Alternate Dispute ResolutionOp EdsOP. ED.

Introduction

Climate change and global warming are the two crucial issues that need the instant attention of people. It is being noticed that global warming is increasing with each passing day. It is necessary to keep up with the protection of the environment along with fulfilling our needs. There have been many neglected ways that can prove to be a significant factor in curbing global warming. When arbitration is discussed, it is well known to many of the people that are being chosen for various reasons. Commercial cases, investment treaties, and many other kinds of matters are being decided through arbitration and other alternate dispute resolution mechanism. Till now, commercial and other sectors of arbitration were being chosen for simplified process, speedy decisions, convenience, etc. so cases get resolved as soon as possible.

While we connect climate changes with international arbitration, it is not shocking to know that, like commercial issues, climate change issues are also in priority. There have been various steps taken by the arbitration institutions which are evident to prove that international arbitration is extending its approach to deal with the issue of global warming. Not only the awards passed by the tribunals but, the implementation of various treaties and campaigns are equally important to curb the major environmental issues. The matters of climate change are of public importance and thus attract the interest of arbitrators too. While we notice that arbitration has been gaining importance from last years, will the steps being taken concerning climate change also come out as fruitful decisions? The steps that have been taken till now are not questionable but, for how long will they be effective?

The questions will be raised for ensuring the effectiveness. However, analysis of the strides made by the arbitration sector will give a proper understanding of the same. The Paris Agreement of 2016[1] is not in direct connection to arbitration but, the arbitration proceedings being held along with it will manage the climatic changes. It is necessary to relate the aspects to get better results out of them.

Correlation of Paris Agreement and International Commercial Arbitration

In 2015 United Nations Framework Convention on Climate Change (UNFCCC), the Paris Agreement was adopted for the first time that all nations were committed to ambitious efforts to combat climate change and adapt to its effects. The Paris Agreement aim is to lower the global temperature by 2 degrees celsius above pre-industrial levels i.e., mitigation and to enhance the ability of the nations to deal with the impacts of climate change that is to adapt to climate changes. Paris Agreement also aims to support the developing nations and the nations who are in danger to adopt such changes. The task force of ICC had a broader view foreseeing the climate change-related disputes and tried to include any dispute arising out of or concerning the effect of climate change and its policies. [2]

As per the IPCC Special Report on Global Warming of 1.5 degrees Celsius published in 2018, it stated that climate change is one of the biggest challenges of all time. Therefore, to combat this challenge all they require is rapid and far-reaching transitions in energy, urban infrastructure, land, industrial systems to avoid the worst effects of climate change.[3] So as the new rapid changes to land, infrastructure, and industrial systems that are arising out from the global response to climate change will give a new scope of investment and contracts, accordingly, this will give a rise to contractual legal dispute. Such disputes can be categorised as:[4]

  1. Contracts concerning specific transition, adaptation, or mitigation contracts

Here the contract can be executed between the investor, industry body, funder, State, etc. in conformity with the Paris Agreement commitments. These contractual terms are can be reinforced through appropriate and effective dispute mechanisms. The contacts shall be expressly made with a clause relating to UNFCCC such as Green Climate Fund (GFC), agreements reacted to low emission projects.[5]

  1. Contracts not concerning specific transition, adaptation, or mitigation contracts

As every business activity and contractual relationship is capable of being impacted by energy and other systems transition, mitigation, or adaptation measures and/or the environmental impacts of global warming, those contracts that have no direct impact on climate change or have no specific climate-related purpose may predate the Paris Agreement.

The correlation that has been created with the Paris Convention would help the arbitration institutions to reach their goals too. The goal to reach “greener arbitration” is concerning the goal of the Paris Convention. Therefore, working on both of them would bring out better results from both ends. It would not only facilitate but, also encourage other associations to do the same.

The potential steps by ICC in climate change-related disputes

The Task Force’s mandate is first to explore how ICC Arbitration and alternative dispute resolution (ADR) services are currently used to resolve disputes that potentially engage climate change and related environmental issues. As the Paris Agreement and the Intergovernmental Panel on Climate Change (IPCC) Special Report are relatively recent, disputes arising out of “rapid and far-reaching transitions in energy, land, urban and infrastructure, and industrial systems” are not yet reflected in past and existing ICC cases. Nevertheless, three important aspects of existing ICC cases are instructive:[6]

(i) ICC Arbitration and ADR are frequently adopted in commercial contracts concerning energy, land use, urban and infrastructure, and industry with these sectors representing a large portion of ICC cases;

(ii) climate change-related investment is rapidly increasing and system transition of the scale proposed by IPCC will recalibrate regulatory risk and investment strategy in sectors where ICC Arbitration and ADR are already prevalent; and

(iii) climate change mitigation and adaptation, and systems transition as a whole, may cause environmental impact, and ICC Arbitration and ADR are increasingly being used to resolve environmental claims.

These steps taken by ICC promote the goal of the institution widely. The implementation of the task force is evident that apart from resolving the disputes, arbitration has paved a way to safeguard the environment. The process of curbing global warming is not simplified, yet not complicated. It could be time taking but, with collective efforts in different ways by the arbitration sector will come out to be successful.

CGA: A pathway to greener arbitration

Lucy Greenwood in 2019 founded the Campaign for Greener Arbitrations (CGA) 2019 intending to reduce the carbon footprint on international arbitrations. This campaign is led by a Steering Committee from the arbitration community. This campaign runs on the set of protocols so that the goal of developing practical steps which could be implemented to accomplish the Campaigns Guiding Principles. There are several green protocols suggested and some are as under:[7]

  1. The green protocol for arbitral proceedings

This protocol suggests the measures to conduct arbitral proceedings in a more environmental-friendly manner. This protocol can be initiated by the parties or by the tribunal a well.  Here the parties can do remote proceedings, less use of travel, avoiding printings on paper, etc.

  1. The green protocol for law firms and legal service provides.

This protocol has focused on the firm’s day-to-day operations. Here the firms are required to motivate their employees to work eco-friendlier. The firm shall make  “Green Ambassadors” who shall make new policies on working of firms do that the environment depletion can be reduced. Firms shall also use incentive programmes for the employees so that they can be encouraged to use this protocol.

  1. The green protocol for arbitrators

Here the independent arbitrators are required to seek guidance from this protocol. They are expected to reduce travel, energy, etc. so that the wastage of resources can be reduced. The arbitrators expected to integrate the conduct rules with green protocols.

  1. The green protocol for arbitration institutions.

In the protocol, the institutional representatives are required to guide both internal and external operations of the firm. The institutions shall try to motivate the parties and arbitrators to conduct the proceedings remotely and try to provide such infrastructures as well.

  1. The arbitration hearing venues

The facilitators of conducting arbitral proceedings are required to adopt this protocol. They are encouraged to use technological platforms to promote digital representations of cases and file sharing so that the paper works can be reduced. They shall also use clean energy while conducting such proceedings.

So, this campaign can successfully be achieved by only implementing rules i.e. reduce the hard copy bundles and travel least as possible. The Campaign also plans to expand its research to consider the usage of e-mails and energy consumption, as well as other aspects of an international arbitration practice beyond those analysed in the initial impact assessment.

 Conclusion

The issue of climate change is crucial, and the steps taken by the arbitral institutions are paramount. It has been known so far, the arbitration resolves the issues related to climate change issues but, the self-contribution in making arbitration greener is a new concept. It would take time for the adaption of this mechanism completely in the field but, would have essential contributions towards nature. This will also increase the importance of arbitration globally. As arbitration will be labelled as a mechanism to resolve one more problem. These steps will gain more importance shortly. Also, this will lead to the opening of doors for news initiatives in the field of international arbitration.


*Advocate, High Court of Chhattisgarh.

**Student, Semester VIII, BA LLB(Hons.), Amity Law School, Amity University, Chhattisgarh.

[1]http://www.scconline.com/DocumentLink/Oz50zWNo.

[2]Melissa Denchak, Paris Climate Agreement: Everything you need to know, NRDC, 10-2-2021

[3]The IPCC Special Report, Global Warming of 1.5˚C (October 2018), p. 15.

[4]In-depth Q&A: The IPCC’s Special Report on Climate Change at 1.5°C, Carbon Brief, 8-10-2018

https://www.carbonbrief.org/in-depth-qa-ipccs-special-report-on-climate-change-at-one-point-five-c.

[5] Green Climate Fund Proposal Toolkit (2017), p. 3.

[6]Kirsten Odynski, The Role of ICC Arbitration in Resolving Climate Change Disputes, White and Case, 29-1-2020

   https://www.whitecase.com/publications/alert/role-icc-arbitration-resolving-climate-change-disputes.

[7]Chetna Alagh and Sejal Makkad, Arbitration and climate: Steps taken by arbitration associations to curb global warming, The Daily Guardian, 30-4-2021

https://thedailyguardian.com/arbitration-and-climate-steps-taken-by-arbitration-associations-to-curb-global-warming/.

Op EdsOP. ED.

Introduction

Dr B.R. Ambedkar while presenting the Indian Constitution, 1950[1], in the Constituent Assembly, said that every generation is a nation of its own.  It is this perennial change in generational thought that demands the law to be adaptive[2]. With the rapid advancement upon the advent of the internet has allowed us to possess goods or services with a click of a button. Now more than ever before, we need the law to clearly state guidelines to allow the smooth functioning of e-commerce transactions. The purpose of the law should be to present solutions to resolve the probability of miscommunication, that could arise, because of the barrier caused by physical distance.

The term “e-commerce” is a common abbreviation used for “electronic commerce”. It includes carrying out business activities electronically, rather than abiding by the conventional method of physical shopping. With different stages involved in online shopping, it is realistic to say that in case of a dispute it will be extremely difficult to decide which court will have a jurisdiction in the matter, due to the multifaceted jurisdictional nature of such transactions. Sections 15-20 of the Code of Civil Procedure, 19082 (hereinafter “CPC”) deals with different types of jurisdiction and the “place of suing”. In simple terms, it specifies the venue of a particular case that is triable before a court.3 Jurisdiction is of three types – pecuniary, territorial, and subject-matter jurisdiction. To exercise territorial jurisdiction more effectively, the law segregates products that can be purchased into two categories – immovable properties and movable properties. Immovable as the word suggests means a property that cannot be moved from one place to another because it is fixed to the ground. Sections 16-18 of CPC deals with such properties, and the law applied is simple since the jurisdiction of a court, in case of immovable property, lies where the property is located.4 However, it should be noted that in cases of a parties only wanting to have benefit on property, different rules are applied.

This article aims to focus on the second category at hand, which is movable property. Through this piece, I shall explore the various statutory templates that are followed by courts in adjudicating jurisdictional disputes involving moveable property, particularly in the field of e-commerce matters. Subsequently, I shall analyse the impact of foreign judgments on cross-border jurisdictions followed by a brief examination of alternative mechanisms that can be utilised to resolve such disputes.

The term “movable property” is defined as property which can be transferred from one place to another. Sections 19 and 20 of the CPC lays down the law according to which courts shall have jurisdiction in cases concerning movable properties. The two places where the law provides for a jurisdiction to file for the suit depends on:

(a) the person who is aggrieved files a case that is where the cause of action happens; and

(b) where the defendant/perpetrator of the grievance carried on his business that is where the breach took place.5

The concept of “exclusive jurisdiction contracts” complicates the concept of place of suing in case of movable property. In such cases, it should be kept in mind that the contract exists between the company and the customer and that the manufacturers are not involved in case of any dispute.

The establishment of the e-commerce market has given birth to companies like Amazon, Nykaa, etc. – which have become popular, not just regionally, but throughout the world. Such online business companies insert exclusive jurisdiction clauses into their contracts which instructs that only courts, of a specific place/State/region, shall have the jurisdiction to settle potential disputes. This is in accordance with Official Trustee v. Sachindra Nath Chatterjee6 where the Supreme Court observed that before a court can be held to have jurisdiction to decide a particular matter, it must not merely have the jurisdiction to try the suit brought before it. It must also have the authority to pass the order sought for. Hence, there is no scope to create a new jurisdiction that does not exist at the first place.7

Tests to decide jurisdiction in e-commerce matters

As it has already been established, with the advent of e-commerce transactions, there is plenty of scope for confusion regarding the jurisdiction of courts. This varies with the nature of good in question, as well as place where the suit is filed. In India, civil matters intertwined with aspects of e-commerce are traditionally governed by Sections 15-19 of the CPC. At times, the issue(s) gets intermingled with complications due to the nature of business, wherein a specific territory cannot be ascertained to settle a jurisdictional dispute.

It is pertinent to mention that this legal vacuum has not gone unrecognised by the courts. To fill this gap in the current absence of a decisive law, courts have employed several tests to determine jurisdiction in e-commerce matters. One such test is the purposeful availment test as given by a 2011 US Supreme Court decision8 and affirmed by a 2009 Delhi High Court judgment of Banyan Tree Holding (P) Ltd. v. A. Murali Krishna Reddy9, and further explained via another 2017 Delhi High Court judgment of Impresario Entertainment & Hospitality (P) Ltd. v. S&D Hospitality10. The US Supreme Court laid down the interpretation of the purposeful availment test. The Court held that this test could be understood as the placing of goods into the stream of commerce, by the defendant, with the expectation that they will be purchased by consumers within the forum of the State. They further elucidated this concept by explaining that this, however, did not amend the rule of personam jurisdiction11. It was merely an observation that a defendant may then be subjected to a certain jurisdiction without ever entering the certain forum. The real test was associated with the defendant’s “intentionality” and whether their activities were intended to submit to the power of that sovereign.12

The Banyan Tree case, as decided by the Delhi High Court, expounded on this further considering e-commerce disputes. They deliberated on the issue of mere accessibility versus purposeful usage and held that:

…to establish jurisdiction in cases where the defendant does not reside/carry on business in the forum state but the website in question is “universally accessible”, the plaintiff will have to show that the defendant purposefully availed the jurisdiction of the forum court.13

In other words what was required to establish jurisdiction was the defendant’s intention to engage in a commercial transaction specifically at a forum state. In the Impresario Entertainment case14, the High Court further clarified this position by differentiating between the purposeful availment test from the purposeful avoidance test. The Court explained that to decide jurisdiction, it was not enough for the defendant to show that he had avoided the forum state but rather essential for the plaintiff to prove that the defendant had purposely availed the jurisdiction of the forum state.

Another test that can be used to decide jurisdiction in e-commerce matters is the forum convenience test. This is a test derived from the general doctrine of forum non conveniens which pertains to all civil matters. The general principle is that a court can recognise that a select forum is inconvenient for the parties involved in a suit and can, in accordance with that recognition, send the case to a more appropriate court. This change is to be made in the interests of all the parties and intent of reaching end of justice. 15

In the Supreme Court’s decision in Kusum Ingots & Alloys Ltd. v. Union of India16, this principle was legitimised and allowed in the Indian context when it laid down that in appropriate cases as it deemed fit, the Court could refuse to exercise its discretionary jurisdiction by invoking the doctrine of forum convenience. Part of cause of action arising in a certain territorial jurisdiction cannot compel the relevant court to decide the case conclusively. Instead, they can choose to exercise this principle to concede and confer jurisdiction. In light of this, it is reasonable to infer that this principle can be applied to e-commerce matters, when appropriate, as well. Considering this is a legitimate principle under the law and has been affirmed by the Supreme Court, there is no reason why it cannot be applied.

While Indian courts have not adopted a specific manner of adjudication, there are many more available tests derived from law across the world that can be applied and derived for deciding jurisdiction in e-commerce disputes. One such significant example is the minimum contacts test. This is a test based on a theory first instituted in the US Supreme Court’s decision in International Shoe Co. v. Washington 17. It governs personam jurisdiction in a forum state when parties are “non-residents”. Curiously, this theory works where the personam jurisdiction is derived from connections and contacts to forum state. It can be applied if the court feels that a person has “sufficient minimum contacts” – which may be the defendant’s physical presence, conferred jurisdiction through a contract, a stream of commerce, etc.

More tests like the substantial connection test18, zippo test19 and the effects test20 are also continually being adopted for e-commerce cases abroad. Clearly, there is a substantial number of precedents available internationally, regarding jurisdiction in e-commerce. Ultimately, it is up to Indian courts to decide which test is most suitable for them or to come up with a new test altogether. 

Analysing Indian judicial precedents

With the advent of the internet and e-commerce, Indian courts as well as courts around the world are having a difficult time in deciding the place where a person can sue, or which courts shall have the requisite jurisdiction. This becomes increasingly complicated because e-commerce is not like the traditional business transaction. It involves various intermediaries before the final product reaches the beneficiary. When there are more people involved, things get even more complicated as far as exact jurisdiction, and the power of courts are concerned. This section of the paper will try and analyse Indian case laws to provide some clarity in cases pertaining to e-commerce.

Naturally, the question that arises is why it is necessary to delve into a discourse pertaining to the jurisdictions of courts. Ergo, this discussion would entail exploring the implications of a court not having any jurisdiction. In Kiran Singh v. Chaman Paswan21, the court held that any decision passed by courts without having a proper jurisdiction to adjudicate the suit would end up as a nullity. A defect in jurisdiction can be of anything – meaning territorial, pecuniary, or even subject-matter. Therefore, if the court does not have proper jurisdiction, then it loses all its power to decide a case. Even if both parties consent to a particular court’s jurisdiction, the law will strike down the authority of the court, in such a case.22

Initially when the courts were not experienced while dealing with questions of jurisdiction in cases dealing with transactions over the internet, certain incorrect judgments were made. One of them is Casio (I) Co. Ltd. v. Ashita Tele Systems (P) Ltd.23. The court in this case held that only because the plaintiff was able to use the internet from a particular place, the court had the requisite jurisdiction to adjudicate upon the matter.24 This case is perhaps against the interest of the defendants which the CPC would certainly not endorse. Perhaps the court did not envisage the wrong precedent it was setting up because if this case were to be applied in the current times where any website could be virtually accessed from anywhere, then according to this judgment every court would have competent jurisdiction.

After this the Banyan Tree25 case removed the inadequacy with the Casio (I) Co. Ltd.26 judgment. In Banyan Tree27, the defendant challenged the jurisdiction of the High Court of Delhi. The plaintiff argued relying on the Casio28 case that since the internet is accessible to everyone in India, therefore, the question of jurisdiction should not be entertained. This argument of the plaintiff is completely erroneous, and the court rightfully rejected this claim of the plaintiffs. The court held that plaintiff either must show that he or she carried on a business within the jurisdiction of the court and if not, he or she should show that the injury arose within the jurisdiction of the court where the plaintiff has filed the case. This case was the very few ones who set a right precedent and tried to bring in some objectivity in absence of any previous judgments.

Things get quite perplexing as one cannot possibly fathom what the term “carrying business” encompasses. In today’s times with large e-commerce companies spread across several jurisdictions, it is difficult to specify where exactly the customer can sue a particular e-commerce company. For further clarity, we can refer to Dhodha House v. S.K. Maingi29. In this case, the court clarified the meaning of the term “carrying business”. A mere presence of an agent at a particular place, say X, does not mean that the firm carries out its business at the place X. For example: Amazon has various agents across the country which deliver its packages to many places. Just because its agents deliver packages to various places it cannot be said that Amazon carries out its business from all those places. One would have to look at that branch of Amazon which regularly receives orders and initiates the transactions. This place does not have to be the head branch necessarily. If we go by the reasoning of the Dhodha House case30, Amazon can be sued even those places where there are sub-branches. However, it should be shown that the specific branch does in fact carry out substantial business of Amazon.

Indian laws and precedents still do not provide a clear picture specifically in cases involving business to customer transactions (B2C). Indian laws were enacted without considering the numerous complexities that the internet creates. It is highly recommended that there should be separate legislation in the form of a statute specifically dedicated to e-commerce transactions or if not, then certain additions must be made to the CPC so that there is no room for confusion when dealing with such transactions. Although there is some clarity regarding B2B transactions, issues arise when there are multiple intermediaries and consumers are involved.

Understanding the impact of foreign judgments on cross-border jurisdictions

Indian statutory provisions accommodate and acknowledge the applicability of certain rulings that are in compliance with the judgments of international courts. The implication of international rulings on courts within the Indian jurisdiction is laid down in Section 13 of the CPC31. This provision also allows for judicial compliance in all situations, except for a few scenarios wherein the courts would have to delve further to ascertain the court’s jurisdiction. In certain cases, courts have noted that if there was a mutual arrangement to accede to a particular court’s jurisdiction, then the court would be officially recognised as having presiding authority over the issue at hand. As a result, its final verdict would be binding upon both parties.32

The role of legislation holds utmost importance especially with regards to decisions of foreign tribunals concerning internet-related conflicts. The Indian judiciary does not refuse to implement the decision of a foreign court. It can only maintain that the decision of a foreign court is incomplete when it does not comply with the requirements specified under Section 13 of the CPC.33 Hence, if a judgment is issued against such a citizen of India in consequence of any egregious infringement of some other country’s laws, the judgment would be implemented against such an Indian citizen within the subcontinent, given that they do not have to bear any of the maladies laid down in Section 13 of the Code of Civil Procedure.34 When it becomes an issue of who shall be vested with the “primary jurisdiction” over the internet, the legal precedents examined would strongly suggest that the Indian courts will have no reservation in endorsing a rational judgment of a foreign court, in the instance of such a court passing an extra-territorial judgment to be enforced against an Indian citizen.35

Understanding the corpus of private international law (PIL) and alternative dispute resolution (ADR)

Private international law, which is referred to as a dispute of laws in more common law-based countries, is a corpus of statutes that aims to address any issues stemming from the existence of an external factor in contractual relationships.36 Upon the emergence of the internet, cross-border ties gradually escalated, creating increasingly complicated issues of purview and relevant legislation. A variety of unique features of internet-based operations has also introduced fresh complexities. The fundamental challenge in dealing with legal relations involving international facets arises from the fact that the legal structures of more than a few nations can be observed to have a correlation with each other.37 Thus, the implementation of the regulations from one regulatory regime, instead of the latter, would, for most cases, yield different outcomes.38

Theory of harmonisation and reaching a middle ground

A proposed solution to this issue seems to be the option of choosing, on the basis on some parameters between the multiple presumably practicable systems, the legislation of a one specific legal framework to regulate the contractual relationship. This would mean the process of deciding the relevant legislation could take place under private international law. This also happens to be the approach that has the minimum impact on existing national legislation, since it does not entail any amendments to it to tackle the issue presented by way of inclusion of a foreign factor.39

Concepts of private international law are acknowledged in the Indian subcontinent. The Supreme Court held in 1964 that India follows the very well-established concept of private international law that the “law of the forum”, in which the litigation is commenced, regulates all issues of procedural practice.40 It is left at the discretion of the parties to consent and select one or more appropriate court systems to resolve their differences. If the respondents and plaintiffs specifically agree, in compliance according to their own arrangement, that their case be heard by a specific court, the two parties shall be obliged by the “forum selection” provision in their contract.41

The other approach, that is far more invasive to established domestic law, would be to attempt via a mechanism of “harmonization”, to eliminate the root cause of the issue by removing the discrepancies that arise amongst the law and regulations of a nation. “Harmonization” can be implemented via the conciliation process between nations by way of treaties instituting uniform policy and following ratification by the participating nations of the foreign conventions concerned. The results in the adjustment of state laws to harmonise them into conformity with the provisions of the requisite convention.42

Conclusion

Not only can e-commerce platforms have revolutionary multidisciplinary facilities, but also well-functioning information systems including appropriate data protection and precautions for individuals. The clauses of the agreement, based on the location of the products, must not be generic, but instead should be specific in nature in order to avoid jurisdiction discrepancies in the event of disputes. These must be drawn to the customer’s appropriate attention and should even provide them with a sufficient chance to read, review and then finally accept the conditions given. It will indicate that perhaps the concerns continue to be properly dealt with or that at minimum e-commerce platforms have a resolute plan in place to tackle such issues with ease and efficiency.


Undergraduate student enrolled in the BA, LLB (Hons.) course at Jindal Global Law School (Authored on 10-11-2020), e-mail: 18jgls-raghav.sg@jgu.edu.in.

[1] <http://www.scconline.com/DocumentLink/Uei3bEDC>.

[2] Misra, J.P., and J.P. Mishra, Dr B.R. Ambedkar and the Constitution – Making in India, Proceedings of the Indian History Congress 52 (1991): 534-41, accessed 17-10-2020. <http://www.jstor.org/stable/44142653>.

3 Mishra, Sachin, 2020, Determining Jurisdiction over E-Commerce Disputes in India, docs.manupatra.in, accessed October 8 <http://docs.manupatra.in/newsline/articles/Upload/FE4BA350-DBEF-49DA-97D4-09E54ED8B813.pdf>.

4 India, Legal, 2020, Jurisdiction of Civil Court and Place of Suing, legalservicesindia.com, accessed October 9 <http://www.legalservicesindia.com/article/1780/Jurisdiction-of-Civil-Court-and-Place-of-Suing.html>.

5 India, Legal, 2020. Jurisdictional Challenges in Online Transactions, legalservicesindia.com, accessed October 13 <http://www.legalservicesindia.com/article/2268/Jurisdictional-Challenges-in-Online-Transactions.html>.

6 (1969) 3 SCR 92

7 Ibid.

8 J. McIntyre Machinery Ltd. v. Nicastro, 2011 SCC OnLine US SC 122: 564 US 873 (2011) 

9 2009 SCC OnLine Del 3780

10 2018 SCC OnLine Del 6392

11 Ibid.

12 Ibid.

13 Banyan Tree Holding (P) Ltd., supra note 9.

14 2018 SCC OnLine Del 6392

15 Bryan A. Garner and Henry Campbell Black, Black’s Law Dictionary (St. Paul, Minn. West Group, 1999).

16 (2004) 6 SCC 254

17 1945 SCC OnLine US SC 158 : 326 US 310 (1945) 

18 Douglas De Savoye v. Morguard Investments Ltd., 1990 SCC OnLine Can SC 124 : (1990) 3 SCR 1077 

19 Zippo Mfg. Co. v. Zippo Dot Com Inc., 952 F Supp 1119 (WD Pa 1997).

20 Calder v. Jones, 1984 SCC OnLine US SC 58 : 465 US 783 (1984)

21 (1955) 1 SCR 117

22 Ibid.

23 2003 SCC OnLine Del 833

24 Ibid.

25 2009 SCC OnLine Del 3780

26 2003 SCC OnLine Del 833

27 2009 SCC OnLine Del 3780

28 2003 SCC OnLine Del 833

29 (2006) 9 SCC 41

30 (2006) 9 SCC 41

31 <http://www.scconline.com/DocumentLink/Mw0TY9U5>.

32 Narhari Shivram Shet Narvekar v. Pannalal Umediram, (1976) 3 SCC 203

33 Ibid.

34 Lalji Raja and Sons v. Firm Hansraj Nathuram, (1971) 1 SCC 721

35 O.P. Verma v. Gehrilal, 1960 SCC OnLine Raj 89

36 Dr Verschraegen Bea, Private International Law, 1st edn., (Kluwer Law International, 2001)

37 Malcolm N. Shaw, International Law 573 (Cambridge University Press, 5th edn. 2003).

38 Ibid.

39 S.C. Symeonides, Private International Law Bibliography 2017: US and Foreign Sources in English, American Journal of Comparative Law, 66 (2018), No. 2, pp. 89-100.

40 Ramanathan Chettiar v. Somasundaram Chettiar, 1963 SCC OnLine Mad 187

41 Ibid.

42 P. Hay, P.J. Borchers and R.D. Freer, Conflict of Laws: Private International Law: Cases and Materials, St. Paul, MN, Foundation Press, 2017.

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The success of any dispute resolution system depends greatly on the effectiveness of the enforcement mechanism which it prescribes. Arbitration could emerge as a successful alternative dispute redressal mechanism in India purely because of the ease with which an arbitral award can be enforced. An arbitral award could be enforced by the courts in the same manner as if it were a decree of the court. Since the enforcement of an award is similar to enforcement of a decree of a court, the same is broadly governed by the principles laid down by the Code of Civil Procedure, 1908[1] (CPC), but with some minor differences.

Although an award passed by an arbitral tribunal is treated as a decree of the court, yet there exists no legal presumption by which an arbitral tribunal is treated as a court for the purpose of enforcement. This scenario poses various practical difficulties in enforcement of an arbitral award, which the article endeavours to highlight.

In order to fully appreciate the whole gamut of controversy, the authors have briefly dealt with the provisions of CPC that deal with jurisdiction of court at the stage of institution of suit and at execution of decree, how these provisions were made applicable to the regime under the Arbitration Act, 1940[2] (the 1940 Act), the sudden shift brought by India’s adoption to the UNCITRAL Model Law on International Commercial Arbitration[3] (the UNCITRAL Model Law) by enacting the Arbitration and Conciliation Act, 1996[4] (the 1996 Act) and subsequent amendments made to the 1996 Act. The article focuses on provisions of the 1996 Act that deal with jurisdiction of court and the enforcement of an arbitral award and their interplay especially in view of the amendments made to these provisions by the Arbitration and Conciliation (Amendment) Act, 2015[5] (the Amending Act, 2015). In the course of discussion, the authors have analysed the judgments of the Supreme Court which have settled the various controversies surrounding the laws of arbitration in India and how there still exists ambiguity with respect to certain aspects of the legislation.

JURISDICTION OF COURTS AS PER THE CODE OF CIVIL PROCEDURE, 1908

Jurisdiction of court under CPC is subject-matter centric. Civil proceedings are instituted in courts within whose local limits the defendant resides or the subject property is situated or cause of action has arisen. Sections 15 to 21[6] CPC deal with jurisdiction of the court in which a suit can be instituted.

Once a decree is passed, it is either enforced by a court which has passed the decree or is transferred to a court which exercises jurisdiction over the person against whom the decree is passed or within whose jurisdiction the property is situated which would be sufficient to satisfy such decree. Sections 36 to 74[7] contained in Part II of the CPC deal with execution of decree and orders.

Provisions relating to transfer of decree are provided in Sections 39 to 45[8]. A court which has passed the decree may on an application of the decree-holder, send the decree for execution to another court if the person against whom the decree is passed, resides or carries on business within the local limits of jurisdiction of that court, or if such person has no property within the local limits of the jurisdiction of the court which passed the decree sufficient to satisfy such decree and has property within the local limits of the jurisdiction of such other court, or if the decree directs the sale or delivery of immovable property situated outside the local limits of the jurisdiction or for any other reason which the court may think fit. In addition to the aforesaid, under Section 46[9], the court which has passed the decree, upon an application filed by the decree-holder, may issue a percept to any other court which would be competent to execute such decree to attach any property belonging to the judgment debtor and specified in the percept.

Order 21 Rules 26[10] and 29[11] are also relevant in the present context as they lay down the circumstances in which execution of decree may be stayed. A decree may be stayed for reasonable time inter alia to enable the judgment debtor to file an appeal. It can also be stayed on such terms as to security, if a suit is pending in any court against the decree- holder of such court or of a decree which is being executed by such court. The appellate court can also grant the stay to the execution proceeding.

The aforesaid provisions, with some modifications were adopted by the legislature while enacting the Arbitration Act, 1940.

JURISDICTION OF COURTS UNDER THE ARBITRATION ACT, 1940

The 1940 Act provided for application of the Code of Civil Procedure to all proceedings before the court and to all appeals under the 1940 Act, subject to the provisions of the 1940 Act (Section 41[12]). The definition of “court” under the 1940 Act was more or less the same as the court under CPC. As per Section 2(c)[13] court meant a civil court having jurisdiction to decide the question forming the subject-matter of reference if the same had been the subject-matter of suit but did not include a small cause court except for the purposes of arbitration proceedings under Section 21[14].

One of the key features of the 1940 Act which was done away in the 1996 Act was that an award under the 1940 Act did not become final and binding on the parties. Under the 1940 Act, an arbitral award once passed had to be filed in court and the court had to give notice to the parties. The parties were entitled to file their objection to the award. The court had power to modify or correct the award and also to remit the award to the arbitrators for reconsideration, if any issues were left undetermined, or where the award was so indefinite to be incapable of execution, or where objection to legality of award is apparent upon the face of it. In case, the court found no cause to remit the award and the time period for making application to set aside the award had expired or such application had been refused, the court would proceed to pronounce the judgment according to the award and upon the judgment so pronounced a decree shall follow and the award will become effective.

Section 31 of the 1940 Act[15] dealt with jurisdiction. As per this Section, an award had to be filed in court having jurisdiction in the matter to which the reference relates. The concept of jurisdictional seat in the 1940 Act was conspicuous by its absence. A holistic reading of the 1940 Act would indicate that it was the subject-matter of dispute that formed the basis of jurisdiction of court just like jurisdiction under CPC.

The enforcement of arbitral award also had to be done as per the provisions of CPC. This practice prevailed in India till the enactment of the 1996 Act, which was based on UNCITRAL Model law.

UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION

The need for improvement and harmonisation of domestic laws dealing with arbitration, especially international commercial arbitration, led to the United Nations Commission on International Trade law adopting the UNCITRAL Model Law in the year 1985. This was ratified by India in the form of the 1996 Act. The 1996 Act overhauled its predecessor and ushered in a new era of dispute resolution through arbitration.

Article 20 of the UNCITRAL Model Law provides that the parties are free to agree on the place of arbitration. In case parties fail to do so, the arbitral tribunal, having regard to the circumstances of the case and the convenience of parties, can determine the place of arbitration. Article 20(2) is a non obstante clause which provides that notwithstanding anything contained in Article 20(1), the arbitral tribunal can hold meeting at any place, unless otherwise agreed by the parties. Thus, Article 20 contemplates two places  – one is the seat, which the parties have agreed as per the agreement or the Tribunal has determined, the other is the venue, where the Tribunal can hold any of its meeting irrespective of that place not being seat as chosen by the parties or determined by the Arbitral Tribunal. The Model Law mandates the award to contain the date and the place of arbitration (Article 31). Thus, the “place” where the award was made gained significance under the UNCITRAL Model Law.

An arbitral award can be set aside by the court only if the grounds mentioned in Article 34 are satisfied. Article 35 deals with recognition and enforcement of arbitral award as per which, an arbitral award, irrespective of the country in which it was made, shall be recognised as binding and upon application in writing to the competent court, shall be enforced subject to the provisions of Articles 35 and 36. Article 35 is a significant departure from the practice that was followed by Courts in India due to the 1940 Act. Unlike the 1940 Act, under the UNCITRAL Model Law, an arbitral award is binding on parties and capable of enforcement i.e. an award was treated as a decree capable of enforcement. It does not require approval of the jurisdictional civil court for its enforcement.

Article 36 deals with the grounds for refusing recognition and enforcement of arbitral award, irrespective of the country in which it was made. Just like Article 34, the grounds for refusal to recognise and enforce the arbitral award are limited. Article 36(2) is of vital importance. As per this provision, in case, an application for setting aside or suspension of award is made in a court of the country in which, or under the law of which the award was made, then the court where the recognition or enforcement of award is sought, may, if it considers proper, adjourn its decision. It may also, on an application of the party claiming recognition or enforcement of the award, order the other party to provide appropriate security. Thus, a discretionary power has been granted to the court where recognition or enforcement is sought to defer its decision.

Although the UNCITRAL Model Law underwent amendment in 2006, the aforesaid articles remained intact.

THE ARBITRATION AND CONCILIATION ACT, 1996 AND THE SUBSEQUENT AMENDMENTS

As mentioned in the foregoing paragraph, the 1996 Act is modelled on the UNCITRAL Model Law. Part I of the 1996 Act applies where the place of arbitration is in India, Part II applies where the place of arbitration is outside India.[16] In this article we are concerned with Part I of the Act.

The 1996 Act defines court in Section 2(1)(e) to mean the principal civil court of original jurisdiction in a district and includes the High Court in exercise of its ordinary original civil jurisdiction having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit but does not include any civil court of a grade inferior to such principal civil court or any court of small causes.

The definition of court has been subject-matter of various deliberations and judgments as this definition along with Sections 20, 31(4) and 42 are critical in determining which court shall have jurisdiction to hear applications arising out of arbitration agreement and arbitral proceedings.

The language of Sections 20, 21, 31, 32 and 34 of the 1996 Act have been borrowed from the UNCITRAL Model Law without any material change.

Concept of Juridical Seat

Section 20 of the 1996 Act, just like Article 20 of the UNCITRAL Model law deals with place of arbitration and contemplates a situation where arbitration proceedings can be held at a place different from the place decided by the parties to the arbitration agreement or as determined by the Arbitral Tribunal. It differentiates between juridical seat and venue.

In the early years of coming into force of the 1996 Act, the concept of “seat” and “venue” were not very clear. The Indian courts in various judgment held that the 1996 Act is “subject-matter centric”. The concept of parties choosing a neutral place for arbitration, which was well established in other parts of the world, especially in International Commercial Arbitrations, was alien to India. It was not before 2012, in the decision in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (BALCO)[17], that a Constitutional Bench of the Supreme Court drew a distinction between venue and seat and held that arbitrations are anchored to the seat and that seat is the centre of gravity. In holding so, the Constitutional Bench clarified that the term “subject-matter of arbitration” used in the definition of court in Section 2(1)(e) cannot be confused with the term “subject-matter of the suit”. The subject-matter of arbitration is arbitration itself and hence, the term court would mean the court of the seat of arbitration. The court also took note of Section 20 of the Act, a statutory provision in support of party autonomy and observed that any other interpretation would leave the provision nugatory. Thus, came the concept of supervisory court.

It must be pointed out that although in para 96 of the judgment, the Supreme Court recognises supervisory court, it holds that the legislature has intentionally given jurisdiction to two courts – (i) the court which would have jurisdiction where the cause of action is located and (ii) the supervisory court.  An isolated reading of para 96 of the judgment reveals that courts have concurrent jurisdiction and parties can either choose the court where the cause of action has arisen or the court exercising supervisory jurisdiction over the arbitral proceedings. Many courts in India followed this approach. However, a holistic reading of the judgment makes it clear that the courts at seat alone will have jurisdiction to challenge arbitral award. This observation of the authors is supported by a recent judgment of the Supreme Court in BGS SGS Soma JV v. NHPC Ltd.[18] (BGS SGS Soma JV).

The Supreme Court in Indus Mobile Distribution (P) Ltd v. Datawind Innovations (P) Ltd.,[19] while analysing in detail the effect of Section 20 of the 1996 Act on the jurisdiction of court held that the place chosen by the parties in the arbitration agreement to hold arbitral proceedings, may not in the classical sense have jurisdiction, i.e. no part of the cause of action may have arisen at such a place, however, in arbitration law, the moment such a place is chosen, it becomes the juridical seat, which is akin to exclusive jurisdiction clause. Thus, jurisdiction of court under the arbitration law is seat-centric.

Section 21 deals with commencement of arbitral proceedings from the date on which request for dispute to be referred to arbitration is received by the respondent and as per Section 32, it terminates when the Tribunal has made the final award. Just like the UNCITRAL Model Law, Section 31(4) of the 1996 Act also mandates the award to mention the date and the place of arbitration. These provisions were not subjected to any amendments.

Challenge to Arbitral Award

An arbitral award can only be challenged before the court within whose jurisdiction an award is made. Section 34 deals with application for setting aside the arbitral award. The grounds for setting aside an award are confined to those provided in the Section. As per Section 34(3), the time period to challenge the arbitral award is three months. Section 34 underwent some change in 2015 and the grounds for challenge were further limited. In order to make the dispute resolution process effective, sub-clause (6) was introduced which mandated the courts to dispose of Section 34 application within a period of one year from the date of service of  notice.

Finality of Award and its Enforcement

Section 35 deals with finality of arbitral awards. An award is final and binding on the parties and persons claiming under them. Section 36 deals with enforcement of arbitral award. As per this section, where the time for making an application to set aside the arbitral award has expired, or such application having been made, it has been refused, the award shall be enforced under the CPC in the same as it were a decree of the court. This is significantly different from the position contemplated in the 1940 Act where the arbitral award by itself was not final, binding and enforceable and required approval from the court by way of judgment and decree to make it enforceable.

Position under the 1996 Act distinct from that under the UNCITRAL Model Law

A bare reading of Articles 36 of the UNCITRAL Model Law and Section 36 of the 1996 Act would suggest that contrary to Article 36 of the UNCITRAL Model Law, where a discretion has been granted to the executing court to stay or not to stay the execution of arbitral award till the pendency of proceedings challenging the arbitral award, no such discretion vests with the Courts under Section 36 of the 1996 Act.

Judgments of the Court and the position of law prior to the Amending Act of 2015

The aforesaid position has been subject-matter of various judgments in the past. The Supreme Court in National Buildings Construction Corpn. Ltd. v. Lloyds Insulation (India) Ltd.[20] and Fiza Developers and Inter-trade (P) Ltd. v. AMCI (India) (P) Ltd. .[21] held that the very filing and pendency of application under 34 operates as a stay of enforcement of the award. Similar stand was taken in National Aluminium Co. Ltd. v. Pressteel & Fabrications (P) Ltd.[22] , however, the Court was quick to add that automatic suspension of the execution of arbitral award defeats the very purpose of arbitration. This suggestion of the Supreme Court was accepted by the 246th Law Commission[23], which in its report recommended insertion of the following:

Section 36(1) will be subject to Section 36(2);

36(2) where an application to set aside the arbitral award has been filed in the Court under Section 34, the filing of such an application shall not by itself render the award unenforceable, unless upon a separate application made for that purpose, the court grants stay of the operation of the award in accordance with the provisions of sub-section (3) hereof;

36(3) upon filing of the separate application under sub-section (2) for stay of the operation of the award, the court may, subject to such conditions as it may deem fit, grant stay of the operation of the award for reasons to be recorded in writing:

Provided that the Court shall while considering the grant of stay, in the case of an award for money shall have due regard to the provisions for grant of stay of money decrees under the Code of Civil Procedure, 1908.

The aforesaid recommendation was duly incorporated in the 1996 Act by the Amending Act of 2015. Thus, post the Amending Act of 2015, mere filing of Section 34 application will not in itself render the arbitral award non-executable.

Position post the Amending Act of 2015: Judgment in Board of Control for Cricket in India v. Kochhi Cricket (P) Ltd.

After the amendment,  there were conflicting decisions passed by the various High Courts regarding whether the amendment made to the 1996 Act by the Amending Act of 2015 shall apply to pending court proceedings or not. The position was finally settled by the Supreme Court in Board of Control for Cricket in India v. Kochhi Cricket (P) Ltd. [24]. The issue before the Court was whether the amended Section 36, would apply in relation to proceedings initiated prior to coming into force of the amendment. The question required interpretation of Section 26 of the Amending Act of 2015 as per which the amendment was to apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act and would apply to the arbitral proceedings which commenced before the commencement of this Act only if the parties agreed to its application.

The Court held that the era of automatic stay was over. Section 36 being procedural in nature, the amendment would be applicable to pending court proceedings as well. Consequently, in order to stay enforcement of arbitral award, application to that effect under Section 36(2) will have to be filed before the competent court and that mere challenge to arbitral award will not make the arbitral award non-executable. However, the issue that whether Section 36 proceedings are independent of Section 34 proceedings was not decided despite being raised by the parties.

It will not be out of place to mention that a press note dated 7 March 2018 was brought to the notice of court as per which a new Section 87 was proposed to be inserted to clarify that unless parties agree otherwise the 2015 Amendment shall not apply to

  • Arbitral proceedings which have commenced before the commencement of the 2015 Amendment Act; and
  • Court proceedings arising out of or in relation to such arbitral proceedings irrespective of whether such court proceedings are commenced prior to or after the commencement of the 2015 Amendment Act.

Shall apply only to

  • Arbitral proceedings commenced on or after the commencement of the 2015 Amendment Act; and
  • To court proceedings arising out of or in relation to such arbitral proceedings.

The Supreme Court took note of the press note and advised the Central Government to keep in the mind the very object of the enactment of the 2015 Amendment Act as the proposed Section 87 would defeat the very purpose for which the amendment was made to the 1996 Act.

Parliament ignored the advice of the Supreme Court and went ahead and introduced Section 87 to the 1996 Act by way of Section 13 of the Arbitration and Conciliation (Amendment) Act, 2019[25].

Section 87 of the 1996 Act was challenged in a batch of petition before the Supreme Court in Hindustan Construction Co. Ltd. v. Union of India.[26] The Supreme Court struck down the insertion of Section 87 by the Amending Act, 2019 as well as deletion of Section 26 of the Amending Act, 2015. This judgment, although a landmark, suffers from some errors; only time will tell whether the errors are glaring enough to take away the precedential value of this judgment.

Jurisdiction of Court: Section 42 of the 1996 Act

Another crucial provision of the 1996 Act which has been a subject-matter of various controversies is Section 42 which deals with jurisdiction. A bare perusal of Section 42 would suggest that Section 42 has an overriding effect over all other provisions of the Act.

As per Section 42, the court where the first application emanating from the arbitration agreement or arbitral proceedings is made, shall have jurisdiction over the arbitral proceedings and will have exclusive jurisdiction over all other future court proceedings. Reading Section 42 in isolation would suggest that in a case where the cause of action arose in city  A, and the arbitration was seated in city B, if a party files an application before courts in city A, the courts in city A alone will exercise jurisdiction over future court proceedings emanating from the arbitration agreement. These readings of the section run counter to the concept of seat and supervisory jurisdiction which is etched deeply in the UNCITRAL Model Law based on which the 1996 Arbitration Act is modelled. Therefore, in order to understand the true import of Section 42, the same has to be read together with Section 2(1)(e) and Section 20. The aforesaid position, with a similar example was discussed in BGS SGS Soma JV[27], where the Court observed that the moment a seat is chosen by the parties, the Court of the seat is conferred with exclusive jurisdiction to decide the proceedings emanating from the arbitration agreement.

In para 62 of the judgment, the Court held that the decision of High Court of Delhi in Antrix Corpn. Ltd. v. Devas Multimedia (P) Ltd.[28] (Antrix Corpn.) is incorrect. The High Court of Delhi in Antrix Corpn.[29] by relying on para 96 of BALCO[30] had concluded that the two courts can have concurrent jurisdiction and that merely choosing a seat cannot amount to exercising such a right of exclusive forum selection. The High Court of Delhi in Antrix Corpn.[31] was of the opinion that holding otherwise would in effect render Section 42 of the 1996 Act ineffective. The Supreme Court concluded that Section 42 of the 1996 Act is meant to avoid conflicts in jurisdiction of courts by placing the supervisory jurisdiction over all arbitral proceedings in connection with the arbitration in one court exclusively. The Court further observed that in cases where it is found on facts that no seat is designated by the agreement or the so-called seat is only a convenient venue and that several courts may have jurisdiction as part of the cause of action have arisen within their jurisdiction, then the court where the earliest application is filed, will be the court that shall exercise exclusive jurisdiction under Section 42.

Interplay between Sections 36 and 42 of the 1996 Act

We have in the initial paragraphs of this article discussed in detail how a decree is executed under CPC. As per Section 38 CPC, a decree may be executed either by the court which has passed the decree or the court to which the decree may be sent for execution. An arbitral award, unlike a judgment and order, is passed by an Arbitral Tribunal which does not have power of execution of decree and thus, the first part of Section 38 that deals with execution of decree by the court which has passed it does not apply in the case of arbitral award. The second part of Section 38 that deals with execution by court to which decree is sent also does not get attracted in the case of execution as there exists no deeming fiction to hold that the court within whose jurisdiction the arbitral award was passed should be taken to be the court which passed the decree. It is for the same reason, why Section 39 CPC can also not be fully applied to execution of an arbitral award as there exists no court from where a decree has been transferred for execution. However, Section 39 comes to the rescue in determining which court will have jurisdiction to execute an award as it marks out certain indicators needed to determine the appropriate court where an execution petition may be filed.

Thus, an arbitral award may be executed at any place having a close nexus with a judgment debtor or his assets or properties or both. As such, a person in whose favour the award is passed is not required to file an execution petition before the District Court within whose jurisdiction the award was passed and then seeks its transfer to the court where inter alia the assets or properties of a judgment debtor lie.[32]

Position of law clarified by the judgment in Sundaram Finance Ltd. v. Abdul Samad

The Supreme Court in Sundaram Finance Ltd. v. Abdul Samad (Sundaram Finance)[33] clarified the position of law on this point by holding that the enforcement of an award through its execution can be filed anywhere in the country where such a decree can be executed and there is no requirement for obtaining a transfer of decree from the court, which would have jurisdiction over the arbitral award.

The Supreme Court in Sundaram Finance[34]  while holding so also took note of the relevance of Section 42 of the 1996 Act in determining jurisdiction of executing court and concluded that Section 42 will not get attracted in case of execution proceedings. The Court observed that when final award is made, of which execution is sought, the arbitral proceedings already stand terminated (Section 32) and thus, Section 42 of the Act, which deals with jurisdiction issue in respect of arbitral proceedings, will have no relevance.

The judgment in Sundaram Finance[35]  although seems to have settled the position of law relating to execution of arbitral awards, however, certain parts of the judgment could have been more elaborative to avoid any ambiguity in future. The Court by holding that Section 42 will not get attracted in case of execution of award under Section 36 has taken into account only those cases where a final award has been passed by the Tribunal and not an interim award. Similarly, while referring to Section 46 CPC, which deals with issuance of percept, the Court has failed to hold which court will be competent to issue precepts – does it mean that an execution petition may be filed, as a matter of principle, in a court where Section 34 application is pending and necessary direction may be issued by that court to the court which otherwise under CPC would be the competent court to execute the decree? One problem that may emerge from the ambiguity is that litigants may rely on para 10 of Sundaram Finance judgment[36] to maintain their petition before a court which otherwise lacks territorial jurisdiction to enforce the arbitral award.

The lack of clarity in the aforesaid issue is problematic as even the obiter of the Supreme Court is binding on lower courts. An ambiguous obiter may pose a different level of problems as we have seen in the past.[37]

CONCLUSION

From the foregoing discussion, one thing is clear that although the legislature and the judiciary have come a long way in streamlining the dispute settlement process through arbitration, yet there continues to exist an ambiguity with respect to certain aspects of the Arbitration and Conciliation Act, 1996. The amendments brought by the Amending Act of 2015 have definitely aided in changing the outlook of the international community towards India as an arbitration friendly nation, however, the lack of clarity that has crept in because of the divergent judicial pronouncements subsequent to these amendment poses a greater challenge which needs to be overcome soon.

One of the areas which need clarity is the interplay between Sections 34 and 36 of the 1996 Act.  The Amending Act, 2015 has intertwined these Sections. As per the amended Act, in order to obtain a stay on the execution of an arbitral award, an application challenging the arbitral award under Section 34 of the Act has to be accompanied by a separate application seeking stay of the arbitral award under Section 36(2).  Only when the competent court passes an order of stay of the award, on the application made under Section 36(2), the arbitral award becomes unenforceable. The court while hearing the application for stay of the arbitral award may impose certain conditions on the judgment debtor. One of these conditions may include payment of money as well in case of a money decree.  In such a situation, a question arises as to whether such an action of the supervisory court, i.e. imposition of condition involving payment of money amounts to deemed execution of award or not. The courts are yet to examine this issue. One of the standpoint from which the court will have to examine this issue is that unlike jurisdiction under CPC, the jurisdiction of courts under the 1996 Act is not subject-matter centric. A court, under the 1996 Act, exercises supervisory jurisdiction over arbitration purely because of the fact that the arbitration was conducted within its local limits. There can be a situation where the supervisory court has absolutely no nexus with the subject-matter of dispute. In such a situation, whether by conferring the power to stay the execution of an award by imposing conditions involving payment of money, has the legislature not transgressed the settled principles of law relating to jurisdiction of court at the time of execution of a decree.

The aforesaid issue gives rise to another practical problem. Assuming the court stays the award and directs the judgment debtor to deposit a certain portion of arbitral amount and at the same time, allows the decree-holder to withdraw that amount upon an application being made by him, then whether such an order would amount to deemed enforcement of award. Also, which court would be responsible to see whether the proper stamp duty has been paid or not on an arbitral award as per the judgment laid down in M. Anasuya Devi. v M. Manik Reddy[38], since the issue of stamp duty has to be seen at the stage of enforcement.

Another issue that will require examination is whether the court under Section 34 while staying the arbitral award are deemed to be the court “which has passed the decree” as per Section 37 of the CPC, 1908 so as to make certain sections of the CPC while enforcing the decree workable like precepts. This issue, although was discussed in Sundaram Finance[39], has not been tested.

In order to make the dispute resolution through arbitration reach its full potential, the courts will have to address the aforementioned issues and ensure that the judgments in future provide a solution keeping in mind the practical realities of dispute resolution in India.


Advocate on Record, Supreme Court of India.

† † LLM, National University of Singapore, Advocate practicing at Supreme Court of India.

[1] Code of Civil Procedure, 1908. 

[2] Arbitration Act, 1940.

[3] UNCITRAL Model Law on International Commercial Arbitration. 

[4] Arbitration and Conciliation Act, 1996. 

[5] Arbitration and Conciliation (Amendment) Act, 2015. 

[6] Sections 15 to 21 CPC 

[7] Sections 36 to 74 CPC 

[8] Sections 39 to 45 CPC 

[9] Section 46 CPC 

[10] Order 21 Rules 26 CPC 

[11] Order 21 Rules 29 CPC 

[12] Section 41 of the Arbitration Act, 1940 

[13] Section 2(c) of the Arbitration Act, 1940 

[14] Section 21 of the Arbitration Act, 1940 

[15] Section 31 of the Arbitration Act, 1940 

[16] Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552 

[17] Ibid.

[18] (2020) 4 SCC 234  — Whether a three-Judge Bench in SGS Soma could have clarified the judgment passed by a Constitution Bench in BALCO, supra Note 16 is something which requires further deliberation.

[19] (2017) 7 SCC 678 

[20] (2005) 2 SCC 367, para 6

[21] (2009) 17 SCC 796, para 20

[22] (2004) 1 SCC 540 

[23]Law Commission of India, Report No. 246 on Amendments to the Arbitration and Conciliation Act, 1996 (August 2014).

[24] (2018) 6 SCC 287. 

[25] Section 13 of the Arbitration and Conciliation (Amendment) Act, 2019

[26] 2019 SCC OnLine SC 1520 

[27] Supra Note 18.

[28] 2018 SCC OnLine Del 9338 

[29] Ibid.

[30] Supra Note 16.

[31] Supra Note 28.

[32] Daelim Industrial Co. Ltd. v. Numaligarh Refinery Ltd., 2009 SCC OnLine Del 511 — “A money award, can be enforced through courts of the place wheresoever the money or any property of the party liable to pay is situated”; Indusind Bank Ltd. v. Bhullar Transport Co., 2012 SCC OnLine P&H 21674 .

[33] (2018) 3 SCC 622.

[34] Ibid.

[35] Ibid.

[36] Ibid.

[37] Para 96 of  BALCO, supra Note 16 (elaborated in the foregoing paragraphs of this paper).

[38] (2003) 8 SCC 565 .

[39] Supra Note 33.

Law School NewsLive Blogging

Welcome to the Madhyastham UPES ADR Fest, 2021, University of Petroleum and Energy Studies, Dehradun.

The Alternate Dispute Resolution Association of UPES School of Law is proud to organize “Madhyastham UPES ADR Fest, 2021. Due to the risk associated with a novel Corona Virus (COVID-19) outbreak, this Competition will be organized in Online Mode only. UPES School of Law is a private school that was established in 2007 in Dehradun. UPES is one of the constituent schools of the University of Petroleum and Energy Studies (UPES) and is recognized by the University Grants Commission (UGC). UPES is the first Indian University to partner with UK-based The University of Law for legal studies.

Alternative Dispute Resolution or ADR as it is commonly known is almost a movement that has quickly gained momentum in the Indian as well as the International Legal Fraternity. Dispute Resolution is a method by which people settle differences. It is a process by which compromise or agreement is reached while avoiding argument and dispute. It is a bargaining process between parties when both seek to reach an agreement that settles a matter of mutual concern or resolves a conflict.

“Madhyastham UPES ADR Fest’21” will be held in February from 25th-28th. This fest will witness three national competitions:

  • 3rdNational Mediation Competition 
  • 1stNational Negotiation Competition 
  • 1stNational Arbitral Award Writing Competition 

BRIEF ITINERARY OF THE EVENT:

Day 1– 25th February 2021: Inaugural Ceremony [6:00 PM]

Day 2– 26th February 2021:

  • Preliminary Round of 1st National Negotiation Competition [9:00 AM]
  • Quarter-Final Round of 1st National Negotiation Competition [2:00 PM]
  • Semi-Final Round of 1st National Negotiation Competition [5:30 PM]

Day 3: 27th February 2021:

  • Final Round of 1st National Negotiation Competition [10:00 AM]
  • Preliminary Round of 3rd National Mediation Competition [2:00 PM]
  • Quarter-Final Round of 3rd National Mediation Competition [6:30 PM]

Day 4: 28th February 2021:

  • Semi-Final Round of 3rd National Mediation Competition [10:30 AM]
  • Final Round of 3rd National Mediation Competition [2:00 PM]
  • Valedictory Ceremony [6:00 PM]

INAUGURAL CEREMONY

06:00 PM: The inaugural ceremony commences. It commenced with the introduction by the hosts Mr. Nishant and Ms. Simran. They briefed about the University, ADR Association, and the Event (Madhyastam’21).

06:05 PM: The hosts thanked all the collaborations and to the Dean, UPES School of Law, Prof. (Dr.) Vijay Kumar Singh.

06:10 PM: Prof. (Dr.) Vijay Kumar Singh motivated the participants and imparted knowledge about the importance of ADR mechanism.

06:15 PM: The hosts thanked our faculty coordinators; Mr. Afkar Ahmed, Ms. Aprajita Singh and Mr. Shashank Pathak.

06:17 PM: Mr. Shashank Pathak wished all the students all the best and appreciated the efforts of the entire ADR Association for organizing the event.

06:20 PM: The session was concluded by the hosts and the student convener Ms. Nishtha Kansal, ADR Association, and wished all the participants the best of luck for the competition.

06:23 PM: The inaugural ceremony hereby ends.

 

1st National Negotiation Competition 2021

PRELIMINARY ROUND:

10:00 AM: Judges Briefing 

The Judges for the preliminary round of the 1st National Negotiation Competition were briefed about the facts by the core members of the committee.

11:00 AM: Preliminary Round

1st Negotiation Competition has started. Every participant poured their skills and knowledge into the competition. The low temperature of winter just faded with the highly competitive atmosphere.

12:00 AM: Result of the Preliminary Round

The result of the preliminary round of the 1st National Negotiation Competition is here.
The teams that have qualified for the quarter-finals are :
TC – 101
TC – 107
TC – 118
TC – 111
TC – 106
TC – 112
TC – 117
TC – 119

QUARTER-FINAL ROUND

02:00 PM: Judges Briefing

The Judges for the quarter-final round of the 1st National Negotiation Competition were briefed about the facts by the core members of the committee.

4:00 PM: Quarter-Final Round

The quarter-final round for the 1st National Negotiation Competition has ended. The highly competitive faces of the participants were really noticeable. Everyone gave their best for the competition. May victory serve the worthy and may the light of knowledge grace us all.

4:40 PM: Result of the Quarter-Final Round

The result of the quarter-final round of the 1st National Negotiation Competition is here.
The teams that have qualified for the semi-final round are :
TC – 107
TC – 111
TC – 106
TC – 118

SEMI-FINAL ROUND

06:00 PM Judges Briefing

The Judges for the Semi-Final round of the 1st National Negotiation Competition were briefed about the facts by the core members of the committee.

08:00 PM: Semi-Final Round

The nail-biting atmosphere of the semi-final round of the 1st National Negotiation Competition had everyone on the edge of their seats. The judges weren’t letting them off easily. They were placing hurdles, one after another although these hurdles weren’t enough to down their courage.

08:20 PM: Result of the Semi-Final Round

The result of the Semi-final round of the 1st National Negotiation Competition is here.
The teams that have qualified for the final round are :
TC – 111
TC – 118

DAY 3

11:50 AM: Final Round of 1st National Negotiation Competition

The teams with glitter in their eyes and butterflies in their stomach have started their journey for the final round of the 1st National Negotiation Competition. They utilized their every skill and ability to compete and make it to victory.

May victory serve the worthy, our best wishes are with them.

3rd National Mediation Competition 2021

02:00 PM Judges Briefing

The Judges for the preliminary round of the 3rd National Mediation Competition were briefed about the facts by the core members of the committee and research team.

All the very best to all the participants.

03:45 PM Preliminary Round

The first round of the competition ended successfully. These lazy afternoons weren’t lazy enough as everyone was fighting their own battles. Although it was a tough competition still everybody tried to give their best for the competition.

05:30 PM: Result of the Preliminary Round

The result of the preliminary round of the 3rd National Mediation Competition is here.
The teams that have qualified for the quarter-final round are:
Mediators
TC-302
TC-306
TC-311
TC-313
TC-315
TC-316
TC-328
TC-332

Client counsel Pairs
TC-305
TC-306
TC-308
TC-321
TC-322
TC-329
TC-331
TC-332

All the best to the qualifying teams!!

06:30 PM Judges Briefing

The Judges for the quarter-final round of the 3rd National Mediation Competition were briefed about the facts by the core members of the committee and research team.

08:30 PM  Quarter-Final Round

The quarter-final round ended. Beside being virtual round, the tension on the faces so much visible. It was hard for the judges also to evaluate the teams as every team performed so well.

11:30 PM: Result of the Quarter-Final Round

The result of the quarter-final round of the 3rd National Mediation Competition is here.
The teams that have qualified for the quarter-final round are:
Mediators
TC- 302
TC- 311
TC- 316
TC- 332

Client counsel Pairs
TC- 332
TC- 306
TC- 329
TC- 321

DAY- 4

11:45 AM: SEMI-FINAL ROUND

The semi-final rounds of the 3rd National Mediation Competition has commenced. After the commendable performance of the participants, judges look impressed and a bit stressed about the marking, awaiting results.
Teams are quite stressed but they are happy about how they managed to finally deliver their best. The judges were least concerned about the lapse of time and were more interested in watching their competitive nature.

1:15 PM: Results of the Semi-Final Round

The result of the semi-final round of the 3rd National Mediation Competition is here.
The teams that have qualified for the final round are:
Mediators
TC- 311
TC- 332

Client counsel Pairs
TC- 306
TC- 329

2:20 PM: Judges Briefing for the Final Round

The Judges for the Final Round of the 3rd National Mediation Competition were briefed about the facts by the core members of the committee and research team.

4:30 PM: Final Round 

The final round of the 3rd National Mediation Competition ended. The teams had made it to the final after so much hardship that none was ready to give in for a moment and everyone just did an extraordinary job.

6:00 PM: Valedictory Ceremony

We are all set for the valedictory ceremony of MADHYASTHAM UPES FEST’21.

This COVID-19 situation has changed our way of living a lot and still, we are adopting this new normal. There was a time when we used to gather for fests and go through the ups and downs together. But now we held meetings on online platforms and sort all problems virtually. It proves that no matter what when there is a team working together no obstacles matter in front of their courage and dedication.

We would like to thank each of you who has contributed to this MADHYASTHAM UPES FEST’21 and raised it to a grand success. We would like to express our sincere gratitude to all our faculty coordinators and Prof.(Dr.) Vijay Kumar Singh, Dean, UPES School of Law for giving us their valuable time and having faith in us in organising such a big event via virtual mode.

Op EdsOP. ED.

The principle of Gram Swaraj is based on the idea of “self-governance” or “self-rule” which teaches human beings to be self sufficient by living in peace and harmony and by understanding and respecting the needs and demands of their fellow brethrens.

In dispute resolution, this principle inspires the conflicting parties to resolve their disputes amicably by understanding and respecting the needs and demands of each other. The true aim of the dispute resolution system based on the principle of Gram Swaraj is to unite the parties towards the path of humanity and love for mankind.

Mohandas Gandhi, in his autobiography, had shared an instance wherein he successfully convinced the parties to arbitrate their dispute and, thereafter, successfully convinced the award holder to allow the award debtor to pay the awarded sum in “moderate instalments”, even though the instalments were to run “over a very long period”. Had his client (the award holder) not gotten convinced for such a settlement, the award debtor would be declared bankrupt “and there was an unwritten law among the Porbandar Memans living in South Africa that death should be preferred to bankruptcy.”[1] Gandhi wrote thereafter that “It was more difficult for me to secure this concession of payment by installments than to get the parties to agree to arbitration. But both were happy over the result, and both rose in the public estimation. My joy was boundless. I had learnt the true practice of law. I had learnt to find out the better side of human nature and to enter men’s hearts. I realized that the true function of a lawyer was to unite parties riven asunder. The lesson was so indelibly burnt into me that a large part of my time during the twenty years of my practice as a lawyer was occupied in bringing about private compromises of hundreds of cases. I lost nothing thereby – not even money, certainly not my soul.[2]

This enshrines the spirit of Alternative Dispute Resolution mechanism in India.

Alternative Dispute Resolution (hereinafter ‘ADR’),which stands as an acronym for a variety of dispute resolution methods such as arbitration, mediation, conciliation, Permanent Lok Adalats, etc., complements the formal justice system. The ADR mechanism gives the autonomy to the parties to select the procedure and the dispute resolution method which are best suited to their needs and preferences. This enables them to resolve their disputes more efficiently by avoiding the complexities involved in court adjudication. This means that they will have more freedom, relaxed rules, tailored remedies, speedy resolution, cost-efficient mechanisms, and an improved access to justice.

However, the parties while deciding to resolve their dispute through any mode of ADR face certain difficulties such as uncertainty in the selection of procedures, uncertainty in the selection of an efficient panel of neutrals (arbitrator, conciliator, mediator, etc.), uncertainty in fixing the fee of the panel of neutral(s), difficulty in searching for a proper place of proceeding etc. To overcome these shortcomings, the institutional ADR offers many advantages. The institutional ADR facilitates the process of ADR by equipping the parties with the prerequisites for effective conduction of the proceedings. For example, it provides to the parties a well built-in infrastructure, a panel of specialised and efficient neutral(s), uniform fees, updated rules, and predetermined procedures, among others.

While these institutional advantages can be avail for the ADR methods such as arbitration, mediation, negotiation, etc, in India, the institutional system of Permanent Lok Adalat (hereinafter ‘PLA’) provides for some additional benefits. Moreover, whenever we think about institutional ADR, we mostly think of Arbitration and Mediation. However, we fail to acknowledge that these mechanisms are predominantly of the rich and the corporate. The common man hardly avails justice through these modes of ADR. Thus, the PLA is an ADR institution for justice to the common man. It is cost-efficient, speedy, government-supported, and promises justice to all, irrespective of their economic, social, or other disability.

PERMANENT LOK ADALATS

Permanent Lok Adalats (hereinafter ‘PLAs’) are one of the most effective tools of ADR in India. PLAs are special tribunals established by the National Legal Service Authority (hereinafter ‘NALSA’) or the State Legal Service Authority (hereinafter ‘SLSA’) with a pre-litigation attempt to resolve the disputes related to public utility in a speedy manner by means of compromise. The latest statistics on PLAs available on the NALSA website reveal that currently there are 298 PLAs in the country which had collectively settled 102,625 out of 143,061 cases from April 2018-March 2019, the total settlement value of those touches Rs. 3,870,578,815[3]. Moreover, the pecuniary jurisdiction of the PLA has been increased from Rupees Ten lakhs to Rupees One crore.[4]

Unlike Lok Adalats which can only be called occasionally, PLAs are established institutions. With the aim of fulfilling the constitutional promise of justice to all, in an affordable, efficient and speedy manner, Parliament in 2002 made certain amendments in the Legal Services Authorities Act, 1987 (hereinafter ‘the Act’), and added Chapter VI-A for pre-litigation conciliation and settlement of the disputes.

This amendment, which gave birth to the system of PLA, was an attempt to further strengthen the system of Lok Adalat in India by institutionalising a forum for compulsory pre-litigation re-conciliation and settlement of disputes related to public utility services such as those related to transport, postal, sanitation, education, dispensary, banking, insurance, housing and real estate, power, light, water, etc.[5]

Further, the unique feature of PLA is that, unlike Lok Adalat, it is a hybrid mechanism of reconciliation and adjudication. In Interglobe Aviation Ltd v. N. Satchidanand,[6] the Supreme Court of India said that the procedural trait of PLA is CON-ARB (that is “conciliation-cum- arbitration”). Further, in Bar Council of India v. Union of India[7], it was said that PLAs are empowered to decide the dispute on merits upon failure between the parties to arrive at a settlement by the way of conciliation.[8]

This means that PLA has twofold power. First: it has the power to conduct the conciliation proceedings between the parties, taking into consideration the circumstances surrounding the dispute, to help them reach an amicable solution in an impartial, speedy, and independent manner.Second: if during the conciliatory proceedings in action, the panel of neutrals realises that one of the parties is unnecessarily becoming adamant to not settle the dispute, even when there exist possible “elements of settlement” for the parties to sign an ‘agreement of settlement on dispute’, then the PLA also has the power to give a decision in the dispute, provided that the dispute does not relate to any non-compoundable offence.[10]

Therefore, the major advantage of PLA is that even though it is a forum for ADR which primarily aims at resolving disputes consensually, yet it is empowered to give a final and binding decision when one of the parties purposefully gets unwilling to settle a fit case.

Are the awards of PLA appealable?

Every award of PLA is final and binding[11] and “shall not be called into question in any original suit, application or execution proceeding”[12]. Here, one may argue that the appeal of the award of PLA should be possible primarily because (i) the Act expressly doesn’t bar the appeal for the award of PLA whereas it does expressly bar the appeal for the award of Lok Adalat under Section 21(2) of the Act which says that “no appeal shall lie to any court against the award [of Lok Adalat]”[13] and (ii) because PLA can adjudicate a dispute on the merits of the case which opens room for the aggrieved party to move the award in appeal, in contrast to Lok Adalat which only conciliates a dispute and passes award on the consent of the parties, thus, leaving no room for an appeal.[14]

However, the Supreme Court of India refuted these arguments in Bar Council of India[15](supra), and held that the award of PLA is non-appealable. It further clarified that (i) the right to appeal is not an inherent right but a creation of statute; if a statute doesn’t expressly prohibits the appeal of an award, that by ipso facto doesn’t make an award appealable especially when the text of the statute strongly suggests otherwise; (ii) that PLAs are special tribunals aiming at resolving public utility disputes at the earliest, and hence, to avoid unnecessary prolongation, the right to appeal is absent; (iii) that if at all, a party is aggrieved by the adjudication of PLA, he always has an option to invoke the special and extraordinary jurisdiction of the High Court under Articles 226 and 227 of the Constitution of India.[16]

Procedure followed by PLA

The procedure followed by the PLA is in complete resonance with what is required to be followed in any ADR mechanism. The legislation requires that the proceedings in the PLA, both at the time of conciliation between the parties and at the time of deciding a dispute on merit if needed, should be guided by “the principles of natural justice, objectivity, fair play, equity, and other principles of justice.”[17] Moreover, it is required that the PLA should remain impartial and independent while conciliating the parties to reach an amicable solution.[18] Further, as far as procedural applicability is concerned, the PLA is not bound by the Code of Civil Procedure, 1908 and the Evidence Act, 1872[19]. However, “for the purpose of holding any determination”, the PLA shall have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 while trying a suit.[20]

Suggestions

While PLA is one of the fastest growing ADR institutions in the country, its jurisdiction to entertain only the matters related to the public utility services needs to be expanded. I suggest that the civil dispute claims such as breach of contract claims, tort claims, equitable claims, traffic rules claims, negotiable instrument claims, etc., must also be put under the purview of PLA. Here, it is noteworthy that according to the 245th Report of the Law Commission of India, the disputes related to negotiable instruments, police and traffic challan, electricity bills, and sanitation are the source of excessive litigation in the country.[21]

The huge backlog of cases only makes justice less accessible. Therefore, to reduce the backlog of cases, and in the interest of speedy justice, it is suggested that such disputes should compulsorily be resolved through PLA.

Further, after regarding the composition of PLA, it is my suggestion that there should be some definite definition of the term persons “having adequate experience in public utility service”.[22] In SN Pandey v. Union of India[23], the Supreme Court of India said that “We do emphasis that the persons who are appointed on the Permanent Lok Adalats should be person of integrity and adequate experience. Appropriate rules, inter alia in this regard, no doubt will have to be framed, if not already in place”.[24] Hence, it is proposed that the Government should notify certain specifications for the appointment of the neutrals in the panel of a PLA.

Lastly, a time-frame needs to be introduced for resolution of disputes in PLAs. Currently, there is no time limit for the resolution of disputes that are filed before PLAs.Therefore, if disputes are left unresolved for a longer period, there will be ambiguity and instances of unchecked discretionary actions by the PLA panels. Hence, to keep alive the spirit of PLA, a time-frame must be defined by the Government.

PLA vis-à-vis International Arbitration Institutions

Whether it can be said that PLA is an Indian model bearing close similarity to international arbitration tribunals?

While there are a few procedural similarities between the PLA and international arbitration institutions, the system of PLA is a unique one. The unique model devised to grant justice to the common man makes PLA stand out in the world from the rest of the ADR institutions.

The PLA charges zero fee for the resolution of disputes[25]. Also, the parties have the option of arguing their case by themselves, thus allowing them to save on the lawyer’s cost. In contrast, resolving a dispute before an international tribunal through any mode of ADR viz. arbitration, mediation, or conciliation is very costly. It involves hefty administration fee, counsel fee, neutrals’ fee (i.e. the fee charged by the panel of arbitrators, mediators, or conciliators as the case may be) among others.

Further, the PLA model is inherently a ‘multi-tier dispute resolution’ model i.e. it first provides conciliation of the dispute, and, if the conciliation fails because of the adamant nature charged with mala fide of one of the parties, then the PLA can even adjudicate the dispute. Whereas, to avail a multi-tier dispute resolution process before an international tribunal, it requires (i) consent of the parties at dispute, (ii) a multi-tier dispute resolution clause, (iii) time, resources, and efforts to defend any challenge related to the existence, validity, invocation, or qualification of the multi-tier dispute resolution clause, and (iv) multiple costs at every tier of the multi-tier dispute resolution.

Furthermore, under the PLA model, the parties do not have to decide anything ‘mutually’ concerning the dispute resolution before entering into any contractual relationship relating to the use of public utility services. PLAs are government institutions which provide CON-ARB form of ADR with pre-defined procedure, rules, composition and qualifications of the panelists, and which are currently located at 298 different ‘places’ in India. A party can unilaterally invoke the jurisdiction of the PLA without the need for any pre-existing dispute resolution agreement. In contrast, the resolution of a dispute before an international tribunal is purely based on ‘party autonomy’ and existence of a valid ‘dispute resolution agreement’. Thus, the parties have to mutually agree upon the form of ADR, its procedure, forum, place, venue, number of arbitrators (or mediators or conciliators as the case may be), subject-matter, etc., before entering into any contractual relationship. This involves a lot of time, effort, and resources both during the drafting of the dispute resolution agreement and thereafter, during defending its ingredients before the tribunal. The system of PLA, therefore, provides an escape route from these complexities and challenges, thus, saving a lot of time, resources and energy of the parties, and ensuring a time-bound resolution of the dispute.

Finally, the subject-matter of disputes before PLAs and international tribunals is largely different. PLAs aim at resolving public utility disputes at the domestic level while the international tribunals function to resolve international/domestic commercial disputes, investor-State treaty disputes, and State-to-State disputes. Both the tribunals, however, share similarity so far as both are (i) institutionalised forum of ADR and (ii) not bound by the domestic rules of evidence and civil procedure.

The advantages of the PLA cannot be compared readily with those of international tribunals. PLA is a forum that provides justice to the common man whereas international tribunals are predominantly of the rich and the corporate.

CONCLUSION

PLA – the unique hybrid of reconciliation and adjudication in India- is the Indian contribution to the world ADR jurisprudence. The PLA performs the function of promoting and strengthening the principle of “equal access to justice” in the country.  It is very popular among the litigants and legal functionaries not only because of its innovative nature and inexpensiveness but also because it serves the common man. The country which is infected with illiteracy, poverty, downtrodden and pendency of cases, PLA is the institutional ADR mechanism progressing towards the attainment of the principle of “Gram Swaraj” and the constitutional promise of justice to everyone at the doorstep.


*IV Year BA LLB (Hons.) student at Maharashtra National Law University, Nagpur. Email id: prakhar.spc@gmail.com

[1] Mahatma Gandhi, The Story of My Experiments with Truth 158 (1959).

[2] Ibid, 158-59 (1959).

[3] National Legal Service Authority, Permanent Lok Adalat, April 2018 to March 2019, National Legal Service Authority of India (May 02, 2020, 02:05 Am)

[4] Section 22-C(1) of the Legal Services Authorities Act, 1987

[5] See Section 22-A(b) of the Legal Services Authorities Act, 1987

See also, National Legal Service Authority, Lok Adalat: Permanent Lok Adalat, National Legal Service Authority of India (May 02, 2020, 02:25 Am), https://nalsa.gov.in/lok-adalat.

[6] (2011) 7 SCC 463

[7] (2012) 8 SCC 243

[8] See also, Section 22-C(8) of the Legal Services Authorities Act, 1987

[9] S.N. Pandey v. Union of India, (2012) 8 SCC 261

[10] Section 22-C(7) read with Section 22-C(8) of the Legal Services Authorities Act, 1987

[11] Section 22-E(1) of the Legal Services Authorities Act, 1987

[12] Section 22-E(4) of the Legal Services Authorities Act, 1987

[13] Section 21(2) of the Legal Services Authorities Act, 1987

[14] P.T. Thomas v. Thomas Job, (2005) 6 SCC 478

[15] (2012) 8 SCC 243

[16] Bar Council of India v. Union of India, (2012) 8 SCC 243

[17] Section 22-D of the Legal Services Authorities Act, 1987

[18] Section 22-C(5) of the Legal Services Authorities Act, 1987

[19] Section 22-D of the Legal Services Authorities Act, 1987

[20] Section 22(1) of the Legal Services Authorities Act, 1987

See also, Bar Council of India v. Union of India (2012) 8 SCC 243.

[21] Law Commission of India, Report No. 245 on Arrears and Backlog: Creating Additional Judicial (wo)manpower, Government of India, (July 2014) 

[22] Section 22-B(2)(b) of the Legal Services Authorities Act, 1987

[23] (2012) 8 SCC 261

[24] SN Pandey v. Union of India, (2012) 8 SCC 261

[25] National Legal Service Authority, Lok Adalat, National Legal Service Authority of India (May 04, 2020), https://nalsa.gov.in/lok-adalat.

Case BriefsSupreme Court

Supreme Court: In the case where a Notice Inviting Tender had a clause asking the parties invoking arbitration to furnish a “deposit-at-call” for 10% of the amount claimed, the bench of RF Nariman and Vineet Saran, JJ struck down the said clause on the premise that:

“Deterring a party to an arbitration from invoking this alternative dispute resolution process by a pre-deposit of 10% would discourage arbitration, contrary to the object of de-clogging the Court system, and would render the arbitral process ineffective and expensive.”

The Court was hearing the matter where the Punjab State Water Supply & Sewerage Board Bhatinda had issued notice inviting tender for extension and augmentation of water supply, sewerage scheme, pumping station and sewerage treatment plant for various towns mentioned therein on a turnkey basis. Clause 25(viii) of the Notice inviting Tender was challenged before the Court which read

“It shall be an essential term of this contract that in order to avoid frivolous claims the party invoking arbitration shall specify the dispute based on facts and calculations stating the amount claimed under each claim and shall furnish a “deposit-at-call” for ten percent of the amount claimed, on a schedule bank in the name of the Arbitrator by his official designation who shall keep the amount in deposit till the announcement of the award.”

Noticing that a 10% deposit has to be made before any determination that a claim made by the party invoking arbitration is frivolous, the Court said that such a clause would be unfair and unjust and which no reasonable man would agree to.

The Court said that since arbitration is an important alternative dispute resolution process which is to be encouraged because of high pendency of cases in courts and cost of litigation, any requirement as to deposit would certainly amount to a clog on this process. It also said:

“it is easy to visualize that often a deposit of 10% of a huge claim would be even greater than court fees that may be charged for filing a suit in a civil court.”

Striking down the said clause, the Court said that unless it is first found that the litigation that has been embarked upon is frivolous, exemplary costs or punitive damages do not follow.

“Clearly, therefore, a “deposit-at-call” of 10% of the amount claimed, which can amount to large sums of money, is obviously without any direct nexus to the filing of frivolous claims, as it applies to all claims (frivolous or otherwise) made at the very threshold.”

[ICOMM Tele Ltd. v. Punjab State Water Supply & Sewerage Board, 2019 SCC OnLine SC 361, decided on 11.03.2019]

Law School NewsMoot Court Achievements & Reports

Priyanka Sunjay, 5th Year, National Law University Jodhpur was adjudged as the best negotiator at the 5th RMLNLU National Mediation Competition 2019.
The team comprising, Shreya Poonia and Priyanka Sunjay won the award for the best team.
Law School NewsMoot Court Achievements & Reports

The 4th SLCU National Alternative Dispute Resolution Competition 2018 was conducted by the Alternate Dispute Resolution Board of School of Law, CHRIST (Deemed to be University) from 13 – 15 December 2018. The event comprised of three competitions, Mediation, Negotiation and Client Counselling conducted over a period of three days having preliminary rounds, quarter final round, semifinal round and final round. The competition witnessed 48 teams from 16 law colleges across the nation take part in it.

Inauguration:
The inauguration of the 4th SLCU National ADR Competition conducted on 13 December 2018 was graced by Mr Satish Srinivasan, Partner, ALMT Legal, Bengaluru, Ms Rukmini Menon, Mediator, Bangalore Mediation Centre & Ms Rhea Mathew, Counsel at Arista Chambers. A conceptual understanding was provided to the audience by explaining the merits of client counselling, negotiation and mediation by the guests who illustrated the manner in which the proceedings occur and iterated the difference between the various facets of dispute resolution.
The guests also spoke of how dispute resolution is now growing, why it is preferred over litigation and the scope that we, as law students can seek if we pursue the same in future.

Final Rounds:
The Final Round of Client Counselling was judged by Hon’ble Mr Justice Veerna Angadi & Mr Prabhakaran PM, Partner, Lakshikumaran & Shridharan, Bengaluru. The Final Round of Mediation & Negotiation was judged by Hon’ble Mr Justice V Gopala Gowda, Former Judge, Supreme Court of India, Hon’ble Justice Chandrashekariah, Former Judge, High Court of Karnataka & Mr Prashanth Poppat, Senior Partner, ALMT Legal.

Valedictory Ceremony:
The valedictory ceremony of the competition was graced by Hon’ble Mr Justice V Gopala Gowda, Former Judge, Supreme Court of India, Hon’ble Justice Chandrashekariah, Former Judge, High Court of Karnataka, Mr Prashanth Poppat, Senior Partner, ALMT Legal Bengaluru & Ms Tara Ollappaly, Co-ordinator, Centre for Advanced Mediation Practice, Bengaluru.

Prize Winners:
Client Counselling

  • Winners – National Law University, Jodhpur
  • Runners Up – Symbiosis Law School, Pune
  • 2nd Runners Up – West Bengal National University of Juridical Sciences, Kolkata
    Mediation

Mediator

  • Winner – NMIMS
  • Runner Up – NALSAR, Hyderabad

Client Advocate Team

  • Winners – Tamil Nadu National Law University
  • Runners Up – Jindal Global Law School, Panipat

Mediator (Preliminary Rounds)

  • Best Mediator – Joseph Moses, Jindal Global Law School, Panipat
  • 2nd Best Mediator – Shantanu Awasti, WBNUJS, Kolkata

Negotiation

  • Winners – National Law University, Jodhpur
  • Runners Up – Dr Ram Manohar Lohia National Law University, Lucknow
  • National Law University, Jodhpur was declared as the overall champions of the 4th SLCU National ADR Competition, 2018.

Law School NewsOthers

ILS Centre for Arbitration (ILSCA) in association with Peacekeeping and Conflict Resolution Team (PACT) is organizing a two day workshop on “ADR Methods with  Focus on Commercial Arbitration and Mediation”.

This Workshop will provide participants with core arbitration, mediation and negotiation skills and hands-on experience through a variety of simulations and practical role play sessions.

Highlights of the Workshop:

  1. Use of Arbitration-Mediation(Med-Arb) as an appropriate ADR tool in Indian and foreign jurisdictions.
  2. Setting and executing Arbitration and Mediation clauses in commercial contracts.
  3. Recent updates on mandatory Commercial Mediation in India and its impact on the courts of Law.
  4. Pre-Litigation Mediation and court-referred Mediation in India and abroad.
  5. Scope and practice of Investor-State Arbitration in India and Abroad.

Eligibility:

  • All the Law students studying in either 3 or 5 year Law course in India are eligible to attend this workshop.
  • Recent Law Graduates, Professionals, and Law Enthusiasts can also be a part of the coveted Workshop.

Location: ILS Law College, Pune.

 Registration procedure

The prospective participants can register by visiting the link given below:

Certificates shall be awarded to all the participants provided they are present for all the sessions conducted on both the days.

 Fees:

  • For ILS Students: ?2500 plus GST(18%)
  • For Non ILS Studens: ?3500 plus GST(18%)
  • For Professionals and Recent Graduates: ?5000 plus GST(18%)

Important Dates

  • Registration Starts from: 13th December, 2018    
  • Last Date to Register:  31st December , 2018

 For Correspondence:

Student Coordinators:

Faculty Coordinators:

  • Sathya Narayan, Ms. AnwitaDinkar; Ph: 020 25676866

Official Email ID (for communications, queries and requests): ilscapact@gmail.com

For the schedule of the workshop, click HERE

Case BriefsHigh Courts

Delhi High Court: While deciding the instant review petition wherein the issue was raised that whether the either parties during the trial can use the Counselor’s report furnished in the course of mediation proceedings or the Mediator’s report in case the process fails. The petitioner further raised a grievance against the decision of this Court dated 07.02.2017 holding that the reports furnished by the Counselor and Mediator were not confidential and will not fall within the bar of confidentiality. Allowing the petition it was observed by the Division Bench of S. Ravindra Bhat and Yogesh Khanna, JJ., that ‘confidentiality’ is the essence of mediation proceedings, thus constituting “a permanent ‘dark area’ and off limits, till such time appropriate and nuanced clear rules are enacted by legislation or binding norms by way of limited exception”.

As per the facts, the parties to the instant petition are disputants before the Family Court claiming guardianship of the son born to them. In order to resolve the dispute amicably, the parties opted for Mediation which unfortunately failed. The Counselor appointed by the Mediator submitted its report to this Court thereby causing the decision of 07.02.2017. The counsel for the petitioner Prosenjeet Banerjee referring to the Delhi High Court Mediation and Conciliation Rules, 2004, Conciliation Rules of United Nations Commission on International Trade Law (UNCITRAL) and Mediation Training Manual issued by the Supreme Court, argued that mediation is purely a confidential process and anything said or any view expressed by the parties; or documents obtained etc in the course of the process, need not be a part of the mediation report especially when the mediation has failed. It was also argued that the Mediator was not authorised by the Court to refer the dispute to the Counselor. The respondents via Inderjeet Saroop put forth before the Court that the Counselor’s report is only to be referred for the purposes of appreciation of the parties’ stand vis-à-vis their child and urged the Court to exercise it’s parens patriae jurisdiction for the benefit of the child.

Perusing the contentions and facts and referring to the various Rules and Conventions namely UNCITRAL Rules, Arbitration and Conciliation Act, 1996 etc. all highlighting the confidentiality aspect of mediation, the Court observed that a Mediator is not an amicus curiae and therefore the process itself involves a neutral third party who in a non- judgmental fashion acts as a facilitator for the disputants to reach an agreement. Therefore mediation process depends upon maintaining confidentiality at all times till the end of the proceedings, thus a mediator cannot file reports to the Court especially when the process has failed. Mediators cannot involve experts or counselors in the process and if any need arises, the parties must approach the Court to explain requirement and the Court in such cases may use its discretion under Section 12 of the Family Courts Act, 1984. In case a counselor is appointed, a mediator shall not present when the parties are interacting with the counselor and interactions of the counselor and Court should be confidential as well. Based on the observations, the Court directed the Family Court to

disregard the reports of the Mediator and Counselor when it will determine the case upon its merits. It was also held that the said report will not be a subject of debate or argument. [Smriti Madan Kansagra v. Perry Kansagra, 2017 SCC OnLine Del 12156, decided on 11.12.2017]