This article has been written by Adv. Tasneem Banu pursuing Crack The Solicitors Qualifying Examination (SQE 1) and has been edited by Oishika Banerji (Team Lawsikho).
This article has been published by Sneha Mahawar.
Table of Contents
Introduction
With the rise in international trade and investment, cross-border commercial disputes are also climbing the mountains. International arbitration has emerged as the preferred method of resolving such cross-border commercial disputes while maintaining business relationships (Arbitration and Conciliation (Amendment) Ordinance, 2020). As a result of open-ended economic policies, there has been an increase in cross-border transactions involving Indian parties. As a result, the number of international commercial disputes that are related to Indian parties is accelerating. The international community’s attention has been drawn to India’s international arbitration regime as a result of this. Developments in arbitration jurisprudence over the last decade reflect a completely renewed approach in accordance with international best practices. The Supreme Court of India and high courts have issued a number of pro-arbitration rulings that have significantly altered the Indian arbitration landscape. This article gels into the aspect of IBA Rules and guidelines regarding international arbitration, taking into account the growth and recognition international arbitration has received over a period of time.
Background of arbitration in India
From 2012 to 2022, the Supreme Court issued a number of landmark decisions, thereby declaring the arbitration law in India to be seat-centric. They also referred the non-signatory nations to be a part of an arbitration agreement in order to settle disputes by means of arbitration in terms of recognising emergency arbitrator orders, narrowing the scope of public policy objections in regard to domestic and foreign seated arbitration, and clarifying the different loopholes of dispute arbitrability.
The Indian legislature and executive have also taken steps to improve the ‘ease of doing business in India’ and to clearly reflect an arbitration-friendly policy. The Arbitration and Conciliation (Amendment) Act, 2015 became law on October 23, 2015. The 2015 Amendment Act was well received and improved the efficiency of arbitration in India significantly. Under the chairmanship of retired Justice B.N. Srikrishna, a High-Level Committee to Review the Institutionalization of Arbitration Mechanisms in India (“Committee”) was formed.
The Arbitration and Conciliation (Amendment) Act, 2019 was enacted on August 9, 2019, after the Committee’s recommendations. The Central Government notified Sections 1, 4-9, 11-13, and 15 of the 2019 Amendment Act on August 30, 2019.
The 2019 Amendment Act was passed with the goal of making India a hub of institutional arbitration for both domestic and international arbitrations. Certain provisions of the 2019 Amendment Act, however, were criticised, including the proposal to establish an Arbitration Council of India and the provision to limit the applicability of the 2015 Amendment Act.
Definitions in relation to arbitration that need discussion
- ‘Arbitral Tribunal’ refers to a single arbitrator or a panel of arbitrators;
- ‘Claimant’ refers to the Party or Parties who initiated the arbitration and any Party who becomes aligned with such Party or Parties through joinder or otherwise;
- ‘Document’ means any writing, communication, picture, drawing, programme, or data of any kind, whether recorded or maintained on paper or by electronic, audio, visual, or other means;
- ‘Evidentiary Hearing’ means any hearing at which the Arbitral Tribunal receives oral or other evidence, whether in person, by teleconference, videoconference, or other methods.
The IBA rules : an insight
It is ideal to note that the International Bar Association (“IBA”) has been contributing to publishing several rules and guidelines in regard to international arbitration that has been structured in a way that facilitates streamlining of the arbitral procedure which in turn facilitates usage of international arbitration as an alternative means of resolving dispute rest. It is necessary to remember that in principle, the IBA rules and guidelines are not to be considered legal provisions and therefore do not necessarily override any national laws in relation to arbitration or any arbitration rules that are chosen by the parties. They become binding only upon agreement by the parties.
Although these Rules have been vested with the trait of being of a non-binding nature, they have, nevertheless, become relevant and have thereby found divergent acceptance in international arbitral practice. These rules have been designed in such a way that they can assist participants ranging from the counsel of the parties to that of arbitral institutions, national courts and arbitrators, in terms of dealing with issues that sees the daylight in the context of international arbitration, such as,
- Collection of evidence (Section A),
- Arbitrators’ impartiality and independence (Section B),
- Ethics of arbitrators (Section C),
- Representation of parties (Section D) and
- Drafting clause for facilitating arbitration (Section E).
- The purpose of these IBA Rules on the Taking of Evidence in International Arbitration is to provide an efficient, economical, and fair process for taking evidence in international arbitrations, particularly those involving Parties from different legal traditions. They are intended to supplement the legal provisions as well as the institutional, ad hoc, or other rules that govern the arbitration proceedings.
- Parties and Arbitral Tribunals may adopt, in whole or in part, the IBA Rules of Evidence to govern arbitration proceedings, or they may vary or use them as guidelines in developing their own procedures. The Rules are not intended to limit the inherent and advantageous flexibility of international arbitration, and Parties and Arbitral Tribunals should be aware of this and are free to tailor them to the specific circumstances of each arbitration.
- The taking of evidence shall be conducted on the principles that each Party shall act in good faith and be entitled to know, reasonably in advance of any evidentiary hearing or any fact or merits determination, the evidence on which the other Parties rely.
An overview of guidelines that are laid down by the IBA rules
The 2014 IBA Guidelines on Conflicts of Interest in International Arbitration, as updated in August 2015, is considered to be a leading soft law instrument that facilitates providing guidance in terms of the obligations of the arbitrator’s alongside conflicts arising out of interest issues. The IBA Guidelines on Conflicts of Interest are applicable to both commercial and investment arbitration alongside legal and non-legal professionals who are serving as arbitrators. It is the Introduction to These Guidelines that further stipulates that they are said to be based upon statutes and case law in a cross-section of jurisdictions, and the judgment and practitioners’ experience that is involved in international arbitration.
It is noteworthy to mention that Part I of the 2014 IBA Guidelines on Conflicts of Interest is inclusive of “General Standards” in regards to impartiality, independence and disclosure, as well as “Explanatory Notes”, that have been made on those Standards.
Further, Part II of those Guidelines is vested with the responsibility of entitling Practical Application of the General Standards, which is further divided into three coloured lists, namely,
- The Red List,
- The Orange List, and
- The Green List
The Green List accompanies Application Lists, which contain specific and non-exhaustive scenarios that are ipso facto supposed to take place in arbitration practice, with an aim to assist users for the purpose of determining whether the appointment of an arbitrator would stand in violation with the interest rules or not.
- Arbitrators and party representatives are frequently unsure of the scope of their disclosure duties. The expansion of international commerce, particularly larger multinational groups and foreign legal firms, has resulted in a rise in the complexity of analysing disclosure and conflict of interest issues. Parties now have additional chances to use arbitrator challenges to postpone arbitrations or to deny the opposing party the arbitrator of their choice.
Any relationship disclosure, no matter how trivial or significant, may result in unnecessary or frivolous objections. At the same time, it is critical that more information be made available to the parties in order to safeguard awards from challenges based on purported failures to disclose and to promote a level playing field among parties.
- A complicated set of decisions must be made by the parties, arbitrators, institutions and courts about the information that arbitrators should reveal and the standards that should be used for disclosure. Furthermore, when an objection or challenge is filed following a disclosure, institutions and courts must make tough decisions. There is a contradiction between the parties’ right to disclose circumstances that may call an arbitrator’s impartiality or independence in order to safeguard the parties’ right to a fair hearing, and the need to minimise unwarranted challenges against arbitrators in order to protect the parties’ ability to select arbitrators of their choice.
- It is in the best interests of the international arbitration community for ill-founded challenges against arbitrators to be avoided, and for the legitimacy of the process to be unaffected by uncertainty and a lack of uniformity in the applicable standards for 2 disclosures, objections, and challenges. The 2004 Guidelines reflected the belief that the standards in use at the time lacked clarity and uniformity. The Guidelines, therefore, include some “General Standards and Explanatory Notes on the Standards.” Furthermore, the Guidelines list specific situations indicating whether they warrant disclosure or disqualification of an arbitrator in order to promote greater consistency and avoid unnecessary challenges, arbitrator withdrawals, and removals. These lists, labelled “Red,” “Orange,” and “Green” (the “Application Lists”),
- The Guidelines reflect the IBA Arbitration Committee’s understanding of the best current international practice, and are firmly rooted in the principles expressed in the General Standards below.
- The General Standards and Application Lists are based on statutes and case law from various jurisdictions, as well as the judgment and experience of international arbitration practitioners.
- The IBA Arbitration Committee updated its analysis of the laws and practises in a number of jurisdictions while reviewing the 2004 Guidelines. (https://www.ibanet.org/MediaHandler?id=e2fe5e72-eb14-4bba-b10d-d33dafee891).
- The Guidelines aim to strike a balance between the various interests of parties, representatives, arbitrators, and arbitration institutions, all of whom share responsibility for ensuring the integrity, reputation, and efficiency of international arbitration.
- The Guidelines apply to international commercial and investment arbitration, regardless of whether the parties are represented by lawyers or non-lawyers, and regardless of whether non-legal professionals serve as arbitrators.
- These Guidelines are not legal provisions and do not supersede any applicable national law or arbitral rules that the parties have chosen. However, as with the 2004 Guidelines and other sets of rules and guidelines issued by the IBA Arbitration Committee, it is hoped that the revised Guidelines will find widespread acceptance within the international arbitration community and that they will assist parties, practitioners, arbitrators, institutions, and other stakeholders. In dealing with these critical issues of impartiality and independence, courts must be impartial and independent.
- The IBA Arbitration Committee is confident that the Guidelines will be applied with sound judgment and without undue formalist interpretation. The Application Lists cover a wide range of situations that commonly arise in practice, but they do not purport to be exhaustive and cannot be. Nonetheless, the IBA Arbitration Committee is confident that the Application Lists provide concrete guidance that is useful in applying the General Standards. The IBA Arbitration Committee will continue to study the Guidelines’ actual application in order to improve them.
- The IBA published the Rules of Ethics for International Arbitrators in 1987.
These Guidelines supersede those Rules, which cover a broader range of topics. These Rules cover more topics than these Guidelines, and they continue to apply to subjects not covered by the Guidelines.
Conclusion
As we come to the end of this article, it is ideal, to sum up the several sets of rules and guidelines that are being adopted or have already been by the IBA in regard to international arbitration, although not appear to be per se binding, has become widely recognised and adopted by the international arbitration community at large as a means of expression of arbitration best practices. Thus, they are considered to be a guiding light for every international arbitration participant, including national courts.
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