiming under them’ is a legislative recognition of the doctrine that besides the parties, an arbitral award binds every person whose capacity or position is derived from and is the same as a party to the proceedings. Having derived its capacity from a party and being in the same position as a party to the proceedings binds a person who claims under it.”). See: English Arbitration Act, 1996, s. 58(1); UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 35(1). 3. For a detailed discussion on the form and contents of an arbitral award, see Chapter 36. 4. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), p. 987. 5. See: Arbitration Act, s. 48(1)(e) (“Enforcement of a foreign award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the court proof that … the award … has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.”). See Yukos Capital SarL v OJSC Rosneft Oil Company [2014] EWHC 2188 (Comm) (the Court held that it had the power to enforce awards in common law, notwithstanding the award being set aside by a foreign court). 6. F J Bloemen Pty Ltd v Council of City of Gold Coast [1973] AC 115.

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Chapter 39—​Effects of a Valid Award

A valid award made by an arbitral tribunal has an effect on the arbitral tribunal, the arbitration agreement, the parties, as well as third parties. It is conclusive with respect to all issues on which it is passed, unless it is successfully challenged and set aside. Hence, the finality of the award is subject to any recourse that an aggrieved party may have under a statute, or under an agreement to arbitrate.7

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An award does not have automatic effect on the subject matter of the arbitration and only creates an obligation that is enforceable.8 Hence, separate enforcement proceedings on the award will always be necessary.9

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This chapter will address the aspects of a valid award. The focus will be on a valid award, not one that is void or has been set aside.

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[39.2] EFFECT ON THE ARBITRAL TRIBUNAL

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Subject to certain exceptions, the arbitral tribunal becomes functus officio upon making of the final award. Its mandate terminates. It loses its authority to act.10

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This means that once the arbitral award becomes final and binding, the arbitral tribunal has no jurisdiction to make any addition/​alteration of even a minor nature to it.11

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Even if fresh evidence comes to light the arbitral tribunal cannot reopen the case or reexamine the issues.12 The arbitral tribunal has no power to alter the award in any manner and, if it does, its award becomes a nullity.13

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Every award issued by the arbitral tribunal carries preclusive effect on its subject matter, regardless of what other aspects of the dispute remain to be determined.14

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Even issuance of an interim award makes the arbitral tribunal functus officio in respect of the issues disposed in it.15 Further, a partial or an interim award can be

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7. Arbitration Act, ss. 34, 48; English Arbitration Act, 1996, s. 58(2). See: Centrotrade Minerals and Metals Inc. v Hindustan Copper Ltd. (2017) 2 SCC 228. 8. Robert Merkin, Arbitration Law (LLP 2004), p. 790. 9. See: Hunter v Rice (1812) 15 East 100 (104 ER 782); Thorpe v Eyre (1834) 1 Ad&El 926. 10. Arbitration Act, s. 32; UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 32(3). For a detailed discussion on the doctrine of functus officio, see Section 38.2 in Chapter 38. 11. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), p. 990. 12. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), p. 352, at para. 6-​166. 13. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), p. 409. 14. PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation (Indonesia) [2014] SGHC 146. 15. Aero Club v Solar Creations Pvt. Ltd. 2020 SCC OnLine Bom 472, at para. 19; Fidelitas Shipping Co Ltd v V/​O Exportchleb [1965] 1 Lloyd’s Rep 223, CA (Eng); Opotiki Packaging & Coolstorage Ltd v Opotiki Fruitgrowers Co-​operative Ltd (in receivership) 2003 1 NZLR 205; Paul Price v Ian Carter [2010] EWHC 1451 (TCC).

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Law, Practice and Procedure of Arbitration in India

enforced even if there are other issues outstanding in the reference.16 Hence, the finality of an interim award will depend on its form and contents.17 The exceptions to this doctrine are that: (1) The arbitral tribunal has the power to make corrections to the award;18



(2) the arbitral tribunal may issue an interpretation to the award;19 and



(3) the arbitral tribunal may make an additional award to address the issues that were omitted by it in its earlier award.20

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In addition to the above, the court may remit the dispute to the tribunal for it to revisit some, or all of its findings.21 The object of this is to allow the tribunal to repair the defect/​default in the award so as to avoid setting aside of the award.22

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[39.3] EFFECT ON THE ARBITRATION AGREEMENT

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A valid award creates new rights between the parties that supersede their previous rights, in relation to the matters that were referred to arbitration.23 For an example, in case of a contract, the winning party’s contractual rights are replaced with a right to enforce the award.24

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It is an implied term of an arbitration agreement that the parties agree to perform the award.25 Under institutional arbitration rules, too, parties are obligated to perform the award, immediately and without delay.26

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16. Marine Contractors Inc v Shell Petroleum Development Company of Nigeria Ltd. [1984] 2 Lloyd’s Rep 77; Overseas Fortune Shipping Pte Limited v Great Eastern Shipping Co Ltd, The Singapore Fortune [1987] 1 Lloyd’s Rep 270; Westland Helicopters Ltd v Al-​Hejailan [2004] EWHC 1625 (Comm). 17. Aero Club v Solar Creations Pvt. Ltd. 2020 SCC OnLine Bom 472, at para. 20. 18. For a detailed discussion on the power of the tribunal to correct the award, see Section [38.3] in Chapter 38. 19. For a detailed discussion on the power of the tribunal to interpret the award, see Section [38.4] in Chapter 38. 20. For a detailed discussion on the power of the tribunal to make an additional award, see Section [38.5] in Chapter 38. 21. For a detailed discussion on the power of the court to remit the award, see Section [38.6] in Chapter 38. 22. Radha Chemicals v Union of India Civil Appeal No. 10386/​2018 (10 October 2018); Kinnari Mullick and Another v Ghanshyam Das Damani (2018) 11 SCC 328. 23. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn., Sweet & Maxwell 2015), p. 351, at para. 6-​162. 24. Robert Merkin, Arbitration Law (LLP 2004), p. 787; FJ Bloemen Pty Ltd. v Council of City of the Gold Coast [1973] AC 115. 25. Associated Electric and Gas Insurance Services Ltd. v European Reinsurance Co. of Zurich [2003] UKPC 11, at para. 9. 26. SIAC Rules, 2016, r. 32.11; UNCITRAL Arbitration Rules, 2013, art. 34(2); ICC Arbitration Rules, 2021, art. 35(6); LCIA Arbitration Rules, 2020, art. 26.8.

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Hence, a valid award confers a new right of action on the successful party in substitution of the right under the arbitration agreement. It enables the award holder to approach the appropriate court for enforcement of the award, as a deemed decree of the court, in case the losing party does not perform the award.27

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The Supreme Court of India in Amazon.Com NV Investment Holdings LLC v Future Coupons Private Limited & Ors.,28 while giving recognition of awards passed by emergency arbitrators, held:

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“62. An Emergency Arbitrator's “award”, i.e., order, would undoubtedly be an order which furthers these very objectives, i.e., to decongest the court system and to give the parties urgent interim relief in cases which deserve such relief. Given the fact that party autonomy is respected by the Act and that there is otherwise no interdict against an Emergency Arbitrator being appointed, as has been held by us hereinabove, it is clear that an Emergency Arbitrator's order, which is exactly like an order of an arbitral tribunal once properly constituted, in that parties have to be heard and reasons are to be given, would fall within the institutional rules to which the parties have agreed, and would consequently be covered by Section 17(1), when read with the other provisions of the Act, as delineated above. 63. A party cannot be heard to say, after it participates in an Emergency Award proceeding, having agreed to institutional rules made in that regard, that thereafter it will not be bound by an Emergency Arbitrator's ruling. 68. We, therefore, answer the first question by declaring that full party autonomy is given by the Arbitration Act to have a dispute decided in accordance with institutional rules which can include Emergency Arbitrators delivering interim orders, described as “awards”. Such orders are an important step in aid of decongesting the civil courts and affording expeditious interim relief to the parties. Such orders are referable to and are made under Section 17(1) of the Arbitration Act.”

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[39.4] EFFECT ON THE PARTIES

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There would be little point in going through with an arbitration if a party were able to bring about another set of proceedings on the same cause of action. Hence, a final award is binding on the parties to arbitration and operates like a court judgment.29 27. Arbitration Act, s. 36; English Arbitration Act, 1996, s. 66. See: Sundaram Finance Limited v Abdul Samad and Anr. (2018) 3 SCC 622, at para. 14, 20. 28. 2021 SCC OnLine SC 557. 29. Robert Merkin, Arbitration Law (LLP 2204), p. 787; See: Pitcher v Rigby (1821) 9 Price 79; Caledonian Railway Co. v Turcan & Ors. [1898] AC 256.

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Law, Practice and Procedure of Arbitration in India

A final award creates an estoppel with regard to the matters it deals with. Hence, it prevents parties from pursuing the same matter in a later stage of the arbitration,30 or in subsequent proceedings.31 This is known as the principle of res judicata. The term “res judicata” literally translates to “a matter judged”. It is a doctrine that aims at “finality of litigation by preventing a party from re-​litigating any claim or issue already litigated.”32

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It mandates that the adjudication of a proceeding on the merits of the dispute is conclusive and binding on the parties and persons claiming through them. Such adjudication cannot be re-​agitated or re-​opened in subsequent proceedings involving the same subject matter, legal grounds, and parties, that is, the triple identity criteria.33

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The doctrine of res judicata has its genesis in two Latin maxims:34

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(1) Interest reipublicae ut sit finis litium; namely, ending litigation is in public interest and so, “no one needs to be vexed twice for one and the same cause”; and

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(2) Nemo debet bis vexari pro una et eadem causa; namely, a person should not be proceeded against twice, for the same cause. Redfern and Hunter on International Arbitration, explain:

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“The basic principle of res judicata is that a legal right or obligation, or any facts, specifically put in issue and determined by a court or tribunal of competent jurisdiction cannot later be put back into question as between the same parties.”35

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The bar to fresh proceedings applies to claims coming with the reference to arbitration, irrespective of whether they were brought to the notice of the arbitral tribunal.36 Even

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30. Westland Helicopters Ltd. v Al Hejailan [2004] EWHC 1625 (Comm), [2004] 2 Lloyd’s Rep 523. 31. KV George v Secy. to Government, Water and Power Department, Trivandrum (1989) 4 SCC 595; Daryao v State of Uttar Pradesh (1962) 1 SCR 574; Hope Plantations Ltd. v Taluk Land Board, Peermade (1999) 5 SCC 590; Fidelitas Shipping Co. Ltd. v V/​o Exportchleb [1965] 1 Lloyd’s Rep 223, CA (Eng); Noble Assurance Co. v Gerling Konzern General Insurance Co. [2007] EWHC 253 (Comm); Charles M. Willie and Co (Shipping) Ltd. v Ocean Laser Shipping Ltd. [1999] 1 Lloyd’s Rep 225. 32. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), p. 1394; Satyadhan Ghosal & Ors. v Deorajin Debi & Anr. (1960) 3 SCR 590. 33. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), p. 1394. 34. 16 Halsbury’s Laws of England, p. 852, n. 1. See: M. Nagabhushana v State of Karnataka (2011) 3 SCC 408. 35. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 559, at para. 9.173. 36. Willday v Taylor (1977) 241 EG 83; Nomihold Securities Inc. v Mobile Telesystems Finance SA [2012] EWHC 130 (Comm).

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Chapter 39—​Effects of a Valid Award

if some part of the loss had not become apparent at the date of the award res judicata will apply.37 A party cannot institute fresh proceedings, even if the award is unsatisfied. The proper course of action is to request enforcement of the award.38

Hence, res judicata has the following consequences40:

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Neither can a party contend in appeal that there was no arbitration agreement, post the passing of an award (if it has specifically conceded that the appointment of the arbitrator was valid), since such a contention will be barred by res judicata.39

(1) fresh proceedings cannot be instituted to re-​adjudicate the issues that have been determined;41



(2) any finding of fact and law in the award will be conclusive if it has a bearing on a subsequent proceeding on a different issue between the same parties;42

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The principle of res judicata broadly falls into two categories:43 (1) cause of action estoppel: this prevents a party for re-​litigating the same action against the other; and



(2) issue estoppel: this prevents a party from questioning or denying an issue which has already been decided in previous proceedings between the parties.44

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37. Clegg v Dearden [1848] 12 QB 576; Conquer v Boot [1928] 2 KB 336 (Courts in some cases have been able to avoid this rule by finding an intention on part of the parties to allow losses to be assessed serially.) See: EE & Brian Smith (1928) Ltd. v Wheatsheaf Mills [1939] 2 KB 302; Purser & Co. (Hillingdon) Ltd. v Jackson [1976] 3 All ER 641. 38. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), p. 359, at para. 6-​179. 39. J. Kodanda Rami Reddy v State of AP and Ors. (2011) 1 SCC 197. 40. Robert Merkin, Arbitration Law (LLP 2004), p. 789. 41. Shanmughasundaram and ors. v Diravia Nadar and Anr. (2005) 10 SCC 728. 42. Sybray v White [1836] 1 M&W 435; Lord Feversham v Emerson [1855] 11 Exch 385. 43. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 559, at para. 9.174. 44. See: Arnold v National Westminster Bank plc. [1991] 3 All ER 41, [1991] 2 AC 93 (“Cause of action estoppel arises where the cause of action in the later proceedings is identical to that in the earlier proceedings, the latter having been between the same parties or their privies and having involved the same subject matter … the bar is absolute in relation to all points decide unless fraud or collusion is alleged, such as to justify setting aside the earlier judgment … issue estoppel may arise where a particular issue forming a necessary ingredient in a cause of action, has been litigated and decided and in subsequent proceedings between the same parties involving a different cause of action to which the same issue is relevant, one of the parties seeks to re-​open that issue.”).

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Law, Practice and Procedure of Arbitration in India

The Supreme Court of United Kingdom in Virgin Atlantic Airways Ltd. v Zodiac Seats UK Ltd.45 held:

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“… once a cause of action has been held to exist or not to exist, that outcome may not be challenged by either party in subsequent proceedings. This is ‘cause of action estoppel’… where the claimant succeeded in the first action and does not challenge the outcome, he may not bring a second action on the same cause of action … even where the cause of action is not the same in the later action as it was in the earlier one, some issue which is necessarily common to both was decided on the earlier occasion and is binding on the parties … ‘issue estoppel’ was the expression devised to describe this principle… …res judicata bars not only subsequent re-​litigation of a claim previously asserted, but subsequent re-​litigation of any claims relating to the same cause of action … which might have been made…”

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The Supreme Court of India in Bhanu Kumar Jain v Archana Kumar & Anr.46 held that there is a distinction between issue estoppel and res judicata. While the former is invoked against a party, the latter debars a court from determining the matter if it has attained finality between the parties.

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In many civil law countries, res judicata is only applied as cause of action estoppel to the dispositive part of the award, but not to the reasons.47 Further, the types of res judicata may often be used interchangeably.48

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Res judicata normally only applies to parties and the persons claiming under them.49 Some contracts in the construction field, however, provide for name borrowing so that a party can bring arbitration proceedings against a third party, in the name of another. In such a situation, the award will also bind the party whose name is borrowed.50

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45. [2013] UKSC 46, at para. 17. See: Baxendale-​Walker v APL Management Ltd. [2018] EWHC 543 (Ch). 46. (2005) 1 SCC 787, at para. 30 (“Res judicata debars a court from exercising its jurisdiction to determine the lis if it has attained finality between the parties whereas the doctrine issue estoppel is invoked against the party. If such an issue is decided against him, he would be estopped from raising the same in the latter proceeding. The doctrine of res judicata creates a different kind of estoppel viz. estoppel by accord.”). 47. This is the position in Switzerland, Germany, and Sweden. However, in France, Belgium, and the Netherlands, recourse can be had to the reasons to explain the meaning of the dispositive portion. See Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 559, at para. 9.174. 48. Ravinder Singh v Sukhbir Singh and Ors. (2013) 9 SCC 245. 49. Ravi Prakash Goel v Chandra Prakash Goel (2008) 13 SCC 667. 50. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), p. 360, at para. 6-​182; See: Gordon Durham & Co. Ltd. v Haden Young Ltd. 27 Con. LR 109.

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Chapter 39—​Effects of a Valid Award

Res judicata is provided in the Code of Civil Procedure, 1908.51 It is applicable to arbitration proceedings.52 However, the Supreme Court of India has held that issue estoppel will have no application to civil proceedings.53

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Determination of whether res judicata is applicable or not is a question of fact requiring “examination of materials and evidence on record”.54 Further, res judicata is considered a part of the public policy of India. Re-​litigation of the same issue constitutes abuse of law and is vexatious and oppressive.55

Cause of Action Estoppel

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A claim in a second arbitration, on the same cause of action, is an abuse of process, and barred by res judicata.56 A party is also barred from instituting fresh proceedings to recover additional losses from the same cause of action.57

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This is known as cause of action58 estoppel, that is, being estopped by a previous decision where the cause of action has been raised and already conclusively determined.59

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The bar in such cases is absolute in respect of all the points decided by the tribunal, unless fraud or collusion is alleged to justify setting aside of the earlier judgment.60 If courts are willing to enforce awards that have been set-​aside in other jurisdictions,61 they would apply cause of action estoppel principles if re-​litigation of an award was attempted.

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51. Code of Civil Procedure, 1908, s. 11. 52. See: KV George v Secretary to Govt., Water and Power department, Trivandrum (1989) 4 SCC 595, at para. 16 (“with regard to the submission as to the applicability of the principles of res judicata as provided in Section 11 of the Code of Civil Procedure to arbitration case, it is to be noted that Section 41 provides that the provisions of the Code of Civil Procedure will apply to the Arbitration proceedings.”); Indian Oil Corporation Ltd. v SPS Engineering Ltd. (2011) 3 SCC 507. 53. Venture Global Engg. LLC v Tech Mahindra Ltd. (2018) 1 SCC 656, at para. 124, 126. 54. Abhinav Knowledge Services Pvt. Ltd. v Babasaheb Ambedkar Open University 2017 SCC OnLine Guj 1170, at para. 20. 55. Union of India v Videocon Industries Ltd. 2012 SCC OnLine Del 1368. 56. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 560, at para. 9.177; Injazat Technology Capital Ltd. v Dr. Hamid Najafi [2012] EWHC 4171; Swallowfalls Ltd. v Monaco Yachting and Technologies SAM [2015] EWHC 2013. 57. Conquer v Boot [1928] 2 KB 336; Naamlooze Vennootschap Handels-​en-​Transport Maatschappij “Vulcan” v A/​ S J Ludwig Mowinckels Rederi [1938] 2 All ER 152; Cie Graniere SA v Fritz Kopp AG [1978] 1 Lloyd’s Rep 511; Telfair Shipping Corp v Inersea Carriers SA, The Caroline P [1983] 2 Lloyd’s Rep 351; H E Daniels Ltd v Carmel Exporters and Importers Ltd [1953] 2 QB 242. 58. Cause of action comprises of all facts and circumstances necessary to give rise to a right of relief. 59. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), p. 982. 60. Ibid; Bhanu Kumar Jain v Archana Kumar & Anr. (2005) 1 SCC 787. 61. Yukos Capital SARL v OJSC Oil Company Rosneft [2014] EWHC 2188 (Comm).

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Law, Practice and Procedure of Arbitration in India

The ILA Committee62 has endorsed application of the cause of action estoppel which depends on the triple identity test, that is, same parties, same subject matter, and same relief. Recommendation 3 provides that: “3. An arbitral award has conclusive and preclusive effects in further arbitral proceedings if: • it has become final and binding in the country of origin and there is no impediment to recognition in the country of the place of subsequent arbitration;



• it has decided on or disposed of a claim for relief which is sought or is being reargued in the further arbitration proceedings;



• it is based upon a cause of action which is invoked in the further arbitration proceedings or which forms the basis for the subsequent arbitration proceedings; and



• it has been rendered between the same parties.”63

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The doctrine of cause of action estoppel64 applies to subsequent arbitration matters.65 It also applies to litigation arising out of the arbitration, such as enforcement proceedings.66

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However, the High Court of Delhi in Cruz City 1 Mauritius Holdings v Unitech Limited67 held that the findings of the supervisory court deciding an annulment application would not operate as res judicata before the enforcing court deciding an enforcement application, because:

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“… the decision of the arbitral tribunal or the Court where the award was assailed … may have persuasive value … However, it would not be correct to

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62. Filip De Ly and Audley Sheppard, International Law Association Committee (ILA) “International Commercial Arbitration Committee Reports on Lis Pendens and Res Judicata” (1 March 2009) Arbitration International, Vol. 25, Issue 1, pp. 1–​2. 63. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), pp. 560–​561, at para. 9.178. 64. Hope Plantations Ltd. v Taluk Land Board, Peermade (1999) 5 SCC 590; Manoharan a/​l Malayalam v Menteri Dalam Negeri, Malaysia [2009] 2 MLJ 660. 65. Siporex Trade SA v Comdel Commodities Ltd [1986] 2 Lloyd’s Rep 428; Fidelitas Shipping Co Ltd v V/​O Exportchleb [1965] 2 All ER 4. 66. International Investor KCSC v Sanghi Polyesters Ltd. (2003) (1) ALT 36; Carpatsky Petroleum Corporation v PJSC Ukrnafta [2020] EWHC 769 (Comm); Noble Assurance Co v Gerling-​Konzern General Insurance Co [2007] EWHC 253 (Comm). 67. (2017) SCC OnLine Del 7810, at para. 22.

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Chapter 39—​Effects of a Valid Award

hold that the enforcing court is bound to do so and that an unsuccessful party is precluded, on the ground of res judicata, to furnish proof to establish the grounds set out in Section 48 … to resist recognition and enforcement of a foreign award.”

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The rights of the successful party no longer lie in the original cause of action, but in the right to enforce the award.68 Hence, if the losing party does not implement the award, the cause of action does not get resurrected; instead, the winning party has to initiate proceedings to enforce the award.69

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The doctrine of “cause of action estoppel” has been extended to cover disputes that the arbitral tribunal was asked to decide, as well as, matters for which it would be an abuse of process to allow new proceedings to be commenced.70

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Hence, an unsuccessful claimant in arbitration cannot commence fresh court proceedings or arbitration based on the same cause of action.71 The court would either exercise its inherent jurisdiction to strike out such a claim as an abuse of process or restrain the claimant from referring the matter to arbitration.72

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However, there are exceptions to this rule, which are as follows: (1) If the reference to arbitration does not confer upon the arbitrators the jurisdiction to resolve all disputed matters;73



(2) If the cause of action falls outside the terms of the arbitration agreement;74 or

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68. Purslow v Baily (1704) 2 Ld Raym 1039; Bremer Oeltransport GmbH v Drewry (1933) 1 KB 753; F J Bloemen Pty Ltd v Gold Coast City Council [1973] AC 115. 69. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), p. 359, at para. 6-​179; F J Bloemen Pty Ltd v Gold Coast City Council [1973] AC 115; H E Daniels Ltd v Carmel Exporters & Importers Ltd [1953] 2 QB 242; Stargas SpA v Petredec Ltd, The Sargasso [1994)] 1 Lloyd’s Rep 412. 70. Greenhalgh v Mallard [1947] 2 All ER 255; Ethiopian Oilseeds and Pulses Export Corpn v Rio Del Mar Foods Inc [1990] 1 Lloyd’s Rep 86. 71. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.173–​9.181. 72. Fidelitas Shipping v V/​O Exportchleb [1965] 2 All ER 4; Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581; Dallal v Bank Mellat [1986] QB 441; Arnold v National Westminster Bank plc [1991] 3 All ER 41. 73. Marks v Marriot (1696) 1 Ld Raym 114; Compagnie Graniere SA v Fritz Kopp AG [1980] 1 Lloyd’s Rep 463; Telfair Shipping Corporation v Inersea Carriers SA, The Caroline P [1983] 2 Lloyd’s Rep 351; Excomm Ltd. v Guan Guan Shipping (Pte) Ltd., The Golden Bear [1987] 1 Lloyd’s Rep 330. 74. Gueret v Auduoy (1893) 62 LJQB 633; Crane v Hegeman-​Harris Co Inc [1939] 4 All ER 68; Cie Graniere SA v Fritz Kopp AG [1980] 1 Lloyd’s Rep 463; Telfair Shipping Corpn v Inersea Carriers SA, The Caroline P [1985] 1 All ER 243; Excomm Ltd v Guan Guan Shipping (Pte) Ltd, The Golden Bear [1987] 1 Lloyd’s Rep 330.

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Law, Practice and Procedure of Arbitration in India



(3) If disputes have arisen after the reference to arbitration;75



(4) If the original cause of action remains in existence.76

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Additionally, if the award is declaratory in nature, it cannot be directly enforced. In such a situation, the winning party would have to bring separate judicial proceedings on the original cause of action and rely upon the award as evidence of his right.77

Issue Estoppel

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There is no doctrine of stare decisis in arbitration. Hence, an arbitral tribunal’s previous decision will not ordinarily be binding in a subsequent dispute between the same parties with a different cause of action.78

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However, the arbitral tribunal’s previous decision will still be relevant in the resolution of a subsequent dispute between the same parties by application of the doctrine of issue estoppel.79 This is because, even if the cause of action is different, a party cannot contradict an earlier finding on an issue.80

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While the doctrine of cause of action estoppel prohibits re-​litigation of the same cause of action, the concept of issue estoppel is narrower and prevents a re-​opening of questions of the state of law or fact which have earlier been established.

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Four conditions must be satisfied to establish issue estoppel, namely:81 (1) The judgment must have been given by a court of competent jurisdiction;



(2) the judgment must be final, conclusive, and supported by reasons;

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75. Rees v Phelps (1689) 3 Mod Rep 264; HE Daniels Ltd. v Carmel Exporters & Importers Ltd. [1953] 2 QB 242; Ravee v Farmer (1791) 4 Term Rep 146. 76. Robert Merkin, Arbitration Law (LLP 2004), p. 787. 77. Robert Merkin, Arbitration Law (LLP 2004), p. 788. 78. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 561, at para. 9.179. 79. See: Hope Plantations Ltd. v Taluk Land Board, Peermade (1999) 5 SCC 590, at para. 26 (“… once an issue has been finally determined, parties cannot subsequently in the same suit advance arguments or adduce further evidence directed to showing that the issue was wrongly determined. Their only remedy is to approach the higher forum … determination of the issue … gives rise to … an issue estoppel. It operates in any subsequent proceedings in the same suit in which the issue had been determined. It also operates in subsequent suits between the same parties in which the same issue arises …”). 80. Arts & Antiques Ltd. v Richards [2013] EWHC 3361; Associated Electric & Gas Insurance Services Ltd. v European Reinsurance Co. of Zurich [2003] 1 WLR 1041. 81. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), p. 983.

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Chapter 39—​Effects of a Valid Award



(3) it must identify the parties; and



(4) issue must be the same as that arising in the subsequent proceedings.

The Supreme Court of India has observed that the principles of preclusion such as issue estoppel and res judicata are fundamental principles of law and are based on public policy and private justice.82

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Thus, in any subsequent proceedings between the parties on other matters, any finding of fact or law in an earlier award relevant to the matters in difference in those proceedings would be conclusive as between them,83 unless a third party is involved.84

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The issues referred to arbitration will be subject to estoppel even if they have not been determined in the award, as long as the award has not been challenged on the basis of a failure to deal with the issues.85 Further, the award will even be binding as to those issues that were resolved by necessary implication.86

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A ruling on a particular issue cannot be challenged by putting forward different arguments.87 If a party has failed to raise a point in the earlier proceeding due to negligence, the party would not be allowed to do so in the later proceeding, unless there are special circumstances justifying the same.88

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The Supreme Court of India has held that the principle of issue estoppel prevents a party from initiating arbitral proceedings, if the court has held that it has jurisdiction to try the dispute. It is not required to refer the same to arbitration.90

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Similarly, once it has been held that the arbitration has a foreign seat, a party is precluded from arguing that Part I of the Arbitration Act will apply.91

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82. Hope Plantations Ltd. v Taluk Land Board, Peermade (1999) 5 SCC 590. 83. Union of India v Videocon Industries Ltd. 2012 SCC OnLine Del 1368; Cruz City 1 Mauritius Holdings v Unitech Limited 2017 SCC OnLine Del 7810; Aktiebolaget Legis v V Berg & Sons Ltd [1964] 1 Lloyd’s Rep 203. 84. Imperial Gas Light and Coke Co v Broadbent [1859] 7 HL Cas 600. 85. Lidi GmbJ v Just Fitness Ltd. [2010] EWHC 39. 86. See: Middlemiss & Gould v Hartlepool Corporation [1973] 1 All ER 172. 87. Fidelitas Shipping Company Ltd. v V/​O Exportchleb [1965] 1 Lloyd’s Rep 13. 88. Johnson v Gore Wood [2002] 2 AC 1; Fidelitas Shipping Company Ltd. v V/​O Exportchleb [1965] 1 Lloyd’s Rep 13; Middlemiss & Gould (a firm) v Hartlepool Corpn [1973] 1 All ER 172; Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd (formerly Contour Aerospace Ltd) [2013] UKSC 46. 89. Associated Electric and Gas insurance Services Ltd. v European Reinsurance Co. of Zurich (2003) 1 WLR 1041. 90. Anil v Rajendra (2015) 2 SCC 583. 91. Union of India v Reliance Industries Ltd. (2015) 10 SCC 213.

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Law, Practice and Procedure of Arbitration in India

Where however, the arbitral tribunal’s decision on an issue turned out to be erroneous or inconsistent with judicial decisions subsequently made, issue estoppel would not apply to prevent a party from raising the issue in subsequent disputes between the parties.92

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Issue estoppel does not operate so broadly as to exclude every issue raised in an arbitration from future proceedings. Only the determination of issues that are necessary to the decision of the arbitral tribunal will become estopped in this way and a collateral or obiter93 determination would not fall within the doctrine of issue estoppel.94

The ILA Committee has endorsed the application of issue estoppel in international arbitrations. Recommendations 4 and 5 provide that:95

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“4. An arbitral award has conclusive and preclusive effects in the further arbitral proceedings as to: • Determinations and relief contained in its dispositive part as well as in all reasoning necessary thereto;



• Issue of fact or law which have actually been arbitrated and determined by it, provided any such determination was essential or fundamental to the dispositive part of the arbitral award.

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5. An arbitral award has preclusive effects in the further arbitral proceedings as to a claim, cause of action or issue of fact or law, which could have been raised, but was not, in the proceedings resulting in that award, provided that the raising of any such new claim, cause of action or new issue of fact or law amounts to procedural unfairness or abuse.”

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Res Judicata Challenge: Jurisdictional or Admissibility Issue

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Parties to arbitration often raise challenges on grounds of res judicata, both before the arbitral tribunals as well as courts. Thus, it becomes important to determine whether a res judicata issue is a jurisdictional challenge or an admissibility one.96

92. Arnold v National Westminster Bank plc (No 2) [1993] 1 EG 94. 93. Hope Plantations Limited v Taluk Land Board, Peermade (1999) 5 SCC 590; Good Challenger Navegante SA v Metal Export Import SA, The Good Challenger [2003] EWCA Civ 1668. 94. Sun Life Assurance Company of Canada & Ors v The Lincoln National Life Insurance Co [2004] EWCA Civ 1660; Arnold v National Westminster Bank plc. [1991] 3 All ER 41; Amalgamated Coal Fields Ltd. v Janapada Sabha AIR 1964 SC 1013, at para. 18. 95. Filip De Ly and Audley Sheppard, International Law Association Committee (ILA) “International Commercial Arbitration Committee Reports on Lis Pendens and Res Judicata” (1 March 2009) Arbitration International, Vol. 25, Issue 1, Pt. II, at para. 4 and 5. 96. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), p. 1403.

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A jurisdictional challenge raises questions about the tribunal’s authority and competence.97 An admissibility challenge, on the other hand, attacks the validity of the claim rather than the forum. It alleges that the claim should not be heard in any forum.98 If the challenge is jurisdictional, the courts have the authority to review the arbitral tribunal’s decisions. However, in an admissibility challenge, the power to review lies with the arbitral tribunal.99

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The effect of both challenges is similar. They will both postpone or prevent a final judgment on the matter.100 Res judicata objections in international arbitration may be: (1) considered an admissibility issue;



(2) considered a jurisdictional issue; or



(3) considered to be neither an admissibility nor a jurisdictional issue.

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Various jurisdictions, like France and the US have considered res judicata to be an admissibility issue. The Ninth Circuit Court of Appeals of United States of America in Chiron Corporations v Ortho Diagnostic Systems Inc.101 held that a res judicata objection is to be decided by the arbitral tribunal and not by the courts.102

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However, in other jurisdictions, res judicata is treated as a jurisdictional issue. The ICSID tribunal in AMCO v Republic of Indonesia (Resubmitted Case)103 classified the res judicata objection as a jurisdictional challenge.

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Lastly, there are jurisdictions (for instance, Hungary and Switzerland) where res judicata is treated neither as an admissibility nor a jurisdictional issue but treated as an issue of public policy.104

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97. Jan Paulsson, Jurisdiction and Admissibility, Global Reflections on International Law, Commerce and Dispute Resolutions, Liber Amicorum in Honour of Robert Briner 615 (2005), pp. 601–​617, at p. 617. 98. Gretta Walters, “Fitting a Square Peg into a Round Hole: Do Res Judicata Challenges in International Arbitration Constitute Jurisdictional or Admissibility Problems?” (2012) Journal of International Arbitration, Kluwer Law International, Vol. 29, Issue 6, pp. 651–​680, at p. 660. 99. Ibid, pp. 651–​680, at p. 661. 100. Nikita V. Nota, “International Arbitration: Some Reflections on Jurisdiction and Admissibility” (2010) 2 Ukranian J. Bus. L. 31, p. 32. 101. 207 F.3d 1126 (9th Cir. 2000), decided on 28 March 2000. 102. See: Marriot International Hotels Inc. v JNAH Development S.A. Paris Court of Appeal No. 09/​13550, decided on 09 September 2010. 103. ICSID Case No. ARB/​81/​1 (1992) 89 ILR 552, decision on jurisdiction. 104. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), p. 1404; Gretta Walters, “Fitting a Square Peg into a Round Hole: Do Res Judicata Challenges in International Arbitration Constitute Jurisdictional or Admissibility Problems?” (2012) Journal of International Arbitration, Kluwer Law International, Vol. 29, Issue 6, pp. 651–​680, at p. 669.

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Law, Practice and Procedure of Arbitration in India

A res judicata objection deals with a defect in the claim itself, rather than a defect in the forum. Since arbitrations are based on mutual consent of the parties, the res judicata objection should be characterised as an admissibility issue. Therefore, courts at the seat or at the place of enforcement should limit review of such decisions to public policy concerns.105

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Applicable Law for Determining Res Judicata Challenge The scope of the doctrine of res judicata varies from one jurisdiction to another despite it being recognised and used in almost every jurisdiction.106 A determination of the law governing the arbitration will determine the scope of res judicata.

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International commercial arbitrations are often governed by more than one law, namely, the procedural law or the law of the seat and the substantive law or governing law.107 Res judicata is normally considered to be a part of the procedural law, as:

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“it is a rule of evidence in common law jurisdictions and is codified in procedural codes in civil law jurisdictions”.108

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However, in some instances, arbitral tribunals, especially in England and the US, have applied substantive law to submissions on res judicata.109 In other cases, arbitral tribunals did not specify the law governing the issue of res judicata, nor did they base their reasoning on any particular legal basis.

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These arbitral tribunals based their reasoning entirely on the premise that prior awards must be considered final and binding in subsequent arbitral proceedings, unless successfully challenged before the competent domestic courts.110 Hence, res judicata principles are applied, detached from any particular legal system111

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105. Gretta Walters, “Fitting a Square Peg into a Round Hole: Do Res Judicata Challenges in International Arbitration Constitute Jurisdictional or Admissibility Problems?” (2012) Journal of International Arbitration, Kluwer Law International, Vol. 29, Issue 6, pp. 651–​680, at p. 670. 106. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), p. 1405. 107. Ibid. 108. International Law Association, Committee on International Commercial Arbitration, Interim Report on Res judicata in international commercial arbitration; ICC Award Case No. 13507, Yearbook Commercial Arbitration, Vol. XXXV, 158-​67 (2000); Bernard Hanotiau, “Chapter 17: Res Judicata and the Could Have Been Claims” in Neil Kaplan and Michael J. Moser (eds), Jurisdiction, Admissibility and Choice of Law in International Arbitration: Liber Amicorum Michael Pryles (Kluwer Law International 2018), pp. 289–​302; ICC Case No. 7438 of 1994. 109. Silja Schaffstein, The Doctrine of Res Judicata Before International Arbitral Tribunals, 2012, available at https://​ qmro.qmul.ac.uk/​xmlui/​bitstream/​handle/​123456789/​8665/​S chaffstein_​S_​PhD_​Final.pdf?sequence=1, pp.143, 168; ICC Case No. 6293 of 1990; ICC Case No. 10027 of 2000 (the tribunal stated that in its opinion, res judicata was a matter of procedure). 110. ICC Case No. 3383 of 1979. 111. ICC Case No. 6363 of 1991.

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Chapter 39—​Effects of a Valid Award

There does not seem to be a consistent approach among arbitral tribunals to apply the law of the seat of the arbitration to determine res judicata issues. While most tribunals have applied the law of the seat, they have often refrained from justifying the choice-​of-​law amongst all the other available options.112

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Moreover, the rationale of some arbitral tribunals to apply res judicata rules of the arbitral seat on the basis that it is a procedural matter appears to be flawed. It disregards the general understanding that international arbitral tribunals have no lex fori and are not bound by any domestic legal principles.

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[39.5] EFFECT ON RIGHTS IN REM

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Arbitral tribunals may choose to apply transnational res judicata principles, detached from any particular domestic law, while taking into account the nature and objectives of international commercial arbitration.113

Mustill and Boyd state:

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An award operates in personam and not in rem.114 Since an arbitral award cannot determine rights in rem,115 a claimant is not barred from initiating proceedings in rem, on the same cause of action, unless the cause of action has been satisfied by performance of the award.116 In such a situation, the award will be evidence of the winning party’s legal rights in the proceedings in rem.117

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“The question whether an award operates is a bar to further proceedings depends on whether the arbitrator has made an award of damages, or for the payment of a debt, or has merely made a declaration as to the rights of the parties. Moreover, the position may be different depending on whether the further proceedings are in personam or in rem.”118

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Sir James Hannen J., in The Cella119 said the decision may turn on the difference in character between actions in rem and in personam. The plaintiff in an action in rem can

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112. Silja Schaffstein, The Doctrine of Res Judicata Before International Arbitral Tribunals, 2012, available at https://​ qmro.qmul.ac.uk/​xmlui/​bitstream/​handle/​123456789/​8665/​S chaffstein_​S_​PhD_​Final.pdf?sequence=1, p. 146. 113. Ibid, pp. 95, 173. 114. SC Rolinay Sea Star Srl v The Bumbesti (owners) The Bumbesti [1999] All ER (D) 691. 115. Fulham Football Club (1987) Ltd. v Sir David Richards [2010] EWHC 3111 (Ch), at para. 72. 116. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), p. 359, at para. 6-​180; The Sylph [1867] LR 2 A & E; The Rena K [1978] 1 Lloyd’s Rep 545, at p. 560. 117. Robert Merkin, Arbitration Law (LLP 2004), p. 788; The Sylph (1867) LR 2 A & E 24; The Tuyuti [1984] 2 Lloyd’s Rep 51; The Rena K [1978] 1 Lloyd’s Rep 545. 118. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), p. 409. 119. [1888] 13 PD 82. See: The Rena K [1978] 1 Lloyd’s Rep 545.

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Law, Practice and Procedure of Arbitration in India

proceed to judgment on the basis of the award. He does not have to prove his claim all over again as the award gives rise to an issue of estoppel.120

[39.6] EFFECT ON THIRD PARTIES An award operates in personam and is only binding upon the parties to the arbitration and the persons claiming under them.121

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No obligations can be imposed upon a third party by an arbitration award.122 The award can also not affect the rights of a third party. By way of an example, a party cannot, in an award, be directed to terminate a contract with a third party to the arbitration.123

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Pertinently, the award cannot be invoked or enforced124 by third parties, even if they are a member of the same group of companies.125 Neither will it be binding in a subsequent arbitration with a third party.126 Further, a person who is not a party can bring no challenge to the award.127

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Hence, the fact that an award has no direct effect on third party rights has the following consequences: (1) The factual findings in an award cannot be used as evidence in proceedings involving third parties, whether or not a party to the arbitration is affected by those proceedings, unless the parties to the arbitration agree, or the court gives leave;128 and (2) if allowed, any factual findings of the award will only be of persuasive significance, in proceedings involving third parties.129

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There are, however, certain circumstances when the award will bind the third party:

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120. The Tuyuti [1984] 2 Lloyd’s Rep 51. 121. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 562, at paras 9.183–​9.184; Arbitration Act, s. 35; English Arbitration Act, 1996, s. 58 (1). See: Ravi Prakash Goel v Chandra Prakash Goel (2008) 13 SCC 667; Sun Life Assurance Co. of Canada v Lincoln National Life Insurance Co. [2004] EWCA Civ 1660; Fulham Football Club Limited v Sir David Richards [2010] EWHC 3111 (Ch); OMV Petrom SA v Glencore International AG [2014] EWHC 242 (Comm). 122. Tunbridge Wells Local Board v Ackroyd (1880) 5 Ex D 199; Re Kitchin, Ex parte Young (1881) 17 Ch D 668; Kastner v Jason [2004] EWHC 592 (Ch). 123. Wicks v Cox [1847] 11 Jur 542; Hern v Dryden (1710) 11 Mod Rep 272; Turner v Swainson (1836) 1 M & W 572. 124. Robertson v Hatton (1857) 26 LJ Ex 293; Ex parte Skeete (1839) 2 Will Woll & H 49. 125. Golden Ocean Group Ltd. v Humpuss Intermoda Transportasi Tbk Ltd. [2013] EWHC 1240 (Comm). 126. Sacor Maritime SA v Repsol Petroleo SA [1998] 1 Lloyd’s Rep 518. 127. Methanex Motunui Ltd. v Spellman [2004] 1 NZLR 95. 128. Mitchell Construction Kinnear Moodie Group v East Anglia Regional Hospital Board [1971] CLY 375; Dolling-​ Baker v Merrett [1991] 2 All ER 890. 129. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at paras 9.182–​9.185.

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Chapter 39—​Effects of a Valid Award

(1) When the third party has agreed to be bound by it;130



(2) when the third party is interested in the subject matter of arbitration, has attended proceedings, or acquiesced to be bound by the award;131



(3) when the third party has entered into a binding agreement to honour the arbitration award;132



(4) to establish that the subsequent proceedings are an abuse of process.133 (However, the court must be wary when allowing third parties to rely upon the award on this ground);134



(5) when the contractual context gives rise to third party rights;135 and



(6) to quantify the loss suffered by a party that he seeks to recover in subsequent proceedings against a third party.136

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[39.7] CONCLUSION

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A valid award is final, binding, and conclusive on all issues that it refers to and has several important effects.

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Firstly, the award results in the arbitral tribunal becoming functus officio. The mandate of the tribunal terminates, and it loses the power to alter or modify the award, in any manner.

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However, as stated in Chapter 38, this rule is subject to certain exceptions. The arbitral tribunal may make changes to the award to correct it, interpret it, or address any additional issues that were unintentionally omitted by it.

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130. Thomas Jackson v Henderson, Craig & Co. (1916) 115 LT 36; Govett v Richmond [1834] 7 Sim 1; The Tuyuti [1984] 2 Lloyd’s Rep 51. 131. Thomas v Atherton [1877] 10 Ch D 185; West v Dowuman 1879 39 LT 666. 132. Hawkins v Benton [1846] 8 QB 479. 133. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), p. 361, at para. 6-​ 184; Arts & Antiquities Ltd. v Richards [2013] EWHC 3361; Michael Wilson v Thomas Sinclair [2012] EWHC 2560. 134. Michael Wilson v Thomas Sinclair [2012] EWHC 2560 (“… it will probably be a rare case where an action in this court against a non-​party to an arbitration can be said to be an abuse of the process of this court. Where a claimant has a claim against two or more persons and is obliged to bring one such claim in arbitration the defeat of that claim in arbitration will not usually prevent the claimant from pursuing his claim against the other persons in litigation. Arbitrations are private and consensual and non-​parties cannot, in the absence of consent, be joined or be affected by the decisions of the tribunal.). 135. Cooperative Wholesale Society Ltd. v Birse Construction Ltd. [1997] TLR 454. 136. Drake insurance Plc v Provident Insurance Plc. [2003] EWCA Civ 1834; Stargas SpA v Petredec Ltd. [1994] 1 Lloyd’s Rep. 412.

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Law, Practice and Procedure of Arbitration in India

Secondly, the passing of a valid award results in the creation of new rights between the parties to the arbitration. These rights supersede the rights in the arbitration agreement. The effect of this is that now, the parties cannot rely on the arbitration clause in the agreement, but instead must file for enforcement of the award.

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Thirdly, a valid award creates an estoppel with regard to the matters it deals with and has res judicata effect. It prevents a party from re-​litigating the same cause of action (i.e. cause of action estoppel) and questioning/​denying the same issue which has already been decided (i.e. issue estoppel). Fourthly, for an award to be valid, it cannot determine any rights in rem.

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Lastly, though the award cannot directly bind third parties to the arbitration, it is binding upon all the persons claiming through the parties to the arbitration.

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Further, in certain exceptional circumstances, such as where the third party has agreed to be bound by the award, or where the contractual context gives rise to third party rights, the award will bind third parties as well.

Chapter 40 REMEDIES AND RELIEFS [40.1]

INTRODUCTION..................................................................................................................... 1115

[40.2] PAYMENT OF MONEY........................................................................................................... 1117

[40.5] [40.6] [40.7] [40.8]

DECLARATORY RELIEF........................................................................................................ 1123 RECTIFICATION...................................................................................................................... 1124 INDEMNITY............................................................................................................................. 1125 INJUNCTIONS.......................................................................................................................... 1126 EXEMPLARY DAMAGES....................................................................................................... 1128

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[40.4]

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[40.3] RESTITUTION AND SPECIFIC PERFORMANCE............................................................ 1121

[40.9] ADAPTATION AND FILLING GAPS IN CONTRACTS................................................... 1130

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[40.10] CHOICE OF LAW GOVERNING RELIEF........................................................................... 1131

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[40.1] INTRODUCTION

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[40.11] CONCLUSION.......................................................................................................................... 1131

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The arbitral tribunal’s power to grant relief is based on the arbitration agreement and applicable law.1

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Most national arbitration legislations are silent regarding the powers of the arbitral tribunal to issue remedies, as such powers are treated “as an aspect of the substantive dispute between the parties”.2 However, in other jurisdictions, the arbitral legislation provides the arbitral tribunal with the same remedial authority as local courts.3

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In England, the English Arbitration Act, 1996 permits parties to agree upon the remedies available to the tribunal.4 In addition, the arbitral tribunal has the power to make a declaration, order payment of money, issue injunctions, order specific

1. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 515, at para. 9.40; Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3322. 2. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3323. 3. See: Singapore International Arbitration Act, 2002, s. 12(5); Uniform Arbitration Act, 2000, s. 21(a). 4. English Arbitration Act, 1996, s. 48(1).

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Law, Practice and Procedure of Arbitration in India

performance of a contract (other than a contract relating to land), and order the rectification5, setting aside or cancellation of a deed/​document.6 Hence, parties may, by agreement, limit the default powers of the arbitrators to grant relief. Additionally, parties can also confer upon the arbitral tribunal, the power to award remedies that would not otherwise be available to them.7 The arbitral tribunal may also be empowered to exercise a variety of powers not even open to the courts.8

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It is quite common in construction disputes, for parties to authorise the arbitral tribunal in the arbitration agreement, to “open up, review or revise” any certificate, decision, notice, or opinion.

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The courts have also recognised such powers of the arbitral tribunals. However, it has been interpreted strictly to exclude valuations or certificates that have been agreed through express words,9 to be final and binding.10 Where the valuation is at the “sole discretion” of the employer, it has been held to be binding upon the arbitral tribunal, notwithstanding the wide wording of the arbitration clause.11

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The powers of the arbitral tribunal to issue remedies includes the power to fix the terms upon which a partnership dissolution is to be done12 even where there is no termination clause,13 to make contractual adjustments between parties.

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The Court in Heyworth v Hutchinson14 held that a buyer of defective goods was entitled to an abatement in price; to direct a party to provide indemnity;15 to order a party’s name to be used in litigation against a third party;16 to give directions in an award as to the future use of property;17 to open up, review, or revise valuations and

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5. See: Societe Commerciale de Reassurance v ERAS (International) Ltd (formerly Eras (UK)) [1992] 1 Lloyd’s Rep 570; X Ltd v Y Ltd [2005] EWHC 769 (TCC). 6. English Arbitration Act, 1996, s. 48. 7. Robert Merkin, Arbitration Law (LLP 2004), p. 731. 8. British Airways Board v Laker Airways Ltd [1985] AC 58, HL; Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), pp. 516–​517, at para. 9.45. 9. See: Dennys, Raeside, and Clay, Hudson’s Building and Engineering Contracts (12th edn, 2010), at para. 4-​031. 10. United Overseas Land v Loke Hong Kee (S) Pte Ltd [1979] SGCA 10; Crestar Ltd v Carr (1987) 37 BLR 113. 11. WMC Resources Ltd v Leighton Contractors Pty Ltd (2000) 16 BCL 53. 12. Van Der Zijden Wildhandel (P J) NV v Tucker and Cross Ltd (No 1) [1975] 2 Lloyd’s Rep 240; Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, 1989), p. 394. 13. Russell v Russell (1880) 14 Ch D 471; Walmsley v White 1829 67 LT 433, Mahendra Kumar Poddar v Bansal Builders & Others (2000) SCC OnLine Cal 142; Firm Ashok Traders and Another v Gurumukh Das Saluja and Others (2004) 3 SCC 155. 14. (1867) LR 2 QB 447. 15. Brown v Watson (1839) 6 Bing NC 118; Re Goddard and Mansfield (1850) 1 LM & P 25. 16. Round v Hatton (1842) 10 M & W 660. 17. Winter v Lethbridge (1824) 13 Price 533; Ross v Clifton (1841) 9 Dowl 357.

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Chapter 40—​Remedies and Reliefs

assessments made by a quantity surveyor;18 and to award any such remedies conferred by the agreement that is not contrary to public policy.19

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However, there are certain limitations on the remedies that may be awarded by the arbitral tribunal.20 The tribunal, being a creature of contract, does not have the power to issue remedies that affect third parties,21 or the society as a whole.22 Requests for such reliefs have been made non-​arbitrable in many jurisdictions.23 More specifically: (1) the arbitral tribunal cannot impose criminal sanctions;24



(2) matrimonial disputes, testamentary and probate matters, and issues pertaining to succession which relate to the legal status of a person, cannot be granted by the arbitral tribunal;25 and



(3) the arbitral tribunal cannot grant reliefs against oppression/​mismanagement since rights of third parties, stakeholders, and shareholders are involved.26 Neither can the arbitral tribunal pass an order of winding up that affects all creditors of the company.27

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Further, an award that produces a result contrary to public policy may not be enforced.28

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[40.2] PAYMENT OF MONEY

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The most common relief granted in an award is a direction for the payment of money.29 This payment may represent the money due under a contract, that is, debt, or the

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18. Moody v Ellis (1984) 26 BLR 39. 19. See: Arbitration Act, s. 34(2)(b)(ii); ONGC Ltd v Saw Pipes Ltd (2003) 5 SCC 705; Wood v Griffith (1818) 1 Swanst 55; Alder v Savill (1814) 5 Taunt 454; Turner v Swainson (1836) 1 M & W 572. 20. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), p. 328, at para. 6-​096; Robert Merkin, Arbitration Law (LLP 2004), p. 732. 21. Alder v Savill (1814) 5 Taunt 454; State Bank of India v Ericsson India Private Limited & Ors (2018) 16 SCC 617, at para. 5; Raukura Moana Fisheries Ltd v The Ship “Irina Zharkikh” [2001] 2 NZLR 801. 22. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), p. 1351. 23. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3322. 24. S.W. Palanitkar & Ors. v State of Bihar and Anr. (2002) 1 SCC 241; Wood v Griffith (1818) 1 Swanst 55. 25. Olympus Superstructures (P) Ltd. v Meena Vijay Khetan (1999) 5 SCC 651; Fulham Football Club (1987) Ltd. v Sir David Richards [2010] EWHC 3111 (Ch), [2011] EWCA Civ 855. 26. OP Gupta v Shiv General Finance Pvt. Ltd. (1975) SCC Online Del 147. 27. Haryana Telecom v Sterlite Industries (India) Ltd. (1999) 5 SCC 688; Fulham Football Club (1987) Ltd. v Sir David Richards 2010 EWHC 3111 (Ch), [2011] EWCA Civ 855. 28. Arbitration Act, s. 34; English Arbitration Act, s. 68(2)(g). 29. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​097; Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.41.

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Law, Practice and Procedure of Arbitration in India

compensation for loss suffered, that is, damages, or payment due in satisfaction of a claim for restitution.30

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The arbitral tribunal is empowered to direct which party is to make the payment, and to whom,31 as well as determine when and how the payment is to be made.32 Pertinently, the award can direct payment to be made to a third party if such payment can be shown to be for the benefit of the winning party and operates to discharge the losing party.33

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The arbitral tribunal may also direct that payment be made in instalments, with the whole sum becoming payable if an instalment is skipped,34 and award interest.35 However, the Supreme Court of India has not recognised the power of the tribunal to award interest in case of default in payment.36

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An award that fails to specify the timing of payment may be challenged on grounds of uncertainty.37 Notwithstanding this, it is implied that as with all directions of the tribunal, payment also must be made within a reasonable time.38

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Further, care should be taken to ensure that the payment is made directly to the other party, or in accordance with the instructions in the award, so as to avoid any disputes pertaining to whether the award has been satisfied.39

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The courts are not allowed to review the merits of the award and re-​examine the decision of the arbitral tribunal as to payment.40

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30. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​097; Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.41. 31. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​098. 32. Hobdell v Miller (1840) 6 Bing NC 292; Armitage v Walker 2 K & J 221. 33. Musawi v RE International (UK) Ltd. [2012] EWHC 4076. 34. Royston v Rydal (1605) Rolle Ab. Arb. H8 Com. Dig. Arb. E. 15; Kockill v Witherell (1672) 2 Keb. 838. 35. Arbitration Act, s. 31(7); English Arbitration Act, 1996, s. 49. 36. Vedanta Limited v Shenzhen Shandong Nuclear Power Construction Co. (2019) 11 SCC 465. 37. Margulies Brothers Ltd v Dafnis Thomaides & Co (UK) Ltd [1958] 1 All ER 777; River Plate Products Netherlands BV v Etablissement Coargrain [1982] 1 Lloyd’s Rep 628; Oricon Waren-​Handels GmbH v Intergraan NV [1967] 2 Lloyd’s Rep 82. 38. Montrose Canned Foods Ltd v Eric Wells (Merchants) Ltd [1965] 1 Lloyd’s Rep 597; Sohan Lal Gupta & Ors v Asha Devi Gupta & Ors (2003) 7 SCC 492. 39. Razcom CI v Barry Callebaut Sourcing AG [2010] EWHC 2598 (QB) (payment made to a party’s bank account contrary to its instructions was found to not be in satisfaction of the award). 40. Interperformances Inc v RJ Lithuania No. 2016-​1, Interperformances Inc v R J Supreme Court of Lithuania, Civil Case No. 3K-​3-​483-​421/​2015, 25 September 2015 in A. J. van den Berg (ed.), Yearbook Commercial Arbitration 2016, Vol. XLI (2016), pp. 1–​17.

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Chapter 40—​Remedies and Reliefs

Currency of the Award While in England the arbitral tribunal is statutorily empowered to award payment in any currency,41 there is no such similar provision in the Arbitration Act. Notwithstanding this, the currency of the award is governed by the parties’ contract and the applicable law.42

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Robert Merkin states that even in the absence of an express power to make the award in any currency:43 (1) an award can be expressed in a foreign currency, with the interest varied to represent the value of that currency;



(2) if conversion is necessary for enforcement purposes, this is to be done at the rate of exchange prevailing at the date of the award or the date at which the court gives leave for the enforcement of the award; and



(3) the parties are free to agree upon the currency of the award, a decision that will be upheld even though it produces injustice.

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Normally, the payment is awarded in either the currency of contract or the currency of the loss.44 The former is the currency with which the payments under the contract have the closest and most real connection, while the latter is the currency that most truly expresses the claimant’s loss.45

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The tribunal must endeavour to make the award in the currency of the contract under which the disputes arose, unless the parties have expressly/​impliedly agreed to the contrary in writing.46 Further, the tribunal can hear submissions on which currency the award should be made in.47

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41. English Arbitration Act, 1996, s. 48(4). 42. Lesotho Highlands Development Authority v Impreglio SpA [2005] UKHL 43, [2006] 1 AC 221; Vedanta Ltd v Shenzhen Shandong Nuclear Power Construction Company Ltd (2019) 11 SCC 465; Renusagar Power Co. Ltd v General Electric Ltd. (1994) Supp 1 SCC 644; The Government of India v Cairn Energy India Pty Ltd [2014] 9 MLJ 149; Taman Bandar Baru Masai Sdn Bhd v Dinding Corporations Sdn Bhd [2009] MLJU 0793, although the issue of the currency of the award was not dealt with in these cases, the general approach to an allegation of excess of powers by a tribunal set out in Lesotho, which includes a decision as to currency, has been endorsed. 43. Robert Merkin, Arbitration Law (LLP 2004), p. 734. 44. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 515, at para. 9.41. 45. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​100. 46. Ibid. 47. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 516, at para. 9.41.

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Law, Practice and Procedure of Arbitration in India

The House of Lords in Miliangos v George Frank (Textiles) Ltd48 held that English courts could give judgment for a sum expressed in a foreign currency, and that any enforcement difficulties could be overcome by converting the sum awarded into sterling at the date at which leave for enforcement is given.

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The House of Lords in Services Europe Atlantique Sud (SEAS) v Stockholms Rederiaktiebolag SVEA, The Folias49 laid down the following guidelines as regard to the determination of foreign currency in the award: (1) If the parties have agreed upon a currency in their contract, the award must be in that currency;



(2) in a situation where the parties have agreed on a currency of the contract, but do not intend for damages to be expressed in that currency, the award should be made in the currency that most truly expresses the claimant’s loss;



(3) currency which expresses the claimant’s loss is that in which the claimant felt the loss at the date of the breach.

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Currency fluctuations between the date of the breach and date of judgment must be disregarded.50

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The Supreme Court of India in Forasol v Oil and Natural Gas Commission51 held that there are six relevant dates to be considered for determining the foreign exchange rate in a case where an amount is payable in a foreign currency, namely: (1) date when amount became due and payable;



(2) date of commencement of action;



(3) date of decree;



(4) date when the court orders execution;

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(5) date when the decretal amount is paid or realised; and,

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(6) in case a decree has been passed by the court in terms of an award made in foreign currency, the date of the award.

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Hence, an award made in foreign currency can be enforced by converting the sum awarded into the currency of the enforcement court. The relevant date for such

48. [1976] AC 443. 49. [1978] 2 WLR 887, [1979] AC 685. See: Virani Ltd v Manuel Revert y CIA SA [2004] 2 Lloyd’s Rep 14. 50. Attorney General of the Republic of Ghana v Texaco Overseas Tankships Ltd, The Texaco Melbourne [1994] 1 Lloyd’s Rep 473. 51. (1984) Supp SCC 263, at paras 24, 25.

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conversion must be decided in accordance with the terms of the contract. If the same is not possible, the date of conversion is the date on which the award attains finality and becomes a deemed decree of the court.52

[40.3] RESTITUTION AND SPECIFIC PERFORMANCE Specific Performance

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The arbitral tribunal may be authorised by the parties, or the applicable law, to order specific performance of a contract.53

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In the US,54 a tribunal is authorised to award specific performance. In England, the arbitral tribunal has the same power as a court to order specific performance of a contract, other than a contract relating to land.55

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This statutory restriction is limited to contracts involving a transfer of an interest in land.56 An agreement between a landlord and tenant for remedial works, for instance, is not a contract relating to land but to construction. Therefore, in such a case, specific performance of the same can be ordered.57

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In India, the Arbitration Act does not expressly empower the arbitral tribunal to direct specific performance. However, it is a settled position that there is no prohibition under the Specific Relief Act, 1963, nor under the Arbitration Act, on reference of issues relating to specific performance of a contract to arbitration.58

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However, the Supreme Court of India has held that an arbitral award determining the price of land cannot be executed as a decree for specific performance of a sale agreement, if the arbitration agreement does not permit the arbitrator to do so.59

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52. Meenakshi Saxena v ECGC Ltd. (2018) 7 SCC 479; Jugoslavenska Oceanska Plovidba v Castle Investments Co. Inc [1973] 3 All ER 498; Forasol v Oil and Natural Gas Commission (1984) Supp. SCC 263; Trammo AG v MMTC Limited 2019 SCC OnLine Del 7337. 53. Nigel Blackaby, Constantine Partasides, Alan Redfer, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 519, at para. 9.52. 54. Uniform Arbitration Act, s. 21. See: Brandon v MedPartners Inc. 203 FRD 677, 686 (SD Fla. 2001). 55. English Arbitration Act, 1996, s. 48(5)(b). 56. Robert Merkin, Arbitration Law (LLP 2004), p. 744; Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), p. 332, at para. 6-​108. 57. Telia Sonera AB v Hilcourts (Docklands) Ltd. [2003] EWHC 3540. 58. Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer 2020), p. 1372. See: Olympus Superstructures Pvt. Ltd. v Meena Vijay Khetan (1999) 5 SCC 651; Union of India v Saraswat Trading Agency & Ors. (2009) 16 SCC 504. 59. Firm Rajasthan Udyog and Others v Hindustan Engineering and Industries Ltd. (2020) 6 SCC 660, at para. 25–​27.

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Law, Practice and Procedure of Arbitration in India

The High Court of Bombay in Satinderpal Singh Anand v Sharanpal Balmukund Chopra60 held that the power to grant specific performance is subject to the following:

(1) relief of specific performance must be specifically sought in the claim; and,



(2) such relief cannot be claimed as a matter of right.

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Further, specific performance of a contract will only be granted if:61 (1) it is not legally impossible to revive the contract;



(2) such a remedy would not involve a disproportionate interference with State sovereignty; and



(3) damages will not satisfy the losses.

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However, arbitral tribunals have refrained from directing specific performance because it causes problems in enforcement of the award, as compared to the simpler enforcement process prevalent in case of damages.62

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Restitution

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Redfern and Hunter state that restitution is a form of specific performance that puts:

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“the aggrieved party in the same position as that in which it would have been had the wrongful act not taken place.”63

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Though arbitral tribunals have the power to award restitution,64 in practice this is seldom done because it makes the award difficult to enforce.65 Instead, the tribunals tend to award a sum corresponding to the value which a restitution in kind would bear.66

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60. 2008 SCC OnLine Bom 473. 61. Occidental Petroleum Corporation and Occidental Exploration and Production Co. v Ecuador, Decision on Provisional Measures, ICSID Case No. ARB/​06/​11 (Decision on Provisional Measures dated 17 August 2007). 62. Satinderpal Singh Anand v Sharanpal Balmukund Chopra (2008) SCC OnLine Bom 473. 63. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.53. 64. See: English Arbitration Act, 1996, s. 48(5)(a). 65. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.55. 66. Case Concerning the Factory at Chorzow (Claim for Indemnity) (Germany v Poland) 1928 PCIJ Series A No. 17. See NAFTA, Chapter 11, Article 1135 (“… disputing party may pay monetary damages and any applicable interest in lieu of restitution”); Nigel Blackaby, Constantine Partasides QC, Alan Redfern, with J. Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 521, at para. 9.57.

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[40.4] DECLARATORY RELIEF Declaratory relief has become a common remedy in international arbitrations, where requests for damages are coupled with a request for a declaration that there has been a breach of contract.67

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A declaration may be made with or without a decision on a related money claim and is appropriate when the parties simply want a decision on their rights, or to determine the existence or meaning of a contract.68 It is a discretionary remedy that declares the position in law based on given facts.69

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Pertinently, parties are free to seek declaratory relief in arbitration, without claiming damages.70 Hence, declaratory relief is useful when the parties have a continuing relationship and want to resolve a dispute without risk of damaging that relationship by demanding monetary compensation.71

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However, though a declaratory award has a binding effect on the parties, is recognised, and can be relied upon in subsequent proceedings, it is not capable of enforcement.72 In the words of Redfern and Hunter, a declaratory award:

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“… is capable of recognition, but it is not itself capable of enforcement; for the purposes of enforcement an award must also involve an obligation to pay compensation or to take, or refrain from taking, a particular course of action.”73

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In England, the statute expressly permits the tribunal to grant declaratory relief.74 In India too, tribunals may pass declaratory relief since there is nothing in the Arbitration Act prohibiting them from doing so.75

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67. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 523, at para. 9.60. 68. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), p. 332, at para. 6-​109. 69. Vine v National Dock Labour Board [1957] AC 488; Imperial Tobacco Ltd v Attorney General [1981] AC 718. 70. Saudi Arabia v Arabian American Oil Co. (Aramco) (1963) 27 ILR 117 (“There is no objection whatsoever to Parties limiting the scope of the arbitration agreement to the question of what exactly is their legal position. When the competence of the arbitrators is limited to such a statement of the law and does not allow them to impose the execution of an obligation on either of the Parties, the Arbitration Tribunal can only give a declaratory award.”). 71. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 524, at para. 9.62. 72. Robert Merkin, Arbitration Law (LLP 2004), p. 743; Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 524, at para. 9.62. 73. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 524, at para. 9.62. 74. See English Arbitration Act, 1996, s. 48(3). 75. National Thermal Power Corporation Ltd. v Wig Brothers Builders and Engineers Ltd. (2009) SCC OnLine Del 911, at para. 69.

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Law, Practice and Procedure of Arbitration in India

The House of Lords in Gouriet v Union of Post Office Workers76 held:

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“… it is when an infringement of the plaintiff ’s rights in the future is threatened or when, unaccompanied by threats, there is a dispute between parties as to what their respective rights will be if something happens in the future, that the jurisdiction to make declarations of right can be most usefully invoked. But the jurisdiction of the court is not to declare the law generally or to give advisory opinions; it is confined to declaring contested legal rights, subsisting or future, of the parties represented in the litigation before it and not those of anyone else.” Mustill and Boyd add that:

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“… the arbitrator should beware of being lured into deciding hypothetical questions on an assumed basis of fact, remembering that he only has jurisdiction to decide bona fide disputes and that his award may simply give rise to further disagreement if the assumed facts later turn out to be wrong.”77

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The declaratory relief must be final in establishing the legal position definitively, with binding effect on the parties. The High Court of Singapore in Bocotra Construction Pte Ltd v A-​G78 held as follows:

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“The primary purpose of granting a declaration is that the controversy between the parties may be resolved and become res judicata. This would be rendered illusory if the original ‘resolution’ was merely a stopgap measure designed to preserve the status quo. It may transpire from subsequent proceedings that the interim declaration should not have been granted, and consequently there would only be a transient and anomalous state of ‘interim res judicata’. The reality is that such a declaration would not determine the parties’ rights in the dispute once and for all.”

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[40.5] RECTIFICATION

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While in England the statute allows the arbitral tribunal to make rectifications in the contract,79 there is no provision in the Arbitration Act that vests the arbitral tribunal with the power to rectify deeds or documents. Arbitral Institutions may also expressly provide for the power of the arbitrators to rectify the contract.80

76. [1978] AC 435, at para. 501. 77. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterwoths 1989), p. 390. 78. [1995] 2 SLR(R) 282, at para. 31. 79. English Arbitration Act, 1996, s. 48(5)(c). 80. MCIA Arbitration Rules, 2017, r. 29; SIAC Rules 2016, r. 27(a).

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Chapter 40—​Remedies and Reliefs

Absent any specific power to rectify the agreement, the question becomes, whether the scope of the arbitration clause is wide enough to confer jurisdiction for rectification upon the arbitrator. As noted in Redfern and Hunter:

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“… a standard-​form arbitration clause that refers to ‘disputes arising under the contract’ is probably not wide enough to include a claim for rectification, since what is sought by rectification is a rewriting of the contract to reflect what one party claims to have been the agreement actually made. The phrase ‘in connection with’ in the arbitration clause may, however, be considered to give the arbitral tribunal a wider power.”81 The Court of Appeal in Ashville Investment Ltd v Elmer Contractors Ltd82 held that

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“There is no reason in principle why an arbitrator cannot make an order for the rectification of a contract, provided this is justified at law and by the arbitration agreement ...”

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To establish a claim for rectification, a party must prove that the document failed to give effect to: (1) a prior concluded contract, in which case the terms of the prior contract must be objectively determined; or



(2) a common intention shared by the parties, in which case the existence of the intention must be established as a subjective state of mind –​though it must also be shown that, as a result of communication between them, the parties understood each other to share that intention.83

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[40.6] INDEMNITY

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An arbitral tribunal has the power to make an express or implied indemnity award. The award may also contain a declaration that one party is entitled to be indemnified by the other in respect of a liability or expenditure incurred by him.84

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Though the power to order an indemnity has not been specifically addressed in the English Arbitration Act, 1996, Russell on Arbitration states that:

81. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 524, at para. 9.64. See: Ethiopian Oilseeds and Pulses Export Corpn v Rio Del Mar Foods Inc [1990] 1 Lloyd’s Rep 86; Ashville Investments Ltd v Elmer Contractors Ltd [1988] 2 All ER 577. 82. [1988] 2 Lloyd’s Rep. 73, at para. 582. 83. FSHC Holdings v Glas Trust Corporation Ltd [2019] EWCA Civ 1361. 84. See: Bocotra Construction Pte Ltd v A-​G [1995] 2 SLR(R) 282.

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Law, Practice and Procedure of Arbitration in India

“… it is subsumed within the power to order the payment of a sum of money and/​or to make a declaration of the right to be indemnified.”85 Mustill and Boyd advise that if the arbitral tribunal is to retain power to decide disputes as to the scope of the indemnity and to make further money awards of any amount found due under the indemnity, the arbitrator should make it clear that the award is an interim award.86

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Russell on Arbitration further states that if the amount of the indemnity cannot be ascertained,

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“because it will depend upon the amount, if any, payable to a third party, then the tribunal may grant a declaration of the right to be indemnified and/​or may refrain from issuing its final award until the amount payable can be fixed.”87

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[40.7] INJUNCTIONS

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Numerous jurisdictions recognise the power of arbitral tribunals to award equitable relief.88 Such relief includes injunctions, subject to limitations in the arbitration agreement, applicable rules,89 and the legislation concerned.

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In England, the statute expressly permits the tribunal to grant injunctions,90 unless excluded by the parties.91 This includes the power to issue anti-​ suit injunctions.92 Pertinently, the powers of the arbitral tribunal to grant an injunction are restricted to “the same powers as the court”.93

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Hence, an arbitral tribunal will not have the power to issue a freezing injunction (which is not a power that can be exercised by all courts), unless the parties have expressly conferred such a power upon the tribunal.94

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85. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), p. 334, at para. 6-​113. 86. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), p. 390. 87. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), p. 334, at para. 6.113. 88. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), p. 390. 89. David Wotherspoon, “The Arbitration Tribunal and Equitable Relief: An Update from the British Columbia Court of Appeal” (The Advocate, May 2009). 90. English Arbitration Act, 1996, s. 48(5)(a). 91. See: Vertex Data Science Ltd. v Powergen Retail Ltd. [2006] EWHC 1340. 92. Spliethoff ’s Bevrachtingskantoor BV v Bank of China Ltd. [2015] EWHC 999. 93. English Arbitration Act, 1996, s. 48(5); See: Wealands v CLC Contractors Ltd [1999] 2 Lloyd’s Rep 739 94. Kastner v Jason [2004] EWHC 592 (Ch), [2004] 2 Lloyd’s Rep. 233.

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Chapter 40—​Remedies and Reliefs

In India, the Arbitration Act empowers the arbitrator/​tribunal to grant reliefs in the nature of a permanent injunction.95 As such, an arbitral tribunal can grant an injunction since the Arbitration Act provides that it will have the same powers as the court in granting relief.

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Further, such orders are enforceable under the Civil Procedure Code, 1908 (“CPC”), in the same manner as if it were an order of the court.96 The High Court of Delhi97 has held that the arbitrator has the power of a civil court “to award all forms of injunctions and damages”.

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Article 17H of the UNCITRAL Model Law on International Commercial Arbitration (“Model Law”) provides that interim reliefs granted by arbitral tribunals shall be recognised as binding. Ordinarily, such interim reliefs would be enforceable upon an application to the competent court, irrespective of the country in which it was issued.

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However, in the absence of a similar provision in India, interim reliefs (including emergency awards) granted by foreign arbitral tribunals are not directly enforceable in India. A fresh application under Section 9 of the Arbitration Act has to be filed, which may be based on the interim relief granted by the foreign arbitral tribunal.98

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In furtherance of the inherent principles of the Arbitration Act, courts in India are increasingly taking note of injunctions passed by foreign tribunals as well. The High Court of Delhi recently upheld the prima facie validity of an interim injunction passed by the SIAC Emergency Arbitrator, under Section 17(1) of the Arbitration Act.99

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Therefore, an arbitral tribunal has the power “to make an award in the form of an interim or final injunction”.100 However, enforcement of such an award is through the courts, which is time consuming.

95. 96. 97. 98.

Arbitration Act, s. 17. Eros International Media v Telemax Links India Pvt. Ltd. (2016) SCC OnLine Bom 2179, at para. 18. Krishan Gopal v Parveen Rajput (2019) SCC OnLine Del 8330, at para. 20. Raffles India International Private Limited v Educomp Professional Education Limited (2016) SCC Online Del 5521. 99. Amazon.com NV Investment Holdings LLC v Future Coupons Private Limited & Ors. O.M.P. (ENF)(COMM) No. 17 of 2021, decided on 2 February 2021, at para. 7. 100. Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), p. 390; Birtley and District Co-​operative Society Ltd v Windy Nook and District Industrial Co-​operative Society Ltd [1959] 1 All ER 43.

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Law, Practice and Procedure of Arbitration in India

In view of this difficulty, Redfern and Hunter advise that: “An arbitral tribunal is not usually empowered to make effective orders against third parties; and if injunctive relief against third parties is required, it is generally quicker and more effective to seek it direct from the court.”101

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This is further reinforced by the fact that most arbitration rules state that an arbitration clause is not to be taken as excluding the power of national courts to make orders for interim measures of protection.102

[40.8] EXEMPLARY DAMAGES

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Exemplary or punitive damages are awarded not to compensate the wronged party, but to punish and deter the wrongdoer.103 It is an extreme measure, which is permitted only in exceptional cases.104 In England, the award of exemplary damages is permitted only in actions in tort where:105 (1) there are oppressive/​arbitrary/​unconstitutional actions by servants of the government;



(2) the defendant’s conduct has been calculated by him, to make a profit, which may exceed the compensation payable to the claimant; and



(3) there is express authorisation by the statute.

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On the other hand, such damages cannot be awarded in India.106

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The arbitral tribunal when awarding exemplary damages must consider firstly, whether it has jurisdiction to award exemplary damages; and secondly, whether such an award is enforceable, if made.107

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So far as the first question is concerned, the tribunal’s power to award punitive damages will depend on the law of the seat of arbitration and the provisions of the arbitration agreement.108 101. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.59. 102. ICC Arbitration Rules, 2021, art. 28(2); UNCITRAL Arbitration Rules, 2013, art. 26(9). 103. Nigel Blackaby, Constantine Partasides, Alan Redfern and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 516, at para. 9.44. 104. Hindustan Unilever Limited v Reckitt Benckiser India Limited (2014) SCC OnLine Del 490; Bank Bumiputra Malaysia Bhd, Kuala Terengganu v Mae Perkayuan Sdn Bhd [1993] 2 MLJ 76; Penang Port Commission v Kanawangi s/​o Seperumaninam [1996] 3 MLJ 427; Addis v Gramophone Co Ltd [1909] AC 488. 105. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), p. 330, at para. 6-​102. 106. M/​s Trojan and Co. v RMNN Nagappa Chettiar (1953) SCR 789. 107. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), p. 330, at para. 6-​102. 108. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 517, at para. 9.47.

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Chapter 40—​Remedies and Reliefs

For example, in England, there may be no bar on the arbitral tribunal to award exemplary damages, if the parties have agreed upon the same in writing.109 On the other hand, in the US, courts in New York have consistently held that arbitrators cannot award punitive damages.110

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The Supreme Court of United States in Mastrobuono v Shearson Lehman Hutton Inc.111 treated New York’s rule that arbitrators could not award punitive damages as an instance of a State law refusal to give effect to an agreement to arbitrate.112 Hence, in certain cases, especially if the arbitration agreement so permits, arbitral tribunals may award punitive damages in the US. Gary Born explains:

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“… an arbitral tribunal may (and must) give effect to mandatory laws and public policies: that rule extends to public policies forbidding awards of punitive damages. Thus, where applicable mandatory law or public policy forbids awards of punitive damages, arbitral tribunals may (and must) refuse to award such damages, even if the parties’ chosen law is to the contrary.”113

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So far as the enforceability of such an award is concerned, where the exemplary damages awarded do not violate the law at the seat of arbitration, the enforcement of the award will be upheld.114 However, enforcement/​recognition may be refused if the award is contrary to public policy.

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In fact, the Federal Supreme Court of Germany refused to enforce part of a US decision that provided for the recovery of punitive damages, on the grounds that such recovery was contrary to German public policy.115

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For this reason, arbitral tribunals should treat claims for exemplary damages with caution and:

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“… it is preferable for arbitral tribunals to treat any award in respect of punitive damages or any other penalties as an entirely separate claim, in order to ensure that the

109. See English Arbitration Act, 1996, s. 48(1). 110. Garrity v Lyle Stuart Inc. 353 N.E.2d 793 (NY 1976) (“an arbitrator has no power to award punitive damages, even if agreed upon by the parties, because the freedom of contract does not embrace the freedom to punish, even by contract.”). 111. 514 US 52 (U.S.S.Ct. 1995). 112. (“… if contracting parties agree to include claims for punitive damages within the issues to be arbitrated, the FAA ensures that their agreement will be enforced according to its terms even if a rule of state law would otherwise exclude such claims from arbitration.”). 113. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3336. 114. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), p. 331, at para. 6-​106. 115. Bundesgerichtshof (Neu Juristische Wochenschrift, 1992), p. 3096.

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Law, Practice and Procedure of Arbitration in India

punitive portion of the award is severable in the event of a successful challenge in the courts at the place of enforcement.”116

[40.9] ADAPTATION AND FILLING GAPS IN CONTRACTS Generally, an arbitral tribunal does not have the power to fill gaps/​adapt the contract, because its role is limited to interpretation of the contract. Redfern and Hunter explain:

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“… it is generally accepted in modern times that an arbitral tribunal has implied consent to ‘fill gaps’ by making a determination as to the presumed intention of the parties in order to make a contract operable.”117

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The basis for this power may be the doctrine of rebus sic stantibus (a contract is binding as long as circumstances remain the same) that qualifies the doctrine of pacta sunt servanda (the express words of a contract must be obeyed).118

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The ability of the tribunal to adapt and fill in gaps in the contract is useful in a number of different situations. For instance, the parties may not have had sufficient information about some factors at the time of conclusion of the contract.119 It helps the tribunal to alter the contract to reflect new circumstances, specifically those leading to hardship and the economic equilibrium of the contract.120

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(1) in contracts for future performance, when parties have left matters to be adjusted in the working out of the contract, “courts will assist the parties to do so, so as to preserve rather than destroy bargains, on the basis that what can be made certain is itself certain”; (2) an express stipulation in the contract for a reasonable fair measure or price “will be a sufficient criterion for the courts to act on”; and

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Parties may fail to provide for particular contingencies that may arise in their business relationship, in the contract, and thus require the contract to be amended.121 The Court of Appeal in Mamidoil-​Jetoil Greek Petroleum Co. SA v Okta Crude Oil Refinery AD122 held that:

(3) even in the absence of express language in the contract, courts can imply a reasonable obligation.

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116. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.51. 117. Ibid, at para. 9.65. 118. Ibid, at para. 9.66. 119. Yearbook of the United Nations Commission on International Trade Law, Vol. XIV (1983), p. 85. 120. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.65. 121. Attorney-​General v Barker Brothers Ltd [1976] 2 NZLR 495, CA. 122. [2001] 2 All ER (Comm) 193, [2001] EWCA Civ 406.

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Chapter 40—​Remedies and Reliefs

However, arbitral tribunals must be cautious about altering contracts and must ensure that they do not impose their own views on what would have been an appropriately negotiated agreement.

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By adapting or supplementing a contract, the tribunal creates new contractual obligations on the parties. These, when accepted by both parties, create a new mandate for the tribunal to follow.123

[40.10] CHOICE OF LAW GOVERNING RELIEF

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Civil and common law jurisdictions have taken divergent approaches to the choice of law governing issues of relief. While some civil law jurisdictions have held the law governing issues of relief to be the substantive law, common law jurisdictions have held it be the law of the forum.124

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“… The better view is that issues concerning the arbitral tribunal’s power and jurisdiction with respect to remedial authority are governed by the law of the arbitral seat … while issues concerning the substantive standards for granting relief and the quantum and character of relief are governed by the substantive law… This treatment of the law… is consistent with the treatment of other issues concerning the arbitrators’ authority …”

[40.11] CONCLUSION

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The arbitration agreement and applicable law regulate and limit the relief that may be granted by an arbitral tribunal. Normally the powers of the tribunal to grant relief are akin to that of a court. However, parties by agreement are free to even enhance these powers in certain jurisdictions such as England.

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Further, certain reliefs that will have an effect in rem are non-​arbitrable and cannot be granted by the tribunal. This includes the power to impose criminal sanctions, decide disputes related to succession, order winding up of a company, etc. Commonly, arbitral tribunals award compensation to a party. In the award, the tribunal specifies inter alia the amount of compensation, by whom it is to be paid, the manner of payment, currency of payment.

123. Yearbook of the United Nations Commission on International Trade Law, Vol. XIV (1983), p. 87. 124. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), pp. 3338–​3339.

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Law, Practice and Procedure of Arbitration in India

The arbitral tribunal has the discretion to direct payment even in a foreign currency, should the need arise. However, the power of the arbitral tribunal to award exemplary damages is limited. It may be considered as contrary to public policy, thereby rendering the award unenforceable.

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Additionally, the arbitral tribunal can order specific performance of a contract or restitution. However, normally it refrains from making such orders because they create problems in enforcement of the award.

Further, the tribunal is empowered to grant declaratory relief, and if so requested, make rectifications in the contract, order an indemnity, issue injunctions, and fill in contractual gaps.

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In summary, the arbitral tribunal’s powers to issue remedies are broad and quite inclusive and are increasingly being upheld by national courts and legislations.

Chapter 41 AWARD OF INTEREST [41.1] [41.2]

INTRODUCTION..................................................................................................................... 1133 INTEREST.................................................................................................................................. 1135

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[41.3] AT COMMON LAW................................................................................................................. 1137 [41.4] STAGES OF AWARDING INTEREST................................................................................... 1140 [41.5] EXERCISE OF THE ARBITRAL TRIBUNAL’S DISCRETION.......................................... 1148 [41.6] INTEREST UNDER CONTRACT.......................................................................................... 1151 [41.7]

WITHHOLDING INTEREST................................................................................................. 1155

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[41.8] RATE OF INTEREST APPLICABLE...................................................................................... 1157 [41.9] WHETHER COMPOUND INTEREST IS PAYABLE.......................................................... 1165

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[41.10] LOSS AND EXPENSE AND SPECIAL DAMAGES............................................................. 1170

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[41.1] INTRODUCTION

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[41.11] CONCLUSION.......................................................................................................................... 1173

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Some arbitrations may take some years to resolve from the time the cause of action arises.1 A party deprived of the use of money to which it is legitimately entitled has a right to be compensated for the deprivation.

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This includes the interest that it would have accrued on money that it should have been paid or would otherwise have had the use of if the other party had not breached its obligations.

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Interest is defined as the return or compensation for use or retention of a sum of money belonging to or owned by one person to another.2

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Justice Indu Malhotra states: “In commercial transactions, the tribunal while awarding compensatory interest must keep in view that the purpose is to compensate the successful party who has been unjustifiably deprived of the use of money, or forgone the return on investment,

1. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3358. 2. Halsbury’s Laws of England, Vol. 32 (4th edn, 1980), at para. 106.

1134

Law, Practice and Procedure of Arbitration in India

which he is legitimately entitled to, and has a right to be compensated by the award debtor for the period of deprivation.”3

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The Supreme Court of India in Bhagwati Oxygen Ltd. v Hindustan Copper Ltd.4 held that an arbitrator has the power and jurisdiction to grant interest for three stages namely, pre-​reference period, pendente lite and post-​award period, provided that the rate of interest is reasonable and the agreement does not provide a bar for grant of such interest nor does it prohibit such grant.

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An arbitral tribunal has the additional power to award interest from the date of the award, until the date of realisation.5 The award of such future interest should be the norm unless there are strong reasons to depart from the same.6 The rationale for this is to ensure that there is a “load and tension on the other party to pay of the sum promptly since otherwise payment of the sum may be delayed indefinitely”.7

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However, if the parties had agreed in the contract that no interest is payable, the arbitral tribunal cannot award interest for the pre-​reference and pendente lite period.8

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The UNCITRAL Model Law9 contains no provisions regarding interest, nor does the US Federal Arbitration Act (FAA), the Swiss Law on Private International Law,10 or the French New Code of Civil Procedure.11

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An arbitral tribunal should not refuse to exercise its power to award interest unless it has a good reason to do so.12 Mustill and Boyd state that if the arbitral tribunal decides not to award interest, it should explain its reasons for doing so in its award.13

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3. Indu Malhotra, Commentary on the Law of Arbitration, Vo1. 1 (4th edn, Wolters Kluwer 2020), p. 811. 4. (2005) 6 SCC 462, at para. 33. 5. Hindustan Construction Co. Ltd. v State of J&K (1992) 4 SCC 217, at para. 7. 6. Nityananda Samantray v State of Orissa (1986) SCC OnLine Ori 55, at para. 8. 7. Nityananda Samantray v State of Orissa (1986) SCC OnLine Ori 55, at para. 8. 8. M/​s Sree Kamatchi Amman Constructions v Divisional Railway Manager (Works) Palghat and Ors. (2010) 8 SCC 767; Tehri Hydro Development Corporation Limited and Another v Jai Prakash Associates Limited; Indu Malhotra, Commentary on the Law of Arbitration (4th edn, Wolters Kluwer 2020), p. 811. 9. See UNCITRAL Model Law, U.N. GAOR, 40th Sess., Supp. No.17, U.N. Doc. A/​40/​17, Annex 1 at 81–​93 (21 June 1985). 10. See Bundesgesetz über das Internationale Privatrecht (IRPG), Federal Law on International Private Law, art. 176-​94 (18 December 1987) (Switz.). 11. See Nouveau Code De Procédure Civile (N.C.P.), art. 1442-​1507 (Fr.). 12. See Van Der Zijden Wildhandel (PJ) NV v Tucker and Cross (No 2) [1976] 1 Lloyd’s Rep 341. 13. See also Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), p. 394.

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Chapter 41—​Award of Interest

[41.2] INTEREST A party deprived of the use of money, from the time of the clause of action to the monies are paid arising from an award, is legitimately entitled has a right to be compensated for the deprivation.14

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This includes the interest that it would have accrued on money that it should have been paid, or would otherwise have had the use of if the other party had not breached its obligations. Payment of interest can be agreed by the debtor and creditor, or arise where a principal sum of money has been wrongly withheld by a debtor from a creditor.15 John Gotanda explains,

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“Everyone who contracts to pay money on a certain day knows that, if he fails to fulfil his contract, he must pay the established interest rate of interest as damages for his non-​performance.”16

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The award of interest in arbitration is now common.17 Johnny Veeder18 explains why:

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“In all international commercial arbitrations where a claim for the payment of money is advanced, whether debt or damages, it is highly probable that the claimant had also suffered a financial loss resulting from late payment of the principal amount. That loss can amount to a significant proportion of the total claim; and in certain cases, it can exceed the principal amount.19 In a modern arbitration regime, it is unthinkable that a claimant should not have the right to recover that loss in the form of interests.”

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Interest has been defined as “the return or compensation for the use or retention by one person for a sum of money belonging to or owned by any reason to another.”20

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14. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3358. 15. Carmichael v Caledonian Railway Co (1870) 8 M. (HL) 119, at 131, per Lord Westbury. 16. J. Gotanda, “Compound Interest in International Disputes” (2002-​2003) 34 Law & Political International Business 393, at pp. 395–​399. 17. Saleh, “The Recognition and Enforcement of Foreign Arbitral Awards in the States of the Arab Middle East”, in Lew (ed.) Contemporary Problems in International Arbitration (CCLS/​Kluwer 1986), pp. 348–​349. See also, Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), p. 602. 18. Veeder, “Whose Arbitration Is It Anyway: The Parties’ or the Arbitration Tribunal’s? An Interesting Question?” in Newman and Hill (eds), The Leading Arbitrator’s Guide to International Arbitration (2nd edn, Juris 2008), p. 344. 19. In an arbitration the claim for interest can be substantial. For example, in the Kuwait v American Independent Oil Company arbitration US$ 96 million was awarded in interest, which exceeded the US$ 83 million, awarded as damages. 20. Halsbury’s Laws of England, Vol. 32 (4th edn, 1980), para. 106.

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Law, Practice and Procedure of Arbitration in India

In essence, an award of interest compensates a party for its forgone return on investment or money withheld without a justifiable cause.21 It is compensatory in that the aggrieved party should be restored to the position it would have been in had the dispute never arisen.22

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D. Williams and A. Kawharu23 discuss the award of interest in an arbitral award. An arbitral tribunal being a creature of contract, parties have the right to agree what powers, if any, the arbitral tribunal shall have as regards the award of interest.24 The parties can even agree that no interest shall be payable, in which case the arbitral tribunal will not have any power to award it.

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This limitation or restriction need not be part of the arbitration agreement itself. It may even be contained elsewhere in the contract documents. The right to grant interest is, therefore, covered either under the contractual provision between the parties or by virtue of the applicable law.25

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The arbitral tribunal may also have the discretion to award interest. Most institutional rules do not contain any express provisions prescribing the rate of interest to be awarded and instead leave the same to the discretion of the tribunal.

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The presumption underlying such provisions is that an arbitral tribunal has the power to make an award in respect of an interest in just the same way as it has the power to make an award in respect of any other claims submitted to it.26

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For example, the SIAC Rules allows an arbitral tribunal to award “simple or compound interest” on any sum that is the subject of the arbitration, either at the rates agreed by the parties, or, in the absence of party agreement, at rates that the tribunal deems appropriate, “in respect of any period which the Tribunal determines to be appropriate”.27

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21. Vedanta Ltd. v Shenzhen Shandong Nuclear Power Construction Co. Ltd. (2019) 11 SCC 465, at para. 3. 22. The principle can be altered subject to the agreement of the parties. 23. David A.R. Williams, Amokura Kawharu, Williams & Kawharu on Arbitration (2011) at 14.13.1. For purpose of the award, see also Vandervaere v Milan (Unreported NSW Sup Ct CA, 11 September 1992), at para. 6. 24. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​115; Firma C-​ Trade SA v Newcastle Protection and Indemnity Association, The Fanti [1989] 1 Lloyd’s Rep 239; Labrador Co v Queen [1893] AC 104, PC (Can). 25. See Gotanda, “Awarding Interest in International Arbitration” (1996) 90 Am J Intl L 40, at pp. 50ff; Gotanda, “A Study of Interest”, Villanova University School of Law Working Paper Series No. 83 (August 2007). 26. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.73. 27. SIAC Arbitration Rules (6th edn, 1 August 2016), r. 32.9.

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Chapter 41—​Award of Interest

Similarly, the LCIA Rules permits an arbitral tribunal to award simple and compound interest “without being bound by rates of interest practiced by any state court or other legal authority”.28

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The AIAC Arbitration Rules confirms the competence of the arbitral tribunal to award interest when it states that “tribunal may award simple or compound interest from such date, at such rate and with such rest as the arbitral tribunal considers appropriate”.29

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The Mumbai Centre for International Arbitration, under Rule 30.2 of the MCIA Rules 2016, allows the arbitral tribunal to award simple or compound interest “on any sum which is the subject of the arbitration at such rates as the parties may have agreed or, in the absence of such agreement, as the Tribunal determines to be appropriate, in respect of any period which the Tribunal determines to be appropriate.”

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There is no guidance on the manner in which interest is to be awarded within the ICC Arbitration Rules, UNCITRAL Arbitration Rules, or the ICSID Convention Rules of Procedure for arbitration proceedings.

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The Chartered Institute of Arbitrators’ Practice Guidelines suggest that an arbitral tribunal “should” make an award of interest and even if a party has not claimed interest, the arbitral tribunal will be justified in “drawing the oversight to the claimant’s attention”.30

[41.3] AT COMMON LAW

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The English court’s ability to award interest developed over time. The House of Lords in London, Chatham & Dover Railway Co v South Eastern Railway Co.31 enunciated the common law principle that in the absence of any agreement or statutory provisions for the payment of interest, a court has no power to award interest, simple or compound, by way of damages, for the late payment of the debt.

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The rule was no more than a presumption that the claimant had suffered no loss by being kept out of his money. The presumption could be rebutted if the plaintiff could prove a quantifiable loss that was within the contemplation of the parties.

28. LCIA Arbitration Rules (1 October 2014), r. 26.4. 29. AIAC Arbitration Rules (2018), r. 6(g). 30. Practice Guideline 13, Guidelines for Arbitrators on how to approach the making of awards on interest, at paras 1.2.2, 1.2.5, available at https://​www.ciarb.org/​media/​4218/​2011-​making-​of-​awards-​on-​interest.pdf. 31. [1893] AC 429.

1138

Law, Practice and Procedure of Arbitration in India

While the House of Lords in President of India v La Pintada Compania Navigation SA (The La Pintada)32 recognised the inherent injustice in the rule, it nevertheless affirmed that the rule is too well settled to be departed from, other than by legislation. The Court confined this common law rule only to claims for interest by way of general damages and held that interest may be recovered for late payment of a sum due by way of special damages.33

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It based its judgment on the distinction drawn by the Court of Appeal in England in Wadsworth v Lydall34 and the High Court of Northern Ireland in Department of Environment for Northern Ireland v Farrans (Construction) Ltd.35

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Similarly, at common law, an arbitral tribunal had no inherent jurisdiction to award interest. However, the Court in The La Pintada36 held that the principle that a party should be compensated for the loss of use of money applied to arbitrations as well as to judicial proceedings.

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It thereby put an end to the doubts raised in the decision of the Court of Appeal in England in Techno-​Implex v Gebr Van Weelde Scheepvartkantoor BV.37

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The arbitral tribunal’s jurisdiction is derived from an implied term by the submission to arbitration that it should have the power to decide the issues on the subject of the reference.

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Tucker LJ in Chandris v Isbrandtsen-​Moller Co Inc38 explained:

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“Mr Mocatta argued that the judgment was based upon the assumption that it was the Civil Procedure Act 1833, which gave the arbitrator his power to award interest; that, once that Act was repealed, all such powers had gone; and that, unless the arbitrator was given fresh powers, he had none. I think that was the reasoning in this judgment. But I agree with Mr Mocatta that the real basis of Edwards v Great Western Ry [11 CB 588] was not that the arbitrator derived his powers from the Act of 1833, but that he derived them from the submission to him, which necessarily gave

32. 33. 34. 35. 36. 37. 38.

[1985] AC 104, HL. See Dods v Coopers Creek Vineyard Ltd & Co [1987] 1 NZLR 530. [1981] 2 All ER 401, CA (Eng). 19 BLR 1. [1985] AC 104, HL. [1981] QB 648, [1981] 2 WLR 821, CA (Eng). See also Page v Newman (1829) 9 B & C 378. [1951] 1 KB 240, at pp. 262–​263, [1950] 2 All ER 618, CA (Eng), per Tucker LJ. See also Techno-​Implex v GebrVan Weelde Scheepvartkantoor BV [1981] QB 648, [1981] 2 WLR 821, CA (Eng); President of India v La Pintada Cia Navigacion SA [1985] AC 104, HL.

1139

Chapter 41—​Award of Interest

him the ‘implied powers’ –​referred to by Lord Salvesan; and I see no reason why, since the Act of 1934, an arbitrator should not be deemed impliedly to have the same powers. Therefore, with diffidence, having regard to the view expressed by the Divisional Court on this matter, I have come to the conclusion that in such a case as this the arbitrator has power to award interest.”

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The power of an arbitrator to award interest has now been statutorily recognised in England.39 Section 49 of the English Arbitration Act gives deference to the agreement between the parties in relation to the matters of interest.

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Only in the circumstance where there is no such agreement, the provision grants discretion to the arbitral tribunal to award interest from such dates, or such rates as it considers meets the justice of the case.40

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The UNCITRAL Model Law41 contains no provisions regarding interest, nor does the US Federal Arbitration Act (FAA), the Swiss Law on Private International Law,42 or the French New Code of Civil Procedure.43

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However, a number of States that have adopted the UNCITRAL Model Law have modified the statute, to include an express authorisation for the arbitrators to award interest, but typically without specifying the standards governing such awards.44

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The most notable exception is the English Arbitration Act. Such exception also includes Hong Kong Arbitration Ordinance45 and Singapore Arbitration Act.46 Both of them provide the arbitral tribunal with the power to award interest.

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Other common law jurisdictions which explicitly make a provision for interest are in New Zealand and Malaysia. Their arbitral legislation provides that an arbitrator may award interest on the whole or any part of any sum.47

39. English Arbitration Act, 1996, s. 49. 40. English Arbitration Act, 1996, s. 49(3). 41. See UNCITRAL Model Law, U.N. GAOR, 40th Sess., Supp. No.17, U.N. Doc. A/​40/​17, Annex 1 at 81–​93 (21 June 1985). 42. See Bundesgesetz über das Internationale Privatrecht (IRPG), Federal Law on International Private Law, art. 176-​94 (18 December 1987) (Switz.). 43. See Nouveau Code De Procédure Civile (N.C.P.), art. 1442-​1507 (Fr.). 44. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3358. 45. Hong Kong Arbitration Ordinance, s. 79. 46. Singapore Arbitration Act, s. 20. 47. New Zealand Arbitration Act, 1996, s. 12(1)(b).

1140

Law, Practice and Procedure of Arbitration in India

In the Indian context, the legislative history on interest starts with the Arbitration Act of 1940 which contained a provision of interest. However, 1940 Act did not allow the arbitrator to award such interest on the award. Section 29 of the Arbitration Act of 1940 allowed the court to award interest, at such rate as was deemed reasonable to be paid on the principal sum adjudged by the award and confirmed by the court.48

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Two other legislations allowed the court to grant of interest namely, the Interest Act, 1839 and the Civil Procedure Code 1908 (“CPC”). Section 1 of the Interest Act, 1839 laid down the procedure for awarding interest by the courts.

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Section 34 of the CPC dealt with the court’s powers to award interest in money judgments. Arbitrators did not have the power to award interest under these provisions as the definition of court in both the statutes did not include an arbitrator.49

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The Interest Act, 1978 repealed the erstwhile Interest Act, 1839 to include “arbitrator” in the definition of court. Section 3(3) of the Interest Act, 1978 defined the court to include a tribunal and an arbitrator.

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Such updating of the law has provided a first impetus towards granting of interest in arbitration in India. The power of an arbitrator to award interest has now been statutorily recognised in India.50 The Arbitration Act confers power on the arbitrator to award interest.

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The ambiguity surrounding the applicability of the Arbitration Act on agreements entered into before the Act is now settled.

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The Supreme Court in India in Shahi & Associates v State of UP51 held that Section 31(7) of the Arbitration Act would be applicable to all arbitral proceedings commenced after it came into force. This is notwithstanding the fact that the arbitration agreement pre-​dates the coming into force of the 1996 Act.52

[41.4] STAGES OF AWARDING INTEREST

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Interest may be awarded for the whole or any part of the period between the date when the cause of action in the case arose53 and the date on which the award is made.

48. Indu Malhotra, Commentary on the Law of Arbitration, Vo1. 1 (4th edn, Wolters Kluwer 2020), p. 812. 49. See Seth Thawardas Pherumal v Union of India [1955] 2 SCR 65, at para. 47; where the courts explained that the arbitrator was not court within the meaning of CPC or the Interest Act, 1839. 50. Arbitration Act, s. 31(7). 51. Shahi & Associates v State of UP (2019) 8 SCC 329. 52. Ibid, at para. 12. 53. BP Chemicals Ltd v Kingdom Engineering (Fife) Ltd [1994] 2 Lloyd’s Rep 373, 38 ConLR 14. See also TN Small Industries Corporation v Southern Railway (2008) 7 (NOC) 1349 (Mad).

1141

Chapter 41—​Award of Interest

There are generally three instances where the claim for payment of interest may arise, namely, (1) From the stage of accrual of a cause of action till the commencement of the arbitration proceedings, that is, pre-​reference period;



(2) During the pendency of the proceedings before the arbitral tribunal called pendente lite;



(3) Future interest arising between the date of the award and the date of the order for enforcement.

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The grant of pre-​award interest to compensate a claimant is based on two assumptions: (1) The assumption that had the claimant been paid the principal sum when it became due it would have invested it and so, the delay in receipt of the principal sum has resulted in a loss;54 and



(2) The assumption that the claimant has incurred costs as a result of borrowing funds to replace the delayed principal sum.55

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Normally, strict proof of the above loss is not required. An interest rate providing a reasonable approximation of the loss is applied instead.56

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Though the UNCITRAL Model Law on International Commercial Arbitration is silent on the application and calculation of pre-​award interest, in England, arbitral tribunals have the power to award such interest. This power is rooted in common law and Section 49 of the English Arbitration Act, 1996.

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Section 49 of the English Arbitration Act operates concurrently with the existing jurisdiction of the arbitral tribunal to award pre-​award interest, under common law.57

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Hence, even if the parties have agreed to apply a foreign law by providing a foreign seat in their arbitration agreement, such agreement will not oust the arbitral tribunal’s power to award pre-​award interest, unless the parties have explicitly barred the payment of interest.58

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In India, Section 31(7)(a) of the Arbitration Act empowers an arbitral tribunal to grant pre-​award interest, that is, pre-​reference and pendente lite interest, at any rate, that it deems reasonable, subject to agreement between the parties.59

54. 55. 56. 57. 58. 59.

2016 UNIDROIT Principles of International Commercial Contracts, art. 7.4.10. Sergey Ripinsky and Kevin Williams, Damages in International Investment Law, 361 (2008), p. 363. John Y. Gotanda, “Awarding Interest in International Arbitration” (1996) 90 AM. J. INT’L L. 40, p. 40. Lesotho Development v Impregilo SpA [2006] 1 AC 221 (HL), at para. 238G. Ibid, at paras 238G, 239A. Vedanta Ltd. v Shenzen Shandong Nuclear Power Construction Co. Ltd. 2019 11 SCC 465, at para. 7.

1142

Law, Practice and Procedure of Arbitration in India

The Supreme Court of India in McDermott International Inc. v Burn Standard Co. Ltd.60 held:

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“154. … Section 31(7)(a) provides that the Arbitral Tribunal may award interest, at such rate as it deems reasonable, on the whole, or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which award is made i.e., pre-​award period. This, however, is subject to the agreement as regards the rate of interest on unpaid sums between the parties. The question as to whether interest would be paid on the whole or part of the amount or whether it should be awarded in the pre-​award period would depend upon the facts and circumstances of each case. The Arbitral Tribunal in this behalf will have to exercise its discretion as regards (i) at what rate interest should be awarded; (ii) whether interest should be awarded on the whole or part of the award money; and (iii) whether interest should be awarded for the whole or any part of the pre-​award period.”

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The Supreme Court of India in Hyder Consulting (UK) Ltd. v State of Orissa (Hyder Consulting)61 further held that:

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“27. Section 31(7)(a) employs the words ‘… the Arbitral Tribunal may include in the sum for which the award is made interest …’. The words ‘include in the sum’ are of utmost importance. This would mean that pre-​award interest is not independent of the ‘sum’ awarded. If in case, the Arbitral Tribunal decides to award interest at the time of making the award, the interest component will not be awarded separately but it shall become part and parcel of the award. An award is thus made in respect of a ‘sum’ which includes within the ‘sum’ component of interest, if awarded.”

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The Supreme Court of India in Bhagwati Oxygen Ltd. v Hindustan Copper Ltd.62 held that an arbitrator has the power and jurisdiction to grant interest for three stages namely, pre-​reference period, pendente lite, and post-​award period, provided that the rate of interest is reasonable and the agreement does not provide a bar for grant of such interest nor does it prohibit such grant.

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An arbitral tribunal has the additional power to award interest from the date of the award, until the date of realisation.63 The award of such future interest should be the norm unless there are strong reasons to depart from the same.64

60. 61. 62. 63. 64.

(2006) 11 SCC 181, at para. 154. (2015) 2 SCC 189, at para. 27. (2005) 6 SCC 462, at para. 33. Hindustan Construction Co. Ltd. v State of J&K 1992 4 SCC 217, at para. 7. Nityananda Samantray v State of Orissa 1986 SCC OnLine Ori 55, at para. 8.

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Chapter 41—​Award of Interest

The rationale for this is to ensure that there is a “load and tension on the other party to pay of the sum promptly since otherwise payment of the sum may be delayed indefinitely”.65 Hence, a successful claimant (including a respondent who succeeds in a counterclaim) in the arbitration is entitled to have included in the award an amount in respect of interest on the principal sum awarded in his favour from the date the cause of action arose.

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Such interest on the award is allowed to accumulate until the date of payment. No exception should be made to this except for good reason.66

Pre-​reference Period Interest

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The arbitrator has the power to award interest for the pre-​reference period on the sums found due and payable in absence of any specific stipulation or prohibition in the contract to claim or grant any such interest.67

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The common law did not recognise any right of the party to be awarded interest on any sum which was due to him but which was paid before the commencement of arbitration or judicial proceedings, as the matter was and remained governed by the principle in The La Pintada.68

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The English Arbitration Act, 1996 does not confer upon the arbitrator default powers to award interest on sums paid before the commencement of the proceedings.69 Such interests cannot be awarded by the arbitrator unless: (1) the arbitration agreement between the parties so provides, or



(2) the claimant can bring himself within the exception of the special damage in The La Pintada.70

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However, there are statutes that depart from the English principle. For example, the Australian Arbitration Act prescribes a general period, that is, “for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made” for which the arbitrator may award interest. This time includes the pre-​reference period as well.71

65. 66. 67. 68. 69. 70. 71.

Ibid, at para. 8. Panchaud Frères SA v Pagnan & Fratelli [1974] 1 Lloyd’s Rep 394. Markanda, Law Relating to the Arbitration and Conciliation Act (10th edn, LexisNexis 2020), p. 937. [1985] AC 104, HL. English Arbitration Act, s. 49; See also Singapore Arbitration Act, s. 20. Robert Merkin, Arbitration Law (Service Issue No. 22 1998), at para. 16.63. See also New Zealand Arbitration Act, s. 12(1)(b)(ii), which again details out a general time period (“may award interest on the whole or any part of any sum which is awarded to any party, for the whole or any part of the period up to the day on which the sum awarded (including all interest) is paid in full”).

1144

Law, Practice and Procedure of Arbitration in India

There are other arbitration statutes which make a more direct reference to the pre-​ reference period. Section 79(1)(b) in Hong Kong Arbitration Ordinance says, “on money claimed in, and outstanding at the commencement of, the arbitral proceedings but paid before the award is made.”

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In the Indian context, though the Interest Act, 1839 dealt with the concept of pre-​ reference interest, it was only the Interest Act, 1978 which defined “court” to include an arbitrator. Statutorily, an arbitrator had no power to award pre-​reference interest in cases arising before the commencement of the Interest Act, 1978.

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However, a Constitution Bench of the Supreme Court of India in Dhenkanal Minor Irrigation Division v NC Budharaj remedied this by holding that the arbitrator can award interest for the pre-​reference period, even for cases that arise prior to the enactment of the Interest Act, 1978.72

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The Arbitration Act follows into the footsteps of the Australian Arbitration Act and provides a time frame for which the arbitrator is allowed to award interest. The time frame includes the pre-​reference period when the arbitration had not been commenced.73

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The Supreme Court of India in HP State Electricity Board v RJ Shah74 held that an arbitrator has the power to award interest for the period prior to commencement of arbitration proceedings, provided the reference relates to the period after the commencement of Interest Act, 1978.

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However, if the parties have represented the same and the arbitrator does not allow it, the court, as in the case, has power to award interest for the pre-​reference period.75

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The arbitrator’s power to grant pre-​reference interest has been challenged in the cases where there is an express prohibition in the arbitration agreement between the parties. If there is a bar against payment pre-​reference interest, the arbitrator cannot award interest in that case.76

72. 73. 74. 75. 76.

Dhenkanal Minor Irrigation Division v N.C. Budharaj (2001) 2 SCC 721, at para. 26. Arbitration Act, s. 31(7)(a). (1994) 4 SCC 214. Mohinder Pal Singh v Northern Railways 2007 SCC OnLine Del 1165, at para. 9. See Union of India v Saraswat Trading Agency (2009) 16 SCC 504 as mentioned in Indu Malhotra, Commentary on the Law of Arbitration, Vol. 1 (4th edn, Wolters Kluwer 2020), p. 820.

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Chapter 41—​Award of Interest

If the agreement does not prohibit the grant of interest, the arbitrator is mandated to direct payment of interest while giving an award.77 It may also be payable where the party claiming the interest proves such a trade usage.78

Pendente Lite Interest

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Interest for the period during the pendency of the proceedings before the arbitral tribunal is called pendente lite. The grant of pendente lite interest may depend upon several factors in the agreement, nature of the claim, disputes referred to in the arbitration, items on which interest can be awarded, and the period for which the interest should be awarded.79

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Arbitrators have the power, subject to contrary agreement, to award simple or compound interest from such dates, at such rates, on the whole, or part of the amount claimed in arbitration and outstanding at the commencement of the arbitration but paid before the award was made.

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Such a period by default includes the pendente lite duration of the arbitration proceedings. Interests will usually be awarded when from the date when the sum paid or awarded originally fell due and the cause of action in the sum arose.80

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While the Interest Act, 1978, and its predecessor, the Interest Act, 1839 provided for the award of interest up to the date of institution of proceedings, they did not address the concept of interest pendente lite. The Code of Civil Procedure, 1908 gives the court the power to order interest from the date of the suit to the date of the decree.81

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Initially, the Supreme Court of India, in Department of Irrigation v Abhaduta Jena,82 held that since an arbitrator was not a court within the meaning of Section 34 of the Code of Civil Procedure, an arbitral tribunal cannot award any interest pendente lite.83 However, later, the Supreme Court of India, in Govt. of Orissa v G.C. Roy84 overruled its previous decision.

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77. See Vishnu Kumar Gupta v Union of India 1999 SCC OnLine J&K 34; where issue arose as to the application of the Interest Act to the state of Jammu & Kashmir. It was held that merely because of such inapplicability would not exclude arbitrator from awarding interest, save for anything mention in the arbitration agreement. 78. Manjit Johl v Dewan Modern Breweries Ltd. (1996) SCC OnLine Del 95, at para. 17. 79. Indu Malhotra, Commentary on the Law of Arbitration, Vo1. 1 (4th edn, Wolters Kluwer 2020), p. 820. 80. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​123. 81. Code of Civil Procedure, 1908, s. 34. 82. (1988) 1 SCC 418. 83. Department of Irrigation v Abhaduta Jena (1988) 1 SCC 418, at para. 20. 84. (1992) 1 SCC 508.

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Law, Practice and Procedure of Arbitration in India

The Court took various factors into consideration, for example, that a person deprived of the use of money is legitimately entitled to claim interest,85 and disentitling an arbitrator from granting interest pendente lite would lead to multiplicity of proceedings since a party would now have to approach a court.86

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An arbitral tribunal being a creature of contract cannot be barred from granting interest (unless there is a specific bar under the agreement itself).87 It was held that an arbitrator would have the power to award interest pendente lite.

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The arbitrator’s power to grant of pendente lite interest is an implied term of the agreement. The High Court of Delhi held that the basic consideration is as valid for the period the dispute is pending before the arbitrator as it is for the period prior to the arbitrator entering upon the reference.88

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Given that there is no prohibition in the agreement to an award of interest,89 if a party makes a claim for pendente lite interest and it is referred to the arbitrator, he has the power to award the same.90

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The Latin maxim Generalia specialibus non derogant explains that the special prevails over the general. The Arbitration Act being a specific statute on arbitration prevails over the general law in the award of interest.91

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As such, the express provisions in Section 31(7)(1) of the Arbitration Act prevail over the Interest Act. The latter act is therefore not applicable to pendente lite interest in arbitral proceedings.

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The pendente lite interest could also be attributed to the delay which was caused by one of the parties in the arbitration proceedings. The High Court of Calcutta held that it would be unfair to deny a person wrongfully deprived of his dues for years, of pendente lite interest, where delay in disposal of arbitration proceedings is not attributable to him.92

Govt. of Orissa v G.C. Roy (1992) 1 SCC 508, at para. 43(i). Ibid, at para. 43(ii). Ibid, at para. 43(iv). D Khosla & Co. v YN Rao (1994) SCC OnLine Del 496, at para. 7. Jiwani Engineering Works Pvt. Ltd. v Union of India AIR 1981 Cal 101, at para. 9; Gujrat Industrial Development Corp. v SR Parmar and Co. 1995 (1) Arb LR 394, at para. 12. 90. Steel of Authority of India v RN Datta (1983) SCC OnLine Cal 48, at para. 13; Hans Construction Co. v Delhi Development Authority (1994) SCC OnLine Del 483, at para. 9; ONGC v Anil Conts. Co. (2000) SCC OnLine Guj 93, at para. 17. 91. Markanda, Law Relating to the Arbitration and Conciliation Act (10th edn, LexisNexis 2020), p. 940. 92. Union of India v Chitta Ranjan Maity (2009) SCC OnLine Cal 184, at para. 28. 85. 86. 87. 88. 89.

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Chapter 41—​Award of Interest

The Supreme Court of India held that that pendente lite interest does not arise from any term of the contract but on the losses or damages due to the claimant.93

Post-​award Interest

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The New York Convention does not provide expressly for interest running between the date of the award and the date of judgment by the competent authority where enforcement is sought. There may be considerable delay between these dates.94 Hence, arbitral tribunals in addition to the principal sum claimed may award a post-​award interest.

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Such interest is added until the last day when each and every penny awarded is paid up. The starting point for post-​award interest could be the date of the award, or it could be a later date.95

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The arbitral tribunal may set a rate of post-​award interest in any amount it deems appropriate.96 Often such rate is governed by the rate that applies to the court judgment rate in the jurisdiction where the award is made.

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The arbitral tribunal has the discretion to award interest from the date of the award, or any later date, until payment on the outstanding amount of any award.97

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There are a number of national statutes which provide for post-​award interest. New Zealand Arbitration Act provides that the sum directed to be paid by an award is to be subject to interest from the date of the award.98

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Correspondingly, Hong Kong Arbitration Ordinance99 and Singapore Arbitration Act100 offer interest on the amount awarded at the end of the arbitration.

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Malaysian Arbitration Act being a common law statute is one of the national statutes which makes provision only for post-​award interest, that is, award interest on any sum of money ordered to be paid by the award from the date of the award to the date of realisation.101

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93. Raveechee & Co. v Union of India (2018) 7 SCC 664, at para. 11. 94. A.F.J. Ylts, “Post-​ award Interest under the New York Convention: The Laurentian Forest” (1 July 1985) Arbitration International, Vol. 1, Issue 2, pp. 190–​192. 95. James Dow, “Interest”, London Business School at GAR, available at https://​globalarbitrationreview.com/​ guide/​the-​guide-​damages-​in-​international-​arbitration/​3rd-​edition/​article/​interest. 96. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.83. 97. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​123; See also English Arbitration Act, s. 49(4). 98. New Zealand Arbitration Act, Sch. 1, art. 31(5). 99. Hong Kong Arbitration Ordinance, s. 79(1)(a). 100. Singapore Arbitration Act, s. 20. 101. Malaysian Arbitration Act, s. 33(6)(a).

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Law, Practice and Procedure of Arbitration in India

Section 37(1)(b) of the Arbitration Act which was inserted with 2015 Amendment has the effect of providing post-​award interest. The arbitral tribunal has the discretion under Section 31(7)(b) to determine the rate of interest for the period post the date of the award.

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However, if the arbitral tribunal does not specify details in relation to the future interest, then the award is to carry a rate of 2 per cent higher than the rate of interest that is prevalent on the date of the award.102 The High Court of Himachal Pradesh in Ranjit Singh Rana v H.P. Housing and Urban Development103 held that grant of future interest is mandatory since the expression used in subsection 7(b) is “shall”.

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The reason for giving post-​award interest is premised on the basis that arbitration being a more efficacious dispute resolution mechanism. If no post-​award interest is awarded, it may disrupt the resolution of the dispute. Award of interest puts pressure on the party to pay sums promptly.104

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The Supreme Court of India105 held that post-​award interest under Section 31(7)(b) of the Arbitration Act would also be awarded on the amount of interest pendent lite if any, and not merely on the principal sum. The court interpreted the word “sum” used in Section 31(7), sub-​clauses (a) and (b) of the Act to be an amount of money that could include principal or interest or both.

[41.5] EXERCISE OF THE ARBITRAL TRIBUNAL’S DISCRETION

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An arbitral tribunal should not refuse to exercise its power to award interest unless it has a good reason to do so.106 Mustill and Boyd state that if the arbitral tribunal decides not to award interest, it should explain its reasons for doing so in its award.107

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The arbitral tribunal when exercising the discretion to award interest should make no exception except for good reasons.108 However, when the arbitrator does not award

1 02. 2015 Amendment, s. 16(1). 103. 2009 SCC OnLine HP 253 mentioned in Markanda, Law Relating to the Arbitration and Conciliation Act (10th edn, 2020), p. 943. 104. Nityananda Samantray v State of Orissa (1986) SCC OnLine Ori 55, at para. 9. 105. M/​s Hyder Consulting (UK) Ltd v Governor State Of Orissa through Chief Engineer (2015) 2 SCC 189, at para. 10. 106. See Van Der Zijden Wildhandel (PJ) NV v Tucker and Cross (No 2) [1976] 1 Lloyd’s Rep 341. 107. See also Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd edn, Butterworths 1989), p. 394. 108. Panchaud Frères SA v Pagnan & Fratelli [1974] 1 Lloyd’s Rep 394, at 411.

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Chapter 41—​Award of Interest

interest, it cannot be construed to be an obvious error as he has the discretion whether to award it or not.109 Interest is awardable in arbitration if the arbitration legislation so provides. On the other hand, silence could lead to the assumption that interest could not be awarded. The arbitrator has the discretion to award accumulated interest prior to the payment of the award amount is a debt, irrespective of how it arose.110

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The Court in Coastal States Trading (UK) Ltd v Mebro Mineraloelhandelsgesellschaft GmbH111 held that in granting leave to enter judgment in terms of the award, it could award interest upon the interest that had accumulated up to the date of payment of the principal sum awarded by the arbitral tribunal.

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The Court treated the accumulated interest as a debt. Oliver LJ in Techno-​Implex v Gebr Van Weelde Scheepvartkantoor BV112 held that the exercise of the arbitral tribunal’s discretion involves what is regarded as a basic implied term that the arbitral tribunal must decide in accordance with the rights of the parties under the law.

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The arbitral tribunal’s power to award interest is a matter of substantive law and not merely a rule of practice that the arbitral tribunal can disregard at its discretion.

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In England, under common law, arbitral tribunals have a manifold113 discretion when awarding discretion, similar to that which courts have in England have under Section 35A of the Senior Courts Act, 1981.

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Subject to what parties have agreed, the arbitral tribunal under Section 49 of the English Arbitration Act has a discretion whether to exercise their power of interest or not.114 Identical to the English Arbitration Act, such discretion is found in other common law statutes115 as well.

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109. Markanda, Law Relating to the Arbitration and Conciliation Act (10th edn. LexisNexis 2020), p. 932. 110. Monmouthshire County Council v Newport Borough Council [1947] 1 All ER 900, [1947] AC 520, HL. 111. [1986] 1 Lloyd’s Rep 465; cited in Walker v Rome [1999] All ER (D) 1283. 112. [1981] QB 648, [1981] 2 WLR 821, CA (Eng). 113. A tribunal can determine whether interest should be paid, rate of interest, principal on which interest should be paid, the period of interest and whether different rates can apply for different periods. See Gisele Stephens-​Chu and Joshua Kelly, “Awards of Interest in International Arbitration: Achieving Coherence Through Purpose”, Indian Journal of Arbitration Law, (© Indian Journal of Arbitration Law; Centre for Advanced Research and Training in Arbitration Law, National Law University, Jodhpur 2018, Vol. VII Issue 1), pp. 9–​37. 114. National Bank of Greece SA v Pinios Shipping Co. & George Dionysios Tsitsilianis (No. 3) [1990] 1 Lloyd’s Rep. 225. 115. Singapore Arbitration Act, s. 20(1)(a); Hong Kong Arbitration Ordinance, s. 79(1); Australian Arbitration Act, s. 25; New Zealand Arbitration Act, 1996, s. 12.

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Law, Practice and Procedure of Arbitration in India

The Court of Appeal in Carrasco v Johnson116 provided guidance on how this discretion is to be exercised and held that: (1) In case of statutory interest, only a claimant’s general attributes, and not the special position it may have been in, should be considered;



(2) In commercial cases, regard must be had to the rate at which a person in similar circumstances could have borrowed.



(3) In case of individual claimants who have suffered a personal injury, interest should be awarded at the investment rate, that is, the rate applicable to money placed in an account administered by the UK Court Funds Office; and



(4) In a case that does not fall into either of the above categories, a fair interest rate must be applied.

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Whilst the arbitral tribunal may retain discretion under Section 31(7) of the Arbitration Act, if a principal sum is awarded without interest there will usually be a request for the arbitral tribunal to provide an additional award dealing with it. Though the power to award interest is discretionary it has to be exercised judicially, on the principles of fairness, equity, and good conscience.

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Under Section 31(7)(a) of the Arbitration Act, the arbitral tribunal has been given discretionary power of not only imposing interest but also for determining the rate of interest that could be imposed from the date of cause of action to the date of the award, unless otherwise agreed by the parties.

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The arbitral tribunal even has the discretion to decide whether such interest would be imposed on the whole or a part of the money awarded and further whether it would be imposed for the entire duration from the date of cause of action to the date of award, or on a part of it.117

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A similar discretionary power has also been afforded under Section 31(7)(b) to the arbitral tribunal, which pertains to the post-​award period (viz. from the date of the award to the date of realisation). The aforementioned section is not subject to either party autonomy or an agreement between the parties. The parties, therefore, cannot contract out of the provisions of Section 31(7)(b).118

116. Carrasco v Johnson 2018 EWCA (Civ.) 87 (Eng.). 117. Hyder Consulting (UK) Ltd. v State of Orissa (2015) 2 SCC 189, at para. 69. 118. Vedanta Ltd. v Shenzhen Shandong Nuclear Power Construction Co. Ltd. (2019) 11 SCC 465, at para. 8.

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Chapter 41—​Award of Interest

Hence, an arbitrator has the power to award interest at all stages and cannot deny the same based on whims and fancies nor can he be allowed to act arbitrarily.119 Arbitrators are bound to make the award in accordance with the law and if there is no embargo or legal hurdle in awarding interest for all the three stages, then there cannot be any justifiable reason to deny the same.120

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The Supreme Court of India in Vedanta Ltd. v Shenzhen Shandong Nuclear Power Construction Co. Ltd.121 held that:

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“9. The discretion of the arbitrator to award interest must be exercised reasonably. An Arbitral Tribunal while making an award for interest must take into consideration a host of factors, such as: (i) the ‘loss of use’ of the principal sum; (ii) the types of sums to which the interest must apply; (iii) the time period over which interest should be awarded; (iv) the internationally prevailing rates of interest; (v) whether simple or compound rate of interest is to be applied; (vi) whether the rate of interest awarded is commercially prudent from an economic standpoint; (vii) the rates of inflation; (viii) proportionality of the count awarded as interest to the principal sums awarded.”

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When the arbitral tribunal awards interest in accordance with the provisions of Section 31(7) of the Arbitration Act, it is not obligated to provide any reason for the same.122 However, if the arbitrator awards a different rate of interest, then reasons are expected. This is, even more, the case, where the arbitrator awards different rates for different periods.123

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In a challenge to the award, a court is also bound to give reasons if it refuses to grant post-​award interest on the sums awarded by the arbitrator.124

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[41.6] INTEREST UNDER CONTRACT

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Since most of the institutional rules do not contain express provisions for the payment of interest, the right to interest will therefore flow from the parties underlying contract.125 Parties are free to agree on the scope of the arbitral tribunal’s power to award interest.126 119. Markanda, Law Relating to the Arbitration and Conciliation Act (10th edn, LexisNexis 2020), p. 926. 120. Indian Hume Pipe Co Ltd v State of Rajasthan (2009) 10 SCC 187, at para. 21. 121. (2019) 11 SCC 465, at para. 9. 122. Justice R.S. Bachawat, Law of Arbitration & Conciliation, R.S Bachawat, Anirush Wadhwa & Anirudh Krishnan (5th edn, LexisNexis 2012), p. 2361. 123. Union of India & Anr. v Bakshi Steel Ltd. (2005) SCC OnLine Del 806, at para. 17. 124. Mohinder Singh & Co. v Board of Trustees of the Port of Bombay (2009) 4 SCC 86, at para. 5. 125. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.73. 126. Arbitration Act, s. 31(7); F G Minter Ltd v Welsh Health Technical Services Organisation (1980) 13 BLR 1; Balfour Beatty Construction Ltd v Kelston Sparkes Contractors Ltd [1996] ADRLN 18; Firma C-​Trade SA v Newcastle Protection and Indemnity Association, The Fanti [1989] 1 Lloyd’s Rep 239, CA.

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Law, Practice and Procedure of Arbitration in India

The arbitral tribunal should therefore give effect to an express contractual term providing for the payment of interest on a particular basis or at a certain rate if applicable to the matter to the matter in hand.127 Under the English Arbitration Act, 1996, parties are also free to agree to the power of the arbitrators to award interest, which means that the powers of the arbitrators can be greater than or narrower than the powers conferred on the courts.128

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A similar example is found in clause 42.9 of the CIDB Standard Form of Contract for Building Works (2000 Ed). The arbitrator will have jurisdiction to award interest on the basis of that contract, whether express or implied.129

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In relation to building contracts, failure of an architect or engineer to certify will constitute a breach of contract for which the contractor may claim contractual interest. In the absence of such an express provision, he may be entitled to interest as special damages.130 The position is the same where the employer is late in payment.131

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Where the basis of an award is the revision by the arbitral tribunal of the certificate to a higher amount than originally certified, the position as suggested by case authorities132 is as follows: if the architect or engineer observes the terms of the contract and certifies what he believes to be the amount due, interest may not be claimed.

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The reason for this is that the debt due under a properly issued certificate is the sum certified. The balance when an arbitrator revises the certified sum upwards becomes due when the arbitrator makes his award, not at the date of the original certificate.

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If, on the other hand, the architect or engineer’s certificate is not in accordance with the terms of the contract and is revised upwards for that reason, there is a breach and interest may be claimed. Interest may also be claimed if there is sufficient evidence that the architect or engineer had under-​certified in bad faith or from an improper motive.

Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​115. Robert Merkin, Arbitration Law (Service Issue No. 22 1998), at para. 16.57. FG Minter Ltd v Welsh Health Technical Services Organisation (1980) 13 BLR 1. Holbeach Plant Hire Ltd v Anglian Water Authority (1988) 14 ConLR 101; F G Minter Ltd v Welsh Health Technical Services Organisation (1980) 13 BLR 1; Secretary of State for Transport v Birse-​Farr Joint Venture 9 Const LJ 213; Royal Borough of Kingston-​upon-​Thames v Amec Civil Engineering Ltd (1994) 10 Const LJ 225, (1993) 35 Con LR 39. In relation to building contracts, failure of an architect or engineer to certify will constitute a breach of contract for which the contractor may claim contractual interest. In the absence of such an express provision, he may be entitled to interest as special damages. 131. Holbeach Plant Hire Ltd v Anglian Water Authority (1988) 14 ConLR 101. 1 32. See Nash Dredging Ltd v Kestrel Marine Ltd 1986 SLT 62; Hall and Tawse Construction Ltd v Strathclyde Regional Council 1990 SLT 774; The Secretary of State for Transport v Birse-​Farr Joint Venture 62 BLR 36; Royal Borough of Kingston Upon Thames v AMEC Civil Engineering Ltd (1994) 10 Const LJ 225, (1993) 35 Con LR 39; BP Chemicals Ltd v Kingdom Engineering (Fife) Ltd [1994] 2 Lloyd’s Rep 373, 38 ConLR 14. Cf. Morgan Grenfell (Local Authority Finance) Ltd v Seven Seas Dredging Ltd (1990) 21 ConLR 122.

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1 27. 128. 129. 130.

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Chapter 41—​Award of Interest

In the Arbitration Act, if the arbitrator’s award interest in contravention to the party’s agreement, it would be a violation of the contract.133 Section 37(1)(a) is prefaced by the phrase “unless otherwise agreed by the parties”; this indicates that if the agreement prohibits an award of interest, the arbitrator cannot award interest.134

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While under the Arbitration Act courts have held that any contractual bar in the agreement would dis-​entitle the tribunal from granting interest,135 for cases arising under the 1940 Act, courts have adopted a much more restrictive interpretation to determine whether the contract contains an express bar to the grant of interest.136

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The rationale behind this is that the 1940 Act does not contain any provision relating to the grant of interest, while the Arbitration Act, in Section 31(7)(a) gives “more respect to the agreement entered into between the parties”.137

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Thus, parties may, by means of an agreement, exclude the award of interest138 or agree to a pre-​determined rate of interest139 for the pre-​reference and pendente lite period, however, there is no express legislative language to the same effect dealing with the post-​award period.140

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The position under the Arbitration Act of 1940 was different. There was no statutory provision dealing with interest and so courts, when dealing with awards under the 1940 Act held that in the absence of an express bar under the agreement, an arbitrator

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133. M/​S. M.B. Patel & Co v Oil & Natural Gas Commission (2008) 8 SCC 251, at para. 6. 134. Indu Malhotra, Commentary on the Law of Arbitration, Vo1. 1 (4th edn, Wolters Kluwer 2020), p. 819. 135. Sayeed Ahmed and Co. v State of UP (2009) 12 SCC 26, at para. 14; Union of India v Saraswat Trading Agency (2009) 16 SCC 504, at paras 28, 33, 34, (agreement barred payment of interest and so arbitrator could not award interest from the period when the agreement was subsisting); Sree Kamatchi Amman Constructions v Railways (2010) 8 SCC 767, at paras 11, 19 (where a clause in the agreement provides that no interest will be payable upon inter alia amounts payable under the contract, an arbitral tribunal cannot award pre-​reference/​ pendente lite interest); Union of India v Bright Power Projects (India) P. Ltd. (2015) 9 SCC 695, at paras 10, 11 (when the terms of agreement prohibit the grant of interest on amounts payable to the contractor, the parties are bound by that agreement and cannot claim interest), Jaiprakash Associates Ltd. v Tehri Hydro Development Corporation Ltd. (2019) SCC OnLine SC 143, at paras 13, 15–​17 (Arbitration Act, s. 31(7) sanctifies party agreement). 136. Union of India v Ambica Construction (2016) 6 SCC 36, at para. 34 (“bar to award interest on delayed payment by itself will not be readily inferred as express bar to award interest pendente lite by the Arbitral Tribunal”); Reliance Cellulose Products Ltd. v ONGC Ltd. (2018) 9 SCC 266, at paras 24, 25 (in cases under the 1940 Act an arbitrator can award interest for all three periods as long as there is no express bar in the agreement between the parties. Further an express bar to payment of interest must be strictly construed). 137. Union of India v Bright Power Projects (India) P. Ltd. (2015) 9 SCC 695, at para. 18. 138. DSA Engineers (Bombay) v Housing and Urban Development Corporation (2008) 4 Arb LR 347 (DB), at para. 13. 139. Indian Institute of Technology v Creative Construction (2007) SCC OnLine Bom 252, at para. 12; see also, Board of Trustees for Port of Calcutta v Engineers-​De-​Space-​age (1996) 1 SCC 516. 140. DSA Engineers (Bombay) v Housing and Urban Development Corporation (2008) 4 Arb LR 347 (DB), at para. 13.

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Law, Practice and Procedure of Arbitration in India

has the jurisdiction to award interest for all three periods, that is, pre-​reference, pendente lite, and post-​award.141

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The Supreme Court of India, in Chittaranjan Maity v Union of India,142 and Raveechee & Co. v Union of India,143 held that despite the contractual clauses being virtually identical, accorded completely different interpretations when evaluating whether the contractual clause amounted to an express bar on the ability of the arbitrator to award interest.

It was decided solely because the former case dealt with an award passed under the 1996 Arbitration Act, while the latter dealt with an award passed under the 1940 Act.

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The Supreme Court of India in the Chittaranjan Maity case held that the contractual clause amounted to a bar on the arbitrator’s ability to award interest.144

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However, the Supreme Court of India in the Raveechee case, despite the contractual clause being identical, held that:

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“10. … arbitrators have awarded amounts to the claimant on account of the losses suffered by them … amounts are not awarded on account of any payment due under the contract but are awarded on losses determined in the course of arbitration or the ‘lis’. A claimant becomes entitled to interest not as compensation for any damage done but for being kept out of the money due to him. Obviously, in a case of unascertained damages such as this, the question of interest would arise upon the ascertainment of the damages in the course of the lis. Such damages could attract interest pendente lite for the period from the commencement of the arbitration to the award. Thus, the liability for interest pendente lite does not arise from any term of the contract, or during the terms of the contract, but in the course of determination by the arbitrators of the losses or damages that are due to the claimant. Specifically, the liability to pay interest pendente lite arises because the claimant has been found entitled to the damages and has been kept out from those dues due to the pendency of the arbitration i.e. pendente lite. 11. … general rule that an arbitrator has the power to award interest unless specifically barred from awarding it; and the bar must be clear and specific.”

Under Section 31(7)(a), a party can limit the arbitrator’s powers to award interest. However, if the party does not raise the plea that the arbitral tribunal could not

141. 142. 143. 144.

Irrigation Deptt. State of Orissa v G.C. Roy (1992) 1 SCC 508, at para. 11. (2017) 9 SCC 611. (2018) 7 SCC 664. Chittaranjan Maity v Union of India (2017) 9 SCC 611, at paras 17, 20, 21.

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Chapter 41—​Award of Interest

award interest in view of a contractual bar at the appropriate time, then it will be precluded from raising any objection at a later stage of the proceedings based on waiver principle.145

[41.7] WITHHOLDING INTEREST

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The party who has retained money to which he is not entitled should not benefit thereby. Lord Denning MR in Jefford v Gee146 stated:

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“When money is owing from one party to another and that other is driven to have recourse to legal proceedings in order to recover the amount due to him, the party who is wrongfully withholding that money from the other ought not in justice to benefit by having the money in his possession and enjoying the use of it.”

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An eventually successful party delaying in bringing his claim may be a factor to be taken into account by the arbitral tribunal in exercising its discretion to award interest. The courts have applied the following principles when deciding to award interest as follows: (1) Where a claimant has delayed unreasonably in commencing or prosecuting proceedings, the court may exercise its discretion either to disallow interest for a period or to reduce the rate of interest.



(2) In exercising that discretion, the court may take a realistic view of delay. In the case of business disputes, litigation is for all parties an unwelcome distraction from their proper business. It is not reasonable to expect any party to take every litigious step at the first possible moment, or to concentrate on litigation to the exclusion of all else.



(3) Delay should only be characterised as unreasonable for present purposes when, after making due allowance for the circumstances, it can be seen that the claimant has neglected or declined to pursue his claim for a significant period.

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(4) When determining what disallowance or reduction of interest should be made to mark a period of unreasonable delay, the court may bear in mind that the defendant has had the use of the money during that period of delay.147

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145. Union of India v Susaka (P) Ltd. (2018) 2 SCC 182, at para. 27. 146. [1970] 2 QB 130 at p. 143, CA (Eng), per Lord Denning MR, citing Lord Herschell in London, Chaltham & Dover Railway Co v South Eastern Railway Co [1893] AC 429. 147. Claymore Services Ltd v Nautilus Properties Ltd [2007] EWHC 805 (TCC), at para. 55; Network Rail Infrastructure Ltd v Handy [2015] EWHC 1460 (TCC), a delay of 11 months in prosecuting a claim was, in the context of the dispute, not unreasonable or reprehensible conduct that would justify withholding interest.

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Law, Practice and Procedure of Arbitration in India

Devlin J in Kemp (A B) Ltd v Tolland148 explained: “I do not think I should award interest on the basis of anybody’s fault. I should award it on the simple commercial basis that if the money has been paid at the appropriate commercial time, the other side would have had the use of it.” Similarly, Donaldson J in The Owners of the MV Myron v Tradax Export SA149 said:

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“All matters of costs in the arbitration and interest upon any monies due are for the arbitrators or umpire. However, it may assist if I express my views upon the principles that are applicable. It is of paramount importance to the speedy settlement of disputes that a respondent who is found to be under a liability to a claimant should gain no advantage and that the claimant should suffer no corresponding detriment as the result of delay in reaching a decision. Accordingly, awards should in general include an order that the respondent pay interest on the sum due from the date when the money should have been paid.”

fo

That delay may in exceptional cases be taken into account was considered in Panchaud Frères SA v Pagnan & Fratelli150 where Lord Denning MR said:

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“In a commercial transaction, if the plaintiff has been out of his money for a period, the usual order is that the defendant should pay interest for the time for which the sum has been outstanding. No exception should be made except for good reasons.”

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In the same case, Megaw LJ stated:151

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“In my judgment, it cannot be a proper exercise of discretion to refuse to award interest against a party who has been held liable for damages for breach of contract on the ground that the successful party has been guilty of delay, unless and until an opportunity has been given to that party to show whether indeed he has been guilty of delay; and, if so, to what extent.”

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Sir Eric Sachs agreed:152

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“Accepting, as I do ... that any party in a case such as this is prima facie entitled to interest on his damages if he succeeds, it next follows that any party seeking to obtain

1 48. [1956] 2 Lloyd’s Rep 681, at p. 691, per Devlin J. 149. [1970] 1 QB 527, at p. 536, per Donaldson J. 150. Panchaud Frères SA v Pagnan & Fratelli [1974] 1 Lloyd’s Rep 394, at pp. 409–​411, CA (Eng), per Lord Denning MR. 151. Panchaud Frères SA v Pagnan & Fratelli [1974] 1 Lloyd’s Rep 394, at 409 at p. 411, CA (Eng), per Lord Denning MR. 152. Panchaud Frères SA v Pagnan & Fratelli [1974] 1 Lloyd’s Rep 394, at 409 at p. 414, CA (Eng), per Sir Eric Sachs.

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damages can conduct his case on the basis that he will automatically be awarded interest on them unless a contrary contention is raised for him to deal with.”

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Lastly, to combat procedural delays that are beyond the control of the parties, a solution may be to enter into an agreement on pre-​award interest prior to agreeing upon a postponement of the proceedings, or parking a consolidated sum of money in an escrow bank account for it to generate interest, which may then later be transferred to the parties.153 The Supreme Court of India in Hyder Consulting (UK) Ltd. v State of Orissa,154 held that:

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“the term ‘interest’, appears to be distinct from the principal amount on which it is imposed. Furthermore, the imposition of an interest is stated to be for the purpose of providing compensation for withholding the said principal amount or, as in the case of clause (a) of sub-​section (7) of Section 31 of the 1996 Act, for withholding the money awarded as per the claim, as determined by the Arbitral Tribunal, from the date the cause of action arose till the date when such award was made. In other words, interest is imposed to compensate for the denial to one party, by the other party, of the money which rightfully belongs to the said former party under the relevant agreement governing the arbitration proceedings.”

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[41.8] RATE OF INTEREST APPLICABLE

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A more problematic issue in practice than the question of whether an arbitral tribunal can award interest is the one practical question of how much should be the rate of interest.155

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Although the legislation in most jurisdictions has left this question to the discretion of the arbitral tribunal,156 there are certain factors to be considered while fixing the rate of interest.

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Russell explains that the purpose of a pre-​award interest is to compensate the party deprived of money due and not to penalise the paying party.157 The paying party is

153. Mino Han, Ashutosh Ray, “Allocating Pre-​award Interest When a Procedural Delay Is beyond Parties’ Control”, available at http://​arbitrationblog.kluwerarbitration.com/​2020/​09/​01/​allocating-​pre-​award-​ interest-​when-​a-​procedural-​delay-​is-​beyond-​parties-​control/​. 154. (2015) 2 SCC 189, at para. 80. 155. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.74. 156. See Singapore Arbitration Act, s. 20(1); Malaysian Arbitration Act, s. 33(6)(b); Hong Kong Arbitration Ordinance, s. 79(1). 157. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​120.

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merely deprived of a benefit to which he was never properly entitled, that is, enjoyment before awarding of sums due to the other party.158 Similarly, Lord Wilberforce in General Tire & Rubber Co v Firestone Tyre & Rubber Co Ltd159 explained this basic principle thus:

Goff LJ in Rees & Kirby v Swansea City Council160 stated:

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“Interest is not awarded as punishment against a wrongdoer for withholding payments that should have been made. It is awarded because it is only just that the person who has been deprived of the use of the money due to him should be paid interest on that money for the period during which he was deprived of its enjoyment.”

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“Now here, it seems to me, we must adopt a realistic approach. We must bear in mind, moreover, that what we are considering here is a debt due under a contract; this is not a claim to interest ... but a claim in respect of loss or expense in which a contractor has been involved by reason of specific events. The respondent, like (I imagine) most building contractors, operated over the relevant period on the basis of a substantial overdraft at their bank, and their claim in respect of interest paid by them to the bank on the relevant amount during that period. It is notorious that banks do themselves, when calculating interest on overdrafts, operate on the basis of periodic rests; on the basis of the principle stated by the Court of Appeal in Minter’s case, which we here have to apply, I for my part can see no reason why that fact should not be taken into account when calculating the respondent’s claim for loss or expense in the present case.”

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The Court then left it to the parties to agree on the rates at which interest was to be calculated. However, the Court directed that regard be had to the rates charged by the contractor’s bank upon its overdraft, and to the periodic rests applicable to the account. The contractor was contending for quarterly rests, which the Court did not rule out.

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This type of claim must be pleaded and proved. The claimant will need to establish one of two things: (1) Increased borrowings, normally from its bank, at the time of and as a result of the additional expenditure giving rise to an entitlement to claim; or

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158. London, Chatham and Dover Railway Co v South Eastern Railway Co [1893] AC 429, HL, per Lord Herschell. 159. [1975] 2 All ER 173, at p. 192, per Lord Wilberforce. See also Raja Lope & Tan Co v Malayan Flour Mills Bhd [2000] 6 MLJ 228; Precision Bellows [1985] 3 All ER 523. (1985) 30 BLR 1, at p. 23, per Goff LJ. Freedom Maritime Corpn v International Bulk Carriers, The Khian Captain (No 2) [1986] 1 Lloyd’s Rep 429, at p. 434, per Hirst J; Business Computers Ltd v Anglo African Leasing Ltd [1977] 2 All ER 741; Re Bird Precision Bellows [1985] 3 All ER 523. 160. (1985) 30 BLR 1, at p. 23, per Goff LJ.

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(2) Diminution of capital which was either earning interest or otherwise gainfully deployed, again at the time of and as a result of additional expenditure giving rise to an entitlement to claim.

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In the case of a genuine claim for increased borrowings, it is necessary for the claimant to produce precise and complete records of the number of extra borrowings, the reason for them, the exact rate of interest paid to the bank, and the precise period during which the extra interest was incurred. Claims presented on a notional basis without requisite details of dates of borrowings or records will not succeed under this head.

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If the parties have expressly agreed on a fixed rate of interest or on a method for calculating interest, the arbitral tribunal will typically apply interest in accordance with the parties’ agreement. The starting point is usually the parties’ agreement,161 as most arbitration legislations provide for payment of interest in accordance with the parties’ agreement.

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In the absence of such an agreement, arbitral tribunals have wide discretion. They may grant interest based on their subjective view of what is necessary to achieve full compensation, based on the law that applies to the dispute, or even, at times, based on the law governing the award of interest.

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When submitting on the proper rate of pre-​award interest, a party may argue that the judgment rate is not an appropriate rate of interest to award in the context of a dispute between two businesses;162 that a rate, which more accurately reflects those commercially available to the parties, should be used.

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It is normal for the arbitral tribunal to ask the requesting party to provide evidence of its loss suffered, whether by way of cost of borrowing or the loss of the use of the capital.

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In the absence of such evidence, there is still a presumption that interest is payable but the arbitral tribunal will only be able to apply notional standard rates.163

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The choice of law governing the award of interest may have a substantial impact on the authority of the arbitrator granting interest as well as the standard of interest.164

161. See English Arbitration Act, s. 49; Singapore Arbitration Act, s. 20; Hong Kong Arbitration Ordinance, s. 79. 162. Claymore Services Ltd v Nautilus Properties Ltd [2007] EWHC 805 (TCC), at para. 68; Persimmon Homes (South Coast) Ltd v Hall Aggregates (South Coast) Ltd [2012] EWHC 2429 (TCC). 163. Peter Sheridan, “Construction and Engineering Disputes” (1999), at para. 19.09. 164. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3360.

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Law, Practice and Procedure of Arbitration in India

This is the law of the seat of the arbitration. A contrary position can be seen in the civil law nations, where the law of the underlying matrix contract is the law governing the award of interest.

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In England, interest is calculated by taking into account general assumptions about the loss that has been suffered and specific proof of loss is not generally required.165 In commercial cases, the courts may measure the loss by looking at the cost of borrowing and, subject to contrary proof, an interest rate as in the London Interbank Offered Rate (LIBOR). Such interest rate representing a commercial borrowing rate is presumed to be appropriate166 unless the parties can adduce evidence to prove that a higher or lower rate will be more appropriate.

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For contracts where there is a close connection to England, the Late Payment of Commercial Debts (Interest) Act, 1988 applies which provides for simple interest to be paid at the base rate, plus a margin of 8 per cent for the late payment of certain debts.

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Many arbitral awards provide for interest rates that are expressed in floating commercial borrowing benchmarks, namely a commonly used commercial rate which are LIBOR mentioned above, EURIBOR, EONIA, and US Prime.

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The arbitral tribunal in Unglaube v Costa Rica167 applied the 5-​year Treasury Rate of the United States. The arbitral tribunal considered that the interest rate should be conservative, which conserves the value of the valuation determined and assumes a medium-​term investment involving low risk.

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An arbitral tribunal may also apply a fixed rate of interest at 9.1 per cent compounded annually over five years as in Alpha Projektholding v Ukraine.168 The arbitral tribunal held that “this rate better reflects the opportunity cost associated with Claimant’s losses, adjusted for the risks of investing in Ukraine”.

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The arbitral tribunal’s power to award interest can be traced to the provisions of Section 3 of the Interest Act, 1978.169 The section allowed the arbitral tribunal to award interest in the arbitration proceedings for recovery of any debt, or damages, in which a claim for interest is raised, where the debt or damages stand already paid.170

165. 166. 167. 168. 169. 170.

Equitas v Walsham 2013 EWHC 3264. Ibid, at paras 123(ii)–​(iv). ICSID Case No. ARB/​08/​1. ICSID Case No. ARB/​07/​16. Markanda, Law Relating to the Arbitration and Conciliation Act (10th edn, LexisNexis 2020), p. 927. NHAI v PCL Suncon (JV) (2014) SCC OnLine Del 91 as mentioned in Markanda, Law Relating to the Arbitration and Conciliation Act (10th edn, 2020), p. 927.

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Chapter 41—​Award of Interest

The Arbitration Act provided that the arbitral tribunal could award interest at 18 per cent per annum. However, Section 31(7) of the 2015 Amendment to the Arbitration Act provided:

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“A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of two per cent higher than the current rate of interest171 prevalent on the date of award, from the date of award to the date of payment.”

This change brought rate of interest with tandem with commercial reality, amending the arbitrary figure of 18 per cent per annum. The arbitral tribunal has discretion in awarding pre-​award interest in arbitration.172

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The Supreme Court of India held that in international commercial arbitrations, in the absence of party agreement on interest, the rate of interest is ordinarily governed by the law of the seat of arbitration. It must correspond to the currency of the award and be in conformity with the laws in force in the lex fori.173

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Section 3 of the Interest Act 1978 allows the court to enhance or reduce the rate of interest in proceedings to set aside the arbitral award.174 The court’s decision based on valid reasons will be after examining the circumstances of the case.175

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Furthermore, the courts will only interfere with the rate of interest if it is convinced that the grant of interest by the arbitral tribunal was ex facie bad in law.176

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Reasonable Rate of Interest

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An award of interest compensates a party for its foregone return on investment or money withheld without a justifiable cause.177 Similarly, the arbitral tribunal must bear in mind that “the purpose of interest is to compensate the successful party for not having had at his disposal the amount awarded for a period of time”.178

171. The expression “current rate of interest” shall have the same meaning as assigned to it under clause (b) of s. 2 of the Interest Act, 1978 (14 of 1978). 172. See Berger, “General Principles of Law in International Commercial Arbitration: How to Find Them –​How to Apply Them” (2011) 5 World Arb. & Med. Rev. 97, pp. 130–​136 (practice of international tribunals “to award interest goes back to the famous ‘Alabama’ Award of 1872”) as cited in Born, International Commercial Arbitration (3rd edn, 2020), p. 3359. 173. Vedanta Ltd. v Shenzen Shandong Nuclear Power Construction Co. Ltd. (2019) 11 SCC 465, at para. 5. 174. MSK Projects (I)(JV) Ltd. v State of Rajasthan (2011) 10 SCC 573, at para. 25. 175. HUDA v Raj Singh Rana (2009) 17 SCC 199, at para. 22. 176. Manalal Prabhudayal v Oriental Insurance Co. Ltd. (2009) 17 SCC 296, at para. 16. 177. Vedanta Ltd v Shenzhen Shandong Nuclear Power Construction Company Ltd (2019) 11 SCC 465, at para. 3. 178. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​120.

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Law, Practice and Procedure of Arbitration in India

The Practice Guidelines of the Chartered Institute of Arbitrators advise the arbitral tribunal when awarding interest, to bear the “compensatory principle” in mind, namely, that the interest “should be designed solely to compensate a successful claimant for having been kept out of the sum of money … should not be penal in nature or such as to deter others from paying late”.179

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Given the precise objective of the giving of interest in the arbitration award, the rate of interest must be reasonable. Most arbitration legislation does not direct the arbitrator to award interest at a reasonable rate.

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However, one such exception lies with the Australian Arbitration Act. Section 25 of the Australian Arbitration Act allows the tribunal to determine a “reasonable rate of interest”.

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The requirements of reasonableness are provided for in Bilateral Investment Treaties (BITs). Typical clauses for interest compensation in BITs define prejudgment interest as a “normal commercial rate”. Some variations of this phrase are also including “commercially reasonable rate” such as BITs of the United States and Japan.

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Consequentially, investor–​State disputes have been resolved with the award of a reasonable rate of interest in the awards. For example, the arbitral tribunal in BG Group v Argentina180 agreed with BG that interest be awarded at a reasonable commercial rate.

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The arbitral tribunal in ICSID Case –​ARB/​05/​24 held:

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“It is therefore appropriate that the rate of interest represents a reasonable and fair rate that approximates the return the injured party might have earned if it had had the use of its money over the full period of time”.

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Internationally, the interest rates are much lower than the commercial lending rates prevalent in India. Hence, in international arbitrations seated in India and cases of capital borrowed from a foreign country, the question of a reasonable rate of interest always arises.

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This is relevant consideration because the granting of extremely high rates of interest makes the award as a lottery win for a foreign party that mobilised funds from international markets. Such high rates of interest will not fall within the limits of reasonable interest.181

179. Practice Guideline 13, Guidelines for Arbitrators on how to approach the making of awards on interest, at para. 3.4, available at https://​www.ciarb.org/​media/​4218/​2011-​making-​of-​awards-​on-​interest.pdf. 180. UNCITRAL Arbitration, Award dated 24 December 2007. 181. Vedanta Ltd v Shenzhen Shandong Nuclear Power Construction Company Ltd (2019) 11 SCC 465.

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Chapter 41—​Award of Interest

The Supreme Court of India in Vedanta Ltd v Shenzhen Shandong Nuclear Power Construction Company Ltd182 dealt with an award that granted the same interest for an Indian rupee claim and a Euro claim. The Court observed that the interest was high from an economic standpoint and had no correlation with the prevailing contemporary international rates of interest.183

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The Supreme Court of India held that it is essential to take into account complications caused by different interest rates and coordinate the choice of currency with the interest rate.184

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Though the interest rate for the INR component of the claim was kept undisturbed, the interest with respect to the Euro claim was altered to LIBOR185 rate plus three per cent, as prevailing on the date of the award.186

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The Supreme Court of India’s judgment is in line with international standards, specifically, the Practice Guidelines issued by the Chartered Institute of Arbitrators (CIArb), which recommends the application of different rates of interest, as per the currency of the award as follows:187

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“8. US Dollar Awards 8.1 One obvious possibility for arbitrators, when awarding interest on sums expressed in US dollars, is to apply the US Prime Rate as a benchmark. This is the rate which banks in the US charge their most creditworthy business borrowers operating in the US and it is the rate normally applied by the Commercial Court when awarding interest on US dollar amounts wherever the claimant carries on business and whether or not the sum is payable in the United States. The Prime Rate is applied without an uplift unless there is evidence that a borrower with the general attributes of the claimant would have been charged more to borrow the sum in issue. 8.2 Another possibility is for arbitrators to use the US$LIBOR 3-​month rate. As to the uplift, a ‘spread’ or margin is normally added to LIBOR in financing operations. Thus a typical uplift for a long-​term secured loan might be 1.25 per cent. To give effect to the principle that arbitrators are to assess the cost of a short-​term unsecured loan, a rate of 2.5 per

Ibid. Vedanta Ltd v Shenzhen Shandong Nuclear Power Construction Company Ltd (2019) 11 SCC 465, at para. 16. Ibid, at para. 20. Giselle Stevens-​Chu and Joshua Kelly, “Awards of Interest in International Arbitration: Achieving Coherence through purpose” (July 2018) Indian Journal of Arbitration Law, Vol. 7, Issue 1. “LIBOR is an average interest rate calculated from time to time, based on inputs given by major banks in London as to their interest rates. Under the LIBOR regime, banks give details vis-​à-​vis actual interest rate that they are paying, or would be required to pay for borrowing from other banks.” 186. Vedanta Ltd v Shenzhen Shandong Nuclear Power Construction Company Ltd (2019) 11 SCC 465, at para. 20. 187. Practice Guideline 13, Guidelines for Arbitrators on how to approach the making of awards on interest, at para. 6.1, available at https://​www.ciarb.org/​media/​4218/​2011-​making-​of-​awards-​on-​interest.pdf. 182. 183. 184. 185.

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Law, Practice and Procedure of Arbitration in India

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cent over LIBOR might perhaps be awarded on the basis that this would be a reasonable average rate to charge a reasonably creditworthy business customer for an unsecured loan. In special cases, where there is evidence that a borrower with the general attributes of the claimant would have been charged more, a higher uplift might be appropriate. 9. Euro and Other Currencies 9.1 Arbitrators should do their best to assess ‘the average bank short-​term lending rate to prime borrowers prevailing for the currency of payment at the place for payment, or where no such rate exists at that place, then the same rate in the State of the currency of payment’: Art.7.4.9 of the UNIDROIT Principles of International Commercial Contracts. That rate should be applied without an uplift save that, where there is evidence that a borrower with the general attributes of the claimant would have been charged more, an uplift may be appropriate.”

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The High Court of Bombay in Susaka Pvt. Ltd. v Union of India and Ors.188 held that:

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“A situation where the parties have not agreed upon a rate of interest, the Arbitral Tribunal when awarding payment of money may include in the sum for which the award is made interest at such rate as it deems reasonable on the whole or any part of the money, for whole or any part of the period between the date on which cause of action arose and the date on which the award is made”.

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The Supreme Court of India in Union of India v S.N. Associates and Builders emphasised the same. The Court opined:

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“[The] arbitrator is entirely within its discretion to fix appropriate rate of interest has again got to be rejected because it is the discretion of the Arbitrator to fix reasonable rate of interest and this discretion cannot be substituted by the Court”.

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The courts can reduce the interest rate awarded by an arbitral tribunal where the rates do not reflect the prevailing economic conditions,189 are unreasonable,190 are excessive,191 and to promote the interests of justice.192

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However, reduction of interest awarded by the arbitral tribunal for the sole reason that the respondent is a public sector company is not a good justification.193

1 88. (2005) SCC OnLine Bom 159, at para. 6. 189. Krishna Bhagya Jala Nigam Ltd. v G. Harischandra Reddy (2007) 2 SCC 720, at para. 11; Indian Oil Corpn. Ltd. v Lloyds Steel Industries Ltd. (2007) SCC OnLine Del 1169, at para. 40. 190. Manalal Prabhudayal v Oriental Insurance Co. Ltd. (2009) 17 SCC 296, at para. 15. 191. Rajasthan SRTC v Indag Rubber Ltd. (2006) 7 SCC 700, at para. 9; V4 Infrastructure Private Limited v Jindal Biochem Private Limited FAO(OS) (COMM) 107/​2018 (Delhi High Court). Decided on 5 May 2020, at para. 24; Vedanta Ltd. v Shenzen Shandong Nuclear Power Construction Co. Ltd. (2019) 11 SCC 465, at para. 17. 192. Food Corporation of India v A.M. Ahmed & Co. (2006) 13 SCC 779, at para. 25. 193. Reliance Cellulose Products Ltd. v ONGC Ltd. (2018) 9 SCC 266.

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Chapter 41—​Award of Interest

Before the 2015 Amendment, when an arbitral award was silent regarding the rate of post-​award interest applicable, 18 per cent was the default rate of interest in terms of Section 31(7)(b).194 However, if the arbitral tribunal had granted post-​ award interest at a lower rate, the court could not have enhanced it to the statutory 18 per cent.195

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The Supreme Court of India has held that a dual-​rate of interest196 is unjustified and arbitrary since the same affects the statutory right of the award debtor to challenge the award.197

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The High Court of Delhi in National Projects Construction Corporation Limited v Interstate Construction Company198 discussed the award of interest at 18 per cent on the awarded amount. In this case:

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“42. The Arbitral Tribunal has awarded 18% future interest from the date of the award till the date of the payment. The Arbitral Tribunal has awarded the said interest relying on the provisions of Section 31(7)(b) of the A&C Act on an assumption that the said provision has also provided for award of future interest at the rate of 18% per annum. However, Clause (b) of Section 31(7) of the A&C Act was substituted by the [2015 Amendment] with retrospective effect from 23.10.2015. 46. In view of the above, this Court considers it apposite to set aside the impugned award to the extent the Arbitral Tribunal had awarded future interest at the rate in excess of 9% per annum”

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[41.9] WHETHER COMPOUND INTEREST IS PAYABLE

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Compound interest will usually reflect, more accurately, the loss of use of money that a party has suffered because compound interest is a commercial reality.199

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Typically, a party’s commercial loss suffered will be compound interest, reflecting the fact that most businesses would be in a position to earn compound interest or to otherwise realise the compound return on their investments.200 194. Madhu Mehra v Pritpal Singh (2010) SCC OnLine Del 2174, at para. 5. 195. BHEL v Tata Projects Ltd. (2015) 5 SCC 682, at para. 4. 196. The arbitral tribunal awarded a dual rate of interest where if the claim amount was paid within 120 days from the passing of the award the awarded sum would carry interest at 9 per cent but if the awarded claim amount was not paid within 120 days, the awarded sum would carry interest at the rate of 15 per cent. 197. Vedanta Ltd. v Shenzen Shandong Nuclear Power Construction Co. Ltd. (2019) 11 SCC 465, at para. 15. 198. O.M.P. (COMM) 78 of 2021, decided by the High Court of Delhi on 2 August 2021. 199. Sempra Metals Ltd (formerly Metalgesellschaft Ltd) v Inland Revenue Commissioners [2007] UKHL 34, at para. 41, cited by the New Zealand Court of Appeal in Clarkson v Whangamata Metal Supplies Ltd [2007] NZCA 590. 200. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3365.

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The compound interest, albeit low when counted over a small period, can become much more significant over long periods; given that banks only lend with compound interest. A party who has to borrow with compound interest but only recovers simple interest will also suffer a loss.201

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Essentially, if the contract provides for compound interest there is no prohibition upon the arbitral tribunal making such an award. However, in the absence of such an express provision, it would be somewhat unusual for an arbitral tribunal to award compound interest.

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Compound interest is commonly awarded in investment arbitration.202 Investment arbitration also allows us to trace how compound interest became the new normal in international arbitration.

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The practice of investment treaty arbitration originally did not allow the arbitral tribunal to award compound interest.203 Marjorie Whiteman204 explained:

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“[t]‌here are few rules within the scope of the subject of damages in international law that are better settled than the one that compound interest is not allowable.”

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This approach continued in the 1980s and 1990s where it was unusual for compound interest to be awarded.205 However, C. Brower explains the present era approach by arbitral tribunals that:

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“The concept of compound interest, even in cases involving sovereigns and hence decided under public international law, has gained such acceptance that recent awards have granted it without even citing precedents.”206

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The arbitral tribunal in Compania del Desarrollo de Santa Elena, SA v Costa Rica207 opined:

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201. See Robert Merkin, Louise Flannery, Arbitration Act 1996 (5th edn, Informa Law from Routledge 2014), p. 218. 202. See, for example, Compañiá de Aguas del Aconquija SA and Vivendi Universal v Argentine Republic ICSID Case No ARB/​97/​3, Award 20 August 2007, at para. 9.2.6. 203. RJ Reynolds Tobacco Co v Iran (1984) 7 Iran-​US CTR 181, at pp. 191–​192; Autopista Concesionada de Venezela, CA v Bolivarian Republic of Venezuela ICSID Case No. ARB/​00/​5, Award 23 September 2003, 10 ICSID Reports 309, at para. 396. 204. M. M. Whiteman, Damages in International Law, Vol. 3 (1943), p. 1997. 205. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3364 citing RJ Reynolds Tobacco Co v Islamic Republic of Iran, Award No. 145-​35-​3 (6 August 1984) where the tribunal said that it did “not find that there are any special reasons for departing from international precedents which normally do not allow the awarding of compound interest”. 206. C. Brower, “Awarding Interest –​Ex Officio or only When Request, At What Rate, As of When, Compound or Not” in The Resolution of the Dispute –​from the Hearing to the Award (2007) 29 ASA Special Series 70, at p. 75; David A.R. Williams and Amokura Kawharu, Williams & Kawharu on Arbitration (2011), at para. 14.13.4. 207. Compania del Desarrollo de Santa Elena, SA v Republic of Costa Rica ICSID Case No. ARB/​96/​1, Award 17 February 2000, 51 ICSID Reports 153, at para. 104.

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Chapter 41—​Award of Interest

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“Where an owner of property has at some earlier time lost the value of his asset but has not received the monetary equivalent that then became due to him, the amount of compensation should reflect, at least in part, the additional sum that his money would have earned, had it, and the income generated by it, been reinvested each year at generally prevailing rates of interest. It is not the purpose of impound interest to attribute blame to, or to punish, anybody for the delay for the payment made to the expropriated owner; it is a mechanism to ensure that the compensation awarded [to] the Claimant is appropriate in the circumstances.”

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An ICSID arbitral tribunal in Wena Hotels208 went further. It held that an award of compound interest is generally appropriate in modern arbitration. Many arbitral tribunals nowadays heed the dissenting opinion of Judge Howard Holtzmann in very early case,209 where he propounded that:

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“in the language of Article 38 of the Draft Articles on Responsibility of States, simple interest may not always ensure full reparation of the loss suffered”.

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The English Arbitration Act 1996210, the Singapore International Arbitration Act,211 and the Malaysian Arbitration Act212 provide two types of interest that can be awarded by the arbitral tribunal in terms of award, that is, simple or compound.

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Similarly, the Hong Kong Arbitration Ordinance213 provides for compound interest. Australian Arbitration Act prevents arbitral tribunal from awarding interest on interest under certain circumstances.214

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Most civil law countries prescribe a fixed interest rate to be awarded which is taken to be simple interest. The exception amongst such civil law countries are the Netherlands and Japan which allow the interest to be capitalised at the end of the year.215

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The handful of institutions which do allow awarding interest make provision for both simple and compound interest. AIAC216 also allows the tribunal similar freedom. LCIA Arbitration Rules Article 26.4 provides that:

208. Wena Hotels Ltd. v Egypt ICSID Case No. ARB/​98/​4. 209. Starett Housing Corporation v Iran, Iran-​US CTR 122, 269(1983). 210. English Arbitration Act, ss. 49(3) and 49(4). 211. Singapore Arbitration Act, s. 20(1). 212. Malaysian Arbitration Act, s. 33. 213. Hong Kong Arbitration Ordinance, s. 79. 214. Australian Arbitration Act, ss. 25 and 26. 215. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 9.77. 216. AIAC Arbitration Rules (1st edn, 2018), r. 32.9, says that tribunal may award simple or compound interest from such date, at such rate, and with such rest as the arbitral tribunal considers appropriate.

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“The Arbitral Tribunal may order that simple or compound interest shall be paid by any party on any sum awarded at such rates as the Arbitral Tribunal decides to be appropriate”.

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SIAC Arbitration Rules allows the tribunal to award “simple or compound interest on any sum which is the subject of the arbitration at such rates as the parties may have agreed or, in the absence of such agreement, as the Tribunal determines to be appropriate”.217 This choice is absent in the Arbitration Act. However, the Supreme Court of India has held that awarding compound interest will not be in violation of the public policy of India. It can be awarded when permissible under a statute.218

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The Supreme Court of India in Hyder Consulting (UK) Ltd. v Governor, State of Orissa219 held that if the arbitral award is silent about interest from the date of award till the date of payment, the party in whose favour the award is made will be entitled to interest at 18% per annum on the principal amount awarded, from the date of award till the date of payment.

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Earlier, the Supreme Court of India in State of Haryana and Others v S.L. Arora and Company Ltd220 held that Section 31(7) makes no reference to payment of compound interest, nor does it require the interest which accrues till the date of the award, to be treated as part of the principal from the date of award for calculating the post-​award interest.

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The Court explained that:

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“‘A sum directed to be paid by an arbitral award’ refers to the award of sums on the substantive claims and does not refer to the interest awarded on the ‘sum directed to be paid by the award’. In the absence of any provision for interest upon interest in the contract, the arbitral tribunals do not have the power to award interest upon interest, or compound interest, either for the pre-​award period or for the post-​award period.”

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The Law Commission in its 246th Report took note of this judgment. It observed that though under the 1940 Act there was an express bar on awarding compound interest,221 under the Arbitration Act the words used are of wider import and indicate that award of compound interest “is not only permitted but also the norm”.222

2 17. 218. 219. 220. 221. 222.

SIAC Arbitration Rules (6th edn, 1 August 2016), r. 32.9. Renusagar Power Co. Ltd. v General Electric 1994 Supp. 1 SCC 644, at para. 93. (2015) 2 SCC 189. State of Haryana and Others v S.L. Arora and Company. (2010) 3 SCC 690, at para. 14; Report No. 246, Amendments to the Arbitration and Conciliation Act, 1996 (August 2014), at para. 65. Report No. 246, Amendments to the Arbitration and Conciliation Act, 1996 (August 2014), at para. 67.

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The Law Commission was of the view that the decision of the Supreme Court of India in the S.L. Arora case was wrongly decided and needed to be put right. Therefore, it recommended the introduction of Explanation 2 to Section 31 to legislatively overcome the ratio in S.L. Arora case. The objective of Explanation 2 was to ensure that an arbitral tribunal had the power to award compound interest:

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“Explanation 2: The expression ‘sum directed to be paid by an arbitral award’ includes the interest awarded in accordance with section 31(7)(a).”

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Though this Explanation 2 did not find a place in the 2015 Amendment, the Supreme Court of India in Hyder Consulting (UK) Ltd., v Governor, State of Orissa subsequently did overrule a significant portion of the S.L. Arora case.

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The Supreme Court of India held that since Section 37(1) gives the arbitral tribunal the discretion to award interest on the “sum for which the award is made”, the sum awarded may be the principal amount and such interest as the arbitral tribunal deems fit.223

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The Court explained that the reason for its judgment since:

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“The legislature has not chosen to prefix the term sum with the word principal or any other qualifying term, which would imply that ‘sum’ only means ‘a particular amount of money’; and the language in the Arbitration Act differed from the Code of Civil Procedure –​in the latter the court is only empowered to award interest on the ‘principal sum adjudged’.”224

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Section 31(7)(b) of the Arbitration Act confers power on the arbitral tribunal to award interest on the sum found to be due as interest. Hence the arbitral tribunal may award interest on interest.225

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The Supreme Court of India in the Central Bank of India v Ravindra and Ors226 considered the question if the parties can decide for compound interest amongst them with an agreement. The Court held that: “Parties are free to enter into transactions evidenced by deeds incorporating a covenant or stipulation for payment of compound interest at reasonable rates and authorized the

223. 224. 225. 226.

Hyder Consulting (UK) Ltd. v State of Orissa 2015 2 SCC 189, at para. 4. Ibid, at para. 11. Angel Infin Pvt. Ltd. v Echjay Industries Ltd. 2007 SCC OnLine Bom 50, at para. 19. Central Bank of India v Ravindra and Ors (2002) 1 SCC 367, at para. 36.

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creditor to capitalize the interest on the amount remaining unpaid, so as to enable interest being charged on the agreed interest component of the capitalised sum for the succeeding period.” Even if there is an absence of agreement between the parties with respect to compound interest, such omission will not bar the arbitrator from awarding from compound interest under Section 31(7)(b).

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The High Court of Bombay considered the provision 3(3)(c) of the Interest Act, 1978, which prevented the court from awarding interest in interest. The Court deduced that since no such embargo is found in Section 31(7)(b), the arbitral tribunal is free to award compound interest in absence of any agreement.227

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[41.10] LOSS AND EXPENSE AND SPECIAL DAMAGES

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The arbitral tribunal may award interest as direct “loss and expense” under the contract or as special damages to compensate a claimant for direct and consequential losses in special circumstances caused to it by the respondent’s wrongful conduct.228

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Special circumstances do not have to be unique to a particular contract or even unusual. It is enough to prove that parties had knowledge at the time the contract was made of facts or circumstances from which it was reasonable to infer that delay in payments would lead to interests’ payments.229

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The arbitral tribunal is allowed to award interest as “loss and expense” and interest as special damages under building contracts. These two types of interests are distinct. Interest as “loss and expense” under building contracts arise as entitlements in the contract.

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In the construction industry, imputed knowledge is sufficient to claim this rather than specifically communicated knowledge.230 Secondly, interest as special damages arising as entitlements for damages for breach of contract.231

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Both types are considered together because they have each derived support from the other in the course of their development and raise similar considerations. A claim for interest constitutes special damages in that it must be specifically proved.232

227. 228. 229. 230. 231. 232.

Angel Infin Pvt. Ltd. v Echjay Industries Ltd. 2007 SCC OnLine Bom 50, at para. 19. James Edalman et al., McGregor on Damages (20th edn, 2017), at paras 19-​005–​19-​029. Peter Sheridan, Construction and Engineering Disputes (Sweet & Maxwell 1999), at para. 19.23. See Holbeach Plant Hire Ltd v Anglian Water Authority (1988) 14 ConLR 101. NHAI v HCC Ltd (2014) SCC Online Del 3507, at para. 63. International Minerals & Chemical Corpn v Karl O Helm AG [1986] 1 Lloyd’s Rep 81, per Hobhouse J.

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Where there is a contractual right to direct loss and expense, see, for example, clause 31 of the Malaysian CIDB Standard Form of Contract for Building Works (2000 Edition) and associated sub-​contracts, additional financing costs incurred in bearing expenditure which the claimant is entitled to may be recoverable as direct loss and expense.233

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It is open for the claimant to expressly plead his claim for interest as special damages and go on to prove it, for example, in Department of Environment for Northern Ireland v Farrans Construction Ltd234 the plaintiff was awarded special damages as interest paid on borrowings he was obliged to make in consequence of the defendant’s wrongful deduction from interim payments of liquidated damages. The deductions were later released to the contractor before the proceedings commenced.

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The editors of Building Law Reports commenting on the case of Department of Environment for Northern Ireland v Farrans Construction Ltd235 have doubts on the correctness of this decision:

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“Such losses are ones which are difficult to estimate accurately and for that reason might also be regarded as falling within the category of ‘general damages’ rather than ‘special damages’ ... On the basis they would appear to be caught by the common law rule against the recovery of interest as damages for breach of contract to pay a sum of money. A court or arbitrator would only award interest if and when there was a judgment or award for the principal sum and not where the principal sum had already been paid to the plaintiff or claimant.”

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The Court in President of India v Lips Maritime Corpn, The Lips236 held in the case of a claim for damages for the late payment of money that it will not determine in favour of the plaintiff if the damages flow from such delay naturally.

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But a plaintiff will be able to recover damages in respect of a special loss if it is proved that the parties had knowledge of facts or circumstances from which it was reasonable to infer that delay in payment would lead to that loss.

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The Court in Wadsworth v Lydall,237 where the defendant wrongfully delayed payment of a sum of money due to the plaintiff, held that it was foreseeable that the plaintiff would be forced in consequence to borrow money in order to complete the transaction.

233. 234. 235. 236. 237.

F G Minter Ltd v Welsh Health Technical Services Organisation (1980) 13 BLR 1. 19 BLR 1. Ibid, at paras 6–​7. [1987] 1 Lloyd’s Rep 131, [1987] 1 All ER 957. [1981] 2 All ER 401.

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The Court allowed actual interest charges incurred by the plaintiff on his borrowing to be recovered from the defendant as special damages. Interest can also be awarded as consequential damages. The House of Lords in Sempra Metals v Inland Revenue238 observed that interest can be awarded as damages for the loss of opportunity to invest money, cost of having to borrow money, or any other loss.239 It held that:

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“interest losses caused by a breach of contract or by a tortious wrong should be held in principle recoverable, but subject to proof of loss, remoteness of damage rules, obligations to mitigate damage and any other relevant rules relating to the recovery of alleged losses”.240

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However, this case made it clear that the standard of proof for awarding interest as damages was higher and stricter than that for awarding pre-​award interest.241

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It is difficult to locate national arbitration statutes which provide for granting interest as special damages. Authority to award interest as a part of loss or expense is vested within the rights of the arbitral tribunal and remains the discretion of the arbitral tribunal. Hence, it would be precedents which could provide us with the background into interests as damages.

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The same applies to the Indian framework. The Supreme Court of India had opportunities to rule on this issue. Under the Arbitration Act of1940, controversy arose, if the arbitrator has the freedom to award interest as compensatory or by way of damages.

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The Supreme Court of India in the case of Renusagar242 held that:

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“There is no absolute bar on award of interest by way of damages; it would be permissible to do so, if there is a usage or contract, express or implied, or any provision of law to justify the award of such interests”.

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The Supreme Court of India in ONGC v Clelland Engineers S.A.243 again had an opportunity to determine the issue of interest as damages. The Court explained that:

Sempra Metals v Inland Revenue Commissioners (2008) 1 SC 561 (HL) (Eng.). Ibid, at para. 95. Sempra Metals v Inland Revenue Commissioners [2008] 1 SC 561 (HL) (Eng.), at para. 100. Cassa di Risparmio della Repubblica Di San Marino SpA v Barclays Bank Ltd. [2011] EWHC 484; JSC BTA Bank v Ablyazov & Ors. [2013] EWHC 867; Mortgage Express v Countrywide Surveyors Ltd. [2016] EWHC 1830. 242. Renusagar v General Electric Co. Ltd. (1994) Supp (1) SCC 644, at para. 93. 2 43. (1994) 4 SCC 327, at para. 4, as mentioned in Indu Malhotra, Commentary on the Law of Arbitration (4th edn, Wolters Kluwer 2020), p. 824. 238. 239. 240. 241.

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“The power of the arbitrator to grant interest is akin to Section 34 of the CPC, which is the power of the court in view of section 29 of the Arbitration Act 1940; the power to grant interest on interest is same as interest as damages”.

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The Supreme Court of India has not pronounced on this matter after the enactment of the new Act. It may be that the higher rate of interest mentioned in Section 37(1)(b) is to award interest as a compensation for the loss occurred or in some cases as special damage. The Supreme Court of India in Bhagawati Oxygen Ltd v Hindustan Copper Ltd.244 held that:

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“A person deprived of the use of money to which he is legitimately entitled has a right to be compensated for the deprivation, call it by any name. It may be called interest, compensation or damages”.

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As a consequence, it means that damages can be awarded in the form of interest.

[41.11] CONCLUSION

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Section 31(7)(b) of the Arbitration Act confers power on the arbitral tribunal to award interest on the sum found to be due as interest. Hence, the arbitral tribunal may award interest on interest.245

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The Supreme Court of India has held.that a person deprived of the use of money to which he is legitimately entitled to has a right to be compensated for the deprivation.246 It may be called by many names such as interest, compensation, or damages.

(1) the “loss of use” of the principal sum;

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The arbitral tribunal’s discretion to award interest must be exercised reasonably taking into consideration a host of factors, such as:247 (2) the types of sums to which the interest must apply;



(3) the time period over which interest should be awarded;



(4) the internationally prevailing rates of interest;



(5) whether simple or compound rate of interest is to be applied;

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244. 245. 246. 247.

Bhagawati Oxygen Ltd. v Hindustan Copper Ltd. (2005) 6 SCC 462, at para. 36. Angel Infin Pvt. Ltd. v Echjay Industries Ltd. 2007 SCC OnLine Bom 50, at para. 19. Bhagawati Oxygen Ltd. v Hindustan Copper Ltd. (2005) 6 SCC 462, at para. 36. Vedanta Ltd. v Shenzhen Shandong Nuclear Power Construction Co. Ltd. (2019) 11 SCC 465, at para. 9.

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(6) whether the rate of interest awarded is commercially prudent from an economic standpoint;



(7) the rates of inflation;



(8) proportionality of the count awarded as interest to the principal sums awarded.

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There still seems difficulty on how to evaluate interest claim by way of a rational and uniform approach. As such, resolving interest claims may be a difficult and time-​consuming process. The difficult process has resulted in inconsistent arbitral awards.

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Interest issues become complicated when large claim amounts which run into millions as well as a lengthy period of time between the starting of the dispute and the publication of the final award.

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Part of the difficulty involving the award of interest arises from the omission by parties of interest provision into their arbitration agreements.

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Since then, many arbitral institutions have included interest provisions in their rules.248 However, parties who include institutional rules which do not provide for interest might find themselves in troubled waters while claiming interest.249

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In contrast, parties drafting bespoke arbitration agreements may focus on the provisions which they consider important. It may be that the interest provision is relegated or ignored.

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Failure to include interest provision may warrant court’s intervention in the last leg of the arbitration process defeating the brevity of the entire process.

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The parties’ inclusion of an interest provision in the arbitration agreement will avoid a later argument on whether interest is payable or not. It prevents a fresh controversy over a grant of simple or compound interest.

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Parties would also have the freedom to set an interest rate in their arbitration agreement that they think is reasonable and be paid when there is an overdue payment. Since the arbitral tribunal derives its authority from the party’s agreement, it will ensure that the interest given in arbitral awards the ambit of the arbitration agreement.

248. See SIAC Arbitration Rules (6th edn, 1 August 2016), r. 32.9; LCIA Arbitration Rules (1 October 2014), r. 26.4; AIAC Arbitration Rules (1st edn, 2018), r. 32.9. 249. ICC Arbitration Rules and HKIAC Arbitration Rules do not make provision for interest.

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DIVISION 9

ALLOCATION OF COSTS

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Chapter 42 COSTS OF THE ARBITRATION [42.1]

INTRODUCTION..................................................................................................................... 1177

[42.2] TYPES OF COSTS..................................................................................................................... 1181

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[42.3] COSTS OF THE REFERENCE................................................................................................ 1185 [42.4] COSTS OF THE AWARD........................................................................................................ 1188 [42.5] NO REQUIREMENT TO ITEMISE COSTS......................................................................... 1189 [42.6] JURISDICTION TO MAKE AN AWARD OF COSTS........................................................ 1190 [42.7] AGREEMENT BETWEEN THE PARTIES........................................................................... 1194

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[42.8] DISCRETION TO AWARD COSTS....................................................................................... 1197 [42.9] DETERMINING LIABILITY AS TO COSTS....................................................................... 1200

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[42.10] COSTS PRIMA FACIE TO FOLLOW THE EVENT........................................................... 1203 [42.11] EXCEPTIONS TO THE GENERAL RULE........................................................................... 1209

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[42.12] EXAMPLES OF EXCEPTIONAL CIRCUMSTANCES....................................................... 1212 [42.13] EXAMPLES WHICH ARE NOT SPECIAL CIRCUMSTANCES....................................... 1216

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[42.14] SUBMISSIONS ON COSTS..................................................................................................... 1217 [42.15] CHALLENGING THE APPORTIONMENT AND ALLOCATION OF COSTS............ 1219

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[42.16] COSTS INCURRED IN ASSOCIATED LEGAL PROCEEDINGS.................................... 1222 [42.17] AWARD OF INTEREST ON COSTS ORDER...................................................................... 1222

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[42.18] AWARD OF COSTS WITHOUT SUBSTANTIVE JURISDICTION................................. 1223 [42.19] EMERGENCY ARBITRATOR’S COSTS............................................................................... 1224

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[42.20] CONCLUSION.......................................................................................................................... 1225

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[42.1] INTRODUCTION

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International commercial arbitration can often be a complex and expensive process for a multitude of reasons. The proceedings itself are varied in nature. The parties must pay for the services of the arbitral tribunal and, where applicable, the relevant arbitral institution. They have to bear the costs of the arbitration as it is a private dispute resolution mechanism. International arbitral tribunals generally exercise the authority to award the prevailing party in an arbitration, the cost of arbitration, including its legal costs. Costs of the arbitration include the arbitral tribunal’s fees and expenses, arbitral institutions’ fees, legal fees and expenses, expert fees and expenses, party’s own direct

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costs (cost of employees travelling and attending meetings or hearings), and party’s own indirect costs (time costs of employees).

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It is not uncommon to hear that costs of arbitration have escalated or that in complex cases, arbitration may cost as much as litigation.1 The costs of international commercial arbitrations are regularly substantial as compared to equivalent litigation. It is expensive not only in absolute terms but also compared to the amount in dispute.2

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The question of costs arises in each arbitration and the obligation to pay arises from the arbitration agreement.3 Costs are of a practical concern when deciding to initiate arbitral proceedings and whether to continue.4 Arbitration cases are not reported which makes it difficult to cite actual cases to show how the cost discretion is exercised in particular cases.5

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The question of who pays for the costs is of some importance particularly to the parties. Yves Derains and Eric A. Schwartz6 have commented:

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“Apart from the ultimate outcome the time that may be required for the conduct of an arbitration, there is usually no aspect of the arbitration process that is of greater concern to the parties than its cost.”

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However, “no general practice as to the treatment of costs in international commercial arbitration could be discerned” despite the costs being an integral component of the arbitral process.7 The arbitral tribunal approach in apportioning and allocating liability for costs is unpredictable and broad brush.8

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This stems from the fundamental dichotomy that is rife in international law. On one hand it can be said that there exists prevalently the English rule of “costs follow the event”.

1. 246th LC Report, para. 70. 2. E. A. Schwartz, “The ICC Arbitral Process, Part IV: the Costs of ICC Arbitrations” (1993) 4 ICC Cr Bull, at p. 8. 3. Re Kenworth Engineering Ltd [2005] 2 HKLRD 97, at para. 44, per S. Kwan J. 4. Michael W Buhler, “Awards of Attorney’s Fees in International Arbitration” (2005) 20 Mealy’s International Arbitration Report, 5, at p. 3. 5. Andrew Chew Peng Hui, The Law of Costs in Civil Proceedings (Sweet & Maxwell Asia 2013), p. 1284. 6. Y. Derains and E. A. Schwartz, A Guide to the ICC Rules of Arbitration (2nd edn, Kluwer Law International 2005), p. 328. 7. A. Redfern and M. Hunter, Law and Practice of International Commercial Arbitration (3rd edn, Sweet & Maxwell 1999), p. 406. 8. Ibid.

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Conversely, the other approach is the American “no costs shifting” which provides that each party bears its own legal costs regardless of the outcome of the dispute.9 This approach is also prevalent in China and Japan.

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Awards applying the American Rule are less common in international commercial arbitration, but remain frequent in investor–​State arbitrations.10 As justification for the American Rule, it is often advanced that legal costs are properly considered as a normal cost incurred during the usual course of business and that it lowers barriers to access to justice.

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The introduction of 2015 Amendment aimed to rationalise costs to be awarded by the Tribunal by following the principle “costs follow the events” irrespective of the usual practice disposing the claim of costs by stating that the parties would bear their own costs.

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The Supreme Court of India in Salem Advocate bar Association (II) v UOI11 held:

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“37. Judicial notice can be taken of the fact that many unscrupulous parties take advantage of the fact that either the costs are not awarded or nominal costs are awarded against the unsuccessful party. Unfortunately, it has become a practice to direct parties to bear their own costs. In a large number of cases, such an order is passed despite section 35(2) of the Code. Such a practice also encourages the filing of frivolous suits. It also leads to the taking up of frivolous defences. Further, wherever costs are awarded, ordinarily the same are not realistic and are nominal. When section 35(2) provides for cost to follow the event, it is implicit that the costs have to be those which are reasonably incurred by a successful party except in those cases where the court in its discretion may direct otherwise by recording reasons therefor. The costs have to be actual reasonable costs including the cost of the time spent by the successful party, the transportation and lodging, if any, or any other incidental costs besides the payment of the court fee, lawyer’s fee, typing and other costs in relation to the litigation.”

9. T. Eisenberg and G. P. Millar, “The English vs the American Rule on Attorney’s Fees: An Empirical Study of Attorney’s Fee Clauses in Publicly-​Held Companies’ Contract” (2010) New York University Law and Economics Working Papers, paper 241 reads: “The American Rule for compensating attorneys requires each party to pay its own attorney, win or lose; the English Rule (applicable rule in most of the world) requires the losing party to pay the winner’s reasonable fees.”; W. Olson and D. Berstein, “Loser Pays Where Next?” (1996) 55 Maryland Law Review 1161: “The loser pays rule is often referred to as the ‘English Rule’ because it has long been the practice in the English common law system. The contrary practice in which each side is left to bear its own legal fees, is commonly termed the ‘American Rule’. See also the AAA Commercial Arbitration Rules, r. 48. 10. Cf. Wendy J. Miles, op. cit., p. 417; Kateryna Bondar, “Allocation of Costs in Investor-​State and Commercial Arbitration: Towards a Harmonized Approach” (2016) ArbIntl, Vol. 32 No. 1, p. 57. 11. (2005) 6 SCC 344.

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Law, Practice and Procedure of Arbitration in India

To harmonise the difference between jurisdictions, most arbitral institutions function on a modified basis of the former principle wherein the arbitral tribunal considers primarily the outcome in fixing the costs.12 As a general rule, the arbitral tribunal may award costs but is not bound by a steadfast rule as regarding costs.

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For instance, ICC Rules of Arbitration 2021 require the arbitral tribunal to consider if a party has conducted the arbitration in an expeditious and cost-​effective manner, while deciding costs.13

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Even where applicable institutional rules do not expressly grant the arbitral tribunal power to award legal costs, the parties’ arbitration agreement should be interpreted to impliedly grant such authority.14

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More so, it is also important to consider the procedural law of the seat of the arbitration governs the applicable law of costs. Gary Born15 explains:

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“There is little question that the arbitrator’s power to make a cost award is governed by procedural law of the arbitration (typically, that of the seat of the arbitration).”

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That is consistent with the treatment of the arbitrators’ power to order provisional measures, disclosure, and other forms of relief, and no other national legal system is a plausible candidate to govern this issue.

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Costs are an incidental or derivative remedy arising from the substantive claim. It is left to the arbitral tribunal’s discretion with limited guidance from national legislations.16

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12. WIPO Arbitration Rules (2016), art. 74 provides: “in its award, the Tribunal may, subject to any contrary agreement by the parties and in the light of all the circumstances and the outcome of the arbitration, order a party to pay the whole or part of reasonable expenses incurred by the other party in presenting its case, including those incurred for legal representatives and witnesses”. 13. ICC Rules of Arbitration, 2021, art. 38. 14. Michael Bühler and Thomas Webster, Handbook of ICC Arbitration: Commentary, Precedents, Materials (2nd edn, Sweet & Maxwell 2008), p. 361: (“In opting out of national courts with international arbitration, the parties are agreeing to pay the costs associated with international arbitration.”). 15. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3355. 16. For example, Arbitration Act, s. 31(8) provides: “The costs of arbitration shall be fixed by arbitral tribunal in accordance with Section 31A”. Discretion is available to arbitral tribunals in investment treaty arbitrations: see Toto Costruzioni Generali SpA v Republic of Lebanon (ICSID Case No. ARB/​07/​12), Award June 2012 at para. 258; Swisslion DOO Skopje v The Former Yugoslav Republic of Macedonia (ICSID Case No. ARB/​09/​16), Award July 2012 at para. 258.

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[42.2] TYPES OF COSTS Generally, the arbitral tribunal in most jurisdictions and under most arbitration rules will have the power to award costs, firstly, where the costs award is mandatory based on the expressed provisions of the law of the seat or agreed terms or procedure and secondly, where parties have properly claimed costs.

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In the absence of such express power, the arbitral tribunal may have an implied power to award costs arising both from its substantial jurisdiction and power to provide remedies to deal with connected matters such as costs. Gary Born17 explains:

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“This reflects a general principle that, absent contrary indication in the parties’ agreement, international arbitrators should be presumed to have authority to make an award on the costs of legal representation … Even where applicable institutional rules do not expressly grant the arbitral tribunal power to award legal costs, the parties’ arbitration agreement should be interpreted to impliedly grant such authority. That follows from the overwhelming weight of authority in developed jurisdictions and from the basic principle that a party’s right to compensation for wrongful damage must include the costs of righting that damage. An implied agreement granting the arbitrators power to award the costs of the arbitration, including legal costs, is a natural and inherent aspect of the tribunal’s authority (absent contrary agreement).”

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Costs of the arbitration are all costs and expenses properly incurred in or incidental to the conduct of the arbitration. It does not refer to the substantive amount claimed in the reference.

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The parties will usually make a claim for costs during the arbitral proceedings; otherwise, the arbitral tribunal may exceed its jurisdiction if it makes an award as to costs without a relevant request.18

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It is important to remember that the definition varies between institutional rules when considering the costs of an arbitration.

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Article 38(1) of the ICC Rules of Arbitration 2021 provides that costs include inter alia “reasonable legal and other costs incurred by the parties for the arbitration”, whereas 2020 LCIA Rules provide somewhat more direction regarding allocation of costs of the arbitration.

17. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3343. 18. Some examples are found in the Mexican Commercial Code, Title IV Commercial Arbitration, art. 1415 (IV); Swedish Arbitration Act, 1999, s. 42; Swiss Rules of International Arbitration, 2012, art. 38(e); Australian Centre for International Commercial Arbitration (ACICA) Rules, 2016, art. 44(e); HKIAC Administered Rules, 2018, art. 34.

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Law, Practice and Procedure of Arbitration in India

Article 28.2 of the LCIA Arbitration Rules 2020 uses a broader term “legal or other expenses incurred by the parties themselves” and also prescribes that the tribunal “will have the power to decide by an award that all or part of the legal or other expenses incurred by a party to be paid by another party”.19

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These rules also prescribe a general standard that, absent contrary agreement, “costs should reflect the parties’ relative success and failure in the award or arbitration or under different issues, except where it appears to the arbitral tribunal that in such circumstances the application of such general principle would be inappropriate under the arbitration agreement or otherwise”.20

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The LCIA Rules reflect the general English approach towards legal costs (e.g. the prevailing party is presumptively entitled to its costs), while authorising the tribunal to adopt a different standard if appropriate in particular circumstances.21

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Article 40 of the UNCITRAL Arbitration Rules provides an exclusive definition by using the word “only” as follows: “2. The terms ‘costs’ includes only:

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(a) The fees of the arbitral tribunal to be stated separately as to each arbitrator and to be fixed by the tribunal itself in accordance with Article 41; (b) The reasonable travel and other expenses incurred by the arbitrators’

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(c) The reasonable costs of expert advice and of other assistance required by the arbitral tribunal;

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(d) The reasonable travel and other expenses of witnesses to the extent such expenses are approved by the arbitral tribunal;

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(e) The legal and other costs incurred by the parties in relation to the arbitration to the extent that the arbitral tribunal determines that the amount of such costs is reasonable;

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(f) Any fees and expenses of the appointing authority as well as the fees and expenses of the Secretary-​General of the PCA.” Therefore, the 2013 UNCITRAL Rules expressly provide the arbitral tribunal with the authority and duty, to “fix the costs of arbitration” in its award. The costs of arbitration

19. LCIA Rules, 2020, art. 28(3). 20. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3349. 21. Other institutional rules are similar. See, for example, ICDR Rules, 2014, art. 34; HKIAC Rules, 2018, art. 34; VIAC Rules, 2018, art. 38; WIPO Rules, 2020, art. 73.

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are defined to include the “legal and other costs incurred by the parties in relation to the arbitration”, but only “to the extent that the tribunal determines that the amount of such costs is reasonable.22 Colin Y. C. Ong and Michael Partick O’Reilly23 suggest that costs can be recast into central costs and party costs: (1) Central costs (costs relating to central administration such as arbitral tribunal fees and expenses, arbitral institution fees, and costs of services directly commissioned directly by the arbitral tribunal or arbitral institutions); and



(2) party costs (costs directly incurred by the parties like representation, witness representation, and investigations).

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It can also be re-​labelled as costs of the proceeding or arbitration and the costs of the parties,24 alternatively, as arbitration costs and legal costs. It is clear that these terms encompass a range and, at times, confusing meanings in international arbitration rules and legislation.25

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Redfern and Hunter state that there is “no general practice as to the treatment of costs in international commercial arbitrations could be discerned”.26 Parties in international arbitration cases should not assume that their jurisdiction’s normal approach or conceptions of costs will be followed.

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For instance, the arbitral tribunal in Konsortium Oeconomicus v The Czech Republic27 ruled that, under German law, which applied to the proceeding as the law of the seat of the arbitration, two individuals who acted as the claimant’s representatives in the arbitration but who were not named as parties in the arbitration were jointly and severally liable for the arbitral tribunal’s award of costs to the respondent.

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22. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3347. 23. C. Ong and M. O’Reilly, Costs in International Arbitration (LexisNexis 2013), p. 5. 24. J. Y. Gotanda, “Attorney’s Fees Agonistes: The Implications of Inconsistency in the Awarding of Fees and Costs in International Arbitration” in M. A. Fernandez-​Ballesteros and D. Arias (eds), Liber Amicorum Bernado Cremades (2010). 25. J. Lew, L. Mistelis, et al., Comparative International Commercial Arbitration (Kluwer Law International 2003), p. 652. 26. A. Redfern and M. Hunter, Law and Practice of International Commercial Arbitration (Sweet & Maxwell 1999), p. 406; M. Hodgson and C. Chopra, “ICSID Tribunals’ Reasoning on Costs: A Survey of 145 Public ICSID Awards up to 31 May 2014”, available at http://​www.allenovery.com/​SiteCollectionDocuments/​ ICSID_​Reasoning_​on_​costs_​(revised).pdf. 27. Konsortium Oeconomicus v The Czech Republic, Decision for Termination of the Proceedings (5 December 2011), Award on Costs (8 February 2012) and Addendum to the Award on Costs (22 February 2012), available at http://​www.italaw.com/​cases/​1185.

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Law, Practice and Procedure of Arbitration in India

The position in India mirrors the position taken in most international jurisdictions. In summary, an arbitral tribunal has to consider four types of costs:28 (1) The arbitral tribunal’s own fees and expenses and expenses of witnesses and courts. This would include the costs of an arbitrator who has ceased to act for reasons such as a subsequent conflict of interest, but who is entitled to fees and expenses for work done.



(2) The fees and expenses of any arbitral institution involved in the arbitration, for example, in the appointment of arbitrators or in the hearing of appeals.



(3) The parties’ own costs including legal costs and fees of counsel or other representative29 including a lay representative. The costs incurred in negotiating the reference to the arbitrators will be included under this head.30



(4) Any other disbursements incidental to the arbitration. This would include the fees of experts, interpreters, transcripts of proceedings, photocopying, the hiring of premises for the holding of the arbitration,31 and the like.32 This would also include expenses incurred in connection with court proceedings as well.

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The costs of the arbitration in the Indian context are a compendious term. It encompasses both the costs of the reference and costs of the award.

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However, the distinction between the two may still have some relevance in practice because parties and arbitral tribunals may find it helpful in determining how these different recoverable costs are to be dealt with.33

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However, the general rule the arbitral tribunal should follow is to reason the costs granted. Gary Born34 explains that:

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28. Arbitration Act, s. 31A; UNCITRAL Arbitration Rules, art. 40 defines the term “costs” as: “(a) The fees of the arbitral tribunal to be stated separately as to each arbitrator and to be fixed by the tribunal itself in accordance with article 41; (b) The reasonable travel and other expenses incurred by the arbitrators; (c) The reasonable costs of expert advice and of other assistance required by the arbitral tribunal; (d) The reasonable travel and other expenses of witnesses to the extent such expenses are approved by the arbitral tribunal; (e) The legal and other costs incurred by the parties in relation to the arbitration to the extent that the arbitral tribunal determines that amount of such costs is reasonable; (f) Any fees and expenses of the appointing authority as well as the expense of the Secretary-​General of the PCA”. 29. This includes lay representatives; Piper Double Glazing Ltd v DC Contracts (1992) Ltd [1994] 1 All ER 177, [1994] 1 WLR 777. 30. In Re an Arbitration between Autothreptic Steam Boiler Co Ltd and Townsend, Hook & Co (1888) 21 QBD 182. 31. If not included in the arbitral institution’s fee, or if alternative venues are used. 32. Hawkins v Rigby 29 LJCP 228; Re Westwood, Baillie & Co and Government of Cape of Good Hope (1886) 2 TLR 667. 33. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​129. 34. “Chapter 15: International Arbitral Awards: Legal Framework” in G. Born, International Arbitration: Law and Practice (2nd edn, Wolters Kluwer Law & Business 2015), p. 17.

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Chapter 42—​Costs of the Arbitration

“Historically, most legal systems imposed no requirement that awards be reasoned. Nonetheless, modern arbitration legislation in many jurisdictions has superseded the historical rule and requires that arbitrators give reasons for awards made within national territory, unless otherwise agreed by the parties.”

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The Chartered Institute of Arbitrators’ Survey on Costs of International Arbitration, 2011 concluded using illustrative examples that the claimants spend 12 per cent more than respondents in arbitration proceedings.35 “The party costs averaged around £1,348,000 in common law countries and £1,521,000 in civil law countries, a difference of nearly 13%”.36

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[42.3] COSTS OF THE REFERENCE

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It is now commonplace in arbitration for applications for the security of costs to be made during the currency of the proceedings.37 In particular, it is prevalent in institutional arbitration in the light of the support rendered by arbitral institutions in various capacities.

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The term “costs of the reference” generally means all costs in connection with the Arbitration.38 Section 31A of the Arbitration Act empowers the tribunal to award “reasonable” costs in the award including the legal fees and expenses.

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Unless the parties have agreed otherwise, parties may engage skilled and experienced representatives to present their case.39 The costs of the reference are those costs which the parties reasonably incur in commencing,40 preparing, presenting, and prosecuting the claims made or in defending against them.

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Such costs are legal fees payable by the parties to their lawyers or representatives together.41 They may include the cost of negotiating and settling the terms of the submission and of any fresh submission, between the parties.42

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35. Ibid, p. 13. 36. CIArb Costs of International Arbitration Survey 2011, at p. 1, available at http://​aryme.com/​docs/​adr/​2-​2-​ 2594/​arbitraje-​reino-​unido-​2011-​uk-​ciarb-​international-​arbitration.pdf. 37. CIArb Guidelines on Applications for Security of Costs, available at http://​www.ciarb.org/​docs/​default-​ source/​ciarbdocuments/​guidance-​and-​ethics/​practice-​guidelines-​protocols-​and-​r ules/​international-​ arbitration-​guidelines-​2015/​2015securityforcosts.pdf?sfvrsn=16. 38. Walker & Brown (1882) 9 QBD 434. 39. Certain arbitration rules like GAFTA and PORAM do not allow lawyers in independent practice to attend the hearing without leave of the arbitral tribunal; see also Ceval Alimentos SA v Agrimpex Trading Co Ltd [1995] 2 Lloyd’s Rep 380. 40. Cost incurred in commissioning experts with a view to providing support for commencement of an arbitration was considered as a proper part of costs in the arbitration as in Societe Anonyme Pecheries Ostendaises v Merchants’ Marine Insurance Company [1928] 1 KB 750, at p. 763, per Atkin LJ; Bolton v Mahadeva [1972] 1 WLR 1009, at p. 1014, per Cairns LJ. 41. Sabah Shipyard (Pakistan) Ltd v Government of the Islamic Republic of Pakistan [2004] 3 SLR(R) 184. 42. Anthony Walton and Mary Vitoria, Russell on Arbitration (20th edn, Stevens & Sons 1982), p. 333.

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Law, Practice and Procedure of Arbitration in India

They extend to cover reasonable payments to other professionals and expert witnesses as well as the hotel and travelling expenses of the lawyers, witnesses, and all concerned, copying charges, telephone, fax, electronic mail expenses, and taxes on services rendered.

Lloyd-​Jacob J in Re Nossens’s Letter Patent45 opined:

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If the matter was such that it was reasonable to engage expert witnesses,43 fees paid to witnesses must also be reasonable.44 The arbitral tribunal may allow costs of the client’s own team if it can be shown that it provided some benefit to the arbitral process and avoided the engagement of external expertise.

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“The established practice of the courts has been to disallow any sums claimed in respect of the time spent by the litigant personally in the course of instructing his solicitors. In the case of litigation by a corporation, this has not been strictly applied, for it has been recognized that, if expert assistance is properly required, it may well occur that the corporation’s own specialist employees may be the most suitable or convenient experts to employ. If the corporation litigant does not decide to provide expert assistance from its own staff, as happened in the case, the [judge] has to determine the appropriate charge to allow. For an outside expert, the normal assessment would be based on current professional standards, and this in suitable cases would include a proper proportion of the overhead costs of running his office or laboratory, that is, of the costs necessarily incurred by him in his capacity as a consultant, as well as a profit element upon such expenditure. The [judge], in the exercise of his discretion, took the view that it would be an unreasonable burden to place upon the chargeable party the inclusion of any items in respect of the respondent’s own overhead expenses or any profit element referable thereto … In this he was plainly right, covering as he did the actual and direct costs of the work undertaken in the sense of indemnifying the respondents for the salaries, materials and out-​of-​pocket expenses of those engaged in the conduct of the experiments. No part of the respondent’s expenditure on overheads was occasioned by this litigation and it would be unreasonable to transfer the burden to the [other party] of meeting some part of it by reason only of the respondent’s decision to prefer the services of their own staff to those of independent experts.”

Costs of the reference also include any fees payable to an arbitral institution for administration and supervision of the arbitration. These are the party-​related costs.

43. Atwell v Ministry of Public Buildings and Works [1969] 1 WLR 1074. 44. Wright v Bennett [1948] 1 All ER 410. 45. Re Nossens’s Letter Patent [1969] 1 WLR 638, at pp. 643–​644.

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Chapter 42—​Costs of the Arbitration

The 2015 ICC Commission Report “Decisions on Costs in International Arbitration”46 observed that: “Tribunals often concluded that although one party’s costs were significantly higher than those of the other party, they still remained reasonable.”

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In other words, imbalance does not automatically signify unreasonableness. In some cases, arbitral tribunals fixed the reasonableness of the legal costs by calculating the average of the fees claimed by both parties, benchmarked against the market rate.47 The High Court of Singapore in VV v VW48 explained the approach:

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“While the courts recognise that senior counsel with particular expertise are able to command certain fee levels, there is within any common law system an inherent bench-​marking process which would be able to assess what the reasonable and appropriate figure would be in the circumstances within the general prevailing legal market. This does not necessarily relate to what a particular counsel might charge his client (and what the client might be content to pay for the expertise).”

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The arbitral tribunal should consider realistically counsel’s fees claimed as costs. The Singapore Court of Appeal in Lin Jian Wei v Lim Eng Hock Peter49 elaborated:

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“Not infrequently, timesheets incorporate and embed substantial aspects of inefficiency and overlapping work. They should not always be taken at face value. Instead, taxing Registrars and Judges should always approach claims for large amounts of time spent with an attitude of healthy agnosticism. They ought to carefully assess at the outset the actual amount of time that might be required by competent counsel to do the relevant work. Unfortunately, from time to time, bills of costs do overstate the amount of work and play up the complexity of the matter in dispute …. In summary, although it is true that the importance and complexity of the matter and the difficulty or novelty of that time spent, while significant, it but only one of a number of reference points to gauge the reasonableness and proportionality of the amount to be taxed. A taxation award should result from an exercise in judgment, not arithmetic, whatever arithmetical cross-​checks may be employed.”

46. ICC, Decisions on Costs in International Arbitration –​ICC Arbitration and ADR Commission Report, available at http://​www.iccwbo.org/​Advocacy-​Codes-​and-​Rules/​Document-​centre/​2015/​Decisions-​on-​ Costs-​in-​International-​ Arbitration-​-​-​ICC-​Arbitration-​and-​ADR-​Commission-​Report/​. 47. Simpsons Motor Sales (London) Ltd v Hendon Corp (No 2) [1965] 1 WLR 112, at p. 118, per Pennycuick J; Stanley v Phillips (1966) 115 CLR 470; P Rosen & Co Ltd v Dowley & Selby [1943] 2 All ER 172; Edwards v Legalese Pty Ltd t/​a Peter Scragg & Associates (No 2) [2012] SADC 110. 48. [2008] 2 SLR(R) 929, at [29], per Judith Prakash J. 49. [2011] 3 SLR 1052, at paras 70–​71.

1188

Law, Practice and Procedure of Arbitration in India

Sometimes, the term “costs of the reference” is given a wider connotation so as to include even costs of the award. It therefore includes all costs incurred in connection with the arbitration. The power to deal with the costs of the reference includes the power to deal with the costs of the award.

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For instance, the Court in Re an Arbitration between Walker & Son and Brown50 held that an agreement between the parties referring to costs of the reference was to be taken as meaning all costs and not simply party costs. However, the Court in Lewis v Haverfordwest RDC51 criticised an award where the arbitral tribunal ruled that its costs of the award was to be borne by the losing party but went on to order that the parties are to bear their own legal costs.

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[42.4] COSTS OF THE AWARD

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The costs of the award are the arbitral tribunal’s fees and proper expenses incurred for setting up, administration, and completion of the arbitration. These are arbitral tribunal-​related costs.52

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In the absence of agreement, the arbitral tribunal is entitled to fix its fees subject to taxation by the appropriate authorities.53 Fouchard Gaillard Goldman54 adds that:

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“In institutional arbitration, the arbitral institution is responsible for obtaining an advance from the parties in respect of these fees and expenses.”

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By and large, these expenses are incurred for payment of the fees and expenses of the arbitral tribunal and witnesses. They also include any other expenses incurred in connection with the arbitral proceedings and the arbitral award.

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The demarcation between the costs of the award and costs of the reference can give rise to confusion. Field J illustrates in Re an Arbitration between Walker & Son and Brown55 the point when he said:

50. 51. 52. 53. 54.

(1882) 9 QBD 434. [1953] 2 All ER 1599, [1953] 1 WLR 1486. Government of Ceylon v Chandris [1963] 2 QB 327, at para. 333. Progen Engineering Pte Ltd v Winter Engineering (S) Pte Ltd [2006] SGHC 224. “Part 4: Chapter II –​The Arbitral Proceedings” in E. Gaillard and J. Savage (eds), Fouchard Gaillard Goldman on International Commercial Arbitration (Kluwer Law International 1999), p. 684. 55. (1882) 9 QBD 434, at p. 435.

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Chapter 42—​Costs of the Arbitration

“Common sense suggests that the power over the costs of the reference includes a power to give the costs of the award. If no award was made, the reference would never be finished.” Section 31A of the Arbitration Act provides that the general rule is that the unsuccessful party has to bear the costs unless the tribunal orders otherwise, for reasons in writing.56

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The arbitral tribunal in Lithuania v OAO Gazprom57 decided that the parties will share the costs equally for half a million euros.

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However, it is normal for the award on costs to direct that the unsuccessful party reimburse the successful party for the costs of the award as well as the cost of the reference.

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[42.5] NO REQUIREMENT TO ITEMISE COSTS

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An arbitral tribunal in making an award of costs may draw a distinction on liability between the costs of the reference, the costs of the award, and other costs involved. The arbitral tribunal is not required to itemise separately the various items which contribute to the costs of the arbitration.58

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In practice, the arbitral tribunal may itemise its fees and expenses separately when exercising its lien to retain the award until payment is made towards its fees and expenses.

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This reduces considerably the scope for parties to argue and take issue over a global figure which is not particularised.59 Also, the tribunal calls for the parties to submit a statement or memo of costs itemising various heads and subheads.

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Scrutton J in Arnhold Karberg & Co v Blythe, Green, Jourdain & Co60 stated the arbitral tribunal does not have discretion in respect of costs of argument on an appeal to the High Court. This is a matter for the court who will deal with it in the same way as any other matter before it.61

56. Arbitration Act, s. 31A(2). 57. Lithuania v OAO Gazprom 22 June 2016. 58. Re Gilbert v Wright 20 TLR 164; Rolimpex Central Handlu Zagranicznego v Haji E Dossa & Sons Ltd [1971] 1 Lloyd’s Rep 380. 59. R v South Devon Rly Co [1850] 15 QB 1043; Government of Ceylon v Chandris [1963] 2 QB 327. The decision was followed by the High Court of Delhi in Jeevan Industries (P) Ltd. v Haji Bashiruddin Madhusudan AIR 1975 Del 215. 60. Arnhold Karberg & Co v Blythe, Green, Jourdain & Co [1915] 2 KB 379, at p. 393, per Scrutton J. See also Higham v Havant and Waterloo UDC [1951] 2 KB 527, [1951] 2 All ER 178, CA (Eng). 61. Marc Rich & Co AG v Beogradska Plovidba, The Avala [1994] 2 Lloyd’s Rep 363.

1190

Law, Practice and Procedure of Arbitration in India

However, the effects of an arbitration-​related application to the courts may be felt in the arbitration. In many cases, the arbitral tribunal will suspend proceedings pending determination by the court (such as in the case of an appeal against jurisdiction that has at least a realistic prospect of success).

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Proceedings will usually be able to continue despite being lengthened in duration. In such cases, the increased costs simply form part of the overall costs of the award.

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It does not usually happen in the Indian context as both the arbitral tribunal and courts have power to fix and determine costs under Section 31A of the Arbitration Act and can also make an award directing actuals costs to the parties. However, it goes without saying that the cost can be awarded only after giving due opportunity to make their submissions on this regard.62

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[42.6] JURISDICTION TO MAKE AN AWARD OF COSTS

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Section 31(8) of the Arbitration Act mandates the arbitral tribunal to fix costs in accordance with Section 31A. Section 31(8) was amended by the 2015 Amendment Act.

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The unamended section used the words “Unless otherwise agreed by the parties”. Accordingly, the arbitral tribunal’s power to fix the cost was subject to the parties’ agreement before 2015 amendment.

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Section 31A of the Arbitration Act provides that:

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“Notwithstanding anything contained in the Code of Civil Procedure the Court or arbitral tribunal shall have the discretion to determine:

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(a) whether costs are payable by one party to another;

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(b) the amount of such costs; and (c) when such costs are to be paid.”

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The court or the arbitral tribunal while making an order as to payment of costs have to follow the general rule that the unsuccessful party shall be ordered to pay the costs of the successful party.63 In cases where the court or arbitral tribunal decides otherwise, the reasons of such order are to be recorded in writing.64

62. Harrison v Thompson [1989] 1 WLR 1325; Centrala Morska Importowo Eksportowa v Compania Nacional De Nanegacao S.A.R.L. [1975] 2 Lloyd’s Rep 69. 63. Arbitration Act, s. 31A(2)(a). 64. Arbitration Act, s. 31A(2)(b).

1191

Chapter 42—​Costs of the Arbitration

The award of costs is procedural in nature. As such, the arbitral tribunal is empowered to make an award of costs within the arbitration itself. Where two or more arbitrations are heard together, they remain legally separate. The arbitral tribunal must issue costs awards for each of them unless two or more arbitrations are formally consolidated.65 Once formally consolidated, the arbitral tribunal can produce a single award covering the matters in dispute.

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The ICC Commission Report on “Decisions on Costs in International Arbitration” identifies a number of aspects of cost management that the arbitral tribunal might consider discussing with the parties before passing an award, including:66 (1) Informing the parties that it “intends to take into account the manner in which each party has conducted the proceedings and to sanction any unreasonable behaviour by a party when deciding on costs”;



(2) “what cost items the tribunal considers may potentially be recoverable”;



(3) “what records will be required to substantiate cost assessment claims”;



(4) “sensitive matters, such as whether there is third-​party funding and any implications it may have for the allocation of costs”; and



(5) the timing and sequence of submissions on costs.

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The Arbitration Act provides that the arbitral tribunal while determining the costs shall have regard to all the circumstances including certain circumstances enumerated in Section [42.8] of this chapter.

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The Courts in some jurisdictions have interpreted the provisions empowering an arbitral tribunal to award costs as mandatory.67 Rowlett J in Re Becker, Shillan & Co and Barry Bros68 explained that:

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“… that does not mean that it is in [the arbitrator]’s discretion whether he will deal with them or not, but that he must deal with them by exercising his discretion upon them. If he chooses, he can say that he leaves them to be borne by the parties that incur them and make no order that either party pays the costs of the other. But he must exercise his discretion upon them.”

65. Maritime Transport Overseas GmbH v Unitramp SA, The Antaios [1981] Lloyd’s Rep; Wilhelmsen v Canadian Transport Co, The Takamine [1980] 2 Lloyd’s Rep 204. 66. 2015 ICC Report on Decisions on Costs, at para. 32. 67. For instance, Arbitration Act, s. 31(8) mandates the tribunal to decide costs. 68. Re an Arbitration between Becker, Shillan & Co and Barry Bros [1921] 1 KB 391, at p. 395, per Rowlatt J; Blue Horizon Shipping Co SA v E D and F Man Ltd, The Aghios Nicolaos [1980] 1 Lloyd’s Rep 17, per Ormrod J, where he described it as the arbitral tribunal’s “bounden duty” to make an award as to costs.

1192

Law, Practice and Procedure of Arbitration in India

This position in India mirrors predominantly most countries and legislations, particularly the Model Law compliant nations. Smith J in Re Stephens, Smith & Co and Liverpool and London and Globe Insurance Co’s Arbitration69 stated:

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“The effect of the clause is to make arbitrators and umpires judges in their own cause, and to allow them to settle finally the amount of costs to be paid to them.” The arbitral tribunal’s power to award costs applies to all submissions from which it is not expressly excluded. Thus, an arbitral tribunal may direct that: (1) costs of an interlocutory application, such as an application for disclosure, be payable forthwith;



(2) the party liable for costs be required to pay them within a specified but limited period; and



(3) a net payer on the substantive award who is due its taxed costs (such a respondent who makes a relevant offer, the amount of which is not exceeded in the award) be entitled to deduct such costs from the amount payable under the substantive award.70

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Therefore, the arbitral tribunal must specify the party entitled to costs; the party who shall pay the costs; the amount of costs or method of determining that amount; and the manner in which the costs shall be paid.71

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It may also include a further direction that if the successful party has paid to take up the award, the other party shall forthwith reimburse the successful party for any costs for which such other party is liable under the award.

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While the arbitral tribunal has full discretion to award and apportion costs, Mustill and Boyd state that it must confine its attention strictly to facts connected with or leading up to the arbitration which have been proved before it or which it itself observed during the arbitration proceedings. The arbitral tribunal must not take into account considerations extraneous to the dispute, such as, the prejudice of race, religion, or sympathy with the unsuccessful party.72

69. (1892) 36 Sol Jo 464, per Smith J; see also Re an arbitration between Williams and Stepney [1891] 2 QB 257, CA (Eng). 70. Everglade Maritime Inc v Schiffahrtsgesellschaft Detlef von Appen mbH, The Maria [1993] QB 780, at p. 803, [1993] 3 All ER 748, at p. 766, [1993] 2 Lloyd’s Rep 168, at p. 180, CA (Eng), per Evans LJ. 71. Arbitration Act, s. 31A. 72. Mustill and Boyd, Commercial Arbitration (2nd edn, Butterworths 1989), p. 395.

1193

Chapter 42—​Costs of the Arbitration

The arbitral tribunal’s discretion and decision-​making authority to make an award as to costs cannot generally be delegated to a third party. The principle of delegatus non potest delegare applies unless provided for by the agreement or allowed by the procedural law of the seat. For example, some arbitral legislation allows the arbitral tribunal may delegate the taxation of costs to the court or to the institution.73

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The exercise of this power must be exercised in and by the award itself, or it cannot be exercised at all.74 As such, the award of costs must be in the form of an award either as part of the substantive award or dealt with separately in a supplementary award. Gary Born75 adds that:

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“Among other things, separate awards on costs may be the subject of annulment proceedings.”

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Such an award consists of the allocation of costs between the parties and a determination of the amount of costs which are to fall within the award. The award as to costs ceases to have effect if the substantive award is set aside.76

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An award which does not deal with costs is not a complete award.77 Crucially, if an arbitral tribunal has not included costs in its award, it is not assumed that it has made no order as to cost and for each party to bear their own. Instead, it has been held that the arbitral tribunal has failed to make the determination of costs.78

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Where the arbitral tribunal fails to do so, it will not become functus officio until it remedies the defect or time for making a request for an additional award expires, provided it is allowed by the agreed provisions or by the procedural law.79

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For example, whether party may then apply to the arbitral tribunal for an additional award covering costs under Section 33(4) of the Arbitration Act. The applicable rule for requesting an additional award of costs are the same as those for an additional award on substantive issues.

73. Singapore International Arbitration Act (Cap 143A), s. 21(1). 74. Cave J in Re an arbitration between Prebble and Robinson [1892] 2 QB 602, at p. 605. 75. “Chapter 23: Form and Contents of International Arbitral Awards” in G. Born, International Arbitration: Law and Practice (3rd edn, 2020), p. 3267; VV v VW [2008] 2 SLR(R) 929. See also Tang Boon Jek Jeffrey v Tan Poh Leng Stanley [2001] 2 SLR(R) 237, CA (Sing); Maruna v Lopatka [2002] BCSC 1084, SC (BC). 76. Re an arbitration between Becker, Shillan & Co and Barry Brothers [1921] 1 KB 391, [1920] All ER Rep 644; Blue Horizon Shipping Co SA v E D & F Man Ltd, The Aghios Nicolaos [1980] 1 Lloyd’s Rep 17, CA (Eng). 77. Davis v Witney UDC 15 TLR 275. 78. Williams v Wilson (1853) 23 LJ Ex 17, 9 Exch 90; Re an arbitration between Becker, Shillan & Co and Barry Brothers [1921] 1 KB 391, [1920] All ER Rep 644. 79. Casata Ltd v General Distributors Ltd [2006] NZSC 8.

1194

Law, Practice and Procedure of Arbitration in India

Therefore, the arbitral tribunal is obliged to exercise its power to award costs.80 To say that the arbitral tribunal has “discretion” as to costs does not mean that it is in the arbitral tribunal’s right to decide whether it will deal with them or not, but that may exercise its discretion during the exercise of awarding them.81

[42.7] AGREEMENT BETWEEN THE PARTIES

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At common law, the parties are free to agree on how the costs of the arbitration are to be allocated as between them in terms of the quantum, apportionment, and determination of the mode and manner of payment of costs.82

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Such agreement may include listing the categories of costs, limiting or restricting the sums that may be recovered, and setting the manner and form of submissions to the arbitral tribunal.

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The power to deal with the costs of the reference includes the power to deal with the costs of the award.83 An agreement between the parties with respect to payment of costs, even if not communicated to the arbitral tribunal, will prevail over its award ordering each party should bear its own costs.84

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The unamended Section 31(8) of the Arbitration Act gave parties the option to agree on who will bear the cost of arbitration.85 However, the 2015 amendment invalidated any such agreement entered into before the dispute has arisen.

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Section 31A(5) of the Arbitration Act reads that an agreement which has the effect that a party is to pay the whole or part of the costs of the arbitration in any event shall only be valid if such agreement is made after the dispute in question has arisen.

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The deletion of words “unless otherwise agreed by the parties” in Section 31A only signifies that the parties, by an agreement, cannot contract out of payment of “costs” and denude the Arbitral Tribunal to award “costs” of arbitration in favour of the successful party.86

80. Blue Horizon Shipping Co SA v E D & F Man Ltd, The Aghios Nicolaos [1980] 1 Lloyd’s Rep 17, at p. 21, CA (Eng), per Ormrod LJ. 81. See also Re an arbitration between Becker, Shillan & Co and Barry Brothers [1921] 1 KB 391, [1920] All ER Rep 644. 82. See Fitzsimmons v Lord Mostyn [1904] AC 46, HL; Mansfield v Robinson [1928] 2 KB 353, at p. 358. 83. Re an Arbitration between Walker & Son and Brown [1882] 9 QBD 434. 84. Mansfield v Robinson [1928] 2 KB 353; Fitzsimmons v Lord Mostyn [1904] AC 46. The position is different in the Indian perspective. 85. Section 31(8) of the unamended Arbitration Act reads: “Unless otherwise agreed by the parties, –​(a) the cost of an arbitration shall be fixed by the arbitral tribunal”. 86. National Highways Authority of India v Gammon Engineers and Contractor Pvt. Ltd. (2018) SCC OnLine Del 10183, at para. 26.

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Similarly, Section 74(8) of the Hong Kong Arbitration Ordinance, 2011 invalidated any provision where parties agree to bear their own costs as follows: “A provision of an arbitration agreement to the effect that the parties, or any of the parties, must pay their own costs in respect of arbitral proceedings arising under the agreement is void.”

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However, such an agreement made after the dispute arises is not invalidated as Section 74(9) provides: “A provision referred to in subsection (8) is not void if it is part of agreement to submit to arbitration a dispute that had arisen before the agreement was made.”

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It essentially means that the parties must mutually agree to the costs arrangement after the arbitration commences.

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Moreover, Section 60 of the English Arbitration Act, 199687 expressly invalidates any such pre-​dispute agreement on costs which reads as follows:

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“An agreement which has the effect that a party is to pay the whole or part of the costs of the arbitration in any event is only valid if made after the dispute in question has arisen.”

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The LCIA Rules, 2014 provides that in the event that the parties have agreed before their dispute that one or more parties shall pay the whole or any part of the Arbitration Costs, such agreement, in order to be effective, shall be confirmed by the parties in writing after the commencement date of arbitration.88

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However, it is common in commercial contracts to see clauses specifying that one party agrees to bear the costs incurred by the other in making a claim for a breach of that contract, regardless of the outcome. It is even possible for the agreement to provide for the claimant to be entitled to its costs on the indemnity basis.

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This is plainly an onerous term in a contract, but it is one negotiated by (usually) commercial parties. Some jurisdictions invalidate unfair contract provisions in consumer contracts89 and other jurisdictions invalidate unconscionable contract provisions.90 Whether the courts will apply the old approach to the new legal framework remains to be seen.

87. 88. 89. 90.

Shashou v Sharma [2009] EWHC 957 (Comm). LCIA Rules, 2014, r. 28.5. Irish Arbitration Act, 2010, s. 21. Barrass v Bank Banking & Trust Company (In re Checking Account Overdraft Litig. MDL No. 2036), 685 F.3d 1269 (11th Cir. 2012), CA; cf. Hough v Regions Financial Corporation 672 F.3d 1224 (11th Cir 2012), CA.

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It is likely that cases such as Windvale Ltd v Darlington Insulation Co Ltd91 will provide some guidance where it was held that it will also apply to an agreement whereby one party is to bear the entire costs of the arbitration which will be taken to imply that the party is to bear its own costs irrespective of whether it is the claimant or not, and irrespective of the outcome.

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The purpose of this prohibition as regards to arbitration clauses is to prevent the situation arising in which one party who wishes to pursue a claim in arbitration finds it is unable to do so as whatever the result, it has agreed to bear some or all of its costs or the costs of the other party. Such provisions may be seen to be designed to discourage a party from exercising its right to access to justice.

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The arbitral tribunal is vested with the responsibility of awarding costs in the usual way when faced with a purported agreement to this effect.92 If the agreement as to costs has arisen after the dispute arises there is no perceived objection to such an agreement after the dispute has arisen.

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At that stage, the parties may be presumed to be at arm’s length as regards the enforcement of the arbitration agreement. An award which allocates the costs which is inconsistent with a (valid) agreement between the parties is void in common law.93

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An agreement may be formed when both parties make aligned submissions as to cost, for example, when parties request for costs to be awarded to the successful party.94 However, the arbitral tribunal retains the discretion whether to award costs.95

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There are legislations which allow parties to make supplementary agreements as to costs96 or refer to potential agreements as to costs.97 This may translate into protocol on costs as agreed by the parties done in consultation with the arbitral tribunal.98

(1983) The Times, 22 December. Smeaton, Hanscomb & Co Ltd v Sassoon I Setty, Son & Co (No 2) [1953] 2 All ER 1588, [1953] 1 WLR 1481. Mansfield v Robinson [1928] 2 KB 353. ICC Case No. 12745 at para. 272, in A. J. van den Berg (ed.), Yearbook Commercial Arbitration 2010 –​Vol. XXXV (2010), pp. 40–​128; ICC Case No. 14108 at para. 260, in A. J. van den Berg (ed.), Yearbook Commercial Arbitration 2011 –​Vol. XXXVI (2011), pp. 135–​201. Teinver SA, Transportes de Cercanias SA and Autobuses Urbanos del Sur SA v Argentina ISCID Case No. ARB/​ 09/​1, Decision on Jurisdiction 21 December 2012. Brazilian Arbitration Act, 1996, art. 27; Irish Arbitration Act, 2010, s. 21(1). English Arbitration Act, 1996, ss. 61(1), 61(2), 62, 63(1), and 64(1). J. Y. Gotanda, “Awarding Costs and Attorneys’ Fees in International Commercial Arbitrations” (1991) 21 Michigan J Intl Law, at pp. 1–​50 for a model provision on costs; see also Michael Buhler, “Awarding Costs in International Commercial Arbitration: an Overview” (2004) 22 ASA Bulletin, p. 249.

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91. 92. 93. 94. 95.

96. 97. 98.

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Chapter 42—​Costs of the Arbitration

But generally, some legislations are less flexible if qualifying words such as “unless the parties otherwise agree”.99 Most arbitral legislations set out a framework of awarding costs.

[42.8] DISCRETION TO AWARD COSTS

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The arbitral tribunal must exercise its discretion in regards to the costs of arbitration whether it is by the agreement of the parties100 or by law.

It will generally take into account the extent to which that party recovered what it initially claimed, the extent to which each party’s position was reasonable, the extent to which a party’s conduct needlessly complicated the proceedings, and similar factors.101

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The arbitral tribunal has broad discretion in apportioning liability and quantum of costs based on the circumstances of the case. It is said that the arbitral tribunal’s discretion is “absolute” and “unfettered”.102

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However, while the arbitral tribunal’s discretion is wide, it does not mean that it is entitled to act wholly as an irresponsible autocrat.103 The arbitral tribunal’s discretion is grounded in an obligation of fairness which is analogous to that exercised by the courts in determining costs.

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Where most of the claims of the respondent were rejected, award of costs of Rupees three lakhs was objected to by the petitioner, it was held that the re-​constituted tribunal held as many as 26 hearings inasmuch as expenditure incurred on the senior advocate and the juniors must have weighed with the arbitrator while arriving at the amount of costs.104

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Section 31A (3) of the Arbitration Act gives certain parameters to be seen by the arbitral tribunal while determining costs: (1) the conduct of the parties;



(2) whether a party has succeeded partly in the case;

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99. Australian International Arbitration Act, ss. 22(2). 100. Williams v Wilson (1853) 23 LJ Ex 17, 9 Exch 90, at p. 99, per Parke B: “We think it clear that it was intended that he –​that is the arbitrator –​should exercise his discretion on the question of the costs, not whether he would award upon that question or not at his option or discretion”. See also Richardson v Worsley 5 Exch 613, 155 ER 268; Maeda Construction Co Ltd v Building Design Team [1991] 3 MLJ 24, at p. 26. 101. “Chapter 15: International Arbitral Awards: Legal Framework” in G. Born, International Arbitration: Law and Practice (2nd edn, 2015), p. 44. 102. Blexen Ltd v G Percy Trentham Ltd [1990] 42 EG 133, CA (Eng); Everglade Maritime Inc v Schiffahrtsgesellschaft Detlef von Appen GmbH, The Maria [1993] QB 780, [1993] 3 All ER 748, [1993] 2 Lloyd’s Rep 168, CA (Eng). 103. Lloyd del Pacifico v Board of Trade 46 TLR 476. 104. GAIL (India) Ltd v Gangotri Enterprises Ltd 2014 (3) RAJ 538 (Del).

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(3) whether the party had made a frivolous counterclaim leading to delay in the disposal of the arbitral proceedings; and



(4) whether any reasonable offer to settle the dispute is made by a party and refused by the other party.

The House of Lords in Donald Campbell and Co v Pollak105 explained:

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“The Court has an absolute and unfettered discretion to award or not to award them. This discretion, like any other discretion, must of course be exercised judicially and the judge ought not to exercise it against the successful party except for some reason connected with the case. Thus, if … a judge was to refuse to a give a party his costs on the ground of some misconduct wholly unconnected with the cause of with the cause of action or of some prejudice due to his race or religion … then the Court of Appeal might well feel itself compelled to intervene.”

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The Court in Bani v Korea Shipbuilding and Engineering Corporation106 elaborated how it should be exercised:

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“While the exercise of any discretion necessarily means that there is an area within which the judge’s discretion is final and unchallengeable, it is highly desirable that the general lines on which a familiar discretion will be exercise should be generally known and broadly predictable.”

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Therefore, an arbitral tribunal when exercising its discretion remains bound the following qualifications: (1) the agreement of the parties is paramount (provided the agreement came into force after the dispute arises);



(2) the arbitral tribunal is not entitled to misdirect itself in the exercise of its discretion;

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(3) the power to “direct to and by whom” the costs are to be paid applies only to the parties to the reference;

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(4) the power to direct “in what manner” the costs are to be paid must be exercised with proper discretion; and



(5) the general principle that costs follow the event.

105. Donald Campbell and Co v Pollak [1927] AC 732, at pp. 811–​812. 106. Bani v Korea Shipbuilding and Engineering Corporation [1987] 2 Lloyd’s Rep 445, at p. 448, per Bingham LJ.

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Provided that arbitral tribunal meets these requirements, it may make an award as to costs which to it seems fair and appropriate107 provided that it acts in line with the powers granted to it. The arbitral tribunal’s award on costs must be supported by coherent reasons.108

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For example, if the arbitral tribunal decides to treat its award relating to the costs of the reference and costs of the award differently, it must explain its reasons for doing so clearly and rationally. An arbitral tribunal must not act capriciously. The arbitral tribunal will be doing so if it can be shown to have decided on the apportionment of costs before the final result of the reference is determined.109

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The MCIA Rules, 2016 provide that in making decisions as to costs, the tribunal may take into account such circumstances as it considers relevant, including the extent to which each party has conducted the arbitration in an expeditious and cost-​effective manner.110

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The question of arbitral tribunal’s discretion raises another crucial question: Does a decision on costs and arbitral tribunal fees fall within the ambit of procedural law or is it a decision on substantive law? This becomes relevant when the jurisdiction of the arbitral tribunal to award costs is determined on the basis of the same.

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Most jurisdictions consider the decision on costs and fees to be a matter of procedural law.111 On the other hand, costs can also be seen as essentially the same as consequential damages and hence, should fall within the ambit of substantive law. In any case, it is a matter of discretion of the arbitrator.112

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Some see a distinction between the general power to make costs awards, a commonly agreed procedural matter and second, the standards to apply. For example, the key justification for a loser-​pays approach is substantive, in seeking to fully indemnify the winner and put it in a position it would have been in financially but for the default on the part of the losing party.113

107. Bradshaw v Air Council [1926] Ch 329. 108. Arbitration Act, s. 31A(2). 109. Messers Ltd v Heidner & Co (No 2) [1961] 1 Lloyd’s Rep 107; Smeaton, Hanscomb & Co Ltd v Sassoon I Setty, Sons & Co (No 2) [1953] 2 All ER 1588, [1953] 1 WLR 1481. 110. MCIA Rules, 2016, r. 33.8; similar provision exists in LCIA Rules, 2014, r. 28.4. 111. J. Y. Gotanda, “Awarding Costs and Attorneys’ Fees in International Commercial Arbitrations” (1999) 21 Michigan J Intl Law, p. 16. 112. Ethos Limited v Geofin Investment Pvt. Ltd. 2018 SCC OnLine Del 12514, at para. 15. 113. “Part III: The Award, Chapter 15: Costs in Arbitration’ in Jeffrey Maurice Waincymer, Procedure and Evidence in International Arbitration (Kluwer Law International 2012).

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Law, Practice and Procedure of Arbitration in India

Gary Born states: “As to the proper standards, while it is accepted that the authority to award costs is procedural, he notes that it has been suggested that the substantive law governing the parties’ underlying contract or dispute ought to provide the standard for awards of legal costs. In some cases, the applicable substantive law might also have an express provision in relation to costs.”114

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Nevertheless, Gary Born advocates the adoption of international standards. He suggests that the sui generis standards of institutional rules and arbitral practices typically “provide that: (1) the prevailing party is presumptively entitled to a costs award;



(2) only reasonable costs will be reimbursed; and



(3) expenses that were inefficient or unnecessary will not be reimbursed, while costs resulting from the need to respond to unreasonable or uncooperative actions will be recoverable”.

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The arbitral tribunal is vested with the task of deciding if the costs claimed a question of procedural law or substantive law. It is for the arbitral tribunal to determine the question of costs on the basis of facts of the case, procedural law, applicable legislations, and policy considerations before passing an award for costs.

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[42.9] DETERMINING LIABILITY AS TO COSTS

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It follows that the arbitral tribunal must exercise its discretion judicially.115 In England, the only ground for challenging its discretion is either as a question of law or serious irregularity.116

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The focus will be whether the discretion has been exercised in accordance with the statute and any agreement between the parties. More so, in absence of any prejudice, there would possibly be no cause for complaint.117

114. This is sometimes the case in regulatory legislation seeking to encourage private litigants. See, for example, the US Racketeer Influenced and Corrupt Organizations Act 18 USC § 1964(c) (Sup) as applied in Triumph Painters Ltd v Kerr McGee Refining Corp, in Albert Jan van den Berg (ed.), Yearbook Book of Commercial Arbitration, Vol. XVIII (The Hague: Kluwer Law International 1995), p. 120. 115. L Figueiredo Navegacas SA v Reederei Richard Schroeder KG, The Erich Schroeder [1974] 1 Lloyd’s Rep 192; Lloyd de Pacifico v Board of Trade 46 TLR 476; Matheson & Co Ltd v A Tabah & Sons [1963] 2 Lloyd’s Rep 270; Centrala Morska Importowo Eksportowa (known as Centromor) v Compania Nacional de Navegacao SARL [1975] 2 Lloyd’s Rep 69; Gbangbola v Smith & Sheriff Ltd [1998] 3 All ER 730; Stotesbury v Turner [1943] KB 370; Donald Campbell & Co Ltd v Pollak [1927] AC 732. 116. Fence Gate Limited v NEL Construction Limited [2001] All ER (D) 214 (Dec), at para. 85. 117. JSW Steel Ltd v AI Ghuriar Iron & Steel LLC 2015 (2) Arb LR 373.

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Chapter 42—​Costs of the Arbitration

Further, Indian Courts have also been reluctant in interfering with the arbitral tribunal’s discretion to award cost. The High Court of Delhi in Kishan Chand, Engineers and Contractors v Union of India118 held that the discretion to award cost is vested on the arbitrator and no interference is called for to such exercise of discretion by the arbitrator. An arbitral tribunal will misdirect itself where it exercises its discretion on no material,119 extraneous or extra-​legal material,120 or based on an improper reason.121

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An arbitral tribunal does not exercise its discretion as to costs judicially when it takes into account matters which are unconnected with the proceedings, for example the fact that, in its view, the conduct of the successful party before the reference commenced was immoral.122

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The case of Stotesbury v Turner123 illustrates the rule that arbitral tribunal must exercise its discretion by applying the same principles as are applied by the High Court.124 In that case, a without prejudice offer of £550 was made and offered in the course of an arbitration.

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The arbitral tribunal awarded less than £550 against the respondent. It then considered the without prejudice offer of settlement and directed the claimant to pay all the costs of the arbitration proceedings.

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On appeal, the Court set aside the award and held that the discretion of the arbitral tribunal was the same as that of a judge. It must be exercised judicially.125 The Court went on to say that the arbitral tribunal should not have considered the without

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1 18. (1998) 47 DRJ 391. 119. Civil Service Co-​operative Society v General Steam Navigation Co [1903] 2 KB 756, at p. 765, per Lord Halsbury; Ritter v Godfrey [1920] 2 KB 47, CA (Eng). 120. Everglade Maritime Inc v Schiffahrtsgesellschaft Detlef von Appen GmbH, The Maria [1993] QB 780, at p. 790, [1993] 3 All ER 748, at p. 754, [1993] 2 Lloyd’s Rep 168, at p. 173, CA (Eng), per Bingham MR. 121. Blexen Ltd v G Percy Trentham Ltd [1990] 42 EG 133, CA (Eng). 122. Lloyd del Pacifico v Board of Trade 46 TLR 476. 123. Stotesbury v Turner [1943] KB 370, at pp. 371–​372, per Atkinson J: “Since the decision in Lloyd del Pacifico v Board of Trade [(1930) 46 TLR 476] it has been accepted that the discretion of an arbitrator to deal with costs is identical with that of a judge. Wright J there said: ‘The discretion of an arbitrator to deal with costs depended on the incorporation in the submission of the provisions of the Arbitration Act 1889. Those provisions were identical with the provisions in Or. 65, r. 1, of the Rules of the Supreme Court and ss 31 and 50 of the Supreme Court and ss. 31 and 50 of the Supreme Court of Judicature (Consolidation) Act 1925, which regulated the discretion of a judge of the Supreme Court’.” 124. Re an Arbitration between Becker, Shillan & Co and Barry Brothers [1921] 1 KB 391; Lloyd del Pacifico v Board of Trade 46 TLR 476; Stotesbury v Turner [1943] KB 370; Matheson & Co Ltd v A Tabah & Sons [1963] 2 Lloyd’s Rep 270. 125. Everglade Maritime Inc. v Schiffahrtsgesellschaft Detlef Von Appen Mbh, The Maria [1993] 2 Lloyd’s Rep 168, at p. 179, per Lloyd QC: “Although the Act gives the arbitrator a full discretion as to costs, his exercise of the discretion is limited to this extent that he must apply the same principles when deciding upon his award of costs as are applied in the High Court. This means that the discretion must be exercised judicially”.

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prejudice offer. Therefore, there were no grounds on which it could properly exercise its discretion to deprive the claimant of its costs. However, the court will not interfere with the exercise of the arbitral tribunal’s discretion merely because it would have exercised that jurisdiction differently.126 Had the offer in that case been made “without prejudice to costs” the position would have been different.

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If the arbitral tribunal exercises it discretion in not a judicial way, that part of the award may be remitted to it for reconsideration127 or the court may set it aside and, by consent of the parties, make its own determination.128

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The remedy of remission may also be available in an appropriate case. If the arbitral tribunal exercises its discretion judicially, the costs order will not be set aside even if founded on a mistake of law.129 Unless it is clear that the arbitral tribunal has not acted a judicial manner, the court will seek to give effect to the award.130

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The arbitral tribunal must not apply an invariable rule of practice to the issue of costs. The Court in James Allen (Liverpool) Ltd v London Export Corp Ltd131 held that the GAFTA Board of Appeal’s practice of ordering both parties to pay their own costs was inconsistent with the discretion vested in them.

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An arbitral tribunal who feels compelled by a rule of practice to award costs to a party in any particular way has abrogated its responsibility to exercise its discretion and has misdirected itself.

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This approach is best seen in the case of Blue Horizon Shipping Co SA v E D & F Mann Ltd, The Aghios Nicolaos132 where it was alleged that the arbitral tribunal considered itself obliged to apportion costs when a claimant was only partially successful.

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The arbitral tribunal’s discretion in taxing and settling costs is explained in detail in Chapter 44.

126. Channel Island Ferries Ltd v Cenargo Navigation Ltd, The Rozel [1994] 2 Lloyd’s Rep 161. 127. LE Cattan v A Michaelides & Co [1958] 2 All ER 125, [1958] 1 WLR 717; Warinco AG v Andre & Cie SA [1979] 2 Lloyd’s Rep 298; Patroclos Shipping Co v Société Secopa [1980] 1 Lloyd’s Rep 405; Archital Luxfer Ltd v Henry Boot Construction Ltd [1981] 1 Lloyd’s Rep 642. 128. Smeaton Hanscomb & Co Ltd v Sassoon I Setty, Son & Co (No 2) [1953] 2 All ER 1588, [1953] 1 WLR 1481; Lewis v Haverfordwest RDC [1953] 2 All ER 1599, [1953] 1 WLR 1486). 129. Heaven and Kesterton Ltd v Sven Widaeus A/​B [1958] 1 All ER 420, [1958] 1 WLR 248. 130. P Rosen & Co v Dowley and Selby [1943] 2 All ER 172. 131. [1981] 2 Lloyd’s Rep 632. 132. Blue Horizon Shipping Co SA v E D & F Mann Ltd, The Aghios Nicolaos [1980] 1 Lloyd’s Rep 17, CA (Eng).

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[42.10] COSTS PRIMA FACIE TO FOLLOW THE EVENT The notion of costs following the event traditionally means that if a party wins as to part, it should obtain its entire costs unless the amount awarded was de minimis, trivial, or nominal.133

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Robert Merkin states that the arbitral tribunal has full discretion to direct by whom costs of arbitration to be paid.

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This has come to mean, first, that the arbitral tribunal is required to apply the general rule which governs judicial proceedings that the successful party should be awarded its costs and secondly, that as a judicial decision has to be made in the form of an award, the parties should be entitled to make submissions on costs.134

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An arbitral tribunal is required to apply the general rule that costs prima facie follow the event135 in that the successful party should be awarded its costs by considering primarily the success outcome of the proceedings.136 It may consider the conduct of the parties in and about the proceedings, proportionality, and reasonableness if the circumstances justify it.

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The Court in Office and Industrial Cleaners Ltd v John Paul Construction Ltd137 held that the discretion afforded to an arbitrator was not unqualified and had to be exercised judicially. It is imperative to note that in the context of costs awards, the general rule of costs follow the event has equal application to arbitrators as judges.138

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The 246th Law Commission Report also recommended the inclusion of the loser pays rule into the Arbitration Act, in order to provide a deterrence against frivolous conduct and further compliance with contractual obligation.139

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133. Peter Sheridan, Construction and Engineering Arbitration (Sweet & Maxwell 1999), p. 432. 134. Robert Merkin, Arbitration Law (LLP 2004), at para. 16.73. See also Centrala Morska Importowo Eksportowa (known as Centromor) v Companhia Nacional de Navegacao SARL [1975] 2 Lloyd’s Rep 69; Harrison v Thompson [1989] 1 WLR 1325. 135. CIArB International Arbitration Guidelines 2015/​2016, Drafting Arbitral Awards, Part III –​Costs, at the Preamble, it states that “… The ‘costs follow the event’ rule is reported to be almost universally recognised in both common and civil law countries. It is also argued that there is an emerging trend to use it as a default rule in international arbitration. However, in practice, it is used only as a starting point which leads to a much-​moderated approach taking into account various factors and subject to a test of reasonableness and proportionality”. 136. Messrs Ltd v Heidner & Co [1961] 1 Lloyd’s Rep 107, at p. 115, per Winn J explained the expression “costs follow the event”: “The arbitrators were making an award as to costs without having, as their formal award shows, applied their minds to the most important consideration relevant to the exercise of their discretion, namely who had won –​who had been successful in the proceedings”. 137. 21 February 2008 [2008] IEHC 38. 138. Vogelaar v Callaghan (1996) 1 IR 88. 139. 246th Law Commission Report, at para. 71.

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It recommended that misconceived claims against a party are not only to be rejected but the party initiating such claims has to be burdened with costs.140 As a result of the recommendation, Section 31A was inserted into the Act envisaging the principle that costs follow an event.141

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Under Section 31A(2)(a) of the Arbitration Act, the general principle of awarding costs is “winner takes all”. The English Court in Veolia Water UK plc v Fingal County Council, the High Court of England and Wales explained the underlying rationale for the normal rule of costs as follows:

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“The overriding starting position should remain that costs should follow the event. Parties who are required to bring a case to court in order to secure their rights are, prima facie, entitled to the reasonable costs of maintaining the proceedings. Parties who successfully defend proceedings are, again prima facie, entitled to the costs to which they have been put in defending what, at the end of the day, the court has found to be unmeritorious proceedings.”142

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The application of the rule requires the identification of the event from which the costs follow (i.e. the identification of which party has won the proceedings).

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The reasonableness of the party’s costs was the issue in an arbitration proceeding in VV v VW143 governed by the Singapore International Arbitration Act where there is no appeal. The claimant made a claim for S$927,000 whereas the respondent brought a counterclaim of S$20,000,000. The arbitrator ruled that it had no jurisdiction to deal with the respondent’s counterclaim and that the respondent’s successful cross claim can only diminish the claimant’s claim.

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The arbitral tribunal subsequently dismissed the claimant claim. As such, there was no need to decide on the respondent’s cross-​claim. The arbitrator’s award costs of S$2,800,000 to the respondent.

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The claimant applied to the High Court to set aside the costs award. One of the grounds was that the costs award offended the principle of proportionality and, therefore, in conflict with the public policy of Singapore. Judith Prakash J in VV v VW doubted if the principle of proportionality was formally applicable in the assessment of costs in arbitration in Singapore. The Court held

140. 141. 142. 143.

All India Radio v Unibros. (2010) (6) RAJ 217 (Del). 2015 Amendment, s. 17. [2006] IEHC 240. VV v VW [2008] 2 SLR(R) 929.

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that while it would have reviewed and controlled excessive costs claimed in court proceedings.144

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The Court held that it was not part of the public policy of Singapore for the court to assess parties’ costs incurred for arbitration which was outside the court system on the basis of any principle, including the proportionality principle. There is no public interest involved in the legal costs of parties to a one-​off and private proceedings.145

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This must be contrasted with the judgment of Quentin Loh JC in Ting Kang Chung John v Teo Hee Lai Building Constructions Pte Ltd.146 The Court held that it had jurisdiction and interest in ensuring a proper level of fees and costs levied, whether of arbitrators or counsel, in domestic arbitrations.

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As such, it is a moot whether an arbitral award on costs which is alleged to be disproportionate can be set aside in an international arbitration in Singapore.

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The Singapore Court of Appeal in Lin Jian Wei v Lim Eng Hock Peter147 affirmed that the principle of proportionality when it explained:

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“We think that costs that are plainly disproportionate to, inter alia, the value of the claim cannot be said to have been reasonably incurred. Thus, in assessing whether costs incurred are reasonable, it needs to be shown that the cost incurred were not just reasonable and necessary, for the disposal of the matter, but also, in the entire context of that matter, proportionately incurred …”

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However, the general approach in various arbitration rules is that reasonable costs may be recovered under an award as to costs.148 The arbitral tribunal may consider the principle of proportionality in that the costs incurred should generally not be out of proportion or disproportionate with the amounts in dispute.149

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The arbitral tribunal should consider adjusting the costs awarded where reasonable costs are disproportionate to the amount in dispute.150

144. The Singapore Court of Appeal in Lin Jian Wei v Lim Eng Hock Peter [2011] SGCA 29, at para. 34 affirmed that the principle of proportionality applied in the assessment of legal costs following the 2010 amendment of the Singapore Rules of Court by O 59 para. 1(2). 145. VV v VW [2008] 2 SLR (R) 929, at para. 31. 146. [2010] 2 SLR 625. 147. [2011] SGCA 29, at para. 56. 148. UNCITRAL Arbitration Rules, 2010, art. 40(2)(e); WIPO Rules, art. 72. 149. Lownds v Home Office [2002] 1 WLR 2450; Research in Motion UK Ltd v Visto Corporation [2008] EWHC 3026 (Pat); Digicel (St Lucia) v Cable & Wireless plc [2010] EWHC 888 (Ch); Lin Jian Wei v Lim Eng Hock Peter [2011] SGCA 29. 150. Research in Motion UK Ltd v Visto Corporation [2008] EWHC 3026 (Pat).

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Law, Practice and Procedure of Arbitration in India

Article 42(1) of the UNCITRAL Arbitration Rules provide: “The costs of the arbitration shall in principle be borne by the unsuccessful party or parties. However, the arbitral tribunal may apportion each of such costs between the parties if it determines that apportionment is reasonable, taking into account the circumstances of the case.”

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The rule that costs should follow the event applies also in string arbitration involving a series of arbitrations between various parties involving the same subject matter where the successful party was to be awarded the costs of third parties which have to be paid by him by virtue of his unsuccessful participation in other proceedings.151 Delvin J in Smeaton, Hanscomb & Co Ltd v Sassoon I Setty, Sons & Co (No 2)152 stated:

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“Prima facie, a successful party is entitled to his costs. To deprive him of his costs or to require him to pay part of the costs of the other side is an exceptional measure.”

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A successful party is not entitled at law to its costs but merely prima facie entitled. It is the arbitral tribunal’s duty to consider, even when minded to apply this principle, whether it is applicable in the circumstances.

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The arbitral tribunal in exercising its discretion, as a general rule, awards the successful party its costs, as in the High Court where “costs follow the event”. The arbitral tribunal should not depart from this general rule in the absence of special circumstances.153

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Mocatta J in The Erich Schroeder154 explained:

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“In exercising his discretion judicially an umpire/​arbitrator must have regard in the first place to the primary principle guiding courts and arbitral tribunals in the exercise of their discretion in relation to costs, namely, that costs follow the event.”

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Lord Goddard LCJ in Lewis v Haverfordwest RDC155 emphasised that it would be unusual for the winning party not to receive costs. It would be material for the arbitrator to justify such a departure from the norm.

151. L E Cattan Ltd v A Michaelides & Co (a firm) [1958] 2 All ER 125. 152. [1953] 2 All ER 1588, at 1590, [1953] 1 WLR 1481, at p. 1484; see also Tramountana Armadora SA v Atlantic Shipping Co SA [1978] 2 All ER 870, at p. 873, [1978] 1 Lloyd’s Rep 391, at p. 394 where the court held that the prima facie rule of English law and practice is that costs should follow the event. 153. See also Semco Salvage & Marine Pty Ltd v Lancer Navigation Co Ltd, The Nagasaki Spirit [1996] 1 Lloyd’s Rep 449; Channel Island Ferries Ltd v Cenargo Navigation Ltd, The Rozel [1994] 2 Lloyd’s Rep 161; The Erich Schroeder [1974] 1 Lloyd’s Rep 192; Blue Horizon Shipping Co SA v E D and F Man, The Aghios Nicolaos [1980] 1 Lloyd’s Rep 17; Heaven & Kesterton v Etablissements Francois Albiac et Cie [1956] 2 Lloyd’s Rep 316. 154. The Erich Schroeder [1974] 1 Lloyd’s Rep 192, at p. 194, per Mocatta J. 155. Lewis v Haverfordwest RDC [1953] 2 All ER 1599, [1953] 1 WLR 1486, per Lord Goddard LCJ; Portland Steamship Co Ltd v Charlton Steam Shipping Co [1925] 23 Ll L Rep 268, at p. 271.

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Chapter 42—​Costs of the Arbitration

He added that:

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“… there is a settled practice of the courts that, in the absence of special circumstances a successful litigant should receive his costs, and that it is necessary to show some grounds for refusing an order which would give them to him. The discretion to refuse that order must be judicially exercised. Those words ‘judicially exercised’ are always somewhat difficult to apply, but they mean that the arbitrator must not act capriciously and must, if he exercises his discretion to refuse the usual order, show a reason connected with the case which the court can see is proper.”

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The arbitral tribunal in Smeaton, Hanscomb & Co Ltd v Sassoon I Setty, Sons & Co (No 2)156 decided that each party should bear its own costs and that the sellers should bear the costs of any appeal to the High Court.

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Devlin J held that the award was bad because the arbitral tribunal had failed to consider the most important aspect of the allocation of costs, namely, the outcome of the arbitration.

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A claimant who has proved part of its claim and recovered damages in respect of it is entitled to a full costs award in its favour. It is treated in the same way as a wholly successful claimant.157

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This rule is well established in judicial proceedings.158 The claimant is taken to have won the arbitration if the sum awarded to it exceeds that made in an offer even if by a small amount.159

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The award was challenged in Ajay Singh (Sunny) Deol v Suneel Darshan160 on the ground that since the arbitrator rejected the claim for damages, the arbitrator could not have awarded arbitration costs in favour of the claimant.

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156. [1953] 2 All ER 1588, at 1590, [1953] 1 WLR 1481, at p. 1484; Heaven and Kesterton v Etablissements Francois Albiac et Cie [1956] 2 Lloyd’s Rep 316; Tramountana Armadora v Atlantic Shipping Co SA [1978] 2 All ER 870, [1978] 1 Lloyd’s Rep 391; Dineen v Walpole [1969] 1 Lloyd’s Rep 261, CA (Eng); Fenceline Ltd v W J Simms, Sons & Cook Ltd (1972) 224 Estates Gazette 1041; Patroclos Shipping Co v Societe Secopa [1980] 1 Lloyd’s Rep 405; Wilhelmsen v Canadian Transport Co, The Takamine [1980] 2 Lloyd’s Rep 204; Leif Hoegh & Co A/​S v Maritime Mineral Carriers Ltd, The Marques de Bolarque [1982] 1 Lloyd’s Rep 68; Bani v Korea Shipbuilding and Engineering Corpn [1987] 2 Lloyd’s Rep 445, CA (Eng). 157. Demolition & Construction Co Ltd v Kent River Board [1963] 2 Lloyd’s Rep 7; Blue Horizon Shipping Co SA v E D & F Mann Ltd, The Aghios Nicolaos [1980] 1 Lloyd’s Rep 17, CA (Eng); Channel Island Ferries Ltd v Cenargo Navigation Ltd, The Rozel [1994] 2 Lloyd’s Rep 161; Metro-​Cammell Hong Kong Ltd v FKI Engineering plc (1996) 77 BLR 84. 158. Ritter v Godfrey [1920] 2 KB 47, CA (Eng); Donald Campbell & Co Ltd v Pollak [1927] AC 732, HL. The aforementioned case was followed in Secretary of State v Lodna Colliery Co. Ltd. 164 Ind Cas 860. 159. Tramountana Armadora SA v Atlantic Shipping Co SA [1978] 2 All ER 870, [1978] 1 Lloyd’s Rep 391; Archital Luxfer Ltd v Henry Boot Construction Ltd [1981] 1 Lloyd’s Rep 642; Everglade Maritime Inc v Schiffahrtsgesellschaft Detlef von Appen GmbH, The Maria [1993] QB 780, [1993] 3 All ER 748, [1993] 2 Lloyd’s Rep 168, CA (Eng). 160. High Court of Bombay, Arbitration Petition No. 819 of 2011.

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Law, Practice and Procedure of Arbitration in India

The High Court of Bombay reject the objection and held that the arbitrator has rendered most of the findings in favour of the claimant while holding that the respondent had committed breaches of the agreement and had since inception had no intention to comply with his part of the obligation under the agreement.

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The arbitrator, however, rejected the claim for loss of profit on the ground that the claimant had failed to prove such loss of profit. The Court further held that considering the facts and circumstances of the case the arbitrator was thus justified in awarding cost. The arbitral tribunal should consider a claim and a successful counter-​claim not amounting to a complete defence separately and allocate the costs between the two causes of action in so far as it is feasible.161

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Even where there is a set-​off which serves simply to reduce the sum payable by the respondent to the claimant and should be distinguished from a counter-​claim, a successful claimant should be entitled to its costs162 provided the set-​off does not extinguish the claim itself.163

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Where the claimant has set out a number of separate claims,164 the arbitral tribunal may apportion the costs between the parties if not all of them are made out.165 A claimant who has only partial success may be awarded full costs if it establishes the bulk of its claim in financial terms,166 or conversely, where the respondent has succeeded on all but minor claims.167

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The arbitral tribunal will look at the overall result to determine which party can be said to have “won” the arbitration.168 This can involve an apportionment of recoverable costs to reflect the claims won or lost.169

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161. Tramountana Armadora SA v Atlantic Shipping Co SA [1978] 2 All ER 870, [1978] 1 Lloyd’s Rep 391; Archital Luxfer Ltd v Henry Boot Construction Ltd [1981] 1 Lloyd’s Rep 642. See Mustill and Boyd, Commercial Arbitration (2nd edn, 1989), p. 395, nn. 12 and 13. 162. Nicholson v Little [1956] 2 All ER 699, [1956] 1 WLR 829, CA (Eng). 163. Hanak v Green [1958] 2 QB 9, [1958] 2 All ER 141, CA (Eng). 164. Norris v Daniel (1834) 10 Bing 507; Gyde v Boucher (1836) 5 Dowl 127; England v Davison (1841) 9 Dowl 1052; Pearson v Archbold (1843) 11 M & W 477; Brooks v Parsons (1843) 1 Dow & L 691; Lund v Hudson (1843) 1 Dow & L 236; Kilburn v Kilburn (1845) 13 M & W 671; Crosbie v Holmes (1846) 3 Dow & L 566; Rule v Bryde 1 Exch 151; Hellaby v Brown (1857) 1 H & N 729; Ellis v Desilva (1881) 6 QBD 521, CA (Eng). 165. Thyssen (Great Britain) Ltd v Afan Borough Council (1978) 15 BLR 98, CA (Eng); Blue Horizon Shipping Co SA v E D & F Man Ltd, The Aghios Nicolaos [1980] 1 Lloyd’s Rep 17, CA (Eng); Ismail v Polish Ocean Lines, The Ciechocinek (No 2) [1980] 1 Lloyd’s Rep 97; Eleftheria Niki Compania Naviera SA v Eastern Mediterranean Ltd, The Eleftheria Niki [1980] 2 Lloyd’s Rep 252; Archital Luxfer Ltd v Henry Boot Construction Ltd [1981] 1 Lloyd’s Rep 642; Channel Island Ferries Ltd v Cenargo Navigation Ltd, The Rozel [1994] 2 Lloyd’s Rep 161. 166. Demolition and Construction Co Ltd v Kent River Board [1963] 2 Lloyd’s Rep 7. 167. Harris v Petherick (1879) 4 QBD 611, CA (Eng); Anglo-​Cyprian Trade Agencies v Paphos Wine Industries Ltd [1951] 1 All ER 873, at 875; Evmar Shipping Corp v Japan Line Ltd, The Emvar [1984] 2 Lloyd’s Rep 581. 168. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​139. 169. Rotary Watches Ltd v Rotary Watches (USA) Inc [2004] WL 3200214.

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Chapter 42—​Costs of the Arbitration

It must be noted that the principle of “costs follow the event” is not recognised in the Philippines. The Philippines Court of Appeal in Luzon Hydro Corporation v Baybay and Transfield Philippines Inc170 held the principle is not part of Philippines law as a litigant cannot be penalised for exercising its right to litigate.171 It further held that the arbitral tribunal in the case had abused its discretion in applying the principle. The award on costs was set aside.

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[42.11] EXCEPTIONS TO THE GENERAL RULE

The rule that a successful party should be awarded his costs is not inflexible. In some special situations, justice may demand that the successful party should be deprived of the whole or part of his own costs.172

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The Arbitration Act allows the arbitral tribunal to deviate from the general rule and make a different order. However, the tribunal has to give reasons recorded in writing for the same.173 Some circumstances in which an arbitral tribunal may depart from the general rule include where: (1) the claim has been grossly exaggerated;



(2) one of the parties has acted unsatisfactorily;



(3) the successful party has failed on an issue which was time consuming; or



(4) the proceedings were conducted in an extravagant manner.

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Further, LCIA Rules, 2014 also provides an exception to the general rule stating the cost will follow the success of the party except where it appears to the arbitral tribunal that in the circumstances the application of such a general principle would be inappropriate under the arbitration agreement or otherwise.174

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Importantly, in the decision of London Borough of Tower Hamlets v The London Borough of Bromley,175 the Chancery Division of the High Court of England and Wales observed that “one should depart from the general rule only where the needs of justice and the circumstances of the particular case require, and a measure of caution is needed”.

170. Yearbook of Commercial Arbitration, Vol. XXXII (2007), 456 at p. 472. 171. Ibid; see also Philippines Supreme Court Special Rules of Court on Alternative Dispute Resolution, r. 21, effective October 2009. 172. P Rosen & Co Ltd v Dowley and Selby [1943] 2 All ER 172, at 175. 173. Arbitration Act, s. 31A(2)(b). 174. LCIA Rules, 2014, r. 28.4. 175. [2015] EWHC 2271 (Ch).

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Law, Practice and Procedure of Arbitration in India

In the above case, the Chancery Division observed that among the circumstances to be considered is whether a party has succeeded with part of its case even if it has not been wholly successful. The other aspect to be considered by the court is the parties’ “conduct”, which includes both: (1) whether it was reasonable for a party to raise, pursue or contest any particular issue; and



(2) the manner in which issues so raised were pursued.

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Where the arbitral tribunal considers that it should exercise discretion to depart from the normal rule as to costs, it must do so on a reasoned basis.

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A combination of factors is usually involved and while decided cases indicate the nature of factors which may be relevant, these will be determined on a case-​by-​case basis.176 Emmanuel Gaillard and John Savage177 explain:

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“It is increasingly common for the arbitral tribunal to order the party which is defeated on the merits of a dispute to pay all or a substantial part of the costs of the arbitration. That is traditionally the practice in some common law countries and now frequently occurs when the arbitral tribunal has its seat in continental jurisdictions such as France or Switzerland. In reaching their decision on the allocation of costs between the parties, arbitrators may take into account the attitude of the parties during the arbitral proceedings.”

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Julian D. M. Lew, Loukas A. Mistelis, and Stefan Kroll178 state the same:

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“An emerging trend can be recorded for the arbitration tribunal to order the losing party to pay all or the substantial part of the costs of the arbitration. This tradition is widely accepted and can be seen, for example, in England, in France and Switzerland. The other emerging trend in allocating costs between the parties is to take into account their attitude during the proceedings.”

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What is suggested here is that the parties’ negative attitude resulted in its poor conduct in and about the proceedings that affect the cost and time effectiveness of the arbitration.

1 76. [2007] IESC 60. 177. E. Gaillard and J. Savage (eds), Fouchard, Gaillard and Goldman, International Commercial Arbitration (1999), p. 685. 178. J. Lew, L. Mistelis et al., Comparative International Commercial Arbitration (Kluwer Law International 2003), p 653; see also J. Rosell, “Arbitration Costs as Relief and/​or Damages” (2011) 28 Journal of International Arbitration 2, pp. 115–​126.

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Chapter 42—​Costs of the Arbitration

It may include unreasonable conduct, delaying and diversionary tactics, and lack of diligence and good faith. The ICC Commission179 has listed examples of poor conduct to include:

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“Excessive document requests, excessive legal argument, excessive cross-​examination, dilatory tactics, exaggerated claims, failure to comply with procedural orders, unjustified applications for interim relief, and unjustified failure to comply with the procedural timetable.”

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The ICC Commission in its updated Report: “Decisions on Costs in International Arbitration”180 has elaborated that improper conduct or bad faith of the parties include improper conduct in procedural steps, improper conduct in document production, false witness or expert evidence, false submissions to the arbitral tribunal, aggression or lack of professional courtesy, and unsubstantiated fraud allegations.

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Further, the adoption of particular procedural rules like the IBA Rules on the Taking of Evidence in International Arbitration may reinforce the arbitral tribunal’s powers on costs allocation in considering the poor conduct of the parties. Article 9(7) provides:

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“If the Arbitral Tribunal determines that a Party has failed to conduct itself in good faith in the taking of evidence, the Arbitral Tribunal may, in addition to any other measures available under these Rules, take such failure into account in its assignment of the costs of the arbitration, including costs arising out of or in connection with the taking of evidence.”

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It follows that an arbitral tribunal has discretion to depart from the general rule that costs prima facie follow the event in exceptional circumstances only.

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An arbitral tribunal may even, in appropriate circumstances, award the unsuccessful party some or all of its costs.181 The cases on this point suggest that the arbitral tribunal has acted judicially despite making an award whereby costs did not follow the event.

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Where an arbitral tribunal intends to exercise its discretion and depart from the general rule, it has to hear submissions from the parties.182 It should always bear in mind the duty to act judicially. It should not take into account any matter not strictly connected with the arbitration.

1 79. ICC Commission Report, Controlling Time and Costs in Arbitration (2nd edn, 2012), at para. 82. 180. ICC Commission Report, “Decision on Costs in International Arbitration” (2015) ICC Dispute Resolution Bulletin 2. 181. Civil Service Co-​operative Society v General Steam Navigation Co [1903] 2 KB 756, CA (Eng); Andrew v Grove [1902] 1 KB 625, at p. 628, per Channell JJ. 182. Gbangbola v Smith & Sherrif Ltd [1998] 3 All ER 730.

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Law, Practice and Procedure of Arbitration in India

The arbitral tribunal should be cautious in making cross awards in which each party is awarded some of its costs where both the claim and counterclaim are partially successful or where there are different offers to settle applicable to different periods in the arbitration.183 The better approach available to the arbitral tribunal is to make a one-​ way award giving the winning party a proportion of its costs claim.184

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If it is inclined to depart from the rule, it should give the parties an opportunity to address it on costs before it makes its award, albeit its failure to do so will not invalidate the award.185 After hearing the parties, the arbitral tribunal should make a judicial order clearly setting forth the reasons for departing from the rule.186

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The general rule applies even in the case of statutory arbitrations where the statute confers an absolute discretion on the arbitral tribunal in relation to the arbitration.187

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[42.12] EXAMPLES OF EXCEPTIONAL CIRCUMSTANCES

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Arbitral tribunals routinely take into account improper conduct and bad faith procedural behaviour by a party when deciding costs. Where a party undermines an expeditious and cost-​efficient conduct of the arbitration, the tribunal should consider ordering that party to reimburse the other party for additional costs.

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Events that the arbitral tribunal may wish to take into account while departing from the rule that “costs allowed the event” includes: Where for all relevant purposes, the respondent is entitled to be treated as the victorious party and the claimant withdraws the claim, leaving only minor issues to be resolved.188 An example of such a circumstance is seen in the case of Evmar Shipping Corp v Japan Line Ltd, The Evmar189 where the successful claimant had delayed making his claim and the award was small.

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The claimant delayed its notification to claim despite knowing the relevant facts in support of it or had drawn up its case in an unhelpful way for example, lack of

183. See Summit Property Limited v Pitmans (a firm) [2001] EWCA Civ 2020, for difficulties arising out of making cross awards. 184. C.Y.C. Ong and M.P. O’Reilly, Costs in International Arbitration (LexisNexis 2013), p. 58. 185. Mustill and Boyd, Commercial Arbitration (2nd edn, Butterworth 1989), p. 396. 186. Lewis v Haverfordwest RDC [1953] 2 All ER 1599, [1953] 1 WLR 1486; Smeaton Hanscombe & Co Ltd v Sassoon I Setty, Son & Co (No 2) [1953] 2 All ER 1588, [1953] 1 WLR 1481. 187. Re Barnett and Eccles Corp (1901) 65 JP 757. 188. Argolis Shipping Co SA v Midwest Steel & Alloy Corpn, The Angeliki [1982] 2 Lloyd’s Rep 594. 189. [1984] 2 Lloyd’s Rep 581.

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Chapter 42—​Costs of the Arbitration

particulars or made unhelpful and irrelevant allegations which then caused delay, difficulty, and additional expense. The arbitral tribunal in Westland Helicopters Ltd. v Arab Organisation for Industrialization,190 awarded £18million against the losing party for he delayed the proceedings which lasted 13 years.

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When the amount awarded to the claimant is so small that the respondent can be said to be the true winner of the reference to arbitration.191

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The respondent may be awarded costs where the claim is deliberately exaggerated and the failure (by otherwise successful party) on one or more issues on which a large amount of time (or costs) is involved. This can include a situation where the successful party fails on an issue that took a great deal of time.192

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However, the respondent must not be evasive in setting out its version of events, have withheld material evidence, or concealed its true defence which becomes known after considerable expense in the arbitration by refusing to engage prior to commencement thus effectively inviting the claim.

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The arbitral tribunal in Elgindata193 asserted that:

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“It is now clear that a too robust application of the follow the event principle encourages parties to increase the costs of the litigation or arbitration, since it discourages parties from being selective as to the points they take. Because if you recover all your costs as long as you win, you are encouraged to leave no stone unturned in your efforts to win.”

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Costs may likewise be awarded to the respondent where the claimant has been dishonest by advancing untrue allegations or in breach of the implied basis upon which parties agree to engage in arbitration resulting in unnecessary expense and delay.

1 90. 80 ILR 622 (23 October 1987). 191. Harris v Petherick (1879) 4 QBD 611, CA (Eng); Tramountana Armadora SA v Atlantic Shipping Co SA [1978] 2 All ER 870, [1978] 1 Lloyd’s Rep 391. 192. Re Fearon and Flinn (1869) LR 5 CP 34; Heaven and Kesterton Ltd v Sven Widaeus A/​B [1958] 1 All ER 420, [1958] 1 WLR 248; Perry v Stopher [1959] 1 All ER 713, [1959] 1 WLR 415, CA (Eng); Matheson & Co Ltd v A Tabah & Sons [1963] 2 Lloyd’s Rep 270; Dineen v Walpole [1969] 1 Lloyd’s Rep 261, CA (Eng); Tramountana Armadora SA v Atlantic Shipping Co SA [1978] 2 All ER 870, [1978] 1 Lloyd’s Rep 391; Ismail v Polish Ocean Lines, The Ciechocinek (No 2) [1980] 1 Lloyd’s Rep 97; Channel Island Ferries v Cenargo Navigation, The Rozel [1994] 2 Lloyd’s Rep 161, at p. 170, per Phillips J. 193. [1993] 1 All ER 232.

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Law, Practice and Procedure of Arbitration in India

Other considerations are when the claimant has been obstructive, vexatious, made unreasonable objections, or conducted the arbitration unreasonably, such as by failing to follow directions.194 A successful party may not be awarded costs where it wasted costs, for example, by calling unnecessary and irrelevant evidence.195 It can also include extravagance such as using too many counsels or expert witnesses and the like.

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Another illustration of this principle applies to taxation of cost in that anything has been done, or that any omission has been made, unreasonably or improperly on behalf of any party, the costs of that party in respect of that act or omission will not be allowed and that any costs occasioned by it to any other party will be paid by him to that other party.196

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Failure of a successful party to accept an offer made earlier by the other party which would have left him in as good a position as under the award.197 The High Court equivalent of making an offer in arbitration is payment into court.

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The question to be considered is whether the successful party acted unreasonably in continuing with the reference, which will usually be the case unless the award is in some material respect an improvement on what the successful party would have obtained by accepting the offer.

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Persisting with a claim where the defendant has provided information that conclusively demonstrates that the claim will fail and would result in a successful strike-​out application was the matter not subject to an arbitration agreement.

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Where there are several parties involved in the arbitration, special orders for costs may be appropriate. An arbitral tribunal may not award the costs of arbitration against a person who is not a party to the arbitration proceedings.

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194. Channel Island Ferries v Cenargo Navigation, The Rozel [1994] 2 Lloyd’s Rep 161, at 170, per Phillips J; Re Elgindata Ltd (No 2) [1993] 1 All ER 232, at p. 237, [1992] 1 WLR 1207, at p. 1214, CA (Eng), per Nourse LJ; Unimarine SA v Canadian Transport Co Ltd, The Catherine L [1982] 1 Lloyd’s Rep 484; Tramountana Armadora SA v Atlantic Shipping Co SA [1978] 2 All ER 870, [1978] 1 Lloyd’s Rep 391; Matheson & Co Ltd v A Tabah & Sons [1963] 2 Lloyd’s Rep 270; Lewis Emmanual & Son v Sammut [1959] 2 Lloyd’s Rep 629; Behring International Inc v Islamic Republic of Iran Air Force et al. (1992) Yearbook Com Arb 382, Iran US Claims Tribunal; J & C Cabot v City of Keilor [1994] 1 VR 220; A-​G v Wentworth (1988) 14 NSWLR 481. 195. Rosen & Co v Dowley & Selby [1943] 2 All ER 172; Lewis Emmanual & Son v Sammut [1959] 2 Lloyd’s Rep 629. 196. Matheson & Co Ltd v A Tabah & Sons [1963] 2 Lloyd’s Rep 270; Unimarine, SA v Canadian Transport Co Ltd, The Catherine L [1982] 1 Lloyd’s Rep 484. 197. Demolition and Construction Co Ltd v Kent River Board [1963] 2 Lloyd’s Rep 7; Lewis v Haverfordwest RDC [1953] 2 All ER 1599, [1953] 1 WLR 1486; Cutts v Head [1984] 2 WLR 349.; The same was relied upon by the Supreme Court of India in NTPC v Reshmi Constructions, Builders & Contractors, (2004) 2 SCC 663, at para. 34; Calderbank v Calderbank [1976] Fam 93, [1975] 3 WLR 586.

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Chapter 42—​Costs of the Arbitration

Arbitrations, being private proceedings, generally cannot affect the rights of third parties.198 The arbitral tribunal’s jurisdiction derives from the agreement of the parties to the reference; hence the arbitrator has no jurisdiction to order a non-​party to pay costs.199 A party must commence a separate action to claim contribution from a non-​party including his own representatives. Examples of such situations may include: (1) where there is a multi-​party arbitration in which several claimants claim against a respondent (some of them succeed while others fail), the respondent may ask for an order which includes costs occasioned by the joinder of those claimants who have failed;



(2) where the claimant claims against two respondents who join in their defence through the same legal representatives and an award is given in favour of one respondent but against the other, the successful respondent, in the absence of any agreement to the contrary, should be entitled to recover half the costs of his defence from the claimant;200



(3) where two respondents are joined in the alternative, if the arbitral tribunal is satisfied that the joinder was reasonable and proper, it may make an award that the claimant pay the costs of the successful respondent and then require the unsuccessful respondent to indemnify the claimant.

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Such orders are known as “Bullock” orders.201 A variation of the “Bullock” order is the “Sanderson” order where the arbitral tribunal orders the unsuccessful party to pay the successful party’s costs directly.202

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In making these orders, the arbitral tribunal must decide in accordance with the principles of reason and justice in which a reasonable person could come to the conclusion arrived at.203

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198. Wilhelmsen v Canadian Transport Co, The Takamine [1980] 2 Lloyd’s Rep 204; James Allen (Liverpool) Ltd v London Export Corporation Ltd [1981] 2 Lloyd’s Rep 632. Cf. Aiden Shipping Co Ltd v Interbulk Ltd, The Vimeira (No 2) [1986] AC 965, [1986] 2 All ER 409, [1986] 2 Lloyd’s Rep 117, HL. 199. Forbes-​Smith v Forbes-​Smith and Chadwick [1901] P 258, at p. 271. 200. Beaumont v Senior and Bull [1903] 1 KB 282; Ellingsen v Det Skandinaviske Compani [1919] 2 KB 567, CA (Eng). 201. Bullock v London General Omnibus Co [1907] 1 KB 264, CA (Eng); Lackersteen v Jones (No 2) (1988) 93 FLR 442. 202. Sanderson v Blyth Theatre Co [1903] 2 KB 533, CA (Eng). 203. Hong v A and R Brown Ltd [1948] 1 KB 515, at p. 522, [1948] 1 All ER 185, at p. 187, CA (Eng), per Lord Greene MR; Mayer v Harte [1960] 2 All ER 840, at p. 846, [1960] 1 WLR 770, at p. 777, CA (Eng), per Harman LJ; Bayliss Baxter Ltd v Sabath [1958] 2 All ER 209, at p. 214, [1958] 1 WLR 529, at p. 536, CA (Eng), per Jenkins LJ.

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Law, Practice and Procedure of Arbitration in India

[42.13] EXAMPLES WHICH ARE NOT SPECIAL CIRCUMSTANCES However, legal precedents also state that the following do not constitute special circumstances justifying a departure from the general rule:204 (1) where neither party had made any serious effort to settle the dispute;205



(2) a refusal by a party to mediate the dispute;206



(3) where the successful party took a technical point of which the arbitral tribunal did not approve;207



(4) where there is a defence that the respondent was always willing to put right the matters complained of;208



(5) where the successful party does not win the entirety of his claim;209



(6) where there was a preliminary friendly discussion which took place without prejudice and the refusal of an offer made without prejudice;210



(7) where the mere feeling on the part of the arbitral tribunal that the conduct of the successful party before the commencement of the reference was immoral;211



(8) where the size of the claim was very small;212



(9) any factors which the parties have agreed to exclude or factors occurring during the performance of the contract prior to the commencement of the arbitration;213 or



(10) disputes arising from other contracts or unrelated proceedings conducted elsewhere.

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204. Smeaton Hanscomb & Co Ltd v Sassoon I Setty, Son & Co (No 2) [1953] 2 All ER 1588, [1953] 1 WLR 1481; Heaven and Kesterton v Sven Widaeus A/​B [1958] 1 All ER 420, [1958] 1 WLR 248; Heaven and Kesterton v Etablissements Francois Albiac & Cie [1956] 2 Lloyd’s Rep 316, at p. 322. 205. Lewis v Haverfordwest RDC [1953] 2 All ER 1599, [1953] 1 WLR 1486. 206. Beadle v M & Local Authority Moore Ltd [1998] 3 NZLR 271, CA, affirmed in Glaister v Amalgamated Dairies Ltd [2004] 2 NZLR 606, CA. 207. Messrs Ltd v Heidner & Co (No 2) [1960] 1 Lloyd’s Rep 500. 208. Dineen v Walpole [1969] 1 Lloyd’s Rep 261, CA (Eng). 209. Demolition and Construction Co Ltd v Kent River Board [1963] 2 Lloyd’s Rep 7, at p. 15. Computers Unlimited v Xerox India Ltd (2014) (1) Arb LR 485 (SC), where the Court under Section 34 was pleased to modify the award of costs and expenses in proportion to the percentage of claims awarded. 210. Stotesbury v Turner [1943] KB 370. 211. Lloyd Del Pacifico v Board of Trade 35 Com Cas 325 at pp. 332, 334. 212. Messrs Ltd v Heidner & Co (No 2) [1961] 1 Lloyd’s Rep 107, at p. 116. 213. Everglade Maritime Inc v Schiffahrtsgesellschaft Detlef von Appen GmbH, The Maria [1993] 2 Lloyd’s Rep 168, at p. 173, per Sir Thomas Bingham MR; Hanak v Green [1958] 2 QB 9, at p. 27, per Sellers LJ.

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Chapter 42—​Costs of the Arbitration

Where two or more arbitrations are heard at the same time by the same arbitral tribunal without being formally consolidated and the parties to the said arbitrations have not made an agreement that the proceedings are to be dealt with as a single set of proceedings, a single award may bind all the parties.

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The arbitral tribunal must deal with the costs in each arbitration separately. However, it has been suggested that the arbitral tribunal is entitled to award costs in those arbitrations after viewing the realities of the successes and failures in the proceedings as a whole.214

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Conversely, if more than one arbitration is formally consolidated so that one award binds all the parties, the award on costs may require that any party to those consolidated proceedings pay the costs of any other party to those proceedings. This is the practice of the courts where proceedings are frequently consolidated.215

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Where there is no consolidation, the only exception to the rule that the costs of each arbitration are to be treated separately is where the costs in one arbitration can properly be claimed as damages or entitlement in the other arbitration.216

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This would be a rare case where such costs flow naturally from the breach of contract in the other arbitration. The tests of causation and remoteness must both be fulfilled.217

[42.14] SUBMISSIONS ON COSTS

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As a general rule, an arbitral tribunal must not award legal costs to a party absent a claim submitted to that effect.218

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Section 18 of the Arbitration Act provides:

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“The parties shall be treated with equality and each party shall be given a full opportunity of presenting that party’s case.”

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The parties should be given the opportunity to submit to the arbitral tribunal on their case and comment on their opponent’s case including that of costs. Normally, the parties will put up a list of their costs claimed with relevant supporting documents.

214. Unimarine, SA v Canadian Transport Co Ltd, The Catherine L [1982] 1 Lloyd’s Rep 484, at p. 489. 215. Ibid, at p. 486, where an indication to this effect is given for consolidated arbitrations. 216. Hammond & Co v Bussey (1887) 20 QBD 79, CA (Eng); Suzuki & Co Ltd v Burgett and Newsam [1922] 10 Ll L Rep 223. 217. Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191, [1984] 3 All ER 229. 218. Thomas H. Webster and Michael W. Bühler, op. cit., paras 37–​74; Paolo Michele Patocchi, op. cit., p. 66, suggesting that “[i]‌f no costs are claimed by the parties, an arbitrator may nevertheless ask the parties to clarify their prayer for relief in this respect, especially if no party has claimed costs; the situation is certainly more difficult where a party has claimed legal costs and the other has not”.

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Law, Practice and Procedure of Arbitration in India

These may consist of a schedule of activities undertaken, lawyers, witnesses, expert witnesses and staff working on the scope of work in terms of time spent, expenses paid to arbitral institutions. Upon submission of the costs claim, the arbitral tribunal will need to be satisfied that the costs claimed for reimbursement have in fact been incurred by the claiming party and each party is thereafter able to comment on the other’s costs claim.219

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If neither party objects to the other side’s costs, the arbitral tribunal will usually see this as an indication that the costs are reasonable. The arbitral tribunal can ask for further information on costs.220

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The arbitral tribunal will normally integrate its costs decision into the substantive award as that there is only one award that is published.221 Alternatively, normally upon request of the parties, the arbitral tribunal may bifurcate the award by publishing the substantive (partial or interim222) award followed later by a separate award on costs.223

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Bearing in mind that their mandate ends once they issue their final award, arbitrators should make sure to include their decision on costs in the final award.

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The two-​stage approach of a separate substantive partial award followed by an award on costs has its pros and cons. J.Y. Gotanda224 explains:

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“When the amount in dispute is more significant, I would replace the mandatory fee shifting procedure with a system that allows for briefing or arguments or both, of issues relating to costs and fees after the tribunal decides the merits of the case, including any remedies. In this circumstance, a separate procedure for resolving the claim for costs and fees warrants the associated expenses because: (1) parties are more willing to expend resources to litigate this claim will allow the parties to address the impact of the tribunal’s decision on the main claims as well as the effect of the parties’ overall conduct during the proceedings on the claim for costs and the parties’ overall conduct during the proceedings on the claim for costs and fees; ... (3) the dispute is likely to be

2 19. This was the approach taken in Noble Ventures, Inc v Romania ICSID case ARB/​01/​11. 220. ICSID Arbitration Rules, art. 28(2) provides: “Promptly after the closure of the proceeding, each party shall submit to the Tribunal a statement of costs reasonably incurred or borne by it in the proceeding and the Secretary-​ General shall submit to the Tribunal an account of all amounts paid by each party to the Centre and of all costs incurred by the Centre for the proceeding. The Tribunal may, before the award has been rendered, request the parties and Secretary General to provide additional information concerning the cost of the proceeding”. 221. King v Thomas McKenna Ltd [1991] 2 QB 480, only one award was issued as the amount in dispute was small. 222. ICC Rules, 2017, art. 38(3) limits such powers to decisions on party costs. 223. Interpretation can be asked under s. 33 of the Arbitration Act. 224. J.Y. Gotanda, “Bringing Efficiency to the Awarding of Fees and Costs in International Arbitration” in Kröll, Mistelis, et al. (ed.) International Arbitration and International Commercial Law: Synergy, Convergence and Evolution (2011), p. 144.

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Chapter 42—​Costs of the Arbitration

more complicated and, as a result, tribunal s could benefit from fuller briefing and argument; and (4) the process allows the tribunal to more carefully tailor the award to fit the circumstances of the case, thus leading to a higher quality decision on costs and fees and reducing arbitrary awards.”

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At times, quantification of the costs is delegated to the courts225 or an arbitral institution.226

[42.15] CHALLENGING THE APPORTIONMENT AND ALLOCATION OF COSTS

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The grounds for challenging the arbitral tribunal’s award on costs are the same as the grounds provided under Section 34. They are rather narrow and restricted grounds. A mere error of fact or law does not provide sufficient grounds for setting aside the award.227

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The court will not interfere in the award of costs by an arbitrator where it is not clear from the award whether the assessment was based on the total costs of the proceedings or the proportionate costs.228

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The only way an award on costs can be challenged is if it constitutes an excess of the arbitral tribunal’s jurisdiction, is unreasoned, or perverse and unconscionable. The failure to apply a contractual provision (e.g. one going to costs) has been held to fall well short of the public policy threshold.229

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Ordinarily, a party can only successfully appeal against an order for costs when the court finds that: (1) The arbitrator’s decision was plainly wrong; or



(2) The arbitrator’s decision was one no reasonable arbitrator could have arrived at; or



(3) The arbitrator had not exercised any discretion at all.

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225. For example, the Hong Kong Arbitration Ordinance, 2011 s. 75, parties can agree that the court shall tax the costs. 226. Singapore International Arbitration Act (Cap 143A), s. 19A(1): “… the arbitral tribunal may make more than one award at points in time during the arbitral proceedings on different aspects of the matters to be determined”. 227. Lesotho Highlands Development Authority v Impregilo SpA [2005] UKHL 43. The decision was followed in Ssanyong Engineering & Construction Co. Ltd. v National Highways Authority of India AIR 2019 SC 5041; Bharat Sanchar Nigam Limited v BWL Industries Pvt. Ltd. 2010 SCC OnLine Del 1668; State Trading Corporation of India Ltd. v Irano Hind Shipping Company 2010 SCC OnLine Del 1708; Sui Southern Gas Co Ltd v Habibullah Coastal Power Co (Pte) Ltd [2010] SGHC 62. The aforementioned case was followed in Ssanyong Engineering & Construction Co. Ltd. v National Highways Authority of India, AIR 2019 SC 5041 and Vijay Karia v Prysmian Cavi E Sistemi SRL (2020) SCC OnLine SC 177. 228. Anil Kumar Bannerjee v Indian Oil Corp (2005) 3 Arb LR 155, p. 161. 229. Downer Connect Ltd v Pot Hole People Ltd HC Christchurch CIV-​2003-​409-​2878, 19 May 2004.

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Law, Practice and Procedure of Arbitration in India

For instance, the High Court of Calcutta230 set aside a costs award in favour of the successful party as a substantial part of the claims had been rejected. In another case,231 the Supreme Court of India set aside a costs award, reasoning that when claims are inflated out of all proportion, heavy costs should be awarded to the other party and the party making such inflated claims should be deprived of costs.

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In considering potential avenues upon which an award on costs could potentially be challenged, it may fall foul of the public policy rule. Unlike countries such as the USA, where it is customary for parties to bear their own costs, Indian public policy is for costs to follow the event.

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In a straightforward claim where the claimant seeks damages and costs and succeeds. If the arbitral tribunal refused to make any award as to costs this could constitute a conflict with public policy.

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Where the petitioner was dragged into arbitration proceedings illegally by the respondent and thus, arbitrator ought not to have awarded cost of arbitration in favour of the respondent and against the petitioner, it was held that it shows patent illegality and is in conflict with public policy of India.232

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The mere fact that the arbitral tribunal did not follow the general principles or reached a conclusion which the court would not have reached is not of itself a ground for overturning the arbitrator’s award of costs.233 There would have to be an egregious departure from acceptable norms for this ground to be successful.234

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Alternatively, it can also be argued that the parties referred their dispute to the arbitral tribunal with the intention that it would deal with the issue of costs in accordance with the law.

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If it can be shown that the arbitral tribunal had exercised its discretion judicially bearing in mind the rule that costs are to follow the event, his award is valid. Conversely, where it can be shown that the arbitral tribunal had not considered the rule at all and fettered his discretion, its award on costs may be bad.

Steel Authority of India v Shyam Sundar Choudhury AIR 2005 Cal 305. State of J&K v Dev Dutt Pandit AIR 1999 SC 3196. Gujarat State Fertilizers Co Ltd v TATA Motors Ltd (2015) (2) Arb LR 290. Rosen & Co v Dowley & Selby [1943] 2 All ER 172; Perry v Stopher [1959] 1 All ER 713, [1959] 1 WLR 415, CA (Eng); Matheson & Co Ltd v A Tabah & Sons [1963] 2 Lloyd’s Rep 270. 2 34. Ssanyong Engineering & Construction Co. Ltd. v National Highways Authority of India AIR 2019 SC 5041; Vijay Karia v Prysmian Cavi E Sistemi SRL (2020) SCC OnLine SC 177. 230. 231. 232. 233.

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Chapter 42—​Costs of the Arbitration

The High Court of Delhi, in Ircon International Ltd. v C.R. Sons Infra Projects Ltd.,235 noted that the arbitrator despite correctly noting the principle envisaged in Section 31A had ordered costs to be awarded in favour of a party who had not succeeded.236 The award was set aside.

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The division bench of the English Commercial Court in James Allen (Liverpool) Ltd v London Export Corporation Ltd,237 for example, held the trade arbitrators to be guilty of misconduct in ordering each party to bear their own legal costs.

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If the award of costs has been determined in advance of the resolution of the disputes between the parties, the arbitral tribunal will exceed his jurisdiction if it ignores that agreement.238 If the arbitral tribunal has taken into account irrelevant considerations, its award can be challenged.

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Examples of such irrelevant considerations include immoral conduct in the commercial sense239 or the arbitral tribunal’s disapproval of one of the parties,240 or where irrelevant information relating to matters outside the scope of the reference to arbitration was considered.241

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If the arbitral tribunal has not addressed the question of allocation of cost at all, but simply awarded costs to the claimant, the award may be set aside in so far as it relates to costs or the award may be remitted to the arbitral tribunal for proper consideration.242

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The High Court of Delhi in MMTC Ltd. v Karam Chand Thapar243 considered a factual matrix where the arbitrator had awarded full cost to a party without quantifying the same or giving reasons.244 The award was set aside by the Court.

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235. Ircon International Ltd. v C.R. Sons Infra Projects Ltd. (2018) SCC OnLine Del 13155. 236. Ircon International Ltd. v C.R. Sons Infra Projects Ltd. (2018) SCC OnLine Del 13155, at paras 10–​13. 237. [1981] 2 Lloyd’s Rep 632. See also Blue Horizon Shipping Co SA v E D & F Mann Ltd, The Aghios Nicolaos [1980] 1 Lloyd’s Rep 17, CA (Eng). 238. Messers Ltd v Heidner & Co (No 2) [1961] 1 Lloyd’s Rep 107; Smeaton, Hanscomb & Co Ltd v Sassoon I Setty, Son & Co (No 2) [1953] 2 All ER 1588, [1953] 1 WLR 1481. 239. Lloyd del Pacifico v Board of Trade 46 TLR 476. 240. Everglade Maritime Inc v Schiffahrtsgesellschaft Detlef von Appen GmbH, The Maria [1993] QB 780, [1993] 3 All ER 748, [1993] 2 Lloyd’s Rep 168, CA (Eng); Rosen & Co v Dowley & Selby [1943] 2 All ER 172; Messers Ltd v Heidner & Co (No 2) [1961] 1 Lloyd’s Rep 107. 241. Stotesbury v Turner [1943] KB 370. 242. Dineen v Walpole [1969] 1 Lloyd’s Rep 261, CA (Eng); Unimarine, SA v Canadian Transport Co Ltd, The Catherine L [1982] 1 Lloyd’s Rep 484; Leif Hoegh & Co A/​S v Maritime Mineral Carriers Ltd, The Marques de Bolarque [1982] 1 Lloyd’s Rep 68. 243. MMTC Ltd. v Karam Chand Thapar and Bros. (Coal Sales) Ltd. 2018 SCC OnLine Del 12295. 244. Ibid, at para. 79.

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Law, Practice and Procedure of Arbitration in India

[42.16] COSTS INCURRED IN ASSOCIATED LEGAL PROCEEDINGS Parties may, despite being involved in arbitration proceedings, be involved in courts proceedings either to enforce an arbitration agreement, requesting a stay and even an anti-​suit injunction. All these applications or defending against them involve costs.

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Further, the arbitral tribunal can also apply to the court for the purpose of obtaining evidence under Section 27 of the Arbitration Act, the costs of which are borne by the parties.

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The moot point is whether such costs can be recovered. It is suggested that an innocent party on being successful in its application for a stay may recover on an indemnity costs basis for the loss it had incurred as a result of agreement.245 The arbitral tribunal may award such damages as being within the scope of its power.246

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Conversely, costs incurred following the final award, such as costs for its enforcement or resisting annulment proceedings cannot be considered costs of the arbitration.

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The Arbitration Act gives power to court or arbitral tribunal (as the case may be) to determine the cost not only for the arbitration proceeding but also for any proceeding under any provision of the Arbitration Act.247

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Further, it provides that “cost” includes any other expenses incurred in connection with the arbitral or court proceedings and the arbitral award.248 Therefore, the Arbitration Act answers the above moot question in affirmative.

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[42.17] AWARD OF INTEREST ON COST ORDERS

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Where the relevant statutory provision or procedural rule provide for an arbitral tribunal the discretion to decide that interest is applicable on a cost order, it may do so249. It is suggested that the arbitral tribunal may have such power as ancillary to the power to award costs unless there is an express prohibition.250

245. A v B (No 2) [2007] EWHC 54 (Comm); United Discount Company Ltd v Robert Zoller [2001] EWCA Civ 1755. 246. Final Award in ICC case 14046, A. J. van den Berg (ed.), Yearbook of Commercial Arbitration 2010, Vol. XXXV (2010), pp. 241–​247. 247. Arbitration Act, s. 31(A)(1). 248. Arbitration Act, explanation iv, s. 31A(1). 249. UP Co-​Op. Federation Ltd v Three Circles (2009) 10 SCC 374, in the absence of an express prohibition the arbitrator has the power to award interest on costs since the successful litigant, but for the arbitral proceedings, would have invested that money and obtained interest on it. 250. C.Y.C. Ong and M.P. O’Reilly, Costs in International Arbitration (LexisNexis 2013), p. 31.

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Chapter 42—​Costs of the Arbitration

The intention behind award of interest on costs is that the litigants have actually incurred the amount which they would have legitimately invested but for the lengthy litigation proceedings. However, the court may set aside tribunal’s award on interest on the grounds of justice and equity.251

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Different approach has been taken in other jurisdictions as the Australian Supreme Court in South Australian Superannuation Fund Investment Trust v Leighton Contractors,252 held that the arbitral tribunal has no power to award interest on costs.

[42.18] AWARD OF COSTS WITHOUT SUBSTANTIVE JURISDICTION

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Generally, the arbitral tribunal has power to make an award as to costs. The question is whether an arbitral tribunal can make an award as to costs when it rules it has no jurisdiction over the underlying dispute.

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An example of such a situation when the ICSID tribunal decides it has no jurisdiction but goes on to issue an award as to costs thereafter.253

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Another example is where there is no valid agreement and the respondent had objected to the arbitral tribunal jurisdiction. The respondent cannot be liable for costs. The claimant who wrongly engaged the services of the institution and arbitral tribunal have to the pay the costs.254

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In India costs under Section 31(8) does not include any losses suffered by a party under the merits of the dispute. This is a matter for determination by the arbitrator keeping in mind the rights and liabilities of the parties, and if such determination is not within his jurisdiction, it cannot be awarded couched as an award of costs under Section 31(8).255

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In India, the challenge to an arbitrator’s jurisdiction has to be presented before filing of statement of defence.256 In addition to this, the decision of costs usually occurs at the end of the arbitration proceedings while writing the award. Thus, issue of costs would only be decided once the tribunal confers exclusive jurisdiction to adjudicate the matter.

251. Krishna Bhagya Jala Nigam v G. and Reddy (2007) 2 SCC 720; MSK Projects (I) Ltd v State of Rajasthan (2008) 2 Arb LR 340. 252. South Australian Superannuation Fund Investment Trust v Leighton Contractors (1996) 66 SASR 509. 253. Murphy Exploration and Production Company International v Republic of Ecuador ICSID Case No. ARB/​08/​ 4. 254. C.Y.C. Ong and M.P. O’Reilly, Costs in International Arbitration (LexisNexis, 2013), p. 32. 255. Indian Oil Corp Ltd v Artson Engineering Ltd, Mumbai (2007) 2 RAJ 187: (2006) 6 Bom CR 465, costs under s. 31(8) does not include the cost to keep the bank guarantee alive. 256. Arbitration Act, s. 16(2).

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Law, Practice and Procedure of Arbitration in India

In some instances, the parties may have expressly accepted the arbitral tribunal’s authority to make a jurisdictional determination (e.g. by signing ICC Terms of Reference without reservation); in these cases, there should be no dispute regarding the arbitral tribunal’s power to make an award of costs following a negative jurisdictional decision.257

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[42.19] EMERGENCY ARBITRATOR’S COSTS Emergency arbitrator provisions are now part of the nomenclature of a progressive arbitration regime. Many arbitral institutions have procedural rules relating to emergency arbitrators.258 An emergency arbitrator is appointed prior to the constitution of the arbitral tribunal to issue an urgent provisional decision to preserve the situation.

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In most jurisdictions, it cannot be enforced as an award. However, the arbitral tribunal subsequently can consider the failure to comply with an emergency arbitrator’s decision as a breach by the offending party and also, draw the necessary adverse inferences when dealing with the matter.

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The emergency arbitrator will normally decide on the costs of the emergency procedure. It is temporary and not binding on the arbitral tribunal when it is constituted who can accept, amend, or reverse the decision.259

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Despite the recommendations of the 246th Law Commission Report, the concept of Emergency Arbitrator was not adopted when the Arbitration Act was amended in 2015.

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However, the High Court of Bombay260 and the High Court of Delhi261respectively have emerged as the torch bearers wherein interim reliefs were granted by the Courts in sync with the order of the Emergency Arbitrator.

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257. See, for example, Final Award in ICC Case No. 9302, XXVIII Y.B. Comm. Arb. 54, 67 (2003) (dismissing arbitration on jurisdictional grounds, but ordering costs split: “The issue of jurisdiction was a complex one, the outcome of which was difficult to predict. [B]‌oth parties operated in good faith in the genuine belief that different rules governed their relationship (B] oth parties have fully cooperated in the arbitration, and acted, through their counsel, in a highly professional manner, which the tribunal appreciated.”); Montague v Commonwealth Dev. Corp., XXVI Y.B. Comm. Arb. 744, p. 748 (Queensland Sup. Ct. 1999) (2001) (rejecting argument that tribunal lacked power, after concluding that there was no valid arbitration agreement, to award costs against unsuccessful claimant: “there was clearly an agreement ... that the preliminary jurisdictional point ... should be determined in the arbitration and ... that the arbitrator should make a decision with respect to the cost of the arbitration on this issue”). 258. AIAC Arbitration Rules, 2018, s. 5, Sch. II and Sch. III; SIAC Arbitration Rules, 2016, Sch. 1; LCIA Arbitration Rules, 2014, art. 9B; HKIAC Administered Arbitration Rules, 2018, Sch. 4; ICC Arbitration Rules, 2017, Appendix V; DIAC Arbitration Proceedings Rules, 2018, r. 14; MCIA Arbitration Rules, 2016, r. 14. 259. ICC Arbitration Rules 2017, art. 6(6), Appendix V. 260. HSBC PI Holdings (Mauritius) Ltd. v Avitel Post Studioz Ltd & Ors., Arbitration Petition No. 1062/​2012 dated 22 January 2014. 261. Raffles Design International India Private Limited & Ors. v Educomp Professional Education Limited & Ors O.M.P (I) (Comm.) 23/​2015, CCP(O) 59/​2016 and IA Nos. 25949/​2015, 2179/​2016 dated 7 October 2016.

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Chapter 42—​Costs of the Arbitration

[42.20] CONCLUSION The cost allocation in international arbitration is an issue over which no normative source prevails or follows a developed international standard. The broad discretion that lies with the arbitral tribunal leads to uncertainty.

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Although, the way in which costs will be allocated should not be a matter which decides the conduct of the parties and the counsel. Neither do the parties or counsel are in great need of advance knowledge so as to frame their argumentation accordingly. However, a certain amount of predictability in allocation of costs at an early stage will help an arbitration proceeding succeed more efficiently.

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Accordingly, the parties should give appropriate attention to bring certainty with respect to costs. In a case where the parties cannot agree, the arbitral tribunal should make its approach in deciding the issue of cost known at an early stage.

Chapter 43 OFFERS OF SETTLEMENT AND COSTS PROTECTION [43.1] INTRODUCTION....................................................................................................................... 1226

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[43.2] WITHOUT PREJUDICE OFFER.............................................................................................. 1230 [43.3] OPEN OFFER............................................................................................................................... 1233 [43.4] SEALED OR “CALDERBANK” OFFER................................................................................... 1234 [43.5] CONSEQUENCES OF REJECTING A SEALED OR CALDERBANK OFFER.................. 1238 [43.6] REQUIREMENTS OF A SEALED OR CALDERBANK OFFER.......................................... 1240

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[43.7] FACTORS RELATING TO OFFERS OF SETTLEMENT...................................................... 1242 [43.8] TERMS OF THE OFFER............................................................................................................. 1243

[43.1] INTRODUCTION

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[43.9] CONCLUSION............................................................................................................................. 1246

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As international commercial arbitration tends to get lengthy, burdensome, and costly, parties are often interested in finding an amicable settlement after proceedings have started. The law encourages parties to compromise disputes and accept reasonable offers rather than pursue protracted legal proceedings.1

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The Indian Arbitration Act recognises this possibility, and specifically requires the arbitral tribunal to encourage parties to conduct negotiations.2 Negotiations which are reasonably directed towards settlement are privileged.3

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The English Court of Appeal in Cutts v Head4 explained the rationale:

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“The public policy justification, in truth, essentially rests on the desirability of preventing statements or offers made in the course of negotiations for settlement being brought before the court of trial as admissions on the question of liability.”

1. Code of Civil Procedure, 1908, s. 89. 2. Arbitration Act, s. 30. 3. M.Siddiq (Dead) v. Mahant Suresh Das & Others (2019) 4 SCC 659, at para. 6. 4. [1984] Ch 290, at 306, [1984] 1 All ER 597, at pp. 605–​606, per Oliver J. The same was relied upon by High Court of Delhi in Master Abhishek Mehra v. JLG Retails Ltd. 2018 and the Supreme Court of India in NTPC v. Reshmi Constructions, Builders & Contractors (2004) 2 SCC 663, at para. 34.

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Chapter 43—​Offers of Settlement and Costs Protection

It means that such negotiations are not to be revealed to the arbitral tribunal without the consent of all those who are entitled to the privilege before the substantive issues are decided.5 In other words, negotiations between the parties to reach an amicable settlement of their dispute are privileged.6 By doing so, the adjudicatory process is not clouted by the statements that were made in an attempt to reach an amicable settlement.7

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There is no difficulty for such offers to be disclosed to the arbitral tribunal on the issue of costs after that. The tribunal can consider the circumstance where any reasonable offer to settle the dispute was made by one party, in line with the objective of public policy and refused by another while determining costs.8 The Australian Court in Leichhardt Municipal Council v Green9 held:

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“… the practice of Calderbank letters is allowed because it is thought to facilitate the public policy objective of providing an incentive for the disputants to end their litigation as soon as possible. Furthermore, however, it can be seen as also influenced by the related public policy of discouraging wasteful and unreasonable behaviour by litigants.”

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The intention is to encourage settlement between the parties. A claimant or respondent who makes an offer should not have to fear that the arbitral tribunal’s view will be clouded by the disclosure of the fact of the offer during proceedings.10

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Offers to settle in arbitration are now widely accepted.11 It is included in arbitral legislations12 and rules and conventions,13 and recognised by court decisions in common law jurisdictions.14

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5. Rush & Tomkins Ltd v Greater London Council [1989] AC 1280, HL; see also Cutts v Head [1984] 1 Ch 290, [1984] 1 All ER 597, CA (Eng). 6. Govid Prasad Sharma & Others v. Doon Valley Officers Cooperative Housing Society Limited (2018) 11 SCC 501, at para. 4. 7. Perry Kansagra v. Madan Kansagra (2019) SCC OnLine SC 211, at para. 29. 8. Arbitration Act, s. 31A(3)(d). 9. Leichhardt Municipal Council v Green [2004] NSWCA 341, at para. 14. 10. Perry Kansagra v Madan Kansagra (2019) SCC OnLine SC 211, at para. 29. 11. Michael Buhler, “Awarding Costs in International Arbitration: An Overview” (2004) ASA 249; R. H. Smit and T. B. Robinson, “Costs Awards in International Commercial Arbitration: Proposed Guidelines for Promoting Time and Cost Efficiency” (2009) Am Rev of Intl Arb, p. 267; L. M. Saralegui, “The Effect of Settlement Offers on the Decision on Costs” (2010) The European & Middle Eastern Arbitration Review s 2.1: overviews. Futuristics Offshore Services and Chemicals Ltd v. Oil and Natural Gas Corporation Ltd (2012) SCC OnLine Bom 1432, at para. 9. 12. See Arbitration Act, ss. 30, 31A(3)(d); New Zealand Arbitration Act, 1996, s. 6(2)(b); Hong Kong Arbitration, s. 74(2); Part 36 of the English Civil Procedure Rules (CPR). 13. Even the Unidroit Principles of Transnational Civil Procedure 2000, r. 24: “Settlement” recognises offers to settlement; US Federal Rules of Civil Procedure, r. 68, on settlement. 14. SBS Transit Ltd (formerly known as Singapore Bus Services Limited) v Koh Swee Ann [2004] 3 SLR(R) 365; Jet Holding Ltd v Cooper Cameron (Singapore) Pte Ltd [2006] SGHC 20; Chinney Construction Co Ltd v Po Kwong Marble Factory Ltd [2005] 3 HKLRD 758; Fence Gate Ltd v NEL Construction Ltd [2001] EWHC 456 (TCC), [2001] All ER (D) 214 (Dec); Linpave v Gillingham FC [2003] 69 Arbitration 145 (unreported); Décor Ceilings Pty Ltd v Cox Constructions Pty Ltd [2006] SASC 85; Marek v Chesney 473 US 1 (1985); Rajni Sanghi v Western Indian State Motors Limited and Others (2015) 16 SCC 631.

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Law, Practice and Procedure of Arbitration in India

It is also applied in arbitration in civil law jurisdictions through soft law instruments like the IBA Rules on the Taking of Evidence in International Arbitration, 2010. The concept of privilege in common law has contributed to the success of offers to settle. It is now reinforced in arbitration through Article 9 of the IBA Rules on the Taking of Evidence in International Arbitration 2010 which deals with materials properly admissible in evidence.

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In particular, Article 9(2) provides:

“2. The Arbitral Tribunal shall, at the request of a Party or on its own motion, exclude from evidence or production any Document, statement, oral testimony or inspection for any of the following reasons:

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(a) lack of sufficient relevance to the case or materiality to its outcome;

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(b) legal impediment or privilege under the legal or ethical rules determined by the Arbitral Tribunal to be applicable; …”

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Article 9(3) explains further:

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“3. In considering issues of legal impediment or privilege under Article 9.2(b), and insofar as permitted by any mandatory legal or ethical rules that are determined by it to be applicable, the Arbitral Tribunal may take into account:

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(a) any need to protect the confidentiality of a Document created or statement or oral communication made in connection with and for the purpose of providing or obtaining legal advice;

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(b) any need to protect the confidentiality of a Document created or statement or oral communication made in connection with and for the purpose of settlement negotiations;

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(c) the expectations of the Parties and their advisors at the time the legal impediment or privilege is said to have arisen;

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(d) any possible waiver of any applicable legal impediment or privilege by virtue of consent, earlier disclosure, affirmative use of the Document, statement, oral communication or advice contained therein, or otherwise; and (e) the need to maintain fairness and equality as between the Parties, particularly if they are subject to different legal or ethical rules.” In essence, Article 9(3)(b) provides that there will be materials relevant to the dispute which were created for the purpose of settlement negotiations including offers to settle. They should not be disclosed to the arbitral tribunal and is covered by privilege.

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The privilege attached to offers is often expressly claimed, usually by a “without prejudice” formula or label heading the offer document. However, the fact that privilege is claimed does not create it if it would not otherwise exist.15

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However, the Court of Appeal16 held that there is no justification for covering all internal corporate communications with a blanket of litigation privilege. For litigation privilege to apply, the communications must always be made for the dominant purpose of obtaining information or advice in connection with the conduct of litigation (which includes avoiding or settling litigation). Drake J in Dixons Stores Group Ltd v Thames Television plc17 explained:

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“The mere fact of heading a letter ‘without prejudice’ is not decisive as to whether or not the letter is in fact privileged. The privilege exists in order to encourage bona fide attempts to negotiate a settlement of an action and if the letter is not written to initiate or continue such a bona fide attempt to effect a settlement it will not be protected by privilege. But, conversely, if it is written in the course of such bona fide attempt, it will be covered by privilege, and the absence of any heading or reference in the letter to show it is without prejudice will not be fatal.”

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Thus, “without prejudice” correspondence attracts joint privilege and can only be waived with the consent of both parties.18

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The basic principle of an offer made without prejudice save as to costs is that where the offeree rejects the offer and continues to refer to arbitration, he will prima facie be liable for the costs incurred subsequent to the offer if he fails to recover more than the value of the offer.19

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Diamond J in Everglade Maritime Inc v Schiffahrtsgesellschaft Detlef von Appen GmbH, The Maria20 explained that it was a matter of law that if the offeree achieved more, whether fractional or otherwise, than the offer of settlement, costs should follow the result. 15. Reed Executive Plc v Reed Business Information Ltd [2004] EWCA Civ 887, [2004] All ER (D) 233 (Jul), for the assessment of costs between the parties, the Court of Appeal refused to look at correspondence about a proposed mediation because it was marked only “without prejudice”. 16. WH Holding Ltd & West Ham United Football Club Ltd v E20 Stadium LLP [2018] EWCA Civ 2652. 17. [1993] 1 All ER 349, at p. 351, per Drake J; see also Bradford & Bingley Plc v Rashid [2006] UKHL 37, [2006] All ER (D) 145 (Jul), at para. 84; Avonwick Holdings Ltd v Webinvest Ltd [2014] EWHC 3322 (Ch). 18. Christopher James Briggs and Others. v Alexander Clay & Ors. [2019] EWHC 102 (Ch.). 19. Tramountana Armadora SA v Atlantic Shipping Co Ltd [1978] 2 All ER 870, at p. 878, [1978] 1 Lloyd’s Rep 391, at pp. 397–​398, per Donaldson J. See also G Hawkins & Sons Pty Ltd v Cable Belt (Aust) Pty Ltd (1986) 2 BCL 246; Huron Liberian Co v Rheinol GmbH [1985] 2 Lloyd’s Rep 58, at p. 61. 20. [1992] 2 Lloyd’s Rep 167, per Diamond J.

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Law, Practice and Procedure of Arbitration in India

The issue is whether the arbitral tribunal is entitled to take into account the making and rejection of an offer in its award of costs. This will depend upon whether the offer is made “without prejudice”, “open”, “sealed” or Calderbank.21 Under Section 31A of the Arbitration Act22 the arbitral tribunal may take the fact of the offer into account in awarding costs and expenses in respect of the period from the making of the offer to the making of the award.

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Thus, the principles on costs are applicable as the arbitral tribunal by default has the jurisdiction to apply them. It is an important consideration for parties drafting arbitration agreements or negotiating at the start of a dispute as to whether they wish for the costs consequences of offers to apply.

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In practical terms, at the preliminary meeting the parties should agree on how without prejudice offers are to be dealt with through the course of the arbitration. Such agreement will provide much greater clarity and perhaps even impetus to settle during proceedings.

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[43.2] WITHOUT PREJUDICE OFFER

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Lindley LJ in Walker v Wilsher23 provided the classic definition of the phrase “Without Prejudice”:

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“What is the meaning of the words ‘without prejudice’? I think they mean without prejudice to the position of the writer of the letter if the terms he proposes are not accepted. If the terms proposed in the letter are accepted a complete contract is established, and the letter, although written without prejudice, operates to alter the old state of things and to establish a new one.”

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The definition was also confirmed by the Court of Appeal in Tomlin v Standard Telephone and Cables Ltd.24 It was further cited with approval in Cutts v Head.25

21. Following the decision in Calderbank v Calderbank [1975] 3 All ER 333. 22. Section 31A(3)(d) provides “In determining the costs, the Court or arbitral tribunal shall have regard to all the circumstances, including –​(d) whether any reasonable offer to settle the dispute is made by a party and refused by the other party.” 23. Walker v Wilsher (1889) 23 QBD 335. The aforesaid judgment was followed by the Supreme Court of India in Chairman and MD, NTPC Ltd v. Reshmi Constructions, Builders & Contractors (2004) 2 SCC 663, at para. 34. 24. Tomlin v Standard Telephone and Cables Ltd. [1969] 3 All ER 201. The aforesaid judgment was followed by the Supreme Court of India in NTPC v. Reshmi Constructions, Builders & Contractors (2004) 2 SCC 663, at para. 34. 25. Cutts v Head [1984] 1 All ER 597. The aforesaid judgment was followed in High Court of Delhi in Master Abhishek Mehra v. JLG Retails Ltd. 2018 and the Supreme Court of India in NTPC v. Reshmi Constructions, Builders & Contractors (2004) 2 SCC 663, at para. 34.

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Chapter 43—​Offers of Settlement and Costs Protection

The Supreme Court of India, in NTPC Ltd. v. Reshmi Constructions, Builders and Contractors,26 while considering a final bill accepted by a party “without prejudice”, stated:

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“It is open to the parties to the correspondence to give the phrase a somewhat different meaning, e.g. Where they reserve the right to bring an offer made ‘without prejudice’ to the attention of the court on the question of costs if the offer be not accepted (see Cutts v Head) but subject to any such modification as may be agreed between the parties, that is the meaning of the phrase. In particulars, subject to any such modification, the parties must be taken to have intended and agreed that the privilege will cease if and when the negotiations ‘without prejudice’ come to fruition in a concluded agreement.”27

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The “without prejudice” rule governs admissibility of evidence and is founded on the public policy of encouraging litigants to settle their differences rather than litigate them towards a conclusion.28

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The proposals made by the parties during the course of negotiations are always “without prejudice”, and in case the settlement does not come about, such proposals cannot be held against, or to be binding on the party making the same.29

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Lord Hope said:30

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“Where a letter is written without prejudice during negotiations with a view to compromise, the protection that these would claim would be given to it unless the other party can show there is a good reason for not doing so.”

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The arbitral tribunal must disregard any “without prejudice” offer of settlement made in the course of negotiations between the parties before or during the course to the arbitration. If they were to bind the parties, no party would freely make a proposal on account of the risk of being bound down to the same, even though the settlement may not eventually be reached.31

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Issue cannot be held to be dead if the offer is not accepted for the simple reason that there is a “without prejudice” proposal to settle.32 The offeror, in making a wholly

26. NTPC v. Reshmi Constructions, Builders & Contractors (2004) 2 SCC 663. 27. NTPC v. Reshmi Constructions, Builders & Contractors (2004) 2 SCC 663, at para. 34. 28. Rush & Tompkins Ltd v GLC [1989] AC 1280. The aforesaid judgment was followed by the Supreme Court of India in NTPC v. Reshmi Constructions, Builders & Contractors (2004) 2 SCC 663, at para. 34. 29. Carlsberg Breweries A/​S v. Som Distilleries and Breweries Limited 2017 SCC OnLine Del 8125, at paras 48–​ 50, 136. 30. Ofulue v Bossert [2009] 2 WLR 749. 31. Carlsberg Breweries A/​S v. Som Distilleries and Breweries Limited 2017 SCC OnLine Del 8125, at paras 48–​50,136. 32. Tata Industries Ltd. v. Grasim Industries Ltd (2008) 10 SCC 187, at paras 28, 29.

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Law, Practice and Procedure of Arbitration in India

“without prejudice” offer33 to the offeree, makes it in terms which indicate that the offer is not to be revealed to the arbitral tribunal at any stage.34 Similarly, in Wharton’s Law Lexicon35 the author while interpreting the term “without prejudice” observed that:

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“The rule is that nothing written or said ‘without prejudice’ can be considered at the trial without the consent of both parties-​not even by a judge in determining whether or not there is good cause for depriving a successful litigant of costs … The word is also frequently used without the foregoing implications in statutes and inter parties to exclude or save transactions, acts and rights from the consequences of a stated proposition and so as to mean not affection’, ‘saving’ or ‘excepting’.”36

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However, in the case of OceanBulk Shipping & Trading SA v TMT Asia Ltd and others37 the Court looked at the issue regarding the admissibility of “without prejudice” negotiations in respect of the subsequent interpretation of the meaning of a settlement agreement and examined whether the question, should the interpretation of the exception be recognised as an exception to the “without prejudice” rule?

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Lord Clarke held:

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“I see no reason why the ordinary principles governing the interpretation of a settlement agreement should be any different regardless of whether the negotiations which led to it were without prejudice. The language should be construed in the same way and the question posed by Lord Hoffmann should be the same, namely what a reasonable person having all the background knowledge which would have been available to the parties would have understood them [i.e. the parties] to be using the language in the contract to mean. That background knowledge may well include objective facts communicated by one party to the other in the course of the negotiations. As I see it, the process of interpretation should in principle be the same, whether the negotiations were without prejudice or not. In both cases the evidence is admitted in order to enable the court to make an objective assessment of the parties’ intentions.”

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Therefore, it is clear that the “without prejudice” rule only covers discussions that take place with a view to settlement and that this will not, therefore, cover general case management discussions.

33. ICC Commission Report, Decisions on Costs in International Arbitration (2015), at para. 95. 34. Simaan General Contracting Co v Pilkington Glass Ltd [1987] 1 All ER 345, [1987] 1 WLR 516 for an example of such an offer. 35. Wharton’s law lexicon, available at https://​www.amazon.com/​Whartons-​Law-​Lexicon-​Containing-​ Explanation. 36. Superintendent (Tech. I) Central Excise, I.D.D. Jabalpur and Ors. v. Pratap Rai (1978) 3 SCC 113. 37. [2010] 3 WLR 1424.

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Chapter 43—​Offers of Settlement and Costs Protection

The effect of a “without prejudice” correspondence between the parties would have to be determined by the arbitrator.38

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Atkinson J. in Stotesbury v Turner39 set aside the award of the arbitral tribunal who expressly took into account the “without prejudice” offer which was made before it at a preliminary meeting. The Court noted that the discussion had taken place before the arbitral tribunal while it had not been acting in a judicial capacity. Further, where a letter offering terms, but not stated to be “without prejudice” is followed by another saying that the communications between the parties are to be “without prejudice”, the former letter is protected.40

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The Courts in India41 are conscious of the general rule that “Without Prejudice” communications exchanged in an attempt to resolve contractual disputes ought not to be relied upon unless the terms have been accepted.

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[43.3] OPEN OFFER

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An open offer is one where, by letter, the offeror invites the offeree to settle the claim for a stated sum (which includes costs). It is expressed to be open or is published in circumstances where it is clear that no privilege is claimed upon it. The open offer is made known to the arbitral tribunal by the parties.

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Redfern and Hunter state:

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“An open offer, properly so called, is one to which either party can refer at any stage of the proceedings. In an appropriate case, it may influence the arbitrator both in his decision on matters in dispute and on the order as to costs.”

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An open offer is not privileged unless both parties treat it as a secret document; thereby endowing it over time with a degree of privilege. The arbitral tribunal can legitimately take the rejection of such an offer into account when fixing costs.42

38. NTPC v. Reshmi Constructions, Builders & Contractors (2004) 2 SCC 663, at para. 39. 39. See Simaan General Contracting Co v Pilkington Glass Ltd [1987] 1 All ER 345, [1987] 1 WLR 516; see also Walker v Wilsher (1889) 23 QBD 335. The case was relied upon in NTPC v. Reshmi Constructions, Builders & Contractors (2004) 2 SCC 663; Tomlin v Standard Telephones and Cables Ltd [1969] 3 All ER 201, [1969] 1 WLR 1378. The case was relied upon in NTPC v. Reshmi Constructions, Builders & Contractors (2004) 2 SCC 663; Tramountana Armadora SA v Atlantic Shipping Co SA [1978] 2 All ER 870, [1978] 1 Lloyd’s Rep 391; Ian Keith Brown v CBS (Contractors) Ltd [1987] 1 Lloyd’s Rep 279. 40. Halsbury Law of England, Vol. 15 (3rd edn), at para. 728. 41. Oxbridge Associates limited v. Mr. Atul Kumra 2019 SCC OnLine Del 10641; Superintendent Central Excise v. Pratap Rai (1978) 3 SCC 113. 42. Tramountana Armadora SA v Atlantic Shipping Co SA [1978] 2 All ER 870, [1978] 1 Lloyd’s Rep 391.

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Law, Practice and Procedure of Arbitration in India

The arbitral tribunal may decide that the offeree is entitled to his costs if he recovered more in the award than was offered, or conversely that the offeror should recover some of his costs if the amount awarded is less than was offered. For example, in Award No. 2 in the case of Meadowsweet v Bindweed, the arbitral tribunal observed:

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“An offer by one party during the reference to compromise the dispute, which the other party has unreasonably failed to accept, will entitle the party who made the offer to its costs from the date that the offer should have been accepted in the event that the offer was for a sum equal to or greater than the amount awarded.”43

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However, there is no obligation or general rule that an open offer should have the same kinds of consequences as an offer expressly made (and rejected) in contemplation of there being costs consequences.

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[43.4] SEALED OR “CALDERBANK” OFFER

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A sealed offer has been described as the arbitration’s equivalent of making a payment into court. There are no formal requirements for such an offer but it will usually be in the form of a letter which must be expressed to be “without prejudice save as costs” and will offer terms for settlement the arbitration which are open for acceptance for a stated period.44

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Calderbank v Calderbank45 was an English Court of Appeal decision establishing the concept of a “Calderbank Offer”. The Court of Appeal46 observed discretion as to costs as follows:

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“In a commercial arbitration a sealed offer was regarded as similar in its effect to a payment into Court. The arbitrator must not be influenced by unverified and extraneous facts. The discretion is absolute and is to be exercised judicially. On the authorities a commercial arbitrator does not have any wider discretion as regards costs than the Judge. An arbitrator would make error in law if he did not exercise the discretion to award costs otherwise than in accordance with the restraints imposed by law upon a Judge.”

Therefore, a sealed offer stands midway between open and without prejudice letters. It is an offer expressed to be “without prejudice save as to costs”, or which is headed

43. Anthony Canham, “Award No. 2 In the Case of Meadowsweet V Bindweed” (2000) Arbitration: The International Journal of Arbitration, Mediation and Dispute Management (Chartered Institute of Arbitrators (CIArb); Kluwer Law International) Vol. 66 Issue 2, pp. 117–​133. 44. Sutton, Gill, and Gearing, Russell on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 6-​158. 45. [1975] 3 All ER 333 (EWCA). 46. Carey & Browne v Henderson & Liddell (1920) 2 Lloyd’s Rep 479 (CA).

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Chapter 43—​Offers of Settlement and Costs Protection

“without prejudice” but also contains a statement to the effect that the offer will be brought to the arbitral tribunal’s attention on the question of costs.47

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The High Court of England and Wales in Sternberg Reed Solicitors v Harrison,48 while deciding on a correspondence, found that the correspondence that the arbitrator took into account was impliedly “without prejudice”. That is, it was it was not marked “without prejudice”, but was created as part of an attempt at compromise. Such correspondence, the Court found, could not be taken into account on substantive issues, but could be taken into account when deciding costs. “Save as to costs” are the relevant words. Otherwise, the offer will be inadmissible as without prejudice correspondence.49

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The offeror invites the offeree to accept a sealed offer (which includes costs) in settlement on the express or implied understanding that the offer may be revealed to the arbitral tribunal at the time when the question of costs is to be decided, but not before.

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The term “sealed offer” refers to the practice of sealing a copy of the offer in an envelope or pass-​protected file which is delivered to the arbitral tribunal to be opened only after the substantive issues are decided.50

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The expression is something of a misnomer. The sealed offer is not sealed at the time when it is made. The offeree obviously sees the offer.51

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Letters headed “without prejudice save as to costs” are commonly referred to as Calderbank letters, although they may still be described as sealed offers.52 The term is named after the case of Calderbank v Calderbank53 where it dealt with costs protection over the distribution of property upon dissolution of a marriage.

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If a sealed offer is made and rejected, the arbitral tribunal, even if it knows of the existence of the offer, will not be aware of the amount. Sealed offers and Calderbank letters clearly attract privilege. They are effective in costs submissions.

47. See Oksuzoglu v Kay [1998] 2 All ER 361, CA (Eng); Cutts v Head [1984] Ch 290, [1984] 1 All ER 597. The case was relied upon in NTPC v. Reshmi Constructions, Builders & Contractors (2004) 2 SCC 663; Calderbank v Calderbank [1975] 3 All ER 333. 48. Sternberg Reed Solicitors v Harrison [2019] EWHC 2065. 49. Reed Executive plc v Reed Business Information Ltd [2004] EWCA Civ 887, [2004] All ER (D) 233 (Jul). 50. King v Thomas McKenna & Co [1991] 2 QB 480, at pp. 492–​493, [1991] 1 All ER 653, at p. 662, CA (Eng), per Lord Donaldson MR. 51. Huron Liberian Co v Rheinoel GmbH [1985] 2 Lloyd’s Rep 58, at p. 60, per Staughton J. 52. See Australian Medic-​Care Company Ltd v Hamilton Pharmaceutical Pty Limited (No 2) [2009] FCA 1494 for a detailed structured offer of settlement made without prejudice save as to costs. 53. [1975] 3 All ER 333.

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They may not be revealed to the arbitral tribunal against the privilege of any party until all issues of liability and quantum have been determined. The distinction between the two is procedural, the impact upon costs being the same. Donaldson J54 explained the effect of an offer of settlement on costs:

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“How should an arbitrator deal with costs where there has been a ‘sealed offer’? I think that he should ask himself the question: ‘Has the claimant achieved more by rejecting the offer and going on with the arbitration than he would have achieved if he had accepted the offer?’ This is a simple question to answer… If the claimant in the end has achieved no more than he would have achieved by accepting the offer, the continuance of the arbitration after that date has been a wasted of time and money. Prima facie, the claimant should recover his costs up to the date of the offer and should be ordered to pay the respondent’s costs after that date. If he has achieved more by going on, the respondent should pay the costs throughout. Let me stress, however, that while this is the general rule, there is an overriding discretion.”

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The function of a Calderbank offer is twofold. It is an attempt to amicably dispose of a dispute and it is intended to provide protection as to costs should the attempt to settle fail.

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In practice, there are three procedures in making a sealed offer or Calderbank offer:

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The first method is that the arbitral tribunal is informed of the existence of the sealed offer when it is made. The arbitral tribunal is allowed to open it only after it has finalised the substantive issues in dispute. Thereafter, the offer is used as a guide in its award of costs. Rightly or wrongly, parties fear that the knowledge of an offer might influence the decision of the arbitral tribunal in assessing strength of the case.

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The second method is that the arbitral tribunal is not informed that a sealed offer has been made but is invited to make an interim substantive award, and at a later date, a final award as to costs. The request to the arbitral tribunal to do this may alert it to the possibility that a sealed offer has been made. The need for a subsequent hearing may increase the costs of the arbitration. Lord Donaldson MR in King v Thomas McKenna & Co55 suggested the third method. He proposed that a sealed envelope which may or may not contain an offer be

54. Tramountana Armadora SA v Atlantic Shipping Co SA [1978] 2 All ER 870, at pp. 877–​878, [1978] 1 Lloyd’s Rep 391, at pp. 397–​398, per Donaldson J. 55. [1991] 2 QB 480, [1991] 1 All ER 653, CA (Eng). See also Everglade Maritime Inc v Schiffahrtsgesellschaft Detlef von Appen GmbH, The Maria [1992] 2 Lloyd’s Rep 167, affd [1993] 2 Lloyd’s Rep 168, CA (Eng); Tramountana Armadora SA v Atlantic Shipping Co SA [1978] 2 All ER 870, [1978] 1 Lloyd’s Rep 391.

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Chapter 43—​Offers of Settlement and Costs Protection

in all cases given to the arbitral tribunal. It is to be opened after the substantive award is made. If the envelope does contain a sealed offer, the award of costs will take the offer into account. This method overcomes the possibility of a procedural mishap of the arbitral tribunal not knowing of a relevant offer to settle when making its decision as to costs.56

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“BasebalI” Arbitration and “High/​Low” Arbitration

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Another kind of offer (which originated in the United States) is known as Baseball Arbitration, the same was invented in 1966 by Carl Stevens.57 This technique is much stricter and completely different from a Calderbank letter or sealed offer. Any offer made in a baseball arbitration is considered final and binding, and it’s subject to the whole claim as such.

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The principle of baseball arbitration involves an arbitral process where, at the conclusion of the parties’ submissions, each party provides the tribunal with its “best offer” in a sealed envelope.58 The tribunal is then charged with choosing one party’s “offer”, or the other party’s “offer’; rather than making an independent determination of the “correct” resolution under applicable law.

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Other forms of dispute resolution similarly limit the decision maker’s freedom to decide the parties’ dispute in a characteristically adjudicative fashion, and instead prescribe a particular issue to be “answered” by the tribunal, as with “high/​low” or “bracketed arbitration”. In high/​low arbitration, for example, the parties agree on the minimum and maximum amounts that the arbitrator can award.59

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Baseball or high/​low arbitration is designed to encourage parties to compromise and negotiate a settlement by putting forth a final or last best offer.60

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56. Harrison v Thompson [1989] 1 WLR 1325; King v Thomas McKenna Ltd [1991] 2 QB 480, [1991] 1 All ER 653, CA (Eng); Chinney Construction Co Ltd v Po Kwong Marble Factory Ltd [2005] 3 HKLRD 758. 57. See Carl Stevens, “Is Compulsory Arbitration Compatible with Bargaining?” (1966) 5 INDUS. REL. 38. 58. The name is derived from a form of dispute resolution used in fixing the salaries of professional athletes in the United States. See Borris, “Final Offer Arbitration from A Civil Law Perspective” (2007) 24 Int’!Arb. 307; Gordon, “Final Offer Arbitration in the New Era of Major League Baseball” (2007) 6 J. Am. Arb. 153; Jarrosson, “Les Frontieres de /​’Arbitrage” (2001) Rev. Arb. 5, at p. 38; Meth, “Final Offer Arbitration: A Model for Dispute Resolution in Domestic and International Disputes” (1999) 10 Am. Rev. Int’l Arb. 383; Mistelis, “ADR in England and Wales” (1997) 12 Am. Rev. Int’l Arb. 167, at p. 203 (baseball arbitration is form of alternate dispute resolution rather than arbitration because third party assists parties in reaching agreement but does not make own decisions). 59. See Bladanand and McNeill, “Alternative Dispute Resolution in Commercial Intellectual Property Disputes” (1998) 47 Am. U.L. Rev.1709, at p. 1713. 60. See Gary B. Born, International Arbitration and Forum Selection Agreements: Drafting and Enforcing (5th edn, Kluwer Law International 2016), pp. 148–​149 (“The intention behind ‘high-​low’ and ‘baseball’ arbitration clauses is to provide a financial incentive for compromise and negotiation in the event of a dispute”.).

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[43.5] CONSEQUENCES OF REJECTING A SEALED OR CALDERBANK OFFER The “idea behind” the discussed offers is that it encourages settlement between the parties as the partly that is more likely to lose the case is inclined to make a sealed offer before the arbitration ends in order to avoid a detrimental award on the merits and also lose the award with a mechanism by which it can cap its costs.

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However, if a party rejects a sealed offer, an award will then be nullified. If the award is less than the offer, the offeree will be liable for the costs incurred by the offeror after the expiry of the acceptance period to the date of the award.61

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If a respondent makes a sealed offer shortly after the reference to arbitration is made, and the claimant succeeds but recovers less than that of the offer, the claimant will be liable for most of the respondent’s costs up to the date of the award. Such costs may be substantial. On the other hand, if the offer is made shortly before or during the hearing, the costs liability will be far smaller. Whether the successful party has achieved more by rejecting the offer will depend upon the particular facts of the case.62

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The principal sum and interest will be considered in determining whether the award is more or less than the amount of the sealed offer.63 Costs are to be left out. “More advantageous” means greater in monetary terms.

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The Calderbank cost consequences can therefore follow. Naturally, it will be open for the rejecting party to argue that this is a near miss and that the offer was not so substantially better as to justify serious costs consequences for not accepting it.

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Therefore, a possibly overall successful claimant might be ordered to pay the costs of the arbitration, or at least a part of it for not accepting the sealed offer. The rationale of this rule is simple, should the successful claimant accept the offer, the arbitration proceedings could have been avoided and much time could be saved. It is designed to promote and incentivise the parties to settle.

61. Tramountana Armadora SA v Atlantic Shipping Co SA [1978] 2 All ER 870, [1978] 1 Lloyd’s Rep 391; Archital Luxfer Ltd v Henry Boot Construction Ltd [1981] 1 Lloyd’s Rep 642; Cheeseman v Bowaters United Kingdom Paper Mills Ltd [1971] 3 All ER 513, [1971] 1 WLR 1773, CA (Eng). 62. Centreland Management Ltd v HSBC Pension Trust (UK) Ltd [2013] EWHC 3238 (Ch). 63. Everglade Maritime Inc v Schiffahrtsgesellschaft Detlef von Appen GmbH, The Maria [1992] 2 Lloyd’s Rep 167, affd [1993] 2 Lloyd’s Rep 168, CA (Eng).

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Chapter 43—​Offers of Settlement and Costs Protection

A significant consequence of making a sealed offer is that the arbitral tribunal may also make an award of costs on the indemnity basis.64 It can award costs which are reasonably incurred (as is the normal way) but also not proportionate.65 There is no requirement that the arbitral tribunal awards on the indemnity basis. This can significantly increase the legal bill a party faces if the arbitral tribunal chooses to award on an indemnity basis.

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For instance, the New Zealand Court in General Distributors Ltd v Casata Ltd66 held that in appropriate cases, a tribunal may award indemnity costs, where there had been a settlement offer at an earlier stage of the proceedings which had not been bettered than then final award.

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However, the indemnity costs will be limited to the winning party’s actual and reasonable costs. A sealed or Calderbank offer is intended to be analogous to a payment into court.

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It reproduces, so far as it can be done, the litigation procedure of a payment into court. Where if the ultimate decision in favour of the claimant is for less than the payment into court, the claimant will prima facie be liable for the costs of the action incurred after the date of payment.67

Reverse or Claimant’s Offer

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Both the Claimant and the Respondent can make a Calderbank offer. The Claimant’s benefit in making such an offer is that if it beats it, it has a strong argument for being awarded its costs on the indemnity basis.

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The Court in Linpave Building Ltd v Gillingham FC68 held that arbitral tribunals may “wish to recognise the existence of a successful reverse offer by way of an enhancement of the awards they would otherwise make of interest and costs”. It was said that a successful reverse offer reinforces and enhances the event.

64. There is no conceptual objection to an arbitrator awarding costs on the indemnity basis; see Robfert Merkin, Louise Flannery, Arbitration Act 1996 (5th edn, Informa Law from Routledge 2014), p. 250. 65. Jones v Bradley (No 2) [2003] NSWCA 258, at para. 8. 66. [2006] NZSC 8, [2006] 2 NZLR 721. 67. The English Court of Appeal in Stokes Pension Fund v Western Power Distribution (South West) Plc [2005] EWCA Civ 854 explained the requirements for an offer to be equivalent to a payment into court, including the requirement that the offeror is “good for the money”. 68. [2003] 69 Arbitration 145, per J Tackaberry QC (unreported).

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Whilst there is no provision within the Rules of Court 2012 for a Claimant to make a “without prejudice save as to costs” offer, there is no reason why an arbitral tribunal cannot make such an award. Claimants have a right under the English Civil Procedure Rules to make such offers.69 It serves a logical purpose in incentivising claimants to make offers during the course of a dispute.

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[43.6] REQUIREMENTS OF A SEALED OR CALDERBANK OFFER

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A sealed offer needs to be made in writing and must be clearly marked with the words “[C]‌onfidential and without prejudice save as to costs”. As already mentioned, the settlement is usually deposited with the chairman of the arbitral tribunal, but it must not be disclosed to the arbitral tribunal before it has taken its decision on the merits of the case.

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On the other hand, one should not wait too long before handing over the sealed offer to the arbitral tribunal, as otherwise it is very likely that the arbitral tribunal will make its substantive decision at the same time as the cost decision

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An arbitral tribunal is entitled to award costs to the offeror if it publishes an arbitral award for less than the amount in the sealed offer. The level of offer represents a precise benchmark against which the ultimate sum recovered by the offeree is to be measured.

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The offer itself must be framed in terms where it is possible for the recipient and the arbitral tribunal readily to ascertain just what is being offered and compare it like for like with the amount awarded.

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The need to compare “like for like” is important. The arbitral tribunal may need to recalculate any pre-​award interest as if the award had been made at the time of the offer.70

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Making a sealed offer is a tactical decision. It requires careful consideration. A low-​ ball offer that the claimant will never accept is not worth the paper that it is written on. It is bound not to beat the costs awarded by the arbitral tribunal. A respondent making an offer in order to protect its costs position needs to consider what the arbitral tribunal might realistically award, then pitch his offer slightly above that. Only then does it create a real costs risk for the other party in not accepting the offer.71

69. See the English Civil Procedure Rules, Pt 36. 70. J. Bailey, Construction Law (2014), p. 1707. 71. Evmar Shipping Corpn v Japan Line Ltd, The Evmar [1984] 2 Lloyd’s Rep 581.

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Chapter 43—​Offers of Settlement and Costs Protection

Arbitral Tribunal’s Discretion The arbitral tribunal retains its discretion in awarding costs.72 It may disregard a Calderbank offer and apply the rule that costs are to follow the event if the sealed offer is for a sum greater than the award.73

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However, the arbitral tribunal is required to justify its decision judicially by way of reasons for departing from the general Calderbank principles.74 It may not be sufficient for the arbitral tribunal to state merely that it had exercised it discretion to save itself from having committed an error in law.75

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The party may try to appeal such a decision but Section 31A of the Arbitration Act makes it clear that costs are in the arbitral tribunal’s discretion. The courts are likely to deny such applications.

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The arbitral tribunal may also depart from the Calderbank principles if the parties have acted unreasonably. Donaldson J in Tramountana Armadora SA v Atlantic Shipping Co SA (The Vorros)76 explained:

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If, for example, the way in which the claimant conducted the arbitration in the period before the sealed offer was made is open to criticism, this may be a ground for depriving him of all or part of his costs or even, in a very extreme case, of requiring him to pay all or part of the costs of the respondent.

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Conversely, if after the sealed offer has been made and rejected, the conduct of the respondent is open to criticism, this may be a ground for depriving the respondent of all or part of the costs incurred by him in this period and might even, in a very extreme case, justify an order that he pay all or part of the claimant’s costs.

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In essence, the offeror in making a Calderbank offer is not given a licence to adopt a belligerent attitude, refuse to negotiate further, and deliberately increase its legal costs.

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72. Centreland Management Ltd v HSBC Pension Trust (UK) Ltd [2013] EWHC 3238; arbitral tribunal’s discretion is elaborately discussed in Chapter 42. 73. Perry v Stopher [1959] 1 All ER 713, [1959] 1 WLR 415, CA (Eng); Harris v Petherick (1879) 4 QBD 611, CA (Eng); Anglo-​Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873; Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 All ER 685, [1984] 1 WLR 394, CA (Eng); Lipkin Gorman v Karpnale Ltd [1992] 4 All ER 409, [1989] 1 WLR 1340, CA (Eng); Beoco Ltd v Alfa Laval Co Ltd [1994] 3 WLR 1179. 74. Argolis Shipping Co SA v Midwest Steel and Alloy Corpn, The Angeliki [1982] 2 Lloyd’s Rep 594; Cadmus Investment Ltd v Amec Building Ltd [1998] ADRLJ 72, per Tuckey J; where the arbitrator failed to consider a Calderbank offer, the Court held that the decision on costs should reflect the views of the tribunal, therefore the offer should be considered and reasons for ignoring it should be given; see [2003] 69 Arbitration 145, per J Tackaberry QC (unreported). 75. Blexen Ltd v G Percy Trentham [1990] 42 EG 133, CA (Eng); Ramachandra Reddy & Co v. State of A.P. and Others (2001) 4 SCC 241, at para. 5. 76. [1978] 2 All ER 870, at p. 878, [1978] 1 Lloyd’s Rep 391, at p. 398, per Donaldson J.

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[43.7] FACTORS RELATING TO OFFERS OF SETTLEMENT An arbitral tribunal may properly take into account an offer made prior to the arbitration notice. Costs may run from a period in advance of the arbitration notice.77 An offer not expressed to be open for any specified period of time is implied to remain open until the date of the hearing.

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The Court in Argolis Shipping Co SA v Midwest Steel and Alloy Corpn, The Angeliki78 considered the situation where the offer was made four days before the commencement of the hearing and was accepted one day into the hearing. The arbitral tribunal awarded the offeree its costs until the date of acceptance. Lloyd J held that the arbitral tribunal might legitimately have taken the view that the offeree had insufficient time to consider the offer.

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The arbitral tribunal should consider an offer made during the hearing in the same way as a late payment into court. Costs do not automatically follow the acceptance of such payment. The arbitral tribunal retains its discretion on the award of costs.79

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An offer of settlement made during the hearing should contain an offer in respect of costs and any acceptance will create a binding agreement. The arbitral tribunal retains the discretion to consider as to whether or not the offer should be reasonably accepted at that stage.

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An offer in arbitration is contractual in nature. It may be expressed to be open for a limited time. It may be appropriate when considering such a matter to allow a brief period of time which would be adequate for any reasonable offeree in the circumstances to consider the offer and accept or reject it.

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Staughton J in Huron Liberian Co v Rheinoel GmbH80 said:

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“One has an initial reaction of surprise, and even disapproval, at the suggestion that a sealed offer may not still be open for acceptance until the hearing of the arbitration.”

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As a matter of practice, where an offeree accepts the offer, it is entitled to its costs until the date of acceptance in addition to the amount paid in. On the other hand, the arbitral tribunal may disregard an offer that has been withdrawn when considering costs.

77. 78. 79. 80.

Re Gibson’s Settlement Trust, Mellors v Gibson [1981] 1 All ER 233. [1982] 2 Lloyd’s Rep 594. Arbitration Act, s. 31A(3)(d); Griggs v Petts [1939] 4 All ER 39. [1985] 2 Lloyd’s Rep 58, at p. 61, per Staughton J.

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Chapter 43—​Offers of Settlement and Costs Protection

Some sealed offers are of course expressed to be open until the date of the hearing, on terms of costs, for example the sealed offer in Archital Luxfer Ltd v Henry Boot Construction Ltd.81 An offer which is not expressed to lapse at any specified time will remain open for a reasonable time, that is, until the commencement of the hearing. By notice, the time for acceptance may be restricted by the offeree.

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If it is not accepted within that time, it lapses and may not be accepted thereafter without the consent of the offeror.82 The arbitral tribunal may still, of course, consider it when coming to its decision on costs. The offer may also be withdrawn by the offeror at any time.

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An offer to settle is a procedural device to which contractual principles do not necessarily apply.83 Accordingly, a party can withdraw the offer of compromise without the necessity of establishing a good reason as required in withdrawing the payment into court.

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It will cease to be available for acceptance if the offeree expressly rejects it.84 The arbitral tribunal may still consider an offer which lapses or ceases to be available for acceptance because it is withdrawn or rejected when making his decision on costs.

[43.8] TERMS OF THE OFFER

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An offer should state the causes of action it covers. It should have separate provisions relating to the scope of the offer (i.e. all claims and counterclaims or some subset of them only), the principal sum (or other remedy) offered together with interest until the date of acceptance, the offeree’s costs and the arbitral tribunal’s fees and expenses and if applicable, institutional fees and expenses until the date of acceptance to avoid subsequent disputes.85

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The offer may include a provision that if once accepted, a consent award be recorded by the arbitral tribunal so as to take the benefit under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 for enforcement purposes.

81. 82. 83. 84. 85.

[1981] 1 Lloyd’s Rep 642. Huron Liberian Co v Rheinoel GmbH [1985] 2 Lloyd’s Rep 58. Cumper v Pothecary [1941] 2 KB 58, at p. 67, CA (Eng). Huron Liberian Co v Rheinoel GmbH [1985] 2 Lloyd’s Rep 58. See Tramountana Armadora SA v Atlantic Shipping Co Ltd [1978] 2 All ER 870, at p. 878, [1978] 1 Lloyd’s Rep 391, at p. 398, per Donaldson J.

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Law, Practice and Procedure of Arbitration in India

An offer to settle for a lump sum will normally be construed to include both the principal sum and interest. An offer may be uncertain if it offers a principal sum with interest to be assessed. In such a situation, the offeree may either seek clarification or otherwise rely on the ambiguity.

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For example, the arbitral tribunal in Kin Shing (Leung’s) General Contractors Ltd v Chinese University of Hong Kong86 had to deal with such a situation where there were various unclear offers “without prejudice save as to costs”. One of it read like this:

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“Our client is prepared to bear a reasonable sum in respect of your client’s costs incurred in the proceedings inclusive of the Arbitrator’s costs but excluding any costs which the Arbitrators has order your client to bear. Our client’s strong preference is to resolve both matters of principle and costs at the same time however, and therefore this part of the offer is subject to your provision of a reasonable estimate thereof (with breakdown).”

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The claimant rejected the offers saying that they were not valid Calderbank offers. The claimant did not clarify why it considered the offers to be invalid. However, the arbitral tribunal took the offers into account in its costs award.

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The claimant appealed to the Court. The Court while admitting that the respondent’s offers were not classic Calderbank offers upheld the arbitral tribunal’s ruling on costs. In such a situation, the Court suggested that the offeree should clarify with the offeror if it did not think they were valid offers.87

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The offeree may find it difficult to assess the interest without knowing the breakdown of the offer. This may prejudice the offeree who may reasonably reject the offer notwithstanding that the principal sum offered exceeded the sum awarded eventually.

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If the principal and interest are offered as separate named sums, the offeree may later claim that it was reasonable for it to reject the offer if either the principal sum or the interest recovered exceeded that in the offer. Since arbitrations are frequently held many years after the dispute arises, the interest may form a significant element of the final recovery. Any offer of settlement by a net payer should include an offer to pay reasonable costs to the date when the offer is accepted in addition to the sum offered by way of

86. Kin Shing (Leung’s) General Contractors Ltd v Chinese University of Hong Kong [2011] HKEC 284, [2011] HKCFI 138. 87. Codent Ltd v Lyson Ltd [2005] EWCA Civ 1835.

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Chapter 43—​Offers of Settlement and Costs Protection

settlement. Donaldson J in Tramountana Armadora SA v Atlantic Shipping Co Ltd88 has suggested that: “If a party wishes to make a ‘sealed offer’ and to have it considered in the context of an order for costs, he must offer to settle the action for £X plus costs.” Gibson J in Archital Luxfer Ltd v Henry Boot Construction Ltd89 explained that:

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“It will always be prudent to offer to pay taxed costs, because the risk of error (ie in determining the value of the costs to the date of the offer), but the sufficiency of an offer is concerned with its demonstrable substance and not with its form.”

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When considering a lump sum which includes costs the arbitral tribunal must determine, after removing the costs element, whether the remainder is greater than the sum awarded. If it is not, the offer has no effect on costs.

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The offeror has the burden of showing that the offer is effective. An offer would be uncertain if it indicates that both sides should pay their own costs. However, if the offer was clearly in excess of the awarded sum after having accounted for the costs, it will provide costs protection.

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It is highly important for parties to consider what they are actually settling and draft their offer in terms which reflects that. An offer which includes the term “full and final settlement of all claims between the parties” may create some ambiguity. The other party may seek to assert that this also extinguishes any future disputes, such as liability for latent defects.

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The court will be slow to infer such a term.90 If parties wish for their agreement to assure that they need never fear a claim from the other side, clear language such as “whether past, present or future and whether or not known or contemplated” ought to be used.91

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The Supreme Court of India92 has held that on some occasions that a compromise decree does not stand on a higher footing than any agreement between the parties. Thus, it may be set aside on any of the grounds which invalidate an agreement.

88. [1978] 2 All ER 870, at p. 878, [1978] 1 Lloyd’s Rep 391, at p. 398. 89. [1981] 1 Lloyd’s Rep 642, at p. 654. 90. Point West London Ltd v Mivan Ltd [2012] EWHC 1223 (TCC), at para. 32; Bank of Credit and Commerce International SA v Ali [2001] UKHL 8, [2001] All ER (D) 06 (Mar). 91. Kazeminy v Siddiqi [2012] EWCA Civ 416. 92. Ruby Sales and Services Pvt. Ltd. v State of Maharashtra (1994) 1 SCC 681; Union Carbide Corpn. v Union of India (1991) 4 SCC 584, per contra Sailendra Narayan Bhanja Deo v State of Orissa AIR 1956 SC 346; Shankar Sitaram Sontakke v Balkrishna Sitaram Sontakke (1955) 1 SCR 99.

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Law, Practice and Procedure of Arbitration in India

[43.9] CONCLUSION This chapter explored different possibilities to make cost arrangements which not only protect the cost but also promote parties to consider and reach a reasonable settlement. The cost protection measures are in the interests of arbitration, generally, and of the parties as it enhances the efficiency of the arbitration process.

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However, parties should not use the option of settlement merely to evade costs and should make a genuine and reasonable offer to avail themselves the benefit of the exercise.

Chapter 44 DETERMINATION OF COSTS [44.1]

INTRODUCTION..................................................................................................................... 1247

[44.2] POWER OF THE ARBITRAL TRIBUNAL TO ALLOCATE COSTS............................... 1248

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[44.3] MEANING OF ALLOCATION OF COSTS.......................................................................... 1250 [44.4] THE ARBITRAL TRIBUNAL MUST EXERCISE PROPER JUDGMENT WHEN ALLOCATING COSTS............................................................................................................. 1250 [44.5] ALLOCATION OF COSTS BY COURT................................................................................ 1251 [44.6] DETERMINATION OF COSTS IN AWARD........................................................................ 1252 [44.7] PROCEDURAL COURT RULES ON COSTS NOT BINDING......................................... 1252 RECOVERABLE COSTS.......................................................................................................... 1253

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[44.8]

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[44.9] CONTINGENCY FEE ARRANGEMENT............................................................................ 1254 [44.10] THIRD PARTY FUNDING..................................................................................................... 1255

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[44.11] THE LEVEL OF COSTS AWARDED..................................................................................... 1258 [44.12] SETTING DOWN..................................................................................................................... 1259

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[44.13] STRUCTURE OF THE COSTS AWARD............................................................................... 1260

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[44.14] CONCLUSION.......................................................................................................................... 1261

[44.1] INTRODUCTION

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The arbitral tribunal or, in certain instances, the court determines the costs that will be payable by the parties to arbitration as part of its award leading to the conclusion of the arbitration.

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“Taxation” or “settling” was the term earlier used to describe costs in courts.1 The Arbitration Act does not contain these terms, and, instead, uses the words “fix”2 and “determine”3 to refer to costs. While “determination” of costs expresses the process of division of costs,4 in international arbitrations, the term “fix” is used to describe the process of identifying and setting out with certainty the sum of costs.5

1. See generally the Rules of the Court, 2012 and Halsbury’s Laws of Malaysia, Civil Procedure (2014 Reissue); Singapore International Arbitration Act (Cap 143A), s. 21(1) provides: “Any costs directed by an award to be paid shall, unless the award otherwise directs, be taxable by the Registrar of the Singapore International Arbitration Centre”. 2. Arbitration Act, s. 31(8). 3. Arbitration Act, s. 31A. 4. See English Arbitration Act, 1996, s. 63. 5. SIAC Arbitration Rules, 2016, r. 36.1 provides: “36.1 The fees of the tribunal shall be fixed by the Registrar …”; ICC Rules of Arbitration, 2012, art. 37(4) provides: “The final award shall fix the costs of the arbitration and decide which of the parties shall bear them or in what proportion they shall be borne by the parties.”

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Law, Practice and Procedure of Arbitration in India

Section 31A(3) of the Arbitration Act lists the following parameters to be considered by the tribunal while fixing costs: “(a) The conduct of all the parties;6 (b) whether a party has succeeded partly in the case;

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(c) whether the party had made a frivolous counterclaim leading to delay in the disposal of the arbitral proceedings; and (d) whether any reasonable offer to settle the dispute is made by a party and refused by the other party.” An award as to costs involves two stages:7

(1) Apportioning or allocating liability for costs (including cost shifting)8 as between the parties; and



(2) quantifying the amount of costs payable by a party.

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Normally all costs will be allowed, except insofar as they are of an unreasonable nature or have been unreasonably incurred in circumstances when costs are awarded on an indemnity basis.

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[44.2] POWER OF THE ARBITRAL TRIBUNAL TO ALLOCATE COSTS

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Arbitration, much like traditional dispute resolution, can be an expensive proposition. The savings of a party in avoiding payment of court fee is usually offset by other costs of arbitration such as arbitrators’ fees, institutional fees, and expenses incurred in relation to the venue.9

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The Supreme Court of India in Union of India v Singh Builders Syndicate,10 observed that the high costs of arbitration were “seriously hampering the growth of arbitration” in the country and self-​regulation by arbitrators was essential to combat this issue.11

6. Emaar MGF Land Ltd. v Sunita OMP (Comm) No. 250/​2018 decided by the Delhi High Court on 31 May 2018. 7. Colin Y.C. Ong and M.P. O’Reilly, Costs in International Arbitration (LexisNexis 2013), p. 11. 8. Costs shifting is requiring a party to pay some or all the costs incurred by the other party. Lord Justice Jackson, Review of Civil Litigation Costs: Final Report, (2009) at p. viii defined costs shifting as: “The ordering that one person is to pay another’s costs. Cost shifting usually operates on a ‘loser pays’ basis, so that the unsuccessful party is required to pay the successful party’s recoverable costs.” 9. 246th Law Commission Report, at para. 70. 10. Union of India v Singh Builders Syndicate (2009) 4 SCC 523. 11. Ibid, at para. 24.

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Chapter 44—​Determination of Costs

In India, the 1899 Act12 and the 1940 Act13 enabled the arbitral tribunal to award costs for arbitration proceedings and also gave powers to the court to review such costs, if unreasonable.14 Later, in the 246th Law Commission Report it was noted that it would be just for the arbitral tribunal to allocate costs in a manner which reflects the parties’ relative success and failure in the arbitration, unless special circumstances warrant an exception.15

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Hence, the loser pays rule was recommended to curb frivolous suits and further compliance to contractual obligations.16

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The rationale of this rule was that had the loser not caused the dispute, the winner would not have had to initiate arbitration and so the loser is to blame for all the costs that have been incurred during arbitration proceedings and must be obligated to reimburse these costs and restore the winner to the position it would have been in, had there been no dispute.

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Pursuant to the Law Commission Report, the 2015 Amendment inserted Sections 31(8) and 31A into the Arbitration Act. These Sections now empower the tribunal to allocate costs, at their discretion, but parties cannot claim the same as a matter of right.17

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The arbitrators have discretion to award reasonable costs including relating to their own fees and expenses, fees and expenses of courts and witnesses, legal fees, administration fees of the institution supervising the arbitration, and any other expenses incurred in connection with the arbitral or court proceedings or the arbitral award. It also incorporates the loser pays rule.18

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Hence, the 2015 Amendment discourages delay tactics and frivolous applications made by parties during the arbitral proceedings. It also carves out a limited role for party autonomy.

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Although in the past arbitral tribunal did not embrace the task of allocation of costs with enthusiasm,19 now arbitral tribunals are increasingly doing so since being familiar with the proceedings they are best placed to judge the reasonableness of costs.20

12. 13. 14. 15. 16. 17. 18. 19. 20.

1899 Act, art. IX, Sch. I. 1940 Act, art. VIII, Sch. II. 1940 Act, s. 38(3). 246th Law Commission Report, at para. 70. Ibid, at para. 71. ONGC v Dolphin Offshore Enterprises (2011) (2) Arb LR 273 (Bom). Arbitration Act, s. 31A(3). Robert Merkin and L. Flannery, Arbitration Act 1996 (5th edn, Informa Law from Routledge 2014), p. 254. The arbitral tribunal in Rotary Watches Ltd v Rotary Watches (USA) Inc [2004] EWHC 90038 (Costs) ordered that costs be assessed by the High Court under the s. 63(4) of the English Arbitration Act, 1996.

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Law, Practice and Procedure of Arbitration in India

[44.3] MEANING OF ALLOCATION OF COSTS Costs are assessed either on a summary or detailed basis. In practice, summary costs assessments are done using a “broad brush” approach and a global figure comprising of arbitral tribunal’s fees and expenses, legal fees, and incidental expenses.

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Detailed assessment involves an examination of the breakdown of a party’s costs. The goal is to assess whether the costs are reasonable and proportionate.

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The courts are unlikely to interfere with the arbitral tribunal’s discretion once it has fixed the amount of costs,21 even if the court would have exercised the discretion in a different way.22

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Whether or not it is appropriate to assess costs on a summary or on a detailed basis will depend upon the circumstances of the case. Summary determination may well be appropriate in a relatively small domestic arbitration where the parties’ costs are comparable, while a detailed examination may be more appropriate in a larger dispute.

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Generally, the arbitral tribunal’s award of costs is more efficacious if there is a need for foreign enforcement under the New York Convention.

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[44.4] THE ARBITRAL TRIBUNAL MUST EXERCISE PROPER JUDGMENT WHEN ALLOCATING COSTS

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The arbitral tribunal must exercise proper judgment and discretion when it is assessing its own fees,23 taking into account the interests of the party who is obliged to pay the costs as well as the party entitled to be paid.24

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Allocation of costs must be determined post consideration of all claims and the success of the claims. 25 Costs should not be exorbitant and have to be

21. VV v VW [2008] 2 SLR(R) 929; Chapter 43. 22. Sutton, Gill, and Gearing, Russell on Arbitration (23rd edn, Thomson Sweet & Maxwell 2007), pp. 325–​326, at para. 6-​140. 23. Appleton v Norwich Union Fire Insurance Society Ltd [1922] 13 Ll L Rep 345; and those of his legal advisor: SN Kurkjian (Commodity Brokers) Ltd v Marketing Exchange for Africa Ltd (formerly T M Motiram (UK) Ltd) (No 1) [1986] 2 Lloyd’s Rep 614. 24. Government of Ceylon v Chandris [1963] 2 QB 327, at p. 338, [1963] 2 All ER 1, at p. 6, [1963] 1 Lloyd’s Rep 214, at p. 229, per Megaw J. The aforementioned case was followed in Jeevan Industries (P) Ltd. v Haji Bashiruddin Madhusudan AIR 1975 Del 215. See Appleton v Norwich Union Fire Insurance Society Ltd. [1922] 13 Ll L Rep 345, at p. 347, cited in Government of Ceylon v Chandris [1963] 2 All ER 1, at p. 3. 25. Ircon International Ltd. v C.R. Sons Infra Projects Ltd. 2018 SCC OnLine Del 13155, at paras 10–​13.

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Chapter 44—​Determination of Costs

realistic.26 The arbitral tribunal when determining cost allocation must take into account the multitudinous factors of the case. Such consideration may include the complexity or difficulty of issues; the level of skill and responsibility required; the number and importance of documents involved; the circumstances of meetings and hearings; the seniority of the fee earners involved, the importance of the matter to the client; and the value of the claims.

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What is reasonable is to be judged at the time when the decision to incur the costs was made, and not in hindsight. The Court in Barlett v Higgins27 allowed the costs of an examination of evidence, although it turned out to be unnecessary as the case unfolded.

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Section 31A(3) of the Arbitration Act provides that the following parameters must be considered by the tribunal while deciding costs:

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“(a) The conduct of all the parties;28

(b) whether a party has succeeded partly in the case;

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(c) whether the party had made a frivolous counterclaim leading to delay in the disposal of the arbitral proceedings; and

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(d) whether any reasonable offer to settle the dispute is made by a party and refused by the other party.”

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[44.5] ALLOCATION OF COSTS BY COURT

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Though ordinarily the arbitral tribunal is obligated to determine the costs of the arbitration29 under the Arbitration Act, courts also have the discretion to determine costs.30 Costs awarded by the arbitral tribunal can be challenged by a party under Section 34 of the Arbitration Act, and set aside by a court.31

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For example, if it is found by the court that the arbitral tribunal has awarded costs despite claims being frivolous, the award on costs can be set aside.32 Additionally, if the

26. Sanjeev Kumar Jain v Raghubir Saran Charitable Trust (2012) 1 SCC 455, at paras 23.25. The decision was rendered by the Supreme Court of India in context of ss. 35, 35A, and 35B of the Civil Procedure Code before the s. 31A was brought in by the 2015 Amendment. 27. [1901] 2 KB 230. 28. Emaar MGF Land Ltd. v Sunita OMP (Comm) No. 250/​2018 decided by the Delhi High Court on 31 May 2018. 29. See Arbitration Act, s. 31(8). 30. Arbitration Act, s. 31A. 31. See MMTC Ltd. v Karam Chand Thapar and Bros. (Coal Sales) Ltd. (2018) SCC OnLine Del 12295, at para. 79. 32. Ircon International Ltd. v C.R. Sons Infra Projects Ltd. (2018) SCC OnLine Del 13155, at paras 10, 11.

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Law, Practice and Procedure of Arbitration in India

arbitral tribunal makes a decision on costs without hearing both parties, the court can remit the matter to the tribunal on grounds of procedural mishap.33 Importantly, it is highly unlikely for a court to determine costs if a reasoned award has been passed by the arbitrator after considering all factors.34

[44.6] DETERMINATION OF COSTS IN AWARD

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Determination of costs by the arbitral tribunal forms part of the award.35 However, the arbitral tribunal when making the final award can reserve the right to tax or settle costs.

The arbitral tribunal will not be functus officio36 on doing so. It may make a subsequent award dealing with costs.

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If the award is silent on costs, parties can request the tribunal to determine costs37 or request the court to remit the matter to the tribunal.38

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[44.7] PROCEDURAL COURT RULES ON COSTS NOT BINDING

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Lord Diplock in Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corpn Ltd39 explained that in the absence of specifically agreed rules of procedure an arbitral tribunal has the complete discretion to determine how the arbitration is to be conducted from the time of its appointment to the time of its award, so long as the procedure it adopts does not offend the rules of natural justice.

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In India, Section 19(3) of the Arbitration Act gives the arbitral tribunal the discretion to conduct arbitral proceedings “in the manner it considers appropriate”, which implies that the tribunal also has the discretion to determine the procedure for allocation of costs.

33. Arbitration and Conciliation Act, 1996, s. 34(2). 34. Ministry of Youth Affairs and Sports v Swiss Timing Ltd. (2019) SCC OnLine Del 9390, at para. 26; Earnest Business Services Private Limited v The Government of the State of Israel (2019) SCC OnLine Bom 1793, at para. 89; Dans Energy Pvt. Ltd. v GE Power India Ltd. (2018) SCC OnLine Del 10617, at para. 25; Delhi Metro Rail Corporation Ltd. v Voestalpine Schine Gmbh MANU/​DE/​1121/​2018, at para. 13, 15. 35. See Re Prebble and Robinson [1892] 2 QB 602, at 605 where Cave J held that the power to settle costs, unless exercised in the award cannot be exercised at all. 36. Gary B. Born, International Commercial Arbitration, Vol. 1 (2nd edn, Wolters Kluwer Law & Business 2015), p. 45. 37. See Arbitration and Conciliation Act, 1996, s. 33. 38. Arbitration and Conciliation Act, 1996, s. 34(3). 39. [1981] AC 909 at p. 985, [1981] 1 All ER 289, at p. 301, HL, per Lord Diplock.

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Any allocation of costs must be done judicially and impartially.40 The party who is entitled to costs cannot recover more than the cost of the proceedings. This is known as the indemnity principle.41

[44.8] RECOVERABLE COSTS

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Recoverable costs are those that are reasonably incurred in or incidental to the reference.42 They are of two types:

(1) Parties’ own costs, witness costs, and other ancillary costs; and



(2) the fees and expenses of the arbitral tribunal/​institution.

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“(a) The arbitrator’s fees and expenses,

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Section 59(1) of the English Arbitration Act, 1996 defines costs of arbitration as including:

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(b) The fees and expenses of any arbitral institution concerned, and (c) The legal or other costs of the parties.”

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Similarly, Section 31A(1) of the Arbitration Act states “costs” means reasonable costs relating to: (1) the fees and expenses of the arbitrators, courts, and witnesses;



(2) legal fees and expenses;



(3) any administration fees of the institution supervising the arbitration; and



(4) any other expenses incurred in connection with the arbitral or court proceedings and the arbitral award.

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It follows that costs of arbitration includes costs of or incidental to arbitral proceedings and would presumably also include the costs of negotiation and settling the terms of any submissions to arbitration.43

40. Appleton v Norwich Union Fire Insurance Society Ltd [1922] 13 Ll L Rep 345; Government of Ceylon v Chandris [1963] 2 QB 327, [1963] 2 All ER 1, [1963] 1 Lloyd’s Rep 214. The aforementioned case was followed in Jeevan Industries (P) Ltd. v Haji Bashiruddin Madhusudan AIR 1975 Del 215. 41. Re Eastwood (decd), Lloyds Bank Ltd v Eastwood [1975] Ch 112, at p. 131, [1974] 3 All ER 603, at p. 608, CA (Eng). 42. Johnson v Reed Corrugated Cases Ltd [1992] 1 All ER 169. 43. Sutton, Gill, and Gearing, Russell on Arbitration (23rd edn, Thomson Sweet & Maxwell 2007), p. 321, at para. 6.130.

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Law, Practice and Procedure of Arbitration in India

Even if a party is represented by a person who is not legally qualified, he can recover the costs of such representation.44 However, the costs of applications to the court do not form a part of the recoverable costs.45 Recoverable costs (other than the fees and expenses of the arbitral tribunal itself) can be determined by agreement of the parties,46 in the arbitral tribunal’s award.

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If the arbitration clause makes a provision for cost, then it prevails, unless parties have altered the same by further agreement.47 However, agreement of parties can only be given effect to of the same is entered into after the dispute arises pursuant to the 2015 amendment.48

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It is open to the arbitral tribunal to refuse to determine recoverable costs. For instance, the arbitral tribunal or court may decline to award a party the costs of a procedural hearing on the ground that the party’s conduct was unreasonable, even though he may ultimately succeed in the arbitration.

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[44.9] CONTINGENCY FEE ARRANGEMENT

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A contingency fee arrangement between the party and its lawyers or representatives is where the latter would be paid, on a no win no fee basis, the fee for winning based on an agreed percentage of the sum recovered.

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The Bar Council of India, established under the Advocates Act, 1961, regulates the conduct of advocates practising in India and bars an advocate from stipulating a fee that will be contingent upon the results of litigation, or from agreeing to share the proceeds of litigation.49

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However, a law firm is not a person for the purposes of the Advocates Act and neither can the arbitral tribunal be viewed as a “court” for the purposes of that Act. Hence, if a law firm enters into a contingency fee arrangement in respect of arbitration proceedings, the same may not be void in India.50

44. Piper Double Glazing Ltd v DC Contracts (1992) Ltd [1994] 1 All ER 177, at p. 182, [1994] 1 WLR 777, at p. 782, per Potter J. 45. Higham v Havant and Waterloo UDC [1951] 2 TLR 87, at p. 90 (“I should have doubted very much whether it was competent for the arbitrator to deal with costs which might be incurred before the Divisional Court. I think that those costs were necessary in the discretion of the Divisional Court.”). 46. Mansfield v Robinson [1928] 2 KB 353. 47. National Fire and General Insurance Co v UOI AIR 1956 Cal 11. 48. Arbitration Act, s. 31A(5). 49. Standards of Professional Conduct and Etiquette, Chapter II, Part VI, Bar Council of India Rules, 1975, r. 20 [read with s. 49(1)(c) of the Advocates Act]. 50. Jayaswal Ashoka Infrastructures Pvt. Ltd. v Pansare Lawad Sallagar (2019) SCC OnLine Bom 578.

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Chapter 44—​Determination of Costs

The High Court of Bombay in Jayaswal Ashoka Infrastructures Pvt. Ltd. v Pansare Lawad Sallagar51 held that if a person, despite being a law graduate, did not appear before the arbitrators as an advocate and only appears as a counsel, then the contingency fee arrangement will not be void.

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A conflict may arise where the law of the contract is one that permits contingency fees, but the law of the seat does not. In such a situation, the arbitral tribunal should make an order in line with the parties’ agreement.

Unlike many other issues of professional conduct, the IBA Guidelines on Party Representation do not address the subject of contingency fees. Instead, the subject is almost entirely a question of national law as discussed above.

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[44.10] THIRD PARTY FUNDING

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Third party funding refers to a method of funding where a third party, with no connection to the proceedings, pays some or all of the costs of the case and gets a share of the sum awarded in damages, if the case is won by the party for which the funding had been provided.

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Third party funders normally finance all or a portion of a party’s legal costs and typically earn an agreed percentage of the award or a success fee, or a combination of the two, in the event of a successful arbitration.

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Third party funding fees are not involved in awards as to costs as they may offend the rule relating to champerty and/​or maintenance.

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For example, the arbitral tribunal in an investment arbitration case of Kardassopoulos and Fuch v Republic of Georgia52 stated that it knew “of no principle why any such third-​ party financing arrangement should be taken into consideration in determining the amount recovery of the Claimants of their costs”.

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The funding fees may be recoverable in some jurisdictions which allow third party funding. External or Third-​Party Funding has become an important feature in the world’s most popular seats of arbitration including London, Singapore, and Hong Kong. The High Court of England and Wales, while deciding an appeal against an ICC Arbitration, in Essar Oilfields Services Limited v Norscott Rig Management Pvt. Ltd.,53

51. (2019) SCC OnLine Bom 578. 52. ICSID case no. ARB/​05/​18 and ARB/​07/​15 at para. 691, 3 March 2010; see also RSM Production Corporation v Grenada ICSID Case No. ARB/​05/​14 which applied the same approach. 53. Essar Oilfields Services Limited v Norscott Rig Management Pvt. Ltd. [2016] EWHC 2361 (Comm).

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dealt with a case where 300 per cent of the sums lent or 35 per cent of the damages was to be given to the Third-​Party Funder (the greater of the two). It was held that third party funding can be classified into “Other Costs” and was assigned to the losing party.54

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Singapore introduced the Civil Law (Amendment) Act, 201755 which abolished civil liability in tort for maintenance and champerty paving the way for third party funding agreements.56 Further, a specific provision allowing third party funding agreements as not being against public policy was included with certain qualifications.57

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Solicitors were allowed to introduce, refer, advise, draft in relation to the third-​ party funding arrangement. However, they have been barred from receiving a direct financial benefit from the introduction or referral of a funder.58

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Similarly, Hong Kong also relaxed the maintenance and champerty considerations and introduced the “Code of Practice for Third Party Funding in Arbitration”. The Code prescribes capital adequacy requirements, procedure required for identifying and disclosing conflicts of interest, and term that must be included in the funding agreement regarding termination, control, and liability for costs.

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Third party funding is not a new concept in India, either. The concept of third-​ party litigation funding is recognised in the Civil Procedure Code, 1908 in the states of Maharashtra, Gujarat, Madhya Pradesh, and Uttar Pradesh.59

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Further, the Supreme Court of India in Bar Council of India v A.K. Balaji60 observed that:

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“There appears to be no restriction on third parties (non-​lawyers) funding the litigation and getting repaid after the outcome of the litigation.”61

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54. The legislation provides for power to the Arbitrator for allocation of the costs of Arbitration to either or both of the parties depending on the conduct of the parties during the arbitration proceedings. It covers legal and other costs under s. 59(1)(c). 55. Civil Law (Amendment) Act, 2017, s. 2. 56. Civil Law (Amendment) Act, 2017, s. 2 inserted s. 5A into the Singapore International Arbitration Act. 57. Civil Law (Amendment) Act, 2017, s. 2 inserted s. 5B into the Singapore International Arbitration Act. 58. Civil Law (Amendment) Act, 2017, s. 3 amended s. 107 of the Legal Profession Act (Cap. 161) to include s. 107(3B) into the Act. 59. State amendments have been carried out into the Civil Procedure Code by way of Order XXV r. 2 to give the court power to join third party funders as a party. 60. Bar Council of India v A.K. Balaji (2018) 5 SCC 379. 61. Ibid, at para. 38.

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Chapter 44—​Determination of Costs

While the Arbitration Act does not explicitly mention third party funding, there does not appear to be any bar on the same. The Supreme Court of India in In Re Mr. G62 on the validity of third party funding arrangements held that:

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“The rigid English rules of champerty and maintenance do not apply in India, so if this agreement had been between what we might term third parties, it would have been legally enforceable and good. It may even be that it is good in law and enforceable as it stands though we do not so decide because the question does not arise; but that was argued and for the sake of argument even that can be conceded. It follows that there is nothing morally wrong, nothing to shock the conscience, nothing against public policy and public morals in such a transaction per se, that is to say, when a legal practitioner is not concerned.”63

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More recently, the Supreme Court of India in Bar Council of India v AK Balaji64acknowledged that there is no bar to obtaining third party funding from non advocates.

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Separately, concerns as to third party funding may arise under the Foreign Exchange Management Act (FEMA),65 if the funder is located outside India. The FEMA classifies transactions involving foreign exchange and/​or non-​residents into two primary categories: current66 and capital account transactions.67

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Since the Act does not explicitly classify third party funding as either a current or capital account transaction, it is uncertain as to how such funds would be regulated.

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The ICC adopted, on 12 February 2016, a “Guidance Note for the disclosure of conflicts by arbitrators”,68 containing a reference to third party funding. It advises arbitrators to consider, when evaluating whether to make a disclosure, “relationships with any

Mr “G”a Senior Advocate of the Supreme Court (1955) 1 SCR 490. Ibid, at para. 11. (2018) 5 SCC 379. Foreign Exchange Management Act (Act No. 42 of 1999). Section 2(j) of the Act specifies: “current account transaction” means a transaction other than a capital account transaction and without prejudice to the generality of the foregoing such transaction includes,—​(i) payments due in connection with foreign trade, other current business, services, and short-​term banking and credit facilities in the ordinary course of business, (ii) payments due as interest on loans and as net income from investments, (iii) remittances for living expenses of parents, spouse and children residing abroad, and (iv) expenses in connection with foreign travel, education and medical care of parents, spouse and children.” 67. Section 2(e) of the Act specifies: “capital account transaction” means a transaction which alters the assets or liabilities, including contingent liabilities, outside India of persons resident in India or assets or liabilities in India of persons resident outside India. 68. International Chamber of Commerce, Guidance Note for the disclosure of conflicts by arbitrators (ICC, 2012).

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62. 63. 64. 65. 66.

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Law, Practice and Procedure of Arbitration in India

entity having a direct economic interest in the dispute or an obligation to indemnify a party for the award.”69

[44.11] THE LEVEL OF COSTS AWARDED

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Further, under revised general standard 7(a) IBA’s 2014 Guidelines on Conflicts of Interest,70 it is a party’s duty to disclose any relationship with persons having a direct economic interest in the award, such as an entity providing funding for the arbitration, or having a duty to indemnify a party for the award.71

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Costs may be awarded on a standard basis or an indemnity basis. In case of the former, a reasonable amount is awarded in respect of all costs reasonably incurred. The latter are awarded in exceptional circumstances where the conduct of the party paying the costs is oppressive or unreasonable.72

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The Court in Burgess v Stafford Hotel Ltd73 did not allow costs on an indemnity basis against a tenant who had taken advantage of a statutory right of appeal to extend his tenancy as long as he could.

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However, if the arbitration agreement provides that costs are to be awarded on an indemnity basis, the arbitral tribunal’s discretion should be exercised to correspond with the contractual entitlement.

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The Court in Gomba Holdings (UK) Ltd v Minories Finance Ltd (No 2)74 allowed costs on an indemnity basis where a mortgage deed provided for this. After considering relevant factors, an arbitral tribunal can award a party a proportion of his costs.75 However, the arbitral tribunal cannot simply award as such because one or the other party was proportionately right as the general rule is costs to follow the event.

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All costs will be allowed except insofar as they are of an unreasonable amount or have been unreasonably incurred when costs are awarded on an indemnity basis.

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69. International Chamber of Commerce, Guidance Note for the disclosure of conflicts by arbitrators (ICC, 2012). 70. International Bar Association, IBA Guidelines on Conflicts of Interest in International Arbitration (IBA, 2014). 71. Gary B. Born, International Commercial Arbitration, Vol. 2 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 1978. 72. Johnson Matthey plc v Eros Casting Ltd (1993) The Times, 7 December. 73. [1990] 3 All ER 222, [1990] 1 WLR 1215, CA (Eng). 74. [1993] Ch 171, [1992] 4 All ER 588, [1992] 3 WLR 723. 75. Cinema Press Ltd v Picture and Pleasures Ltd [1945] KB 356; Archital Luxfer Ltd v Henry Boot Construction Ltd [1981] 1 Lloyd’s Rep 642; Blue Horizon Shipping Co SA v E D & F Mann Ltd, The Aghios Nicolaos [1980] 1 Lloyd’s Rep 17, CA (Eng).

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Chapter 44—​Determination of Costs

Atkin J in Societe Anonyme Pecheries Ostendaises v Merchants’ Marine Insurance Co Ltd76 in referring to the equivalent English rule, said:

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“That rule is the guiding rule in the taxation of costs. It is intended to sum up generally the principles upon which costs are awarded; and I cannot help thinking that if that rule was really rigorously applied by everybody –​and by ‘rigorously applied’ I mean applied in all cases and giving full effect to the width of its language –​there would be many fewer complaints by successful litigants than there are at the present moment. It is a rule which is intended to give the successful litigant a full indemnity for all costs reasonably incurred by him in relation to the action. It says in terms that the taxing master is to allow ‘all such costs, charges and expenses, as shall appear to him to be necessary or proper for the attainment of justice’. That is the whole principle that the taxing master has got to apply.”

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Atkin J further said that the costs are not limited to costs incurred after the writ has been issued and that costs incurred before the action was brought are allowed.

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[44.12] SETTING DOWN

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Although the Code of Civil Procedure, 1908 does not govern arbitrations, the principle of costs which it embodies is trite law and a sensible basis upon which the arbitral tribunals may rely while taxing costs.

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If the arbitral tribunal wishes to award costs, this must be clearly indicated in the award. The arbitral tribunal’s determination regarding costs commonly follows the determination of the substantive issues in the award. For example, the award can be worded as follows:

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“I award and direct that the Respondent (or Claimant) shall pay the Claimant’s (or Respondents) costs of the reference to be taxed if not agreed (or to be taxed by me if not agreed).”

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Where the successful party for some reason is not entitled to part of its costs, the award may be worded as follows: “The Respondent (or Claimant) shall pay the Claimant’s (or Respondent’s) costs of the reference except those costs thrown away by the adjournment on (ie the date) caused by the Claimant’s (or Respondent’s) default in attendance. Further, that in respect of

76. [1928] 1 KB 750, at p. 762.

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Law, Practice and Procedure of Arbitration in India

the said adjournment the Claimant (or Respondent) shall pay the Respondent’s (or Claimant’s) costs.” Where it is preferable to award cost by proportion the award may be worded as follows: “The Claimant shall pay three-​quarters (or a percentage) of the Respondent’s costs.”

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Where both the claim and the counterclaim are successful, the award may be worded as follows:

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“The Respondent shall pay the Claimant’s costs of the claim and the Claimant shall pay the Respondent’s costs of the counterclaim. In relation to costs of the award, the arbitrator may state in the award as follows: ‘The Respondent (or Claimant) shall pay and bear the costs of this my award which I tax and settle at Rs. Xxxxx’.”

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While there is no specific terminology mandated while dealing with costs, it helps for the arbitral tribunal to take into consideration all relevant circumstances and legislations, before wording the costs award.

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[44.13] STRUCTURE OF THE COSTS AWARD

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Colin Y. C. Ong and Michael Patrick O’Reilly77 have suggested the following structure for a costs award which can either be part of the final award or be contained in a separate costs award:

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“(1) Introduction.

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The tribunal should set out to what extent its authority to make an award as to cost is supplemented by provisions in the procedural law of the seat and any agreed or adopted procedural rules; and if so to set out the basic terms applicable so that the parties can see that the tribunal has had regard to the relevant provisions. Where any relevant provisions require the tribunal to have specific regard to particular factors the tribunal should indicate that it has had regard to these. (2) Recital of submissions. The tribunal should set out briefly the submissions advanced by each party. This will enable the parties to see that the tribunal has apprised itself of the

77. C.Y.C. Ong and M.P. O’Reilly, Costs in International Arbitration (LexisNexis 2013), pp. 62–​63.

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position adopted by each and had them fully in mind when deciding the question of costs, hence enabling any reviewing court to satisfy itself that there has been due process. (3) Apportionment/​allocation.

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The tribunal should set out the factors to which it has had regard, any guidance followed and circumstances which it considered relevant in coming to its award on apportionment of central costs and allocation of party costs. In particular, the tribunal should indicate its view on the relative degrees of success of each party (and how, all things being equal) this translates into an award, together with any adjustments eg because of offers of settlement etc. The tribunal should indicate any adjustment made to reflect conduct or other related factors.

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(4) Fixing costs.

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(5) Conclusion.

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The tribunal should identify the costs submitted by the receiving party and indicate broadly which elements of those costs it has disallowed and the reasons for those disallowances (eg they were unreasonable, disproportionate, etc).

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The tribunal should always summarise its award, stating clearly the sum to be paid, by which date, and the consequences in interest (if applicable) of late payment. It may be sensible also to indicate, where the award as to costs is published as a separate document, that this is the final award and that the tribunal is functus office (that is its jurisdiction is exhausted because it has fulfilled its mission) subject to the need to correct accidental slips and clerical errors.”

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[44.14] CONCLUSION

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Determination of costs is a complex process which may require special expertise, more so, in cases of complex disputes. The arbitral tribunal or the court must act judicially in allocating costs. Further, parties should be informed of how the costs are being allocated so they are left in no doubt as to the procedure being adopted. The award as to costs must be reasoned especially in an event when the arbitral tribunal is digressing from the general principal of “cost follows the event”.

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Law, Practice and Procedure of Arbitration in India

Normally, all reasonable costs, reasonably incurred, are reimbursed. Although in the past the arbitral tribunal did not embrace the task of allocation of costs with enthusiasm,78 it is now increasingly doing so. A new regime for costs in India was introduced by way of insertion of Section 31A into the Arbitration Act by the 2015 Amendment on the recommendations79 of the Law Commission of India.

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The arbitral tribunals and courts now have the discretion to ascertain costs with respect to arbitral proceedings and court proceedings under any provision of the Arbitration Act.80

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Lastly, whether or not it is appropriate to assess costs of a summary or on a detailed basis will depend upon the circumstances of the case.

78. Robert Merkin, L. Flannery, Arbitration Act 1996 (5th edn, Informa Law from Routledge 2014), p. 254. 79. 246th Report of the Law Commission of India. 80. Ethos limited v Geofin Investment Pvt. Ltd. [OMP (Comm) No. 249/​2018 decided by the Delhi High Court on 13 November 2018; Delhi Metro Rail Corporation Ltd. v Voestalpine Schine GMBH (2018) 250 DLT 239; Indu Malhotra, Commentary on the Law of Arbitration, Vol. 2 (4th edn, Wolters Kluwer), p. 844.

DIVISION 10

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CHALLENGE TO ARBITRAL AWARDS

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Chapter 45 CHALLENGE TO THE ARBITRAL AWARD [45.1] INTRODUCTION....................................................................................................................... 1265 [45.2] THE PURPOSE OF CHALLENGING THE ARBITRAL AWARD....................................... 1267

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[45.3] CHALLENGE PROCEDURE OTHER THAN BY THE COURT......................................... 1267 [45.4] CORRECTION/​INTERPRETATION OF THE AWARD AND MAKING OF AN ADDITIONAL AWARD.............................................................................................................. 1270 [45.5] RECOURSE TO COURTS.......................................................................................................... 1272 [45.6] APPLICATION TO REMIT THE AWARD.............................................................................. 1275 [45.7] STAY ON OPERATION OF THE ARBITRAL AWARD........................................................ 1276

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[45.8] CONCLUSION............................................................................................................................. 1277

[45.1] INTRODUCTION

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Arbitration finally determines the dispute between the parties. At the conclusion of arbitration there is generally a winner and a loser. Further, once made, the arbitral award is final and binding1 on the parties to arbitration.2

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The final award may lead to the unsuccessful party feeling aggrieved. Even the successful party may not be wholly content with the award, perhaps because it considers it to be at variance with its expectations. However, parties are expected to abide by the decision of the arbitral tribunal.

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In line with the pro-​enforcement bias under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (“New York Convention”) and the UNCITRAL Model Law on International Commercial arbitration, 1985 (“UNCITRAL Model Law”) and the principle of limited judicial intervention,3 arbitration statutes do not permit a review of the merits of the award.

1. The words “final and binding” do not amount to exclusion of the right to appeal against the award. See Shell Egypt v Dana Gas [2009] EWHC 2097 (Comm). 2. See Arbitration and Conciliation Act, 1996, ss. 35, 46; English Arbitration Act, 1996, s. 58(1); UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 35(1); ICC Rules of Arbitration, 2021, art. 35(6); LCIA Arbitration Rules, 2020, art. 26.8; SIAC Rules, 2016, r. 32.11; UNCITRAL Arbitration Rules, 2013, art. 34(2). For a detailed discussion on the effect of the award on the parties to arbitration, see Section [39.4] in Chapter 39. 3. See UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 5.

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Law, Practice and Procedure of Arbitration in India

It only permits a limited challenge to ensure that “the arbitration has been conducted in accordance with basic rules of due process, respecting the parties’ equal right to be heard before an independent and impartial tribunal within the boundaries of the arbitration agreement.”4 This is because:

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“There are serious disadvantages in having a system of arbitration that gives an unrestricted right of appeal from arbitral awards. First, the decisions of national judges may be substituted for the decisions of the arbitral tribunal specifically selected by or on behalf of the parties. Secondly, a party that agreed to arbitration as a private method of resolving disputes may find itself brought unwillingly before national courts that hold their hearings in public. Thirdly, the appeal process may be used simply to postpone the day on which payment is due, so that one of the main purposes of international commercial arbitration –​the speedy resolution of disputes –​is defeated.”5

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Hence, though finality is the norm (since the scope to challenge the award is limited),6 most jurisdictions give parties the right to take recourse against the award.7

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A party, if dissatisfied with the award, can prevent it from being given effect to by adopting one of two methods, namely:8 (1) It can challenge the validity of the award in the courts of the seat, on the statutory grounds available under the law of the seat;9 or



(2) oppose enforcement of the award in the country where the winning party seeks to enforce the award.10

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This chapter deals with challenges to the award, that is, the process by which the same or a different arbitral tribunal, or a court of law is invited to vary, remit, set aside, or vacate11 the award, in whole or in part.

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4. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 10.04. 5. Ibid, at para. 10.67. 6. See PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2006] SGCA 41; Ssanyong Engg. & Construction Co. Ltd. v NHAI (2019) 15 SCC 131. 7. Gary B. Born, International Commercial Arbitration, Vol. 3 (3rd edn, Kluwer Law International, Wolters Kluwer 2021), p. 3447. See UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 34; Arbitration and Conciliation Act, 1996, s. 34; English Arbitration Act, 1996, ss. 67–​69. 8. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 10.05. 9. In view of art. V(1)(e) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958, courts in other jurisdictions that are party to the convention, may refuse to recognise and enforce an award that has been set aside by a court of the seat of arbitration. For a detailed discussion on whether the court will enforce an award that has been set aside in the seat, see Section [48.5] in Chapter 48. 10. For a detailed discussion on the grounds that can be taken to oppose recognition and enforcement of New York Convention and Geneva Convention awards, see Chapters 48 and 49. 11. In the USA, the term “vacate” is used in place of “setting aside”. See Federal Arbitration Act, ss. 9–​10.

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Chapter 45—​Challenge to the Arbitral Award

A challenge to the award is distinct from an appeal against a judgment. An appeal suggests a review of the merits of the decision.12 A challenge to the award is much narrower in scope.13 In proceedings to challenge an award, issues such as evaluation of evidence14 and findings of fact15 cannot be re-​examined.

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[45.2] THE PURPOSE OF CHALLENGING THE ARBITRAL AWARD The purpose of challenging the award is to have the court “declare all, or part, of the award null and void.”16 In case of complete annulment of the arbitral award, the claimant can then recommence proceedings because the award does not exist, that is, status quo ante is restored.17

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A party may seek to challenge the award to try to stop it from being recognised/​ enforced by courts in other jurisdictions.18 Alternately, a party, including the winner of the arbitration, may be unhappy with some element of the award.

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[45.3] CHALLENGE PROCEDURE OTHER THAN BY THE COURT

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Prior to challenging the award before the court, it is necessary to exhaust all other remedies, that is:19 (1) any available process of appeal/​review of the award under the applicable rules of law;



(2) any provision for the correction of the award;

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12. Nigel Blackaby, Constantine Partasides, Alan Redfern, and Martin Hunter, Redfern and Hunter on International Arbitration (6th edn, Oxford University Press 2015), at para. 10.04. 13. See Dyna Technologies Pvt. Ltd. v Crompton Greaves Ltd. (2019) 20 SCC 1, at para. 24 (“… arbitral awards should not be interfered with in a casual and cavalier manner … Section 34 is different in its approach and cannot be equated with a normal appellate jurisdiction. The mandate under Section 34 is to respect the finality of the arbitral award and the party autonomy to get their dispute adjudicated by an alternative forum as provided under the law.”). 14. Sutton, Gill, and Gearing, Russel on Arbitration (24th edn, Sweet & Maxwell 2015), at para. 8-​094; P.R. Shah, Shares and Stock Brokers Pvt. Ltd. v B.H.H. Securities Pvt. Ltd. (2012) 1 SCC 594, at para. 21 (“A court does not sit in appeal over the awa