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A write-up on the video of Justice R.F. Nariman at IAF Delhi Launch, 2015

The video was about the right to arbitrate. He talked about progressive Indian Contract Act, 1872 as there was already an exception in Section 28 - Agreement in restraint of legal proceedings are void which was the right to arbitrate.

India was progressive as it took the mantle of English laws, wherein the right to arbitrate was considered as something private and outside the courts of king’s bench till 1668 which is significant because the first Dutch ruler William III (protestant) and James II (Catholic) who had been expelled in the glorious revolution because there wasn’t the signal shot fell.

The Parliament thought of Bargaining strength because William III ruled jointly with his cousin Mary, D/O James II. So they decided that they would have the first Bill of Rights of 1689. Expressions such as the 8th Amendment, Cruel and unusual punishment, comes from this Bill of Rights. Appointment of judges was a burning topic and the Bill of Rights sought for the first time to amend the doctrine of the King’s pleasure so far appointment of judges is concerned because till then the moment a monarch left, the next monarch could either loo away with all the judges and put whoever he wanted but parliament for the first time asked the king to sign the Bill of Rights which guaranteed both tenure and salary but the King refused to do so because it was not part of their law.

They had to wait until the Act of Settlement was passed in 1701 to ultimately secure the tenure and salary of the judges. The parliament by a statute stated that a private tribunal would now be controlled by the courts of the king’s bench and the only ground for setting aside a private tribunal was the ground of bribery and fraud.

Moving further, he talked about the Champsey Bhara principle which was laid down in Champsey Bhara vs. Jivraj Balloo 1923. In 1802, Chamsey Bhara's principle was applied in the decision of Kent vs Storm, that if an award happened to be an error of law then on that ground it would be set aside. This principle was borrowed from administrative law, and according to Lord Denning in the Northumberland case in 1952, administrative law itself didn’t use this principle.

In Gherulal Parakh v. Mahadeodas Maiya and Ors. 1959, which stated at least in contract law the heads of public policy were closed. This continued till 1980 when an illuminating judgment arrived at the exact opposite conclusion that given constitutional, fundamental rights, etc, the heads of public policies are never closed and must be open when justice so demands.

The first time we had ever to confront this problem in private international law was in the Renu Sagar judgment 1994, where J Agrawal said because there are 2 views: Gherulal view & 1986 view, you can construe this either broadly or narrowly, and ultimately adopted narrow view which comprised 3 basic things:
  1. The fundamental policy of Indian law,
  2. Against the interest of India,
  3. Award being contrary to justice and morality.

The present act came into force in 1996 does away with the domestic act 1940, foreign award act 1961, the Geneva Convention 1937 and brings arbitration within one particular head and divides into parts: i) Domestic Scenario, ii) New York Convention, iii) Geneva Convention, etc,

Ultimately, the fundamental policy of Indian Law cannot possibly go to merits and restored the Renu Sagar decision. Justice and Morality can no longer be open-ended but it must be the most basic notions to say that an award should not be recognized and enforced. The Champsey Bhara principle was reinstated only for Domestic Arbitration not for International Arbitration.

Furthermore, he talked about the seats. In National Thermal Power Corporation vs Singer Co. under the Foreign Awards Act, a section 9 B which said the arbitration agreements which were governed by Indian Law were outside the scope of the Foreign Awards Act. The Domestic Arbitration clause specified that the Indian Act 1940 will apply, whereas the foreign arbitration clause said the ICC rules will apply, but since the substantive law of the contract is Indian, the law of the arbitration agreement will also be Indian, and therefore an award delivered abroad would be a domestic award. This was done by enacting section 51 in part II and dropping Section 9 B.

Another situation arose in 2003, where an award was to be delivered abroad not yet delivered, the Supreme Court said it made a significant omission in section 2, and said this part will apply in India, dropping the word ‘only’. Because of the dropping the word ‘only’, the court said we come back to concurrent jurisdiction and unless an agreement is so drafted that it expressly does away with the Indian Act even part I will apply. The logic of this decision was applied in Venture Global Scales in 2008, to say, a foreign award could be a domestic award at the same time as they are defined separately.

Foreign Arbitration must be now regarded as Seat centric

2 imp aspects of law comm report: public policy exception and seat part

The rougher the justice, the more will a court want to interfere.

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