[Webinar Report] Arbitration In India: The Good, The Bad And The Ugly


13 May 2020 2:23 PM GMT

  • [Webinar Report] Arbitration In India: The Good, The Bad And The Ugly

    The UNCITRAL National Coordination Committee, India (UNCCI), recognized by the United Nations Commission on International Trade Law ("UNCITRAL") comprises of leading legal practitioners, scholars, academics and administrators in India and are tasked with addressing the need of the judiciary to better understand the internationally prevailing application and interpretation of...

    The UNCITRAL National Coordination Committee, India (UNCCI), recognized by the United Nations Commission on International Trade Law ("UNCITRAL") comprises of leading legal practitioners, scholars, academics and administrators in India and are tasked with addressing the need of the judiciary to better understand the internationally prevailing application and interpretation of UNCITRAL standards. In its endeavour to establish links within the Indian legal and academic community, UNCCI with the support of UNCITRAL Regional Centre for Asia and the Pacific (UNCITRAL-RCAP) are organising a series of discussions on the various topics relevant to the work of UNCITRAL.

    Owing to the circumstances arising out of the Covid19 pandemic, the discussions have are being conducted on virtual platforms and the first if these in the series of discussions to follow was on the theme "Arbitration in India: The Good, the Bad and the Ugly" hosted by Centre of Excellence on Alternative Dispute Resolution (CADR) at the Faculty of Law, Manav Rachna University. The speakers at the session included some of the leading names in international arbitration, Hon'ble Ms Justice Indu Malhotra (Judge, Supreme Court of India), Mr Salim Moollan QC (Queen's Counsel and Barrister at Essex Court Chambers, London and the Former Chairman, UNCITRAL) and Mr Gourab Banerji (Senior Advocate and Barrister, Vice Chairman of UNCCI and India's National Correspondent to UNCITRAL CLOUT and Overseas Associate at Essex Court Chambers, London) and the discussion was moderated by Director of the Faculty of Law and India's National Correspondent to UNCITRAL CLOUT Mr Ajay Thomas and Delhi based lawyer and the Secretary of UNCCI Ms Adwaita Sharma.

    Mr Ajay Thomas began the discussion by thanking UNCCI, UNCITRAL-RCAP and Live Law for the support and introduced the panellists. He described the recent amendments to the arbitration legislation as a great game changer. He also said that he sincerely hoped that through the efforts by the bench, the bar, the government, academia and the business community together can work together to develop India to be a more arbitration friendly seat and venue.

    Justice Indu Malhotra speaking about the Good of arbitration in India started off by speaking about the 2015 amendments to the Act describing it to have made a significant change to the landscape of arbitration in India. She described the most important amendments to be; first with regard to foreign seated arbitrations where a specific provision was incorporated which provided for interim relief by moving the courts in India stating that this was a lacuna filled in light of the BAALCO judgement. With regard to India seated arbitrations, she described as significant the amendments made to part one of the Act which included amendments to Section 11 specifying the scope of scrutiny by incorporating sub section 6(A) whereby the scope of reference was limited to ascertaining the existence of an agreement to arbitrate. She then referred to section 12 conflict of interest and drew attention to the IBA guidelines in this regard to which the Indian Legislation had given a statutory flavour through schedules to the Act and pointed out that India was the only jurisdiction to incorporate the same into its legislation whereas in other jurisdictions it is a soft law treated as a guidance to address these issues. She also pointed out to section 17 which empowers the arbitral tribunal to provide interim relief at par with a court and thereby minimising court intervention. She also drew attention to the legislation providing for specific timelines for the conclusion of domestic arbitration and while it was not mandatory for India seated international arbitration though an endeavour ought to be made and said this was very successful in the Indian context. She further went on to speak about the public policy exception being given a narrow definition statutorily and an award could be set aside on this basis only on three grounds and opined that India perhaps is the only country to have defined it in such narrow terms. She further went on to state that apart from these developments to the arbitration statute; the Commercial Courts Act also played a positive role in fast-tracking the proceedings. On the 2019 amendments, she opined that the basic purpose was to move from Ad-hoc arbitration to institutional arbitration and these amendments also focussed on promoting arbitration in India, strengthening arbitral institutions, accredit arbitrators and arbitral institutions. She further dispelled the notion that the Arbitration Council of India is government dominated and would have a regulatory role. She also addressed the concerns related to the VIII schedule of the Act which has drawn criticism from the international practitioners by stating that it is in part-I of the Act and applies only to domestic arbitration and does not prohibit international lawyers from being appointed as arbitrators. She also clarified that the provision is not yet in force and that the Government is giving it serious thought due to the outburst of criticism by international lawyers. She concluded her address by stating that India can be compared to any of the world's arbitration friendly jurisdictions and that the same was reflected through the World Bank's ratings for ease of doing business where India had climbed from 161 in 2016 to 63rd position in 2019.

    Following this, Gourab Banerji spoke about the Bad of arbitration in India, began by thanking Ms Anna Jouben-Bret the Secretary of UNCITRAL and Ms Athita Komindr the head of UNCITRAL-RCAP. He lauded Justice Indu Malhotra for having written a comprehensive book on Arbitration while on the bench, which is a huge accomplishment as said that he cannot remember of any other judge who had written a book while serving as a judge. He said that 10 years ago the landscape was entirely different and the reality now is that the landscape has dramatically changed over the last decade and particularly over the last five years. He congratulated the Government for its efforts and initiatives in improving the landscape of arbitration in India. As a practitioner, he believed that there is still room for improvement in certain aspects of arbitration in India. He pointed out that the pre-reference stage, i.e the appointment of arbitrators was critical to the arbitration process and the bottleneck faced which isn't completely ironed out here is due to the history of judicial intervention with a seven judge finally deciding that appointment of arbitrator is judicial and not administrative. He opined that the legislature stepped in and brought section 11(6)(a) of the Act and thereby narrowing the scope and limiting it to the existence of an agreement to arbitrate. However he expressed reservations as issues like arbitability, accord and satisfaction, non-signatories and other issues earlier debated under Section 11, this is because the judicial mind would tend to look beyond the existence of an agreement to arbitrate and do justice to the case. Therefore he was of the view that legislative intervention was required here to clarify the scope at the stage of Section 11 application. Moving on from this stage to the arbitration, where in the past many problems existed, like delay, expertise of arbitrators, bias, while many of these are addressed, there are still some aspects which require improvement. He expressed concerns regarding the expertise of arbitrators, bias, gender inequality but lauded the addition of Schedules V & VII of the statute. He also had concerns especially from a practitioner's perspective regarding the declaration under Section 12 of the Act where one has to also declare that one had sufficient time to devote to the arbitration, also a cause for concern was that bias under schedule-V could be challenged only right at the end of the arbitration proceedings. He also was of the view that section 16 may still require addressing as inevitably almost all tribunals don't like their jurisdiction being challenged and many a times this is clubbed with the merits of the of the case. Though he did not have a ready solution to this he suggested could be addressed by either the legislature or the judiciary perhaps by saying that this needs to be decided at the preliminary stage. Moving onto enforcement, he agreed with Justice Indu Malhotra regarding the improvement of the process but said that deposit of money is not the answer but suggested framing of issues like under section 100 of CPC as a period of one year is not always possible to decide on these matters because of docket pressure and the judges aren't to be blamed for this. He concluded by crediting the Government for the amendments and called for debate and further amendments where required.

    The last panellist Salim Moollan spoke about the ugly of arbitration in India. He began by saying that this task could be thought to be an ungrateful one, but in truth, every arbitral jurisdiction has an 'ugly' side – be it in its arbitration statute, in its arbitration jurisprudence, or in its everyday practice of arbitration; which have gone seriously wrong and which need fixing. He added that, the difference between India and most other arbitral jurisdictions is that, practitioners in other jurisdictions are usually be keen to portray the attractive features of their jurisdiction while discretely fixing the problems that inevitably exist, in India, it would appear, the grass is always greener elsewhere; and the national sport is to say so in vocal terms to the outside world. He lauded India for its efforts in recent years to address issues concerning arbitration and pointed out that unlike many countries for whom legislative time for this field is sparse or non-existent, India has consistently shown a willingness to progress not simply through judicial fixes or through the development of best practices and rules by practitioners, but also through legislative amendments. Quoting Lord Goldsmith from his inaugural address at the 11th Annual International Arbitration Conclave in New Delhi last February and describing him as a friend and promoter of Indian arbitration, he identified two features of the legislation as problematic. The first was that, the Arbitration Council of India not merely being a body to promote arbitration as was recommended but apparently also to regulating it. The second concern he had was the required qualifications of arbitrators as specified in the new section 43G and in the Eighth Schedule, which according to him prohibit the appointment of foreign lawyers and of non-legal experts as arbitrators in Indian seated Arbitrations. He gave the example of Mauritius, where, he said that every involved Minister and civil servant used every public platform to reiterate that the mission of Government was to support, and not interfere. He also gave the example of the Mauritius International Arbitration Centre, which is wholly owned by the Mauritian Government and is independently administered by one of the most respected international organisations in the field (the PCA) and stated that its independence is guaranteed by express provisions in its statutes and by international agreements with the PCA. As for the question of foreign lawyers acting as arbitrators, he said that as he understood it, the provisions are not in force as yet and noted that the Law Minister in his speech at Justice Indu Malhotra's book launch two months ago, stated that it was not the intention of the legislation to ban foreign lawyers. He added that the two thorns have historically been the assumption by Indian courts of supervisory authority over foreign arbitrations and an overly expansive interpretation of the concept of public policy under Article 34 of the Model Law / section 34 of the 1996 Act and Article V of the New York Convention / section 48 of the 1996 Act. He pointed out that the first issue is now well and truly dead following the Balco judgment and the 2015 amendments to the Act, which he opined as a very significant achievement. However, according to him the second issue also appears to be on the way to being resolved but he was of the view that the road to resolution will be less straightforward for the simple reason that it cannot be settled simply by the recognition of the correct test but also requires a meaningful understanding of the field and the ability to apply the test faithfully. This according to Mr Moollan sometimes involves doing what does not come easily to any lawyer i.e. to resist the temptation of correcting another lawyer's perceived errors of law. He concluded his address by calling for constructive engagement between the arbitration Bar and arbitration users and the powers that be instead of being vocal critics.

    The session concluded with a brief question answer session followed by the concluding remarks by the Secretary of UNCCI, Ms Adwaita Sharma.

    The video recording of the webinar can be accessed at the following link

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