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