Arbitration Laws in India PDF

KEY FEATURES OF ARBITRATION
IN INDIA
&
VIGILANCE ISSUES
1 November 2017
Surjendu Sankar Das

Counsel
surjendu.das@AMSShardul.com
-I-
SCHEME OF THE ARBITRATION AND

CONCILIATION ACT 1996
© 2017 | Shardul Amarchand Mangaldas & Co Privileged and Confidential 2

SCHEME OF THE ACT
• Part I of the Act applies to domestic arbitrations/awards
 Chpt. I – General Provisions (Definitions, extent of judicial intervention, etc.)
 Chpt. II – Arbitration Agreement (Referring parties to arbitration, interim, measures by

Court)
 Chpt. III – Composition of Tribunal (Appointment, grounds of challenge)
 Chpt. IV – Jurisdiction of Tribunal (Kompetenz-Kompetenz, interim measures)
 Chpt. V – Conduct of arbitral proceedings
 Chpt. VI – Making of Award (Time limit, form & content of award, cost, etc.)
 Chpt. VII – Recourse against Award
 Chpt. VIII – Finality and enforcement of Award
 Chpt. IX – Appeals
 Chpt. X – Miscellaneous (jurisdiction, limitation, etc.)

• Part II of the Act applies to foreign arbitration/awards.
 Part II is divided into two chapters:
• Chapter I – New York Convention Awards.
o Definition of foreign award

o Power of juridical authority to refer the parties to arbitration
o Procedure and condition for enforcement
o Appeals
• Chapter II – Geneva Protocol and Convention Awards.
• Part III - Conciliation

AMENDMENT - OVERVIEW
• The Amendment Act contains 25 Sections which make substitutions,
deletions and insertions and also introduces 4 Schedules into the
Principal Act.
• The most important of these amendments make provisions for:
 Jurisdiction of Indian Courts in matters of international commercial
arbitration (ICA). (proviso to S. 2(2))
 Disclosures by arbitrators of circumstances which give rise to justifiable
doubts as to their independence and impartiality (S. 12);
 Rules regarding oral hearings (S. 24(1));
 Time limit for making arbitral award (S. 29A)
 Fast track procedures (S. 29B).
 Comprehensive regime of costs (S. 31A);
 Explanation of public policy (S. 34 (2)(b)), and
 Time limit for setting aside arbitral award (S. 34 (6));
- II -
CONTROVERSY UNDERLYING
“SEAT” AND “VENUE”

CHOICE OF LAWS
• Law governing (main) contract
• Law governing arbitration
• Procedural law of arbitration

“SEAT” VIS-À-VIS “VENUE”
• “Seat” S. 20(1) and (2) ; “venue” S. 20(3)
• In ICA, having a seat in India, hearings may be necessitated

outside India. In such case, the hearing will be at the venue, but it
would not have the effect of changing the seat of arbitration which
would remain in India.
• If the agreement is construed to provide for the “seat” or “place”

being in India –Part I applies. If the agreement provides for a
“seat” or “place” outside India, Part I does not apply to the extent
inconsistent with the arbitration law of the seat.
(Balco, 2012)

EVOLUTION OF LAW
• Bhatia International (2002, SC) – Section 9
 Part I applies unless the parties by agreement, express or implied,
exclude all or any of its provisions
• Venture Global (2008, SC) – Section 34

 Followed Bhatia
• Indtel Tenchical (2008, SC) – Section 11

 If agreement is silent on as law and procedure of arbitration, the law
governing arbitration would ordinarily be the same as law governing
contract.
• Videocon Industries (2011, SC)
 Seat is ‘London’ or ‘KL’? Parties specifically agreed arbitration
agreement to be governed by English Law – hence Section 9 in DHC
not maintainable.

• Balco (2012, SC)
 Prospectively overruled Bhatia and Venture
 Part I is applicable only to all arbitrations which take place within
India
 An agreement as to seat of arbitration is analogous to an exclusive
jurisdiction clause
 ‘Venue’ not synonymous with ‘seat’. But in arbitration under ICC, a
provision that venue of arbitration shall be London does amount to
designation of juridical seat.
• Reliance Industries (2014, SC)

 Law governing contract was Indian. Law governing arbitration
agreement was English. Hence, applicability of Indian Arbitration Act
was ruled out by a conscious decision and agreement. Juridical seat or
legal place would be London.

• Enercon (2014, SC)
 Parties were Indian and German. Venue was London. Indian
Arbitration Act will govern the agreement. The law governing
Contract was Indian.
 It would not be appropriate to read “venue” as “seat”.
• Eitzen Bulk (2016, SC)

 London seated arbitration under English law. DB of Guj HC held S. 34
is maintainable. Bombay High Court allowed enforcement under Part
II as there was an express exclusion of Part I.
 SC hold that foreign award passed in London cannot be interfered

with u/s 34. Dismissed Guj HC proceedings and upheld Bom HC
judgement.

• Indus Mobile (April 2017, SC)
 Seat of arbitration was Mumbai and exclusive jurisdiction vests with
Mumbai Court.
 The moment seat if designated, it is akin to an exclusive jurisdiction
clause.
 A reference to seat is concept by which a neutral venue can be chosen.
No part of cause of action may have arisen. SC held Mumbai Court
alone have jurisdiction to the exclusion of all other courts in country.

• Imax Corporation (March 2017, SC)
 Law governing contract is Singapore and jurisdiction of Courts at
Singapore. Arbitration under ICC Rules. ICC Court decided London as
juridical seat of arbitration, which parties accepted.
 S. 34 filed in Bom HC. SC held conduct of parties exclude applicability
of Part I. Section 34 was dismissed.
 Relationship between seat and law governing arbitration is an integral
one. Seat is defined as juridical seat of arbitration. The place of
arbitration determines the law that will apply to and related matters
like, challenge, etc.
• Roger Shashoua (July 2017, SC)

 Arbitration under ICC Rules. SHA governed by Indian law. Venue of
arbitration as London.
 London is the seat of arbitration. Section 34 is not maintainable.

- III -
APPOINTMENT OF ARBITRATORS IN PSU

SELECTION OF ARBITRATOR
 By party agreement
 By institution/ appointing authority (see, e.g. articles 5-7 of

the ICADR Rules, articles 11-15 of ICC Rules)
 By national courts (section 11 of the Indian Arbitration Act)

CONFLICT OF INTEREST
 Relevant test (universally accepted): "justifiable doubts as to the

independence and impartiality of the arbitrator"
 IBA Guidelines on Conflict of Interest
‒ non-waivable red list (ineligible)
‒ waivable red list ("serious but not severe")
‒ orange list (disclosure required)
‒ green list (no disclosure)
 Section 12 of the Indian Arbitration Act, read with Schedules V, VI
and VII
 Challenge procedure (ICADR Rules, Art 9)

USUAL MODES OF APPOINTING
ARBITRATORS BY GOVERNMENT ENTITIES /
PSUs
 Arbitrator is a ‘Named Person’ within the Government entity /
PSU
 Named Person outside the Government entity / PSU
 Former employee as an arbitrator
 Selection of arbitrator from an ‘appointing authority’ who, in turn,

is a senior official of the Government entity /PSU
 Selection of arbitrator from panel maintained by the Government

entity / PSU

NAMED PERSON WITHIN PSU
 Generally most commonly found procedure in PSUs. This

involves appointment of the senior most position holders in
organization to act as arbitrators.
 Pre-Amended these clauses were, provided certain conditions met

(Indian Oil Corp. Ltd. v. Raja Transport - Supreme Court,
2009)
 Post Amendment : Invalid – ineligible for appointment under

Section 12(5) and Entry 1 of Schedule 7.
‒ Assignia-VIL v. Rail Vikas Nigam (Delhi High Court, 2016)

‒ Afcons Infrastructure v. Rail Vikas Nigam (Delhi High Court, 2017)
‒ West Haryana Highways Project v. NHAI (Delhi High Court, 2017).

NAMED PERSON OUTSIDE PSU
• Arbitrator is not employed with the disputing Government entity

or PSU but maybe part of a Government Department or some
other PSU.
• Post Amendment : Still a valid procedure provided that such an

arbitrator does not become ineligible as per the other grounds
under Fifth and Seventh Schedule.

FORMER EMPLOYEES
 Position Unclear – differing judgments of the High Courts
 Invalid - Assignia-Vil case (Delhi High Court, 2016) - held

appointment of past/present employees raises doubts as to their
impartiality and independence.
 Valid –
‒ Reliance Infrastructure Ltd v. Haryana Power Generation Corporation
(Punjab & Haryana High Court, 2016) - can appoint them provided they
have (a) no other past business relationship with the party; (b) no
justifiable grounds as to their impartiality exist or have been raised by
the other party.
‒ Afcons Infrastructure (Delhi High Court, 20I 7) and Offshore
Infrastructure Limited v. BHEL (Madras High Court, 2016) upheld
this.
NAMED APPOINTING AUTHORITY
 In this scenario, the arbitration clause provides an ‘appointing
authority’ – usually the departmental officer or senior most officer
of the PSU- who is vested with the power to appoint an arbitrator.
 Prior to July 2017 : It was valid if the arbitrator appointed by the

‘appointing authority’ is independent – e.g. retired judge. (DBM
Geotechnics & Constructions Pvt. Ltd. v. Bharat Petroleum
Corporation Ltd. – Bombay High Court, 2017)
 On 3 July 2017 – Supreme Court in TRF Ltd. v. Energo Engineering

Projects Ltd found it is Invalid.
‒ Held once an arbitrator is statutorily ineligible under Section 12(5) – he
cannot nominate another person.
‒ Court found that a Managing Director (who is himself ineligible) cannot
appoint another nominee (otherwise eligible under the Act).
PANEL OF ARBITRATORS
 PSU maintains a panel of arbitrators for selection of arbitrators.

 PSU sends a list of names to the other party – the other party
selects certain arbitrators from this list.
 Voestalpine Schienen GmbH case – Delhi High Court held this is
valid.
 However, following guidelines should be followed :
‒ Panel must be broad-based - could contain names from
Government departments, other PSUs as well as private entities
and legal community.
‒ The other party should be allowed to choose from a broad
panel and not a small list provided by the PSU - any part of
clause asking for such a small list would be struck down.

Arbitrator Appointment Procedure Valid/Invalid
I. ‘Named Person’ within the disputing Invalid
Government entity/PSU.
II. ‘Named Person’ outside the disputing Valid

Government entity/PSU, but within the
general Government apparatus.
III. Arbitrator (either sole or party-nominated) Unclear
is a former employee of the disputing
Government undertaking/ PSU.
IV. Selection of an arbitrator by an ‘appointing Invalid

authority’ who, in turn, is a senior official
of the disputing Government entity /PSU.
V. Arbitrator is selected from a panel Valid

maintained by the disputing Government
entity /PSU.

CASE 1:
• Disputes between A (PSU) and B (Private Company)
• Agreement provides CGM to act as sole arbitrator. If CGM is unable to

act, he will appoint sole arbitrator.
• B invokes arbitration. A refers to arbitration before GM.
• In another arbitration between A and B (under same contract), Supreme

Court confirms appointment of Retd. Judge and held CGM cannot act as
arbitrator. Defeats principles of natural justice
• B moves before arbitrator (GM) under S. 13. Application rejected.
• B moves before arbitrator under S. 14 application that mandate has been

automatically terminated.
• S. 14 application rejected. B files Writ – pending since 2011.

CASE 2:
 Disputes between GAIL and HRD Marcus
 Arbitration for revision/determination of price for three years.
 In arbitration 2013-2016: Tribunal consists of Justice SS Chadha, Justice JK

Mehra and Justice Doabia
 In arbitration 2016-2019: GAIL nominates Justice Doabia, HRD nominates

Justice Ramamoorthy. Justice Lahoti appointed as presiding arbitrator.
 HRD challenges GAIL’s nominee and Presiding Arbitrator appointment
 Justice Lahoti – Item 1, 8 and 15 of 7th Schedule
 Justice Doabia – Item 1, 15 and 16 of 7th Schedule
 Delhi High Court rejected HRD’s please. Supreme Court upholds High
Court order (31 August 2017, SC)
- IV -
CONDUCTING ARBITRATION

STEPS
 General principles:
 Parties are free to agree on procedure for conducting arbitration
 Arbitrator not bound by CPC and Evidence Act
 Pleadings & Documents
 Statement of Claim Statement of Defence and Counterclaim
Rejoinder and reply to Counterclaim Rejoinder if any
 Framing of issues
 Evidence
 Witness Statement
 Reply witness statement
 Expert witness statement
 Court assistance
 Recording of evidence
 Oral arguments and written submissions

-V-
ARBITRAL AWARD

MAKING OF ARBITRAL AWARD
 Time Limit for Arbitral Award (S. 29A)
 The award shall be made within 12 months from the date the tribunal
enters upon the reference. Reference will be deemed on the date on
which arbitrator(s) have received notice in writing of their appointment.
(S.29A(1))
 The period of 12 months may be extended by the parties but shall not
exceed 6 months. (S.29A(3))
 If the award is not made within the specified period, the mandate of the
arbitrators shall terminate, unless the Court extends the period.
Provided, if the delay is attributable to the tribunal, it may order a
reduction of fees not more than 5% per month of delay. (S.29A(4))

 Fast Track Procedure (S. 29B)
 The parties to an arbitration agreement may at any time before the

appointment of the tribunal, agree in writing to have their dispute
resolved by fast track procedure. They may also agree to appoint a
sole arbitrator, chosen by the parties.
 The award shall be given within 6 months from the date of

reference of the tribunal.

 Form and Content of award (S. 31)
 Award shall be in writing and signed by members of tribunal
 In a Tribunal, signature of the majority is sufficient – reason for

omitted signature to be given
 Award shall state the reasons unless parties agreed that no reason
to be given or it’s a consent award
 Award shall state its date and place of arbitration
 Signed copy of award shall be delivered to each party
 Tribunal may make ‘interim award’ at any time during

arbitration
 Interest: Unless otherwise agreed by parties, tribunal may
include interest between date of cause of action and date of
award. Default interest rate for post-award period is 2% higher
than current ROI.
 Post award interest includes interest pendent lite and not merely
the principal amount. (Hyder Consulting – 2015 SC).

 Cost regime (inserted by Section 31A)
 The Court or Tribunal shall have the discretion to determine whether costs
are payable to a party, the amount thereof and when they are to be paid.
 Costs has been defined as reasonable costs relating to:
o The fees and expenses of the arbitration, Courts and witnesses;
o Legal fees and expenses;
o Any administrative fees of the supervising institution;
o Any other expenses in connection with the arbitral or Court
proceedings and the arbitral award.
 The general rule is that the unsuccessful party will pay costs to the
successful party. The reasons for a different order shall be recorded in
writing.
 Consideration for cost – conduct of parties, succeeded partly, frivolous
counterclaim, reasonable offer to settle the dispute refused by other party

CORRECTION AND INTERPRETATION
 File an application within 30 days from receipt of award to correct any
computation error, any clerical or typographical errors or any other errors
of a similar nature in the award
 If parties agree, a party may request the tribunal to give interpretation of a

specific point of part of the award
 If tribunal finds that the above request is justified, it shall make the
correction of give interpretation within 30 days (extendable by tribunal).
 Tribunal may correct any error on its own within 30 days of award

 If tribunal receives a request within 30 days of receipt of award, shall
make an additional award as to claims presented in the arbitration but
omitted from the award. It shall make the additional award within 60
days (extendable by tribunal) from receipt of request.

STAMPING AND REGISTRATION
REQUIREMENT:
 Stamping as per applicable rate at the seat of arbitration.
 Foreign award is not to be stamped if enforcement is sought in

India (Bom, Del, MP High Courts)
 Domestic award will be registrable if it creates, declares, assigns

any right, title or interest in immovable property. (S. 17(1)(b),
Registration Act 1908)
 Foreign award requires no registration (Section 17(2)(vi),

Registration Act 1908)

- VI -
RECOURSE AGAINST AWARD

RECOURSE AGAINST ARBITRAL
AWARD
• Setting aside of Domestic Award
 An application for setting aside award is to be made within three

months which may be extended by Court for a further period of 30
days, if satisfied
 Application shall be filed only after issuing prior notice to other

party and affidavit on such compliance is to be filed (inserted by
S. 34(5))
 Application shall be disposed of within a period of one year from

the day on which notice is served on other party.

 No automatic stay on award anymore. S. 36(2) application has to
be filed to seek stay of operation of the award. While considering
stay, Court may impose condition
 When the time for making an application to set aside an award
has expired the award will be enforced under the CPC as if it were
a decree of the Court. (S. 36(1))
 If a party requests, the Court may adjourn the proceedings in

order to give the tribunal an opportunity to resume the
proceedings or to take such other action to eliminate the grounds
for setting aside the award. (S. 34(4))
 Kinnari Mullick v. Ghanashyam Das (2017, SC)
PROPER “COURT” FOR
ENFORCEMENT
 Award in ICA seated in India:
 If the subject matter is money, the Commercial Division of a
High Court where assets of the opposite party lie
 If the subject matter is not money, the Commercial Division
of a High Court where the opposite party resides or carries
on business or personally works for gain
 Domestic award not in ICA:

 Commercial Court exercising such jurisdiction which would
ordinarily lie before any principal Civil Court of original
jurisdiction in a district,
 As well as the Commercial Division of a High Court in
exercise of its ordinary original civil jurisdiction.

MISCELLANEOUS
• Section 42 – If an application under Part I has been filed with respect to
arbitration agreement in a Court, that Court alone shall have jurisdiction
over the arbitral proceedings and all subsequent applications arising out
of the agreement and the arbitral proceedings shall be made in that Court
and in no other Court (Devas Multimedia, Del High Court 2017): The test
is (i) whether competent court; and (ii) relief can be granted.
• Three judge bench of the Supreme Court of India in the case of State of
West Bengal & Ors. vs. Associated Contractors (2015) 1SCC 32, held that:
“Applications under Section 42 is not applicable to applications made
before “court” as defined under Section 2(1)(e) of the Act. Thus, bar under
Section 42 is not applicable to (i) applications made before judicial
authorities under Section 8 of the Act; (ii) applications made before the
Chief Justice or his delegates under Section 11 of the Act; (iii) applications
filed before court inferior to Principal Civil Court or to High Court having
no original jurisdiction; and (iv) applications filed in a court that has no
subject-matter jurisdiction.”

GROUNDS FOR CHALLENGE
• A party was under some incapacity
• Arbitration agreement is not valid
• No proper notice of appointment of arbitrator or proceedings or

otherwise unable to present its case
• Exceeding jurisdiction – award deals with dispute not contemplated

by terms of submissions or beyond the scope of submission
• Composition of tribunal or arbitration procedure is not in accordance

with the agreement
• The subject-matter of the dispute is not capable of settlement by

arbitration under the law

• The arbitral award is in conflict with the public policy of India
• Award is in conflict with ‘Public Policy’ only if:
‒ it was induced by fraud or corruption or was in violation of Ss. 75 and

81
‒ is in contravention with the fundamental policy of Indian law; or
‒ is in conflict with the most basic notions of morality or justice.
• Contravention of fundamental policy of Indian law shall not entail review

on the merits of dispute
• Award other than one arising out of ICA may be set aside on the grounds
of ‘patent illegality’. Provided, this may not be done merely on the
grounds of erroneous application of the law or by reapplication of
evidence.

‘PUBLIC POLICY’
Associate Builders v. Delhi Development Authority, 2014 SC:
• “Fundamental Policy of Indian law” would include factors such as: a)

disregarding orders of superior courts or principles of natural justice; also
decision of arbitrators cannot be perverse and irrational in so far as no
reasonable person would come to the same conclusion.
• “Award is against justice and morality” would include : a) with regard

to justice, the award should not be such that it shocks the conscience of
the court; b) with regard to morality, courts have restricted the scope of
morality to “sexual immorality” only; c) With respect to an arbitration,
when the contract is not illegal but against the mores of the day, however,
held that this would only apply when it shocks the conscience of the
court.
• “Patent Illegality” would include: fraud or corruption, contravention of

substantive law which goes to the root of the matter, error of law by the
arbitrator, contravention of the Act itself, or if arbitrator does not give
reasons for his decision, etc.
ENFORCEMENT OF FOREIGN
AWARDS
• What is ‘foreign award’?
 Award made pursuant to arbitration agreement in writing to
which First Schedule applies
 Made in reciprocating territories
• Where to file?
• “Court” means High Court exercising original civil jurisdiction
over the subject matter of the arbitral award and in other case in
High Court having jurisdiction to hear appeal from decree of
subordinate court. (S. 47)
 Read with the Commercial Courts Act, 2015, this means that all
applications related to international commercial arbitrations will be
heard by the Commercial Divisions of the High Courts

Procedure For Enforcement
Section 47/ 56 – A party seeking enforcement is required to apply to Court (as

defined in Section 2 (1) (e) of the Act), with the following documents:
• Original award or duly authenticated copy;
• Original arbitration agreement or a duly certified copy; and
• Necessary evidence to prove that the award was a foreign award.
• If the language of the award is a language other than English, the award
shall be accompanied by a translation.
Section 46/ 55 – Foreign Award when binding:

• Any foreign award which would be enforceable, is treated as binding on the
persons who are parties to the same.
• Award may be relied on by way of defence, set off or otherwise in legal
proceedings in India.

Opposition to Enforcement
• Section 48 (1) - Enforcement may be refused if:
− Parties to the arbitration agreement were under some incapacity;

− Agreement was not valid under the governing law or law of the seat of
arbitration;
− A party was not given proper notice of the appointment of the arbitrator/s or
the arbitration or was otherwise unable to present its case;
− Arbitral tribunal exceeded its jurisdiction;
− Composition of the arbitral tribunal or the arbitral procedure is not in
accordance with the agreement of the parties or, the law of the seat of
arbitration;
− Award has not become binding under the law of the seat of arbitration; or
− Award has been set aside or suspended by a Court of the seat of arbitration

• Section 48 (2) - Enforcement may also be refused if:

− the subject matter of the dispute is not capable of settlement by arbitration; or
− enforcement would be contrary to the “public policy” of India
PUBLIC POLICY: PRE AMENDMENT POSITION

• ‘Public Policy’ under Section 34: broad meaning given in relation to adjudication of
domestic awards under Section 34 of the Act and included:
− the fundamental policy of Indian law
− the interests of India;
− justice or morality; or
− “patent illegality” (added by Oil & Natural Gas Corp. Ltd. v SAW Pipes ((2003) 5 SCC
705)
• In Shri Lal Mahal Ltd. v. Progetto Grano Spa, (2014) 2 SCC 433, a three judge bench of
the SC, overruled its earlier decision in Phulchand Exports and held that the wider
meaning given to the term public policy under Section 34 is not applicable to Section
48(2)(b) and enforcement of Foreign Award could not be refused for grounds of patent
illegality
PUBLIC POLICY: POST 2015 AMENDMENT POSITION

• This position is now clarified by two new Explanations added to Section
48(2) vide the 2015 Amendments.
• Explanation 1 states that the conflict with public policy of India only on
account of the making of the award affected by fraud or corruption, or
contravention with fundamental policy of Indian law and conflict with most
basis notions of morality and justice and not on patent illegality. Thus, the
judgement in Shri Lal Mahal is given statutory effect
• Explanation 2 states that review on merits is precluded in determining

contravention of fundamental policy of Indian law.

Case Study 1
• A (Indian party) enters into contract with B (foreign party)
• Law governing arbitration - Indian
• Procedural law -ICC Rules
• Place/venue of arbitration – London
• Contract contains exclusive jurisdiction clause of Indian Court
• Award partly against A
• A files challenge u/S. 34 in Dist. Court. Court stays enforcement

of Award
• B files execution u/s. 48 in High Court.

Case Study 2:
• A (Indian Party) enters into agreement with B (foreign Party) Law
governing arbitration – English Law
• Procedural Law – SIAC, Seat - Singapore
• Award against A. So, A files Section 34 challenge in Indian Court
• B invokes Bank Guarantee (BG) issued by C (Indian Bank) under AB
agreement
• A obtains stay against B & C from Indian Court against invocation of BG
• C refuses to pay since stay operating. B invokes arbitration against C
(SIAC Rules, English Law, S’pore seat)
• A seeks to implead in BC arbitration, but dis-allowed. Appeal in S’pore
HC, disallowed.
• BC Award in B’s favour - C honours Award outside India

- VII -
DRAFTING OF AN
EFFECTIVE ARBITRATION CLAUSE

ARBITRATION CLAUSE CHECKLIST
• Preliminary Consideration: Is arbitration the best dispute resolution?
• Multi-step clause: Inclusion of negotiation and/or mediation prior to

commencement of arbitration
• Which disputes will be arbitrated?
• What is the composition of Tribunal?
• “Seat” / ”Place” or arbitration. Venue
• Language of arbitration
• Using an arbitral institution
• Choice of law/governing law
• Currency of award
Basic provisions Additional provisions
Scope /disputes covered Good faith discussions
Number of arbitrators Qualification and nationality of

arbitrator
Governing law Appointing authority
Seat, venue Other matters – confidentiality
Jurisdiction
Language
Number of parties
Rules etc. (Ad hoc or Institutional)

• Advantages of Institutional Arbitration
 Procedural efficiency
 Emergency arbitrator if, SIAC, ICC, etc.
 Less intervention by Courts – challenge of arbitrator is to the

institution and not Court
 Diverse pool of arbitrators and can appoint experts in the particular

field

• Indian party
 Would usually want an India seated arbitration
 In order to have access to Indian courts
 Save travel time and costs
 Not expose themselves to foreign jurisdictions
• Foreign party;
 Would want to move the arbitration outside India
 To avoid Indian Court system
 Advantage of S. 9 and S. 27 (unless expressly excluded)

TIPS ON DRAFTING ARBITRATION CLAUSE
• Step 1: Define what is arbitrable – Any dispute arising out of or in connection

with this contract, including any question regarding existence, validity or
termination
• Step 2: Commit the parties to arbitration – shall be referred to and finally
resolved by arbitration
• Step 3- Pick a set of rules – under the [ICC, SIAC, MCIA, etc.] which Rules
are deemed to be incorporated by reference into this clause
• Step 4 – Specify the number of arbitrators – The number of arbitrators shall
be [one/three]
• Step 5 – Specify the location of arbitration – The seat or legal place of
arbitrations shall be [City and/or Country]
• Step 6 – Specify the language in which arbitration will be conducted –The
language to be used in the arbitral proceedings shall be […..].
• Step 7 – Specify substantive law – The governing law of the arbitration shall
be [….].

THANK YOU

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KEY FEATURES OF ARBITRATION

Surjendu Sankar Das

SCHEME OF THE ARBITRATION AND

© 2017 | Shardul Amarchand Mangaldas & Co Privileged and Confidential 2

 Chpt. II – Arbitration Agreement (Referring parties to arbitration, interim, measures by

 Chpt. III – Composition of Tribunal (Appointment, grounds of challenge)

 Chpt. IV – Jurisdiction of Tribunal (Kompetenz-Kompetenz, interim measures)

 Chpt. V – Conduct of arbitral proceedings

 Chpt. VII – Recourse against Award

 Chpt. VIII – Finality and enforcement of Award

 Chpt. X – Miscellaneous (jurisdiction, limitation, etc.)

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 Part II is divided into two chapters:

• Chapter I – New York Convention Awards.

o Definition of foreign award

• Chapter II – Geneva Protocol and Convention Awards.

• Part III - Conciliation

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• Law governing (main) contract

• Law governing arbitration

• Procedural law of arbitration

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• “Seat” S. 20(1) and (2) ; “venue” S. 20(3)

• In ICA, having a seat in India, hearings may be necessitated

• If the agreement is construed to provide for the “seat” or “place”

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• Venture Global (2008, SC) – Section 34

• Indtel Tenchical (2008, SC) – Section 11

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• Reliance Industries (2014, SC)

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• Eitzen Bulk (2016, SC)

 SC hold that foreign award passed in London cannot be interfered

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• Roger Shashoua (July 2017, SC)

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APPOINTMENT OF ARBITRATORS IN PSU

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 By institution/ appointing authority (see, e.g. articles 5-7 of

 By national courts (section 11 of the Indian Arbitration Act)

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 Relevant test (universally accepted): "justifiable doubts as to the

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 Named Person outside the Government entity / PSU

 Former employee as an arbitrator

 Selection of arbitrator from an ‘appointing authority’ who, in turn,

 Selection of arbitrator from panel maintained by the Government

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 Generally most commonly found procedure in PSUs. This

 Pre-Amended these clauses were, provided certain conditions met

 Post Amendment : Invalid – ineligible for appointment under

‒ Assignia-VIL v. Rail Vikas Nigam (Delhi High Court, 2016)

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• Arbitrator is not employed with the disputing Government entity

• Post Amendment : Still a valid procedure provided that such an

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 Position Unclear – differing judgments of the High Courts

 Invalid - Assignia-Vil case (Delhi High Court, 2016) - held

 Prior to July 2017 : It was valid if the arbitrator appointed by the

 On 3 July 2017 – Supreme Court in TRF Ltd. v. Energo Engineering

 PSU maintains a panel of arbitrators for selection of arbitrators.