The theme for the 4th CARTAL Conference on International Arbitration is “Navigating Murky Waters: Addressing Uncertainties in International Arbitration”. The conference is being hosted over a period of two days, i.e., 5th & 6th October, 2019, by the Centre for Advanced Research & Training in Arbitration Law [“CARTAL”] at National Law University, Jodhpur, Rajasthan, India. The Conference will feature panel discussions on three topics: human rights and environment protection concerns in international investment arbitration, taking of evidence in international arbitration: Prague Rules versus IBA Rules, and institutional arbitration in India.
The Conference is being held in association with our institutional partners – the Asia Pacific Forum for International Arbitration (AFIA), the Bar Council Of India, the Chartered Institute of Arbitrators (India), the International Chamber of Commerce (Int’l Court of Arbitration), the Mumbai Centre For International Arbitration, the SAARC Arbitration Council (SARCO), the Society of Indian Law Firms (SILF) and the Vienna International Arbitral Centre of the Austrian Federal Economic Chamber (VIAC). The Conference is supported by our knowledge partners SCC Online and Eastern Book Company.
Day 1 (5/10/2019)
- Inaugural Ceremony
- Welcome address by Hon’ble Vice Chancellor Dr. Poonam Saxena
- Introduction to CARTAL by Executive Director, Dr. Nidhi Gupta
- Keynote address delivered by Justice (retd.) Madan Lokur
- Introduction to the panel discussions by the Convenors of CARTAL
Panel I on how “Human Rights and Environment Protection Concerns shape the practice in International Investment Arbitration“ consists of:
- Ms. Dilber DeVitre, Associate at Homburger, Switzerland;
- Mr. Kabir Bhalla, Senior Associate and Barrister at King & Spalding , London and;
- Mr. Harshad Pathak, Senior Associate at P&A Law Offices, Delhi. [Moderator]
Ms. Dilber Devitre (Associate, Homborgur, Switzerland) speaking on Human Rights and Environmental Concerns in Investment Treaty Arbitration: Recent Trends & Case laws, brings up her experience as an intern when faced with questions of human right and environmental concerns in investor- State arbitrations. Ms. Devitre observes that there is more conversation on these issues as opposed to the past. The Global Arbitration Review is given as an example, as it has consistently reported on European countries such as Germany and Spain being involved in claims relating to the investment in the energy sector and the violation of domestic environmental standard by foreign investors thereof.
Mr. Devitre points out that while humans rights have traditionally been addressed in international such as UN Declaration of Human Rights, treaties on environmental protection don’t talk about human rights and therefore, there is no direct overlap. However, she argues that human rights relating to right to health and an adequate standard of life breathes in concerns of environmental degradation as violative of human rights. In furtherance of this, BITs and MITs are presented as treaties that provide for the protection of rights of an investor against State sanctions.
At this juncture, Ms. Devitre highlights the criticisms faced by investor-State Arbitration that arise from BITs and MITs being a source of investor rights only. First, it is argued that the ISDS regime, in itself, is not balanced in terms of the rights of State and investor. Thereby, she contends, BITs and MITs are not conducive for States to impose obligations but only for investors to bring about claims against measures of States. This gives rise to the second criticism. Ms. Devitre claims that State’s power to regulate investors, is curtailed. The curtailment of this power is detrimental when regulation is necessary, especially, in matters having a public purpose such as climate change and environmental concerns.
Vattenfall v. Germany (I), is provided as a case study. Vattenhall being a Swedish energy company obtained license to open and operate an energy plant using coal in a German city. Under social oppositions against the plant relating to quality of air and water in the neighbouring river, the new government imposed addition requirements to protect the river near plant. When Vattenhall submitted the dispute to ICSID, it argued that the new government legislation amounts to expropriation and excessive regulation after a considerable expenditure into the plant was made by Vattenhall. The case was eventually settled in the favour of Vattenhall and plant began its operations. This, Ms. Devitre calls as an instance of the State not being permitted to regulate where regulation was necessary. Therefore, it is being contented that, investor-State arbitrations allow for investors to circumvent State sanctions.
As for the recent trends in this matter, Ms. Devitre highlights- first, the use of human rights and environmental concerns as tools for interpretation. Article 31 of the Vienna Convention on the Law of Treaties provides for the interpretation of a treaty in accordance with to other treaties between the parties and conventions consented to by the State. She considers this provision sufficient to provide a backdoor for the settlement of disputes involving concern of human rights and environment. For example, in Philip Morris v. Uruguay, the Tribunal held that the legislation which required for health warnings to cover 80% of cigarette packets was not an expropriatory measure. The Tribunal held that the legislation such as this was in public interest so as to discourage the consumption of tobacco i.e a public health concern. Furthermore, while agreeing with Uruguay, the Tribunal held that not only was the foreign investor under an obligation, but so were all domestic tobacco companies. Therefore, the Tribunal refuted arguments relating to “unfair treatment.”
Second, Ms. Devitre refers to States leveraging human rights obligations as a defence i.e as a shield, to oppose claims by investors. Such arguments emerged in claims against Argentina in CMS v. Argentina, Continental Casuality Co. v. Argentina and National Grid v. Argentina wherein it claimed that all measures were a necessity with a public purpose. While the tribunal in CMS disagreed, the Continental Casuality tribunal agreed with this contention.
Third, she observes that obligations relating to human rights and environmental concerns are used as a sword by submitting these contentions as counterclaims. Case in point being Cortec Mining v. Kenya. Domestic laws of Kenya required mining companies to conduct an environmental impact assessment. However, the investors in this case did not comply with this requirement. The Tribunal held that the actions of the investors amounted to “improper investment” and therefore, the tribunal lacked jurisdiction to settle the dispute.
Ms. Devitre argues that this trend gives rise to certain challenges. As for the jurisdictional challenges, Cortec presents a sufficient illustration. While challenges relating to cause of action question the existence of an obligation on the investor, challenges of connectedness require claims to intrinsically connected to the investors claim. In Urbaser v. Argentina, when the investor was required to make an investment for clean water and sanitation and failed at doing so, the Tribunal held that the provision allowing for arbitration under the relevant contract does not sufficiently allow for submitting a counterclaim against the investors claims. Therefore, claims can not be adequately connected.
Mr. Kabir Bhalla (Barrister, King & Spalding LLP) begins his presentation by delineating the structure of his presentation, which identifies three problems, which legal standards are to be applied, who makes the argument, and which forum is appropriate to hear disputes of this kind.
Mr. Bhalla draws out the similarity between investment arbitration and human rights treaties. He points out that Article 1 of the European Convention on Human Rights [“ECHR”] enshrines a right to property, qualified, notably, by the proviso that the provisions shall not in any way impair the right of the State to enforce laws that control such right in the general interest, for imposition of taxes, and so on. He argues that this is quite like the way a claim against expropriation functions. Similarly, Article 14 of the ECHR which prohibits discrimination, has parallels with claims for impairment of investment through unreasonable or discriminatory measures. The real question, he emphasises, is how arbitrators, States and investors have negotiated these overlaps.
He refers to Tecmed v. United Mexican States, to explain that states have started using the second paragraph of Article 1, Protocol 1, to extend the discretion they have to impose certain measures. In Siemens v. Republic of Argentina, the tribunal observed that Protocol 1 permits a “margin of appreciation” not found in customary international law.
He points out also that in Phillip Morris, a very eminent tribunal including Dr. Gary Born, stated that the margin of appreciation applies to claims arising out of BITs and not just the ECHR. Highlighting a contrary perspective however, he mentions the case of Von Pezold v. Zimbabwe, where it was emphasised that due caution must be exercised in importing concepts from other legal regimes, including European human rights law. Thus, he says, we have witnessed two tribunals saying different things about Article 1 Protocol 1 within the space of a year, which adds to uncertainty for investors in ascertaining what legal standards will apply.
Moving beyond the ECHR, he points out that in Bear Creek Mining, there was a partial dissenting opinion by Professor Sands, who spoke of free standing obligations and applying it in the context of damages and reduction of legal damages. Urbaser v. Argentina, talks about a lot of different conventions and treaties, and uses the pathway provided by Article 31(3)(c) of the VCLT. The decision emphasises that findings as to this point, must be context dependent. This, he emphasises, adds to the uncertainty that investors face.
The second problem is the question of who makes an argument.
Mr. Bhalla points out that it he will be focusing on briefs and submissions made by an amicus curiae. He highlights that some of the key challenges to effective amicus participation, is the fact that under the relevant rules, they are prevented from making submissions, if even one-party objects. Rule 37 of the ICSID Rules also imposes a duty on the tribunal to ensure that the non-disputing party submission does not disrupt the proceeding or unfairly prejudice or burden any party.
While in some cases, such as Biwater Gauff and Methanex, amicus submissions have been accepted, several other cases also evidence a more negative trend in this respect, in many instances, simply by virtue of procedural rules. For instance, in Pac Rim Cayman, the amicus did not have the right to access the record or evidence. In cases where seventy percent of the decision often depends on facts, he argued, such requirements are prohibitive and lead to the failure of amicus submissions.
The third and final problem, Mr. Bhalla points out is of deciding the appropriate forum.
Referring to the case of Biloune v. Ghana, he points out is that, often, on the construction of the BIT itself, the dispute does not fall within the ambit envisioned.
Second, he notes that there may be cases of concurrent jurisdiction. He highlights Article 26 of the ICSID Convention, and Article 35(2)(b) of the ECHR. However, in cases where there is identity- on three counts, that is, of parties, cause of action and objective of dispute, fork in the road applies and parties must choose one remedy.
He explained using the case of Amto v. Ukraine, a case under the Energy Charter Treaty; where the question was whether an action before the European Court of Human Rights meant that the ECT arbitration had to be stayed. In this case, the Court was able to differentiate the two causes of action and allow concurrent proceedings.
Mr. Harshad Pathak (Associate, P&A Law Offices) reiterates that the central concern is to infuse a sense of balance into investment arbitration. However, he points out, noble as these objectives may be, issues of compatibility are raised. He raises two questions that he will subsequently attempt to answer, which are; whether the investment treaties in question be used to hold the investor liable for human rights and environmental concerns; and secondly, whether a host state can file a counterclaim against an investor.
He explains that there are three situations in which jurisdiction can be exercised and then outlines the cases and recent developments in each such situation. The first, and easiest basis for exercise for such jurisdiction, he opines, is express consent given by the investor. He highlights this point by referencing the case of Burlington Resources Inc v. Republic of Ecuador, where the investor ultimately thought it preferable to enter into another arbitration agreement allowing for counterclaims by the State than have the dispute be litigated in domestic courts.
The second source of such obligations are treaties that may or may not permit counterclaims.
An example is Article 9 of Romania-Greece BIT; which came up in Spyridon Roussalis v. Romania, where the treaty itself provides only for disputes concerning the obligations of the host state. It also the investor concerned the right to submit the dispute. This example, shows, therefore, that treaty provisions can very specifically limit the locus to bring claims to investors only. When such cases are common, the doors allowing a State to file a counterclaim are unlikely to open.
In Urbaser v. Argentine, on the other hand, the Argentine-Spain BIT allowed for submission at the request of either party. This shows that the underlying treaty provision is crucial in determining whether the State is allowed to bring a counterclaim.
The third source is double or implied consent. Mr. Pathak explains this concept by referring to Prof. Reisman’s dissent in Spyridon Roussalis, the reasoning of which was also accepted by the tribunal in the case of Antoine Goetz v. Republic of Burundi. The concept refers instances where tribunals have found that where the investor’s consent to ICSID was sufficient to imply that there was consent to a counterclaim being brought, without any need to locate consent in the underlying BIT. Article 46 of the ICSID Convention provides that counterclaims can be brought, as long as they are within the contemplation of the parties.
He then deals with another broad question touched upon earlier by previous panellists, as to the source of an investor’s human rights and environmental obligations. He begins by referring to the Burlington Resources v. Ecuador case, where contractual obligations and the domestic law of the host State were together the source of the obligation.
Second, he introduces the idea of such obligations being derived from the treaty itself, referring to the Netherlands Model BIT that earlier panellists referred to and the Indian Model BIT which referred to investors being subject to the law of the host State including environmental law, law relating to the conservation of natural resources, and the law relating to human rights.
He concludes his presentation by speaking of the fact that though such initiatives, like the Model BITs aforementioned may be criticised for not being in line with current practice, they certainly provide us with some indication towards the future. For instance, a revised draft of India’s Model BIT, reduced the obligation to a general provision and included provisions for CSR; in response to criticism of the more extreme view taken in the earlier draft. Nevertheless, they embody the change that is soon to come.
The conclusion of the panel is followed by a question and answer session by the panellists.
In response to a question as to why host states should be given the leeway to bring counterclaims, Ms. Devitre emphasises that investors cannot be left completely unaccountable for their actions. Mr. Bhalla adds to this by saying that the imbalance perceived in the investor state dispute settlement system must be countered.
A question is asked about the role that institutional rules can play in facilitating counterclaims, but the answer from the panellists, in agreement with each other, is that rules must remain neutral and only keep the possibility of counterclaims open. The rest must be left up to party autonomy.
Another interesting question is posed, with respect to whether the citizens of a host state may seek redress against the actions of investors through the judiciary instead of the executive in case of a complacent government. A second part to the question also provokes consideration of whether judicial action is holding some investor action unlawful may itself be challenged as expropriation.
Mr. Harshad responds to this question by, first, pointing out that there is precedent for holding judicial action to amount to expropriation, pointing out the White Industries Case. Subject to the particular requirements of the system within the host state, other panellists also agree, that it may be possible for citizens to take action against investors through the judiciary. This depends on, inter alia, whether the domestic judiciary is authorised to interpret or apply the country’s international obligations, in this case, BITs.
18:00- High Tea
We now begin with Panel II on “Taking of Evidence in International Arbitration: Prague Rules versus IBA Rules”. The second panel of the day consists of:
- Thomas Snider, Partner, Al Tamimi & Co., Dubai
- Meaghan Gragg, Partner, Hughes Hubbard & Reed, New York
- Neeti Sachdeva, Registrar & Secretary General, MCIA
- Ajay Thomas, Independent Arbitrator and Vice Chairman, ICC India Arbitration Group
- Commander Madhvendra Singh, Independent Arbitrator
The Panel will focus on the similarities and the dissimilarities between the two sets of rules on taking of evidence in International Arbitration, viz., the Prague Rules and the IBA Rules to assess whether the Prague Rules can serve as a better alternative to the widely used IBA Rules. The discussion is being moderated by Mr. Snider.
Mr. Thomas Snider (Partner, Al Tamimi & Co., Dubai) opens the panel discussion by characterising the importance of fact-finding and taking of evidence in international arbitration through the statement that 70% of all arbitrations turn on facts and evidence rather than the application of principles of law. This is why we must focus on emulating the best practices for taking of evidence in international arbitration. Thus, a comparison between the widely known and accepted IBA Rules with the newly promulgated Prague rules that intend to replace the former becomes necessary.
Mr. Snider traces the distinction between the adversarial and inquisitorial approaches of the common law and civil law traditions respectively when it comes to fact-finding and gathering of evidence and highlights that the most important difference between the two approaches is reflected in the role of judges. Whereas in an adversarial system, the entire burden of collecting and presenting evidence lies with the counsels and the judge has to merely decide based on such evidence, the roles are reversed in an inquisitorial system where the judge is tasked with the finding of facts and plays a more robust and proactive role than the counsels. Setting the groundwork, he explains the historical context behind the IBA Rules. When the IBA Rules were put together, efforts were made to unite the common and civil law traditions and Mr. Snider believes that this job was achieved in a rather satisfactorily manner. However, he also notes that there exists a prevailing view that IBA rules have a bias towards the common law owing to its common law origins. This has resulted in growing discontentment with its application amongst the civil law countries and a quest to find a more suitable alternative.
Tonight, we will talk about the alternative Prague Rules and compare it with the existing IBA Rules and ask questions such as: have the Prague rules really deviated from the IBA Rules? And if yes, then to what extent? Whether they have pushed the ball forward? Are they really an alternative to IBA rules?
Mr. Ajay Thomas (Independent Arbitrator and Vice Chairman, ICC India Arbitration Group) at the outset notes that the application of Prague Rules is yet to be seen in India. As an arbitrator deciding matters in domestic arbitration proceedings, he seeks to analyse and see whether these rules have any potential in the Indian context.
Mr. Ajay begins by introducing the organisation that is responsible for the first rules on taking of evidence in international arbitration – the International Bar Association (IBA). He states that the IBA Rules are a classical example of soft law – a quasi-legal instrument whose binding force is much weaker than that of a traditional legal instrument. He propounds that the test of a good soft law is the ability of that soft law to bridge the gap by building bridges and not to burn those bridges. These instruments of soft law are the instruments that promote gradual harmonisation or rather progressive harmonisation of the international law.
Coming to the various aspects of international arbitration that contribute significantly to the length of the arbitration, Mr. Ajay relies on the International Arbitration Survey (2010) conducted by the Queen Mary University of London in association with White & Chase. He notes that disclosure of documents is the number one reason behind lengthy arbitration proceedings. Emphasising on the same, he recounts a story originally narrated by Mr. Peter Rees QC. Mr. Rees once spotted a signboard outside a jeweller’s shop that read “Ears Pierced While You Wait” and found that this could serve as a great metaphor for the current state of international arbitration. The signboard shows the promise of flexibility and a quick service if one was ready to wait inside the shop. However, the sign fails to specify for how much time one will be required to wait for the services to be performed. Similarly, people were lured into entering the arbitration shop based on the same promises of fast and efficient service but the reality is such that the process has become extremely slow and one that has failed to offer much flexibility. This is the context in which we need to analyse the utility of the IBA/Prague rules.
He further discusses the requirement of having such rules on taking of evidence by providing two reasons: first, the Court procedural rules are not applicable to international arbitration proceedings and second, most institutional rules do not deal with the process of taking of evidence. Therefore, such rules are needed to fill the gap.
Mr. Ajay also remarks that since these procedural rules have no binding force as such, they can be aptly compared to “a lighthouse in stormy seas” as these rules are an important source of guidance and inspiration to the parties and the tribunal in the stormy seas of international arbitration.
Ms. Neeti Sachdeva (Registrar & Secretary General, MCIA) begins by giving broad overview of the Prague Rules followed by a detailed discussion on the relatively important articles.
She draws the attention of the audience to the full name of the Prague Rules alluding to the wider scope of its application as opposed to the IBA Rules. The Prague Rules on the Efficient Conduct of Proceedings in International Arbitration – as the name suggests itself are not limited to the providing just rules on taking of evidence. The Prague Rules go beyond the scope of IBA Rules on Taking of Evidence in International Arbitration and provide for an efficient method of case management aimed at reducing the time and costs involved. Ms. Sachdeva suggests that this has been made possible by the Prague Rules through a series of provisions that permit the arbitral tribunal to play a highly proactive role and contribute to the overall efficiency of the proceedings.
For instance, Articles 3.1 and 2 expressly direct the tribunal “to take an active role” and hold a case management conference (known as Procedural hearing in the Indian context) at the earliest to fix a procedural timetable and identify the preliminary issues, respectively. Similarly, the Rules encourage the parties to resolve their disputes on a document-only basis to provide speedy resolution. Additionally, the parties are allowed to request for document production under Art. 3.4 but the power has been vested with the arbitral tribunal to accept or deny such request under Art. 4.1. All of these provisions are to some extent tilting towards the practices that prevail in civil law jurisdictions.
Coming to the initial question of whether the Prague Rules are really bringing in anything new to the table, Ms. Sachdeva answers in the negative. She concludes that Prague Rules are a mere codification of the best practices on how to conduct arbitration proceedings and do not add anything new to the existing practices of taking of evidence in international arbitration.
Ms. Meaghan Gragg (Partner, Hughes Hubbard & Reed, New York) will talk about whether the Prague Rules really differ from the IBA Rules?
She begins by stating that the scope of the two rules is not identical as was explained by Ms. Sachdeva: the IBA Rules are limited to gathering of evidence whereas the Prague Rules are much wider in its ambit.
She discusses how the institutional rule supplement the law of the seat but they tend not to answer the specific questions related to the taking of evidence such as document discovery or witnesses. The IBA Rules have been filling this gap for a long time now.
The IBA Rules were adopted with the idea of bridging the gap between civil and common law traditions but they are more often than not applied in adversarial common law jurisdictions. Over time, there has been increasing dissatisfaction with respect to the cost of arbitration proceedings and the amount of time they take. Some European countries pinpoint IBA Rules as the source of increasing cost and length of the procedure and decided to come up with a new set of rules – one not limited to taking of evidence but one that is rather more about case management. This is how the Prague Rules came into being.
The fear of the arbitral tribunal, commonly known as the due process paranoia, in Ms. Gragg’s view is not an over-hyped concern. In several high value and complex international proceedings, it exists – whether justified or not. The Prague Rules push for a more proactive role of the tribunal hitting at the root of this paranoia.
Ms. Meaghan distinguishes between the IBA Rules and the Prague Rules to flesh out instances in the Prague Rules that provide for the tribunal’s proactive role such as in the case of holding of a case management conference, document discovery, etc. She also discusses the similar provisions found in the two sets of rules as can be witnessed from the ability of the tribunal to exclude witness statement, and draw adverse inference in specific situations.
She concludes that both set of rules have the potential to contribute significantly to increasing the efficiency of international arbitration proceedings in their own ways, the success will depend on the application by the Tribunal and the appetite of the parties especially in high value complex disputes and the potential to win their case.
Commander Madhvendra Singh (Independent Arbitrator) begins to summarise the views of his fellow panellists as the last speaker on the panel. After summarising, he notes that the prevailing view is that the IBA Rules have proved to be a majorly successful instrument in arbitration proceedings. He goes on to suggest that the Prague Rules must be seen as an addendum to the already existing practices.
He also emphasises on the fact that application of the national laws of one party on taking of evidence have the potential of creating conflict between the parties involved in an international arbitration, it is best to resort to already established international set of rules on taking of evidence. Commander Singh draws attention to provisions under various institutional rules such as the LCIA Rules and the SIAC Rules as well as the Indian Arbitration & Conciliation Act to demonstrate how a situation like this is dealt with.
He appreciates a particular provision under the Prague Rules that allows the tribunal to encourage the parties to go for settlement proceedings before resorting to arbitration. If the parties so choose, the tribunal can also sit as a mediator and the same panel can go back to act as an arbitrator to resolve the dispute in an efficient manner.
Mr. Snider, the moderator for the evening, concludes the panel discussion by asking his fellow panellists three simple questions:
1. Does the panel feel that the Prague Rules are different from the IBA Rules?
The panellists answer unanimously in the negative.
2. Has anyone on the panel seen the Prague Rules in practice?
The answer was again in the negative.
3. Whether the panellists expect to see the application of Prague Rules in the future?
The panellists differed in their answers – while some answered in the negative saying that the IBA Rules are already very well-accepted and applied, others expect to see a growing use of the Prague Rules. The latter group believes that the civil law countries will lead the charge in the application of Prague Rules since the rules provide procedures that are relatively familiar to their jurisdictions and the stakeholders from these countries already foster apprehensions towards relying on the IBA Rules that tend to favour the common law practices.
Cultural Programme and dinner hosted by Prof. Dr. Poonam Pradhan Saxena, the Hon’ble Vice Chancellor, National Law University, Jodhpur for the panellists and the Board of Editors, Indian Journal of Arbitration Law/Members, CARTAL.
Day 2 (6/10/2019)
The third panel, on the topic of “Towards Institutional Arbitration in India”, is being moderated by Honourable J. Madan B. Lokur, who begins the panel discussion with a brief introduction of the panellists.
The first panellist is Mr. Tejas Karia, Partner, Shardul Amarchand Mangaldas & Co., who speaks about arbitration in India being at crossroads. He begins by pointing out that traditionally, India has seen the prevalence of arbitration in an ad hoc manner; and people are largely unfamiliar with institutional arbitration. He emphasises that the presence of members of some of the major arbitral institutions in the world bodes well for the quality of discussion that can be expected from the panel.
He explains that he will, initially, be covering the positives in the Arbitration and Conciliation (Amendment) Act, 2019 despite being aware of the criticism it has largely been met with.
He highlights, first, that arbitral institutions will be accredited by the Arbitration Council of India [“ACI”]; which would mean that the process of appointment that generally took between 2 to 6 months would now take much less time; and would also ensure that instead of arbitrators being appointed on the basis of the value of the arbitration (as is general practice in SC and HC appointment’s)- the best suited people can be selected.
Second, he points out that the time limit prescribed in Section 29A has been removed for international arbitration. The intent was to remove this for institutional arbitration as the rules have their own time limits; and this evidences an assumption of sorts that most ICA are institutional.
He however, does acknowledge the criticism levelled against the fact that provisions for emergency arbitrators were not included, even though they have been strongly recommended. Further, he references the controversy surrounding the seeming exclusion of foreign lawyers as arbitrators by virtue of Schedule VIII but argues that since Section 11(1) and 11(9) do not restrict on the basis of nationality; it is very likely that subsequent judicial decisions will clarify that there is no such exclusion.
The second panellist –Ms. Shaneen Parikh, Partner, Cyril Amarchand Mangaldas, begins by explaining that she will cover the establishment of the ACI and the surrounding controversy; and opines that it is actually a positive that these provisions have not been notified yet, in the hope that the problems within it will be corrected before it becomes law.
The composition of the ACI, she explains, is largely such that members are appointed by the Central Government and headed by a former judge of the Supreme Court, High Court or an eminent practitioner. She expresses concern about the fact that there is no provision for a foreign member to be on board, just like most foreign arbitral institutions.
She then highlights the duties and functions of the ACI, which include some positives, such as the promotion and encouragement of all forms of ADR; but also some that raise concerns, such as the grading of arbitral institutions, especially in the manner set out by regulations– as these raise questions as to the level of interference with arbitration.
She then addresses the controversy created by the eighth schedule, and shows that its wording, possibly due to oversight rather than such intent, does lead to an exclusion of foreign arbitrators by defining advocate in the sense of the way the term is defined in the Advocates Act, 1961.
She briefly touches upon the implications of the maintenance of an electronic depository of all awards in India by the ACI, which provoke a host of questions such as whether it will be an opt-in or opt-out provision; and who will be responsible for providing the awards to the ACI.
Ms. Shwetha Bidhuri, Head (South Asia), SIAC, starts by calling the amendments a “positive step from the outside”, as they aid India’s image as a business-friendly jurisdiction by showing that the government is actively interested in improving its attractiveness to investors and businesses. Even the provision for accreditation, she believes, is necessary in India, as it gives greater clarity to those seeking to choose amongst the many institutions in the jurisdiction.
She points out that the question to ask at this stage, is whether these developments are enough; and examine what needs to be done. She argues that a good arbitration law is always very necessary to make a jurisdiction arbitration-friendly; and points out that there are still important issues such as that of third-party funding and whether two Indian parties can have a foreign seat
The second most important factor, she says, is that there must be arbitration friendly judges; and points to a recently witnessed positive trend. She explains that a collective effort is required, and isolated changes cannot lead to the level of change required.
Third, the preference for institutional arbitration must be actively cultivated, and a conscious effort towards sensitisation is required in this respect. Lastly, she stresses that the most important aspect is training for arbitrators- and sensitisation about the differences between arbitration and litigation.
The fourth panellist is Ms. Payal Chawla, founder of JusContractus.
She states that it is crucial to study the provisions missing in the 2019 amendment, to be able to understand its gaps. This is mostly on the basis of Supreme Court judgments that have had to, in her words, bend the law, and the 246th Law Commission Report.
The concept of emergency award and emergency arbitrator have not been included in the amendment, despite its mention in the Justice Srikrishna Committee Report.
The 246th Law Commission Report recommended the addition of the words ‘any person claiming through or under’ to the definition of the word ‘party’; based on the three-judge bench judgment in Chloro Controls; which talked about the inclusion of non-signatories to an arbitration in certain cases. She explains that this can be connected to the words used in the New York Convention where the words ‘anybody in respect of a defined legal relationship, whether contractual or not’ are used. Similar wordings exist in Section 7. She brings out the anomaly, therefore, in the fact that the new amendments brought the relevant wording in Section 8, but not in Section 2.
Further, in the case of Lalchand v. Rishab Enterprises, it was stated that the ratio in Chloro Controls should be followed in domestic arbitration as well. In Cherian Properties, it was pointed out that Section 35 makes the award binding on non-signatories as well. However, she brings to notice that the phrase is missing in Section 7, 9, 11 and 34; and its absence in Section 2(h) could leave the non-signatories remediless.
The next missing provision she highlights is the non-inclusion of Section 16(7) on the arbitrability of fraud. She states that the decision in Radhakrishnan v. Maestro Engineers, relied on Russell v. Russell which has widely been considered to be in favour of the arbitrability of fraud- and came to the opposite conclusion. The addition of this sub-clause, as recommended by the Law Commission was to legislatively overrule this decision.
In Indus Mobile, the Court spoke about conferring exclusive jurisdiction to the seat; using the reasoning in paragraph 96 of BALCO v. Kaiser. The Court, in Indus Mobile; uses BALCO to say, in her words, that the seat can be considered akin to the cause of action. Once the seat is chosen, there would be exclusive jurisdiction. However, she points out that this would render the scope of Section 42 of the Act minimalistic.
She also brings to attention the judgment in Indus Mobile, and Sundaram Finance; explaining that they are trying to do what the Act should have ideally done with respect to the seat and venue in arbitration. The 246th Law Commission Report suggested changes to Section 20 of the Arbitration Act suggesting that Section 20(1) and 20(2) be treated as seat and Section 20(3) as venue.
The fifth panellist, Ms. Hazel Tang, Counsel, International Chamber of Commerce, Singapore, outlined the ICC’s story in Singapore and emphasised that parallels can be drawn therefrom.
She discusses the progression of institutional arbitration in Singapore, explaining that it began with a joint agreement with the Ministry of law in Singapore- to use Singapore governing law in International Arbitration. Since then, the Ministry of Law has been actively promoting arbitration in Singapore. She points to the increasing popularity of Singapore as the place of arbitration in ICC arbitration and mentions that it is the fourth most chosen place of ICC arbitrations.
She notes that interestingly, Singaporean parties are nowhere near the top ten parties in arbitration; and the popularity of a place of arbitration can therefore be significantly independent from the nationality of parties to the arbitration. This can be of relevance to the promotion of institutional arbitration in India as well.
In 1956; the Arbitration Act was enacted in Singapore; and now, there are different arbitration Acts for domestic and international arbitration.
She emphasises that one difficulty is about how to treat international arbitration together with litigation. For instance, in a historic controversy, a court decision in Singapore hinted that foreign lawyers would be prohibited from appearing in arbitrations in Singapore; and this decision was vehemently criticised.
She explains how this was resolved, with firstly, an amendment to allow foreign lawyer representation in cases not governed by Singapore law, where the contracts were governed by other foreign law; as an incremental step and finally the act was fully amended to remove the bar.
She also informs the gathering of a notable suggestion in Singapore, relating to allowing for appeals from arbitral awards in the substantive sense, something that is generally not seen as a pro-arbitration move but is being envisioned as a part of reforms towards the same.
She concludes by bringing to notice the two factors whose role in the success of arbitration in Singapore is often underestimated, the availability of hearing facilities; and the accessibility of a place in terms of flights, visa requirements and tax exemptions.
Arun Mal, Lawyer, Allen & Overy, Hong Kong introduces the Hong Kong perspective into the discussion of institutional arbitration.
Mr. Mal begins by showing the evolution of the law in Hong Kong. He discusses the establishment of the Hong Kong International Arbitration Centre [“HKIAC”] in 1985. The HKIAC did not administer cases; only provided services for ad hoc arbitration. However, in 1997, HKIAC became the default body to decide the number and appointment of arbitrators. By 2008, HKIAC had published its own HKIAC Administered Arbitration Rules. Mr. Mal refers to the development of the HKIAC into “light touch” institutions which- first, does not scrutinise awards and it leaves it to the tribunal to render a valid award (which the tribunal is expressly obliged to do in accordance with the Rules). This helps to minimise the risk of interference with the tribunal’s decisions and avoid possible delays and additional costs associated with the scrutiny process. Second, the HKIAC has powers under the Rules to facilitate the efficient and effective running of an arbitration where necessary; if not, HKIAC will not intercede.
Mr. Mal also refers initiatives, taken up by HKIAC to promote institutional arbitration, such as-
- HKIAC Tribunal Secretary Service
- Hong Kong Arbitration Week
- HKIAC-PCA Cooperation Agreement 2010
- HKIAC Procedures for the administration of UNCITRAL Arbitrations
- ‘Permanent Arbitral Institution’ status in Russia
This is followed by a question and answer session with the panellists, where one of the questions asked was why immunity for arbitrators is envisioned within the Act, but not for arbitral institutions.
In response, Mr. Tejas Karia says that this was because the primary purpose was to protect arbitrators and not exclude institutions per se. It was simply assumed that as institutions either appoint after referral by the SC or HC; or according to their rules; there is substantially less probability of them being sued. Ms. Hazel added, that this situation is often covered by the institutional rules; such as Article 41 of the ICC Rules.
- Vote of thanks by the Joint Organizing Secretaries;
- Closing ceremony.