Ankit Khushu

Abstract of Winning Articles:

1st Prize:
Puneet Dinesh
National Law University, Delhi
Title: "Diluting the significance of 'arbitral seat' in domestic arbitration: Revisiting BALCO"

Conferment of jurisdiction to the court at the 'arbitral seat' of domestic arbitration is a principle confirmed by the constitutional bench of the Supreme Court in Bharat Aluminum Co. v. Kaiser Aluminum Technical Services Inc. It has the effect of disturbing the cardinal principles of the Code of Civil Procedure and incorrectly applying the theory of 'arbitral seat' accepted internationally. BALCO achieves it by interpreting Section 2(1)(e) of the Arbitration Act, 1996 in a way (I argue) that does not enjoy judicial or legislative justification. This essay will operate at three levels. First, it will introduce the complication faced by several High Courts and the change in jurisprudential climate, primarily instigated by the BALCO court. Second, the paper engages in characterizing the judicial opinion of various Supreme Court and High Court decisions on this matter by presenting three exclusive hypotheticals. Each of the three hypotheticals will be explored by analyzing these significant judicial decisions along with its interface with the theory of 'arbitral seat'. Third, the paper proceeds to examine the practical consequences arising out of BALCO's conferment of jurisdiction. The three sub-divisions under this part will present a judicial compass for the courts to navigate in similar disputes in the future.

2nd Prize:
Isha Kabra
NALSAR University of Law
Title: "Arbitrability of Tax Matters under Bilateral Investment Treaties: A Licence to Walk Over the Obligations?"

The first question that arises when an issue comes up for arbitration is whether or not that subject matter is arbitrable. Taxation is one such disputed field where its arbitrability is opposed by the states as they consider taxation as an expression of their sovereign power and feel that arbitration on taxation, if allowed, would scuttle their sovereignty. The issue becomes even more complex when combined with the international investment paradigm. Increasingly, countries conclude bilateral investment treaties amongst themselves to promote investment from foreign investors by providing them protection. Taxation by the host state is an important issue for the investors and often acts as a factor which can make or break a deal. There is huge amount of debate over the issue of whether an investor can proceed for arbitration against a taxation matter under a bilateral investment. This paper explores this question in detail. The first part of the paper gives a brief introduction about arbitration and tax and the bilateral investment treaties. The second part explores the arbitrability of taxation matters under bilateral investment treaties by traversing through various tribunal decisions. The third part deals with the complicated regime of exclusion clauses for taxation matters under the bilateral investment treaties and the fourth part analyzes the (in)compatibility of such exclusions with the current international investment regime. The last part of the paper looks at what direction India is moving forward to in the light of the previous parts of the paper and finally the paper concludes with a judgment on what should be the way forward in India as well as worldwide.

3rd Prize:
Aayush Marwah
Amity Law School, Delhi (GGSIPU)
Title: "The 'Futility' of the Principle of Exhaustion of Local Remedies in Investment Treaty Arbitration"

In the short jurisprudential history of Investment Treaty Arbitrations (ITA), the conflict between the principles of 'exhaustion of local remedies' and the 'futility exception' has been a subject of much debate and contemplation resulting in diverging interpretations of the rules by various tribunals. The Bilateral Investment Treaties (BITs) contain a provision, stipulating that if a dispute arises between the investors and the State, the investors would first approach the domestic courts of the host State in an attempt to resolve the issue. The fulfilment of such restriction acts as a precondition to the submission of the dispute to ITA. The investors in an attempt to submit the dispute directly to ITA claim the 'futility' of the domestic remedy provision. The present article elucidates the different approaches adopted by various tribunals across the board when dealing with this conflict between the principles. The author explores the two major approaches taken by the arbitral tribunals when interpreting the provisions. In the First approach, the tribunals deal with the application of the Most Favoured Nation clause to dispute resolution provisions to circumvent the provision of exhaustion of local remedy in the BITs. Under the Second approach, the author elaborates upon the evolution of the doctrine of futility in ITA, through various decisions by the arbitral tribunals. Further, the author discusses the legal rationale behind the decisions of various tribunals on the futility of the exhaustion of local remedy in line with the principles of international law and arbitration jurisprudence.

Finalists:

Varun Mansinghka
National Law University, Jodhpur
Title: "Legality of Third-Party Funding in International Commercial Arbitration and its Impact on Independence of Arbitrators"

Third-party funding is becoming an increasingly common feature of international arbitration. Despite its increasing prevalence in both commercial as well as investor-state arbitration, currently there is no regulatory framework for third-party funding. In fact, many jurisdictions still consider third-party funding as equivalent to the tort of champerty or violative of the state's public policy. Even though the involvement of a third-party funder can have serious implications for inter alia the prospects of settlement, independence of arbitrators, allocation of costs and security for costs; no national, international or institutional legal instrument requires mandatory disclosure of third-party funding. While some recent efforts have been made to mandate disclosure of third-party funding, these efforts are restricted to disclosure of funding in certain specific factual circumstances only. This paper discusses the question of validity of third party funding in leading common law jurisdictions and compares the same to the position in India. Further, the paper highlights the need for mandatory disclosure of third-party funding, focussing on funding's potential impact on independence of arbitrators. Finally, the paper proposes a disclosure model which preserves independence of arbitrators while safeguarding the interest of all the stakeholders, including the funders.

Gladwin Isaac
Gujarat National Law University
Title: "Walking the Tight Rope of Third Party Funding in Arbitration in India: Challenges, Opportunities and Prospects"

Third-party funding is an issue that has caught the attention of the arbitral community worldwide. India, as a country that aspires to be considered both arbitration and investor-friendly, should also, in the opinion of this author, be participating in the critical discourse surrounding this issue. Surprisingly, or unsurprisingly, from India, there is barely any contribution to this debate. At a point where our Eastern neighbours, that is, Hong Kong and Singapore are seriously considering not just legalising, but also regulating this concept, it is the right time, for India to consider its Look East policy with respect to this issue too. Third-party funding also gains importance, from a policy perspective, given that India is also focused on increasing access to justice to its citizens. In such a situation, to leave third-party funding to exist in a legal vacuum would not be a mature way of handling the hurricane of legal developments around this issue, in the international community. By way of this article, the author proposes to explain the relevance of this concept and its possible benefits to the existing Indian framework. The author then goes on to take note of worldwide developments regarding third-party funding and concludes with a case for initiating serious discussion and discourse on this issue, in the Indian context.

Soumya Jha
Hidayatullah National Law University, Raipur
Title: "Bits of BAT and its inevitable Buts: A Critical Evaluation based on Practical Considerations"

The concept of Bilateral Arbitration Treaty (BAT) is another step to create a pro-arbitration regime for dispute settlement across the globe. This notion was first introduced by Professor Gary B. Born in his "Kiev Arbitration Days" speech in November 2012, which was titled as BITs, BATs and BUTs. Borrowing from the concept of bilateral investment treaties, BAT requires the Contracting States to conclude an arbitration treaty between them, thereby making international arbitration as the default mechanism for the settlement of disputes pertaining to international commercial matters. Eventhough, it seems to be a promising concept, certain practical implications of BAT pose serious legal hurdles to the effectiveness of the same. To name a few, issues of party autonomy, seat of arbitration, issues of arbitrability, enforcement of awards in third countries which are not parties to BAT and the legal validity of BAT itself are a few matters that require necessary attention. In the light of these issues, the present paper seeks to make a critical assessment of the proposed BAT, by assessing its theoretical and practical effectiveness. It also evaluates the substantial benefits, if any, that the BAT provides over the traditional system of international arbitration. Finally, deriving from the international investment regime, it puts forward a proposal for a multilateral arbitration treaty in a self sufficient delocalised arena, in order to make this proposal feasible and cost effective, which in turn, may substantially enhance the effectiveness of arbitration treaties.