The 7th Edition of the ICC India Arbitration Day was held in Delhi on 16th November 2024. The session brought together more than 200 arbitration experts, practitioners, in-house counsel, and speakers from India and abroad to delve into various emerging issues in arbitration. The conference focused on the latest developments, challenges, and best practices in arbitration.
The Conference featured exciting panels on topical issues in arbitration including the mock ICC Court Session on the challenge of arbitrators. It provided a platform for participants to exchange insights on how to streamline arbitration processes, ensure fair resolutions, and foster confidence in arbitration as an effective means of resolving cross-border disputes.
The conference began with welcome remarks by Mr. Tejus Chauhan Director, Arbitration and ADR, South Asia, ICC Dispute Resolution Services, and an opening address by Ms. Claudia Salomon, President, ICC International Court of Arbitration.
In her opening address, Ms. Salomon talked about how ICC has become global with many of its members and arbitrators being Asian. She elaborated upon the expedited procedure introduced by the ICC in 2017 wherein the final award is issued within 6 months from the date of the case management conference, fees is 20 per cent lesser due to an ad-valorem structure, increased predictability, and disincentive against the arbitrators to have multiple hearings as they get paid based on the amount in dispute. Lastly, she underscored the role and importance of an arbitral institution as a gatekeeper, guardian and guide of the process.
“I think of a dispute resolution process or an arbitration to be a lot like insurance, something that you need to have but hope you never need”.
-Ms. Claudia Salomon
“Parties can’t find themselves surprised that they don’t have an avenue of recourse. Parties can’t be surprised to find that they don’t have an independent, impartial, neutral institution that they trust in the moment of crisis”
-Ms. Claudia Salomon
Session I: Arbitrating beyond borders – Cross jurisdictional perspectives on effective advocacy and settlement
The first session moderated by Mr. Prakash Pillai, Managing Director, Clasis LLC and Partner, Clyde & Co Clasis Singapore Pte. Ltd., Singapore, consisted of four panelists namely, Ms. Sara K Aranjo, Partner, Morgan Lewis & Bockius LLP. Dubai and Member, ICC International Court of Arbitration, Mr. Andrew Cannon, Partner and Global Co-Head International Arbitration Practice, Herbert Smith Freehills, London, Ms. Shruti Sabharwal, Partner, Shardul Amarchand Mangaldas, Delhi, and Mr. Abraham Vergis, Senior Counsel; Managing Director, Providence Law Asia, Singapore.
This session discussed the various challenges and opportunities surrounding cross-border arbitration in a globalized world, with an emphasis on settlement and effective advocacy.
Moderating the session, Mr. Pillai glanced through the discussions that the panelists undertook. Talking about the practical aspects he underscored the importance of understanding the arbitral tribunal; arbitrator; opposite parties in order to maximise the prospects of success.
Mr. Pillai opened the stage for Ms. Sara to seek her opinion on cultural differences. Ms. Sara shared with the audience that arbitration is catering to international needs; it is essential at the same time to cater to domestic disputes. Sharing an anecdote to reflect on the diversity and the role played by it, she discussed with the audience that in an arbitration seated in Geneva one of the witnesses was a former high-ranked military officer and a member of a royal family from the Arabian Gulf. The members of the tribunal were predominantly from Western Europe and throughout the cross-examination process, which lasted for almost four hours, and the witness was refusing to drink, eat, to take any breaks, given the technique of continental Europe counsel and cross-examination, the witness told the female counsel on the other side, that why are you doing all of this young lady? Ms. Sara elaborated that the credibility of that witness, the key witness of the case was completely lost in the eyes of the members of the tribunal.
Mr. Andrew also deliberated on the aspect of cultural diversity in arbitration raising the question that do we want a uniform arbitration culture? He stated that “International arbitration aims to draw from the best aspects of each legal tradition.” He elaborated that everything that is good is synthesized from different legal traditions and brought together into one set of procedures to avoid all the gaps.
Mr. Andrew also stated that-
“A tribunal expressly appointed as one that understands ways and cultures, can do best justice in the circumstances of that dispute.”
Taking the discussion forward Ms. Shruti agreed that indeed the international arbitration culture does exist, but she also specified that arbitration culture is not static and will keep on evolving. She highlighted that the pool of arbitrators, the diverse the better not just in terms of institutions, tribunals, but also council and parties. Advocating that presently there is an international arbitration culture, she pointed out that now Indian arbitrators are sitting more in International Tribunals. Sharing her perspective on ‘culture’, she stated that “culture will always be important for the determination of any dispute.” She also shared an anecdote from an arbitration wherein a Korean entity was involved and by the end of it how the panel and counsels tried to understand the Korean business culture.
Picking the bits from the other panelists, Mr. Abraham highlighted that there is a need to understand and appreciate the cultural diversity and the nuances in how the business is done in this part of the world (Asia). Shedding light on his perspective, as an independent counsel based in Singapore, he said that there is more and more work coming from other jurisdictions because they need a counsel who is able to communicate in English to run the case effectively. Mr. Abraham elucidated that it is a challenge for the ICC to embrace these cultural differences and to start thinking more creatively as to how international arbitrations need to be worked in Asia. Hence, he viewed that he was not in favour of ‘one-size-fits-all’ arbitration.
Developing the conversation around increasing diversity in Asia, Mr. Pillai discussed around the use of English Language and highlighted that Chinese entities press for use of Chinese in dispute resolution; hence, he pointed out that if this happens, what will become of the shared ‘international arbitration culture’.
Session II: Common Threads, Unique Perspective: Arbitration with States and State-owned entities (SOEs)
The second session was moderated by Mr. Andrew Battison, Partner, Litigation, Arbitration & Investigations, Linklaters Singapore Pte. Ltd., Singapore, and impanelled by Ms. Sheila Ahuja, Partner and Co-Head of the India Group, A&O Shearman, Singapore and Alternate Member, ICC International Court of Arbitration, Ms. Maninder Acharya, Senior Advocate and Former Additional Solicitor General of India, Mr. Dinesh Pardasani, Partner, DSK Legal, Delhi and Arbitrator and Mr. Sumant Behari Mathur, Chief General Manager (Law) and Principal Legal Officer, Steel Authority of India Limited.
Delving into the topic of arbitration with States and State-owned entities (SOEs), this panel dealt with the aspects of time and costs, special procedures, confidentiality, transparency, and post-arbitration proceedings actions such as enforcement and setting aside of awards.
Starting with the first topic, which is characteristics of states and SOEs that set them apart from typical private commercial parties, Mr. Andrew opened the floor for Ms. Maninder to speak about the key concerns that states have in disputes and where these may differ from private commercial parties.
Ms. Maninder highlighted that there are a few concerns which will be particular to the states, but a few will overlap. The common one is that the arbitration should be time and cost effective. However, this affects state and state-owned entities a little more than the private parties because they have to bear the cost from the public exchequer and the public funds which are audited. She highlighted that SOEs are also under a public gaze. Another key concern unique to the state, she explains, decisions cannot be taken quickly because they are deliberated at various levels of the hierarchy before approval. Additionally, officers are transferred in the meantime which breaks continuity. Third concern is the prejudice in the perception regarding State or SOEs that they must have done something. The last concern that she highlighted was that there are political complications that the state has to deal with if a project that they are responsible for, lands up in a dispute and this affects the communities and livelihoods of the people
Picking up on the points mentioned by her, Mr. Andrew posed a question to Ms. Maninder that are there any differences in the way that a state might approach these issues when dealing with domestic parties as opposed to international parties. Ms. Maninder answered that concerns are almost similar but in international arbitration, there is a heightened burden about on the State about the repute of nation.
Moving on to the next speaker, Mr. Andrew opened the floor to Mr. Sumant to talk about the purpose of India establishing SOE ecosystem and how it has evolved.
Mr. Sumant started off by explaining how and why the public sector enterprises (‘PSUs’) were established in India and how it has evolved into what it is now. He explained how the second five-year plan, the 1948 Kashmir war, and industrialisation played a key role in establishing PSUs in India. He also highlighted the difference between the domestic and international arbitrations is the environment which causes a difference in the concept. He underscored how there is a subtle difference between he domestic and international arbitration.
Mr. Andrew posed a question to both previous speakers that now that PSUs are taking more of a commercial role but still have a governmental approval process, how do you work with this in the context of commercial disputes. Mr. Sumant answered that ultimately it is public money in the PSUs, so every rupee spent has to be justified and if there’s a contract which has gone wrong, PSUs are prone to more explanations. Ms. Maninder added that it is more of a difficult process because whatever decisions government officers take, they are answerable, so they are cautious for that whereas for a contract it is merely an economic decision.
Moving on to the second topic, which is how the policy and attitudes to particular forms of ABR and litigation change and evolve over time, Mr. Andrew opened the floor for Mr. Dinesh to talk about how dispute resolution preferences and policy have changed over time in India through litigation, arbitration, and recently, mediation.
Mr. Dinesh stated that prior to the Guidelines for Arbitration and Mediation in Contracts of Domestic Public Procurement, 2024 were notified in June, the answer to this question was very clearly arbitration but now it has become confusing. He explained that there is no alternative to arbitration and the solutions to certain problems in arbitration is surgery and not amputation. He underscored that Courts cannot become alternative to these bigger disputes which arbitration is the forum for.
Commenting on Mr. Dinesh’s answer, Mr. Sumant stated that it a situation of mediation versus arbitration. He stated that in a mediation, one has to walk steps towards the other party to reach a position where the solution is acceptable to both the parties. Now, taking a decision once there’s a dispute, then going back on that and walking a few paces beyond, it all gets very difficult for a SOE. This is because an SOE is subjected to so many questions, audits, vigilance, etc. So, unless there’s a change in the environment that if a person takes a very genuine decision, he’s not subjected to those examinations and queries, then only mediation is likely to succeed. Contrary to this, in arbitration a decision comes to you whether you like it or not.
Adding onto the point of mediation raised by Mr. Sumant, Mr. Dinesh stated that indeed mediation is a good initiative, but it is not an alternative to arbitration because no officer would come forward for admitting any claim, that can only be decided in an adjudication which could lead to court or arbitration. However, he explained that mediation is complementary to arbitration as one can have a pre-mediation proceeding before going into arbitration.
Moving onto the last speaker, Mr. Andrew opened the floor to Ms. Sheila by asking her whether she sees any preferences in dispute resolution types, forums or rules that are applied between different economic sectors or areas?
Ms. Sheila answered that it depends on whether the dispute is a general commercial one that can be resolved in court or is it a bit more specialised which would need a tribunal or is it cross border where justice will only be served with the neutrality of an international tribunal. She cited an example of how in Southeast Asia and Greater China, there isn’t the same trust in the courts for finance-related disputes and more people resort to arbitration, because arbitrators have a lot more experience in such disputes and they are neutral. She also cited the example of how in construction disputes, arbitration is more preferred due to the technicalities. She explained that even those who tend to go to arbitral processes instead, it comes down to the choice of arbitrator and flexibility in procedure, so that one can deploy a procedure that’s suited to the type of dispute at hand.
Adding to what Ms. Sheila said, Ms. Maninder added two points. One, when it comes to questions related to geology, chemistry, engineering, etc, courts don’t have the kind of time that is needed to deal with such disputes. Secondly, there can be an expert appointed in the tribunal, which is a benefit that the court does not provide.
Mr. Andrew posed a question to Ms. Sheila that how she sees the concept of transparency in arbitral proceedings fitting into a commercial investor state. Ms. Sheila responded that there is a constant battle between transparency and confidentiality which are two diametrically opposite principles. She highlighted how some people, especially states or SOEs, prefer arbitration due to confidentiality. But on the other hand, transparency has become an issue because sometimes an award is challenged to bring limelight to the issue by someone who feels that it wasn’t correct and there needs to be some accountability. Thus, one needs to be in the middle of the spectrum, for that, the tribunal should be able to decide the issue of confidentiality.
Mr. Andrew posed another question to Ms. Sheila that does she see Indian companies utilizing an investor state to speak resolution against other states for their outbound investments. Ms. Sheila mentioned how previously if she mentioned the words investment treaty or investor state, she would be met with a very negative reaction. But nowadays, when she talks to a client, they only want to talk about what are maximum ways of protecting their investment.
Coming to the sub-topic of importance of managing time and cost, the panel discussed the issues that arise in the course of arbitrations that drive up the costs and delay the proceedings from both sides of the table. They also delved into what could be a few solutions for the same.
Lastly, regarding the final sub-topic of post-arbitration proceedings actions such as enforcement and setting aside of awards, the panel discussed the key concerns that drive post-award proceedings, the issues with enforcement, concerns surrounding investment treaties, pre-conceptions against India, and much more.
Session III: The ICC Court in action: A behind-the-scenes look at the Challenge of Arbitrators
The third session was an interactive mock session conducted by Ms. Claudia Salomon, President, ICC International Court of Arbitration, Ms. Payel Chatterjee, Partner, Trilegal, Mumbai and Alternate Member, ICC International Court of Arbitration, Mr. Amar Gupta, Partner, JSA Advocates & Solicitors, New Delhi and Member, ICC International Court of Arbitration, Mr. Sanjeev Kapoor, Partner, Khaitan & Co, New Delhi and Vice President, ICC International Court of Arbitration, Ms. Yvonne Mak, Counsel, ICC International Court of Arbitration, and Mr. Kabir Singh, Partner, International Arbitration and Dispute Resolution, Clifford Chance, Singapore and Member, ICC International Court of Arbitration.
In this mock session the panellists were faced with the mock challenge wherein the respondent has challenged the claimant’s co-arbitrator, arguing lack of independence and impartiality because of repeat appointments by the claimant. The panellists had to discuss two aspects of the issue- one, admissibility and two, merits.
Arguing on behalf of the claimant, Ms. Payel talked about there being a need for a specialised knowledge, the pool for such persons is small and well-known, and the qualitative perspective as the issues are unrelated and parties are different. She added that the arbitrator disclosed that she is annually working on 20 or more arbitrations where she is nominated by many parties so there is no financial dependency on the claimant which shows that there is some partiality or bias at play.
Mr. Kabir, arguing for the Respondent, highlighted how it doesn’t matter whether it is the claimant’s counsel making the appointment or the party itself, both can result in deviation from partiality. He added whether the timing needs to be considered because this is coming after the hearing so it’s going to be disruptive.
Ms. Claudia posed a question about consideration regarding the disruptiveness of this issue and whether this arbitrator should not continue to Mr. Sanjeev. Mr. Sanjeev, arguing for the claimant, responded that he concurs with Mr. Kabir and stated that in Indian context, there’s a concept of how many is too many, more than two arbitrations in last three years is too many. He highlighted how in such cases, disclosures are very important and one of them has only now been made, the real test is to check the essence of it, whether in essence there is any reasonable ground that the arbitrator will be biased. Deriving of a significant financial income, he added, can be one factor that affects this bias, but in this case, clearly, the arbitrator was not deriving any significant income just from one party. Additionally, it’s a three people tribunal, not a sole arbitrator tribunal, so there are enough checks and balances in place.
He also added that this does not seem like a credible challenge and the timing does make one suspect why did the respondent choose to challenge the arbitrator at the fag end after the hearing is over despite knowing about the appointment beforehand and only after the publication of the news article. He argued that allowing this claim would delay the process as a new tribunal would have to be constituted.
Arguing for the respondent, Mr. Amar underscored why he has reservations regarding rejection of this claim on merits. He talked about the factors such as the threshold mentioned in section 12, integrity of the process, trust and confidence in the tribunal and those mentioned by his colleagues.
In this manner, the panel argued from both sides of the table to portray how such a claim will be dealt with and argued in an ICC proceeding.
Session IV: Debate – This House believes that the Office Memorandum dated 03-06-2024 issued by the Ministry of Finance does not disrupt India’s aspirations to become an arbitration hub
The final session moderated by Ms. Manini Brar, Founder, Arbridge Chambers, New Delhi consisted of Mr. Abhinav Bhushan, Director (Foreign Law), Dispute Resolution, Drew & Napier, Ms. Swee Yen Koh, Senior Counsel, Partner and Head of the International Arbitration Practice, Wong Partnership LLP, Singapore, and Member, ICC International Court of Arbitration, Mr. Rajeshekar Rao, Senior Advocate, High Court of Delhi, New Delhi, and Mr. Devathas Satianathan, Partner, International Arbitration, Construction & Projects, Rajah & Tann, Singapore LLP, Singapore.
The final discussion delved into a debate on the new Guidelines for Arbitration and Mediation in Contracts of Domestic Public Procurement, 2024 (‘Guidelines’) with two panellists for the motion and two against.
Mr. Devathas, who was for the motion, stated that the Guidelines are a call for an efficient approach to dispute resolution. He explained that it simply states that arbitration should not be routinely used or automatically included. He also mentioned that in July, the finance minister stated that the guidelines are flexible and continue to permit arbitration for high-value disputes after application to the State. Furthermore, he clarified that the Guidelines are not a blanket proscription of arbitration in all cases, in fact, it doesn’t even comment on arbitration beyond the remit of procurement contracts. He stated that the Guidelines do not undermine the aspiration of India to become an arbitration hub but instead supports this aspiration by providing a dispute resolution mechanism depending on the case at hand.
Explaining how the office memorandum is indeed pro-mediation, Mr. Devathas quoted Guideline 7(vii) which calls on government entities to adopt mediation under Mediation Act 2023 and/ or negotiated amicable settlements for resolution of disputes. He concluded his arguments stating that the Guidelines provide these two options which are imperative to party autonomy, which is right to choose the form of resolution mechanism, and awake, which means to choose the right form of alternate dispute resolution at the right time in a conscious and thoughtful manner.
Mr. Rao, speaking for the opposition, stated that the Guidelines have been enacted because the Government has spent over INR 50 crores on an average in last five years on arbitrations, which was such a big amount that it warranted a complete reset from what India’s stance has been since 1996, and they have gone back to the old legal system where disputes were mediated and negotiated. He cited an incident of 1995 when the Supreme Court decided that the government is often a litigator so the different departments should mediate between themselves before a committee. However, in 2004, the Supreme Court clarified that this solution did not work. Mr. Rao pointed out that this same government is now saying that in a 5 trillion-dollar economy, we will arbitrate disputes that are less than 10 crores which are not even a drop in the ocean. He stated that from this perspective, this is a classic case of double-speak.
“This [the guidelines] is a classic case of old wine in a new bottle, whine with a ‘wh’”
-Mr. Rajeshekar Rao
Coming to the issue of what will an average person do, Mr. Rao pointed out three issues. First, how has the government decided that a binding tribunal headed by a retired Supreme Court judge is not enough but the same judge sitting in an advisory committee is going to be taken seriously. The second one, he explained, is that there have been several instances where awards are challenged so is that a problem with the process or the system. The third issue is that autonomy was already addressed in 2015 when amendments were made to the Arbitration Act, 1996 and the Commercial Courts Act, 2015, as the idea was to give parties a choice.
Concluding his arguments, Mr. Rao raised three issues. First, there is a disconnect because on one hand the Prime Minister is talking about the aspiration to make India an arbitration hub but on the other hand how many people can afford to have a hearing at the Hyatt for five days in a row when their claim is for INR 1 crore. Second, this office memorandum is issued by the Ministry of Finance and not Law, so if they are mere guidelines, then someone needs to clarify that it’s not binding. Third, this is increased litigation as government frequently challenges awards.
“Once again, you’re missing the wood for the trees when you think that the outcome determines what the process is like. Select good people, push your officers to act independently, help them make decisions and tell them that their decisions will be protected. They’re not going to have to keep looking over their shoulders.”
-Mr. Rajeshekar Rao
Moving on to the second round of arguments, Ms. Swee began her arguments in favour of the motion. She stated that the opposition is merely trying to confuse everyone by suggesting that the Guidelines are regressive or anti- arbitration, whereas they are extremely pro-arbitration. She explained how and why the guidelines are consistent with the objectives and aspirations of India. She emphasized on India’s legislative efforts, establishment of arbitration centres, and pro-arbitration judicial decisions. She also underscored the unique approach of the government to tell its own departments to resolve disputes via institutional arbitration in order to solve the various issues that were being faced in this realm.
She highlighted three solutions being provided by the guidelines; one, express endorsement of institutional arbitrations, two, discouragement of challenges against arbitral awards, and three, limitation to contracts of domestic procurement where the disputed amount is below 10 crores.
Moving on to the last speaker, Mr. Abhinav, who was against the motion, highlighted that there is no government entity that does arbitration for less than 10 crores. He underscored how the world ‘should’ is used in the guideline repeatedly in a way that it does not promote institutional arbitration.
“This office memorandum does not disrupt India’s chances of becoming a global hub for arbitration. It actually destroys it. It goes even a step further”.
– Mr. Abhinav Bhushan
“This memorandum is antithetical to every letter and word that came out of the Honorable Prime Minister’s mouth [when he talked about making arbitration India’s priority]”.
– Mr. Abhinav Bhushan
Concluding the immensely engaging and enlightening sessions, Ms. Shania Elias, Deputy Director, Arbitration and ADR, India, ICC Dispute Resolution Services delivered the closing remarks and vote of thanks.
