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Kushagra Tolambia[1] A court may issue an Anti-Arbitration Injunction ("AAI") to prevent parties or an arbitral panel from initiating or continuing arbitration proceedings. An AAI is typically requested prior to the start of an arbitration, during the arbitration proceeding, or following the conclusion of the substantive proceeding but before the judge issues the final award.[2] Arguments against anti-arbitration injunctions As a fundamental arbitral premise, "competence-competence" is attacked from the ground up. This concept is used by arbitral tribunals to establish their own jurisdiction. Thus, a tribunal is empowered by the principle of "competence-competence" to draw the conclusion that the arbitration agreement is not legally valid or ineffective and to declare that the tribunal does not have jurisdiction. The tribunal loses this power when an injunction prohibits arbitration. It does not follow the generally acknowledged legal guidelines for conducting international arbitration. In this system, the tribunal first determines its jurisdiction before allowing courts to intervene and review the decision of the tribunal (on specific grounds). The clauses listed below support this long-standing system: Article 23 of the UNCITRAL Arbitration Rules (2010)[3]: o In accordance with Article 23(1), the authority to determine its own jurisdiction, includes any disputes regarding the arbitration agreement's legitimacy or existence, belongs to the arbitral tribunal. o In accordance with Article 23(3), "The arbitral tribunal can decide on a plea [that the tribunal does not have jurisdiction] either in an award on the merit or as a preliminary matter. Despite any ongoing legal challenges to its jurisdiction, the arbitral tribunal, if it wants to, proceed with the arbitration proceedings and issue an award. In accordance with Article 16(3) of the UNCITRAL Model Law[4], If the tribunal finds that it has jurisdiction on a preliminary question, any party may request that the case be remanded to the courts in the arbitration site. The tribunal can proceed to issue an award given in the Article 34 of the UNCITRAL Model Law[5], but a court may thereafter order the award to be vacated if the arbitration agreement is void or the dispute cannot be resolved through arbitration proceedings. The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards allows the arbitral tribunal to issue such award, but it also allows a court to decline to uphold that award for reasons akin which are stated in Article 34 of the Model Law, such as the illegality of the arbitration agreement. The level of unnecessary court interference rises as a result of the arbitral proceedings. There should be as minimal disruption as possible. It encourages the exploitation of the arbitral procedure. For instance, Gary Born stated that "antiarbitration injunctions are often used as part of deliberate obstructionist strategies that are typically pursued in local courts with a favourable disposition in order to obstruct the parties' agreed-upon arbitral process." Even if the right to enjoin arbitration procedures were inherently recognised to be a possibility, the author writes, "that authority should be exercised with the greatest caution and only in exceptional circumstances."[6] Arguments which go in favour of anti-arbitration injunctions There are exceptions to the competence-competence principle. Sometimes used in support of this claim is the following statement made by Lord Collins in the UK Supreme Court case of Dallah: "So also, the principle that a tribunal in an international commercial arbitration has the power to consider its own jurisdiction is no doubt a general principle of law. It is a principle which is connected with, but not dependent upon, the principle that the arbitration agreement is separate from the contract of which it normally forms a part. But it does not follow that the tribunal has the exclusive power to determine its own jurisdiction, nor does it follow that the court of the seat may not determine whether the tribunal has jurisdiction before the tribunal has ruled on it."[7] According to Article 8 of the Model Law, courts must send parties to arbitration "unless it determines that the contract is invalid, ineffective, or unable to be carried out" if a matter involving an arbitration agreement is the subject of legal action. The New York Convention's Article II contains a similar clause. These provisions assume that a party may file a lawsuit even for a claim which is purportedly related to arbitration, and that the court, not an arbitral tribunal, will determine whether the arbitration agreement is invalid, ineffective, or unable to be carried out. It is intrinsically unreasonable for an arbitration panel to have the authority to decide any matter if the arbitration agreement was never made. To put it another way, it is irrational for an arbitral tribunal to rule that it lacks jurisdiction if the decision's result is that the tribunal lacked jurisdiction to begin with. A party who challenges the jurisdiction of the tribunal will eventually find themselves in court. It is preferable to "front end" the review process and avoid spending time and money on the arbitral proceeding by having courts decide the jurisdictional question right away. Statutory Framework regarding AAI. AAIs are evolving into a potent tool in the hands of arbitration parties. However, neither the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958, nor the UNCITRAL Model Law 1985, which serve as the foundation for the Arbitration and Conciliation Act, 1996 (the "Act"), include a specific clause that allows courts to grant AAIs. The Act does not specifically forbid it either. AAI critics contend that courts must compel arbitration referrals without previously taking into account any objections to the jurisdiction of an arbitral tribunal. They rely on the explicit clauses in Section 16 when read in conjunction with Section 5 of the Act to support this. The power of the arbitral tribunal to decide on its own jurisdiction, including any questions regarding the existence and legitimacy of the agreement, is established by Section 16 of our national laws, which enshrine the idea of Kompetenz-Kompetenz. Additionally, the non-obstructive clause in Section 5 states that no judicial authority should intervene unless specifically authorised by the Act, "notwithstanding anything contained in any other law for the time being in force." Such critics do not, however, take into account the possibility that an arbitration reference may not be definitive. Section 8 of the Act gives the power for courts to "refer the parties to arbitration" while bringing substantive cases before a civil court, "unless it finds that prima facie no valid arbitration agreement exists." In a similar vein, Section 45 of the Arbitration and Conciliation Act gives courts the authority to include arbitration in foreign-seated arbitrations unless they determine "that the said agreement is null and void, inoperative, or incapable of being performed." Additionally, Section 45 is a non-obstructive clause, therefore it is not constrained by Section 5 or the Kompetenz-Kompetenz principle as mentioned in Section 16. However, it is important to know that a court can only consider something under these principles during substantive hearings in front of a civil court. These two clauses make it apparent that the Act's statutory framework enables courts to grant AAIs, even though for a few particular grounds., such as the presumption that the arbitration agreement is invalid or that an arbitration agreement is ineffective, or unable to be performed, or if the court finds it to be fair and practical. Regarding the arbitrability of disputes, the rules established by the Hon. Supreme Court in the cases of Avitel Post Studioz Limited and Ors. v. HSBC PI Holdings (Mauritius) Limited and Ors.[8], N. Radhakrishnan v. Maestro Engineers and Ors.[9], and A. Ayyaswamy v. A. Paramasivam[10] are pertinent. In accordance with them, if a case involves significant and serious charges of fraud, courts may opt not to refer it to arbitration as that calls for a careful analysis of the evidence. In these cases, courts governed by the stringent guidelines of the Indian Evidence Act and the Codes of Civil and Criminal Procedure can be a more appropriate venue than an arbitral tribunal. Complexities in the decisions of courts. The famous and widely regarded decision in the case of Kvaerner Cementation India Ltd. v. Bajranglal Agarwal & Anr ("Kvaerner Judgement")[11], which involved a bench of three judges, made the Indian Supreme Court's support for arbitration apparent in this regard in 2001. While affirming that no dispute may be submitted to arbitration if there is no particular arbitration provision, the Supreme Court of India held in this two-page decision that the existence and validity of an arbitration agreement, as a preliminary question, may be determined by the arbitral tribunal and that the arbitral tribunal shall have the power to determine its own jurisdiction. The anti-arbitration injunction lawsuit was rejected by the Supreme Court on this basis. But for whatever reasons, this verdict was not made public until 2012. As a result, conflicting verdicts were issued by Indian courts till the year 2012 since the problem could not be resolved. The seven-judge bench of the Supreme Court in the well-known case of SBP & Co v. Patel Engineering Limited[12] that it is not possible to argue that the arbitrator alone has the authority to determine its own jurisdiction without considering the jurisdiction of the civil courts. The Civil Procedure Code of 1908, Section 9, grants the Civil Courts the authority to issue injunctions, according to the Supreme Court's observation. The Supreme Court reiterated this stance in its ruling in the case of World Sport Group v. MSM Satellite Singapore Ltd.[13], in which it dealt with the topic of issuing an anti-arbitration injunction with respect to a part II arbitration, also known as international commercial arbitration. The Supreme Court specifically addressed Section 45 of the Act in this regard and ruled that the Civil Court cannot assess the legitimacy or legality of the substantive contract and must limit its inquiry whether the arbitration agreement is void, ineffective, or incapable to be carried out. In contrast to the reasoning used in the Kvaerner Judgement, which made the Civil Courts to refer disputes to arbitrators for decision-making in their respective jurisdictions, this convinced the Civil Court to accept these anti-arbitration suits and to at least analyse the arbitration agreement. Two Indian High Courts, the Delhi High Court in McDonald's India Private Limited v. Vikram Bakshi and Ors.[14] and the Calcutta High Court in The Board of Trustees of Port of Kolkata v. Louis Dreyfus Armatures SAS and Ors.[15], both consistently held that the Civil Courts have the jurisdiction to grant anti-arbitration injunctive relief, distinctly disregarding the observations in the Kvaerner Judgement. In McDonald's, the two-judge bench of the Delhi High Court changed the fundamental assumptions underlying the established rules of the Act by ruling that Indian courts would have the authority to decide on the legality of an arbitration agreement. This observation was nevertheless constrained by the guidelines established by the Supreme Court in Sasan Power Limited vs. North American Coal Corporation (India) Limited[16], which made it clear that the arbitration agreement is the only subject of the examination required by Section 45 of the Act; the validity of the substantive contract is not taken into consideration. The courts of India abruptly and suddenly returned to the guidelines outlined in the Kvaerner Judgement, despite the consistent observations in the many judgements given below. The High Court of Delhi in Ravi Arya v. Palmview Investments Overseas[17], the High Court of Calcutta in Lafarge India Pvt Ltd v. Emami Realty and Anr.[18] and the Supreme Court in National Aluminium Company Ltd v. Subhash Infra Engineering Pvt. Ltd.[19] and A. Ayyasamy v. A. Paramasivam and Ors.[20], denied granting anti-arbitration injunctions, stating that the arbitral tribunal may choose its own jurisdiction in determining whether the arbitration agreement is valid and enforceable. The Supreme Court of India made a significant point regarding the standards to be considered into account when determining whether the dispute could be arbitrated, stating that generally and traditionally, all disputes which involve rights in personam are thought to be amenable with arbitration, while all disputes which involve rights in rem must be decided by courts and public tribunals and are not suitable for private arbitration. However, the Court makes it clear that this is not a fixed or unbending norm and that arbitration has traditionally been considered a viable option for resolving disputes about lesser rights in personam arising from superior rights in rem. In the case of Himachal Sarang Power Pvt Ltd v. NCC Infrastructure[21] which is an international arbitration case, the Delhi High Court declined to issue an anti-arbitration injunction, retracing the path and stating that if the procedures are not vexatious and/or oppressive, such injunctions may not be obtained. This has now opened the door for yet another factor that the Civil Court could take into account in a lawsuit seeking an anti-arbitration order. The Bina Modi judgement[22] followed, winning the support of everyone who is in favour of arbitration. The decision on McDonald's was per in curium because it did not refer to or take into consideration the Kvaerner verdict, according to the Bina Modi Judgement, which went one step further in removing the authority of Civil Court to issue an anti-arbitration injunction. The Bina Modi ruling, which rejected the anti-arbitration injunction, also took into account the restriction outlined in clause 41(h) of the Specific Relief Act, 1963 and determined that an anti-arbitration injunction cannot be granted by a civil court since the Act provides an equally effective alternative remedy. Many people who were keeping an eye on the appeal—possibly more so than the parties themselves—had their hearts broken when this judgement was reversed by the Delhi High Court's Appellate Bench[23]. The Appellate Bench ruled that the Court must consider the facts and circumstances of the case when determining whether an arbitration agreement is valid. Since foreign arbitration involves significant costs and efforts, the legislature, in its wisdom, decided that the Court should determine whether an arbitration agreement is valid, as well as whether it is cooperative and capable of being carried out. Surprisingly, this decision makes no attempt to address the non obstante language in section 45 or the fact that this provision, which adopts Article II of the New York Convention on the execution of arbitral judgements, does not give civil courts the authority to issue an injunction against arbitration. In reality, unless the court finds that the arbitration agreement is prima facie invalid, inoperative, or incapable of being carried out, the clause makes it mandatory for the courts to refer an action filed in arbitration at one of the parties' request when they are seized of it. The criteria stated under this provision do not include the arbitrability of the case or the complicated nature of the arbitration process. Therefore, it may be said that the restrictions specified in section 45 are rigid and do not allow for the Civil Courts to consider any factors that are not clearly included there. However, Lalit Modi may still have hope given that a petition for special permission to appeal against the decision made by the Appellate Bench of the Delhi High Court has been filed before the Supreme Court[24]. Searching for the middle ground The fundamental rule continues to be that, if there is a valid arbitration agreement between the parties, that dispute must be settled by arbitration. Party autonomy is recognised by the courts. As a result, a court of law can only award AAIs in exceptional circumstances. It is still the responsibility of the party asking for an AAI to argue and show that it has no alternative or suitable solution and that postponing the arbitration process is fair and in everyone's best interests. In the Indian arbitral context, the vagueness, inconsistencies and ambiguity about the requirements to be satisfied when approving or rejecting anti-arbitration injunctions prevents us from reaching a judgement. The Indian Courts appear to agree on one thing, though: the Civil Court should exercise its authority to issue injunctions in anti-arbitration lawsuits extremely sparingly. The Indian Courts' decision to tip the balances in favour of arbitrations is a welcome reprieve. According to public opinion, there is an urgent need for the Indian judicial system to adopt a pro-arbitration stance given the backlog of cases in the Civil & Commercial Courts of India. The intent behind the Act may be defeated if such anti-arbitration lawsuits are entertained for an extended period. This problem and conundrum could be resolved in large part by restricting the scope of the investigation of Civil Court into potential interference in anti-arbitration injunction lawsuits. [1] Kushagra Tolambia is a third-year B.A. LL.B (Hons.) student at National Law University, Lucknow. [2] Julian Lew, Control of Jurisdiction by Injunctions Issued by National Courts in International Arbitration 2006: Back to Basics? (Albert Jan van den Berg ed, Kluwer, 2007) 185–220. [3] UNCITRAL Arbitration Rules (2010) art. XXIII. [4] UNCITRAL Model Law art. XVI § 3. [5] UNCITRAL Model Law art. XXXIV. [6] Gary B. Born, International Commercial Arbitration (Vol I, Kluwer 2009)1049-1054. [7] Dallah Real Estate and Tourism Holding Co v Ministry of Religious Affairs of the Government of Pakistan [2010] 3 WLR 1472, at para. 84. [8] Avitel Post Studioz Limited and Ors. v. HSBC PI Holdings (Mauritius) Limited and Ors., (2020) 6 MLJ 544. [9] N. Radhakrishnan v. Maestro Engineers and Ors., 2009 (13) SCALE 403. [10] A. Ayyaswamy v. A. Paramasivam, AIR 2016 SC 4675. [11] Kvaerner Cementation India Ltd. v. Bajranglal Agarwal & Anr, (2012) 5 SCC 214. [12] SBP & Co v. Patel Engineering Limited, 2005 (8) SCC 618. [13] World Sport Group v. MSM Satellite Singapore Ltd, AIR 2014 SC 968. [14] McDonald’s India Private Limited v. Vikram Bakshi and Ors, 2016 (4) ARbLR 250. [15] The Board of Trustees of Port of Kolkata v. Louis Dreyfus Armatures SAS and Ors., 2019 SCC OnLine Bom 251. [16] Sasan Power Limited vs. North American Coal Corporation (India) Limited, (2016) 10 SCC 813. [17] Ravi Arya v. Palmview Investments Overseas, 2019 SCC OnLine Bom 251. [18] Lafarge India Pvt Ltd v. Emami Realty and Anr, (2016) SCC OnLine Cal 4964. [19] National Aluminium Company Ltd v. Subhash Infra Engineering Pvt. Ltd., 2019 SCC OnLine SC 1091. [20] A. Ayyasamy v. A. Paramasivam and Ors., (2016) 10 SCC 386. [21] Himachal Sarang Power Pvt Ltd v. NCC Infrastructure, 2019 SCC OnLine DEL 7575. [22] Bina Modi v. Lalit Modi, 2020 SCC OnLine Del 90. [23] Bina Modi v. Lalit Kumar Modi, 2020 SCC OnLine Del 1678. [24] Bina Modi v. Lalit Kumar Modi, (2021) 3 SCC 1134.

*Sparsh Srivastava[1] Introduction Over the years, several legal proceedings have focused on the question of whether an arbitration clause in an unstamped or inadequately stamped agreement can be enforced. Conflicting decisions have been delivered by various High Courts, and even the Supreme Court has not taken a firm stance on the matter. On April 25, 2023, the issue was finally laid to rest by a constitutional bench of the apex court, through its judgment in N.N. Global Mercantile Private Limited v. Indo Unique Flame Ltd. (II) (“N.N. Global Mercantile Pvt Ltd II”), wherein the Court declared that, “an unstamped document is unenforceable and consequently, the arbitration clause contained therein is also equally unenforceable under law.” Background One of the foremost decisions on the issue of enforceability of such arbitration clauses was delivered in the case of SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P.) Ltd. (“SMS Tea Estates”) where the Division Bench of the Supreme Court had held that, “if a document is found to be unstamped/ insufficiently stamped, then even the arbitration clause embedded in it cannot be acted upon as per Section 35 of the Indian Stamp Act, 1899.” The two-judge bench decision in SMS Tea Estates was followed by the Supreme Court in Garware Wall Ropes Limited v. Coastal Marine Constructions & Engineering Limited (“Garware Wall Ropes”), which held that, “since an unstamped agreement is unenforceable, the arbitration clause contained in it would not exist as a matter of law until the agreement was duly stamped.” This view, taken in Garware Wall Ropes, was again, approved by a three-judge Bench of the Supreme Court in Vidya Drolia v. Durga Trading Corp. (“Vidya Drolia”), wherein the Court held that, “the existence and validity being intertwined with each other, an arbitration agreement would not exist if it is illegal or does not satisfy the mandatory legal requirements for it to be enforceable, one of which is the payment of stamp duty.” In complete contravention with the reasoning in the above judgements, a three-judge bench of the apex court, in N.N. Global Mercantile Private Limited v. Indo Unique Flame Limited (I) (“N.N. Global Mercantile Pvt Ltd I”), departed from such a view and consequently, overruled the SMS Tea Estates. The Court, came to this conclusion while relying on the principle of Competenz-Competenz, enshrined under Section 16 of the Arbitration and Conciliation Act, 1996 (“Act, 1996”) which provides that the arbitral tribunal is competent to rule its own jurisdiction and the doctrine of separability, which views the arbitration agreement as a separate and autonomous arrangement from the underlying contract and allows its legal enforcement even if the latter is unenforceable. These are two foundational principles of arbitration law and are fundamental to preventing judicial intervention in the initial judicial proceedings. The Supreme Court further delved into the same question and revisited onto the correctness of the ratio in the Garware Wall Ropes case, which was approved in the Vidya Drolia case by a coordinate Bench. The presence of such conflicting opinions led to the matter being referred in N.N. Global Mercantile Pvt Ltd I to a bigger bench of five judges, which resulted in the decision at hand. To critically appraise the decision of the Court, let us examine the reasoning of both the concurring and dissenting opinions of the judges. Decision of the Supreme Court The latest judgement was delivered by a 3:2 majority, wherein the majority held that an unstamped or inadequately stamped instrument is “bereft of life,” i.e., it is incapable of existing in law, and is therefore void. The bench also observed that the decision in SMS Tea Estates, as reiterated in the Garware and approved in the Vidya Drolia case, is legally valid while that taken in N. N. Global (I) case is bad law. The majority held that ‘ an instrument, which is exigible to stamp duty, may contain Arbitration Clause and which is not stamped, cannot be said to be a contract, which is enforceable in law.’ The majority declined the doctrine of separability and relied on the fundamental argument of “Nothing can arouse from nothing.” In contrast, the dissenting opinion delivered by Justice Ajay Rastogi and Justice Hrishikesh Roy stated that such flaws do not render any document permanently void and that failure to pay stamp duty is unquestionably a defect that could be easily resolved. Furthermore, they also noted that the Act, 1996 is a special law and cannot be invalidated by a general law, such as the Stamp Act. In addition to this, interestingly, they also observed is no provision in the Indian Stamp Act, 1899 which provides that an arbitration agreement would be void when not stamped as the Act specifically does not provide for arbitration agreement and would only get covered into the residuary entry. Moreover, the dissenting judges observed that while making use of the doctrine of Competenz-Competenz stipulated under Section 16 of the Act, 1996, the Arbitral Tribunal possesses the sole competence to rule on its own jurisdiction, address any challenges posed to the existence, legality, and applicability of the arbitration agreement. Thus, declaring the decision in the Garware case to be inconsistent with both the legislation and the decision in the Vidya Drolia case, to be incorrect. Analysis With the resolution of this long-debated topic, a clear decision has been provided by this judgement regarding agreements and contracts with arbitration clauses. But the verdict seems to on both its pros and cons as it has raised several questions that will undoubtedly have an impact on the practice of arbitration in India. While the judgment provides much clarity on the long prevailing issue of admissibility of unstamped documents for adjudication of arbitral disputes, it may not bode well for India’s pro-arbitration stance as by permitting courts to dwell upon the validity of an arbitration agreement, the Court has expanded the range of judicial action because they are no longer limited to making a prima-facie finding that an arbitration agreement exists, overshadowing the two doctrinal pillars of the Arbitration (i.e. Doctrine of Separability and Competenz-Competenz). Consequently, the apex court has missed a golden opportunity to boost the image of India as an arbitration-friendly jurisdiction. Furthermore, some of the key concerns of the judgement, in the view of the author, are as follows: (1) In the future, the disputing party may use this as a tool to delay the procedure of the constitution of an arbitral tribunal citing the issue of insufficiency of stamps which will then have to be adjudicated by the Courts as a preliminary issue thereby delaying the entire arbitration process, making the purpose of opting Arbitration as infructuous. (2) The decision further lacks certain guidelines that would permit the courts to not engage in a mini-trial for determining the sufficiency of stamping prior to referring the matter to arbitration. Although there appears to be some respite in the judgment as it also mentions therein that where a claim of insufficiency of stamping appears to be wholly without foundation, a reference may be made to the arbitration leaving it open for the Arbitral Tribunal to exercise powers under the Stamp Act, if necessary. The judgement leaves a scope of being misused by one of the disrupting parties to indulge in the nominal or procedural issues, in contrast to the objective of the Act, 1996 and arbitration, as a whole. The purpose of the Arbitration is to provide for a speedy process of dispute resolution but the same is jeopardized by allowing the disruptive parties to take advantage of the procedural delays that are expected to arise by this judgement. (3) The Act, 1996 is a special legislation, that should have been given primacy over Indian Stamp Act, 1899. The Latin maxim, Generalis Specialibus Non-Derogant, which means that the erstwhile special law is given superiority over the general law, is in direct conflict with this decision. (4) The Indian Stamp Act, 1899 is a legislation primarily intended to provide revenue to the Government and as per the present judgement, it is being allowed to come in the way of judicial remedies, in lieu of safeguard that ought to be provided in the name of the veracity of an agreement. Conclusion In conclusion, India’s ambition to become a global arbitration hub requires careful consideration of the concerns arising from the recent decision, as it undermines the arbitration’s basis of a pro-arbitration approach. It is essential to take appropriate steps purpose, and spirit of the Act, 1996, ensuring they remain unaffected by the complexities introduced by stamping requirements in the arbitration agreement. The Supreme Court, thus, in the author’s opinion, missed an opportunity to reinforce and foster arbitration in India as a flexible and user-friendly process, instead introducing an additional layer of scrutiny. [1] This paper is written by Sparsh Srivastava, a 2nd-year law student at National Law University Odisha. His areas of interest include Commercial Dispute Resolution (particularly, Arbitration) and International Law. The author can be reached out at- sparsh4203@gmail.com.

Priyanshu Shrivastava[1] Background Giving one party the right to appoint an arbitrator of their choice, directly or indirectly, goes against one of the cardinal principles of arbitration of ensuring an impartial and independent arbitrator. In India, such arbitration agreements providing one party the option to unilaterally appoint the arbitrator(s) were common. This is particularly in situations where the parties’ underlying contract involved a state entity, for example a Public Sector Undertaking. Due to asymmetrical bargaining powers, the other party has no option but to accept the standard form contract, often referred to as the General Conditions of Contract (“GCC”), including such unilateral appointment clauses (See GCC (BHEL), Clause 32.1; GCC (BPCL), Clause 108.1). In response to this practice, the Arbitration and Conciliation Act, 1996 (“Act”) was amended through the Arbitration and Conciliation (Amendment) Act, 2015. Through this amendment, the Indian parliament incorporated the Red List and the Orange List of the IBA Guidelines on the Conflicts of Interest in International Arbitration (“IBA Guidelines”) in Schedule 5 and Schedule 7 of the Act, respectively. Section 12(5) of the Act gave effect to Schedule 7 (i.e., the Red List) by stating that such relationships mentioned on this list would entail ‘ineligibility’ of an arbitrator “[n]otwithstanding any prior agreement to the contrary”. Because of this non-obstante clause, such unilateral appointment arbitration clauses do not survive. In fact, the parties cannot even consensually agree to such an arbitration clause. For instance, one standard-form contract has an arbitration clause with the heading “[a]ppointment of Arbitrator where applicability of section 12 (5) of Arbitration and Conciliation Act has been waived off ” (GCC (Indian Railways), Clause 64.(3)). Even this does not survive the impact of Section 12(5) of the Act. That being said, it is trite law in India that such clauses lead to a de jure ineligibility of an arbitrator. This is separate from circumstances which give rise to ‘justifiable doubts’ under Section 12(1) of the Act; this can be addressed through a disclosure made by the arbitrator (See also HRD Corporation v. GAIL). In this regard, the Indian legislation goes a step ahead vis-à-vis Article 12 of the UNCITRAL Model Law on International Commercial Arbitration (“Model Law”) as the latter does not include any de jure disqualifications. The discussions on the nature and implications of unilateral appointments (or unequal arbitrator appointments) under Indian law and their concomitant aspects have taken place on this blog and on other platforms as well (here, here, and here). This legal position is no longer res integra (See TRF v. Energo Engineering, para. 54). Ordinarily, parties choose to appoint their arbitrators via courts under Section 11 of the Act to cure the ineligibility which will be caused if they follow the unilateral appointment procedure in their contracts. In Indure v. JMC Projects India, the Delhi High Court even referred the dispute to the Delhi International Arbitration Centre, thereby promoting institutional arbitration. There is, yet, another way to cure this defect. In that light, it seems pertinent to point out that the present discussion relates to a separate branch of Section 12(5) of the Act. The Proviso to Section 12(5) of the Act states that the “parties may, subsequent to disputes having arisen between them, waive the applicability of this sub-section by an express agreement in writing” (emphasis supplied). This proviso is modelled after General Standard (4)(c) of the IBA Guidelines. This waiver is another way to cure the ineligibility caused by unilateral appointments, to resurrect the mandate of an ineligible arbitrator. Apex Court’s Construction — Bereft of Practicalities? The Supreme Court of India (“SC”), in Bharat Broadbank v. United Telecoms, ruled on the nature of waiver present in proviso to Section 12(5) of the Act. The parties’ contract contained a unilateral appointment clause as appointment of the sole arbitrator was to be made by one of the parties’ Chairman/Managing Director. Three important points of discussion arise from this decision. First, the SC discussed the difference of this provision with Section 4 of the Act, which is on a party’s waiver of its right to object to any non-compliance under the Act’s non-derogable provisions. Unlike Section 4 of the Act, the waiver under Section 12(5) of the Act does not come into operation by conduct. Rather, there is a requirement of an “express agreement in writing” vis-à-vis the waiver. It follows that this provision contains a specific procedure for the waiver and the general procedure mentioned in Section 4 of the Act has no bearing on it. Second, the SC did not clarify the form in which such a waiver has to be made. The Apex Court merely reiterated that such a waiver has to be made expressly in words. The court also refused to take guidance from Section 7 of the Act which states that an arbitration agreement can be contained in “an exchange of letters, telex, telegrams or other means of telecommunication including communication through electronic means which provide a record of the agreement ”. In the absence of any jurisprudence on this waiver, this provision can certainly provide some much-needed guidance. The wording of Section 7 of the Act indicates that an arbitration agreement is not confined to any specific form, but can be derived from parties’ letters, correspondences, or any other means of communication. This provision gives an indication that there is no rigid form for the parties’ “express agreement” vis-à-vis waiver under Section 12(5). This opens up a multitude of possible forms in which such a waiver can be made. This angle is further explored below in this piece. Third, while rejecting the lower court’s consideration of the arbitrator’s appointment letter to be an express agreement of waiver, the SC opined that the party must be fully aware of the arbitrator’s ineligibility; that there must be “full knowledge”. It is argued that this specific requirement cannot form a part of the threshold for such waivers. This is because, in these given facts and circumstances, the appointment of the arbitrator took place before the decision in TRF v. Energo Engineering was delivered. In fact, in the words of the apex court, the arbitrator’s “invalid appointment only became clear after the declaration of the law by the Supreme Court in TRF Ltd. which, as we have seen hereinabove, was only [after the appointment was made]”. Currently, the law on unilateral appointments is settled. If a party engages in the process laid down in a unilateral appointment clause, constructive knowledge can very well be imputed on such a party. This is also in consonance with the travaux préparatoires of the Model Law. Possible Forms of Waiver — Cannot Put the Same Shoe on Every Foot The lower courts in India have blindly followed the rigid, linear approach laid down by the Apex Court. However, the applicability of this waiver cannot be in black and white. Quite the opposite, considering the dynamic environment arbitration functions in, there are multiple possible forms of waiver. These forms are discussed by taking on alternative perspectives vis-à-vis the judicial application of this waiver by lower courts. In furtherance of this, two fictional scenarios are pertinent. For this purpose, it is assumed that there is a unilateral appointment clause in the arbitration agreement entered between ‘A’ and ‘B’, where B’s managing director has the right to unilaterally appoint the sole arbitrator. Scenario 1: This is where, after a dispute has arisen between the parties, A invokes the arbitration agreement either through a request made and/or through a notice (under Section 21 of the Act). In response to A’s request/notice, B’s managing director appoints a sole arbitrator. The appointment is acknowledged and accepted by A through a correspondence. It is argued that these series of letters/correspondence between A and B can be construed as an ‘express agreement’ amounting to a waiver. However, these facts were overlooked by the Delhi High Court in at least two decisions (Delhi Integrated Multi Modal Transit Systems v. Delhi Jal Board; AK Builders v. Delhi State Industrial Infrastructure Development Corporation). Scenario 2: This is where the arbitral proceedings, with a unilaterally appointed sole arbitrator, between A and B have been going on for around twelve months. Now, the parties successfully sought a court order extending the time limit under Section 29A of the Act, thereby mutually extending the mandate of the sole arbitrator. This means that both A and B consented to continuation of the sole arbitrator’s mandate. It is well settled that a court order containing statements made by the parties can be regarded as an “an agreement in writing” (See Brahm Singh v. Nisha Rani; Mahabir v. Manohar Singh). Therefore, it is argued that such an extension of the sole arbitrator’s mandate can be construed as a waiver under Section 12(5) of the Act. At the same time, it is admitted that not every extension can be construed as a waiver. For instance, in Naresh Kanayalal Rajwani v. Kotak Mahindra Bank, the Bombay High Court terminated the mandate of a sole arbitrator who had unilaterally extended his mandate. There was no consent to extend the arbitrator’s mandate. These scenarios showcase the need for a relatively flexible approach while applying the waiver under Section 12(5) of the Act. While doing this, the courts must keep in mind the objectives of the Act. It would defeat the purpose of the Act, and the underlying Model Law, if the mandate of arbitrator(s) is terminated on the basis of rigid and impractical thresholds, evoking the need to restart the whole process of arbitration leading to significant increase in both cost and time. Fairness and efficiency are two sides of the same coin. Both of them need to be balanced. [1] B.A. LL.B. (Hons.), National Law University, Jodhpur. His interests lie in commercial dispute resolution (including arbitration) and international trade law. The author can be reached at priyanshumukesh.shrivastava@nlujodhpur.ac.in.

Gautam Mohanty[1] & Shivam Hargunani[2] INTRODUCTION The distinct nature of arbitration and insolvency regimes is apparent. While the fundamental foundation of arbitration lies in party autonomy, an insolvency regime is often comprised of mandatory rules safeguarding the interests of various stakeholders. The lack of guidance or limited guidance on the impact of insolvency proceedings on arbitration has put the spotlight on finding clarity to specific issues through case law. Be that as it may, new inconsistencies come to the forefront when dealing with insolvency questions in arbitration, especially in light of the repercussions of the Covid-19 pandemic. As described by the American Courts, this phenomenon is a “conflict of near polar extremes”.[3] A cursory glance over various international legal systems indicates a significant level of divergence in the context of regulating the intersection of arbitration and insolvency. Some jurisdictions prohibit individual proceedings, including arbitration; some jurisdictions prohibit arbitration only in some circumstances subject to certain limitations and procedural adaptations, while some jurisdictions stipulate that insolvency proceedings have no impact on arbitration proceedings. Additionally, there is no international convention or instrument that harmonizes the various national approaches to insolvency. The existing judicial precedents in India and regulatory guidance provide little guidance to issues such as the continuation of arbitration proceedings, the impact of foreign seated arbitration, the ability to participate in the insolvency resolution process and the enforcement of arbitral awards vis-à-vis insolvency proceedings.[4] The law on bankruptcy and insolvency in India underwent a complete change with the enactment of the Insolvency and Bankruptcy Code 2016 (“IBC”). Notably, apart from the imposition of a moratorium, the IBC did not stipulate any other provisions pertaining to the impact of insolvency on arbitration proceedings. Such being the case, guidance from case law has helped tackle issues that are not covered by the IBC but which lie at the intersection between arbitration and insolvency. The consequences of the above intersection, although unclear, are slowly emerging. The Supreme Court of India in Indus Biotech Pvt. Ltd v. Kotak India Venture (Offshore) Fund and Ors.[5] was presented with the opportunity to place itself at the intersection between insolvency and arbitration. In the above context, the Hon’ble Supreme Court has in clear and explicit terms postulated that if an insolvency application is admitted, then an arbitration proceeding is not maintainable. The court has further observed that an insolvency action concerning a right in rem cannot be overridden by an arbitration action that involves a right in personal. In relation to the only provision in IBC dealing with arbitration, i.e., imposition of a moratorium, it is to be noted that Section 14 of the IBC specifically bars “the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority”.[6] Pertinently the above provision of law is an all-encompassing one, thereby implying that the imposition of moratorium does not differentiate between pending arbitration proceedings and those commenced after the institution of insolvency proceedings. The law in this regard is clear and has been stated by the Hon’ble Supreme Court of India in the case of Alchemist Asset Reconstruction Co.[7] wherein it was held that arbitration proceedings commenced after the initiation of a ‘corporate insolvency resolution process’ (“CIRP”) are considered non-est in law. Notwithstanding the above, in the absence of statutory exceptions, judicial exceptions have allowed for the continuation of arbitration proceedings in a situation where: (1) the arbitration proceedings maximize the value of the assets of the corporate debtor; (2) the proceedings are beneficial to the corporate debtor and do not adversely impact its assets,[8] or (3) if proceedings are allowed to continue no recovery can be pursued against the corporate debtor during the operative period of the moratorium.[9] Further, in some instances, Courts have refused to issue an injunction on claims and counterclaims advanced by a creditor where it was found that the corporate debtor, in case of an order to pay, would not be in an adverse financial situation.[10] Recently, the Hon’ble Bombay High Court in Nahar Builders Ltd. v. Housing Development and Infrastructure Ltd.[11] was presented with the question of whether security obtained pursuant to interim measures in an arbitration prior to the initiation of insolvency proceedings could be encashed despite the moratorium order? Interestingly, the Hon’ble Bombay High Court allowed for encashing the security and disbursement of the amounts and observed that the moratorium order would have no effect on the security. Similarly, the Hon’ble Delhi High Court when faced with the exact question of law, has observed that a moratorium prohibits encashing of security and disbursement of any amounts.[12] The above is just an example to highlight the importance of case law jurisprudence in developing the understanding of issues pertaining to arbitration that are not explicitly dealt with by IBC. THE CASE OF INDUS BIOTECH PVT. LTD v. KOTAK INDIA VENTURE(OFFSHORE) FUND & ORS A. Facts and procedural history In the case, an arbitration petition was filed by Indus Biotech Private Limited (“Petitioner”) under Section 11(3) read with Section 11(4)(a) and 11(12)(a) of the Act, 1996 seeking the appointment of an Arbitrator on behalf of Respondents Nos. 1 to 4 in order to adjudicate upon certain disputes between the parties. The genesis of the dispute can be traced back to the Share Subscription and Shareholders’ Agreements (“SS and SA”) dated 20.07.2007, 12.07.2007, 09.01.2008 and the Supplemental Agreements dated 22.03.2013 and 19.07.2017 whereby the Respondents had subscribed to equity shares and Optionally Convertible Redeemable Preference Shares (“OCRPS”) in the Petitioner company. Subsequently, it was decided by the Petitioner company to make a Qualified Initial Public Offering (“QIPO”). However, under Regulation 5(2) of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements), Regulations 2018 (“SEBI Regulations”), a company with any outstanding convertible securities or any other right which would entitle any person with an option to receive equity shares of the issues was not entitled to make QIPO. Therefore, to facilitate the QIPO, Petitioner proposed converting the OCRPS invested by Respondent into equity shares. During the negotiations, a dispute arose with regard to the calculation and conversion formula to be applied in converting the preference shares of the Respondents into equity shares. The stance of Respondent was that it was entitled to 30% of the total paid-up share capital in equity shares. Per contra, the stance of Petitioner was that Respondents Nos. 1 to 4 were entitled to receive 10% of the total paid-up share capital. Accordingly, Respondents Nos. 1 to 4, relying on their estimation, contended that on redemption of OCRPS, a sum of Rs. 367,08,56,503/- became due and payable. Consequently, as Petitioner company did not pay the aforesaid sum, Respondent approached the National Company Law Tribunal (“NCLT”) to invoke the jurisdiction of the Adjudicating Authority by initiating the Corporate Insolvency Resolution Process (“CIRP”) as provided for under the IBC. Respondent No.2 filed a petition under Section 7 of IBC before the NCLT in IBC No. 3077/2019 dated 16.08.2019 seeking appointment of Resolution Professional. In the above petition, Petitioner filed a Miscellaneous Application No. 3597/2019 under Section 8 of the Act, 1996, seeking a direction to refer the parties to arbitration. The NCLT, Mumbai Bench-IV, through its order dated 09.06.2020 after considering all contentions of the parties, allowed the application filed by the Petitioner under Section 8 of the Act, 1996. The relevant extracts of the order of NCLT that illustrate that there was no default under the meaning of Section 3(12) while considering the petition under Section 7 of IBC is as below: “5.13 Therefore, in a Section 7 petition, there has to be a judicial determination by the Adjudicating Authority as to whether there has been a ‘default’ within the meaning of Section 3(12) of the IBC. 5.14 In the present case, the dispute centres around three things-(1) The valuation of the Respondent/Financial Creditor’s OCRPS; (2) The right of the Respondent/Financial Creditor to redeem such OCRPS when it had participated in the process to convert its OCRPS into equity shares of the Applicant/Corporate Debtor; and (3) Fixing of the QIPO date. All of these things are important determinants in coming to a judicial conclusion that a default has occurred. The invocation of arbitration in a case like this seems to be justified. 5.15 Looking at the contention raised, and that the facts are not in dispute, we are not satisfied that a default has occurred. We note Mr. Mustafa Doctor’s statements that the Applicant/Corporate Debtor is a solvent, debt free and profitable company. It will unnecessarily push an otherwise solvent, debt-free company into insolvency, which is not a very desirable result at this stage. The disputes that form the subject matter of the underlying Company Petition, viz., valuation of shares, calculation and conversion formula and fixing of QIPO date are all arbitrable, since they involve valuation of the shares and fixing of the QIPO date. Therefore, we feel that an attempt must be made to reconcile the difference between the parties and their respective perceptions. Also, no meaningful purpose will be served by pushing the Applicant/Corporate Debtor into CIRP at this stage.” (emphasis supplied) On being aggrieved by the above order of the NCLT, the Respondents approached the Hon’ble Supreme Court by filing a Special Leave Petition (“SLP”). At the outset, the Court clarified that in the ordinary course, the appropriate legal remedy against the NCLT order dated 09.06.2020 was to file an appeal in the NCLAT as stipulated under Section 61 of IBC. However, the Court noted that as the NCLT order was passed in the backdrop of a petition under Section 7 of IBC, in the context of Petitioners seeking for resolution of the dispute through arbitration and the fact that the Arbitration Petition was already pending before the Hon’ble Supreme Court as on the date the order was passed by the NCLT, under exceptional circumstances it would entertain the petition filed and examine the matter on merits. B. Scope of Proceedings under Section 7 of the IBC The Hon’ble Supreme Court of India, before commencing its analysis, deemed it appropriate to analyze the ambit of Section 7 of the IBC. To that extent, the Court observed that Section 7 of IBC postulates for the ‘financial creditor’ to file an application for initiating Corporate Insolvency Resolution Process against a corporate debtor before the Adjudicating Authority when a default has occurred. Further, the Court also observed that the provision categorically stipulates four factors which are necessary to trigger an application under Section 7 of the IBC viz., (i) there should be a ‘debt’ (ii) ‘default’ should have occurred (iii) debt should be due to ‘financial creditor’ and (iv) such default which has occurred should be by a ‘corporate debtor’: on such application being filed with the compliance required under sub-section (1) to (3) of Section 7 of IBC, a duty is cast on the Adjudicating Authority to ascertain the existence of a default if shown from the records or based on other evidence furnished by the financial creditor, as contemplated under sub-section (4) to Section 7 of IBC. The Court further referred and relied on the case of Innoventive Industries Limited v. ICICI Bank and another[13] to explain the scheme and working of proceedings under Section 7 of the IBC. The germane portions which are relevant for the present purposes are as below: “28. When it comes to a financial creditor triggering the process, Section 7 becomes relevant. Under the Explanation to Section 7(1), a default is in respect of a financial debt owed to any financial creditor of the corporate debtor--it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made Under Sub-section (1) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records required therein. Form 1 is a detailed form in 5 parts, which requires particulars of the applicant in Part I, particulars of the corporate debtor in Part II, particulars of the proposed interim resolution professional in Part III, particulars of the financial debt in Part IV and documents, records and evidence of default in Part V. Under Rule 4(3), the applicant is to dispatch a copy of the application filed with the adjudicating authority by registered post or speed post to the registered office of the corporate debtor. The speed, within which the adjudicating authority is to ascertain the existence of a default from the records of the information utility or on the basis of evidence furnished by the financial creditor, is important. This it must do within 14 days of the receipt of the application. It is at the stage of Section 7(5), where the adjudicating authority is to be satisfied that a default has occurred, that the corporate debtor is entitled to point out that a default has not occurred in the sense that the “debt”, which may also include a disputed claim, is not due. A debt may not be due if it is not payable in law or in fact. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Under Sub-section (7), the adjudicating authority shall then communicate the order passed to the financial creditor and corporate debtor within 7 days of admission or rejection of such application, as the case may be…” C. Action in rem v. Action in personal An essential facet of the judgment was determining whether a proceeding under Section 7 of IBC was an action in rem or action in personam. The Respondents argued that it is an action in rem, implying that insolvency and winding-up matters were non-arbitrable. Additionally, the Respondents also argued that when the petition is filed under Section 7 of the IBC, the adjudicating authority ought to have looked into that aspect alone and not considered an application filed under Section 8 of the Act, 1996. With regard to the above contentions, the Hon’ble Supreme Court opined that a proceeding under Section 7 of the IBC becomes an action in rem on the date of admission and from that point onwards, the matter would not be arbitrable as the only course of action to be followed thereafter, according to the court, is the resolution process under IBC. Thereafter, as per the Court, the crucial facet of determining whether an insolvency matter is arbitrable or not is ascertaining whether the Adjudicating Authority has concluded that there has been a default or not. The Court also clarified that mere filing of an application under Section 7 of IBC does not trigger a bar on arbitration. In light of the evidence placed before it coupled with the fact that the conversion formula was still in dispute, the Court held that it would be inappropriate to hold that there was a default and admit the petition of Respondents merely based on the petition filed under Section 7 of IBC. The Apex Court observed that if a default is assumed automatically in an application under Section 7 of IBC, then it may so happen that a company which is running its administration ably and discharging its debts in a planned manner may also be pushed to the CIRP and get entangled in a proceeding with no point of return. With a view to concretising its aforesaid observation, the Court relied upon the case of Vidya Drolia and Ors. v. Durga Trading Corporation[14] wherein the tests to be applied to determine when the subject matter is not arbitrable or not was laid down. Notably, the tests formulated by the Apex Court in the above case are as below: “76. In view of the above discussion, we would like to propound a fourfold test for determining when the subject matter of a dispute in an arbitration agreement is not arbitrable: 76.1(1) when cause of action and subject matter of the dispute relates to actions in rem, that do not pertain to subordinate rights in personam that arise from rights in rem. 76.2(2) when cause of action and subject matter of the dispute affects third party rights; have ergaomnes effect; require centralized adjudication, and mutual adjudication would not be appropriate and enforceable; 76.3(3) when cause of action and subject matter of the dispute relates to inalienable sovereign and public interest functions of the State and hence mutual adjudication would be unenforceable; and 76.4(4) when the subject-matter of the dispute is expressly or by necessary implication non-arbitrable as per mandatory statute(s)… 77. Applying the above principles to determine non-arbitrability, it is apparent that insolvency or intracompany disputes have to be addressed by a centralised forum, be the court or a special forum, which would be more efficient and has complete jurisdiction to efficaciously and fully dispose of the entire matter. They are also actions in rem…” Accordingly, the Court observed that since the petition under Section 7 of IBC was not yet admitted, it had not assumed the status of proceedings in rem. D. Finding of the Court The Court ultimately held that it would be premature to conclude that there was a default in payment of any debt as the conversion formula was still in dispute. Therefore, the amount repayable by the Petitioner company to Respondents was still to be determined. However, the Court also stated that after the amount had been determined and not paid by the Petitioner company, then the same will amount to a default. INTERNATIONAL ASPECTS OF THE TUSSLE BETWEEN INSOLVENCY AND ARBITRATION The intersection of Insolvency laws and arbitration laws and their tussle in respect of the international framework requires to be studied in two different aspects. In this section, the authors shall attempt to conduct a comparative analysis of the Indian regime with other legal regimes prevailing in countries, like the USA, England and France where the insolvency regime is more developed. Further, this section will also examine the practice of enforcement of foreign arbitral awards under the insolvency law regime of India. 1. Intersection of insolvency and arbitration proceedings: The international scenario The Hon’ble Supreme Court of India in the year 2021 in its landmark judgment of Indus Biotech Private Limited v. Kotak India Venture[15] held that in case a petition has already been admitted under Section 7 of the IBC[16] thereafter any application that has been made under Section 8 of the Arbitration Act[17] shall not be maintainable. The Hon’ble Court further held that in case the application under Section 8 of the Arbitration Act was filed first and the petition under Section 7 of IBC was not admitted by then in that scenario the adjudicating authority will be required to decide the petition under Section of the IBC first and thereby ascertain whether a default had taken place or not and only then take note of the application of Section 8 of the Arbitration Act.[18] Now, let’s take a look at the legal regime of some other countries and how the intersection between the jurisprudence of insolvency laws and arbitration laws unfolds in those jurisdictions: A. USA B. England C. France A. United States of America (USA) As per the United States Bankruptcy Code, when a bankruptcy petition is filed, it leads to the automatic triggering of stay[19] against most civil actions and proceedings against the debtor due to which the property of the debtor can also not be proceeded against. [20]This implies that even arbitration proceedings are automatically stayed upon the filing of the bankruptcy petition.[21] This stay covers any potential claim against the debtor as well as claims that may be made in existing arbitration proceedings, and in order to further proceed against the debtor, such claimants/parties are required to then obtain special permission by making a motion in the court overseeing the particular bankruptcy proceedings because the said court itself has the power to annul, modify, or terminate the stay.[22] It is pertinent to note that under the US Bankruptcy Code, the debtor is not required to take any active action or send any notice to any claimant to give effect to the stay on claims[23] mentioned above. Notably, the stay on claims is not only triggered by filing a petition under Chapter 11 of the Bankruptcy Code for a reorganization of the debtor but also when a petition under Chapter 7 of the Code for liquidation of the debtor, or when an involuntary petition against a debtor under section 303 of the Code is registered.[24] B. England and Wales The jurisprudence of laws prevalent in England and Wales under the Insolvency Act 1986 provides that when an individual or a corporation has become a subject of insolvency proceedings, an automatic stay is given against any legal proceedings against that individual or corporation. The said individual or corporation may become subject to insolvency proceedings and thereby immediately trigger the automatic stay/ moratorium in the following ways: 1. A bankruptcy order being made against an individual[25] 2. The court making a winding-up order against the company[26] 3. The company entering into administration[27] The legal proceedings against which this moratorium applies also include arbitration proceedings as well.[28] As per the English Insolvency Act, 1986, in order to be able to proceed in the arbitration matter against the individual or the corporation against which the legal moratorium is triggered, the following methods may be adopted: 1. By the permission of the insolvency court 2. by the permission of the administrator appointed to the company 3. By the permission of the individual’s trustee in bankruptcy It should be noted here that in case the court does not grant permission to continue the arbitration proceedings against the insolvent debtor, the claimant will have to file a proof of debt in the insolvency process, and later in case the claimant feels that the concerned insolvency officer’s decision is not satisfactory in respect of the debt amount, the claimant will have two options. It can either challenge such a decision using the insolvency process or it can try to negotiate a settlement of the claims with the concerned insolvency officer.[29] C. France The Insolvency regime in France lays down three significant types of insolvency proceedings, namely safeguard (“sauvegarde”), receivership (“redressementjudiciaire”), and liquidation (“liquidation judiciaire”). The significant differences between these three kinds of insolvency proceedings boils down to the fact that safeguard proceedings are voluntary in nature and in such a scenario the debtor before it reaches a state of insolvency, is the one who files the application to open these proceedings. On the other hand, receivership insolvency proceedings and liquidation insolvency proceedings are mandatory in nature and are required to be commenced within 45 days of the date when the debtor became insolvent. If there is a possibility that the debtor will recover from the insolvency, the receivership proceedings are commenced. And if it is apparent that there is no such possibility, liquidation proceedings are opened either directly at the time the debtor becomes insolvent or when the recovery plan adopted in the context of the receivership is not successful.[30] It should be noted that even though the legal regime under the laws of France do not provide for any provision which specifically ascertains what the effect of the opening of insolvency proceedings will be on arbitration proceedings, however, the French Commercial Code addresses the impact of insolvency proceedings on pending judicial proceedings and the possibility to bring new proceedings against the debtor.[31] This inevitably leads to these provisions being applicable to arbitration.[32] As per the said provisions, when the insolvency court orders for the insolvency proceedings to be commenced, the pending judicial or enforcement proceedings relating to both moveable and immoveable property are stayed up until the point when the claimant files with the insolvency practitioner, which is appointed by the insolvency court, its submission of claim. Another important thing to note is that when the insolvency proceedings are ordered by the insolvency court, the claimants/ creditors are not allowed to start any new judicial or enforcement proceedings and new judicial proceedings against the debtor for payment of a sum of money or termination of a contract on the grounds of non-payment of a sum of money.[33] Hence, if the arbitration proceedings did not commence before the initiation of the insolvency proceedings, new proceedings cannot be initiated before the arbitral tribunal. The claimant in such a case can only submit its claims to the insolvency practitioner and wait for the claim to be verified.[34] 2. Enforcement of Foreign arbitral awards under the Indian legal framework India is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards,[35] also known as the “New York Arbitration Convention” or the “New York Convention” which follows the principle of refusal to enforce an award on the ground of public policy if the award is against the notion of justice and morality of the jurisdiction of the court in which enforcement is sought. Further, the New York Convention also lays down that the contracting parties should recognize foreign arbitral awards under their respective national insolvency frameworks. Binding nature of arbitral awards against corporate debtors The moratorium passed by the NCLT effectively leads to the prohibition of continuing any pending suits against the corporate debtor as well as the institution of new suits against it. Under the Code of Civil Procedure, 1908, a ‘reciprocating territory’ implies a foreign country that the Central Government of India may notify in its Official Gazette declare it to be a reciprocating territory having 'Superior Courts' in relation to such country.[36] When a creditor, who is the holder of a decree from a foreign court in a reciprocating country and is desirous of enforcing the said decree, it shall be required to file execution proceedings in India before a District Court. However, if the decree is rendered in a non-reciprocating country, a fresh suit must be filed in India. Hence, when a creditor has obtained a foreign arbitral award against a certain corporate debtor and the said arbitral award is accepted by the NCLT against a corporate debtor, the principles under Section 44A of CPC are borrowed in the interest of justice.[37] Hence, this provision confers a right on the creditor/decree holder of the foreign arbitral award regarding its enforcement in India.[38] In the case of Agrocorp International Private (PTE) Ltd. v. National Steel and Agro Indus,[39] the corporate debtor, against whom the insolvency petition was filed by the operational creditor, raised the objection that foreign arbitral awards should not be considered as having a binding nature unless they are declared as enforceable the Arbitration and Conciliation Act, 1996. However, the NCLT took note of the fact that England is a reciprocating country and thereby rejected this objection of the corporate debtor. In this regard, it is essential to mention that Explanation 2 of Section 44A of CPC provides that the term “decree” shall not include an arbitration award, even if such an award is enforceable as a decree or judgment. This was not taken note of in the Agrocorp judgment. Further, it should be noted that when the foreign arbitral award is passed, it can be used as the basis for initiating insolvency proceedings against the party against whom the foreign arbitral award was passed. However, it should also be given due attention that the credit amount in respect of which the award was passed should be undisputed in nature. The Hon’ble Supreme Court in K. Kishan v. M/s Vijay Nirman Company Pvt. Ltd.[40] categorically stated that it is true that the arbitral awards can be used as proof of existence of operational debts however, such debts have to be undisputed in nature for the corporate insolvency resolution process to be initiated by the operational creditor under IBC. On this basis the Hon’ble Supreme Court in the abovementioned case noted that since the claim amount is currently under challenge before the Court, the corporate insolvency resolution process cannot be entertained at this stage. In the case of Fuerst Day Lawson Ltd v. Jindal Exports Ltd.,[41] the Hon’ble Supreme Court has shed light on the different stages through which the foreign arbitral award goes through in respect of the scheme prescribed under the Act, 1996. The Hon’ble Supreme Court held that first the enforceability of the foreign arbitral award has to be determined, and only then the concerned party can proceed to take the necessary steps in respect of execution of the said foreign arbitral award.[42] However, in the abovementioned recent judgment of Agrocorp International Private (PTE) Limited v. National Steel and Agro Industries Limited[43]it was stated by the Hon’ble NCLT Mumbai bench that enforcement of a foreign award is not a requirement in order to establish an insolvency claim against the corporate debtor. The Hon’ble NCLT in this case held that the foreign arbitral award was not under challenge and had attained finality and therefore, it can be treated as a valid proof of debt thereby enabling a foreign creditor to initiate insolvency proceedings in India. Further, the Vedanta[44] decision of the Hon’ble Supreme Court is also a welcome step in the right direction as it clarified two significant issues: (i) the limitation period of enforcement of arbitral awards and (ii) the interpretation of public policy in the context of enforcement of awards. This decision came in the same year i.e., 2020 after NAFED v. Alimenta[45]wherein the Hon’ble Supreme Court took a broad approach to interpreting ‘public policy’ and refused enforcement of a foreign arbitral award; stating it to be in violation of public policy. However, the authors are of the opinion that the narrow interpretation of the Hon’ble Supreme Court in Vendanta[46] would not only help in the enforcement of foreign arbitral awards but also help in bringing Indian legal framework in tandem with international jurisprudence. Decree/Award without merits It is also worth noting in this regard that earlier in 2001, the Hon’ble Supreme Court had noted in its decision in International Woolen Mills v. Standard Wool (UK) Ltd.[47]which was later affirmed in 2014 in the Bombay High Court case of Marine Geotechnic LLC v. Costal Marine Construction & Engineering Ltd.[48] that if a decree follows a judgment that is not on merits then whether the decree is from reciprocating or non-reciprocating territory, it cannot be enforced in India. Hence, if such a decree was passed ex-parte and devoid of any merits, it shall not be enforceable in India. Status of foreign arbitral awards under the Arbitration and Conciliation Act, 1996 The Hon’ble Supreme Court in 2020 in the case of Govt. of India vs. Vedanta Limited &Ors.[49] examined the issue of the enforceability of foreign arbitral awards under the legal framework established under the Arbitration Act and asserted that a foreign award does not become a “foreign decree” at any stage of the proceedings. The germane portions of the judgment are as below: “The foreign award is enforced as a deemed decree of the Indian Court which has adjudicated upon the petition filed under Section 47, and the objections raised under Section 48 by the party which is resisting enforcement of the award. A foreign award is not a decree by itself, which is executable as such under Section 49 of the Act. The enforcement of the foreign award takes place only after the court is satisfied that the foreign award is enforceable under Chapter 1 in Part II of the 1996 Act. After the stages of Sections 47 and 48 are completed, the award becomes enforceable as a deemed decree, as provided by Section 49. The phrase “that court” refers to the Indian court which has adjudicated on the petition filed under Section 47, and the application under Section 48. In contrast, the procedure for enforcement of a foreign decree is not covered by the 1996 Act, but is governed by the provisions of Section 44A read with Section 13 of the CPC.” It is also necessary to note here that the Supreme Court also clarified the position regarding the period of limitation for enforcement of a foreign arbitral award. The Hon’ble Supreme Court taking into consideration its decision in Bank of Baroda v. Kotak Mahindra Bank[50] noted that such enforcement shall be dealt with under Article 137 of the Limitation Act, which prescribes a limitation period of three years starting from the time when the right to apply for enforcement is accrued. Further, it was also clarified that Article 136 of the Limitation Act, 1963 applies only to decrees of a civil court in India and therefore, the period of limitation under Article 137 of the Limitation Act should apply. CONCLUSION In light of the above, the authors are of the opinion that different jurisdictions across the world take different approaches in respect of their insolvency law regimes; however, there is one common aspect to be observed in this regard i.e., every regime discussed above has incorporated a system wherein if the debtor has become insolvent or is unable to pay its debts, then the arbitration proceedings are put on hold. After this, some countries provide an option to the claimants for approaching the insolvency court and obtaining special permission to proceed with the arbitration proceedings. The authors are of the view that this is the best approach for resolving the tussle between the framework under the two laws and this should be the next step that needs to be taken in the context of the Indian policy framework. Finally, the authors are of the opinion that ideally it would be a better exercise that an international guidance note is introduced that would serve to ensure coherency and clarity in international practice in the context of invoking insolvency proceedings by using a foreign arbitral award. The above guidance note will not only ensure clarity of procedure but will also aid in avoiding conflicts with domestic procedural and substantive laws of the country in which the arbitral award is relied to initiate insolvency proceedings. Furthermore, it would also be helpful for the smooth functioning of international trade and commerce if a clear framework is established by the nations through treaties. The authors are further of the opinion that the enforcement of foreign arbitral awards under the domestic legal framework especially under the Insolvency law framework would further help in the betterment of commerce in the country as opposed to just having a mechanism under the Arbitration law framework. Countries such as USA, France and England have already successfully proceeded in this direction and put in place the necessary framework under their insolvency laws.[51] If we look at the Indian Insolvency framework enshrined under the IBC, the law is silent in this regard as of now. The authors believe that amendments are thus required in IBC so as to include the concept of enforcement of foreign arbitral awards so that NCLT when presented when the opportunity to align Indian legal framework with the international jurisprudence is able to exercise rightful jurisdiction in a procedurally correct manner from time to time. [1] Gautam Mohanty is currently a doctoral student at Kozminski University, Warsaw, Poland researching on Third Party Funders in Investment Arbitration. 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. [2]Shivam Hargunani is an independently practicing advocate before courts and tribunals in the state of Madhya Pradesh. He completed his graduation in B.B.A. LL.B. with Honors in Corporate Laws from National Law University Odisha in 2015 and later also completed LL.M. in Commercial Laws from the University of Edinburgh in 2017. [3] Société Nationale Algerienne v. Distrigas Corporation, 80 B.R. 606 (D. Mass. 1987). [4] Alipak Banerjee and Payel Chatterjee, ‘Arbitration and Insolvency: Co-relation or Collision?’ (2021) 23(3) Asian Dispute Review 117-121. [5] Indus Biotech Pvt. Ltd v. Kotak India Venture (Offshore) Fund and Ors., AIR 2021 SC 1638. [6] Insolvency and Bankruptcy Code 2016, s 14. [7] Alchemist Asset Reconstruction Co. Ltd. v. Hotel Gaudayan Pvt. Ltd., AIR 2017 SC 5124. [8] Power Grid Corporation of India Ltd. v. Jyoti Structures Ltd., 2017 SCC Online Del 12729. [9] Jharkhand Bijli Vitran Nigam Ltd. v. IVRCL Ltd. (Corporate Debtor) and another, 2018 SCC Online NCLAT 296. [10] SSMP Industries Ltd. v. Perkan Food Processors Pvt. Ltd., 2019 SCC Online Del 9339. [11] Nahar Builders Ltd v. Housing Development and Infrastructure Limited, 2020 SCC OnLine Bom 1044. [12] Morgan Securities and Credits Pvt. Ltd. v. Videocon Industries Ltd., FAO(OS) 96 of 2019. [13] Innoventive Industries Ltd. v. ICICI Bank and another, (2018) 1 SCC 407. [14] Vidya Drolia and others v. Durga Trading Corporation, (2021) 2 SCC 1. [15] Indus Biotech Private Ltd. v. Kotak India Venture, 2021 SCC OnLine SC 268 (Indus Biotech). [16] Insolvency and Bankruptcy Code 2016, s 7. [17] Arbitration and Conciliation Act 1996, s 8. [18] Indus Biotech (n 15). [19] United States Bankruptcy Code, 11 U.S.C. § 362, s 362(a)(1). [20] United States Code, Title 11 (United States Bankruptcy Code). [21] In re US Lines Inc., 197 F.3d. 631, 640 (2d Cir 1999). [22] In re Edwin A. Epstein Jr. Operating Co., 314 B.R. 591 (Bankr. S.D. Tex. 2004). [23] ACandS Inc. v. Travelers Casualty and Surety Co., 435 F.3d. 252, 259 (3d Cir 2006). [24] Hon. Allan L. Gropper and Thomas W. Walsh, IBA Toolkit On Insolvency And Arbitration: National Report of United States of America (January 2021) [25] United Kingdom Insolvency Act 1986, s 285. [26] United Kingdom Insolvency Act 1986, s 130(2). [27] United Kingdom Insolvency Act 1986, Schedule B1, para 43. [28] Bristol Airport plc and another v. Powdrill and others, [1990] 2 All ER 493. [29] Patrick Taylor and Gavin Chesney, IBA Toolkit on Insolvency and Arbitration: National Report of England and Wales (January 2021) [30] Flore Poloni and Nicolas Partouche, IBA Toolkit on Insolvency And Arbitration: National Report of France (January 2021) [31] French Commercial Code, arts L. 622-21, L.631-14, L.641-3. [32] Appeal no. 02-13.940, Commercial Division, French Cour de Cassation (2 June 2004). [33] French Commercial Code, arts L.622-21 and L.631-14. [34] Appeal no. 95/80373, Paris Court of Appeals (8 September 1998). [35] United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (signed 10 June 1958, entered into force 7 June 1959) [36] Code of Civil Procedure 1908, s 44A, explanation 1. [37] Gurpartap Singh and another v. Vista Hospitality Pvt. Ltd. and others, [2014] 186 Comp Cas 202 (Delhi). [38] Manoj Moolekkudi Subramanyan v. Rajesh Palliparambil Ravi, OP(C). No. 950 OF 2020 (Kerala). [39] Agrocorp International Private (PTE) Ltd. v. National Steel and Agro Indus. Ltd., CP(IB) no. 798/MB/C-IV/2019 (Agrocorp). [40] K. Kishan v. M/s Vijay Nirman Company Pvt. Ltd., Civil Appeal No. 21825 OF 2017 (Supreme Court). [41] Fuerst Day Lawson Ltd. v. Jindal Exports Ltd., (2001) 6 SCC 356. [42] ibid; Government of India v. Vedanta Ltd. and others, 2020 SCC Online SC 749 (Vedanta). [43] Agrocorp (n 39). [44] Vedanta (n 42). [45] NAFED v. Alimenta, 2020 SCC OnLine SC 381. [46] Vedanta (n 42). [47] AIR 2001 SC 2134. [48] Company Petition No. 69 of 2013 (Bombay). [49] Vedanta (n 42). [50] Bank of Baroda v. Kotak Mahindra Bank, AIR 2020 SC 1474. [51] Alexis Mourre, ‘Arbitrability of Antitrust Law from the European and US Perspectives’ in Gordon Blanke & Philip Landolt (eds.), EU and US Antitrust Arbitration: a Handbook of Practitioners (Kluwer Law International 2011) at 1, 161.

*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.