Arbitration Law

[Saara Mehta]   Saara is a 4th year student at NLIU,Bhopal. Introduction A case decided on 26th September, 2018 by a Division Bench of the Supreme Court, P.Radha Bai and Ors. v. P. Ashok Kumar and Anr.[1], is an aid towards understanding how the Limitation Act, 1963 (“Limitation Act”) operates vis-à-vis the Arbitration and Conciliation Act, 1996 (“Arbitration Act”). The issue under consideration was whether Section 17 of the Limitation Act could be used to condone the delay in filing an application to set aside the award under Section 34(3) of the Arbitration Act. Under Section 17, the period of limitation begins to run from the time when fraud played against the award debtor is discovered or could have been discovered with reasonable diligence.[2] Factual Matrix and Adjudication prior to the Supreme Court An award was made in February, 2010 by a tribunal adjudicating a dispute between the Appellants no. 1-6 and Respondents no. 1 and 2, all heirs of a common descendent. The award was received within 3 days of its delivery. According to the Respondents, the Appellants entered into a Memorandum of Understanding (“MoU”) with the Respondents in bad faith. They submitted that pursuant to this, the Appellants agreed to give certain properties to Respondent no. 1, which cumulatively were more than what the award stipulated. Further, after entering into the MoU,   the   Appellants   were   required   to   execute   Gift   and Release   Deeds   to   give   effect   to   the   MoU. This execution, allegedly, was delayed intentionally, owing to which the limitation period to apply for execution of the award under Section 34(3) (three months and an extended period of 30 days) expired. On expiry, the Appellants filed an Execution Petition for execution of the award, but the trial court held that this was not maintainable. On appeal, the High Court set aside this order; the trial court was directed to decide the petition on its merits. On realising the intentional delay of the Appellants in executing the gift deed, the Respondents applied under Section 34(3) of the Arbitration Act. They sought to condone the delay in the application on account of fraud by the Appellants. The City Civil Court, Hyderabad, dismissed the application on the ground that it was not empowered to condone delay beyond three months and 30 days, as stipulated in Section 34. Following this, four civil revision petitions were filed by the Respondents before the Andhra Pradesh High Court under Article 227 of the Constitution. The High Court remanded the matter back to the trial court solely for determination of the question of whether Section 17 of the Limitation Act would apply to condone delay in filing an application under Section 34(3) of the Arbitration Act. The Respondents, aggrieved by the High Court’s order, appealed to the Supreme Court in the present case. The Supreme Court’s Decision The Respondents submitted that since application of Section 17 of the Limitation Act had not been specifically excluded under the Arbitration Act, the benefit of Section 17 should not be denied to the Respondents. The Supreme Court, in this regard, took note of Section 29(2) of the Limitation Act, which provides: “Where any special or local law prescribes for   any   suit,   appeal   or   application   a   period   of limitation different from the period prescribed by the   Schedule,   the   provisions   of   Section   3   shall apply   as   if   such   period   were   the   period prescribed by the Schedule and for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law, the provisions contained in Sections 4 to 24 (inclusive) shall apply only in so far as, and to the extent to which, they are not expressly excluded by such special or local law”.[3] The case of Vidyacharan Shukla v. Khubchand Baghel and Others[4] was relied on to interpret this section. This case provides that Section 29(2) has two limbs. The first limb is that the limitation period prescribed by the special law or local law shall prevail over the limitation period prescribed in the Schedule to the Limitation Act. In the present case, the Supreme Court noted that the Arbitration Act was a special law and thus the period in Section 34(3) would apply to filing objections to the arbitral award. The second limb, identified in Vidyacharan, is that Sections   4   to   24   of   the Limitation   Act   will   apply   for   determining   the   period   of limitation “only in so far as, and to the extent to which, they are   not   expressly   excluded   by   such   special   or   local   law.”[5] Thus, the Court held that Sections 4 to 24 would apply towards limitation period under the Arbitration Act only if these sections were not expressly excluded under the Act. Relying on previous pronouncements, in which Section 12 and 14 of the Limitation Act had been extended to condone delay under Section 34, the Respondents argued that since application of Section 17 had not been expressly excluded by the special law, it could be extended in the same way. Citing Vidyacharan, as well as Hukumdev Narain Yadav v. Lalit Narain Mishra,[6] the Court concluded that “express exclusion can be inferred either from the language of the special law or it can be necessary implied from the scheme and object of the special law”. The Court observed that there existed a contradiction in the language of Section 17 and Section 34(3). The Supreme Court, inter alia, observed as follows. First, Section 17 of the Limitation Act does not extend or break the limitation period. It only postpones commencement of the limitation period till the applicant has discovered the fraud. Besides, Section 34(3) of the Arbitration Act has a limitation provision built in itself. It provides that the limitation period commences from the when a party making an application had received the arbitral award, or from the disposal of a request under Section 33 of the Arbitration Act for correction and interpretation of the Award. Section

[Pulkit Khare]   Pulkit Khare is a 4th year B.A., LL.B. (Hons.) student at The National University of Advanced Legal Studies, Kochi Introduction The Arbitration and Conciliation Act, 1996 (hereinafter the “Act”) was enacted to consolidate and amend the laws relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards  as well as to define the laws relating to conciliation by adopting the  UNCITRAL Model Law on International Commercial Arbitration, 1995 and the UNCITRAL rules.[1]The said Act was amended by the Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter the “Amending Act”) to make arbitration process cost effective and speedy, with minimum court intervention.[2] As per Section 6 of the Amending Act, it stipulated addition of sub-section 6A in Section 11 of the Act (Section 11 provides for appointment of arbitrators under the Act), as follows: (6A) 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, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement. At this point before proceeding with Section 11(6A), it is necessary to understand sub-sections (4), (5), (6) of Section 11 which primarily speak of situations where the parties to an arbitration agreement were unable to appoint an arbitrator(s) within the 30-days of arbitration notice, or where the parties were unable to follow the procedure for appointing an arbitrator so agreed between them. In such a scenario to bring effect to a valid Arbitration clause, one of the parties may request the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court to take the appointment procedure forward. In United India Insurance Co. Ltd. & Anr. v. Hyundai Engineering and Construction Co. Ltd. & Ors.[3] the question before the apex court in light of Section 11(6A) was, Whether submitting to arbitration clause under an agreement posits unequivocal expression of the intention of arbitration or is hedged with a conditionality? Facts Respondents were awarded a contract for design, construction and maintenance of a bridge for which they undertook an agreement for a Contractor All Risk Insurance Policy (“Agreement”) from the Appellants for the entire project. The Agreement stipulated that in cases of dispute arising out of quantum of compensation, such shall be referred to Arbitration within three months. But the agreement also stipulated that no difference or dispute shall be referable to arbitration, if the Appellants had disputed or not accepted liability under or in respect of the Policy. Incident During the construction of the bridge, an accident occurred for which the Respondents submitted their claim to the Appellants. Appellants appointed a surveyor who assessed the loss to be below the Appellants claim but also opined that the damage was on account of the faulty design and improper execution of the project and hence was not payable under the policy to the Respondents. Another report of a Committee of Experts set up by the of Ministry of Road Transport and Highways, Government of India, was also taken into consideration to enquire into the accident. Appellants taking into account both the aforementioned reports intimated the Respondents that the claim put forth was not payable, since policy specifically excludes any loss/damage caused by faulty design, defective workmanship/material and also the damage was caused due to willful acts/negligence in execution of work of such nature. Reconsideration to the matter raised by the Respondents was rejected by the Appellants. View of the Madras High Court Respondents invoked the Arbitration clause and upon non appointment of Arbitrator by the Appellants approached Madras High Court under Section 11(4) and 11(6) of the Act. The Madras High Court stating the post amendment position (insertion of sub-section 6A) under the Amending Act said it had a limited mandate to examine the factum of existence of an arbitration agreement and nothing more or less.       Hence allowing the petition, it appointed an Arbitrator in the matter. Decision of the Supreme Court On appeal by the Appellants against the judgment of Madras High Court, in regards, whether the courts were to send the matter directly to arbitration in case of a valid arbitration agreement or they could consider circumstances in pre-invigoration of Arbitration. The Supreme Court relied on Oriental Insurance Company Limited v. Narbheram Power and Steel Private Limited[4] and The Vulcan Insurance Co. Ltd. v. Maharaj Singh and another[5] holding that the arbitration clause has to be interpreted strictly, since in the present case the arbitration clause will get kindled  if the dispute between the parties is limited to the quantum to be paid under the policyThus, to put is differently, there can be no arbitration in cases where the insurance company disputes or does not accept the liability under or in respect of the policy. The court therefore instead of the mandate under subsection 6A, didn’t confine itself to examination of existence of arbitration agreement, rather went ahead and decided as to whether the arbitration agreement was triggered or invigorated in the circumstances or not. Hence, the Court chose to surpass the exclusive provision for appointment of arbitrator and went ahead to check whether arbitration was enlivened in the circumstances. The Dilution of the Courts jurisdiction which was brought about by inserting sub-section 6A through Section 6(ii) of the Amending Act is now being sought to be omitted under Section 3(v) of the Arbitration and Conciliation (Amendment) Bill, 2018 (Amending Bill). This step of the Court is in line with the legislative intent, since the Amending Bill, inter alia, has been brought out to plug some of the loopholes brought in by the Amending Act. Conclusion The issues raised by Section 11(6A) of the Act has been plugged by the Supreme Court, while rendering the decision in the present case by surpassing the mandatory appointment of arbitrator on existence of an arbitration agreement. The Amending Bill shall eventually fructify the position laid down by

Effects of the Amendment of the Arbitration & Conciliation Act, 1996. [Siddhart Jain] The author is a 2nd year student at DSNLU, Visakhapatnam. Introduction With the growth of legal awareness amongst the general populous, there is a rise in the number of suits pending before courts. The inability of courts in the speedy disposal of cases has led to a rise in the trend of using arbitration as a means of disposal of most cases, where time is of utmost importance. Arbitration, has primarily become a preferred option to settle commercial disputes Globally and in India as well. Arbitration in India is governed by the Arbitration and Conciliation Act, 1996. The Act was introduced due to the need to facilitate quick enforcement of contracts, reduce the pendency of cases in courts and hasten the process of dispute resolution through arbitration. However, another prime factor for the need of this Act was globalization since there was a need to project India as an investor friendly country having a sound legal framework and ease doing business in India. One of the most significant legal changes made by the Indian legislature in recent years has been the introduction of The Arbitration and Conciliation (Amendment) Act, 2015 (Amendment Act)[1]. The Amendment Act seeks to resolve issues that have traditionally afflicted the alternative dispute resolution framework in India, for example, protracted disputes, excessive judicial intervention, dearth of qualified and impartial arbitrators, and so on [2] Need for Amendment In the recent years, the Government has been taking considerable steps time and again to make India too an international commercial arbitration hub much to the likes of Paris or New Yorks. The case of White Industries v. Republic of India[3] was the first investment arbitration claim, wherein the decision was pronounced against the country, due to judicial delay. Though the Supreme Court has delivered some landmark judgements which support a pro-arbitration approach, the objective of the Act of 1996 was far from reached due to exploitation of several loopholes in the act. The major issue with arbitration in India is twofold: – Court interference becomes inevitable as most of the arbitral awards are challenged until they reach the highest court of the land. There is no provision in The Arbitration and Conciliation Act, 1996 to expedite the arbitration process where the arbitration tribunal shall have to make an award within a fixed period of time. The above reasons made the dispute settlement process more time consuming and defeated the purpose of the legislation. The effects of this are quite evident since even Indian companies who entered into contracts with international investors preferred execution of awards and arbitration proceedings in a jurisdiction other than India.[4] The amendment to the Act of 1996 was a must in today’s time in light of Modi government’s agenda to improve ease of doing business.[5] Major Amendment “Proceedings in arbitrations are becoming a replica of court proceedings, despite the specific provisions in Chapter V of the Act which provide adequate powers to the arbitral tribunal. The Commission hopes that arbitral tribunals would use the existing provisions in the Act, in order to reduce delays.”[6] The world’s leading international arbitral institutions have been revising their respective rules over recent years in an attempt to make arbitration faster and more efficient. This is evidenced by the suite of new rules and mechanisms introduced by such institutions that are aimed at reducing the time and cost of arbitration. One notable example is the so-called ‘expedited procedure,’ which has been adopted by the ICC Court of International Arbitration (ICC), the Singapore International Arbitration Centre (SIAC), and the Hong Kong International Arbitration Centre (HKIAC).[7] The recent Act of 2015 has provided for fast track arbitration by the addition of Section 29(A) & (B) which maybe the saving grace for arbitration in India due to growing demon of delayed proceedings. The section is at par with Expedited Procedure Provision in world’s leading international arbitral institutions. The section combats delayed proceedings by providing the parties to a dispute with an option to choose fast tract procedure, ensuring that the award shall be made within a period of twelve months from the date the arbitral tribunal enters upon the reference subject to other conditions.[8] The act has further incorporated features of Expedited Procedure Provision by enabling parties to settle dispute merely on the basis of written pleadings, documents and submissions filed by the respective parties, doing away with oral hearing. It is also noteworthy that the enabling provision in Sec 26 of the amendment Act provides for fast track arbitration to be applied to the existing disputes if the parties mutually agree to apply this procedure. The Act is undoubtedly aimed at reducing inordinate delays that plague dispute resolution in India. However, the boon of speedy disposal of proceedings comes at the cost party autonomy. Party autonomy is the most prominent features of arbitration on which arbitration framework rests. In this regard, Section 29(A) raises serious concerns. The section, as it stands now, allows the parties to extend the period for passing an award by another six months if the award is not passed within 12 months. However, if the award is not passed despite this extension of six months, the mandate of the tribunal automatically terminates and it is only the court, which on an application by one of the parties and upon being satisfied of sufficient cause, can extend the period for passing the award further. The parties, even if they mutually agree, cannot extend the mandate of the arbitral tribunal beyond the 18-month period allowed by Section 29(A). This mandatory requirement to file an application before the court, an agreement between the parties notwithstanding, is antithetical to the idea of parties having the autonomy to set down time limits and procedures for the adjudication of disputes. Conclusion The process of speedy disposal is still new in India and needs to be practiced to lessen the burden on the judicial system. The fast track arbitration comes at the

Is Institutional Arbitration Worth the Expense? – An Asian Perspective. [Rishabh Malaviya] The author is an LLM (International Arbitration & Dispute Resolution) student at National University of Singapore. Introduction Every arbitration is conducted within the framework provided by the lex arbitri (law of the place of arbitration). Complementary to the lex arbitri is the choice of the mode of arbitration, i.e. parties make a choice between conducting the arbitration on an ad hoc basis or conducting it under the aegis of an arbitral institution.This essay has been divided into three parts. In the first part, the additional costs of institutional arbitration (with specific reference to institutional arbitration by the Singapore International Arbitration Centre (“SIAC”), the Hong Kong International Arbitration Centre (“HKIAC”), and the Mumbai Centre for International Arbitration (“MCIA”)) and (despite this) the preference for institutional arbitration are highlighted. In the second part, I underscore some of the perceived advantages of institutional arbitration, and compare this model to ad hoc arbitrations. In the third part, I conclude by attempting to answer the question, ‘Whether institutional arbitration is worth the expense?’. Part I: The Costs and the Contradiction Institutional arbitration, of course, imposes additional costs on the parties. These costs are in addition to the regular expenses (like tribunal fee and expenses for hiring rooms for hearing, etc.) that would be incurred in ad hoc arbitrations as well. Parties are usually required to pay a ‘filing’ or ‘registration fee’ along with an ‘administration fee’. This latter fee is usually calculated on an ad valorem basis, while the former represents a fixed sum. For example, the SIAC provides for a filing fee of S$2000 for overseas parties, and for an administration fee ranging from S$3800 to S$95000 depending on the sum in dispute.[1] The HKIAC provides for a registration fee of HKD 8,000, and for an administrative fee ranging from HKD 19,800 to HKD 400,000.[2] In turn, the MCIA provides for a filing fee of Rs. 40,000, and an administration fee ranging from Rs. 110,000 to Rs. 4,160,000.[3] Ordinarily, these additional costs would discourage parties from opting for institutional arbitration. In fact, as per a 2015 survey, 68% of respondents considered costs as one of the three worst characteristics of international arbitration.[4] Despite this, and counter-intuitive though it may seem, there seems to be a preference among parties for institutional arbitration for the resolution of their disputes. A 2008 study found that 86% of awards were rendered under institutional rules.[5] The above-mentioned 2015 survey found the figure to be 79% of respondents’ arbitrations over the preceding 5 years.This is also reflected in the massive surge in the number of cases handled by institutions over the years. In 2016, 343 new cases were filed with the SIAC, up from 90 in 2006.[6] The HKIAC saw 271 new arbitration cases filed in 2015.[7] The MCIA is a relatively new institution, but is receiving immense support from the local government.[8] Part II: ‘Off the Peg’ v. ‘Tailor Made’ The above-mentioned statistics make one wonder why parties who dislike the notion of steep costs in international arbitration, concurrently prefer the more expensive institutional arbitration. Of course, institutional arbitration has several advantages. To begin with, it is conducted in accordance with a set of pre-existing and time-tested procedural rules, administered by experienced staff.[9] This ‘reduces the risk of procedural break-downs, particularly at the beginning of the arbitral process’.[10] This is because once parties agree to abide by institutional rules, they do not need to keep agreeing on every aspect of the arbitral procedure. For example, institutional rules contain detailed provisions for the appointment of an arbitrator, if the parties cannot agree on a procedure for appointment or if any party/arbitrator fails to act in accordance with an agreed procedure. The SIAC Rules empower the President of the SIAC Court of Arbitration to appoint the arbitrator where the parties fail to nominate an arbitrator or fail to agree upon a nominee.[11] The HKIAC Rules confer similar powers on the HKIAC;[12] and the MCIA Rules confer the power on the Council of Arbitration of the MCIA.[13] The significance of these provisions is that if the parties face difficulties in appointing an arbitrator, there is no need for them to resort to the provisions of the governing lex arbitri to overcome such difficulties. This can be especially advantageous in situations where the lex arbitri provides for appointment of the arbitrators by national courts (for example, the (Indian) Arbitration & Conciliation Act, 1996, provides for the appointment by courts).[14] Parties would not need to waste time and money in protracted court proceedings (on average, a contractual dispute takes 1420 days to resolve in the courts of Mumbai, and costs 39.6% of the claim amount)[15]. Further, institutional rules lay down strict qualifications for arbitrators and often have a highly-reputed panel of arbitrators from which the parties may choose.[16] Typically, the appointment of arbitrators is subject to the confirmation of the institutional authorities.[17] Further, challenge procedures under institutional arbitration rules usually impose substantial additional costs on the parties.[18] It is submitted that these provisions ensure that highly qualified arbitrators are appointed in the proceedings, and that the parties think twice before raising frivolous challenges to the appointment of arbitrators. Incidentally, arbitrators’ fees are also ordinarily fixed by the institution, which precludes awkward negotiations about the same. Another advantage of institutional arbitration is that the institutional rules contain detailed provisions on consolidation and joinder of parties.[19] National arbitration legislation usually does not specifically deal with such issues and the UNCITRAL Model Law, in particular never intended to regulate matters such as consolidation.[20] Therefore, these provisions in the rules provide valuable guidance to arbitrators dealing with these issues.Additionally, institutional rules include innovative procedures such as expedited proceedings and emergency arbitrations. Provisions on expedited proceedings allow tribunals, in some circumstances, to consist of a sole-arbitrator, and the proceedings to be completed within truncated timelines (usually six months).[21] Provisions on emergency arbitrators allow parties to apply for emergency interim relief, even before the final tribunal is constituted.[22] Furthermore, during

Enforcement of Arbitral Awards Against Non-signatories: Supreme Court. [Ankit Shrivastava] Ankit Shrivastava is a 2nd year B.A.LLB(Hons.) student  from National Law Institute University, Bhopal. The Supreme Court has at last, answered two increasingly pertinent questions regarding the implications accompanying an outsider to the arbitration proceedings, and the magnitude of the NCLT’s say in arbitral awards and their valid enforcement. The judgment under analysis is Cheran Properties Limited v. Kasturi and Sons Limited and Ors.[i], wherein the apex court upheld the award by the NCLT and enforced the same against the appellants who were not a party to the arbitration proceedings. The judgment has reinstated the Supreme Court’s arbitration-friendly outlook and is being widely seen as a progressive step by the legal community. This post aims to analyse the judgment which has cleared the cloud over a number of recurring issues. Factual matrix: “K.C. Palanisami” (KCP), “Cheran Properties Limited” (Cheran) and other entities entered into an agreement with respondents “Sporting Pastime India Limited” (SPIL), a wholly-owned subsidiary of “Kasturi & Sons Limited” (KSL), for transfer of shares. According to the agreement the stipulated transaction was such that SPIL would transfer a certain amount of shares to KSL, out of which 90% of which would then be sold to KCP and its nominees which included Cherian and subsequently, Cherian would receive 95% of KCP’s 90% share. Thereafter, disputes regarding the transfer of shares and title arose between the transacting parties and the matter was settled by way of arbitration. Cheran was not a party to the arbitration proceedings despite being a nominee and the recipient of 95% of the concerned shares. The arbitral award directed KCP and SPIL to return the documents of title and share certificates to KSL and Hindcorp. KCP challenged the award of the arbitral tribunal in the Madras High Court under Section 34 of the Arbitration and Conciliation Act, 1996 (henceforth, the Act).The challenge was dismissed first by single judge and on appeal by division bench of Madras High Court. Even the appeal against the said order of Division Bench of Madras High Court was dismissed by the Supreme Court. The High Court had made an observation that the shares had not been purchased by the CPL as a matter of an independent right but as a nominee of KCP. Meanwhile KSL commenced proceedings, inter alia, for the rectification of the register of SPIL before the National Company Law Tribunal (‘NCLT’) to give effect to the Award. This was vehemently opposed by Cherian. Consequently, NCLT allowed the petition and later the appellate body i.e. the National Company Law Appellate Tribunal (NCLAT) dismissed the appeal leading to the filing of proceedings before the Supreme Court of India. Procedural contentions: It was contended on behalf of Cherian (“the Appellants”) that KSL compounded proceedings on wrong legal basis in the first place, therefore, its approach was untenable and that, the appellant ought to have been a party to the arbitral proceedings. Emphasis was placed with regard to Section 36 of the Act to assert that that an arbitral award has to be enforced as a decree of a civil court. The case of Chloro Controls India Private Limited v. Severn Trent Water Purification Inc.[ii] was distinguished by contending that the concerned case dealt with the provisions of international arbitration while the case at hand dealt with domestic arbitration. Reliance was placed on Indowind Energy Limited v Wescare (India) Limited[iii] and S.N.Prasad, Hitek Industries (Bihar) Limited v Monnet Finance Limited[iv] to contend that Cherian cannot be made to be a party to the arbitration agreement and the subsequent award as it wasn’t a signatory to the proceedings. Another principal contention put forth by the appellants was that the arbitral award couldn’t be executed by a tribunal such as the NCLT/NCLAT in a “camouflaged petition” under sections of the Companies Act, 1956 which would then be prohibited by the Act. Counsel for the respondents contended that the exclusive share transfer agreement between the parties stipulated Cherian to be bound by it. The Indowind case, as relied upon by the appellants is not applicable here as it involves a completely different set of laws. The counsels also argued that Section 35 of the Act, indicates that an arbitral award binds parties to an arbitration and persons claiming under them. They have, at all material times, been aware of the fact that they were claiming under KCP in pursuance of the original agreement. It was also argued that the NCLT possessed the exclusive jurisdiction to direct a rectification of the register of the company while trying to retain the authority of Chloro Controls whose judgment explicitly said that an arbitration agreement entered into by a company within a group of companies could bind non-signatory affiliates, if the circumstances could demonstrate a mutual intention of the parties to bind both signatories and non-signatories. Judgment: The court upheld the validity of Chloro Controls and declared along the same lines that Cherian was bound by the agreement even though it wasn’t a signatory and observed that the transfer of shares to nominees was also subsequent to the express condition requiring the nominees to be bound by the share transfer agreement. Relying on the very recent judgment of Sundaram Finance Limited v Abdul Samad[v], the court also concluded that execution proceedings can be initiated anywhere in the country where the assets of the judgment debtor are located and decisively held that award could be enforced by the NCLT. The Court further deemed approaching the NCLT necessary for registration of transfer and rectification of the register, and the only remedy available to KSL, thereby dismissing the appeal. Analysis: The case highlights and reminds us of some important concepts of arbitration law that have evolved over time. To establish Cherian’s inclusivity in the award meted out, the Supreme Court aptly relied on Indowind, in which it was held, “It is fundamental that a provision for arbitration to constitute an arbitration agreement for the purpose of Section 7 should satisfy two conditions: (i) it should be between

Section 26 of the Arbitration (Amendment) Act, 2015 gets Retrospective and Prospective Application. [Fathima Nooh] The author is a third-year student at National University of Advanced Legal Studies, Kochi. She may be reached at vnfathima89@gmail.com. The Supreme Court has, in its latest judgment in the case of Board of Cricket Council of India v. Kochi Cricket Board, settled an important issue about the applicability of the 2015 amendments to the Arbitration and Conciliation Act, 1996. The Court was called upon to decide whether section 36 of the Act, as amended by the 2015 Amendment Act, was applicable to applications filed under section 34 before the commencement of the Amendment Act. The Court decided in the affirmative. The decision is welcome as it is in line with the pro-arbitration approach followed by the Supreme Court in its recent decisions. Section 26 of the 2015 Amendment Act, which deals with the applicability of the amendments, has been controversial ever since its introduction as it left unclear whether the amendments would apply to the court proceedings in relation to the arbitration proceedings commenced prior to the commencement of the Amendment Act. There have been several conflicting decisions by various High Courts in the country in this regard. The Case The case came before the Supreme Court as a civil appeal arising out of a Special Leave Petition of 2016. Seven other similar appeals were also considered along with this appeal.  Four of these appeals related to section 34 applications filed prior to the commencement of the Amendment Act and the remaining four appeals pertained to similar applications filed after the commencement of the Amendment Act. The issue involved in the case was whether the amended section 36 would apply to section 34 applications filed before the commencement of the Act i.e. the pending applications, and whether the same would apply to section 34 applications filed after the commencement of the Act, though the arbitration proceedings were commenced prior to the coming into force of the Amendment Act. Before discussing the decision of the Court, it is pertinent to have a look at section 36 of the Act in both the pre-amendment and the post-amendment versions. The pre-amendment version reads as follows: Where the time for making an application to set aside the arbitral award under section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the Court. The post-amendment section 36, while providing that the arbitral award shall be enforced in accordance with the provisions of the Code of Civil Procedure, 1908, in the same manner as if it were a decree of the court in case the time for making an application to set aside the award under section 34 has expired, subjects the same to its sub-section (2), which provides that: Where an application to set aside the arbitral award has been filed in the Court under section 34, the filing of such an application shall not by itself render that award unenforceable, unless the Court grants an order of stay of the operation of the said arbitral award in accordance with the provisions of sub-section (3), on a separate application made for that purpose.  The Decision Section 26 of the Amendment Act lays down that the Amendment Act shall not apply to“the arbitral proceedings commenced, the arbitral proceedings commenced, in accordance with the provisions of section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree, but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act.” The Court observed that section 26 has two separate and discrete parts as indicated by the word “but” in between. The first part refers to the Amendment Act not applying to certain proceedings and the second refers to its applicability to certain proceedings. The first part undoubtedly applied to arbitration proceedings as evident from the wording of the section “…to arbitration proceedings…,” but the second part makes the interpretation of the section difficult by using the expression “in relation to arbitration proceedings.” The second part does not have any reference to section 21, which speaks of the arbitration proceedings commencing on the date on which the request for referral has been received by the respondent; therefore, it was concluded that the second part does not include arbitration proceedings but rather court proceedings in relation to arbitral proceedings. Thus, the Court found that it is the commencement of these court proceedings that is referred to in the second part of section 26. The Court thus noted:  “The scheme of Section 26 is thus clear: that the Amendment Act is prospective in nature, and will apply to those arbitral proceedings that are commenced, as understood by Section 21 of the principal Act, on or after the Amendment Act, and to Court proceedings which have commenced on or after the Amendment Act came into force.” While the position regarding the arbitration proceedings commenced after the coming into force of the Amendment Act was clear, the same was not true regarding section 34 applications filed before the commencement of the Amendment Act. In order to make the position clear, the Court equated “enforcement” (as found in section 36) with execution. Under section 36 of the principal Act, the arbitration award is a decree and thus is enforced as per the provisions of the Code of Civil Procedure, 1908. The decree can be enforced only through the execution process given in order XXI of the Code. The Court further observed that the old version of section 36 was only a clog in the right of the decree-holder, who cannot execute the award in his favour unless the conditions in the section are met. This does not mean that there is a corresponding right in the judgment debtor to stay the execution of the award.  Thus, since execution clearly pertains to the “realm of procedure,”  the new section 36 would also

The Arbitration and Conciliation (Amendment) Bill, 2018: Unclogging the Arbitral Logjam. [Soham Banerjee] The author is a fourth-year student at GLC Mumbai. He may be reached at sohambanerjee.glc@gmail.com. Ever since India moved into the top 100 in the World Bank’s Ease of Doing Business report, the general perception about our country steadily becoming investor-friendly has received a major fillip. The path to ensuring that India becomes a major industrial hub has been possible majorly through the sustained efforts of the government in policy reforms and formulations, something which was on display in full flow recently when the Union Cabinet approved the Arbitration and Conciliation (Amendment) Bill, 2018 (Bill). It is a foregone conclusion that the principal deterrence behind investors not perceiving India as a major investment hub is the protracted dispute resolution mechanism currently in operation in the country. The clogged up judicial system coupled with the ineffective Alternate Dispute Resolution (ADR) mechanisms makes the resolution of disputes arising out of investments in the country a costly and expensive affair. This is why the recent Bill approved by the Union Cabinet in bringing about amendments to the Arbitration and Conciliation Act, 1996 (Act) serves as a much-needed intervention in the ills that have plagued the arbitral regime in India. Proposed Amendments The object and intent of the Bill makes it evident that the government is keen on establishing India as a major hub of ADR. The amendments to the 1996 Act, it is said, would “facilitate achieving the goal of improving institutional arbitration by establishing an independent body to lay down standards, make arbitration process more party friendly, cost effective and ensure timely disposal of arbitration cases.” The following are the primary amendments sought to be introduced via the passing of this Bill: Establishment of the Arbitration Council of India (ACI), a statutory body tasked with promoting and upholding institutional arbitrations in the country; Amendment to section 29A of the Act; Introduction of sections 42A and 42B in the Act; and Introduction of section 87 in the Act. We shall deal with each of these amendments in greater detail hereon. The Arbitration Council of India The creation of the ACI is by far the most unique feature of this Bill. The Bill suggests the formation of a separate, independent and statutory body in the form of the ACI which shall be presided over by: a judge of the Supreme Court; or the Chief Justice or any other judge of the High Court; or any other eminent person, including an academician, apart from other government nominees. The primary functions of the ACI include inter alia: grading arbitral institutions and accrediting arbitrators by laying down prescribed norms; initiating measures to promote arbitration, mediation, conciliation and other ADR Mechanisms; evolving policy guidelines and regulations which shall lay down uniform standards for the practice and propagation of ADR mechanisms in India; facilitating quick appointment of arbitrators through designated arbitral institutions by the Supreme Court or the High Court; clothing the Council with the function of maintaining an electronic depository of all arbitral awards rendered. Amendment to Section 29A of the Act Section 29A of the Act, introduced by the Arbitration and Conciliation (Amendment) Act, 2015, sought to impose a time limit of 12 months on the way arbitrations were to be conducted. The section mandated that an award should be passed within twelve months of the arbitrators entering reference.[1] The parties were, however, free by consent to extend the said time limit to 6 more months. The problem in the implementation of this section arose in the lapse of the mandate of the tribunal should the award not have been made within this 18-month period, subject to the court extending the said period before or after its lapse. Furthermore, the proviso to this section also empowered the courts to deduct the fee of the tribunal should the delay be attributable to the same and vested the courts with the power to substitute one or all the arbitrators on the tribunal. Therefore, merely in terms of broadening the scope of judicial interference in arbitral proceedings and destroying party autonomy, section 29A posed grave challenges to the independence of the arbitral regime in the country. However, the Bill makes an honest effort to do away with the incongruencies introduced by section 29A of the amended Act. The operation of section 29A had made it difficult for arbitral tribunals to conclude proceedings within the prescribed time limit as the stage of pleadings and recording of evidence (wherever necessary) often made the rendering of the award within the prescribed time limit nugatory. The Bill seeks to counter the imbalance inherent in section 29A through the following two ways: initiating the 12-month cut-off period from the date of conclusion of pleadings of the parties as opposed to the date of the arbitrators entering upon reference; and excluding international arbitrations from the limited timeline of making the arbitral award. Introduction of Sections 42A and 42B A novel addition to the arbitral regime, the proposed sections 42A and 42B, seek to redress the lacunae left unaddressed by the amendments to the Act in 1996 and 2015. Section 42A enjoins upon the arbitrators and the arbitral institutions the duty to ensure confidentiality of the arbitral proceedings, save the award. Section 42B thereafter absolves the arbitrators from any suit or legal proceeding initiated against them in respect of any action they undertake in good faith during the arbitral proceedings. The intent, therefore, behind the incorporation of these two sections is clear: ensuring a speedy and efficient arbitral process where the arbitrators are free from any extraneous consideration while conducting the proceeding or rendering the award; ensuring a transparent and equitable arbitral process, bereft of any unintended breaches of information or data; and encouraging and promoting investors to resort to arbitration for the settlement of their disputes in an efficacious and time-bound manner. Introduction of Section 87 Another significant change envisioned by the Bill is the removal of difficulties posed by the interpretation of section 26

Preserving the Quintessential Value of the Arbitration and Conciliation Act, 1996: Analysing the Supreme Court’s Decision in Sundaram Finance Limited v. Abdul Samad. [Megha Tiwari and Amrit Singh] The authors are fourth-year students of WBNUJS Kolkata. Arbitration has evolved as an efficacious alternative to litigation for settlement of disputes, and is now considered an important tool in promoting investment in Indian businesses. The recent amendments to the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”) and the subsequent judicial pronouncements have strived to make dispute resolution swifter. In keeping with this philosophy, the Supreme Court delivered its judgment in the case of Sundaram Finance Limited v. Abdul Samad,[1] conclusively settling a matter dividing opinion between various high courts.  The issue in contention was whether the execution of an arbitral award could be done in the court in whose jurisdiction the assets are located without obtaining a transfer of decree from the court originally having jurisdiction, as provided for in the Code for Civil Procedure, 1908 (hereinafter referred to as “the Code”). Facts of the Case The Appellant had initiated arbitral proceedings against the Respondents for repayment of a loan granted for purchasing a vehicle. A notice was served upon the Respondents by publication, but the latter failed to appear for the arbitral proceedings. Hence, an ex-parte award was passed directing them to repay the loan amount to the Appellants, with post-judgment interest at the rate of 18%. Consequently, execution proceedings were filed in a trial court at Morena, Madhya Pradesh, where the assets of the respondents were located. However, the trial court returned the application for lack of jurisdiction, stating that since the award is to be executed in the manner of execution of a decree,[2] the Appellants would first have to obtain a transfer of decree from the court originally possessing jurisdiction. As the trial court’s order was in adherence to the view adopted by the Madhya Pradesh High Court in earlier decisions, the Appellants preferred an application directly to the Supreme Court by special leave. The Supreme Court discussed in detail the view adopted by the Madhya Pradesh and the Himachal Pradesh high courts on one side favouring the requirement of transfer of decree, and that of the Delhi, Kerala, Madras, Rajasthan, Allahabad, Haryana and Karnataka high courts on the other. The Opposing Views Transfer of decree must be obtained before filing for execution of an award In the case of Computer Sciences Corporation India Pvt. Ltd. v. Harishchandra Lodwal,[3] the Madhya Pradesh High Court explained that section 36 of the Act provides that an arbitral award must be enforced as a decree of the court under the Code. When a decree is sought to be enforced in a court where the assets are located, section 39 of the Code requires a transfer of decree from the court that passed the decree. The High Court opined that though an arbitral award is not passed by a court, the relevant court for arbitral proceedings is defined in section 42 of the Act read with section 2(e) thereof. Therefore, a transfer of decree must be obtained for the execution of the award in the court where the assets are located. In the case of Jasvinder Kaur v. Tata Motor Finance Limited,[4] the High Court of Himachal Pradesh came to the same conclusion by incorrectly relying on the decision of the Karnataka High Court in ICDS Ltd. v. Mangala Builders Pvt. Ltd.[5] to hold that a transfer of decree was required for execution of an arbitral award. In ICDS Ltd.,[6] the issue adjudicated upon was whether an arbitral award could be executed in a court lower than the principal civil court in a district, as required by section 2(e) of the Act. The court held that it could not, and ordered the respondents to file for execution in the principal civil court. Since the execution application was not filed in a court outside the jurisdiction of the court in section 2(e), the question of transfer of decree was not a matter of contention, and hence, not adjudicated upon. Transfer of decree must not be obtained for execution of an award In the case of Daelim Industrial Co. Ltd. v. Numaligarh Refinery Ltd.,[7] the Delhi High Court reasoned that the transfer of decree is to be obtained from the court that passed the decree, but an arbitral award is passed by an arbitrator, and not a court. It was then argued that the concerned court would therefore be the court mentioned in section 42. However, negating this argument, the Delhi High Court held that the jurisdictional clause in section 42 of the Act would only apply to arbitral proceedings, and execution of an award is not an arbitral proceeding. Therefore, the award must be executed directly by the court without requiring a transfer of decree. The same view was later adopted by the Rajasthan High Court,[8] and the Punjab and Haryana High Court.[9] The Kerala High Court was of the opinion that since a decree is not required for the execution of an award, a transfer of decree could not be obtained, and execution should be done based on a certified copy of the award.[10] The Madras High Court, in its well-reasoned decision in the case of Kotak Mahindra Bank Ltd. v. Sivakama Sundari,[11] ruled that the provisions under the Act are different from those of the Arbitration and Conciliation Act, 1940, which required the district court to pass a decree to confirm the award. Since no confirmation of the award is required under the current Act, the award must be enforced directly. It also explained that the transfer of decree must be done by the court that passed the decree. However, in this case, there is no deeming provision anywhere in the Act stating that the court as defined in section 2(e) would be the court deemed to have passed the decree. Therefore, the award must be executed without requiring a transfer of the decree. The Allahabad High Court held that the arbitrator cannot

Two Indian Parties can Choose a Foreign Seat of Arbitration and a Non-Signatory to the Arbitration Agreement can be Made Party to the Arbitration Proceedings: Delhi High Court in GMR Energy. [Devina Srivastava] The author is a third-year student at Symbiosis Law School, Pune. She may be reached at devina.srivastava@symlaw.ac.in. The Delhi High Court delivered a important judgment on 14th November, 2017 in the case of GMR Energy Ltd. v. Doosan Power Systems India Pvt. Ltd.,[1] resolving the persistent ambiguity regarding two critical issues of arbitration law in India: 1) whether two Indian parties can choose a foreign seat of arbitration, and 2) whether a non-party to the arbitration agreement can be joined to the arbitration proceedings. Answering both questions in the affirmative, the court has adopted a pro-arbitration approach. Though the judgment does open doors for progressive judicial perspectives on arbitration, questions are rife about the reasoning used by the court to reach its decision. Facts of the Case GMR Chattisgarh Energy Ltd. (GCEL) entered into three agreements with Doosan India in 2010 (EPC Agreements). These agreements contained an arbitration clause that specified the rules of Singapore International Arbitration Centre (SIAC) as the rules governing the arbitration. In addition to this, a corporate guarantee was executed between GCEL, GMR Infrastructure Ltd. (GIL) and Doosan in 2013. Further, two MOUs were executed between Doosan and GMR Energy in 2015. All these documents became the subject matter of a dispute when Doosan India invoked arbitration proceedings against GIL, GMR Energy and GCEL. In response to this, GMR Energy filed a civil suit before the Delhi HC seeking a stay against Doosan from continuing arbitration proceedings against it on the ground that it was not a signatory to the arbitration agreement. Doosan, on the contrary, cited the EPC Agreements, the Corporate Guarantee, the two MOUs and factors such as family governance, transfer of shareholding, comingling of funds among GMR Energy and GCEL and GIL and contended that GMR Energy was the ‘alter ego’ of GCEL and GIL. Nevertheless, Delhi HC granted a stay in July, 2017. Doosan then filed an application under Section 45 of the Arbitration Act, 1996 (Act), asking the court to refer parties to arbitration. Issues for Consideration For the purpose of this article, we shall discuss the following issues that arose before the court for consideration: Whether the arbitration is a domestic arbitration, covered by Part I of the Act or an international commercial arbitration, covered by Part II of the Act. Whether GMR can be made a party to the arbitration proceedings. Whether the court should only form a prima facieopinion on the question of alter ego or should it return a finding on it. Contentions of the Parties and Findings of the Court Issue 1: Whether the arbitration is a domestic arbitration, covered by Part I of the Act or an international commercial arbitration, covered by Part II of the Act. GMR contended that the arbitration was a domestic one and was not governed by Part II of the Act and hence, Doosan’s application under Section 45 was not maintainable. The court rejected this contention citing Yograj Infrastructure Ltd. v. Sangyong Engineering & Construction Co. Ltd.[2], in which it was held that where the arbitration clause provides that the proceedings shall be in accordance with the SIAC Rules, it translates to Singapore being the seat of arbitration. GMR Energy raised another argument that as per the definition of ‘international commercial arbitration’,[3] at least one of the parties must be foreign for the arbitration to be an international commercial arbitration. The court rejected this contention and held that as per the decision in Sasan Power Ltd. v. North American Coal Corporation[4], two Indian parties were free to arbitrate outside India and the same would constitute a foreign award. A question that arose was whether the choice of a foreign seat was in contravention of Section 28 of the Indian Contract Act, 1872 as it would constitute an agreement in restraint of legal proceedings. The court answered this question in the negative as the arbitration clause forms a separate and independent substantive contract in itself.[5] Further, it could not be said that choosing a foreign seat amounted to derogation of Indian substantive law as under Section 45; the question only relates to whether the agreement is “null and void, inoperative or incapable of being performed” and it cannot be held to be illegal or void. Issue 2: Whether GMR can be made a party to the arbitration proceedings. This issue arose because GMR was not a signatory to any of the agreements containing the arbitration clause or to the corporate guarantee. Further, the two MOUs had been terminated by Doosan. GMR relied on the judgment given in Chloro Controls v. Seven Trent Water Purification Inc.[6], in which a word of caution against subjecting non-party to arbitration agreement to arbitration proceedings was iterated by the Supreme Court. However, in the same judgment, the court also recognized guarantee, apparent authority, piercing the corporate veil and implied consent as the basis to bind a non-signatory. Further, Doosan drew the court’s attention to a decision of the Singapore High Court inJiang Haiying v. Tan Lim Hui & Anr.[7], in which it was held that the privity rule, though strict, is not absolute and can be bent in situations where it may be imperative to pierce the corporate veil, such as in the case of an alter ego. In consonance with this, the court read Clause 17.1 of the Corporate Guarantee to reach the conclusion that in the present case, the intent of the parties was to consolidate all disputes relating to the project and, hence, GMR could be made a party to the arbitration proceedings. It was especially so because the companies did not observe separate corporate formalities and comingled funds. Resultantly, another question that arose was whether the arbitral tribunal could pierce the corporate veil of the company or whether it is only the court that can exercise such a power. The attention of the court was drawn towards Integrated Sales Services Ltd. v.