India’s lower house of Parliament approves further amendments to the Indian Arbitration Act

As previously reported here, a draft Bill to amend the Arbitration and Conciliation Act 1996 (the “Act“) was approved by the Indian Cabinet on 7 March 2018 (the “Bill“). The Bill was listed as a part of the agenda for the monsoon session of the Indian Parliament and was passed by the Lower House on 10 August 2018, without any amendments. The text of the Bill can be found here.

The Law Minister has described the Bill as “a momentous and important legislation” aimed at making India “a hub of domestic and international arbitration”. The key features of the Bill are:

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MCIA recognised by the Supreme Court of India as an appointing institution

As previously reported here and here, the Mumbai Centre for International Arbitration (MCIA) was launched in October 2016, to promote institutional arbitration in India. The MCIA has been established as a joint initiative between the government of Maharashtra in India and the domestic and international business and legal communities.

In a first, of hopefully many pro-arbitration moves, we understand that the Supreme Court of India has invoked section 11 of the amended Indian Arbitration and Conciliation Act, 2015 (the Amended Act) and instructed the MCIA to appoint an arbitrator in an international dispute between Sun Pharmaceutical Industries Ltd (Indian company) and Falma Organics Limited (Nigerian company). This decision marks the first time that an Indian court has invoked section 11 of the Amended Act to designate an institution to assist with the appointment of an arbitrator.

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Law Commission of India proposes wide-ranging changes to the country’s arbitration regime

The Law Commission of India has proposed major amendments to the Arbitration & Conciliation Act, 1996 (the “Arbitration Act”) in order to remedy a number of perceived weaknesses and to stimulate growth in Indian arbitration as a platform for dispute resolution. Its full report is published here. Some of the highlights of the proposed amendments are as follows:

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Recent Developments in India-related international arbitration

Herbert Smith Freehills has issued the latest edition of its Indian international arbitration e-bulletin. This issue considers some significant decisions of the Indian courts, including two decisions on the arbitrability of fraud claims and a decision of the Supreme Court concerning the power of Indian courts to intervene in foreign-seated arbitrations.

The e-bulletin also reports on some interesting news stories on India-related arbitration claims, including the ongoing GMR-Maldives dispute and a decision on the termination of an arbitral tribunal’s mandate.

SIAC emergency arbitrator awards – a speedier route to interim relief before the Indian Courts?

The Singapore International Arbitration Centre (the SIAC) introduced emergency arbitrator provisions in its arbitration rules in July 2010 and has had 34 applications filed before it to date where parties have asked for an emergency arbitrator to be appointed. The SIAC further reports that 9 out of the 34 emergency arbitrator applications have involved Indian parties (5 where the Indian party was the respondent and 4 where Indian parties were both the claimant and the respondent).

An emergency arbitrator is typically approached by parties where the Tribunal has not been constituted and a party may require urgent interim relief including, amongst others, orders for preservation of properties, freezing accounts, orders against the dissipation of assets etc. Seeking relief from an emergency arbitrator is increasingly been chosen as an alternative to seeking injunctive relief from the courts (in support of the arbitration). According to statistics released by the SIAC, the average time taken by an emergency arbitrator to pass an award after having heard the parties ranges from 8-10 days, with the shortest period being 2 days to pass an award.

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Indian Supreme Court upholds ‘unworkable’ arbitration clause while ensuring that supervisory jurisdiction over the arbitration only lies with the Indian Courts

Adding to the welcome suite of recent pro-arbitration decisions from the Indian judiciary, the Indian Supreme Court in Enercon (India) Ltd and Ors v Enercon Gmbh and Anr,¹ applied the principles of severability of the arbitration clause from the underlying contract and referred a dispute to arbitration despite some flaws in the drafting of the arbitration clause.

On the facts, the Indian Supreme Court retained the Indian judiciary’s supervisory jurisdiction over the dispute by holding that the seat of arbitration was in India, despite London being chosen as the ‘venue’ of the arbitration. In making this determination, the Court was heavily swayed by the fact that the laws specifically chosen by the parties in the contract to apply to different aspects of the dispute were Indian laws, and that besides being designated as the ‘venue’ there was no other factor connecting the dispute to London. On this basis the court held that the English courts did not have concurrent jurisdiction over the dispute.

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Indian Supreme Court upholds ability of arbitrators to decide issues of fraud

In another pro-arbitration decision emanating from the Supreme Court of India in the case of World Sport Group (Mauritius) Ltd v MSM Satellite (Singapore) Pte Ltd,¹ the court referred to arbitration a dispute involving allegations of fraud. In doing so, the court read restrictively its previous decision in N Radhakrishnan v Maestro Engineering² – where it had held that issues of fraud fell more properly to be determined by courts. The court held that the interpretation given in Radhakrishnan applied only to domestic arbitration. The recent decision further reduces the risk of interference by courts in foreign-seated arbitrations.

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Recent Developments in India-related international arbitration

Herbert Smith Freehills has issued its latest Indian International Arbitration e-bulletin. The e-bulletin considers two pro-arbitration decisions from the Indian courts as well recent decisions rendered by the English High Court and the Singapore Court of Appeal. The e-bulletin also comments on the India-Pakistan Indus river arbitration and Singapore International Arbitration Centre’s 2012 Annual Report.

Please click here for a copy of our latest Guide to Dispute Resolution and Governing Law clauses in India-related Commercial Contracts.

High Court applies Sulamérica test in Arsanovia and gives rise to unexpected results

In December last year, the High Court upheld a challenge under section 67 of the Arbitration Act 1996 (the Act) in Arsanovia Ltd and others v Cruz City 1 Mauritius Holdings [2012] EWHC 3702 (Comm) and overturned an arbitration award on the ground that the Tribunal did not have substantive jurisdiction. The court was required to determine, by reference to the English common law conflict of law rules, the law applicable to the arbitration agreement in the absence of an express governing law. This was required in order resolve the issue of which law determined whether one of the claimants was party to the arbitration agreement.

In resolving whether to follow the law of the underlying contract (India) or the law of the seat (England) the court considered the Court of Appeal’s reasoning in the well-known cases of C v D and Sulamérica. Of particular note, the court factored in the exclusion by the parties of Part I of the Indian Arbitration and Conciliation Act 1996 (Indian Arbitration Act), and consequently held somewhat surprisingly that the parties had impliedly chosen the governing law to be Indian.

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Recent Developments in India-related international arbitration

Herbert Smith Freehills has issued its latest Indian International Arbitration e-bulletin. The e-bulletin considers the decision of the Supreme Court of India in Bharat Aluminium, as well as the recent decisions of the Delhi High Court concerning non-disclosure of interests by arbitrators and the power of the court to re-examine evidence under section 34 of the Indian Arbitration and Conciliation Act 1996.

Please click here for a copy of our latest Guide to Dispute Resolution and Governing Law clauses in India-related Commercial Contracts.