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Enforcing foreign awards in India is a challenging task

A successful conclusion of the arbitral process is no guarantee as there are factors that deter the enforcement of awards in India, i.e. the urgency to eliminate court intervention in order that the objectives of arbitration as a mode of alternative dispute resolution stand achieved.

Kirit S. Javali

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The law in India concerning arbitration has seen many phases and developments over the years. Its origins were contained in the 1899 Arbitration Act and the Code of Civil Procedure, 1908. Thereafter, the Arbitration Act, 1940 and the Foreign Awards Act, 1961 led the way. The 1940 Act covered only domestic arbitration and while it was perceived to be a good piece of legislation in its actual operation and implementation by all concerned – the parties, arbitrators, lawyers and the courts, it proved to be ineffective and was widely felt to have become outdated.

Then came the Arbitration & Conciliation Act, 1996 (“1996 Act”). The 1996 Act applies both to international and domestic arbitrations. It has been aligned with the UNCITRAL Model Laws from time to time to ensure that the international business community views India as a mature jurisdiction having the will and the laws capable of affording quick and smooth dispute resolution mechanisms. The 1996 Act requires the Arbitrators to give reasons for their awards unless otherwise agreed by the Parties. The purpose was to curtail the jurisdiction of the Courts in the interference of the arbitral awards.

Invoking arbitration and getting an arbitral award in one’s favour after a long and hard battle is at times only half the battle won. The main challenge is the enforcement of the arbitral award.Enforcing a judgment or an arbitral award against the counterparty can be a highly complex affair. Winning a case may represent just the first step in a long, difficult battle to recover the proceeds.

 India became a signatory to the New York Convention (“Convention”) on the Enforcement of Foreign Arbitral Awards on 13 July 1961. The Convention provides for the recognition of all foreign arbitral awards provided they meet certain basic minimum standards (such as the award being in writing, and not contrary to public policy)

 In theory, Indian courts may only refuse to enforce a foreign award in the limited circumstances set out in Article V of the Convention. In other words, an award rendered in one country can be taken, with relative ease, to another country and be enforced. Unlike most other Convention states, India has not officially recognised all the signatories to the Convention. Indian courts will therefore only enforce foreign awards under the Convention if they have been issued in a state that has been notified in the Official Gazette of India as a country to which the Convention applies. It is important to bear in mind, therefore, that the seat of arbitration specified in a contract should be a Convention country which has also been notified in the Official Gazette of India.

Under Section 48(1) & (2) of the 1996 Act, enforcement of a foreign award may be refused atthe request of the party against whom it is invoked, if that party furnishes proof that:

The parties to the agreement were 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

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

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

The award contains decisions on matters beyond the scope of the submission to arbitration; or

The subject matter of the dispute is not capable of settlement by arbitration under the law of India; or The enforcement of the award is contrary to the public policy of India.

Under the Arbitration and Conciliation (Amendment) Act 2015, it was clarified that an award will be in conflict with the public policy of India if:

 the making of the award was induced or affected by fraud or corruption or was in made in breach of confidentiality (between the parties) or was based on evidence relating to a dispute that is subject to conciliation proceedings;

it is in contravention with the fundamental policy of India law (that is, not to be a review on the merits); or it is in conflict with the most basic notions of morality and justice.

For the avoidance of doubt, 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.

 Even where international arbitration awards have been made in a notified country, enforcement in India to date has been difficult.

Court Intervention & the Public Policy Conundrum

 In India, court intervention is facilitated under Part I of the 1996 Act, which applies to arbitration conducted in India and the awards thereunder. Part II provides for enforcement of foreign awards and has further been sub-divided into two distinct chapters. Chapter one deals with the Awards as regulated by the Convention; defined as per Section 44 of the 1996 Act. Chapter two deals with Awards as regulated by the Geneva Convention; Section 53 of the 1996 Act covers it. The arbitration conducted in India and the enforceability of such awards (whether domestic or international) fall in the category of Part I, whereas the enforceability of foreign awards in India, is based on the guidelines laid down in the New York Convention.

The Supreme Court of India in a number of decisions had made up its mind to follow the principle of “least interference” with foreign arbitral awards while determining enforceability of foreign arbitral awards under Section 48 of the 1996 Act.

Historic Position

The Supreme Court of India in the case of ONGC vs Saw Pipes ((2003) 5 SCC 705) greatly increased the scope of interference and continued to be followed by the courts in India.

 In, Renusagar Power Plant Co. Ltd. v. General Electric Co.  AIR 1994 SC 860,  it was held that any interference on the merits of the decision of the arbitral tribunal would be outside the purview of Section 48 of the 1996 Act.It further held that,“the enforcement of a foreign award would be refused on the ground that it is contrary to public policy if such enforcement would be contrary to (i) fundamental policy of Indian law; or (ii) the interests of India; or (iii) justice or morality.” Although the judgment was passed under the old arbitration regime and the erstwhile Foreign Awards (Recognition and Enforcement) Act, 1961 (“Foreign Awards Act”), it has stood the test of time including the amendments made in the year 2015 to the 1996 Act. 

Recent decisions

 In the case of Shri Lal Mahal Ltd. v. Progetto Grano Spa (2014) 2 SCC 433,a threeJudge Bench of the Supreme Court held that review of a foreign arbitral award on its merits is untenable as it is not permitted under the Convention. It stated that the expression ‘public policy of India’ under Section 48 of the Act should be construed narrowly; whereas the same could be given a wider meaning under Section 34 of the Act.

 In Cruz City 1 Mauritius Holdings v. Unitech Limited (2017) 239 DLT 649 the Delhi High Court enforced a foreign award even though it may have been violative of FEMA. The Court held that the discretion to disallow enforcement is limited to the circumstances stated in Section 48, in which case a balancing act may be performed by the Court enforcing a foreign award.The Court observed that a violation of fundamental policy of Indian law must entail a breach of some legal principle or legislation which is so basic to Indian law that it is not susceptible of being compromised. “Fundamental Policy” was held to be the core values of India’s public policy as a nation, which may find expression not only in statutes but also time honoured, hallowed principles which are followed by Courts.”

 In the case of NTT Docomo 2017 SCC OnLine Del 8078, the award holder sought to enforce a foreign award for damages in India. The Reserve Bank of India (“RBI”) filed an intervention application before the Delhi High Court to challenge the enforcement on the ground that the award facilitated the acquisition of shares by an Indian company from a foreign company, in a manner which would be in contravention of the provisions of FEMA. The Delhi High Court rejected the application and held that there is no provision in law which permits the RBI to intervene in a petition seeking enforcement of an arbitral award to which the RBI is not a party. The court aligned with the finding of the tribunal that the award was simply in the nature of damages, and therefore RBI permission was not a prerequisite to allow enforcement.

 In Ssangyong Engineering & Construction Co. Ltd. v. National Highways Authority of India, AIR 2019 SC 5041, the Supreme Court laid down further principles on what constitutes the “fundamental policy of Indian law” and limited the scope for interference with foreign arbitral awards. It clarified the scope of the “public policy” ground for setting aside an award as amended by the Arbitration and Conciliation (Amendment) Act 2015 (“2015 Act”), and affirmed the prospective applicability of the 2015 Act.

Section 48 of the 1996 Act was further amended by the Arbitration & Conciliation (Amendment) Act, 2015 to delete the ground “contrary to the interest of India”. It was clarified that, in any case, refusal to enforce a foreign award is discretionary. Courts can choose to enforce foreign awards even if there exist some grounds of objection under Section 48.

 The Amended Act 2015 now provides that while considering whether a foreign award should be enforced in India, the test to determine whether the award is in contravention with the fundamental policy of India shall not entail a review on the merits of the dispute. (Explanation to subsection (2) of Section 48 and to sub-section (1) of Section 57 of the Amended Act) This change reinforces the aim of non-interference with the enforceability of a foreign award. The Amended Act now clarifies the scope of review under Section 48 (2) (b), on the grounds of public policy. Explanation 1 to Section 48(2) (b) expressly mandates that an award will conflict with the public policy of India only if: the making of the award was induced or affected by fraud or corruption; or the award is in contravention with the fundamental policy of Indian law; or the award is in conflict with the basic notions of morality and justice. This amendment is clarificatory in nature, and reaffirms the judicial interpretation laid down by the courts, in recent times.

In the recent case of Vijay Karia  v. Prysmian Cavi E Sistemi Srl 2020 SCC SC 177, decided on 13.02.2020 in relation to a foreign award,a 3-judge bench of the Supreme Court comprising of RF Nariman, Aniruddha Bose and V. Ramasubramanian, JJ held that the enforcement of a foreign award under Section 48 of the Arbitration and Conciliation Act, 1996 may be refused only if the party resisting enforcement furnishes to the Court proof that any of the stated grounds has been made out to resist enforcement. The said grounds are watertight – no ground outside Section 48 can be looked at. The Supreme Court further held that ‘the important point to be considered is that the foreign award must be read as a whole, fairly, and without nit-picking. If read as a whole, the said award has addressed the basic issues raised by the parties and has, in substance, decided the claims and counter-claims of the parties, enforcement must follow.’.

More recently, the Bombay High Court in the case of Banyan Tree Growth Capital LLC v. Axiom Cordages Ltd Commercial Arbitration Petition bearing no. 476 of 2019, considered the objections to the enforcement of a foreign award on the ground of the award being in violation of the public policy of India, given it was allegedly contrary to provisions of Foreign Exchange Management Act, 1999 (“FEMA”) and the Securities Contracts (Regulation) Act, 1956 (“SCRA”).

 This judgment has discussed in detail the law in relation to the legality of put options under the SCRA and the FEMA, issue of inadequate stamping and scope of fundamental policy of Indian law. Indian courts have time and again recognised the concept of put options, which is one of the most well-known exit mechanisms for foreign investors. The courts have granted interim reliefs in disputes involving exercise of put options and not interfered with the award granting reliefs based on put options.

Nafed Ruling: A complete U-turn by the Supreme Court

Most recently, the waters have now been muddied by the Nafed ruling, a mere two months later contrary to the decisions rendered by the Court in the recent past and more so in the light of the decision laid down by a coordinate Bench of the Court in Vijay Karia v. Prysmian SA.

The Supreme Court, in the case of National Agriculture Cooperative Marketing Federation of India v. Alimenta S.A. (“NAFED v. Alimenta S.A.”), refused to enforce a foreign arbitral award in a case dealing with groundnut export in the 1980’s. While doing so, the Court seems to have undertaken a review of the award on merits as an appellate court and arrived at its own conclusions on the parties’ liability under the contract. This is clearly not permitted under the provisions of Section 48 of the 1996 Act. As regards, the public policy argument, the Court considered a series of judgments and concluded as follows: “…

There was no permission to export commodity of the previous year in the next season, and then the Government declined permission to NAFED to supply. Thus, it would be against the fundamental public policy of India to enforce such an award, any supply made then would contravene the public policy of India relating to export for which permission of the Government of India was necessary.”

 This conclusion has been arrived at on the presumption that grant of permission from the government to carry out supplies by NAFED is a fundamental public policy of India.

The Court also quoted Redfern and Hunter: “Even if blatant, a mistake of fact or law, if made by the arbitral tribunal, is not a ground for refusal of enforcement of the tribunal’s award.” However, the Hon’ble Court did not apply this principle despite it being approved in the recent case of  Vijay Karia v. Prysmian. 

In dealing with an old case when India was a closed economy, the Supreme Court has despite settled principles previously enunciated on enforcement of Foreign Arbitral Awards has taken a complete U turn!

The scope of refusing enforcement of a foreign arbitral award is extremely limited, according to the statute.

Other issues for consideration for enforcement of arbitral awards:

 Jurisdiction

The Supreme Court of India has clarified that an award holder can initiate execution proceedings before any court in India where assets are located. In case, the subject-matter of the arbitration is of a specified value, commercial courts established under the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act 2015 (“Commercial Courts Act”) would have jurisdiction.

By virtue of the Commercial Courts Act and the Amendment Act, the Commercial Division of a High Court where assets of the opposite party lie shall have jurisdiction for applications relating to enforcement of such awards if the subject matter is money. In case of any other subject matter, Commercial Division of a High Court which would have jurisdiction as if the subject matter of the award was a subject matter of a suit shall have jurisdiction, i.e., where the opposite party resides or carries on business or personally works for gain.

The Delhi High Court in the recent case of Glencore International AG vs Hindustan Zinc Limited (O.M.P. (EFA) (COMM.) 9/2019 & O.M.P. (EFA) (COMM.) 10/2019) held that a foreign award can be enforced anywhere as a deemed decree, depending on the location of the assets of the Judgement Debtor. The Court also observed that the various provisions of Order XXI of the CPC clearly held that the only relevant factor in execution of the Award was the location of the assets or the property of the JD and not the Judgment Debtor. The final Award on costs as well as the final Award on interest on costs was passed in favour of the Decree Holder.

 Limitation

Courts have been of the view that the limitation period for enforcement of a foreign award would be the limitation period for execution of decrees, i.e., twelve years.

Asset Tracing

Asset Tracing is a critical aspect for the Parties to consider, even before signing the contract. Often this is not given much thought. From a commercial perspective, one does not take into calculations that a dispute may arise so what is the need to stoke fire on a wrong note, and hence this aspect is not considered very seriously.

However, when disputes do arise, the need for having conducted a due diligence of the properties is always felt in hindsight.

The Debtors may have their assets such as receivables from abroad or real estate and bank accounts, or assets like airplanes, fine art or expensive jewellry located in several jurisdictions. In such cases, the party in whose favour the award is passed needs to workclosely with their local counterparts in the jurisdiction (s) where the Debtor’s assets are located to find and freeze those assets. This puts pressure on the debtor to pay the judgment or award or, if the debtor continues to refuse or has absconded, it allows the Claimant an opportunity to foreclose against seized assets to satisfy the debt. Timing is often critical to prevent the Debtor from moving assets to yet another jurisdiction.

The ability to connect the dots and detect patterns of behaviour to help locate the Debtor’s hidden financial and physical assets is vital. One would also require to leverage legal discovery tools and proprietary asset tracing databases from reputed companies engaged in enforcement who would have developed an extensive global network of onthe-ground investigators to assist in finding assets.

There is no doubt that some judgements now and then have caused ripples, however, the Courts have by and large tried to ensure minimum intervention and the Legislature have addressed the issue of enforcement of foreign arbitral awards. The endeavour should be to preserve the spirit underlying the Act which is precisely the objective of the new amendment Act.

By Kirit S. Javali, (Advocate, Supreme Court, Partner Jafa & Javali, Advocates)

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Policy & Politics

India emerges as the world’s largest producer and consumer of sugar and world’s 2nd largest exporter of sugar

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India emerges as the world’s largest producer and consumer of sugar and world’s 2nd largest exporter of sugar

In Sugar Season (Oct-Sep) 2021-22, a record of more than 5000 Lakh Metric Tons (LMT) sugarcane was produced in the country out of which about 3574 LMT of sugarcane was crushed by sugar mills to produce about 394 LMT of sugar (Sucrose). Out of this, 35 LMT sugar was diverted to ethanol production and 359 LMT sugar was produced by sugar mills. With this, India has emerged as the world’s largest producer and consumer of sugar as well as the world’s 2nd largest exporter of sugar.

The season has proven to be a watershed season for Indian Sugar Sector. All records of sugarcane production, sugar production, sugar exports, cane procured, cane dues paid and ethanol production were made during the season.

Another shining highlight of the season is the highest exports of about 109.8 LMT that too with no financial assistance which was being extended upto 2020-21. Supportive international prices and Indian Government Policy led to this feat of Indian Sugar Industry. These exports earned foreign currency of about Rs. 40,000 crores for the country.

The success story of sugar industry is the outcome of synchronous and collaborative efforts of Central and State Governments, farmers, sugar mills, ethanol distilleries with very supportive overall ecosystem for business in the country. Timely Government interventions since last 5 years have been crucial in building the sugar sector step by step from taking them out of financial distress in 2018-19 to the stage of self-sufficiency in 2021-22.

During SS 2021-22, sugar mills procured sugarcane worth more than 1.18 lakh crore and released payment of more than 1.12 lakh crore with no financial assistance (subsidy) from Government of India. Thus, cane dues at the end of sugar season are less than ₹ 6,000 crore indicating that 95% of cane dues have already been cleared. It is also noteworthy that for SS 2020-21, more than 99.9% cane dues are cleared.

Government has been encouraging sugar mills to divert sugar to ethanol and also to export surplus sugar so that sugar mills may make payment of cane dues to farmers in time and also mills may have better financial conditions to continue their operations.

Growth of ethanol as biofuel sector in last 5 years has amply supported the sugar sector as use of sugar to ethanol has led to better financial positions of sugar mills due to faster payments, reduced working capital requirements and less blockage of funds due to less surplus sugar with mills. During 2021-22, revenue of about ₹ 18,000 crore has been made by sugar mills/distilleries from sale of ethanol which has also played its role in early clearance of cane dues of farmers. Ethanol production capacity of molasses/sugar-based distilleries has increased to 605 crore litres per annum and the progress is still continuing to meet targets of 20% blending by 2025 under Ethanol Blending with Petrol (EBP) Programme. In new season, the diversion of sugar to ethanol is expected to increase from 35 LMT to 50 LMT which would generate revenue for sugar mills amounting to about ₹ 25,000 crores.

There is an optimum closing balance of 60 LMT of sugar which is essential to meet domestic requirements for 2.5 months. The diversion of sugar to ethanol and exports led to unlocking of value chain of the whole industry as well as improved financial conditions of sugar mills leading to more optional mills in ensuing season.

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Policy & Politics

DFS modifies Emergency Credit Line Guarantee Scheme for Civil Aviation sector

ECLGS necessary for collateral-free liquidity at reasonable interest rates to tide over their present cash flow problems

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DFS modifies Emergency Credit Line Guarantee Scheme for Civil Aviation sector

Recognising that an efficient and strong civil aviation sector is vital for the economic development of the country, the Department of Financial Services (DFS), Ministry of Finance, has modified the Emergency Credit Line Guarantee Scheme (ECLGS) yesterday to enhance the maximum loan amount eligibility for airlines under ECLGS 3.0 to 100% of their fund based or non-fund-based loan outstanding as on the reference dates or Rs. 1,500 crore, whichever is lower; and of the above, Rs. 500 crore shall be considered, based on equity contribution by the owners.

All other criteria terms and conditions parameters prescribed under the operational guidelines of the ECLGS on 30.8.2022 shall be applicable as it is.

The modifications introduced are aimed to give necessary collateral-free liquidity at reasonable interest rates to tide over their present cash flow problems.

Earlier in March 2022, the Emergency Credit Line Guarantee Scheme (ECLGS) was extended beyond March 2022, till March 2023, to implement the announcement made in the Union Budget 2022-23 by Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman. Keeping in view the high proportion of non-fund based credit in the overall credit of the civil aviation sector, the eligible borrowers were permitted to avail up to 50% of their highest total fund and non-fund based credit outstanding, subject to a maximum of Rs. 400 crore per borrower. 

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Analysis on “Climate resilient housing structures for marginalised communities living in coastal areas” 

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Analysis on “Climate resilient housing structures for marginalised communities living in coastal areas” 

Introduction 

Climate change has emerged as one of the pressing issues of the 21st century. Climate change is like a pandemic, it does not spare even the most advanced countries. Weather and climatic extremes are becoming more common as a result of human-caused climate change across the world. Acute occurrences of storms, droughts, floods, cyclical fluctuations in precipitation and long-term variations in temperature and sea levels, are all made more likely by climate change. This will result in deaths, injuries, and poor health related diseases, as well as damage to infrastructure, livelihoods and natural resources. Marginalised communities who live in old and substandard houses and have limited resources are especially susceptible to floods and cyclones. Approximately 40% of the world’s population now lives within 100 km of a coastline and 100 m of sea level. it is anticipated that by 2030 half of the world’s population would reside in coastal areas. As per the World Bank study (2018), climate change will relocate 143 million people in sub-Saharan Africa, Latin America, and south Asia. Climate proofing the houses and infrastructure for all is a necessity.  

Climate change and vulnerability of India’s Coastal infrastructure 

India is one of the most vulnerable countries to the effects of climate change and simultaneously suffers from endemic levels of poverty. In recent years, India has experienced an increase in the severity and frequency of weather events and climate-related natural disasters.India is the third-worst-affected country due to the climatic disasters. In India 170 million people live in the coastal regions. According to the Internal Displacement Monitoring Centre, between 2008 and 2018, over 3.6 million Indians were moved every year, the majority as a result of monsoon rains, which are the heaviest in South Asia. As per the report Human Cost of Disasters (2000-2019) published by the United Nations Office for Disaster Risk Reduction, India has the third highest number of disaster events. It is also the second most impacted country by floods with 345 million people affected. Extreme cyclones namely the recent Yaas, Amphan, Fani, Gaja, and Hudhud, as well as catastrophic floods, have wreaked havoc on its coastal states of Odisha, Andhra Pradesh, Tamil Nadu, and Kerala. The mangrove ecosystem, which acts as a natural barrier against cyclones and coastal erosion in coastal areas, has been badly harmed and is expected to be further harmed as an outcome of climate change. According to estimates from the Central Water Commission, the total damage from climate-related extreme weather events on infrastructure and housing is more than INR 36 million, or 3% of India’s GDP. 

The major cyclone Fani hit Odisha with a population of around 46 million people, in May 2019. State authorities used an effective early-warning system to evacuate 1.2 million people in 24 hours, making it one of the largest evacuations in history and earning praise from the United Nations. With the increasing effects of climate change, tens of thousands more people may be forced to migrate or be displaced from high-risk areas along the Indian coast. Many families may be forced to relocate within their own state or further afield to avoid the effects of sea level rise and coastal inundation if concrete climate and development action is not taken. It is imperative that climate resilient infrastructure and houses are built which are affordable, safe and adequate which could benefit the people living in poverty.  

Safeguarding future prosperity

Acknowledging the effects of climate change on our lives and directing all our resources and efforts towards the attainment of climate resilience is important. Climate resilience refers to the ability to predict, prepare for, and assess how climate change can create hazardous events and take steps to cope with such events. Adaptation to climate change for people living in coastal areas is a necessity. Infrastructure that is both accessible and functional is critical to human well-being and economic progress. People living in coastal areas are vulnerable to triple threats which are limited resources for affordable housing infrastructure, socioeconomic vulnerability, and increased flooding due to sea level rise.


Analysis 

As climatic conditions worsens and extreme weather events like floods, storms and cyclones are becoming normal in the climate-constrained weather. To maintain the global average temperature below the Paris Agreement’s 1.5 degree safe limit, collaborative action and funding is required. Government and Non Governmental Organisation should come together to take preventive measures which would ultimately reduce disaster risks and post recovery losses. It is imperative to invest in making climate resilient housing for the people. There is a huge requirement of funds which can be solved if the government incentivises private investors to enter into the long term contracts with Development Financial Institutions to work on innovative and sustainable houses for the marginalised communities. If appropriately managed, relocating communities from hazard-prone places can be a valuable adaptation strategy for providing alternatives to physical protection. However, there is a need for more forward looking sustainable housing planning to protect the people living in coastal areas who are vulnerable. Sensitising and raising awareness amongst the people about the benefits of climate resilient houses is also a significant component for the planning. Furthermore, strong community demand and community support can lead to decision-makers and planners reaching a consensus. Currently, India’s construction industry is altering its building processes in order to minimise greenhouse gas emissions and make sustainable buildings more accessible to individuals with limited financial resources. Failure to do so sufficiently will put marginalised communities in more danger in the future.

Abhinav is an Practicing Advocate based out of Delhi & Parth is a law Scholar. 

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Policy & Politics

Dispute, Discrepancy, and Debate: Anti-Arbitration Injunctions in India

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Overview of Anti Arbitration Injunctions
The conundrum of anti-arbitration injunctions is similar to the relationship between a devil and deep blue sea, thereby, addressing the two-sided sword of danger and distress irrespective of choosing directions. India’s approach on anti-arbitration injunctions can be summarized more or less on the same lines. In common parlance, an anti-arbitration injunction suit seeks to injunct the initiation of arbitration proceedings. Generally, the parties prefer to take this recourse before the initiating arbitration proceedings. However, the same is not confined to narrow boundaries and hence, recourse can be availed before the tribunal passes the final award.
There are two broad limbs while dealing with such injunctions. On one hand, it is argued that this remedy strikes the power of arbitral tribunal to regulate or decide its own jurisdiction which results in increasing judicial intervention. On the other hand, it is argued in cantena of judgments that the duty of the court to ‘refer’ parties to the arbitration plays a vital role. The Hon’ble Apex Court in Vidya Drolia & Ors. v. Durga Trading Corporation (“Vidya Drolia”) reiterated four-fold conditions for determining arbitrability of disputes by appropriate forum viz., (i) instances where cause of action and subject matter of the dispute relates to actions in rem, not pertaining to subordinate rights in personam which arise from rights in rem, (ii) mutual adjudication would not be appropriate when cause of action and subject matter of the dispute inherently affects third party rights and hence, centralized adjudication must be there, (iii) mutual adjudication not possible when cause of action and subject matter of the dispute relates to sovereign and public interest functions of the State, and (iv) when the subject-matter of the dispute is expressly, or by necessary implication non-arbitrable as per mandatory statute.
Further, in P. Anand Gajapathi Raju v. P.V.G. Raju (Died) another set of principles were crystalised, viz., firstly, there must be an arbitration agreement; secondly, a party to the agreement must bring an action in the court against the opposite party; thirdly, similar subject matter of the action and arbitration agreement; and fourthly, the other party must move to the court for arbitration before it submits its first statement on the substance of the dispute. Simultaneous reading of S. 8 & 45 of the Arbitration and Conciliation Act, 1996 (“Act”) makes it clear that the remedy of anti-arbitration injunction sustains limited judicial intervention. India is struggling to find a fine line of balance on the issue of autonomy to arbitral tribunals and ability of courts to interfere in matters pertaining to jurisdiction, injustices, or aggravation in any arbitration proceedings.

Narrow Bridge Prior to Bina Modi-Lalit Modi and Amazon-Future Retail
Section 16 of the Act encircles the principle of Kompetenz-Kompetenz which talks about the issue of jurisdiction by arbitral tribunal as sufficient and efficient. In the case of Uttarakhand Purv Sainik Kalyan Nigam Ltd. v. Northern Coal Field Ltd, the Hon’ble Supreme Court, while examining this backbone principle applied this principle and held that “the dispute related to the arbitrability should be decided by the tribunal itself and courts can interfere only when there is no agreement at all or whether the consent to enter into an agreement is vitiated by fraud or misrepresentation.” Hence, under the said Act, the challenge before a court is maintainable only after the final award is passed as provided by sub-section (6) of Section 16. In the case of N.N. Global Mercantile v. Indo Unique Flame Ltd, similar footings were observed while dealing with the said principle. Interestingly, in Kvaerner Cementation India Limited v. Bajranglal Agarwal, it was held that the civil court do not have the jurisdiction to interfere in arbitral matters, owing to the principle of Kompetenz-Kompetenz which focuses on the competence of a court.
Quite recently, the Calcutta High Court denied the contention of forum non conveniens while restraining the other party from taking steps for a London-seated arbitration while reiterating that the contract was signed cautiously. Similarly, in Sancorp Confectionary v. Gumlik, the Delhi High Court refused to interfere and stated that all objections shall be heard by the arbitral tribunal itself. The Hon’ble Supreme Court in World Sport Group v. MSM Satellite Singapore Ltd while analysing the issue whether the arbitration agreement was null and void applied the principles of Section 45 of the Act. However, it is interesting and vital to note the case of Board of Trustees of Port of Kolkata v. Louis Dreyfus Armatures SAS & Ors where the Calcutta High Court granted anti-arbitration injunction and warned that it must only be granted in exceptional and unprecedented circumstances.

Window of Interference Post Bina Modi-Lalit Modi and Amazon-Future Retail
Recently, the Hon’ble Supreme Court in Vidya Drolia laid down certain principles while analysing the issue of non-arbitrability, while placing substantial reliance on Duro Felguera and Boghara Polyfab. Firstly, the scope of judicial review under Section 8 and 11 of the Arbitration and Conciliation Act, 1996 (“Act”) is identical but vastly limited, secondly, arbitral tribunal is the preferred authority to determine and decide all questions of non-arbitrability and court is the second option on such aspects, and thirdly, the court may interfere rarely only when it is manifestly and ex facie precise that the arbitration agreement is non-existent, invalid, or / and the disputes are non-arbitrable. Further, while following the principle of Kompetenz-Kompetenz, the Apex Court strongly observed that it is the arbitral tribunal which must be preferred as first authority to determine and decide all questions of non-arbitrability. 
Recent judgments have shaken the balance between the courts and tribunals while sliding towards granting autonomy to arbitral tribunals. The suits in Bina Modi vs Lalit Modi were dismissed while reiterating the observation in Kvaerner Cementation wherein the Hon’ble Supreme Court dismissed suits as unmaintainable since an alternative remedy was present under Section 16 of the Act. Reliance was also placed on Section 41(h) of the Specific Relief Act, 1963, which bars the grant of injunctions when there is a possibility of deriving equally effective relief by any other usual mode of proceedings. The court while disallowing observed that the adequate remedy would be to approach the arbitral tribunal instead.
While hearing the Amazon-Future Retail, Justice Amit Bansal, stated that “there is only a very small window for interference with orders passed by the arbitral tribunal while exercising jurisdiction under Article 227. The said window becomes even narrower where the orders passed by the arbitral tribunal are procedural in nature.” The bench while upholding non-interference stated that the willingness of the court must be of utmost importance and added that arbitrators have a far greater flexibility in adopting procedure to conduct the arbitration proceedings as compared to civil courts and concluded by stating that nothing was found to suggest that the arbitral tribunal has denied equal opportunity to the parties or that it has not been accommodating towards the requests of the petitioners. Recently, the Supreme Court has set aside the orders of the Delhi High Court which initiated coercive steps against the companies and its promoters Biyanis for alleged violation of the Emergency Award passed by the Singapore Tribunal on the application filed by e-commerce giant Amazon.

Conclusion
In Vidya Drolia, the Hon’ble Supreme Court’s attempt to pose responsibility on the lower Courts while ensuring caution in exercising authority over proceedings referred to it under the Act clearly shows that we’re moving towards a pro-arbitration regime which must be accepted by open arms in order to curb over-burdening of judiciary. Prima facie, there are two important questions; firstly, can we have a common rule that everything must be decided by the arbitral tribunal with no power in hands of the court?, and secondly, has India approached this issue as if it were caught between the devil and the deep sea in choosing to exclusively rest the jurisdiction with the arbitral tribunal? Practically speaking, in the Indian context, we cannot shut eyes on the fact that there may be instances wherein the courts need to interfere in rare and exceptional circumstances. At times, the arbitral proceedings can be oppressive, vexatious, and inequitable. The law on anti-arbitration injunction suits in India has certainly reached a stifling point and hence, aim to not evolve as oppressive, manifestly unfair, unreasonable, and prejudicial to the interest of the parties.

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Policy & Politics

Bapu! Why don’t you come back again?

Not only India but the whole world celebrated Mahatma Gandhi’s birthday, which made me think…

Vijay Darda

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Dear Bapu!
Let me say sorry to you. Your birthday was celebrated yesterday, October 2. It has become a tradition to write something on your birthday, just as there is a tradition of garlanding your statues at various intersections. There is the tradition of singing panegyrics to your virtue and then the misfortune of forgetting everything the next day. Even though I did not write anything, Bapu, my mind kept me restless throughout the day. Several questions kept raising their heads. I kept wondering who imprisoned our dear Bapu only in statues. Bapu! You took on the world’s biggest empire with such an ease and patience that the world was stunned! Have we forgotten the great man who freed us from the slavery of centuries?
As the Sun was about to set after celebrating your birthday, I felt that the questions which were stirring my mind must be agitating more people like me. Was it any easy task to awaken an almost uneducated country that had been in a deep slumber of ignorance for centuries? Bapu, when you came to India in 1915, toured the whole country and became active in the freedom movement in 1917, the literacy rate of the country was not even 7 per cent. The British were sending your sons and daughters across the sea as indentured labourers. The morale of the country was shattered but you did an amazing thing Bapu! No one had even imagined that your efforts, which looked very simple, would infuse consciousness in the country. Be it the Nilaha Kisan movement of Champaran or the 24-day Dandi March in March-April 1930 for the right to salt, they shook the sleeping soul of India awake. You taught this country to talk to the British on equal terms. When the Viceroy gave you the message to come to Delhi to meet him, what a befitting reply you gave! That, this country is ours. If you want to meet me, come down to Sevagram and I will be there! This also reminds me of the incident when you met George V in London. You were asked why you were clad in so few clothes? And what a wonderful answer you gave him: The king is wearing all the clothes!
Bapu! You were a source of inspiration for not just India but more than 40 countries. Thanks to you Bapu, those countries are free today! It was you who created awakening against apartheid. During his visit to India, Barack Obama too had said in the Parliament that had Gandhiji not been there, he would not have become the President.
You experienced and understood the pain in the common man’s life, and that is why you could do what no one could imagine. There is no such feeling of sensitivity left in our leaders, Bapu! I wish our leaders could learn from you! Today, the whole country is engaged in the Beti Bachao Beti Padhao campaign, something which you taught us Bapu. You fought for women’s education and equal rights when neither family nor society even thought about it. Today, the Sarva Shiksha Abhiyan is in full swing, but the credit goes to you, Bapu! You must be seeing from wherever you are Bapu that the daughters of Mother India are scaling the pinnacle of success today. The national flag is flying high all over the world. There is a discussion to give one-third reservation to women today, whereas you had said long ago that if the country has to be taken on the path of progress, women will have to be given equal rights. If I think about your philosophy of life, I feel proud that on our soil there was a Mahatma called Mohandas Karamchand Gandhi who thought about the welfare of humanity. Seeing the women using blowpipes to blow air into the hearth and ending up with damaged lungs, Bapu called the scientist Magan Bhai to Sevagram and asked him to invent such a hearth that would rid women of this problem. In this way, the Magan chulha came into existence! The practice of open defecation is being phased out today, and the credit for this too goes to you, Bapu. You taught us the skill of digging a pit and burying the dirt so that it gets converted into manure. Your goal was that man should get freedom from manual scavenging.
You understood India in a true sense and also found solutions to the problems in accordance with its ambiance. You talked about naturopathy. You taught us the value of everything right from the value of livestock to the value of soil. Rajiv Gandhi talked about ensuring and taking the fruits of democratic power to the last person in the villages, and today our Prime Minister Narendra Modi is making rapid efforts in that direction, but you are the father of this concept of village development, Bapu! You understood the power of youth, recognised the power of women, and realised the need for solidarity in society.
You started the eradication of untouchability and opened the temple gates for Dalits. You propagated humanity as the biggest religion to unite the country divided by caste, religion, and creed. When you talked about Ram Rajya, there was no religious exclusivity anywhere in it. There was a sense of equality for all. You paved the way for truth and non-violence when history was being stained with blood due to long periods of violence. That’s why you taught us to sing: Raghupati Raghav Raja Ram, Patit Pawan Sita Ram; Ishwar Allah tero naam, sabko sanmati de bhagwan! You believed in forgiveness, non-violence, fasting, friendship, and brotherhood. Lord Mahavir and Lord Buddha resided in your conscience.
You also wanted the villages to benefit from science, so you became friends with the great scientist Albert Einstein. He rightly said about you: “Generations to come will scarce believe that such a one as this ever in flesh and blood walked upon this Earth.” The situation is the same today. It is our fault Bapu that today’s generation does not know anything about you properly! Bapu, why don’t you come to this land of Bharat once again? Many of your dreams are still unfulfilled, Bapu!

The author is the chairman, Editorial Board of Lokmat Media and former member of Rajya Sabha.

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Nation

Bombay High Court grants bail to Anil Deskmukh, remains in jail

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In a money laundering case brought by the Enforcement Directorate, the Bombay high court on Tuesday granted bail to former Maharashtra minister and Nationalist Congress Party (NCP) leader Anil Deshmukh.

The bail was granted on a surety amount of Rs 1 lakh. The ED has asked for a two-week delay in the order’s implementation.

Deshmukh was arrested in November of last year and moved the high court after his bail request was rejected earlier this year by a special PMLA court.

Deshmukh has been given bail in the ED case, but he will continue to be held in relation to the CBI case that was brought against him in April of last year.

The Supreme Court had earlier ordered the High Court to quickly hear and resolve the NCP leader’s case because it had been pending for six months.

Deshmukh’s lawyers, Vikram Chaudhari and Aniket Nikam, argued that the senior NCP politician ought to be given bail in light of his age (72), good health, and lack of prior convictions.

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