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Dipen Sabharwal

White & Case LLP

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Legal framework

National arbitration laws

IndiaIndia White & Case LLP

What legislation applies to arbitration in your jurisdiction?

The Arbitration and Conciliation Act 1996 is the key law governing arbitration in India. The act has four parts:

Part I sets out general provisions on domestic arbitration;

Part II addresses the enforcement of foreign awards (Chapter 1 deals with New York Convention awards and

Chapter II with awards under the 1927 Geneva Convention);

Part III deals with conciliation; and

Part IV sets out certain supplementary provisions.

Parts I and II are the most significant and are based on the UNCITRAL Model Law and the New York Convention

respectively.

Mandatory laws


Are there any mandatory laws?

There are no mandatory laws governing arbitration in India, except the Arbitration and Conciliation Act, which ensures

party autonomy in respect of most procedural matters.

New York Convention



Is your country a signatory to the New York Convention? If so, what is the date of

entry into force?

India signed the New York Convention on June 10 1958 and ratified it on July 13 1960. The convention entered into

force on October 11 1960.

Are there any reservations to the general obligations of the convention?

India applies the convention only to the recognition and enforcement of awards made in the territory of another

contracting state, and only to differences arising out of legal relationships - whether contractual or not - that are

considered commercial under national law.

Treaties and conventions

What other treaties and conventions in relation to arbitration is your jurisdiction

party to?

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Arbitration agreements


India is a party to the Geneva Convention on the Execution of Foreign Arbitral Awards 1927. It is not a signatory to

the International Centre for the Settlement of Investment Disputes Convention 1965.

As of December 2013, India had signed 83 bilateral investment treaties and bilateral investment promotion and

protection agreements, of which 72 were in force; the remainder are in the process of being enforced. The

government is also negotiating treaties with the United States and Canada. India has additionally signed

comprehensive economic cooperation agreements, which contain investment protection provisions, with major

investment partners such as Japan and Singapore.

UNCITRAL


Has your jurisdiction adopted the UNCITRAL Model Law?

The Arbitration and Conciliation Act is broadly based on the UNCITRAL Model Law and was enacted to consolidate,

define and amend the law relation to domestic arbitration, international commercial arbitration and the enforcement of

foreign arbitral awards.

Reform


Are there any impending plans to reform the arbitration laws in your jurisdiction?

In 2010 the Law Ministry released a consultation paper on proposed amendments to the Arbitration and Conciliation

Act. There has been little progress on legislative reform since then. Significantly, since 2012 the Indian judiciary has

issued a series of important decisions reversing its reputation of being excessively interventionist towards the

international arbitration process.

Validity


What are the validity requirements for an arbitration agreement?

The arbitration agreement must be in writing. It may be in the form of an arbitration clause in a contract or in a

separate agreement. There is no particular form for an arbitration agreement and the courts will look at the wording

to determine whether the parties intended to enter into an arbitration agreement. The agreement need not use the

words ‘arbitration’, ‘arbitrator’ or ‘arbitral tribunal’.

Enforcement of agreements


How are arbitration agreements enforced in your jurisdiction? What is the attitude

of the national courts towards arbitration agreements?

The Indian courts are increasingly adopting a pro-arbitration approach and enforcing valid arbitration agreements.

The statement of objects and reasons of the Arbitration and Conciliation Act also recognises the principle of non-

intervention by courts in the arbitration process. However, the Indian courts will refuse to enforce an arbitration

agreement where the agreement is invalid or the dispute is not arbitrable.

Arbitral tribunal

Consolidation


Can an arbitral tribunal with its seat in your jurisdiction consolidate separate arbitral

proceedings under one or more contracts, and, if so, in what circumstances?

The Arbitration and Conciliation Act is silent on the power of a tribunal to consolidate separate arbitration proceedings

under one or more contracts. However, the Indian courts are unlikely to interfere with a tribunal’s decision toconsolidate proceedings with the consent of the parties.

Choice of law


How is the substantive law of the dispute determined? Where the substantive law is

unclear, how will a tribunal determine what it should be?

The Indian courts will recognise and implement the parties’ choice of governing law, unless it is opposed to the publicpolicy of India. Where all parties are Indian, the Supreme Court has restricted such parties from choosing foreign law

as the substantive law to resolve their dispute.

In domestic arbitration, if the parties have not designated the substantive law in their agreement, the tribunal will

decide the dispute in accordance with Indian law. However, in international commercial arbitration (ie, where one or

more parties is non-Indian), the tribunal has the power to apply the rules of law which it considers most appropriate

given all circumstances surrounding the dispute.

Separability


Are there any provisions on the separability of arbitration agreements?

The Arbitration and Conciliation Act contains no specific provisions on separability. However, Indian law recognises the

doctrine of separability and a valid arbitration clause is separable from the parent contract and constitutes an

agreement by itself.

Multiparty agreements


Are multiparty agreements recognised?

The Arbitration and Conciliation Act is silent on multi-party arbitrations. However, the Indian courts have recognised

multi-party agreements.

Criteria for arbitrators


Are there any restrictions?

The Arbitration and Conciliation Act does not require that arbitrators have any specific background or qualifications.

The arbitrators can be of any nationality, unless the agreement stipulates otherwise. The arbitrators must be

independent and impartial, and treat all parties equally.

The appointment of an arbitrator can be challenged if the parties raise reasonable doubts as to his independence or

impartiality, or if he does not possess the qualifications as agreed between the parties.

Contractual stipulations


What can be stipulated about the tribunal in the agreement?

The parties are free to agree on a procedure for appointing the tribunal. However, they cannot exclude the

requirements that the arbitrators be independent and impartial, and treat all parties equally.

Default requirements


Are there any default legal requirements as to the selection of a tribunal - for

example, concerning the number of arbitrators or their characteristics?

The parties are free to decide on the number of arbitrators, as long as this is not an even number. If the parties fail to

specify the number of arbitrators, the tribunal will consist of one arbitrator. When the parties fail to agree on a

procedure for appointing a three-member tribunal, each party will nominate one arbitrator and the two party-

appointed arbitrators will then appoint the presiding arbitrator. If a party fails to appoint an arbitrator within the

stipulated period, the other party can apply to the chief justice of India (in international commercial arbitration) or the

chief justice of the relevant high court (in domestic arbitration) seeking appointment of the arbitrator.

Challenging the appointment of an arbitrator


Can the appointment of an arbitrator be challenged? Can an arbitrator be

disqualified? What is the procedure for this?

The appointment of an arbitrator can be challenged if reasonable doubts are raised as to the arbitrator’s independenceor impartiality, or if the arbitrator does not possess the qualifications as agreed between the parties.

This challenge may be made only for reasons which the challenging party discovered after the arbitrator's appointment.

The parties are free to agree on a procedure to challenge the appointment of an arbitrator. Unless the arbitrator withdraws

or both parties agree to the challenge, the tribunal will decide whether the arbitrator should be disqualified. Local arbitration

institutions in India - including the London Court of International Arbitration India and the Indian Council for Arbitration - have

also set out procedures for challenging the appointment of an arbitrator.

Jurisdictional objections


How should an objection to jurisdiction be raised?

A party seeking to challenge the existence of an arbitration agreement must raise its objections before the tribunal at

the first available opportunity. No objections can be raised once the award has been issued. Lack of arbitrability is

considered to be a matter of jurisdiction.

Replacement of an arbitrator


Why and how can an arbitrator be replaced?

A replacement arbitrator can be appointed where the mandate of an existing arbitrator is terminated. The mandate of

an arbitrator ends if:

he is unable to perform the required functions;

he acts with undue delay;

he withdraws from the office; or

the parties agree to terminate his mandate.

A replacement arbitrator must be appointed in accordance with the same procedure used to appoint the original arbitrator.

Powers and obligations


What powers and obligations do arbitrators have?

The Arbitration and Conciliation Act gives the arbitrators broad powers to conduct the proceedings. These include the

power to:

rule on the existence and validity of the arbitration agreement or on its own jurisdiction;

order interim measures;

determine the admissibility and weight of the evidence adduced before it;

decide the dispute on the merits according to the governing law and terms of the contract;

encourage settlement through other mechanisms, including conciliation;

determine the costs of the arbitration and their apportionment between the parties; and

deliver a reasoned award.

In exercising these powers, arbitrators are obliged to adhere to the principles of natural justice. They must give both parties

proper notice of hearing and equal opportunity to present their case. They should not act partially or unfairly, or with

particular interest towards the appointing party. Their conclusions should be based on material provided by the parties and

not on personal knowledge.

Liability of arbitrators


Are arbitrators immune from liability?

The Arbitration and Conciliation Act does not afford arbitrators immunity from liability.

Communicating with the tribunal


How do the parties communicate with the tribunal?

The Arbitration and Conciliation Act provides no specific guidance on the manner and method in which the parties

must communicate with the tribunal. In practice, all substantive communications are in writing. The parties can agree

on the language(s) to be used in the arbitration proceedings. In the absence of such agreement, the tribunal can

determine the language(s).

Reaching decisions


Is unanimous agreement of the tribunal required? If there is disagreement, does the

will of the majority suffice? What are the implications of this?

The Arbitration and Conciliation Act does not require unanimous agreement from the tribunal.

Unless otherwise agreed by the parties, any decision of the tribunal can be made by a majority of all its members. If

the parties and the tribunal agree, the presiding arbitrator may be authorised to decide questions of procedure.

In case of disagreement, a dissenting arbitrator can issue a separate opinion, but the Arbitration and Conciliation Act

prescribes no rules as to the form of such a dissenting opinion.

Arbitral proceedings

Arbitrability



Are there any disputes incapable of being referred to arbitration?

Disputes that are non-arbitrable include:

disputes relating to rights and liabilities which arise out of criminal offences;

matrimonial disputes;

guardianship matters;

insolvency and winding-up matters;

testamentary matters; and

tenancy matters.

Can the arbitrability of a dispute be challenged?

The Arbitration and Conciliation Act includes the principle of non-arbitrability and recognises it as an express ground to

set aside an award. In general, civil and commercial disputes can be resolved by arbitration.

Jurisdiction and competence-competence


Is the principle of competence-competence recognised in your jurisdiction? Can a

party to an arbitration ask the courts to determine an issue relating to the tribunal’sjurisdiction and competence?

The principle of competence-competence is recognised in India. The Arbitration and Conciliation Act empowers the

tribunal to decide matters pertaining to its own jurisdiction, including any issue relating to the existence and validity of

the arbitration agreement.

When a tribunal rules on its own jurisdiction and competence, the party disputing jurisdiction can challenge the award

of the tribunal only when it is rendered.

However, an Indian court may rule on the tribunal’s jurisdiction and competence in two situations:

Where it is asked to appoint an arbitrator, the court may examine the existence and validity of an arbitration

agreement before making such an appointment; and

Where a party objects to the court’s jurisdiction in an ongoing matter because of the existence of an arbitrationagreement, the court will test the validity of the arbitration agreement and not automatically refer the matter to

arbitration.

Starting an arbitration proceeding


What is needed to commence arbitration?

Under the Arbitration and Conciliation Act, a party can commence arbitration by issuing a notice in writing to the other

party of its intention to refer the dispute to arbitration. Unless otherwise agreed by the parties, arbitration proceedings

are deemed to have commenced on the date on which the respondent receives such notice from the claimant.

Limitation periods

Are there any limitation periods for the commencement of arbitration?


The Limitation Act 1963 applies to all proceedings under the Arbitration and Conciliation Act, just as it applies to

proceedings in the Indian courts, except to the extent expressly excluded by the Arbitration and Conciliation Act. Any

arbitration proceedings commenced after the limitation period (three years from the date on which the cause of action

arose) will be time barred.

Procedural rules


Are there any procedural rules that arbitrators must follow?

The parties can agree on the procedure for conducting the arbitration proceedings. If no such procedure is agreed by

the parties, the tribunal is authorised to conduct the proceedings in such manner as it considers appropriate. The

tribunal is expressly exempt from applying the provisions of the Civil Procedure Code 1908 and the Evidence Act

1872. If, under the arbitration agreement, the arbitration is to be administered by an arbitration institution, the rules of

that institution become a part of the arbitration clause by implication.

Dissenting arbitrators


Are dissenting opinions permitted under the law of your jurisdiction?

Dissenting opinions are permitted under the Arbitration and Conciliation Act. The dissenting arbitrators have the

option to prepare a separate award or to give their opinion in the same document which contains the award of the

majority members of the tribunal. However, this dissenting opinion or award does not form part of the majority

decision and is not enforceable.

Judicial assistance




Can local courts intervene in proceedings?

Local courts can intervene in domestic arbitration proceedings. This includes the power to issue interim orders and

appoint arbitrators.

Can the local courts assist in choosing arbitrators?

Courts can also assist in selecting arbitrators if the parties are unable to agree on the appointment of a sole arbitrator

or if the two party-appointed arbitrators fail to appoint a chairperson.

What is the applicable law (and prevailing practice) where a respondent fails to

participate in an arbitration? Can they compel parties to arbitrate? Can they issue

subpoenas to third parties?

If a respondent fails to participate in arbitration without sufficient cause, the tribunal may proceed ex parte.

While arbitrators cannot compel third parties to appear before them, the tribunal or a party, with the tribunal’sapproval, may apply to the court for assistance in taking evidence. The court may make an order requiring third

parties to provide evidence directly to the tribunal. If a person fails to attend in accordance with such order of the

court, it is subject to the same penalties and punishments as it may have incurred during court proceedings.

Third parties


In what instances can third parties be bound by an arbitration agreement or award?

The Arbitration and Conciliation Act grants no powers to a tribunal to enjoin a third party to pending arbitration

proceedings. Non-signatories to the arbitration agreement can be bound to the arbitration agreement under the

‘groups of companies’ doctrine where a clear intent to bind such nonsignatories can be established.

Default language and seat


Unless agreed by the parties, what is the default language and location for

arbitrations?

The parties can agree on the language(s) and location to be used in the arbitration proceedings. In the absence of

such agreement, the tribunal has the discretion to determine the language(s) and location.

Gathering evidence



How is evidence obtained by the tribunal?

The parties are free to agree on the rules of gathering and submitting evidence. If the parties do not agree on these

matters, the tribunal has the discretion to determine how evidence may be gathered and submitted to it. The tribunal

is required to observe the fundamental principles of natural justice when considering evidence.

What kinds of evidence are acceptable?

The tribunal may take both documentary and oral evidence on record. The courts can assist the tribunal in taking

evidence if such assistance is sought either by the tribunal or by one of the parties with prior approval of the tribunal.

Confidentiality



Is confidentiality ensured?

The Arbitration and Conciliation Act does not include specific provisions on the confidentiality of arbitration

proceedings. As a result, there is no express obligation to treat an arbitration agreement, any proceedings arising

therefrom or the award as confidential. Parties can address the issue of confidentiality in the arbitration agreement or

by separate agreement.

Can information in arbitral proceedings be disclosed in subsequent proceedings?

Section 76 of the act provides for confidentiality in conciliation proceedings. The Supreme Court has found that the

duty of confidentiality is implied in mediation proceedings.

Ethical codes


What ethical codes and other professional standards, if any, apply to counsel and

arbitrators conducting proceedings in your jurisdiction?

Costs

The award

The Arbitration and Conciliation Act provides that arbitrators should be independent and impartial, treat each party

equally and give them equal opportunity to present their case. There is no ethical code that governs the conduct of

counsel and arbitrators in arbitration. Counsel must adhere to general ethical guidelines of the professional bodies to

which they are admitted.

Estimation & allocation


How are the costs of arbitration proceedings estimated and allocated?

Subject to any agreement between the parties, the costs of arbitration are fixed by the tribunal. In doing so, the

tribunal is to identify:

the party that is entitled to costs;

the party that will pay the costs;

the amount of costs;

the method of determining this amount; and

the manner in which costs are to be paid.

The Arbitration and Conciliation Act defines ‘costs’ as:

reasonable sums relating to the fees and expenses of the arbitrators and witnesses;

legal fees and expenses;

fees of the arbitration institution; and

any other expense incurred in connection with the arbitration proceedings.

The Arbitration and Conciliation Act does not prescribe guidelines regarding the allocation of costs and the tribunal has

discretion in apportioning costs. In practice, however, tribunals exercise this discretion to award costs to the

successful party.

Security for costs


Can the national court or tribunal order security for costs under the law in your

jurisdiction?

The Arbitration and Conciliation Act empowers both a court and a tribunal to order security for costs as an interim

measure.

Requirements


What legal requirements are there for recognition of an award? Must reasons be

given for the award? Does the award need to be reviewed by any other body?

The award must be in writing and be signed by all members of the tribunal or signed by the majority with reasons for

any omitted signatures. The Arbitration and Conciliation Act requires the award to set out the reasons on which it is

based, unless the parties have agreed that no reasons are to be given. The award should state the date and place of

the arbitration, and a signed copy must be delivered to each party.

Timeframe for delivery

Are there any time limits on delivery of the award?


The Arbitration and Conciliation Act imposes no time limits on delivery of the award.

Remedies



Does the law impose limits on the available remedies? Are some remedies not

enforceable by the court?

The Arbitration and Conciliation Act imposes no specific limitations on the remedies available through arbitration. The

limitations are thus the same as those applicable in any Indian court proceedings. The tribunal can order specific

performance and award damages, injunctions, declarations, costs and interest. Under Indian law, exemplary or

punitive damages for breach of contract are not available.

Indian courts can issue interim measures pending constitution of the tribunal. This power continues through the

proceedings until the declaration of the award.

What interim measures are available? Will local courts issue interim measures

pending constitution of the tribunal?

Both courts and tribunals can issue interim measures, but courts have wider powers to grant interim protections. The

parties can, by agreement, restrict the power of the tribunal to grant interim measures.

Available interim measures include:

orders for security for costs;

injunctions;

appointment of a receiver;

orders for preservation, custody, sale and protection of goods; and

any other interim measure that may be just and convenient.

The Supreme Court has clarified that Indian courts will not grant interim measures of protection in relation to

arbitrations seated outside India, irrespective of any agreement between the parties.

Interest



Can interest be awarded?

Subject to any agreement between the parties, the tribunal has discretion on matters relating to the award of

interest. It may award interest at such rate as it deems reasonable on the whole or part of the amount, for the whole

or part of the period between the date on which the cause of action arose and the date of the award.

At what rate?

The Arbitration and Conciliation Act prescribes a default rate of 18% per annum from the date of the award until it is

paid, if the award is silent on this issue.

Finality


Is the award final and binding?

Under the Arbitration and Conciliation Act, the award is final and binding on the parties (subject to any right to

challenge the award).



What if there are any mistakes?

The act allows a tribunal to:

correct any computation, clerical, typographical or similar error;

provide its interpretation of a specific point or part of an award; and

make an additional award as to claims omitted from the original award.

Can the parties exclude by agreement any right of appeal or other recourse that the

law of your jurisdiction may provide?

The right to challenge an award is a statutory right and thus cannot be waived or taken away by an agreement

between the parties.

Appeal



On what grounds can parties appeal an award?

The Arbitration and Conciliation Act does not provide for appeals to court, but does allow for challenges to the award.

The grounds for challenging domestic awards under Indian law are largely based on Article 34 of the UNCITRAL Model

Law. A challenging party can raise the following grounds:

lack of capacity of the parties to conclude an arbitration agreement;

lack of a valid arbitration agreement;

lack of proper notice of appointment of an arbitrator or of the arbitration proceedings, or inability of a party to

present its case;

lack of impartiality or independence of the arbitrator;

composition of the tribunal or conduct of the proceedings contrary to the effective agreement of the parties;

non-arbitrability of the subject matter of the dispute; or

conflict with the public policy of India.

What is the procedure for challenging awards?

For domestic awards, an application to challenge the award must be filed in court within three months of receipt of the

award. In certain circumstances, the court may consider an application for setting aside within a further period of 30

days if it is satisfied that there was sufficient cause for such delay. If the court rejects the application for challenge, the

award is enforceable as a decree of the court. The unsuccessful party has only one right to appeal an order setting

aside or refusing to set aside an award, and no second appeal can be made against an appellate order. However,

there is a constitutional right to file an appeal before the Supreme Court of India (a ‘special leave petition’). TheSupreme Court will exercise its discretion sparingly and consider such an appeal only if there is a gross error of law or

an important issue of law is involved.

The parties cannot enter into an agreement to waive their right to challenge an arbitral award.

Enforcement



What steps can be taken to enforce the award if there is a failure to comply?

The Arbitration and Conciliation Act states that an award may be enforced as if it were an Indian court decree.

Can awards be enforced in local courts?

Third-party funding






A domestic award does not require separate enforcement application proceedings. On the other hand, a foreign

award (ie, an award in arbitration seated outside India) is enforced through an enforcement process in any court within

the territorial limits where the defendant resides or has its business or where its assets are located.

How enforceable is the award internationally?

India is a party to the New York Convention. The enforceability of an award issued by a tribunal seated in India in an

international jurisdiction will therefore depend on whether that jurisdiction has signed the New York Convention and its

reservations at the time of signature.

To what extent might a state or state entity successfully raise a defence of state or

sovereign immunity at the enforcement stage?

The defence of sovereign immunity is not available to state entities at the enforcement stage where those state entities

are engaged in commercial activities.

Are there any other bases on which an award may be challenged, and if so, by what?

Section 48 of the Arbitration and Conciliation Act lists the grounds on which the enforcement of a New York

Convention award may be refused and is based on Article V of the New York Convention.

How enforceable are foreign arbitral awards in your jurisdiction?

Awards issued in most of the major arbitration centres of the world are enforceable in India. Part II of the Arbitration

and Conciliation Act, which governs enforcement of foreign awards in India, applies only to awards issued in

jurisdictions notified by the Indian government as jurisdictions in which the New York Convention applies. The

government has notified all key centres of international arbitration, including France, the United Kingdom, China,

Singapore, Sweden, Switzerland and the United States.

A party enforcing an award issued in an arbitration seated outside India under the New York Convention must apply to

court and produce the following documents:

the original award or an authenticated copy;

the original arbitration agreement or a duly certified copy;

such evidence as may be necessary to prove that the award is a foreign award; and

translations of these documents, if necessary.

Will an award that has been set aside by the courts in the seat of arbitration be

enforced in your jurisdiction?

Indian courts will not enforce a foreign award that has been set aside by the court at the place of arbitration.

Rules and restrictions


Are there rules or restrictions on third-party funders?

The Arbitration and Conciliation Act is silent on third-party funding. There are no rules or restrictions in India dealing

with third-party funding of arbitrations.

Class-action or group arbitration

Hot topics

Concept


Is there a concept in your jurisdiction providing for class-action arbitration or group

arbitration? If so, are there any limitations to the arbitrability of such claims or

requirements that must be met before such claims may be arbitrated?

The Arbitration and Conciliation Act is silent on group arbitration.

Emerging trends


Are there any hot topics or trends emerging in arbitration in your jurisdiction?

With respect to international commercial arbitration, since its September 2012 decision in Bharat Aluminium v Kaiser

Aluminium Technical Services (popularly known as the BALCO decision), the Supreme Court of India minimised the

supervisory role of the courts in the arbitration process. In a series of judgments the Supreme Court sought to

reform its much-criticised tendency to interfere in the international arbitration process. The Indian government has

also reiterated its intention to develop India into a major international arbitration destination.

As regards investment treaty arbitration, India has been at the receiving end of a number of claims. In November

2011 India was held liable under the Australia-India bilateral investment treaty (BIT) in the first publicly known

investment treaty award under an Indian BIT. The tribunal, seated in London, held that the Indian courts’ failure toresolve the claimant’s jurisdictional claim over a period of nine years amounted to a breach of India’s obligation toprovide the claimant (Australian mining company White Industries) with an effective means of asserting claims and

enforcing rights. Since this award, a number of international companies have initiated investment claims against India.

In response, the government is growing sceptical of investment treaty arbitration, debating the inclusion of dispute

provisions in future bilateral investment agreements and preparing a revised model BIT.

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