Indian Arbitration Law Review Vol 1
Indian Arbitration Law Review Vol 1
Volume 1
February, 2019
This Inaugural Edition has been published due to the time and effort of the
following persons:
Patron
Mr. Prashant Mishra
Partner, L&L Partners, New Delhi
Editor-in-Chief Content Editor
Mr. Udyan Arya Shrivastava Mr. Hardik Jain
Managing Editor Technical Editor
Ms. Aishwarya Srivastava Ms. Shubhi Bhandari
Peer Review Board
Ms. Aimen Reshi Ms. Raghavi Viswanath
Ms. Aishwarya Diwan Ms. Sadhvi Mohindru
Ms. Eira Mishra Mr. Sarthak Malhotra
Ms. Neelu Mohan Mr. Sujoy Sud
Mr. Piyush Prasad Mr. Vivekananda
Mr. Prateek Mishra Neelakantan
CONTENTS
Editorial ............................................................................ V
SHORT ARTICLES
The debate around applicability: An analysis of
the Arbitration and Conciliation (Amendment)
Act, 2015 .......................................................................... 25
Vartika Tiwari & Pragya Dubey
LONG ARTICLES
Mandatory rules and its effect on enforceability
of arbitral awards: The ‘second Look’ solution 98
Meenal Garg
EDITORIAL
Arbitration law has grown from being a niche field of law to one
of the mainstays of legal systems over the course of the past two
decades. Its growing popularity has unsurprisingly resulted in
significant academic discourse, be it in respect of highly specific
procedural matters, or more far-reaching conceptual questions
such as that of arbitrability.
This inaugural Volume of the Indian Arbitration Law Review aims
to explore contemporary issues in domestic and international
arbitration and study the dynamic confluence of the academic and
transactional world presented by this field of law. We hope that
the eleven articles in this Volume will satiate the readers’ thirst for
knowledge and encourage them to delve deeper into arbitration
law.
This Volume begins with the short article ‘Waiving the right to set
aside an award’, which explores the issue of waiver of parties’ right
to set aside an award. It discusses various issues of enforceability
that may arise in different jurisdictions and explores the potential
pitfalls of accepting such waivers from a policy perspective. In
jurisdictions where the applicable law prevents an absolute
waiver, the article discusses the viability of a two-tier/appellate
arbitration clause, as an alternative.
‘The debate around applicability: An analysis of the Arbitration and
Conciliation (Amendment) Act, 2015’ looks at the confusion
surrounding the applicability of the 2015 Amendment to pending
arbitral proceedings and arbitration related court proceedings
during the period between the Arbitration and Conciliation
(Amendment) Ordinance, 2015 and the 2015 Amendment. The
authors also analyse the judiciary’s attempts to clarify the issue in
INDIAN ARBITRATION LAW REVIEW/ VI
Vol. 1 Feb 2019
B.C.C.I vs. Kochi Cricket Pvt. Ltd, as well as that of the government
in the 2018 Bill.
Next, in ‘The interim award puzzle in the Indian arbitration regime: Future
course’ the author explores the exercise of discretion of courts in
granting interim awards. The observations of the Supreme Court
in the Bhadra Products case are analysed, and potential future
prospects and scope for amendment are discussed in detail.
‘Is arbitration necessarily a human activity? – Technological disruption &
the role of robots in arbitration’ ambitiously suggests a role for robots
powered by Artificial Intelligence in arbitrating disputes. The
author presents a stance on the viability of using robots as
arbitrators, addressing questions of efficiency, confidentiality, and
fairness, balanced against the human and humane approach of
arbitrators.
The long article, ‘The public policy doctrine in arbitration: A primer on
its effect on challenges and enforcement of awards’ is a comprehensive take
on one of the more widely discussed issues in Indian arbitration.
Tracing the development of the public policy doctrine in Section
34 of the Arbitration and Conciliation Act, 1996 and the
UNCITRAL Model Law, it provides an in-depth analysis of the
major judicial pronouncements on the issue.
In ‘Conflicting jurisprudence on the arbitrability of IP disputes in India:
Navigating the journey forward’ the author discusses the possibilities
of arbitration as a viable option in intellectual property disputes
and the debate round the arbitrability of such disputes.
‘Mandatory rules and their effect on enforceability of arbitral awards: The
‘second look’ solution’ addresses the effect that mandatory laws in
arbitration have on party autonomy and enforceability. The article
INDIAN ARBITRATION LAW REVIEW/ VII
Vol. 1 Feb 2019
Editorial Board,
Indian Arbitration Law Review
INDIAN ARBITRATION LAW REVIEW/ 1
Vol. 1 Feb 2019
Abstract
The need for disputing parties to waive their right to set aside
an arbitral award primarily arises out of the necessity to
achieve commercial certainty, especially in cases where the
judicial system at the seat of arbitration is inefficient and
inconsistent. However, various jurisdictions have taken
differing positions on whether to allow parties to
contractually waive their right to challenge an award, based
on a need to either protect rights of disputing parties by
providing for judicial review or allow disputing parties the
autonomy to make an informed choice to waive their right to
set aside an award. This paper discusses the reasons and
motivations of parties in choosing to exercise such waiver
and the differing issues of enforceability that arise in various
jurisdictions. Further, the paper analyses the pitfalls of
agreeing to such waivers from a policy perspective. The
paper also briefly discusses the viability of a two-tier /
appellate arbitration clause as an alternative to a waiving the
right to set aside an award.
I. Introduction
Are all rights available to a person under a constitution, statute,
contract or common law, capable of being waived? The answer
to this varies with jurisdiction and the type of right sought to be
waived. For instance, with respect to constitutional rights
(including fundamental rights), while some jurisdictions hold on
to the inalienable nature of these rights, on account of such rights
being conferred on the public at large and not merely on an
The authors are dispute resolution lawyers practising in Mumbai.
Waiving the Right to set aside an Award 2
12 Supra note 9.
13 Id.
14 Matt Marshall, Section 69 almost 20 years on…., KLUWER ARBITRATION,
(Oct. 15, 2018), http://arbitrationblog.kluwerarbitration.com/2015/06/24/
section-69-almost-20-years-on/.
15 Noble China Inc. v. Lei, [1998] O.T.C. LEXIS 2175 (Ontario Superior Court);
Judgment of 18th January 2007, Case No.4674 (Tunisian Cour de cassation)
[GARY BORN, INTERNATIONAL COMMERCIAL ARBITRATION, 3368 (2 ed.
Kluwer Law International 2014)].
16 Id. at pp. 3371-3374a.
17 Italian Code of Civil Procedure, Article 829(1); Portuguese Law on
Voluntary Arbitration, 2011, Article 46(5); Egyptian Arbitration Law,
Article 54(1). [GARY BORN, INTERNATIONAL COMMERCIAL ARBITRATION,
3368 (2 ed. Kluwer Law International 2014)].
7 1 Ind. Arb. L. Rev. (2019)
22 Michael Kerr, Arbitration and the Courts: The UNCITRAL Model Law, 34
Int’l & Comp. L.Q. 1, 15 (1985). [See GARY BORN, INTERNATIONAL
COMMERCIAL ARBITRATION, 3368 (2 ed. Kluwer Law International 2014)].
9 1 Ind. Arb. L. Rev. (2019)
23 Section 28 of the Indian Contract Act, 1872 read with Section 35 of the
(Indian) Arbitration and Conciliation Act, 1996 (as amended).
Waiving the Right to set aside an Award 10
VI. Conclusion
The law and practice of commercial arbitration, both
international and domestic, is constantly evolving and newer and
more nuanced structures of alternative dispute resolution are
constantly being put to test at the altar of judicial review in various
jurisdictions. As highlighted above, while most arbitral
institutions and certain jurisdictions are accepting of the validity
of an agreement to waive the right to challenge an arbitral award,
such clauses may face enforceability issues in other jurisdictions
such as India, and rightly so. While arbitration, as an alternative
dispute resolution mechanism, must be the first port of call when
disputes arise between parties to commercial contracts, there is
still a case for limited judicial review by courts when arbitration
fails to successfully resolve such disputes.
However, this does not mean parties are dispossessed of the
contractual means to structure their dispute resolution
mechanisms so as to reduce the possibility of arbitral awards
eventually being challenged and set aside. In this regard, a two-
tier arbitration mechanism is a structure that has the potential to
alleviate parties’ concerns in relation to any infirmities that may
afflict an award rendered in the first instance, while retaining the
twin benefits of speedy resolution of disputes and cost efficiency.
Only time will tell whether parties to international and domestic
commercial contracts explore such nuanced means of resolving
their disputes.
INDIAN ARBITRATION LAW REVIEW/ 12
Vol. 1 Feb 2019
Abstract
Definitional requirements of “investment” are a pre-
requisite needed to be satisfied in order to invoke the
jurisdiction of an investment tribunal. For these purposes, the
term ‘investment’ is defined by the contracting states under
their respective bilateral investment treaties (BIT). The
primary requirement for an investment to be legal is that it
shall be in consonance with the laws of the host State. The
investor is vested with the right to be treated fair and
equitably (FET) as required under substantive protections
guaranteed under BITs as well as minimum standard
treatment under customary international law. Ambiguity
arises in cases where the investment has been acquired
through corrupt practices. More often than not, the State
officials are involved in the fraudulent transactions.
However, it is the investor that has to bear the consequences
of entering into such an arrangement. The paper has been
divided into three parts that address the issue of corruption
defence and the applicability of doctrine of estoppel in
arbitral proceedings. Firstly, the paper aims to address the
attitude of the arbitral tribunals in cases involving the
corruption defence. Secondly, the paper looks into the
applicability of the doctrine of estoppel in investment
arbitration. Lastly, the paper aims to look into the
appropriate course of action that could be adopted in such
cases.
I. Introduction
Liberal economic structures have brought about greater
interdependency in the world owing to proliferation of trade and
The authors are students at Maharashtra National Law University, Mumbai.
13 1 Ind. Arb. L. Rev. (2019)
18 World Duty Free Comp. v. Republic of Kenya, ICSID Case No. ARB/00/7,
Award (Oct. 4, 2006) ¶181.
19 ICC Case No. 7047 (1994); Wena Hotels Ltd v The Arab Republic of Egypt,
ICSID Case No. ARB/98/4, Award (December 8, 2000); ICC Case No.
3916(1982).
20 Nartnirun Junngam, Public Policy in International Investment Law: The
Confluence of the Three Unruly Horses, 51 TEXAS INT’L LJ, 67-100 (2016)
21 Zachary Douglas, The Plea of Illegality in Investment Treaty Arbitration,
29(1) ICSID REV., 180, (2014).
World Duty Free Comp. v Republic of Kenya, ICSID Case No. ARB/00/7,
Award (Oct. 4, 2006), ¶162 & 179.
22 Metal-Tech Ltd. v. Republic of Uzbekistan, ICSID Case No. ARB/10/3,
Award (Oct. 4, 2013) ¶389
23 Mark W Friedman, Corruption in International Arbitration: Challenges and
Consequences, GLO. ARB. REV. (2017)
17 1 Ind. Arb. L. Rev. (2019)
PM) https://www.ejiltalk.org/the-viability-of-corruption-Defences-in-
investment-arbitration-when-the-state-does-not-prosecute/.
29 Metal-Tech Ltd. v. The Republic of Uzbekistan, ICSID Case No ARB/10/3,
Award (October 4, 2013) ¶110.
30 Stefanie Schacherer, Metal-Tech Ltd. v. The Republic of Uzbekistan,
Investment Treaty News, (Oct. 18, 2018, 11:59 PM)
https://www.iisd.org/itn/2018/10/18/metal-tech-v-uzbekistan/.
31 Metal-Tech Ltd. v. The Republic of Uzbekistan, ICSID Case No ARB/10/3,
Award (October 4, 2013) ¶421.
32 Wena Hotels Ltd. v. Arab Republic of Egypt, ICSID Case No. ARB/98/4,
Award (Decembers 8, 2000) ¶116.
33 Shaparak Saleh, Protection of States’ Diplomatic Assets in France, KLUWER
ARBITRATION BLOG, 2018, (Sep. 27, 2018, 3:31 PM)
19 1 Ind. Arb. L. Rev. (2019)
http://arbitrationblog.kluwerarbitration.com/2018/02/21/protection-states-
diplomatic-assets-france/.
34 International Law Commission, Draft Articles on Responsibility of States for
Internationally Wrongful Acts, Art. 7, (2001).
35 L.C. MacGibbon, Estoppel in International Law, 7, INT'L & CO. L.Q., 512
(1958).
36 Charles T. Kotuby, General Principles of Law, International Due Process
and the Modern Role of Private International Law, 23 DUKE J. OF COMP. AND
INT.L.423-428 (2013).
37 Andreas Kulick, About the Order of Cart and Horse, Among Other Things:
Estoppel in the Jurisprudence of International Investment Arbitration
Tribunals, 27 EURO. J. OF INT. L, 108-115 (2016).
Corruption Defence and the Doctrine of Estoppel 20
49 Michael Hwang S.C, Corruption in Arbitration- Law and Reality, (Sep. 27,
2018, 3:09 PM) https://www.arbitration-
icca.org/media/4/97929640279647/media013261720320840corruption_in_
arbitration_paper_draft_248.pdf.
50 Jason Summerfield, The Corruption Defence in Investment Disputes: A
Discussion of the Imbalance Between International Discourse and Arbitral
Decisions, 7 TDM 1 (2009).
51 Metal-Tech Ltd v The Republic of Uzbekistan (ICSID Case No. ARB/10/3)
52 Ruth Cowley, Investor corruption: Bribery at centre of failed investor claim,
(Sep. 27, 2018, 3:12 PM) http://www.nortonrosefulbright.com/files/
investor-corruption-115917.pdf.
Jason Yackee, Investment Treaties and Investor Corruption: An Emerging
Defence for Host States, 2012, (Sep. 27, 2018, 3:31 PM)
https://www.iisd.org/itn/2012/10/19/investment-treaties-and-investor-
corruption-an-emerging-Defence-for-host-states/.
23 1 Ind. Arb. L. Rev. (2019)
Abstract
On 23 October, 2015, with the intention of making India more
arbitration-friendly, the President of India promulgated the
Arbitration and Conciliation (Amendment) Ordinance, 2015
(“Ordinance”). This Ordinance was finally enacted as The
Arbitration and Conciliation (Amendment) Act, 2015 (“2015
Amendment”) by the Parliament on 31 December 2015. The
period between the promulgation of the Ordinance and the
enactment of the 2015 Amendment was marked with
uncertainty as to the applicability of the amendments to
pending arbitral proceedings and arbitration related court
proceedings. This continuing confusion necessitated the
incorporation of Section 26 in the 2015 Amendment to clarify
the applicability of the 2015 Amendment. However, even
Section 26 could not yield the desired results and varied
interpretations provided by High Courts painted an
inconsistent picture. Finally, the Hon’ble Supreme Court of
India had to intervene and put the issue to rest in the matter
of BCCI vs. Kochi Cricket Pvt. Limited (“BCCI Judgement”).
Meanwhile, the Government of India via a press release
dated 7 March, 2018 expressed its willingness to enact a
certain Section 87 to the Arbitration and Conciliation Act,
1996 (“the Principal Act”) in order to clarify the issue, which
was eventually incorporated in the Arbitration and
Conciliation (Amendment) Bill, 2018 (“2018 Bill”). In this
paper, the author seeks to discuss and analyse the issue of
applicability of the 2015 Amendment. The paper has been
divided into five parts - the first part provides a brief
introduction to the debate; in the second part, the author
discusses the conflicting interpretations of Section 26; in the
third part, the author discusses the BCCI Judgement; the
The authors are students at the National Law Institute University, Bhopal.
The Debate Around Applicability of 2015 Amendment 26
fourth part discusses the 2018 Bill and its implications and
finally, in the fifth part, the author provides an in-depth
analysis of the applicability provision.
7 Board of Control For Cricket v. Kochi Cricket Pvt Ltd And Etc, AIR 2018
SC 1549, ¶3.
8 Supra note 5.
9 Litigation Team Khaitan & Co., The Arbitration And Conciliation
(Amendment) Act, 2015, MONDAQ (Jul. 1, 2018, 12:15 AM),
http://www.mondaq.com/india/x/459478/trials+appeals+compensation/The
+Arbitration+And+Conciliation+Amendment+Act+2015.
10 Supra note 5).
11 Delphi TVS Diesel Systems Limited v. Union Of India, W.P.Nos.37355 to
37357 of 2015, ¶2, (Madras High Court) (Unreported).
12 The Arbitration and Conciliation (Amendment) Act 2015 § 26.
The Debate Around Applicability of 2015 Amendment 28
13 Thyssen Stahlunion GmBH v. Steel Authority of India, 1999 Supp (3) SCR
461.
14 The Arbitration and Conciliation Act 1996 § 85(2).
15 Supra note 13, ¶33-34.
16 Id.
17 Khaitan & Co, Ambiguities in applicability of Arbitration Amendment Act
2015, LEXOLOGY (Date Accessed Feb. 03, 2019, 6:47 PM),
http://www.mondaq.com/india/x/537190/Arbitration+Dispute+Resolution/
Evolution+Of+Arbitration+In+India.
18 Id.
19 Rendezvous Sports World v. Board of Control for Cricket in India, 2017 (2)
BomCR 113.
29 1 Ind. Arb. L. Rev. (2019)
41 Id.
42 Supra note 7.
43 Id.
44 Justice B.N. Srikrishna Committee, High Level Committee To Review The
Institutionalisation Of Arbitration Mechanism In India, (Jul 30, 2018).
45 Id.
46 Press Information Bureau, Government of India, Ministry of Law and
Justice, Cabinet approves the Arbitration and Conciliation (Amendment)
Bill, 2018, PRESS BUREAU OF INDIA (Jul. 10, 2018, 3:25 PM),
http://pib.nic.in/newsite/PrintRelease.aspx?relid=177128).
33 1 Ind. Arb. L. Rev. (2019)
47 Arbitration and Conciliation (Amendment) Bill 2018, Bill No. 100 of 2018.
48 Supra note 36.
49 Id.
50 Supra note 7, ¶56.
51 Supra note 7, ¶57.
52 Cyril Amarchand Mangaldas, Case In Point, CYRIL SHROFF (Date Accessed
Feb. 03, 2019, 7:36 PM), http://www.cyrilshroff.com/wp-
content/uploads/2018/07/Vol.-IV-X-April-2018.pdf.
53 Id.
54 Id.
The Debate Around Applicability of 2015 Amendment 34
Daksha Khanna
Abstract
The grant of Interim Awards is a lesser opted method but not
a novel concept in Indian arbitration proceedings, with its
use being traced back to the inception of the Arbitration &
Conciliation Act, 1996 itself. This seemingly straightforward
provision however, suffers from uncertainties which obstruct
the pro-arbitration atmosphere currently prevailing in Indian
courts. As the jurisprudence on the subject is limited, this
article reviews the judicial treatment of the provision until
now in the context of pragmatic realities like costs, possibility
of use of the provision as a delay tactic, and the limited
statutory prescription. In the light of the recent observations
of the Supreme Court in the Bhadra Products case, which
recommended to the Parliament to club the challenge of
interim award with the final award under Section 34 to avoid
‘piecemeal challenges’ and reduce costs. It becomes
necessary to evaluate the far-reaching consequences of
taking away of such recourse from parties at the interim
stage. In addition, the article also questions the considerable
discretion of the tribunal and subsequently the courts, upon
which the application of the provision relies. The article also
touches upon the peripheral issue of the grant of interim
award on admitted liability and whether it is permitted to
contract out of Section 31(6) of the Act. Considering the
deficiency of discussion on the aforesaid provision in the
246th Law Commission Report recommendations and
Arbitration & Conciliation (Amendment) Act 2018, this
article explores the need and extent to which the interim
award provisions should be amended for a greater degree of
certainty, uniformity and compliance with international
standards.
The author is a student at Government Law College, Mumbai.
The Interim Award Puzzle in the Indian Arbitration 38
I. Introduction
“Arbitral award” is defined in Section 2(1) (c)1 of the Arbitration
and Conciliation Act, 1996 (“the Act”) as including an “interim
award”, also occasionally fashioned as a “partial award”. Sub-
section (6) of Section 31 of the Act empowers the Arbitral
Tribunal to make an interim award on “any matter with respect to
which the Tribunal may make a final arbitral award”2. There are broadly
two ways in which an interim award takes effect; an interim
arbitral award is can be in its essence a final award, as it
conclusively determines the rights and liabilities of parties on an
issue and is binding upon them3, and interim in the sense that it
is made at the interim stage4 wherein the arbitral tribunal has not
become functus officio and secondly, if the form of the award is such
that it is intended to have effect only so long as the final award is
not delivered, it will have the force of the interim award and it will
cease to have effect once the final award is made5. It is a common
method used by tribunals to delineate the issues (like jurisdiction,
liability, applicable law, etc.) in dispute and, where appropriate,
determine some issues at an early stage of the proceedings6. A
2012 survey by the Queen Mary University in collaboration with
White and Case LLP found that partial or interim awards are
issued in one third of international arbitral proceedings7,
highlighting the need to exact its principles in the domestic
arising out of, or relating to, the agreement.11 It has been observed
that it would not be conducive to interpret the decision of the
Joint Arbitration Committee with regard to the venue to be an
interim award, conferring a right of challenge to an aggrieved
person under Section 34 of the Act.12 By an interim award, the
arbitrator has to decide a part of the dispute referred to him; he
may determine some of the issues or some of the claims which
form a part of the dispute.13 Where the tribunal merely recorded
the finding that a majority of the shareholders did not want a
division of the properties of the company, such statement of
factum did not constitute an interim award. Thus, in such
circumstances, it was held that it was not an appropriate stage for
filing of an application under Section 34 of the Act.14
Difference between “interim award” and “decision on jurisdiction”
Another contentious issue raised in this regard have been cases
wherein interim awards have been made on seemingly
jurisdictional issues thereby raising questions of their treatment
either as an award under Section or an interim award under
Section 31(6) of the Act. After grappling with the issue of
limitation in NTPC vs. Siemens15, the Supreme Court has recently
ruled in M/s Indian Farmers Fertilizer Co. vs. M/s Bhadra Products16,
that an award on the issue of limitation is to be treated as an
interim award and can be challenged under Section 3417 of the
Arbitration Act. The Supreme Court held that as long as the
award finally decides an issue between the parties, it was an
27 Kalyan Sangam Infratech Ltd v IDBI Bank Ltd, 2015 SCC OnLine Bom
2055.
28 Lenders can claim dues only after passing of Interim Award, SCC (Oct. 5,
2018, 5 PM) https://blog.scconline.com/post/2015/05/06/lenders-can-claim-
dues-only-after-passing-of-interim-award/.
29 1 A. WADHWA & A. KRISHNAN, JUSTICE RS BACHAWAT’S LAW OF
ARBITRATION 1689 (6 ed. Lexis Nexis 2018).
30 Ex mar BV v. National Iranian Tanker Co., (1992) 1 LLYOD’S REP 169.
The Interim Award Puzzle in the Indian Arbitration 44
obligated the arbitral tribunal to make the award only after ‘proper
hearing’, barring exceptional cases where they can properly find
that they are not satisfied that the defence or set-off is made in
good faith, or where there is a sum properly due on the basis of
the respondent’s own figures.31 Guidelines of the aforesaid
nature, not amounting to directions may provide a useful guide to
regulate the tribunal’s conduct and avoid the uncertainties that
accompany ever-fluctuating discretion.
The Enforcement-Stay Interplay
An interim award can be enforced in accordance with Section 36
of the Act in accordance with the provisions of the Code of Civil
Procedure, 1908 (‘Code’) as a decree of the Court. In the context
of a final arbitral award, there is no automatic stay on the
operation of the award, if there is an application to set aside award
under Section 34 pending with the Court. However, in the
context of interim awards, it is important to note the judgment of
V. Raghavan vs. Dr. R. Venkitapathy,32 wherein the Madras High
Court noted that, what is contemplated under Section 36 of the
said Act is only the postponement of the enforcement of the
award and not the stay of further proceedings by the Arbitral
Tribunal pursuant to an interim award. Hence, it seems that
pendency of the proceedings before the Court under Section 34,
challenging the interim award cannot stall the Arbitral Tribunal
from passing the final award. However, this remains a grey area
in absence of any precedent which lays down a definite position.
Right time to challenge: Countering the ‘piecemeal challenge’ argument
Despite the pro-arbitration atmosphere prevailing in the judicial
sensibilities, the future discourse in this regard may be altered in
view of the observations of the Supreme Court in the Bhadra
33 M/s Indian Farmers Fertilizer Co. v. M/s Bhadra Products, 2018 SCC Online
SC 38, ¶29.
34 Supra note 6.
The Interim Award Puzzle in the Indian Arbitration 46
Varsha Banta
Abstract
The present paper is an endeavour into understanding
technological disruption in the field of arbitration. In a
dynamic world where individuals and businesses constantly
outsource their tasks to external agencies for benefits of
greater expertise or reduced costs, this paper argues that this
inclination towards outsourcing is permeating the legal
services industry as well. The only difference is, here, this
external agency, Artificial Intelligence (“AI”), threatens the
place of humans in the legal sphere, most notably within the
field of arbitration law. More specifically, the discussion
unfolds into increased reliance on predictive justice tools to
grant awards, and the challenges such reliance poses in
terms of efficiency, confidentiality and control of
proceedings.
This paper is a relevant inquiry as it creates a space to stop
and take heed of the rapid technological reforms the world is
undergoing today. It takes a balanced view of the changes
and the benefits they bring, but advocates for a traditional,
humane approach to arbitration, with a view to continually
uphold principles of equity and fairness. It is an attempt to
remind oneself of the value of the human legal consciousness,
and the perils of over-mechanization of legal services.
Although present literature discusses the viability of robots
as arbitrators, it does not offer a definitive stance. An attempt
to offer such a stance has been made in this paper.
The author is a student at Jindal Global Law School, Sonepat.
Is Arbitration Necessarily a Human Activity? 50
Introduction
The word disruption is used liberally and frequently in today's
dynamic commercial environment. Principally used to connote
any pioneering business innovation within an existing
framework1, a ‘disruption' is a rite to passage to a new way of
doing things. This is accompanied by several positive changes.
This is because it obviates an intermediate actor or process that
imposes economic or time constraints, on remaining actors in the
chain. Consider Jeff Bezos of Amazon, for example, the largest
online retail platform today. What Bezos essentially did through
his business model was to innovate and provide the same goods
and services as physical retail outlets, but on a larger scale, at
better costs and most importantly, at the convenience of the
consumer's click.2 More recently, Amazon has been developing
Prime Air, a delivery system that will use remote-controlled
robotic vehicles to transport goods from the Company's order
fulfilment centres to the consumers.3 The use of robotics to
facilitate ease of business is however not limited to giants like
Amazon, but is gradually being adopted as a way of life in
countries such as Japan with the largest elderly population in the
world. Between 2010 and 2025, the number of Japanese citizens
is likely to rise only by 7 million.4 This leaves a considerably low
percentage of the population available and able to join and
actively contribute to the workforce, which is further
compounded by strict immigration laws dissuading a foreign
labour force.5 However, Japan has found a solution to the thin
labour supply within eldercare and personalized services through
robotic nursing aides. Japanese researchers are also endeavouring
to provide a more humane touch to these robo-nurses, indicating
a possible overtake of human nurses, who would pride
themselves on their ability to empathize and nurture. 1
2 John F. Furth, Why Amazon And Jeff Bezos Are So Successful At Disruption,
ENTREPRENEUR INDIA, (Oct. 13, 2018, 10:04 AM),
https://www.entrepreneur.com/article/312481.
3 Margaret Rouse, Amazon Prime Air Drone, TECHTARGET, (Oct. 13, 2018,
10:06 AM), https://internetofthingsagenda.techtarget.com/definition/
Amazon-Prime-Air-drone.
4 ALEC ROSS, THE INDUSTRIES OF THE FUTURE 15 (Simon & Schuster 2016)
5 Id. at 16.
6 The future of arbitration: New technologies are making a big impact — and
AI robots may take on “human” roles, HOGAN LOVELLS PUBLICATIONS, 1, 1
(2018).
7 United Nations Commission On International Trade Law, UNCITRAL
Technical Notes on Online Dispute Resolution, UNCITRAL, (Oct. 14, 2018,
11:48 AM), http://www.uncitral.org/pdf/english/texts/odr/V1700382_
English_Technical_Notes_on_ODR.pdf.
8 Supra note 6, at 3.
Is Arbitration Necessarily a Human Activity? 52
This paper will be divided into three parts. Part I will trace and
identify the various technological developments in the field of
arbitration with exclusive reliance on AI, and particularly the
proposition of predictive justice.11 Part II will weigh the benefits
of and challenges to such a proposition concerning efficiency,
confidentiality, and control of proceedings.12 Part III will argue
for arbitration as a primarily human activity, with emphasis on
legal considerations of the definition of arbitrators along with
ethical considerations of human consciousness and equity.13 2
PART I
The advent of information technology has occurred both in
offline as well as online arbitration. Computers although first
invented in 1822 by British mathematician Charles Babbage, have
undergone significant development. Today, their elementary
frameworks albeit in sophisticated forms, often incorporate
complementary technologies such as robotic engineering.14
Offline arbitration or traditional arbitration utilizes technologies
available or operable online and applies it to the pre-existing
framework. These technologies include transmitting messages or
files, video conferencing, handling and managing documents
along with tracking the transfer of documents.15 However, the
relationship between ODR and technology is much deep-rooted.
Conventionally used to resolve online trade disputes between
traders such as eBay16, ODR remains one of the critical links
16 Supra note 7.
17 Supra note 10, at 7.
18 Id. at 7.
19 Supra note 8.
20 State v. Loomis, 881 N.W.2d 749, 66, 68 (Wis. 2016).
Is Arbitration Necessarily a Human Activity? 54
29 Supra note 9.
30 Id.
31 Id.
32 Supra note 27, at 30.
57 1 Ind. Arb. L. Rev. (2019)
36 Sophia The Robot Gets Saudi Citizenship, THE ECONOMIC TIMES, (Oct 15,
2018, 11:02 AM), https://economictimes.indiatimes.com/news/science/
sophia-the-robot-gets-a-saudi-arabian-citizenship/first-ever-robot-
citizen/slideshow/61355634.cms.
37 Daniel Jurafsky and James H. Martin, Speech and Language Processing
An Introduction to Natural Language Processing, Computational Linguistics
And Speech Recognition, PRENTICE HALL SERIES IN ARTIFICIAL
INTELLIGENCE, (Oct 16, 2018, 11:30 AM),
http://www.deepsky.com/~merovech/voynich/voynich_manchu_reference_
materials/PDFs/jurafsky_martin.pdf.
59 1 Ind. Arb. L. Rev. (2019)
Abstract
Arbitration law in India is principally governed under the
Arbitration and Conciliation Act, 1996 (the “Act”) (as
amended in 2015). The aim and object of the Statute is to
foster an environment wherein alternative modes of dispute
settlement, such as arbitration, negotiation and mediation
are given full effect to and judicial intervention in such modes
of dispute resolution are kept at a bare minimum. The Act
therefore delineates permissible instances wherein the
intervention of the Courts would be warranted.
This paper aims to analyse one such permissible instance
under the Act – that of setting aside and challenge to an
arbitral award on the ground of Public Policy. The
interpretation of the term Public Policy has come under
severe judicial scrutiny, often resulting in contradictory and
ambiguous interpretations being applied to the doctrine by
the Courts.
Part I of this paper traces the development of the doctrine
under the pre-1996 regime and its peripheral, yet gradual
intrusion under the Act. Part II analyses the ‘broad’ and
‘narrow’ view of Public Policy, as given effect to by the
Courts and traces its impact on the enforcement of domestic
awards and the challenge to foreign arbitral awards. Part III
interprets a host of judicial decisions starting from Saw Pipes
and Renusagar to Associate Builders and Shri Lal Mahal.
Part IV captures the amendments brought in the 1996 Act by
the 2015 Amendments introduced by the Parliament. Part V
concludes by positing that the recent judicial trends suggest
that the narrow view of Public Policy is being favoured by
The authors are students at Government Law College, Mumbai.
61 1 Ind. Arb. L. Rev. (2019)
I. Introduction
Arbitration and Conciliation (or Mediation) have evolved as
effective mechanisms of alternative dispute resolution in India,
providing parties with a forum for settlement of their disputes,
without having to invest their resources in protracted litigation
before the Civil Courts in India. However, the awards rendered
through such alternate means of dispute resolution are subject to
the review of the civil courts inter alia on the grounds of it being
violative of the Public Policy of the country.
An arbitral award made under Part I (awards made in an India-
seated Arbitration) of the Arbitration and Conciliation Act, 1996
(the “Act”) can be challenged under Section 34 (2) (a) and (b) of
the Act which is derived from Article 34 of the UNICITRAL
Model Law. Therefore, the objective of this paper is to trace the
development of the public policy doctrine in arbitration and
reflect upon its use as a ground for challenging or setting aside an
arbitral award.
PUBLIC POLICY IN THE PRE-1996 LANDSCAPE
The Arbitration (Protocol and Convention) Act, 1937
The doctrine of Public Policy was initially codified in The
Arbitration (Protocol and Convention) Act, 1937 (the “Protocol
and Convention Act”). Under the provisions of the Act, a foreign
award would not be enforced if it contradicted the public policy or
the law of India.1 The Foreign Awards (Recognition and
Enforcement) Act, 1961 (the “Foreign Awards Act”) also
provided for the non-enforcement of a foreign award if it was
10 ITC Limited v. George Joseph Fernandes & Anr, (1989) 2 SCC 1, ¶26.
11 Arbitration and Conciliation Act 1996 § 2(1)(f)
65 1 Ind. Arb. L. Rev. (2019)
12 ANTON G. MAURER, THE PUBLIC POLICY EXCEPTION UNDER THE NEW YORK
CONVENTION 59 (Huntington, New York: Juris 2013).
13 Arbitration and Conciliation Act 1996 § 48(2)(b).
14 Arbitration and Conciliation Act 1996 § 57(iii).
15 Gherulal Parakh v. Mahadeodas Maiya & Ors, AIR 1959 SC 781, ¶21, 23 &
30.
The Public Policy Doctrine in Arbitration 66
fill the lacuna and to decide what they felt is against the Public
Policy of the country.
However, there was a fundamental divergence once again from
the broad view when the Courts in the Zoroastrian Cooperative
Housing Society Case20 refused to intervene in the formation of a
society limiting membership to people of a particular religion.
Premising its arguments on the Gherulal principle (supra), the
Court upheld the sanctity of the contract entered into between
the parties and held that an agreement otherwise legal could not be held
to be void unless it resulted in the performance of an unlawful act.
THE IMPACT OF PUBLIC POLICY ON
ENFORCEMENT OF FOREIGN AWARDS
The enforcement of foreign awards under the 1996 Act are
governed under the principles enshrined in the Geneva
Convention and the New York Convention. While the illegality
of the contract forms the principal ground for non-enforcement
of a foreign award under the Geneva Convention,21 violation of
the Public Policy of the country where the award is sought to be
enforced is the principal criterion required under the New York
Convention.22 It would be pertinent to note at this point in time
that India was one of the first countries to ratify the New York
Convention and incorporate its provisions within its own
municipal laws, by virtue of the enactment of the Foreign Awards
(Recognition and Enforcement) Act, 1961.
In Renusagar Power Company Ltd. vs. General Electric Company, 23 the
Supreme Court adopted the narrow view of the Public Policy and
held that “public policy” would mean the doctrine of public policy as
applied by the Court in India and not international public policy.” Placing
reliance on the objects and reasons of the Foreign Awards Act,
the Court reasoned that facilitation of international trade and
commerce would be severely affected if the broad view of Public
Policy was sought to be enforced. The Courts set out certain tests
to determine when a foreign award can be said to fall foul of the
Public Policy doctrine in order for the court to refuse its
enforcement:
If the award contradicted the fundamental policy of
Indian law;
If the award was vitiated by virtue of it affecting the
interests of India; and
If the award was against the basic tenets of justice and
morality.
A distinction was also drawn between the award itself and the
enforcement of the award, noting that the public policy doctrine
applied only at the enforcement stage of the award and precluded
the Courts from undertaking a review of the merits of the
award24. The application of the public policy doctrine for the
non-enforcement of a Foreign Award would thus be valid only if
it fell afoul of any of limbs of the three-pronged test as laid down
in Renusagar25 and if the Public Policy that was being infringed
upon, was the Public Policy of India and not of any other foreign country26.
THE IMPACT OF PUBLIC POLICY ON DOMESTIC
AWARDS
Upon the enactment of the 1996 Act, the Courts had a general
tendency to apply the narrow view even to Part I arbitrations.27
24 Id at ¶34 – 36.
25 Id at ¶66.
26 Smita Conductors Ltd. v. Euro Alloys Ltd, (2001) 7 SCC 728, ¶12.
27 Olympus Superstructure v. Meena Khetan AIR 1999 SC 2102; Narayan
Lohia v. Nikunj Lohia AIR 2002 SC 1139.
69 1 Ind. Arb. L. Rev. (2019)
28 Konkan Railway Co. Ltd. v. Mehul Construction Co, (2000) 7 SCC 201, ¶4.
29 Vijaya Bank v. Maker Development Services Pvt. Ltd, (2001) 3 Bom. CR
652, ¶21 & 35.
30 ONGC Ltd. V Saw Pipes Ltd., (2003) 5 SCC 705 ¶28.
31 Id. at ¶31.
32 Id. at ¶55.
The Public Policy Doctrine in Arbitration 70
Act to justify its interference with the award. The Supreme Court
held that the meaning of the term public policy was wide enough in the
case of domestic awards, to even incorporate a ground of “patent illegality”.33
In my view, the Supreme Court in Saw Pipes fundamentally
misconstrued Section 28(1)(a) as a provision applicable to the
jurisdiction of Courts considering challenges to awards. In reality,
Section 28(1)(a) is a provision (along with Section 28(1)(b)) that
governs the law to be applied by an arbitral tribunal in deciding
the dispute between the parties. They were therefore both merely
choice of law provisions. A new head of public policy was thus
evolved, which did not take into account the Supreme Court’s
own caution on creating new heads of public policy without any
conclusion on “clear and incontestable harm to the public”34 or that such
heads could only be created to prevent an “injury to public interest or
welfare.”35
The phrase ‘patent illegality’ has been read to mean an obvious
illegality based on a clear ignorance or disregard of the provisions
of law.36 Saw Pipes effectively first interpreted and enunciated the
law regarding liquidated damages as it should be based on the
specific facts and circumstances of the case, and then found the
arbitral tribunal’s application of this (new) law to be erroneous.
This process is inconsistent with ascertaining that a finding
suffered from “patent illegality” and suggests that the Supreme
Court did not exclude mere “error of law” or even “error in application
of the law” when it referred to “patent illegality”. Introducing patent
illegality has unforeseen consequences especially with respect to
international commercial arbitration where foreign law is a
33 Id. at ¶22.
34 Gherulal Parakh v. Mahadeodas Maiya & Ors, AIR 1959 SC 781 ¶23.
35 Murlidhar Aggarwal & Anr v. State of Uttar Pradesh & Ors., (1974) 2 SCC
472 ¶30 & 31; Rattan Chand Hira Chand v. Askar Nawaz Jung (Dead) by
LRS and Ors., (1991) 3 SCC 67 ¶ 17 & 19.
36 Prem Singh v. Deputy Custodian General Evacuee Property, AIR 1957 SC
804; Basappa v. Nagappa, AIR 1954 SC 440; Syed Yakoob v. K.S.
Radhakrishnan, AIR 1964 SC 477.
71 1 Ind. Arb. L. Rev. (2019)
37 McDermott International Inc. v. Burn Standard Co. Ltd, (2006) 11 SCC 181.
38 Id. at ¶65.
39 Jagmohan Singh Gujral v. Satish Ashok Sabnis, (2004) 1 Bom CR 307;
Bharat M.N. v. Satish Ashok Sabni, (2003) 6 Bom CR 257; Centrotrade
Minerals & Metals Inc. v. Hindustan Copper Ltd., (2006) 11 SCC 245.
The Public Policy Doctrine in Arbitration 72
55 Sasan Power Ltd. v. North American Coal Corporation India Pvt. Ltd, (2016)
10 SCC 813.
56 Sasan Power Ltd. v. North American Coal Corporation India Pvt. Ltd, 2015
SCC Online M.P. 7417.
57 TDM Infrastructure (P) Ltd. v. UE Development India (P), (2008) 14 SCC
271.
58 Addhar Mercantile Private Limited v Shree Jagdamba Agrico Exports Pvt.
Ltd, 2015 SCC OnLine Bom 7752.
59 Atlas Export Industries v. Kotak & Company, (1999) 7 SCC 61.
60 TDM Infrastructure, (2008) 14 SCC 271 ¶23.
61 Addhar Mercantile, 2015 SCC OnLine Bom 7752 ¶8.
62 Atlas Export, (1999) 7 SCC 61, ¶10 & 11.
The Public Policy Doctrine in Arbitration 78
63 Sasan Power Ltd. v. North American Coal Corporation India Pvt. Ltd, 2015
SCC Online M.P. 7417 ¶52.
64 Sasan Power Ltd. v. North American Coal Corporation India Pvt. Ltd, (2016)
10 SCC 813 ¶28 & 29.
65 Id. at ¶29.
66 Id. at ¶50.
67 GMR Energy Limited v. Doosan Power Systems India Private Limited and
Ors, 2017 SCC OnLine Del 11625 ¶31.
79 1 Ind. Arb. L. Rev. (2019)
68 Venture Global Engineering LLC and Ors v. Tech Mahindra Ltd and Ors,
(2017) 13 SCALE 91 (SC).
69 Sutlej Construction v. The Union Territory of Chandigarh, (2017) 14 SCALE
240 (SC).
70 Vedanta Limited v Shenzen Shandong Nuclear Power, 2018 SCC Online SC
1922.
The Public Policy Doctrine in Arbitration 80
before the appeal was made to the Supreme Court of India, the
Delhi High Court refused to interfere with the award as it did not
satisfy the test of patent illegality enumerated in Section 34 of the
Act.71
The recent judicial trend suggests therefore that when Indian
parties have willingly entered into a foreign seated agreement, it
cannot be by itself held to be contrary to the public policy. This
is of particular practical significance to multi-national
corporations who may contract through an Indian subsidiary, but
are in essence, controlled and managed by a foreign entity.
Therefore, the strict approach of determining the nature of the
arbitration based purely on the country of incorporation72 poses
further issues in adopting a strict view of the issue of whether two
Indian parties may select a foreign seat.
VI. Conclusion
The interpretation of the Public Policy Doctrine in Arbitration
has undergone severe scrutiny in recent times and in the absence
of a statutory definition of the same, the Courts have upended the
legislative process of defining the contours of the doctrine, often
leading to conflicting and contradictory positions on the same. In
certain instances, as has been noted above, mere infractions of
Indian Laws have been held to violate Public Policy while the
introduction of the ‘patent illegality’ principle has allowed the
Courts to sit in appeal over the Arbitrator’s decision.
Resolution of disputes through Arbitration primarily hinges on
the principle of minimal judicial intervention. Moving forward, to
ensure that India becomes a global hub of arbitration in the world,
the doctrine of public policy needs to be given a restrictive
meaning and more importantly needs to be properly delineated in
71 Vedanta Limited v Shenzen Shandong Nuclear Power, 2018 SCC Online Del
10916.
72 Arbitration and Conciliation Act 1996 § 2(1)(f).
81 1 Ind. Arb. L. Rev. (2019)
reference to its width and scope. While the recent judicial trend
points to an increasingly restrictive and narrow scope of Public
Policy being given effect to by the Courts, the need of the hour is
in statutorily defining the contours of Public Policy to ensure that
the lacuna and vacuum that currently exists in our Statute books
in reference to the same does not come in the way of prospective
investors and litigants from carrying out their business with ease
under India’s robust economic climate, or seating their
arbitrations in India.
INDIAN ARBITRATION LAW REVIEW/ 82
Vol. 1 Feb 2019
Rudresh Mandal
Abstract
Broadly, intellectual property is concerned with the grant of
considerable protection (measured in terms of monopoly
rights) to its owner. In recognition of the tilt towards the
owner brought about by these monopoly rights, States have
sought to develop intellectual property policies and laws
which strive to establish of a balance between the protection
afforded to ‘creators’ and the benefit derived by the ‘public’
from exploiting IP. Conventionally, in furthering this
balance, IP disputes have been considered to be in the
exclusive realm of the judiciary. This paper seeks to explore
the possibilities of arbitration as an alternative to
adjudicating IP disputes. Part I of this paper outlines the
theoretical debate surrounding the arbitrability of IP
disputes. Thereafter, Part II briefly engages in analysing the
Indian position on the same, with a cursory comparative
analysis. Subsequently, Part III engages in charting a way
forward on the arbitrability of IP disputes.
Introduction
With the courts of India struggling to meet its extraordinary
pending caseload (an approximate of 3.3 crore),1 arbitration has
emerged as an efficacious alternative to traditional dispute
resolution. The process of adjudication - measured in terms of
6 Darryl Horowitt, The Pros and Cons of Arbitration, COLEMAN & HOROWITT
LLP, www.ch-law.com/files/pdf/news/Arbitration.pros.cons.client.memo.
pdf.
7 Eros International Media Limited v Telemax Links India Pvt Ltd and Others
(2016), SCC OnLine Bom 2179.
8 The Indian Performing Right Society Ltd v Entertainment Network (India)
Ltd (2016) SCC OnLine Bom 5893.
9 Alternative Dispute Resolution, WIPO, www.wipo.int/amc/en/.
10 ICC, Adjudicating Intellectual Property Disputes, an ICC report on
specialised IP jurisdictions, INTERNATIONAL CHAMBERS OF COMMERCE,
https://iccwbo.org/publication/adjudicating-intellectual-property-disputes-
an-icc-report-on-specialised-ip-jurisdictions/
11 A Ayyasamy v. A Paramasivam and Others, (2016) 10 SCC 386.
85 1 Ind. Arb. L. Rev. (2019)
33 Id.
34 Id.
35 THOMAS HALKET, ARBITRATION OF INTERNATIONAL INTELLECTUAL
PROPERTY DISPUTES, 74 (2012).
36 Eros, supra note 7.
37 Booz Allen, supra note 20.
91 1 Ind. Arb. L. Rev. (2019)
Patents. While this does not therefore give the award an in rem
effect, it charts a somewhat middle ground.
Next in the saga of arbitrability of IP disputes was IPRS Ltd. vs.
Entertainment Network Ltd.38 This case posed a novel question to
the Indian judiciary: would the mandatory registration of
copyright derogate from the capacity of an arbitral tribunal to
decide questions of existence of copyright in a work? Recognising
that adjudication of such claims of infringement of copyright,
might require determination of purely legal questions (the Eros
Court did not deal with the feasibility of arbitrating legal questions
of IP and strangely held that the determination of copyright was
in essence a question of fact39), the Court here held that if an
arbitral tribunal were permitted to decide the existence of
copyright in a work, it would amount to a judgment in rem. The
Calcutta HC, in Diamond Apartments vs. Abanar Marketing40 also
held that complex and nuanced issues of law should not be
brought before arbitral tribunals. Adjudicating upon the scope
and existence of a particular copyright would necessitate a
decision on complicated legal questions, and should thus not be
brought to arbitration.41
A ‘RELIEF’ BASED DETERMINATION OF
ARBITRABILITY
In Booz Allen,42 the Supreme Court held that the issue of
arbitrability also had to be determined on the touchstone of the
‘reliefs test’, that is, whether the relief sought before an arbitral
tribunal could only be granted exclusively by the Courts of the
State or specialised tribunals. The Bombay HC in Rakesh Malhotra
vs. Rajinder Malhotra,43 for instance, noted that all disputes arising
from Sections 397 and 398 of the Companies Act, 1956 were
actions in rem, and were thus inarbitrable and had to be submitted
before the Company Law Board.
In contractual disputes, a wide range of reliefs is sought, ranging
from a claim for damages, injunctions or specific performance. It
is presumed that all reliefs claimed as a result of breach of contract
(including contracts concerning IP) can be granted by an arbitral
tribunal, and the tribunal can simply engage in a fact-based
determination.44 However, is it undeniable that there exists a
number of situations where the relief claimed by a party in an IP
related contractual dispute cannot be granted by a private arbitral
tribunal, and would instead fall under the purview of the
Copyright Board. Thus, all disputes arising out of issues revolving
around copyright assignment45 and compulsory licensing46 (for
example, questions of royalty refunds emerging from the licence)
and disputes enlisted under Section 6 of the Copyright Act47
would be amenable to adjudication only by the Copyright Board,
and not arbitral tribunals.
However, when it comes to cases of infringement of IP with
claims of damages/injunctions/lost profits, the position in Indian
jurisprudence is conflicting. IPRS vs. Entertainment Network48 and
Germany,
China & South
Switzerland & Belgium Portugal & India
Africa (rigid
(flexible approach) (intermediate
approach)
approach)
64 Id.
65 Eros, supra note 7.
66 Booz Allen, supra note 20.
Arbitrability of IP Disputes in India 96
disputes, while at the same time not deviating from the dictum of
Booz Allen.67
Further, while the jurisprudential position in India is clear on the
inarbitrability of questions of validity or existence of IP rights,
Gary Born puts forth a novel argument supporting the arbitrability
of such issues.68 He argues that there should be no objections to
an arbitral tribunal adjudicating upon the existence of an IP right,
so as long as it only binds the parties. That should not be taken
to imply that an arbitral tribunal can register copyright, or annul
a patent. His argument merely is that a tribunal can engage in
deciding issues of validity of an IP right, and this is in fact central
to the tribunal’s mandate; the only caveat being that the award
must operate inter partes. However, it seems unlikely for such
argument to gain traction in the Indian landscape, given the firm
stance on inarbitrability of in rem disputes. For instance, the only
adjudicatory authority which can engage in rectification of
trademarks under the Trademarks Act is the IPAB.69 Perhaps in
countries with an extreme pro-arbitration mind-set, it might be
accorded some importance.
Thus, given that claims of validity/existence would oust the
jurisdiction of arbitral tribunals, one must be cautious of attempts
to bypass the arbitral process by instituting such ‘dressed up
claims’,70 which are mala fide and have no basis in law. While
hearing these ‘dressed up claims’ the adjudicatory body must accord
necessary weightage to the arbitration clause. In Ayyasamy,71 the
Supreme Court noted that the burden to prove inarbitrability (a
heavy one) necessarily lay with the party desirous of bypassing the
arbitration clause. Only after a perusal of the material at hand
Meenal Garg
Abstract
Since its inception, the courts and the disputing parties have
never seen eye to eye as far as the mandatory rules are
concerned. This difference of opinion exists on the traditional
public-private dichotomy which is exhibited by mandatory
rules. The mandatory law problem is further aggravated once
the parties seek to enforce an arbitral award. This paper is
an attempt to review the existing scholarship pertaining to
mandatory rules. The author has firstly tried to elaborate and
clarify the concept of mandatory laws in the relevant context.
Secondly, the paper explores the ‘second look’ doctrine
which is often overlooked by commentators and scholars.
Finally, the author has advocated a liberal exercise of this
doctrine with a view to bring harmony amongst diverse
interests of the courts, the parties and the arbitrator.
I. Introduction
Arbitration is founded on the principle of party autonomy. It is
preferred over the conventional adversarial method of dispute
resolution because it gives the parties a choice to determine
various catalysts of arbitral proceeding like the arbitrators, the
substantive law and the procedural law applicable to the dispute.
Generally, an arbitrator is only required to consider the will of the
parties and respect the agreed law while deciding a dispute.
The author is a student at University Institute of Legal Studies, Chandigarh.
99 1 Ind. Arb. L. Rev. (2019)
1 Mitsubishi Motors Co. v. Soler Chrysler Plymouth Inc., 473 U.S. 614 (1985).
Mandatory Rules & Enforceability of Arbitral Awards 100
10 Id.
11 Gralf-Peter Calliess & Moritz Renner, Transnationalizing Private Law - The
Public and the Private Dimensions of Transnational Commercial Law, 10
GERMAN L. J. 1341, 1355 (2009).
12 A.F.M. Maniruzzaman, International Arbitrator and Mandatory Public Law
Rules in Context of State Contracts: An Overview, 7 J. INT’L ARB. 53, 54
(1990).
13 Alexander K.A. Greenawalt, Does International Arbitration Need a
Mandatory Rules Method, 18 AM. REV. INT’L ARB. 103, 106-07 (2007).
Mandatory Rules & Enforceability of Arbitral Awards 104
17 Doug Jones, Choosing the Law or Rules of Law to Govern the Substantive
Rights of the Parties: A Discussion of Voie Directe and Voie Indirecte, 26
SINGAPORE ACAD. L. J. 911, 928 (2014).
18 See Carolina Pitta E Cunha, Arbitrators and Courts Compared: The Long
Path Towards an Arbitrators’ Duty to Apply Internationally Mandatory
Rules, YOUNG ARB. REV., Apr 2016, at 26, 32.
19 See Maniruzzaman, supra note 12, at 56-57.
Mandatory Rules & Enforceability of Arbitral Awards 106
24 See Mitsubishi Motors Co. v. Soler Chrysler Plymouth Inc., 473 U.S. 614
(1985).
25 See also Eric A Posner, Arbitration and the Harmonization of International
Commercial Law: A Defense of Mitsubishi, 39 VA. J. INT’L L. 647 (1999).
109 1 Ind. Arb. L. Rev. (2019)
26 See Gordon Blanke, Brexit and Private Competition Law Enforcement under
the Arbitration Act, 1996: Taking Stock: Part 2, 10(1) GLOBAL COMPETITION
LITIG. REV. 1, 3-4 (2017).
27 Greenawalt, supra note 13, at 118.
28 Lorenzo, supra note 8, at 88.
Mandatory Rules & Enforceability of Arbitral Awards 110
Abstract
This paper seeks to expound the legal conundrum regarding
host state counterclaims in investment arbitration. Host state
counterclaims exemplify the complex nature of the system of
investor-state arbitration. Unlike commercial arbitration,
states do not have an automatic right to bring counterclaims
against investors in investment arbitration. This paper
attempts to make a comprehensive analysis of the law on host
state counterclaims in investor-state dispute settlement
(‘ISDS’) mechanism. The paper highlights the need to allow
host state counterclaims. It shall critically analyse the
requirements for admissibility of host state counterclaims,
which include consent, connectedness, arbitration rules and
procedural requirements and attempts to assimilate the same.
Further, this paper analyses several international investment
agreements (‘IIAs’) and underlines the divergent approaches
to host state counterclaims in investment arbitration.
Thereafter, it delineates the Indian approach to
counterclaims in investment treaty practice. In doing so, it
shall specifically analyse the Draft India Model and the India
Model Bilateral Investment Treaties of 2015 and 2016
respectively. Thereafter, the paper shall examine the recent
arbitral awards dealing with counterclaims and their
interpretation of the dispute resolution provisions of the
underlying IIAs. Finally, the authors propose a model clause
corresponding to Article 28(9) of the Common Market for
Eastern and Southern Africa Investment Agreement
(‘COMESA’) and Article 14.11 of the Draft India Model
I. Introduction
It is widely acknowledged that investor state arbitration suffers
from a lack of balance.1 Dispute settlement under IIAs allows
investors to seek remedy for breach of obligations imposed upon
the host state. On the other hand, it ensures that the host state
abides by its obligations, and reduces political risk of foreign
investment.2 Nonetheless, a pertinent issue that arises is the
uncertainty regarding the rights of the host state. In general, no
rights are conferred upon host states vis-à-vis investors under
IIAs,3 preventing states from seeking a remedy under the ISDS
mechanism. As a result, states make recourse to counterclaims
when investors initiate arbitral proceedings against them.
By virtue of a counterclaim, the host state opposes the claim
advanced by the investor. It is not an exercise of right of defence,
but rather of a right to bring an action.4 However, there are two
fundamental impediments to advancement of counterclaims
under IIAs. Firstly, obligations of the host state towards the
investor under the IIA are unilateral; and secondly, the investor is
55 Urbaser, ¶1149.
Host State Counterclaims in Investor-State Arbitration 126
foreign investor for any alleged breach of its obligation under the
agreement.
Second, some treaties do not expressly provide for the admission
of host state counterclaims but impliedly allow it. Generally, in
such treaties, the language of the dispute settlement provision is
quite broad enough to include counterclaims within its ambit. For
instance, the tribunals are conferred with the authority to hear
“any dispute between an investor of one Contracting Party and
the other Contracting Party relating to the investment”60 or
simply “any dispute”. 61 Furthermore, other treaties exclude a
particular type of counterclaims62 giving rise to a contrario
conclusion in favour of admissibility of other types of
counterclaims.63
Third, some treaties do not provide for the admission of host
state counterclaims, either implicitly or explicitly. Some IIAs uses
restrictive language in the offer to arbitrate under their dispute
settlement provision to limit the tribunals’ jurisdiction to only
hear disputes regarding the obligations of the Contracting Party
under the IIA.64 For example, in Roussalis vs. Romania, the tribunal
82 Draft Model Text for the Indian Bilateral Investment Treaty (2015),
https://www.mygov.in/sites/default/files/master_image/Model%20Text%20
for%20the%20Indian%20Bilateral%20Investment%20Treaty.pdf
[hereinafter Draft India Model BIT].
83 Draft India Model BIT, art. 14.2(i).
84 Draft India Model BIT, art. 14.11.
85 India Model BIT, art. 11.
86 India Model BIT, art. 12.
Host State Counterclaims in Investor-State Arbitration 132
have a remedy under the BIT to pursue their rights in case of their
breach. This position frustrates the elementary principle of equity
jurisprudence that there is no wrong without a remedy.87
X. Recent Decisions dealing with Counterclaims
The issue of whether or not an investor and a host state settle a
dispute, and address counterclaims through arbitration, depends
entirely on whether the investor consents to do so.88 Hence, the
scope of the dispute resolution provision of the IIA plays an
important role in determining what can and what cannot be
subject to arbitration between the parties. It is thus necessary to
examine how arbitral tribunals have interpreted dispute resolution
provisions of various IIAs in recent times. In the table below, we
examine six recent decisions, which have diversely contributed to
the growing jurisprudence of counterclaims in investor-state
arbitration.
Arbitral BIT and Provision Decision of the Tribunal
Decision Article
and
Tribunal
investment of the
former.
Urbaser vs. Article Disputes arising The tribunal found that the
Argentina91 X(1) of the between a Party BIT accepted a possibility
Argentina- and an investor of for the Respondent to raise
Spain BIT the other Party in counterclaims. The
connection with tribunal’s view was
investments corroborated by Article
within the X(3) of the BIT, which
meaning of this stipulates that in certain
Agreement shall, circumstances, the dispute
as far as possible, may be submitted to an
be settled amicably international arbitral
between the tribunal “at the request of
parties to the either party to the dispute”.
dispute.
Metal-Tech vs. Article 8(1) Each Contracting The tribunal opined that
Uzbekistan92 of the Party hereby Article 8(1) of the BIT was
Israel- consents to submit not restricted to disputes
Uzbekistan […] any legal initiated by an investor
BIT dispute arising against a Contracting Party.
Oxus Gold vs. Article 8(1) Disputes between The tribunal decided that it
Uzbekistan94 of United a national or lacked jurisdiction over the
the company of one counterclaims submitted by
Kingdom- Contracting Party Uzbekistan. The tribunal
Uzbekistan and the other opined that the language of
BIT Contracting Party the BIT clearly indicated
concerning an that only the investor could
obligation of the bring claims concerning
93 Rusoro, ¶623.
94 Oxus Gold v. The Republic of Uzbekistan, UNCITRAL, Final Award, ¶948
(Dec.17, 2015).
135 1 Ind. Arb. L. Rev. (2019)
95 See Perenco.
96 See Burlington Resources.
Host State Counterclaims in Investor-State Arbitration 136
Abstract
Although emergency arbitration has emerged as a turning
tide for the grant of urgent interim reliefs globally, it has still
not been able to develop a strong ground in many
jurisdictions, including India. Many arbitral institutions have
started providing for rules governing emergency arbitrations
wherein the parties have an opportunity to seek interim relief
prior to the constitution of the arbitral tribunal. This is done
keeping in mind the needs of parties that require urgent
interim relief, the issuance of which can be an important
factor in the outcome of the arbitral proceedings. However,
it is imperative to note that there still exists a large number
of arbitral institutions which do not have any provisions for
emergency arbitration, therefore compelling parties to seek
such measures from the national courts.
This article strives to demonstrate how emergency
arbitration is beneficial for parties by making an unbiased
comparison of the grant of urgent relief by an emergency
arbitrator and by national courts on various practical
grounds. The research article dwells deep into the practical
aspect of emergency arbitration by providing a comparative
analysis of the emergency arbitration rules of various Indian
and International arbitration institutions. An attempt is made
to explain and examine the various legal obstacles, such as
enforceability and recognition of the relief granted,
surrounding emergency arbitration in India and thereafter
provide solutions for the same.
3 § 9 and § 17 of the Indian Arbitration and Conciliation Act, 1996 are broadly
derived from and based on Articles 9 and 17 of the 2006 version of the
UNCITRAL Model Law on International Commercial Arbitration, originally
adopted by United Nations Commission on International Trade Law
(UNCITRAL) in 1985.
4 Philippe Cavalieros and Janet Kim, Emergency Arbitrators Versus the
Courts: From Concurrent Jurisdiction to Practical Considerations, in Maxi
Scherer (ed), 35(3) JOURNAL OF INTERNATIONAL ARBITRATION 276 (2018).
Emergency Arbitration in India 140
CONFIDENTIALITY
Maintaining confidentiality to protect the commercial secrets and
relationships is at times very crucial for the parties involved in the
dispute. According to A. Yesilirmak, in the context of emergency
arbitration, confidentiality may be of greater importance in order
to avoid pre-judgment on the merits of the case.7 While traditional
litigation and its docket is public, arbitrations are usually private
and confidential and the documents, filings and transcripts
associated with it are very rarely made public. For this reason, a
party may prefer to apply to an emergency arbitrator for interim
relief rather than the national court where the proceedings are
made public.8
ORDERS AGAINST THIRD PARTY
In certain circumstances, interim relief is sought against a third
party which is not a signatory to arbitration agreement, for
example, when it is necessary to protect the subject-matter of the
dispute. Especially in shareholder litigation, it sometimes
becomes inevitable to enforce interim injunctions against a non-
signatory to prevent any harmful corporate actions from going
forward. .9 However, an arbitral tribunal’s jurisdiction is limited
in this context as it cannot pass any orders binding third parties.
EX-PARTE ORDERS
Sometimes, an advance notice regarding the proceeding might
lead the respondent party to get rid of the assets from the
concerned jurisdiction. Therefore, the availability of the option to
obtain ex-parte interim orders can be of immense significance in
such circumstances where an element of surprise is necessary.
Indian courts have the power to grant ex-parte orders in some
exceptional circumstances like few other jurisdictions.10
Whereas, on the other hand, arbitral tribunal cannot exercise this
option as it is required to treat both the parties equally, and give
them equal opportunity to present their case. Hence, emergency
arbitrator is not in a position to pass an order on ex-parte basis.
SPEED
Since urgency is the edifice of the parties’ run to attainment of
interim reliefs, speed is a prominent concern which needs to be
carefully addressed by the parties. While the ICC reported that
its emergency arbitrations last on an average for sixteen days, the
ICDR reported fourteen days,11 and the SCC reported an average
of five to eight days.12 Hence, on an average, grant of interim
reliefs by emergency arbitrators may take from a week to a
fortnight.
Furthermore, the parties should also consider the time taken for
enforcing the interim award in case of non-compliance by the
other party.
10 Rishab Gupta, Aonkan Ghosh, Choice Between Interim Relief from Indian
Courts and Emergency Arbitrator, KLUWER ARBITRATION BLOG (May 10,
2017), available at http://arbitrationblog.kluwerarbitration.com/2017/05/10/
choice-between-interim-relief-from-indian-courts-and-emergency-
arbitrator/.
11 J. Brian Johns, ICDR Emergency Arbitrations, THE ICDR INTERNATIONAL
ARBITRATION REPORTER 6 (Fall 2016).
12 A. H. Ipp, SCC Practice Note: Emergency Decisions Rendered 2015–2016,
4 (June 2017).
143 1 Ind. Arb. L. Rev. (2019)
COSTS
Sr. Name of the Fees and Filing Total Fees
No. Arbitral Expenses of Fees/Adm and
Institution the Emergency inistrative Expenses
Arbitrator Expenses of the
Emergency
Arbitrator
Application
1. Singapore SGD 25,000 SGD 5,000 SGD 30,000
International
Arbitration
Centre13
2. Hong Kong HKD 2,05,000 HKD HKD
International 45,000 2,50,000
Arbitration
Centre14
3. Stockholm EUR 16,000 EUR 4,000 EUR 20,000
Chamber of
Commerce15
4. London Court of GBP 20,000 GBP 8,000 GBP 28,000
International
Arbitration16
5. International USD 30,000 USD 10,000 USD 40,000
Chamber of
Commerce17
Since the abovementioned fees are not derived from the sum
involved in dispute and are further required to be paid upfront in
full, national courts steer the sail ahead here too.
21 For a detailed analysis of the rules, refer to the table in (B.), in this section of
the note.
147 1 Ind. Arb. L. Rev. (2019)
22 See Mumbai Centre for International Arbitration Rules, 2016, available at:
http://mcia.org.in/mcia-rules/english-pdf/#mcia_rule14 (Sep 02, 2018, 11:08
AM)
23 See Delhi International Arbitration Centre (Arbitral Proceedings) Rules,
2018, available at: http://www.dacdelhi.org/topics.aspx?mid=74 (Sep 02,
2018, 11:37 AM)
149 1 Ind. Arb. L. Rev. (2019)
24 The terminologies of the approaches have been derived from Jan K. Schaefer,
New Solutions for Interim Measures of Protection in International
Commercial Arbitration: English, German and Hong Kong Law Compared,
2.2 ELECTRONIC J. COMP. L. (1998), available at
<http://www.ejcl.org/22/art22-2.html>; which were further also employed
by Donald Francis Donovan, The Allocation of Authority Between Courts
and Arbitral Tribunals to Order Interim Measures A Survey of Jurisdictions,
the Work of UNCITRAL and a Model Proposal, in Albert Jan van den Berg
(ed), 203 12 NEW HORIZONS IN INTERNATIONAL COMMERCIAL ARBITRATION
AND BEYOND, ICCA CONGRESS SERIES, 203-241 (Kluwer Law International
2005)
Emergency Arbitration in India 150
that the court cannot independently apply its mind and grant interim relief in
cases where it is warranted”.
The Delhi High Court in the Raffles Design28 case granted an
interim order similar to that granted by the SIAC emergency
arbitrator but clarified that that an emergency award in a foreign
seated arbitration cannot be enforced in India under the Act.
Thus, in the absence of any statutory provision or a conclusive
apex court precedent, the parties have to find a solution to fill this
gap and bring about the enforcement of the relief granted by
emergency arbitrator seated outside India. It appears that the
parties are left with the option to indirectly enforce the interim
relief in India, passed under a foreign seated arbitration by making
an application under section 9 of the Act.
However, this is not a viable option since it requires parties to re-
agitate the issue of interim relief before the Indian courts even
though an emergency arbitrator may have considered the matter
in detail, and granted the relief sought. It further adds to the
potential delay in a party being able to utilize the relief it has
already obtained from an emergency arbitrator. This roundabout
process of enforcement may also further increase the risk of
dissipation of assets by a recalcitrant party.
III. The Way Forward: Suggestions and Conclusion
The situations requiring emergency arbitration have been
increasing globally in massive numbers, however, most of the
jurisdictions have failed to cope up with the same. The
uncertainty regarding the effectiveness of the interim measures
issued by the emergency arbitrator has forced the parties to take
recourse to the national courts for seeking urgent reliefs. This
28 Raffles Design International India Pvt. Ltd. & Anr. v. Educomp Professional
Education Ltd.& Ors. (MANU/DE/2754/2016)
Emergency Arbitration in India 154
essentially results in the loss of all the benefits that made the party
choose arbitration over litigation.
The amendment to Section 2(1) (d) of Act proposed by the Law
Commission of India would have brought Indian arbitration law
in tandem with the global trend to enforce emergency awards by
way of legislative amendment. The problem is more prevalent in
foreign seated arbitrations as the domestic seated emergency
orders can still be enforced under the amended Section 17(2) of
the Act. But, in order to provide for the enforcement of
emergency awards passed in foreign seated arbitrations, a
provision similar to section 17 of the Act needs to be inserted in
Part II of the Act.
There remain many more ambiguities with respect to India’s take
on emergency arbitration. For example, considering that
emergency arbitration is workable only under the ambit of
institutional arbitration, what will be the outcome when a party
has chosen for ad-hoc arbitration instead of institutional
arbitration, can the party invoke emergency arbitration using such
agreement? In such a scenario, should the courts be conferred the
power to appoint an emergency arbitrator? Will the parties have
to enter into a separate agreement to choose arbitral institutions
for providing an emergency arbitrator? In the absence of
regulatory legislation governing this aspect and judicial
clarification, answering such questions is certainly not easy.
With the amendments brought in the Act in 2015 and the
Arbitration and Conciliation Amendment Bill of 2018 being silent
about the various concerns regarding emergency arbitration,
parties, for now, are without guidance as to how they wish to
proceed with emergency arbitration if at all. However, it is
pertinent to note that if Indian arbitration law does eventually
embrace emergency arbitration, catch-all phrases in enumeration
of interim measures granted by tribunals should be substituted
155 1 Ind. Arb. L. Rev. (2019)
STANDARDS OF DISQUALIFICATION OF AN
ARBITRATOR UNDER THE ICSID
CONVENTION
Abstract
The ICSID Convention provides a standard for
disqualification of arbitrators for lack of qualities of
independence and impartiality. However, jurisprudence on
the standard of “manifest lack” of qualities in an arbitrator
that the Convention envisages is not yet settled as it does not
shed much light on what constitutes the terms “manifest
lack”. In the recent past, arbitrators have faced frequent
challenges regarding their independence and impartiality in
relation to the matter at hand. Owing to the absence of clarity
in the Convention, this article lays emphasis on the various
decisions that have contributed to the change in
jurisprudence regarding the disqualification of arbitrators
and have introduced a new dimension, akin to certain other
arbitration rules. It discusses the three major standards laid
down in these decisions for determining “manifest lack” of
qualities in an arbitrator under ICSID, namely, the strict
standard, the reasonable doubt standard and the very recent,
the appearance of bias standard. Further, the article
highlights a paradigm shift in the ICSID challenge
jurisprudence from an initial stringent requirement of
manifest lack towards a linear approach that has contributed
to the divergence seen in recent challenge decisions. This
article also advocates the need for certain uniform and
unambiguous set of rules for effective adjudication of
arbitrator challenges in ICSID.
The authors are students at the School of Law, University of Petroleum and
Energy Studies (UPES), Dehradun.
157 1 Ind. Arb. L. Rev. (2019)
I. Introduction
The Convention on Settlement of Investment Dispute between
States and Nationals of Other State (“ICSID Convention”) was
enforced in 1966 with the objective to promote economic
development by providing a forum for settlement of investment
disputes. To fulfil this objective the Convention established the
International Centre for Settlement of Investment Disputes
(“ICSID”) as a forum for settlement of Investment disputes
between contracting States and Nationals of other contracting
States through the mechanism of dispute resolution.1 It is
pertinent to mention that while adjudicating these disputes, the
party appointed arbitrators plays a vital role. Resultantly, they are
duty bound to keep themselves free from any clout throughout
the proceedings.2
The parties to the dispute are entitled firstly, to a fair-hearing3, i.e.,
the dispute is heard by independent, impartial and competent
arbitrators4 and secondly, to have an arbitrator disqualified if he
lacks these qualities.5 Consequently, the ICSID Convention6
under Article 14 protects the right of the parties by enunciating
certain specific qualities that an individual must possess to get
37 Karel Daele, Saint Gobain v. Venezuela and Blue Bank v. Venezuela – The
Standard for Disqualifying Arbitrators Finally Settled and Lowered, 29 No.
2 ICSID REV. 296, 297 (2014).
38 Amco Asia, supra note 33, at ¶29.
39 Horn, supra note 24, at 358.
40 Suez, Sociedad General de Aguas de Barcelona S.A., and Vivendi Universal
S.A. v. The Argentine Republic, ICSID Case No. ARB/03/19, Suez,
Sociedad General de Aguas de Barcelona S.A., and Inter Aguas Servicios
Integrales del Agua S.A. v. The Argentine Republic, ICSID Case No.
ARB/03/2017, AWG Group Limited v. The Argentine Republic
(UNCITRAL), Decision on a second proposal for disqualification of a
member of the arbitral tribunal (May 12, 2008). (“Suez II”).
41 Bottini, supra note 8, at 355-356.
42 Suez II, supra note 40, at ¶29.
Standards of Disqualification of an Arbitrator under ICSID 164
96 Id. at ¶60.
97 Blue Bank International & Trust (Barbados) Ltd. v. Bolivarian Republic of
Venezuela, ICSID Case No. ARB/12/20, Decision on Proposal to disqualify
majority of Tribunal (Nov 12, 2013). (“Blue Bank”).
98 Id. at ¶22-32.
99 Id. at ¶27-31.
100 Id. at ¶45-54.
101 Vasani, supra note 29, at ¶199-202.
102 Blue Bank, supra note 102, at ¶59.
103 Blue Bank, supra note 102, at ¶60.
104 Blue Bank, supra note 102, at ¶60
171 1 Ind. Arb. L. Rev. (2019)
122 Dimitropoulos, supra note 31, at 397-398; Federica Cristani, supra note 3 at
159.
123 Vasani, supra note 29, at 197-200.
124 CLEIS, supra note 27, at 17.
125 Vasani, supra note 29, at 198.
126 DAELE, supra note 5, at 233.
127 Fábrica de Vidrios Los Andes, C.A. & Owens-Illinois de Venezuela, C.A. v.
Bolvarian Republic of Venezuela, ICSID Case No. ARB/12/21, Reasoned
Decision on the Proposal to disqualify arbitrator, ¶33 (Mar 28, 2016);
Raiffeisen Bank, supra note 126, at ¶79.
128 Vivendi, supra note 70.
129 DAELE, supra note 5, at 225.
130 Nations Energy, Inc. & Ors. v. Republic of Panama, ICSID Case No.
ARB/06/19, Decision on proposal to disqualify arbitrator, ¶56 (Sept 7, 2011).
Standards of Disqualification of an Arbitrator under ICSID 174
V. Conclusion
The lack of uniformity in norms pursuant to the conflict of
interest in the matter related to investment arbitration has always
been a matter of great concern in the international arbitration
community. Thus, it is necessary to keep arbitrator free from
smear and prevent manoeuvres that cause prejudice to the
proceedings. This might look simple but indeed it is not.
The integrity of the arbitrator is not only of importance to the
cross-border trade and investment but also to the community
which is directly or indirectly related by the arbitral process. Thus,
the adjudicators of arbitration challenges should adopt a
procedure which is in consonance with the public policy. The Co-
arbitrators or the Chairman while deciding on a challenge should
also keep in mind that the convention is around half a century old
and interpretation of the term “manifest” should be in
consonance with the present scenario and circumstances.
The scope of ambiguity in the standard of “manifest lack”
required to disqualify an arbitrator under the ICSID makes it
difficult for the parties to get an arbitrator disqualified. Dr. Kim
has observed in Blue Bank that majority of the challenge decisions
have relied on the strict standard of “manifest lack”. However,
the strict standard has a major drawback since it sets a high
burden of proof on the challenging party to show “manifest lack”
of independence and impartiality. Owing to this drawback, the
reasonable doubt standard was laid down. The reasonable doubt
standard is more party friendly since it significantly lowers the
burden of proof on the parties to show “manifest lack” and this
standard is also in consonance with the standards used in most
arbitral tribunals and institutional arbitrations. Nevertheless,
despite the paradigm shift, in the standard of disqualification, i.e.,
recent reliance on the “reasonable standard” and “appearance of
bias” tests, the absence of the doctrine of stare decisis makes it
uncertain as to what standard of “manifest lack” will be followed.
177 1 Ind. Arb. L. Rev. (2019)