Chapter 2

This document, Arbitration in India Chapter 2: The Arbitration Agreement by Dipen

Sabharwal, provides a deep dive into the legal framework surrounding arbitration agreements
in India. It emphasizes both the substantive and procedural aspects of these agreements,
explaining their essential elements, types, and implications under the Arbitration and
Conciliation Act, 1996 (hereafter referred to as the 1996 Act). Here’s an even more detailed
breakdown incorporating key excerpts:

1. Introduction to Arbitration Agreements

The arbitration agreement is the cornerstone of any arbitration proceeding. Without a valid
arbitration agreement, an arbitral tribunal lacks jurisdiction to resolve disputes. The
significance of this agreement cannot be overstated: it defines the consent of the parties to forgo
court litigation in favor of arbitration and is the source of the tribunal’s power.

Under Indian law, the arbitration agreement is crucial for the validity of the entire process, and
Indian courts have upheld this principle consistently. According to Section 7 of the 1996 Act,
arbitration must be based on a valid agreement, largely modeled after Article 7 of the
UNCITRAL Model Law. This section defines an arbitration agreement as an agreement to
submit certain disputes (whether contractual or not) to arbitration. These disputes must arise
out of a legal relationship defined by the parties.

The nature of arbitration in India is consensual, meaning the authority of arbitrators is derived
directly from the parties’ agreement. Without this foundation, national courts and tribunals have
no jurisdiction to arbitrate disputes. The chapter highlights that arbitration should never be
treated as a simple "midnight clause" and must be drafted with significant diligence to avoid
future legal disputes.

2. Key Elements of a Valid Arbitration Agreement

A plain reading of Section 7 of the 1996 Act lays down the following four key elements that
are required for a valid arbitration agreement:

1. Agreement to submit disputes to arbitration: The first essential feature is that the parties must
agree to submit either all or certain disputes, whether present or future, to arbitration.

2. The agreement must be in writing: Section 7 mandates that the arbitration agreement must
be in writing, which can take various forms (contractual clauses, separate agreements, or even
electronic exchanges).

3. Containment in a contract or a separate agreement: The arbitration agreement can either be

a clause within the main contract or a separate agreement entirely. In both cases, the agreement
should clearly demonstrate the parties' intention to arbitrate.
4. The dispute must arise out of a defined legal relationship: The disputes referred to arbitration
must concern a defined legal relationship, whether contractual or not. The nature of this legal
relationship provides a boundary for what disputes can be arbitrated.

3. Intention of the Parties

A crucial determinant of a valid arbitration agreement is the intention of the parties to submit
to arbitration. This intention must be clear and unequivocal, as underscored in the Supreme
Court case of Jagdish Chander v. Ramesh Chander. The court stressed that the intention should
be reflected in the terms of the agreement itself, rather than its form. Thus, even if the terms
like “arbitration” or “arbitrator” are absent, an agreement can still be valid as long as the
intention to submit to arbitration is evident from the language used.

The Supreme Court’s guidelines outline several scenarios:

An agreement containing terms that oblige the parties to submit disputes to arbitration reflects
a binding intention.
Clauses that merely contemplate the possibility of arbitration in the future (e.g., “the parties
may consider arbitration”) do not constitute a binding arbitration agreement.

The courts also look at whether the parties have waived their right to litigate in public forums,
which solidifies their intent to arbitrate. In contrast, if an agreement states that parties may refer
disputes to arbitration upon mutual consent at a later date, it lacks the mandatory element
necessary for enforceability.

4. Requirements for a Valid Arbitration Agreement

Beyond intention, Section 7 of the 1996 Act imposes formal requirements for the agreement:
Written requirement (Section 7(3)): The agreement must be in writing, which can be
established through:
A document signed by the parties,
An exchange of letters, telex, telegrams, or electronic communications that serve as evidence
of the agreement,
Statements of claim and defense in which the existence of the arbitration agreement is
alleged by one party and not denied by the other.

Courts have interpreted the writing requirement flexibly, as shown in Smita Conductors Ltd.
v. Euro Alloys Ltd., where correspondence reflecting an intent to arbitrate was sufficient even
in the absence of a formal signature.

Section 7(5) of the Act allows the incorporation of an arbitration clause from another
document. This means that a contract can refer to another document containing the arbitration
clause, and such reference will constitute a valid arbitration agreement, provided that the
incorporation is clear and express.
5. Forms of Arbitration Agreements

The 1996 Act recognizes three main forms of arbitration agreements under Section 7(2):

1. Arbitration Clause in a Contract: This is the most common form, where an arbitration clause
is integrated within a larger contract governing the legal relationship of the parties. Courts must
ascertain the parties’ intent to arbitrate from the language of the contract.

2. Separate Arbitration Agreement: In some cases, parties may enter into a separate agreement
outside the main contract. Such agreements must also clearly indicate the parties’ intention to
resolve disputes through arbitration.

3. Arbitration Agreement by Incorporation: As provided in Section 7(5), if a contract refers to

another document containing an arbitration clause, this clause can be validly incorporated.
However, the reference must clearly indicate the parties’ intention to incorporate the arbitration
clause from that external document into their agreement.

The Supreme Court in M.R. Engineers established a legal test to assess the validity of
arbitration clauses incorporated by reference, which includes examining whether the referred
clause is appropriate and applicable to the dispute at hand. General references to another
contract do not suffice unless the reference to the arbitration clause is specific and clear.

6. Types of Arbitration Agreements

The chapter outlines various types of arbitration agreements, including:

1. Asymmetrical Arbitration Clauses: These clauses allow one party more control over the
dispute resolution process than the other. For instance, one party might be given the unilateral
right to initiate arbitration, while the other cannot. In Bhartia Cutler Hammer v. AVN Tubes,
the Delhi High Court found such a clause invalid, citing the lack of mutuality as it violated the
Contract Act's Section 28, which precludes contracts that absolutely restrict legal proceedings.

The Calcutta High Court, in contrast, has historically upheld the validity of these clauses,
referencing cases like S&D Securities v. Union of India. Courts in other jurisdictions, like the
UK, have also upheld their enforceability.

2. Pathological Clauses: Pathological arbitration clauses are poorly drafted, often introducing
vagueness or inconsistencies that create difficulties in their enforcement. Common defects
include:
Reference to nonexistent arbitral rules or institutions,
Conflicting references to arbitration and court jurisdiction,
Incomplete clauses that fail to provide necessary details like the place of arbitration or the
method for appointing arbitrators.

Courts may attempt to “save” these clauses by interpreting them in a way that reflects the
mutual intention of the parties, but in some cases, they will be deemed unenforceable.
3. MultiTier Clauses: These require parties to undertake preliminary steps like negotiation or
mediation before proceeding to arbitration. The Supreme Court in Centrotrade Minerals &
Metal Inc. v. Hindustan Copper Ltd. upheld a multitier clause requiring arbitration under the
rules of the Indian Council of Arbitration (ICA), with a second appealable arbitration under the
ICC Rules. The court underscored the importance of party autonomy and rejected arguments
that such clauses violated public policy.

7. Principle of Separability

The doctrine of separability ensures that an arbitration clause is treated as independent of the
underlying contract. If the main contract is rendered void or voidable, the arbitration clause
may still remain in effect, preserving the jurisdiction of the arbitral tribunal to rule on disputes.
Section 16(1) of the 1996 Act formally establishes this doctrine by allowing tribunals to rule
on their own jurisdiction, including challenges to the validity of the arbitration agreement.

This principle was reinforced in the Supreme Court case Shin Satellite Public Co. Ltd. v. Jain
Studios Ltd., where the court applied a test of substantial severability, ruling that invalid
provisions could be severed from an arbitration clause as long as the remaining portion
continued to reflect the parties’ intent to arbitrate.

8. Arbitrability of Disputes

Not all disputes can be referred to arbitration, and the concept of arbitrability determines
whether a subject matter is suitable for arbitration. In

Booz Allen & Hamilton v. SBI Home Finance, the Supreme Court made a crucial distinction
between:
Rights in personam: These are rights against a specific individual and are typically arbitrable.
Rights in rem: These are rights enforceable against the world at large (e.g., property rights,
public rights), which are reserved for the courts.

Certain types of disputes, such as those involving criminal offenses, matrimonial matters,
insolvency, and tenancy governed by special statutes, are deemed nonarbitrable under Indian
law. However, the test of arbitrability remains flexible, with courts sometimes allowing
disputes involving subordinate rights in personam that arise from rights in rem to be arbitrated.

9. Third Parties and NonSignatories

The 2015 Amendments to the Arbitration Act marked a significant shift by expanding the scope
of arbitration to include nonsignatories. In the landmark case Chloro Controls India Pvt. Ltd.
v. Severn Trent Water Purification Inc., the Supreme Court applied the group of companies
doctrine. Under this doctrine, nonsignatory companies that were deeply involved in the
underlying transaction could be compelled to arbitrate.
Post2015 Amendment: The amendments broadened Section 8 to include any party "claiming
through or under" a signatory to the arbitration agreement, allowing for a more liberal
interpretation of who could be bound by an arbitration agreement.
10. Drafting Considerations

The document provides detailed guidance on drafting arbitration agreements. Key

considerations include:
Ensuring clarity in expressing the parties’ intent to arbitrate.
Choosing applicable law for both the main contract and the arbitration process.
Defining the procedural rules and the juridical seat of arbitration.
Deciding whether to opt for institutional arbitration or ad hoc arbitration.
Specifying the method of appointing arbitrators, particularly in multiparty contracts.

Parties should take care to anticipate the possibility of related disputes and ensure that the
agreement accommodates consolidation of arbitrations across multiple contracts, if necessary.
The choice of an arbitration institution or arbitrators, the language of arbitration, and the
enforceability of the award in jurisdictions where parties’ assets are located must also be
considered.

Conclusion

Chapter 2 provides a comprehensive and detailed examination of arbitration agreements under

Indian law. It covers the key elements required for a valid agreement, the interpretation of
intent, various forms and types of arbitration clauses, and crucial issues such as separability
and arbitrability. The chapter also highlights the evolution of Indian jurisprudence concerning
third parties and nonsignatories, along with practical advice for drafting effective arbitration
agreements.
Chapter 3

The document, "Multiparty and Multicontract Arbitrations" in "Arbitration in India", provides

a thorough exploration of the legal framework governing arbitrations involving multiple parties
and contracts in India. It covers the complexities, legal mechanisms, and judicial interpretations
necessary to handle such scenarios under the Arbitration and Conciliation Act, 1996 (1996 Act).
Here's a more detailed and comprehensive breakdown of the key points from the chapter:

1. Introduction: Growth of Multiparty and Multicontract Arbitration

The chapter begins by emphasizing the growing prevalence of multiparty and multicontract
arbitrations, particularly in sectors like construction, energy, infrastructure, and finance. These
arbitrations are driven by the complex nature of business transactions today, where multiple
parties and interconnected contracts are often involved in the execution of a single project.

Key Drivers:
Crossborder transactions: Increasing international trade, tax structuring, and complex
financing arrangements have made multiparty arbitrations common, especially where there is
an Indian nexus.
Need for Efficiency: A key challenge is the risk of multiple proceedings in different forums for
disputes arising out of related contracts, which increases time, cost, and the likelihood of
inconsistent outcomes.
The need for consolidation of proceedings or joinder of additional parties has thus become
crucial to streamline dispute resolution. However, the 1996 Act does not provide
comprehensive mechanisms to address all the challenges posed by such arbitrations.

2. Legal Framework for Multiparty and Multicontract Arbitrations

The Arbitration and Conciliation Act, 1996 forms the foundation of the legal framework for
arbitrations in India. The Act is divided into two primary parts relevant to arbitration:
Part I deals with arbitrations seated in India, including both domestic and international
commercial arbitrations.
Part II governs the recognition and enforcement of foreign arbitral awards.
Multiparty Arbitration under the Act:
The 1996 Act contains no explicit provision governing multiparty arbitrations, but it does allow
for party autonomy, meaning parties can agree on the procedures for joinder and consolidation.
Sections 8 and 45 of the 1996 Act, as amended by the Arbitration and Conciliation
(Amendment) Act, 2015, enable parties to join additional participants who are “claiming
through or under” a party to the arbitration agreement.
Judicial Precedents: The Indian judiciary has played a pivotal role in filling gaps where the
legislation is silent, offering interpretations that support joinder and consolidation in certain
circumstances.

3. Types of Multiparty and Multicontract Scenarios

The chapter identifies and categorises four common scenarios where multiparty and multi-
contract arbitration issues arise:
 Scenario 1: Two Parties Governed by Multiple Contracts
In this scenario, two parties engage in multiple contracts, either executed simultaneously or
over time, for the same transaction or purpose.

Issue: Disputes arising from these multiple contracts often overlap. Parties may prefer a single
arbitration to resolve all issues, avoiding parallel proceedings.

Legal Mechanism: The solution lies in incorporating express language in each contract’s
arbitration clause to allow for consolidation. Absent specific language, courts in India have
adopted a flexible approach, often allowing consolidation where there is an implied intention
to arbitrate related disputes together.

Case Example: Astonfield Renewables Pvt. Ltd. v. Ravinder Raina is an example where two
contracts (Appointment and Employment Agreement and Stock Issuance Agreement) were
governed by different laws (Indian and Maltese). The Delhi High Court upheld the tribunal’s
jurisdiction to hear disputes under both contracts due to the explicit intention of the parties.

Scenario 2: Multiple Parties to a Single Contract

Contracts often involve multiple parties who contribute to different parts of the project or
transaction, such as in joint ventures or construction contracts.

Issue: When disputes arise, it may not be possible for all parties to agree on arbitrators or the
procedures to be followed in a multiparty arbitration. Additionally, parties may have different
interests, complicating the arbitration process.

Legal Mechanism: One of the biggest challenges is ensuring equality in the appointment of
arbitrators. In such cases, institutions and courts need to ensure that all parties are treated fairly
during the appointment process. The Dutco case (a landmark French ruling) stressed the
importance of equal treatment in arbitrator appointments.

Indian Context: Indian courts have historically supported arbitration agreements that may not
offer complete equality in arbitrator appointments. However, in recent rulings like Perkins
Eastman Architects DPC v. HSCC (India) Ltd., the Supreme Court of India moved toward
curtailing onesided arbitration clauses that undermine party equality in appointments.

Scenario 3: Related Parties and Multiple Contracts

This scenario arises in large transactions where multiple entities from the same corporate group
(e.g., parent companies, subsidiaries, and affiliates) are involved in executing different parts of
the project through separate contracts.

Issue: When disputes arise, the question of whether these related entities, not directly party to
the main contract, can be joined in a single arbitration is crucial.

Group of Companies Doctrine: This doctrine allows nonsignatory affiliates to be bound by an

arbitration agreement if their participation in the transaction implies consent. The Indian
Supreme Court applied this principle in the Chloro Controls case, allowing arbitration to
proceed against nonsignatories based on the interdependent nature of the contracts and parties.

Case Example: In Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc., the
Court referred all parties involved in related agreements to a single arbitration, even though
some agreements lacked arbitration clauses, recognizing the interconnectedness of the
transaction.

Scenario 4: Multiple Parties and Multiple Contracts

This is the most complex scenario, often seen in large infrastructure or energy projects where
numerous actors are bound by different contracts that are interconnected.

Issue: Harmonizing different arbitration clauses across contracts with varying terms, seats of
arbitration, and rules poses significant challenges. Each party may have agreed to a different
institutional rule or jurisdiction, complicating consolidation efforts.

Judicial Approach: Courts in India have generally favored consolidation when disputes arise
from the same underlying transaction. However, the 1996 Act lacks clear guidance on how to
address multicontract disputes, leading to reliance on institutional rules or ad hoc tribunal
decisions.

4. Joinder and Consolidation Mechanisms

The chapter delves into two critical mechanisms that facilitate multiparty and multicontract
arbitrations: joinder and consolidation.

Joinder of Nonsignatories
The Indian judiciary has been willing to allow the joinder of nonsignatory parties in specific
circumstances, particularly through the "claiming through or under" doctrine under Sections 8
and 45 of the 1996 Act.

Legal Test: The Supreme Court in Chloro Controls and subsequent cases developed a test to
determine whether a nonsignatory party can be joined in arbitration. Factors include:
1. Principal or Mother Agreement: Is there a principal agreement that governs all ancillary
contracts?
2. Intrinsic Interlinking: Are the contracts so interlinked that they cannot be separated?
3. Conduct of the Parties: Has there been tacit consent by nonsignatory parties to be bound by
the arbitration agreement?

Consolidation of Proceedings
Consolidation is another mechanism often invoked to avoid the duplication of arbitral
proceedings and ensure consistent outcomes.

Legal Standard: Courts in India, particularly in P.R. Shah Shares and Stock Brokers v. B.H.H.
Securities, have supported consolidation where separate arbitrations could result in conflicting
awards or inefficient resolutions. However, Indian courts are cautious about consolidation
when contracts have incompatible arbitration clauses.

Case Example: In Duro Felguera S.A. v. Gangavaram Port Limited, the Supreme Court
refused to consolidate six interrelated contracts because two were international arbitrations and
four were domestic, governed by different rules. The court emphasized that incompatible
arbitration clauses hinder consolidation efforts.

5. Procedural Challenges in Multiparty Arbitrations

Multiparty and multicontract arbitrations face several procedural challenges:

Appointment of Arbitrators
The Dutco Principle of equal participation in arbitrator appointments is crucial but difficult to
maintain in multiparty settings. Indian courts have shown flexibility, but recent rulings (e.g.,
Perkins Eastman) suggest stricter adherence to this principle.

Confidentiality
Section 42A of the 1996 Act mandates confidentiality in arbitration proceedings. In multiparty
scenarios, maintaining confidentiality can be challenging, especially when different parties are
privy to varying levels of information.

Procedural Complexity
Arbitrators face difficulties in ensuring that all parties receive equal treatment, particularly
when some parties have divergent or conflicting claims. Tribunals must carefully manage
crossclaims and the allocation of time to present cases.

6. Setting Aside and Enforcement of Arbitral Awards

Setting aside or enforcing awards in multiparty or multicontract arbitrations is another

challenge:

Grounds for Challenge: Awards can be set aside or refused enforcement under Sections 34 and
48 of the 1996 Act if they:
Exceed the scope of the arbitration agreement.
Do not adhere to the agreed procedures (e.g., improper constitution of the tribunal).

Judicial Trends: Indian courts tend to defer to the decisions of foreign arbitral tribunals when
enforcing foreign awards, especially when the seat of arbitration is outside India. However, in
domestic arbitrations, the courts scrutinize the awards more rigorously.

7. Conclusion and Recommendations

Multiparty and multicontract arbitrations are complex but can provide procedural efficiency
when disputes are consolidated. Indian courts have generally favored consolidation and joinder,
but these processes must be carefully managed to ensure fairness and procedural integrity.
 Key Recommendations:
1. Draft Clear Arbitration Clauses: Parties should ensure that arbitration clauses across related
contracts are harmonized to allow for consolidation where appropriate.
2. Institutional Rules: Choosing institutional rules that address multiparty and multicontract
issues, such as joinder and consolidation, can mitigate many challenges.
3. Party Autonomy: Parties should clearly state their intention regarding joinder and
consolidation in the contracts to avoid disputes.

This chapter provides a comprehensive analysis of the legal issues, judicial approaches, and
practical challenges in handling multiparty and multicontract arbitrations in India. By
leveraging the available legal tools and carefully drafting dispute resolution clauses, parties can
better manage the complexities of such arbitrations.
Chapter 4

Certainly! I will now provide an even more detailed breakdown of Chapter 4, emphasizing the
nuances and legal intricacies of the text, including relevant case law, amendments, and
comparative analysis.

Chapter 4: Constitution and Establishment of an Arbitral Tribunal

Authored by Rahul Donde and Rishabh Raheja, Chapter 4 of Arbitration in India discusses the
constitution and establishment of an arbitral tribunal under the Arbitration and Conciliation
Act, 1996 (the 1996 Act). The chapter traces the evolution of the law, focusing on amendments
in 2015 and 2019, and explains how different legal regimes apply to arbitration processes
initiated at different times.

4.1 Introduction
The chapter opens with a central theme: the integrity of arbitration relies on the competence
and impartiality of the arbitrators appointed to conduct the proceedings. Sections 10 to 15 of
the 1996 Act regulate how arbitral tribunals are constituted, and these sections apply to all
arbitrations seated in India, whether they involve domestic or international disputes.

The 1996 Act is based on the UNCITRAL Model Law on International Commercial
Arbitration, 1985 (Model Law), but departs in significant ways. A prominent difference lies in
the framework governing the constitution and establishment of the arbitral tribunal, which has
seen substantial changes through the 2015 Amendment and 2019 Amendment. India’s
arbitration landscape operates under three distinct regimes:
1996 Regime (pre2015 Amendment): Governs arbitrations initiated before 23 October 2015.
2015 Regime (post2015 Amendment): Applies to arbitrations initiated between 23 October
2015 and the coming into force of the 2019 Amendment.
2019 Regime (post2019 Amendment): Governs arbitrations initiated thereafter.

The chapter is divided into three key parts:

1. Appointment of Arbitrators
2. Disclosures, Challenges, and Ineligibility of Arbitrators
3. Termination of Mandate and Substitution of Arbitrators

4.2 Appointment of Arbitrators

4.2.1 Number of Arbitrators (Section 10)

Section 10(1) of the 1996 Act grants parties the freedom to decide the number of arbitrators,
provided that it is not an even number. This provision was meant to avoid deadlock situations
in decisionmaking, which could lead to significant delays in arbitration.

However, the Supreme Court of India has made exceptions, ruling in MMTC Limited v. Sterlite
Industries (India) Ltd. that an arbitration agreement with an even number of arbitrators does
not render the agreement invalid. Similarly, in Narayan Prasad Lohia v. Nikunj Kumar Lohia,
the court ruled that Section 10(1) is not mandatory, and parties may agree to have an even
number of arbitrators. The court suggested that if the arbitrators reached an impasse, they could
appoint a third arbitrator. This ruling upheld the principle of party autonomy, a fundamental
pillar of arbitration.

While party autonomy is preserved in these judgments, Section 10(2) of the Act provides a
default rule: when parties fail to specify the number of arbitrators, a sole arbitrator is appointed.
This is distinct from the Model Law, which prescribes three arbitrators in the absence of a party
agreement.

4.2.2 Nationality of Arbitrators (Section 11)

Section 11(1) of the 1996 Act allows arbitrators of any nationality to be appointed, reinforcing
party autonomy. The default rule of permitting foreign arbitrators aligns with international
standards. However, for international commercial arbitration, Section 11(9) gives courts or
arbitral institutions the discretion to appoint an arbitrator from a nationality other than the
parties, though this is not mandatory.

In Malaysian Airlines Systems Bhd Ltd. v. STIC Travels, the Supreme Court clarified that the
term "may" in Section 11(9) is discretionary, meaning that courts or institutions are not
compelled to appoint a foreign arbitrator unless one of the parties objects to the appointment
of an arbitrator of the same nationality as the opposing party. The court may consider if there
is an advantage in appointing an arbitrator familiar with the applicable law, weighing the need
for neutrality and subject matter expertise.

4.2.3 Qualifications of Arbitrators (Eighth Schedule)

One of the most significant changes introduced by the 2019 Amendment was the addition of
the Eighth Schedule, which sets forth qualifications and norms for arbitrators. These include:
1. An advocate, chartered accountant, cost accountant, or company secretary qualified under
Indian law.
2. Ten years of professional experience in the relevant field.
3. Familiarity with the Constitution of India.

The first four categories of qualifications are tied to Indian professional qualifications,
significantly narrowing the pool of eligible arbitrators by excluding foreign professionals and
young Indian professionals with less than ten years of experience.

The Eighth Schedule has sparked considerable criticism for limiting party autonomy and
diversity in the arbitrator pool. Critics argue that it undermines India’s potential to become an
international arbitration hub by making it difficult for foreign professionals to serve as
arbitrators. This restrictive approach diverges from international practices, where qualifications
focus on expertise and neutrality, rather than national qualifications.

4.2.4 Procedure for Appointment (Section 11)

4.2.4.1 Appointing Authority
Under the 1996 Regime, the Chief Justice of the relevant High Court (for domestic arbitration)
or the Chief Justice of India (for international arbitration) had the power to appoint arbitrators.
This was considered a judicial function that could not be delegated to arbitral institutions.
The 2015 Regime simplified this by empowering the High Courts and the Supreme Court to
make appointments directly, bypassing the Chief Justices. The courts also gained the ability to
delegate this power to arbitral institutions. This shift towards institutional arbitration is
evidenced in cases like Sun Pharmaceutical Industries, where the court directed the Mumbai
Centre for International Arbitration (MCIA) to appoint an arbitrator.

In the 2019 Regime, the Arbitration Council of India (ACI) was empowered to grade arbitral
institutions, which are now responsible for appointing arbitrators. The shift toward institutional
arbitration underlines a significant move away from judicial intervention, aligning India with
practices in other leading arbitration hubs, such as Singapore.

4.2.4.2 Circumstances for Court Involvement

Sections 11(4) and (5) outline scenarios where courts (or now arbitral institutions) are
empowered to appoint arbitrators:
If the parties have not agreed on an appointment procedure.
If the agreed procedure fails due to noncompliance by one party.

In situations where no procedure is agreed, the court must make the appointment. However, if
a procedure exists but fails, the court must take measures to enforce the agreed procedure. This
ensures the balance between party autonomy and judicial oversight. The court's intervention is
a corrective mechanism to ensure that arbitration is not stalled due to procedural deadlock.

4.2.4.3 Nature and Scope of Court Involvement

One of the most contentious issues has been whether the court acts in a judicial or
administrative capacity when appointing arbitrators. The Supreme Court’s ruling in S.B.P. v.
Patel Engineering Ltd. held that the court acts in a judicial capacity, requiring it to examine
jurisdictional issues such as the existence of an arbitration agreement. This decision caused
delays as it allowed parties to challenge appointments at the outset of arbitration.

The 2015 Amendment attempted to curb this by limiting the court’s role to a prima facie
determination of the existence of the arbitration agreement, thereby reducing the scope for
delaying tactics. Section 11(6A) introduced by the 2015 Amendment was designed to align
Indian practice with the KompetenzKompetenz principle, which holds that the tribunal itself
should determine its jurisdiction.

The 2019 Regime further reduces judicial intervention, transferring the responsibility for
appointments to arbitral institutions, whose role is to ensure that arbitration proceeds smoothly
without the need for extensive court oversight.

4.2.4.4 Appeal and Review

The 1996 Regime allowed appeals against appointment orders under Section 11 via Article 136
of the Constitution. This was clarified in Patel Engineering, where the court allowed appeals
in exceptional circumstances.
The 2015 Amendment eliminated appeals from Section 11 decisions, making them final. The
2019 Amendment further simplifies this by removing judicial appointment entirely, placing it
under arbitral institutions. As these institutions are not judicial bodies, their decisions cannot
be appealed.

4.3 Disclosures, Challenges, and Ineligibility

4.3.1 Disclosures by Arbitrators (Section 12)
4.3.1.1 Content of Disclosure
Section 12(1) of the 1996 Act required arbitrators to disclose circumstances likely to raise
justifiable doubts about their independence or impartiality. However, without clear guidelines,
this provision led to inconsistent judicial interpretations, especially in cases involving public
sector arbitrations where employees of the disputing parties were appointed as arbitrators.

The 2015 Amendment clarified the disclosure obligations by introducing the Fifth Schedule,
which is based on the IBA Guidelines on Conflicts of Interest. It lists 34 circumstances where
arbitrators must disclose potential conflicts, including any past or present relationships with
the parties or their counsel. These disclosures also cover the arbitrator’s availability to complete
the arbitration within 12

months, aiming to minimize delays.

The Fifth Schedule represents an effort to adopt international best practices into Indian
arbitration law, ensuring greater transparency and trust in the process. These provisions,
however, also apply to public sector arbitrators, and the introduction of stricter disclosure
norms has led to a significant reduction in the practice of appointing employees of the parties
as arbitrators.

4.3.1.2 Timing of Disclosures

The duty to disclose arises when the arbitrator is approached for appointment and continues
throughout the proceedings. If a relevant circumstance arises after the arbitrator’s appointment,
the arbitrator must disclose it immediately. This ongoing duty seeks to address situations where
conflicts may emerge during the course of the arbitration.

4.3.1.3 Failure to Disclose

Section 12 does not specify the consequences of a failure to disclose. Courts have generally
held that a nondisclosure alone is not sufficient grounds for a challenge unless it gives rise to
justifiable doubts about the arbitrator’s independence. However, if a failure to disclose creates
significant doubts about impartiality, parties may challenge the appointment. For instance, in
cases where an arbitrator had undisclosed ties to counsel, courts have voided the appointment
on these grounds.

4.3.2 Challenges to Arbitrators (Section 13)

Section 13 of the 1996 Act gives parties the right to challenge arbitrators on grounds of bias,
lack of independence, or failure to meet agreed qualifications. Under the 2015 Amendment,
challenges must be raised within 15 days of discovering the circumstances giving rise to the
challenge. The tribunal decides on the challenge unless the arbitrator voluntarily steps down.
Indian courts have recognized the importance of party autonomy in the challenge process but
have also balanced it with fairness. Challenges based on the appointment of employees or
individuals with significant ties to the parties have been upheld by courts, citing the conflict of
interest provisions in the Fifth and Seventh Schedules. In TRF Ltd. v. Energo Engineering
Projects Ltd., the court invalidated an arbitrator’s appointment on the grounds that the
individual nominated was closely tied to the appointing party.

4.3.3 Ineligibility of Arbitrators (Section 12(5))

The 2015 Amendment introduced the concept of ineligibility under Section 12(5), which
renders individuals automatically disqualified from serving as arbitrators if they have certain
relationships with the parties or the subject matter of the dispute, as listed in the Seventh
Schedule. Unlike the Fifth Schedule (which deals with disclosures), the Seventh Schedule lists
nonwaivable disqualifications, unless expressly waived by both parties after the dispute arises.

This provision aims to strengthen the independence and impartiality of arbitrators, addressing
a longstanding concern over appointments of individuals who were closely associated with the
parties or had professional relationships with them. Courts have upheld these ineligibility
provisions, ensuring that arbitrators with clear conflicts cannot serve, even if the parties initially
agreed to their appointment.

4.4 Termination of Mandate and Substitution (Sections 14 and 15)

4.4.1 Termination of Mandate
Section 14 provides for the termination of an arbitrator’s mandate if the arbitrator is unable to
perform their duties or if both parties agree to terminate the appointment. The arbitrator’s
incapacity to act can be due to illness, conflict of interest, or any other reason that prevents
them from performing their functions. Parties may also agree to terminate the arbitrator’s
mandate if they lose confidence in the arbitrator’s ability to handle the arbitration impartially.

4.4.2 Substitution of Arbitrators

Section 15 governs the process of substituting arbitrators. When an arbitrator’s mandate is
terminated, a substitute must be appointed using the same procedure followed for the initial
appointment. This is critical in ensuring that the arbitration process is not unduly delayed by
the replacement of arbitrators.

The section also provides that prior hearings need not be repeated unless the newly appointed
tribunal decides otherwise, ensuring that the process remains efficient even after a substitution.
Indian courts have emphasized that the substitution of an arbitrator should not lead to the
invalidation of previous rulings unless expressly agreed by the parties. In Rajasthan Small
Industries Corporation v. Ganesh Containers Movers Syndicate, the court exercised its
discretion to directly appoint an arbitrator, underscoring its focus on maintaining the efficiency
and integrity of the arbitration process.

4.5 Conclusion

In conclusion, Indian arbitration law has evolved considerably since 1996, with significant
reforms introduced by the 2015 and 2019 Amendments. These reforms aim to reduce judicial
intervention, promote party autonomy, and increase efficiency in the arbitration process. The
shift from judicial to institutional arbitration under the 2019 Regime is a notable development,
aligning India with global practices and reinforcing the role of arbitral institutions in
appointment processes.

While the introduction of disclosure and ineligibility requirements in the Fifth and Seventh
Schedules strengthens the independence and impartiality of arbitrators, certain provisions, such
as the Eighth Schedule, have been criticized for their restrictive nature, particularly in limiting
the pool of arbitrators to those with Indian qualifications. Despite these challenges, the ongoing
modernization of India’s arbitration regime reflects its ambition to become a global arbitration
hub.
Chapter 5

Comprehensive and Detailed Summary of Chapter 5: Jurisdiction of the Arbitral Tribunal

This chapter, authored by Constantine Partasides and Manish Aggarwal, examines critical
aspects of arbitral tribunals' jurisdiction under Indian law. It covers fundamental doctrines such
as competencecompetence and separability, the role of courts versus tribunals in resolving
jurisdictional disputes, judicial review of jurisdictional decisions, and the imposition of time
limits on arbitration proceedings. These doctrines and frameworks are analyzed within the
context of the Arbitration and Conciliation Act of 1996 (the 1996 Arbitration Act), particularly
with reference to the UNCITRAL Model Law on International Commercial Arbitration.

1. Introduction: Defining Jurisdiction in Arbitration

The jurisdiction of an arbitral tribunal pertains to its authority or power to adjudicate a

particular dispute, a principle rooted in the consensual nature of arbitration. While the term
“jurisdiction” is not expressly defined in the 1996 Arbitration Act, Indian courts have
interpreted it broadly to include issues concerning the existence, validity, and scope of the
arbitration agreement. This chapter focuses on the tribunal’s jurisdiction, codified in Section
16 of the Act, which incorporates the doctrines of competencecompetence and separability. The
centrality of these doctrines is aimed at preserving the autonomy of the arbitral process while
limiting judicial interference.

2. CompetenceCompetence and Separability: Section 16 of the 1996 Arbitration Act

2.1 CompetenceCompetence Doctrine

The competencecompetence doctrine is a cornerstone of international arbitration, empowering

arbitral tribunals to rule on their own jurisdiction, including any objections concerning the
existence or validity of the arbitration agreement. Section 16 of the 1996 Arbitration Act
codifies this principle and provides the tribunal the authority to rule on:

Objections regarding its jurisdiction.

Issues regarding the validity of the arbitration agreement.

Section 16(1) explicitly states that an arbitration clause within a contract shall be treated as an
agreement independent of the other terms of the contract, affirming the tribunal’s jurisdiction
to determine the validity of the contract without nullifying the arbitration agreement.

The Indian Supreme Court has elaborated on this doctrine, emphasizing that it helps ensure the
autonomy of the arbitration process by minimizing the disruption caused by jurisdictional
objections. The court has interpreted this provision broadly to include challenges to both the
existence and validity of the arbitration agreement. However, once the tribunal issues its
decision on jurisdiction, judicial review can be sought only after the final award is made (under
Section 34).
2.2 Doctrine of Separability

The separability doctrine, also enshrined in Section 16, reinforces the independence of the
arbitration agreement from the main contract. This doctrine ensures that the arbitration
agreement survives even if the main contract is declared null and void, enabling the arbitral
tribunal to resolve disputes related to the validity or termination of the main contract. The
purpose of the separability principle is to protect the parties’ intention to resolve their disputes
through arbitration, even when the underlying contract is challenged.

The Supreme Court of India has endorsed this doctrine, stating that it ensures the parties’
agreement to arbitrate does not become unenforceable every time the legality or validity of the
underlying contract is contested. Thus, even when the main contract is rendered void or
unenforceable, the arbitration clause remains intact unless the clause itself is explicitly
challenged.

2.3 Waiver of Objections and Timing of Jurisdictional Challenges

Section 16(2) of the Act stipulates that a plea regarding the tribunal’s lack of jurisdiction must
be raised at the latest by the submission of the statement of defense. The failure to raise such
objections within the prescribed timeline may result in the waiver of the objection, unless the
tribunal accepts a justified delay (Section 16(4)).

Further, under Section 16(5), if the tribunal rejects the jurisdictional plea, it may continue with
the proceedings and issue an arbitral award. Judicial recourse against this decision is available
only after the final award is rendered, in the form of a setaside application under Section 34.

3. Allocation of Jurisdictional Competence Between Arbitral Tribunals and Courts

The allocation of jurisdictional authority between Indian courts and arbitral tribunals has
undergone significant evolution, particularly with the amendments to the 1996 Arbitration Act
in 2015 and 2019. These reforms were aimed at reducing excessive judicial intervention and
providing greater autonomy to arbitral tribunals.

3.1 Referral to Arbitration (Sections 8 and 45)

The referral to arbitration, as envisaged under Sections 8 and 45, occurs when a party to a court
proceeding invokes the existence of an arbitration agreement, seeking referral of the dispute to
arbitration. The legal framework governing this referral varies depending on whether the
arbitration is seated domestically or internationally.

3.1.1 Domestic Arbitration: Section 8

Section 8 governs the referral of domestic disputes to arbitration. The 2015 Amendment
significantly altered the landscape of judicial review by introducing a prima facie standard for
determining the validity of the arbitration agreement. Courts are now required to refer the
matter to arbitration unless they find prima facie that no valid arbitration agreement exists. This
amendment aimed to restrict the court’s role to a preliminary review, as opposed to a detailed
examination of jurisdictional issues.

Before this amendment, in SBP v. Patel Engineering (2005), the Supreme Court held that the
courts must conclusively decide the validity of the arbitration agreement before referring the
parties to arbitration. This ruling was widely criticized for undermining the
competencecompetence principle. The 2015 Amendment addressed this by empowering courts
to conduct only a limited review before referring the case to arbitration, thus restoring the
autonomy of arbitral tribunals.

3.1.2 ForeignSeated Arbitration: Section 45

Section 45 applies to foreignseated arbitrations. Like Section 8, it now requires courts to

conduct a prima facie review of the validity of the arbitration agreement. The 2019 Amendment
aligned the review standards under Sections 8 and 45 by replacing the term “unless it finds”
with “unless it prima facie finds,” thereby limiting the courts' scope of intervention. This reform
was aimed at maintaining consistency in the referral process for both domestic and international
arbitrations.

3.2 Appointment of Arbitrators (Section 11)

The appointment of arbitrators presents another opportunity for judicial examination of

jurisdictional issues, particularly where parties disagree on the appointment process.

Pre2015: Under the original Section 11, the Chief Justice (or her designate) was responsible
for appointing arbitrators in the event of a deadlock between the parties. The scope of the Chief
Justice's authority included determining the validity of the arbitration agreement. In Patel
Engineering, the Supreme Court ruled that such judicial determinations were final, limiting the
arbitral tribunal’s ability to subsequently rule on its own jurisdiction.

Post2015: The 2015 Amendment curtailed this judicial role by introducing Section 11(6A),
which limited the court's review to the "existence" of an arbitration agreement. This reform
sought to expedite the appointment process and reduce judicial interference at this stage.
However, the scope of the review under Section 11(6A) led to conflicting interpretations in
subsequent cases.

2019 Amendment: The 2019 Amendment further reduced the court's role by deleting Section
11(6A) and delegating the appointment of arbitrators to arbitral institutions. This change
reflects the legislature’s intent to promote institutional arbitration and minimize court
involvement in the arbitral process.

3.3 AntiArbitration Injunctions

Although Section 5 of the 1996 Arbitration Act seeks to limit judicial interference, Indian
courts have occasionally entertained antiarbitration injunctions, which prevent arbitration from
proceeding. The legitimacy of such injunctions remains a contentious issue, with conflicting
court rulings.

In Kvaerner Cementation v. Bajranglal Agarwal (2001), the Supreme Court ruled that the
tribunal, not the court, has the authority to decide jurisdictional challenges, including those
related to the validity of the arbitration agreement. This ruling was intended to reinforce the
competencecompetence doctrine.

However, courts have sometimes granted antiarbitration injunctions in exceptional

circumstances, such as when the arbitration agreement is deemed null, void, or incapable of
being performed. For instance, in McDonald’s India v. Vikram Bakshi (2016), the Delhi High
Court relied on English precedents to grant an antiarbitration injunction on the grounds of
oppressive or unconscionable conduct.

The boundaries of antiarbitration injunctions continue to evolve, with courts attempting to

balance the tribunal’s competence to rule on its jurisdiction against the need to prevent abuse
of the arbitration process.

4. Judicial Review of Arbitral Tribunal’s Jurisdictional Decisions

The 1996 Arbitration Act establishes a unique regime for judicial review of jurisdictional
rulings, distinguishing between decisions that reject jurisdictional objections and those that
accept them.

4.1 Review of Decisions Rejecting Jurisdictional Objections

Under Section 16(5), if an arbitral tribunal rejects a jurisdictional objection, it must continue
with the proceedings and issue an arbitral award. Judicial review of this decision is deferred
until the final award is rendered, at which point the aggrieved party can challenge the tribunal’s
jurisdiction under Section 34. This framework reflects a deliberate legislative choice to prevent
dilatory tactics by parties seeking to delay arbitration by

filing premature appeals on jurisdictional grounds.

4.2 Review of Decisions Accepting Jurisdictional Objections

In contrast, if the tribunal accepts the jurisdictional objection and declines to proceed with the
arbitration, the party seeking arbitration can appeal the decision immediately under Section
37(2)(a). This allows for swift judicial review of negative jurisdictional rulings, ensuring that
parties are not deprived of their right to arbitration without recourse to the courts.

5. Time Limits for Arbitral Proceedings

Indian arbitration law imposes strict time limits on the arbitral tribunal’s mandate, both
contractually and statutorily, to ensure efficient resolution of disputes.
5.1 Contractual Time Limits

Parties to an arbitration agreement may stipulate specific time limits within which the tribunal
must issue its award. Indian courts have consistently enforced these deadlines. In Jayesh H.
Pandya v. Subhtex India, the Supreme Court ruled that the tribunal’s mandate automatically
terminates if the award is not rendered within the stipulated period, unless an extension is
granted by the court.

5.2 Statutory Time Limits: Section 29A

The 2015 Amendment introduced Section 29A, which mandates that arbitrations seated in India
must be completed within 12 months of the tribunal’s constitution. Parties may extend this
period by an additional 6 months through mutual agreement. If the award is not rendered within
this timeframe, the tribunal’s mandate terminates unless the court grants an extension upon
showing “sufficient cause.”

The 2019 Amendment modified Section 29A by:

Removing the 12month mandatory limit for international commercial arbitrations seated in
India. Instead, the statute encourages completion within 12 months from the date of completion
of pleadings.
Shifting the starting point of the time limit for domestic arbitrations to the date of completion
of pleadings, rather than the tribunal’s constitution.
Allowing courts to extend the tribunal’s mandate if necessary, ensuring that the arbitration is
not disrupted due to procedural delays.

6. Conclusion

The evolution of Indian arbitration law reflects a broader trend towards minimizing judicial
intervention and promoting the autonomy of arbitral tribunals. The 2015 and 2019
Amendments to the 1996 Arbitration Act sought to streamline the arbitration process, reduce
court involvement, and enhance India’s reputation as an arbitrationfriendly jurisdiction.
However, the practical implementation of these reforms has encountered challenges,
particularly in terms of conflicting judicial interpretations and the balancing of tribunal
autonomy with judicial oversight.

The chapter concludes that clarity, predictability, and a uniform approach to jurisdictional
challenges are essential to fostering confidence in arbitration as a mechanism for dispute
resolution in India. The ongoing refinement of the legal framework through judicial decisions
and legislative reforms is necessary to ensure that arbitration remains an efficient and effective
alternative to litigation.
Chapter 6

Chapter 6 of Arbitration in India, titled "The Laws Applicable to an Arbitration," by Nakul

Dewan, offers an indepth analysis of the legal principles governing arbitration, especially under
Indian law. This chapter covers the interaction between various legal frameworks applicable in
arbitration, emphasizing party autonomy and the constraints imposed by national laws,
particularly the Arbitration and Conciliation Act, 1996 (the “1996 Arbitration Act”). Here is a
more detailed breakdown:

1. Introduction to the Laws Governing Arbitration:

Arbitration is largely governed by three types of laws, each playing a significant role in
different aspects of the arbitration process:
Substantive Law (Lex Causae): Governs the contract and determines the rights, obligations,
and liabilities of the parties. It regulates the core issue of the dispute.
Law Governing the Arbitration Agreement: This is the law that governs the arbitration clause
itself. It controls the validity, interpretation, and scope of the arbitration agreement.
Lex Arbitri (Law of the Seat/Curial Law): This law governs the arbitration process and
procedural aspects, such as how the arbitration is conducted, and what the arbitrators can and
cannot do. It is often referred to as the procedural law of the arbitration and is determined by
the seat (place) of the arbitration.

Each of these laws can be chosen independently by the parties. For example, the substantive
law could be Indian law, while the arbitration agreement might be governed by English law,
and the lex arbitri might be determined by the seat, say Singapore.

2. Substantive Law of the Contract (Lex Causae):

This section elaborates on the substantive law or lex causae, which governs the merits of the
dispute, including the rights and obligations under the contract, the interpretation of the
contract, and the consequences of its breach.

Freedom of Choice: In general, international arbitration provides parties the flexibility to

choose the substantive law. This aligns with international norms such as Article 28 of the
UNCITRAL Model Law on International Commercial Arbitration, which allows parties to
freely designate the law governing the substance of the dispute.

Section 28 of the 1996 Arbitration Act: Indian law, under Section 28 of the 1996 Arbitration
Act, prescribes the rules for selecting substantive law, distinguishing between domestic
arbitrations and international commercial arbitrations.
In domestic arbitrations between Indian parties, the substantive law must be Indian law, as
per Section 28(1)(a). This restriction is in place to prevent Indian parties from opting out of
Indian law for disputes concerning Indian contracts, which reflects public policy
considerations.
In international commercial arbitrations seated in India, the parties are free to choose a
foreign substantive law. If they fail to do so, the tribunal is empowered to apply the rules of
law it considers most appropriate (Section 28(1)(b)).
 Indian Parties and Foreign Law: Indian courts have clarified that two Indian parties cannot
derogate from Indian law when their contract is governed by Indian laws. This is especially
important for contracts that are to be performed in India, where Indian law is mandatory to
ensure compliance with Indian public policy. The Supreme Court in TDM Infrastructure Pvt.
Ltd. v. UE Development India Pvt. Ltd. confirmed that Indian parties cannot opt out of Indian
substantive law.

3. Indian Parties and Choice of Foreign Law:

This section elaborates on the limitations for Indian parties when choosing foreign laws in
arbitration, particularly when both parties are Indian. Section 28(1)(a) of the 1996 Arbitration
Act mandates that the substantive law for Indiaseated arbitrations between Indian parties must
be Indian law.

Judicial Clarification: The Supreme Court in Bharat Aluminium Co. (BALCO) v. Kaiser
Aluminium Technical Services Inc. (BALCO) clarified the limitations of Section 28,
emphasizing that the public policy of India does not allow Indian parties to contract out of
Indian substantive law.

Addhar Mercantile Pvt. Ltd. v. Shree Jagdamba Agrico Exports Pvt. Ltd.: This case
emphasized that, while Indian parties can choose a foreign seat of arbitration, they cannot avoid
Indian substantive law if the contract has a purely Indian context. If parties select foreign
substantive law, it would be deemed pathological (i.e., defective) in contracts involving two
Indian parties.

4. International Arbitration and Public Policy Considerations:

Public policy is a significant factor that limits the freedom of parties to choose applicable laws
in arbitration. Arbitration agreements cannot violate fundamental principles of public policy.

NonArbitrable Disputes: Certain disputes are inherently nonarbitrable under Indian law due to
their public nature. The Supreme Court in NTPC v. Singer outlined that the parties’ choice of
law must be bona fide and consistent with public policy. Certain categories of disputes are
reserved exclusively for national courts, including:
Criminal matters
Matrimonial and guardianship disputes
Testamentary disputes
Insolvency and windingup matters
Tenancy disputes under specific laws

Rights in Rem vs. Rights in Personam: Only disputes concerning rights in personam (rights
between individuals) are arbitrable, while disputes over rights in rem (rights against the world)
are not. Indian courts have repeatedly upheld this principle to ensure that matters affecting the
public domain remain under the exclusive jurisdiction of national courts.
 5. Law of the Arbitration Agreement:
The arbitration agreement is treated as a separate contract, independent of the substantive
contract. This principle of separability ensures that the arbitration agreement remains valid
even if the underlying contract is void or unenforceable.

Doctrine of Separability: The chapter cites the Reliance Industries Limited v. Union of India
case, where the Supreme Court upheld the separability of the arbitration agreement. The
arbitration clause can be governed by a different law than the main contract, and even if the
main contract is invalid, the arbitration agreement may still be enforced.

Harbour Assurance v. Kansa: The English case Harbour Assurance v. Kansa reinforced the
idea that the arbitration clause is independent of the main contract. This principle was later
codified in Section 16(1)(a) of the 1996 Arbitration Act, which allows arbitral tribunals to rule
on their jurisdiction.

Closest Connection Test: The chapter also discusses the Sulamerica test, which provides a
threestage inquiry for determining the law governing the arbitration agreement in the absence
of an express choice by the parties. The test prioritizes the substantive law chosen for the
contract, but in the absence of an express choice, the tribunal considers the law of the seat as
having the closest connection to the arbitration agreement.

6. Lex Arbitri (Law of the Arbitration Procedure):

The lex arbitri governs the procedural aspects of arbitration, including the powers and duties
of the arbitrators, evidentiary procedures, remedies, and the role of the courts. It is determined
by the seat of arbitration.

Importance of the Seat: The law of the seat (juridical seat) plays a crucial role in defining the
procedural framework for arbitration. The Supreme Court in Enercon (India) Ltd. v. Enercon
Gmbh clarified that the seat of arbitration determines the curial law. This was contrasted with
the venue of arbitration, which may simply refer to the geographical location for hearings and
does not carry the same legal significance.

Judicial Review and Lex Arbitri: In cases where the seat of arbitration is in India, Indian courts
have jurisdiction over the arbitration proceedings under the 1996 Arbitration Act. However, for
foreignseated arbitrations, Indian courts can only provide limited assistance under Sections 9,
27, and 37 of the Act (for interim relief, evidence, and appeals).

Indian Intervention in Foreign Arbitrations: The chapter notes that historically, Indian courts
have assumed supervisory jurisdiction over foreignseated arbitrations, leading to controversial
decisions like Venture Global Engineering v. Satyam Computers Services Ltd., where Indian
courts set aside a foreign award. However, this was rectified by the Bharat Aluminium Co.
(BALCO) judgment, which emphasized the territorial nature of arbitration, limiting Indian
court intervention in foreignseated arbitrations.
 7. Choice of Seat and Lex Arbitri:
This section further elaborates on the critical distinction between the seat and venue of
arbitration. The seat of arbitration is where the arbitration is legally situated, and it determines
the lex arbitri. The venue, on the other hand, is merely the physical location for hearings and
has no bearing on the procedural law of arbitration.

Supreme Court's Interpretation in Enercon Case: The Enercon (India) Ltd. v. Enercon Gmbh
case clarified that even though London was chosen as the venue, the seat of arbitration was
determined to be New Delhi because the parties had selected Indian law for the substantive
contract and arbitration agreement.

8. Indian Parties and Foreign Seats:

The chapter discusses the autonomy of Indian parties to select foreign seats for arbitration, as
clarified in Atlas Exports v. Kotak & Company. Indian law permits two Indian parties to
arbitrate in a foreign seat, and any resulting award would be treated as a foreign award under
Part II of the 1996 Arbitration Act, enforceable under the New York Convention.

Sasan Power Limited v. North American Coal Corporation India Pvt. Ltd.

: This case reaffirmed that Indian parties can choose a foreign seat without violating public
policy. However, the substantive law governing the contract in such arbitrations must still be
Indian law.

9. Judicial Intervention by Indian Courts:

Indian courts' involvement in arbitration is strictly limited by the 1996 Arbitration Act,
especially after the 2015 Amendment. Indian courts cannot interfere with arbitrations seated
outside India, except for limited support in matters such as interim relief (under Section 9),
evidencetaking (under Section 27), and appeals (under Section 37).

BALCO Judgment: The Bharat Aluminium Co. (BALCO) decision significantly curtailed the
power of Indian courts to intervene in foreignseated arbitrations. It confirmed that the
supervisory jurisdiction lies solely with the courts of the seat of arbitration.

10. Conclusion:
The chapter concludes by underscoring the importance of party autonomy in international
arbitration while acknowledging the limitations imposed by national laws, particularly in
domestic arbitrations. It emphasizes the certainty provided by the 1996 Arbitration Act, which
mandates the application of Indian substantive law in domestic arbitrations. However, it
recognizes the growing alignment of Indian arbitration practices with international norms,
particularly with regard to the choice of seat and judicial intervention in foreignseated
arbitrations. The chapter reflects a shift toward greater clarity and reduced court intervention,
providing a more arbitrationfriendly environment in India.
Chapter 7

Comprehensive Summary of Chapter 7: The Conduct of Arbitral Proceedings in India

Chapter 7 of "Arbitration in India" offers a detailed exploration of how arbitration is conducted

under Indian law, focusing on the Arbitration and Conciliation Act, 1996 (the 1996 Arbitration
Act), and amendments in 2015 and 2019. The chapter addresses the legal and procedural
nuances that practitioners must be aware of, emphasizing party autonomy, the procedural
flexibility granted to arbitral tribunals, evidence collection, hearings, and potential procedural
pitfalls. This summary provides a stepbystep breakdown of the key aspects discussed in the
chapter.

1. Party Autonomy in Arbitral Proceedings

1.1 Overview of Party Autonomy

Party autonomy is the foundational principle of arbitration, granting the disputing parties
significant control over how the arbitration is conducted. Under the 1996 Arbitration Act,
parties are free to choose the rules that govern the arbitral proceedings, including the procedure
for presenting claims and defenses, the selection of arbitrators, and the format of hearings. This
is crucial as arbitration offers a flexible alternative to court litigation, where procedural rules
are more rigid.

Section 19 of the 1996 Arbitration Act formalizes this principle by stating that arbitral tribunals
are not bound by the Code of Civil Procedure, 1908 (CPC) or the Indian Evidence Act, 1872,
but can still draw upon these laws for guidance when necessary. This flexibility allows tribunals
to adopt procedures that are tailored to the specific needs of the case.

1.2 Legal Framework for Party Autonomy

Section 19(2): Parties are given the freedom to agree on procedural rules governing the
arbitration. If parties reach an agreement, the arbitral tribunal must respect and follow these
rules.
Section 19(3): If the parties fail to agree on procedural matters, the arbitral tribunal is
empowered to conduct the proceedings in the manner it deems appropriate. This includes
deciding issues related to the admissibility, relevance, materiality, and weight of any evidence
presented.

1.3 Consequences of NonCompliance

If an arbitral tribunal fails to comply with the procedural agreement between the parties, the
award could be challenged or refused recognition. Under Article V(1)(d) of the New York
Convention, enforcement of an award can be denied if the arbitration did not conform to the
agreed procedure. Similarly, Section 34(2)(v) of the 1996 Arbitration Act allows Indian courts
to set aside an award if the arbitral procedure did not align with the parties’ agreement or the
provisions of the Act.
2. FastTrack Arbitration (Section 29B)

2.1 Introduction to FastTrack Procedure

The 2015 Amendment to the Arbitration Act introduced a fasttrack arbitration mechanism
under Section 29B. This was a response to concerns over delays in the arbitration process and
is aimed at providing a swifter resolution of disputes, particularly in cases where the complexity
is limited, or both parties are amenable to a faster process.

2.2 Key Features of FastTrack Arbitration

Sole Arbitrator: Parties may agree to appoint a sole arbitrator to handle the dispute. This is
often faster than constituting a threemember tribunal.
Written Submissions: The arbitration is primarily conducted based on written pleadings,
without the need for oral hearings unless all parties request them or the tribunal deems it
necessary. This minimizes the time and cost involved in organizing oral arguments.
SixMonth Timeline: The arbitral tribunal must deliver the award within six months of the
tribunal entering into the reference. This provision aims to expedite dispute resolution.
Additional Fees for Timely Resolution: Section 29A(2) incentivizes quicker resolutions by
entitling the arbitral tribunal to additional fees if the parties agree that the tribunal has expedited
the proceedings.

2.3 Adoption of the FastTrack Procedure

The fasttrack procedure can be opted for at any stage of the arbitration process, either before
or after the arbitral tribunal is constituted. The provisions of Section 29B allow parties to adopt
this mechanism through mutual consent. Despite its advantages, this fasttrack option is not
widely used in practice.

3. Preliminary Steps in Arbitration

Once the arbitral tribunal is constituted, the next step is to organize the proceedings. A
preliminary meeting is generally held where the tribunal and parties discuss the procedural
roadmap for the arbitration.

3.1 Preliminary Meeting Objectives

Procedural Timetable: The tribunal sets a schedule for filing written submissions, hearing
dates, and timelines for presenting evidence.
Jurisdictional Issues: Parties may raise jurisdictional objections at this stage, which the tribunal
will address.
Interim Relief and Bifurcation: Issues such as interim relief (temporary measures to protect
the rights of parties) and the potential bifurcation of proceedings (separating the issues of
liability and damages) may also be discussed.
Language and Venue: The language of the proceedings and the venue for hearings are agreed
upon.
4. Written Submissions (Section 23)

The written submissions phase is central to arbitration, as it allows each party to present its
case to the tribunal through statements of claim and defense, along with supporting documents
and legal arguments.

4.1 Statement of Claim

Under Section 23(1), the claimant submits a statement of claim outlining the facts of the case,
the points in dispute, and the remedies sought. The claimant must provide any supporting
documents, as well as any evidence they intend to rely on during the arbitration.

Failure to Submit the Claim: If the claimant fails to file the statement of claim within the
prescribed timeline, the tribunal has the power to terminate the proceedings under Section
25(a).

4.2 Statement of Defense

The respondent, in turn, files a statement of defense addressing the points raised by the
claimant. Under Section 23(2A), the respondent may also file a counterclaim or setoff, which
must fall within the scope of the arbitration agreement.

4.3 Amendments and Supplementation

Parties are permitted to amend or supplement their claims and defenses during the course of
the arbitration, unless the tribunal considers that doing so would cause undue delay or
confusion.

4.4 Timelines for Submissions

The 2019 Amendment imposes a sixmonth timeline for filing the statement of claim and
defense, which begins when the arbitrator or tribunal receives notice of their appointment.

5. Collection of Evidence

The process of collecting and evaluating evidence is critical to arbitral proceedings. The 1996
Arbitration Act grants the arbitral tribunal substantial flexibility in how evidence is handled.

5.1 Admissibility, Relevance, Materiality, and Weight (Section 19)

Admissibility: The tribunal is empowered to determine whether evidence is admissible in the

proceedings. The rules of evidence that apply in court proceedings, such as those found in the
Indian Evidence Act, do not strictly apply to arbitration.
Relevance and Materiality: Evidence must be relevant and material to the issues at hand. The
tribunal decides whether the evidence will help resolve the dispute.
 Weight: After admitting evidence, the tribunal evaluates the weight or probative value of the
evidence. This is particularly important when assessing the credibility and reliability of
documents, witness statements, or expert reports.

5.2 Types of Evidence

Documentary Evidence: Documents form a major part of the evidence presented. Parties are
expected to submit all relevant documents along with their written submissions.

Witnesses of Fact: Parties may rely on witness testimony to support their case. Witnesses
usually provide written statements, which can be crossexamined during hearings.

Expert Evidence: The tribunal can appoint experts, or parties can present their own experts to
give specialized opinions on technical issues. Section 26 governs the appointment of experts
and the submission of expert reports.

Site Inspections: In disputes where physical inspection is necessary (e.g., construction

disputes), tribunals can conduct site inspections.

5.3 Court Assistance in Taking Evidence (Section 27)

Under Section 27, the arbitral tribunal or the parties, with the tribunal’s approval, can seek
court assistance in obtaining evidence. This might include summoning witnesses or obtaining
documents that are beyond the reach of the parties.

6. Hearings (Section 24)

Although hearings are not always mandatory, they are commonly conducted in arbitration
proceedings, especially in complex cases.

6.1 Decision to Hold a Hearing

Section 24(1) grants the arbitral tribunal the discretion to decide whether to hold oral hearings,
unless the parties have agreed otherwise. The tribunal can rely solely on written submissions if
the case is straightforward or

if both parties request a paperbased procedure.

6.2 Structure of Hearings

DaytoDay Hearings: The 2019 Amendment encourages tribunals to conduct hearings on a

daytoday basis to avoid delays. Adjournments are discouraged unless sufficient cause is shown.
Virtual Hearings: The use of virtual hearings has become more prominent due to the COVID19
pandemic. The Indian Arbitration Forum has published guidelines for conducting virtual
hearings, addressing issues like time zone differences, technical support, and secure
communication.
7. PostHearing Proceedings and Issuance of Award

Once the hearings are concluded, the tribunal may request posthearing briefs from the parties
to summarize their positions, highlight key evidence, and address any unresolved issues.

7.1 PostHearing Briefs

Posthearing briefs provide a final opportunity for parties to frame their arguments and ensure
that all critical points are addressed. These briefs help the tribunal focus on the most relevant
issues before drafting the award.

7.2 Closing of Proceedings

Once the tribunal declares the proceedings closed, no further submissions are allowed. The
tribunal then begins drafting the final award. However, under Section 33, the tribunal may
correct or interpret the award after issuance.

8. Common Pitfalls in Arbitration

The chapter concludes by identifying several pitfalls that can affect the conduct of arbitration
in India. Practitioners must be mindful of these challenges to avoid jeopardizing the validity of
the arbitral award.

8.1 Failure to Comply with Agreements

Any deviation from the procedural agreements between the parties can be deemed misconduct
on the part of the tribunal, potentially leading to the setting aside of the award.

8.2 Failure to Submit the Statement of Claim

If the claimant fails to submit the statement of claim within the prescribed time frame, the
tribunal may terminate the proceedings under Section 25(a).

8.3 Admissibility of Hearsay Evidence

The use of hearsay evidence is permissible in arbitration since the strict exclusionary rules of
the Indian Evidence Act do not apply. However, the tribunal must carefully assess its reliability
and weight.

8.4 False Witness Statements

The submission of false witness statements or evidence can lead to criminal proceedings under
Section 193 of the Indian Penal Code, which prescribes penalties for perjury.
8.5 Reopening Proceedings After Closure

Once the tribunal declares the proceedings closed, it is generally not possible to reopen the
case. However, under Section 33, the tribunal retains limited jurisdiction to correct or interpret
the award.

Conclusion

Chapter 7 of "Arbitration in India" provides a detailed guide to the conduct of arbitral

proceedings under Indian law, emphasizing the role of party autonomy, procedural flexibility,
and the tribunal’s discretion in managing the case. The chapter highlights the importance of
adhering to procedural agreements, following statutory timelines, and managing evidence
effectively. Additionally, the discussion of potential pitfalls offers practical advice to arbitration
practitioners on how to avoid common errors that could affect the enforceability of arbitral
awards. With continuous reforms and amendments to Indian arbitration law, the chapter
remains a valuable resource for understanding the nuances of arbitration in India.
Chapter 8

The document, Chapter 8: Interim Measures, from the book Arbitration in India provides an
intricate and exhaustive analysis of interim measures in arbitration law, with a particular focus
on their use within Indian jurisdiction. Interim measures are indispensable in arbitration, acting
as safeguards for parties during the often lengthy arbitration process by preserving assets,
protecting rights, and maintaining the status quo. This chapter covers various critical aspects
of interim measures, ranging from the powers of courts and arbitral tribunals to the applicability
of relevant legal provisions in domestic and international arbitrations.

1. Introduction to Interim Measures

Interim measures play an essential role in arbitration by addressing potential risks during the
dispute resolution process. In arbitration, there can be significant time gaps between the
initiation of the dispute and the final award. Without interim measures, parties may dissipate
assets or destroy evidence, making it difficult to enforce any award that follows. Interim
measures can protect a party from irreparable harm, preserve the status quo, and ensure that
the eventual arbitral award remains enforceable. These measures may be sought before, during,
or after arbitration and can be issued by either the arbitral tribunal or a court of law.

Both Section 9 and Section 17 of the Arbitration and Conciliation Act, 1996 (referred to as the
"Arbitration Act") play significant roles in the interim measures framework in India:
Section 9 grants powers to courts to issue interim relief before, during, and even after the
conclusion of arbitral proceedings but before the award is enforced.
Section 17 allows arbitral tribunals to grant similar reliefs during arbitration.

The interplay between these two sections is essential to understanding the reliefseeking
mechanisms available in arbitration, as this chapter elaborates.

2. Scope of Application of the Arbitration Act: Domestic and International Arbitrations

The scope of Sections 9 and 17 primarily applies to arbitrations seated in India. However, a
significant point of contention has been whether these sections can be invoked in arbitrations
seated outside India. This debate was sparked by the Supreme Court’s decision in Bhatia
International v. Bulk Trading S.A. (2002), which ruled that Part I of the Arbitration Act,
including Section 9, could apply to international commercial arbitrations seated outside India
unless explicitly excluded by the parties. The Bhatia decision allowed parties to seek interim
measures from Indian courts in foreignseated arbitrations.

However, the Bhatia ruling was overturned by the Bharat Aluminium Co. (BALCO) v. Kaiser
Aluminium Technical Services Inc. decision in 2012, where a Constitution Bench of the
Supreme Court held that Part I of the Arbitration Act would not apply to international
arbitrations seated outside India. As a result, Indian courts could no longer grant interim relief
in such arbitrations unless the arbitration agreement was executed before 6 September 2012
(due to the prospective application of the BALCO ruling).
After BALCO, the inability to obtain interim relief in foreignseated arbitrations raised practical
concerns, especially where parties had assets located in India. To address these concerns, the
2015 Amendment to the Arbitration Act allowed certain provisions, including Section 9, to
apply to international arbitrations seated outside India, provided the assets in question were
located within India. This was a key change to ensure that parties could still seek interim relief
domestically, even when the arbitration itself took place abroad.

3. Powers of Arbitral Tribunals to Grant Interim Measures: Section 17

Pre2015 Position
Before the 2015 Amendment, Section 17 of the Arbitration Act empowered arbitral tribunals
seated in India to grant interim measures. However, its scope was limited, and the types of
measures that could be granted were not explicitly defined. Tribunals could only issue interim
relief in respect of the subject matter of the dispute, and their orders lacked enforceability.
Often, parties had to approach courts under Section 9 to enforce tribunalordered interim relief.

Post2015 Amendment
The 2015 Amendment significantly expanded the powers of arbitral tribunals. It aligned the
powers of arbitral tribunals under Section 17 with those of courts under Section 9, enabling
tribunals to grant the same types of interim relief. The amendment also provided that any order
made by an arbitral tribunal would be enforceable as if it were an order of the court, and such
orders could be directly enforced under the Code of Civil Procedure, 1908 (CPC).

This expansion aimed to reduce the courts’ involvement in arbitration, reinforcing the
autonomy of arbitral tribunals. To complement this, Section 9(3) was inserted, providing that
once an arbitral tribunal is constituted, courts should not entertain applications for interim
measures unless the court finds that the remedy provided under Section 17 is inadequate or
ineffective.

Interim Orders vs. Interim Awards

The chapter further distinguishes between interim orders and interim awards. An interim award,
defined under Section 31(6) of the Arbitration Act, is a decision on part of the dispute and has
the same finality as a final award. It can be challenged under Section 34, similar to a final
award. On the other hand, an interim order under Section 17 is typically appealable under
Section 37(2)(b), but lacks the same finality as an award.

For instance, in Asian Electronics Ltd. v. M.P. State Electricity Board, the court examined
whether an order was an interim award or an interim order based on its substance, not just its
label. The court held that interim awards deal with substantive issues that could be finally
decided in the arbitration, while interim orders are more akin to protective measures and are
thus appealable.

4. Measures Against Third Parties

One limitation of Section 17 is that arbitral tribunals cannot issue interim measures against
third parties who are not parties to the arbitration agreement. The jurisdiction of an arbitral
tribunal is based on the consent of the parties, and it cannot make binding orders affecting
individuals or entities that have not agreed to arbitration.

By contrast, courts under Section 9 have broader powers and can issue interim measures against
third parties. For example, in Girish Mulchand Mehta v. Mahesh S. Mehta, the Bombay High
Court allowed interim relief affecting third parties who derived their rights from a party to the
arbitration agreement. This decision highlighted the court’s capacity to grant relief that impacts
nonsignatories to the arbitration agreement, particularly when their rights are connected to the
arbitration.

In Shakti International Private Limited v. Excel Metal Processors Private Limited, the Bombay
High Court ruled that an arbitral tribunal could not appoint a court receiver under Section 17
since such an appointment was within the exclusive jurisdiction of the court.

5. Appeals and Review: Section 37

Interim measures granted by arbitral tribunals under Section 17 can be appealed under Section
37(2)(b) of the Arbitration Act. However, Section 37(3) precludes a second appeal, although
the Supreme Court’s extraordinary jurisdiction under Article 136 of the Indian Constitution
remains available.

An appeal against an interim award, on the other hand, would follow the same process as a
challenge to a final award under Section 34, where the court assesses whether the tribunal’s
decision complies with the law. Judicial decisions have reinforced the principle that orders
made under Section 17 are reviewable, but the scope of such review is limited to issues of
jurisdiction and substantive fairness.

6. Enforcement of Interim Measures

Prior to the 2015 Amendment, there was no direct mechanism for enforcing interim orders
granted by arbitral tribunals. Parties would often have to file fresh Section 9 applications in
court to enforce such orders. However, after the 2015 Amendment, interim orders granted by
arbitral tribunals under Section 17 are directly enforceable as court orders under the CPC.

Interim Measures in ForeignSeated Arbitrations

For arbitrations seated outside India, Section 17 does not apply, and the ability of tribunals to
grant interim measures depends on the laws of the seat of arbitration. However, Indian courts
can still grant interim relief in foreignseated arbitrations under Section 9, provided that the
arbitration agreement allows for this and that assets are located within India.

7. CourtOrdered Interim Measures: Section 9

Section 9 allows courts to grant interim measures in a variety of situations:

Before the commencement of arbitration.
During the arbitration proceedings.
After the award is made but before it is enforced.
 Competent Court
The competent court for granting interim relief under Section 9 depends on the type of
arbitration. For domestic arbitrations, the court with jurisdiction over the subject matter is
competent. For international commercial arbitrations, the appropriate High Court has
jurisdiction. Courts under Section 9 are also empowered to grant interim measures in
arbitrations seated outside India, as discussed above.

Guiding Principles for Interim Measures

In granting interim relief, courts are guided by the same principles that apply to granting
injunctions under the

CPC. The party seeking relief must demonstrate:

A prima facie case.
Balance of convenience.
Irreparable harm if the relief is not granted.

These principles ensure that interim measures are granted only when necessary and to prevent
the misuse of such provisions.

8. Timing and Duration of Interim Measures

Interim measures under Section 9 can be sought at any time during the arbitration process,
including before the proceedings commence. Once a court grants an interim measure before
arbitration begins, the arbitration must be initiated within 90 days. This time limit was
introduced in the 2015 Amendment to ensure that interim relief does not serve as a substitute
for substantive arbitration.

Before Arbitral Proceedings Begin

The chapter discusses cases like Sundaram Finance Ltd. v. NEPC India Ltd., where the
Supreme Court held that a party could seek interim relief even before formally commencing
arbitration. However, the court must be satisfied that a valid arbitration agreement exists and
that the party intends to initiate arbitration soon.

9. Enforcement and Review of Interim Measures

The 2015 Amendment ensured that interim orders under Section 17 are enforceable as court
orders. Similarly, interim awards are enforceable under Section 36 as if they were court decrees.
The enforcement mechanism allows parties to secure compliance with tribunalordered interim
measures without having to seek separate court orders.

Conclusion

This chapter offers an indepth look at the legal framework governing interim measures in
Indian arbitration. The legislative amendments, especially the 2015 and 2019 Amendments,
significantly enhanced the powers of arbitral tribunals while delineating the circumstances in
which courts could intervene. The chapter highlights the delicate balance between tribunal
autonomy and judicial oversight, ensuring that arbitration remains an effective means of
dispute resolution. The alignment of Sections 9 and 17 underscores the intention of the
legislature to reduce court interference and empower arbitral tribunals to effectively manage
the arbitration process.