Dispute Resolution

UNITED ARAB EMIRATES - RECIPROCATING COUNTRY UNDER INDIAN LAWS

I. Introduction

India and the United Arab Emirates (“UAE”) have had strong diplomatic and trade relations since decades. At the 13th Session of the “India-UAE Joint Commission Meeting on Trade, Economic and Technical Cooperation” held on August 17, 2020, representatives from both India and UAE expressed optimism over the growing trade, economic and investment cooperation between the two countries. While both the countries are optimistic about growth in trade relations, the Indian Government in the beginning of 2020, took commendable steps to facilitate cross border trade by declaring UAE as a reciprocating territory for execution of foreign judgments in India under Section 44A of the Civil Procedure Code, 1908 (“CPC”). The same was done by way of an Extraordinary Gazette Notification No. 36 of 2020, issued by the Ministry of Law and Justice on January 17, 2020.
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Ethical Practices to be followed by a Mediator

“My joy was boundless. I had learnt the true practice of law. I had learnt to find out the better side of human nature and to enter men’s hearts. I realised the true function of a lawyer was to unite parties riven asunder. The lesson was so indelibly burnt into me that a large part of my time during the twenty years of my practice as a lawyer was occupied in bringing about private compromises of hundreds of cases. I lost nothing thereby – not even money, certainly not my soul.”

–Mahatma Gandhi

Alternate dispute resolution (“ADR”) mechanisms have become the front runner in the dispute resolution space, with mediation gaining a great deal of traction in the last couple of decades. This is so not only with respect to disputes amongst individuals, but companies as well. It is seen that a myriad range of civil disputes such as disputes arising out of contractual relationships, family or matrimonial relationships, employment, partnerships, tortious disputes and consumer disputes can be resolved through mediation.
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The Final Word on the Limitation Period for Enforcement of Foreign Awards

The Supreme Court has, in its recent judgment of Government of India v. Vedanta Limited & Ors.[1], settled the law relating to limitation for filing petitions for enforcement and execution of foreign awards in India. The Court held that petitions seeking enforcement/execution of foreign awards are required to be filed within three years from the date when the right to apply accrues and in the event there is any delay in filing such petitions, the same can be condoned under Section 5 of the Limitation Act, 1963 (“Limitation Act”).
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The Age of the Indian Consumer

In a recent decision[1] passed by the Hon’ble Supreme Court, developers were directed to pay compensation in excess of the contractually stipulated amount to flat purchasers, on account of delay in handing over possession and non-fulfilment of certain representations made to them. It was also held that consumer forums established under the Consumer Protection Act, 1986 (CP Act, 1986), are empowered to award just and reasonable compensation (even beyond the contractually stipulated amount, wherever necessary) to alleviate the harassment and agony caused to a consumer.
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Avitel v. HSBC: Finality on the Question of Arbitrability when Allegations of Fraud are Raised By Indranil Deshmukh, Vineet Unnikrishnan and Samhita Mehra The Supreme Court in the case of Avitel Post Studioz Limited v. HSBC PI Holdings (Mauritius) Limited (“Avitel Case”) has recently engaged with the question of whether allegations of fraud can be adjudicated in arbitration, or whether they require adjudication before a court. In its judgment, the Court has laid down clear tests to determine when a dispute involving allegation of fraud is arbitrable, and when it would require adjudication before a court. Material Facts In this case, a Share Subscription Agreement (“SSA”) dated April 21, 2011, was entered into between Avitel and HSBC, by way of which HSBC invested USD 60 million in Avitel to acquire 7.80% of its shareholding. The SSA contained a clause providing for arbitration at the Singapore International Arbitration Centre in case of a dispute. An accompany Shareholders’ Agreement (“SHA”) dated May 6, 2011, was also executed, which contained an identical arbitration clause. Thereafter, a dispute arose between the parties. HSBC alleged that the promoters of Avitel, namely, the Jain Family, had induced HSBC to invest in Avitel by making a representation that Avitel was on the verge of finalising a lucrative contract with the British Broadcasting Corporation. HSBC alleged that there was no such contract, and that around USD 51 million from the USD 60 million investment had in fact been siphoned away to other companies owned or controlled by the Jain Family. Arbitral proceedings were initiated, and a final award was passed in favour of HSBC inter alia holding the above allegations to be true (“Award”). The matter reached the Supreme Court in the context of a petition under Section 9 of the Arbitration and Conciliation Act, 1996 (“Act”), filed by HSBC seeking orders of deposit of the full claim amount of USD 60 million to protect the subject matter of the Award, pending enforcement of the same. Issues and Discussion The Supreme Court was asked to consider whether HSBC had a prima facie case for enforcement of the Award in India. Challenging the enforcement of the Award, it was contended on behalf of Avitel that since the allegations of fraud have been made in arbitral proceedings involving serious criminal offences, such as forgery and impersonation, such a dispute is not arbitrable then under Indian law and the award unenforceable, as a consequence. On behalf of HSBC, it was contended that non-arbitrability would be triggered only in cases where serious allegations of fraud would vitiate the arbitration agreement and not in other cases. After taking stock of the jurisprudence on this point thus far, the Court held that “serious allegations of fraud”, leading to non-arbitrability would arise only if either of following two tests were satisfied, and not otherwise. 1. Where the Court finds that the arbitration agreement itself cannot be said to exist being vitiated by fraud; or 2. Where allegations are made against the State or its instrumentalities, relating to arbitrary, fraudulent, or mala fide conduct, giving rise to question of public law as opposed to questions limited to the contractual relationship between the parties. This means that all other cases involving “serious allegations of fraud” i.e. cases that do not meet the above two tests laid down by the Supreme Court, would be arbitrable. Applying the aforesaid test to the facts before it, the Court found that the issues raised and answered in the Award were the subject matter of civil as opposed to criminal proceedings. The fact that a separate criminal proceeding was sought to be initiated by HSBC is of no consequence whatsoever. It was held that the impersonation, false representations and siphoning of funds found to have been committed were all inter parties and had no “public flavour” so as to be non-arbitrable on account of allegations of fraud. As such, the Supreme Court inter alia upheld the orders of deposit of the full claim amount of USD 60 million to be kept aside for the purposes of enforcement of the Award in India. Way Forward The Supreme Court’s judgment in the Avitel Case lends clarity to courts and arbitral tribunals, which should aid in weeding out incessant and creative submissions to “wriggle out” out of arbitration agreements. The two grounds forming exceptions to arbitrability of matters involving serious allegations of fraud as crystallised by the Supreme Court are clearly identifiable and easily discernable. Therefore, the judgment in the Avitel Case is likely to save precious judicial time that may otherwise have been spent in deliberating on the question of arbitrability of a dispute involving allegations of fraud.  

The Supreme Court in the case of Avitel Post Studioz Limited v. HSBC PI Holdings (Mauritius) Limited[1] (“Avitel Case”) has recently engaged with the question of whether allegations of fraud can be adjudicated  in arbitration, or whether they require adjudication before a court. In its judgment, the Court has laid down clear tests to determine when a dispute involving allegation of fraud is arbitrable, and when it would require adjudication before a court.
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Supreme Court sets out object and purpose of Order VII Rule 11 of the Code of Civil Procedure,1908

Introduction

Judicial time is precious and ought to be employed in the most efficient manner possible. Sham litigations are one such menace that not only waste the time of the courts, but also cause unwarranted prejudice and harm to parties arrayed as defendants in such litigations, thereby defeating justice. In order to deal with such a menace, the Code of Civil Procedure, 1908 (“CPC”), under Order VII Rule 11[1] (“O7 R 11”) provides litigants the option to pursue an independent and special remedy, empowering courts to summarily dismiss a suit at the threshold, without proceeding to record evidence, and conducting trial, on the basis of the evidence adduced, if it is satisfied that the action should be terminated on any grounds contained in this provision.

Recently, the Hon’ble Supreme Court of India (“SC”) in the case of Dahiben v. Arvindbhai Kalyanji Bhanusali[2] (“Case”), while dealing with an appeal against an order allowing rejection of a suit at the threshold, had occasion to consider various precedents, discussing the intent and purpose of O7 R11, while setting out the principles in relation to the same.
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Section 65B of the Indian Evidence Act, 1872: Requirements for admissibility of electronic evidence revisited by the Supreme Court

Background

A three-judge bench of the Supreme Court recently held that the requirement of a certificate under Section 65B(4) of the Indian Evidence Act, 1872 (“Evidence Act”), is a condition  precedent to the admissibility of electronic record in evidence.[1] This judgment arose from a reference by a Division Bench of the Supreme Court, which found that the Division Bench judgment in Shafhi Mohammad v. State of Himachal Pradesh[2] required reconsideration in view of the three-judge bench judgment in Anvar P.V. v. P.K. Basheer.[3]
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MULTIPLICITY OF PROCEEDINGS DEFEATS THE PURPOSE OF ALTERNATE DISPUTE RESOLUTION - DELHI HIGH COURT SMM

Introduction

Recently, the Hon’ble High Court of Delhi (“Court”) in Gammon India Ltd. and Anr. v. National Highways Authority of India[1], had the occasion to opine on the scourge of multiplicity of arbitral proceedings while dealing with a petition under Section 34 of the Arbitration and Conciliation Act, 1996 (“Act”) wherein the objections raised were primarily based on the findings of a subsequent award. In dealing with the issues before it, the Court revisited various judicial precedents while setting out the principles to be considered when referring multiple disputes arising out of the same agreement to arbitration.
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Introduction:

This article analyses the legal basis and the genesis of the power of an arbitrator to recall its order of termination of proceeding on account of default of the Claimant.

India seated arbitral proceedings, whether ad-hoc or institutional, are governed by the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act), which is based on the UNCITRAL Model Law on International Commercial Arbitration, 1985 (UNCITRAL Model Law). Whilst arbitrators are not bound by the Code of Civil Procedure, 1908 (CPC) or the Indian Evidence Act, 1872[1], they is usually guided by the broad principles enshrined in the said enactments, while conducting the arbitral proceedings. In this regard, it is pertinent to note that under Order IX Rule 13 of CPC, the Court has power to recall its order. Under the said rule, if the Court is satisfied that summons was not duly served on the defendant, or that there was sufficient cause for defendant’s failure to appear when the suit was called on for hearing, the Court is empowered inter-alia to pass an order setting aside an ex- parte decree that may have been passed against the defendant.Continue Reading Arbitrator’s power to recall its order of termination of arbitral proceeding- A tale of Dubiety? (Part I)

In Shakti Bhog Food Industries Ltd. v. The Central Bank of India and Anr.[1], the Hon’ble Supreme Court has clarified as to when the three-year limitation period contemplated under Article 113[2] of the Limitation Act, 1963 (Act), commences. It has also reiterated the importance of considering the averments made in a plaint as a whole while determining an application for rejection of plaints under Order VII Rule 11[3] of the Code of Civil Procedure, 1908 (CPC).Continue Reading When does the clock of limitation start ticking for suits falling under Article 113 of the Limitation Act?