Anish Gupta

The Government of India has made certain positive moves in a bid to make India mark its presence amongst global hubs of arbitration across the globe amongst the likes of London, Stockholm and Singapore. Government of India with a view “to speed up the resolution of the commercial disputes and to facilitate effective conduct of international and domestic arbitrations” has set up a High Level Committee with Justice B N Srikrishna former Judge of the Hon’ble Supreme Court of India as its chairman and other judges of the Supreme Court of India, State High Courts, representatives of Industry and senior advocates as the members. On submission of the report by the High Level Committee, the Union Cabinet has approved the recommendations of the High Level Committee. The Union Cabinet, having approved the recommendations of the High Level Committee, has affected the Arbitration and Conciliation (Amendment) Bill 2018 (hereinafter the Bill of 2018) introduced in the Lok Sabha which the Lok Sabha has already passed. One of the objectives of the Amendment Bill 2018 is to encourage institutional arbitration for settlement of disputes and make India a robust centre of Alternative Disputes Resolution (ADR) mechanism.[1]

The Bill of 2018 was proposed on July 18, 2018 seeking to amend the Arbitration and Conciliation Act, 1996.  It contains provisions dealing with domestic and international arbitration and defines the law for conducting conciliation proceedings.

With India’s efforts to promote international trade and a bid to turn New Delhi as a likely centre for International arbitration, there were several amendments proposed through the Bill of  2018 as to establishment of Arbitration Council of India, designated arbitral institutions to which parties can approach for appointment of arbitrators, exclusion of international arbitration from the mandate of section 29A, the competition of  written claim and the defence to the claim in an arbitration proceeding within six months of the appointment of the arbitrators, regulations as to confidentiality of proceedings.

While there has been a plethora of legislative changes, the air of arbitration as a quicker and preferred mode of dispute resolution mechanism has also been contributed by judiciary through its pronouncements. The courts in India recently have made consistent efforts to free arbitration from laches.

The Hon’ble Supreme Court of India most recently in Sai Babu v. Clariya Steels Pvt. Ltd.[2] held that termination of arbitration proceedings u/s 32 of the arbitration and conciliation act cannot be recalled. Briefly the facts were that the sole arbitrator terminated proceedings under Section 32(2) (c) of the arbitration and conciliation act on the ground that the continuation of the proceedings become unnecessary or impossible. Later, he allowed an application by one of the parties seeking recall of the order terminating the proceedings. The court held that “It is clear, therefore, that a distinction was made by this Court between the mandate terminating under section 32 and proceedings coming to an end under section 25. This Court has clearly held that no recall application would, therefore, lie in cases covered by section 32(3).”

Similarly, the court in another case of Ssangyong Engineering & Construction Co. Ltd. v. National Highways Authority of India (NHAI)[3] held that “…This being the case, a fundamental principle of justice has been breached, namely, that a unilateral addition or alteration of a contract can never be foisted upon an unwilling party, nor can a party to the agreement be liable to perform a bargain not entered into with the other party. Clearly, such a course of conduct would be contrary to fundamental principles of justice as followed in this country and shocks the conscience of this Court“.

However, the Court cautioned that this ground is available only in very exceptional circumstances. “Under no circumstance can any Court interfere with an arbitral award on the ground that justice has not been done in the opinion of the Court. That would be an entry into the merits of the dispute which, as we have seen, is contrary to the ethos of Section 34 of the 1996 Act, as has been noted earlier in this judgment“.

Therefore, the courts have been delivering judgements with a consistent mindset to save time and costs in arbitration. But there is still a lot of deliberations and issues yet to be pondered upon or clarified by the courts as to arbitrability of IPR disputes, Insolvency matters and transfer of property act disputes.

With respect to arbitration of disputes relating to intellectual property laws, there lies an array of uncertainty in Indian jurisdiction. The Hon’ble Supreme Court in A. Ayyasamy v. A. Paramasivam & Ors[4], went on to observe patents, trademarks and copyrights as in a category of non-arbitrable disputes. However, the entire observation was mere obiter dicta by the court as the main issue before the court was of arbitrability of fraud. Therefore, the position with respect to arbitrability of disputes pertaining to IPR is still blur. But with increasing role of expert arbitrators in the proceedings, there lies a possibility to arbitrate.

Whereas recently the Hon’ble Supreme Court in the case of Vidya Drolia & Ors. v. Durga Trading Corporation[5], went on to refer to larger bench the correctness of its judgment in Himangni Enterprises v. Kamaljeet Singh Ahluwalia[6], in which it was held that where the Transfer of Property Act, 1882 applied between landlord and tenant, disputes between the said parties would not be arbitrable. The court further observed that Transfer of Property Act has been silent with respect to the applicability of the Arbitration Act and there lies a need for clarity in this sphere.

India recently witnessed the competition of the largest democratic elections of the globe where the country reinstated its faith on Sh. Narendra Modi to lead the country for the next half decade and with the retainment of the cabinet and the Lok Sabha, it is believed that there shall be a continuation of the policy objectives rather than a change.

Therefore, with contingent issues being pondered upon by the court and legislature enacting acts to encourage India as a centre of Arbitration, the re-election of NDA can be seen as an indicator of certainty in Arbitration as well as more developments in the arbitration sector in order to make India mark its presence amongst global hubs of arbitration.

[1] CIARB, “Changing trends of international commercial arbitration in India”, May 20, 2019.

[2] Civil Appeal No. 4956 of 2019.

[3] Civil Appeal No. 4779 of 2019.

[4] Civil Appeal Nos. 8245-8246 of 2016.

[5] Civil Appeal No. 2402 of 2019.

[6] (2017) 10 SCC 706

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December 2020