Professional Documents
Culture Documents
IN INDIA
&
VIGILANCE ISSUES
1 November 2017
Chpt. VI – Making of Award (Time limit, form & content of award, cost, etc.)
Chpt. IX – Appeals
CONTROVERSY UNDERLYING
“SEAT” AND “VENUE”
By party agreement
Valid –
‒ Reliance Infrastructure Ltd v. Haryana Power Generation Corporation
(Punjab & Haryana High Court, 2016) - can appoint them provided they
have (a) no other past business relationship with the party; (b) no
justifiable grounds as to their impartiality exist or have been raised by
the other party.
‒ Afcons Infrastructure (Delhi High Court, 20I 7) and Offshore
Infrastructure Limited v. BHEL (Madras High Court, 2016) upheld
this.
© 2017 | Shardul Amarchand Mangaldas & Co Privileged and Confidential 20
NAMED APPOINTING AUTHORITY
In this scenario, the arbitration clause provides an ‘appointing
authority’ – usually the departmental officer or senior most officer
of the PSU- who is vested with the power to appoint an arbitrator.
Delhi High Court rejected HRD’s please. Supreme Court upholds High
Court order (31 August 2017, SC)
© 2017 | Shardul Amarchand Mangaldas & Co Privileged and Confidential 25
- IV -
CONDUCTING ARBITRATION
ARBITRAL AWARD
The award shall be made within 12 months from the date the tribunal
enters upon the reference. Reference will be deemed on the date on
which arbitrator(s) have received notice in writing of their appointment.
(S.29A(1))
The period of 12 months may be extended by the parties but shall not
exceed 6 months. (S.29A(3))
If the award is not made within the specified period, the mandate of the
arbitrators shall terminate, unless the Court extends the period.
Provided, if the delay is attributable to the tribunal, it may order a
reduction of fees not more than 5% per month of delay. (S.29A(4))
Award shall state the reasons unless parties agreed that no reason
to be given or it’s a consent award
Post award interest includes interest pendent lite and not merely
the principal amount. (Hyder Consulting – 2015 SC).
The Court or Tribunal shall have the discretion to determine whether costs
are payable to a party, the amount thereof and when they are to be paid.
Costs has been defined as reasonable costs relating to:
o The fees and expenses of the arbitration, Courts and witnesses;
o Legal fees and expenses;
o Any administrative fees of the supervising institution;
o Any other expenses in connection with the arbitral or Court
proceedings and the arbitral award.
The general rule is that the unsuccessful party will pay costs to the
successful party. The reasons for a different order shall be recorded in
writing.
Consideration for cost – conduct of parties, succeeded partly, frivolous
counterclaim, reasonable offer to settle the dispute refused by other party
If tribunal finds that the above request is justified, it shall make the
correction of give interpretation within 30 days (extendable by tribunal).
Tribunal may correct any error on its own within 30 days of award
• Three judge bench of the Supreme Court of India in the case of State of
West Bengal & Ors. vs. Associated Contractors (2015) 1SCC 32, held that:
“Applications under Section 42 is not applicable to applications made
before “court” as defined under Section 2(1)(e) of the Act. Thus, bar under
Section 42 is not applicable to (i) applications made before judicial
authorities under Section 8 of the Act; (ii) applications made before the
Chief Justice or his delegates under Section 11 of the Act; (iii) applications
filed before court inferior to Principal Civil Court or to High Court having
no original jurisdiction; and (iv) applications filed in a court that has no
subject-matter jurisdiction.”
• Award other than one arising out of ICA may be set aside on the grounds
of ‘patent illegality’. Provided, this may not be done merely on the
grounds of erroneous application of the law or by reapplication of
evidence.
• Where to file?
• “Court” means High Court exercising original civil jurisdiction
over the subject matter of the arbitral award and in other case in
High Court having jurisdiction to hear appeal from decree of
subordinate court. (S. 47)
Read with the Commercial Courts Act, 2015, this means that all
applications related to international commercial arbitrations will be
heard by the Commercial Divisions of the High Courts
• In Shri Lal Mahal Ltd. v. Progetto Grano Spa, (2014) 2 SCC 433, a three judge bench of
the SC, overruled its earlier decision in Phulchand Exports and held that the wider
meaning given to the term public policy under Section 34 is not applicable to Section
48(2)(b) and enforcement of Foreign Award could not be refused for grounds of patent
illegality
© 2017 | Shardul Amarchand Mangaldas & Co Privileged and Confidential 48
Opposition to Enforcement
• Explanation 1 states that the conflict with public policy of India only on
account of the making of the award affected by fraud or corruption, or
contravention with fundamental policy of Indian law and conflict with most
basis notions of morality and justice and not on patent illegality. Thus, the
judgement in Shri Lal Mahal is given statutory effect
DRAFTING OF AN
EFFECTIVE ARBITRATION CLAUSE
• Language of arbitration
• Currency of award
© 2017 | Shardul Amarchand Mangaldas & Co Privileged and Confidential 53
Basic provisions Additional provisions
Jurisdiction
Language
Number of parties
• Foreign party;
Would want to move the arbitration outside India