Volume 6, Issue 2 (January 2018)

TABLE OF CONTENTS

 

EDITORIAL

Empiricism in the Indian Arbitration Landscape

Indulekha Thomas

The role of empiricism in international arbitral scholarship is now well recognised. The recent increase in empirical works is correlated with the trend towards greater transparency in both commercial and investment arbitration. Empirical methodology is now commonly used to test or supplement normative reasoning. In this context, this editorial aims to gauge the extent to which India has adapted to empiricism. Though the number of empirical studies in arbitration is on the rise, India still lacks an institutional culture conducive to empiricism. The author argues that recent trends of institutionalism, transparency, inter-disciplinarity and prominence of arbitral discourse in India can be harnessed to support greater appreciation of empirical methodology. Given the increased use of empirical studies globally and the recent instances of systematic stakeholder consultations in Indian arbitral policy making, the need for effective engagement with empiricism seems indicated.

 

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ARTICLES

 

Arbitrators as Law-Makers

Doug Jones

As the majority of international commercial arbitrations remain private, the significance of the legal issues considered and decided by arbitrators is often unknown. In light of this, the purpose of this paper is twofold. First, it addresses the reality of arbitrators confronting questions of law, by providing examples of instances where arbitrators have had the responsibility of “making law” in disputes concerning the oil and gas industry, maritime law, construction law and arbitration law. Secondly, it considers whether there is a role for the publication of redacted awards in the international arbitral community. Despite criticisms about the impact of arbitration on the development of common law and the importance of confidentiality, the paper suggests that reforms to the writing and publication of awards in institutional rules could lead to arbitral awards usefully contributing to the development of law in a range of contexts.

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Soft Law Rules in International Arbitration: Positive Effects and Legitimation of the IBA as a Rule-Maker

David Arias

Soft law has gained increasing importance in the context of international arbitration. This reality has not been devoid of detracting voices who stood against the development of soft law in this field. Although it is not denied that soft law may have brought about new challenges to the industry, the benefits enjoyed by international arbitration as a result of the creation and increasing utilization of soft law instruments, outweigh any potential drawback. In particular, this article shows that soft law has contributed to levelling the playing field, increasing certainty and codifying best practices, norms and intelligent guidance on how to tackle recent concerns. This article also shows that the International Bar Association, surely the most active institution when it comes to the creation of soft law at the international arbitration level, is entirely legitimized in its role. This legitimation is given by its experience, its inclusiveness when creating soft law instruments and its reflection of the cultural diversity in the arbitral community. Beyond that, IBA’s soft law instruments have been eagerly welcomed by the arbitration community, which is another indicator of its legitimacy to produce them.

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The Choice of a Foreign Seat in Domestic Disputes – An Opportunity for one More Step Forward in India’s Journey to Establish itself as an Arbitration Friendly Jurisdiction?

Duncan Speller & Dharshini Prasad

The growth of India as an arbitral jurisdiction continues to raise interesting questions of principle and policy. This article explores one such question - whether Indian parties have the autonomy to choose a foreign seat.  As matter of statutory interpretation and case law, it is the authors’ view that the answer is yes. A comparative and policy analysis also suggests that the ability of domestic parties to choose a foreign seat should not be fettered.  Nonetheless, until the question is definitively answered by the Supreme Court of India, parties must conclude their arbitration agreements with an awareness that choosing a foreign seat could pose certain enforcement and other risks. Finally, and somewhat propitiously, in a decision rendered just after the final draft of this article was completed, the Delhi High Court in GMR Energy Ltd. v. Doosan Power Systems India Pvt. Ltd. C.S.(Comm.) 447/2017 confirmed that Indian parties are entitled to choose a foreign seat, albeit for different reasons than those discussed in this article in particular, the application of Section 28 of the Indian Contracts Act. The authors welcome the Court’s decision.

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Free Zone Arbitration: The Mechanics

Gordon Blanke

This article examines the operation of free zone arbitration in the United Arab Emirates (UAE), with a focus on the arbitration capabilities offered through the Dubai International Arbitration Centre (DIFC) and the Abu Dhabi Global Market (ADGM). The UAE leads the way in free zone arbitration as a novel form of arbitration. In an attempt to highlight the unique characteristics of free zone arbitration, this article will look at the legislative, institutional and judicial mechanics of free zone arbitration. In doing so, it will, in particular, introduce the reader to free zone arbitration as a desirable new product offering on the arbitration landscape in the Middle East and more specifically, the UAE. It is seen that free zone arbitration facilitates the choice of common law style arbitration within a civil law environment, and encourages the interplay between, and the mutual integration of the civil and common law worlds to enable the unobstructed enforcement of free zone arbitration awards onshore.

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The Emperor’s New Clothes: Should India Marvel at the EU’s New Proposed Investment Court System?

Stephan Wilske, Raeesa Rawal & Geetanjali Sharma

Those in the arbitration world will no doubt be familiar with the criticism faced by investor state dispute settlement in recent times. Around the world, many nations have responded to this criticism by revisiting the way in which they resolve investment disputes. India, for instance, has released a 2016 Indian Model BIT. The EU, on the other hand, has taken a radical departure from the classical approach and has proposed an ‘Investment Court’. Given that India and the EU are soon to recommence negotiations on their Broad-based Bilateral Trade and Investment Agreement, this paper begins by reviewing the trade relationship between the two global powerhouses. The authors provide a comparison of how both India and the EU have sought to deal with the criticism levied against ISDS and assess which approach remains truer to the inherent nature of arbitration, while responding to the critique of ISDS. The analysis focuses on the key features and characteristics of the decision-making bodies under the Investment Court System proposal and the 2016 Indian Model BIT.

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The Evolution and Current Status of the Concept of Indirect Expropriation in Investment Arbitration and Investment Treaties

Pascale Accaoui Lorfing & Maria Beatriz Burghetto

Identifying an instance of indirect expropriation involves weighing the right of the State to regulate on the one hand, and on the other, the protection of the foreign investor. This article deals with the analysis developed to examine State measures that indirectly impact the investors’ rights. From the Calvo doctrine to international treaties, the notion of indirect expropriation is a work in progress that has evolved within the changing historical, political and economic context, towards the recently renewed recognition of the State’s power to regulate in certain areas of public interest.

The different approaches (sole effects doctrine, police powers doctrine, proportionality test) adopted by arbitral tribunals in assessing the existence of an indirect expropriation and determining its consequences have paved the way for recent international instruments which recognize a certain exclusive domain where States are allowed to regulate without a duty to compensate the investor. However, the lack of specific uniform criteria available to arbitral tribunals has led to some inconsistent decisions. The authors attempt to provide some responses to questions that remain unanswered in the approaches currently adopted by arbitrators.

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NOTES

 

Counsel Ethics in International Arbitration: Is There Any Need for Regulation?

Paolo Marzolini

Is there any need to establish ethical norms governing the conduct of counsel in international arbitration?  In order to answer this question, the article considers the reasons which gave rise to the arbitration community’s perceived need for regulation when it comes to counsel ethics.  If, on the one hand, the opening of the arbitration community to “newcomers” calls for shared principles and rules covering several facets of the arbitration proceedings, on the other hand, these principles and rules should also take into account the duties which counsel traditionally owe to their clients.  The tension which may sometimes exist between these forces may provide the pathway to concrete and effective solutions shared by all players in arbitration.

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Court’s Assistance in Conduct of Arbitral Proceedings

Binsy Susan & Adarsh Ramakrishnan

An arbitral tribunal, being a private forum, has inherent limitations in taking evidence and relies on the court’s assistance for procuring or summoning the same. While providing such assistance, the court cannot go behind an order of the arbitral tribunal and adjudicate upon its correctness. This paper delves into Section 27 of the Arbitration and Conciliation Act, 1996 and elaborates on the procedure for application and execution in taking evidence in arbitration, the powers and limitations of the court in making an order for evidence and the effect of non-compliance with such orders. This article also discusses the newly introduced Section 17(2) of the 1996 Act, its effect on the enforcement of interim orders of the tribunal and briefly compares the Indian position with the English jurisprudence on non-compliance with arbitral orders.

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‘Public Policy’ as the Root Cause of Due Process Paranoia: An Examination of the Statute and Court Decisions in India

Shubham Jain

“Due process paranoia” has been the buzzword in International Arbitration circles in the past few years. It has been seen that tribunals have been overly cautious in their approach while deciding whether or not to follow a particular (usually simplified) procedure. A major driver of this paranoia is the perceived enforcement risk associated with the awards and the impact of non-enforcement on the arbitrators. In this article, the author examines the Indian Arbitration and Conciliation Act and Indian jurisprudence to study enforcement risk and due process paranoia. It is argued that the real cause for the paranoia is not the actual due process clauses under the New York Convention. Instead, the origins of the paranoia lie in the old unruly horse of ‘public policy’ which incorporates the residuary notions of due process. While the courts have been able to provide sufficient clarity on how they will apply the due process clauses, they have been unable to do so in case of challenges on the grounds of public policy. Therefore, any effort directed towards addressing the paranoia needs to balance the requirements of providing sufficient flexibility to the jurisdictions in the application of the public policy clause and the necessity of providing confidence to the tribunals to go ahead with the proceedings without spending time and money to comply with minor and unnecessary procedural requirements.

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