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- Harshit Batra[1] In 2021, we are living in a world that derives its meaning from a piece of paper - a transaction, a proof, or in the most legal terms of all – a shred of evidence. Tangible evidence has become a sin quo non to the happening or non-happening of an event. Our society with the bedrock of the legal community has come far on its way of development. The importance of contracts and legal documents cannot be overstated – they are the primary poof of the very fundamental principle of ‘consent’ – they are the palpable proof of existence and hence, mandated to establish any relationship, more specifically, a commercial relationship. For such reasons, the rigid concept of ‘consent’ is established through the contractual nature of parties to a commercial relationship and thus, becomes the non-consensual type in the absence of a contract. However, with the development of society and the legal community, the rigidity of this concept of ‘consent’ has loosened and has become wide enough to include consent through the conduct of the parties, the concept of which has now been deeply established in many jurisdictions. To act under a contract, or to suppress the obligations under a contract, the parties should be privy to the same, as is followed by the transnational principle of international law – for which, consent is primary. In the regional context, the Indian Contract Act, 1872 mandates free consent in a contract.[2] ‘Consent’ is also fundamental to the process of arbitration, i.e., as a principle, only the parties that have consented to arbitration can arbitrate.[3] For such purposes, this matter of consent has not been limited to a contract. The presence of a contract is no more a sine quo non to an arbitration process – i.e., arbitration can be held between such parties that have no written contract between them, where the intention to arbitrate is sufficient to exclude the presence of rigid contractual nature.[4] It is given to understand that an arbitration agreement is required for arbitration to commence. However, it should not mean to be understood that such an arbitration agreement requires a defined contractual relationship. The UNCITRAL Model Law specifies that the parties must submit to arbitration in a “defined legal relationship, whether contractual or not”.[5] As a general practice, the parties enter into a contractual relationship (with free consent) and agree to submit to arbitration in case of a breach of a contract. However, with no such strict requirement, it is often argued that making a person who has not entered into a contract (a non-signatory), a party to an arbitration is non-consensual and against the very fundamental principles of arbitration. It is for this reason that arbitration can be validated with consent and contractual nature between the parties. The non-consenting non-signatory vs. the consenting non-signatory There exists a grey area in the understanding of consent in making a non-signatory party to an arbitration proceeding. Thus, as a clear understanding must allow – a non-signatory can be made a party to the arbitration agreement as long as the party is ‘consenting’, which is independent of the contractual nature of the parties. The aforementioned conduct establishing consent plays a vital role here as the intention of the parties takes supremacy. Consent through contracts is not the only way of establishing this intention – It is a settled position that the intention of the parties can be gathered from the correspondences exchanged between the parties[6] dividing the consent in explicit and implicit nature.[7] While explicit consent[8] would mean the presence of an agreement which would make the parties both consenting and signatory – thus posing no issue. It is the latter that is established through the conduct of the parties and is treated as ‘implied consent’[9]. It should also be noted that consent acts as an exception to the transnational principle of privity of contract. Recently, the United States Supreme Court in GE Energy Powe Conversion France SAS, Corp. v. Outokumpu Stainless USA,[10] held that nothing in the New York Convention[11] or the domestic law (Federal Arbitration Act) prohibits courts from deciding that non-signatories may be bound by or enforce arbitration agreements based on contract, agency, equity or related principles. The Supreme Court referred to the drafting history of the New York Convention and concluded that: "Nothing in the drafting history suggests that the Convention sought to prevent contracting states from applying domestic law that permits non-signatories to enforce arbitration agreements in additional circumstances." The Court found that the New York Convention does not address whether non-signatories may enforce arbitration agreements under domestic doctrines such as equitable estopped and according held that "silence is dispositive here because nothing in the text of the Convention could be read to otherwise prohibit the application of equitable estoppel doctrines." To make a consenting non-signatory party to an arbitration, certain principles can be relied on: 1. Officious bystander principle: An outdated principle in the present yet an obvious choice. This test laid down in Southern Foundries (1926) Ltd. v. Shirlaw[12] has been used to imply anything into a contract that has not been expressed as is so obvious of its existence. MacKinnon LJ wrote, "Prima facie that which in any contract is left to be implied and need not be expressed is something so obvious that it goes without saying; so that, if, while the parties were making their bargain, an officious bystander were to suggest some express provision for it in their agreement, they would testily suppress him with a common 'Oh, of course!'".[13] The less usage of this test is because of the subjectivity of intention and thus the ‘consenting’ nature of the parties involved. Even with the obvious nature of the conduct of the parties, is still remains to be subjective because of no set or straight jacket formulae of understanding of a reasonable man. 2. Ordinary principles of contract and agency: The court of appeals of the second circuit in Thomson-CSF v. AAA[14] has observed that a non-signatory party may be bound to an arbitration agreement if so is dictated by the "ordinary principles of contract and agency" which were discussed to be the following and has been followed since: a. Incorporation by reference: Under this principle, an indirect relationship subsists. A non-signatory may compel arbitration against a party to an arbitration agreement when that party has entered into a separate contractual relationship with the non-signatory which incorporates the existing arbitration clause.[15] b. Assumption: Based purely on the conduct of a non-signatory may lead to an assumption of an obligation of the parties to arbitrate. The ‘intention to be bound’ is mandated under this principle. c. Agency: The simplest, least controversial circumstance in which a non-signatory may be bound by an arbitration agreement is when an agent executes a contract on behalf of its principal. It is well-settled, under all developed legal systems, that one party (an “agent” or similar representative) may in certain circumstances legally bind another party (a “principal”) by its acts.[16] d. Veil-piercing/alter ego: This principle binds the subsidiary with the parent due to a sufficiently close relationship which justifies lifting of the corporate veil to see the actual relationship. Authorities from virtually all jurisdictions hold that a party who has not assented to a contract containing an arbitration clause may nonetheless be bound by the clause if that party is an “alter ego” of an entity that did execute, or was otherwise a party to, the agreement. This is a significant, but exceptional, departure from he fundamental principle that each company in a group of companies (a relatively modern concept) is a separate legal entity possessed of separate legal rights and liabilities.[17] It was observed[18] that to apply the alter ego doctrine to justify the disregard of a corporate entity, the court must determine that there is such unity of interest and ownership that separate personalities of the corporations no longer exist, and that failure to disregard the corporate form would result in fraud or injustice. e. Estoppel: Based on the conduct of the parties, this rule estops the party from running away from arbitration by claiming to be non-signatory. However, for the purposes of law and equity, a person cannot enjoy the benefits through his conduct and wiggle out of the obligations. It was observed in Tencara[19] that when a non-signatory receives direct benefits from the arbitration agreement, he is estopped from escaping from his liabilities therein. Under this doctrine, there needs to be a close relationship between the parties (the non-signatory with the signatory) and the claims are intimately founded in and intertwined with the underlying contract obligations.[20] Other widely used principles: 1. Group of companies doctrine: An exception to the principle of privity of contract, the present doctrine binds the companies of the same group and considers them to have a single legal entity or uneréalitééconomique unique.[21]The inextricable connections between the companies makes them bound by any agreement executed by a signatory. Some commentators refers to the non-signatory, to be less than an obvious party.[22] This doctrine is akin to principles of agency or implied consent, whereby the corporate affiliations among distinct legal entities provide the foundation for concluding that they were intended to be parties to an agreement, notwithstanding their formal status as non-signatories.[23] It was first established through the case of Dow Chemical v. Isover Saint Gobai[24]and invoked in the Chloro Controls India case.[25] The Delhi High Court[26] has observed that to bind a non-signatory to an arbitration proceeding without its prior consent can be an exceptional case. The Indian Supreme Court in the Mahanagar case[27] has observed that the doctrine of a group of companies is applicable in instances of a direct relationship between the signatory and the non-signatory, direct commonality of the subject matter and the composite nature of the transaction. India bulls was recently bound on the principles of estoppel, group of companies doctrine and alter ego, amongst others.[28] 2. Third-party beneficiary: It is generally accepted that if a third party is bound by the same obligations stipulated by a party to a contract and this contract contains an arbitration clause or, in relation to it, an arbitration agreement exists, such a third party is also bound by the arbitration clause, or an arbitration agreement, even if it did not sign it.[29] Such a non-signatory is considered a third-party beneficiary. The Delhi High Court recently in Shapoorji Pallonji considered the question of compelling a non-signatory to and arbitration. Here, a contractor-initiated arbitration proceedings against the developer and its subsidiary on the basis of an arbitration agreement with the subsidiary. Considering the question of making the non-signatory subsidiary, it was observed that whether a non-signatory is a direct beneficiary of the contract containing the arbitration clause is material in determining whether the said beneficiary can be compelled to arbitrate even though it is not a signatory to the Agreement. However, this is coupled with the condition that such benefit should be direct and not indirect. 3. Guarantor: To bind a non-signatory under this principle, the relationship between the parties, the contractual language of the guarantee agreement has to be seen and the underlying arbitration clause will be significant in ascertaining whether the parties intended that the guarantor to be bound (and benefited) by the arbitration clause in the underlying contract.[30] The non-signatory banks are also seen to be made a party on invocation of a bank guarantee under a Section 9 petition[31]. In a very recent case, the Delhi High Court[32] compelled India bulls to arbitrate even when it was a non-signatory on the basis, inter alia, of issuance of bank guarantees. It was observed in Kotak Mahindra Bank Ltd. v. Williamson Magor and Co. Ltd. and Another,[33]that where there is a controlling agreement and also a separate guarantee of the performance of agreed obligations, it is simply not enough to say (1) that there is no arbitration agreement; or (2) that it is for the person invoking the guarantee to demonstrate the intention to be bound. If the Chloro Controls principle is applied, as explained in Cheran Properties,[34] the task is a two-step process. First, one must assess whether the guarantee is enfolded within the umbrella, master or controlling agreement. If it is, and the guarantor seeks to escape the arbitration agreement within the master agreement, the second step is for the guarantor to show that they are not bound and did not intend to be bound. 3. Subrogation: Under many national legal systems, there are circumstances where one party may be subrogated to the contractual rights of another party. This frequently occurs in the case of insurers, who may be subrogated to the rights of insureds. In these circumstances, the insurer is typically entitled to invoke (and is bound by) the arbitration provisions of the insured’s underlying contract (from which the subrogated rights arise).[35] This arises mainly in the insurance and reinsurance in which the subrogee "stands in the shoes" of the original party to the agreement containing the arbitration clause.[36] 4. Succession: The dominant trend in case law holds that an arbitration agreement is not only valid between the parties, but can also be relied upon against their heirs, their legatees, their assignees and all those acquiring obligations. The only exceptions are cases where the arbitration agreement is drafted in such a way as to exclude successors and assignees.[37] 5. Ratification: A non-signatory to an agreement may subsequently become a party to that agreement upon ratification.[38] Ratification can occur with regard to arbitration agreements, as well as with other forms of commercial contracts. Likewise, in the case of novation, a new contract generally replaces a previous contract and one of the original parties is substituted by a new party as per the new contract. The same choice-of-law rules that apply to guarantee/guarantor relations should also apply in the context of ratification. As has been mentioned above, making non-signatories a party to an arbitration is an exceptional circumstance that can happen with the applicability of the abovementioned principles. The Delhi High Court[39] has observed that whenever a non-signatory third-party denies liability and sets up a title in itself and such denial raises disputed questions of fact which cannot be adjudicated without trial, in such cases, Section 9[40] against third parties may not be invoked. There exists a reluctance in binding the non-signatories to arbitration because of the rigid approach to bind the parties on a contractual basis. However, as has been observed by the Hon’ble Supreme Court of India,[41] “[c]ourts have to adopt a pragmatic approach and not a pedantic or technical approach while interpreting or construing an arbitration agreement or arbitration clause”. [1] Harshit Batra is an Advocate and RERA Consultant practicing Pan India. His areas of expertise include Dispute Resolution, RERA litigation and Criminal laws. He is also the National Coordinator of the Youth Bar Association of India (Regd.) which is involved in actively filing several Public Interest Litigations. One of the current cases is where a plea has been made before the Hon’ble Supreme Court to formulate SOP mandating Pre-Litigation Mediation across India. Harshit has pursued a five-year integrated law degree from Guru Gobind Singh Indraprastha University. He then, went on to do an LL.M in Alternate Dispute Resolution from VIPS (GGSIPU). Additionally, he holds two P.G. Diploma courses in Corporate Laws and Management from Indian Law Institute (ILI) and in International and National IPR Law from The Indian Academy of International Law & Diplomacy (Indian Society of International Law). [2] Section 10, Indian Contract Act, 1872, Section 14, Indian Contract Act, 1872 [3] Benson Lim, Adriama Uson, Relooking at Consent in Arbitration, Kluwer Arbitration Blog, http://arbitrationblog.kluwerarbitration.com/2019/02/12/relooking-at-consent-in-arbitration/ [4] Thomson-CSF v. AAA, 64 F.3d 773 (2d Cir. 1994) [5] UNCITRAL Model Law, art. 7. [6] Enercon (India) Ltd. & Ors.v. Enercon GMBH and Anr., (2014) 5 SCC 1 (India). [7] Award in ICC Case No. 5721, 117 J.D.I. (Clunet) 1019, 1024 (1990). [8] Section 7, Arbitration and Conciliation Act, 1996 [9] Shapoorji Pallonji and Co. Pvt. Ltd. vs. Rattan India Power Ltd. and Ors. (07.04.2021 - DELHC) : MANU/DE/0645/2021 [10] GE Energy Powe Conversion France SAS, Corp. v. Outokumpu Stainless USA LLC: 140 S.Ct. 1637, 1640 (2020) [11] Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 10 June 1958) [12] Southern Foundries (1926) Ltd. v. Shirlaw, [1939] 2 KB 206. [13] Id. [14] Thomson-CSF v. AAA, 64 F.3d 773 (2d Cir. 1994). [15] Import Export Steel Corp. v. Mississippi Valley Barge Line Co., 351 F.2d 503. [16] Final Award in ICC Case No. 6268, XVI Y.B. Comm. Arb. 119 (1991). [17] Adams v. Cape Indus. Plc, [1990] Ch 433, 532 (English Ct. App.). [18] Oriental Commercial & Shipping Co., Ltd v. Rosseel, NV, 609 F.Supp. 75, 78 (S.D.N.Y. 1985). [19] American Bureau of Shipping v. Tencara Shipyard SpA, 170 F. 3d 349 (2nd Cir. 1999). [20] Sunkist Soft Drinks, Inc. v. Sunkist Growers Inc., 10 F.3d 753, 757-58 (11th Cir. 1993). [21] Anna Kombikova, “Extension of the Arbitration Agreement to third parties based on the ‘Group of Companies’ and ‘Piercing the Corporate veil’ doctrines” available at https://www.international-arbitration-attorney.com/wp-content/uploads/arbitrationlawkombikova_anna.pdf [22] William Park, Non– Signatories and International Contracts: An Arbitrator’s Dilemma, Permanent Court of Arbitration, (2009). [23] Final Award in ICC Case No. 6519, 2(2) ICC Ct. Bull. 34, 35 (1991). [24] Dow Chemical v. Isover Saint Gobain, ICC Award No. 4131, YCA 1984, at 131 et seq. [25] Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc., ( (2013) 1 SCC 641). [26] Magic Eye Developers Pvt. Ltd. v. Green Edge Infra Pvt. Ltd. & Ors., (CS(COMM) 1290/2018). [27] Mahanagar Telephone Nigam Ltd. v. Canara Bank & Ors, (2019 SCC OnLine SC 995). [28] Shapoorji Pallonji v. Rattan India Power Ltd (Delhi High Court, 07.04.2021). [29] Final Award in ICC Case No. 9762, XXIX Y.B. Comm. Arb. 26, 40 (2004). [30] W. Craig, W. Park & J. Paulsson, International Chamber of Commerce Arbitration, ¶5.10 (3d ed. 2000). [31] Section 9, Arbitration and Conciliation Act, 1996 [32] Shapoorji Pallonji v. Rattan India Power Ltd., (Delhi High Court, 07.04.2021). [33] Kotak Mahindra Bank Ltd. v. Williamson Magor and Co. Ltd. and Another, 2021 SCC OnLine Bom 305. [34] Cheran properties Limited v. Kasturi and sons limited & ors CIVIL APPEAL NOS 10025-10026 OF 2017 [35] Omağ, Merih Kemal, Türk Hukukunda Sigortacının Kanuni Halefiyeti, Istanbul 2001, p. 35 [36] Smith v. Pearl Ins. Co. Ltd., [1939] 1 All E.R. 95. [37] Award in ICC Case No. 2626, 105 J.D.I. (Clunet) 980, 981 (1978). [38] Kunal Mimani & Ishan Jhingran, “Extension of Arbitration Agreements to Non-Signatories: An International Perspective” Indian Law Journal available at https://www.indialawjournal.org/archives/volume4/issue_3/article_6.html [39] Avon Healthcare Services Ltd v. Trade international, (DB, 19.04.2021). [40] Section 9, Arbitration and Conciliation Act, 1996 [41] Enercon (India) Ltd. & Ors.v. Enercon GMBH and Anr., (2014) 5 SCC 1 (India).

-Aditya Rathore and Amit Chawla[1] 1. Introduction Investor-State Dispute Settlement (ISDS) is a legal provision in International Investment Agreements (IIAs) and the Bilateral/Multilateral Investments Treaties, aimed towards the resolution of disputes between foreign investors and the host-states. ISDS empowers the foreign investors to invoke arbitration against the host-states in the event they believe that the host government has violated the concerned investment agreements. As per United Nations Conference on Trade and Development (UNCTAD), the total number of ISDS cases surpassed the 1,000 mark in 2019[2] while as per International Centre for Settlement of Investment Disputes (ICSID), 838 cases have been registered under the ICSID Convention and Additional Facility Rules.[3] These figures are a clear manifestation of the increasing confidence of the foreign investors in the ISDS system and in particular, the ICSID. This confidence, as reposed by investors and the states in ISDS, largely draws from the arbitration’s ability to give a binding decision and thereby bring finality to the dispute at hand. This finality is not possible if the parties were to take the judicial recourse to resolve their dispute wherein, they need to climb the rungs of the ladder in form of several courts in the judicial hierarchy to reach a binding decision which can take years, if not decades. However, in the process of attaining finality, stakeholders have had to let go of their recourse to appealing the award, even if the award was based on errant reasoning. While ICSID does have an annulment procedure, prescribed under Article 52 of the ICSID Convention, the purpose it serves is very limited and comes nowhere close to an appeals facility. This lack of an appellate structure in ISDS, especially in ICSID, not only denies the parties the opportunity of appealing awards but also adds up to the fractured jurisprudence in investment arbitration by creating inconsistent awards on the same point of law. The authors, through this piece, will argue for the need for an appellate structure in the ICSID framework while discussing the finality vs correctness and consistency debate. The authors will further discuss the best possible option for an appellate structure in ICSID between a multi-lateral investment court or an appeals facility in ICSID. 2. Finality vs. Correctness & Consistency Proponents of international arbitration have time and again cited the important role played by institutions like ICSID in improving international cooperation and economic development all around the world. More so, the record number of cases for arbitration registered with ICSID also points in the same direction.[4] Nevertheless, this is not to say that opponents of international arbitration do not exist. On the contrary, institutions like ICSID are now under constant criticism for their perceived bias towards multinational corporations and the high costs associated with ICSID along with a lack of an appellate structure.[5] Several Latin American countries have already withdrawn from the ICSID Convention.[6] Amidst all the systemic issues (consistency in decisions, legitimacy and transparency, cost, etc.) highlighted time and again within ICSID, one issue that has always been at the center of the controversy is the lack of an appeals facility in ICSID. Amongst the international arbitration community, at the heart of the appeals facility question lies the finality vs. correctness and consistency debate. Members of the “finality” camp argue that ICSID arbitration removes the dispute from the hassle of the municipal courts and helps in providing predictability to the process.[7] Also, that the additional review system would impose heavy costs upon the parties and would also result in elongated proceedings. In addition to this, arbitrator bias against investors based on the notion that the state would have the power to appoint the arbitrator at the appellate stage and the additional caseload due to increased frequency of review appeals are some of the additional concerns associated with the appeal mechanism. On the contrary, members of the “correctness and consistency” camp argue that an appeal mechanism will help in bringing coherence and consistency to the already fragmented investment law jurisprudence.[8] An appeals facility can be an apt solution for keeping in check the constant inconsistent awards by the ICSID and other such tribunals on the same point of law. In CMS vs. Argentina[9] and LG&E vs. Argentina[10], tribunals in both these cases reached diverging conclusions over the validity of Argentina’s use of ‘state of necessity’ defence as an argument for the economic measures undertaken during the domestic downturn. The CMS tribunal had rejected this argument of the Argentine Republic whereas this argument, to a certain extent, was accepted by the LG&E tribunal. Similar instances of inconsistency in ICSID awards were observed in the SGS vs. Phillipines[11] and SGS vs. Pakistan.[12] These cases concerned themselves with textually similar umbrella clauses and the Tribunal had to determine whether the presence of an umbrella clause caused the breach of the contract into a breach of the treaty. Consequently, the tribunal in one of the cases held in the affirmative while in the other rejected the contention. These cases are an apt example of why the introduction of an appeals facility will allow for a smooth transition towards a precedent-based system which will help in ensuring consistency of jurisprudence as the decisions rendered could act as precedents in situations where two different awards are based on identical facts and legal principles and thereby increasing the legitimacy of the arbitral awards. As alluded to before, the ICSID does have an annulment procedure as well. Pursuant to an application for annulment under Article 52, an ad hoc annulment committee can annul the final award on the following grounds: (1) the tribunal was not properly constituted; (2) the Tribunal has manifestly exceeded its powers; (3) there was corruption on the part of a member of the Tribunal; (4) that there has been a serious departure from a fundamental rule of procedure; or (5) that the award has failed to state the reasons on which it is based. However, the constitution of an ad hoc committee, whenever an annulment application is made, has led to an extensive interpretation of the grounds of annulment[13] - Klockner vs. Cameroon,[14] Vivendi vs. Argentina[15] and MINE vs. Guinea[16] are such cases in point. Moreover, grounds for annulment are restricted solely to procedural irregularities and fail to take into account substantive measures like public policy. In fact, several questioned awards are not annulled because of the high standards set for the annulment procedure.[17] The high standard set for annulment procedure by the annulment committee concerns itself only with the legitimacy of the process in rendering the award. It has been observed that even if the awards are annulled, grounds are usually of wrong application of law rather than wrong interpretation of a correct law. Grounds such as failure to state correct reasons, erroneous interpretation of law, etc. are also not taken into account by the annulment committee. In comparison to annulment proceedings, an appeals facility will provide for a broader scope of review of an award (scope of review has been discussed in the next section).[18] In fact, investors and states alike, are perturbed by the fact that if they were to lose an ICSID arbitration based on erroneous reasoning, they will still have to comply with the award. Thus, to quell the rising discomfort amongst key stakeholders in ISDS, the authors believe that the establishment of an appeals facility in ICSID becomes pertinent. The methodology for the establishment of such an appeals facility will be discussed in the next section. 3. Multilateral Investment Court vs. Appeals facility The debate concerning the establishment of an appeal mechanism in ISDS can be traced the back to early 1990s.[19]Whereas it was only in 2004 when a proposal to establish an ICSID Appeals facility was tabled by the ICSID Secretariat which laid down a possible broad framework for the efficient implementation of the appeals facility.[20] Recently and more prominently, the United Nations Commission on International Trade Law (UNCITRAL) Working Group III has also been working on the ISDS reforms and has suggested: (i) establishment of a multilateral investment court and/or (ii) creation of an appeals facility.[21] The authors will also be making suggestions basis the UNCITRAL Working Group III reforms. 3.1. Multilateral Investment Court The rationale behind the establishment of a multilateral investment court (“MIC”) is the idea of setting up a permanent ICJ-like body that will be adjudicating upon appeals from all tribunals/institutions in ISDS. The establishment of MIC would be premised on a two-layered structure for dispute adjudication i.e., a first instance tribunal and an appellate tribunal which would comprise of permanent full-time members as the deciding authority on disputes referred. Sovereign states would be entrusted with the task of appointing the adjudicators and the non-state actors would be given the task of nominating or vetting the candidates. The members of the multilateral investment court would be expected to adhere to a strict code of ethical conduct while deciding disputes. Nevertheless, the composition and the functioning of MIC is fraught with criticism and concerns. The premise of MIC is based on the ground that the disputing party would have little or no role in appointing the arbitrators and the discretion to appoint the arbitrator rests solely with the state. This is in stark contrast to the principle of party autonomy which forms the backbone of arbitration and may also push the investor to lose confidence in the system. Concerning enforcement, the ISDS awards are enforceable in nearly every state however, if and when the MIC is constituted, it is highly probable that the setting up of MIC could disrupt the established procedures of enforcement of arbitral awards as there is no clarity on whether or not the awards rendered by MIC would be enforceable in jurisdictions that have not consented to MIC. 3.2. Appeals Facility A safer alternative to Multilateral Investment Court can be the establishment of an appeals facility within the ICSID Convention. In the normal course of proceedings in ICSID, an award made under the convention is binding on the parties and is not subject to any appeal and the only recourse available to parties is to file for annulment of the award. This can often lead to the party being left remediless, even if the award by the tribunal is based on an erroneous application of the law. However, an appeals facility within the ICSID would ensure that such questionable or faulty awards are subjected to an additional review and thus, providing the parties with an additional remedy. The appeals facility in ICSID can be based on the blueprint of WTO Appellate Body with an eminent pool of highly qualified and experienced arbitrators. An appeals facility, based on the lines of the dispute settlement system of WTO, would go a long way could help in dealing with the credibility crisis faced by the first instance tribunal. At this juncture, it is important to clarify that the establishment of an appellate body will not imply that the award rendered by the first instance tribunals lacks authority. In fact, the appeals facility by acting as a watchdog over the decisions rendered by the first instance tribunals will not only ensure that awards are rendered error-free but also will help in unifying the fragmented investment law jurisprudence. Nevertheless, this is not to say that the appeals facility is completely fool-proof and in fact, this set-up is also plagued with certain disadvantages such as the elongated costs and duration of proceedings, additional caseload due to filing of review applications, etc. Questions pertaining to the extent and standard of review of the appellate tribunal have also been raised. Critics have also time and again argued the merits of annulment provision over an appeals facility. In the humble views of the authors, an appeals facility is desirable as the ICSID annulment committee does not possess the power to rectify mistakes in the award despite identifying one. Also, as per Article 52(3) of the convention, the power to constitute the ad hoc annulment committee given to the ICSID Chairman without consulting the parties to the dispute raises pertinent doubts about the constitution of the ad hoc committee.[22] An appeals facility after taking into consideration the practical challenges can be a wise choice to tackle these issues. As regards the scope of review, the authors suggest that public policy should also be subject to appeal in addition to the grounds stipulated under Article 52. Public policy, one of the most important facets in any arbitration, has been excluded from the annulment grounds mentioned in Article 52 of ICSID when in fact, Article 34 of the UNCITRAL Model Law explicitly states that the arbitral award can be set aside if it conflicts with the public policy of the state. More so, whether the arbitral award violates public policy or not is a primary consideration for the national courts while hearing any appeals against the validity of the award. Additionally, the authors suggest that a de novo appreciation of law and facts at an appellate stage would result in elongated proceedings and impose a heavy cost on the parties. Hence, only manifest errors of facts along with errors of law should be subjected to appeal. The authors also suggest that the appeals facility could also explore a possibility to limit the scope of an appeal to certain facets of law such as principles of expropriation, non-discrimination, fair and equitable treatment etc. Also, subjecting only manifest errors of fact would accord a degree of deference to the conclusions reached by the first-instance tribunal and would help in reducing costs and delays. Manifest errors would also help in guiding the appeals facility in determining if errors based on facts for ex., dishonest testimony, failure to take into account any document etc. have influenced the decision of the first instance tribunal. This is also supported by the fact that The Comprehensive Economic Trade Agreement (CETA) entered into between EU and Canada which aims to bring the agreement in consonance with the Investment Court system also signifies the need for an appellate structure that would allow appeals based on issues of law and manifest errors of facts.[23] The WTO Appellate body also has a dedicated self-contained appeals mechanism however, appeals can only be instituted based on an issue of law and not of facts. The Appellate Body also has the power to uphold, modify and even reverse the findings of the panel but the annulment procedure under ICSID is only limited to the watertight provisions which run contrary to the scheme of WTO appellate body which provides appeals on substantive issues of law and also on errors in the interpretation of WTO provisions, if any. On the contrary, the ICSID Convention is only concerned with the legitimacy of the process even if it results in an error of law while the WTO appellate body is also tasked with the review of panel decisions if they are based on an error in interpreting any WTO provisions. In the humble views of the authors, despite the practical challenges posed by an appeals facility in ICSID, it remains a considerate choice as the parties would now have a remedy against awards that contain errors of law rather than just filing for an annulment of such awards. It would also help in ensuring consistency in the awards by setting up precedents for cases where the treaties are similarly worded and have identical facts. The appeals facility would help to enhance a great deal of confidence in the investment law system and would pave the way for a progressive investment regime. 4. Conclusion The authors, through this piece, have endeavoured to discuss the idea of establishing an appellate structure in the ICSID, while shedding light on possible pros and cons of such a procedure. The authors have discussed that the setup of an appellate structure in ICSID can either be fulfilled through the establishment of a MIC or an appeals facility in ICSID, however, both the setups pose their own set of problems. It suffices to say that a decision on establishing an appellate structure will involve a discussion from all the stakeholders of ICSID which in itself is a daunting task. As a matter of fact, the ICSID itself had abandoned the idea of establishing an appeals facility in 2005 (a year after it had initiated such a discussion) citing such an attempt as “premature”.[24] However, with the upsurge in economic investments and ISDS, the time has become ripe enough for the ICSID to not only reinitiate the discussion but also to take active steps towards the establishment of an appellate structure. [1] Aditya Rathore is a final-year student at NLU Odisha. He can be reached at rathore.aditya731@live.com. Amit Chawla is a law graduate and can be reached at­­­­ amit.chawla016@gmail.com. [2] UNCTAD, ‘Investor-State Dispute Settlement Cases Pass The 1,000 Mark: Cases and Outcomes in 2019’ < https://unctad.org/system/files/official-document/diaepcbinf2020d6.pdf> accessed 7 August 2021. [3] ICSID, ‘The ICSID Caseload-Statistics’ accessed 8 August 2021. [4] Pinsent Masons, ‘Record year for arbitration cases registered with ICSID’ accessed 8 August 2021. [5] Silvia Karina Fiezzoni, ‘The Challenge of UNASUR Member Countries to Replace ICSID Arbitration’ (2011) 2 BLR accessed 7 August 2021. [6] Nicolas Boeglin, ‘ICSID and Latin America: Criticisms, Withdrawals and Regional Alternatives’ (bilaterals.org, June 2013 ) accessed 9 August 2021. [7] ‘UNCITRAL Working Group III: Reforms in the Realm of Investor-State Disputes - UNCITRAL’s Proposals for an Appeals facility and Its Impact on Duration and Cost’ (Kluwer Arbitration Blog, 26 March 2020) accessed 9 August 2021. [8] Thomas W Walsh, 'Substantive Review of ICSID Awards: Is the Desire for Accuracy Sufficient to Compromise Finality' (2006) 24 BJIL 444 accessed 7 August 2021. [9] CMS Gas Transmission Company v. The Republic of Argentina, ICSID Case No. ARB/01/8. [10] LG&E Energy Corp., LG&E Capital Corp., and LG&E International, Inc .v. Argentine Republic, ICSID Case No. ARB/02/1. [11] SGS Societe Generale de Surveillance S.A. v. Republic of the Philippines, ICSID (W. Bank) ARB/02/6 [12] Societe Generale de Surveillance S.A. v. Islamic Republic of Pakistan, ICSID (W. Bank) ARB/01/13. [13] Christoph Schreuer, ‘From ICSID Annulment To Appeal Half Way Down The Slippery Slope’ accessed 29 August 2021. [14] Klöckner Industrie-Anlagen GmbH and others v. United Republic of Cameroon and Société Camerounaise des Engrais, ICSID Case No. ARB/81/2. [15] Compañiá de Aguas del Aconquija S.A. and Vivendi Universal S.A. v. Argentine Republic, ICSID Case No. ARB/97/3. [16] Maritime International Nominees Establishment v. Republic of Guinea, ICSID Case No. ARB/84/4. [17] Tai-Heng Cheng, ‘Reconsidering ICSID Awards’ accessed 31 August 2021. [18] Thomas W Walsh, 'Substantive Review of ICSID Awards: Is the Desire for Accuracy Sufficient to Compromise Finality' (2006) 24 BJIL 444 accessed 7 August 2021. [19] Albert Jan van den Berg, ‘Appeal Mechanism for ISDS Awards: Interaction with the New York and ICSID Conventions’ (2019) 34 (1) ICSID Review accessed 8 August 2021. [20] Secretariat, I.C.S.I.D., ‘Appeal Mechanism for ISDS Awards: Interaction with the New York and ICSID Conventions’ accessed 7 August 2021. [21] Secretariat, I.C.S.I.D., ‘Appeal Mechanism for ISDS Awards: Interaction with the New York and ICSID Conventions’ accessed 7 August 2021. [22] David Collins, ICSID Annulment Committee Appointments: Too Much Discretion for the Chairman? (2013), available: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2246756 [23] EU-CETA, Article 8.28.2 [24] Secretariat, I.C.S.I.D., ‘Suggested Changes to the ICSID Rules and Regulations’ < https://icsid.worldbank.org/sites/default/files/Suggested%20Changes%20to%20the%20ICSID%20Rules%20and%20Regulations.pdf> accessed 7 August 2021.

Swetalana Rout In a significant ruling of the Supreme Court[1], it has been decided that the scope of power of a Court is limited to the grounds under Section 34 of the Arbitration and Conciliation Act, 1996 [hereinafter “1996 Act”]. The Apex Court held that Courts cannot modify or vary an arbitral award and has no power to do so. It also highlights the remodelling of Section 34 in accordance with UNCITRAL Model Law on International Commercial Arbitration, 1985 [hereinafter “Model Law”]. Factual Matrix: A series of appeals arose before the Apex Court with respect to the notifications issued under the National Highways Act, 1956 [hereinafter “NH Act”] comprising of awards given by the Competent Authority based on the guideline value of the specific lands and not on sale deeds. As a result, , significantly lower amounts were granted by the relevant authorities. The arbitrator appointed by the government (District Collector) did not find irregularities in the compensation amounts and approved the same. However, after the award was challenged in the District and Sessions Court, the Judge enhanced the amount and in reality, modified the award. The High Court of Madras also affirmed the modification. Thus, the Apex Court had to decide whether the power of a court under Section 34 of the 1996 Act to “set aside” an award of an arbitrator would include the power to modify such an award. Opinion of the Court: The Apex Court took note of the fact that Section 34 is an appellate provision in nature and an award can be set aside only as per the grounds mentioned in subsections (2) and (3) of Section 34. It further held, “Quite obviously if one were to include the power to modify an award in Section 34, one would be crossing the Lakshman Rekha and doing what, according to the justice of a case, ought to be done. In interpreting a statutory provision, a Judge must put himself in the shoes of Parliament and then ask whether Parliament intended this result. Parliament very clearly intended that no power of modification of an award exists in Section 34 of the Arbitration Act, 1996. It is only for Parliament to amend the aforesaid provision in the light of the experience of the courts in the working of the Arbitration Act, 1996, and bring it in line with other legislations the world over.” Since it is the opinion of the Tribunal that counts to eliminate grounds of setting aside an award, it can be indicated by the Court hearing the Section 34 application. This particular provision is largely based on Model law, which gives no discretion to a Court to modify/vary an award. The Apex Court has also referred to some cases including McDermott International Inc. v. Burn Standard Co. Ltd.[2] and Dakshin Haryana Bijli Vitran Nigam Ltd. v. Navigant Technologies Pvt. Ltd.[3] The Mcdermott[4] judgement specifies that where the Court sets aside the award passed by the majority members of the tribunal, the underlying disputes would require to be decided afresh in an appropriate proceeding. Under Section 34 of the 1996 Act, the Court may either “dismiss the objections filed, and uphold the award, or set aside the award if the grounds contained in sub-sections (2) and (2A) are made out”. There is no power to modify an arbitral award. There have been a plethora of cases indicating that the High Court is instructive. In Cybernetics Network Pvt. Ltd. v. Bisquare Technologies Pvt. Ltd.[5], the Delhi High Court pointed out that courts cannot deal with claims in detail which are already decided on by the Arbitral Tribunal even if it appeared that the Tribunal/Arbitrator has erred in rejecting a few claims under the power given to the Courts under Section 34(4). Another judgement delivered by the Delhi High Court[6]held that under the Arbitration Act, a successful challenge can lead to setting aside of an award, which was distinct from the power of the court under the Arbitration and Conciliation Act, 1940 [hereinafter “1940 Act”], as per which an award could be modified. Additionally, the decision in Puri Construction P. Ltd. v. Larsen and Toubro Ltd.[7] was also taken into consideration, where the Delhi High Court, while reiterating the law laid down in McDermott,[8] held that the power to modify, vary or remit the award does not exist under Section 34 of the Arbitration Act. The Delhi High Court held that a Court modifying or varying the award, would in essence be correcting the errors of the arbitrator. The Court also referred to Gayatri Balaswamy[9], relied on by the Respondent, which held that Mcdermott[10]did not settle the issue of modification by Court under Section 34. The Court observed that the judgements relied upon in Gayatri Balaswamy were the modified awards in the exercise of powers under Article 142 of the Constitution of India.[11] Hence, this judgement was wrong in holding that the judicial trend shows that this provision has the power to modify, revise or vary an award. Another decision of the Madras High Court was highlighted to reiterate Mcdermott’s position that a modification is not possible under Section 34. Several other cases cited by the Respondent were also rendered irrelevant by the Apex Court since they were also passed in accordance with Article 142 of the Constitution[12] and did not constitute the ratio decidendi. Analysis of NHAI vs. M. Hakeem: To interpret the current judicial trend and reading Section 34 as a power to modify, revise or vary an award would be akin to bringing back the previous law under the 1940 Act to the limelight. It would lead to ignoring the fact that the 1996 Act was based on the Model Law and was remodelled accordingly. Section 34 has also been compared with the provisions for challenging an award under the Arbitration Acts across the globe in this decision. It is explicit that there are provisions exclusively in their legislations, that permit varying the award, unlike Section 34. Further, the Apex Court also held that to assimilate the Section 34 jurisdiction with the revisional jurisdiction under Section 115 of the Code of Civil Procedure, 1908[hereinafter “CPC,1908”][13] is fallacious. Since Section 115 of the CPC, 1908 sets out three grounds for entertaining a revision and states that the High Court may make ‘such order as it thinks fit’ which are clearly missing in Section 34, it is not possible to interpret the award that way. The legislative intent was also cleared out in this judgement. In the decision, ‘purposive construction’ was referred to by Bennion in his classic on Statutory Interpretation, re-affirming that it must be applied on the facts of this case as in legislations dealing with land acquisition, a pragmatic view is required to be taken and the law must be interpreted purposefully and realistically so that the benefit reaches the masses. Purposive construction of statutes, relevant in the present context, was referred to in a recent concurring judgment of Eera v. State (NCT of Delhi),[14] as the theory of “creative interpretation”. However, even “creative interpretation” has its limits. The legislators did not intend to use the word “modify” anywhere in Section 34 of the Act but what was contemplated is only to “set aside” an award passed by the Arbitrator if it falls within the realm of Section 34 of the Act. There are a number of case laws where NHAI has not filed an appeal arising out of the Section 3A Notification, resulting in several land owners getting away with more compensation given by the District Court. We cannot be blindfolded by the fact that the award is based on the “guideline value” relevant only for stamp duty purposes and completely ignoring the sale deeds which are a correct measure of the land value. The Court also acknowledged the fact that differential compensation cannot be awarded solely to achieve a different public purpose. The public purpose can be extremely commendable, but the legislature cannot say that the award for the differential compensation is to be paid depending on the same. Conclusion: As per the High Courts, there is a difference of opinion on the issue of modification of awards. Hence, the Hakeem[15]judgement lays down a significant rule since it clarifies the position of Section 34 that Courts can neither modify, revise or vary an award. This decision places importance on the minimal judicial interference of Courts which is the basis of any arbitration. This decision is also consistent with the legislative intent and the recent amendments made to the Arbitration Act, specifically Section 34. [1]National Highways No. 45E and 220 National Highways Authority of India v. M. Hakeem, 2021 SCC OnLine SC 473. [2] McDermott International Inc. v. Burn Standard Co. Ltd. , (2006) 11 SCC 181. [3] Dakshin Haryana Bijli Vitran Nigam Ltd. v. Navigant Technologies Pvt. Ltd., 2021 SCC OnLine SC 157. [4] Supra note 2. [5] Cybernetics Network Pvt. Ltd. v. Bisquare Technologies Pvt. Ltd, 2012 SCC OnLine Del 1155. [6] Nussli Switzerland Ltd. v. Organizing Committee Commonwealth Games, 2014 SCC OnLine Del 4834 [7] Puri Construction P. Ltd. v. Larsen and Toubro Ltd., 2015 SCC OnLine Del 9126. [8] Supra note 2. [9] Gayatri Balaswamy v. ISG Novasoft Technologies Ltd., 2014 SCC OnLine Mad 6568. [10] Supra note 2. [11] The Constitution of India, 1950, Article 142. [12] Id. [13] The Code of Civil Procedure, 1908, Section 115. [14] Eera v. State (NCT of Delhi), (2017) 15 SCC 133. [15] Supra note 1.

*Snehil Balani Understanding the Problem There is a constant wiggle between international arbitration proceedings and cross-border insolvency due to their opposite nature which often creates two extreme sides, in which none of them can be labelled as right or wrong. The intersection between the two can be seen more frequently in the times of covid as corporations and businesses were not able to comply with their international contractual obligations which led to international arbitration proceedings and on the other hand were not able to pay-back to the creditors which led to initiation of domestic insolvency proceedings against them. This led to parallel international arbitration and domestic insolvency proceedings against the same party. The conflict between the two was aptly explained by the Singapore Court of Appeal in the case of Larsen Oil and Gas Pte Ltd. v. Petroprod Ltd. (2011) as “Arbitration and insolvency processes embody, to an extent, contrasting legal policies. On the one hand, arbitration embodies the principles of party autonomy and the decentralisation of private dispute resolution. On the other hand, the insolvency process is a collective statutory proceeding that involves the public centralisation of disputes so as to achieve economic efficiency and optimal returns for creditors.” The intersection and conflict can be explained through an example: Party ‘A’ (residing in India) enters into a commercial contract for delivering certain goods to party ‘B’ (residing outside India). The contract contained an arbitration clause which provided that any or all disputes arising out of or in connection with the contract shall be finally resolved by arbitration in accordance with SIAC rules. The seat of the proceedings shall be Singapore and the contract shall be governed according to the laws of India. ‘A’ failed to comply with the contract and an arbitration proceeding is initiated by ‘B’ for breach of contract and damages. Subsequently, an insolvency proceeding by a different creditor in India against ‘A’ was admitted to CIRP and a moratorium is passed against ‘A’ under section 14 of the Insolvency and Bankruptcy Code, 2016 (“IBC” hereinafter). Now, a lot of questions arise in the present scenario, such as - Will the moratorium include a foreign seated arbitration within its ambit in order to stay the arbitration proceedings? No, in order to recognize foreign seated arbitration, there needs to be a pact between countries to recognise the same and India holds no such pact with other countries. But, it can be recognised on a case-to-case basis as illustrated in the further segments. - What are the possible repercussions that might arise if the arbitration proceeding is stayed recognising the insolvency proceedings in India? Possible repercussions include violation of party autonomy and pacta sunt servanda. - What are the repercussions if the arbitration proceeding is not stayed? It will go against the interest of the creditors and also against the principle of audi alteram partem which is one of the fundamental principles of natural justice. - Is there a mid-way? Ultimately, the probable solution regarding the conflict as addressed by different international organisations and networks was to recognise the insolvency proceedings moratorium in the interest of all the parties involved. Detailed analysis for the above points is covered in the following segments. Why Should Insolvency Proceedings be Recognised Under the International Arbitration? If the arbitral proceedings are continued and no stay is granted then it will be “contrary to the public policy of India”.Section 48(2)(b) of the Arbitration and Conciliation Act, 1996 (“the act” hereinafter) explains the term as: - Induced or affected by fraud or corruption; or - In contravention with the fundamental policy of Indian law; or - In conflict with most basic notions of morality or justice. The phrase ‘contrary to the public policy of India’ was further explained by the apex court within the context of section 48(2)(b) of the act in the case of Ssyangyong Engineering and Construction Co. Ltd. v. National Highway Authority of India (2019). It stated that “fundamental policy of law” includes principles of natural justice. This was in line with the judgment of Renusagar Power Co. Ltd. v. General Electric Co. (1994). Audi Alteram Partem (the rule of fair hearing) is one of the most basic principles of natural justice which states that rights/liberty/property of a person should not be affected without him being given a chance to represent himself and it was explained by the apex court in the case of Smt, Maneka Gandhi v. Union of India and Anr.(1978) as “even where there is no specific provision for showing cause, yet in a proposed action which affects the rights of an individual it is the duty of the authority to give reasonable opportunity to be heard”. If arbitral proceedings are conducted and an award is passed against party ‘A’ then it will affect his assets and property, in turn affecting the amount received by other creditors. Here, the rights and property of other creditors are being affected through the decision by the arbitral tribunal without giving them a chance for representing themselves, which will be contrary to the public policy of India and thus, unenforceable according to the laws of India under section 48(2)(b) of the act. The exception of public policy is also highlighted under Chapter VII of the UNCITRAL Model Law, Article V(2)(b) of the New York Convention. Why Should the Arbitration Proceedings be Given Effect and Insolvency Proceedings Not To be Recognised? There are multiple reasons as to why a stay should not be granted in the present example. If a stay is granted it will be “against the intent of the parties” which is one of the fundamental principles of international arbitration law. This principle has been highlighted by multiple courts and tribunal across the globe, for eg. by the Singapore court of appeal in the case of Insigma Technology Co. Ltd. v. Alstom Technology Ltd. (2009). The court held that “courts should construe an arbitration agreement so as to give effect to a clear intention evinced by the parties to settle their dispute by arbitration”. Stay in proceedings will also be against the principle of “pacta sunt servanda”. This is a common principle of international law which provides that “agreements must be kept”. In the present example, the agreement and intent of the parties to resolve any or all disputes arising out of the contract by arbitration would not be recognised if a stay is granted by recognising the insolvency proceedings. Also, the IBC extends to the whole of India according to Section 1(2) of it. So, the moratorium cannot have an effect on a Singapore seated international arbitration. Finding the Tryst This conflict between the two was explained by the U.S. courts in Re United States Lines Inc (1999) as “a conflict of near polar extremes: bankruptcy policy exerts an inexorable pull towards centralization while arbitration policy advocates a decentralised approach towards dispute resolution”. The issue between the two was attempted to be resolved by the UNCITRAL Model Law on Cross-Border Insolvency (“Model Law” hereinafter) which provides for a stay of arbitral proceedings under article 20 if, foreign insolvency proceedings have been recognised. Another attempt was made by the Judicial Insolvency Network (“JIN” hereinafter) provides to recognise cross-border insolvencies but only among signatory nations. Currently, 49 states have adopted the Model law and 16 jurisdictions have adopted the JIN guidelines. Thus, the conflict is tried to be resolved by putting a stay to arbitral proceedings and recognising cross-border insolvencies through the above-mentioned treaties. The problem in India is the non-adoption of such treaties in order to recognise foreign insolvency proceedings in India and vice-versa. Even though, Section 234 of the IBC provides for “agreements with foreign countries”, but it is not utilized for entering into bilateral treaties with foreign countries in order to recognise insolvency proceedings. Ultimately, recognition of insolvency can provide the best solution because it takes into consideration the interest of the larger group of creditors and is not limited to one creditor. Also, the person claiming the amount through arbitration proceedings (‘B’ in the present example) can get his remedy along with other creditors through the process of insolvency. This will ultimately help him to get his claim and not compromise with the interest of other parties. In the long term, the problem of recognition of cross-border insolvency for India can only be solved by adopting Model law and JIN guidelines. Until then, the short-term solution would be to recognise insolvencies on a case-to-case basis, keeping in mind the interest of all the parties. The same thing was done by NCLAT (National Company Law Appellate Tribunal) in the case of Jet Airways (India) Ltd. v. State Bank of India & anr. (2019). It recognised a Dutch foreign insolvency proceeding in India even without having a formal pact for recognition of insolvency proceedings between both countries. NCLAT did so by keeping in mind the interest at large which includes the interest of other creditors involved in the case. Even though, the case did not include an arbitration proceeding but this case provides the certainty that courts and tribunals can recognise foreign insolvency proceedings even without having a pact between the two countries. And this is what needs to be done until India adopts the Model law and JIN guidelines. Conclusion From the above analysis it can be concluded equality must be maintained among all the parties involved in a particular scenario (parties seeking arbitration and creditors seeking insolvency). Arbitration proceedings should not take away the rights of the creditors in the name of party autonomy and pacta sunt servanda. Arbitration proceedings should not be held at the cost of the interest of the creditors. By recognising moratorium, all the parties can seek their lending and damages under a same mechanism (insolvency proceedings) which is not detrimental to either of the parties. Thus, there is a need for optimum use of section 234 of the IBC in order to enter into agreements with foreign countries for recognition of cross-border insolvency proceedings and until then recognition can be done on a case-to-case basis.

-Rohan Gulati* INTRODUCTION The hotly debated and persisting conundrum of seat and venue of arbitration has been a canvas that has been painted with several strokes of paint [judgments]. Be that as it may, the fact that these paint strokes have been made by different brushes [different approaches and reasoning] is perhaps the perplexing aspect altogether. Somewhere between the fine margins, the enigma of exclusive jurisdiction clauses and forum selection clauses has garnered immense interest. Before deep-diving into the intricacies of the debate and a flood of judgments, it is indispensable to pause, take a step back, and highlight the most recognized principle of the seat of arbitration in the context of exclusive jurisdiction clauses. Simply put, in cases where a seat of arbitration is designated by the parties, the courts at the seat of arbitration will have jurisdiction in respect of all cases arising out of or in relation to such arbitration.[1] Such jurisdiction has been referred to as the supervisory jurisdiction of the seat court since the seat has been considered to hold the center of gravity.[2] Unfortunately, in the Indian jurisdiction, at times, contracts carry two different jurisdictional clauses, i.e., a clause that stipulates the seat of arbitration (commonly referred as the ‘exclusive jurisdiction clause’) and another clause that stipulates the courts that hold the jurisdiction in case of any dispute (commonly referred as the ‘forum selection clause’). These two jurisdiction clauses carry their distinct legal implications respectively but become dichotomous when included in the same contract. In an attempt to decode the afore-stated dichotomy, three different High Courts in India hand-picked three different brushes [different approaches] and each of them painted a different stroke on a brand-new canvas. The purpose of this article is to go stroke-wise [judgment-wise], identify the best stroke [the ideal and correct judgment], and highlight the stroke that hand-picked the wrong brush [the judgment that did not follow the correct law]. [Note: The words ‘exclusive jurisdiction’ and ‘seat of arbitration’ will be used interchangeably in the article.] THE FIRST STROKE The Hon’ble Delhi High Court (“Delhi High Court”) in the case of My Preferred Transformation and Hospitality Pvt. Ltd. v. Sumithra Inn[3] was confronted with a situation where a Management Services Agreement (“MSA”) stipulated that the courts of New Delhi would have exclusive jurisdiction insofar as the arbitration proceedings were concerned but the courts at Bangalore would have jurisdiction for all matters arising out of the MSA. The petitioner in the instant case had approached the Delhi High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 (“1996 Act”) and the respondent vehemently opposed the same on the ground that in accordance with the MSA, the courts at Bangalore had the appropriate jurisdiction to appoint an arbitrator under Section 11(6) of the 1996 Act. Thus, the Delhi High Court had to resolve the tussle between an exclusive jurisdiction clause and a forum selection clause, both stipulated under the MSA, and whether the Delhi High Court was forum conveniens. The Delhi High Court laid down 4 permutations and combinations that could arise in such situations (not limited to the MSA): · Cases in which the contract only contained a ‘forum selection’ clause, but no ‘seat of arbitration’ clause; · Cases in which the contract contained a ‘seat of arbitration’ clause but not a ‘forum selection’ clause; · Cases in which the contract contained a ‘seat of arbitration’ and a ‘forum selection’ clause and both clauses vested jurisdiction in the same court, or courts at the same territorial location; or · Cases in which the contract contained a ‘seat of arbitration’ and a ‘forum selection’ clause, vesting jurisdiction in courts at different territorial locations. [Note: In the afore-stated four scenarios, the Delhi High Court had used the words ‘exclusive jurisdiction’ which have been replaced with the words ‘forum selection clause’ to maintain consistency in the language throughout the article.] It was prima facie apparent that the instant case fell into the last category. The Delhi High Court then relied upon the judgment of the Hon’ble Supreme Court of India (“Supreme Court”), delivered in the case of Mankastu Impex Pvt. Ltd. v. Airvisual Ltd.[4] (“Mankastu Impex”), wherein the Supreme Court was confronted with an identical set of facts, albeit regarding an international commercial arbitration. The Supreme Court there had opined that since Hong Kong was designated as the seat of arbitration, the same would have precedence over the forum selection clause. Thus, following on the lines of Mankastu Impex, the Delhi High Court observed that merely conferring jurisdiction upon the courts at Bangalore would not mean that the Section 11 petition would lie before the High Court of Karnataka at Bangalore.[5] Additionally, by combining two pertinent aspects - first, there was no provision that specifically conferred jurisdiction, and second, the seat of arbitration was agreed to be New Delhi in the MSA - the Delhi High Court concluded that it would be vested with the jurisdiction under Section 11 of the 1996 Act. Whilst the stroke painted by the Delhi High Court appears to be with the correct brush, there is certainly more than what meets the eye. While answering the issue of jurisdiction, the Delhi High Court observed the following (emphasis added): “42. In the case of a domestic arbitration…the Court, having jurisdiction over the seat of arbitration, would be exclusively competent to entertain petitions under the 1996 Act, in exercise of its supervisory jurisdiction over the arbitral process, unless there is a separate clause conferring exclusive jurisdiction on a court in another territorial location, qua the particular provision which is in issue. If, in other words, in the present case, the MSA were to contain an exclusive jurisdiction clause, conferring exclusive section 11 jurisdiction on a court located elsewhere than at New Delhi, the situation may have been different. There is, however, no such specific exclusive jurisdiction clause; ergo, territorial jurisdiction, to entertain the present petition under Section 11 of the 1996 Act, thus, has to abide by the seat of arbitration which is, undisputedly, New Delhi.”[6] From a bare perusal, the Delhi High Court essentially highlighted that if a clause conferred a ‘provision-specific’ jurisdiction upon a ‘particular’ court, it would prevail over and above the exclusive jurisdiction (that designates the seat of arbitration). This observation may be in conflict with the existing landscape and lead to an anomaly even in the instant case or where contracting parties may wish for the Delhi High Court to adjudicate a Section 11 petition and for the Madras High Court to adjudicate a Section 34 petition, even when the seat of arbitration is Bangalore. This would effectively turn the exclusive jurisdiction clause entirely redundant. Therefore, the reasoning of the Delhi High Court that primarily conveys that a forum selection clause, if conferred with ‘provision-specific’ jurisdiction will supersede the courts at the seat of arbitration, seems to be largely flawed and inconsistent in light of the ratios in the case of BGS SGS Soma JV v. NHPC Ltd.[7] (“BGS Soma”) and Indus Mobile Distribution Pvt. Ltd. v. Datawind Innovations Pvt. Ltd.[8] (“Indus Mobile”). Both BGS Soma and Indus Mobile had similar issues and held that if there exists a clause that designates the seat of arbitration, it implies that the courts at the seat of arbitration would have the jurisdiction and the clause would thereby be akin to an exclusive jurisdiction clause. THE SECOND STROKE The second stroke on the canvas came from the Hon’ble Calcutta High Court (“Calcutta High Court”) in the case of Bowlopedia Restaurants India Ltd. v. Devyani International Ltd.[9] (“Bowlopedia Restaurants”). The case concerned a Section 9 petition that involved the question of jurisdiction - the courts at Kolkata were vested with the jurisdiction but the seat of arbitration was agreed to be at New Delhi. The Calcutta High Court framed the issue as: when there is a forum selection clause that stipulates a different court over the seat of arbitration, whether it would override the latter? Whilst answering the afore-stated issue in affirmative, the Calcutta High Court premised its ruling on two pillars viz., (i) the principle of party autonomy and (ii) a part of the cause of action arising within the territorial limits of the Calcutta High Court. That being said, the Court disregarded the essence and weight of the seat of arbitration in domestic cases and held that the significance of seat and venue is material to international commercial arbitration and not domestic arbitration. According to the Court, the seat of arbitration clause will be significant in a case where the forum selection clause is absent. In all other cases, party autonomy would dictate that the seat of arbitration clause be overridden by the forum selection clause as the courts at the forum will also hold jurisdiction over the subject matter.[10] The above decision is a classic example of throwing the baby out with the bathwater. The judgment, is without an iota of doubt, a bad precedent in the current regime. The Court considered the principles of jurisdiction as established under Section 20 of the Code of Civil Procedure, 1908 (“CPC”) to hold that since a part of the cause of action arose within its territorial limits, the Calcutta High Court would have the appropriate jurisdiction. On the contrary, as per the authoritative judgments in BGS Soma and Indus Mobile as discussed above, the seat of arbitration clause would firstly prevail over the forum selection clause and secondly, the courts at the seat of arbitration would have supervisory jurisdiction over the arbitral process. Pertinently, the principle of the cause of action is wholly irrelevant whilst determining a tussle between an exclusive jurisdiction and forum selection clause in an arbitration case.[11] The ethos of the decision in BGS Soma was primarily aimed at giving supremacy to the seat of arbitration over the traditional CPC approach of deeming the cause of action to be the center of gravity. Therefore, the decision in the case of Bowlopedia Restaurants completely derails from the existing line of decisions and sets a bad precedent in law. The Calcutta High Court seems to have not only painted a bad stroke on the canvass but also picked the wrong brush in doing so. It is hoped that the decision is revisited by a Division Bench of the Calcutta High Court and the judgment of the learned single judge is set aside to keep at bay the ghosts of the past. THE THIRD STROKE A Division Bench of the Hon’ble Bombay High Court (“Bombay High Court”) in the case of Aniket SA Investments LLC v. Janapriya Engineers Syndicate Private Limited[12] (“Aniket Investments”) delivered a landmark judgment and held that a choice of seat is in itself an expression of party autonomy and carries the effect of conferring exclusive jurisdiction to the courts at the seat of arbitration. The judgment arose as a result of an appeal from the decision rendered by the learned single judge and under a Section 9 petition filed before the Bombay High Court. The arbitration agreement stipulated that the seat of arbitration would be Mumbai. However, the forum selection clause stipulated that ‘subject to’ the arbitration clause, the courts at Hyderabad shall have exclusive jurisdiction. The learned single judge, the forum selection clause took precedence over the seat of arbitration, and whilst dismissing the petition, held that the courts at Hyderabad will be forum conveniens. Aggrieved, the petitioner appealed to a Division Bench that set aside the order of the learned single judge. Relying on the Supreme Court’s decision in Bharat Aluminum Company v. Kaiser Aluminum Technical Services Inc.[13](“BALCO”) and BGS Soma and approving the reasoning adopted in Indus Mobile, the Division Bench ruled that once the parties have selected a seat of arbitration, it would carry with it a conferment of exclusive jurisdiction over the entire arbitral process. The Bombay High Court categorically noted that one of the most pertinent aspects of BGS Soma was its clarification of the judgment in BALCO. Interestingly, the Bombay High Court also noted[14] that BALCO was often misconstrued in the sense that two courts at different locations could exercise jurisdiction i.e., concurrent jurisdiction however, BGS Soma authoritatively clarified this point that neither did BALCO promote concurrent jurisdiction of the courts nor did it divide two different courts as the cause of action court and seat court.[15] In accordance with BGS Soma, the Bombay High Court ultimately opined that since Mumbai was fixed as the seat of arbitration and the forum selection clause only being ‘subject to’ the arbitration agreement, courts at Mumbai would hold precedence in jurisdiction over the Hyderabad courts. Thus, the judgment of the Bombay High Court is perhaps the most lucid and authoritative insofar as the debate at hand is concerned. Not only does the judgment reflect a stance friendly to party-autonomy, it also follows the correct law and disregards any misinterpretations. As discussed, due to the conflicting nature of the judgments rendered by the Delhi High Court and the Calcutta High Court, it is imperative that the judgment of the Bombay High Court is followed as the proper precedent. In sum, the Bombay High Court seems to have hand-picked the best brush and painted the best stroke on the canvas. CONCLUSION Despite the landmark Supreme Court judgments and given the three conflicting precedents of different High Courts in India, the conundrum remains far from being settled at the moment. On one hand, the courts must take note of the interpretations that must be consistently followed after BALCO and then BGS Soma. On the other hand, arguing the conundrum between exclusive jurisdiction and forum selection clauses may be a litigating lawyer’s delight, albeit the outcome of such decisions may yield a bad precedent, as observed in the case of Bowlopedia Restaurants. Post the BGS Soma judgment, it had become amply clear that there remained no room for concurrent jurisdiction being exercised by two different courts with different territorial limits. The regime had always been structured to provide the courts at the seat of the arbitration the exclusive jurisdiction over the arbitral process. However, what has gone around has certainly come around. In the meantime, it is vital that the judgment in Aniket Investments is treated as the most valuable precedent concerning the dichotomy between exclusive jurisdiction and forum selection clauses. It would be appropriate to end with an observation made by the Bombay High Court in the case of Aniket Investments: “It is too late in the day, to contend that the seat of arbitration is not analogous to an exclusive jurisdiction clause.”[16] * Rohan Gulati is a Junior Staff Editor for the Arbitration Workshop Blog. He is currently a fourth-year law student pursuing B.B.A. LL.B. at Symbiosis Law School, Hyderabad. His primary area of interest is Alternative Dispute Resolution (ADR) with a specific focus on arbitration law. He can be contacted at rohan.gulati@student.slsh.edu.in [1] BGS SGS Soma JV v. NHPC Ltd., (2020) 4 SCC 234. [2] Bharat Aluminium Company v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552. [3] 2021 SCC OnLine Del 1536. [4] (2020) 5 SCC 399. [5] Supra note 3 at ¶ 40. [6] Id, ¶ 42. [7] (2020) 4 SCC 234. [8] (2017) 7 SCC 678. [9] 2021 SCC OnLine Cal 103. [10] Supra note 9 at ¶ 36. [11] Supra note 1 at ¶ 49. [12] 2021 SCC OnLine Bom 919. [13] (2012) 9 SCC 552. [14] Supra note 12 at ¶ 24. [15] Supra note 1 at ¶ 57. [16] Reliance Industries Ltd. v. Union of India, (2014) 7 SCC 603 at ¶ 45.

Shubham Gandhi[1] The arbitration agreement is principally governed by the terms as mutually agreed by the parties before entering into agreement, highlighting the principle of “Party autonomy”. The court usually is not allowed to alter or change the terms as agreed by the parties in the agreement. However, in a recent case of Northrop Grumman Ship Systems Inc. v. The Ministry of Defense of the Republic of Venezuela, the United States Court of Appeal had to decide whether one party to the arbitration agreement could request to relocate the seat of arbitration against the wishes of another. The doctrine of Impracticability stated that, if the court is of the view that the arbitration proceedings could not be carried out or it became impracticable to carry out at an agreed place, then the court has the power to change the seat of arbitration. The court stamped out two important questions in order to serve justice to the parties: (i) whether it became impracticable to conduct arbitration proceedings on the seat so agreed (ii) whether the alleged instance of impracticability can be reasonably foreseen by the parties before the agreement. The author in this post will analyse the judgment rendered by the court and application of the doctrine of Impracticability, analyse the aborning position of the international law regarding this rule and finally argue for the adoption of “interest of justice” in the advance to the doctrine. The Agreement: Brief Facts Huntington Ingalls, also known as Northrop Grumman Ship Systems Inc., (“Claimant”) a shipbuilding entity, entered into a $315 million contract with the Ministry of Venezuelan (“Ministry”), to repair two Navy frigates—ARV Mariscal Sucre and ARV Almirante Brion. The parties entered into a mandatory arbitration agreement, which stated that “Arbitration actions shall take place in Caracas, Venezuela.” However, in the year 2002, there were disagreements between both the parties regarding the cost overruns, which lead to the claimant filing a suit claiming injunctive relief, damages and enforcement of the arbitration clause before the Southern District of Mississippi. The claimant requested the district court to order arbitration in Mississippi instead of Caracas, which was initially agreed in the agreement. The request was then supported by the declaration indicating that arbitration would be impracticable in Caracas, considering the pressure on Venezuela courts exerted by the then 1999 Venezuelan government in wake of the “Bolivarian Revolution” caused by Hugo Chavez. The claim was further strengthened by a statement made by Manuel Gomez, a Venezuelan lawyer and law professor, stating that the Venezuelan government exerted various forms of undue influence on the Venezuelan judiciary, which led to Venezuelan Judiciary subject to immense political pressure and thereby lacking independence. He further asserted that this political pressure resulted in direct influence of government over the arbitration matters being conducted in the State. After a series of arguments over the relocation, the Tribunal concluded that the legal seat of the arbitration should be changed to Rio de Janeiro, Brazil, in order “to safeguard the neutrality and integrity of the arbitration proceedings”. The tribunal awarded $128 million in favour of the claimant. When the claimant filed an application to enforce the arbitral award, the Ministry opposed the award on the ground of manifest arbitrariness evident from changing the seat of arbitration than otherwise agreed. Thus, the appeal was considered. The Court of Appeal Judgment While adjudicating on whether change of seat of arbitration was justified on the ground of doctrine of impracticality, the court considered the two following contentions. ● Condition in the country made the arbitration Impracticable The court while adjudicating the extent of the word “impracticable” relied on the precedent of McDonnell Douglas Corp. v. Islamic Republic of Iran, wherein it was held that the arbitration would be impracticable if arbitration would be so gravely difficult and inconvenient that the party would be for all practical purposes deprived of its day in court, leading to violation of natural justice principle i.e. “audi alteram partem”. Thereby in such circumstances, the court of law is justifiable to consider the request for change in a seat of arbitration accordingly. The court in the present case, followed the reasoning laid down in McDonnell judgment, and held that, due to the revolution, the Venezuela government is exercising undue influence on the judiciary and this restrains the court from functioning in a just manner, making the judicial function impracticable. Thereafter the court in the present case held that “performance may be impracticable because of unreasonable difficulty, expense, injury, or loss to one of the parties involved.” The court further relied on Menendez Rodriguez v. Pan Am. Life Ins. Co., wherein it was held that, Cuban refugees could not access justice after the revolution which made the judiciary a body in control of the government. The court in the present case considered the situation similar to one discussed and relied on the statement made by Manuel Gomez, stating that the arbitration in revolution time is not possible. ● Parties reasonably cannot foresee such situation (Unforeseability) Unforeseability, in the words of the court, denotes that “the affected party must have had no reason to know at the time the contract was made of the facts on which he later relies”. Since no counter assertion was made by the Ministry, the court, relied on the statement of Mr. Gomez who stated that the deterioration of independence of the Judiciary came in the aftermath of the Bolivian Revolution which saw over 100 judges being summarily sacked and replaced within fortnight, and accepted the submissions of the claimant. The court ultimately concluded that the changes made thereafter were not reasonably foreseen by the claimant. International viewpoint on change of seat of arbitration The rules regarding the doctrine of Impracticability was subject to debate in 64th Session of the Institute de Droit International, wherein the proposal made by renowned Prof. Arthur von Mehren that, “if a State renders it unduly difficult to carry on an arbitration on its territory, the arbitration tribunal is entitled to remove the arbitration to such place as it may decide”, was accepted with a majority. In light of it, Article 3(d) came into force, which substantially laid down the rule regarding change in the seat of arbitration. The article stated: “Should it become unduly difficult to carry on an arbitration at the agreed place, the tribunal is entitled, after consultation with the parties, to remove the arbitration at such place as it may decide.” The striking question raised by Von Mehren in the session was about the body who had the final authority to decide the matter. In order to answer the point, Prof. Pierre Lalive, in his work, very vehemently submitted that no one has the authority to change the seat of arbitration. As per his understanding the arbitration tribunal should be equipped with the power to decide the change in seat of arbitration. However, it is also noted that no arbitration institution contains rules regarding the change of the seat of arbitration which does not lead to the conclusion that no one has the authority to change the seat of arbitration, rather, in the present case, the US court changed the seat of arbitration by applying the doctrine of Impracticability. Arguing for “Interest of Justice” Principle In addition to the elements of Impracticality laid down in Northrop Grumman v. Venezuela, the author would like to submit that there should be one more criterion in deciding the request of change in the seat of arbitration. The author believes that the principle of “in the interest of justice” should also be added to the doctrine of Impracticability which shall be construed ‘narrowly’ while doing absolute justice. In Ali Shipping Corp v Shipyard Trogir, the English court preferred the “interests of justice” principle as it is narrower as compared to the “public interest” exception. The party to the agreement must bring forth the cogent argument in order to prove that conducting the proceedings at the venue will be against the principle of justice and that it should be rectified by the courts. There may be instances like natural calamity, practical impossibility, the government has substantial influence or the courts are already biased towards the government, as observed in the present case, where the arbitration proceedings cannot take place and if they does, it shall be against the interest of justice. Concluding Remark The court in the present case has moved away from the traditional perspective, giving a new interpretation to the doctrine of Impracticality. The court stated that impracticality not only signifies impossibility of performance, but also interpreted the impossibility of performance of judicial function in an impartial way as a constituent of doctrine of Impracticability. While applying the doctrine they relied largely on the submissions made by lawyers and academicians from Venezuela. The seat or place is a part and parcel of an arbitration agreement (pacta sunt servanda) and should be respected. But an arbitration agreement is always subject to the general principle of contract law and therefore the rule of rebus sic stantibus; changed circumstances must be duly considered and be implemented to further the cause of justice. That being said, a new ground of “in interest of justice” should find its place in the existing doctrine. [1] Student of Dharmashastra National Law University, Jabalpur.

Umang Bhat Nair[1] Arbitration today, as a means of consensual dispute resolution, can be likened to a game of football where the arbitration between the parties is the ball. The parties together form one team, both agreeing to ‘score a goal’ by solving their differences. The dispute between the parties is the other team, that tries its best to prevent the parties from reaching their goal. The arbitral tribunal is the unbiased referee that conducts the game, ensuring that there are no fouls or illegalities and gives a final decision on matters in dispute. The lex arbitri, or the law of the arbitration, forms the boundary line of the field that demarcates the playing area. Parties may agree to arbitrate their disputes in any manner as long as they remain within the confines of the Arbitration & Conciliation Act, 1996 (“the Act”) (assuming the arbitration is India-seated). Finally, the arbitral institution chosen by the parties plays the role of coach or manager of the team. It helps parties resolve their differences efficiently, much like a coach would advise teams on efficient ways of scoring a goal. While a coach may heavily influence the strategy of a football team, at the end of the day, he merely plays an advisory role and the actual strategy implemented is left to the players in the field. Similarly, an arbitral institution plays a facilitative role, allowing parties to choose innovative methods to help have speedier dispute resolution, but, at the end of the day, playing only an advisory role. Ideally, an arbitration runs smoothly with each participant mentioned playing its intended role. However, issues arise when one participant strays from the assigned role. For example, if a referee were to start taking biased calls contrary to his assigned role, he would be challenged, and the game would not proceed. Similarly, an arbitration would not proceed if an arbitrator uncharacteristically became biased towards one party. In the same vein, arbitral institutions are also meant to be mere facilitators of an efficient dispute resolution. Today, we see frequent innovative additions to Rules by institutions wishing to set themselves apart from others in a bid to attract more customers. While such innovations are welcome, problems arise when institutional innovations overreach themselves by going against the mandatory provisions of the lex arbitri. For example, the Indian arbitration community waits with bated breath for the Supreme Court’s decision on whether orders passed by an emergency arbitrator are enforceable under the Indian Arbitration Act.[2] As will be elaborated on later in this article, the primary reason for multiple rounds of litigation on this issue is a conflict between an offering of an arbitral institution and the provisions of the lex arbitri. When it comes to the lex arbitri, it must be kept in mind that it is much more than mere procedures written down that may be opted out of by party agreement. The lex arbitri answers more substantive questions as well – arbitrability of a dispute, denial of enforcement due to public policy of the enforcing country etc… When parties submit to arbitration seated in a particular country and agree to the application of said country’s arbitration law, they must abide by the law’s mandatory provisions. In this article, the author shall highlight how we are seeing a change in the role of arbitral institutions today that is overshadowing the provisions of the lex arbitri in the name of party autonomy. The author shall substantiate this argument by analysing two institutionally unique offerings: (1) Joinder procedures and (2) emergency arbitration. The focus of this article shall be on arbitrations seated in India with Part I of the Act applicable. Laying the Theoretical Groundwork Before analysing the tussle between institutional rules and the lex arbitri, the author shall lay the groundwork for the same. In Bhayana Builders Pvt. Ltd. v. Oriental Structural Engineers,[3] the Delhi HC has comprehensively highlighted the principle of party autonomy embodied in various provisions of the Act including Sections 11(2), 13(1), 19(2), 20(1) and 22(1). The Act has a two-tiered approach to determining procedure. The first tier consists of party agreement. In the absence of party agreement, recourse is taken to the second tier, and the tribunal/ court is empowered to step in and determine procedure. For example, if parties do not agree under Section 19(2) on the procedure to be followed by the tribunal, Section 19(3) then empowers the tribunal to conduct the proceedings as it deems appropriate. Party agreement to adopt institutional arbitration and consequently, institutional rules is a first-tier approach. This is by virtue of Section 2(8) of the Act. Section 2(8) reads, “Where this Part – a) Refers to the fact that the parties have agreed or that they may agree, or b) In any other way refers to an agreement of the parties, That agreement shall include any arbitration rules referred to in that agreement.” It must be noted that the provision specifically allows for institutional rules to be read in only where Part I of the Act refers to party agreement. With this theoretical grounding, the article shall now discuss how certain institutional innovations overreach and overshadow provisions of the lex arbitri that weren’t meant to be interfered with by party agreement. Joinder Provisions The 2016 SIAC Rules[4] stand out when in many aspects in terms of offering unique procedural mechanisms for parties wishing to arbitrate. One such example is SIAC’s comprehensive joinder provisions found in Rule 7 of the SIAC Rules. Rule 7 lays down the procedure for joining additional parties to the proceedings. This procedure is attractive for those cases in which the parties to the dispute wish to join another party to the ongoing arbitration instead of filing for a fresh arbitration. If such a request for joinder is accepted, the arbitration becomes a multi-party arbitration which then raises a whole set of additional concerns. For example, multi-party arbitrations lead to complexities in the formation of the arbitral tribunal.[5] In the context of the SIAC Rules, it is a concern as to how tribunal constitution would take place in situations envisaged under Rule 7.10 read with Rule 7.12. Rule 7.10 deals with joinder of a party post Tribunal formation. If the joinder is granted, Rule 7.12 states that, “any party who has not nominated an arbitrator or otherwise participated in the constitution of the Tribunal shall be deemed to have waived its right to nominate an arbitrator or otherwise participate in the Tribunal’s constitution…” This results in a situation wherein the newly joined party is automatically deemed to have waived its right to partake in the constitution of the tribunal since its co-claimant/ respondent has already done so. This is troublesome, especially for India-seated arbitrations. Indian Courts have held that principles of fairness and equality of parties’ trumps party autonomy when it comes to the constitution of the arbitral tribunal.[6] For example, the Apex Court in its watershed judgement in Perkins Eastman Architects DPC v. HSCC (India) Ltd.,[7] found that appointment by one party of a sole arbitrator violates equality and such a clause shall be invalidated regardless of party agreement. The Court further distinguished cases involving a three-member tribunal since any right of one party to appoint was counterbalanced by the right of the other to appoint its own arbitrator. However, it is the author’s submission that in cases such as those discussed above in the context of SIAC joinders – the principle of equality between parties would stand violated. It is not necessary that co-claimants or co-respondents shall have similar interests in the arbitration and clubbing them together for the purposes of a single appointment would violate party equality.[8] Prof. Martin Hunter, a prominent international arbitration practitioner, states, “when I am representing a client in an arbitration, what I am really looking for in a party-nominated arbitrator is someone with maximum predisposition towards my client, but with the minimum appearance of bias.”[9] When keeping this in mind along with the fact that all parties may not have similar interests in the arbitration – it is necessary to allow each party an equal influence in the composition of the tribunal to maintain equilibrium between all parties. By waiving one party’s right to participate in the constitution of the arbitral tribunal, that party shall have no avenue to have a say in the composition of the decision-making body of the arbitration. The principle of party equality is also reflected explicitly in Section 18 of the Act which mandates that the parties shall be treated equally in the arbitral proceedings. As Section 21 of the Act read with Rule 3.3 of the SIAC Rules makes clear, the proceedings begin as soon as the Notice of Arbitration is received by SIAC and therefore Section 18’s mandate would include the Tribunal formation stage. Therefore, it is seen that the institutional joinder provisions directly conflict with established principles of the Act by automatically waiving the right of one party from having any say in tribunal formation. Emergency Arbitration Emergency Arbitration is offered by numerous institutions, the HKIAC and SIAC being two notable examples. An in-depth analysis on the history and jurisprudence of Emergency Arbitration in India has been covered on this platform earlier.[10] The present article argues that, irrespective of how the Amazon-Future dispute is settled by the Supreme Court,[11], while orders by an Emergency Arbitrator is attractive as a concept, it goes against the spirit of the Act. The author supports this argument by putting forth two important considerations: First, In M/s Deep industries Limited v. Oil and Natural Gas Corporation Limited and Anr.,[12] the Supreme Court has held that the Act is a “self-contained” and “exhaustive” code dealing with arbitration. It carries with it a negative import that it is necessary for an act to be mentioned in the Act for it to be permissible by law.[13] Section 2(1)(d) of the Act, which defines an arbitral tribunal, does not expressly include an emergency arbitrator. Even after the 246th Law Commission Report specifically called for an amendment to include ‘emergency arbitrators’ in Section 2(1)(d), the Government of India did not do so in its multiple amendments 2015 onwards. Moreover, attempting to equate an emergency arbitrator to that of a tribunal would be inappropriate given that his role is transient with his authority ceasing to exist upon constitution of the tribunal. If an emergency arbitrator is indeed equated to an arbitral tribunal, what is happening is different arbitrators are taking the reins of the proceedings at different points in time. Given that the Act does not in any way permit the appointment of temporary arbitrators, emergency arbitrators cannot find a place within its provisions today. Second, Under Section 5, the Act allows for intervention by an authority other than an arbitral tribunal only as permitted – Reference to arbitration (Section 8), interim measures (Section. 9), tribunal appointment (Section 11), Court-assistance for evidence (Section 27) and Setting Aside/ enforcement of Award (Sections 34 and 36). Section 17(2) of the Act states that orders passed by the tribunal granting interim relief is to be deemed a Court order for all purposes. While it is true that a single judge bench of the Delhi HC has enforced an emergency arbitrator’s order under Section 17(2),[14] the author argues that this was incorrectly done. Relief by an Emergency Arbitrator cannot be enforced as akin to that of interim relief under Section 17 of the Act as this would be extending the scope of the provision which is against the ‘exhaustive’ nature of the Act. Section 17 is not one of the provisions attracted under Section 2(8) where parties may agree to incorporate institutional rules and amend its working. By introducing the concept of an Emergency Arbitrator into Section 17 by mere agreement to certain institutional rules – what is happening is that a pure creature of contract (the Emergency Arbitrator) is being vested with powers equal to that of a Court when it comes to passing enforceable orders. Unlike an arbitral tribunal that finds regulation in the Act (for e.g., in Section 12), the Emergency Arbitrator is left completely unregulated under the Act. Importantly, there is no indication in the Act itself that the term “arbitral tribunal” as used in provisions such as Section 16 and 17 intended to include Emergency Arbitrators. Given the self-contained exhaustive nature of the code coupled with the exclusion of sections 16 and 17 from the scope of Section 2(8) of the Act, it would be directly against the Act’s framework to allow Emergency Arbitrator’s orders to be enforced via section 17. Therefore, we see another example of how the parties’ choice of institutional rules leads to conflicts with the lex arbitri. The author must clarify that while Emergency Arbitration is a welcome step in dispute resolution, the Act needs to be amended before an order passed by an Emergency Arbitrator can be validly enforced. Enforcing the order under Section 17 of the Act as it reads today would be an interpretational overreach against the framework of the Act. Conclusion In this article, the author has demonstrated how the lex arbitri, specifically the Indian Arbitration Act is being hammered, with the nail being institutions and their inventions, and the hammer being party autonomy. As explained in the section discussing the Supreme Court’s decision in Perkins Eastman, the Supreme Court has clearly shown a primacy accorded to equality between parties. Even in the face of party agreement saying otherwise, the top court struck it down in favour of party equality. Hence, while institutional innovations are welcome, parties need to keep in mind that party autonomy itself is granted to parties under the Act and much like how a football is not permitted to leave the field’s boundary, parties cannot exercise party autonomy to step outside the mandatory provisions of the Act While suggesting an institution for arbitration, clients may be advised to opt out of institutional offerings that are likely to lead to longer bouts of litigation when any order or award comes for enforcement to India. This would allow parties to opt for the best institutions to handle their arbitration while at the same time precluding additional challenges by recalcitrant counterparties. In addition, courts must be careful to not stretch the text of the Act’s provisions during interpretation to the extent that the very spirit of the Act is defeated. Finally, institutions must ensure that any developments in their offerings are not used by parties to undermine the provisions and spirit of the lex arbitri. [1]Umang Bhat Nair, fourth year student of NALSAR University of Law, Hyderabad, umangbn.ubn@gmail.com. [2] ‘Supreme Court reserves verdict on Amazon’s plea against Future-Reliance deal,’ The Hindu accessed 2 August 2021. [3]2018 SCC OnLine Del 7634. [4]‘Singapore international Arbitration Centre Rules 2016’ accessed 2 August 2021. [5]Umang Bhat Nair, Appointment of arbitrators in multi-party arbitration – when will post-Dutco reforms come to India?, National Forum for Research in Arbitration Law accessed 2 August 2021. [6]Perkins Eastman Architects DPC v. HSCC (India) Ltd., (2019) SCC OnLine 1517; Proddatur Cable TV Digi services v. Siti Cable Network Limited, (2020) SCC OnLine Del 350. [7] Id. [8] BKMI Industrienlagen GmbH & Siemens Dutco Construction, Yearbook Commercial Arbitration, Vol. XVIII, 140 (Kluwer Law International, 2016). [9] Martin Hunter, Ethics of the International Arbitrator, 53 Arbitration 219, pp.222-223 (1987). [10]Gaurav Rai & Suraj Raj Kesherwani, Arbitrating Shareholder Disputes: A Case for Emergency Arbitration in India, The Arbitration Workshop accessed 2 August 2021. [11] Supra, at n. 2. [12](2020) 15 SCC 706. [13]Id. [14] AmazonCom NV Investment Holdings LLC v. Future Coupons Private Limited & Ors., (2021) Delhi High Court O.M.P. (ENF) (COMM.) 17/2021, Order dated 18 March 2021.

Meenal Garg[i] The problems pertaining to investment arbitration system came to the limelight when many states including India started withdrawing from the investor state dispute resolution (“ISDS”) system that have put a big question mark on the efficacy of the present system. The proposal for a world investment court was made to address the contemporary problems plaguing the current ISDS system. The supporters of such a world court argue that a public forum is the best alternative to resolving investment disputes which are essentially international public law disputes.[ii] However, the critiques have maintained that such a world court would trample the autonomy of the states. In recent years, the European Union has come up with a proposal of setting up a two-tier world investment court.[iii]However, such a model is only a theoretical concept and it has left the exact mechanism of dispute resolution at the mercy of multilateral negotiations. In order to address this issue, this paper proposes the creation of a Permanent Court of Investment Arbitration (“PCIA”). The nomenclature of this body indicates that it is a hybrid body encompassing the features of contemporary investment arbitration regime and the world investment court. From ICSID to PCIA ICSID Convention has arguably been the most successful conventions in the world of investment of arbitration. Apart from facing similar problems that are plaguing the notion of investment arbitration generally, ICSID has also come under attack for apparently being biased in favour of investors (who usually represent developed countries). Consequently, there have been endeavours[iv] to reform the ICSID regime which implies that the current ICSID regime is not suitable for investment arbitration. However, this author believes that the ICSID regime can be tweaked to create the PCIA. Before discussing the benefits and probable criticism of the PCIA, it is necessary to understand the core framework of the proposed PCIA. The first objection usually put forth in the establishment of the PCIA or any supranational body is that even if there was a perfect PCIA structure, it would be almost impossible to convince states to amend thousands of existing BITs and negotiate for a multilateral convention establishing the PCIA.[v] In this respect, it is argued here that the ICSID convention[vi] can serve as the basis for establishing the PCIA. It is proposed that the PCIA would be a permanent body with tenured judges very similar to the International Court of Justice (“ICJ”). Currently, there are 155 contracting states to the ICSID convention. Moreover, as per Art. 66 of the ICSID convention, the necessary amendments to the convention can be carried out with the approval of a two-thirds majority. Therefore, at the very first instance, it can be seen that establishment of the PCIA through an ICSID amendment would be comparatively easier than convincing all 155 states to enter into a new multilateral convention. Secondly, the ICSID already has a well established infrastructure in place and hence, the costs of setting up the PCIA would be reduced. Thirdly, investment arbitration is a complicated subject requiring subject expertise and seasoned professionals. Therefore, it would be advisable that the roster of tenured judges must be comprised of such experts. In this respect, ICSID has a well known panel consisting of reputed arbitrators. Therefore, this panel can serve as a guide or the basis for establishing the new roster. Fourthly, a roster of tenured judges free from appointment bias would definitely lead to production of more coherent and consistent line of investment arbitration jurisprudence. However, a caveat that needs to be mentioned here that no supranational body strictly follows the rule of precedent.[vii] Lastly, ICSID has well defined rules pertaining to procedure, confidentiality and enforcement of arbitral awards. Many of these rules can be incorporated into the charter of the PCIA. The Arbitrator Appointment Problem The first objection that can be raised against PCIA is that it takes away the autonomy of the parties to appoint an arbitral tribunal. It should be noted here that the investment arbitration community is a tight knit community where a few individuals are handling majority of the business.[viii] This frequently gives rise to the issue of arbitrator bias where these individuals are known for their inclination and favourtisim towards the investors or the state, as the case may be. PCIA can help solve this problem through the appointment of tenured judges with relatively stable tenure as compared to ad hoc arbitrations. In this respect, two further issues arise regarding arbitrator appointment. First and foremost, there arises the issue of who should make the appointment of tenured judges. In the current ICSID regime, there has been some criticism with regards to the fact that ICSID is a body affiliated to the World Bank and hence, it is biased in the favour of the investors.[ix] On the other hand, if a system akin to ICJ is followed, i.e., appointments are made by states[x] then the roster would be predisposed to protecting the state interests. The utopian solution to this problem would be to establish a roster partly elected by states and partly elected by investors. However, the obvious fallacy here is that one cannot identify all present and future investors as potentially every human being or company can be an investor. One solution to this problem could be that the investor state and the host state appoint their nominee arbitrators who in turn would agree upon the third arbitrator. However, the problem with this alternative is that it would nullify the very purpose for which the ISDS system was evolved i.e. eliminating the need for raising an investor dispute to state authorities. Moreover, any ad hoc appointment system would not address the inconsistency of arbitral awards. Therefore, this author is inclined towards the states electing the panel of judges. It is noteworthy to mention here that it is a known fact that most investors belong to developed nations and the respondent states in most investment arbitrations are developing countries.[xi] Therefore, a manner of appointment that adequately distributes the appointment power between the developed nations and developing nations can lead to an unbiased roster of judges for the PCIA. Such a model would obviously require a separate course of enquiry as the contemporary ICJ appointment practices[xii] cannot be mutatis mutandis applied to PCIA. However, certain features like independence from government should be taken into account. Moreover, the prevalent matrix of roster composition in ICJ may be incorporated in PCIA but it must be ensured that there is equal representation of developed country and developing country on the bench adjudicating the dispute unless the same is waived off by the parties. The second issue, popularly known as double hatting, pertains to the fact that reputable investment arbitrators are also counsel in many investment arbitrations. Such a practice raises many concerns of independence and impartiality. In this respect, the ICSID and UNCITRAL have published the second draft of a code of conduct[xiii] for investment an arbitrator which also focuses on the problem of double hatting. Double hatting assumes importance in context of PCIA because if such arbitrators are offered tenured positions then there would be an embargo on them being able to practice as counsel while they are judges. The question then arises as to why such arbitrators would accept the PCIA model or more specifically the position of a tenured judge, when they are content in the current regime which is favourable to them. The answer to this question lies in a social fact rather than a technicality. Lawyers accept appointment as ICJ judges due to a variety of reasons, for instance, for the prestige that comes with such a post, career objectives etc, irrespective of the fact that ICJ also prohibits double hatting. Therefore, if the investment arbitral community desires for a change, it is imperative that such a desire moves at least some of the arbitrators to abandon their economic benefits and contribute towards this system of change. It is admitted here that in the times to come, such a hope may prove to be wishful thinking, nevertheless, in such a scenario, the states would be compelled to select less experienced but more neutral professionals which would invariably lead to a tradeoff between expertise and neutrality. Adios Procedural Autonomy? Apart from the arbitrator appointment problem, supporters of arbitration also argue that a public court system would take away the procedural flexibility that arbitration has to offer with regards to procedure, confidentiality etc. This criticism is quickly dismissed by the supporters of world court citing public law reasoning or transparency concerns. This author believes that arguments made by both sides are valid and to address the same, the author has proposed to retain the procedural flexibility of the ICSID convention in the PCIA charter. In other words, all ancillary issues associated with party autonomy can be left at the discretion of the parties and in some cases, to the discretion of the bench. To illustrate, in case of confidentiality, the general rule may be to keep the proceedings confidential and publish the resultant award unless both the parties agree to the contrary (which is unlikely) or one party may present an application which can be adjudicated by the bench on the facts and circumstances of each case. Similarly, regarding appellate procedures, the PCIA charter may provide for limited grounds of appeal which may be limited or expanded through appellate arbitration clauses. At the cost of stating the obvious, it should be noted that the above scenarios are merely illustrative and the exact modalities can only be worked out through a series of multilateral negotiations. Moreover, leaving a broad room for party autonomy would also go a long way in alluring nations to fulfill the requisite two-thirds majority. Conclusion Investment arbitration, the ICSID convention or a world investment court, neither is a perfect system to resolve investor-state disputes. It has been argued that the PCIA model suggested in this paper is the most expedient and suitable model for ISDS as it has retained the existing party autonomy except in one respect viz. the autonomy to appoint the arbitrator/judge. This is because in this author’s opinion, no other alternative exists which can allow for party autonomy and also address issues like consistency of awards, independence of arbitrators etc. Though the shortfalls and the exact nature of PCIA charter has been left to be determined by negotiations and implementation, this paper aims to highlight that a permanent and independent supranational body comprised of tenured judges which respects party autonomy can go a long way in transforming the current international investment regime. [i] Meenal Garg is a post graduate candidate at NLSIU, Bangalore. He can be contacted at meenal.garg95@gmail.com. The author would like to thank Garv Malhotra and the blog’s editorial team for their comments and suggestions. [ii] Gus Van Harten, ‘A Case for an International Investment Court’ (IISD, 7 August 2008) accessed 22 April 2021. [iii] ‘Investment in TTIP and Beyond- The Path for Reform’ (European Union, 2015) < http://trade.ec.europa.eu/doclib/docs/2015/may/tradoc_153408.PDF> accessed 29 April 2021. [iv] Yarik Kryvoi, ‘ICSID Arbitration Reform: Mapping Concerns of Users and How to Address Them’ (Kluwer Arbitration, 11 November 2018) accessed 11 August 2021. [v] Joost Pauwelyn, ‘At the Edge of Chaos? Foreign Investment Law as a Complex Adaptive System, How it Emerged and How it can be Reformed’ (2014) 29 ICSID Review 372, 417. [vi] Convention on the Settlement of Investment Disputes between States and Nationals of Other States (entered into force 14 October 1966) 575 UNTS 159 (ICSID Convention). [vii] ibid art 59. [viii] Pia Eberhardt and Cecilia Olivet, Profiting from Injustice (2012) 38-43. [ix] W Mark C Weidemaier ‘Disputing Boilerplate’ (2009) 82 Temple Law Review 1, 18-19. [x] Statute of the International Court of Justice (entered into force 24 October 1945) 59 Stat 1055 (ICJ Statute) art 4 [xi] ‘ICSID Caseload-Statistics: Issue 2021-1’ (ICSID, 2021) < https://icsid.worldbank.org/sites/default/files/publications/The%20ICSID%20Caseload%20Statistics%20%282021-1%20Edition%29%20ENG.pdf> accessed 29 April 2021. [xii] Rohan Abraham, ‘How are Judges elected to the International Court of Justice?’ (The Hindu, 21 November 2017) accessed 11 August 2021. [xiii] ‘Draft Code of Conduct for Adjudicators in International Investment Disputes: Version Two’ (ICSID, 19 April 2021) accessed 11 August 2021.

Gaurav Rai[1] & Suraj Raj Kesherwani[2] PDF Version of the Article Introduction 1. Domestic arbitrations in India are dominated by construction arbitrations and arbitrations in relation to the supply of goods and services. However, a niche has also been carved out under the construction and supply of goods or services contracts when the bids for such contracts are made by a consortium of bidders. Such a consortium also tends to incorporate a joint venture (“JV”) company to perform such contracts. Such JV agreements or shareholding agreements usually also provide for the exit of the JV partners after a minimum fixed term as a member. However, such exit clauses entail that the exiting partner must allow the remaining JV partners to match the offer received by the exiting partner to buy the shares of the exiting partner. These clauses are referred to as Right of First Refusal (“ROFR”) clauses. ROFR is a contract clause that provides a party the right to be the first to be entitled to accept an offer before others are so offered or entitled to accept.[3] The idea behind the ROFR clause is that the current JV partners would rather keep the shares of the JV within themselves rather than allow an outsider to become a member of the JV. This backdrop forms the setting for the discussion in Chapter 1 of this article relating to the sale by the exiting shareholder of its shares in Mumbai International Airport Limited. 2. It is pertinent to note that such ROFR clauses can also be found in agreements when one party buys shares in another party with an option to buy more shares in the future. The ROFR clauses in such cases are styled in such a manner that the selling party shall not sell shares in its company to a third party without giving an opportunity to the buying party to buy the further shares in the selling party. This forms the basis of the entire dispute between Future Group and Amazon when Future group decided to sell one of its companies to Reliance Group, wherein Amazon alleged that it had the right to buy the shares in this company before it was bought by Reliance. This discussion shall form Chapter 2 of this article. 3. Thereafter in Chapter 3 we shall move towards highlighting the relevance of emergency arbitration in such shareholder disputes and highlight the status of the law relating to emergency arbitration in India. This paper shall also show why such emergency arbitrations may also require legislative recognition which may be useful for the growth of arbitrations in India including resolution of disputes related to ROFR Clauses in shareholder agreements. Finally, we shall summarize our suggestions and takeaways in the Final Conclusion to this paper. Chapter 1 – Mumbai International Airport Limited Shareholder Dispute 4. The Mumbai International Airport was one of the first airport modernization concession contracts awarded to a consortium based on bids received by the Airports Authority of India (“AAI”).[4] The modernization was to be executed by a new JV company named Mumbai International Airport Limited (“MIAL”) having an authorised share capital of INR 250 Crores. After the incorporation of MIAL, a shareholder agreement (“Shareholder Agreement”) was executed between MIAL, AAI and the private participants who were members of the consortium, wherein concerned parties agreed to subscribe to the shareholding of MIAL as per the table below.[5] 5. In 2011, by mutual agreement, BSDM sold 50% of its stake (13.5% of MIAL’s shares) for an undisclosed price to GVK and GVK became the owner of 50.5 % shares of MIAL. BSDM was left with 13.5% stake in MIAL.[6] Offer by Adani and ROFR of GVK 6. In March 2019, Adani Group Company (“Adani”) made an offer to BSDM to purchase the shares at INR 77 per share for the entire shareholding of BSDM, totalling to INR 1248 Crores.[7] The Shareholder Agreement contained a ROFR clause wherein, if one of the consortium members wanted to sell its shares in MIAL, it had to offer the right to the other consortium members in the form of a notice indicating the number of shares, the price and other relevant information. GVK indicated its willingness to exercise its rights under the ROFR clause.[8] This clause was subject to Clause 2.5 of the Concession Agreement titled as Operation Management and Development Agreement (“OMDA”) between the AAI and the Consortium Members wherein under sub-clause (c) of Clause 2.5; the consortium members were free to sell their shares after 7 (seven) years from the effective date without the approval of AAI, subject to the overall shareholding of the relevant member not going below 10%.[9] Since BSDM intended to sell its entire stake of 13.5%, it can be safely assumed that any sale would have required eventual approval of the AAI. Seeking interim relief – Delhi High Court and the Arbitral Tribunal 7. A dispute arose between the GVK and BSDM when BSDM alleged that GVK had failed to make the payment as per the conditions under the ROFR clause of the Shareholder Agreement within 30 (thirty) days of the offer being sent to GVK and ACSA Global Ltd. in the form of the notice.[10] The time period of 30 (thirty) days was mandated under the ROFR clause. GVK filed an application for interim relief under Section 9 of the Arbitration and Conciliation Act, 1996 (“Act”) before the Hon’ble High Court of Delhi (“DHC”) to restrain BSDM from selling their stake. GVK argued that it had exercised its right and invoked the ROFR clause and it was upon BSDM to conclude the sale. The DHC, by its order dated 1 July 2019, did not provide any interim relief and left it to the arbitral tribunal to take a decision if an application under Section 17 of the Act is moved by GVK before the arbitral tribunal. 8. The matter proceeded for arbitration before a three-member arbitral tribunal. It appears that the arbitration was initiated under Clause 9.4.3 of the Shareholder Agreement which provided for a three-member arbitral tribunal seated in New Delhi.[11] After the constitution of the tribunal, it can be safely assumed that GVK moved an application for interim relief. The arbitral tribunal directed GVK to deposit the amount for the purchase of the shares in an escrow account before hearing GVK’s application to restrain BSDM from selling its stake.[12] Later, by a detailed order on 19.01.2020, the arbitral tribunal under Section 17 of the Act restrained BSDM from selling their stake to anyone till the resolution of the dispute.[13] Hence, it can be assumed that a prima facie case existed on facts that the conditions under the ROFR clause had been fulfilled by GVK for the purchase of the shares of BSDM because of which interim protection was granted to GVK. Vacation of interim protection provided to GVK 9. In a turn of events, about 300 Million USD of the money that was arranged and deposited in the escrow account by GVK had been withdrawn by its investors because of which GVK had to give up its claim for the purchase of the shares. Hence, the restraint on BSDM no longer existed. BSDM was eventually able to complete the sale of the shares to Adani in February 2021.[14] Eventually, GVK also got into a separate agreement altogether to sell its stake of about 50.5 % to Adani.[15] Adani closed the buyout of all three original private participants and became the owner of 74% of shares in MIAL. Chapter Conclusion 10. The lesson that is learnt from the MIAL dispute is that a ROFR Clause having a short time period of 30 (thirty) days to finalise the transaction was not enough to conclude the same. We understand that due diligence of the background of the shareholder and the shares being bought itself may not be necessary as the party who is purchasing the shares is itself a shareholder; however, to complete any transaction which involves payout of substantial magnitude would require time greater than 30 (thirty) days to close the transaction. Hence, the parties while drafting the shareholder agreement must have the foresight of such a situation arising and the possibility of buying or selling their stake in a JV company having a ROFR clause. 11. We can see that in this case, even though a time period of 30 (thirty) days was provided, BSDM was not able to exit as intended for almost three years from the first offer it received from Adani. Hence, it could have been in favour of both BSDM and GVK to see that a more extended period be provided for fulfilling the conditions under the ROFR clause and see that BSDM received the payout of the funds by GVK exercising the ROFR clause or from the original offeror who intended to buy its stake. Chapter 2 - Amazon-Future Group Dispute Background 12. In the year 2019, Amazon.Com NV Investment Holdings LLC (“Amazon”) after extensive exchanges with the Kishore Biyani driven Future Group, procured 49% stake in one of Future Group's unlisted firms Future Coupons Limited (“Future Coupons”). Future Coupons is the advertiser substance of Future Retail Ltd. (“Future Retail”) and holds a 7.3% stake in Future Retail. By implication, Amazon got 3.6% shareholding in Future Retail. As a component of the arrangement, Amazon also negotiated a 'call option' permitting it to purchase halfway or whole stake of the advertisers in Future Retail for a period going from 3 (three) to 10 (ten) years from the date of the Agreement[16](“2019 Agreement”). 13. As part of the 2019 Agreement, the parties had a call option in the form of an exit clause which determined that Amazon would practice the privilege of the first refusal in a situation where Future Group wishes to sell all or part of Future Coupon’s promoter or Future Retail’s shareholding. Also, there was a provision that expressed that Future Group will not sell any resource within 10 (ten) years of the arrangement with Amazon. It is these provisos that became the premise of the disputes between Amazon and Future Group. Reliance Deal 14. In 2020, Future Group being staggered under huge debts followed by a nationwide lockdown due to COVID-19, sustained heavy losses in its retail business. Hence, around August 2020, Future Group entered into an agreement with Reliance Retail Ventures Limited (“Reliance Retail”) (a subsidiary of Reliance Industries Limited) for INR 24,713 Crore to sell its retail logistics and warehousing to Reliance Retail (“Reliance Deal”). As a part of the Reliance Deal, Future Group agreed to sell its supermarket chain Big Bazaar, premium food supply unit Food Hall and fashion stores and clothes supermarket Brand Factory’s retails to Reliance Retail[17]. This turned into the significant conflict between Amazon and Future Group and progressed into arbitration under the 2019 Agreement. Emergency Arbitration under SIAC Rules 15. Amazon and Future Retail, in their 2019 Agreement, concurred on New Delhi as the seat of arbitration and for the arbitration to be conducted under the aegis of Singapore International Arbitration Centre (“SIAC”). Accordingly, Amazon aggrieved by the Reliance Deal and in order to obstruct the Reliance Deal, initiated emergency arbitration against Future Group and sought interim protection by way of such emergency arbitration under the aegis of SIAC. SIAC thereafter appointed Mr. V.K. Rajah as the emergency arbitrator (“Emergency Arbitrator”). 16. Amazon alleged that the Reliance Deal was in breach of the terms of the 2019 Agreement, which barred the Future Group from selling any stakes to any third party without Amazon’s consent. Amazon further challenged the Reliance Deal to be in violation of the ROFR clause in the 2019 Agreement, which provided Amazon the first right to purchase the Future Group’s shares under the 2019 Agreement[18]. However, the Future Group contented that the ROFR clause of the 2019 Agreement would not apply to the Reliance Deal till the completion of 3 (three) years of the 2019 Agreement. 17. The Emergency Arbitrator ruled in favour of Amazon and as an interim measure, put the Reliance Deal on hold and restrained the Future Group from proceeding with the Reliance Deal until the resolution of the dispute (“Interim Order”). The Future Group did not have any response to challenge this request that was passed by the Emergency Arbitrator except for holding up till the constitution of the arbitral tribunal.[19] Enforcement of Interim Order before Single Judge of DHC 18. To enforce the Interim Order, Amazon filed an application before the DHC to restrain Future Group from concluding the Reliance Deal. The single judge of the DHC vide its decision dated 18 March 2021 in the matter titled Amazon.com NV Investment Holdings LLC vs. Future Coupons Private Limited, [20] upheld the validity of the Interim Order by holding that an emergency arbitrator is an arbitrator for all intents and purposes under Section 17(2) of the Act. In view of this, DHC (single judge) held Future Group to be liable under Order XXXIX Rule 2A of the Code of Civil Procedure, 1908, which lead to the attachment of properties of Future Group companies and its promoters, including the properties of Kishore Biyani. Moreover, DHC further directed the Future Group to file an additional affidavit providing further details in relation to its assets and properties[21]. In addition to the same, the DHC also asked the Future Group not to take any further action in violation of the Interim Order. Appeal before the Division Bench of DHC 19. Future Group appealed against the judgment dated 18 March 2021 of the DHC (single judge) before the Division Bench and the judgment of the Single Judge was stayed by the Division Bench vide order dated 22 March 2021[22]. The DHC (Division Bench) took note of the Supreme Court of India’s (“SCI”) order, which records that the proceedings before National Company Law Tribunal Mumbai (“NCLT Mumbai”) will be allowed to go without a final order of sanction of the scheme between Future Group and Reliance. It also came over the petition filed by the Future Retail, which operates its business by the name Big Bazaar, FBB, Easy day, etc. In the said petition, the NCLT Mumbai has reserved its order over the scheme of arrangement of the Reliance Deal. The Reliance Deal, which is contested by Amazon, has already received clearance from the Competition Commission of India, and SEBI and the scheme of arrangement is now awaiting the nod from the NCLT and the shareholders.[23] Special Leave to Appeal before the Supreme Court 20. The DHC (Division Bench) thereby entailed Amazon to file a special leave petition (“SLP”) before the SCI. Amazon in its SLP, has sought a stay of the order dated 22 March 2021 of the DHC (Division Bench) till the issues are finally adjudicated by the SCI. Amazon has stated that the order dated 22 March 2021 of the DHC (Division Bench) is a grave error permitting Future Group to commit further breaches of the SIAC Award.[24] The SCI vide its order dated 19 April 2021 stayed the proceedings before the Delhi High Court and decided to start hearing the matter on 28 June 2021.[25] The matter has been partly heard by the SCI and is next listed on 27 July 2021 for the remaining arguments.[26] SIAC Proceedings 21. Both the parties to the dispute are gearing up for the last leg of the proceedings at SIAC regarding Future Group's INR 24,713 Crore sales of its retail assets to Reliance Industries Ltd. Recently, the SIAC has constituted its panel to pass the final judgment on the case between Amazon and Future Group. As per the sources[27], the arbitration panel is as follows: Albert Jan van den Berg (nominee arbitrator of Amazon), Jan Paulsson (nominee arbitrator of Future Group) and Michael Hwang (veteran barrister) (the presiding arbitrator). Chapter Conclusion 22. The lesson learnt from the Amazon Future Dispute is that urgency of the matter is prime in cases involving the sale of shares if one party has an ROFR clause in their favour. Primarily because one of the parties already has a buyer ready to receive the shares on the payment of the sum. The emergency arbitration provisions under the SIAC Rules have hence helped Amazon to protect its interest in the interim. Interestingly, in both the disputes discussed above, the disputes were fought during the interim stage itself since the appointment of the tribunal which hears the arguments on merits, in any case, would delay the completion of the sale of the shares and the original offeror would have to walk away while the arbitration proceedings are ongoing, which would hence make the main arbitration proceedings infructuous. This is what happened in the MIAL Dispute. 23. The Amazon Future dispute is currently past the interim measures / emergency stage complete. It would be interesting to see if the arbitration proceeds to merits and how it would affect the deal between Reliance and Future Group. Chapter 3 - Interim Measures and Emergency Arbitration 24. It is pertinent to note that interim measures of protection become extremely relevant to protect the subject matter of the dispute before arbitration. In the 2015 amendment, the (Indian) Arbitration and Conciliation Act, 1996 amended the applicability of certain sections of Part I of the Act including Section 9 and stated that Section 9 will be available for parties in foreign seated arbitrations as well. Prior to the amendment, parties in a foreign seated arbitration would not have the option of approaching Indian Courts under Section 9 of the Act to get interim relief. The alternate and quick approach in this regard would be to seek interim relief from the local courts or the emergency tribunal constituted by an arbitral institution in a foreign arbitration and then attempt to enforce the order in India. Evolution of Emergency Arbitration 25. In Asia, the SIAC was the first institution to incorporate emergency arbitration provisions in its 2010 Rules. The emergency arbitrator provisions were introduced in the SIAC Rules in order to address situations where a party is in need of emergency interim relief before a Tribunal is constituted.[28] Status of Emergency Arbitration under the Act 26. However, an issue may arise when the parties have received an interim relief from the emergency arbitrator in a foreign country attempt to enforce the same in India because under Part II of the Arbitration and Conciliation Act, 1996 only awards final or otherwise can be enforced and not interim orders. Under the SIAC Rules these interim orders are called ‘awards’[29] and the emergency arbitrator has been recognized as an arbitrator under the International Arbitration Act of Singapore.[30] Such an ‘award’ and may not pass the test of being an award under Part 2 of the Arbitration and Conciliation Act, 1996 to be enforced as one. Status of orders of Foreign Seated Emergency Arbitrators HSBC v. Avitel Post 27. In a case dealing with an order of interim protection ordered by the emergency arbitrator prior to the 2015 amendment of the Act, the Bombay High Court in its judgments of the Single Judge and the Division Bench in the dispute between HSBC and Avitel Post Studioz[31] held that the parties had expressly stated in the contract that the seat of arbitration will be Singapore and the arbitration will be governed by the SIAC Rules. The arbitration clause also stated that Part I of the Arbitration and Conciliation Act, 1996 will not be applicable save as except section 9 of the Act. To this extent while the courts in Single Bench and Division Bench were dealing with the applicability of Section 9 to this particular arbitration, it held that since the parties themselves allowed the applicability of Section 9 hence the same will be applicable even though Singapore is the seat of the arbitration and arbitration agreement is to be governed by the laws of Singapore. 28. The Single Judge held that this application under Section 9 has been made not for the enforceability of the emergency award but for grant of interim measures simpliciter under Section 9 which was available to the parties. Even the Division Bench agreed that even if an emergency award has been made by a foreign seated arbitrator, the order of Indian Courts exercising their jurisdiction under Section 9 has to be made independent of any such interim order of relief and that this application under Section 9 has not been made to circumvent the procedure of enforcement of a foreign seated award under Part II of the Act. Raffles Design v. Educomp 29. To this extent the Hon’ble DHC in Raffles Design International Pvt Ltd v Educomp Professional Education Ltd & Ors 2016 (6) Arb.L.R 426 (Delhi) while dealing with an application under Section 9 of the Act for enforcement of an order of a foreign seated emergency arbitrator, held that Section 9 cannot be used to enforce an award of a foreign seated emergency arbitrator. The DHC held that an emergency award can be enforced only by filing a suit. 30. However, it held that the parties may independently approach courts of India under Section 9 for securing interim relief, as the applicability of Section 9 of the Act has been extended to foreign seated arbitrations as well by the 2015 amendment. The Court also held that the choosing Singapore as the seat of arbitration and SIAC Rules to govern the arbitration would not preclude a party from approaching a Court for obtaining interim relief as the SIAC Rules itself provides that the parties may approach a court for interim relief. However, the DHC finally held that the question whether the interim orders should be granted under Section 9 of the Act or not would have to be considered by the Courts independent of the orders passed by the arbitral tribunal. Ashwini Minda v. U-Shin 31. The single judge of the DHC in Ashwani Minda v. U-Shin[32] while dealing with an application for interim relief under Section 9 in a foreign seated arbitration distinguished the Raffles decision discussed above on the point that the institutional arbitration rules applicable in the Raffles case was SIAC which allowed seeking interim relief from courts unlike the Japan Commercial Arbitration Association (“JCAA”) applicable to the case at hand. The DHC held that reading of the arbitration clauses clearly evinces the intention of the parties to exclude the applicability of Part I of the Act. Further, the DHC by applying the doctrine of election also held that having invoked the mechanism of the emergency arbitrator and inviting a detailed and reasoned order declining the relief, it is not open for the applicants to take a second bite at the cherry by way of an application under Section 9 and hence held the same to be not maintainable. 32. In appeal, the Division Bench in Ashwini Minda v. U-shin[33] upheld the judgment of the Single Bench however it gave different reasons for the same. The Division Bench agreed with the single judge on principle of doctrine of election stating that the Indian Courts do have jurisdiction to grant relief under Section 9 in foreign seated arbitration however in the present case, the applicant having agitated similar points before the emergency arbitrator of JCAA and having lost on jurisdiction and merits before the Emergency Arbitrator it will not be open to it to approach the Indian Courts under Section 9 being aggrieved by such an order. Additionally, the Division Bench also referred to Section 9(3) of the Act wherein the Courts are not supposed to grant interim relief once the arbitral tribunal has been constituted or if an efficacious remedy is not available to the parties. When the application was filed before the single bench the arbitral tribunal had not been constituted and that was also one of the reasons mentioned in the Section 9 application however by the time the application came to the be heard by the Division Bench, the arbitral tribunal had been constituted. Further, a remedy before the arbitral tribunal does exist and no arguments have been made that such a remedy is not efficacious. 33. Based on the aforesaid two points, the Division Bench fortified the reasons in declining to interfere with the judgment of the single judge. The Division Bench also gave further reasons to distinguish the Raffles Judgment by holding that in the Raffles case, the emergency award passed by the Emergency Arbitrator and upheld by the Singapore Court was being violated by the party and hence a relief was provided to the affected party by way of an order under Section 9. The same was not the issue in the case at hand. Based on these additional reasons, the Division Bench dismissed the appeal. 34. Considering the reasons given by the Division Bench above, it declined to rule on the observations of the single judge on the aspect of whether the applicability of Section 9 of the Act has been excluded by the parties by way of the dispute resolution clause. The Division Bench held that this issue would remain open and the judgment of the single bench has not closed the issue and the same will be available for discussion at the appropriate stage. Analysis 35. Hence a combined reading of the aforesaid judgments demonstrates that although the power under Section 9 continues to exist under the Act for grant of interim measures, even in foreign seated arbitrations, the emergency award by a foreign seated arbitrator cannot be enforced under Section 9 of the Act. A similar relief however can be claimed under Section 9 and the Court while exercising jurisdiction has to remain independent of the order passed by the emergency arbitrator. However, if the emergency arbitrator has denied the relief to such an applicant seeking interim relief, then the applicant cannot invoke Section 9 of the Act as it would be presumed that the party has consciously elected to pursue an efficacious remedy before the emergency arbitrator and the Emergency Arbitrator refusing the remedy by way of a detailed reasoning, the parties have closed their right to approach Indian Courts under Section 9. Further, if the regular arbitral tribunal has already been constituted it would be a further impediment to the application to Indian Courts under section 9 as the party will have to necessarily prove that it does not have an efficacious remedy available before the arbitral tribunal because of which the Section 9 application has been sought. Status of orders of India Seated Emergency Arbitrators 36. The three cases above dealt with emergency arbitrations orders made in a foreign seat. However, in the Amazon Future Dispute, the Emergency Arbitrator was appointed in an arbitration seated in New Delhi, India but under the aegis of SIAC and governed by SIAC Rules which provided for such emergency arbitration. Hence, when Amazon received a favourable order for interim relief from the Emergency Arbitrator, it approached the DHC for enforcing the same under Section 17(2) of the Arbitration and Conciliation Act, 1996 to recognize the interim order of the Emergency Arbitrator as an interim measure granted by the arbitral tribunal. 37. The DHC (single bench) in Amazon.Com NV Investment Holdings LLC v Future Coupons Private Limited & Ors.[34] relied on the arguments made by the parties and the conclusions drawn by the Emergency Arbitrator as well and agreed with the Emergency Arbitrator that the (Indian) Arbitration and Conciliation Act, 1996 does not disallow an emergency arbitration and that the order of the emergency arbitrator can be enforced under Section 17(2) of the Act. It held that the Emergency Arbitrator is included in the definition of arbitral tribunal under the Act. 38. The judgment of the single bench of the DHC is a welcome step for Indian parties to approach Indian institutions for emergency arbitrations and including institutional arbitration in the dispute resolution clauses under the contract. Although a stay order was granted against this judgment by the Division Bench of the DHC, the same was done for reasons other than the reasoning provided by the single judge for enforcing the order of the emergency arbitrator and in any case the stay order was interim in nature and not the final judgment of the Division Bench. 39. It is pertinent to note that as of 2021, the Mumbai Centre for International Arbitration, Indian Council of Arbitration, Delhi International Arbitration Centre, Madras High Court Arbitration Centre, Nani Palkhivala Arbitration Centre and Hyderabad Arbitration Centre among others provide for emergency interim relief by way of appointment of an emergency arbitrator by the arbitration centre. This is a welcome step by the arbitration centres in India realising the utility of emergency arbitration in several arbitrations including the arbitrations related to shareholder dispute and disputes related to the invocation of the ROFR Clause. 40. Interestingly, the 246th Law Commission Report, which forms the basis of the 2015 amendment to the Arbitration and Conciliation Act, 1996, had proposed recognizing an emergency arbitrator as an arbitral tribunal under the Act to recognize arbitrators as provided for under the SIAC Arbitration Rules[35] however the change as recommended was not carried out in the amendment to the Act. In India’s attempt to move towards an institutional arbitration, which is evident from the 2019 amendment made to the Act, it would not be out of place for the parliament out of abundant caution, to include the Emergency Arbitrator as an arbitral tribunal recognized under the Act in lines with the International Arbitration Act of Singapore and the judgment of the single bench of the DHC in Amazon.Com NV Investment Holdings LLC v Future Coupons Private Limited & Ors. Conclusion 41. Hence the authors in conclusion submit that parties to shareholder agreements should deliberate on a reasonable time for concluding a sale of shares under a ROFR Clause and further the dispute resolution clause should state that the arbitration would be conducted under the aegis of an institution which has the provision for appointing an emergency arbitrator to protect the rights of all involved. 42. In furtherance of the same, in case India wants to develop as a major hub for arbitration the parliament should consider amending the Act to recognize emergency arbitration just like the legislature of Singapore. It would provide much needed legitimacy to the emergency arbitrations provisions under the various Indian arbitration centres mentioned above and to protect the rights of the parties specifically in such disputes where grant of interim relief in a short time is of utmost importance. Further it may also explore whether the award of the emergency arbitrator should be considered for enforcement as an award under Part 2 of the Act or if provisions are to be made within Section 9 of Part 1 itself for enforcement of interim measures awarded under a foreign seated emergency arbitrator. [1] Gaurav is an Associate at AKS Partners and the Editor of The Arbitration Workshop Blog. His area of interest lies in investment arbitration, international & domestic commercial arbitration and contract law. He can be contacted at raigaurav.legal@gmail.com. [2] Suraj is an Associate at AKS Partners. He holds a BA. LLB degree from UPES Dehradun and his work profile primarily includes commercial arbitration and litigation. He can be contacted at srajk.law@gmail.com. [3] ‘Definition of Right of First Refusal’ (The Law Dictionary) accessed 14 July 2021. [4] Rekha Jain, G. Raghuram, and Rachna Gangwar, ‘Airport Privatization in India: Lessons from the Bidding Process in Delhi and Mumbai ’ (Working Paper, IIM Ahmedabad 2007) 3 accessed 21 June 2021. [5] Clause 3.2, Shareholder Agreement, Mumbai International Airports Limited, 4 April 2006 available at https://www.civilaviation.gov.in/sites/default/files/moca_000981.pdf [6] ‘India’s GVK Power Raises Stake in Mumbai Airport Firm to 50.5 Pct’ Reuters (2 March 2011) accessed 7 June 2021. [7] ‘Battle for Stake in Mumbai Airport: High Court Refuses Interim Relief to Adani’ (The Economic Times, 6 November 2019) accessed 12 June 2021. [8] Shahkar Abidi, ‘GVK to Buy Bidvest Stake, Keep Adani out of MIAL’ (DNA India, 25 February 2019) accessed 7 June 2021. [9] ‘Operation, Management and Development Agreement between Airports Authority of India and Mumbai International Airport Private Limited for the Mumbai Airport’ accessed 8 June 2021. [10] ‘Battle for Stake in Mumbai Airport: High Court Refuses Interim Relief to Adani’ (n 7) (“…GVK had offered to buy Bidvest’s stake, but failed to arrange for the funds within the 30-day period.”). [11] Clause 9.4.3, Arbitration, Shareholder Agreement, Mumbai International Airports Limited, 4 April 2006 available at https://www.civilaviation.gov.in/sites/default/files/moca_000981.pdf. [12] ‘Battle for Stake in Mumbai Airport: High Court Refuses Interim Relief to Adani’ (n 7) (“On September 15, an arbitral tribunal, which heard the case between GVK and Bidvest, gave GVK time till October 31 to deposit the money. According to the arbitral order, if GVK failed to deposit the money, Bidvest was free to sell its stake to anyone else.”). [13] ‘Breather for GVK Group! Arbitration Tribunal Restrains Bidvest from Selling Stake in Mumbai Airport’ (Business Today) accessed 9 June 2021. [14] Aneesh Phadnis, ‘Adani Completes Purchase of 23.5% Stake in Mumbai International Airport’ Business Standard India (8 February 2021) accessed 9 June 2021. [15] Forum Gandhi, ‘Adani Takes over MIAL, Navi Mumbai Airports after a 2-Year Tussle with GVK’ (@businessline) accessed 17 June 2021. [16] ‘The Long Game: Amazon, Reliance & The Future Group Dispute’ (Algo Legal, 18 December 2020) accessed 25 June 2021. [17] Pranav Mukul, ‘Explained: Why Future Group Took Amazon to Court, and What the Delhi HC Said | Explained News, The Indian Express’ (The Indian Express, 4 January 2021) accessed 25 June 2021. [18] ‘What Is Amazon-Future-Reliance Battle? Explained’ (India TV, 27 March 2021) accessed 25 June 2021. [19] ‘Singapore International Arbitration Centre | SIAC Rules 2016’ accessed 25 June 2021. [20] AmazonCom NV Investment Holdings LLC v Future Coupons Private Limited & Ors [2021] Delhi High Court O.M.P(ENF)(COMM) 17/2021 Order dated 18 March 2021, available at https://www.livelaw.in/pdf_upload/jrm18032021ompenfcomm172021200230-390779.pdf. [21] ibid. [22] Future Coupons Private Limited & Ors v Amazon.Com NV Investment Holdings LLC [2021] Delhi High Court FAO(OS) (COMM) 50/2021 Order dated 22 March 2021 available at http://delhihighcourt.nic.in/dhcqrydisp_o.asp?pn=52155&yr=2021. [23] ‘Future Group Says NCLT Can Continue Hearing on RIL Deal as per Supreme Court Direction’ (ETRetail.com, 22 March 2021) accessed 22 June 2021. [24] ‘Amazon Moves SC for Stay on Delhi HC Order till Verdict on Future-Reliance Deal Dispute’ (The Times of India, 9 April 2021) accessed 23 June 2021. [25] AmazonCom NV Investment Holdings LLC v Future Coupons Private Limited & Ors [2021] Supreme Court of India SLP (C) 6113-6114/2021 Order dated 19 April 2021 available at https://main.sci.gov.in/supremecourt/2021/9459/9459_2021_33_24_27640_Order_19-Apr-2021.pdf. [26] AmazonCom NV Investment Holdings LLC v Future Coupons Private Limited & Ors [2021] Supreme Court of India SLP (C) 6113-6114/2021 Order dated 22 July 2021 available at https://main.sci.gov.in/supremecourt/2021/3947/3947_2021_32_12_28754_Order_22-Jul-2021.pdf. [27] Anirudh Laskar, ‘Singapore Tribunal to Hear Amazon-Future Case on 12 July over RIL Deal’ (Mint, 6 June 2021) accessed 23 June 2021. [28] ‘The Emergency Arbitrator and Expedited Procedure in SIAC: A New Direction for Arbitration in Asia’ (Singapore International Arbitration Centre) accessed 14 July 2021. [29] ‘Singapore International Arbitration Centre Rules 2016’ para 1.3 accessed 17 July 2021 (“Award” includes a partial, interim or final award and an award of an Emergency Arbitrator;). [30] International Arbitration Act - Singapore s 2(1) (‘“arbitral tribunal” means a sole arbitrator or a panel of arbitrators or a permanent arbitral institution and includes an emergency arbitrator appointed pursuant to the rules of arbitration agreed to or adopted by the parties including the rules of arbitration of an institution or organisation’"). [31] HSBC PI Holdings Mauritius v Avitel Post Studioz High Court of Bombay (Single Judge) Arbitration Petition 1062 / 2012 decided on 22 January 2014.; Avitel Post Studioz v HSBC PI Holdings Mauritius High Court of Bombay (Division Bench) Appeal No. 196/2014 in Arbitration Petition No. 1062/2012 decided on 31 July 2014. [32] Ashwani Minda and Ors vs U-Shin Ltd and Ors High Court of Delhi - Single Judge OMP (I) (COMM.) 90/2020, MANU/DE/1043/2020. [33] Ashwani Minda and Ors vs U-shin Limited and Ors High Court of Delhi - Division Bench FAO (OS) (COMM) 65/2020, 2020 (4) ArbLR 256 (Delhi). [34] Amazon.Com NV Investment Holdings LLC v Future Coupons Private Limited & Ors (n 20). [35] ‘Amendments to the Arbitration and Conciliation Act 1996’ (Law Commission of India 2014) 246 .

*Arpit Sarangi 1. Introduction The law of Limitation is an essential legislation that prescribes an outer time limit within which a claim can be brought after the cause of action has occurred. The Limitation Act, 1963 (Hereinafter, “Act, 1963”) is made applicable to Arbitration and Conciliation Act, 1996 (Hereinafter, “Act, 1996”) through Section 43(1) of Act, 1996 which provides that the Act, 1963 “shall apply to arbitrations as it applies to proceedings in court.” The first part of the Article would analyse the application of Act, 1963 to Section 11 of Act, 1996 (i.e. application of limitation act to initiate arbitration) whereas the second part would analyse the application of Act, 1963 to Section 34 of Act, 1996 (i.e. application of limitation act to set aside or challenge an arbitral award in a Court of law). There is a fundamental difference between Section 11 and Section 34 of Act, 1996. Section 34 provides for an exclusive statutory time limit whereas Section 11 does not provide for any such time limit. 2. Application of Act, 1963 to Section 11 of Act, 1996. a. A primer on Section 11 of Act, 1996 and the current position of law. Section 11 provides for the procedure to initiate arbitration. It can further be divided into two issues. The first issue is relating to an application to Court to appoint an arbitrator and the other being an issue of claim to a cause of action. For the first issue, the limitation period begins from the date of refusal to appoint an arbitrator by the other party or on expiry of thirty days, whichever is earlier. Moreover, for the second issue, the period of limitation begins from the “Cause of Action”. In the case of Bharat Sanchar Nigam Limited v. M/s Nortel Networks India Pvt. Ltd.[1], the Court held that both of the above issues should not be time-barred to allow an application under Section 11. Consequently, in the above case, the first issue was within limitation but as the second issue (i.e. Cause of Action) was barred by limitation, the application of Section 11, of Act, 1996 was denied. When does a “cause of action” arise? The Supreme Court (SC) in the case of Grasim Industries v. State of Kerala[2] has held that the provisions of Art. 137 of the Act, 1963 would apply to the Act, 1996. Any application under Section 11 of the Act, 1996 should be initiated within three years from the date when the cause of action arose. Article 137 of the Act, 1963 provides for an outer time limit of three years from the time the “right to apply accrues” to applications for which no exclusive time period of limitation is provided elsewhere in the Division of Act, 1963. As, Section 11 of Act, 1996 did not have any specific mention in the division, consequently, Article 137 of Act, 1963 was applied.[3] Now, the question arises what is the cause of action under arbitration law? The Supreme Court in the case of State of Orissa v. Damodar Das observed that “cause of action” under Arbitration law is treated to be similar to those of civil suits[4]and generally arises when there is a dispute. Further, in the case of Major (Retd.) Inder Singh Rekhi v. Delhi Development Authority, the Supreme Court held that the dispute can be said to arise only when “a claim is asserted by one party and denied by the other on whatever grounds. Mere failure or inaction to pay does not lead to the inference of the existence of dispute. Dispute entails a positive element and assertion of denying, not merely inaction to accede to a claim or a request.”[5] The Courts have also inclined to hold that the “cause of action” arises when the final bill handed over to the other party became due.[6] However, where final bills have not been prepared, the Courts have held that the cause of action arises when- · There was an assertion of claim yet there was no payment.[7] · the notice demanding the disputed amount remains unanswered[8] · There is a clear and unequivocal denial of that right asserted by the other party in a notice.[9] The Supreme Court has held that a party cannot postpone the accrual of a cause of action by writing or sending reminders.[10] However, if the parties are in constant negotiation in some specific matters, certain exceptions were seen to be made. In the case of Hari Shankar Singhania & Ors vs Gaur Hari Singhania & Ors., the Supreme Court held that certain exceptions can be made in the case of family settlement. The Court differentiated a family settlement from a commercial settlement as the former results in peace and goodwill among the family members. The Court held that the well-being of a family is to be considered of prime importance. The process of arbitration would begin only when a dispute cannot be settled by conciliation. Consequently, if the parties are in dialogue even after the disputes have appeared, the limitation under Article 137 of Act 1963 cannot be considered to have commenced.[11] Hence, a narrow approach was provided to the application of Article 137 of Act 1963 to Act, 1996 in case of family disputes. b. What is the current settled position? The above discussion suggests that the point of law on the application of Act, 1963 to Act, 1996 is not clear. Moreover, in the recent case of Geo Miller v. Rajasthan Vidyut Nigam[12] Court had an opportunity to deal with similar issues. The judgment to the above issues are as follows What is the time limit for application for appointment of an Arbitrator under 11(6) of Act, 1996? The Court held that by application of Article 137 to the Act 1963, the limitation period for a reference of a dispute to arbitration or to appoint an arbitrator under Section 11 of Act, 1996 is three years from the date on which the cause of action or the claim which is required to be arbitrated first arise. Further, mere interaction between the parties in the form of letters or reminders will not extend the statute of limitations. What is the “cause of action” to determine the beginning of the time limit under the Act, 1963? The Courts were inclined to hold that the “cause of action” arises when the final bill became due. However, after perusing the decision of Major (Retd.) Inder Singh Rekhi[13] and Hari Shankar Singhania[14] the Court made an interesting observation. It held that- “Having perused through the relevant precedents, we agree that on a certain set of facts and circumstances, the period during which the parties were bona fide negotiating towards an amicable settlement may be excluded for the purpose of computing the period of limitation for reference to arbitration under the 1996 Act. However, in such cases the entire negotiation history between the parties must be specifically pleaded and placed on the record. The Court upon careful consideration of such history must find out what was the ‘breaking point’ at which any reasonable party would have abandoned efforts at arriving at a settlement and contemplated referral of the dispute for arbitration. This ‘breaking point’ would then be treated as the date on which the cause of action arises, for the purpose of limitation. The threshold for determining when such a point arises will be lower in the case of commercial disputes, where the party’s primary interest is in securing the payment due to them, than in family disputes where it may be said that the parties have a greater stake in settling the dispute amicably, and therefore delaying formal adjudication of the claim.” An analysis of the Geo-Miller judgment. An analysis of the Geo Miller judgment would suggest to us that Court has moved away from a strict interpretation of “cause of action”. In earlier decisions, the act of negotiation delayed the beginning of “cause of action” only in family settlements. However, after the Geo Miller judgment, negotiation can also delay the beginning of the time period in commercial matters to compute limitation. However, the Court did introduce the caveat of “breaking point” during the negotiations which would mark the beginning of the limitation period. Moreover, the threshold of the “breaking point” would be lower in commercial disputes than in the case of family settlements. The Author believes that Geo Miller’s judgement would allow more time for settlement of dispute via negotiation but it would also make the determination of “cause of action” more subjective and confusing. 3. Application of Act, 1963 to Section 34 of Act, 1996. a. A primer on Section 34, of Act, 1996 and current position of law. The second part of the Article discusses the application of Act, 1963 to challenge and finally set aside an arbitral award under Section 34 of Act, 1996. Hence, this part would discuss the application of Act, 1963 to Act, 1996 after an award is delivered. Section 34 of Act, 1996 provides that any party to an arbitral award can take recourse to a Court to set aside the same award if any of the conditions mentioned under Section 34(2) of Act, 1996 is satisfied. Further, Section 34 (3) of Act, 1996 provides that- “An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal: Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.[15]” It can be observed that Section 34(3) of Act, 1996 prescribes an outer time limit of three months from the date on which the party challenging the arbitral award received the award or, from the date on which the request under Section 33 of Act, 1996 is answered. The proviso to the above section allows an additional thirty days to challenge the arbitral award but only if the Court is satisfied. In the above context of Section 34 (3) of Act, 1996 it is pertinent to refer the Section 29 (2) of the Act, 1963 which provides that if any special law provides for a period of limitation distinct from the time-limit prescribed under the Act, 1963, then the time limit prescribed under the special act would apply and provisions under Sections 4 to 24 of the Act, 1963 apply only in so far as they are not excluded by the special law.[16] Section 4 to 24 of Act, 1963 mostly provides for exclusion of certain time-period in the computation of the period of limitation. The Courts have observed that Act, 1996 is a special Law.[17] b. Application of Section 5 of Act, 1963 to Act, 1996. The SC in the case of UOI v. Popular Construction[18] was asked to determine whether Section 5 of the Act, 1963 apply to an application contesting an award filed under Section 34 of the Act, 1996. The Court held that the 1996 Act is a 'special law' as required under Section 29 (2) of Act, 1963 and that Section 34 of Act, 1996 provides for a period of limitation distinct from the Limitation Act.[19] Further, the Court noticed that proviso to Section 34(3) of the Act 1996 contain the words 'but not thereafter' and observed that this phrase would amount to an express exclusion within the meaning of Section 29(2) of the Act 1963. Furthermore, the Court held that to consider an application to set aside the Award beyond the proviso's extended timeframe would render the words 'but not thereafter' completely meaningless.[20] Analysis of the above judgment. The quick and timely execution of arbitral awards is essential to give complete effect and strength to arbitration laws in any country. The Court discarding the application of Section 5 of Act, 1963 helps in quick disposal of arbitral awards in three ways. Firstly, it creates certainty in determining the period of limitation as an application of Section 5 of Act, 1963 may lead to a situation where the beginning of the time period would be different from what is statutorily provided under Section 34(3) of Act, 1996 (i.e. from receive of arbitral award or disposal of the request under Section 33.). Secondly, the non-application is in consonance with Section 34(3) of Act, 1996. Thirdly, it helps in making arbitration a quick and efficacious remedy. c. Application of Section 14 of Act, 1963 to Act, 1996. Section 14 of the Act, 1963 allows for the exclusion of time spent in bona fide proceedings in a Court sans jurisdiction to compute the limitation period. The SC in the case of Consolidated Engineering Enterprises vs Principal Secretary Irrigation Department[21] was asked to determine whether Section 14 of Act, 1963 would apply to an application submitted under Section 34 of Act, 1996. Section 14(2) of Act, 1963 provides that “In computing the period of limitation for any application, the time during which the applicant has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the same party for the same relief shall be excluded, where such proceeding is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it.[22]” The Court began by observing that it would be preposterous to assume that just because Section 5 of Act, 1963 does not apply to Act, 1996, it would suo-moto result in non-application of Section 14, Act 1963 to Act, 1996. The Court further went to interpret Section 14 of Act, 1963 and held that a justice-oriented approach is to be taken than an approach that aborts the proceedings.[23] Further, no provisions in the Act, 1996 expressly or impliedly prevent the application of Section 14 of the Act, 1963. On the contrary, the Court held that Section 43(4) of Act, 1996 encourages the application of Section 14 of Act, 1963 as the former section allows exclusion of the time period between the commencement of the arbitration proceedings and the date in which the award is set aside in computing the limitation period for initiating any proceeding with respect to the dispute.[24] Analysis of the above judgment. The author believes that the SC was correct in applying Section 14 of Act, 1963 to Act, 1996 as the application doesn’t provide for a new period of limitation but only provides for exclusion of a certain period that is wasted in the Court of wrong jurisdiction. This doesn’t create any uncertainty in determining the period of limitation. The period of limitation still begins from as statutorily mentioned under Section 34 (3) of Act, 1996. Further, Section 34 (3) provides for a strict timeline of 90 days with a further extension of 30 days on approval of Court and there may be genuine cases where parties may wrongfully approach a Court with different jurisdiction due to confusion to set aside an arbitral award under Section 34 of Act, 1996. A blanket non-application of Section 14 of Act, 1963 would lead to the washing away of rights of the parties without any substantive wrongdoing on the part of parties. d. Application of Section 18 of Act 1963 to Act, 1996. In the case of P. Radha Bai v. P. Ashok Kumar[25] the SC was asked to determine whether Section 17 of Act, 1963 would be applicable in computing the period of limitation under Section 34(3) of the Arbitration Act? Section 17 of the Act, 1963 provides that where any fraudulent act has been committed by any person and consequently the plaintiff or the applicant is restricted from establishing his right, the time period for the purpose of limitation would only begin to run when the plaintiff or applicant has discovered the fraud or could, with reasonable diligence would have discovered it.[26] The Court referred to the case of Hukumdev Narain Dev v. Lalit Narain Mishra[27] wherein it was observed that an express exclusion of Section 4 to 24 of Act, 1963 is not required to be made under the Special act and an implied exclusion would suffice. Further, the implied exclusion has to be determined from the scheme, subject matter and object of Special law. Therefore, the Court in the P. Radha Bai case went on to analyze the implication of application of Section 17 of Act, 1963 to Section 34(3) of Act, 1996 and also the characteristics of the above Sections. The Court started by observing that Section 17 of Act, 1963 neither extends nor breaks the limitation period. It delays or postpones the start of the limitation period which is evident from the use of the statement "the period of limitation shall not begin to run".[28] Subsequently, the Court provided the characteristics of Section 34 of Act, 1996. It observed that 1. The phrase "may not be made" used in Section 34(3) has to be interpreted to mean "cannot be made". 2. The use of the phrase "but not thereafter" in the proviso to Section 34(3) of Act 1996 showcases the legislative intent not to allow any period beyond the time limit mentioned or else the phrase would become otiose. 3. The period to enforce the award under Section 36 of Act 1996 begins once the time limit to challenge the award under Section 34 of Act, 1996 expires. Moreover, if Section 17 of Act 1996 were to be used to calculate the limitation period under Section 34(3), the date of discovery of the alleged fraud or error would be the beginning of the limitation period. It would result in a different starting point of limitation than provided under Section 34 (3) of Act, 1996 and would result in undermining of the Special Law.[29] Analysis of the above judgment. Dr. Peter Binder in International Commercial Arbitration and Conciliation in UNCITRAL Model Law Jurisdiction had observed that the period to challenge and set aside an arbitral award should be an “unbreakable time” for sake of “certainty and expediency”. Hence, “time” and “certainty” were always considered to be a sine qua non for an efficient arbitral system. The author believes that SC was correct in discarding the application of Section 17, of Act 1963 to Act 1996 in three ways. Firstly, it creates certainty in the commencement of the limitation period. Secondly, it is in consonance with Section 34(3), Act 1996 which statutorily recognizes a beginning time period of limitation. Thirdly, it is in consonance with the reasoning of SC’s other judgments like Consolidated Engineering Enterprises vs Principal Secretary Irrigation Department and UOI v. Popular Construction. 4. Conclusion The SC has provided a time limit of three years to approach the Court to initiate arbitration. However, it can be observed from the above cases that “time is of the essence” for the cases under Arbitration. Consequently, a time limit of three years seems a bit too long to resurrect a dispute. This flaw or deficiency has also been pointed out by SC in the case of Bharat Sanchar Nigam Limited v. M/s Nortel Networks India Pvt. Ltd.[30]Further, the concept of “breaking point” also adds to the ambiguity and subjectivity of the provision. Hence, it can be concluded that Section 11 of Act, 1996 has some flaws and should be rectified by the legislature. However, analysis of the second part or application of Act, 1963 to Section 34 of Act, 1996 suggests that the SC has been moving in the right direction and the point of law is clear and without any ambiguity. *Arpit Sarangi, final year student of Hidayatullah National Law University, arpitsarangi12@gmail.com. [1] Civil Appeal No. 843-844 of 2021 [2] (2018) 14 SCC 265 [3] Article 137, The Limitation Act, 1963. [4] State of Orisaa v. Damodar Das, (1996) 2 SCC 216. [5] Major (Retd.) Inder Singh Rekhi v. Delhi Development Authority 1988 AIR 1007 [6] Ibid. [7] Ibid. [8] SAIL v. JC Budharaja, 1999 AIR (SC) 3275 [9] Supra 3. [10] Supra 5. [11] Hari Shankar Singhania & Ors vs Gaur Hari Singhania & Ors., (2006) 4 SCC 658. [12] 2019 SCC OnLine SC 1137 [13] Supra 6. [14] Supra 12. [15] Section 34 (3), Arbitration and Conciliation Act, 1996 [16] Section 29(2), The Limitation Act, 1963. [17] UOI v. Popular Construction, (2001) 8 SCC 470 [18] (2001) 8 SCC 470 [19] Ibid. [20] Ibid. [21] (2008) 7 SCC 169 [22] Section 14(2), The Limitation Act, 1963. [23] Supra 22. [24] Ibid. [25] AIR 2018 SC 5013 [26] Section 17, The Limitation Act, 1963 [27] 1974 2 SCC 133 [28] Supra 26. [29] Ibid. [30] Supra 2

Mr. Ashford, welcome to the Arbitration Workshop! Firstly, we are highly honoured to have you agree to give us your interview. Secondly, we appreciate your initiative to share your perspective with our readers. Q. Before we delve in, may we request you to kindly introduce yourself and tell us about the origins of your interest in the field of arbitration? A. I am a Partner and the Co-Head of International Arbitration at Fox Williams LLP. I was formerly a disputes partner at the firm now known as Cripps Pemberton Greenish. I am a Fellow of the Chartered Institute of Arbitrators. I am regularly appointed as arbitrator alongside my practice as counsel and I have current appointments in ICC, LCIA and LCAM arbitrations. I have been working in international arbitration for around 20 years, before which I was a general commercial litigator doing a fair amount of domestic arbitration. I am a widely published author, commentator and lecturer, including the Handbook on International Commercial Arbitration published by Juris Publishing of New York in 2014; the Guide to the IBA Rules on the Taking of Evidence in International Arbitration and the Guide to the IBA Guidelines on Party Representation in International Arbitration, both published by Cambridge University Press in early 2013 and mid-2016 respectively. I am writing A Guide to the IBA Guidelines on Conflict of Interest in International Arbitration, with publication anticipated in 2022. Q. What discernible trends in commercial and investment arbitration do you see emerging due to the COVID-19 pandemic? What considerations do you think future Claimants should take into due notice before initiating arbitrations? A. The pandemic has affected us all but whatever deprivations we have each suffered, the pandemic has changed, and possibly for the better, arbitration procedure. The pandemic has shown the arbitration community that life can go on much as it did before albeit with virtual, rather than in-person, conferences and hearings. After an initial thought of whether hearings could simply be adjourned until ‘better times’ it became apparent that these better times were some way off and we ought simply to get on with things. I think these changes reflect a permanent shift in the way that things are done and will influence how we do things long after the pandemic. That is not to say that we will remain as we are doing nearly everything virtually. Equally, we will not go back to doing everything in-person: the best of both will be retained. Time zones have been a relatively minor issue. Advance thought needs to be given to local times for all participants. The most extreme example I have experienced has been a 13-hour time difference between participants on an evidentiary hearing but in the end it worked well. The fundamental thing for Claimants remains that they must have confidence that they are pursuing a respondent that will be able to meet any award, or substantial part of it. That has only become a more important factor in light of the pandemic when the fortunes of companies have either improved or deteriorated depending on their sector and other factors. Q. How important do you think it is to arrest arbitrator bias? How are you advising your clients to arrest arbitrator bias in light of Halliburton v Chubb? A. It is a fundamental issue. Justice must not only be done, it must be seen to be done. Of course, we very rarely see, or even suspect, actual bias, it is apparent bias that invariably is the issue. The word ‘biased’, has, in other contexts, a far more pejorative connotation, but we use it to mean an absence of demonstrated independence or impartiality (Yiacoub v The Queen [2014] UKPC 22). The objective is to exclude any legitimate doubt as to the tribunal's independence and impartiality. The key to this is enquiry and disclosure: the parties must tell the arbitrator about themselves, their counsel, witnesses, experts and perhaps funders or others with a financial interest. The arbitrator must then make all appropriate enquiries and make consequential disclosures. If conducted properly, this exercise should bring everything into the sunlight and permit the parties to decide whether to accept the position, or whether to object. Q. In India, the Indian Arbitration Act, 1996 addresses issues of arbitrator bias in two schedules 5 and 7 – if the situation is caught under the ambit of schedule 7, then that would lead to an automatic exclusion of the impugned arbitrator. On the other hand, if it comes under the purview of schedule 5, then there would be a challenge proceeding before the tribunal etc. Internationally, do you think a similar system must be put in place either in UNCITRAL Model Law or a similar instrument that is not soft law (IBA) to combat the issue of arbitrator bias? A. I would hope that the international arbitration community can get its own house in order without the need for legislation or other hard law. Consent is fundamental, if the parties are happy with an arbitrator who, whilst impartial, is not, say, independent, then that is a matter entirely for them: a village elder is a classic example and works well as everyone knows that the village elder has connections and relationships such that he (or she) cannot claim to be independent but the parties trust the impartiality. In England, Halliburton and another case, Newcastle United Football, have dented my confidence that we are sorting this out properly. There is no doubt that the arbitrators in Halliburton and Newcastle did things that ought not to have been done. All courts found as much. Yet both arbitrators were able to continue, their behaviour criticised and yet forgiven by the courts. A large part of that forgiveness was centred on their repute – there was confidence that they would render a fair decision in the end. That is simply not good enough if justice must be seen to be done as we cannot look inside the minds of an arbitrator to see what might have, subconsciously, affected the decision and/or the decision-making process. I prefer the approach in Almazeedi: non-disclosure is a flaw in an arbitrator’s independence which makes him unsuitable – it is that simple. It must be recalled that bias is the absence of demonstrable independence – by failing to make the disclosures that they were obliged to make, the arbitrators failed to demonstrate the very independence that was required of them. At the very least, there was an asymmetry of information such that the party with less information may always feel aggrieved. Q. What is your take on third-party funding in commercial arbitration? Do you think third-party funders should be joined to arbitration proceedings given their alleged influence on arbitration proceedings? A. Funding is inevitable and may well see an uptick in light of the pandemic. Claimants will see the benefit of de-risking and taking off balance sheet the costs and risks of the dispute. Claimants will use funding for that process especially when funding arbitrations themselves will divert valuable resources from the recovery post-pandemic. It should not be forgotten however, that funding is not a panacea: it is very expensive money and a well-resourced and capitalised company may well choose to either fund itself or take one of the very many insurance products that are available and which can achieve much the same result with a lower cost. No, I don’t think that funders should be parties, they are strangers to the underlying contract under which the dispute has arisen. The parties have not agreed to arbitrate with a funder who has come into the dispute at a relatively late stage. Some solution may need to be crafted to ensure that a funder of an unsuccessful claimant might be held responsible for costs but there are other routes to do that. Q. Commercial arbitration entails strict adherence to the contract, however, there might be occasions wherein specific terms of the contract are unconscionable or not in line with the Contract law of the country. How do you deal with such clauses in arbitrations where the tribunal itself is a feature of the contract and might not be inclined to decide the dispute dehors the provisions of the contract itself? A. A lot will depend on the governing law. English law, for example, has a key characteristic that the courts will normally uphold what the parties agreed, subject to some basic principles of contract. For example, in the classic Monday/Friday case of The Laconia, the hire fell due on a Sunday; so, the charterer paid on Monday. The money was sent back and the ship repossessed on Monday. The hire was payable in advance so it should have been paid on Friday. It was held by the House of Lords that the shipowner was entitled to repossess. That gives certainty and predictability even if the result can appear harsh. Those same consistent results do not seem to be available in the case of, say, French, German or even New York law. They all have statutory overrides for ‘good faith’ and to override their disclaimers. French contract reforms from 2016 require parties to disclose any information that is ‘essential’ for the other contracting part. In the US, juries impose their own idea of fairness. However, if parties wish the deal that they negotiated to be upheld, then the English courts will normally honour that objective, an objective that the courts consider to be not unreasonable between commercial parties in their business dealings in the absence of some manifest vitiating factor. If parties choosing English law prefer that good faith should apply in their contract to potentially override its terms, then they can insert a good faith clause and other provisions for mediation, cooling-off, grace periods, notices of action and the like. The English courts respect good faith clauses: the difference is that in the case of English law, it is the parties themselves who are trusted to decide the ideology. Q. Most Commercial arbitrations would deal with the contract between the parties and extensive evidence including letters and other related communications written to each other during the execution of contracts. How necessary do you believe oral evidence is in such commercial arbitrations? A. Far less than we probably imagine. In England April 2021 saw the implementation of the recommendations of the Witness Evidence Working Group (reporting to the Business and Property Courts Board) with a radical approach to the gathering and content of witness evidence. In 2020 the ICC Commission reported on The Accuracy of Fact Witness Memory in International Arbitration and cautioned the reliability of witness evidence and made recommendations for the future. The general point is that, assuming that they are not forgeries, the documents do not lie. They might not tell the whole story and may need some supplementation by oral testimony, but they are generally the most reliable source of the truth. The most famous critique of witness evidence is that of Leggatt J (as he then was) in Gestim v Credit Suisse. Leggatt J said the following about the approach to witness evidence: “…place little if any reliance at all on witnesses’ recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts.” Witness Statements are, at least supposed to be, a reflection of the witness’ recollection or memory of the events that they can speak to. That is often not the case, rather they were lawyer crafted aspirational accounts of what the lawyers would like the witness to say. We lawyers ensure that the witnesses speak to events about which they might never have been involved and, even if they were, have little or no recollection of. The result was overly long, largely inadmissible accounts where the witness appeared to recall events with the utmost clarity. With that criticism, it is nevertheless important that there is a forum for the party to put over its case and tell its story to the tribunal. The witness statement is a convenient place for that to happen but the two purposes need to be borne carefully in mind. Q. The (Indian) Arbitration and Conciliation Act, 1996 has a provision on the settlement between the parties, which encourages the arbitrators to attempt settlement of the matter between the parties and if the parties come to a consensus, a consent award is passed. As a Lawyer, how do you advise your clients regarding their options to settle the matter prior to initiating or during the arbitration? Are such negotiated settlements a realistic option in high-profile arbitrations? A. Arbitrators are wary of entering into the settlement arena for fear of being accused of pre-judging and hence appearing to be biased. Some laws, as you point out, expressly permit or encourage the tribunal to descend into the settlement arena, but absent that, most arbitrators will avoid any participation in settlement discussions. They may ask the parties whether they have or wish to discuss settlement but will rarely go further than that and will certainly not be involved in settlement discussions. The settlement rate in international arbitration is lower than in many domestic disputes before national courts. Quite why that is, is not clear but I suggest two causes: firstly, the amounts involved can be very large and the costs a relatively small proportion and hence it is worth, ‘rolling the dice’ to try and get a win. Secondly, there are cultural barriers and parties do not know how to broach settlement when there may be language barriers and different approached to without prejudice discussions. More work needs to be done in this area and it may be that a specialist type of mediator, experienced in international arbitration, needs to come to the fore. Q. Are there any specifics of arbitral practices that you particularly enjoy? What practices do you employ to engage and keep up with the recent trends in arbitration? Is there any particular practice you would recommend young lawyers to regularly engage in to become better in the field? A. I love a good Redfern Schedule! As counsel it permits written advocacy outside of pleadings or memorials and it gives a chance to summarise your case (and your opponent’s) in a less formal environment and to request or resist documents based on what is truly in dispute. As the question acknowledges, there is always something new in international arbitration. There is no substitute to having a voracious appetite for reading, reflecting on and debating current issues. Those debates do not have to be formal and chatting with a colleague over a coffee can be very informative. My top tip would be get your narrative right and get it simple: ideally capable of expression in 3 sentences. We start off in the law thinking that the law reports will have all the answers. But the biggest task of a disputes lawyer is to take the information from the client and turn it into a persuasive narrative. Everything else is easy. Practice and practice that skill. You can start by describing your home, family or holiday. If you can master that 3 sentence narrative, try explaining a case you are working on in that way and build from there. Q. What would be your word of advice to the readers trying to make a name for themselves in the transnational practice of international arbitration? What books are a part of your library that is a must-have for a commercial arbitration practitioner (Counsel and Arbitrator)? A. There will be no substitute for hard work and challenging or critical thinking: do not accept the orthodoxy - it might not be right. Try and be as international as possible and do not expect your domestic norms to be carried over into international practice. The answer should be the most efficient way that something can be done, not what has been done before. Needless to say, all of my own books are on my shelf! But probably don’t get too constrained by what others say. By all means look at what, say, Gary Born has to say on a particular subject. Then consider whether you agree and why. The wonderful thing about international arbitration is that in many things there is no doctrine of precedent and your tribunal can probably do what it likes. The Editorial Team at the Arbitration Workshop would like to thank Mr. Peter Ashford for taking out time from his busy schedule and for sharing his perspectives with us!

-Harshvardhan Tripathi* India has witnessed a rapid evolution in the judicial opinion on the choice of ‘seat’/ ‘venue' of arbitration in recent times. The conceptual distinction between the ‘seat’ and the ‘venue’ is of immense importance and has implications for both, international commercial arbitration and domestic arbitration based in India. Most importantly, the choice of a ‘seat’ of arbitration provides exclusive jurisdiction to the Courts of the seat to regulate the arbitral proceedings arising out of the agreement between the parties. On the other hand, the choice of a venue has no such legal consequence and is merely a convenient place for the stakeholders to meet and conduct the arbitral proceedings. The venue can be changed as per the convenience of the parties and has no legal impact on the arbitration or the court proceedings arising out of it. Jurisprudential Development in seat vs venue debate so far The Arbitration and Conciliation Act, 1996 (‘Act’) uses the word ‘place’ of arbitration instead of ‘seat’ or ‘venue’ of the arbitration. Section 20 of the Act provides that either the parties can choose the place of arbitration mutually, in which case it would fall under Section 20(1) of the Act, or otherwise the Arbitral Tribunal can determine the place of arbitration under Article 20(2). In the same vein, the parties can choose a convenient place for holding arbitration proceedings as per Article 20(3) of the Act. Even though ‘seat’ and ‘venue’ have not been incorporated explicitly in the Act, the Supreme Court of India (‘SC’) in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services, Inc., (‘BALCO’) held the ‘place’ mentioned in Section 20(2) refers to the seat of arbitration, and in Section 20(3) refers to the venue of the Arbitration.In order to bring clarity and align the Act in line with BALCO, the Law Commission of India in its 246th Report suggested substituting ‘place’ in Section 20(2) with seat and with ‘venue in Section 20(3). However, these changes were not implemented in the 2015 Amendment and the statute still does not make an explicit reference to the ‘seat’and‘venue’ of arbitration. Although ‘seat’ and ‘venue’ have not been actively legislated upon, these concepts have been discussed and developed significantly by the Courts in India. For the purpose of this article, the key development in the seat vs venue conundrum in the context of domestic arbitration in India are discussed below In the 2017 decision of Indus Mobile Distribution Private Ltd v. Datawind Innovations Private & Ors (‘Indus Mobile’) the SC transplanted the international concept of ‘seat’ of arbitration in the context of domestic arbitration and ruled that if the arbitration clause confers exclusive jurisdiction upon the Courts of a particular city/state it is tantamount to designating that place as the ‘seat’ of arbitration and Courts of only that city/state will have the supervisor power over the conduct of the arbitration proceedings and provide relief. Principles laid down by the England and Wales High Court in Shashoua v Sharma were incorporated by the SC in the 2017 decision of Roger Shashoua & Ors v Mukesh Sharma, (‘Roger Shashoua’). The main principles that emerge out of Roger Shashoua are 1. The venue of arbitration is not automatically the same as the seat of arbitration. 2. The exception to (1) is a situation when the arbitration agreement defines the ‘venue’ of arbitration and mentions the supranational body of rules governing the arbitration without designating a seat explicitly. In such a scenario, if there are no other significant contrary indicia i.e. any information that leads to the opposite conclusion, then the venue of the arbitration is actually the seat of arbitration. The Courts have to analyze this issue based on the facts of each case. In the 2018 ruling of the Union of India v. Hardy Exploration and Production (India) Inc., (‘Hardy Exploration’) a three-judge bench of the SC laid down the following principle of determining the seat of arbitration 1. The venue of arbitration is not automatically the same as the seat of arbitration However if a concomitant factor is added to the venue, only then can the venue be equivalent to the seat of arbitration (‘concomitant factor test’). 2. If the arbitration agreement mentions the ‘place’ of arbitration, that in itself is not sufficient to consider it equivalent to the seat of arbitration. The presence of any contrary evidence would lead to the place not being the same as the seat of arbitration. 3. If the arbitration agreement mentions a condition precedent in connection to the place of arbitration, then the condition must be satisfied and only then can the place of arbitration be the same as the seat. In the 2019 decision of Brahmani River Pellets v. Kamachi Industries, (‘Brahmani’), the SC blurred the distinction between seat and venue as laid down in BALCO and held that merely specifying the venue of arbitration is sufficient to infer that the parties also intended to designate the venue as the seat of arbitration. Brahmani ignored the concomitant factor test of Hardy Exploration and simply equated the venue with the seat of arbitration. This question was revisited by the three-bench judge bench of SC in BGS SGS SOMA JV v NHPC Ltd., (‘BGS’). In BGS, the Court further developed the Roger Shashuatest and held that ‘venue’ of arbitration can also be the seat of arbitration if : 1. The seat of arbitration has not been designated in the arbitration agreement, and; 2. There is an express designation of ‘venue’ in the arbitration agreement combined with a supranational body of rules governing arbitration, and; 3. There are no significant contrary indicia The Court held that intention of the parties with respect to choosing a place as the seat of arbitration is to be gathered from the language of the arbitration agreement. BGS declared that Hardy Exploration was not in line with the 5 judge bench decision in BALCO, and therefore it was not good in law. In 2020, A three-judge bench of the SC in Mankastu Impex Pvt. Ltd. v. Airvisual Ltd., (‘Mankastu’)again aligned the reasoning with the concomitant factor test inHardy Exploration and held that place of arbitration does not automatically refer to the seat of arbitration. The Court has to gather the intention of the parties in connection to the seat of arbitration from a holistic reading of the arbitration agreement. In addition to the arbitration agreement, the conduct of the parties is also to be considered. The conundrum surrounding the seat/venue of the arbitration resurfaced recently in the context of domestic arbitration in M/s Inox Renewables Ltd v Jayesh Electricals Ltd.(“Inox”) (2021), where the division bench of the Supreme Court of India found that when the parties decided to shift the venue mentioned in the arbitration agreement from Jaipur to Ahmedabad through a mutual consensus, they intended the new ‘venue’ to in fact be the ‘seat’ of arbitration and not a mere ‘venue’. Therefore, the Courts of the ‘seat’ i.e. Ahmadabad will have exclusive jurisdiction to deal with the Section 34 application filed by M/s. Inox Renewables Ltd. (“Appellant”). Background Facts: The first contract was a purchase order agreement’ (“POA”) entered between M/s Gujarat Fluorochemicals Ltd. [“GFL”] and Jayesh Electricals Ltd. [“Respondent”] in 2012 for the manufacture and supply of power transformers at wind farms. The purchase order contained an arbitration clause that specified Jaipur as the venue for Arbitration and courts in Rajasthan to have exclusive jurisdiction to supervise the arbitration proceedings. However, in 2012 GFL transferred its entire business to the Appellant through a ‘business transfer agreement’ (“BTA”), to which the Respondent was not a party. This second agreement between GFL and Appellant fixed Vadodra as the seat of arbitration and gave exclusive jurisdiction to Courts in Vadodra. Procedural History: When the dispute between the appellant and respondent arose, the respondent approached the Gujarat High Court under Section 11 of the Indian Arbitration and Conciliation Act, 1996 (“Act”) for the appointment of an arbitrator. Accepting the request, the Gujarat High Court appointed a retired judge of the Gujarat High Court as the sole arbitrator. The arbitrator passed the award in 2018 in favour of the respondent. Aggrieved by the findings of the award, the appellant filed a Section 34 petition in Ahmedabad to set aside the award passed by the sole arbitrator. The Commercial Court of Ahmedabad held that it did not have the jurisdiction to entertain the Section 34 application because the arbitration clause in the BTA vests the Courts of Vadodara with the exclusive jurisdiction. The Appellant filed an appeal in the Gujarat High Court against this decision. The division bench of the High Court opined that the Commercial Court of Ahmedabad had erred by looking at the arbitration clause in the BTA. As mentioned before, the respondent was not a party to the BTA, and therefore the Commercial Court should have looked at the arbitration clause in the POA instead of the BTA. After pointing this out, the High Court held that the Courts of Rajasthan have been vested with the exclusive jurisdiction as per the arbitration clause in the POA. Therefore, the High Court dismissed the application filed by the appellant. Appeal against this decision came before the division bench comprising J Nariman and J Hrishikesh Roy. Reasoning: The Apex Court first looked at the observation made by the arbitrator in para 12.3 of the award with respect to the venue/place of the arbitration: “ 12.3 . . . However, the parties have mutually agreed, irrespective of a specific clause as to the [venue, that the place] of the arbitration would be at Ahmedabad and not at Jaipur. The proceedings, thus, have been conducted at Ahmedabad on the constitution of the Tribunal by the learned Nominee Judge of the Hon’ble High Court of Gujarat.”(Emphasis applied) It concluded that “by mutual agreement, parties have specifically shifted the venue/ place of arbitration from Jaipur to Ahmedabad.” Reaffirmation of the principle expounded in BSG SGS Soma The Supreme Court heavily relied on its previous decision in BGS SGS, wherein it was held that in the absence of any “significant contrary indicia” (i.e. significant contrary information), if the arbitration agreement names a place as a venue of arbitration, it is indicative of the parties intention to anchor the proceedings in that place and make it the seat of arbitration. In Inox, such contrary indicia was absent and there existed evidence of the positive intention of the party to designate Ahmedabad as the seat of arbitration: 1. The parties approached the Gujarat High Court for the appointment of the Sole arbitrator, which indicates that the parties had mutually formed the intention to override the exclusive jurisdiction clause in the arbitration agreement to make Ahmedabad the status of the seat of arbitration. 2. The arbitrator’s finding recorded the finding that the unequivocal intention of the parties was to shift the ‘seat’ of the arbitration from Jaipur to Ahmedabad through mutual consent. This finding was not objected to by the Respondent at that stage. Besides the finding, the conduct of the parties reveals that Ahmedabad was not merely a convenient venue for holding a few proceedings. The parties consciously novated their choice of seat. 3. The award was passed at Ahmedabad and was accordingly recorded in the arbitration award as the place of pronouncement and delivery of the award. Following the rule in BGS SGS, the Court reached the correct inference that in this case, Ahmedabad displayed attributes of the ‘seat’ of the arbitration and not merely the ‘venue’, and this was in fact intended by the parties through their mutual consent. It is appreciable that the Apex Court did not adopt a literal interpretation of the arbitration clause like the Gujarat High Court, and rather paid attention to the intention that the parties expressed in choosing to make Ahmedabad the new seat for arbitration through mutual consent. Applying the Concomitant factors test to the facts of Inox Before Inox, there seems to be developing two distinct lines of judicial opinion in determining the seat of arbitration: one line follows the principle in Roger Shahshua as consolidated in BGS SGS and believes that venue of the arbitration can also be the seat if there are no significant contrary indicia, and the other line of judicial opinion favours the concomitant factor test of Hardy Exploration along with the addition made by Mankatsu to it. Inox has clearly chosen to follow the BGS SGS line of judicial opinion. However, it would be instructive from an academic perspective to apply the contrasting approach in Hardy Exploration to inspect how it might have affected the Court’s conclusion in Inox. The Apex Court had adopted a contrasting approach to BGS SGS in its three-judge bench decision of Union of India v. Hardy Exploration and Production (India) Inc. (“Hardy Exploration”) in 2018, wherein it had observed that the venue can become the seat of arbitration only if ‘something else is added to it as a concomitant’. Even though BGS SGS held Hardy Exploration to be contrary to Supreme Court’s ruling in BALCO, it cannot be said that Hardy Exploration has been overruled because of the equal bench strength in Hardy Exploration and BGS SGS. As held in the 2004 Supreme Court decision of five bench in Central Board of Dawoodi Bohra Community &Anr v. State of Maharashtra &Anr, a bench of coequal strength can only doubt the correctness of a previous bench of coequal strength, but cannot overrule it or hold a previous decision by such coequal bench to be per incurium. Until the question is finally settled by a bench of 5 judge strength, it cannot be conclusively said that Hardy Exploration has been overruled by BGS SGS. The ‘concomitant’ factors in favour of Ahmedabad were: 1. That the parties first approached the Gujarat High Court in Ahmedabad for the appointment of the arbitrator and expressed clear intent of designating Ahmedabad as the seat of the arbitration. 2. A similar intention was reiterated before the sole arbitrator and the same was recorded in the award. These factors also satisfy the test laid down in Mankatsu wherein the three-judge bench of SC followed Hardy Exploration’s dictum and held that the venue of arbitration does not automatically become its seat. The test in Mankatsu gave primacy to the intention of the parties which could be gathered from a holistic reading of the arbitration clause and considering the conduct of parties. Considering the chain of events holistically, the arbitration clause was novated. Even the conduct of the parties as evident from the above two points clearly indicates that the parties intended Ahmedabad to be the seat of arbitration. Can the seat of arbitration be shifted only through a written agreement? The Court in Inox correctly distinguished the instant fact scenario from the 2011 division bench decision of Videocon Industries Limited vs. Union of India & Anr.(“Videocon”). In Videocon, the arbitration agreement contained an amendment clause that allowed for amendment or modification of contract only through a written agreement between the parties. Giving heed to this explicit requirement imposed by the arbitration agreement, the Apex Court had held that if the parties wanted to amend the contract and change the seat of arbitration through mutual agreement, it could only be done when the agreement is recorded in writing. However as J Nariman aptly pointed out in Inox, the ruling in Videocon cannot be extended to those cases where a similar clause in the arbitration agreement mandating ‘amendment only through written agreement’ is absent. Hence, Videocon does not lay down the general principle of law that the place of arbitration can only be shifted through a written agreement, and is rather a fact-specific decision that has no applicability to the factual matrix in Inox. A surprising conversion of venue to the seat of arbitration? Although the decision in Inox lays down the correct law, it has not sufficiently dealt with an important facet highlighted by division bench of Delhi High Court in its 2019 ruling of Dwarika Projects Limited v. Superintending Engineer, Karnal, PWD (B&R), Haryana that ‘the parties cannot be taken by surprise and be told that the venue for arbitration had morphed into the juridical seat of arbitration.’ The arbitral tribunal should fix the jurisdictional seat of the arbitration only after deliberation with the parties involved. Can it then be said that the Respondent was not ad idem with the appellant and therefore was taken by surprise about Ahmedabad being the seat of the arbitration as opposed to a mere venue? It seems unlikely that the respondent was taken by surprise, because at the time of the appointment of the arbitrator, it had made joint submissions before the Gujarat High Court along with the appellant, and displayed consensus of making Ahmedabad both the seat and the venue of the arbitration. Thus, the respondent consciously novated the venue of arbitration specified in the purchase order, with a new choice of ‘seat’ through their express averments before the Court. Conclusion Litigation on the determination of the seat/venue conundrum is becoming increasingly rampant. This case highlights the need for the arbitration clauses to be drafted carefully and with precision. Arbitration clauses should specify the ‘seat’ and ‘venue’ of arbitration distinctly to ensure that the effectiveness and finality of the arbitration mechanism are not eclipsed by long-drawn litigation proceedings afterwards. Furthermore, clarity can be brought into Section 20 itself by implementing the suggestions of the 246th Law Commission of India Report. Usage of the word ‘Place’ has caused immense confusion and therefore to bring the Arbitration Act in line with the judicial interpretation, ‘place’ should be replaced with ‘seat’ in Section 20(2) and with ‘venue’ in Section 20(3). The Arbitral Tribunal can also play a pivotal role in this respect to reduce litigation on the vexed question of determining the seat/venue of arbitration. Similar to Inox, wherein the Sole Arbitrator recorded the intention of the parties to affix Ahmedabad with the status of the seat in the Arbitral Award itself, Arbitral Tribunals in other proceedings can record the party’s intentions in clear unambiguous language. If the matter then goes before the Courts, such clear expression with respect to the party’s intention would greatly facilitate the Courts in deciding the question. Inox will be binding on such cases before the Indian Courts where the seat of the arbitration has not been declared and only the venue of arbitration has been identified in the arbitration clause. If the conduct of the parties shows that the venue was in fact intended to be the seat, then the Court would consider the venue to be tantamount to the seat of arbitration in such cases. It is indeed appreciable that by determining the seat of arbitration in the context of the intention displayed by the parties and by looking at the conceptual essence of a seat vis-à-vis venue of arbitration, the Supreme Court of India in Inox has successfully managed to digress from the narrow reasoning adopted by the Gujarat High Court that took a literal interpretation of the arbitration clause. Such an approach is welcome and it can be expected that this case law will set the evolving Indian jurisprudence on the seat/venue conundrum of the arbitration on the correct course of development. *-Harshvardhan Tripathi is a 5th-year student at NALSAR University of Law, Hyderabad.