This article is written by Veena Chandra, a student of HNLU, Raipur.

The Speaker

Mr Vipul Wadwa 

He has completed his graduation in BA (LLB) from GGS Indraprastha University. He has previously worked in Suri & Company and Bharucha and Partners as an Associate and gained practical knowledge of the related industry. He joined Trilegal as an associate and was later elevated to the position of Senior Partner and honed his skills as a professional. Currently, he is working for Shardul Amarchand Managaldas as a Senior Associate.

The Host

Anubhav Garg

He is currently pursuing his BBA LLB from Guru Gobind Singh Indraprastha University and is currently working with Lawsikho.

Question 1: Why did you choose Law as a Career option and what motivated you to specialize in arbitration as a career option?

Answer 1: My interest for law arose when I understood my love for working in a logical way because the law is all about logic and presence of mind where the test of a real lawyer is when he able to explain the law to people by deciphering it in the easiest language possible which even a layman could understand. I personally love reading provisions and judgments and interpreting them. Hence due to these qualities, I found myself to be a suitable candidate to pursue law as a career option.

A lot of commercial contracts in India now have an arbitration clause in it that meant the emergence of arbitration. I was interested in it and it being a not very delayed process, I wanted to do it as my practice subject.

Question 2: In what condition does an organization prefer to go in an arbitration proceeding instead of hauling the matter to litigation? 

Answer 2: So in order to proceed to arbitration, there needs to be an arbitration clause that needs to be there in your contract as per Section 7. Generally, the parties prefer to have this clause in their agreements because of the simplicity of this procedure which is not as complicated as our regular court proceedings with respect to the method of taking evidence or the method of calling parties or the statement of the plaint and all the formatting. Everything is at a very simplicial level, due to which, the delays are cut short in the process of getting the award, in fact, the arbitrators are also encouraged to declare the award as soon as possible and not keep the matters pending which makes it a speedy process.

Question 3: Sir so is there any cost advantage while going for arbitration?

Answer 3: You might have seen in the old Hindi movies how the litigation goes on forever, which is the truth as well because most of the litigators charge fees according to their appearances and as the case goes on and on, the litigators get richer and the time passes by but as in the case of arbitration though there is some set amount of fees that the arbitrator takes but if a good cost analysis is done then you’ll find that it is better than the time-consuming litigation. 

Question 4: Sir can you tell us what more benefits are there while going for arbitration apart from its cost efficiency and time efficiency for the clients that seek arbitration?

Answer 4: In order to make it more cost-efficient the parties can fix the seat of the arbitrator. According to the agreement you can also decide on whether you want to have oral evidence or not. It all depends on the drafter of the agreement because a good draftsman would know what all things lead to an escalation in cost and time in arbitration. He would avoid such types of things while drafting an agreement. Now the one thing that happens in arbitration is, that if you win the litigation it gives you cost on as you have spent and this leads parties to have a fair share to at least cover the amount of money that was spent in the Arbitration which is also an advantageous factor in choosing arbitration.

Question 5: Can you let us know the process of arbitration in a few simple steps?

Answer 5: The steps of process of arbitration are as follows:

i) There should be a contractual agreement between the parties which should contain the arbitration clause in it because an oral arbitration clause holds no value in the court of arbitration.

ii) If there arises any dispute among the parties then they need to refer it to the dispute resolution mechanisms given in the arbitration clause. Where most of the agreements have a two-tier mechanism in their arbitration clause, one mitigation clause whose benefit is that you can first go for mitigation with the counterparty whose benefit is that you can first settle and lessen your cost before going to arbitration in case of a legal dispute arising. 

iii) Once that happens the parties need to invoke the arbitration clause where Section 21 comes into play after which party may or may not agree for your invocation.

iv) So you may have to go to court for appointment of independent arbitrator especially in the ruling on Perkins case a single party can’t appoint an arbitrator where there are only two methods by which appointment can be done: one is by giving notice of such appointments under section 21 and other by the court through section 11.

v) Once this is done the arbitrator enters into reference he has to give a declaration such reference which is terms of section 13-16 which says he has not conflicted in any error and there is no de facto or de jure responsibility as an arbitrator. He has to also give the declaration as to whether he has an interest in the subject matter of the dispute or whether he is related to either party in the arbitration or if he has been appointed as an arbitrator on more than three occasions by any of the counsel of the parties. Only after this declaration can he proceed with the arbitration. 

vi) Once the arbitrator proceeds with the arbitration he is given 12 months’ time to finalize it and to fill an application.

vii) After this, he has to render his award which is executable as a decree of any civil court just like a regular award which comes from any court. 

viii) Then comes the Section 34 proceedings which say that if an award is passed it can be challenged in the court on very limited grounds which is a time-bound procedure.

viii) After the award takes its finality then comes the stage of Section 36 which talk about the enforceability of the award.

Question 7: Sir can you brief us about these specific sections?

Answer 7: So to begin with:

Section 7: This section talks about the agreement of arbitration between two-parties which in itself is an independent contract so if due to any circumstances the agreement is declared to be void the arbitration clause still survives. Also the party may not need to include arbitration in the agreement itself they can also make an altogether different agreement on arbitration but must refer to the principle agreement while making such arbitration agreement.

Section 9: This section talks about the interim measures before the court.

Section 11: This section says that arbitrator can be appointed as per the terms of the parties in the arbitration agreement or if no such things are prescribed in the arbitration then he can be appointed by the court subject to limitations prescribed in that section. Most of the high courts have now a very experienced panel of arbitrators whose appointment is done by the court in the circumstances as mentioned earlier.

Section 13-16 These sections say the certain things about what sort of declaration part that the arbitrator is required to make. So there are lots of things that the parties and arbitrator have to keep in mind in order to carry on with the appointment. Things like a person can’t be an arbitrator in his own case, he can’t be an arbitrator in the matter in which he is legally and financially interested, he can’t be an arbitrator where he is in a relationship with the parties etc all these are safeguards that are provided in order to ensure independent and less biased process.

Question 8 Why is Meaning, Scope and Relevance of Commencement Of Arbitration Proceedings so important that it has been set as the theme of today’s discussion?

Answer 8 [Shared Screen and Displayed Some PDF] Section 21 begins with the commencement of the proceedings and goes with wordings as:

“Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent.”

This is important to understand because according to section 9 (2), the commencement of the arbitration proceedings has to take place within 90 days or so. To understand the “commencement aspect” of section 9 we have Section 21 of the Act. So in case, you have an order in your favour and if you fail to commence within 90 days of that order then it may be a case that your order is set aside. Though there are judgments saying that it can’t be made ipso facto null and void by ipso facto rule but there are no SC judgements regarding the same.

So the law is not settled as to what happens post 90 day period so it’s important that you apply to the court under section 9 (1) and you immediately commence arbitration proceedings.

Difference between “reference” and “commencement of the proceeding”

To understand better the meaning of why the commencement is important and what relevance it has, we need to understand it with reference to section 29 A of the Act. 

“29-A. Time-limit for arbitral award.— [1](1) The award in matters other than international commercial arbitration shall be made by the arbitral tribunal within a period of twelve months from the date of completion of pleadings under sub-section (4) of Section 23:

Provided that the award in the matter of international commercial arbitration may be made as expeditiously as possible and endeavour may be made to dispose of the matter within a period of twelve months from the date of completion of pleadings under sub-section (4) of Section 23.]

(2) If the award is made within a period of six months from the date the arbitral tribunal enters upon the reference, the arbitral tribunal shall be entitled to receive such amount of additional fees as the parties may agree.

There’s a difference between “reference” and “commencement of the proceeding” Commencement of the arbitration takes place when you invoke the arbitration clause under Section 21 by providing notice to the parties of it. It is completely different from the arbitrator entering into “Reference” which means when the arbitrator accepts his appointment in the matter and sends notice to both the parties stating his acceptance.

Hence due to this difference, it becomes necessary to understand section 21. 

Meaning Notice in Section 34 according to section 21 

Section 34 of the act lays down the ground for setting aside an arbitral award where Section 34 (2) (iii) states that the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case.

“Notice” in this section means the notice that has been mentioned in Section 21 of the Act, hence it is very important to give proper notice to the arbitrator which is properly worded so in order to avoid invoking of section 34(2) (iii) of the act. This reasoning highlights the importance of section 21.

Matter of Limitation 

A careful reading of the 3 judgments of SC will make you understand the meaning of Limitation with respect of section 21 of the Act. The Judgements are:

i) Milk food case 

ii) State of Goa v/s Praveen Enterprises

iii) Voltas v/s Rolta case 

Section 43 of the Act talks about the limitations of the act and so if you think that your claims are becoming time-barred or you don’t want it to become time-barred in future then you should invoke section 21 as soon as possible.

Is it from the date of counterclaim notice that we say counterclaims are also the limitations to run for those counterclaims or is from some other date? This question came up before the SC in the case of State of Goa v/s Praveen Enterprises. The contention was, in this case, since respondents failed to specify its claims in response Section 21 notice by the claimant it cannot claim them now so the contention put forth in response to section 21 notice even the respondent is required to specify its claims and on the date of arbitration it cannot be done.

In response to the point of view of limitation, the SC said that the date or limitation for counterclaims run from the date you institute those counterclaims before the arbitrator and for claims it starts when you fill the date of arbitration.

Question 9 Whether Section 21 notice is required to be in a particular prescribed format?

Answer 9 Merely invoking this section without specifying your claims may be acceptable but as a matter of practice it is advisable to avoid any vague interpretation of the clause, specifying of the claims should be done, however following a particular format is not required while making a request for a reference of the disputes to arbitration. This has been referred to in the case of Sarvesh Security and the only thing that matters in this is the intention and not the format.

Question 10: What are workplace challenges that the lawyers face while working in this niche area?

Answer 10: The primary challenge that the arbitrators face is related to understanding the claims which are more technical based and relates to the amount of claim that is being asked by the party. The second challenge faced is an industry-specific thing. So suppose a claim relates to an industry relating to the engineering field, then arbitrators need to specifically understand the field in order to determine the actual amount of the claim and look into the aspect of whether the claim is maintainable or not. It becomes important to understand whether a party is claiming remoteness of damage or direct damages so that it is something substantial that the clients may claim.

Question 11: What is the advice that you would like to give to the audience in general?

Answer 11: It is very important to keep our basics clear in the area of law which in which we are practising not only should you be well updated with the news of your field but also with the basics of the CPC, Evidence etc. laws because these are the basic laws that you’ll be required to most humbly elaborate on when you are working as a practising lawyer.

Question 12: Sir, Can you let us know your approach towards your journey towards the field of law?

Answer 12: Being from a Non-national background, it wasn’t easy to drive past this thing, hence to get exposure and learn the basics of the law I started with working with tier 3 law firms and moved past it to tier 2 and then tier 1 in order to understand and give my best of the services to these reputed firm. The work environment also gradually changes while working in these firms. The tier 1 firms maintain a particular standard and your drafting skills also go through a substantial change which is ultimately a very big factor leading to a proper enhancement of your skills and learning drafting skills as well.

Question 13: What are pay grades in Tier 1 and Tier 2 Law firm and what is the pace of growth?

Answer 13: The pay is high and also the brand value that these firms have established makes it very lucrative in terms of pay grade. But money should not be the only important thing. You should also put into the work that your partner is involved in and the individual should make their own choice while selecting the work. Just don’t apply only based on brand value.

Question 14: What are pitfalls of working in a tier 1 law firm?

Answer 14: One of the major pitfalls that a person might encounter while working in a tier 1 law firm is the burn out that may happen to that person. While working in the independent practice you easily get to understand the different laws and nuances related to it but by working in a firm you may be a master in your own subject or the area of practice but you might not be able to learn different laws and likewise. So yes this is one of the major pitfalls while working in the tier 1 law firm.

Question 15: What is the way forward and what are the plausible changes in arbitration as a practice that will be carried forward and what are the implications that are bound to occur due to such changes?

Answer 15: Since all the courts have gone digital and matters are being heard from the process of digital conferencing so that it has become an all-digital court but it is difficult in some aspects as well because if the normal courts had been functioning then it had been easier to take a pass over if the senior counsel wasn’t able to report. But now it is a bit difficult to do such a thing. So obviously this is a good move. Especially when the parties in international arbitration belong to a different country and aren’t able to attend the proceedings then it is a welcome step for such a situation which also reduces the cost of such proceedings and helps the parties to save money by adopting such an act.

Implications of such a Digitally transformed world are good as well as bad but it all depends on the time because as time changes and evolves the people will ultimately begin realising that it is a good move and will be able to accept it in a better way. 

The implication of such a digital change has made the lawyers realise how important it is to make and build connections where at par growth is possible while working from home.

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