The Indian Supreme Court has put beyond doubt the freedom of parties to India-related contracts to choose arbitration outside of India (see PASL Wind Solutions v GE Power Conversion India, covered here). Market practices suggests that when such parties arbitrate offshore, they are likely to do so in Singapore or London – and both are suitable. Often, parties also prefer arbitration in India.
This article addresses the key differences between these choices of seat to assist with this important choice in commercial contracts. Carefully considering these at the outset and choosing the right seat (and the right dispute resolution mechanism) can help make the process efficient and effective.
As we note below, parties' experience of institutional arbitration in India, the UK and Singapore is increasingly similar, although ad-hoc arbitration in India is likely to be subject to delay due to the heightened role of the Indian courts. These areas of convergence are considered in more detail at the end of this article.
In our experience the key factors parties consider when choosing an arbitral seat are:
(i) Whether they are willing to submit to the Indian courts as the supervisory courts, with the risks of relative delay and uncertainty which that may bring compared to the English or Singapore courts.
(ii) Whether interim relief will be required against people or assets in India, in which case arbitration in India may be preferred.
(iii) Where arbitrability is a grey-area in India (for example for some kinds of shareholder disputes), whether the parties prefer to increase the likelihood that the arbitration nonetheless proceed, by choosing London or Singapore arbitration. Each of these issues and more are considered in more detail below.
Where to choose? – The key considerations
Enforcement of Tribunal and Emergency Arbitrator (interim relief) orders
If the ability to obtain enforceable interim relief against assets in India is a key consideration, this may be a decisive factor in favour of choosing a seat in India, because there is no mechanism under Indian law to directly enforce an order of a foreign-seated tribunal. However, this limitation is somewhat mitigated by the option to use an order of a foreign tribunal to ask the Indian courts to grant interim relief in similar terms under section 9 of the Indian Arbitration and Conciliation Act (for example, see HSBC v Avitel here, where the Bombay High Court granted relief in similar terms to two SIAC emergency arbitrator orders).
In India (for India-seated arbitrations) and Singapore (for Singapore-seated or offshore arbitrations), an interim order is enforceable as if it were an order of court. An English court will not act unless satisfied the applicant has exhausted any available arbitral process in respect of a failure to comply with the tribunal's order.
Choice of seat and arbitrability
All three seats recognise that certain disputes are not suitable for arbitration as a matter of public policy. These include family disputes, criminal or tax matters or insolvency proceedings affecting the rights of third parties (eg, schemes of arrangement, judicial management, and winding up). However, parties should consider their choice of seat carefully where disputes may arise in relation to minority oppression, mismanagement or unfair prejudice claims, intellectual property, or allegations of fraud.
Note that the non-arbitrability of a dispute under Indian law is a ground to resist enforcement in India, so when dealing with counterparties that only have assets in India, care must be taken before arbitrating offshore a dispute that is potentially non-arbitrable under Indian law.
Note that under Singapore law, arbitrability is determined by looking at the law of the seat and the law of the arbitration agreement, so the agreement should also be governed by Singapore or English law in a Singapore seated arbitration, to maximise the likelihood that disputes are arbitrable (see Anupam Mittal v Westbridge Ventures II  SGCA 1).
Impact of arbitral seat on choice of governing law
Parties to India-related contracts should consider whether Indian law imposes any restrictions on the parties' choice of governing law. This depends on: (i) whether all parties are incorporated in India (or in the case of an individual, are Indian nationals and/or residents); (ii) whether the contract has a "foreign element"; and (iii) the parties' choice of seat.
Indian courts are increasingly adopting a more flexible approach in allowing Indian parties the freedom to choose the governing law and seat of arbitration applicable to India-related contracts. For instance, in PASL Wind Solutions v GE Power Conversion India, the Supreme Court allowed two Indian parties the freedom to choose a foreign seat of arbitration (see our blog here). Meanwhile, in the case of Sasan Power Limited v North America Coal Corporation India Private Limited (see decision here), the Supreme Court allowed two Indian parties also to choose a foreign governing law since the dispute contained a "foreign element". However, there may still be some restrictions on the parties' freedom of choice in this respect, such as Section 28(1)(a) of the Indian Arbitration Act 1996, which provides that in an arbitration other than an international commercial arbitration (ie, an arbitration where at least one party is not incorporated, resident or national of India), Indian law shall be mandatory. We recommend parties seek specific advice on these issues before selecting the governing law and seat of arbitration applicable to their contracts.
Note: Consider whether you want to allow appeals on issues of law. If so, parties must choose London seat and English governing law and make sure that any waiver of such right to appeal in applicable arbitration rules (ie, LCIA Rules and ICC Rules do contain a waiver of appeal; whereas the LMAA Rules do not) is excluded.
Choice of seat is an important consideration for arbitration users. The arbitral seat or legal place of arbitration determines which country's arbitral procedural law applies and which courts have supervisory jurisdiction over the arbitration. Choosing the right seat can make a meaningful difference to the effectiveness of remedies and have a significant bearing on the outcome of a dispute.
Increasing convergence between India, the UK and Singapore
Parties have found increasing similarities in their experience of institutional arbitration, whether the seat is in India, London or Singapore. Institutions are often able to deal with issues that, in ad hoc arbitrations, might ordinarily be referred to the court, for example regarding the appointment of arbitrators or first review of arbitrator challenges.
Whether the seat of arbitration is India, London, or Singapore, many of the substantive principles will be similar. Examples of convergence of the national arbitration laws across all three seats include:
- Arbitration is confidential under the laws of India, England and Singapore subject only to exceptions, such as disclosures required by law.
- Third-party funding is available for arbitration at all three seats. Third-party funding is clearly regulated and prevalent in England and Singapore and has been recognised judicially as essential to ensuring access to justice in India (see our blog here).
- The courts at all three seats can appoint arbitrators in ad-hoc arbitrations (the arbitral institution is capable of appointing arbitrators under most institutional rules such as the ICC, LCIA, SIAC and MCIA rules). The appointment of arbitrators has historically been a source of delay in India, although the Indian Supreme Court has recently asked courts to attempt to decide such applications within six months (see our blog here).
- Attempts to commence insolvency proceedings at all three seats will be stayed where a disputed debt is subject to an arbitration agreement (see Indus Biotech Private Limited v. Kotak India Venture Fund from the Indian Supreme Court and recent decisions in England and Singapore here and here).
- At all three seats, arbitrators are subject to duties of independence and impartiality and must disclose circumstances likely to give rise to justifiable doubts as to his or her impartiality or independence. Indian statute defines the content of this duty in detail (see the Fifth Schedule and the Seventh Schedule of the Indian Arbitration and Conciliation Act 1996) and the duty has been developed through case law in England and Singapore (for example, in Halliburton v Chubb, discussed here).
- In all three jurisdictions, domestic awards can be set-aside, and awards refused enforcement, on similar grounds as found in Article V of the New York Convention (such as lack of jurisdiction, a serious failure of due process, non-arbitrability of the dispute, or that the award is contrary to the public policy of the place of enforcement). There is important local nuance as to how these principles have developed in each jurisdiction; but it would be difficult to predict at the contract drafting stage how these differences play out.
While many substantive principles are similar across the three jurisdictions, parties' experience in practice can be quite different given the unpredictable nature of litigation in India (especially delays and timelines) and the ease with which parties approach Indian courts during various stages in an arbitration. While Indian courts are gradually and consistently taking a more pro-arbitration view, relative delays and uncertainty in the Indian court system can come as a surprise to international parties.
“India-related businesses are no strangers to London as a trusted seat of arbitration. London offers a forum that understands the needs and unique circumstances of clients with an India nexus. The well-established legal framework under English law, the multitude of experienced arbitrators, and strong track record of upholding and enforcing arbitral awards contributes to London's status as the go-to destination for the resolution of complex cross-border disputes. With the recent developments in the Indian arbitration landscape, London will no doubt remain a preferred seat of arbitration for Indian clients in their commercial contracts.”
ANDREW CANNON, PARTNER, LONDON
“The arbitration scene in India is undergoing an exciting transformation. Indian and international clients alike are very discerning and do not hesitate to demand effective and efficient solutions for their disputes. The need of the hour for all India-related disputes is for lawyers to use their experience to simplify the complex, global dispute resolution scene and deliver practical, tailor-made solutions that help clients achieve their goals.”
ANURADHA AGNIHOTRI, OF COUNSEL, LONDON
“Indian parties have been the top users of SIAC arbitration for many years, and many of the leading Singapore authorities concern India-related disputes, creating helpful precedent for parties to understand how India-specific issues (like the jurisdiction of the NCLT, or the impact of Indian insolvency laws) may impact a Singapore seated arbitration. Together with its familiar common law legal system, geographic and cultural proximity and well-established arbitration infrastructure, we expect the number of Indian parties arbitrating in Singapore to continue to increase.”
TOMAS FURLONG, PARTNER, SINGAPORE