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Mr. Ben Giaretta, welcome to the Arbitration Workshop! We appreciate that you have given us this opportunity to share your valuable perspective on arbitration with our readers. Q1. 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 Commercial Arbitration? A1. I am a Partner and the Co-Head of International Arbitration at Fox Williams LLP. I was formerly the Asia Head of Arbitration at Ashurst LLP, based in Singapore. I am a Chartered Arbitrator and Fellow of the Chartered Institute of Arbitrators (CIArb), and the Chair of the London Branch of the CIArb. I am on the panels of arbitrators of various arbitral institutions throughout the world including the HKIAC, the SIAC and the SCCA. I have been working in international arbitration for around 20 years, having started when I was a newly qualified lawyer in Ashurst in London, and then becoming solely focussed on this area when I moved to Singapore. Also, when I was a junior lawyer, I studied for the Postgraduate Diploma in Arbitration at the Queen Mary University of London under Professor Julian Lew and Professor Loukas Mistelis. I have been involved in arbitration in many industry sectors, but my main experience has been in energy, infrastructure and technology. Q2. We understand that you have had a diverse and unique experience working across jurisdictions- Africa, Asia-Pacific, Europe, Gulf Regions. In your opinion, can you identify some of your experiences in the jurisdictions described above, which you think are unique to the field of arbitration? Further, what significant differences did you notice in the practice of arbitration in these jurisdictions? How do you think these differences should be reconciled to make different jurisdictions more compatible with international arbitration? A2. This is not an easy question to answer because I have seen a range of approaches to arbitration in each of these regions. For example, in several countries, I have seen approaches which one might say are identical to international practice in other parts of the world, but I have also seen approaches which are very similar to the behaviours in the local courts. I have also seen individual arbitration practitioners behave one way in one context, and a different way in another context. I think it is very difficult to generalise, therefore - and very difficult to reconcile the various practices. I am also not making a value judgment here about these approaches. For example, some of the behaviours that one might associate more with national court practice have turned out, in context, to be much more effective than approaches that one would typically associate with international arbitration. It is this complexity, variety and flexibility that is a great strength of arbitration. Indeed, perhaps I might say that the way for arbitration practitioners to be true to the spirit of international arbitration is not to default to “typical” behaviours, whatever those might be, but instead, they should think carefully about what works in the particular case – which may include behaviours that one might normally see in a national court. Q3. As we know, your involvement in sectoral arbitration covers a plethora of sectors- energy, natural resources, construction, commodities, to name a few. Most of these sectors require comprehensive technical and sector-specific knowledge. Do you think Artificial Intelligence could simplify these technical arbitrations? A3. This depends on what artificial intelligence you are referring to. I am not aware at present of any AI that can do this – i.e. effectively replace the explanations of technical areas that are provided by expert witnesses. I wouldn’t rule out such AI being developed in the future, of course, but the main form of AI that I think might be developed and become popular is a tool that analyses and organises the issues and evidence in an arbitration case generally. At present, we see a considerable amount and variety of issues and evidence, and I believe there are substantial efficiencies to be found in developing software that would allow the people involved in an arbitration to handle this material easily and effectively (this could perhaps be built into a platform used by an arbitral institution). At a simple level, for example, I can imagine that the software could generate at a touch of a button all the evidence that relates to a particular issue and display it in a manner in which it can be easily reviewed. I don’t see such AI replacing the need for human intervention and explanation, however. If there is a technical issue about the construction of a building, for example, the AI that I have described might make the process of handling the evidence more straightforward but I envisage that there will still be a need for a human expert or advocate to explain it to the tribunal, and to interact with the tribunal, answering any questions that arise. This would also preserve the flexibility that I have referred to in my answer to the previous question. Q4. Energy is a sector that you have extensively worked in. What are your views on the arbitration of climate disputes? Do you feel that we need a new regime for arbitrating environment disputes, as many have argued in the current literature? A4. This depends of course on what type of disputes we are talking about. Commercial disputes that involve environmental obligations contained in contracts might readily be referred to arbitration. But when we are talking about environmental obligations contained in statutes or environmental impacts that have a wide international element, then I am not convinced that a forum such as arbitration which has been developed for private disputes is entirely adequate to handle these issues. Of course, I am aware that the same debate has been raging in the field of investment treaty arbitration for many years now and the fundamental point is that no good alternative to arbitration has yet been developed. But perhaps efforts might be put in (by the United Nations, for example) to create a forum that would properly address such matters. Q5. You’ve worked on disputes in India and have also adjudicated on disputes involving Indian parties- do you see India becoming a global hub of arbitration in the next decade? What do you think are issues that may cause an impediment to it? A5. There is an important assumption built into this question that needs to be examined carefully. What sort of “global hub” does India want to become? There are variations here. For example, I am aware that a considerable investment of time and money is being made in India into the study of arbitration as an academic subject. India might become an academic “hub” for arbitration. Or India might promote a particular city (or cities) as a place in which international arbitration hearings are held. Or there might be a focus on the resolution of disputes in a particular industry. Or it could lead the world in the combination of dispute resolution methods (med-arb, for example). It could pursue some or all of these aims – and more. I can see arbitration become generally more important in India over the next decade and for India to continue to increase its standing in the arbitration “world” because I can see there is an outstanding generation of Indian arbitration lawyers coming through, who will build on the work that already has been done to develop Indian arbitration. But I can see that an obstacle to this growth might be the apparent lack of direction in Indian arbitration. One of the lessons to be learnt from the rise of Singapore as a leading arbitration centre is that there is a considerable advantage to be gained from having a clear strategy. The Indian Government is already considering such strategy, of course, and I would encourage even greater debate among the arbitration community in India about which direction Indian arbitration should be taking. Q6. Arbitration as a field has continued to attract elaborate discussions on varied aspects- costs, the impartiality of arbitrators, confidentiality, etc. According to you, what is an issue concerning arbitration, old or new, that you believe hasn’t been talked about much but deserves urgent attention? A6. It is difficult to say – one of the consequences of there being so many arbitration conferences and seminars is that it feels as if every part of arbitration has been dissected endlessly! One important aspect that I believe should be talked about more, however, is the engagement of the user with arbitrators and arbitration practitioners. We talk about this in broad terms (increasing time and cost) but we don’t talk about it enough in terms of the perspectives of individual clients. For example, many clients feel excluded when they enter the hearing room. What can be done to improve their experience? Are they getting the best service, both from their lawyers and from the arbitrators? We must never forget that arbitration is a service industry. Q7. Finally, what would be your advice for law students and young lawyers wanting to pursue arbitration as a career? A7. I think an open outlook is very important: you need to be open to different ways of doing things, different perspectives, different cultures, not only across the world but also within your own country. And there is no substitute for diligence. I have found that people who have succeeded in arbitration, like in many areas of life, are those who have put in the time and the effort in order to get where they want to be. The Editorial Team at the Arbitration Workshop would like to thank Mr. Ben Giaretta for taking out time from his busy schedule and for sharing his perspectives with us!

Yash Sharma* With the digitisation of the world, technological advances have significantly eased the way we perform tasks. Artificial Intelligence (hereafter as AI) is one of the most prominent advances of the 21st Century, which has eminently reduced the burden of labour from humans. Automation is not only present in the mainstream industries such as the automobile industry and information & technology industry but is disrupting other mainstream sectors, and the legal industry is not one to shy away from it. In his book in 1990, Richard Susskind was of the view that e-mails, e-filings would soon impact the legal industry[1]. Later in 2017, he claimed that the outlook of the legal sector would change significantly as disruption of technology will assist lawyers in breaking down tasks that would help firms to achieve maximum cost-efficiency.[2] Well, he is not wrong in making such claims as AI has revolutionised arbitration with various products. AI products are built on the cornerstone of four algorithms such as blockchain, big data, data mining and machine learning. This paper aims to assess AI in its capacity to assist parties/ arbitrators and its ability to replace arbitrators altogether. AI AND ITS CAPACITY TO SUPPORT PARTIES/ ARBITRATORS AI assists by providing due diligence in assessing contractual matters, predictive technology in evaluating outcomes, legal analytics in finding relevant case laws/topics, document automation and intellectual property filings.[3] However, the present paper will only delve into the first three categories. Due diligence is the most crucial part of the proceedings for both the arbitrators and the parties as they might miss out on an exceptionally essential clauses/facts, which might potentially affect the trajectory of the case. ‘Kira’ is one such software that assists parties in due diligence of contracts and lease deeds. It scans the document and highlights the relevant portion, parallelly it runs another scan wherein the user can look at different clauses that are embedded in the software itself to strengthen the document. The Magic Circle itself relies on software such as Kira in their daily practice.[4] ‘ArbiLex’ is another program that provides dual services for International Arbitration. The first being that of an analytical nature, by looking at the relevant documents and highlighting important parts, the second feature is that of a predictive nature, where it predicts the winning percentage of claims[5]. Since International Arbitration involves high-value cross border disputes, such predictive tools give parties a chance to assess the probability of success and offer insights on whether they should pursue such claims. For e.g., Company A belongs to France, and Company B belongs to the U.S.A., there arises a dispute regarding the works contracts agreed between the parties. Now if Company A runs the check and finds a probability of 72% to win the case, most likely they will proceed forward with such huge claims, whereas if the test shows a win probability of 32% they want to settle the dispute amicably without pressing any hefty claims. The Columbian government has introduced a ‘Siarelis’ robot which poses questions to the judges with respect to the claims and provides probable answers for the same with supporting judgements.[6] A tool of a similar nature can provide immense help to arbitrators in the long run. Another tool that provides tremendous support to in-house counsels in discovering relevant e-documents is predictive coding. A counsel who is well-versed with the facts reviews the reference set and codes it according to relevance. The computer, once the algorithm is applied copies the same decision throughout the remaining documents. This process significantly removes the irrelevant documents leaving the counsels only the assorted relevant document for inspection.[7] Ross Intelligence is another tool that eases the work when it comes to finding applicable case laws and other legal papers. The search engine is so advanced with nuanced algorithms that users can practically type their queries as questions and still receive a detailed analysis of it.[8] Lastly, one of the most prominent problems that parties face is choosing an unbiased arbitrator, which takes up a significant amount of time. Such biases, in the view of the author, can be removed by utilising the Arbitration Intelligence Questionnaire, it which consists of two parts and must be filed by the parties and arbitrator after every arbitration. The questionnaire covers a wide range of questions which later builds a portfolio for the arbitrator highlighting the type of arbitrations he has been in. This answer is readily available for parties to look upon and decide the arbitrator. Notably, no specific legal framework of arbitration in itself provides rules to enforce artificial intelligence; however, Article 19 of the UNCITRAL (Model Law) states that the parties are free to follow procedures of their own, failing which, the arbitrator can demand his way to be followed for the expedient disposal of cases.[9] Therefore, there exists no bar on the employment of AI-centric tools, provided that a clause pertaining to the same finds its mention within the contractual agreement. On account of the convenience they bring along with them, AI instruments are gaining significant popularity in their employment as supportive tools to the arbitration process, but their usage in the same requires the fulfilment of certain legal mandates such as the aforementioned. AI AS A SOLE ARBITRATOR With such rapid changes, it is foreseen that AI can remove replace arbitrators and would be able to adjudicate matters on its own. Some jurists are of the view that with proper precision AI can be the perfect impartial and independent arbitrator, free of bias which human arbitrators possess. The process behind building such a complex system is machine learning. It can be referred to as a system that learns from its experience and are is capable of changing their behaviour to enhance their performance. The algorithm detects patterns in order to automate tasks or make predictions. Such algorithms need to be in consonance with the four V’s of Big Data such as Volume, Velocity, Variety and Veracity. Although AI as an arbitrator makes for an attractive alternative, the same cannot be implemented in its present state. There exist multiple limitations on the functionality of AI-based on the Four V’s mentioned above. These limitations exist in the form of pre-requisites which are required to be fulfilled for the functioning of the machine learning software. Volume refers to large amounts of data, which will be fed into the algorithm for the recognition of patterns. Via machine learning, these patterns will be studied and on the basis of these patterns, the software will then make informed decisions. Velocity refers to the speed and frequency of incoming data. In the legal world, this data is constantly changing. The software uses past data to study patterns and thus, this implies that the decisions to be made in the present and future are determined by data of the past. On account of the ever-changing nature of data in the legal context, such a system would be rendered ineffective and instead be called out for being conservative and incapable of keeping up with the constantly changing scenario. Variety refers to the repetition of certain patterns which have binary outcomes. Without repetition, the system would be incapable of identification and thereby fail in making predictions, let alone successful ones. Lastly, Veracity pertains to the accuracy and trustworthiness of data.[10] A plethora of studies has arrived at the common conclusion that humans are regular victims of irrationality being a part of their decision-making processes. Contrary to popular belief, the same can be said about machines as well. A computer program in the U.S. has reported being biased against black prisoners. The study showed that the program stated that black people were the ones to re-offend the same crime.[11] Google, in one of its algorithms, referred to gorillas as black people.[12] Another important factor that plays an important role is who is to be held accountable if such systems default. Since these machines do not have are not legal entities enforcing liability on these machines will reap no benefits. Even if such a law is passed, there would be next to no justice serviced as the programmer will have the right to switch it off. In the same light, it would be tough to hold the programmer liable for the mistakes of the machine. Machines feed on data to come to conclusions, and the programmer would wave off liability on him by stating that the machine has its own algorithm to come to such conclusions. Another critical factor that such machines miss are emotions and empathy. Based on the foundation of principles of a sound justice system such emotions play a massive role in determining the facts of the case and lastly such systems are only equipped to provide answers and not reasons for the same as well. A lot of times, parties choose options for receiving the reason for the award; however, with the current state of development, such decisions will not be available to parties. CONCLUSION In the present scenario, with AI blooming in the legal sector, it does not provide for the means and resources for the machines to act as sole arbitrators. The Adjudicating matter is more than providing the winner of the suit; it is also about judicial activism and constant checking of the system. Insertion of AI into the field of law is no child’s play, due to the role which law plays in society. It establishes rules which govern all individuals, entities and their interactions. The pursuit of justice is not to be lost in modernising law and order. Thus, AI instruments require themselves to be extremely accurate and reliable before finding employment in the justice department. Significant changes to the current technology are to be made in order to make the inclusion of AI into law more trustable and viable. However, it is not to be understood that such a change will never see the light of the day. Moreover, in my opinion, AI should work in consonance with human beings rather than an individual itself independently. Algorithms could be developed where they provide extensive details about help in the drafting of the award rendered which when coupled with a human arbitrator will increase its effectiveness as the human arbitrator can understand the line of reasoning followed and can thus correct if the machine goes out of place to provide necessary inputs. With the upward shift of arbitration in India, much work is needed to inculcate AI in its system. Legal-tech firms with the Indian Council of Arbitration should formulate a plan which embarks India on a technological approach in the arbitration which in turn will make Indian a hot seat for International Arbitration. *(3rd Year Law Student at O.P. Jindal Global University, Sonipat) [1] Susskind Richard, Future of Law: Facing the Challenges of Information Technology, Oxford University Press, 1996. [2] ‌Susskind Richard et al., “Richard Susskind on the Future of Law” (Blog.oup.com, August 13, 2017) < https://blog.oup.com/2017/08/richard-susskind-law-vox-future-of-law/ > accessed July 23 [3] Faggella D, “AI in Law and Legal Practice - A Comprehensive View of 35 Current Applications” (Emerj, March 13, 2020) accessed July 23, 2020 [4] Elizabeth Huang, “Tech Wizards: Your Guide to AI and the Magic Circle, Cambridge University Law Society (CULS)” (Culs.org.uk, 2017) < https://www.culs.org.uk/per-incuriam/tech-wizards-your-guide-to-ai-and-the-magic-circle/> accessed July 22, 2020 [5] “ArbiLex - Predictive Analytics for International Law” (Arbilex.co, 2020) accessed July 22, 2020 [6] “Artificial Intelligence in International Arbitration: From the Legal Prediction to the Awards Issued by Robots” (Garrigues.com, February 18, 2019)< https://www.garrigues.com/en_GB/new/artificial-intelligence-international-arbitration-legal-prediction-awards-issued-robots/ > accessed July 22, 2020 [7] Wheater Michael, “Predictive Coding: The Current Landscape” (Dispute Resolution blog, July 21, 2016) accessed July 22, 2020 [8] “ROSS Intelligence” (ROSS Intelligence, 2014 accessed July 22, 2020 [9] “Subject to the provisions of this Law, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings.” [10] Scherer Maxi, 'Artificial Intelligence and Legal Decision-Making: The Wide Open?', (2019), 36, Journal of International Arbitration, Issue 5, pp. 539-573, accessed July 22, 2020 [11] Buryani Stephen, “Rise of racist robots- how AI is learning all our worst impulses” (Guardian.co.uk, August 08, 2017) accessed July 22, 2020 [12] Griffin Andrew, “Google photos tags black people as ‘Gorillas’, puts pictures in special folder” (Independent.co.uk, July 01, 2015) < https://www.independent.co.uk/life-style/gadgets-and-tech/news/google-photos-tags-black-people-gorillas-puts-pictures-special-folder-10357668.html> accessed July 23, 2020

Dr. Amit George, welcome to the Arbitration Workshop! We appreciate that you have given us this opportunity to share your perspective with our readers at an exciting moment. Q1. 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 Commercial Arbitration? A1. I am a practicing advocate, and I appear primarily before the High Court of Delhi and before various arbitral tribunals in ad-hoc and institutional arbitrations. My interest in arbitration primarily sprung from the experience of working with my father who has for long been specializing in infrastructure arbitration. After undertaking a judicial clerkship for a year at the High Court of Delhi, I joined my father’s chambers where I remained for a period of around three years before I struck out on my own. During this time, I had occasion to participate in a large number of arbitration proceedings which helped me develop an interest in this area of law. Subsequently, upon going independent, I concertedly sought to specialize in arbitration inasmuch as the field had already started growing at a tremendous pace at that point in time and, from a purely practical perspective, a specialization in arbitration helped in being able to generate independent work at a relatively early stage of my career as also in developing and refining my skills in various aspects of adversarial litigation such as drafting of pleadings, oral evidence, oral arguments etc. Q2. Commenters state that the popularity of arbitration as a mode of dispute resolution is under threat. Some are even of the belief that litigation in a Commercial Court may be better suited than arbitration as arbitration has not been what it was advertised as “a quick and efficient dispute resolution process”. What are your views? A2. While I believe that the Commercial Courts Act, 2015 definitely reflects a positive and welcome cultural shift in the way civil litigation is sought to be conducted in our country, I would be a little more guarded in terms of its ultimate impact in the long run in being able to ensure timely and efficient adjudication of commercial disputes. Though this is a subject that requires detailed discussion, to put it pithily the expedited procedure under the Commercial Courts Act is largely dependent on having the requisite infrastructure in place in terms of courtrooms, technology etc. as also in terms of a sufficient number of judges being available to try these cases in a systematic manner. Elements in the Commercial Courts Act such as case management hearings, and ensuring that a trial is conducted in a systematic manner right till the culmination thereof without any deviation from the agreed schedule, can only be guaranteed in an environment where a Commercial Court is not inundated with a large number of cases, and which is unfortunately already becoming a reality in many of the designated Commercial Courts. When a Judge presiding over a Commercial Court has in excess of forty or fifty matters a day to deal with, to what extent can he or she ensure fidelity to a pre-fixed schedule for a particular case listed on the said day? Therefore, unless an urgent and significant augmentation of resources – especially in the form of recruitment of Judges – is carried out specifically with the Commercial Courts in mind, I can visualize the Commercial Courts system soon being gridlocked and suffering from the same woes that have hobbled the traditional Civil Court system. While the ‘software’ in the form of the Commercial Courts Act is relatively sound, the ‘hardware’ in the form of existing manpower and infrastructure is woefully inadequate to be able to meet the soaring ideals of the Act. Arbitration, with all its flaws, ensures parties a dedicated arbitral tribunal to hear their case on a designated date and time, which is something that the Commercial Courts Act is far from being able to achieve, at least with the current state of availability of judicial manpower and infrastructure. Yet further, after the 2015 amendment to the Arbitration and Conciliation Act, 1996, the overall timeline for conclusion of arbitral proceedings has significantly improved though it is still far from ideal. While it needs no gainsaying that the arbitration system undoubtedly suffers from various challenges which need to be addressed, the unquestioning and euphoric embrace of the Commercial Courts Act as being a panacea for all ills is a bit of a utopian ideal. Q3. In our experience, we have seen that the contract law jurisprudence in India is underdeveloped because of which we see reliance being placed upon the principles of English Law. Do you agree? Do you feel that contract law can be developed through arbitrations in India? A3. I think it might be a bit harsh to state that the contract law jurisprudence in India is not developed inasmuch as with the Indian Contract Act has come into existence in the year 1872, there is a reasonably large body of precedent emanating from the Indian courts on various aspects of contract law. However, because the Indian Contract Act is steeped in, and owes its origins to, the English Law tradition, it is but natural to make a reference to the English Law to fully understand and grasp the origin and the subsequent evolution of many of the fundamental concepts under the Indian Contract Act. Hence, a reference to English Law, while providing greater insight and nuance to the area of contract law being examined, is not necessarily indicative of an insufficient body of jurisprudence in India. As regards the development of contract law through arbitration, in my view many arbitral awards contain illuminating expositions on issues relating to contract law and, once issues of confidentiality are satisfactorily addressed, there should be an institutional mechanism put in place to make this body of work available to everyone in the legal fraternity. Possibly, this is an endeavour that the proposed Arbitration Council of India can embark upon in the future. Q4. In your experience, what value does oral evidence have in commercial disputes where the contract and documents exchanged between the parties contain most of the material relevant for deciding the dispute between the parties? A4. On a wider level, I agree that oral evidence is largely redundant in cases where there is significant documentary evidence in relation to the subject matter of the dispute. There are still, however, a significant number of cases where there is a specific area of factual contestation between the parties which may not be adequately addressed in contemporaneous communications or other relevant documentation. In such a scenario, if it is crucial for one of the parties to prove the existence of certain facts in order to be able to prevail in the proceedings, then oral evidence would be indispensable. Further, oral testimony of expert witnesses might still be required in cases where there are complex technical or accounting issues afoot. Therefore, though I agree that a stereotypical and mechanical recourse to oral evidence in all cases should be avoided, at the same time, oral evidence does continue to play an important role in certain scenarios. Q5. Readers of Bar & Bench and our blog are well versed with your excellent summaries of cases. Please kindly share with our readers the process that you undertake for identifying relevant cases for your summaries and other helpful tips? A5. As regards the identification of the relevant case law, with the focus of the ‘In Review’ column on Bar & Bench being to ensure the widest possible coverage of the various judgments rendered, the only judgments which are excluded are those which have been rendered on the basis of consensus between the parties or those which are limited purely to the specific facts occurring in the case at hand without any wider legal principles at play. Though a detailed critical analysis of these various judgements is impractical owing to limitations of space and time, the focus is on distilling the ratio of the judgement as also bringing to light findings which either adjudicate upon a completely novel point or offer an articulate and concise reiteration of an existing position in law. Also, considering the large volume of cases being dealt with every month, it is imperative to have a strong team working on the same. My associates in the chamber dedicate several hours in a month to give final form to the review before it is published. Without their involvement and dedication, it would be impossible to undertake this task on a regular basis. The only ‘tip’ which I can profess to share is to try and get comfortable with the process of actually enjoying the exercise of reading judgements, and which stage is reached after the initial few weeks of religiously following a daily routine in this regard. Once this comfort level is attained, it then becomes progressively easier to sift through a large number of judgments and discern the ratio contained therein. Q6. Public Policy grounds to challenge domestic arbitrations awards have seen great changes over the years. Do you believe that the issue is now well-settled post the 2015 and 2019 amendments to the Arbitration Act, 1996 as well as the judgment of the Supreme Court in Ssangyong Engineering & Construction Company Ltd. v. National Highways Authority of India [(2019) 15 SCC 131]? In your opinion is it fair that ‘Patent Illegality’ remains a ground only for the challenge of domestic awards and not a ground for testing a foreign award during enforcement under Section 48? A6. I do not believe that the amendments have effected a sea-change in terms of the scope of interference with an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996. While this may have been the intention inasmuch as the ‘public policy’ ground was significantly whittled down through the amendments, the express textual adaption of the concept of ‘patent illegality’ has once again opened up the potential to articulate a challenge to an arbitral award on the merits. The judgement of the Supreme Court in Patel Engineering Ltd. v. North Eastern Electric Power Corporation Ltd. [2020 SCC Online SC 466] seems to uphold such an expansive interpretation of the patent illegality provision under the amended Section 34. Hence, even though the scope of challenge under Section 34 remains limited, as it always has been, the position today is not radically different from the unamended Section 34 as existed before the amendments viz. if there is a gross perversity or illegality in the arbitral award then the court can interfere and set-aside the same. Inasmuch as the terms ‘perversity’ and ‘patent illegality’ are relatively vague and amorphous in nature, deducing any universal objective standard is difficult. As regards the differentiated standard in the case of a foreign award, the exclusion of the ground of patent illegality for testing a foreign award cannot be said to be unfair or problematic for the reason that the correct forum for testing a foreign award on the merits is before the Courts of the seat of arbitration. Past experience has shown that the existence of a ‘patent illegality’ provision frequently invites a review of the merits of an arbitral award which, in the context of a foreign award, is extremely problematic, both personally for the litigating parties as also institutionally in terms of the efficacy of international arbitration. Q7. In your experience and opinion, what kind of importance does an academic background in arbitration have when it comes to arbitration practice? A7. Insomuch as an academic background potentially equips a practitioner with a more detailed and nuanced understanding of the underlying theory behind the law, it is definitely of significant help while dealing with complex legal and procedural issues. Yet further, a certain level of comfort with sustained research work also helps in navigating the voluminous record that is part and parcel of most contemporary arbitration proceedings. Therefore, an academic background definitely helps provided that this background is then supplemented with the relevant exposure in terms of the conduct of real-world arbitration proceedings inasmuch as the gap between the ideal theoretical formulation of how an arbitration proceeding should be conducted, on the one hand, and the reality on the ground level, on the other, can be quite wide. Q8. With the pandemic of COVID 19 affecting the daily life and since arbitrations are being held via virtual hearings, how do you see the arbitration practice changing? Do you feel that the practice will now favour the written word of pleadings and written arguments more than the oral arguments made? A8. Inasmuch as oral arguments remain central to our adversarial system of dispute resolution, I do not expect a significant reduction in the emphasis or in the time devoted to oral arguments. However, I do foresee a significant increase in supplemental aids in the form of written submissions, convenience compilations etc. Though these aids have always existed, with the current pandemic and the logistical issues caused on account of the same, the utilization of these supplemental aids should increase significantly. Q9. In this era of online research, many people still rely on hardbound books for their research. What best describes your style of research? Which books on contract law and arbitration, that are part of your library, would you recommend to an arbitration practitioner? A9. When it comes to research, I largely utilize a mixed approach. I reach out to the printed commentaries for a better understanding of the basics of the problem and the relevant seminal judgements on the point. However, considering the vast amount of precedent that is now generated on any area of law, particularly arbitration, any commentary is effectively outdated the very next day after it is published. Therefore, it is very important that online resources are also consulted in addition to the standard textbooks on the subject. Yet further, one discovers articles online which can provide focused and easily accessible insight into the latest precedent or general developments in relation to the law. As regards the texts that I rely on, following are the list of titles that I regularly refer to for the purpose of research in arbitration law: Commentary on the Law of Arbitration [2020] Indu Malhotra J. Principles of Law of Arbitration in India [2018] Dharmendra Rautray R.S Bachawat’s Law of Arbitration & Conciliation [2017] Anirudh Wadhwa and Anirudh Krishan Redfern and Hunter on International Arbitration [2015] Nigel Blackaby, Constantine Partasides, Alan Redfern and Martin Hunter International Commercial Arbitration [2014] Gary Born International Construction Arbitration Handbook [2014] John W. Hinchey and Troy L. Harris Comparative International Commercial Arbitration [2003] Julian D. M. Lew, Loukas A. Mistelis and Stefan Michael Kröll Q10. Finally, what would be your advice for law students and young lawyers wanting to pursue arbitration as a career? A10. If the contemporary trend continues to hold good into the future, the field of arbitration is poised to grow manifold and become one of the largest prospective areas of practice for a lawyer in India. Therefore, the potential is unlimited as far as law students or young practitioners are concerned. However, one aspect which I always try and bring forth in any discussion on this issue is that arbitration, particularly domestic arbitration, should not be viewed as completely divorced from the litigation firmament inasmuch as there is still a significant amount of interplay between the two, which is likely to continue into the future. Hence, while it is increasingly possible to have a career-focused purely on arbitration, it is important that practitioners, at least in the early years, also dabble in general litigation to whatsoever extent possible to better augment their skillset for an arbitration-centric practice. The Editorial Team at the Arbitration Workshop would like to thank Dr. Amit George for taking out time from his busy schedule and for sharing his perspectives with us!

Arnav Joshi* Artificial Intelligence(AI) has developed to such an extent that it has steadily started taking over jobs in almost all sectors which were always thought to be needing human intelligence. Dispute resolution is no such exception to this. Scholars and researchers have analysed the scope of AI in International Arbitration. Many of them have even suggested that arbitrators powered by AI will replace the job of a human arbitrator in the near future. While this prediction may seem time-efficient, powerful and glittering on paper, AI comes along with its obvious merits, nonetheless completely replacing an arbitrator’s job by an algorithm has its limitations. One of the most important reasons why AI is pegged to replace a human arbitrator is that humans often unconsciously let their stereotypes and prejudice creep into their actions. An arbitrator is supposed to be free of bias or an internal interest leaning towards any party, but in most cases, and often unknowingly an arbitrator’s decisions are biased to a certain degree. AI lacks consciousness, emotions and feelings, hence there is no scope of any decision to be biased or unfair (at least theoretically). Several countries have started exploring the option of employing AI in their arbitration institutes. One of the primary reasons why AI is thought to be useful in arbitration mechanisms is that algorithms programmed specifically for this purpose will allow it to collect and analyse data within seconds which would reduce the arbitral proceedings drastically as opposed to the traditional method.i While using AI for assistance in legal research, document review, speech recognition, inter alia, is acceptable allowing AI to decide arbitral matters is nowhere near as effective as it sounds. A major setback in using AI is that it is not able to provide reasons as to how it approaches a viable solution and also the fact that every case is different with unique circumstances, which cannot be dealt with by only using previous arbitral awards and data. Societal norms and human morals of compassion and empathy, which are the very origins of governing laws, must be applied. Technological Black-Box: US trial courts have started using an AI tool named COMPAS which is used to assist judges to predict the tendency of an offender repeating an offence in the future. In the Loomis caseii, the trial court used COMPAS to get a risk score and based on this score Loomis was sentenced to 6 years in prison. The use of COMPAS to assist judges has been heavily criticised by a lot of people. The main argument made by the US judiciary to use this risk assessment tool is to provide a bias-free risk score of an offender to repeat the crime in times when judges cannot form a clear decision.iii When Loomis appealed, the court held that the algorithm used to come up with the risk score cannot be disclosed due to trade secret concerns. The consequence of using this technology is that both parties cannot be giving the reasoning for the AI software’s decision. This is very clearly violative of the party’s due process rights. Most international arbitration agreements require the arbitrator to produce a reasoned award. Even though the AI-powered tool used in US trial courts is programmed for criminal matters, in international arbitration too the argument to incorporate AI into the system for making arbitral awards is indistinguishable that is, to come up with a fair decision free of any human bias. Hence similar to the Loomis case, if AI starts rendering arbitral awards, the aggrieved party may not be able to challenge the award, owing to this technological black-box.iv A reasoned award assures the parties as to the nature and quality of the arbitrator and will aid in case either party uses the judicial appeal procedure of the arbitral award.v That is why reasoned arbitral awards are a requirement in many jurisdictions and seldom not mentioned in arbitration agreements. As the algorithm may not be disclosed for obvious business reasons, it may prove to be a huge weakness in the system. A human arbitrator who can give reasoned awards will certainly resonate confidence to both the parties. The idea of justice without giving a party the right to appeal seems incomplete and not fair at all regardless of how precise a robo-arbitrator’s arbitral award may be. Need for Human Attributes: An AI software does not have any emotions or any sense of justice for that matter. For a robo- arbitrator anything and everything is data. AI will rely on previous records of arbitral awards of international arbitration (most arbitral awards are not published in present times due to confidentiality). Justice in every form is a human virtue.vi Every international arbitration dispute is different with unique facts and circumstances so judging a particular dispute only on the basis of a previous award seems inappropriate. Application of legal text into matters is to be done keeping in mind human moral values. These values of compassion, empathy and equity are societal norms and have not been explicitly written down anywhere as a text. Therefore, it would pose a huge challenge for an algorithm to apply these moral values while giving arbitral awards as these values are essentially human virtues and cannot be read and processed like other data. AI lacks any kind of moral system hence it would be difficult for it to strike a perfect balance between complex circumstances surrounding every dispute with interpretation and application of the law.vii An algorithm at least in the near future is always going to be deprived of human virtue. Therefore, even though it might arrive at a correct decision by using precedents and a textual interpretation of the law, the decision may not always be fair to the parties involved. Another drawback of employing AI to preside over international arbitrations is that even these softwares are not 100% bias-free. After all, algorithms are designed by humans so there is a chance that human bias can creep into the programming of these algorithms. It is no secret that AI programs are criticised for being prejudicial. A report published claimed that the risk assessment tool COMPAS, which was discussed earlier, is biased and quite possibly unreliable.viii At least in its early stages, machine learning is going to suffer from high-risk bias as evinced from a study of past cases. In this case, human intervention is essential to review an arbitral award generated by AI. Conclusion: These were not the only hindrances that AI will face replacing humans as arbitrators Along with these, another catch is that developing AI as robo-arbitrators would require arbitration proceedings to be published unredacted which contradicts the basic principle of confidentiality in an arbitration agreement. Confidentiality is one of the major reasons why parties opt to resolve disputes through arbitration in the first place. But the drawbacks analysed in this article are reasonably sufficient to conclude that AI cannot replace the job of a human arbitrator completely. There is always going to be a discrepancy in not getting reasoned arbitral awards by robots. This not only will be opposed by parties participating in the arbitration but will be in all likelihood set aside in almost all jurisdictions around the world. Nothing can replace human virtue which is the most fundamental requirement for justice. Not every dispute can be handled through data analysis and reviewing precedents. Yes, maybe AI can be very efficient to assist arbitrations with legal research, speech recognition and appoint authority based on qualification, experience and level of satisfaction of parties in previous cases etc. But is the system really ready to hand over the job of an arbitrator to algorithms just to save time and maybe uniformity of arbitral awards but compromise human values which are the genesis behind laws and justice? *(3rd-year student at Jindal Global Law School, Sonipat ) i The Path for Online Arbitration: A Perspective on Guangzhou Arbitration Commission’s Practice - Kluwer Arbitration Blog, Kluwer Arbitration Blog (2019), http://arbitrationblog.kluwerarbitration.com/2019/03/04/the- path-for online-arbitration-a-perspective-on-guangzhou-arbitration-commissions- practice/?doing_wp_cron=1594709438.1868491172790527343750. (last visited Jul 22, 2020). ii Loomis v. State 881 N.W.2d 749 (Wis. 2016) iii J.J. Prescott, State v. Loomis Harvardlawreview.org (2017), https://harvardlawreview.org/2017/03/state-v- loomis/ (last visited Jul 22, 2020). iv Dressel Julia and Farid Hany, The accuracy, fairness, and limits of predicting recidivism, Sciencemag.org (2017), https://advances.sciencemag.org/content/4/1/eaao5580/tab-pdf (last visited Jul 22, 2020). v Reasoned Awards in International Commercial Arbitration - Kluwer Arbitration Blog, Kluwer Arbitration Blog (2016), http://arbitrationblog.kluwerarbitration.com/2016/02/19/reasoned-awards-in-international-commercial- arbitration/?doing_wp_cron=1595073631.9092049598693847656250 (last visited Jul 22, 2020). vi Aristotle, Nicomachean Ethics, 350 B.C.E Translated by W. D. Ross. vii Artificial intelligence in international arbitration: from the legal prediction to the awards issued by robots, Garrigues.com (2019), https://www.garrigues.com/en_GB/new/artificial-intelligence-international-arbitration- legal-prediction-awards-issued-robots (last visited Jul 22, 2020). viii Machine Bias, ProPublica (2016), https://www.propublica.org/article/machine-bias-risk-assessments-in- criminal-sentencing (last visited Jul 22, 2020).

- Purbasha Panda* Part I of this Article dealing with the Judgment of the Singapore Court of Appeal can be accessed here. part two deals with the final observation of the SGCA and the Indian position of law in this regard. SGCA made the following observations regarding the appropriate position of law with respect to standard of review in these kinds of disputes. (a) Bonafide Prima facie standard of review is the appropriate standard of review The general approach is that in presence of an arbitration clause, the jurisdiction of courts are ousted with respect to dispute which falls within the scope of the arbitration agreement. The prime question that arose in this case was “Whether such an approach can be mirrored while dealing with stay on winding up application because of presence of arbitration clause especially dealing with cross-claim or disputed debts ?” The court relied on the dicta in the case of Pacific Recreation Pte Ltd v. S Y Technology Inc and Another[1] in this case the court has held that tests for both the situation must necessarily mirror each other. The court marked that when one raises a cross claim or a disputed claim one is simply trying to assert that the debt claim doesn’t prove its insolvency and therefore winding up order must not be granted. In the opinion of the author, the court essentially meant that there is no such specialty about a winding up application that a different standard of review must be applied to it, having ruled this the court however did take due consideration of the “bonafide interest test” to move a step ahead from just examining existence of an arbitration agreement and if the dispute falls within the scope of the arbitration agreement. Bonafide test and the Exceptional Circumstance Test: Two Sides of the same coin As discussed in the preceding sections, the exceptional circumstance approach was formulated in the Salford case. The exceptional circumstance test is basically similar to the bonafide prima facie test, what it entails essentially is examination of existence of arbitration agreement, the examination of whether the dispute falls within the purview of the arbitration clause and if there are existence of ‘exceptional circumstances’ the court should then dismiss or stay the winding up application. The existence of “exceptional circumstance” is obviously to prevent abuse of process of court. That is the winding up application based on a debt that is covered by an arbitration agreement will be stayed unless there are exceptional circumstances. These exceptional circumstances might be a situation where a debtor might be disputing the claim amount in the course of the proceeding but in a previous correspondence or transaction between the parties the debtor might have admitted the claim amount. The “exceptional circumstance test” is also aimed towards checking the veracity of the disputed claim. The “bonafide prima facie test” also more or less is similar, aimed towards preventing abuse of process of court. For example, winding up applications are used as litigation strategy to create undue pressure on the opposite party to make payment through the threat of liquidation, which may lead to abuse of process of court and appellate courts generally exercise inherent power to prevent abuse of process of court and the ‘bonafide prima facie test” allows the same. In the instant case, the SGCA essentially found the “bonafide prima facie test” to be more appropriate and more efficient in terms of avoiding abuse of process of court. The court also laid down certain circumstances which can be termed as tests to check if disputing the debt is resulting in abuse of process of court. If the debt has been previously admitted in terms of both liability and quantum. Genuine concern of triggering of insolvency regime. Requirement of independent persons to investigate the company’s assets . (b) The Prima facie standard of review promotes coherence in law The SGCA marked that “coherence in law” with respect to these kind of disputes is extremely crucial because there is a larger tendency of the “abuse of process of courts” to occur in these kind of disputes as coherence a crystal clear position of law to be resorted by courts aids in reducing the abuse of process of court and further promotes coherence. The question that arises here is “How does the prima facie standard of review allows to promote coherence?” The SGCA has marked that a triable standard of review is more extensive. It is mostly a test on touchstone of the merits of the dispute. That is allowing a debtor trying to stay a winding up application more leeway to present its case. The SGCA has held that this approach might encourage debtors to use winding up application as a tool to create undue pressure on parties to pay the debts by the threat of liquidation in contrast to a prima facie. The author has found that a persistent fear expressed by SGCA runs through the entire judgement that is use of winding up application as a tool to create undue pressure on the other party to make payments which is a kind of abuse of process of court. While it is crucial to take care of this but the question that arises here is that “Does an over zealousness towards maintaining coherence to prevent abuse of process of court might cause difficulty for those cases where the factual circumstances might be peculiar, for example cases involving very covert fraudulent references, do those kind of cases mandate a test different than the “bonafide prima facie interest test” ? (c) Insolvency and Arbitration regimes are not in conflict with each other The SGCA has marked that the insolvency and arbitration regime do not intersect and have separate fields of operation. One of the genuine concern with respect to implication of adopting a prima facie standard of review is that such an approach might be detrimental to creditors who are legitimately seeking to wind up insolvent companies, the recovery process might get derailed or delayed, even if the allegations might be unmeritorious. The court relied on “Larsen Oil and Gas Pte Ltd v. Petrtoprod Ltd[2] . It was observed in this case that the nature of an arbitration proceeding is starkly different to that of insolvency proceeding. Arbitration proceedings are private in nature whereas insolvency process is a collective statutory proceeding that involves public centralisation of disputes so as to achieve economic efficiency. Under this case a distinction was drawn between disputes involving an insolvent company that stem from its pre-insolvency rights and obligations as opposed to rights and obligations that stem from rights and obligation after an insolvency application is admitted. The SGCA held that if a dispute stems from rights and obligations after the insolvency regime has been triggered, then dispute would gain a public character and the arbitration clause would be ousted and all the claims of the creditors would be satisfied through insolvency mechanism. (d) Triable standard of review offends party autonomy Party autonomy is one of the prime pillars on which the entire edifice of arbitration proceedings rests, the triable standard of review allows for more leeway for sustenance of winding up petitions ignoring the arbitration clause. Thus, the court keeping in spirit with the pro-arbitration stance rejected the “triable standard of review”. DECISION OF THE SGCA IN THE INSTANT CASE In the instant case, the court found out that the applicable standard of review is the prima facie standard of review. The court also found that the defence raised by AnAn was bonafide. SGCA rejected the argument that AnAn’s delay in particularising the appropriate claim amount and the delay in formation and submission of the other valuation report [ i.e. the Deloitte Report] does not result in abuse of process of court. The court also marked that priorly AnAn had not admitted any debt. The appeal was allowed and the winding up order by the court below was reversed. The SGCA further marked that winding up application would have been dismissed even if the higher triable issue standard was adopted. VTB was endowed with the responsibility of calculating the total claim amount under the terms of GMRA. For, the purposes of this calculation the ‘Net Value of GDRs’ had to be determined. The terms of GMRA had provided for three possible routes for calculation of this net value of GDR.VTB had chosen to go for the third route, however certain pre-conditions which had to be fulfilled before resorting to the third route, were not complied by VTB. The SGCA found that VTB had not fulfilled its contractual obligations under the terms of GMRA. SGCA also found that the reliance placed on third route by VTB was misplaced and therefore the claim amount stated by GTB would be erroneous. However, while resorting to this analysis the court was careful enough to mark that in any case such an analysis of a party’s failure to fulfil a contractual obligation would not just be a mere summary analysis. It would be a ‘triable standard of review’ analysis. Indian position of law with respect to interplay between arbitration and winding up proceedings/ insolvency proceedings · Indian Legal Framework of interplay between winding up and insolvency proceedings One of the major changes which were brought by the “Insolvency and Bankruptcy Code, 2016” was removal of provisions relating to voluntary winding up and winding up due to inability to pay debts from the purview of Companies Act, 2013 to the “Insolvency and Bankruptcy Code, 2016”. Now, under the Companies Act, we have winding up proceedings on ground other than inability to pay debts as mentioned under Section 271 which includes (a) passing a special resolution to wind up (b) winding up when the corporate entity acts against sovereignty or integrity of India (c) winding up when the company is conducting affairs in fraudulent manner (d) any just and equitable ground in opinion of the tribunal. · Interplay between winding up and arbitration proceedings The Indian courts have also come across similar kinds of disputes, where a stay on winding up application was filed taking help of the arbitration clause. Let’s see what are the tests and standard of review that the Indian courts have adopted to decide on these kind of disputes. A landmark case on this regard is Tilok Chand Jain v. Swatika Strips (P) Ltd and Ors[3](Tilok Chand). This case essentially dealt with a stay on winding up application in presence of an arbitration clause. This case dealt with certain payments that had to be made to erstwhile partners upon dissolution of a partnership firm. A private limited company had entered into a partnership agreement with another partnership firm. This partnership ultimately got dissolved due to certain issues and at the time of dissolution, the private limited company undertook to make all due payments in terms of the partnership deed and later on all the partners were allotted equity shares. The petitioners in this case were not allotted any shares however during the course of the case they argued that a certain calculation of amount was made to them on basis of value of goodwill of the firm to be paid to them at the time of dissolution, which they also argued as the admitted claim. The petitioners who were erstwhile partners sent a demand notice for making the payments to the private limited company. When payments were not made even after the demand notice, they filed a winding up application for closing the private limited company. The company resisted the winding up application on several grounds. Firstly, the company argued that the value of goodwill stated as argued by petitioners was overstated. Secondly, they also argued that the partnership deed has an arbitration clause and any dispute with respect to payments falls within its scope. The court undertook a thorough analysis of company accounts, the balance sheet drawn upon dissolution and found that there was no admitted liability and that the value of goodwill was indeed overstated. The court also found that the company was doing fair business and was in position of making its day-today payments. The court also expressed the concern that winding up application cannot be used as a recovery mechanism neither it can be used to create undue pressure on the other party to make payments. They also marked that the disputes can be duly referred to arbitration as there is a bonafide existence of disputed claim. The court went on to hold that [..] “There is not an iota of evidence on the record produced by the creditor to show the incapability of the company to pay its debt. Again, it may be noticed that the winding up cannot be ordered solely on the creditors' claim, but it is only the liability of the company to pay which is the primary consideration. In view of the facts and circumstances stated above, the dispute raised by the company appears to be bona fide and this is not a fit case for the company to be ordered to be wound up.” [..] This judgement delivered by the Punjab and Haryana High Court was significantly relied on in numerous cases. In the case of Prime Century City Development Pvt. Ltd and Ors v. Ansal Buildwell Limited and Ors[4] the prime question that the Delhi High Court delved to analyse in this case was “Whether the presence of arbitration clause ousts the jurisdiction of company courts ?”. The court relied on multiple case laws and held that the mere presence of an arbitration clause cannot oust the jurisdiction of company courts. The court further held that [..] In my analysis of the modus, there is hardly any scope of a clash to occur between the rights to seek arbitration and for the other party to enforce winding-up. This is for the reason that if there is an admission of debt, or a moonshine and malafide defense to the petition has been presented, an Award would be a foregone conclusion and procrastinating and deferring the inevitable end to the dispute would be contrary to and in negation of the expectation of law. Where a bona fide defense to the winding-up petition has been disclosed the petition ought to be dismissed in any case by the Company Court. It cannot enter upon disputed questions, which would either have to be adjudicated upon by means of an ordinary and regular civil suit, or by making Reference, where the parties have contracted with each other to resolve their differences through arbitration. Therefore, the Company Judge will in no circumstances substitute himself for or assume the role of the arbitrator [..]. We take a look at the major case laws in Indian Jurisdiction then it can be found that the Indian courts do not very specifically use the term “prima facie standard of review” or “triable standard of review” however the Indian courts have in spirit adopted the “prima facie standard of review” which exhorts limited judicial intervention, such that the court is merely required to determine “whether it appears on a prima facie basis that there is an arbitration clause and if the dispute is caught by the arbitration clause ?” also Indian courts have also resorted to the ‘bonafide dispute test’ as we saw previously in the case of Tilok Chand . Courts have refrained from going into the merits of the dispute that is adopting a triable standard of review as that would amount to getting into the shoes of the arbitrator. · Interplay between insolvency and arbitration proceedings in India In a recent decision Indus Biotech Private Limited v. Kotak India Venture Fund-I[5] of Mumbai Bench of NCLT this dichotomy was analysed and decided. This question of law essentially cropped up in an interlocutory application which was filed before NCLT in a primary insolvency application. The IA was filed u/s 8 of the A&C Act to refer the parties in the main petition to arbitration. The Kotak Private Equity Group consisting of four entities had showed interest in subscribing to the share capital of “Indus Biotech”. Indus Biotech had entered separate “Share Subscription and Share Purchase Agreement” [‘SSSA’] agreement with each entity, however the terms and conditions of the four SSSA were materially identical. Ultimately, Kotak Group subscribed to certain equity as well ass OCRPS shares issued by Indus Biotech. Later on to fulfil certain requirements under the SEBI Issue of Capital and Disclosure Requirements Regulations, 2018 [‘ICDR Regulations’], the Kotak Group decided to convert OCRPS to equity shares. The Kotak Group also argued that as per SSSA they were entitled to trigger provisions relating to early redemption, to which Indus Biotech denied. Thus, Kotak Group invoked the arbitration agreement concerning three basic disputes, which are (a) Valuation of respondent or financial creditor’s OCRPD (b) Right of redemption with respect to conversion of OCRPS into equity shares (c) Fixing the date for qualified institutional public offering. The prime question before NCLT was in presence of an arbitration clause in the SSSA should the primary insolvency petition filed under Section 7 of the Code has to be admitted which was filed by Indus Biotech. Kotak Group argued that the SSSA contained an arbitration agreement which is wide enough to cover dispute between the parties. Kotak Group further argued that the insolvency application cannot sustain and that Indus Biotech would not be a financial creditor. They further argued that the mandate provided u/s 8 of the A&C Act for reference to arbitration is satisfied in this given case. The requirements are basically existence of an arbitration agreement and singularity of the scope of the arbitration agreement and the scope of the underlying dispute. They also further argued that the Section 7 petition filed by Indus Biotech is essentially a dressed up petition. The case of Rakesh Malhotra v. Rajinder Kumar Malhotra[6] was relied on to establish that any court has power to refer the parties to arbitration if it is found that the company petition is malafide and vexatious in nature. Indus Biotech on the other hand advanced all their arguments in light of one primary question of law that is “Whether the reliefs claimed in the insolvency petition is capable of being referred to arbitration?”. The counsel for Indus Biotech essentially argued that insolvency matters are inherently non-arbitrable. He referred to the Pioneer Case and argued that insolvency petitions usually deal with rights in rem as held in this case. They further relied on Booz Allen to establish that insolvency petitions which essentially deals with rights in rem are non-arbitrable. The NCLT bench analysed the entire dispute and the case laws relied by both parties elaborately and made certain observations. With respect to reliance placed on Booz Allen and the reading of the Booz Allen judgement that certain kind of matters are strictly non-arbitrable. The bench referred to Para 38 of Booz Allen “generally and traditionally, all disputes relating to rights in personam are considered to be amenable to arbitration; and all disputes relating to rights in rem are required to be adjudicated by courts and public tribunals, being unsuited for private arbitration. This is not however a rigid or inflexible rule. Disputes relating to subordinate rights in personam arising from rights in rem have always been considered to be arbitrable.” Thus, the dicta in Booz Allen clearly provides that the analysis to the question “whether a dispute is arbitrable or non-arbitrable” does not merely stop on the strict division of list of arbitrable and non-arbitrable matters, rather the test goes a step ahead. Though, the Bench clarified the extent to which Booz Allen can be relied in these kind of cases, however it did not base its decision in the instant case on this analysis. The Bench marked that to trigger any insolvency application, the first step is occurrence of an default as provided under Section 6 of the Code. The court found out that the Indus Biotech, the “Corporate Debtor” in this case is a financially healthy company and there was no occurrence of default in the instant case. Hence, to drag a financially healthy company to insolvency would not be sustainable. Since, the mandate provided under Section 6 of the Code for admission of an insolvency application was not satisfied in this case, the bench marked that the insolvency petition cannot be admitted and referred the parties to arbitration. On interplay between IBC and arbitration proceedings the court marked that Section 238 of the Code provides for an overriding effect of IBC over any other law, similarly Section 5 of the A&C Act starts with a non-obstante clause and provides for an overriding effect. The court found that when there are two legislations with non-obstante clauses on their operation, then the piece of legislation formulated later overrides the former. However, in the instant case since the requirements to trigger IBC were not fulfilled and the corporate debtor was a financially healthy company, the court referred the parties to arbitration. To summarize the points discussed in this case, a simple approach of relying on the list of arbitrable and non-arbitrable matters enumerated in Booz Allen to clearly rule out the possibility of arbitration of insolvency matters is not entirely correct, sub-ordinate personam rights arising from primary in rem proceedings can be arbitrated. Secondly, section 238 of the code gives an overriding effect to IBC over any other legislation but this overriding effect can be brought to use and IBC can be triggered only when the essentials requirements for an insolvency application is fulfilled and default happens to be one such essential requirements and without the occurrence of it IBC cannot be triggered. * Purbasha is a Staff Writer at the Arbitration Workshop and is a graduate of the 2020 batch of NUSRL, Ranchi. She can be contacted at purbasha.nusrl.13@gmail.com [1] (2008) 2 SLR ( R) 491 [2] [ 2011] 3 SLR 414 [3] [1991] 70 Comp Cas [4] 2003(2) ARBLR 127 (Delhi) [5] CP (IB) No.3077/2019 [6] 2014 SCC OnLine Bom 1146

Anan Group (Singapore) Pte Ltd V. Vtb Bank (Public Joint Stock Company) - Purbasha Panda* A. Introduction One of the prime pillars of common law contractual theory is to hold parties to their bargain. When parties enter into a contract, they bargain rights, obligations and considerations which they intend on fulfilling in form of contractual obligations. It primarily means that formation of the contract necessitates performance of the contract. Simply stated one enters into a contract for fulfillment of one prime objective which is the ‘performance of the contract’. The entire edifice of modern-day contract law rests on this simple yet paramount principle. When parties enter into an arbitration agreement or agree to incorporate an arbitral clause in their contract, it is to essentially refer disputes arising out of the principal contract to arbitration, they essentially aim to resolve their disputes through private settlement and intend to oust jurisdiction of courts with respect to these disputes but in those cases where these disputes intersect with certain statutory rights which leads to invocation of discretionary powers of courts, the question which arises is “ How far can arbitration proceedings survive when they intersect with statutory jurisdiction of a court ?” One such kind of dispute that essentially falls in this category is the “conflict of arbitration with winding up proceedings”, winding up proceedings primarily being creation of a statute. On April 7, 2020 the Singapore Court of Appeal decided on the contentious issue of fate of stay applications on winding up proceedings in presence of an arbitral clause in a contract. The ordinary common law approach is that if disputes are subject to arbitration agreement, courts usually grant a stay on court proceedings to allow parties to fulfill their bargain with respect to the arbitration agreement. In usual cases, courts usually resort to ‘prima facie standard of review’ which is a summary review as opposed to the ‘triable standard of review’ however the question that arises here is “ when courts are posed with the question of stay of winding up applications because of presence of an arbitral clause, will the same ‘standard of review’ would be made applicable? Or courts would have to adopt a different standard of review taking due regard of the distinctive nature of winding up proceedings?” B. Factual background of the case This case essentially deals with a ‘Global Master Repurchase Agreement’ [ ‘GMRA’] entered between AnAn Group Singapore Pte Ltd [‘AnAn Group’], a Singapore holding company and VTB Bank (Public Joint Stock Company), a state-owned Russian Bank on 3 November 2017. Under the terms of the agreement, AnAn Group was required to sell ‘global depository receipts’ [‘GDRs’] of shares in a company called EN+ Group PLC (EN+) and then it would have to repurchase the GDR from VTB at a later date at pre-agreed rates. The pre-agreed rate was essentially original price paid by VTB plus interest and other costs. Under the terms of the agreement, AnAn was also obligated to maintain collateral and a repo rate was used to quantify the condition of the collateral. The Repo rate was essentially price of GDR plus interest rate divided by prevailing value of GDR. The GMRA had obligated AnAn to maintain the repo rate at 60% and in case it exceeds 60%, VTB would be entitled under GMRA to issue a ‘Margin Trigger Event Notice’ requiring AnAn to provide sufficient cash to reduce the repo rate ratio to 50%, if AnAn fails to do so, then that would constitute a ‘Margin Trigger Event’. The GMRA also required AnAn to maintain the repo rate below the liquidation repo rate of 75%. If this repo ratio equaled or exceeded the liquidation repo rate, a liquidation event would be deemed to have occurred, this would constitute another event of default. In the event of default, the non-defaulting party would provide a notice to the defaulting party specifying the relevant event of default and to designate an early termination date. The repurchase date of GDR would then be the early repurchase date. The non-defaulting party would also be endowed with the responsibility of calculating the amount owed by parties to each other. On 7 November 2017, in accordance with GMRA, AnAn sold 35,715,295 GDR of EN+ to VTB worth US $ 249,999,990. On 6 April 2018, the United States Treasury’s Office of Foreign Assets Control (“OFAC”) imposed certain sanctions which caused the value of the GDRs to plummet further leading the repo rate to increase beyond the benchmark. VTB issued a ‘Margin Trigger Event Notice’, informing AnAn that the repo ratio had arisen above the benchmark and demanded AnAn to make the top up payment so as to bring the repo rate to 50% or below. AnAn failed to make the top up payment and as a result of which the repo rate could not be restored within its margin. On 12 April 2018, a default notice was sent by VTB to AnAn, designating 16 April, 2018 as the early termination date of GMRA. According to this notice, two events of default had occurred, firstly the repo rate had exceeded the Margin Trigger Repo Rate of 60% and AnAn had failed to top up cash margin of approximately US $ 85 million by 10 April 2018, constituting a further event of default. According to the terms of the GMRA, VTB was required to send a calculation notice stating the amount which is actually owed by AnAn which was the defaulting party. According to the terms of GMRA the final claim amount was calculated at US $ 170 million, which AnAn failed to repay within the mandated three-week period. On 17 August 2018, VTB approached the High Court for winding up of AnAn. This winding up application was resisted by AnAn on several grounds. Firstly, AnAn argued that the (“OFAC”) sanction constituted a force majeure event. Secondly, AnAn argued that the claimed sum of about US$ 170 million was overstated, lastly it also argued that the GMRA contained an arbitral clause and any dispute with respect to payment of amount would fall under the scope of the arbitral clause. While, this application was being decided, the main question of law that surfaced was “ When a debtor is seeking to resist a winding up application ordinarily the applicable standard of review would be the “triable standard of review”, the question that arose before the court was whether this standard of review would also be applicable when there is an arbitration clause in the contract and the dispute more or less falls within its purview?” The Judge held that AnAn was required to establish triable standard of review in relation to the debt. This view of the judge was essentially in light of one of the earlier decisions of the Singapore Court of Appeal which is Metal form Asia Pte Ltd v. Holland Lee don Pte Ltd[1] . This decision would be discussed elaborately further in the course of the article. The Judge also held that the dispute raised by AnAn was not bonafide. The Judge also marked that AnAn’s argument with respect to force majeure was unsustainable as the GMRA did not even contain a force majeure clause. AnAn had argued that the calculation of the total claim amount was erroneous however it failed to state what exactly is the claim amount that it considers to be appropriate. The Judge held that AnAn had deliberately omitted to particularize its case on the quantum of the debt as it knew that there would in any case be a substantial debt which would provide a sufficient basis for the court to grant a winding up order. The judge further ordered the winding up of AnAn. AnAn then filed an appeal before the Singapore Court of Appeal (‘SGCA’), pending the hearing of the substantive appeal. AnAn made an application for leave to adduce fresh evidence in form of a valuation report prepared by Deloitte & Touché Financial Advisory Services Pte Ltd (“the Deloitte Report”). This valuation report stated a different claim amount, far less than what was claimed by VTB. This application to adduce fresh evidence was accepted. However, AnAn’s substantive appeal rested on two arguments (i) That the applicable standard of review was the prima facie standard of review. (ii) That this threshold has been crossed by the court below. VTB dropped the ‘force majeure argument’ before the SGCA and took the position that the appropriate standard of review when dispute is subject to the arbitration agreement is the triable standard of review. VTB essentially argued that the dispute raised by AnAn was not bonafide and therefore the winding up order should sustain. The Singapore Court of Appeal decided this matter on two essential questions of law mentioned below- (a) What is the appropriate standard of review with the respect to stay on winding up application, when the same is subject to an arbitration agreement? (b) Whatever might be the ‘appropriate standard of review’, has that been met in this given case? C. ANALYSIS OF THE SINGAPORE COURT OF APPEAL [‘SGCA’] To answer these questions of law, the court took into consideration of case laws across jurisdictions. The Judge in the High Court had ruled in favour of ‘triable standard of review’ as it considered himself to be bound by another case law decided by the SGCA which is Metal form Asia Pte Ltd v. Holland Leedon Pte Ltd[2] (“Metalform”). However, the judge had also held that if he hadn’t considered himself to be bound by Metalform, he would have resorted to the standard adopted by Abdullah JC in BDG v. BDH[3] (“BDG”). The court has also elaborately discussed the common law authority in these kinds of cases which is Salford Estates (No 2) Ltd v. Altomart Ltd (No 2)[4] (“Salford”). In addition to this another case law from Hong Kong jurisdiction was also taken into consideration while deciding this case law which is “In Re South West Pacific Bauxite[5]” (“Lasmos Case”). In the succeeding sections of the article, the author would elaborate extensively on how the SGCA interplayed with the ratio(s) of these case laws to find answer to the questions raised above and also to conclusively determine the dispute raised. · The fault with the dicta in ‘Metalform” As discussed in the preceding sections, the prime reason for holding the ‘triable standard of review’ was because of the fact that the Judges held themselves to be bound by the dicta of Metalform. This case essentially dealt with an undisputed debt. Metalform owed the opposite party an undisputed debt. Metalform made continuous efforts to refinance and pay the undisputed debts by installments, however, the debt still remained unpaid. A demand notice was served on Metalform. Anticipating a winding up application, Metalform then applied for an injunction to restrain the other party from presenting a winding up application. The injunction prayed was mostly in nature of interim injunction to restrain the opposite party from presenting a winding up application till a decision is reached by the arbitrator regarding one of its cross claim. In this case, the interesting fact was that the parties had agreed on the common fact that the disputes need to be adjudicated before the arbitral tribunal. Though the court had resorted to the ‘triable standard of review’ and had allowed the injunction application, SGCA marked that there wasn’t much conflict with respect to intersection of arbitration and winding up disputes in Metalform. Therefore, the reliance on Metalform by the High Court was found to be misplaced by SGCA. · “Salford” and the common law approach with respect to the applicable standard of review The English case law which was widely referred by SGCA on this aspect is a case law called, Salford Estates (No 2) Ltd v. Altomart Ltd (No 2)[6] (“Salford”). The court marked that this decision is extremely authoritative and has been widely relied by numerous English case laws later on. In this case the Court of Appeal of England and Wales had ruled that when there is a question of stay on a winding up application and the subject matter concerns with a disputed debt which also falls within the scope of the arbitration clause, the applicable standard of review has to be lowered except for certain “exceptional circumstances” .The court found that such an approach of a lower standard of review would align more with the principle of holding parties to their bargain honoring the arbitration agreement. That is the court ruled in favour of the “prima facie standard of review” however it also carved out the “exceptional circumstances clause” where one can possibly think about considering a higher standard of review. · The “Exceptional Circumstance Test”, the “Bonafide dispute test” and the reliance on case laws from the Hong Kong jurisdiction Courts in Hong Kong have also taken a pro-arbitration stance and have ruled mostly in favour of the prima facie standard of review. The courts have held that by dismissing the winding up application, the parties would be held to their bargain. The arbitration proceedings would further allow for enforcement of contractual obligations. In the case of “In Re South West Pacific Bauxite (HK) Ltd[7] (“Lasmos Approach”) was widely relied on this aspect. This case law is pertinent to mention here because this case law also ruled on the efficacy of the ‘exceptional circumstance test’ in deciding these kinds of disputes. In this case, Hong Kong Court of Appeal (“HKCA”) ruled that the lowered standard of review would also definitely not bar the courts from invoking the insolvency regime. For example, there might be a situation where there might be an urgent need to appoint independent persons to investigate the company’s assets or there might be a case where there might be substantiated concerns of fraudulent preferences. These are some of the exceptional circumstances where a winding up application would not be dismissed, where the application of the prima facie standard of review would mandate taking due consideration of the underlying exceptional circumstances. This was known as the Lasmos approach. It is not the case that this approach was not subjected to any kind of criticism. For example, in the case of Ka Chon v. Interactive Brokers LLC, the HKCA had expressed reservations regarding the prima facie approach . They had marked that this approach curtails a party’s right to present a winding up application. They had specifically mentioned that in cases where winding up applications are summarily dismissed, it would appear that the arbitration act provides for automatic stay of winding up applications and such an intention cannot be attributed to a piece of legislation that does not expressly provide for the very same thing. It is not the case that the Hong Kong jurisdiction had placed reliance only on the “exceptional circumstance test”. In the case of “Hollmet AG 7 Another v. Merdian Success Metal Supplies Ltd.[8] , HKCA has said that “that if a company wishes to stay a winding up application on basis that the underlying debt upon which the statutory notice is founded is disputed, he must establish how bonafide was that dispute. This test makes the ‘prima facie dispute test’ as not merely the prima facie dispute test rather it makes the prima facie test move a step further to analyze the veracity of the disputed claims raised, so that it doesn’t appear that the jurisdiction of the company courts have been ousted just by mere presence of an arbitral clause in the agreement. The SGCA undertook elaborate analysis of these case laws and compared it with several case laws from the Singapore jurisdiction . · Singapore jurisdiction and the veracity of the prima facie standard of review The Singapore courts have more or less ruled mostly in favour of the “prima facie review”. Some decisions have favored the “exceptional circumstance approach” whereas some other decisions have favored the “bonafide test approach”. Let’s see how these tests have been relied on by the SGCA in deciding the instant case. (a) BDG and reading of the Salford approach under the Singapore jurisdiction In the case of BDG v. BDH[9], the “Salford approach” was adopted by Abdullah JC, the judge gave several reasons for preferring the prima facie standard of review over the triable standard of review. Firstly, it is a prime concern to hold parties to their bargain that is if the parties have entered into an arbitration agreement. The arbitration agreement must be honored. Secondly, if we take a look at the objective of the “triable standard of review test” then it is to ensure that winding up petition is not staved off because of some tenuous reason, further this standard of review ensures that remedies are readily obtained when nothing much can be said against the claim or application. However, when there is an arbitral clause in the contract and if the dispute falls within the scope of the clause then the disputes are to be arbitrated. Courts shouldn’t step in. It is a fact that the parties selected an arbitration process, it may lead to a different assessment from that of courts but whatever that assessment may be, the arbitral proceedings must be exhausted and after this only the court procedure must be resorted. The arbitration agreement must be honored at all costs. Lastly, to avoid the fact that winding up proceedings are not stopped in an ungenuine way the “prima facie standard of review” must entail a test of how bonafide the claim of the party opposing the winding up application is. If there is a prima facie view that issues raised are not bonafide, then the parties must be referred to arbitration. Thus, the prima facie test coupled with the bonafide claim test somehow can possible balance two interests that is (a) Honoring the arbitration agreement (b) Checking the veracity of the disputed claim and checking if the defense raised to stay a winding up application is genuine. The court also relied on the case of BWF v. BWG[10] , this was again a decision delivered by the Singapore High Court, where the court held that the applicable standard of review is the “Bonafide prima facie standard of review” as it coheres with the concept of party autonomy in the field of arbitration. Part II of this article can be accessed here. it deals with the observations of the SGCA regarding the appropriate position of law with respect to standard of review in these kinds of disputes and the Indian Law regarding this issue * Purbasha is a Staff Writer at the Arbitration Workshop and is a graduate of the 2020 batch of NUSRL, Ranchi. She can be contacted at purbasha.nusrl.13@gmail.com [1] [2002] 2 SLR ( R) 268 [2] [2007] 2 SLR (R) 268 [3] [2016] 5 SLR 977 [4] [2015] Ch 589 [5] [2018] HKLRD 449 [6] [2015] Ch 589 [7] [2019] HKCA 873 [8] [1997] HKLRD 828 [9] [2016] 5 SLR 977 [10] [2019] SGHC 81

- Ragini Agarwal[1] and Mayank Udhwani[2] In an application for setting aside parts of the arbitral award under §34 of the Arbitration and Conciliation Act, 1996 [“the A&C Act”], the Delhi High Court in GMR Vijaywada v. NHAI[3] on August 4, 2020, directed that the quantum of compensation be determined by a new court-appointed arbitral tribunal. While the position of law on the correct course of action once an award has been set aside is unclear, respecting party autonomy has always been the fundamental principle on which arbitral proceedings are based. In this post, after delineating the factual matrix of the dispute [A], the authors explain the erroneous nature of suo moto appointment of sole arbitrator by the Delhi High Court [B]. The authors then proceed to discuss the ordinary course of treatment of an award which is set aside by the court, which remains a grey area [C]. A. Brief Facts In 2009, a Concession Agreement was entered between GMR Vijaywada Expressways Ltd. [“GMR”] and National Highways Authority of India [“NHAI”]. Owing to a change in the Sand Mining Policy in 2012 and the bifurcation of Andhra Pradesh into two states in 2014, GMR suffered substantial losses. Consequently, GMR sought compensation from NHAI pursuant to the “change in law” clause under the Concession Agreement. Dispute arose between the parties after NHAI rejected the demand for compensation and a three-member arbitral tribunal [“Tribunal”] was established as per the terms of the Concession Agreement. The Tribunal had to decide two issues. First, whether the aforementioned events, which had caused GMR to suffer losses, amounted to “change in law”. Second, if the answer to the first question is in affirmative, then what would be the quantum of compensation owed by NHAI to GMR. The Tribunal reached a unanimous conclusion with respect to the aforementioned events amounting to a “change in law”, thereby entitling GMR to receive compensation. However, the Tribunal reached a split-verdict in relation to the second issue. The majority award held that the NHAI should determine the compensation owed by it to GMR, whereas the minority award opined that the quantum of compensation should be decided by the Tribunal itself. The decision of the Tribunal was challenged by both the parties under §34 of the A&C Act before the Delhi High Court. GMR challenged the decision of the Tribunal to give discretion to NHAI in the determination of the quantum of compensation whereas NHAI contested the decision of the Tribunal granting a right of compensation in favour of GMR. While the Delhi High Court agreed with the Tribunal on the first issue, it set aside the majority award on the second issue wherein the Tribunal had granted discretion to NHAI to determine the amount of compensation owed by it to GMR. Going a step further, the Delhi High Court appointed a sole arbitrator to decide the issue of quantum of compensation. It is this issue that the authors find particularly contentious. B. Suo Moto Appointment of a Sole Arbitrator Undermines Party Autonomy In ¶65 of the judgment, the Delhi High Court observed that the Tribunal itself could have decided the issue of compensation owed by NHAI to GMR. Furthermore, it was noted that the Tribunal could have taken assistance from a third entity to reach the quantum of compensation owed by NHAI and such an entity would have been an extension of the Tribunal (See §26, A&C Act). Since the majority award had allowed NHAI to determine the quantum of compensation owed to GMR, the High Court had rightly set aside that decision on grounds that NHAI, being a party to a dispute, cannot assume the role of an arbitrator, i.e., become an extension of the tribunal. This was in accordance with §12(5) of the A&C Act. However, the High Court steered in the wrong direction when it proceeded to suo moto appoint a retired judge of the Supreme Court as the sole arbitrator to determine the issue of quantum of compensation owed by NHAI to GMR. The authors contend that such an appointment was bad in law as it undermines party autonomy thereby creating a bad precedent. §11 of the A&C Act, which provides a very limited scope of judicial intervention, provides that an arbitrator is to be appointed by the parties to the contract in a manner agreed upon by the parties themselves. It is only when the parties fail to abide by procedure that they had agreed upon while appointing an arbitrator can the court exercise its jurisdiction to appoint an arbitrator. In the present case, the scenario which warrants intervention of the court in appointment of arbitrators did not exist. GMR had only prayed that an independent firm of Chartered Accountants be appointed to determine the quantum of compensation (¶6). Despite that, the Delhi High Court appointed a sole arbitrator without a prayer to that effect or the consent of the parties, thereby undermining the consecrated principle of party autonomy in arbitration. If fresh arbitration was indeed the appropriate course according to the Court, at the very least, appointment of the arbitrator should have been done in accordance with the provisions of the Concession Agreement between GMR and NHAI which presumably provided for a three-member tribunal to adjudicate upon the disputes between the parties. Therefore, appointing a sole arbitrator is in contravention of the provisions of the Concession Agreement. In this regard, it has been held by the Supreme Court in Central Organisation for Railway Electrification v. M/s ECI-SPIC-SMO-MCML (JV) (2019) that the High Court cannot appoint an independent arbitrator without following the procedure prescribed for appointing an arbitrator under the contract between the parties (¶22). Further, in Union of India v. Parmar Construction Company (2019), the Supreme Court held as follows: “44. To conclude, in our considered view, the High Court was not justified in appointing an independent arbitrator without resorting to the procedure for appointment of an arbitrator which has been prescribed under clause 64(3) of the contract under the inbuilt mechanism as agreed by the parties.” Setting aside the award with liberty to the parties to establish a new tribunal to determine the quantum of compensation or pursue any other appropriate remedy under law would have been the ideal direction. C. Post-Award Treatment of Disputes: A Grey Area §34 of the A&C Act allows the Courts to set aside the award in exercise of its supervisory jurisdiction if the award is faulty on the parameters of any one of the given grounds. However, it is not very clear what happens once an award or part of it is set aside. The ordinary courses of action are a) correction of error or modification of the award by the court; or b) mere setting aside of the award with liberty to the parties to pursue further remedies. Ordinary Courses of Action Under the Arbitration Act, 1940, §15 allowed for modification of the award by the courts and §16 provided for remission of the award back to the tribunal. These provisions were conspicuously missing in the A&C Act that ushered in a new regime of arbitration based on the principles of respecting party autonomy and minimising supervisory jurisdiction of courts. In McDermott International Inc. v. Burn Standard Co. Ltd. (2006), the Supreme Court had held that the jurisdiction of courts under §34 does not extend to correction of awards. Furthermore, it was held that what is permissible is the quashing of the award while leaving the parties free to pursue fresh arbitration if they so desired. The rationale behind this was to respect the party’s conscious choice to exclude court jurisdiction when choosing arbitration. However, a single-judge bench of the Madras High Court in Gayatri Balaswamy v. ISG Novasoft Technologies Ltd.(2014), held that the phrase “recourse against arbitral awards” under §34 would include the power to modify the award for the benefit of the parties (¶¶51,52). This decision was confirmed by the division bench of the Madras High Court wherein modification of compensation by the single-judge bench was upheld (¶44). The holding of the Madras High Court seems to be in conformity with the current trend of modification of the quantum of compensation by the courts. Grant of interest is one of the areas, wherein the courts frequently end up modifying awards instead of setting it aside. Delhi High Court’s V4 Infrastructure Private Limited v. Jindal Biochem Private Limited (2020) and Madras High Court’s J.K. Fenner (India) Ltd. v. Neyveli Lignite Corporation (2013) are cases in point. Even in the McDermott case, the Supreme Court had exercised its jurisdiction under Art. 142 of the Constitution to modify the interest from 10% to 7.5%. In Sterlite Technologies Ltd. v. BSNL (2019), the Madras High Court analysed a conspectus of judgments on the limited power of courts to modify awards and recommended that the Law Commission should revisit the power of courts to modify or correct awards (¶44). At the same time, since the setting aside of the award does not lead to a determination on issues and cannot operate as res judicata, courts often leave the parties to their own devices for the further course of action. In Turner Morrison Ltd. v. Rani Parvati Devi (2020), the Delhi High Court set aside part of the award that reduced interest while allowing parties to seek a fresh reference to arbitration with respect to interest payable. This view of fresh arbitration being the valid course of action is supported by the text of the A&C Act as well. §43(4) for instance, states that limitation period for commencement of proceedings (including arbitration) with respect to a specific dispute would exclude the time between commencement of the previous arbitration and the date of setting aside an arbitral tribunal’s award on the specific dispute by the court. Remission of the Award The A&C Act does not permit revision of the award by the same arbitral tribunal. This was clarified in Radha Chemicals v. Union of India (2018) that §34(4) providing for remitting of the award would not apply to awards that have already been set aside. §34(4) operates on an application by parties as an alternative to setting aside of the award if the defect is a curable one. The idea behind preventing this remission is to prevent the parties from getting a second bite at the cherry to get their award reviewed and rewritten. In the case under analysis presently, the Court in GMR Vijaywada v. NHAI chose to appoint a sole arbitrator to determine the quantum of compensation payable to the party. In the opinion of the authors, this decision was flawed since such an appointment falls beyond the jurisdiction of the Court under §34. The Indian literature on powers of the court to appoint arbitral tribunals in pursuance of post-award remedies is scarce. Since §34(4) of the A&C Act is broadly similar to the Model Law on Arbitration which the Singaporean law is also based on, the authors derive guidance on this point from the Singaporean jurisdiction. Singaporean courts have delineated upon this aspect on a few occasions. In AKN v. ALC (2015), the Singapore Court of Appeals dealt with the issue of whether courts had the power to remit the matter to a new tribunal. Significantly, it noted that both the parties agreed on the aspect that the clear language of Art. 34(4) (pari materia with §34(4) of the A&C Act) did not permit remission of the award to a newly constituted tribunal (¶¶10,11). This view was supported by its previous decision in BLC and others v BLB and another (2014) (¶¶119,120). Since remission is a reconsideration of the issue in dispute, the courts exercise caution in applying this power. If there are additional considerations, however, the matter may be remitted to a new tribunal in a post-award stage. One of such considerations is when there is a specific prayer by a party to that effect. Front Row Investment Holdings v. Daimler South East Asia (2010) is an example of the Singapore High Court appointing a fresh tribunal to determine the counterclaim of one of the parties, when a party prayed for the same. Thus, if the law as interpreted by Singaporean courts is relied upon, it seems clear that to respect the party autonomy in the arbitral process and act within the contours defined under the A&C Act, the Court should have refrained from appointing a new tribunal to determine the dispute after setting aside the award. Concluding Remarks The change in regime of arbitration through the A&C Act, 1996 was welcomed as a step towards speedy and effective resolution of disputes reinforcing respect for party autonomy. The decision of the Delhi High Court in this case, however, undermines the ability of the parties to tailor the arbitration according to their needs. It sets a bad precedent because it suggests that if a tribunal reaches a split-verdict, then the High Court can give a go-by to the rules of appointment of arbitrator under the contract between the parties. Undoubtedly, the post-award treatment of disputes needs more clarity. At the same time, it cannot be gainsaid that the Delhi High Court decision gravely undermines the party autonomy in arbitration. Such a decision falls under the realm of excessive judicial supervision, taking India a step back in its progressive attempts towards making the jurisdiction arbitration-friendly. [1] Ragini Agarwal is a graduate of National Law University, Jodhpur. She can be contacted at: ragini.nluj@gmail.com [2] Mayank Udhwani is a graduate of National Law University, Jodhpur. He can be contacted at: mayank.udhwani@nlujodhpur.ac.in. [3] 2020 SCC Online Del 923.

Mr. Rautray, welcome to the Arbitration Workshop! We appreciate the opportunity to share your perspective with our readers at an exciting moment, where new discernible trends pertaining to arbitration are emerging in the domestic and international sphere. Q.1. 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 International Arbitration? A.1. I am a practising lawyer for over 25 years and am a Barrister-at-Law (Lincoln’s Inn). I did an LL.M in Corporate and Commercial law from the London School of Economics. I have authored two books published by Wolters Kluwer titled “Master Guide to Arbitration in India” and “Principles of Law of Arbitration in India”. I was one of the arguing counsel in the BALCO matter before the Constitution Bench. I am also the co-founder of the law firm Kachwaha & Partners based out of New Delhi. My father was a Special Class contractor for the State Government of Orissa and was engaged in the construction of several dam projects in the State. He too had contractual disputes with the State leading to arbitration. My involvement with domestic arbitrations early on (even before I became a lawyer) eventually led to exposure to international arbitrations. Q.2. Given your expertise in Construction and Infrastructure Arbitrations, in your opinion, what are the challenges that a counsel has to face in an arbitration against governmental bodies such as NHAI, Oil India, etc.? A.2. The most challenging part is not about the subject matter of the dispute but about the counsel representing the government body. One has to re-think and strategize all the time to overcome the dilatory tactics of the opposite counsel. Ironically, most counsel representing government bodies fail to appreciate that not only it is counter-productive for their clients but to their own practice. It is difficult for any counsel, to act against the fundamentals of arbitration as a speedy alternate dispute resolution mechanism and yet expect to flourish as an arbitration lawyer. Besides one’s adversary, most government bodies approach arbitration with a premeditated notion to appoint an arbitral tribunal who would decide the matter in their favour instead of choosing independence and impartiality (which is also true for private parties). Consequently, they end up compromising on the expertise and of course the independence and impartiality of the arbitral tribunal. Q.3. The BALCO Judgement (2012), in which you appeared as a counsel, established the principle that party autonomy is the grundnorm of International Commercial Arbitration. However, with recent amendments to the Act disallowing a certain category of people from being appointed as arbitrators, what do you think will be the fate of Government agency panels consisting of former employees. Isn’t it necessary to nominate such technical experts to arbitral Tribunals in construction and civil engineering disputes? A.3. The appointment of a former employee from the government panel is not per se a transgression unless done with an objective to achieve a desired result. The recent amendments do not infringe on the principles of party autonomy. Irrespective of the fact that the arbitrator is a former employee and has been so for more than three years or has just retired, parties can still agree to appoint him or her. The parties need to have confidence in the technical expert’s independence and impartiality which in the Indian scenario is difficult considering numerous factors including the nature of their employment with the government body and the duration of their employment. Certainly, the appointment of technical experts is of great significance in construction and civil engineering disputes, but it is also not correct to assume that technical experts can be found only amongst government employees. Unless both parties have the confidence the appointment of an arbitrator from the government panel would be resisted and viewed with suspicion. It is therefore important to create a pool of independent and impartial technical experts for a fair adjudication of disputes and in order to put their expertise to the best use and advantage of both the parties. Q.4. In recent years, Indian arbitral jurisprudence has been progressing towards pro-enforcement. Do you agree with this statement? If yes, could you please share some of your experiences which made you realise the same. A.4. Indian courts have been pro-enforcement ever since the Arbitration and Conciliation Act, 1996 came into force. Of course, there have been times when courts have been influenced by the old jurisprudence under the 1940 Act but that route has been abandoned and the course has been corrected very quickly. One such example is the introduction of the ground of “patent illegality” to set aside the award. This is a very good example of the influence the old jurisprudence under the 1940 Act has had on the 1996 Act. The judicial legislation by the courts should be avoided. Unfortunately, recent judgments of the courts have shown signs of adoption of a regressive approach. For instance, the judgment of the Supreme Court in Ssangyong Engineering & Construction Co. Ltd. v. National Highway Authority of India, 2019 SCC OnLine SC 677, wherein the court upheld a minority award invoking the Article 142 of the Constitution of India. Although this may appear a pro-enforcement approach, on the contrary, it is anti-enforcement. For example, the judgment of the Indian Court upholding a minority award would not be acceptable to a foreign court if one of the parties decided to bring enforcement proceedings based on the minority award in the court of a foreign country under the New York Convention. Secondly, it unnecessarily encourages the courts in India to look at and give weightage to a minority award each time enforcement proceedings are brought before it. This is against the basic tenets of arbitration i.e parties agreement to be bound by a majority award. Q.5. What value does oral evidence have in commercial disputes where the contract and documents exchanged by the parties contain most of the material relevant for deciding the dispute between the parties? A.5. The necessity to lead oral evidence is explained in the Indian Evidence Act. Although, the Arbitration Act explicitly states that the Indian Evidence Act does not apply to arbitration proceedings, the principles of it do apply to an arbitration proceeding. The question of whether to lead oral evidence in commercial disputes is a matter which depends on the nature of disputes between the parties. Where the pleadings of the parties and the issues arising from it are limited to the contents of the documents exchanged between the parties, there should be an extremely good reason for a party to lead oral evidence. If one of the parties still insist on leading oral evidence, then the arbitral tribunal should take cognisance of the wastage of time and award costs against that party. Besides, the arbitral tribunal should give little or no weightage to such evidence. The need to lead oral evidence can be further limited if the parties are required to give proper and cogent reasons for the denial of the contents of the opposite party’s documents. Q.6. In our experience, we have seen that many contracts have exclusionary clauses that state that the contractor will be entitled to extension but not any costs for delay even when the delay is caused by the Employer. Do you believe such clauses can be enforced? A.6. Exclusionary clauses should be given a restrictive meaning and cannot be applied to all kinds of delays. Moreover, the enforceability of such clauses should be restricted to consequential damages arising out of the employer’s delays. If the delay caused by the employer is of a nature that affects the financial viability of the project, then a contractor cannot be forced to stick to its side of the bargain whilst the employer continues to violate the terms of the contract with impunity. The contract should be interpreted to give a commercial meaning. There can be two types of delay. Non-excusable and excusable delay. Non-excusable delay are delays caused by the contractor which would entitle the employer to claim liquidated damages. Excusable delay, on the other hand, are delays caused by the employer which will entitle the contractor to claim additional time and costs. Excusable delays can further be categorised into (a) compensable and (b) non-compensable delays. Compensable delays entitle the contractor to additional compensation and time but non-excusable delay would entitle the contractor to additional time but not additional costs. Non-excusable delay can be caused by force majeure events and events which neither party has control of. Therefore, exclusionary clauses in a contract should be restricted to giving effect to non-compensable delays. Q.7. In our experience as Tribunal Secretaries, we have often witnessed the adversarial nature of arbitration proceedings, which often entail exchanging harsh words between counsel on different sides. How should a relatively less experienced counsel approach such a difficult situation especially when its peer opposing practitioner is a senior in the bar? A.7. The advocacy skills and patience are both put to the extreme test when the opposite counsel displays little or no skill at all in his advocacy. The situation often arises when the opposite counsel shows a lack of finesse and experience in addressing the arbitral tribunal or to the opposite counsel. The selection of words and framing of sentences while addressing puts to test the patience and skill of the opposite side counsel. Hence, for a counsel, it is extremely important to not lose sight of his duty to be polite and courteous not only to the arbitral tribunal but to the opposite counsel. The need for politeness and courtesy is not restricted to advocacy but must also reflect in the pleadings. It is often seen that counsel refer to words, without much thought, such as “malafide”, “fraudulent”, “dishonest”, “frivolous” etc. to in their pleadings. Such adjectives are unnecessary and should be discouraged by the arbitral tribunal. In the event such tactics are used by a senior person at the bar or is his natural style of advocacy, the opposite counsel should continue to be polite and yet respond to the allegations made. The rebuttal can be dignified yet acerbic. Although, it is difficult in practice it is something which each one of us should aim to learn and achieve. Q.8. In your experience and opinion does an academic background in arbitration hold any pivotal importance when it comes to arbitration practice? A.8. An academic background in arbitration does have an important role to play especially in international arbitrations but not so much in domestic arbitrations. However, arbitration practice varies from region to region and country to country. Domestic arbitrations often adopt local court practices and therefore it necessitates gaining of practical experience. Q.9. Do you have any recommendations for parties to consider when opting for an institutional arbitration and ad-hoc arbitration? A.9. Institutional arbitrations are not necessarily the best in India and the rules framed by them reflect the international arbitration culture instead of domestic. In order to grow and consolidate, institutions in India often have favourite arbitrators, retired judges or law firms to promote their cause. Moreover, Indian institutions lack professionalism and bring little value to the entire arbitration experience. This may be true for some of the foreign arbitral institutions as well. However, international institutions such as SIAC or the ICC have a good track record. Parties in India should be best advised to go for ad-hoc arbitrations. Q.10. What are the three steps in your opinion that one should undertake to start a career in international arbitration? Further, what are the three steps that one should undertake to develop an arbitration practitioner’s profile? A.10. Firstly, one should have a keen interest in the field. Secondly, one should pursue an academic course on the subject and thirdly, it is important to train under a good arbitration practitioner and avoid a senior counsel. The aforesaid would help in the development of an arbitration profile. Besides it can be augmented by writing case law notes on the latest decisions, writing articles and participating in arbitration conferences and seminars. The Editorial Team at the Arbitration Workshop would like to thank Mr. Rautray for taking out time from his busy schedule and for sharing his perspectives with us!

- N. Surya Narayanan and S. Teepanjali[1] The purpose of this article is to find out how, and in what context, each of the three words can be, and is generally, interpreted by the courts to mean both ways, i.e., the juridical location and the physical location of the arbitration, and the probable counter-arguments to it. CONCEPT OF ‘SEAT’ In Domestic Arbitrations (“DA”), or International Commercial Arbitrations (“ICA”), an argument which generally (if there is even a very small room for ambiguity) arises either when an award is sought to be enforced, or when an award is challenged, is that the Court which is hearing the case does not have jurisdiction, for it not being the court of the ‘seat’ of arbitration. The concept of the ‘seat’ of arbitration needs no new explanation. With respect to an arbitration, while the main underlying contract might be governed by the law of one country, parties have the right to subject the arbitration clause to the laws of the other country as well (either the seat or that of the countries involved). Generally, the law(s) of the seat of the arbitration is one of the laws which govern the arbitration. The concept of seat is of much prominence and importance in both DAs and ICAs, though in varying degrees. In the case of DAs, since the arbitration law is the same throughout the country and both parties belonging to the same country, the role of the ‘seat’ is limited to conferring supervisory jurisdiction on the courts of the seat (place mentioned), i.e., to supervise the conduct of the arbitration, including matters such as interim reliefs and challenges to the arbitral award (Enercon (India) Limited v. Enercon GMBH) [2]. In the case of ICAs, an agreement on a ‘seat’ not only confers supervisory jurisdiction to the agreed place but also plays a decisive role in determining which law will be the proper law of the arbitration agreement, in addition to various other aspects such as arbitrability, standards for annulment of awards, neutrality, choice of arbitrators and related issues.[3] On the other hand, irrespective of what the seat of the arbitration is, the hearings, meetings and other proceedings of an arbitration can be held anywhere, as agreed to between the parties, and/or with the consultation of the arbitrators, and it is commonly known as the ‘venue’ of arbitration. This is for the sake of convenience of the parties and the arbitrators, in saving time, money and labour. In India, the concept of ‘seat’ has been the core issue of various judicial decisions, from time to time, including the most-spoken-about five-judge Constitution Bench judgment of the Supreme Court in BALCO v. Kaiser Inc.[4] In short, according to the Court, the Arbitration and Conciliation Act, 1996 will apply to an ICA only if the seat of the arbitration is in India. WHAT’S THE GOOD WORD? Before entering into the analysis, it is important to peruse the terminologies used in Conventions and legislations concerning arbitration, with respect to the concepts of seat and venue. Section 20 of the Arbitration and Conciliation Act, 1996 refers to ‘place of arbitration’. While sub-section (1) grants the parties the right to agree on a place of arbitration, sub-section (2) reads that failing such an agreement, the tribunal determines the ‘place of arbitration’ having regard to the circumstances of the case. The word ‘circumstances’ here basically includes the remaining terms of the contract and the conduct of the parties, including the communications exchanged between them. When Sub-Section (3) is considered, the word ‘place’ is used to denote the place where the tribunal is to meet. Therefore, it is clear, also in terms of the SC’s decision in BALCO, that Sub-sections (1) and (2) talks about what we refer to as the seat of arbitration, while (3) talks about what we refer to as the ‘venue’. Unsurprisingly, this provision has been adopted, in toto, from Article 20 of the UNCITRAL Model Law on International Commercial Arbitration. Even the New York Convention, in Article V(1)(d) refers to it as the ‘place’. At the same time, legislations such as the ‘Arbitration Act 1996’ of the United Kingdom, in Section 3 of the Act, uses the word ‘seat of arbitration’, instead of a ‘place’ or a ‘venue’. The approach of the courts towards these three words is as follows: Seat: Whenever the arbitration clause might use the word ‘seat’, it conveys a definitive intention of the parties to refer to the ‘juridical place’ of arbitration. Since there are no possibilities of the usage of the word ‘seat’ being equated to ‘venue’ or the ‘location of the proceedings’, the chance of the ‘seat’ argument being raised as a jurisdictional objection, in a DA does not exist. In an ICA, the rarest exception might be where the terms of the arbitration agreement and the contract clearly indicate that the curial law of the arbitration would be a particular law of a country (mostly either of the parties) and that the courts of the particular country would have exclusive jurisdiction to settle all the disputes (definitely either of the parties). This kind of exception does, almost, not occur in any case, since the parties would not use the word ‘seat’ and simultaneously expressly agree to the curial law being a particular arbitration law. But this exception was how the England and Wales High Court, in Braes of Doune Windfarm (Scotland) Ltd. v. Alfred McAlpine Business Services Limited[5], justified the designation of Glasgow, Scotland, as the seat by the parties, to be an agreement as to the venue of the arbitration. Note: The above exception has to be understood keeping in mind, that in an ICA, the proper law of an arbitration agreement can be different from the curial law, which is the law of the seat, while in a DA, there is no such differentiation since both the seat and curial laws are that of the Arbitration and Conciliation Act, 1996. Place: The usage of the word ‘place’ starts with the presumption[6] that it, in essence, is the juridical seat of arbitration, since even the legislations and the conventions use the word ‘place’. Even in BALCO and various English decisions[7] (Shagang South-Asia (Hong Kong) Trading Co. Ltd. v. Daewoo Logistics), the view that the words ‘place’ and ‘seat’ are interchangeably used, and the usage of the word ‘place’ is an implied choice of the ‘seat’ finds much support. But there might be some arguments put forth about the context or the way the word ‘place’ is used. If there is an initial agreement on a place of arbitration, and no specific mentioning of another place as it’s seat, the place is deemed to be the seat.[8] What is to be keenly observed is in the Arbitration and Conciliation Act, 1996, wherever the intention was to refer to the ‘juridical seat’ the word ‘place’ was never singularly used but was always referred to as the ‘place of arbitration’, signifying the importance of the phrase. For example, the word ‘place’ can be used in an arbitration clause in different ways, Clause 1: The place of arbitration shall be Chennai, India. Clause 2: The arbitration shall take place in Chennai, India. Clause 3: The arbitration shall take its place in Chennai, India. Clause 4: The arbitral proceedings shall take place in Chennai, India. Here Clauses 1 and 3, more or less resonate the same idea of it being the juridical seat, but Clause 2 gives room for the clause to also mean that it refers only to the hearings/proceedings, and was not meant to be the place, the courts of which would supervise/govern the arbitration. Therefore, a comparison of Clauses 1 and 3 would give a view that Clause 2 can also be interpreted to mean the ‘venue’ or the physical location of the arbitral proceedings. One might also find a little support from the ruling of the Supreme Court in Union of India v. Hardy Exploration and Production (India) Inc[9] (3-judge bench) which ruled that the word place by itself cannot be used as seat and it does not ipso facto assume such a status. It can be so only if there are a few concomitant factors to support it being a seat. But even this ruling of the court can be countered since the arbitration clause in the above case incorporated the word ‘venue’ and the court’s discussion was not strictly with respect to the word ‘place’ (even though it unintentionally used the word ‘place’ in the judgment). But what followed in Mankastu Impex Private Limited vs. Airvisual Limited[10] further dilutes the presumption in favour of the word ‘place’. The Supreme Court held that, “It has also been established that mere expression “place of arbitration” cannot be the basis to determine the intention of the parties that they have intended that place as the “seat” of arbitration. The intention of the parties as to the “seat” should be determined from other clauses in the agreement and the conduct of the parties.” The Supreme Court seems to have erred in ruling so with respect to the term ‘place’, since even though the arbitration clause in this case contained the phrase ‘place of arbitration’, the Court’s discussion is also with respect to the term ‘venue’, but comes to the conclusion as quoted above. Further, even otherwise, reducing a statutory term/phrase to a stage of needing supplementary help from the other terms of the contract does not seem to be right. Of course, if the parties, use both words (‘seat’ and ‘place’) in the arbitration agreement, the city used with the seat can be taken to be the juridical seat and the ‘place’ might be the venue. Now, when Clauses 2 and 4 are compared in order to compulsorily differentiate both, a prima facie view would be that Clause 2 would refer to the seat and Clause 4 would refer to the venue, since the word ‘arbitration’ conveys a more definitive intention to anchor the entire arbitration to the place, and not merely the proceedings, in the words of the English Court in Process & Industrial Developments Limited v. Federal Republic of Nigeria[11]. Venue: While, in both the abovesaid cases of Mankastu and Hardy Exploration, what the court ruled was, in essence, something with respect to ‘venue’, the judgment in BGS SGS Soma JV v. NTPC Limited[12] (which came before Mankastu), further adds confusion to the existing conundrum. “Wherever there is an express designation of a venue and no designation of any alternative place as the ‘seat’, combined with a supranational body of rules governing the arbitration, the inexorable conclusion is that the stated venue is actually the juridical seat”. Even though it might be justifiable for the court to have held so, considering the fact that it is reasonable to expect the parties to agree on the ‘seat’ of arbitration, keeping in mind its importance, than the ‘venue’ of the hearings, in an arbitration agreement, if they have not agreed on both of these, the parties should also consider that when the statutory term specifically being used, and the jurisprudence generally favouring the use of the word ‘seat’ or the phrase ‘place of arbitration’, usage of the word ‘venue’ to refer to the ‘seat’ should be detested from. But when such term has still been used in an arbitration clause, or when clauses incorporating none of the above terms, such as, “The Arbitration shall be held in Chennai, India” are used, the courts/tribunals can then refer to the other terms of the contract, or fall back on the ‘real and most closest connection’ test as followed by the court in Enercon (India) Ltd’s case[13], wherein the court examines as to which place, amongst the ones the parties submit to be the seat, has the closest connection to the arbitration as a whole. OTHER FACTORS TAKEN INTO ACCOUNT: There are various other factors that the courts have taken into consideration and can continue to consider when it is faced with the seat argument/defense. (i) Institution: In the case of DA, the place of the arbitration centre to which the parties have referred the dispute to, can be taken to be as the seat of the arbitration, subject to an express agreement on the seat of the arbitration within India. In the case of International Commercial Arbitrations, the rules of the Institution, such as LCIA (London Court of International Arbitration) Rules or the SIAC (Singapore International Arbitration Centre) Rules, must be given the first glance to see how the tribunal should decide on the question of seat in the absence of an express agreement between the parties on the seat. In such an absence, while Article 16 of the LCIA Rules, 2014 starts with a presumption of England being the seat, and such a presumption is rebuttable in view of the circumstances of the case, the SIAC Rules, 2016, in Rule 21, does not provide for a default seat, as against its previous edition of the Rules. (ii) Neutral Place: An agreement on the seat of arbitration being a country other than the ones to which the parties belong to, can be construed as an expression of their intention to have their disputes decided by a tribunal which they have chosen, commonly on the grounds of expertise and privacy, and the efficiency of its supervisory law.[14] This again is subject to the construction and interpretation of the other terms of the contract, and the court’s conclusion will definitely differ according to which of the triad terms, viz., venue, place and seat, is used in the ‘Seat-Clause’. (iii) Government Contracts: A choice of a neutral place is common, especially those involving government contracts,[15] as the perceived effectiveness of the neutral arbitral process is often a vital condition in the process of negotiation of the contract.[16] (iv) Commercial Purpose: The common commercial purpose, the context of the contract, circumstances of the parties and the background of the parties have to be taken into account.[17] For example, a contract for procurement of goods to be used in a country can be interpreted to have its seat in the subject country as it is not only territorially closely related to the contract but also forms the centre of the purpose of the contract. SOLUTION TO RESOLVE THE AMBIGUITY: The 246th Law Commission Report, in fact, suggested amendments to Section 20 of the Act wherein, the provision would read ‘Seat and Venue of Arbitration’, Sub-sections (1) and (2) would carry the terms ‘seat and venue’ while Sub-section (3) refers only to ‘venue’.[18] But due to the existing judgment in BALCO, the recommendations seems to have not been incorporated as an amendment to the act. It is the right time for a Constitution Bench of the Supreme Court, to consider, analyse and solve its conflicting decisions in Hardy, BGS SGS Soma and Mankastu, and set down a standard for all these three terms, in a definitive manner, unlike its previous attempts. Further, parties when entering into arbitration agreements, must make sure to use the term ‘seat’/’juridical place’, as it almost leaves no room for differing interpretations or arguments of ambiguity. It is also advisable for the parties to add a separate clause on ‘venue’ of arbitration, to the effect that it might either be a specific place(s) or an agreement to agree on a venue later, so that it becomes assured as to what the seat and the venue might be. Until then, the arguments can go either way, depending on contrary indications in the rest of the terms of the contract, with respect to all the three terms. [1] The authors are 4th year students pursuing B.A. LL. B (Hons) in the School of Excellence in Law, The Tamilnadu Dr. Ambedkar Law University, Chennai. They can be reached at mailme_surya@yahoo.in and teepanjali.7@gmail.com, respectively. [2] Enercon (India) Limited v. Enercon GMBH, (2014) 5 SCC 1 (India). [3] Chapter 14: Selection of Arbitral Seat in International Arbitration', in Gary B. Born, International Commercial Arbitration (Second Edition), 2nd edition (© Kluwer Law International; Kluwer Law International 2014) pp. 2055 – 2063. [4] Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 (India). [5] Braes of Doune Windfarm (Scotland) Ltd. v. Alfred McAlpine Business Services Limited, [2008] 1 Llyod’s Rep 608 (United Kingdom). [6] Shagang South-Asia (Hong Kong) Trading Co. Ltd. v. Daewoo Logistics, [2015] EWHC 194 (Comm) (United Kingdom). [7] Ibid. [8] Naviera Amazonica Peruana S.A. v. Compania International de Seguros del Peru, 1988 1 Llyod’s Rep 116 (United Kingdom). [9] Union of India v. Hardy Exploration and Production (India) Inc., (2019) 13 SCC 472 (India). [10] Mankastu Impex Private Limited vs. Airvisual Limited, 2020 SCC OnLine SC 301, ¶21. [11] Process & Industrial Developments Limited v. The Federal Republic of Nigeria, [2019] EWHC 2241 (Comm) (United Kingdom). [12] BGS SGS Soma JV v. NHPC Ltd., 2019 SCC OnLine SC 1585, ¶48 (India). [13] Refer Endnote 2. [14] Premium Nafta Products Ltd. & Ors v. Fili Shipping Company Ltd & Ors, [2007] UKHL 40 (United Kingdom). [15] Sulamérica Cia Nacional De Seguros S.A. v. Enesa Engenharia S.A., [2012] EWCA Civ 638 (United Kingdom). [16] STEPHEN M. SCHWEBEL, INTERNATIONAL ARBITRATION: THREE SALIENT PROBLEMS 1-60 (1 ed. Grotius Cambridge 1987). [17] Mitsubishi Heavy Industries Ltd v. Gulf Bank K.S.C, [1996] EWCA Civ 1281 (United Kingdom). [18] Indus Mobile Distribution Pvt. Ltd. vs. Datawind Innovations Private Limited, (2017) 7 SCC 678 (India).

- ADVAIT GHOSH[1] I. INTRODUCTION Arbitration arise out of contractual disputes, and arbitrators usually have to decipher the underlying contract between the parties to adjudicate the claims and counter claims filed before them. These contracts are often “double-barrelled”, that is in a contract one promise cannot be performed without the performance by the other party, in other words the Contract contains reciprocal promises. This article will attempt to elucidate in what manner reciprocal contracts are interpreted by the arbitral tribunal, and will attempt to understand the manner in which they shape the arbitration award, and also how in some cases they lead to the arbitration award being successfully challenged under Section 34 of The Arbitration & Conciliation Act, 1996. II. The meaning of Reciprocal Promise/ Contract Reciprocal promises are defined in Section 2 (f) of The Indian Contract Act, 1872 and it is reproduced verbatim as follows-“Promises which form the consideration or part of the consideration for each other, are called reciprocal promises”. III. Approach of the National Courts when dealing with interpretation of reciprocal contracts We shall analyse the approach of the National Courts in Section 34 Petitions preferred under The Arbitration and Conciliation Act, 1996 in case of reciprocal contracts through Judgments of the High Courts and Apex Court as enumerated below. A) MMTC LTD VS ANGLO AMERICAN METALLURGICAL SOCIETY (FAO(OS) 532/2015) - In this the Petitioner and the Respondent had entered into a long term agreement as per which the Appellant agreed to purchase a certain amount of freshly mined and cooked coal from the Respondent over 8 delivery periods between 2004 and 2007. Disputes arose between the parties vis a vis the 5th delivery period of coal. On 2.7.2009 Appellant wrote to the Respondent that they had arranged a cargo ship for lifting of the coal, referable as “stem”. Appellants had categorically requested for 2 stems, keeping in mind the backlog incurred. Respondent acknowledged the request via e-mail and asked for some time to enquire about the availability of coal. Appellants send numerous requests to the Respondents, however Respondent failed to arrange a cargo ship for the same, due to which the Appellant was unable to perform their end of the contract. Respondent terminated the contract and send a notice invoking the arbitration clause contained in the contract, for alleged breaches suffered by them. The Arbitral Tribunal upheld the claim of the Respondents (Claimants therein), stipulating that the Appellants (Respondents therein) had committed a breach of agreement by not supplying coal. The Ld. Single Judge of the Delhi High Court agreed with the findings of the arbitral tribunal and declined to interfere in the said award. Appeal under Section 37 of The Arbitration & Conciliation Act was preferred to the Division Bench of the Delhi High Court. The Hon’ble Bench concluded that the contract envisaged between the parties was a “reciprocal promise”, it was the Respondents duty to nominate the stem, only subsequent to which the Appellant would supply coal. The Hon’ble Court referred to Section 51 of The Indian Contract Act as per which, a contract which consists of reciprocal promises to be simultaneously performed, the promisor need not perform his promise, unless the promise is ready and willing to perform his part of the reciprocal promise. The Hon’ble Court also referred to Section 54 of The Indian Contract Act as per which a contract which consists of reciprocal promises, one party prevents the other from performing their contract, the contract becomes voidable at the instance of the party which was prevented from performing their end of the contract, and that party is entitled to seek compensation from the other party. In light of these provisions the Hon’ble Court concluded that the Appellant was not bound to dispatch coal, until the “stem” had been nominated by the Respondent, the action of the Respondent in not nominating the stem make the contract voidable at the instance of the Appellant, and thus there was no breach on the part of the Appellant. The Hon’ble Court said that the findings of the Arbitral Tribunal and Ld. Single Judge were erroneous, and set aside the arbitral award holding it against the “public policy” of the country, as it contravenes the fundamental policy of Indian Law. Thus, this recent judgement of the High Court of Delhi explains the importance of reciprocal promises in a contractual manner, and how the interpretation of these contracts is of prime importance. B) STATE TRADING CORPORATION VS M/S MARPO LTD 86 (2000) DLT 361 RECIPROCITY KEEPS A CONTRACT ALIVE - The Respondent offered to sell to Petitioner 20,000 tonnes of soya bean oil, and accordingly contract was drawn up. In the terms of the contract there was a 20% counter trade commitment as well. It was agreed that shipment would be affected by 31.8.1987, Respondent was also required to open a performance bank guarantee within one week of contract, subsequent to which the Petitioner was to open Letter of Credit in favour of Respondent. After the execution of the contract Respondent failed to supply the soya beans and also failed in its duty to open the performance bank guarantee. The Appellant was entitled to treat the contract as having been terminated, however they chose to keep the contract alive and even opened the Letter of Credit as envisaged in the contract. The Appellant did not terminate the contract till 30.04.1987, and after this invoked the arbitration clause to seek reference to arbitration. The arbitral Tribunal returned a finding that the contract had come to an end on 31.3.1987 and not on 30.4.1987, and thus disallowing their claim of difference in market price of soya bean in that one month. When appeal under Section 30 of The Arbitration and Conciliation Act 1940 was made before the Hon’ble High Court of Delhi the Court concluded that the contract was one of reciprocal promises, and even though the Respondent had abdicated their duty in not opening the bank guarantee, and even though the said contract being voidable at the instance of the appellant as per Section 54 of The Indian Contract Act , the Petitioner kept the contract alive till 30.4.1987. The Hon’ble Court also referred to Section 62, and held that the contract, consisting of reciprocal promises till 30.4.1987 had been kept alive and subsisting by the conduct of the contracting parties. The award was annulled on this account as the Court held that the contract was kept alive till 30.4.1987 due to its reciprocity. C) RAM CHANDRA NARAYAN NAYAK VS KARNATAKA NEERAVARI NIGAM (2013) 15 SCC 140) (IMPORTANCE OF RECIPROCAL CONTRACTS) – The Petitioner/contractor was awarded a contract to build irrigation canals in Belgaum, Karnataka. The Petitioner deposited earnest money in the form of bank guarantee as well. The Petitioner mobilized men & machinery and completed a portion of the awarded contract. It is the case of the Petitioner that he required cement for completion of rest of the construction work and accordingly made repeated demands to the Respondent for the same. It is also the Petitioners case that cement could not be procured from the open market, without the permission of the Respondent, which was never given, and hence the Petitioner was unable to execute the contract. The Respondent forfeited the earnest money, subsequent to which the Petitioner invoked the arbitration clause. The Sole Arbitrator held that the contract had been unlawfully terminated and awarded damages to the Petitioner. The Single Judge of the Karnataka High Court did not make the award the rule of the court and held that the forfeiture of the earnest money by the Respondent was correct; this finding was upheld by the Division Bench also. The matter was appealed to the Supreme Court of India. The Hon’ble Court referred to Section 51 of the Indian Contract Act and held that the contractor was not bound to complete his end of the work, unless and until the Respondent supplied the raw materials to them. The Court referred to the case of Muhammed vs Pushpalata (Civil Appeal No.4581 of 2008) wherein the Supreme Court interpreted Section 51 of the Indian Contract Act to conclude that tenant would not be liable to pay higher rent to the landlord, unless and until the landlord handed over peaceful possession of the repaired bathroom to such tenant. The Court also referred to Section 52 of the Indian Contract as per which reciprocal promises are to be performed in manner stipulated in the contract, and if not specified as per usual industry practise. The Hon’ble Court said it is part of ordinary business common sense also that first cement must be supplied to the contractor, subsequent to which only work can be completed by the contractor. The Court referred to the case of Nathulal vs Phoolchand (1970 AIR SC 546) wherein the Apex Court had held that full payment of the property would only be effected when seller changed the land records in favour of the purchaser, that being as per Section 52 of The Indian Contract Act, and the natural course of business transaction. CONCLUSION- The above-mentioned Case Laws help us understand the judicial intricacies which the Courts grapple in regard to contracts containing reciprocal promises. Contractual relationships being essentially in nature of a barter system often entail these kinds of reciprocities. The National Courts have set aside arbitral awards on the grounds on erroneous interpretation of reciprocity of contracts, signifying their seminal importance. It is also pertinent to mention herein that after the 2015 Amendment to the Arbitration & Conciliation Act, 1996 erroneous interpretation of contract will fall under patent illegality under Section 34 of The Arbitration & Conciliation Act, 1996. In the recent case of South East Asia Marine vs Oil India Limited (Civil Appeal No. 900/2012) the Supreme Court held that “erroneous interpretation of contract will be considered to be a patent illegality under Section 34(2) of The Arbitration & Conciliation Act, 1996, which will result in the arbitral award being set aside. A similar view was taken by the Supreme Court in Patel Engineering Ltd vs NEEPCO (SPECIAL LEAVE PETITION (C) NOS. 3438-3439 of 2020) wherein also the Court held that “erroneous interpretation of contract is a Patent Illegality, which goes to the very root of the dispute. ” The test for Patent Illegality was elucidated by Justice Nariman in the celebrated case of Ssangyong Engineering vs NHAI (Civil Appeal No. 4779 of 2019) where Justice Nariman said “Patent Illegality is something which goes to the very root of the dispute, shocking the conscience of the Court”. [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

Vikash Kumar & Saksham Shrivastav[1] Introduction Perhaps of all the protocols under an Infrastructure Arbitral Proceeding, computation of damages is the most vital for both, the parties as well as the arbitrators. It is a reflection of how judiciously the arbitrator has acted. Infrastructure arbitral proceedings are mostly built around big and complex transactions, wherein the computation of damages is usually done through the use of mathematical formulas which are primarily – Hudson, Emden and Eichleay. These are the most frequently used and widely applicable formulas as they are recognised and accepted by various International Arbitration Institutions and FIDIC (International Federation of Consulting Engineers). Despite of such formulas for calculating damages there are limited options when it comes to formulas to calculate compensation, as the arbitrators are independent of their application, varying from the facts and circumstances of the cases. It is an accepted position that different formulas can be applied in different circumstances and the question as to whether damages should be computed by taking recourse to one or the other formula, depending on the facts and circumstances of a particular case, would eminently fall within the domain of the Arbitrator. If the learned Arbitrator, therefore, applied the Emden Formula in assessing the amount of damages, he cannot be said to have committed an error warranting interference by this Court. This, however, gives rise to a lacuna. On one hand, there is no binding law that specifies the usage of any particular formula and on the other hand, the arbitrator cannot act whimsically as he is expected to act judiciously. So what happens if the arbitrator applies a new formula, not recognised by any arbitration institution, in order to balance the interest of both the parties? Recently Hon’ble Delhi High Court while determining the validity of an award in the case of MS SMS Ltd. v. Konkan Railways Corporation Ltd. dealt with similar circumstances. Background of the Case In the aforesaid case, the North Eastern Railway was implementing the Construction of the Udhampur-Srinagar Baramula Rail Link (“USBRL”) project in the State of Jammu and Kashmir. The construction of this project was to be done by the Konkan Railway Corporation Limited (“Respondent”) on behalf of the Northern Eastern Railway. The construction of the project ‘Kotli Tunnel’ was awarded by Respondent to M/s SMS Infrastructure Ltd. (“Petitioner”) vide contract agreement dated 23.01.2004 at the cost of Rs. 133.07 Cr. The completion period as given under the contract was supposed to be of 36.5 (thirty-six and a half) months i.e. it was expected to be completed till 26.12.2006. However, upon reaching the said deadline, only 10% of the work was completed. An extension was granted up to 31.12.2008 without levying any penalty, despite the Petitioner contending that it would require a minimum of 4 years to complete the project i.e. by December 2012. Petitioner suspended the work in May 2007 due to financial crisis, and unsafe conditions. Later Respondent foreclosed the contract vide letter dated 05.10.2007 citing technical impossibility. Disputes were raised by both the parties and thereafter an Arbitral Tribunal was constituted to adjudicate the disputes. In the arbitration proceedings, Claimant-Petitioner prayed for compensation for idling of Machinery and Manpower, loss of overheads, loss of profits for the balanced work, loss due to the damage and non-capitalization of material due to delay, claim on interest and cost of Arbitration Proceeding. The Petitioner claimed Rs. 75.66 Cr. vide letter dated 31.12.2008. This was followed by Respondent submitting a counterclaim for Rs 21.65 Cr. against the claimant during the Arbitral proceeding. Award by Learned Arbitrator The Learned Tribunal held that no joint/agreed records were available to prove the idling, and therefore it worked out a “notional proportionate loss” that would have resulted due to underutilization. The Learned Arbitral Tribunal applied this formula after taking the following factors into account. Firstly, The Claimant was expected to work off 85% of its machinery cost of approximately Rs. 16 crores over a period of 96 months. If the contract had not been foreclosed, it was expected to complete the work by December 2011, as per the letter dated 16.4.2007. Secondly, since both parties contributed to the delays at various stages, the Tribunal deemed it to be fair if the loss on account of under-utilization of machinery was shared by both parties. Thirdly, as per the Tribunal, the Respondent could only be held liable for a delay of 10 months, in arriving at the decision to foreclose the contract. Finally, after considering the cost of machinery as Rs.16 Crores (as per joint note), 50% of the “notional idling cost” for 10 months was worked out to Rs.70.83 lacs (i.e. 16 crores x 85/100 x (10/96) x 5) and was awarded by the Learned Tribunal for idling machinery. Similarly, Arbitral Tribunal also awarded Rs.6 lakh to the Claimant for the idling of manpower following the above method. Claimant-Petitioner challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996 before Delhi High Court for being illegal and alternatively praying for the amount of the compensation to be enhanced. Issue Whether the use of “Notional proportionate loss” formula for the computation of damages is valid in the eyes of law? An Erroneous Formula: Court’s View The court after taking into account the arguments of both the parties and careful perusal of the award of the learned arbitrator observed that the formula of “Notional proportionate loss” applied by the learned Tribunal suffered from three fundamental flaws in the assumptions that it relied upon: a) The Tribunal took into consideration a period of only 10 months i.e. time taken by the Respondent to foreclose the contract on 05.10.2007 after the Claimant suspended the project work and applied this period in its formula. This was done despite the specific finding by the learned Tribunal that on encountering the shear zone at Portal 1, from April 2005 to December 2006, both the Claimant and Respondent were grappling with the situation and trying to find methods to control it. Thus, the period to be taken into consideration to compensate the Claimant for the idling on its resources should at the very least run from April 2005 from when, admittedly, the shear zone was encountered and the work under the contract had to cease; b) The Tribunal held that the Claimant could only utilise 85% of its machinery, cost of which was approximately Rs.16 crores, over a period of 96 months i.e. till December 2011 when the Claimant was expected to complete the Contract work as per letter dated 16.04.2007. This period of 96 months was completely arbitrary and hypothetical as the period of the contract was clearly stipulated in the contract as 36.5 Months. c) The Tribunal then observed that as both the parties have contributed to the delays at various stages, the loss on account of under-utilization of machinery should be shared by both the parties. The Court weighed in on the aforesaid parameters and held they were wholly unfounded in law. It further held that for the purpose of computing the damages suffered from idleness, the only inquiry that was relevant was an inquiry as to the extent to which the contract remained idle i.e. un-operated and, the resource deployment that thus remained idle. Admittedly, the works contract could not be operated to the extent of 93% on account of shear zone etc. Resultantly, the Claimant was denied their contracted right to recover the cost through contractual realizations to the extent of 93%. The Court declared that the Tribunal had applied completely misplaced, ad-hoc and perverse concept of “notional idling cost” to determine the compensation to be paid to the Claimant. Analysis Firstly, since the Arbitral Tribunal concluded that the foreclosure of the contract cannot be attributed to the Claimant-Petitioner, it should have awarded the compensation claimed by the Petitioner on the account of idling of machinery and manpower in a reasonable manner. Secondly, in the opinion of the authors, the approach of the Tribunal is totally flawed as the Respondent had made no investment towards the machinery and therefore multiplying the entire amount of compensation by ½ is completely unsustainable. Therefore, the final conclusion drawn by the arbitral Tribunal is perverse and incorrect. Also, the compensation awarded by the arbitral Tribunal is highly inadequate for Petitioner given the investment made for the project. Since the circumstance of the idling of manpower and machinery was not disputed by the Respondent during the arbitral proceedings, the learned Arbitrator should have taken a more practical and feasible approach while awarding the quantum claimed on the amount of idling of machinery and manpower. Given the circumstances, ideally, the Arbitral Tribunal should have awarded the amount asked by the claimant in this issue. The Hon’ble Court also set aside the award on the grounds of ‘Patent Illegality’ as expounded in the landmark judgment of Ssangyong Engineering & Construction Co. Ltd. v. NHAI. Patent Illegality stems from an award that is found to be based on no evidence at all or an award that ignores vital evidence in arriving at its decision. On such grounds, the award is said to be perverse and liable to be set aside. This also suggests that a grave blunder was done by the arbitrator by using imaginary and impermissible parameters, like in the present case, application of the Notional Proportional Loss formula that did not have any known precedent. Conclusion After analysing the facts, the line of reasoning of both the Tribunal as well as the Court, and the legal precedents, the authors conclusively put that Arbitrator should not have deviated from the standard formulas for computation of damages. This not only deprived the parties of the proper remedies but also trapped them in pursuit of the justice system. Such irregularities on behalf of the Arbitrators while computing the damages can result in unnecessary litigation and wastage of resources. This can be inferred from the fact that in this case, since the court does not have the power to remand the parties to go back to the arbitral Tribunal, now the Petitioners need to again initiate a fresh arbitration proceeding. [1] Vikash Kumar is a final year student at National University of Study and Research in Law, Ranchi and can be contacted at vkbairagi23@gmail.com. Saksham Shrivastav is a third year student at National University of Study and Research in Law, Ranchi and can be contacted at saksham.shrivastav@nusrlranchi.ac.in.

- Ragini Agarwal[1] An Analysis of the Delhi High Court judgment of MMTC Ltd. v. Anglo-American Metallurgical Coal Pty. Ltd. (Mar. 2, 2020) **1st Runner Up Case Summary Writing Competition June 2020** In an interesting take on the scope of judicial interference in arbitral awards, a Division Bench of the Delhi High Court in MMTC Ltd. v. Anglo-American Metallurgical Coal Pty. Ltd.[2] hearing an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (“the Act” or “the Arbitration Act”) set aside an arbitral award on the grounds that it conflicted with the public policy of India. Five years ago, in an application under Section 34 for the same award, J. Muralidhar had ruled that no grounds for interference could be found.[3] This contrast raises debatable questions on how the spread of ‘public policy’ is construed by different judges in the same factual matrix. It also raises concerns about the threshold of ‘perversity’ and grant of interest by the arbitrators. However, before delving into the questions that this judgment raises, it shall be useful to have a look at the facts that gave rise to this case. Brief Facts MMTC Ltd. (“the Appellant”) had entered into a Long Term Agreement (“LTA” or “the Agreement”) with Anglo-American Metallurgical Coal Pty. Ltd. (“the Respondent”) for the purchase of freshly mined and washed coking coal for three delivery periods of a year each starting July 2004 and ending in June 2007. The Appellant exercised the option of extending the agreement for a further period of two years in 2007. On account of the global financial crisis in 2008, the fifth delivery period was extended to September 2009 and the price for the coal was USD 300/MT. Thereafter, by an ad hoc one time supply agreement, a second shipment was sent during the fifth delivery period in which part of the coal was to be delivered at USD 300/ MT whereas the other part was to be delivered at USD 128.25/MT. The LTA prescribed a procedure for delivery which included nomination of vessel by the Appellant and the acceptance of the same by the Respondent. The Appellant was responsible for taking delivery of the coking coal at the port of delivery. To facilitate the same, the Respondent was responsible for informing the Appellant about lay days and quantities six weeks in advance. These obligations became relevant in the Arbitral Tribunal’s decision when dispute arose. Averments of Each Side The Appellant contended that in July, 2009 it had written to the Respondent informing about receiving certain quantities of coal along with a request for additional deliveries in August and September 2009 taking into consideration the pending backlog of the fifth delivery period. The Respondent acknowledged the request with respect to the July 2009 delivery but as regards “revert shortly.” Subsequent failure to revert caused the Appellant to request for confirmation for August 2009 which the Respondent was again, unable to confirm. A similar pattern was repeated in September 2009. Since the fifth delivery period ended then, the Appellant issued a letter to the Respondent stating that the LTA has come to an end. When the Respondent submitted proposal for fresh delivery of balance quantity that was the backlog of the fifth delivery period, the Appellant considered the terms onerous. The exchanges between the parties could not fructify into a fresh contract. In March 2010, the Respondent issued notice seeking USD 78,720,414.92 along with interest @12% on account of alleged breach of the Appellant’s obligation to lift the desired quantity of coal as envisaged under the LTA. The damages were based on the calculation of difference between the allegedly prevailing market price and the contracted price. The Respondent contended that the contracted quantities were available for supply and that it was the Appellant who had failed to lift the quantities as agreed under the LTA. This allegation was denied by the Appellant. In November 2010, the Respondent reiterated its demand. More than three years after the termination of the Agreement, in September 2012, the Respondent appointed an arbitrator to decide the claims. Procedural History The Arbitral Tribunal decided by a 2:1 majority that the Appellant was liable for breach of the Agreement. On appeal under Section 34 to set aside the award, the Single Judge Bench of the Delhi High Court refused to set aside the Award. On the issue of limitation raised before it, the Court stated that the Appellant’s statement terminating the agreement was merely to convey that the delivery period was coming to an end.[4] In no way did it denote that the obligation of the parties under the LTA had come to an end and that was clear from the future correspondences as well.[5] On the question of repudiation of contract, the majority Award had examined the correspondences between the parties with letters by the Appellant stating “in short, we are not denying our obligation. The request is only for staggering the time frame for lifting...” as well as the testimonies to arrive at the conclusion that that there was no repudiation of the contract by the Respondent. On account of the same, it could not be said that the Appellant was released of its obligations thereunder. The Single judge thus, dismissed questions of ‘perversity’ and of bias vitiating the Award and concluded that there were no grounds made out under Section 34 of the Arbitration Act. It was against this order that the Appellant appealed before the Division Bench of the Delhi High Court under Section 37. Analysis of the Issues Raised · Scope of a Section 37 Interference The scope of interference under Section 37 is narrower than Section 34 since as an appellate forum, the Court under Section 37 can only intervene if the judge’s decision exceeds jurisdiction or is manifestly contrary to Indian law or substantive provisions.[6] On the general principles of the said Section, the Division Bench recognised that it is to forbear from interfering in conclusions of fact arrived at by the Arbitral Tribunal.[7] This forbearance, however, in the opinion of the Court was not an absolute restriction, since in the very next paragraph it deemed it fit to interfere with the Arbitral award on grounds of correcting an infirmity that went to the root of the award and rendered the award perverse. The court was cognizant that it could not re-appreciate evidence, however, when the award was based on ‘no evidence’, interference under Section 37 would be justified.[8] · Threshold of Perversity ‘Perversity’ as a ground for interference was under the umbrella of public policy and not ‘patent illegality’, prior to the Arbitration and Conciliation (Amendment) Act, 2015[9] (the Amendment Act). The award having been rendered prior to the Amendment Act was not covered by the ground of patent illegality as defined under Section 34(2A) of the Arbitration Act. Notably, perversity as a ground for setting aside awards was present even under the Arbitration Act, 1940.[10] In ONGC Ltd. v. Saw Pipes[11] and subsequently, ONGC v. Western Geco International Ltd.,[12] (“Western Geco”) it was held that ‘public policy’ under Section 34(2)(b)(ii) of the Arbitration Act was given an expansive interpretation with ‘perversity’ as a ground within public policy being tested on the Wednesbury principles of reasonableness. Further, an award must be as per the terms of the contract, otherwise it is liable to be set aside.[13] In the instant case, the Division Bench stated: “(I)t is also our understanding that if the court finds that a conclusion or inference drawn by the Arbitral Tribunal, even if upheld in proceedings under section 34, is not supported by a plain, objective and clear-eyed reading of documents, this court would not flinch in correcting such conclusion or inference, especially if it goes to the root of the matter.”[14] (emphasis supplied). In the opinion of the Court, the Arbitral Tribunal had read irrelevant imaginary words into the communication between the parties. The Court looked at the three e-mails upon which the decision of the Arbitral Tribunal hinged and stated that on a plain reading, the Respondent had not stated anywhere that it did not have the coal at a specified price. Instead, it had stated that it did not have coal for the remainder period of 2009 and in such a circumstance it could not be said that the Appellant was in breach of the terms of the Contract.[15] Essentially basing the award on evidence constructed from existing evidence or “imaginary interpolations” could not be allowed and such an interpretation would be liable to be set aside as perverse. The first rule of interpretation would be to look at plain text and if any ambiguity is found within, to look at the intendment of the parties.[16] Such a definition of perversity is supported by the decision of the Supreme Court in Associate Builders v. DDA[17] wherein the juristic principle that an award would be perverse if it ignores vital evidence in decision making or bases its finding on ‘no evidence’. After the Amendment Act of 2015, however, as held in Ssangyong Engg. & Construction Co. Ltd. v. NHAI,[18] and later approved in Vijay Karia v. Prsymian Cavi E Sistemi SRL[19], Western Geco is no longer considered good law. Reliance on the same would have been per incuriam had the award not been rendered prior to the 2015 Amendment. Irrespective, in the opinion of the author, the interpretation of the Delhi High Court seems to give another possible view of the case scenario. It is an established principle on the ruling on ‘perversity’ that the standard of ruling is very strict and there have been instances such as the Rashtriya Ispat Nigam Limited v. Dewan Chand Ram Saran[20] wherein despite not agreeing with the opinion of the Tribunal, the Court refused to interfere since the view was a ‘possible’ one, even if not ‘plausible’. · Quantum of Damages and Grant of Interest The Appellant had contended that Respondent had not produced any evidence to prove the market price but had instead relied upon the negotiation letters and correspondence related to nearly a year before the alleged date of breach to arrive at the market price through some averages. The Division Bench ruled that the award of the claim of USD 78,720,414.92 as damages along with interest pendent lite and interest on principle sum for the future @15% amounting to a total of approximately INR 748 crores was unjustified as it was based on incorrect factual footing.[21] Interestingly, on the question of damages, J. Muralidhar had ruled in 2015 that the Arbitral Tribunal had given adequate reasons on the issue of quantum of damages. Author’s Comment This judgment presents an interesting take on the recourse that the parties have against arbitral awards. While on the one hand, it is an accepted position that Section 34 was introduced to limit the scope of interference of the court in decisions so as to ensure that the arbitral awards have finality and the commercial wisdom of opting for arbitration does not fail; on the other hand, the widening scope of the interpretation of the Courts’ in analysing such awards flies in the face of such rationale. The decision of the Court in the above case seems to cross the thin balance that separates the boundaries of interpretation that is reasonably possible and not at all possible. What the Single judge bench of J. Muralidhar considered a reasonable appreciation of evidence, the Division Bench in the instant case considered not at all possible. The Division Bench failed to contextually interpret the emails as the Tribunal had done and instead ruled that a plain, and only plain approach would be reasonable. Such a ruling seems to be faulty approach to providing recourse against arbitral awards on limited grounds and smacks of judicial entitlement. The Bench did not even consider if the view was a ‘possible’ one, even if not entirely plausible. A better approach would have been to investigate whether the Respondent could have been referring to availability under the ad hoc arrangement in the emails, as had been considered by the Tribunal and the Single Judge Bench. The arbitrator is the ultimate master of quantity and quality of evidence to be relied upon. At the same time, an interpretation of perversity is also an interpretative exercise. A detailed examination on considering the evidence is not warranted in an application for setting aside awards. A fine balance between the scope of two interpretations must be found with established principles for deciding the same. Role of courts in ensuring that the arbitral awards do not interfere with established principles of justice cannot be gainsaid. Courts in exercise of their power should ensure that in dealing with cases of perversity, the scope of interpretation does not become akin to a Matryoshka doll with each case revealing new aspects considering which awards can be interfered with. [1] Ragini Agarwal is a law student pursuing B.A. LL.B. (Business Law Hons.) at National Law University Jodhpur. She can be reached at raginiadm@gmail.com. [2] FAO(OS) 532/2015 & CM.APPL 20560/2015 dt. Mar. 2, 2020 (GS Sistani and Anup Jairam Bhambhani JJ.) available at http://164.100.69.66/jupload/dhc/AJB/judgement/02-03-2020/AJB02032020FAOOS5322015_175403.pdf. [3] O.M.P. 790/2014 dt. Jul. 10, 2015 available at https://indiankanoon.org/doc/94251561/. [4] Supra, n. 3 at ¶34 - 35. [5] Id., at ¶36. [6] Morepen Laboratories Limited v. Phafag AG, 2013 (136) DRJ 668. [7] Supra, n. 2 at ¶19. [8] Id., ¶29. [9] W.e.f. Oct. 23, 2015 available at http://www.adrassociation.org/pdf/acact2015.pdf. [10] Arosan Enterprises Ltd. v. Union of India, (1999) 9 SCC 449. [11] (2003) 5 SCC 705, ¶30,31,64,74. [12] (2014) 9 SCC 263, ¶39, 40. [13] National Thermal Power Corporation v. Siemens, 2012 SCC OnLine Del 5686, ¶47. [14] Supra, n. 2, at ¶20. [15] Id., at ¶25. [16] Id., at ¶27,34, relying upon observations of Supreme Court’s decision in Smt. Kamala Devi vs. Seth Takhatmal & Anr., (1964) 2 SCR 152. [17] (2015) 3 SCC 49, ¶31. [18] (2019) 15 SCC 131. [19] 2020 (3) SCALE 494. [20] (2012) 5 SCC 306. [21] Supra, n. 2 at ¶35.