Arbitration Law

[By Anchit Jain and Lovish Jain] Anchit is a student at ICFAI University, Dehradun and Lovish is a CS (Executive) Candidate. Prelude In the present era of increasing disputes mainly in the corporate sector and inextricable compliance requirements, alternate dispute resolution through arbitration is the new preference of the parties to settle the same, but on the contrary various judgments and rulings in past on the matter of corporate disputes and their resolution through arbitration didn’t prove to be of much utility as the very significant topic of ‘Appointment of Arbitrator in a Company’ and the procedure for the same is more into chaos these days. In the very article, authors powered their views on the unaddressed topic of ‘Appointment of Arbitrator in a Company’ and what are the implications of recent rulings of the court i.e. “how the board of directors specifically ‘managing director’, is not eligible to appoint an arbitrator in the company.” Authors endeavour to guide the issue and also provide a possible solution which encompasses the delegation of authority of arbitrator’s appointment and procedure to be followed for the same on the shoulders of ‘Appointing Authority’ or the other possible way is a route through ‘Institutional Arbitration’. Asymmetrical Arbitration Clause An Asymmetrical Arbitration Clause allows a party to single-handedly choose an arbitrator(s) for the resolution of a dispute.[i] This clause is aggressively disputed as the other party has no say in the abovementioned decision making. On the question of a party’s autonomy over the asymmetrical arbitration clause, the Delhi High Court in the case of Proddatur Cable TV Digi Services v. Citi Cable Network Limited[ii] held that a company is run by the ‘collective’ efforts of directors i.e. ‘Board of Directors’ (Board) and Board performs in the good faith of the company. Section 166[iii] prohibits a director’s involvement from a situation where he has a direct or an indirect interest that conflicts or possibly may conflict with the interest of the company. The Court said that it was natural that the Board will have an interest in the outcome of Arbitration, and thus, based on the Supreme Court’s ruling in the Perkins Eastman Architects DPC & Anr. v. HSCC (India) Ltd.[iv], Court restricted a person who has an interest in the outcome of a dispute and consequently held that the Managing Director must not have the power to appoint a sole arbitrator. If consideration is given to only one party on the matter of the appointment of an arbitrator, it may violate the soul of arbitration i.e. an arbitrator must be impartial and independent and both the parties should equally contribute in the appointment of an arbitrator. Impartiality and Independence The Supreme Court, in the case of Voestalpine Schienen GMBH v. Delhi Metro Rail Corporation Limited[v], ruled that impartiality and independence are the hallmarks of any arbitration proceedings. The judgment cites the 246th Law Commission’s Report[vi] in which the 57th paragraph states that party autonomy cannot be stretched to a point where it negates the very basic impartiality and independence of the adjudicators. In Voestalpine[vii], Supreme Court relied on the ‘Cour de Cassation, France’s judgment of 1972 in Consorts Ury’ which also reiterated that “An independent mind is indispensable in the exercise of judicial power, whatever that source of power may be, and it is one of the essential qualities of an arbitrator”. The current position draws a debate between two basic features of Arbitration- ‘Independence & Impartiality’ and ‘Party Autonomy’. This debate needs to end for the settlement of this conflict as it is a barrier in the Indian practice of Arbitration. What will be the procedure of appointing an arbitrator and who will effectuate it: An Inadequate Precedent The article now needs to enlighten the view on the act of appointment of the arbitrator, to which Perkins[viii] held that both parties nominating their respective arbitrator would balance the situation. This does not bring the concept of sole arbitrator to an end as the cases of Perkins[ix] and Proddatur[x] also ended with the Court appointing Judges as the replacement for the sole arbitrators. Balancing the power between both parties is the answer to ‘How’, and involvement of both the parties answers ‘Who’. In the Institutional arbitration method, arbitrators are provided by the institution. The situation is conciliated when both the parties opted for Institution and the arbitrators provided are impartial and independent. But when ad-hoc is the pattern, then the arbitrators have to be chosen by the parties. This is a stage where Proddatur’s[xi] judgment fails to provide an answer and instead creates a barrier, especially for a company that is a party in a dispute. Ineligible Board of Directors and Inapplicable Article of Association Proddatur[xii] held that a company is run by none other than the directors collectively. This excluded the collective decision of the Board from nominating an arbitrator because Section 166(4)[xiii] restricts a director’s participation in a situation that attracts his direct or indirect interest. Moreover, Perkins[xiv] relies on the principle of “Qui facit per alium facit per se” (what one does through another is done by oneself). Both these factors bar a company from nominating and appointing authority for nominating an arbitrator. Proddatur[xv] explicitly excludes the Board, the governing authority of the company, and forgets to clarify ‘who’ from a company can nominate an arbitrator. If a company’s Articles of Association (AOA) provides that a Board is allowed to appoint a sole arbitrator, then that specific clause of the AOA cannot be given effect because u/s 6[xvi] it overrides the provision of The Act.[xvii] One Possible Solution: Appointment of Appointing Authority The Act[xviii] provides that the parties can choose their procedure[xix] and if the parties fail to agree on the appointment of the: (i) Umpire,[xx] (ii) Sole arbitrator[xxi] or, (iii) Arbitrator as per the procedure,[xxii] then the Supreme Court or the High Court, as the case may be, can make the appointment. The Act also provides that the Court, on its behalf, can ask a graded institution to appoint the

[By Apoorv Jaiswal and Gokul Holani] The authors are students at National University of Juridical Sciences, Kolkata and National Law Institute University, Bhopal respectively. Background The relevancy of arbitration as a method of dispute resolution has grown manifold to resolve disputes of varied subject matters. The relationship between a client and a lawyer is purely contractual, thus, the remedy of the lawyer for recovering the fee, etc., can be arbitration proceedings since it is a defined legal relationship and subject matter is arbitrable. However, in cases of foreign seated arbitrations, existence of a commercial relationship is necessary.[i] Recently, this issue came before the Delhi High Court (HC) in Spentex Industries Ltd. v. Quinn Emanuel Urquhart & Sullivan LLP where a dispute arose as to enforcement of award under Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 relating to payment of outstanding fee to the law firm by the client. The facts of the case were that the Plaintiff approached the Respondent for its legal services and an engagement letter was issued by the Respondents containing a clause to arbitrate in cases of possible future disputes. Later, the Respondents raised invoices for the dispute and an award was passed in the arbitration proceedings. Proceedings before Delhi HC arose when an application was filed by Respondents for rejection of the Plaintiff’s suit challenging the arbitration agreement. The Plaintiff’s two fold arguments in the suit were that (a) the relationship between the Plaintiff and the Respondent cannot be considered as ‘commercial’ under the law in force in India and, (b) the agreement also involved an element of contingent fee, thus violative of public policy in India. Lawyer-Client Relationship vis-a-vis Commercial Relationship Section 44 of the Arbitration and Conciliation Act, 1996 (ACA) warrants that a foreign award should arise out of a legal relationship that is commercial in nature under the Indian laws. However, the term ‘commercial’ has not been defined in ACA and courts have previously relied on the ‘common parlance’ meaning of the term.[ii] The term ‘commercial’ has been broadly interpreted to “embrace every phase of commercial business activity and intercourse.”[iii] In the present case, the Plaintiff argued that the lawyer-client relationship is not commercial in nature as per the laws in India and thus, the arbitration agreement is null and void. Rationale being that the primary duty of a lawyer is to administer justice, which cannot be classified as commercial.[iv] However, HC distinguished the judgments cited by the Plaintiff in the present case, stating that the rulings were with respect to advocates practising in India, whereas, here the Respondent was a foreign law firm. Therefore, the rules for code of conduct for advocates in India could not be made applicable to them. Further, the Court reasoned that as the arbitration was merely carried out by the Respondent for recovering their outstanding fees and not relating to professional issues, it was indeed commercial in nature. Although the judgment seems to follow the pro-arbitration stance taken by the judiciary lately, there are certain problems with the analysis given by the HC relating to the commercial nature of foreign lawyer-client relationship. The two rationales employed while reaching this conclusion were (i) Respondent, being a foreign law firm, was not obliged by the non-commercial character of lawyer-client relationship in India and (ii) That the arbitration was solely for the outstanding fee. First rationale seems problematic considering the express terms ‘commercial under the law in force in India’ used in Section 44.On a plain reading, it is clear that the legal relationships ought to be commercial in nature as per the laws in India. However, HC in the present case has artificially ignored the phrase ‘commercial under the law in force in India’. Though, an interpretation that even foreign lawyers and law firms must adhere to the commercial relationship requirement as per laws in India seems to be regressive, but the same is warranted by the provision. A better approach can be deleting the phrase “under the law in force in India” from Section 44 by means of an amendment, to maintain the progressive, pro-arbitration approach. The reasoning of the second rationale follows from the first, i.e. as the Indian law of non-commercial relationship between lawyer-client is not applicable on the Respondent being a foreign law firm, the terms of the arbitration agreement have to be interpreted to determine the commercial or professional nature of relationship. As the arbitration was for outstanding fee and not relating to professional issues, the Court upheld the commercial nature of the relationship. However, as the second rationale is based on the erroneous first rationale, rendering the judgment devoid of merits and liable to be overruled on appeal. Validity of agreement in lieu of contingency fee Enforcement of an award could have been challenged on a few grounds under the ACA, that are as follows:  (i) Section 45 where the said arbitration agreement must be null and void, inoperative or incapable of being performed; or  (ii) under Section 48(1)(a) where the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or (iii) under Section 48(2)(b) where the enforcement of the award would be contrary to the public policy of India. Plaintiff further argued the existence of elements of contingency fee in the agreement would thus, render agreement null and void, inoperative and incapable of being performed and against the public policy of India. Lawyers in India are not allowed to charge contingency fee in India.[v] In Re: ‘G’, A Senior Advocate of The Supreme Court, where a senior advocate was suspended by the Bar Council for misconduct under Section 11(1) of Bar Councils Act, 1926 for entering into an agreement of contingent fee with the client, his suspension was upheld by the Supreme Court and the agreement was held to be illegal and void. The Hon’ble Supreme Court in Sasan Power Ltd. v. North American

[By Arjun Sahni and Moksh Roy] The authors are third year students of Symbiosis Law School, Noida. Introduction The regime and system of international arbitration, including the procedure, applicable laws, inter alia, are ever changing. One such issue pertains to the element of arbitrability, that is, whether a particular subject matter is capable of being referred to arbitration or not. This problem arises even when there is an arbitration clause/agreement that specifically governs the dispute or the subject matter in question. Historically, disputes involving the elements and claims of bribery/corruption, antitrust/competition, intellectual property rights, employment and labour disputes et al. were considered to be non-arbitrable.[i] The idea behind this has been that such claims run contrary to the aspects of international as well as national public policy, and party-appointed private individuals do not have the power, competence, and right to render decisions with respect to such claims.[ii] However, exponential development in international and domestic arbitration jurisprudence has led to a drastic change in the fora of arbitrability as many jurisdictions have become pro-arbitration and consider that almost all disputes are capable of being referred to arbitration,[iii] including the ones which are tainted with the aspects of commercial fraud, corruption & bribery.[iv] To date, the law, in international and domestic legislation, is not entirely clear on even if claims involving expansive elements of corruption and bribery can be referred to arbitration and how such claims are to be arbitrated. What do we mean by commercial fraud? The UNCITRAL Guide on Recognizing and Preventing Commercial Fraud, 2013 defines it as an element of deceit having a serious economic dimension as a result of which there is a loss of value. Consequently, elements of corruption and bribery become integral to the aspect of commercial fraud. Corruption relates to the abuse of some entrusted power for private gain whereas bribery is the act of receiving preferential treatment, be it in the form of money, goods and/or services, in exchange for doing or abstaining from doing something which runs contrary to the settled law.[v] The position of these elements in law is that they attract penal provisions and are termed as criminal actions, be it in the international or domestic front. Arbitrators are individuals appointed by private parties for resolving disputes between themselves, whereas criminal acts are the actions against the state and public peace.[vi] States have in the past, been reluctant to let arbitrators decide such matters; however, that trend has undergone a change. Position of the New York Convention, 1958 and the UNCITRAL Model Law on International Commercial Arbitration, 1985 (the Model Law) Drawing on the Geneva Protocol, 1923, New York Convention’s Article II(1) provides that an international arbitration agreement shall only be valid if it “concerns a subject matter capable of settlement by arbitration”. On the same lines, Article V(2)(a) of the New York Convention puts forth that an arbitration award may not be recognized if “the subject matter of the difference is not capable of settlement by arbitration”. On a bare reading of these provisions, it is not entirely clear what makes a dispute not capable of being settled by arbitration. If the parties agree on referring their differences to arbitration, virtually nothing can hold them back.[vii] The UNCITRAL Secretarial Guide on the New York Convention, 2016 puts forth that the definition and scope of the term “subject matter” is dependent upon its interpretation rendered by courts of different countries. The same goes for the wordings of Article V(2)(a) of the New York Convention. The Supreme Court of the United States of America in Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 1985 was faced with a similar problem and the bench was of the opinion that in the absence of a clear list of disputes that are non-arbitrable, the domestic laws which are applicable to the arbitration agreement or laws as determined by the conflict/choice of law rule will have to be taken into consideration and the issue of arbitrability will depend on those domestic laws. The Model Law does not contain a single provision that specifically relates to the aspect of arbitrability, thereby signifying that all the disputes are arbitrable and capable of being referred to arbitration.[viii] The arbitrability issue in the context of the Model Law is, similar to the position of the New York Convention, dependent on the domestic laws of a country. What do the national jurisdictions hold? In many arbitration friendly regimes, such as the United Kingdom and Singapore, the questions of arbitrability of disputes tainted with corruption & bribery rarely find a place.[ix] Similar to India’s position, the domestic legislation of these countries do not explicitly mention what kind of disputes can and cannot be submitted to arbitration. In the absence of the same, such a determination is on a case to case basis, subjectively, based on precedents and national court’s rulings. As far as the United Kingdom’s position goes, the infamous decision rendered by the House of Lords in the Fiona Trust & Holding Corporation v. Privalov in 2007 made it crystal clear that even the disputes that are tainted with the elements of fraud are arbitrable. The Bench based its decision on the principle of separability, that an arbitration clause/agreement is separate and distinct from the contract in question, and in light of the same, even if the contract is tainted with the elements of fraud, the arbitration agreement will retain its full vigour and the constituted arbitral tribunal will have the requisite jurisdiction. The Court was of the opinion that such disputes can be subjected to arbitration unless and until the law clearly prescribes the contrary. India’s position on the subject still remains unclear. The Supreme Court decision rendered in Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd. in 2011 laid down the first test to determine arbitrability of disputes. The bench opined that disputes involving the aspects of public policy, fraud and corruption give rise to the aspects of in rem rights (something that affects the world at large)

[By Mrudula Dixit] The author is a fourth year student of Symbiosis Law School, Pune. Introduction There are a few peculiar provisions in the Arbitration and Conciliation Act, 1996 (“Act”)[i] which stand out for instance Section 9 of the Act. Section 9 states that an interim measure can be granted by a court before, during or after making of the arbitral award at the instance of the party making an application. Section 9 is different in one aspect – it allows for the grant of an interim measure after the pronouncement of the final arbitral award as well. The parties can apply under Section 9 after the final award is granted but before it is enforced as per Section 36 of the Act.  This provision in the Indian law is a deviation from the UNCITRAL Model Law on International Commercial Arbitration which does not contain any post-award interim measure. Thus, in India, the parties have been granted a small window of opportunity to effectively secure their award or protect their interests. Further Section 36 of the Act clarifies that when the time for making an application to set aside the arbitral award under Section 34 has expired [i.e 3 months from the date of announcement of the award], then such final award can be enforced in accordance with the provisions of the Code of Civil Procedure, 1908 (‘Code’).[ii]  Though this part of the provision has been explicitly included in the impugned Section, its interpretation and practical application remains controversial. Recently, in November 2019, the Supreme Court made certain observations on this aspect in the case of Hindustan Construction Company Limited & Anr v. Union of India (‘HCC’).[iii] Here the primary question for consideration was whether Section 87 of the Act is liable to be struck down as ‘manifestly arbitrary’. Section 87 of the Act states that amendments made to the Act by the Arbitration and Conciliation (Amendment) Act, 2015 would not apply to court proceedings arising out of or in relation to such arbitral proceedings irrespective of whether such court proceedings were commenced prior to or after commencement of 2015 Amendment Act. What is of relevance for the purpose of this Blog is not the wider question of law posed before the Apex Court but rather an ancillary observation made by Justice Rohinton Nariman in the judgment. He accepted the ratio previously laid down in two cases before the Bombay High Court and succinctly stated that Section 9 allows a party to secure the final arbitral award via an application for interim measure.  In view of the decision, this Blog aims at summarizing the jurisprudence of Section 9 and post-award interim measures. Further, it also seeks to analyse its implications of the same on Sections 34 and 36 of the Act. Jurisprudence As mentioned above, in course of the judgment, Justice Nariman made certain remarks about the interpretation of Section 36 of the Act. He carefully delineated the nexus between Sections 9, 34 and 36 before concluding that Section 36 does not prohibit grant of stay of a money decree under the Code. As he elucidated the scope of Section 9, he relied on a pivotal case, namely Dirk India Pvt. Ltd v. Maharashtra State Power Generation Co. Ltd. (“Dirk India“).[iv] Dirk India was the first judgment to bolster the legislative intent of granting an ‘interim’ relief at a post-award stage. The Bombay High Court was faced with the issue of determining whether a party which has lost in an arbitral proceeding can make an application under Section 9 post-award. Justice Chandrachud reiterated the words of the Section 9 and held in paragraph 12 that; ‘When [interim relief is] sought after an arbitral award is made but before it is enforced, the measure of protection is intended to safeguard the fruit of the proceedings until the eventual enforcement of the award. Here again the measure of protection is a step in aid of enforcement. It is intended to ensure that enforcement of the award results in a realisable claim and that the award is not rendered illusory by dealings that would put the subject of the award beyond the pale of enforcement.’ The decision made by the court in Dirk India effectively meant that post-award interim measure can only be sought by an Award–Creditor and not by the Award–Debtor. Dirk India was relied upon by Justice G.S Kulkarni in March 2019, in the case of Mahyco Monsanto Biotech (India) Pvt. Ltd. v. Nuziveedu Seeds Ltd.[v] The Petitioner in this case had made an application under Section 9 of the Act after he had succeeded in his claim before the Arbitral Tribunal. The tribunal, by majority, had granted the petitioner a sum of Rs. 117 Crores which the petitioner wished to secure before enforcement under Section 36. Justice Kulkarni relied heavily on Dirk India and held that the law is set in that regard. He reiterated the settled position by stating that post-award interim measures ensure that the award is not illusive or avoidable. The position laid down in these two cases of the Bombay High Court have been reinforced by the Supreme Court in HCC. Analysis of the judgments    The observations of the Author are: When an Award–Creditor approaches the court under Section 9 to secure the award, it acts on a presumption that the Award–Debtor will prefer an application to set aside the arbitral award under Section 34 of the Act. Moreover, when Section 34 is read together with Section 36, an arbitral award cannot be enforced until and unless the 90 days’ period expires or the application under Section 34 has been duly disposed of. Because of this obvious paradox, the pre-emptive right to secure the award, bestowed upon the Award–Creditor by the interpretation of Section 9 in Dirk India, is likely to prejudice the party affected by the arbitral award as it takes away its 3-month window given by law. As a way of a corollary, the ‘remedy’ under Section 34(4) which gives power to

[By Muskan Arora] The author is a third year student of West Bengal National University of Juridical Sciences, Kolkata. On 8 May 2019, the Supreme Court (“SC” or “the Court”) rendered a decision in Ssangyong v. NHAI (“SsangYong”). In the instant case, the parties entered into a contract to build a highway in Madhya Pradesh. The dispute arose out of the application of a price-escalation clause, which NHAI altered subsequent to execution of the contract. The dispute was referred to arbitration, which resulted in a majority award with a dissent. The SC decision rendered in SsangYong sought to set aside the award passed by the Delhi High Court. The validity of the award was upheld by the Delhi High Court and the matter was appealed to the Supreme Court. While disposing the case, the Supreme Court set aside the majority award passed by Delhi High Court and as a consequence, held that “the disputes that were decided by the majority award would have to be referred afresh to another arbitration”. Further, the Court noted “in order to do complete justice between the parties, invoking our power under Article 142 of the Constitution […] we uphold the minority award.” Through this blog, the author will evaluate first, the applicability of Article 142 of the Constitution of India in the present case. Second, the blog will discuss the legal significance of a dissenting opinion in arbitration. It hypothesizes that contrary to the Court’s view, a dissenting opinion does not have the legal effect of an award and considers its implications on the present decision. Nonetheless, the blog provisionally considers that in such a circumstance, the Court may be justified in upholding its pragmatic finding. Application of Article 142 of the Constitution of India to SsangYong   In arbitration cases, parochial judicial review and oversight becomes relevant only when an individual approaches the Court for either setting aside the judgment on grounds mentioned under Section 34 of the Arbitration and Conciliation Act, 1996 (“the Act”) or for enforcement of an arbitration award or agreement. The task is tempered with readily available jurisprudence preventing the traditional judicial setup from encroaching into the domain of arbitration. In the SsangYong case, the Court has traversed one step beyond and has exercised its powers under Article 142 of the Constitution to enforce a minority award, which in itself is problematic. This presents a theoretical debate on the scope of the laws that apply upon a party’s choice of lex arbitri. A party’s choice of seat as India, results in Indian courts having supervisory jurisdiction. But does that mean that the entirety of the Indian legal regime would be applicable? Can there be a distinction made on the basis of laws applicable to purely domestic arbitrations and international arbitrations seated in India? Further, can the scope of Article 142 be extended to a point wherein it overrides the provisions of another statute, in this case, Section 34 of the Act? The nexus between Article 142 and Section 34 can be examined by understanding the scope of these two individually. A reading of Section 34 makes it clear that the judiciary’s power is restricted to either setting aside the award or declining to do so. The Supreme Court has cleared this position in McDermott International v. Burn Standard Company wherein it held that, “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”. Despite this prevailing position, in the SsangYong judgment the Supreme Court has overstepped its jurisdiction by substituting the majority opinion with its own judgment. In doing so the Court used its plenary powers under Article 142 of the Constitution. The jurisprudence of Article 142 bolsters the tenets of doing complete justice by giving SC power to pass such decree or make such order as is necessary. By using Article 142 to override the provisions of another statute, the Court is setting an example that confers upon it an unreasonable power to decide a case by omitting to examine the legal standards of other statutes. The literature discussing the propriety of Article 142 has intentionally left it a little unclear to allow the courts to do “complete justice”. Given that this faded understanding is capable of bestowing arbitrary powers in the hands of the court, any use of it must be balanced against the consequences of its improper use. The intention of the drafters in having such a provision in the first place would be vastly diminished, if not altogether eviscerated, were courts to use this power at their whims and fancies. The Supreme Court has also supported this understanding in Supreme Court Bar Association v. Union of India wherein it was held that due consideration has to be accorded to statutory provisions while applying Article 142. Even though it is a settled principle that cases under Article 142 do not hold any precedential value, nonetheless the ratio decided is not obscured somewhere behind the four corners of the judgement. Thereby, it not just extends the ambit of Article 142 to an unreasonable extent but also serves as a persuasive non-binding juridical standard despite Article 142’s nature of defying stare decisis. The propriety of dissenting opinions and the correctness of SsangYong In international commercial arbitration, dissenting or minority opinions are considered a legal vacuum. They have neither jurisprudential value in formulating arbitral decisional law nor hold any precedential value. This practice has been both constant and uniform. Despite this widespread understanding of dissenting opinion, Supreme Court in the Ssangyong judgement has upheld the minority opinion. The Supreme Court in the case of Common Cause v. Union of India has eloquently and succinctly articulated the position on dissenting opinions in India. It held: “the view taken by the minority cannot be cited as the law laid down by the Constitution Bench nor can it be followed in the face of the opinion of the majority to the contrary”. In light of a contrary

[By Darshana Paltanwale and Manasvini Vyas] The authors are fourth year students of Symbiosis Law School, Pune and National Law University, Odisha respectively. Introduction Over the years, mediation has garnered recognition and preference in India, as the Indian legislature and courts have been inclined towards the development of Alternative Dispute Resolution (“ADR”) mechanism in the country, in line with the international standards. It also stems from the fact that commercial entities actively opt for procedures like mediation over litigation.[i] Although mediation as a form of alternate dispute resolution is commonly used in India when settling family and civil law cases, active measures are being taken by different organs of the Government to promote mediation as a means of dispute resolution. In furtherance of same, Indian Institute of Arbitration and Mediation signed an MOU with Singapore International Mediation Centre in 2015 to promote international commercial mediation in the country. Later, in 2018, the Indian Parliament amended the Commercial Courts Act, 2015 and mandated that the parties must resort to mediation before filing a suit before a Commercial Court. But in spite of the affirmative actions, growth of international commercial mediation has been impeded because of certain maladies. To illustrate, lack of a proper legislation and adequate state machinery for enforcement of a settlement agreement, inconsistency with respect to definitions of terms like conciliation and mediation, etc. pose a challenge in the advancement of mediation process. In light of these issues, the signing of the Singapore Mediation Convention, 2019 (“the Convention”) comes as a welcome change. This landmark move is believed to trigger an array of changes and developments with respect to the growth of commercial mediation in India. The issues that this step aims to solve shall be critically analysed through this article. Inconsistency with respect to the terms ‘mediation’ and ‘conciliation’ While defining the term ‘mediation’, the Convention disregards any difference that exists between ‘mediation’ and ‘conciliation’ by virtue of their nomenclature. In the same vein, several jurisdictions allow the terms ‘mediation’ and ‘conciliation’ to be used interchangeably. However, the same does not hold true for India, as there exists uncertainty with respect to whether the two terms are synonymous. A plain reading of Section 89 of Code of Civil Procedure, 1908 (“CPC”) and Section 30 of the Arbitration and Conciliation Act, 1996 (“the Act”), suggests that mediation and conciliation are prescribed as two separate modes of settlement of disputes. By contrast, on several occasions, the Supreme Court of India has opined otherwise. In the case of M/S. Afcons Infra. Ltd. & Anr. v. Cherian Varkey Construction Co. (P) Ltd. & Ors., the Court expressed that mediation is a synonym of the term conciliation. Several leading commentators on the ADR regime in India, such as Justice Indu Malhotra, also hold the same view.[ii] It is suggested that the use of the term ‘conciliation’ in the Act covers both mediation and conciliation[iii] because if there exists any difference between the two processes, the same is due to the difference in degree of intervention of the facilitator, which is not in fact a difference in principle.[iv] This lack of certainty regarding the relationship between the two terms has been rectified by the Convention as it explicitly defines the term ‘mediation’ in Article 3 of its text.[v] It simply defines mediation as any process aimed at resolving disputes through amicable settlement, aided by a third party, irrespective of the terminology used to refer to this process. This will act as a guide for the promulgation of the legislation in India and thus will aid in stimulating certainty with respect to the scope of the two methods. Enforcement of settlement agreements Another stumbling block that impedes the growth of international commercial mediation in the country is the lack of recognition and enforceability of international mediation settlement agreements. A mediation conducted under the aegis of the court is governed by the CPC, and the settlement agreement as an outcome of this mediation is enforced in the form of a decree of the court. In addition to this, a settlement agreement that forms a part of a foreign arbitral award, shall be enforced as a consent award under Part II of the Act. Article 1(3) of the Convention precludes its application to mediations concluded either under the aegis of a court or within arbitral proceedings, wherein the parties agree to resort to mediation instead of arbitration. Hence, these settlement agreements will remain to be enforced as consent decrees and consent awards respectively, and shall be outside the ambit of the Convention. Further, settlement agreements resulting from private mediations are enforced as contracts in India.[vi] Thus, parties must initiate court proceedings to incorporate the settlement terms as part of a judgement so that the settlement agreement gets the sanction of law. The inherent problem with this approach is that it forces the parties to resort to courts to obtain a judgement after they have sat through a long mediation process, hence causing delay and inconvenience in the dispute resolution procedure. Moreover, the validity of such an agreement could only be challenged on the basis of the general principles of Indian Contract Law and not on the basis of the substance of the dispute. Furthermore, the settlement agreements concluded through private conciliation are governed by Part III of the Act. Owing to Section 73 of the Act, if a conciliator identifies ‘elements of settlement’ acceptable to the parties, a settlement agreement can be chalked out after taking into account the observations of the parties. This settlement agreement must mandatorily be signed by the parties and authenticated by the conciliator in order to accord its finality, and attribute a binding effect to it. By virtue of Section 74 of the Act, this agreement is deemed to have the status and effect of an arbitral award on agreed terms issued during the course of arbitration proceedings. While it is true that this legal fiction saves the parties from the trouble of initiating fresh court proceedings for enforcement, at the same

[Our next Guest Post has been authored by Mr. Ajar Rab, Partner, Rab & Rab Associates LLP, Dehradun, India. The author is a leading lawyer practising in the field of arbitration law including international commercial arbitration. He is also actively involved in academia, acting as a visiting faculty at various universities. He can be reached at ajar@rabs.in] Introduction It is no secret that arbitration in India has not received the same kind of success as it has in international jurisdictions. One of the reasons is the reliance on the Code of Civil Procedure, 1908 (“CPC”) and the reluctance of the arbitrators in India to disassociate arbitration from courtroom procedures and evidence rules, despite the express provision to the contrary contained in Section 19 of the Arbitration and Conciliation Act, 1996 (“Act”) . Such reliance is based on several judgments which clearly affirm that in the absence of procedure provided under the Act, the basic principles of the CPC will continue to apply [i]. This leads to the creation of a ‘courtroom of choice’ where parties get the luxury of choosing their arbitrators, seat, and venue of arbitration but continue to adopt courtroom litigation techniques, procedures and strategies. In this context, it is necessary to look back on why arbitration as a mechanism of dispute resolution gained prominence. Arbitration permitted parties to avoid court procedures and evidence rules in favour of the application of the commercial understanding of the parties [ii], i.e., the tribunal was expected to understand the ‘benefit of the bargain’ and ‘expectations of parties’ in a particular commercial transaction and decide the dispute in consonance with the same. The intent was to further commerce and also reduce reliance on national law with respect to procedure and rules of evidence. However, despite the embargo in Section 19 of the Act, the arbitration practice in India has mostly been to conduct a court trial in an arbitration proceeding. A natural corollary of this practice is the adoption of the common law methodology of cross-examination where a counsel is supposed to have a question and answer session with a witness to reduce to the extent possible, the adverse impact of the witnesses’ testimony [iii] or what is referred to as ‘affidavit-in-chief’ [iv]. Thus, the purpose is to either demonstrate that the witnesses’ testimony is not safe to rely on because the witness is not credible or that what the witness has said in the testimony is not to be believed [v]. This practice, especially in the movies, is glorified in criminal trials where the eye witness testimony is crucial for both the prosecution and the defense. However, commercial disputes are usually document-driven, with cross-examination often adding little, except to confirm facts already stated in the pleadings [vi]. Some lawyers prefer to have a cross-examination for the strategic advantage of highlighting certain documents to the arbitral tribunal or to explain certain complicated facts. However, the practice in domestic arbitrations in India, by and large, is to have cross-examination irrespective of such intent and just as a matter of routine, causing unnecessary delay and expense. The issue is further compounded by a few judgments which hold such an exercise essential to a just and fair award [vii] without paying its due regard to the rationale for opting arbitration as a dispute resolution mechanism, i.e., as an alternative to court adjudication with a view to secure effective, efficient, speedy dispute resolution based on the commercial understanding of the parties instead of a rigorous application of court procedures and rules. Therefore, the scope of cross-examination by arbitral tribunals in India needs to adopt a more confined approach, akin to international practice. Having two or three days reserved for each witness and permitting cross-examination pointlessly to restate information already proved by documents in the pleadings should be curtailed. There is little sense in having each document marked as exhibits, presented and explained by the testimony of the live witness [viii] unless the execution of certain documents is clearly denied. Even in such instances, the denial would be contained in the pleadings itself and the said fact will only be confirmed in the cross-examination. In the event the purpose is to elicit new information [ix], cross-examination may be required, but it may be pertinent to point out that the cross-examination is usually permitted only to the extent of contradicting the direct testimony of the witness or to facts in the knowledge of the witness [x] and hence, the scope of eliciting new information may again be limited. While it is true that questions of knowledge and negligence can be better illustrated by means of cross-examination, unfortunately, the scope and ambit of cross-examinations are not confined to such questions alone by the tribunals. Counsels are often given the leeway and liberty of time on account of not risking a future challenge to the award as the practice followed has been akin to that of a court, and hence presumably just and fair. In international arbitration, several authors [xi] caution against cross-examining a witness unless the direct testimony of that witness is damaging to the outcome of the case [xii]. Unfortunately, however, the practice of cross-examination is inevitably followed by most arbitral tribunals in India, without giving adequate consideration to the nature of the dispute and whether any fruitful purpose will be served by cross-examining the witnesses. For example, in disputes with Public Sector Undertakings, usually, the private party will file a claim for delay in handover of site, drawings, approval of extra work, escalation, etc. all these will be supported by voluminous documents marked as exhibits, and in such cases, the purpose of cross-examination may be limited to confirmation of facts already contained in the exhibits. Moreover, tribunals often tend to ignore that while in civil law jurisdictions, where prenegotiation discussions are also admissible to demonstrate good faith, witness testimony may be more relevant [xiii], in common law jurisdictions such as India where parole evidence is the norm, the relevance of cross-examination may be more circumspect. For

[By Mreganka Kukreja] The author is a final year student of Symbiosis Law Schoole, Pune and can be reached at mreganka.kukreja@symlaw.ac.in. Introduction The seemingly unending saga of the seat versus venue debate seems to have taken an interesting turn in light of the Supreme Court’s recent decision in the case of Brahmani River Pellets Limited v. Kamachi Industries Limited. [i] In this judgment, the Division Bench revisited the applicability of the simple yet intriguing principles surrounding the seat and venue in the context of domestic arbitration, and thus sparked controversy. Through this blog post, the author discusses the background of the case; the key arguments of the parties; the decision of the court and the implications of the judgment on the Indian arbitration regime. Background Brahmani River Pellets Limited (hereinafter “Appellant”) entered into an agreement with Kamachi Industries Limited (hereinafter “Respondent”) for sale of iron ore pellets, which were required to be loaded from Bhubaneshwar, Odisha and were destined for the port in Chennai, Tamil Nadu. A dispute arose between the parties regarding the price and payment terms and the Appellant refused to deliver the goods to the Respondent. Accordingly, the Respondent invoked the arbitration clause under the agreement which provided that the arbitration shall take place under the Arbitration and Conciliation Act, 1996 (hereinafter “Arbitration Act”) and the venue of such arbitration shall be Bhubaneswar. The Appellant did not agree for the appointment of the arbitrator. Hence, the Respondent filed a petition under Section 11(6) of the Arbitration Act before the Madras High Court for appointment of an arbitrator. The Madras High Court vide its order appointed a sole arbitrator by holding that in absence of any express arbitration clause excluding the jurisdiction of other courts, both the Madras High Court and the Orissa High Court would have jurisdiction over the arbitration proceedings. Challenging the impugned order, the Appellant preferred an appeal before Division Bench of the Supreme Court. Issue for determination Whether the Madras High Court could exercise jurisdiction under Section 11(6) of the Arbitration Act even though the agreement contains the clause that the venue of arbitration shall be Bhubaneswar? Key Arguments of the Parties The Appellant contested the impugned order in a two-pronged manner- First, since the parties had agreed with Odisha as the venue for arbitration, it acquired the status of a juridical seat. Second, as observed in Indus Mobile Distribution Private Limited v. Datawind Innovations Private Limited and others [ii] (hereinafter “Indus Mobile Case”), once the parties agree on the seat of arbitration in domestic arbitration, the said court acquires the exclusive jurisdiction. The Appellant, therefore, submitted that Odisha High Court, being the juridical seat, holds exclusive jurisdiction in the matter and the decision of Madras High Court must be set aside. In response to the assertions of the Appellant, the Respondent argued that- first, since the cause of action arose at both the places i.e. Bhubaneswar and Chennai, both the Madras High Court and the Odisha High Court would have supervisory jurisdiction over the matter. Second, reliance was placed on the decision of Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. [iii] (hereinafter “BALCO”) to argue that mere mention of the venue as a place of arbitration would not confer exclusive jurisdiction upon that court. There should be other concomitant circumstances, like the use of words “alone”, “exclusive”, “only” etc. to indicate the exclusive jurisdiction of the court over the matter. The Respondent, therefore, submitted that Madras High Court could also exercise jurisdiction over the matter. Decision [A.] Party autonomy to choose the exclusive jurisdiction of the court The Division Bench observed that Section 2(1)(e) of the Arbitration Act defines the court which would have jurisdiction to decide the questions forming the subject-matter of arbitration, and if such subject-matter is situated within the arbitral jurisdiction of two or more courts, the parties could agree to confine the jurisdiction in one of the competent courts. In this regard, Section 2(1)(e) must be read with Section 20 of the Arbitration Act which gave recognition to the autonomy of the parties as to the place of arbitration. It was noted that such party autonomy has to be construed in the context of parties choosing a court which has jurisdiction out of two or more competent courts having jurisdiction. The Division Bench then discussed the Supreme Court’s decision in Swastik Gases (P) Ltd. v. Indian Oil Corpn. Ltd. [iv] (“Swastik Gases”) In this case, the arbitration clause provided that the agreement shall be subject to the jurisdiction of the courts at Kolkata. However, the appellant filed an application before the Rajasthan High Court. In holding that Calcutta High Court shall have exclusive jurisdiction, it was observed that words like “alone”, “only”, “exclusive” do not make any material difference as to the intention of the parties to choose exclusive jurisdiction. The same was also not hit by Section 23 of the Indian Contract Act,1882 as it was not forbidden by law nor was it against public policy. Therefore, in the present case, since the parties agreed to Bhubaneshwar as the venue of arbitration, the parties intended to exclude the jurisdiction of all other courts. [B.] Juridical seat designates the exclusive jurisdiction of the court  The court in the instant case discussed the Indus Mobiles case in which it was laid down that under Section 20(1) and 20(2) of the Arbitration Act, where the word “place” is used, it refers to “juridical seat” and the moment the seat is designated, it is akin to an exclusive jurisdiction clause. Therefore, on the designation of Bhubaneshwar as the venue of arbitration, a status of the seat was acquired and thus, the Odisha High Court was vested with the exclusive jurisdiction for regulating the arbitral proceedings. Given above, the Supreme Court held that when the parties had agreed to have the venue of arbitration at Bhubaneswar, the Madras High Court erred in assuming the jurisdiction under Section 11(6) of the Arbitration Act. Therefore, the impugned order was set aside. Concluding Comments [A.] Questionable interpretation of the precedents