Search Results

- Abhay Raj & Shruti Avinash [1]   INTRODUCTION Blockchain technology and cryptocurrencies, with their decentralised structures and global reach, have reshaped economic interactions but also introduced complex legal challenges that demand tailored dispute resolution mechanisms. Arbitration, valued for its flexibility and confidentiality, has emerged as a preferred method for resolving blockchain-related disputes, yet it often struggles with enforcement and regulatory inconsistencies. This article critically examines the effectiveness of arbitration in addressing crypto and blockchain disputes, focusing on India while drawing insights from jurisdictions that have developed structured approaches, including the United Arab Emirates, Singapore, the United Kingdom, and the United States. By analysing regulatory frameworks such as the UAE’s Virtual Asset Regulatory Authority, Singapore’s Payment Services Act, the UK’s Financial Conduct Authority guidelines, and U.S. case law on digital assets, this article highlights key lessons for India. Additionally, it explores hybrid dispute resolution models that blend arbitration with litigation and online dispute resolution (“ ODR ”), aiming to develop more robust mechanisms that align with the evolving complexities of blockchain governance.   CHALLENGES IN BLOCKCHAIN DISPUTE RESOLUTION Unique Attributes of Blockchain Transactions Blockchain transactions present unique challenges for traditional arbitration, primarily due to the pseudonymous nature of participants and the decentralised structure of cryptocurrencies. The anonymity of parties makes it difficult to identify responsible entities, while the lack of clarity on jurisdictional boundaries complicates the application of legal frameworks. Platforms like Binance and Bybit , with their complex corporate structures, often blur lines of responsibility between different entities, further entrenching these issues.   Additionally, the rise of smart contracts, which execute autonomously based on pre-programmed code, introduces complexities in interpreting, executing, and enforcing agreements. The extreme volatility of crypto assets means that arbitration awards can quickly become irrelevant or outdated, undermining their effectiveness. With many arbitrators and judicial bodies unfamiliar with blockchain technology, traditional dispute resolution mechanisms struggle to adapt, highlighting the urgent need for more tailored approaches in the crypto space.   Arbitration – A Failed Method for Dispute Resolution Theoretically, arbitration is well-suited for resolving blockchain disputes due to its inherent flexibility, confidentiality, and the cross-border enforceability of awards under international frameworks. The ability to appoint arbitrators with expertise in blockchain technology and smart contracts ensures that complex technical issues are addressed by informed professionals.   However, as noted by practitioners like Panchamiya , these theoretical strengths often falter in practice. They argue that the pseudonymous nature of blockchain participants creates significant enforcement challenges , particularly in cases involving fraudsters or decentralised autonomous organisations, where identifying and holding responsible parties accountable is exceedingly difficult. This challenge is further compounded by the varying regulatory landscapes across jurisdictions, with some countries imposing strict regulations or outright bans on crypto assets. Such regulatory disparities add complexity to legal actions and the enforcement of arbitration awards, particularly when damages are ordered in cryptocurrency or fiat currency.   ODR Platforms - A Failed Method for Dispute Resolution  Emerging ODR platforms like Kleros and Aragon Court seek to overcome the limitations of traditional arbitration by harnessing blockchain technology and decentralised principles. These platforms use juror pools incentivised through game-theoretic mechanisms, where participants stake tokens to serve as decision-makers. Outcomes are rewarded or penalised based on alignment with majority rulings, providing a decentralised yet structured method for resolving disputes.   Although these systems have shown promise in resolving small-scale disputes, they face significant drawbacks . One major concern is the lack of legal expertise among jurors, which can lead to inconsistent and unpredictable outcomes, particularly in cases involving intricate contractual or technical issues. Moreover, ODR platforms typically incentivise jurors based on majority decisions, which undermines impartiality by encouraging jurors to align with the majority view rather than issuing an independent, fair verdict. This creates a situation where jurors may prioritise consensus over justice, especially in more complex cases.    For high-value or complex disputes, the absence of procedural rigor, institutional oversight, and enforceability significantly limits the practical utility of these platforms. Critics like Panchamiya , Chevalier and Schmitz argue that while ODR may align with blockchain’s decentralised ethos, it falls short of providing the institutional strength and reliability necessary to handle larger, more complex disputes effectively. These concerns highlight the need for a more balanced approach that incorporates the strengths of traditional dispute resolution mechanisms, such as arbitration and litigation, alongside the innovative potential of ODR.          Litigation – A Failed Method for Dispute Resolution Given the shortcomings of both arbitration and ODR platforms, scholars may advocate for litigation as the preferable option for resolving blockchain disputes. Litigation offers complementary strengths, especially in jurisdictions that recognise crypto assets as "property." Courts possess powerful tools for asset recovery, such as freezing orders and proprietary injunctions. This was exemplified in Fetch.ai Ltd v Persons Unknown , where the English courts granted injunctions to trace misappropriated crypto assets. Similarly, the Singapore High Court’s ruling in CLM v CLN and others highlighted the critical role of interim measures in preventing asset dissipation.    However, litigation is not without its challenges. Its public nature may deter parties seeking confidentiality, and cross-border enforcement remains a persistent issue . In India, for instance, the lack of specific procedural rules for crypto-related cases has led to inconsistent judicial outcomes, further discouraging stakeholders from viewing litigation as a reliable and effective option.   PROPOSING A HYBRID APPROACH TO BLOCKCHAIN DISPUTE RESOLUTION  The limitations of arbitration, ODR, and litigation as standalone solutions highlight the need for a hybrid approach to effectively resolve blockchain-related disputes. Arbitration, while flexible and confidential, often struggles with enforcement challenges and jurisdictional ambiguities. Similarly, ODR platforms, though aligned with blockchain’s decentralised ethos, frequently lack the expertise and procedural safeguards needed for complex disputes. Litigation, despite offering powerful tools like freezing orders and proprietary injunctions, is hindered by its public nature and inconsistent cross-border enforcement.    To address these gaps, a hybrid model must integrate the strengths of arbitration, courts, and online dispute resolution (ODR) while mitigating their weaknesses. Arbitration clauses should be drafted with greater clarity, explicitly defining governing laws, counterparties, and enforcement mechanisms to provide certainty in blockchain-related disputes, particularly in India, where regulatory uncertainty adds complexity. A well-crafted clause could specify that disputes be resolved under the rules of an institution like the Mumbai Centre for International Arbitration (MCIA), with the seat of arbitration in India and governing law aligned with the Information Technology Act, 2000, and relevant RBI or SEBI regulations. Given the technical nature of blockchain, arbitrators should have expertise in digital assets, and proceedings should allow blockchain-based evidence and smart contract executions as admissible proof. At the same time, ODR platforms must evolve with expert panels and procedural safeguards to ensure neutrality and competence, while courts refine tools for fraud prevention and cross-border asset recovery, enabling them to effectively tackle crypto-related enforcement challenges.   Harmonised international standards are essential to ensure the recognition and enforcement of blockchain-related decisions across jurisdictions. A promising innovation lies in embedding arbitration agreements directly within smart contracts. By enabling automated enforcement of awards, this approach can bridge the gap between traditional dispute resolution mechanisms and blockchain technology, streamlining processes and offering a tailored solution for the crypto space.    The Future of Blockchain Arbitration: Balancing Innovation with Practicality The future of blockchain arbitration depends on innovations that address its inherent limitations. Dincer’s concept of  Lex Cryptographia —a self-contained legal framework rooted in blockchain principles—presents a compelling vision for resolving disputes within the ecosystem. Embedding arbitration mechanisms directly into smart contracts could automate dispute resolution processes, offering unprecedented efficiency. For instance, a smart contract governing a token sale could include coded arbitration clauses that activate in the event of a breach, automatically appointing pre-selected arbitrators and executing their decisions without human intervention.   However, as scholars such as Chevalier and Schmitz have cautioned, this technological efficiency must not come at the expense of fairness. Procedural safeguards must remain integral to ensure transparency and equitable outcomes. Moreover, Lex Cryptographia's reliance on decentralised enforcement mechanisms raises potential conflicts with traditional judicial systems, particularly regarding enforceability. These challenges highlight the need for a harmonised approach that blends the innovative potential of blockchain technology with the procedural integrity of established legal systems.   Towards a Cohesive Regulatory and Arbitration Framework for Blockchain Disputes Globally, jurisdictions have begun adapting to the unique challenges posed by crypto disputes, providing valuable lessons for India. The United Arab Emirates, emerging as a global hub for cryptocurrencies, demonstrates a forward-thinking approach. Regulatory bodies like the Virtual Asset Regulatory Authority have introduced guidelines that seamlessly incorporate arbitration into crypto governance frameworks. Additionally, the Abu Dhabi Global Market and the Dubai International Financial Centre have established mechanisms that facilitate blockchain arbitration, showcasing how proactive and robust regulatory infrastructures can effectively address the complexities of emerging technologies.    Additionally, Vietnam offers further lessons: while cryptocurrencies are not recognised as legal tender, disputes involving blockchain transactions are addressed through arbitration and litigation. Notable cases like  Case No. 22/2017/HC-ST  underline the importance of clear regulatory definitions, offering a potential roadmap for India to clarify the legal status of cryptocurrencies and establish effective dispute-resolution mechanisms.   Arbitration’s adaptability is particularly crucial in addressing cross-border disputes, where jurisdictional conflicts are common. Binance, for example, currently relies on arbitration clauses ( Clause 32.1, Terms of Use, 03 June 2024 ) through the Hong Kong International Arbitration Centre, showcasing how arbitration can provide a neutral forum for resolving disputes involving global stakeholders. This approach allows for a streamlined process and ensures that parties from different jurisdictions can resolve their disputes in an impartial and structured environment. However, these clauses also reveal the limitations of arbitration, particularly in enforcing awards against pseudonymous or non-cooperative parties. The challenge becomes even more pronounced when assets are held in jurisdictions that do not recognise or enforce the arbitral process, raising concerns about the practical efficacy of arbitration in certain cross-border contexts. This underscores the need for innovative solutions to enhance the enforceability and reach of arbitration in the evolving landscape of international disputes.   INDIA’S REGULATORY LANDSCAPE FOR CRYPTOCURRENCIES  India’s regulatory framework for cryptocurrencies is marked by uncertainty and an evolving legal landscape. Initially, the Reserve Bank of India imposed a blanket ban on cryptocurrency transactions in 2018. This ban, however, was overturned by the Supreme Court in the landmark case of Internet and Mobile Association of India v Reserve Bank of India , providing temporary relief to crypto stakeholders. Despite this significant ruling, subsequent regulatory measures have failed to establish a comprehensive framework for cryptocurrency governance.   The Finance Act, 2022 introduced taxation for virtual digital assets, signalling the government’s recognition of the crypto market’s existence, but it stopped short of clarifying their legal status. This piecemeal approach has left crypto businesses and users navigating an ambiguous regulatory environment, impacting investor confidence and long-term growth prospects in the sector.   The interplay between public policy and arbitration is equally significant, particularly in India, where landmark cases like Renusagar Power Co. Ltd. v General Electric Co. and ONGC Ltd. v Saw Pipes Ltd. have shaped the concept of public policy. When it comes to cryptocurrencies, public policy considerations can influence the enforceability of arbitration awards. For example, if cryptocurrencies are deemed illegal under Indian law, awards involving such transactions risk being set aside for violating public policy. To address these challenges, arbitration agreements must explicitly account for potential conflicts with local laws, ensuring awards remain enforceable while navigating the evolving legal landscape of blockchain technology.    India’s fragmented regulatory landscape highlights the urgent need for integrative approaches to foster trust and stability in its rapidly growing cryptocurrency sector. Hybrid dispute resolution models can play a pivotal role in bridging regulatory gaps. For instance, regulators could adopt frameworks that blend arbitration with court oversight, ensuring enforceable outcomes while retaining the flexibility required by blockchain stakeholders. Collaborative efforts between the Securities and Exchange Board of India and the Reserve Bank of India could further support the establishment of specialised tribunals for crypto disputes, harmonising financial regulations with modern arbitration practices.   In India's cryptocurrency market, dispute resolution mechanisms vary across platforms, with exchanges like WazirX implementing specific processes to address user conflicts. WazirX, for instance, has established a Peer-to-Peer (P2P) dispute resolution system designed to ensure secure and transparent transactions. This system employs an escrow mechanism where WazirX holds the seller's USDT (Tether) until the transaction is successfully completed and payment is confirmed by both parties. In cases where disputes arise, either party can raise a dispute after a specified period, prompting WazirX's dispute team to intervene. The team swiftly verifies proofs of payment from both the buyer and seller, following a multi-check process to ensure accuracy. This approach aims to provide a fair and final decision to settle disputes, typically within 48 hours. Additionally, in July 2022, WazirX introduced a Payment Proof Collection feature to streamline the process of collecting evidence from buyers and sellers in case of disputes. This enhancement mandates both parties to submit proof when raising a dispute, thereby reducing the time required for resolution and enhancing the overall efficiency of the P2P transaction process.   However, the Indian cryptocurrency landscape has faced significant challenges, as exemplified by the 2024 cyberattack on WazirX, which resulted in the loss of approximately $234 million. In response, WazirX proposed a Scheme of Arrangement under the Singapore Companies Act to restructure its liabilities and provide users with a clear path to optimised recoveries. The scheme includes rebalancing remaining cryptocurrency assets to match liabilities associated with the platform and aims to distribute assets efficiently to affected users.   This regulatory ambiguity also extends to the arbitrability of crypto-related disputes under the Arbitration and Conciliation Act, 1996 . As per the principles outlined in Vidya Drolia v Durga Trading Corporation , disputes that involve public interest or are classified as actions in rem are non-arbitrable. The unresolved classification of cryptocurrencies under Indian law—as property, securities, or commodities—further complicates this issue. Without clear legislative definitions, disputes involving crypto assets risk being categorised as non-arbitrable, undermining arbitration’s efficacy as a mechanism for resolving such disputes.   To address these challenges, India needs a clear regulatory framework that defines the legal status of cryptocurrencies, establishes governance guidelines, and ensures enforceability in dispute resolution. Collaboration between the RBI and SEBI is essential to classify cryptocurrencies and delineate regulatory oversight. Inspired by models like Singapore’s Payment Services Act, India could introduce licensing requirements, AML/KYC compliance, and consumer protection measures. Additionally, specialised crypto dispute resolution tribunals, integrated with arbitration and court oversight, could streamline enforcement. Incorporating blockchain-based mechanisms like smart contract arbitration could further enhance efficiency. A cohesive approach will foster trust, stability, and India’s leadership in the global crypto ecosystem.   CONCLUSION Blockchain’s decentralised nature fundamentally reshapes the way disputes are addressed, exposing limitations in traditional dispute resolution methods. While arbitration offers flexibility and neutrality, it must evolve to address procedural and enforcement challenges inherent in the crypto ecosystem. Technological advancements, such as blockchain’s transparency and immutability, present promising avenues for enhancing arbitration, but these innovations must ensure fairness and procedural rigour to gain widespread acceptance.   The integration of arbitration, litigation, and ODR into a hybrid model represents the most viable path forward, combining the strengths of each approach to address the complexities of blockchain-related disputes. India’s evolving regulatory landscape, supported by international examples and technological innovations, can serve as a foundation for creating robust and harmonised dispute resolution frameworks. As blockchain adoption accelerates, the legal community must prioritise the development of dynamic, hybrid solutions that balance efficiency, fairness, and enforceability. By embracing these innovations, stakeholders can ensure sustainable growth and legal certainty in the rapidly expanding digital economy. [1] Abhay Raj, an Associate at TLP Advisors and Senior Staff Editor at The Arbitration Workshop, can be reached at rajabhayuk@gmail.com . Shruti Avinash, a final-year student at NALSAR University of Law Hyderabad and Junior Editor at The Arbitration Workshop, can be contacted at shrutiavinash7@gmail.com .

*Vaibhav Yadav This article discusses the interrelationship between investment arbitration and environmental issues. The subject of environmental protection in arbitration has been overlooked. However, with time, it has become evident that examining the link between environmental protection and arbitration is significant. Initially, arbitral tribunals ignored environmental concerns in arbitration, but recently, tribunals have started considering these issues more seriously. Environmental matters in investment matters are raised either through a claim or a counterclaim. The integration of environmental concern into arbitration is complex and lacks flexibility. It is crucial that environmental issues are no longer ignored in matters related to investment arbitration. This article examines how arbitral tribunals address the integration of environmental concerns and investment arbitration, drawing on the landmark case of Perenco v. Ecuador. It emphasises the need to strike a balance between investment arbitration and environmental protection. It also explains how the tribunal awarded compensation to the investor while at the same time holding the investor accountable for environmental harm. Introduction The issue of investment arbitration and the environment is emerging as an important concern at the global level. Environmental concerns were ignored in most bilateral investment treaties which were signed before 2000. Most treaties from that period lack provisions for environmental protection. However, bilateral treaties signed after 2000 have included provisions for environmental protection, granting the host state the right to make the rules for protecting the environment. For example, the Morocco and Nigeria Bilateral Investment Treaty includes provisions for environmental preservation. The definition of investment now expressly includes sustainable development. Environmental principles are gradually becoming a responsibility for investors in bilateral investment treaties. [1] For instance, the Brazil-Malawi Bilateral Investment Treaty imposes responsibilities on investors to protect the environment. Tribunals are increasingly prioritising sustainable development in cases where conflicts arise between investment arbitration and environmental concerns. For example, in the case of Chemtura v. Canada, the tribunal ruled that the investor must adhere to sustainability principles and avoid harming the host state's environmental resources. Perenco v. Ecuador  is a landmark case which addresses the conflict between environmental protection and investment arbitration. [2]   Background Perenco, a French oil company, and Burlington, another foreign oil company, had contracts with Petroecuador, Ecuador's national oil company controlled by the Ecuadorian government. Perenco oil company operated two oil blocks and began earning substantial profits due to the oil prices. However, subsequently, Ecuador enacted Law No. 42, imposing a 99 per cent tax on Perenco earnings. Perenco initially paid the tax but later opposed it. The Ecuador Government terminated Perenco's contract and sought to negotiate a new one.  The Ecuadorian government wanted to formulate a new contract with Perenco. Petroeuador took control of the oil block previously operated by Perenco. The Ecuador Government also filed a case in a local court to recover taxes from Perenco. [3] Main Issue Perenco alleged that the Ecuadorian government had violated the France-Ecuador Bilateral Investment Treaty by imposing a disproportionate tax of 99 per cent on its earnings and committed illegal expropriation. Perenco had made allegations against Ecuador that it had committed illegal expropriation. Consequently, Perenco had filed a claim with ICSID for arbitration. Ecuador countered, alleging that Perenco caused environmental damage and polluted the oil block sites. Accordingly, Ecuador had filed a counterclaim against Perenco in ICSID for arbitration. [4] Proceedings of  the Tribunal An arbitral tribunal consisting of three arbitrators was established. The tribunal granted an interim measure to Perenco, directing Ecuador to halt the local court case against Perenco. In 2011, the tribunal confirmed its competence to hear the matter. In 2014, the tribunal determined that Ecuador was held liable for disproportionate treatment. [5] According to the Tribunal, Ecuador violated provisions of the bilateral investment treaty by imposing an unreasonable tax on Perenco's earnings. The Tribunal also found Ecuador liable for Expropriation due to the cancellation of the Perenco contract. The Arbitral Tribunal held Perenco liable for the environmental damage caused by its operations, which disturbed the natural resources of the Amazon region. [6] Award by Arbitral Tribunal Perenco had sought $ 1.5 billion in damages from the Ecuadorian government for breaching the bilateral investment treaty.  However, the tribunal awarded $ 449 million to Perenco for disproportionate treatment by the Ecuadorian government and illegal expropriation. An important factor for higher compensation was Ecuador's failure to adhere to the interim measures of the tribunal, and Ecuador had continued legal proceedings against Perenco in its local courts. [7] The Tribunal awarded Ecuador $54 million for its counterclaim against Perenco. In the related Burlington case, Ecuador had already been awarded $ 39 million. The Burlington case is connected to the Perenco case, which is why the tribunal granted Ecuador an award of $54 million in the Perenco case. [8] Ecuador had also filed a counterclaim for damage to the oil block, but the tribunal denied it, stating that an award for damages to the oil block had already been granted in the Burlington case. The Burlington and Perenco cases are connected with each other because both companies operated similar oil blocks and faced similar issues. [9] Appointment of Expert by the Tribunal The Tribunal appointed an independent expert to determine environmental damages. The tribunal appointed an independent expert for a fair assessment of the environmental damages, without any prejudice or partiality. Both Perenco and the Ecuador government had appointed their expert for the assessment. The tribunal awarded environmental damages based on evidence provided by its appointed expert. The Tribunal also referenced Ecuador’s constitution and local law, which emphasised strict liability for environmental damage, highlighting the priority given to environmental conservation in Ecuador. [10]   Counterclaim in ICSID Article 46 of the ICSID Convention states that a counterclaim can be filed in a matter which is connected with a substantial issue of a case. It means that if parties agree to ICSID arbitration, then a counterclaim can be filed only if it is connected with a substantial issue of the case. In the case of Perenco v. Ecuador , the environmental counterclaim was allowed because it was directly related to the investment issues raised in the arbitration. [11] A. Issue of Environmental Counterclaim in Perenco v. Ecuador The case of Perenco v. Ecuador is unique for addressing an environmental counterclaim. This case is a rare example where an environmental counterclaim has been held in favour of the host state. The Tribunal has given various reasons for the imposition of environmental damage. The tribunal observed that states have significant freedom to formulate and amend environmental rules to conserve their environment. [12] The Tribunal highlighted the impact of the 1992 Rio Declaration on Ecuador’s domestic environmental laws. In the Burlington case, the tribunal observed that there is a stronger environmental rule in the local law of Ecuador. In the Burlington case, the tribunal awarded $93 million for environmental damage and also granted damages for harm caused to the oil block sites. The Burlington and Perenco cases were interconnected to their issues and operations, resulting in awards of $ 54 million and $ 39 million, respectively, for environmental damages. [13] B. Approach of the Tribunals Regarding Environmental Counterclaim Tribunal adopted various approaches to deal with environmental counterclaims. In the Burlington case, the tribunal ordered an inspection of the damaged oil block areas to determine the impact of the oil company's operations on the soil and land. On the other hand, in the Perenco case, the tribunal was actively involved in environmental matters. [14] In the case of  David   Aven et al v. Costa Rica , the issue of environmental counterclaim was raised. In this case Costa Rica had filed a counterclaim against the foreign investor's claim for damage caused to the environment. In this case, the tribunal refused to deal with the matter of the environmental counterclaim due to procedural errors and the counterclaim was not presented within a reasonable period of time. All the above cases prove that there has been an evolution of tribunals for dealing with matters of environmental counterclaims. Now, tribunals are imposing liability on foreign investors for causing damage to the environment and this can also deter foreign investors from causing damage to the environment. [15] C. Environmental Restoration Fund When the tribunal awarded Ecuador damages for environmental harm, Perenco suggested the creation of an environmental restoration fund to restore the damaged Amazon sites. Ecuador agreed to the suggestion of Perenco. The tribunal had not agreed to the suggestion and said that it is competent only to award environmental damage. The tribunal said it is not competent to give direction for the creation of the environmental restoration fund. [16] Although both parties agreed to the creation of an environmental redemption fund, the tribunal should have considered issuing an order for the establishment of an environmental restoration fund. If there is a proper check of the tribunal, then it could ensure that an environmental restoration fund could be effectively used for the restoration of damaged Amazon sites. Without oversight, awarded damages may not be used for restoring damaged Amazon sites. It would be commendable that tribunals award environmental damages and provide further guidance on their enforcement and utilisation in order to enhance their effectiveness. [17] Conclusion The determination of Perenco v. Ecuador exhibits that environmental issues are significant to investment arbitration. Previously, when issues were related to environmental damage, the tribunals generally ruled in favour of the foreign investor. But the recent approach of tribunals is showing that they are increasing support for host states when environmental damage is caused. The Perenco case emphasised that there can be a complex interplay between investment arbitration and environmental protection. Bilateral investment treaties should expressly include sustainability provisions, such as environmental impact assessment, responsibility of the investor for the protection of the environment etc. Provisions related to sustainability should be favourable for the host state and the foreign investor. Foreign investors should be actively involved in discussions about sustainability rules to be included in treaties. [18]   The Tribunals should adopt a uniform approach in connection with matters related to environmental counterclaims. There should not be contradictory approaches of tribunals while dealing with matters of environmental counterclaim. The tribunals should address environmental damage in investment arbitration after properly examining the evidence provided by the parties to the case. [19] *Vaibhav Yadav is an LLM student at NLU Delhi. [1]  Nikolaos Voutyrakos ‘Investment Arbitration and Environmental Protection: A Critical Look?’’ Arbitration Academy [2]  Id., [3]  Jason Rudall, ‘The Tribunal with a Toolbox: On Perenco v. Ecuador, Black Gold and Shades of Green’(2020) 11 Journal of International Dispute Settlement 485-500. [4]  Id., [5]  Id., [6]  Id, [7]  Id., [8]  Id., [9]  Id., [10]  Id., [11]  ICSID Convention, art 46. [12]  Id., [13]  Id., [14]  Supra at 13. [15]  Id., [16]  Id., [17]  Id., [18]  Id., [19]  Kirtin Bahaguna and Likshika Sahni, ‘Harmonising Profit and Planet:Rethinking Environmental Counterclaims in Investor- State Arbitrations’ ( Cambridge International law Journal, November 23, 2023).

Gargi Bindal [1] Introduction The Indian jurisprudence has taken commendable steps to establish a pro-arbitration stance . However, the deviation from this pro-arbitration stance has been displayed in SC’s recent judgment, Delhi Metro Rail Corporation v. Delhi Airport Metro Express Private Limited [“ DMRC v. DAMEPL ”]. This judgment has raised concerns as an arbitral award was set aside at the fifth level of scrutiny by invoking curative jurisdiction. . This concern has become more pronounced following the ruling in Gayatri Balasamy v. ISG Novasoft , where the Supreme Court held that courts possess limited powers to modify arbitral awards under Sections 34 and 37 of the Indian Arbitration and Conciliation Act, 1996. In Gayatri Balaswamy , while the majority recognised instances like severability, clerical errors, and post-award interest modifications, the dissent by Justice Viswanathan strongly cautioned against merit-based intervention, echoing the very apprehensions that surfaced in DMRC v. DAMEPL . This judgment, therefore, both reaffirms and restricts the contours of court involvement, providing new interpretive clarity to the phrase ‘judicial interference’. Background In 2008, DMRC awarded the Airport Metro contract to DAMEPL, but disputes led to arbitration. In 2017, INR 3000 crore award was passed in DAMEPL’s favour, eventually set aside by the SC in its curative jurisdiction.   Stage Timeline Description Stage 1 March 2018 Challenge to the arbitral award Under Section 34 of the Arbitration Act, 1996 [" the Act "], DMRC contested the award before a single judge of the Hon’ble High Court of Delhi [" DHC "]. The DHC rejected the challenge and upheld the arbitral award observing that the award was reasonable and no intervention was necessary. Stage 2 Jan 2019 Appeal under Section 37 The award passed in favour of DMRC was partially set aside by the Ld. Division Bench of DHC due to patent illegality after DMRC challenged the Judgment passed by the Ld. Single Bench of the DHC under Section 37 of the Act. Stage 3 September 2021 Special Leave Petition [“SLP”] before SC DAMEPL, aggrieved with the order passed by Ld. Division Bench exercising its jurisdiction under Section 37 of the Act, filed a SLP. The SC upheld the DMRC award, stating that it was neither blatantly unlawful nor perverse. Stage 4 November 2021 Review Petition before SC DMRC filed a Review Petition which was dismissed. Stage 5 April 2024 Curative Petition before SC SC allowed the Curative Petition [“CP”] filed by DMRC and set aside the award on the ground of patent illegality. At the stage of CP, the SC conducted a merit-based evaluation of the award, finding the Tribunal had ignored key evidence and contractual terms. After seven years, it set aside the award, directing DAMEPL to return INR 2800 crores received from DMRC during execution. Deconstructing the matter In the DMRC case , the judgment debtor managed to get the award set aside by SC in the exercise of the CP on the grounds of miscarriage of justice and perverse illegality. However, this interpretation overlooks several essential factors being:- 3.1 Jurisdictional Overreach The CP should not have been allowed in the instant case to overturn the arbitral award, which was upheld after three rounds of litigation. The judgment in Rupa Hurra v. Ashok Hurra outlined two exhaustive grounds for allowing a CP: a breach of natural justice principles or the presence of bias on the part of the judge.  It also introduced the test of ‘manifest injustice’, emphasizing that a CP should only be entertained in rare cases. In this context, the reasons cited by DMRC for contesting the award in the CP, such as assertions that the defects did not significantly impact obligations under the Agreement and that DMRC had taken practical steps to address the deficiencies, were purely factual in nature and thus outside the inherent power of SC . However, the SC allowed the CP by analysing the facts afresh to conduct a factual analysis, ultimately reaching a conclusion that could be viewed as an alternative perspective. In doing so, the Court exceeded its restricted jurisdiction and overlooked its established precedents , which have consistently upheld that contract interpretation is solely the responsibility of the arbitrator. Further, by applying the test of manifest injustice, the court intervened and deviated from the principles of Rupa judgment. 3.2 Delay in Enforcement The fifth round of review in the DMRC case contradicts the principle of prompt enforcement of arbitral awards. The parties chose arbitration with the expectation that their case would be resolved quickly . However, the present case compounds the challenges faced by the decree-holder, who remains entangled in multiple rounds of litigation despite receiving a favourable award. The SC, while considering the SLP in the DMRC case , underscored the significance of prompt enforcement of arbitral awards. It duly noted that under Article 136 , the interference must be spare and only when exceptional circumstances exist. However, it went against that principle while considering the CP. This brings India back to the position of the White Industries case , whereby despite having the ICC award in favour of White Industries and against Coal India, the award could not be enforced for approximately 10 years. More recently, the Antrix- Devas dispute has similarly highlighted persistent challenge in the enforcement of foreign arbitral awards in India. 3.3  Impact on Business Climate The DMRC judgment would negatively impact the cost of doing business in India. The SC's observation of not burdening the public utility with significant financial liability is exceptionally flawed because if the public exchequer argument were applied to commercial disputes, private companies would lose trust in Arbitration Such an approach effectively adopts a differential standard of enforcement for public sector undertakings, compromising the neutrality and finality that arbitration is designed to provide. This not only distorts the level playing field between public and private parties but also compromises investor confidence in India’s arbitration framework, as private firms might view arbitration against government entities as inherently biased. This ruling may also deter foreign investors from selecting arbitration seated in India, leading them to prefer arbitration in other jurisdictions in their contracts with Indian Government companies, with the hope of limiting the interference of Indian Courts. Pro enforcement approach of SC India has sought to establish itself as a pro-arbitration jurisdiction by reversing infamous decisions such as Venture Global ,   Phulchand Exports , and Bhati Case . To emphasise judicial non-interference, several judgments have been delivered- such as Vijay Karia , where the principle of non-interference with foreign awards was upheld. In Vedanta , it was reiterated that minimal judicial intervention should be the objective, while Avitel reaffirmed India’s pro arbitration stance, emphasising the need for limited judicial interference in the enforcement of foreign arbitral awards. The Court set a high threshold for challenging awards based on alleged arbitrator bias and underscored the importance of timely objections and robust enforcement mechanisms in international arbitration. Despite these efforts, the DMRC judgment deviates from India’s pro-enforcement trajectory. The rationale behind such deviation was that the Court concluded that the Tribunal had not properly given due consideration to contractual provisions and important evidence under the concession agreement. This extensive merits review and intervention deviated from contemplated minimal judicial intervention under the Act departed from the prevailing pro- arbitration approach. By allowing such intervention and delay, the judgment risks setting a precedent that undermines the finality of awards, thereby weakening the confidence of investors in India’s arbitration framework. Comparative analysis with other jurisdictions While Indian Courts have made significant strides towards a pro-arbitration approach, their practice is still inconsistent, particularly in the case of public policy or claims of procedural infirmity. A comparative analysis helps illustrate the spectrum of judicial mindsets around the world and provides benchmarks for assessing India’s arbitration regime. 5.1  Singapore The Singapore Courts adopt a narrow and rigorous interpretation of the statutory grounds for setting aside awards. The Pacific Richfield Marine case , encapsulates Singapore's stance by stating that the power to set aside awards should be exercised rarely.  Further, enforcement policy in Singapore is so vigorous that in cases like CHY v. CIA , the Singapore Courts rejected the application to set aside any award even when the award was contrary to Singapore’s Public Policy. This approach reflects the prevailing judicial philosophy of minimal intervention in arbitral awards. However, Indian Courts have shown inconsistent approach with judicial intervention still being a huge concern. 5.2  China In recent years, China’s arbitration has experienced rapid growth, accompanied by significant efforts to foster a more arbitration-friendly judicial environment. A report analyzing data from 2012 to 2022 indicates that over the past decade, the courts in the People's Republic of China have fully recognized and enforced more than 90% of foreign awards presented to them, with nearly half of these cases being resolved within six months. Compared to India, China has shown a more structure approach towards enforcement of award. 5.3  United Kingdom The Commercial Court in the United Kingdom generally adopts a non-interference approach to arbitration whenever possible. The Court recognises that the primary aim of the Arbitration Act 1996 is to "significantly reduce the extent of court intervention in the arbitral process." Excessive court involvement undermines the finality of arbitral awards and reduces the effectiveness of international arbitration as a reliable dispute resolution mechanism. As a result, the success rate for applications challenging awards with a seat in London is relatively low, standing at approximately 11% for applications filed in 2019-2020. Judicial Intervention in India is more frequent compared to the UK, impacting its reputation as an arbitration hub. Conclusion The SC, by exercising its inherent power under the CP, has defeated the ends of pro-arbitration jurisprudence. The extreme interference of the court in conducting a merit-based analysis of an arbitral award defies the stance of the hands-off approach taken by the court in the last 10 years. Excessive judicial intervention and strict enforcement undermine the efficiency of arbitration and make it into unpredictable traditional litigation. Thereby reducing the trust of private parties and foreign investors in doing business in India. The judiciary has been promoting the culture of commercial arbitration and ought to take inspiration from countries such as Singapore, China, Hong Kong and the United Kingdom to adopt a hands-off approach with minimal judicial intervention. This would help prevent delays like those observed in the DMRC case and ensure the smooth enforcement of arbitral awards. [1] Gargi Bindal is a final-year law student at the Institute of Law, Nirma University. She has a keen interest in arbitration law, constitutional law, and commercial law. Gargi has honed her legal research and advocacy skills through participation in prestigious national and international moot court competitions, including the Willem C. Vis International Commercial Arbitration Moot (Vienna), the Herbert Smith Freehills Moot, and the B.R. Sawhney Memorial Moot etc. She can be reached at  gargibindal05@gmail.com .

- Arnav Doshi & Jugaad Singh I. Introduction The much awaited Draft Arbitration and Conciliation (Amendment) Bill, 2024 (‘ Draft Amendment ’) carried with it high expectations to bolster the pro-arbitration regime in India. The enforcement of interim measures by foreign-seated tribunals in India has been one such issue which was expected to be rectified by the Expert Committee – as it remained unaddressed in earlier amendments and discussions.   The current framework suffers from a disparity between interim measures passed by arbitral tribunals governed under Part I of the Arbitration and Conciliation Act, 1996 (‘ Act ’) (Indian-seated tribunals) and those passed by arbitral tribunals governed under Part II of the Act (Foreign-seated tribunals). While interim measures by Indian-seated tribunals can be directly enforced under Section 17(2) of the Act, to the extent that it has been deemed to be an order of the Court under the Code Of Civil Procedure, 1908 (‘ CPC ’), there exists a legislative vacuum for the enforcement mechanism exists for interim measures by foreign-seated tribunals. This has been acknowledged by the Delhi HC in Raffles Designs International India v Educomp Professional Education (para 98).   The Bombay HC judgment in HSBC PI Holdings (Mauritius) Limited v Avitel Post Studioz Limited   had provided much needed respite by allowing parties to a foreign-seated arbitration to seek relief for such interim measures before the courts under Section 9 of the Act. Alas, cases such as Bharat Aluminum Co. v. Kaiser Aluminum Technical Services (‘ BALCO ’) ensured that Section 9 would apply only to arbitrations under Part I of the Act. The 246th Law Commission Report took cognizance of this vacuum and a proviso was inserted to Section 2(2) by the Arbitration and Conciliation (Amendment) Act, 2015, making Section 9 the established route for enforcement of interim measures by foreign-seated tribunals.   Unfortunately, in a bid to minimize recourse to the courts in arbitration matters, the Draft Amendment completely obviates any recourse for the enforcement of interim measures passed by a foreign-seated tribunal, by limiting the parties from filing an application under Section 9 during the pendency of an arbitral proceeding. The authors seek to examine the existing framework (II) in contrast with the proposed amendment and its potential consequences on India’s reputation as an arbitration hub (III). The authors shall further examine the existing methods of enforcement in other jurisdictions and propose solutions to prevent a remediless situation for parties seeking the enforcement of interim measures (IV). II. Existing Framework on Interim Measures in Foreign-Seated Arbitration Within the existing framework under the Act, Section 17, akin to Section 9, empowers the arbitral tribunal to issue interim reliefs. However, the reliefs granted under Section 17 are confined to Part I of the Act, and thus, to Indian-seated arbitrations. As previously mentioned, prior to the 2015 Amendment, the challenges to the enforcement of interim measures by foreign-seated tribunals originated from the decision of the Constitutional Bench in BALCO . However, in deciding that the application of Section 9 would be circumscribed to Part I of the Act, the bench addressed the grievance that the exclusion of the application of Section 9 to foreign seated arbitrations, would result in great hardship to parties who were in need of interim measures – by tellingly observing that it was an issue to be redressed by the legislature.  The Delhi High Court in Shanghai Electric Group Company Limited v. Reliance Infrastructure Limited (‘ Shanghai Electric ’) succinctly encapsulated the issue at hand - “ Unlike Section 17, there is no corresponding provision under the Act for enforcement of interim orders passed by a foreign tribunal. The Act only contemplates enforcement of foreign awards (and not foreign interim orders). ”   Pertinently, Section 17H of the UNCITRAL Model Law on International Commercial Arbitration (‘ UNCITRAL Model Law ’) states that, “ An interim measure issued by an arbitral tribunal shall be recognized as binding and, unless otherwise provided by the arbitral tribunal… ”. In the wake of BALCO , the 246th Report by the Law Commission of India proposed an amendment to Section 2(2) of the Act which was subsequently enacted vide the Arbitration and Conciliation (Amendment) Act, 2015 by way of a proviso to Section 2(2). The proviso allowed the provisions of Section 9 to apply to international commercial arbitration, even if the place of arbitration is outside of India (foreign-seated tribunals). Such application was subject to the underlying agreement, i.e., whether the agreement allowed recourse to Indian courts under Section 9. This amendment led to ambiguity regarding whether such an agreement must be implied or express and has resulted in multiple judgements by courts. However, a discussion on such exclusions is outside the scope of this discussion, which pertains to foreign seated arbitrations where the agreement does not exclude the applicability of Part I of the Act.   The Supreme Court in Mankastu Impex Private Limited v. Airvisual Limited  reaffirmed the intent of the newly amended Section 2(2) to allow for the application of Section 9 from Part I to international commercial arbitration. Thereby, resolving the “remediless” vacuum of enforcement of interim measures by foreign-seated tribunals by establishing Section 9 as the appropriate route for grievance redressal.   In a similar vein, the Division Bench in Ashwani Minda and Another v. U-Shin Limited and Another ruled that the principles of Section 9 of the Act are “ equally applicable when interim measures are sought in the Indian courts in connection with a foreign-seated arbitration .” The  Delhi HC too, in Shanghai Electric clarified that the import of Section 2(2) proviso of the Act specifically makes the provision of Section 9 applicable to foreign-seated arbitral tribunals. Therefore, in view of the ineffective remedy under Section 17 of the Act, Section 9 permits parties seeking interim relief before or during the arbitration. III. Analysis of the Proposed Amendment to Section 9 of the Act In the Draft Amendment, the proposed amendment to Section 9 of the Act (‘ Proposed Amendment ’) replaces the words “or during” with the words “the commencement of”. In doing so, it allows the courts to entertain an application under Section 9 of the Act only prior to the constitution of the arbitral tribunal and after the making of an arbitral award prior to its enforcement under the provisions of the Act. Therefore, parties would be restricted from approaching the court under Section 9 during the pendency of the arbitral proceedings. As discussed in the previous sections, this Proposed Amendment does not affect Indian-seated arbitrations as the Act deems an interim measure by an arbitral tribunal to be akin to an order by a court under the CPC in terms of its enforcement. However, for foreign-seated tribunals, which do not enjoy the benefit of direct enforceability of interim orders and had to rely on Section 9 of the Act, the change stymies enforcement of interim measures during the pendency of the arbitral proceedings. If the subject matter of the dispute or the concerned assets are located within India, there would be no recourse for the affected party to safeguard the same till after the arbitral proceedings are completed. While the intention behind this change might have been to streamline the arbitration process in India , it has come into conflict with practical challenges, leaving parties involved in foreign seated arbitration vulnerable and without recourse to Indian courts.   In light of these developments, a question arises whether such an amendment would be in line with India’s obligations under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (‘ New York Convention ’).  Article III of the New York Convention provides that each contracting state shall recognize arbitral awards as binding and enforce them as per the domestic rules of procedure. Despite the New York Convention being silent on the issue of interim orders , it allows for enforcement of such interim awards which have the characteristic of ‘finality’.         Further, the Proposed Amendment does not align with the principles of comity of international law and the New York Convention, which thereby impacts India’s aspirations to be an arbitration friendly jurisdiction for international commercial arbitration. The absence of a clear recourse to Indian courts for the enforcement of interim orders could be perceived by potential foreign investors as a major drawback. Such a perception may discourage them from choosing India as a seat for arbitration or from engaging in commercial transactions governed by Indian law. Additionally, this concern is not limited to foreign investors alone—it could also deter other parties who might otherwise prefer arbitration as their preferred mode of dispute resolution for commercial contracts. The resulting chilling effect could ultimately hinder the development of arbitration as a robust and reliable mechanism for resolving cross-border disputes within the country.   IV. Proposed Solutions for Direct Enforceability of Interim Measures by Foreign Tribunals To incapsulate the problem at hand, the Proposed Amendment will effectively curtail access to the courts during the duration of the arbitral proceedings to obtain an interim measure in a foreign-seated arbitration. This would be the final straw towards the dismantling of an enforcement mechanism which already lacks direct enforceability and, in its stead, even an adequate standard for adjudication of reliefs.   The simplest method of rectification to the Proposed Amendment would be to introduce a ‘carve in’ provision in the amendment to Section 9(1) which would allow parties in foreign-seated arbitrations to approach courts for interim relief at any stage of the arbitration.   This would retain the intention of circumventing unnecessary recourse to the courts during the pendency of domestic arbitral proceedings when the relief sought after could be provided by a directly enforceable order by the tribunal under Section 17 of the Act. Meanwhile, a ‘carve-in’ would allow enforcement of interim measures by a foreign-seated tribunals, and consequently, prevent such interim reliefs from becoming an ‘inefficacious remedy’. The act of resolving inefficacious remedies through Section 9 of the Act is one which has been carried out before by the Delhi High Court in Bhubaneshwar Expressways v. National Highways Authority of India . In this case, the HC allowed the petitioner to file a Section 9 application for interim relief as the tribunal was non-functional due to the recusal of one of the arbitrators. The HC explained the principle that if the alternative remedy is inefficacious and a party is suffering hardships, the courts can extend the remedy available to the parties.  A carve-in would greatly reinforce the principle of providing an efficacious remedy.   Despite a carve-in being introduced, the problem of direct enforceability of interim measures by foreign-seated tribunals still persists. Section 17H of the UNCITRAL Model Law provides for direct enforcement of interim measures by foreign seated tribunals. Within national legislations, only Section 61 of the Hong Kong Arbitration Ordinance , 2011 and Section 17L of the New Zealand Arbitration Act, 1996 make arbitral orders and directions directly enforceable in the same way as judgment of court. In contrast, despite being pro-arbitration hubs, several nations such as Singapore, the UK, and the USA reject the concept of direct enforceability of interim measures by an arbitral tribunal. It is a perfectly understandable stance for a sovereign State to disallow the same owing to complex international relations and the possibility of such measures having unintended or ‘inappropriate’ effects which may go against national interests or public policy of the State.   Therefore, adopting a mechanism of direct enforceability of interim measures by foreign seated tribunals, like that of Hong Kong or New Zealand, may not be apposite in the Indian arbitration milieu. Hence, by way of the proposed solution, a standard of adjudication could be adopted thereafter to allow for effective and efficient recognition and enforcement of interim measures by foreign-seated tribunals.   V. Conclusion The Draft Amendment was aspired to resolve the conundrum concerning the enforcement of interim measures granted by foreign-seated tribunals. However, not only has the Proposed Amendment disturbed the parchment safeguard implemented by the courts but also in effect estops parties from enforcing interim reliefs granted by a foreign-seated tribunal. Thus, the intended purpose of an amendment to Section 9 of the Act has been further diluted.   As a relief measure, the Draft Amendment is at the stage of public consultation with the possibility of rectification of the Proposed Amendment. In view of same, the authors urge reconsideration of the Proposed Amendment basis the prejudice and hinderance caused to parties on account of a direct bar on the enforcement of interim awards once the arbitration proceedings have commenced. Considering the Indian courts have ex facie allowed the enforcement of interim awards rendered by foreign-seated tribunals, the ‘carve-in’ recommendation to Section 9 of the Act, as a welcome change, would entail parties to approach courts at any stage to enforce interim awards.

- Raghav Agarwal [1]   In India, arbitration was initiated by the Arbitration Act of 1889, and further, the Arbitration Act, 1940 after that, in 1996, a significant amendment was incorporated in the Arbitration Act. The same followed through in the 2015 and 2019 Amendment Acts.  Amendments were made to the principal Act by introducing the 2021 (Amendment) Act to match the level of International Arbitration law. The recent draft of the Arbitration Bill, 2024 proposed a series of amendments to the Arbitration and Conciliation Act, 1996.   The Ministry of Law and Justice requested feedback from the public, including opinion pieces and general comments. Arbitration is favoured as a practical means of resolving disputes amicably due to its ability to save money, procedural time, and avoid sluggish court proceedings. However as per the recent PwC report [2] arbitration position is weaken due to the time taken in arbitrations which is mostly more than what has been mandated in the Arbitration and Conciliation Act, of 1996. It is unable to satisfy the main justification for parties to submit their disputes to arbitration which are arbitration expertise, neutrality on decision, cost and time inputs, and timely resolution of the matter. The main aim of the legislature is unclear. A few modifications strengthen arbitration's position as a mode of dispute settlement, while other amendments demotivate arbitration and do not meet the parties' needs. In this article, the amendments proposed in the draft bill, pros and cons of the amendments, and a general overview of the bill are extensively analysed. An expert committee is constituted to proposed reforms to the Arbitration and Conciliation Act, 1996 it suggested a series of amendment to the act.    Proposed amendments and personal comments – Table mentioned amendments to the act and discusses all of the bill's main positive and negative of the Bill.       Arbitration and Conciliation, 1996  Existing Provision      Arbitration and Conciliation (Amendments), 2024  Proposed Provision                                            Comments   Short title, extent, and commencement - Arbitration and Conciliation, 1996    The amended Act will be called Arbitration Act, 1996 as provisions related to conciliation have been incorporated in Mediation Act 2023. The removal of conciliation provisions could be seen as a step towards simplifying the Act and focusing on arbitration as the primary method of dispute resolution.        Section 2 (1) (a)"arbitration" means any arbitration whether or not administered by a permanent arbitral institution.         Section 2(1)(a) of the Act to expand the definition of arbitration to explicitly include arbitration conducted through “audio-video electronic means. Introduction of Section 2(1) (aa) to the Act defines “audio-video electronic means” as use of any communication device for videoconferencing, filing of pleadings, recording of evidence, transmission of electronic communication, for the purposes of conduct of arbitral proceedings. [3] A significant step towards the digital transformation of arbitration in India. arbitration in India has been taken with the proposed expansion of Section 2(1)(a) and the inclusion of Section 2(1) (aa). In particular, for cross-border disputes, the revisions improve accessibility and efficiency in arbitral procedures by specifically acknowledging "audio-video electronic means," such as videoconferencing and electronic files.   Section 7 - Arbitration agreement 4) An arbitration agreement is in writing if it is contained in   (a)    A document signed by the parties;   (b)   An exchange of letters, telex, telegrams or other means of telecommunication 1[including communication through electronic means] which provide a record of the agreement; or   (c)  An exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.                 The amendment also addresses the increasing use of digital platforms for commercial transactions by proposing an amendment to Section 7(4)(a) of the Act to recognize arbitration agreements executed via digital signatures. [4]                     This change acknowledges the growing importance of online dispute resolution, especially in the postpandemic era. It reflects the reality that virtual hearings can enhance accessibility, reduce costs, and increase efficiency in arbitration proceedings.   Section 2 - Definitions   Arbitration and Conciliation act, 1996   Used place interchangeably with "seat," leading to jurisdictional ambiguities. Introduction of new section -   2A. (1) In case of arbitration other than international commercial arbitration –  Where seat of arbitration has been agreed by the parties or determined by the arbitral tribunal as per Section 20, the court means the court having pecuniary and territorial jurisdiction over the seat of arbitration.   In all other cases, the court means the court having pecuniary and territorial jurisdiction to decide the disputes forming the subject matter of the arbitration if the same had been the subject-matter of a suit. [5]   (2) In case of international commercial arbitration –             It provides clear guidelines for determining which court has authority, aiming to reduce ambiguity and streamline the arbitration process.      Where the seat of arbitration has been agreed by the parties or determined by the arbitral tribunal as per Section 20, Court means the High Court having territorial jurisdiction over the seat.    In all other cases, the Court means the High Court having territorial jurisdiction to decide disputes forming the subject matter of arbitration.    Replaces "place" with "seat" throughout the Act and provides clear guidelines for determining the seat of arbitration.   Appellate Arbitral Tribunal (AAT): Section 34 applications heard only by courts Section 34 -   New Body - Establishing an Appellate Arbitral Tribunal : To draft called for establishing an appellant body for adjudication of the matters. [6] Creating an Appellate Arbitral Tribunal has its pros and cons. On the plus side, it would offer a specialized place for handling arbitration appeals, which could lead to better and more consistent decisions. This could make the process faster and take some pressure off regular courts, making arbitration outcomes more predictable. However, there are downsides too. Setting up and running a new tribunal could be costly. Adding another layer of appeal might make the process more complicated and take longer. There could also be issues with figuring out the new tribunal's authority compared to existing courts. So, while this move could improve efficiency and specialization, it also brings concerns about cost, complexity, and jurisdictional conflicts Section 9 of the Arbitration and Conciliation Act. Codifying emergency arbitration provision -    Section 2(1)(a) to the Act, which provides a formal definition of an emergency arbitrator under the newly proposed Section 9-A   Section 9-A (1) of the Act, an arbitral institution may appoint an emergency arbitrator before the constitution of the Arbitral Tribunal, specifically for the purpose of granting interim measures as provided under Section 9 of the Act. This provision grants parties the ability to seek urgent relief without waiting for the formation of the Arbitral Tribunal, providing them with an expedited process for securing interim measures, especially in cases requiring immediate intervention. Order passed have same enforceability as passed by a tribunal [7] . This change aims to provide a faster, more efficient way to secure interim measures, especially in situations needing immediate action. Section 2 e) "Court" means--   (i) In the case of an arbitration other than international commercial arbitration, the principal Civil Court of original jurisdiction in a district, and includes the High Court in the exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject matter of the arbitration if the same had been the subject- Matter of a suit, but does not include any Civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes Court means section 2 a   2A. (1) In case of arbitration other than international commercial arbitration –  where seat of arbitration has been agreed by the parties or determined by the arbitral tribunal as per Section 20, the court means the court having pecuniary and territorial jurisdiction over the seat of arbitration. [8]       Section 2 e)  -   (ii) in the case of international commercial arbitration, the High Court in the exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject matter of the arbitration if the same had been the subject matter of a suit, and in other cases, a High Court having jurisdiction to hear appeals from decrees of courts subordinate to that High Court. In all other cases, the court means the court having pecuniary and territorial jurisdiction to decide the disputes forming the subject matter of the arbitration if the same had been the subject-matter of a suit.    (2) In case of international commercial arbitration –    Where the seat of arbitration has been agreed by the parties or determined by the arbitral tribunal as per Section 20, Court means the [9] High Court having territorial jurisdiction over the seat.    In all other cases, Court means the High Court having territorial jurisdiction to decide disputes forming the subject matter of arbitration.   Amendment to Section 9(1) of the Act  Section 9(1) - A party may, before, or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to a court for interim measure. Earlier provision allows courts to grant interim relief during arbitration proceedings Changes proposed -  Limits recourse to Section 9 once arbitration proceedings have commenced, even for interim relief.   In cases where a tribunal is seated outside India (foreign tribunal), any interim relief granted by such a tribunal regarding assets located within India, does not have direct enforceability under the Act.10 In such a case, a party has an option to approach the Court under Section 9 of the Act to seek an enforceable interim measure       The lack of direct enforceability for interim relief granted by foreign tribunals concerning assets in India could complicate matters for international parties, requiring them to seek court intervention under Section 9. Deletion of Fourth schedule  Schedule 4 Model fee - Up to Rs.5,00,000      Rs.45,000 2. Above Rs.5,00,000 and up to Rs. 20,00,000- Rs. 45,000 plus 3.5 per cent. of the claim amount over and above Rs.5,00,000. 3. Above Rs.20,00,000 and up to Rs. 1,00,00,000 -  Rs.97,500 plus 3 per cent. of the claim amount over and above Rs.20,00,000. 4. Above Rs.1,00,00,000 and up to Rs. 10,00,00,000-  Rs.3,37,500 plus 1 per cent. of the claim amount over and above Rs.1,00,00,000. 5. Above Rs.10,00,00,000 and up to Rs. 20,00,00,000 Rs.12,37,500 plus 0.75 per cent. of the claim amount over and above Rs.10,00,00,000. 6. Above Rs. 20,00,00,000  Rs.19,87,500 plus 0.5 per cent. of the claim amount over and above Rs.20,00,00,000 with a ceiling of Rs.30,00,000. Draft Amendment introduces changes to Sections 11(14) and 11-A of the Act noting that in cases of institutional arbitration, arbitrator fees would continue to be determined by the respective institution’s rules. Where no such rules exist, or in ad hoc arbitrations, the fees will be specified by the Council.iii [10] Removing the Fourth Schedule, which set a model fee structure for arbitrators, makes the fee determination process simpler. With the new changes to Sections 11(14) and 11-A, fees in institutional arbitration will now follow the institution's rules. For ad hoc arbitrations or where no rules exist, the Council will decide the fees. This update aims to make fee determination more flexible and clearer, ensuring that costs are transparent. Earlier under the act appeal under Section 37 of the Act is allowed against orders refusing to refer parties to arbitration under Section 8 of the Act, but no similar provision exists for orders refusing to appoint arbitrators under Section 11 of the Act Section 11 - It proposed Parties will have the right to appeal against order of the court refusing the appointment of arbitrators. [11] Appeal against refusing to appointment of arbitrators under section- 11. If court refuses the appointment now parties have the right to appeal earlier there was no remedy defined under the act. Sub-section (4) to Section 8 of the Act,  section 8 (4) –  Refer parties to arbitration when there is an express clause provided in the contract.  No time limit for deciding on application   New introduction under section 8 – Mandates a 60-day timeline for deciding applications under Section 8 of the Act. Previously, there was no statutory time-limit, often leading to delays. By introducing such a timeline, the amendment ensures that the referral process is expedited [12] The new rule sets a 60-day deadline for deciding applications under Section 8 of the Act. Before this, there was no set time limit, which often caused delays. By adding this timeline, the amendment aims to speed up the referral process and make it more efficient   Section 34 of Arbitration and Conciliation Act Section 34 - Patent Illegality Test: Limited to domestic arbitration.   Extends patent illegality test to international commercial arbitration (ICA). [13]       Increases the effectiveness of setting aside of arbitral award. Section 9 of the arbitration and conciliation act -     Section 9, provides the formation of a tribunal from the date of the court’s order as is the case currently. Amendment to section 9 -  Provides timeline - the 90-day period for constituting an Arbitral Tribunal from the date of the application for interim relief [14] The change to Section 9 of the Arbitration and Conciliation Act introduces a 90-day deadline for forming an Arbitral Tribunal from the date of the application for interim relief. Previously, the tribunal was formed from the date of the court's order, which could lead to delays. This new timeline aims to speed up the process, ensuring that the tribunal is constituted more quickly and that arbitration proceedings can begin without unnecessary delays Section 16 – Competence of arbitral tribunal to rule on its own jurisdiction   It does not provide for timeline for jurisdictional challenge     The Draft Amendment introduces a 30-day period to decide jurisdictional challenges under Section 16(5) of the Act by the Arbitral Tribunal, ensuring that objections to an Arbitral Tribunal’s jurisdiction are resolved promptly. Introducing a 30-day period for the Arbitral Tribunal to decide on jurisdictional challenges under Section 16(5) is a positive change. It ensures that these challenges are resolved quickly, preventing unnecessary delays and allowing the arbitration process to proceed more smoothly. Section 37 – Appeals-      Introduces Section 37(1-A) to the Act, mandating a 60-day period for filing an appeal under Section 37(1) of the Act ensuring minimal delays in appellate proceedings and allowing the parties to move forward efficiently. It aims to minimize delays in appellate proceedings, ensuring that appeals are handled promptly. This change helps parties move forward, reducing the overall time spent in the arbitration process which is main motive of arbitration Section 2(1)(ca) of the Act.   (ca) "arbitral institution" means an arbitral institution designated by the Supreme Court or a High Court under this Act Definition - As a body or organisation that provides for the conduct of arbitration proceedings under its aegis, by an Arbitral Tribunal as per its own rules of procedure or as otherwise agreed by the parties.   Broadens the definition of arbitral institutions and confers additional powers to them, including the authority to extend Tribunal mandates and reduce fees for delays. [15] Broadens the definition of arbitral institutions and confers additional powers to them, including the authority to extend Tribunal mandates and reduce fees for delays. Section 29 of Arbitration act  Relevant Provision –  Sub-section 5 - The extension of the period referred to in subsection (4) may be on the application of any of the parties and may be granted only for sufficient cause and on such terms and conditions as may be imposed by the Court.     The proposed change is to extend the mandate of the Arbitral Tribunal, reduce arbitrators’ fees for delays, and substitute arbitrators whenever necessary. [16]       Overall, this step will Reduce delay in the proceedings Section 11 - Appointment of arbitrators Adding of new proviso to Sections 11(4), (5) and (6) of the Act,    Adding of new proviso to Sections 11(4), (5) and (6) of the Act – It will require the applicant to disclose the number of pending arbitration proceedings and awards passed in disputes between the parties to the court [17] This disclosure helps the court get a clearer picture of the ongoing disputes and the previous arbitration between the parties. It can aid in making more informed decisions regarding the appointment of arbitrators by providing this information upfront, the process becomes more transparent and efficient, potentially reducing delays and misunderstandings                              No requirement for the stamping of arbitral awards under the Stamping Act,1899. Requires arbitral awards to be stamped as per the Stamp Act, 1899. [18]  Introduction of a new layer of formality and compliance. Section 31 - Forms and contents of arbitral award Insert new Section 31(2-A) to the Act -  Which outlines a procedural checklist for arbitral awards. This checklist requires arbitrators to confirm essential elements — such as party capacity, validity of the arbitration agreement, and notice of arbitration. [19] It Promotes greater consistency and confidence in the arbitration process Section 31 Forms and Contents of arbitral award  - (7)     (a) Unless otherwise agreed by the parties, where and in so far as an arbitral award is for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made.   1 [(b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of two percent. higher than the current rate of interest prevalent on the date of award, from the date of award to the date of payment.   Explanation-The expression "current rate of interest" shall have the same meaning as assigned to it under clause (b) of section 2 of the Interest Act, 1978 (14 of 1978). Section 31 Forms and Contents of Arbitral Award -    The interest rate would be calculated at 3% above the repo rate, replacing the existing mechanism of 2% above the general rate of interest. [20]         Increasing the rate for fastening the payment is a positive step. Section 34 – Application for setting aside an arbitral award    Insertion of Section 34(7) provides that when an award is set aside in part, the Tribunal, on the direction of the Court or the Appellate Arbitral Tribunal, will only decide the issues on which the award was set aside, while the non-offending portions remain binding. It specifically clarifies that tribunal will decide the said issues based on the existing records of the original arbitral award, unless the Court or Appellate Arbitral Tribunal directs to the contrary [21] The Tribunal will only re-examine the specific issues that were problematic, while the rest of the award remains binding. This approach maintains the integrity of the original award and avoids unnecessary re-litigation of settled matters. Only courts adjudicate challenges to arbitral awards under Section 34 Introduces an Appellate Arbitral Tribunal to hear challenges to arbitral awards, alongside courts. [22] It also helps reduce the burden on traditional courts, potentially speeding up the resolution of disputes. By offering an alternative to court adjudication Section 34 2 (a) An arbitral award arising out of arbitration other than international commercial arbitration may also be set aside By the court, if the court finds that the award is vitiated by patent illegality appearing on the face of the award Section 34 2 (a) An arbitral award arising out of international commercial arbitration may also be set aside by the court if the court finds that the award is vitiated by patent illegality appearing on the face of the award   The new amendment Removes the distinction between domestic and international commercial arbitration regarding the grounds of patent illegality (Section 34(2-A)) Now International commercial arbitration award can also be set aside if found on the grounds of patent illegality. [23] This change will ensure that all arbitral awards, regardless of their origin, are subject to the same scrutiny for patent illegality. This could potentially enhance the credibility and reliability of arbitration as a dispute resolution mechanism   Advantage and Drawbacks - The Bill provides for the guidelines that the dispute can only be referred to arbitration where the value of the claim is below Rs. 10000 which showcases doubt posed by the government on the efficiency of the arbitration. The Bill downside India as a seat for arbitration the proposed bill extends grounds for challenging the award patent illegality under section 34. The parties cannot get interim relief once the tribunal is constituted and can now only seek relief under section 17 it is beneficial as it lowers strain on the court which is the very objective of arbitration. However, if a question is raised on the appointment, interest bias, or ineligible arbitrator then it is needed that option of approaching the court should be available to the parties under section 9 of the act. In Amazon vs Future Retail [24] court held that the award of emergency arbitrator is enforceable under section 17(2). The recent bill proposed a provision for the appointment of emergency arbitrators which enhances the position of India's seat for arbitration globally. Enforcement of timelines by the bill 60 days for filling application of appointment of arbitrator and appeal section 37 aims to minimize delays in appellate proceedings, ensuring that overall time spent in the arbitration is reduced. [25] Conclusion The Draft bill aims to bring India's arbitration system up to date with global norms and fix long-standing inefficiencies, the Draft Arbitration Bill, 2024, is a major step in that direction. Although the proposed reforms, which include integrating digital procedures, addressing jurisdictional issues, and codifying emergency arbitration, have the potential to streamline arbitration, they also add complexity. For example, the creation of an Appellate Arbitral Tribunal as already adopt by the American Arbitration Association and the European Court of Arbitration which may lower the strain on conventional courts, but it might also result in additional expenses and levels of procedure.   Overall, the draft law takes an active approach, seeking to enhance India's standing as a major centre for international arbitration. However, careful execution, support from all parties involved, and resolving practical obstacles are necessary for its success.  [1] Raghav Agarwal is a 8th SEM | B.B.A. LL. B student at Bharati Vidyapeeth New Law College. [2] http://corporate-attributes-and-practices-towards-arbitration-in-india.pdf/ & Arbitration vs. Mediation: Understanding What We Want vs. What We Need | SCC Times [3] https://www.whitecase.com/insight-alert/keeping-times-government-india-proposes-new-arbitration-lawreforms.Final_Public_Notice.pdf M inistry of legal affair Draft arbitration bill. [4] https://www.whitecase.com/insight-alert/keeping-times-government-india-proposes-new-arbitration-lawreforms . [5] Government of India invites comments on draft Arbitration and Conciliation (Amendment) Bill, 2024 | Current Affairs | Vision IAS . Final _Public_Notice.pdf [6] Final_Public_Notice.pdf M inistry of legal affair Draft arbitration bill. [7] Final_Public_Notice.pdf M inistry of legal affair Draft arbitration bill. [8] Final_Public_Notice.pdf M inistry of legal affair Draft arbitration bill. [9] Final_Public_Notice.pdf M inistry of legal affair Draft arbitration bill. [10] Draft Arbitration And Conciliation (Amendment) Bill, 2024: Comments Invited [11] Draft Arbitration And Conciliation (Amendment) Bill, 2024: Comments Invited [12] Future of Arbitration in India: Decoding the Draft Arbitration and Conciliation (Amendment) Bill, 2024 | SCC Times [13] Future of Arbitration in India: Decoding the Draft Arbitration and Conciliation (Amendment) Bill, 2024 | SCC Times & Draft Arbitration And Conciliation (Amendment) Bill, 2024: Comments Invited [15] Final_Public_Notice.pdf [16] Final_Public_Notice.pdf [17] Final_Public_Notice.pdf [18] Final_Public_Notice.pdf [19] Final_Public_Notice.pdf [20] Final_Public_Notice.pdf [21] Final_Public_Notice.pdf [22] Final_Public_Notice.pdf [23] Final_Public_Notice.pdf [24] ('MANU/SC/0187/2022'); [25] Final_Public_Notice.pdf & https://www.barandbench.com/columns/the-draft-arbitration-and-conciliation-amendment-bill-2024-an-analysis & https://www.scconline.com/blog/post/2024/12/10/future-of-arbitration-in-india-decoding-the-draft-arbitration-and-conciliation-amendment-bill-2024/

-  Vighnesh Kumar Sharma [1]   Introduction Consent has been the cornerstone of arbitral proceedings, and any deviation from the practiced norm is likely to create a challenge in the proceedings as well as the dispute resolution process. As Arbitral proceedings are consensual, the parties to the dispute provide their consent to resolve the matter through arbitration rather than taking it to the courts. The core principle of mutual consensus is said to be undermined by one of the operating doctrines in the field of Arbitration law that is the ‘Group of Companies Doctrine’, which states that a non-signatory may be bound by the agreement if it is a member of the same group of companies, as that of the signatory and all the parties to the agreement must mutually agree to make the non-signatory a party to the agreement . The basis of arbitration proceedings is that there shall be consensus-ad-idem between the parties , and the doctrine has been criticized on this issue, as it blurs the line between consenting and non-consenting parties, thus changing the method in which arbitration is conducted. However, the Apex Court has accepted this doctrine in the Cox and King Judgement with open arms, as it held that the doctrine is a means of recognizing the common intention of parties to bind a non-signatory by analysing the corporate affiliation. The court emphasized the fact that in some situations the signatory does not perform the contractual obligations, and following the strict rule of making signatories liable would lead to the exclusion of non-signatories, which would be unjust to the signatory as well as the party that suffered. The Hon’ble court concluded that the definition of parties under Arbitration Act includes both signatory as well as non-signatories. The requirement of written arbitration agreement has been excluded and the actions of the non-signatory will be analysed to apply the doctrine. Party autonomy or party independence is required for a party to provide its consent to submit the dispute through arbitration. Phrase claiming through or under has neither been defined under the act nor been used. A person claiming through or under a party to agreement is merely standing at the spot of the original party.      Evolution of Group of Companies Doctrine The doctrine was first used in France in the case of Dow Chemicals vs. Isover Saint Gobian , in this case, the non-signatories did not raise an issue of being held accountable under the arbitration agreement. Hence, the group of companies’ doctrine was formed. In India, the Apex court in Chloro Controls Case recognized that the non-signatory can be made party to the arbitration clause if it can be recognized from the circumstances that the intent of the parties was to make the non-signatory a party to the agreement. The court summarized that the underlying basis for application of this doctrine rests on maintaining corporate separateness while determining the intention of parties to bind themselves. Before this, the judiciary followed a strict approach by ensuring that any claim that falls beyond the scope of the agreement and in which there are parties, who are not signatories to the agreement cannot be referred to arbitration. The Apex Court in Chloro Controls, recognized the need  to make the party subject to arbitration even without prior consent. This was based on different factors to examine the situations in composite transactions where multi-party agreements are involved; the nature and obligation of the task performed by the non-signatory needs to be considered. The courts can follow this approach if they feel that, ends of justice will be served, or if the courts by examining came to the conclusion that the work couldn’t have been completed without the aid and execution of the non-signatory party. Striking the Balance By acknowledging and applying this doctrine in arbitration cases, the defence of the corporate veil has been pulled off. Economic entities will be held liable for their actions even if they were not a part of the arbitration agreement between the parties. The doctrine ensures that a party that has played a role in the contract should not go unrecognized in case a dispute arises. The doctrine interprets the action and role played by the parties in order to make them liable. The courts apply this doctrine to check the interconnectedness of the work done between the parties, this helps in avoiding parallel proceedings in court. Doctrine plays an important role in international transactions, or cross-border contracts, as it helps in identifying the responsibility and due diligence between the parties. Critics have argued that by applying this doctrine, the intent behind the contract and arbitration agreement between the parties gets destroyed, as they explicitly choose to keep the third parties out of the agreement. However, this doctrine is being applied to widen the scope of arbitration agreements, by prioritizing the substantive commercial reality over formal structure of agreements, by not following the strict approach of excluding parties who are not a signatory. The doctrine recognizes the realistic approach of the corporate world, where the subsidiaries of a company can play an active role in the transaction as a whole. Doctrine in Foreign Jurisdictions In France, the courts have followed a liberal approach in applying this doctrine. The doctrine can be applied under certain conditions. Firstly, if the third party has played an active involvement in the transactions. Secondly, if the parties to the arbitration agreement have a mutual consent/interest in bringing in the third party in proceedings. An Arbitration agreement can be extended to a non-signatory if it can be established that all parties had common intention to be bound by the agreement. The US and UK are skeptical about the use of the doctrine, by following the age-old privity rule, believing that the old contract theory ensures consent between the parties. The English courts have laid down the rule that the non-signatories can be a party if they are claiming under the original party. As the privity principle is followed strictly, the arbitration agreement is extended to non parties on the basis of agency, assignment, novation etc. The US courts have recognized this doctrine. The US courts have also used non-consensual doctrines to extend arbitration agreement to a non-signatory, for example the courts have pierced corporate veil where the parent company exercised control over the subsidiary company. In India, the Supreme Court has held that piercing of the corporate veil or doctrine of alter ego cannot be the  foundation for applying Group of Company Doctrine. Piercing of corporate veil  is invoked on basis of two theories- Instrumentality theory which state that when a company is merely an instrument when the director or owner uses its corporate personality for benefit of owner and the theory of Alter ego which states that there exists a unity of interest between the company and its owner, and thus the separate legal existence feature of the company has ceased. The distinction between the two entities will be blurred and the company acts as a puppet to carry out illegal activities. Conclusion The acceptance of the doctrine marks a change from a strict rule-based approach to a more flexible and analytical approach. While the doctrine challenges the core principles of arbitral proceedings, it ensures that corporate entities cannot avoid the liabilities by exploiting their corporate structure in multiparty agreements/transactions. The adoption of the doctrine highlights the recognition of interconnected economic units in the society by the Indian Judiciary. However, there is still some grey area, regarding its applicability where the seat of the arbitral proceedings is India, and the law governing the proceeding is foreign law. Such clarity will be helpful in ensuring consistency and uniformity in cross-border disputes. The judgment has provided clarity on the validity and the requirements for the application of the doctrine. Parties can now be aware of the manner in which they want to proceed with the proceedings. Though the doctrine diverts from the traditional view of arbitration proceedings, it ensures that no party can escape the liability by being non-signatory. By emphasizing substantive intent, it underscores the intent of the judiciary to adapt frameworks according to the complexities of modern commerce. [1] Vighnesh Kumar Sharma is a third-year student at National Law University Odisha. He is interested in dispute resolution and is also actively exploring other others of law.

Ayushi Yelimineti [1] Introduction   The practice of selecting an arbitrator from a given pool of arbitrators gained much discourse after the judgement given in Voestalpine Schienen GmbH v. Delhi Metro Rail Corporation Ltd.   (“Voestalpine”) . This practice essentially looks like one party providing the other with a pool of arbitrators, followed by the other party nominating arbitrators to be appointed from this given pool. While there can be many variations and nuances to this practice, the guiding principles remain what was laid down in Voestalpine . The Court in Voestalpine upheld the practice but highlighted that the arbitrator panel should be broad so that the party choosing from this panel has enough flexibility to exercise its right to appoint an arbitrator. However, this left a lot of ambiguity, and since then, courts have expressed concerns regarding the possible ill effects of such a practice and taken conflicting stances. While such a practice does give some say to the party selecting the arbitrators from the pool chosen, it could still be unfair as this pool could be entirely comprised of arbitrators who would be inclined to rule in one party’s favour. In Perkins Eastman Architects DPC v. HSCC (India) Ltd .  The Apex Court exercised its powers under S. 11 of the Arbitration and Conciliation Act, 1996 (“ the Act”)  by appointing an independent arbitrator when the procedure laid down raised doubts on the independence and impartiality of the arbitrator to be nominated. Thus, the Apex Court reiterated the principles of equality and fairness and reiterated the invalidity of unilateral appointment of arbitrators. Equality and fairness are important principles to be kept in mind when appointing an arbitrator, but at the same time, party autonomy remains the brooding spirit of arbitration. In this article, we will first trace the Court’s different approaches to this practice, analyse it from the contours of arbitration and highlight the lingering grey area.   The Conflicting Approaches   In Voestalpine, the arbitration clause was such that it was laid down that the Respondent would choose a panel of five persons, and then both the parties would have to choose their nominee arbitrator from the said panel. The appointed arbitrators would then appoint the presiding arbitrator of the tribunal. The Apex Court reflected that a panel of five arbitrators is limited, and there should be a broader list. A fresh list, which contained thirty-one names, was then forwarded, and the Court observed that this gave the Petitioner a broader choice and a fair say in the appointment process. Thus, this point emerged to be crucial to keep in mind when dealing with similar situations. This was followed by another development in the judgement laid down in Central Organisation for Railway Electrification v ECI-SPIC-SMO-MCML (JV)  (“CORE”). In this case, the arbitration clause mandated that the Respondent nominate two arbitrators from a pool of four individuals. The general manager of CORE would choose one arbitrator from the two nominees and would also appoint the other two arbitrators. The Apex Court upheld this clause, noting that the Respondent’s power to choose two nominees from the given pool counter-balances the powers rested upon the petitioner, further highlighting that the choice of the parties must be given importance.   Following this, Courts echoed the ambiguity in the stance to be taken with regard to the selection of arbitrators from a select panel given. The Delhi High Court, in   Margo Networks Pvt. Ltd. and Another v Railtel Corporation of India Ltd . (“Margo”), faced a similar clause where the Railway Authority was to form a panel of ten persons comprising its former employees. The Court found the clause to be unliteral and ordered the formation of an independent panel. It noted that the factual conspectus involved in CORE was quite different from the one in the given case and is thus not applicable. Further, the Court noted that “counterbalancing" could not be said to have been achieved when one party is entitled to appoint 2/3rd of the arbitral tribunal unilaterally. The Delhi High Court in Taleda Square Pvt Ltd Vs. Rail Land Development Authority   again raised questions on the correctness of the judgement laid down in CORE and observed that the Petitioner should not be compelled to select its nominee arbitrator from a limited panel maintained by the Respondent. Finally, in Union of India v M/s. Tantia Constructions Limited  and JSW Steel Ltd. v. South Western Railway , the Apex Court referred CORE to a larger bench. It was announced that a new five-judge bench would hear this reference.   Analysis through the Contours of Arbitration   Section 11 (2) of the Act states that subject to sub-section (6), the parties are free to agree on a procedure for appointing the arbitrator or arbitrators, which means that parties are free to insert a clause that involves the selection of an arbitrator from a given pool of individuals. However, when the Court in Voestalpine upheld this practice, it reiterated strongly that there was a need for the panel to be broad to ensure equality in the process of appointment of arbitrators. It can then be argued that it is the duty of the Court to constitute an independent and impartial panel when the panel given is limited and restrictive. There arises a need to balance party autonomy and equality in such proceedings and Courts have made different interpretations of this balancing point. While party autonomy is said to be the backbone of arbitration, and minimal judicial interference is one of the most important principles of arbitration, the purpose of this efficient dispute resolution remains defeated if there is no fairness or equality in proceedings. Having an equal say in the appointment of arbitrators has a substantial impact on the fairness of proceedings, and a breach of this fairness warrants the protection given by Courts. Further, there is a possibility that such clauses would create apprehensions in the minds of parties and discourage them from pursuing arbitration.   The Grey Area remains   Discourse over the unilateral appointment of arbitrators has been ongoing for years, and it has been well-established that the unilateral appointment of arbitrators is invalid. However, can it be said that the appointment of an arbitrator from a given pool is a loophole in the above-mentioned saga? In CORE,  not only did the Respondent have the power to appoint 2/3rd of the panel but also to choose a restrictive list of four individuals from which the petitioner had to nominate one. The tribunal formed would consist solely of arbitrators suggested or chosen by the Respondent. Even the one arbitrator that is to be chosen based on the Petitioner’s nomination is to be selected from a limited pool of four individuals listed by the Respondent. It is hard to argue that such a clause provides for any counterbalancing or follows the guideline laid in Voestalpine, which provides for having a “broad panel”. There is no clarity as to what exactly can be construed to be counterbalancing and what number of individuals make a panel broad. These vague terms have not been coupled with any objective directions, and subsequently, there has been a cloud of ambiguity when dealing with such clauses. A dominant party could greatly benefit from such a clause and constitute an arbitral tribunal largely based on its selection, which could still be upheld. Thus, it can be argued that judicial protection given to parties in an arbitration proceeding against the unilateral appointment of arbitrators is flimsy, and the practice of unilateral appointment of arbitrators still remains, albeit with some scrutiny. Moreover, this ambiguity has prevailed for years, which has led to an unclear idea as to what such a clause should provide for. Two parties that mutually find it best to include the clause would still lack clarity as to what is valid, which could prevent them from including it altogether. Party autonomy then would also suffer in the midst of this grey area.   International Standards   Equality in appointment of arbitrators is a well-recognised principle internationally and different jurisdictions have set their own standards and norms. The French Cour de cassation’s ruling on appointment of arbitrators in Siemens AG and BKMIIndustrienlagen GmbH v. Dutco Consortium Construction Co.  ( “Ducto” )  served an important precedent for appointment of arbitrators. It held that parties cannot choose to waive their right of equality in appointment of arbitrators before a dispute arises and that the principle of equality in designation of arbitrators is a matter of public policy. Thus, according to the ruling any agreed method for appointing an arbitral tribunal that does not guarantee strict equality of all parties may not be applied against a party until all parties affirm their pre-agreed designation method after the dispute has arisen.   Moreover, Article 18 of the UNICTRAL Model Law on International Commercial Arbitration states that parties shall be treated with equality and each party shall be given a full opportunity of presenting his case. Article 34(2)(a)(iv) also provides that an arbitral award can be set aside if the arbitral tribunal is not in accordance with the agreement of the parties, unless such agreement was barred by law, and in the absence of such agreement, the tribunal constituted was not in accordance with this Law. Under the amended International Chamber of Commerce Arbitration Rules (“ ICA” ), 2021, Article 12(9) provides that notwithstanding any agreement between the parties on the method of the constitution of the arbitral tribunal, in exceptional circumstances the International Court of Arbitration ( “ICA” ) can appoint each member of the tribunal to avoid a significant risk of unequal treatment and unfairness that may affect the validity of the award.   It is undisputed that internationally, there has been a stern protection given to the principle of equality in the appointment of arbitrators. While different forums have also made allowance for the principle of party autonomy, it often comes secondary to the principle of equality in the appointment procedures. For example, as mentioned, Article 12(9) ICC Rules gives the ICA the discretion to appoint members of the tribunal no matter what the parties have agreed to if it grossly threatens the equality of the parties. Although, in Ducto , party autonomy was allowed to undermine the principle of equality if consented to after the dispute has arisen. Thus, if parties are allowed to waive their right, they must know what is it entirely that they are consenting to keeping the dispute in mind.   Way Forward   While finding a balance between fairness and upholding party autonomy can be tricky, it is the much-needed call of the hour. With increasing uncertainty about arbitration clauses mandating selection from a pool of arbitrators, there is a greater tendency to approach the courts, which hampers the efficiency and smooth functioning of arbitration proceedings. Such a situation also leaves scope for parties to abuse the proceedings and have an unfair advantage by means of a clause resting them with disproportionate power. An equal say in the appointment of arbitrators is an important part of fair arbitration proceedings, and a potentially biased arbitral panel goes against the fundamentals of justice. While arbitration is to be more flexible than the traditional proceedings in Courts, these fundamentals must not be bargained with. The author argues that by aligning with the global standards as discussed, the Judiciary can offer firm protection to the principle of equality. and if it is allowed to be waived completely, there must be the consent of the parties after the dispute has arisen as held in the Ducto case, so they have a holistic idea of the proceedings with context to the dispute at hand. There is much anticipation that CORE  being referred to a five-judge bench would provide answers to some crucial questions raised and clear the prevailing ambiguity. Meanwhile, the grey area in the practice of appointing arbitrators from a given pool continues to linger. [1]   Ayushi is a fourth-year student at Dr. Ram Manohar Lohiya National Law University, Lucknow. She is interested in dispute resolution and is also actively exploring other others of law.

- Neha Bhambhani* INTRODUCTION: UNVEILING THIRD PARTY FUNDING Third-party funding (hereinafter referred as “TPF”), also known as “Litigation Financing”, is the creation of an agreement between parties involved in legal proceedings and a stranger party funder. It is an arrangement where the third party not involved in the proceedings funds the whole or part of the litigation process on the pretext of financial benefit if the funded party wins the dispute. Generally, third-party funders are profit-driven entities, such as banks, investment firms, insurance companies, hedge funds, or individuals. These entities carefully engaged in assessing the case merits and likelihood of victory before granting the funds because, if the funded party loses, the funder cannot retrieve their investment, thus bearing the funding risk themselves. Although TPF has been a major consideration globally among countries including the United States, the United Kingdom, and Canada, there lies no specific legislation for India to regulate it. Only two nations, Hong Kong and Singapore have recently taken the initiative to regulate TPF through enacted legislation and amendments. In order to set the qualifications and ensuring compliance with public policy, Singapore amended its Civil Law Act and formed Civil Law (TPF) Regulations. Similarly, the Hong Kong Legislative Council passed the Arbitration and Mediation Legislation (TPF) (Amendment) Ordinance 2017 ( hereinafter referred as “Ordinance”) and Code of Practice for TPF of Arbitration 2018 (hereinafter referred as the “HK Code”)  allowing TPF in Hong Kong.   THIRD-PARTY FUNDING IN INDIA: CURRENT STATUS AND JUDICIAL PERSPECTIVE In India, TPF remains valid even though there is no statutory recognition to regulate it. The Indian Judiciary has demonstrated, through its prevailing judgments, the need to regulate and facilitate the smooth functioning of TPF. In the case of Ram Coomar Coondoo v. Chunder Canto Mookerjee , the Privy Council held that the old concept of Maintenance and Champerty is not considered an offence as long as the TPF agreement is not against public policy. Maintenance is a condition where a third party often persuades a person to initiate litigation proceedings and may or may not have an interest in those proceedings. Champerty becomes a more specific arrangement, as the third party funder provides financial support to the party in arbitration proceedings with an intent for profit. In the recent intra-court appeal case of Tomorrow Sales v SBS Holdings , the Division bench of Delhi High Court ruled that third party funder Tomorrow Sales Agency (TSA) cannot be held financially liable for the cost incurred by funded party SBS Transpole Logistics Pvt. Ltd. as funder is not a party to the arbitration agreement or arbitral proceedings. Therefore, the arbitral award cannot be enforced against Tomorrow Sales Agency. Additionally, the TPF is recognised under Order XXV rule 3 of the Code of Civil Procedure 1908 for civil suits in states like Maharashtra, Gujarat, Uttar Pradesh, and Madhya Pradesh acknowledging the possibility of TPF applicable to their states. The court exercises discretion to add the third party funder as a party in the proceedings who is bearing the litigation cost of the plaintiff. In Maharashtra, the court may direct a third-party funder along with the plaintiff to furnish security for the costs of the proceedings to avoid frivolous litigation. Moreover, the Indian landscape has evolved where some of the funders such as Legal Pay had already announced plans for launching the first third-party litigation funding platform with an estimated return of 20-25%.   HONG KONG TPF FRAMEWORK: A MODEL FOR INDIA? In order to legalize TPF in Arbitration proceedings, Hong Kong has passed an Ordinance and HK Code for third-party funders to follow during arbitration proceedings. These provisions ensure consistency and protection for the funder and the funded party in the proceedings. It establishes a comprehensive and mandatory legal framework to safeguard funded party interests and emphasises the disclosure requirement by the funder to ensure transparency in the proceedings. India could consider adopting similar ideas from the Hong Kong ordinance and code for implementing its legislation by incorporating a clear definition of a third-party funder. (Section 98J Ordinance). It is crucial to establish the meaning of the third party by identifying their rights and liabilities and excluding individuals and entities with no other special interest beyond funding the proceedings. The Content Code of Practice outlines terms, features, and risks that should be set out in the funding agreement. This includes reasons for terminating the agreement or for third-party funders to withhold funding (Section 98Q Ordinance). The agreement must also specify the degree of control the third-party funder will have in arbitration proceedings. (Section 98Q(1)(b)(i) Ordinance). The ordinance of Hong Kong requires disclosure of third-party funding in arbitration proceedings. (Section 98U Ordinance). It includes a written notice of the funding agreement and the name of the third party funder provided to each party involved in the arbitration and to the arbitration body. This is significant to ensure the neutrality of the arbitrator and for parties to assess the involvement of a third party funder in the proceedings. Additionally, the ordinance authorizes the Hong Kong Secretary for Justice to appoint an advisory body and an authorized body to observe and implement the operation of the ordinance and the code. (Section 98X Arbitration Ordinance).   THE DEGREE OF CONTROL The Ordinance obligated parties to set out the degree of control of the funders in relation to arbitration. This is essential to safeguard the autonomy of the funded party as the funding process involves inherent risk for the investor, with no guarantee of regaining their invested capital . In such situations, the funder gets the leverage in controlling and influencing the decision-making rights of the funded party. If a funder is not content with the outcome of the proceedings, he can force the funded party to renegotiate the award for their benefit. In this way, the entire TPF process has the potential to become a power game where the funded party, being financially unstable relies on the funder to provide financial resources and legal expertise. India could benefit by incorporating such provisions to ensure the independence of the funded party in decision-making, especially in cases where the party is unable to make informed decisions.   TERMINATION OF FUNDING AGREEMENT The TPF agreement should be formed to balance the rights of both the funded party and the funder. It should unambiguously stipulate circumstances and reasons for third party funders to withhold funding in the arbitration proceedings (Section 98Q(1)(b)(iii) Ordinance). The HK Code specifies certain conditions under which funders are allowed to terminate a funding agreement during the proceedings to prevent funders from arbitrarily terminating the agreement. (Paragraph 2.13 HK Code). This becomes important because arbitration proceedings are unpredictable which may prompt funders to terminate funding for their benefit. For example, a funder decides to invest elsewhere to maximize their profits or to avoid any potential risk arising from a conflict of interest. Therefore, it is imperative to include clear reasons in the agreement to eliminate the burden on the funded party to search for substitute sources for funding to withstand proceedings. India can adopt similar provisions in its legislation to protect funded parties from the consequences of withholding funding. The agreement should contain specific situations and reasons where the funder is unable to continue funding or decides to withdraw a percentage of their investment. In these cases, the funder must obtain the consent of the appropriate authority to ensure that the funded party remains informed and prepared for such situations.  However, specifying the conditions of withdrawal in the termination clause does not exempt the third party funder from honouring the rights of the funded party. They must secure the latter’s position which could be compromised due to such termination or withdrawal of funding agreement.   ENSURING ACCOUNTABILITY:  ENFORCEMENT MECHANISMS The Hong Kong ordinance has adopted a soft law approach as there is no imposition of civil or criminal proceedings for non-compliance with the HK Code (Section 98S(1) Ordinance).  Whereas, in the Indian context, it is vital to incorporate regulatory measures by implementing TPF legislation that include the imposition of compensation, proportionate fines for non-compliance, and constraining the funder from participating in future TPF agreements. These measures can prevent funders from participating in corrupt practices, such as exerting financial means to influence the decision of the Arbitrator or concealing illicit gain from unlawful activities by funding arbitration proceedings. In addition, this ensures that funders adhere to the terms of the agreement and avoid superfluous reasons to withhold funding. The legislation should consider the exercise of jurisdiction of the arbitral tribunal in situations like imposing orders in cases of conflicting of substantial interest of the funders in the outcome of proceedings, and preventing interference with decision making right of the funded party that impacts the outcome of the proceedings. This ensures the balance between the autonomy and fairness in the proceedings. Similar to Hong Kong, the Indian legislature can establish an oversight body responsible for the implementation and suggesting changes in the legislation. This preserves the authority of the legislature to modify, alter, or improve any procedure based on changing circumstances thereby guaranteeing continuous scrutiny.   CONCLUSION The use of the TPF in India in arbitration proceedings reflects the necessity for establishing a clear and strong statutory framework drawing from Hong Kong legislation. India requires a nuanced approach for forming legislation to ensure smooth functioning and fairness between the parties involved. The judicial decisions also show willingness to accept TPF, but the absence of clear guidelines leaves room for different interpretations that lead to uncertainty. While Hong Kong provides flexibility to third party funders by implementing a soft law approach, India can include penalties for non-compliance and also establish authorities to monitor the whole process. By tailoring international practices, India can pave the way for a just and transparent TPF process. *Fourth-year Student, B.A. LLB. (Hons.), Institute of Law, Nirma University.

Akul Mishra [1] I.  Introduction Arbitration is fundamentally designed to provide an alternative to court proceedings, focusing on resolving disputes outside the judicial system.  However, in India, there remains a significant reliance across various areas of law, to preserve the essence of arbitration, such interventions must be minimised wherever possible. Yet, the amendment that brought Section 36(3)6 of the Arbitration and Conciliation Act, 1996 (“A&C Act, 1996”) brings a new open-ended question, which affects the overall enforcement and finality of arbitral awards. Furthermore, the concern persists over how much this may undermine the benefits of arbitration as a non-judicial dispute resolution mechanism. The potential harm appears magnified in light , of the recent Supreme Court case of Delhi Metro Rail Corporation Ltd. v. Delhi Airport Metro Express Ltd. ,  where an arbitral award was set aside on grounds of blatant illegality. This case was finally settled by a curative petition. While the extended timeline in this instance may be an exception, Section 36 interventions raise fears that prolonged timelines for , setting aside arbitral awards could become more common in India, eroding the core purpose of Arbitration. In this blog post, the author would like to propose a solution that avoids any apparent delay in Indian domestic arbitration through Section 36(3). First, the contradiction that Section 36(3) with Section 34 is analysed, alongside the precariously confusing situation it stipulates. Second, the author aims to introduce a positivist solution to the contradiction, with an intention to maintain the true nature of why Arbitration remains a quick dispute resolution mechanism.   II. Issues regarding contradictory legal interplays with Sections 34 and 36(3) Section 36(3) Upon filing of an application under sub-section (2) for stay of the operation of the arbitral award, the Court may, subject to such conditions as it may deem fit, grant stay of the operation of such award for reasons to be recorded in writing: [Provided further that where the Court is satisfied that a Prima facie case is made out that,-- (a) the arbitration agreement or contract which is the basis of the award; or (b) the making of the award, was induced or effected by fraud or corruption, it shall stay the award unconditionally pending disposal of the challenge under section 34 to the award. As seen above, Section 36(3) provides for an unconditional stay on the arbitral award. These conditions include a prima facie fraud assesment or corruption regarding the arbitral award framing and/or the arbitration agreement/ parent contract. To assess whether this amendment is a step in the right direction, we must first examine the language of the interconnected Section 34 . While Section 34 allows Indian courts to set aside awards, it raises the question of whether Section 34 is equivalent to an appellate jurisdiction of the High Court and the Supreme Court. Section 34 already accounts for fraud allegations and corruption in petitions to set aside arbitral awards. But, Section 36(3) has now introduced a wider, more overarching jurisdiction of Indian courts, which directly goes against the strict approach of the Supreme Court, emphasising Section 5. The Supreme Court’s minority opinion has stated that Section 34 is not an appellate jurisdiction . The narrow sine-qua-non considerations were emphasised over subjective interpretation . The considerations it should note are narrow in light of the unequivocal importance in Section 5 of the Arbitration Act. The Supreme Court’s analysis is strict, it has stated that an arbitral award cannot be set aside on merits . Thus, from all the aforementioned cases, we see a clear, consistent approach to Indian courts’ jurisdiction in setting aside arbitral awards. This narrow approach is a clear paradox against the amendment of Section 36(3), which is wider, allows courts to intervene regardless of party autonomy, and finally, breaks the res integra approach that courts had envisaged concerning the reading of Section 34 and Section 5. The proviso of Section 36 does not survive without Section 34, and an unconditional stay will continue until a Section 34 application has been heard and decided upon. But, suppose an unconditional stay has been granted, the court deciding on the Section 34 application will reference the stay granted under Section 36. Thus, this increases the court’s jurisdiction by a very wide margin and places a contradiction to the narrow interpretation often taken behind Section 34. This proves to be the biggest issue regarding the proviso from the amendment. The only material qualifier is that the courts must find prima facie evidence of what constitutes fraud/corruption to grant an unconditional stay. However, this qualifier itself is an over-dependence on courts over arbitral tribunals. If there is a high evidentiary value of fraud/corruption, which one may assume is the intention behind the use of ' prima facie ,' then the courts will acknowledge and use the same to set aside the award through its narrow powers under Section 34. Thus, it does not seem necessary to have additional power of the court when the power of the court is, ideally, enough under Section 34. Additionally, a Delhi High Court judgement of Italian Thai Development vs Ntpc Ltd did take a very narrow approach in adjudicating through Section 36(3) , where it ascertained that only a prima facie case of fraud would allow an unconditional stay of the award. Yet, this does not answer the question of why this process was necessary when any application under Section 34 would have also successfully answered this question by an application of judicial mind, in consistency with jurisprudence, which guarantees minimum interference with Arbitral awards and the process as a whole. In the factual matrix of Italian Thai Development the petitioner had made an application under Section 34. Thus, the rationale defending two different outcomes, one under Section 36, which is pending disposal of one under Section 34, seems to show a massive waste of resources and case pendency, which affects why out-of-court proceedings like arbitration, must be considered in the first place. This hurts the overall image and use of arbitration. III. A Proposed Objective Solution The solution that the author proposes may be considered radical. There is some belief in the lack of defence behind the logic of why we need two separate court-related findings, one under Section 36(3) and one under Section 34. Thus, the entire intention behind the amendment was, from what the author believes, extremely unnecessary unless there has been a pattern of unfair arbitral awards being upheld by Indian courts. The cost-benefit analysis is that the intention behind arbitration must be upheld, and when there was a recourse available under Section 34, there may not be any requirement under Section 36(3). An unconditional stay depends upon the questions that will be acknowledged and adjudicated under an application under Section 34. Thus, the first and most radical solution is to stop and repeal the amendment to prevent any new jurisprudence that could severely affect the scope of arbitration in the country and hurt the entire process of arbitration while simultaneously overwhelming courts with increasing yet unnecessary jurisdiction under the A&C Act, 1996. Repealing amendments itself is a big task . So if the solution is to repeal the amendment, it is too exceptional. Thus, the solution needs to be less extreme. A new less extreme solution could be to make the considerations under Section 36(3) as objective as possible. This also comes out of the fact that the definition of what ‘ prima facie ’ means in Indian law is unclear, vague, inconsistent and highly contested. Prima facie has very high evidentiary value and must be, on a more accurate definition, on the face of it, present a case of fraud or corruption, to ensure that an unconditional stay is granted under Section 36(3). Interestingly, the Delhi High Court, in the case of MTNL V Canara Bank , had to answer the question of what prima facie is and how much the court can investigate/assert that there is fraud or corruption in any or all conditions under Section 36(3). There was a distinction on what prima facie means, as envisaged by the court, the court did not go into the nuances of what part of the transaction in question came off as fraud. This was adjudicated upon by the arbitrator and formed the reason why the Delhi High Court asserted that there is no prima facie case of fraud. Fraud does not mean that the court will delve into Reserve Bank of India/ Securities and Exchange Board of India’s guidelines, then assert that the transaction was fraudulent, then assert the award was fraudulent and finally grant an unconditional stay. The narrow approach was also defended by stating that the parties can resubmit such allegations under a Section 34 petition. This reasserts my argument that if the same allegations considered under Section 34, the necessity of a Section 36(3) process will fail. However, it brings in the reason why the author believes that there should be guidelines under Section 36(3), which can include some proposals that may be delved into by the legislative or as guidelines by the apex court themselves. These can be included in a very non-exhaustive manner, A)  The court shall only acknowledge, use and adjudicate the evidence presented at hand to determine if there is, prima facie , a case of fraud/corruption to grant an unconditional stay. B) The court shall abstain from going into the depth of the transaction or the arbitral award itself but only stick to the allegations submitted by both parties to assert a prima facie case. C) The court shall not question the judicial mind, conduct, credentials, decision, application/implementation of law by the esteemed arbitrator, and shall not question the decision taken by the arbitrator even if there is a prima facie case of fraud and corruption.   IV.  Conclusion A reader may notice that the solution is quite objective, meant to be followed step by step. In Part III for example, there is a clear-cut distinction between finding a prima facie corruption or fraud case and questioning the arbitrator’s decision and application of mind. Thus, this distinction is objective, and the proposed solution suggests that the courts should delve into what prima facie is, but follow objective criteria and decide on the unconditional stay. Even if new evidence is suddenly revealed, it can be used in a Section 34 application, but Section 36(3) should be extremely narrow and restrictive to ensure that it meets jurisprudence. It is in line with the courts’ logic, notwithstanding the strict jurisprudence in Section 34. Current jurisprudence has seen that The Calcutta High Court has dismissed Section 36(3) petitions if no strict prima facie case is made out for an unconditional stay in the cases of WBSIDC Vs. Kaushalya Infrastructure Development Corporation and RMB Srijan Limited v. Great Eastern Energy Corporation Limited . The threshold is considered to be very high and Questions of fact do not meet this threshold. Thus, the objective criteria will not clash with jurisprudence but rather support the strict perspective and logic taken up by Indian courts. It makes their job easier and removes the burden of defining the term prima facie. The Courts have taken a high standard of proof for defining prima facie , with evidence at hand and a clear distinction of cases. Thus, it will be imperative if the evidence considerations are included in the objective criteria, meeting the high standard of proof asked out of Section 36(3) petitions. [1] Akul Mishra is a fourth year law student at Jindal Global Law School, interested in corporate and commercial laws.

Vrinda Gaur [1] Introduction Special Economic Zones (‘ SEZs ’) play a crucial role in facilitating the flow of investment in the country and propels overall economic growth in a country. All around the globe, there is a massive flux in the establishment of such special economic zones to reap their economic benefits. A major attraction for players is the lucrative exemptions granted to parties under various financial and commercial statutes, whose obligations are otherwise quite burdensome to comply with. There are approximately 378 SEZs operational in India, amongst which the first of its kind was established in Gujarat, t, the Gujarat International Financial Tech City (‘ GIFT City ’). With multiple players entering such zones to accumulate the economic incentives that come along, disputes and conflicts are inevitable. To address such disputes, it is necessary to provide participants with a robust and speedy resolution mechanism to uphold their confidence during their operations within these zones. This article seeks to articulate the prospects of promoting arbitration as a dominant mode of dispute resolution mechanism in SEZs in juxtaposition with relevant provisions of the Special Economic Zones Act, 2005 (‘ SEZ Act ’).   Decoding the Relevant Provisions of the SEZ Act The SEZ Act promotes the establishment of areas with special privileges to attract foreign investments in the country and facilitate trade and economic development. It aims to set up Financial Service Centres in SEZs, which are often governed by distinct laws and rules from those ordinarily applicable in a recognized state or jurisdiction.    A salient feature of the SEZ Act is that it provides numerous lucrative incentives and concessions to investors in terms of legal exemption under numerous statutes. For instance, Section 26 enumerates certain exemptions from the Customs Act, 1962, Customs Tariff Act, 1975, Finance Act, 1994, and Central Sales Tax Act, 1956. Further, Section 27 provides for the applicability of the Income Tax Act, 1961 with certain modifications to facilitate investments within the region. Moreover, Section 56 of the Act, makes the applicability of the Banking Regulation Act, 1949, and the Insurance Act, 1938 subject to certain amendments and restrictions. The SEZ Act entails certain provisions for the adjudication of disputes by the designated courts and via arbitration. For instance, Section 23 empowers to State Government, to designate one or more courts to try all suits of a civil nature and notify offences committed with the SEZs.  Section 42 provides that if no court has been designated to refer the disputes that arise within the zone, then such disputes shall be referred to arbitration. Additionally, Section 42(2) and  Section 42(3) provide for the appointment of an arbitrator by the Central Government and the applicability of the Arbitration and Conciliation Act, 1996 (‘ 1996 Act ’) to all arbitration disputes within the zones respectively. However, extensive intervention by the central government in the appointment of arbitrators and the excessive reliance on procedural formalities and court dependency of the 1996 Act, has rendered arbitration proceedings inefficacious within SEZs. This concern was further aggravated by Ranganath Properties Private Limited v. Phoenix Tech Zone Private Limited, wherein the Telangana High Court held that the SEZ Act, being a special legislation, Section 42 of the SEZ Act would prevail over an arbitration agreement entered between the parties, thereby undermining the prerequisite of mutual consent to arbitrate. In light of this, it becomes imperative to explore the prospective avenues of growth of arbitration within SEZs and vouch for a comprehensive special regime.   Prospective Framework and Suggestions One must bear in mind that the SEZ Act, which is the dominant statute regulating SEZs is an inherently economic legislation facilitating the inflow of foreign direct investments. Unlike the 1996 Act, it does not provide for comprehensive rules for resolving disputes and little calibre was invested in framing provisions for dispute resolution via arbitration.   One major factor jeopardizing the growth of arbitration in SEZs is Section 42(1) of the SEZ Act. It restricts the reference of a dispute to arbitration on the designation of a court by the State Government under Section 23(1) and empowers these courts to try all civil disputes arising within the SEZs  The express use of the term “shall” in Section 42(1) , makes it incumbent upon the parties to seek adjudication by designated courts, even in cases where parties have an agreement that specifically conveys their intention to resolve disputes through arbitration.       Additionally, the aggravated intervention of the Central Government in appointing arbitrators when a dispute is referred to arbitration adds to the plight. Ideally, as the general principles of the 1996 Act, extend to the SEZ Act, the appointment of an arbitrator would be the discretion of the parties, mainly the developers and entrepreneurs. However,  the absolute power bestowed on the Central Government for designating an arbitrator goes against the \ arbitral principles of party autonomy and mutual consent.        In light of the above concerns, there are two possible ways out. First, we need to explore the avenues for fast-tracking the process of establishing arbitration institutions within such zones. Though in 2017, a representative office of the Singapore International Arbitration Centre was inaugurated in GIFT City, Gujarat, to promote International Commercial Arbitration within the zone, it still lacks a case management office of the SIAC that would facilitate the resolution of disputes via arbitration under defined SIAC rules. All flourishing jurisdictions such as Dubai and Singapore prefer to settle disputes within SEZs through an institutional mechanism having distinct rules with limited applicability to domestic law.   Though the Union Finance Minister in the 2022-23 budget speech announced the establishment of an International Arbitration Centre in GIFT City in line with the Singapore International Arbitration Centre, and the London Commercial Arbitration Centre, progress seems stagnant on this front.   Additionally, the government’s efforts seem sparse in facilitating the establishment of similar centres in multiple other SEZs spread across the country. Promoting arbitration through arbitral institutions, governed by its distinct rules especially when one party to the dispute is a foreign party, would ameliorate the burden of meddling within the intricacies of the 1996 Act. t.   While the government continues to scuffle to make state-of-the-arbitral institutions functional within the SEZs in India, exploring alternative avenues could bring much relief to the aggrieved investors for the time being.  For instance, Parties may resort to a framework prescribed within a Bilateral Investment Treaty(BIT) to which the Government and the country of which the investor is a national are parties.  Most BITs entail either resolution through consultation or give investors a prerogative to submit an investment dispute directly for International Arbitration under an Institution as agreed between the parties, guaranteeing a neutral and time-efficient resolution. Next, though the promotion of institutional arbitration is likely to accord speedier resolutions and evade the intricacies of the court-facilitated process, one issue that is likely to arise is the enforcement of an award. This can be addressed by establishing a special arbitration division, within the jurisdictions of the High Courts where the SEZ is operational. Their functions would entail assisting in the enforcement of awards and playing a supervisory role to the arbitral institutions established within the SEZs. Another aspect worth incorporating is a dual model of dispute resolution, i.e. mandatory mediation followed by arbitration. The present Indian regime has made mediation optional irrespective of express declaration regarding the same in the contract between the parties . A mandatory approach is beneficial, especially within SEZs for two common reasons. One, SEZs often involve multinational enterprises with diverse cultural backgrounds. Mediation allows for a more culturally sensitive approach than Arbitration, fostering better understanding between parties via adopting different negotiation tactics. Two, mediation offers a more collaborative and less adversarial outcome as compared to arbitration. In SEZs, where businesses often operate in close proximity and may have multiple ongoing dealings either within or outside the SEZs, maintaining cordial relationships is crucial to maintaining the flow of investments within such regions and beyond.   Key Takeaways from the Expert Committee Report The Expert Committee Report suggesting reforms to the 1996 Act, entails certain recommendations for promoting arbitration within SEZs. The report suggests that with the promotion of institutional arbitration and adopting investor-friendly tactics for settlement show great prospects of emerging as neutral seats for International commercial arbitration. This would not only benefit the Indian lawyers in expanding professional opportunities but also encourage foreign lawyers/firms to arbitrate and expand their firm offices in the special zones, and subsequently in other parts of India.       An unfortunate aspect owing to which foreign lawyers are hesitant to practice in India is the painstaking practice of visa issuance as also expressed in the  Justice B.N. Krishna Report . On the other hand, jurisdictions such as Singapore, allow foreign lawyers involved in arbitration and mediation activities to get short-term visa passes at immigration checkpoints which are valid for a maximum duration of 60 days in addition to tax exceptions for non-resident arbitrators.   Conclusively, the report suggests that non-desirability of India as a seat for International commercial arbitration owing to its entangled arbitration regime. However, a special regime that enfeebles the applicability of the 1996 Act to some extent in addition to the proposed incentives of tax exemptions and visa relaxations to lawyers and arbitrators, SEZs will most likely act as icebreakers in attracting parties to India as desirable seats for international commercial arbitration in the future.   Looking Forward While the prospects discussed above are promising, they necessitate a certain degree of legal recognition. Currently, India lacks distinct guidelines and rules both within the SEZ Act and separately for efficiently conducting arbitration proceedings within SEZs. Recognising the need for a distinct arbitration regime within SEZs, as highlighted by the recently released arbitration report, it would be prudent for India to adopt a balanced approach similar to that of Dubai. Dubai ’s approach to framing such rules does not completely oust the applicability of general arbitration principles, such as the doctrine of party autonomy, fairness, and non-intervention by the courts. Further, it has recognized the intervention of DIFC courts in exceptional instances. Similar power could be bestowed upon the special arbitration divisions formed for facilitating arbitration within SEZs. Implementing similar reforms in GIFT City, to start with, would significantly enhance its appeal as an arbitration hub and reinforce the primary aim of attracting foreign investments by promoting confidence in the dispute settlement process. [1] Vrinda Gaur is a 4th Year law student from National Law University Lucknow.

Ishan Aryan and Gunjan Choudhary [1] INTRODUCTION The development of reputable and efficient alternate dispute resolution mechanisms is essential to the growth of global trade and commerce. This is directly responsible for the growing acceptance of international commercial arbitration. Given this, it should come as no surprise that arbitral rulings made in one nation are subject to enforcement by courts in another. Perhaps the foundation of the international arbitration structure is the simplicity of its enforcement. A jurisdiction’s appeal as a business destination is also greatly influenced by how simple it is to enforce arbitral rulings there. In the end, no company would want to do business with a party who owns property in a place where awards are difficult to enforce. In the dynamic world of commerce, disputes are inevitable. Efficient and reliable mechanisms for resolving such disputes are crucial for fostering the ease of doing business. In this context, arbitration emerges as a compelling alternative to traditional court systems. India, with its aspirations to become a global economic leader, has a strong incentive to be pro-arbitration and ensure minimal judicial intervention. Without a doubt, India has developed into a country that supports arbitration. This reputation has been enhanced by numerous court rulings and amendments to the Arbitration and Conciliation Act, 1996 (‘ The Act ’). However, the recent ruling in the case DMRC v. DAMEPL ( ‘DMRC case’ ) draws our attention to the dilemma of drawing a line between upholding valid arbitral awards ensuring minimum judicial intervention and disallowing enforceability of awards which blatantly the grounds set under the law. THE FIVE STAGES OF APPEAL The facts, briefly are that DMRC and DAMEPL were locked in a legal battle concerning the construction of an Airport Express line. DAMEPL blamed faulty construction by DMRC for operational issues and sought termination of the agreement. An arbitral tribunal ruled in favour of DAMEPL, awarding compensation. The arbitral award was eventually challenged at multiple stages mentioned below: First , the Single Judge Bench of the Delhi High Court ordered DMRC to deposit 75% of the award sum in an escrow account within a given time frame after they unsuccessfully contested the Award under Section 34 of the Act. Second , DMRC brought forth new, never-before-raised facts in an appeal filed under Section 37 of the Act at the Delhi High Court Division Bench. In 2019, twenty months after it was passed, the bench overturned the award on the basis that it violated Section 34(2A) of the Act due to patent illegality. In arriving at this decision, the Court interfered with the settled legal dispute, addressing novel facts and re-evaluating evidence and interpreting the contractual terms, which is contrary to the directive of Section 5 of the Act, which expressly prohibits such judicial interference. Third, DAMEPL filed a Special Leave Petition ( ‘SLP’ ) with the Supreme Court of India on behalf of the aggrieved party. Thirty-one months after the SLP petition was filed, the Supreme Court upheld the arbitral verdict in 2021. The Court cited Section 34 , coupled with Section 37 of the Act, which required a narrow scope for judicial action, in holding that arbitral decisions could not be interfered with and advocating for judicial caution when reviewing their legitimacy. Fourthly, this was followed by a review petition filed by DMRC which was dismissed and later at the Fifth stage, a curative petition filed under Article 142 of the Constitution of India wherein the court set aside the arbitral award on the ground of gross miscarriage of justice and perversity. THE BLATANT MISUSE OF THE CURATIVE JURISDICTION The Supreme Court’s use of curative jurisdiction is a major point of contention. This power is meant for exceptional cases involving fundamental flaws in the legal process. The curative jurisdiction of the Hon’ble Supreme Court is meant to be exercised only in the rarest of rare circumstances. The DMRC case, did not meet this high threshold. The court intervened and interpreted the provisions of the contract and this undermines the expertise entrusted to arbitrators chosen for their specialized knowledge in the relevant field. It runs afoul of the very basic tenets of arbitration by involving greater court intervention and prolonging dispute resolution while increasing the cost. The primary goal of the Act is to reduce the function of courts as supervisors in the arbitral procedure. Except in cases specifically authorized, Section 5 of the Act prohibits judicial involvement with regard to Part I, regardless of any current laws that may be in effect. Only in compliance with the provisions outlined in Section 34 of the Act may an application be filed to set aside an arbitral ruling. The curative jurisdiction was recognised for the first time in ‘ Rupa Ashok Hurra v. Ashok Hurra ’ case (‘ Rupa Hurra case ’) and was further solidified in later cases including ‘ Vineet Narayan & Others v. Union of India ’ and ‘ Union of India v. Union Carbide ’. It is important to note that amongst the cases where the curative jurisdiction was upheld or solidified, none of them were a commercial matter. The curative jurisdiction is certainly a bliss for civil and criminal cases, but the same principles should not apply directly in commercial matters especially in arbitration matters where the finality of award and minimum court intervention are the fundamental principles. ERRONEOUS APPLICATION OF TWO-LAYER TEST Regretfully, in spite of 2023 being a year of promise that solidified India’s standing as a globally arbitration-friendly jurisdiction, the Supreme Court swiftly rejected its own directive about minimum judicial intervention in the DMRC case. This was made clear by the Supreme Court’s alleged use of an infrequently exercised power to overturn a final ruling in which it appeared to have distinguished itself from the Tribunal and from its own earlier rulings by considering merits. Even more unexpected is the fact that the Supreme Court denied the review motion and exercised its jurisdiction three years after issuing the prior ruling. In the DMRC case, the Supreme Court thoroughly reviewed an arbitral award that had been made in DAMEPL’s favour on the basis of merits. The Supreme Court exercised its extraordinary power to revoke the award on the grounds of a “grave miscarriage of justice” after conducting a thorough review. However, the court disregarded its own guidelines, which were established in the Rupa Hurra case. Even though the decisions of the Supreme Court are not infallible, they are nonetheless final and should not be easily overturned. The Supreme Court ignored the two-layer test as laid down in Rupa Hurra case that supported the use of such authority. Initially, there has to be a a)     gross miscarriage of justice or b)    an abuse of process Secondly, the first test’s selected basis should be interpreted through the narrow prism of whether a)     natural justice principles have been broken or b)    if the bench was prejudiced The two-layer test immunized the decision-making process from consistently and mechanically exercising an extremely rare jurisdiction. The Supreme Court solely utilized the initial standard and subsequently exercised its curative authority, citing a severe injustice in light of ‘the extraordinary circumstances of this case where the arbitral tribunal has perverted the process of arbitration to provide an undeserved windfall to DAMEPL.’ By adopting this stance, the court neglected to conduct the second and equally crucial test, which asked if the previous ruling was prejudiced or violated natural justice principles. It is important to note that unless the conditions laid down in Rupa Hurra case was fulfilled, the court had no role in interfering with the award.  The execution proceedings of the award already were in place and as a result of the judgment, not only was the award set aside and the Supreme Court’s own judgment set aside, but DAMEPL was also ordered to reimburse the amount that had been paid to it during the execution of the award, including after the Supreme Court’s previous ruling. PATENT ILLEGALITY OR LATENT ILLEGALITY? A comprehensive interpretation of the UNCITRAL Model Law and Rules, the legislative intention behind the 1996 Act, Section 5 , and Section 34 of the 1996 Act would demonstrate that the grounds in Section 34 are the only ones that warrant judicial intervention in arbitral awards. It is settled principle of law that courts must rigorously adhere to and stay within the parameters of Section 34 of the Act when addressing petitions submitted under that section, abstaining from the appreciation or re-appreciation of factual or legal issues. There are various meanings for “patently illegal,” “blatant illegality,” or “error on the face of the record,” including: fundamental legal error; breach of a statute or the constitution; or inconsistency with common law. Patent illegality means - testing if there has been an abuse of the process of law or not. If the illegality is such that it requires scrutiny into the evidence, it is no more patent and it becomes latent. When a court sits for review of the award under Section 34 , this review is not an appeal . All the subsequent review stages under Section 37 , Articles 136 , 137 and 142 of the Constitution, are all limited to the grounds as laid down under Section 34 . This implies that even in subsequent review stages, re-appreciation of evidence or facts is not allowed. Unfortunately, in the DMRC case, the apex court has delved extensively into the facts and reconsidered evidence. The court relied on the case of Associate Builders v. Delhi Development Authority and held that the arbitral tribunal has ignored vital evidence and interpreted certain clauses of the contract in a manner that no fair minded or reasonable persons would arrive at. It is important to note that when the parties agree to submit their disputes to arbitration, they consciously make a decision not to avail the rights as provided for under court litigation. Party autonomy is a fundamental principle in arbitration and the parties voluntarily appoint arbitrators to adjudicate upon their dispute. The award shows that the arbitrators did consider the CMRS certificate but did not find it to be of much relevance in deciding the dispute. It is within the domain of the arbitrators to give more weightage to one piece of evidence over the other. Further, it is difficult to accept that a tribunal comprising of three technical members was not fair minded at all in their interpretation of the contract. The award delivered by the tribunal is final and binding and cannot be challenged just because the parties are not satisfied with the award. The grounds for challenge are very limited. In foreign jurisdictions including countries like France , Spain and Switzerland , the courts do not look at the merits of the award at all. The grounds in these countries relate to procedural review. The courts only look at the process by which the award was made, if it is erroneous then award may be set aside or referred back to the arbitrator. DISPUTE IN A PUBLIC-PRIVATE PARTNERSHIP: A NIGHTMARE The most compelling example of how the arbitration regime in India has fallen short of its primary goal of expeditiously resolving disputes is the torturous journey taken by a private party seeking enforcement of the arbitral ruling in a public-private partnership agreement. The delays can deter foreign private investors and paint India as a business-unfriendly state. In fact, the case would still proceed since the judgment passed by the Supreme Court would have to be executed. The arbitration proceeding has not attained finality almost ten years after the arbitration was called and more than six years after the award was made. Third parties perceive that when the government is a party, the system’s delays—both judicial and arbitral—seem to be made worse. Across the board, when the government is a party to a dispute, the project is usually very valuable and requires funds from taxpayers in the form of interest, time, or, frequently, investment. Interest accrued from public-private partnership delays entails tax payer funds and weakens and disincentives private investors from participating in significant Public Private Partnerships that can support the development of the country. Therefore, it is heavily on the system to make sure that disagreements between government parties—especially in public-private partnerships—are settled amicably and without appearing to indicate that the government is abusing its power. Courts should be aware that investors around the world are keeping a careful eye on high-value disputes. The effectiveness and legitimacy of the court procedures in India may be called into question if one ventures into unfamiliar legal territory while ignoring issues of res judicata or engages in factual inquiries on appeal.  The dilatory tactics being played by the government is also apparent from the amendment to Section 89 of the Metro Railways (Operation and Maintenance) Act, 2002, that was proposed by the Ministry of Housing. It is unacceptable for DMRC to have treated DAMEPL unfairly, as the company has been paying interest costs on a constant basis. Losses have also been incurred, and this has caused annoyance for vendors, lenders, and any subcontractors who may be involved in the project. The taxpayers, whom DMRC claims to serve, are, of course, the worst affected party. In the middle of all of this, the Government’s decision to modify the Metro Act is remarkable for the Indian democracy. In any case, the dispute settlement mechanism by itself gives the G-20 leaders a disincentive to consider rethinking their investment in India. The fact that international suppliers successfully sued DAMEPL for payment delays, fed up with the delays, shows how the issue can discourage foreign investments. For example, Siemens Aktiengesellschaft of Germany, a vendor of power supply, signalling, and train control systems, and Construcciones Y Auxiliar De Ferrocarriles , S.A. of Spain, a supplier of rolling stock to DAMEPL, both sued DAMEPL to recover amounts owed to them under the respective sub-contracts. They were awarded sums totalling INR 62 crores and INR 44 crores, respectively.  For temporary relief prior to execution, both vendors filed a case with the Delhi High Court. Following the SLP ruling, the High Court in both cases ordered DAMEPL to deduct the award amount owed to its international suppliers from the termination payment collected from DMRC. Unfortunately, despite repeated orders from the Delhi High Court, DMRC’s delay tactics—using dubious and repetitive petitions—have prevented DAMEPL from fulfilling its obligations in both cases. While discussing the government’s anti-arbitration moves, it is also relevant to mention the recent Guidelines issued by the Ministry of Finance. It is upsetting and confusing that the Ministry of Finance has directed government organizations, PSUs, and the like to forgo arbitration clauses in favour of mediation for disputes exceeding Rs.10 Cr. The arguments made in favour of the guidelines include lack of finality regarding delivery of the award and the long-time taken to resolve the dispute. It is interesting to observe such contradictory arguments made in favour of introducing the guidelines while in almost every case, it is the government that carelessly contests every award up to the Supreme Court due to their fear of ‘vigilance.’ HARMONIZING ARBITRAL AUTONOMY AND JUDICIAL OVERSIGHT The recent ruling by the Supreme Court in the DMRC case emphasizes the necessity of a formal framework controlling judicial intervention in arbitral verdicts. Therefore, a framework should be established to distinguish between situations that call for this kind of intervention and those that protect the integrity of the arbitration process. The framework needs to emphasize on the idea of “patent illegality” and should reaffirm that the only situations in which an arbitral award may be challenged are those in which there has been a breach of contract, the Act, or substantive Indian law. Guidelines should emphasize on the significance of respecting arbitral rulings unless they manifest blatant legal mistakes or transgress public policy. Guidelines should support the idea of minimal judicial intervention in arbitral awards, honoring the independence of arbitrators in construing the terms of contracts and the restricted role of courts in supervising arbitral rulings. Through various judgments, Courts have reiterated that there are only limited grounds which are available to challenge an arbitral award under Section 34 of the Act, and as far as the power of the subordinate courts are concerned, the Act does not allow them to ‘correct errors of the arbitrators’, but only to quash and set them aside leaving it to the parties to get the dispute resolved again by the arbitration tribunal or any other means. The same uniformity needs to be maintained in all the judgments and the intervention should only be done in the rarest of the rare cases. CONCLUSION The DMRC case sets a dangerous precedent. If courts can readily intervene based on their interpretation of contracts, parties unhappy with arbitral awards might increasingly seek judicial review. This could lead to protracted litigation, negating one of the key benefits of arbitration – swift resolution. It is noteworthy that in the DMRC case, the Supreme Court did issue a warning against routinely taking the curative path. Its re-appreciation of the reward based on merit, however, lessens the significance of its own caution. Even though a lot of the work gained in 2023 has been undone by this ruling, it will be interesting to observe how the Supreme Court handles its fallout. India aspires to be a global hub for commercial arbitration. This judgment, if not addressed, could damage that reputation. International businesses might become wary of entering into contracts with Indian entities if the finality of arbitral awards is uncertain. This dispute also highlights the need to stop government parties from abusing the system for expediting the due execution of arbitral awards in public-private partnerships, since DMRC is a joint venture between the State Government of Delhi and the Government of India, two of its principal shareholders. Indeed, excessive delays from judicial appeals possibilities give a perverse incentive for government parties to postpone implementation at the expense of public monies and infrastructure projects. Clear guidelines must be set to limit the extent of judicial interventions in order to prevent abusive appeals and ensure the timely execution of arbitral rulings. [1] Ishan Aryan and Gunjan Choudhary, both the authors are 4th year law students pursuing B.A.LL.B. from National Law University Odisha.

Riddhi Agarwal [1]   Introduction   Arbitration agreements in contemporary times incorporate pre-arbitral procedures to refer the said dispute to Conciliation, negotiation, and mediation . The latter has a flexible structure as compared to arbitration and allow parties to deliberate more freely and amicably in an informal setting. Arbitration clauses are also known as  “ mandatory arbitration ” since these are contractual provisions that guide parties to settle disputes through other methods before taking up arbitration. The position of MDR in India is ambiguous since High courts all over the country have different interpretations of the same. From an international perspective, the position of India is similar to that of English law as has been depicted in the case of Halsey , which opined that mediation or other dispute redressal methods should be encouraged but not forced. On the other hand, Australia , Hong Kong , and Singapore have a rigid stand that encourages strict adherence to Multi-tiered dispute resolution clauses before proceeding to arbitration or Litigation. Through this article, the author will explore the scope of Escalation clause in India by taking into consideration of judicial developments and changes brought in through the Mediation Act, of 2023. The author also suggests the Med-Arb approach as a legitimate and more efficient Alternate Dispute Resolution approach.   Legal stand on Multi-tiered dispute resolution clauses: Scope of good faith negotiations and mediations.   The position of escalation clause or MDR Clause has been ambiguous in India which gives great flexibility for its application but also creates confusion. In plenty of cases, courts nationwide have upheld the mandatory nature of multi-tiered dispute resolution clauses.   In the case of Nirman Sindia v. Indal Electromelts Ltd. , the Kerala High Court held that pre-conditions to arbitration are mandatory and parties cannot skip the prescribed mode of dispute resolution and jump to the second step without exhausting the first step. The Delhi High Court upheld this position in the case of Sushil Kumar Bhardwaj v. UOI .   It was held in Simpark Infrastructure (P) Ltd. v. Jaipur Municipal Corporation , that if an agreement prescribes a pre-condition or a multi-tiered dispute resolution clause, the requirements need to be fulfilled before approaching arbitration since if the steps are not being followed, the action will classify as pre-mature action, in a significant precedent set by the Bombay High Court in Tulip Hotels (P) Ltd. v. Trade Wings Ltd , the court acknowledged that pre-conditions to arbitration are mandatory. Parties must adhere to the procedure agreed on before approaching arbitration. Still, this condition depends upon the parties' intention and nature of such conditions.   However, in many recent judgments, the courts have taken a different stand and interpreted the escalation clause as discretionary. In the case of Demerara Distilleries Private Limited v. Demerara Distillers Limited , the agreement required a ‘mutual discussion’ before arbitration but this requirement was flouted by the other party and the application for arbitration was made without following pre-conditions to arbitration. The court in this case thought that the contention was not pre-mature and that mutual discussion or mediation before arbitration is discretionary. Therefore, based on facts the requirement was held to be discretionary. The courts have often interpreted escalation clauses as discretionary or empty formality. In the case of Quick Heal Technologies Limited v. NCS Computech Private Limited and M/S IMZ Corporate Private Limited v. MSD Telematics Private Limited ,  the court after looking into the circumstances and facts of the case held that the condition to arbitration is just an empty formality or unnecessary.   This position is being upheld by the Delhi High Court in the recent case of M/s Oasis Projects Ltd. v. the Managing Director, National Highway, and Infrastructure Development Corporation Ltd . In this case, Oasis Projects entered into a contract with NHIDCL and when disputes arose between both parties, Oasis Projects chose to invoke arbitration proceedings without adhering to pre-conditions to resolve the dispute. The counsel on behalf of NHIDCL relied upon the case of Sushil Kumar Bhardwaj v. UOI and Iron & Steel Co. Ltd v. Tiwari Road Lines , it was held in these cases that fulfillment of pre-conditions to arbitral proceedings is necessary, and if the procedure is not followed, a petition for arbitration would not be sustained.   According to the principle of ‘ The parallel consultation exception ’ established in Rajiv Vyas v. Johnwin , if the pre-arbitral consultation is not completed, it should not stop the parties from starting arbitration. Instead, they should be directed to continue negotiating at the same time as the arbitration procedure, even after it has started. This is because it would be irrational for a court to decline a referral to arbitration in the event of unsuccessful discussions, only to have the parties start the arbitration procedure anew. Another exception recognized by Indian courts is the Interim Relief Exception in which Indian courts have ruled that failing to conduct pre-arbitration consultation cannot be used to hinder a party from exercising their substantive rights by denying them access to urgent interim relief or thwart a party’s claim and make any future arbitration futile.   On the other hand, Oasis Projects relied upon section 77 of the Arbitration and Conciliation Act, 1996 (hereinafter, the Act of 1996), and stated that the conciliation process is not mandatory and does not bar petitioners from invoking an arbitration agreement. The court held that a conciliation clause cannot bind the parties since it is a voluntary process and hence indirectly escalation clause was declared as discretionary. It was also decided that any party could end the mediation process at any time. So, the Court agreed to hear the petition under Section 11 of the Act and chose a single arbitrator to settle the disagreement between the two sides.   Mandatory pre-litigation Mediation in light of The Mediation Act, 2023   One of the major features of the Mediation Bill, 2023 (hereinafter, the Act of 2023) was that it mandated ‘pre-litigation mediation’ under section 6 of the draft. However, this mandate as per the wording of section 5 (1) was done away with and introduced as a voluntary process under the Act of 2023. The purpose of mandated 'pre-litigation mediation' is for parties to acquire knowledge about the mediation process through sessions before initiating a lawsuit. Following the compulsory 'information sessions', either party is allowed to terminate and exit the procedure. Alternatively, if they like, individuals can choose to participate 'voluntarily'. If the intention is to provide required mediation, it may be more appropriate to refer to it as a mandatory pre-litigation information session on mediation.   Indian Courts have observed that mandating parties to engage in mediation will not impact the inherently voluntary nature of the process. In Afcons Infrastructure Ltd v. Cherian Varkey Constructions Co. (P) Ltd , the Supreme Court of India decided that if a judge finds there is a possibility of settling a lawsuit, except in certain cases, the parties involved may be required to engage in mediation. By virtue of Section 89 and Order 10 Rule 1A of the Civil Procedure Code.   Italy has been using required pre-litigation mediation as an experimental approach since 2011. Only the 'information sessions' are mandatory. Statistics show that since its establishment, the number of lawsuits filed has decreased, the rate of settlements has increased, and the usage of mediation has increased when compared to other European countries. India is currently confronting a crisis similar to the one that Italy encountered in 2013. Italy utilized a technique known as 'opt-out' mandatory mediation to handle its high number of pending cases. In 2010 and 2013, a law was enacted that compelled mandatory pre-litigation mediation for particular problems, such as those involving property partition and joint ownership, before filing a lawsuit. According to their opt-out approach, plaintiffs are not entitled to appear in Italian courts unless they can demonstrate that they participated in an initial mediation session that was unsuccessful. This Italian law has shown to be quite effective over time. But the same is not the case in India since s.24(c) of the Act of 2023 provides for termination of mediation by written consent of both the parties or even one party and there is no model that compels pre-litigation mediation in certain categories of cases, rendering MDR clause ineffective. Legal Framework for Med-Arb in India: A possible way out   Med-Arb is an amalgamation of the best features of both arbitration and mediation. In this, the parties first try to overcome their issues through mediation with the help of a third party who is neutral to both parties known as a mediator. If the mediation achieves desirable results then a settlement is being signed but if mediation fails in whole or relating to any particular issue then parties can further resolve it through arbitration wherein the arbitrator can same person who mediated the parties or any other person.   There is yet no legal framework that governs Med-Arb but many existing legislations such as the Act of 1996, the Act of 2023, and the Commercial Courts Act, of 2015 encourage Med-Arb in India.   There is yet no legal framework that governs Med-Arb but many existing legislations such as the Act of 1996, the Act of 2023, and the Commercial Courts Act, of 2015 encourage Med-Arb in India. In the case of Haresh Dayaram v. State of Maharashtra , it was observed by the Supreme Court that Med-Arb is a novel ADR technique that can be utilized to resolve complex commercial disputes. The Court further stated that Med-Arb can be conducted by retired judges who are experienced and knowledgeable in both mediation and arbitration. Recently Gujrat High Court on the occasion of 78thIndependence day inaugurated Med-Arb centre which would comprise of specially trained official trained by Gujrat State Legal  Services Authority (GSLSA). In the case of DMRC v. DAMPEl , the importance of shifting from traditional approach towards Med-arb was encourage since the Indian government's most current recommendations for arbitration and mediation in domestic public procurement contracts, announced in June 2024, reflect the country's changing dispute resolution landscape. These rules address the specific issues that government organisations encounter while emphasising the value of arbitration's speed, convenience, and finality. They also indirectly discourage the government from using arbitration to resolve public procurement disputes. Med-Arb is a potentially effective and increasingly popular ADR method in India. Its suitability depends on the parties' consent and the dispute's specific characteristics.    Conclusion The position of pre-arbitral procedures in India is open to wide judicial interpretation with pros and cons on a case-to-case basis. Making mediation and conciliation has benefits since parties would have more flexibility and can retain their relationship with each other. A legal framework to regulate matters related to the mandatory or directory nature of escalation clauses would be a step to de-clog the judiciary and facilitate a smooth process. [1] Riddhi Agarwal is a third-year student currently pursuing B.A LL.B (Hons.) programme at Rajiv Gandhi National University of Law, Patiala.