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- Shagun Singhal and Khushbu Turki[1] **Best Entry Case Summary Writing Competition June 2020** INTRODUCTION On 2 March 2020, the Delhi High Court, in the case of MMTC v. Anglo American Metallurgical interpreted the scope of perversity as per the pre-2015 amendment law. While doing so, the Court considered the scope of “imaginary” evidence in perverse decisions. The authors contend that the interpretation given by the Courts has cautioned the arbitrators to solely deduce their reasoning based on plain evidences, thereby minimising the chances of judicial errors from taking place in the upcoming disputes. To establish this, the authors have divided the paper into four parts - Part I explains the origination of perversity and its interpretation by the Courts over the years; Part II highlights the facts and decisions of the arbitral tribunal and the Courts in the current case; Part III analyses the decision of the Court and also comments on its relevance in the current position of law and finally, in Part IV, the authors conclude by affirming that the principle of “imaginary evidence” as enunciated in the current case, if applied to the existing law, shall make the ground of “perversity” extremely lucid and uncomplicated for Courts to understand and interpret. This summary is premised on the fact that the principles enumerated by the Court while relying on the pre-2015 amendment law is applicable to the present scenario i.e. the post 2015 amendment law. ORIGINATION OF THE “PERVERSITY” PRINCIPLE In Renusagar Power Co. Ltd v. General Electric Co.[2] (‘Renusagar’) the Supreme Court dealt with the issue of setting aside an award on the ground of public policy, for the first time. Since the term itself appears to be vague and ambiguous, the Court adopted a narrow approach and stated that this defence should be invoked only in exceptional circumstances. The Court further elaborated that such exceptional circumstances would include – “a contravention of the fundamental policy of India law, public interest of India, and justice and morality.”[3] This defence was thereafter incorporated in the Arbitration and Conciliation Act, 1996 (‘the Act’), under Section 34(2)(b)(ii). However, the restriction affirmed in Renusagar was revised in the case of Oil & Natural Gas Corporation Ltd v. Saw Pipes Ltd. (‘Saw Pipes’), wherein the Court introduced “patent illegality” as a new ground under public policy. It concluded that an award passed in contravention to the substantive law of India could be set aside under patent illegality in Section 34, provided the illegality goes to the root of the matter.[4] Widening the horizon of public policy further, the ground of “fundamental policy of Indian law”, as mentioned in Renusagar was interpreted in the case of Oil & Natural Gas Corporation Ltd. v. Western Geco International Ltd. (‘Western Geco’) The juristic principles of judicial approach, natural justice, and the Wednesbury principle of Reasonableness were included in the concept.[5] Adopting a judicial approach essentially meant that the Court must have acted in an impartial manner, without being influenced by any extraneous considerations. The duty of the Court to decide the matter in accordance with the principles of natural justice implies that the Court must apply its mind while arriving at a decision i.e. it should record the reasons behind the decision. The Wednesbury principle asserted that decisions that are unreasonable will deemed to be perverse in nature.[6] Thereafter, in Associate Builders v. Delhi Development Authority (Associate Builders’), the Supreme Court held that a decision would be vitiated by perversity if it was found to be based on no evidence or on evidence which was so unreliable that no reasonable person would depend on it.[7] ‘PERVERSITY’ POST THE 2015 AMENDMENT IN THE ACT The numerous judgements delivered (Saw Pipes, Western Geco and Associate Builders), the increasing uncertainty amongst investors regarding the potential for judicial interference with arbitral awards, and the possible erosion of faith in arbitration proceedings in India prompted an amendment of the Arbitration and Conciliation Act, 1996 (‘the Act’).[8] Section 34(2) was amended to include "Explanation 2", as well as sub-section 2A. The amendment had a two-fold impact: Explanation 2 stipulated that the evaluation of an award on the ground of violation of the fundamental policy of Indian law, would not entail a review on its merits. Further, “patent illegality appearing on the face of the award” was incorporated as a ground for setting aside awards arising out of domestic arbitrations under sub-section 2A.[9] The amendment, therefore effectively curtailed the scope of interpretation given in the previous judgements, thereby ensuring that arbitral awards would no longer be reviewed on the merits of the dispute. After the modification of Section 34 through the 2015 Amendment Act, the Supreme Court further clarified that the post amendment law shall apply only to cases filed after 23 October, 2015.[10] For the petitions filed prior to that date, the pre-amendment law was to be applicable. In Ssangyong Engineering and Construction Co. Ltd. v. NHAI[11] (Ssangyong) the Supreme Court observed that the amendment had in a way overruled the Wednesbury principle laid down in Western Geco. Therefore, the Court found it fit to bring perverse and irrational decisions within the ambit of “patent illegality”. While the Court in Ssangyong upheld the validity of the “no evidence test” of perversity stipulated in Associate Builders, it did not elaborate on what other situations might fall within the ambit of the perversity rule The authors shall now establish how the interpretation given by the Court in the present case of MMTC v. Anglo American adds to the scope of perversity of an arbitral award. FACTS OF THE CASE MMTC and Anglo American were parties to a long-term contract, pursuant to which MMTC was to purchase coking coal from Anglo American, at a price of USD 300 per metric tonne, over five delivery periods. Following a slump in the industry, the parties agreed to a one-time ad-hoc arrangement under which coal would be supplied at a discounted price of USD 128.25 per metric tonne. The obligation under the original contract continued separately. Sometime after the execution of the ad-hoc arrangement, MMTC requested Anglo American to supply the coal due in the fifth delivery period while referring to certain backlogs in the supply. Anglo American responded by stating that there was no coal available for supply for the rest of the year. Subsequently, Anglo American initiated arbitration proceedings against MMTC for breaching the contract by failing to lift the coal as per the existing agreement. The entire matter revolves around the interpretation of certain correspondence between the parties to determine whether MMTC can be held liable for breaching the contract. THE TRIBUNAL’S AWARD Based on the analysis of the testimonies and the e-mails exchanged between the parties, the Tribunal concluded that Anglo American’s statement regarding the non-availability of coal had been made in the context of the ad-hoc arrangement. The non-availability had been communicated for supplying coal at the ad-hoc price, and Anglo American had always been willing to supply coal at the price mentioned in the long-term agreement.[12] Although the e-mails made no specific mention of the ad hoc price, the tribunal stated that the same could not be interpreted literally, and had to be read in context of the parties’ previous dealings. It therefore held MMTC responsible for breaching the contract, and awarded Anglo American damages of USD 78,720,414.92 pendente lite and future interest and cost.[13] DECISION OF THE COURTS When the award was challenged by MMTC in the Delhi High Court, the single judge upheld the validity of the award and refused to set it aside under Section 34 of the Arbitration and Conciliation Act (‘the Act’). MMTC then preferred an appeal under Section 37 of the Act before the Division Bench.[14] The Bench observed that while requesting for coal, MMTC had clearly referred to backlogs and requested for the supply due in the fifth delivery period. Moreover, since there was no mention of any specific or reduced price in the e-mail, there was no reason for Anglo American to assume that the coal was being demanded at a reduced price, especially when the entire correspondence was clearly in relation to the original contract between the parties. The Bench concluded that the arbitral tribunal had acted in an arbitrary and capricious manner by reading words into written communications between the parties, and omitting to read what had been written in plain and unambiguous terms.[15] Relying heavily on the reasoning given in Associate Builders, the bench held that the tribunal had made a perverse award, and therefore, set it aside. REASONING GIVEN BY THE COURT Since the 2015 amendment is applicable only to the cases filed after 23 October, 2015,[16] the Court in the present case relied entirely on Associate Builders while evaluating the validity of the Tribunal’s award. The Tribunal concluded that the non-availability of coal had been communicated with reference to the ad-hoc price, by relying solely on the testimony of the Respondent’s witness, which appeared to be directly contravening the textual evidence presented before the Tribunal. It further refused to acknowledge the plain and unambiguous text of the e-mail, in which the appellant had clearly referred to the supply of coal under the original contract and mentioned certain backlogs as well. By acting in this manner, the arbitrators tried to read words into the parties’ correspondence in order to cull out some imaginary context in which the correspondence had been made. The Tribunal thus adopted an approach which could not be accepted as an alternate or possible view of interpreting the factual matrix. Accordingly, the Division Bench was completely justified in concluding that the award made by the Tribunal was perverse in nature. CONTRIBUTION TO THE CURRENT JURISPRUDENCE The Court in Ssangyong had held that while perversity of the award can no longer be an independent ground for setting aside the award, it would be subsumed within the ambit of patent illegality. Therefore, the authors submit that even though the High Court relied entirely on the principle of perversity to set aside the award in MMTC v. Anglo American, the judgement significantly adds to the existing jurisprudence on perversity and patent illegality in arbitral awards by expanding the scope of the perversity principle. This has been done in two ways as First, the Court held that any deduction of the arbitrators based on imaginary evidence constructed by them from the existing evidence shall be deemed to be perverse. Second, while placing reliance on Section 94 to 98 of the Evidence Act, the Court asserted that the reasoning given by the arbitral tribunal should be assisted by a plain, objective and clear-eyed reading of the documentary evidence, in order for it to not be considered as perverse in nature.[17] This essentially implies that the dealings or the communication between the concerned parties may be evaluated on the basis of the circumstantial evidence only when such an interpretation does not disregard a plain and objective reading of the other evidence. The Court while interpreting patent illegality under Section 34, has repeatedly stated that the error apparent on the face of the award should not be trivial in nature and must go to the root of the matter.[18] This implies that in order to set aside a perverse award, the perversity must go to the root of the matter. When an arbitrator relies on imaginary or constructed evidence to decide a matter, such an approach drastically changes the entire context in which the rights and liabilities of the parties are determined. The perversity in such cases clearly goes to the root of the matter and can thus lead to the setting aside of the patently illegal award. Thus, the authors assert that even though the current case relied entirely on pre-amendment laws to arrive at the conclusion, the findings of the Court are relevant in the post amendment scenario as well. Such an interpretation of perversity, shall caution the arbitrators against interpreting evidences based on their psyche and to rely only on plain readings. Further, this interpretation along with reasoning given in Associate Builders, shall also aid Courts in recognising unreasonable and irrational decisions that rely on imaginary evidences, thereby ensuring that the wide latitude given to arbitrators while interpreting the facts, does not lead to the miscarriage of justice. CONCLUSION It is now an established principle that the arbitral awards cannot be interfered with in a casual and cavalier manner, that is solely based on an alternate view of the facts of a case.[19] While it may be contended that the Court’s interpretation in the current case is an alternate view, it is pertinent to examine the tribunal’s reasoning before arriving at such a conclusion. The tribunal in the current case, by relying on made-up evidences rendered a decision based on its own psyche, making its analysis to be subjective in nature. This prompted the Courts in rectifying the error committed by the tribunal by adjudging it’s reasoning to be ‘perverse’ and ‘irrational’. Moreover, the Court put forth the difference between an impossible view based on a fictional evidence and an alternate view based on a contrasting interpretation. It is therefore concluded that the inclusion of “imaginary” evidences within the ground of perversity has made it extremely cogent for the Courts to revise similar errors, provided an arbitrator commits an alike mistake. This case is also an exhibition on how the contemporary law regarding perversity is still developing in spite of recurrent changes over the years. Since Court intervention in arbitration is a highly debated topic, the judges are coming up with possibilities of minimal intervention by laying down all circumstances under which a decision rendered by an arbitral tribunal can be erroneous. The authors therefore conclude that this progression of interpretation of perverse decisions in the current case will aid Courts in setting aside irrational awards diligently and thereby minimise the occurrence of judicial errors in the upcoming disputes. [1] Shagun Singhal & Khusbu Turki, second year law students of National Law Institute University, Bhopal, can be reached at shagunsinghal023@gmail.com & khushbuturki14@gmail.com. [2] AIR 1994 SC 860. [3] Id. [4] (2003) 5 SCC 705. [5] (2014) 9 SCC 263. [6] Id. [7] (2015) 3 SCC 49. [8] Law Commission of India, “246th Report on Amendment to the Arbitration and Conciliation Act, 1996” (August, 2014). [9] Id. [10] BCCI v. Kochi Cricket Pvt Ltd. (2018) 6 SCC 287. [11] (2019) 15 SCC 131. [12] MMTC v. Anglo American Metallurgical Pvt. Ltd., FAO(OS) 532/2015 & CM. APPL 20560/2015, MANU/DE/0664/2020. [13] Id. at 1. [14] Id. [15] Supra note 12 at 43. [16] Supra note 10. [17] Supra note 12 at 47. [18] Supra note 11. [19] Dyna Technologies Pvt. Ltd. v. M/S Crompton Greaves Ltd. (2019) SCC OnLine SC 1656.

-Malcolm Katrak[1] Recently, the Supreme Court of India, in the case of Patel Engineering Ltd. v. North Eastern Electric Power Cooperation Ltd. (Special Leave Petition (C) No. 3584 of 2020) (Patel Engineering), affirmed the position taken in Ssangyong Engineering & Construction Co. Ltd. v. National Highways Authority of India [(2019) 15 SCC 131] (Ssangyong). Even though Ssangyong has been discussed previously here and here, it is necessary that the ‘public policy’ aspect of Ssangyong’s decision be analyzed. This analysis would be specific in nature, dealing only with the aspect of ‘patent illegality’ under the public policy head. For this reason, understanding the arguments and decision in Patel Engineering is important. Primarily, Patel Engineering deals with the issue of an arbitral award being set aside under Section 34 of the Arbitration and Conciliation Act, 1996, (“the Act”) on the grounds of patent illegality or perverseness. Facts The respondent and original applicant had filed three applications, under Section 34 of the Act, before the Additional Deputy Commissioner (Judicial) Shillong (ADC), to set aside three arbitral awards passed against it in respect of certain packages. Through a common judgment, the ADC rejected the respondent’s applications for setting aside the three arbitral awards under Section 34 of the Act. Aggrieved by the said judgment, the respondent filed three appeals, under Section 37 of the Act, in the High Court of Meghalaya. Pertinently, the High Court allowed the respondent’s appeals and set aside the common judgment passed by the ADC on the ground that the awards were patently illegal. Thereafter, the petitioner filed special leave petitions (SLPs) before the Supreme Court, all of which were dismissed by the Supreme Court. After the dismissal of the SLPs, the petitioners filed multiple review petitions on the ground that the judgment of the High Court, allowing the respondent’s appeals, suffered from error apparent on the face of the record as it had not taken into consideration the amendments made to the Act of 1996 by the Arbitration and Conciliation (Amendment) Act of 2015 (“the Amendment Act, 2015”). The High court dismissed all the review petitions, which resulted in the petitioners filing another SLP in the Supreme Court. Analysis of the judgment The main contention of the petitioner was that the High Court relied upon the decisions of ONGC Ltd. v. Saw Pipes Ltd. (2003) 5 SCC 605 (Saw Pipes) and ONGC Ltd. v. Western Geco International Ltd. (2014) 9 SCC 263 (Western Geco), which were no longer good law due to the Amendment Act, 2015. Essentially, Saw Pipes laid the foundation for the concept of ‘patent illegality’ under the expansive interpretation of ‘public policy of India’. Simply put, the ground of patent illegality is available under the statute for setting aside a domestic award if the decision of the arbitrator is found to be perverse or irrational (judging on general standards of reasonableness), the construction of the contract is such that no fair or reasonable person would take that view, or the view taken by the arbitrator is not even possible. On the same footing, the decision in Western Geco expanded the concept even further by providing a broad definition of ‘public policy of India’. The Amendment Act, 2015, provided statutory force to the concept of patent illegality as a ground for setting aside of arbitral awards by inserting Section 34 (2A) in the Act. However, this ground was not to be invoked in an international commercial arbitration seated in India nor could it be invoked to resist the enforcement of a foreign award. Interestingly, the Supreme Court, in Ssangyong, noted that the expansive interpretation given to the term ‘public policy of India’ in the Saw Pipes and Western Geco cases had been done away with and that a new ground of ‘patent illegality’ had been introduced, which would apply to applications under Section 34 filed after October 2015. The petitioner, in the present case, argued that since the Ssangyong decision enumerated that Saw Pipes and Western Geco are no longer good law, the High Court, by relying on the said decisions, had erred. However, rejecting this contention, the Supreme Court relied on its own interpretation of Ssangyong, stating that the ground of patent illegality, under Section 34, would be applicable to domestic awards. This means that the ground of patent illegality, to set aside an award, would be applicable only when the two parties are Indian entities. Therefore, the High Court, while setting aside the award on the ground of patent illegality, has considered the principles of the Ssangyong even though it may have quoted Saw Pipes and Western Geco to reach the said decision. Relying on Ssangyong, the Supreme Court rejected the contention of the Petitioner and concluded that if the award passed by the arbitrator suffers from the vice of irrationality, patent illegality could be applied as a ground for setting it aside. Ssangyong and beyond In my opinion, Ssangyong has cleared the air regarding the scope of public policy as a ground for setting aside of arbitral awards. It has brought the essential elements of Associate Builders v. DDA [(2015) 3 SCC 49] and BCCI v. Kochi Cricket Pvt. Ltd. & Ors.[(2018) 6 SCC 287] under its aegis. The former deals with interpretation of basic morality and justice arguments for setting aside an arbitral award and the latter deals with applicability of the 2015 Act, specifically, section 34. It seems that post Ssangyong, the Supreme Court has adopted a positive approach towards ‘minimal judicial interference’ policy. This can be witnessed through the Supreme Court’s reliance on Ssangyong in the decision of Vijay Karia & Ors. v. Prysmian Cavi E Sistemi SRL &Ors. (Civil Appeal No. 1544 of 2020), wherein the Court stated, “the foreign award must be read as a whole, fairly, and without nit-picking. If the said award has addressed the basic issues raised by the parties and has, in substance, decided the claims and counter-claims of the parties, then the enforcement must follow.” The Supreme Court, further, stated that the appeal ought to be rejected if the appellants indulge in a speculative litigation with the fond hope that by flinging mud on a foreign arbitral award, some of the mud so flung would stick. There is no doubt that there are several issues with Ssangyong, specifically, the problem with the minority decisions (which has been dealt with here). Another issue is that the judgment has been pronounced by a division bench (two judges), which always casts a shadow over the precedential value of the decision. Nonetheless, the decision has played an important role in streamlining the ‘minimal judicial interference’ principle. Moreover, by consolidating all the previous definitions of public policy and the applicability of same in varied instances, the judgment has already made a mark in the arbitral jurisprudence of India. The reliance of Patel Engineering on Ssangyong is just another feather in its cap. NAFED an anomaly If consistency is the cornerstone of the administration of justice, the Supreme Court, occasionally, tends to fiddle with its alignment. The case of National Agricultural Cooperative Marketing Federation of India v. Alimenta S.A.(Civil Appeal No. 667 of 2012) (NAFED) is an example of deviating from the charted path of Ssangyong. NAFED had an award passed against it by an arbitral tribunal, which was later upheld by the High Court of Delhi. Further, the High Court allowed for its enforcement and converted it into a decree, resulting in the appeal to the Supreme Court by NAFED. NAFED’s main submission before the Court was that it was unable to fulfil its contractual obligations in view of government’s refusal to permit it to export its commodity, and, therefore, the contract was void, resulting in no damages being awarded to the respondent. Accepting this contention, the Supreme Court, even after considering Ssangyong and Vijay Karia, held that the award was ex facie illegal, and in contravention of fundamental law of the country. The Supreme Court also ignored the decision of the Delhi High Court in Cruz City 1 Mauritius Holdings v. Unitech (2017) 239 DLT 649, which was referred to with approval in Vijay Karia, and which held that violation of “any particular provision or a statute” would not satisfy the “narrow width” of the public policy defence, particularly when the allegation was made with a view to set aside a foreign award. Conclusion In recent years, the Supreme Court has taken a pro-arbitration stance and, therefore, laid down decisions in the hopes of achieving the rule of finality. One such decision is Ssangyong, which is on the path to becoming the panacea for all public policy cases. There may be situations where judicial pronouncements tend to take a different path as seen in NAFED. However, such instances should be the exceptions rather than the norm. As Harish Salve, QC, in his latest conversation with Mr. John Beechey, mentioned, “Consistency must be there in all forms”. If a precedent has been set, there is no need to chop and change it; it must be given some time to stabilize and achieve finality. Ssangyong is one such judgment that creates confidence in the system and this confidence cannot be achieved without respect to the rule of finality. [1] Malcolm Katrak is an Assistant Lecturer at Jindal Global Law School. He has a joint LL.M. from Erasmus University, Rotterdam, and University of Hamburg as well as an M.Sc. in Law and Economics from the Indira Gandhi Institute of Development Research, Mumbai. Previously, he worked as a Law Clerk to Justice (Retd.) S.N.Variava, Former Judge, Supreme Court of India. The author can be contacted on this ID- mkatrak@jgu.edu.in

- Purbasha Panda[1] Staff Writer, The Arbitration Workshop A. INTRODUCTION Party autonomy is the plinth on which the entire edifice of arbitration proceeding rests. The concept of party autonomy allows a party to determine the nature of arbitral clauses as well as choice of procedure of arbitration subject to such safeguards which are necessary in public interest. With increasing complexity of contractual disputes, parties are incorporating varied kinds of arbitral clauses in their contracts. For example, some commercial contracts provide for arbitral clauses mandating a condition precedent of compulsory mediation or negotiation to resolve contractual disputes before invocation of arbitration or in case of construction contracts a hierarchical form of arbitral clause can be found which provides for tiers of arbitral proceedings for disputes arising out of a single contract. These kinds of arbitral clauses are often referred to as ‘multi-tier arbitral clauses’ or ‘escalation clause’. On 2nd June, 2020, a three judge Bench of the Apex Court comprising of Rohinton Fali Nariman J., S. Ravindra Bhat J. and V. Ramasubramanian J. finally decided on validity of such clauses and enforceability of awards arising out of such hierarchical arbitral proceedings. B. FACTUAL BACKGROUND OF THE CASE The instant case essentially dealt with a contract for sale entered between an U.S based corporation M/s Centrotrade Minerals and Metals Inc. [‘Centrotrade’] and Hindustan Copper Ltd. [‘HCL’] for delivery of 15,500 DMT of copper concentrate to be delivered at the Kandla Port in the State of Gujarat to be used by HCL for one of its plants situated at Khetri, Rajasthan. The consignments were delivered, post which disputes arose with respect to the quality of the goods delivered and subsequent to which the arbitration clause was invoked which provided for a two-tier dispute resolution clause. The dispute resolution clause provided that the disputes arising out of the contract has to be first referred to an arbitration seated in India to be presided by the arbitration panel of the Indian Council of Arbitration and to be conducted in accordance with the ‘Rules of Arbitration of the Indian Council of Arbitration’, in case the parties disagree with the arbitral award rendered through this arbitration then either would have a right to appeal to a second arbitration seated in London to be conducted in accordance with ‘Rules of Conciliation and Arbitration of the International Chamber of Commerce [‘ICC Arbitration Rules’]. Centrotrade invokes the arbitral clause and the arbitration proceedings seated in India rendered a Nil award, after which ‘Centrotrade’ invoked the second part of the arbitral clause as a result of which ‘ Mr. Jeremy QC’, was appointed as the arbitrator in accordance with ICC Arbitration Rules, while this arbitration proceeding was going on HCL filed a suit at a lower court at Khetri, Rajasthan challenging the arbitration clause, further a revision petition was filed on this order before a Division Bench of the High Court of Rajasthan restraining the appellant from proceeding further with the arbitration proceedings, and an ad-interim ex-parte order was passed by the High Court of Rajasthan to this effect. HCL refused to participate in the arbitration proceedings taking aid of this order. This order was finally vacated by the Apex Court. The arbitrator ‘Jeremy QC’ referred the matter of stay of arbitration to the ICC court which then allowed the arbitrator to continue with arbitral proceedings. An arbitral award was delivered as a result of these arbitration proceedings in favour of Centrotrade. The arbitral award adjudged that HCL would have to a pay a particular sum inclusive of interest for purchase price of the first and second shipment, in addition to this HCL would also have to pay a certain sum inclusive of interest in respect of demurrage due on first shipment. When Centrotrade was trying to enforce this award in India, HCL filed objections to the enforcement application filed by Centrotrade before a Single Judge Bench of High Court of Calcutta, which rejected the objections and as a result of which the award became executable in India. However, this order was brought to challenge before a Division Bench of Calcutta High Court and the court firstly held that the award passed by the arbitration proceedings seated in London is a ‘foreign award’. Further, it held that both the arbitrators seated in India and London had concurrent jurisdiction and both the awards rendered through these arbitrations are mutually destructive of each other, as a result of which neither can be enforced. The Division Bench of Calcutta High Court set aside the judgements of the Single Judge Bench. Further, Centrode went on to file a ‘Special Leave Petition’ before the Apex Court and the matter finally came before a Division Bench of the Apex comprising of S.B Sinha J. and Tarun Chatterjee J. Two separate judgements were delivered by S.B Sinha J. and Tarun Chatterjee J. which was reported in ‘Centrotrade Minerals & Metals Inc. v. Hindustan Cooper Ltd.[2] S.B Sinha J. in his judgement held that multi-tier arbitration clauses are not enforceable under the legislative framework in India and would be violative of Section 23 of the Indian Contract Act, 1872 and therefore, he went on to dismiss the appeal filed by Centrotrade. However, Tarun Chatterjee J. had a drastically different take on this issue. Tarun Chatterjee J. essentially decided the entire matter in light of four issues which are (a) Enforcement of a multi-tier arbitration clause under the legislative framework of India. (b) Whether the award rendered by the arbitrator seated in London would be considered to have arisen out of an appeal from the award rendered by the arbitrator in India? (c) If the ICC award was a ‘foreign award’? (d) Whether HCL was given proper opportunity to present its case during the course of arbitral proceedings? Tarun Chatterjee J. held that a multi-tier arbitral clause is permissible under the legal framework of India. The award rendered through the second tier of the arbitral clause is in nature of an appeal. The ICC award is indeed a foreign award. However, he held that HCL was not given proper opportunity to present its case and therefore, he went on to dismiss the appeal filed by Centrotrade. In light of the fact there was disagreement in opinions of both the judges, the matter was then referred to a three judge Bench of the Apex Court comprising of Madan B. Lokur J., R.K Agarwal J. and Dr. D.Y Chandrachud J. This case was reported as Centrotrade Minerals and Metals Inc v. Hindustan Copper Ltd.[3]. The three-judge bench confined themselves only to the question of enforceability and validity of a multi-tier arbitration clause under legal framework in India. The other questions relating to enforceability of such an award and if proper opportunity was given to HCL to present its case before the arbitrator in the arbitration proceedings seated at London was decided by another bench of the Apex Court comprising of R.F Nariman J., S. Ravindra Bhat J. and V. Rama Subramanian J. in a judgement delivered on 2.06.2020 reported as M/S Centrotrade Minerals & Metals v. Hindustan Copper Ltd.[4] C. PRIMARY ISSUES BEFORE THE COURT · Validity of a multi-tier arbitration clause under the legal frame work in India The validity of the two-tier arbitration clause was brought before the three-judge Bench of the Apex Court in 2017. The Bench comprising of Lokur J., R.K Agarwal J. and Dr. D.Y Chandrachud J. upheld that multi-tier arbitration clauses are valid under the legal framework in India. Various underlying questions also cropped up while the Bench delved into deciding enforceability of the two-tier arbitration clause like (a) Form and conclusiveness of an ‘arbitral award’, (b) Difference or similarity between the term ‘arbitration result’ and ‘arbitral award’(c) Scope of party autonomy in formulating the nature of an arbitration clause. The court firstly aimed to verify the scope of appellate arbitration procedure within the confines of the A&C Act. The counsel for HCL relied on Section 34(1), Section 35 and Section 36 of the A&C Act and formulated an argument that a combined reading of all the three Sections points towards an interpretation that an arbitral award can be set aside only through an application made to the court, thereby excluding a two-tier arbitration clause. The court rejected such an interpretation and held that the use of word ‘only’ in Section 34(1) of the A&C Act has been misinterpreted by the counsel for HCL. The court marked that the import of Section 34(1) of the A&C Act nowhere suggests that only recourse of a court has to be taken to set aside an arbitral award. The court held that the fact that recourse to a court is available to a party for challenging an award does not ipso facto prohibit the parties from mutually agreeing to have a second look at an award with the intention of an early settlement of disputes and differences. The court further marked that the intention behind Section 34(1) of the Act is to avoid subjecting to stop a party from challenging an award at multiple forums. Further, the court held that the term ‘final and binding’ in Section 35 of the A &C Act does not mean final for all intent and purposes. The finality is subject to any recourse that an aggrieved party might have under a statute or an agreement providing for arbitration in second instance. The court also delved into Article 34(1) of the UNCITRAL Model Law and marked that the sole recourse against an arbitral award is definitely through an application for setting aside to be a made to a court, however this does not preclude a party to have a procedure of appeal of second instance to an arbitral tribunal. This analysis led the court to decide on another question of law which is, in the instant case ‘Whether the arbitral award rendered by the first tier of arbitration is final and binding?” The counsel for HCL contended that the award rendered through first tier is final and binding and an appeal cannot arise from it to another arbitral tribunal, it can only be set aside under Section 34 of the A&C Act, shedding light on ‘finality of an award’ the court relied on ‘Uttam Singh Duggal & Co v. UOI[5] and held that once an award is made on a subject matter, no action can be started on original claim which has been subject matter of reference , also the fact that arbitration proceedings occur in two steps, the first step involves arbitration proceedings giving rise to an award, the second step involves enforcement of an award. However, though relying on this case the Apex Court marked that an arbitral award does not have to be enforced to attain finality, it can be final when it conclusively determines substantive rights and claims of the parties. In the instant case, the arbitration clause provided that in case the award rendered by the first-tier process is not agreeable by any of the parties, then the parties can appeal against such an award. In the instant case a NIL award was delivered by the first-tier arbitration. The court held that the arbitral award rendered by the first tier of arbitration is not final and binding and such conclusiveness of an arbitral award was made a function of the party autonomy with respect to the nature and form of the arbitration clause. This brought the court to another question which is, ‘How far can party autonomy be stretched to define nature of an arbitration clause, can it possibly be extended to include an appellate procedure in an arbitration clause?’ The court while examining the scope of party autonomy in defining an appellate procedure in an arbitration clause held that party autonomy is the backbone of arbitration procedure. The concept of party autonomy does not only extend to determining the (a) proper law of contract (b) proper law of arbitration agreement or (c) law of arbitration proceeding, otherwise known as curial law but it also extends to determining nature of an arbitral clause. It further relied on Reliance Industries Ltd v. UOI[6] which marked that [..] The terms of a contract have to be understood in a way that parties want or intend for the terms to be understood or interpreted. In agreements of arbitration, party autonomy is the grund norm. Another question that stemmed from this analysis is ‘Whether incorporation of such a clause in the principal contract and an arbitral award arising out of such an arbitral clause violates public policy’. While deciding on this question, the two-tier arbitration clause was also put to test by the Apex Court on touchstone of violation of public policy. The court made the following observation in this regard-: If terms of contract would be violative of public policy. If the terms affect (a) substantive content of the award (b) terms in a contract which purport to exclude or restrict the supervisory jurisdiction of the court (c) terms which require the arbitrator to conduct reference in an unacceptable manner (d) terms which purport to empower arbitrator to carry forward procedures or exercise power which lie exclusively with the courts (e) terms which require an arbitrator to make reference in an unacceptable manner (f) terms which purports to empower the arbitrator to carry forward procedures. The Apex Court held that the implication of a two-tier arbitration and an award arising out of such a clause does not fall into any of the categories defined for the purposes of testing violation of public policy. The court marked that it does not find anything fundamentally objectionable in preferring and accepting a two-tier arbitration system. Thus, the court fundamentally upheld an appellate arbitration procedure. The court also marked it was not the first time in this case that a multi-tier arbitration clause had come before the court. It marked that in case of commodity trade arbitration multi-tier arbitration had become the norm. It also relied on ‘Report on Working Group on International Contract Practices: On work of its third session’ [ 1982]. India happened to be one of state members of the UNCITRAL Working Group. It was mentioned in the report that ‘Parties are free to agree that the award may be appealed before an arbitral tribunal of second instance and that model law should not exclude such practice although it was not used in all countries. However, they did not include a specific provision in this regard.’ In the instant case, it was observed by the Apex Court that India was a state party of the ‘Working Group’ in 1982. The framers of the A&C Act who legislated and drafted the Act during the nineties must have been aware of this very fact and therefore there is no such provision in the Act that exclusively prohibits a two-tier arbitration from the scope of the act. The court also recognized the fact that the award delivered by the arbitrator seated in London was a ‘foreign award’. · Enforcement of an arbitral award arising out of a multi-tier arbitral clause Before, we delve into this issue it is imperative to have a preliminary idea on how a foreign award is enforced in India. In case, a party receives a foreign award from a country which is signatory to the ‘Convention on the Recognition and Enforcement of Foreign Awards, 1958’ [‘New York Convention’] and the award is made in a territory which has been notified as a convention country by the Government of India, the award would then be enforceable in India. A foreign award is defined under the A&C Act under Section 44(1). The enforcement of such foreign award is initiated by filing an execution petition, such an execution petition is filed under Section 47, 48 and 49 of the A&C Act. In the instant case, it is at this stage that HCL had filed objections with respect to enforcement of the foreign award, post which the Single Judge Bench of Calcutta High Court rejected the objection raised by HCL, after which an appeal was preferred before a Division Bench of Calcutta High Court which had held that the award was liable to be set aside on the ground mentioned under Section 48(1)(b) of the Act. This particular question came before the Supreme Court by way of an SLP before a Division Bench comprising of S.B Sinha J. and Tarun Chatterjee J., post which the matter was referred to a three judge Bench comprising of Lokur J., DY Chandrachud J. and R, K Agarwal J. This Bench primarily dealt with the question of validity of a tier-arbitration clause and further ordered the question of enforcement of the foreign award must be put before another Bench. Hence the question ‘Whether the award passed by the ICC arbitrator was liable to be set aside under Section 48(1)(b) of the A&C Act?’ Three primary arguments were made by HCL in this matter (a) Setting aside of the arbitral award on ground of Section 48(1)(b) of the Act. (b) The applicability of the stay order by the Rajasthan High Court on the arbitration proceedings at London (c) The duty of the arbitrator at London to determine the question of jurisdiction as a preliminary position. Before deciding on the veracity of HCL’s first argument, the court ventured to draw distinction between provision under A&C Act for setting aside a domestic arbitral award and a foreign award under the confines of the Act and the legislative policy behind this distinction. This was primarily important as later the court went to define the scope of interference with enforcement of an arbitral award in light of this distinction. With respect to interference with a foreign arbitral award, relying on the case of Vijay Karia vs Prysmian Cavi E Sistemi Srl[7] (Vijay Karia Case) which was also decided by the same bench, the court marked that in case of domestic arbitrations, once an award is passed, the award would be in operation, there is no requirement to get the award enforced. However, in case of ‘foreign arbitrations’, once an award is passed an enforcement application has to be filed. The legislative intent behind drawing this distinction is to ensure that a person who belongs to a convention country and who has gone through a challenge procedure of the said award in its country of origin must then be able to recognize or enforce this award. In light of this legislative policy, the court ventured out to define the scope of challenge to a foreign arbitral award under Section 48 of the Act. In the instant matter, Article 136 of the Constitution of India was invoked by the parties, hence the question that arose before the court was ‘Whether Article 136 should be used to circumvent this legislative policy?’. The court observed that keeping the abovementioned legislative policy in mind, the Supreme Court’s jurisdiction under Article 136 to interfere with a foreign award should be narrowly and specifically defined. To determine if a party has been given proper opportunity to present its case. The Apex Court relied on two foreign judgements and the recent ‘Ssangyong Case’. In the case of Minmetals Germany Gmbh v. Ferco Steel Ltd.[8] , it was held that the test to determine if a party has been given proper opportunity to present its case is to check if the procedure adopted by the arbitrator is contrary to rules of natural justice, also the fact that the enforcee has been prevented to present its case owing to matters outside its control. Further the court has also referred to the case of Jorf Lafar Energy Co. v. AMCT Export Corp. herein the test laid down was that the conduction of arbitral proceedings should not violate due process. The court further relied on the ‘Sangyong Case’ to define the object of Section 48(1)(b) of the Act. The court held that the expression ‘was otherwise unable to present its case’ occurring in Section 48(1)(b) cannot be given an expansive meaning and would have to be read in context and colour of words preceding the said phrase. The court marked that this expression is a facet of natural justice principles which would be breached only if a fair hearing was not given by the arbitrator to the parties. The court further ruled that if no opportunity is given to deal with an argument that goes to the root of a matter or evidence then this might result in denial of justice. The court held that a narrow meaning has been given to Section 48(1)(b) in light of pro-enforcement approach led down in ‘Vijay Karia Case’. The court took an assessment of the sequence of events in the arbitration proceedings to decide if HCL was provided proper opportunity to present its case. The court found that on 03. 05. 2001, the arbitrator had directed HCL to serve submission along with documents, a time table was set out for this but by 30.07.2001 no defense submission or supporting evidence were filed. Until August 2001, respondents did not participate in arbitral proceedings. On 09.08.2001, the arbitrator informed the parties via fax that it is going to pass the award. It is after this point that HCL requested for extension of a month to put forward their defense. HCL was granted time till 31.8.2001, during this time HCL had also sought extension till 12.9.2001, however on 13.9.2001 the arbitrator received the arguments of HCL via fax. These submissions were taken into consideration in the award even after the deadline as the 9/11 attacks had happened during that time, hence considering this precarious situation and the implication of this incident on communication services the arbitrator took into account all these submissions made by HCL. The court marked that the arbitrator had been extremely fair in conduction of arbitral proceedings and the rejected the ground raised by HCL under Section 48(1)(b) of the Act for setting aside the arbitral award. The second argument put forward by the counsel for HCL was that the effect of stay order of the Rajasthan High Court on conduction of arbitration proceedings needs to be taken into consideration in light of its refusal to become part of the arbitral proceedings even after repeated invite to participate. The court rejected this argument and held that the order of Rajasthan High Court was directed against the parties and not against the arbitrator. This stay order was also vacated by the Apex Court subsequently. The court marked that the arbitrator had proceeded in light of green signal received by the ICC Court. The third argument which was put forward by the counsel of HCL was that the London arbitrator ought to have determined the question of jurisdiction as a preliminary question. Firstly, this plea was rejected by the court on the ground that it was taken before the Apex Court in the instant matter for the first time. Secondly, the court marked that there was no mandate to support the fact that arbitrator had sought to take up the plea as to jurisdiction as a preliminary objection which should be decided over other matters. Thus, this plea of HCl was also rejected by the Apex Court In light of all these arguments, the Apex Court held that the judgement of Tarun Chatterjee J. which had held that HCL was not given a proper opportunity to present its case cannot be sustained in law and the appeal filed by Centrotrade should be allowed and that the foreign award should be enforced. D. ANALYSIS AND CONCLUDING REMARKS Before, we understand the implication of upholding the validity of a multi-tier arbitration clause. Let us try to understand the object of a multi-tier arbitration clause. Multi-tier arbitration clauses are incorporated in contracts to provide for a dispute resolution framework wherein escalation in tiers of the arbitral clauses are provided for increasing complexity in a contractual dispute. There are different kinds of escalation clauses incorporated in contracts. For example, some escalation clauses provide that the parties must undergo a pre-mediation or negotiation process before they start the arbitration proceedings so as to exhaust all opportunities of amicable settlement of dispute before arbitration. These kind of escalation clauses can provide for an opportunity for resolution of disputes in a more informal setting, thus it can prove to be cost effective to the parties to the extent that it can possibly avoid an arbitral proceeding. In case of governmental construction contracts, we often find that there are tiers of dispute resolution. In these, kind of contracts it is usually seen that a party has to approach a departmental authority for redressal for his grievance before approaching an arbitral tribunal. These clauses are aimed at avoiding a possible arbitration proceeding and providing preliminary means to settle the dispute. In light of all this, the crux of the ratio upholding these clauses is that party autonomy as an essential feature of arbitration does not only extend to determining the nature of arbitral proceedings but also extends to formulating the nature of the arbitral clause. If we take a look at the arbitral clause in this instant case, then we can find that the arbitral clause is two tiered. The first tier provides for an arbitration in India and in case the parties disagree with the award arising out of this arbitration proceeding then they can go for an arbitration seated in London which would deliver the final award. It is imperative to note that both these arbitral proceedings are of the same nature and intensity. There is no escalation in terms of the intensity of the arbitration proceeding in the clause, there is no informal or non-adversarial methods provided for amicable settlement or resolution of disputes before arbitration proceedings are commenced, hence it is dubious as to how this clause allows for dispute prevention, moreover such an appellate procedure also allows for the arbitration proceedings to continue for a greater interval of time as opposed to a single tier arbitration clause, which again is clearly in conflict with one of the primary objectives of the A&C Act which is speedy resolution of disputes. This analysis again brings us to the question that “Can party autonomy be exercised to formulate a kind of arbitral clause which might not be in spirit of one of the basic objectives of the Act?”. These questions are again before the courts to answer. [1] Purbasha is a Staff Writer at the Arbitration Workshop. She can be reached at purbasha.nusrl.13@gmail.com. [2] (2006) 11 SCC 245 [3] (2017) 2 SCC 228 [4] Civil Appeal No. 2562 of 2006 decided by the Supreme Court of India on available at https://main.sci.gov.in/supremecourt/2004/19375/19375_2004_34_1501_22350_Judgement_02-Jun-2020.pdf [5] 72 (1998) DLT 798 [6] (2014) 7 SCC 603 [7] 2020 SCC OnLine SC 177 [8] (1999) 1 All ER (Comm) 315 : (1999) C.L.C. 647

Mr. Panda, 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 and particularly when online dispute resolution is finally establishing itself as a credible option in this COVID Era. 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 have been working in the litigation field since I started working as a lawyer in the year 2008 after graduating from the first batch of Hidayatullah National Law University, Raipur, Chhattisgarh. Prior to that, I completed my Secondary schooling from DAV Public School, Cuttack, Odisha and High Secondary from Stewart Science College, Cuttack, Odisha. I started my career in the Kolkata Office of the Firm (Khaitan & Co) and extensively practiced in the Original Side jurisdiction of the Calcutta High Court amongst other courts/ forums. This provided me good exposure to trial and final arguments on some very interesting legal issues involved in commercial civil suits, some of which were filed even before my birth. I recollect that arbitration then was considered secondary to litigation and was more popular for the high tea menu of the arbitration venue (mostly a colonial club or a five-star hotel) which lawyers and arbitrators enjoyed at client’s expenses after court hours. We have indeed come a long way since then. Arbitration emerged as an area of alternate dispute resolution over the second half of the last decade and today, you are unlikely to come across a commercial contract without arbitration being designated as the course for dispute resolution under the contract. I found that arbitration provided space for in depth and detailed argumentation with the undivided attention of the panel to the matter at hand and allowed a lot more leeway for technical argumentation. I found this appealing both from the perspective of my clients as well as from my perspective in terms of development of my advocacy skills of how to approach a matter. Specifically, in the case of international arbitration, I have found that parties are a lot more comfortable resolving dispute through arbitration and are apprehensive of taking part in proceedings before the domestic courts. With my developing interest in arbitration over the years, and work involving international clients, I also began working in the field of international arbitration in addition to commercial litigation and employment, which are my other areas of focus. Q.2. In recent years, the issue of impartiality of party appointed arbitrators has come into sharp scrutiny, how valid is the criticism in the context of due process in International Arbitration. Could you also elaborate a little upon the thought process and deliberations that take place between Counsels and Parties while selecting an arbitrator in domestic, international arbitrations? A.2. As it is rightly said, “With great power comes great responsibility.” With arbitrators acting as a substitute to courts and with reduced judicial intervention to arbitral awards, the role of arbitrators has assumed significance like never before. There is a lot at stake for the parties who repose faith and trust on the arbitrators, that they will adjudicate their matters efficiently and will dispense justice fairly, reasonably and in accordance with the rule of law. Needless to mention, the independence and impartiality are the key hallmarks of an arbitral tribunal. It is also important to keep in mind that an arbitrator’s reputation is of utmost importance for him/ her to be selected by parties to resolve high stake disputes between them. Given the significance that the notion of impartiality carries in the career of an arbitrator, it is unlikely that too many persons shall choose to act in a manner that is biased or impartial. The increasing dependency on arbitration as a means to facilitate the adjudication of commercial disputes, has bestowed upon the courts the responsibility to give sanctity to this institution, by promoting independence and impartiality in the appointment of arbitrators. Having said this, there have been instances where questions of impartiality of the arbitrators have been raised in the recent past. However, given that the parties to an arbitration have the autonomy to appoint the tribunal, they also have the autonomy to remove an arbitrator if it can conclusively be shown that there is reason for such apprehension. Another issue I have seen is the inclusion of unilateral clauses in contracts. In this regard, the legislature has notably inserted Schedule V and VII into the Arbitration and Conciliation Act, 1996 (“1996 Act”), via its 2015 Amendment, to restrain the parties having a higher bargaining position, from influencing the adjudication process. These two Schedules, read with Section 12(5) of the 1996 Act, essentially lay down the qualifications of an arbitrator, viewed from the test of independence and impartiality. In simpler terms, if an arbitrator has an interest in the outcome of dispute, then his appointment will not be permitted in law. The judiciary has additionally complimented the legislative changes by taking a pro-active approach to promote the legislative intent. I was privileged to have advised and strategized the first case on the subject after the 2015 amendment was the Voestalpine Schienen GmbH v. Delhi Metro Rail Corporation Limited (Voestalpine case) reported in (2017) 4 SCC 665, wherein the Supreme Court ordered deletion of the arbitration clause that vested, in one party, the right to constitute a panel of persons out of which the arbitrator was to be appointed. It further directed the constitution of a broad-based panel, so that no party is given the charge to chart the process. Subsequently, in the case of Perkins Eastman Architects DPC & Anr v. HSCC (India) Ltd. (Perkins) reported in 2019 SCC OnLine SC 1517, the Supreme Court laid down a much welcomed principle, originating from the Voestalpine judgment, by holding that any person, having a substantial interest in the outcome of the dispute, shall have no authority to appoint the sole arbitrator, as it will hamper the rights of the other party to the dispute. However, a three judge bench of the same court, in the case of Central Organisation for Railway Electrification v. M/S ECI-SPIC-SMO-MCML (JV) reported in 2019 SCC OnLine SC 1635, has yet again opened the debate as regards validity and enforceability of unilateral clauses and appointment of arbitrators, which was answered previously in the Perkins judgment. In my view, it is high time that such obsolete clauses be done away with if we intend to demonstrate India as an arbitration friendly country. Q.3. What new technology or method could be introduced to assist arbitration lawyers in their practice especially given that in light of COVID-19 arbitration hearings have moved online? A.3. In my opinion we already have several available platforms to enable the smooth conduction of arbitrations virtually. For instance, various documents sharing platforms are already available for electronic bundles, like, video-conferencing platforms, ranging from customized hearing solutions offered by some providers (such as Opus, Transperect and Xbundle) to licensed publically available platforms to free-to-use platforms. Some organisations like the ICC, SCC, JAMS, AAA-ICDR and the LMAA, are using or proposing the use of commercially available services like FaceTime, Skype, Vidyocloud, Microsoft Team, Zoom, while others are offering more bespoke services – examples being SIAC, in collaboration with Maxwell Chamber’s Virtual platform, JAM’s EndisputeTM mediation platform, IDRC’s collaboration with Opus 2. One of the few impediments I foresee, however, is at certain stages of proceedings such as the recording of evidence. For instance, a party might, during the examination, feign a technical glitch, terminate the call and seek clarification from his/ her lawyer to guide him as to how best to answer the question. Alternatively, a third party may be prompting the witness being questioned, through another device, or by simply being physically outside the line of sight of the camera. In such a situation, despite having the best of technology, like AI proctored system, the entire process will fail. The Supreme Court of India, taking suo motu cognizance of the above issue but not in relation to arbitration particularly, vide its order dated 06 April 2020, directed the suspension of conduction of evidence through online mode. A possible solution to the same can be envisioned through the appointment of a Local Commission, who could be present to monitor the situation. All of the above can be explored and are useful for online hearings during COVID-19. Having said this, practically speaking, there is still a lot of reluctance to adopt, adapt and embrace technology amongst arbitrators (particularly adhoc ones) even for conducting procedural and other stages of an arbitration which are comparatively easier to conduct through virtual medium and with the prevalent situation, I am hopeful that slowly but steadily use of technology will help achieve the larger objective of efficient, inexpensive and expeditious adjudication through arbitration. 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. Yes, I agree with the statement. This has been the recent trend barring a few exceptions here and there. There has been a move to make India a preferred destination for arbitration as is evidenced by the various amendments of the 1996 Act and laudable efforts of the judiciary to minimize interference and, particularly, the adoption of the principles enshrined in the Convention on Recognition and Enforcement of Foreign Arbitral Awards, 1958. The principle of reduced judicial interference imbibed in the New York Convention has been adopted both in letter and spirit by the Indian Courts now. These limited grounds of objections have also been incorporated in the Act under Section 48. Under the pre-amendment era, the Courts were sceptical about enforcement of foreign awards and usually preferred delving into merits of the case, consequently, interfering with its findings. This gathered a lot of criticism globally, specifically in terms of the judgment rendered in the case of Phulchand Exports v. OOO Patriot reported in (2011) 10 SCC 300. Later, steps were taken to slowly venture into a pro-enforcement regime with the Supreme Court’s decision (Bharat Aluminium Co. v. Kaiser Aluminium Technical Service reported in (2016) 4 SCC 126) settling the applicability of Part I to only Indian seated arbitrations. This is a celebrated decision as it cleared the air regarding the limited jurisdiction of Indian Courts with respect to foreign awards under Part II. Recently, the Supreme Court (Vijay Karia v. Prysmian Cavi E Sistemi Srl, reported in 2020 SCC OnLine SC 177) re-affirmed the pro-enforcement regime by delineating the scope of “due-process” objections that are available to a party under Section 48. It also held that courts have a discretion to enforce a foreign arbitral award even if certain grounds objecting to the same are made out. However, it is important that the judiciary proceed with its pro-enforcement outlook keeping in mind the sanctity of public policy and certain basic principles of law. International arbitral awards which are contrary to these basic tenets shall cause chaos and pave the way for judicial adventurism. Even in case of an application for setting aside an arbitral under Section 34 of the 1996 Act, the amendments to Section 34 and Section 36 of the 1996 Act in particular come as a welcome change with the intent of reduced judicial interference on very limited grounds and also doing away with the automatic stay the moment a challenge was filed, as was the case prior to the 2015 Amendment. The requirement of a mandatory application for stay of execution of the arbitral award and consideration and grant thereof subject to imposition of conditions like – pre-deposit of a percentage of the awarded sum is a good deterrent for the judgment debtors filing a challenge against arbitral awards as a matter of course. The courts have also taken a pro-active role where I have personally witnessed the reluctance of courts to interfere with arbitral awards and in some cases, do not even hesitate to dismiss frivolous and vexatious applications even in the admission hearing stage. Therefore, it can safely be stated that we have come a long way since what the position used to be particularly in the pre-2015 Amendment era. Q.5. In your experience, how prevalent are dissenting awards? Does it help to have a dissenting award in case of a challenge to the majority award? A.5. Speaking of international commercial arbitration, dissenting opinions are essentially unheard of. The sample size is so negligible that it does not warrant discussion. They are not very prevalent on the whole. They usually arise when there is a staunchly pro-State or pro-Investor arbitrator on the tribunal and either one of the State or investor has made a decent argument in an otherwise losing case. Usually, it is only in instances where it is almost impossible to find a middle ground that a decision will be unanimous. However, in fact, in most cases the decision is unanimous because a strong argument cannot be made for the losing side. Having said this, an award does not become more or less enforceable/ easy to challenge in view of it being a majority award as opposed to a unanimous award. It is a recognized principle that if there are two possible and legally tenable views on an issue, an award cannot be set aside on the basis that the majority award adopted one view, but the Court before which such an award is being challenged may have adopted the other. However in cases of apparent illegalities/ abnormalities in the majority award, it cannot be denied that a majority award does give the Court before which such an award is being challenged, an insight into the rationale of the arbitrator that forms the minority opinion, providing a more complete picture to the deciding Court. 2. As far as domestic arbitration is concerned, an “arbitral award” has always been construed as an award passed by the majority members of an arbitral tribunal (Section 31 of the Act provides for the same). Implying, a dissenting opinion, does not qualify as an award. In fact, it has been held time and again that a minority award is in the nature of an opinion and is not binding in nature and hence cannot be relied upon in proceedings under Section 34 of the 1996 Act. It is a settled position of law that it is not permissible to look into at the minority award while considering a petition to set aside a majority award. [Chowgule Brothers v. Rashtriya Chemicals & Fertilizers Limited reported in 2006 (3) Arb. LR 457 and Fertilizer Corporation of India Ltd., New Delhi v. I.D.I. Management (U.S.A.) reported in AIR 1984 Delhi 333 (DB) and National Highways Authority of India v. Som Datt Builders- NCC- NEC (JV) reported in 2014 SCC Online Del 2733] In fact, there are plethora of judgements which affirm the position that the courts while hearing a Section 34 application, can only quash the award and not correct it. Therefore, the position is clear, courts cannot replace the majority award with minority opinion, but they can very well refer to it, while deciding a Section 34 application. Be that as it may, dissenting opinions can always be relied upon by parties while making their submissions and Courts may refer to the minority opinion while considering the Section 34 application, though the same is not binding as stated above. Q.6. 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.6. An arbitral proceeding is expected to be a less formal set-up as compared to a typical litigation in a court room. Like the judges regulate the conduct of proceedings in a court, the arbitral tribunal regulate the conduct of arbitration proceedings. Usually, the arbitrators are seasoned professionals in their respective field and do interject to ensure that the proceedings are conducted in a manner by which the counsel do not go personal and are not disrespectful to one another. I have always believed that if you are well prepared for the matter, you can take on any counsel on merits irrespective of his/ her seniority. In my experience, the arbitral tribunal can see through and gauge your preparation levels and noise levels and drama do not help the cause. However, in case one is faced with such scenarios, one could resort to preliminary discussion on the code of ethics that a lawyer is expected to follow, be it courtroom or an arbitral proceeding. Moreover, one should, through their demeanour, indicate to the other counsel that cases are won on merits and not by employing profane language. As a key rule, one should always maintain their calm before the arbitral tribunal as one’s composed attitude is critical in such situations. Additionally, taking assistance of the arbitral tribunal may be advisable to regulate the conduct of the proceedings. In most cases, harsh words are only aimed at derailing or misleading a counsel and if one can ignore without losing focus, that would be the ideal course to follow. Q.7. In your experience and opinion does an academic background in arbitration hold any pivotal importance when it comes to arbitration practice? A.7. Yes, an academic background that is arbitration centric certainly gives one an edge. In my opinion, there are two essential aspects of an arbitration proceeding (similar to court proceedings)- understanding of law and the presentation. The former gets strengthened by having a strong academic background, which ensures that one is thorough with the basics of Arbitration. This background will definitely provide one a head-start in their research work, which would be of great help in urgent matters. However, I strongly believe that personal interest and temperament of learning and exploring the subject with interest is of greater significance than academic background. Practical experience in handling matters in the original side of courts, particularly the trial/ evidence stage gives much needed exposure for effectively handling arbitration proceedings. This coupled with strong first principles and domain knowledge of substantive laws like – Contract, Specific Relief, etc helps in breaking down complex legal issues involved in voluminous arbitration claims into smaller propositions which are easier to address in pleadings, evidence and arguments. Q.8. Moving ahead, the issue of costs involved in Arbitration has also come under sharp criticism, with practitioners often complaining that the costs involved in arbitration are extravagant. Do you agree and to what extent? What possible legislative and practical innovations, in your opinion, counter the issue of rising costs? A.8. The problem of costs is undeniably prevalent but has significantly reduced in the recent times. Costs are fundamentally viewed in terms of the (i) advocate’s and tribunal’s fees (ii) legal costs. The Legislature has been proactive in addressing the issue at hand and for the same, inserted Schedule IV to the 1996 Act, which provides for the calculation of the arbitrator’s fees. Uncertainty regarding the calculation of cost in the case of a sole arbitration, still prevails despite the amendment. Though in reality, most of the arbitrators in adhoc arbitration give it a go-by and propose their own schedule of fees which is often imposed upon parties in the procedural hearing itself. However, the imposition of statutory timelines, promotion of institutional arbitration over adhoc arbitration and arbitration as a preferred mode of dispute resolution has brought in a lot of discipline and has ensured reduction of costs to a lot extent. The imposition of costs in favour of the successful party by arbitral tribunals has also been an effective deterrent against parties trying to delay the arbitral process. The large number of sittings, hearings spread over long time span, shorter duration of hearings (rather than having full day hearings for evidence and final argument stage), non-availability of dates of all the members of the tribunal, etc have been addressed to a lot extent and there is a lot more discipline in the arbitrators, counsel and the parties which has resulted in expeditious disposal of matters and in turn, reduced costs. In case of institutional arbitration, though at the first instance, various heads of expenses look alarming but the professionalism and efficiency with which the proceedings are administered and conducted saves substantial costs in the longer run. The entire process, despite being expensive, pales in comparison to the costs involved in seemingly eternal litigations. However, to uphold the efficacy of the process, certain measures must be resorted to in order to reduce the costs and the way forward in this regard could be mandating a percentage of arbitration fees in institutional arbitrations. Even though the legislature and judiciary refrain from interfering in private arbitration agreements, measures should be taken to rein in the unfettered discretion of arbitrators in charging fees, and adherence of the same to the model structure proposed in the Act. This system will ensure that parties are given an opportunity to choose arbitrator that suits their pocket and will go a long way in making the process friendlier and efficient. In fact, parties may also consider going for arbitral tribunals comprising of sole arbitrator rather than three member tribunals which increases the costs significantly. This would also save on time and costs as in case of a three-member arbitral tribunal getting mutually convenient dates for the members of the tribunal becomes an issue which defeats the purpose of arbitration as an alternative remedy. On a cost benefit analysis between an arbitration (through virtual medium) and a litigation (particularly in the prevalent times with suspended functioning of most courts), in my view the pros outweigh the cons of arbitration and therefore, should be a preferred mode of dispute resolution. In terms of practical innovations, the adoption and use of technology at most stages of the arbitration and promoting hearings through virtual medium would save on substantial costs and expenses usually incurred towards travel, venue and related incidental expenses in case of physical hearings at different cities/ countries. Q.9. Based on your experiences, do you have any recommendations for parties to consider when drafting an arbitration clause to include in their contract? A.9. Essential Check-list for drafting an arbitration clause: Must convey the intention to arbitrate; Must specify “Seat” and “Place” of arbitration. It should be, explicitly made clear that, the same is non-negotiable; Must contain the manner in which proceedings are to be carried out – institutional or adhoc – in the event that the parties opt for institutional arbitration, it is important to identify the arbitral institution; Must not contain unilateral clauses for appointment of arbitrators Must specifically set out the number of arbitrators and the procedure for appointment of the tribunal (in cases of adhoc arbitration); Must provide for language to be adopted for proceedings; In case of international arbitration, it must provide the law which would govern the proceedings. 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. To be able to start a career in international arbitration, following steps must be kept in mind: a) Be a scholar of international law, as much of international arbitration involves expertise in Private International Law. Specifically, for commercial arbitration, a person should be well attuned to Private International Law and Conflict of Laws Rules; b) International arbitration requires having the ability to network, especially with people outside of your country and having a culture very different from yours. Being able to deal with that becomes important; c) If one plans to work in investment arbitration in India specifically, it is important to understand that the government is not adept at knowledge about Bilateral Investment Treaties and the law surrounding it. Hence, one will need to know how to manage expectations and spoon feed them every step of the way. I believe that the latter part of the question has already been covered earlier. Just to sum it, careful observation of the under noted will definitely help one build a rich arbitration practitioner’s profile: a) One should first try and practice in the original side of the courts and then delve into arbitration as this will provide them great insights to the process of trial and final arguments; b) The above coupled with good domain knowledge on the first principles is a pre-requisite to become an intellectual practitioner. Importantly, having great command over Procedural laws and the nitty-gritties of contractual relations, will definitely help one, step-up their profile. c) The most crucial aspect which often gets overlooked – the adoption of a meticulous approach, must always be observed. In order to be a great practitioner, one should always pay attention to each and every detail; which can be achieved by reading voraciously. I have seen that matters which involve bulky correspondences are often lost owing to adoption of a non-meticulous approach, therefore adopting an attention-based meticulous approach becomes important, as, it is a game-changer. The Editorial Team at the Arbitration Workshop would like to thank Mr. Panda for taking out time from his busy schedule and for sharing his perspectives with us!

Analysis of Ashwani Minda v. U-Shin - Advait Ghosh[1] INTRODUCTION Institutional Arbitration has gained popularity in the world of arbitration, with institutions like ICC, LCIA, SIAC and JAMS gaining a stellar reputation across the globe for their expertise in administering arbitrations. The concept of an “Emergency Arbitrator” is usually provided for in these institutions and has also gained popularity as a concept. Parties who seek immediate relief move Emergency applications before a temporarily appointed arbitrator for adjudication of urgent interim relief. This article will endeavour to understand whether a party which has sought interim relief before the emergency arbitrator, and has been unsuccessful is entitled to move the National Courts for interim relief under Section 9 of The Arbitration and Conciliation Act, 1996 for the same relief or whether such application will be barred under the “Doctrine of Election”. This article will endeavour to explain this question through a recent judicial pronouncement of the Hon’ble High Court of Delhi in the case of Ashwani Minda vs U-shin. WHAT IS AN EMERGENCY ARBITRATOR/TRIBUNAL? The concept of Emergency arbitrator was first envisaged in the SIAC arbitration rules in 2010. The basic purpose of an emergency arbitrator or tribunal is to adjudicate on urgent interim relief which the parties seek, and which cannot wait for the formal appointment of a sole arbitrator or arbitral tribunal. Emergency applications have now increasingly become a commonplace feature in all arbitral institutions and usually the reliefs which are sought through emergency arbitration are in the nature of preservation orders, freezing orders, Mareva injunctions and general injunctive relief. Indian Arbitral institutions like the Indian Council of Arbitration and Delhi International Arbitration Centre also have provisions for emergency arbitrations in their rules. WHAT IS THE MEANING OF DOCTRINE OF ELECTION? The Doctrine of Election is a branch of the rule of Estoppel, it is essentially an branch of equity jurisprudence. It means that when several remedies are available to a litigant arising out of the same transaction the aggrieved party can choose either of them, but not both. The lectures of Maitland have succinctly described this position by saying as follows:-“election is the obligation imposed by a party by the courts of equity to choose between 2 inconsistent or alternate rights when there is clear intention of persons for whom he derives one, that he should not enjoy both. Case Analysis - Ashwani Minda v. U-Shin (Omp (I) (Comm.) 90/2020)[2] A. INTRODUCTION On 12th May 2020 Justice Jyoti Singh of the Hon’ble Delhi High Court delivered a landmark judgement as to the applicability of the Doctrine of Election to arbitration proceedings. It explains in a very nuanced manner the applicability of this doctrine to arbitration proceedings and makes interesting observations about the Courts power to grant interim relief when the arbitral tribunal has adjudicated on the same interim relief. It also discusses in what circumstances can parties be said to be excluded by conduct from Part-1 of The Arbitration and Conciliation Act, 1996? B. FACTUAL BACKGROUND OF THE CASE The applicant/petitioner in the said instant case entered into a joint venture agreement with the respondent, U-shin Ltd. The respondent is a Japanese corporation with the business of designing, developing and sale of control mechanisms for automotive machines. Respondent No.2 is also a Japanese company. Respondent No.1 is a wholly owned subsidiary of Respondent No.2. As per clause 5.1 and 5.2 of the JVA applicant no.1 was to have majority shareholding in the JV, and thus applicant would have complete control over the JV through day to day management activities as well as majority voting rights at directors and shareholders meetings. As per Article 7 of the said JVA-“Benefits and obligations under the agreement shall not be directly or indirectly transferred by any of the parties hereto without prior consent in writing, providing herein that nothing shall restrict right to transfer or assign benefits and obligations hereunder to any parent company or merged or subsidiary company”. On 10.04.2019 Respondent No.1 informed applicants that business integration has been duly executed, and Respondent No.1 had become the group company of Respondent No.2, which meant that Respondent No.1 was the wholly owned subsidiary of Respondent No.2. Thereafter Respondent No.1 was de-listed from the Tokyo Stock exchange and major changes were brought in Respondent No.1 by Respondent No.2, largely extending its control. On 16.12.2019 Respondent informed applicants that Respondent No.2 was obliged to give an open offer under the provisions of the Takeover Code. The Applicant considered this as a breach of the JVA and sought interim injunctive relief to prevent Respondents from purchasing shares via open offer from the Emergency Arbitrator appointed under Japanese Commercial Arbitration Association rules. The Emergency Arbitrator heard the submissions of the parties in detail and declined to grant interim relief in favour of the applicants/petitioners. The applicants filed a petition under Section 9 of The Arbitration and Conciliation Act, 1996 seeking inter alia the same relief that was sought from the Emergency Arbitrator. C. ISSUES BEFORE THE COURT AND THE DECISION OF THE COURT- 1) Scope of right of party to approach the Court for seeking interim relief when the arbitral tribunal/arbitrator has already declined to give the same interim relief:-The Hon’ble Court said that the parties have consciously chosen to tread on a particular path and they cannot now turn back because they have been unsuccessful. The Court said that the Doctrine of Election will bar the applicant from seeking interim relief as the same issue has been raised before the Emergency Arbitrator. All the issues have been conclusively dealt by the arbitrator vide detailed order and applicants cannot be permitted to take a second bite at the cherry. 2) Whether Part 1 of the Arbitration and Conciliation Act, 1996 has been consciously excluded by the agreement of the parties? The Court considered the arbitration clause entered into between the parties which provided for disputes to be resolved by arbitration as per rules of the Japanese Commercial Arbitration Association with seat in Tokyo. It is settled Law that when seat of Arbitration is situated in a particular country, only that particular countries courts can grant interim relief, as designation of seat is akin to an exclusive jurisdiction clause. The Court contended that it was conclusively held in the BALCO case that when seat of arbitration is held to be outside India, then Part- I of the Arbitration and Conciliation Act,1996 will stand excluded, and subsequently petition under Section 9 cannot be made in India. This position was somewhat altered by 2015 amendment to the arbitration act by virtue of Section 2(2) was amended and the applicability of certain provisions of the Arbitration Act like Section 9 was extended even to foreign seated arbitration, unless the parties have consciously decided to exclude Part 1 of The Arbitration and Conciliation Act,1996 by express or implied conduct. The Hon’ble Court after analysing the facts in the present case held that parties have consciously decided to conduct arbitration as per the Japanese Commercial Arbitration Association rules, with arbitration seated in Tokyo. The Hon’ble Court opined that the Dispute Resolution Mechanism in the present case envisages conduct of arbitration in Japan as per JCAA rules. JCAA rules provide a detailed mechanism for seeking interim and emergency measures, which was known to the parties when entering into the agreement. A perusal of the arbitration clause clearly expresses the intention of the parties to exclude applicability of Part-1 of the Act. Article 77(5) of the JCAA rules deem emergency measures to be interim measures granted by the arbitral tribunal when it is constituted. Justice Jyoti Singh further noted that applicants on 13.03.2020 filed an application for emergency measures and on 19.03.2020, the Emergency Arbitrator was appointed. After hearing both the parties the Arbitrator passed a very detailed order on 02.04.2020, wherein the interim relief which was sought was declined. The Hon’ble Court remarked-“when the Petitioner has already invoked the mechanism of the emergency arbitrator and invited a detailed and well-reasoned order by the Emergency Arbitrator, it is not for them to take a second bite at the cherry. Therefore Part-I of the Act has been ousted by the action of the parties themselves, and this petition is sans merit. 3) CONCLUSION Arbitration has become the preferred mode of dispute resolution amongst the business community. International Commercial Arbitration administered by institutions like SIAC, JAMS, LCIA have gained prominence for their effectiveness in governing these arbitrations and giving timely and effective resolutions. Parties to the arbitration clause or agreement often seek appointment of Emergency Arbitrator or tribunal for seeking urgent interim relief. The question which arises is whether the parties can seek interim relief before the Court under Section 9 of The Arbitration and Conciliation Act, 1996 when such relief has already been adjudicated by the Emergency Arbitrator or will it be barred under the Doctrine of Election? This question has to some extent been answered in the above mentioned case of Ashwin Minda where the Court declined to entertain the application for relief as the Court said the emergency arbitrator has comprehensively dealt with the relief sought, and the Court concluded that the subsequent petition under Section 9 would be barred as being stymied by the Doctrine of Election, and the Petitioner cannot be allowed to “take a second bite at the cherry”. There is another aspect herein which merits consideration, that is if the arbitral institution has rules which do not deem the emergency arbitrator or the tribunal to be the permanent tribunal, and purely deems it to be an “ad-interim” mechanism, then a subsequent application under Section 9 of The Arbitration and Conciliation Act, 1996 can be maintainable. It can also be put forth that if the emergency arbitrator or tribunal has adjudicated on interim reliefs which are wholly different from the one sought before the National Court or if such reliefs cannot be adjudicated effectively by the emergency arbitrator or tribunal, then despite the parties already having agitated their rights before the emergency arbitrator, a subsequent application under Section 9 of The Arbitration and Conciliation Act, 1996 would be maintainable before the National Courts and the Doctrine of Election would not be applicable. [1] Advait is an Advocate working in the litigation team at Kesar Dass Batra. He deals in matter related to Arbitration, Civil Suits and Criminal. He has argued matters before the District Courts of Delhi and the Delhi High Court. He can be reached at advaitgh@gmail.com [2] Available at http://164.100.69.66/jupload/dhc/JIS/judgement/14-05-2020/JIS12052020OMPICOMM902020_074007.pdf

- Kartikey Sanjeev Bhalotia[1] I. Introduction Section 7 of the Arbitration and Conciliation Act, 1996 (‘Act’) lays down the base of the Act by defining an ‘arbitration agreement’. Sub-section (5) to the said provision statutorily recognises the concept of ‘incorporation by reference’, i.e., incorporation of an arbitration clause into a contract by reference to a secondary document. The sub-section reads: “(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.” A perusal of the above shows that there are two requirements that need to be fulfilled before an arbitration clause can be said to have been incorporated in a contract by reference: a) the contract under consideration should be a written contract b) the reference made, i.e., the words used for referring to the document containing the arbitration clause should be such that it has the effect of making the arbitration clause contained in the said document a part of the contract While it might not be difficult to prove the first requirement, the Supreme Court of India has taken upon itself to lay down the various facets of what reference can be considered “such as to make that arbitration clause part of the contract”. This article analyses some of the landmark judgments of the Supreme Court which has delved into the aspect of ‘incorporation by reference’ in the Indian arbitration law jurisprudence. The article would then highlight how the existing standards laid down by the Supreme Court go beyond the statutory provision and therefore, requires a reconsideration for a push towards a more arbitration-friendly regime under the Indian jurisprudence. II. M.R. Engineers & Contractors Pvt. Ltd. v. Som Datt Builders Ltd. The Supreme Court in the case of M.R. Engineers & Contractors Pvt. Ltd. v. Som Datt Builders Ltd.[2] in the year 2009, was faced with the question whether in a contract where the Appellant was a sub-contractor of the Respondent, a general reference to the principal contract between the Respondent and the Public Works Department of Kerala, would be sufficient to be such as to have the effect of incorporating the arbitration clause contained in the principal contract. The court primarily tried to differentiate between “reference to another document in a contract” and “incorporation of another document in a contract, by reference”, and observed: “In the first case, the parties intend to adopt only specific portions or part of the referred document for the purposes of the contract. In the second case, the parties intend to incorporate the referred document in entirety, into the contract. Therefore when there is a reference to a document in a contract, the court has to consider whether the reference to the document is with the intention of incorporating the contents of that document in entirety into the contract, or with the intention of adopting or borrowing specific portions of the said document for application to the contract.” The Supreme Court in coming to its decision heavily relied on Russell on Arbitration (23rd edn, Sweet & Maxwell 2007) while analysing various English courts judgements and summarised the English law on the point. The court held that a general reference to a document in a contract does not automatically lead to the incorporation of the arbitration clause contained therein, the parties while incorporating terms of a document, say another contract, need to refer to the arbitration clause ‘specifically’. The Supreme Court, like the English Courts, laid down one exception to the rule and held that a general reference may be sufficient in cases where the document referred is a ‘standard form contract’ of some recognised trade associations or regulatory institutions. However, in laying down such a law, the court completely ignored their preceding analysis of the difference between “reference to another document in a contract” and “incorporation of another document in a contract, by reference”. Therefore, in relying on the English authorities the Supreme Court missed an opportunity towards laying down a simple test under Section 7(5). To put this into perspective, let us assume that there exists a contract wherein the parties have referred to another document which contains an arbitration clause. Further, the document which has been referred to is not a ‘standard form contract’ issued by a recognised trade association or regulatory institution. In such a scenario, there might arise two possibilities, firstly, the reference made by the parties is to some specific parts of the said document; secondly, the reference is of such wide import that it has an unequivocal effect of incorporating that whole document in the contract, i.e., any person referring to such a contract would be of the opinion that the parties have intended to incorporate each and every clause of the referred document in their contract. Now, if one was to apply the test of “reference to another document in a contract” and “incorporation of another document in a contract, by reference” which formed part of the obiter of the Supreme Court’s decision in M.R. Engineers the answer to the question whether the reference made by the parties have the effect of incorporating the arbitration clause contained in the said document would be simple, i.e., under the first case where a reference was made to a specific part, the incorporation would be limited to that specific part and no other part, while in the second case, as the reference was so general that it had the effect of incorporating that another document in the contract it would be held that it amounted to incorporating the arbitration clause like any other terms under that document. However, the Supreme Court went on to lay down a general law that placed a complete bar on general references, except in case of a standard form contract. Therefore, applying the same under the above scenario the document not being a standard form contract the courts would hold such reference as not having the effect of incorporating the arbitration clause. This poses certain problems, especially because the reasoning is based primarily based on the technical aspect of an arbitration clause that though it might be a part of a contractual document, it is a contract in itself. This misnomer about an ‘arbitration clause’ may be known to corporate lawyers, however, it will not be rational to assume that the same is the case for a business person. “All terms of the contract are hereby incorporated” does not usually mean “all terms but the arbitration clause, are hereby incorporated” for contracting parties. III. M/S. Inox Winds Ltd. v. M/S. Thermocables Ltd. The Supreme Court in the case of M/S. Inox Winds Ltd. v. M/S. Thermocables Ltd.[3] was again faced with a similar question of deciding whether the arbitration clause stood incorporated in the absence of a specific reference to the same. The Supreme Court in coming to its decision made reference to an English judgment in Sea Trade Maritime Corporation v. Hellenic Mutual War Risks Association (Bermuda) Limited (The “Athena”) and introduced to the Indian arbitration law jurisprudence the concepts of ‘single contract’ and ‘two contract’ cases. The Supreme Court in making reference to the above decision laid down the meanings of these terms as follows: “If there is a reference to a secondary document in a contract between two parties and that secondary document is a contract to which at least one party is different from the parties to the contract in question, it would be a two contract case… In such a contract general reference to the earlier contract would not be sufficient to incorporate the arbitration clause. However, if the reference is to standard terms in a contract that would be a case of ‘single contract’ and the use of general words to incorporate the arbitration agreement by a reference is permissible.” The above explanation was observed to be similar to what the Supreme Court had held in M.R. Engineers. However, the Court chose not to rely on the said judgements completely. The Supreme Court took reliance on 2010 English judgement Habas Sinai Ve Tibbi Gazlar Isthisal Endustri AS v. Sometal S.A.L.[4] (‘Habas Sinai’) that expanded the ambit of ‘single contract’ cases by including within its meaning even the standard form contracts of one of the parties. This essentially meant that ‘single contract’ cases were no more restricted to standard form contracts by trade associations or regulatory institutions, but also included standard forms of one of the parties to the contract. Therefore, the Supreme Court expanded the exception of general reference as laid down by it in M.R. Engineers. A reference to the observation made in Habas Sinai is relevant for our discussion: “A commercial lawyer would probably understand that an arbitration clause is a separate contract collateral to another substantive contract and that the expression ‘arbitration clause’ is, on that account, something of a misnomer for ‘the arbitration contract which is ancillary to the primary contract’. But a businessman would have no difficulty in regarding the arbitration clause (as he would call it) as part of a contract and as capable of incorporation, by appropriate wording, as any other term of such a contract; and it is, as it seems to me to a businessman's understanding that the court should be disposed to. give effect. A businessman who had agreed with his counterparty a contract with 10 specific terms under various headings and then agreed with the same counterparty terms 1-5 under the same headings as before and, as to the rest, that all the terms of the previous contract should apply, would, I think, be surprised to find that ‘all’ should be interpreted so as to mean ‘all but the arbitration clause’.” The reference to the above observation by the Supreme Court clearly highlights a more pragmatic and arbitration-friendly approach. The same has been reiterated by the Supreme Court again in a 2019 judgement of Giriraj Garg v. Coal India Ltd & Ors.[5] However, the point still remains is that how do these observations take different forms in cases of different documents referred to, i.e., why does the difference of ‘single contract’ and ‘two contract’ even exists? Why is it that the intention of the parties is not judged on similar standards in references to all types of documents containing an arbitration clause? The reason that the courts throughout have given for these difference in standards is that when the reference is made to a standard form of contract of a trade association or regulatory authority or one of the parties to the contract the parties can be expected to be familiar with the terms of such contract including the arbitration clause contained therein. However, in case of a ‘two contract’ case where the reference is made to a contract of one of the parties or any other document, not being a standard form contract, the parties have to be given a reasonable leeway of not being aware of all the terms of such contracts. The status quo of the law in India on the incorporation of an arbitration clause by reference to some document may be simply summarised as follows: a. The courts have laid down different standards for holding an arbitration clause successfully incorporated on the basis of the document being referred to and not on the intention of the parties in using the language they used for referring to the said document. b. The courts have differentiated the cases of references in two categories, i.e., ‘single contract’ or ‘two contract’ case. c. A ‘single contract’ case is such wherein, the reference is made to a ‘standard form contract’ of some recognised trade association or a regulatory institution or one of the parties to the contract. In such a case the courts have found a general reference (i.e not specifically making reference to the arbitration clause contained in the document) would be sufficient to be such as to have the effect of incorporating the arbitration clause contained in the principal contract. d. A ‘two contract’ case is such wherein, the reference is made to a document which is not a standard form contract but any other contract may it be of one of the parties to the contract or among third parties, or any other document containing an arbitration clause. In such a case the courts have found that general reference to the terms of such a document would not be held to have incorporated the arbitration clause. It basically means that even if it is found that reference is so general that parties have intended to incorporate all the terms of the contract, but the arbitration clause. IV. Conclusion The author believes that the reasoning given by the courts in differentiating between a ‘single contract’ and ‘two contract’ cases, creates a difference when there is a need for none. This only leads to complicating the interpretation of the statutory terms of Section 7(5). The only criteria laid by the statutory provision are that the contract should be written, and the reference made should have the effect of making the arbitration clause a part of the contract. It is therefore argued that, if the words used to refer to the contract are such that they do not qualify the reference to some specific parts of the document containing the arbitration clause, and are of such wide amplitude that it a reasonable business person would consider it to cover all terms, the courts have to imply the intention on the part of the contracting parties to incorporate even the arbitration clause. It has to be noted that Section 7(5) in itself does not differentiate between the types of the document referred to by the parties, it only requires for the reference (irrespective of the type of the document) to be such that it has the effect of incorporating the arbitration clause in the contract under consideration. The standard to test the intention of the contracting parties should be on the basis of a ‘reasonable-business-person’ standard and not a ‘well-informed-commercial-lawyer’ standard. In the opinion of the author, this is the correct interpretation of the statutory provision, and can substantially add to the evolution towards an arbitration-friendly regime of the Indian jurisprudence. [1] The author is a 5th Semester student of B.B.A. LL. B (Hons.) at the National Law University Odisha (Cuttack). He can be contacted on his email address: Kartikey.bhalotia2@gmail.com [2] M.R. Engineers & Contractors Pvt. Ltd. v. Som Datt Builders Ltd. (2009) 7 SCC 696 [3] M/S. Inox Winds Ltd. v. M/S. Thermocables Ltd. (2018) 2 SCC 519 [4] Habas Sinai Ve Tibbi Gazlar Isthisal Endustri AS v. Sometal S.A.L. [2010] EWHC 29 (Comm) : [2010] 1 Lloyd's Rep 661 : [2010] 1 All ER (Comm) 1143 : [2010] Bus LR 880 [5] Giriraj Garg v. Coal India Ltd & Ors. (2019) 5 SCC 192

- Raghav Bhargava, Rhea Sampat[1] Online Dispute Resolution (“ODR”) is a mechanism that primarily focuses on resolving disputes online, through the use of technology. The advent of ODR began in the early 2000s, wherein it was primarily used to address disputes arising out of e-commerce. However, with the onset of COVID-19, ODR has become a focal question in legal regimes across the globe. One such important aspect is the use of ODR in arbitration. At the outset, it is imperative to clarify that ODR does not refer to holding virtual hearings but rather looks at moving the entire arbitral process online. This article aims to first analyze prominent ODR mechanisms across the globe. Second, address issues in India and finally recommend changes to make it more lucrative within the country. ODR around the world European Union (“EU”)– EU’s reliance on ODR was first witnessed in its E-Commerce Directive of 2000, wherein it included a clause that stated, “to amend any legislation which is liable to hamper the use of schemes for the out-of-court settlement of disputes through electronic channels”.[2] This clause was the beginning point for ODR in the EU. The growing popularity of ODR led to the enactment of the Directive for Consumer ODR, 2016.[3] The highlight of the directive is the establishment of an ‘ODR Platform’ that facilitates the independent, impartial, effective, fast and fair out-of-court resolution of disputes between consumers and traders online. Additionally, it provides a platform to file a complaint through an ODR entity that shall offer a solution and shall mediate between the two parties. The Directive has gone one step ahead in ensuring the protection of personal data and confidentiality by prescribing various thresholds to be met by all parties involved. United Nations Commission on International Trade Law (“UNCITRAL”)– UNCITRAL had recognized the possibility of including online dispute resolution in its future work programme[4] as early as 2000. Since then, the Commission over multiple sessions from 2010 through 2016, considered the working of ODR and in 2017, published the ‘UNCITRAL Technical Notes on Online Dispute Resolution’ (“Notes”).[5] Although non-binding, the Notes are comprehensive and lay down the scope, stages, roles and responsibilities during an ODR process, which act as a stepping stone for nations to build on and enact. Transparency, independence, expertise and consent are the principles identified by the UNCITRAL in conducting ODR proceedings. Based on the EU and the UNCITRAL model, various jurisdictions across the world such as Mexico[6], British Columbia[7], Philippines[8] and Netherlands[9] have sanctioned the use of ODR for quick resolution of disputes. Current Status in India The majority of dispute resolution in India occurs in courts and offline alternative mechanisms. However, the ODR process has begun to evolve with various online and institutional frameworks having been established to facilitate the process. The most notable one is the Centre for Online Dispute Resolution (“CODR”)[10] which was established as an institution that aims at providing a fast, cheap and fair way of dispute resolution. As of January 2020, CODR had managed to resolve over 30 disputes, within a mere time frame of 25-30 days! Similarly, another platform providing this service is Legal Referee[11]. The Construction Industry Arbitration Council[12] also has a provision for online settlement of construction disputes. Unfortunately, there is currently no government regulated ODR mechanism. Recently, the Vice President of India had termed ODR as a ‘laudable initiative’ which saves time and effort and must be promoted more. Additionally, the Department of Justice has released a circular[13] permitting individuals to choose from a set of ODR contact points for dispute settlement, including State Legal Service Commissions. Problems The primary problem with arbitration through ODR is the existing economic and technological divide within the country. The divide places an undue advantage over a particular strata. Further, a greater emphasis is placed on face-to-face legal proceedings. Thus, a lack of trust and faith in the online regime exists. Another key issue arising from ODR proceedings is that of jurisdiction. Proceedings take place over the internet thus, challenging the traditional notions of jurisdiction. For national arbitration, issues of court’s jurisdiction would lead to situations of forum shopping or delays in the conclusion of proceedings. The seat of the arbitration that determines the substantive law would remain unclear causing further delays in the resolution process. Moreover, arbitral proceedings are premised on the confidentiality and secrecy of proceedings. The 2019 amendment to The Arbitration and Conciliation Act, 1996 has made confidentiality statutorily mandated except when it is necessary to publish the arbitral award. In such circumstances, sharing data over the internet to other parties via third-party websites causes serious confidentiality concerns. Lack of protection of sensitive information and confidential documents shared to supplement claims of parties, often privileged communication also undermines the process. The current ODR regime in India hinges on independent entities providing a dispute resolution facility with no relation to the judicial system. There is no registration process required for these service providers. Additionally, they function in a paradigm that is devoid of any checks and balances. Ergo, there is a lack of authenticity and accountability of the existing ODR providers. The ODR medium determines who the arbitrator is, as a result, often there is lack of knowledge of the credentials of the arbitrator and competence, hence adding further apprehensions. Lastly, but most importantly is the issue with the current mechanism in itself. By virtue of being independent bodies/institutions, the existing ODR providers are self-regulated. The parties availing such services are mandated to follow their rules and regulations. With no governing body regulating them, there is a clear absence of due process and fairness in the proceedings. Often, these arbitral proceedings are not referred to by courts nor is there any supervision of courts over these arbitral proceedings. This makes the system susceptible to exploitation, corruption and biasness. No further recourse is available for parties thereafter. Recommendations i. National ODR Governing Body In order to make ODR more lucrative and efficient in India, first and foremost, it is essential to create a national body governing ODR proceedings. It is recommended this body be multi-functional. First, this body should serve as an accreditation provider to ODR platforms. This will supplement in distinguishing between bodies whose work is legitimate and recognized from those acting independently. Second, this body must enable the creation of a uniform system of procedural and substantive rules governing ODR in India. In this regard, reference may be made to the Technical Notes adopted by UNCITRAL which outline suggestions to govern ODR on an international level. Third, this body would serve is providing credibility to the arbitral award. The award rendered would attain legitimacy and make it binding. Finally, the body will also help regulate all ODR proceedings and act as a bridge between alternative settlements and the judicial process. It would enable judicial recourse pre and during arbitral proceedings and post rendering of the award. ii. Enforcement Mechanism Another concern that needs to be addressed is with respect to the enforcement and the mandatory nature of the award. By virtue of being independent of the judicial system, questions would arise with respect to whether the parties would consider this mandatory and whether the successful party is able to enforce such an award? A curious example is WIPO’s UDRP Process[14] which is one of the most famous existing ODR mechanisms. The parties not only consider it binding upon themselves, judicial enforcement across jurisdictions is also provided to the parties. This could serve as a reference point while drafting regulations. Thus, an impending need arises for a central legislation to govern this mechanism. iii. Definition of ODR Finally, the starting point for any change whether it be a central governing body or legislation would be a standard definition of what ODR would entail in India and the rules and regulations that would govern it. This would be quintessential to ensure that further litigation does not arise challenging the interpretations and contours of the ODR process. In a country like India where the pending number of cases in superior and subordinate judiciary goes over 3.5 crores, the growing popularity of ODR would only seem beneficial and go a long way in the timely resolution of disputes. CONCLUSION The purpose of arbitral proceedings is to not only de-stress courts but also to create a more litigant friendly regime leading to a quick resolution of disputes. Irrespective of a world with or without COVID-19, ODR has the potential to make arbitration more friendly, effective and efficient. However, at the same time is also essential to regulate is well to preemptively eradicate issues which may prove to be detrimental in the long run. It will be interesting to observe how the government takes this forward. Nevertheless, there is no doubt that ODR and arbitration must become focal points of legal policy in India. [1] Raghav Bhargava is a final year student at Gujarat National Law University and can be contacted at bhargavaraghav700@gmail.com. Rhea Sampat is also a final year student at Gujarat National Law University and can be contacted at rheasampat.5@gmail.com [2] Clause 51 of the DIRECTIVE 2000/31/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (Directive on electronic commerce). [3] REGULATION (EU) No 524/2013 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 21 May 2013 on online dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Regulation on consumer ODR). [4] Paragraph 390 of the Report of the United Nations Commission of International Trade Law, Thirty-third session held between 12 June and 7 July, 2000. [5] Technical Notes on Online Dispute Resolution, United Nations Commission on International Trade Law. [6] Concilianet, Government of Mexico. [7] Civil Resolution Tribunal, Government of British Columbia. [8] Alternative Dispute Resolution Services, Bureau of Legal Affairs, Republic of Philippines. [9] Online Dispute Resolution, European Consumer Centre, Netherlands. [10] Centre for Online Dispute Resolution, accessible at: https://www.codr.co.in/#/home. [11] Legal Referee Services, accessible at: http://legalreferee.com/pricing/. [12] Online Dispute Resolution is a laudable initiative and saves times and cost,Press Information Bureau, accessible at: https://pib.gov.in/PressReleasePage.aspx?PRID=1529821. [13] Online Dispute Resolution, Department of Justice, accessible at: https://doj.gov.in/page/online-dispute-resolution-through-mediation-arbitration-conciliation-etc. [14] WIPO Guide to Uniform Domain Name Dispute Resolution Policy, accessible at: https://www.wipo.int/amc/en/domains/guide/.

- Balaji Harish Iyer[1] I. Introduction In earlier posts, we discussed the benefits of online arbitration[2] and concluded that conducting arbitrations online will not affect the seat of arbitration[3]. The third and final in this series, this article will examine whether online arbitral awards or e-awards are enforceable. To quote, “One of the qualities of arbitration that makes it the most popular A.D.R. method … is the finality and enforceability of the arbitral award due to the strong enforcement network in the New York Convention.”[4] The discussion on the enforceability of arbitral awards overlaps with the discussion on the grounds of challenges to awards, since they are more or less the same. Further, an award that has been annulled after a challenge is no longer enforceable in another jurisdiction. An online arbitral award or e-award can be defined as an arbitral award that is signed digitally by the arbitral tribunal and emailed to the parties directly, or if an institution is involved for transmission to the parties by the institution. The losing party must comply with the e-award, and the winning party can seek recognition and enforcement of the e-award in the domestic courts of all those countries where the losing party has assets that can be attached.[5] This article will not entertain a debate as to the “seat” or “place of signing” of the award;[6] this will be taken to have been determined either by the parties or by the arbitral tribunal at the commencement of the arbitration since, as had been stated earlier, “seat” in arbitrations nowadays is a non-issue. [7] II. Formal Requirement in Arbitration Law Many curial laws have form requirements for an award:[8] The (Indian) Arbitration & Conciliation Act, for example, provides that an award shall be in writing and shall be signed by the members of the arbitral tribunal;[9]it further provides that the signed copy of the award shall be delivered to the parties.[10] Some domestic laws impliedly allow arbitral awards written and signed digitally; section 52 of The Arbitration Act 1996 of England, parties are free to agree on the form of an award. The implication is that an e-award is upheld, recognized and enforceable under English law, as though it is a traditional paper award. These laws can be interpreted with a degree of modernity that upholds an e-award and permits its enforcement, in favour of admitting alternative forms of writing.[11] A “written” award does not necessarily mean an award printed on paper and signed physically by the arbitrators. Most jurisdictions have laws that regulate and recognize the use of electronic or digital signatures. Since many national laws recognize the validity of arbitration agreements concluded electronically, there is no room to assume that a similar logic will not apply to e-awards. An arbitral award that is signed with a digital signature[12] by an arbitrator should be considered as valid.[13] For instance, the United Nations Convention on the Use of Electronic Communication in International Contracts provides that where the law requires a communication to be made in writing, the requirement is satisfied if the communication is made electronically and is accessible later for reference.[14] Domestic courts can apply this standard to ensure that an e-award complies with the writing requirement under domestic law. An e-award can be considered as a functional equivalent to a traditional, paper award and meet the standards required for enforcement or to be upheld at the seat. Even where there are no such laws, domestics courts should not consider the absence of a physical place of arbitration or the absence of an award “written” on paper to impede upholding an award or denying enforcement. Interpretative principles must be applied to broaden the formal requirements of an award to include e-awards that are digitally signed by the arbitral tribunal. Article IV of the New York Convention requires that a party seeking recognition and enforcement of an award produces duly authenticated originals or certified copies of the award and the arbitration agreement. A party can printout and produce the printed copy of the award, with the covering email of the arbitral tribunal or institution to satisfy this requirement. Delivery of the award to the parties triggers time limits for challenging the award by the losing party and seeking enforcement by the winning party. Delivery of the award either by the tribunal or the institution to the parties by email may be an appropriate method of communicating and delivering the award to the parties. When a party receives the award by email and proof of delivery are not issues that affect the delivery of an award in today’s day and age with mailing clients such as Apple Mail or Microsoft Outlook having features such as “delivery notifications” or “read receipts”. No jurisdiction, as such, imposes strict formal requirements for delivery of the award to parties.[15] As an evidentiary matter,[16] it is suggested that the party seeking enforcement or the party challenging the award simply produces a printout of the e-award with the covering email of the tribunal or institution, as the case may be. Thus, there is no reason to state that an award that is made and communicated to the parties electronically is not “authentic”[17]. Recently, the Andhra Pradesh High Court was moved to obtain security under section 9 of The Arbitration & Conciliation Act in a post-award action; in this case, the Petitioner (a Korean trader) had obtained an award under the I.C.C. Rules of Arbitration. The arbitration was conducted entirely through video conferencing and an e-award was issued, which was communicated to the parties by the I.C.C. through an official email. The Petitioner sought to attach a cargo of sulphuric acid that the Respondent (an Indian acid trader) had loaded at Visakhapatnam Port under section 9, to ensure security for enforcement of the e-award under section 48 of The Arbitration & Conciliation Act. The Andhra Pradesh High Court ordered the attachment of the sulphuric acid as security for the Petitioner’s award-debt.[18] III. Article V Requirements for Annulment, Recognition & Enforcement The United Nations Convention on the Recognition & Enforcement of Foreign Arbitral Awards 1958 (“New York Convention” or “N.Y.C.” or “Convention”) permits the cross-border recognition of arbitral awards. The Convention standardizes the requirements and empowers a national court to scrutinize whether an arbitral award meets them for annulment and/or enforcement in its territory;[19] most countries nowadays have adopted the requirements for enforcement set out in the New York Convention in their domestic arbitration laws.[20] In principle, as long as an award meets these requirements, it is quite possible to uphold, recognize and enforce an e-award under the Convention standards.[21] IIIA. Due Process Requirements Long has it been settled that an arbitration must follow due process through following procedural rules that ensure the impartiality and fairness of proceedings and the decision-making. A violation of due process is a ground that justifies not recognizing or enforcing an arbitral award.[22] A swift and fair process is indispensable in online arbitration, as much as it is indispensable to traditional arbitrations. The fundamentals of due process should be observed by institutions and tribunals.[23] A party must be given proper notice of arbitral proceedings; nowadays, emails are an accepted mode of giving notice; while there are issues such as being unable to prove when a party receives an email, email software such as Microsoft Outlook have made it simpler for a sender to be notified if the receiver of the email opens a particular email by creating provisions for “read receipts”. A High Court in India has held that a notice sent on WhatsApp is good service.[24] Any apprehension of “virtual inequality” in terms of both parties being able to access internet and having an equal opportunity to present their respective cases[25] is easily dispelled in this age of 4G internet. Even if it could not be dispelled in this manner, it is not far removed to say that a party is as responsible for the quality of its internet connection as it is responsible for the strength of its lawyers. Equality in the treatment of the parties can be ensured by using technology only up to the lowest common denominator.[26] Technical safeguards can easily be implemented to ensure that there are no interruptions to online arbitral proceedings that can potentially jeopardize the due process of an e-award.[27] IIIB. Public policy requirements Is rendering an e-award against public policy? Without reiterating the earlier discussion on formal requirements, it is safe to say that rendering an e-award is not against the public policy of either the seat (for annulment) or against the public policy of the enforcing territory. In either case, whether there is an implication or not, the law can be liberally interpreted to permit online arbitration awards. It should be noted that while online arbitration may be novel, “novelty” is an insufficient answer to annul or refuse to recognize and enforce e-awards.[28] There is no direct nexus between an electronic award and its violation of public policy for being electronic. IV. Conclusion The formal requirements of an arbitral award can be liberally interpreted by domestic courts and arbitrators alike, to permit e-awards, uphold their validity and enforce them against losing parties in jurisdictions across the world. There seems to be no specific prohibition or impediment. Rapidly evolving technology and internet capabilities are also answering to due process requirements of arbitrations. It is quite safe to say that e-awards cannot be challenged on formal or due process grounds. Traditional principles that exist in this regard are sufficient to answer the apparent challenge of a shift from traditional (physical) arbitration to online arbitrations. Online arbitration appears to have unique issues in the application of traditional principles of international commercial arbitration; in reality however, this is not the case. As discussed in previous articles, there are definitely benefits to online arbitration. These benefits far outweigh the apparent issues. In a technology-driven world, arbitrations too must adopt a technological platform. [1] Balaji Harish Iyer is an advocate practising before the Bombay High Court. His focus is on arbitration and alternate dispute resolution. Balaji obtained his Master’s degree in law (International Dispute Resolution) from Humboldt University of Berlin and Bachelor’s degree (with Honours) from National Law University, Delhi. Mobile: +917349360143. [2] Balaji Harish Iyer, Arbitration vs The World (Article Series) Part I: International Arbitration in the Time of Covid-19, The Arbitration Workshop(2020), https://www.thearbitrationworkshop.com/post/arbitration-vs-the-world-article-series-part-i-international-arbitration-in-the-time-of-covid-19 (last visited Apr 24, 2020). [3] Balaji Harish Iyer, Arbitration vs. The World (Article Series) Part II: Making a Mountain Out of a Molehill, The Arbitration Workshop (2020), https://www.thearbitrationworkshop.com (last visited May 25, 2020). [4] Hong-Lin Yu & Motassem Nasir, Can Online Arbitration Exist Within the Traditional Arbitration Framework?, 20 Journal of International Arbitration 455–473, 470 (2003). [5] Ihab Amro, Online Arbitration in Theory and in Practice: A Comparative Study in Common Law and Civil Law Countries, Kluwer Arbitration Blog (2019), http://arbitrationblog.kluwerarbitration.com/2019/04/11/online-arbitration-in-theory-and-in-practice-a-comparative-study-in-common-law-and-civil-law-countries/ (last visited Apr 8, 2020). [6] See the discussion in, Hong-Lin Yu and Motassem Nasir, supra note 4 at 471. [7] Balaji Harish Iyer, supra note 3. [8] United Nations Convention on the Recognition & Enforcement of Foreign Arbitral Awards, 3 & 4 (1958); Ihab Amro, supra note 5. [9] The Arbitration and Conciliation Act, 31(1) (1996). [10] Id. at 31(4). [11] Haitham A. Haloush, The Authenticity of Online Alternative Dispute Resolution Proceedings, 25 Journal of International Arbitration 355–364, 359 (2008). [12] See specifically on “digital signatures”, Id. at 362–364. [13] Lars Markert & Jan Burghardt, Navigating the Digital Maze - Pertinent Issues in E-Arbitration, 27 J. Arb. Stud. 3–31, 24–25 (2017). [14] United Nations Convention on the Use of Electronic Communication in International Contracts, 9(2) (2013). [15] Id. at 26. [16] See for e.g., Indian Evidence Act, 65B (1872). [17] See, Hong-Lin Yu and Motassem Nasir, supra note 4 at 472. [18] Sulphide Corporation v. New Way Vyapaar Pvt. Ltd., ICOMAOA No. 2 of 2020, High Court of Andhra Pradesh at Amaravati. [19] United Nations Convention on the Recognition & Enforcement of Foreign Arbitral Awards, supra note 8 at 5; See the relevant section in Sami Kallel, Online Arbitration, 25 Journal of International Arbitration 345–353, 349 (2008). [20] See for e.g., The Arbitration and Conciliation Act, supra note 9 at 48. [21] See, Ihab Amro, Enforcement of Cross-Border Online Arbitral Awards and Online Arbitration Agreements in National Courts, Young ICCA Blog (2016), http://www.youngicca-blog.com/enforcement-of-cross-border-online-arbitral-awards-and-online-arbitration-agreements-in-national-courts/ (last visited May 24, 2020). [22] See, United Nations Convention on the Recognition & Enforcement of Foreign Arbitral Awards, supra note 8 at 5(1)(b). [23] Mohamed S. Abdel Wahab, The Global Information Society and Online Dispute Resolution: A New Dawn for Dispute Resolution, 21 Journal of International Arbitration 143–168, 160 (2004). [24] SBI Cards & Payments Services Pvt. Ltd. v. Rohidas Jadhav, 2018 S.C.C. Online Bom. 1262. [25] Lars Markert and Jan Burghardt, supra note 13 at 14–15; See also, Mohamed S. Abdel Wahab, supra note 21 at 160–161. [26] Lars Markert and Jan Burghardt, supra note 13 at 15. [27] Id. at 16. [28] Mohamed S. Abdel Wahab, supra note 21 at 166.

Balaji Harish Iyer[1] INTRODUCTION In an earlier post[2] we had discussed the need to make a shift from traditional or offline arbitration to online arbitration. Over the last few weeks, several webinars have discussed the online arbitration; parties are regularly making applications to continue pending proceedings online[3]; arbitrators are setting new procedural timelines and exploring methods to organise hearings, conduct witness examinations and hear arguments: online arbitration is here to stay. An objection that was raised in one of the author’s international commercial arbitrations, proceeding under the Rules of Arbitration of the International Chambers of Commerce was that continuing proceedings online would render the “place of arbitration” otiose. This second article in this series examines whether this really is the case. The arbitration world is ever preoccupied with the meaning of “place of arbitration” and the preoccupation in the context of online arbitrations is, in this author’s opinion, making a mountain out of a molehill.[4] WHAT IS “PLACE OF ARBITRATION”? All international commercial arbitrations deal with the interaction of multiple laws because it is trite that an arbitration clause stands separate from the main contract. Thus, a contract can involve the following three laws, viz.:[5] The substantive or governing law of contract that is, the law that is used to determine the rights and liabilities of the parties to the contract and the dispute; The substantive or governing law of arbitration that is, the law that is used to determine the existence and validity of the arbitration clause itself; and, Curial or procedural law governing the conduct of the arbitral proceedings. “Place of arbitration” has been interpreted[6] to be an identifier of the curial law. It is settled law that curial law determines the seat of arbitration and consequently which court will have supervisory jurisdiction over the arbitration proceedings.[7] In essence, determining the seat is determining the legal framework that governs the entire arbitral procedure; stakeholders will know which courts to approach for interim reliefs before, during and after the proceedings, for annulling the award, terminating the mandate of the arbitral tribunal, or assistance in taking evidence. HOW IS SEAT DETERMINED? The curial law is primarily determined by party autonomy.[8] An example of an arbitration clause is reproduced below:[9] “Any dispute or controversy relating to or arising out of or in connection with this Agreement, including any question relating to its existence, validity and termination (“Dispute”), shall firstly be referred by written notice to each Party, who shall endeavor to resolve the Dispute within a period of thirty (30) days following notice of the Dispute. If the Dispute has not been resolved within 30 days, the Dispute shall be finally resolved by arbitration in accordance with the Rules of Arbitration of the International Chamber of Commerce (“I.C.C”). The place of arbitration shall be London. The Arbitration shall be conducted in the English language.” Here, the parties have themselves determined that the “place of arbitration shall be London”. This clarifies that the arbitration proceedings are governed by the English Arbitration Act. There may be occasions where the parties do not expressly determine the place of arbitration. In such a scenario, the arbitral tribunal will determine what the seat of arbitration is.[10] To this end, there is generally a strong prima facie presumption that the parties intended the place at which the arbitration proceedings to be conducted to be the seat, on the ground that that is the country most closely connected with the proceedings.[11] CAN THE PROCEEDINGS BE HELD AT ANOTHER VENUE? It must be said that the determination of the seat creates a fictional link between the arbitral proceedings and a particular jurisdiction. The arbitral tribunal and parties may agree still to conduct proceedings at a different venue from the seat[12] if it is convenient to all stakeholders. In the example taken above, it is possible for the parties and tribunal to meet at Dubai, for instance, which is midway between India, Singapore and England. Simply meeting at Dubai and conducting proceedings there will not make the proceedings subject to Emirati curial law. The (English) Arbitration Act, 1996 will continue to apply to the proceedings; the courts of England will continue to have supervisory jurisdiction; the award can still only be challenged in English courts. This is because of the fictional link created by the parties or determined by the tribunal to exist between the arbitration proceedings and England as its seat. WHAT DOES THIS MEAN FOR ONLINE ARBITRATION? In a traditional, offline arbitration the proceedings may be conducted at a different venue from the seat if it is convenient to all stakeholders. Every meeting may be held at different venues, and simply changing the venue will not change the seat. In online arbitration, the parties can meet remotely over the internet, without any requirement for travel.[13] The internet becomes the environment that hosts the arbitration proceedings. Could there then be an argument that the “place of arbitration” is really at the location of the server where the video conference is hosted?[14] The answer must be “no”[15], because the location of the server or each of the parties or the arbitrators is irrelevant. The internet server’s location here has only as much importance as Dubai in the example taken earlier. Courts have repeatedly decided that holding hearings, deliberations or rendering awards at places other than the seat will have no impact on the “place of arbitration”.[16] As long as the parties agree or the tribunal determines that the arbitration is subject to one particular curial law, dispute resolution practitioners should not allow arbitration proceedings to be jeopardised if parties choose to conduct the arbitration online. The internet environment has no value and is chosen by stakeholders for convenience. What we must remember is: “What counts is the choice of law, not the fact that the procedure may be conducted partially or totally online.”[17] [1] Balaji Harish Iyer is an advocate practising before the Bombay High Court. His focus is on arbitration and alternate dispute resolution. Balaji obtained his Master’s degree in law (International Dispute Resolution) from Humboldt University of Berlin and Bachelor’s degree (with Honours) from National Law University, Delhi. Mobile: +917349360143. [2] See Balaji Harish Iyer, Arbitration vs The World (Article Series) Part I: International Arbitration in the Time of Covid-19, The Arbitration Workshop (2020), https://www.thearbitrationworkshop.com/post/arbitration-vs-the-world-article-series-part-i-international-arbitration-in-the-time-of-covid-19 (last visited Apr 24, 2020). [3] See, Ihab Amro, Online Arbitration in Theory and in Practice: A Comparative Study in Common Law and Civil Law Countries, Kluwer Arbitration Blog (2019), http://arbitrationblog.kluwerarbitration.com/2019/04/11/online-arbitration-in-theory-and-in-practice-a-comparative-study-in-common-law-and-civil-law-countries/ (last visited Apr 8, 2020). [4] For similar views, see, Mirèze Philippe, Hypochondria About the Place of Arbitration in Online Proceedings, Kluwer Arbitration Blog (2015), http://arbitrationblog.kluwerarbitration.com/2015/09/16/hypochondria-about-the-place-of-arbitration-in-online-proceedings/ (last visited Apr 8, 2020). [5] Prashant Daga, Seat, Venue or Place Of Arbitration: Analysis Of Hardy Exploration And Production (India) Inc, Mondaq (2018), https://www.mondaq.com/india/trials-appeals-compensation/750704/seat-venue-or-place-of-arbitration-analysis-of-hardy-exploration-and-production-india-inc (last visited Apr 24, 2020). [6] See most recently in India, Union of India v. Hardy Exploration & Production (India) Inc., MANU/SC/1046/2018, for the discussion on the meaning of “place”, “venue” and “seat”. [7] See for e.g., Roger Shashoua v. Mukesh Sharma, (2017) 14 S.C.C. 722. [8] See, Gary Born, International Arbitration: Cases and Materials 599–600 (2 ed. 2015). [9] Clause reproduced from an ongoing I.C.C. arbitration between Indian and Singaporean entities. [10] Generally see, UNCITRAL Model Law on International Commercial Arbitration, 692–696 20(1); For a national law based on the Model Law, see, The Arbitration and Conciliation Act, 20 (1996); In England & Wales, see also, Arbitration Act, 53 (1996) which is not a Model Law arbitration law; See also, Osinachi Nwandem, Online Dispute Resolution: Scope and Matters Arising 15 (2014), https://papers.ssrn.com/abstract=2592926 (last visited Apr 8, 2020). [11] Union of India v. Hardy Exploration & Production (India) Inc., MANU/SC/1046/2018. [12] UNCITRAL Model Law on International Commercial Arbitration, supra note 10 at 20(2). [13] Balaji Harish Iyer, supra note 2; See, Adnan Ahmed, Challenges of Electronic Arbitration in Electronic Commerce Transactions, Multi-Knowledge Electronic Comprehensive Journal for Education and Science Publications (2017), https://www.mecsj.com/uplode/images/photo/Challenges_of_Electronic_Arbitration_in_Electronic_Commerce_transactions_2.pdf (last visited Apr 8, 2020). [14] See, Tiffany J. Lanier, Where on Earth Does Cyber-Arbitration Occur?: International Review of Arbitral Awards Rendered Online, 7 ILSA Journal of International & Comparative Law 1–14, 14 (2000); See also, Haitham A Haloush, Jurisdictional Dilemma in Online Disputes: Rethinking Traditional Approaches, 42 The International Lawyer 1129–1146, 1133–1141 (2008); See also, Salvomír Halla, Arbitration Going Online - New Challenges in 21st Century?, 5 Masaryk University of Law & Technology 215–225, 218–221 (2011). [15] Mirèze Philippe, ODR Redress System for Consumer Disputes, 1 IJODR 57–69, 62 (2014); See, Mirèze Philippe, Now Where Do We Stand with Online Dispute Resolution, 6 Int’l Bus LJ 563–576, 571–572 (2010); See also, Vikrant Sopan Yadav, Cyber Arbitration through Lenses of Indian Legal System: An Analysis, 2 International Journal of Law 31–33, 32 (2016). [16] Mirèze Philippe, supra note 15 at 574; See also, Richard Hill, On-line Arbitration: Issues and Solutions, Arbitration International (1999), http://www.umass.edu/dispute/hill.htm (last visited Apr 8, 2020). [17] Mirèze Philippe, supra note 15 at 575.

Gaurav Rai[1] I recently conducted an online lecture on ‘Drafting an Arbitration Agreement’ at Jindal Global Law School on the invitation of my dear friend and Co-editor of The Arbitration Workshop, Gautam Mohanty. Pursuant to the same, I have decided to pen down a more detailed version of my lecture to help lawyers, contract drafters, and law students to get an insight into the dos and don’ts of drafting an arbitration clause. My suggestions are based on my experience of matters I have dealt with as a Legal Assistant to Arbitral Tribunals and on the interpretation given by the Supreme Court in the recent past to arbitration clauses. I believe the reason the Supreme Court had to interfere and interpret these arbitration clauses was because they were poorly drafted. My endeavour through this article would be to point out the common mistakes and to make suggestions to avoid the same. Also, I will put up multiple model drafts towards the end of the article, which incorporates all the elements, and then the reader can pick and choose the language to do a drafting exercise of its own. Bargaining Power of the Party Before we move into the necessary and optional ingredients of an arbitration clause, the most crucial factor to be kept in mind while drafting such clauses is to understand the bargaining power of your client while drafting a arbitral clause. A private party in a government contract will have little scope to make changes to a standard contract, based on the tender documents. Alternatively, a Government Entity in a government contract will have more power to make changes, however, what has to be seen is whether the government entity or PSU has the liberty to make changes to these standard forms or whether the same have been handed down from the ministry or another higher entity. In case the Government Entity of PSU has the authority to draft the standard form contract, the draftsman should be careful while drafting clauses and see to it that they are not one sided and give all powers to the Government entity regarding the appointment of the arbitral Tribunal. As has been the experience, the Courts has stripped down such arbitral clauses to the bare minimum to allow arbitration by removing the one sided power to appoint an arbitrator and hence not conforming to the arbitration clause between the parties.[2] There might be some situations where the private party may have scope to dictate terms in a contract wherein the government entity does not have many similar works for there to be a standard form. It further helps the private sector client if they are the market leader in a particular segment in which the government is wishing to foray, giving the private party some edge over the drafting of the contract. Ingredients of a Dispute Resolution Clause. a. “Dispute” Under Section 16 of the Arbitration and Conciliation Act, 1996, the Arbitral Tribunal has the power to deal with only those matters which are referred to it and which are within the scope of the arbitration clause/ agreement. One such circumcision is the meaning of the word dispute, which can be defined by the parties in the arbitration clause itself. For e.g., the contract may state that only when the parties discuss the issue with persons at a defined level and the parties are not able to resolve such issues amicably within 60 days, the same will become a dispute which can be resolved by arbitration. The parties may also make it clear as to what kind of disputes are not to be referred to arbitration. Such circumcision is called excepted matters. For eg. if the contract consists of transfer and sharing of intellectual property, the parties may carve out an exception and state that issues of IPR will not be referred to arbitration, and the appropriate courts will have jurisdiction to decide the issue of technology transfer. Even in insurance contracts only issues of quantification of insurance pay-out are referred to arbitration. The parties may also provide for a multi-tier dispute resolution system, hence not allowing any dispute to be referred to arbitration unless the pre-arbitral dispute resolution process fails. I will discuss more about the multi-tier dispute resolution clauses later. Hence, while drafting an arbitration clause, it will be necessary to see the client’s requirements regarding the escalation of the dispute to arbitration. Quite often, business and commercial interest would not want to escalate everything to arbitration and instead try and solve the issues and differences amongst themselves. In contradistinction to such definition of dispute and layers of escalation, parties may have an extensive and unfettered arbitration clause wherein it states that any dispute, difference, disagreement of any sort will be resolved by way of an arbitration. Such clauses might be necessary for the client who has clear black and white contracts, which has no scope of interpretation, and the client wants a favourable and quick ruling by way of an arbitration instead of delaying the process by using multiple steps. b. Multi-tier dispute resolution Multi-Tier Dispute resolution clauses are the trickiest part of the dispute resolution clause and must be drafted carefully, especially if dealing with domestic arbitration matters. Classically multi-tier dispute resolution clauses have been enforced by the Courts in the UK[3] and Singapore.[4] The Courts have followed the letter of the contract and disallowed the invocation of arbitration by the parties if they do not follow the pre-escalation procedure before invoking arbitration. In India, however, the courts are divided over the necessity of following pre-escalation steps. Some consider it mandatory[5] while others consider it only as an option.[6] Construction Contracts based on the FIDIC model provide for the dispute to be first referred to the Dispute Resolution Board (DRB) before being referred to arbitration. In PATI-BEL v. NHAI[7], the Delhi High Court upheld the rejection of the counterclaims of NHAI by the Arbitral Tribunal. NHAI had not raised the disputes with the DRB and had directly raised the counterclaims with the arbitral Tribunal. Hence the Arbitral Tribunal rejected the counterclaims as the same were beyond its jurisdiction. Hence, my suggestion would be to carefully draft the multi-tier dispute resolution clause using words that clearly indicate whether the pre-arbitral step is to be mandatorily performed or is it just an option for the parties before invoking arbitration. The use of words like “shall” and “may” can make it clear. Further, the clause can indicate that only on the failure of the previous step will the parties be able to move to the next step. There is no substitute to having clear, unambiguous language when drafting a contract clause. c. Procedure for appointment arbitrators and the dilemma of disqualification of arbitrators. The procedure for appointment of arbitrators has seen the maximum amount of legislation being devoted to it in the amendment of 2015 and 2019. There is an intense tussle amongst drafters of contracts and the legislature regarding the persons who can be appointed as arbitrators and the regulation regarding the same. The Supreme Court has also had a fair amount of input into the meaning of the disqualification requirements of the nominees to the arbitral Tribunal. Let us pull back a little and try to deconstruct the legislation, the judgments, and the ideal process to appoint arbitrators and, more importantly, who to appointed as arbitrators. Appointment of arbitrators is governed by Section 11 of the Arbitration and Conciliation Act, 1996 as far as India seated arbitrations are concerned. Section 11 gives the parties the freedom to decide the procedure for the appointment of arbitrators. While drafting this portion of the clause, the client’s needs are to be kept in mind. In case a sole arbitrator has to be appointed, the appointment of a serving employee as of an arbitrator is invalid,[8] so is the unilateral nomination of a sole arbitrator.[9] In case the client wants only a Sole arbitrator, the only possible way is to jointly agree on a sole arbitrator, which is very difficult in practice to achieve. The authority to appoint a sole arbitrator can be given to an independent arbitral institution or the High Court (domestic) or the Supreme Court (India seated international commercial arbitration) as the case may be. In case a three-member Arbitral Tribunal is to be appointed, the procedure mentioned in the Act under Section 11 is the simplest and safest. The Clause simply states that the members of the arbitral Tribunal will be appointed in the manner mentioned under Section 11. The procedure under Section 11(3) can be reproduced, and time lines be specified for the appointment by the parties. By putting timelines in the procedure, the other side can be forced to act quickly. Since, the parties are given to choose the procedure for appointment under the Act, the other side will lose the chance to nominate someone to the arbitral Tribunal if the times period lapses.[10] In which case, the concerned High Court or the Supreme Court will appoint the arbitrator for the defaulting party or a designated arbitral institution can be given the power to appoint an arbitrator for the defaulting party. Such a right will have to be given to the arbitral institution within the arbitration clause itself. Further, the Clause can also mention how to appoint the Third/Presiding Arbitrator by again giving such powers to the arbitral institution such as Delhi International Arbitration Centre or the Mumbai Centre for International Arbitration. If your client is apprehensive about even one member being appointed from the opposite side which might sway the arbitral Tribunal, you may give the right of appointing the entire arbitral Tribunal to an institution. Drafting such a clause also applies to foreign seated arbitrations, and institutions such as the Singapore International Arbitration Centre, International Chamber of Commerce and Hong Kong International Arbitration Centre can help. Government contracts will invariably have either a panel of arbitrators from which the choice of arbitrators is to be made by both the parties, or at the minimum, the Government will appoint a former employee or an engineer or former high ranking member from a sister concern as its nominee to the arbitral Tribunal. Honestly, I have witnessed some excellent technical persons as arbitrators who may not be well versed with the law but know the contracts inside out and are thorough professionals. They assist the other non-technical members of the Arbitral Tribunal and the Advocates for the parties in understanding the technical aspects of the case. The appointment of such former employees has been challenged several times in the Courts of this country. However, the understanding developed now is that there is no bar in appointing an expert professional who was a former employee of the organization appointing them. However, forming a panel of such former employees and asking the other party to also chose an arbitrator from such a panel has been looked down upon and must be avoided if your client is a government entity.[11] d. Laws & Rules (i.) Governing the Contract In my limited understanding, two private domestic parties cannot choose their contract to be governed by foreign law. The substantive law governing a contract between two Indian domestic parties will always be the Indian Contract Act, 1872. If we are concerned with a contract of sale and purchase of goods, accordingly the Sale of Goods Act, 1932 will apply. So it is advisable to mention that the contract between the parties will be governed by the laws of India out of abundant caution. It is pertinent to mention here that I am referring to the substantive contract between the parties and not the law governing the arbitration agreement. The Arbitration agreement/ clause is separable from the main contract and is capable of being governed by a law other than the substantive law of the contract. If we are concerned with atleast one foreign party, it becomes all the more important to mention the law governing the contract between the party by a reference to the country of one party or the other. (ii.) Governing the Arbitration – Law of the Seat of the Arbitration The other law that has the most significant effect on the entirety of the arbitration proceedings is the law of the seat of the arbitration. The arbitration proceedings are such that two parties of different countries can choose a neutral location to conduct their arbitration. Such a location is called the seat of arbitration. The laws of the Seat of the arbitration govern the arbitration proceedings. To put it simply, the Arbitration Act applicable in the seat will govern the arbitration proceedings and the designated courts of the Seat of Arbitration will have supervisory jurisdiction over the arbitration. This becomes extremely relevant as these courts will decide any challenge to the arbitral award made by the arbitral Tribunal. It is imperative to draft this section of the clause perfectly, as it has caused the most litigation. It is advisable that if there is foreign seat of arbitration such as Singapore, London, Paris, Hong Kong etc., then an appropriate institution is appointed to conduct the arbitration such as the Singapore International Arbitration Centre, London Centre for International Arbitration, ICC Paris, Hong Kong International Arbitration Centre respectively. Now, this suggestion comes with a caveat. Although, the arbitration is conducted in a more structured manner when administered by an institution, the fee structure, however, of such institutions is directly connected to the claims made by the parties. Hence the parties must be careful about making exorbitant over the top claims and counterclaims. Also, the entire fee for the arbitration is payable at the beginning and can be escalated if the claims and counter claims increase. The problem of the seat of arbitration may seem to affect only foreign seated arbitrations but more recently and based on my experience, I can state that even in domestic arbitration choosing the seat of arbitration specifically is very important. The reason being there has been a stark contrast in the manner the designated high courts and commercial courts handle matters related to their supervisory jurisdiction in arbitration matters. The High Court of Delhi, in my experience, has been very efficient and consistent in handling arbitration applications whether it is regarding appointment or arbitrators or granting an extension of time for making the award or dealing with Section 9 applications for interim relief. On the other hand if the parties chose Hyderabad as the seat of arbitration, the High Court does not even have the jurisdiction to deal with the arbitration matters and the same goes to the District Court where the applications of the parties may not move quite as efficiently. Furthermore, the parties have the liberty to choose arbitration institutions as the Delhi International Arbitration Centre and the Mumbai Centre for International Arbitration to have a more structured arbitration by choosing Delhi or Mumbai as the seat of arbitration respectively. The Supreme Court has made it clear in Indus Mobile v. Datawind[12] that once the seat is designated in a domestic arbitration, the courts of the seat get exclusive jurisdiction to deal with the issues of arbitration arising between the parties. It is also advisable to state out of abundant caution that after the parties state what the seat of the arbitration will be, they may additionally state that the arbitral Tribunal in consultation with the parties may conduct the proceedings in any venue, they deem fit and convenient. Such a choice will not affect the seat chosen by the parties (emphasis supplied). e. Model clauses Based on the discussion above on the several possible ingredients of arbitration clauses, the readers can now go through the examples given below which attempt to cover the different options amongst the ingredients to form an arbitration clause. I shall do this instead of drafting full fledge arbitration clauses because it will be difficult to draft multiple permutations of various ingredients and the options amongst them. 1. Straight to Arbitration - All-inclusive/ excepted matters & dispute defined. Any dispute or disagreement regarding the interpretation, fulfilment or obligations of the parties under this agreement shall be resolved by arbitration. OR All disputes or disagreements which relate to __________________________ under the agreement shall be resolved by arbitration. Any dispute or disagreement regarding the _____________________________ shall not be open to be resolved by arbitration and the parties shall be open to seek remedies from the courts of ________________ (Exclusive jurisdiction clause assigning jurisdiction to one of the courts which would normally have the jurisdiction in the first place to the parties to the agreement.) 2. Multiple steps/ Escalation 2 step Any dispute or disagreement regarding the interpretation, fulfilment or obligations of the parties under this agreement shall be notified to the opposite party within 60 days of the disagreement. The parties shall mandatorily attempt to resolve the disputes amongst themselves in good faith within 60 days of notifying the dispute to the opposite party. If such dispute is not resolved or the time period for the resolution of the dispute by amicable negotiations expires, the aggrieved party may resolve the dispute by way of arbitration. OR 3 step Any dispute or disagreement regarding the interpretation, fulfilment or obligations of the parties under this agreement shall be notified to the opposite party within 60 days of the disagreement. The parties shall mandatorily attempt to resolve the disputes amongst themselves in good faith within 60 days of notifying the dispute to the opposite party. If such dispute is not resolved or the time period for the resolution of the dispute by amicable negotiations expires, the aggrieved party shall resolve the dispute by way of Conciliation as per the Arbitration and Conciliation Act, 1996.[13] On the failure of the conciliation process or the expiry of 180 days from the beginning of the conciliation process whichever is earlier, the parties have a right to resolve their disputes by way of arbitration. 3. Appointment of arbitrators and procedural rules of arbitration Ad hoc / Institutional Arbitration. Each party to this agreement shall appoint one arbitrator and the two arbitrators shall appoint the Presiding/ Third Arbitrator. (if there are only two parties to the agreement). 4. At the minimum – Substantive law and Seat. This contract will be governed by the laws of India/USA. The Place of Arbitration shall be New Delhi. The parties are free to choose any venue for the meetings to be held in consultation with the members of the arbitral Tribunal. OR This contract will be governed by the laws of India/USA. The Place of Arbitration shall be Singapore/ Paris/ Hong Kong and shall be administered by the Singapore International Arbitration Centre/ ICC Paris/ Hong Kong International Arbitration Centre as per their rules. The parties are free to choose any venue for the meetings to be held in consultation with the members of the arbitral Tribunal. [1] Gaurav is an Advocate working in the area of Arbitration Law and Contracts primarily as a Legal Assistant to Justice A.K. Patnaik (Former Judge, Supreme Court of India). He can be contacted at raigaurav.legal@gmail.com. [2] TRF Ltd. v. Energo Engineering Projects Ltd., 2017 (8) SCC 377; Afcons Infrastructure Ltd. vs Rail Vikas Nigam Limited on 29 May, 2017, ARB.P. 21/2017, Judgment dated 29.05.2017 of the Delhi High Court. [3] Cable & Wireless PLC v. IBM United Kingdom Limited, 2002 EWHC 2059.. [4] International Research Corp PLC v. Lufthansa Systems Asia Pacific Pte Ltd and another, [2013] SGCA 55(Singapore). [5] M/s. Haldiram Manufacturing Company Pvt. Ltd. v. M/s. DLF Commercial Complexes Limited, 193 (2012) DLT 410 (India); Tulip Hotels Pvt. Ltd. V. Trade Wings Ltd, Arbitration Application No.4 of 2007 – Bombay High Court at Goa decided On 19.03.2008, (India). [6] Ravindra Kumar Verma v. M/s B.P.T.P. Limited & Another, 2015 147 DRJ 175; Union of India v. Baga Brothers, FAO No. 387/2006, decided on 07.07.2017 (India). [7] NHAI v. PATI-BEL (JV), O.M.P. (COMM) 314/2017, Del HC,(India)., . [8] TRF Ltd. v. Energo Engineering Projects Ltd., 2017 (8) SCC 377. [9] Perkins Eastman Architects DPC and Another v. HSCC (India) Ltd., AIR 2020 SC 59 [10] Siemens Limited vs Jindal India Thermal Power decided on 30 January, 2018 by the Delhi High Court in ARB.P. 243/2017 [11] M/s Voestalpine Schienen GMBH v. Delhi Metro Rail Corporation Ltd., (2017) 4 SCC 665; AFCONS Infrastructure v Rail Vikas Nigam Limited ARB.P. 21/2017 decided by the Delhi High Court on 29.05.2017. [12] Indus Mobile Distribution Private Limited v. Datawind Innovations Private Limited and Ors. (2017) 7 SCC 678 [13] Parties can define the contours of the conciliation as allowed by the Act.

- Purbasha Panda[1] A. INTRODUCTION On 29 April, 2020, a Division Bench of the Apex Court consisting of Justice Uday Umesh Lalit and Justice Vineet Saran delivered a landmark judgment on waiver of right to object in arbitration proceedings. This case has also opened a myriad of questions regarding validity of consolidation of arbitral claims and ‘composite reference’ in case of multiple arbitration agreements arising out of a single transaction. Further, it raised some pertinent questions on scope and exclusivity of supervisory jurisdiction of courts at the seat of arbitration. B. FACTUAL BACKGROUND OF THE CASE The instant case dealt with disputes arising out of four ‘equipment rental agreements’ entered between the claimant company which was engaged in the business of manufacturing infrastructural equipments and the respondent company which hired those equipments for a construction project. These four agreements were entered by the parties in series. The arbitration clause of the first agreement which was entered between the parties on 1.8.2010 conferred exclusive jurisdiction to the courts of New Delhi to decide any dispute arising out of the agreement. It further mentioned New Delhi to be the place of arbitration. Following this, two more agreements of the same nature were entered between the parties for supply of more equipments. The final agreement in this series was entered between the parties on 14.4.11 which conferred exclusive jurisdiction to the courts of Kolkata to deal with any dispute arising out of the agreement. A default with respect to payment was made by the respondent and subsequent to this, the claimant invoked the arbitration clause. Arbitration clauses of all these agreements provided that the appointment of the arbitrator would be made in accordance with the ‘Construction Industry Arbitration Association Rules [‘CIAA Rules’]. In accordance with these rules, a sole arbitrator was appointed, and the arbitral tribunal entered upon reference in New Delhi. In its reply to the notice of arbitration the respondent denied existence of any agreement between the parties and filed a title suit at the Court of Civil Judge (Junior Division), Sealdah praying for a permanent injunction restraining the claimant from relying on the arbitration clause. At the interim stage, the trial court passed the restraint order putting a stay on the arbitration proceedings. Meanwhile, the claimants appealed against the order and also filed an application under Section 5 read with Section 8 of the Arbitration and Conciliation Act, 1996 [‘the Act’] at the trial court. The trial court observed that the dispute clearly fell under the scope of the arbitration clause and referred the parties to arbitration. A common ex-parte arbitral award covering claims of all four agreements was passed in favour of the claimants. This award was challenged by the respondent before the Calcutta High Court, which got dismissed on ground of lack of jurisdiction. After which, the respondents approached the court of District Judge at Alipore, to challenge the arbitral award. Here, the respondents pleaded non-existence of the arbitration agreement and also for the first time pleaded that the arbitrator appointed at New Delhi did not have the requisite authority to conduct the arbitration. They argued that the agreement dated 14.4.11 provided the arbitration proceedings to be conducted in Kolkata, thus the arbitration proceedings were conducted beyond the scope of authority of the arbitrator. This petition was dismissed by the Alipore court on the ground of lack of jurisdiction. The Alipore court marked that the jurisdiction to entertain a Section 34 petition under the Act is conferred on the courts of the place where the arbitration is usually conducted, these courts are also known as ‘courts exercising supervisory jurisdiction’ over the arbitration proceedings. In this case, it was observed by the court that the arbitration agreements clearly provided the place of conduction of the arbitration proceedings to be New Delhi, therefore only courts of New Delhi can exercise supervisory jurisdiction over the proceedings. A revision petition was filed against this order before the Calcutta High Court which was also dismissed on the ground of existence of alternative remedy u/s 37. After which, an appropriate petition was filed by the respondents before the Calcutta High Court by which the order passed by the Alipore court upholding the award was dismissed and the case was restored back to the court of Additional District Judge Alipore. This order was brought to challenge before the Supreme Court. C. ISSUES BEFORE THE COURT (i.) Scope of right of a party to object to arbitral proceedings It was argued by the claimants before the Apex Court that it was only at the stage of preferring the Section 34 petition before the Alipore Court that the respondents raised the issue of jurisdiction of the arbitrator appointed at New Delhi, thus in accordance with Section 4 of the Act, the respondents have waived their right to raise an objection on this ground. Moreover, Section 16 of the Act provides that any objection regarding jurisdiction of tribunal must be raised before the tribunal at the first instance. Therefore, the prime question before the Apex Court was ‘whether the respondents have waived their right to raise an objection in the instant case?’ To answer this question, in the instant case the Apex Court undertook a combined reading of Section 4 as well as Section 16 of the Act. Section 4 of the Act provides that right of objection to an arbitration proceeding can be exercised by a party when there has been non-compliance of (a) any derogable provision of Part I of the Act (b) any requirement under the arbitration agreement. However, when such objection is not raised without undue delay or within the time limit provided under the agreement, it would be considered that the parties have waived off their right to object. To decide on amplitude and applicability of Section 4 read with Section 16 of the Act to the present set of facts, the court referred to two its decision namely, Narayan Prasad Lohia vs. Nikunj Kumar Lohia and others[2] (‘Lohia Case’) and Konkan Rly. Corpn. Ltd. v. Rani Construction (P) Ltd[3] (‘Konkan Railway Case’). The ‘Lohia Case’ essentially dealt with a challenge to an arbitral award which was passed by a tribunal consisting of even number of arbitrators. Section 10 of the Act clearly creates a mandate that no arbitral tribunal can be formed with even number of arbitrators. Thus, one of the grounds in this case for challenging the arbitral award was that the award was passed by a tribunal formed outside the confines of the Act. To decide, if waiver under Section 4 of the Act has occurred or not, the court ventured to find out if Section 10 is a derogable provision. It is also important to mention here as discussed in the case of Krishan Lal v. State of J&K[4], that Section 4 only covers non-compliance of derogable provisions, because if it would cover non-compliance of mandatory provisions then that would not have been allowed considering that mandatory requirement of a statute cannot be waived by consent or acquiescence. In the ‘Lohia Case’ the Apex Court has marked that Section 10 is a derogable provision, therefore a waiver can arise with respect to it. Section 16(2) of the Act provides that a plea that the arbitral tribunal does not have jurisdiction must be raised not later than the submission of statement of defence. In ‘Lohia Case’, it was marked by the Apex Court that, a conjoint reading of Section 10 and Section 16 shows that an objection to the composition of arbitral tribunal is derogable and must be raised within the time prescribed under Section 16(2) and if a party chooses not to do so, then it would be considered as a ‘deemed waiver’. In the instant case, relying on the ‘Lohia Case’ the court marked that, the respondent raised its object to conduction of arbitral proceedings in New Delhi only at stage of the Section 34 petition. It did not raise any such objection on the jurisdiction of the arbitral tribunal or the venue of the arbitral proceedings during the arbitration, rather the sole arbitrator in its award had marked that even when details of each sitting was being sent to the respondent, the respondent deliberately choose not to participate in the award and kept on taking adjournments. The Apex court considered this to be a deemed waiver of right to object on behalf of the respondents. (ii.) Separability of the arbitration agreements in case of a composite reference In this case, a common award was passed by the sole arbitrator covering claims arising out of four arbitration agreements entered between the parties. The seat of arbitration as provided under the arbitration clause in the agreement dated 4.4.11 was Kolkata, whereas the other three arbitration agreements conferred exclusive jurisdiction on New Delhi courts. It was argued by respondents in this case that every arbitration agreement had to be considered independently and if an agreement specified the place of arbitration to be Kolkata, the party autonomy in that behalf ought to be respected. The respondents relied on Duro Felgeura S.A v. Gangavaram Port. Limited[5] (‘Duro Case’) on separability of arbitration agreements and the disputes arising out of them. In ‘Duro Case’ the court had rejected the approach of making a composite reference to arbitration covering all claims arising out of the arbitration agreements even if they are part of a single transaction. It was discussed in the ‘Duro Case’ that to be able to bind multiple arbitration agreements in a common thread, for their composite reference, it is essential that the agreements refer to each other and constitute a valid arbitral clause by reference. Section 7(5) of the Act provides that ‘mere reference of a document cannot lead to an inference that arbitration clause in the document becomes part of the agreement by reference’. Interpreting this very provision, the court in ‘Duro Case’ held that for incorporating an arbitral clause by reference that is reading arbitral clause of one document as part of another document, there has to be ‘conscious acceptance’ of arbitral clause of that another document. The courts could not find such ‘conscious acceptance of arbitral clause of one agreement in other agreements’ and therefore in ‘Duro Case’ the court ruled in favour of separability of arbitration agreements. However, in the instant case, the Apex Court refused to rely on the ratio of ‘Duro Case’, on the ground that the factual circumstances of both the cases are starkly different. The ‘Duro Case’ essentially dealt with a series of six arbitral agreements out of which four dealt with ‘Domestic Arbitration’ and two specifically dealt with ‘International Commercial Arbitration’. In ‘ Duro Case’ another reason the court did not allow for composite reference was because the nature of all the six agreements in the series were not the same and allowing for composite reference would have given rise to chaotic legal circumstances, however the Apex Court in the instant case marked that all the four agreements in the series were more or less of the same nature, apart from one agreement which provides for a different venue, therefore the court refused to rely on ‘Duro Case’ and allowed for composite reference of arbitration for claims arising out of all six agreements. While making this observation the Apex Court in the instant case also marked that in case of ‘International Commercial Arbitration’ place of arbitration has a special significance as the place of arbitration may determine which curial law will apply. However, the court marked that in case of domestic arbitration, substantive law and curial law would be the same. In the instant case, the Apex Court did not further elaborate on this statement, however the author would like to highlight on the implication of the observations of the Apex Court. (iii.) Scope of the ‘Seat theory of Arbitration’ In the instant case, the Apex Court has also made some observation regarding the scope of exclusivity of Delhi Courts to entertain cases arising out of arbitration proceedings seated at Delhi. To decide on this issue, the Apex Court referred to the case of Indus Mobile Distribution Pvt Ltd v Datawind Innovations Pvt. Ltd.[6], herein the Apex Court had held that the moment a seat is designated it is akin to having an exclusive jurisdiction clause. In the instant matter, the ‘Indus Case’ was also referred by the claimants to establish the sanctity of the ‘seat theory’ of arbitration to justify the valid jurisdiction of Delhi courts to entertain a case arising out of the arbitration proceedings. In the instant case, the Apex Court held that the very fact that arbitration proceedings were conducted in Delhi, therefore by virtue of the seat theory the courts in Delhi have jurisdiction to entertain cases arising out of this arbitration. The Apex Court has time and again ruled on scope of ‘seat theory of arbitration’ in numerous cases. For example, in the recent case of BGS SGS Soma JV v. NHPC,[7] the Apex Court has ruled in favour of the ‘seat theory’ of arbitration. In the scheme of the act, Section 2(1)(e) provides for the definition of ‘court’. It provides that those courts which would have jurisdiction over subject matter of arbitration as if the same have been subject matter of a ‘suit’ would fall under the definition of court. This definition points towards the principles of place of suing provided under Section 15 to 20 of the Code of Civil Procedure, further pointing towards existence of jurisdiction of courts where a cause of action might have occurred. On the other hand, Section 20(2) of the Act allows parties to select a seat of the arbitration. The courts at seat of arbitration essentially exercises supervisory jurisdiction over disputes arising out of the arbitration, this is called the ‘seat theory’, the underlying logic behind this is to honour the principle of party autonomy, that is if parties have chosen a particular place as the situs of arbitration, they obviously intended for the disputes arising out of the arbitration to be referred to courts at that seat. Thus, a combined reading of these two provision points out towards a seeming existence of concurrent jurisdictions for disputes arising out of an arbitration. However, the dubiety around this was cleared in the ‘Soma Case’. The pre-existing interpretation of Para 96 of BALCO[8] pointed towards existence of this concurrent jurisdiction, however in the ‘Soma Case’ the court clarified that such interpretation of para 96 is highly misplaced. The Court further marked that Para 96 of BALCO[9] has to be read in light of the entire judgement and not in isolation. D. ANALYSIS AND CONCLUSION To summarize, the court essentially dealt with three issues in the instant case (a) Waiver of right to object in an arbitration proceedings (b)Separability of arbitration agreements (c) Scope of seat theory in arbitration proceedings. With respect to ‘waiver of right to object’ in arbitration proceedings, the Apex Court in light of Section 4 read with Section 16 of the Act held that any objection with respect to jurisdiction of arbitrator or seat of arbitration has to be raised before the arbitral tribunal in accordance with Section 16 of the Act, after which it would be considered that parties have waived off their right to object to arbitral proceedings. In the instant case, the Apex Court held that the Hon’ble Calcutta High Court had erred in setting aside the award. The court also further marked any objection with respect to place of arbitration or scope of authority of arbitrator cannot be raised by the respondents in any further proceedings in any forum With respect to separability of arbitral agreements, the Apex Court marked that in the instant case, the four arbitral agreements forming a series had common characteristics, like all of them dealt with ‘Domestic arbitration’, the manner of appointment of arbitrator in all the four agreements were similar, therefore the Apex Court found a thread of commonality between all the four arbitral agreements and did not see any harm in allowing for composite reference. It is important to note here that the entire ‘separability of arbitral agreements’ issue, was discussed by the Apex court in the light of the ‘Duro Case’, on this issue the court did not make any observation on composite reference v/s separability of arbitral agreements as an independent question of law. .It would have been much better for sake of clarity on this question of law, if the Hon’ble Lordships would have shed some light on it as an independent question of law, going little beyond the precedents presented before the court. While deciding on this issue, the court has also made an observation that in case of ‘Domestic Arbitrations’ the curial law, lex Arbitri as well as the substantive law are one and the same in contrast to ‘International Commercial Arbitration’, where curial law and substantive law might be different. To understand the implication of this ratio, it is imperative to have some clarity on some essential theories of jurisdictions referred in ‘International’ as well as ‘Domestic’ arbitration. The term ‘substantive law’ of the court refers to the law governing the substantive issues in dispute. ‘Curial Law’ on the other hand essentially refers to the law that governs the procedure of arbitration. In addition to this, ‘Lex Arbitri’ essentially refers to the law of the country of situs of arbitration. These three theories basically govern the quagmire of jurisdiction in ‘Domestic’ as well as ‘International Commercial Arbitration’. Lex Arbitri is important because the seat of the arbitration essentially determines the curial law which would govern the arbitration proceedings, unless there is an agreement that some other law would govern the arbitral proceedings. This is referred to as ‘Lex Loci Arbitri’.[10] In the case of BGS SGS Soma JV v. NHPC[11] (Soma Case), the Apex Court has marked that there is an inextricable link between ‘Lex Arbitri’ and ‘Curial law’. The court went on to mark that “the territorial link between the place of arbitration and the law governing the arbitration is well established in international instruments, namely New York Convention of 1958 which maintains that reference to “law of the country where arbitration took place [Article V (1) (d)], synonymously to “law of the country where award is made” [Articles V (1) (a) and (e)]”. These observations clearly indicate towards existence of this inextricable link. This relationship is very crucial in case of ‘International Commercial Arbitration. For instance, an arbitral tribunal with its seat in France may be required to decide the substantive issues in dispute between the parties in accordance with the law of Switzerland or the laws of India, or some other law as the case may be. However, the arbitration itself and the way in which it is conducted, will be governed, even though in outline by relevant French Law on international arbitration. However, in case of domestic arbitration in India, the ‘Lex Arbitri’, ‘Curial Law’ as well as ‘Substantive Law’ would be the same. Thus, in the instant case the court marked that making a distinction between courts of Delhi or Kolkata to entertain cases arising out of the arbitration proceedings does not have any such dire implication. Finally, with respect to the scope of ‘seat theory of arbitration’, the court relied on the ‘Indus Case’ and held that designation of seat is akin to having an exclusive jurisdiction clause, therefore the fact the arbitration proceedings were duly conducted in Delhi, makes Delhi the situs of arbitration , granting the courts of Delhi an exclusive jurisdiction to deal with disputes arising out of the arbitration. [1] Purbasha is a law student currently pursuing BA.LLB (Hons.) from National University of Study and Research in Law, Ranchi. She is a Staff Writer at the Arbitration Workshop and can be reached at purbasha.nusrl.13@gmail.com. [2] Prasad Lohia vs. Nikunj Kumar Lohia and others (2002) 3 SCC 572 [3] Konkan Rly. Corpn. Ltd. v. Rani Construction (P) Ltd (2002) 2 SCC 388 [4] Krishan Lal v. State of J&K (1994) 4 SCC 422 [5] Duro Felgeura S.A v. Gangavaram Port. Limited (2017) 9 SCC 729 [6] Indus Mobile Distribution Pvt Ltd v Datawind Innovations Pvt. Ltd. (2017) 7 SCC 678 [7] BGS SGS Soma JV v. NHPC 2019(6) Arb.L.R 393(SC) [8] Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc.(2012) 9 SCC 552 [9] Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (2012) 9 SCC 552 [10] O.P Malhotra, The Law & Practice of Arbitration and Conciliation, Third Edition, Thomson Reuters. Pg 900. [11] BGS SGS Soma JV v. NHPC 2019 (6) Arb.L.R 393(SC)

- ADVAIT GHOSH[1] I. INTRODUCTION This article will attempt to elucidate the bars to seeking interim relief through the prism of The Arbitration and Conciliation Act, 1996 in cases of determinable contracts and will also endeavour to understand if there are any exceptions to this rule as the seeking of Interim reliefs in case of determinable contracts is usually stymied by the provisions of The Specific Relief Act 1963. II. Determinable Contracts & Specific Relief Act Determinable Contracts derive their existence from the termination clause envisaged therein. The word determinable used in Clause (c) to sub-section 1 of Section 14 of The Specific Relief Act, 1963, means that which can be put an end to. Literally, the word determinable means to “put an end to”. The seeking of Interim Reliefs in the case of determinable contracts containing an arbitral clause is commonplace, even though the chances of success are limited due to the obstacles placed by The Specific Relief Act 1963 and other allied Legislations. The General Law concerning the seeking of Interim Reliefs in a determinable contract was settled in the case of Indian Oil Corporation vs. Amritsar Gas Service (2013) 9 SCC 32 wherein the Apex Court held that a distributorship agreement which had a clause which entitled either party to terminate the contract with 30 days prior notice and without assigning any reason was “determinable” in nature and could not be specifically enforced. III. The approach of the National Courts when dealing with a Section 9 application under The Arbitration and Conciliation Act, 1996 in case of determinable contracts: - We shall analyse the approach of the National Courts in Section 9 Petitions preferred under The Arbitration and Conciliation Act, 1996 in case of determinable contracts through Judgements of the Delhi High Court and Apex Court as enumerated below. A) M/S INTER ADS EXHIBITION PVT LTD vs. BUSWORLD INTERNATIONAL (O.M.P.(I) (COMM.) 273/2019) (2020 (1) ArbLR 250 (Delhi) In this, the Petitioner and the Respondent had entered into a Joint Venture Agreement to jointly organize an event known as “Busworld” in Bangalore. The Respondent, after the successful completion of the event, terminated the JVA with the Petitioner herein. The Petitioner filed an application for Interim Relief in the Delhi High Court under Section 9 of The Arbitration and Conciliation Act, 1996, praying that the Respondents be restrained from terminating the Joint Venture Agreement with the Petitioners herein. The Court concluded that as per Article 7.3 of the Joint Venture Agreement, either party could terminate the agreement, hence the contract is of determinable nature. The Delhi High Court referred to the case of Rajasthan Breweries Ltd. vs. Stroh Brewery (2000 (55) DRJ 68: 2000 (3) ARBLR 509) where the Delhi High Court had remarked that in cases of determinable contracts, specific performance of a determinable contract is statutorily barred under Section 14(1) d of The Specific Relief Act 1963 and also under Section 41(h) which says that “injunction will be refused when there is an equally efficacious relief available to the parties”. On the basis of this decision, the Court declined to give relief to the Petitioner and dismissed the application for Interim relief preferred by them. B) PARSOLI MOTOR WORKS vs. BMW INDIA PVT LTD ( OMP. (I) (COMM.) 559/2017) 2018 (2) ArbLR 50 (Delhi) The Respondent entered into an agreement with the Petitioner for the sale of its cars in Gujarat. The Petitioner claimed before the Court; there was a mutual understanding with the Respondent that the dealership would be renewed on a yearly basis. The Respondent, due to the Petitioners' inability to meet their yearly targets, terminated the said dealership in the year 2018. The Petitioner filed an application under Section 9 of The Arbitration and Conciliation Act, 1996 (due to the arbitration clause in the dealership agreement) seeking to restrain the Respondents from terminating the said dealership as it was their contention that huge expenditure had been made by the Petitioner to promote BMW in Gujarat, and unilaterally ending the contract would cause huge hardship to them, which cannot be monetarily compensated. The Delhi Court referred to the case of Planet M. Retail vs. Select Infrastructure Pvt Ltd OMP No. 488/2013:2014 (4) ArbLR 348 (Delhi) wherein a Division Bench of the Delhi High Court refused to restrain the termination of a License Deed on the grounds that the License Deed entered into between the parties was terminable in nature, and hence Injunction could not be granted due to the statutory bar under Section 14 and Section 41 of The Specific Relief Act, 1963. Thus, the Court declined to give relief to Parasoli Motors and did not restrain BMW India from terminating the said Agreement. The above two Case Laws and the cases referred to by them elucidate the approach of the Courts in dealing with Interim Reliefs in case of determinable contracts. Thus, it is quite lucid that the National Courts are disinclined to grant interim relief in case of determinable contracts. We shall endeavour to understand through the next cases discussed herein-below whether there is a possible exception to this rule and if so, in what kind of circumstances does it arise? C) DANIELI CORUS BV vs. STEEL AUTHORITY OF INDIA (OMP(I)(COMM) 189/2017) 246 (2018) DLT 329 The Petitioner and the Respondent entered into a contract for setting up a “Blast Furnance” at Rourkela Steel Plant. The Petitioner shared technical drawings related to the Blast Furnance with the Respondent. The drawings wherein the nature of confidential information and where only to be used for the purpose of the execution of the project. The Petitioner claimed that the Respondent had uploaded the confidential drawings of the Petitioner on a 3rd party website. The Petitioner also filed an additional affidavit before the Court wherein it was affirmed that the Respondent had floated a tender for Operational Tyres, and the drawings of the Petitioner were copied. In light of these circumstances, the Petitioner preferred an application under Section 9 of The Arbitration and Conciliation Act, 1996, to restrain the Respondents from further disclosing or disseminating confidential information to 3rd parties. The Respondent, in reply to the said application, contended that this was a determinable contract for which no injunction could be granted, and damages were sufficient to compensate for the breach in Contract. The Court referred to the case of John Richard Brady vs. Chemical Process Equipment (AIR 1987 Delhi 372) where the Court invoked General Equity of Breach of Confidence and restrained the Respondents from disclosing technical drawings as the Court was of the opinion that such conduct was a breach of confidence and amounted to the unauthorized use of labour. The Court also referred to the case of Zee Telefilms vs. Sundial Telecommunication (2003 (5) BomCR 404) where the Bombay High Court had restrained the Respondents from disclosing confidential information even though the Contract between the parties was determinable in nature, as the Court was of the opinion that monetary compensation would not be sufficient to remedy the breach, and hence Injunction was granted to the Petitioner. Finally, the Court made a reference to the case of Daljeet Titus vs. Adebar and Ors 130 (2006) DLT 330, where it was remarked Court would step in and grant Injunction even in case of determinable contracts to prevent a breach of confidence. After analysing all the above cases, the Court restrained the Respondents from disclosing the drawings to 3rd parties and opined that damages would not be sufficient to remedy this breach of confidence. Furthermore, the Court said that once a party has obtained information on the basis of contractual terms, it cannot turn around and question the confidentiality of this information. It is estopped from doing so. IV. Amendment of the Specific Relief Act in 2018 The parliament made significant amendments to the Specific Relief Act in 2018. One of the key amendments was made to Section 10 of the Act. It has made the specific performance of a contract the rule instead of being an alternative in cases where the actual damage for non-performance could not be ascertained or where the compensation for non-performance would not be an adequate relief. Section 10 of the Act has been substituted, and instead the newly inserted Section 10 states that the specific performance of a contract shall be enforced by the court subject to the provisions contained in sub-section (2) of Section 11, Section 14 and Section 16 of the Act. However, these amendments to The Specific Relief Act have not changed provisions regarding determinable contracts, and the provisions which govern the working of determinable contracts continue to be the same as before. V. Conclusion The above-mentioned Case Laws help us understand the Judicial intricacies which the Courts grapple with regard to granting of Interim Relief in Determinable Contracts. The Courts usually do not interfere on account of the statutory bars provided under the Specific Relief Act, 1963 however if there are extenuating circumstances like monetary compensation not being sufficient for the breach as also provided in Section 38 of The Specific Relief Act, 1963 and to prevent a breach of confidential information obtained through a contractual relationship as enumerated through the above cases the Courts will grant Injunction in case of determinable contracts also. [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