AN INTRODUCTORY

GUIDE TO
ARBITRATION
IN ASIA
Second edition, 2018

www.morganlewis.com
INDIA

Model Law Yes

New York Yes

Convention
Arbitral institution Mumbai Centre for International Arbitration (MCIA)
20th Floor, Express Towers,
Nariman Point,
Mumbai, 400021

Phone
+91 22 6105 8888

Email
contact@mcia.org.in

Current rules
Arbitration Rules of the Mumbai Centre For International Arbitration
(MCIA Rules 2nd Edition, 15 January 2017)

Model clause
‘Any dispute arising out of or in connection with this contract, including
any question regarding its existence, validity or termination, shall be
referred to and finally resolved by arbitration in accordance with the
Arbitration Rules of the Mumbai Centre for International Arbitration
(“MCIA Rules”), which rules are deemed to be incorporated by
reference in this clause.

The seat of the arbitration shall be ________________.

The Tribunal shall consist of [one/three] arbitrator(s).

The language of the arbitration shall be ________________.

The law governing this arbitration agreement shall be

________________.

The law governing the contract shall be______________.’

Arbitral institution Singapore International Arbitration Centre, India

Office (SIAC)
1008, The Hub
One Indiabulls Centre

19
 10th Floor, Tower 2B
Senapati Bapat Marg
Elphinstone Road
Mumbai 400 013
India

Tel: +91 22 6189 9806 (Main)

Tel: +91 22 6189 9841 (Direct)
Fax: +91 22 4332 7600
Email: corpcomms@siac.org.sg
Current rules
Arbitration Rules of the Singapore International Arbitration Centre (Fifth
Edition, 1 April 2013)
Model clause
‘Any dispute arising out of or in connection with this contract, including
any question regarding its existence, validity or termination, shall be
referred to and finally resolved by arbitration administered by the
Singapore International Arbitration Centre (“SIAC”) in accordance with
the Arbitration Rules of the Singapore International Arbitration Centre
(“SIAC Rules”) for the time being in force, which rules are deemed to be
incorporated by reference in this clause.

The seat of the arbitration shall be [Singapore].*

The Tribunal shall consist of _________________** arbitrator(s).

The language of the arbitration shall be ________________.

* Parties should specify the seat of arbitration of their choice. If the

parties wish to select an alternative seat to Singapore, please replace
“[Singapore]” with the city and country of choice (e.g., “[City,
Country]”).
** State an odd number. Either state one, or state three.’

What legislation governs domestic and international arbitration

in India?
Arbitration in India is governed by the Arbitration and Conciliation Act, 1996 as amended by the
Arbitration and Conciliation (Amendment) Ordinance, 2015 (Arbitration Act). It is based largely on
the Model Law. Part I of the Arbitration Act applies to domestic arbitrations seated in India, and Part
II relates to the enforcement of certain foreign awards, such as awards under the New York
Convention—to which India is a party—and the Convention on the Execution of Foreign Awards, 1923
(Geneva Convention).

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Does Indian law consider all matters to be arbitrable?
The Act does not in specific terms exclude any category of disputes — civil or commercial — from
arbitrability. However, an award will be set aside if the court finds that the subject matter of the
dispute is not capable of settlement by arbitration under the laws currently in force, or if the award
conflicts with Indian public policy.

Section 2(3) of the Arbitration Act merely declares that Part I, relating to domestic arbitration and
award, shall not affect any other law for the time being in force by virtue of which certain disputes
may not be submitted to arbitration.

Since the Arbitration Act is silent on types of non-arbitrable disputes, the Supreme Court outlined
judicially enumerated issues that cannot be referred to arbitration — based on analysis of the types of
rights involved (rights in rem or in personam), conferment of jurisdiction on special courts or on
public policy. These include matters involving crimes, matrimony, insolvency and winding up,
guardianship, tenancy, testamentary matters, 1 trusts 2 and consumer protection. 3 However, it held that
the law did not exclude issues of fraud as being non-arbitrable.

The Supreme Court in World Sport Group (Mauritius) Ltd. v. MSM Satellite (Singapore) Pte. Ltd. 4 held
that allegations of fraud did not prevent the court from making reference to arbitration under Section
45 of the Arbitration Act. However, in the case of India-seated arbitrations, there was a cloud on
efficacy of arbitral proceedings to resolve issues of fraud.

The Supreme Court of India in the recent judgment of A. Ayyasamy v. A. Paramasivam & Ors. 5 held
that mere allegations of fraud simplicitor does not nullify the arbitration agreement, but only in cases
where there are serious allegations of fraud, the disputes may be held non-arbitrable. Every
allegation of fraud would need to be weighed on a scale of seriousness and complexity to identify the
veracity of the allegations.

In what circumstances will the court stay proceedings in favour

of arbitration?
The courts will stay proceedings pending before it in favour of arbitration if the dispute falls within the
scope of an arbitration agreement and if the arbitrator is competent or empowered to decide it,
unless (in the case of an application made under Section 8 of the Arbitration Act, concerning a
domestic commercial arbitration) they find that prima facie no valid arbitration agreement exists, or
(in the case of an application made under Section 45, concerning a foreign commercial arbitration)
the courts find that the arbitration agreement is null and void, inoperative or incapable of being
performed.

Is an arbitration clause that does not refer to a set of an

administering institution’s rules enforceable?
The courts will uphold an arbitration agreement, including those providing for ad hoc rather than
administered proceedings, so long as it evidences an intention by the parties to resolve their dispute

1
Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd. & Ors. (2011) 5 SCC 532.
2
Shri Vimal Kishor Shah & Ors. V. Mr. Jayesh Dinesh Shah & Ors., Civil Appeal No. 8614 of 2016 (Supreme Court).
3
Aftab Singh and Others v. Emaar MGF Land Limited and Anr., Consumer Case No. 701 of 2015 (NCDRC).
4
AIR 2014 SC 968.
5
Civil Appeal Nos. 8245 and 8246 of 2016 (Supreme Court).

21
by arbitration. The Arbitration Act supplies a default procedure where the parties have not indicated
what procedural rules are to apply.

How are appointments and challenges to the appointment of

arbitrators made?
Chapter III of Part I of the Arbitration Act relates to the composition and appointment of the arbitral
tribunal. The parties to a dispute are free to determine the number of arbitrators, as long as it is not
an even number. If the parties do not specify the number, the arbitration will be conducted by a sole
arbitrator. The parties are free to agree on the procedure to appoint an arbitrator.

If the parties fail to appoint the arbitrator, they may approach the Supreme Court in case of
international commercial arbitration and the High Court in domestic arbitrations under Section 11 of
the Arbitration Act. The role of Supreme Court and High Court is confined to the examination of the
existence of an arbitration agreement while appointing an arbitrator.

Before appointing an arbitrator, the Supreme Court or the High Court shall seek a disclosure in writing
from the prospective arbitrator as to whether any circumstances exist that are likely to give rise to
justifiable doubts as to his or her independence and impartiality. The application for appointment of
the arbitrator before the Supreme Court or High Court is required to be disposed of as expeditiously
as possible, and an endeavour shall be made to do so within a period of 60 days.

An arbitrator can be challenged if justifiable doubts arise as to his or her independence or impartiality
or if he or she does not possess the necessary qualifications agreed to by the parties. A party can
only challenge an appointment it has made (or in which it participated) if it becomes aware of these
grounds after the appointment was made. The grounds stated in the Fifth Schedule of the Arbitration
Act give guidance on determining whether circumstances exist that give rise to justifiable doubts as to
the independence or impartiality of an arbitrator. The Seventh Schedule contains circumstances
where an arbitrator is rendered ineligible for appointment.

The parties may agree on a procedure for challenging the appointment of an arbitrator. In the
absence of such a procedure, a party that intends to challenge an arbitrator shall, within 15 days
after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any
circumstances giving rise to the challenge, send a written statement of the reasons for the challenge
to the arbitral tribunal. Unless the arbitrator challenged withdraws from his or her office or the other
party agrees to the challenge, the arbitral tribunal shall decide on the challenge. If the challenge is
not successful, the arbitration will continue and the tribunal shall pass an award. Where an award is
made, the party challenging the arbitrator may make an application to set aside such an award in
accordance with and in the manner provided in the Arbitration Act.

Who appoints the tribunal if the arbitration agreement does not

provide for it?
In the absence of an agreement by the parties, the following procedure shall be adopted. If a sole
arbitrator is to be appointed and the parties are unable to agree on the appointment, the arbitrator
shall, in international commercial arbitrations, be appointed by the Supreme Court or, in domestic
arbitrations, the High Court, or any person or institution designated by such court. The relevant court
must make the appointment within 60 days.

If three arbitrators are to be appointed, each party shall appoint one arbitrator, and the two
appointed arbitrators shall appoint the third arbitrator. If a party fails to appoint an arbitrator within
30 days, the appointment of the arbitrator shall be made by the Supreme Court for international

22
commercial arbitrations and the High Court for domestic arbitrations, or any person or institution
designated by such court.

What is the extent and nature of court supervision of

arbitration?
For arbitrations seated in India, under the Arbitration Act, a court may not intervene in an arbitration
proceeding except on application by either of the parties under the following circumstances:

• Application for dispute to be referred to arbitration under Sections 8 and 45;

• Application for interim measures under Section 9;

• Application for court to appoint arbitrator under Section 10;

• Application challenging the appointment of an arbitrator under Section 13;

• Application to determine the termination of mandate of an arbitrator under Section 14;

• Application for assistance in taking evidence under Section 27;

• Application to extend time period for completion of arbitral proceedings beyond the 18-month
time frame under Section 29A(4);

• Application to set aside an arbitral award under Section 34;

• Enforcement of an award under Section 36;

• Appeals from certain orders of a court under Section 37;

• Application to order the tribunal to deliver an award to an applicant on payment to the court
under Section 39;

• Application for a determination of jurisdiction under Section 42; or

• Extension of time periods under Section 43.

Can an arbitral tribunal grant interim orders or relief?

Yes. Section 17 of the Arbitration Act provides that the arbitral tribunal has the same powers as a civil
court to grant and enforce interim measures of protection as it considers necessary in respect of the
subject matter of the dispute. This is subject to some narrow exceptions, such as the granting of
injunctive relief against encashment of a bank guarantee. The arbitral tribunal may also require a
party to provide appropriate security in connection with any interim measure ordered. The interim
orders passed by an Arbitral Tribunal will be deemed to be an order of the court and will be
enforceable as court orders under the Code of Civil Procedure, 1908.

Can an arbitral tribunal award interest?

Yes. Section 31(7) of the Arbitration Act empowers an arbitral tribunal to award interest at such rate
as it deems reasonable, unless otherwise agreed by the parties. The principal sum awarded in a final
award will carry interest at two per cent per annum over the prevailing rate of interest from the date
of award to the date of payment.

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Are arbitration proceedings confidential?
Under the Arbitration Act, there is no express or implied obligation to treat an arbitration agreement,
any proceedings arising from it, or the award as confidential.

Are there any restrictions on who may represent parties in

arbitration?
The Arbitration Act does not impose any restrictions on the representation of parties in arbitration
proceedings.

How are domestic arbitral awards enforced in India?

Domestic awards shall be enforced under the Code of Civil Procedure in the same manner as if the
award were a decree of the court. Such enforcement can only be refused on the grounds specified in
the code.

Foreign awards may be enforced in the same manner as a decree of the court. The party applying for
enforcement must produce the original award or an authenticated copy, the original agreement or an
authenticated copy, and evidence necessary to prove that it is a foreign award. If the award is in a
foreign language, the party must produce a certified English translation.

How and when may parties challenge arbitral awards made in

India?
There is no appeal from arbitral awards made in India. A domestic award may only be set aside by
the courts upon application by a party. Any such application must be made within three months from
the date on which the party making that application had received the arbitral award. The grounds for
a court to set aside an award are as follows:

• The parties were under some incapacity, or the agreement was not valid under the law of the
country where the award was made or that the agreement was subject to;

• The party against whom the award is invoked was not given proper notice as required;

• The award deals with a difference not contemplated by the submission to arbitration;

• The composition of the arbitral authority or the arbitral procedure was not in accordance with the
agreement of the parties;

• The award has not yet become binding on the parties, or has been set aside or suspended by a
competent authority of the country under the law of which that award was made;

• The subject matter of the dispute is not capable of being settled under the laws of India;

• The enforcement of the award would be contrary to the public policy of India. The notion of
public policy has been clarified by an explanation to Section 34 and is limited to fraud, corruption,
contravention of fundamental policy of Indian law, or basic notions of morality or justice. The
court may not review the merits of the dispute in deciding whether the award is in contravention
with the fundamental policy of Indian law; or

• In the case of domestic arbitrations only, the award is vitiated by patent illegality that appears on
the face of the award.

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Can foreign arbitral awards be enforced in India?
Yes. The procedure governing the enforcement of New York Convention awards is set out in Part II
Chapter I of the Arbitration Act.

A foreign award is an (i) Arbitral Award, (ii) on differences between persons arising out of legal
relationships, whether contractual or not, (iii) considered as commercial under the law in force in
India, (iv) made on or after the 11th day of October 1960, (v) in pursuance of an agreement in
writing for arbitration to which the convention set forth in the first schedule applies (New York
Convention), and (vi) in one of such territories as the Central Government, being satisfied that
reciprocal provisions made may, by notification in the Official Gazette, declare to be territories to
which the said convention applies.

The enforcement of a foreign award in India is a two-stage process that is initiated by filing an exe-
cution petition. Initially, a court would determine whether the award adhered to the requirements of
the Arbitration Act. The foreign award is deemed to be the decree of the Court under Part II of the
Arbitration Act, once the conditions for enforcement under Section 48 are satisfied. As per recent
trend, almost all challenges to enforcement of foreign awards have been rejected in Indian courts.

When can the Indian courts refuse enforcement of foreign

arbitral awards?
Under Section 48, the enforcement of a foreign award may be refused on the following grounds:

• The parties were under some incapacity or the agreement was not valid under the law of the
country where the award was made or that the agreement was subject to;

• The party against whom the award is invoked was not given proper notice as required;

• The award deals with a difference not contemplated by the submission to arbitration;

• The composition of the arbitral authority or the arbitral procedure was not in accordance with the
agreement of the parties;

• The award has not yet become binding on the parties, or has been set aside or suspended by a
competent authority of the country under the law of which that award was made;

• The subject matter of the dispute is not capable of being settled under the laws of India;

• The enforcement of the award would be contrary to the public policy of India; or

• The notion of public policy has been clarified by an explanation to Section 48 and is limited to
fraud, corruption, contravention of fundamental policy of Indian law, or basic notions of morality
or justice. The court may not review the merits of the dispute in deciding whether the award is in
contravention with the fundamental policy of Indian law.

Nishith Desai Associates, 2018.

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