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Timely Delhi HC reminder to foreign arbitrals respect of sovereign bodies protecting domestic public policy (Opinion)

I. BRIEF BACKGROUND OF THE PERTINENT FACTS

The sudden twist within the flip of occasions was triggered by the order handed by the Competition Commission of India (CCI) on December 17, 2021 (Revocation Order’), whereby the CCI, opposite to its earlier approval, determined to preserve in abeyance its preliminary order November 28, 2019 (Approval Order’) — the place the Commission was happy to approve Amazon’s proposed acquisition of 49 per cent of the shareholding of the Future Coupons below Section 6 of the Competition Act, 2002.

It was contended earlier than the CCI by Amazon, that that they had the intention to strengthen and additional increase the enterprise of Future Coupons. On the premise of these representations, CCI granted the approval. By advantage of the proposed acquisition, Amazon sought to purchase strategic management over Future Retail by strategic funding into Future Coupons.

Moreover after a criticism made by Future Coupons, the CCI vide the Revocation Order’ made scathing observations over Amazon’s conduct, whereby it has noticed that Amazon had intentionally’ made false statements and suppressed materials particulars in regards to the true nature of the proposed Combination’ for which it sought the CCI’s approval.

In view of the surprising revelation of details and owing to Amazon’s willful misrepresentation’, the CCI was happy to preserve in abeyance the Approval Order’ that was earlier handed by it.

Furthermore, the CCI issued instructions to Amazon ordering them to furnish recent particulars within the related Form envisaged below the Combination Regulations, 2011 of the Competition Act.

It can also be pertinent to observe the exemplary and penal nature of the Revocation Order because the CCI was not hesitant in imposing a penalty of Rs 202 crore on Amazon for his or her mala fide and deliberate misconduct’ by which they misled’ the Commission by furnishing false particulars. It is pointless to say that such misconduct’ on the half of Amazon was tantamount to fraud and in flip was a violation of the public policy of India.

Parallel to the developments earlier than the CCI, the on-going Singapore International Arbitration Centre (SIAC) administered arbitral proceedings generated traction. In the aftermath of the Revocation Order’ handed by the CCI, Future Retail & Future Coupons – the Respondents within the mentioned arbitral proceedings (collectively referred to as Future) had been every fast to choose two functions for Termination (Termination Application) of the arbitral proceedings below Section 32(2)(c) of the Arbitration & Conciliation Act, 1996 ( A&C Act).

The mentioned Termination Applications’ had been predicated totally on the findings made by the CCI in its Revocation Order’, extra significantly with regard to Amazon’s fraudulent’ representations.

Further, it was contended by the Future, that in view of the CCI’s findings in opposition to Amazon, it grew to become evident that Amazon couldn’t assert its proper over Future Coupons. Resultantly, the failure to shut Future Coupon’s Share Subscription Agreement (SSA) and the Shareholders Agreement (SHA) and the corresponding failure to execute the “single integrated bargain” rendered the on-going arbitral proceedings “impossible” throughout the which means of Section 32(2)(c) of the A&C Act.

Thereafter, the Arbitral Tribunal (Tribunal) determined that it ought to proceed with a listening to on the substantive and evidentiary points of the matter earlier than listening to the Termination Applications’.

Aggrieved by the Tribunal’s resolution, the Future persistently urged the Tribunal to hear the Termination Applications’ earlier than the evidentiary hearings within the gentle of the impact that the Revocation Order’ had forged on the arbitral proceedings. However, regardless of repeated assertions by the Future, the Tribunal vides its procedural orders dated December 29, 2021, December 30, 2021 & December 31, 2021 (impugned orders) declined to accede to any of the Future’s requests.

It is pointless to say, that the Future was aggrieved by the Tribunal’s refusal to hear the Termination Application’ prior to the evidentiary hearings. Therefore, the Future was fast to invoke their constitutional cures below Article 226 & 227 of the Constitution of India earlier than the Delhi High Court difficult the impugned orders. Accordingly, Future Retail and Future Coupons every most well-liked two petitions earlier than the Delhi High Court.

II. THE JUDGMENT OF THE SINGLE JUDGE

The Single Judge of the Delhi High Court was confronted with the query of whether or not he ought to train his jurisdiction below Article 226 & 227 of the Constitution of India and thereby grant the reduction sought by Future Retail and Future Coupons of their respective petitions. As each petitions arose from the identical arbitral proceedings and owing to the commonality of the impugned orders, the Single Judge proceeded to hear and resolve each the petitions by passing a standard judgment.

Before opining on whether or not the Court ought to arbitrarily train its constitutional energy below Article 226 & 227 by interfering with the impugned orders of the Tribunal, the Court laid down its opinion with regard to details on file and the Tribunal’s conduct in refusing to postpone the listening to of knowledgeable witness.

From the paperwork on file, the Court famous that the hearings from January 5 to 7, 2022 had been devoted to the Expert Hearing’ whereas the listening to on January 8, 2022 was to be for oral submissions on the Termination Applications’.

In view of the factual place, the Court rejected the Future’s rivalry that the Tribunal had not scheduled a day of receiving oral submissions on the Termination Applications’.

The Single Judge proceeded to motive by making the statement that the Tribunal had been greater than accommodating to each the events.

Furthermore, it was contended by the Future that the listening to of the Termination Applications’ ought to have taken precedence over the listening to of the knowledgeable witness. It was contended that the Termination Applications’ go to the very root of the matter and if the mentioned functions had been allowed, the arbitral proceedings wouldn’t survive. Rejecting these contentions, the Court held that there was no advantage within the submission that simply because the listening to of the knowledgeable witnesses proceeded the

1. Judgment dated 4.01.2022 in CM(M) 2/2022 & CM No.176/2022

listening to for the Termination Applications that the Tribunal was not prepared to take into account or discounted the advantage of the Termination Applications.

Consolidating its opinion, the Single Judge reiterated that the administration of the arbitral course of lies with the arbitrator and that such contentions didn’t warrant any interference from Court.

Furthermore, the Court laid emphasis and concurred with the reasoning employed by the Tribunal in its resolution to schedule sooner or later for listening to the Termination Applications’.

The Single Judge concluded discovering that there was no infirmity within the resolution of the Tribunal in refusing to postpone the hearings of the knowledgeable witnesses. The Court noticed that acceding to such a request for adjournment would nonetheless derail arbitration proceedings.

In order to additional increase its reasoning, observations concerning the difficulties in scheduling recent dates for modern-day arbitrations had been made, as most frequently the involved events discover it troublesome to come to a consensus. Lastly, the Court rejected all of the contentions put forth by the Future pertaining to difficulties that arose owing to the Covid-19 pandemic.

It is our opinion that the reasoning employed by the Single Judge on this concern is cogent and demonstrates adequate utility of thoughts with respect to the proof on file. However, it will not be out of place to observe that the Court has erred by failing to take cognizance of the bottom on which the Termination Applications’ had been predicated i.e. the Revocation Order’.

As rightfully put ahead by the Future that the CCI’s Revocation of Amazon’s Combination would go to the very root of the maintainability of the arbitral proceedings. It can also be pertinent to observe that within the occasion that the Tribunal finds advantage within the grounds of the Termination Applications’, the whole arbitral course of can be rendered infructuous.

It is our opinion that such an final result would nonetheless have resulted in enormous waste of prices incurred by each events in pursuing the arbitral proceedings pending the disposal of the Termination Applications’.

It can also be our opinion that the Single Judge has erred by failing to take cognizance of the findings made by the nation’s apex anti-trust regulatory physique and the resultant ramifications within the Revocation Order’.

After laying adequate emphasis on the factual particulars and the Tribunal’s conduct in refusing to postpone the evidential hearings, the Court was confronted with the query of whether or not it may train its jurisdiction below Article 226 & 227 of the Constitution of India and thereby intrude with the impugned orders.

The Single Judge proceeded to talk about the settled place of legislation by counting on the judgment of the Apex Court in Deep Industries v ONGC 2 (Deep Industries’).

The Supreme Court in Deep Industries settled the query that the non-obstante embodied in Section 5 of the A&C Act doesn’t bar a celebration from assailing the order of an Arbitral Tribunal earlier than the Constitutional Courts below Article 226 & 227.

The Supreme Court in Deep Industries, whereas conserving in thoughts the doctrine of minimal judicial interference, imposed fetters on the powers of the Courts by connoting that the High Courts have to be circumspect in exercising their extraordinary powers and should strictly invoke them when the resultant orders are “patently lacking in inherent jurisdiction” 3.

In view of the aforesaid ruling of the Apex Court in Deep Industries, the Single Judge was constrained to accede to the place that Court may train jurisdiction below Article 227 and thereby intrude with orders handed by Arbitral Tribunals.

However, the Single Judge held that there was a small window for interference with orders handed by arbitral tribunals and extra significantly when the orders are procedural in nature.

Moreover, it was clearly enunciated in Surender Kumar Singhal v Arun Kumar Bhalotia (Surender Kumar Singhal) that the powers envisaged by Article 226 & 227 will be exercised in opposition to orders of the arbitral tribunals in “exceptional circumstances”. Applying this criterion to the current,

Applying this criterion to the current

2 2020 15 SCC 706

3 2020 15 SCC 706 at para 17 4 2021 SCC OnLine Del 3708

case the Single Judge refused to train the jurisdiction vested in it and thereby upheld the impugned orders.

It is our opinion, that the distinctive circumstances envisaged in Deep Industries and Surender Kumar Singhal warranted utility to the details of the current case in view of Amazon’s fraudulent conduct. However, the Single Judge has erred in making use of the dictum of the Apex Court in Deep Industries.

III. THE ORDER OF THE DIVISION BENCH

Resultantly, the judgment of the Single Judge was challenged by Future earlier than the Division Bench of the Delhi High Court. The Division Bench was fast to observe the observations made by the CCI within the Revocation Order.

The Division Bench noticed that the sooner Approval Order was now saved in abeyance and concurred with Future’s rivalry that the SSA & SHA between Amazon and Future Coupons grew to become unenforceable. Resultantly, the arbitration settlement was rendered unenforceable.

The Division Bench laid additional emphasis on the scathing observations made by the CCI in opposition to Amazon’s conduct and thereby held that opinion that the Tribunal ought to have thought of listening to the Termination Applications earlier than the evidential hearings. Accordingly, the judgment of the Single Judge and the arbitral proceedings had been stayed.

It is our opinion that the Division Bench appropriately paid heed to the observations made by the CCI with regard to Amazon’s deceitful and fraudulent conduct and resultant ramifications of the Revocation Order and accordingly set-aside the judgment of the Single Judge.

CONCLUSION

5 Order dated 5.01.2022 in LPA 6/2022 & LPA 7/2022

It is our opinion that the order of the Division Bench rightly set-aside the judgment of the Single Judge within the Petition filed by the Future in opposition to the Tribunal’s impugned orders.

It can also be our opinion that the order of the Division Bench has exemplified an strategy that may information Courts when they’re confronted with difficult conditions on whether or not to train their extraordinary powers below Article 226 & 227 of the Constitution.

It is true that the on-going arbitral proceedings between Amazon and the Future Group are being adjudicated by a world tribunal administered below the SIAC Rules, however in essence the arbitration nonetheless stays a domestic arbitration seated in New Delhi.

In view of the above, it’s crucial that the orders handed by top-regulatory bodies such because the CCI have to be afforded satisfactory consideration by worldwide arbitral tribunals, in order that India’s domestic public policy and the India’s anti-trust framework just isn’t thwarted for need of consideration by foreign arbitral tribunals.

It is our opinion that order of the Division Bench has not forged any eclipse on the sacrosanct ideas of “ease of doing business” and “investor confidence” in India. The Division Bench’s strategy is actually a welcome-step in reminding worldwide arbitral tribunals of their obligation to pay satisfactory heed to the orders of sovereign bodies and to shield India’s domestic public policy.

(Hiroo Advani is an authority on arbitration legislation and one of solely two Indian legal professionals ever listed within the International Who’s Who of Commercial Arbitrators)

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