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*Ritika Gupta & Dakshita Dubey I. INTRODUCTION With the transactions of the global economy shifting to Asia, it is inevitably leading to disputes, which as is standard usually get referred Developing into a hub of arbitration, the Hong Kong Special Administrative Region (“HKSAR”) was ranked as the third most preferred arbitral seat in the world and is also home of the Hong Kong International Arbitration Centre. While the HKSAR region is an integral part of China, from the currency to the way the people live is distinct. The laws applicable to HKSAR are not as stringent as the laws applicable to the provinces of China, the same applies to the law governing the Dispute Resolution mechanisms, including Arbitration. Section 84 of the Hong Kong Arbitration Ordinance (“HKAO”), deals with the enforcement of Awards before the Courts in Hong Kong and specifies that the Award once recognized shall be treated and enforced as a judgment of the Court. The People’s Republic of China (“PRC”) and the HKSAR signed the Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region (“the Arrangement”), in 1999, in order to facilitate the smooth enforcement of Arbitral Awards. In recent years, PRC and HKSAR have passed various other Agreements enhancing the pro-arbitration stance of the region. The present article intends to highlight the laws governing the enforcement of an award in the region, by explaining the kinds of awards that can be enforced, the procedure adopted, and what the Courts of PRC and HKSAR have held regarding the same. II. KINDS OF AWARDS As given in Section 2 of HKAO, there are essentially the following four types of Awards that parties can enforce: a. Convention Awards – As defined in Section 2(1)(g) of the HKAO, a Convention Award means an arbitral award made in a State or the territory of a State, other than China or any part of China, which is a party to the New York Convention. b. Mainland Awards – As defined in Section 2(1)(o) of the HKAO, a Mainland Award means an arbitral award made in accordance with the Arbitration Law of the People’s Republic of China. c. Macao Awards – As defined in Section 2(1)(m) of the HKAO, a Macao Award means an arbitral award made in Macao in accordance with the arbitration law of Macao. d. Other Awards – The other awards include the awards which can not be defined as the above-mentioned definitions. III. PROCEDURE UNDER HKAO FOR ENFORCEMENT Division 1 of Part 10 (Sections 82-98D) of the HKAO deal with the Enforcement of Awards. In matters of enforcement, it is the position of the Courts of Hong Kong that the enforcement of arbitral awards should be "almost a matter of administrative procedure" and the courts should be "as mechanistic as possible". There are two major requirements for the enforcement of an arbitral award in HKSAR- an Application for Enforcement coupled with the required documents, as mandated by the HKAO. There are two stages in the enforcement of an arbitral award in HKSAR: a. Recognition stage – an award is converted into a HKSAR judgment; b. Execution stage – the judgment can be enforced using an acceptable method of enforcement. At the recognition stage, the court has to decide whether to grant permission to enforce the award. An application to the High Court for leave to enforce an award may be made ex-parte by affidavit. Additionally, the applicant must make full and frank disclosure of relevant information to the court in support of the application. If the award is in order, and the court grants permission, it will give a judgment “in terms of” the award. A party may then enforce the arbitral award by pursuing the same enforcement methods for court judgments, such as statutory demand, charging order, or writ of execution. An application seeking leave to enforce an arbitral award under Section 84 of the HKAO is governed by Order 73, Rule 10 of the Rules of High Court (“RHC”), as amended by Section 13 of Schedule 4 of the HKAO. The application is made ex parte, supported by an affidavit. The Court may direct a summons to be issued if it considers it appropriate to give the other party an opportunity to be heard in an inter partes hearing. Once leave to enforce is granted, the Court's order must be drawn up by, or on behalf of, the applicant and personally served on the respondent, delivered to his or her last known or usual place of business or abode, or in such other manner as the Court may direct. The award may be enforced 14 days after the date of service of the Court's order on the respondent or, under Order 73, Rule 10(6) of the RHC, the respondent may apply by way of summons and affidavit to set aside the order granting enforcement of the award within 14 days of being served. Failure to make a prompt objection to the Tribunal or the supervisory court may constitute estoppel. The party opposing enforcement has to show a real risk of prejudice and that its rights are shown to have been violated in a material way. Notwithstanding the 14-day time limit to apply for leave to set aside the enforcement order, the Court has power the to grant an extension of time under Order 3, Rule 5 of the RHC. In Astro Nusantara International BV and Others v. PT First Media TBK, the Court of Final Appeal granted an extension of time for the award debtor to challenge the enforcement orders notwithstanding a 14-month delay, taking into account that the award debtor had a strong case that the relevant awards had been made without jurisdiction over certain parties and that the delay had not caused the award creditor any uncompensatable prejudice. Along with the above-mentioned Application for Enforcement, the award creditor also needs to submit the documents as mandated in the HKAO. Furthermore, the time limit to apply for enforcement is six years. Section 85 of the HKAO deals with the enforcement of “Other Awards”, and lists out the following documents to be submitted for the same: a. the duly authenticated original award or a duly certified copy of it, b. the original arbitration agreement or a duly certified copy of it, c. if the award or agreement is not in either or both of the official languages, a translation of it in either official language certified by an official or sworn translator or by a diplomatic or consular agent. The above criteria also need to be met for the enforcement of the Convention Award under Section 88, Mainland Award under Section 92, and Macao Award under Section 98C. Apart from this, for these awards, the parties may also bring an action in Court but this procedure is rarely followed as it is procedurally cumbersome. IV. PRC ARBITRATION LAW – LAW ON ENFORCEMENT OF AWARD PRC Arbitration Law is not as extensive or elaborate as the HKAO. Chapter VI deals with the Enforcement of Awards and gives the power to the party in favour of whom the award has been made to approach the Court in case of non-enforcement of the same. The following instruments govern the recognition and enforcement of domestic awards in China: a. Arbitration Law. b. Civil Procedure Law (“CPL”). c. Supreme People’s Court (“SPC”) interpretations on and related to the Arbitration Law. d. SPC interpretations on and related to the CPL. For the purposes of recognition and enforcement, the law governing PRC divides arbitral awards into the following four main types, depending on a number of factors, including the place of the arbitration institution, the place of arbitration, and/or the presence/absence of foreign elements in the dispute: a. Local awards: which are rendered in mainland China by Chinese arbitration institutions over disputes without a foreign element. b. Foreign-related awards: which are rendered in mainland China by Chinese arbitration institutions and arguably foreign arbitration institutions over disputes with foreign element(s). c. Hong Kong, Macau, and Taiwan awards: which are rendered in Hong Kong, Macau (by arbitration institutions and arbitrators in Macau), or in Taiwan (by arbitration institutions and ad hoc arbitral tribunals in Taiwan). d. Foreign awards: which are rendered in jurisdictions other than mainland China, Hong Kong, Macau, and Taiwan. Depending on whether a foreign award is subject to the New York Convention, foreign awards are further divided into New York Convention awards and non-New York Convention awards. There are no "recognition" proceedings for a domestic award. Once a domestic award is rendered, the award creditor can apply for its enforcement before the competent court directly. For foreign awards, recognition and enforcement proceedings can be applied together or only recognition proceedings can be started. In the case of the first scenario, if once the trial division of the court recognizes the award, which gives the award effect in mainland China, the enforcement division can enforce the award as if it were a domestic award. In the latter case, the court will only rule on the recognition issue. V. ENFORCEMENT LAW AS UNDER THE 1999 ARRANGEMENT In the 1999 Arrangement between the PRC and the HKSAR, the main agenda was to allow the awards of both jurisdictions to be enforceable at each place. For this purpose, the Arrangement came into being. It attempted to broaden the scope of arbitral awards under the mutual enforcement regime and to align the position with the international approach under the New York Convention. Most of the laws followed the UNICTRAL Model Law with certain adjustments. However, there were places of ambiguity in the Arrangement which led to differences in interpretation in Mainland and Hong Kong. For example, it was a matter of dispute if recognition of an award as a procedural requirement is a pre-requisite for its enforcement, considering that the Arrangement did not mention the recognition of an award. Similarly, Parallel Proceedings for enforcement were not allowed, which were not commercially viable for parties who had assets in multiple jurisdictions. The Courts of Hong Kong had held that until proceedings for the enforcement of award at Mainland are concluded, the same proceeding cannot be instituted in Hong Kong, causing losses to the Award Creditor. Therefore, there was a need for a uniform set of rules to fill this void of uncertainty created by the rules. VI. SUPPLEMENTAL ARRANGEMENT 2020 On 27 November 2020, the Chinese Supreme People’s Court and the Hong Kong Department of Justice signed the Supplemental Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region (“Supplemental Arrangement”). The Supplemental Arrangement modified the existing Arrangement of 1999. The main content of the Supplemental Arrangement is as follows: a. Article 1 clarifies the position of the two stages of enforcement, i.e., recognition and enforcement. Since the 1999 Arrangement does not expressly state the recognition procedure for arbitration awards, debates had been going on in the Mainland Courts about whether it is a pre-requirement for enforcing arbitral awards made in Hong Kong against an award debtor’s assets. The Supplement Arrangement clarified this position of law by clearly stating that the enforcement of arbitral awards specified under the 1999 Arrangement shall be interpreted to cover both procedures for the “recognition” and “enforcement” of the arbitration awards. b. Article 2 clarifies the types of arbitral awards under the 1999 Arrangement. It specifies that all arbitral awards made pursuant to the Arbitration Ordinance of Hong Kong can be enforced in the Mainland pursuant to the Supplemental Arrangement. That includes all awards rendered in Hong Kong-seated arbitrations, whether institutional or ad hoc. This aligns with the usual international approach to the seat of arbitration under the New York Convention. c. Article 3 allows for parallel enforcement of awards both in Hong Kong and China simultaneously, which was earlier barred by the HKAO, under Section 93. This amendment is particularly helpful for enforcement against parties who have assets in multiple jurisdictions, as it facilitates timely enforcement and helps to prevent asset dissipation. d. Article 4 recognizes that before or after the enforcement of an award, the courts may order preservation measures in accordance with the applicable law. The Supplemental Arrangement fills the void and ensures that interim measures are available throughout the entire lifespan of an arbitration, including prior to the commencement of the proceedings (under the Interim Measures Arrangement), during the arbitral proceedings (under the Interim Measures Arrangement), and after the conclusion of the proceedings at the enforcement stage of the award (under the Supplemental Arrangement). The Supplemental Agreement is a progressive step towards creating a pro-arbitration region, allowing parties to move with the least hassle if the award is rendered in their favour. VII. EXCEPTIONS TO ENFORCEMENT OF AN AWARD The exceptions to the Enforcement of an Award against an Award Debtor, as given in Section 86 of HKAO, are the following: a. Incapacity of Parties; b. Void arbitration agreement; c. Violation of audi alteram partem; d. Deals with matters beyond the scope of arbitration; e. Wrong arbitral procedure used; f. If the award has already been set aside or is not yet binding on the parties; g. Contrary to the public policy of Hong Kong; h. Can not be dealt under the law of Hong Kong. In considering whether or not to refuse the enforcement of the award, the court does not look into the merits or at the underlying transaction. In dealing with applications to set aside an arbitral award, or to refuse enforcement of an award, whether, on the ground of not having been given notice of the arbitral proceedings, inability to present one's case, or that the composition of the tribunal or the arbitral procedure was not in accordance with the parties' agreement, the court is concerned with the structural integrity of the arbitration proceedings. In this regard, the conduct complained of "must be serious, even egregious", before the court would find that there was an error sufficiently serious so as to have undermined the due process. Another ground on which the awards are not enforced against the corporate debtor, is through the exception of crown immunity. Crown Immunity is a common law doctrine based on the principle that the Crown enjoys immunity from being sued in its own courts. Crown immunity is not limited to immunity from suit, but also extends to immunity from execution. Any assertion of Crown immunity must come from the “Crown”, which in Hong Kong now means the PRC Central People’s Government (“CPG”). The Hong Kong Court has also considered the assertion of Crown Immunity by reference to: a. The laws of the country of incorporation - The laws of the country of the company establish whether the entity is treated as an agent or instrumentality of the Crown. b. The Common Law Control test - The common law control test operates on a case-by-case basis, which looks for the nature and degree of control exercised by the Crown. An enjoyment of independent discretion in a company’s operation has consistently been held to be a powerful indicator of a company’s independence from the Crown. VIII. CONCLUSION The HKSAR is a pro-arbitration region and Courts generally have very limited intervention while enforcing awards, making HKSAR a popular destination for dispute resolution by giving parties the assurance that arbitral awards in their favor can be executed in HKSAR. With the recent Ordinances, the region is aiming to be a commercial arbitration hub, keeping in mind that in commercial disputes, time is of the essence and hassle-free legal procedures are needed the most. In a comparison, HKSAR procedures are more direct and elaborative than the procedures in PRC, which is why, an active attempt is taken to constantly bring in amendments that will further help in shaping the pro-arbitration stance of HKSAR. *Students at Chanakya National Law University, Patna, Bihar.

*Ishika Chauhan **Yash Bhatnagar Introduction On 31 January 2023, the Singapore International Commercial Court (Court) delivered a vital judgment about the issue of apparent bias of an arbitrator in a Singapore seated arbitral proceeding where it dismissed the application to set aside the award along with the application to remove the Presiding Arbitrator on the grounds of apparent bias. The Court observed that parties who agree to arbitrate their dispute do not have a right to a "correct" decision but only a right to a decision within the ambit of their agreement to arbitrate and a decision that is arrived at following a fair process. The dispute arose between CFJ ("the Seller") and another v CFL ("the Purchaser") regarding the sale of shares in a member of one to members of the other. After the pronouncement of the partial award, the Seller filed a Notice of Challenge to the Singapore International Arbitration Centre ("SIAC") seeking the removal of the President from the arbitral Tribunal because there were justifiable doubts over his independence or impartiality. This article explores the landmark judgment while analyzing the problems that arise in a dispute due to the apparent bias of an arbitrator, backing it by the obiter of the judgement and existing precedents over the contention. Brief Facts Of The Case On 23 July 2012, the Purchaser acquired a 49% stake in one of the Seller's subsidiaries through a Share Purchase Agreement ("the SPA") to which the Seller and the Purchaser were parties. Subsequently, the Purchaser alleged that the Seller had, among other things, deceived it into investing in the Subsidiary by making several representations. The SPA was governed by English law and contained an arbitration agreement that stipulated Singapore as the seat of the arbitration. The Purchaser invoked arbitration against the Seller primarily for the tort of deceit about misrepresentations, along with two other claims about a breach of contractual warranties and a contractual claim for indemnification. Over the course of two years, three partial awards were issued by the Tribunal. After the second partial award issuance on 29 January 2020, the Seller challenged the President's appointment. Argument On Behalf Of The Seller The Seller presented a two-fold argument on the issue of independence and impartiality of the President- The Seller vehemently argued that the Panel to which the President was appointed has a direct link to the Purchaser. It tried to establish the connection by making the following submissions- (a) Firstly, the Seller tried to draw a link between the Purchaser and the Ruritanian Government by mentioning that the State owns the Purchaser. Thus, there exists a close and patent relationship between the two. (b) Secondly, the Seller draws a connection between the Ruritanian Government, the Ruritanian Court, and the Panel. It contends that there is no actual "separation of power" between the executive and judiciary in the Ruritanian Constitution. Since the Ruritanian Court founded the Panel, it became a part of the Government. (c) Lastly, the Seller draws an association between the President and the Government. It claims that by accepting the offer to be a part of the Panel, the President was directly engaged with the owner of the Purchaser, i.e., the Government. The President's non-disclosure of his appointment to the Panel promptly raises doubts. The President disclosed this information to the parties almost after two years. Argument On Behalf Of The Purchaser The Purchaser presented expert evidence from an expert on Ruritanian law in response to Seller's argument regarding President's direct link with the Purchaser via Government. The expert expressed that Ruritania's judiciary exercised its power independently of the Ruritanian Government, and the law per Ruritania's constitution protected its adjudicatory independence. The Purchaser also contended that the Third Partial Award dismisses doubts over the President's impartiality since several findings in the Second and the Third Partial Award were favorable to the Seller. Reasoning Of The Court The test to determine apparent bias While referring to the case of BOI v BOJ [2018] 2 SLR 1156, the Court expounded that the test is to check whether there exist facts and circumstances that give rise to reasonable suspicion or apprehension of bias in the fair-minded and informed observer. This includes: (a) Classification of facts and circumstances that are significant for checking the existence of bias. (b) Understanding whether the fair-minded and informed observer would reasonably entertain an apprehension of bias from those facts and circumstances. The Court elaborated that the fair-minded and informed individual is not personally concerned with the matter's outcome other than the general public's interest in the fair and proper dispensation of justice. Burden of proof The Court also opined that the burden of proof lies on the party questioning the arbitrator's independence and impartiality to show that the fair-minded and informed observer would harbor justifiable doubts about the objectivity of the person in authority. Hence, it would be a reasonable inference that it is on the Seller to prove those above, and it seeks to do by alleging that the Purchaser and the Panel are connected through Government and, by extension, the appointment of the President to the Panel. To assess the alleged case of apparent bias, regard must be given to the facts and circumstances that would have been known to the fair-minded and informed observer. Such facts and circumstances would be based on the evidence the parties have placed before the Court and assert to be relevant to this question. However, the Court held that the Seller's case flounders on establishing a link between the judiciary and the Government since it failed to produce any evidence to support the same. Who is a fair-minded and informed observer? Court explained that a fair-minded and informed observer is not supposed to have "detailed knowledge of the law"; the observer cannot be taken to have "specialized knowledge," but a knowledgeable observer would "take the trouble to inform himself or herself on all relevant facts that are capable of being known by members of the public generally." In this regard, the Court summarised that the knowledge of Ruritania's judiciary operating independently from other branches of Government is not specialized. Thus, a fair-minded and informed observer could draw a logical distinction between the Ruritanian Court and the Government. A fair-minded and informed observer would undertake a comprehensive investigation, and unlike the Seller, they would not draw the second connection. The test of disclosure Regarding the argument of disclosure made by the Seller, the Court observed that an arbitrator does not have to disclose every appointment to the parties. The Court referred to the case of Halliburton Company v Chubb Bermuda Insurance Ltd [2020] UKSC 48 for to discuss the test of the disclosure; an arbitrator only needs to disclose appointments and matters "which would cause the [reasonable observer] to conclude that there was a possibility of a lack of impartiality." In conclusion, there is no reasonable suspicion of bias; it would follow that the question of disclosure does not arise, and thus, the President's non-disclosure does not raise doubts. Assessing the circumstances as they exist To assess the application of the arbitrator's removal, a reference should be made to the existing circumstances at the time of the hearing, considering that the purpose of such an application is to stop an arbitrator from getting involved in further proceedings. The Court agreed with the argument made by the Purchaser while referring to Halliburton for the proposition that the Court must "assess the circumstances as they exist on the date of the hearing for removal of the arbitrator." Analysis The issue of the apparent bias of an arbitrator is essential in international arbitration, as it can impact the legitimacy and fairness of the arbitral process. The principle of impartiality and independence of arbitrators is one of the fundamental pillars of international arbitration, and a lack of either of these qualities can raise concerns of bias. While talking about breach of Natural Justice in the current case, The SICC distinguished between instances when a tribunal ignores points presented by the parties and a tribunal's comprehension of the matter or the law, or the tribunal opting not to deal with an issue it felt superfluous, in rejecting the Seller's allegations for breach of natural justice. A breach of natural justice, according to the SICC, must be "obvious and nearly unavoidable," yet there wouldn't be one of the tribunal had just misunderstood a key topic or proposition. International jurisprudence has recognized that the standard for determining whether there is an appearance of bias is objective. In other words, the test is whether a reasonable and informed third party, knowing all relevant facts and circumstances, would conclude that there is a real possibility that the arbitrator is biased towards a particular party. This principle is further evolved through the obiter of CFJ v. CFL Judgment. The case hence gives rise to the fact of appointment of an informed and fair-minded observer and sets up a precedent of effective two-stage check on the arbitration proceeding, which will eventually make the process more equitable. In the past, Russian courts have set aside awards on the basis of non-disclosure. by an arbitrator as well. This decree read with the CFJ Judgement is well enough to contextualize a robust mechanism for the free and fair arbitration proceeding. The leading case on this issue is the ICSID annulment decision in the case of Hrvatska Elektropriveda v. Slovenia. In this case, the ad hoc committee held that the test for apparent bias is whether "an informed and reasonable third party would conclude, on a balanced assessment of the facts, that there exists a real possibility that the arbitrator was biased." International arbitration rules such as the International Chamber of Commerce (ICC) Rules and the UNCITRAL Model Law on International Commercial Arbitration provide guidelines on the issue of apparent bias. For example, the ICC Rules state that an arbitrator shall be impartial and independent throughout the arbitration. If doubts arise regarding an arbitrator's impartiality or independence, the parties may challenge the arbitrator. If a challenge is made, the arbitral Tribunal will decide. If the challenged arbitrator does not withdraw, the other party may request the competent Court or authority to decide on the challenge. Overall, the issue of the apparent bias of an arbitrator is crucial in international arbitration, and international jurisprudence has developed standards and guidelines to ensure the legitimacy and fairness of the arbitral process. Court's Holding and Conclusion At the outset, the Court rejected the Seller's claims entirely. It held that there exists no case of apparent bias of the President, therefore, dismissed the application of the Seller. The principle of impartiality and independence of arbitrators is fundamental to the legitimacy and fairness of the arbitral process. International jurisprudence has recognized that the standard for determining whether there is an appearance of bias is an objective one, and that the test is whether a reasonable and informed third party, having knowledge of all relevant facts and circumstances, would conclude that there is a real possibility that the arbitrator is biased. The case (CFJ v CFL), in point, strengthens the norms and solidifies the 2nd principle of Natural Justice in the field of Arbitration and Conciliation as well; Nemo Judex in causa sua. *Ishika Chauhan is an undergraduate law student from Dr. Ram Manohar Lohiya National Law University, India. They hold interests in various fields of law including intellectual property, dispute resolution, and insolvency Laws. **Yash Bhatnagar is an undergraduate law student from Dr. Ram Manohar Lohiya National Law University, India. They hold interests in various fields of law including Corporate Governance, Intellectual Property, Cyber Security, Data Protection, and Human rights.

-Haaris Moosa[1] Facts and Judgment The judgment of the Delhi High Court in Hindustan Zinc Ltd. v. National Research Development Corpn[2] puts forth important questions regarding the use of the defence of nullity for challenging the enforcement of arbitral awards under Section 47 of the Code of Civil Procedure, 1908 ('CPC, 1908’). The rationale of the section is to avoid multiplicity of litigation for settling questions relating to the status of discharge, nullity and non-executability of the decree etc.[3] In the instant case, the defence of nullity was raised based on the bar of limitation under section 3 of the Limitation Act, 1963, according to which the claims preferred after the period of limitation are to be dismissed. However, the Delhi High Court in this case went on to place reliance on Morgan Securities & Credits Pvt. Ltd. v. Morepen Laboratories Ltd [4] wherein all remedies other than section 34 of the Arbitration and Conciliation Act 1996 (‘1996 Act’) for challenging the enforcement of an arbitral award were proscribed. The court in Morgan Securities held that the proscription extended to all the objections under section 47 of the CPC, 1908. The court went on to hold that ‘a challenge to an award on the ground that it is a “nullity” or is otherwise illegal can be addressed only in proceedings that may be initiated in accordance with Section 34 of the Act.’[5] The court in Hindustan Zinc repeats this ratio by holding that section 34 of the 1996 Act is exhaustive and challenges falling outside it cannot be accepted. Discussion The Supreme Court in Perkins Eastman Architects DPC v. HSCC (India) Ltd.[6] retrospectively nullified (from the date of the Arbitration and Conciliation (Amendment) Act, 2015 No. 3 of 2016) all arbitration agreements that involved unilateral appointment of arbitrators. The awards that were pronounced by such unilaterally appointed arbitrators were held to be non-est. Consequently, a large number of cases involving vehicle finance agreements, wherein unilateral appointment of arbitrators by the lender was the norm for years, became legally untenable. It is settled law that a non est award is no award. In the experience of this author, arbitrations between the lender and the borrower in the vehicle finance industry are mostly ex parte, under Section 25 of the 1996 Act, which says that the arbitrator can continue the proceedings if the defendant fails to submit the statement of defence in the time period agreed upon by the parties. This is because of the disproportionate bargaining power of the lender, which results in the selection of arbitral venues and seats in the agreements that parties find difficult to travel to. In the experience of the author, the borrowers become aware of the arbitration award only when the notice for execution under Order 21 Rule 22 or 37 of the CPC, 1908 and Section 36 of the 1996 Act is served on them. Order 21 of the CPC, 1908 allows the Decree Holder to enforce the decree against the Judgment Debtor and thus realise the fruits of the judgment/claim/award. Section 36 of the 1996 Act makes it clear that enforcement of the arbitration award is to be “in accordance” with the provisions of the CPC, 1908. Rule 22 and 37 of Order 21 deal with situations that warrant the issuance of notice to the Judgment Debtor. An execution petition (under section 36 of the 1996 Act and Order 21 CPC,1908) can only be filed after the 120 days required for preferring a challenge to the arbitration award under section 34 of the 1996 Act. This leaves the borrowers holding the bag since they would have an ex parte arbitral award against them passed by a unilaterally appointed arbitrator without having the legal right to make a challenge under section 34 of the 1996 Act. Recently, the Supreme Court has categorically held that arbitration awards cannot be challenged under writ proceedings and especially during their enforcement.[7] In such a situation the only remedy for the borrower/award debtor is an objection under section 47 of the CPC. Hindustan Zinc proposes to take away this right. Further, a three judge bench of the Supreme Court in Vasudev Dhanjibhai Modi v. Rajabhai Abdul Rehman[8] had earlier held that “Again, when the decree is made by a Court which has no inherent jurisdiction to make it, objection as to its validity may be raised in an execution proceeding if the objection appears on the face of the record”. There are several judgments from various High Courts which have adhered to the above Supreme Court ruling. The Calcutta High Court in Saraswat Trading Agency v. Union of India[9] had held that the Court was duty-bound to declare the non-executability of a decree if it is a nullity. Similarly, the High Court of Chhattisgarh, while dealing with an argument of non-executability of an arbitration award in R.S. Bajwa & Company v. State of Chhattisgarh[10] had ruled that the declaration of nullity can be done by “any court in which it is presented,” and that “nullity can be set up whenever it is sought to be enforced or relied upon and even at the stage of execution or even in collateral proceedings.” Furthermore, the High Court of Kerala in India Cements Capital Limited v. William[11] while dealing with the enforcement of an arbitration award, held that the court is obliged to decide the question of non-executability due to nullity under Section 47 of the CPC, 1908, and that “the remedy available under Section 47 of the Code cannot be denied to an affected party”. A division bench of the High Court of Kerala in Food Corporation of India v. A. Mohammed Yunus [12] had also categorically held that when the challenge is to the manner of appointment of the arbitrator, interference by the executing court is warranted. Even though the court in Hindustan Zinc engaged with the submissions of the counsel for the judgment debtor based on Khanna Traders vs. Scholar Publishing House P. Ltd. & Ors[13] a single bench judgment of the Delhi High Court, wherein the defence of nullity under section 47 of CPC, 1908 was accepted relying on Vasudev Dhanjibhai Modi, the court in the instant case refused to accept it citing another single bench judgment of the Delhi High Court in Morgan Securities. Conclusion It is evident from the above discussion that the decision of the Delhi High Court in Hindustan Zinc Ltd. [14] goes against the ruling laid down by the Supreme Court in Vasudev Dhanjibhai Modi v. Rajabhai Abdul Rehman[15] and has the potential to perpetuate the misery of award debtors who have received ex parte unilateral arbitration awards against them, especially in case of vehicle financing contracts. [1] A pureplay lawyer specialising in Commercial Arbitration, Customs and Insolvency based out of Kochi, Kerala. LLM in International Law (Class of 2020) from South Asian University, New Delhi. Email - harismoosa@gmail.com [2]2023 SCC OnLine Del 330 [3]Justice Kurian Joseph and Namit Saxena, Mulla , The Code of Civil Procedure, Volume 1 (20th Ed., Lexis Nexis 2021),728 and 729 [4] 2006 SCC OnLine Del 774 [5] 2023 SCC OnLine Del 330, Para 22 [6] (2020) 20 SCC 760 [7]Bhaven Construction v. Sardar Sarovar Narmada Nigam Ltd. 2022 (1) SCC 75; Deep Industries vs. Oil and Natural Gases Corporation Limited and another 2020 (15) SCC 706. [8] (1970) 1 SCC 670 [9] 2004 SCC OnLine Cal 141 [10] 2008 SCC OnLine Chh 14 [11] 2015 SCC OnLine Ker 24805 [12] 1987 SCC OnLine Ker 12 [13] 2017 SCC OnLine Del 7684 [14] 2023 SCC OnLine Del 330 [15] (1970) 1 SCC 670

Shubhendra Mishra[1] Introduction The Micro Small and Medium Enterprises Development Act, 2006 (hereinafter ‘Act’) was framed as a single comprehensive act for regulating and developing small-scale industries and enterprises, primarily to promote their growth and provide security to their interests. It had always been a longstanding demand of the sector to free itself from a plethora of laws and regulations that acted as a deterrent because of the limited availability of resources and awareness to deal with them. Pursuant to this conundrum, well-deliberated legislation was pronounced to provide adequate solutions. But as with any other legislation in the country, this Act is also influenced by arbitrary aspects which have crept into the roots of the legislation and gone uncatered to. This article aims to deal with a similar noticeable example of the Act, that is, Section 19, highlighting its arbitrary aspects and providing adequate reasoning as to why an amendment for the same is a pressing priority now. Purpose of Section 19 of the Act: An unjust discrimination between buyer and seller Section 18(2) of the Act provides for reference to the process of conciliation if a dispute arises between the parties with regard to any amount due under Section 17 of the Act while making a reference to the Micro Small Enterprises Facilitation Council (hereinafter ‘Council’). But if such a settlement process fails to reach a justified conclusion and results in termination, then either the Council takes up the matter for arbitration or refers it to some institution that provides dispute resolution services for such arbitration. The provisions of the Arbitration and Conciliation Act, 1996 (hereinafter ‘Arbitration Act’) shall then apply to the dispute as if the arbitration was in pursuance of an arbitration agreement referred to in sub-section (1) of section 7 of the Arbitration Act. Now, according to section 19 of the Act, if an arbitral award has been passed pursuant to such an arbitration proceeding under section 18 and an application for setting aside any decree, award or other order is to be made before any court of law, the law mandates the deposition of 75% of the total amount of the arbitral award pronounced, and time and again it has been upheld in various High Court and Supreme Court judgements that this provision is mandatory in nature and not merely directory. An analysis of its jurisprudence will take us to the conclusion that it exists mainly to protect the interests of the seller of a micro or small enterprise by upholding the validity of the arbitral award and to provide for facilitating promotion and development and enhancing the competitiveness of micro, small and medium enterprises and for matters connected therewith or incidental thereto. According to the Courts, this discrimination exists on valid grounds as a buyer, when challenging an adverse award, has to make a pre-deposit. However, when a seller is non-suited, he need not make any pre-deposit for challenging the order, which is adverse to him. Therefore, if a defeated seller is called upon to make some deposit, it will appear irrational or arbitrary. This justification is based on the idea that deposition is necessary with respect to the secured assets if taken possession of or sold, may fall short of the dues therefore, such a deposit may be necessary. An analysis of this reasoning also points out this provision's arbitrary and discriminatory nature. In the case of Kerala SRTC v Union of India, the counsel for the petitioner argued that Section 19 of the Act is arbitrary and discriminatory and, therefore, violative of Article 14 of the Constitution of India as it creates discrimination between the seller and buyer and militates the right to equality under Article 14 of the constitution. It was also contended that the right to move to a competent court under Section 34 of the Arbitration Act is similar to the right to appeal provided under the unamended Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter ‘the SARFAESI Act’). The judgement of Mardia Chemicals Ltd v Union of India was relied upon as a contention to argue that the stipulation regarding pre-deposit should be declared unenforceable, however, this argument was ultimately rejected. The reason behind such rejection was the dissimilarity that exists in the purpose with which the above-compared acts were framed and the objectives that they aim to fulfil. Lack of Confidence in Courts and Legislative overreach Any string of analysis cannot take us to the conclusion as to why the cap has been set mandatorily at 75% since, logically, if the arbitral award passed is pristine in nature, then the courts should simply mandate the deposition of 100% of the arbitral award to save the time and promote efficiency in the pronouncement of judgments. Setting the cap below 100% clearly demonstrates two chains of conclusions that can be derived. Firstly, the legislation deprives the courts of their confidence in determining whether an award passed under the Act is arbitrary and, in this way, undermines their existence and power. Secondly, this is a prime example of legislative overreach as such a law indicates that the legislature can encroach upon the judiciary whenever intended, as it directs the court to take a deposition of 75% of the amount mandatorily. In this way, the power of the court to hear appeals for challenging the award under section 34 of the Arbitration Act gets restricted. Even if the award passed is arbitrary, the courts are now left with no option other than to take a deposition of 75% before hearing the appeal. No Backdoor Remedy If The Arbitral Award Passed was Adverse: Abuse of provisions of Section 19 There are multiple loopholes through which the provisions of this law can be abused without any hindrance. Firstly, the courts also fail to consider the facts as to the unruly or arbitrary nature of the award passed due to an arbitration proceeding commenced ex-parte through section 18(3) of the Act. It should be noted that the law provides that an arbitration proceeding cannot be commenced ex-parte if any of the parties are not provided with sufficient opportunity of hearing even though an arbitral tribunal has been vested with the power of a civil court, because it will lead to a violation of the principle of natural justice of audi alteram partem, which mean no case should be decided without hearing both the parties. But still, by the skilful use of the provisions of section 19 of the Act, an award can be passed ex-parte with utmost arbitrariness. Still, no remedy will lie against it unless the aggrieved party deposits 75% of the arbitral award to the court. Secondly, in a situation where a party has to deposit the said amount, does not possess adequate funds for the same, will not be able to file an appeal before the court. Thus, the only option left with the party would be to declare itself insolvent or dilute its existing assets, which will not be justified in every case, especially where the arbitral proceeding has resulted in an unfavourable award. The courts also fail to consider the situation where a dispute may arise between enterprises of similar standards, for example, two micro or small enterprises. In such a situation, where the buyer itself is a micro or small enterprise, it becomes very difficult or almost impossible for the buyer to make a deposit of 75% of the award, which in the majority of the circumstances is a hefty amount and such deposition is too big of a sacrifice to be done before their appeal is heard and a justified conclusion is reached by the courts. Therefore, the deposition of 75% of the award before the dispute is resolved could be prejudicial to the interests of the buyer. Thirdly, situations may arise where an arbitral proceeding is presided over by three arbitrators, that is, the minimum number of arbitrators required for constituting an arbitral tribunal under Section 11(3) of the Arbitration Act, but the award is passed only by two of the arbitrators because one of the arbitrators has expired or retired or was not involved for any other reason when the award was passed or was unable to sign the arbitral award passed. In such a scenario, the scope for passing an adverse or arbitrary award expands tremendously. For dealing with such a situation, no exception or alternate remedy exists. The Way Forward Need of the hour is an amendment for adding an exception to Section 19 of the Act. The exception should cover majorly the aspects including any of the following: firstly, if the chances of the aggrieved going insolvent are evident and can be adequately proved by them, then the courts should allow the appeal of such a person to be heard before them without mandating the deposition. Secondly, if the provision of a mandatory deposition is to be upheld, then the percentage of such deposition should be reduced to an extent so as to not give rise to the impossibility of satisfaction of the provision. In totality, the financial conditions of the aggrieved at the time of the appeal before the court should be the primary factor to be considered before the imposition of the statutory mandates because a deposition of 75% of the award could be burdensome for the buyer and could have a detrimental effect on the ability of the buyer to make the remaining payment. If no exceptions are added, the courts can follow the precedence of Mardia Chemicals Ltd. Etc v UOI & Ors. Etc, which resulted in the striking down of a similar provision in the SARFAESI Act. In this case, it was contended and held that such an oppressive provision should not have been made. It works as a deterrent or as a disabling provision impeding access to a forum meant for the redressal of the grievance of a borrower. The amount of deposit of 75% of the demand, at the initial proceeding itself, sounds unreasonable and oppressive more particularly when the secured assets/the management thereof, along with the right to transfer such interest has been taken over by the secured creditor or in some cases property is also sold. The requirement of a deposit of such a heavy amount on the basis of a one-sided claim alone, cannot be said to be a reasonable condition at the first instance itself before the start of adjudication of the dispute. The courts can also follow a similar line of reasoning to address this issue with respect to section 19 of the Act. This section deprives the courts of their power to hear appeals and is manifestly arbitrary under certain circumstances which have been previously enumerated in the article. In the case of Seth Nandlal v State of Haryana, it was held that – “right of appeal is a creature of the statute and while granting the right the legislature can impose conditions for the exercise of such right so long as the conditions are not so onerous as to amount to unreasonable restrictions rendering the right almost illusory.” Therefore, if an existing provision unreasonably hampers the power of the courts and the right of the people to appeal, it should either be amended or struck down completely. Conclusion The main thrust of the contentions in this article to challenge the validity of the impugned enactment is that no adjudicatory mechanism is available to the other party to ventilate their grievance through an adjudicatory authority when access to the justice is the hallmark of any legal system. The effectiveness of an enactment decreases when it is at odds with the basic principle of law-making, that is, the law should be lenient, but its enforcement should be strict. Indeed, when a transaction of a similar nature as enumerated under the Act takes place and there is a default with respect to the same, logically the seller will be at the suffering the end but that should not prevent the legislature as well as the courts to foresee the possible loopholes that exist as a result of one-sided legislation and its possible misuse, which can grow rampant if left unattended to. [1] Shubhendra Mishra is an undergraduate law student from Dr Ram Manohar Lohiya National Law University, India. He holds interests in various fields of law, including Arbitration Law, Insolvency law, Corporate Law, Mergers and Acquisitions and Securities Law. He can be reached at shubhendra.rajat102@gmail.com.

Aditya Singh & Rahul Kumar* Introduction The scope of Judicial intervention in Arbitration proceedings in India has been a matter of concern for the future of Arbitration in the country. This Judicial intervention, inter alia, entails the power to modify arbitral awards. In some legal systems, courts have the authority to modify or set aside arbitral awards. This power is typically granted to courts through statutory provisions or through the arbitration agreement itself. In order to modify an arbitral award, a court must typically find that the award is in some way incorrect or unjust. Indian law, however, as was reaffirmed by the Supreme court in NHAI v M Hakeem, leaves no room for the discretion of the court to vary or change the award even if it thinks the same is necessary for Justice. The authors of this piece aim to highlight why it is essential to rethink the concept that the power to modify the award should only lie with the Arbitral Tribunal, and the only option available to the court should be to remand the award back to the tribunal. Current Scenario The language of the Arbitration and Conciliation Act, 1996, under Section 34 and Section 37, makes it abundantly clear that it would not be correct for a court to modify the award even if it suffers from patent illegality or erroneous interpretation of the law. The only recourse available in this matter would be either to set aside the award or to remand it back to the tribunal. Furthermore, it is important to note that the 1996 act has been modelled on the UNCITRAL Model Law on International Commercial Arbitration, 1985, which provides for a minimal scope for judicial intervention, restricting the relief for dissatisfaction with the award to either set aside the award or remand the matter back to the Tribunal as per the provisions of Section 34 of the Act. The NHAI v M Hakeem judgement of the Supreme Court cements this position by terming the 'limited remedy' under Section 34 to be coterminous with the 'limited right' to have the award either set aside and/or remand the matter. Even as the court found glaring errors in the calculation of the award by the arbitrator, it found itself bound by law not to alter the award in any manner and merely set it aside. Justice Nariman, in the instant case, goes on to mention that if, in its current form, the courts interpret Section 34 to include the power to modify awards to do what it considers justice, it would be going against the intent that the parliament had when developing the Act. However, he did state that the parliament may consider amending such a provision to bring the Act in line with arbitration laws the world over such as in Singapore,Australia and the United Kingdom, which do give the courts the power to vary the award if they see that there is a need for the same. Moreover, in NHAI v P Nagaraju, the Supreme Court held that the arbitrator had erred in determining the market value; however, it could not substitute its own view and modify the award. One can argue that a more sensible approach would have been to substitute the correct market value and enforce the award accordingly, as this would have saved both parties a lot of costs and trouble, and would not deem the entire arbitration process worthless. This is not to say that there have not been instances of courts altering the interest component in awards based on fairness and correcting any irrationality that the award suffers from. In oriental structural engineersreduced the interest on the late payment of the award on the grounds of ‘justice and equity’. Even the Delhi High Court reduced the interest awarded in Jindal Biochem, stating that it was higher than the prevailing bank rate. Dyna Technologies took this one step further when the court modified the sum awarded itself after holding that the award was unsustainable. It is, however, observed that across all such judgements, none of the courts mentioned which exact provision granted them the power to alter the interest rates of such awards. A Practical Approach While the view that the stand of the supreme court to not step in and alter awards on their own, is the way forward, allowing the courts to take the other extreme step does more harm to the process of arbitration than good. If the court can dismiss the award in its entirety and order that the entire process is started from scratch, it might as well disregard arbitration as a process entirely in the eyes of the court. It would double up the costs of the parties and only serve to deepen the pockets of the legal teams representing them, and this entire process would still not ensure the finality of the second award as the court may decide to dismiss that as well. A middle ground must be sought wherein neither is the process of arbitration dismissed nor does an award full of errors harm the interest of any party. For this, the language of Section 34 has to be interpreted in a broad and liberal manner, so as to include the power of modifying the award, by highlighting that the words ‘recourse against an arbitral award’ would entail varying it to ensure a fair outcome. Even the Andhra Pradesh High Court in the K. V. Rao case interpreted the term ‘recourse to a court against an arbitral award’ to not be limited to setting aside the award, as not only would that defeat the whole purpose of the arbitration proceeding, it would also effectively put the parties in a position worse than that at the start of the proceeding. The Madras High Court in Novasoft Technologies interpreted the provision in a similar manner and stated that ‘A statute cannot be interpreted in such a manner as to make the remedy worse than the disease.’ Keeping in mind such open-minded interpretations of the courts and the remarks of Justice Nariman, a statutory amendment must be considered to the Arbitration and Conciliation Act which empowers the courts to vary the award to a certain degree in order to achieve the final goal of any dispute resolution mechanism- Justice. A slightly off-centre approach here would be to allow specific, limited areas where modification of the award is possible by the courts to rectify some errors. While contemplating such changes to the powers of the courts, the legislature must be careful in maintaining a balance between the autonomy and independence that one seeks to have with the process of arbitration and the efficiency that arbitration is supposed to provide, while also making sure that no glaring errors go by unfettered and prejudice any party. Conclusion Courts must realise that parties choose arbitration as the method of settling their disputes to escape the court proceedings. If a court then proceeds to disregard the autonomy of the parties and write a judgement correcting or modifying the award, it would be against the very spirit of the legislation and would serve to undermine the entire arbitration process. The judicial pronouncements on arbitration have always been marred with inconsistencies, and such judgments are necessary to provide some finality in some issues. This stance of the Supreme Court to not entertain any pleas to modify the award and remanding it back to the tribunal should be the standard moving forward, and courts should stay away from interfering with the modalities of the award. However, where the errors are minute or where it would be more practical, courts should be allowed to make minor changes in arbitral awards. Where precisely this line should be drawn must be answered by a combination of legislative amendments, judicial pronouncements and common sense not to alter the essence of the award itself. * Aditya Singh is an undergraduate law student from Dr Ram Manohar Lohiya National Law University, India. They hold interests in various fields of law including Arbitration Law, Insolvency Laws, IPR, Alternative Dispute Redressal processes and Securities Law. Rahul Kumar is an Advocate at Sarvada Legal and can be contacted at rahul@sarvada.co.in.

Mr Price, welcome to the Arbitration Workshop! Firstly, we are extremely honoured that you agreed to give us an interview and to share your perspective with our readers. Q. Before we delve in, may we request you to kindly introduce yourself and tell us about the origins of your interest in the field of International Arbitration? A. I am a partner in the London Litigation & Trial Department of Latham & Watkins. I am Fellow of the Chartered Institute of Arbitrators (CIArb), a Committee Member of the London Branch of the CIArb, and one of the Executive Committee Members of the Branch's Young Members Group. I am also Secretary of The City of London Law Society Arbitration Committee. I have worked in international arbitration for a little over 10 years. I started as a trainee in the arbitration group at Latham, and over the years I have advised on a number of large commercial arbitrations with a particular focus on the construction and energy sector, but I have also worked in investment treaty arbitration and English court litigation too. Last year I finally completed my COVID-delayed MSc in Construction Law from King's College London, which was a demanding but incredible experience from which I learned a huge amount. I also have a significant advisory practice dealing with UN / UK / EU sanctions and export controls, and that has been a real focus of my work this year with the invasion of Ukraine. Q. The Law Commission of England and Wales has recently published its proposed revisions to the Arbitration Act 1996. The proposed revisions relate to matters such as the summary dismissal of unmeritorious claims, confidentiality, and jurisdictional challenges to awards, among others. What is your take on it? Are you entirely happy with the proposed reforms or is there an aspect you feel the Law Commission has not dealt with? How do the reforms in the long-term impact London as an arbitration hub? A. The Arbitration Act 1996 is a successful piece of legislation. It modernised English arbitration law very considerably when it was introduced, and has helped make London one of the most popular seats of arbitration. But we cannot rest on our laurels, particularly in a world where other seats (Singapore springs particularly to mind) provide compelling alternatives. So after twenty five years it is right that we take stock of the Act and whether it needs to be refined. The Law Commission has done a good job in identifying areas where change might be appropriate, but it is important that, having published its consultation paper, it now reflects on the huge volume of responses that are being provided, and really considers the views of practitioners and users. In the areas you mention, I agree with some of the Law Commission’s proposals, but not others. For example, the Law Commission proposes to include a statement in the Act making it clear that arbitrators may summarily dismiss unmeritorious claims. I believe this is helpful in clarifying that arbitrators do have this power, and in encouraging them to use it. By contrast, however, the Law Commission has decided not to address confidentiality in a reformed Act. But I believe that users might benefit from a general statement about the confidentiality and privacy of arbitrations, and the situations where those principles do not apply, as confidentiality remains an important reason for people choosing arbitration. I also do not agree with the proposal to change the process for challenging an award on the basis that the arbitrators lacked jurisdiction, from a complete re-hearing before the court to merely an appeal if the party has already fought and lost the issue of jurisdiction before the arbitrators. That puts the court in a worse position than the arbitrators in determining jurisdiction. It seems a fundamental point of principle that a party should have the right to a de novo review before the court on an issue that goes to the consent of that party to arbitrate in the first place. By contrast an appeal may be appropriate where the issue is one of the fairness of the procedure adopted to try the case, but where the arbitrators’ jurisdiction to try the case is not in doubt. It is interesting that Singapore retains the full re-hearing approach for jurisdictional challenges based on the seminal English Supreme Court case of Dallah Estate and Tourism Holding Company v The Ministry of Religious Affairs, Government of Pakistan [2010] UKSC 46. Q. In Enka Insaat Ve Sanayi AS v OOO “Insurance Company Chubb” [2020] UKSC 38, the English Supreme Court clarified the law regarding ascertaining the governing law of an arbitration agreement in the absence of an express choice of law provision. More recently, in Kabab-Ji SAL v Kout Food Group [2021] UKSC 48, the English Supreme Court confirmed the principles set out in Enka v Chubb. What possible lessons can contracting parties take away from both cases? A. One fundamental lesson is to include a provision in your arbitration agreement explicitly stating the law that is to apply to the arbitration agreement. Where the law governing the underlying contract is different to the law of the seat of arbitration, that is the solution to dealing with the issues raised by Enka. Interestingly, the decision in Kabab-Ji suggests that some commonly worded governing law provisions in contracts will in themselves amount to an express choice of the law governing the arbitration agreement in any event. But a separate express choice of law provision for the arbitration agreement is probably helpful. The difficult issue that arises from Enka is the fact that where there is no express choice of law governing the arbitration agreement, but the underlying contract is governed by foreign law, that foreign law now applies to the arbitration agreement. In addition, that foreign law constitutes an agreement within the meaning of Article 4(5) of the Act to disapply the non-mandatory provisions of the Act where those provisions relate to substantive (as opposed to procedural) matters. Those matters are instead governed by the foreign law applicable to the arbitration agreement, as opposed to English law under the Act as the law of the seat. This could lead to some surprising outcomes. For example, the principle of “separability” in section 7 is a non-mandatory substantive provision. Where the foreign law of the underlying contract (and therefore the arbitration agreement) does not recognise the principle of separability, the door suddenly opens to arguments that because the underlying contract is unenforceable (eg. for illegality), the arbitration agreement falls away as well, rather than remaining viable because of the principle of separability enshrined in section 7 of the Act and the decision of the House of Lords in Fiona Trust & Holding Corp v. Privalov [2007] UKHL 40. I think most users of arbitration in England would consider that an unwelcome outcome. The issue with separability could be repeated in relation to other non-mandatory sections of the Act that deal with substantive matters. The uncertainty caused by this development is something that is concerning and which the Law Commission should address as a priority in its review. At present this issue is considered by the Law Commission as a matter of minor importance. However, I, and many other practitioners, believe it is matter of fundamental importance. Q. While many institutions and jurisdictions expressed remote hearings as the ‘new norm’ of conducting arbitration proceedings in the last year, it appears that the world might be returning to normalcy in terms of increased physical hearings. What are your thoughts on the same, and if you could also shed some light on the disruption that remote hearings have caused to the industry of commercial arbitration? How did your firm adapt to the work from home and remote hearing culture? A. The world of lockdowns seems a long time ago now. I think there was a great deal of scepticism in some quarters as to whether remote hearings would be functional and / or fair. There were concerns that the technology would not be up to the task, that it would be difficult to cross-examine, and that time zones would mean hearings taking many weeks longer. But, in my experience, these issues were generally overcome, and I think an element of remote hearing will probably stay with us for the future (particularly for discrete applications and case management hearings). It is difficult to justify, for example, flying a witness halfway round the world to testify for ten minutes when they could simply join the hearing remotely. But I do think though that there is some value in having all the key participants together in the same hearing room. It focuses minds and leads to better dialogue. Q. Having considerable experience with economic sanctions, do you have any specific observations on how sanctions may impact commercial disputes and commercial arbitration? A. I think we are entering a world where we are likely to see the increased use of economic sanctions, and that impacts both the underlying legal relationship between parties, but also (sometimes) their ability to resolve their disputes through arbitration. The impact of sanctions on the underlying legal relationship requires careful consideration. The questions that need to be considered include: do the sanctions apply to a transaction as a jurisdictional matter? Do the sanctions actually prevent performance of the obligation in question? What have the parties agreed about the impact of sanctions in their contract? These are difficult questions, and the answers are not intuitive. For example, with the sanctions against Russia, those sanctions can apply to transactions that are predominantly carried out in jurisdictions that do not impose sanctions, but which in part touch upon the territory of a country or organisation (such as the US, UK and EU) that does impose sanctions. You could have an Indian company dealing with a Russian company, but the US, UK or EU considers that its sanctions apply to that transaction because part of it (perhaps a payment) is performed or occurs within their territory. You need to look at the nature of the sanctions very carefully. The restrictions they impose vary to a great extent. There is a considerable difference between dealing with an asset freeze target, where most transactions will be impossible, and dealing with the target of sectoral sanctions, where most transactions will actually be viable. Often sanctions-related disputes involve a party seeking to use the sanctions as an excuse to get out of an inconvenient relationship, and much of the time the answer is that strictly speaking the transaction can be performed. The final level of analysis is then whether there is some sort of sanctions clause (akin to a force majeure clause) that excuses performance where it has been disrupted rather than made unlawful. Interestingly though, in the case of the sanctions against Russia, anecdotal evidence suggests that some obligations are simply impossible (rather than unlawful) to perform, because many actors in the financial and business world will no longer permit payments to be made to Russia-related parties. Arbitrating these sorts of disputes brings in an extra layer of complexity. If the seat of arbitration is in a jurisdiction that imposes sanctions, then the arbitration must be conducted in compliance with those sanctions. Arbitrators, parties and counsel may be required personally to comply with particular sanctions (ie. an arbitrator who is a US national). The sanctions may form part of the governing law of the contract in dispute, or may be considered mandatory laws that override the parties' choice of law or constitute a form of relevant public policy. There may be conflicting sanctions regimes (ie. US/UK/EU sanctions v Russian counter-sanctions) which amongst others things could lead to parallel proceedings. Each case is going to have a unique combination of these issues, and the answers will also differ depending on the stage you are at (ie. before the Tribunal, the courts of the seat, or on enforcement). I think we will see in the coming years a fascinating body of jurisprudence being built up in this area. Q. Are there any specifics of arbitral practices that you particularly enjoy? What practices do you employ to engage and keep up with the recent trends in arbitration? Is there any particular practice you would recommend young lawyers should regularly engage in to become better in the field? A. It is important to keep practicing the basics - good clear concise written work, compelling advocacy, and good client management. Without these basics you cannot get anywhere in arbitration. These are skills that take considerable time to master and require constant practice. You never stop improving your drafting or learning about advocacy. Any opportunity for a young lawyer to practice advocacy, including mooting, is incredibly valuable and helps build confidence. Q. What would be your word of advice to the readers hoping to be future arbitration practitioners and academicians? A. Spend time familiarising yourself with some of the key literature on international arbitration and get a good base of knowledge on arbitration law in the particular jurisdiction in which you are qualified, but also be aware of some of the key authorities and from other jurisdictions and tribunals. Have a good working knowledge of fundamentals like the three pillars of international arbitration: the New York Convention, the UNCITRAL Arbitration Rules and the UNCITRAL Model Law. Meeting other people in the arbitration community at seminars and conferences is also a valuable way to stay up to date in the fast-moving world of arbitration law, and it is also a lot of fun. You make some great friends whilst learning about interesting and difficult legal issues. The Editorial Team at the Arbitration Workshop would like to thank Mr. Robert Price for taking out time from his busy schedule and for sharing his perspectives with us!

*Gautam Mohanty & ** Abhay Raj I. Introduction The Constitution of India 1949 (“Constitution”), in its Article 227, postulates a specific legislative intent of the High Court – the intention of serving as a supervisory power over courts and tribunals throughout the territories in relation to its jurisdiction. In furtherance of this, the goal is for the High Court to maintain strict judicial and administrative control over the administration of justice, ultimately promoting the justice system’s orderly and efficient functioning. To that purpose, however, the Indian Arbitration and Conciliation Act, 1996 (“Act, 1996”) does not provide a cogent clarification to the question of what is the scope of jurisdiction of High Courts under Article 227 is in terms of their competence to intervene with the arbitral tribunal’s order. With that, the specific question that warrants consideration is whether an arbitral tribunal, being a creature of the contract, qualifies as a ‘tribunal’ under Article 227 of the Constitution. This conundrum arises precisely because of three reasons. First, the connotation of a ‘tribunal’ under Article 227 covers only an ‘administrative body’ established for the purpose of discharging quasi-judicial duties, per Articles 323-A and 323-B of the Constitution. Second, Section 5 of the Act, 1996 provides for no intervention of the judiciary in the arbitral process and maintenance of the principle of ‘minimal judicial intervention’. Third, Section 5 of the Act, 1996 contains a non-obstante clause, establishing the precedence of the Act, 1996 over any other law in force in India. There have been, however, efforts in Indian jurisprudence to bring an arbitral tribunal under the ambit of the ‘tribunal’ as mentioned under Article 227 of the Constitution. In SREI Infrastructure Finance Limited v. Tuff Drilling Private Limited, the Court observed that arbitral tribunals fall within the ambit of ‘tribunal’ because first, it functions under the purview of a defined Act, thereby exercising quasi-judicial power; second, it is for resolving the disputes (lis) between the parties; and third, since Article 227 is a constitutional provision, the non-obstante clause in Section 5 does not have any bearing on it. Thus, the fundamental question of whether an arbitral tribunal can be considered a ‘tribunal’ for the purposes of the Constitution’s Article 227 has been answered affirmatively to a great extent. Despite this, Indian courts have delivered divergent conclusions vis-à-vis the supervisory jurisdiction of the High Court under Article 227 over an arbitral tribunal’s order. Notably, in a recent judgement delivered in the case of Virtual Perception Opc. Pvt. Ltd. v. Panasonic India. Pvt. Ltd., the Single Judge Bench of Hon’ble High Court of Delhi, observed that a petition filed under Article 227 of the Constitution could not be allowed against an arbitral tribunal’s order. Herein, the High Court rejected a challenge made by the Claimant to the findings of an application filed under Section 16(3) of the Act, 1996 contending that the Tribunal had exceeded its jurisdiction by violating the legal provisions. Notably, the High Court in the context of supervisory jurisdiction of Courts against orders of arbitral tribunals, observed that “[…] even in case of an order passed by an arbitral tribunal under Section 16 of the Act, the constitutional jurisdiction of this Court under Article 227 of the Constitution is not barred. However, its scope is extremely limited.” In another case, the Division Bench of the Hon’ble High Court of Delhi, in the case of Future Retail Ltd. v. Amazon.com NV Investment Holdings LLC and Ors., observed that a petition filed under Article 277 could be allowed against an arbitral tribunal’s order. Herein, the High Court’s Division Bench stayed the arbitration proceedings before the Singapore International Arbitration Centre (“SIAC”) Tribunal in alleged violation of Section 18 of the Act, 1996. Pertinently, the stay of proceedings was granted pursuant to an appeal from the Order of a single judge of the High Court of Delhi who had categorically observed that Article 227 of the Constitution could not be invoked to challenge the case management orders passed by an arbitral tribunal. In the above backdrop, the present post highlights the scope and supervisory jurisdiction of High Court under Article 227 of the Constitution over the arbitral tribunal’s Order. As such, the authors in Part II expand upon Article 227 of the Constitution and its interaction with the Indian arbitration regime. The article will then highlight the relevant jurisprudence concerning the above and trace its evolution in the last few years. In Part III, the authors discuss the tests formulated by Courts for subjecting the tribunal’s order to the jurisdiction of Article 227 in order to largely preserve the sanctity of the arbitral process. Consequently, Part IV will attempt to deep dive into the above-mentioned cases of Virtual Perception and Future-Amazon to decipher the reasoning of the Courts and whether the Courts could have relied on the sanctity tests as postulated in landmark cases of Bhaven Constructions and Deep Industries. Concluding remarks are finally provided in Part V. II. The intersection of Article 227 and Arbitration Article 227 has often been used as a getaway in cases where a party is aggrieved by an arbitral tribunal’s order. Despite the best efforts of judges and drafters, the tribunal’s Orders have been frequently subjected to court intervention. However, the intersection of arbitration and Article 227 of the Constitution has often been viewed with a critical eye, primarily to boost arbitration’s motto of ‘minimal judicial intervention’, which is well-established under the Indian jurisprudence too. As such, the usage of Article 227 requires the satisfaction of ‘grave injustice’ or ‘failure of justice’ by the Court or Tribunal. The threshold requirements for the invocation of Article 227 were laid down in the case of Surya Dev Rai v. Ram Chander Rai & Ors., wherein it was held that Article 227 can be invoked a) in cases where the Court or Tribunal has neglected to exercise a jurisdiction which it does have, ultimately causing injustice; b) in cases where the Court or Tribunal has assumed authority/jurisdiction which it does not have; or c) in cases where the jurisdiction while being available is exercised in a way that oversteps the limitations of jurisdiction. Further, in specific reference to the arbitral tribunal and its Order, the Hon’ble Supreme Court in the case of Surender Kumar Singhal v. Arun Kumar Bhalotia, summarized the applicable principles concerning Article 227 vis-à-vis challenge to arbitral orders as below: (I) “An arbitral tribunal is a tribunal against which a petition under Article 227 would be maintainable; (ii) The non-obstante clause in Section 5 of the Act does not apply in respect of exercise of powers under Article 227 which is a Constitutional provision; (iii) For interference under Article 227, there have to be ‘exceptional circumstances’; (iv) Though interference is permissible, unless and until the order is so perverse that it is patently lacking in inherent jurisdiction, the writ court would not interfere; (v) Interference is permissible only if the order is completely perverse i.e., that the perversity must stare in the face; (vi) High Courts ought to discourage litigation that necessarily interferes with the arbitral process; (vii) Excessive judicial interference in the arbitral process is not encouraged; (viii) It is prudent not to exercise jurisdiction under Article 227; (ix) The power should be exercised in ‘exceptional rarity’ or if there is ‘bad faith’ is shown; (x) The efficiency of the arbitral process ought not to be allowed to diminish and hence interdicting the arbitral process should be completely avoided (emphasis supplied).” Moreover, the landmark judgement delivered by the seven judge bench of Hon’ble Supreme Court of India in SBP and Company v. Patel Engineering Limited and Anr., merits a much greater discussion between Article 227 and its interference with arbitral tribunals and their Orders. The Apex Court observed that since Arbitral Tribunal is a creation of a contract the exercise of jurisdiction by the Court over every arbitral order is impressible. The seven-judge bench in 2005 as such observed: “…But that would not alter the status of the arbitral tribunal. It will still be a forum chosen by the parties by agreement. We, therefore, disapprove of the stand adopted by some of the High Courts that any order passed by the arbitral tribunal is capable of being corrected by the High Court under Article 226 or 227 of the Constitution of India. Such an intervention by the High Courts is not permissible. 45. The object of minimizing judicial intervention while the matter is in the process of being arbitrated upon, will certainly be defeated if the High Court could be approached under Article 227 of the Constitution of India or under Article 226 of the Constitution of India against every order made by the arbitral tribunal. Therefore, it is necessary to indicate that once the arbitration has commenced in the arbitral tribunal, parties have to wait until the award is pronounced unless, of course, a right of appeal is available to them under Section 37 of the Act even at an earlier stage.” 46. We, therefore, sum up our conclusions as follows: […] (vi) Once the matter reaches the arbitral tribunal or the sole arbitrator, the High Court would not interfere with orders passed by the arbitrator or the arbitral tribunal during the course of the arbitration proceedings and the parties could approach the court only in terms of Section 37 of the Act or in terms of Section 34 of the Act. However, subsequent judgements of the Supreme Court (as mentioned in Part III) extended the scope of the ‘advisory jurisdiction of High Courts’ over arbitral tribunals under exceptional circumstances (this will be discussed below in greater length). In the author’s opinion, this extension of scope has provided the possibility of direct intervention with arbitral tribunal orders by the High Courts and as such, undermines the principle of ‘minimal judicial intervention’ in arbitration. While academically, the decisions made in SREI Infrastructure, Emta Coal, and Bhaven Construction were not considered by the 7-judge bench decision in SBP, they are evidently per incuriam, even though the cases have not been overruled in the eyes of the law. As such, it is important for the authors to consider the cases mentioned as good law. III. The Test for Sanctity of Arbitral Process The Indian Supreme Court (for instance in Bhaven Constructions and Deep Industries), after analysing the issues with the usage of Article 227 in the arbitral process and to ultimately protect the sanctity of the arbitral process, has laid down certain tests. These tests, per se, serve as a high threshold for the maintainability of a petition under Article 227 before the High Court. As such, it was time and again held through these tests that the supervisory jurisdiction cannot be utilized for overturning the factual and legal findings of the case and cannot merely operate as a court of appeal (emphasis supplied). 3.1. The Bhaven Construction Test- The Exception Rarity Test In its 2021 judgement, Bhaven Construction v. Executive Engineer Sardar Sarovar Narmada Nigam Ltd. and Anr., the Hon’ble Supreme Court of India was required to examine the question as to whether the arbitral process could be interfered with under Article 226 and Article 227 of the Constitution and if yes, under what circumstances? The Court observed that the usage of Article 227 for allowing judicial interference with the arbitral tribunal’s order can only be made in ‘exceptional rarity’. This was primarily based on the fact that on the one hand, the Indian Constitution’s Article 227 forms a part of the basic structure, and on the other hand, the arbitral tribunal is shielded from the High Court’s interference due to the principle of minimal judicial intervention. The High Court held that its interference could only be justified if the party is rendered ‘remediless’ under the Act, 1996, or the parties have acted in ‘bad faith’ in the arbitration proceedings. However, on its facts, Bhaven Construction ultimately held that Article 227 could not be used to interfere with the arbitral tribunal’s order deciding on a challenge to its jurisdiction. Notably, the Court in the above case held as below: “It is, therefore, prudent for a Judge to not exercise discretion to allow judicial interference beyond the procedure established under the enactment. This power needs to be exercised in exceptional rarity, wherein one party is left remediless under the statute, or a clear ‘bad faith’ shown by one of the parties. This high standard set by this Court is in terms of the legislative intention to make the arbitration fair and efficient. […] In the instant case, Respondent No. 1 has not been able to show exceptional circumstance or ‘bad faith’ on the part of the Appellant, to invoke the remedy under Article 227 of the Constitution. No doubt the ambit of Article 227 is broad and pervasive, however, the High Court should not have used its inherent power to interject the arbitral process at this stage.” 3.2. The Deep Industries Test - The Inherent Jurisdiction Test In its 2020 judgement of M/s Deep Industries Ltd. v. Oil and Natural Gas Corporation and Anr., the Hon’ble Supreme Court laid down the test of ‘inherent jurisdiction’ for determining the applicability of Article 227 in a challenge to an arbitral order passed by a Tribunal. The Supreme Court observed that High Courts must exercise caution when interfering with tribunal’s orders and should limit their interference to orders that patently lack inherent jurisdiction. Pertinently, the Apex Court in the above case, observed as below mentioned: “15. Most significant of all is the non-obstante clause contained in Section 5 which states that notwithstanding anything contained in any other law, in matters that arise under Part I of the Arbitration Act, no judicial authority shall intervene except where so provided in this Part. Section 37 grants a constricted right of first appeal against certain judgments and orders and no others. Further, the statutory mandate also provides for one bite at the cherry, and interdicts a second appeal being filed (See Section 37(2) of the Act). 16. This being the case, there is no doubt whatsoever that if petitions were to be filed under Articles 226/227 of the Constitution against orders passed in appeals under Section 37, the entire arbitral process would be derailed and would not come to fruition for many years. At the same time, we cannot forget that Article 227 is a constitutional provision which remains untouched by the non-obstante clause of Section 5 of the Act. In these circumstances, what is important to note is that though petitions can be filed under Article 227 against judgments allowing or dismissing first appeals under Section 37 of the Act, yet the High Court would be extremely circumspect in interfering with the same, taking into account the statutory policy as adumbrated by us here in above so that interference is restricted to orders that are passed which are patently lacking in inherent jurisdiction.” However, in the instant case, the Court did not elaborate upon what it termed “patently lacking in inherent jurisdiction.” Thereafter, in Punjab State Power Ltd. v. Emta Coal Ltd., the Supreme Court clarified the test’s interpretation and meaning of the term “patent lack in inherent jurisdiction” and held that “a foray to the writ Court from a section 16 application…can only be if the order passed is so perverse that the only possible conclusion is that there is a patent lack in inherent jurisdiction. A patent lack of inherent jurisdiction requires no argument whatsoever - it must be the perversity of the order that must stare one in the face.” IV. Analysis of Virtual Perception and Future-Amazon Dispute The present part of the article discusses the recent case of Virtual Perception and Future-Amazon, to highlight the understanding of the Court’s in cases of supervisory jurisdiction under Article 227. This is based on the fact that on the one hand, the Hon’ble High Court of Delhi in Virtual Perception observed that the usage of Article 227 in every arbitral order “…would open the doors of the Court under Article 227 of the Constitution against virtually any procedural order of the Tribunal”. On the other hand, the Hon’ble High Court of Delhi in Amazon-Future case stayed the arbitration proceedings and allowed intervention by the High Court to the arbitral order. Thus, it is important to analyse the recent judicial precedents to understand the extent of supervisory jurisdiction of the High Courts over arbitral tribunal’s order. 4.1. Virtual Perception Opc. Pvt. Ltd. v. Panasonic India Pvt. Ltd. In its recent judgement of Virtual Perception, the Delhi High Court has deliberated upon whether a petition can be filed under Article 227 in cases of a plea against an arbitral order. Herein, the plea was twofold: (1) that the arbitral tribunal exceeded its jurisdiction (as per Section 16(3) of Act, 1996) and (2) that it violated certain applicable legal provisions. Accordingly, the Court divided the relevant issue as ascertaining the scope of supervisory jurisdiction of the High Court against orders of an arbitral tribunal. The above-mentioned case makes it abundantly clear that an arbitral tribunal’s order is not barred from being challenged under Article 227 in the High Court, and even the High Court is not precluded from exercising its jurisdiction in such cases. However, the scope of the challenge in itself is highly restricted. The case placed reliance on the Deep Industries test and SBP & Company case to arrive at its aforesaid conclusion. The High Court further observed that Courts would be exceedingly restricted in exercising their discretion to interfere with the orders passed under Section 37 of the Act. Consequently, the High Court in light of the legislative policy of the Act, 1996 stated that the intervention of Courts would be confined to decisions which are ‘patent lacking in inherent jurisdiction’. A manifest/patent lack of jurisdiction of arbitral tribunals would only exist if the perversity in the challenged decision “stares one in its face”. Additionally, the Court also observed that the procedure for conducting arbitration proceedings is within the jurisdictional domain of the arbitral tribunal and if a tribunal acts within its jurisdiction, the correctness of that order cannot be inspected under Article 227 of the Constitution. In the end, to limit the Court’s intervention the High Court held that mere contentions that the Order (a) betrays the legal provisions; or (b) is an attempt of abuse of power; or (c) does not meet parties’ interest – does not constitute an exception to challenge the Order under Article 227 of the Constitution. Any other interpretation, in Court’s understanding “…would open the doors of the Court under Article 227 of the Constitution against virtually any procedural order of the Tribunal”. 4.2. Future Retail Ltd. v. Amazon.com NV Investment Holdings LLC and Ors. As the present post focuses on Article 227, it is to be noted that the following analysis will only focus on the judgment delivered by the Division Bench of the High Court that allowed the petition under Article 227 and stayed the proceedings before SIAC. The facts of the case are straightforward with the Future Group filing a petition before the Delhi High Court’s single-judge Bench under Article 227 challenging the SIAC tribunal’s procedural ruling. This procedural ruling was based on the Future Group’s application for termination of SIAC’s proceedings before the arbitral tribunal. The request for termination was based on the Competition Commission of India’s Order of 17th December 2021, which cancelled the statutory approval awarded for the transaction between Amazon and Future Group. Notably, vide the procedural order the SIAC tribunal had declined Future’s Group request for an early hearing of an application for termination of the SIAC arbitration and had decided to continue with the pre-scheduled hearings in the matter and recording of expert testimony. Furthermore, the ‘application for hearing of termination of the SIAC proceedings’, were kept at a later date and did not dismiss the application filed by the Future Group. Aggrieved by the same, the Future Group filed a petition under Article 227 before the Delhi High Court requesting the Court to declare that since the arbitration agreement in itself is null and void, the arbitration proceedings before the SIAC tribunal were a nullity and therefore void too. However, the Single Judge dismissed the petition and did not allow a stay on the SIAC’s proceedings, observing that it did not have jurisdiction in such procedural matters of the arbitral tribunal. Importantly, the Single Judge of the Delhi High Court while declining to grant the relief as prayed for by Claimant held that (a) the Court cannot interfere with the case management orders of arbitral tribunals and (b) the factual matrix of the case did not merit intervention of the court, since none of the grounds inter alia, “exceptional circumstances”, “patently lacking in inherent jurisdiction” for interference were satisfied. Subsequently, the Future Group appealed to the High Court’s Division Bench, seeking total termination of SIAC’s arbitration proceedings. The Division Bench, while impugning the order of the Single Bench, ordered an interim stay on the SIAC’s arbitration proceedings, thereby overturning the order of the Single Judge of the Delhi High Court. However, it must be noted that the Division Bench did not discuss the maintainability of the petition filed by Future Group under Article 227. The Supreme Court, on appeal, held that the SIAC’s arbitration proceedings were indeed valid, and the High Court’s Division Bench did not have jurisdiction to hear the petition to terminate the arbitration proceedings instituted by Amazon. This case has brought the supervisory jurisdiction of the High Court again into question. As such, it is important to clarify whether the supervisory jurisdiction under Article 227 should be limited to only post-arbitration-related proceedings or whether the High Court can sit as a court of appeal in all arbitration-related matters. Thus, the inherent question is – whether the understanding and reasoning of the Division Bench in regard to putting a stay to the arbitration proceedings per Article 227 is correct. To answer and expand upon the same, it is first interesting to observe how the Division Bench did not consider the maintainability issue and merely proceeded with staying the SIAC’s proceedings. It classified the issue as one relating to jurisdictional objection rather than one concerning the procedural ruling of the arbitral tribunal. The Division Bench held that “the Arbitral Tribunal should have taken up the application filed under Section 32(2)(c) of the Arbitration and Conciliation Act, 1996, seeking termination of the arbitration proceedings, on priority and before recording evidence.” The Division Bench discussed whether the arbitration proceedings had a legal effect in India or were in essence, a nullity. In author’s view, the Indian Supreme Court’s landmark judgements have made it aptly clear that the High Court cannot directly interfere with the orders passed by the arbitral tribunals. The 2002 case of SBP and Company, reasoned that the High Court does not have any supervisory jurisdiction over the arbitral tribunal and its order, and as such, any subsequent judgement departing and contradicting the seven-judge bench judgement shall be considered per incuriam. It has been rightly argued elsewhere that “[w]hile the Act gives legal recognition and support to an arbitral tribunal and its exercise of powers, it does not confer upon the arbitral tribunal the state’s power of justice dispensation, nor does it transfer the civil courts’ jurisdiction. The arbitral tribunal remains a private tribunal and its constitution is dependent upon the arbitration agreement between the parties.” Further, if we even take into consideration the above-mentioned tests, the petition did not have maintainability before the Hon’ble High Court. The Deep Industries test clearly stipulates that there should be a “patent lack of inherent jurisdiction”, which was not the case in the present scenario. Further, since the present scenario merely included a procedural concern, it cannot be brought under the domain of “exceptional rarity” that would make the case admissible in the High Court under Article 227. Moreover, the interference would also be in violation of the Bhaven Construction test since none of the parties/arbitrator(s) have acted in ‘bad faith’, and have not been rendered remediless. As such, it can be observed that the reasoning of the arbitral tribunal in regard to the maintainability issue and extending its supervisory jurisdiction per Article 227 is flawed. Conclusion In light of the above, it is clear that if there is an intersection between Article 227 and Act, 1996, the Indian High Courts have no supervisory jurisdiction. Perhaps strangely, the Division Bench in the Amazon case ordered a stay to arbitral proceedings at SIAC – on the surface, at least – the Division Bench did not have the jurisdiction to hold the petition maintainable under Article 227. The authors provided two different examples, including Virtual Perception, wherein the High Court after analyzing the tests, held that they did not have jurisdiction to allow the petition. On the other hand, the present post also discussed the Amazon-Future case to depict the errant reasoning of the Division Bench, and the non-usage of the landmark tests, thereby highlighting the structural scarcity of understanding of the intersection. *Gautam Mohanty is currently a doctoral student at Kozminski University, Warsaw, Poland. He is also an advocate enrolled at the bar in India and an Assistant Professor (on leave) at Jindal Global Law School India (JGLS) and an arbitration consultant with Arbitrator Justice Deepak Verma, Former Judge of Supreme Court of India. He can be reached at gautam.mohanty1414@gmail.com. **Abhay Raj is a 3rd Year Student of Jindal Global Law School (a constituent of O.P. Jindal Global University).

Unnati Sinha[1] Introduction Third-Party Funding is a term that sounds foreign and is often seen as being illegitimate in India. However, pursuant to a few conditions, India's highest court has approved of the idea of third-party financing. Simply put, third-party arbitration funding ("TPAF") refers to the provision of funds to a plaintiff to pursue arbitration proceedings in return for a share of the award (if one is made in their favor). It is a subcategory of general TPF, which also provides cash for other legal actions and private matters. The clear advantage of TPAF is its usefulness as a mechanism to increase participation in arbitration for underprivileged parties or parties looking to mitigate risks. It is also being recognized as a successful source of funding for entrepreneurs. However, a potential drawback of TPAF is that funders could want to make money by supporting frivolous or unjustified lawsuits. Champerty, the commercial exploitation of the law, is forbidden under our common law. Champerty and TPAF are two sides of the same coin, with only legitimate interests standing between them. The idea of third-party funding agreements has made it possible for financially vulnerable claimants to successfully pursue their legitimate interests without jeopardising their companies' viability. This causes our regime to be somewhat out of harmony with TPAF, which would need to be fixed by explicit legislation. This trend of TPF is spreading quickly across international jurisdictions for two primary reasons (1) it makes sure that legitimate rights are not compromised because of paucity of financial resources and levels the competitive landscape for both parties; and (2) it presents a beneficial platform for funders to make investments. The doctrine of champerty falls under the scheme of public policy but the concept of third-party funding is confined within the parameters of prohibition for public policy grounds, so from a business perspective, it makes sense for funders to favor funding petitioners' or claimants' claims because there is a greater chance of making a large profit there than with funding a defendant's or respondent's claims because the money will primarily be used to refute the claims made and there will be minimal to no profit embroiled. The present article discusses the process of Third-Party funding in the light of Indian (international commercial arbitration and domestic arbitration) and Foreign jurisdictions, followed by some suggestions and recommendations. Third-Party funding process in arbitration TPF agreements are mainly executed by prospective funders when the claims presented have a strong chance of being accepted and, more crucially, when the claimant is struggling financially and the expense of litigation may not be something they are able to handle. How funders undertake TPF The funder will do extensive due diligence after receiving a TPF claim before approving. They will take the merits of the case and the scope of the requested damages into account before making a financing decision. A compelling claim and a quantifiable profit margin between the penalties sought and the expected legal expenses must be present for a chance to qualify for TPF. According to certain statistics published by the Report Of The Icca-Queen Mary Task Force in 2018, the funders reject over 90% of TPF applications. Moreover, it was discovered that the hit rate (number of sales of a product per customer who try to find out about the product) varied between 20 and 85 percent for various TPF funders in a 2021 survey conducted by MNLU Mumbai on TPF in India. It was also observed that parties that sponsored a greater number of lawsuits appeared to have a better success rate (pg 241-242). Confidentiality and Disclosure rules A TPF agreement between two parties is required to maintain some level of confidentiality, but at the same time, the essence of arbitration frequently calls for the disclosure of the third party leading up to the arbitration in the event that there is a conflict of interest between the third party and any other party taking part in the arbitration. In order to improve access to justice, the supported parties may also seek to reveal certain arbitration-related information to the third-party funder. However, doing so would be against the TPF agreement's and the arbitration's “secrecy rules”, which poses the challenge of striking a balance between disclosure and confidentiality duties as mentioned in 43A of the Arbitration and Conciliation (Amendment) Act, 2019 which obliges the parties and the Tribunal to maintain confidentiality of all arbitration proceedings. Though the said provision is yet to be notified, in a given circumstance, the possibility of the opposite party alleging breach of confidentiality on account of such TPF arrangement cannot be ruled out. It has been debated that disclosure rules should take secrecy interests into consideration and attempt to establish exemptions for them. In certain instances, the TPF parties look for temporary solutions such as the imposition of "security of costs" to safeguard themselves in the event that they are granted costs but the other party is unable to reimburse them. Upon granting the application, the tribunal may order the party to put aside a specific amount of money as security prior to the end of the proceedings in order to prevent these circumstances. However, the mere fact that TPF exists does not prove that the party is broke or insolvent. In this situation, it is necessary to reveal the TPF agreement in order to protect the interests of the opposing party and the enforcement of a future judgement. The Legality of Third-Party Funding Agreements in India Despite the ban on champerty and maintenance in other nations, India has never legally or expressly prohibited third-party financing arrangements as was noted by the Calcutta high court in the case of Ram Coomar Coondoo v. Chander Canto Mookerjee(1876). In practice, under various state amendments (Maharashtra, Gujarat, Madhya Pradesh, Uttar Pradesh) to Section 25 and Order XXV Rules 1 and 3 of the Code of Civil Procedure, 1908, third-party financing arrangements do exist and are recognized by the law of civil litigation. Although these contracts are not inherently void (unless assisted by legal counsel), as mentioned in the Bar Council of India rules and the Advocates Act, 1961. Their existence has been shown to merit judicial review under the Indian Contracts Act, 1872. It has been noted by the Supreme Court in Bar Council Of India v. A.K. Balaji, there is no absolute bar on foreign law firms/lawyers conducting arbitration in international commercial arbitration and the same would be subject to the rules and regulations of the concerned arbitration institution or the provisions of Section 32 and 33 of the Advocates Act. According to the rulings (Nuthaki Venkataswami v. Katta Nagi Reddy (died) (1962)) of the Indian courts, it has been affirmed that a reasonable arrangement to provide finances to support a lawsuit in exchange for a portion of the property, if recovered, is not to be seen as going against public policy. Other terms of the agreement like litigants' and funder's respective privileges and obligations in funded proceedings, disclosure of personal information to the sponsor/funder, the sponsor's contribution to the evaluation of settlement proposals by courts or opponents, and the funder's liability for accumulated debts, etc. may also be considered by the Indian Courts. It is important to note that the existence of such agreements must always be fully disclosed in court proceedings to avoid adverse rulings at the implementation or compliance stage. For instance, the independence of the arbitrator becomes important, when a funder is involved and such lack of independence may be cited as an important basis for challenging an arbitral award. Foreign Jurisdictions Australia is home to a sophisticated third-party litigation funding market. Australia was one of the first countries to eliminate crimes and illegalities related to champerty and maintenance. Singapore was the first Asian country to legalize third-party funding of arbitration. It passed the Civil Law (Amendment) Act 2017, abolishing maintenance and champerty. It recognizes that third-party funding arrangements may be justified for certain dispute resolution mechanisms as long as they do not violate public policy and establish the funder’s rights and its overflow. It also enacted the Civil Law (Third Party Funding) Regulations,2017 to govern third-party financing arrangements. The Hong Kong Arbitration and Mediation Legislation Act (Third Party Funding) (Amendment) Act 2017, applies to domestic and international arbitration and prohibits "maintenance and champerty" However, three exceptions were carved out: (1) the third party affirms a valid stake in the performance of the litigation; (2) Both parties will satisfy the court that they are obligated to accept third party funds for reasons of access to justice and (3) proprietary classifications of processes such as bankruptcy. Under section 59(1)(c) of the Arbitration Act,1996 of the UK the arbitrator has the power of apportioning legal costs and “other costs”. In the case of Essar Oilfields Services Ltd. v Norscot Rig Management Pvt. Ltd., decided by the High Court of England and Wales, the arbitrator's third-party costs were determined under section 59(1)(c) and were included in the category of “public or other expenses”. It was also debated in this case whether the category of “public or other expenses” should be included in the Arbitration and Conciliation Act, 1996 (UK) and whether disbursements to third-party funds are subject to Article 31(1) of the ICC Regulations which is concerned with “Decision as to the Costs of the Arbitration”. After the High Court concluded that the funds were received only for the purpose of prosecuting the lawsuit and were fair, the arbitrator formally awarded the third-party funding fees under the heading "Other Expenses”. It is important to note that a private organization, the Association of Litigation Funders, implemented the Code of Conduct for Third Party funding Arrangements in the UK on behalf of its members in 2011. According to the Code, funders must always have enough money on hand to satisfy their commitments to pay for all of the disputes they have promised to cover as well as to pay for all of their financing responsibilities for a minimum of 36 months. The declared objective of the ALF is to guarantee best practices and moral conduct among litigation funders, seeking to advance the use and use of litigation financing as an element of the sensible management of financial risk in dispute settlement, and actively influencing TPF legislation and regulation. Additionally, they have a strict grievance procedure that can be activated in the event of a member’s misconduct. Conclusion The emergence of third-party financing of disputes in India has to be investigated since promoting the success of such a system creates a new asset class where investors may potentially produce more liquidity in addition to outsized rewards. Concerns exist over how a complicated policy and notion will develop and grow in India. Second, there is a persistent danger of excessive regulation, where a rigid structure of interests will make it challenging to comply with such requirements. Because third-party financing is a very new and developing idea, flexibility in its operation is recommended. There are no regulatory restrictions in India that prevent third-party financing from penetrating the commercial sector. India should handle third-party financing by adopting various approaches established by top arbitration countries (as mentioned in the preceding section), so long as the contracts are not against public policy or illegal in any other way. The adoption of enabling legislation "has considerably aided in the expansion of these countries as arbitration centres." A recent modification to Singapore's Civil Law Act, for instance, makes third-party financing for arbitration and related processes acceptable. Comparative measures that are implemented and modified appropriately for the Indian environment will not only support India's progress toward international arbitration but also serve as a cornerstone for India to become a South Asian Hub. [1] Unnati Sinha is a 3rd-year student pursuing B.B.A.L.L.B (Hons.). She can be reached at unnatisinha1412@gmail.com.

-Samarth Kapoor[1] Introduction Arbitration is considered an alternative to traditional Court litigation. Comparing both the mechanisms of dispute resolution gives an idea that arbitration has an edge over the age-old traditional court litigation as the former offers more privacy, is speedy in nature when it comes to redressal of disputes and is less expensive than the latter. However, the present arbitration regime in India is proving to be wrong in terms of affordability. The high cost of arbitration is making the whole regime unsuccessful and as the cost has various factors involved in it, the need to overlook the same becomes extremely important. Due to the absence of any authoritative regime regarding the arbitration cost, the issue pertaining to the same is persistent. But now the Supreme Court has settled down the debate with regard to the cost of the arbitrators. In the judgment pronounced recently, the Hon’ble Supreme Court settled a few disputes as to the nature of the Fourth Schedule of the Arbitration Act, at what stage the arbitrator’s fees should be fixed and the interpretation of the sum in dispute as mentioned in the Fourth Schedule. The Law Commission had earlier suggested the changes with regard to the fees of the Arbitrators and the same were incorporated in the Amendment Act 2015 and 2019. The amendment came in 2015 and introduced the Fourth Schedule (which was crafted on the basis of the Delhi International Arbitration Centre (Administrative Costs & Arbitrators’ fees) Rules (DIAC Rules) Model Fee) and inserted Section 31A in the Arbitration Act, 1996 (“Arbitration Act”) through which the cost regime was defined and the said provision defines the term “costs” to be considered for a particular set of arbitration. Through the 2019 Amendment, sub-section 3A was inserted in Section 11 which stipulates that the Arbitrator appointed by the parties shall have to abide by the rates specified in the Fourth Schedule. However, the Courts had observed otherwise, as some recognized it to be suggestive in nature in cases where the arbitrator was appointed by the parties and mandatory where the tribunal has been constituted by the Court. Now the differing views of the High Court made a ruckus in the present cost regime. Considering the fact that the Arbitrator works as an adjudicating body and for the work they do, remuneration should be given but what should be the quantum of the same? The fee structure should align with the intention of the Arbitration Act. If Arbitration costs more than litigation or some other method of dispute resolution then what is the point of having it as an alternative, all the efforts of the legislature and the judiciary will be wasted that were taken till now. It’s important to analyze the present legal regime related to the Arbitration cost and for that, it becomes important to look at the provisions of the Arbitration act governing this aspect and the amendment that came into effect in 2015 that changed the cost regime specifically focusing on the goal of increasing the affordability of the Arbitration. Interpretation of Section 31A: What is the intention behind the amendment? In the judgment of the Union of India v. Singh Builders Syndicate (“Singh Builders”), the Supreme Court took note of the exorbitant fees charged by the Arbitrators and held that, “What is found to be objectionable is parties being forced to go to an arbitrator appointed by the court and then being forced to agree for a fee fixed by such Arbitrator. It is unfortunate that delays, high costs, and frequent and sometimes unwarranted judicial interruptions at different stages are seriously hampering the growth of arbitration as an effective dispute resolution process. Delay and high cost are two areas where the Arbitrators by self-regulation can bring about marked improvement.” While discussing the issue of arbitration cost, the Supreme Court also took note of Institutional Arbitration and the benefits of the same as they have a fixed schedule of fees which causes less hindrance in the Arbitration procedure as the Arbitrators are bound by the same. The same suggestive view was taken by the Supreme Court in the case of Sanjeev Kumar Jain v. Raghubir Saran Charitable Trust, wherein it was suggested to have reasonability while deciding the costs, to disclose the fee structure before the appointment of the arbitrator, and every High Court to have a scale of Arbitrator’s fee calibrated with reference to the amount involved in the dispute. Taking note of the judgment, the Law Commission of India in its 246th Report recommended some amendments to the Arbitration Act with regard to having a model schedule of fees. Pursuant to the report, the Amendment Act of 2015 came into existence and Fourth Schedule was introduced in the 1996 Act along with Section 31A. Both these provisions were introduced to tighten the loose end (Arbitrators fees), but the wordings preferred in both provisions were deemed to be of no use as it implies discretion on the Courts and on the tribunal to decide the Cost. Section 31A of the Act covers fees and expenses of the arbitrators, administrative fees of the arbitral institution, and other expenses related to arbitral proceedings and the award. The point to be considered here is the reasonability of costs that can be recovered and not the actual costs, hence, this means that to determine the reasonableness of the costs, the factors will vary and will depend upon case to case basis.[2] Section 31A(2) of the Act states the position as to who will bear the cost of the arbitration wherein the general rule will be governed by the Loser pays principle and departure from the same will warrant a reasoned order. The provision starts with the word “if” which implies discretion on the Court or the tribunal to make an order as to the payment of costs. The wordings of the provision are not in consonance with the intention of the legislature which introduced the new regime on costs.[3] After introducing Section 31A, it was presumed that Courts will take note of the provision and the cost part will be dealt with by the Courts or the tribunals at the early stage of the arbitration proceedings but to the surprise of everyone, neither the courts nor the tribunals took efforts to determine the costs because of the discretion provided in the provision which makes the introduction of Section 31A pointless. Meaning of “Costs”: What we can infer? As per the explanation provided under Section 31A(1) of the Arbitration Act, the costs consist of different components such as fees and expenses of the arbitrators and courts, administrative fees of the arbitral tribunal, legal and other expenses incurred with regard to the arbitration and court proceedings. However, what is defined in the explanation is the reasonable costs and not the actual costs incurred by the parties, hence, the degree of variance may differ on a case-to-case basis. The assessment to determine the reasonability of the costs incurred is not straightforward and the factors that need to be taken into consideration may vary. What is covered within the scope of costs defined is the cost of reference which is broader in nature and which means costs incurred by the parties while adjudicating the matter before the arbitral tribunal and another one is the cost of the award which means the administrative cost of the reference.[4] In the case of ONGC Ltd. v. Dolphin Offshore Enterprises (India) Ltd., the Bombay High Court observed the meaning of the term “Costs” and held that the cost of the proceedings includes the cost of reference, cost of the arbitration proceedings, and cost of the parties. It should be the case that the winning party be compensated not just the arbitral tribunal’s fee but all the expenses borne by the party during the arbitral proceedings. The Hon’ble Supreme Court in the case of National Highway Authority of India v. Gayatri Jhansi Roadways Ltd., held that arbitrator’s fees can be counted under the head of “costs”, but it might not be the case that Sections 31(8) and 31A would directly govern the contracts in which a fee structure has been provided. What is covered within the definition of the Costs is related to the reasonable amount that can be claimed by the party which is incurred during the arbitral proceedings. The only catch is the subjectivity involved with this which makes it difficult for the parties to reach a conclusion as to what can be termed as a reasonable cost and whatnot. NATURE OF FOURTH SCHEDULE: MANDATORY OR DISCRETIONARY? In the case of DSIIDC Ltd. v. Bawana Infra Development Pvt. Ltd., wherein the issue was raised as to the mandatory nature of the Fourth Schedule and whether the arbitrator is bound to follow the same. Answering the question in the negative, the Delhi High Court held that in the case where the arbitrator is appointed by the parties the fee schedule is decided by the arbitrator if no agreement is there in place and if the arbitrator is appointed by the Court u/s 11 of the Arbitration Act, the rules framed by the High Court u/s 11(4) will govern the arbitrator’s fees and in absence of the same, Fourth Schedule will be directory in nature. On a similar footing, in the case of Kumar & Kumar Associates v. Union of India, wherein the arbitrator was appointed u/s 11 of the Act, the Court made a strict direction that the Fourth Schedule will be binding on the Arbitrator. In the case of NHAI v. Gayatri Jhansi Roadways Ltd., the Delhi High Court observed that if the parties have decided the fees while appointing the arbitrator then the Fourth Schedule will not be mandatory to follow in determining the Fees of the Arbitrators but this will be the picture only in cases of Ad-Hoc Arbitration and in other scenarios the parties will not be at any liberty to enter into an agreement with regards to the fees of the Arbitrators. Similarly, in the case of Pashchimanchal Vidyut Vitran Nigam v. IL& FS Engineering and Construction Co. Ltd., the arbitrator was appointed by the parties and the Court observed that no power has been vested in the Courts to determine the fees of the arbitrators, and Fourth Schedule is merely suggestive in nature keeping note of Section 11(1) of the Act. In the case of G.S. Developers & Contractors Pvt. Ltd. v. Alpha Corp. Development Pvt. Ltd., the Delhi HC held that the Fourth Schedule is mere guiding in nature as the same has not been incorporated in the Rules by the High Court, hence, the Arbitrator is free to determine his own fee. With regards to the question of determining the fees of the Arbitrators when there exists an agreement pursuant to the same, the Bombay HC in the case of Transocean Drilling Services (India) Pvt. Ltd. v. ONGC Ltd., observed that the tribunal is bound by the agreement signed between the parties as it is the source of the tribunal’s power. CEILING AMOUNT IN THE FOURTH SCHEDULE: WHAT EXACTLY DOES THE PROVISION TRANSPIRE The Fourth Schedule enlists two conditions - first when the tribunal consists of a sole arbitrator and the other where it consists of two or more arbitrators. In both situations the schedule specifies a ceiling amount as fees that are to be paid to the tribunal which is Rs. 30,00,000/- in cases where the tribunal consists of two or more arbitrators and Rs. 37,50,000/- in cases where the matter has been adjudicated by the sole arbitrator. The wide interpretation of the schedule has given rise to a lack of uniformity but the question remains the same whether the Fourth Schedule is mandatory or directory in nature in cases of Ad-Hoc Arbitrations. The Supreme Court in the recent judgment of Oil and Natural Gas Corporation Ltd. v. Afcons Gunanusa JV (“Afcons Judgment”), the issue was regarding the computation of ceiling amount by interpreting the sixth entry of the fourth schedule. The entry defined the sum in dispute and the model fee which can be charged by the Arbitrator(s). As per the sixth entry, there are 3 sects, first is that the if the amount involved in the arbitration is Rs. 20,00,00,000/- the fee charged by the arbitrator(s) will be Rs. 19,87,500/-. Secondly, if the amount exceeds Rs. 20,00,00,000/-, for every amount exceeding the 20,00,00,000/- cap, 0.5% of that amount (variable amount) will be charged by the arbitrator(s) in addition to their prescribed fees of Rs. 19,87,500/-. Lastly, there exists a restriction on the maximum amount that is to be charged by the arbitrator(s) which is Rs. 30,00,000/. Now, the whole issue is related to the interpretation of the ceiling limit of Rs. 30,00,000/-, i.e., whether the ceiling limit is for the whole fees including the fee given and the variable amount or does it applies to only the variable amount, i.e., extra 0.5% amount that is to be paid if the amount involved in the dispute is exceeding Rs. 20,00,00,000/-. The Supreme Court had an issue with a different grammatical sense of the act culminating in the English and the Hindi version of the Arbitration Act. The issue was that in the English version of the Arbitration Act, at Serial No. 6 of the Fourth Schedule, there exists no comma and because of this reason, the construction of the language conveys the meaning that the ceiling should only be applicable to the variable amount. While deciding on this aspect the Supreme Court took the task to cull out the legislative intent behind this provision. While referring to the DIAC Rules from where the sixth schedule has been taken, the Supreme Court noted that the rule consists of a comma and this ultimately entails that the ceiling would be applicable to the base amount and the variable amount. The Hon’ble Supreme Court while referring to the 246th Law Commission Report and the intent indicated by the same held that the introduction of the Fourth Schedule was to put an end to the exorbitant fees charged by the arbitrators, and if there are 2 options available for the legislature to select, it would be appropriate to choose the lower amount since it goes parallel to the legislative intent. The Patna High Court in the case of State of Bihar v. Bihar State Sugarcane Corporation Ltd. had held that the ceiling of Rs. 30,00,000/- as referred in Entry No. 6 of the fourth schedule is applicable to both the base amount and the variable amount. However, disagreeing with the ratio of Bihar State Sugarcane, the Delhi High Court in the case of Rail Vikas Nigam Ltd. Simplex Infrastructures Ltd., had held that the usage of the word “plus” in Entry No. 6 would entail an inference that the ceiling is applicable to variable amount only. The judgment of the Delhi High Court was challenged before the Supreme Court which was upheld in the Afcons Judgment. The Schedule specifies the ceiling limit in two different scenarios, however, it failed to notice that whether in the case of a tribunal consisting of two or more arbitrators, the fees prescribed are to be divided separately considering the ceiling limit of Rs. 30,00,000/- to be collective in nature or the ceiling limit will be considered individually.[5] In the case of Punjab State Power Corp. Ltd. v. Union of India,[6] the Punjab & Haryana High Court while deciding the quantum of fees of the tribunal consisting of three arbitrators posed the question that whether the fees are to be paid individually on a pro-rata basis or be paid collectively to the arbitrators. Diverging from the general norm, the High Court held that the fees will be calculated by 1/3rd pro-rata distribution of the composite fees determined under the Fourth Schedule. If we go by the same rationale, then it will go against the intention of the legislature that focuses on the good treatment of the arbitrators which will further the case of an arbitration-friendly environment. However, the Supreme Court in the Afcons Judgment resolved the issue of ceiling applicable to an individual arbitrator and the entire arbitral tribunal. The Supreme Court went on to hold that there is nothing in the schedule that entails such interpretation of the provision, secondly if such interpretation is taken into consideration then it will lead to the disparity. The ultimate conclusion that the Supreme Court has reached is that the ceiling is applicable to each arbitrator and not the tribunal as a whole. LOSER PAYS PRINCIPLE: a developing theory The principle revolves around the theory of the unsuccessful party bears the expense of litigation or arbitration. As per the Loser Pays Principle, the winning party or the award creditor will get indemnified by the award debtor at the end of the arbitration. Now, this particular approach recognizes the calculation of the costs at the conclusion of the proceedings. Many Common Law and Civil Law countries follow the same principle and recognize the rights of the winning party not to bear the legal costs because of the wrongdoing of the losing party. Law Commission of India, in its 246th Report, suggested incorporating the principle in the domestic arbitration regime in India and the reasoning for the same was stated to be restrictions that can be imposed on the frivolous litigations/ claims of the parties. The principle revolves around the idea of reducing the fake claims to be raised in an arbitration proceeding, to penalize the losing party and for early disposal of the cases,[7] however, the principle has to be evolved in such a manner to cover the position where proper allocation is to be made. As it is hard to identify the actual winner in an arbitration proceeding, the principle gives either no result or a result detrimental to the interest of justice. The principle is considered to be a best practice across many jurisdictions, but the chances or the reasons to apply this principle are inefficient in itself as there is yet another set of justifications required to identify as to who actually won the arbitration case. This conundrum can be considered while applying the principle but it is the right practice to minimize the foul claims to be raised in the proceedings, a practice prevalent in India. MEANING OF “SUM IN DISPUTE”: INFERENCE DRAWN The term “sum in dispute” appears in the Fourth Schedule of the Arbitration Act. While the meaning of the term was set out by the judicial pronouncements to be the aggregate value or amount involved in a dispute (including the amount of claim and the counter-claim), the other provisions of the Arbitration Act did not allow the same interpretation to be made. Provisions of Section 23, 31, 31A, and 38 talk about the submission of claims and counter-claims, cost structure, and deposits and while perusing these sections, one can easily dissect the meaning of sum in dispute, i.e., whether this particular term includes the aggregate amount of claim and counter-claim or otherwise. In many judgments, it has been held that the Arbitral fee under the fourth schedule is based on the cumulative value of the claim and counter-claim made by the parties. In the case of Delhi State Industrial Infrastructure Development Corporation Ltd. (DSIIDC) v. Bawana Infra Development (P) Ltd., the Delhi High Court referred to the legislative intent behind the introduction of the fourth schedule and while referring to the same the bench referred to the DIAC rules (which is the guiding factor of the fourth schedule). The High Court noted that in the DIAC rules, it has been clearly provided that the term “sum in dispute” shall include the counter-claim made by any party, hence, the intent of the legislature is crystal clear which points to the conclusion that “sum in dispute” would be an aggregate value of claim and counter-claim. In the case of Jivanlal Joitaram Patel v. National Highways Authority of India, the Delhi High Court referred to the case of DSIIDC and held that the expression “sum in dispute” as referred to in the fourth schedule has to be interpreted in the sense that it includes the total amount of claim made by the claimant and the total amount of counter-claim made by the respondent and Sections 31(8), 31A and 38(1) of the Arbitration Act can only be made applicable when the tribunal fixes its own fees. The said judgment was in consonance with the earlier judgment of Supreme Court Singh Builders wherein it was held that the “sum in dispute” as referred to in the Fourth Schedule is the aggregate amount of claim and counter-claim and hence no separate fee is payable on counter-claims. As Section 38 was referred to in the above-mentioned judgment it would become necessary to explain the contours of Section 38. The said section deals with the deposits to be made by both parties and it talks about the discretionary power of the tribunal to direct the parties to deposit an amount in the form of an advance for the costs (as per section 31(8)) which it will incur to adjudicate upon the claim submitted to it. The proviso to this section explains a situation where the tribunal has the power to direct the parties to make separate deposits in a case where the claim and the counter-claim have been submitted separately. Now, if we focus on the term “sum in dispute” and proviso to Section 38(1), we will be having diverse views as there is a proper bifurcation given by the legislature in terms of claims and counter-claims. The interpretation of the Fourth Schedule is directly linked with the interconnection between Section 31(8), 31A and 38(1). For differentiating between the claims and the counter-claims, Section 23(2-A) will be helpful which talks about the submission of counter-claim by the respondent which the tribunal will adjudicate upon if the same falls within the ambit of the arbitration agreement. This will then help the tribunal to determine the costs in accordance with Section 31A if a party files a frivolous counter-claim which leads to a delay in the arbitration proceedings. The intent behind taking up the counter-claim with the claim in the same proceeding was not because of the reason that the counter-claim arose due to the claim but to avoid a multiplicity of proceedings. The Arbitration Act treats both, the claim and the counter-claim distinctively and allows the tribunal to fix a deposit of costs for the claim and counter-claim separately. However, in the case of NTPC Ltd. v. Afcons R.N. Shetty and Co. Pvt. Ltd., the Delhi High Court held that while interpreting the term “sum in dispute” as referred to in the fourth schedule, the amounts contained in the claims and counter-claims can be considered separately and exception can be carved out for the same. The Delhi High Court observed that there can be a huge gap between the amounts claimed by both parties and taking the aggregate of both amounts to calculate the fees of the Arbitrator(s) will burden the party claiming the smaller amount to pay extra fees. The same judgment was challenged in the series of appeals filed before the Supreme Court which was resolved by the judgment of ONGC v. Afcons. In the case of Voltas Ltd. v. Rolta India Ltd., the Supreme Court held that counter-claims were independent claim proceedings by the respondent and the applicability of limitation would be determined with reference to the date the same was instituted before the tribunal. Similarly, in the case of State of Goa v. Praveen Enterprises, the Supreme Court was of the view that the respondent can seek independent recourse to arbitration for deciding the counter-claim but raising a counter-claim in the same proceedings obviates a multiplicity of proceedings. The Supreme Court in the Afcons Judgment held that the term referred to in the fourth schedule of the Act refers to the amount in a claim and counter-claim separately and not cumulatively. And as the sum is separate, the arbitrator(s) can charge the fees separately for both heads and the fee ceiling contained in the fourth schedule will separately apply to both. However, the dissenting opinion authored by Justice Sanjiv Khanna opined that the expression “sum in dispute” consists of the sum total of both, the claims and the counter-claims. The Supreme Court observed the different provisions of the Arbitration Act and held that even though the claim is dismissed or withdrawn, the counter-claim will be adjudicated independently and the same cannot be considered as a set-off even if the counter-claim may arise from similar facts as a claim. The scenarios in such situations may vary where in one case the parties have already agreed to the terms of the payment, second where the parties have not agreed on the payment terms and the court while appointing the arbitrator directs to follow the Fourth Schedule and the last where the parties have not agreed and the Courts have also neglected the payment part.[8] Now in the last situation, the party who wants a speedy and effective redressal will be at loss as the arbitrator will have the liberty to charge exorbitant fees and as nothing is there on paper which governs the pro-rata distribution of payment, the other party will take advantage of the same. In arbitration, the major focus should be on Party Autonomy. If the parties have agreed to the terms related to fees of the arbitrators, and as to what all will be covered as the costs of the arbitration, the tribunal is bound by the terms agreed between the parties. In the case of Bharat Aluminium Co. v. Kaiser Aluminium Technical Services, the Supreme Court emphasized on the concept of Party Autonomy although in a different aspect but the principle was placed on top to guide the spirit of arbitration regime in India. Similarly, in the recent case of Amazon.com NV Investment Holdings LLC v. Future Retail Ltd., the Supreme Court re-emphasized the principle of Party Autonomy as the guiding principle of the Arbitration Act. The parties agreeing to arbitrate a dispute has received a primacy over the provisions of the act. Arbitration and the arbitral tribunal is a subject matter/ outcome of the contract entered between the parties, and every aspect that is covered under the contract is binding on the parties and on the tribunal as well. The Legislature and the Judiciary’s focus on the principle of Party Autonomy is a significant move to channelize the functioning of the arbitral tribunal and also to control the parties and the arbitrators to venture outside the contract. Conclusion The main crux of awarding the cost is to make the loss that the succeeding party has incurred. Before the 2015 amendment, the provision of Section 31(8) of the Arbitration Act governs the whole conundrum. However, the provision was way too much wide and the interpretation of the same was not even sufficient to dictate the terms of awarding the costs. If there is no authority to govern the cost regime, then, consequently, the winning party will lose a substantial part of the award in the arbitration costs. The question here stands as to what will be the recourse if the other party succeeds in frustrating the arbitral proceedings and resultantly the winning party will have to bear the cost of the same.[9] The position does not align with the interest of justice and in the favour of the innocent party who was not at fault but had been compelled to seek a remedy through arbitration. In such scenarios, the Loser Pays principle plays a significant role to restrict the parties to raise frivolous claims and frustrate the arbitration proceedings. The principle is yet to prove its effectiveness in the Indian arbitration regime but will be interesting to see as to how the parties will consider this aspect. Recently, the Hon’ble Supreme Court has decided on the issue pertaining to arbitrators’ fees and with respect to the conundrum of the Fourth Schedule. The judgment is highly appreciated as it has given much-needed clarity on the aspect of the nature of the fourth schedule, however, the close analysis of the judgment will present the loophole it holds. The dissenting opinion of Justice Sanjeev Khanna in terms of the interpretation of the expression “sum in dispute” and on the powers of the arbitral tribunal to fix its own fees in absence of any agreement between the parties. While deciding on the issue of applicability of the ceiling limit, the Supreme Court took note of the legislative intent and also referred to DIAC rules to hold that the ceiling limit is applicable to the cumulative of the base amount and the variable amount and is in accordance with the legislative intent to reduce the exorbitant fees charged by the Arbitrators but at the time of interpreting the expression “sum in dispute,” the majority did not go with the legislative intent. Justice Sanjeev Khanna specifically refers to the DIAC rules and observed the legislature’s conscious exclusion of the separate reference to the amounts mentioned in claims and counter-claims. From the perspective of making India an arbitration hub, the suggestive changes should be taken care of which will work as authority for future litigations to come. The “Loser Pays Principle” should be adopted in the Indian Arbitration regime as it will restrict the parties to delay the proceedings and only the genuine issues will be raised during the arbitral proceedings. However, serious concerns have to be looked upon to identify that the innocent party should not be subjected to the applicability of this principle. Now, this will increase the discretionary power of the tribunal to consider different aspects before applying this principle and to ask the losing party to bear all the expenses of the arbitration. After perusing different authorities the intention of the legislature is still in dubious situation as to what exactly the position the legislature wanted to resolve this issue. Whether it is to make India “Arbitrators’ friendly” or “Arbitration friendly.” While there should be a focus on party autonomy but on a similar footing, the cost regime should be developed and should be looked upon. [1] Final Year Law Student pursuing B.A., LL.B. (Hons.) at Maharashtra National Law University, Aurangabad. [2] Ajay Bhargava, Arvind Ray & Vansha Sethi, Cost Regime under Arbitration and Conciliation Act, Lexology (September 11, 2022, 7:45 PM), https://www.lexology.com/commentary/arbitration-adr/india/khaitan-co/costs-regime-under-arbitration-and-conciliation-act. [3] Badrinath Srinivasan, Need for overhaul of the Costs Regime in Indian Arbitration Law, Kluwer Arbitration (September 12, 2022, 7:15 PM), http://arbitrationblog.kluwerarbitration.com/2019/03/05/need-for-overhaul-of-the-costs-regime-in-indian-arbitration-law/ [4]Dr. P.C. Markanda, Law Relating to Arbitration and Conciliation, 10th Edn., p. 968. [5]Tanya Aggarwal, Fee Schedule of Arbitral Tribunal: Focusing on the Sole Arbitrator’s Fee, SCC Online Blog (September 11, 2022, 6:15 PM), https://www.scconline.com/blog/post/2020/06/11/fee-schedule-of-arbitral-tribunal-focusing-on-the-sole-arbitrators-fee/. [6] Punjab State Power Corp. Ltd. v. Union of India, 2017 SCC OnLine P&H 5375. [7] Aastha Chawla, Cost Allocation Rules in Arbitration: A Solution to frivolous claims?, Mondaq (October 2, 2022, 7:15 PM), https://www.mondaq.com/india/arbitration-dispute-resolution/1169440/cost-allocation-rules-in-arbitration-a-solution-to-frivolous-claims#:~:text=The%20Losing%20Party%20pays%20it,follows%20an%20outcome%2Dbased%20approach.&text=As%20per%20this%20approach%2C%20the,the%20entire%20legal%20cost%20incurred. [8] Kartik Seth & Anchal Kapoor, Arbitrary Arbitrator Fees and the Law post 2019 Amendment, Bar and Bench (September 16, 2022, 6:30 PM), https://www.barandbench.com/columns/arbitrary-arbitrator-fees-and-the-law-post-2019-amendment#:~:text=20%2C00%2C00%2C000%2C%20the,is%20payable%20as%20arbitrator%20fees. [9]Anhad S. Miglani & Shaurya Punj, Saving Arbitration from Arbitration Costs: The Case of Arbitrator’s Fees, SCC Online Blog (September 16, 2022, 11:10 PM), https://www.scconline.com/blog/post/2020/08/10/saving-arbitration-from-arbitration-costs-the-case-of-arbitrators-fees/#_ftn1.

Richa Jain[1] INTRODUCTION In a recent ruling of the Hong Kong Court of Appeal, the reputed Herbert Smith Freehills law firm has once again derailed a landmark ruling in C v D having global implications for contract disputes. The Hong Kong Court of Appeal on June 7, 2022, determined that any disagreement over escalation clauses should be settled by arbitrators appointed by the parties rather than by the courts. In other words, the decisions of the arbitration panel on such matters will be final and binding and cannot be used to contest the final award. PRE-CONDITIONS & ESCALATION CLAUSES Many commercial contracts have "escalation clauses", which compel a party to engage in negotiations or mediation before initiating legal actions. These clauses are designed to facilitate speedy dispute settlement, though in practice, they frequently result in costly litigation. In the dispute resolution provision of an agreement, parties frequently consider negotiation or other means of amicable dispute resolution as a “precondition” for sending the matter to arbitration. Parties often agree to a list of preconditions or escalation procedures that must be met before formal arbitration may begin. Pre-conditions in a dispute resolution process take the shape of 'multi-tiered' and 'escalation' clauses, which often envision cost-effective conciliatory means of peacefully settling conflicts before resorting to the zero-sum game of arbitration. A recurring problem in commercial contracts is whether a claimant's inability to comply with the terms of a dispute resolution clause raises an issue of admissibility or jurisdiction. A number of recent rulings by courts throughout the world have addressed this issue, all holding that problems of compliance with pre-arbitral processes relate to the admissibility of an issue in dispute rather than the arbitral tribunal's jurisdiction. JURISDICTION v ADMISSIBILITY The delineation between jurisdiction and admissibility is immensely crucial. If an arbitral tribunal lacks jurisdiction over an issue, then it does not have the authority to issue an award on the merits of that matter. In contrast, admissibility pertains to whether the arbitral tribunal has the authority to rule on the merits of the claims brought to it. At its core, the distinction between a matter of jurisdiction and matter of admissibility has a delicate balance with a thin line. Matter of Jurisdiction – It is the theory that the arbitration agreement is not triggered until the pre-condition procedures are met. It also purports that the formation of a Tribunal is invalid and that the issue concerning the same cannot be heard by the Tribunal because it goes to the core of its jurisdiction. Matter of Admissibility – It is the argument that the arbitration agreement exists and gives the arbitrators a jurisdiction to hear the question of non-compliance with the pre-conditions, but does not allow adjudication of significant claims until the problem of non-compliance with the pre-conditions is resolved. While a challenge to jurisdiction is a ground for appeal in a number of jurisdictions such as the United States, Switzerland, and England, and as also stated in the UNCITRAL Model Law, on the question of admissibility, the decision of the arbitral tribunal is decisive and is not a ground for appeal. In this article, the author compares the current position in India with other jurisdictions to outline pre-arbitral procedural requirements and determine whether they are an issue of jurisdiction or admissibility. INTERNATIONAL JURISPRUDENCE HK Case of C vs. D The case of C vs. D [2021] HKCFI 1474 stems from a contract that obliged parties to try to settle problems through settlement sessions for 60 days before proceeding to arbitration. A disagreement ensued between the parties, and the defendant requested arbitration. The plaintiff disputed the arbitral tribunal's jurisdiction on the grounds that the contract's dispute escalation clauses had not been followed. The arbitral tribunal rejected this objection, and the plaintiff then sought to dismiss the arbitral tribunal's ruling on the grounds that it dealt with an issue that did not fit within the scope of the arbitration filing. The court correctly observed that the essential question here is whether the parties intended for the issue of fulfilment of pre-conditions' to be decided by the arbitral tribunal. To answer this question, the Hong Kong court referred to Lord Hoffmann's landmark English decision Fiona Trust [2010] EWHC 3199, in which he held that there is a presumption that parties, as rational businessmen, would have intended any dispute arising out of their relationship to be decided by the same tribunal. After reviewing significant International Judgements, the Hong Kong court concluded that the "commonly held position of international tribunals and national courts" is that failing to comply with a pre-condition to arbitration is an issue of admissibility rather than jurisdiction. The Hong Kong court acknowledged that the commonly held position may be overturned if the parties expressly stipulate that failure to comply with pre-arbitration conditions precludes the arbitral tribunal's jurisdiction, but the court then concluded that no such express provision existed in the circumstances in question. One of the takeaways from above judgement is that when a party fails to comply with a pre-condition to arbitration, that should not stop the case from moving ahead, since it will be up to the arbitrators to evaluate if the provision was followed and, if not, what the repercussions should be. Since the tribunal retains jurisdiction to consider the case, an award cannot be challenged in court on this ground. This gives the procedure far more clarity (and finality), and should avoid costly and prolonged litigation. The aforementioned C v. D case was affirmed in Kinli Civil Engineering vs. Geotech Engineering [2021] HKCFI 2503 in the context of a dispute filed under a contract including an arbitration agreement allowing that a party may submit a disagreement to arbitration. The Court issued a stay of litigation in favour of arbitration, stating that the Court has no involvement in evaluating whether the preconditions for the right to arbitrate have been met. US Case of BG Group vs. Republic of Argentina The US Supreme Court's 2014 decision of BG Group vs. Republic of Argentina 134 S.Ct, 1198 is perhaps the oldest known case which seeks to delineate the problems of admissibility and jurisdiction. It denied a challenge to an arbitral award on the grounds that a statutory pre-condition to arbitration was not met. In this case, BG Group had invoked arbitration under the Argentina-UK BIT in response to Argentina's actions in the aftermath of its economic collapse in late 2001. The Argentina-UK BIT obliged claimants to fight their claims in Argentina for 18 months before filing a claim in arbitration. After arbitrators rendered an award against Argentina, it moved to vacate the award in US courts, claiming that the arbitrators lacked jurisdiction since BG Group did not follow the local litigation requirement. The US Supreme Cour ruled that, courts presume that the parties intend arbitrators, not courts, to resolve disputes about the meaning and application of specific procedural preconditions for using arbitration, such as the satisfaction of "prerequisites such as time limits, notice, laches, estoppel, and other conditions precedent to an obligation to arbitrate." The arbitral tribunal ruled that BG Group's claim was valid despite the fact that it had not sought remedy in Argentine courts first. BG Group won the arbitration, which was held in Washington, DC. Singapore Case of BBA vs. BAZ and BTN vs. BTP The case of BBA vs. BAZ [2020] SGCA 53 concerned a dispute originating from a sale and purchase agreement that included an arbitration clause requiring arbitration in Singapore. The contract specifically prohibited the arbitral tribunal from awarding punitive, exemplary, or consequential damages. BAZ won the arbitration and attempted to have the verdict enforced in Singapore. BBA opposed enforcement on the grounds that (i) the arbitral tribunal had exceeded its jurisdiction by awarding damages and pre-award interest, which they claimed amounted to compensation for loss of opportunity in violation of the prohibition on awarding consequential damages, and that (ii) the claim for fraud was time-barred. The Singapore Court of Appeal refused to rescind the decision, reasoning that the first concern was about the award's merits rather than jurisdiction, and that the time-bar problem was about admissibility rather than jurisdiction because it was directed at the claim rather than the tribunal. This is a significant judgement that explains an essential point of law while also limiting the basis for potential court intervention in the initial stages of an arbitration. UK Case of Republic of Sierra Leone vs. SL Mining Ltd. The English High Court declined to set aside an arbitral judgement in Republic of Sierra Leone v SL Mining Ltd [2021] EWHC 286 (Comm.) on the grounds that the defendant had failed to comply with certain pre-conditions to arbitration. The underlying issue was the revocation of a mining permit. The licence included a multi-tiered dispute resolution clause in which the parties promised to try to resolve disagreements amicably for three months. A notice of dispute was served on 14th July, 2019 and six weeks later on 30th August, 2019, the defendant issued a notice of disagreement, followed by a request for arbitration. The claimant sought to invalidate the decision under Section 67 of the English Arbitration Act 1996 wherein “if the issue relates to whether a claim could not be brought to arbitration, the issue is ordinarily one of jurisdiction and subject to further recourse”, claiming that the arbitral panel lacked substantive jurisdiction to hear the case. The English court determined that the primary comments and authorities all pointed "one direction" in that pre-conditions to arbitration are concerns of admissibility to be determined by arbitrators rather than jurisdiction falling under Section 67. It is important to note here that the Chartered Institute of Arbitrators, one of the world's major arbitration organisations, has warned arbitrators to distinguish between a challenge to jurisdiction and admissibility in the Preamble and S.6 of its International Arbitration Practice Guidelines on Jurisdictional Challenges. The Guidelines establish optimal practises in international commercial arbitration. STANCE OF INDIAN LAW The jurisprudence on the legality of jurisdiction vs. admissibility in the Indian context is still at a very nascent stage. We have till now seen the status quo of other jurisdictions by analysing some important international judgements governing this law in order to deeply understand the position of Indian Law. Now, let us try to discern the position of Indian Jurisdiction for multi-tiered contracts containing escalation clauses and pre-conditions. In the case of BSNL v. Nortel (2021) 5 SCC 738, the Hon’ble Supreme Court employed the 'tribunal v. claim' test to assess whether the question of a statutory time bar is one of jurisdiction or admissibility. To put it simply, the 'tribunal v claim’ asks whether the objection / issue is directed at the tribunal, in the sense that the claim should not be arbitrated due to a flaw in or failure to consent to arbitration, or at the claim, in the sense that the claim itself is defective and should not be raised at all. In the current instance, the Court relied on BBA vs. BZA, and ruled in favour of treating the question of limitation as one of admissibility since it challenges the character of the claims submitted rather than the tribunal's jurisdiction. Another significant case is United India Insurance Co. Limited v Hyundai Engineering and Construction Co Ltd & Ors (Civil Appeal no 8146 of 2018), in which the Supreme Court held that in a case where the amount under the CAR Policy has to be admitted as a pre-condition to bring forth the claim in Arbitration, the said pre-condition must be satisfied before Arbitration can be invoked, because only the admitted amount can be made part of the dispute to be adjudicated. To restate, the Arbitration Clause would be activated only if the purportedly defaulting party admits obligation under the CAR Policy as a precondition. However, because the decision was not explicitly concerned with the distinction between a jurisdictional and an admissibility issue, it is indicative of the dearth of Indian law on the subject. Given this deficiency and the situation of law in other jurisdictions, it is hoped that the Supreme Court would take a stride forward rather than two steps back. Certain important takeaways from analysing foreign Jurisprudence to incorporate in Indian Jurisprudence could be: · With multi-tiered conflict resolution clauses, clear drafting and compliance are critical to avoid costly and time-consuming judicial proceedings; · Failure to comply with pre-arbitration procedures does not change the venue of dispute resolution from arbitration to court; · in many cases, parties should provide the arbitrator with their grievances, both substantive and procedural; · if the parties really want the court to intervene on pre-arbitration compliance concerns, their wish should be conveyed in the clause. CONCLUDING REMARKS The relevancy of admissibility and jurisdiction is becoming extremely pertinent in cases where parties have escalation clauses or preconditions in their contractual agreements and arbitration in dispute. Not many cases have dealt with this novice issue, thus it is still a gray area, especially for the Indian jurisdiction. With the newer arbitration clauses and contracts, we can see the incorporation of preconditions in dispute clauses. The 'tribunal v. claim' test might be helpful in situations involving pre-conditions to arbitration. The test requires the judge to assess the object of the objection in order to decide whether the problem is one of admissibility or jurisdiction, and then to evaluate whether a motion to set aside the award on the cited grounds can be granted. By using 'tribunal v. claim,' courts across diverse jurisdictions are clearly inclined to treat the question of conformity with preconditions laid forth in dispute resolution clauses as one of admissibility rather than jurisdiction. The tribunal's ruling on the issue of admissibility is regarded final. Therefore, by delimiting the grounds for challenge, this practice furthers the idea of minimal judicial interference which advises courts of law to meddle with the arbitral judgement to the smallest degree feasible. There is an existing gap on this subject in Indian arbitration law. However, given the judgements in the aforementioned countries as well as that of BSNL v Nortel Networks India Pvt Ltd., it is anticipated that when the matter is taken before the Supreme Court of India, it would resolve the issue of non-compliance as one of admissibility rather than jurisdiction. Such a decision would be consistent with the pro-arbitration attitude and "overarching" concept of least involvement enunciated in the Arbitration and Conciliation Act of 1996. [1] Richa Jain is a student of RMLNLU 3rd Year.

Unnati Sinha[1] Introduction The Arbitration & Conciliation Act (“Act”)(hereafter referred to as "the 1996 Act") was initially made official by the issuance of an ordinance as a promising approach to the urgent economic changes demanded by new economic policy. The Arbitration & Conciliation (Amendment) ordinance, which, 20 years later, revised the 1996 Act to bring it into compliance with international standards. Arbitration has recently evolved into the best option for resolving business conflicts. However, during the last 20 years, the arbitration procedure, particularly in ad hoc domestic disputes, has started to resemble the adversarial processes in India to a greater extent. High costs brought on by an inadequate supply of qualified and educated arbitrators contributed to the rising frustration felt by its customers. Public authorities addressed the adjustments that are required to close any voids in the 1996 Act and reduce the likelihood of it being misinterpreted and other issues with its implementation. Numerous organizations submitted reports and recommendations with the goal of modifying the 1996 Act. These recommendations, however, fall short of the urgent demands of contemporary practice. The 1996 Act has not been modified despite two failed efforts to do so in the years 2001 and 2010. Additionally, the Arbitration and Conciliation (Amendment) Act, 2015 includes novel features that have not yet been included in important arbitration legislation. Some of these regulations deal with unusual situations in ad hoc domestic arbitration, such as the deadline for finishing the arbitration and the fees of the arbitrators. The Amendment Act also makes other important revisions that significantly diverge from the legislation that was previously in place, resolve disputes, or affirm the regulations that have developed as a result of court interpretations. Amendments to the Indian Arbitration Act, 1996 The Arbitration and Conciliation Act, 1996 (the "Arbitration Act") has finally been amended, after great outcry. The President of India gave his nod to the Arbitration and Conciliation (Amendment) Act, 2015 (the "Amendment Act") on December 31, 2015, and it entered into effect on October 23, 2015. The Amendment Act suggested significant modifications to the Arbitration Act. The road to the Amendment Act was somewhat difficult. The Arbitration Act was passed in 1996 in order to facilitate quick and efficient conflict settlement via arbitration or conciliation and lessen the load on courts, . The Act now employs a new word, "arbitral institution," which refers to an arbitration institution selected by the Supreme Court or High Court in accordance with the law. The judge of the relevant High Court may appoint an arbitral tribunal to carry out the duties and responsibilities of the arbitration institution and supervise the arbitral tribunal regularly. The Supreme Court and the High Court have powers to appoint arbitration bodies from time to time, classified by the Council. Once the arbitral ruling has been rendered, no application may be brought for interim orders under Section 17. The aim is to resolve the dispute within a year from the day the pleadings under Section are accomplished. The ruling in international commercial arbitration may be made as quickly as practicable (4). After the revision, only the arbitral tribunal's record may be utilized under Section 34 to seek the annulment of an arbitral award. The Act's Sections 37(1) and 50 provide the legislature with further authority to appeal. A new Section, known as Sections 42A and 42B, has been added regarding the confidentiality of all arbitral proceedings, with the exception of awards where a disclaimer is required for the execution and enforcement of the award. This section also states that the arbitrator is not subject to legal action for anything done or aimed to be done in good faith in accordance with this Act or the rules or regulations created thereunder. The Act for the Establishment of the Arbitration Council of India contains a new component, Part 1A. After the amendment, judicial authorities may refuse to submit a party to arbitration based on the proposal of the party asserting rights thereby or based on it, even if the contract is first determined to be invalid, void, or unenforceable. Matters relating to the parties' entering into the contract are referred to in Article 44. Arbitrator qualifications and experience have changed, and Article 26 of the law has been rejected by recent amendments. The court has started enforcing the arbitration award. This means that time limits under the Arbitration Act are no longer pending and no courts need to be involved. The Supreme Court addressed the retroactive issue of the 2015 Amendments and the changes that reversed the BCCI decisions made by the 2019 Amendments in decisions published in the cases BCCI Vs. Kochi Cricket and Hindustan Construction Vs. UOI. The Supreme Court in the aforementioned case totally avoided the anomalies that would develop if the meaning it gave to Section 26 is applied to other circumstances by ignoring the aforementioned revised parts as well. For instance, Section 9 amendment, being a judicial procedure, would apply even before the changes went into effect, but a Section 17 modification will only apply to arbitral proceedings begun after the 2015 Amendment. It is possible to argue that although Section 36 does not alter vested rights, Sections 9 and 17 modifications will have an impact on those rights, therefore a Section 9 amendment would not be applicable retroactively. Since the revisions in amendment act were implemented via an ordinance, there was still uncertainty and ambiguity, and it was unclear whether the amendments would be applied prospectively or retroactively. The Amendment Act is unquestionably a positive step and has been praised for giving the Indian arbitration process the much-needed boost. Maximizing Possibilities for Joinder in International Arbitration Although non-signatories have been included in the arbitral procedure as a result of Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc., there is still some uncertainty over their acknowledgment. Relying on their participation and interest, the question of whether the arbitral judgment is enforceable against such non-signatories varies from case to case. The Supreme Court thoroughly construed Part II of the Act in Gemini Bay Transcription (P) Ltd. v. Integrated Sales Service Ltd. and concluded that foreign awards should also be enforceable on non-signatories to the arbitration. However, it is unclear if their authority corresponds with a party's obligations under Section 2(h) of the Act. The arbitration's subject matter and location are entirely at the discretion of the parties. Since these non-signatories share equal responsibility with the signatories for the award's compliance, they should have an equal say in changing the arbitration's structure. According to Section 2(1)(f)(iii) of the Act, one such condition for international commercial arbitration (“ICA”) is the central focus of central management and control in the case of an association or a group of people. The ICA principles would be in effect if such central management or power were to be applied in any nation other than India. By putting ICA into the equation, this clause thereby denotes a proactive strategy involving various stakeholders, including signatories and non-signatories. The possibility exists to change the character of arbitration from domestic to international commercial arbitration if a non-signatory foreign party is established outside of India, as well as any organization or group of persons with administration or control outside of India. The High Courts have appropriately departed and progressively adopted a favorable stance, even though some earlier judgments had ascribed a restrictive interpretation to the scope of ICAs. According to Section 44 of the Act, participants in a "legal connection," whether or not one is contractual, may decide on overseas awards. When compared to Section 2(1)(f) of the Act, this section does not include the "foreign party" component. Therefore, in accordance with the Act, a foreign award may be made regardless of the ICA's terms. The court has weakened the arbitration clause so that Indian parties may get a foreign seat, bringing ICA to local courts. With this decision, the courts have given parties reason to believe in the arbitration's party autonomy premise. It is important to contrast the two current circumstances. Even if there might be a foreign component in an arbitration ruling, a foreign party is nonetheless subject to domestic arbitration. With the proper judicial interpretation and application of the laws, the discordant tone may be corrected. The foundation of arbitration is autonomy and consent, hence the Indian courts may take a more cutting-edge approach to granting ICA in response to parties' requests. The equivalents of the parties to the arbitration will soon experience some relief after following the path of the arbitration guidelines. The Indian Supreme Court upholds the arbitrability of cases involving allegations of fraud In its ruling on whether disputes involving fraud allegations are subject to arbitration in India, the Supreme Court concluded that only "substantial fraud allegations" need to be decided by civil courts, i.e. allegations that violate the agreement to arbitrate or raise questions of public law. The Share Subscription Agreement ("SSA"), via which HSBC invested US$60 million in Avitel India in 2011, gave rise to the underlying issue. The HSBC investment was based on the assertions made by Avitel's promoters that, amongst many other significant contracts, they were close to finalizing a high-value deal with the British Broadcasting Corporation and that the money would be used to buy equipment to support this contract. Later, HSBC learned that such a contract did not exist and that the promoters had diverted a bulk of their funding into other businesses. It started the arbitration process in 2012, and the conclusion of the arbitration was reached in 2014. In the meantime, in 2013, HSBC also filed a criminal complaint. The arbitral tribunal ruled in favor of HSBC, concluding that Avitel's promoters intentionally made false or misleading claims to induce investment into HSBC. In addition to interest and costs, the court awarded damages totaling $60 million. The Supreme Court issued this ruling as under the section 9 of the Act proceedings. HSBC requested that the entire sum be insured in Avitel’s bank account pending enforcement of the arbitration award. Among other things, the Supreme Court considered whether HSBC had strong prima facie evidence in the enforcement proceedings. The parties argued before the Supreme Court over whether the disagreement may be the focus of an arbitration hearing since there were fraud claims implicated, involving criminal accusations. The court took into account earlier instances and cited Section 8 of the Act, which requires courts to submit disputes that are covered by an arbitration agreement to arbitration. The court established two criteria to evaluate if "serious accusations of fraud" exist to the point where the civil courts should get involved: (i) When the fraud corrupts the arbitration agreement and renders it void, (ii) When the state or one of its agencies is accused of acting arbitrarily, dishonestly, or maliciously, and the hearing entails discussing issues that are of general interest and not related to the parties' contractual arrangement. Regarding the case's circumstances, the court determined that there was no fraud present that would have rendered the SSA's arbitration clause invalid. False representation, money theft, and other difficulties were all between the parties and did not meet the criteria outlined in the previous sentence for a judicial trial. This situation regarding the arbitration of disputes, including fraud charges, has been beneficially clarified by this judgment. It may also inspire civil courts to be more discriminating in deciding if fraud is being charged just to thwart arbitration procedures. Concluding Remarks As a result of legislative reforms that eliminated several flaws in the main 1996 Act and rendered invalid court judgments that inhibited the correct implementation of arbitration rules in India, these improvements are significant advances toward enhancing the arbitration process and arbitration jurisprudence. A word of caution is linked to these advancements, however,that the revisions call for the application of many rules in the arbitration process to be made in too little time, which is difficult to do in reality and runs the danger of forcing unnecessary judicial conflict settlement. The aforementioned revisions reiterate the specifics that are now used by the parties or institutions, but there are still no clear-cut requirements supporting institutional arbitration in India. Although the adjustments may have been made with noble intentions, their implementation was not perfect. The change is a positive move, and with some other changes, India would be able to establish itself as a center for arbitration. [1] Unnati Sinha is a 3rd-year student pursuing B.B.A.L.L.B (Hons.). She can be reached at unnatisinha1412@gmail.com.

Mr. Sheth, welcome to the Arbitration Workshop! Firstly, we are extremely honoured that you agreed to give us an interview and to share your perspective with our readers. Q. Before we delve in, may we request you to kindly introduce yourself and tell us about your professional background? A. I am the Founder and Director at Konverj-Zeus Consulting Pvt. Ltd. I am a Risk, Forensics and Dispute Advisory professional with 14+ years of post-qualification experience. I am a Chartered Accountant, a Certified Fraud Examiner and a Valuer of Securities & Financial Assets. I am a member of – Steering Committee of Young MCIA (Mumbai Centre for International Arbitration) for 2021-23 Chartered Institute of Arbitrators Institute of Chartered Accountants of India Association of Certified Fraud Examiners Q. How did you come to be associated with the field of Arbitration? A. I started my professional career in Risk and Corporate Governance with some of the larger accounting firms in India. Later, I started conducting Forensic Investigations for banks and non-banking corporates. While conducting forensic investigations, I then supported few arbitration matters, both in India and internationally. Post these experiences, I started serving dispute matters for some of the larger law firms. This is how I got into the entire Arbitration field. Q. How is your expertise utilised by prospective clients in arbitrations? How would you explain your role in the entire arbitration mechanism of today.? A. Currently, for domestic and international arbitration, my role is primarily that of a Commercial Damage Quantification Expert. I also testify as an Expert Witness. My role also sometimes extends to rebutting the other Expert’s report or value and submitting a Rebuttal report. I have supported Arbitrations in India and internationally under the Rules of SIAC, LCIA, AAA and ICC. The disputes that I currently support are interestingly of varied nature. They include Contractual disputes, Shareholder disputes, Construction disputes, Valuation disputes, IP disputes and Anti-Trust disputes. Some disputes also include supporting the counsels to cross examine the other Expert. Another area of support is Economic Consulting in matters of Investment arbitrations or matters involving Competition Acts. Today, in few cases, I also get approached to be a Consultant, obviously not independent role, to help the client to ascertain the extent of damage or value of the claim. Arbitration for me also includes supporting on Managed Document Review, where there are tonnes of documents to be reviewed, which is where I support law firms. These more often conducted using technological platforms, which save a lot of time and cost. Then there are calculation of damages in Business Interruption disputes that I have supported the clients in quantifying the Lost Profits due to, say for example, catastrophic events like earthquakes or hurricanes. A few dispute matters have also involved fact finding exercise for me, where our Forensic Accounting skill set comes into play. In these cases, I review a lot of financial records and un-earth the facts of the case, which then become very important for the law firms to strategize their case. And lately, I also play a new role in supporting Litigation Funding and Litigation Management. So, my role in disputes, especially in arbitrations is spread across. Q. At what stage of the arbitration proceedings do you find your expertise the most valuable? How does your expertise assist the Claimant or Respondent in representing their case before the arbitral tribunal ? A. As mentioned, most of the cases I am involved in require my expertise as an Expert for the independent report and testify as an expert witness. This is the stage where in most cases the SOC and SOD are filed and then my role as an expert comes up. My support here is more of an independent evaluator of the claim or counter-claim values. Another role is where I am a consultant to the client, helping them ascertain the value of damage or claim. This is the stage of pre submission and filing of claim or counter claim statements. When we talk about litigation funding and litigation management, the role is spread right throughout the case and may start from when the dispute arises and ending post the dispute is over or settled. Q. In our experience, we have seen arbitral tribunal’s being skeptical about damages expert engaged by the parties, what has been your experience while providing expert evidence on behalf of a party. Alternatively, do arbitral tribunals engage you or other damages expert as an independent witness? What if any is the difference in your role when engaged by the arbitral tribunal as compared to when engaged by a party in an arbitration? A. Yes, the Tribunal may appoint an independent expert on their own, irrespective of whether the parties have or have not appointed an expert, more so in cases where they have not. The expert’s role in terms of duties and independence is same whether appointed by the client or the Tribunal. However, matters such as a list of issues on which the expert is requested to express an opinion, information, data, timeframe, communication protocols, method of exchange of expert reports and instructions concerning examinations, tests, experiments and site visits, if any that the expert receives is given by the Tribunal. So, in that sense the role and results differ if I get appointed by the Tribunal. In certain cases, the Tribunal may appoint an expert to report to it on specific issues to be determined by the arbitral tribunal. The parties usually participate in selection of an expert and also agree upon the selection by the Tribunal. Q. Could your broadly throw light on the different mechanism or methods of valuations which are utilised by experts like you in determining the damages or valuation of a transaction or the value of a shareholding which may be relevant in an arbitration proceeding. A. I believe it depends upon what one is valuing. If it is a company or share valuation, then one has three basic approaches – Income approach, Market approach and Asset approach. If one is valuing Intellectual Property, then one can select the most appropriate one of the methods – Cost method or Income method or Market method. If one is calculating the lost profits, then usually either of Before and After approach, Yardstick (comparable) approach and Sales Projections (But For) approach is used. Q. Could you guide our readers towards certain literature that arbitration practitioners and Chartered Accountants could read to know more about valuation and damages expert in arbitration practice. A. I think for my fellow Chartered Accountant friends, as many would know, Aswath Damodaran has authored numerous books and are the best reference material. But equally important are publications like International Valuation Standards by International Valuation Standards Council and for valuations in India, it is always useful to refer to ICAI Valuation Standards by Valuation Standards Board. For lost profits, I think Lost Profits Damages: Principles, Methods, and Applications by Everett P Harry III and Jeffrey H. Kinrich is very useful. But there are various books depending on the topic one wants to refer. Q. What advice could you provide to budding Chartered Accountants who might want to develop an expertise and a practice as damages and valuation experts in Arbitrations? A. I think I would recommend my fellow budding Chartered Accountants to take up this area as early as possible to gain a lot of experience. I would suggest one should start working with some of the top Economic Consulting firms globally, which will give them immense exposure to the more complex projects. Attending events or webinars and just interacting or listening to speakers in this zone also adds up to a lot of knowledge. Academically and professionally, I think a degree or a specialised course in Valuation or Economics would definitely be very useful. I would welcome interested professionals to this service line of consulting, which is only here to grow in future. The Editorial Team at the Arbitration Workshop would like to thank Mr. Keval Sheth for taking out time from his busy schedule and for sharing his perspectives with us!