Author: Ajay, V Year of B.A.,LL.B from Damodaram Sanjivayya National Law University, Visakhapatnam.
In this article, I have tried to analyze the recent developments in Amazon Fortune dispute in the backdrop of the principles of non intervention by the judicial authorities. Apart from covering the latest ruling by the apex court, I have also delved into the factual matrix as well as previous decisions on this issue by Delhi High Court. I have analyzed in detail, what were the observation by both the courts and to what extent, the main issue pertaining to the jurisdiction of the emergency arbitrator has been settled.
Party autonomy and non intervention of the judicial authorities are considered as fundamental principles of any international commercial arbitration proceeding. When compared with the other popular seats of arbitration such as LCIA, SIAC etc, India has always lagged behind on the criteria of judicial interference at the various stages of the arbitral proceedings. The legislative as well as judicial wing of the State has rightly recognized this issue and took substantial steps in the direction of making the arbitration process more autonomous for the parties in consonance with the principle of Kompetenz Kompetenz. Inspite of the changes brought by the amendments of 2015 and 2019, there is still a lot of scope for judicial intervention through various provisions of the Arbitration and Conciliation Act, 1996 (A&C Act, 1996). The same has been the core issue in many recent cases of international commercial arbitration in India.
Amazon-Future Retail dispute has been a latest development wherein the Courts have intervened at various stages and the same has lead to a constant evolution of the topic concerned. Recent most development has been in the form of judgement by the Supreme Court of India which set aside the order of Delhi High Court dated October 29, 2021 through which the court has earlier refused to stay the award passed by foreign seated emergency arbitrator. By the effect of such decision, Future Group was restrained from going ahead with the merger deal with Reliance Retail. Total amount of this merger is more than 24 thousand crores and the emergency award has been passed previously by the SIAC in favour of Amazon. To what extent the fundamentals of non intervention by the courts which is not only guaranteed by the cardinal principle of Kompetenz Kompetenz but also under the various provisions of the A&C Act, 1996 such as Section 5 and Section 16, has been upheld in the entire process needs a thorough examination.
UNDERSTANDING THE DISPUTE
The background developments pertaining to the case, involves upholding of the award passed by the emergency arbitrator by the appointed panel of arbitrator at the SIAC back on October 21, 2020. Thereby, the Delhi High Court declined to stay the enforcement of the emergency award and against such refusal or non interference by the High Court, Fortune Group has filed an appeal to the apex court. Presently, the bench of CJI NV Ramana, Justices AS Bopanna and Hima Kohli have not only set aside the order of the Delhi High Court pertaining to non interference with the emergency award but also remanded the matter to be determined afresh. The judgement has been delivered with respect to the following two pleas:
Special Leave Petitions filed by Future Retail Ltd. and Future Coupons Pvt. Ltd. against the March 2021 order by single bench judge of the Delhi High Court, directing attachment of the assets of the petitioners for breaching the emergency award.
Special Leave Petitions by Future Retail Ltd. and Future Coupons Pvt. Ltd. against the order by Delhi High Court on 29th October, 2021 by which the court refused to interfere with the emergency arbitral award.
It is very pertinent to delve into the various observations that have been made by the apex court while reaching to such a decision in the present case.
OBSERVATIONS BY THE APEX COURT
The apex court has expressly observed while examining the decision of the single bench judge that there were instances of procedural irregularities. Adequate opportunity in term of sufficient time was not given to the Fortune Groups to present their case. The same cannot be valid as per the rule of law as it is contrary to the fundamental tenet of any trial according to which both sides are to be heard by the court or any adjudicating authority before reaching to any conclusion. Principle of Natural Justice also entails the same. Not only such basic principles but also the provisions contained under Section 18 of the A&C Act, 1996 guarantees that both the side should be given adequate opportunity to present their case and the arbitral tribunal will treat both the parties equally.
Further, the court has observed that the contempt in civil proceedings can be made under Order XXXIX Rule 2A of the CPC, only when the disobedience by the parties is wilful or conscious disobedience. Accordingly, the bench set aside the punitive orders by the single judge bench of the Delhi High Court against the Future Group and its promoters due to the absence of any wilful or conscious disobedience on their behalf.
The bench has also observed that the lower court while dealing with question of interim order for the enforcement of such emergency award, has delved into the merits of the dispute more than what is required and permissible under the law. The courts are expected to be cautious while making any such observations which involves delving into merits of the case as the same can further influence the hearing before the appointed arbitral tribunal.
With respect to the order of the Delhi High Court dated 29th October, 2021, the bench held that there are certain substantial questions of law pertaining to the effect of such arbitral award and the jurisdiction of emergency arbitrator which are yet to be decided. The high court is required to examine the same and accordingly, the matter is remitted back to be adjudicated on its own merit. Undoubtedly, the present decision by the apex court has been a consequence of the previous decision by the single bench of Delhi High Court. Therefore, in order to appreciate the status quo, it is reasonable to revisit the previous decision on this issue by the high court.
DECISION BY SINGLE JUDGE OF HIGH COURT
The single judge bench of the Delhi High Court by an order dated 4th January, 2022, refused to interfere with the emergency award. The reasoning for the same was provided in various points. Firstly, it accepted that there is very less scope for the courts to interfere with the orders of any appointed arbitrator tribunal and if such an order is relating to some procedural part, the scope of examination is minimal.
In the instant case, orders passed by the arbitral tribunal are falling within the category of case management orders and therefore, they are completely within the ambit of arbitral tribunal. The courts should not be interfering with the manner in which the arbitration proceedings are to be conducted. Also, the provisions provided under Section 19 of the A&C Act, 1996 empowers the parties to agree on the rules that they want to be followed in the arbitration proceeding and in the absence of such agreement between the parties, the arbitral tribunal is free to conduct the proceedings according to the set of rules that they find most convenient to the parties as well as circumstances of the case.
Further, the court did not found any instance of illegality or perversity based on which the arbitral award can be set aside or enforcement of such award is to be stayed. There was no evidence before the court of law to prove that both the parties have not been given equal opportunity to present their case. The judge has further emphasized on the need of minimum interference by the courts in any arbitral proceedings, in order to ensure impartial and expeditious disposal of the dispute by arbitration.
INTERVENTION v/s AUTONOMY
Section 9 of the A&C Act, 1996 gives power to the courts to pass interim relief during the pendency of the arbitration proceedings but the same is subject to the provision provided under Section 41(h) of the Specific Relief Act, 1963, according to which any injunction cannot be granted by the court if doors are open for the petitioner to seek equitable remedy through usual mode of proceedings. Also, the power of the court to grant anti arbitration injunction should be exercised only in exceptional circumstances and in accordance with the provisions of Section 8 and Section 45 of the A&C Act, 1996. Further, Section 16 lays down that the arbitration tribunal is competent to rule on its own jurisdiction and it is power to decide any objection pertaining to the existence and validity of the arbitration agreement. Therefore, the practice of judicial intervention via such anti-arbitration injunctions should be avoided as the same is not only against the brooding spirit of arbitration i.e. autonomy of the parties involved but it is also misused by the parties involved to obstruct and delay the arbitral proceedings.
It is true that arbitration regime in any jurisdiction cannot thrive without the positive support and recognition by the municipal courts at all level in that place.
Likewise, it cannot be denied that any jurisdiction cannot emerge as favorable or popular seat for international commercial arbitration, till the time there is unnecessary judicial intervention. The ideal situation lies in finding a middle ground wherein the judicial intervention is allowed only in very exceptional cases i.e. when the relief provided by the appointed arbitral tribunal is not adequate in nature.
The implication of the recent decision of the Supreme Court in the case of Future Retail Ltd. v. Amazon.com Investment Holdings & Ors is certainly not in the direction which is desirable to make India an arbitration hub for the world but certainly, it is not the last episode of the season. Much more is to follow as a consequence of such ruling. Hopefully, the spirit of arbitration is not only upheld but also ascertained with the upcoming developments on this issue.