Welcome back to our updates from the world of arbitration.
Before it lapsed following the dissolution of the Lok Sabha, the reforms that were proposed in the Arbitration and Conciliation (Amendment) Bill, 2018 had, as we had noted in the last edition of these updates, come under heavy criticism.
The proposal to permit only Indian-qualified advocates to become arbitrators, was singled out by former UK Attorney General Lord Goldsmith QC (Peter Goldsmith). Not only would this restrict foreign lawyers, it would also prohibit the appointment of many ‘experienced and able arbitrators’ including ships’ masters, architects and doctors, he warned.
Judicial interpretations of limitation and seat, critiqued
Should a rule of computation of time periods contained in the Limitation Act apply to section 34(3) of the Arbitration Act, 1996? To answer this question the Supreme Court has generally resorted to the test of “express exclusion”.
Union of India v. Hardy Exploration & Production (India), where a three-judge bench of the Supreme Court of India considered problems arising from the failure to clearly designate a ‘seat’ of arbitration in arbitration clauses, has been criticized for adding to an already incoherent line of authority interpreting the principle of implied exclusion.
Assignment of claims and third-party funding
While Indian courts have held that assignment of claim is not allowed, they have permitted assignment in arbitration. According to one author, only statutory recognition will make its scope clear.
Meanwhile, changes to laws in Singapore and Hong Kong to permit third-party funding in arbitration were put forward to argue that third-party funding in litigation would improve access to justice.
United against intra-European BITs
The nations that are part of the European Union have agreed to terminate all intra-EU bilateral investment treaties following a 2018 judgment of the Court of Justice of the European Union that declared investor-state arbitration clauses in such treaties to be incompatible with EU law.
Czechs feel Chinese heat
But Huawei, the Chinese telecom giant, has warned the Czech Republic of potential international arbitration in relation to assertions by a Czech government agency that Huawei’s technologies and equipment pose a security threat.
The ICC, which had in 2001 commissioned a report on the tools and techniques for the effective management of arbitrations in the construction industry, has recently updated that report to reflect the latest best practices and the revised ICC Rules of Arbitration.
Did you mean: optional employment arbitration?
Google has announced that it would no longer be mandatory for its employees to go through arbitration in case of a dispute with the tech giant. Google employees will be able to file a lawsuit against the company.
From the docket
The Delhi High Court has rejected a plea from the central government seeking an anti-arbitration injunction against the arbitral proceedings initiated by Khaitan Holdings in relation to the Bilateral Investment Treaty (BIT) between India and Mauritius. Khaitan Holdings is seeking compensation for the cancellation of its Unified Access Services Licences in 2012.
The court, in Union of India v. Khaitan Holdings (Mauritius), held that proceedings were already underway under the bilateral investment treaty and that the tribunal (under Article 21 of the BIT) is empowered to deal with issues raised by Union of India under the principle of Kompetenz-Kompetenz.
Overturning an order by an arbitral tribunal that had rejected the petitioner’s prayer for amendment of the statement of claim in the arbitration proceedings, the Delhi High Court has held that claims which are raised at the time of invoking arbitration but are not part of statement of claim, are not time-barred by limitation.
In NCC Limited v. Indian Corporation Limited, the Delhi High Court held that the arbitral tribunal under Section 16 of the Arbitration and Conciliation Act, 1996 had the power to decide whether a dispute falls within the arbitration agreement. The General Manager’s decision to categorise the claims raised by a contractor as “Notified Claims” can also be decided by the tribunal, the court held. It reiterated that the court’s power under Section 11(6A) is only confined to ascertaining the existence of a binding arbitration agreement between the parties.
In Royale India Rail Tours v. Cox & Kings India, the Delhi High Court held that under Section 8 of the Act, only “a party to the arbitration agreement or any person claiming through or under him”, can apply for reference to arbitration. The judgments in Ameet Lalchand Shah v. Rishabh Enterprises (2018), Cheran Properties v. Kasturi and Sons (2018), and Chloro Controls India v. Severn Trent Water Purification Inc (2013), where the courts had referred non-signatories to arbitration, were distinguished. The arbitration agreement only binds Indian Railway Catering and Tourism Corporation and Cox & Kings, the court held. Since there are no claims sought against Royale India Rail, which is also not the claimant before the tribunal, it cannot be made party to the arbitration proceedings.
The Supreme Court in Rajasthan Small Industries Corporation v. Ganesh Containers Movers Syndicate has held that mere neglect in the conduct of an arbitrator to pass an award or delays in passing the award by itself cannot be reasons to appoint a new arbitrator. The court analysed the position of law under Sections 11, 14, and 15 of the Act, the judgment in S.B.P. and Company v. Patel Engineering Limited and Another (2009) and held that the terms of the agreement between the parties in the appointment of an arbitrator, had to be adhered to. The court also reiterated that the 2015 amendment cannot apply retrospectively in arbitral proceedings that had already commenced, unless otherwise agreed by the parties.
In Jaiprakash Associates v. Tehri Hydro Development Corporation, the Supreme Court held that the arbitral tribunal had no jurisdiction to award any interest if the agreement between the parties specifically barred the awarding of interest. The court held that an arbitrator is the creature of an agreement and should make the award in accordance with the general law of the land and agreement.
The Division Bench of the Delhi High Court, in Delhi Metro Rail Corporation v. Delhi Airport Metro Express, set aside the arbitration award in favor of Delhi Airport Metro Express Private Limited on the grounds of non-consideration of vital evidence by the arbitral tribunal. The court however, upheld the tribunal’s conclusions on the question of waiver. It held that the award was illegal and that there confusion and ambivalence about the termination notice and the date of termination.
Thank you for reading. We will be in your inbox again next month, with more updates from the world of arbitration.