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Mr. Peacock, welcome to the Arbitration Workshop! Firstly, we are extremely honoured to have you agree to give us your interview and to share your perspective with our readers. Q. Before we delve in, may we request you to kindly introduce yourself and tell us about the origins of your interest in the field of Arbitration? A. Firstly, thank you for the invitation and congratulations on The Arbitration Workshop project. I am a Dispute Resolution lawyer, and international arbitration specialist, based in London. I am a partner in the law firm Herbert Smith Freehills (HSF) and Head of the India Disputes practice. I have been involved in arbitration cases since I qualified as a solicitor some 20+ years ago having been fortunate to work as a junior with Julian Lew QC, Larry Shore and Robert Volterra during their time with HSF. I have been involved on India-related arbitrations since the outset – one of my first cases as an associate involved the interplay between the Delhi High Court and a prospective Singapore arbitration. Since that time, I have been fortunate to act for a number of India’s largest corporations on their disputes in various forums, and also to act for investors into India on their commercial and treaty arbitrations. I have also sat as an arbitrator and had the pleasure of being addressed by Indian advocates. I spent 3 years heading up the HSF arbitration practice in Singapore, which involved a large number of India-related matters. I am (when circumstances permit) a frequent visitor to India and a long-time supporter of arbitration in India. I have the great privilege to sit on the Council of the excellent Mumbai Centre for International Arbitration (MCIA), amongst my other appointments. Q. What discernible trends in commercial and investment arbitration do you see emerging as a result of the COVID-19 pandemic? What considerations do you think future Claimants should take into due notice before initiating arbitrations? A. I think the trend will be for a long tail of disputes arising from the devastating commercial impacts of the pandemic, many of which will of course end up being resolved through arbitration. While some of these disputes have already started to arise, many businesses and industry sectors, are understandably more focussed on ensuring their survival in the near term than in seeking to litigate out now breaches of agreements with counterparties who may not themselves be capable of satisfying any remedies that are awarded. Limitation periods may force some claims to be brought sooner, but otherwise I would expect businesses to want to get to the other side (or what they hope is the other side) of this situation before then deciding what breaches remain significant and what claims to pursue whether in commercial or investment arbitration. The considerations for claimants will be the same as always - to ensure at the outset that they are clear on the strategy, commitment, and the ultimate enforceability of the arbitration outcome before starting proceedings. There may of course be short-term reasons to threaten or bring proceedings, such as negotiation leverage or the availability of interim relief, but arbitration and litigation are both exercises where claimants need to be clear on their goals and what investment of time and effort may ultimately be needed to achieve success before they press the button to commence. Q. Do you agree with the general impression that the Model BIT of India is protectionist in scope especially with concerns caused by the omission of Fair & Equitable Treatment standard and the presence of a clause mandating exhaustion of domestic remedy before initiating arbitration proceedings? What changes, if any, would you recommend in the Model BIT of India which could satisfy the interests of India while at the same time providing adequate protection to the foreign investor? A. The prior question is whether to enter into a bilateral investment treaty (BIT) at all. That is, whether you promise foreign investors standards of treatment and the availability of treaty remedies, rather than no such promises. Of course, the debate in relation to India includes the backdrop that a large number of BITs which included substantially different provisions to the current Model BIT were unilaterally cancelled. Those cancellations and the scope of the protections in the model BIT certainly appeared, at least in part, to be a reaction to the BIT claims that India was then facing and before it had succeeded in defending any such claims, which it has since done, albeit it has lost on others. I know that, since the publication of the Model BIT, the Indian government has been consulting and trying to get views from investors on what levels of protection they would like to see, and would be influenced by, in terms of investments into India, but also importantly for Indian investors overseas. The latter perspective is obviously important for BITs with countries where Indian outbound investment may be substantial, so the question of what satisfies the interests of India must include what level of protection its Indian businesses want when they invest overseas. Q. ICSID and UNCITRAL have now released the long-awaited Draft Code of Conduct for Adjudicators in Investor-State Dispute Settlement, what is your take on the draft code? How successful do you think will the code of conduct be in addressing issues such as biasness and double hatting in investment arbitrations? A. There is a lot in the draft Code, and I suspect we have some distance to go before we reach a final text. I certainly applaud the efforts to bring greater clarity on how Investor-State Dispute Settlement is intended to operate and to address criticisms of the process. That is not to say that all the criticisms are valid, or that sweeping changes are needed. Double-hatting, for example, in my view is more of a problem in theory than in practice. Likewise, I simply do not think that the current system is fundamentally undermined by bias. No doubt there will always be some instances or allegations that need to be properly addressed, as there are in national courts. Disclosure is also an area where greater focus is always helpful provided the demands are realistic and do not themselves create unnecessary grounds for future challenges that might undermine the process intended to be supported. Q. How important do you think Data Protection is in International Arbitration? Also, in simple terms can you describe what exactly does the term “data” include within its ambit in the context of data protection in arbitrations and what possible repercussions emerge in case of a leak of such “data”? A. Unfortunately, there are few simple answers when it comes to managing data in arbitrations. It is a topic that was seldom discussed 10 years ago, but now is – rightly – absorbing a lot of considered thought from institutions, arbitrators, parties and their counsel. Fundamentally, the arbitration process (like many others) needs to ensure that it has adequate measures in place to prevent the improper dissemination or use of personal data belonging to those who may be involved in the dispute, or may be peripheral to it. The harm that may arise of course depends on what data is leaked and to whom. Individuals may suffer personal, reputation or financial consequences depending on the nature of the data. Companies, governments and other organisations may suffered their own harm if their data is improperly access or used, including by criminals who may view the arbitration process as a repository of often sensitive data about valuable or otherwise important projects. A good entry to the topic is the ICCA-IBA Joint Task Force’s Roadmap to Data Protection in International Arbitration which was published as a consultation draft last year (https://cdn.arbitration-icca.org/s3fs-public/document/media_document/roadmap_28.02.20.pdf). Q. Given your varied experiences as a member of HSF’s India Executive, working in the Moscow office on English law Russian disputes, co-chairing the Nordic Group and also having previously led the Singapore arbitration practice of the firm, do you think cultural considerations and different legal traditions are an important aspect that every law firm needs to address while interacting with clients? If yes, then how should a law firm go about doing that? A. Another big topic! Yes, any firm or practitioner who deals with cross-border transactions or disputes must try to understand the differing perspectives of the various stakeholders to the process. This is not just the clients, although of course they are the entry point for the law firm. In an arbitration context, think also about the counterparties, the arbitrators, co-counsel, opposing counsel, witnesses, experts, arbitral institutions. If you are addressing an arbitral tribunal of 3 diverse practitioners in the same way you would address a judge in your domestic courts, then you are probably doing it wrong. If you are making submissions in English, are you using the right English for your audience? The use of cricket analogies, for example, may be common enough in the Indian or English court, but confusing at best for an arbitral tribunal whose members do not know or care about “straight bats” and the “front foot”. Q. How is your firm adapting to the Work from Home culture? Do you think virtual hearings will become the norm beyond the quarantine period as well? A. The success of moving into a fully or mostly ‘work from home’ environment has surprised me, and I think many others. Obviously, the circumstances under which we have been forced to adapt are not welcome, but the rapid evolution in the use of technology has been beneficial in terms of providing options for the future. Virtual hearings are one such option. Even before last year many procedural hearings in international arbitration would take place by telephone in order to avoid the cost and disruption of travelling to meet in person. 2020 has seen those hearing move onto virtual platforms, and I would expect that to endure. For final hearings involving witnesses and lengthy oral submissions, I suspect we will see more flexibility around the use of virtual or hybrid hearings. That said, many tribunals and counsel (not to mention parties and witnesses) may retain a preference for in person hearings where possible. For example, where there is conflicting witness testimony, a tribunal may well prefer to see the witnesses in person to give their evidence and be questioned on it, rather than have them appear virtually. There will always be a trade-off in terms of time, disruption, costs, and the carbon cost of flying to meet in person. I think what 2020 has done is re-set expectations in terms of what can effectively be done virtually. That lesson will remain with us. Q. Are there any specifics of arbitral practices that you particularly enjoy? Is there any particular practice you would recommend young lawyers should regularly engage in to become better in the field? A. For me, the best parts of the job are the strategic planning and the advocacy. In both cases, it is vital to try to see the dispute as others may see it. What is it that the counterparty sees in this case? Why is it acting the way it is, and what does that tell me about how I should address them and the dispute? Likewise, for an advocate, it is vital to think how the case appears to a neutral decision-maker who has less familiarity with the details and less time to reach a firm view on the merits. It is too tempting to fall for your own arguments, and just to focus on your own perspective. You will do yourself and your client no favours if you do. Q. What would be your word of advice to the readers trying to make it big in the transnational practice of international arbitration? A. Focus on doing each role you are given as best you can and learning from those around you. Repeat at the next steps and then learn also how to delegate and work with those junior to you. After a few years, you will be astonished how much you have learned and how far you have developed.

- Er. Alpesh Subhash Yadav[1] 1. Introduction The Pandemic of COVID 19 literally tripped the circuit breakers on physical interactions around mid March 2020 and pushed the commercial world to adapt to a new reality of conducting businesses virtually considering the travel restrictions and compulsory social distancing measures. The legal profession and the administration of justice have been no exception. Technology has been quick to address the need for remote conduct of arbitration, from the very early stages of the current pandemic. Virtualisation of arbitration proceedings has been largely found efficient, affordable, and substantially eliminated (or at least reduced) the risk of getting infected by virus during such proceedings. A considerable number of efficient and reliable tools for conducting arbitration through audio visual mode were discovered / evolved and parties to arbitration got themselves acquainted (more or less) with this digital mode of doing business. Sharing of data, documents, charts, photographs, and the like, virtually, digitised, easy to navigate, searchable documents, organise and position at the disposal of counsels, witness, and tribunal made things smarter. The time-consuming fumbling of paper pages look like a thing of the past. The accomplishment for which virtual arbitration must also be applauded is the coverage of geographical distances that otherwise had been expensive and time consuming. Given the advantage of virtual proceedings over physical proceedings and with advancement in tools and technology being available with the commercial and legal fraternity, it would be difficult to argue that virtual hearings are not efficient. However, are they effective and will they continue to be mode of arbitration once the pandemic ends and normalcy prevails is what is discussed in this article. 2. Criticisms and Positives of Virtual hearings While lockdown and restrictions, imposed to control the spread of virus, are been substantially relaxed in many parts of world, spread of COVID 19 by and large seems to be coming in control and vaccination for eradicating the virus being commenced in many parts of the World including India, voice for resuming physical proceedings or rather urge to accept and work with corona environment by taking all necessary precautions is increasing. The Chairman of Bar Council of India, in his letters[2] addressed to the Chief Justice of India[3], has expressed concern over the gap between availability of resources with lawyers of humble background from rural cities as compared to those from urban cities for such virtual proceedings. The letter highlights the fact that "90% of the advocates and judges are unaware of the technology and its nuances”. The Bar Counsel also expressed that virtual court cannot displace and replace traditional courts even partly due to lack of knowledge and training in technology, lack of technological infrastructure and due to law and procedures of dispensation of justice in trail matters. A recent letter[4] by Supreme Court lawyers to CJI, seeking resumption of physical functioning at the top court, express similar concerns. The representation made by senior lawyers highlights virtual court has more lacune than benefits and that it has failed to adequately serve the cause of justice. More or less similar concerns also apply to arbitration. The sudden necessity to adopt technology stimulated due to pandemic has raised several concerns, including arbitrator / counsel / client not familiar with technology or are not tech savvy, difficulty in briefing clients / counsels virtually, frequent interruptions due to internet connectivity, hyperactive antivirus, improper permissions, incompatible operating systems, etc. particularly in India, where ad hoc arbitrations are still prominent. In institutional arbitration such challenges can be overcome to some extent as proceedings are administrated centrally, and technical assistance can be made available on demand. The other major concern is the difficulty in communicating during virtual proceedings particularly when participants involved from a particular side are not at the same venue. Similar concern also exists with arbitrators if they want to discuss amongst themselves during the hearing. Solutions presently available through various virtual platforms and messaging tools for such private communications have their own shortcomings. It is believed that gravity of proceedings can be viscerally felt when it is physically experienced in practice which is unlikely in case of virtual hearings where participants are in their familiar home environment. The counsels (both lawyers and nonlawyers) practising arbitration commonly feels that the art of advocacy to some extent is getting ineffective in virtual proceedings. Especially during arguments and cross examinations due to lack of direct eye contact which plays a very vital role. It has a very significant impact on a witness that knows and feels is being looked at directly and a very significant feedback on the tribunal and counsels when direct eye contact is received during arguments. This important impact/feedback cannot be experienced in virtual proceedings as direct, mutual, and simultaneous eye contact is technically impossible. This sometime lead to detached and subconsciously uninvolved experience, when compared to the more intense environment of a physical setting. Compounded to this ineffectiveness, it is possible for witness coaching to take place through mobile or email communications. There also always exist the risk of technological failures and disturbances during proceedings. The other concerns are confidentiality, including the need to ensure the hearing itself and data, documents, transcripts, and videos shared during the proceedings are not compromised. Procedural fairness and the associated implications. Enforcement of an arbitral award passed with remote proceedings by using virtual technology would be challenging. In an event[5] organised by Confederation of Indian Industries and Society of India Law Firms, Justice Rajiv Sahai Endlaw, Judge, Delhi High Court opined, “It is the new normal till the pandemic lasts. I don't see it as a normal for normal times…….” Agreeing with Justice Endlaw, Senior Advocate Sibal remarked, “Technology is not a fulltime solution to everything. For technology to work, you need to have infrastructure. Technology is for the rich and the powerful. Unless the infrastructure reaches the poor. what are you talking about!.....” Therefore, argument in favour for resuming physical hearings is increasing, particularly when no lockdowns are in force and where international traveling is not required for some or all of the persons that must attend. 3. Conclusion Virtual procedures or online arbitration practices adopted even partially, if not for the entire arbitration, could significantly reduce time and costs of travel, and of organising physical hearings. A combination of virtual and physical hearings depending on the requirements and mode of business to be conducted in the proceedings, could prove to be both efficient and effective without compromising, either the health of the attendees or the immediacy of arguments and scrutiny of witness. Parliamentary Standing Committee[6] on Personnel, Public Grievances, Law and Justice, in its interim report submitted to Rajya Sabha suggested virtual proceedings are likely to become permanent particularly for statutory arbitrations such as Telecom Dispute Settlement Appellate Tribunal, Intellectual Property Appellate Tribunal, National Company Law Appellate Tribunal, etc. The committee acknowledged the difficulties in virtual proceedings and admitted need for massive investments to put in place the infrastructure necessary to support the digitised hearings. The report highlighted ‘Justice delayed is Justice denied’ but ‘Justice hurried is also Justice buried’. Currently, due to pandemic, the virtual hearings have been used as an interim tool for avoiding disruptions, but sooner or later the virtual hearings are bound to become normal especially for internationals and cross-border disputes owing to their expeditious and cost-effective means for resolution of disputes. The government and arbitration institutions should enact the necessary changes for adopting virtual hearings under the Arbitration and Conciliation Act, 1996 and issue model guidelines on virtual hearing for all the arbitrations in India. [1] Alpesh holds a bachelor’s degree in Civil Engineering from Mumbai University and is postgraduate in Infrastructure Development and Management from National Institute of Construction Management and Research. He also has Diploma in Construction Management from Institute of Engineers. He is currently pursuing Master of Business Laws (MBL II) from National Law School of India University and have also enrolled for Post Graduate Diploma in Environmental Law from NLSIU. He has over 16 years of experience in the field of contracts management and arbitration and holds senior management position in one of India’s top construction organisation. He can be contacted at alpesh.yadav@hotmail.com [2] Chairman of Bar Council of India letters dated 28.04.2020 and 26.05.2020 addressed to CJI. [3] Justice Sharad Arvind Bobde, CJI. [4]Representation, written by advocates Shri Kuldeep Rai, Shri Ankur Jain and Shri Anubhav and signed by 505 other lawyers including Senior Advocates, seeking resumption of physical functioning of top court. [5]Confederation of Indian Industries and Society of India Law Firms to hold an online panel discussion on 'Virtual Courts' on 21st November 2020. [6]Hon’ble Rajya Sabha Member and Chairman of Standing Committee on Personnel, Public Grievances, Law and Justice, Shri Bhupender Yadav on 11th September 2020 submitted an Interim Report on the “Functioning of the Virtual Courts/Court proceedings through video conferencing” to Hon’ble Rajya Sabha Chairman Shri M Venkaiah Naidu.

We are grateful to Ms. Lucy Greenwood, who agreed to give us this interview. We are delighted that she will be sharing her experiences with us. Having read her Articles and Books during the preparation of our LLM Thesis and on other occasions, this is in every sense a fanboy moment for the Editorial Team at the Arbitration Workshop. To give our readers a brief introduction of Ms. Lucy Greenwood, she is an independent international arbitrator specializing in commercial and investment disputes. She has over 20 years of experience in commercial and investment treaty arbitrations in a wealth of different industries and has acted as counsel or arbitrator in more than 60 arbitrations. She is highly regarded for her efficient resolution of disputes and active case management of arbitrations and is recognized by Who's Who Arbitration, Legal 500 and Global Arbitration Review. She is a Chartered Arbitrator, a Member of the State Bar of Texas and a Solicitor of the Supreme Court of England and Wales. Her extensive experience includes arbitrations involving fracking and water rights, land disputes, major construction and design issues, transportation of heavy oil, consideration of complex contractual provisions regarding pricing and liquidated damages, emergency proceedings in relation to joint operating agreement disputes, energy exploration and developments and FPSO facilities offshore. She is listed on the following panel rosters - AAA Panel of Commercial Arbitrators, ICDR Panel, AAA Panel of Arbitrators for Large, Complex Cases, as a renowned energy arbitrator she is listed on the CPR Institute Oil and Gas Panel, she is listed on the AiADR (Asian Alternative Dispute Resolution) arbitrator list, as well as WIPO, ACICA (Australian Centre for International Dispute Resolution) HKIAC (Hong Kong International Arbitration Centre), Asian International Arbitration Centre, Singapore International Arbitration Centre, Arbitrators’ Roster for the American Chamber of Commerce, Jamaica, Arbitrators’ Roster for the Houston Maritime Arbitration Association, Dispute Adjudication Service Presidential Panel, Russian Arbitration Centre, Ukrainian International Commercial Arbitration Court, National Arbitration and Mediation Panel, Neutrals Panel for Federation of Integrated Conflict Management and on the lists of numerous arbitral institutions, as well as on Global Arbitration Review's Arbitrator Research Tool. She is a Trustee of the Chartered Institute of Arbitrators, Chair, International Committee, Dispute Resolution Section, American Bar Association, Past Chair, North America Branch of the Chartered Institute of Arbitrators and a Fellow of the College of Commercial Arbitrators. Ms. Lucy Greenwood, we welcome you to the Arbitration Workshop Blog and thank you again for agreeing to this interview. Q.1 How did your interest in arbitration and career as an arbitrator begin? Were there any significant obstacles that you had to overcome when you started your career as an arbitrator? A.1 I became involved in arbitration early in my career. I studied law (including private and public international law) at the University of Cambridge, then I joined a magic circle firm in London. During my first week as a qualified lawyer in 1998 I was involved in a $1 billion arbitration case, a worldwide freezing injunction in support of an arbitration seated in Switzerland. After six months in the disputes department in London I was seconded to the Paris office of the firm. I spent three years there working on ICC arbitration matters. After I returned to London, I had three children in quick succession whilst continuing to work full time in international arbitration. After four years back in London I joined a major international law firm in Houston, Texas and continued to specialise in international arbitration matters, focusing on energy related work in the investment and commercial arbitration sphere. In terms of obstacles that I faced, like any international arbitration associate I found there were challenges in juggling work issues but these are particularly exacerbated when both parents are working in demanding full time jobs, which was the case for me and my husband. Throughout all the ups and downs of juggling careers and children I always knew I was in the right profession for me, and, when I became a full time independent arbitrator, I knew I was in the right role in that profession. Sitting as arbitrator plays to all my strengths in terms of case and people management, analysing and determining problems and writing, I feel very privileged indeed to have this job! Q.2 Based on your experience, could you tell us your opinion about the issue of double hatting? Do you believe institutions guidelines could help in addressing this issue and allaying the concerns of litigants? A.2. I am not in favour of double hatting, as you might expect given the fact that for the past few years I have practised exclusively as an international arbitrator and I do not practise any longer as counsel. My reasons for not being in favour of double hatting are slightly purist in the sense that I feel strongly that my role as an international arbitrator is wholly distinct from my previous role as an arbitration counsel. I think they require different skills and different approaches. I therefore struggle with the notion that it is beneficial to either profession to move between the two, however I appreciate that this is a slightly purist approach. I do not feel that more guidelines could really help addressing this issue it very much comes down to the individual and their reasons for acting as both arbitrator and counsel. Q3 How did the idea/genesis of the green pledge come about? How do you think arbitrators and counsels today can do more in terms of being environmentally friendly and take the green pledge to another level? A.3 The “green pledge”, which is my promise to parties and counsel arbitrating before me that I will manage the arbitration in an environmentally friendly manner, came about when I spoke at London International Disputes Week on technology in arbitration in 2019. I concluded that we were not using technology to run arbitrations more efficiently and/or to run them in a more environmentally friendly way. I soon realised that there was a lack of understanding and awareness of the environmental impact of international arbitrations generally. So the green pledge was expanded and became the Campaign for Greener Arbitrations. This is a global initiative to reduce the carbon footprint of international arbitrations. We have conducted detailed empirical research into the environmental impact of a major arbitration and the results are staggering. The Campaign is currently working on ‘green protocols’ - best practice guides to assist participants in the international arbitration process to reduce their carbon footprint. Please visit www.greenerarbitrations.com and sign up to show your support for the green pledge and the campaign. Q.4 Would you please enlighten our readers about arbitrations in Climate disputes? What are your views on the existing regime for arbitration of climate disputes? Do you feel a new regime, as has been debated by many, is required to effectively arbitrate climate disputes? A.4 There is no doubt that, as the ICC Commission report on arbitration and change concluded, climate change disputes are likely to grow exponentially. In my practice I have seen a significant increase in arbitrations arising out of climate change issues, particularly those involving renewables technology. Commercial arbitration is well suited to the resolution of certain types of dispute which will arise as a result of climate change, for example those relating to renewables and other new technologies. In relation to broader environmental issues some disputes are more likely to be decided in investor state arbitrations, particularly where regulatory change has resulted from a country's attempts to reduce emissions in accordance with commitments it may have made in relation to the Paris Agreement. Currently I am not of the view that we need a new regime to arbitrate climate change disputes, although I do think we need greater understanding of the complex issues involved. Q.5. There has been a growing debate about diversity in arbitration. While some argue, that statistically the situation has improved, do you feel the situation has drastically improved? How do you think the arbitration community can contribute more towards enhancing diversity or what essential steps need to be taken? A.5 I first wrote about the underrepresentation of women on international arbitration tribunals back in 2010 . At that time there was little to no statistical data to monitor the lack of women at the very top of our profession. Since then of course there have been great strides made in relation to the under representation of women, I am thinking particularly of the Equal Representation in Arbitration pledge which was launched in 2015. This has had a dramatic impact, both in raising awareness of the issue and encouraging greater transparency in relation to the data. Yet in order for international arbitration as an industry to get the benefit of true diversity we need to be focusing on diversity of background, viewpoint, and opinion and not just gender. To achieve this, we need to be building a more inclusive community in international arbitration which attracts entrants from all different sectors of society, ethnicity, geography, sexual orientation and of course gender. . I am optimistic that we can continue to change and improve in this regard. Increased engagement on social media can help make the profession more accessible, additionally the switch to webinars throughout the COVID-19 pandemic has meant that practitioners can access content that they would not otherwise have been able to do so and there is a better understanding generally at the senior level of the profession of the value of mentoring. Q.6. We understand that you have presided as an arbitrator in several energy arbitrations and have also written about energy arbitration and specialized arbitrators. Why do you think energy arbitrations specifically require extra scrutiny while selecting arbitrators? What can parties do to ensure that they have chosen the most suitable arbitrator for the dispute? A.6 Arbitrators are selected for two main reasons: experience and expertise . Of course, these two things are related. My ten years spent working in Houston Texas meant that I was able to gain a good grounding in energy related issues and this has proved invaluable in determining the wide range of energy related matters that I have been involved in. Energy related work in particular has certain nuances that really do require a deep understanding of the issues. Q.7 What would be your word of advice to the readers trying to make a name for themselves in the transnational practice of international arbitration? A.7 There is no substitute for hands on experience arguing international arbitration cases, however, practising international arbitration is also surprisingly (and rewardingly) academic. I recommend that practitioners read numerous scholarly articles on major issues in international arbitration and, where possible, contribute to the discussions on the subject by publishing their own articles. Attending and speaking at conferences is important in terms of profile raising and to build a network. I have been encouraged by the switch from in person conferences to webinars as this has meant that practitioners who would not otherwise have had access to senior members of the profession have been able to interact with them. The Editorial Team at the Arbitration Workshop would like to thank Ms. Lucy Greenwood for taking out time from her busy schedule and for sharing her perspectives with us!

- Gaurav Rai[1] PDF version of the article Introduction An essential aspect of commercial dispute resolution is the contract between the parties. Having a well-drafted contract that covers all aspects, especially regarding the most basic of issues, is essential. The thumb rule, while drafting contracts, should be that nothing is understood or assumed, or a given. It is only when there is a lack of foresight and a situation arises not covered by one of the provisions of the contract that arbitration and dispute resolution processes begin. The author bases this on his experience of looking at contracts while analysing them during arbitration to determine the nature of rights and obligations of the parties to the contract. However, it must also be noted that arbitrations also come up when a clear meaning of an express term of the contract is onerous and secondary to the primary purpose of the contract or goes against the tenets of the statutes governing the contract. Hence, this article is an endeavour to discuss the two situations mentioned above and the principles of contractual interpretation that deal with the aforesaid scenarios. Business Efficacy Principle To close the gaps in the contract, the arbitral Tribunal would be guided by the principle of Business Efficacy. Under this principle, the Court or Tribunal implies a term in the contract that the parties would have always intended to have in the contract as prudent businessmen and by such implication, business efficacy is supplied to the contract. It is to be remembered that while applying the principle, only the bare minimum has to be implied which, helps to make the contract workable. The classic case for this principle is the opinion of Bowen L.J. in The Moorcock (1889) 14 PD 64, which was cited with approval in the case of Satya Jain v. Anis Ahmed Rushdie (2013) 8 SCC 131 wherein the Supreme Court said that “this test requires that a term can only be implied if it is necessary to give business efficacy to the contract to avoid such a failure of consideration that the parties cannot as reasonable businessmen have intended.” In Nabha Power v. Punjab State Power Corporation (2018) 11 SCC 508, the Supreme Court outlined the jurisprudence regarding implying terms of the contract and affirmed the 5 prong (penta) test to be applied in such a scenario. The same is extracted hereunder: This test has been set out in B.P. Refinery (Westernport) Proprietary Limited vs. The President Councillors and Ratepayers of the Shire of Hastings (supra) requiring the requisite conditions to be satisfied: (1) reasonable and equitable; (2) necessary to give business efficacy to the contract; (3) it goes without saying, i.e., The Officious Bystander Test; (4) capable of clear expression; and (5) must not contradict any express term of the contract. The same penta-principles find reference also in Investors Compensation Scheme Ltd. vs. West Bromwich Building Society (supra) and Attorney General of Belize and Ors. vs. Belize Telecom Ltd. and Anr. (supra). Needless to say that the application of these principles would not be to substitute this Court’s own view of the presumed understanding of commercial terms by the parties if the terms are explicit in their expression. The explicit terms of a contract are always the final word with regards to the intention of the parties. The multi-clause contract inter se the parties has, thus, to be understood and interpreted in a manner that any view, on a particular clause of the contract, should not do violence to another part of the contract. Non-strict interpretation of express terms and Business Common Sense On the opposite end of the spectrum of the aforesaid principle of contractual interpretation are the cases in which strict interpretation of the express terms of the contract are not followed. Many parties have an incorrect understanding that each express term of the contract, however onerous or skewed, will be followed to the letter. They forget that a well-drafted commercial contract, without any gaps, may have terms that may be inconsistent with the Indian Contract Act, 1872 or the Sale of Goods Act, 1930. Such terms of the contract cannot be enforced and the provisions of the Contract Act or the Sale of Goods Act will prevail over such terms. For example, a term in the contract expressly stating that parties will not be liable for damages for breach of the contract will fly directly in the face of Section 73 and 74 of the Indian Contract Act, 1872 and such a term cannot be enforced. This position is also supported by Section 28(1) and the amended Section 28(3) of the Arbitration and Conciliation Act, 1996. I have discussed some of these issues in an article on exclusion clauses in a contract, which can be accessed here. There is another principle of contractual interpretation that does not allow a strict and pedantic interpretation of the Contract. This principle of interpretation of contracts is called Business Common Sense. Although not in a specific context of the interpretation of commercial terms of a contract, the Supreme Court of India in Enercon India Limited and Ors. V. Enercon GMBH (2014) 5 SCC 1, cited with approval the observations of Lord Diplock in Antaios Cia Navieara SA v. Salen Rederierna AB, the Antaios [1985] AC 191 wherein it was stated that if a detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business common sense, it must be made to yield to business common sense. This means that the strict interpretation of the contract is not preferred when enforcing such a term in the contract makes it impracticable to perform the contract. The test for business common sense being that of a reasonable commercial person. Use of the principle of business common sense is generally required in a standard contract with skewed clauses wherein there is no scope for negotiations between the parties. However, this principle, will not apply to all standard contracts but only to those terms that do not make commercial sense and/or are beyond the primary purpose of the contract. For e.g., a contract for the supply of goods may have a clause giving the buyer an option for the supply of an additional quantity of items at a later date at the same price. However, if the market conditions change drastically and the price quoted at the start of the contract may not be practical anymore for additional quantities, then in such a case fulfilling the term of the contract for additional quantities of goods would not make business common sense and the supplier may not be required to supply the additional quantities at the earlier quoted price as per the terms of the Contract. Concluding remarks and suggestions Interpretation of contracts is of utmost importance in arbitration matters, and any guidance regarding the principles to be used in the aforesaid scenarios was limited to foreign principles. The apprehension of an arbitral Tribunal based in India to use such principles would be understandable and hence it is immensely satisfying when an issue of interpretation of the contract in a power purchase agreement in a Thermal Power Plant was appealed all the way up to the Supreme Court and the Supreme Court recognized and relied on the principles of contractual interpretation in common law jurisdiction to provide domestic arbitrations with some affirmation in using the said principles in their awards. The Supreme Court in Nabha Power v. Punjab State Power Corporation (2018) 11 SCC 508 has outlined the literature on several principles of contractual interpretation including the ones discussed above. Although they haven’t strictly implied a term in the contract using the Business Efficacy test but have stated the use of this principle and the others in the manner utilised in other jurisdictions as principles that can apply to India as well. Finally, they have also provided a word of caution and a guideline before ending with the case which is relevant for our discussion and is extracted hereunder: We may, however, in the end, extend a word of caution. It should certainly not be an endeavour of commercial courts to look to implied terms of contract. In the current day and age, making of contracts is a matter of high technical expertise with legal brains from all sides involved in the process of drafting a contract. It is even preceded by opportunities of seeking clarifications and doubts so that the parties know what they are getting into. Thus, normally a contract should be read as it reads, as per its express terms. The implied terms is a concept, which is necessitated only when the Penta-test referred to aforesaid comes into play. There has to be a strict necessity for it. In the present case, we have really only read the contract in the manner it reads. We have not really read into it any ‘implied term’ but from the collection of clauses, come to a conclusion as to what the contract says. The formula for energy charges, to our mind, was quite clear. We have only expounded it in accordance to its natural grammatical contour, keeping in mind the nature of the contract. Hence, we see a summing up of the principles relating to both express and implied terms which, can act as a definitive guide to arbitral Tribunal when dealing with the interpretation of contracts in such a scenario. [1] Gaurav is Advocate based in Delhi working primarily in areas of arbitration and contract law. He completed his BBA.LLB(Hons.) from National Law University Odisha in 2015 and his Master of Laws (LL.M) from University College London in 2016. He can be contacted at raigaurav.legal@gmail.com

- Khushbu Turki[1] I. Introduction Some of the most common disputes in construction contracts revolve around a scenario wherein the employer, who has breached the contract, is unwilling to pay the requisite amount of compensation to the contractor. Instead, he offers the contractor a choice of entering into a supplementary agreement, and accepting a reduced amount as compensation. The contractor, who is often not in a good financial position, agrees to enter into the said agreement, and accepts the reduced compensation. Later, however, the contractor challenges the validity of the agreement on the ground that he entered into the same under economic duress. This challenge is based on the following two contentions – First, the fact that the contractor accepted a reduced compensation due to a financial crunch itself indicates duress; and Second, entering into such an agreement amounts to a waiver of the right to seek compensation, which cannot be waived under the Contract Act. The author has undertaken an attempt to analyse the accuracy of such claims, and the same has been done in three parts. Part I examines the essentials of duress, the conditions in which financial distress can amount to economic duress, and duress amounting to coercion and undue influence. Part II discusses the waiver of the right to seek compensation under the Indian Contract Act, 1872 (‘the Act’). Lastly, in Part III, the author concludes that adopting a fact centric approach is a must while dealing with claims of duress, and waiving of compensation or accepting a reduced amount is solely a matter of discretion of the concerned party which is not prohibited under the Act. II. duress as coercion Economic duress has been recognised as a form of coercion under Section 15 of the Act.[2] However, in order to successfully establish a claim of duress, it is necessary for the affected party to establish the following two criteria – first, the existence of an illegitimate pressure; and second, the lack of a reasonable alternative, that is, the lack of any other practical choice in a particular situation.[3] It is pertinent to note that in a contractual setting, mere commercial pressure cannot be termed as illegitimate in nature.[4] The coercive action required for vitiating free consent has to be of a category in which the person under duress is left with no option but to give consent, and is unable to take an independent decision in his interest. Bargaining and thereafter accepting an offer by give and take to solve one's financial difficulties cannot be treated as duress. Such situations arise in trade and commerce every day, and consequently, certain business decisions are taken by parties, some of which they might not have taken but for their immediate financial requirements and economic emergencies.[5] Further, since “reasonable alternative” is a subjective term, the existence of another practical choice needs to be evaluated from the factual matrix of each case. In such cases, it is material to enquire whether the allegedly coerced party did or did not protest at the time of being coerced, whether it had the option of availing a legal remedy, whether it was independently advised, and whether after entering into the agreement it still expressed its dissatisfaction and took steps to avoid it. Proceeding on an assumption that the acceptance of the reduced compensation due to a financial exigency is enough to constitute duress is an inherently flawed approach. Accepting this proposition can potentially give rise to a scenario wherein parties to a contract, who even willingly entered into such supplementary agreements would later claim that they did so under duress. It is therefore necessary to examine the seriousness of the financial crunch to conclude if it was grave enough to not leave the affected party with any other alternative but to enter into the supplementary agreement. For instance, there can be cases wherein the affected party accepts the reduced compensation simply because it does not wish to prolong the entire process and thereafter sue the defaulting party for compensation. The desire to avoid the long legal process may stem from a reluctance to invest money in dispute resolution, since the affected party might not be in a financially strong position. However, financial troubles cannot justify the decision of not taking recourse to a legal remedy in every situation. A distinction must be drawn between a situation wherein the affected party makes a choice of not opting for the legal remedy and a situation wherein it is not reasonable to expect the party to take legal recourse because of the acuteness of the financial crunch. In the former situation, whatever the party’s reason for accepting the reduced compensation, the decision is arrived at after applying the necessary commercial wisdom. A rational choice made between two evils cannot be labelled as one made under duress. It is a business decision, unlike the latter situation where no real choice exists except entering into the supplementary agreement. A similar view was expressed by the Supreme Court in the case of National Insurance Co. Ltd. v. Boghara Polyfab Pvt. Ltd., wherein the Court observed that if a claimant who is keen on having a settlement and avoiding litigation, voluntarily reduces the claim for damages and requests for settlement, then he cannot later challenge the same on grounds of duress.[6] In such situations, even if the claimant agreed for settlement due to financial compulsions and commercial pressure, the decision is his free choice. Therefore, instead of equating every situation involving a financially unstable party with duress, a more appropriate approach would be to examine the seriousness of the exigency and thereafter decide on whether it would constitute duress. III. DURESS AS UNDUE INFLUENCE Economic duress, as explained above, may also fall squarely within the ambit of undue influence, as defined under Section 16 of the Act.[7] There are two ways in which a claim of duress can be established under this Section – First, if the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other, this shall amount to undue influence. A party would be considered to be in such a dominating position when it holds some real or apparent authority over the other, or in case of fiduciary relations. An employer who refuses to pay the requisite compensation to the contractor despite knowing his financial troubles, and thereafter proposes the idea of the supplementary agreement with a reduced compensation clause, can clearly be understood as a dominant party in that contractual relationship. However, the Section will come into operation only when such dominant authority is used to obtain an unfair advantage, and the same shall again have to be established in the manner in which coercion is sought to be established. Hence, the burden of proof in such a scenario will lie on the affected party, which will have to establish the exercise of such duress or undue influence. Second, when a party who is in a position to dominate the will of another, enters into a contract with him, and the transaction appears, on the face of it or on the evidence adduced, to be unconscionable, the burden of proving that such contract was not induced by undue influence falls upon the dominant party. Here, the nature of the transaction is sufficient to raise a presumption of undue influence. The phrase “unconscionable bargain” has not been defined in the Act. The Supreme Court, in the landmark case of Central Inland Water Transport Corporation v. Brojonath Ganguly, deduced that an unconscionable bargain would be one which indicates no regard for conscience, and is irreconcilable with what is right or reasonable.[8] Unconscionability in such cases does not arise out of fraud, but out of the unconscientious use of superior power.[9] The same has been reiterated in a number of judgments.[10] However, a bargain would not be unconscionable merely because the parties to it are unequal in bargaining position, or because the inequality results in an allocation of risks to the weaker party.[11] But gross inequality of bargaining power, together with terms unreasonably favourable to the stronger party, may confirm indications that the transaction involved elements of deception or compulsion, and may show that the weaker party had no meaningful choice or no real alternative but to assent to the unfair terms. Relying on the aforementioned proposition, it appears that a supplementary agreement providing for a reduced compensation to a contractor already under financial strain would clearly raise a presumption of an unconscionable transaction, with the employer being in the dominant position. Once the presumption arises, the burden of proof shifts to the dominant party. This presumption would then have to be negated by relying on the facts and circumstances of the case. Hence, it is essential to note that irrespective of who discharges the burden of proof, the outcome in matters of economic duress would always be heavily dependent on the facts of the case at hand. IV. WAIVER OF THE RIGHT TO SEEK COMPENSATION Waiver is the abandonment of a right which every individual is at a liberty to waive. It signifies nothing more than an intention of not insisting upon the right.[12] In India, the general principle with regard to waiver of contractual obligations is found under Section 63 of the Act. The Section provides that it is open to a promisee to dispense with or remit, wholly or in part, the performance of the promise made to him, and he may accept instead of it, any other satisfaction that he deems fit.[13] This implies that every contracting party has a choice to accept a modified performance of the opposite party’s contractual obligations. The author believes that the same principle should be applied when dealing with cases relating to acceptance of a reduced compensation. However, the contention raised by the affected party in such disputes is that the right to waiver is relevant only in respect of the rights existing under the contract between the parties, and not for the rights conferred by the Act itself. Since the Act provides for a party’s right to claim compensation in lieu of a breach of contract, the same cannot be waived off. The author finds no merit in this contention for the following three reasons: First, there is no reason why a distinction should be drawn between rights conferred by the specific contract and those conferred by the Act. If a party can waive off a breach of contract by the defaulting party, and can voluntarily abandon its legal rights to enforce the contract or to claim any remedy in relation to that breach, then a party claiming compensation for a breach should also be well within its rights to accept a reduced amount of compensation. Second, even if such a contention is accepted, it must be noted that while the Contract Act confers the right to claim compensation for a breach of contract, the right pertains to claiming compensation and not the exact amount due under the original contract. As long as the party is being compensated under the supplementary agreement, the requirements of the Act are being satisfied. Third, the general principle of law is that everyone has a right to waive the advantage of a law or rule made solely for the protection and benefit of the individual in his private capacity, which may be dispensed with, without infringing any public right or public policy.[14] Therefore, the test to determine the nature of interest at stake is to see if it affects the general welfare of the society. If the answer is negative and it is the right of the party alone that is being affected, then the right is entirely capable of being abnegated either in writing or by conduct.[15] Hence, as the right of a party to claim compensation for breach of contract does not affect the general welfare or interest of the society, it may be waived off by accepting a reduced compensation. V. CONCLUSION It is true that commercial realties do not always correspond to the existing provisions of law, and economically powerful entities such as public corporations, which get the works executed, can easily prevail over private parties by withholding legitimate payments, arm-twisting them into not accepting any payments or desisting from making claims towards undue and inordinate delay that is solely caused by the public undertaking, corporation or agency. While the author agrees that in many cases, the contractor accepts the reduced compensation because of the ongoing financial crisis, this does not hold true for every situation. Hence, it is suggested that instead of developing a proposition which is based on an assumption that equates acceptance of a reduced compensation due to financial distress with economic duress, it is better to adopt a fact centric approach to evaluate the claim of duress. This is because accepting such a proposition is equivalent to proceeding with an assumption that the employer is at fault, even though it is the contractor’s responsibility to discharge the initial burden of proof in cases of coercion. Even in cases of undue influence, it would fall upon the contractor to establish that the employer was in a dominant position and misused the same, or to prima facie establish that the transaction was unconscionable in nature. Further, equating a financial crunch with economic duress runs contrary to and considerably dilutes the criteria for establishing duress as laid down by the Courts in various judgments. In situations wherein the affected party has expressed reservations about its financial position, or has indicated in any way that it is entering the supplementary agreement under duress, the Court can easily invalidate the agreement after checking the veracity of such claims. Additionally, the waiver of compensation resulting from the agreement would also automatically be set aside. [1] Khushbu is a Staff Writer for the Arbitration Workshop Blog. She is currently a third year law student pursuing B.A L.L.B (Hons.) at National Law Institute University, Bhopal. She also serves as an Editor for the NLIU Law Review and the Indian Arbitration Law Review. She can be contacted at khushbuturki14@gmail.com [2] Section 15, The Indian Contract Act, 1872. [3] Pao On v. Lau Yiu Long, (1979) UKPC 17. [4] M/s. Balaji Pressure Vessels Ltd. v. Bharat Petroleum Corporation Ltd., 2014 SCC OnLine Bom 1709. [5] Double Dot Finance Limited v. Goyal Mg Gases Limited & Anr., 117 (2005) DLT 330. [6] National Insurance Co. Ltd. v. Boghara Polyfab Pvt. Ltd., 2009 (1) SCC 267. [7]Section 16, The Indian Contract Act, 1872. [8] Central Inland Water Transport Corporation v. Brojonath Ganguly, 1986 SCR (2) 278. [9] The State of Karnataka and Ors. v. State of Tamil Nadu and Ors., (2018) 4 SCC 1. [10] Delhi Transport Corporation v. DTC Mazdoor Congress and Ors., 1991 AIR 101. [11] Assistant General Manager and Ors. v. Radhey Shyam Pandey, (2020) 6 SCC 438. [12] Waman Shriniwas Kini v. Ratilal Bhagwandas & Co., AIR 1959 SC 689. [13] Section 63, The Indian Contract Act, 1872. [14] Lachoo Mal v. Radhey Shyam, (1971) 1 SCC 619. [15] Indira Bai v. Nand Kishore, (1990) 4 SCC 668.

Written by - Advait Ghosh[1] and Akash Yadav[2] Edited by – Gaurav Rai[3] I. INTRODUCTION The question which arises, often in arbitration jurisprudence is, can all disputes be resolved by arbitration, and whether the presence of arbitral clauses or agreements between such parties automatically exclude the jurisdiction of all judicial forums other than arbitral tribunals? The question has been answered to some extent by the Supreme Court in the case of Booz Allen Hamilton vs SBI Home Finance Pvt Ltd (2011) 5 SCC 532[4]. In this case the Supreme Court of India devised a 3-prong test to define arbitrability. 1. Whether the dispute is capable of being resolved by arbitration? 2. Whether the dispute is covered by the arbitration agreement? 3. Whether parties have referred dispute to arbitration? The Supreme Court classified disputes into arbitrable and non-arbitrable on the basis whether these disputes deal with rights in rem or rights in personam. It is pertinent to note that rights in rem deal with rights which are available or can be enforced against the public at large while rights in personam deal with rights which are available against specific individuals. The Apex Court went on to hold that that rights in personam were capable of being resolved through the mechanism of arbitration as they deal with issues which do not affect the public and society at large while rights in rem cannot be resolved through arbitration. A few examples of right in rem matters would be: - 1. Matrimonial and Guardianship matters 2. Tenancy Disputes 3. Insolvency and Winding up matters. 4. Testamentary matters. In Vimal Kishore Shah vs Jayesh Dinesh Shah and Ors (2016) 8 SCC 788.[5]the Supreme Court said that disputes which arise out of Trust Deeds under The Indian Trusts Act, 1882 also cannot be resolved by arbitration. The Indian Courts have till now have not declared fraud to be non-arbitrable, and divergent opinions have come forth on this aspect. This article will endeavour to explain in what manner the Courts have grappled with this issue. This article will also deal with the latest amendment brought by way of ordinance in November 2020 by which awards in which allegations of fraud have been made will be automatically stayed until the disposal of the Section 34 application challenging such awards. II. HISTORICAL BACKGROUND The Legislations that preceded the Act of 1996 was the Act of 1899 and that of 1940. Both these legislations specifically dealt with the question of arbitrability of fraud. Section 19 of the 1899 Act is of prime importance as it gave power to the Court to grant stay of legal proceedings. The stay could be granted when parties had submitted their disputes to arbitration. The jurisprudence of that time pertaining to arbitrability of fraud was influenced by the decision of Russel vs Russel [1880] 14 Ch D 471 (Eng.).[6] , a decision of the English High Court. In this case the English High Court considered a question whether “allegations of fraud, would exclude the operation of an arbitration clause”? The Court opined that an allegation of fraud would prima-facie exclude the jurisdiction of the arbitral tribunal. In Narsingh Prasad Bubna and Others v. Dhanraj Mills AIR 1943 Pat. 53.[7] the Patna High Court opined that allegations of fraud should not be dealt by arbitral tribunals and were better suited to be tried by the National Courts. In the case of Abdul Kadir Shamsuddin Bubere v. Madhav Prabhakar Oak AIR 1962 SC 406[8] the Indian Supreme Court held that “when there are serious allegations of fraud, then the party against whom these serious allegations are made, may desire that the case be tried in the Civil Courts”. The decision of the Supreme Court in Abdul Kadir has been the basis for subsequent decisions of various High Courts and the Supreme Court on the issue of arbitrability of fraud. III. QUADRET OF DECISIONS ON THE ARBITRABILITY OF FRAUD UNDER THE ARBITRATION ACT OF 1996 The 1996 Arbitration Act was heavily influenced by the economic liberalization of 1991 and the enactment of the UNCITRAL Model Law on International Commercial Arbitration in 1985. These two factors necessitated a new Legislation which was in sync with global best practises on arbitration. A series of decisions has shaped the jurisprudence related to arbitrability of fraud under the 1996 Act. Let us examine these decisions. The first of these decisions was of N. Radhakrishnan vs Maestro Engineers (2010) 1 SCC 72[9] in which the Supreme Court dealt with a case which emanated from Section 8 of the Arbitration & Conciliation Act, 1996. Section 8 unequivocally provides for reference to arbitration, if there is an arbitration agreement or a clause between parties to the dispute. The Supreme Court despite the unequivocal language of Section 8 chose not to refer the parties to arbitration as it felt that the case involved serious allegations of fraud, which should be dealt by the Civil Courts. The above-mentioned decision resulted in a setback to the jurisprudence on the arbitrability of fraud under the new Act as it displayed a lack of trust in in arbitral tribunals to adjudicate on the issue of fraud and it also showed that lack of willingness of Courts to refer parties to arbitration, despite the unequivocal language of Section 8. In 2014 the Supreme Court of India in the case of Swiss Timing Ltd vs Commonwealth Organizing Committee[10] made a departure from the ratio of N. Radhakrishnan. The Supreme Court upheld the appointment of a sole arbitrator expressly remarking that” allegations of fraud do not lead to ouster of jurisdiction of an arbitral tribunal”. It also said that continuation of criminal proceedings against one of the parties to the dispute will not result in ouster of jurisdiction. In 2016 the Supreme Court again dealt with a case A. Ayyasamy v. Paramasivam and Ors (2016) 10 SCC 386. [11]that emanated from Section 8 of The Arbitration & Conciliation Act, `1996. The Apex Court envisioned a dual paradigm to assess the arbitrability of fraud. The Apex Court said that issues of complex fraud are not capable of being resolved by arbitration, while cases of simple fraud can be adjudicated by an arbitral tribunal. The Apex Court appointed an arbitrator as the case dealt with an issue of simple fraud. The ratio of the Supreme Court has now been reaffirmed by a larger bench of the Supreme Court in the case of Rashid Raza vs Sadaf Akhtar (2019) 8 SCC 710.[12] The Supreme Court extensively looked into the issue of arbitrability of fraud in Avitel Post Studioz Ltd Vs HSBC Holdings Pvt Ltd.[13]In this case the 2 parties entered into a “Share-Holders Agreement” by virtue of which HSBC made investments to the tune of 600 Million USD in Avitel. Avitel had falsely misrepresented to HSBC that they had a contract with the British Broadcasting Corporation and the funds were required for that purpose. An independent audit revealed that the funds were being diverted elsewhere; HSBC lodged a FIR with the Economic Offenses Wing and also preferred an interim application for injunction before the Bombay High Court to secure the amount in dispute. The High Court granted the application. The Supreme Court was approached by way of special leave. Avitel submitted before the Supreme Court that the disputes were related to allegations of serious fraud, and hence were non-arbitrable, and should be left for adjudication to the Civil Court. The Supreme Court reiterated the test laid down in Ayyasamy and concluded that” When there are allegations of fraud-simpliciter and they are merely alleged, it is not necessary to nullify the arbitration agreement”. In this case the Supreme Court said that the nature of allegations do not prima-facie disclose a case of serious fraud, and hence arbitration will be allowed. IV. CONCLUSION It can be thus concluded with a degree of certainty that only in cases of “egregious fraud” will the arbitration proceedings be stymied, in cases of fraud simpliciter arbitration proceedings will not halt, the arbitral Tribunal may have to deal with issues under Section 17 and 19 of the Indian Contract Act, 1872. However, what is interesting to note is that the President of India gave his ascent to the Arbitration and Conciliation (Amendment) Ordinance 2020[14] by which Section 36 of the Act was amended. By virtue of this amendment any arbitration agreement or contract which is the basis of the award or if the making of the award was induced by corruption or fraud, the award shall be unconditionally stayed, while the award is pending challenge under Section 34. The Authors firmly believe that by virtue of this amendment the legislature has tried to impliedly make fraud not capable of arbitration. The parties will now have to take a conscious decision as to whether they can pursue an arbitration if allegations of fraud are made by the other side or even by themselves. Another grey area is the fact that the party which will try to move for a civil court resolution might not be able to do so if the other party alleges the existence of an arbitration agreement as the civil court will then not want to interfere with the matter. Whether there is a serious allegation of fraud or not, will then have to be decided only during the challenge to the arbitration award and during the stay of the enforcement proceedings, which might then make the arbitration proceedings a waste of time and money. Even if the legislature intended to the check arbitrations in case of serious fraud, the amendment should have been brought to Section 8 and 11 which deals with reference to arbitration and appointment of arbitrators and not in a provision of the Act which deals with post award enforcement and stay. It will be interesting to see how the dichotomy between the provisions of section 8 and 11 and the long list of judgments of the Supreme Court on the issue of arbitrability of fraud plays out against the Ordinance and the amendment to Section 36 which stops automatic enforcement of arbitral awards if there is an allegation of fraud regarding the formation of the underlying agreement. [1] Advait is an Advocate working in the litigation team at Kesar Dass Batra. He deals in matter related to Arbitration, Civil Suits and Criminal. He has argued matters before the District Courts of Delhi and the Delhi High Court. He can be reached at advaitgh@gmail.com. [2] Akash is a practicing advocate in various Courts and Tribunals of Delhi and has keen interest in issues pertaining to law and legal system in India. I deal with matter relating to Insolvency laws, Arbitration laws, Civil and Criminal matters. He can be reached at akashyadav940@gmail.com. [3] Gaurav Rai is an Advocate practicing in the field of Arbitration and is the Editor of the Arbitration Workshop Blog. He can be contacted at raigaurav.legal@gmail.com. [4] (2011) 5 SCC 532 [5] (2016) 8 SCC 788. [6] [1880] 14 Ch D 471 (Eng.). [7] AIR 1943 Pat. 53. [8] AIR 1962 SC 406. [9] (2010) 1 SCC 72 [10] (2014) 6 SCC 677 [11] (2016) 10 SCC 386. [12] (2019) 8 SCC 710 [13] In the Supreme Court of India - CIVIL APPEAL NO. 5145 OF 2016 [14] THE ARBITRATION AND CONCILIATION (AMENDMENT) ORDINANCE, 2020 (No. 14 of 2020) Available at https://legalaffairs.gov.in/sites/default/files/The%20Arbitration%20and%20Conciliation%20%28Amendment%29%20Ordinance%202020.pdf

*Gautam Mohanty The recently concluded 2018 Report of the ICCA-Queen Mary Task Force on Third-Party Funding (TPF) in International Arbitration was centred around the objective of “identification of issues that arise in relation to third party funding in international arbitration”.[i] The Task Force clearly identified that “modern forms of third-party funding are no longer new to international arbitration”[ii] and recognised that the discussion regarding TPF had moved beyond questions about “whether third party funding should be permitted”[iii] to “evaluation of how to address specific issues implicated by TPF”.[iv] An issue which appears to be unaddressed in the current academic discourse is the joinder of third party funders (TPFs) in international arbitration. The imminent need to focus on the joinder of TPFs stems from the fact that extension theories in international arbitrations constitute exceptions to the most fundamental feature of arbitration, i.e., the consensual nature of arbitration. As a consequence, the status of TPFs within the arbitration proceedings remains uncertain.[v] Scholars, as well as international organizations, demand further research on the issue of whether TPFs can be joined as parties to arbitration proceedings. Introduction to TPF in International Arbitration The practice of TPF in International Commercial Arbitration (ICA) is no longer a hypothetical question[vi], but a phenomenon which has garnered sufficient traction and credibility in the arbitration community. TPF has, thus, established itself as a legitimate commercial practice[vii]. Even though litigation financing is not a novel concept in practice across jurisdictions, its manifestation in an identical form by the way of TPF in arbitration is indeed novel and has attracted much attention from many academic scholars and arbitral institutions. Much academic discourse in relation to TPF has centred around conducting a stakeholder benefit analysis and discussing issues arising from TPF which, inter alia, include issues with regard to tribunal composition, contractual level of power exercised by funders, conflicts of interest and disclosure requirement. Notably, TPF has been described as both a panacea and a plague[viii] and a perusal of available academic literature with regard to TPF highlights the same. Despite certain authors considering TPF as the “best thing since sliced bread”[ix], other scholars have considered TPF as the “arbitration antichrist”.[x] However, as stated above, an issue which appears to be unaddressed is the joinder of TPFs in arbitration proceedings because most scholars often equate TPF with insurance contracts and contingency fee arrangements thereby deducing that a TPF does not become a party to the arbitration proceeding. Such an approach, in the opinion of the author, is counter-intuitive as it fails to appreciate and take into account the distinction between an active and passive funder in the arbitration process.[xi] The identification of the true nature of the funder assumes pivotal importance for determining whether the funder can be joined as a party to the arbitration proceedings by applying the theories on the extension of the arbitration clause to non-signatories. Extension theories are regularly applied to non-signatories in ICA, however, their application is very limited in Investment Arbitration. This is primarily because proceedings in Investment Arbitration are governed by provisions of the relevant treaty. Further, despite the increased attention, the question of joinder of non-signatories or third-parties to arbitration still remains unexplored due to its complexity which encompasses issues pertaining to the applicable national law, identifying whether there is implied or express consent and applicability of tests such as alter ego and lifting of the corporate veil. This is the gap which requires further deliberation and hence in view of the author the next direction in which discussions pertaining to TPF should proceed. One of the reasons owing to which regulation of TPF has been elusive lie not only in its relative novelty but also in the vast range of funding arrangements available and the great diversity of funds providers.[xii] However, TPF easily distinguishes itself from others, such as bank loans transactions, on the basis of its much more extensive and in-depth assessment and monitoring procedures.[xiii] In his book, Von Goeler has rightly noted that at the root of the concerns about the risks and pitfalls of TPF lies the fact that the involvement of third party funders renders the bipolar contractual arbitration more complex.[xiv] Funders will retain a certain degree of control over the arbitral proceedings but they will virtually never have agreed to arbitrate the dispute it is funding.[xv] This leads to a difficult situation where funders, though have a significant economic interest in the arbitration and obtain control over it, are not bound by the arbitration agreement thus not subject to the arbitral tribunals’ jurisdiction. In other words: “This discrepancy between arbitral consent and economic involvement might alter the procedural dynamics of an international arbitration, affect the procedural rights and interests of the parties, raise new procedural issues and prompt new procedural motions, and thereby modify the ordinary course of the proceedings.”[xvi] Extension Theories in International Arbitration for Joinder of Third Parties The theoretical constructs in relation to non-signatory parties, and in particular TPFs, is ultimately premised on ascertaining implied consent to arbitrate, where the formal requirement of signature is missing. All theories, non-signatory theories and traditional theories of contract law take the same contractual approach to the issue of arbitration and third parties so that courts and tribunals can choose to refer to the one that is closer to their legal tradition and background.[xvii] Nevertheless, it is pertinent to note that although interrelated, the various theories affecting non-signatories remain self-standing theories, so that implied consent must be inferred entirely by reference to at least one theory, rather than by reference to different parts of several theories.[xviii] In his book, Von Goeler has identified and segregated two procedural scenarios whereby an arbitral tribunal may rule on its jurisdiction over TPFs. In the first scenario, TPFs might become an additional party to the arbitration and in the second scenario, the funder might substitute the funded party altogether.[xix] He further elaborates by observing that TPF might have a ‘negative impact on the tribunal’s control over parties and counsel if behind the scenes TPFs are making the key decisions’[xx]. This is because in the absence of inclusion of the funder, the arbitral tribunal is only competent to regulate the impact of a funder’s involvement in the proceeding, ‘indirectly, through its powers over the funded party’,[xxi] even where the funder is perceived to be the real player in the arbitration. From the perspective of the non-funded party, the inclusion of the funder in the main arbitration proceedings assumes pivotal importance for primarily three discernible reasons: (1) to establish liability[xxii] (2) for security of costs[xxiii] (3) efficient enforcement of the arbitral award. Transparency of TPF in the Arbitration Context (Disclosure and Confidentiality) A precursor to the discussion about joinder of TPFs in arbitration proceedings primarily revolves around the issue of whether disclosure of TPF is mandatory or discretionary as it is only thereafter that a Tribunal will indulge in the exercise of determining the extent of involvement of TPFs in the negotiation and performance of the parties’ contract. Some concrete guidance, in recent times, concerning TPF has been provided by the Code of Practice for Third Party Funding of Arbitration (Arbitration ordinance Chapter 609) passed by Hong Kong (hereinafter referred to as “the Code of Practice”) and the Civil Law(Amendment) Act and the Civil Law (Third Party Funding) Regulations 2017 passed by Singapore. Nonetheless, there is no automatic disclosure of the existence of TPFs mandated by either of the aforementioned legislations or any of the leading arbitral jurisdictions and institutions, which leads to the likely inference that disclosure of TPFs is discretionary. If so, the next query that emerges is under what circumstances should the discretionary disclosure be made. Funded Parties and Tribunals will be reluctant to disclose or order the production of the funding agreement, as funding legal proceedings is a private matter and may give rise to issues of contractual confidentiality given that “most funding agreements contain confidentiality provisions.”[xxiv] Perhaps, most arbitration institutions do not seem to consider how a party funds its claim as an important parameter for formulating strict regulations regarding disclosure. As a result, arbitral institutions often ignore the impact of the funding arrangement on the constitution of the arbitral tribunal, since one of the appointed arbitrators may have a conflict of interest with the TPFs. In this regard, General Standard 7(a) of the IBA Guidelines on Conflicts of Interest in International Arbitration provides that: A party shall inform an arbitrator, the Arbitral Tribunal, the other parties and the arbitration institution or other appointing authority (if any) of any relationship, direct or indirect, between the arbitrator and the party (or another company of the same group of companies, or an individual having a controlling influence on the party in the arbitration), or between the arbitrator and any person or entity with a direct economic interest in, or a duty to indemnify a party for, the award to be rendered in the arbitration. The party shall do so on its own initiative at the earliest opportunity. One more reason which necessitates disclosure of TPF is for fixation of costs. There may exist situations wherein the funded party is unsuccessful and, by itself, incapable of paying the costs. The successful party in such a case would be unable to recover money from the funder, due to lack of knowledge of their identity as well as the funder not being a party to the arbitration. Thus, knowledge about the funder helps in fixation of costs on each party. Finally, confidentiality stands for a strong reason for disclosure of the identity of the funders. Often parties to an arbitration chose rules or laws which impose requirements of confidentiality regarding the arbitration proceedings on the parties as well the arbitration. In order to ensure that this confidentiality remains and to assess whether third parties are bound by it or not, disclosure is important. Conclusion In the context of India, the Arbitration and Conciliation Act, 1996 nor its subsequent amendments in the year 2015 and 2019 have addressed the issue of TPF, let alone acknowledge it. The tort of champerty and maintenance has, in most common law jurisdictions, provided the maximum resistance for transactions involving TPFs. However, recent trends indicate common law countries like Hong Kong and Singapore have abolished champerty and maintenance in favour of regulating TPF[xxv] in international arbitration. Despite judicial dicta observing that the tort of champerty and maintenance are inapplicable to the Indian legal scenario, no law expressly allows TPF in arbitration in India.[xxvi] In the aforesaid backdrop, the author feels that if India aims to be an “arbitration hub” then it is imperative that India keeps afoot with latest developments in international arbitration and one possible way to do the same is acknowledging TPF as a viable commercial practice for impecunious Parties and regulating the same. *The author wishes to thank Mr. Raghav Bhargava for his able assistance during the preparation of this article. The article was initially published in the RSRR Excepts from Experts Blog Series. The link to the same is:http://rsrr.in/2020/09/03/joinder-of-third-party-funders/. [i] Chapter 1: Introduction, ICCA Reports No.4: Report of the ICCA-Queen Mary Task Force on Third-Party Funding in International Arbitration, ICCA Report Series, Volume 4, International Council for Commercial Arbitration; 2018) at Pg. 1-16. [ii] Id at Pg.2. [iii] Id at Pg. 3. [iv] Id. [v] D. G. Henriques, Third-Party Funding: A Protected Investment?, Spain Arbitration Review, Revista del Club Español del Arbitraje, Wolters Kluwer España, 2017, Volume 2017, Issue 30, Pg. 100 – 140. [vi] Marc Krestin and Rebecca Mulder, Third-Party Funding in International Arbitration: To Regulate or Not to Regulate?, Kluwer Arbitration Blog, available at http://arbitrationblog.kluwerarbitration.com/2017/12/12/third-party-funding-international-arbitration-regulate-not-regulate/?doing_wp_cron=1598722743.0059421062469482421875. [vii] Supra Note 2. [viii] Susanna Khouri, Third Party Funding in International Commercial and Treaty Arbitration-A Panacea of a Plague? A discussion on the risks and benefits of Third Party Funding, 8 Transnational Dispute Management, 2011. [ix] S. Perry, Third-Party Funding: The Best Thing Since Sliced Bread?, Global Arbitration Review. [x]Supra Note 9. [xi]On the distinction between active and passive funders, see Cento Veljanovski, Third party litigation funding in Europe (2012) 8 Journal of Law, Economics and Policy 408. See also the decision of the Privy Council, in Dymocks Franchise Systems (NSW) Pty Ltd v Todd & Ors (No.2) (New Zealand), [2004] UKPC 39, 21 July 2004; Maxi Scherer and Aren Goldsmith, Third party funding in international arbitration in Europe: Funders’ Perspectives (2012) 2 RDAI/IBLJ Roundtable 210–211. [xii] M Stoyanov and O Owczarek, Third-Party Funding in International Arbitration: Is It Time for Some Soft Rules? (2015) 2 BCDR Intl Arb Rev 171, 173. [xiii] J Lyon, Revolution in Progress: Third-Party Funding of American Litigation (2010) 58 UCLA Law Review 571, 593; C Hendel, Third Party Funding (2010) Spain Arb Rev 67, 77. [xiv] J Von Goeler, Third-Party Funding in International Arbitration and Its Impact on Procedure (Kluwer Law International 2016). [xv]Id. [xvi]Supra note 15. [xvii] Gary Born, International Commercial Arbitration, 2nd edn (Kluwer, 2009) at 1204: “Whatever legal construct is utilized, the beginning and ending question is ordinarily whether the parties, with their actions considered objectively and on the basis of commercial good faith, intended that a particular entity be a party to the arbitration clause. This question arises in numerous contexts-ranging from implied assent, to guarantee, to incorporation and assumption, to subrogation, to agency, to group of companies’ analysis-but the fundamental inquiry remains the same in each case.” See also, CfW Park, “Non-signatories and International Contracts: An Arbitrator’s Dilemma”, in Permanent Court of Arbitration (ed), Multiple Party Actions in International Arbitration (Oxford University Press, 2009). [xviii] Stavros L Brekoulakis, Third Parties in International Commercial Arbitration, Oxford International Arbitration Series. [xix] J von Goeler, Third-Party Funding in International Arbitration and Its Impact on Procedure (Kluwer Law International 2016). The first scenario is explained by Von Goeler as the inclusion scenario where the non-funded party seeks to compel the funder to arbitrate as an additional party on the side of the funded party by arguing that the funder is also bound by the arbitration agreement. In the second scenario, If the funded party assigns its rights under the contract containing the arbitration clause to the funder, the funder may be bound by this clause by way of substituting the funded party, which in turn ceases to be a party to the arbitration agreement. [xx]Waincymer, Procedure and Evidence in International Arbitration, 608. [xxi]Goldsmith & Melchionda, Rev. Dr. Aff. Int. (2012) 221, 228. [xxii]The funder may be believed to be an entity with deeper pockets when liability is at issue. That is conceivable, for example, where a parent company assumes the role of third-party funder by paying for the arbitration costs of its respondent subsidiary. [xxiii]A non-funded respondent may seek inclusion in order to obtain an order for costs or security for costs directly against the funder, notably in case the funded party will likely be unable to pay a potential adverse costs award. [xxiv] Alison Ross, The dynamics of third-party funding, Global Arbitration Review 7(1) (2012), Pg.19. [xxv] Christine Sim, ‘Third Party Funding in Asia: whose duty to disclose?’, Kluwer Arbitration Blog, May 22 2018, http://arbitrationblog.kluwerarbitration.com/2018/05/22/third-party-funding-asia-whose-duty-disclose/. [xxvi] Ram Coomar Coondo v Chunder Canto Mukherjee, AIR 1954 SC 557; Unnao Commercial Bank Ltd v Kailash Nath, AIR 1955 All 393; Lala Ram Swarup v The Court of Wards (1940) 42 Bom L.R. 307; Rattan Chand Hira Chand v Askar Nawaz Jung (Dead) by LRs (1991) 3 SCC 67.

Bodhisattwa Majumder[*] Dispute resolution clauses often stipulate a multi-tiered dispute resolution clause providing alternative dispute resolution (“ADR”) mechanisms rather than an arbitration clause. These clauses provide alternative dispute resolution methods, apart from arbitration, which is less time-consuming and cost-efficient than arbitration. The multi-tiered dispute-resolution clauses (“MTDC”) provide sequential dispute resolution procedures which conclude with arbitration.[i] Arbitration is placed as a last resort due to its binding nature and formal set up, compared to other avenues such as Negotiation, Mediation, Expert opinion or the like.[ii] In order to provide teeth to the pre-conditions to arbitration, the pre-arbitration procedures are made mandatory before going for arbitration.[iii] The same is done in furtherance of achieving a swift, dispute resolution process that consumes the least amount of financial and physical strain on the parties. However, the improper drafting of the multi-tiered clauses leads to further disputes that make the entire process futile. [iv] The parties move to litigation at the first drop of the hat contesting the mandatory nature of the clauses and whether there has been sufficient compliance to reach the stage of arbitration. In every jurisdiction, the nature of these clauses has been disputed and challenged due to the consensual nature of the phrases, hence making them unenforceable.[v] The author in this piece strives to understand the impediments in the execution of these clauses, the reasons for conflict and also analyse the approach of the jurisdictions to resolve the same. The author has written this article in the context of Maritime Arbitration and the clauses drafted in the “Charterparties” (the contract between a shipowner and a cargo owner to hire the ship for a voyage). Multi-tiered arbitration clauses - Enforcement In order to develop an understanding of the efficiency of a MTDC, it is necessary to set a frame of reference regarding the construction. This is quintessential as the ruling on the enforceability of such a clause depends on the wording to derive the intention of the parties. The author for this article seeks to refer to the model dispute resolution clauses provided by the International Court of Arbitration (“ICC”).[vi] i. Optional ADR- Under these model clauses, the parties at any point in time of the ongoing dispute arising out of the contract may seek ADR as a mechanism. The entire discretion to opt for the pre-Arbitration mechanisms are placed with any single party unilaterally. ii. Obligation to consider ADR- Under these, the parties have to compulsorily “consider” ADR as a resolution mechanism before proceeding to any other method. The consent of the parties appears immaterial and the framework of the contract rules the procedure. iii. Obligation to submit the dispute to ADR, with an expiration mechanism- Under these model clauses, the parties have an obligation to submit the dispute for ADR within a fixed date of reference. This date of referring to ADR is placed as a deadline with reference to the original date of the dispute to avoid any delay of filing. iv. Obligation to submit the dispute to ADR, followed by arbitration- According to these types of clauses, the parties have to compulsorily use ADR as a resolution mechanism before proceeding to any other method. In the above categories of clauses, Clause (ii) stands as the most disputed as the term “consider” has varied meanings defined by various arbitration institutions, which has been discussed in the next section. The forums have interpreted the measure of “considering” differently, and the minimum efforts required for being classified as “considering” have been diverse. For instance, in many situations, a discussion on the telephone has been considered sufficient and in some instances, a physical meeting was set to be the standard. As a result, the jurisdiction of the institution conducting arbitration procedure is challenged on the basis of the conduct of the parties.[vii] The forums move to adjudicate on the factum of the efforts by the parties to resolve the dispute through alternative means. Baltic and International Maritime Council (“BIMCO”) has also provided the model Clause, which falls within Clause (i) of the ICC Model Clauses and lays out optional mediation at any point of time before or after the commencement of arbitration. This has been followed by the London Court of International Arbitration.[viii] In order for the multi-tiered clauses to sustain, the sake of brevity has been a criterion before the courts of law, along with an unambiguous intention of the parties. In the absence of the same, the courts have interpreted the intention from the conduct of the parties before arriving for arbitration and that has often led to decisions incoherent to the intention of having a swift dispute resolution process. In most jurisdictions, there has been an inclination to rule against the enforcement of MTDC,[ix] however, recent years have seen contrary opinion. The approach of jurisdictions towards MTDC I. United Kingdom (London Court of International Arbitration) Previously it was followed that whenever there was a lack of bare agreement mandating compliance of pre-arbitration procedure, the agreement cannot be enforceable.[x] Such agreements have been held as unworkable and impractical in practice.[xi] But in many cases where the procedure was mentioned, the courts have taken a lenient perspective when good faith has been exercised by the parties and an intention existed between the parties to mediate/negotiate.[xii] The stance in the common law courts was unclear regarding MTDC until recently.[xiii] The Court provided four-point guidelines to be adhered to while adjudicating on the enforceability of MTDC. Firstly, the pre-arbitral steps must be an enforceable obligation; Secondly, the obligations should be ‘expressed’ as a pre-requisite to arbitration; Thirdly, the process followed to meet the obligation should be sufficiently clear and certain by reference to objective criteria. Lastly, given that the above pointers are followed, the court shall have the discretion to stay proceedings in case it feels that an enforceable obligation has not been adhered to. II. Australia (Australian Commercial Dispute Centre) The Australian Courts have leaned in favour of enforcing arbitration clauses and opined that an agreement to meet/negotiate/discuss is a mandatory procedural aspect that the parties cannot disregard while proceeding to arbitration. It was held in the ruling of United Group Rail Services[xiv]that merely because there have been ambiguities and uncertainty, it does not connote that the MTDC clauses were unenforceable outright. The Australian courts have also adopted approach similar to the UK Regime to determine enforceability. The Courts have placed reliance on the structure of the agreement, the conduct of the agreement to meet pre arbitration obligations and then arrived into conclusion rather than focusing solely on the construct of the clause. This in turn connotes that the parties cannot seek shelter of poor drafting to avoid their pre-arbitration obligations. The decisions in most common law jurisdictions therefore have moved towards the mandatory regime, which places the pre-arbitral steps as a pre-requisite for arbitration. The approach taken is such that only when the steps are defined, complied and the compliance is genuine, the mode of arbitration can be pursued. III. Singapore The High Courts in Singapore, following the common law approach, share jurisprudential thoughts similar to Australia and hold that an agreement to negotiate serves a useful purpose and merely because there will be difficulty in proving breach, the courts should not hold such clauses to be lawfully unenforceable.[xv] It considers enforcement of pre-arbitration clauses a necessary precedent to have the arbitration. IV. India Post the amendments in (Indian) Arbitration and Conciliation Act 1996, the courts in their rulings had left it for the arbitration tribunal to answer and decide whether the compliance of the pre-arbitral steps have been taken into consideration by the parties.[xvi] Before the 2015 amendment, Indian courts have emphasised on the conduct of the parties while dealing with the nature of the pre-arbitration steps. If it was pointed out by the parties that the step of negotiation before the arbitration was a mere formality, the court[xvii] did not allow any party to take benefit from the clause and declare the arbitration as void. The most used and prominent observations were made by the Allahabad High Court in Sun Securities[xviii] where it held that the only scenario when the pre-arbitration mechanism is enforceable is when it forms a part of the procedure for appointment of the arbitrator. Another pre-requisite for this was that the mechanism should be adjudicatory. Premature Arbitration – Approach of Indian Courts towards MTDC The Indian regime has joined the bandwagon of other common law countries and adopted the mandatory approach while determining the enforceability of a MTAC.[xix] An invocation of the arbitration clause is said to be pre-mature if the procedure prescribed in the arbitration clause has not been complied with. The Indian Courts have primarily considered invocation of the arbitration clause as pre-mature in mostly three categories; Firstly, if the language of the clause mandates the pre-arbitration procedure; Secondly, if the conduct of the parties fell short of the conduct required in facilitating the pre-arbitration procedure and lastly, if the formalities required has not been complied.[xx] A. Language of the agreement In order to ascertain whether the clause of the agreement mandates pre-arbitration steps or whether the step is merely an option for the parties to exercise or they have to give efforts towards it compulsorily the Apex Court has noted:[xxi] that in order to understand the intention of the parties the prime importance shall be given to nature of the clauses and the language of the clause. In case the parties have intended to make the pre-arbitral steps mandatory and thereby indicated the same by using a clear, unambiguous clause the jurisdiction of the Arbitral Tribunal is ousted by non-compliance. Thus, in order to have an enforceable pre-arbitration procedure, the parties must have the terms drafted in a clear, unambiguous, and precise manner. B. Conduct of the parties The Apex Court in Visa International[xxii] also emphasized on the efforts made towards the facilitation of the pre-arbitration process, and deliberated whether the parties made serious efforts towards mutual discussion. In one instance, the Apex Court[xxiii] had taken the help of the correspondence exchanged between the parties (letters, emails, etc) to determine the intention of the parties. The conduct of parties was taken as primordial proof of the desire of the parties to partake into settlement in the following case. In clauses where it is mentioned explicitly that arbitration will take place for disputes which cannot be settled amicably, it forms a precondition for the parties to attempt for alternate ways to resolve the dispute before approaching the court. C. Insufficient formalities Non-compliance with procedural formalities also forms an impediment towards the enforcement of MTDC which can also result in premature arbitration. These include the statutory and contractual formalities such as Stamp duty, Registration, Signature, witness etc. The Apex Court in one instance[xxiv] had stopped the appointment of arbitrator as the deed had not borne stamp duty. As an Agreement to arbitrate is a contract, it is bound by the laws of contract (Indian Contract Act, 1972) and thereby the invalidity of the main contract might also affect the arbitration clause. Therefore, it is the duty of the tribunal to examine the instrument before admitting it as evidence for arbitration.[xxv] Conclusion The courts in a substantial number of jurisdictions have traditionally been reluctant or unwilling to enforce MTDC. However, in the last few years, courts in a have shown an inclination to enforce them. In order for a multi-tiered arbitration clause to be enforceable, along with the positive injunctions, the negative injunctions should also be precise and the parties are aware.[xxvi] The Courts have laid down guidelines for inclusion of an injunction which specifies with the connotation of definite words as “Shall” or “Must”. And in other instances where there has been a use of open-ended sentences such as “may”or“choose to” which leave scope of interpretation, then the timeline should be mentioned under which the parties can exercise their choice. Further, it has also been the practice that only after expiration of that period, the arbitration clause can be invoked. Simultaneous exercise of choice to mediate/arbitrate has led to disputes and that needs to be avoided. The various means of alternative dispute resolution exist to facilitate expedite procedures for the parties to relieve themselves from the clutches of litigation. In order to facilitate the same, it is quintessential to ensure that there is a certain degree of certainty and lack of vagueness which can be utilised by the parties to delay the due process. The Indian jurisdiction in this front has led the bandwagon of enforcement by laying specific criteria of enforcement and also laying possible instances where there is a leeway provided to the party. Comparatively, other jurisdictions are yet to follow the suite. The need is eminent for the other jurisdictions to have a uniform set of guidelines and model agreements for ensuring clarity among the parties and the courts alike. [*]Bodhisattwa Majumder is a Final Year Student at Maharashtra National Law University. He is also the Editor-in-Chief of the Arbitration & Corporate Law Review, a venture to explore his interests in Corporate and Commercial Laws. He can be contacted at bodhisattwa@mnlumumbai.edu.in. [i] Michael Pryles, Multi-Tiered Dispute Resolution Clauses, 18 J. Int'l Arb. 159 (2001). [ii] Klaus Peter Berger, “Law and Practice of Escalation Clauses”, 22 Arb. Int'l 1 (2006). [iii] James H. Carter, “Issues Arising from Integrated Dispute Resolution Clauses, in New Horizons in International Commercial Arbitration and Beyond”, ICCA Congress Series No. 12, 446 (A.J. van den Berg ed., 2005). [iv] Michael Pryles, “Multi-Tiered Dispute Resolution Clauses”, 18 J. Int'l Arb. 159 (2001). [v] Id, at pp. 423 [vi] Dyala Jimenez-Figueres, “Multi-Tiered Dispute Resolution Clauses in ICC Arbitration”, 14 ICC Bull. 71 (No. 1, 2003). at pp. 73. [vii] Multi-tiered Dispute resolution clause, Global Arbitration News, https://globalarbitrationnews.com/multi-tiered-dispute-resolution-clauses-a-reminder-of-the-court-of-appeals-split-decision/, Accessed 6th November, 2020. [viii] Recommended Clauses 2015-16, The North of England Protecting and Indemnity and Assoc. Ltd., Available at https://www.nepia.com/recommended-clauses-2015-16, Accessed 28th September, 2020. [ix] Pre-Arbitral Steps – Indian law perspective, International Law Office, https://www.internationallawoffice.com/Newsletters/Arbitration-ADR/India/Khaitan-Co/Pre-arbitral-steps-Indian-law-perspective, Accessed 6th November, 2020. [x] Walford v. Miles (1992) 1 All ER 453 (HL) [xi] Dhanani v. Crasnianski (2011) 2 All ER (Comm) 799 [xii]Cable & Wireless Plc v. IBM United Kingdom Ltd 2002 EWHC 2059 (Comm). [xiii] Ohpen Operations UK Ltd v Invesco Fund Managers Ltd [2019] EWHC 2246 (TCC). [xiv] United Group Rail Services v. Rail Corpn. New South Wales (2009) 127 Con LR 202., [xv] International Research Corpn. Plc v. Lufthansa Systems Asia Pacific Pte Ltd. 2012 SGHC 226. [xvi] M/s Simpark Infrastructure Pvt. Ltd. Vs Jaipur Municipal Corporation; MANU/RH/1010/2012; Ravindra Kumar Vermavs M/s BPTPltd.& Anr. MANU/DE/3028/2014; SBP & Co. vs Patel Engineering Co. (2005) 8 SCC 618 [xvii] Nirman Sindia v. Indal Electromelts 1999 SCC OnLine Ker 149. [xviii] Sun Security Services v. Babasaheb Bhimrao Ambedkar University Arbitration Case No. 4 of 2013 (All). [xix] Supra Note 15. [xx] Sushil Kumar Sharma v. Union of India CASE NO.: Writ Petition (civil) 141 of 2005; Siemens Limited v. Jindal India Thermal Power Arb. P.243/2017; SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P) Ltd., (2011) 14 SCC 66. [xxi] Id, Sushil Kumar Sharma. [xxii] Visa International Ltd. v. Continental Resources (USA) Arbitration Petition NO.16 OF 2007 [xxiii] Supra Note 18, Siemens Ltd, at ¶30 [xxiv] Garware Wall Ropes Ltd. v. Coastal Marine Constructions & Engineering Ltd Civil Appeal No. 3631 of 2019. [xxv] Supra Note 18, SMS Tea Estates. [xxvi] Wah v. Grant Thornton International Ltd. (2013) 1 Lloyd’s Rep 11.

Akshay Anurag* Introduction India, being the world’s largest democracy suffers from an inherent defect of extensive delays in the conventional judicial system. It is a quite well known fact that India has huge pendency of cases in various courts. The prevailing litigative journey in the courts has become expansive, time consuming, complex and most cumbersome. The advent of alternative dispute resolution has become a global necessity as it has been one of the most significant movements for conflict management and judicial reform. Alternative Dispute resolution as the name manifests is an alternative to the conventional dispute resolution mechanism which is primarily litigation centric. With the passage of time, arbitration has evolved as the instrument which is assisting the parties to settle their disputes in a very short span of time.[1] Competition law was brought in the pursuit of globalization wherein India has responded by opening up its economy, removing controls and resorting to liberalization. The main aim of Competition Act, 2002 is to promote and sustain competition in markets, to protect the interests of consumers. The main objective of the law is to encourage healthy competition in trade and business and help stop unscrupulous business activities that, in most cases, are aimed at cheating the consumers and controlling markets through means -- fair or foul.[2] Since competition law exists to prevent market distortions, enhance the overall efficiency of the market and safeguard consumer welfare, there is a substantial public interest involved. Unlike competition law, arbitration is the creation of private autonomy. Whenever a dispute has potential to affect public at large, uncertainty arises as to the arbitrability of the dispute quite often. However considering the conventional litigation as a dispute resolution method and the pendency of decisions before various authorities notified under competition law, one can rest his arguments in favour of arbitration as an alternative. Arbitrability of Disputes and an Air of Uncertainty. The prevailing notion is that a dispute is arbitrable only if it is capable of being settled by arbitration. However, no definite criteria have been laid down to determine whether a dispute can be resolved by arbitration or not.[3] The complex issue of arbitrability of disputes is not governed by any statue but only by the virtue of case laws. It is pertinent to note that reference to arbitrability is mentioned only under section 2(3) of the Indian Arbitration Act, 1996, which states that certain disputes may not be submitted to arbitration, but again this provision failed to take note of disputes that cannot be resolved via Arbitration.[4] To fill the void, the apex court has proved to be the torchbearer throwing the light on the arbitrability of a subject matter. In the case of Kingfisher Airlines Limited v. Prithvi Malhotra Instructor[5], the apex court held that the creation of special tribunal with respect to certain subject matter per se does not preclude arbitration in that subject matter. Instead, disputes would be considered non-arbitrable only where a particular enactment creates special rights and obligations and gives special powers to the Tribunals that are not enjoyed by civil courts. However, in the case of Natraj Studios Pvt. Ltd. v. Navrang Studios[6] the court pronounced that the arbitral tribunals, which are a substitute to civil courts cannot hear a dispute under the Rent Control Act as the statute noted that these rights to be adjudicated in the specialized tribunals only. International Position at a glance Owing to the fact that Competition law is a public law for safeguarding the public interest, the anti-trust disputes must be raised by courts notwithstanding the will of litigants.[7] Also, competition law issues more often require complex economic evidence discouraging the parties to choose arbitration which proved to be time consuming and expansive in this scenario. However the United States has taken contrary view as to the Indian aspect, taking a lead to arbitrate an antitrust dispute. In Mitsubishi Motors v. Soler[8], the US supreme court noted that subjecting the antitrust claims to arbitration would not violate public policy and the antitrust claims can be very well submitted to arbitration proceedings and it should be given full effect in international contract. Following the same trend the European Court of Justice held that claims implicating European Union competition law are arbitrable, even though by definition they implicate public policy.[9] Arbitrating Disputes vis-a-vis Adjudication before Competition Commission of India (CCI) The Competition Act is primarily enforced through the Competition Commission of India which is vested with both regulatory and quasi-judicial powers.[10] But it must be borne in mind that CCI neither has a statutory power to refer a dispute to any alternative method nor competition act permits the parties to proceed with alternative dispute resolution methods. The arbitrability of competition issues has been the subject of controversy since ages. India has a conventional approach with respect to the arbitrability of competition law disputes. Thus far in India, antitrust disputes can’t be subjected to arbitration as the general view confirms that arbitral tribunal is well competent to decide issues in personam but fails in deciding rights in rem.[11] This view was reflected in the case of Union of India v. Competition Commission of India[12] wherein notwithstanding a valid arbitration clause the court held that CCI has the jurisdiction to hear the matter. The court further pronounced that, though the arbitral tribunal has the mandate, it lacks expertise or the ability to conduct an investigation necessary to decide issues of abuse of dominant position by one of the parties to the contract. Thereby making the dispute non- arbitrable. The right to file a suit before the CCI is an unwaivable right which is grounded on the perception that the scope of proceedings in CCI is different from the scope of proceedings before an arbitral tribunal whose mandate is only circumscribed by the terms of the contract.[13] Further, Section 5 of the Arbitration and conciliation Act cannot be read in isolation. It must be juxtaposed with Section 2(3) of the Indian Arbitration Act, 1996 which renders certain disputes to be non- arbitrable. The above pronouncements proved to be a guiding light in determining arbitrability of competition disputes. However, this pronouncement raises a separate query as to whether the arbitral tribunal has jurisdiction where both the parties wilfully submit the dispute to arbitration. Arbitrating Competition Law disputes: Changing Perspective There are many instances wherein courts have been hostile towards the arbitrability of antitrust disputes in order to safeguard the public interest.[14] It must be noted that merely precluding arbitrability of competition law disputes is not the only way to preserve public interest. An alternative to this would be that the Competition Commission of India should play the dual role of parens patriae and amicus curiae in the arbitral proceedings pursuant to allowing the parties to proceed for arbitration.[15] An amicus curie provides submissions on the matter at issue on behalf of parties. This ensures that an arbitral tribunal has the opportunity to hear from third parties that have expertise in the matter at stake and can assist in dispute proceedings thereof. The United States (US) has allowed the arbitration of antitrust disputes but the US court balanced its strong stance in favour of arbitrability with an obligation for the arbitrator to apply the antitrust law. Similarly, a glance at Section 27 of the Indian Arbitration Act, 1996 to be made which allows an arbitral tribunal to seek assistance from the Court in taking evidence. This provision can be invoked by the arbitral tribunals to consult the CCI when confronted with questions of competition law. Furthermore, non- arbitrability of antitrust claims has led to various shortcomings. A report published in 2014 indicates that in the past five years of CCI’s establishment, almost all the cases decided by the CCI are pending before appellate bodies. Consequently, no private claim has reached its conclusion and the aggrieved parties are still awaiting a remedy.[16] Since, arbitration offers a greater degree of flexibility, confidentiality and autonomy to parties than court proceedings which would make it easier for private parties to vindicate their claims under competition law and also proved to be compatible with the aims and objectives of Competition law i.e welfare of the consumers.[17] However, the enforcement i.e imposition of fines etc. or interpretation of legal aspects of competition act should be the prerogative of competition authorities. Hence arbitration should be considered as the accompanying means and not as a substitute to CCI. Summing Up It is evident that there is a lack of jurisprudence in India with regard to alternative means available to resolve competition issues. As India is attempting to reclaim its position on the stage of international arbitration, allowing arbitration to resolve competition law disputes with some safeguards, would be a progressive step in the right direction to align India’s arbitration regime with international standards. This can be achieved legislatively by an amendment to Competition Act, 2002 obliterating the bar on civil courts jurisdiction to entertain competition law disputes. * Akshay Anurag, Associate, Singh and Associates, Gurugram. he can be contacted at akshayanurag07@gmail.com and https://www.linkedin.com/in/akshay-anurag [1] Ethiopian Airlines v. Stic Travels (P) Ltd., (2001) 7 SCC 454. [2] Competition Law to relieve consumers of unhealthy business practice, Shafique, available at http://www.thefinancialexpress-bd.com/more.php?news_id=135247&date=2012-07-02, last visited on August 20, 2020. [3] Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd., AIR 2011 SC 2507. [4] Aftab Singh v. Emaar MGF Land Limited, 2017 SCC OnLine NCDRC 1614. [5] Kingfisher Airlines Limited v Prithvi Malhotra Instructor 2013(7) Bom CR 738 (India). [6] Natraj Studios Pvt Ltd v Navrang Studios AIR 1981 SC 537. [7] Assimakis P. Komninos, Arbitration and EU Competition Law 7 (Univ. Coll. London, Dep‘t of Law, Working Paper, 2009) available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=152010 [8] Mitsubishi Motors v. Soler , 473 US 614 (1985) [9] Eco Swiss v. Benetton,(1999) ECR I- 3055. [10] John R. Allison, Arbitration Agreements and Antitrust Claims: The Need for Enhanced Accommodation of Conflicting Public Policies, 64 N.C.L. REV. 219 (1986) Available at: https://scholarship.law.unc.edu/nclr/vol64/iss2/5, last accessed on March, 22, 2020. [11] Supra note 3. [12] Union of India v. Competition Commission of India, A.I.R. 2012 Del 66 (India). [13] Man Roland v. Multicolour Offset, (2004) 7 S.C.C. 447 (India). [14] Union of India v. Competition Commission of India, AIR 2012 Del 66; Man Roland v. Multicolour Offset, (2004) 7 S.C.C. 447. [15] Tanya Choudhary, ‘Arbitrability of Competition Law Disputes in India – Where are we now and where do we go from here?’, (2016) IJAL IV (2) 69, 84, available at: http://www.ijal.in/sites/default/files/IJAL%20Volume%204_Issue%202_Tanya%20Choudhary.pdf, last accessed on March, 23, 2020. [16] Aman Malik, Complaints Dwindle as CCI Faces Awareness Deficit, LIVE MINT, available at http://www.livemint.com/Politics/p3uUm7UvYnBZTbbgljwU7K/ComplaintsdwindleasCCI-faces-awareness-deficit.html, last accessed on March, 23, 2020. [17] Carl W. Hittinger & Terry Smith, Arbitrating Antitrust: Are Things Getting More Complicated?, available at: http://www.thelegalintelligencer.com/id=1202541387095?keywords=Arbitrating+Antitrust:+Are+Things+Getting+More+Complicated&publication=The+Legal+Intelligencer , last accessed on March, 23, 2020.

Ms. Jhangiani, welcome to the Arbitration Workshop! Firstly, we congratulate you Ma’am, for being appointed the Queen’s Counsel by her Majesty the Queen and for being the first female Queen’s Counsel at your firm Clyde & Co. Secondly, we appreciate the opportunity to share your perspective with our readers. Q. Before we delve in, may we request you to kindly introduce yourself and tell us about the origins of your interest in the field of Arbitration? A. Thank you very much for your kind wishes. I have to confess that my entry into the field of international arbitration was actually by accident. I was a barrister specialising in High Court work in London when my husband and I decided we wished to relocate and move eastwards. It is not easy to practise outside your home jurisdiction as a litigator, because litigation tends to be entirely domestic (although we have seen the emergence of international commercial courts in the last decade or so…). I therefore applied to study international commercial arbitration at Queen Mary University in London, and before I had even commenced the course, I was offered a role at my current firm in Dubai, specialising in international arbitration. I have no doubt that my interest in studying the course assisted in landing the job. Once I started the course, I found I thoroughly enjoyed the field, and I graduated with distinction. Q. The recent Report of the Cross-Institutional Task Force on Gender Diversity in Arbitral Appointments and Proceedings highlights the issue of Gender Diversity in international arbitration appointments. Do you agree with the aforesaid finding of the Task Force? What is your opinion regarding this issue? A. The Report is an excellent piece of authorship. It highlights that positive steps have been made in recent years towards more gender diversity in international arbitration appointments, but there is still a great deal of work to be done. A key feature of the report is that it makes recommendations on how to improve gender diversity of both Counsel and arbitrators. I hope those recommendations are heeded by all of those involved in the field, including institutions and law firms, so that we can continue to make the progress which is very much needed. Q. Would you agree that disputes regarding interpretation of the contract form the core of most arbitration disputes? How do you navigate the principles of contract law and contractual interpretation in different arbitrations where the substantive law of contract is based on different laws and legal systems. A. Most commercial arbitrations deal with contractual disputes, and I do agree that the interpretation of the relevant contract will often be in issue. The way I have dealt with this in my own practice is to address what the relevant principles are for contractual interpretation under the substantive law of the contract, before arguing why, based on those rules, the Tribunal should agree with the interpretation put forward by my client. Q. What do you think about the liberalisation of third-party funding in top global arbitration centres? As a member of SIAC Users’ Council and Director of Chartered Institute of Arbitrators’ do you propose any further changes in provisions to streamline the process especially given that both UK and Singapore have legislations governing third party funding? A. Third Party Funding has developed organically in different jurisdictions and each jurisdiction has adopted an approach which works best for that jurisdiction. For example, funders are essentially self-regulated in England & Wales, but are regulated by legislation in Singapore. Whilst this means that the approach is not streamlined globally, I think each jurisdiction is best placed to consider what regulation and legislation is most appropriate for its own legal landscape. Q. How are you adapting to the Work from Home culture? Do you think virtual hearings will become the norm beyond the quarantine period as well? A. Like everyone else, I have been forced to adapt! And the process has been smoother than I thought it would be, to be honest. My experience of virtual hearings – including cross-examination at virtual hearings – has been very positive. I expect we will continue to reap the cost and convenience benefits of virtual hearings, even beyond the pandemic. That said, my personal view is that virtual hearings are better suited to shorter hearings (for example, those lasting one week or less), than longer hearings. Q. Are there any specifics of arbitral practices that you particularly enjoy? What practices do you employ to engage and keep up with the recent trends in arbitration? Is there any routine you would recommend young lawyers should regularly engage in to become better in the field? A. Thankfully there are many aspects of arbitral practice that I enjoy. I particularly enjoy advocacy, but I am also very interested in arbitration practice and procedure. I regularly read the Kluwer arbitration blog (and also contribute to it on topics that catch my interest). I would highly recommend that young lawyers sign up to receive the blog. I would also recommend regularly participating in seminars and webinars in the field, as the field is continually evolving and it is good to be abreast of latest developments, as well of the discussions and thought leadership which may foreshadow future developments. Q. What would be your word of advice to the readers trying to make it big in the transnational practice of international arbitration? A. If you can gain any experience from an arbitrator's point of view, that will stand you in excellent stead as Counsel. Receiving arbitral appointments is not easy, but receiving an appointment as a tribunal secretary may be easier to attain for younger lawyers. The experience you gain as tribunal secretary will be invaluable, as will the impression you will make if you work hard and do a fantastic job. The Editorial Team at the Arbitration Workshop would like to thank Ms. Sapna Jhangiani for taking out time from her busy schedule and for sharing her perspectives with us!

- Gaurav Rai[1] PDF version of the Article I. Introduction The most common commercial arbitrations today arise out of Construction contracts. These contracts have now also contributed certain terms and clauses which are unique only to such contracts. This is evident by the fact that there are special treatises and books on contract law and arbitration in the construction industry. One such clause is the exclusion clause. Although such exclusion clauses may not be specific to construction industry they are most widely used in construction contracts. This article will deal with exclusion clauses in which the clauses of a contract exclude the liability of employers in construction contracts for delays caused by the employers themselves. Such clauses will be referred to as exclusion clauses generally during the course of this paper. Such a detailed discussion regarding the status of the law and the scope of such exclusion clauses is necessary because the suggestions of the 103rd Report of the Law Commission of India[2] have not been accepted. Titled “Unfair Contract Terms”, this report dated 28th July 1984 took a harsh view of contracts of adhesion which were one sided and had unconscionable terms specifically those which excluded liability for faults of one of the parties to the contract. The Law Commission was of the view that the Contract Act in India, in its current form, would not be able to stop parties from inserting one sided clauses which extinguished the liability of one party even in cases of wilful breach. This report in chapter 6 made a single suggestion in the form of an insertion of Section 67A to the Contract Act in the form of an amendment which would have read as follows: Section 67-A (1) Where the Court, in terms of the contract or on the basis of evidence adduced by the parties, comes to the conclusion that that the contract or any part of it is unconscionable, it may refuse to enforce the contract or the part that holds it unconscionable. (2) Without prejudice to the generality of the provisions of this section, a contract or part of it is deemed to be unconscionable if it exempts any party thereto from – (a) liability for wilful breach of the contract, or (b) the consequences of negligence.” (Emphasis supplied) The author submits that such a clause would have definitely changed the landscape of contract law jurisprudence and would have made absolutely clear the status of the law which is being discussed in this paper. However, the author does not agree with the premise of the Report that parties can completely exclude the liability for their wilful default. This article is going to weave through a myriad of scenarios, Sections of the Indian Contract Act, 1872 and Judgments of the Courts of India to analyse the status of the law regarding exclusion clauses and show that such clauses in contracts when being dealt with in arbitration matters will not bind the arbitral Tribunal and it can disregard the same. The author will, however, attempt to highlight and establish the most beneficial approach to either side i.e. the Contractor and the Employer, so as to safeguard their interest. This article will however limit its scope and not deal with supplemental agreements entered into between the parties when such issues of delays and compensation arise during the execution of the Contract which may or may not have such an exclusion clause. II. Compensation for breach of Contract and delay in performance of Contract The very basic universal rule of contract law is that when a party breaches the terms of the Contract they are obligated to compensate the party who suffers from such breach for any loss caused which naturally arose in the usual course of business. The same is outlined under Section 73 of the Contract Act, 1872 and is extracted hereunder: 73. Compensation for loss or damage caused by breach of contract. When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach. Compensation for failure to discharge obligation resembling those created by contract. When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract. Explanation. In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract must be taken into account. In addition to the compensation provided for breach of Contract, Section 55 of the India Contract Act, 1872 also lays down how compensation may be available for the delay in the performance of the Contract. It centres around the nature of the contract in question. Different consequences are stipulated based on whether time is of the essence of the contract or not. This phrase is of utmost relevance to the discussion. Section 55 of the Indian Contract Act,1872 is extracted hereunder: 55. Effect of failure to perform at fixed time, in contract in which time is essential. When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract. Effect of such failure when time is not essential. If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure. Effect of acceptance of performance at time other than that agreed upon. If, in case of a contract voidable on account of the promisors failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of such acceptance, he gives notice to the promisor of his intention to do so. As is well highlighted above, the second paragraph of Section 55 which deals with cases where time is not of the essence of the contract, does not contain conditions for claiming compensation from the employer for the delay that might have been caused unlike the third paragraph which states that notice must be given at the time of accepting an extension of time from the employer for the contractor to eventually seek compensation at a later date. In Hind Construction v. State of Maharashtra (1979) 2 SCC 70 it was held by a three judge bench of the Supreme Court as follows: …….where the parties have expressly provided that time is of the essence of the contract such a stipulation will have to be read along with other provisions of the contract and such other provisions may, on construction of the contract, exclude the inference that the completion of the work by a particular date was intended to be fundamental, for instance, if the contract were to include causes providing for extension of time in certain contingencies or for payment of fine or penalty for every day or week the work undertaken remains unfinished on the expiry of the time provided in the contract such clauses would be construed as rendering ineffective the express provision relating to the time being of the essence of contract. Most construction contracts have such clauses that allow extension of time or imposition of penalty/ liquidated damages for delay in completion of works. Hence, on the basis of the principle laid down by the Supreme Court in the aforesaid case, all construction contracts which have such clauses will not be construed to have stipulated that time is of the essence of the Contract and consequently only the second paragraph of Section 55 of the Contract Act,1872 will be applicable for dealing with disputes regarding compensation for delay. III. Exclusion clauses for delay caused by the Employer Under this sub-head, the author will deal with how judgments in the Supreme Court of India have dealt with such exclusion clauses which state that Contractors are not entitled to receive damages for delay caused by the employers themselves in performing their obligations. In most construction contracts, according to the author, delays such as handing over of vacant possession of the land, approval or drawings etc is the responsibility of the Employer. The Author, however, submits that most Indian Judgments, while dealing with the aspect of delays caused by the employers, have not truly discussed the difference between the rights of the parties in contracts where time is of the essence and where time is not of the essence. The Courts have either discussed Section 55 as a whole or have not discussed Section 55 or any other provision of the Contract Act altogether. The Courts while dealing with arbitral Awards under challenge have, on the basis of the principle of supremacy of the contract or the principle that the scope of the arbitral Tribunal is within the four corners of the contract, either set aside awards which granted compensation for delay of the Employer even in the presence of exclusion clauses or have enforced/upheld the arbitral award which has dismissed the claims for compensation for delay caused by the Employer, solely on the basis of such exclusion clauses. Even the judgments which have upheld the award for allowing claims even in the presence of such clauses have given reasons which are difficult to justify. Through the discussion of these judgments, I shall follow up on my general position as put forth above and simultaneously lay out my specific criticism for each judgment. In Ch. Ramalinga Reddy v. Superintending Engineer 1999 (9) SCC 610 the Supreme Court affirmed the judgment of the High Court of Andhra Pradesh which had set aside the award of the arbitrator for payment of extra rates for work done beyond the agreed time. The High Court stated that Clause 59 of the A.P. Standard Specifications which applied to the contract between the parties stated that no claim for compensation on account of delays or hindrances to the work from any cause would lie except as therein defined and it held that the claim fell outside the defined exceptions. It also distinguished the judgment of the Supreme Court in P.M. Paul v. Union of India 1989 Supp. (1) SCC 368 and stated that the contract under consideration in P.M. Paul case did not have a clause which provided that the Employer would not be liable to pay compensation on account of delay in the work from any cause nor was it stipulated at the time of extension of the contract that no claim for compensation would lie on behalf of the contractor. Irrespective of all the points made above, it is pertinent to note that both these cases were based on the Arbitration Act, 1940 (Act,1940). In General Manager, Northern Railway v. Sarvesh Chopra 2002 (1) Arb.L.R 506 (SC) the decision to not allow the reference to arbitration due to the claim being an excepted matter i.e. not arbitrable was based on (i) The Arbitration Act, 1940 and (ii) the expanded scope of judicial inquiry when an application is being made to appoint an arbitrator. The author argues that the consideration under the Act, 1940 for the appointment of arbitrator does not hold good any longer. The author admits that the Seven Judge Bench in SBP & Co. v. Patel Engineering ( 2005 ) 8 SCC 618 held that under the Arbitration and Conciliation Act, 1996 the power of the Chief Justice of the Supreme Court or High Court to appoint an arbitrator was a judicial power and was amenable to jurisdiction under Article 136 of the Constitution of India, 1950 which entailed a detailed examination of the disputes and the arbitration clause and also included the aspect of confirming whether the claims formed part of the excepted matter in which case the reference to arbitration could be disallowed at the appointment stage itself. However, it was clarified by the Supreme Court in National Insurance Company v. Boghara Polyfab (2009) 1 SCC 267 that there are three kinds of preliminary issues in an arbitration matter and the issue of whether the claims were within the scope of the arbitration clause formed part of the third kind i.e. to be left for the Arbitral Tribunal to decide. Further, in the case of Duro Felguera v. Gangavaram Port Ltd. (2017) 9 SCC 729 it has become crystal clear that post the 2015 amendment and the inclusion of Section 11(6A), the only consideration for the courts while exercising power under Section 11 to appoint an arbitrator is to check the existence of the arbitration clause and all other considerations such as the claims being beyond the scope of the arbitration and forming part of the excepted matter is left to the Arbitral Tribunal to decide. Hence, upon a reading of the above two judgments along with the insertion of Section 11(6A) it becomes abundantly clear that the decision in General Manager Northern Railway v. Sarvesh Chopra(Supra) wherein the court set down principles to not allow arbitration in case of excepted matters also is no longer good law as the same is now the prerogative of the Arbitral Tribunal to decide in arbitration proceeding. On merits, however, General Manager Northern Railway v. Sarvesh Chopra (Supra) judgment, makes a very pertinent observation regarding the contract law jurisprudence of India and highlights how the same is distinct from the American and Commonwealth jurisprudence on ‘no damage clauses’ in the contract which finds favours in those jurisdictions. The Supreme Court particularly referred to Section 55 of the Contract Act,1872 which provides for circumstances under which compensation will be available to the contractor even if the contract does not stipulates for damages to be payable for delays caused by the Employer. The relevant portion of the judgment is extracted hereunder: Thus, it appears that under the Indian law, in spite of there being a contract between the parties whereunder the contractor has undertaken not to make any claim for delay in performance of the contract occasioned by an act of the employer, still a claim would be entertainable in one of the following situations: (i) if the contractor repudiates the contract exercising his right to do so under Section 55 of the Contract Act, (ii) the employer gives an extension of time either by entering into supplemental agreement or by making it clear that escalation of rates or compensation for delay would be permissible, (iii) if the contractor makes it clear that escalation of rates or compensation for delay shall have to be made by the employer and the employer accepts performance by the contractor in spite of delay and such notice by the contractor putting the employer on terms. Pertinently, what has been quoted above is correct, however it is imperative to note that Section 55 of the Contract Act, 1872 does not apply wholly to Construction Contracts. As was discussed above and outlined by the Supreme Court Judgement in Hind Construction v. State of Maharashtra (1979) 2 SCC 70, Construction Contracts are generally in the nature of contract where time is ‘not’ of the essence because almost all construction contracts have clauses for extension of time or for liquidated damages for delay caused by the contractor. According to the apex Court, existence of such extension clauses indicates that time is never meant to be the essence of Construction Contracts. Hence, as per the author, at best, only the second paragraph of Section 55 of the Contract Act, 1872 applies to construction contracts and the discussion of the entirety of Section 55 of the Contract Act seems unwarranted, as paragraphs 1 and 3 deal with situations where time is of the essence. Hence all the points laid down by the Supreme Court in General Manager Northern Railway v. Sarvesh Chopra (Supra) do not apply to construction contracts in general. Even though General Manager Northern Railway v. Sarvesh Chopra (Supra) not being relevant in today’s times, due to the outdated nature of the reasons for its conclusion, it remains the only judgment of the Supreme Court of India which actually deals with the concept of exclusion clauses in reference to the applicable provisions of the Contract Act,1872 and also makes a pointed mention to the fact that irrespective of clauses excluding the liability of the Employer for delay caused by the Employer itself, there are still circumstances as outlined by Section 55 that the Contractor will be able to get compensation for such delay. The judgments discussed hereafter do not discuss any principles of contract law when discussing exclusion clauses. Their decision on whether the same will be applicable or not is established around the principles of arbitration law that the Arbitral Tribunal is a creature of the contract and cannot decide any dispute dehors the contract between the parties. In Ramnath International Construction v. Union of India (2007) 2 SCC 453, the court looked into the award of an arbitrator which awarded amounts for delay caused by the Employer. It is pertinent to note that this judgment was under the Arbitration Act, 1940. The Court held that the contract provided that if there is any delay, attributable either to the contractor or the employer or to both, and the contractor seeks and obtains an extension of time for execution on that account, he will not be entitled to claim compensation of any nature, on the ground of such delay, in addition to the extension of time obtained by him. Based on this interpretation of the contract, the Court set aside the amounts awarded under the claims for compensation as a consequence of such delay. It was interesting to note that the court made a subsequent observation which will become quite significant when the author analyses the rationale or validity of such exclusion clauses in the backdrop of the Contract Act, 1872. The Court held that: As rightly held by the High Court, which decision we have affirmed while considering questions no. (i), clause 11 (C) of the General Conditions of Contract is a clear bar to any claim for compensation for delays, in respect of which extensions have been sought and obtained. Clause 11(C) amounts to a specific consent by the contractor to accept extension of time alone in satisfaction of his claims for delay and not claim any compensation. In view of the clear bar against award of damages on account of delay, the arbitrator clearly exceeded his jurisdiction, in awarding damages, ignoring clause 11(C). (Emphasis supplied) In the opinion of the author, this reasoning by the Supreme Court is at best misguided. The extension of time being provided to the contractor is in no way a compensation for the delays caused by the Employer. It is more in the nature of the right that the contractor needs to complete the project because of the delays caused by the employer. For that matter, in case the extension is not provided, the contractor will not have a case for escalation prices or extra costs for the work done in the extended period of time but will definitely have a case for loss of profits for the work that could not be done by the contractor within the time, due to the delay caused by the Employer. Finally, just like the Sarvesh Chopra Judgment, the judgment in Ramnath International Construction v. Union of India (Supra) also states that the arbitrator is supposed to confine his decision to the limits of the contract and that the arbitrator has gone beyond the terms of the contract, more specifically Clause 11(C) and hence the award is liable to be interfered with. In Asian Techs Ltd. v. Union of India - (2009) 10 SCC 354 the Supreme Court of India dealt with an identical Clause 11(c), however, it arrived at a different conclusion regarding the validity of the arbitral Award which allowed the escalation of prices for work done during the extended period of time. In Asian Techs (Supra) the court outlined the various delays attributable solely to the Employer and upheld the award of the arbitral Tribunal which allowed the claim of the contractor towards increased costs. However, a keen eye will notice that this judgment had a different conclusion from Ramnath International (Supra) only because the Employer, in this case, had verbally agreed for the increased costs to be determined later. The Contractor carried on work only on such assurance made by the Employer. The relevant text from the judgment is extracted hereunder: The letter dated 24.11.1988 makes it clear that the appellant was not ready to carry out the work beyond the contracted period otherwise than on separate work orders, and the subsequent correspondence like the letter dated 11.10.1989 makes it clear that it was on the specific assurance given by the respondent to the appellant to continue the work and that the rates would be decided across the table that the appellant went ahead with the work. Hence, in our opinion it is now not open to the respondent to contend that no claim for further amount can be made due to Clause 11(C) and that the arbitrator would have no jurisdiction to award the same. Hence, the Court in the aforesaid case, without discussing whether time was of the essence of the contract or the applicability of the provisions of Section 55 of the Contract Act, 1872 or even a reference to the Sarvesh Chopra(Supra) judgment, came to a conclusion in line with the Sarvesh Chopra judgment and stated that the contractor had notified the employer for escalated rates and the same was agreed to by the Employer and hence the arbitrator was justified in granting the claims of the contractor for escalated rates for work done during the extended period of time for delays caused due to the employer. Further, in Union of India v. Chandalavada Gopalakrishna Murthy (2010) 14 SCC 633 the Supreme Court dealt with an award which allowed damages for delay by the Employer even though the contract between the parties contained Clause 17(3) which stated that if there is any delay by the Railways, the terms of the contract can be extended, however, the contractor shall not be entitled to damages or compensation. The Court directly applied the ‘precedents’ of Ch. Ramalinga Reddy v. Superintending Engineer (Supra) and General Manager, Northern Railway v. Sarvesh Chopra (Supra) and set aside the award. The non-binding nature of this Judgment of the Supreme Court in Union of India v. Chandalavada Gopalakrishna Murthy (2010) 14 SCC 633 can be explained in more ways than one. First, this judgment stems from an arbitration under the Arbitration Act of 1940. Secondly, it does not discuss any of the principles of contract law and arbitration law. Thirdly, this judgment heavily relies on these precedents of Ch. Ramalinga Reddy v. Superintending Engineer (Supra) and General Manager, Northern Railway v. Sarvesh Chopra (Supra). Hence, in the opinion of the author, it is not advisable to associate heavy precedential value to this case as I have already dismantled the previous judgments that it relies on. IV. The Judgments which set aside awards not in consonance with the contract are no longer good law. The author is of the firm belief that the aforesaid judgments cannot be heavily faulted with as they were bound by the principles affirmed in the case of ONGC v. SAW Pipes [2003] 5 SCC 705 which stated that any award not in consonance with the contract between the parties is liable to be set aside as being against public policy. The basis of this judgment was the provisions of Section 28(3) of the Arbitration and Conciliation Act, 1996 as it existed before its amendment in 2015. The unamended Section 28(3) is extracted as hereunder: 28. Rules applicable to substance of dispute …. (3) In all cases, the arbitral tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction. This particular section has been amended on the basis of the recommendation of the Law Commission 246th Report. The relevant portion of the report is extracted hereunder: The amendment to section 28(3) has similarly been proposed solely in order to remove the basis for the decision of the Supreme Court in ONGC vs. Saw Pipes Ltd, (2003) 5 SCC 705 – and in order that any contravention of a term of the contract by the tribunal should not ipso jure result in rendering the award becoming capable of being set aside. The Commission believes no similar amendment is necessary to section 28 (1) given the express restriction of the public policy ground (as set out below). … In sub-section (3), after the words “tribunal shall decide” delete the words “in accordance with” and add the words “having regard to” [Note: This amendment is intended to overrule the effect of ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705, where the Hon’ble Supreme Court held that any contravention of the terms of the contract would result in the award falling foul of Section 28 and consequently being against public policy.] The ruling of ONGC v. SAW Pipes regarding the supremacy of contract and limits of arbitrator jurisdiction to the four corners of the contract, was legislatively overruled by the amendment to Article 28(3) of the Arbitration and Conciliation Act, 1996. Hence, it is quite obvious that all the other judgments relying on ONGC v. SAW Pipes, the unamended Section 28(3) of the Arbitration and Conciliation Act, 1996 or the principle that an arbitral award not in consonance of the contract is to be set aside, are no longer good law. By way of this amendment, the Arbitration and Conciliation Act, 1996 has given the power to the arbitrators to only ‘take into account’ the provisions of the contract between the parties and not be completely bound by the contract. Specific reference also needs to be made to Section 28(1) of the Arbitration and Conciliation Act, 1996 which is extracted hereunder: “28. Rules applicable to substance of dispute.—(1) Where the place of arbitration is situate in India,— (a) in an arbitration other than an international commercial arbitration, the arbitral tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India; (b) in international commercial arbitration,— (i) the arbitral tribunal shall decide the dispute in accordance with the rules of law designated by the parties as applicable to the substance of the dispute; (ii) any designation by the parties of the law or legal system of a given country shall be construed, unless otherwise expressed, as directly referring to the substantive law of that country and not to its conflict of laws rules; (iii) failing any designation of the law under clause (a) by the parties, the arbitral tribunal shall apply the rules of law it considers to be appropriate given all the circumstances surrounding the dispute.” Section 28(1)(a) mandates all domestic arbitral Tribunal in India to mandatorily follow the substantive law of India. This invariably includes the Contract Law of India governed by the Indian Contract Act, 1872 and a domestic arbitral Tribunal cannot decide a matter in derogation of the same[3] Hence a summation of the of these two sections namely, Section 28(1) and the amended Section 28(3), is that all the provisions of the Contract which are diametrically opposite to the Contract Act, 1872 and more specifically, Section 55 and Section 73 of Contract Act, 1872 will not bind the arbitrators. This may also be applicable to International Commercial Arbitrations seated in India if the Contract between the parties in such cases states that the substantive law governing the Contract will be the Indian Law and hence the Contract Act, 1872 will be in play in the same manner and the exclusion clauses as discussed in this article will not bind the arbitrators at the time of dispute resolution. The most detailed judgment which deals with the contractual as well as contract law aspect of such exclusion clauses is the Delhi High Court judgment in Simplex Concrete Piles v. Union of India (2010) ILR 2 Delhi 699. The operative portion of the judgment states that contractual clauses disentitling the aggrieved party to the benefits of Section 55 and Section 73 of the Contract Act, 1872 would be void being violative of Section 23 of the Contract Act,1872 as the said Sections are a matter of public policy & public interest to preserve the sanctity of the Contract. Due credit must be given to the Delhi High Court for pronouncing this judgment even before the 2015 amendment of the Arbitration and Conciliation Act, 1996 particularly the amendment to Section 28(3). The author submits that today, post the amendment to Section 28(3), the simple fact that the provisions of the Contract Act,1872 are being violated by the provisions of a Contract would be enough for the Arbitral Tribunal to disregard such provisions of the contract. V. Saving for Employers in Construction Contracts It is true that this entire article has been, in a way, a defence for contractors in construction contracts and to give them a way to not sustain losses for obligations not performed by the Employers. However, on a very practical note, what needs to be understood is that most employers will try their best to fulfil their obligations and as far as government employers are concerned they are limited in their budgets. They also take up obligations and responsibilities under the contract, such as handing over of peaceful possession of the land, which cannot be guaranteed many a time. As I have already shown that exclusion clauses in contracts will not pass the muster of the Contract Act, 1872 the only other solution for employers who are in breach of their obligations causing a delay in the overall performance of the contract by the contractor, is for them to provide limited liability towards the breaches they commit which will cause such delays. A limited damage clause is in consonance with Section 74 of the Contract Act, 1872 and does not run foul of Section 55 and Section 73 of the Contract Act, 1872. Hence a clause in the contract providing reasonable damages and limiting the damages will be upheld by the Arbitral Tribunal as they are valid and damages beyond these limits cannot be provided even if the contractor has suffered losses greater than the limits. Such a clause does not go into the distinction of whether time is of the essence of the contract or not hence does not complicate the matter with issues such as providing notice or parties getting into supplemental contracts for waiving their rights to claim damages. The more recent National Highway Authority of India (NHAI) contracts have clauses that limit the compensation for delay in handing over of land to INR 1000 per month per 1000 Square metre or part thereof of land not handed over and in the opinion of the author are perfectly valid if the claim of the contractor for compensation is squarely covered under this clause for delay in handing over the land and no other delays have been caused wherein the liability is not limited. Further, if the clause limiting such liability has certain conditions which are not fulfilled or rather breached by the Employer, then the limited liability as provided for under the clause may not be applicable and the Arbitral Tribunal will be within it rights to deal with the claims of the contractor under Section 73 of the Contract Act, 1872 and grant compensation to the fullest extent based on evidence provided by the Contractor. For a clearer understanding of this position, reference may be made to National Highways Authority of India v. N.K. Toll Road Limited O.M.P. (COMM) 126/2017 High Court of Delhi.[4] In any case paragraphs 24-29 are extracted hereunder for the benefit of the readers: 24. At the outset, it is necessary to observe that there is no dispute that NHAI had committed a default in handing over of land for the works to be executed. The Arbitral Tribunal had found that there was a delay of at least 206 days in handing over the site, which was wholly attributable to NHAI. The dissenting note entered by Mr Arun Kumar Sinha, which is heavily relied upon by Mr Nanda Kumar also accepts that NHAI had delayed handing over the land for at least a period of 206 days. 25. It is also not disputed that NHAI is liable to compensate N K Toll for the damages on account of delay in handing over the site. The only question to be addressed is whether the Arbitral Tribunal had erred in assessing the damages in terms of Sub-clause 31.2 of the Agreement and in terms of Sections 55 and 73 of the Contract Act. It is, at this stage, also relevant to note that although Mr Nanda Kumar had contended that Sub-clause 31.2 of the Agreement was not applicable, he did not articulate any grievance with regard to the quantum of damages as assessed (assuming that Sub-clause 31.2 of the Agreement was applicable). Thus, the only question to be addressed is whether the Arbitral Tribunal (majority) had erred in holding that Sub-clause 31.2 of the Agreement was applicable for determining damages. 26. Mr Nanda Kumar's contention that Arbitral Tribunal had not taken into account the provisions of Sub-clauses 13.5.1 and 13.5.2 of the Agreement is ex facie incorrect. A plain reading of the impugned award indicates that the Arbitral Tribunal had discussed the issue whether the said sub-clauses were applicable and had rejected the same. The relevant extracts of the impugned award wherein the question of applicability of the provisions of Sub-Clause 13.5.2 are discussed are set out below:- "Now considering the effect on compensation of clause 13.5.2 of the contract agreement (page 41), it states, quote "Additional right of way for construction of main carriageway shall be made available to the concessionaire as per the handing over schedule mentioned herein free from all encumbrances and without the concessionaire being required to make any payment to NHAI on account of any costs, expenses and charges for the use of such additional right of way for the duration of the Concession Period. 50% (fifty percent) of additional right of way for construction of main carriageway on or before 6 (six) months from the appointed date, balance 50% (fifty percent) of the additional right of way for construction of main carriageway on or before 12 (twelve) months from the appointed date. Additional right of ways for service roads and other facilities shall be handed over to the concessionaire on or before 18 (eighteen) months from the appointed date. On or after the appointed date, the concessionaire shall commence, undertake and complete all construction works on the project highway in accordance with this agreement. Provided, however, that if NHAI does not enable such access to any part or parts of the additional right of way for any reason other than a force majeure Event or breach of this agreement by the concessionaire as per the schedule mentioned herein, NHAI shall pay to the concessionaire damages at the rate of Rs. 1,000 (Rupees one thousand) per month per 1,000 (one thousand) sq. meters or part thereof if such area is required by the concessionaire for construction works. Such Damages shall be raised to Rs.2,000 (Rupees two thousand) per month after COD if such area is essential for smooth and efficient operation of the project highway. Provided further that the completion certificate or the provisional certificate, as the case may be, for the project highway shall not be affected or delayed as a consequence of such parts of the existing right of way remaining under construction after the scheduled project completion date". It is evident that NHAI did not keep its obligations in providing additional right of way as scheduled in the above clause of the CA. The consequence of such failure are dealt with by two provisos to clause 13.5.2. The first proviso states, quote. "Provided, however, that if NHAI does not enable such access to any part or parts of the additional right of way for any reason other than a force majeure Event or breach of this agreement by the concessionaire as per the schedule mentioned herein, NHAI shall pay to the concessionaire damages at the rate of Rs.1,000 (Rupees one thousand) per month per 1,000 (one thousand) sq. meters or part thereof if such area is required by the concessionaire for construction works. Such Damages shall be raised to Rs, 2,000(Rupees two thousand) per month after COD if such area is essential for smooth and efficient operation of the project highway". The second proviso puts a further condition, stating that, quote "Provided further that the completion certificate or the provisional certificate, as the case may be, for the project highway shall not be affected or delayed as a consequence of such parts of the existing right of way remaining under construction after the scheduled project completion date". Thus considering clause 13.5.2 in its entirety, the stated sums mentioned as Damages against the failure of the Respondent to make available additional ROW can be applicable only if the provisional completion certificate was not delayed or affected as a consequence of delay/non-fulfillment of reciprocal promises by the Respondent." 27. The Arbitral Tribunal further examined the correspondence between the parties in relation to N K Toll's request for issue of provisional completion certificate and concluded that the same had been denied to N K Toll until it completed the entire four laning of the Project Highway, meeting all the requirements as per the specifications and standard. The Arbitral Tribunal concluded as under:- "The denial of PCC to the Claimant resulted in non- fulfillment of second provisio of clause 13.5.2 of the CA and breach of contract, thereby the pre-determined damages provided therein will no longer apply. The rate of damages payable by NHAI to the Concessionaire, if it does not enable access to any part or parts of the additional ROW to the Concessionaire as per the schedule mentioned in this clause are covered by two riders, and there can be no other interpretation that these damages will not be applicable, if the second rider is not complied with. Thus material breach has been committed by the Respondent and the damages on this account will have to be dealt with by clause 31.2 (page 74 of CA) read with section 55 and 73 of the Indian Contract Act 1872." 28. Sub-clause 31.2 of the Agreement (as quoted in the impugned award) reads as under: "31.2 In the event of NHAI being in material default of this Agreement and such default is cured before Termination, NHAI shall pay to the Concessionaire as compensation, all direct additional costs suffered or incurred by the Concessionaire arising out of such material default by NHAI, in one lumpsum within 30 (thirty) days of receiving the demand or at NHAI's option in 3 (three) equal installments with interest @ SBI PLR plus 2% (two per cent)". 29. As noticed above, there is no dispute that the damages awarded by the Arbitral Tribunal are in conformity with the aforesaid sub-clause.” The Court hence did not deem it proper to interfere with the award of the arbitral Tribunal due to reasons as is evident from the quote above. Hence the author believes that if the Employers take into account the following points, they will be able to adequately safeguard their interests in arbitration proceedings. Conclusion In conclusion, the author would like to state that the American principle of ‘no damage clauses’, which have been adopted by certain other commonwealth jurisdictions, have no place in Indian Contract Law jurisprudence. Hence, clauses excluding the liability of the Employer for delays committed by the Employer are not good consideration under Section 23 of the Indian Contract Act, 1872 and cannot limit the power of the Arbitral Tribunal to grant compensation to the fullest extent to the Contractor in a construction contract under the Second paragraph of Section 55 and Section 73 of the Contract Act. Section 28(1) of the Arbitration and Conciliation Act makes it clear that the substantive laws of India will mandatorily apply to all domestic arbitrations and also to those International Commercial Arbitrations wherein the parties have chosen Indian Law as the substantive law to govern their relationship in which case it is further fortified that such exclusion clauses which exclude the liability of the employer for their breaches cannot bind the arbitral Tribunal as the same will be in violation of the substantive law of India, namely the Indian Contract Act, 1872. Further, the amendment to Section 28(3) also relieves the arbitral Tribunal from the four corners of the Contract between the parties as contracts between the parties is only to be taken into account and not circumscribe the scope of the arbitral Tribunal. Such damages for breaches by the Employer can, however, be limited by inserting a carefully worded liquidated damages clause in line with Section 74 of the Indian Contract Act, 1872 which will then not be a violation of Section 55 and Section 73. Finally, on a personal note, the author firmly believes that with the necessary course correction provided by the amendment to Section 28(3) of the Arbitration and Conciliation Act, 1996, domestic arbitrations will form the source for the development of contract law jurisprudence in India. [1] Gaurav Rai is an Advocate practicing in the field of Arbitration and is the Editor of the Arbitration Workshop Blog. He can be contacted at raigaurav.legal@gmail.com. [2] ‘Unfair Terms in Contract’ (Law Commission of India 1984) 103 [3] Indu Malhotra, Commentary on the Law of Arbitration in India Vol. I (Wolter Kluwer, 4th Ed.) 738-740 [4] Available at https://indiankanoon.org/doc/6516976/

PDF version of the Article - Shiv Sang Thakur[1] 1. Introduction The Central Government passed The Arbitration and Conciliation (Amendment) Act, 2019 (“Amendment Act, 2019”) amending the Arbitration and Conciliation Act, 1996 (“A&C Act”) with the aim of making India an international hub of Institutional Arbitration (“IA”). But the various provisions of the Amendment Act, 2019 seem dubious in its attempt to fulfil that aim. In this research paper, the author will undertake a stepwise analysis of how IA can be strengthened in India and what role the Amendment Act, 2019 will play in bringing the arbitral institutions in India in line with international arbitration. For the same, the author will rely on empirical research and analysis as well. 2. Theoretical Background Institutional Arbitration versus Ad-Hoc Arbitration It is not uncommon for a civil suit to take years to be resolved in Indian Courts. No wonder 91% of the companies prefer alternative dispute resolution-making arbitration a kind of private form of litigation aiming at quick redressal of disputes. An ad-hoc arbitration is not administered by any institution and therefore, the parties are required to determine all aspects of the arbitration such as the number of arbitrators, manner of their appointment, place and seat of the arbitration and such other procedures for conducting the arbitration, etc. 95% of arbitration in India is done through ad-hoc arbitration as opposed to IA.[2] Both are recognized forms of arbitration under UNCITRAL Model Law on International Commercial Arbitration, 1985 (“UNCITRAL Model Law”).[3] According to a survey, companies having arbitration experience claimed that disputes around the constitution of the arbitral tribunal were one of the top reasons extending the length of arbitral proceedings. But so far, ad-hoc arbitration has been inefficient in upholding the aim of effective arbitration proceedings in India. Lack of qualified arbitrators, administrative hurdles and multiple stages in a proceeding increasing further cost and poor awards leading to judicial intervention are a few amongst the many drawbacks that ad-hoc arbitration is plagued with. Thus, the flexibility which ad-hoc arbitration provides will not necessarily produce greater efficiency, rather it creates complex proceedings due to lack of expertise and organisation[4]. This has paved the way for the need for IA in India. Institutional Arbitration - The Need of The Hour IA, as opposed to ad-hoc arbitration, is popular and accepted worldwide. For example; centres such as Singapore International Arbitration Center (“SIAC”), London Court of International Arbitration (“LCIA”) etc. are popular forums for resolution of disputes. It does not come as a surprise that in 2019, total Indian parties involved in SIAC were 485 becoming the top foreign users of SIAC whereas in 2016 LCIA closed its Indian branch due to shortage of cases. This shows that Indian parties generally preferred ad-hoc arbitration over IA, and when opting for IA, exhibited a marked preference for institutions set up outside India. IA is deemed to be based on expertise, efficiency and an organised set-up providing varying degrees of credible administrative support. It has pre-decided rules, fees determination policies and an administration acting as a connection between parties, disclosing necessary information while maintaining party autonomy. It provides a pool of experienced arbitrators, renders case management systems with effective use of e-services and helps in the appointment of the arbitral tribunal. This, thus, makes the process much easier than ad-hoc arbitration. A prominent step towards institutionalizing arbitration in India was taken by the Supreme Court when it asked Mumbai Center for International Arbitration (“MCIA”) to appoint arbitrators in an international arbitration dispute between Sun Pharmaceuticals Industries Ltd. and Nigeria-based Falma Organics Ltd. invoking Section 11 of the A&C Act.[5] In the author’s opinion, institutionalising arbitration in India should have a two-fold objective; first, to save Indian parties from going outside and second, to attract foreign parties to opt for arbitration in India. But unfortunately, till date, there is no arbitral institution in India of a global repute. This points at a need for one with international standards. In furtherance of the same, the Indian government introduced the Amendment Act, 2019 on the basis of recommendations of the Justice B.N. Srikrishna Committee Report (2017) (“Srikrishna Committee Report”). 3. Results of Empirical Survey The authors conducted an empirical survey in the form of two questionnaires through google forms. The first one is a survey of 130 law students across India and the second one covers the responses of 10 legal professionals working in ADR. Findings 6 out of 10 legal professionals agreed that the Amendment Act, 2019 has the potential to bring significant development in IA. But the opinion changed when 7 of them were doubtful about whether the Amendment Act, 2019 could help in solving domestic and international disputes post-lock-down. Vikas Mahendra, one of the legal professionals who participated in the survey and was also one of the contributors to the Srikrishna Committee Report, opined that the Amendment Act, 2019 will not help in improving IA condition. Other professionals were quite dicey about the implementation of a few provisions of the Amendment Act, 2019. Let us discuss these provisions in detail. Debatable Provisions of the Amendment Act, 2019 The survey raises a concern about the implementation of the Amendment Act, 2019. On close scrutiny of the provisions of the Amendment Act, 2019, it appears to be a case of noble intentions but with a misplaced approach.[6] The Srikrishna Committee Report laid down emphasis on three things for the improvement of IA in its report; i) government support; ii) awareness of IA, and ii) reform in the statutory regime.[7] While a few of these provisions have a positive potential, others are contrary to what the committee suggested which casts doubt about its impact on improving the condition of the arbitral institutions in India. A few of such provisions are stated below: 1) Formation of Arbitration Council of India ( “the Council”) The Amendment Act, 2019 lays down the formation of the Council for grading of arbitral institutions and arbitrators and to boost IA in India.[8] But the Council has its own drawbacks. The Council has become a non-independent regulatory[9] body giving power to the Central Government in the form of appointment[10], removal[11] of members. The salaries and allowances will also be financed and prescribed by the central government from time to time[1] [12]. It potentially paves the way for corruption and political favouritism, especially when the fact that the government is the biggest litigator in the country is factored in. Of the seven members forming a part of the Council as “members”, at least six are appointed/nominated by the Central Government.[13] The Amendment Act, 2019 thus, has departed from the recommendation of the [2] Srikrishna Committee Report in various ways. Where the committee recommended grading of only arbitral institutes, the bill included both institutes and arbitrators. Apart from a major change in the incorporation of the recommendation of appointment provisions, the bill gives power to the council to frame regulations which were not recommended by the committee.[3] Ideally, a stakeholder approach in the appointment, i.e. the arbitral institutes, government representatives etc. having a combined say in appointment should have been adopted, rather than the method currently followed. Additionally, the Council should have been an independent regulatory body getting initial financial assistance from the government and later financed by its stakeholders, i.e., parties, arbitrators, arbitral institutions as suggested by Srikrishna Committee Report such as CIETAC in China or HKIAC in Hong Kong.[4] 2) Amendment to Section 11 of the A&C Act, 1996 The Supreme Court and High Court can designate an arbitral institution which will be graded by the Council to appoint arbitrators.[14] But the High Courts of states having no graded arbitral institutions will maintain a panel of arbitrators consisting of retired judges or senior counsels.[15] Generally, the credibility of such judges and counsels as an arbitrator is debatable. Hence, the very aim of institutionalizing arbitration gets defeated. This problem can be resolved by having a regional branch maintaining a chamber of arbitrators of either the Council or New Delhi International Arbitration Center (“NDIAC”) which has been nationalised through The New Delhi International Arbitration Center Act, 2019 or any other arbitral institution conducting ADR in other states not having an arbitral institution. 3) Fixed timelines for the passing of award under Section 29A The Amendment Act, 2019 amended Section 29A by fixing a timeline of 12 months for the announcement of arbitral awards commencing from the date of completion of pleadings which is further extendable to 6 months. Though this provision might play a progressive role in ad-hoc arbitration which is infamous for lengthy proceedings, it might act as a restriction for arbitral institutions. Institutions have the power of extending and monitoring timelines as per the complexity of disputes under their respective rules. Further, this provision is neither in conformity with UNCITRAL Model Law nor with the ICC Rules of Arbitration[16] or SIAC or LCIA. Hence, the author suggests that the legislation be amended to create a suitable exemption for institutional arbitrations which are already governed by their own rules.[17] The provision for fixed timelines should be made applicable only to the ad-hoc arbitrations. 4) Excluding foreign registered lawyers as arbitrators. Apart from unclear grading criteria, the Eighth Schedule of the Amendment Act, 2019 provides vague criteria for qualification of arbitrators. Accordingly, it indirectly bars foreign legal professionals from practicing as arbitrators. This narrow-minded approach will surely discourage foreign parties to choose India as an international seat since the choice of arbitrators will become highly restricted. On the one hand, we envisage more participation of foreign parties in India while on the other hand, we restrict their participation with the inception of such abovementioned clauses. This will surely not bring favourable results for international commercial arbitration. Most of the sections of the Amendment Act, 2019 are yet to be notified. Surely some sections of the Amendment Act, 2019 bring hope such as immunity of arbitrators,[18] maintenance of an electronic depository of the awards[19] or decision of fee structure of the tribunal by the arbitral institution[20] while others such as Section 87 got struck down before its inception by the Supreme Court on the grounds of being unconstitutional in Hindustan Construction Company Limited & Another v. Union of India & Another.[21] The provisions of the Amendment Act, 2019 may be susceptible to further challenge before the Courts, pushing the fate of IA in India under the clouds of doubt. The legislature should aim at ensuring that there are lucid provisions in place which make the system of IA in India robust and workable. The Way Ahead. Indian arbitration culture should have two-fold aims; first is the shift from ad-hoc to IA and second to empower arbitral institutions. IA’s development depends on two important pillars. First, on the statutory backup with least judicial and governmental interference and second, awareness. Indian arbitration statutory provisions so enshrined should align with international provisions to build the Indian arbitration culture worldwide. The Council aims at promotion of alternative dispute resolution (“ADR”) mechanisms. The first step should be an awareness among young professionals and law universities. This will also help in removing misconceptions regarding IA being costly and only favourable for big companies and firms. Considering the depletion of cost efficiency in ad-hoc arbitration and the set of advantages that IA provides, it will surely make IA a preference for various groups in different types of disputes. Young professionals will also play a major role in awareness of arbitration culture in India. In the survey, out of 130 law students, more than 3/4th of them suggested alternative dispute mechanisms individually or in combination as the best solution for pending cases in India. 84% of them were aware of IA and as a recommendation, most of them described the importance of new-age arbitrators as integral for future IA development. Today arbitration culture is changing where lawyers are shifting from half time to full-time arbitrator. Budding and young lawyers should be encouraged for ADR practice; preventing litigation. This also brings to the fore where both arbitration and litigation lawyers should complement each other advocating and encouraging practices which seem suitable for a certain suit. Conclusion Today no one can say which regime or institution or mechanism will work well post-lockdown. However, there is a confidence that ADR (including mediation along with arbitration) will play a major role in the resolution of commercial disputes. Only when the foundation of arbitral institutions in India is strong, will the parties have trust and faith in the working of ADR mechanisms. Whether the Amendment Act, 2019 will prove to be a catalyst for IA development or not will be decided on how the future unveils itself. While few provisions of the Amendment Act, 2019 seem dubious, others will surely contribute to the aim of institutionalising arbitration in India. A big shift in dispute mechanism tactics in India is the need of the hour considering the overburdened judiciary and the ambiguous dispute resolution machinery. As it is rightly said that “Rome was not built in a day” hence rather having a skyrocket aim of making India an international hub in a short glimpse of time, focus should be on the gradual development of IA in India from its previous nascent stage. [1] Final year law student at Dr. D.Y Patil College of Law (University of Mumbai), New Mumbai. Email: shivsangthakurwork@gmail.com. [2] Naren Karunakaran and ET Telecom, “How India Inc Is Coping with Ineffective Ad-Hoc Arbitration and Paving Way for a New Trend” (ETTelecom.com, 2020) accessed July 24, 2020 [3] UNCITRAL Model Law on International Commercial Arbitration, 1985, art. 2(a). [4] Konoorayar, Vishnu; Pillai, K. N. Chandrasekharan; V. S., Jaya, Alternative Dispute Resolution in India - ADR: status/effectiveness study, 100-115 SSOAR accessed October 2020. [5] Sun Pharmaceuticals Industries v. Falma Organics Ltd. (2014) Arbitration Case No.33 (SC). [6]Nishith Desai Associates (Dispute Resolution Team), “Emperor’s New Clothes? Arbitration And Conciliation (Amendment) Bill, 2019” (Mondaq.com, 29 July 2019) accessed July 24, 2020. [7]Srikrishna N, ‘Report of the High-Level Committee to Review the Institutionalisation of Arbitration Mechanism in India’ (July 30, 2017) accessed July 24, 2020 [8] Arbitration & Conciliation (Amendment) Act 2019 (“ACA 2019”), §10 inserting §43B in the A&C Act, 1996 [9] A&C Act, 1996, §43L (as amended by ACA 2019, §10). [10] A&C Act, 1996, §43C (as amended by ACA 2019, §10) [11] A&C Act, 1996, §43G(1) (as amended by ACA 2019, §10) [12] A&C Act, 1996, §43C(3) (as amended by ACA 2019, §10) [13] A&C Act, 1996, §43C(1) (as amended by ACA 2019, §10) [14] A&C Act, 1996, §11(3A) (as amended by ACA 2019, §3) [15] Id. [16] ICC Arbitration Rules 2017, §27 [17] Srikrishna N, “Report of the High-Level Committee to Review the Institutionalisation of Arbitration Mechanism in India” (July 30, 2017) accessed July 24, 2020 [18] A&C Act, 1996, §42B (as amended by ACA 2019, §10) [19] A&C Act, 1996, § 43D(2)(j) (as amended by ACA 2019, §10) [20] A&C Act, 1996, §11(14) (as amended by ACA 2019) [21] Hindustan Construction Company Ltd. v Union of India (2019) SCC Online SC 1520