Sneha Jaisingh discusses guerrilla tactics in Indian arbitral proceedings
Professor William Park compared arbitration to fine dining, which, unlike the messy hamburger of litigation, provides a balanced meal of efficiency, expediency, party autonomy and due process principles. Alas, today, arbitration in India is more messy mince and less fine dining, largely due to recalcitrant parties adopting guerrilla tactics.
‘Guerrilla tactics’ refers to deliberate attempts by certain parties – usually the respondents to arbitrations – to derail and obstruct arbitral proceedings, often as a ground to challenge the final award. While some argue that these tactics should not be categorised as guerrilla tactics as they are merely defensive in nature, one cannot deny their existence. Parties must, therefore, be mindful when dealing with counterparties in an arbitration. While there can never be a straitjacket formula to address guerrilla tactics, there are a few points that parties should bear in mind.
At the outset, to avoid a challenge to the existence of an arbitration agreement, when drafting and negotiating an arbitration clause or agreement, parties must ensure that the clause or agreement is easy to interpret and unambiguous. Where an institution is being chosen to administer the disputes and, or, govern the procedural law, parties must choose the institution that is most likely to suit their needs, and understand the nature of the potential disputes. The institution should also be cost effective. Next, when faced with a dispute, parties must exercise proper diligence when appointing arbitrators and ensure that relevant disclosures have been made with respect to any matters that may give rise to a justifiable doubt as to the independence or impartiality of an arbitrator.
Once the arbitral tribunal has been constituted, it must proceed with the first hearing and the first procedural order. This is particularly important as, under the Arbitration and Conciliation Act, 1996 (Act), a tribunal has wide discretion to determine how arbitral proceedings will be conducted, provided that each party is treated equally and given a full1 opportunity to present their case. Consequently, a robust first procedural order will likely pay dividends later. If issues such as place and applicable law of the arbitration have not already been agreed to, they must be addressed at the first hearing. Parties may also address whether there is any jurisdictional challenge, interim measure or other preliminary issue that needs to be determined. More procedural aspects such as length of pleadings, filing of documents, simultaneous exchanges of pleadings or documents, communications with parties and arbitrators, how to deal with impromptu applications, rules of evidence, costs including on account of adjournments should also be addressed. It is also good practice to try and obtain the consent of the counterparty on such issues so that the tribunal’s scope is narrow.
Guerrilla tactics often also include attempts to bring matters that are extraneous to the arbitration before the tribunal. Illustratively, a party may make allegations of oppression and mismanagement in the case of shareholder disputes, raise issues such as invalidity of patents in disputes pertaining to recovery of royalty fees, allege that the underlying agreement which is the subject matter of the dispute is anti-competitive, or is vitiated by fraud. As the same factual matrix may give rise to various causes of action, it is critical that parties ensure that the scope of the arbitration is well defined and that a party only raises claims which are arbitrable in nature. Equally, where a counterparty has sought to raise claims in respect of extraneous matters, a party may be able to establish that the extraneous proceedings filed by the counterparty are vexatious and designed to thwart the arbitration.
Other intimidation tactics may include the counterparty filing large volumes of pleadings or evidence which are irrelevant. In such cases the admission and denial of documents is crucial so that the onus of proving the existence and the relevance of extraneous documents is on the counterparty seeking to introduce them. To some extent, the filing of voluminous pleadings and, or, evidence may be obviated through the tribunal’s first procedural order.
Counterparties seeking to delay proceedings may also file for discovery or the production of documents as part of a fishing expedition or roving enquiry. Although the Act does not prescribe procedures for discovery and production of documents, Indian courts have held that principles of evidence and procedure for civil suits would apply to arbitral proceedings. Parties should, therefore, bear in mind that the discovery and production of documents sought must be relevant and material to the case. Discovery will not be allowed on matters which relate solely to a party’s own case. A party is entitled to inspection of all documents which do not constitute exclusively the other party’s evidence of their case.
Briefly, an arbitral tribunal has wide ranging powers to control proceedings. However, there is always a risk that, when faced with guerrilla tactics, the tribunal may fall prey to due process paranoia. It is, therefore, imperative that the party against whom such tactics are being employed provides the tribunal with adequate support to enable it to take takes steps against the recalcitrant party keeping in mind principles of equity and natural justice.
Authors
Sneha Jaisingh
Partner
E: sneha.jaisingh@bharucha.in
- Sohan Lal Gupta v. Asha Devi Gupta(2003) 7 SCC 492 holds that for a fair hearing each party must have: (i) notice of the hearing; (ii) a reasonable opportunity to be present at and throughout the hearing, together with advisers and witnesses; (iii) a reasonable opportunity to present evidence and arguments in support of its case and to test the opponent’s case by cross-examination, rebuttal evidence and oral arguments; and (iv) unless expressly agreed, presented the whole of their evidence and argument at the hearing.