"I realise that some of my criticisms may be mistaken; but to refuse to criticize judgements for fear of being mistaken is to abandon criticism altogether... If any of my criticisms are found to be correct, the cause is served; and if any are found to be incorrect the very process of finding out my mistakes must lead to the discovery of the right reasons, or better reasons than I have been able to give, and the cause is served just as well." -Mr. HM Seervai, Preface to the 1st ed., Constitutional Law of India.

Monday, May 22, 2017

Costs Allocation Under the Amended Indian Arbitration Law: A Critique

In a recent paper presented at the Conference on Dispute Management in Infrastructure Projects: New Challenges, May 19-20, 2017, Vigyan Bhawan, New Delhi, this blawgger argues that even after the 2015 amendments, there has not been a marked change in the way in which courts award costs in arbitration related court proceedings. In the paper, this blawgger calls for costs allocation by courts and arbitral tribunals in accordance with best international practices as provided for in Section 31A of the Arbitration and Conciliation Act, 1996 as amended. The abstract of the paper is as follows:

"Section 31(8) of the Arbitration and Conciliation Act, 1996 as originally enacted dealt with costs in arbitration. The evolution of the law on the subject led to dissatisfaction. After numerous calls for reforms, the Law Commission of India in its 246th Report sought overhaul of the existing law on the subject. Based on the said Report, Section 31(8) stood replaced by a new provision on costs in the form of Section 31A. This paper examines if the new regime on costs allocation is satisfactory, especially in the light of objectives of the recent amendments. The paper specifically focuses on whether arbitral tribunal and courts award costs in the arbitral proceedings or in arbitration related court proceedings respectively in consonance with the objectives of the latest amendments to the Act."

The paper can be downloaded from this link. The presentation can be accessed from this link.

Friday, January 27, 2017

Preservation of Biodiversity & Jallikattu

Readers would be well aware of the recent massive protests in Tamil Nadu regarding the banning of Jallikattu and the subsequent events consequential to the protests, such as the promulgation of the Ordinance allowing Jallikattu and the Tamil Nadu Legislative Assembly passing of a Bill replacing the Jallikattu Ordinance. News reports indicate that certain petitioners have approached the Supreme Court seeking relief against the Ordinance and the Bill. 

One of the threads of arguments put forth by certain experts well-versed with Jallikattu and breeding of animals seems to be that Jallikattu promotes native breeding of cows and also leads to preservation of animal biodiversity. The argument seems to be that the bull which “wins” in the Jallikattu is considered as the strongest among bulls and is treated as the common heritage of the village. It also appears that the said bull is allowed to mate with cows in the village thereby producing healthy second generation of those cows. Whether this is true or not is a matter for experts on veterinary science and village socio cultural practices to comment upon. On paper, this argument seems compelling. A few recent news reports dealing with this aspect can be found here here and here.

From a perusal of the 2014 [Animal Welfare Board of India v. A. Nagaraja & Ors. (2014) 7 SCC 547] and the 2016 [Chief Secretary to the Govt., Chennai Tamilnadu and Ors. v. Animal Welfare Board and Ors. 2016 (12) SCALE 334] judgements of the Supreme Court on Jallikattu ban, it appears that the said argument (preservation of native cow breeds) was never brought to the Hon’ble Court’s attention. As to why, there could be several reasons. One of the reasons cited has been the lack of awareness of this aspect of rural practices among the mainstream population and the lack of available scientific studies documenting it. Further, it has also been argued that those who are aware of these practices could neither approach the High Court/ Supreme Court nor create awareness among others owing to their lack of economic strength.

The lack of detailed arguments before the Supreme Court (going by the judgements) on the issue is surprising considering news reports on the subject even as early as in 2014 (see here). There were a few reports even before the 2016 judgements (See the BBC report cited above and this news report)

Whether these arguments are actually true or not is for the Supreme Court to determine. Nevertheless, when far-reaching issues such as preservation of biodiversity, rural economic, socio-cultural practices, access to justice are raised, Hon’ble Supreme Court ought to deeply delve on the issues and pass judgements.

Another aspect of the matter is the statistics cited in the 2014 judgement relating to cruelty towards animals. It is well known to those well-versed with statistics is that the numbers game is dangerous in that it is extraordinarily difficult to examine the correctness of statistical data. Therefore, it is humbly submitted that whenever such studies and statistical data are relied upon, it is important to the said data to be made public and invite comments on the correctness thereof. Statistical data might, prima facie, appear forceful but there are innumerable possibilities that the statistical data and the inferences may be erroneous. [See, for instance the "elegantly” titled article by Paul F. Velleman “Truth, Damn Truth, and Statistics”, Journal of Statistics Education Volume 16, Number 2 (2008)] on the issue. Judges have to be careful about statistical data. The inferences sought to be made in statistical studies produced in courts should not only satisfy judges but should satisfy rigorous statistical standards of replication, randomization, proper sampling and others. 

Taking this issue in a larger context, it could be explored if data and studies submitted in litigation having large-scale impact on the country (such as the Jallikattu ban judgements and other PILs) represent only one side of the story or tend obfuscate truth. Unlike in typical adversarial litigation, it is possible that in PILs, studies presenting comprehensive facts / data may not be forthcoming, especially if comprehensive facts/ data are not available with the Government, in which case, the courts should tread with extreme caution. For instance, this blogger does not think that Secretaries of the State of Tamil Nadu or the Union of India was very well aware of the biodiversity related issues associates with Jallikattu (assuming this aspect was not brought to the court's knowledge).

In the context of Jallikattu, if the native breeding of cows arguments is true, then it would be in the interest of the country that the native breeds are preserved. For this purpose, it could make sense to allow Jallikattu albeit in a heavily regulated form. the larger challenge is, however, ensuring preservation of the local biodiversity.

(Edited after posting)

Monday, January 16, 2017

Empirical Findings in International Arbitration: Part I

Christopher R Drahozal has come up with a paper titled "Empirical Findings on International Arbitration: An Overview". For those uninitiated, Drahozal has been writing a lot about empirical analysis in International Arbitration, including especially the book he co-edited with Richard W. Naimark titled "Towards a Science of International Arbitration: Collected Empirical Research" (2005). The book surveys the empirical literature on the subject and was published a decade ago to an international arbitration audience who found it very interesting especially because of the lack of empirical findings on the subject, primarily owing to arbitration being a private and a confidential affair.

In the paper referred above, Drahozal gives an overview of some important inferences in international arbitration. In the process of doing so, he also critiques certain empirical surveys. We've been stressing on empirical research in arbitration for quite some time (see here, for instance). This two-series post quotes/ paraphrases some important findings cited in the paper and is hoped that this would be a fillip to those interested in embarking on empirical international arbitration research.

Prominence of Use of Arbitration in International Contracts

The data on the use of arbitration in international contracts is not comprehensive to provide a definitive conclusion on the prominence of arbitration clauses in such contracts. A work by Eisenberg & Miller tends to focus on specific agreements and inference derived therefrom cannot be generalised for reasons stated in the paper.

Reasons why Parties Agree to Arbitrate

Parties' preference of arbitration over litigation may depend on the types of contract. Certain agreements such as international merger agreements, international credit commitments agreements may not contain arbitration clauses as much as other agreements for specific reasons. 

Frequency of International Arbitration Proceedings

The data on the number of references to arbitrations is incomplete since they do not include ad hoc arbitrations, or comprehensively cover all arbitral institutions. At times, they take into account even domestic arbitrations. Further,there is no baseline comparison to qualitatively evaluate the references to arbitration. On the other hand, there has been a growth in the number of investor-State arbitrations. 

Costs in International Arbitration

An ICC survey has reported the following costs breakup based on a sample of 221 arbitral awards:
  • Party costs- lawyers' fees and expenses, expert and other witnesses' expenses and other party incurred costs- 83%
  • arbitrators' fee- 15%
  • Case administration- 2%
The figures on attorney fees in investor-State arbitration is startling 😈.  average claimants' costs is approximately USD 44,37,000/- and average respondents' cost is USED 45,59,000/- and the average tribunal costs is USD 7,46,000 (that is, 7.7% of the total costs).

Length of Arbitral Proceedings

The length connotes the time between filing and award. In ICSID arbitration the average time taken for the publication of arbitral award after the final hearing is 379 days. 

Time taken for Investor-State arbitration under UNCITRAL Arbitration Rules- 1446 days
Time taken for Investor-State arbitration under ICSID arbitration- 1381 days

(Does this debunk the theory that ad hoc arbitration is considerably slower?- food for thought!)

Drahozal seems to compare time taken in investor state arbitration with commercial arbitration administered by arbitral institutions (p. 13). Such a comparison may not be correct. 

Duration of LCIA arbitration
  • Sole arbitrator tribunal- 18.5 months
  • Three member tribunal-21 months.
Duration of SIAC Arbitration
  • Sole arbitrator- 13 months
  • Three member tribunal- 15.3 months
Duration of Stockholm Chamber of Commerce Arbitration

  • Sole arbitrator- 10.9 months
  • Three member tribunal- 19 months

  • Size of Arbitral Tribunal: Approximately half of the ICA involve sole arbitrator. 

    Multi-Party Proceedings: ICC has reported that about 34% of the ICC Arbitration in 2015 involved multiple parties.

    Use of Emergency Arbitrators

    ICDR- 67 requests
    SIAC- 50 requests
    ICC- 34 requests

    However, it appears that many parties prefer national courts for interim/ emergency relief.

    Part II will address the rest of the paper. Happy reading! 

    Wednesday, December 21, 2016

    Failures in Law Making: The Case of Arbitration Law in India

    A recently published paper of this blawgger deals with failures in law making with focus on arbitration law in India. The abstract is provided below:

    The Statement of Objects and Reasons to the Arbitration & Conciliation (Amendment) Bill, 2015 placed substantial blame on the judiciary for the delay in disposal of arbitration matters and the increasing court interference in arbitration, both of which, according to the said Statement, had, the effect of undermining the object of the Arbitration & Conciliation Act, 1996. It is true that although the decisions in some cases could have been delivered taking into consideration the framework of arbitration, this paper argues that a substantial amount of blame falls on the law makers as well on two major aspects: If the judiciary has wrongly interpreted a particular provision, it is for the legislature to be proactive and immediately take action to correct the erroneous interpretation. However, it took about fifteen years for the government and the legislature to bring about the statutory reforms in the 1996 Act. This constitutes the first failure of the government and the legislature vis-à-vis the 1996 Act. Secondly, the courts cannot be entirely faulted since it was difficult to trace the legislative intent in enacting a particular provision of the 1996 Act. Therefore, an authoritative source such as parliamentary debates or reports of the Government on the 1996 Act would have aided the courts in finding out the legislative intent. This paper argues that failure by the lawmakers on both these counts contributed immensely to the failure of Arbitration & Conciliation Act, 1996 in achieving its objects.

    The conclusive portion of the paper notes that whenever courts misconstrue a statute or render judgements contrary to, or which undermine, legislative intent, the government and the legislature should be more dynamic and correct such errors. Failure to do so will make law uncertain and justice costlier, and at times, elusive; It, secondly, argues, that authoritative sources from which legislative intent can be gathered should be made available especially in statutes that address a new area or which is drafted in a manner different from the previous law on the subject; Lastly, the paper reminds readers that legislative ambiguities impose immense costs on the parties and great burden on the judicial system and that therefore, the government and the legislature should act proactively to address these ambiguities.

    The paper can be accessed from here.

    [The paper was written for a conference in Kolkata which was held on 09.12.2016. ]