UEFA shows Manchester City the Red Card - Why Indian Football should take note

Manchester City Football Club (“MCFC”) was banned from participating in club competitions of the Union des Associations Européenes de Football (“UEFA”) for the next two seasons, on February 14, 2020. A fine of EUR 30 million was also imposed on the grounds of having committed serious breaches of UEFA Club Licensing and Financial Fair Play Regulations (“UEFA Regulations”), and because of failure to cooperate with the investigation. The Adjudicatory Chamber of the UEFA Club Financial Control Body (“CFCB”) has found that MCFC overstated its sponsorship revenue in its accounts submitted to UEFA between 2012 and 2016.[1]
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Arbitration Agreements in Unstamped Documents

Introduction

There has been constant confusion with respect to admissibility of unstamped documents. Section 35 of the Indian Stamp Act, 1899 (“Stamp Act”), provides that an unstamped or inadequately stamped document is inadmissible in evidence. Applying Section 35 of the Stamp Act, the Supreme Court in Garware Wall Ropes Ltd v. Coastal Marine Construction & Engineering Ltd [1](“Garware Judgement”) held that an arbitration agreement contained in an unstamped contract cannot be taken in evidence and invoked. It was further held that, in case the Court is faced with an unstamped document, it must proceed to impound the same, in accordance with the provisions of the Stamp Act; only once such an impounding is done — the deficit stamp duty and penalty paid, can the Court proceed on the basis of the arbitration agreement.
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Exclusion of Time Spent in Pre-arbitration Negotiations

Complex commercial transactions and arrangements often contemplate a requirement to engage in good faith negotiations/discussions or mediation in order to resolve the dispute amicably before the parties can resort to arbitration[1]. It is also common in these arrangements that the parties are required to spell out their claim in writing and provide the other party with an opportunity to respond before good faith negotiations can commence. Given the complex nature of arrangements, stakes involved and multitude of relationships between the parties, often a considerable amount of time is spent in exploring ways to amicably resolve matters instead of “washing dirty linen in public”. It has been a matter of considerable debate whether the time spent in good faith negotiations/discussions/mediation can be excluded for the purpose of computing the period of limitation for reference to arbitration.

The recent Supreme Court judgement in the case of Geo Miller & Co. Pvt. Ltd. v. Rajasthan Vidyut Utpadan Nigam Ltd.[2] (Geo Miller Case) has explained the legal position on this aspect and paved the way for making a carve out for time spent in exhausting pre-arbitration procedures for the purpose of computing the period of limitation for reference to arbitration.
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Applicability of the 2015 Amendments to the Arbitration and Conciliation Act

We have previously dealt with the Supreme Court’s decision in the case of BCCI v. Kochi[1] (see here and here) as well as the 2015 Amendments[2] to the Arbitration and Conciliation Act, 1996 (Act) and thereafter the 2019 Amendments[3] to the Act. Briefly recapped, the BCCI case read Section 26 to mean that the 2015 Amendments as a whole were to apply prospectively (meaning thereby that they would apply to arbitral proceedings commencing after October 23, 2015). However, as far as Section 36 (enforcement of a domestic award) of the principal Act was concerned, the 2015 Amendments applied retrospectively since the right to an “automatic stay” under Section 36 was not a vested one.

This meant that both in pending Section 34 petitions (filed prior to October 23, 2015) and in fresh Section 34 petitions, there would be no automatic stay of an award unless a separate application was made for such a stay, which the Court would have the discretion to grant or refuse and would also be premised on the posting of security.
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Good Faith Negotiations and Mediation 

It has become increasingly common for parties to adopt multi-tiered dispute resolution clauses in agreements. A typical multi-tiered dispute-resolution clause requires parties to first attempt to resolve a dispute amicably – for instance, by engaging in friendly discussions, submitting to mediation or undertaking good faith negotiations – before the commencement of arbitration proceedings. There has been much ado about the enforceability of such clauses and whether they should be considered void due to vagueness: how does one engage in “friendly discussions”, and what exactly are “good faith negotiations”, when a presumably acrimonious dispute has already arisen between parties?

Despite this ambiguity, courts have increasingly found tiered dispute-resolution clauses to be enforceable. In fact, with a view to combat rising pendency in courts, these principles have been extended to the initiation of litigation as well. The Commercial Courts Act, 2015 (CCA) was amended last year to state that any suit that does not contemplate urgent interim relief cannot be instituted without the plaintiff having exhausted the remedy of pre-institution mediation and settlement.[1] A similar model is also followed in a number of other countries, including the UK, Italy, Greece and Turkey, where it has been successful in encouraging dispute resolution through mediation.[2]
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Arbitrator Fees in India

The Law Commission of India, in its 246th report, noted that one of the problems associated with arbitration in India (especially ad hoc arbitrations) is the high quantum of fees charged by arbitrators.[1] The Report went so far as to call the fees “arbitrary, unilateral and disproportionate”. The Commission recommended the adoption of a model schedule of fees for Courts to consider while framing rules for fixing of the fees of arbitrators appointed in accordance with Section 11 of the Arbitration and Conciliation Act, 1996 (the Act). The Commission restricted its suggestions to ad hoc domestic arbitrations, noting that different standards may apply in institutional arbitrations and in international commercial arbitrations (where the Commission recommended greater deference to party autonomy).
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Applicability of the 2015 and 2019 Amendments - arbitration and conciliation act

Readers may recall our earlier blog published here, where we discussed the Supreme Court’s decision of BCCI v. Kochi Cricket[1] dealing with the date of coming into force of the amendments that were made to the Arbitration and Conciliation Act, 1996 (“Act”), by the Arbitration and Conciliation (Amendment) Act, 2015 (“2015 Amendments”). We also briefly discussed the position as set out in the then tabled, proposed 2018 amendments to the Act.

Briefly recapped, in BCCI, the Supreme Court ruled that generally the 2015 Amendments applied prospectively. However, it dealt with the issue slightly differently insofar as Section 36 was concerned. Section 36 of the Act prior to the 2015 amendments provided that if the time for making an application challenging an award had expired or if a challenge application had been made and refused, the award could be enforced. This implied an automatic stay against enforcement. The 2015 Amendments took away the automatic stay and instead stated that the mere filing of a challenge application under Section 34 against the award will not render the award unenforceable, unless the Court grants a stay against enforcement on a separate application being made.
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The Singapore Convention on Mediation 2019

The United Nations Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention) was adopted by the United Nations on June 26, 2018 and opened for signature on August 7, 2019, with 46 countries affixing their signatures to what is intended be a game changer in the alternate dispute resolution space.

The use of mediation has grown, particularly because it is cheaper than international arbitration (which is now being criticised for the very evils it was created to avoid, i.e. costs and complexity), and also because it is more likely to preserve commercial relationships.  These benefits are recognised in the Preamble to the Convention, reflecting the hope that the enforceability of international commercial settlement agreements  would facilitate efficient administration of justice by States, and also contribute to the development of harmonious international economic relations.
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Bombay High Court’s New Rules on Arbitral Tribunal Fees

The provisions for appointment of an arbitrator, under Section 11 of the Arbitration and Conciliation Act, 1996 (Act), underwent a sea change with the 2015 amendments. A notable amendment was in relation to setting fees for arbitrators appointed by a court under the Act, for the purpose of which, the new Section 11 (14) and Fourth Schedule were introduced.

Under these provisions and for the purpose of determination of the fees of the arbitral tribunal and the manner of their payment, the High Court was empowered to frame such rules as may be necessary, after taking into consideration the rates specified in the Fourth Schedule.

Years after the amendments kicked in (on and from October 23, 2015), the Bombay High Court issued the Bombay High Court (Fee Payable to Arbitrators) Rules, 2018, pursuant to Section 11 (14) and the Fourth Schedule (the Rules).[1]
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Difference between International Investment Arbitrations and International Commercial Arbitrations

A foreign investor’s power to sue a host State plays a vital role in investment protection. Investment arbitration is undertaken to resolve disputes between a foreign investor and the host State and is also known as Investor-State Dispute Settlement (ISDS) and differs from an International Commercial Arbitration (ICA/s) dispute due to the nature of the claim and the parties involved. While the former deals with disputes arising under a public treaty between two contracting States, the latter deals with disputes arising out of a commercial contractual obligation[1].

Under a Bilateral Investment Treaty (BIT/s), States ensure certain rights and protections to investors from the other contracting State[2]. These include Fair and Equitable Treatment, National Treatment, Most Favoured Nation (MFN), Protection from Expropriation to name a few. Each of these are protections accorded under international law and are usually negotiated upon by the contracting States, such that any derogation from the protections accorded give rise to the investor’s right to initiate an investment arbitration against the host State. Currently, there are 2,344 BITs and around 314 Treaties with Investment Provisions in force globally[3].
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