THE SEAT VS. VENUE CONTROVERSY: A PERPETUAL DEBATE

Introduction

As India is trying hard to establish itself as an arbitration friendly jurisdiction, the long unresolved controversy of ‘seat vs. venue’ must be addressed authoritatively and promptly. This grey area under the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) continues to adversely affect the evolution of India as a pro-arbitration jurisdiction.

The issue is of utmost significance as it not only determines the location or place where arbitration will be conducted but also ascertains the applicability of the lex arbitri on the arbitration proceedings i.e. it determines which court(s) will exercise supervisory jurisdiction over such arbitration.

The concept of ‘seat’ and ‘venue’ does not find any place per se in the Arbitration Act. The Arbitration Act instead uses the term ‘place’ and provides that ‘place’ of arbitration can either be decided by the parties or the tribunal and notwithstanding such determination, arbitration hearings can be held, for convenience, on a ‘place’ other than the agreed ‘place’ of arbitration.

Nonetheless, these two concepts have been the subject of various landmark rulings in India. The courts have held that, “the ‘seat’ means the place where court is, which has the territorial jurisdiction with respect to the subject matter/cause of action of the matter, and the ‘venue’ is the place where the arbitral tribunal sits to hold the arbitration proceedings”. For instance arbitration proceedings seated at Bengaluru will be governed by the Arbitration Act and any application challenging the award/order of the arbitral tribunal under S. 34 or S. 37 of the Arbitration Act will lie before the Principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction i.e. High Court of Karnataka.

Journey so far: a brief overview
In Bhatia International vs. Bulk Trading S.A.(“Bhatia International”), the Supreme Court of India (“SC”) extended the applicability of Part I of the Arbitration Act even to arbitrations seated outside India, unless the parties specifically excludes its applicability under the arbitration agreement. This meant that Indian courts will have jurisdiction vis-à-vis S. 9 (interim measures etc. by Court), S. 34 (application for setting aside arbitral awards) or S. 37 (appeal against certain orders of the courts/arbitral tribunal) of the Arbitration Act. As a consequence, courts in India started interfering with the foreign seated arbitrations which lead to a chaotic situation in India and therefore this decision was considered having far reaching implications as this not only dented India’s approach towards arbitration particularly the stance on the principle of party autonomy but also delayed the entire process of arbitration including the enforcement of foreign arbitral awards.

Considering the overreaching interpretations as provided in Bhatia International, the said decision was referred for reconsideration to the five judge bench of the SC in Bharat Aluminium Company vs. Kaiser Aluminium Technical Services Inc.(“BALCO”), wherein the SC overruled the decision in the case of Bhatia International and held that Part I of the Arbitration Act will not apply to international commercial arbitrations (“ICA”) seated outside India.

It is pertinent to mention that the genesis of the debate ‘seat’ v. ‘venue’ lies in the judicial pronouncement in BALCO. The decision in BALCO was considered to be an authoritative attempt to reiterate India’s approach as a pro-arbitration hub. The SC held that Section 2(1) (e) of the Arbitration Act defining ‘court’ confers jurisdiction on two courts i.e. the court where cause of action arises and the court where arbitration takes place. It further held that the term ‘place’ used in S. 20 (1) and S. 20 (2) would connote ‘seat’ whereas the term ‘place’ used in S. 20 (3) connotes ‘venue’ of the arbitration.

Again, in Enercon (India) Ltd. vs. Enercon GMBH (“Enercon”), the SC further reiterated the law as laid down in BALCO. It made an attempt to clarify the position of law in case the parties have failed to or improperly mentioned the law applicable to arbitration agreements. The SC adopted the ‘closest and most intimate connection test’ to the arbitration agreement for determining the ‘seat’ of arbitration.

This test states that when it is unclear as to which law is applicable to the arbitration agreement, the legal system in which arbitration is taking place or the system which has the closest and most intimate connection with the arbitration proceedings. In this case, while the agreement stated that the ‘venue’ was London it remained silent on the ‘seat’ of arbitration. The SC held that London will only be considered as a ‘venue’ and not ‘seat’ as parties had specifically chosen Indian laws to govern different aspects of dispute. Further, it was held that beside being designated as ‘venue’ there was no other factor including the absence of express words in the arbitration agreement reflecting London as ‘seat’ of arbitration. Finally, the SC concluded that, India had a closer and more intimate connection with the contract because the party had chosen all the three applicable laws, viz. substantive law of the contract, law governing arbitration and applicable Patent Law to be Indian laws, the parties would not have intended otherwise by fixing the seat of arbitration in London and thus concluded that the ‘seat’ of arbitration in this case would be in India.

In Indus Mobile Distribution Pvt. Ltd. vs. Datawind Innovations Pvt. Ltd., the SC made an interesting ruling vis-à-vis ‘seat’ of arbitration. It held that ‘seat’ is a neutral ‘venue’ chosen by parties for conducting the arbitration in an impartial manner. It is not necessary that any cause of action to have arisen at the neutral ‘venue’ and by designating a particular place as an exclusive jurisdiction in the agreement, the parties intend to fix  that particular place as the seat of arbitration. For instance, if both the parties operating from Delhi fix courts at ‘Chennai’  to have exclusive jurisdiction over arbitration proceedings arising out of the arbitration agreement entered into between them, it will mean that the ‘seat’ of such arbitration would also be ‘Chennai’ itself as the same reflects from the intention of the parties.

Judicial Interpretation: shifting sands
In Union of India v. Hardy Exploration and Production (India) Inc. , (“Hardy Exploration”) the SC while determining the ‘seat’ held that an arbitration agreement needs to be read holistically. In the given case, the venue was Kuala Lumpur and the seat was not decided by the parties or by the arbitral tribunal.

The SC held that simply because arbitration took place physically at one place, it would not ipso facto be treated as the seat as well. The arbitration agreement needs to be read and any intention of parties, to make such a place their seat needs to have been incorporated. Thereby, deviating from BALCO, the SC in this case held India to be the seat of Arbitration. 

Further in BGS SGS Soma JV v. NHPC Ltd. , (“BGS SGS”) a three judge SC bench noted that Hardy Exploration was a bad law for not following BALCO. As the strength of the bench in Hardy Exploration was same as in BGS SGS, the law stated in the former is not overruled.

The SC in BGS SGS held that the intention of parties to hold a particular place as a seat can be determined by the language of the agreement. Herein, the agreement mentioned Delhi or Faridabad as the venue of arbitration. Though part of cause of action had occurred in Faridabad, all arbitration proceedings took place in Delhi. The Court held that since no other place was designated as a seat and by way of the agreement, the intention to not make Faridabad the seat of arbitration could be concluded. Accordingly, Delhi was held to be the seat for arbitration.

In addition to this, SC also reiterated the position as held in BALCO that the term ‘place’ used in S. 20 (1) and S. 20 (2) would refer to ‘seat’ whereas ‘place’ used in S. 20 (3) would refer only to the ‘venue’ of the arbitration.

Recently, the SC in Mankastu Impex Pvt. Ltd. v. Airvisual Ltd. , (“Mankatsu”) again dismissed the notion that a venue, in absence of a seat, automatically constitutes the seat. It held that in order to determine the intention of the parties, conduct of the parties, the applicable rules, other clauses in the arbitration agreement and governing laws need to be taken into consideration.

In this case, the arbitration agreement entered into between the parties provided Hong Kong to be the ‘place of arbitration’. Additionally, the agreement also provided that “….any dispute, controversy, difference arising out of or relating to the MoU shall be referred to and finally resolved by arbitration administered in Hong Kong…..”. Therefore, the SC held that the term “arbitration administered in Hong Kong” read with the clause which provides Hong Kong as the  “place of arbitration” would strongly indicate that the ‘seat’ of arbitration is at Hong Kong and the laws of Hong Kong shall govern the arbitration proceedings as well as have power of judicial review over the arbitration award.

Analysis and Conclusion
There exists three major reasons for ‘seat vs. venue’ conundrum: (1) failure on part of the legislature in defining ‘seat’ and ‘venue’ in the Arbitration Act, despite the 246th Law Commission Report which in order to remove ambiguity surrounding the issue recommended an amendment in the Arbitration Act to define ‘seat’ and ‘venue’ separately; (2) conflicting judicial pronouncements adding fire to the ongoing ‘seat vs. venue’ controversy; and (3) poor drafting of the arbitration clauses/agreement in the form of failure to expressly specify the ‘venue’ and ‘seat’ of arbitration proceedings.
While we certainly agree with the position laid down in BGS SGS and Mankatsu i.e. various factors inter alia intention of the parties, other clauses in the agreement, conduct of the parties, etc. should be borne in mind while deciding the ‘seat’ instead of merely using ‘venue’ as the ‘seat’ interchangeably, the most certain answer would lie in a Constitution Bench’s decision on the controversy. Furthermore, drafters of the arbitration agreement must necessarily mention the ‘seat of arbitration’ in a categorical manner to avoid any future dispute(s).

References

RECENT LEGAL UPDATES IN INDIA

Arbitration

Arbitration clause in contract between state instrumentality and private party does not oust writ jurisdiction: The Supreme Court of India (“SC”) in Unitech Limited vs. Telangana State Industrial Infrastructure Corporation has held that the presence of an arbitration clause within a contract between a State instrumentality and a private party is not an absolute bar to availing remedies under Article 226 of the Constitution. The SC observed that the State and its instrumentalities are not exempt from the duty to act fairly merely because in their business dealings they have entered into the realm of contract. It was also held that State instrumentalities do not shed either their character or their obligation to act fairly in their dealings with private parties in the realm of contract. The SC observed that investors who respond to the representations held out by the State while investing in public projects are legitimately entitled to assert that the representations must be fulfilled and to enforce compliance with duties which have been contractually assumed.

SC suggests amendments to Sections 11(7), 37 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) to bring Sections 8 and 11 of the Arbitration Act at par on appealability: The SC in Pravin Electricals Pvt Ltd vs. Galaxy Infra and Engineering Pvt Ltd has observed that amendments to Sections 11(7) and 37 of the Arbitration Act might be necessary so that the orders passed under Sections 8 and 11 of the Arbitration Act are brought on par as far as appealability is concerned. The SC observed that the decision in Vidya Drolia v . Durga Trading Corporation has now read the "prima facie test" into Section 11(6A) of the Arbitration Act so as to bring the provisions of Sections 8(1) and 11(6) read with Section 11(6A) of the Arbitration Act on par. Considering that Section 11(7) and Section 37 of the Arbitration Act have not been amended, the SC opined that an anomaly arises. Accordingly, SC observed that the Parliament may need to have a re-look at Section 11(7) and Section 37 of the Arbitration Act.

Limitation period for filing application under Section 34 of Arbitration Act commences from date of receipt of signed copy of arbitral award by parties: The SC in Dakshin Haryana Bijli Vitran Nigam Ltd. vs. M/S Navigant Technologies Pvt. Ltd. has held that the period of limitation for filing an application under Section 34 of the Arbitration Act would commence from the date on which the signed copy of the award was made available to the parties. The SC observed that there can be no finality of the award, except after it is signed. The SC also added that, in an arbitral tribunal comprising of a panel of three members, if one of the members gives a dissenting opinion, it must be delivered contemporaneously on the same date as the final award, and not on a subsequent date, as the tribunal becomes functus officio.

Delay in filing application under Section 37 of Arbitration Act can be condoned: The SC in Government of Maharashtra vs. Borse Brothers Engineers and Contractors Pvt Ltd. has overruled the decision of M/s NV International v . State of Assam, wherein it was held that a delay of more than 120 days in filing of appeals under Section 37 of the Arbitration Act, cannot be condoned. The SC, in this case, held that a delay beyond 90, 60 or 30 days for filing appeals under Section 37 of the Arbitration Act, depending on the forum, can be condoned. However, the SC added that such condonation of delay should be an exception and not the norm, having regard to the objective of the Arbitration Act for expeditious resolution of disputes. SC noted that the power to condone delay under Section 5 of the Limitation Act, 1963 (“Limitation Act”) applies to Section 37 of the Arbitration Act, by virtue of Section 43 of the Arbitration Act and Section 29(2) of the Limitation Act. It was also observed by the SC that the Commercial Courts Act, 2015 does not exclude the application of Section 5 of the Limitation Act, 1963.

Limitation period for filing an application under Section 11 of Arbitration Act governed by Article 137 of Limitation Act: The SC in Bharat Sanchar Nigam Ltd . and Another vs. Nortel Networks India Pvt. Ltd. has held that the period of limitation for filing an application under Section 11 of the Arbitration Act would be governed by Article 137 of the First Schedule of the Limitation Act, and will begin to run from the date when there is failure to appoint the arbitrator. The SC also observed that in rare and exceptional cases, where the claims are ex facie time barred, and it is manifest that there is no subsisting dispute, the court may refuse to make the reference. The SC has also suggested an amendment to Section 11 of the Arbitration Act to provide for a period of limitation for filing an application for appointment of an arbitrator, which is in consonance with the object of expeditious disposal of arbitration proceedings under the Arbitration Act.

Application under Section 11 of Arbitration Act can be rejected if claim is ex – facie time barred: The SC in Secunderabad Cantonment Board vs. M/s B . Ramachandraiah & Sons has reiterated that in a limited category of cases, where there is no doubt that a claim is ex – facie time barred, the court may decline to refer the case to arbitration. In this case, the SC held that if, upon receiving a letter for appointment of arbitrator within a specified time period, a party fails to appoint an arbitrator within such specified time period, the limitation period as against the other party for filing an application under Section 11 of the Arbitration Act begins once such specified time period is over.

Court cannot supplant its opinion over that of the arbitral tribunal under Section 34 of the Arbitration Act: The High Court of Delhi (“DHC”) in National Highways Authority of India vs. M/S Bscpl Godhra Tollways Limited has held that the scope of examination under Section 34 of the Arbitration Act is limited to determining whether the arbitral award fails on any of the grounds as set out in sub-sections (2) and (2A) of Section 34 of the Arbitration Act. It was observed that courts are not permitted to examine the arbitral award as a first appellate court and cannot supplant its opinion over that of the arbitral tribunal. In this case, it was held that the findings of the arbitral tribunal were based on cogent reasons, and that the interpretation of the agreement by the arbitral tribunal was sound, and not patently illegal or contrary to the fundamental policy of Indian law. The DHC held that the interpretation of the contractual provisions was well within the jurisdiction of the arbitral tribunal and warranted no interference by the court.

Dispute regarding assignment of trademark is arbitrable: The DHC in Hero Electric Vehicles Private Limited and Another vs. Lectro E - mobility Private Limited and Another has held that even though “grant and issue of patents and registration of trade marks” cannot be arbitrated upon, a dispute regarding assignment of trademark can be subjected to arbitration. The DHC observed that assignment of trademark is by contractual, and not statutory, fiat, and that it does not involve any exercise of sovereign functions. The DHC relied on the recent decision of the SC in Vidya Drolia vs. Durga Trading Corporation, ( 2021 ) 2 SCC 1 to hold that the court should not enter into intricate jurisprudential thickets, such as differentiating between actions in rem and rights in rem , while deciding an application under Section 8 of the Arbitration Act.

Company Law and IBC

Inappropriate to entertain Article 32 petition by homebuyers against developers: The SC in Upendra Choudhury v. Bulandshahar Development Authority has held that proceedings under Article 32 of the Constitution by a homebuyer, seeking relief in respect of a real estate project, cannot be entertained. The SC observed that there were specific statutory provisions holding the field under which the homebuyers would have effective remedy, such as the Consumer Protection Act, 1986 and the Consumer Protection Act, 2019, the Real Estate (Regulation and Development) Act, 2016, the Insolvency and Bankruptcy Code, 2016 (“IBC”), etc. The SC also observed that many real estate projects across the country are facing difficulties, and the intervention of the SC cannot be confined to one or a few selected projects.

Adjudicating authority has to satisfy itself that resolution plan can be implemented effectively: The SC in Committee of Creditors of AMTEK Auto Limited Through Corporation Bank vs. Dinkar T Venkatasubramanian and Others has held that the role of the adjudicating authority under sub-section (1) of Section 31 of the IBC comes into being upon the approval of the resolution plan by the committee of creditors (“CoC”) under sub-section (4) of Section 30 of the IBC. It was observed that the function which is assigned by the statute to the adjudicating authority is to determine whether the resolution plan which has been approved by the CoC meets the requirements of sub-section (2) of Section 30 of the IBC. It was also observed that upon being satisfied that the resolution plan meets those requirements, the adjudicating authority “shall by order approve the resolution plan”. However, the SC stated that before passing an order of approval, the adjudicating authority has to satisfy itself that the resolution plan has provisions for its effective implementation.

Moratorium order under Section 14 of IBC bars parallel proceedings against corporate debtor under Section 138 of NI Act: SC in P Mohanraj vs. M/S Shah Brothers Ispat Pvt Ltd has held that when an order of moratorium is passed under the IBC, parallel proceedings under Section 138 of the Negotiable Instruments Act, 1881 (“NI Act”) against the corporate debtor cannot be allowed to continue as the same will be covered by the bar under Section 14 of the IBC. However, it was clarified that such a bar will apply only to the corporate debtor and not the natural persons responsible for management of the corporate debtor. The SC observed that proceedings under Section 138 of the NI Act can be said to be a “civil sheep” in a “criminal wolf’s” clothing, as it is the interest of the victim that is sought to be protected, the larger interest of the State being subsumed in the victim alone moving a court in cheque bouncing cases.

Person ineligible under Section 29A of IBC to submit resolution plan cannot propose scheme of compromise and arrangement under Section 230 of Companies Act, 2013 (“Companies Act”): The SC in Arun Kumar Jagatramka v. Jindal Steel and Power Ltd and Another has held that a person who is ineligible under Section 29A of the IBC to submit a resolution plan, cannot propose a scheme of compromise and arrangement under Section 230 of the Companies Act. The SC also upheld the constitutional validity of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, which stipulate that a person who is not eligible under the IBC to submit a resolution plan for insolvency resolution of the corporate debtor shall not be a party in any manner to such compromise or arrangement. The SC observed that it would lead to manifest absurdity if the very persons who are ineligible for submitting a resolution plan, participating in the sale of assets of the company in liquidation or participating in the sale of the corporate debtor as a 'going concern', are somehow permitted to propose a compromise or arrangement.

National Company Law Tribunal (“NCLT”) has jurisdiction over contractual disputes that arise solely on ground of insolvency: The SC in Gujarat Urja Vikas Nigam Limit vs. Amit Gupta and Others has held that the NCLT has jurisdiction over contractual disputes that arise solely on account of insolvency. The SC further held that the jurisdiction of the NCLT under Section 60(5)(c) of the IBC) cannot be invoked in matters where a termination may take place on grounds unrelated to the insolvency of the corporate debtor, or in the event of a legitimate termination of a contract based on an ipso facto clause. The SC directed the NCLT to be wary of setting aside valid contractual terminations which would merely dilute the value of the corporate debtor.

Bank guarantee can be invoked even during moratorium period: The National Company Law Appellate Tribunal (“NCLAT”) in Bharat Aluminium Co Ltd vs. M/s J. P Engineers Pvt Ltd has held that a bank guarantee can be invoked even during moratorium period issued under Section 14 of the IBC in view of the amended provision under Section 14 (3)(b) of the IBC. The NCLAT observed that the assets of the surety are separate from those of the corporate debtor, and proceedings against the corporate debtor may not be seriously impacted by the actions against assets of third party like surety. The NCLAT also noted that in this case, the corporate debtor had issued a bank guarantee for ensuring the price of goods, which was irrevocable and unconditional and payable on demand without demur. The NCLAT reiterated that the object of the IBC is not to allow guarantors to escape from an independent and co-extensive liability to pay off the entire outstanding debt, which is why Section 14 of the IBC is not applicable to guarantors.

Securities and Exchange Board of India (“SEBI”) proposes to revamp norms pertaining to appointment, removal and remuneration of independent directors (“ID”): The SEBI has proposed that ID’s appointments and re-appointment shall be subject to the dual approval system firstly approval of shareholders and approval of majority of minority shareholders would mean those other than the promoter and promoter group. If either of the requirements are not met, a new person will not be appointed and existing independent directors can't be removed and the company will either have to propose a new candidate or propose the same person after a cooling off period of 90 days with reasoning for proposing the same candidate. In case of removal, a second vote of all shareholders can be called after a cooling off period of 90 days but within a period of 120 days.

Ministry of Corporate Affairs (“MCA”) introduced Companies (Specification of definitions details) Second Amendment Rules, 2021 (“Rules”): The MCA has amended the Rules to alter the definition of ‘listed companies’. By way of Rule 2A any company that is not listed or whose equity is not under a recognized stock exchange or which has non-convertible debt securities is not in terms of SEBI (Issue and Listing of Debt Securities) Regulations, 2008, shall not be a listed company in terms of Regulation 2 (52) of the above-mentioned Rules.

MCA broadens disclosure norms to bring in crypto transactions: MCA has released a notification which enhanced disclosure requirements in financial statement filings to be made by companies to include cryptocurrency and virtual currency transactions and holdings, loans to key managerial personnel and trade payables to Micro Small and Medium Enterprises (“MSME”). The disclosure is aimed at giving a better picture of the company’s finances to the stakeholders. According to the notification released by MCA, every company which has indulged into cryptocurrency transactions will have to disclosure: (a) its cryptocurrency holdings as on the date of the financial statements; (b) the total profit or loss on transactions involving these crypto or virtual currencies; and (c) deposits or advances received from any person for the purpose of trading or investing in these circumstances.

SEBI eases listing of startups: SEBI has approved several changes to the listing rules on the Innovators Growth Platform, including reducing from two years to one the time early-stage investors need to hold 25% of pre issue capital, and allowing IPO-bound startups to allocate up to 60% of the issue size to any eligible investor with a lock-in of 30 days on such shares. SEBI approved the proposals with respect to framework of Innovators Growth platform under SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, with an objective to make the platform more accessible to companies in view of the evolving start-up ecosystem.

RBI to consider proposal to merge two or more Urban Cooperative Banks (“UCB”): As per the “Master Direction - Amalgamation of Urban Cooperative Banks, Directions, 2020” (“Master Direction”) wherein it may consider proposals for merger and amalgamation among UCBs under three circumstances: (a) when the net worth of the amalgamated bank is positive, and the amalgamating bank assures to protect entire deposits of all depositors of the amalgamated bank; (b) when the net worth of amalgamated bank is negative, and the amalgamating bank on its own assures to protect deposits of the depositors of the amalgamated bank; and (c) when the net worth of the amalgamated bank is negative and the amalgamating bank assures to protect the deposits of all depositors of the amalgamated bank, with the financial support from the State government as part of the process of merger.

Non-repatriable investment by Non-Resident Indians (“NRI”) not to be considered as Foreign Direct Investment (“FDI”): Department for Promotion of Industry and Internal Trade clarified that downstream investment by a company owned and controlled by NRIs on a non-repatriation basis will not be considered FDI. Investment on repatriation basis means the sale or maturity proceeds of an investment, net of taxes, are eligible to be transferred out of India. In case of non-repatriation investments, this cannot be transferred out of the country.

Others

Banks duty-bound to exercise due diligence in maintaining and operating their locker facility: The SC in Amitabha Dasgupta vs. Union Bank of India has held that the banks owe a duty of care to exercise due diligence in maintaining and operating their locker or safety deposit systems and that they cannot contract out of the minimum standard of care in this regard. The SC observed that the banks cannot wash off their hands and claim that they bear no liability towards their customers for the operation of the locker. The SC directed the Reserve Bank of India (“RBI”) to lay down rules and regulations mandating the steps to be taken by banks with respect to locker facility/safe deposit facility management. However, until such regulations are framed and issued by the RBI, the SC has provided guidelines which have to be followed by the banks.

Competition Commission of India (“CCI”) directs Make My Trip and Go Ibibo to allow FabHotels, Treebo to be listed on its online portals: The CCI, in an interim order, has directed Make My Trip and Go Ibibo to allow FabHotels and Treebo to be listed on its online portals, after observing that such delisting affects competition in the market by denying access to important channel of distribution. The order came after an application under Section 33 of the Competition Act, 2002 was moved by FabHotels and Treebo directing Make My Trip and Go Ibibo platforms to re list their properties on all their portals. FabHotels and Treebo had alleged that Make My Trip and OYO entered into a confidential commercial agreement wherein Make My Trip agreed to give preferential treatment to OYO on its platform leading to "denial of market access to them" thereby contravening Sections 3(4) and 4 of the Competition Act, 2002.

The Ministry of Electronics and Information Technology (“MEITY”) released Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“Intermediary Guidelines”): The MEITY in exercise of the powers conferred by sub-section (1), clauses (z) and (zg) of sub-section (2) of section 8 of the Information Technology Act, 2000 (21 of 2000), and in supersession of the Information Technology (Intermediaries Guidelines) Rules, 2011. The intent of the said rules is to regulate the publication and circulation of content on social media. Some of its salient features are a three-tier regulatory framework for online for intermediaries, disclosure of originator and appointment of a point of contact by intermediaries.

INTERNATIONAL LEGAL UPDATES

Uber drivers are "workers" entitled to minimum wage, paid annual leave and other workers’ rights: The Supreme Court of the United Kingdom (“UKSC”) in Uber BV and Others v. Aslam and Others has held that Uber drivers are 'workers', rejecting Uber London's stance that the drivers are only independent contractors with Uber as their booking agent. The UKSC observed that since they are workers, Uber drivers are eligible to receive the national minimum wage, paid annual leave and other workers’ rights in line with the laws of the United Kingdom. The UKSC further held that Uber drivers are working whenever they log into the Uber App, as opposed to Uber's stance that they would only be considered working when they drive passengers to destinations. The UKSC’s ruling was based on the premise that the terms of the contract between Uber and its drivers did not convey the whole picture, and that the ground reality has to be examined to discern whether the drivers were workers entitled to the United Kingdom's statutory protections for such a class. The UKSC also noted that the United Kingdom laws bar would bar contracting out from the protective laws. In other words, those contractual terms which prevent workers from availing statutory protections would be void.

UKSC provides guidance on an arbitrator’s duties of impartiality, disclosure and confidentiality: UKSC in Halliburton Company vs. Chubb Bermuda Insurance Ltd. provided guidance on the disclosures that parties should expect from an arbitrator when circumstances exist which might give rise to justifiable doubts as to his or her impartiality.  In providing this guidance, the UKSC discussed the interaction between an arbitrator’s duties of impartiality, disclosure, and confidentiality, which are not easily reconciled. The general principle that can be taken from the decision is that there is no strict prohibition on arbitrators accepting overlapping appointments, even those involving a common party.  The practice is not inherently problematic so long as the arbitrator can approach each arbitration objectively and with an open mind.  Each case is fact-specific as to whether a fair-minded and informed observer would conclude the possibility of bias, and that will in large turn on the custom and practice in arbitration in the relevant field.

Iraq will become the 168th Signatory to the New York Convention: On March 4, 2021, the Parliament of Iraq passed the “Law on the Accession of the Republic of Iraq to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards,” which, upon being published in the Official Gazette, will formally ratify the country’s anticipated accession to the New York Convention.

Hong Kong Court of First Instance sets aside award for wrongful identification of party: Hong Kong Court of First Instance in arbitral proceedings where the respondent was wrongly named has set aside the arbitral award on the basis that the named respondent is not a party to the arbitration agreement and was not given proper notice of the proceedings. This rare example of a successful set-aside application demonstrates that the courts will be prepared to overturn an award where a statutorily prescribed ground is clearly established. The judgment turns heavily on its facts, rather than marking any general change to the courts’ pro-enforcement approach. However, it emphasises the need for claimants to identify each counterparty carefully before commencing arbitration, especially when a complex corporate structure is involved, or risk losing the benefit of their awards

AKS Partners has been enlisted in the Forbes India Legal Powerlist 2020 as one of the Top Law Firms, above top 10 years of experience in Litigation and Arbitration.

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