The Arbitration and Conciliation (Amendment) Ordinance, 2015 – which provides for less cumbersome, more cost-effective, efficient and expeditious dispute resolution – has been welcomed by litigants. However, more clarity is needed with regard to the ambiguities in the new Section 11 – in particular, in relation to the scope and applicability of the Fourth Schedule and the model fee structure payable to arbitrators.
The courts have issued a series of judgments which have strengthened the pro-arbitration stance of the Indian judiciary with regard to international commercial arbitration. However, the jurisprudence is more nuanced with respect to arbitrating disputes between two Indian parties and uncertainty still persists with regard to whether two Indian parties can choose a foreign seat and a foreign law to govern their arbitration agreements.
The courts continue to retain jurisdiction over pre-BALCO arbitration agreements under the Bhatia International regime. However, theories of expressed and implied exclusions have been carved out to bar the application of Part I of the Arbitration and Conciliation Act 1996. That said, unless the courts provide further clarity, implied exclusion of Part I does not apply to two Indian parties which have agreed to foreign-seated arbitration.
While the jurisdiction of the Indian courts in relation to international commercial arbitration remains a complex issue, the Supreme Court has attempted to strike a balance between the courts, arbitrators and parties through a series of judicial pronouncements. A recent Supreme Court decision significantly altered the settled position on the application of the Arbitration and Conciliation Act in relation to international commercial arbitration.
A transaction culminating in arbitral proceedings often creates questions regarding the scope and power of an arbitral tribunal to grant relief to a successful party. A question that often arises when arbitral awards are made is whether further interest can be imposed on an awarded sum. In other words, can interest be awarded on interest? The Supreme Court recently ruled that such claims for compound interest are sustainable.
A recent Supreme Court judgment confirms that Part I of the (Indian) Arbitration and Conciliation Act 1996, which governs domestic arbitration, does not apply where the arbitration clause has expressly specified foreign law as the law applicable to the arbitration agreement. The court further held that the issue of arbitrability of the disputes themselves would be determined in accordance with the law governing the arbitration agreement.
A recent Supreme Court decision has significantly altered the country's position on the arbitrability of fraud. However, while the decision could speed up domestic arbitration proceedings, it has raised many questions, as the single judge held that he was not bound by a two-judge bench decision because it had been made without reference to relevant decisions and statutory provisions.
Allegations of fraud by a party have proved to be a vexatious issue for arbitration in India. Judicial pronouncements have led to a situation where even a hint of any fraudulent activity could take disputes out of an arbitrator's jurisdiction. Although recent decisions on international arbitrations linked to India appear to have steered the legal position towards international practice, allegations of fraud in domestic arbitrations remain a minefield.
The Supreme Court recently held that the doctrine of 'double exequatur' is inapplicable in India, in light of the change in law introduced by the Arbitration and Conciliation Act. The court rejected the argument that a foreign arbitral award could not be enforced in India unless confirmation thereof was first sought from the relevant foreign court.
A series of recent Indian court judgments have given a much-needed impetus to arbitration and its practice in India. These judgments are clearly a conscious attempt on the part of the Indian judiciary to restrict intervention in arbitration and related processes in order to make the arbitration process a credible, speedy and effective mode of dispute resolution.
The Supreme Court recently held that that when interpreting the expression 'public policy in India', patent illegality cannot be included as one of the grounds on which the enforcement of foreign awards may be refused. The court has endeavoured to make a distinction between awards made in India and foreign awards, with a view to limiting the scope of grounds by which to challenge the latter.
The Delhi High Court recently examined the question of when an arbitration clause can be deemed binding on a party that is not a signatory to the agreement containing the clause. The court held that the question should be determined based on the terms of the agreement, along with the intention and conduct of the parties. However, a cautious eye should be kept on applications in order to discourage frivolous petitions.
The Delhi High Court recently affirmed that where parties to an agreement make reference to an arbitrator for the purposes of determining a question of law, the decision taken by the arbitrator cannot be interfered with by the courts, even if the court itself may have a different view on the question of law from that taken by the arbitrator. The court may interfere only where the view arrived at by the arbitrator is implausible or contrary to law.
In a recent appeal of an International Chamber of Commerce arbitration in Malaysia, the Delhi High Court had to consider whether the Indian law of limitation was a procedural law or a substantive law. The lead arbitrator had noted that since the statute of limitations in both India and Malaysia was procedural, an action could be brought in Malaysia even if the period of limitation in the claim had expired under the Indian Limitation Act.
A recent case before the Delhi High Court demonstrates that the courts continue to frown on parties' efforts to avoid arbitration by filing suits that implead unnecessary parties. Efforts on the part of the courts to weed out frivolous civil suits filed by parties to scuttle the arbitral process is a necessary step and will go a long way towards building the confidence of commercial parties when considering engaging in arbitration.
A constitutional bench of the Supreme Court recently issued a judgment in which it restricted the scope of interference by Indian courts in arbitrations conducted outside the territorial boundaries of India by excluding the applicability of Part I of the Arbitration and Conciliation Act 1996 to such arbitrations. This judgment was much anticipated in international commercial arbitration circles and is very welcome.
Bilateral investment treaties have recently become the chosen pathway for dispute resolution by foreign investors in India. However, historically foreign companies that invest in India have rarely invoked the dispute resolution clauses of such treaties. A view has been canvassed that India should therefore consider amending its investment treaties so as to reduce the protections accorded to foreign investors.
A recent case before the Supreme Court has confirmed the grounds under which arbitration awards may be challenged. As detailed under Section 34 of the Arbitration and Conciliation Act, the court has the power to allow an amendment where an application has been made within the prescribed limits, if the peculiar circumstances of the case so warrant and it is so required in the interest of justice.
In a recent case the Supreme Court held that there is an implied exclusion of Part I of the Arbitration and Conciliation Act 1996 if the parties have expressly chosen foreign law as the curial law to govern the arbitration procedure. Therefore, as a cautionary approach, where parties intend not to be governed by the act's provisions, it is best specifically to exclude the applicability of Part I of the act.
Two recent Supreme Court judgments deal with a situation where, due to the peculiar facts of the case, non-parties to the arbitration agreement were joined in the arbitration proceedings. The court therefore considered whether the arbitration agreement should be allowed to have effect in relation to all parties before the court, or only with respect to the parties to the arbitration agreement.