Arbitration Law

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.

Power of National Courts to Injunct Investment Arbitration Proceedings: The Indian Position. [Chandni Ghatak] The author is a fourth-year student of National Law University, Jodhpur. The article has been authored under the guidance of Mr. Kartikey Mahajan, an Associate at Kirkland & Ellis LLP. International arbitration works on a sentiment of non-restraint which domestic courts ought to exhibit in relation to such proceedings. However, parties to international treaties containing arbitration clauses often resort to domestic courts to obtain anti-arbitration injunctions, impeding the arbitration process. This post critically analyses one such judgment rendered by the Delhi High Court recently in the case of Union of India v. Vodafone Group PLC United Kingdom & Anr.[1] The Court granted an anti-arbitration injunction against arbitral proceedings initiated by Vodafone Group against Union of India in relation to the provisions contained in the India-UK Bilateral Investment Promotion & Protection Agreement [BIPPA]. These proceedings were initiated because of the retrospective application of taxation laws, causing huge losses to Vodafone. Vodafone International Holdings BV, a subsidiary of the Vodafone Group[2] had, prior to the proceeding being discussed, initiated arbitration proceedings on similar claims under the India and Kingdom of Netherlands BIPPA.[3] In the forthcoming sections, the author shall illustrate the errors in the judgment and  how such practice, if gone unopposed, could threaten India’s aim of emerging as a leading hub of international arbitration. The Rarity of Anti-Arbitration Injunctions in matters concerning Bilateral Investment Treaties International arbitration does not depend on national courts for legitimacy; this recourse is made as a matter of right based on the agreement of the parties.[4] In Maffezini v. Kingdom of Spain[5], the international character of the obligations in these treaties called for the Tribunal to retain the ultimate right to ascertain the scope and meaning of these obligations.  Investment treaties are specifically worded, establishing unambiguously the intent of the parties to be bound by such terms. To allow its frustration due to intervention by national courts would defeat the very purpose of such treaties.[6] Thus, as a matter of general practice, anti-arbitration injunctions are rarely granted. The Occasional Recourse to Anti-Arbitration Injunctions There are a common set of grounds based on which such an order may be passed, such as the existence of oppressive and vexatious arbitration proceedings,[7]  extent of likelihood of parties suffering irreparable harm if such injunction is not granted, and the like.[8] These grounds have been accepted in India as well in the case of Louis Dreyfus[9] [LD] by the Calcutta High Court, which is the only other Indian case to discuss investment treaties at length. The LD case also reinforces the principle of non-interference, which is enshrined even in Indian arbitration law under section 5 of the Arbitration and Conciliation Act, 1996. Abuse of Process – What & How? The Delhi High Court observed that the arbitration proceedings culminated into a type of abuse of process due to the presence of multiplicity of proceedings initiated by a single economic entity along with the emergence of parallel proceedings. Heavy reliance was placed on the case of Orascom v. Algeria[10]  [Orascom] to argue that entities forming part of the same vertical chain, controlled by the same management could not proceed with multiple arbitrations for the same claim.[11] However, this argument may be refuted by analysing the decision of the ICSID Tribunal inAmpal-American Israel Corporation v. Arab Republic of Egypt.[12] The Tribunal therein found that although the claims made by the parent company before one tribunal and the ones made by a 100% owned subsidiary in the parallel arbitration proceeding amount to a double pursuit of the same interest, this exercise is reasonable if the jurisdiction of both the approached forums is unclear. Once jurisdiction is confirmed, only then can the abuse of process argument be made.[13] Therefore, it can be argued that not only has such form of proceedings been accepted to a certain extent, it certainly is not a ground to grant an anti-arbitration injunction. Problems with the Delhi High Court Judgment The risk of causing ‘due process’ paranoia Due process paranoia is understood as a perceived reluctance by tribunals to act decisively in certain situations for fear of the award being challenged based on a party not having had the chance to present its case fully.[14] In SGS v. Pakistan[15], wherein after a series of adverse judgments rendered by the Pakistan Supreme Court, when arbitration proceedings ultimately continued, one of the arbitrators exited, considering his inability to ignore the past injunction passed on the said proceedings by the concerned national court.[16] Even in the instant case, the arbitration had witnessed several procedural impediments such as resignation of the Indian arbitrators in the past,[17] and pleas made by the Indian Government to change the arbitrators[18]. Therefore, it may be argued that this intervention by the domestic court could lead to the tribunal adopting such an overly cautious approach. Improper reliance on Modi Entertainment A major argument used to justify the passing of such an injunction has been the proving of India as a ‘natural’ jurisdiction.[19] The case of Modi Entertainment Networks,[20] was relied on as a landmark Indian judgment laying down the principles on natural jurisdiction. This is an incorrect position, considering that in the aforesaid judgment, the Court did not have to ascertain such principle in keeping with the presence of an arbitration clause.[21]  Despite an express arbitration clause in the India-UK BIPPA,[22] by using the aforesaid principles, the Hon’ble High Court is creating a license to disregard arbitration clauses. Taxation as a subject is not excluded under the India-UK BIPPA A ground for granting such injunction has been that taxation as envisaged under the Indian Constitution is a subject of sovereign concern, thereby disallowing its arbitrability.[23] This is erroneous since the scope of the concerned BIPPA has not laid down any express exclusion as to matters concerning taxation being out of the scope of the Treaty.[24] If India wished to exclude such matter, it would have been done by way of the provisions of the BIT itself as it has done in the past in, for instance, the India-Austria BIT. The arbitral claims in the instant case deal specifically with

Employee of a Party Allowed as Arbitrator: Analyzing Aravali Power v. Era Infra Engineering. [Akshita Pandey] The author is a third-year student of National Law Institute University, Bhopal.] The preamble to the Arbitration and Conciliation Act, 1996 (hereinafter, “1996 Act”) states that it is an Act to amend and consolidate the law relating to domestic arbitration. The 1996 Act is based on the UNCITRAL Model Law on International Commercial Arbitration, 1985 and the UNCITRAL Conciliation Rules, 1980. Though a marked improvement compared to its predecessor, the legislation has witnessed several issues and challenges in its implementation. One of the contentious issues relates to the appointment of an employee as an arbitrator in the arbitration proceedings. On the one hand, concerns as to the impartiality and independence of the arbitrator arise and, on the other hand, the question as to the extent of a court’s interference with the arbitration procedure agreed upon by the parties is also to be considered. The following discussion delves into aforementioned issues by analyzing the latest Supreme Court decision in the case ofAravali Power Company Pvt. Ltd. v. Era Infra Engineering Ltd..[1] Facts of the Case The construction work of a permanent township for Indira Gandhi Super Thermal Power Project at Jhajjar, Haryana was awarded to the Respondent-M/s. Era Infra Engineering Ltd. A contract consisting of the General Conditions of Contract (GCC) was signed, clause 56 of which contained the arbitration clause. The relevant portion of the clause is as follows: “There will be no objections, if the Arbitrator so appointed is an employee of NTPC Limited (formerly National Thermal Power Corporation Ltd.), and that he had to deal with the matters to which the contract relates and that in the course of his duties as such he had expressed views on all or any of the matters in disputes or difference.” Due to failure to complete the work on the scheduled time, the Appellant-Aravali Power Company Pvt. Ltd. cancelled the remaining works. The Respondent alleged that the delays were not attributable to them and invoked arbitration, further stating that the arbitrator be a retired High Court judge. The Chief Executive Officer of the Appellant was appointed as the sole arbitrator by the Appellant pursuant to the GCC. The arbitrator fixed the date of hearing wherein the Respondent sought an extension of one month. It was after that that the Respondent objected to the appointment of the arbitrator. The arbitrator rejected the objection on the ground that the Respondent had participated in the previous arbitral proceedings without any protest. The Respondent approached the High Court of Delhi where the arbitration proceedings were stayed and the appointment of the arbitrator was set aside. The decision of the High Court was challenged by the Appellant. Issue before the Court The issue involved in the case, therefore, was whether naming an employee of one of the parties as an arbitrator before the Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter, “Amendment Act”) came into force, renders such appointment invalid and unenforceable. The Decision The division bench of the Supreme Court undertook an analysis of the statutory provisions and the judgments dealing with the appointment of an employee of a party to the arbitration agreement as an arbitrator. Section 12(1) of the 1996 Act requires an arbitrator to disclose in writing any circumstances that give rise to justifiable doubts as to his independence or impartiality. Section 12(3) states that the appointment of an arbitrator can also be challenged on this ground. The general rule is that courts should give effect to the provisions of the arbitration agreement.[2] But where the independence and impartiality of the arbitrator is in doubt, the court has the power to make alternative arrangements.[3] Thus, referring the dispute to the named arbitrator shall be the rule and nominating an independent arbitrator an exception.[4] In its previous decisions, the Supreme Court has held that no provision of the 1996 Act suggests that any provision in an arbitration agreement naming the arbitrator will be invalid if such named arbitrator is an employee of one of the parties to the arbitration agreement. However, a situation may arise where there is a justifiable apprehension of the independence or impartiality of the employee arbitrator. This is possible (i) if such person was the controlling or dealing authority in regard to the subject contract, or (ii) if he is a direct subordinate (as contrasted from an officer of an inferior rank in some other department) to the officer whose decision is the subject-matter of the dispute.[5] In the instant case, the Court considered both the scenarios where the appointment of employee as an arbitrator gives rise to justifiable doubts with respect to his independence or impartiality. With respect to the first ground, the Court held that in light of the facts placed before it, the arbitrator in the present matter cannot be said to be a dealing authority in regard to the contract. Further, the arbitrator held the position of the CEO and was in no way subordinate to the officer whose decision is the subject matter of dispute. In fact, the decision, which could be a subject matter of dispute, was that of his subordinates. Hence, there was no justifiable apprehension as to the independence or impartiality of the named arbitrator and his appointment was valid. Dealing with the question of the applicability of the Amendment Act, the Court held that the arbitration proceedings were invoked on 29.07.2015 and the amendment to the 1996 Act was deemed to have come into force on 23.10.2015 and, therefore, the instant case would be governed by the pre-amendment Act. The Court also clarified that in post-amendment cases, if the appointment of the arbitrator is contrary to the amended provisions, it would be illegal, notwithstanding the fact that it is in conformity with the arbitration clause. Analysis The Supreme Court has once again upheld the validity of an arbitration clause providing for the appointment of an employee of one of the parties as an arbitrator. Generally, the provision of an employee arbitrator is found in

Application of Natural Justice in Arbitral Proceedings. [M. Koshy Mammen] The author is a third-year student of Jindal Global Law School. Since arbitration is increasingly being favoured over litigation, it is imperative that the principles of natural justice which guide the judiciary should also be followed by arbitration when giving an award. This article examines whether the Arbitration and Conciliation Act, 1996 (“Act”) mandates the arbitral tribunal or the arbitrator to follow the principles of natural justice when adjudicating upon a matter. The first part discusses why it is essential that arbitration proceedings must follow the principles of natural justice. The next part deals with the principle audi alteram partem and whether it is observed in arbitrations. And the final part explores whether the principle nemo judex in sua causa is adhered to in arbitrations in India. There are three major reasons why the principles natural justice must be followed in arbitration proceedings. Firstly, the award of an arbitral tribunal is final and binding and cannot be challenged like a court decision (save for certain situations). For appealing an order,[1] there are even more limited grounds and it is not ordinarily allowed. Hence, it is essential that the principles of natural justice are followed when adjudicating upon a matter and giving an award for the first time. Secondly, not all the countries have a sophisticated arbitration system like Singapore or London. Modern seats of arbitration may have flaws since they do not have a history of arbitration culture. This lets arbitrators and the parties take advantage of the system and use it to their benefit. One instance is the arbitrator giving an award in favour of the influential and more powerful party so that they may be reappointed again for arbitrations later. There may be an instance where the parties are at unequal bargaining power, or where one of the parties may be lured into the arbitration, or where one party is unknowingly invited to arbitrate or is not aware of its rights. Thirdly, more often than not, the arbitrator appointed is skilled only in a particular area of knowledge and does not know the manner in which judges must conduct themselves. One cannot reasonably expect arbitrators to behave in the same standard as the judiciary. Therefore, it is essential that principles of natural justice are set as the minimum benchmark to adhere to in order to make certain that the adjudication happens in a fair manner. In an arbitration agreement, after a breach, if one party refuses to appear in front of the arbitral tribunal, the tribunal can go ahead with the proceedings[2] and give an award not in favor of that party and the Courts would not entertain a challenge on the ground that he was not provided with a chance to present his case. However, the case is not the same when a party not mentioned in the arbitration agreement is forced to become a party in an arbitration he did not agree to. If the non-signatory refuses to come before the tribunal, the tribunal may still go ahead and give an award in the absence of one party. One needs to examine if this process complies with the principle of audi alteram partem. One can argue that the non-signatory had the chance to present his case but deliberately rejected it and hence must face the outcome but this argument is flimsy considering the fact that audi alteram partem is the cornerstone of principles of natural justice and it is a clear violation of it. The law in India regarding forcing non-signatories to be bound by arbitration is unsettled. In Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya[3], the Court stated that arbitration was a viable option only as against some of the parties and the Act did not confer any power on the judiciary to add non-signatories to arbitration agreements. The case Indowind Energy Ltd. v. Wescare (I) Ltd.[4] upheld the Sukanya Holdings judgement. Both the cases did not allow a non-signatory to be added to the arbitration proceedings. Following these judgments, in Sumitomo Corporation v. CDS Financial Services,[5] the Court refused to refer non-signatories to the arbitration stating that arbitration strictly needs to be between parties mentioned in the agreement, as per section 2(1)(h) of the Act. One can observe that until this judgement, the Court was cautious not to violate the rule of audi alteram partemin arbitral proceedings. However, in Chloro Controls India Pvt. Ltd. v. Severn Trent Water Purification Inc.,[6] the Court reversed this position and expanded the scope of arbitration agreements. This landmark judgement extended arbitration agreements to non-signatories as well. Taking a cue from this judgment, the Amendment Act of 2015 amended section 8 of the Act to include ‘any party claiming through or under such party.’[7] Therefore, with this amendment, arbitration agreements may be extended to non-signatories in both domestic arbitrations and in international arbitrations seated in India. If a non-signatory is asked to present himself before a tribunal and he refuses to do so, the tribunal can make an award in his absence. Therefore, this might trigger the principle of audi alteram partem. No matter how cautious the tribunal may be to anticipate the arguments which may be put forward by the absent party, it will not be sufficient. Section 18 states that the arbitral tribunal shall give each party the opportunity to present its case.[8] This provision may seem to incorporate the principle of audi alteram partem. However, it was held by the Court that section 18 by itself is not a ground for challenging an award.[9] To the casual eye, the provisions seem to be in compliance with the hearing rule; however, a careful examination has shown otherwise. As regards the question whether the rule of nemo judex in sua causa is adhered to in arbitrations in India, it is pertinent to examine section 13 which lays down the procedure to challenge an arbitrator in order to remove him. Section 13(3) states that the arbitrator who is being challenged can himself determine his own competence as an arbitrator.[10] This is a clear violation of the principle of nemo judex in causa

Indus Mobile Distribution Private Limited v. Datawind Innovations Private Limited: A Critique. [Shaalini Agrawal] is a third-year student of Gujarat National Law University. The seat of arbitration has various internal and external implications for the arbitral proceedings. One such implication is that the administration and control over the arbitration is done by the courts of the country where the seat is located. Such courts have the power to regulate the conduct of arbitration and hear application challenging the arbitral award.[1] Where the seat of arbitration is designated, expressly or by implication, by the parties as India, the courts in India will have supervisory jurisdiction over the arbitral proceedings and Part 1 of the Arbitration and Conciliation Act, 1996 (“Act”) will apply. In case of domestic arbitration where parties have chosen a neutral city as the seat of arbitration, the question that arises for consideration is which courts in India will have the jurisdiction- courts of seat of arbitration or court which has the subject matter jurisdiction under sections 16-20 of the Civil Procedure Code, 1908 (“Code”). There have been conflicting judgements of various High Courts and the Supreme Court on this issue. Most recently, the Supreme Court in Indus Mobile Distribution Private Limited v. Datawind Innovations Private Limited[2] (“Indus Mobile”) has held that the designation of seat in the arbitration agreement is akin to an exclusive jurisdiction clause. It means that when the parties have chosen a particular place as the seat of arbitration, the courts of that place will have exclusive jurisdiction to regulate the arbitral proceedings. This is irrespective of where the cause of action arose or where the parties or the subject matter of dispute is located. This case comment argues that the judgement in Indus Mobile was erroneous because firstly, it completely ignored the wording of section 2(1)(e) of the Act and secondly, it ignored the judicial precedents of over 70 years that interpreted section 2(1)(e) to confer jurisdiction only on the courts that have territorial jurisdiction over the subject matter of the arbitration according to sections 16-20 of the Code and misplaced reliance on Bharat Aluminium Co v. Kaiser Aluminium Technical Services[3] (“BALCO”). Facts of the Case In this case, Respondent no. 1 was engaged in the manufacture, marketing and distribution of mobile phones and tablets with its registered office at Amritsar. An agreement was entered into between the Appellant and the Respondent no. 1 where the latter would be the former’s retail chain partner. Respondent no. 1 was supplying goods to the Appellant from New Delhi to Chennai. Dispute arose between the two parties. Respondent no. 1 sent a notice to the Appellant stating the default of outstanding dues of Rs.5 crores with interest on the part of the latter and called upon it to pay the outstanding dues within 7 days. Appellant failed to pay and the arbitration clause in the agreement was invoked by the Respondent No. 1. Clause 18 of the agreement provided that the “…dispute shall be finally settled by arbitration conducted under the provisions of the Arbitration & Conciliation Act 1996 by reference to a sole Arbitrator which shall be mutually agreed by the parties. Such arbitration shall be conducted at Mumbai, in English language.” Clause 19 of the agreement further provided that “all disputes & differences of any kind whatever arising out of or in connection with this Agreement shall be subject to the exclusive jurisdiction of courts of Mumbai only.” Respondent no. 1 then filed two petitions under sections 9 and 11 of the Arbitration and Conciliation Act, 1996 before the Delhi High Court. The Delhi High Court disposed of both the petitions holding that since no part of the cause of action arose in Mumbai, only the courts of Delhi and Chennai (from and to where goods were supplied), and Amritsar (which is the registered office of the appellant company)  could have jurisdiction over the matter. This is so irrespective of the exclusive jurisdiction clause as the courts in Mumbai would have no jurisdiction in the first place. Since the court in Delhi was the first court that was approached, it would have exclusive jurisdiction over the matter. Appellants approached the Supreme Court where they argued that even if no part of the cause of action arose at Mumbai, yet courts in Mumbai would have exclusive jurisdiction over all the proceedings as the seat of the arbitration is at Mumbai. Respondents supported the Delhi High Court judgement by stating that one of the tests prescribed by section 16-20, Civil Procedure Code, 1908, to give a court jurisdiction over the matter must at least be fulfilled and merely the designation of seat as Mumbai would not give exclusive jurisdiction over the proceedings to the Mumbai courts. Decision of the Supreme Court and its Analysis The Supreme Court set aside the order of the Delhi High Court in the following words: “..the moment the seat is designated, it is akin to an exclusive jurisdiction clause. On the facts of the present case, it is clear that the seat of arbitration is Mumbai and Clause 19 further makes it clear that jurisdiction exclusively vests in the Mumbai courts. Under the Law of Arbitration, unlike the Code of Civil Procedure which applies to suits filed in courts, a reference to ‘seat’ is a concept by which a neutral venue can be chosen by the parties to an arbitration clause. The neutral venue may not in the classical sense have jurisdiction – that is, no part of the cause of action may have arisen at the neutral venue and neither would any of the provisions of Section 16 to 21 of the CPC be attracted. In arbitration law however, as has been held above, the moment ‘seat’ is determined, the fact that the seat is at Mumbai would vest Mumbai courts with exclusive jurisdiction for purposes of regulating arbitral proceedings arising out of the agreement between the parties.” However, the Supreme Court in the above paragraph upheld two conflicting propositions. Firstly, it held that “On the facts of the

Section 29A: A Target On Party Autonomy. [Shashank Chaddha] The author is a fourth-year student of National Law Institute University, Bhopal. The Arbitration and Conciliation Act, 1996 (“Act”), amended by the Arbitration and Conciliation (Amendment) Act, 2015 (“Amending Act”), introduced a host of changes, one of them being the insertion of two new sections– Section 29A and Section 29B- to the Act. The two sections, essentially, place an obligation on the parties, in addition to placing an obligation on the arbitral tribunal, to conclude the arbitration proceedings within a time period of 12 months, or if an extension is granted, within 18 months.[i] Section 29B talks about a new mode of procedure that may be adopted by an arbitral tribunal towards completing arbitration proceedings within 6 months’ time period. While this insertion may cure the evil of delays that used to considerably hamper the arbitration proceedings, section 29A, which forms the focus of this post, compromises with the grund-norm or the backbone on which arbitration lies– party autonomy. The present article attempts to highlight this scenario. Demystifying the Provision Section 29A uses the word ‘shall’,[ii] which implies a mandate on the part of the arbitral tribunal to deliver a final award within 12+6 months; else, there will be a penalty imposed by the High Court on the arbitrator’s fee,[iii] or the arbitrator’s mandate may be terminated.[iv] However, the section overlooks the possibility of cases where the parties themselves are responsible for delay in cases, or where due to reasons attributable to complex nature, the proceedings cannot be completed within the 12+6 months’ time, without any fault of the arbitrator or the parties. The section does not provide any mechanism to deal with such situation. Where the parties enter into an arbitration agreement, in case of ad-hoc arbitration, they lay down the procedure to deal with various aspects, such as evidence, submission of claims, etc., which might take some time when seen from a practical point of view. Therefore, when the agreement itself has provided for detailed steps to be undertaken during a proceeding, which cannot be practically completed within the statutory limited time frame, the provisions of the agreement come in direct conflict with section 29A. This means, on the one hand, that we have the arbitration agreement reflecting parties’ intention based on party autonomy, and, on the other hand, that we have the legislature’s will to complete the arbitration proceedings within a certain period, even if that has the power of overriding the express procedure laid down by the parties. When we deal with this section, it is also important to understand the intention behind the insertion of this section. The Law Commission of India, in its 176th Report[v] (2001), had suggested inserting a statutory limit to be imposed for completion of arbitration proceedings. However, in that Report, the Commission had suggested introduction of a 24-month time limit (inclusive of an extension of 12 months). The Commission observed in this regard: “We are not inclined to suggest a cap on the power of extension as recommended by the Law Commission earlier. There may be cases where the court feels that more than 24 months is necessary. It can be left to the court to fix an upper limit. It must be provided that beyond 24 months, neither the parties by consent, nor the arbitral tribunal could extend the period. The court’s order will be necessary in this regard.”[vi] However, after this Report was released, the Central Government released a Consultation Paper,[vii] based on the said Report, and the Committee was of the opinion that: “…neither any time limit should be fixed as contemplated by the proposed section 29A nor should the court be required to supervise and monitor arbitrations with a view to expediting the completion thereof. None of these steps is conducive to the expeditious completion of the arbitral proceedings. Moreover, court control and supervision over arbitration is neither in the interest of growth of arbitration in India nor in tune with the best international practices in the field of arbitration. The Committee is of the opinion that with the proposed amendment the arbitral tribunal will become an organ of the court rather than a party-structured dispute resolution mechanism. The Committee, therefore, recommends the deletion of the proposed section 29A from the Amendment Bill.”[viii] However, taking source from the 176th Report, the Parliament inserted section 29A to the Act, ignoring the Consultation Paper. Comment Observing that section 29A has the potential to comprise the basic tenets of arbitration, it would have been a pro-arbitration approach had there been a provision regarding allowing parties to give their own thought as to how long, and in what manner, do they wish to carry the proceedings forward through according primacy to the arbitration agreement, by beginning the section with “Unless otherwise agreed by the parties…”. The express intention of the parties must be respected, in entirety. Anything to the contrary might result in further litigation, rather than minimizing it, where a party can allege that the arbitration proceedings were carried out hastily and that proper opportunity was not given to such party. The sanctity of the principle of party autonomy must be restored, and the parties should be free to contract the methods for carrying out the private mode of dispute resolution mechanism. [i] The Act, section 29A(3). [ii] Ibid, section 29A(1). [iii] Ibid, section 29A(4), [iv]  Ibid, section 29A(6). [v]  Law Commission of India, 176th Report, available at http://lawcommissionofindia.nic.in/arb.pdf, pages 126-127. [vi]  Ibid, page 125, ¶ 2.21.4. [vii]  Ministry of Law & Justice, Government of India, Proposed Amendments to the Arbitration & Conciliation Act, 1996, available at http://lawmin.nic.in/la/consultationpaper.pdf (Annexure-IV of the Paper). [viii]  Ibid, ¶127.