INTERVIEW: MR. TARIQ KHAN ON FOREIGN ARBITRAL AWARDS

The October edition of Au courant features an interview with Mr. Tariq Khan, (Principal Associate at Advani & Co.), wherein he discusses foreign arbitral awards.

Tariq Khan is currently working as the Registrar of the International Arbitration and Mediation Centre (IAMC), Hyderabad. He is a former Partner of Advani & Co., New Delhi, which is India’s oldest arbitration law firm. He is enlisted in the Forbes Legal Powerlist, 2020-2021 as one of the top individual lawyers and the youngest lawyer listed in BW (Business World) Legal 40 under 40, 2020. He has been recognized as an Arbitration Expert by SCCOnline. He has authored several books including a commentary on Indian Arbitration Law. He has been teaching arbitration as a guest faculty for the past seven years in some of the prominent law schools of India including NALSAR University of Law, Hyderabad and has more than 50 publications on arbitration to his credit. He has been practicing as a lawyer in the Delhi High Court and has significant experience in domestic and international arbitrations, commercial disputes, writs, MSME disputes and Insolvency & Bankruptcy cases.

Question 1: Brief discussion on landmark judgments and the approach of Supreme Court on enforcement of foreign arbitral awards.

Arbitration in India is often criticized due to unruly court interference. However, recent judicial pronouncements indicate that Indian courts are taking an increasingly pro-arbitration stance by adopting a minimal interference model. This would help in bringing India’s Arbitration regime in line with International standards and eventually make India a center for arbitration. The enforcement of foreign arbitral awards in India has seen paradigm shift, which is in consonance with the framework laid down by the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958, famously coined as the New York Convention. Despite efforts made to make India a leading arbitration hub by the legislature, the regressive approach adopted by the Indian courts in enforcement of foreign awards, in judgments like NAFED v Alimenta S.A. and Venture Global Eng. LLC v. Tech Mahindra is undoubtedly acting as a huge stumbling block.

However, the regressive view taken in NAFED's case has been overshadowed by the Supreme Court of India in its recent judgment Government of India v. Vedanta Ltd. Youngest BW (Business World) Legal 40 under 40, 2020. Featured in Fortune 500 (India) magazine (Special Issue, 2017-2018) for authoring the best seller book ‘On the Rise’ published by Universal Law Publishing (an imprint of Lexis Nexis). Qualified to the conference round of Judge Advocate General, Indian Army. Frequently invited to speak in various law conferences and events by domestic bar associations, law schools, alternative dispute resolution centres amongst other organizations. Teaching arbitration as a guest faculty for the past six years in some of the prominent law schools of India. Have more than 50 publications to his credit in various journals, magazines and popular legal news portals.

Question 2: What are your views on the Vedanta judgment?

The Vedanta judgment is a step forward in making India the global arbitration hub. In my view, the judgment will have far reaching consequences in making India a preferred arbitration hub and foster a foreign venture climate. By way of this judgment, the Apex Court has vehemently reiterated that the courts ought to be reluctant in declining the enforcement of foreign awards and minimize judicial intervention. Having a pro-enforcement system in place will go a long way to convert India into a preferred arbitration destination and in order to do so, the country has to take significant steps. The government must adopt an approach which instills confidence in foreign companies to invest in India. Also, in order to actually achieve the dream of India of becoming a global arbitration hub, the courts would have to embrace the pro-arbitration system wherein they follow limited intervention when it comes to enforcement of a foreign arbitral award, as pictured by the judiciary in the Vedanta Judgment.

Question 3: What are your views on the Vodafone judgment now that the government is challenging the vote?

In my view, India should not have challenged the Award in view of fact that Vodafone won the taxation dispute in the SC in January 2012 and there are very slim chances of succeeding in Singapore. Also, this was an opportunity for India to show the world that it is going to accept well reasoned Awards and will do away with the practice of challenging each and every Award. The Indian government must realise that the idea is to promote investment and not to create an unstable and unpredictable business environment. Therefore, this is an opportunity to give a

positive message to the international community that the government will respect the arbitral Awards and will enforce them. Incidentally, there is a practice in public sector undertakings to challenge every Award which is against them. This tradition must go and the government, by not challenging this decision, will in fact encourage other PSUs also to not challenge reasoned Awards which will eventually gain confidence of the investors to invest in India.

Question 4: How to make arbitration more robust in India? Where are we lacking how to attract more investments? Whether India is a safe jurisdiction for investment right now and how to improve upon that?

To ensure an efficient arbitral mechanism and see it grow substantially in the near future, appointment of young lawyers as arbitrators must be encouraged. Despite the existence of various arbitral institutions, institutional arbitration in India remains in a nascent state which is evident from the fact that almost 90% of arbitrations in India are ad hoc. The main reasons of parties being reluctant in approaching these institutions are lack of awareness about the advantages of institutional arbitration over ad hoc arbitration, outdated rules of procedures and poor infrastructure.

The government has taken steps to make India the hub of International Arbitration. However, larger issue has been missed i.e. why India is languishing for decades and has not been able to become an arbitration hub. The reason in my view is that emphasis is put only on cities like Delhi and Mumbai and that the concerns of other cities which are in need of an arbitration culture and institutions are not addressed. We must also promote arbitration culture in Kanpur, Lucknow, Ahmedabad, Kolkata, Jaipur etc. if we really want to make India a hub of arbitration. Additionally, we must also learn from the development of the best three arbitral institutions i.e. ICC, SIAC and LCIA that have huge number of cases, growth in revenue etc. (e.g SIAC's case filings have increased by over 300% in the last ten years). Therefore, it is necessary that arbitral institutions in India adopt modern rules, make effective use of technology and provide organized structure of proceedings, excellent administrative support and good infrastructure. Additionally, ease of doing business in India also needs to be facilitated, to provide a solid base and ensure longevity. Not only will it make India the hub, but also create a dynamic arbitration culture. Stakeholders will also have an important role to play in shaping up the future of arbitration in India. For instance, lawyers must understand that the practice of challenging every arbitral award must be discouraged and the focus should not be on getting more work from one client by filingfrivolous challenges to the award, instead we must focus on making arbitration more effective which will eventually generate more work as there will be more investment.

Question 5: What are your views on Indian parties choosing a foreign seat of arbitration and enforcing the arbitral award in India?

One of the most essential considerations while parties sign an arbitration agreement is the “choice of seat.” An arbitration-friendly jurisdiction is the criteria for parties, as that ensures the enforcement of arbitral awards in finality and in an efficient manner. The question whether two Indian parties can choose a foreign seat of arbitration has been an obscure one. Earlier a divergence of opinion was seen, but the very recently passed judgment by the Gujarat High Court, while dealing with a dispute wherein two Indian parties had entered into an arbitration agreement and had chosen Zurich as the seat of arbitration, has settled the position of law in this regard. The court has laid that two Indian parties can choose a foreign seat of arbitration and that such award would be enforceable as a foreign arbitral award in India. However, while doing so they shall lose their right to approach Indian courts for interim relief which seems to be much of a disadvantage for the purpose of securing interest of the parties.

Question 6: What are your views on enforcement of interim awards passed by the emergency arbitrators?

Emergency arbitrators can prove to be advantageous as they offer relief to aggrieved parties on

priority basis, thereby ensuring preservation of interest of the party. A petition before an emergency arbitration is carried out within a stipulated time frame, which is not the case when

petitions are filed before a court of appropriate jurisdiction. Though the term “emergency arbitration” is not defined in the Arbitration and Conciliation Act but, the rules provided under various arbitration institutions have tried to recognize it. However, the need to incorporate the same in the Act and give it a formal statutory recognition remains as that would not only give a legal backing to the awards pronounced under the regime but would also be a step towards attracting arbitrations in India.