"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, August 8, 2011

Roundup of Prominent Developments in India and Abroad on Arbitration

Union of India v. Krafters Engineers (Supreme Court of India)

In Union of India v M/s Krafters Engineers, the Supreme Court of India clarified the law on the power of the arbitrator to award interest when the contract prohibits it. See the comments in the Indian Corporate Law Blog and the Lex Arbitri Blog.

Jivraj v Hashwani (UK Supreme Court) Nurdin Jivraj v Sadruddin Hashwani is an important case decided (pdf) by the UK Supreme Court. The issue was whether an arbitration clause requiring that the arbitrators should be from a particular religious community was valid. The English Court of Appeal had previously held that such a requirement violated the English Employment Equality (Religion or Belief) Regulations 2003 and was therefore void. The Court of Appeal had also held since the arbitration clause became substantially different if the void portion of the arbitration was severed, the entire arbitration clause was void. The UK Supreme Court overturned the decision of the Court of Appeal and held that the Employment Equality (Religion or Belief) Regulations 2003 was not applicable as arbitrators were not employees under the Regulations but were independent providers of service. Comments on the judgement can be found in UKSC Blog, Kluwer Arbitration Blog, Indian Corporate Law Blog and Lex Arbitri Blog.

Barclays Bank v Nylon Capital (English Court of Appeal on Expert Determination)
In this case, the English Court of Appeal had to decide on the question as to whether the court should stay proceedings brought for a declaration as to the interpretation of an agreement for the reason that the issue falls within the domain of the expert appointed as per the expert determination clause in that agreement. The said clause provided that the expert shall determine the matters in dispute between the parties and such determination may include dispute as to the interpretation of any provision of the agreement or even his jurisdiction. Such determination was to be final and binding on the parties. The court decided as follows:
  • Even if the agreement confers jurisdiction on the expert to decide a question pertaining to the jurisdiction of an expert, the court is the “final decision maker” on the question.
  • In construction of arbitration clauses, there is a presumption that sensible businessmen intended that any dispute arising out of an agreement should be decided by the arbitral tribunal. However, there is no such presumption as regards expert determination clauses. Therefore, the question as to whether a matter was to be referred to an expert or not is a matter of construction of the expert determination clause with “no presumption either way”.
  • It is an established principle that courts would not interfere with the determination of experts except in narrow circumstances. Courts would interfere where the expert determines the issue referred to him in a manner contrary to the mandate conferred upon him by the parties. Whether the expert had acted contrary to his mandate is a question of law.
  • Unlike an arbitrator who is bound to proceed with fairness, an expert can determine how he can proceed, subject, of course, to any stipulation in the agreement.
  • Where the court is asked to determine whether a dispute is within the expert’s jurisdiction and if the agreement provides that such a question should be decided by the expert, the court should decide, first, if there is a dispute; second, the court should decide if it is in the interests of justice and convenience that it should decide the dispute.
  • When an expert determines questions pertaining to his jurisdiction, such determinations are not final even if the parties agree. Such determinations can always be challenged.
  • Where a party challenges the jurisdiction of the expert to determine a dispute, the said party could approach the court and the court would determine the issue of jurisdiction of the expert.
Use of And/ Or in Legal Documents:

Indian Corporate Law Blog had a small post a few days back providing the link to an article on the use “And/ Or” in legal writing.

Kishanganga Arbitration:

Lex Arbitri has a post on the latest developments in the Kishanganga arbitration between India and Pakistan.

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