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Gaurav Rai[1] The IBA guidelines of 2004 set out instances which can raise justifiable doubts as to independence and impartiality of an arbitrator.[2] Although not binding, they are considered as starting points or guides to challenge of arbitrators internationally and under the arbitration statutes based on the model law.[3] In 2014 the IBA guidelines ("2014 guidelines") were amended to truly reflect the experience of the international arbitration community and clarified certain doubts regarding the nature of its suggested applicability. In the 2014 guidelines it was made clear that these guidelines were not legal provisions and did not override any applicable national law or arbitral rules chosen by the parties. It was however hoped that these revised guidelines would find broad acceptance within the international arbitration community, and that they would assist parties, practitioners, arbitrators, institutions and courts in dealing with these important questions regarding impartiality and independence.[4] The aforesaid 2014 guidelines consists of the Red (Non-waivable and waivable), Orange and Green Lists. In these lists are enumerated several instances of relationships between an arbitrator, party and counsel and as to whether such persons nominated as arbitrators are supposed to disclose such relationship and also as to how these situations affect the independence and impartiality of the arbitrator to serve in the Tribunal. The standard of test proposed in the IBA guidelines for such suitability is the reasonable third person standard test borrowed from the UNCITRAL Model laws of 1996.[5] The Arbitration and Conciliation Act, 1996 of India, however, went a step further and via an amendment in 2015 added Schedule 5 and Schedule 7 to the Act. Schedule 5 consisted of situations which shall act as a guide in determining whether circumstances exist which give rise to justifiable doubts as to the independence and impartiality of the Arbitrator.[6] Schedule 7 consists of situations and instances which make a person ineligible to be appointed as an arbitrator.[7] These possible situations were borrowed from the IBA Guidelines on arbitrator Impartiality and Independence and is a mix of the orange and red lists of the said guidelines.[8] The Constitution of India mandates that a Supreme Court Judge retire at the age of 65 and that a High Court Judge retires at the age of 62. Most domestic arbitrations in India, above a certain amount of claim, invariably have retired Supreme Court and High Court judges functioning as arbitrators. In some cases, State run entities appoint retired engineers who can adequately apprise the arbitral Tribunal of underlying technical issues regarding arbitration which arise out of construction projects. Several parties also seek to appoint Senior Counsels to their arbitration. Every person so nominated is to be judged on the same anvil of instances enumerated under Schedule 5 and Schedule 7 of the Arbitration and Conciliation Act, 1996. In this paper the author will be looking at certain instances which affect such prospective arbitrators after the introduction of the amendment to the Arbitration and Conciliation Act, 2015. The author aims to use this as an introduction to a working series wherein different instances as encountered in arbitrations will be discussed and debated. The same is also an invitation to readers of this blog to supplement this working series with their own experiences in the domestic arbitration circuit and their experience with Schedule 5 and Schedule 7 of the Arbitration and Conciliation Act, 1996. [1] Gaurav Rai - The author is Advocate registered in State Bar Council of Delhi and is currently working as a legal assistant to Justice A.K. Patnaik, Former Judge Supreme Court of India and assists Justice Patnaik in his work as an arbitrator. He can be reached at raigaurav.legal@gmail.com [2] ‘IBA Guidelines on Conflicts of Interest in International Arbitration 2004’ . [3] Nigel Blackaby and others, Redfern and Hunter on International Arbitration (Sixth Edition 2015, Oxford University Press) para 4.88. [4] ‘IBA Guidelines on Conflicts of Interest in International Arbitration 2014’ s Introduction Para 6 . [5] ‘IBA Guidelines on Conflicts of Interest in International Arbitration 2014’ (n 4) 6 Clause (b) of Explanation to General Standard 2. [6] Explanation 1, Section 12(1), Arbitration and Conciliation Act, 1996 [7] Section 12(5), Arbitration and Conciliation Act, 1996 [8] HRD Corporation v GAIL (India) Ltd (2017) 12 SCC 471 (Supreme Court of India) [14].

16th July 2019 The Arbitration and Conciliation (Amendment) Bill 2019 has been introduced in the Rajya Sabha on 15th July 2019 by Union Minister of Law and Justice Mr. Ravi Shankar Prasad. A link to the bill is as hereunder: http://164.100.47.4/BillsTexts/RSBillTexts/asintroduced/Arbitration-Rs%20intro-E-15719.pdf A previous version of the bill had been introduced in August 2018 in the Lok Sabha. It had passed the Lok Sabha but had not been passed in the Rajya Sabha in time and had hence lapsed. There are several new features being brought out in the bill and the Arbitration Workshop will deal with those features and how it affects Arbitrations in India once the Bill is passed and becomes an Act.

- Ujjawal Satsangi[1] Jan Paulsson explains the Idea of Arbitration, in his book of the same name, in following wise words “[a] binding resolution of disputes accepted with serenity by those who bear its consequences because of their special trust in chosen decision-makers.”[2] This sentence binds the entire philosophy behind arbitration and essentially enumerates its components. We must understand that arbitration is an alternative method of dispute resolution and such method can only be effective and acceptable if the parties to the agreement have faith in the decision maker. Paulsson emphasised upon ‘special trust in chosen decision-makers’ which is the cornerstone of any acceptable and justiciable arbitration. Unless the parties are ready to accept the judgment of the chosen umpire, the arbitration cannot be considered to be a rendering of justice and would be nothing more than a sham. Among all the words used, two i.e. “special trust” and “chosen” are of significant importance. Both these words were under constant scrutiny and interpretation by various courts around the world. The word chosen has to be understood from a mutual prospective. Since, arbitration is a method adopted mutually by the parties, the arbitrator so chosen must also be mutually appointed by the parties. A logical stretch of this proposition leads us to assume that one party’s unilateral act of appointing an arbitrator, without considering the opinion of the other, violates the sacred thread of mutuality which is the foundation of arbitration, and hence the very neutrality of the appointed arbitrator becomes questionable. With this backdrop, I will analyse two questions i.e. 1. Whether a party to arbitration can unilaterally appoint an arbitrator? and 2. Whether such appointment prima facie posts a challenge to neutrality of an arbitrator? Section 11(2) of the Act and Freedom to Determine Procedure Arbitration and Conciliation Act 1996, in very simple terms, provides the power to the parties to decide the procedure of arbitration and manner of appointment of the arbitrator(s).[3] It makes us wonder, as to whether this liberty has any limitation attached to it or does it give the unfettered powers to the parties to construct a contract as per their own whims and fancies. The only caveat visible from a reading of the sub-section is with respect to the failure of the parties to perform their obligations and power of the Courts to intervene then. However, the fundamental question we post here is whether at the very moment of entering the contract, the parties can formulate a clause wherein one of the parties waives his very right to nominate or appoint an arbitrator or not. As explained, the simple reading of the sub-section suggests that the parties can formulate a clause where one party waives its right to appoint an arbitrator. However, we must not forget that in modern times parties do not always find themselves to be at equal footing and hence there are chances of one party taking advantage of the other and formulating onerous contracts. It is in this factual circumstance we require a reading of the law. Evidently, such onerous contracts were a benchmark for the industry where we saw government agencies, statutory bodies, public sector undertaking and other like organisations with bargaining power on their side preferring standard contracts formulated by them for entering into any agreement and without any exception used an arbitration clause, naming their own employee or MD /CEO/Chairman or trusted confidante as the arbitrator.[4] Amendment to the Act and judgement of TRF Ltd v. Energo Engineering Projects Limited On the very face of it, such clauses were averse to the idea of arbitration discussed above. Although, the parties agreed to such clauses in the contract at the first place and indeed the law in its plain reading did give them the right to formulate such procedures, but in principle, the clauses were a sham and were going against the very spirit of arbitration. As a result, a welcome change was brought by the government when the Schedule V and Schedule VII were added to the Arbitration and Conciliation Act 1996 by way of amendment in 2016.[5] The newly added schedules, essentially took away the immoral foundation of aforementioned illustrations of clauses wherein people with interest, especially employees, agents and consultants were made ineligible from becoming the arbitrator. The situation was further clarified and streamlined when the Hon’ble Supreme Court in TRF Limited v. Energo Engineering Projects Limited[6] explained that not only the persons falling into the category of Schedule VII are ineligible for becoming an arbitrator but they are also ineligible for nominating an arbitrator in their stead. With the above position of law in place, the question of neutrality of an arbitrator is more or less being addressed. The reading of the above judgment construes that even if a unilateral appointment of arbitrator is present, the party with such power cannot exercise it arbitrarily and it has to be exercised keeping the neutrality of the arbitrator in mind. Unilateral Right to Appoint Arbitrator vis-à-vis Arbitration Act 1940 In the regard, the pertinent question of validity of such clauses is now required to be revisited. As we delve into the basic foundation of arbitration, as explained by Jan Paulsson, the mutuality of parties is a must. If we read the question, in light of the above principle and the reasoning behind bringing Schedule V and Schedule VII in the Arbitration and Conciliation Act 1996, it can be said that a clause giving unilateral power to one of the party to appoint arbitrator does not qualify the basic principle of mutuality and gives arbitrary powers in the hands of one of the parties resulting into grave injustice. This question did come for scrutiny before the Apex Court in Dharma Prathishthanam v. Madhok Construction Pvt. Ltd.[7] wherein the above position was read in accordance with the earlier Arbitration Act of 1940 wherein the following was observed: “A unilateral appointment and a unilateral reference – both will be illegal. It may make a difference if in respect of a unilateral appointment and reference the other party submits to the jurisdiction of the arbitrator and waives its rights which it has under the agreement, then the arbitrator may proceed with the reference and the party submitting to his jurisdiction and participating in the proceedings before him may later on be precluded and estopped from raising any objection in that regard.” The reasoning coming out of the above position being that a unilaterally appointed arbitrator may continue only if the other party agrees to his appointment and waives his objection. But prima facie, such appointment will be illegal. Although, the above observations were in respect of the Arbitration Act, 1940 it must not be forgotten that even then mutuality of parties had to be respected. Unilateral Right to Appoint Arbitrator vis-à-vis Arbitration and Conciliation Act 1996 Considering the jurisprudence we have discussed so far, the Bombay High Court, on a couple of occasions found it necessary to address the daunting question at hand. The first two occasions which came before the Hon’ble Bombay High Court were in Prajakta Mahesh Joshi v. Rekha Uday Prabhu[8] and Zenith Fire Services (India) Private Limited v. Charmi Sales.[9] On both the occasions, the Hon’ble Court was pleased enough to throw some light on the question at hand and tried to answer some pertinent questions. While in Prajakta Mahesh Joshi v. Rekha Uday Prabhu[10], the Hon’ble Court read the situation in light of the scheme of the Act and passed the following observations: “Considering the scheme and object of Arbitration Act, in my view, first requirement is that the Arbitrator must be appointed by the consent of the parties. The consent of Petitioner was never obtained. Therefore, the unilateral appointment of Arbitrator, in such fashion itself is impermissible mode to resolve the disputes by this alternative dispute resolution mode through the Arbitration…It is contrary to the terms and the law. Apart from this clause, it is necessary for both the parties to appoint and/or nominate and/or select sole Arbitrator by consent. The appointment of the Arbitral Tribunal without consent itself was contrary to the agreed terms of the contract.” It was in the following judgement of Zenith Fire Services (India) Private Limited v. Charmi Sales[11] wherein the Hon’ble Court applied Doctrine of Acquiescence examined the situation and strengthens the above position in following words: “Mere appointment of Arbitrator by one party and admittedly when it was not mutual appointment, that itself also is not sufficient to treat valid appointment of the Arbitrator, as per clause as well as under the provisions of the Arbitration Act. The mutual consent is a must, even otherwise, to appoint sole Arbitrator. I am inclined to observe that such appointment of the sole Arbitrator cannot be accepted as valid and legal appointment by invoking the Doctrine of Acquiescence and/or Estoppel and/or Waiver. Considering the whole scope and purpose of Arbitration Act and specifically in view of the provisions of Section 11 and the judgment of Supreme Court and even otherwise such unilateral appointment of Arbitrator itself is void, unjust and contrary to law. The whole proceedings therefore so initiated and continued also faces the same consequences. The consequential proceedings in view of this illegal appointment of sole Arbitrator are also bad.” Effect of Amendment and TRF Ltd v. Energo Engineering Projects Ltd on Unilateral Appointment of Arbitrator Recently, on 04.03.2019, once again the Bombay High Court addressed the issue and to the relief of many covered the scenario by taking into account the amendment of 2016 and the judgment of Hon’ble Apex Court in TRF Limited v. Energo Engineering Projects Limited.[12] Significantly, the following observations were made by the Hon’ble Court which is pertinent to note: “Learned counsel for the Petitioners is also correct in her second contention that article 12 of the agreement being the arbitration agreement as entered between the parties had become unworkable by virtue of the amended provisions of the Arbitration and Conciliation Act (Act No. 3 of 2016) as the Respondent either ought to have appointed an arbitrator by consent of the petitioners or in that regard, ought to have approached the High Court under Section 11 of the Act and could not have proceeded to make a unilateral appointment…In these circumstances, a unilateral appointment of the Arbitrator on the part of the Respondent would be required to be held to be illegal and invalid considering the provisions of Section 11, subsection 5 of the Act which were clearly attracted on such disagreement on the part of the parties. It was necessary for the Petitioners to approach the High Court under Section 11(6) of the Act.”[13] With these observations made by the Hon’ble Bombay High Court, the question pertaining to validity of unilateral appointment of arbitrator is now fairly settled. Consent of parties for valid application of a clause is sacrosanct in the law of contract and we need to understand that mutuality of agreement between the parties must be adhered to in arbitration as well. Hence, the clauses pertaining to unilateral appointment of arbitrator must now be examined with a strict scrutiny and in accordance with the spirit of arbitration. [1] Ujjawal Satsangi is a practicing advocate at the Allahabad High Court. He practices in Arbitration Law, apart from Civil Laws, Services laws, Commercial Laws and Criminal Laws. He has regularly assisted the Hon'ble High Court of Allahabad, NCLT, DRT, and other forums. Further, he has been representing the interest of his clients in Arbitrations, Investment Negotiations and other commercial transactions. He graduated from National Law University Odisha in 2016. He has been an avid writer and often writes on several niche topics of law with an aim of enriching the world of legal writing and bringing a meaningful impact by the same. He can be contacted at ujjawalsatsangi@gmail.com [2] Jan Paulsson, The Idea Of Arbitration (Oxford University Press 2013). [3] Section 11(2) of Arbitration and Conciliation Act 1996. [4] 246th Report of Law Commission of India (2014). [5] Arbitration and Conciliation (Amendment) Act 2016, Act No. 3 of 2016. (See also article by Gaurav Rai – on Challenges’ for Arbitrators – Introduction available at https://www.thearbitrationworkshop.com/post/challenges-for-arbitrators-the-indian-experience-introduction) [6] TRF Limited v. Energo Engineering Projects Limited, 2017 (8) SCC 377. [7] Dharma Prathishthanam v. Madhok Construction Pvt. Ltd., 2005 (9) SCC 686. [8] Prajakta Mahesh Joshi v. Rekha Uday Prabhu, 2013 (7) BomCR 791 [9] Zenith Fire Services (India) Private Limited v. Charmi Sales, 2013 (3) BomCR 156 [10] Prajakta Mahesh Joshi v. Rekha Uday Prabhu, 2013 (7) BomCR 791 [11] Zenith Fire Services (India) Private Limited v. Charmi Sales, 2013 (3) BomCR 156 [12] TRF Limited v. Energo Engineering Projects Limited, 2017 (8) SCC 377. [13] Meenu Arora v. Dewan Housing Finance Corporation Ltd., Commercial Arbitration Petition No. 396 of 2017

Author - Gaurav Rai Editor - Gautam Mohanty In this part of our ongoing paper series I am going to talk about appointment of Senior Advocates as arbitrators and the possible questions that arise regarding such an appointment. I will also look at the status of law regarding treatment of the connection between Senior Advocate as an arbitrator and the counsel for the party appointing such Senior Advocate to the arbitral Tribunal. Section 12 of the Arbitration and Conciliation Act 1996 (hereinafter referred to as “Act, 1996”) casts an obligation on a person, who is approached in connection with his possible appointment as an arbitrator, to disclose in writing any circumstances which might lead to justifiable doubts regarding his impartiality and independence. Such circumstances might include the existence of either direct or indirect relationship or interest of either the past or present in any of the parties or in relation to the subject matter in dispute, whether financial, business, professional or other kind which is likely to give rise to justifiable doubts as to his independence or impartiality. Further Explanation 1 of Section 16, Act 1996 stipulates that the grounds stated in the Fifth Schedule are to serve as a guide in determining whether circumstances exist which may give rise to justifiable doubts as to the independence or impartiality of an arbitrator. The arbitrator is supposed to inform in writing all circumstances which may give rise to justifiable doubts to his independence and impartiality throughout the arbitral proceedings. Hence the question which might come up for consideration is whether such a Senior Advocate so nominated as an arbitrator was required to disclose that he appeared as a counsel assisted by advocates for the nominating party in certain cases before various courts in matters in which the party nominating the Senior Advocate as an arbitrator was not the client engaging the services and in which the subject matter of dispute of this arbitration was not the subject matter of dispute. Such a circumstances is similar to the revolving door in investment arbitration or even commercial arbitrations where in Queen’s Counsel or Barristers in the English Legal System are appointed as arbitrators who also have their own active practice as lawyers. A challenge to such a Senior Advocate came up for adjudication before the Bombay High Court in Perma Container (UK) Line Limited Vs. Perma Container Line (India) Pvt. Ltd. MANU/MH/0614/2014. In this case it was alleged that the arbitrator did not disclose the fact that he had appeared as a counsel and was instructed by solicitors of the claimant in February 2011. Further the Respondent alleged that the arbitrators generally from his conduct demonstrated a bias and that the award was in conflict with public policy on that ground. The Hon’ble Bombay High Court lay reliance on the fact that the Senior Advocate was briefed by the Advocates in a completely unrelated matter between different parties. They specifically held in para 132 of the judgement as reported in Manupatra that: “In my view, unless a party making allegations, demonstrates that the learned arbitrator had interest in the subject matter of the dispute in which he was acting as arbitrator or was related to any of the parties in any manner whosoever, no bias can be attributed against such arbitrator on the ground of he having been engaged by solicitors of one of the party and that also in some unconnected matter once or twice.” Further, in the case of Sheetal Maruti Kurundwade Vs. Metal Power Analytical (I) Pvt Ltd. and Ors. MANU/MH/3556/2017, the question that arose for decision was about the scope and purport of the provisions regarding appointment of arbitrators and challenges to their continuance in section 12(1), 12(3) and 12(5) and item 3 of the Seventh Schedule of the Act,1996 as amended by the Amendment Act. In this case two of the three arbitrators were practicing counsels before the Bombay High Court and were briefed by various law firms in different matters and one such law firm namely M/s. Hariani and Co. had been engaged by the parties to the arbitration. It was contended by one party that Section 12(1)(a) read with section 12(3) and 12(5) and item 3 of the Seventh Schedule would operate to automatically disqualify the two arbitrators as they were practicing counsels briefed by M/s Hariani and Co. and their association as practicing counsel with the law firm was sufficient to render them both ineligible to function as independent and impartial arbitrators in any matter where M/s Hariani and Co. appeared for one of the parties. The Hon’ble Bombay High Court considered inter alia the provisions of section 12(5) read with item 3 of the Seventh Schedule of the Act, 1996 and rejected the contention that the two arbitrators were ineligible to act as arbitrators. After discussing at length regarding the practice of the legal profession, the Court held the following in para 28 as reported in Manupatra reproduced herein below: “28. Therefore, counsel having accepted a brief from a particular attorney, advocate-on-record or lawyer for some other client is not per se a disqualification or ineligibility. The disqualification connection must be between the arbitrator-counsel and the litigant. That this is of the essence is obvious from Item 3 of the two Schedules in a given case, where the law firm or lawyer is itself or himself the client,” The Court further explained the general independence of Senior Advocates in the Indian Legal System as follows: In-house counsel or counsel who receive a fee-paid general retainer or salary from a law firm stand on a different footing. We are here concerned with independent counsel, those in the profession who in the course of their daily practice receive briefs from many attorneys, law firms or individual practitioners. This is a remnant of the "'dual system"', now abolished, and a central feature of that system, one that continues to this day in practice, is the independence of counsel. They accept briefs from multiple attorneys (often on the same day at the same time in different courts). They are not always briefed at every stage of the case, nor is there any rule that they perform the same functions at every stage: a counsel may lead at one stage, and at another may take second chair to a senior. None of this is backed by statute, but hinges on traditions of long standing. As the Bombay High Court has held in the two cases cited above, the fact that a person has been briefed as a Senior Advocate by a law firm or by solicitors to appear in some cases and the very same law firm or solicitor also appears for one of the parties before the arbitral tribunal are not circumstances which are likely to give rise to justifiable doubts to the independence or impartiality of such a person to act as an arbitrator and does not make such persons ineligible to act as an arbitrator within the meaning of Section 12(1) and 12(5) of the Arbitration and Conciliation Act, 1996 read with Schedule 7 of the Act, 1996.

- Balaji Harish Iyer[i] I. The New Delhi International Arbitration Centre Parliament passed The New Delhi International Arbitration Centre Act (“Act”) to set up a federal government-backed international arbitration centre on 26th July 2019. The Act seeks to establish the so-called New Delhi International Arbitration Centre (“NDIAC”) to inter alia, create “an independent and autonomous regime for institutionalised arbitration … as to make it a hub for institutional arbitration”[ii]. Under the Act, the NDIAC will take over and take transfer of the functions of the current International Centre for Alternate Dispute Resolution (“ICADR”).[iii] The Act, in its current form, recognises the shortcomings of the ICADR which has “[…] not been able to actively engage and embrace developments in the arbitration ecosystem and to create a reputation par excellence keeping pace with the dynamic nature of arbitration over more than two decades”[iv]. This move to create the NDIAC is a welcome one in its objectives to strengthen Indian arbitration. However, what remains to be seen is if the NDIAC will live up to its goals once established or fall into the trap that ensnared the ICADR. We will note that there is an apprehension of governmental interference in the functioning of the NDIAC, but critiquing this interference is not the scope of this article. The Act lays down the institution’s structure, thereby providing an opportunity for the institution to create its own arbitral rules of procedure. In order to develop an effective set of arbitral rules, the NDIAC would be well-served in recognising the requirements of the market from an arbitration institution and striving to satisfy these requirements. II. The arbitration marketplace The past two decades have seen arbitration move from being an “alternative” to a more traditional method of adjudicating disputes. To serve this shift from litigation to arbitration, numerous arbitration institutions have emerged, both abroad and in India, in varying degrees of success and importance. Leaders among these are the International Court of Arbitration of the International Chamber of Commerce, the London Court of International Arbitration, the Arbitration Institute of the Stockholm Chamber of Commerce, and the Singapore International Arbitration Centre; examples of renowned, but regional arbitration centres are the German Arbitration Institution in Bonn, Germany; the Asian International Arbitration Centre in Kuala Lumpur, Malaysia; and the China International Economic and Trade Arbitration Commission with its various provincial centres throughout China. These international arbitration institutions have achieved global and regional success for several reasons. IIA. Model arbitration agreements Drafting a model arbitration agreement that may be copy-pasted by parties, with minimal changes, into their contracts is an advantage for institutions. Parties may not take care to carefully craft the arbitration agreement, leading to pathologies;[v] pathological arbitration agreements are always a source of pre-arbitral litigation[vi], before the parties can enter into and determine the actual dispute that has arisen between them. Almost all arbitration institutions today have crafted their own model arbitration agreements that can simply be incorporated by an arbitration user. For example, the International Chamber of Commerce’s model agreement reads as: “All disputes arising out of or in connection with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules.”[vii] The ICC has a model arbitration agreement in other languages such as Polish, Arabic, Portuguese and Russian, thus catering to a wide linguistic market. Institutionally drafted model arbitration agreements rarely suffer from pathologies and provide ample room for parties to agree on aspects such as language, seat, or substantive law of the underlying contract. By adopting a model arbitration agreement, parties also adopt the rules of the concerned institution, thus making it clear as to what rules govern the arbitration. The NDIAC will have to create its own model arbitration clause that is free from pathologies, preferably in multiple languages, if the Centre intends to cater to a wide international market. IIB. Arbitral rules of procedure One of the highlights of the success behind the institutions named is the applicability of their arbitral rules of procedure. The NDIAC needs to overcome the shortcomings of the ICADR in this regard. The procedural rules of the new institution should be arbitration-friendly and free of all archaic procedures. Rules that combine flexibility and efficiency are given preference over rules that are unclear and obtuse. Parties tend to appreciate rules that are clearly and precisely drafted. This is because arbitration agreements are often drafted and dictated by businessmen’s commercial interests rather than legal interests; counsel who drafts arbitration agreements are often unfamiliar with practical and procedural idiosyncrasies faced during an arbitration. For example, the ICC Rules of Arbitration provide for scrutiny of the award by the ICC once the tribunal renders it.[viii] This lets parties know that an ICC arbitrator will issue an enforceable award, that runs through multiple scrutiny levels. Parties may also be keen to adapt institutional rules to their specific needs and expectations. Many institutional rules cater to this expectation. Many leading arbitral institutions have provided rules for emergency arbitration[ix], expedited procedures, consolidation of multiple arbitrations involving the same disputants under different contracts,[x] joinder of third parties, etc. Rules that provide for time- and cost-effectiveness are also preferred. Expedited proceedings, emergency proceedings, etc., ensure faster proceedings. Parties are also incentivised not to create excessive delay by rules that allow arbitrators to take into consideration the efficacious conduct of proceedings by parties in determining costs.[xi] IIC. Expertise The ability of an institution to tap into expert resources forms another cornerstone of success. Institutions do not determine disputes themselves; they provide an administrative platform for the ease of dispute resolution by the tribunal. Therefore, an institution that can maintain a panel of arbitrators[xii] ranging from junior-level arbitrators to seasoned specialists to render services to the users of institutional arbitration is at an advantage. Above all, the arbitrators must be able, conflict-free, and non-partisan. The arbitrators must also be supported by a bar of dedicated professionals competent to conduct arbitrations in accordance with institutional procedures, rather than being distracted by traditional litigation. To this extent, the aim of the NDIAC to create a Chamber of Arbitration comprising national and international arbitrators across various categories of disputes, including construction, maritime, contract, etc., is impressive. However, the Chamber of Arbitration must take care not to pander to the interests of retired judges of the High Courts or Supreme Court who seek arbitral appointments or other form of governmental interference. In other words, the Chamber of Arbitration must not become a second Supreme Court for retired judge-arbitrators, who may not be experts in the subject-matter of the dispute, to conduct proceedings in whatever fashion they may like. This practise reflects poorly on Indian arbitrators, who in turn, fare extremely poorly at present in appointment as international arbitrators. The Chamber must also be nationally diverse, having arbitrators renowned across jurisdictions and industries, to enable foreign disputants to avail dispute resolution services. One key reason for this is that parties from different jurisdictions are reluctant to subject themselves to the jurisdiction of arbitrators from the opposite parties’ country of origin. Having a few big names among the Chamber of Arbitration would be a powerful marketing tool in itself. India can attract renowned expert arbitrators by providing incentives to arbitrate in India. For example, Singapore provides tax exemptions for non-resident arbitrators. The income is derived by a non-resident arbitrator for arbitrations carried out in Singapore (i.e., governed by the Arbitration Act or International Arbitration Act) are exempt from tax, as per section 13-V of the Singaporean Income Tax Act. With a taxation system like Singapore, India would do well to provide similar tax exemptions to international arbitrators, conducting arbitrators seated in India. IID. Costs Although arbitration was envisaged as the “cheaper” alternative to traditional litigation, the hard truth is that this is not the case. Arbitration in India is plagued by delays leading to increased costs to disputants. Ancillary litigation such as applications for interim relief to courts and applications for appointment of arbitrators, etc. lead to delays of the actual arbitration proceeding and burden parties with the costs of advancing or opposing these matters in courts. In the general context of international commercial arbitration, the costs incurred by disputants are also vast. The I.C.C. charges almost $90,000 for a dispute worth $1 Million. A new international arbitration centre can compete with the more renowned institutions by lowering the costs of arbitration. For instance, the Ukrainian Chamber of Commerce charges only $20,200 for a $1 Million dispute, providing an economic incentive to opt for cheaper arbitration services. Rules must provide a clear-cut cost calculation mechanism (as in, for e.g., the 2018 D.I.S. rules). Most rules mandate parties to deposit the arbitrators’ fees and expenses, and administrative fees prior to the arbitration. Most institutions also undertake to communicate the costs (calculated according to their cost calculation mechanism) and pay the arbitrators’ fees directly – this ensures that the first and only priority of the arbitrators is a resolution of the dispute, rather than their remuneration. This would also entail a perception of the autonomy of arbitrators from the parties appointing them. IIE. Flexibility to choose lex arbitri There are numerous arbitral seats across the globe with liberal curial laws, such as, e.g., Sweden, France, Singapore, and Switzerland. Most international arbitral institutions allow parties to choose their seats according to their needs, which may include costs of arbitration, proximity to major global economic centres, or a jurisdiction perceived as being neutral and non-interfering to the arbitral process. Typically, the arbitration hearing (or any other part of the proceeding, e.g., tribunal deliberations) need not occur in the designated seat. For example, an arbitration hearing may take place in Paris but be seated in The Netherlands under the rules of the Permanent Court of Arbitration. The flexibility to choose a seat different from the geographical location of the proceeding or the underlying dispute is, in today’s day and age, of some importance, particularly where parties may be apprehensive of entering the countries of their counterparties. Parties may wish to choose, for e.g., a Swiss seat and Swiss curial law since Swiss courts tend to avoid interference with an award and because Swiss awards are readily enforceable the world over as Switzerland is a party to the New York Convention. Indian jurisprudence presently compels foreign parties to choose Indian law as the curial law, from the moment they choose India as the geographical “place” of arbitration. This requirement is now due for reconsideration. IIF. Judicial system An arbitration institution’s reputation is also closely linked to the reputation of the country in which the institution is incorporated. India must seek to improve its judicial system, constantly upgrade The Arbitration & Conciliation Act, 1996, and other laws, and create a pro-arbitration image. Unfortunately, the Indian judicial system in general and Indian arbitral jurisprudence, in particular, have given several causes for concern to the international arbitral community. However, this negative image is gradually changing through (for instance) the 2015 amendments to The Arbitration & Conciliation Act, 1996 such as the inclusion of cost-calculation mechanisms for arbitrators’ fees in proportion to the claim, restricting the grounds for annulling an award, extending the option of approaching courts for interim reliefs in an international commercial arbitration, etc. There are also several High Courts in the country that have indicated a pro-arbitration stance, the Delhi High Court being the foremost among them. III. Conclusions The setting up of an international arbitration centre is underway. However, this article suggests that merely setting up a shell, without creating progressive internal structures to the institution is a wasted affair. The New Delhi International Arbitration Centre would do well to take several leaves out of the books of renowned international institutions, and create a framework that is clear, concise, flexible and amenable to change. Setting up an international institution is the first step, but the rest must follow in quick succession, if India is to truly become an “arbitration hub”. [i] Balaji Harish Iyer is an advocate practising in Mumbai, with a focus on arbitration and admiralty law. Balaji is an alumnus of Humboldt University of Berlin and National Law University, Delhi. He can be reached at +91-7349360143 (mobile). [ii] The New Delhi International Arbitration Centre Act, Preamble (2019). [iii] Id. at 7–10. [iv] Id. at preamble. [v] See, Jae Hee Suh, Interpretation of pathological clauses: a cautionary tale?, Practical Law Arbitration Blog (2019), http://arbitrationblog.practicallaw.com/interpretation-of-pathological-clauses-a-cautionary-tale/ (last visited May 23, 2020). [vi] See, June Yeum et al., Singapore: Pathological Arbitration Clause Revisited, Mondaq (2017), https://www.mondaq.com/arbitration-dispute-resolution/582212/pathological-arbitration-clause-revisited (last visited May 23, 2020). [vii] Arbitration Clause, International Chamber of Commerce , https://iccwbo.org/dispute-resolution-services/arbitration/arbitration-clause/ (last visited May 23, 2020). [viii] ICC Rules of Arbitration, 34 (2017), https://iccwbo.org/dispute-resolution-services/arbitration/rules-of-arbitration/ (last visited Apr 1, 2020). [ix] ICC Rules of Arbitration, 29 (2017), https://iccwbo.org/dispute-resolution-services/arbitration/rules-of-arbitration/ (last visited May 23, 2020). [x] See for e.g., Id. at 7–10. [xi] See, Id. at 38. [xii] SIAC Panel, https://www.siac.org.sg/our-arbitrators/siac-panel (last visited May 23, 2020).

Rishabh Dheer Advocate, High Court of Delhi rishabhdheer@gmail.com I) The Bottom Line In a nutshell, the judgment of the Supreme Court (‘SC’) in BGS-SGS SOMA JV v. NHPC Limited - 2019 SCC OnLine SC 1585 (hereinafter referred to as ‘Judgment’)[1] reconciles various precedents and determines the weight ascribed to the ‘seat’ in determining territorial jurisdiction in arbitration matters. In doing so, the SC unambiguously prioritizes ‘seat’ over everything else. This means that the cause-of-action-based methodology which classically determines jurisdiction under the Code of Civil Procedure, 1908 (‘CPC’) is knocked out, and ‘venue’ and ‘seat’ are absolute factors when it comes to jurisdiction in arbitration matters. II) Facts The Petitioner and the Respondent entered into an Agreement in 2004 in respect of works pertaining to a hydropower project to be executed in the States of Assam and Arunachal Pradesh. Disputes having arisen between the parties, the Petitioner invoked the arbitration clause contained in the Agreement against the Respondent in 2011. The relevant part of the arbitration clause for the purposes of the present article is reproduced below: “Arbitration Proceedings shall be held at New Delhi/Faridabad, India and the language of the arbitration proceedings and that of all documents and communications between the parties shall be English.” (emphasis supplied) A three-member Arbitral Tribunal (‘AT’) was constituted in 2011. The AT held seventy-one sittings between 2011 and 2016. Accordingly, a unanimous arbitral award was delivered by the AT in 2016 in New Delhi allowing the claims of the Petitioner. Aggrieved, the Respondent instituted award-challenge proceedings under Section 34 of the Arbitration and Conciliation Act, 1996 (‘Act’) before the District Court in Faridabad, Haryana. Owing to the constitution of a Special Commercial Court in Gurugram, the Respondent’s petition was transferred to the Gurugram Commercial Court. In the interim, the Petitioner raised an objection to the Respondent’s petition and sought its return for presentation before the appropriate Court in New Delhi or Assam. The Special Commercial Court in Gurugram held in favour of the Petitioner and returned the Respondent’s petition under Section 34 of the Act for presentation to the appropriate Court in New Delhi. Aggrieved, the Respondent filed an appeal under Section 37 of the Act read with Section 13(1) of Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 before the Punjab and Haryana High Court (P&H High Court), in which the Court held that firstly, the appeal filed by the Respondent under Section 37 of the Act was maintainable under sub-clause (c) of sub-section (1); and secondly, Delhi was only a convenient venue for the arbitration proceedings and could not be construed to mean the ‘seat’ of the arbitration proceedings. The Court, accordingly, held that the Courts in Faridabad would have jurisdiction on the basis of the cause of action having arisen in part in Faridabad. Aggrieved by the findings of the P&H High Court on both counts, the Petitioner approached the SC. III) Scope of the present article The focus of this article is not on the findings of the SC on the maintainability of the appeal preferred by the Respondent before the P&H High Court inasmuch as the SC’s decision on this count is clear and convincing. The SC held that the P&H High Court had, for the purposes of an appeal under Section 37 of the Act, erred in concluding that a case of a Section 34 petition being returned to an appropriate Court would amount to an order “refusing to set aside an arbitral award under Section 34”. In this regard, the SC held that “the refusal to set aside an arbitral award must be under Section 34”[2] [Ed: the word ‘under’ has been emphasized in original] i.e., firstly, after the grounds stipulated under Section 34 had been applied by the Court to the arbitral award; secondly, and after the Court had refused to interfere on the basis of such grounds. Therefore, the P&H High Court failed to consider the words “under Section 34” while reaching the conclusion that it did. Accordingly, this article shall focus on the second, and more important, part of the Judgment which relates to the determination of the ‘seat’ of the arbitration proceedings. To that end, the SC in Paragraph No. 23 of the Judgment characterized the issue in the following terms: 23. [...] it is therefore important to lay down the law on what constitutes the “juridical seat” of arbitral proceedings, and whether, once the seat is delineated by the arbitration agreement, courts at the place of the seat would alone thereafter have exclusive jurisdiction over the arbitral proceedings. This article under ‘Part V’ covers the SC’s analysis of its previous judgments, reliance placed on judgments of the English Courts, and the principle, and the importance, attributed to territoriality and party autonomy in determining the ‘juridical seat’ of the arbitration proceedings. IV) Arguments of the parties Broadly, the Petitioner had four contentions – Firstly, the conclusion arrived at in the impugned judgment inasmuch as New Delhi was merely a ‘venue’ and not the ‘juridical seat’ was incorrect. The parties had chosen to hold the arbitration proceedings in New Delhi; for the AT, this meant that the arbitral award (being rendered in New Delhi) was being made at the ‘seat’ of the arbitration proceedings. Secondly, notwithstanding the fact that both New Delhi and Faridabad may have had jurisdiction, the conduct of the parties in choosing New Delhi made their choice qua the ‘seat’ of the arbitration proceedings obvious. Accordingly, the principle enunciated in Hakam Singh v. Gammon (India) Limited[3] would apply. Thirdly, the illustration cited in Paragraph No. 96 of the Constitution Bench’s judgment in Bharat Aluminium Co. v. Kaiser Aluminium Technical Service, Inc.[4] (‘BALCO’) was incorrect and contrary to the theory of concurrent jurisdiction propounded therein, and an overall reading of BALCO would clearly demonstrate that the Five-Judge Bench had, in fact, concluded that a clause in an agreement stating the ‘seat’ of arbitration would be akin to an exclusive jurisdiction clause. Lastly, the judgment delivered by the Three-Judge Bench in Union of India v. Hardy Exploration and Production (India) Inc. (‘Hardy Exploration’)[5] was contrary to BALCO and resulted in an incorrect understanding of the law inasmuch, in the facts of the present case, New Delhi ought to have been declared as not just the ‘venue’ but also the ‘seat’ for the arbitration proceedings in question. The Respondent, on the other hand, made two submissions – Firstly, the arbitration clause did not expressly provide for either New Delhi or Faridabad as the ‘seat’ of the arbitration proceedings. Hence, only a convenient venue had been referred to, and the fact that the proceedings were held in New Delhi would not confer upon it the status of a ‘seat’; and secondly, Faridabad was rightly clothed with jurisdiction to entertain the petition under Section 34 of the Act as part cause of action had arisen in Faridabad as the Agreements had been executed there, and since notice had been issued by the Petitioner to the Respondent at its Faridabad address. It was further contended that in light of BALCO, both New Delhi and Faridabad would have concurrent jurisdiction – the former being a neutral forum, and the latter being the place where a part of the cause of action arose. However, since the Respondent first approached the Court in Faridabad, that Court alone would exercise jurisdiction pursuant to Section 42 of the Act. What the Court held The Court, at the outset, set out the relevant provisions of the Arbitration Act, 1940 (‘1940 Act’) to illustrate that the concept of ‘place’ found no mention in the erstwhile 1940 Act. It was only pursuant to the adoption of the provisions of the UNCITRAL Model Law on International Commercial Arbitration – which introduced the concept of ‘place’ and ‘seat’ of arbitration proceedings – in the 1996 Act that the word ‘place’ was introduced in Sections 2(1)(e), 2(2), 20, 31(4) and 42. The Court also highlighted that in light of the new provisions in the Act pertaining to the concept of ‘juridical seat’ in arbitration proceedings, and the importance accorded by the Act to such ‘juridical seat’, “the arbitral award is now not only to state its date, but also the place of arbitration as determined in accordance with Section 20.”[6] (emphasis supplied) The SC while answering the point at issue under Paragraph No. 23 (supra) viz. “whether […] courts at the place of the seat would alone thereafter have exclusive jurisdiction over the arbitral proceedings” comprehensively analyzed Indian as well as English precedents and, in particular, stressed upon the Shashoua principle, and clarified the ostensible confusion in BALCO emanating from Paragraph No. 96 therein. 1) The Shashoua Principle When can a ‘venue’ tantamount to a ‘seat’? Let’s consider the following – i. Does the arbitration clause provide for a venue or place for the arbitration proceedings, without specifically naming the ‘seat’? If the answer to (i) above if yes, then: ii (a) Is there sufficient evidence that the parties to the contract intended to choose another seat for the arbitration proceedings? OR ii (b) Is there any significant indication to the contrary to demonstrate that the ‘venue’ stated in the arbitration clause was merely a convenient geographical location, or fixed for a few particular hearings, for instance, for the purposes of recording evidence? If the answer to (ii) above is no, it would axiomatically follow that the place designated in the arbitration clause would be read as the ‘juridical seat’ where the parties intended to anchor the entire arbitration process right up to, and including, the making of the arbitral award. In Roger Shashoua & Ors. v. Mukesh Sharma (‘Shashoua’),[7] the English Court held that when an arbitration clause had expressly designated London as the ‘venue’ for the arbitration proceedings without designating any alternate place as the ‘seat’, the inevitable conclusion was that London would be the ‘juridical seat’ of the arbitration proceedings. Judge Cooke in Shashoua observed as follows: 34. London Arbitration is a well known phenomenon which is often chosen by foreign nationals with a different law, such as the law of New York, governing the substantive rights of the parties. This is because of the legislative framework and supervisory powers of the courts here which many parties are keen to adopt. When therefore there is an express designation of the arbitration venue as London and no designation of any alternative place as the seat, combined with a supranational body of rules governing the arbitration and no other significant contrary indicia, the inexorable conclusion is, to my mind, that London is the juridical seat and English law the curial law. In my judgment it is clear that either London has been designated by the parties to the arbitration agreement as the seat of the arbitration, or, having regard to the parties’ agreement and all the relevant circumstances, it is the seat to be determined in accordance with the final fall back provision of section 3 of the arbitration act. (emphasis supplied) Not only has Shashoua been referred to by the SC in several previous judgments including BALCO, where the Court approvingly quoted Shashoua at Paragraph Nos. 108 and 109, and Enercon (India) Limited v. Enercon GmbH & Anr.,[8] the emphasis upon Shashoua by the SC in the Judgment itself confirms the importance of same inasmuch the Court has cited, referred to, or relied upon it at several places in the Judgment viz. Paragraph Nos. 36, 52, 62, 65, 69, 79, 85, 86, 87, 93, 94, 96 and 98. 2) Addressing the Elephant in the Room (Paragraph No. 96): How to read BALCO Reading BALCO as a Whole: The SC in the Judgment emphasized that BALCO was clear inasmuch as if an agreement executed between the parties specified the ‘seat’ of arbitration, the same would amount to an exclusive jurisdiction clause, and that Paragraph No. 96 read with the previous and subsequent paragraphs in BALCO clearly evinced that the Courts at the ‘seat’ would alone exercise jurisdiction in relation to such arbitration proceedings. At the same time, the Court was in recognition of the fact that Paragraph No. 96 in BALCO left room for possible contradiction by purportedly providing for concurrent jurisdiction. The oft-quoted Paragraph No. 96 of BALCO is reproduced hereunder: 96. Section 2(1)(e) of the Arbitration Act, 1996 reads as under: “2. Definitions (1) In this Part, unless the context otherwise requires (e) "Court" means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject matter of the arbitration if the same had been the subject matter of a suit, but does not include any civil court of a grade inferior to such principal Civil Court, or any Court of Small Causes.” We are of the opinion, the term "subject matter of the arbitration" cannot be confused with "subject matter of the suit". The term "subject matter" in Section 2(1)(e) is confined to Part I. It has a reference and connection with the process of dispute resolution. Its purpose is to identify the courts having supervisory control over the arbitration proceedings. Hence, it refers to a court which would essentially be a court of the seat of the arbitration process. In our opinion, the provision in Section 2(1)(e) has to be construed keeping in view the provisions in Section 20 which give recognition to party autonomy. Accepting the narrow construction as projected by the Learned Counsel for the Appellants would, in fact, render Section 20 nugatory. In our view, the legislature has intentionally given jurisdiction to two courts i.e. the court which would have jurisdiction where the cause of action is located and the courts where the arbitration takes place. This was necessary as on many occasions the agreement may provide for a seat of arbitration at a place which would be neutral to both the parties. Therefore, the courts where the arbitration takes place would be required to exercise supervisory control over the arbitral process. For example, if the arbitration is held in Delhi, where neither of the parties are from Delhi, (Delhi having been chosen as a neutral place as between a party from Mumbai and the other from Kolkata) and the tribunal sitting in Delhi passes an interim order Under Section 17 of the Arbitration Act, 1996, the appeal against such an interim order under Section 37 must lie to the Courts of Delhi being the Courts having supervisory jurisdiction over the arbitration proceedings and the tribunal. This would be irrespective of the fact that the obligations to be performed under the contract were to be performed either at Mumbai or at Kolkata, and only arbitration is to take place in Delhi. In such circumstances, both the Courts would have jurisdiction, i.e., the Court within whose jurisdiction the subject matter of the suit is situated and the courts within the jurisdiction of which the dispute resolution, i.e., arbitration is located. (emphasis supplied) The SC proceeded to dissect the Five-Judge Bench’s findings in the aforementioned paragraph as follows – firstly, the definition of ‘Court’ under Section 2(1)(e) must be construed in accordance with Section 20 of the Act, which recognizes party autonomy in choosing the ‘seat’ for arbitration proceedings; secondly, jurisdiction shall be exercised by Courts where the cause of action is located as also where the arbitration take place; thirdly, notwithstanding any obligations under an agreement, an appeal under Section 37 against an interim order passed by the AT under Section 17 of the Act would only lie in the Court in Delhi (following from the example mentioned therein) on account of such Courts exercising supervisory control over the arbitration proceedings; fourthly, both sets of Courts may exercise jurisdiction over a dispute. Having already done so earlier in Paragraph No. 40, the SC in Paragraph No. 46 of the Judgment again adverted to Paragraph Nos. 75, 76, 96, 110, 116, 123 and 194 of BALCO and noted that a conjoint reading of the said paragraphs made it apparent that the 1996 Act accepted the territoriality principle and gave recognition to party autonomy (i.e., exclusivity based on the parties’ selection of the ‘seat’). Paragraph Nos. 40 and 46 of the Judgment are reproduced below: 40. A reading of paragraphs 75, 76, 96, 110, 116, 123 and 194 of BALCO (supra) would show that where parties have selected the seat of arbitration in their agreement, such selection would then amount to an exclusive jurisdiction clause, as the parties have now indicated that the Courts at the “seat” would alone have jurisdiction to entertain challenges against the arbitral award which have been made at the seat. The example given in paragraph 96 buttresses this proposition, and is supported by the previous and subsequent paragraphs pointed out hereinabove. The BALCO judgment (supra), when read as a whole, applies the concept of “seat” as laid down by the English judgments (and which is in Section 20 of the Arbitration Act, 1996), by harmoniously construing Section 20 with Section 2(1)(e), so as to broaden the definition of “court”, and bring within its ken courts of the “seat” of the arbitration. xxx 46. If paragraphs 75, 76, 96, 110, 116, 123 and 194 of BALCO (supra) are to be read together, what becomes clear is that Section 2(1)(e) has to be construed keeping in view Section 20 of the Arbitration Act, 1996, which gives recognition to party autonomy - the Arbitration Act, 1996 having accepted the territoriality principle in Section 2(2), following the UNCITRAL Model Law. The narrow construction of Section 2(1)(e) was expressly rejected by the Five Judge bench in BALCO (supra). This being so, what has then to be seen is what is the effect Section 20 would have on Section 2(1)(e) of the Arbitration Act, 1996. (emphasis supplied) Interestingly, the SC tested the aforementioned proposition of exclusivity based on ‘seat’ selection to conclusively demonstrate that BALCO in no uncertain terms supported territorial jurisdiction and party autonomy; and why BALCO could not have contemplated the provision of concurrent jurisdiction as alleged by the Respondent. Paragraph No. 51 states as follows: 51. Take the consequence of the opposite conclusion, in the light of the facts of a given example, as follows. New Delhi is specifically designated to be the seat of the arbitration in the arbitration clause between the parties. Part of the cause of action, however, arises in several places, including where the contract is partially to be performed, let us say, in a remote part of Uttarakhand. If concurrent jurisdiction were to be the order of the day, despite the seat having been located and specifically chosen by the parties, party autonomy would suffer, which BALCO (supra) specifically states cannot be the case. Thus, if an application is made to a District Court in a remote corner of the Uttarakhand hills, which then becomes the Court for the purposes of Section 42 of the Arbitration Act, 1996 where even Section 34 applications have then to be made, the result would be contrary to the stated intention of the parties - as even though the parties have contemplated that a neutral place be chosen as the seat so that the Courts of that place alone would have jurisdiction, yet, any one of five other Courts in which a part of the cause of action arises, including Courts in remote corners of the country, would also be clothed with jurisdiction. This obviously cannot be the case. If, therefore, the conflicting portion of the judgment of BALCO (supra) in paragraph 96 is kept aside for a moment, the very fact that parties have chosen a place to be the seat would necessarily carry with it the decision of both parties that the Courts at the seat would exclusively have jurisdiction over the entire arbitral process. (emphasis supplied) 3) Indus Mobile: The meaning of ‘place’ under Section 20 of the Act The 246th Report of the Law Commission of India proposed an amendment to Section 20, in that, the word “place” was sought to be replaced by the words “seat and venue” in Section 20(1), and by the word “venue” in Section 20(3) “to make the wording of the Act consistent with the international usage of the concept of a “seat” of arbitration, to denote the legal home of the arbitration.”[9] The SC in Indus Mobile Distribution Private Limited v. Datawind Innovations Private Limited & Ors.[10] (‘Indus Mobile’) cleared the air surrounding Section 20 of the Act and ruled that when the parties had agreed upon a ‘seat’ or, upon failure of the parties to so agree, when the AT had determined a ‘place’ in accordance with Section 31(4) of the Act, it would follow that a ‘seat’ had been determined by the parties or the AT, as the case may be, and that the Courts at the ‘seat’ had been endowed with jurisdiction for the purposes of regulating the arbitration proceedings. In Indus Mobile, the SC held in relevant part as follows: 18. The amended Act, does not, however, contain the aforesaid amendments, presumably because the BALCO judgment in no uncertain terms has referred to "place" as "juridical seat" for the purpose of Section 2(2) of the Act. It further made it clear that Section 20(1) and 20 (2) where the word "place" is used, refers to "juridical seat", whereas in Section 20 (3), the word "place" is equivalent to "venue". This being the settled law, it was found unnecessary to expressly incorporate what the Constitution Bench of the Supreme Court has already done by way of construction of the Act. 19. A conspectus of all the aforesaid provisions shows that the moment the seat is designated, it is akin to an exclusive jurisdiction clause. On the facts of the present case, it is clear that the seat of arbitration is Mumbai and Clause 19 further makes it clear that jurisdiction exclusively vests in the Mumbai courts. Under the Law of Arbitration, unlike the Code of Civil Procedure which applies to suits filed in courts, a reference to "seat" is a concept by which a neutral venue can be chosen by the parties to an arbitration clause. The neutral venue may not in the classical sense have jurisdiction - that is, no part of the cause of action may have arisen at the neutral venue and neither would any of the provisions of Section 16 to 21 of the Code of Civil Procedure be attracted. In arbitration law however, as has been held above, the moment "seat" is determined, the fact that the seat is at Mumbai would vest Mumbai courts with exclusive jurisdiction for purposes of regulating arbitral proceedings arising out of the agreement between the parties. 20. It is well settled that where more than one court has jurisdiction, it is open for parties to exclude all other courts. For an exhaustive analysis of the case law, see Swastik Gases Private Limited v. Indian Oil Corporation Limited (2013) 9 SCC 32. This was followed in a recent judgment in B.E. Simoese Von Staraburg Niedenthal and Anr. v. Chhattisgarh Investment Limited: (2015) 12 SCC 225. Having regard to the above, it is clear that Mumbai courts alone have jurisdiction to the exclusion of all other courts in the country, as the juridical seat of arbitration is at Mumbai. […] (emphasis supplied) 4) ‘Seat’ is the centre of gravity: The legislative intent behind the change in definition of ‘Court’ under Section 2(1)(e) of the Act vide the Arbitration and Conciliation (Amendment) Act, 2015 By taking the example of the incorporation of “international commercial arbitration[s]” under Section 2(1)(e)(ii) pursuant to the 2015 Arbitration Amendment where the High Courts alone were given jurisdiction, the SC expanded further on how the designation of a ‘seat’ conferred exclusion jurisdiction to the Courts at the ‘seat’ despite the fact that such Courts may otherwise not have exercised jurisdiction under the classical tenets of jurisdiction contemplated under the CPC. To that end, the SC categorically stated “that in international commercial arbitrations held in India, the High Court alone is to exercise jurisdiction over such proceedings, even where no part of the cause of action may have arisen within the jurisdiction of such High Court, [and] such High Court not having ordinary original jurisdiction.” (emphasis supplied) 5) Test for the ‘seat’ The SC has sought to read arbitration clauses in a manner such that where a ‘venue’ was specified in an arbitration clause, the same would inexorably amount to a ‘seat’ in the absence of an indication to the contrary.[11] In this regard, the SC examined the law laid down by the English Courts and culled out their relevant parts – i. In Enercon GmbH v. Enercon (India) Limited,[12] the arbitration clause stated that “[t]he venue of the arbitration proceedings shall be London.” The clause further stated that “[t]he provisions of the Indian Arbitration and Conciliation Act, 1996 shall apply.” In concluding that London was, in fact, the designated ‘juridical seat’ of arbitration, the Court reconciled the reference to the 1996 Act and noted as follows: Moreover, as Cooke J. noted, this conclusion is consistent with the views expressed in The Conflict of Laws, Dicey, Morris & Collins, 14th Edition at ¶16–035 where the authors state that the seat “is in most cases sufficiently indicated by the country chosen as the place of the arbitration. For such a choice of place not to be given effect as a choice of seat, there will need to be clear evidence that the parties … agreed to choose another seat for the arbitration and that such a choice will be effective to endow the courts of that country with jurisdiction to supervise and support the arbitration”. […] the main issue is whether this last sentence [i.e., the “provisions of the Indian Arbitration and Conciliation Act 1996 shall apply] is to be regarded as “significant contrary indicia” (using the language of Cooke J.) so as to place the “seat” of the arbitration in India. xxx Second, the language in [arbitration] clause […] refers to the “arbitration proceedings”. That is an expression which includes not just one or more individual or particular hearings but the arbitration proceedings as a whole including the making of an award. In other words the parties were anchoring the whole arbitration process in London right up to and including the making of an award. The place designated for the making of an award is a designation of seat. Moreover the language in [arbitration] clause […] does not refer to the venue of all hearings “taking place” in London. [The arbitration c]lause […] instead provides that the venue of the arbitration proceedings “shall be” London. This again suggests the parties intended to anchor the arbitration proceedings to and in London rather than simply physically locating the arbitration hearings in London. Indeed in a case where evidence might need to be taken or perhaps more likely inspected in India it would make no commercial sense to construe the provision as mandating all hearings to take place in a physical place as opposed to anchoring the arbitral process to and in a designated place. […] (emphasis supplied) ii. In Shagang South-Asia (Hong Kong) Trading Company Limited v. Daewoo Logistics,[13] the arbitration clause provided for arbitration to be held in Hong Kong where English Law would apply. The Court applied the Shashoua principle and ruled that the arbitration clause providing for arbitration in Hong Kong “would ordinarily carry with it an implied choice of Hong Kong as the seat of the arbitration and of the application of Hong Kong as the curial law.” The Court further noted that a significant contrary indicia was imperative to demonstrate that the parties had agreed to a different ‘seat’ or curial law. iii. In Process and Industrial Developments Limited v. Nigeria,[14] the arbitration clause provided for the notice of arbitration to be served in accordance with the rules of the Nigerian Arbitration and Conciliation Act, 2004 and that the venue of the arbitration to be London. The Court held ‘seat’ of the arbitration designated by the parties to be London for the following reasons: It is significant that clause 20 refers to the venue "of the arbitration" as being London. The arbitration would continue up to and including the final award. Clause 20 does not refer to London as being the venue for some or all of the hearings. It does not use the language used in s. 16(2) ACA of where the tribunal may "meet" or may "hear witnesses, experts or the parties". I consider that the provision represented an anchoring of the entire arbitration to London rather than providing that the hearings should take place there. Clause 20 provides that the venue of the arbitration "shall be" London "or otherwise as agreed between the parties". If the reference to venue was simply to where the hearings should take place, this would be an inconvenient provision and one which the parties are unlikely to have intended. It would mean that hearings had to take place in London, however inconvenient that might be for a particular hearing, unless the parties agreed otherwise. […] Accordingly, the reference to the "venue" as being London or otherwise as agreed between the parties, is better read as providing that the seat of the arbitration is to be England, unless the parties agree to change it. This would still allow the arbitrators to decide where particular hearings should take place, while providing for an anchor to England for supervisory purposes, unless changed. (emphasis supplied) 6. The error in Hardy Exploration – Contrary to BALCO The SC observed that the Three-Judge Bench in Hardy Exploration failed to apply the Shashoua principle and consequently held contrary to the law laid down by the Constitution Bench in BALCO. The SC in Hardy Exploration held that the reference made to Kuala Lumpur in the arbitration clause referred to the ‘venue’ and that the ‘juridical seat’ was to be determined by the AT as the agreement failed to stipulate for the same. Under Paragraph No. 40, the Court in Hardy Exploration had noted that “the word 'place' cannot be used as seat. To elaborate, a venue can become a seat if something else is added to it as a concomitant. But a place unlike seat, at least as is seen in the contract, can become a seat if one of the conditions precedent is satisfied. It does not ipso facto assume the status of seat. Thus understood, Kuala Lumpur is not the seat or place of arbitration and the interchangeable use will not apply in strict sensu.” The SC in the Judgment noted that had the Court applied the Shashoua principle, “the answer would have been that Kuala Lumpur, which was stated to be the “venue” of arbitration proceedings […] would therefore be the juridical “seat” of the arbitration.”[15] The SC also overruled the judgment delivered by a Division Bench of the High Court of Delhi in Antrix Corporation Limited v. Devas Multimedia Pvt. Ltd.[16] (which the Respondent had relied upon) as it incorrectly interpreted Paragraph No. 96 of BALCO to infer that both Courts i.e., the court where the cause of action arose as also the court at the ‘seat’ would exercise concurrent jurisdiction. 7. Finding on facts: New Delhi had exclusive jurisdiction The SC concluded that as the arbitration proceedings were held in New Delhi – and not in Faridabad – it would follow that the parties had chosen New Delhi as the ‘seat’ of arbitration under Section 20(1) of the Act, thereby conferring it with exclusive jurisdiction insofar as Courts at the ‘seat’ were concerned. Upon such a determination being made, the fact that a part of the cause of action may have arisen at Faridabad was considered irrelevant. VI. Analysis The SC has, undoubtedly, cleared the haze enveloping the ‘seat’ jurisprudence in Indian arbitration. To that extent, the Judgment is indeed a step towards an arbitration-friendly regime. However, the Judgment presents the following concerns: i. Was it apposite for the SC to declare that Hardy Exploration “cannot be considered to be good law”[17] in light of the fact that it was a decision rendered by a coordinate Three-Judge Bench? It is respectfully submitted that the SC was seemingly conscious in the usage of the phrase “cannot be considered to be good law” in the context of Hardy Exploration. This is on account of the fact that the SC, while expressing its disagreement with findings in Antrix, was categorical in holding that “the law stated by the Bombay and Delhi High Courts […] is incorrect and is overruled.”[18] (emphasis supplied) Therefore, much like the recent events involving two contrary Three-Judge Bench judgments on the Land Acquisition law issue, will this question, too, be referred to a larger Bench? This begs the question – is the law really settled qua ‘venue’ and ‘seat’? ii. While party autonomy has been considered foremost by placing the parties’ selection of a ‘juridical seat’ at the highest pedestal, doubts as to the correctness of this approach, especially in a domestic setting where there are no ambiguities as to the choice of law etc., remain. A perusal of the cases relied upon by the SC would demonstrate that, in most instances, the question concerning the ‘juridical seat’ of arbitration was with respect to the parties’ intention to have chosen Country A or Country B as the ‘seat’ of the arbitration proceedings as opposed to jurisdiction being ascribed to a particular city, such as Mumbai or Kolkata, within the same country. Other literature referred to in the Judgment such as ‘Redfern and Hunter on International Arbitration’ and ‘The Conflict of Laws: Dicey, Morris & Collins’ also analyse the choice of seat in an international context. It is respectfully submitted that it is perhaps for this reason that the example mentioned in Paragraph No. 96 of BALCO as also the phrase, “both the Courts would have jurisdiction” contained therein raised doubts. iii. The Three-Judge Bench explained that if “the conflicting portion […] in paragraph 96 [were to be] kept aside for a moment”,[19] BALCO “when read as a whole”[20] clearly and unmistakably ruled that the selection of a ‘seat’ amounted to choosing the exclusive jurisdiction of the Courts where the ‘seat’ was located. While the Judgment may seem to suggest a simpliciter reiteration of the position adopted in BALCO, it is respectfully submitted that the tone and tenor of the Three-Judge Bench in clarifying the Constitution Bench’s judgment may set an improper example in respect of the construction and interpretation of judicial precedents. [1] BGS-SGS SOMA JV v. NHPC Limited, 2019 SCC OnLine SC 1585. The original text of the Judgment is freely available at https://main.sci.gov.in/supremecourt/2018/34840/34840_2018_4_1501_19002_Judgement_10-Dec-2019.pdf [2] BGS-SGS SOMA JV v. NHPC Limited, ¶ 16. [3] Hakam Singh v. Gammon (India) Limited, (1971) 1 SCC 286. The Supreme Court in Hakam Singh held that if two or more Courts could have assumed jurisdiction in accordance with the Code of Civil Procedure, 1908 then an agreement between the parties referring their disputes to the exclusive jurisdiction one of such Courts to try the arbitration-related proceedings would not be contrary to public policy. [4] Bharat Aluminium Co. v. Kaiser Aluminium Technical Service, Inc., (2012) 9 SCC 552. [5] Union of India v. Hardy Exploration and Production (India) Inc., 2018 SCC OnLine SC 1640. [6] BGS-SGS SOMA JV v. NHPC Limited, ¶ 34. [7] Roger Shashoua & Ors. v. Mukesh Sharma, [2009] EWHC 957 (Comm). [8] Enercon (India) Limited v. Enercon GmbH & Anr., (2014) 5 SCC 1. [9] Report No. 46, Law Commission of India, Amendments to the Arbitration and Conciliation Act 1996, August 2014, p. 52. [10] Indus Mobile Distribution Private Limited v. Datawind Innovations Private Limited & Ors., (2017) 7 SCC 678. [11] In Enercon (India) Limited v. Enercon GmbH & Anr., (2014) 5 SCC 1, the SC held that even though the arbitration clause mentioned London as the ‘venue’, the same would not be amount to being the ‘juridical seat’ as there were strong indicators to suggest that the parties had understood the seat of arbitration to be India. This was on account of the fact that the substantive law, curial law, and the law governing the arbitration agreement were all in India. The SC also expressed its disagreement with the proposition that Courts in India and England could have exercised concurrent jurisdiction. Such conferment of jurisdiction may have ensued intricate complexities and would inter alia give rise to the possibility of conflicting judgments. [12] Enercon GmbH v. Enercon (India) Limited, [2012] EWHC 689. [13] Shagang South-Asia (Hong Kong) Trading Company Limited v. Daewoo Logistics, [2015] EWHC 194. [14] Process and Industrial Developments Limited v. Nigeria, [2019] EWHC 2241. [15] BGS-SGS SOMA JV v. NHPC Limited, ¶ 93. [16] Antrix Corporation Limited v. Devas Multimedia Pvt. Ltd., 2012 SCC OnLine Del 9338. [17] BGS-SGS SOMA JV v. NHPC Limited, ¶ 96. [18] BGS-SGS SOMA JV v. NHPC Limited, ¶ 61. [19] BGS-SGS SOMA JV v. NHPC Limited, ¶ 51. [20] BGS-SGS SOMA JV v. NHPC Limited, ¶ 40. The Court also mentions that a “reading of paragraphs 75, 76, 96, 110, 116, 123 and 194 of BALCO” would show that the parties’ selection of the ‘seat’ would amount to an exclusive jurisdiction clause.

- Rishabh Dheer[1] The short point of the present article is to examine the findings of the Supreme Court in Mankastu Impex Private Limited v. Airvisual Limited[2] (‘Mankastu Impex’) in relation to determining the juridical seat of arbitration proceedings. The title of this article makes clear that in my opinion, the judgment leaves more questions than answering the same. Before discussing Mankastu Impex, I find it apposite to mention two observations made by Justice Navin Chawla (Judge, High Court of Delhi) in a recent webinar on territorial jurisdiction in arbitration proceedings[3] that serve as a fitting prelude to the seat-venue conundrum – first, that this debate is akin to the Israeli-Palestinian conflict which never seems to get resolved, and that every time one feels that the conflict stands resolved comes another judgment creating more confusion in the minds of lawyers; and second, the seat-venue debate is “a litigating lawyer’s delight and a drafting lawyer’s nightmare.” Note: Neither does this article discuss the seat v. venue debate scrutinized in BGS-SGS Soma JV v. NHPC Limited[4] (‘BGS-SGS Soma’) nor does it detail the findings of the Supreme Court in Bharat Aluminium Co. v. Kaiser Aluminium Technical Service, Inc.[5] (‘BALCO’). A comprehensive discussion on these aspects can be found in my earlier article analyzing BGS-SGS Soma here. Also excluded from the purview of this article is the examination of Clauses 17.1 & 17.3 (infra) and the consequent finding of the Court in respect of Sections 2(2) & 11 of the Arbitration and Conciliation Act, 1996 (‘Act’). BACKGROUND A Memorandum of Understanding (‘MoU’) was executed between the Petitioner (a company incorporated under the laws of India) and the Respondent (a company incorporated under the laws of Hong Kong) pursuant to which the Respondent agreed to sell its complete line of air quality monitors to the Petitioner. Disputes arose between the parties and the Petitioner invoked the arbitration clause contained in the MoU and proposed an arbitrator’s name, subject to the consent of the Respondent. Separate proceedings under Section 9 were also initiated by the Petitioner against the Respondent before the High Court of Delhi. The arbitration clause i.e., Clause 17 of the MoU has been reproduced below: 17. Governing Law and Dispute Resolution 17.1 This MoU is governed by the laws of India, without regard to its conflicts of laws provisions and courts at New Delhi shall have the jurisdiction. 17.2 Any dispute, controversy, difference or claim arising out of or relating to this MoU, including the existence, validity, interpretation, performance, breach or termination thereof or any dispute regarding non-contractual obligations arising out of or relating to it shall be referred to and finally resolved by arbitration administered in Hong Kong. The place of arbitration shall be Hong Kong. The number of arbitrators shall be one. The arbitration proceedings shall be conducted in English language. 17.3 It is agreed that a party may seek provisional, injunctive, or equitable remedies, including but not limited to preliminary injunctive relief, from a court having jurisdiction, before, during or after the pendency of any arbitration proceeding. In response to the Petitioner’s invocation of the arbitration clause, the Respondent contended that Clause 17 provided for the arbitration to be administered and seated in Hong Kong. Therefore, the Petitioner ought to have referred the dispute for arbitration in Hong Kong. The Respondent further contended that in light of the usage of the phrase “arbitration administered in Hong Kong” under Clause 17.2 of the MoU, the Respondent had not intended to refer disputes to an ad hoc arbitral tribunal but to an arbitration institution in Hong Kong. It was in this backdrop that a petition under Section 11(6) of the Act came to be filed by the Petitioner before the Supreme Court for the appointment of a sole arbitrator in terms of Clause 17.2 of the MoU. The Petitioner had two broad contentions – Firstly, the proposed arbitration between the parties was an “international commercial arbitration” in terms of Section 2(1)(f) of the Act, being seated in Delhi. Accordingly, the appointment of a sole arbitrator was sought in terms of Section 11(6) read with Section 11(9) of the Act; and secondly, pursuant to Clause 17.1 of the MoU, the parties had clearly agreed that the MoU would be governed by the laws of India and that the Courts at New Delhi would exercise jurisdiction. The Respondent, on the other hand, made two submissions – Firstly, Part-I of the Act was inapplicable as the parties had, pursuant to Clause 17.2 of the MoU, categorically agreed that the “place of arbitration shall be Hong Kong” in addition to providing that the disputes “shall be referred to and finally resolved by arbitration administered in Hong Kong”. Hence, Indian Courts were proscribed from entertaining the petition for the appointment of an arbitrator and the Petitioner was required to approach the Hong Kong International Arbitration Centre; and secondly, placing reliance on BGS-SGS Soma, the Respondent submitted that the usage of the word ‘administered’ in Clause 17.2 of the MoU manifested that the arbitration would be seated in Hong Kong. The Supreme Court held that the juridical seat of arbitration was Hong Kong in the following terms: 20. It is well-settled that “seat of arbitration” and “venue of arbitration” cannot be used inter-changeably. It has also been established that mere expression “place of arbitration” cannot be the basis to determine the intention of the parties that they have intended that place as the “seat” of arbitration. The intention of the parties as to the “seat” should be determined from other clauses in the agreement and the conduct of the parties. 21. In the present case, the arbitration agreement entered into between the parties provides Hong Kong as the place of arbitration. The agreement between the parties choosing “Hong Kong” as the place of arbitration by itself will not lead to the conclusion that parties have chosen Hong Kong as the seat of arbitration. The words, “the place of arbitration” shall be “Hong Kong”, have to be read along with Clause 17.2. Clause 17.2 provides that “....any dispute, controversy, difference arising out of or relating to the MoU “shall be referred to and finally resolved by arbitration administered in Hong Kong.....”. On a plain reading of the arbitration agreement, it is clear that the reference to Hong Kong as “place of arbitration” is not a simple reference as the “venue” for the arbitral proceedings; but a reference to Hong Kong is for final resolution by arbitration administered in Hong Kong. The agreement between the parties that the dispute “shall be referred to and finally resolved by arbitration administered in Hong Kong” clearly suggests that the parties have agreed that the arbitration be seated at Hong Kong and that laws of Hong Kong shall govern the arbitration proceedings as well as have power of judicial review over the arbitration award. [emphasis supplied in bold] ANALYSIS: A Fragmentary Judgment? The principle enunciated by the Supreme Court, which forms the major portion of discussion in the subsequent paragraphs, is once again reproduced below: “20. […] It has also been established that mere expression “place of arbitration” cannot be the basis to determine the intention of the parties that they have intended that place as the “seat” of arbitration. The intention of the parties as to the “seat” should be determined from other clauses in the agreement and the conduct of the parties.” Let us now examine the judgment in Mankastu Impex in three main prongs: 1. Are the findings in Mankastu Impex contrary to BALCO? At the outset, it is pertinent to highlight that the Constitution Bench in BALCO expressly recognized party autonomy and the territoriality principle. However, the three-judge Bench in Mankastu Impex concluded that the place of arbitration could not be the basis to determine the seat of arbitration – an antithetical finding to BALCO. Moreover, the Court did not elaborate on why it thought so. Instead, it straightaway proceeded in identifying altogether separate criteria for determining the seat (¶20). The following points manifest why the Court’s finding in Mankastu Impex in that ‘place’ cannot be the basis to determine the ‘seat’ is incorrect – (i) BALCO unequivocally states that Section 20 of the Act affords autonomy to parties to agree to any ‘place’ or ‘seat’, terms which as per the Constitution Bench “are often used interchangeably” (¶76). BALCO also quoted from Redfern and Hunter on International Arbitration[6] in support of the seat theory – “The concept that an arbitration is governed by the law of the place in which it is held, which is the ‘seat’ of the arbitration is well established in both the theory and practice of international arbitration”. (ii) Despite the usage of the word ‘place’ in all three sub-sections to Section 20, BALCO expressly distinguished between ‘seat’ (by referring to Sections 20(1) & 20(2)) and ‘venue’ (by referring to Section 20(3)). Furthermore, the Act adopts the UNCITRAL Model Law which, too, only refers to ‘place’ of arbitration under Article 20. Similarly, the New York Convention[7] does not expressly use the word ‘seat’. Article V(1)(d) contained thereunder refers to “the law of the country where the arbitration took place”, which indicates that the Convention gives recognition to party autonomy. Similarly, Clause 2 of the Geneva Protocol[8] recognizes territoriality and party autonomy inasmuch as “[t]he arbitral procedure, including the constitution of the arbitral tribunal, shall be governed by the will of the parties and by the law of the country in whose territory the arbitration takes place”. (iii) In an attempt to make the wording of the Act consistent with the international usage of the concept of a “seat” of arbitration, the 246th Report of the Law Commission of India inter alia proposed an amendment to Section 20(1) of the Act. It recommended the substitution of the word “place” with “seat and venue” in Section 20(1). However, this did not see the light of the day. In this context, the Court in Indus Mobile Distribution Private Limited v. Datawind Innovations Private Limited & Ors.[9] succinctly observed that this was “presumably because the BALCO judgment in no uncertain terms has referred to ‘place’ as ‘juridical seat’ for the purpose of Section 2(2) of the Act. It further made it clear that Section 20(1) and 20(2) where the word ‘place’ is used, refers to ‘juridical seat’, whereas in Section 20(3), the word ‘place’ is equivalent to ‘venue’. This being the settled law, it was found unnecessary to expressly incorporate what the Constitution Bench of the Supreme Court has already done by way of construction of the Act.” (iv) In BGS-SGS Soma, the Court places party autonomy at the fore in parties’ selection of a seat. The Court emphasized on the principle enunciated in Roger Shashoua & Ors. v. Mukesh Sharma[10] – which the Court in BALCO also quoted approvingly – to conclude that an arbitration clause providing for arbitration in a particular city or country (I have consciously avoided using ‘venue’ or ‘place’ here) would carry with it an implied choice of such city or country being the juridical seat unless a significant contrary indicia could demonstrate that the parties had agreed upon a different seat. (v) Even in Hardy Exploration and Production (India) Inc.[11] (‘Hardy Exploration’), the Court observed that when “a ‘place’ is agreed upon, it gets the status of seat which means the juridical seat. […] When only the term ‘place’ is stated or mentioned and no other condition is postulated, it is equivalent to ‘seat’ and that finalises the facet of jurisdiction. But if a condition precedent is attached to the term ‘place’, the said condition has to be satisfied so that the place can become equivalent to seat.” It must be clarified at this juncture that the oft-quoted test from Hardy Exploration for determination of ‘seat’ – of something else to be added to the ‘venue’ as a concomitant for it to become ‘seat’ – was used by the Court in light of the arbitration clause stipulating Kuala Lampur as the venue (and not ‘place’) for arbitration proceedings. Therefore, the Court in Mankastu Impex seems to have confused ‘venue’ with ‘place’ and, in that process, steered away from BALCO. The ramification of holding that ‘place’ may not amount to ‘seat’, especially in a scenario where the arbitration clause only specifies the place of arbitration, potentially allows for an argument that parties did not intend for such place to be the juridical seat of arbitration proceedings. In Mankastu Impex, given that (i) the arbitration clause categorically stipulated the place of arbitration as Hong Kong; & (ii) the Petitioner and the Respondent relied upon Hardy Exploration and BGS-SGS Soma, respectively, the Court could have utilized the opportunity in reading BALCO harmoniously with either or both Hardy Exploration and BGS-SGS Soma. By doing so, in any permutation and combination, the Court would have reached the same result i.e., Hong Kong being the juridical seat but with a cogent reasoning appended to the judgment. This is because in the facts of the case and in light of the dispute resolution clause, (i) the place specified in the arbitration clause (i.e., Hong Kong) having no condition precedent attached to it would have been equivalent to ‘seat’ as per the test in Hardy Exploration; and (ii) there being no contrary indication at all for postulating a different seat, let alone any significant contrary indicia, Hong Kong would have been the ‘seat’ even as per the test in BGS-SGS Soma. The following table simplifies the legal position that the three co-equal Benches prescribe for determination of the juridical seat in arbitration proceedings: Hardy Exploration ‘Place’ is equivalent to ‘seat’ when mentioned in the contract. However, if a condition precedent is attached, then the same has to be satisfied first for such ‘place’ to become the ‘seat’. A ‘venue’ can become the ‘seat’ if something else is added to it as a concomitant. BGS-SGS Soma A ‘place’ or ‘venue’ specified in the arbitration clause would tantamount to ‘seat’ unless there is significant indication to the contrary to demonstrate that the ‘venue’ stated in the arbitration clause was merely a convenient geographical location. Mankastu Impex A reference to ‘place’ alone is not sufficient. The intention of parties has to be determined from other clauses in the contract as well as the conduct of the parties. 2. A judgment with insufficient reasoning, a peculiar dispute resolution clause, and ineffectual principles At the cost of repetition, I find it necessary to highlight that the Court noted that providing for a “place of arbitration cannot be the basis to determine the intention of the parties” as to the seat. The Court then prescribed that the intention of the parties should, therefore, be determined “from other clauses in the agreement and the conduct of the parties.” (¶20) Two aspects need to be considered under this head – first, the judgment is bereft of sufficient reasoning; and second, there appears to be no correlation per se between the reasoning and the conclusion of the Court inasmuch as the Court merely relied on the text of a rather peculiar arbitration clause in arriving at its finding by rephrasing it. Bereft of Sufficient Reasoning: Unlike Hardy Exploration and BGS-SGS Soma (without going into their correctness), the judgment in Mankastu Impex does not engage with many of the aspects that the former two judgments examine in great depth. It is a short judgment which does not advert to three critical aspects: (i) While noting that the place cannot determine the parties’ intention as to seat, the Court preceded its observation by using the phrase “[i]t has also been established that” (¶ 20). However, neither does the Court elaborate upon this aspect nor does it cite any previous decisions to clarify what exactly has been established. If the reader were to hazard a guess and infer the Court’s reference to Hardy Exploration, then in light of the fact that Mankastu Impex was interpreting a clause stipulating the place of arbitration, the Court ought to have pinpointed the principle within Hardy Exploration. This is on account of the fact that even though Hardy Exploration is commonly referred to for the test of ‘venue’ qua ‘seat’, it distinctly culls out the principle in respect of both ‘place’ (¶32-34) and ‘venue’ (¶35) becoming a ‘seat’. (ii) There was no rationale for the Court to mention “conduct of the parties” (¶20) as a criterion for ascertaining the parties’ intention as the seat. In fact, a perusal of the judgment would in itself elucidate that the Court does not make use of its homemade criterion in arriving at any conclusion whatsoever – factually or principally. This can be corroborated from the fact that the Court would have reached the exact same conclusion with the exact same reasoning, or the lack thereof, in the absence of this criterion. What this, therefore, means is that a party applying the test in Mankastu Impex would have to go through an unwarranted checkpoint. (iii) While the judgment does refer to precedents in support of the significance of the juridical seat in arbitration proceedings (a matter which was uncontested and is even otherwise well-settled), the question that the Court had to answer was qua the maintainability of the petition under Section 11 of the Act, for which it had to determine the seat of arbitration. In that context alone, the Court made no reference to any precedents, including BALCO. Peculiarity of the Arbitration Clause: The Supreme Court was dealing with an arbitration clause inter alia providing for disputes being “finally resolved by arbitration administered in” a particular jurisdiction. The predominant – if not the only – basis for the Court in concluding that Hong Kong was the juridical seat was merely a reading of Clause 17.2 of the MoU which, even otherwise, was categorical in its purport. Pertinently, the Court does not use its own test ((¶20) in arriving at this conclusion. The following will elucidate my point: Clause 17.2 of the MoU Any dispute, controversy, difference or claim arising out of or relating to this MoU, including the existence, validity, interpretation, performance, breach or termination thereof or any dispute regarding non-contractual obligations arising out of or relating to it shall be referred to and finally resolved by arbitration administered in Hong Kong. The place of arbitration shall be Hong Kong. Findings by the Supreme Court 21. On a plain reading of the arbitration agreement, it is clear that the reference to Hong Kong as “place of arbitration” is not a simple reference as the “venue” for the arbitral proceedings; but a reference to Hong Kong is for final resolution by arbitration administered in Hong Kong. The agreement between the parties that the dispute “shall be referred to and finally resolved by arbitration administered in Hong Kong” clearly suggests that the parties have agreed that the arbitration be seated at Hong Kong […] 22. […] The words in Clause 17.2 that “arbitration administered in Hong Kong” is an indicia that the seat of arbitration is at Hong Kong. (sic.) The Court’s finding reproduced above unambiguously evidences that the intention of the parties in choosing Hong Kong as the ‘seat’ is neither exhibited “from other clauses in the agreement” nor from “the conduct of the parties”. This raises certain questions the answers to which are anyone’s guess – How would the Court have decided the issue in the absence of the word ‘administered’ from the arbitration clause? Would the Court have prescribed a different test in the absence of Clause 17.2 altogether? Or, would the Court have concurred with the test laid down either in Hardy Exploration or BGS-SGS Soma for determining the seat had the arbitration clause simply provided for “place of arbitration” as Hong Kong? In future, how will High Courts across the country deal with cases where the juridical seat has to be determined, especially in light of the fact that the findings in Mankastu Impex are diametrically opposed to those in BGS-SGS Soma? And finally, is Mankastu Impex a classic example of the Court applying an incorrect formula, yet yielding a correct answer? 3. The Supreme Court missed the opportunity to refer the issue to a Constitution Bench In arriving at its eventual conclusion, the Supreme Court inter alia noted (¶13) that “considering Clause 17 of the MoU in the present case and the definite clauses therein and in the facts and circumstances of the case, we are not inclined to go into the question on the correctness of BGS Soma or otherwise”. What emerges from this is that the Supreme Court, yet again, missed the opportunity to refer this issue (of seat, venue, place) to a larger Bench in the interest of certainty of law. At this juncture, it is apposite to mention that whether or not reference to a larger Bench should have been made by the Supreme Court in BGS-SGS Soma in light of its express disagreement with Hardy Exploration – a judgment by a Bench of co-equal strength – is, at best, a moot point now. Consequently, as of March 2020, there are three judgments passed by co-equal Benches of the Supreme Court – Hardy Exploration (2018), BGS-SGS Soma (2019) and Mankastu Impex (2020) – that ostensibly lay down the ‘test’ for determining the juridical seat for arbitration proceedings. It is pertinent to note that the ‘test’ that each of the three judgments propounds is different. Therefore, there are not two but three conflicting judgments in operation now, creating further confusion on this issue in addition to increasing the prospect of chance litigation. In this context, it would be apt to recall that “increase in the frequency of conflicting judgments of the superior judiciary will do incalculable harm to the system inasmuch as the courts at the grass roots will not be able to decide as to which of the judgments lay down the correct law and which one should be followed.”[12] Much like the reference to a Constitution Bench[13] in 2019 on the issue of the interpretation of Section 24 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 owing to two contradictory judgment delivered by two Benches of co-equal strength (one in 2014 and another in 2018), a reference of the seat-venue conundrum by the Court in Mankastu Impex to a Constitution Bench would have put a lid on the issue. This is particularly because the Court very well recognized that this issue had, in fact, snowballed into a major controversy inasmuch the Court recorded the Petitioner’s submission (¶13) that “Hardy Exploration and BGS Soma, both being by the three-Judges Bench, […] it was not open to the Bench rendering the decision in BGS Soma to hold that the decision in Hardy Exploration was incorrect and the learned Bench in BGS Soma ought to have referred the matter to larger Bench” before expressing its disinclination in dealing with the correctness of BGS-SGS Soma. CONCLUSION Clearly, the judgment in Mankastu Impex muddies the waters. The three co-equal Bench judgments will beleaguer Courts across the country especially in matters calling for the interpretation of a contentious dispute resolution clause. While the most certain answer would lie in a Constitution Bench settling the controversy, a draftsman must clearly mention the ‘seat’ of arbitration in an agreement if the parties so intend in order to preclude the Lernean Hydra from reappearing. [1] The author is an Advocate practicing in New Delhi. He can be reached at rishabhdheer@gmail.com. [2] Mankastu Impex Private Limited v. Airvisual Limited, 2020 SCC OnLine SC 301. [3] The Delhi High Court Bar Association on 16 April 2020 organized a webinar on “Territorial jurisdiction in Arbitration – Seat v. Venue: Unravelling the mystery of ‘Place’ that matters” where Justice Navin Chawla was the keynote speaker. [4] BGS-SGS Soma JV v. NHPC Limited, 2019 (6) Arb LR 393 (SC). [5] Bharat Aluminium Co. v. Kaiser Aluminium Technical Service, Inc., (2012) 9 SCC 552. [6] Blackaby, N., Partasides, C., & Redfern, A. (2009). Redfern and Hunter on International Arbitration. Oxford: Oxford University Press, 5th ed. (2009). [7] Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958). [8] League of Nations (1928). Protocol on Arbitration Clauses, Geneva, September 24, 1923. [9] Indus Mobile Distribution Private Limited v. Datawind Innovations Private Limited & Ors., (2017) 7 SCC 678. [10] Roger Shashoua & Ors. v. Mukesh Sharma, [2009] EWHC 957 (Comm). [11] Union of India v. Hardy Exploration and Production (India) Inc., (2019) 13 SCC 472. [12] Official Liquidator v. Dayanand & Ors., (2008) 10 SCC 1, ¶ 70. [13] Indore Development Authority v. Manoharlal & Ors., 2020 SCC OnLine SC 316.

Written by Gaurav Rai[1] Edited by Justice A.K. Patnaik[2] A. Introduction Force Majeure is a French word which means Superior Force. It is broader than its latin counterpart Vis Major which means Act of God. Ideally clauses in the contracts dealing with the consequences on the happening of a contingency should be called contingent clauses and that is how they are treated under Section 32 of the Indian Contract Act. The Indian Contract Act, 1872 does not provide for the modalities and intricacies of such clauses but, Section 32, only recognizes the right of the parties to make such clauses in their contracts. B. Legal Position As a way of general commercial practice, the scope of Force Majeure Clauses is defined in the contract itself. For eg., Force Majeure Clause may state that “all such events beyond the reasonable control of the parties which hinder the performance of the contract will be Force Majeure”. Such clauses are not only broad to the extent that they include all events which traditionally would not fit within the definition of Force Majeure but may also have a lower threshold for invocation. In many cases, a mere “hindrance” may be enough to invoke a Force Majeure Clause as compared to the requirement of impossibility under the second limb of Section 56 of the Indian Contract Act, 1872 for the contract to become frustrated due to a supervening impossibility. Hence it is to be noted that if a Force Majeure Clause exists in the contract, the language of the Force Majeure Clause in the contract becomes extremely relevant to govern the invocation and the consequential relief from the same. Frustration of contracts is dealt with in the second limb of Section 56 of the Indian Contract Act, 1872. It states that all contracts become void if the performance of the contract becomes impossible after the contract has been entered into and such impossibility was not foreseen at the time of making the contract. This paragraph of Section 56 is generally referred to as the contract becoming frustrated due to ‘supervening impossibility’. There need not be any clause in the contract between the parties for a contract to become void under this Section 56 of the Indian Contract Act, 1872. If this section of the Act is attracted, in the absence of the Force Majeure Clause in the contract between the parties, the contract becomes void and the parties will not be required to perform their obligations under the contract any longer. However, the parties will be able to get payment for any work already done under the contract by invoking Section 65 of the Indian Contract Act, 1872. The second limb of Section 56 of the Indian Contract Act, 1872 however, will not be attracted if the contract has a Force Majeure Clause and particular event which is causing the delay in performance of the obligations of the parties under the contract is covered under this Force Majeure Clause of the contract. In a situation where the unforeseen event is not covered by the Force Majeure Clause of the contract, it may be a frustration of the contract under the second limb of Section 56 of the Contract Act. The seminal judgment on the interpretation of second limb/paragraph of Section 56 of the Indian Contract Act, 1872 is the case of Satyabrata Ghose v. Mugneeram Bangur AIR 1954 SC 44.[3] In this case, the Supreme Court has held that: “The second paragraph enunciates the law relating to discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done. The wording of this paragraph is quite general, and though the illustrations attached to it are not at all happy, they cannot derogate from the general words used in the enactment. This much is clear that the word "impossible" has not been used here in the sense of physical or literal impossibility. The performance of an act may not be literally impossible but it may be impracticable and unless from the point of view of the object and purpose which the parties had in view; and if an untoward event or change of circumstances totally upsets the very foundation upon which the parties rested their bargain, it can very well be said that the promisor finds it impossible to do the act which he promised to do.” ……… In cases, therefore, where the Court gathers as a matter of construction that the contract itself contained impliedly or expressly a term, according to which it would stand discharged on the happening of certain circumstances the dissolution of the contract would take place under the terms of the contract itself and such cases would be outside the purview of Section 56 altogether. Although in English law these cases are treated as cases of frustration in India they would be dealt with under, Section 32 of the Indian Contract Act which deals with contingent contracts or similar other provisions contained in the Act.[4] (Emphasis supplied) Most recently in the case of Energy Watchdog v. Central Electricity Regulatory Commission, (2017) 14 SCC 80 [5] the aforesaid position is affirmed, and it was held therein: 32. "Force Majeure" is governed by the Indian Contract Act, 1872. In so far as it is relatable to an express or implied Clause in a contract, such as the PPAs before us, it is governed by Chapter III dealing with the contingent contracts, and more particularly, Section 32 thereof. This case has summarized and analysed many previous cases and discussed the issues connected with Force Majeure Clauses of the contract and Section 56 of the Indian Contract Act, 1872 and is a good reference point. A fundamental difference between Force Majeure Clauses and the second limb of Section 56 of the Indian Contract Act, 1872 is that Force Majeure Clauses in contracts are generally drafted in such a manner as to keep the contract alive. These clauses mostly provide consequences which aim at the contract surviving the contingent event and the parties not being in violation of deadlines under the contract. They give the parties some relief such as extending the time period of performance, sharing of costs of extended time period, delay in payment etc. These clauses anticipate that the Force Majeure event will only last for a particular amount of time and hence the parties intend to continue the contract after the Force Majeure period subsides. However, such clauses generally also provide that if the Force Majeure period extends beyond a particular time period, say 90 days, then contract will become frustrated. Hence, it can be concluded from the aforesaid discussion that, if there is no Force Majeure Clause in the contract between the parties, the parties can only get relief under Section 56 of the Indian Contract Act, 1872 that too if they pass the threshold of impossibility as laid down in the Act and as interpreted by the Supreme Court in Satyabrata Ghose v. Mugneeram Bangur. However, if there is an express Force Majeure Clause in the contract between the parties which outlines certain events as contingencies and also provides the consequences on the occurrence of such events then the parties will be governed by the express terms of the Force Majeure Clause of the contract. Further, the threshold for invoking the same will have to be passed as per the terms of the contract and the parties will only get the benefits or remedies as outlined under the contract. Any relief under Section 56 of the Indian Contract Act,1872 cannot be invoked in such circumstances. C. Practical Analysis Commercial contracts in India generally have Force Majeure Clauses wherein they define contingencies under which certain protections or consequences follow on the happening of such contingencies. Any vague Force Majeure Clauses, however, cannot be enforced in the Court of Law. The rights of the parties in these contingencies have to be specifically provided under the contract. Some examples of contingencies, may be war, epidemic, riots, act of God such as tsunami, earthquake or hurricane. On the happening of these contingencies the parties may decide the consequences, eg. extension of time period for performance of contract, sharing of increased cost due to delay in performance of the contract, right to terminate the contract without being in breach of the same due to prolonged time of existence of Force Majeure conditions etc. In my experience in assisting the Presiding Arbitrator, I have come across 3 cases wherein the arbitral Tribunal accepted that the Force Majeure Clause of the contract was attracted in the facts of the case and as per the terms of the contract and held that the parties were to be governed by the consequences as stated in the clause. The issue of Force Majeure as discussed in these cases are broadly stated hereunder: a. In a road construction case, a particular stretch of land which was handed over to the construction company to develop could not be utilised as the District Collector had disallowed cutting of trees in the particular stretch. The order of the District Collector was passed pursuant to the Orders of the Supreme Court of India, wherein the Supreme Court had protected the trees and disallowed their cutting until further orders. The construction company waited for some time for the orders to be reversed, but when the orders were not reversed, the Employer delinked the particular stretch from the scope of the work. The construction company claimed that it was entitled to idling charges for its labour and machinery deployed at the site for the period it was not able to work on the stretch until the delinking of the stretch. The Employer however took the defence that this contingency fell under Non-Political Force Majeure Event, which could not have been reasonably avoided by the Employer and because of which the parties were to bear their own cost during the subsistence of the orders passed by the Supreme Court and the District Collector. The argument of the Employer was accepted based on the terms of the agreement and the facts of the case and consequently the parties were to be governed by the terms of the Non-Political Force Majeure Event wherein it was stated that the parties will bear their own cost during the subsistence of the contingent event. The construction company lost this particular claim in the arbitration. b. In a contract for supply and installation of transformers, the contractor was unable to procure the transformers from the list of vendors approved by the buyer. All the vendors in the list were either unable to provide the exact specification of transformers as sought by the buyer or were unable to manufacture the transformer in the required time period as they had heavy backlog of orders. Major delay was caused in supply and installation of the transformers for which liquidated damages had been deducted by the buyer from the price of the contract. In arbitration, it was found that the Force Majeure Clause in the contract between the parties was very wide. It characterised every instance which was beyond the control of the parties and which caused delay in performance of the obligations of the parties as a Force Majeure Event. Further, the Force Majeure Clause also gave certain examples of such events and stated that the same were not exhaustive. Looking at the circumstances that none of the buyer’s approved vendors were in a position to supply the transformers to the contractor within the time period as prescribed in the contract, which the contractor could then install, the arbitral Tribunal held that the same amounted to a Force Majeure Event and the contractor must be given extension of time for performance of the contract as per the terms of the Force Majeure Clause. Further, liquidated damages deducted by the buyer on an incorrect interpretation of the contract was asked to be paid to contractor. However, the parties were not held to be liable for any increased cost due to the Force Majeure event because the terms of the contract specifically denied such a right to the parties. c. A telecom service provider company had a contract with a tower installation company. The contract had a defined lock—in period which, if broken, would entitle the tower company an exit price from the telecom service provider for premature exit from the contract. The telecom license of the company was cancelled by the Hon’ble Supreme Court in the 2G case based on which the telecom service provider terminated its contract with the tower installation company. The tower installation company sued for a premature Exit Amount from the contract as per the terms of the contract. The Force Majeure Clause in the contract defined Force Majeure as an act or event affecting the performance by a party of its obligations from events beyond its reasonable control including several factors and specifically order or directive of any court or competent Government Authority in India. The clause however also stated that the party whose performance is affected has to take all steps (if any) which it could reasonably be expected to have taken in order to prevent such act or event occurring. Further, the contract also stated that the Exit Amount was payable only if the termination was voluntary. The telecom service provider argued that the termination was not a voluntary termination rather an involuntary termination as their licenses had been cancelled by the Hon’ble Supreme Court of India and no foul play could have been attributed to the service provider in the license being cancelled. The telecom service provider had taken all the steps to fight the case so that their licenses are not cancelled but the same was not within their hands as the telecom licenses were cancelled for reasons beyond their control. After a discussion of all the facts and circumstances of the case, the arbitral Tribunal agreed with the reasons given by the telecom service provider and held that the Exit Amount will not be payable as the termination was an involuntary one based on the Force Majeure Clause. D. Conclusion The author hopes that the aforesaid examples will give the readers an insight into treatment of Force Majeure Clauses in arbitration and can be kept in mind by drafters of commercial contracts and by arbitration practitioners. The language of the Force Majeure Clause becomes extremely relevant in its treatment. It is suggested that Force Majeure Clauses should be specific in the events which would entitle the parties to claim protection from being in breach of the contract but it should also be made clear in the clause that if the Force Majeure Event extends beyond a particular time then it would give the parties the right to terminate the contract without any negative consequences for any actions during the Force Majeure Period. Such a clause creates a balance and would be beneficial for all the parties to the contract. [1] Gaurav Rai has completed his BBA.LLB(Hons.) from National Law University Odisha in 2015 and his Master of Laws (LL.M) from University College London in 2016. He is an Advocate registered with the Bar Council of Delhi and has been working in the office of Justice A.K. Patnaik, Former Judge, Supreme Court of India as a Legal Assistant. His primary focus is on arbitration and he assists Justice Patnaik in his duties as an arbitrator. He can be contacted at raigaurav.legal@gmail.com [2] Justice A.K. Patnaik is a Former Judge of the Supreme Court of India. Since his retirement in 2014 he is actively working as an arbitrator dealing with Domestic, International Commercial and Foreign Seated Arbitrations. [3] Satyabrata Ghose v. Mugneeram Bangur and Company & Ors. AIR 1954 SC 44 [4] Satyabrata Ghose v. Mugneeram Bangur and Company & Ors. AIR 1954 SC 44 [5] Energy Watchdog v. Central Electricity Regulatory Commission (2017) 14 SCC 80

Balaji Harish Iyer[1] INTRODUCTION The Novel Coronavirus Disease (“Covid-19”) that originated in China in late December 2019 has literally brought the world to a screeching halt. Entire countries have gone into lockdown, trade movements and international supply-chains have been restricted or disrupted[2], and stock markets have tumbled. Closely linked to business, trade and commerce, arbitration has also suffered a hit from this disease. Arbitral institutions such as the International Chamber of Commerce (“I.C.C.”), Singapore International Arbitration Center, Hongkong International Arbitration Center, and the London Court of International Arbitration, among others, have taken measures[3] to avoid personal meetings. Some institutions have asked arbitrators, counsels and parties to email their queries, submissions and awards, or file them online through specific portals;[4] others have mandated a 14-day self-quarantine for visitors to the centers.[5] The result of such restrictions and stop-gap solutions postponed, delayed indefinitely or cancelled cases.[6] Naturally, this means losses amounting to several millions of dollars. The solution to this standstill appears to be simple: implement methods to continue arbitrations online and conduct virtual proceedings, and thereby encourage Online Dispute Resolution.[7] The first in an article series, this article is aimed at providing an overview of the benefits of online arbitration; further articles will deal with specific issues that could relate online arbitrations. CAN PRESENT INSTITUTIONAL RULES MANAGE THE SITUATION? Not all of the existing institutional arbitration rules envisage a situation such as the one caused by Covid-19. Arbitrators and parties may have to use the applicable existing institutional arbitration rules to delay or extend arbitral proceedings beyond the stipulated date for conclusion; for example, the 2017 version of the I.C.C. Rules of Arbitration empower the Court of Arbitration and the arbitrator to extend the arbitral proceedings[8] beyond the typically prescribed six months[9]. An I.C.C. arbitral tribunal, by application of parties or sua sponte, also may resort to modifying the agreed procedural timetable and communicate such a modification to the Court of Arbitration.[10] The 2018 version of the rules of the German Arbitration Institute (“D.I.S.”) also empower arbitral tribunals to amend the agreed procedural timetable,[11] which can be used by D.I.S. arbitral tribunals to accommodate parties and proceedings that are impacted by Covid-19. These examples of how such a singular situation may be managed are not to suggest that there are no institutional rules that provide for online arbitrations.[12] Online arbitrations[13], requiring parties to share their respective cases and supporting documents digitally and receive a decision online,[14] has been propagated for a long time. Most examples are of the Business-to-Consumer and e-commerce space. For instance, disputes over domain names have been resolved by the Internet Corporation for Assigned Names and Numbers[15] almost since the idea of the internet; while this is not a true arbitration culminating in a binding award[16], it has nonetheless proven effective. eBay and PayPal follow similar dispute settlement mechanisms. In the realm of true arbitrations[17], which culminate in binding awards, the International Commercial Arbitration Courts of the Chambers of Commerce & Industries of Russia[18] and Ukraine[19] provide for hearings, examinations of witnesses and experts to happen via video conference, but this is subject to the discretion of the arbitral tribunals constituted under these respective rules; there are no reported cases of arbitral tribunals agreeing to conduct proceedings via video conference. The I.C.C. has long-established “Netcase”, a secure online arbitration portal which can be used by all parties to conduct proceedings following their assent by signing a statement of acceptance.[20] The I.C.C. also has prescribed a set of standard guidelines[21] for tribunals and parties that wish to adapt technology into the arbitral process in general. While examples of institutional rules being technology-friendly certainly exist, it appears that the international arbitration community has been relatively slow on its uptake,[22] with one commentator stating that he recalls only one instance, as president of a D.I.S. arbitral tribunal, in which virtual hearings were conducted[23]. This begs the question as to why the international arbitration community has been so slow to adapt I.T. to international arbitration? The answers could range from an inertia towards adapting technology to a lack of awareness; the current operation of online dispute resolution in specific business-to-consumer markets such as domain names, PayPal and eBay;[24] and, issues such as enforceability of awards rendered online[25] and the rules applicable to such disputes. In other words, there are both legal and non-legal drawbacks to the usage of information technology in international arbitration, none of which in my submission, are fatal to the process; on the contrary, there are sufficient answers and safeguards to the issues raised by bringing in technology to aid international arbitration. This article series will examine each of these issues in turn, in further articles. This particular article will confine itself to embellishing the benefits of bringing in technology to aid international arbitration. WHAT ARE THE BENEFITS OF TECHNOLOGY IN ARBITRATION? The most obvious benefits of adapting technology into arbitrations, conducting virtual hearings and online arbitrations are achieving savings on cost and time.[26] Online arbitration is potentially cost-effective because of the speed of the process and only a partial assumption of operating costs (such as travel and venue costs) by the parties. The instantaneous availability of information reduces the time taken for an arbitration. This advantage has been best espoused as follows: “The fabulous advantage of online disputes is that distances are abolished. A dispute is resolved in the same manner as the contract was entered into – and performed …. …. …. As far as online justice is concerned, if the competent court is located far away from the claimant’s home, [online arbitration] will guarantee access to justice that might otherwise be impracticable. This is all the more necessary as on the Internet people and businesses whose paths would never have crossed offline now enter into contracts with each other. The advantage of [online arbitration] in overcoming geographical limitations holds true until it comes to enforcing the outcome of the […] procedure.”[27] Disputes can be settled remotely, without requiring parties or counsels to be physically present; most people would have to connect through videoconference with the arbitral tribunal or in certain instances through their chosen organisations. Physical meetings could be replaced by electronic media, resulting in at least a partial elimination of physical presence. While there have been comments on the requirement of significant technological resources for organizing virtual hearings[28], in reality, it would not cost much or be overly complicated to organize hearings through software such as Skype, Zoom[29] or Google Meets. Other objections have been raised as to the equality of parties in organizing videoconferences arising out of differences in qualities of internet connections;[30] while this objection will be dealt with in a subsequent article in this series, suffice it to say that such problems were things of the past and with the advent of unlimited 4G, high speed and fiber technology, are unlikely to occur. Document transfers and correspondence takes place online. The cost involved is modest, in comparison to the need to photocopy or print out bulky documents. The tribunal, parties and counsels can do keyword searches within documents to minimize time and effort. Statements of claim, defence, and witness statements could be digitally signed and ratified. CONCLUSION Given the current standstill that international business and dispute resolution have achieved, there is a case to be made for resorting to online arbitration and adapting technology into the arbitral process. It is not denied that there are legal issues such as determination of the seat of arbitration, confidentiality, equal treatment of parties and enforceability of awards; these aspects will be dealt with individually in further articles in this series; despite these potential drawbacks, it is submitted that these drawbacks can be overcome and technology can serve to aid the arbitral process. In sum, perhaps the time is ripe for the world to adopt online dispute resolution and online arbitration in particular. [1] Balaji Harish Iyer is an advocate practising before the Bombay High Court. His focus is on arbitration and alternate dispute resolution. Balaji is an alumnus of the Humboldt University of Berlin, where he pursued an LL.M. in International Dispute Resolution, and National Law University, Delhi. Email: balaji@georgerebello.com, Mobile: +917349360143. [2] Gary L Benton, How Will the Coronavirus Impact International Arbitration?, Kluwer Arbitration Blog (2020), http://arbitrationblog.kluwerarbitration.com/2020/03/13/how-will-the-coronavirus-impact-international-arbitration/ (last visited Apr 1, 2020). [3] See Id.; See also Raid Abu-Manneh et al., Impact of Covid-19 in International Arbitration, Mayer Brown (2020), https://www.mayerbrown.com/en/perspectives-events/publications/2020/03/impact-of-covid19-in-administered-arbitrations (last visited Apr 2, 2020); See also Asmita Singh, Impact of Coronavirus on International Arbitration, The Arbitration Workshop (2020), https://www.thearbitrationworkshop.com/post/impact-of-coronavirus-on-international-arbitration-asmita-singh (last visited Apr 2, 2020). [4] See, COVID-19: Urgent Communication to DRS Community, (2020), https://iccwbo.org/media-wall/news-speeches/covid-19-urgent-communication-to-drs-users-arbitrators-and-other- neutrals/. (last visited Apr 1, 2020); See also, LCIA Services Update: COVID-19, (2020), https://www.lcia.org/lcia-services-update-covid-19.aspx (last visited Apr 1, 2020); See also, COVID-19 Information for SIAC User, , https://www.siac.org.sg/images/stories/press_release/2020/[ANNOUNCEMENT] COVID-19 Information for SIAC Users.pdf (last visited Apr 1, 2020). [5] See, Precautionary Measures at HKIAC in Response to COVID-19, , https://www.hkiac.org/our-services/Facilities (last visited Apr 1, 2020). [6] See specifically on the impact Gary L Benton, supra note 1; See a report on requests for adjournment by parties to arbitral tribunals, Aishwarya, Coronavirus: Indian Arbitration Forum urges Arbitral Tribunals to view requests to adjourn proceedings leniently to minimise health risks (2020), https://www.barandbench.com/news/coronavirus-indian-arbitration-forum- urges-that-requests-to-adjourn-arbitral-proceedings-be-considered-to- minimise-health-risks (last visited Apr 1, 2020). [7] Nils Schmidt-Ahrendts, Virtual Hearings in times of COVID-19 (2020), https://www.linkedin.com/posts/nils-schmidt-ahrendts-95ba8336_virtual-hearings-in-times-of-covid-19-activity-6650814927810383872-j7k7 (last visited Apr 1, 2020); See also Asmita Singh, supra note 2. [8] ICC Rules of Arbitration 2017, 31(2) (2017), https://iccwbo.org/dispute-resolution-services/arbitration/rules-of-arbitration/ (last visited Apr 1, 2020). [9] Id. at 31. [10] Id. at 24(2) & 24(3). [11] DIS Arbitration Rules 2018, 27.6 (2018), http://www.disarb.org/en/16/rules/-id38 (last visited Apr 1, 2020). [12] See Chen Zhi, The Path for Online Arbitration: A Perspective on Guangzhou Arbitration Commission’s Practice, Kluwer Arbitration Blog (2019), http://arbitrationblog.kluwerarbitration.com/2019/03/04/the-path-for-online-arbitration-a-perspective-on-guangzhou-arbitration-commissions-practice/ (last visited Apr 2, 2020); See also Jana Herbeczkova, Certain Aspects of Online Arbitration, 4, https://www.law.muni.cz/sborniky/dp08/files/pdf/mezinaro/herboczkova.pdf (last visited Apr 2, 2020). [13] See some permutations and combinations in Farzaneh Badiei, Online Arbitration: Definition and Its Distinctive Features, 684 CEUR Workshop Proceedings 87–93, 92 (2010). [14] See the example in Jana Herbeczkova, supra note 11 at 4–5. [15] Gabrielle Kaufmann-Kohler, Online Dispute Resolution and its Significance for International Commercial Arbitration, 693 Global Reflections on International Law, Commerce and Dispute Resolution 437–456, 441 (2005); See also Course on Dispute Settlement in International Trade, Investment and Intellectual Property, , in International Commercial Arbitration: Electronic Arbitration, 5. [16] See Gabrielle Kaufmann-Kohler, supra note 14 at 440; See also Course on Dispute Settlement in International Trade, Investment and Intellectual Property, supra note 14 at 5; See also Jana Herbeczkova, supra note 11 at 7. [17] See Gabrielle Kaufmann-Kohler, supra note 14 at 441. [18] The Rules of Arbitration of International Commercial Disputes, 30(6) (2017), https://mkas.tpprf.ru/en/documents/ (last visited Apr 1, 2020). [19] See The Rules of the International Commercial Arbitration Court, 47(2) (2018), https://icac.org.ua/wp-content/uploads/Rules-of-the-ICAC-at-the-UCCI.pdf (last visited Apr 1, 2020). [20] ICC Netcase: A Secure Online Environment for ICC Arbitration, (2005), https://iccwbo.org/content/uploads/sites/3/2016/11/NetCase-Pamphlet-English.pdf (last visited Apr 1, 2020). [21] See the entire Operating Standards for the Use of IT in International Arbitration, (2004), https://library.iccwbo.org/content/dr/COMMISSION_REPORTS/CR_0029.htm?l1=Commission%20Reports&l2= (last visited Apr 1, 2020). [22] Nils Schmidt-Ahrendts, supra note 6 at Bullet (3); See also Gabrielle Kaufmann-Kohler, supra note 14 at 455 where the author states, “The amounts at stake will not act as an incentive to replace live hearings with e-mails and chat rooms”; See also Course on Dispute Settlement in International Trade, Investment and Intellectual Property, supra note 14 at 6–7; See also Section 9 in Jana Herbeczkova, supra note 11 at 11. [23] Nils Schmidt-Ahrendts, supra note 6 at Bullet (3). [24] Pablo Cortes, What is Online Dispute Resolution? 1 (2011), https://www.law.ox.ac.uk/sites/files/oxlaw/dr_pablo_cortes.pdf (last visited Apr 2, 2020). [25] Gabrielle Kaufmann-Kohler, supra note 14 at 453–54; See also Jana Herbeczkova, supra note 11 at 10–11. [26] Farzaneh Badiei, supra note 12 at 90–91. [27] Gabrielle Kaufmann-Kohler, supra note 14 at 453. [28] Course on Dispute Settlement in International Trade, Investment and Intellectual Property, supra note 14 at 33. [29] Nils Schmidt-Ahrendts, supra note 6 at Bullet (7). [30] Course on Dispute Settlement in International Trade, Investment and Intellectual Property, supra note 14 at 36.

Shreesh Chadha[1] INTRODUCTION The Arbitration and Conciliation (Amendment) Act, 2015 (2015 Amendment) introduced a large number of changes and it’s aspects have been discussed time and again by the Supreme Court of India and various High Courts. However, the same kind of lucidity has not been given to the amendment in Section 8 of the Act, 1996, particularly the limitation for filing an application before the “judicial authority” for appointment of an arbitrator. The unamended Section 8 of Arbitration and Conciliation Act, 1996 (Act) specified the time limit for filing an application in implicit terms as “not later than when submitting his first statement on the substance of the dispute”. Subsequently, Section 8 of the Act, 1996 was amended and currently reads as-“not later than the date of submitting his first statement on the substance of dispute”. Pertinently, issues pertaining to this amendment were raised before the Delhi High Court in SSIPL Lifestyle Pvt. Ltd. vs. Vama Apparels (India) Pvt. Ltd.[2], which recently adjudicated on the purport of the 2015 Amendment in this regard. This article will elucidate the reasoning of the Delhi High Court and the analysis of the position of law on the time limit to refer the dispute to arbitration as per Section 8 of the Act, 1996. MEANING OF “FIRST STATEMENT” IN SECTION 8 OF THE ACT,1996 The Supreme Court had previously clarified the meaning of “first statement” as used in both the amended and unamended Section 8 of the Act, 1996. In Rashtriya Ispat Nigam Ltd. vs. Verma Transport Company[3] the SC has observed that the term “first statement” in Section 8 of the Act, 1996 means – “36. The expression “first statement on the substance of the dispute” contained in Section 8(1) of the 1996 Act must be contradistinguished with the expression “written statement”. It employs submission of the party to the jurisdiction of the judicial authority. What is, therefore, needed is a finding on the part of the judicial authority that the party has waived its right to invoke the arbitration clause.” Further, the Delhi High Court in Sharad P. Jagtiani vs. Edelweiss Securities Limited[4] has opined that the “first statement” in a civil suit, must necessarily mean the “written statement” submitted by the defendant. The Delhi High Court opined as follows: “15. Section 8 does not specify the manner in which the party has to submit its first statement on the substance of the dispute, and normally with respect to a suit, the first statement on the substance of the dispute by the defendant would be the written statement.” Therefore, it is an established position that irrespective of the 2015 Amendment, the event that governed the time limit of referring a dispute to arbitration, was the filing of the written statement. LIMITATION PERIOD UNDER SECTION 8 OF THE ACT, 1996 The issue of time limit under the unamended Section 8 of the Act,1996 was dealt by the Supreme Court in Booz Allen and Hamilton Inc. vs. SBI Home Finance Ltd. & Ors.[5] It was stated that even though there was no time limit mentioned in Section 8 of the Act, 1996 (before the 2015 Amendment), the provision read with the scheme of the Act indicated that an application before the judicial authority should be filed “at the earliest”. Thus, it follows as a necessary inference that any time before the filing of a written statement, irrespective of whether interim applications were filed by the defendants, or settlement talks were going on between parties, an application under Section 8 of the Act, 1996 for referral of disputes to arbitration can be raised. Notably, the Amendment 2015, had introduced the words- “not later than the date” in Section 8 of the Act, 1996, and it was the impact of such an amendment which was the issue before the Delhi High Court in SSIPL Lifestyle (supra). In SSIPL Lifestyle case (supra), the issue came up for hearing before a Single Judge when in two connected suits, the Defendants-Vama Apparels filed an application under Section 8 of the Act, 1996 in both suits along with applications for condonation of delay under the Limitation Act,1963. These applications were being heard together in the two suits filed for recovery of sums arising out of a sale-purchase agreement between the parties. The issues that were raised before the Single Judge bench were- (i) Whether the amended Section 8 of the Act, 1996 prescribes a time limit for filing an application? And (ii) Whether the time limit under the Code of Civil Procedure, 1908 (CPC) and Commercial Courts Act, 2015 is applicable to an application under Section 8 of the Act, 1996? In response to the questions framed, the Bench analysed other decisions of the Delhi High Court which previously dealt with these issues. One of them being, Hughes Communications India Ltd. and Ors. vs. Union of India[6] wherein it was opined that the only time limitation under Section 8 of the Act,1996 is that it should not be filed later than the first statement by the defendant. It was further held, that merely because the time for filing the written statement had expired, the defendant is not estopped from filing an application under Section 8 of the Act, 1996 and seek referral of the dispute to arbitration. This case was cited with disapproval in the SSIPL Lifestyle case (supra), as it relied on a decision of the Madras High Court in M/s Sri Ragavendra Advertising & Anr vs. Prasar Bharti (Broadcasting Corporation of India)[7] which dealt with the unamended Section 8 of the Act, 1996. A significant ruling by the Delhi High Court in Krishan Radhu vs. Emmar MGF Construction Pvt. Ltd.[8] on the effect of the 2015 Amendment to Section 8 of the Act,1996 was cited with approval in SSIPL Lifestyle (supra). It was held in this case that by inclusion of the words “not later than the date of submitting his first statement on the substance of dispute” a specific time limit for filing a Section 8 application under the Act, 1996 was introduced. Affirming that the words, “first statement” necessarily refer to the written statement, it was propounded that the amended Section 8 of the Act, 1996 required the party to file an application under Section 8 of the Act, 1996 for the referral of the dispute to arbitration, and the words “not later than the date” prescribe the time limit that would concomitantly apply to the filing of the written statement. The relevant excerpt of the Krishan Radhu (supra) judgement is extracted hereinbelow: “17. Thus, the third amendment to Section 8 (1) whereby the existing words “not later than when submitting” have been substituted by “not later than the date of submitting” are of some import. Under the amended law the defendant is now required to invoke the arbitration clause and apply to the court for a reference thereunder by moving an application but not required to file his written statement or any answer to set out his statement on the substance of the dispute. Rather, the submission of the written statement or reply indicating his (first) statement on the substance of the dispute may be construed as waiver of the right to seek reference to arbitration, or even as submission to or acquiescence of the jurisdiction of the court where the action has been brought by the claimant (the plaintiff). The amended provision of Section 8 (1), however, sets out a limit to the period within which such application invoking the arbitration agreement must be presented. It is this limitation period which is indicated by the words “not later than the date of submitting. ... 19. It is clear from the above provision of law that a defendant when called upon to respond to the claim brought by a civil suit and upon being served with the summons is required, by the law, to submit his reply or response in the form of “written statement” within the period of thirty (30) days. So read for purposes of the arbitration law, it is this period which is the period within which “first statement on the substance of the dispute” under the amended law is expected to be submitted.” Therefore, the extendable period of 30 days as mentioned in Order 8 Rule 1, CPC is the stipulated limitation even for an application under Section 8 of the Act, 1996. The correct position in law as cited by the Bench, was advanced by the Delhi High Court in Anil Mahindra vs. Surender Kumar Makkar[9] wherein it was held that the defendants in this case, had participated in the proceedings before the civil court, by availing the extended 90 day period under Order 8 Rule 1, CPC to file the written statement, and belatedly filing the Section 8 application under the Act, 1996 after expiry of the stipulated period amounts to unnecessarily delaying the adjudication of the dispute. The Section 8 of the Act, 1996 application was hence, denied in this case. Relying on the abovementioned decisions, in Krishan Radhu (supra) and Anil Mahindra (supra), the Bench observed that the period for filing the written statement in this case was closed, and the Section 8 application could not be filed after the expiry of such period. It was held that the 2015 Amendment was introduced to provide for a time limit under Section 8 of the Act, 1996 and the word “date” in the amended provision implied precision and was incapable of ambiguity. It was also observed that the scheme of the 2015 amendments in other provisions such as Section 9, Section 11, Section 29A, Section 29B has been to “tighten the time limit to commence and conclude arbitration proceedings” and that such an effort to expeditiously resolve arbitration or related proceedings must be given full effect to by the Courts. Therefore, it was conclusively answered in no uncertain terms that the time limit for filing an application under Section 8 of the Act,1996 is the same as the time limit for filing the written statement under Order 8 Rule 1, CPC, which is 90 days for non-commercial suits, and 120 days (by virtue of Commercial Courts Ac, 2015) for commercial suits. CONCLUSION The ruling of the Delhi High Court in SSIPL Lifestyle (supra) is in line with subsequent amendments to the Act,1996 such as the time limit being prescribed for completion of pleadings before the tribunal [in S. 23 by the Arbitration and Conciliation (Amendment) Act, 2019]. It is also pertinent to mention that by implication the time limit for filing a Section 8 application is mandatorily 120 days, and cannot be filed beyond that period, as held by the Supreme Court in M/s SCG Contracts India Pvt. Ltd. vs. K.S. Chamankar Infrastructure Pvt. Ltd. & Ors[10]. The impact of the ruling is vast. It compels the parties to stick to a time limit for referring the dispute to arbitration, and holds the delay in such a request as a waiver of the right to invoke arbitration. Granted, the procedure of arbitration is inherently more flexible, less time consuming and more informal than court proceedings, but the Delhi High Court has proved that such a callous approach to arbitral proceedings is unwarranted and cannot be permitted. [1] Shreesh Chadha is a final year student at Jindal Global Law School(JGLS), Sonepat and can be reached at shreeshchadha@gmail.com. [2] SSIPL Lifestyle Pvt. Ltd. vs. Vama Apparels (India) Pvt. Ltd. C.S. COMM. 735/2018. [3] Rashtriya Ispat Nigam Ltd. vs. Verma Transport Company 2006 7 SCC 275. [4] Sharad P. Jagtiani vs. Edelweiss Securities Limited, FAO (OS) 188/ 2014. [5] Booz Allen and Hamilton Inc. vs. SBI Home Finance Ltd. & Ors. (2011) 5 SCC 532. [6] Hughes Communications India Ltd. and Ors. vs. Union of India CS(COMM) 439/2017. [7] M/s Sri Ragavendra Advertising & Anr vs. Prasar Bharti (Broadcasting Corporation of India)2009 -5-L.W.439. [8] Krishan Radhu vs. Emmar MGF Construction Pvt. Ltd. CS(OS) 3281/2014. [9] Anil Mahindra vs. Surender Kumar Makkar C.M.(M) 243/2016. [10] M/s SCG Contracts India Pvt. Ltd. vs. K.S. Chamankar Infrastructure Pvt. Ltd. & Ors. (Civil Appeal No. 1638 of 2019 arising out of S.L.P (C) No. 103/2019).

Link to the originally published article in The Interpreter by the Lowy Institute ANAÏS TOBALAGBA [1] & JUSTIN JOS [2] Newly released rules can help close a gender gap in international tribunals – both on the bench and in processes. Of those who serve on the world’s various international tribunals for resolving business or human rights disputes, the under-representation of women as arbiters has been well documented. According to the International Chamber of Commerce, out of the total of sole arbitrators appointed or confirmed by the International Court of Arbitration in 2018, only 29% were women, whereas 21% of presidents and 13% of co-arbitrators were women. Similarly, the 2019 Annual Report of the International Centre for Settlement of Investment Disputes shows that 24% of the arbitrators and conciliators appointed were women. Trends are slowly evolving towards filling this gender gap as international arbitral institutions recognise the need for change. Initiatives such as the Equal Representation in Arbitration Pledge, for example, seek to increase the number of women appointed as arbitrators. In this context, how can promoting gender diversity in international arbitration influence the resolution of business and human rights disputes? This question has of late become particularly relevant. On 12 December 2019, the Business and Human Rights Arbitration Working Group released The Hague Rules on Business and Human Rights Arbitration (known simply as the Hague Rules). These rules “provide a set of procedures for the arbitration of disputes related to the impact of business activities on human rights”. They allow individuals, states, and corporate entities to settle their disputes with companies and business partners in front of an international arbitral tribunal. There has been a lot of debate about the suitability of international arbitration for human rights disputes, including in relation to claims against corporations. Concerns were raised about the potential unlikeliness of corporations to settle their human rights disputes through arbitration, and about international arbitration possibly conflicting with other remedies for human rights abuses. However, the 2011 UN Guiding Principles on Business and Human Rights place responsibility on states and businesses to provide remedies for those harmed by corporate activities. The Hague Rules thus seem to facilitate the establishment of a new dispute settlement avenue for rights-holders. The adverse impacts of business operations affect men and women differently. The Danish Institute for Human Rights reports, for instance, that in supply chains across several industries, women face gender-specific forms of segregation, discrimination, and violence. Women also face barriers in accessing effective remedies when their rights have been violated. These barriers include lack of information about their rights, high financial costs of participating in grievance processes, stigma and stereotypes associated with certain abuses of women’s rights, and dispute resolution processes that lack gender responsiveness. According to the UN Working Group on the issue of human rights and transnational corporations and other business enterprises: even if affected women are able to access certain judicial, non-judicial or operational-level mechanisms, they are unable to enforce suitable remedies, because these remedial mechanisms typically adopt gender-neutral processes or, worse, operate within existing patriarchal norms. In other words, some avenues for remedy fail to consider women’s specific but varied experiences and needs. In the context of business and human rights, this may result in reinforced power imbalances between companies and female rights-holders. This is where international arbitration may have a role to play. It is accepted that arbitration is not an appropriate way to address all human rights violations that women face. Yet, it may offer female rights-holders alternative options for remedy when other non-state mechanisms have the potential of perpetuating discrimination against women. While international arbitration should not be presumed to replace state judicial and non-judicial mechanisms to address business-related violations of women’s rights, it is an avenue that, as one analyst puts it, “we cannot afford to close off”. However, for international arbitration to contribute to filling gender gaps in the resolution of business and human rights disputes, it is crucial that the nominated arbitral tribunal adopt a gendered approach to decide on cases of gender discrimination, inequality and abuses of women’s human rights. One of the ways the arbitral tribunal can develop more gender-responsive processes and awards is by consistently appointing and encouraging parties to appoint female arbitrators. This fits with the Hague Rules, which call for the formation of “a diverse tribunal”. As it is also the case for state-based judicial institutions, many agree that more gender diversity in arbitration produces better-quality decisions that are more satisfactory for all the parties involved, including women. It is important to note that beyond gender, the goal for more diversity in arbitral tribunals extends to the full spectrum of diversity. To achieve this objective the arbitral tribunal could establish a formal process through which it would appoint and encourage parties to appoint women arbitrators. It would be simplistic to ignore the fact that the pool of women available to be arbitrators is relatively small, and parties can have limited access to information about suitable women candidates. This is why this process could involve systematically providing parties with lists of potential female arbitrators or referring them to arbitrator databases such as ArbitralWomen. Although international arbitration of business and human rights claims is a recent and still uncertain process, making it work for female rights-holders is important in order to achieve effective remediation outcomes. To meet this goal, it is imperative that the nominated international arbitral tribunal adopt an intersectional understanding of women’s human rights while resolving disputes between rights-holders and corporations. [1] Anaïs Tobalagba is a PhD Researcher and a Teaching Fellow at the Faculty of Law of the University of Technology Sydney (UTS). Her research focuses on corporation’s human rights responsibilities and their potential to prevent violence against women in business operations. Before commencing her graduate studies at UTS, Anaïs worked in Europe, North and Central America, Africa and Australia for various government and non-government institutions including the International Committee of the Red Cross and Partnership Africa Canada (now Impact). She managed projects on national implementation of international humanitarian law, certification of conflict minerals, and access to justice for women survivors of conflict-related sexual violence. [2] Justin Jos is a PhD candidate at the Faculty of Law, University of New South Wales, Sydney. He completed his undergraduate law and business administration (BBA LLB) degree from National Law University Odisha, India and Master of Laws (Distinction) from University of Exeter, United Kingdom as a Commonwealth Shared Scholar. Justin’s main research interests lie at the intersections of corporate accountability and international human rights law.

19th July 2019 The Supreme Court of India on 1st July,2019 delivered the judgment in the case of Reckitt Benckiser (India) Private Limited v. Reynders Label Printing India Private Limited and Anr[1]. The question poised before the Court was whether a Foreign group company (Respondent No. 2 in the Clause Title) which was part of the same group as its Indian Affiliate, could be made a party to the arbitration under an agreement to which it was not a signatory. The applicant and the Respondent No. 1 (Indian Affiliate) were parties to the Agreement and a petition had been made to implead the Foreign Group Company to the proposed arbitration although it was not a signatory to the agreement. Link to the Judgment is here: https://sci.gov.in/supremecourt/2016/24972/24972_2016_9_1503_14652_Judgement_01-Jul-2019.pdf Hon’ble Justice Khanwilkar in his judgment made it clear that this issue was “no longer res integra” and relied upon the principles laid down in the case of Chloro Controls India Private Limited Vs. Severn Trent Water Purification Inc. and Ors.[2], wherein a three-Judge Bench of the Apex Court opined that ordinarily, an arbitration takes place between persons who have been parties to both the arbitration agreement as well as the substantive contract underlying it. Invoking the doctrine of “group of companies”, the Court in the Chloro Controls case(Supra) went on to further observe that an arbitration agreement entered into by a company, being one within a group of corporate entities, can, in certain circumstances, bind its non-signatory affiliates. Accordingly, the Supreme Court of India while placing reliance on Chloro Controls(Supra) went on to examine whether it was manifest from the indisputable correspondence exchanged between the parties, culminating in the agreement dated 1st May, 2014, that the transactions between the applicant and Respondent No.1 were essentially with the group of companies and whether there was a clear intention of the parties to bind both the signatory as well as non-signatory parties (Respondent No.1 and Respondent No.2, respectively). Notably, the Applicant during the course of proceedings made two assertions, namely that the Respondent No. 2 was the parent company of the Respondent No 1 and that the negotiations in finalising the Agreement were made by a Mr. Frederick Reynders who was a promoter of Respondent No. 2. Thereafter the court examined the Counter affidavit and the communication exchanged between the parties and came to the conclusion that the Respondent No. 2 was not the parent company of Respondent No. 1 but both the companies were rather part of the same group of companies. Secondly, Mr. Frederick Reynders was not a promoter of Respondent No. 2 but rather an employee of Respondent No. 1 on behalf of whom he made the negotiations. The Applicant had also made an assertion during its rejoinder that Mr. Frederick Reynders was taking instructions from Respondent No. 2. As per the facts of the present case the only causal connection that the Respondent No. 2 had to this agreement was that the group companies of Respondent No. 1 had agreed to indemnify the Applicant for losses caused to them. Once it has been held that the Respondent no. 2 had no intention to be part of the Agreement the onus falls on the applicant to show that the Respondent no. 2 had an intention to arbitrate albeit for a limited purpose of enforcing the indemnity clause. This burden had not been discharged by the applicant and hence the Supreme Court was not inclined to allow the application to implead Respondent No. 2. Having established that Mr. Reynders was not connected to the Respondent No. 2 and only acted in his capacity as a representative of the Respondent No. 1, the Supreme Court stated that in such a situation it was irrelevant that the Respondent No. 2 was part of the same group company as Respondent No. 1 as the burden was on the Claimant to establish that Respondent No.2 had an intention to consent to the arbitration agreement and be party thereto, maybe for the limited purpose of enforcing the indemnity clause in the agreement, which refers to Respondent No.1 and the supplier group against any claim of loss, damages and expenses, howsoever incurred or suffered by the applicant and arising out of or in connection with matters specified therein. Based on the affidavit and the communications between the parties, the Court dismissed the arguments of the Applicant that there existed a clear and mutual intention of the parties to extend the arbitration clause to the non-signatory foreign group company. Hence the Hon’ble Supreme Court of India did not allow the Foreign Group Company, which was not a signatory to the agreement containing the arbitration clause, to be impleaded in the arbitration between the two signatory parties to the agreement. Hence this case should be a guide to parties and arbitral Tribunals as to what factors are relevant for a non-signatory Foreign Group Company to be impleaded in an arbitration in which its Indian affiliate is a signatory. The thumb rule for impleading foreign group companies which are non- signatories to the arbitration agreement is to check whether there was a clear and mutual intention of the parties to bind not only the signatory but the non-signatory parties as well. [1] Reckitt Benckiser (India) Private Limited v. Reynders Label Printing India Private Limited and Anr. Petition for Arbitration (Civil) NO. 65 OF 2016, Supreme Court of India [2] (2013) 1 SCC 641 - https://sci.gov.in/jonew/judis/39605.pdf