Khaitan & Co updates

Patent illegality: Supreme Court travels a long road to tame a herd of unruly horses
Khaitan & Co
  • Arbitration & ADR
  • India
  • 16 July 2020

The patent illegality ground was formally introduced to the Arbitration and Conciliation Act 1996 by way of the Arbitration and Conciliation (Amendment) Act 2015. Prior to 2015, the scope of this ground of challenge was set out in various Supreme Court decisions stemming from Oil & Natural Gas Corporation Ltd v Saw Pipes Ltd. This article examines the genesis of patent illegality and tracks its trajectory from Oil & Natural Gas Corporation.

Arbitration under special statutes with regard to contractual stipulations
Khaitan & Co
  • Arbitration & ADR
  • India
  • 09 July 2020

The freedom to contract principle forms the basis of the Contract Act, and a similar principle is also provided for in the Arbitration and Conciliation Act. However, the question often arises as to what happens when one party – despite a contractual agreement setting out the scope and ambit of arbitration – seeks recourse to remedies provided for under a special statute. This article examines this issue in view of the Micro, Small and Medium Enterprises Development Act.

Enforcement of foreign arbitral awards and scope of judicial intervention: a minimalist approach
Khaitan & Co
  • Arbitration & ADR
  • India
  • 02 July 2020

The enforcement of a foreign arbitral award in India is founded on the fundamental principle of minimal judicial intervention in order to further India's pro-arbitration and consequently pro-foreign investment climate. However, the Delhi High Court recently refused to enforce a foreign arbitral award under the Arbitration and Conciliation Act. This article analyses the court's decision, its reasons for refusing the enforcement of the award and whether this judgment is a step back for Indian arbitration law.

Foreign arbitral award allows exit based on put option? "No worries" says Bombay High Court
Khaitan & Co
  • Arbitration & ADR
  • India
  • 25 June 2020

The Bombay High Court recently passed an order in favour of the enforcement of a foreign arbitral award which had been rendered by an arbitral tribunal constituted under the Singapore International Arbitration Centre Arbitration Rules. The award upheld the validity and performance of a put option created pursuant to a share subscription agreement and a put option deed, which provided a foreign investor with an exit from its investment in an Indian company on agreed terms and conditions.

Anti-arbitration injunctions: use and controversy
Khaitan & Co
  • Arbitration & ADR
  • India
  • 04 June 2020

While anti-suit injunctions are typical court-ordered injunction orders which restrain the parties from initiating or continuing legal action in foreign courts, anti-arbitration injunctions are specific orders which prohibit parties from initiating or continuing arbitration proceedings. As the Indian courts may assume jurisdiction and grant anti-arbitration injunctions even though they seem to weaken the competence-competence principle, these injunctions are highly controversial.

Supreme Court refuses foreign award enforcement – return of public policy challenge
Khaitan & Co
  • Arbitration & ADR
  • India
  • 21 May 2020

The Supreme Court recently refused enforcement of a foreign award on the basis that it was contrary to the fundamental public policy of India. Although a recent decision, the dispute arose almost 40 years ago and thus pertains to an era which preceded the amendment of the Arbitration and Conciliation Act. In its decision, the court analysed the concept of public policy and the difference between contingent contracts and frustration as a principle for voidability of contracts under the Contract Act.

Determining applicable law: role of arbitral tribunals
Khaitan & Co
  • Arbitration & ADR
  • India
  • 14 May 2020

If the parties to a contract fail to choose the applicable law, the task trickles down to the arbitral tribunal. This will be one of the first tasks required of an arbitral tribunal, as adjudication of a dispute is not possible until the applicable law has been determined. Further, the application of an incorrect law is a ground for setting aside an arbitral award. This article examines the role of an arbitral tribunal in determining the applicable law in arbitration proceedings.

Venue versus seat debate: urgent need for reference to larger bench
Khaitan & Co
  • Arbitration & ADR
  • India
  • 07 May 2020

The concepts of 'seat' and 'venue' in the context of arbitration law have been the subject of numerous landmark rulings in India. However, the test for distinguishing between these two concepts has yet to be settled under Indian law. In order to avoid confusion, inconvenience or conflicting decisions in the future, this issue must be referred to a larger bench of the Supreme Court as soon as possible for its final word on the matter.

Do interim or partial final awards constitute arbitral awards?
Khaitan & Co
  • Arbitration & ADR
  • India
  • 16 April 2020

The division bench of the Bombay High Court recently confirmed the legal position and the tests for determining whether a partial final award may be interpreted as an arbitral award under the Arbitration and Conciliation Act. In so doing, it also clarified the position on the limitation period for challenging such an award.

Enforcement of interim orders passed by arbitral tribunals seated outside India
Khaitan & Co
  • Arbitration & ADR
  • India
  • 12 March 2020

Following the passing of amendments in 2015, the Arbitration and Conciliation Act specifically provides that arbitral tribunal orders which are passed under Section 17 of the act will be enforceable under the Code of Civil Procedure as if they were a court order. However, a party can take advantage of Section 17 only when the arbitration is seated in India, which raises questions as to the enforceability of interim measures granted by arbitral tribunals which are situated outside India.

Insufficiently stamped agreements: can parties still seek interim relief in support of India-seated arbitrations?
Khaitan & Co
  • Arbitration & ADR
  • India
  • 20 February 2020

The Supreme Court recently held that the courts cannot appoint an arbitrator on the basis of an arbitration clause if the agreement containing such clause is insufficiently stamped. The court concluded that such an arbitration clause does not exist in law. In so doing, the court expressly overruled a prior decision of the Bombay High Court to the extent that it dealt with the powers of the courts under Section 11 of the Arbitration and Conciliation Act.

Seat/venue/place saga continues: Supreme Court reverses view and declares earlier judgments bad law
Khaitan & Co
  • Arbitration & ADR
  • India
  • 02 January 2020

The Supreme Court recently decided key issues relating to the interpretation of arbitration clauses and the scope of appealable orders under the Arbitration and Conciliation Act. This judgment does an admirable job of resolving residual ambiguities regarding the issue of exclusive jurisdiction where the seat of an arbitration is situated. Notably, through its decision, the Supreme Court has specifically declared that its earlier judgment in Hardy Exploration and the Delhi High Court's decision in Antrix are incorrect.

Supreme Court holds government cannot seek preference while seeking stay on enforcement
Khaitan & Co
  • Arbitration & ADR
  • India
  • 12 September 2019

The Supreme Court recently considered whether an unconditional stay can be granted under Section 36 of the Arbitration and Conciliation Act 1996 when the applicant is the government. The court rightly held that the safeguards which were incorporated for the Crown by Order 27, Rule 8A of the Code of Civil Procedure are now inapplicable and outdated, especially as the purpose and intent of alternate dispute resolution is to treat parties equally.

Supreme Court rules that arbitrators' fee schedule fixed by parties overrides Fourth Schedule of Arbitration Act
Khaitan & Co
  • Arbitration & ADR
  • India
  • 08 August 2019

The division bench of the Supreme Court recently held that if the parties to an arbitration have agreed an arbitrators' fee schedule, the arbitrators must charge their fees in accordance with this agreed schedule and not in accordance with the Fourth Schedule of the amended Arbitration Act. While this decision gives credence to party autonomy and may thus be hailed as pro-arbitration, it specifies no limits and provides no other directions for parties to bear in mind when fixing a fee schedule.

Terminating arbitrator's mandate – can parties proceed with truncated tribunal?
Khaitan & Co
  • Arbitration & ADR
  • India
  • 25 July 2019

It is common knowledge that arbitration provides greater flexibility and party autonomy compared with traditional litigation before the courts. Corollary to this, the agreed terms for the appointment of an arbitrator or arbitral tribunal must be strictly followed while making such appointments if a dispute arises between the parties to an agreement. However, what happens when an arbitrator fails to or is prevented from acting specifically at the penultimate stage?

Award replacing contractual provisions with new terms "shocks the conscience" of Supreme Court
Khaitan & Co
  • Arbitration & ADR
  • India
  • 20 June 2019

The question of whether a contract can be amended retroactively was raised in the arbitration proceedings between Ssangyong and the National Highways Authority of India. The Supreme Court's ruling on the case is a welcome exposition on the contours of Section 34 of the Arbitration and Conciliation Act, especially in relation to challenges on grounds of violations of principles of natural justice.

Enforcement of foreign awards: does violation of legal provision equate to contravention of fundamental policy?
Khaitan & Co
  • Arbitration & ADR
  • India
  • 18 April 2019

In 2013 the Supreme Court held that the enforcement of a foreign arbitral award can be refused only if it is contrary to, among other things, the 'fundamental policy of Indian law'. This article focuses on the Indian courts' interpretation of this term and looks at a common question that arises in relation to this area of law – namely, whether a foreign arbitral award which is a mere violation of an Indian legal provision qualifies as a contravention of the fundamental policy of Indian law.

Arbitrability of consumer disputes: loophole in Booz Allen framework?
Khaitan & Co
  • Arbitration & ADR
  • India
  • 14 March 2019

The Supreme Court recently ruled that consumer disputes are incapable of being submitted to arbitration, placing them in the infamous category of 'non-arbitrable' subjects in India. However, the court also stated that where an elected consumer fails to file a consumer complaint, the parties are not barred from submitting the dispute to arbitration. This article analyses whether such a statement could have far-reaching implications for arbitrability as a ground for challenging an award.

Clarity in arbitral proceedings – legislation post-pronouncement of arbitral award
Khaitan & Co
  • Arbitration & ADR
  • India
  • 07 February 2019

The focus of India's rapidly evolving arbitration regime appears to be concentrated on factors such as ensuring that arbitrations are completed in a timely manner and appointed arbitrators are impartial. While these factors are significant, the importance of substantive and procedural clarity in terms of what happens after an award is passed is also crucial.

Revisiting Supreme Court Centrotrade decision and utility of two-tier arbitration clauses
Khaitan & Co
  • Arbitration & ADR
  • India
  • 13 December 2018

Two-tier arbitration clauses or appellate arbitration mechanisms were upheld by a three-judge bench of the Supreme Court in Centrotrade Minerals and Metal Inc v Hindustan Copper Limited. This article discusses the evolution of the jurisprudence surrounding two-tier arbitration in India and analyses both the utility of such a mechanism for the parties and its usefulness in certain situations.

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