Volume III Issue II (May, 2022 to August, 2022)


Quarterly Alternative Dispute Resolution Round-Up (June-August 2022)


Cutting Corners: Reviewing the Delhi High Court’s Approach to Sovereign Immunity by Shantanu Singh

How must a court execute an ex-parte award rendered against a foreign State? Can the court freeze the bank accounts of its wholly-owned company to satisfy such an award? Moreover, how should any court deal with the dynamic personality of foreign States, who are, at once, sovereigns immune from judicial proceedings before courts in other States and find themselves increasingly engaged in commercial relationships with private entities? These are among the queries that the Delhi High Court (DHC) has had to answer in sitting upon the enforceability and execution of an award passed against the respondent-State of Ethiopia in Matrix Global Pvt. Ltd. v Ministry of Education, Federal Democratic Republic of Ethiopia. 

This article is about the enforcement proceedings in this case. First, I describe the DHC’s decision on sovereign immunity and critically analyse the ‘means’ it adopts in executing the arbitral award against Ethiopia. Second, criticisms of the DHC’s approach, where constructive, are offered along with specific concerns on how it mistakes certain aspects of immunity in reaching its conclusions. Last, I turn to how the DHC’s wayward approach accentuates the urgent need to frame and enact a dedicated domestic legislation on the subject of immunity to provide foreign States with the same protection and certainty that India and its wholly-owned companies enjoy abroad.

Should Consumer Disputes be Arbitrable in India? by Khushboo Sharma & Anushkaa Bajpai

While several regional arbitration centres in Asia have become prevalent international arbitration centres, India still lags behind. Investors prefer to invest in jurisdictions that are arbitration friendly. In this context, India has been sending mixed signals to the investor community. 

There have been numerous efforts to make India an arbitration-friendly jurisdiction. Unfortunately, all such efforts have overlooked the concept of arbitrability. Consequently, the rampant discussion on arbitrability of disputes is still in muddy waters, just like the arbitrability of consumer disputes. 

As India aspires to be a pro-arbitration state, there is a strong need to balance the judicial trend wherein the Courts have been increasing the scope of ‘arbitrable subject matters’ in consonance with the global trend of upholding the right to avail arbitration to resolve disputes rather than going to civil Courts.

Reading Between the Lines of India’s Venue and Seat Debate by Ahan Gadkari

In the context of international commercial arbitrations, the term ‘venue’ refers to any suitable physical or geographical location for holding arbitral proceedings. In contrast, the word ‘seat’ has been interpreted as the jurisdictional location of the arbitration, where courts would have supervisory authority over the arbitral proceedings. The terms “seat” and “venue” are not defined in either the 1940 Arbitration Act or the 1996 Arbitration and Conciliation Act. Section 20 of the Act specifies “Place of Arbitration,” which is synonymous with “seat” and “venue.” Despite the Law Commission’s recommendation that the 2015 Amendment Act include separate definitions for seat and venue, such proposals did not result in real modifications. In the lack of a clear legislative framework, the law has been established via a variety of judicial declarations, some of which are inherently contradictory. 

The Supreme Court of India rightly recognised this difference in Bharat Aluminium Company Ltd v. Kaiser Aluminium Technical Services Ltd. The Supreme Court, citing the decisions of the English Court of Appeal in Naviera Amazonica Peruana SA v. Compania Internacional de Seguros del Peru and Union of India v McDonnell Douglas Corpn,  held that while the ‘seat’ is the centre of gravity of arbitral proceedings, this does not necessitate that all proceedings be physically conducted at the seat of arbitration. In reaching its conclusion, the Supreme Court implicitly acknowledged the distinction between ‘seat’ and ‘venue.’ With respect to this difference, however, the judgements of the Supreme Court and various High Courts in India post-BALCO have been confusing and contradictory. Such confusion has also been emphasised by Justice Navin Chawla in his recent webinar on territorial jurisdiction in arbitral proceedings. An overview of the applicable case law reveals the different perspectives of the courts.

The Good, The Bad, The Ugly: Reining in the Tumultuous Group of Companies Doctrine by Alay Raje & Samridhi Shrimali

Recently, in Cox and Kings v. SAP India, the Supreme Court of India has referred a larger bench to contemplate the application of the Group of Companies Doctrine in arbitrations. In the Indian Context, the evolution of the doctrine has been capricious in nature. As propounded in Chloro Controls India v. Severn Water Purification, the GoCD binds a non-signatory by an arbitration agreement, subject to the existing parties mutually intending that the non-signatory be bound by it. Post Chloro Controls, through several cases, the grounds for invoking the doctrine now encompasses inter alia the existence of a direct relationship between the signatory to the arbitration agreement and the non-signatory entity of the group; direct commonality of the subject-matter; composite nature of the transaction between the parties. 

In Cox & Kings, the signatory to the mutual agreement was a wholly-owned subsidiary of the non- signatory, and the petitioners instituted arbitration against the non-signatory upon the failure to initiate proceedings against the signatory owing to the signatory’s ongoing insolvency proceedings. In lieu of this, the Supreme Court, while acknowledging that after Chloro Controls, several arbitral tribunals and Courts have used GoCD on the basis of economic convenience rather than legal standards, has referred the question of the extent and applicability of the doctrine to a larger bench. Hence, the hot debate on the doctrine was reignited. 

Arguably, the doctrine has, in some ways, acted as a lagniappe for the arbitration ecosphere. The dipping numbers of multiple litigations, acting as a one-stop solution for parties aggrieved by group corporates that avoid their liabilities through their business structures, are some, to name a few. However, the doctrine has ventured into diverse directions, departing from the fundamental concepts. Thereby, revisiting the contours and rationale of the doctrine has become the need of the hour. The authors in this article elucidate the pitfalls of the doctrine such as; the interpretation of the phrase – “claiming through and under”; disregard for principles of like mutuality and party autonomy; abusing the term “exceptional circumstance”, and penurious interpretation of corporate law in arbitration law. The discussion over these defects is supplemented with solutions, followed by concluding remarks.

Balancing Institutional Structure with Party Autonomy: In Support of the Lok Adalat System by Sarthak Wadhwa

This paper shows – First, that the scope of adversarial proceedings determines judicial pendency across the various modes of alternative dispute resolution and that these modes can be arranged from least to most adversarial on a spectrum. Second, that on this spectrum – multiple modes of alternative dispute resolution have become inclined towards a more adversarial process foregoing significant amounts of party autonomy that traditionally characterises ADR. Third, that within this contextual framework – LAs offer a relatively balanced approach to party-centric dispute resolution by mandating pre-trial conciliatory processes and providing an institutional infrastructure to give effect to the outcomes of these processes. And fourth, that in doing so – LAs further the objectives of ADR, viz. speedy, inexpensive dispute resolution without the kerfuffle of tackling the complicated court system and procedural complications. In this endeavour, the procedure to set aside orders serves as the analytical lens through which to compare and contrast the ‘feasibility’, ‘flexibility’, and – most importantly – ‘finality’ of these different ADR mechanisms.


Volume III Issue II