Volume IV: Issue [2] 2015-16 ADVISORY BOARD Martin Hunter S. K. Dholakia Fali S. Nariman Loukas Mistelis Lakshmi Jhambolkar Gary B. Born Promod Nair Emmanuel Gaillard W. Michael Reisman Gabrielle Kaufmann-Kohler CHIEF PATRON Prof. Poonam Saxena, Vice Chancellor FACULTY ADVISOR Ms. Aakanksha Kumar, Asst. Professor (Law) EDITORS-IN-CHIEF Akhil Raina Arundathi Venkataraman MANAGING EDITOR EXECUTIVE EDITOR Prithvij Beniwal Pavitra Venkateswaran SENIOR CONTENT EDITORS Sanjana Srikumar Vanshika Mohta Varun Mansinghka ASSOCIATE EDITORS Bhavana Sunder Inika Serah Charles Joseph Thaliath Sagar Gupta Shivesh Aggarwal Viraj Dhuri COPY EDITORS Anina D‘Cunha Divyansh Singh Indulekha Thomas Mihika Gupa Rishabh Nautiyal Zubin Nicholas Pereira PUBLISHED BY The Registrar, National Law University, Jodhpur ISSN: 2320 – 2815 | eISSN : 2320 – 2823 ii CONTENTS EDITORIAL Seat of Arbitration and Indian Arbitration Law -Loukas Mistelis … 1 ARTICLES 1. Memoirs of a Personal Journey -Abhishek Manu Singhvi … 14 2. Indian Arbitration Law: Legislating for Utopia -Armaan Patkar … 28 3. Arbitrability of Competition Law Disputes in India -Tanya Choudhary … 69 4. On the Maintainability of Review Against a Section 11 Order -Harshad Pathak … 87 5. Dispute Resolution in Africa for Indian Investors: An Overview of Civil-Law OHADA Jurisdictions -Delphine Constantin … 118 6. Blessed Unions in Arbitration: An Introduction to Joinder and Consolidation in Institutional Arbitration - Arjun Gupta, Sahil Kanuga & Vyapak Desai … 134 iii Centre for Advanced Research and Training in Arbitration Law (CARTAL) National Law University NH – 65, Mandore Jodhpur – 342 304 Rajasthan (India) E-mail: [email protected], [email protected] iv SEAT OF ARBITRATION AND INDIAN ARBITRATION LAW Loukas Mistelis* International arbitration is a well-established mechanism for the settlement of cross-border commercial disputes. In many jurisdictions, such as the United States, it is also an important mechanism for the settlement of specialist commercial disputes. In both domestic and international arbitration, the disputing parties wish to avoid national court adjudication either for reasons of ensuring a neutral and specialist international tribunal (international cases) or a forum which is more efficient or a subject-matter expert (domestic cases). In both instances, essential considerations for arbitrants are confidentiality (or at least a high level of privacy), the right to select an arbitrator with specialist knowledge, and the easier enforcement of arbitral awards. I. I. Seat of Arbitration: A Theoretical Debate with Practical Consequences Many major cities and jurisdictions are competing to attract arbitration cases in their territory as it appears that arbitration contributes to the local economy: Singapore, Mauritius, London, Paris, New York and other cities are promoting themselves as arbitral seats with concerted marketing efforts. According to surveys1 conducted by the School of International Arbitration, the seat of arbitration is quite an important consideration amongst the various choices parties to arbitration agreements have to make. This is a choice corporate lawyers have to make, often in consultation with outside counsel.2 However, the most important choice is that of the law governing the contract: parties choose a law to make sure that their contract works but also have to plan for an escape route in case things go wrong (a sort of ―pre-nuptial agreement‖). It is no surprise that the choice of seat (and the choice of arbitration institution) captures the interest of lawyers. The most important factor influencing the choice of seat is the legal * LLB, MLE, Dr. Juris, MCIArb, Advocate, Clive M. Schmitthoff Professor of Transnational Commercial Law and Arbitration, Centre for Commercial Law Studies, Queen Mary University of London; Member, Advisory Board, Indian Journal of Arbitration Law. 1 QMUL School of International Arbitration and White and Case, 2010 International Arbitration Survey: Choices in International Arbitration, available at http://www.arbitration.qmul.ac.uk/docs/123290.pdf; QMUL School of International Arbitration and PwC, 2006 International Arbitration Survey: Corporate Attitudes and Practices, available at http://www.arbitration.qmul.ac.uk/docs/123295.pdf. See also, Loukas Mistelis, Arbitral Seats: Choices and Competition, KLUWER ARBITRATION BLOG (Nov. 26, 2010), available at http://kluwerarbitrationblog.com/2010/11/26/arbitral-seats-choices-and-competition/. 2 QMUL School of International Arbitration and White and Case, 2010 International Arbitration Survey: Choices in International Arbitration, at p. 9, 14, available at http://www.arbitration.qmul.ac.uk/docs/123290.pdf,. 1 infrastructure at the seat (62%), which includes the national arbitration law, the track record in enforcing agreements to arbitrate and arbitral awards in that jurisdiction, and its neutrality and impartiality. The law governing the substance of the dispute (46%) came second. Convenience is also an important factor (45%) including location, industry specific usage, prior use by the organisation, established contacts with lawyers in the jurisdiction, language and culture, and the efficiency of court proceedings. As with the choice of governing law, corporations are also focusing on practical issues – such as access and convenience – while the location of the relevant people involved in the arbitration and the recommendations of external counsel are the least important factors.3Cost is the most important aspect of general infrastructure that influences that choice of seat (42%), followed by good transport connections (26%) and hearing facilities (including translators, interpreters and court reporters) (21%). Respondents also listed safety and the absence of bribery as important factors. Efficiency and promptness of court proceedings are the most important aspects of the convenience of a seat (20%), followed by language (16%), good contacts with specialised lawyers operating at the seat (15%) and the location of the parties (11%). Cultural familiarity is also a factor (10%). Interestingly, previous experience of the seat is not a particularly important factor (7%), nor is the location of the arbitrators (6%).4 In the list of popular seats, London, Paris and Switzerland always feature very highly. What is particularly intriguing about these three popular seats is that none of them have adopted the UNCITRAL Model Law as their local arbitration law, but have consciously developed positive law with its own distinct features. The English Arbitration Act of 19965 is based on the residual jurisdiction of the English courts to support arbitral proceedings, respects party autonomy and also classifies its own provisions as mandatory or non-mandatory.6 The French law of 20117 and the Swiss 3 Id., at p. 17. 4 Id. 5Arbitration Act, 1996, c. 23, (U.K.), available at http://www.legislation.gov.uk/ukpga/1996/23/contents [―UKAA, 1996‖]; Audley Sheppard, English Arbitration Act 1966, in CONCISE INTERNATIONAL ARBITRATION 977 (Loukas Mistelis ed. 2nd ed. Kluwer Law International, 2015). 6 United Kingdom Arbitration Act, 1996, Id. § 4, Schedule 1. 7 French Code of Civil Procedure, 1806, [Law 2011-48 of Jan. 13, 2011 on Reforming the Law Governing Arbitration], available at http://www.iaiparis.com/pdf/FRENCH_LAW_ON_ARBITRATION.pdf; Denis Bensaude, French Code of Civil Procedure, in CONCISE INTERNATIONAL ARBITRATION, 1133 (Loukas Mistelis ed. 2nd ed. Kluwer Law International, 2015). 2 Private International Law Act of 19878 distinguish between domestic and international arbitration and adopt a ―hands-off‖ approach in relation to the role of the national courts. Those courts‘ jurisdiction is activated only when the parties so wish or there is a risk of denial of justice. However, they largely wait for arbitral tribunals to make a determination at the first instance. Both the French and Swiss Law provide full support for party autonomy. Although it is commonplace that the UNCITRAL Arbitration Model Law, in its 1985 and 2006 versions9 represents best international standards, in that it provides a clear and predictable system for court support and fully respects party autonomy, it appears that two thirds of arbitration cases are seated in non-Model Law countries. The UNCITRAL Model Law operates on the basis of territoriality: that the jurisdiction of courts is activated using the seat of arbitration as the only connecting factor. It is the view of this author that this is a rather unintended consequence of the Model Law drafting; the drafters wanted to have a clear provision of the (territorial) scope of application of the Law rather than intended to localize arbitration supervision and support. In particular, Article 1 of the Model Law clearly intended to provide for the instances in which the Law applies and in doing so, it is a unilateral conflict of laws rule, i.e. a self-limiting rule setting out the scope of application of the law. However, it may well be argued that the drafters did not intend to denounce the concept of delocalization.10 8 Federal Statute on Private International Law Act, 1987 (c. 12) (Switz.), [hereinafter Swiss PIL] available at https://www.swissarbitration.org/sa/download/IPRG_english.pdf; von Segesser & Anya George, Swiss Private International Law Act, in CONCISE INTERNATIONAL ARBITRATION, 1189 (Loukas Mistelis ed. 2nd ed. Kluwer Law International, 2015). 9 Model Law on International Commercial Arbitration of the United Nations Commission on International Trade Law, G.A. Res. 40/72, U.N. Doc. A/RES/40/72 (Dec. 11, 1985), available at http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1985Model_arbitration. html; Stavros Brekoulakis, et al., UNCITRAL Model Law on International Commercial Arbitration (1985/2006), in CONCISE INTERNATIONAL ARBITRATION 835 (Loukas Mistelis ed. 2nd ed. Kluwer Law International, 2015). 10 HOWARD HOLTZMANN & JOSEPH NEUHAUS, A GUIDE TO THE UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION: LEGISLATIVE HISTORY AND COMMENTARY 1, 592-593, 826 (Kluwer Law International 1989). It appears that the delocalization debate did not play a major role in the UNCITRAL Model Law drafting. Quite to the contrary, the commentary clearly states that the seat of arbitration (―place‖ in the terminology of the Model Law) determines: whether the Model Law applies, whether courts of the place will supervise and/or assist the arbitration, whether the arbitration is international or not and also determines where the award is being made. 3 At the same time, it is undisputed that they also wished to achieve a high level of legal certainty as to the applicable law and this has been achieved.11 Presently, 72 States and 102 jurisdictions have adopted the UNCITRAL Model Law.12 However, it seems that the Model Law alone is not sufficient to establish a jurisdiction as a desirable seat of arbitration.13 One cannot underestimate the importance of the local judiciary, legal and ancillary professions, and general infrastructure such as hotels, transport links and hearing rooms. In addition, sustained marketing through conferences, tax incentives and promotion through arbitration institutions also appear to be of significant value. And the competition is rather fierce! One particular aspect of localization of arbitration relates to the exclusive jurisdiction of courts at the seat of arbitration to review arbitral awards. In this respect, parties to arbitration proceedings can typically only challenge an award before the courts at the place14 of arbitration, assuming the courts at the place of arbitration consider the award ―made‖ or ―deemed to be have been made‖ in its territorial jurisdiction. National arbitration systems consider awards either domestic or foreign, with few systems offering the option of ‗international awards‘, i.e. domestic awards unconnected to the place of arbitration and not subject to the law of the place of arbitration.15 In this context, the seat of arbitration provides the absolute and exclusive connecting factor. In the opposing camp, the delocalization supporters challenge the importance of the seat of arbitration and the relevance of the law and the courts over arbitral proceedings within their territorial jurisdiction. The supporters of delocalization challenge the importance of the seat on several grounds. In particular, the choice of seat is often a matter of convenience; the choice of seat is often determined not by the parties but by the arbitral institution they have selected; the choice of seat is often governed by 11 The scope of application is well established in Article 1 of the Model Law and this is confirmed largely by the relevant case law. See, UNCITRAL 2012 Digest of Case Law on the Model Law on International Commercial Arbitration, p. 7, et. seq., available at http://www.uncitral.org/pdf/english/clout/MAL-digest- 2012-e.pdf [―UNCITRAL Digest 2012‖]. 12 See http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1985Model_arbitration_status.html (Jan. 28, 2016). 13 The surveys cited in supra note 1 confirm that the three most important arbitral seats (London. Paris, Geneva and Zurich) are in jurisdictions which have not adopted the UNCITRAL Model Law. 14 We use the terms (legal) seat and (legal) place of arbitration interchangeably to denote the connection of arbitration with the local law and the jurisdiction of local courts. The English Arbitration Act refers to set or juridical seat (section 3) while the UNCITRAL Model Law refers to place of arbitration. 15 See the distinction in the French Arbitration Law 2011: actions against domestic awards pursuant Articles 1494 et seq.; actions against awards made in France in international arbitration pursuant Articles 1518 et seq.; actions against awards made abroad pursuant Articles 1525 et seq. 4 the desire for neutrality; and the role of the arbitral tribunal is transitory and the seat has no necessary connection with the dispute.16 The main argument against delocalized arbitration is that arbitration cannot operate in a legal vacuum and review of awards at the place of arbitration is a fair price to pay for predictability and certainty. At the very least, ultimately, the parties will expect the law to recognize and give effect to the tribunal‘s award. There are other areas where the support of the courts may be needed, e.g. to uphold and enforce the agreement to arbitrate, to appoint or remove arbitrators, and for interim relief in support of the arbitration process. National courts are often asked to support or intervene for these purposes. This is why arbitration cannot be fully delocalized from the national law.17 In fact, delocalized arbitration is self-regulatory arbitration. However, it must also be noted that delocalization relates usually either to the arbitration process or to the award, or both.18 While the emancipation from the procedural law of the place of arbitration is now accepted19 and most systems have very limited mandatory provisions relating to arbitral procedure, the enforcement of delocalized awards appears to be problematic- ultimately, the enforcement is controlled by national courts. However, at least French and US courts20 (but also Austrian, Dutch and a few other courts) have 16 Roy Goode, The Role of the Lex Loci Arbitri in International Commercial Arbitration, 17 ARB. INT‘L. 19 (2001), at 13. For a comprehensive summary. Loukas Mistelis, Delocalization and its Relevance in Post-Award Review, Queen Mary School of Law Legal Studies Research Paper No. 144/2013 (May 8, 2013), available at SSRN: http://ssrn.com/abstract=2262257 [―Mistelis-Delocalization‖]. 17 William Park, The Lex Loci Arbitri and International Commercial Arbitration, 32 I.C.L.Q. 21 (1983); Stewart Boyd, The Role of National Law and the National Courts of England, in CONTEMPORARY PROBLEMS IN INTERNATIONAL ARBITRATION 149 (Julian Lew ed. Kluwer Law International, 1986). 18 Mistelis-Delocalization, supra note 16. 19 Loukas Mistelis, Reality Test: Current State of Affairs in Theory and Practice Relating to "Lex Arbitri, 17(2) AM. REV. INT'L ARB. 155 (2006). 20 Société Hilmarton Ltd v Société Omnium de traitement et de valorisation, Cour de cassation [Cass.] [Supreme Court for judicial matters], (OTV), 121 Clunet 701 (1994) (Fr.); In re Chromalloy Aeroservices Inc and The Arab Republic of Egypt, 939 F Supp 907 (DDC 1996), XXII YBCA 1001 (1997) 1004; République arabe d'Egypte v Chromalloy Aeroservices Cour d'appel de P [CA] [Court of Appeal], Paris,, XXII YBCA 691 (1997) (Fr.). 5