The rise in cross-border disputes involving Indian parties has brought complex challenges to the forefront of international arbitration. One of the most contentious issues has been the growing number of fraud allegations that not only complicate arbitration proceedings but also escalate into long-lasting legal battles post-award. This topic was discussed in detail during a thought-provoking panel session at LIDW 2025, “Fraud, Arbitration and the Indian Litigant — Battle Before and Carnage After?”, hosted by RPC and 3 Verulam Buildings (3VB).
The expert panel included:
- Rajesh Pillai KC, 3VB
- Amit Sibal SA, India
- Kirtan Prasad, RPC
- Karthikey Mahajan, Khaitan & Co.
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Alex Reed
Kirtan Prasad moderated the session of LIDW 2025 Panel Discussion and began by introducing the panelists before initiating the discussion. She posed a key question to Karthikey Mahajan, asking, “What do Indian parties typically do before entering arbitration? What are some of the tactics or strategies they employ, even if a bit unconventional?”
Karthikey Mahajan responded by explaining that allegations of fraud are particularly common in disputes involving Indian parties, largely due to the lack of regulatory obligations that exist in jurisdictions like London, where solicitors and barristers must have a credible basis to allege fraud. In India, however, there is no equivalent framework, leading to the more frequent and sometimes loose use of fraud allegations as strategic tools in arbitration.
He noted that such allegations are typically raised by the respondent, often with the intention of challenging the arbitration process itself, although there are genuine cases where fraud is involved.
Karthikey also described two primary ways fraud is alleged in pre-arbitration stages: either through seeking to stay arbitration proceedings by raising fraud allegations in Indian courts, or by preemptively requesting interim relief from the court before arbitration is formally initiated.
Kirtan Prasad then turned to Amit Sibal, asking, “There are several amendments currently coming into force in respect to the Indian Arbitration Act. Can you share how these amendments address some of the issues that Karthikey has raised, particularly beyond the issue of fraud? Could these changes help in streamlining the arbitration process or provide better clarity?”
Amit responded by highlighting some of the proposed amendments to the Arbitration Act, 1996, set to come into effect in 2024. These amendments aim to address some of the delaying tactics identified by Karthikey, particularly those related to the appointment of arbitral tribunals. Amit pointed out that when parties are unable to agree on a tribunal, one party often approaches the court to make the appointment. However, courts are often overwhelmed, leading to significant delays. The proposed amendments suggest outsourcing the appointment process to designated arbitral institutions, which, although not yet in effect, are expected to help expedite the process. Furthermore, the amendments propose strict timelines for various stages in the dispute resolution process, including a 60-day timeline for court applications related to appointment disputes, 60 days to appeal a refusal to appoint a tribunal, and 30 days for the tribunal to decide on preliminary objections regarding its jurisdiction.
Amit argued that clarity is needed on whether fraud is inherently arbitrable, especially when the arbitration agreement itself is not tainted by fraud. He proposed that either the courts or the legislature should explicitly clarify that fraud is arbitrable unless the arbitration agreement is itself invalidated by the fraud. While the amendments do not currently include this clarification, he warned that the distinction between “simple” and “complex” fraud remains a grey area that could continue to impede the arbitration process if not resolved.
Kirtan then turned to Rajesh Pillai. asking, “How does this compare to the situation in England? Specifically, in England, fraud and public policy are recognized as grounds for refusing enforcement of arbitral awards under the New York Convention. How do these grounds impact the arbitration process there, and are there any notable differences in how such issues are handled compared to India?”
Rajesh began by acknowledging the pro-arbitration stance in England, noting that courts have limited powers to overturn arbitral awards. The primary grounds for challenging awards are outlined in Sections 67 and 68 of the Arbitration Act. Section 67 deals with jurisdictional challenges, while Section 68 is typically where most fraud-related allegations arise, particularly when there has been a serious procedural irregularity. Rajesh pointed out that, in theory, appeals can be made on points of law under Section 69, though this can often be excluded to ensure finality in the arbitration process.
Turning to the issue of fraud, Rajesh emphasised that fraud allegations need to be distinctly stated and substantiated. In terms of procedural irregularities under Section 68, he mentioned that there had been several successful challenges this year, where tribunals failed to properly address issues before them. This was surprising given the expectations for thorough arbitration procedures. However, fraud remains a key reason for setting aside awards in England, as it is considered a serious procedural irregularity.
The panel then shifted its focus to the issue of modifying arbitral awards, particularly in light of the Gayatri Balasamy case. The case raised important questions about the scope of courts’ powers to intervene in arbitral awards once they have been rendered. The discussion centered on whether, and under what circumstances, courts could modify an arbitral award, especially when such modifications are not explicitly allowed under the arbitration agreement or under the applicable legal framework.
Kirtan turned to Alex Reed and asked, “If we go back to basics, all clients really want is to get their hands on the money, and they also want to uncover if there is any fraud related to the underlying transaction. As the expert in both areas, how difficult is it to operate in India when trying to unearth such issues? How challenging is it to uncover fraud and enforce financial claims in the Indian context?”
Alex began by stating that when he first started working on Indian disputes, he was initially optimistic, as he could read documents in English and had prior experience with asset tracing. However, he quickly encountered the complexities of India’s legal lexicon, mentioning terms such as Benami, Hindu Undivided Family, which were unfamiliar to him at the time.
Alex highlighted two primary considerations for investigators: first, whether the necessary information can be obtained, and second, how that information can be used effectively in legal proceedings. He explained that, from an investigator’s standpoint, India presents a unique contrast: while the country is information-rich compared to many others, the challenge lies in using that information effectively within the legal system. Financial statements, court records, and other public information are often readily accessible both online and on the ground. However, enforcing judgments and accessing assets in India can be incredibly difficult due to legal and procedural complexities.
Alex shared a personal anecdote from his experience where he had to travel to a rural part of southern India to collect property records. The local sub-registrar’s office had no online records, and during his visit, the electricity went out, forcing him to return the next day to continue the search. He reflected on how such obstacles are common not just in India but across the region, making asset tracing a complex and difficult process.
Despite these challenges, Alex noted that clients are showing a growing appetite for pursuing asset tracing, acknowledging that while the process is difficult, it’s one they are willing to undertake in pursuit of securing their claims.
The session ended with a comprehensive discussion on the complexities of asset tracing and fraud detection, particularly in the Indian context. As the conversation wrapped up, Kirtan thanked all the panelists for their insightful contributions and acknowledged the complexity of the issues raised, particularly regarding fraud, jurisdiction, and asset recovery.
