Arbitration Dispute Resolution Legal Alerts

Arbitration Brief – August 2022

Hello! Welcome back to our updates from the world of arbitration. Old wine in a new bottle? That seems to be the case with the latest New Delhi International Arbitration Centre (Amendment) Bill, 2022…

Hello! Welcome back to our updates from the world of arbitration.
Old wine in a new bottle? That seems to be the case with the latest New Delhi International Arbitration Centre (Amendment) Bill, 2022. The Bill that was passed by the Lok Sabha on 08 August seeks to change the name of the (to-be-setup) New Delhi International Arbitration Centre to India International Arbitration Centre. A number of other changes such as increasing the period within which Central Government may remove difficulties and correction of typographical errors are also within the ambit of the bill.
Followers and practitioners of arbitration law will remember that the setting up of New Delhi International Arbitration Centre was embroiled in controversy with a litigation by ICADR in the High Court of Delhi. That matter has since been withdrawn by ICADR, but effective time has been wasted to set up a centre to provide commercial arbitration of international quality in India for both domestic and foreign arbitrations. It is certainly time that the government’s efforts come to fruition and a centre like SIAC is created in India.
The Queensland Court of Appeal referred parties to arbitration holding that the agreement contained a binding arbitration agreement which provided that in the event the parties are unable to resolve their dispute through Australian Commercial Disputes Centre (ACDC) then, either party may initiate court proceedings. The clause containing the arbitration agreement also provided that the parties are free to agree on another dispute resolution process suggested by ACDC and agreed to by the parties other than a final settlement by a single arbitrator. The Court of Appeal held that the particular sub-clause providing for initiation of court proceedings was of limited application and would kick-in if, the parties opt for an alternate mode of dispute resolution such as mediation. The Court of Appeal held that the clause contained all the elements of a valid arbitration agreement.
Apple Inc. and Koss Corporation have arrived at a settlement in respect of a dispute concerning breach of confidentiality obligations between the parties. An ICC-Tribunal had rendered the award dated 24 November 2021 whereby it had awarded nominal damages of USD 100,000 in favour of Apple Inc.
From the Docket 
A much-awaited decision touching various facets of fees of the arbitrator(s) has been rendered by the Supreme Court (SC) in August 2022. In ONGC v. Afcons-Gunanusa JV, The SC has ruled that:

  1. Arbitrators cannot determine their own fees and the parties are free to approach the Court for review of the arbitrators fees if the same is unreasonable under section 39(2) of the Arbitration and Conciliation Act, 1996 (“Act”). The Fourth Schedule is, however, not binding.
  2. The Arbitral Tribunal is entitled to charge fee separately on the claim and the counter-claim as both are separately included in the definition of ‘sum in dispute’ in the Fourth Schedule of the Act.
  3. The ceiling of Rs. 30,00,000 prescribed in the Fourth Schedule of the Act is applicable to each arbitrator and is not the cumulative fee of a multi-member tribunal.
  4. The maximum fee that an arbitrator is entitled to is Rs. 30,00,000 and the said ceiling of Rs 30,00,000 in the entry at serial no. 6 of the Fourth Schedule is applicable to the sum of the base amount (of Rs 19,87,500) and the variable amount over and above it.

 In Mahanadi Coalfields v. IVRCL-AMR Joint Venture, the SC has held that the mere use of the word “arbitration” or “arbitrator” in a clause will not make it an arbitration agreement, if it requires or contemplates a further or fresh consent of the parties for reference to arbitration. The provision in the agreement should disclose that the parties intended to be bound to submit their disputes to arbitration as a means of resolving the same.
The principle that a signed Arbitration Agreement is not a pre-requisite for referring the dispute to arbitration was recently upheld by the Delhi High Court in the matter of Buildmyinfra v. Gyan Prakash Mishra. The Single Bench of Justice Prateek Jalan held that “it is not necessary for the written document to be signed by all the parties, as long as the existence of an arbitration agreement can be culled out from the exchange of letters or other means of communication between the parties”.
The 2015 ICC arbitral award against Atrix Corporation Ltd. to pay damages of over US$ 560 million along with interest to Devas Multimedia America Inc. has been recently set aside by the Hon’ble Delhi High Court. The dispute pertains to a 2005 contract whereby Antrix was to build, launch and operate satellites for Devas to provide multimedia broadcasting services in India. However, the fate of the contract was short lived as Antrix had to terminate the contract on the ground of ‘force majeure’ when the Cabinet Committee on Security refused to provide orbital slot in S-band to Antrix for any commercial activities. The dispute was taken by Devas to ICC which ordered Antrix to pay damages to Devas for wrongful termination of contract. However, the factors that Devas:

  1. was formed for ‘unlawful object’ just to secure the prestigious contract without having any minimum experience;
  2. had no operational services at the time of signing of the contract;
  3. held no intellectual property rights for offering its services; and
  4. indulged in illegal activities of siphoning off huge funds out of the investment brought for the contract to give colour to its fraudulent intention,

has finally led the Hon’ble Delhi High Court to set aside the arbitral award passed by ICC on the grounds of patent illegalities, fraud and public policy.

The test for impartiality and independence of the Arbitrator makes the appointment of Sole Arbitrator by one party or the company or appointment of the Managing Director or its nominee as the arbitrator invalid, as such appointments are directly hit by the bar provided under section 12(5) of the Arbitration and Conciliation Act, 1996.

The judgment of Perkins Eastman Architects v. HSCC (Perkins’) serves as a panacea to unilateral and self-serving appointment of arbitrator by any party. Applying the principles of fairness, impartiality and neutrality of the arbitrator as laid down in the Perkins’ judgment, the Hon’ble High Court of Delhi has recently set aside the appointment of a sole arbitrator by a High Powered Committee of the Indian Roads Congress which comprised of members, who had interest in the outcome of the arbitration.

The Memorandum of Understanding (MOU) between the parties being determinable in nature, the same is not capable of specific performance due to the statutory bar contained in Section 14(d) of the Specific Relief Act. Hence, the party was not entitled to any interim relief under Section 9 of the Act.

Thank you for reading. We will be back again in your inbox shortly with more updates.

Mani Gupta & Sonali Jain