Third Week of Arguments: Constitution Bench on Bhatia International

Arguments continued this week before the Constitution Bench comprising the Chief Justice, and Justices Jain, Nijjar, Khehar and Desai. Unlike counsel before him, Dr Singhvi concentrated principally on the applicability of section 9 of the 1996 Act to arbitrations in which the seat is abroad, and it was his case that section 9 ought to apply no matter what view the court takes of the applicability of other provisions of Part I. Counsel reiterated that section 2(2) of the Act is an “affirmative” provision and not one that excludes the jurisdiction of the Indian court, and emphasised that section 2(5), which provides that the 1996 Act applies to “all arbitrations”, has been made subject to section 2(4) but not to section 2(2). The Chief Justice pointed out that there are provisions that although worded positively have a “negative effect” and vice versa, and asked why this is not true of section 9 as well. Counsel’s answer was that the “nature” of section 9 is “seat-neutral”, “Part-neutral” and “asset-based”, intended to ensure that arbitral proceedings are not frustrated by the alienation of assets. Counsel submitted that a petition under section 9 is never maintainable for frustrating arbitral proceedings (for example by seeking an anti-arbitration injunction).
Arguments, especially on Wednesday, also focussed on whether a civil suit is maintainable seeking interim relief in the event a petition under section 9 is not. The Chief Justice put to counsel the possibility that the underlying assumption in Bhatia International that a party is “remediless” unless Part I applies to an arbitration with a foreign seat may not have taken into account the fact that it is open to the claimant to institute a civil suit and seek interim relief to ensure that property is not dissipated. Counsel’s submission was that section 9 is a clearer path to the same result, but that if that is held to be inapplicable, a clear and unequivocal finding that a civil suit is maintainable is necessary, along with guidelines on the circumstances in which it may be instituted. This arose particularly because of the possibility that it is not open to a court to grant interim relief once an application under section 8 or section 45 is allowed. It was suggested that this may not necessarily be the case, despite the observations in Anand Gajapathi Raju and other cases that “nothing remains” to be decided one such an application is allowed, because sections 8 and 45 do not provide in terms that the suit shall be stayed. The thrust of counsel’s submission was, however, that a remedy under section 9 is more appropriate because holding that a civil suit is maintainable may not be entirely consistent with principles of arbitration law. Counsel also referred to the rules of various arbitral institutions and the experience of other jurisdictions to demonstrate that obtaining interim relief from a national court in which assets are located is by no means incompatible or inconsistent with the arbitration agreement. The arbitration legislation of many jurisdictions, including England and Wales, and the rules of arbitration of a number of arbitral institutions, expressly so provide.
The Respondents opened their case towards the end of the week and Mr Salve’s submissions emphasised that the seat of arbitration is a fundamental premise of jurisdiction in international arbitration, and that the existence of “concurrent jurisdiction” is entirely alien to arbitration law.
Arguments continue on Tuesday.

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V. Niranjan

1 comment

  • > The issues involved, and the arguments briefed to have been advanced before the court, are prima facie too technical, or hyper-technical, – to enable anyone having no expert knowledge, more so at least any reasonable know of what the general scheme of the laws on 'arbitration' about,- to even broadly understand the inherent implications; and as to what consequences would follow in the event of the court deciding them one way or the other. The first and foremost point on which one may wish to be clear seems to be, – is it not ,in any event, open to the parties to a cross-border dispute, to resort to the more efficacious, speedier, hence hassle- less course of action alternatively available (subject to correction, should that be a wrong premise?) before the- 'international court of arbitration'?? An elucidation of this aspect by an expert on the law might help in having a clear understanding of the whole gamut of issues , from a practical point of view !

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