By Advocate & IP Anil Chawlaindialegalhelp.com/files/arbitrationclause.pdfAnil Chawla Law Associates...

Presentation at

Annual ConferenceOrganized byOrganized by

The Institute of Company Secretaries of India

On 15th September 2019

At Motel Shiraz, Bhopal

By Advocate & IP Anil ChawlaSenior Partner,

Anil Chawla Law Associates LLP

www.indialegalhelp.com

This Presentation gives the presenter’s views on the subject. It gives no legal advice. It is not intended to be either complete or exhaustive narration of the subject.

A. Understanding Arbitration

A1. Domestic vs. International Arb.

B. Ad-hoc Arbitration Key

Points

B1. Domestic in IndiaA2. Domestic vs. Foreign Award

A3. Place – Seat and Venue

A4. Ad-hoc vs. Institutional

A5. Format of Agreement

A6. Key Issues

Copyright - Anil Chawla Law Associates LLP 2September 2019

B1. Domestic in India

B2. Domestic outside India

B3. International In India

B4. International Outside India

This Presentation as well as our Guide on the subject available at www.indialegalhelp.com

A1. Domestic vs. International Arbitration

Commercial Arbitration

Domestic Arbitration International Arbitration

4Copyright - Anil Chawla Law Associates LLPSeptember 2019

Site in India

Domestic Award

Site outside India

Domestic Award

Foreign Award

Site in India

Domestic Award

Site outside India

Domestic Award

Foreign Award

A1. Domestic vs. International Arb. (Continued)


Section 2(f) of The Arbitration and Conciliation Act, 1996

A1. Domestic vs. International Arb. (Continued)

For arbitration to be “international”, at least one of the parties ought to be:

� Indian citizen (passport-holder) living outside India

� Citizen of any country other than India

� Company incorporated outside India (even when the company is owned


wholly by Indian resident citizens)

� A NGO whose central management and control is exercised from outside

India (even when the controlling office located outside India is operated

wholly by Indian citizens)

� A foreign government

Relationship ought to be (a) legal (b) commercial. Need not be contractual.

Absence of a contract does not create a bar.

A2. Domestic vs. Foreign Award


Section 44 of The Arbitration and Conciliation Act, 1996

A2. Domestic vs. Foreign Award (Continued)


First Schedule of The Arbitration and Conciliation Act, 1996

A3. Seat / Place & Venue

� Parties to an Agreement are free to decide the seat or place of arbitration.

� Seat of arbitration is not just a geographical decision.

� Seat determines the courts under whose judicial supervision and control.

� Seat has to be differentiated from venue of arbitration.


� Seat has to be differentiated from venue of arbitration.

� Proceedings may be held at different places and even by video

conferencing. Notwithstanding meetings at different places, courts at the

seat will have jurisdiction over the arbitration.

� Seat is decided by the Parties. Venue(s) is / are decided by the arbitrators.

� There may be more than one venue, but there will be only one seat of

arbitration.

� Seat / place determines whether award is domestic or foreign.

A4. Ad-hoc vs. Institutional

The following define whether arbitration is ad-hoc or institutional:

� Venue - Arbitration Institution provides basic infrastructure.

� Panel of Arbitrators - Appointment of arbitrators from Arbitration Institution’s panel.


� Panel of Arbitrators - Appointment of arbitrators from Arbitration Institution’s panel.

� Appointing Authority - Arbitration Institution has authority to appoint the arbitrators.

� Administration of Arbitration - Arbitration Institution provides administrative services like

sending notices etc.

� Rules of Arbitration - Parties may accept the Arbitration Institution’s rules or may choose

some other rules. For example, arbitration conducted at London Court of International

Arbitration using UNCITRAL Rules.

A4. Ad-hoc vs. Institutional (Continued)

Parameter Ad-hoc Arbitration Institutional Arbitration

Administration Low efficiency High efficiency

Reputation Depends on individual

arbitrators

High depending on

institution


arbitrators institution

Costs Less expensive More expensive

Control Completely by parties Professionally by the

Institution

Flexibility More flexible Less flexible

Supervision No supervision By the Institution

Remuneration of

Arbitrators

Depends on individual

arbitrators

Decided by Institution

A5. Format of Agreement

� Need not be a formal agreement.

� E-mail correspondence can amount to an agreement.

� Must be in writing (other than oral).


� Must be in writing (other than oral).

� May be part of an agreement or may be a separate arbitration agreement.

� Defined legal relationship is must. Non-contractual but commercial relationships are

covered.

� Under law, no format for either arbitration clause or arbitration agreement.

� Institutions often have their standard clauses.

A5. Format of Agreement (Continued)


A6. Key Issues

� Law - (a) the law that will govern the Agreement (Law of one country or the other or UNIDROIT

Principles of International Commercial Contracts) (b) law for the arbitration and (c) the law

controlling conduct of arbitration (Rules of one country or the other or of the institution or UNCITRAL

Rules).


� Place / Seat and Venue (as discussed in previous slides).

� Appointment of Arbitrators - Provide procedure for appointment of arbitrators.

Either be ad-hoc or institutional.

� Appointing Authority - Ad-hoc or institutional.

� Qualification of Arbitrators - Neutral, impartial and independent of both the

parties.

� Language - Must be stated in explicit terms without any ambiguity.

A6. Key Issues (Continued)

� Number of Arbitrators - Always odd in numbers. Single arbitrator also possible.

Presumed to be single under Indian law. Presumed to be three under UNCITRAL.



� Powers of Courts – In case of international arbitration, the Parties may decide to

stop application of sections 9, 27 and 37(3) and 37(1)(b).


Sub-section 2(2) of the Arbitration and Conciliation Act, 1996






� Appeal / Two Stage Process – First stage may have a solo arbitrator with second

stage having three arbitrators.

� Costs – Often each side bears his own costs, Pay your own way (PYOWA) /

Unsuccessful bears the full costs, Costs follow the event (CFTEA). (Sub-section 31A(2)


Unsuccessful bears the full costs, Costs follow the event (CFTEA). (Sub-section 31A(2)

of the Arbitration and Conciliation Act, 1996).

B1. Domestic in India

� Takes place between two Indian Parties.

� Jurisdiction is of Indian law as well as Indian courts.

� Part I of The Arbitration and Conciliation Act, 1996 is applicable.

Key points:


Law governing Agreement Has to be necessarily Indian law.

Law for arbitration The Act

Curial Law Need not be specified as the arbitration is under

provisions of the Act.

Place of arbitration Seat to be at a place within India. For the sake of

convenience, meetings / proceedings may be held

alternately at the respective cities of the parties.

B1. Domestic in India (Continued)

Number of Arbitrators Three is almost the norm.

Appointment of Arbitrator Each party to appoint one arbitrator. The two arbitrators to

select the Presiding Arbitrator.

Appointing Authority Need not be specified since section 11 of the Act provides

the powers to High Court.


Qualification of Arbitrators If some technical knowledge is required, advisable to

specify.

Language English unless both parties are comfortable with some

other language.

Appeal Not recommended

Costs During the proceedings each party bears its own.

Cost Allocation – By the Arbitration Panel in award.

B2. Domestic Outside India

� Unusual situation. To be resorted to only when there are compelling reasons.

Law governing

Agreement

Has to be necessarily Indian law.

Law for arbitration Parties are free to choose. If Indian law is not

chosen, please take care to mention that Part I of


chosen, please take care to mention that Part I of

the Act will NOT apply.

Curial Law UNCITRAL Rules / ICSID Rules are two common

options.

Place of arbitration A neutral location may be chosen. The country

where the foreign parent is located will put the

other party at a disadvantage and should hence be

avoided by the other party.

B2. Domestic Outside India (Continued)


Appointment of

Arbitrator

Each party to appoint one arbitrator. The two

arbitrators to select the Presiding Arbitrator.

Appointing Authority Need not be specified since the chosen Curial Law

will often have a provision.


Qualification of

Arbitrators

If some technical knowledge is required, it is

advisable to specify.

Language English unless both parties are comfortable with

some other language.




B3. International in India� Law governing the agreement is a critical issue. Six options for an India-UK agreement:

a) This Agreement shall be governed by Indian law. OR

b) This Agreement shall be governed by the law of UK. OR

c) This Agreement shall be governed by the UNIDROIT Principles of International Commercial

Contracts (2016). OR

d) This Agreement shall be governed by the UNIDROIT Principles of international Commercial


d) This Agreement shall be governed by the UNIDROIT Principles of international Commercial

Contracts (2016) and, with respect to issues not covered by such Principles, by generally accepted

principles of international commercial law. OR

e) This Agreement shall be governed by the UNIDROIT Principles of International Commercial

Contracts (2016) and, with respect to issues not covered by such Principles, by the law of India.

OR

f) This Agreement shall be governed by the UNIDROIT Principles of International Commercial

Contracts (2016) and, with respect to issues not covered by such Principles, by the law of UK.

B3. International in India (Continued)

Law governing

Agreement

One of the six options given above.

Law for arbitration Part I of Arbitration and Conciliation Act, 1996 will

apply.




options.

Place of arbitration Specify the place in India.


Appointment of

Arbitrator

Each party to appoint one arbitrator. The two

arbitrators to select the Presiding Arbitrator.

B3. International in India (Continued)

Appointing Authority Need not be specified since the Act has a provision

for Supreme Court of India to act as Appointing

Authority.

Qualification of

Arbitrators

If some technical knowledge is required, it is

advisable to specify.


Language English unless both parties are comfortable with some

other language.




B4. International Outside India

� Arbitration law should be of the country where arbitration is proposed to be held.

Law governing

Agreement

One of the six options given in the previous chapter

about international arbitration in India.

Law for arbitration Arbitration law of the seat of arbitration to apply. Part I


Law for arbitration Arbitration law of the seat of arbitration to apply. Part I

of Arbitration and Conciliation Act, 1996 will NOT

apply.


options.

Place of arbitration Specify the place outside India.


B4. International outside India (Continued)

Appointment of Arbitrator Each party to appoint one arbitrator. The two arbitrators to

select the Presiding Arbitrator.

Appointing Authority May be left to the Curial Law.

Qualification of Arbitrators If some technical knowledge is required, it is advisable to

specify.


specify.

Language English unless both parties are comfortable with some other

language.




Copyright - Anil Chawla Law Associates LLP 30

www.indialegalhelp.com

[email protected]

September 2019

Anil Chawla Law Associates LLP is registered with limited liability and bears LLPIN AAA-8450.

This Presentation is an academic exercise. It does not offer any advice or suggestion to any individual or firm or company. While all efforts have been made to ensure accuracy and correctness of information provided, no warranties / assurances are provided or implied. Readers are advised to consult a Legal Professional / Company Secretary / Chartered Accountant before taking any business decisions. Anil Chawla Law Associates LLP does not accept any liability, either direct or indirect, with regard to any damages / consequences / results arising due to use of the information contained in this Presentation.

Date post:	10-Aug-2020
Category:	Documents
Upload:	others
View:	1 times
Download:	0 times

By Advocate & IP Anil Chawlaindialegalhelp.com/files/arbitrationclause.pdfAnil Chawla Law Associates...

Documents