The Arbitration and Conciliation Act, 1996 (A&C Act) is based on the 1985 UNCITRAL Model Law and came into force on 25-1-1996. The Indian Legislature recognised the need to honour India’s obligations under 1958 New York Convention and implement the modern arbitration regime to promote comity of nations in the field of international commercial arbitration and to foster international trade. The A&C Act has in Section 5 embodied the policy of minimal judicial interference. Although, the principle of minimised judicial interference is recognised by the most leading arbitration jurisdictions, the national courts of the seat have a supervisory jurisdiction to oversee the arbitration proceedings.
The Discounted Cash Flow (‘DCF’) valuation method was first introduced by Economist Myron J. Gordon in 1962 in an attempt to combine imprecise financial practices with economic theory to calculate the values of enterprises. This valuation method was later adopted by arbitral tribunals with an aim to calculate damages to be awarded.
The seminal judgment of the 3-Judge Bench of the Supreme Court of India in Vidya Drolia v. Durga Trading Corpn.(Vidya Drolia) has been instrumental in settling many controversies that have existed in Indian arbitral jurisprudence since the commencement of the Arbitration and Conciliation Act, 1996 (the Act). The judgment of the Supreme Court has addressed multiple issues concerning the interpretation of the various facets of the arbitration agreement that have time and time again been obscured by obsolete and conflicting jurisprudence.
Nearly after a decade the Indian arbitration regime has come in consonance with the western world and settled the long due controversy on stamping of arbitration agreement. A Bench comprising of Dr Justice D.Y. Chandrachud, Justice Indu Malhotra and Justice Indira Banerjee in N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. has held that since the arbitration agreement is an independent agreement between the parties, and is not chargeable to payment of stamp duty, the non-payment of stamp duty on the commercial contract, would not invalidate the arbitration clause, or render it unenforceable, since it has an independent existence of its own.
The decision of the 3-Judge Bench of the Supreme Court of India in N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. (Global Mercantile) has undoubtedly marked the inception of a new era of pro-arbitration jurisprudence in India. The seminal judgment of the Supreme Court delivered on 11-1-2021 has brought India more in consonance with the opinions of the courts in the western world that have pioneered International arbitration jurisprudence for decades. The present article will study the far-reaching effect of the judgment and will highlight the manner in which the Supreme Court through its cogent and contemporary reasoning has discarded the fetters that recalcitrant parties would weaponise to circumvent their obligations in honouring valid arbitration agreements.
Indian arbitration jurisprudence has undoubtedly witnessed many controversies with regard to the various facets of the Arbitration and Conciliation Act, 1996 (the Act). Notable controversies include the applicability of Part 1 of the Act to internationally seated arbitration agreements which began from Bhatia International v. Bulk Trading SA which was finally settled by the Supreme Court in 2012 in e Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc.(BALCO).
One of the most important facets of arbitration is mutual consent of the disputing parties to resort to arbitration as means of resolution of disputes. In fact, requirements for a valid arbitration agreement are also expressly provided for under Section 7 of the Arbitration & Conciliation Act, 1996 (“the Act”). In other words, for a valid arbitration agreement to exist, there must be consensus ad idem, which simply means that the contracting parties must have the common intention to take the dispute to an arbitral tribunal to claim relief.
In about a span of decade, dispute funding or litigation funding or now more commonly known as Third Party Funding (‘TPF’) is no longer just restricted to common law jurisdictions but it has gained much spotlight in international litigation and commercial arbitration, albeit high risk.
Courts in India and Singapore have taken a pro-arbitration stance with a strict adherence to the principle of non-interference with arbitral awards. They have also taken proactive steps to ensure their speedy execution. This contributes to the two countries’ credentials as arbitration-friendly regimes.
Over the past decade, the Indian legal market has demonstrated considerable growth and has in fact, adopted a liberalised approach. With the increase in the number of foreign investors being interested in the Indian market, it becomes all the more dramatic and exciting of an industry for lawyers. Especially young lawyers, that are practising in their formative years, would always be eager to work in a market where there is immense opportunity to learn and gain experience and to be in the midst of a dynamic marketplace.