Volume 2, Issue 2 (January 2014)

TABLE OF CONTENTS

India’s Arbitration Legislation: Does the Single Act Serve the Purpose
J Martin Hunter

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A New Dawn for India- Reducing Court Intervention in Enforcement of Foreign Awards
Arpan Kumar Gupta

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Assimilating the Negative Effect of Kompetenz-Kompetenz in India: Need to Revisit the Question of Judicial Intervention?
Pratyush Panjwani & Harshad Pathak
The principle of kompetenz-kompetenz has been recognized under Section 16(1) of the Indian Arbitration and Conciliation Act, 1996. As a theoretical principle, it is widely accepted to have a dual effect. While its positive effect confers upon an arbitral tribunal the power to rule on its jurisdiction, the negative effect establishes a presumption of chronological priority for the tribunal with respect to resolving jurisdiction questions.
Stemming from what appears to be an inherent distrust in the arbitration machinery, the Indian Courts have been reluctant in acknowledging this negative effect while assessing the myriad questions put before it. The consequence is the adoption of a not so pro-arbitration approach that is plagued with judicial interventions at every stage.
The present paper attempts to analyse the implications of the principle of kompetenz-kompetenz, when considered in its entirety and determine the permissible extent of judicial intervention in the arbitral process. In particular, two concerns are sought to be addressed – the first of which pertains to the necessity and extent of judicial intervention permitted by law while entertaining an application under Sections 8, 9 or 11 of the Act. Therein, the authors commence with a critique of the decision of the Supreme Court of India in Patel Engineering, which marked a discernible shift in the attitude of Courts. Subsequently, the authors make a reasoned argument as to the limited jurisdictional facts that can be assessed by the concerned Courts or judicial authorities or the Chief Justice, as well as the prima facie standard of review that ought to have been adopted by the apex Court.
The second concern pertains to the consequences of a party’s failure to raise a timely challenge to the jurisdiction of a tribunal under Section 16 of the Act. Whether a party, having not raised a jurisdictional objection during the arbitration proceedings, can be permitted to raise the same as a ground for setting aside the award under Section 34 of the Act? Relying upon the doctrine of deemed waiver, the jurisprudence relating to the ‘wait-and-see’ approach in commercial arbitration, and the negative effect of kompetenz-kompetenz, the authors endorse the view that limits the defaulting party’s opportunity under Section 34 of the Act. In other words, if a party fails to raise any jurisdictional objection before the tribunal, it shall be prohibited from challenging the arbitral award on the same grounds in a proceeding before the appropriate Courts. 

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Saving Face or Upholding ‘Rule Of Law’: Reflections on Antrix Corp Ltd. V. Devas Multimedia P. Ltd.
Nidhi Gupta

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Assessing the Geopolitics of Investor-State Arbitration: A TWAILian Critique from Indian Perspective
Parth Shah & Udit Vyas
Investment treaty arbitration of White Industries has opened a lot of eyes and has struck fear into the heart of the Indian Government. The wide scope of Investment treaty Arbitrations borders on a frightening range for every government involved especially Third World Countries as it derives its powers from a Bilateral Investment Treaty and other forms of treaties meant for trade. Such powers have been present from the colonial times, but their usage is being truly recognized by different institutions now. A mechanism which out rightly is set to promote trade and development in the Third World countries is strangely enough taking the opportunities away from such countries largely due to the structural development of such institutions. Signs of such bias have been in the open for quite some time but the Indian Economy is just facing the music. Several countries have been worn out due to it and strangely enough, most of the time developing countries feel the brunt of the violations caused under the Investment treaty arbitrations. In some cases, there is clear abuse of the freedom allowed by the BIT from the tribunal by not following such said principles, which result in compensation and damages amounting to millions flushed out of their economic set-up, leaving them weak. This paper will deal with the alleged bias in the two investment arbitrations that the Indian government has been a party to. The focus will also be on Regime bias, which is more focused on the forging of legal rules and the meaning acquired by a particular term and how it is interpreted by different bodies and on Doctrinal Bias, which speaks about usage of doctrines and principles under the current state of International law. 

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The Possible Conflict of Law Rules Employed in International Commercial Arbitration to Discern the Governing Law: An Analysis
Tapobrata Mukhopadhyay
It is rarely the case that highly diversified commercial contracts, containing arbitration as a dispute resolution method, mention specifically all the applicable governing laws. Indeed, modern transnational arbitration agreements often do not mention the applicable law governing the contract, primarily because of the increased flexibility that this ambiguity offers. However, it should be noted that there exists no clear and established consensus within the international community regarding the mechanism that may be followed by an arbitral tribunal to determine the law governing the contract, in case it is not expressly chosen by the parties. Although concepts of private international law, or conflict of laws are often used by the arbitral tribunal to arrive at the law governing the contract- the practise itself has been widely debated, and even disregarded by recent tribunals. Moreover, there exists an inherent lack of consistency among the various conflict rules followed by tribunals in such a situation. As a result of this, parties to an arbitration agreement are often compelled to have their contract governed by a law not envisaged by either side. Through this article, the author attempts to discern a logical thread of hierarchy between the multifarious conflict rules that are generally adopted by an arbitral tribunal. This, he does by analyzing the advantages and disadvantages of the various conflict rules under the broad delocalization regime. The author, in this article also explores the possibility of bypassing the application of conflict rules altogether by direct application of substantive law by the tribunal. The article ultimately vouches for the development of an international consensus on the mechanism for determining the applicable governing law.

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UNCITRAL Arbitration Rules, 2010: Comment on Certain Revisions
Badrinath Srinivasan

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Defining the Contours of a Commercial Arbitral Tribunal: Can ICSID Decisions Confer an Inherent Power on the Tribunal to Regulate Appointment of Counsels?
Ridhi Kabra
International arbitration dwells in an ethical no-man’s land. There exists no supra-national norm of sufficient clarity that allows arbitrators to regulate the behaviour of a counsel whose participation is detrimental to the fair adjudication of the dispute. In such circumstances, if a party appoints a counsel much after the tribunal has been formed, such that the independence and impartiality of the tribunal is put to test, important questions about the scope of inherent powers of the tribunal are raised. Two ICSID decisions have sought to address this problem, by advocating the existence of an inherent power, exercisable under certain circumstances to terminate the appointment of such a counsel. This paper attempts to expand the use of such a power in the field of international commercial arbitration, in the absence of any codification of law on the issue. The fundamental assumption of this paper is that this power is to be exercised only in situations where the tribunal has been formed and a party has exercised mala fides in appointing a counsel post such formation. It proposes the adoption of a middle path between the two ICSID decisions in order to ensure legitimacy of the arbitral process. 

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The Curious Case of Arbitration of Trust Disputes
Shradha Rakhecha
Arbitration provides a neutral forum chosen by the parties for resolution of disputes arising out of defined legal relationship. This note examines whether arbitration can be an effective tool for resolving Trust disputes or not. In a recent judgement, Jayesh Shah v. Kaydee Trust, Bombay High Court supported the ‘deemed acceptance’ doctrine and stated that with other obligations that stem from a Trust Deed, also stems the obligation to arbitrate, making the beneficiary ‘party’ to the arbitration agreement, even when they are not signatories to it. Such a proposition has been most respectfully disagreed to in this note. The legislators’ intention of making express or implied consent of both parties is an obvious observation that cannot be conversely construed, as agreed by the Supreme Court in Jagdish Chander v. Ramesh Chander. Moreover, as per the provisions of the Arbitration & Conciliation Act, 1996, a beneficiary, is not a ‘party’ to the agreement, and if considered so, the same is not a valid arbitration agreement. The Delhi High Court has also expressed the same opinion in Ms. Chhaya Shriram v. Deepak C. Shriram. To resolve the issue of coexistence of arbitration agreement in Trusts, various foreign legal systems have made its position clear either by way of legislation or by interpretation by their courts. This note concludes by providing suggestions including an amendment in the 1996 Act. 

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The Kishenganga Hydro-Electric Project Arbitration Dispute - Partial Award (Pakistan v. India): An Analysis
Aardraa Upadhyay &. Tamojit Chatterjee
Arbitration has emerged as an effective form of dispute resolution. The medium of arbitration has proved to be a quick and practical settlement for cross-border disputes, especially in cases wherein the parties are from different socio-cultural and political backgrounds. This is mainly because of the presence of a neutral third party in the dispute resolution process and other considerations such as the requirement of expertise over the relevant subject matter etc. The foremost pillar of any arbitration process is the disputing party submitting themselves to the process and relying upon the fair judgement of the appointed arbitrating agency or individual. The partial award discussed presently arose out of the first ever arbitration proceeding under the Indus Water Treaty entered into between India and Pakistan, the two parties. The dispute comprises various intricate issues which have arisen out of the provisions of the Indus Water Treaty. The Treaty serves to lay down a comprehensive set of rules for the sharing of river waters between the two countries. This arbitration is of special significance as its outcome will purport to serve future disputes arising out of the Treaty especially in light of the socio-political relationship between the two parties. The partial award given by the Permanent Court of Arbitration with the erstwhile help of the World Bank has proved to be an elixir for future arbitration disputes of such nature. The varied challenges that are faced by states over water resources world-wide originate from a multitude of factors, including the perpetual rise in population, urbanization, environmental degradation, and industrialization which makes the nature of the dispute more composite in nature involving the participation of individuals, states and corporations. It is in light of such complexities that such disputes go beyond the traditional issues of water quantity, etc., and take on a graver form by focusing on issues of water quality, water rights, etc.,. This myriad web involving the participation of different actors and the wide ranging consequences of the same call for the development and the expansion of dispute settlement institutions. Thus, formal institutions of dispute settlement like the Permanent Court of Arbitration serve to dissect through the complexities and cull out the most reasonable solution to the dispute at hand. The Kishenganga Arbitration dispute deals with the construction of a Hydro Electric Project by India on the river Kishenganga. Due to its tributary being Jhelum, a water sharing treaty is present between Pakistan and India. It entails the erection of a 37m-high concrete dam in the Gurez Valley, which will divert the Kishenganga River via a 22km long tunnel south into Lake Wular passing through an underground power-house. The construction will result in the diversion of the water in Pakistan through a different route and is the root cause of the dispute. The main issue of the dispute centres on the diversion of water which will create a different route for entry in Pakistan. The first issue raised by the Court in the above matter deals with the permissibility of delivering waters to another tributary through the Kishenganga Hydro Electric Project (“KHEP”). The second issue deals with the contentious problem of reservoir depletion under the Treaty. The paper shall deal with the background of the case and the dispute settlement mechanism under Indus Water Treaty. After discussing the various facts and issues that arose in the dispute, an analysis of the interim order has been done by discussing the various technicalities and objections raised in the order in detail. The paper shall also deal with the effect of the partial award on future disputes of such nature.

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