UNDERSTANDING ADR CLASS NOTES -

Class Notes - 07/08/2024: Alternative Dispute Resolution (ADR)

Overview of ADR

• Scope: ADR is primarily intended for civil disputes and does not apply to criminal offenses or matters
where open justice is required. This means that cases involving crimes, public interest matters, or
those needing public hearings should be handled through traditional court systems rather than ADR
mechanisms.

Historical Context of ADR

• Emergence in the USA: ADR developed in the United States as a response to the increasing burden
on the court system, particularly for political and civil disputes. The goal was to reduce the pressure
on the judiciary and offer individuals an alternative to formal court processes.

• Purpose of ADR: ADR seeks to facilitate a friendly settlement of disputes, emphasizing cooperation
and communication between the parties. It provides a more efficient and cost-effective way of
resolving conflicts, especially for cases that do not require a formal, adversarial process.

Recommendations in India for ADR

1. Law Commission of India - 14th Report:

• The Law Commission has recommended the adoption of ADR as a way to provide a simpler,
more affordable, and effective method for handling disputes. The aim is to ensure that
justice is accessible to all, including those who cannot afford long and complicated court
procedures.

2. Law Commission of India - 77th Report:

• The Commission emphasized that India, as an agrarian society, faces difficulties in following
the technical procedures of UK courts. As a result, ADR is seen as a better-suited method
for resolving disputes in India due to its informal nature and its ability to cater to the unique
societal context.

Key Legislative Frameworks for ADR in India

India has three main acts that regulate and facilitate the use of ADR:
 1. Arbitration & Conciliation Act: Governs arbitration and conciliation processes, providing a legal
framework for their implementation.

2. Legal Services Authority Act: Aimed at ensuring legal aid and promoting alternative dispute resolution
mechanisms for the underprivileged.

3. Section 89 of the Code of Civil Procedure (CPC): This section lays down the framework for
implementing ADR methods and mandates that courts promote and encourage ADR where appropriate.

Section 89 of the CPC - Methods of ADR

Section 89 specifically outlines five methods for resolving disputes:

1. Arbitration: A method where a neutral third party (the arbitrator) makes a binding decision after
hearing both sides of the case. This process is adjudicatory in nature, meaning it involves a decision-
maker who issues a binding ruling on the dispute.

2. Conciliation: A process where a neutral third party (the conciliator) assists the parties in reaching a
settlement. The conciliator may suggest terms of settlement, but the final decision rests with the
parties themselves.

3. Mediation: Similar to conciliation but generally less formal. A mediator facilitates communication
between the parties, helping them to arrive at a mutually acceptable solution. The mediator does not
impose a solution, but assists in negotiating one.

4. Judicial Settlement: A process where a judge facilitates the resolution of a dispute by encouraging
settlement between the parties, often in the form of an informal discussion or negotiation.

5. Lok Adalat: A community-based dispute resolution process where cases are heard by a panel of
judges or social workers. The goal is to reach a quick and amicable resolution, particularly for people
who cannot access regular courts.

Other ADR Methods

Apart from those specified under Section 89, other ADR methods include:

• Negotiation: Direct talks between parties involved in a dispute with the goal of reaching a mutually
acceptable agreement without third-party intervention.

• Online Dispute Resolution (ODR): A growing area where disputes are resolved using digital platforms
and technology. This method has gained popularity due to the increasing digitalization of society.

Nature of ADR Methods - Adjudicatory vs. Non-Adjudicatory

 • Arbitration is the only adjudicatory method listed under Section 89. This means it involves a formal
decision-making process where the arbitrator or panel makes a binding decision that resolves the
dispute.

• Mediation, Conciliation, Judicial Settlement, and Lok Adalat are non-adjudicatory methods. These
processes are informal and non-binding, meaning the parties have more control over the outcome.
The third parties (mediators, conciliators, or judges) act as facilitators but do not impose a decision.

Consent in ADR - A Key Principle

1. Arbitration: To initiate arbitration, all parties must consent to the process. This consent is often
formalized in an arbitration agreement. If no prior agreement exists, the parties may jointly apply to
the court to refer the matter to arbitration.

2. Conciliation: Like arbitration, conciliation also requires the consent of the parties to proceed. It is
generally voluntary, and the conciliator will only facilitate a settlement if both parties are willing.

3. Mediation, Judicial Settlement, and Lok Adalat: These processes may not require the formal written
consent that arbitration and conciliation do, but the willingness of the parties is still essential for the
process to succeed.

Key Characteristics of ADR:

1. Less Formal: ADR processes are generally more flexible and informal than traditional litigation, allowing
parties to interact directly with each other or with the help of a neutral facilitator.

2. Doctrine of Equity: ADR is based on the principle of equity, ensuring that the parties are treated
fairly and justly, and that decisions reflect a balance of interests rather than strict legal rules.

3. Direct Participation of Disputants: One of the core features of ADR is that the disputants themselves
participate directly in the process, unlike in litigation, where lawyers represent the parties. This
fosters open communication, helps in understanding the needs and concerns of both sides, and often
leads to more satisfactory outcomes.

4. Promotes Communication: ADR emphasizes dialogue and negotiation, enabling the parties to better
understand each other’s perspectives and collaboratively find solutions that may be more effective
than a judicial ruling.

Important Takeaways:
 • ADR is Civil-Only: ADR methods are intended only for civil disputes and are not appropriate for
criminal cases or cases involving public interest.

• Historical Significance: ADR emerged in the USA to ease the strain on courts and provide a more
amicable way to resolve disputes. Its use in India is based on recommendations to provide affordable
and effective justice, especially in an agrarian society.

• Core Acts: Key laws regulating ADR in India include the Arbitration & Conciliation Act, Legal Services
Authority Act, and Section 89 of the CPC.

• Methods of ADR: Arbitration is the only adjudicatory method under Section 89 of the CPC. The
rest—mediation, conciliation, judicial settlement, and lok adalat—are non-adjudicatory and focus
on settlementwithout imposing a binding decision.

• Consent is Key: Arbitration and conciliation require explicit consent from all parties to proceed,
ensuring that no party is forced into these processes.

• Main Features: ADR is characterized by informality, equity, and direct participation by the parties.
It fosters open dialogue and communication between disputants, often leading to better and more
mutually acceptable solutions.

Class Notes - 13/08/2024: Negotiation and Mediation

Negotiation: Overview and Process

• 5 Steps of Negotiation:

1. Disagreement: The initial conflict or dispute.

2. Communication/Dialogue: Parties begin engaging in discussions to understand each other’s

viewpoints.

3. Conflict and Identification of Interests: Understanding the deeper needs and concerns driving
the conflict.

4. Willingness to Find Common Ground: Both parties express a desire to resolve the conflict
by identifying mutual benefits.

5. Beneficial Outcome: Reaching a resolution that is satisfactory to both parties.

Roger Fisher's Perspective on Negotiation

• Definition: Negotiation is the process of resolving disagreements through communication. It is designed

to reach an agreement when the parties have both shared and opposing interests.

• Key Factors Influencing Negotiation:

• Skill: Negotiators' abilities in persuasion, listening, and compromise.

• Knowledge: Understanding of the subject matter and the interests of both sides.

• Preparation: Prior research and readiness to engage.

• Practical Problems: Real-world constraints or concerns that shape the negotiation.

• Acceptable Solutions: Solutions that are perceived as fair by both sides.

• Legitimacy: Ensuring fairness and justice in the process.

• Fairness: Both parties should feel that the process is just.

• Commitment: Ensuring that both parties are committed to following through on agreements.

• Relationship: Whether the relationship between the parties needs protection (e.g., ongoing
partnerships).

Seven Elements of Negotiation:

1. Interests: What do the parties truly want, considering both needs and desires?

2. Legitimacy: Fairness for both sides; ensuring the process is seen as just.

3. Relationship: Protecting or dissolving the relationship between the parties.

4. Alternatives: The BATNA (Best Alternative to a Negotiated Agreement) and WATNA (Worst
Alternative to a Negotiated Agreement). These help parties assess whether a negotiated agreement
is better than other options.

5. ZOPA (Zone of Possible Agreement): The overlap in acceptable terms for both sides, allowing for a
mutually beneficial negotiation.

6. Commitment: The process of formalizing an agreement, including demands, offers, and promises.

7. Communication Choices: The way information is conveyed—through medium, tone, and approach.

Mediation: Overview
 • Definition: Mediation is a flexible, confidential, and cost/time-efficient process for resolving disputes.
A mediatorfacilitates discussions between two parties to help them reach a mutually agreeable
solution. Unlike negotiation, mediation involves a third-party facilitator, but the mediator does not
impose a decision.

• Key Characteristics of Mediation:

• Flexibility: The process is adaptable to the needs of the parties involved.

• Confidentiality: The discussions remain private and cannot be used as evidence in future legal
proceedings.

• Cost and Time Efficiency: Mediation tends to be faster and less expensive compared to
litigation or arbitration.

• Role of the Mediator:

• The mediator helps facilitate communication between the parties to bring them to the same
page.

• They encourage mutual understanding and guide the parties to find beneficial outcomes
without being prejudiced.

• The mediator must disclose any conflicts of interest that could affect impartiality (as per
the Indian Mediation Act, 2023).

International Commercial Mediation: Singapore Convention on Mediation (SCM)

• Purpose: The Singapore Convention on Mediation (SCM) applies to international settlement

agreements arising from mediation that resolve commercial disputes.

• Article 1(1): The settlement agreement must have an international character—meaning at

least one party is from outside the country where the mediation takes place.

• Article 1(2): The agreement must be commercial in nature.

• Article 1(3): SCM does not enforce agreements that are already enforceable by judgment
or arbitral award.

• Article 3(1): The competent authority in the jurisdiction, like the Mediation Council of India,
enforces the agreement.
 • Article 3(2): Res Judicata applies, meaning the case cannot be brought again based on the
same facts after mediation.

• Grounds for Refusing Enforcement (Article 5(1)):

• Incapacity: If a party lacked the ability to consent to the settlement.

• Void/Inoperative Agreement: If the agreement is invalid under the law governing it.

• Serious Breach by Mediator: If the mediator acted improperly.

• Failure to Disclose Conflict: If the mediator failed to disclose any relevant conflict of interest.

• Contrary to Public Policy: If the agreement is against the public policy of the party state.

Indian Mediation Act, 2023

• Section 10: Discusses conflict of interest and disclosures required from the mediator. The mediator
must not have any stake in the outcome and must disclose any potential biases that could influence
their impartiality.

• The Indian Mediation Act, 2023 focuses on improving the efficiency of dispute resolution within
India, offering an alternative to lengthy litigation.

• Enforcement of Mediation Settlement: In cases involving international commercial disputes, if

mediation occurs outside of India, SCM applies. However, for domestic matters, the Indian Mediation
Act governs.

Important Takeaways:

• Negotiation Process: Negotiation is a five-step process starting with disagreement and ending with a
beneficial outcome for both parties. It is driven by communication, identification of interests, and
willingness to find common ground.

• Roger Fisher’s Negotiation Theory: Effective negotiation involves understanding interests, legitimacy,
alternatives (BATNA/WATNA), and commitment. Communication is key in reaching mutually
acceptable agreements.

• Mediation:

• Mediation is a flexible, confidential, and cost-efficient method for dispute resolution.

• The mediator helps facilitate communication without making decisions or imposing solutions.
 • In international commercial disputes, SCM governs enforcement, while for domestic disputes
in India, the Indian Mediation Act, 2023 applies.

• Singapore Convention on Mediation (SCM): Enforces international mediation agreements, but only for
commercial disputes. It provides clear guidelines on enforcement and exceptions, including when the
agreement cannot be enforced.

• Indian Mediation Act, 2023: Governs domestic mediation and sets out clear provisions on conflict
of interest and disclosures. For international disputes, the SCM is applied.

Class Notes - 17/08/2024: Indian Mediation Act, 2023

Overview of the Indian Mediation Act, 2023

The Indian Mediation Act, 2023 regulates the process of mediation within India, providing a framework for
resolving disputes through mediation rather than formal litigation or arbitration. It aims to increase the
efficiency and accessibility of dispute resolution by emphasizing informal, cooperative processes.

Types of Mediation under the Indian Mediation Act, 2023

The Act recognizes three types of mediation:

1. Court-Referral Mediation:

• This occurs when a court refers a matter to mediation. This usually happens when a dispute
is brought before the court, and the judge believes that mediation could be a more suitable
resolution method.

2. Contractual Mediation:

• This is mediation that occurs when parties agree to mediate their dispute through a
contractual clause, often included in business or commercial agreements. It is a pre-agreed
method of resolving disputes.

3. Statutory Mediation:

• Certain types of disputes are required by law to be mediated. These could be disputes that
fall under specific legislation that mandates mediation as a prerequisite before proceeding to
court.
Key Provisions of the Indian Mediation Act, 2023

• Section 3: Defines the term mediation and the role of a mediator. A mediation agreement is a
clause within an agreement where the parties consent to resolve disputes through mediation. A
mediated settlement agreement is the outcome that arises when the parties successfully resolve
their issues with the help of the mediator.

• Section 6: Deals with compoundable offences, providing that mediation can be used to resolve
disputes involving these offences, provided the parties involved consent. Compoundable offences are
those where the victim can agree to forgive the offender, leading to the resolution of the matter
without the need for prosecution.

Facilitative Mediation

The Indian Mediation Act, 2023 emphasizes facilitative mediation, which means that the mediator does not
make decisions or impose solutions. Instead, the mediator facilitates communication and helps the parties
find a mutually agreeable solution by guiding the conversation, helping clarify interests, and suggesting possible
solutions.

Important Takeaways:

• Three Types of Mediation: The Indian Mediation Act, 2023 recognizes court-referral, contractual,
and statutory mediation, each serving different types of disputes.

• Section 3: Defines mediation and mediators, with mediation agreements and mediated settlement
agreementsbeing central to the process.

• Section 6: Allows mediation in cases involving compoundable offences, provided all parties consent
to resolve the dispute through mediation.

• Facilitative Mediation: The Indian Mediation Act, 2023 promotes facilitative mediation, where the
mediator acts as a neutral facilitator without imposing decisions on the parties.

Class Notes - 10/09/2024: Arbitration

Overview of Arbitration

Arbitration is a dispute resolution process where the parties involved submit their conflict to the decision of
a third party (the arbitrator), as defined under Article 2 of the UNCITRAL Model Law. Unlike litigation, the
decision made by the arbitrator is typically binding on the parties, and the process is less formal than
traditional court proceedings.

Types of Arbitration

1. Ad Hoc Arbitration:

• Arbitration that is arranged by the parties themselves, without any institutional support or
rules.

2. Institutional Arbitration:

• Arbitration conducted under the rules of a specific arbitration institution, such as the
International Chamber of Commerce (ICC) or the London Court of International Arbitration
(LCIA).

3. Contractual Arbitration:

• Arbitration that arises from an agreement (typically a clause within a contract) between the
parties to resolve future disputes through arbitration.

4. Statutory Arbitration:

• Arbitration that is mandated by a specific statute or law, for example, consumer disputes or
disputes under labor law.

5. Domestic Arbitration:

• Arbitration involving parties from the same country.

6. International Arbitration:

• Arbitration involving parties from different countries or where the subject matter concerns
international law or cross-border issues.

Intention in Arbitration Agreements

The intention of the parties to resolve disputes through arbitration is the most important ingredient for
determining whether an arbitration agreement exists. This intention can be reflected in the following ways:

• Express Agreement: A clearly stated clause within a contract where both parties explicitly agree to
arbitration.

• Implied Agreement: The intention to arbitrate can also be inferred from the parties' conduct during
negotiations or past behavior.

Case Analysis: Jagdish Chander v. Ramesh Chander

• Key Issue: Whether the arbitration clause in an agreement was valid.

• Court's Holding:

• The mere inclusion of the term "arbitration" or "arbitration clause" is not sufficient to make
it an arbitration agreement.

• The intention to arbitrate must be clear and expressed explicitly in the agreement.

• A clause stating “may” arbitrate is not enforceable as it creates uncertainty, and an

arbitration clause must be mandatory, i.e., using the word “shall.”

• If the clause leaves the choice to arbitrate or not to the parties, it cannot be considered a
binding arbitration agreement.

Case Analysis: Enercon India v. Enercon

• Key Issue: The validity and enforceability of the arbitration clause in the IPLA (International Product
License Agreement).

• Court's Holding:

• The separability principle (also known as Kompetenz-Kompetenz) allows the arbitration

clause to be enforceable even if the underlying contract is disputed. The arbitration clause
can be severed from the main contract.

• Even if the IPLA is found to be invalid, it does not necessarily invalidate the arbitration clause
because the clause can stand independently of the rest of the agreement.
 • In this case, past conduct of the parties showed that they had previously agreed to
arbitration, and the clause, even though vague in certain technical aspects, was deemed
workable.

• Pathological clauses: Arbitration clauses that are unclear or vague on technical or procedural
issues are considered pathological (i.e., unworkable). However, the intention behind the clause
could still make it enforceable.

Important Takeaways:

• Types of Arbitration: Arbitration can be classified as ad hoc, institutional, contractual, statutory,

domestic, or international, depending on the nature of the agreement and parties involved.

• Intention in Arbitration: The key factor in an arbitration agreement is the clear intention to arbitrate,
which can be expressed explicitly in the contract or inferred from the conduct of the parties.

• Jagdish Chander v. Ramesh Chander: "May" arbitration clauses are not enforceable. Arbitration
clauses must clearly express the intention to arbitrate, and the use of the word "shall" is necessary
for enforceability.

• Enercon India v. Enercon: The separability principle means that even if the main contract is invalid,
the arbitration clause can remain enforceable. The conduct of the parties and the clear intention to
arbitrate can make an otherwise vague arbitration clause valid and workable.

Class Notes - 11/09/2024: Arbitration and Related Concepts

Binding Nature of Arbitration Agreements

• General Rule: Arbitration agreements usually bind only the signatories to the agreement, not non-
signatories.

• Exceptions: In certain circumstances, non-signatories can be bound by an arbitration agreement,

especially if they are connected to the dispute through related contracts or other legal doctrines.

Case Analysis: Caravel Shipping Services v. Premier Sea Foods

 • Issue: Whether an arbitration clause is valid and applicable to the parties when it was part of an
annexure and not directly in the main agreement.

• Court’s Ruling:

• The annexure was considered part of the main agreement, meaning both parties should be
bound by it.

• The court emphasized that an arbitration agreement does not necessarily need to be signed
by the parties to be valid. Section 7(4) of the Arbitration Act does not mandate that the
arbitration agreement must be signed in all cases.

• Section 7(3) outlines the pre-requisites for a valid arbitration agreement, and it was found
to be satisfied in this case.

Third-Party Non-Signatory and the Group of Companies Doctrine

• Group of Companies Doctrine: This doctrine applies when a corporation signs an arbitration agreement,
and it extends to bind its affiliates if the intention to do so is clearly stated by both main parties.

• Chloro Controls v. Severn Trent: Intention is the central element to determine if non-signatories can
be bound by an arbitration agreement. The intention of the parties must be explicitly clear and
established, particularly in the context of affiliates or subsidiaries being involved.

• Cox and Kings v. SAP India:

• The court applied caution when using the Group of Companies Doctrine, noting that affiliates
are separate legal entities.

• The doctrine was applied because there was a single economic reality underlying the dispute,
specifically the creation of a hybrid solution.

• Onus of Proof: The party seeking to enforce arbitration against a non-signatory has the
burden of proof to establish the intention of the parties.

• Caution: The doctrine must be applied carefully because it can undermine key principles like
party autonomy and the separate legal entity of corporations.

Stamping and Severability

 • Section 35 of the Stamp Act: The stamping of arbitration agreements is mandatory. If the agreement
is not stamped properly or inadequately stamped, it is considered invalid.

• Severability Principle:

• The doctrine of severability states that even if the main contract has issues like non-
stamping, the arbitration clause can still stand independently.

• Strict technicalities related to stamping should not impede arbitration, as the severability
principle allows the arbitration clause to survive despite defects in the main contract.

Case Analysis: NN Global v. Indo Unique

• Issue: Whether an arbitration clause in an inadequately stamped or unstamped contract remains

enforceable.

• Court’s Ruling:

• The court reaffirmed the doctrine of severability, ruling that non-stamping or inadequate
stamping in the main document does not render the arbitration clause invalid.

• Previous judgments that required strict stamping for the validity of arbitration clauses were
overruled.

• The UNCITRAL Article 16 principle supports the idea that arbitration clauses survive
independently of the main contract’s validity.

Multi-Tier Dispute Resolution (Wedding Cake Theory)

• The Wedding Cake Theory outlines a multi-tier dispute resolution process where parties go through
a series of steps before reaching arbitration, each step becoming more formal and binding:

1. Negotiation (informal)

2. Mediation (informal)

3. Conciliation (more structured)

4. Arbitration (formal and binding)

5. If all else fails, litigation (final resort)

 • Benefits:

1. Cooling period: Time to calm down before escalating to arbitration.

2. Relationship preservation: Less adversarial than litigation.

3. Cost and time savings: By resolving disputes early, fewer resources are spent.

4. Filtering issues: Early steps allow non-essential issues to be filtered out before arbitration.

• Cons:

1. Limitation period: Some issues may be time-barred before arbitration.

2. Non-binding enforceability: Early steps like negotiation or mediation are non-binding, and
may not be enforceable.

3. Neutral figure change: Changing mediators or conciliators may cause inconsistencies in the
process.

• Section 11(6) Majority View: The majority view holds that pre-arbitral awards (negotiation,
mediation, or conciliation outcomes) are part of the overall arbitration process under Section 11(6)
of the Arbitration Act and should be included in the arbitration stage.

• Minority View: The minority view considers these pre-arbitral steps to be directory, not mandatory,
and should not automatically be considered part of the arbitration process.

Important Takeaways:

• Arbitration Agreement Validity: Arbitration agreements do not require signatures to be valid. The
intention of the parties, either express or implied, is the key factor in determining enforceability.

• Group of Companies Doctrine: This doctrine allows non-signatories to be bound by arbitration

agreements, but it must be applied with caution to preserve party autonomy and separate legal
entity principles.

• Severability Principle: Even if the main contract has defects like non-stamping, the arbitration
clause can still be enforceable under the doctrine of severability.

• Multi-Tier Dispute Resolution: The Wedding Cake Theory outlines a step-by-step process leading to
arbitration, offering benefits like cost efficiency and relationship preservation but also presenting
challenges like lack of enforceability for non-binding steps.
Class Notes - 17/09/2024: Drafting an Arbitration Agreement

Overview of Arbitration Agreement

An arbitration agreement is essential in preparing for situations where disputes may arise, especially when
there is a potential for the relationship between parties to turn contentious. It helps to secure procedural
consistency, mitigate delays, and prevent cost inefficiencies. A well-drafted agreement also addresses
weaknesses that could arise during arbitration and protects corporate rights to the fullest extent. The New
York Convention plays a critical role in the enforcement of international arbitral awards.

6 Key Elements of an Arbitration Agreement

1. Seat of Arbitration:

• Definition: The seat refers to the legal home of the arbitration, determining the court
jurisdiction, the procedural law applicable, and the governing arbitration rules. The venue
refers to the physical location where hearings may take place, which may be different from
the seat.

• Importance: The seat dictates:

• The court jurisdiction and procedural law.

• The local courts' role in supervision and enforcement.

• Neutrality and global enforcement of the arbitral award.

• Choosing the Seat: Factors to consider include:

• Neutral location.

• Must be a signatory to the New York Convention.

• Arbitration-friendly laws and a pro-arbitration judiciary.

• Smooth post-award enforcement mechanisms.

• Language and convenience.

 • Drafting Tip: Prefer using the term ‘seat’ over ‘venue’ or ‘location’; ‘place’ is also acceptable
when referring to the seat.

2. Type of Arbitration:

• Institutional Arbitration: Managed by an institution (e.g., SIAC, LCIA, HKIAC).

• Ad-Hoc Arbitration: No institutional involvement; parties manage the arbitration themselves.

• Drafting Tip: For institutional arbitration, include terms like "in accordance with [institution
name]rules", e.g., “administered by SIAC” or “under the rules of LCIA”.

3. Scope of Arbitration:

• 3-Step Test for Arbitrability: Determine if the dispute is within the scope of arbitration using
the phrases:

• ‘Arising from’

• ‘Arising out of’

• ‘Arising in relation to’

• Exclusions: Specify any disputes excluded from arbitration, for example, issues regarding the
existence, validity, or termination of the agreement.

• Drafting Tip: Clearly specify the scope, such as “any dispute arising out of or in connection
with this agreement”.

4. Governing Law:

• Definition: Refers to the substantive law and procedural law that will apply to the arbitration
agreement.

• Seat vs. Governing Law: The seat and the governing law may be different, but they must
be in harmony to avoid conflicts.

• Drafting Tip: Specify the law, such as “interpreted in accordance with the laws of State X”
or “governed by the laws of State X”.

5. Number of Arbitrators and Their Appointment:

• Arbitrator Count: Typically 1 or 3 arbitrators, depending on the quantum of the dispute.

• One Arbitrator: Used for fast-track or expedited arbitration.

 • Three Arbitrators: Often used for complex or high-value disputes.

• Appointment Process: If there are three arbitrators:

• Two-party appointed arbitrators, with a presiding arbitrator chosen by both.

• If no consensus, the President or Registrar appoints the third arbitrator.

• Arbitrator Qualifications: Arbitrators should be neutral, independent, and impartial, with

expertise in the relevant field, industry knowledge, and possibly, specific language skills.

• Drafting Tip: Use phrases like “sole arbitrator by mutual agreement” or “presiding
arbitrator” when specifying the number and process.

6. Language of Arbitration:

• Language Specifications: Arbitration can be conducted in English, or another language if

agreed by the parties.

• Drafting Tip: Specify the language to ensure clarity, such as “arbitration shall be conducted
in English, and/or [other language]”.

Multi-Tier Arbitration and Timelines

• In cases where arbitration is part of a multi-tier dispute resolution process, the timelines for each
tier (e.g., negotiation, mediation) should be clearly stated in the agreement.

• Drafting Tip: Clearly outline the steps and deadlines for each stage to prevent unnecessary delays
and ensure a structured process.

Drafting Order of Arbitration Agreement:

1. Scope of Arbitration: Begin with defining the scope of the arbitration.

2. Type of Arbitration: Specify whether the arbitration will be institutional or ad-hoc.

3. Number of Arbitrators: Define the number of arbitrators and the appointment process.

4. Seat of Arbitration: State the seat or location of arbitration.

5. Governing Law: Specify the substantive and procedural law governing the agreement.

6. Language of Arbitration: State the language in which arbitration will take place.
Important Takeaways:

• Arbitration Agreement: A well-drafted agreement is key to mitigating disputes and ensuring

procedural consistency in case of a conflict.

• Seat vs. Venue: The seat of arbitration is crucial as it determines jurisdiction, the law applied, and
the enforceability of the award.

• Scope: Clearly define the scope of arbitration to avoid ambiguity, especially regarding exclusions like
validity or termination issues.

• Governing Law: Ensure that the governing law aligns with the seat of arbitration for consistency.

• Multi-Tier Arbitration: Clearly define the steps and timelines for each stage in a multi-tier dispute
resolution process to avoid delays.

Class Notes - 18/09/2024: Arbitration Case Law and Key Concepts

Simpark Infrastructure v. Jaipur Municipal

• Issue: The dispute was regarding the delay in the delivery of contractual obligations. Simpark
Infrastructure filed for arbitration under Section 11 for the appointment of arbitrators, but the
contract included a clause for amicable resolution (MTDR) before resorting to arbitration.

• Court’s Ruling:

• Condition Precedent: The court emphasized that conditions precedent must be followed
before moving to the arbitration stage. The first attempt should be to resolve the dispute
amicably through the agreed-upon methods before arbitration can be initiated.

• Section 11(6): The court reinforced that Section 11(6) upholds party autonomy and the
agreed procedures for dispute resolution, meaning the parties cannot bypass the amicable
resolution process.

• Premature Arbitration: Since the amicable resolution process was not exhausted, filing for
arbitration was deemed premature. This decision delayed the arbitration process and raised
concerns about the limitation period for filing a suit or arbitration.
 • Key Takeaway: A mandatory pre-arbitration process (like amicable resolution) must be followed
before proceeding to arbitration, and conditions precedent must be fulfilled to initiate arbitration.

Geo Miller v. Rajasthan Vidyut

• Issue: The case concerned the limitation period and whether the time spent in pre-arbitral processes
(such as negotiations) should be excluded from the limitation period.

• Court’s Ruling:

• Exclusion from Limitation Period: The court held that time spent during pre-arbitral
processes, such as good faith negotiations or attempts to settle amicably, should be
excluded from the limitation period.

• Breaking Point: The limitation period is calculated from the date of the breaking point or
the date when the parties withdraw from the amicable resolution process. If the parties
have entered into negotiations in good faith but eventually abandon the effort, the date of
withdrawal becomes the starting point for calculating the limitation period.

• Key Takeaway: The limitation period can be extended by the duration of good-faith negotiations or
pre-arbitral attempts to resolve the dispute, and the breaking point marks the beginning of the
limitation period.

Emaar MGF v. Aftab Singh

• Issue: Can Section 8 of the Arbitration and Conciliation Act be interpreted broadly to allow an
arbitration agreement to override a special forum (like a Consumer Forum) established by special
legislation through party autonomy?

• Court’s Ruling:

• Special Forum Supremacy: The court ruled that special legislation, such as those governing
consumer disputes, cannot be overridden by arbitration agreements.

• Judicial Authority: Section 8 does not allow an arbitration agreement to supersede a special
court'sjurisdiction, especially when the special court is given exclusive authority by law (such
as consumer courts).

• Arbitrability: The court clarified that certain disputes are non-arbitrable due to legislative
intent that cannot be overridden by party autonomy.
 • Key Takeaway: Section 8 cannot be interpreted to allow arbitration to override special forums
established by legislation, especially for non-arbitrable matters like consumer disputes.

Ssangyong Construction v. NHAI (WPI)

• Issue: The case dealt with the challenge of an arbitration award under Section 34(2), specifically in
terms of whether the award was patently illegal and violated public policy.

• Court’s Ruling:

• Public Policy: The court ruled that an arbitration award could be set aside under Section
34(2) if it is patently illegal and violates public policy.

• Patently Illegal: If the award involves an action that is manifestly against the law or contrary
to public policy, it will be subject to challenge.

• Key Takeaway: An arbitration award can be challenged under Section 34(2) if it is found to be
patently illegalor in violation of public policy, highlighting the role of public policy in the arbitration
process.

Important Takeaways:

• Conditions Precedent: Conditions precedent, such as amicable resolution, must be fulfilled before
initiating arbitration, as demonstrated in Simpark Infrastructure v. Jaipur Municipal.

• Limitation Period: Time spent in good faith negotiations or pre-arbitral attempts is excluded from
the limitation period, as ruled in Geo Miller v. Rajasthan Vidyut.

• Non-Arbitrable Matters: Special forums (like consumer courts) cannot be overridden by arbitration
agreements, as confirmed in Emaar MGF v. Aftab Singh.

• Public Policy and Arbitration Awards: Patently illegal awards that violate public policy can be set
aside under Section 34(2), as seen in Ssangyong Construction v. NHAI.

Class Notes - 24/09/2024: Arbitration Case Law and Key Concepts

Afcons Infrastructure v. Cherian Verkey

 • Issue: The dispute arose over delay in fulfilling contractual obligations, and the parties had no prior
agreement for arbitration. One party filed a suit under Section 89 of the CPC, while the respondents
requested arbitrationunder the same section.

• Court’s Ruling:

• Section 89 of CPC: The court clarified that Section 89 of the CPC can be used to refer
disputes to arbitration even when there is no prior agreement for arbitration between the
parties. Unlike Section 8 of the Arbitration Act, which requires consent for arbitration, Section
89 allows the court to suggest arbitration, but it cannot force parties into arbitration without
their consent.

• Consent and Consensus: The Supreme Court emphasized that consent and consensus are
essential for the ADR process. The court only has the power to suggest methods, such as
arbitration, but the final decision is up to the parties involved.

• Arbitrability: The court checks whether the dispute is arbitrable by assessing its nature. The
case cannot move to arbitration without the parties consenting to it.

• Key Takeaway: Under Section 89 of the CPC, arbitration can only be suggested by the court, and
it is ultimately up to the parties to decide whether to proceed with arbitration after assessing the
dispute.

Booz Allen Hamilton v. SBI Home Finance

• Issue: Whether the enforcement of a mortgage under a loan agreement falls within the scope of
arbitrability.

• Court’s Ruling:

• Rights in Rem vs. Rights in Personam:

• If a dispute involves rights in rem (rights affecting the public or a group), it is non-
arbitrable. If it involves rights in personam (rights against a specific individual), it
is arbitrable.

• Mortgage Enforcement: In this case, the enforcement of the mortgage was

considered a right in rembecause the public would be affected by the auction of the
property, even though debt recovery itself is in personam (against a specific
individual).
 • Non-Arbitrable Matters: The court ruled that certain categories of disputes—such as criminal,
matrimonial, guardianship, insolvency, winding up, testamentary, and eviction or tenancy
disputes—are governed by special statutes and are non-arbitrable.

• Combination of Rights: When both rights in rem and rights in personam are involved and
cannot be bifurcated, the dispute is considered non-arbitrable.

• Key Takeaway: Disputes involving rights in rem (public rights) are generally non-arbitrable. If the
dispute involves both rights in rem and rights in personam, it will be treated as non-arbitrable.

Vidya Drolia v. Durga Trading

• Issue: Whether tenancy disputes are arbitrable.

• Court’s Ruling:

• The Supreme Court established a 4-fold test for determining the arbitrability of disputes:

1. Right in Rem vs. Right in Personam.

2. Whether the dispute affects third-party rights.

3. Whether the dispute relates to inalienable public interests or sovereign functions.

4. Whether the dispute is expressly or implicitly non-arbitrable under a specific

statute.

• Arbitrability Check: The court can assess arbitrability at three stages:

1. Before court.

2. Before the arbitral tribunal.

3. Under Section 34 and 48 for challenges to arbitral awards.

• Tenancy Disputes: The court held that tenancy disputes are not automatically non-
arbitrable; the 4-fold test must be applied. Tenancy disputes may still be arbitrable depending
on the specific circumstances and relevant legislation.

• Key Takeaway: The arbitrability of disputes requires a comprehensive test, not limited to just rights
in rem or special legislation. The 4-fold test must be applied to assess whether a dispute is arbitrable.
Fulham Football Club v. Richards

• Issue: Whether a dispute involving the affairs of a company that affects a member's rights could be
subject to arbitration, despite the involvement of a special forum (in this case, related to football
rules).

• Court’s Ruling:

• The court ruled that the arbitration clause in the football club's rules could be invoked to
stay the petition, as long as the dispute involved the rights of the individual parties and
did not affect third-party rights or public interests.

• Arbitrability: The court emphasized that arbitration was appropriate because the dispute
only concerned the individual rights of the member and did not have implications for third-
party rights or the public interest.

• Stay on Petition: Since the dispute was within the scope of the arbitration agreement and
did not affect third-party rights, the stay on the petition was allowed.

• Key Takeaway: Disputes concerning individual rights that do not affect third-party interests or
public policyare arbitrable, even if they are subject to specific rules, like in the case of a football
club.

Important Takeaways:

• Section 89 of CPC allows the court to suggest arbitration when there is no prior agreement, but
consent is necessary before proceeding with arbitration.

• Arbitrability is determined by assessing whether the dispute involves rights in rem (non-arbitrable)
or rights in personam (arbitrable), and whether it falls under special legislation or public policy.

• Vidya Drolia v. Durga Trading establishes a 4-fold test for arbitrability, which goes beyond just
rights in rem or rights in personam to include third-party rights, public interests, and statutory
exclusions.

• Arbitration Clauses can be invoked even if the dispute is part of a larger special forum (like in
Fulham Football Club v. Richards) as long as it only concerns individual rights and does not affect
third-party or public interests.

Class Notes - 25/09/2024: Arbitration Case Law and Key Concepts

Lohia v. Lohia

• Issue: In this case, there were two arbitrators appointed for the arbitration, and the challenge was
raised regarding the number of arbitrators under Section 10. The contention was that the arbitration
award should be set aside due to the even number of arbitrators, which allegedly violated procedural
norms.

• Court’s Ruling:

• Section 10: The court held that the violation of the even-number rule (where typically an
odd number of arbitrators is preferred to avoid ties) is not non-derogable. This means that
such violations do not automatically invalidate the arbitration process or the award.

• Sections 11, 4, and 34: The court referred to Section 11, which allows two arbitrators to
appoint a third, making this provision a provisional mandate to resolve the situation.

• Non-Derogable Provisions: The only provisions considered non-derogable are Sections 12,
13, 16, and 35. These pertain to issues like arbitrator independence, procedural fairness,
and challenging the award on limited grounds.

• Outcome: The arbitral award could not be set aside merely because of the number of
arbitrators being even. The procedural nature of the violation was deemed insufficient to
annul the award.

• Key Takeaway: The number of arbitrators does not need to be strictly adhered to as long as the
procedure is followed correctly, and only specific violations (like those under Sections 12, 13, 16,
and 35) can be grounds for annulment.

MMTC v. Sterlite Industries

• Issue: The dispute involved the enforcement of a minority award instead of the majority award. The
tribunal had the kompetenz-kompetenz to decide the validity of the arbitration agreement, and the
question arose whether a minority award could be enforced over a majority one.

• Court’s Ruling:

• Kompetenz-Kompetenz: The tribunal exercised its kompetenz-kompetenz (the power to rule

on its own jurisdiction and the validity of the arbitration agreement). The tribunal concluded
that the minority awardshould be enforced despite the majority award.
 • Enforcement of Minority Award: The court ruled that since there was no separate agreement
to the contrary, the minority award was enforceable. This was a rare situation where the
minority award was deemed valid over the majority’s decision.

• Scope of Review: The court reiterated that the scope for intervention in arbitration awards
is limited. Under Section 34, an award can only be challenged on specific grounds, primarily
related to violation of public policy or procedural fairness.

• Enforcement of Award: The court emphasized that the majority award cannot be reviewed
or substituted with the minority’s opinion unless there are clear grounds under Section 34.

• Key Takeaway: The tribunal's kompetenz-kompetenz gives it authority to decide on its own
jurisdiction and validity of decisions, and the minority award can be enforced if no separate agreement
prevents it. Arbitration awards are only reviewable on limited grounds under Section 34.

Important Takeaways:

• Lohia v. Lohia: A violation of procedural rules, such as having an even number of arbitrators, does
not automatically invalidate an arbitral award. Only certain provisions, like those under Sections 12,
13, 16, and 35, are non-derogable and can lead to the annulment of the award.

• MMTC v. Sterlite Industries: The tribunal's competence to decide on its own jurisdiction (kompetenz-
kompetenz) extends to situations like enforcing a minority award over a majority award, and
challenges to the arbitral award can only be made on specific grounds listed under Section 34.

Class Notes - 01/10/2024: Lex Arbitri, Seat, and Venue in Arbitration

Overview of Key Arbitration Concepts

1. Lex Arbitri: Refers to the law of the country where the arbitration takes place (the seat of
arbitration). It governs procedural aspects like appointment of arbitrators, court supervision, and
enforcement of awards.

2. Substantive Law: The governing law that governs the underlying dispute between the parties (e.g.,
Indian Lawin some cases).

3. Procedural Law: The rules that govern how the arbitration is conducted, such as the ICC rules or
UNCITRAL.
 • 3 Key Laws:

• Substantive/Governing Law (e.g., national law of the jurisdiction involved)

• Procedural Law (e.g., ICC, UNCITRAL rules)

• Lex Arbitri (the law of the seat of arbitration)

Bharat Aluminium Company v. Kaiser Aluminium Technical Services

• Issue: Whether Section 20 of the Arbitration Act refers to the seat or the venue of arbitration.

• Court’s Ruling:

• Seat of Arbitration: The court clarified that when referring to the place of arbitration under
Section 20(1) and (2), it refers to the seat of the arbitration. The seat determines
jurisdiction, procedural law, and supervisory role of local courts.

• Venue: If the reference is made under Section 20(3), it refers to the venue, where the
arbitration hearings may take place but is not the legal seat.

• Part 1 vs Part 2: The Supreme Court overruled previous cases (Bhatia International and
Venture Global), stating that Part 1 (Indian laws) applies only to India-seated arbitrations.
For foreign-seatedarbitrations, only Part 2 (for enforcement of foreign awards under Section
47 and Section 49) applies. The court confirmed that Indian courts cannot intervene in
foreign-seated arbitrations unless there are specific enforcement issues.

• Interim Reliefs: Following the 2015 amendment, Indian courts can grant interim reliefs in
foreign-seated arbitrations, but the law of the seat governs the substantive proceedings.

• Key Takeaway: Seat determines the law that applies to arbitration, and Part 1 applies only to
arbitrations within India. The 2015 Amendment allows for interim relief in foreign-seated arbitrations.

PASL Wind Solutions Pvt Ltd. v. GE Power Conversion India

• Issue: Whether the seat of arbitration was Zurich or Mumbai, and whether the arbitration was
international or domestic.

• Court’s Ruling:
 • Seat of Arbitration: The court held that the closest connection test only applies when the
parties have not explicitly chosen a seat. In this case, since the parties had clearly chosen
Zurich as the seat, there was no need to apply the closest connection test.

• Foreign Award Criteria: The court outlined four criteria for determining whether an award is
foreign:

1. Commercial dispute.

2. Written arbitration agreement.

3. Dispute between persons.

4. Arbitration conducted in a country signatory to the New York Convention.

• The case was treated as a foreign award because it met these criteria, even though the
parties were Indian. The court reaffirmed that party autonomy allows parties to choose a
foreign seat.

• Interim Reliefs: The 2015 amendment allows Indian courts to grant interim relief in the
case of foreign arbitrations.

• Key Takeaway: Even though the parties are Indian, they can choose a foreign seat for arbitration,
and the foreign award provisions under Part 2 of the Arbitration Act apply. Interim reliefs can now
be granted by Indian courts for foreign-seated arbitrations.

Enka Insaat Ve Sanayi AS v. OOO Insurance Company Chubb

• Issue: Whether the seat of arbitration was London or Russia, and whether the arbitration agreement
would be governed by English law or Russian law.

• Court’s Ruling:

• Seat of Arbitration: The court ruled that the seat of arbitration was London because the
arbitration was to be conducted under ICC rules, which specified London as the seat.
Therefore, English law applied to the arbitration.

• Choice of Law: The court found that the seat of arbitration governs the arbitration
agreement’s procedural aspects, and without an express choice of law, the arbitration is
governed by the law of the seat.
 • Closest Connection Test: The closest connection test was applied to determine the
appropriate seat and the applicable law. This test considers where the arbitration agreement
is performed legally, the reasonable expectations of the parties, and the public policy of the
seat.

• Key Takeaway: The seat of arbitration determines the procedural law. In this case, English law
governed the arbitration because the seat was in London, regardless of the fact that one party was
in Russia.

Union of India v. Reliance Industries

• Issue: The dispute involved a production sharing contract, and the issue was whether the procedural
law was governed by the UNCITRAL rules or Indian law, and whether the lex arbitri applied.

• Court’s Ruling:

• Lex Arbitri: The court reaffirmed that the lex arbitri (law of the seat) governs procedural
law questions. Since the seat was in London, English procedural law (UNCITRAL rules) applied.

• Res Judicata: The Henderson principle on res judicata applies according to the procedural
law of the seat. Hence, the lex arbitri determines how res judicata is applied in arbitration,
and Indian law did not apply in this case because the seat was in London.

• Key Takeaway: Lex arbitri governs procedural issues in arbitration, and in this case, English law
applied due to the seat of arbitration being in London.

Important Takeaways:

• Lex Arbitri: The law of the seat governs procedural issues in arbitration, such as appointment of
arbitrators, court supervision, and interim relief.

• Seat vs. Venue: The seat of arbitration determines the procedural law and jurisdiction, while the
venue is where the hearings take place but does not affect the legal framework of the arbitration.

• Bharat Aluminium Company and PASL Wind Solutions clarified that foreign-seated arbitrations are
governed by the law of the seat, and Indian courts can grant interim reliefs in these cases under
the 2015 amendment.

• Enka Insaat Ve Sanayi reaffirmed that the seat of arbitration, rather than the parties’ location or
national laws, determines which procedural law applies.
 • Union of India v. Reliance emphasized that lex arbitri governs procedural issues, and foreign-seated
arbitrations are subject to the laws of the seat.

Class Notes - 08/10/2024: Interim Measures and Conduct of Arbitral Proceedings

Overview of Interim Measures in Arbitration

• Interim Measures are temporary reliefs that aim to maintain the status quo during arbitration
proceedings, similar to provisions under the CPC (Code of Civil Procedure).

• Why Interim Measures?: They are essential to prevent harm or protect the interests of parties until
a final arbitral award is issued. These measures ensure that the situation does not worsen during the
arbitration process and provide immediate protection.

Key Sections on Interim Measures:

1. Section 9 - Interim Measures by Court (Before Constitution of the Tribunal)

• Section 9(1): Allows a party to apply to the court for interim measures before the tribunal
is constituted.

• Example: If one party fears the other might transfer or hide assets before the tribunal
is set up, they can approach the court to freeze assets.

• Time Limit: Interim measures granted by the court are valid for 90 days (unless extended),
and the tribunal can review and adjust these measures once constituted.

2. Section 9(3) - Remedy Activation:

• When Activated: Interim measures under Section 9 are available only when tribunal remedies
are ineffective or not constitutionally available. The court steps in to provide relief until the
tribunal is established.

• Example: If there’s urgency and the tribunal cannot act quickly, the court may grant
interim relief.

3. Section 16 - Competence of Arbitral Tribunal to Rule on Its Jurisdiction

 • Kompetenz-Kompetenz Principle: This principle allows the tribunal to decide on its own
jurisdiction, including issues like:

• Validity of the arbitration agreement.

• Scope of the arbitration.

• Court Intervention: A party can challenge the tribunal’s jurisdiction in court, but only after
the tribunal issues its final award, ensuring that premature court intervention is avoided.

• Example: If one party argues that the arbitration agreement is invalid, the tribunal decides
first. If it finds the agreement valid, arbitration proceeds without the court's interference.

4. Section 17 - Interim Measures by the Arbitral Tribunal

• Authority of Tribunal: Once the tribunal is constituted, it has the power to grant interim
measures, such as:

• Freezing of assets.

• Securing the amounts in dispute.

• Providing security for costs.

• Priority: The tribunal's decision on interim relief takes priority once constituted, unless the
remedy is ineffective.

• 2015 Amendment: The amendment provides that interim orders made by the tribunal under
Section 17 are enforceable as court orders.

• Example: If a party requests an injunction to stop the other from selling property
under dispute, the tribunal can issue a binding order, enforceable as a court ruling.

5. Section 18 - Equal Treatment of Parties

• Equality and Opportunity: This section mandates that all parties must be treated equally
during the arbitration proceedings.

• Audi Alteram Partem (right to a fair hearing) ensures that both parties have the
right to present their case fully.

• Example: If one party claims they were denied the chance to present key evidence, this
would be a violation of Section 18, ensuring equal procedural fairness.

6. Section 19 - Determination of Rules of Procedure

 • Flexibility: Arbitral tribunals are not bound by CPC or the Indian Evidence Act. They have
the flexibility to determine the procedural rules that govern the arbitration, provided both
parties agree.

• Tribunal’s Discretion: If the parties cannot agree on the rules, the tribunal has the authority
to decide.

• Example: If the parties cannot agree on how evidence should be presented, the
tribunal will decide whether documents are admissible and which rules apply.

7. Section 20 - Place of Arbitration

• Seat vs. Venue: The seat refers to the legal jurisdiction and determines the procedural law.
The venue is the physical location where hearings take place.

• Section 20(1): The seat of arbitration is determined by the parties and governs the
arbitration's legal framework.

• Section 20(3): The venue is where arbitration hearings occur but does not affect
the legal jurisdiction.

• Example: Arbitration could be seated in London (governed by English law), but the
hearings may take place in Mumbai (venue).

8. Section 21 - Commencement of Arbitral Proceedings

• When Proceedings Begin: Arbitration commences when the respondent receives a request
for arbitration from the claimant, unless the parties agree otherwise.

• Example: If a claimant sends a formal arbitration notice, the process is considered

to have started once the respondent receives it.

9. Section 22 - Language of Arbitral Proceedings

• Language of Arbitration: The parties are free to agree on the language of the proceedings.
If they don’t agree, the tribunal will decide.

• Example: In an international arbitration involving parties from India and the UK, if no
language is specified, the tribunal may decide that the proceedings will be in English.

10. Section 23 - Statements of Claim and Defence

• Time Limits: Both claimant and respondent must submit their claims and defenses within
agreed or tribunal-determined timelines.
 • Amendments: Either party can amend their claim or defense if the tribunal allows it, unless
it would cause undue delay.

• Example: If new evidence is discovered, the claimant may amend their claim, subject
to tribunal approval.

11. Section 24 - Hearings and Written Proceedings

• Oral vs. Written Proceedings: The tribunal can decide whether to hold oral hearings or decide
based on written submissions, unless one party requests an oral hearing.

• Equal Communication: Information and documents shared with the tribunal must be
communicated to the other party.

• Example: If the tribunal decides to hold an oral hearing, it must give sufficient notice
to both parties to allow preparation.

12. Section 25 - Default of a Party

• Failure to Participate: If the claimant or respondent fails to submit their claim or defense,
the tribunal may terminate the proceedings or continue without assuming the allegations are
true.

• Example: If the respondent fails to submit their defense, the tribunal will proceed
without assuming that the claimant's claims are accepted as true.

13. Section 26 - Expert Appointed by the Arbitral Tribunal

• Appointment of Experts: The tribunal can appoint experts to assist in understanding technical
or specialized issues. Experts can also be required to attend hearings for cross-examination.

• Example: In a construction dispute, an expert might be appointed to assess the

quality of building materials, and both parties can question the expert during hearings.

14. Section 27 - Court Assistance in Taking Evidence

• Court’s Role: The tribunal or a party (with tribunal approval) can apply to the court for
assistance in gathering evidence.

• Example: If a witness refuses to testify, the tribunal can apply to the court to compel
the witness to attend, ensuring compliance with the arbitration process.

Important Takeaways:
 • Interim Relief: Section 9 provides interim relief before the tribunal is constituted, while Section 17
grants similar relief once the tribunal is in place. The 2015 amendment ensures that tribunal orders
are enforceable like court orders.

• Procedural Flexibility: Section 19 allows the tribunal to determine the procedural rules, and Section
22 gives flexibility regarding the language of proceedings.

• Arbitral Jurisdiction: Section 16 confirms that the tribunal has the power to rule on its own
jurisdiction under the Kompetenz-Kompetenz principle.

• Seat and Venue: Section 20 distinguishes between the seat (jurisdictional authority) and venue
(physical location) of arbitration.

Class Notes - 09/10/2024: Arbitration and Interim Measures

Avanta Holdings Limited v. Vistra ITC India Limited

• Issue: AHL filed a petition under Section 9 of the Arbitration and Conciliation Act, seeking interim
relief for:

• Transfer of CGP shares in the demat account of AHL.

• Restraint on sale of BILT shares.

• Directions to Vistra regarding the above.

• Court’s Observation:

• Scope of Section 9: The court reiterated that Section 9 is meant for temporary relief to
maintain the status quo until the tribunal is constituted or a final award is passed.

• Principles for Granting Interim Relief:

1. Prima Facie Case: There must be a strong initial case for the petitioner.

2. Balance of Convenience: Whether the harm to the petitioner outweighs the harm to
the respondent if the interim relief is granted.

3. Irreparable Loss: The petitioner must demonstrate that failure to grant the interim
relief would cause irreparable harm that cannot be compensated later.
 • Just and Convenience: The court held that the principle of granting interim relief should
not be applied too broadly.

• Status Quo: The court decided that the status quo should be maintained. However, the court
emphasized that interim orders should not reverse the situation back to the pre-dispute
stage.

• Key Takeaway: Section 9 is for temporary relief, and interim orders are granted based on prima
facie case, balance of convenience, and irreparable loss. Status quo should be maintained, but
orders should not roll back to the pre-dispute scenario.

Nandhini Bhatia v. Navil Ratish Kadwalkar (Delhi HC)

• Issue: A divorce case involving a petition under Section 9 of the Arbitration Act.

• Court’s Ruling: The court discussed the application of Section 9 in matrimonial disputes, particularly
regarding interim measures and the preservation of rights during ongoing proceedings.

State of Goa v. Praveen Enterprises

• Issue: This case pertains to a petition under Section 9 seeking interim measures related to
enforcement of arbitration agreements and interim relief.

• Court’s Ruling: The case dealt with the court's authority under Section 9 to grant interim measures,
particularly in public law disputes involving the government.

Emergency Arbitration

• Overview: Emergency arbitration is an option for parties seeking urgent interim relief before the
tribunal is constituted. It allows for temporary measures such as freezing assets or injunctions,
providing swift protection in urgent situations.

• Wannabe Arbitrator: A reference to situations where interim relief is needed before a formal
arbitration tribunal is established, leading to the appointment of emergency arbitrators who can issue
binding interim orders.

History of Emergency Arbitration:

 • Concept: Emergency arbitration developed as a mechanism to provide parties with interim relief in
international arbitration. It is particularly useful in cases where there is an urgent need for relief
before the full tribunal can be constituted. Emergency arbitrators have the power to issue interim
orders in arbitration proceedings, allowing for swift action to prevent harm or preserve the status
quo.

Important Takeaways:

• Section 9 Interim Measures: Interim relief can be sought from the court before the tribunal is formed.
The court considers whether there is a prima facie case, the balance of convenience, and the risk
of irreparable harm.

• Principles for Interim Relief: The court applies a structured approach to interim relief, weighing the
strength of the case, the balance of harm, and the need for urgency.

• Status Quo: Section 9 is not meant to reverse the parties to the pre-dispute stage but to maintain
the current position until the dispute is resolved.

• Emergency Arbitration: Provides a swift remedy in urgent situations before a tribunal is constituted,
with emergency arbitrators issuing binding interim orders.

Class Notes - 15/10/2024: Emergency Arbitration and Arbitral Awards

Emergency Arbitration in India

• Emergency Arbitration is a temporary mechanism used to provide interim relief before the formal
establishment of an arbitral tribunal. While it is not explicitly mentioned in the Indian Arbitration
and Conciliation Act, it is increasingly being recognized and enforced through existing provisions.

• Legal Framework:

1. 246th Report of the Law Commission and the Sri Krishna Report highlight the necessity to
incorporate emergency arbitration into India's legal framework.

2. Emergency Arbitration is essentially a provisional order that will only take effect until the
final award is passed by the arbitration tribunal.

• Awards in Arbitration:
 1. Interim Awards:

• Provisional: These awards are temporary and non-final, remaining in effect only until
the main arbitration award is passed. They can be made final if they are incorporated
into the final award.

• Partial: These awards resolve part of the dispute and can be final and conclusive if
the tribunal decides so.

2. Final Awards: These are final and binding decisions, akin to res judicata, which cannot be
revisited or reopened once issued.

Emergency Awards in India

• Emergency Award Characteristics:

• Temporary: The award is a provisional measure to protect a party’s interests until the main
arbitration concludes.

• Non-final: It is subject to modification or suspension once the final arbitral award is passed.

• Suspension: The emergency award can be suspended if the tribunal’s final decision overrides
it.

• Legal Application:

• In India, emergency awards are treated as interim orders and are enforceable under Section
17 of the Arbitration and Conciliation Act, which allows tribunals to issue interim measures.

• Example (Amazon Case): The court held that Section 17(1) of the Act is broad enough
to include emergency arbitration proceedings, thereby enforcing these provisional measures
for arbitrations seated in India.

• HSBC Holding Ltd. Case: In foreign-seated arbitrations, emergency orders or awards can be
enforced under Section 9 (part of Part 1 of the Act), despite this section primarily dealing
with Indian-seated arbitrations.

• Key Takeaway: While emergency arbitration is not specifically part of India's legal framework, it is
being enforced indirectly through Section 17 (for Indian-seated arbitrations) and Section 9 (for
foreign-seated arbitrations).
Chapter 6 – Making of Arbitral Awards and Termination of Proceedings

1. Arbitral Award:

• An arbitral award is a final, binding, and conclusive decision by the tribunal that resolves
the dispute between the parties.

• Interim awards are considered part of arbitral awards and are enforceable under Section
31(6). They may be final and binding or subject to modification by the tribunal.

2. Principle of Res Judicata:

• The res judicata principle applies to arbitral awards, meaning that once a final arbitral award
is made, the matter cannot be reopened, and the same issue cannot be revisited or re-
litigated.

3. Functus Officio:

• Once the final arbitral award is passed, the tribunal becomes functus officio, meaning it no
longer has the authority to revisit or resolve the same issues unless reformulated. This
principle ensures that the tribunal’s authority is limited to the dispute at hand and prevents
multiple hearings on the same matter.

Types of Awards:

• Interim Awards:

• Provisional Awards: These are temporary and can later be incorporated into the final award.

• Partial Awards: These resolve part of the dispute and can be final and conclusive.

• Final Awards: These are definitive and binding, applying the principle of res judicata. Once an award
is final, the tribunal cannot address new issues under the same contract.

Section 28 - Governing Law of Substantive Disputes

• Substantive Law: Refers to the law that governs the underlying dispute.

• In Indian arbitration: The substantive law is typically Indian law, unless agreed otherwise by
the parties.
 • Tribunal’s Authority: In the absence of an agreed substantive law, the tribunal may decide
based on fairness and justice principles.

Section 29 - Majority Decision in Panel of Arbitrators

• Majority Decision: In a panel of arbitrators, the majority decision prevails. A minority opinion is not
enforceable but can be included as part of the award to leave room for jurisprudential development.

• Section 29A - Time Limits for Award:

• Time Limit for Arbitration: The arbitration process must be completed within 12 months,
with a 6-month minimum and 18-month maximum time frame.

• Extension: The court can grant a 6-month extension if needed, but this extension may lead
to a reduction in the arbitrators' fees.

• Example: If the arbitration exceeds the 18-month limit, the arbitrators may be required to
reduce their fees as a penalty.

Important Takeaways:

• Emergency Arbitration: Although not directly mentioned in the Act, emergency arbitration orders
are recognized and enforced in India under Sections 9 and 17. These awards are temporary and non-
final until the tribunal issues a final decision.

• Arbitral Awards: Both interim and final awards are binding and enforceable under Section 31. The
principle of res judicata prevents the reopening of issues already decided by a final award.

• Section 28: Substantive law generally follows Indian law, unless agreed otherwise. The tribunal has
the flexibility to apply the law that ensures fairness.

• Section 29A: The time limits for arbitration ensure that the process is concluded in a reasonable
time, with provisions for extension and consequences on fees.

Class Notes - 16/10/2024: Fast-Track Arbitration and Emergency Awards

1. Fast-Track Arbitration (Section 29B)

 • Purpose: The Fast-Track Procedure is designed to expedite the standard arbitral process. It simplifies
and accelerates arbitration procedures to ensure quicker resolution of disputes.

• Key Features:

• Final and Binding: Awards rendered through the fast-track process are final and binding, and
the tribunal’s authority is not limited by the functus officio principle. The tribunal’s mandate
concludes once the final award is made, but the tribunal may still have the authority to
resolve other issues if the procedure allows it.

• Streamlined Process: The process is designed to be simplified and time-bound, often with
fewer hearingsthan in regular arbitration. The goal is to resolve disputes in a quicker manner
(typically within six months).

• Consent of Parties: Fast-track arbitration can only be carried out if both parties agree to
the process, either before or after the dispute arises.

• Time Saving: The entire arbitration is expected to be completed within six months, making
it a faster alternative to standard arbitration procedures.

• Appointment of Arbitrators: The parties can agree to appoint a sole arbitrator for fast-
track arbitration, thereby reducing the complexity and time taken in the appointment process.

• Key Takeaway: Fast-track arbitration is designed to expedite the arbitration process through
streamlined procedures, quicker resolutions, and the consent of both parties. The awards are final
and binding, and functus officio does not apply until the final award is rendered.

2. Emergency Award

• Purpose: An emergency award is granted before the constitution of the tribunal to provide urgent
interim reliefin situations that require immediate action to preserve the status quo or prevent harm
before a full tribunal can be established.

• Key Features:

• Interim Relief: The emergency award provides interim relief such as freezing assets or
granting an injunction to preserve the status quo while the arbitration is ongoing.

• Non-Final: Unlike fast-track arbitration awards, emergency awards are provisional and not
final. They are temporary and are meant to preserve positions until the tribunal is constituted
and can address the dispute fully.
 • Functus Officio: In the context of emergency arbitration, the functus officio principle
typically does not apply because the emergency arbitrator’s role is limited to issuing interim
measures, which the main tribunal can later review once it is constituted.

• Key Takeaway: Emergency awards are temporary and meant for urgent interim relief before the
full tribunal is set up. They are non-final and subject to review or reconsideration by the main tribunal
once constituted.

Other Key Provisions

1. Section 30 – Settlement:

• This section deals with the settlement of disputes in arbitration, providing mechanisms for
parties to resolve the dispute by mutual consent during the proceedings, thereby terminating
the arbitration.

2. Section 31 – Forms and Content of Arbitral Awards:

• This section defines the form and content of arbitral awards, which must be written,
reasoned, and issued by the tribunal within a specified time frame.

3. Section 31A – Regime of Costs:

• Section 31A governs the allocation of costs in arbitration, providing a framework for how
the costs of the proceedings, including arbitrator fees and legal costs, are to be divided
between the parties. It ensures that the losing party may be required to bear the costs of
the arbitration.

4. Section 32 – Termination of Proceedings:

• This section outlines the conditions under which arbitration proceedings can be terminated,
including cases where the dispute is settled, the tribunal is unable to continue, or the
claimant withdraws from the process.

5. Section 33 – Correction and Interpretation of Award:

• This section allows parties to request corrections or seek clarification on the arbitral award
if there are any mistakes or ambiguities in the award.

Key Takeaways:
 • Fast-Track Arbitration: This process is a quicker and more streamlined procedure designed to
expedite arbitration. The process is final and binding, and the tribunal may still have some authority
after the award is rendered.

• Emergency Arbitration: Provides interim relief before the full tribunal is formed. It is temporary and
non-final, meant to preserve the status quo until the full arbitration process can proceed.

• Arbitral Awards: Arbitral awards can be final and binding or interim depending on the type of award
issued. Functus officio applies once the final award is made, but interim orders can remain in effect
until the main award is passed.

Class Notes - 22/10/2024: Recourse Against Arbitral Awards

Challenging the Arbitral Award vs. Challenging the Enforcement of the Award

1. Challenging the Arbitral Award (Setting Aside the Award):

• Objective: This challenge seeks to nullify or invalidate the arbitral award before it becomes
enforceable, typically in the country where the arbitration took place.

• Grounds: The challenge is generally based on narrow grounds, which are specified in the
arbitration lawsof the relevant jurisdiction.

• Time Limit: The challenge must be filed within a prescribed time limit, and the court will
assess the validity of the award based on legal principles.

2. Challenging the Enforcement of an Arbitral Award:

• Objective: This challenge is aimed at resisting the enforcement of an arbitral award after it
has been issued and is being enforced in a specific country. The challenge focuses not on
the validity of the award itself but on whether it should be recognized and enforced in that
jurisdiction.

• Enforcement Challenges: Typically arise when one party seeks to execute the award in a
foreign jurisdiction, governed by frameworks such as the New York Convention (1958).

Recourse Against Domestic and Foreign Awards

Feature Domestic Awards (Seat in Foreign Awards (Seat not in
India) India)

Applicable Law Part I of the Arbitration and Part II of the Arbitration and
Conciliation Act, 1996 Conciliation Act, 1996

Grounds for Recourse Section 34: Broad grounds, Section 48: Limited grounds
including public policy, patent for refusing enforcement,
illegality, etc. focusing on public policy

Recourse Type Setting aside the award by Refusal of enforcement in

Indian courts Indian courts

Public Policy Broader interpretation (includes Narrower interpretation,

patent illegality for domestic focusing on fundamental
awards) policy, justice, and morality

Result of Successful Challenge Award is set aside and Enforcement is denied in India,
becomes void but the award may still be
enforced elsewhere

Court Jurisdiction Principal civil court or High Indian courts where

Court in India enforcement is sought

Public Policy: Broad vs. Narrow View

1. Broad View of Public Policy:

• A broad interpretation of public policy allows a wider range of factors to be considered when
challenging an award, such as procedural irregularities, illegality, or errors in the application
of law.

• Interventionist Approach: Courts have more flexibility to annul or refuse enforcement of

awards for reasons beyond the fundamental policies of the state.

• Key Cases:

• ONGC v. Saw Pipes: The scope of public policy was expanded to include patent
illegality.

• Associated Builders Case: Summarized the heads for public policy.

 • ONGC v. Western Geco: Judicial review based on the Wednesbury principle. However,
this conflicted with the non-intervention principle in Sections 5 and 16 of the
Arbitration Act.

2. Narrow View of Public Policy:

• A narrow interpretation restricts public policy to fundamental principles of justice, fairness,

morality, and law. This approach focuses on minimal judicial intervention and respects the
finality of arbitral awards.

• Key Cases:

• Renusagar Power Co. Ltd. v. General Electric Co.: The narrow view applied to
foreign awards.

• 2011 Phoolchand Imports Case: Focused on public policy under Section 48 and 57
of the Arbitration Act.

• 2013 Shri Lal Mahal Ltd. v. Progetto Grano Spa: Overruled Phoolchand and
reaffirmed the narrow view.

• Vijay Karia & Ors. v. Prysmian Cavi (2020): Clarified the application of the narrow
view and stated that patent illegality does not apply to International Commercial
Arbitration (ICA).

Post-2015 Amendment Developments

1. 2015 Amendment to Section 34, 48, and 57:

• The 2015 Amendment clarified the scope of public policy in Section 34, 48, and 57 of the
Arbitration Act.

• Key Cases:

• Ssangyong Engineering & Construction Co. Ltd. v. NHAI (2019):

• The court cannot review the merits of the award.

• The Wednesbury principle (from Geco) does not apply.

• Public policy for foreign awards follows the Renusagar approach, and for
domestic awards, the Associate Builders approach applies.
 • Patent illegality must be on the face of the award and cannot be used to
review the merits of the award.

• Vijay Karia & Ors. v. Prysmian Cavi (2020):

• Three Tests:

1. Narrow view applies to foreign awards.

2. Part I of the Act applies public policy + patent illegality.

3. Patent illegality does not apply to ICA and must be on the face of
the award.

Sections 34, 35, and 36 of the Arbitration and Conciliation Act

1. Section 34 – Grounds for Setting Aside an Award:

• This section lays down the grounds on which a party can challenge the validity of an arbitral
award. The grounds are narrow and primarily focus on public policy and patent illegality.

• Explanations 1 & 2 (2015 Amendment) provide clearer definitions of public policy.

2. Section 35 – Finality of the Award:

• Once the arbitral award is passed, it is final and binding on the parties unless successfully
challenged under Section 34.

3. Section 36 – Enforcement:

• Enforceability: The award is directly enforceable. However, a stay can be granted on

enforcement if the challenging party can show a prima facie case for setting aside the
award under Section 34.

Key Takeaways:

• Challenging the Award vs. Challenging Enforcement: Challenging the award seeks to invalidate the
award before it’s enforced, while challenging enforcement resists the recognition and execution of
an award in a particular jurisdiction.
 • Domestic vs. Foreign Awards: Domestic awards are challenged under Section 34, with broader
grounds, while foreign awards are challenged under Section 48, which has narrower grounds for
refusing enforcement.

• Public Policy: There are broad and narrow views on public policy, with the 2015 amendment
clarifying the grounds on which an award can be challenged. The narrow view respects the finality of
arbitral awards and minimizes judicial intervention.

• 2015 Amendment: Clarified that public policy and patent illegality should be on the face of the
award, and the courts cannot review the merits of the award.

Class Notes - 23/10/2024: Recourse Against Arbitral Awards & Judicial Intervention

Section 37 – Appeal

• Appeals under Section 37 are not about challenging the arbitral award itself, but instead, focus
on decisions made by courts under Section 34 (applications to set aside an arbitral award) or interim
orders during the arbitration process.

• Key Concept: Section 37 appeals are limited to judicial review of certain decisions, such as:

• Challenging the decision to set aside an award under Section 34.

• Interim orders issued by the court during the arbitration process.

Associate Builders v. DDA (SC) - Judicial Intervention and Public Policy

• Key Issues: This case clarified the scope of judicial intervention under Section 34, particularly when
the seat of arbitration is in India.

• The Supreme Court emphasized the principle of minimal judicial interference in arbitration.

• The Court made an important distinction between errors of law and errors of fact:

• Errors of Fact: These cannot be grounds for setting aside the award under Section
34. The court cannot act as an appellate body to review the factual correctness
of an arbitral award.
 • Errors of Law: Judicial intervention may be allowed only in cases where there is a
patent illegality or a violation of public policy.

• Court Observations:

• Public Policy: Challenges based on public policy must be limited to fundamental legal
principles, justice, morality, or patent illegality.

• Interest of India: The "Interest of India" argument, raised in Associate Builders, was
overruled in Ssangyong.

• Patent Illegality: The "prima facie" test applies to Indian-seated arbitrations and can include
instances of fraud and corruption.

• Minimal Judicial Intervention: Courts should refrain from re-evaluating evidence or

substituting their judgment for that of the arbitral tribunal.

• Key Takeaway: Errors of fact, even if apparent, do not warrant judicial intervention. Section 34
upholds the finality of the arbitral award, and challenges must be based on narrow grounds like
patent illegality or public policy violations.

Ssangyong Engineering & Construction Co. Ltd. v. NHAI (2019)

• Clarification on Public Policy: The Ssangyong case refined the definition of public policy under
Section 34(2)(b)(ii) and patent illegality under Section 34(2A).

• Key Points:

• Functus Officio: After issuing the final award, the tribunal is functus officio and
cannot revisit the issues.

• Public Policy: For foreign awards, Renusagar applies, while for domestic awards,
Associate Builders applies.

• Patent Illegality: The prima facie test is applied to determine patent illegality, and
it cannot be based on a re-appreciation of evidence. Errors of fact or mere
disagreements with the award do not constitute patent illegality.

• Key Takeaway: Ssangyong became the go-to precedent for addressing patent illegality under
Section 34. It supersedes earlier judgments like Associate Builders on this point.
Megha Enterprises Case

• Issue: In this case, Haldiram invoked arbitration due to failure of payment, and the petitioner raised
a patent illegality claim.

• Court Observations:

• Limitation Period: The limitation period only bars the remedy and not the underlying debt.
This is not addressed under Section 34.

• Interference with Evidence: The Court refused to interfere with the award merely on the
grounds that it did not concur with the tribunal's conclusions (such as the interpretation
of emails and letters as evidence).

• Patent Illegality: The Court stated that there was no prima facie evidence of patent illegality
in this case. The evidence presented did not meet the threshold for patent illegality.

• Section 34 Limitation: Section 34 is meant to provide limited grounds for challenging arbitral
awards, and courts cannot re-appreciate the evidence or revisit the tribunal's findings on
merit.

• Key Takeaway: Section 34 is limited and does not allow the re-evaluation of evidence. Courts must
respect the tribunal's findings unless there is patent illegality on the face of the award.

Larsen & Toubro v. Air Conditioning Corporation

• Issue: The case involved a dispute over the modified rate of interest in an arbitral award.

• Court's Approach: The Court relied on Section 31(7)(b), which deals with modified interest rates.

• Key Points:

• The court reaffirmed the principles of non-intervention and minimal judicial

interference in arbitral awards, consistent with Associate Builders and Ssangyong.

• Section 37 Appeals: Appeals under Section 37 are narrowly scoped and do not
permit re-appreciation of evidence or modification of the award, except in cases
of public policy violations or patent illegality.

• Key Takeaway: Section 37 appeals are narrow and limited. The court cannot interfere with the
merits of the award unless there is a clear violation of public policy or patent illegality.
Key Takeaways:

1. Section 37 Appeal: Appeals under Section 37 are limited to reviewing court decisions on setting
aside awards(Section 34) and interim orders, not the award itself.

2. Associate Builders Case: The minimal judicial intervention principle means that courts should not
interfere with arbitral awards based on errors of fact. Public policy challenges should focus on
fundamental legal principles, justice, and morality.

3. Ssangyong Case: Patent illegality can only be reviewed if it is prima facie evident in the award.
Errors of fact or disagreement with the tribunal's decision on evidence do not constitute patent
illegality.

4. Megha Enterprises Case: The limited scope of Section 34 does not allow courts to reappraise
evidence unless there is patent illegality on the face of the award.

5. Larsen & Toubro Case: Courts cannot modify awards based on evidence reappraisal; they must
respect the tribunal’s decisions unless there is a violation of public policy or patent illegality.

Class Notes - 05/11/2024: Enforcement of Foreign Awards & Judicial Referral to Arbitration

Section 45 vs. Section 8 – Referral to Arbitration

Similarities:

1. Referral to Arbitration: Both Section 45 (foreign awards) and Section 8 (domestic awards) empower
courts to refer parties to arbitration when there is a valid arbitration agreement.

2. Limited Judicial Intervention: Both provisions reflect the Arbitration and Conciliation Act’s pro-
arbitration stance, aiming to reduce judicial interference and promote arbitration as an alternative
dispute resolution mechanism.

3. Prima Facie Examination: In both cases, the court conducts a prima facie examination to determine
if the dispute is covered by the arbitration agreement.

Differences:

1. Scope of Application:

• Section 8 applies to domestic arbitration agreements (i.e., arbitration within India).

 • Section 45 applies to international commercial arbitration agreements that are governed
by the New York Convention or Geneva Convention, involving foreign elements.

2. Discretion in Referral:

• Section 8 mandates referral to arbitration if the court finds a valid arbitration agreement.

• Section 45 provides discretion to the court, which can refuse to refer the parties to
arbitration if the agreement is found to be null, void, inoperative, or incapable of being
performed.

3. Timing of Application:

• Section 8 requires that parties apply for referral to arbitration at the first instance of
submitting a statement on the substance of the dispute.

• Section 45 does not impose a strict timeline, offering more flexibility for the court to consider
the arbitration agreement at any point before proceeding with the case.

Key Takeaway: Section 45 applies to international arbitration, where the court has discretion to refer parties
based on prima facie validity of the agreement. Section 8 mandates referral for domestic arbitration
agreements with less judicial discretion.

Section 48 – Grounds for Refusing Enforcement of Foreign Awards

• Section 48 outlines the grounds for refusing enforcement of a foreign award in India, which are:

• Arbitrability (whether the subject matter of the dispute is arbitrable under Indian law).

• Public Policy (issues such as fraud, corruption, or violations of fundamental Indian law
policies).

• Public Policy has been a critical ground for refusal of enforcement.

Public Policy Interpretation:

• Broad View: This view allows a wide interpretation of public policy, including violations of procedural
irregularities, illegality, or errors in law. It’s an interventionist approach, enabling courts to intervene
more freely.

• Key Case - ONGC v. Saw Pipes: Public policy was expanded to include patent illegality.
 • Key Case - Associated Builders: Public policy was further clarified, noting that judicial
intervention should focus on fundamental policy issues.

• Narrow View: This view limits public policy to core issues of justice, fairness, morality, and
fundamental legal principles.

• Key Case - Renusagar Power Co. Ltd. v. General Electric Co.: This case focused on foreign
awards, emphasizing a narrow interpretation of public policy.

• Key Case - Shri Lal Mahal Ltd. v. Progetto Grano Spa: Overruled the broader approach in
Phoolchandand reaffirmed the narrow view.

• Key Case - Vijay Karia & Ors. v. Prysmian Cavi (2020): Narrow view applies to foreign
awards, distinguishing it from domestic arbitration.

Key Takeaway: The interpretation of public policy is narrower for foreign awards and broader for domestic
awards. Courts should only intervene if the award violates fundamental principles of justice or morality.

Section 49 – Enforcement of Foreign Awards

• Enforcement: Once the court is satisfied with the award under Section 48, it can proceed with
enforcement under Section 49.

• Key Point: Under Section 57(1)(e), for an award to be enforced in India, it must be final in the
jurisdiction where it was made. This requirement provides greater flexibility than Section 48, which
allows for enforcement even if the award is still appealable in its jurisdiction of origin.

Key Takeaway: Section 49 requires the foreign award to be final in its home country for enforcement, while
Section 48allows more flexibility for enforcing awards that are still subject to appeal.

Chapters 1 and 2 – New York Convention vs. Geneva Convention

• Chapter 1: Deals with New York Convention Awards (1958). The New York Convention is widely
recognizedand provides a comprehensive framework for the recognition and enforcement of
international arbitral awards.

• Chapter 2: Deals with Geneva Convention Awards (1927). The Geneva Convention is a more limited
framework compared to the New York Convention, with fewer signatory countries.
Key Difference: The New York Convention is broader in scope and has a wider international reach than the
Geneva Convention.

Key Case Studies

1. National Agricultural Cooperative Marketing Federation of India (NAFED) v. Alimenta:

• Facts: Alimenta obtained an award in their favor, but NAFED challenged it in India.

• Supreme Court Judgment: The SC refused to enforce the foreign arbitral award because
the contract was contingent on government approval, and since the government denied
permission, the contract became voidunder Section 32 of the Indian Contract Act.

• Public Policy: The Court found that enforcing the award would violate Indian public policy,
as it contravened government export restrictions.

• Issue: The approach was correct, but the legal reasoning was flawed. While the public policy
argument was valid, the court incorrectly applied the fundamental policy principle. This should
have been examined under SsangYong, which provides a clearer framework for public policy
challenges.

2. Centro Trade Minerals Case:

• Issue: Whether failure to present evidence could prevent enforcement of an arbitral award.

• Court's Ruling: The Court held that a party’s right to be heard includes written submissions.
The Court allowed relief if it can be proven that the failure to present evidence was not a
default of the party.

3. Shin-Etsu Chemical Co. Ltd. v. M/s Aksh Optifibre Ltd.:

• Facts: Shin-Etsu, a Japanese company, entered into a contract with Aksh Optifibre, an Indian
company, with an arbitration clause specifying arbitration in Japan under ICC rules.

• Legal Question: Whether a prima facie determination of the arbitration agreement’s validity
is sufficient under Section 45 at the pre-reference stage.

• Supreme Court Decision: The Court ruled that a prima facie assessment of the arbitration
agreement is sufficient at the pre-reference stage. There is no need for a full trial at this
point, ensuring that judicial intervention remains minimal.
 • Key Takeaway: Section 45 allows a prima facie determination and does not require a full
trial before referring parties to arbitration.

Key Takeaways:

1. Section 45 vs. Section 8: Section 45 applies to international arbitration, with judicial discretion
and prima facie examination of the arbitration agreement, while Section 8 is mandatory for domestic
arbitration.

2. Public Policy: Public policy challenges are broader for domestic awards and narrower for foreign
awards, focusing on fundamental legal principles.

3. Enforcement of Foreign Awards: Section 49 requires the award to be final in its home country,
offering more flexibility than Section 48, which is more stringent on enforcing awards that may still
be appealable.

4. Key Case Precedents: Ssangyong, Associate Builders, and Renusagar provide critical guidance on
public policychallenges, patent illegality, and the narrow judicial review of arbitral awards.