Articles

Third Party Funding: An Overview and the Way Forward in India by Sivaganga P. 

International Arbitration has emerged as the most prominent dispute resolution mechanism across the globe. One of the major challenges associated with the practice of arbitration is the exorbitantly high costs associated with the proceedings. This might stop a party from contesting even legitimate, meritorious claims due to lack of funds for the arbitral proceedings. Third Party Funding is an alternate means for parties to an arbitration agreement to fund their claims. This paper shall analyse the same in the context of India.

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.

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.

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.

Future of Arbitration in Environmental Disputes in India: NGT v. Party Autonomy? by Sneha Rath

By declaring the need to advert to the ‘Seventh Generation’ sustainability principle (also called the ‘Great Law of the Iroquois’- “which requires all decision making to withstand for the benefit of seven generations down the line”), the Supreme Court in its landmark decision, Municipal Corporation of Greater Bombay v. Ankita Sinha and Others has confirmed: the nature of ecological imbalance at present will have an egregious impact on the communities, the NGT being a social-centric forum cannot be a mute spectator and has the responsibility to arrest irreparable environmental damages, and thus, the NGT is well-within the contours of its statutory powers when taking suo moto cognizance of environmental exigencies.

Reforming the Investor-State Dispute Settlement System: Exploring Alternative mechanisms by Ananya Prakash and Zoya Zahed

The Investor-State Dispute Settlement System has been severely criticised in the past decade owing to its various limitations such as transparency, arbitral bias, inconsistency in decision-making, absence of a formal appeals process, apparent regulatory chill, and significant public interest concerns. Though the ISDS mechanism has been routinely relied on to settle disputes between foreign investors and host states, it has resulted in the widespread termination of BITs and incessant demands for reform at an international level. The UNCTAD along with the UNCITRAL, through the Working Group III, have been involved in formulating potential methods for reforming the ISDS system or replacing it altogether. Through this paper, the authors aim to establish possible alternatives to the current system based on the sessions of the Working Group III by analysing their feasibility to present the ISDS system’s way forward.