"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.

Thursday, December 17, 2015

Law Minister Clarifies the New Arbitration & Conciliation (Amendment) Bill, 2015 Would Operate Prospectively

Today, the Lok Sabha passed the Arbitration and Conciliation (Amendment) Bill, 2015 in substance. However, the Minister added a new clause 25A to the Bill. The said clause deals with retrospectivity of the aforesaid amendments. It specifically provides that the amendments would not apply to arbitrations commenced before 23.10.2015. The said clause reads as below":

"25A. Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act.”

This, thus, puts to rest all the debates surrounding retrospective applicability of the 1996 Act. But the crucial question remains regarding the retrospectivity of the 2015 Ordinance amending the said Act, which would, in all possibility, be interpreted in the same lines as the above clause. If not, then it would lead to an anomalous situation where the Ordinance leading to the Amendment Act would apply retrospectively but the Amendment Act would apply prospectively. Another question would be regarding the effect of repeal of the Ordinance by the Amendment Act. Hence, it is possible that the courts would take the stand that the Ordinance would also apply prospectively. 

Today's Lok Sabha debates on the Arbitration and Conciliation (Amendment) Act, 2015 can be accessed from here.

Wednesday, December 16, 2015

Lok Sabha Debates the Bill to Amend the Indian Arbitration Law

The Lok Sabha today debated the Arbitration and Conciliation (Amendment) Bill, 2015 to amend the Indian Arbitration Law. The debate began between 1700- 1800 hrs today (16.12.2015) and is likely to continue tomorrow. Prior to the debate on the aforesaid enactment, the Lok Sabha also debated the Commercial Divisions Bill. Minor amendments were moved and were accepted. Check out the Lok Sabha debates page. 

I am also surpised how the recent decision of the Delhi High Court reading down Commercial Appellate Divisions as Commercial Division did not come up in the debate at all. This clearly shows the disconnect between our Parliamentarians and our courts. (See, Ascot Estates v Bon Vivant, dt. 10.12.2015 where the Delhi High Court read down ‘Commercial Appellate Division’ as ‘Commercial Division’ in Section 10 of the Ordinance) 

The Lok Sabha debates on the Commercial Divisions Bill and the Arbitration Bill can be accessed from here.

Monday, December 7, 2015

RTI Act Overrides Arbitration & Conciliation Act but Conciliation Proceedings Are Confidential: CIC

The Chief Information Commission passed an order dt. 08.08.2015 in Rama Aggarwal v. Delhi State Legal Services Authority holding that notwithstanding that the Right to Information Act, 2005 overrode the provisions of the Arbitration and Conciliation Act, 1996, conciliation proceedings were confidential in nature and that the Public Information Officer was not bound to disclose information relating to, or pertaining to, conciliation proceedings in view of Sections 8(1)(e) and 8(1)(j) of the Right to Information Act, 2005.

Factual Background:

Anil and Rama Aggarwal had marital issues and were referred to the Delhi State Legal Services Authority for counselling and conciliation. Later, Rama Aggarwal filed proceedings under the Protection of Women from Domestic Violence Act, 2005 and for divorce. Rama Aggarwal filed an RTI application seeking, among other things, information pertaining to the conciliation proceedings before the Delhi State Legal Services Authority. The PIO of the Delhi State Legal Services Authority and the First Appellate Authority rejected the application (in respect of those queries on the conciliation proceedings).

Question before the CIC

On appeal, the CIC had to decide whether the PIO and the First Appellate Authority were wrong in denying information on conciliation-related proceedings. 

Decision of the CIC:

The CIC took into consideration the relevant provisions under the Hindu Marriage Act, 1955, the UNCITRAL Conciliation Rules (Article 14), the Arbitration and Conciliation Act, 1996 (Sections 70, 75 & 81), the (Delhi) Mediation & Conciliation Rules, 2004 (Rules 20 and 21) and the decisions of the Supreme Court in Haresh Dayaram Thakur v Maharashtra AIR 2000 SC 2281 and Moti Ram v. Ashok Kumar.

The CIC, after discussing Section 75 of the Arbitration & Conciliation Act, 1996 (1996 Act) which provides that notwithstanding anything to the contrary, the parties shall keep all matters relating to the conciliation proceedings confidential, stated that the RTI Act will definitely override the 1996 Act (irrespective of the non-obstante clause).

At the same time, the CIC held that conciliation proceedings would be exempt from disclosure on the ground that information in conciliation proceedings were made available in conciliation proceedings owing to the fiduciary capacity of the conciliator (and the institution administering conciliation). The CIC held:

"As per the traditional definition, a ‘fiduciary’ is a person who occupies a position of trust in relation to someone else, therefore requiring him to act for the latter's benefit within the scope of that relationship. Anything given and taken in confidence expecting confidentiality to be maintained will be information available to a person in fiduciary capacity. Therefore communication made during conciliation proceeding between the parties and also communication between mediator and other parties, qualifies to be made in fiduciary capacity."

Hence, the Court held that the PIO could refuse disclosure of information under Section 8(1)(a) of the RTI Act, which exempts disclosure on the ground that the information was made available to a person in his fiduciary relationship. 

The CIC also held that the proceedings of mediation related to personal information and the disclosure of the same would cause unwarranted invasion of the privacy of the individual concerned, which is a ground for refusing information under Section 8(1)(j) of the RTI Act. 

The CIC also recognised that disclosure of such information on account of larger public interest was allowed but held that it was in larger public interest that alternative dispute resolution (including mediation) proceedings are kept confidential. The CIC held that if mediation proceedings are allowed to be disclosed under the RTI Act, this would result in the parties not adopting such mechanisms thereby resulting in the burdening of the courts. The CIC also held that conciliation proceedings would also include counselling proceedings between spouses. 

On the basis of the above reasoning, the CIC rejected the appeal.

Key Takings:

The decision is correct in holding that mediation proceedings between private persons cannot be disclosed under the RTI Act as this would result in invasion of privacy and persons choosing court based dispute resolution. One of the chief reasons for choosing mediation and other ADR mechanisms is confidentiality. However, question arises whether mediation proceedings between the State and a private person could be afforded the same protection. The question is complicated and requires consideration but this blawgger would lean in favour of disclosure at least after the resolution of the dispute between the State and the private person.

Secondly, Section 22 of the RTI contains a non-obstante clause; so does Section 75 of the 1996 Act. Despite the conflict, the CIC did not provide justification(s) why the RTI Act overrode Section 75 of the 1996 Act. Nevertheless, the decision of the CIC is correct. Perhaps, it could have justified the same by referring to the ratione of the RTI Act and that the RTI Act was a later law.

The CIC has rightly balanced the need for confidentiality of mediation proceedings and the requirement of disclosure under the RTI Act. 

[A subsidiary point is that the CIC has stated that conciliation and mediation are interchangeable expressions thereby adding another authority on the vexing distinction between conciliation and mediation in Section 89 of the Code of Civil Procedure, 1908.]

Saturday, December 5, 2015

Rajasthan High Court Interprets and Applies the Arbitration & Conciliation (Amendment) Ordinance, 2015

Union of India & Anr v. Rajasthan Micro & Small Enterprises Facilitation Council & Anr decided by the High Court of Rajasthan at Jaipur could be one of the earliest decisions interpreting and applying the the Arbitration & Conciliation (Amendment) Ordinance, 2015.

The second Respondent in this case had filed an application before the Rajasthan MSMEFC (Micro & Small Enterprises Facilitation Council) claiming certain amounts before the MSEFC. Union of India- Railways filed a Writ Petition in 2013 before a Single Bench of the Rajasthan High Court arguing that the MSEFC had no jurisdiction since there was an arbitration clause in the Agreement between the parties and that the appropriate remedy for the second Respondent was invoking arbitration under the Arbitration & Conciliation Act, 1996. The Single Judge rejected the contention of the Writ Petitioner and dismissed the Writ Petition.

Against the dismissal, the Petitioner appealed to a Division Bench of the High Court. The Division Bench rejected the Writ Appeal on two grounds. The first ground was that the MSEFC had jurisdiction to entertain such an Application by the Second Respondent. The second ground was on the basis of the Arbitration and Conciliation (Amendment), Ordinance, 2015. 

The Court took support from the amendment Section 12(5) of the Arbitration and Conciliation Act, 1996 which reads as below:

"Notwithstanding any prior agreement to the contrary, any person whose relationship, with the parties or counsel or the subject matter of the dispute, falls under any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator."

The Court also quoted Item 1 of the Seventh Schedule (newly inserted by the Ordinance) which reads: "The arbitrator is an employee, consultant, advisor or has any other past or present business relationship with a party."

Based on the above provisions, the court held that the second Respondent cannot be directed to seek remedy under the amended 1996 Act since the arbitration clause provided for appointment of an employee of the Appellant as the arbitrator and such employee would be ineligible to be appointed as arbitrator.

The aforesaid decision is perhaps one of the earliest decisions on the applicability of the 2015 Ordinance. The following points are noteworthy in this regard:
  • The approach of the Court in stating that the MSEFC per se had jurisdiction is correct. 
  • However, the reliance on the second ground is not correct: In principle, merely because the arbitration clause provides for appointment of the employee of a party as arbitrator would not make the entire clause unenforceable. The decision of the High Court should not be read as holding that the arbitration clause itself was unenforceable.
  • A court which is faced with the question of enforceability of such a clause (post the amendments) should take an approach similar to the one taken in  Denel Prorpietory Limited v. Ministry of Defence. The court should sever the portion of the clause referring the parties to arbitration from the portion of the clause appointing a party's  employee as arbitrator. An alternative, approach would be to apply such a method to arbitration clauses entered into after 23 October 2015. The former approach seems a better one considering that appointment of a neutral arbitrator would only make the process fair, which is the intent of the amendments and is the approach taken by the High Court as well (in applying the Ordinance to an arbitral clause which was agreed upon much prior to the Ordinance. 
  • It is likely that the phrase "business relationship" is proposed to be given an ejusdem generis construction. In other words, it could be argued that the scope of "business relationship" is restricted by the use of the phrase "employee, consultant, advisor". However, considering the intent and spirit behind the provision (in making the arbitral process fair), "business relationship" should be given the meaning: "occupation, profession, or trade".

Monday, November 16, 2015

Holier than thou, cow.

Cow has become a hazardous subject to be handled cautiously, capable of igniting the frenzy of a mob to lynch or deny nationhood by being verbally deported to another nation. The image of this docile animal has been strategically used to polarize people to achieve ulterior purposes.

Cow has been historically used as an identity symbol to distinguish from Muslim rulers by the re-emerging Hindus of 19th century, who followed the consciousness of medieval period which proscribed beef eating, pertinent only for upper caste Hindus. The shift to preservation of cattle is associated with agrarian expansion of which caste Hindus where the major benefactors. The influence of Buddhist principle of ahimsa and its cooption is also argued to be another strand that endowed the moral dimension to this preservation angle. Cow protection historically therefore has less to do with ‘holiness’ of cows but more with economics. (See, ‘The Myth of Holy Cow’ by D.N Jha; W Norman Brown, “The Sanctity of Cow in Hinduism”, EPW, February 1964).

Analysis on the objective and rationale of cattle preservation/cow protection laws could provide an impassionate sense of laws logic and contrast it with the current high-pitched hyperbole on ‘holy cow.’  The legal regime is located in two major fields, Constitution of India and States laws under Entry 15 of the Seventh Schedul. There are few relevant judicial decisions connected with the prevailing issue.

Constitution of India, besides Entry 15, deals with the topic of cows in Article 48. While speaking in Constituent Assembly on current Article 48, Pandit Thakur Das Bhargava reflected the Assembly’s attitude in the following words, “[w]e have practically substituted this article for the article which other Members wanted from a religious point of view. It is now simply a utilitarian measure but still a measure in which the religious sentiments of crores of people are involved.”  The Directive Principle of State Policy urge the states to ‘endeavour to organise agriculture and animal husbandry on modern and scientific lines and shall, in particular, take steps for preserving and improving the breeds, and prohibiting the slaughter, of cows and calves and other milch and draught cattle.’ The tenor of the directive is writ large in the mandate to the states. The objectives are agriculture and animal husbandry. The prohibition of slaughter is of cattle that have one common character, productiveness. It is both arduous to locate holiness of cows in Article 48, and unreasonable to force the States to legislate to prohibit slaughter of cows because it is sacred, as Article 48 is not drafted to protect the ‘divine cow’ but an agricultural benefaction.

There is also a very plausible contextual explanation for the placement of cattle protection norm in Directive Principles of State Policy. It was a time when the demand for cow protection were gaining momentum and getting violent. Given the liberal fa├žade of the Constituent Assembly, it was difficult to bring the non-secular cow protection directly into the basic document that they strategically positioned it in Directive Principles. Entry 15 that give the mandate of ‘preservation, protection and improvement of stock and prevention of animal diseases; veterinary training and practice’ to States to legislate, leave it upon the States to decide the content of the laws in ursuance of the directive under Article 48 and within the legislative competency under Entry 15.

Out of 36 States and Union Territories of India, 29 States and Union Territories have laws prohibiting slaughter of cows. Out of which except three, Indian National Congress have prime authorship. Majority of these Act are title as cattle/animal preservation as opposed to six which have prohibition of cow slaughter in its title. The nomenclature distinction is highlighted only to augment the point of focus of these legislations.  Of all the cow related laws, it is the Delhi legislation, that was fully drafted by the Bharatiya Janatha Party, though the Rajasthan and Gujarat laws have seen amendments in respective laws during BJP regime tightening up existing laws by enhancing punishments and also prohibiting export of cows for slaughter out of state.

The Delhi legislation covers cows and calves of cows of all ages, bulls and bullocks. The law titled Delhi Agricultural Cattle Preservation Act 1994 has the declared objective to ‘provide for the preservation of animals suitable for milch, draught, breeding or agricultural purposes,’ which ostensibly stands far from the holiness of species. There are certain state laws that specifically target to prohibit slaughter of cows and not the wider range of agricultural cattle like the Punjab Prohibition of Cow Slaughter Act 1955, Uttar Pradesh Prevention of Cow Slaughter Act 1955. Both these enactments have similarly worded objectives that is, ‘to prohibit the slaughter of cow and its progeny in ...’.

The above analysis is taken up with an idea to indicate where the law stands. The cow slaughter laws may be a compromise to placate the hardliners but it has so far not endorsed the religious sentiments outwardly, nor these laws permit trading of human souls for those of cows. The laws of India so far hold the life of humans valued than cow. 

Wednesday, November 4, 2015

Breaking (!) Ban on Penalty Clauses Survives! UK SC in Cavendish Square Holding v Talal El Makdessi

Regular readers of this Blog would be aware of the recent post on the UK Supreme Court's case of Cavendish Square Holding BV v Talal El Makdessi (Earlier posts on case in this blog can be accessed from here and here.). The issues involved in this case are:
  1. Whether the rule against penalties applies to commercial contracts between sophisticated parties.
  2. If the rule does apply to such contracts, whether clauses 5.1 and 5.6 are within the scope of the rule.
  3. If the clauses are within the scope of the rule against penalties, whether the Court of Appeal was wrong to conclude that they were penal and therefore unenforceable.
In this case, it was contended  by one of the parties that the rule against penalties should go as a whole irrespective of whether the contract was a commercial contract. The UK SC would be authoritatively ruling on the rule against penalties which, rudimentarily put, restricts damages to the actual losses suffered and has been established for more than two centuries.

The Supreme Court has decided the case today (04.11.2015). Following is a summary of conclusions of the court on the rule against penalties (as taken from the UK SC Press Release):

1) The penalty rule is an “ancient, haphazardly constructed edifice which has not weathered well” but has stood the test of time. Similar rules exists in all all other developed systems of law.
2) Therefore, it should not therefore be abolished. At the same time, it should not also be extended unnecessarily.
3) Penalty clauses not merely apply to clauses relating to money penalties but also to obligations to transfer assets, or clauses where one party forfeits a deposit following its’ breach of contract.
4) The concepts of ‘deterrence’ and “genuine pre-estimate of loss” in determining whether a clause is a penalty or not are not relevant.
5) The true test, according to Lord Mance, is whether the impugned provision is a secondary obligation which imposes a detriment on the contract-breaker out of all proportion to any legitimate interest of the innocent party in the enforcement of the primary obligation.
6) The method of applying this test is as follows:
a) The first step is to consider whether any (and if so what) legitimate business interest is served and protected by the clause, and if so,
b) whether the provision made for that interest is extravagant, exorbitant or unconscionable.
7) The test to determine penalty clauses, according to Lord Hodge, is whether the sum or remedy stipulated as a consequence of a breach of contract is exorbitant or unconscionable when regard is had to the innocent party’s interest in the performance of the contract. A clause, according to Lord Hodge, fixing a level of damages payable on breach will be a penalty if there is an extravagant disproportion between the stipulated sum and the highest level of damages that could possibly arise from the breach.

The judgement can be accessed from here. The Press Summary of the UK Supreme Court can be accessed from here. More on this judgement and the Bunge SA judgement in the next few posts in this blog.

Tuesday, November 3, 2015

Judgement Cavendish Square Holding BV v Talal El Makdessi to be Delivered Tomorrow

Early August, we had blogged about the case of Cavendish Square Holding BV v Talal El Makdess pending before the UK Supreme Court. We had stated that the decisions would have huge ramifications on international commerce. For the issues involved, see the linked post. UK SC blog reports that the judgements would be delivered tomorrow. We will keep readers posted on this case.

We would also like to draw the attention of the readers to a recent decision, again, of the UK SC which deals with determination of market price for damages in cases of anticipatory breach. A prima facie reading of this judgement [Bunge SA v Nidera BV [2015] UKSC 43] indicates that the decision may provide a restatement of the legal basis of risk purchase/ risk and cost contracts and is therefore worth noting. The case comment of the decision in Bunge v. Nidera can be accessed from here.

Wednesday, October 28, 2015

Is the New Arbitration and Conciliation (Amendment) Ordinance, 2015 Prospective or Retrospective?

Readers may be aware that the President of India has promulgated a new Ordinance amending the Arbitration and Conciliation Act, 1996. For those who are coming across this news for the first time, please read this post. Many of the reforms of the Law Commission of India have been incorporated while many have not been retained in the Ordinance.

One such provision which has not been retained in Section 85A (Transitory Provisions). Section 85A as suggested by the Law Commission's 246th Report reads as below:

"Transitory provisions .—(1) Unless otherwise provided in the Arbitration and Conciliation (Amending) Act, 2014, the provisions of the instant Act (as amended) shall be prospective in operation and shall apply only to fresh arbitrations and fresh applications, except in the following situations -
(a) the provisions of section 6-A shall apply to all pending proceedings and arbitrations. 
Explanation: It is clarified that where the issue of costs has already been decided by the court/tribunal, the same shall not be opened to that extent.
(b) the provisions of section 16 sub-section (7) shall apply to all pending proceedings and arbitrations, except where the issue has been decided by the court/tribunal.
(c) the provisions of second proviso to section 24 shall apply to all pending arbitrations.
(2) For the purposes of the instant section,—
(a) "fresh arbitrations" mean arbitrations where there has been no request for appointment of arbitral tribunal; or application for appointment of arbitral tribunal; or appointment of the arbitral tribunal, prior to the date of enforcement of the Arbitration and Conciliation (Amending) Act, 2014.
(b) "fresh applications" mean applications to a court or arbitral tribunal made subsequent to the date of enforcement of the Arbitration and Conciliation (Amending) Act, 2014."

Note that the aforesaid provision was clear in its retrospective operation. Hypothetically assuming Section 85A was inserted by Ordinance, if one were to pose a question whether the restricted ground of setting aside a domestic award not arising out of an international commercial arbitration would apply to pending proceedings, one would state that the Ordinance would apply only to fresh applications, that is those applications (including for setting aside such an award) which have been filed subsequent to 23 October 2015 (date of the ordinance).

Unfortunately, Section 85A has not been incorporated in the Ordinance. If so, what are the consequences? Would the restricted ground of setting aside a domestic award not arising out of an international commercial arbitration apply to pending applications?

This is really a hard case. Arguments in the affirmative and in the negative are equally convincing. But the following may be worth noting:

  • Section 1(2) of the Act states that the Ordinance shall come into force immediately. 
  • There are certain aspects which the Ordinance itself states it will not affect. For instance, arbitrators previously appointed (S. 9 of the Ordinance amending Section 12 of the Act). 
  • In respect of most other provisions there is no express mention. 
  • Considering the need for urgent reforms, one could reasonably argue that the provision is intended to apply to even to pending proceedings and applications, wherever the language of the Ordinance suggests. For instance, Section 18 of the Ordinance CLARIFIES that patent illegality would not be a ground for setting aside foreign awards. The language supports even pending applications (and possibly appeals against such applications?)
  • Similarly 18(II) eliminates error of law or of fact as a ground to set aside arbitral awards. There is no mention regarding prospectivity. Even in such cases, the courts would (should) apply the Ordinance even to pending applications. The policy argument is the need for reforms and the urgency with which the same has been promulgated especially without incorporating a provision akin to Section 85A. The logical corollary of this would be that in case the language of a provision does not support application to pending proceedings, then it cannot be (and should not be) extended. For instance, 18(III) inserts the requirement that an application shall be filed only after issuing prior notice. Obviously, the act of filing an application to set aside an award would have been an accomplished fact in pending applications.

Of course, there is this well established principle of statutory interpretation that unless an Act expressly/ clearly provides for retrospective operation, it is prospective in nature. 

This issue is likely to result in different views from different courts.  Ideally, if the language of the Ordinance supports application of a provision to proceedings/ applications, it should apply notwithstanding the pendency unless it would result in manifest injustice. If the language does not support application to pending proceedings/ applications, it should apply prospectively. 

Sunday, October 25, 2015

Major Commercial Law Reforms Introduced in India

The President of India has promulgated two ordianances bringing into force sweeping amendments to the Arbitration and Conciliation Act, 1996 and introducing Commercial Courts (see our previous post on the previous Commercial Divisions Bill) in every District in India. The Ordinances can be accessed from here and here. If these amendments are passed subsequently in the Winter Session of the Parliament, these developments are likely to go a long way in reforming commercial dispute resolution in India. Once reforms on procedural law are in place and effective, India can look at reforming its substantive contract law. An extremely interesting period for Indian commercial law.

Monday, October 5, 2015

Golden Opportunity to Reconsider HPHUDA v RS Rana Lost

Followers of Indian arbitration and readers of this blog (here) would be well aware of the decision of the Supreme Court in HPHUDA v RS Rana (2012) where the court held that if the award amount (which is the subject of challenge under Section 34 of the Arbitration and Conciliation Act, 1996) or under Section 37 of the said Act) where the court held that deposit of the Award Amount in the court amounted to payment to the Respondent and hence, the party challenging the arbitral award was not obligated to pay post-award interest from the date of deposit in case if the challenge proceedings ultimately failed.

Recently, the Supreme Court had the occasion to consider a similar plea as made in HPHUDA in the case of Union of India v. MP Trading & Investment Rac. Corp. Ltd. (28.09.2015). In the course of challenge proceedings, the High Court directed the Award Debtor to deposit the award amount in court. On deposit of the same, the Award Holder applied to the court that the deposit be converted into fixed deposit. The Court passed directions as prayed for.

Before the Court, Union of India relied on HPHUDA and argued that once the amount was deposited and interest accrued on the fixed deposit, the Respondent was not entitled to any interest. The Court agreed in principle with Union of India and held that the Award Holder was entitled to interest as per award from the date of award till date of deposit and "shall be entitled only to the interest accrued on the principal amount in terms of the Fixed Deposit made as per the direction of the High Court."

There was a subsidiary point that the Award Debtor did not deposit the entire amount in court, for which the Supreme Court held that the Award Holder would be entitled to interest as per the award for that amount.  

In holding so, the Supreme Court has lost a golden opportunity to reconsider the law as held by the Supreme Court in HPHUDA case. HPHUDA was decided wrongly for the following reasons:

a) Allowing the Award Debtor to save on post-award interest by permitting him to deposit the Award Amount or a part thereof in the court would be unjust on the Award Holder as the latter would be denied the benefit of the Award Amount till the challenge is ultimately decided.

b) The court in HPHUDA created a legal fiction whereby deposit of the Award Amount in the court even without the amount reaching the Award Holder amounted to payment. This legal fiction is without backing of statute or precedent.

c) Since HPHUDA denies the Award Holder the fruits of the Award for the period of challenge, it is contrary to the objective of award of interest: to compensate the claimant for the unjustified retention of money. The Award Debtor may simply deposit the Award Amount in court and keep at the challenge thereby denying the benefit of the Award Amount to the Award Holder for several years.

d) Interest also acts as a negative incentive on the Award Debtor to challenge to the award unnecessarily or on flimsy grounds. Such a negative incentive will cease to exist if no interest is imposed on deposit till the challenge proceedings come to an end. This would provide fillip to unnecessary challenge to arbitral awards and would lead to results antagonistic to the concept of finality of arbitration, which is one of the chief characteristics of arbitration.

For the aforesaid reasons, HPHUDA needs to be reconsidered. The Supreme Court has lost a golden oppportunity in reconsidering the correctness of HPHUDA. For the aforesaid reasons, it should, if at all such an issue arises in future.

For critiques of HPHUDA, see here and here.
 
[There is a typographical error in the MP Trading Judgement- In the second para, it reads "Arbitration and Conciliation Act, 1956" when it should read as "1996".]

Friday, August 28, 2015

Whether a Section 9 Petition Can be Disposed of Ex Parte: Full Bench of Hyderabad HC

In a recent judgement in East India Udyog Ltd. v. Maytas Infra Ltd., a Full Bench of the Hyderabad High Court had to decide whether a court hearing a petition under Section 9 of the Arbitration and Conciliation Act, 1996 could dispose of the same ex parte. The entire list of questions that was referred to the Full Bench is quoted below:

"a) Whether the Court as defined under Section 2 (e) of the Act, is entitled to dispose of the application filed under Section 9 of the Act before initiation of the arbitral proceedings under section 21 of the Act, ex- parte without giving notice to the respondents, if the facts and circumstances so warrant?
b) Whether the Court as defined under Section 2 (e) of the Act, is entitled to grant any interim order pending disposal of the interim measure application under Section 9 of the Act?
c) Whether further application pending disposal of the interim measure under Section 9 of the Act, is maintainable?
"
 
Answering the above questions, the court held that a petition under Section 9 cannot be disposed of ex parte but the court could issue an ad interim ex parte order pending the proceedings under Section 9. In holding so, the court affirmed the already settled law that the powers of the court under Section 9 are akin to that of a court hearing applications for interim orders under the Code of Civil Procedure (for a more nuanced implication of this aspects, see paras 16 to 16.3 of the aforesaid decision.
 
The Full Bench of the Hyderabad HC answered the reference in the following manner:

"The Court as defined under Section 2(e) of the Act, is undoubtedly entitled to dispose of the application filed under Section 9 of the Act even before initiation of the arbitral proceedings under Section 21 of the Act. The Court, however, cannot dispose of such application ex parte without giving notice to the respondents, but Court can pass ex parte ad interim order pending the application filed under Section 9 of the Act."

Sunday, August 16, 2015

National Law School of India Review - Call for submissions


Call for Submissions - National Law School of India Review, Vol. 28(1)

The National Law School of India Review (NLSIR) is now accepting submissions for its upcoming issue- Volume 28(1).  The most recent issue of the NLSIR, Vol. 27(1), will feature contributions by Dr. Catherine Seville, Reader, Newnham College, University of Cambridge, Dr. Wayne Courtney, Associate Professor, University of Sydney, and Prof. Afra Afsharipour, Professor of Law, UC Davis School of Law among several others. Moreover, in August 2009, NLSIR attained the unique distinction of being the only Indian student-run law journal to be cited by the Supreme Court of India, in Action Committee, Un-Aided Private Schools v. Director of Education. NLSIR has also recently been cited in Justice R. S. Bachawat's Law of Arbitration and Conciliation, a leading treatise on arbitration law in India. 

Papers may be submitted under the following categories:


1.    Long Articles: Between 5000 and 8000 words, inclusive of footnotes. Papers in this category are expected to engage with the theme and literature comprehensively, and offer an innovative reassessment of the current understanding of that theme. It is advisable, though not necessary, to choose a theme that is of contemporary importance. Purely theoretical pieces are also welcome.

2.    Essays: Between 3000 and 5000 words, inclusive of footnotes. Essays are far more concise in scope. These papers usually deal with a very specific issue, and argue that the issue must be conceptualized differently. They are more engaging, and make a more easily identifiable, concrete argument.

3.    Case Notes and Legislative Comments: Between 1500 and 2500 words, inclusive of footnotes. This is an analysis of any contemporary judicial pronouncement or a new piece of legislation whether in India or elsewhere. The note must identify and examine the line of cases in which the decision in question came about, and comment on implications for the evolution of that branch of law. In case of legislative comment the note must analyze the objective of the legislation and the legal impact the same is expected to have.

Authors are requested to note that pieces engaging with a foreign theme or legal development,  in any of the above categories, should also explain its relevance in the Indian context, whether by virtue of similar laws or otherwise.

Submissions are preferred in Times New Roman font, double-spaced. Main text should be in font size 12 and footnotes in font size 10. All submissions must be in doc.x format. The review uses only footnotes (and not end-notes) as a method of citation. Submissions must conform to the Bluebook (19th edn.) system of citation.

The NLSIR only accepts electronic submissions. All submissions should contain the name of the author, professional information, the title of the manuscript, and contact information. The last date for submissions to Volume 28(1) is November 30, 2015. Submissions may be emailed to mail.nlsir@gmail.com under the subject heading '28(1) NLSIR - Submissions'.




Saturday, August 1, 2015

Cavendish Square Holding BV v Talal El Makdessi: A Judgement Eagerly Awaited

One of the most closely watched cases in the recent times from a commercial law perspective is the case of Cavendish Square Holding BV v Talal El Makdessi pending before the UK Supreme Court. The hearings were complete on 23.07.2015 and the decision of the court is awaited. The issues involved in the case are the following:
  1. Whether the rule against penalties applies to commercial contracts between sophisticated parties.
  2. If the rule does apply to such contracts, whether clauses 5.1 and 5.6 are within the scope of the rule.
  3. If the clauses are within the scope of the rule against penalties, whether the Court of Appeal was wrong to conclude that they were penal and therefore unenforceable.
The most interesting thing about the case is the Appellant principal that the rule against penalties should cease to be applicable is not only in respect of commercial contracts between sophisticated parties which were negotiated at arm's length but the Appellant questions the whole doctrine against penalties itself. The decision would have huge ramifications in international commerce. See the UK SC page on the case. The vidoes of the hearings beginning from the hearing held on 21.07.2015 are available here. The videos depict a fascinating picture of how hearings take place in the UK SC.

Hat tip: The UK SC Blog

Saturday, July 25, 2015

Indian Journal of Arbitration Law: Call for Papers

Call for papers from the IJAL (Indian Journal of Arbitration Law)

Call for Papers
The Indian Journal of Arbitration Law is a biannual, student reviewed Journal by the Centre for Advanced Research and Training in Arbitration Law of National Law University, Jodhpur.
National Law University, Jodhpur, one of the premier law schools in India, is taking successful initiatives for the promotion of areas related to the specialized fields of law. To strengthen the promotion of knowledge, research and legal interaction in the subject of arbitration law, it has established the Centre for Advanced Research and Training in Arbitration Law. The Indian Journal of Arbitration Law is one such initiative of this centre towards the development of this expert legal arena.
The Journal strives to inculcate the prevalent theories in the field of arbitration with their practical relevance. The editorial board seeks to achieve this feat by including contributions from individuals with varied expertise of practicing arbitration and by focusing on developing trends. In this regard, the board would give due emphasis to the rich thought processes of students of law, who bring to the forefront the innovative academic research currently underway in most law schools all over the world. Inclusion of changing regional trends will play a vital part in understanding the scope and extant of this discipline and would therefore find due importance in the Journal.
The Indian Journal of Arbitration Law is pleased to announce its upcoming issue (Volume 4: Issue 2), which is to be published in January, next year. As this issue will have no theme, submissions can be on any contemporary issue.
The Board of Editors cordially invites original, unpublished submissions for publication in the following categories:
- Articles
- Notes
- Comments
- Book Reviews
Manuscripts may be submitted via email to editor.cartal@gmail.com latest by 30th September, 2015.

For further details regarding Editorial policy and submission guidelines please visit the website here.