Welcome back to our updates from the world of arbitration.
Last month, we were eagerly anticipating the government’s moves in the arbitration space. The wait is now over. The most important news of the past month is from India’s lawmakers.
After it received legislative assent, the Union Government has notified The New Delhi International Arbitration Centre Act, 2019. This law, to create “an independent and autonomous regime for institutionalized arbitration” and to vest the assets of the International Centre for Alternative Dispute Resolution in the new New Delhi International Arbitration Centre, will replace the ordinance that had been passed in March. Meenakshi Lekhi wrote that this law would make India an investor-friendly country with an institutionalised arbitration ecosystem that would be robust and cost-effective for all.
On the same day that it passed the NDIAC Bill, the Rajya Sabha also passed a bill amending the Arbitration and Conciliation Act, 1996 to provide for establishing of the Arbitration Council of India (ACI), an independent body empowered to frame rules on grading institutions and setting out norms on accreditation of arbitrators, quality and performance monitoring, and building capacity for arbitrators. The bill also provides for the settlement of commercial disputes within six months.
With topclass arbitration as an alternative, many of the concerns regarding enforcement and delays in the courts will likely dissipate, Amitabh Kant, the Niti Aayog chief wrote in relation to these new laws. On the other hand, the new amendments to the arbitration law have long been criticized for being “ill thought out”.
One author wrote that cases such as A. Ayyasamy, Ameet Lalchand Shah v.Rishabh Enterprises, Ravi Arya v. Palmview Investments Overseas, andHimachal Sorang Power v. NCC Infrastructure Holdings, where the Indian judiciary has upheld the supremacy of arbitral tribunals over civil courts, showefforts made to support and aid arbitration instead of allowing parties through anti-arbitration injunctions, to move away from chosen adjudicatory processes.
From the docket
In Reckitt Benckiser (India) Private Limited v. Reynders Label Printing India Private Limited, the Supreme Court held that a party (who is not a signatory to the arbitration agreement) can only be impleaded and subjected to the arbitration proceedings when the circumstances shows that the intention of the parties was to bind both the signatory and non-signatory.
The Supreme Court in National Highways Authority of India v. Gayatri Jhansi Roadways Limited, has overruled the single judge order and held that the Fourth Schedule to the Arbitration & Conciliation Act, 1996 will not be applicable if the fees of the arbitrator have already been decided between the parties.
The Supreme Court, in Sterling Industries v. Jayprakash Associate Ltd., relied on its earlier judgement of S.B.P. & Co v. Patel Engineering Ltd., in which it was held that an order passed by an arbitral tribunal could not be corrected by a High Court under Articles 226 and 227 of the Constitution, and held that a writ application was not tenable in view of Section 16(6) of the Act.
In Pam Developments Private Limited v. State of West Bengal, the Supreme Court held that no special treatment should be given to the government in an application for stay of an award under Section 36 of the Arbitration and Conciliation Act, 1996. The Court held that the phrase “have due regard to the provisions for grant of stay of a money decree under the provisions of the Code of Civil Procedure” was not mandatory and overruled the finding of the Calcutta High Court affording special treatment to the government.
In Brahmani River Pellets v. Kamachi Industries, the Supreme Court held that when the contract mentions the jurisdiction of a court, such court shall have the exclusive jurisdiction to deal with the matter. Since the “venue” of the arbitration was Bhubaneshwar, the intention of the party was to exclude the jurisdiction of other courts, the Court held, relying on the principle in Swastik Gases v. Indian Oil that the non-use of words like “only”, “exclusive”, “alone”, and “exclusive jurisdiction” were not decisive and did not make any material difference.
The Delhi High Court in ONGC Petro Additions v. Tecnimont S.P.A., dealt with the issue of “whether the rejection of application for production of Additional Documents in its essence and effect is an interim award,”. The Court held that in order to ascertain whether an order is an interim award or partial award, two important factors need to be considered: the concepts of “finality” and “issue”. The order is final if it conclusively decides an issue in the arbitration proceedings. The Court thus held that the order relating to an additional document doesn’t decide the subject matter of arbitration and the rights of the parties, it is not an interim award.
In Libra Automotive v. BMW India, the Delhi High Court held that while exercising its power under Section 11 of the Act, the Court cannot recast the terms of the contract and direct the parties to go for a composite arbitration against the procedure prescribed under the agreement. The Court held that if the issues are overlapping, two separate arbitrations can commence independently. Law does not prescribe a standard procedure and the parties have the option to adopt alternate mechanism for the adjudication of the future disputes that arise between them. The Court held that in an application under section 11(6) of the Act, the procedure for appointment of an arbitrator prescribed in agreement should be given full effect and the court ought not appoint arbitrator without resorting to the inbuilt mechanism to appoint the arbitrator as agreed.
These were the updates from the world of arbitration in July. Thank you for reading. We will be in your inbox again next month.