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Analysis of Ashwani Minda v. U-Shin - Advait Ghosh[1] INTRODUCTION Institutional Arbitration has gained popularity in the world of arbitration, with institutions like ICC, LCIA, SIAC and JAMS gaining a stellar reputation across the globe for their expertise in administering arbitrations. The concept of an “Emergency Arbitrator” is usually provided for in these institutions and has also gained popularity as a concept. Parties who seek immediate relief move Emergency applications before a temporarily appointed arbitrator for adjudication of urgent interim relief. This article will endeavour to understand whether a party which has sought interim relief before the emergency arbitrator, and has been unsuccessful is entitled to move the National Courts for interim relief under Section 9 of The Arbitration and Conciliation Act, 1996 for the same relief or whether such application will be barred under the “Doctrine of Election”. This article will endeavour to explain this question through a recent judicial pronouncement of the Hon’ble High Court of Delhi in the case of Ashwani Minda vs U-shin. WHAT IS AN EMERGENCY ARBITRATOR/TRIBUNAL? The concept of Emergency arbitrator was first envisaged in the SIAC arbitration rules in 2010. The basic purpose of an emergency arbitrator or tribunal is to adjudicate on urgent interim relief which the parties seek, and which cannot wait for the formal appointment of a sole arbitrator or arbitral tribunal. Emergency applications have now increasingly become a commonplace feature in all arbitral institutions and usually the reliefs which are sought through emergency arbitration are in the nature of preservation orders, freezing orders, Mareva injunctions and general injunctive relief. Indian Arbitral institutions like the Indian Council of Arbitration and Delhi International Arbitration Centre also have provisions for emergency arbitrations in their rules. WHAT IS THE MEANING OF DOCTRINE OF ELECTION? The Doctrine of Election is a branch of the rule of Estoppel, it is essentially an branch of equity jurisprudence. It means that when several remedies are available to a litigant arising out of the same transaction the aggrieved party can choose either of them, but not both. The lectures of Maitland have succinctly described this position by saying as follows:-“election is the obligation imposed by a party by the courts of equity to choose between 2 inconsistent or alternate rights when there is clear intention of persons for whom he derives one, that he should not enjoy both. Case Analysis - Ashwani Minda v. U-Shin (Omp (I) (Comm.) 90/2020)[2] A. INTRODUCTION On 12th May 2020 Justice Jyoti Singh of the Hon’ble Delhi High Court delivered a landmark judgement as to the applicability of the Doctrine of Election to arbitration proceedings. It explains in a very nuanced manner the applicability of this doctrine to arbitration proceedings and makes interesting observations about the Courts power to grant interim relief when the arbitral tribunal has adjudicated on the same interim relief. It also discusses in what circumstances can parties be said to be excluded by conduct from Part-1 of The Arbitration and Conciliation Act, 1996? B. FACTUAL BACKGROUND OF THE CASE The applicant/petitioner in the said instant case entered into a joint venture agreement with the respondent, U-shin Ltd. The respondent is a Japanese corporation with the business of designing, developing and sale of control mechanisms for automotive machines. Respondent No.2 is also a Japanese company. Respondent No.1 is a wholly owned subsidiary of Respondent No.2. As per clause 5.1 and 5.2 of the JVA applicant no.1 was to have majority shareholding in the JV, and thus applicant would have complete control over the JV through day to day management activities as well as majority voting rights at directors and shareholders meetings. As per Article 7 of the said JVA-“Benefits and obligations under the agreement shall not be directly or indirectly transferred by any of the parties hereto without prior consent in writing, providing herein that nothing shall restrict right to transfer or assign benefits and obligations hereunder to any parent company or merged or subsidiary company”. On 10.04.2019 Respondent No.1 informed applicants that business integration has been duly executed, and Respondent No.1 had become the group company of Respondent No.2, which meant that Respondent No.1 was the wholly owned subsidiary of Respondent No.2. Thereafter Respondent No.1 was de-listed from the Tokyo Stock exchange and major changes were brought in Respondent No.1 by Respondent No.2, largely extending its control. On 16.12.2019 Respondent informed applicants that Respondent No.2 was obliged to give an open offer under the provisions of the Takeover Code. The Applicant considered this as a breach of the JVA and sought interim injunctive relief to prevent Respondents from purchasing shares via open offer from the Emergency Arbitrator appointed under Japanese Commercial Arbitration Association rules. The Emergency Arbitrator heard the submissions of the parties in detail and declined to grant interim relief in favour of the applicants/petitioners. The applicants filed a petition under Section 9 of The Arbitration and Conciliation Act, 1996 seeking inter alia the same relief that was sought from the Emergency Arbitrator. C. ISSUES BEFORE THE COURT AND THE DECISION OF THE COURT- 1) Scope of right of party to approach the Court for seeking interim relief when the arbitral tribunal/arbitrator has already declined to give the same interim relief:-The Hon’ble Court said that the parties have consciously chosen to tread on a particular path and they cannot now turn back because they have been unsuccessful. The Court said that the Doctrine of Election will bar the applicant from seeking interim relief as the same issue has been raised before the Emergency Arbitrator. All the issues have been conclusively dealt by the arbitrator vide detailed order and applicants cannot be permitted to take a second bite at the cherry. 2) Whether Part 1 of the Arbitration and Conciliation Act, 1996 has been consciously excluded by the agreement of the parties? The Court considered the arbitration clause entered into between the parties which provided for disputes to be resolved by arbitration as per rules of the Japanese Commercial Arbitration Association with seat in Tokyo. It is settled Law that when seat of Arbitration is situated in a particular country, only that particular countries courts can grant interim relief, as designation of seat is akin to an exclusive jurisdiction clause. The Court contended that it was conclusively held in the BALCO case that when seat of arbitration is held to be outside India, then Part- I of the Arbitration and Conciliation Act,1996 will stand excluded, and subsequently petition under Section 9 cannot be made in India. This position was somewhat altered by 2015 amendment to the arbitration act by virtue of Section 2(2) was amended and the applicability of certain provisions of the Arbitration Act like Section 9 was extended even to foreign seated arbitration, unless the parties have consciously decided to exclude Part 1 of The Arbitration and Conciliation Act,1996 by express or implied conduct. The Hon’ble Court after analysing the facts in the present case held that parties have consciously decided to conduct arbitration as per the Japanese Commercial Arbitration Association rules, with arbitration seated in Tokyo. The Hon’ble Court opined that the Dispute Resolution Mechanism in the present case envisages conduct of arbitration in Japan as per JCAA rules. JCAA rules provide a detailed mechanism for seeking interim and emergency measures, which was known to the parties when entering into the agreement. A perusal of the arbitration clause clearly expresses the intention of the parties to exclude applicability of Part-1 of the Act. Article 77(5) of the JCAA rules deem emergency measures to be interim measures granted by the arbitral tribunal when it is constituted. Justice Jyoti Singh further noted that applicants on 13.03.2020 filed an application for emergency measures and on 19.03.2020, the Emergency Arbitrator was appointed. After hearing both the parties the Arbitrator passed a very detailed order on 02.04.2020, wherein the interim relief which was sought was declined. The Hon’ble Court remarked-“when the Petitioner has already invoked the mechanism of the emergency arbitrator and invited a detailed and well-reasoned order by the Emergency Arbitrator, it is not for them to take a second bite at the cherry. Therefore Part-I of the Act has been ousted by the action of the parties themselves, and this petition is sans merit. 3) CONCLUSION Arbitration has become the preferred mode of dispute resolution amongst the business community. International Commercial Arbitration administered by institutions like SIAC, JAMS, LCIA have gained prominence for their effectiveness in governing these arbitrations and giving timely and effective resolutions. Parties to the arbitration clause or agreement often seek appointment of Emergency Arbitrator or tribunal for seeking urgent interim relief. The question which arises is whether the parties can seek interim relief before the Court under Section 9 of The Arbitration and Conciliation Act, 1996 when such relief has already been adjudicated by the Emergency Arbitrator or will it be barred under the Doctrine of Election? This question has to some extent been answered in the above mentioned case of Ashwin Minda where the Court declined to entertain the application for relief as the Court said the emergency arbitrator has comprehensively dealt with the relief sought, and the Court concluded that the subsequent petition under Section 9 would be barred as being stymied by the Doctrine of Election, and the Petitioner cannot be allowed to “take a second bite at the cherry”. There is another aspect herein which merits consideration, that is if the arbitral institution has rules which do not deem the emergency arbitrator or the tribunal to be the permanent tribunal, and purely deems it to be an “ad-interim” mechanism, then a subsequent application under Section 9 of The Arbitration and Conciliation Act, 1996 can be maintainable. It can also be put forth that if the emergency arbitrator or tribunal has adjudicated on interim reliefs which are wholly different from the one sought before the National Court or if such reliefs cannot be adjudicated effectively by the emergency arbitrator or tribunal, then despite the parties already having agitated their rights before the emergency arbitrator, a subsequent application under Section 9 of The Arbitration and Conciliation Act, 1996 would be maintainable before the National Courts and the Doctrine of Election would not be applicable. [1] Advait is an Advocate working in the litigation team at Kesar Dass Batra. He deals in matter related to Arbitration, Civil Suits and Criminal. He has argued matters before the District Courts of Delhi and the Delhi High Court. He can be reached at advaitgh@gmail.com [2] Available at http://164.100.69.66/jupload/dhc/JIS/judgement/14-05-2020/JIS12052020OMPICOMM902020_074007.pdf

- Kartikey Sanjeev Bhalotia[1] I. Introduction Section 7 of the Arbitration and Conciliation Act, 1996 (‘Act’) lays down the base of the Act by defining an ‘arbitration agreement’. Sub-section (5) to the said provision statutorily recognises the concept of ‘incorporation by reference’, i.e., incorporation of an arbitration clause into a contract by reference to a secondary document. The sub-section reads: “(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.” A perusal of the above shows that there are two requirements that need to be fulfilled before an arbitration clause can be said to have been incorporated in a contract by reference: a) the contract under consideration should be a written contract b) the reference made, i.e., the words used for referring to the document containing the arbitration clause should be such that it has the effect of making the arbitration clause contained in the said document a part of the contract While it might not be difficult to prove the first requirement, the Supreme Court of India has taken upon itself to lay down the various facets of what reference can be considered “such as to make that arbitration clause part of the contract”. This article analyses some of the landmark judgments of the Supreme Court which has delved into the aspect of ‘incorporation by reference’ in the Indian arbitration law jurisprudence. The article would then highlight how the existing standards laid down by the Supreme Court go beyond the statutory provision and therefore, requires a reconsideration for a push towards a more arbitration-friendly regime under the Indian jurisprudence. II. M.R. Engineers & Contractors Pvt. Ltd. v. Som Datt Builders Ltd. The Supreme Court in the case of M.R. Engineers & Contractors Pvt. Ltd. v. Som Datt Builders Ltd.[2] in the year 2009, was faced with the question whether in a contract where the Appellant was a sub-contractor of the Respondent, a general reference to the principal contract between the Respondent and the Public Works Department of Kerala, would be sufficient to be such as to have the effect of incorporating the arbitration clause contained in the principal contract. The court primarily tried to differentiate between “reference to another document in a contract” and “incorporation of another document in a contract, by reference”, and observed: “In the first case, the parties intend to adopt only specific portions or part of the referred document for the purposes of the contract. In the second case, the parties intend to incorporate the referred document in entirety, into the contract. Therefore when there is a reference to a document in a contract, the court has to consider whether the reference to the document is with the intention of incorporating the contents of that document in entirety into the contract, or with the intention of adopting or borrowing specific portions of the said document for application to the contract.” The Supreme Court in coming to its decision heavily relied on Russell on Arbitration (23rd edn, Sweet & Maxwell 2007) while analysing various English courts judgements and summarised the English law on the point. The court held that a general reference to a document in a contract does not automatically lead to the incorporation of the arbitration clause contained therein, the parties while incorporating terms of a document, say another contract, need to refer to the arbitration clause ‘specifically’. The Supreme Court, like the English Courts, laid down one exception to the rule and held that a general reference may be sufficient in cases where the document referred is a ‘standard form contract’ of some recognised trade associations or regulatory institutions. However, in laying down such a law, the court completely ignored their preceding analysis of the difference between “reference to another document in a contract” and “incorporation of another document in a contract, by reference”. Therefore, in relying on the English authorities the Supreme Court missed an opportunity towards laying down a simple test under Section 7(5). To put this into perspective, let us assume that there exists a contract wherein the parties have referred to another document which contains an arbitration clause. Further, the document which has been referred to is not a ‘standard form contract’ issued by a recognised trade association or regulatory institution. In such a scenario, there might arise two possibilities, firstly, the reference made by the parties is to some specific parts of the said document; secondly, the reference is of such wide import that it has an unequivocal effect of incorporating that whole document in the contract, i.e., any person referring to such a contract would be of the opinion that the parties have intended to incorporate each and every clause of the referred document in their contract. Now, if one was to apply the test of “reference to another document in a contract” and “incorporation of another document in a contract, by reference” which formed part of the obiter of the Supreme Court’s decision in M.R. Engineers the answer to the question whether the reference made by the parties have the effect of incorporating the arbitration clause contained in the said document would be simple, i.e., under the first case where a reference was made to a specific part, the incorporation would be limited to that specific part and no other part, while in the second case, as the reference was so general that it had the effect of incorporating that another document in the contract it would be held that it amounted to incorporating the arbitration clause like any other terms under that document. However, the Supreme Court went on to lay down a general law that placed a complete bar on general references, except in case of a standard form contract. Therefore, applying the same under the above scenario the document not being a standard form contract the courts would hold such reference as not having the effect of incorporating the arbitration clause. This poses certain problems, especially because the reasoning is based primarily based on the technical aspect of an arbitration clause that though it might be a part of a contractual document, it is a contract in itself. This misnomer about an ‘arbitration clause’ may be known to corporate lawyers, however, it will not be rational to assume that the same is the case for a business person. “All terms of the contract are hereby incorporated” does not usually mean “all terms but the arbitration clause, are hereby incorporated” for contracting parties. III. M/S. Inox Winds Ltd. v. M/S. Thermocables Ltd. The Supreme Court in the case of M/S. Inox Winds Ltd. v. M/S. Thermocables Ltd.[3] was again faced with a similar question of deciding whether the arbitration clause stood incorporated in the absence of a specific reference to the same. The Supreme Court in coming to its decision made reference to an English judgment in Sea Trade Maritime Corporation v. Hellenic Mutual War Risks Association (Bermuda) Limited (The “Athena”) and introduced to the Indian arbitration law jurisprudence the concepts of ‘single contract’ and ‘two contract’ cases. The Supreme Court in making reference to the above decision laid down the meanings of these terms as follows: “If there is a reference to a secondary document in a contract between two parties and that secondary document is a contract to which at least one party is different from the parties to the contract in question, it would be a two contract case… In such a contract general reference to the earlier contract would not be sufficient to incorporate the arbitration clause. However, if the reference is to standard terms in a contract that would be a case of ‘single contract’ and the use of general words to incorporate the arbitration agreement by a reference is permissible.” The above explanation was observed to be similar to what the Supreme Court had held in M.R. Engineers. However, the Court chose not to rely on the said judgements completely. The Supreme Court took reliance on 2010 English judgement Habas Sinai Ve Tibbi Gazlar Isthisal Endustri AS v. Sometal S.A.L.[4] (‘Habas Sinai’) that expanded the ambit of ‘single contract’ cases by including within its meaning even the standard form contracts of one of the parties. This essentially meant that ‘single contract’ cases were no more restricted to standard form contracts by trade associations or regulatory institutions, but also included standard forms of one of the parties to the contract. Therefore, the Supreme Court expanded the exception of general reference as laid down by it in M.R. Engineers. A reference to the observation made in Habas Sinai is relevant for our discussion: “A commercial lawyer would probably understand that an arbitration clause is a separate contract collateral to another substantive contract and that the expression ‘arbitration clause’ is, on that account, something of a misnomer for ‘the arbitration contract which is ancillary to the primary contract’. But a businessman would have no difficulty in regarding the arbitration clause (as he would call it) as part of a contract and as capable of incorporation, by appropriate wording, as any other term of such a contract; and it is, as it seems to me to a businessman's understanding that the court should be disposed to. give effect. A businessman who had agreed with his counterparty a contract with 10 specific terms under various headings and then agreed with the same counterparty terms 1-5 under the same headings as before and, as to the rest, that all the terms of the previous contract should apply, would, I think, be surprised to find that ‘all’ should be interpreted so as to mean ‘all but the arbitration clause’.” The reference to the above observation by the Supreme Court clearly highlights a more pragmatic and arbitration-friendly approach. The same has been reiterated by the Supreme Court again in a 2019 judgement of Giriraj Garg v. Coal India Ltd & Ors.[5] However, the point still remains is that how do these observations take different forms in cases of different documents referred to, i.e., why does the difference of ‘single contract’ and ‘two contract’ even exists? Why is it that the intention of the parties is not judged on similar standards in references to all types of documents containing an arbitration clause? The reason that the courts throughout have given for these difference in standards is that when the reference is made to a standard form of contract of a trade association or regulatory authority or one of the parties to the contract the parties can be expected to be familiar with the terms of such contract including the arbitration clause contained therein. However, in case of a ‘two contract’ case where the reference is made to a contract of one of the parties or any other document, not being a standard form contract, the parties have to be given a reasonable leeway of not being aware of all the terms of such contracts. The status quo of the law in India on the incorporation of an arbitration clause by reference to some document may be simply summarised as follows: a. The courts have laid down different standards for holding an arbitration clause successfully incorporated on the basis of the document being referred to and not on the intention of the parties in using the language they used for referring to the said document. b. The courts have differentiated the cases of references in two categories, i.e., ‘single contract’ or ‘two contract’ case. c. A ‘single contract’ case is such wherein, the reference is made to a ‘standard form contract’ of some recognised trade association or a regulatory institution or one of the parties to the contract. In such a case the courts have found a general reference (i.e not specifically making reference to the arbitration clause contained in the document) would be sufficient to be such as to have the effect of incorporating the arbitration clause contained in the principal contract. d. A ‘two contract’ case is such wherein, the reference is made to a document which is not a standard form contract but any other contract may it be of one of the parties to the contract or among third parties, or any other document containing an arbitration clause. In such a case the courts have found that general reference to the terms of such a document would not be held to have incorporated the arbitration clause. It basically means that even if it is found that reference is so general that parties have intended to incorporate all the terms of the contract, but the arbitration clause. IV. Conclusion The author believes that the reasoning given by the courts in differentiating between a ‘single contract’ and ‘two contract’ cases, creates a difference when there is a need for none. This only leads to complicating the interpretation of the statutory terms of Section 7(5). The only criteria laid by the statutory provision are that the contract should be written, and the reference made should have the effect of making the arbitration clause a part of the contract. It is therefore argued that, if the words used to refer to the contract are such that they do not qualify the reference to some specific parts of the document containing the arbitration clause, and are of such wide amplitude that it a reasonable business person would consider it to cover all terms, the courts have to imply the intention on the part of the contracting parties to incorporate even the arbitration clause. It has to be noted that Section 7(5) in itself does not differentiate between the types of the document referred to by the parties, it only requires for the reference (irrespective of the type of the document) to be such that it has the effect of incorporating the arbitration clause in the contract under consideration. The standard to test the intention of the contracting parties should be on the basis of a ‘reasonable-business-person’ standard and not a ‘well-informed-commercial-lawyer’ standard. In the opinion of the author, this is the correct interpretation of the statutory provision, and can substantially add to the evolution towards an arbitration-friendly regime of the Indian jurisprudence. [1] The author is a 5th Semester student of B.B.A. LL. B (Hons.) at the National Law University Odisha (Cuttack). He can be contacted on his email address: Kartikey.bhalotia2@gmail.com [2] M.R. Engineers & Contractors Pvt. Ltd. v. Som Datt Builders Ltd. (2009) 7 SCC 696 [3] M/S. Inox Winds Ltd. v. M/S. Thermocables Ltd. (2018) 2 SCC 519 [4] Habas Sinai Ve Tibbi Gazlar Isthisal Endustri AS v. Sometal S.A.L. [2010] EWHC 29 (Comm) : [2010] 1 Lloyd's Rep 661 : [2010] 1 All ER (Comm) 1143 : [2010] Bus LR 880 [5] Giriraj Garg v. Coal India Ltd & Ors. (2019) 5 SCC 192

- Raghav Bhargava, Rhea Sampat[1] Online Dispute Resolution (“ODR”) is a mechanism that primarily focuses on resolving disputes online, through the use of technology. The advent of ODR began in the early 2000s, wherein it was primarily used to address disputes arising out of e-commerce. However, with the onset of COVID-19, ODR has become a focal question in legal regimes across the globe. One such important aspect is the use of ODR in arbitration. At the outset, it is imperative to clarify that ODR does not refer to holding virtual hearings but rather looks at moving the entire arbitral process online. This article aims to first analyze prominent ODR mechanisms across the globe. Second, address issues in India and finally recommend changes to make it more lucrative within the country. ODR around the world European Union (“EU”)– EU’s reliance on ODR was first witnessed in its E-Commerce Directive of 2000, wherein it included a clause that stated, “to amend any legislation which is liable to hamper the use of schemes for the out-of-court settlement of disputes through electronic channels”.[2] This clause was the beginning point for ODR in the EU. The growing popularity of ODR led to the enactment of the Directive for Consumer ODR, 2016.[3] The highlight of the directive is the establishment of an ‘ODR Platform’ that facilitates the independent, impartial, effective, fast and fair out-of-court resolution of disputes between consumers and traders online. Additionally, it provides a platform to file a complaint through an ODR entity that shall offer a solution and shall mediate between the two parties. The Directive has gone one step ahead in ensuring the protection of personal data and confidentiality by prescribing various thresholds to be met by all parties involved. United Nations Commission on International Trade Law (“UNCITRAL”)– UNCITRAL had recognized the possibility of including online dispute resolution in its future work programme[4] as early as 2000. Since then, the Commission over multiple sessions from 2010 through 2016, considered the working of ODR and in 2017, published the ‘UNCITRAL Technical Notes on Online Dispute Resolution’ (“Notes”).[5] Although non-binding, the Notes are comprehensive and lay down the scope, stages, roles and responsibilities during an ODR process, which act as a stepping stone for nations to build on and enact. Transparency, independence, expertise and consent are the principles identified by the UNCITRAL in conducting ODR proceedings. Based on the EU and the UNCITRAL model, various jurisdictions across the world such as Mexico[6], British Columbia[7], Philippines[8] and Netherlands[9] have sanctioned the use of ODR for quick resolution of disputes. Current Status in India The majority of dispute resolution in India occurs in courts and offline alternative mechanisms. However, the ODR process has begun to evolve with various online and institutional frameworks having been established to facilitate the process. The most notable one is the Centre for Online Dispute Resolution (“CODR”)[10] which was established as an institution that aims at providing a fast, cheap and fair way of dispute resolution. As of January 2020, CODR had managed to resolve over 30 disputes, within a mere time frame of 25-30 days! Similarly, another platform providing this service is Legal Referee[11]. The Construction Industry Arbitration Council[12] also has a provision for online settlement of construction disputes. Unfortunately, there is currently no government regulated ODR mechanism. Recently, the Vice President of India had termed ODR as a ‘laudable initiative’ which saves time and effort and must be promoted more. Additionally, the Department of Justice has released a circular[13] permitting individuals to choose from a set of ODR contact points for dispute settlement, including State Legal Service Commissions. Problems The primary problem with arbitration through ODR is the existing economic and technological divide within the country. The divide places an undue advantage over a particular strata. Further, a greater emphasis is placed on face-to-face legal proceedings. Thus, a lack of trust and faith in the online regime exists. Another key issue arising from ODR proceedings is that of jurisdiction. Proceedings take place over the internet thus, challenging the traditional notions of jurisdiction. For national arbitration, issues of court’s jurisdiction would lead to situations of forum shopping or delays in the conclusion of proceedings. The seat of the arbitration that determines the substantive law would remain unclear causing further delays in the resolution process. Moreover, arbitral proceedings are premised on the confidentiality and secrecy of proceedings. The 2019 amendment to The Arbitration and Conciliation Act, 1996 has made confidentiality statutorily mandated except when it is necessary to publish the arbitral award. In such circumstances, sharing data over the internet to other parties via third-party websites causes serious confidentiality concerns. Lack of protection of sensitive information and confidential documents shared to supplement claims of parties, often privileged communication also undermines the process. The current ODR regime in India hinges on independent entities providing a dispute resolution facility with no relation to the judicial system. There is no registration process required for these service providers. Additionally, they function in a paradigm that is devoid of any checks and balances. Ergo, there is a lack of authenticity and accountability of the existing ODR providers. The ODR medium determines who the arbitrator is, as a result, often there is lack of knowledge of the credentials of the arbitrator and competence, hence adding further apprehensions. Lastly, but most importantly is the issue with the current mechanism in itself. By virtue of being independent bodies/institutions, the existing ODR providers are self-regulated. The parties availing such services are mandated to follow their rules and regulations. With no governing body regulating them, there is a clear absence of due process and fairness in the proceedings. Often, these arbitral proceedings are not referred to by courts nor is there any supervision of courts over these arbitral proceedings. This makes the system susceptible to exploitation, corruption and biasness. No further recourse is available for parties thereafter. Recommendations i. National ODR Governing Body In order to make ODR more lucrative and efficient in India, first and foremost, it is essential to create a national body governing ODR proceedings. It is recommended this body be multi-functional. First, this body should serve as an accreditation provider to ODR platforms. This will supplement in distinguishing between bodies whose work is legitimate and recognized from those acting independently. Second, this body must enable the creation of a uniform system of procedural and substantive rules governing ODR in India. In this regard, reference may be made to the Technical Notes adopted by UNCITRAL which outline suggestions to govern ODR on an international level. Third, this body would serve is providing credibility to the arbitral award. The award rendered would attain legitimacy and make it binding. Finally, the body will also help regulate all ODR proceedings and act as a bridge between alternative settlements and the judicial process. It would enable judicial recourse pre and during arbitral proceedings and post rendering of the award. ii. Enforcement Mechanism Another concern that needs to be addressed is with respect to the enforcement and the mandatory nature of the award. By virtue of being independent of the judicial system, questions would arise with respect to whether the parties would consider this mandatory and whether the successful party is able to enforce such an award? A curious example is WIPO’s UDRP Process[14] which is one of the most famous existing ODR mechanisms. The parties not only consider it binding upon themselves, judicial enforcement across jurisdictions is also provided to the parties. This could serve as a reference point while drafting regulations. Thus, an impending need arises for a central legislation to govern this mechanism. iii. Definition of ODR Finally, the starting point for any change whether it be a central governing body or legislation would be a standard definition of what ODR would entail in India and the rules and regulations that would govern it. This would be quintessential to ensure that further litigation does not arise challenging the interpretations and contours of the ODR process. In a country like India where the pending number of cases in superior and subordinate judiciary goes over 3.5 crores, the growing popularity of ODR would only seem beneficial and go a long way in the timely resolution of disputes. CONCLUSION The purpose of arbitral proceedings is to not only de-stress courts but also to create a more litigant friendly regime leading to a quick resolution of disputes. Irrespective of a world with or without COVID-19, ODR has the potential to make arbitration more friendly, effective and efficient. However, at the same time is also essential to regulate is well to preemptively eradicate issues which may prove to be detrimental in the long run. It will be interesting to observe how the government takes this forward. Nevertheless, there is no doubt that ODR and arbitration must become focal points of legal policy in India. [1] Raghav Bhargava is a final year student at Gujarat National Law University and can be contacted at bhargavaraghav700@gmail.com. Rhea Sampat is also a final year student at Gujarat National Law University and can be contacted at rheasampat.5@gmail.com [2] Clause 51 of the DIRECTIVE 2000/31/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (Directive on electronic commerce). [3] REGULATION (EU) No 524/2013 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 21 May 2013 on online dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Regulation on consumer ODR). [4] Paragraph 390 of the Report of the United Nations Commission of International Trade Law, Thirty-third session held between 12 June and 7 July, 2000. [5] Technical Notes on Online Dispute Resolution, United Nations Commission on International Trade Law. [6] Concilianet, Government of Mexico. [7] Civil Resolution Tribunal, Government of British Columbia. [8] Alternative Dispute Resolution Services, Bureau of Legal Affairs, Republic of Philippines. [9] Online Dispute Resolution, European Consumer Centre, Netherlands. [10] Centre for Online Dispute Resolution, accessible at: https://www.codr.co.in/#/home. [11] Legal Referee Services, accessible at: http://legalreferee.com/pricing/. [12] Online Dispute Resolution is a laudable initiative and saves times and cost,Press Information Bureau, accessible at: https://pib.gov.in/PressReleasePage.aspx?PRID=1529821. [13] Online Dispute Resolution, Department of Justice, accessible at: https://doj.gov.in/page/online-dispute-resolution-through-mediation-arbitration-conciliation-etc. [14] WIPO Guide to Uniform Domain Name Dispute Resolution Policy, accessible at: https://www.wipo.int/amc/en/domains/guide/.

- Balaji Harish Iyer[1] I. Introduction In earlier posts, we discussed the benefits of online arbitration[2] and concluded that conducting arbitrations online will not affect the seat of arbitration[3]. The third and final in this series, this article will examine whether online arbitral awards or e-awards are enforceable. To quote, “One of the qualities of arbitration that makes it the most popular A.D.R. method … is the finality and enforceability of the arbitral award due to the strong enforcement network in the New York Convention.”[4] The discussion on the enforceability of arbitral awards overlaps with the discussion on the grounds of challenges to awards, since they are more or less the same. Further, an award that has been annulled after a challenge is no longer enforceable in another jurisdiction. An online arbitral award or e-award can be defined as an arbitral award that is signed digitally by the arbitral tribunal and emailed to the parties directly, or if an institution is involved for transmission to the parties by the institution. The losing party must comply with the e-award, and the winning party can seek recognition and enforcement of the e-award in the domestic courts of all those countries where the losing party has assets that can be attached.[5] This article will not entertain a debate as to the “seat” or “place of signing” of the award;[6] this will be taken to have been determined either by the parties or by the arbitral tribunal at the commencement of the arbitration since, as had been stated earlier, “seat” in arbitrations nowadays is a non-issue. [7] II. Formal Requirement in Arbitration Law Many curial laws have form requirements for an award:[8] The (Indian) Arbitration & Conciliation Act, for example, provides that an award shall be in writing and shall be signed by the members of the arbitral tribunal;[9]it further provides that the signed copy of the award shall be delivered to the parties.[10] Some domestic laws impliedly allow arbitral awards written and signed digitally; section 52 of The Arbitration Act 1996 of England, parties are free to agree on the form of an award. The implication is that an e-award is upheld, recognized and enforceable under English law, as though it is a traditional paper award. These laws can be interpreted with a degree of modernity that upholds an e-award and permits its enforcement, in favour of admitting alternative forms of writing.[11] A “written” award does not necessarily mean an award printed on paper and signed physically by the arbitrators. Most jurisdictions have laws that regulate and recognize the use of electronic or digital signatures. Since many national laws recognize the validity of arbitration agreements concluded electronically, there is no room to assume that a similar logic will not apply to e-awards. An arbitral award that is signed with a digital signature[12] by an arbitrator should be considered as valid.[13] For instance, the United Nations Convention on the Use of Electronic Communication in International Contracts provides that where the law requires a communication to be made in writing, the requirement is satisfied if the communication is made electronically and is accessible later for reference.[14] Domestic courts can apply this standard to ensure that an e-award complies with the writing requirement under domestic law. An e-award can be considered as a functional equivalent to a traditional, paper award and meet the standards required for enforcement or to be upheld at the seat. Even where there are no such laws, domestics courts should not consider the absence of a physical place of arbitration or the absence of an award “written” on paper to impede upholding an award or denying enforcement. Interpretative principles must be applied to broaden the formal requirements of an award to include e-awards that are digitally signed by the arbitral tribunal. Article IV of the New York Convention requires that a party seeking recognition and enforcement of an award produces duly authenticated originals or certified copies of the award and the arbitration agreement. A party can printout and produce the printed copy of the award, with the covering email of the arbitral tribunal or institution to satisfy this requirement. Delivery of the award to the parties triggers time limits for challenging the award by the losing party and seeking enforcement by the winning party. Delivery of the award either by the tribunal or the institution to the parties by email may be an appropriate method of communicating and delivering the award to the parties. When a party receives the award by email and proof of delivery are not issues that affect the delivery of an award in today’s day and age with mailing clients such as Apple Mail or Microsoft Outlook having features such as “delivery notifications” or “read receipts”. No jurisdiction, as such, imposes strict formal requirements for delivery of the award to parties.[15] As an evidentiary matter,[16] it is suggested that the party seeking enforcement or the party challenging the award simply produces a printout of the e-award with the covering email of the tribunal or institution, as the case may be. Thus, there is no reason to state that an award that is made and communicated to the parties electronically is not “authentic”[17]. Recently, the Andhra Pradesh High Court was moved to obtain security under section 9 of The Arbitration & Conciliation Act in a post-award action; in this case, the Petitioner (a Korean trader) had obtained an award under the I.C.C. Rules of Arbitration. The arbitration was conducted entirely through video conferencing and an e-award was issued, which was communicated to the parties by the I.C.C. through an official email. The Petitioner sought to attach a cargo of sulphuric acid that the Respondent (an Indian acid trader) had loaded at Visakhapatnam Port under section 9, to ensure security for enforcement of the e-award under section 48 of The Arbitration & Conciliation Act. The Andhra Pradesh High Court ordered the attachment of the sulphuric acid as security for the Petitioner’s award-debt.[18] III. Article V Requirements for Annulment, Recognition & Enforcement The United Nations Convention on the Recognition & Enforcement of Foreign Arbitral Awards 1958 (“New York Convention” or “N.Y.C.” or “Convention”) permits the cross-border recognition of arbitral awards. The Convention standardizes the requirements and empowers a national court to scrutinize whether an arbitral award meets them for annulment and/or enforcement in its territory;[19] most countries nowadays have adopted the requirements for enforcement set out in the New York Convention in their domestic arbitration laws.[20] In principle, as long as an award meets these requirements, it is quite possible to uphold, recognize and enforce an e-award under the Convention standards.[21] IIIA. Due Process Requirements Long has it been settled that an arbitration must follow due process through following procedural rules that ensure the impartiality and fairness of proceedings and the decision-making. A violation of due process is a ground that justifies not recognizing or enforcing an arbitral award.[22] A swift and fair process is indispensable in online arbitration, as much as it is indispensable to traditional arbitrations. The fundamentals of due process should be observed by institutions and tribunals.[23] A party must be given proper notice of arbitral proceedings; nowadays, emails are an accepted mode of giving notice; while there are issues such as being unable to prove when a party receives an email, email software such as Microsoft Outlook have made it simpler for a sender to be notified if the receiver of the email opens a particular email by creating provisions for “read receipts”. A High Court in India has held that a notice sent on WhatsApp is good service.[24] Any apprehension of “virtual inequality” in terms of both parties being able to access internet and having an equal opportunity to present their respective cases[25] is easily dispelled in this age of 4G internet. Even if it could not be dispelled in this manner, it is not far removed to say that a party is as responsible for the quality of its internet connection as it is responsible for the strength of its lawyers. Equality in the treatment of the parties can be ensured by using technology only up to the lowest common denominator.[26] Technical safeguards can easily be implemented to ensure that there are no interruptions to online arbitral proceedings that can potentially jeopardize the due process of an e-award.[27] IIIB. Public policy requirements Is rendering an e-award against public policy? Without reiterating the earlier discussion on formal requirements, it is safe to say that rendering an e-award is not against the public policy of either the seat (for annulment) or against the public policy of the enforcing territory. In either case, whether there is an implication or not, the law can be liberally interpreted to permit online arbitration awards. It should be noted that while online arbitration may be novel, “novelty” is an insufficient answer to annul or refuse to recognize and enforce e-awards.[28] There is no direct nexus between an electronic award and its violation of public policy for being electronic. IV. Conclusion The formal requirements of an arbitral award can be liberally interpreted by domestic courts and arbitrators alike, to permit e-awards, uphold their validity and enforce them against losing parties in jurisdictions across the world. There seems to be no specific prohibition or impediment. Rapidly evolving technology and internet capabilities are also answering to due process requirements of arbitrations. It is quite safe to say that e-awards cannot be challenged on formal or due process grounds. Traditional principles that exist in this regard are sufficient to answer the apparent challenge of a shift from traditional (physical) arbitration to online arbitrations. Online arbitration appears to have unique issues in the application of traditional principles of international commercial arbitration; in reality however, this is not the case. As discussed in previous articles, there are definitely benefits to online arbitration. These benefits far outweigh the apparent issues. In a technology-driven world, arbitrations too must adopt a technological platform. [1] Balaji Harish Iyer is an advocate practising before the Bombay High Court. His focus is on arbitration and alternate dispute resolution. Balaji obtained his Master’s degree in law (International Dispute Resolution) from Humboldt University of Berlin and Bachelor’s degree (with Honours) from National Law University, Delhi. Mobile: +917349360143. [2] Balaji Harish Iyer, Arbitration vs The World (Article Series) Part I: International Arbitration in the Time of Covid-19, The Arbitration Workshop(2020), https://www.thearbitrationworkshop.com/post/arbitration-vs-the-world-article-series-part-i-international-arbitration-in-the-time-of-covid-19 (last visited Apr 24, 2020). [3] Balaji Harish Iyer, Arbitration vs. The World (Article Series) Part II: Making a Mountain Out of a Molehill, The Arbitration Workshop (2020), https://www.thearbitrationworkshop.com (last visited May 25, 2020). [4] Hong-Lin Yu & Motassem Nasir, Can Online Arbitration Exist Within the Traditional Arbitration Framework?, 20 Journal of International Arbitration 455–473, 470 (2003). [5] Ihab Amro, Online Arbitration in Theory and in Practice: A Comparative Study in Common Law and Civil Law Countries, Kluwer Arbitration Blog (2019), http://arbitrationblog.kluwerarbitration.com/2019/04/11/online-arbitration-in-theory-and-in-practice-a-comparative-study-in-common-law-and-civil-law-countries/ (last visited Apr 8, 2020). [6] See the discussion in, Hong-Lin Yu and Motassem Nasir, supra note 4 at 471. [7] Balaji Harish Iyer, supra note 3. [8] United Nations Convention on the Recognition & Enforcement of Foreign Arbitral Awards, 3 & 4 (1958); Ihab Amro, supra note 5. [9] The Arbitration and Conciliation Act, 31(1) (1996). [10] Id. at 31(4). [11] Haitham A. Haloush, The Authenticity of Online Alternative Dispute Resolution Proceedings, 25 Journal of International Arbitration 355–364, 359 (2008). [12] See specifically on “digital signatures”, Id. at 362–364. [13] Lars Markert & Jan Burghardt, Navigating the Digital Maze - Pertinent Issues in E-Arbitration, 27 J. Arb. Stud. 3–31, 24–25 (2017). [14] United Nations Convention on the Use of Electronic Communication in International Contracts, 9(2) (2013). [15] Id. at 26. [16] See for e.g., Indian Evidence Act, 65B (1872). [17] See, Hong-Lin Yu and Motassem Nasir, supra note 4 at 472. [18] Sulphide Corporation v. New Way Vyapaar Pvt. Ltd., ICOMAOA No. 2 of 2020, High Court of Andhra Pradesh at Amaravati. [19] United Nations Convention on the Recognition & Enforcement of Foreign Arbitral Awards, supra note 8 at 5; See the relevant section in Sami Kallel, Online Arbitration, 25 Journal of International Arbitration 345–353, 349 (2008). [20] See for e.g., The Arbitration and Conciliation Act, supra note 9 at 48. [21] See, Ihab Amro, Enforcement of Cross-Border Online Arbitral Awards and Online Arbitration Agreements in National Courts, Young ICCA Blog (2016), http://www.youngicca-blog.com/enforcement-of-cross-border-online-arbitral-awards-and-online-arbitration-agreements-in-national-courts/ (last visited May 24, 2020). [22] See, United Nations Convention on the Recognition & Enforcement of Foreign Arbitral Awards, supra note 8 at 5(1)(b). [23] Mohamed S. Abdel Wahab, The Global Information Society and Online Dispute Resolution: A New Dawn for Dispute Resolution, 21 Journal of International Arbitration 143–168, 160 (2004). [24] SBI Cards & Payments Services Pvt. Ltd. v. Rohidas Jadhav, 2018 S.C.C. Online Bom. 1262. [25] Lars Markert and Jan Burghardt, supra note 13 at 14–15; See also, Mohamed S. Abdel Wahab, supra note 21 at 160–161. [26] Lars Markert and Jan Burghardt, supra note 13 at 15. [27] Id. at 16. [28] Mohamed S. Abdel Wahab, supra note 21 at 166.

Balaji Harish Iyer[1] INTRODUCTION In an earlier post[2] we had discussed the need to make a shift from traditional or offline arbitration to online arbitration. Over the last few weeks, several webinars have discussed the online arbitration; parties are regularly making applications to continue pending proceedings online[3]; arbitrators are setting new procedural timelines and exploring methods to organise hearings, conduct witness examinations and hear arguments: online arbitration is here to stay. An objection that was raised in one of the author’s international commercial arbitrations, proceeding under the Rules of Arbitration of the International Chambers of Commerce was that continuing proceedings online would render the “place of arbitration” otiose. This second article in this series examines whether this really is the case. The arbitration world is ever preoccupied with the meaning of “place of arbitration” and the preoccupation in the context of online arbitrations is, in this author’s opinion, making a mountain out of a molehill.[4] WHAT IS “PLACE OF ARBITRATION”? All international commercial arbitrations deal with the interaction of multiple laws because it is trite that an arbitration clause stands separate from the main contract. Thus, a contract can involve the following three laws, viz.:[5] The substantive or governing law of contract that is, the law that is used to determine the rights and liabilities of the parties to the contract and the dispute; The substantive or governing law of arbitration that is, the law that is used to determine the existence and validity of the arbitration clause itself; and, Curial or procedural law governing the conduct of the arbitral proceedings. “Place of arbitration” has been interpreted[6] to be an identifier of the curial law. It is settled law that curial law determines the seat of arbitration and consequently which court will have supervisory jurisdiction over the arbitration proceedings.[7] In essence, determining the seat is determining the legal framework that governs the entire arbitral procedure; stakeholders will know which courts to approach for interim reliefs before, during and after the proceedings, for annulling the award, terminating the mandate of the arbitral tribunal, or assistance in taking evidence. HOW IS SEAT DETERMINED? The curial law is primarily determined by party autonomy.[8] An example of an arbitration clause is reproduced below:[9] “Any dispute or controversy relating to or arising out of or in connection with this Agreement, including any question relating to its existence, validity and termination (“Dispute”), shall firstly be referred by written notice to each Party, who shall endeavor to resolve the Dispute within a period of thirty (30) days following notice of the Dispute. If the Dispute has not been resolved within 30 days, the Dispute shall be finally resolved by arbitration in accordance with the Rules of Arbitration of the International Chamber of Commerce (“I.C.C”). The place of arbitration shall be London. The Arbitration shall be conducted in the English language.” Here, the parties have themselves determined that the “place of arbitration shall be London”. This clarifies that the arbitration proceedings are governed by the English Arbitration Act. There may be occasions where the parties do not expressly determine the place of arbitration. In such a scenario, the arbitral tribunal will determine what the seat of arbitration is.[10] To this end, there is generally a strong prima facie presumption that the parties intended the place at which the arbitration proceedings to be conducted to be the seat, on the ground that that is the country most closely connected with the proceedings.[11] CAN THE PROCEEDINGS BE HELD AT ANOTHER VENUE? It must be said that the determination of the seat creates a fictional link between the arbitral proceedings and a particular jurisdiction. The arbitral tribunal and parties may agree still to conduct proceedings at a different venue from the seat[12] if it is convenient to all stakeholders. In the example taken above, it is possible for the parties and tribunal to meet at Dubai, for instance, which is midway between India, Singapore and England. Simply meeting at Dubai and conducting proceedings there will not make the proceedings subject to Emirati curial law. The (English) Arbitration Act, 1996 will continue to apply to the proceedings; the courts of England will continue to have supervisory jurisdiction; the award can still only be challenged in English courts. This is because of the fictional link created by the parties or determined by the tribunal to exist between the arbitration proceedings and England as its seat. WHAT DOES THIS MEAN FOR ONLINE ARBITRATION? In a traditional, offline arbitration the proceedings may be conducted at a different venue from the seat if it is convenient to all stakeholders. Every meeting may be held at different venues, and simply changing the venue will not change the seat. In online arbitration, the parties can meet remotely over the internet, without any requirement for travel.[13] The internet becomes the environment that hosts the arbitration proceedings. Could there then be an argument that the “place of arbitration” is really at the location of the server where the video conference is hosted?[14] The answer must be “no”[15], because the location of the server or each of the parties or the arbitrators is irrelevant. The internet server’s location here has only as much importance as Dubai in the example taken earlier. Courts have repeatedly decided that holding hearings, deliberations or rendering awards at places other than the seat will have no impact on the “place of arbitration”.[16] As long as the parties agree or the tribunal determines that the arbitration is subject to one particular curial law, dispute resolution practitioners should not allow arbitration proceedings to be jeopardised if parties choose to conduct the arbitration online. The internet environment has no value and is chosen by stakeholders for convenience. What we must remember is: “What counts is the choice of law, not the fact that the procedure may be conducted partially or totally online.”[17] [1] Balaji Harish Iyer is an advocate practising before the Bombay High Court. His focus is on arbitration and alternate dispute resolution. Balaji obtained his Master’s degree in law (International Dispute Resolution) from Humboldt University of Berlin and Bachelor’s degree (with Honours) from National Law University, Delhi. Mobile: +917349360143. [2] See Balaji Harish Iyer, Arbitration vs The World (Article Series) Part I: International Arbitration in the Time of Covid-19, The Arbitration Workshop (2020), https://www.thearbitrationworkshop.com/post/arbitration-vs-the-world-article-series-part-i-international-arbitration-in-the-time-of-covid-19 (last visited Apr 24, 2020). [3] See, Ihab Amro, Online Arbitration in Theory and in Practice: A Comparative Study in Common Law and Civil Law Countries, Kluwer Arbitration Blog (2019), http://arbitrationblog.kluwerarbitration.com/2019/04/11/online-arbitration-in-theory-and-in-practice-a-comparative-study-in-common-law-and-civil-law-countries/ (last visited Apr 8, 2020). [4] For similar views, see, Mirèze Philippe, Hypochondria About the Place of Arbitration in Online Proceedings, Kluwer Arbitration Blog (2015), http://arbitrationblog.kluwerarbitration.com/2015/09/16/hypochondria-about-the-place-of-arbitration-in-online-proceedings/ (last visited Apr 8, 2020). [5] Prashant Daga, Seat, Venue or Place Of Arbitration: Analysis Of Hardy Exploration And Production (India) Inc, Mondaq (2018), https://www.mondaq.com/india/trials-appeals-compensation/750704/seat-venue-or-place-of-arbitration-analysis-of-hardy-exploration-and-production-india-inc (last visited Apr 24, 2020). [6] See most recently in India, Union of India v. Hardy Exploration & Production (India) Inc., MANU/SC/1046/2018, for the discussion on the meaning of “place”, “venue” and “seat”. [7] See for e.g., Roger Shashoua v. Mukesh Sharma, (2017) 14 S.C.C. 722. [8] See, Gary Born, International Arbitration: Cases and Materials 599–600 (2 ed. 2015). [9] Clause reproduced from an ongoing I.C.C. arbitration between Indian and Singaporean entities. [10] Generally see, UNCITRAL Model Law on International Commercial Arbitration, 692–696 20(1); For a national law based on the Model Law, see, The Arbitration and Conciliation Act, 20 (1996); In England & Wales, see also, Arbitration Act, 53 (1996) which is not a Model Law arbitration law; See also, Osinachi Nwandem, Online Dispute Resolution: Scope and Matters Arising 15 (2014), https://papers.ssrn.com/abstract=2592926 (last visited Apr 8, 2020). [11] Union of India v. Hardy Exploration & Production (India) Inc., MANU/SC/1046/2018. [12] UNCITRAL Model Law on International Commercial Arbitration, supra note 10 at 20(2). [13] Balaji Harish Iyer, supra note 2; See, Adnan Ahmed, Challenges of Electronic Arbitration in Electronic Commerce Transactions, Multi-Knowledge Electronic Comprehensive Journal for Education and Science Publications (2017), https://www.mecsj.com/uplode/images/photo/Challenges_of_Electronic_Arbitration_in_Electronic_Commerce_transactions_2.pdf (last visited Apr 8, 2020). [14] See, Tiffany J. Lanier, Where on Earth Does Cyber-Arbitration Occur?: International Review of Arbitral Awards Rendered Online, 7 ILSA Journal of International & Comparative Law 1–14, 14 (2000); See also, Haitham A Haloush, Jurisdictional Dilemma in Online Disputes: Rethinking Traditional Approaches, 42 The International Lawyer 1129–1146, 1133–1141 (2008); See also, Salvomír Halla, Arbitration Going Online - New Challenges in 21st Century?, 5 Masaryk University of Law & Technology 215–225, 218–221 (2011). [15] Mirèze Philippe, ODR Redress System for Consumer Disputes, 1 IJODR 57–69, 62 (2014); See, Mirèze Philippe, Now Where Do We Stand with Online Dispute Resolution, 6 Int’l Bus LJ 563–576, 571–572 (2010); See also, Vikrant Sopan Yadav, Cyber Arbitration through Lenses of Indian Legal System: An Analysis, 2 International Journal of Law 31–33, 32 (2016). [16] Mirèze Philippe, supra note 15 at 574; See also, Richard Hill, On-line Arbitration: Issues and Solutions, Arbitration International (1999), http://www.umass.edu/dispute/hill.htm (last visited Apr 8, 2020). [17] Mirèze Philippe, supra note 15 at 575.

Gaurav Rai[1] I recently conducted an online lecture on ‘Drafting an Arbitration Agreement’ at Jindal Global Law School on the invitation of my dear friend and Co-editor of The Arbitration Workshop, Gautam Mohanty. Pursuant to the same, I have decided to pen down a more detailed version of my lecture to help lawyers, contract drafters, and law students to get an insight into the dos and don’ts of drafting an arbitration clause. My suggestions are based on my experience of matters I have dealt with as a Legal Assistant to Arbitral Tribunals and on the interpretation given by the Supreme Court in the recent past to arbitration clauses. I believe the reason the Supreme Court had to interfere and interpret these arbitration clauses was because they were poorly drafted. My endeavour through this article would be to point out the common mistakes and to make suggestions to avoid the same. Also, I will put up multiple model drafts towards the end of the article, which incorporates all the elements, and then the reader can pick and choose the language to do a drafting exercise of its own. Bargaining Power of the Party Before we move into the necessary and optional ingredients of an arbitration clause, the most crucial factor to be kept in mind while drafting such clauses is to understand the bargaining power of your client while drafting a arbitral clause. A private party in a government contract will have little scope to make changes to a standard contract, based on the tender documents. Alternatively, a Government Entity in a government contract will have more power to make changes, however, what has to be seen is whether the government entity or PSU has the liberty to make changes to these standard forms or whether the same have been handed down from the ministry or another higher entity. In case the Government Entity of PSU has the authority to draft the standard form contract, the draftsman should be careful while drafting clauses and see to it that they are not one sided and give all powers to the Government entity regarding the appointment of the arbitral Tribunal. As has been the experience, the Courts has stripped down such arbitral clauses to the bare minimum to allow arbitration by removing the one sided power to appoint an arbitrator and hence not conforming to the arbitration clause between the parties.[2] There might be some situations where the private party may have scope to dictate terms in a contract wherein the government entity does not have many similar works for there to be a standard form. It further helps the private sector client if they are the market leader in a particular segment in which the government is wishing to foray, giving the private party some edge over the drafting of the contract. Ingredients of a Dispute Resolution Clause. a. “Dispute” Under Section 16 of the Arbitration and Conciliation Act, 1996, the Arbitral Tribunal has the power to deal with only those matters which are referred to it and which are within the scope of the arbitration clause/ agreement. One such circumcision is the meaning of the word dispute, which can be defined by the parties in the arbitration clause itself. For e.g., the contract may state that only when the parties discuss the issue with persons at a defined level and the parties are not able to resolve such issues amicably within 60 days, the same will become a dispute which can be resolved by arbitration. The parties may also make it clear as to what kind of disputes are not to be referred to arbitration. Such circumcision is called excepted matters. For eg. if the contract consists of transfer and sharing of intellectual property, the parties may carve out an exception and state that issues of IPR will not be referred to arbitration, and the appropriate courts will have jurisdiction to decide the issue of technology transfer. Even in insurance contracts only issues of quantification of insurance pay-out are referred to arbitration. The parties may also provide for a multi-tier dispute resolution system, hence not allowing any dispute to be referred to arbitration unless the pre-arbitral dispute resolution process fails. I will discuss more about the multi-tier dispute resolution clauses later. Hence, while drafting an arbitration clause, it will be necessary to see the client’s requirements regarding the escalation of the dispute to arbitration. Quite often, business and commercial interest would not want to escalate everything to arbitration and instead try and solve the issues and differences amongst themselves. In contradistinction to such definition of dispute and layers of escalation, parties may have an extensive and unfettered arbitration clause wherein it states that any dispute, difference, disagreement of any sort will be resolved by way of an arbitration. Such clauses might be necessary for the client who has clear black and white contracts, which has no scope of interpretation, and the client wants a favourable and quick ruling by way of an arbitration instead of delaying the process by using multiple steps. b. Multi-tier dispute resolution Multi-Tier Dispute resolution clauses are the trickiest part of the dispute resolution clause and must be drafted carefully, especially if dealing with domestic arbitration matters. Classically multi-tier dispute resolution clauses have been enforced by the Courts in the UK[3] and Singapore.[4] The Courts have followed the letter of the contract and disallowed the invocation of arbitration by the parties if they do not follow the pre-escalation procedure before invoking arbitration. In India, however, the courts are divided over the necessity of following pre-escalation steps. Some consider it mandatory[5] while others consider it only as an option.[6] Construction Contracts based on the FIDIC model provide for the dispute to be first referred to the Dispute Resolution Board (DRB) before being referred to arbitration. In PATI-BEL v. NHAI[7], the Delhi High Court upheld the rejection of the counterclaims of NHAI by the Arbitral Tribunal. NHAI had not raised the disputes with the DRB and had directly raised the counterclaims with the arbitral Tribunal. Hence the Arbitral Tribunal rejected the counterclaims as the same were beyond its jurisdiction. Hence, my suggestion would be to carefully draft the multi-tier dispute resolution clause using words that clearly indicate whether the pre-arbitral step is to be mandatorily performed or is it just an option for the parties before invoking arbitration. The use of words like “shall” and “may” can make it clear. Further, the clause can indicate that only on the failure of the previous step will the parties be able to move to the next step. There is no substitute to having clear, unambiguous language when drafting a contract clause. c. Procedure for appointment arbitrators and the dilemma of disqualification of arbitrators. The procedure for appointment of arbitrators has seen the maximum amount of legislation being devoted to it in the amendment of 2015 and 2019. There is an intense tussle amongst drafters of contracts and the legislature regarding the persons who can be appointed as arbitrators and the regulation regarding the same. The Supreme Court has also had a fair amount of input into the meaning of the disqualification requirements of the nominees to the arbitral Tribunal. Let us pull back a little and try to deconstruct the legislation, the judgments, and the ideal process to appoint arbitrators and, more importantly, who to appointed as arbitrators. Appointment of arbitrators is governed by Section 11 of the Arbitration and Conciliation Act, 1996 as far as India seated arbitrations are concerned. Section 11 gives the parties the freedom to decide the procedure for the appointment of arbitrators. While drafting this portion of the clause, the client’s needs are to be kept in mind. In case a sole arbitrator has to be appointed, the appointment of a serving employee as of an arbitrator is invalid,[8] so is the unilateral nomination of a sole arbitrator.[9] In case the client wants only a Sole arbitrator, the only possible way is to jointly agree on a sole arbitrator, which is very difficult in practice to achieve. The authority to appoint a sole arbitrator can be given to an independent arbitral institution or the High Court (domestic) or the Supreme Court (India seated international commercial arbitration) as the case may be. In case a three-member Arbitral Tribunal is to be appointed, the procedure mentioned in the Act under Section 11 is the simplest and safest. The Clause simply states that the members of the arbitral Tribunal will be appointed in the manner mentioned under Section 11. The procedure under Section 11(3) can be reproduced, and time lines be specified for the appointment by the parties. By putting timelines in the procedure, the other side can be forced to act quickly. Since, the parties are given to choose the procedure for appointment under the Act, the other side will lose the chance to nominate someone to the arbitral Tribunal if the times period lapses.[10] In which case, the concerned High Court or the Supreme Court will appoint the arbitrator for the defaulting party or a designated arbitral institution can be given the power to appoint an arbitrator for the defaulting party. Such a right will have to be given to the arbitral institution within the arbitration clause itself. Further, the Clause can also mention how to appoint the Third/Presiding Arbitrator by again giving such powers to the arbitral institution such as Delhi International Arbitration Centre or the Mumbai Centre for International Arbitration. If your client is apprehensive about even one member being appointed from the opposite side which might sway the arbitral Tribunal, you may give the right of appointing the entire arbitral Tribunal to an institution. Drafting such a clause also applies to foreign seated arbitrations, and institutions such as the Singapore International Arbitration Centre, International Chamber of Commerce and Hong Kong International Arbitration Centre can help. Government contracts will invariably have either a panel of arbitrators from which the choice of arbitrators is to be made by both the parties, or at the minimum, the Government will appoint a former employee or an engineer or former high ranking member from a sister concern as its nominee to the arbitral Tribunal. Honestly, I have witnessed some excellent technical persons as arbitrators who may not be well versed with the law but know the contracts inside out and are thorough professionals. They assist the other non-technical members of the Arbitral Tribunal and the Advocates for the parties in understanding the technical aspects of the case. The appointment of such former employees has been challenged several times in the Courts of this country. However, the understanding developed now is that there is no bar in appointing an expert professional who was a former employee of the organization appointing them. However, forming a panel of such former employees and asking the other party to also chose an arbitrator from such a panel has been looked down upon and must be avoided if your client is a government entity.[11] d. Laws & Rules (i.) Governing the Contract In my limited understanding, two private domestic parties cannot choose their contract to be governed by foreign law. The substantive law governing a contract between two Indian domestic parties will always be the Indian Contract Act, 1872. If we are concerned with a contract of sale and purchase of goods, accordingly the Sale of Goods Act, 1932 will apply. So it is advisable to mention that the contract between the parties will be governed by the laws of India out of abundant caution. It is pertinent to mention here that I am referring to the substantive contract between the parties and not the law governing the arbitration agreement. The Arbitration agreement/ clause is separable from the main contract and is capable of being governed by a law other than the substantive law of the contract. If we are concerned with atleast one foreign party, it becomes all the more important to mention the law governing the contract between the party by a reference to the country of one party or the other. (ii.) Governing the Arbitration – Law of the Seat of the Arbitration The other law that has the most significant effect on the entirety of the arbitration proceedings is the law of the seat of the arbitration. The arbitration proceedings are such that two parties of different countries can choose a neutral location to conduct their arbitration. Such a location is called the seat of arbitration. The laws of the Seat of the arbitration govern the arbitration proceedings. To put it simply, the Arbitration Act applicable in the seat will govern the arbitration proceedings and the designated courts of the Seat of Arbitration will have supervisory jurisdiction over the arbitration. This becomes extremely relevant as these courts will decide any challenge to the arbitral award made by the arbitral Tribunal. It is imperative to draft this section of the clause perfectly, as it has caused the most litigation. It is advisable that if there is foreign seat of arbitration such as Singapore, London, Paris, Hong Kong etc., then an appropriate institution is appointed to conduct the arbitration such as the Singapore International Arbitration Centre, London Centre for International Arbitration, ICC Paris, Hong Kong International Arbitration Centre respectively. Now, this suggestion comes with a caveat. Although, the arbitration is conducted in a more structured manner when administered by an institution, the fee structure, however, of such institutions is directly connected to the claims made by the parties. Hence the parties must be careful about making exorbitant over the top claims and counterclaims. Also, the entire fee for the arbitration is payable at the beginning and can be escalated if the claims and counter claims increase. The problem of the seat of arbitration may seem to affect only foreign seated arbitrations but more recently and based on my experience, I can state that even in domestic arbitration choosing the seat of arbitration specifically is very important. The reason being there has been a stark contrast in the manner the designated high courts and commercial courts handle matters related to their supervisory jurisdiction in arbitration matters. The High Court of Delhi, in my experience, has been very efficient and consistent in handling arbitration applications whether it is regarding appointment or arbitrators or granting an extension of time for making the award or dealing with Section 9 applications for interim relief. On the other hand if the parties chose Hyderabad as the seat of arbitration, the High Court does not even have the jurisdiction to deal with the arbitration matters and the same goes to the District Court where the applications of the parties may not move quite as efficiently. Furthermore, the parties have the liberty to choose arbitration institutions as the Delhi International Arbitration Centre and the Mumbai Centre for International Arbitration to have a more structured arbitration by choosing Delhi or Mumbai as the seat of arbitration respectively. The Supreme Court has made it clear in Indus Mobile v. Datawind[12] that once the seat is designated in a domestic arbitration, the courts of the seat get exclusive jurisdiction to deal with the issues of arbitration arising between the parties. It is also advisable to state out of abundant caution that after the parties state what the seat of the arbitration will be, they may additionally state that the arbitral Tribunal in consultation with the parties may conduct the proceedings in any venue, they deem fit and convenient. Such a choice will not affect the seat chosen by the parties (emphasis supplied). e. Model clauses Based on the discussion above on the several possible ingredients of arbitration clauses, the readers can now go through the examples given below which attempt to cover the different options amongst the ingredients to form an arbitration clause. I shall do this instead of drafting full fledge arbitration clauses because it will be difficult to draft multiple permutations of various ingredients and the options amongst them. 1. Straight to Arbitration - All-inclusive/ excepted matters & dispute defined. Any dispute or disagreement regarding the interpretation, fulfilment or obligations of the parties under this agreement shall be resolved by arbitration. OR All disputes or disagreements which relate to __________________________ under the agreement shall be resolved by arbitration. Any dispute or disagreement regarding the _____________________________ shall not be open to be resolved by arbitration and the parties shall be open to seek remedies from the courts of ________________ (Exclusive jurisdiction clause assigning jurisdiction to one of the courts which would normally have the jurisdiction in the first place to the parties to the agreement.) 2. Multiple steps/ Escalation 2 step Any dispute or disagreement regarding the interpretation, fulfilment or obligations of the parties under this agreement shall be notified to the opposite party within 60 days of the disagreement. The parties shall mandatorily attempt to resolve the disputes amongst themselves in good faith within 60 days of notifying the dispute to the opposite party. If such dispute is not resolved or the time period for the resolution of the dispute by amicable negotiations expires, the aggrieved party may resolve the dispute by way of arbitration. OR 3 step Any dispute or disagreement regarding the interpretation, fulfilment or obligations of the parties under this agreement shall be notified to the opposite party within 60 days of the disagreement. The parties shall mandatorily attempt to resolve the disputes amongst themselves in good faith within 60 days of notifying the dispute to the opposite party. If such dispute is not resolved or the time period for the resolution of the dispute by amicable negotiations expires, the aggrieved party shall resolve the dispute by way of Conciliation as per the Arbitration and Conciliation Act, 1996.[13] On the failure of the conciliation process or the expiry of 180 days from the beginning of the conciliation process whichever is earlier, the parties have a right to resolve their disputes by way of arbitration. 3. Appointment of arbitrators and procedural rules of arbitration Ad hoc / Institutional Arbitration. Each party to this agreement shall appoint one arbitrator and the two arbitrators shall appoint the Presiding/ Third Arbitrator. (if there are only two parties to the agreement). 4. At the minimum – Substantive law and Seat. This contract will be governed by the laws of India/USA. The Place of Arbitration shall be New Delhi. The parties are free to choose any venue for the meetings to be held in consultation with the members of the arbitral Tribunal. OR This contract will be governed by the laws of India/USA. The Place of Arbitration shall be Singapore/ Paris/ Hong Kong and shall be administered by the Singapore International Arbitration Centre/ ICC Paris/ Hong Kong International Arbitration Centre as per their rules. The parties are free to choose any venue for the meetings to be held in consultation with the members of the arbitral Tribunal. [1] Gaurav is an Advocate working in the area of Arbitration Law and Contracts primarily as a Legal Assistant to Justice A.K. Patnaik (Former Judge, Supreme Court of India). He can be contacted at raigaurav.legal@gmail.com. [2] TRF Ltd. v. Energo Engineering Projects Ltd., 2017 (8) SCC 377; Afcons Infrastructure Ltd. vs Rail Vikas Nigam Limited on 29 May, 2017, ARB.P. 21/2017, Judgment dated 29.05.2017 of the Delhi High Court. [3] Cable & Wireless PLC v. IBM United Kingdom Limited, 2002 EWHC 2059.. [4] International Research Corp PLC v. Lufthansa Systems Asia Pacific Pte Ltd and another, [2013] SGCA 55(Singapore). [5] M/s. Haldiram Manufacturing Company Pvt. Ltd. v. M/s. DLF Commercial Complexes Limited, 193 (2012) DLT 410 (India); Tulip Hotels Pvt. Ltd. V. Trade Wings Ltd, Arbitration Application No.4 of 2007 – Bombay High Court at Goa decided On 19.03.2008, (India). [6] Ravindra Kumar Verma v. M/s B.P.T.P. Limited & Another, 2015 147 DRJ 175; Union of India v. Baga Brothers, FAO No. 387/2006, decided on 07.07.2017 (India). [7] NHAI v. PATI-BEL (JV), O.M.P. (COMM) 314/2017, Del HC,(India)., . [8] TRF Ltd. v. Energo Engineering Projects Ltd., 2017 (8) SCC 377. [9] Perkins Eastman Architects DPC and Another v. HSCC (India) Ltd., AIR 2020 SC 59 [10] Siemens Limited vs Jindal India Thermal Power decided on 30 January, 2018 by the Delhi High Court in ARB.P. 243/2017 [11] M/s Voestalpine Schienen GMBH v. Delhi Metro Rail Corporation Ltd., (2017) 4 SCC 665; AFCONS Infrastructure v Rail Vikas Nigam Limited ARB.P. 21/2017 decided by the Delhi High Court on 29.05.2017. [12] Indus Mobile Distribution Private Limited v. Datawind Innovations Private Limited and Ors. (2017) 7 SCC 678 [13] Parties can define the contours of the conciliation as allowed by the Act.

- Purbasha Panda[1] A. INTRODUCTION On 29 April, 2020, a Division Bench of the Apex Court consisting of Justice Uday Umesh Lalit and Justice Vineet Saran delivered a landmark judgment on waiver of right to object in arbitration proceedings. This case has also opened a myriad of questions regarding validity of consolidation of arbitral claims and ‘composite reference’ in case of multiple arbitration agreements arising out of a single transaction. Further, it raised some pertinent questions on scope and exclusivity of supervisory jurisdiction of courts at the seat of arbitration. B. FACTUAL BACKGROUND OF THE CASE The instant case dealt with disputes arising out of four ‘equipment rental agreements’ entered between the claimant company which was engaged in the business of manufacturing infrastructural equipments and the respondent company which hired those equipments for a construction project. These four agreements were entered by the parties in series. The arbitration clause of the first agreement which was entered between the parties on 1.8.2010 conferred exclusive jurisdiction to the courts of New Delhi to decide any dispute arising out of the agreement. It further mentioned New Delhi to be the place of arbitration. Following this, two more agreements of the same nature were entered between the parties for supply of more equipments. The final agreement in this series was entered between the parties on 14.4.11 which conferred exclusive jurisdiction to the courts of Kolkata to deal with any dispute arising out of the agreement. A default with respect to payment was made by the respondent and subsequent to this, the claimant invoked the arbitration clause. Arbitration clauses of all these agreements provided that the appointment of the arbitrator would be made in accordance with the ‘Construction Industry Arbitration Association Rules [‘CIAA Rules’]. In accordance with these rules, a sole arbitrator was appointed, and the arbitral tribunal entered upon reference in New Delhi. In its reply to the notice of arbitration the respondent denied existence of any agreement between the parties and filed a title suit at the Court of Civil Judge (Junior Division), Sealdah praying for a permanent injunction restraining the claimant from relying on the arbitration clause. At the interim stage, the trial court passed the restraint order putting a stay on the arbitration proceedings. Meanwhile, the claimants appealed against the order and also filed an application under Section 5 read with Section 8 of the Arbitration and Conciliation Act, 1996 [‘the Act’] at the trial court. The trial court observed that the dispute clearly fell under the scope of the arbitration clause and referred the parties to arbitration. A common ex-parte arbitral award covering claims of all four agreements was passed in favour of the claimants. This award was challenged by the respondent before the Calcutta High Court, which got dismissed on ground of lack of jurisdiction. After which, the respondents approached the court of District Judge at Alipore, to challenge the arbitral award. Here, the respondents pleaded non-existence of the arbitration agreement and also for the first time pleaded that the arbitrator appointed at New Delhi did not have the requisite authority to conduct the arbitration. They argued that the agreement dated 14.4.11 provided the arbitration proceedings to be conducted in Kolkata, thus the arbitration proceedings were conducted beyond the scope of authority of the arbitrator. This petition was dismissed by the Alipore court on the ground of lack of jurisdiction. The Alipore court marked that the jurisdiction to entertain a Section 34 petition under the Act is conferred on the courts of the place where the arbitration is usually conducted, these courts are also known as ‘courts exercising supervisory jurisdiction’ over the arbitration proceedings. In this case, it was observed by the court that the arbitration agreements clearly provided the place of conduction of the arbitration proceedings to be New Delhi, therefore only courts of New Delhi can exercise supervisory jurisdiction over the proceedings. A revision petition was filed against this order before the Calcutta High Court which was also dismissed on the ground of existence of alternative remedy u/s 37. After which, an appropriate petition was filed by the respondents before the Calcutta High Court by which the order passed by the Alipore court upholding the award was dismissed and the case was restored back to the court of Additional District Judge Alipore. This order was brought to challenge before the Supreme Court. C. ISSUES BEFORE THE COURT (i.) Scope of right of a party to object to arbitral proceedings It was argued by the claimants before the Apex Court that it was only at the stage of preferring the Section 34 petition before the Alipore Court that the respondents raised the issue of jurisdiction of the arbitrator appointed at New Delhi, thus in accordance with Section 4 of the Act, the respondents have waived their right to raise an objection on this ground. Moreover, Section 16 of the Act provides that any objection regarding jurisdiction of tribunal must be raised before the tribunal at the first instance. Therefore, the prime question before the Apex Court was ‘whether the respondents have waived their right to raise an objection in the instant case?’ To answer this question, in the instant case the Apex Court undertook a combined reading of Section 4 as well as Section 16 of the Act. Section 4 of the Act provides that right of objection to an arbitration proceeding can be exercised by a party when there has been non-compliance of (a) any derogable provision of Part I of the Act (b) any requirement under the arbitration agreement. However, when such objection is not raised without undue delay or within the time limit provided under the agreement, it would be considered that the parties have waived off their right to object. To decide on amplitude and applicability of Section 4 read with Section 16 of the Act to the present set of facts, the court referred to two its decision namely, Narayan Prasad Lohia vs. Nikunj Kumar Lohia and others[2] (‘Lohia Case’) and Konkan Rly. Corpn. Ltd. v. Rani Construction (P) Ltd[3] (‘Konkan Railway Case’). The ‘Lohia Case’ essentially dealt with a challenge to an arbitral award which was passed by a tribunal consisting of even number of arbitrators. Section 10 of the Act clearly creates a mandate that no arbitral tribunal can be formed with even number of arbitrators. Thus, one of the grounds in this case for challenging the arbitral award was that the award was passed by a tribunal formed outside the confines of the Act. To decide, if waiver under Section 4 of the Act has occurred or not, the court ventured to find out if Section 10 is a derogable provision. It is also important to mention here as discussed in the case of Krishan Lal v. State of J&K[4], that Section 4 only covers non-compliance of derogable provisions, because if it would cover non-compliance of mandatory provisions then that would not have been allowed considering that mandatory requirement of a statute cannot be waived by consent or acquiescence. In the ‘Lohia Case’ the Apex Court has marked that Section 10 is a derogable provision, therefore a waiver can arise with respect to it. Section 16(2) of the Act provides that a plea that the arbitral tribunal does not have jurisdiction must be raised not later than the submission of statement of defence. In ‘Lohia Case’, it was marked by the Apex Court that, a conjoint reading of Section 10 and Section 16 shows that an objection to the composition of arbitral tribunal is derogable and must be raised within the time prescribed under Section 16(2) and if a party chooses not to do so, then it would be considered as a ‘deemed waiver’. In the instant case, relying on the ‘Lohia Case’ the court marked that, the respondent raised its object to conduction of arbitral proceedings in New Delhi only at stage of the Section 34 petition. It did not raise any such objection on the jurisdiction of the arbitral tribunal or the venue of the arbitral proceedings during the arbitration, rather the sole arbitrator in its award had marked that even when details of each sitting was being sent to the respondent, the respondent deliberately choose not to participate in the award and kept on taking adjournments. The Apex court considered this to be a deemed waiver of right to object on behalf of the respondents. (ii.) Separability of the arbitration agreements in case of a composite reference In this case, a common award was passed by the sole arbitrator covering claims arising out of four arbitration agreements entered between the parties. The seat of arbitration as provided under the arbitration clause in the agreement dated 4.4.11 was Kolkata, whereas the other three arbitration agreements conferred exclusive jurisdiction on New Delhi courts. It was argued by respondents in this case that every arbitration agreement had to be considered independently and if an agreement specified the place of arbitration to be Kolkata, the party autonomy in that behalf ought to be respected. The respondents relied on Duro Felgeura S.A v. Gangavaram Port. Limited[5] (‘Duro Case’) on separability of arbitration agreements and the disputes arising out of them. In ‘Duro Case’ the court had rejected the approach of making a composite reference to arbitration covering all claims arising out of the arbitration agreements even if they are part of a single transaction. It was discussed in the ‘Duro Case’ that to be able to bind multiple arbitration agreements in a common thread, for their composite reference, it is essential that the agreements refer to each other and constitute a valid arbitral clause by reference. Section 7(5) of the Act provides that ‘mere reference of a document cannot lead to an inference that arbitration clause in the document becomes part of the agreement by reference’. Interpreting this very provision, the court in ‘Duro Case’ held that for incorporating an arbitral clause by reference that is reading arbitral clause of one document as part of another document, there has to be ‘conscious acceptance’ of arbitral clause of that another document. The courts could not find such ‘conscious acceptance of arbitral clause of one agreement in other agreements’ and therefore in ‘Duro Case’ the court ruled in favour of separability of arbitration agreements. However, in the instant case, the Apex Court refused to rely on the ratio of ‘Duro Case’, on the ground that the factual circumstances of both the cases are starkly different. The ‘Duro Case’ essentially dealt with a series of six arbitral agreements out of which four dealt with ‘Domestic Arbitration’ and two specifically dealt with ‘International Commercial Arbitration’. In ‘ Duro Case’ another reason the court did not allow for composite reference was because the nature of all the six agreements in the series were not the same and allowing for composite reference would have given rise to chaotic legal circumstances, however the Apex Court in the instant case marked that all the four agreements in the series were more or less of the same nature, apart from one agreement which provides for a different venue, therefore the court refused to rely on ‘Duro Case’ and allowed for composite reference of arbitration for claims arising out of all six agreements. While making this observation the Apex Court in the instant case also marked that in case of ‘International Commercial Arbitration’ place of arbitration has a special significance as the place of arbitration may determine which curial law will apply. However, the court marked that in case of domestic arbitration, substantive law and curial law would be the same. In the instant case, the Apex Court did not further elaborate on this statement, however the author would like to highlight on the implication of the observations of the Apex Court. (iii.) Scope of the ‘Seat theory of Arbitration’ In the instant case, the Apex Court has also made some observation regarding the scope of exclusivity of Delhi Courts to entertain cases arising out of arbitration proceedings seated at Delhi. To decide on this issue, the Apex Court referred to the case of Indus Mobile Distribution Pvt Ltd v Datawind Innovations Pvt. Ltd.[6], herein the Apex Court had held that the moment a seat is designated it is akin to having an exclusive jurisdiction clause. In the instant matter, the ‘Indus Case’ was also referred by the claimants to establish the sanctity of the ‘seat theory’ of arbitration to justify the valid jurisdiction of Delhi courts to entertain a case arising out of the arbitration proceedings. In the instant case, the Apex Court held that the very fact that arbitration proceedings were conducted in Delhi, therefore by virtue of the seat theory the courts in Delhi have jurisdiction to entertain cases arising out of this arbitration. The Apex Court has time and again ruled on scope of ‘seat theory of arbitration’ in numerous cases. For example, in the recent case of BGS SGS Soma JV v. NHPC,[7] the Apex Court has ruled in favour of the ‘seat theory’ of arbitration. In the scheme of the act, Section 2(1)(e) provides for the definition of ‘court’. It provides that those courts which would have jurisdiction over subject matter of arbitration as if the same have been subject matter of a ‘suit’ would fall under the definition of court. This definition points towards the principles of place of suing provided under Section 15 to 20 of the Code of Civil Procedure, further pointing towards existence of jurisdiction of courts where a cause of action might have occurred. On the other hand, Section 20(2) of the Act allows parties to select a seat of the arbitration. The courts at seat of arbitration essentially exercises supervisory jurisdiction over disputes arising out of the arbitration, this is called the ‘seat theory’, the underlying logic behind this is to honour the principle of party autonomy, that is if parties have chosen a particular place as the situs of arbitration, they obviously intended for the disputes arising out of the arbitration to be referred to courts at that seat. Thus, a combined reading of these two provision points out towards a seeming existence of concurrent jurisdictions for disputes arising out of an arbitration. However, the dubiety around this was cleared in the ‘Soma Case’. The pre-existing interpretation of Para 96 of BALCO[8] pointed towards existence of this concurrent jurisdiction, however in the ‘Soma Case’ the court clarified that such interpretation of para 96 is highly misplaced. The Court further marked that Para 96 of BALCO[9] has to be read in light of the entire judgement and not in isolation. D. ANALYSIS AND CONCLUSION To summarize, the court essentially dealt with three issues in the instant case (a) Waiver of right to object in an arbitration proceedings (b)Separability of arbitration agreements (c) Scope of seat theory in arbitration proceedings. With respect to ‘waiver of right to object’ in arbitration proceedings, the Apex Court in light of Section 4 read with Section 16 of the Act held that any objection with respect to jurisdiction of arbitrator or seat of arbitration has to be raised before the arbitral tribunal in accordance with Section 16 of the Act, after which it would be considered that parties have waived off their right to object to arbitral proceedings. In the instant case, the Apex Court held that the Hon’ble Calcutta High Court had erred in setting aside the award. The court also further marked any objection with respect to place of arbitration or scope of authority of arbitrator cannot be raised by the respondents in any further proceedings in any forum With respect to separability of arbitral agreements, the Apex Court marked that in the instant case, the four arbitral agreements forming a series had common characteristics, like all of them dealt with ‘Domestic arbitration’, the manner of appointment of arbitrator in all the four agreements were similar, therefore the Apex Court found a thread of commonality between all the four arbitral agreements and did not see any harm in allowing for composite reference. It is important to note here that the entire ‘separability of arbitral agreements’ issue, was discussed by the Apex court in the light of the ‘Duro Case’, on this issue the court did not make any observation on composite reference v/s separability of arbitral agreements as an independent question of law. .It would have been much better for sake of clarity on this question of law, if the Hon’ble Lordships would have shed some light on it as an independent question of law, going little beyond the precedents presented before the court. While deciding on this issue, the court has also made an observation that in case of ‘Domestic Arbitrations’ the curial law, lex Arbitri as well as the substantive law are one and the same in contrast to ‘International Commercial Arbitration’, where curial law and substantive law might be different. To understand the implication of this ratio, it is imperative to have some clarity on some essential theories of jurisdictions referred in ‘International’ as well as ‘Domestic’ arbitration. The term ‘substantive law’ of the court refers to the law governing the substantive issues in dispute. ‘Curial Law’ on the other hand essentially refers to the law that governs the procedure of arbitration. In addition to this, ‘Lex Arbitri’ essentially refers to the law of the country of situs of arbitration. These three theories basically govern the quagmire of jurisdiction in ‘Domestic’ as well as ‘International Commercial Arbitration’. Lex Arbitri is important because the seat of the arbitration essentially determines the curial law which would govern the arbitration proceedings, unless there is an agreement that some other law would govern the arbitral proceedings. This is referred to as ‘Lex Loci Arbitri’.[10] In the case of BGS SGS Soma JV v. NHPC[11] (Soma Case), the Apex Court has marked that there is an inextricable link between ‘Lex Arbitri’ and ‘Curial law’. The court went on to mark that “the territorial link between the place of arbitration and the law governing the arbitration is well established in international instruments, namely New York Convention of 1958 which maintains that reference to “law of the country where arbitration took place [Article V (1) (d)], synonymously to “law of the country where award is made” [Articles V (1) (a) and (e)]”. These observations clearly indicate towards existence of this inextricable link. This relationship is very crucial in case of ‘International Commercial Arbitration. For instance, an arbitral tribunal with its seat in France may be required to decide the substantive issues in dispute between the parties in accordance with the law of Switzerland or the laws of India, or some other law as the case may be. However, the arbitration itself and the way in which it is conducted, will be governed, even though in outline by relevant French Law on international arbitration. However, in case of domestic arbitration in India, the ‘Lex Arbitri’, ‘Curial Law’ as well as ‘Substantive Law’ would be the same. Thus, in the instant case the court marked that making a distinction between courts of Delhi or Kolkata to entertain cases arising out of the arbitration proceedings does not have any such dire implication. Finally, with respect to the scope of ‘seat theory of arbitration’, the court relied on the ‘Indus Case’ and held that designation of seat is akin to having an exclusive jurisdiction clause, therefore the fact the arbitration proceedings were duly conducted in Delhi, makes Delhi the situs of arbitration , granting the courts of Delhi an exclusive jurisdiction to deal with disputes arising out of the arbitration. [1] Purbasha is a law student currently pursuing BA.LLB (Hons.) from National University of Study and Research in Law, Ranchi. She is a Staff Writer at the Arbitration Workshop and can be reached at purbasha.nusrl.13@gmail.com. [2] Prasad Lohia vs. Nikunj Kumar Lohia and others (2002) 3 SCC 572 [3] Konkan Rly. Corpn. Ltd. v. Rani Construction (P) Ltd (2002) 2 SCC 388 [4] Krishan Lal v. State of J&K (1994) 4 SCC 422 [5] Duro Felgeura S.A v. Gangavaram Port. Limited (2017) 9 SCC 729 [6] Indus Mobile Distribution Pvt Ltd v Datawind Innovations Pvt. Ltd. (2017) 7 SCC 678 [7] BGS SGS Soma JV v. NHPC 2019(6) Arb.L.R 393(SC) [8] Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc.(2012) 9 SCC 552 [9] Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (2012) 9 SCC 552 [10] O.P Malhotra, The Law & Practice of Arbitration and Conciliation, Third Edition, Thomson Reuters. Pg 900. [11] BGS SGS Soma JV v. NHPC 2019 (6) Arb.L.R 393(SC)

- ADVAIT GHOSH[1] I. INTRODUCTION This article will attempt to elucidate the bars to seeking interim relief through the prism of The Arbitration and Conciliation Act, 1996 in cases of determinable contracts and will also endeavour to understand if there are any exceptions to this rule as the seeking of Interim reliefs in case of determinable contracts is usually stymied by the provisions of The Specific Relief Act 1963. II. Determinable Contracts & Specific Relief Act Determinable Contracts derive their existence from the termination clause envisaged therein. The word determinable used in Clause (c) to sub-section 1 of Section 14 of The Specific Relief Act, 1963, means that which can be put an end to. Literally, the word determinable means to “put an end to”. The seeking of Interim Reliefs in the case of determinable contracts containing an arbitral clause is commonplace, even though the chances of success are limited due to the obstacles placed by The Specific Relief Act 1963 and other allied Legislations. The General Law concerning the seeking of Interim Reliefs in a determinable contract was settled in the case of Indian Oil Corporation vs. Amritsar Gas Service (2013) 9 SCC 32 wherein the Apex Court held that a distributorship agreement which had a clause which entitled either party to terminate the contract with 30 days prior notice and without assigning any reason was “determinable” in nature and could not be specifically enforced. III. The approach of the National Courts when dealing with a Section 9 application under The Arbitration and Conciliation Act, 1996 in case of determinable contracts: - We shall analyse the approach of the National Courts in Section 9 Petitions preferred under The Arbitration and Conciliation Act, 1996 in case of determinable contracts through Judgements of the Delhi High Court and Apex Court as enumerated below. A) M/S INTER ADS EXHIBITION PVT LTD vs. BUSWORLD INTERNATIONAL (O.M.P.(I) (COMM.) 273/2019) (2020 (1) ArbLR 250 (Delhi) In this, the Petitioner and the Respondent had entered into a Joint Venture Agreement to jointly organize an event known as “Busworld” in Bangalore. The Respondent, after the successful completion of the event, terminated the JVA with the Petitioner herein. The Petitioner filed an application for Interim Relief in the Delhi High Court under Section 9 of The Arbitration and Conciliation Act, 1996, praying that the Respondents be restrained from terminating the Joint Venture Agreement with the Petitioners herein. The Court concluded that as per Article 7.3 of the Joint Venture Agreement, either party could terminate the agreement, hence the contract is of determinable nature. The Delhi High Court referred to the case of Rajasthan Breweries Ltd. vs. Stroh Brewery (2000 (55) DRJ 68: 2000 (3) ARBLR 509) where the Delhi High Court had remarked that in cases of determinable contracts, specific performance of a determinable contract is statutorily barred under Section 14(1) d of The Specific Relief Act 1963 and also under Section 41(h) which says that “injunction will be refused when there is an equally efficacious relief available to the parties”. On the basis of this decision, the Court declined to give relief to the Petitioner and dismissed the application for Interim relief preferred by them. B) PARSOLI MOTOR WORKS vs. BMW INDIA PVT LTD ( OMP. (I) (COMM.) 559/2017) 2018 (2) ArbLR 50 (Delhi) The Respondent entered into an agreement with the Petitioner for the sale of its cars in Gujarat. The Petitioner claimed before the Court; there was a mutual understanding with the Respondent that the dealership would be renewed on a yearly basis. The Respondent, due to the Petitioners' inability to meet their yearly targets, terminated the said dealership in the year 2018. The Petitioner filed an application under Section 9 of The Arbitration and Conciliation Act, 1996 (due to the arbitration clause in the dealership agreement) seeking to restrain the Respondents from terminating the said dealership as it was their contention that huge expenditure had been made by the Petitioner to promote BMW in Gujarat, and unilaterally ending the contract would cause huge hardship to them, which cannot be monetarily compensated. The Delhi Court referred to the case of Planet M. Retail vs. Select Infrastructure Pvt Ltd OMP No. 488/2013:2014 (4) ArbLR 348 (Delhi) wherein a Division Bench of the Delhi High Court refused to restrain the termination of a License Deed on the grounds that the License Deed entered into between the parties was terminable in nature, and hence Injunction could not be granted due to the statutory bar under Section 14 and Section 41 of The Specific Relief Act, 1963. Thus, the Court declined to give relief to Parasoli Motors and did not restrain BMW India from terminating the said Agreement. The above two Case Laws and the cases referred to by them elucidate the approach of the Courts in dealing with Interim Reliefs in case of determinable contracts. Thus, it is quite lucid that the National Courts are disinclined to grant interim relief in case of determinable contracts. We shall endeavour to understand through the next cases discussed herein-below whether there is a possible exception to this rule and if so, in what kind of circumstances does it arise? C) DANIELI CORUS BV vs. STEEL AUTHORITY OF INDIA (OMP(I)(COMM) 189/2017) 246 (2018) DLT 329 The Petitioner and the Respondent entered into a contract for setting up a “Blast Furnance” at Rourkela Steel Plant. The Petitioner shared technical drawings related to the Blast Furnance with the Respondent. The drawings wherein the nature of confidential information and where only to be used for the purpose of the execution of the project. The Petitioner claimed that the Respondent had uploaded the confidential drawings of the Petitioner on a 3rd party website. The Petitioner also filed an additional affidavit before the Court wherein it was affirmed that the Respondent had floated a tender for Operational Tyres, and the drawings of the Petitioner were copied. In light of these circumstances, the Petitioner preferred an application under Section 9 of The Arbitration and Conciliation Act, 1996, to restrain the Respondents from further disclosing or disseminating confidential information to 3rd parties. The Respondent, in reply to the said application, contended that this was a determinable contract for which no injunction could be granted, and damages were sufficient to compensate for the breach in Contract. The Court referred to the case of John Richard Brady vs. Chemical Process Equipment (AIR 1987 Delhi 372) where the Court invoked General Equity of Breach of Confidence and restrained the Respondents from disclosing technical drawings as the Court was of the opinion that such conduct was a breach of confidence and amounted to the unauthorized use of labour. The Court also referred to the case of Zee Telefilms vs. Sundial Telecommunication (2003 (5) BomCR 404) where the Bombay High Court had restrained the Respondents from disclosing confidential information even though the Contract between the parties was determinable in nature, as the Court was of the opinion that monetary compensation would not be sufficient to remedy the breach, and hence Injunction was granted to the Petitioner. Finally, the Court made a reference to the case of Daljeet Titus vs. Adebar and Ors 130 (2006) DLT 330, where it was remarked Court would step in and grant Injunction even in case of determinable contracts to prevent a breach of confidence. After analysing all the above cases, the Court restrained the Respondents from disclosing the drawings to 3rd parties and opined that damages would not be sufficient to remedy this breach of confidence. Furthermore, the Court said that once a party has obtained information on the basis of contractual terms, it cannot turn around and question the confidentiality of this information. It is estopped from doing so. IV. Amendment of the Specific Relief Act in 2018 The parliament made significant amendments to the Specific Relief Act in 2018. One of the key amendments was made to Section 10 of the Act. It has made the specific performance of a contract the rule instead of being an alternative in cases where the actual damage for non-performance could not be ascertained or where the compensation for non-performance would not be an adequate relief. Section 10 of the Act has been substituted, and instead the newly inserted Section 10 states that the specific performance of a contract shall be enforced by the court subject to the provisions contained in sub-section (2) of Section 11, Section 14 and Section 16 of the Act. However, these amendments to The Specific Relief Act have not changed provisions regarding determinable contracts, and the provisions which govern the working of determinable contracts continue to be the same as before. V. Conclusion The above-mentioned Case Laws help us understand the Judicial intricacies which the Courts grapple with regard to granting of Interim Relief in Determinable Contracts. The Courts usually do not interfere on account of the statutory bars provided under the Specific Relief Act, 1963 however if there are extenuating circumstances like monetary compensation not being sufficient for the breach as also provided in Section 38 of The Specific Relief Act, 1963 and to prevent a breach of confidential information obtained through a contractual relationship as enumerated through the above cases the Courts will grant Injunction in case of determinable contracts also. [1] Advait is an Advocate working in the litigation team at Kesar Dass Batra. He deals in matter related to Arbitration, Civil Suits and Criminal. He has argued matters before the District Courts of Delhi and the Delhi High Court. He can be reached at advaitgh@gmail.com

Gaurav Rai[1] The IBA guidelines of 2004 set out instances which can raise justifiable doubts as to independence and impartiality of an arbitrator.[2] Although not binding, they are considered as starting points or guides to challenge of arbitrators internationally and under the arbitration statutes based on the model law.[3] In 2014 the IBA guidelines ("2014 guidelines") were amended to truly reflect the experience of the international arbitration community and clarified certain doubts regarding the nature of its suggested applicability. In the 2014 guidelines it was made clear that these guidelines were not legal provisions and did not override any applicable national law or arbitral rules chosen by the parties. It was however hoped that these revised guidelines would find broad acceptance within the international arbitration community, and that they would assist parties, practitioners, arbitrators, institutions and courts in dealing with these important questions regarding impartiality and independence.[4] The aforesaid 2014 guidelines consists of the Red (Non-waivable and waivable), Orange and Green Lists. In these lists are enumerated several instances of relationships between an arbitrator, party and counsel and as to whether such persons nominated as arbitrators are supposed to disclose such relationship and also as to how these situations affect the independence and impartiality of the arbitrator to serve in the Tribunal. The standard of test proposed in the IBA guidelines for such suitability is the reasonable third person standard test borrowed from the UNCITRAL Model laws of 1996.[5] The Arbitration and Conciliation Act, 1996 of India, however, went a step further and via an amendment in 2015 added Schedule 5 and Schedule 7 to the Act. Schedule 5 consisted of situations which shall act as a guide in determining whether circumstances exist which give rise to justifiable doubts as to the independence and impartiality of the Arbitrator.[6] Schedule 7 consists of situations and instances which make a person ineligible to be appointed as an arbitrator.[7] These possible situations were borrowed from the IBA Guidelines on arbitrator Impartiality and Independence and is a mix of the orange and red lists of the said guidelines.[8] The Constitution of India mandates that a Supreme Court Judge retire at the age of 65 and that a High Court Judge retires at the age of 62. Most domestic arbitrations in India, above a certain amount of claim, invariably have retired Supreme Court and High Court judges functioning as arbitrators. In some cases, State run entities appoint retired engineers who can adequately apprise the arbitral Tribunal of underlying technical issues regarding arbitration which arise out of construction projects. Several parties also seek to appoint Senior Counsels to their arbitration. Every person so nominated is to be judged on the same anvil of instances enumerated under Schedule 5 and Schedule 7 of the Arbitration and Conciliation Act, 1996. In this paper the author will be looking at certain instances which affect such prospective arbitrators after the introduction of the amendment to the Arbitration and Conciliation Act, 2015. The author aims to use this as an introduction to a working series wherein different instances as encountered in arbitrations will be discussed and debated. The same is also an invitation to readers of this blog to supplement this working series with their own experiences in the domestic arbitration circuit and their experience with Schedule 5 and Schedule 7 of the Arbitration and Conciliation Act, 1996. [1] Gaurav Rai - The author is Advocate registered in State Bar Council of Delhi and is currently working as a legal assistant to Justice A.K. Patnaik, Former Judge Supreme Court of India and assists Justice Patnaik in his work as an arbitrator. He can be reached at raigaurav.legal@gmail.com [2] ‘IBA Guidelines on Conflicts of Interest in International Arbitration 2004’ . [3] Nigel Blackaby and others, Redfern and Hunter on International Arbitration (Sixth Edition 2015, Oxford University Press) para 4.88. [4] ‘IBA Guidelines on Conflicts of Interest in International Arbitration 2014’ s Introduction Para 6 . [5] ‘IBA Guidelines on Conflicts of Interest in International Arbitration 2014’ (n 4) 6 Clause (b) of Explanation to General Standard 2. [6] Explanation 1, Section 12(1), Arbitration and Conciliation Act, 1996 [7] Section 12(5), Arbitration and Conciliation Act, 1996 [8] HRD Corporation v GAIL (India) Ltd (2017) 12 SCC 471 (Supreme Court of India) [14].

16th July 2019 The Arbitration and Conciliation (Amendment) Bill 2019 has been introduced in the Rajya Sabha on 15th July 2019 by Union Minister of Law and Justice Mr. Ravi Shankar Prasad. A link to the bill is as hereunder: http://164.100.47.4/BillsTexts/RSBillTexts/asintroduced/Arbitration-Rs%20intro-E-15719.pdf A previous version of the bill had been introduced in August 2018 in the Lok Sabha. It had passed the Lok Sabha but had not been passed in the Rajya Sabha in time and had hence lapsed. There are several new features being brought out in the bill and the Arbitration Workshop will deal with those features and how it affects Arbitrations in India once the Bill is passed and becomes an Act.

- Ujjawal Satsangi[1] Jan Paulsson explains the Idea of Arbitration, in his book of the same name, in following wise words “[a] binding resolution of disputes accepted with serenity by those who bear its consequences because of their special trust in chosen decision-makers.”[2] This sentence binds the entire philosophy behind arbitration and essentially enumerates its components. We must understand that arbitration is an alternative method of dispute resolution and such method can only be effective and acceptable if the parties to the agreement have faith in the decision maker. Paulsson emphasised upon ‘special trust in chosen decision-makers’ which is the cornerstone of any acceptable and justiciable arbitration. Unless the parties are ready to accept the judgment of the chosen umpire, the arbitration cannot be considered to be a rendering of justice and would be nothing more than a sham. Among all the words used, two i.e. “special trust” and “chosen” are of significant importance. Both these words were under constant scrutiny and interpretation by various courts around the world. The word chosen has to be understood from a mutual prospective. Since, arbitration is a method adopted mutually by the parties, the arbitrator so chosen must also be mutually appointed by the parties. A logical stretch of this proposition leads us to assume that one party’s unilateral act of appointing an arbitrator, without considering the opinion of the other, violates the sacred thread of mutuality which is the foundation of arbitration, and hence the very neutrality of the appointed arbitrator becomes questionable. With this backdrop, I will analyse two questions i.e. 1. Whether a party to arbitration can unilaterally appoint an arbitrator? and 2. Whether such appointment prima facie posts a challenge to neutrality of an arbitrator? Section 11(2) of the Act and Freedom to Determine Procedure Arbitration and Conciliation Act 1996, in very simple terms, provides the power to the parties to decide the procedure of arbitration and manner of appointment of the arbitrator(s).[3] It makes us wonder, as to whether this liberty has any limitation attached to it or does it give the unfettered powers to the parties to construct a contract as per their own whims and fancies. The only caveat visible from a reading of the sub-section is with respect to the failure of the parties to perform their obligations and power of the Courts to intervene then. However, the fundamental question we post here is whether at the very moment of entering the contract, the parties can formulate a clause wherein one of the parties waives his very right to nominate or appoint an arbitrator or not. As explained, the simple reading of the sub-section suggests that the parties can formulate a clause where one party waives its right to appoint an arbitrator. However, we must not forget that in modern times parties do not always find themselves to be at equal footing and hence there are chances of one party taking advantage of the other and formulating onerous contracts. It is in this factual circumstance we require a reading of the law. Evidently, such onerous contracts were a benchmark for the industry where we saw government agencies, statutory bodies, public sector undertaking and other like organisations with bargaining power on their side preferring standard contracts formulated by them for entering into any agreement and without any exception used an arbitration clause, naming their own employee or MD /CEO/Chairman or trusted confidante as the arbitrator.[4] Amendment to the Act and judgement of TRF Ltd v. Energo Engineering Projects Limited On the very face of it, such clauses were averse to the idea of arbitration discussed above. Although, the parties agreed to such clauses in the contract at the first place and indeed the law in its plain reading did give them the right to formulate such procedures, but in principle, the clauses were a sham and were going against the very spirit of arbitration. As a result, a welcome change was brought by the government when the Schedule V and Schedule VII were added to the Arbitration and Conciliation Act 1996 by way of amendment in 2016.[5] The newly added schedules, essentially took away the immoral foundation of aforementioned illustrations of clauses wherein people with interest, especially employees, agents and consultants were made ineligible from becoming the arbitrator. The situation was further clarified and streamlined when the Hon’ble Supreme Court in TRF Limited v. Energo Engineering Projects Limited[6] explained that not only the persons falling into the category of Schedule VII are ineligible for becoming an arbitrator but they are also ineligible for nominating an arbitrator in their stead. With the above position of law in place, the question of neutrality of an arbitrator is more or less being addressed. The reading of the above judgment construes that even if a unilateral appointment of arbitrator is present, the party with such power cannot exercise it arbitrarily and it has to be exercised keeping the neutrality of the arbitrator in mind. Unilateral Right to Appoint Arbitrator vis-à-vis Arbitration Act 1940 In the regard, the pertinent question of validity of such clauses is now required to be revisited. As we delve into the basic foundation of arbitration, as explained by Jan Paulsson, the mutuality of parties is a must. If we read the question, in light of the above principle and the reasoning behind bringing Schedule V and Schedule VII in the Arbitration and Conciliation Act 1996, it can be said that a clause giving unilateral power to one of the party to appoint arbitrator does not qualify the basic principle of mutuality and gives arbitrary powers in the hands of one of the parties resulting into grave injustice. This question did come for scrutiny before the Apex Court in Dharma Prathishthanam v. Madhok Construction Pvt. Ltd.[7] wherein the above position was read in accordance with the earlier Arbitration Act of 1940 wherein the following was observed: “A unilateral appointment and a unilateral reference – both will be illegal. It may make a difference if in respect of a unilateral appointment and reference the other party submits to the jurisdiction of the arbitrator and waives its rights which it has under the agreement, then the arbitrator may proceed with the reference and the party submitting to his jurisdiction and participating in the proceedings before him may later on be precluded and estopped from raising any objection in that regard.” The reasoning coming out of the above position being that a unilaterally appointed arbitrator may continue only if the other party agrees to his appointment and waives his objection. But prima facie, such appointment will be illegal. Although, the above observations were in respect of the Arbitration Act, 1940 it must not be forgotten that even then mutuality of parties had to be respected. Unilateral Right to Appoint Arbitrator vis-à-vis Arbitration and Conciliation Act 1996 Considering the jurisprudence we have discussed so far, the Bombay High Court, on a couple of occasions found it necessary to address the daunting question at hand. The first two occasions which came before the Hon’ble Bombay High Court were in Prajakta Mahesh Joshi v. Rekha Uday Prabhu[8] and Zenith Fire Services (India) Private Limited v. Charmi Sales.[9] On both the occasions, the Hon’ble Court was pleased enough to throw some light on the question at hand and tried to answer some pertinent questions. While in Prajakta Mahesh Joshi v. Rekha Uday Prabhu[10], the Hon’ble Court read the situation in light of the scheme of the Act and passed the following observations: “Considering the scheme and object of Arbitration Act, in my view, first requirement is that the Arbitrator must be appointed by the consent of the parties. The consent of Petitioner was never obtained. Therefore, the unilateral appointment of Arbitrator, in such fashion itself is impermissible mode to resolve the disputes by this alternative dispute resolution mode through the Arbitration…It is contrary to the terms and the law. Apart from this clause, it is necessary for both the parties to appoint and/or nominate and/or select sole Arbitrator by consent. The appointment of the Arbitral Tribunal without consent itself was contrary to the agreed terms of the contract.” It was in the following judgement of Zenith Fire Services (India) Private Limited v. Charmi Sales[11] wherein the Hon’ble Court applied Doctrine of Acquiescence examined the situation and strengthens the above position in following words: “Mere appointment of Arbitrator by one party and admittedly when it was not mutual appointment, that itself also is not sufficient to treat valid appointment of the Arbitrator, as per clause as well as under the provisions of the Arbitration Act. The mutual consent is a must, even otherwise, to appoint sole Arbitrator. I am inclined to observe that such appointment of the sole Arbitrator cannot be accepted as valid and legal appointment by invoking the Doctrine of Acquiescence and/or Estoppel and/or Waiver. Considering the whole scope and purpose of Arbitration Act and specifically in view of the provisions of Section 11 and the judgment of Supreme Court and even otherwise such unilateral appointment of Arbitrator itself is void, unjust and contrary to law. The whole proceedings therefore so initiated and continued also faces the same consequences. The consequential proceedings in view of this illegal appointment of sole Arbitrator are also bad.” Effect of Amendment and TRF Ltd v. Energo Engineering Projects Ltd on Unilateral Appointment of Arbitrator Recently, on 04.03.2019, once again the Bombay High Court addressed the issue and to the relief of many covered the scenario by taking into account the amendment of 2016 and the judgment of Hon’ble Apex Court in TRF Limited v. Energo Engineering Projects Limited.[12] Significantly, the following observations were made by the Hon’ble Court which is pertinent to note: “Learned counsel for the Petitioners is also correct in her second contention that article 12 of the agreement being the arbitration agreement as entered between the parties had become unworkable by virtue of the amended provisions of the Arbitration and Conciliation Act (Act No. 3 of 2016) as the Respondent either ought to have appointed an arbitrator by consent of the petitioners or in that regard, ought to have approached the High Court under Section 11 of the Act and could not have proceeded to make a unilateral appointment…In these circumstances, a unilateral appointment of the Arbitrator on the part of the Respondent would be required to be held to be illegal and invalid considering the provisions of Section 11, subsection 5 of the Act which were clearly attracted on such disagreement on the part of the parties. It was necessary for the Petitioners to approach the High Court under Section 11(6) of the Act.”[13] With these observations made by the Hon’ble Bombay High Court, the question pertaining to validity of unilateral appointment of arbitrator is now fairly settled. Consent of parties for valid application of a clause is sacrosanct in the law of contract and we need to understand that mutuality of agreement between the parties must be adhered to in arbitration as well. Hence, the clauses pertaining to unilateral appointment of arbitrator must now be examined with a strict scrutiny and in accordance with the spirit of arbitration. [1] Ujjawal Satsangi is a practicing advocate at the Allahabad High Court. He practices in Arbitration Law, apart from Civil Laws, Services laws, Commercial Laws and Criminal Laws. He has regularly assisted the Hon'ble High Court of Allahabad, NCLT, DRT, and other forums. Further, he has been representing the interest of his clients in Arbitrations, Investment Negotiations and other commercial transactions. He graduated from National Law University Odisha in 2016. He has been an avid writer and often writes on several niche topics of law with an aim of enriching the world of legal writing and bringing a meaningful impact by the same. He can be contacted at ujjawalsatsangi@gmail.com [2] Jan Paulsson, The Idea Of Arbitration (Oxford University Press 2013). [3] Section 11(2) of Arbitration and Conciliation Act 1996. [4] 246th Report of Law Commission of India (2014). [5] Arbitration and Conciliation (Amendment) Act 2016, Act No. 3 of 2016. (See also article by Gaurav Rai – on Challenges’ for Arbitrators – Introduction available at https://www.thearbitrationworkshop.com/post/challenges-for-arbitrators-the-indian-experience-introduction) [6] TRF Limited v. Energo Engineering Projects Limited, 2017 (8) SCC 377. [7] Dharma Prathishthanam v. Madhok Construction Pvt. Ltd., 2005 (9) SCC 686. [8] Prajakta Mahesh Joshi v. Rekha Uday Prabhu, 2013 (7) BomCR 791 [9] Zenith Fire Services (India) Private Limited v. Charmi Sales, 2013 (3) BomCR 156 [10] Prajakta Mahesh Joshi v. Rekha Uday Prabhu, 2013 (7) BomCR 791 [11] Zenith Fire Services (India) Private Limited v. Charmi Sales, 2013 (3) BomCR 156 [12] TRF Limited v. Energo Engineering Projects Limited, 2017 (8) SCC 377. [13] Meenu Arora v. Dewan Housing Finance Corporation Ltd., Commercial Arbitration Petition No. 396 of 2017

Author - Gaurav Rai Editor - Gautam Mohanty In this part of our ongoing paper series I am going to talk about appointment of Senior Advocates as arbitrators and the possible questions that arise regarding such an appointment. I will also look at the status of law regarding treatment of the connection between Senior Advocate as an arbitrator and the counsel for the party appointing such Senior Advocate to the arbitral Tribunal. Section 12 of the Arbitration and Conciliation Act 1996 (hereinafter referred to as “Act, 1996”) casts an obligation on a person, who is approached in connection with his possible appointment as an arbitrator, to disclose in writing any circumstances which might lead to justifiable doubts regarding his impartiality and independence. Such circumstances might include the existence of either direct or indirect relationship or interest of either the past or present in any of the parties or in relation to the subject matter in dispute, whether financial, business, professional or other kind which is likely to give rise to justifiable doubts as to his independence or impartiality. Further Explanation 1 of Section 16, Act 1996 stipulates that the grounds stated in the Fifth Schedule are to serve as a guide in determining whether circumstances exist which may give rise to justifiable doubts as to the independence or impartiality of an arbitrator. The arbitrator is supposed to inform in writing all circumstances which may give rise to justifiable doubts to his independence and impartiality throughout the arbitral proceedings. Hence the question which might come up for consideration is whether such a Senior Advocate so nominated as an arbitrator was required to disclose that he appeared as a counsel assisted by advocates for the nominating party in certain cases before various courts in matters in which the party nominating the Senior Advocate as an arbitrator was not the client engaging the services and in which the subject matter of dispute of this arbitration was not the subject matter of dispute. Such a circumstances is similar to the revolving door in investment arbitration or even commercial arbitrations where in Queen’s Counsel or Barristers in the English Legal System are appointed as arbitrators who also have their own active practice as lawyers. A challenge to such a Senior Advocate came up for adjudication before the Bombay High Court in Perma Container (UK) Line Limited Vs. Perma Container Line (India) Pvt. Ltd. MANU/MH/0614/2014. In this case it was alleged that the arbitrator did not disclose the fact that he had appeared as a counsel and was instructed by solicitors of the claimant in February 2011. Further the Respondent alleged that the arbitrators generally from his conduct demonstrated a bias and that the award was in conflict with public policy on that ground. The Hon’ble Bombay High Court lay reliance on the fact that the Senior Advocate was briefed by the Advocates in a completely unrelated matter between different parties. They specifically held in para 132 of the judgement as reported in Manupatra that: “In my view, unless a party making allegations, demonstrates that the learned arbitrator had interest in the subject matter of the dispute in which he was acting as arbitrator or was related to any of the parties in any manner whosoever, no bias can be attributed against such arbitrator on the ground of he having been engaged by solicitors of one of the party and that also in some unconnected matter once or twice.” Further, in the case of Sheetal Maruti Kurundwade Vs. Metal Power Analytical (I) Pvt Ltd. and Ors. MANU/MH/3556/2017, the question that arose for decision was about the scope and purport of the provisions regarding appointment of arbitrators and challenges to their continuance in section 12(1), 12(3) and 12(5) and item 3 of the Seventh Schedule of the Act,1996 as amended by the Amendment Act. In this case two of the three arbitrators were practicing counsels before the Bombay High Court and were briefed by various law firms in different matters and one such law firm namely M/s. Hariani and Co. had been engaged by the parties to the arbitration. It was contended by one party that Section 12(1)(a) read with section 12(3) and 12(5) and item 3 of the Seventh Schedule would operate to automatically disqualify the two arbitrators as they were practicing counsels briefed by M/s Hariani and Co. and their association as practicing counsel with the law firm was sufficient to render them both ineligible to function as independent and impartial arbitrators in any matter where M/s Hariani and Co. appeared for one of the parties. The Hon’ble Bombay High Court considered inter alia the provisions of section 12(5) read with item 3 of the Seventh Schedule of the Act, 1996 and rejected the contention that the two arbitrators were ineligible to act as arbitrators. After discussing at length regarding the practice of the legal profession, the Court held the following in para 28 as reported in Manupatra reproduced herein below: “28. Therefore, counsel having accepted a brief from a particular attorney, advocate-on-record or lawyer for some other client is not per se a disqualification or ineligibility. The disqualification connection must be between the arbitrator-counsel and the litigant. That this is of the essence is obvious from Item 3 of the two Schedules in a given case, where the law firm or lawyer is itself or himself the client,” The Court further explained the general independence of Senior Advocates in the Indian Legal System as follows: In-house counsel or counsel who receive a fee-paid general retainer or salary from a law firm stand on a different footing. We are here concerned with independent counsel, those in the profession who in the course of their daily practice receive briefs from many attorneys, law firms or individual practitioners. This is a remnant of the "'dual system"', now abolished, and a central feature of that system, one that continues to this day in practice, is the independence of counsel. They accept briefs from multiple attorneys (often on the same day at the same time in different courts). They are not always briefed at every stage of the case, nor is there any rule that they perform the same functions at every stage: a counsel may lead at one stage, and at another may take second chair to a senior. None of this is backed by statute, but hinges on traditions of long standing. As the Bombay High Court has held in the two cases cited above, the fact that a person has been briefed as a Senior Advocate by a law firm or by solicitors to appear in some cases and the very same law firm or solicitor also appears for one of the parties before the arbitral tribunal are not circumstances which are likely to give rise to justifiable doubts to the independence or impartiality of such a person to act as an arbitrator and does not make such persons ineligible to act as an arbitrator within the meaning of Section 12(1) and 12(5) of the Arbitration and Conciliation Act, 1996 read with Schedule 7 of the Act, 1996.