2023-09-26 MNLU Mumbai - Talk on International Arbitration.pptx

INTRODUCTION TO
INTERNATIONAL
ARBITRATION
HASIT B. SETH
Maharashtra National Law University, MNLU
26 September 2023
(c) Hasit Seth, 2023

Introduction
♔Name: HASIT B. SETH
♔I am a disputes lawyer in India. My practice focuses on
commercial dispute resolution covering IP, construction,
contracts in litigation and arbitrations
♔I am licensed to practice law in New York and India
♔You are welcome to connect at
https://www.linkedin.com/in/hbs and keep in touch

Outline
♔ A problem to think about
♔ Core Concepts: Place (Seat), Governing Laws
♔ India seated International Arbitrations (IA)
♕ Appointments
♕ Award Challenge
♔ “New York” Convention
♔Foreign Awards
♕ Recognition
♕ Defences
♕ Enforcement

A Problem To Think About
International Trade

A Trade Transaction
Buyer
Seller
India China
Indian
Court
Chinese
Court
Contract
Toasters

A Trade Transaction
Buyer
Seller
India Indonesia
India
Seated
Arbitration
Indonesian
Seated
Arbitration
Contract
Toasters

A Trade Transaction
Buyer
Seller
India Indonesia
London
Seated
Arbitration
Contract

A Trade Transaction
Buyer
Seller
India China
Contract
CONTRACT
TERMS
Arbitration
Agreement /
Clause
Institutional
Rules

A Trade Transaction
Contract
CONTRACT
TERMS
Arbitration
Agreement /
Clause
Institutional
Rules
Governing Law of
Contract
a.k.a. Substantial
Law, Proper Law
- provides contract
law rules for
contract
interpretation and
application
Governing Law of Arbitration Agreement determined
by place / seat of arbitration
a.k.a. Lexi Arbitrii, Law of the Seat, Lex Situs, Lex Loci,
Curial Law, etc.
- governs interim relief, assistance of local courts and
challenge to the award.
UNCITRAL, LCIA,
ICC, MCIA, etc.
Law of Arbitration
Agreement / Contract

Considerations In Dispute Resolution
♔ Neutrality
♔ Efficiency
♔ Enforceability
♔ Legal Systems
♔ Predictability

Neutrality
♔ Arbitrator
♔ Forum
♔ Institution
♔ Court

International Trade
An Overview of Scale

World Trade, 2021. Source: https://unctad.org/news/global-trade-hits-record-high-285-trillion-2021-likely-be-subdued-2022

Dispute Resolution In
International Trade
International Framework

The Ecosystem of International Dispute Resolution
♔ UNCITRAL – Neutral Rule Maker
♔ UNCITRAL Model Law
♔ UNCITRAL Arbitration Rules
♔ UNCITRAL Notes of Organising Proceedings (NOAP)
♔ UNCITRAL Guidance on Arbitral Institutions
♔London Court of International Arbitration, LCIA since 1892
♔ International Chambers of Commerce, ICC since 1919
♔ Permanent Court of Arbitration, PCA since 1899
♔ SIAC, DIAC…
♔ Mumbai Centre for International Arbitration, MCIA since 2016
♔ And many others…

UNCITRAL PUBLICATIONS

Supplementary Materials

Indian Legislation
1899 1940 1961

Arbitration & Conciliation Act, 1996

Geneva Convention
♔ Geneva Protocol on Arbitration Clauses of 1923
♔ Geneva Convention on the Execution of Foreign Arbitral
Awards of 1927
♔ Arbitration & Conciliation Act, 1996
♕ S.53-60
♕ “Geneva Convention Awards”
♕ 2nd and 3rd Schedules
♔NY Convention, Art.VII (2)
♕ “2. The Geneva Protocol on Arbitration Clauses of 1923 [2] and the
Geneva Convention on the Execution of Foreign Arbitral Awards of
1927 [3] shall cease to have effect between Contracting States on their
becoming bound and to the extent that they become bound, by this
Convention.” (es)

Two Types of International Arbitrations
♔ “Place” (Seat) is India
♕ Part 1 of the Act – S.1 to 43
♕ Deals with Domestic arbitration
♞ place is in India, both parties are Indians
♕ India seated international arbitration
♞ Place is India
♞ At least one party is not Indian
♔ Place is anywhere but India
♕ Part II: “Enforcement of Certain Foreign Awards”
♕ S.44 to S.60

Place / Seat is India
International Arbitrations Seated In India

Definition - Source
♔ S.2(f) “international commercial arbitration”
♔ Disputes - contractual or not – commercial under Indian
law
♔ At least one of the parties is—
♕ (i) Individual - nationality or habitually residence not in India
♕ (ii) Incorporated – not in India
♕ (iii) AOP - central management and control is not in India
♕ (iv) Foreign Government

Court
♔S.2(e) – “court”
♔(ii) in the case of international commercial arbitration,
♔ the High Court in exercise of its ordinary original civil
jurisdiction, having jurisdiction to decide the questions
forming the subject-matter of the arbitration if the same
had been the subject-matter of a suit, and
♔ in other cases, a High Court having jurisdiction to hear
appeals from decrees of courts subordinate to that High
Court;]

Part 1 & Part 2 Connection
♔ Proviso in S.2(2) – ”Part” refers to Part 1
♔ (2) This Part shall apply where the place of arbitration is in
India:
♔ …subject to an agreement to the contrary, the
♔ S. 9 [Interim Relief By Court], 27 [Court assistance -
evidence] and clause (a) of sub-section (1) [Refusal – refer
to arbitration] and sub-section (3) [No 2nd appeal] of
section37
♔ shall also apply to international commercial arbitration,
♔even if the place of arbitration is outside India, and
♔an arbitral award made or to be made in such place is
enforceable and recognised under the provisions of Part II
of this Act.

A&C Act, 1996: Special Provisions for International Commercial
Arbitrations (ICA)
♔ S.11(9) – SC / Designee – Sole / Third arbitrator – may
appoint arbitrator of nationality different than than the
parties
♔ Reference to HC in S.11(4), (5), (6), (7), (8) and (10) will
mean SC
♔ Fourth schedule not applicable to ICA – Explanation to
S.11(14)
♔ S.28(2) Applicable law – governing law of contract as
specified by the parties; reference to substantive law of a
country and not conflict of law principles; and if not
designated arbitrator to determine considering factors.
♔ Time limits of S.29A inapplicable.

Recognition & Enforcement
of Foreign Awards
Not Seated In India

Convention on the Recognition and
Enforcement of Foreign Arbitral
Awards
“New York Convention”
10 June 1958

Structure
♔ 16 Articles
♔ Adopted in domestic legislation
♔ A&C Act, 1996’s First Schedule
♔ 172 Countries
♔ Reciprocity reservation
♕ India is a prime example – 50 countries are notified

Art 1.1
♔ …recognition and enforcement of arbitral awards
♔ made in the territory of a State
♔ other than the State where the recognition and
enforcement of such awards are sought, and
♔arising out of differences between persons, whether
physical or legal.
♔It shall also apply to arbitral awards not considered as
domestic awards in the State where their recognition and
enforcement are sought.

Art 1.3 - Reciprocity
♔3. ..any State may on the basis of reciprocity
♔declare that it will apply the Convention to the recognition
and enforcement of awards made only in the territory of
another Contracting State.

Art.1.3 – Nature of Disputes
♔ …It may also declare that it
♔will apply the Convention only to differences arising out of
legal relationships,
♔whether contractual or not,
♔which are considered as commercial under the national
law of the State making such declaration.

Art 2 – Arbitral Agreements
♔ Writing Requirement
♕ …Each Contracting State shall recognize an agreement in
writing…”
♔ Differences: Contractual Or Not
♕“… all or any differences which have arisen or which may arise
between them in respect of a defined legal relationship, whether
contractual or not,
♕concerning a subject matter capable of settlement by
arbitration.”
♔ Mode
♕ “2. The term "agreement in writing" …arbitral clause in a contract
or an arbitration agreement,
♕ signed by the parties or contained in an exchange of letters or
telegrams. (c) Hasit Seth, 2023

Art 3 – Non-burdensome Enforcement & Recognition
♔ Recognition as Binding Awards
♕ “Each Contracting State shall recognize arbitral awards as
binding and enforce them in accordance with the rules of
procedure of the territory where the award is relied upon, under
the conditions laid down in the following articles. …”
♔ Non-Burdensome Recognition & Enforcement
♕ “… There shall not be imposed substantially more onerous
conditions or higher fees or charges on the recognition or
enforcement of arbitral awards to which this Convention applies
than are imposed on the recognition or enforcement of domestic
arbitral awards.”

Art.4 – Procedural Requirements
♔Submit
♕(a) The duly authenticated original award or a duly certified copy
thereof;
♕(b) The original agreement referred to in article II or a duly
certified copy thereof.
♕ Certified translation if not in official langugage

Art. 5.1 - Refusing to enforce
♔ Proof of:
♕ Incapacity & Invalidity
♞ (a) …parties to the agreement …under some incapacity, or the
♞ said agreement is not valid under the law to which the parties have
subjected it or, failing any indication thereon, under the law of the country
where the award was made;

♔Refusal if competent authority where recognition and
enforcement is sought is given proof of:
♕ Notice and Inability to Present Case
♞ (b) …not given proper notice of the appointment of the arbitrator or of the
arbitration proceedings or
♞ was otherwise unable to present his case

♔ Proof of:
♕ Violates Scope
♞ The award deals with a difference not contemplated by or not falling
within the terms of the submission to arbitration,
♞or it contains decisions on matters beyond the scope of the submission to
arbitration,
♝provided that, if the decisions on matters submitted to arbitration can be
separated from those not so submitted, that part of the award which contains
decisions on matters submitted to arbitration may be recognized and enforced;
or

Art. 5.1 Refusing to Enforce
♔ Defects In Tribunal
♕(d) The composition of the arbitral authority or the arbitral
procedure was not in accordance with the agreement of the
parties, or, failing such agreement, was not in accordance with the
law of the country where the arbitration took place; or
♔Award Not Binding or Set Aside
♕ (e) The award has not yet become binding on the parties,
♕or has been set aside or suspended by a competent authority of
the country in which, or under the law of which, that award was
made.

5.2 Refusal By Enforcing Court / Authority
♔ Refusal if competent authority where recognition and
enforcement is sought finds that
♕ (a) The subject matter of the difference is not capable of
settlement by arbitration under the law of that country; or
♕ (b) The recognition or enforcement of the award would be
contrary to the public policy of that country.

A&C Act, 1996 Framework

New York Convention Awards

Geneva Convention Awards
♔

Some Important Cases
♔ Bharat Aluminium v. Kaiser Aluminium, (2012) 9 SCC 552
♕ Part I applies to India seated domestic or ICA arbitrations.
♔ Chloro Controls v. Severn Trent, (2013) 1 SCC 641
♕ Group of companies doctrine – non-signatories
♔ Enercon India v. Enercon Gmbh, (2014) 5 SCC 1
♕ Closest and intimate connection test of choice of seat and law.
♔ Shri Lal Mahal v. Progetto Grano, (2014) 2 SCC 433
♕ Public policy ground to refuse enforcement of foreign award not
as wide as for domestic awards.
♔ PSL Wind v. GE Power, (2021) 7 SCC 1
♕ Two Indian parties can choose a foreign seat

Some Important Cases
♔ Noy Vallecina v. Jindal Drugs, (2021) 1 SCC 382
♕ BALCO principles reiterated. Foreign seated awards cannot be
challenged under S.34.
♔ Vijay Karia v. Prysmian Kavi, (2020) 11 SCC 1
♕ Test for inability to present the case.

THANK YOU

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