India: International Arbitration (4th edition)

The In-House Lawyer Logo

This country-specific Q&A provides an overview of the legal framework and key issues surrounding international arbitration law in India.

This Q&A is part of the global guide to International Arbitration.

For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/international-arbitration-4th-edition/

  1. What legislation applies to arbitration in your country? Are there any mandatory laws?

    The Arbitration and Conciliation Act, 1996 (as amended in 2019) governs arbitration in India. The Arbitration and Conciliation Act, 1996 contains provisions dealing with both ‘domestic arbitration’and ‘international arbitration’.

    Various States have also enacted legislations for the arbitration of specific disputes. For example, the State Government of Madhya Pradesh has enacted the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 for conducting arbitration relating to the Work Contract(s) and claims of over a specific value, where the State Government of Madhya Pradesh or any of its Authorities/Departments are involved. Similar Acts also exist in Chhattisgarh, Gujarat and Bihar pertaining to Work Contract(s) dealt by the State Governments and their departments. These acts have their own dispute resolution setup and exclude the jurisdiction of the Arbitration and Conciliation Act, 1996.

    In Arbitration, the parties has given ample power including agrreing for referring to arbitration. When the parties agree to resolve their disputes through arbitration, then the parties are mandatorily bound by the enactment.

  2. Is your country a signatory to the New York Convention? Are there any reservations to the general obligations of the Convention?

    India signed the New York Convention on June 10, 1958 and ratified it on July 13, 1960. The convention entered into force on October 11, 1960.

    India has made two reservations to the New York Conventions :

    • India will apply the Convention only to the recognition and enforcement of awards made in the territory of another contracting State; and
    • India will apply the Convention only to disputes arising from legal relationships, whether contractual or not, that are considered commercial under National Law.
  3. What other arbitration-related treaties and conventions is your country a party to?

    India is a party to the Geneva Protocol on Arbitration Clauses 1923 and the Geneva Convention on the Execution of Foreign Arbitral Awards 1927.

  4. Is the law governing international arbitration in your country based on the UNCITRAL Model Law? Are there significant differences between the two?

    The Arbitration and Conciliation Act, 1996 is based on the United Nations Commission on International Trade Law (UNCITRAL) Model and is broadly compatible with the “Rules of Arbitration of the International Chamber of Commerce”.

    Further, in its judgment in Chloro Controls (I) P Ltd v Severn Trent Water Purification Inc [(2012) 9 SCALE 595], the Supreme Court observed that the legislative intent of the Arbitration and Conciliation Act, 1996 is to harmonise domestic and international commercial arbitration with the UNCITRAL Model Law, the New York Convention and the Geneva Convention.

  5. Are there any impending plans to reform the arbitration laws in your country?

    Recently, the Arbitration and Conciliation (Amendment) Act, 2019 enacted which seeks to establish Arbitration Council of India , other provision such as Confidentiality of Arbitration proceeding, Immunity of the Arbitrator and Qualification and Experience of Arbitrator.

  6. What arbitral institutions (if any) exist in your country? When were their rules last amended? Are any amendments being considered?

    Arbitration Institutions in India

    1. Delhi International Arbitration Centre (DIAC) – New Delhi
    2. Indian Council of Arbitration (ICA) – New Delhi
    3. Construction Industry Arbitration Council (CIAC)- New Delhi
    4. LCIA India – New Delhi
    5. International Centre for Alternative Dispute Resolution (ICDAR) – New Delhi
    6. SCOPE - New Delhi
    7. ICC Council of Arbitration – Kolkata
    8. Mumbai Centre of International Arbitration – Mumbai

    Latest amended rules of the Concerned Arbitration Institutions in India

    1. The Delhi International Arbitration Centre (DIAC) (Arbitration Proceedings) Rules 2018
    2. Rules of Domestic Commercial Arbitration and conciliation (As amended on and with effect from 1 April, 2016)
    3. CIAC, Arbitration Rules, 2013
    4. LCIA India Arbitration Rules (effective 1 June 2016)
    5. The ICADR Arbitration Rules, 1996
    6. Indian Council of Arbitration, Rules of Arbitration & Conciliation, (As Amended On and With Effect From May 8, 2012)
    7. SCOPE Forum of Conciliation & Arbitration (SFCA) Rules of Conciliation and Arbitration, 2003 (As amended 2017 )
    8. Mumbai Centre for International Arbitration, 2016
  7. What are the validity requirements for an arbitration agreement under the laws of your country?

    Section 7 of the Arbitration and Conciliation Act, 1996 deals with the requirement of the Arbitration Agreement

    1. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement
    2. An arbitration agreement shall be in writing
    3. An arbitration agreement is in writing if it is contained in
      1. A document signed by the parties,
      2. An exchange of letters, telex, telegrams or other means of telecommunications which provide a record of the agreement
      3. An exchange of statements of claim and defence in which existence of the agreement is alleged by one party and not denied by the other
    4. The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.
  8. Are arbitration clauses considered separable from the main contract?

    The arbitration clauses are considered separate from the main contract in India. In National Agricultural Coop. Mktg. Federation India Ltd. v. Gains Trading Ltd. , the Supreme Court held that an arbitration clause is a collateral term in the contract, which relates to resolution of disputes, and not performance. Even if the performance of the contract comes to an end on account of repudiation, frustration or breach of contract, the arbitration agreement would survive for the purpose of resolution of disputes arising under or in connection with the contract. In the case of Enercon (India) ltd. vs Enercon Gmbh and Anr. , it was affirmed by the Supreme Court that:

    The concept of separability of the arbitration clause/agreement from the underlying contract is a necessity to ensure that the intention of the parties to resolve the disputes by arbitration does not evaporate into thin air with every challenge to the legality, validity, finality or breach of the underlying contract. The Indian Arbitration Act, 1996, as noticed above, under Section 16 accepts the concept that the main contract and the arbitration agreement form two independent contracts. Commercial rights and obligations are contained in the underlying, substantive, or the main contract.

    Moreover, the Indian Courts in number of cases has consistently held that an Arbitration Clause survives even in a void/voidable contract.

  9. Is there anything particular to note in your jurisdiction with regard to multi-party or multi-contract arbitration?

    Whether a multi-party dispute will be referred to arbitration will depend on the facts of the case and the nature of the relationship between the parties.

    In P.R Shah, Shares and Stock Brokers Private Limited v. B.H.H Securities Private Limited and Others the question arose whether a single arbitration is permissible in respect of member and non-member under the bye-laws and regulations of the Bombay Stock Exchange.

    Supreme Court, interestingly, held that if A had a claim against B and C and if A had an arbitration agreement with B and A also had a separate arbitration agreement with C, there is no reason why A cannot have a joint arbitration against B and C. The Supreme Court further observed that when A has a claim jointly against B and C, and when there are provisions for arbitration in respect of both B and C, there can be a single arbitration.

    In M/s Duro Felguera SA v M/s Gangavaram Port Limited (GPL) (AIR 2017 SC 5070) the Supreme Court of India was called upon to decide whether, in a dispute involving multiple contracts between both foreign and domestic parties, a ‘composite reference’ could be made to the tribunal. The Supreme Court held that a composite reference would not be proper as both domestic and international arbitrations were involved. Accordingly, six separate tribunals were constituted to adjudicate the disputes involved.

  10. In what instances can third parties or non-signatories be bound by an arbitration agreement?

    In Ameet Lalchand Shah and Others v. Rishabh Enterprises it was held that Agreements that are inter-connected, with a similar underlying commercial purpose, would bind all the parties to the agreements, even though one of them might be lacking an arbitration clause, or an entity is not party to all such agreements.

  11. How is the law applicable to the substance determined? Is there a specific set of choice of law rules in your country?

    Section 28 of the Arbitration and Conciliation Act, 1996 prescribed for the law applicable to the substance of dispute. The law relating to the same is as follows:

    Where the place of arbitration is situated in India,

    1. in an arbitration other than an international commercial arbitration, the arbitral tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India;
      Therefore, in case of domestic arbitrations, Indian parties can only apply Indian law to the substance of the dispute.
    2. in international commercial arbitration—
      1. the arbitral tribunal shall decide the dispute in accordance with the rules of law designated by the parties as applicable to the substance of the dispute;
      2. any designation by the parties of the law or legal system of a given country shall be construed, unless otherwise expressed, as directly referring to the substantive law of that country and not to its conflict of laws rules;
      3. failing any designation of the law under clause (a) by the parties, the arbitral tribunal shall apply the rules of law it considers to be appropriate given all the circumstances surrounding the dispute.

    The arbitral tribunal shall decide ex aequo et bono or as amiable compositor only if the parties have expressly authorised it to do so.

    While deciding and making an award, the arbitral tribunal shall, in all cases, take into account the terms of the contract and trade usages applicable to the transaction.

  12. Are any types of dispute considered non-arbitrable? Has there been any evolution in this regard in recent years?

    Non- Arbitrable disputes are following -

    • Matrimonial disputes (relating to divorce, judicial separation, restitution of conjugal rights and child custody);
    • Guardianship matters;
    • Insolvency and winding-up matters;
    • Matters relating to public charities or public charitable trusts under the Public Trusts Act;
    • Testamentary matters (grant of probate, letters of administration and succession certificate); and
    • The enforcement of a mortgage has been held to be a right in rem for which proceedings in arbitration would not be maintainable

    In the matter A. Ayyaswamy vs. A. Paramasivam and Ors., the Hon’ble Supreme Court held that following are the disputes which are considered non-arbitrable:

    • Disputes relating to rights and liabilities which arise out of criminal offences
    • Eviction or tenancy matters.
    • Patent, trade-marks and copyright
    • Anti-trust/competition laws;
    • Bribery/corruption laws
    • Fraud
  13. In your country, are there any restrictions in the appointment of arbitrators?

    The Arbitration and Conciliation (Amendment) Act, 2019 inserted a new provision Schedule VIII (Section 43J) (which is still to be notified) which mandates Qualifications and Experience of Arbitrator-

    A person shall not be qualified to be an arbitrator unless he—

    1. is an advocate within the meaning of the Advocates Act, 1961 having ten years of practice experience as an advocate; or
    2. is a chartered accountant within the meaning of the Chartered Accountants Act, 1949 having ten years of practice experience as a chartered accountant; or
    3. is a cost accountant within the meaning of the Cost and Works Accountants Act, 1959 having ten years of practice experience as a cost accountant; or
    4. is a company secretary within the meaning of the Company Secretaries Act, 1980 having ten years of practice experience as a company secretary; or
    5. has been an officer of the Indian Legal Service; or (vi) has been an officer with law degree having ten years of experience in the legal matters in the Government, Autonomous Body, Public Sector Undertaking or at a senior level managerial position in private sector; or
    6. has been an officer with engineering degree having ten years of experience as an engineer in the Government, Autonomous Body, Public Sector Undertaking or at a senior level managerial position in private sector or self-employed; or
    7. has been an officer having senior level experience of administration in the Central Government or State Government or having experience of senior level management of a Public Sector Undertaking or a Government company or a private company of repute;It is pertinent to note that the same have been incorporated from the IBA Guidelines of Conflict of Interest in International Arbitration.
  14. Are there any default requirements as to the selection of a tribunal?

    The requirements as to the number of the arbitrators are set out under Section 10 of the Arbitration Act. Pursuant to this section, the parties are free to determine the number of arbitrators, provided that this is odd. If the parties fail to determine the number of arbitrators, the tribunal shall consist of a sole arbitrator.

  15. Can the local courts intervene in the selection of arbitrators? If so, how?

    If the parties fail to mutually agree on deciding the arbitrators or in case of failure of one party to act in accordance with the Agreement, then Courts jurisdiction can be invoked. Any of the parties/aggrieved party may move an application for the appointment of the arbitrator under Section 11 of the Arbitration & Conciliation Act, 1996.

    Furthermore, in view of section 14 and 15 of the Arbitration and Conciliation Act, 1996, the Hon’ble Court has the power to terminate the mandate of an Arbitrator if such Arbitrator becomes de-jure or de-facto unable to perform his duty and substitute the arbitrator. Also as per section 29A(6) of the Arbitration and Conciliation Act, the Hon’ble Court can substitute an Arbitrator at the time of extending the time to complete the arbitration proceedings maximum by six months.

  16. Can the appointment of an arbitrator be challenged? What are the grounds for such challenge? What is the procedure for such challenge?

    If a respondent fails to participate in arbitration without sufficient cause, the tribunal may proceed ex parte or adjourn the proceedings. If the respondent fails to communicate its statement of defence, the tribunal may treat the respondent’s right as being forfeited or continue the proceedings without considering such failure to be an admission of the claimant’s allegations.

    While arbitrators cannot compel third parties to appear before them, the tribunal or a party, with the tribunal’s approval, may apply to the court for assistance in taking evidence. The court may make an order requiring third parties to provide evidence directly to the tribunal. If a person fails to attend in accordance with such order of the court, it is subject to the same penalties and punishments as it may have incurred during court proceedings.

  17. What happens in the case of a truncated tribunal? Is the tribunal able to continue with the proceedings?

    The duty to adjudicate disputes independently and impartially is the cornerstone on which a successful arbitration is based. This requirement has become increasingly relevant in today’s complex arbitrations. It is in view of this that Section 12 of the Arbitration Act was amended along with the insertion of Schedules V, VI and VII. As per Section 12(3), an arbitrator may be challenged only if:

    • circumstances exist that give rise to justifiable doubts as to his or her independence or impartiality, as per Schedules V of the Act; or
    • he or she does not possess the qualifications agreed by the parties.

    As per Section 12(4), a party may challenge an arbitrator it has appointed, or in whose appointment it has participated, only for reasons of which it becomes aware after the appointment has been made.

    Section 12(5) provides that, notwithstanding any prior agreement to the contrary, any person whose relationship with the parties or counsel, or with the subject matter of the dispute, falls under any of the categories specified in Schedule VII shall be ineligible for appointment as an arbitrator. At the same time, the statute has also empowered the parties to waive this condition by an express agreement in writing. The parties are free to agree on a procedure for challenging an arbitrator under Section 13 of the Arbitration Act.

    The circumstances that can give rise to justifiable doubts are set out in Schedule V. Schedule VII lays down a list of circumstances which are more serious. If a person falls under any of the provisions in Schedule VII, he or she shall be disqualified from the position of arbitrator. This is in contrast to Schedule V, as a person who falls under the provisions of this schedule will not necessarily be disqualified from the position of arbitrator.

    The interpretation of these schedules and the procedure for challenging an arbitrator, as mentioned in Sections 12, 13 and 14 of the Arbitration Act, were presented before the Supreme Court of India in HRD Corporation v GAIL (India) Limited (SLP (C) 20679 of 2017). In West Haryana Highways Project Private Limited v NHAI (OMP (T) (COMM) 28/2017, decided on 15 May 2017), while adjudicating a petition filed under Section 14 of the Arbitration Act, 1996, the Delhi High Court terminated the mandate of one arbitrator nominated by NHAI, applying the principles of Schedule VII, as that person was advising NHAI on other projects.

    Further, in view of Sections 14 and 15 of the act, the courts have the power to terminate the mandate of an arbitrator if he or she becomes de jure or de facto unable to perform his or her duties, and to appoint a replacement arbitrator accordingly.

  18. Are arbitrators immune from liability?

    In case of a truncated tribunal, a substitute arbitrator can be appointed by the party, whose arbitrator is absent. In case of a truncated tribunal, the tribunal cannot continue with the proceedings.

  19. Is the principle of competence-competence recognised in your country?

    The Arbitration and Conciliation (Amendment) Act, 2019 inserted a new provision Section 42B regarding Protection of action taken in good faith which mandates that “No suit or other legal proceedings shall lie against the arbitrator for anything which is in good faith done or intended to be done under this Act or the rules or regulations made thereunder”.

  20. What is the approach of local courts towards a party commencing litigation in apparent breach of an arbitration agreement?

    The principle of Kompetenz Kompetenz is well recognized in India under the Section 16 of Arbitration & Conciliation Act, 1996 which explains the competence of arbitral tribunal to rule on its jurisdiction.

    Section 16. Competence of arbitral tribunal to rule on its jurisdiction.—

    1. The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose,—

      1. An arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and
      2. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.

    The party wants to challenge the jurisdiction of the Tribunal, has to file the application under section 16 of the Arbitration and Conciliation Act, 1996 prior to filing of his defence to the substance of the matter. Merely a party participated in the process of appointment of arbitrator, does not debar him from challenging the jurisdiction of the Tribunal. In appropriate cases, the Tribunal can also condone the delay in filing such application.
    If the Tribunal rejects the plea regarding challenge to its own jurisdiction, then the Tribunal has to proceed with passing the Award and such Award can be challenge under section 34 of the Arbitration and Conciliation Act, 1996.

    If the Tribunal allows the plea regarding challenge to its own jurisdiction, then the aggrieved party can file an appeal before the Hon’ble Court under section 37 of the Arbitration and Conciliation Act, 1996.

    At present after coming force of the amendment to the Arbitration and Conciliation Act 1996 in 2015, there is an increase in number of challenge.

  21. How are arbitral proceedings commenced in your country? Are there any key provisions under the arbitration laws relating to limitation periods or time bars of which the parties should be aware?

    In India, arbitration is commenced by serving a notice of dispute to the opposite party inter alia invoking arbitration. For commencement of any arbitration, there has to be existence of dispute between the parties, which can be determined through arbitration. However, for the institutional arbitrations, the party need to follow the process as per the particular Rules of such institution. Commencement of arbitral proceedings is discussed under section 21 of the act as “Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent.”

    Section 43 of the Arbitration and Conciliation Act, 1996 mandates that limitation act shall apply to the arbitration similarly as it apply to proceedings in courts. For the purpose of limitation arbitration proceedings are deemed to have on the date on which a request for the dispute to be referred to arbitration is received by the respondent. The Limitation Act provides that the party invoking the arbitration has three years from the date of commencement of arbitration proceedings to seek appointment of the arbitral tribunal.

  22. In what circumstances is it possible for a state or state entity to invoke state immunity in connection with the commencement of arbitration proceedings?

    Sovereign immunity is not recognised as a good defence to enforcement of an arbitral award, arise as it does, in a commercial dispute. In Indian law, states and state entities do not enjoy sovereign immunity in commercial transactions. As a matter of fact, the Union of India, the various states and state-owned entities constitute a majority of party litigants in commercial disputes in India.

  23. What happens when a respondent fails to participate in the arbitration? Can the local courts compel participation?

    The arbitral tribunal has the power to proceed ex parte in a scenario if any of the parties fail to participate. Furthermore, as per section 25 of the Arbitration and Conciliation Act, 1996 if the respondent fails to communicate his statement of defence in accordance with sub-section (1) of section 23, the arbitral tribunal shall continue the proceedings without treating that failure in itself as an admission of the allegations by the claimant and shall have the discretion to treat the right of the respondent to file such statement of defence as having been forfeited. Furtehrmore, if a party without showing any suffucuent cause remain absent, the Tribunal can proced ex-parte against such party.

  24. Can local courts order third parties to participate in arbitration proceedings in your country?

    The Courts or the Tribunal, normally, do not have any power conferred upon them as per the Arbitration & Conciliation Act, 1996 to order third parties to participate in arbitration proceeding. However, at the same time, it can be noted that for the purpose of interim relief, the Court/Tribunal can direct impleadment of a third party for effective implementation of the interim order.

    Further, in its judgment in Chloro Controls (I) P Ltd v Severn Trent Water Purification Inc ( JT 2012 (10) SC 187), the Supreme Court of India held that the phrase ‘persons claiming through or under’ used in Section 45 of the Arbitration Act covers within its ambit multiple and multi-party agreements, though in exceptional cases. It further held that arbitration is possible between a signatory to an arbitration agreement and a third party; however, a heavy onus lies on the third party to show that, both in fact and in law, it is claiming ‘through’ or ‘under’ the signatory party, as contemplated under Section 45 of the Arbitration Act.

  25. What interim measures are available? Will local courts issue interim measures pending the constitution of the tribunal?

    There are two interim measures are available under the Arbitration and Conciliation Act, 1996 Firstly by the Court and Secondly by the Arbitration Tribunal.

    Interim Measures by the Court has been discussed under Section 9 of the Act which mandate that a party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced. Party can ask the following remedies-

    1. For the appointment of a guardian for a minor or person of unsound mind for the purposes of arbitral proceedings; or
    2. For the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement;
    3. Securing the amount in dispute in the arbitration;
    4. The detention, preservation or inspection of any property or thing which is the subject-matter of the dispute in arbitration,
    5. interim injunction or the appointment of a receiver;
    6. such other interim measure of protection as may appear to the Court to be just and convenient,

    Interim measure by the arbitral tribunal has been discussed under section 17 of the arbitration and conciliation act, 1996 wherein party can seek the abovementioned remedies as mentioned in the section 9. The arbitration tribunal shall have the same power for making orders, as the court has for the purpose of, and in relation to, any proceedings before it. That order shall be enforced under the Code of Civil Procedure, 1908 in the same manner as if it were an order of the Court.

    Orders of a tribunal are enforceable under Section 17(2) of the Arbitration Act as if they were an order of a court under the Code of Civil Procedure, 1908. In Alka Chandewar v Shamshul Ishrar Khan (Civil Appeal 8720/2017), the court held that the tribunal in an arbitration is empowered to make a representation to the appropriate court for any action of the parties amounting to contempt, to be tried under the Contempt of Courts Act, 1971, if the parties violate its orders, including any interim orders passed during the course of the proceedings under Section 27(5) of the Arbitration and Conciliation Act, 1996.

    In Jindal ITF Limited v NTPC Limited (OMP [ENF][COMM] 55 of 2018), the Delhi High Court for the first time enforced an interim order passed by a tribunal under Section 17 and accordingly directed the other party to pay the sum ordered by the tribunal as interim relief.

  26. Are there particular rules governing evidentiary matters in arbitration? Will the local courts in your jurisdiction play any role in the obtaining of evidence? Can local courts compel witnesses to participate in arbitration proceedings?

    According to section 19 of the Arbitration & Conciliation Act, 1996, which mandates that the rules of Evidence Act are not applicable in arbitration. Additionally this grant of power to arbitrator is to determine the admissibility, relevance, materiality and weight of any evidence. However, there are various judicial pronouncements, which provide that the broad principles of evidence will be applicable in arbitration. Like the onus to prove a particular fact is on the person, who has stated such fact. The normal rules relating to examination of witness including the rules relating to cross examination is also applicable in arbitration. In the case of State of Madhya Pradesh v. Satya Pal held that “fundamental principles of natural justice and public policy” would apply, though the technical rules of evidence contained under the Indian Evidence Act would not apply. Furthermore, the tribunal may also seek assistance from the Court in obtaining evidence under Section 27 of the Arbitration & Conciliation Act, 1996.

    The court may make an order requiring third parties to provide evidence directly to the tribunal. It was held in M/s National Insurance Company Limited vs. M/s S.A. Enterprises and further upheld in Thiess Iviinecs India vs Ntpc Limited & Anr. that

    “41. The purpose of Section 27 of the Arbitration Act, in my view, is to provide assistance to the arbitral tribunal or to a party in taking evidence with a view to expedite the arbitral proceedings. Merely because the arbitral tribunal has no power to issue a witness summons or to compel the attendance of the witnesses, the parties should not suffer. The legislature has inserted the Section 27 of the Arbitration Act to avoid this inconvenience to the parties to the arbitral proceedings and has thus empowered the arbitral tribunal as well as the parties to take assistance of the Court. The Court is empowered to issue direction to a party or even third party to produce documents or witnesses by summoning the party or even third party if the arbitral tribunal has granted permission and is of the opinion that production of such documents or evidence of such party including third party would be necessary for proper and effective adjudication of the dispute before it.”

  27. What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your country?

    The Arbitration and Conciliation Act provides that arbitrators should be independent and impartial, treat each party equally and give each party an equal opportunity to present their case. The same is governed by the fifth and seventh schedule. A such, in general practice, for the counsels, the ethical codes and other professional standards are governed under Advocates Act, 1961.

  28. In your country, are there any rules with respect to the confidentiality of arbitration proceedings?

    The Arbitration and Conciliation (Amendment) Act, 2019 enacted a new provision Section 42A which mandates confidentiality of Information by the arbitrator, the arbitral institution and the parties to the arbitration agreement shall maintain confidentiality of all arbitral proceedings except award where its disclosure is necessary for the purpose of implementation and enforcement of award.

    This is based on a High-Level Committee chaired by Justice (Retd.) B. N. Srikrishna recommended that a new provision may be inserted providing for confidentiality of arbitral proceedings unless disclosure is required by legal duty, to protect or enforce a legal right, or to enforce or challenge an award before a court or judicial authority. This provision is effective from August 9, 2019 the day received the assent of the President and published in the Gazette of India. Earlier there was no provision regarding the confidentiality of the arbitration proceeding in India.

  29. How are the costs of arbitration proceedings estimated and allocated?

    As per Section 31A of the Arbitration & Conciliation Act, 1996, the Court or the Arbitral Tribunal shall have the discretion to determine:

    1. Whether costs payable by one party to another;
    2. The amount of such costs; and
    3. When such costs are to be paid.

    ‘Costs’ are defined as

    1. The fees and expenses of the arbitrators, Courts and witnesses
    2. Legal fees and expenses;
    3. Any administration fees of the institution supervising the arbitration; and
    4. Any other expenses incurred in connection with the arbitral or Court proceedings and the arbitral award.

    For the determination of the costs, the tribunal has to take into consideration four factors:

    1. the conduct of all the parties,
    2. whether a party has succeeded in the case,
    3. whether the party had made a frivolous counter-claim leading to delay in the disposal of the arbitral proceedings; and
    4. whether any reasonable offer to settle the dispute is made by a party and refused by the other party.
  30. Can pre- and post-award interest be included on the principal claim and costs incurred?

    The arbitral tribunal can award pre-and post-award interest on the principle claims, however, for the costs, it has to be post-award interest.

  31. What legal requirements are there in your country for the recognition and enforcement of an award? Is there a requirement that the award be reasoned, i.e. substantiated and motivated?

    As such the award must be in writing and be signed by all members of the tribunal or signed by the majority with reasons for any omitted signatures. The Arbitration and Conciliation Act requires the award to set out the reasons on which it is based. The award should state the date and place of the arbitration, and a signed copy must be delivered to each party.

  32. What is the estimated timeframe for the recognition and enforcement of an award? May a party bring a motion for the recognition and enforcement of an award on an ex parte basis?

    As per the Arbitration Act, domestic awards (ie, awards made under Part I of the act) are enforced under Section 36 in accordance with the Code of Civil Procedure, 1908 in the same manner as a decree of the court. However, a party cannot apply to enforce the award until 90 days after its receipt.

    Further, foreign awards under Part II, Chapters I and II of the Arbitration Act can be enforced by a court under Section 49 in the same manner as a decree of the court. A foreign award is enforceable only if it was issued in a country which is a signatory to the New York Convention or the Geneva Convention, and if that country has been notified by India as a convention country. In the case of a foreign award, the court will determine whether it was made in accordance with requirements of the Arbitration Act; if it is found to be enforceable, it may be enforced in the same manner as a decree of the court.

    In Sundaram Finance v Abdul Samad ([2018] 143 CLA 1 (SC)) a two-judge bench of the Supreme Court of India clarified the anomaly with regard to the appropriate jurisdiction for enforcement of an arbitral award. The court held that an application for enforcement of an arbitral award under the Arbitration Act may be filed in any jurisdiction in the country where such decree is capable of being executed, and there is no requirement to seek a transfer of the decree from the court which has jurisdiction over the arbitration proceedings.

  33. Does the arbitration law of your country provide a different standard of review for recognition and enforcement of a foreign award compared with a domestic award?

    Under Section 34 of the Arbitration Act, a party may challenge an arbitral award on the following grounds:

    • A party was under some incapacity;
    • The arbitration agreement was not valid under the law;
    • A party was not given proper notice of the appointment of an arbitrator;
    • The award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration;
    • The composition of the tribunal or the arbitral procedure was not in accordance with the agreement of the parties;
    • The subject matter of the dispute is not capable of settlement by arbitration under the law in force;
    • The award conflicts with Indian public policy. An arbitral award will conflict with Indian public policy only if:
      • the making of the award was induced or affected by fraud or corruption, or was in violation of Section 75 or Section 81 of the act;
      • the award contravenes the fundamental policy of Indian law (the test for determining this shall not involve a review of the merits of the dispute); or
      • the award is against the basic notions of morality and justice; or
      • The award (other than in international commercial arbitrations) is vitiated by patent illegality on the face of the award. However, an award shall not be set aside merely on the grounds of an erroneous application of the law or a review of the evidence.

    Further, under Sections 48 and 57, foreign awards under Part II, Chapters I and II are enforceable only if the following conditions are satisfied:

    • The parties to the agreement referred to in Section 44 of the Arbitration Act were under some incapacity under the law applicable to them, or the agreement is not valid under the law to which the parties have subjected it or, failing any indication thereof, under the law of the country in which the award was made;
    • The party against which the award is invoked was not given proper notice of the appointment of the arbitrator or of the proceedings, or was otherwise unable to present its case;
    • The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration. However, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be enforced;
    • The composition of the tribunal or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place;
    • The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made;
    • The subject matter of the dispute is not capable of settlement by arbitration under the law of India; or
    • Enforcement of the award would be contrary to the public policy of India. An award is in conflict with the public policy of India only if:
      • the making of the award was induced or affected by fraud or corruption, or was in violation of Section 75 or Section 81 of the Arbitration Act;
      • the award contravenes the fundamental policy of Indian law (the test for determining this shall not entail a review on the merits of the dispute; or
      • the award conflicts with basic notions of morality or justice.
  34. Does the law impose limits on the available remedies? Are some remedies not enforceable by the local courts?

    As per Section 34(3) of the Arbitration Act, an application to set aside an arbitral award must be made within three months of receipt of the award or, if a request has been made for correction or interpretation of the award, from the date on which that request is disposed of by the tribunal. This three-month period may be extended by a further 30 days if the court is satisfied that the applicant was prevented by sufficient cause from making the application within the stipulated timeframe.

  35. Can arbitration awards be appealed or challenged in local courts? What are the grounds and procedure?

    Yes, an arbitration award can be appealed or challenged under section 34 of the Arbitration and Conciliation act, 1996 wherein it can be set aside by the court.

    (I) Challenging or application to set aside a domestic award under Section 34 of the Arbitration and Conciliation Act, 1996:

    There are following grounds of setting aside of arbitration award

    a) Party was under some incapacity

    b) Arbitration agreement was not valid under the law

    c) Party was not given proper notice of the appointment of an arbitrator

    d) Arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration

    e) The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties

    If the Court finds that:

    a) That the subject matter was not capable of settlement or;

    b) Arbitral award in conflict with the public policy of India

    Award will be in conflict with the public policy of India only if:

    b) The making of the award was induced, or affected by fraud or corruption or was in violation of Section 75

    c) It is in contravention with the fundamental policy of Indian law

    d) It is against the basic notions of moral and justice

    Procedure:

    Such appeal or challenge need to be filed within a period of 90 days from the date of receipt of such award, however, the Court has a power to extend the time for another 30 days, if sufficient cause has been shown. After the lapse of 120 days, the Courts have no power to entertain any challenge to the Award. The challenge to the Award needs to be filed before the competent Court which has territorial as well as pecuniary original jurisdiction.

    (II) For Appeals under Section 37 of the Arbitration & Conciliation Act, 1996:

    a) Refusing to refer the parties to arbitration under Section 8;

    b) Granting or refusing to grant any measure under Section 9;

    c) Setting aside or refusing to set aside an arbitral award under Section 34

    Appeal against an order by the Tribunal

    a) Accepting plea i.e. that the arbitral tribunal does have any jurisdiction under Section16(2)

    b) Granting or refusing an interim measure under Section 17

    (III) Regarding Foreign Award, the Indian Court has no power to set aside or hear Appeal against that Award, however, at the time of execution, the Indian Courts have power to refuse the enforcement of such Foreign Award on the following grounds, as per section 48 of the Arbitration and Conciliation Act, 1996:

    Enforcement of a foreign award may be refused, at the request of the party againstwhom it is invoked, only if that party furnishes to the court proof that —

    The parties to the agreement referred to in section 44 of the Arbitration and Conciliation Act, 1996 were, under the law applicable to them, under some incapacity or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or

    (a) the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

    (b) the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration. Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be enforced; or

    (c) the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place ; or

    (d) the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

    (IV) Enforcement of an arbitral award may also be refused if the court finds that—The subject –matter of the difference is not capable of settlement by arbitration under the law of India; or

    (a) the enforcement of the award would be contrary to the public policy of India.That an award is in conflict with the public policy of India, only if,--

    i. The making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or

    ii. it is in contravention with the fundamental policy of Indian law; or

    iii. it is in conflict with the most basic notions of morality or justice.

    The test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.

    (V) If an application for the setting aside or suspension of the award has been made toa competent authority referred to in clause (e) of sub-section (1) the Court may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security.

  36. Can the parties waive any rights of appeal or challenge to an award by agreement before the dispute arises (such as in the arbitration clause)?

    The Arbitration and Conciliation Act, 1996 provides provision for appeal against the award of the Domestic Tribunal under section Section 37 of the Act. In India, it is settled principles of law that a party by way of contract cannot waive any statutory right or any agreement contrary to the statute is null and void to that extent. Therefore, a party cannot waive any rights of appeal or challenge to an award by agreement before the dispute arises.

  37. To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?

    In a recent judgment, Pam Developments (P) Ltd. vs State of West Bengal [(2019)8 SCC 112), the Supreme Court held that in arbitration, in view of section 18 of the Arbitration and Conciliation Act, 1996, the State being a party enjoys only equal treatment. No State immunity is available to State in case of enforcement.

  38. Have courts in your jurisdiction considered third party funding in connection with arbitration proceedings recently?

    Currently, there are no provisions on third-party funding in India. However, recently, the Supreme Court in Bar Council of India vs. A.K. Balaji and Ors. (MANU/SC/0239/2018) observed that ‘there appears to be no restriction on third parties (non-lawyers) funding the litigation and getting repaid after the outcome of the litigation.’ However, there is a complete bar on the lawyers to be the third party to fund the litigation. Former SC judge B N Srikrishna and another former Chief Justice said that for third party funding to enter India, ideally Parliament should be asked to bring in a law. “It is going to be a difficult job if it were to be implemented merely by interpretation of existing position of law by the courts,” said Justice Srikrishna.

  39. Is emergency arbitrator relief available in your country? Is this frequently used?

    The emergency relief concept is very new to India. Although there is no specification laid under the Arbitration & Conciliation Act, 1996 but there are provisions both under the Delhi International Arbitration Centre under Rule 18A and under Mumbai Centre for International Arbitration under Rule 14. However, the Courts have jurisdiction to entertain an application for interim relief even prior to commencement of arbitration.

  40. Are there arbitral laws or arbitration institutional rules in your country providing for simplified or expedited procedures for claims under a certain value? Are they often used?

    Arbitration and Conciliation (Amendment) Act, 2015 new Section 29B was incorporated which provided Fast Track procedure for Arbitration wherein parties can settle their disputes within a period of 6 months from the date the arbitral tribunal enters upon reference. However, there has been no limit fixed to the amounts of the claims.

  41. Have measures been taken by arbitral institutions in your country to promote transparency in arbitration?

    Arbitration and Conciliation Act, 1996 is completely transparent in nature regarding appointment of Arbitrator, proceeding of Arbitration and other. However, there is no recent measure taken by the arbitral institutions to promote transparency in arbitration in India.

  42. Is diversity in the choice of arbitrators and counsel (e.g. gender, age, origin) actively promoted in your country? If so, how?

    The prties are free to choose their arbitrators and Counsel. However, while choosing Arbitrator, the bar is mandated in section 12(5) of the Arbitration Act read with Schedule V and VII.

  43. Have there been any recent court decisions in your country considering the setting aside of an award that has been enforced in another jurisdiction or vice versa?

    No Such judgement found

  44. Is corruption an issue that is regularly raised in your jurisdiction? What standard do local courts apply for proving of corruption?

    With regard to Arbitration, there is no special enactment. However, there are various legislations, which delas with the same.

  45. Have there been any recent court decisions in your country considering the definition and application of “public policy” in the context of enforcing or setting aside an arbitral award?

    Yes, Ssangyong Engineering & Construction Co. Ltd v. National High Authority of India wherein court held that to deal with purely domestic awards, which may also be set aside by the Court if the Court finds that such award is vitiated by “patent illegality appearing on the face of the award” — In order to provide a balance and to avoid excessive intervention, it is clarified in the proposed proviso to the proposed S. 34(2A) that such “an award shall not be set aside merely on the ground of an erroneous application of the law or by re-appreciating evidence

  46. Have there been any recent court decisions in your country considering the judgment of the Court of Justice of the European Union in Slovak Republic v Achmea BV (Case C-284/16) with respect to intra-European Union bilateral investment treaties or the Energy Charter Treaty? Are there any pending decisions?

    There is no judgement passed or case pending in India on abovementioned judgement.

  47. Have there are been any recent decisions in your country considering the General Court of the European Union’s decision Micula & ors (Joined Cases T-624/15, T-694/15 and T-694.15), ECLI:EU:T:2019:423, dated 18 June 2019? Are there any pending decisions?

    There is no judgement passed or case pending in India on above mentioned judgement.