Articles

Arbitrator’s Discretion: Balancing Contractual Provisions with Justice by Aditya Vikram Singh and Shreya Chandhok

Alternative Dispute Resolution mechanisms have gained significant traction in India due to their efficiency, flexibility, and adaptability in resolving disputes. Amongst these, arbitration stands out as a preferred method, offering parties a way to resolve their disputes outside of traditional court litigation and by choosing subject matter experts to adjudicate over technical disputes. However, arbitrators being creatures of a contract, it has been a matter of debate as to whether an arbitrator can transcend beyond the mandate of a contract if the disputes require so, to do justice. Arbitrations are required to operate within the framework of contractual provisions agreed upon by the parties involved. However, arbitrators have the liberty to employ equitable principles while interpreting contractual terms, albeit being the four corners of the contract. As such, while parties may establish the parameters of arbitration through contractual agreements, arbitrators possess expansive powers to interpret these provisions and ensure fairness, equity, and compliance with public policy, even if it means deviating from strict adherence to contractual terms. This flexibility allows arbitrators to address unforeseen circumstances, fill gaps in contracts (though it does not imply rewriting of contract), consider equitable principles, and craft remedies tailored to the specific needs of the dispute. Ultimately, the authority of arbitrators to transcend contractual provisions highlights their crucial role in delivering justice effectively within the ADR framework. This article through certain instances (specifically pertaining to contractual limitation to claim damages) explores the expansive scope of arbitrators’ powers in India to adjudicate disputes pertaining to construction contracts. The article further explores the extent of authority and discretion vested in arbitrators to administer justice to the parties involved while respecting the contours within which they are expected to function.

An Insight into the Legal Position of Arbitrator’s Fee In India by Savithiri R.

The legislative intent behind recognizing arbitration as a dispute settlement mechanism is to remove the burden off the Courts due to the increasing number of litigations and to provide party autonomy in contractual dealings. Initially, arbitration gained widespread attention because it was expeditious, less expensive, fair, efficient, and an effective method for the settlement of disputes compared to time-consuming, complex, and expensive court procedures. With the introduction of the arbitration law in India, the supervisory role of Courts was minimized and the arbitral award was treated on par with the decree of a Court. The importance of arbitration has grown manifold since 1995 with privatization, liberalization, and globalization. However, during the past few years in India, arbitration has in turn become a ‘costly’ way of dispute resolution because the ‘costs’ involved in arbitration include arbitrator’s fees and expenses, institutional fees and expenses, advocate charges, witnesses, payment for the venue, hearings etc.

The Role Of Market Liberalisation In Navigating India’s Arbitration Landscape  by Mansi Tripathi

With a GDP exceeding $3 trillion, India’s economy dwarfs those of Canada, Russia, Brazil, and Australia, presenting immense economic prospects. With such an expected influx, the heads of companies are optimistic that the expansion would lead to a substantial increase within the country’s market. In a recent exchange with Bar&Bench, Claudia Salomon, who is the first female president of the International Chamber of Commerce’s International Court of Arbitration, stated in her valuable insight that continued endeavour to liberalise the Indian market might lead to the emergence of a more competitive arbitration landscape. In the past few decades, India has undertaken substantial initiatives to establish the efficiency and effectiveness of dispute resolution processes by, aligning with international standards and fostering a more conducive business environment. Arbitration, as a pivotal Alternative Dispute Resolution mechanism on a global scale, is gaining paramount space in the Indian legal landscape as the country embarks upon the journey of market liberalisation which is, a strategic initiative meticulously crafted to catalyse economic growth, attract foreign investments, and fortify global trade relations. This paradigm shift toward opening up the market carries the potential to not only influence but also redefine the mechanisms, challenges, and opportunities within the realm of arbitration, thus, marking a crucial juncture in India’s economic and dispute resolution landscape.
This research paper explores the relationship between market liberalisation and India’s arbitration landscape, focusing on the potential advantages and challenges that can arise from the evolution of the country’s arbitration mechanisms. The paper emphasizes the benefits of arbitration as a flexible, efficient, and cost-effective dispute resolution method, contributing to a conducive business environment in a liberalized market. The paper also discusses the implications and challenges of this relationship.

Construction Arbitration in the Maze of Project Delays and Time Extensions by Shree Dwivedi and Shreya Mishra

Construction business is one of the highest drivers of the Indian Economy. The significance of the Construction Industry is evident from the Foreign Direct Investment inflows in the construction sector including infrastructure activities which have increased in the last two years from $1861 million to $2402 million. Attracting a major portion of Government expenditure, the Construction Industry gives birth to complex legal issues which is further aggravated by extreme technicalities. Construction Contracts are primary instruments that govern the execution of the projects as well as the relationship between the parties involved. In simple terms a contract negotiated between parties for construction of a particular asset such as roads, bridges, buildings, ships etc. is a construction contract. There are a multitude of documents and parties involved in a single Construction Project, wherein the employer is usually the principal, and the contractor and subcontractor are engaged by the principal. The construction contract law is the application of general principles of the Indian Contract Act to a specific situation. A contract is the backbone of any dispute and the same ought to be drafted in a way which provides a mechanism for the resolution of such disputes. In India, the most commonly used mechanism is Arbitration. This paper delves into the intricate web of project delays, claims of liquidated damages and grants of extension of time. Furthermore, it explores the status of non-signatories in construction arbitration and emphasizes the delays caused due to the role of expert advisory in arbitration proceedings.

Resolving the Conundrum between Arbitration and Insolvency Laws in India by Samriddhi Gupta

The intersection of arbitration and insolvency has assumed greater significance with the evolution of a new insolvency regime in India. Often referred to as a ‘conflict of near-polar extremes’ and driven by divergent goals with respect to their policies, insolvency exerts an inexorable pull towards a centralised policy, whereas, arbitration advocates a decentralised approach toward dispute resolution. Moreover, a theoretical conflict between arbitration and insolvency becomes apparent due to the opposing interests of the Corporate Debtor and creditor where the CD is inclined towards challenging the impending insolvency application against them and, subsequently, resolving it through arbitration. This choice is premised on two arguments, namely, the existence of a ‘default’ in payment and a cross-claim against the creditor. The stay on insolvency proceedings allows the CD to retain control over their company’s assets and steer the arbitration proceedings by appointing arbitrators, forums, and tribunals of their choice. On the contrary, the Insolvency and Bankruptcy Code, 2016 strives to safeguard the creditor’s stake by maximising the CD’s assets. This paper sheds light on the current conundrum of the arbitrability of insolvency disputes in India. The first part of the paper focuses on legal provisions pertaining to the arbitrability of insolvency matters and lays down the trajectory of the legal pronouncements on the subject. The second part outlines American jurisprudence and draws a comparison between the two legal frameworks. Finally, the paper concludes by suggesting a prudent and calculative approach that consolidates the benefits of both systems.

From Adhesion to Cohesion- Recontextualizing the Application of the Group of Companies Doctrine under the Law of Arbitration by Sarvagya Chitranshi and H A Dhruti

The ‘group of companies’ doctrine is one of the essential doctrines used under the law of arbitration to impose the obligations of an arbitration agreement on non-signatories. It recognises them as a single economic unit despite being separate legal entities. This doctrine, originating from taxation and company law, imposes contractual obligations on all members due to their shared economic relationship. It essentially serves as an exception to the principles of privity of contract and party autonomy in arbitration law, allowing for broader arbitration coverage within corporate groups. While effective commercially, it however, conflicts with central tenet of arbitration: party autonomy. The doctrine was introduced in the 1980s through the award passed in Dow Chemical v. Isover-Saint-Gobain. A three-pronged rationale was adopted by the Tribunal to invoke the group of companies doctrine. It was stated that firstly, both the signatory and non-signatory parties involved must belong to the same corporate structure. Secondly, the active role of the non-signatories in the conclusion and performance of the agreements was required to be established. Lastly, a common intention of all the parties, signatories, and non-signatories, to arbitrate was essential.

Inequity Unveiled: Challenges to Fair Appointment of Arbitrators by Shirish Sachdeva

Ensuring the impartiality and independence of arbitrators is paramount in arbitration proceedings, as it upholds the key tenets of natural justice. The foundation of the entire arbitration system hinges on the confidence parties placed in arbitrators entrusted with adjudicating their disputes. This confidence is essential in arbitration proceedings as parties themselves participate in the appointment of their arbitrators. In the Indian arbitration landscape, there are nuanced challenges in ensuring the independence and neutrality of arbitrators while upholding the binding nature of contracts and ensuring autonomy of parties in the appointment procedure. Therefore, this spirit of party autonomy at times overlooks the inherent unfairness in the appointment of arbitrators in certain situations, particularly when it comes to contracts with public sector undertakings and other statutory corporations. A big reason as to why such a trend is observed is that contracts with PSUs and other statutory corporations tend to give unilateral rights of arbitrator appointment to these entities which in turn gives rise to the question of bias. In practice, there is a dearth of metrics to evaluate the independence and impartiality of these arbitrators, this has allowed state entities to nominate individuals which have some sort of designation linked with them to preside over their dispute. On that note, it is imperative to note that the practice of nominating serving employees as arbitrators in their dispute was not expressly prohibited in the now repealed Arbitration and Conciliation Act, 1940, and subsequently under the Arbitration and Conciliation Act, 1996 as well.

The Unstamped Arbitration Agreement Peregrination: A Riddle Resolved by Mansi Verma and Aarush Sajit Kumar

The enforceability of arbitration agreements contained within unregistered and unstamped instruments remained a contentious and unresolved area of Indian Arbitration law until very recently when the courts gave a resolute verdict on the enforceability of such contracts in its Supreme Court Reference on Interplay between Arbitration agreements under the Arbitration and Conciliation Act 1996 and the Indian Stamp Act 1899 Judgement. Conflicting legal precedents and a complex interplay of statutory regulations created considerable ambiguity for those seeking to utilize the alternate dispute resolution mechanisms. Several High Courts and even Supreme Court pronouncements in the past failed to lay down a conclusive position as to the enforceability of arbitration clauses contained within instruments subject to mandatory stamping under the Indian Stamp Act, 1899.  At the heart of this conundrum lied section 35 of the Stamp Act which declared that instruments which are unstamped or insufficiently stamped are inadmissible as evidence and unenforceable in Court. Such a verdict created a conundrum which underwent a meandering journey of conflicting verdicts before finding resolution in the NN Global 3 judgement.