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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

*Asmita Singh Coronaviruses are a large family of viruses that cause illness ranging from the common cold to more severe diseases such as Middle East Respiratory Syndrome and Severe Acute Respiratory Syndrome.[1]In December 2019, a new strain was discovered in humans, and it impulsively spread over the globe since then, to the extent that it has been declared as a pandemic by the Word Health Organization.[2] Coronavirus’s impact on Arbitration Centers and Institutes Though Coronaviruses started with China, but it spread to London, Singapore, Zurich, Paris, Geneva, Washington D.C., and also in Germany, Spain, Iran and India. While a vaccine is still being worked on, to prevent the virus from spreading any further, cities are going in a lockdown, trade movements are being restricted, daily life altered, most of private sector is encouraging its employees to work from home (the effectiveness of which is still in question). The pandemic certainly has dealt a solid blow on the global trade and commerce, with stock markets tumbling all over the globe. With trade and commerce being affected severely, the same is also not good news for the arbitration community. As the situation continues to unfold, here are some of the precautionary measures that have been taken by various Arbitration Institutions and prominent arbitration centers of the world. - The Indian Arbitration Forum (IAF) has requested the Arbitral Tribunals nationwide to consider restricting the conduct of proceedings for the next eight weeks to guard against the spread of the novel Coronavirus (COVID-19).[3] - The London Court of International Arbitration (LCIA) has advised the parties and the arbitrators to avoid meetings as much as possible, and to send and answer queries / or even render awards through emails.[4] - Hong Kong (China) where lies the headquarters of The Hong Kong International Arbitration Centre (HKIAC) has mandated all travelers from mainland China entering Hong Kong are required to go into quarantine for 14 days.[5] - Singapore which has The Singapore International Arbitration Centre (SIAC) has denied entry (or even transit through Singapore) to visitors who recently travelled to mainland China.[6]Additionally, Singaporean citizens and permanent residents who recently travelled to mainland China are advised to not go to work, observe a 14 day.[7] - Australian Centre for International Commercial Arbitration (ACICA), and The American Arbitration Association (AAA) have also taken similar approach as Singapore. - Arbitration institutions in mainland China (such as the China International Economic and Trade Arbitration Commission (CIETAC), the Beijing International Arbitration Center (BAC), the Shanghai International Arbitration Center (SHIAC) etc) have all postponed arbitration hearings and recommended parties (and legal representatives) to abstain from attendance in person.[8]The institutions have also advised the parties to apply for extension of deadline as per the applicable arbitral rules. Compliance to the advisory issues by health agencies, and arbitral institutions, would affect both the ongoing and upcoming international arbitrations. Conducting arbitration proceedings in such times is unfeasible as neither the attendance of parties nor the arbitrators, or even witnesses or experts can be mandated or even possible in some cases. This not only affects the pre scheduled timeline of the matter but also the quality and the total cost of the proceedings. Although the parties are encouraged to make submissions online, conduct meetings via video links, and present evidences during such meetings, but such arrangement at the eleventh hour may not be pragmatically feasible. Ongoing proceedings seem to have been delayed until an effective antidote to the virus can be found. While this health crisis might come in handy for parties aiming to delay the completion of arbitration proceedings, it will cost the other party heavily. For parties entering into contracts, the coronavirus cases will undoubtedly be a consideration when negotiation clauses regarding arbitral seats, choice of law, institutions and procedures. Coronavirus giving rise to new arbitration claims In addition to that, a plethora of new international arbitration claims are expected to emerge as a result of the coronavirus, involving pharmaceutical, biotech, other healthcare industries, and also in almost all other sectors: construction, fashion, transport, and technology to name a few. For example, India, alone counts for around 20 percent of the world’s generic drug supply[9]has restricted the export of certain pharmaceuticals because of the scarcity concerns (possible in the near future) due to the corona outbreak [10]India obtains most of its core ingredients for these pharmaceuticals from China. Currently, the import from China is in turn effected by the diverted attention of Chinese government and health care industry tackling coronavirus cases in the country, rather than the export industry.[11] The pandemic, has not only disordered daily lives but has also damaged the global supply chain balance. Most cross-border contracts, especially in the pharmaceutical industry refer the disputes to be resolved through international arbitration. This disruption in the global supply chain of drugs, will now result in a number of arbitrations claims particularly because of contractual breaches. This is only one example of the possible international arbitration claims that might emerge in various industries due to the coronavirus outbreak. Contractual claims of similar nature will surely arise in every sector where cross border transaction, transport or delivery has been impacted. Time to shift to ODR (Online Dispute Resolution) Mechanisms? As of now, none of the arbitral institutes have specific rules or guidelines pertaining to online dispute resolution. With the coronavirus outbreak, and disturbance in almost every sector, including that of dispute resolution, it drives us to develop (and adapt) the online dispute resolution mechanism better. Its time that arbitral institutions aim to cultivate and formalize online dispute resolution mechanism with specific rules and reference to it in the arbitral rules. The technology to conduct hearings online, present arguments, submit and seek documents, already exists, but the same needs to be formally acknowledged by the arbitral institutes, or the community at large. They must craft an institutional framework that allows for multiple separation screens; the appearances of counsel, arbitrators, witnesses and parties simultaneously around the world; and the easy exchange of information [12]During the creation of the framework, the business community and the very essence of arbitration must be the bedrock of the dialog. Allowing technological advances in online dispute resolution will not only save the party’s logistics cost, time, effort of rescheduling, but also ensure continuity of the proceedings even when physical presence cannot be ensured. As for the pandemic is concerned, it is not just for arbitration community to contemplate over its course from here forward, but also for us society as a whole to formulate better strategies for circumstances similar to these. * Asmita Singh is working as a Research Associate in Jindal Global Law School, O.P Jindal Global University. She has a BA.LLB (Hons.) from Jindal Global Law School and a Master’s in International Dispute Resolution from the Humboldt University of Berlin, Germany. She wrote her master thesis on Harmonizing Investor & State Interests in Bilateral Investment Treaties and its impact on the ‘ease of doing business’ index of a country. She was also an Arbitrator at the Berlin Pre-Moot for the 26th Willem C. Vis Moot Court. While working in Germany, she has dealt with matters relating to maritime arbitration, investment arbitration, and commercial arbitration. She has also worked on matters to be filed at the European Court of Human Rights. She believes in a multi-dimensional approach in terms of research and hence works on issues related to law and society; and feminist jurisprudence in addition to international commercial arbitration and international investment arbitration. On the sides, she is also exploring the possibilities of ‘soft skill’ training especially in the legal market. She can be reached at asmitasingh@jgu.edu.in. [1] World Health Organization: WHO (2020). Coronavirus. [online] Who.int. Available at: https://www.who.int/health-topics/coronavirus [Accessed 20 Mar. 2020]. ‌ [2] Who.int. (2020). WHO Director-General’s opening remarks at the media briefing on COVID-19 - 11 March 2020. [online] Available at: https://www.who.int/dg/speeches/detail/who-director-general-s-opening-remarks-at-the-media-briefing-on-covid-19---11-march-2020 [Accessed 20 Mar. 2020]. ‌ [3] Aishwarya (2020). Coronavirus: Indian Arbitration Forum urges Arbitral Tribunals to view requests to adjourn proceedings leniently to minimise health risks. [online] Bar and Bench - Indian Legal news. Available at: https://www.barandbench.com/news/coronavirus-indian-arbitration-forum-urges-that-requests-to-adjourn-arbitral-proceedings-be-considered-to-minimise-health-risks [Accessed 20 Mar. 2020]. ‌ [4] Lcia.org. (2014). LCIA Services Update: COVID-19. [online] Available at: https://www.lcia.org/lcia-services-update-covid-19.aspx [Accessed 20 Mar. 2020]. ‌ [5] Coronavirus: Hong Kong to quarantine all arrivals from abroad. (2020). BBC News. [online] 17 Mar. Available at: https://www.bbc.com/news/world-asia-china-51921515 [Accessed 20 Mar. 2020]. ‌ [6] Stb.gov.sg. (2019). Advisory on COVID-19 (Coronavirus Disease 2019) | STB. [online] Available at: https://www.stb.gov.sg/content/stb/en/home-pages/advisory-on-covid-19.html [Accessed 20 Mar. 2020]. ‌ [7] Ibid. [8] Yang Ernest, Chen Xiaoshan, Zhao Terry (2020). Novel coronavirus (2019-nCoV) – potential effects on international arbitration, sale of goods, shipping and shipbuilding (AsiaPac) | Insights | DLA Piper Global Law Firm. [online] Available at: https://www.dlapiper.com/en/uk/insights/publications/2020/02/novel-coronavirus-potential-effects/ [Accessed 20 Mar. 2020]. ‌ [9] Diwanji Sanika (2019). Topic: Pharmaceuticals in India. [online] Available at: https://www.statista.com/topics/5456/pharmaceuticals-in-india/ [Accessed 20 Mar. 2020]. ‌ [10] Reuters (2020). Global supplier India curbs drug exports as coronavirus fears grow. [online] CNBC. Available at: https://www.cnbc.com/2020/03/04/global-supplier-india-curbs-drug-exports-as-coronavirus-fears-grow.html [Accessed 20 Mar. 2020]. ‌ [11] Reedsmith.com. (2019). India restricts drug exports over Coronavirus fears and international arbitration claims are likely to follow | Perspectives | Reed Smith LLP. [online] Available at: https://www.reedsmith.com/en/perspectives/2020/03/india-restricts-drug-exports-over-coronavirus-fears [Accessed 20 Mar. 2020]. ‌ [12] Benz Jeff (2020). What The Coronavirus Means For Arbitration And Mediation - Law360. [online] Available at:https://www.law360.com/articles/1249725/what-the-coronavirus-means-for-arbitration-and-mediation [Accessed 20 Mar. 2020].

By Gautam Mohanty Edited by Gaurav Rai The Arbitration & Conciliation (Amendment) Act, 2019 (“Amendment Act, 2019”) received the assent of the President on 09.08.2019[1] is yet another major initiative introduced by the Legislature towards making India a hub of domestic and international arbitration and for efficacious conduct and management of arbitration proceedings. This post will briefly aim at bringing forth various changes introduced via the Amendment Act, 2019. The impact of these changes along with a critical analysis of new and amended provisions, however, will be discussed in subsequent posts. Recently, the Ministry of Law and Justice vide its Notification dated 30.08.2019[2] intimated that Section 1, Section 4 to Section 9, Section 11 to Section 13 and Section 15 of the Amendment Act, 2019 shall come into effect from 30.08.2019. It remains to be seen as to when the other Sections of the Amendment Act, 2019 come into force. The key provisions of the Amendment Act, 2019 that will be focused are as below: A. The Arbitration Council of India: The major highlight of the Amendment Act, 2019 is the introduction of the Arbitration Council of India(“Council”) in Section 43A to 43M as Part IA which under the Amendment Act, 2019 will be an independent institution responsible for the promotion and encouragement of arbitration, mediation, conciliation or other alternative dispute resolution mechanism in India (Section 43D). The Council, inter alia, is entrusted with the duty of grading existing arbitral institutions, quality and caliber of arbitrators, performance and compliance of time limits for disposal of domestic or international commercial arbitrations. In pursuance to the above, the Eight Schedule which is to be read as part of Section 43J entails the qualifications, experience and general norms applicable to the Arbitrators. Further, as per Section 43C of the Amendment Act, 2019 the Council, as according to the Amendment Act, 2019, will consist of a Chairperson who will be either a former judge of the Hon’ble Supreme Court of India or Chief Justice of a High Court or a Judge of a High Court or an eminent person possessing special knowledge and experience in arbitration. The members of the Council as provided for under the Amendment Act, 2019 can be (i) an “eminent arbitration practitioner” having substantial knowledge and experience in institutional arbitration, both domestic and international; (ii) an “eminent academician” having experience in research and teaching in the field of arbitration; (iii) Secretary to the Central Government in the Department of Legal Affairs, Ministry of Law and Justice or his representative not below the rank of Joint Secretary as an ex officio member; (iv) Secretary to the Central Government in the Department of Expenditure, Ministry of Finance or his representative not below the rank of Joint Secretary as an ex officio member (v) one representative of a recognised body of commerce and industry, chosen on rotational basis by the Central Government, as a part-time member, and (vi) Chief Executive Officer-Member-Secretary, ex officio (Section 43C(1)(a)–(f)). (NOTE – It is highly pertinent to note that these changes i.e. insertion of Part IA which deals with the Arbitration Council of India and the Eighth schedule outlining the qualifications for being appointed as an arbitrator, have not been notified by the Gazette notification of 30th August 2019.) B. Time Limits for Arbitration Proceedings: The Amendment Act, 2019 introduces 2 significant changes in the context of submission of pleadings and conclusion of arbitration proceedings. The newly introduced Section 23(4) mandates that the Statement of Claim and Statement of Defense shall be completed within a period of 6 months from the date of appointment of the arbitrator(s). Section 29A of the principal Act, has been amended to provide that an arbitral award in domestic arbitrations shall be made by the Tribunal within 12 months from the date of completion of pleadings as stipulated under Section 23(4). Out of experience we have seen that pleadings generally take 3-4 months after the first date of meeting of the arbitral Tribunal. Hence the amendments give the arbitral Tribunal a maximum of 6 months for pleadings + 12 months of regular time + 6 months of time extension by mutual consent of the parties i.e. a total of maximum of 24 months to complete the arbitration proceedings before the need arising for the parties to approach the concerned Court for an extension of time. This however has already started to cause practical difficulties regarding its application, in terms of calculation of time period for the arbitrations which started post 2016 and are already running. However, the authors feel the same will phase out in a year when the new arbitrations which start will follow the new timelines. From a practical standpoint the introduced proviso which provides that during the pendency of an Application for extension of mandate of the Tribunal, the mandate of the arbitrator shall continue till the disposal of the said application atleast ensures that during the pending Application the Tribunal is not functus officio. C. Confidentiality: The Amendment Act, 2019 introduces Section 42A in relation to confidentiality of information in arbitration proceedings. The newly inserted Sections provide for complete confidentiality of all arbitral proceedings except for the award which is used for the purposes of implementation and enforcement of award. D. Protection to Arbitrators: The new Section 42B, is a provision aimed at providing complete immunity to the actions taken by an Arbitrator from suits and other legal proceedings provided such actions are done in good faith. E. Speedy appointment of Arbitrators: The Amendment Act, 2019 attempts to reduce the time period for court appointed arbitrators by way of amending Section 11 of the Principal Act. The amendments introduced empower the Supreme Court and the High Court to designate arbitral institutions or maintain a panel of arbitrators (in jurisdictions where there are no arbitral institutions) for speedy appointment of arbitrators. This will give an impetus to Arbitration institutions to maintain a robust standard to be recognized as an arbitral institution under the Act and to be given the opportunity to appoint arbitrators under Section 11 of the Arbitration and Conciliation Act, 1996. F. A smaller window for setting aside the Award: Previously, as under Section 34(2)(a) of the Act, 1996 a party making an Application for setting aside of an Arbitral Award had to furnish proof in order to satisfy the requirements postulated for setting aside the Arbitral Award. However, under the Amendment Act, 2019 a party now making an Application does not have to furnish proof for setting aside the award. The amendment limits the scope of interference by Courts by stating that Courts can rely only on materials furnished by Parties before the relevant Tribunal. As already stated above, the practical impact of the changes along with an assessment of its proposed impacts on arbitration in India will be conducted in the upcoming posts. [1] http://egazette.nic.in/WriteReadData/2019/210414.pdf [2] http://egazette.nic.in/WriteReadData/2019/211902.pdf

Written by Gautam Mohanty Edited by: Gaurav Rai The Hon’ble Delhi High Court on 23.09.2019, while deciding an Application under Section 45 of the Arbitration and Conciliation Act, 1996(“Act, 1996”) in the case of JES & BEN Groupo Pvt. Ltd & Ors. v. Hell Energy Magyarorzag KFT.(“Hell Energy”) was presented an opportunity to revisit the concept of forum non conveniens in the context of international arbitrations. In international arbitral jurisprudence, the concept of forum non conveniens doctrine allows Courts to decline to hear a case that would be more convenient to try in another forum, notwithstanding that the Court has jurisdiction over the Parties and the subject matter of the dispute. It is founded on the Court’s inherent authority to manage its own affairs in order to promote the orderly and efficient disposition of cases.[1] Notably, the Court while allowing the Application filed by Hell Energy (Defendant No.1 in this case) referred the matter to Arbitration to be held in Hungary rather than in Delhi in accordance with the terms agreed between the Parties in the Exclusive Distribution Agreement. Further, the Court while adjudicating the matter before it, also discussed other issues such as (i) scope and power of the Court under Section 45 of the Act, 1996 (ii)scope and power of the Court to bind a non-signatory to the arbitration agreement[2] (iii)difference in the conceptual understanding of “seat” and “venue”. However, for the purposes of this write up the tests to determine whether there was unequal bargaining power of parties in the context of commercial transactions, will be discussed briefly in the following paragraphs. FACTUAL BACKGROUND: The Plaintiff in the present case was a company incorporated in New Delhi and engaged in the business of import, distribution, marketing and advertising of food and beverage products. Alternatively, the Defendant was a company incorporated under the laws of Hungary and was engaged in the business of production and sale of “Hell Energy” Drinks and development of the brand. Pursuant to an Exclusive Distribution Agreement(“Agreement”) dated 04.10.2017 entered into between Parties granting exclusive distribution rights of the product “Hell Energy” were given to Plaintiff company. Subsequently, Defendant company terminated the Agreement on 25.03.2019 due to the alleged failure of Plaintiff company to fulfill 75% of Annual Order Volume as per Clause 9.2.5 of the Agreement. The bone of contention between the Parties arose when the Plaintiff filed a suit for injunction, cancellation, declaration, reconciliation/rendition of accounts and damages and Defendant relying upon Clause 10.13 of the Agreement contended that the present case was a foreign seated International Commercial Agreement. Clause 10.13 of the Agreement reads as below: “10.13. The Contracting Party undertake to resolve the disputes arising in an amicable way, and if this is ineffective, the parties specify the exclusive competence of the Arbitration Court attached to the Hungarian Chamber of Commerce and Industry, which proceeds according to its rules of procedure, to resolve the dispute. The Arbitration Court is composed of three Arbitrators, and the court is sitting in Budapest and the language of the procedure shall be Hungarian. The contracting parties accept the decision of the Arbitration Court as binding on them, and the costs of the procedure shall be borne by the losing party.” CONTENTIONS OF THE COUNSELS: The Counsel for Defendant, inter alia, submitted that as both India and Hungary were contracting parties to the UNCITRAL Convention on the Recognition and Enforcement of Foreign Arbitral Award (“New York Convention”) and as the present case was a clear case involving International Commercial Arbitration, Part II of the Act, 1996 was applicable thereby barring the Application of Part-I of the Act, 1996. In order to buttress its contentions, the Counsel for Defendant relied upon the observations enumerated in Bharat Aluminum Company v. Kaiser Aluminum Technical Services Inc., (2012) 9 SCC 552, Shin-Etsu Chemical Co. Ltd. vs. Aksh Optifibre Ltd. and Anr., (2005) 7 SCC 234 and Chloro Controls India Private Limited vs. Severn Trent Water Purification Inc., (2013) 1 SCC 641. The Counsel for Defendant when relying upon Shin-Etsu Chemical Co. Ltd. vs. Aksh Optifibre Ltd. and Anr., (2005) 7 SCC 234, particularly focused upon the observation of the Supreme Court wherein it has been held that the correct approach to be adopted by the trial court under Section 45 of the Act at the pre-reference stage, is to draw a prima facie finding as to the validity or otherwise of the arbitration agreement and refer the parties to arbitration. Per Contra, Counsel for Plaintiff argued that the Application filed by Defendant was misconceived and that the present suit filed by Plaintiff was the only appropriate remedy especially when Plaintiff was challenging the validity of the arbitration agreement in present proceedings on the ground of it being in contravention with the Public Policy of India. The essence of the Public Policy argument advanced by the Plaintiff essentially was premised on the fact that in view of Section 28 of the Indian Contract Act, 1872, the agreement entered into between the Parties was void and the arbitration agreement which clearly favored the Defendant in terms of geography, language and laws could not be enforced to the financial and legal determent of the Plaintiff. Pertinently, Section 28 of the Indian Contract Act, 1872 states as below: “28 Agreements in restraint of legal proceedings, void. — 17 [Every agreement,— (a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or (b) which extinguishes the rights of any party thereto, or discharges any party thereto, from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to that extent.] Exception 1.— Saving of contract to refer to arbitration dispute that may arise. —This section shall not render illegal a contract, by which two or more persons agree that any dispute which may arise between them in respect of any subject or class of subjects shall be referred to arbitration, and that only the amount awarded in such arbitration shall be recoverable in respect of the dispute so referred. …” ANALYSIS AND FINDINGS OF THE COURT I. Scope and Power of the Court under Section 45 of the Act Section 45 of the Act, 1996 stipulates as below: “Section 45 - Power of judicial authority to refer parties to arbitration[3] Notwithstanding anything contained in Part I or in the Code of Civil Procedure, 1908 (5 of 1908), a judicial authority, when seized of an action in a matter in respect of which the parties have made an agreement referred to in section 44, shall, at the request of one of the parties or any person claiming through or under him, refer the parties to arbitration, 1[unless it prima facie finds] that the said agreement is null and void, inoperative or incapable of being performed.” The Court while elaborating and explaining the legal principles enshrined in Section 45 of the Act, 1996 held that the provision, in accordance with the New York Convention, incorporates the salutary principle that the Court should not refer the parties to arbitration, when it finds that the agreement between the Parties is null and void, inoperative and incapable of being performed. In its further analysis, Court extensively relied upon Shin-Etsu Chemical Co. Ltd. (2005) 7 SCC 234[4] and Sasan Power Ltd. v. North American Coal Corpn. (India) (P) Ltd., (2016) 10 SCC 813 to opine that Section 45 of the Act, 1996, mandates the Court to take an objective prima facie view of the matter on the basis of the material and evidence produced by the parties on the record of the case. In its concluding paragraph, the Court by placing reliance on Sasan Power (2016) 10 SCC 813 summed up the scope of inquiry under Section 45 of the Act, 1996 as under: “49. In our opinion, the scope of enquiry (even) under Section 45 is confined only to the question whether the arbitration agreement is “null and void, inoperative or incapable of being performed” but not the legality and validity of the substantive contract.” II. Whether the Contract in the present case was inoperative and null and void? After having defined the contours of powers of the Court under Section 45, the Court proceeded to examine the material placed on record before it to ascertain as to whether a prima facie view could be taken in the Application filed by Plaintiff. Referring to the arguments raised by Plaintiff under Section 28 of the Indian Contract Act, 1872 (arguments pertaining to the right to resort to Courts in cases of fraud and serious malpractices being taken away) the Court held that the contentions advanced by the Plaintiff were contrary to the settled principles of law laid down by the Hon’ble Supreme Court of India. The Court with a view to concretize its observation, relied upon the judgement of the Apex Court in World Sport Group(Mauritius) Ltd. v. MSM Satellite (Singapore) Pte.Ltd. (2014) 11 SCC 639[5] to observe that when the parties have expressly entered into an agreement referring any dispute to arbitration, the same cannot be held to be contrary to public policy. Moving ahead to the next bone of contention between the Parties i.e. issues regarding fraud and serious malpractice on part of Defendants, the Court after having perused the arguments forwarded by Plaintiff held that no case in relation to fraud and malpractice was established by the Plaintiff and that the allegations of fraud were only raised to circumvent the Arbitration Clause, without any real substance. Notably, the Court also remarked that the present suit was entirely premised on Plaintiff’s allegations relating to violations of the contractual terms and the resultant damages. The Court while relying upon the ratio laid down in the case of A.Ayyasamy v. A. Paramasivam, (2016) 10 SCC 386 reiterated the test for determining non-arbitrability of disputes in cases of fraud. The relevant portion reads as below: “25. In view of our aforesaid discussions, we are of the opinion that mere allegation of fraud simpliciter may not be a ground to nullify the effect of arbitration agreement between the parties. It is only in those cases where the court, while dealing with Section 8 of the Act, finds that there are very serious allegations of fraud which make a virtual case of criminal offence or where allegations of fraud are so complicated that it becomes absolutely essential that such complex issues can be decided only by the civil court on the appreciation of the voluminous evidence that needs to be produced, the court can sidetrack the agreement by dismissing the application under Section 8 and proceed with the suit on merits…” Therefore, the Court ultimately held that the allegations of the Plaintiff regarding the terms and conditions of the contract being onerous and unreasonable are also questions which would have to be examined by the Arbitrator and cannot be a ground to avoid the Arbitration Clause. III. Court of Natural Jurisdiction Plaintiff in the case also contended that there was no other Court which could be construed as court of “natural jurisdiction” since no part of cause of action in connection with the present suit has arisen outside India. The Plaintiff further contended that Hungarian Chambers of Commerce is not the appropriate or convenient forum to resolve the disputes between the Plaintiffs and Defendants. The Court while rejecting the submission of Plaintiff in that regard, observed that as the agreement between the Parties was valid and binding and Hungarian Chambers of Commerce at Budapest was agreed by the parties as the only appropriate forum to resolve the present disputes the principle of forum non conveniens cannot be applied to the present factual scenario. In that regard, Court referred to the decision of the Supreme Court in Harmony Innovation Shipping Ltd. Gupta Coal Indian Ltd and Ors., AIR 2015 SC 1504, relevant para of which is reproduced hereinbelow: “50. Thus, interpreting the clause in question on the bedrock of the aforesaid principles it is vivid that the intended effect is to have the seat of arbitration at London. The commercial background, the context of the contract and the circumstances of the parties and in the background in which the contract was entered into, irresistibly lead in that direction. We are not impressed by the submission that by such interpretation it will put the respondent in an advantageous position. Therefore, we think it would be appropriate to interpret the clause that it is a proper clause or substantial clause and not a curial or a procedural one by which the arbitration proceedings are to be conducted and hence, we are disposed to think that the seat of arbitration will be at London.” IV. Determining unequal bargaining power Addressing the issue regarding unequal bargaining power as raised by Plaintiff, the Court observed that the plea of unequal bargaining power cannot be a ground to disallow the application under Section 45 of the Act, 1996. According to the Court, since the parties had entered into an agreement of their own volition, the sanctity of the contract has to be preserved and thus, the plea of Forum Non Conveniens being claimed on account of financial burden and legal non viability is not a question that can be entertained while deciding the application under Section 45 of the Act, 1996. For the purposes of the same, Court extensively relied upon the ratio propounded in the case of Central Inland Water Transport Corporation Limited v. Brojanath Ganguly, (1986) 3 SCC 156. PRACTICAL TAKEAWAYS From a practical perspective, it emanates from the above paragraphs that Practioners should in all likelihood expect the Court to rule in favour of the Party invoking arbitration provided arbitration is the agreed procedure for resolution of disputes arising between the Parties. Hence, Parties and respective Counsels must pay utmost heed to drafting of the Arbitration Clause taking into consideration the forum for settlement of disputes as recent trends illustrate the argument of Forum Non Conveniens raised by the Party against arbitration rarely withholds the scrutiny of the Court. [1] Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 507 (1947); Piper Aircraft Co. v. Reyno, 454 U.S. 235, 241, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981). [2] The Court after having relied upon the judgements of the Supreme Court in the case of Chloro Controls India Private Limited v. Severn Trent Water Purification Inc., (2013) 1 SCC 641 and Cheran Properties Limited v. Kasturi and Sons Limited and Ors., (2018) 16 SCC 413, held that the disputes raised by the Plaintiff No.1 can be referred to Arbitration and the Tribunal can further adjudicate whether Defendant No. 2 can be arrayed as a party to the same proceedings. [3] Substituted by Arbitration And Conciliation (Amendment) Act, 2019, w.e.f. 30.08.2019 for the following:- "unless it finds". [4] Paras no 47, 51 and 100. [5]Para 38 of World Sport Group(Mauritius) Ltd. v. MSM Satellite (Singapore) Pte.Ltd (2014) 11 SCC 639.

- Raghav Bhargava [1] Introduction Under the aegis of United National Commission on International Trade Law (“UNCITRAL”), various Working Groups or Committees are constituted to look into reforms. Each Working Group is tasked with working on different focus areas such as Small and Medium Enterprises, Dispute Settlement amongst others. My point of interest is Working Group III (“Working Group”), responsible for recommending reforms on Investor-State Dispute Settlement. In October last year, the Working Group met in Vienna from 14th to the 18th of October during its thirty-eight session and came out with a report highlighting three major reforms. The purpose of this article is to analyze these reforms. I. Multilateral Advisory Centre The discussion surrounding a Multilateral Advisory Centre (“MAC”) stems from the call to establish a Multilateral Investment Court. In the absence of any governing body or an international multilateral treaty, the purpose of the investment court is to remedy unpredictability of investment dispute decisions, reduce time taken to arrive at decisions and also make the investment dispute resolution process cost-effective. The motive is to create a independent body/ organizations that functions taking into consideration interests of big as well as small nations so that they may be able to effectively and efficiently either pursue or defend investment claims. In the background of Multilateral Investment Court, the Working Group proposes to establish MAC to compliment the court. Apart from having an advisory centre which will complement other reforms recommended by the Working Group, the primary purpose is to assist, least-developed and developing states with costs related to defending claims, sound legal advice to states with limited experience in addressing ISDS. The Working Group also recommended the MAC to help investors to bring successful claims, specially Small and Medium Scale Enterprises. While the discussion in the thirty-eighth session was limited to establishment of the centre and not on the extensive services which the MAC should offer, a reference was made to a previous report of the Working Group which discusses the services which may be offered in detail. It is interesting to note that the Working Group went ahead to discuss the modalities of the MAC and the possible structure and financing of the same. It was recommended that the advisory centre be established as an intergovernmental body, with each member state making financial contribution to keep it afloat. The Working Group made an interesting reference to the Advisory Centre on WTO Law (“ACWL”). It was noted that the ACWL could provide a useful model. In order to understand the motive behind the MAC, it is imperative to highlight that international investment law, is not governed by any multilateral treaty or rules and regulations of any independence body. While trade law has World Trade Organizations and related agreements, international criminal law has the International Criminal Court and its statute, investment law does not have any third party governing document or rules. When investment disputes are taking to arbitration, the only governing rules are those of arbitration institutions such as ICSID should the dispute be taken to them. Bi-lateral treaties or International Investment Agreements often play a vital role in the resolution of such disputes; however, the contents of these agreements are based upon the deliberations between the states concerned. Consequently, there are widely criticized for either be biased, not in the true intereste of the investors amongst other. A very prominent example of the same is India’s Model Bilateral Investment Treaty which does not contain any National Treatment or Most Favoured Nation clause amongst others. The lack of any multilateral treaty or regulation, thereby makes this recommendation come at an apt time. The ACWLprovides free legal training and advice to Least Developed Countries (“LDC”) and reduced fee for support in dispute settlement proceedings. On the other hand, they provide some financial concession to developing countries. At the present, the services of ACWL are only limited to developing countries and LDCs. Hence, should the MAC decide to follow such approach, it would be in the interest of investors and developing and LDCs wherein increased investments are being made. However, this move may gather opposition from developed countries which also have significant investments within their territories. The membership of ACWL is automatic for those developing countries and LDCs which are members of the WTO or in the process for becoming members. For countries, otherwise, a fee payment is required to become part of ACWL. This may create a hurdle in ISDC cases as there is no independent body whose membership states have or can take for dispute resolution. A possible solution to the same could be relying on membership of one of the dispute resolution centres such as ICSID, but that may defeat the purpose of the MAC as it would be restrictive and constrained to a limited number of countries only. Most of the member countries of ICSID are developed countries and this move may impose an undue obligation on developing countries or LDCs to become a part of ICSID. II. Code Of Conduct For ISDS Tribunal Members Impartiality and independence of arbitrators, freedom to appoint arbitrators by parties are just some of the characteristics that have formed the basis of arbitration, even in investment disputes. However, recently, there has been a growing resentment towards the method of functioning of arbitrators. Biased approach, unreasoned awards, undisclosed relationships which affect appointments and just a few among the many problems that are plaguing the dispute resolution process and have given rise to criticism about the legitimacy of the ISDS system. In light of this pressing issue, the Working Group discussed creation of a Code of Conduct (“CoC”) for arbitrators The Working Group relied on its own special report which was limited to the contents of CoC to decide that this report was serve as the basis for contents. While discussing the structure of the CoC, the Working Group recognized the need to have two sets of contents in the report. The first, general set of rules which shall be applicable in all situation. Second, specific set of rules which should be adhered to keeping in light with various socio-cultural background of the arbitrator and countries and national laws which they need to adhere to. The report while relying on other rules for arbitrators such as the UNCITRAL Arbitration Rules , International Bar Association guidelines on conduct for arbitrators discussed certain criteria which must be addressed while making these rules. Factors such as impartiality and independence of arbitrators, restrain from adjudication in situations which give rise to justifiable doubts, integrity, not dealing with parties unilaterally and acting diligently to deliver decisions without any undue delay, are some which require to be mentioned in the CoC. However, these recommendations have not yet considered specific situations which may constitute of interest or what is the threshold of disclosure. While the factors discussed are imperative to be included in the CoC, it is equally important that explanations to each of these rules must be provided. International arbitration rules on conflicts of interest such as UNCITRAL, IBA, SIAC and other arbitral institutions have incorporate elaborate events which may fall within conflict of interest and require either disclosure by the arbitrator to the parties or constitute grounds for the arbitrator to step down from the proceedings. These arbitral institutions have been able to develop comprehensive rules for arbitrators in commercial arbitration. These elaborate rules also impacted the Indian arbitration scenario wherein the Indian Arbitration Act was amended to include Schedule V and VII containing rules regarding conflicts of arbitrators. As a result, these could serve a potential basis for the Working Group to include the requirements mentioned therein as the basic threshold required to be met and subsequently tailor make requirements to suit investment arbitration. The Working Group has also recognized the dilemma between optional disclosures and mandatory adherence to these rules, resulting in challenge to the arbitrator’s appointment. While optional disclosure may not solve all issues of impartiality and transparency, compulsory disclosure leading to challenge in appointment may create situations wherein the arbitrators are not willing to take the responsibility upon themselves as a result of onerous burdens. This recommendation is apt coming at a time when investment dispute resolution is heavily criticized for its functioning. The challenge would be with regards to the functioning and enforcement mechanism of CoC as it would determine its effectiveness. III. Third Party Funding Third-Party Funding (“TPF”) is a recent growing trend that has found acceptance in commercial as well as investment arbitration. TPF is a process wherein an individual or corporate entity who is not a party to the arbitration proceedings provides financial support to a party to the proceeding. More and more countries and arbitral institutions are accepting this method of either bringing claims or defending claims. Investment tribunals have in the arbitrations of Quasar De Valores v. Russian Federation and Philip Morris Brands v. Oriental Republic of Uruguary have accepted third party funding. The Working Group discussed having concrete rules for regulating TPF amidst concerns including conflicts of interest arising out of TPF, impact of TPF on costs and on security for costs, disclosure of information to third-party funders not subject to confidentiality obligations, control or influence of third-party funders over the arbitration process, negative impact on amicable resolution of disputes amongst others. The Working Group acknowledged the need for regulating the largely unregulated TPF in ISDS. Varied suggestions were put forth with regards to the TPF. One set of suggestions were to completely prohibit TPF, while another set of suggestions were to only permit TPF in situations wherein the claim was not frivolous or not politically motivated. It was also recommended that a clear definition of what constitutes as TPF must be decided. Some members recommended having a broad definition while some members recommended having a narrow definition so as to exclude pro bono assistance, funding for non-profit purposes, contingency arrangements and inter-corporate financing. The Working Group settled on the following preliminary recommendation regarding TPF before deciding on any concrete steps. It was settled that TPF and the identify of the third-party funder should be disclosed at an early stage along with the identity of the ultimate beneficial owner. It was also suggested that the terms of the funding agreement should also be disclosed to reveal the nature of third-party funder’s involvement. The Working Group also suggested that costs related to third-party funding should not be considered as recoverable costs. Keeping these recommendations in mind, it was decided that the Secretariat would working closely with ICISD and other institutions and prepare draft provisions on TPF. TPF as a mode of financing claims has gathered large support from corporations and countries incapable of either bringing forth high stake claims or defending such claims. It has served as a basis for many countries to defend claims against bring corporation. The best example of this is the TPF provided to Uruguay by the Bloomberg Foundation’s anti-tobacco wing to help it defend claims from Phillip Morris. However, TPF at the same time may encourage frivolous claims and claims to intimidate LDCs and developing countries. Additionally, confidentiality plays an essential role in inter-state disputes. TPF for inter-state disputes may also serve as a method for furthering political agendas of states against each other. Hence, it is safe to say that the stakes inside and outside the arbitral hearing are higher in ISDS than commercial arbitration. Commercial arbitration rules may provide as a reference point but may not be best suited for the ISDS regime. As a result, the modalities, functioning, enforcement mechanism and the rules would require to be robust and stringent to take into consideration the socio-political and economic factors surround such disputes. CONCLUSION The Working Groups’ reports and their recommendations are welcomed at a time where arbitration across the global is developing rapidly. Newer concepts are developing which are being adopted by parties and arbitrators alike. In the context of such rapid development, it is imperative that ISDS also adapts to such changes in order to remain relevant. These recommendations come at a crucial time wherein the ISDS has been under constant scrutiny for various operative and procedural shortcomings. However, it is equally important that factors unique and intrinsic to ISDS are taken into consideration while tailoring these recommendation and not merely adopting rules from other investment and commercial arbitration institutions. [1] Raghav Bhargava is a 4th year student of Gujarat National Law University pursuing law. He has a keen interest in commercial arbitration and international humanitarian law. He is also the Editor-in-Chief, GNLU Student Law Review. He has previously worked under Justice Deepak Verma, Former Judge of Supreme Court of India and has written for the Cambridge International Law Journal. He can be reached at raghavbhargava@hotmail.co.uk

A Legislative Guide Gautam Mohanty[1] & Raghav Bhargava[2] [Originally published in the Journal of International Arbitration. The details of the original publication are as hereunder: Mohanty, Gautam & Bhargava, Raghav. ‘Separability of Arbitration Agreement in Mutual Termination of Contracts in India: A Legislative Guideline’. Journal of International Arbitration 36, no. 6 (2019): 727–738. This article is being republished here under the rights of the Author (Gautam Mohanty) to republish on personal website with permission of Kluwer Law International for a non-commercial purpose and with permission of the Co-author Raghav Bhargava. Gautam Mohanty is an Editor of The Arbitration Workshop. The separability for an arbitration agreement from the underlying contract is a well-established theory in commercial arbitration by courts and arbitral tribunals across the globe. However, the position becomes complex in circumstances where the underlying contract is mutually terminated between the parties. Jurisdictions across the globe have adopted a different approach to this kind of separability either through legislative provisions or judicial decisions. Unfortunately, the position remains rather unclear in India due to conflicting judicial decisions of the Bombay High Court and lack of any authoritative ruling by the Supreme Court of India. This article aims to conduct a comparative analysis of various national systems as well as international rules and arbitral institutions regarding this theory and to suggest the way forward for India. 1. INTRODUCTION An arbitration agreement is treated independent of the contract that contains the agreement. Section 16(1)(b) of the Indian Arbitration and Conciliation Act, 1996 expressly states that the invalidity of a contract shall not affect the validity of an arbitration agreement, even in cases of the contract being void ab initio. This provision is modelled on the UNCITRAL Model Law. This settled position of law has also been reflected through the Honoura’ble Supreme Court of India’s judgment in the case of A. Ayyasamy v. A. Paramasivam,[3] wherein the Apex Court has given due recognition to the principle of severability in contracts stipulating a separate arbitration clause. However, such rulings are restricted to cases whether either the contract is void ab initio or has been terminated, inter alia, due to reasons such as fraud, impossibility to perform, non-performance of the contract etc. Pertinently, the question of whether, as a consequence of mutual bilateral termination of a contract, an arbitration clause is terminated or not, still remains and is res integra. The purpose behind the doctrine of severability in a contract containing an arbitration agreement is to ensure the effective resolution of disputes arising between the parties to a contract via arbitration. It is intended for an effective adjudicatory mechanism to exist even in situations where the contract becomes non-executable due to reasons beyond the control of the contracting parties. While the arbitral process is contingent on mutual consent of the parties to refer the matter to arbitration, a peculiar scenario arises in situations where the contract containing the arbitral agreement is mutually terminated. This results in a dichotomy: the parties’ clear intention to terminate the arbitration agreement for resolution of disputes between the parties, on the one hand, contradicts a pre-decided mechanism of dispute resolution on the other hand. In light of the above, it is pertinent to consider the judicial dicta relating to this issue. The Honourable High Court of Bombay has sought to clarify such bilateral terminations in the cases of Ashok Thapar v. Tarang Exports[4] and Mulheim Pipecoatings GmbH v. Welspun Fintrade Ltd. & anor.[5]But in the absence of any legislative action or a categorical decision by the Honourable Supreme Court of India clarifying the legal position regarding the same and conflicting jurisprudence of the Honourable Bombay High Court, this issue remains unclear. This article aims to analyze views taken by the Honourable Bombay High Court against the current position of law, analyze the position in foreign jurisdictions, and suggest legislative reforms with regard to the issue of existence of an arbitration agreement in cases of bilateral termination of contracts. 2. EXISTING JURISPRUDENCE 2.1 Ashok Thapar v. Tarang Exports 2.1.1 Background Facts The plaintiff and the respondent entered into a Leave and License Agreement, pursuant to which the respondent (Tarang Exports) was permitted to occupy the property. Subsequently, both parties mutually ended the Agreement. Disputes arose with respect to recovery of security deposit and other monies. The plaintiff filed a suit with the City Civil Judge for recovery of the security deposit and other claims based on the Leave and License Agreement. Thereafter, the defendant argued that the Civil Court did not possess requisite jurisdiction to entertain the suit in light of the arbitration clause contained in the Leave and License Agreement. The Civil Court dismissed the defendant’s application and held that it had jurisdiction in the matter. The defendant appealed before the Bombay High Court. 2.1.2 Judgment The Bombay High Court opined that the issue in dispute was “whether an Arbitration Clause survives even after bilateral termination of the Agreement” and that the above issue was res integra in nature. Further, the Bombay High Court, while relying on the judgments of the Supreme Court in the cases of SMS Tea Estate Pvt. Ltd. v. Chandmari Tea Co. Pvt. Ltd.,[6] Branch Manager, Magma Leasing & Finance Ltd. v. Potluri Madhavilata,[7] and Ford Credit Kota Mahindra Ltd. v. M. Swaminathan,[8] held that the doctrine of separability applies even in cases of mutual termination of a contract containing the arbitration agreement and thus, the matter should be referred to arbitration. In its judgment, the Bombay High Court did not address the application of the doctrine of severability in the context of unilateral termination of agreements or in the context of an impossible agreement. 2.2 Mulheim Pipecoatings Gmbh v. Welspun Fintrade Ltd. & Anor. 2.2.1 Facts The appellant and respondent had entered into a Share Purchase Agreement (SPA) which contained an arbitration clause covering all disputes related to it. The agreement included a transfer of shares by the respondent to the appellant. The appellant company was not allowed to transfer the shares to a third party within two years. If after the expiry of two years, they wished to transfer the same, the first preference should be given to the respondent at the same price. A subsequent Memorandum of Understanding (MOU) entered between the two did not contain any mention of arbitration as a method of dispute resolution, but had provisions contradictory to the SPA. Disputes arose regarding the validity of the notice and the transfer of the shares. The matter was brought before the Bombay High Court. 2.2.2 Judgment The Court, while opining that arbitral proceedings must continue in this matter, made interesting observations. Justice Chandrachud distinguished between two situations: first, when the performance of the contract containing the arbitration agreement is brought to an end; second, when the existence of the contract is brought to an end. In the former, the arbitral agreement will survive, while it will not survive in the latter. As a result of Ashok Thapar and Mulheim, a confusion has arisen, as the same court in two different judgments has interpreted severability during mutual termination of an agreement in two opposite ways: in one of which the arbitration agreement will be valid, while in the other it will not be. This contradictory interpretation by the same court requires much needed clarity. 3. INTERPRETING THE JUDGMENT IN ASHOK THAPAR The controversial ruling of the Honourable Bombay High Court in Ashok Thapar has unsettled the position with respect to severability. Frustratingly, while it interprets the law in an unconventional manner, this ruling does not adequately explain its reasons for reaching this conclusion. However, various arguments can be made in support of the Ashok Thapar decision. First, arbitration agreements have autonomy. Legislations in India are often modelled according to legislations in England. The Arbitration and Conciliation Act of 1996 (“Indian Act”) is a proof of the same with respect to the Arbitration Act of 1996 (“English Act”). Pertinently, a similar question as to the status of an arbitration agreement pursuant to mutual bilateral termination of a contract has been dealt with in the landmark English case of England Harbour Assurance Case.[9] In this case, an action was brought by re-insurers on the grounds of illegality of reinsurance policies, as a result of which the plaintiff should not be held liable. The illegality was denied by the defendants who sought a stay and reference to arbitration. The court held that while the purposes of the contract may fail, resulting in termination of a contract, the arbitration clause may not be automatically extinguished for the purpose of the agreement. More recently, in 2007, the English Court of Appeal and House of Lords in Fiona Trusts & Holding Corp. v. Privalov,[10]which involved claims of fraudulent inducement of a party’s agent, observed that such a claim levelled at the sanctity of the underlying contract does not adversely affect the arbitration clause within the contract. The court, while relying upon several authoritative academic works,[11]declared that: It is not enough to say that the bribery impeaches the whole contract unless there is some special reason for saying that the bribery impeaches the arbitration clause in particular … It is only if the arbitration agreement is itself directly impeached for some specific reason that the tribunal will be prevented from deciding the disputes that relate to the main contract. Therefore, the arbitration agreement is treated as a self-contained contract ancillary to the principal contract.[12] This is popularly referred to as the principle of autonomy, wherein the arbitration agreement remains unaffected by the fate of the main contract, that is, the latter’s nullity, resolution, termination, or even its non-existence.[13] Accordingly, the arbitrator/judiciary possesses the ability to determine the existence of an arbitration agreement. This interpretation does find support in section 11(6A)[14] of the Indian Act pursuant to which the courts have the power to determine the existence of an arbitration agreement. The principle of autonomy also finds acceptance in rules of various international arbitration centres and institutions, such as the London Court of International Arbitration (LCIA) Rules,[15] wherein an arbitration agreement is treated as a distinct agreement. Similarly, the International Chamber of Commerce (ICC) Rules,[16] as well as the UNCITRAL[17] Rules, also reflect the independent nature of the arbitration agreement vis-à-vis the principal agreement. Thus, the autonomy of the arbitration agreement has now become a general principle of arbitration on which arbitrators across the globe rely to solve disputes.[18] Secondly, arbitration agreements are not compulsorily governed by the laws governing the contract containing the arbitration agreement. A contract is to be governed by national laws under which it is made, whereas, an arbitration agreement is governed by the laws chosen by the parties. As a result, situations might exist wherein the principal contract is governed by laws separate from that of the arbitration agreement. Thus, laws which govern the principal contract cannot be enforced upon the arbitration agreement. In such situations, an arbitration agreement would stand independent of the principal contract. The arbitration agreement would not be scrutinized based on national law rules regarding the validity of other contracts. The reverse also holds true. National law rules which render an agreement invalid would not be made applicable to the arbitration agreement. Thus, the validity or invalidity of the arbitration agreement would be separate and independent to that of the main contract. Though not explicitly stated, the aforesaid view could also form the basis to come to similar conclusions as that of the court in Ashok Thapar. Redfern and Hunter provide further support to the aforesaid argumentation. In their view, there are two separate contracts.[19] The first contract is the primary contract which contains commercial obligations and transactions with respect to the parties to the contract. This is the contract that governs all transactions between the parties. The second contract is the arbitration clause. This contract deals with all disputes relating to the primary contract which may arise between the parties. The second contract remains dormant and only becomes active when there is a dispute between the parties regarding the first contract. As a result, the autonomy of the arbitration agreement results in two independent contracts, which even though contingent on each other to a certain extent remain independent as well. 4. BOGHARA POLYFAB AND KISHORILAL GUPTA: SEPARABILITY PRINCIPLE ENGULFED IN OBITER For the purposes of this article, the authors believe that the case of Union of India (UOI) v. Kishorilal Gupta & Bros.[20] and National Insurance Co. Ltd. v. Boghara Polyfab Pvt. Ltd.[21] assume pivotal importance, as the Honourable Supreme Court has in the aforesaid cases made observations with regard to the applicability of the separability principle to bilateral termination of contracts. However, as the observations are obiter dicta in nature and not ratio decidendi, they are barred from legal recognition under judicial dictum as laid elaborately laid down by the Apex Court of India.[22] In Union of India v. Kishorilal Gupta & Bros.,[23] the Honourable Supreme Court, while deciding a Special Leave Petition (SLP), was principally adjudicating upon the legal question of survival of an arbitration clause in a contract when the contract was superseded by a new contract. In that case, certain disputes arose under three contracts in relation to the supply of raw materials and for compensation for breach of contract. The Supreme Court of India, after application of its judicial mind uninfluenced by authorities or case-law, observed that: the logical outcome of the earlier discussion would be that the arbitration clause perished with the original contract. Whether the said clause was a substantive term or a collateral one, it was none the less an integral part of the contract, which had no existence de hors the contract … Though the phraseology was of the widest amplitude, it is inconceivable that the parties intended its survival even after the contract was mutually rescinded and substituted by a new agreement.[24] However, after incisively analysing the relevant judicial opinion and principles regarding the doctrine of separability, the Honourable Supreme Court enunciated the necessary principles for judicial determination of separability as below:[25] (1) An arbitration clause is a collateral term of a contract as distinguished from its substantive terms; but none the less it is an integral part of it; (2) however comprehensive the terms of an arbitration clause may be, the existence of the contract is a necessary condition for its operation; it perishes with the contract; [emphasis added] (3) the contract may be non est in the sense that it never came legally into existence or it was void ab initio; (4) though the contract was validly executed, the parties may put an end to it as if it had never existed and substitute a new contract for it solely governing their rights and liabilities thereunder; (5) in the former case, if the original contract has no legal existence, the arbitration clause also cannot operate, for along with the original contract, it is also void; in the latter case, as the original contract is extinguished by the substituted one, the arbitration clause of the original contract perishes with it; and (6) between the two falls many categories of disputes in connection with a contract, such as the question of repudiation, frustration, breach, etc. In those cases, it is the performance of the contract that has come to an end, but the contract is still in existence for certain purposes in respect of disputes arising under it or in connection with it. As the contract subsists for certain purposes, the arbitration clause operates in respect of these purposes. The Supreme Court ultimately held that the new contract entered into between the parties had superseded the earlier contracts entered into between the parties and as a result the arbitration clause postulated in the earlier contracts perished automatically. Even though, the ratio decidendi of the Court in the aforesaid case was limited to the validity of an arbitration agreement in a contract which was superseded by a new contract, the Court has clearly opined as obiter dicta that the existence of an arbitration clause is entirely dependent upon the existence of the contract, which can be argued as necessarily implying that an arbitration clause does not survive pursuant to bilateral termination of the contract. In National Insurance Co. Ltd. v. Boghara Polyfab Pvt. Ltd.,[26]the Supreme Court, while deciding an insurance matter, framed the moot legal question as whether a dispute raised by an insured, after giving a full and final discharge voucher to the insurer, could be referred to arbitration. The disputes in the case arose around the discharge voucher issued by the National Insurance Co. Ltd. (appellant in this case) in favour of Boghara Polyfab whereby the appellant argued that Boghara Polyfab had accepted the payment offered in full and final settlement and therefore arbitration for any disputes arising thereafter was not arbitrable on account of discharge of the contract. In response, Boghara Polyfab argued that the discharge voucher was obtained by fraud and coercion. A perusal of the judgment delivered by the Apex Court categorically highlights that the ratio decidendi of the case is in relation to the ambit of powers vested with the Chief Justice/his designate under section 11 of the Indian Arbitration and Conciliation Act, 1996. Nonetheless, the Supreme Court of India has in its obiter dicta opined about the consequences emanating from bilateral termination of contract as stated below: We may next examine some related and incidental issues. Firstly, we may refer to the consequences of discharge of a contract. When a contract has been fully performed, there is a discharge of the contract by performance, and the contract comes to an end. In regard to such a discharged contract, nothing remains – neither any right to seek performance nor any obligation to perform. In short, there cannot be any dispute. Consequently, there cannot obviously be reference to arbitration of any dispute arising from a discharged contract. … It is thus clear that the arbitration agreement contained in a contract cannot be invoked to seek reference of any dispute to arbitration, in the following circumstances, when the contract is discharged on account of performance, or accord and satisfaction, or mutual agreement, and the same is reduced to writing (and signed by both parties or by the party seeking arbitration): (a) Where the obligations under a contract are fully performed and discharge of the contract by performance is acknowledged by a full and final discharge voucher/receipt. Nothing survives in regard to such discharged contract. (b) Where the parties to the contract, by mutual agreement, accept performance of altered, modified and substituted obligations and confirm in writing the discharge of contract by performance of the altered, modified or substituted obligations. (c) Where the parties to a contract, by mutual agreement, absolve each other from performance of their respective obligations (either on account of frustration or otherwise) and consequently cancel the agreement and confirm that there is no outstanding claims or disputes. 5. THE NOTION OF SEVERABILITY ACROSS INTERNATIONAL JURISDICTIONS 5.1 Austria The Austrian Arbitration Law Reform Act, 2006 is based on the UNCITRAL Model Law and follows the principles enshrined therein. However, during the course of adoption, Article 16 of the UNCITRAL Model Law, which lays down the theory of separability, was excluded from inclusion in the national legislation.[27]A perusal of the legislative history behind the enactment of the Austrian Arbitration Law indicates that the drafters of the statute took an extreme yet interesting view regarding the doctrine of separability and believed this doctrine to be “misleading, overly simplifying and alien to the general principles of Austrian law,”[28]thus, making Austria one of the only countries which does not have a provision in their national legislation with respect to separability of an arbitration agreement from the main contract. In the absence of an express provision and lack of reasoning provided by the Commission that drafted the Austrian Arbitration Act, the Austrian judiciary has played an important role in clarifying the law regarding separability.The Supreme Court of Austria, in its decision of 2015, gave a landmark judgment wherein it rejected the doctrine of separability by holding that the arbitration agreement is only ancillary to the main agreement.[29] As a consequence, an arbitration agreement is considered akin to any other clause in the underlying contract and therefore does not hold any special place in the contract. It is not the case that the existence of the arbitration agreement is contingent on the existence or fate of the main contract. The rationale behind the judgment of the Austrian Supreme Court as understood is centered around the intention of the parties with respect to the arbitration agreement. The Supreme Court of Austria, in its decision of 5 February 2008,[30] held that while an arbitration agreement may be treated as any other clause in the contract, its survival is contingent on the intention of the parties with respect to the arbitration agreement. Thus, the arbitration agreement will survive if the intention of the parties was to ensure it survives, and alternatively, the arbitration agreement will not survive if the parties did not intend for it to survive.The position of law in Austria, thus, reflects a unique position in international arbitration, wherein the fate of the underlying contract does not drive the fate of the arbitration agreement, but rather it is driven by the intention of the parties. Accordingly, where the parties intended for the arbitration agreement to survive the termination of the contract, it will survive the termination. 5.2 Switzerland The law in Switzerland with regard to treatment of arbitration agreements after termination of the contract containing the agreement therein follows in the footsteps of Austria. Austria and Switzerland both believe that the termination of the contract containing the arbitration agreement shall not affect the arbitration agreement except in cases where an express intention to the effect can be shown. The Swiss Code on Private International Law, 1987[31] lays the foundation for independence of the arbitration agreement from the underlying contract. Article 178[32] states that “the validity of an arbitration agreement may not be contested on the ground that the principal contract is invalid or that the arbitration agreement concerns a dispute not yet existing.” The provision indicates that the courts shall not entertain any challenge to the arbitration agreement stemming from the validity or invalidity. While the provision does not make any express mention of the status of an arbitration agreement during mutual termination of contract, however, it sets the basis for further expansion of the theory of separability to mutual termination of contracts. This is evinced by Judgment 4A_438/2013 of February 27, 2014, First Civil Law Court, wherein the court held that “the severability of the arbitration clause is a cornerstone of arbitration and if a contract provides that the rights and obligations of the parties cease at termination, this will not extend to the arbitration clause unless very specifically stated in the contract.” Similar observations were made by the Association Suisse de l’Arbitrage, who stated that the arbitration clause is independent of the underlying contract and in particular will survive the termination of the contract. [33] Thus, it is clear that Switzerland also believes in the independence of the arbitration clause from the contract containing the clause. 5.3 China The law governing arbitral proceedings in China is the Arbitration Law of China, 1994. The legislation is by far the most explicit amongst domestic legislations across the globe with respect to separability of arbitration agreements. Article 19 of the Act[34] states that “an arbitration agreement shall exist independently. The amendment, rescission, termination or invalidity of a contract shall not affect the validity of the arbitration agreement. The arbitration tribunal shall have the power to affirm the validity of a contract.” Even in China, an arbitration agreement can exist independently of the underlying contract and shall continue to be valid even in cases wherein the underlying contract containing the arbitration agreement is mutually terminated. 5.4 Institutional and International Rules The 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”), the key document with respect to arbitral awards, does not provide any direct reference to the principle of autonomy of the arbitration agreement or its separability from the main contract. However, Article V of the New York Convention lays down grounds on which enforcement of awards may be refused. These grounds include invalidity of the arbitration agreement as per laws under which it was made, incapacity of the parties to arbitrate the matter, amongst others. This reflects the belief that it is indeed within the powers of the national legal system to determine whether the arbitration agreement is valid for enforcement or not. Support with regard to autonomy of arbitration agreements can also be found in the UNCITRAL Arbitration Rules,[35] London Court of International Arbitration Rules,[36] as well as the International Chamber of Commerce Rules of Arbitration.[37] 6. CONCLUSION In the authors’ view, it would be preferable in light of the detailed discussions above, that the Indian Legislature amends the law and expressly incorporates a provision similar to article 19 of the Arbitration Law of China, 1994, explicitly giving legal recognition to the obiter dicta of the Supreme Court as enunciated in the preceding paragraphs. However, one must remain sceptical as to whether the Indian Legislature will take the abovementioned suggested steps, as it rarely amends the Indian Arbitration and Conciliation Act, 1996 in view of purely legal conceptual concerns. Thus, for the time being, it would be apt for parties and practitioners to explicitly incorporate the theory of separability into their arbitration agreement. Any express intention of the parties with regard to the survivability of the arbitration agreement as a separate agreement irrespective of the existence of the main contract will in all likelihood be given due recognition by the courts of India. [1] Gautam Mohanty is a registered Advocate in India and is currently working as an Arbitration Associate with Justice Deepak Verma, Former Judge of Supreme Court of India. [2] Raghav Bhargava has a keen interest in commercial arbitration and international humanitarian law. He has previously worked under Justice Deepak Verma, Former Judge of Supreme Court of India and has written for the Cambridge International Law Journal. [3] A. Ayyasamy v. A. Paramasivam, AIR 2016 SC 4675 (India). [4] Ashok Thapar v. Tarang Exports Pvt. Ltd., 2018 SCC OnLine Bom 1489 (India). [5]Mulheim Pipercoatings GmbH v. Welspun Fintrade Ltd. & Anr., (2014) 2 AIR Bom R 196 (India). [6] SMS Tea Estate (P) Ltd. v. Chandmari Tea Co. (P) Ltd. (2011) 14 SCC 66 (India). [7] Branch Manager, Magma Leasing & Finance Ltd. v. Potluri Madhavillata, (2009) 10 SCC 103 (India). [8] Ford Credit Kota Mahindra Ltd. v. M. Swaminathan, AIR 2005 Mad. 18 (India). [9] Harbour Assurance Co. (UK) Ltd. v. Kansa General Int’l Insurance Co. Ltd. [1993] 1 Lloyds Rep. 81 (QB). [10] Fiona Trust & Holding Corp. v. Privalov, [2007] 1 All E.R. (Comm.) 891 (English Ct. App.), aff’d [2007] UKHL 40 (HL). [11] The Court of Appeal relied in particular on L. Collins (ed.), Dicey, Morris and Collins on The Conflict of Laws ¶12-099 (14th ed. 2006), which approved the analysis in Prima Paint and subsequent U.S. decisions. [12] Hayman v. Darwins Ltd. [1942] A.C. 356 (HL). [13] Aiste Skylent, International Arbitration: The Doctrine of Separability and the Competence-competence Principle (Aarhus School of Business, May 2003) accessed 12 February 2019. [14] Arbitration and Conciliation Act 1996, s. 11(6A) (India). [15] LCIA Arbitration Rules, art. 23(1). [16] ICC Arbitration Rules, art. 6(4). [17] LCIA Arbitration Rules, art. 21(2). [18] Supra n. 11. [19] Alan Redfern and Martin Hunter, Redfern and Hunter on International Arbitration, 5th edn, OUP 2009) 117. [20] Union of India v. Kishorilal Gupta & Bros., AIR 1959 SC 1362 (India). [21] National Insurance Co. Ltd. v. Boghara Polyfab Pvt. Ltd., (2009) 1 SCC 267 (India). [22] State of Haryana v. Ranbir, AIR 2006 SC 1796 (India), para. 10. [23] Supra n. 18. [24] Ibid. para. 8. [25] Ibid. para. 10. [26] Supra n. 19. [27] M Nueber and G Zeiler, ‘Austria’ in S Balthasar (ed), International Commercial Arbitration 194 (C.H. Beck 2016). [28] Dietmar Czernich, Theory of Separability in Austrian Arbitration law: Is it on safe pillars?, 32 Arbitration International 463 (2018). [29] Supreme Court, 23 June 2015, 18 Cg1/15v, RdW 2016 (Austria). [30] Supreme Court, 5 February 2008, 10 Ob 120/07f (Austria). [31] Swiss Federal Code on Private International Law, 1987. [32] Ibid. art. 178. [33] Association Suisse de l’Arbitrage, Arbitration Clauses in Switzlerand (2016) accessed 14 March 2019. [34] Arbitration Law of China, 1994, art. 19. [35] 2010 UNCITRAL Arbitration Rules, arts. 16(1) and 21(2). [36] LCIA Arbitration Rules, art. 23(2). [37] Ibid. art. 6(9).

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- Gautam Mohanty and Gaurav Rai IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 5383 OF 2019 (Arising out of SLP (C)No. 3211 of 2018) NATIONAL HIGHWAYS AUTHORITY OF INDIA Appellant(s) VERSUS GAYATRI JHANSI ROADWAYS LIMITED Respondent(s) WITH CIVIL APPEAL NO. 5384 OF 2019 (Arising out of SLP (C) No. 22099 of 2018) GAMMON ENGINEERS AND CONTRACTORS PVT. LTD. Appellant(s) VERSUS NATIONAL HIGHWAYS AUTHORITY OF INDIA Respondent(s) On 10th July 2019, the Supreme Court of India gave its judgment in two connected matters on a similar issue regarding the status of an agreement between the parties on the arbitral fee in future arbitration cases. (Link to the Judgment of NHAI v. Gayatri Jhansi Roadway and Gammon Engineers v. NHAI https://sci.gov.in/supremecourt/2017/40194/40194_2017_5_5_15008_Order_10-Jul-2019.pdf) The issue which arose for the adjudication of the Supreme Court of India was due to two conflicting judgments of the single bench of the Delhi High Court. In the case of NHAI v. Gayatri Jhansi Roadways Limited in an appeal against the order of the arbitral Tribunal fixing its fees in variance to the NHAI policy circular, the Delhi High Court had held that due to removal of the phrase ‘unless otherwise agreed’ in Section 31(8) and the newly introduced 31A of the Arbitration and Conciliation Act, 1996 vide the 2015 amendment, the parties could no longer fix fees of the Tribunal in their agreement. Since the arbitral Tribunal had fixed the fees in accordance with the 4th Schedule, the Delhi High Court dismissed the appeal. Applying this judgment in another arbitration, the arbitral Tribunal had fixed fees in variance with the NHAI Policy Circular on fees which was incorporated by agreement between the parties in the case of Gammon Engineers v. NHAI. NHAI moved the Delhi High Court to terminate the mandate of the arbitral Tribunal as their action of fixing fees without regard to the policy circular was beyond the agreement between the parties. The Delhi High Court in this case disagreed with the co-ordinate bench in NHAI v. Gayatri Jhansi and terminated the mandate of the arbitral Tribunal for fixing fees beyond what was agreed between the parties as per their executed agreement. The Supreme Court dealt with Gammon Engineers v. NHAI matter on facts. A Contract dated 07.02.2006 was entered into between the Appellants and Respondents. Owing to certain disputes which arose thereafter, the disputes were referred to arbitration under the Arbitration Clause stipulated in the Contract on 23.05.2017. Notably, the aforesaid contract contained Paragraph 5 which reads as follows: “5. The parties are desirous that the remuneration and other expenses payable to the Arbitrators as per arbitration clause for referring the dispute between the parties arising out of the said Contract to the Arbitral Tribunal for resolution in accordance with the procedure laid down therein, shall be as follows: I. That the maximum limit for fee payable to each Arbitrator per day shall be Rs.5000/- subject to a maximum of Rs.1.5 lakh per case. II That each Arbitrator shall be paid a reading fees of Rs.6000/- per case. III That each Arbitrator shall be paid Rs.5000/- by way of secretarial assistant per case. IV. That each Arbitrator shall be paid Rs.6000/- per case towards incidental charges like telephone, FAX, postage etc. V. That other expenses based on actual against presentation of bills, shall also be reimbursed to each Arbitrator subject to the following ceiling (applicable for the days of hearing only) (a) Travelling expenses – Economy class (By Air), First class AC (By train) and AC car (By road). (b) Lodging and boarding – Rs.8000/- per day in Metro cities (Delhi, Mumbai, Chennai & Kolkata), Rs.5000/- per day in other cities OR Rs.2000/- per day if any Arbitrator makes his own arrangement. (c) Local travel – Rs.700/- per day VI Charges for publishing the Award Maximum of Rs.10,000/-; VII That in exceptional cases, such as cases involving major legal implication/wider ramification/higher financial stakes etc. a special fees structure could be fixed in consultation with the Contractor/Supervision consultant and with the specific approval of the Chairman, NHAI before appointment of the Arbitrator.” The fee schedule as postulated in the Arbitration Clause was fixed under a policy decision dated 31.05.2004 of National Highways Authority of India. The policy circular dated 31.05.2004 was subsequently replaced by policy circular of NHAI dated 01.06.2017 whereby “the arbitrators would now get for any claim under Rs.100 crores, Rs.25,000 per day together with enhanced other charges or a lumpsum fee of Rs.5 lakhs per case which includes counter claims, in place of the original fee structure”. Decision of the Supreme Court The Supreme Court of India after having heard both Parties, remarked that the fee schedule contained in the policy circular dated 01.06.2017 substituting the earlier circular of 2004 was to be adhered to and not the Fourth Schedule of the Act, 1996. With regard to the application filed before the High Court to remove the arbitrators, the Apex Court while dismissing the application observed that an arbitrator does not become de jure unable to perform his functions if, by an order passed by such arbitrator(s), they have stated that the agreement does not govern the arbitral fees to be charged following the principle laid down by the Delhi High Court in Gayatri Jhansi Roadways Limited case(Supra) which clearly mandated that the Fourth Schedule and not the agreement would govern. Following the decision of the Supreme Court of India, the position has been made clear i.e. when there is a fee schedule agreed upon by the Parties and the same is stipulated in a contract the same is to be necessarily adhered to. Practical effects of the Judgment The authors have seen various other cases as well in which NHAI seeks to impose the circular as the guide for the fees of the arbitral Tribunal. However, in many of the cases the NHAI circular on fees of the arbitral Tribunal do not form part of the agreement between the parties. The Supreme Court has made it clear that the there needs to be an agreement between the parties for the fee structure to be applicable. Hence due caution should be exercised while drafting arbitration clauses in contracts as to whether there exists a fee schedule for the arbitrators. In case the said schedule prescribes a very low fee, there could be a possibility that many good arbitrators might not accept a nomination. Further in the opinion of the authors, there are several arbitration clauses which provide for institutional arbitrations and rules of such institutions to be followed. The Delhi International Arbitration Centre (DIAC) also prescribes the fee structure along with its rules and hence such an arbitration clause which decides to be governed by the DIAC rules even if not governed by the arbitration centre itself falls under thee bracket of an agreement between the parties to use a particular fee structure for arbitrations. DIAC Fee rules are very similar to the Fourth Schedule but most importantly they also clarify a major issue on which the Fourth Schedule is silent. The DIAC Fee Rules, updated in the year 2018, clarify that the fees mentioned in the rules is to be given to each arbitrator of a three-member arbitral Tribunal and not to be split between the three. The silence of the Fourth Schedule of the Arbitration and Conciliation Act, 1996 on this aspect has caused several parties to not accept the interpretation of the arbitral Tribunals that the fees is to be payable to each arbitrator. In such a situation incorporating the DIAC rules and arbitration clause in agreements would give more clarity to the parties regarding the fees to be payable to the members of the arbitral Tribunal. (Link to THE DELHI INTERNATIONAL ARBITRATION CENTRE (DIAC) (ADMINISTRATIVE COST AND ARBITRATORS FEES) RULES- 2018 http://www.dacdelhi.org/topics.aspx?mid=75) In case the parties want their arbitration to be governed by the institution itself it becomes even easier to implement the rules as Section 11(14) makes it clear that the when the arbitration is being conducted by an arbitral institution, the fee rules of such arbitral institutions shall apply instead of any rules made in consonance of the Fourth Schedule by the High Court. This make the case of parties adopting to resolve their arbitration through DIAC even stronger especially when the Act itself specifies that arbitration institutions can have their own fee structure and that the fee structure of DIAC although similar to the Fourth Schedule does not suffer from the lacunae plaguing the Fourth Schedule as explained above. (Link to The Arbitration and Conciliation, Act 1996 amended by the Arbitration and Conciliation (Amendment) Act, 2015 https://indiacode.nic.in/bitstream/123456789/1978/1/199626.pdf)

GAUTAM MOHANTY[1] In arbitration proceedings, a question which regularly presents itself is about the influence of Civil Procedure Code, 1908 on arbitration proceedings. Despite the presence of Section 19 in the Arbitration and Conciliation Act, 1996, which categorically postulates that the CPC, 1908 will not influence arbitration proceedings, arbitral tribunals do infact tend to rely on CPC, 1908 to a larger extent when intricate and complex interpretation and procedural issues arise. One such issue which recently arose was whether the term ‘cause of action’ as envisaged in Order II Rule 2 could be understood as ‘cause of arbitration’. In this post, I will primarily address three issues: (1) What is the bar under Order II Rule 2 and how does it impact arbitration proceedings (2) What are the necessary constituents of ‘cause of action’ and (3) Whether ‘cause of action’ denotes ‘cause of arbitration’ also. BAR UNDER ORDER II RULE 2 OF THE CIVIL PROCEDURE CODE, 1908 Before proceeding, it would be worthwhile to note the provision contained in Order II Rule 2 of CPC which provides that; 2. Suit to include the whole claim— (1) Every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action; but a plaintiff may relinquish any portion of his claim in order to bring the suit within the jurisdiction of any Court. (2) Relinquishment of part of claim — Where a plaintiff omits to sue in respect of, or intentionally relinquishes, any portion of his claim he shall not afterwards sue in respect of the portion so omitted or relinquished. (3) Omission to sue for one of several reliefs—A person entitled to more than one relief in respect of the same cause of action may sue for all or any of such reliefs; but if he omits, except with the leave of the Court, to sue for all such reliefs, he shall not afterwards sue for any relief so omitted.” The provisions of Order II Rule 2 indicate that if a plaintiff is entitled to several reliefs against the defendant in respect of the same cause of action, he cannot split up the claim so as to omit one part of the claim and sue for the other. If the cause of action is the same, the plaintiff has to place all his claims before the Court in one suit as Order II Rule 2 is based on the cardinal principle that the defendant should not be vexed twice for the same cause.[2] One of the objects of Order II Rule 2 is to avoid multiplicity of petitions.[3] The Rule postulated under Order II Rule 2 does not mandate that when several causes of action arise from one transaction, the plaintiff should sue for all of them in one suit. In fact, what the rule lays down is that where there is one entire cause of action, the plaintiff cannot split the cause of action into parts so as to bring separate suits in respect of those parts. A plea of bar under Order II Rule 2 is a highly technical plea. It tends to defeat justice and to deprive the party of a legitimate right. Therefore, care must be taken to see that complete identity of cause of action is established.[4] Where the essential requirement for the applicability of Order II Rule 2, namely, the identity of cause of action in the previous suit and the subsequent suit was not established, the subsequent suit could not be said to be barred under Order II Rule 2.[5] The law relating to bar created under Order II Rule 2 of the CPC is to be noted. The Apex Court in the case of Deva Ram vs. Ishwar Chand[6] has set out the underlying principle for application of Order II Rule 2. Relevant extract is reproduced: “12 ....a bare perusal of the above provisions would indicate that if a Plaintiff is entitled to several reliefs against the Defendant in respect of the same cause of action, he cannot split up the claim so as to omit one part of the claim and sue for the other. If the cause of action is the same, the Plaintiff has to place all his claims before the Court in one suit as Order II, Rule 2 is based on the cardinal principle that the Defendant should not be vexed twice for the same cause”. 15. In Sidramappa v. Rajashetty and Ors. MANU/SC/0396/1969 : [1970] 3 SCR 319, it was laid down that if the cause of action on the basis of which the previous suit was brought, does not form the foundation of the subsequent suit and in the earlier suit the plaintiff could not have claimed the relief which he sought in the subsequent suit, the latter namely, the subsequent suit, will not be barred by the rule contained in Order II Rule 2, CPC. In Gurbux Singh v. Bhura Lal MANU/SC/0241/1964 : [1964]7SCR831, it was observed : In order that a plea of a bar under Order 2 Rule 2(3), Civil Procedure Code should succeed the defendant who raises the plea must make out (1) that the second suit was in respect of the same cause of action as that on which the previous suit was based; (2) that in respect of that cause of action the plaintiff was entitled to more than one relief; (3) that being thus entitled to more than one relief the plaintiff, without leave obtained from the Court, omitted to sue for the relief for which the second suit had been filed. From this analysis, it would be seen that the defendant would have to establish primarily and to start with, the precise cause of action upon which the previous suit was filed, for unless there is identity between the cause of action on which the earlier suit was filed and that on which the claim in the later suit is based there would be no scope for the application of the bar. 16. In view of the above, what is to be seen in the instant case is whether the cause of action on the basis of which the previous suit was filed, is identical to the cause of action on which the subsequent suit giving rise to the present appeal, was filed. If the identity of causes of action is established, the rule would immediately become applicable and it will have to be held that since the relief claimed in the subsequent suit was omitted to be claimed in the earlier suit, without the leave of the court in which the previous suit was originally filed, the subsequent suit for possession is liable to be dismissed as the appellants, being the defendants in both the suits, cannot be vexed twice by two separate suits in respect of the same cause of action.” (Emphasis Supplied) Generally stated, “cause of action” means every fact which is necessary to establish to support a right or obtain judgement. Another shade of meaning is that a cause of action means every fact which will be necessary for the plaintiff to prove.[7] To constitute a bar to fresh suit under Order II Rule 2(3) of CPC three, elements are required to be proved. Firstly, it must be established that the second suit was in respect of the same cause of action as that on which the previous suit was based; secondly, in respect of that cause of action the plaintiff is entitled to more than one relief; and lastly, that being so, the plaintiff, without Leave obtained from the Court, omitted to sue for the relief for which the second suit has been filed. The cause of action for the purpose of this rule means all the essential facts constituting the right and its infringement.[8] In other words, a cause of action consists of all facts which are essential for the plaintiff to allege and to establish, if denied or controverted. It is pertinent to note that in the case of Mahommad Khalil Khan vs. Mahboob Ali Mian[9], the Privy Council, thus summed up the principles underlying this rule: 1) The correct test in cases falling under Order II Rule 2, is “whether the claim in the new suit is in fact founded upon a cause of action distinct from that which was the foundation for the former suit”.[10] 2) The cause of action means every fact, which will be necessary for the plaintiff to prove if traversed in order to support his right to the judgement.[11] 3) If the evidence to support the two claims is different, then the causes of action are also different.[12] 4) The causes of action in the two suits may be considered to be the same, if in substance they are identical.[13] 5) The cause of action has no relation whatsoever to the defence that may be set up by the defendant nor does it depend upon the character of the relief prayed for by the Plaintiff. It refers to the media upon which the plaintiff asks the court to arrive at a conclusion in his favour.[14] Thus, in order to test whether the arbitration proceedings are barred for want of Leave for omitting to sue under Order II Rule 2, the commonality of causes of action between the claim which is first in point of time and the subsequent claims, has to be established. If it is shown that the cause of action, in two proceedings are same and a party has sought to claim reliefs arising out of the same cause of action in parts, without first obtaining Leave for omitting to sue the entire claim in the first proceeding, the subsequent proceedings based on the same cause of action is barred. A. LAW PERTAINING TO CAUSE OF ACTION: The term “cause of action”, as has been defined in Aiyar’s[15] is as below: “Cause of action” in legal parlance is existence of those facts which give a party a right to judicial interference on his behalf… The elements of a cause of action are: first, the breach of duty owing by one person to another; second the damage resulting to the other from the breach. The commission or omission of an act by the defendant, and damage to the plaintiff in consequence thereof, must unite to give a good cause of action. No one of these facts by itself is a cause of action.” Further, the phrase “cause of action” in Halsbury’s Law of England (4th Edn.) as cited in Kunyan Nair Sivaraman Nair vs. Naryanan Nair,[16] has been explained as below: “Cause of action” has been defined as meaning simply a factual situation the existence of which entitles one person to obtain from the Court a remedy against another person. The phrase has been held from earliest time to include every fact which is material to be proved to entitle the plaintiff to succeed, and every fact which a defendant would have a right to traverse. Cause of action has also been taken to mean that particular act on the part of the defendant which gives the plaintiff his cause of complaint, or the subject matter of the grievance founding the action, not merely the technical cause of action.” Notably, in the case of Navin Chandra N. Majithia vs. State of Maharashtra[17] the Hon’ble Supreme Court after placing reliance on Stroud’s Judicial Dictionary as defined the term “cause of action” as below: “…In legal parlance the expression “cause of action" is generally understood to mean a situation or state of facts that entitles a party to maintain an action in a Court or a Tribunal, a group of operative facts giving rise to one or more bases for suing; a factual situation that entitles ...one person to obtain a remedy in Court from another person (Black's Law Dictionary). … a “cause of action” is stated to be the entire set of facts that gives rise to an enforceable claim; the phrase comprises every fact, which if, traversed, the plaintiff must prove in order to obtain judgement…” In reference to arbitration proceedings, the expression, “cause of action” must be read as “cause of arbitration”.[18] Pertinently, the cause of action has no relation whatsoever to the defence which may be set up by the defendant nor does it entirely depend upon the character of the relief prayed for by the plaintiff. It refers to the ground set forth in the plaint as the cause of action, or in other words, to the media upon which the plaintiff asks the Court to arrive at a conclusion in his favour.[19] Additionally, the causes of action in the two suits are the same if in substance they are identical[20] and it is not limited to the actual infringement of the right sued on, but includes all the material facts on which it is founded.[21] In the case of Kunjan Nair Sivaraman Nair vs. Narayanan Nair and Ors.[22], the Hon’ble Apex Court has opined that: “Order 2 Rule 2, Sub-rule (3) requires that the cause of action in the earlier suit must be the same on which the subsequent suit is based. Therefore, there must be identical cause of action in both the suits, to attract the bar of Order II Sub-rule (3)…The salutary principle behind Order II Rule 2 is that a Defendant or Defendants should not be vexed time and against for the same cause by splitting the claim and the reliefs for being indicated in successive litigations. It is, therefore, provided that the Plaintiff must not abandon any part of the claim without the leave of the Court and must claim the whole relief or entire bundle of reliefs available to him in respect of that very same cause of action. He will thereafter be precluded from so doing in any subsequent litigation that he may commence if he has not obtained the prior permission of the Court.” Interestingly, in the case of Balbir Singh vs. Atma Ram Srivastava[23], cause of action has been understood as a set of facts, which establish or give rise to a right of action. The Hon’ble Allahabad High Court, in the aforesaid case, has differentiated between the terms “cause of action” and the “right of action”. It is in the aforementioned context; the following Paras of the above judgement need to be taken into due consideration: “48…There is, however, a 'distinction between “cause of action” and the “right of action”. These terms are not synonymous and interchangeable. A right of action is a right to presently enforce a cause of action a remedial right affording redress, for the infringement of a legal right belonging' to some definite person; a cause of action is the operative facts which give rise to such right of action. The right of action does not arise until the performance of all conditions precedent to the action, and may be taken away by the running of the statute of limitations, through an estopped, or by other circumstances which do not affect the cause of action. There may be several rights of action and one cause of action and rights may accrue at different times from the same cause. … 49. A cause of action arises when that which ought to have been done is not done or that which ought not to have been done is done. The essential elements of a cause of action are thus the existence of a legal right in the plaintiff with a corresponding legal duty in the defendant, and a violation or breach of that "right or duty" with consequential injury or damage to the plaintiff for which he may maintain an action for appropriate relief or reliefs. The right to maintain an action depends upon the existence of a cause of action which involves a combination of a right on the part of the plaintiff and the violation of such right by the defendant... 51. Rule 2 of Order II, Civil Procedure Code however, prohibits splitting up of a cause of action. No precise rule can, however, be formulated for determinating what makes the entire cause of action; it depends upon the facts of a particular case. However, one of the principal tests of identity of causes is said to be the identity of essential facts; if the same evidence will support both actions there is deemed to be but one cause of action. There would be no identity of causes if some of the evidence is the same in both action but the subject-matter is essentially different. Whether the case falls within or out of the rule against splitting depends upon whether the wrong for which redress is sought is the same in both actions and not upon whether different grounds of relief for the same wrong are set forth. Thus, even where the plaintiff is entitled to several forms and kinds of relief there may be only one cause of action. The rule, however, does not require that distinct causes of actions, each of which would authorise independent relief be presented in a single suit.” Therefore, it emanates from the above discussion that the scheme of Order II of the Code of Civil Procedure is of such nature that the provision of Rule 2 is applicable to a given state of facts, wherefrom the plaintiff seeks different kind of reliefs but all of which kinds of relief spring from the same state of facts and, therefore, are connected with the same subject of action. [1] Gautam Mohanty has completed his BBA.LLB(Hons.) from National Law University Odisha in 2015 and has a Master of Laws (LLM) from Central European University, Hungary in 2017. He is currently working as an Arbitration Associate in the office of Justice Deepak Verma, Former Judge Supreme Court of India. [2] Deva Ram vs. Ishwar Chand, (1995) 6 SCC 733. [3] Swatantra Kumar Agarwal vs. Managing Director, UPFC Kanpur, AIR 1994 All 187 (DB). [4] Narashatti Kenpanna vs. Narasappa, AIR 1989 Kant 50. [5] Deva Ram vs. Ishwar Chand, (1995) 6 SCC 733. [6] Deva Ram vs. Ishwar Chand, (1995) 6 SCC 733 (737). [7] Mulla, The Code of Civil Procedure, 1908, 18th Edn. 2016 at Pg. 1569. [8] Sher Ali vs. Torap Ali, AIR 1942 Cal 407. [9] Mahommad Khalil Khan vs. Mahboob Ali Mian, AIR 1949 PC 78. [10] Moonshee Bazloor Ruheem vs. Shumsoonnissa Begum, (1867) 11 MIA 551. [11] Read vs. Brown, (1888) LR 22 QBD 128. [12] Brunsden vs. Humphrey, (1884) 14 QBD 141. See also, Haryana Co-op. Sugar Mills vs. G.D. Supply Co., AIR 1976 P&H 117. [13] Brunsden vs. Humphrey, (1884) 14 QBD 141. [14] Chand Kaur vs. Partap Singh 1889 ILR 16 Cal 98, (PC): 15 IA 156. [15] P Ramanatha Aiyar’s Advanced Law Lexicon, Lexis Nexis; 2017 Fifth edition (23 December 2016). [16] Kunyan Nair Sivaraman Nair vs. Naryanan Nair, (2004) 3 SCC 277, 286, Para 17. See also, Liverpool & London S.P. & I. Assn. Ltd. vs. M.V. Sea Success 1, (2004) 9 SCC 512, 562, Para 140. [17] Navin Chandra N. Majithia vs. State of Maharashtra, (2000) 7 SCC 640, 647, Para 19. See also, State of Rajasthan vs. Swaika Properties, AIR 1985 SC 1289, Hari Shankar Jain vs. Sonia Gandhi, (2001) 8 SCC 233, Para 23, Chand Kaur vs. Partab Singh, ILR 16 Cal 98 (PC) and National Textile Corpn. Ltd. vs. Haribox Swalram, (2004) 9 SCC 786, 796, Para 10. [18] Andrew McGee: Limitation Periods, 4th Edn., 2002, c.16, Para 16.004, Pg.281. [19] Lord Watson in Chand Kaur vs. Partab Singh, (1889) 16 Calcutta 98. See also, Sterling Agro Industries vs. Union of India, AIR 2011 Del 174, Para 6. [20] Praphullachandra vs. Rajbhai, AIR 1964 MP 129. [21] The Indian Plywood Manufacturing Company Limited vs. Orissa Timber Products Limited, (1977) (1) CWR 318. [22] Kunyan Nair Sivaraman Nair vs. Naryanan Nair, (2004) 3 SCC 277 [23] Balbir Singh vs. Atma Ram Srivastava, AIR 1977 All 211.

Shri Ravi Shankar Prasad, Member of Parliament and Minister of Law and Justice has Introduced the New Delhi International Arbitration Centre Bill, 2019 in the Lok Sabha on 3rd July 2019. A Link to the bill is as pasted here. http://164.100.47.4/BillsTexts/LSBillTexts/Asintroduced/127_%202019_LS_Eng.pdf A detailed discussion on this bill will follow on the Blog.