In conversation with Mr. Sahil Narang over recent developments in Arbitration

Mr Sahil Narang is an Advocate-on-Record, Supreme Court of India, and Partner of the disputes team at Khaitan & Co. He has earned his LLB from the Department of Laws, Panjab University, Chandigarh, and LLM from NALSAR in 2010. Sahil Sir has over 9 years of experience in advising and representing domestic and international clients in commercial litigations and arbitrations. Sir has been extensively dealing with emerging areas of law such as food safety, data privacy, insolvency and bankruptcy and has advised various domestic and global clients on issues involved in these areas of law. Sir has also assisted and appeared before the domestic Arbitral Tribunals as well as institutional Arbitral Tribunals constituted under the SIAC, ICC and LCIA, amongst others.

1. Please tell us about yourself, and what inspired you to pursue law?

I hail from Abohar, a small town in the interiors of Punjab. I did my schooling from Abohar. My father was a lawyer practising at the City Civil Courts there. I grew up to see my father, working hard as a lawyer which inspired me to pursue law. I completed graduation from DAV College, Chandigarh and secured my law degree from one of the oldest institutions in the region, the Department of Laws, Panjab University, Chandigarh. After a short stint at the courts at Chandigarh, I got admitted to the LLM programme at the NALSAR University of Law, Hyderabad. I earned the LLM degree and got a job offer post a short internship at Khaitan & Co., Delhi, way back in 2010. I rose from being an intern at Khaitan & Co. to a partner in a span of 8 years. I have been working with the disputes team at Khaitan & Co., Delhi and have handled complex commercial litigations and arbitrations.

2. Please tell us about your experience as an Advocate-on-Record and how it helps you in a law firm? Also tell us about your area of practice.

I have been fortunate enough to gain vast experience in advising and representing domestic and international clients in commercial litigations and arbitrations in the last 14 years at Khaitan & Co. I have dealt with a broad variety of complex disputes including corporate frauds, corporate family disputes, shareholder disputes and have represented clients before various fora across India. I regularly advise on regulatory issues as well as litigations before the Supreme Court, various High Courts and tribunals in India. I also represent clients in the entertainment and cinema industry across multiple fora. I continue to deal with emerging areas of law such as sports, data privacy, insolvency and bankruptcy and have advised various domestic and global clients on issues involved in these areas of law on multiple occasions. I continue to assist and appear before the domestic Arbitral Tribunals as well as institutional Arbitral Tribunals constituted under the Singapore International Arbitration Centre (SIAC), International Chamber of Commerce (ICC), amongst others.

As I was exposed to high-stakes litigation before the Supreme Court during my formative years, I developed a keen interest in the practice and procedure of Supreme Court as a natural consequence. I therefore applied and cleared the Advocate-on-Record examination of the Supreme Court of India in the year 2018. Being an AOR is extremely advantageous even if you are working in a law firm. It allows you to file in the name of the firm. Notably, a partnership having all AORs as partners can be registered as an AOR firm and can file in its name before the Supreme Court. Lawyers and clients also approach the AORs directly for a matter to be filed before the Supreme Court. Being an AOR has helped build my profile before existing and prospective clients.

3. What are your views on the importance of substantive laws in arbitration, especially the Contract Act?

It is extremely critical to consider the substantive laws while drafting the arbitration agreement because this law will essentially govern the issues on merits and affect their outcome. Therefore, it is important to consider the potential issues that might arise and how the proper law of the contract deals with those issues. For instance, whether the substantive law of the contract is English law or Indian law will have an impact on how the Arbitral Tribunal interprets the liquidated damages clause. This is because there may be a considerable difference between Indian law and English law as far as the law on liquidated damages is concerned. Another point one must keep in mind is that in the absence of an express stipulation, the proper law of the contract will usually be the law governing the arbitration agreement as well, which might also have an important role to play if a dispute arises.

4. What are your views on the quasi-unilateral appointments from a panel of arbitrators? Do you support the view of Justice Nariman in Tantia Construction?

Although one may have to argue both sides of a proposition for a client, in my personal opinion, quasi-unilateral appointments from a panel of arbitrators may not be a reasonable way of constitution of the Arbitral Tribunal. I quite understand the appeal of quasi-unilateral appointments as these can expedite the process of appointment of arbitrators, ensuring a more efficient process. However, there is a genuine apprehension that quasi-unilateral appointments might undermine the fundamental principle of neutrality and independence of arbitrators. The risk of bias towards the party that enjoys the quasi-unilateral right to appoint an arbitrator is concerning. This could potentially lead to an imbalance of power and perceptions of unfairness during the arbitration proceedings. Considering an arbitration proceeding owes its inception to mutual consent of the contracting parties, it is equally important to ensure independence and impartiality, which in fact has also been emphasised by the Supreme Court and High Courts repeatedly and a quasi-unilateral appointment might skew that perception. Therefore, quasi-unilateral appointment is a road one must tread carefully.

In my opinion, the view taken by Justice Nariman in Union of India v. Tantia Constructions Ltd.¹ while referring the issue of the correctness of the judgment in Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML (JV)², to a larger Bench furthers the concepts of independence and impartiality. This also gels with the pro-arbitration stance taken by the judiciary in recent times. This is also important because Government is the biggest litigant in the country and the case at hand deals with such clauses which are prevalent in government contracts.

5. What are your views on the recent Constitutional Bench judgment on the issue of stamp duty on arbitration agreements? Do you think this judgment would be roadblock for stakeholders?

The recent N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd.³ has definitely sprung surprise issues on the practitioners of law. Given the three-Judge Bench judgment earlier, it was expected that formalities like stamp duty would be sidelined in an attempt to encourage arbitration. However, the sentiment underlying the N.N. Global judgment⁴ seems to be that stamp duty, which is a major source of revenue for the public exchequer, cannot be treated as a mere technicality. While the principle is appreciated, the judgment has gone so far as to hold that the underlying agreement would not even be considered a contract. The implications of such a finding would be far-reaching, particularly in executed contracts, where the term of the contract is limited. The judgment has definitely raised some intriguing questions of law that remain unanswered, and we will desperately be seeking development of appropriate jurisprudence on the same.

6. Recently Delhi High Court held that a third-party funder should not be liable to pay costs awarded against a party it has funded, what is your view on this?

From a normative point of view, I do not see any reason why a funder should escape the liability of cost if the litigation is unsuccessful when the same funder would be able to reap the benefits if such litigation turns out to be successful. In other words, such a funder is involved in such a litigation for all intents and purposes and should not be allowed to avoid the liability on the grounds of mere technicality. However, the liability must be imposed in accordance with law. Having that said, I agree with the reasoning of the Delhi High Court in Tomorrow Sales Agency (P) Ltd. v. SBS Holdings Inc.⁵ It is however a bit far-fetched to enforce an award against an entity which is not even a party to the arbitration proceedings. It ought to be done only in accordance with the tests laid down by the Supreme Court in Chloro Controls (India) (P) Ltd. v. Severn Trent Water Purification Inc.⁶ and the subsequent cases.

7. Do you think we need statutory recognition for third-party funding for its uniform implementation?

While litigation funding is booming and we are seeing a lot of startups coming up, there are severe limitations on the powers of an arbitrator or a Judge, as regards to a third-party funder. As a legal system, our endeavour should be to avoid such “hit and run” arbitrations by the third-party funders which involve a considerable risk asymmetry. Moreover, there might be a severe imbalance of bargaining power which might often lead to inequitable outcomes as far as third-party funding is concerned. Therefore, I believe that the statutory recognition of the third-party funding would be a positive step. However, I say so with a caveat that the extent of regulation of the same must be kept in check.

8. Our Chief Justice of India emphasises on inclusivity in the legal profession. In this context I would like to ask how students from traditional law schools can secure internships or placements in a Tier-1 law firm, provided that Tier-1 firms have been dominated by premium law schools in India.

I believe that one can easily stand out by gaining substantial internship experience from diverse places before applying to a Tier-1 law firm. In my experience, a significant value is attached to your work experience. Merit and hard work always go a long way. In addition, being an active student always helps. For instance, if your CV shows that you have been involved in things like publications, moot court competitions, certificate courses, etc., it certainly creates a fine impression in the minds of the reader. Further, in my personal experience at Khaitan & Co., there has been a greater diversity in terms of the colleges from which students are coming to Khaitan as interns as well as associates, and I am extremely pleased with the same. In fact, even I completed my LLB. from a non-NLU, and I started my career at Khaitan & Co. This is true for several of my colleagues as well.

9. As an expert in this field, any advice to young advocates and law students who wish to build a career in arbitration.

While one may specialise in a particular field of dispute resolution, it is extremely important to work in as many areas of disputes, during your formative years, as is possible. This helps in overall development as a grounded professional. To the young advocates and law students who are starting out, my advice would be: stay passionate about your work, maintain a strong work ethic and professionalism, and maintain your curiosity about everything around you. It is extremely important to keep abreast of developments in the field of arbitration both at the domestic level as well as internationally. One must also read views of celebrated Indian as well as foreign authors on arbitration which serve as a guiding light in forming views on the subject.