Nlsir Concept Note

Topics: Arbitration, Law, Supreme Court of the United States Pages: 5 (1916 words) Published: April 24, 2013
MAPPING THE FUTURE OF COMMERCIAL ARBITRATION IN INDIA The last three years have witnessed dynamic shifts in the law and practice of Arbitration in India. While there have been steps in the right direction, an unwieldy system continues to weigh down practitioners. Four years after first delving into the nuances of commercial arbitration in India, the NLSIR Symposium (now in its sixth edition) hopes to assess the development of Arbitration Law over the last few years. Day One focuses on the judiciary and its reading of the Arbitration and Conciliation Act, 1996. Day Two focuses on the structural changes needed in the Indian system, for dealing with matters under the 1996 Act as well as under Bilateral Investment Treaties. Session I: The Implications of BALCO on Arbitration Practice On the 6th of September 2012, the Supreme Court delivered its much-awaited verdict in Bharat Aluminium v. Kaiser Aluminium. The decision was widely lauded and, in the eyes of most commentators, set right the perceived wrongs of Bhatia International and Venture Global. However, the impact of this decision is yet to be discussed in detail. The first session of the Symposium focuses on four specific questions arising out of the judgment. First, it may be observed that Justice Nijjar’s opinion looks beyond merely a harmonious construction of the Arbitration and Conciliation Act, 1996. The Court deemed it “necessary to analyse the text of the Arbitration Act, 1996 with reference to its legislative history and international conventions”. Consequently, the Court notes the Act’s moorings in the UNCITRAL Model Law and the principle of territoriality embedded therein. Interestingly, the text of s. 28 and s. 45 of the Act both seem to suggest that the territorial basis of the Act may not be absolute. Was the Supreme Court’s decision justified in light of the text of the statute? Second, the Court veered away from treating s. 9 as sui generis. The primary impact of such a move is that parties no longer have the right to seek interim relief in Indian Courts, an option that practitioners say severely constrains proceedings especially when a party has assets located in India. The Consultation Paper produced by the Ministry of Law and Justice hinted at ‘practical problems’ arising if s. 9 was not available. However, it clearly highlighted that changes, if any, would have to be made through legislative intervention, a view echoed by the Supreme Court.

Consequently, parties may be forced to get interim relief from a foreign court and then seek its enforcement in India. How will Indian courts and practitioners respond to such a development? Third, the court’s decision to apply the decision prospectively has surprised observers. From a practical perspective, it will ensure that, for the foreseeable future, the Bhatia International approach will continue to dominate the arbitration landscape. Will there be a raft of amendments to pre-existing arbitration agreements, or will parties prefer to keep open the option of interim remedies? Fourth, it has been suggested that the clarity introduced by the decision will encourage investors to choose India as a destination for arbitration. Another view is that parties dealing with Indian entities will insist on India being the seat of arbitration, in order to keep the option of interim relief open. In any case, it remains to be seen how foreign investors and businesses will view this decision. How will this seat-centric understanding of Arbitration Law affect the choice of law issues arising between parties? How will this decision affect India’s position as an arbitrationfriendly location? Session II: Revisiting the Expansive Role of the Indian Judiciary and its Implications Four years ago, the 2nd NLSIR Symposium raised important questions regarding the role of the judiciary in the functioning of the Arbitration Act, 1996. It was mooted that “there is certainly no doubt that the Supreme Court has...
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