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Harsh Patidar & Monish Raghuwanshi* PART - II This part of the Article succinctly coruscates Third-Party Funding by highlighting its merits, demerits, and complexities that can be ascribed to third-party funding. In peroration, this article curtly ails to delineate certain recommendations and suggestions in the form of remedies to get rid of all the complexities associated with TPF and to make the arrangement of TPF an effective and viable route for litigation funding. Benefits of Third-Party funding IN ARBITRATION The business of law is evolving in recent time which mandates the need to have third party funding in domestic and international arbitration. In the middle of this context, it is not only increasingly timely but extremely important to explore the interplay between conflict funding and arbitration. A way to reconcile the increasing need of business for the funding of legal issues with maintaining the dignity and ultimate enforceability of awards should be found out. Dispute settlement proceedings can be a considerable burden for the parties and as a result of the dispute itself, financial problems occur. Companies that are eventually party to arbitration disputes should take into account the possible benefits of third-party funding and should be aware of the potential risks. I. Provides access to justice to under-resourced parties Third-Party Funding of an arbitration dispute has the potential to provide adequate justice and access to justice for parties having fewer resources and are facing financial burden. This enables under-resourced parties to go ahead with the arbitration proceedings which would otherwise be halted due to lack of finances. II. Reduces the arbitration costs The exorbitant costs of claiming and advancing arbitration can be discouraging. Third-Party funding in arbitration supports claims which are worthwhile but would not be followed simply because of the substantial costs otherwise. Even a business with a substantial amount of funds should consider third party funding to their arbitration dispute. This reduces the expenses involved and affects positively its cash flows and allows capital that would otherwise be incurred in legal fees to be allocated to other productive areas of that business. Also, without a set mold of a third-party funding agreement, parties can negotiate on the terms and conditions of the agreement making it flexible and a less costly affair. III. Minimises the risk Arbitration proceedings are associated with risks making the parties unwilling to take such risks. Third-Party Funding eliminates the risk factor involved in an arbitration proceeding as the costs involved therein are relieved for the parties. The third-party funder does not play any role in taking decisions on the case or the negotiations involved in order to reach a consensus in the arbitration matter. The emphasis of the third party is on properly evaluating the potential of success of the case for which the funding is proposed, taking into account all of the considerations such as the competency and experience of the legal representative of the claimant, increasing or lowering the speed in the execution of the proceedings. Also, the funder cannot at any time interfere with the process or with the decisions of the claimant. IV. Extra layer of scrutiny The additional layer of oversight that comes with the third-party funding may be another benefit of a funding arrangement with an external party. A third-party funder is like any other organization and it is doubtful that they will back a claim unless they are optimistic about its success. The funder only takes into account the cases that guarantee merit. This acts as a validation for the party and could also contribute to an early settlement. Third-party funders also have their own legal advisors to review claims and often evaluate the merits of a claim by independent research and evaluation. They give an objective and independent assessment of the situation and provides an extra layer of scrutiny by a realistic approach. Plugging the complexities ASSOCIATED with third-party funding in arbitration & litigation In India, there exists no legal embargo to third-party funding arrangements, yet, there are certain convolutions associated with third-party funding. They are as follow: I. Public Policy Considerations The laws of “public policy” do not ascribe to a customary or a fixed rule. The main question of whether an agreement is against the public policy or not is to be determined on formal doctrines only. Public policy can a constitute breach of an Act and whatever is contrary to the acceptable principles when made the main consideration of a contract. II. Mere right to sue In pursuant to the contention that the contract is against the public policy, one can contend that a specific arrangement is nothing but an assignment of a right to sue that is inhibited by Section 6(e) of the Transfer of Property Act, 1882. Further, in the Sri Sarada Mills case,[1] the Supreme Court of India held, “claims to damages for breach of contract or claims to damages for tort and assignment of the mere right of litigation, are bad. The reason behind this rule is that a bare right of action for damages is not assignable because the law will not recognize any transaction which may savour maintenance or champerty. It is only when there is some interest in the subject matter that a transaction can be saved from the imputation of maintenance. That interest must exist apart from the assignment, and to that extent, must be independent of it.”[2] III. Conflict of interest In TPF, a funder can resort to a pre-established connection with a person belonging to the Arbitral Tribunal, in that case, the autonomy and impartiality of an arbitrator might be alleged if such facts appear before opposite party. From fifth Schedule of the Arbitration Act,[3] which takes an arbitrator’s indirect interest into consideration, one can infer that it might envisage third-party funding. IV. Confidentiality In India, the Arbitration Act[4] has added Section 43A that binds the parties and Arbitral Tribunal to restore the confidentiality of all the proceedings pertaining to arbitration. Thus, there exists a possibility of the opposite party challenging violation of confidentiality on the ground of such a third-party funding arrangement cannot be set at naught. Emerging International Trends in Third-Party Funding A. Innovative risk transfer arrangements The third-party funding arrangements for the party comprise of the cases where the party does not want to incur the costs of litigation but would pay from his pocket, a share of the envisaged value of a triumphant party, upon dismissal of the averment. The parties not only want the litigation connected costs funded but also the risk of a contrary decision transferred. For this, the market includes certain paraphernalia which provides insurance and some sort of arrangements that transfer the risk of an issue for a plummeted price paid by the funder. B. Proliferating legal imposition for third party funding Countries like Australia, Hong Kong, etc, are abandoning the clunky common law principles of champerty, and maintenance, and have made third-party funding legal. Recently, Singapore brought the amended Civil Law Act and the Civil Law Regulations, 2017 legalizing third-party funding in arbitration. C. Emergence of artificial intelligence Nowadays, Artificial Intelligence abled algorithms are being used to ascertain the results of disputes, and to assess and price the risk in funding a matter. For example, “Legalist”, a tech third-party funding entity, uses an Algorithm that ascertains the possibilities of winning the matter using its database of 10 million court disputes before making an investment. D. The portfolio funding Under portfolio funding, a plenitude of averments brought by a claimant in contrast to identical or non-identical defendants is funded. This aids the claimant to seek more favourable terms since the funder’s finding and return is rampant across the averments, trivializing exposure to only one claim. Further, funders are being contacted to carry out transactions such as payment to creditors of an insolvent entity who would otherwise have to await the output of a claim before receiving the payment, proliferating the proceeds of a settlement, and even funding the expenses of the business, which may be based on a triumphant claim. The Future Ahead In India, states like Gujarat, Madhya Pradesh, Maharashtra, Uttar Pradesh, Orissa, Andhra Pradesh, and Tamil Nadu have recognized third-party funding after amending Order 25 Rule 1 of the Civil Procedure Code, 1908. This Order authorizes the courts to secure expenses for litigation by asking the financier to fund by becoming a party in order to deposit the costs in court. On adverting to some infrastructure companies such as Patel Engineering and Hindustan Construction Company have countenanced third-party funding in relation to their unresolved and unsettled averments in the sphere of arbitrations. The pivotal purpose seems to be to relax their advantageous status and position. It is axiomatic that third-party funding is evolving as an endeared path for alleviating tensions and conflicts in debt-laden construction entities. The ambiguity prevailing over the market demands emanating in the light of COVID-19 pandemic, coupled with the worldwide economic nosedive, can discourage claimants from making cogent and strong averments by adverting to these on the basis of a monetary deficit. Arbitration financing as a means in the current financial health can help micro-level entities and other claimants encountering difficulties in accomplishing their administration and maintenance costs or widening their regime by saturating the fund saved on litigation. Conclusion Third-Party Funding in Arbitration is a new emerging trend all over the world. With an upsurge in the arbitration claims and costs and risks involved in it, third-party funding gives relief to businesses and commercial organizations. The benefits of third-party funding clearly exceed any supposed shortcomings which have been noted in the above discussion. However, the complexities revolving around the adoption of this concept in arbitration needs to be addressed by means of adequate contractual regulation. Given the increased number of new third-party funders entering the market as well as globalization, many funders are operating across many jurisdictions. Therefore, the implementation of uniform external regulations is needed for different jurisdictions. In India, there is no clear regulation regarding third-party funding. It is, however, established by judicial precedents that third-party funding other than that of advocates is an accepted practice in India in litigation proceedings. Such an agreement between the third-party funder and party to a dispute takes into account the doctrine of public policy and the principles of justice, equity and good conscience. As there is no fundamental difference between litigation and arbitration proceedings, the third-party funding in the arbitration claims should be validated in India through a statute. *Harsh Patidar is a III Year, B.A. LL.B. (Hons.) student at National Law Institute University, Bhopal, harshpatidar.ug@nliu.ac.in Monish Raghuwanshi is a II Year, B.A. LL.B. (Hons.) student at National Law Institute University, Bhopal, monishraghuwanshi.ug@nliu.ac.in [1] Sri Sarada Mills Ltd. V. Union of India, (1973) AIR 281. [2] Id. [3] The Arbitration and Conciliation Act, 1996, No. 26, Acts of Parliament, 1996 (India). [4] Id. § 43, cl. A.

Harsh Patidar & Monish Raghuwanshi [1] PART- I Abstract India’s development as one of the main five economies on the planet made it quite possibly the favoured countries for wooing foreign investment lately. Nonetheless, hassles and interruptions brought by the COVID-19 pandemic could bring about another influx of matters related to litigation. The COVID-19 has hit hard the economy, due to which parties to litigation matters may get themselves incapable to bear the significant expenses of litigation or arbitration. Nevertheless, India is a cost-preferred jurisdiction for litigation and arbitration. Accordingly, bringing back the emphasis on the resource class being TPF (third-party funding). This article is divided into two parts. In this part, the authors have dealt with an introduction to TPF, the third-party funding in the Indian context, and the TPF under various other jurisdictions such as Singapore, Australia, etc. Introduction Third-party funding[2] refers to an agreement by a third party to the dispute to provide a party, funds or other material support in order to finance part or all of the cost of the proceedings, either individually or as part of a specific range of cases. Such support or financing is either provided in exchange for remuneration or reimbursement that is wholly or partially dependent on the outcome of the dispute or provided through a grant or in return for a premium payment. Such an agreement between the litigant and the third-party funder is profoundly known as the Champerty agreement and the remuneration or share in the proceeds is maintenance.[3] Champerty is defined[4] as “a bargain between a plaintiff or defendant in a suit and a third person, campum partire, to divide between them the land or other matter sued for in the event of the litigant being successful in the suit, whereupon the champertor is to carry on the party's suit or action at his own expense; the purchasing of an interest in the thing in dispute, with the object of maintaining and taking part in the litigation”.[5] This concept of champerty first came in the United Kingdom where it was regarded as a tool for access to justice for poor litigants who are unable to bear the exorbitant costs of litigation. However, this process was widely abused as a stranger without any substantial interest in the litigation was “officious intermeddling” in litigation, which often resulted in the oppression of the person against whom the action is brought.[6] This form of gambling and trafficking by the stranger to litigation attracted tortious and criminal liability. But, gradually rising costs of litigation increased the demand for third-party funding which led to the abolition of the common law offense of champerty[7] making it an accepted practice in litigation proceedings. However, such an agreement should not per se be opposed to public policy and should be in furtherance of justice and to resist oppression. Arbitration in the current scenario is being extensively used for the settlement of commercial disputes all over the world. With such a rise in the arena of arbitration, the cost involved therein is in upsurge which mandates the need for third-party funding in the arbitration proceedings. However, the question that comes flagging here is whether this principle of champerty in litigation is applicable to arbitration proceedings or not? Third-Party Funding in THE Indian Context The arbitration is in the embryonic stage in India and the institutionalization and stride taken by the Indian Courts have led to an upsurge in the arbitration commercial settlement claims. Due to the Covid-19, lots of businesses are in disruption in India and the costs of the dispute settlement mechanisms from litigation to arbitration are on a hike. The funding of arbitration costs by a third party may ease such economic distress of the businesses and commercial organizations. However, the position of third-party funding is not clear and there is an absence of statute regarding the validation or prohibition in this regard. Indian Courts have not explicitly disregarded the concept of third-party funding to a party in litigation or arbitration proceeding. The judicial precedents of the Privy Council and Supreme Court on many occasions have dealt with this issue. Earlier, in 1825, in the case of Ram Gholam Singh v. Keerut Singh[8], the Sudder court declared “a contract to give half of a large estate for a comparatively small advance as unfair and called the transaction as savoured strongly of gambling”. Later, in the case of Tara Soonduree Chowdhrain v. The Court of Wards[9], a champerty agreement was held void on the grounds of being contrary to the public policy. Later, the courts started recognising a champerty and maintenance agreement in India. On the question of the applicability of English law, making champerty and maintenance an offence in India, Sir R. Couch, C.J. in the English case of Pechell v. Watson[10] observed that “the English Common Law, and the Statutes as to maintenance and champerty, are not applicable, and are considered as having no force in India”. In furtherance to this, the Privy Council in the case of Chedambara Chetty v. Renga Krishna Mithu Vira Puchaiya Naickar[11] held that “the law in India is not the same as it is in England. The Statute of Champerty being part of the Statute Law of England, has, of course, no effect in the mofussil of India; and the Courts of India do admit the validity of many transactions of that nature, which would not be recognized or treated as valid by the Courts of England”.[12] However the Courts will administer according to the principles of justice, equity and good conscience and will take into account the question that “whether the transaction is merely the acquisition of an interest in the subject of litigation bona fide entered into, or whether it is an unfair or illegitimate transaction got up for the purpose merely of spoil, or of litigation, disturbing the peace of families, and carried on from a corrupt and improper motive”. The validity of a third-party funding agreement depends on the Indian Contract Act, 1872[13] under which such an agreement should not violate the doctrine of public policy. This doctrine of public policy is based on the maxim “ex turpi causa non oritur actio” which means that an agreement against public policy would be void without any effect.[14] The Privy Council on the question of the applicability of the doctrine of public policy in the champerty and maintenance agreement, in the case of Ram Coomar Coondoo and Anr v. Chunder Canto Mookerjee[15], observed that “a fair agreement to supply funds to carry on a suit in consideration of having a share of the property, if recovered, may not be opposed to public policy. But agreements of this kind ought to be carefully watched, and when found to be extortionate, and unconscionable, so as to be inequitable against the party; or to be made, not with the bona fide object of assisting a claim believed to be just, and of obtaining a reasonable recompense therefor, but for improper objects, as for the purpose of gambling in litigation, or of injuring or oppressing others by abetting and encouraging unrighteous suits, so as to be contrary to public policy, the effect ought not to be given to them”.[16] The Supreme Court of India in In Re: G, A Senior Advocate of the Supreme Court[17], further cleared its position on the validity of champerty and maintenance observing that “it can be accepted at once that a contract of this kind would be legally unobjectionable if no lawyer was involved. The rigid English rules of champerty and maintenance do not apply in India, so if this agreement had been between what we might term third parties, it would have been legally enforceable and good. It follows that there is nothing morally wrong, nothing to shock the conscience, nothing against public policy and public morals in such a transaction per se, that is to say when a legal practitioner is not concerned”.[18] Now it is a well-settled law that a champerty and maintenance agreement is valid in India.[19] However, this should not be opposed to public policy under the Indian Contract Act, 1872. The interpretation of public policy is wide and non-exhaustive. The question that lies here is whether a champerty agreement is void in India if an advocate is the third party. The Supreme Court in Bar Council of India v. AK Balaji[20] dealt with this question of law and went on to hold that “funding of litigation by an advocate is impermissible. However, there appears to be no restriction on third parties (non-lawyers) funding the litigation and getting repaid after the outcome of the litigation”. The concept of third-party funding is a recognised practice in litigation. The development in the adoption of the practice of third-party funding in arbitration proceedings is in a nascent stage in India. There is no fundamental difference in the litigation and arbitration proceedings as both resort to the settlement of disputes and work in furtherance of the principle of justice, equity and good conscience.[21] In this regard, the English Court in Bevan Ashford vs. Geoff Yeandle Ltd. observed that “The law of champerty has its origins in, and must still be based upon, perceptions of the requirements of public policy. I find it quite impossible to discern any difference between court proceedings on the one hand and arbitration proceedings on the other that would cause contingency fee agreements to offend public policy in the former case but not in the latter...If it is contrary to public policy to traffic in causes of action without a sufficient interest to sustain the transaction, what does it matter if the cause of action is to be prosecuted in court or in an arbitration?”.[22] Therefore, the validity of a third-party funding agreement in the arbitration proceeding in India would fundamentally depend on the doctrine of public policy under the Indian Contract Act, 1872. A Comparative Study: EVINCING DIASPORA OF TPF IN OTHER COUNTRIES A. Position in Australia In Australia, TPF is allowed. However, the situation is becoming knotty with a galore of juridical and law-making advancements in the year in review, affecting the arrangements of TPF and the advancements regarding TPF of representative proceedings, with TPF being kept under a certain level of regulation and control. Despite legislation, the status under the jurisdiction of Australia is that the formal tenets of the law of contract, in pursuance of which a contract might be considered as antithetical to public policy or illegal, are not disconcerted. This indicates that a TPF in the contract can be set at naught by the courts in Australia if it were not in consonance with common law public policy provisions and considerations.[23] There exists no legal regulatory framework that is applicable to litigation funding. The funding by the litigants is regulated and controlled under the administration of the Court, the Trade Practices Act 1974, the Federal Court of Australia Act 1976 and various other State consumer protection laws and regulations. In common law, there exist no legal limitations for TPF in the litigation sphere and mechanisms other than the Rules of the Court and the Court’s acknowledgment of whether the proceedings result in abuse of procedure pertaining to third party funding. Notably, in the judgments of the High Court in the Fostif case[24] and Trendlen case,[25] there appears to be relevant satellite litigation in third party funding issues comprising of frivolous litigation over the legality of the funding mechanisms. Many legal scholars have contended that the absence of a legal setup and framework for TPF at the State level might proliferate ambiguity, notwithstanding the stance of the High Court on TPF in litigation. Indisputably, there has been a clarion call to set up a legal framework as well as a monetary framework for the regulation of third-party funding, to safeguard the interests of the litigants and to ensure the existence of third-party litigation funding. Talking about the limitations on the charges and additional amount in the form of interest funders can claim that no law extant in Australia imposes any restrictions on the costs that a funder could ask from the party. The court in the Fostif case ruled that “contract law considerations such as illegality, unconscionability and public policy may still arise in relation to a litigation funding agreement but there is no objective standard against which the fairness of the agreement may be measured. Accordingly, whether a particular clause in a litigation funding agreement may contravene public policy will be answered having regard to the circumstances of each particular case”.[26] A priori, the courts in Australia can nullify a TPF in litigation funding agreement in circumstances where the interest owned by the funders’ amounts to an equitable subterfuge in the perception that it indulged captivating a barter by resorting to clandestinely benefiting of a person’s incompetency to adjudge for him, on grounds of inability, requirement, lack of awareness, etc. B. Position in the UK In the United Kingdom, Section 58B of the Courts and Legal Services Act, 1990 allows TPF agreements between legal service contributors and litigants and allows TPF in litigation, whereby the third party could get a portion in the form of a share of the “damages”. Section 58B (1) of the Act reads as follows: “A litigation funding agreement which satisfies all of the conditions applicable to it by virtue of this section shall not be unenforceable by reason only of it being a litigation funding agreement”. Further, Section 58B (2) defines litigation funding agreement as: “(a) a person agrees to fund the provision of advocacy or litigation services to another person, and (b) the litigant agrees to pay a sum to the funder in specified circumstances”. Thus, third-party funding is legally regulated. Additionally, the report of the legal department (1996) had anointed “maintenance” and “champerty” as “the procurement, by direct or indirect financial assistance, of another person to institute, or carry on or defend civil proceedings without lawful justification. Champerty is a particular form of maintenance, where the maintainer’s agreement with the litigant gives them a share in the proceeds or subject matter of the action; action referred to as a division of the spoils”. The woes of the courts date back to the medieval time frame and the main dispute of the shielding of the sanctity of the justice delivered to the public. A bastion of TPF in litigation can distort the judicial procedure; they can whip up dubious or frivolous legal assertions to conceal evidence or even witnesses, or artificially alter the amount of any damages that can be remedied. In these ways, a crusader can try to guarantee a triumph in the court of law as a way of hounding or exhorting pressure on their adversaries. The judiciary in England has shown a casual attitude toward third-party funding set up, taking exigencies of funding problems into consideration, and proclaiming that access to justice for litigants is of paramount importance. In the year 2009, Lord Justice Jackson was questioned by the Master of the Roster, “to review the rules and principles governing the costs of civil litigation and to make recommendations in order to promote access to justice at proportionate cost”. In the conclusive report presented by him, he patronaged TPF as supplementing an amplification and sometimes the only way of TPF in litigation, assisting ingress to justice: “I accept that third party funding is still nascent in England and Wales and that in the first instance what is required is a satisfactory voluntary code, to which all litigation funders subscribe. At the present time, parties who use third party funding are generally commercial or similar enterprises with access to full legal advice. In the future, however, if the use of third- party funding expands, then full statutory regulation may well be required. In 2010, the Civil Justice Council, an advisory non-departmental public authority funded by the Ministry of Justice came with a consultation paper titled, A Self-regulatory Code for Third-Party Funding”. C. Position in Singapore At present, third-party funding is prohibited in Singapore. The present prohibitions extend to funding for international arbitration proceedings. As a common law nation, Singapore’s laws on third-party funding have their existence in English law. Singapore law disallows third-party funding in two ways: “Firstly, Singapore law generally treats third-party funding agreements as contrary to public policy or illegal – and for that reason, unenforceable. This policy is informed by the common law doctrines of maintenance and champerty. In brief, maintenance is the giving of assistance or encouragement to a litigant by a person who has neither an interest in the proceedings nor any other motive recognised by law as justifying his or her interference. Champerty is a subset of maintenance – it is the maintenance of an action in exchange for a promise to give the maintainer a share in the fruits of the proceedings. Typical third-party funding agreements fall foul of both doctrines and are therefore generally unenforceable under Singapore law”; and secondly, “Singapore law regards maintenance and champerty as torts at common law. An affected party could (at least in theory) sue the party (or parties) in tort if the affected party has suffered special damage as a result of the relevant tortious arrangement”. The embargo on third-party funding under Singapore law is far fetching. The Singapore Court of Appeal has delineated that “the principles behind the doctrine of champerty apply to all types of legal disputes and claims, including arbitration proceedings”.[27] There are various statutory and common law exceptions to it: Firstly, the Singapore Companies Act allows the liquidator belonging to an insolvent entity to sell to the third party who will provide funding.[28] Secondly, a TPF agreement would not be repealed if that same agreement is ancillary to the circumstance where the property interest gets transferred. Additionally, the factum that the funder may be benefited from a third-party funding agreement does not mean that the funding set up falls foul of the principle of champerty and maintenance.[29] Further, Singapore has decided to follow the “light touch” approach to govern and regulate third-party funding agreements. For instance, the Law Ministry of Singapore has made its target as important to “precedence to party autonomy and flexibility, with disclosure as the foundational principle, taking light touch mindset into consideration for the sake of regulation which had been accepted in jurisdictions where TPF is allowed”. It is undeniable that in order to be victorious, monitoring shall be commensurate with the real stakes in existence. However, scanty monitoring of a high-stake company could result in market misconduct, immoderate monitoring of a high-stake company or an entity stultifies growth. Since funding is “non-recourse”, it is self-regulating in nature: funders would lose their cash cows if they fund frivolous and vexatious claims. To be cont. [1] Harsh Patidar is a III Year, B.A. LL.B. (Hons.) student at National Law Institute University, Bhopal, harshpatidar.ug@nliu.ac.in Monish Raghuwanshi is a II Year, B.A. LL.B. (Hons.) student at National Law Institute University, Bhopal, monishraghuwanshi.ug@nliu.ac.in [2] INTERNATIONAL COUNCIL FOR COMMERCIAL ARBITRATION, REPORT NO. 4, QUEEN MARY TASK FORCE ON THIRD-PARTY FUNDING IN INTERNATIONAL ARBITRATION, 50, (2018). [3] Winnie Lo v HKSAR, (2012) 15 HKCFAR 16. [4] JOWITT'S DICTIONARY OF ENGLISH LAW, (Daniel Greenberg, Jowitts, 5th ed. 2019). [5] Damodar Kilikar & Ors. v. Oosman Abdul Gani & Anr., 1961 KLJ 356. [6] Legislative Council Panel on Administration of Justice and Legal Services, Abolition of the common law offence of champerty, March 25, 2014, https://www.doj.gov.hk/en/legco/pdf/ajls20140325e2.pdf (Last visited on Mar. 28, 2021). [7] Criminal Law Act, 1967, § 13, No. 58, Acts of Parliament, 1967 (UK). [8] Ram Gholam Singh v. Keerut Singh, 4 Sel. Rep. 12. [9] Tara Soonduree Chowdhrain v. The Court of Wards, 13 B.L.R. 495. [10] Pechell v. Watson, 8 M.& W. 691. [11] Chedambara Chetty v. Renga Krishna Mithu Vira Puchaiya Naickar, L.R. 1 Ind. Ap. 241. [12] Id. ¶ 15. [13] Indian Contract Act, 1872, No. 9, Acts of Parliament, 1872 (India). [14] Kamarbai and Ors. v. Badrinarayan & Anr., AIR 1977 Bom 228. [15] Ram Coomar Coondoo and Anr v. Chunder Canto Mookerjee, (1876) ILR 2 CAL 233. [16] Id. ¶ 38. [17] In Re: G, A Senior Advocate of the Supreme Court, 1955 1 SCR 490. [18] Id. ¶ 11. [19] DAMODAR KILIKAR, supra note 5. [20] Bar Council of India v. AK Balaji, 2018 SCC OnLine SC 214. [21] Kshama Loya Modani and Vyapak Desai, Asia no longer third to Third Party Funding-Meets the Financing world of Arbitration, KAULA LUMPUR REGIONAL CENTRE FOR ARBITRATION (Dec. 2017), https://nishithdesai.com/fileadmin/user_upload/pdfs/NDA%20In%20The%20Media/News%20Articles/180129_A_Asia-No-Longer-Third-To-Third-Party-Funding.pdf (Last visited on Mar. 28, 2021). [22] Bevan Ashford v. Geoff Yeandle Ltd., [1998] 3 W.L.R. 172. [23] Clyne v. NSW Bar Association, [1960] 104 CLR 186. [24] Campbells Cash and Carry Pty Ltd v. Fostif Pty Ltd, [2006] 229 CLR 386. [25] Mobil Oil Australia Pty Ltd v. Trendlen Pty Ltd, [2006] HCA 42. [26] CAMPBELLS, supra note 24. [27] Otech Pakistan Pvt Ltd v. Clough Engineering Ltd and Anr., [2007] 1 SLR(R) 989. [28] Re Vanguard Energy Pte Ltd, [2015] 4 SLR 597. [29] Lim Lie Hoa and another v. Ong Rebecca Jane, [1997] 1 SLR(R) 775.

-Alpesh Yadav[1] INTRODUCTION Even as the global economy has grappled with the effects of pandemic COVID-19, the urgency of addressing climate change has remained unchanged rather has further intensified. The recent flash flood which occurred on 7th February 2021 in the State of Uttarakhand washed away two hydroelectric projects in the outer Garhwal Himalaya region, impacted several other major hydro projects located downstream, took lives of hundreds of villagers and damaged properties and infrastructure of the region. The sudden flooding is believed to be caused due to glacial lake outbursts releasing water trapped behind the ice causing flood. The Government proclaimed the calamitous event as a natural disaster. However, if we believe the reports published in international newspapers[2] of the very next day, they quoted that scientists had warned the Government long back that the Himalayas had been warming at a dangerously high rate and the region's ecosystem had become too physically exposed to the dangers of development projects. The scientific committee appointed by Supreme Court in 2014[3], had also advised against building dams in the paraglacial zone, i.e., river valleys in which the floor is higher than 7,000 feet, but such objections were disregarded. Both the hydropower projects that washed away in the flood were constructed in this zone. The Scientific Committee appointed by the Apex Court of India in 2020[4] advised against the construction of 33 feet wide 500 miles of highway in high Himalayans hills of Uttarakhand but such advice was also ignored. While climate change is on high priority on the global political and business agendas, balancing the infrastructural requirements and environmental risk could always be difficult and there could be several such claims and conflicts. Public and private parties are increasingly subjected to regulations, impacting commercial relationships, and therefore rise in potential for disputes is inevitable. It is not within the remit of the present article to put forth a detailed analysis or critique on India’s approach towards the impact of climate change. What is attempted herein is only a primer on the important legislations related to the environment and how it could be practical to adopt arbitration to resolve climate-related disputes. CHANGED CLIMATE Climate is the pattern of variation in temperature, humidity, atmospheric pressure, wind, precipitation, atmospheric particle count and other meteorological variables in a given region over long periods. The climate of a location is also affected by its latitude, terrain, and altitude as well as nearby water bodies and their currents. Earth's climate is dynamic and is always changing through a natural cycle. However, the changes that are occurring now are at an alarming speed and human activities contribute maximum to its causes. The excessive carbon dioxide released in the atmosphere acts as a blanket, trapping heat and warming the planet. Change in climate and global warming are amongst the most serious challenges that mankind is facing today. If we look at the issue from India’s perspective, we are one of the most vulnerable countries to climate change. About half of India's population is dependent upon agriculture or other climate-sensitive sectors. About 12% of India is flood-prone while 16% is drought-prone. India is the third-largest emitter of greenhouse gases in the world after China and the United States. The underlying causes of environmental degradation in India can be classified as social, economic, and institutional. The social factors include excessive population, poverty, and unchecked urbanization, the economic factors include non-existent or poorly functioning markets for environmental goods and services, unprecedented industrial growth without any measures to check the resultant environmental degradation. The institutional factors are lack of awareness and poor infrastructure making the implementation of environmental law extremely difficult and ineffective. CLIMATE CHANGE DISPUTES Climate change is not just another issue, it has several aspects and interconnections with science, technology, economy, trade, diplomacy, and politics and can be the mother of many issues. It is inherently a global concern because of the interconnectedness of our ecosystems and communities, small changes can ripple out throughout the world and eventually affects all living organisms. It is different from other problems faced by humanity, and it compels us to think differently at many levels. The concept of climate change is broad, and disputes arising in these contexts can be in myriad forms. DEVELOPMENT OF ENVIRONMENTAL LAW IN INDIA Environmental legislations existed in India right from the British Regime, however, a well-developed framework came into existence only after the United Nations Conference on the Human Environment in Stockholm in 1972. The outcome of this conference was the constitution of the National Council for Environmental Policy and Planning within the Department of Science and Technology in 1972. This Council later in 1985 evolved into a full-fledged Ministry of Environment and Forests (MoEF), an apex administrative body in the country for regulating and ensuring environmental protection. Constitutional sanction was given to environmental concerns by incorporating them into the Directive Principles of State Policy and Fundamental Rights and Duties by way of the 42nd Amendment to the Constitution after the Stockholm Conference, 1976. The Directive Principles of State Policy and the Fundamental Duties chapters explicitly enunciate the national commitment to protect and improve the environment. Substantive laws for the prevention and/or regulation of any activity that may cause climate change that existed/existing in India: During the British Regime ● Shore Nuisance (Bombay and Kolaba) Act, 1853 ● The Indian Penal Code, 1860 ● The Indian Easements Act, 1882 ● The Fisheries Act, 1897 ● The Factories Act, 1897 ● The Bengal Smoke Nuisance Act, 1905 ● The Bombay Smoke Nuisance Act, 1912 ● The Elephant's Preservation Act, 1879 ● Wild Birds and Animals Protection Act, 1912. Post-Independence of India National Council for Environmental Policy and Planning was set up in 1972 and later evolved into the Ministry of Environment and Forests (MoEF) in 1985. Policy Statement for Abatement of Pollution and the National Conservation Strategy and Policy Statement on Environment and Development brought out by the MoEF in 1992. Environmental Action Programme (EAP) formulated in 1993 with the objective of improving environmental services and integrating environmental considerations into development programmes. ● National Environment Policy, 2006. ● Water (Prevention and Control of Pollution) Act, 1974. ● Water (Prevention and Control of Pollution) Cess Act, 1977. ● Air (Prevention and Control of Pollution) Act, 1981. ● Atomic Energy Act of 1982. ● Motor Vehicles Act,1988. ● The Wildlife (Protection) Act, 1972. ● The Forest (Conservation) Act, 1980. ● Environment (Protection) Act, 1986 (EPA). ● The National Environment Appellate Authority Act, 1997. ● Public Liability Insurance Act, 1991 (PLIA). ● National Environment Tribunal Act, 1995. ● Environment Impact Assessment (EIA) Notifications. The National Action Plan on Climate Change (NAPCC), Prime Minister's Council for Climate Change, laid the framework to address India's development concerns and defined its approach for mitigation and adaptation of climate challenges. The Eight Missions developed for satisfying the principles of the National Action Plan on Climate Change are: ● National Solar Mission (started in 2010). ● National Mission for Enhanced Energy Efficiency (approved in 2009). ● National Mission on Sustainable Habitat (approved in 2011). ● National Water Mission. ● National Mission for Sustaining the Himalayan Ecosystem (approved in 2014). ● National Mission for a Green India (approved in 2014). ● National Mission for Sustainable Agriculture (approved in 2010) and ● National Mission on Strategic Knowledge for Climate Change. Besides the above legislations, rules and policies, there are several other plans and incentives by the governments for energy conservation and to mitigate the impact of climate change. Each State also has its own Action Plans on climate change. The Indian Constitution is one of the few in the world that contains specific provisions on the environment. The three constitutional provisions which have a direct bearing on environmental matters are: ● First and foremost, Article 21 states: "No person shall be deprived of his life or personal liberty except according to procedure established by law." The Apex Court has recognized that the several liberties that are implied by Article 21 include the right to a healthy environment.[5] ● Second, Article 48A requires that "the State shall endeavor to protect and improve the environment and to safeguard the forests and wildlife of the country." ● Third, Article 51A establishes that "it shall be the duty of every citizen of India to protect and improve the natural environment including forests, lakes, rivers, and wildlife and to have compassion for living creatures." The Indian Judiciary has been playing a vital role in implementing environmental principles, ensuring social justice, and protecting human rights. It can be rather said that, while adjudicating the environmental matters, the Supreme Court has actually brought the pattern of "judge-driven implementation" of environmental administration in India. The Courts have played a crucial role in implementing the environment law and doctrine of Polluter Pays, Precautionary Principle and the most significant Public Trust Doctrine[6]. The National Green Tribunal set up under the National Green Tribunal Act, 2010 is a specialized court to adjudicate and ensure disposal of environmental disputes. The NGT has jurisdiction to deal with violations of environmental law, to provide compensation to victims of pollution, relief for environmental damage and restitution of the environment. The Tribunal is also empowered with appellate jurisdiction against orders passed by regulatory agencies. SUITABILITY OF ARBITRATION FOR CLIMATE CHANGE DISPUTES India, today has a plethora of constitutional and legislative provisions on environmental protection. The mainstream judiciary and NGT have played a pivotal role by developing and strengthening the environmental jurisprudence in India. Despite such a robust system in place, there are several glaring concerns that underpin the overall legal mechanism. Improper implementation of policies, callousness in enforcing judicial rulings, lack of expertise and technical know-how amidst the legal fraternity, loopholes in the legislative framework are still areas of concern. Moreover, the dynamic nature of environmental problems requires quick decision-making, whereas our Constitutional Courts are so overburdened with other pressing cases that it is difficult for them to give sufficient attention to environmental matters. The NGT is neither administrative tribunals nor constitutional tribunals and does not have the power for judicial review. The jurisdiction of the NGT is limited to only 7 statutes which act as a barrier for taking up environmental matters which do not fall within these statutes. Bench(s) at the NGT are not updated with legal developments in environmental law, as can be evident from the fact that several judgments delivered still talk about strict liability when the rule of absolute liability exists for quite some time. The Bench also lacks diversity and does not include stakeholders from various sectors/places. The existing strength of the tribunal is just six apart from the chairman, whereas the NCT Act mandates the appointment of 20 members (10 judicial and 10 experts) for the 10 benches in five zones with two courts in each zone. The fact is the premier institutions which is required to deal with the environmental issues that cannot be countenance never had full strength. Even though Central Pollution Control Board (“CPCB”) and State Pollution Control Board (“SPCB”) have quasi-judicial powers, but the issue is that not everyone empowered to file appeals there. Also, the members appointed to the CPCB and SPCBs do not have sufficient knowledge about the environment and most appointments are made based on political interest by MLAs, MPs, and bureaucrats[7]. In an age when India is witnessing a staggering rise in industrialization and development, the country is correspondingly facing environmental issues at a rapid pace. The present legislative structure to resolve environmental disputes is still not sufficiently equipped to meet the needs of the hour. It is therefore necessary to refer the issues to an autonomous multi-specialty body depending on the nature and complexity of the issues to address concern effectively. Also, due to the strict liability provisions in environmental statutes, parties in commercial arrangements typically allocate environmental risk in their contract. There may be an indemnity or exclusions to an indemnity clause. There may be a release or allocation of liability provision. There may be an “as is” clause. These are amongst the clauses that may generate disputes. Provisions for arbitration in contracts to include the resolution of such disputes could be a good way for effective resolution. Although some types of environment and climate-related disputes may not lend themselves to arbitration. Nonetheless, disputes with an environmental component that may arise in the context of contractual and commercial disputes can be resolved through commercial arbitration in India. Arbitration can have a unique role to play in the resolution of disputes that arise from the transition to a greener economy. The specific features of arbitration which make it ideally suited to resolve environment-related disputes include: a) the ability of the parties to choose arbitrators and experts with appropriate scientific and environment-related expertise, b) the ability to expedite proceedings and apply interim and conservatory measures particularly in cases involving potentially irreversible damage to the environment, c) the ability to apply specific governing or applicable law, including relevant environment-related statues, d) preservation of confidentiality and at the same time taking steps toward increased transparency in accordance with parties’ requirement and taking into consideration public interest involved, e) arbitral rules are flexible enough that they can be applied to any case. In a testament to the flexibility of arbitration, the continuity of arbitration proceedings in the global pandemic adapting virtual mode has demonstrated arbitration can be an optimal process to resolve disputes given its key advantages as an effective, customizable, and efficient mechanism. The arbitration community has shown its ability to pivot quickly and adapt seamlessly in changing global circumstances to better suit the reality of disputes in the uncertain landscape. The ability to customize the process, proceed efficiently and maintain confidentiality, hallmark the advantage and suitability of arbitration for climate change-related disputes. Customization Arbitrations allow parties to calibrate the right balance of procedural protections to efficiency. It gives the parties ability to select institutional rules or ad hoc rules that are conducive for resolving their dispute efficiently. They can select arbitrators best suited to resolve their dispute. An arbitrator with relevant experience and familiarity in an industry could expedite the resolution of a dispute significantly. This is especially true for environment-related disputes involving a high degree of technical knowledge. Efficiency The arbitration process is generally more efficient than pursuing the dispute in courts, especially considering the backlog of cases the courts have. It also gives parties more flexible and immediate options which may be crucial for resolving climate-related disputes. Further arbitrators can encourage settlement where appropriate and if parties agree to explore such possibilities. The tribunal itself can even conduct mediation, conciliation, or other procedures as appropriate to settle the dispute in such cases. Confidentiality Unlike courts, arbitrations are generally private allowing for confidentiality (including sensitive information) which may be important in the context of climate-related disputes. Furthermore, climate change and environment-related disputes invariably have an international dimension and therefore the inherent flexibility, an option of choosing a neutral forum, neutral venue and internationalism of the arbitral process make commercial arbitration an ideal dispute resolution method for climate-related disputes. The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 which is overwhelmingly signed and ratified by the majority of countries allows for seamless award enforcement possibilities worldwide. The United Nations Framework Convention on Climate Change, Article 14 (2) expressly anticipates arbitration for resolution of interstate disputes arising out of the breach of its provisions “in accordance with procedures to be adopted by the Conference of the Parties as soon as practicable, in an annex on arbitration”. This was reaffirmed in Article 24 of the Paris Agreement on 12th December 2015[8]. Even in the side events at 21st Conference of Parties[9] (COP21) to UNFCCC held in Paris, wherein the historic Paris Agreement was signed, COP22 held in Morocco, 2016 and COP23 held in Germany, 2017, the importance of arbitration for redressal of climate-related disputes were discussed and commended. The International Bar Association Report published in 2014[10] also recognized arbitration may offer a number of advantages to the parties looking to resolve the disputes related to climate change. The IBA Report recommends institutions to develop rules and expertise specific to the resolution of environmental disputes to adapt arbitration for climate change disputes. Mr. David W. Rivkin, President of the International Bar Association (IBA), in his keynote address at the United Nations Conference on Climate Change (COP 21) held in Paris, December 2015 emphasized the importance of accessible and enforceable dispute resolution mechanism frameworks. Mr. Rivkin, while emphasizing on benefits of arbitration, stated that international arbitration has been used at least since ancient Greek times to resolve important disputes and to avert major political and diplomatic crises. In so doing, it has helped create the rule of law. International arbitration should similarly play a critical role in developing the legal framework of the post COP21 world. Mr. Rivkin further said international arbitration is flexible, not only in its procedural rules and tribunal appointment processes but in the different types of parties that may choose to use it and the types of disputes it can be applied to. Arbitration allows parties to provide for the independent, impartial resolution of disputes. By holding parties to their agreements and creating predictability and certainty, arbitral tribunals have promoted international rule of law and international commerce. Mr. Rivkin expresses his thought that affected populations should be able to participate in the arbitral process, provided the terms of the arbitration agreement or the rules used clearly encompass their rights and protections. Finally, Mr. Rivkin said that the commercial stakeholders in climate change-related issues, such as international monetary lenders, insurers, construction companies, states, and extraction industries, all stand to benefit from the certainty of contract, including in respect of internationally or state or industry imposed climate change or sustainable development objectives and targets. Mr. Rivkin concluded that there is huge potential to consider how the existing use of international arbitration and ADR mechanisms in resolving climate change-related disputes may be advanced and expanded, both in the context of contractual obligations and treaty mechanisms. Internationally, arbitration institutions such as ICC, PCA, SCC, HKIAC, LCIA, AAA, etc. are already administering a copious number of cases related to environmental disputes under private commercial and public-private partnership contracts and parties are benefitted in redressing the disputes in a reasonable time. Resolution of environment-related disputes through arbitration is not something new to India, the prominent amongst such arbitration was for the resolution of the dispute which arose between India and Pakistan over the construction of 330 MW Kishenganga Hydroelectric Project in the then State of J&K. Pakistan took India to arbitration at Permanent Court of Arbitration (“PCA”), a Hague based institution, in 2010. The provision for arbitration paved its path from the Indus Waters Treaty Agreement, a World Bank brokered agreement designating commercial use of the Indus River system. The PCA partially ruled in favour of India by allowing India its right under the Treaty to divert waters from the Kishanganga for power generation in J&K. The PCA, however, maintain that India shall release a minimum flow of nine cubic metres per second into the Kishanganga river (known as Neelam in Pakistan) at all times to maintain environmental flows. The American Arbitration Association (“AAA”) has expressly listed environmental disputes, which include pollution control, environmental clean-up, chemical regulation, landfills, etc., as one of its areas of expertise. The International Chambers of Commerce (“ICC”) formed a task force on “Arbitration of Climate Change Related Disputes” to explore how ICC arbitration can be used to tackle climate change-related disputes. The ICC in its Report published in November 2019[11] concluded that it is uniquely positioned to arbitrate climate-related disputes and indicated a willingness to accommodate and administer such disputes. Interestingly, expenses guidelines of the Stockholm Chamber of Commerce (“SCC”), London Court of International Arbitration (“LCIA”), Korean Commercial Arbitration Board (“KCAB”) and the China International Economic and Trade Arbitration Commission, provide for the reimbursement of costs or expenses reasonably incurred by arbitrators, which include the cost of carbon offsetting their flights to and from case-related proceedings. CONCLUSION The need for a green economical architecture has widened the scope for diverse and complex legal relationships amongst private and public stakeholders and also the potential for the use of flexibly adapted dispute resolution mechanisms such as arbitration. The climate change-related action and regulations have increased dramatically after the Paris Agreement came into force and as a consequence of legislative developments thereafter, environment-related disputes are on increase and so will be the commercial arbitrations on climate disputes. If our country’s dream to become Global Arbitration Hub is to be achieved, it would be crucial for our system to widen the scope of arbitration and adopt and adapt arbitration for climate change-related disputes, at the international as well as domestic level. [1]* Mr. Alpesh holds Engineers Degree from Mumbai University and PGs in Construction Management from NICMAR and Institute of Engineers. He is pursuing Master of Business Law and PGD in Environmental Law from NLSIU. He has over 16 years of experience in Contracts Management and Arbitration. He can be contacted at alpesh.yadav@hotmail.com. [2] Article published in New York Times on 8th February 2021. [3] As advised by Dr Ravi Chopra, Director People’s Science Institute, Uttarakhand. [4] Committee led by Dr Ravi Chopra, Director People’s Science Institute, Uttarakhand. [5] Subhash Kumar v. State of Bihar, A.I.R 1991 SC 420, and Virendra Gaur v. State of Haryana, (1995) 2 SCC 577. [6] Adopted by the Hon'ble Supreme Court of India in M.C. Mehta vs Kamal Nath & Ors. [1997(1) SCC388]. [7] As stated in Bhattacharya Committee Report, 1984, the Menon Committee Report and Supreme Court Judgement in Techi Tagi Tara v. Rejendra Singh Bhandari & Ors., 2017. [8] Art. 14(1) of the UNFCCC / Art. 24 of the Paris Agreement (by incorporation: “The provisions of Article 14 of the Convention on settlement of disputes shall apply mutatis mutandis to this Agreement”). [9] Formal Meeting UNFCCC Parties (Conference of Parties) (COP) held every year to assess progress in dealing with climate change. [10] IBA Climate Change Justice and Human Right Task Force published the report Achieving Justice and Human Rights in an Era of Climate Disruption (IBA Report). [11] This Report was prepared by the Task Force chaired by Mr. Windy Miles and Mr. Patrick Thieffry. The Report was unanimously approved by the ICC’s Commission on Arbitration and ADR in a meeting held on 2nd April 2019 in Paris. The Report is available at www.iccwbo.org and http://library.iccwbo.org/.

Shivangi Tiwari[1] and Nishtha Pandey[2] Case study Malibu Lagoon Task Force [3] In March 2000, business interests, resource agencies, conservation groups, and property owners initiated a programme to look after the health of the environmental lagoon. This initiative was taken up to address the improvement in native plants and animal species, protection of human health, and restoration of the function of the wetlands. The mediator worked with the participants and created a holistic membership list that had all the potential stakeholders. The members were grouped into 4 subcommittees and were assigned to review two of the eight chapters of the report by UNEP. They were asked to develop criteria for selecting a strategy, to rank each strategy, and further to reduce it to three from fifteen. The first attempt by the group led to commotion amongst them, the mediator then suggested that rather than fighting over the list, the group should agree upon a set of recommendations that included short-term and long-term high priority recommendations for wetland restoration projects and short-term and long-term priority projects for wetland treatment projects. The final historic recommendations report that was forwarded to the state and federal agencies represented a compromise on the issue that was a hindrance in the peaceful resolution of the problem, which is the timing and scope of work. The ground of consensus was the group agreeing to the fact that starting small and learning from the experiences in each step was always better than fighting over who would pay for the ultimate solution. Application of ADR in climate related disputes Environmental problems are the most widespread and equally challenging for the present as well as future generations. These problems revolve around important aspects of every sphere, ranging from science, sociology, economics, history and culture, property rights, and legal or regulatory constraints, and its effect could be seen on private individuals, the general public, multiple regulatory jurisdictions, and special interests. These problems are even more dangerous as they require an assessment based on unknown consequences. Moreover, when these disputes have impact on the common public they may become emotionally charged and push stakeholders toward rigid postures making it more difficult to negotiate. However, it is important to note that regulatory regimes and legal actions are only marginally effective as they cannot holistically solve the problem at hand. In this situation, ADR methods could exhaustively examine the challenge posed by the ubiquitous environmental problem. There is an increasing need to handle the environmental problems through the joint efforts of all the stakeholders so that the difficulty of ignorance and omission can be eliminated. Otherwise, a uniform approach would be unproductive with regard to the local needs. Hence the need of the hour is to devise a gradual mechanism that is applicable to all mediation processes and enables the mediators to effectively carry out the process. The process is the make-or-break segment of the entire resolution mechanism. If the process that is undertaken is efficient enough, it could result in achievable goals and better environmental outcomes and durable agreements. Examples of ADR successes ADR is increasingly applied to resolve environmental disputes. These are some examples to illustrate the diversity of processes, differences in the structure, and variety of products that are the outcome of ADR application to environmental disputes in various fields like of transportation, hydroelectric dams, and toxic waste sites. Washington State was facing several challenges associated with the permitting, design, and construction of major transportation projects. These included conflicting rules, delays in the permit processes, questionable environmental outcomes, and frustration by tribes that their cultural artefacts and environmental concerns were not being considered. Consequently, TPEAC process to resolve a number of disputes regarding the permitting of transportation projects in Washington was established by the legislature. The process aimed to streamline permits and achieve better environmental results on transportation projects. Consultants were hired to help develop the structure and processes. The committee initiated six technical subcommittees, with broad stakeholder representation, to work on different aspects of the problem.[4] The subcommittees were co-chaired by at least two members of the committee, which had different perspectives on the problems being addressed. Outside consultants acted as facilitators to get the process up. Subcommittees were modified over to meet new challenges. All resolutions by the subcommittee were unanimously adopted. The committee and the participating agencies adopted numerous products as standard practices. All participants acknowledged the establishment of trust relationships among the participants. After four and a half years a decision was made to ask the members of TPEAC to assume the new products and processes as part of their standard operating procedures and not to seek extra funding in the next budget cycle. The Washington State Office of Regulatory Assistance has adopted these products and processes as a model for all of state government. In California, the Dispute Resolution Service of the Federal Energy Regulatory Commission (FERC) and the FERC Office of Litigation initiated a mediated process to re-license several hydroelectric facilities. The issue was the balancing of ecological populations, hydro-power production, and municipal and agricultural uses for the water resources. The other issues included water rights for water districts, 100-year-old water rights applicants, a recent energy crisis, lack of reliable historical data, and a drought. Numerous administrative and legal challenges to the process were the product of past re-licensing processes. The settlement was reached using ADR after addressing the concerns. This permitted the licensee to file their pre convened terms and conditions of the project without any dissent and disapproval. In the GE-Pittsfield case in Western Massachusetts, PCB contamination that caused high levels of public concern was involved. ADR was used to address four major areas. Which are as follows: The liability responsibility of GE for clean-up; The community’s input on impacts of the clean-up process; The establishment of a panel of neutral experts to make recommendations for remediation in the near future; Finally, the agreement to use ADR in order to resolve any dispute that may arise during the implementation of the remediation plan. (EPA website, unknown) Stakeholders were neighbors, business entities, environmental groups, and regulatory agencies. It is important to note that the settlement agreement had strategies for adaptive management. This process necessitated extensive public outreach and community meetings to address all of the interests in the area. (EPA website, unknown) Concerns relating to ADR The use of ADR methods to resolve complex environmental issues includes a number of difficulties that need to be addressed. The question which is frequently asked is who is included and who is excluded in the process. The relevance of this question is substantially increased due to the notion that dispute resolution is an alternative to the traditional environmental decision-making processes which require significant public participation. As a general rule of thumb, stakeholders should be defined as broadly as possible. If the agreements and solutions devised are going to receive broad political and public acceptance, it becomes crucial. A group of stakeholders which is too narrow may simply lead to future disputes that will require all parties to return to the negotiating table or face litigation.[5] Processes involving public entities are to be open for the various interest groups which form a major part of the process; these groups must be given opportunities so that their views are considered even if they do not wish to be a regular participant. Moreover, the leeway to add more stakeholders should also be opened at all times during the process so that the interest which was not considered could be accommodated even at the later stages. Cost is one the major consideration, as although in limited issues, mediation is less expensive than litigation, however, it is not the case with environmental disputes as they involve multiple issues from a wide range of problems, so monetary consideration plays a huge role. Moreover, a lot of time is consumed while researching a particular topic. Hence many times the final agreement is reached on the consensus arrived at by the scientists and the concerned parties. The inclusion of the entire stakeholder is one of the important aspects of ADR (thomas-larner 2004). BATANA needs to be discussed with all the concerned parties, if even one of the parties is hesitant or does not participate with good faith in the process, it is better to postpone or terminate the process. The effectiveness and durability of any agreements are determined by the critical stakeholder involvement and therefore it should be a matter of early discussion. One of the strategies that could be used is to meet the reluctant parties and explain the ADR process to them, as in many cases their hesitation is the result of their ignorance about the ADR methods. Another strategy that could be applied, is to meet any representative of the reluctant parties, this also opens the avenue of another set of stakeholders and makes the resolution process even more inclusive. At last, it is up to the “willing party” to decide as to whether progress could be made with the available participants. Conclusion A host of events stretching from storms of historical segments to mundane events that influence a meagre number of people may give rise to Weather and climate disputes. Ensuing legal disputes vary all over the map. Looking upon some of the various reasons why mediation and arbitration are effective, it can be inferred that many such disputes are uniquely befitted to mediation and arbitration. The Paris Climate Agreement proved to be a milestone for Climate change, as it was for the first time the international community came forth to combat climate change and disputes ensuing thereof. Arbitration could be a boon to resolve disputes revolving around climate change. However, one of the major drawbacks of the Paris Climate Agreement is its inability to cater to the needs of the countries which are not a party to it. To address this shortcoming, many nations have put forward a proposal relating to the same before the International Environment Court, which would hopefully prove itself to be beneficial in such matters. The resolution of disputes relating to climate change by using ADR is growing rapidly, the reason for the same could be attributed to the fact that it helps to deal with the critical legal claims having a wide impact, which is not the case in conventional litigation. This is because climate change disputes could not be framed under a given set of regulations as they are very wide and complex. One of the benefits of ADR is that the parties could be asked to chip in their views and opinions and a middle path could be assessed for its acceptability and amenability to a large group of population. Moreover, ADR methods are also making their way to the legislation in several countries. However, it must be noted that ADR is not effective in every legal case, especially where the problem is very complex. Hence, mandates from the legal bodies and courts to resolve cases using ADR are still necessary. Application of administrative ADR helps in finding out the potential environmental threats and conflicts at an initial stage, when they are relatively easier to resolve, which indeed has a positive impact on the dispute resolution methods. It is overwhelming to note that the principles applied in Environmental ADR are in sync with the international environmental principles. [1] The author is a third-year law student at Hidayatullah National Law University and can be reached at shivangi.1995@hnlu.ac.in [2] The author is a third-year law student at Dr.Ram Manohar Lohiya National Law University and can be reached at nishthapandey3103@gmail.com [3] Alana Knaster, ‘Resolving Conflicts Over Climate Change Solutions: Making the Case for Mediation’ (2010) accessed 29 March 2021. [4] Dan Swecker, 'Applying Alternative Dispute Resolution to Environmental Problems' (Mediate India - Everything Mediation, 5 July 2006) accessed 22 April 2021. [5] ibid

Shivangi Tiwari[1] and Nishtha Pandey[2] Oui, ce qui est en cause avec cette conférence sur le climat, c’est la paix [3] Abstract Climate change and its effects know no boundaries. Across the globe, rapid changes in weather and climate patterns are taking place. Due to disarrangements of this sort, the competition for scarce resources substantially increases, security risks for many countries escalate to a great extent as the pace at which these changes are taking place surpasses our ability to adapt.[4] To solve the disputes revolving around climate change, alternative dispute resolution methods, specifically arbitration and mediation, are of great significance. This paper seeks to emphasize that arbitration and mediation have an edge over the conventional legal processes in the arena of climate change dispute resolution. The paper initially navigates through the general introduction of arbitration and mediation followed by that of climate change disputes. Later the various types of climate change, their cause, and the rate of their increase are discussed concisely. Further, the paper exhaustively discusses why ADR should be preferred over standard legal methods of dispute resolution. The advantages of the ADR processes are enlisted and their feasibility is catalogued. In the end, the paper demonstrates that ADR has an upper hand over conventional legal methods of dispute resolution. After analysation, it was majorly found that, even though the instances of adopting ADR for dispute resolution of climate change have increased, it is far less than enough despite innumerable advantages over standard legal practices. Introduction Alternative dispute resolution (ADR) is the method of resolving disputes without going for formal litigation. The term encompasses within its purview any means of dispute resolution which takes place outside the court. This method originated in the United States in the 1970s in the wake of growing dissatisfaction amongst the masses towards litigation. ADR involves the disputants and a non-partisan third party who helps the parties to come to an amicable solution by initiating communication, discussion of the differences and thereby finding out the means to resolve the dispute. In the modern days, the rapid increase in disputes relating to climate change has time and again proved that the most suitable method for the resolution of these disputes is through mediation or arbitration. Many reasons are backing the same as discussed below. Firstly, the urgency to resolve the disputes in a timely manner necessitates the use of arbitration and mediation. Mediations and arbitrations, if desired can be concluded in a very short time. The processes can typically get over many months sooner than a dispute can be resolved in the courts. Perhaps the most important factor backing a quick resolution of emergency claims is that often quick payment of certain claims namely claims for personal injury, physical damage to homes and businesses, and lost business income may turn down the loss of claimants by ameliorating any further losses.[5] Secondly and most importantly, a properly delineated dispute resolution approach to emergency claims ultimately results in enhancement party satisfaction both procedurally and substantively, because of its nature to benefit both the claimant as well as the payer. Thirdly, the considerations relating to continuity of business may also drive the businesses involved in weather and climate disputes to strive to resolve those disputes more rapidly than any other comparable legal problems. Fourthly, the uncertainty about the outcome of a dispute via litigation is another factor typically promoting the settlement in almost any kind of legal dispute. Lastly, the processes involved in ADR allow the parties to select dispute resolution neutrals, which are construed as the engagement of dispute resolution professionals who are equipped with relevant expertise far more in extent than in a typical court system. Climate change disputes involve complex environmental, scientific, commercial, and insurance issues apart from legal issues. Thus, the requirement of a “subject-matter expert,” or at least a neutral who is aware of or is capable of learning relevant technical information in a lesser time is of great importance. Modes of alternative dispute resolution There are different modes of alternative dispute resolution like negotiation, conciliation, mediation, and arbitration. The two most common amongst them are arbitration and mediation, which are discussed below. Arbitration The process of arbitration resembles a simplified version of the trial which requires limited discovery and simplified rules of evidence. The process cannot be set in motion without the existence of a valid arbitration agreement or any other mode of agreement embedded with an arbitration clause before the emergence of the dispute. The disputant parties refer their dispute to one or more persons known as the “arbitrator”. The parties must abide by the decision of the arbitrator. The decision is called the “Arbitral Award”. The fair settlement of the dispute is the main objective of Arbitration. The arbitrators do not need to be lawyers, the disputants are free to select arbitrators from any other field which in their opinion is more suitable for the resolution of the dispute. For example, parties that are indulged in a construction dispute can choose an arbitrator with an engineering background if they wish. To compose a panel, the parties can zero in on a single arbitrator. If no consensus as to the choice of arbitrator is reached, each side selects one arbitrator and the two arbitrators selected thereby elects the third arbitrator. Usually, the arbitration hearings last between a few days to a week, and the panel meets only for a few hours each day. Mediation Mediation is another alternative to litigation and is the most widely used method of Alternative Dispute Resolution. In this process, a third neutral party works intending to assist two or more disputants in reaching an agreement. It is an uncomplicated party-centered negotiation process where a third party acts as a mediator for the amicable settlement of the disputes by making the use of appropriate communication and negotiation skills. The parties are the ones to control the process. The mediator does not impose his views and does not decide what a fair settlement should be. The process of mediation is non-binding in nature. It is used for negotiating a wide range of case types. The process is private and strictly confidential, which is one of the biggest advantages of mediation. It is of the utmost importance that the mediator is impartial and utilizes his techniques to draw out dialogue between the parties most openly and constructively possible. Rise in climate change dispute Climate change has taken effect in the world over the last century, as its effects are no respecters of national borders. Alterations to weather patterns throughout the globe are unprecedented. These sorts of disruptions pose serious threats to many countries as competition for scarce resources grows and the pace of change exceeds our ability to adapt. These changes are, however, accelerated by some of the disastrous events that have intimidated the existence of mankind, like for instance, early-season drought-driven wildfires in Colorado, Summer Hurricane Debby in Florida and Georgia. In many recent cases, concerns about the weather and climate change have been an important issue. Hurricane Katrina, in 2005, gave rise to an important decision by the Fifth Circuit Court limiting immunity for the Army Corps of Engineers[6]. These events point towards the fact that weather and climate-related events are thick and fast and ensue litigation, in this already spanning arena of climate change-related disputes. Link between climate change and dispute The direct link between climate change and disputes lacks scientific evidence and is frequently inconclusive. However, climate change could be at best regarded as a dispute multiplier, as it extends the dispute or the effect thereof. Some of the prime examples for the same could be:-[7] Land and water - Climate change can intensify the land and water dispute as the land may become less fertile or flooded. Food security - Reduced rainfall and rising sea levels may lead to a decline in agricultural production and loss of arable land. This may result in civil unrest as the competition for consumption may take the centre stage. Migration and displacement - Climate change leads to scarcity and struggle for water and arable land which may, in turn, result in migration and give rise to a wide spectrum of problems. One of the gravest would be the animosity between the host and the migrant as access to new resources takes place. Increasing inequality and injustice - Climate change broadens the gap between the haves and have nots, and this is the major cause of disputes. The reason for the same could be attributed to the fact that during these changes there is a part of the population which is the hardest hit. This instills and intensifies the grievances and conflict between the resource users and outside actors such as governments. Classification of climate change disputes Climate change disputes usually arise from the problems that would occur because of climate change or the policies adopted by international organisations. Changing climate would demand many transitions that would have to be made in terms of land, urban dwellings, infrastructure, industrial setup and their functioning etc, and for these transitions, one has to enter into new contracts and have to resort to other legal mechanisms that are potential legal conflicts. Climate change could be broadly classified into three groups:[8] (i) Contracts relating to the implementation of energy or other systems transition or adaptation in accordance with the Paris Agreement commitments. These types of contracts may be entered by industry body, state or its entity, investor etc to synchronise with the Paris Agreement or other international documents which obligates one to cater to climate change. These are the transitions that usually take place in the infrastructure, land, energy etc and would require the parties to effectively allocate risks and enforce appropriate dispute resolution mechanisms. (ii) Contracts without any specific climate related purpose but where a dispute in question, could give rise to a climate or related environmental issue. Some contracts do not explicitly involve any terms regarding the climate or climate change, neither do they handle the subject matter that includes climate change or any related terms, however, these contracts do get affected due to the party's response to national laws, commitments towards Paris Agreement, national or international courts’ decisions related to the environment or climate change etc. (iii) Agreements entered into in order to resolve existing climate change or related environmental disputes, potentially involving impacted groups or populations. These contracts are entered into after a dispute has arisen. In such disputes, it gets very difficult for the parties to form a consensus on various aspects including dispute resolution. These types of disputes are very rare, but in those limited cases where the parties agree to be bound, they enter into a submission contract. A Prominent example of a submission contract is when a population is affected by investments made in the protected forestry impacting their livelihoods and access to natural resources.. Similarly, a population may be impacted by the establishment of a wind farm or solar power panel installation, affecting arable land or fisheries. Globally, climate change litigation is growing with no bounds. Claimants are now better funded, resourced and organized. They look into the trends of these Climate Change disputes globally and try to replicate on the national level, some even take cues from the international data, and set new targets. According to one count, the number of climate-related cases now stands in excess of 1,300, with cases having been brought in from at least 28 countries. The United States, Canada, Australia, New Zealand, the United Kingdom and the EU are particular hot spots. Leaving behind conventional issues, there is an influx of innovative cases with different sets subject matter at hand. Moreover, the courts are also stepping in to create laws where the legislation is either absent or inadequate. Arbitration in climate change disputes How can parties access arbitration in climate change-related disputes? Just like many other disputes, the existence of an arbitration agreement between the parties is a prerequisite in cases related to climate change disputes. As arbitration is a popular and well-acclaimed method of dispute resolution in sectors that are most likely to be affected by the implementation of climate change policies (such as energy, construction, industrial systems and infrastructure), these sectors usually make use of arbitration clauses. In disputes where there is no pre-existing relationship between the parties, such as disputes arising in the industrial sectors, an agreement post-emergence of the dispute would be needed. Arbitration is considered to become a more common method of dispute resolution, more so because the parties usually try to avoid the costly parallel proceedings that may lead to conflicting decisions. [9] Current and potential use of arbitration in climate change related disputes The Commission on Arbitration and ADR of the International Chamber of Commerce (the “ICC”) published a report in November 2019. The report examines the role of arbitration and ADR in the resolution of international disputes related to climate change. According to the report, around 70% of all new ICC arbitration cases in 2018 arose out of the sectors which are expected to be impacted the most by climate change, with the construction, engineering, and energy sectors alone accounting for over 40%. The Report also highlights that investments related to climate change are increasing rapidly and that systems transition of the scale proposed by the Intergovernmental Panel on Climate Change (IPCC) will recalibrate regulatory risk and investment strategy in sectors where arbitration and ADR are present and are of relevance. Expertise of arbitrators and experts The ICC Report admits the relevance of, access to appropriate scientific expertise disputes relating to climate change. It also acknowledges the potentiality of the parties under the ICC Rules to have a conclusive influence on the choice of arbitrators, the powers of the parties relating to the same includes: Specification of the competence and skills which their arbitrators should have in their arbitration agreements; Calling for the ICC Court to consult them before making an appointment of a sole arbitrator or presiding arbitrator; and even The power to challenge the appointment of arbitrators can be on grounds of lack of impartiality or independence or otherwise. The ICC Rules also allow for the possibility of both party-appointed experts and/or tribunal-appointed experts in proceedings. This opens the door for the tribunal to have access to any climate change-related expertise which it may need to decide the issues in dispute. The ICC can also provide assistance in the appointment of tribunal-appointed experts by way of providing expert recommendations along with that it may also assist with the administration of expert proceedings.[10] Contrary to the institutions such as the Permanent Court of Arbitration (“PCA“), no formal list of specialised environmental arbitrators or technical and scientific environmental experts is maintained by the ICC. This is highlighted as a potential working point by the ICC, as it issues a recommendation to the ICC to reach out to climate change scientists and other technical and modelling experts. Advantages of arbitration in climate change related disputes The Report notes that, apart from the advantage of being a neutral forum, the arbitration benefits from the New York Convention, which allows proper enforcement of arbitral awards and cross-border recognition. The non-alignment of international arbitration enhances its suitability, provided the likely presence of States and state entities as parties to the dispute. The Report underlines the various specific procedural features of arbitration which can be adapted to suit climate change-related disputes. The six procedural features which are identified in the Report are as follows: Access to appropriate scientific and other expertise Guaranteeing the availability of appropriate expertise is conceivably the most important feature of arbitrating climate change-related disputes. The appointment of arbitrators with relevant expertise can fulfil this prerequisite. The guidance relating to the drafting of the relevant legal, scientific and technical expertise of the arbitrators and experts is provided in the report. Recourse to measures and procedures for the early or urgent resolution of disputes Avoidance of any delays in the disputes relating to climate change, reasonableness, and avoiding any delay are of great significance. The expedited procedures mentioned in the ICC report, use of emergency proceedings, and other interim measures of relief are some of the other methods which are mentioned under the report. The appropriate and timely applications of the other management techniques are also very essential.[11] Opportunity for the application of climate change commitments and/or law The growth in the awareness and the adoption of commitment and policies relating to climate change by industries and regulatory authorities appear to become part of the body of ‘applicable law’ upon which the tribunals could count upon to resolve a dispute. Increased transparency The frequent involvement of the States and the State authorities along with the vested interest of the people is viewed as a potential cause for the need to improve the transparency in climate change disputes. This procedural feasibility is provided by Arbitration. Possibility for the involvement of third parties It is a frequently raised question that whether persons other than the ones who are the disputants could be allowed to take part in these proceedings, such as those citizens who are affected, non-governmental and intergovernmental organizations should be allowed to participate in the arbitration. Unequivocal and clear concurrence of the relevant parties is naturally paramount in determining such a question. In this respect, the Report addresses the joinder of additional parties and consolidation of compatible proceedings. Mediation in climate change disputes Mediation provides a chance for thoughtful solutions to the dispute which are highly catastrophic and sudden in nature. It generally deals with problems that are high on emotionality. Mediation allows the parties to explore “win-win” situations in which all of them are in much better condition than they would have been if they had chosen the option of litigating in the court. Mediation has been an active part of peaceful conflict resolution for thousands of years in a variety of societies around the world, in one form or the other. However, there are variations in this application in different countries over time.[12] The environmental catastrophes are increasing in all spheres including frequency, reach, and cost, and hence are generating conflicts around the world. Without mediation, open dialogue, collaborative negotiation, and a common approach to implementing solutions to these problems, improving aid and recovery, and systemic preventative approach to future disasters, and other such relieves would be ineffective, and would be delayed by years, if not decades.[13] The report of the Security Council identified the potential benefits that skillful, impartial third-party mediation can bring to the peaceful settlement of disputes. it was stated that mediation will be essential to combat the changes in climate. It becomes all the way more necessary when Copenhagen looms. However, it is also true that such an approach would require a new kind of leadership and decision-making skill that goes beyond the national interests.[14] Why mediation? The major reason for opting for mediation is to settle certain weather and climate-related legal disputes and create solutions that are not available in court. For example, an owner who unknowingly causes pollution is unaware of the remedy to be used and further course of action that should be adopted. In conventional litigation settings, the parties would argue multiple defences, but here, innocent property owners are not interested in owning polluted property. In these circumstances, defendants would often end up buying the polluted property, and then later handle the legal and economic consequences. Similar solutions can be available for weather or climate-damaged properties, where again, defendants may want to argue with regards to causation, damages, related defences, and those which are potentially responsible for economic loss to damaged properties. With the assistance of mediation as a legal tool, the concerned parties may agree to acquire the properties and then handle them appropriately as legal and economic factors may demand.[15] Mediation revolving around environmental issues involves multiple parties and technical issues necessitating more extensive upfront assessment work, convening of the appropriate parties, mutual learning, and collaborative fact-finding, as well as agreement building and implementation Therefore, opting for a conventional legal process in this situation, would make the process more tedious.[16] The researchers have time and again reiterated the effectiveness of mediation for environmental issues as they are more useful for building cooperative working relationships. Moreover, in the past too, it has been successful, though infrequently used for negotiating environmental conventions and treaties at both national and international levels.[17] Mediation is more effective than other forms of dispute resolution. In mediation parties are the decision-maker themselves and not the mediator, unlike in the case of arbitration. It has an upper edge from conciliation too as in mediation there is almost no operational time in bringing the parties to the mediation table.[18] Mediators and other conflict resolution professionals have considerable experience in formulating a mediation plan for decades and so. Hence, they have much better ways of reaching agreements. By adopting mediation, the United Nations, without significant financial investments, could significantly improve the quality of conversations and mediations at important climate change meetings.[19] Suggestions for effective mediation Mediators should strive to figure out beforehand the possibility of emergence of any new climate-related conflicts might emerge. For example, In Nigeria, the community of cattle herders, due to the degradation of the quality of land, flocked southwards into the areas which were traditionally occupied by the farming communities, later on, there were vociferous riots between the two communities. In 2018, more than 1,300 were killed in a six-month period.[20] Mediators should ensure that they turn to the right expertise who has the calibre of understanding the chief environmental and resource issues that may aggravate a conflict. Mediators should ensure that they craft the agreements in a way that leaves the doors open for maneuvering. Thus, ensuring that the agreements remain viable irrespective of the climate shifts. Mediators can actively help proponents look for ways in which cooperation over environmental challenges namely, climate change or shared resources such as transboundary water can help in peacebuilding and reconciliation between the divided communities. This can be particularly fruitful for people to work jointly, even in cases where political dialogue is not working. Feasibility for Mediation Parties who are considering whether or not to engage in mediation must first assess whether the dispute is amenable to the process of Mediation. One of the ways the professionals assess it is through the process of “Best Alternative to a Negotiation Agreement” (BATNA). [21]In this, the mediators examine the feasibility of a negotiated process and evaluate the conflict using a set of criteria: Uncertainty regarding the outcome. If parties are uncertain about the strength of their position, or on their influential acumen on the decision-makers, a court, or a jury, then, in that case, mediation provides them with the opportunity to have greater and more direct control over the result.[22] The cost of winning may be disastrous The possibility of more years of inaction, or frustration that none of the sides has been willing to make a concession is one of the key features, which the parties must be aware of, before adopting mediation as an alternative method of dispute resolution. 3. Common ground or trade-off balance exists The recognition of common ground is the most important part as it forms the basis of arriving at the settlement. Although it is impossible to ascertain whether a compromise could be reached at the early stages of the process, individual assessment by the parties regarding the issues upon which they could compromise will make the way ahead easy and less cumbersome. 4. Overlapping jurisdictions and diverse interests Diverse interests in a community could be no less than a nightmare. Moreover, different cultures, economic resources, and organizational structure act as a hindrance. However, mediation provides a structure for talks, with ground rules that identify the purpose of the talks and formalize the negotiation process. 5. Parties may need to preserve their relationship Winning in court or in the political arena may negatively affect the relationship among parties as in many cases they have to conduct business together. It is always desirable that parties reach a stage in a consensus process where they candidly explore tradeoffs [1] The author is a third-year law student at Hidayatullah National Law University and can be reached at shivangi.1995@hnlu.ac.in. [2] The author is a third-year law student at Dr.Ram Manohar Lohiya National Law University and can be reached at nishthapandey3103@gmail.com. [3] Translates into ‘what is at stake with this climate conference, is peace’. H.E. Mr. François Hollande, President of France, Opening of the Leaders Event, COP21, Paris, 30 November 2015. [4] John Sturrok, ‘Mediation and Climate Change’ (Mediate India - Everything Mediation, December 2009) accessed 17 April 2021. [5] Krystyna Blokhina Gilkis, 'Alternative Dispute Resolution' (Legal Information Institute, 8 June 2017) accessed 18 April 2021. [6] R Wayne Thorpe, ‘Mediation and Arbitration in Weather and Climate Disputes’ (Natural Resources & Environment, Fall 2012) accessed 27 April 2021. [7] Mikkel Funder, Signe Marie Cold-Ravnkilde and Ida Peters, ‘Addressing Climate Change and Conflict in Development Cooperation- Experiences from Natural Resources Management’ (DIIS Report, 2012) accessed 28 March 2021. [8] Amanda Neil, Melissa Conway and Emma Roberts ‘ICC Task Force predicts climate change related disputes will increase exponentially’ (Freshfields Bruckhaus Deringer, 9 December 2019) accessed 27 March 2021. [9] Amanda Neil, Melissa Conway and Emma Roberts ‘ICC Task Force predicts climate change related disputes will increase exponentially’ (Freshfields Bruckhaus Deringer, 9 December 2019) accessed 27 March 2021. [10] Herbert Smith and Freehills ‘Arbitration of Climate Change Disputes’ (Herbert Smith Freehills, 20 December 2019). accessed 28 April 2021. [11] Juan Pablo Valdivia Pizarro, 'The Value of Arbitration and ADR in Resolving Climate Change Related Disputes: A View into the ICC Commission’s Report' (Linklaters, 31 March 2021). accessed 27 March 2021. [12] R Wayne Thorpe, ‘Mediation and Arbitration in Weather and Climate Disputes’ (Natural Resources & Environment, Fall 2012) accessed 27 March 2021. [13] Kenneth Cloke, 'Conflict, Climate Change, and Environmental Catastrophe: How Mediators Can Help Save the Planet' (2011) 12 Cardozo J Conflict Resol 307. [14] John Sturrock, ‘Mediation and Climate Change’ (Mediate India - Everything Mediation December 2009) accessed 25 April 2021. [15] R Wayne Thorpe, ‘Mediation and Arbitration in Weather and Climate Disputes’ (Natural Resources & Environment, Fall 2012) accessed 27 March 2021. [16] United Nations Security Council, ‘Report of the Secretary-General on Enhancing Mediation and its Support Activities’ (Security Council S/2009/189:8, April 2009) accessed 20 April 2021. [17] Mediator Beyond Border International, ‘Supporting Statement for the Inclusion of Mediation in Climate Change Treaty Negotiations’(Mediation beyond Border- Partnering for Peace and Reconciliation) accessed 21 April 2021. [18] Supporting Statement for the Inclusion of Mediation in Climate Change Treaty Negotiations’(Mediation Beyond Border) accessed 21 April 2021. [19] Kenneth Cloke, 'Conflict, Climate Change, and Environmental Catastrophe: How Mediators Can Help Save the Planet' (2011) 12 Cardozo J Conflict Resol 307. [20]Oli Brown, ‘Heating up: mediation and climate change’ (Prio Climate and Conflict, 9 July 2019) accessed 18 April 2021. [21]Roger Fisher and William Ury, ‘Getting to Yes - Negotiating an agreement without giving in’ (1981) accessed 25 April 2021. [22]Alana Knaster, ‘Resolving Conflicts Over Climate Change Solutions: Making the Case for Mediation’ (2010) accessed 29 April 2021.

-Rohan Gulati* INTRODUCTION There has been a discernable trend in India where arbitration and courts have not been able to work without the other. Based on this trend, it is perhaps ironic that the Arbitration and Conciliation Act, 1996 (“1996 Act”) was inspired and based on the UNCITRAL Model Law of 1985 (“Model Law”) that is founded on the key feature of judicial non-intervention. However, the 1996 Act was not entirely based on the Model Law. Interestingly, the 1996 Act is the outcome of a synergized blend between the age-old Arbitration Act of 1940 (“1940 Act”) and the Model Law. While the 1996 Act adopted certain provisions of the Model Law, it retained, modified, and carried forward some from the 1940 Act. A prime example of a modified provision is Section 37 as we now read it under the 1996 Act. Section 37 is a statutorily conferred right to appeal against orders on certain grounds, however, it has often been an area of misinterpretation and misuse that has stalled several arbitration proceedings. In the recent case of Chintels India Ltd. v. Bhayana Builders Pvt. Ltd.,[1] the Hon’ble Supreme Court of India (“Court”) has to put the rest a pertinent issue of law i.e., whether or not an order refusing to condone the delay in filing a Section 34 application is appealable under Section 37(1)(c) of the 1996 Act. Accordingly, this article strives to critically analyze the afore-stated judgment, and to facilitate analysis, it is divided as follows – Part I will briefly scan the development of the law; Part II will concisely discuss the facts; Part III will succinctly highlight the decision of the Court and reasons thereof; Part IV entails a critique of the judgment; and lastly, Part V concludes by suggesting a plausible way ahead. THE LAW: PAST & PRESENT Not to put the cart before the horse, it is pertinent to highlight the minute difference between Section 39(1)(vi) of the 1940 Act and Section 37(1)(c) of the 1996 Act in order to set the tone for the analysis. Section 39(1)(vi) of the 1940 Act read as follows: “39. Appealable orders.— (1) An appeal shall lie from the following orders passed under this Act (and from no others) to the court authorised by law to hear appeals from original decrees of the court passing the order: An order— *** (vi) setting aside or refusing to set aside an award:” Whereas, Section 37(1)(c) of the 1996 Act stands as follows: “37. (1) An appeal shall lie from the following orders (and from no others) to the court authorized by law to hear appeals from original decrees of the court passing the order, namely— *** (c) setting aside or refusing to set aside an arbitral award under Section 34.” Therefore, the primary difference between the text of the 1940 Act and the 1996 Act only witnesses an inclusion of the words – “under Section 34.” Incidentally, Section 37 is a ‘consequential provision’ under the 1996 Act that is absent from the Model Law given its principle feature of judicial non-intervention. FACTS OF THE CASE Chintels India Ltd. (“Appellant”) had approached the Hon’ble Delhi High Court (“High Court”) by way of an application under Section 34 for setting aside an award dated 3rd May 2019 passed by an Arbitral Tribunal. Notably, the Appellant had also filed applications seeking condonation of delay of 28 days in filing and an additional 16 days in re-filing the petition. These applications were filed in light of filing the Section 34 application beyond the statutory limit of 3 months. The Appellant had averred the ground of change in counsel in his submissions concerning the applications seeking condonation of delay. However, the learned single judge of the High Court after perusing the record carefully, categorically observed that the applications seeking condonation of delay were itself filed only after the period of 120 days. Therefore, the Appellant must have filed the applications along with the Section 34 application at the first instance. In view of the afore-stated, the learned single judge of the High Court was not inclined to condone the delay and accordingly dismissed the applications that in effect led to the dismissal of the Section 34 application as well. Aggrieved by the decision of the learned single judge, the Appellant preferred an appeal under Section 37(1)(c) of the 1996 Act before a Division Bench of the High Court. However, the Division Bench of the High Court being bound by the decision of the Court in the case of State of Maharashtra v. Ramdas Construction Co.,[2] held that such an appeal is not maintainable. However, the Division Bench granted a certificate to appeal under Article 133 read with Article 134A of the Constitution of India, 1950 to the Appellant that granted liberty to approach the Court concerning the pertinent question of law involved. DECISION OF THE SUPREME COURT The Court mapped out the question of law involved lucidly and authoritatively held that an order refusing to condone delay under Section 34 that in effect leads to dismissal of the Section 34 application itself would be incorrect in law. To arrive at this decision, the reasons were manifold; Firstly, the Court observed that Section 39(1)(vi) of the 1940 Act is pari materia to Section 37(1)(c) of the 1996 Act. The reasoning behind the same was pointed towards the substance of the provision that is identical to the 1940 Act. Moreover, the 1996 Act went a step ahead to refine the provision and cover Section 34 in its entirety. Secondly, and pertinently, the court relied upon the ‘effect test’ that was discussed earlier in the case of Essar Constructions v. N.P. Rama Krishna Reddy[3] (“Essar Constructions”). Identical to the principles of cause and effect, the effect test pertains to the decision of the court on the ‘cause’ that leads to an ‘effect’. In the present context, the cause refers to the refusal to condone the delay, however, the effect will be the dismissal of the Section 34 application, being a harsh move on the award-debtor. To further provide clarity upon the effect test, the Court discussed Section 37(1)(a) wherein no appeal lies from an order referring parties to arbitration under Section 8 since that is the intended effect of the provision itself. Thirdly, the Court reiterated that the principle of minimal judicial intervention as enshrined under Section 5 of the 1996 Act could not be narrowed down to limit appeal provisions within the statute itself. In other words, the principle of judicial non-intervention cannot be absolute concerning the 1996 Act. CRITIQUE The judgment of the Court without an iota of doubt provides clarity and settles the law upon a pressing issue. In doing so, the Court overruled Union of India v. Radha Krishna Seth[4] and State of Maharashtra v. Ramdas Construction Co.[5] that stated the law incorrectly. While the decision may seem worthwhile, it suffers from certain pitfalls. Accordingly, to facilitate a critique, the present part is divided into two distinct categories i.e. (i) The Good and (ii) The Bad & Ugly. (i) The Good First and foremost, the decision will favor the award-debtors wherein the application for condonation of delay had been dismissed by the courts that in effect dismissed the Section 34 application as well. The effect test as upheld by the Court will by and large favor award debtors that raise legitimate grounds for setting aside the arbitral award under Section 34 and would not have to worry in case the statutory limit for three months has elapsed. Given the diverse variety of social, geographical, and economic factors in India that often lead to delays in filing, the decision is certainly a precedent that the award-debtors would look to rely upon proactively. Noteworthy, the judgment opens up another avenue of remedy, albeit narrow, for award debtors under the 1996 Act itself. Prior to the judgment, in case of dismissal of the Section 34 application, the award debtors would rest hopes on Article 136 of the Constitution that provides for a Special Leave to Appeal before the Court. However, due to the present decision, the narrow scope of appeal under Section 37(1)(c) is more likely to be invoked. It may provide the award-debtor a reasonable opportunity in case the application under Section 34 was dismissed in effect due to refusal to condone the delay. Notably, the Court made a relevant distinction between the return of application under Section 34 due to lack of jurisdiction and the dismissal of the application under Section 34 on account of delay. While doing so, the Court distinguished the judgment in the case of BGS SGS Soma JV v. NHPC[6] and clarified that the case pertained to return of the application due to lack of jurisdiction of the court and whereas, the present case dealt with the refusal to condone delay that led to the dismissal of the Section 34 application itself. Prior to the present decision of the Court, there had been differing positions that caused a muddled regime. Therefore, in light of the same, the present decision settles yet another ambiguous area of arbitration law. (ii) The Bad & Ugly Pertinently, in order to arrive at the reasoning in the present judgment, the Court had to first consider Section 39(1)(vi) of the 1940 Act pari materia to Section 37(1)(c) of the 1996 Act and only then rely upon a case decided in accordance with the scheme of the 1940 Act i.e., Essar Constructions. However, considering that there have been ‘words of caution’ in relying upon the scheme of the 1940 Act and the cases decided as per the same if the basis of the present judgment is questioned, its foundation may start to fumble. In the case of Sundaram Finance v. NEPC India Ltd.,[7] the Court had authoritatively observed that the provisions of the 1996 Act must be interpreted and construed independently to avoid any misconstruction. In simpler terms, the 1996 Act must be interpreted on its own strength without being influenced by the scheme of the 1940 Act. Additionally, in the case of Ashok Traders v. Gurumukh Das Saluja,[8] the Court had observed that the 1996 Act is a long leap in the direction of alternative dispute resolution systems and the cases decided as per the 1940 Act must be ‘applied with caution’ for determining the issues under the 1996 Act. Whereas, in the present case, there seems to be an absence of any caution that the Court may have considered. Section 37(1)(c) of the 1996 Act could have very well been interpreted on its own strength and in doing so, the Court could have taken cue of the effect test from the case of Essar Constructions and reiterated the principle rather than considering Section 39(1)(vi) of the 1940 Act pari materia to Section 37(1)(c) of the 1996 Act. Retreating to the key feature of the Model Law of judicial non-intervention, the present decision appears to be in murky waters. The statutory right of appealable orders under Section 37 could very well be subjected to misuse on account of delaying the enforcement of the award. In a jurisdiction like India, where the fate of litigation is summed up based on delay and prolonged cases, decisions opening up multiple avenues for award debtors are strong weapons that could be deployed very often leading to delay in awards attaining finality. Ultimately, the faith in the arbitration process from the award holder's viewpoint is bound to diminish and may result in laxity and increased legroom for the award debtors. Lastly, the award debtor may not always be a private entity, and where the instrumentalities or extended limbs of the State are involved, they may drag their feet for a considerable time. This would result in the award-holder being entangled in several rounds of litigation despite possessing an award in their favor. CONCLUSION The present decision may have settled one area, however, it has added yet another hurdle before the awards attain finality as it may lead to prolonging litigation arising out of or in relation to arbitration. As a plausible way ahead, the courts must consider two indispensable aspects viz., (i) in case the Section 34 application is filed beyond the limitation period of 3 months, the application seeking condonation of delay must be filed with the Section 34 application itself and not on any date thereafter and (ii) the award-debtors must precisely set-out the grounds under Section 34(2) and/or 34(2A) for setting aside the award. The former aspect will be particularly helpful in not letting the award debtors misuse the present decision to condone the delay beyond the outer limit of 30 days [as per the proviso to Section 34(3)]. However, in case the award-debtors do not comply with Section 34(2) and sub-section (3) of the 1996 Act, the courts must preclude the award-debtors from utilizing the present judgment as a dilatory tactic in an attempt to impede the enforcement and finality of awards. * Rohan Gulati is a Junior Staff Editor for the Arbitration Workshop Blog. He is currently a fourth-year law student pursuing BB.A LL.B at Symbiosis Law School, Hyderabad. His primary area of interest is Alternative Dispute Resolution (ADR) with a specific focus on arbitration law. He can be contacted at rohan.gulati@student.slsh.edu.in [1] 2021 SCC OnLine SC 80. [2] Order dated 12.04.2017 in C.A. Nos. 5247-5248/2007. [3] (2000) 6 SCC 94. [4] 2005 SCC OnLine All 8400. [5] (2006) 6 Mah LJ 678. [6] (2020) 4 SCC 234. [7] (1999) 2 SCC 479. [8] (2004) 3 SCC 155.

***Vidhi Pramesh Parikh INTRODUCTION Arbitration is a method of alternate dispute resolution (“ADR”) where the parties agree to appoint one or more arbitrators who make an unbiased decision concerning the dispute raised and the decision made by these arbitrators is binding on the parties and also admissible in the court of law. By choosing arbitration, the parties choose an alternative way to resolve the disputes instead of litigating in courts. The use of ADR methods has spiked during the last few years since parties get to avoid time-consuming and tedious procedures and opt for an easier procedure. An arbitrator is a neutral professional who is usually appointed by the parties to decide on the disputes or the differences between the parties. Gender inequality has existed for ages in every field that one comes across, including the field of law. RISE IN THE GENDER DISPARITY The discrimination between men and women in the workplace within any profession continues to persist. Male arbitrators outnumber female arbitrators by a huge margin. For instance, in 2017, Mumbai had 31 arbitrators out of which only 2 were women arbitrators[1] - the difference is huge. A 2012 survey by the ABA Women Dispute Resolution (WIDR) Committee showed that only 18% of all the arbitrators included were women.[2] Parties always tend to look out for seasoned, experienced, and well-known arbitrators, which makes it difficult for the new lawyers to make a mark. One of the key factors for the lack of successful woman arbitrators is generally called the “pipeline leak”[3]. Pipeline here means an exemplary resume that one should build to become a successful arbitrator with the help of legal education, experience, and various associations with other senior arbitrators or senior judges as arbitrators are chosen from a very limited pool of professionals. In most international arbitration cases, the arbitrators are chosen from a limited pool of professionals who are most likely already at a higher level - senior lawyers, judges, partners or the like. This unconscious or implicit bias to choose the existing established arbitrators (mostly male) could be considered as a silent killer of diversity in the legal profession. It is said to be one of the most significant reasons for the disparity between male and female representation on international arbitral tribunals. Men play an important role in achieving gender equality and promoting activities to empower women. The change in gender diversity has to be brought about at the grassroots level. In May 2016, a huge number of people came together to sign an initiative that aimed to increase the number of women arbitrators in the fraternity. According to the research undertaken by Lucy Greenwood, a woman arbitrator, the institutional appointments of female arbitrators increased from 12% in 2015 to 17% in 2016.[4] The 2019 report of the Cross Institutional Task Force on Gender Diversity in Arbitral Appointment showed that 34% of institutional appointments were female and 21.5% of appointments by the co-arbitrators were female, whereas only 13.9% of the party appointments were female.[5] John Bickerman, the former Chair of the American Bar Association Section of Dispute Resolution, highlighted the problem of gender discrimination in 2006 and remarked that “in terms of the big cases, we see the same names all the time, and they are the same very accomplished, well-established, high-profile white men that have been doing this for the past ten or fifteen years”.[6] William Tetley, a well-known lawyer from Canada, shared an experience where how this ‘men’s private club’ played a huge role in his career. He mentioned how without any prior experience or knowledge about the Arbitration Rules of the International Chamber of Commerce (ICC), he was asked by his acquaintance to be the judge on his case. Neither of the other arbitrators knew about his lack of experience or expertise but they instead praised his work, which further proves that how white men or men, in general, have had the upper hand in this field of work for decades.[7] Meanwhile, Ms. Julia Kenny, a partner at Palladium Legal (a reputed law firm both in India and UK), has served as an international arbitrator for over a decade. She has worked for clients from the UAE, Canada, South Africa, and more. She has even served as a lead arbitrator in disputes under the UNICITRAL, International Chamber of Commerce (ICC), the Stockholm Chamber of Commerce (SCC), and various other arbitration forums. She serves as a notable example of the success that women can experience as arbitrators, whether on a national level or an international level if given space and opportunity to grow. While gender discrimination between white men and women is a prevalent issue, people of colour go through even greater discrimination. The American Arbitration Association boasts that 25% of their total arbitrators are both women and people of colour, but the problem is that the other 75% of them are white males. In a profession where there is discrimination between men and women, women of colour have faced and shall further face an increasing number of hurdles due to their colour and ethnicity. It is imperative that a fair chance should be given to every individual. One should not be discriminated against or be given an undue advantage over others, whether due to nepotism or in any other unfair manner. The lack of women arbitrators on a global scale demotivates the upcoming generation from pursuing arbitration as a career. It is understandable that people would lose faith in meritocracy i.e., achieving something due to their merits and therefore lose the incentive to work diligently. Having no mentors shall become a regular practice to guide the minority groups in the profession. Such a vicious circle can be brought to an end only when gender diversity becomes a reality instead of an illusion. TODAY’S SCENARIO Today, there are various institutes, law firms, and practising lawyers who have introduced initiatives to bridge the gender disparity observed and to bring about gender diversity on an international level. Presently, there has been a hike in the number of cases that are referred to arbitration than litigation due to the various advantages that arbitration has. The International Chamber of Commerce posted its highest number of cases since 2016 with 946 new arbitration cases. In 2018, SCC had appointed 28% of its arbitrators as women which increased to 32% in the year 2019.[8] On the other hand, the International Chamber of Commerce (ICC) had 18% representation by women in the year 2018 which increased to 21% in the year 2019.[9] Recently, in January 2020, the Equal Representation in Arbitration (ERA) Pledge, which was taken in 2016, crossed a milestone of having 4,000 signatories. The ERA has also initiated an “Arbitrator Search” tool,[10] where users can search for female arbitrators by filing a simple form that requires basic personal information, the area of expertise, the applicable law, the language preferred, and similar details. Once the form is filled and the request is received by them, their Search Team shall find the best potential candidate for the stated requirements. As it is rightly said, every step counts, and this tool helps disputants find women arbitrators who are not very well-known but have excelled in their fields. In the 2020 ICC report for the year 2019, it was noted that the ICC itself appoints 25%-30% of its total arbitrators and that ICC appointed as many women arbitrators as were nominated by the parties: 131 women were nominated by the parties (42% of all the women arbitrators), 134 women were appointed by the ICC itself (43% of the all the women arbitrators) and 45 women were nominated as the president of the tribunal by their co-arbitrators (14% of all women arbitrators). It also saw 1,476 appointments and confirmations of arbitrators out of which 21% were women arbitrators.[11] The report also mentioned that the number of women arbitrators appointed has doubled in the past four years and that the parties and counsels can play a huge role in increasing the number of women arbitrators even more. In 2019, 34% of women arbitrators were appointed through institutions whereas 21% were appointed through their co-arbitrators. There are various arbitral institutions such as the LCIA, ICC and other prominent arbitral institutions who have supported the cause of increasing the number of women who participate in the arbitration process, and there has since been an upward trend. A few other instances are the Gender Equality Global Campaign, Alliance for Equality in Dispute Resolution, and the ADR Inclusion Network Pledge - all with the aim to bring changes to the gender disparity in the profession. CONCLUSION The practice of arbitration has seen a considerable spike during the COVID-19 times due to the ease of conducting meetings through virtual modes as well as the impossible circumstances where people cannot visit the courts. There have been hearings that have taken place over the newly adopt video calling mode being the new normal. This has also resulted in an increase in the number of cases that the arbitral institutions have had to take up. Consequently, these institutes are now appointing arbitrators in a greater capacity, meaning that there is also an increase in the number of women arbitrators who are being appointed. “If everyone is thinking alike, then nobody is thinking,” said Benjamin Franklin. Every individual could adopt a different approach to think things through. A diverse approach can bring various skills and experiences to the table and can improve the quality and fairness of the arbitral awards being made. Having an equal number of women arbitrators onboard also increases the faith in the system as there are higher chances that more parties come forward and choose arbitration. Diversity can be achieved even by changing various hiring policies where a clause can be added regarding the hiring ratio of professionals, which could highly improve the way that the opportunities are given. The institutes where arbitrators admit/register themselves can take the first step to regulate the disparity since they have the exact data about the arbitrators. Since they have a say in the appointment of arbitrators for a tribunal, they can try to bring about diversity at the forefront. Law firms and lawyers who not only advise the clients about their cases but also recommend the names of the arbitrators can also consciously make an effort to suggest women arbitrators. The arbitrators in their fraternity can promote this practice as well. Like it is said, “Every drop counts.” Henry Ford had quoted once, “If everyone is moving forward, then success takes care of itself.” In this context, the only solutions are spreading general awareness and taking prompt and consistent actions to curb the huge gender gap present in this profession. International arbitration is being talked about and practiced on a huge scale now. This profession has a great potential to grow if reformative steps are taken in the right direction. The initiative should be taken from the strongest stakeholders, which would motivate other sections to step in and take a step further. To bring about any positive change, one has to start taking a series of affirmative actions; gender parity cannot be achieved overnight as a miracle. One human uplifts another, and there has to be a conscious and voluntary effort by each person. The situation has improved from what it was a few years back, but it can be better. Reasonable and significant steps/initiatives should be taken to bring about a considerable change. Hopefully, there would soon be no woman who chooses to be an arbitrator but is denied any opportunity simply because she is a woman. *The name of the author of this article is Vidhi Pramesh Parikh. She is a second-year student studying at Jitendra Chauhan College of Law, Mumbai and she is also a member of the Institute of Company Secretaries of India. Email id- parikhvidhi1@gmail.com. ** The author is solely responsible for the veracity of the statements cited in the article. [1]https://www.msei.in/SX-Content/common/Investors/List-of-Arbitrators/2017/October/LIST-OF-ARBITRATORS---MUMBAI.pdf [2]https://www.americanbar.org/groups/diversity/women/publications/perspectives/2018/winter/where-are-women-arbitrators-battle-diversify-adr/ [3]https://indiacorplaw.in/2020/08/gender-and-ethnic-diversity-in-arbitral-institutions-where-do-we-stand.html#:~:text=The%20lack%20of%20gender%20balance%20on%20arbitral%20tribunals,to%20a%20smaller%20pool%20of%20possible%20female%20arbitrators. [4]http://arbitrationblog.kluwerarbitration.com/2017/06/04/women-arbitration-rise/ [5]https://www.lcia.org/News/report-of-the-cross-institutional-task-force-on-gender-diversity.aspx#:~:text=In%202019%2C%2034%25%20of%20institutional,of%20party%2Dappointments%20were%20female.&text=Opportunities%20for%20qualified%20women%20to,wish%20to%20progress%20their%20careers [6]https://www.lalive.law/wp-content/uploads/2018/12/Diversity-in-international-arbitration_dos-Santos.pdf, Page 9 [7]https://www.lalive.law/wp-content/uploads/2018/12/Diversity-in-international-arbitration_dos-Santos.pdf, Page 14 [8]https://sccinstitute.com/statistics/#:~:text=SCC%20Statistics%202019,leading%20forums%20for%20dispute%20resolution.&text=Statistics%20regarding%20the%20appointed%20arbitrators,2018%20to%2032%20%25%20in%202019. [9]https://iccwbo.org/media-wall/news-speeches/icc-releases-2019-dispute-resolution-statistics/ [10] http://www.arbitrationpledge.com/arbitration-search [11]https://iccwbo.org/media-wall/news-speeches/cross-institutional-report-reflects-advances-in-gender-balance-in-arbitration/

- Pranjal Pandey* & Ayushi Pandit**~ In the recent case of V4 Infrastructure Pvt Ltd v Jindal Biochem Pvt Ltd.[1], the Delhi High Court has held that an arbitral tribunal cannot award interest on basis of reasons which are perverse, unjustifiable and contrary to the record. The Division Bench of Delhi High Court in the instant case was deciding on the appeal filed against the arbitral award under Section 37 of the Arbitration and Conciliation Act, 1996(“the Act”). The Court while deciding the challenge to the award observed that there was an inherent and glaring discrepancy in the claim made by the respondent and the relief granted by the arbitral tribunal. This mysterious change during the course of arbitration proceedings prompted the Court to intervene as this mystery shocked the conscience of the Court. The Court examined the arbitral award and expressed that the grant of refund along with eighteen percent rate of interest in addition to the damages by the arbitral tribunal was perverse, unreasonable and unjustified. The Arbitral Award The dispute arose out of the termination of a Space Buyer Agreement (agreement) between the appellant, V4 Infrastructure Pvt Ltd (VIPL) and the respondent Jindal Biochem Pvt Ltd (JBPL). In the statement of claim filed before the Arbitral Tribunal, JBPL claimed for specific performance of the agreement as well as damages for failure to handover possession of the property along with interest. The foremost controversy of the dispute revolved around the termination notice issued by the VIPL alleging that the JBPL had failed to discharge any of its obligations under the agreement. The Arbitral Tribunal adjudicated upon the allegations and found that the JBPL had not committed any breach of the agreement as in the termination notice issued by VIPL. The arbitral tribunal concluded that JBPL had performed its obligations under the agreement and was deprived possession illegally. Thus the Arbitral Tribunal rendered an award for a refund of the entire consideration amount under the agreement and damages for deprivation of use of premises along with interest at the rate of eighteen percent per annum from the date of payment, till the date of actual realization. The challenge to Arbitral Award The award was challenged by VIPL under Section 34 of the Act on the ground that the premise of the award was intrinsically flawed. The challenge to the award was based on the fact that the arbitrator had made an erroneous assumption premise Respondent had not claimed specific performance of the agreement. However, the learned Single Judge dismissed the challenge to the award under section 34 and confirmed the same by holding that there was no infirmity in the award. VIPL filed an appeal under Section 37 of the Act assailing the order passed by the Single Judge. During the pendency of the appeal, the appellant readily paid the principal amount to the respondent awarded by the arbitrator and only challenged the damages and the rate of interest. Thus the scope of review before the Division Bench was limited to the aspect of damages and rate of interest awarded by the tribunal. The Appellant had questioned the reasonability of the awarded rate of interest and it was argued that the rate of interest of eighteen percent was exorbitant, unreasonable and unjustifiable in the facts of the case. The foundation of this argument was based on the fact that the respondent had filed the claim seeking relief of specific performance, and then without there being any abandonment and relinquishment of the said relief, the learned arbitrator has proceeded to award the alternate relief of refund of consideration with damages and interest. On the other hand, the respondent justified the damages and the interest awarded by the arbitrator on account of the hardship suffered by the respondent for many years. It was also contended that the scope of judicial review while exercising jurisdiction under Sections 34 and 37 of the Act is limited, and the impugned award does not suffer from any perversity that would invite interference by any Court. The Verdict The Court at the outset stated that it is trite law that the scope of interference in the award under Section 37 of the Act is quite restrictive. However, on account of the inherent and glaring contradictions between the claim made by the Respondents and the relief granted by the arbitral tribunal, the Court deemed it fit to intervene. The court observed several instances wherein the Respondent were willing to seek execution of the sale deed in their favour. The Respondent had sought specific performance of agreement as primary relief, before ripening of the dispute the Respondent sent a letter to the Appellant, requesting execution of the sale deed in its favour and even during arbitral proceeding at the stage of recording evidence the Respondent’s witness admitted that he is seeking specific performance of the contract. The court observed that there was conspicuous lack of material on record to show that the Respondent had abandoned the claim for specific performance and yet still the arbitral tribunal in the award stated that the Respondent had not sought the relief of specific performance and thus was entitled to the alternate relief of refund of entire payment. The Court inferred that the Respondent had a change of mind and the Respondent only became interested in pursuing the remedy of refund of the consideration amount, even after seeking specific performance as their primary relief. This inference was drawn by the Court on the basis that there was nothing on record to depict the Respondent abandoning the claim of specific performance before the Arbitrator. If the Respondent were genuinely interested in the property they would have argued for the relief of specific performance instead of pursuing the alternate remedy of refund of the entire consideration amount. This vital aspect was missed by the arbitral tribunal while making the award as well by the Single Judge while adjudicating upon the challenge of the award under Section 34. Keeping this proposition in consideration, the Court then examined the justification of giving eighteen percent interest in the arbitral award in addition to the damages. Perversity in the Award The Court highlighted that under the disparity between the statement of claims filed by the Respondents before the arbitral tribunal and the observations of the arbitral tribunal. In the statement of claims, the Respondent had sought the Specific Performance of Space Buyer Agreement, however, in the award the arbitrator observed that there was no such claim of specific performance. The Court led that these findings in the award are ex-facie incorrect and contrary to the pleadings and evidence on record. It was this perversity in the award which compelled the Court to intervene and re-examine the award. Grant of exorbitant interest rates The Court held that the Respondent’s claims were adjudicated on the erroneous premise that specific performance could not be granted and the transformation in the claims without any reasonable cause was not justiciable. As the award was completely silent on this aspect the Court held that rendering of eighteen percent interest this basis of the wrong presumption that specific performance could not be granted was perverse, unjustifiable and contrary to the record. Effect of the interim order The Court also took note of the interim order granted in favour of Respondent prior to the constitution of the arbitral tribunal, which provided for maintaining status quo in relation to the property in question. This order was obtained by the Respondent for the preservation of the property in question, till the final adjudication of the relief of specific performance of the agreement and as a consequence of this order, the Appellant was deprived of the right to deal with the properties. Thus the Court held that the as the nature of the interim order obtained by Respondent was not justified, and thus Respondent should also bear the consequences of seeking and obtaining interim relief which was not commensurate with the final relief sought of refund of consideration amount. In the next part, the author analyses the legislative provisions relating to specific performance and damages as enunciated by the Court to justify the interference in the arbitral award. In the instant case, the Court examined the same issue from a different angle. The Court after critically analysing of Section 21 of the Specific Relief Act, 1963 the Court held that the award of compensation under Section 21 is inherently linked to the claim for specific performance of a contract. Section 21 of the Specific Relief Act empowers the Court to award compensation in certain cases. When the contract has become impossible with no fault of the plaintiff, Section 21 enables the Court to award compensation in lieu of the specific performance. [2] It is pertinent to mention that the nature of relief to be awarded under Section 21 is one of the discretion of the Court which has to be exercised on sound principles and when the court gets into equity jurisdiction, the same would be guided by justice, equity, good conscience and fairness to both the parties.[3] Further, the Court emphasised that the compensation awarded would be determined as per Section 73 of the Indian Contract Act, 1872 (“Contract Act)”. Relief under Section 21 must pass the muster of Section 73 of the Indian Contract Act, 1872 The Court noted that award of interest by way of damages at an exceptionally high rate of interest is not tenable when governed by the principles specified in Section 73 of the Contract Act. Section 73 provides that when a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has committed the breach, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from such breach. It is pertinent to mention that while discussing Section 73 and Section 74 of the Indian Contract Act, the ruling of the constitutional bench in Fateh Chand can be said to be the torchbearer judgement.[4] In this landmark case, the Apex Court emphasized that while assessing damages the Court should award compensation as it deems reasonable in the light of all the circumstances of the case. Thus the circumstances do play a significant role in the process of assessment of damages. It is noteworthy to refer observation of Supreme Court in wherein after analysing various judicial pronouncements observed that “Reasonable compensation will be fixed on well-known principles that are applicable to the law of contract, which are to be found inter alia in Section 73 of the Contract Act. Since Section 74 awards reasonable compensation for damage or loss caused by a breach of contract, damage or loss caused is a sine qua non for the applicability of the section.”[5] Since it is imperative that the compensation awarded must pass the test of reasonability which would be determined as per the circumstances of every case, therefore any arbitral award arising out of an arbitration governed by Indian law must be governed by the same test of reasonability. By applying the said test in the instant case it was observed by the Court that as the grant of damages along with the exorbitant interest of eighteen percent on the assumption that the Respondent had not claimed relief of specific performance and was only seeking a refund of the sale consideration was not reasonable. As it was evident from the record that the actual scenario was quite the contrary, thus the Court declared that the arbitrator had committed a perversity in the award. In order to make the award reasonable and resolve the perversity in the impugned award, the Court declared the interest rate of eighteen percent as unreasonable, irrational and unjustified, and reduced the same to nine percent, thus striking a balanced approach. Thus the Court considered the equitable interest of both the parties as well as their conduct during the proceedings and gave a ruling which was fair, just, and reasonable for both the parties. Analysis In any arbitration proceeding in addition to direct claims, the claim for interest on those due amounts and damages form an important part of the claim. The interest component is awarded as an equitable remedy for the loss incurred to the claimant due to the delay in receiving the payments while the dispute is finally adjudicated upon. It is submitted by the author that the claim of interest is also based on the concept of fairness. Fairness is a multidimensional concept and it would also be unfair to the successful party if it were deprived of the fruits of its labour as a result of a dissatisfied party raising a multitude of arid technical challenges after an arbitral award has been made.[6] Thus in absence of an express bar, the arbitrator has the jurisdiction and authority to award interest for all the three periods pre-reference, pendente lite and future. Power of Arbitral Tribunal to award interest The arbitrator can grant interest at the rate specified in the contract or a reasonable rate of interest as long as there is no prohibition to grant interest.[7] The arbitrator cannot ignore the terms of the contract while awarding interest under Section 31(7) of the Act.[8] When the arbitrator grants interest in accordance with the terms of the contract between the parties, such award cannot be set aside by invoking the general principles of fairness or equity.[9] Even in the cases wherein the agreement, there is no specified rate of interest, the arbitral tribunal can exercise its discretion to award interest as compensation. The Supreme Court of India has laid down that the discretion of the arbitrator to award interest must be exercised reasonably.[10] The rate of Interest must be compensatory as it is a form of reparation granted to the award­holder, while at the same time it must not be punitive, unconscionable or usurious in nature. In essence, an award of interest compensates a party for its forgone return on investment, or for money withheld without a justifiable cause. Courts may reduce the Interest rate awarded by an arbitral tribunal where such Interest rate it is not found reasonable.[11] At this stage, it would be appropriate to refer a passage from the dissenting opinion of the then Chief Justice H.L. Dattu in the case of Hyder Consulting (UK) Ltd. v. State of Orissa: “The Arbitral Tribunal has the discretion to decide whether such interest would be imposed on the whole or a part of the money awarded, and further whether it would be imposed for the entire duration from the date of cause of action to the date of award, or on a part of it. However, such discretion is not unfettered and is not exercisable upon the mere whims and fancies of the tribunal. In Principles of Statutory Interpretation, Justice G.P. Singh, 13th Edn., 2012, at p. 482, it has been stated as “Even where there is not much indication in the Act of the ground upon which discretion is to be exercised it does not mean that its exercise is dependent upon mere fancy of the court or tribunal or authority concerned. It must be exercised in the words of Lord Halsbury, ‘according to the rules of reason and justice, not according to private opinion; according to law and not humour; it is to be not arbitrary, vague and fanciful, but legal and regular’..”[12] Perverse Decisions The said passage even though in the dissenting opinion holds significant relevance while discussing the scope of power of the arbitral tribunal to award interest. In the instant case, the Court held that the findings in the award were contrary to the evidence on record and there was no evidence to depict the Respondent had relinquished the relief of specific performance of the agreement. As enunciated in the case of Associate Builders v. Delhi Development Authority [13]. It is settled law that where a finding is based on no evidence such decision would necessarily be perverse. Indeed, it is trite law that a court does not sit in appeal over the award of an arbitral tribunal by reassessing or re appreciating the evidence.[14] However, a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality.[15] Interest: An Equitable Remedy It is pertinent to mention that in the present case the appellants were willing to offer a settlement to the respondent on reasonable terms however the respondents refused to accept the same. This was a clear case of one party asserting its bargaining power on the other to reap out unnecessary profits. A similar case came up before the Delhi High Court where even after a repeated request by the respondent, the petitioner refused to offer any viable settlement to the respondent.[16] The Court upheld the rate of interest awarded by the arbitrator and held that since the petitioner took advantage of the law which had prescribed for an automatic stay on the enforcement of the arbitral award during the pendency of the petition under Section 34, therefore, the petitioner cannot claim any equity in the form of reduction of the rate of interest in their favour. Thus, it can be said that Interest rates should be adjusted to take into account any unreasonable refusal to consider and/or accept a reasonable settlement offer.[17] Conclusion ‘a man shall not be permitted to blow hot and cold with reference to the same transaction’ The case of V4 Infrastructure Pvt Ltd v Jindal Biochem Pvt Ltd gives an impeccable example of justified interference by the Court under Section 37. The said ruling depicts how cautious the Courts need to be while examining the award and how important the conduct of parties becomes. The Respondents in the said case never particularly pressed for specific performance of the agreement during the arbitration however they did seek an interim order for preserving of property. the contrary findings of Arbitrator on no claim of specific performance being made along with the acquiescence of Respondents on this aspect compelled the Court to look re-examine the finding of the Court. The decision sets a categorical example that the scope of power of the arbitral tribunal to award interest is not unfettered and comes with the riders of justice, equity and fairness. ~ This article is an edited version of the 4th Best Entry in the 1st Case Summary Writing Competition. Suggestions were made by the Editorial Team of the Arbitration Workshop based on which the changes were made by the Authors. * 5th Year, Maharashtra National Law University, Nagpur. The author has express interest in Corporate and Commercial Matters. The author can be reached at- pranjalpandey@nlunagpur.ac.in. ** 4th Year, Maharashtra National Law University, Nagpur. Immense Inclination towards International Commercial Arbitration and Capital Markets. The author can be reached at- ayushi.pandit@outlook.com [1] FAO(OS) (COMM) 107/2018 & CMs. 20269/2018 & 49639/2019,) 107. [2] Urmila Devi and Others vs. Deity, Mandir Shree Chamunda Devi 2018 (2) SCC 284 (Civil). [3] Kanshi Ram v. Om Prakash Jawal 1996 (4) SCC 593. [4] Fateh Chand v. Balkishan Das, 1964 SCR (1) 515. [5] Kailash Nath Associates v DDA (2015) 4 SCC 136, Para 43. [6] Vijay Karia v. Prysmian Cavi E Sistemi SRL, 2020 SCC OnLine SC 177, 65. [7] Jaiprakash Associates Ltd Vs Tehri Hydro Development Corporation India Limited (2019) SCC Online SC 143. [8] Hyder Consulting (UK) Ltd. v. State of Orissa, (2015) 2 SCC 189. [9] Videocon Industries Limited v. Morgan Securities & Credits Pvt Ltd., (2019) SCC OnLine Del 7034; BPL Ltd. v. Morgan Securities & Credits Pvt. Ltd., OMP (COMM) 176/2017. [10] Vedanta Ltd., v. Shenzen Shandong Nuclear Power Construction Co Limited, (2018) SCC Online SC 1922. [11] Manalal Prabhudhayal v. Oriental Insurance Company Ltd., 2009 17 SCC 296. [12] Hyder Consulting (UK) Ltd. v. State of Orissa, (2015) 2 SCC 189, ¶ 69. [13] Associate Builders v. Delhi Development Authority, (2015) 3 SCC 49. [14] P.R. Shah, Shares & Stock Brokers (P) Ltd. v. B.H.H. Securities (P) Ltd., (2012) 1 SCC 594, ¶ 21. [15] Ssangyong Engineering and Construction Company Limited v NHAI, (2019) 15 SCC 1. [16] PEL Industries Ltd. v. SE Investment Limited, (2018) SCC Online Dell 8746. [17]Gisèle Stephens-Chu & Joshua Kelly, Awards of Interest in International Arbitration: Achieving Coherence INDIAN JOURNAL OF ARBITRATION LAW, (June 25, 2020, 7:48 am) http://ijal.in/sites/default/files/IJAL_Volume_7_Issue_1_Gisele_Stephens_Chu_&_Joshua_Kelly.pdf.

Samyak Jain[1]* Recently, Madras High Court in the case of M/s J.K. Fenner (India) Limited v. M/s Neyveli Lignite Corporation[2] (hereinafter ‘Fenner’) had an opportunity to decide whether an arbitrator can grant interest pendente lite in an arbitration proceeding seated in India. The appeal was filed under section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter ‘Arbitration Act”) challenging the validity of the order passed by the arbitral tribunal, wherein the Court modified the award in favour of the claimant and grant interest pendente lite together with principal amount, though the terms of the contract did not prohibit the same. This decision is in conformity with the decisions of the Supreme Courts and various other High Courts in the recent past. Introduction Interest pendente lite is defined as the interest between the date on which the cause of action arises until the date of the award. Recently, this issue is much debated in the legal arena as this issue repeatedly arises before the judiciary. Arbitration is now the principal method in resolving commercial disputes among the parties.[3] Judiciary repeatedly tried to maintain a balance between party autonomy and arbitrator’s power to award interest in order to do justice with the party petitioning for interest. It is also accepted that arbitrator cannot award interest if the terms of the contract expressly barred the tribunal from awarding it. Here, the author first tried to discuss position under the Arbitration Act of 1940 and 1996 with judicial pronouncements and then discusses the interpretation of a single-judge bench of Madras High Court in reaching conclusion in the present case. Position under 1940 Arbitration Act Claimant further supported this contention by placing reliance on the judgment of the Supreme Court of constitution bench in Secretary Irrigation Department, Government of Orissa and Others v. G.C. Roy,[4] (hereinafter ‘GC Roy’) considering the question of arbitrator’s jurisdiction in awarding interest pendente lite in the absence of the contract for the same. The court answered in affirmative that in a situation where the contract does not provide for the grant of such interest nor does it prohibit such grant, or the contract is silent as to the award of interest, the arbitrator has the power to award interest pendent lite. This reasoning is based on the presumption that interest was considered to an implied term of the contract between the parties, and therefore arbitrator has the power to award interest. Further, in Dhenkanal Minor Irrigation Division, Orissa & Ors. v. N.C. Budharaj,[5] (hereinafter ‘NC Budharaj’), a constitution bench judgment of the Supreme Court considered the question of award of interest for the pre reference period. NC Budharaj heavily relied on the judgment of GC Roy and held that arbitrator has the power to award pre reference award as long as there is nothing in the arbitration agreement to exclude the authority of an arbitrator to entertain a claim for pre reference interest. GC Roy and NC Budharaj are considered to be landmark cases under the 1940 Arbitration act. Under 1940 act, it is crystal clear that in absence of provision regarding the awarding of interest in a contract, then the arbitrator has the power to award interest along with principal amount as it is was considered an implied term of the contract. Position under 1996 Arbitration Act Section 31 (7) was added in the 1996 Arbitration Act. The law pertaining to the 1940 act has transformed after the introduction of the new act. Union of India v. Bright Power Projects,[6] states the position that as per section 31 (7) (a) of the Act, the arbitrator has the power to award interest pendente lite, “unless otherwise agreed by the parties.” It is clear from the language of section 31 (7) that it gives autonomy to the parties’ contract and the arbitrator is bound by the express terms of the contract. Therefore, where the parties agreed that no interest shall be payable, the tribunal cannot award interest.[7] Further, a three-judge bench of Supreme Court in the case of Union of India v. M/s Ambica Construction,[8] reiterated the same principle propounded by the Supreme Court in the above-mentioned case. Furthermore, the Supreme Court, recently, had an opportunity to decide whether an arbitrator can grant interest pendente lite in arbitration proceedings seated in India. This precedential judgment was delivered in February 2019 in the case of Jaiprakash Associates Limited v. Tehri Hydro Development Corporation India Limited.[9] A three-judge bench heard the appeal filed against the judgment of the Delhi High Court wherein the Court quashed an arbitration award to the extent it granted interest to the present appellant, though being barred by the contract between the parties to grant the same. In this case, the appellant was awarded a works contract by the respondents. The Contract contained a provision for arbitration of any dispute arising out of the concerned transaction by a panel of three arbitrators under the Arbitration Act. It is important to note that the interpretation of Clause 51 of the Contract clarifies that interest is not payable to the contractor on the money due to him. Then Court after taking into consideration precedents, statutory and common law principles answered in affirmative that arbitrator does not have the power to award interest in case if it is expressly barred by the terms of the contract. In light of the above discussion, it is necessary to discuss the facts of the Fenner case. Factual Background Claimant [hereinafter ‘JK Fenner’] is a company engaged in a business of designing, engineering, manufacturing, supply, testing and commissioning on turnkey basis to various infrastructure facilities like coal mines, chemical refineries, thermal power plants, airports etc. Claimant submitted their bid to a tender floated by the respondent [hereinafter ‘Neyveli Lignite Corporation’] for the design, supply and commissioning of a Lignite Handling and Storage System (LHS) on 11th April 1998. By letter of award dated 31st July 1998 and 12th August 1998, respondent accepted the claimant’s bid. As per the terms of the contract, the claimant is required to complete whole work including successful completion of the trial operation of the installed machinery within 30 months from the date of the letter of award i.e. by 31st January 2001 in consideration of a certain amount of money. By letter dated 1st March 2004, the respondent had provisionally taken over the operation of LHS with immediate effect inclusive of the 14 months period i.e. 1st January 2003 to 29th February 2004, where claimant operated under the instructions of the respondent. The dispute arose between the parties when a claimant sought payment for work done under various heads from the respondent. Despite sincere efforts made by the claimant, the respondent did not accept the claims of the claimant. Therefore, claimant invoked the arbitration clause of the contract by their letter dated 11th January 2007. Both parties appointed arbitrators and proceedings commenced. The arbitral tribunal passed the award on 5th October 2013 and modified the same on 5th January 2014. Tribunal awarded claims in favour of both claimant and respondent under different heads. In particular, the author only discusses Claim I which is about the refund of retention money held by respondent along with interest. Claim I is related to the payments withheld by respondents due to the claimants on the ground that claimant failed to complete work as per the performance guarantee test within the stipulated time. Respondent denied this claim by contending that the claimant was not ready for the test on the pre-decided date, and, therefore was not entitled to the payment. Tribunal observed that the equipment was working satisfactorily from January 2003 and mere failure to issue certificate cannot allow respondent to withheld claimant’s money. Hence, the tribunal awarded principal amount but did not allow interest from the date of the takeover of LHS till paid on the ground that the amount became payable only on the date of the award. Claimant challenged the arbitral award under section 34 of the Arbitration Act before Madras High Court under various heads. Issue Concerned Whether denial of interest by tribunal post 1st March 2004 to the claimant as per clause 6.5.2.1 (d) of the contract is an erroneous observation or not? Discussion The primary purpose of arbitration is no speed, or privacy, neutrality, or economy, but rather parties have the ability to make key choices to suit their particular needs.[10] Arbitration jurisprudence is largely guided by the norm of contractarianism. This is equally applicable in cases of interest pendente lite (period commencing from the date of cause of action to the date of award). In such cases, terms of the contracts agreed by the parties are of paramount importance with regards to the payment of interest applicable to the principal amount. These terms also serve as a determinant factor in establishing arbitrator’s authority in awarding such interest claims. It is important to produce clause 6.5.2.1 (d) of the contract at this stage, which does not prohibit grant of interest. Clause 6.5.2.1 (d): After successful completion of performance test for equipment and certification of results by the purchases/consultant – 10% to be paid. In the event of commissioning delayed beyond 6 months from the scheduled date and the delay is not attributable to the claimant, the final tranche of payment shall be released against the production and acceptance of a bank guarantee for an equal amount valid for one year or any revised scheduled date of commissioning whichever is earlier. It was the case of the claimants that the correct interpretation of clause 6.5.2.1 (d) of the contract would not restrict the arbitrator’s authority to grant interest pendente lite interest. In other words, Claimant contended that agreement does not expressly prohibit levy of interest. Case of Unliquidated Damages: Different from Liquidated Damages? - A New Dimension After discussing Fenner case, it is of utmost importance to discuss the interesting position reached out by Supreme Court in the case of M/s Raveechee & Co. v. Union of India,[11] (hereinafter ‘Raveechee’) wherein the court held that the bar to award interest on the amount payable under the contract would not be sufficient to deny the payment of interest pendente lite by the arbitrator. Court went on to proceed, as a general rule, that arbitrator has the power to award interest. Moreover, the court observed that in a case of unascertained damages, the question of interest would arise upon the ascertainment of the damages in course of the dispute. Such damages could attract pendente lite interest for the period from the commencement of the arbitration to the award. Thus, the liability for pendente lite interest does not arise from any term of the contract, or during the terms of the contract, but in the course of determination by the Arbitrators of the losses or damages that are due to the claimant. Such power was considered to be inherent in an Arbitrator who also exercises the power to do equity unless the contract expressly bars an Arbitrator from awarding interest pendente lite. An agreement which bars interest is essentially an agreement that the parties will not claim interest on specified amounts. It does not bar an Arbitrator, who is never a party to the agreement from awarding it. Nevertheless, the reasoning given in Raveechee is different from the reasoning in Chittaranjan Maity v. Union of India,[12] (hereinafter ‘Maity’) wherein the court held that the arbitrator does not have the power to award interest if it is expressly barred by the terms of the contract. Interestingly, both the judgments deal with the similar clauses under their respective contract which provides that no interest shall be payable upon the earnest money, security deposits or amounts payable to the contractor, but government securities deposited in the contract will be payable with interest. In Maity’s case, the court interpreted section 31 (7) of the Arbitration Act, in which interest award is made subject to the terms of the contract between the parties. Clause 16 (2) of the GCC expressly barring an award of interest would prevail over the arbitrator’s power to award interest. Hence, parties have agreed that interest shall not be payable under the contract barring arbitral tribunal to award interest pendente lite in the present case. On the contrary, the approach adopted by the court in Raveechee is completely different, where they held that GCC clause expressly barred interest payable upon earnest money, security deposits or amount payable to the contractor under the terms of the contract. A distinction was crafted by the court between liabilities to pay interest on the determination of unascertained damages in the course of dispute and liability to interest as per terms of the contract. Court further held that bar to award interest on the amount payable under the contract would not be sufficient to deny interest pendente lite as it would depend upon several factors such as phraseology used in the language of the contract, nature of claim and dispute referred to the tribunal. In sufficient similar worded clauses of both Raveechee and Maity, the court interpreted differently in order to arrive at a different conclusion. Raveechee follows the path that arbitrators have the power to do justice to the parties irrespective of the terms of the contract, whereas Maity follows that arbitrators are creatures of the contract and are bound to follow the express terms of the contract. Conclusion The extent of power vested in an arbitral tribunal is a subject of constant judicial interpretation. Indian Judiciary has constantly tried to clarify these questions when arise. Through the recent pronouncement of Supreme Court in Jaiprakash, the court has attempted to clarify the issue of arbitrator’s power to award interest pendente lite. However, in the light of Raveechee, the issue pertaining to award interest in unascertained damages is yet to be tested. It would be interesting to observe that larger bench of the Supreme Court address this ambiguity while dealing similar clauses in the light of section 31 (7) (a) of the Arbitration Act. In the light of the above discussion, the author is of the opinion that judgment pronounced in Fenner is correct in view of Supreme Court decisions in GC Roy, Maity and Jaiprakash. * This Article is an edited version of the 3rd Best Entry in the 1st Case Summary Writing Competition. Suggestions were made by the Editorial Team based on which changes were made by the author. [1] Samyak Jain, student of 7th semester studying at Institute of Law, Nirma University, Ahmedabad. The author can be reached at the E-mail address- 2808.vishi@gmail.com [2] M/s J.K. Fenner (India) Limited v. M/s Neyveli Lignite Corporation, O.P. No. 252 of 2014. [3] J Martin Hunter & Alan Redfern, International Arbitration 1 (6th ed. 2015). [4] Secretary Irrigation Department, Government of Orissa and Others v. G.C. Roy, (1992) 1 SCC 508. [5] Dhenkanal Minor Irrigation Division, Orissa & Ors. v. N.C. Budharaj, (2001) 2 SCC 721. [6] Union of India v. Bright Power Projects, (2015) 9 SCC 695. [7] Sree Kamatchi Amman Constructions v. Divisional Railway Manager (Works), Palghat & Ors., (2010) 8 SCC 767. [8] Union of India v. M/s Ambica Construction, SLP [C] No. 11114/2009. [9] Jaiprakash Associates Limited v. Tehri Hydro Development Corporation India Limited, 2019 SCC OnLine SC 143. [10] Thomas J. Stipanowich, Arbitration: The “New Litigation,” 2010. ILL. L. REV. 1, 51 (2010). [11] M/s Raveechee & Co. v. Union of India, (2018) 7 SCC 664. [12] Chittaranjan Maity v. Union of India, (2017) 9 SCC 611.

We are grateful to Mr. Michael Black QC, who agreed to give us this interview. We are delighted that he will be sharing his views on his practice as a counsel and an arbitrator. To give our readers a brief introduction of Mr. Black, he has practiced as an international arbitration lawyer throughout his career and for more than 25 years has regularly received nominations as sole arbitrator, party-appointed arbitrator and chairman under the City Disputes Panel, ICC, LCIA, DIFC-LCIA, ADCCAC, UNCITRAL, LMAA, SCMA and DIAC Rules as well as under ad hoc procedures. He is recommended in both Legal 500 and Chambers & Partners in this area and said to be “top of many people’s list for international arbitration work.” He has appeared as counsel in several leading English and Privy Council cases concerning arbitration including B v A – whether failure to apply chosen law a “mere error” or procedural irregularity – the status of dissenting opinions; Michael Wilson & Partners v Emmott – challenging tribunal’s award as to its substantive jurisdiction – decision on procedural matters; Cetelem SA v Roust Holdings Ltd – whether judge has jurisdiction to make interim mandatory order pending ICC arbitral proceedings – whether court usurping arbitral process; Henry Boot Construction (UK) Limited v Malmaison Hotel (Manchester) Limited – powers of Court of Appeal to review decision of judge on appeal from arbitrator; Al-Naimi v Islamic Press – duties of judge when considering a stay of court proceedings; IPCO v NNPC – enforcement of a New York Convention award subject to challenge at the seat; Anzen v Hermes One – optional arbitration clauses and stay of proceedings. ZCCM v Kansanchi – procedural order or award – section 68 Arbitration Act 1996. He has an international reputation as an expert in dispute resolution procedures. He spent nearly five years as a member of the English Civil Procedure Rule Committee. In that time, he was particularly involved in the draftsmanship of the English Court Rules relating to Arbitration Claims. As a result of this experience, he was retained to draft the procedure rules for the Courts of the Dubai International Financial Centre. He was involved in the draftsmanship of the DIFC Arbitration Law 2008. He is a member of the Court of the Casablanca International Mediation & Arbitration Centre and the ICC Global Commission on Arbitration and ADR. As Visiting Professor at Manchester University, he lectures and supervises at Masters’ and Doctoral level in international dispute resolution. He has written widely on arbitration both in the UK and the USA. Mr. Black, we welcome you to the Arbitration Workshop Blog and thank you again for agreeing to this interview. Q.1. How did your interest in commercial dispute resolution in general and arbitration in particular begin? For how many years did you practice before you started accepting nominations as a Sole Arbitrator or a member of an Arbitral Tribunal. Do you believe your practice helped you in developing the skillset to serve as an arbitrator as well? A1. In fact, as soon as I began my pupillage in 1977 I was exposed to both shipping and construction cases. Thereafter my junior practice developed in the areas of construction and insurance where there was a tradition of arbitration. The huge increase in construction disputes in the UK in the 1980s consequent on the economic crises led to an upsurge in domestic construction arbitration. I began receiving a few appointments in the domestic construction area before I was appointed Queen’s Counsel in 1995 but it was thereafter that they became more numerous and international in nature. Yes of course, I firmly believe that one cannot sit in any judicial capacity unless one has acted an advocate. Without that experience the tribunal has no understanding of the pressures on the advocates and why matters are presented in the way they are. Q2. You are considered an expert on Middle Eastern dispute settlement and were influential in the early days of working of the Dubai International Arbitration Centre and the Dubai International Financial City. When and how did you decide to work in the Middle East and what factors led to choosing Dubai as one of the major seat of practice both as counsel and as an arbitrator? A2. I think it is true of most lawyers’ careers that things often happen by accident. The trick is to recognise that fate has provided you with an interesting opportunity. I had always had an interest in the Middle East and indeed both my first major case as a very junior and my first trial in the High Court without a Leader were Middle East cases. Those who were setting up the DIFC approached me in 2003 to assist with the establishment of the DIFC Courts because of my experience on the English Civil Procedure Rule Committee. Q3. To the uninitiated, how do DIFC Court and the DIAC fare as venues for neutral arbitration? In your experience, which kind of parties have switched to DIAC from other neutral hubs like Singapore, Hong Kong, London, Paris and New York. A3. I think DIAC remains more focussed on Dubai disputes and in particular in the construction arena. DIFC-LCIA is more commercial and more international in outlook. Arbitrations administered by that institution are often subject to the curial jurisdiction of the DIFC Courts. The DIFC Courts are one of the most arbitration friendly jurisdictions in the world. The bench has always comprised distinguished international lawyers - the first Chief Justice was Sir Anthony Evans, former English Court of Appeal judge and President of the Chartered Institute of Arbitrators. He was followed by the famous Singaporean arbitrator Michael Hwang SC. The current Chief Justice is the former Chief Justice of Malaysia and bench has recently been joined by the former Chief Justice of Australia. It is hardly surprising that such a jurisdiction attracts business from all over the world. Q.4. India is making progressive steps to develop a few of its cities into International Arbitration hubs. The attempts can be seen in the form of legislative reforms (2015 and 2019 amendment to the Arbitration and Conciliation Act, 1996), executive actions (creation of the New Delhi International Arbitration Centre) and also by the judiciary by practicing minimal interference in International and Domestic Arbitration matters. In your experience, what factors go into making a good neutral hub for arbitration. Could you let us know from your experience of working in London, Singapore and Dubai as to what could steps could cities like New Delhi and Mumbai in India take to become an arbitration hub? A.4. The most important factors in the success of an arbitral seat are conveniently set out in the Chartered Institute’s 10 “London Principles”: ·an arbitration law providing a good framework for the process, limiting court intervention, and striking the right balance between confidentiality and transparency ·an independent, competent and efficient judiciary ·an independent, competent legal profession with expertise in international arbitration ·a sound legal education system; the right to choose one’s legal representative, local or foreign ·ready access to the country for witnesses and counsel and a safe environment for participants and their documents ·good logistical support, including transcription, hearing rooms, document handling, and translation ·professional norms embracing a diversity of legal and cultural traditions, and ethical principles governing arbitrators and counsel ·well-functioning venues for hearings and other meetings ·adherence to treaties for the recognition and enforcement of foreign awards and arbitration agreements ·immunity for arbitrators from civil liability for anything done or omitted to be done in good faith as an arbitrator. Q.5 You have extensively worked both as a counsel and an arbitrator. Based on your experience, could you tell us your opinion about the issue of double hatting? What practices help you in switching between your roles as a Counsel and an Arbitrator? Do you believe institutions guidelines could help in addressing this issue and allaying the concerns of litigants? A.5. I go back to what I said before not only do I think it is not a cause for concern but I think it is highly desirable if not essential. Q.6. As Tribunal Secretaries in domestic arbitrations in India, we have had extensive exposure to construction disputes. In a few International Commercial Arbitrations, we have shareholder disputes take center stage. Given your experience in the resolution of Shareholders dispute, both as a counsel and an arbitrator, could you paint us a picture of the fundamental conflicts that come up in such arbitration matters. Are there any books or reference material that you would recommend for the practice of arbitration in shareholder disputes? A.6. The typical shareholder dispute in which I become involved usually relates to a joint venture between a state entity and a foreign investor in infrastructure projects or the extractive industries. I am not sure that I can recommend books specifically directed to the arbitration of shareholder disputes as of course issues will often depend on the governing law. I would certainly recommend the magisterial general works on arbitration such as Born and the upcoming new editions of Craig, Park & Paulson and Mustill & Boyd. Q.7. 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 routine you would recommend young lawyers regularly engage in to become better in the field? A.7. I enjoy the people. It is a shame that that has been impacted by the present pandemic. Hopefully normality will resume soon. Conference and seminars are the best way to keep up-to-date and young lawyers should attend and participate. Q.8. What would be your word of advice to the readers trying to make it big in the transnational practice of international arbitration and what books and reference material would you want them to read and refer to? A.8. I am not sure what “make it big” means. I think the answer is not found in books. The advice I give to all young lawyers is to say “yes” to every opportunity to gain experience. There is no such thing as useless experience and you never know where it might lead you. The Editorial Team at the Arbitration Workshop would like to thank Mr. Black for taking out time from his busy schedule and for sharing his perspectives with us!

- Rituparna Padhy This is Part I of a three-part series on the new proviso regarding unconditional stay of an award upon discovery of fraud/corruption vis-à-vis Arbitration and Co­­­nciliation (Amendment) Bill 2021. The Rajya Sabha, the Upper House (Council of States) of the bicameral Parliament of India, recently passed through voice vote the Arbitration and Conciliation (Amendment) Bill 2021 [“Amendment Bill”]. The Bill would replace the ordinance that was issued on 4 November 2020. The Bill addresses two issues: a. An unconditional stay shall be granted if the arbitration agreement, underlying contract, or the impugned award is prima facie induced/affected by corruption, and b. Omission of the Eighth Schedule of the Arbitration and Conciliation Act 1996 (“Act”) that had enumerated qualifications for an arbitrator. The Amendment Bill essentially provides that when the court is satisfied that a prima facie case has been made out for the arbitration agreement, the underlying contract, or the making of the award has been induced/affected by fraud/corruption, the court is bound to stay the award’s enforcement unconditionally until the Section 34 application has been disposed of.[1] This new proviso to Section 36(3) of the Act would apply to all court cases related to arbitration proceedings that are pending or were initiated after the 2015 Amendment Act[2] came into force (23 October 2015). Consequentially, it is immaterial whether the arbitration/court case(s) began before or after the 2015 Amendment Act.[3] In this Part, the author will be addressing the impact of the new proviso on the scope of judicial interference, the doctrine of severability, and the computation of the relevant limitation period. Scope of Judicial Interference The Act's objective to minimise judicial intervention in arbitral proceedings is evident in Section 5 of the Act, whose non-obstante clause clarifies that the only judicial intervention permitted is what is expressly provided in the Act.[4] The scope of judicial intervention has been particularly contentious in relation to issues dealing with Section 36 of the Act, with the stance in early 2020 being that a separate stay application has to be made regardless of when the court case/arbitration proceeding was initiated. The Supreme Court in the seminal case of Hindustan Construction Company Ltd. v Union of India[5] (“HCC”) ruling that an automatic stay on the operation of an award was no longer permitted.[6] Now, the new proviso may reintroduce the same “mischief”[7] of an automatic and unconditional stay, albeit in more limited circumstances. This is because once the court is satisfied that a prima facie case of fraud/corruption exists, it is mandated to grant an unconditional stay on the operation of the award, making it partially automatic. Worryingly, there persist more concerns regarding the new proviso to be added to Section 36(3) of the Act. Pursuant to the Amendment Bill, while the award cannot be set aside on the ground of the underlying contract being affected by fraud/corruption, the operation of the award can be stayed for the same ground. It is evident that the grounds on which an unconditional stay on enforcement can be sought would be wider than the grounds permitted for challenging the award itself, which further broadens the scope of judicial intervention without balancing the rights of the parties as well. Moreover, what if a prima facie determination of the arbitration agreement/underlying contract being induced by fraud/corruption is made out under Section 36(3), but the Section 34 challenge is dismissed because the award was not induced/affected by fraud/corruption? Would the award-holder now be able to get the award enforced despite the determination under the stay application? Considering the fact that Section 37 of the Act (exhaustively enumerating the appealable orders) does not apply to court orders relating to Section 36 (as held by the Bombay High Court in Essar Oil and Gas Exploration v Toshiba Water Solutions Pvt. Ltd.[8]),[9] the situation remains uncertain. Presently, even when a Section 34 challenge has been filed, the award in question would not become unenforceable ipso facto. For the operation of the award to be stayed, a separate application has to be filed for the court to determine whether to grant such an order or not.[10] The court has the discretion to grant a stay "subject to such conditions as it may deem fit",[11] which suggests that practically, the court could ‘deem it fit’ to not impose any conditions. If the new proviso expressly mandates an unconditional stay upon a prima facie discovery of fraud/corruption, does it mean that an unconditional stay can be granted for no other grounds/claims? It is uncertain what the impact of the new proviso will be on the limits of judicial intervention be in this context. At the same time, the discretionary authority to impose conditions on a stay order that is granted to courts by Section 36 is more considerate of the parties’ situation. Being compelled to grant an unconditional stay in the face of allegations as that of fraud/corruption could result in the misuse of the provision, since the interests of the award-holder and the conduct of the award-debtor may get more difficult to accommodate equitably. In this context, one could say that the scope of judicial intervention is being curtailed without a sufficient cause, though the Bill’s Statement of Objects and Reasons considers the unconditional nature of the stay a benefit – that an unconditional stay would protect the interests of the aggrieved party better. However, it provides no further explanation as to why the courts need to be divested of their discretionary power. Additionally, the wording in the Amendment Bill - "Where the Court is satisfied that a prima facie case is made out"[12] implies that a claim of fraud/corruption has to be expressly made by a party for the court to adjudicate on it. This interpretation would be more in line with the objective of minimum judicial interference of the Act. However, one could also argue that even when the separate stay application does not expressly argue on the ground of fraud/corruption for a stay on the award, the Court can take up the issue sua sponte. This interpretation would help dispense with the filing of more documents and ward off even more prolonged proceedings. On the other hand, should that be the intended interpretation, more deliberation would ensue - would the increased judicial discretion be antithetical to the objective of reducing judicial interference in arbitration or be in consonance with the Act by expediting proceedings? Furthermore, the Act clearly lays down that an award cannot be set aside merely upon reappreciation of evidence.[13] However, if the tribunal has already undertaken the fact-finding process regarding the alleged fraud/corruption, the court would have to review and second-guess the arbitrator’s decision for granting a stay on that ground. Detecting fraud/corruption in the making of the award may be more procedural in nature and can be undertaken without reappreciating the evidence. In contrast, when the underlying contract has been tainted by fraud/corruption, it would necessitate ‘reappreciating’ the evidence and revisiting the facts and circumstances of the case. Another peculiar situation may arise. As we know, one can file a Section 34 application on the ground of the award being in conflict with the public policy of India due to it being induced/affected by fraud/corruption.[14] While a stay application has to be separately filed, the new proviso permits the applicant to request a stay on the award’s operation on the same ground of fraud/corruption. The dilemma becomes this: would the court have to determine whether a prima facie case of fraud/corruption exists before the court determines the same thing (albeit more conclusively) in the Section 34 challenge? If the prima facie determination is in the affirmative, then the award has to be stayed unconditionally – the award-debtor gets to pause the enforcement of the award well before its Section 34 challenge on the same ground is resolved. Whether the net outcome is beneficial to the objectives of the Act or not would vary from case to case, but this can also tantamount to a pre-emptive decision that places the award-holder in a prejudiced position before the actual proceedings are completed. Essentially, the award-debtor would have an additional loophole through which it can invite greater judicial intervention in the dispute. Doctrine of Severability We see that for a Section 34 application, the decision-making process behind the award should have been induced/affected by fraud/corruption.[15] However, according to the proposed proviso, a stay can be sought under Section 36(2) even when the contract in question appears to be induced/affected by fraud/corruption. Apart from increasing the scope of judicial interference, this has one major implication: it conflicts with the doctrine of severability that is fundamental to arbitration. The principle of severability in arbitration postulates that an arbitration agreement is distinct and separate from the contract between parties, even if the arbitration agreement is one term of the contract.[16] This means that even if the underlying contract is nullified, the arbitration agreement/clause is not invalidated ipso jure.[17] Contextually, a stay on the operation of the award should not be affected by the validity of the underlying contract. This would be in line with the jurisprudence of Section 34 challenges,[18] which is relevant since a stay application is derived from a Section 34 challenge. However, the Amendment Bill blurs the line of severability because if the contract appears to have been tainted by fraud/corruption, then the award [that is based on the arbitration agreement] would be stayed unconditionally. Impact on the Limitation Period When the Amendment Bill enters into force, there can be two general situations regarding a Section 36(2) application: either the stay application was filed first and the fraud/corruption was detected later, or the stay application is filed after the fraud/corruption was detected. In either case, the courts would be able to accommodate the aggrieved parties' concern regarding potential fraud/corruption impacting the arbitration due to two reasons - courts could have the suo motu authority to look into such concerns, and there are no time limits prescribed for filing or adjudging a Section 36(2) application. However, accommodating such concerns carries its own set of complications. It is probable that at the time of filing the Section 34 or Section 36(2) application(s), the aggrieved party was unaware of such acts. The impact of the Amendment Bill would differ between the two applications with regard to the limitation period: Section 34 application Section 34(3) expressly sets a time period of 3 months (from the date of receiving the award) with an additional thirty days (if sufficient cause present) for filing an application to set the award aside.[19] Additionally, Section 34(6) emphasises the need to dispose of such applications expeditiously.[20] Accordingly, it is understandable that courts have consistently refused to grant extensions even when sufficient cause for an extension is found.[21] It is also why courts have excluded the application of Section 17 of Limitation Act 1961, which provides that in cases where fraud is detected, the period of limitation would begin only after the party has discovered the fraud.[22] In light of such a well-established practice, it is unlikely that courts will permit an extension of time when fraud/corruption is discovered after the prescribed period. This is the likely outcome despite the Supreme Court recently opining in the case of Government of Maharashtra v Borse Brothers Engineers and Contractors Ltd.[23] that a short delay may be condoned in limited situations.[24] However, by omitting to add an exception clause in Section 34(3) for the fraud/corruption proviso, the legislature has seemingly not accounted for the legitimate delays that may occur before the discovery of fraud/corruption. Section 36(2) application Section 36(2) appears to be more accommodative of the time it may take before the fraud/corruption is discovered. Since there is no time limit associated with the filing of a Section 36 application, one will theoretically be able to claim a prima facie discovery of fraud/corruption well after the filing as well. Even the court would not be bound to determine a prima facie case within a prescribed time limit, which would ultimately be beneficial for the aggrieved party. Moreover, courts will likely permit invoking Section 17 of the Limitation Act for a Section 36(2) application too, since the Act has no time limits that would override the provisions of the Limitation Act. Even though the abovementioned Section 17 covers fraud, one can be hopeful that courts would extend the principle to cases of corruption as well. Effect of the explanation to the new proviso The explanation of the new proviso clarifies that the proviso would apply retrospectively regardless of whether the court case or the arbitration proceedings commenced before or after the 2015 Amendment. As mentioned previously, this explanation expressly acknowledges the maintainability of the eligible applications in the context of the time period. However, two new procedural concerns arise: a. If a Section 36(2) application is already pending, either a fresh application has to be filed for invoking the new proviso or the party should be permitted to amend the already filed application. This can tantamount to further delays unless the court can take suo motu notice of the new proviso and dispense with any further action on part of the applicant. However, this would again call into question the interpretation of the phrase “prima facie case is made out” – whether this requires the applicant to expressly argue for this proviso to apply, or whether the court can take the matter up without the parties having to invoke the same. b. Due to the retrospective application, a flurry of new Section 36(2) applications could be apprehended due to the allure of an unconditional stay, especially when a previous stay application was already refused in the same matter. The courts must exercise caution when parties attempt to take ‘a second bite at the cherry’ and argue for a stay on the operation of the award. Concluding Remarks Even in 2020, the Supreme Court had to point out that Section 34 proceedings take an average of six years to be disposed of.[25] This in itself exemplifies the significance of a stay on the enforcement of an arbitral award, especially an unconditional one. In this first Part, we analysed how the boundaries of judicial intervention are being modified, the overall inference being that the chances of curial intervention are heightened without some of the necessary safeguards being present. With respect to the doctrine of severability, we studied the potential ripples in litigation the new proviso may cause by subjecting an award’s stay to the validity of the underlying contract. Finally, we observed how time limits in Section 34 appear to be more rigid towards and Section 36 appears to be more accommodative of the new proviso. While relaxing Section 34 time constraints would be detrimental to the speedy disposal of cases in general, an exception clause could have been added to it for complementing the new proviso. Thus, while the Amendment Bill would be welcomed in some procedural aspects, it regrettably leaves much to speculation and interpretation. In the next two Parts, we would delve deeper into the substantive scope of fraud and corruption in the context of arbitration. [1] §2, Arbitration and Conciliation (Amendment) Bill 2021. [2] Arbitration and Conciliation (Amendment) Act 2015. [3] Id. [4] §5, Arbitration and Conciliation Act 1996. [5] WP (Civil) No. 1074 of 2019 [HCC]. [6] Id. at ¶31. [7] HCC supra note 5 at ¶50. [8] Commercial Appeal (L) No. 4288 of 2021. [9] Id. at ¶4. [10] §36(2), Arbitration and Conciliation Act 1996. [11] §36(3), Arbitration and Conciliation Act 1996. [12] Proviso to §36(3), Arbitration and Conciliation Act 1996. [13] Proviso to §34(2A), Arbitration and Conciliation Act 1996. [14] Explanation 1(i) to §34(2)(b)(ii), Arbitration and Conciliation Act 1996. [15] Explanation 1(i) to §34(2)(b)(ii), Arbitration and Conciliation Act 1996. [16] §16(1), Arbitration and Conciliation Act 1996. [17] Id. [18] Vidya Drolia and Others v Durga Trading Corporation, 2020 SCC OnLine SC 1018, ¶67; A. Ayyasamy v A. Paramasivam and Others, (2016) 10 SCC 386, ¶53. [19] §34(3), Arbitration and Conciliation Act 1996. [20] §34(6), Arbitration and Conciliation Act 1996. [21] Simplex Infrastructure v Union of India, SLP (C) No. 17521 of 2017; Basawaraj v Land Acquisition Officer, (2013) 14 SCC 81, ¶12; Government of Maharashtra (Water Resources Department) v M/S Borse Brothers Engineers & Contractors Pvt. Ltd., CA 995 of 2021, ¶56, 60. [22] §17, Limitation Act 1961. [23] CA No. 995 of 2021. [24] Id. at ¶61. [25] HCC supra note 5 at ¶3.

Milind Yadav[1] The 2019 amendments to the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) has helped propel India forward as an arbitration-friendly destination for the global community. The emerging jurisprudence on arbitration discourages judicial intervention in arbitral proceedings until ‘public policy’ enters the frame. Despite acknowledging the need to reduce judicial intervention, courts may occasionally be unable to enforce a challenged award because the challenge that may appear to be a mere procedural error snowballs into a substantive issue related to crucial grounds of challenge like ‘public policy’. The situation gets precarious even further when the arbitral tribunal seems to have overpowered the substantive rules they are bound to follow. The combined situation of substantive irregularity in the award and misuse of jurisdiction by the tribunal calls for judicial intervention as the last resort. The author analyses the above premise through an analysis of the recent case adjudged by the Madras High Court where the challenged award had contravened the provisions of the Arbitration Act. The case appears to revolve around a mere procedural requirement that was not adhered to, and the judicial intervention seems to have been uncalled for. However, the author argues that deeper analysis indicates a potential infringement on the ground of the ‘public policy’ that the Division Bench of the Madras High Court took into consideration but not expressly acknowledged while analysing the award reaffirmed by the Single Judge Bench of the High Court. Facts of the Case Recently, the Madras High Court in Hindustan Petroleum Corporation Ltd v Banu Construction[2] heavily criticized the Single Bench for failing to examine the award when an application to set it aside was submitted/filed. In fact, when addressing the Single Bench’s order that passed the challenged award, the Division Bench remarked, “this is a classic example of what cannot be done by an Arbitration Court.”[3] In this matter, the award was initially challenged before the Single Bench. However, the bench rejected the challenge and reaffirmed the quantum being awarded. This order by the Single Bench was challenged before the Division Bench of the Madras High Court under Section 37 of the Act with the appellant alleging that the order was unreasoned and therefore, unenforceable. The Judgement The court primarily examined the content of the award to deduce the shortcomings in the tribunal order in question. Basing their decision on the principle codified in the Act, which provides that “the award shall state the reasons upon which it is based”[4], the court opined that the arbitrator had not given any considerable reason that indicates his ‘application of mind’ in the quantum awarded.[5] However, the author argues that the judgment not only addresses the consequences of not adhering to procedural formalities but also portrays the jurisprudential understanding to keep arbitral proceedings in check with the help of the principles of public policy, the interest of justice and conscience of the court. Analysis Scope to Set Aside an Arbitral Award The statutory authority of the Court to set aside an arbitral award, albeit limited, is enshrined in Section 34(2)(b)(ii) of the Act. The award can be set aside if it violates the public policy of India, i.e., it contravenes the fundamental policy of law or conflicts with the basic notions of morality or justice. Over the years, the courts have attempted to define public policy in order to inspect/review and set aside arbitral awards. Though courts have not established the definition of ‘public policy’ but it is firmly certain that whatever falls within ‘public policy’ can be rightfully lead to judicial intervention. In Oil and Natural Gas Co. Ltd. v. Saw Pipes[6], the court gave a wider meaning to public policy by applying to it a meaning similar to that of public good and public interest and held that an award that contravenes statutory provisions is against public policy as well. In Mcdermott International Inc v. Burn Standard Co. Ltd[7], the Supreme Court held that courts have a supervisory role to ensure fairness in arbitral awards. In ONGC Ltd. v. Western Geco International Ltd.[8], the court laid down certain principles for a suitable judicial approach as well as natural justice to define the boundaries of the phrase ‘fundamental policy of Indian law’. Essentially, the principles lay down that any court or tribunal must refrain from acting arbitrarily, which may otherwise have civil consequences and that they should act judicially and in the interests of justice.[9] In 2015[10], the Supreme Court emphasised that an arbitrator is the sole judge who examines the facts of the case. Therefore, the arbitrator cannot be irrational/unreasonable when deciding the award, and the reasons for the award should be able to withstand the ‘reasonable man’ test.[11] The court further held that an award cannot be enforced if it goes against justice and morality such that it shocks the conscience of the court.[12] In two recent cases, the Supreme Court has adopted views that is opposite to the observations made by the Hon’ble High Court in the present case. In Venture Global Engineering LLC v. Tech Mahindra Ltd.[13], the Supreme Court held that a court cannot examine the legality of an arbitral award. The point was further elaborated in Ssangyong Engineering & Construction Co. Ltd. v. NHAI[14], where the Supreme Court clarified that courts cannot interfere with an arbitral award on the ground that “justice has not been done in the opinion of the Court”.[15] At the same time, the Supreme Court reasserted its earlier stand on the interpretation of ‘public policy’ as was opined in the judgment of Government of India v Vedanta Limited[16], where the court had held that ‘public policy’ comprised of fundamental policy, the interest of justice, and morality. The Public Policy Role of the Arbitrator The court found that the award by the tribunal is set on a total of 120 pages which covers everything from facts to claims but the reasoning for the quantum awarded by the tribunal was hardly a paragraph on page number 118 of the award.[17] However, it was not with respect to the lack of proportional reasoning with respect to the total number of pages in the award that led to the contravention of public policy. Rather, it was the fact that the arbitrator did not address the reasoning behind his decision at all. The Act mandates the arbitrator to record reasons for the award[18] because the courts, who would have reviewed the dispute otherwise, have limited authority to examine the award when the same is challenged. The courts can then rely on the arbitral tribunal’s reasons for its findings on merits or jurisdiction to adjudicate the challenge. The Statutory Responsibility of Tribunal and the Limitation In the present case, what shook the conscience of the Division Bench Court was that the Single Judge Bench of the High Court chose not to set aside the award despite prima facie inconsistency with the provision of the Act. Rather, the court itself gave reasons for the award in the judgment by examining the merits of the case. It seems unreasonable for the court to take such a course because the Act clearly states that the reasoning for the award must be given in the award itself. There is no provision for the court to provide reasons as a ‘substitute’ to the arbitrator’s findings in a challenged award. The court, instead of analysing the award in its entirety and without examining the merits of the case, stepped into the shoes of the arbitrator to satisfy the ‘reasonableness’ for the quantum awarded. The same is pointed out by the Division Bench to ‘rewrite the arbitration award’ in order to support the quantum awarded is not the ‘business’ of the court.[19] Thus, the court went well over the statutory responsibility by dismissing the challenge and substituting the arbitrator’s lack of reasoning with its own. The Sense of Subtle Biasness Though the Madras High Court did not directly assert partiality and a prejudicial bias on part of the arbitrator, if any, the vehement criticism of the arbitral award may suggest a red alert that the Court realized while analysing the award. The Act requires the appointed arbitrator to disclose his personal interest before the arbitral proceedings commence.[20] However, there remains a probable chance that the arbitrator omitted to make a substantial disclosure, either intentionally or mistakenly. The Act recognises the implications of a biased arbitrator and allows the parties to challenge the appointment of arbitrators if circumstances exist to raise “justifiable doubts as to his independence or impartiality.”[21] However, this provision can be successfully invoked only when the party challenging the appointment has sufficient grounds to prove the arbitrator’s partiality and biases. Thus, when an arbitral award is challenged, courts tend to keep the sceptics of partiality within the purview of “interest of justice and morality”[22] while examining the arbitral award. Conclusion The Madras High Court’s analysis might seem superficial due to the consideration of factors like the number of pages for each part, and the Division Bench observing the lack of proportionality for the reasons assigned to the decision of the arbitrator. However, the court did follow implicitly the spirit of the Indian arbitration jurisprudence within which an award cannot be against the public policy of India and cannot be so egregious as to shock the conscience of the court. The arbitrator in the present case had irrationally chosen to not record proper reasons for the decision. Therefore, the court did take the right approach by opining that the award was “not worth the paper it is printed on”[23] and was hence set aside. [1] Milind Yadav is a Third Year Student at Jindal Global Law School. He is also the Associate Editor of the International Journal of Legal Studies and Arbitration. He can be contacted at milind9yadav@gmail.com. [2] Hindustan Petroleum Corporation Ltd v. Banu Constructions, OSA.No.270 of 2020. [3] Ibid at [2]. [4] Section 31(3), Arbitration and Conciliation Act. [5] Hindustan, Supra note 2 at [9]. [6] Oil & Natural Gas Corporation Ltd. v. Saw Pipes Ltd., 2003 (4) SC 171. [7] Mcdermott International INC. v. Burn Standard Co. Ltd., (1991) 2 SCC 669. [8] Oil And Natural Gas Corporation Ltd. v. Western Geco International Ltd., (2014) 9 SCC 263. [9] Ibid at [26]. [10] Associated Builder v. Delhi Development Authority, (2004) 73 DRJ 551. [11] Ibid at 23-24. [12] Ibid at 26. [13] Venture Global Engg. LLC v. Tech Mahindra Ltd., (2018) 1 SCC 656. [14] Ssangyong Engineering and Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131. [15] Ibid at [48]. [16] Government of India v. Vedanta Ltd., (2020) 10 SCC 1. [17] Supra note 2 at [5]. [18] Section 31(3), Arbitration and Conciliation Act, 1996. [19] Supra note 2 at [15]. [20] Section 12, Arbitration and Conciliation Act, 1996. [21] Section 12(3), Arbitration and Conciliation Act, 1996. [22] Government of India v. Vedanta Ltd., (2020) 10 SCC 1 43. [23] Supra note 2 at [6].