Saturday, August 28, 2010

Mating attack on incumbent president: Court of Arbitration for Sport to hear dispute against World Chess Federation

Chess is a game of strategy. The recent developments in relation to the presidential election of the World Chess Federation appears to be an off-board extension of chessboard strategies. 

National Federations of United States, France, Germany, Switzerland and Ukraine as well as the presidential campaign of Anatoly Karpov have challenged the nomination of the incumbent President Kirsan Ilyumzhinov by Russia, Argentina and Mexico. Both the candidates have been nominated by the Russian Chess Federation on separate occasions and each challenges the validity of the other's nomination. In addition, the claimants have challenged the candidature of Beatriz Morinello, Ilyumzhinov's running mate, for the position of the Vice President, resembling what is in chess parlance called a "double attack". It is to be noted that the success of either of the challenges will disqualify Ilyumzhinov as the rules require each candidate to have a full "slate" (panel) for all the available positions and at least one member on a slate has to be a woman.

The matter will be heard by the Court of Arbitration for Sport on the 15th and 16th of September. 

More reports on the matter can be found here and here.

Wednesday, August 25, 2010

SEBI Circular to streamline arbitration mechanisms in stock exchanges

Securities and Exchange Board of India issued a Circular on August 11, 2010 to all stock exchanges to mandate the availability of arbitration mechanisms in stock exchanges for settlement of disputes between clients and members. It also seeks to streamline the existing mechanisms in this regard.

All stock exchanges are to maintain a panel of arbitrators consisting of as many persons as necessary to ensure timely settlement of disputes. The members of the panel are to be selected on the basis of (i) age, (ii) qualification in areas of law, finance, accounts, economics, management or administration and (iii) experience in financial services including securities market. Persons chosen to be members of the panel are to disclose any associations that they or their dependents have with the securities market. The stock exchange is to provide at least seven days of continuing education per year to the arbitrators and should appraise the performance of the arbitrators at least annually. A detailed nine-point code of conduct for the arbitrators has been provided. Any claim involving a sum upto `25 lakh will be heard by a sole arbitrator whereas any dispute involving a larger sum will be placed before a panel of three arbitrators.

Sunday, August 15, 2010

Venture Global Engineering v Satyam Computer Services & Another: Excerpts and some observations

We had argued in one of our earlier posts, that the judgment of the AP High Court in Venture Global Engineering v. Satyam Computer Services and another was unfounded in law. We reported recently that the said judgment has been reversed by the Supreme Court in appeal. Here we reproduce the relevant portions of the judgment of the Supreme Court and make some observations on the judgment.

Saturday, August 14, 2010

Australian International Disputes Centre

We had earlier written about rapid changes in the arbitration landscape in Australia. Improving on the same, the Australian International Disputes Centre was launched in Sydney on August 3rd, as part of a joint initiative by the Australian Centre for International Commercial Arbitration and the Australian Commercial Disputes Centre and is backed by State and Federal governments.

The Centre offers a wide range of dispute resolution services ranging from arbitration and mediation to hybrid dispute resolution, facilitated negotiation and conciliation, among many others.
The launch of this Centre will give a further boost to Australia and especially Sydney as a commercial hub, competing with other Asia-Pacific dispute resolution Centres in Singapore and Hong Kong.

Friday, August 13, 2010

Breaking News: SC Reverses AP HC judgment in Satyam Venture Case

In one of our earliest posts, we had discussed the judgment of AP High Court which held that an application under Section 34 could not be amended after the limitation period for filing such an application had expired. Our position was that the decision lacked any statutory basis whatsoever and amounted to judicial law making by the HC. The Supreme Court on August 11, allowed the appeal of Venture reversing the judgment of the HC in the matter.

I sincerely thank Mr. Badrinath Srinivasan for bringing the judgment to my attention and sending me a copy of the same. More analysis on the judgment will be posted soon.

Wednesday, August 11, 2010

LCIA India Rules: Tailored for Indian Scenario - Guest Post by Mr. Sonal Singh

We are happy to publish a guest post by Mr. Sonal Singh on LCIA India Rules. Mr. Singh is an Advocate and Solicitor (England & Wales) and is an alumnus of Kings College, London. He is currently associated with the Indian International & Domestic Arbitration Center, a recent initiative which has on its list of consultants stalwarts like Prof. Martin Hunter. Following is the text of Mr. Singh's post:

LCIA India has recently introduced its new arbitration rules (LCIA Rules (India)) specifically tailored for Indian scenario. The opening of LCIA India and unveiling of the LCIA Rules (India) has provided a boost to the development of institutional arbitration in India. The LCIA Rules (India) of course have the advantage of well established and recognized LCIA Rules (London), while at the same time; they have been modified to compliment the current Indian Legal regime.

The LCIA Rules (India) have tried to ensure fairness and expediency in the arbitration proceedings by creating obligations on the parties and Tribunal and granting greater powers to the LCIA Court. Also the new rules have provided an extremely attractive frame work of arbitration cost for parties. All these deviations specifically made to counter the obstacles in India being Arbitration-attractive destination are discussed herein below.

Arbitrations to be handled with speed and efficiency

The LCIA Rules (India) have specifically made a provision under Article 14.2 which states that:

“At all times the parties shall do everything necessary for the fair, efficient and expeditious conduct of the arbitration including complying without delay with any determination of the Arbitral Tribunal and the LCIA Court as to procedural or evidential matters or with any order of directions of the Arbitral Tribunal and the LCIA Court”.

This clause obligates the parties to do everything for efficient and expeditious conduct of arbitration proceedings. This clause does not find place in the original LCIA Rules.

Another effort to expedite the arbitration proceedings can be seen in clause 5.3(b) of the LCIA Rules (India), which require the prospective Arbitrators to confirm their ability to devote sufficient time to ensure the expeditious conduct of the arbitration before they are appointed.This article is some what similar to the new ICC statement of acceptance availability and independence and clarifies that only those arbitrators who can devote sufficient time and conduct the proceedings expeditiously will be selected.

Article 28.4 which appears to be most interesting and innovative states that Tribunal may order costs taking in account the “conduct and cooperation by the parties during the arbitration proceedings”. Thus any undue delay, unnecessary expenses caused by parties or their representatives can be detrimental to their interest and pocket. There might be a possibility, where a party wins the case and gets an order in its favour, but may also be imposed with costs for causing undue delay, obstructing the arbitration proceedings etc.

This clause imposes an obligation on both, the Tribunal, to observe the conduct of the parties, and the parties, to bear good conduct during the arbitration proceedings.

LCIA Court to appoint Members and Chairman of the Tribunal

The LCIA Rules (India) (Article 5.5, 5.6 & 5.7) empowers the LCIA court to appoint the members and the chairman of the Tribunal. Greater authority is provided to the LCIA court to control and ensure that the Arbitration proceedings are conducted in fair, neutral and expeditious manner.

Article 5.6 of the LCIA Rules (India) states that in case of a three-member Arbitral Tribunal, the chairman shall in all cases be selected by the LCIA court. Even power to nominate the chairman has been taken away from the parties and the party nominees.

However, Article 5.7, allows the parties to “nominate” its nominee arbitrator (party arbitrators) but article 5.6 empowers the court to “appoint” them. However, it has been clarified that LCIA court would give due regard for any particular method or criteria of selection agreed in writing by the parties, nature of transaction, circumstances of disputes etc while appointing such arbitrators.

Further, Article 7.1 states in case the parties have agreed that any arbitrator is to be appointed by one or more of them or any third party, such agreement shall be treated as an agreement to nominate the arbitrator. This means that the power to appoint the arbitrators has been exclusively given to LCIA Court.

Seat of arbitration to be determined by LCIA Court

Unlike the LCIA Rules (London), which makes London the default seat if parties fail to arrive at any agreement as to the seat, neither New Delhi nor any other city has been made the default seat under the LCIA Rules (India).

Moreover, Article 16.1, states that when parties fail to agree to the seat of arbitration, LCIA Court shall decide the seat in view of all circumstances and taking into account the written statements made by the parties.

Bhatia International Sidelined

Another unique India-specific provision is Article 32.6 of the LCIA Rules (India) which provides for exclusion of Part-I of the Indian Arbitration and Conciliation Act 1996, where the place (or seat) of arbitration is outside India.

This clause sidelines the much controversial decision of the Hon’ble Supreme Court in the case of Bhatia International. Notably, by virtue of this article, in case of arbitrations held outside India, part I is excluded even if parties fail to stipulate to such exclusion in arbitration agreement

Attractive frame work of arbitration costs

The Rules provide for an hourly rate of compensation for arbitration capped at `20,000/- per hour. This is a departure from the current general practice in India. Currently, in ad-hoc arbitrations in India, the arbitrators are the ones who decide their fees. There are no fixed parameters to decide the fees and which may vary from `20,000/- to `1,00,000/-, for High Court Judges and `50,000/- to `2,00,000/- for Supreme Court Judges on per sitting basis (Usually a sitting is scheduled for 3-4 hour and anything over it is considered to be second sitting). The fees also depends on the amount of claim and complexity of disputes. Sometimes arbitrations may charge an extra fee for reading the cases and for drafting the awards. Considering the current practice the new Rules might prove to be attractive and cost effective to the parties.

But the cap on the arbitrators fee leave the floor open for many questions: would international arbitrators who get paid at £400 per hour or so under original LCIA rules and other arbitration rules, agree to conduct arbitrations in almost half the fee? Would it be possible for a party to nominate an arbitrator of its choice? Would not the other party refuse to higher cap as it would affect its own pay out?

These questions will be answered in months to follow when the Rules would be put to judicial scrutiny.


LCIA Rules (India) have been made to strike the correct balance between the well established LCIA Rules and new innovations, improvements and clarifications made as per Indian Legal regime. The New Rules are well equipped to avoid unnecessary delays that may be caused by the employment of dilatory tactics by the parties. In this respect the rules surpass Indian courts and ad-hoc arbitrations.

We can just hope that the opening of LCIA and introduction of the New Rules is the much awaited light at the end of the tunnel for a new culture International Commercial Arbitration in India.

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