ARBITRATION & MEDIATION

Tools to Resolve Corporate Disputes

Anuroop Omkar & Kritika Krishnamurthy

ARBITRATION IN INDIALitigation with an expert adjudicator

Scheme of Arbitration & Conciliation Act, 1996

Based on UNICITRAL Model Law

Succeeded Arbitration Act, 1940

Not bound by court procedure

Arbitrability of a Dispute in India

Tort

Contractual

Claim for Winding up

Voidable Contract

Void Contract

Arbitrability of a Dispute in IndiaFRAUD

Domestic Arbitrations International Commercial ArbitrationsPart I: Section 8 Part II: Section 45

Before: Allegations of fraud and serious malpractices can only be settled by Court (N. Radhakrishnan v. M/S Maestro Engineers.2010 (1) SCC 72)

ICA with seat in India: Not arbitrable (Based on N. Radhakrishnan which is now overruled)ICA with seat outside India: Arbitrable(World Sport Group (Mauritius) Ltd. V. MSM Satellite (Singapore) Pte. Ltd. AIR 2014 SC 968)

Now: Arbitration & criminal proceedings may continue simultaneouslyContention of substantive contract being void/ voidable not bar to arbitration & court to follow the policy of least interference (Swiss Timing Ltd. v. Commonwealth Games 2010 Organising Committee, (2014) 6 SCC 677)

Only bar under Section 45- Arbitration agreement is either (i) null and void; or (ii) inoperative; or (iii) incapable of being performed.

Domestic Arbitration- Role of Courts

Party fails to appoint an arbitrator

Two appointed arbitrators fail to agree upon third arbitrator

No provision for appointment in contract

Independence or impartiality doubtful

Lacks agreed qualifications

Incapable to perform functions or acts with undue delay

Withdraws from office Mandate terminated

by parties

Before commencement by Court- Valid arbitration agreement & intention to commence arbitration or notice to other party

After commencement by Tribunal- Considered ineffective

Grounds under Section 34

HC for domestic arbitration

SC for international commercial arbitration in India

Setting aside Arbitral Award

International Commercial Arbitration

Mediation in IndiaAcross the Ages

Characteristics and Advantages

Maintain Relation

ship

Emphasize

Interests

Facilitated

Negotiation

Maintain Goodwill

Control the

Outcome

Private and

Confidential

Voluntary

Fast Cost Effective

Factors Litigation Arbitration Mediation

Time Slowest Fast Fastest

Cost High Highest Lowest

ControlParties are

passive observers

Parties are passive

observers

Parties are active

participants who find their own solution and

have control over final outcome

Possibility Win-Lose Win-Lose Win-Win

Confidentiality Lowest High Highest

Procedure & Formality Highest Higher Lowest

Distinguished

Negotiation in Mediation

Scope in Commercial Disputes

• Judicial OutlookJudicial Outlook

• Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd. (2010) 8 SCC 24

• Supreme Court on post litigation reference to mediation under Section 89 of Code of Civil Procedure, 1908

• Refer after the pleadings are complete, and before framing the issues. No reference once evidence is commenced

• Mr. Vikram Bakshi and Ors. v. Ms. Sonia Khosla [2014] 184 Comp Cas 392 (SC)

• Oppression and Mismanagement• “legal norms often diverge quite dramatically from

our notion of fairness and the notion of fairness of many disputants and the process of mediation entails the lesson that when people are put together in the same room and made to understand each other’s goals, they will together reach a fair resolution”

•

Generate awareness Remove prejudices Encourage international

best practices

Disputes as opportunity of growth not threat

Avoidant mentality

Save goodwill Confidentiality Highest success

rate

Outlook for Future

Questions