Research Paper On International Commercial Arbitration.docx

International Arbitration Law: Arbitrability of Competition Law Issues Authored by: Prakhar Agarwal* 1.

Introduction The analysis of the various facets of the dispute resolution systems suggests that there are

various objectives of the parties in choosing a particular type of dispute resolution system. These objectives could be in nature involving time, expenditure, and the credibility of the decision given by the forum. To enable parties in achieving their objectives through their preferred method of dispute resolution it is very essential that an effective dispute resolution method should not only produces solutions but is also well-conducted.1 In the modern era of ever expediting multinational trade and commercial disputes, the demand of Arbitration as alternative dispute resolution is advancing. Arbitration is the method by which the private parties waive their rights to approach the jurisdiction of the national courts with the goal of having a neutral, speedy, and flexible form of dispute resolution.2 The concept of ‘party autonomy’ which is the keystone of arbitration allows the parties to opt out of the jurisdiction of their national courts and enforce private dispute resolution through arbitration. However, certain limits have been placed in this choice of private arbitration by reserving certain types of disputes not amenable to be settled by arbitration. This concept in arbitration jurisprudence is known as arbitrability which entails that certain types of issues dealing with strong public interest such as Criminal Law, Family Law Securities Law, Bankruptcy Laws, etc cannot be referred to arbitration.3. There are three stages for issue of arbitrability to arise: First, while making reference to arbitration; Second, during the arbitral proceedings; Third, at the time of enforcement or challenging the arbitral award.4

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IIIrd Year Law Student from Maharashtra National Law University Nagpur, India. This Essay is a Runner Up entry for the 5th RMLNLU International Legal Essay Writing Competition (RILEC)-2017. 1 Anirban Chakraborty, Alternative Dispute Resolution In India, 25 (1st ed. 2016). 2 Tanya Choudhary, Arbitrability Of Competition Law Disputes In India – Where Are We Now And Where Do We Go From Here?, 2(4), Indian Journal of Arbitration Law, 69, 69, (2015), Available at http://www.ijal.in/sites/default/files/IJAL%20Volume%204_Issue%202_Tanya%20Choudhary.pdf, last seen at 1/08/2017. 3 Damien Geradin and EmilioVillano, Arbitrability of EU Competition Law-based Claims: Where Do We Stand After the CDC Hydrogen Peroxide Case?, 40(1), World Competition Law and Economics Review, 67, 67 (2017), Available at Kluwer Law International, last seen on 3/08/2017. 4 Supra. 1, at 31.

Arbitration Laws consistently incorporates the limits over subject matter of certain fields of disputes (Supra) which may be submitted to the arbitration. The subject matter which the arbitration laws permits to be submitted to arbitration are said to be ‘arbitrable’. 5 Various international conventions and domestic statutes talks about the subject matter which can be brought within the ambit of ‘arbitrability’. For example, article V(2)(a) of New York Convention6 says that a national court may refuse the enforcement of an arbitral if the subject matter of the dispute is not capable of settlement by the arbitration under the law of that country. Subsequently, Article II(3) of the New York Convention7 empowers the national courts to refuse to enforcement of arbitration agreement if the agreement is “….null and void, inoperative or incapable of being performed”. The same is being seen in Australia under Section 7 of the International Arbitration Act, 1974 8 , in Hong Kong under Section 20 of the Arbitration Ordinance 9 , in Russia under Article 8 of the International Arbitration Law 10 , in Switzerland under Article 7 and 177 of the Private International Law11, and in U.K under Section 9(4) of the Arbitration Act. 12 Under Dutch Law, the test of arbitrability is provided under Article 1020, paragraph 3 of the Dutch Civil Procedure Code.13 Similarly, section 806 and 808 of the Italian Civil Procedure Code 14 includes the arbitrability of family law matter. 15 The concept of arbitrability can also be seen in Article 1030 of the German ZPO and Article 1(b) and 34(2)(b)(i) of UNCITRAL16 Model Law.17 Competition Law is one such issue which has entranced the attention of the legal scholars from various jurisdictions around the world. A number of National Courts from various 5

Kluwer Law International, 'Modernised EC Competition Law in International Arbitration, Chapter 5: Arbitrability', 89, 89, in Modernised EC Competition Law in International Arbitration, (Phillip Landolt, 1st ed. 2006), Available at Kluwer Law International, last seen on 3/08/2017. 6 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards. 7 Ibid. 8 International Arbitration Act, 1974, Act No. 136 of 1974. 9 Arbitration Ordinance, Cap 609. 10 FEDERAL LAW ON INTERNATIONAL COMMERCIAL ARBITRATION, No. 5338-1. 11 Federal Statute on Private International Law of 1987. 12 U.K Arbitration Act, 1996. 13 Phillip Louis Landolt, Modernised EC Competition Law in International Arbitration, 95, (1st ed. 2006). 14 Civil Procedure Code of 1965. 15 V. Reddy & Nagraj, Arbitrability: The Indian Perspective, 19(2), Journal of International Arbitration, 117, 126, (2002). 16 United Nations Commission on International Trade Law (UNCITRAL) 2002. 17 Homayoo N Arfazadeh, Arbitrability under the New York Convention: the Lex Fori Revisited, available at, http://web.law.columbia.edu/sites/default/files/microsites/columbia-arbitration-day/files/04_2001_-_arfazadeh.pdf, last seen on 5/82017.

jurisdictions has addressed the question of the issue related to the arbitrability of Competition Law issues. In this context, the essay opens with the desires to examine the controversy over arbitrability of claims arising from disputes involving Competition Law. It’ll further discuss the position of Arbitrability of Competition Law issues with respect to the jurisdiction of U.S, EU, and India. Even though the essay incorporates the analysis of the issue pertaining under few jurisdictions, this is by no means an exhaustive study of the entire jurisdiction reviewed, keeping in the consideration that some of them have been studied more extensively than others.. Finally, the essay would like to conclude with stressing the need to evolve a more comprehensive and uniform outlook towards adjudicating arbitrability with an emphasis on adopting a proarbitration approach. 2.

Why Competition Law issue falls within the debate of ‘Arbitrability’? The inception of this debate has its root in the very nature of ‘arbitration’ and

‘competition law’. Both the fields are diametrically opposite. Competition Law, on one hand, is centered on the domination of Public order where the state is being required to promote healthy economic market and upheld the maintenance of public interest whereas on the other hand, arbitration is the private process of dispute resolution centered on the concept of ‘party autonomy’. In such a case the dispute is prone to occur as to whether to submit the issues relating to competition law to arbitration and thus raising the question of ‘Arbitrability’ of Competition Law issues. Number of decisions from various courts around the world has questioned the arbitrability of Competition law issues. Although, various decisions of the number of national courts tends to favor arbitration of competition law issues, yet the issue of arbitrability of Competition law is being raised steadily by the parties to invalidate the arbitration clause. 18 The most substantial argument put forward is that Competition Law is a matter of public policy through which the States checks the deplorable economic activities by imposing penal damages as a means of deterrence. Since the objective of the Competition Law is to prevent market distortion, safeguarding the consumer welfare, promoting economic efficiency, economic growth

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Deyan Draguiev, Arbitrability of Competition Law Issues Reinforced, available http://kluwerarbitrationblog.com/2014/01/10/arbitrability-of-competition-law-issues-reinforced/, Last seen 2/08/2017.

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and development, and the overall efficiency of the market,19 there is an element of paramount public interest involved in the dealings with regards to the matters of the competition law issues. The considerations of the general public interest, the complicated situations encountered in competition law cases and the nation’s Court’s exclusive jurisdiction over competition law matters, are among the few arguments advanced before various jurisdictions from time to time to justify the courts’ negation in allowing the disputes relating to Competition Law to be settled through Arbitration.20 Historically, the method of private dispute resolution of the issues concerning the Competition Law through arbitration has been “ill-treated” because of the prevailing fear and the underlying mindset of the scholars that the competition law issues are “fact intensive” and hence, is too complex for the arbitrators to be dealt with; or that the private nature of arbitration will prevent the fair and accurate application of competition law; or that the arbitrators will have a “pro-business” inclination which might consequent in the under-enforcement of laws. 21 And thus, the idea which was encapsulated regarding the arbitration of the Competition Law issues can be best described as “black hole to which rights are sent and never heard from again."22 But, this judicial hostility had seen a change in the later 20th Century with the U.S case of Mitsubishi Motors Corp v. Soler Chrysler Plymouth 23 , judgment of which respects the party autonomy in International Commercial contracts and held that they should be given full respect even if that means to submit the issues of Competition Law to Arbitration. Further, the legacy of this judgment has been seen in various cases from different jurisdiction, but still the debate is ongoing in many countries pertaining to the Arbitrability of Competition Law issues. 3.

Position of ‘Arbitrability’ of Competition Law issues in the U.S For a long time in US, judges took a hostile view regarding arbitration with the fear of

arbitrators being incompetent or corrupt which might defeat the administration of justice. 19

ASEAN Regional Guidelines on Competition Policy, Chapter 2: Objectives And Benefits Of Competition Policy, available at, http://www.mycc.gov.my/sites/default/files/Chapter-2.pdf, Last seen on 2/08/2017. 20 Brewer, Thomas J., The Arbitrability Of Antitrust Disputes: Freedom To Contract For An Alternative Forum, 66(1), Antitrust Law Journal, 91, 93. (1997), available at www.jstor.org/stable/40843393. Last seen on 2/08/2017. 21 Scherk v. Alberto-Culver Co., 417 U.S. 506, 94 (1974). 22 Supra 2, at 71. 23 473 U.S. 614 (1985).

Accordingly, the US Federal Courts of Appeal considering the judgment in the American Safety Corp. v. J.P. Maguire & Co.24 held that the competition law claims (known as ‘Antitrust’ Claims in US) are inappropriate to be resolve by private bodies. The ‘American Safety Doctrine’ stressed that referring such claims in the hands of the private parties were risky for the stability of the American Economic System. As the business community of the US started looking for less time consuming and less expensive alternative to litigation, US community calls for the proarbitration regimes. The establishment of International arbitration institution ‘American Arbitration Association’ in 1926, U.S signing of the New York Convention 25 in 1970, and subsequently enactment of a second chapter in the U.S Federal Arbitration Act by the Congress26, all infers the shift of paradigm from litigation to Arbitration. Consequently, in Scherk v. Alberto-Culver Co.27, the court had observed that the Federal Arbitration Act (FAA) had “centuries of judicial hostility to arbitration”. Although, the dispute involve was regarding federal Securities Laws, the court respecting the international comity, held that the party autonomy must be respected and hence matter to be refer to arbitration. Subsequently, in Moses H. Cone Memorial Hospital v. Mercury Construction Corp28, the Court held that the FAA had created a “liberal federal policy favoring arbitration agreements, as well as a body of substantive law establishing and regulating the duty to honor an agreement to arbitrate” and thus any question pertaining to the arbitrability of the subject may be decided by the arbitration.29 The progress to the concept of “pro-arbitration” with respect to competition law issues has been has been achieved in 1985 with the non-unanimous judgment in the case of Mitsubishi Motors Corp v. Soler Chrysler Plymouth.30(herein after refer as Mitsubishi Case). The majority’s view in the said case is that the international arbitrators is a team of reputed legal scholars and also that the Judiciary has to respect the parties autonomy in deciding to proceed with arbitration as their preferred method of dispute resolution. The Court further maintain that if, while deciding the ‘Arbitrability’ of the subjects, the Court holds the traditional approach, it 24

391 F.2d 821 (2d Cir. 1968) Supra, at 6. 26 Mark R. Joelson, Chapter 33: The Basis for Applying Antitrust Law from a US Perspective, 1329, in EU and US Antitrust Arbitration: A Handbook for Practitioners, (Blanke and Phillip Landolt, 1st ed. 2011), Available at Kluwer Law International, last seen on 5/08/2017. 27 [1974] 417 US 506. 28 [1983] 460 US 1. 29 Supra 26. 30 473 U.S. 614 (1985). 25

will not only put in risk the prospects of the international trade and commerce but also will harm the countries’ competitive age as arbitration, as a means of alternate dispute resolution has been constantly expediting among the global economic and commercial bodies as the most enticing way of private settlement of disputes. The U.S Supreme Court stated that: “concerns of international comity, respect for the capacities of foreign and transnational tribunals, and sensitivity to the need of the international commercial system for the predictability in the resolution of disputes requires that we enforce the parties’ agreement, even assuming that a contrary result would be forthcoming in a domestic context” It had an overarching effect promoting the pro-arbitration judicial formulae for Antitrust issues (Competition Law issues) not only in the U.S but internationally in many jurisdictions.31 The Court in response to the ‘American Safety Doctrine’ that the inherent convolutions involved in the Antitrust claims makes it “ill-suited” for arbitration, noted that the antitrust issues are not essentially unsusceptible to be resolved by way of arbitration. 32 The case also holds importance as far as international commercial arbitration jurisprudence is concerned for it lays down three crucial aspects; first, it drew emphasis on the idea that the national courts must adopt more liberal attitude while determining the arbitrability of the issue; Secondly, it promotes the national courts to respect the integrity and competency of the international arbitrators and lastly, it gives the very important ‘Second Look Doctrine’ regarding the enforceability of the awards at national courts given by the arbitral tribunals. 3.1

Gift of Mitsubishi: ‘Second Look Doctrine’ The Mitsubishi case favored the Jurisprudence of International Commercial Arbitration

by giving the famous ‘Second Look Doctrine’. In the Mitsubishi case, the U.S Supreme Court held that “potential complexity should not suffice to ward off arbitration” negating the contentions that the arbitral tribunals are incompetent to effectively appreciate and asks to promote the enforcement of the international commercial arbitration. However, the objective of 31

Gordon Blanke, Chapter 49: Antitrust Arbitration under the ICC Rules, 1769, in EU and US Antitrust Arbitration: A Handbook for Practitioners, (Blanke and Phillip Landolt, 1st ed. 2011), Available at Kluwer Law International, last seen on 5/08/2017. 32 Laurence M. Smith, Determining The Arbitrability Of International Antitrust Disputes, 8, Journal of Comparative Business and Capital Market Law, 197, 205, (1986), Available at http://scholarship.law.upenn.edu/cgi/viewcontent.cgi?article=1673&context=jil, Last seen at 6/08/2017.

the Second Look Doctrine is to enable the national courts to refuse the arbitral award on the grounds that arbitrators willfully or by mistake fail to effectively address the issue of the competition law involved in the arbitration.33 It is an opportunity avail with the national Courts (in the present case, The U.S Courts) to refuse to enforce the arbitral award citing the danger pertinent to the U.S Public Policy, pursuant to Article V (2) (b) of the New York Convention34. 3.2

Whether ‘Second Look Doctrine’ really respects the party autonomy to Arbitrate? The most obvious questions that will arise after analyzing the operation of the ‘Second

Look Doctrine’ are that whether the real purpose of Arbitration be served when the final call on the decisions of the arbitrators is to be taken by the national courts? Or, isn’t it that the national court (the place of enforcement of the arbitral award) will operate the enforcement favoring their own country’s law making the party’s choice of law immaterial? Will that not be the disadvantage to the parties who seek speedy resolution when their award might not get enforced by the nation’s court if the nation’s competition law doesn’t approve it? The questions have been answered by the U.S Court in Simula v. Autoliv35 where it held that even if the arbitrators do not incorporates the U.S Laws, the foreign laws will be acceptable unless “the law of the transferee court was so deficient that the plaintiffs would be deprived of any reasonable recourse.” Thus, it is said that by permitting arbitration, courts do not only trust the credibility of the arbitrators to judge in accordance with the U.S Antitrust Laws but are also giving them considerable freedom from any post-award substantive evaluation. Hence, the ‘Second Look Doctrine’ doesn’t really disrespects the party autonomy in resolving the disputes through Arbitration. 4.

Position of ‘Arbitrability’ of Competition Law issues in European Union. The legacy of the pro-arbitration outlook, as viewed by the U.S Supreme Court in the

Mitsubishi Case has been taken forward by the European Court of Justice (ECJ) in refurbishing the position of Arbitrability of Competition Law in the Eco Swiss China Time v. Benetton36 (herein after refer as Eco Swiss) case. The brief facts of the case are that there was a tripartite 33

Supra 1, At 32,33. Supra, at 6. 35 175 F.3d 716 (1999) 36 (1999) 2 All ER (Comm.) 44. 34

agreement for eight years among Eco Swiss, Benetton and Bulova for manufacturing and sale of watches containing the name ‘Benetton by Bulova’. Benetton issued notice of termination three years prior to the terms of agreement and consequently Eco Swiss and Bulova initiated arbitration proceedings against the Benetton under the rules of the Netherlands Arbitration Institute. The Arbitral tribunal, applying the Dutch laws, in the partial award found Benetton guilty for terminating the agreement prematurely and in the final award, directed Benetton to pay USD 26 million as damages. Benetton started the proceeding to set aside both the awards with the contentions that the award is in violation with the Article 81 of the treaty establishing the European Community (EC) which shuns the practices restricting or distorting competition among the member nations. Agreements that promote such practices are void under Article 81(2) EC unless an exemption is granted under Article 81(3). The Supreme Court of Netherland refuted the Contentions put forth by Benetton and upheld the award by concluding that Article 81 EC is not to be regard as compulsory rule “which is so fundamental that no restriction of a procedural nature should prevent it from being observed”, but the Supreme Court did refer the question on this subject matter to the European Court of Justice (ECJ). The ECJ stated in the interest of the efficient Arbitration proceedings the review by the national courts should be limited in scope, and therefore, the annulment of the award should be permitted only in exceptional situations.37 ECJ held that where “…the domestic rules of procedures require a national court to grant an application for annulment of an arbitration award where such application is founded on a failure to observe national rules of public policy, it must also grant such an application where it is founded on failure to comply with the prohibition laid down in Article 81(1) EC”.38 The ECJ further found that the Article 3(1)(g) of EC and Article 81 of EC are the fundamental provisions of the EC Law and thus are within the meaning of ‘Public Policy’ under Article V of the New York Convention. Also, keeping in consideration the arbitration laws of Member states39 and Article 34 (2) (ii)y of United Nations Commission on International Trade

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See, Mostaza Claro v. Centro Movil, [2006] All ER (D) 322. Christoph Liebscher, 'Chapter 23: EU Member State Court Application of Eco Swiss: Review of the Case Law and Future Prospects', 788, in EU and US Antitrust Arbitration: A Handbook for Practitioners, (Blanke and Phillip Landolt, 1st ed. 2011), Available at Kluwer Law International, last seen on 8/08/2017. 39 See, Austria: s. 611 (2) no. 8 in connection with s. 611 (3) CPC; France: n. 11; and Germany: s. 1059 (2) no. 2 (b) CPC. 38

Law (UNCITRAL) 2002, ECJ ruled for an ex officio review of an award for public policy reasons.40 Thus, in the Eco Swiss case, the claims were for the damages due to premature termination of an agreement, which surely would have not endangered the public market of the European Community. Hence, the arbitral award remained standing. 4.1

Rigorous structure of National Courts in EU at the ‘Award Review’ stage The position of the Competition Law in the EU after the Eco Swiss case, though seems to

be arbitration friendly, yet is rigorous at the award enforcement stage. The one question which had neither been raised nor had been answered by the ECJ in Eco Swiss case was ‘what is the intensity of the review of award by the national courts while assessing the impact of the dispute upon the public policy?’ In the Eco Swiss case, the ECJ seems to agree upon the fact that only the provisions of fundamental nature should be considered as public policy but looking at the comprehensive list of the activities under Article 3 EC, it can be said that practically every EC law is public policy. Thus, the national courts in EU have wide power to annul the Arbitral award on the consideration of Public Policy. Hence, it can be concluded that the intensity of the review of arbitral award by national courts in EU is very rigorous. Comparing the position of Arbitrability of Competition Law disputes between EU and U.S, it can be said that in both the Jurisdictions, the arbitration of competition law is now a fait accompli, but when it comes to award enforcement, U.S is more arbitration friendly. 5

Position of Arbitrability of Competition Law issues in India. In India, the courts till recent past has followed a more traditional and conventional view

while determining the arbitrability of the issue. 41 The International as well as domestic arbitration in India is being governed by Arbitration and Conciliation Act, 1996 (The Act) which is on the lines of UNCITRAL Model Law.42 The Act doesn’t states any matter as non-arbitrable. However, Section 2(3) of the Act says that the act would not affect any law by virtue of which certain disputes may not be submitted to arbitration. The restriction on arbitration on few subject 40

Supra 38, At 817. Supra 15, at 119. 42 The Arbitration & Conciliation Act, No. 26 of 1996, Preamble, INDIA CODE (1996) [“Arbitration & Conciliation Act”]. 41

matters is also further confirmed in Sections 34(2)(b) and 48(2) of the Act through which the Courts are empowered to annul the arbitral award if “the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force” or if the “award is in conflict with the public policy of India.”43 With regards to Arbitration in India two things are noteworthy. Firstly it has been held in many cases44 that ONLY the disputes arising out of right in personam and NOT out of right in rem are amenable to arbitration. Secondly, in many judicial decisions45 it has been stated that certain subjects, even though are matter in personam, are reserved exclusively to be heard by the public forum and are not to be adjudicated by Arbitral tribunals in the want of upholding public policy. The scope of this point is only limited to the matters for which, by a way of special enactment, a tribunal is vested with special rights and obligations which gave them distinguished power that aren’t enjoyed by civil courts.46 5.1

Legal Obligations to Arbitrability of the Competition Law Matters To usher the economic market and prevent market distortions, India enacted Competition

Act.47 The Competition Act is enforced through the Competition Commission of India (CCI) which has both regulatory and quasi judicial powers, 48 and Competition Appellate Tribunal (COMPAT) which is to hear the appeals from CCI.49 The Indian court was confronted with the issue of Arbitrability of Competition Law dispute in the leading case of Union of India v. Competition Commission of India.50 The parties filed a complaint before CCI against Railway Board that the latter was abusing its dominant position by imposing increased charges and restricting access to infrastructure. Railways challenge the jurisdiction of CCI before the Delhi

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A. Ayyasamy Vs. A. Paramasivam & Ors., AIR 2016 SC 4675. Booz Allen and Hamilton Inc. v. SBI Home Finance Limited, (2011) 5 S.C.C. 532; State of Orissa v. Ujjal Kumar Burdhan,(2012) 4 S.C.C. 547 (India); Haryana Telecom Ltd. v. Sterlite Industries (India) Ltd., (1999) 5 S.C.C. 688 (India); Chiranjilal Shrilal Goenka v. Jasjit Singh, (1993) 2 S.C.C.507 (India); Osprey Underwriting Agencies v. ONGC Ltd., A.I.R. 1999 Bom 173 (India); Fingertips Solutions Pvt. Ltd. v. Dhanashree Electronics Ltd.,2011 Indlaw CAL 805 (India). 45 Kingfisher Airlines Limited v. Prithvi Malhotra Instructor, 2013(7) Bom C.R. 738 (India); 46 HDFC Bank v. Satpal Singh Bakshi, (2013) 134 D.R.J. 556 (India); Kingfisher Airlines Limited v. Prithvi Malhotra Instructor, 2013(7) Bom C.R. 738 (India); Natraj Studios Pvt. Ltd. v. Navrang Studios, A.I.R. 1981 S.C. 537 (India). 47 The Competition Act, No.12 of 2003, INDIA CODE (2002). 48 Section 7 of The Competition Act, No.12 of 2003, INDIA CODE (2002). 49 Section 53A The Competition Act, No.12 of 2003, INDIA CODE (2002). 50 AIR 2012 DEL 66 (India). 44

High Court to hear the matter pursuant to arbitration agreement between the parties. However, Delhi High Court allowed CCI to hear the case citing that ‘the Arbitral Tribunal would neither have the mandate, nor the expertise, nor the wherewithal’ 51 to investigate into the matter in furtherance of deciding the dispute. In Man Roland v. Multicolour Offset52 , a similar case under Monopolies and Restrictive Trade Practices Act, 1969 [“the MRTP Act”] (the predecessor of the Competition Act), the Supreme Court of India held that the Courts would continue to have jurisdiction even if there is a valid arbitration agreement between the parties. From these two cases, it can be concluded that the right to file a suit before the CCI is an unwaivable right on the reasoning that the arbitral tribunals do not have the expertise and resources to deal with Competition Law claims which is available with CCI/MRTP.53 These two judgments gave us an insight of the position of arbitrability of competition law disputes in India but this is by no means the blanket denial of arbitration for competition law matters. It is because in these two judgments, it was stated that an arbitration clause in an agreement cannot take away the jurisdiction of CCI/MRTP but there are no judicial precedents to suggest that the competition law matters cannot be arbitrable if both the parties willfully submit the disputes to arbitral. 54 Whether the Courts will uphold the award or rejects the same on grounds of Public policy? Since there is no authoritative judgment on the same, the question is still left open in India. 5.2

Present Dead lock for arbitration of Competition Law related matters in India In the Competition Law, the claims may arise both under right in rem as well as under

right in personam. Section 19 of the Competition act enables the any person, consumer or association to bring in the suit before CCI which initiates investigation after that. If any infringement is been found on those investigation, Section 53N of the Competition act empowers third parties affected by anti-competitive conduct to approach the COMPAT and claim damages for the harm suffered. Thus, claims made, liability imposed on the defaulter, or any order made under section 19 of the Competition Act will be an action under right in rem. Whereas, if we look at section 53 of the Competition Act, it provides statutory rights and the remedies only to 51

Para 16, Union of India v. Competition Commission of India, AIR 2012 DEL 66 (India) (2004) 7 SCC 447 (India) 53 Supra 2, at 77. 54 Ibid, at 78. 52

the ‘aggrieved parties’ and such a claim would be based on the rights and interest of the individual party only. This implies that an application made under the said Section would be a purely inter partes which will not affect the rights and interest of the third parties who are not the parties to arbitral proceedings. Thus, competition law does involve right in personam and hence, the applications made under this Section may be referred to arbitration.55 But, the deadlock is the section 61 of the Competition Act which restricts the jurisdiction of civil courts to entertain any competition law disputes. The provision sets up an exclusive jurisdiction to adjudicate on special rights created under competition act and could be construed as excluding the arbitration of the Competition Law matters.56 It might be argued here that this section cannot preclude arbitration pursuant to section 5 of the Arbitration Act which begins with a non-obstante clause reading as notwithstanding anything in any other law, the court has no jurisdiction when there is an arbitration agreement. But, reading section 5 of the arbitration act with section 2(3) of the same,57 which says that any provision of this act will not have impact over any law by virtue of which certain matters cannot be submitted to the arbitration. Thus, from the above explanation, it is quite clear that as far as arbitration jurisprudence of Competition law is concerned, it is highly unlikely that Indian Courts would permit the arbitration of Competition Law issues. 6

Conclusion The position of Arbitrability of Competition Law disputes is quite clear in the U.S and

E.U. In both the Jurisdictions, the arbitration of competition law is now a fait accompli, although, when it comes to award enforcement, U.S is more arbitration friendly. But, it is asserted, that in the countries like India, the judicial hostility towards arbitration has to take a contemporary turn. It is true that for a nation, its public policy is a priority, but it is very important to understand that the relevance of public policy is diminishing on the international front58 and thus opening up new avenues for arbitration.59 The issue in most of the jurisdictions like India is not only the public policy concerns but also the distrust to the arbitration proceedings of the Competition Law

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Ibid, at 79. See, HDFC Bank v. Satpal Singh Bakshi, (2013) 134 D.R.J. 556 (India). 57 See, Warehouse Corporation v. Fortpoint Automotive Pvt. Ltd., 2010 (1) Bom C. R. 560 (India). 58 GKG Caribe Inc. v. Nokia-Mobira Inc., 725 F.Supp. 109, 110-113 (D.P.R. 1989). 59 Supra 2, at 82. 56

disputes. There can be two solutions to it. One, the national competition commissions (Example CCI in India; European Commission in EU) may function as amicus curiae in the arbitration proceedings.60 Second, the nations can adopt the ‘Second Look Doctrine’ as was laid down by the U.S Supreme Court in the Mitsubishi case through which the national courts will be enable to annul the arbitral award if they found that the arbitrators had not applied the Competition Law provisions correctly or if the arbitral award is against the public policy. At last, it is crucial to understand that arbitration as a preferred method of dispute resolution is being chosen by global economies and transnational commercial bodies and thus it is very essential for the countries to have a pro-arbitration approach in order to make their stance as the progressive trade and commerce country in the world. .

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Section 27 of the Indian Arbitration Act, 1996 provides for arbitral tribunal to take assistance from courts and hence this provision can be used by the arbitral tribunals to consult CCI if stumbled upon the question of Competition Law.