On 08-11-2024, the International Bar Association (IBA) hosted a training programme at Amity University, Noida, Uttar Pradesh, for a course which is part of an ongoing programme devised by IBA’s Section on Public and Professional Interest (SPPI) to assist young lawyers and junior members of the profession.
The theme of the event was ‘Fundamentals of International Legal Practice’ and was presented by the IBA Young Lawyers’ Committee. The training covered contemporary issues and emerging trends in the field of dispute resolution along with mergers and acquisitions.
The event commenced with opening remarks from Mr. Pranav Srivastava, Co-Vice Chair, IBA Young Lawyers’ Committee; Partner, Phoenix Legal, New Delhi. He asserted that the programme was designed with a singular purpose to bridge the gap between academic learning and the dynamic demands of international legal practice. Addressing the young lawyers, he said that since we live in a very rapidly evolving legal landscape which is driven by cross-border transactions, cross-border disputes, digital innovation, artificial intelligence, and unprecedented regulatory challenges, the ability to adapt to these global trends is what will set them apart.
He remarked that the sessions to follow had been carefully curated to include a range of the latest developments in international arbitration and the intricacies of cross-border mergers and acquisitions.
Moving on, Prof. DK Bandyopadhyay, Chief Advisor (FPO) & Chairman, Amity Law School, Noida welcomed the gathering and expressed his gratitude to IBA for hosting the training programme in Amity University, Noida.
The gathering was graced by the presence of the Guest of Honor Dr. Lalit Bhasin, President, Society of Indian Law Firms, New Delhi; Honorary Life Member, International Bar Association, who stated that the event was a brilliant initiative by the IBA Young Lawyers’ Committee to bring together young lawyers from different parts of the world. In his address, he mentioned that technology has taken over the legal profession as well as the administration of justice, but the values of this profession remain the same.
Additionally, Dr. Bhasin opined that lawyers should attempt to settle the disputes and not encourage clients to go for litigation because a “bad settlement is better than a successful litigation”. He advised the gathering to keep the flag of nobility of the legal profession flying and not to compromise on ethics or etiquette and urged everyone to give back to society either by pro bono activities or by creating awareness about the rights of the people.
Further, Prof. (Dr.) Balvinder Shukla, Vice-Chancellor, Amity University, Noida welcomed the gathering and thanked the organizers for conducting an event which would provide exposure and learning to the students for becoming global legal professionals.
The gathering then witnessed the valuable insights of R. Venkatramani, Attorney General for India through a video message wherein he spoke about legal topography and the confluence of legal systems. He opined that the next 25 years will see a fundamental change not only in global affairs but the way in which all of us understand justice and the administration of justice.
Mr. Venkatramani talked about the common good and that it should not only be limited to the little world of arbitration, which belonged to the minority of the legal fraternity but must also expand to every frontier of the legal world to a large number of members of the legal fraternity who would have something or the other to contribute.
Session I – Introduction to the IBA Young Lawyers’ Committee: Starting Young at IBA — Opportunities and Challenges
The first session was moderated by Mr. Arush Khanna, Membership Officer, IBA Young Lawyers’ Committee; Partner, Numen Law Offices, New Delhi. The esteemed speakers of the session were Ms. Zeina Obeid, Co-Vice Chair, IBA Young Lawyers’ Committee; Partner, Obeid & Partners, Dubai and Mr. Pranav Srivastava, Co-Vice Chair, IBA Young Lawyers’ Committee; Partner, Phoenix Legal, New Delhi.
Mr. Khanna began the session by giving a brief overview of the Young Lawyers’ Committee in IBA and said that until a few years back, IBA was often perceived as an “old boys’ club” or a “managing partners’ roundtable”. He further elaborated that even though the prospect of having young lawyers engage and participate in the IBA was not a mainstream option for most law firms across the world, that trend is now changing.
Starting with Ms. Obeid, Mr. Khanna asked her to provide an overview of the history of IBA and how the Young Lawyers’ Committee came into force. On this, Ms. Obeid elaborated that, at present, it consists of more than 18,000 members and throwing light on the structure of IBA, she mentioned that the Young Lawyers’ Committee forms part of the Section of Public and Professional Interest Division.
Ms. Obeid also shed light on the objectives of the Young Lawyers’ Committee, which is mainly to help young lawyers to build and develop an international career in different areas of law and to give various initiatives to enhance the skills of the members. She mentioned that the Committee also focuses on building relationships and expanding the network of members with like-minded professionals from all over the world.
Moving on, Mr. Khanna spoke about a unique initiative which is solely present for the Young Lawyers’ Committee, an opportunity to become a National Representative in the Committee. He then asked Mr. Srivastava, who was once a National Representative Officer, to inform the gathering about the insights into becoming a National Representative.
Mr. Srivastava said that the Young Lawyers’ Committee is also called the ‘gateway’ into the IBA for younger lawyers because as one progresses into the Young Lawyers’ Committee one becomes familiar with the rest of the divisions of IBA. While elaborating on the process of becoming a part of the Young Lawyers’ Committee, he said that in order to make the process easier, a National Representative Programme was devised. He also mentioned that if one really wants to avail the benefits of the IBA after becoming a member, involvement in the activities of the IBA is essential. For this, he stated the first step is to become a National Representative after one becomes a member of the Young Lawyers’ Committee.
Apart from the National Representative projects, Mr. Khanna talked about the special projects of the Young Lawyers’ Committee, which includes annual surveys that are often relied upon as policy documents by law firms, offices, and institutes across the world. He also elucidated about the ‘crowning jewel’ of the special projects — the Outstanding Young Lawyer of the Year Award. He then asked Ms. Obeid to enlighten the audience further about the special projects.
Ms. Obeid elaborated on the Outstanding Young Lawyer Award, wherein each year the Committee presents an award to a young lawyer who has shown not only excellence in their work but also has shown commitment towards the community. She further informed that there is no charge for nomination to the same and it is open for all lawyers regardless of whether one is a member of the IBA or not. Ms. Obeid also talked about a mentorship programme that will be conducted next year to mentor young lawyers and young students in different areas of law and also within the IBA. Mr. Khanna also mentioned that the awardee of the Outstanding Young Lawyer Award will get a scholarship to the IBA conference.
Mr. Srivastava then gave a sneak peek into life at IBA and the fun activities that are conducted to fulfil the larger purpose of IBA, which is to network and help the legal profession grow.
To conclude the session, Mr. Khanna opined that it is important for young lawyers to widen their canvas and said that as a young lawyer, every day should be an adventure, and every conversation should be an opportunity.
Session II — Hot Topics and Recent Trends in International Arbitration: An International Perspective
The second session was moderated by Mr. Alipak Banerjee, Diversity and Inclusion Officer, IBA Professional Ethics Committee; Head of International Dispute Resolution, Nishith Desai, New Delhi. The session witnessed a comprehensive discussion on the latest trends in international dispute resolution by the distinguished speakers in the panel — Ms. Zeina Obeid, Co-Vice Chair, IBA Young Lawyers’ Committee; Partner, Obeid & Partners, Dubai, Ms. Neeti Sachdeva, Registrar & Secretary General, Mumbai Centre for International Arbitration, Mumbai, and Dr. Shashwat Bajpai, Founding Partner, DRSB Law Chambers, New Delhi.
Mr. Banerjee gave an overview of the key points that would be discussed and commenced the session by asking Ms. Obeid to explain the major dos and don’ts while drafting a valid arbitration agreement and the latest trends in the Middle East.
Ms. Obeid, answered that, in the Middle East, except for Lebanon, arbitration is still defined by the majority of courts as exceptional rather than a normal method for resolving a dispute. She further elaborated on the importance of ‘proper drafting’ of an arbitration agreement and of having an effective arbitration clause that is operable, not pathological, and one that could be enforceable.
Ms. Obeid further expatiated the best practices to keep in mind while drafting an arbitration clause and mentioned that the intention of the parties must be clear, for which the usage of words like ‘may’ should be avoided, whereas usage of words like ‘shall’ must be favored. She also elucidated the essential elements which shall be reflected in an arbitration clause. The first point she made was that one needs to identify whether one wants to have an ad hoc or institutional arbitration. In the case of institutional arbitration, one needs to make sure that the arbitration institution exists and that the proper name of the institute is present in the clause. Secondly, she mentioned that the number of arbitrators must be specified and that it is also recommended to determine the method of selection of the Tribunal. Thirdly, as to the seat of arbitration, she said that one should pick a seat which is favorable and arbitration friendly. She also informed the audience about the importance of the language in which arbitration would be conducted.
Moving on, Mr. Banerjee called on Mr. Bajpai to inform the audience about the unilateral arbitral appointments in India. Mr. Bajpai explained that the essence of unilateral appointments is that while appointing an arbitrator, it must be ensured that the appearance of impropriety is not reflected in the process. He went on to speak about the observations made in Indian Oil Corporation. Ltd. v. Raja Transport (2009) 8 SCC 520 and how the 246th Law Commissions Report led the Arbitration and Conciliation (Amendment) Act, 2015.
Mr. Bajpai delved into how the newly amended refined Arbitration Act came into existence and said that it was done in a two-fold manner. Firstly, Section 12(5) was added, and secondly, Section 12(1)(b) was amended, which basically reflected the IBA conflict of rules list wherein the red list and the orange list were incorporated in Schedule V and Schedule VII. He went on to say that these two Schedules are the bedrock of judgments against unilateral appointments. Mr. Bajpai then made reference to a judgment rendered by the Supreme Court wherein it was said that following the amendment in the Arbitration Act there could not be a restrictive panel of arbitrators for the parties to choose from.
Taking the discussion forward, Mr. Banerjee pointed out the debate between seat and venue and asked Mr. Bajpai to share his thoughts on what is the jurisprudence around ‘seat v. venue’ and ‘seat v. place’ and what could be done if one has to fight for interim measures in India in a foreign seated arbitration.
Mr. Bajpai reflected on Section 20 of the Arbitration Act, which merely uses the word ‘place of arbitration’. He asserted that the confusion arises because one is stuck to either choose the juridical seat or the physical/geographical venue. He then mentioned a judgment rendered by Justice Rohinton Fali Nariman wherein he propounded that wherever a seat is designated, that automatically becomes the exclusive jurisdiction and that it would preclude every other venue or seat.
Mr. Bajpai mentioned that while adopting the above said approach, the Court adopted the English Court’s judgment and stated four tests in which exclusive jurisdiction could be defined. The first test was that there must be an expressed designation of the seat in the clause itself. Secondly, there is no designation of an alternate venue or seat within the clause or any other provision of the contract. The third test he mentioned was the combination of the afore-mentioned tests with a supra-national body of rules, and the last test was that there must not be any contrary indication in any other provision of the contract or the conduct of the parties.
Further, to answer how to determine Section 9 if there is no seat, Mr. Bajpai again referred to the decision rendered by Justice Nariman wherein it was said that if a cause of action does arise in a certain place, Section 9 can be resorted to. He then retorted to the question of determination of Section 9 in a foreign seated arbitration and elucidated that in such a situation, one must go back to the Amendment made in 2015, which took into consideration the proviso to sub-clause 2 of Section 2, which gives the courts the power to entertain Section 9 notwithstanding that it’s a foreign seated jurisdiction.
Advancing the session further, Mr. Banerjee turned to Ms. Sachdeva and asked her to give a few examples of pathological clauses that she has come across from an institutional perspective. In her reply, Ms. Sachdeva referred to an interesting judgment that went up to the Supreme Court where the clause provided that the parties would have a three-member tribunal wherein the licensor and the licensee will each appoint one arbitrator and the arbitrator appointed by the licensor shall also act as the presiding arbitrator. Here, the Court interpreted the clause to read that the two appointed arbitrators will appoint the third one.
Further, Ms. Sachdeva, in addition to the points made by Ms. Obeid, said that in India, it is first decided whether one wants to go for an institutional arbitration or an ad hoc arbitration since there are instances in India for which ad hoc arbitration may still be well suited for.
Moving on to the segment of the amendments to the Arbitration and Conciliation Act, Mr. Banerjee asked Ms. Sachdeva to comment on the proposed amendments to the Act. Ms. Sachdeva enlightened the audience about interesting amendments that were proposed, one of which is to create an appellate arbitral tribunal, and while sharing her personal view on the same, she said that it was a step too far in a country like India because the law is not only for sophisticated commercial jurisdictions like Delhi or Mumbai. She said that this would have huge ramifications on the number of cases that would go to the court after the deliberation of an award in such an appellate arbitral tribunal. She also touched upon the proposed amendment for the creation of the council itself.
Mr. Bajpai, while elucidating on other amendments, mentioned the introduction of Section 29A, which stipulated the timelines for arbitration and said that the proposed amendment in this provision is that an arbitral institution under whose aegis the arbitration is running can itself extend the time period. He then opined that giving such power to a good institution is imperative for this amendment to go well because it is an important power which should not be treated as a mere formality. The second proposed amendment that Mr. Bajpai talked about was the removal of the word ‘place’ from Section 20 of the Arbitration Act and substitution of the same with ‘seat’. He said that if this proposal is accepted, it would draw the curtains on the long-drawn confusion.
Mr. Banerjee brought up the Group of Companies Doctrine and asked Mr. Bajpai to give the audience some pointers regarding Cox & Kings Ltd. v. SAP India (P) Ltd., (2024) 4 SCC 1. Mr. Bajpai started out to answer this question by giving a brief overview of the doctrine and said that the Group of Companies Doctrine is a theory to bind non-signatories to arbitration. He illustrated that Cox & Kings (supra) accepts the applicability of the doctrine under Section 2(1)(h) read with Section 7. Further, he mentioned that there were two aspects that had been diluted and set aside — First, the applicability of piercing the corporate veil to state that one company is an alter ego of another company which binds it to the arbitration and second, the principle of single economic unit.
Mr. Banerjee asked Ms. Sachdeva for her perspective on the applications filed by Indian parties for the impleadment of a non-signatory. Ms. Sachdeva expressed that until now the stand that was being taken in such a case was to request the parties to file an application once the arbitral tribunal is formed so that they could take a decision. However, she said that this position may now change as the Mumbai Centre for International Arbitration Rules are out for consideration.
Conclusively, Ms. Obeid mentioned that the only country that has adopted the Group of Companies doctrine is Lebanon. On the Middle Eastern approach to arbitration, Ms. Obeid informed the audience that in some countries, such as the United Arab Emirates and Saudi Arabia, there are some free zones which are known as offshore jurisdictions that are governed by common law, and there are specific common law courts as well. She also discussed certain particularities that are followed in Saudi Arabia, such as an increased reference to Sharia and the enforceability of awards.
Session III: Navigating cross-border Mergers & Acquisitions: Challenges, Strategies, and Emerging Trends
The last session provided an overview of the complexities involved in cross-border M&A and included topics such as navigating legal and regulatory differences, conducting due diligence, ensuring cultural integration, and managing tax implications. The session was moderated by Mr. Sujoy Bhatia, Partner, Chandhiok and Mahajan, New Delhi and the panel was graced by eminent speakers — Ms. Tanya Chakraborty, General Counsel, SAMHI Hotels, New Delhi, Ms. Vani Mehta, Regional General Counsel South Asia, GE Aerospace, New Delhi, and Ms. Kripi Kathuria, Partner, Phoenix Legal, New Delhi.
To commence the session, Mr. Bhatia asked Ms. Kathuria to elaborate on what cross-border mergers and acquisitions are. Ms. Kathuria began by saying that the term basically refers to cross-border arrangements between companies incorporated in different countries and that mergers and acquisitions are strategic tools opted by companies to grow their businesses in different jurisdictions. She further remarked that acquisitions could be hostile or friendly. A hostile acquisition would mean that a seller or a buyer buys the shares or securities in the open market or from some other shareholders, and once they have acquired the majority shareholding, they complete the acquisition of the remaining shares, whereas a friendly acquisition would mean that the parties have taken the deal forward after mutual consent.
Ms. Kathuria went on to describe some traditional approaches to cross-border M&A, wherein the first approach that she discussed was share-purchase, in which a company acquires the majority or the entire shareholding of another company. The second approach that was talked about was asset or business acquisition, in which a company acquires either a few specific assets or the entire business of the company.
Further, Ms. Kathuria elucidated on mergers and said that while a merger needs to be approved by the National Company Law Tribunal, there are certain mergers between smaller companies or between companies that are wholly owned subsidiaries of holding companies which can be approved by the Regional Director appointed under the Ministry of Corporate Affairs framework without going to the NCLT. Lastly, she pointed out that now in India, there are specific regulations which permit foreign companies to collaborate with Indian companies and merge into an Indian company and vice versa.
Moving on, Mr. Bhatia put a question before Ms. Chakraborty about the key steps involved in an M&A transaction, to which she gave an analogy by comparing an M&A transaction to an arranged marriage wherein the process starts from understanding the basic terms and conditions and the formation of a Memorandum of Understanding. The second step she mentioned was that once the parties have put everything on paper, the role of the lawyers begins, and they undertake the process of due diligence. Once the diligence framework is set and diligence is completed, the deal moves on to the final documentation, which depends on the nature of the transaction. Finally, Ms. Chakraborty said that the last step in the transaction is the celebratory part, where everybody comes together and after that comes the difficult journey of pulling the newly acquired/merged entity and bringing it to life.
Ms. Mehta shedding some light on the implications present in a cross-border M&A, clarified that India has a very unique position in this world when it comes to M&A because India is a very regulated market and also the only jurisdiction in the world where the merger process is a court-driven process. While speaking about the implications, Ms. Mehta pointed that the transaction is mainly about cultural integration and making the other side understand why approvals are required at every step. Additionally, she also informed the audience that it can take approximately 12-18 months to attain the industry-specific requirements in India which is a challenge when there is either a merger or an acquisition.
Further, Ms. Mehta enlightened the audience about the Competition Commission of India, which is one of the most important regulators across the world, and one of the biggest challenges is to advise as to how the CCI is going to construe any approvals given to potential mergers. She further cautioned how important it is to have a fundamental understanding of taxation laws because, without tax, M&A is not possible in India.
To advance the session, Mr. Bhatia raised the point of regulations around inbound M&A and asked Ms. Kathuria to elaborate on the same. Speaking about the key regulatory bodies which deal with M&A activities in India, she started with the Reserve Bank of India which is responsible for administering the regulations and rules for foreign investors coming into India. This power, Ms. Kathuria said, has been given to RBI under the Foreign Exchange Management Act 1999. She mentioned that the RBI also monitors the incoming and outgoing remittances, which is one of its main objectives.
Further, Ms. Kathuria said that the FDI policy read with FEMA forms the main framework for foreign exchange regulations in India and that the FDI policy provides for the extent of foreign investment in each sector in India. Additionally, she said that the Competition Act provides thresholds in the nature of assets and turnover value and pursuant to a merger or acquisition, the resultant entity will need to cross these thresholds, and it will require prior approvals from the CCI, without which, the transaction will not move forward. She also pointed out that an additional layer of requirements is added in case the M&A activity involves a listed company which is particularly dealt with by the Securities and Exchange Board of India. Ms. Kathuria briefly described withholding tax and capital gains tax as are mentioned in the Indian tax regime and then moved on to say that tax implications are reduced marginally in countries where India has double taxation agreements.
Carrying forward, Mr. Bhatia turned to Ms. Mehta, who discussed some important case laws that have been decided in the history of mergers and acquisitions, one of which was the case of Tata-Docomo. Moving on to the outbound aspect of M&A, Mr. Bhatia shared his personal experience by saying that now Indian private practice lawyers are being approached by law firms in developed countries to ask about the market and M&A opportunities arising from India into their jurisdictions. He also opined that in the coming years, there is a high possibility that India will be a more outbound M&A market than what it is today.
Mr. Bhatia then directed the discussion to Ms. Chakraborty and asked her to illuminate the audience about outbound M&A while talking about the regulatory issues along with the challenges that are faced. To answer the questions, Ms. Chakraborty said that even in outbound M&A, the compliances remain the same except when referring to FEMA, as in this case, we have to deal with the ODI perspective and not the FDI perspective. She mentioned that diligence becomes the biggest tool in all the outbound M&As. While reiterating the point made by Ms. Mehta, Ms. Chakraborty said that the most important aspect of any successful merger is understanding the nuances of the culture. Furthermore, she urged the M&A aspirants to understand the business aspects because businesses today need a comprehensive solution.
While discussing emerging markets in outbound M&A, Mr. Bhatia solicited Ms. Kathuria to inform the audience about the same. She posited that there has been a change in the Indian regulatory framework, which has made Indian companies more confident to invest outside India. She mentioned that some of the major reasons for the varied investments being made by Indian companies are India’s own demand for energy and to make their footprints by exploring those jurisdictions.
To conclude the session, Mr. Bhatia steered the conversation towards Ms. Mehta to address the implications of Artificial Intelligence in implementing cross-border M&A. Ms. Mehta said that AI is an upcoming field and described how it is being used today in M&A through various software programs that help to standardize searches. She remarked that AI is helping the young generation of lawyers in the generation of templates that are sent to customers and vendors as part of any M&A activity. Lastly, Ms. Mehta referred to another important aspect and said that AI helps immensely in the merger of the ERP systems after either a merger or an acquisition takes place.
Mr. Arush Khanna delivered the closing remarks and expressed his gratitude to the experts who had become part of the training programme and to Amity University, Noida, for hosting the event.
The vote of thanks for the event was given by Prof. Shefali Raizada, Director, Amity Law School, Amity University, Noida.
