Is this the End of N. Radhakrishnan v. Maestro Engineers? Swiss Timing v Organising Committee

Recently, a Single Judge of the Supreme Court of India held in the case of Swiss Timing v. Organising Committee, Commonwealth Games 2010 (28.05.2014) that N. Radhakrishnan v. Maestro Engineers where it was held that where allegations of fraud are involved, such disputes are not arbitrable, was rendered per incuriam. SS Nijjar, rejecting the preliminary objections of the Respondent held that even if criminal cases were pending regarding the alleged corruption, the dispute pertaining to termination of contract and non-payment of dues under the contract was arbitrable.

The Single Judge held that the observations in Maestro Engineers that allegations of fraud and serious malpractices cannot be referred to arbitration but can only be settled in court ran counter to the ratio of HPCL v. Pinkcity Midway Petroleums where it was held that where there was an arbitration clause, the matter is to be referred to arbitration in view of the mandatory language of Section 8. The Single Judge held that although Maestro Engineers made reference to the above judgement but failed to distinguish the said decision from the facts in Maestro Engineers. The court also held that Raju v Raju which held in the same lines as Pinkcity was not even brought to the attention of the court in Maestro Engineers.

The court also held that Maestro Engineers was per incuriam for another reason- it failed to take note of the provisions in Section 16 of the Arbitration and Conciliation Act, 1996 which provided that the arbitral tribunal was competent to rule on its own jurisdiction, including on the question as to the existence or validity of the arbitration agreement.

Two observations on this development: one, recently, the Supreme Court in  WSG (Mauritius) Ltd. v. MSM Satellite (Singapore) Pte. Ltd effectively held Maestro Engineers inapplicable in foreign arbitrations in the context of Section 45. This decision effectively sounds the death knell on the operability of Maestro Engineers in the domestic context. Two, SS Nijjar, J. held that Maestro Engineers was per incuriam because it failed to take note of Section 16. Wasn't SBP & Co. v. Patel Engineering guilty of the same failure?

Announcement: 7th Nani Palkhivala Foundation Taxation Law Essay Competition, 2014

The National Law School of India Review (NLSIR), the flagship journal of the National Law School of India University (NLSIU), Bangalore, in association with the Nani Palkhivala Memorial Trust is pleased to announce the release of topics for the 7th Nani Palkhivala Foundation Taxation Law Essay Competition. The competition is open to current students of law in any college or university in India.

Topics:

1. Can "Aspect Theory" Justify Overlapping of Central and State taxes?

2. Base Erosion and Profit Sharing (BEPS) - Issues and Solutions

Nations across the globe are increasingly looking at ways and means of preventing the erosion of their tax bases by entering into multilateral agreements and reforming municipal law, including transfer pricing regulations. In 2013, the OECD released two reports capturing the debate in this field. The lack of uniform standards and ancillary issues of dispute resolution and tax treaty obligations have further complicated the contours of this issue. Authors are expected to identify and deal with the key problems in this area and suggest mitigation measures as well.

Word limit: 3500 words (inclusive of footnotes)

Deadline: 20^th June, 2014 i.e. 23:59 pm on 19^th June, 2014

Prize Money: First Prize - ₹ 6,000
                      Second Prize - ₹ 4,000
                     Third Prize - ₹ 2,000

Joint authorship is not allowed. There is no specific mode of citation to be followed, but citations should be uniform. Please send the essay and author information in separate files. The essay must not contain any identification of the author. Plagiarism will result in disqualification. For any further details or queries, please contact National Law School of India Review (NLSIR) at: mail.nlsir@gmail.com.

SC Withdraws Appointment of Foreign Arbitrator in D6 Cost Recovery Arbitration

In a recent post, we had commented on the judgement of the Supreme Court on Monday (31.03.2014) appointing a foreign arbitrator (Justice Spigelman, Australia) as the third and presiding arbitrator in the arbitration proceedings under the Production Sharing Contract between RIL Consortium (consisting of Reliance Industries Ltd., British Petroleum and Niko Resources) and the Ministry of Petroleum and Natural Gas, Government of India. The matter was once again mentioned in the Supreme Court on Wednesday (02.04.2014) by the counsel for the Government of India wherein it was contended that the arbitrator appointed by the Supreme Court was in fact the first in the list of arbitrators submitted by RIL Consortium. The counsel for RIL Consortium agreed and therefore the judge had no other option but to withdraw the order of appointment. 

The appointment became a controversy because the judge had in his judgement stated that he had conducted an independent "survey" in finding a suitable arbitrator. In the withdrawal order, the judge stated that a "substitute arbitrator shall be appointed subsequently by a separate order." The withdrawal order can be accessed from here. News reports on the withdrawal can be accessed from here and here. 

Supreme Court's Discordant Stance on the Law of the Arbitration Agreement

The Supreme Court of India has been vascillating between two views on the Law of the Arbitration Agreement: according to the first view, as held in NTPC v Singer (See this post) and recently in Sakuma Exports v Louis Dreyfus Commodities (28.03.2014) the proper law of the contract is chosen, in the absence of unmistakable intention to the contrary, the same would be the law of the arbitration agreement; the second view, as decided recently in Enercon GmbH v Enercon India (see this post), seems to follow the Sulamerica decision of the English Court of Appeal in seemingly taking a view that the law of the arbitration agreement would follow the seat than the proper law of the contract.

The merits and demerits of adopting either of these two approaches have been dealt with briefly in a previous post. We wish to address the following aspects connected with the Choice of the Law of Arbitration Agreement in a future series of posts:

1. What is the position in English law regarding the Choice of Law of Arbitration Agreement as explained in Sulamerica and subsequent decisions?

2.  What is the Indian law on the topic?

3. Why has the law of the arbitration agreement assumed significance in the recent times?

4. Was the law of the arbitration agreement given the same importance in the past?

5. What should be the further course of action for India?

Comments/ Guest posts/ links to relevant writings from readers are welcome on these questions.