Hello! Welcome back to updates on arbitration law.
The London Court of International Arbitration (LCIA) has released the LCIA Arbitration Rules and the LCIA Mediation Rules (2020). The updates in the rules aim to provide a more streamlined process for arbitrators, mediators, and contesting parties. Among the changes was the introduction of electronically signed awards and the promotion of the primacy of electronic communication with LCIA. The updated rules shall come in effect from October 1. The Singapore International Arbitration Centre is also reviewing its rules.
The Singapore Convention on Mediation, an international convention that aims to help businesses resolve cross-border disputes and further facilitate international trade took effect on September 12. It seeks to provide businesses around the world with more certainty in resolving cross-border disputes through mediation by making it possible for them to apply directly to the courts of countries that have ratified the treaty.
Foreign award holders who have not yet commenced enforcement proceedings within three years may now have to move fast in filing applications for enforcement. This follows the Supreme Court’s clarification about the time period within which foreign awards must be enforced, while upholding the legality of the 2011 arbitral award won by Vedanta Ltd. against the Indian government.
From the Docket
In IRB Ahmedabad Vadodara Super Express Tollway v. NHAI, the High Court of Delhi held that if the parties have specifically inserted a rule for the appointment of the arbitrator in the agreement, they cannot subsequently derogate from it. In the present matter, through supplementary agreements, the parties had chosen Society for Affordable Redressal of Disputes (SAROD) rules for the arbitration proceedings. The parties specifically inserted Rule 11.2 of the SAROD for the appointment of the presiding arbitrator. Since the nominated arbitrators of the parties failed to appoint the presiding arbitrator, the petitioner invoked Section 11(6) of the Arbitration and Conciliation Act, 1996 and requested the Court to appoint the Presiding Arbitrator. The NHAI countered the petition on the ground that Rule 11.5 of SAROD provides for the appointment of the arbitrator by the governing body of SAROD through a draw of lots (Rule 11.5) and hence, the petition is premature. The High Court held that although rules should be given a harmonious reading; the parties’ agreement to nominate the arbitrator as per Rule 11.2 should be given full effect.
In Chaitanya Construction Company v. Delhi Jal Board, the High Court of Delhi held that a valid arbitration agreement was the foundation of the process of arbitration. The High Court exercised its powers under Section 11 of the Act although the agreement containing the arbitration clause had not been signed by the respondent.
In JMC Projects v. Indure, the Delhi High Court held that “an express agreement in writing”, waiving the applicability of Section 12(5), “is the statutory sine qua non”, to escape the rigours of that provision. The Court held that “no conduct, howsoever extensive or suggestive, can substitute for the express agreement in writing”. In the absence of such express agreement in writing, Section 12(5) of the Act would be applicable and invalidate the appointment of any person whose relationship, with the parties to the disputes, falls under any of the categories specified in the Seventh Schedule of the Act.
In Balasore Alloys v. Medina, the Calcutta High Court held that Indian courts have power and jurisdiction to grant an anti-arbitration injunction against a foreign seated arbitration. However, such power should be used very sparingly and with abundant caution. The court held that the power should only be used in circumstances as discussed by the Supreme Court in Modi Entertainment Network v. W.S.G. Cricket, (2003) 4 SCC 341.
Continuing its long-drawn battle against NHPC, a petition under Section 9 of the Act was filed by HCC against NHPC restraining them from encashing the bank guarantee amounting to INR 214.36 Crore. The Delhi HC held that the legal position related to unconditional bank guarantee is settled, and observed that “‘special equity’ cannot be compartmentalized and may include cases wherein the petitioner is able to prove that (i) encashment of the bank guarantees would cause irrecoverable loss to the petitioner or (ii) would prick the judicial conscience of this Court.” The Court dismissed the petition as the High Court was of the opinion that HCC had not been able to make a case of special equities in the present facts.
In Deccan Paper Mills v. Regency Mahavir, the Supreme Court examined whether action under Section 31(1) of the Specific Relief Act, 1963 would operate as “in rem” or “in personam” in terms of Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532. The Supreme Court held that the action under Section 31(1) is strictly an action between the parties who obtain derivative title from the parties, and hence would be considered as in personam. The Supreme Court relied on Olympus Superstructures v. Meena Vijay Khetan, (1999) 5 SCC 651 to reach its conclusion.
These are the updates from the world of arbitration law. We will be back in your inbox next month with more updates. Till then, stay safe and healthy!