Singapore: One George Street #20-01 Singapore 049145 Tel: +65 6416 8000 Fax: +65 6532 5711 Shanghai: Unit 5006 Raffles City Office Tower 268 Xizang Road Central, Shanghai, PRC 200001

Tel: +86 21 6340 3131 Fax: +86 21 6340 3315 Website: www.wongpartnership.com.sg Email: wonglaw@singnet.com.sg

Investment Protection when dealing Investment Protection when dealing with India with India -- A Singapore perspectiveA Singapore perspective

Presented by:

Nish ShettyHead, India Practice Group

25th June 2007

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OutlineOutline

Overview of Indian Court System and IssuesGeneral Aspects of Indian ArbitrationSingapore as a venue for dispute resolution - the growing relevance of the SIACComprehensive Economic Co-operation Agreement (“CECA”)Construction Industry Arbitration Association - An SIAC-CIDC Dispute Resolution Centre

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Appeal of Indian ArbitrationAppeal of Indian Arbitration

“High litigation costs, time-consuming and complicated nature of lawsuits etc. discourage parties from approaching the courts of law. This has led to the widespread acceptance of alternative dispute resolution mechanisms.”

- Indian Parliamentary Standing Committee on Personnel, Public Grievances, Law & Justice

(July 2005 Report on Arbitration & Conciliation Amendment Bill 2003)

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Issues in Indian Court System

DelayInfluenceRecovery of Costs

Appeal of Indian ArbitrationAppeal of Indian Arbitration

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Indian Court SystemIndian Court SystemIssuesIssues

Delay“There are over ten million [court] cases pending …. all over India and some of them have been in the courts for decades; still undecided.”

- Transparency International, India - Summary of major issues debated at Conference on Delays & Corruption in Indian Judicial System, Dec 1999

“There are concerns … about the delays in disposal of cases and the consequent backlog that has built up over the years… the total backlog in the Subordinate Courts exceed 20 million.”

- Indian Prime Minister Manmohan Singh – 18/9/2004Address to Conf. of Chief Ministers & Chief Justices New Delhi

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“There are occasional noises about probity - or the lack of it – in some sections of the judiciary ….. More than one retired Chief Justice has drawn attention to the growing incidence of corruption among certain sections of the judiciary.”

Indian Court SystemIndian Court SystemIssuesIssues

- Indian Prime Minister Manmohan Singh – 18/9/2004Address to Conf. of Chief Ministers & Chief Justices

Influence

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Indian Court SystemIndian Court SystemIssuesIssues

Recovery of Costs

No practice of awarding costs to

successful litigant

Rationale – Access to justice“.. The Commission is of the firm view that as the right to access to justice is now recognised as a basic human right world over, high rates of Court fees may become a barrier to access to justice”

- Law Commission of India, 189th Report on Revisions of Court Fees Structure

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Type of Arbitrationlargely ad hoc arbitrationsless Institutional arbitration

Key Aspects of Indian ArbitrationKey Aspects of Indian Arbitration

- Indian Prime Minister Manmohan Singh –18/9/2004Address to Conf. of Chief Ministers & Chief Justices

Not widely used “We have also not fully exploited the potential of alternate dispute resolution mechanisms like conciliation, mediation and arbitration.”

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The lack of a well-defined practice of adopting institutional arbitration often brings into question:

Arbitrator’s qualifications and expertiseArbitrator’s independence and impartialityArbitrator’s feesTime line supervision/monitoring

Key Aspects of Indian Arbitration Key Aspects of Indian Arbitration

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General attitude to Arbitration Awards

Prevailing aim

“try to win if you can, if you cannot, do your best to see that the other side cannot enforce the award for as long as possible”

- Fali S Nariman, India Chapter, Arbitration in Asia 2001

Resist enforcement as long as possibleAttitude of Government agencies

Arbitration AwardsArbitration Awards

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Arbitration AwardsArbitration Awards

Setting aside procedure

3 tiers of appeals – District Court, High Court, Supreme Court

“… a time consuming process … there is no fast track slot for proceedings on awards: they take their turn with a plethora of other litigation …”

- Fali S Nariman, India Chapter, Arbitration in Asia 2001

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Indian Arbitration & Conciliation Act 1996

superceded 1940 Indian Arbitration Actadopts 1985 UNCITRAL Model Law

Identical basis to Singapore International arbitration regime

Model Law emphasis on party autonomy and non-intervention.

“[The] scheme and intention behind [international] arbitrations is minimal court involvement””

- Singapore High Court Mitsui v Rush

Judicial InterventionJudicial Intervention

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“Although the old law has gone, the system has not changed”

- Fali S Nariman, India Chapter, Arbitration in Asia 2001

Judicial InterventionJudicial Intervention

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Judicial InterventionJudicial Intervention

Error of lawnot point of review under UNCITRAL Model Law

Ambit of “public policy” exception

GEC v Renusagar Power (1994, Indian Supreme Court)

Challenge of Foreign Awardnarrow definition of “public policy”ground

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Error of law – Renusagar’s case

mere violation/misapplication of law of India ≠ violation of public policy

“public policy” - some fundamental policy of India, interests of India or justice or morality

Judicial InterventionJudicial Intervention

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ONGC v Saw Pipes Ltd (2003, Indian Supreme Court)

Domestic Award set aside on error of law on grounds of public policy

(non-trivial) misapplication of law �against public policy

Renusagar distinguished as dealing with Foreign Award

Judicial InterventionJudicial Intervention

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SingaporeSingapore as a venue foras a venue for Indian DisputesIndian Disputes

Singapore is increasingly becoming relevant as aneutral venue for Indian arbitrations:From the Indian party’s point of view:

-Close proximity to India

-Most Indian metros have direct connectivity via air toSingapore

-Cheaper at times to fly to Singapore than to Delhi

-No language issues

-Cost of conducting an arbitration, particularly hotel costs, are considerably cheaper

-Ability to have the Indian party’s own Indian counsel conduct the arbitration in Singaporewithout the need for a Singapore counsel, even if Singapore law is the governing law

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SingaporeSingapore as a venue foras a venue for Indian DisputesIndian Disputes

Singapore is increasingly becoming relevant as aneutral venue for Indian arbitrations:

�From the Foreign Investor’s point of view:

•Familiar legal system based on English law

•Widely recognised as being efficient and transparent

•Pro-arbitration:

Minimal interference in its supervisory role of the arbitral processin Singapore thus upholding the autonomy and finality of the arbitral process:Court of Appeal - Soh Beng Tee [2007] SGCA 28 (9th May 2007)

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Singapore as a venue forSingapore as a venue for Indian DisputesIndian Disputes

The Singapore International Arbitration Centre (“SIAC”)

-The SIAC has been actively promoting itself as a centre for the administration of arbitrations generally in Asia, including India

-The Singapore government has also been solidly behind this initiative, as have been the Courts

-There is now a significant increase in the number of India related disputes being administered by the SIAC

-Having said that, still only scratching the surface

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Comprehensive Economic CoComprehensive Economic Co--operation operation AgreementAgreementThe CECA is a key agreement that has been entered into betweenSingapore and India

-Not merely an agreement that grants Singapore virtually the sametax benefits as that between Mauritius and India

-Deals with a host of other matters including investment protectionArticle 6.21 (Investor-State) and Chapter 15 (State-State) of theCECA

- CECA encourages “consultations and negotiations” failing whichParties have access to the domestic courts in the same way as their ownNationals OR Arbitration under the UNCITRAL rules OR under theICSID Convention (India is not a party to ICSID and will be conducted inaccordance with the Additional Facility Rules)

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SIAC SIAC –– CIDC DISPUTE RESOLUTION CENTRECIDC DISPUTE RESOLUTION CENTRE

Set up in New Delhi, primarily for the construction industry: Hundreds of millions of

dollars tied up in construction disputes without appropriate mechanisms for their resolution

MOU signed September 2004; & Joint Venture Agreement signed February 2005

Administered and managed on SIAC Model

Opened officially and is now in operation as the Construction Industry Arbitration Association

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Construction Industry Arbitration AssociationConstruction Industry Arbitration Association

The CIAA Arbitration Rules provides for institutionalArbitration procedures and rules for resolution ofConstruction disputes.

(eg Under the CIAA Arbitration Rules, the arbitrator willhave to make a reasoned award within 45 days fromclose of hearing)

Website: www.ciaa.in

Singapore: One George Street #20-01 Singapore 049145 Tel: +65 6416 8000 Fax: +65 6532 5711 Shanghai: Unit 5006 Raffles City Office Tower 268 Xizang Road Central, Shanghai, PRC 200001

Tel: +86 21 6340 3131 Fax: +86 21 6340 3315 Website: www.wongpartnership.com.sg Email: wonglaw@singnet.com.sg

THE END

Nish Shetty, Partner

Tel: +65 6416 8135Email: nish.shetty@wongpartnership.com.sg