DIAC Arbitration Legal Assistance for Corporate Disputes

DIAC Arbitration Legal Assistance for Corporate Disputes in India

Disputes in the commercial sphere can adversely affect trade ties between entities, lead to non-receipt of due amounts, and throw the overall monetary health of an entity into turmoil. A dispute arising out of any trade transaction/contract/non-payment/obligation under a joint venture may snowball and result in protracted litigation at significant cost.

If you are a business/entity/company looking for a resolution to such disputes (subject to applicability) via Arbitration without having to approach a Civil Court, then look no further than DIAC Arbitration Legal Support. Available to all businesses across Delhi NCR & India.

Disputes can be referred to the Delhi International Arbitration Centre (DIAC), who will conduct the arbitration process in accordance with their Rules. Parties can make out their case & place evidence before the Arbitral Tribunal, who shall pass a conclusive Award in accordance with the prevailing laws governing Arbitration.

For example, if a software house based in Delhi is engaged by a firm in Gurugram for provision of a particular software, but is left with outstanding dues after successful completion of the task, and there arises a dispute as to whether the requisite services were rendered satisfactorily - both firms would want to recover/maintain their dues and avoid long drawn out litigation over a simple contract dispute.

In such a scenario, if the contract has been drafted suitably with an Arbitration clause for reference to DIAC, the matter would be amenable to DIAC Arbitration.

BK Singh Advocate can guide you with respect to your Arbitration clause, assessment of your claim(s), vetting Notices and exploring your options under the provisions of the Arbitration Act.

This support would come in handy particularly in the event of large scale claims, diverging opinions on terms of a contract, need for immediate/interim reliefs, or if you are unsure of how to approach the dispute/arbitral forum.

Please note that Arbitration is not necessarily quicker or less expensive in all circumstances and situations, and would depend on various factors including the contract itself, nature of the dispute, behaviour of parties and the choice of rules/proceeding to be followed.

BK Singh Advocate can go through your paperwork to advise you on whether you have recourse to Arbitration or otherwise, and what alternative actions may be available to you.

Why DIAC Arbitration Matters for Corporate Disputes ?

Commerce between companies in various cities across India is now the norm. It could be a manufacturer based in Faridabad selling goods to a dealer in Mumbai, or an IT company in Noida rendering services to a company based in Bangalore, and so on.

In case of any such disagreement/dispute between such trading entities, it can impact their immediate finances (working capital), ongoing/upcoming business and/or ability to meet payroll and overall goodwill.

Hence, arbitration assumes significance in the context of corporate/commercial entities operating in/around Delhi, New Delhi, Ghaziabad, Noida, Gr. Noida, Gurgaon, Faridabad, Meerut etc., in respect of the wide range of contracts they may enter into - services, EPC, dealership/supply, etc.

DIAC can equally have application to entities not situated in Delhi, as long as the arbitration clause and/or the terms of submission to DIAC (if any) and governing law so allow.

Another facet that makes institutional arbitration attractive is that many aspects of the arbitration process are already prescribed and managed by DIAC, rather than being left to be agreed upon by the parties from scratch (e.g. initiating arbitration, appointment of arbitrator(s), submissions, adducing evidence, passing interim orders and the award).

These are set out in the Rules of Arbitration Proceedings, 2023 (the "Rules"), which apply to arbitrations conducted pursuant to these Rules.

BK Singh Advocate can advise you on the suitability of arbitrating your dispute at DIAC and the implications thereof.

Quick Facts:

Institution: DIAC (Delhi International Arbitration Centre)

• Applicable law: The Arbitration and Conciliation Act, 1996 (as amended from time to time)
• Procedure to be followed: DIAC's rules of arbitration procedure for arbitration proceedings, 2023
• Nature of disputes typically arbitrated: commercial agreements, outstanding payments, goods/materials supply and other qualifying inter-corporate disputes
• Relief on urgent matters: by application to the Court / arbitral tribunal as the case may be
• Status of arbitral award: enforceable except as provided under the applicable law
• Scope of legal support: Assistance with contract drafting/scrutiny, initiating arbitrations, presenting claims & defences, representation before arbitral tribunal and post-award remedies.

What Is DIAC Arbitration Legal Assistance for Corporate Disputes?

DIAC arbitration legal support means engaging a lawyer for advice and/or representation in respect of a qualifying matter under the aegis of the Delhi International Arbitration Centre (DIAC). This could take the form of advising on an arbitration clause, drafting/pleading an arbitration claim and/or response, obtaining interim orders, adducing proofs and appearing in arbitral hearings, as well as challenging/enforcing the arbitral award(s) if applicable.

Arbitration arises out of the consent of the disputing parties to have a particular category of dispute determined by an arbitrator/arbitral tribunal.

There can be a sole or panel of arbitrators appointed to hear and determine a matter, as per the arbitration agreement, institutional rules and law.

What kinds of business disputes can be taken to arbitration?

A broad range of disputes arising in the course of business, such as those around monies payable/non-payable, quality of work done, goods supplied, ending of a contract, damages for breach, etc. can all be amenable to arbitration.

This would cover, e.g., a contractor claiming from the developer for amounts withheld from due payments; a distributor seeking damages for wrongful cessation of its distribution rights.

It can also encompass shareholder disputes pursuant to their articles/shareholders' agreement, IP licensing disputes, disputes under IT/tech related contracts, landlord-tenant disputes etc., to the extent they give rise to justiciable causes of action.

However, not all disputes between businesses are capable of being decided by arbitration. Some forms of legal redress, public rights and disputes falling within the exclusive jurisdiction of a Court/Tribunal/other forum will not be.

BK Singh Advocate can advise whether the matter is an appropriate one to take to arbitration and/or which aspects may need to be litigated or pursued elsewhere.

What Legal Framework Governs DIAC Arbitration in India?

The Arbitration & Conciliation Act, 1996 (the "Act") is the key piece of Indian legislation in this regard.

The Act makes provision for (inter alia) arbitration agreements, constitution of the arbitral tribunal, jurisdiction, interim relief, conduct of arbitral proceedings, arbitral award and recourse to the Court.

The provisions of the Act need to be read together with the rules of the relevant institution (DIAC) and/or the agreement between the parties.

Section 7 - Arbitration Agreement

The Act prescribes what constitutes an arbitration agreement and mandates that it be in writing.

This may take the form of an arbitration clause in the underlying contract or a stand-alone arbitration agreement.

Counsel will need to consider whether the transaction in question falls within the scope of the arbitration clause, whether the relevant arbitral institution is provided for, and whether the clause is valid.

It should be noted that a bare stipulation for 'amicable settlement' between the parties may not suffice.

Section 8 and 11 - Referral to arbitration / Constitution of arbitral tribunal

Under section 8, the Court shall refer the matter to arbitration if satisfied with certain conditions in case the parties have resorted to litigation.

Section 11 sets out the procedure for appointing the arbitrator(s).

In addition, one would need to review the relevant provisions of the institution's rules and/or any specific agreement of the parties in respect of constitution of the arbitral tribunal.

Section 9 and 17 - Interim measures

Parties may approach the Court for certain types of interim relief in accordance with section 9 of the Act, while the tribunal itself can make interim orders under section 17.

The above provisions come into play where the Company's interest stands to be affected in respect of property / documents / property etc. in connection with the dispute.

However, it should be noted that the grant of such relief lies in the discretion of the Court / arbitral tribunal, and an arbitration clause alone would not be sufficient to obtain e.g. an injunction or freeze the assets of a counterparty.

Section 34, 36 and 37 - Arbitral Award / Recourse to the Court

There are limited statutory grounds on which a party may approach the Court to challenge/set aside an arbitral award under section 34 of the Act.

Section 36 regulates enforcement of the award and the impact of a pending challenge under section 34, including whether the Court may grant a stay. Certain orders passed in relation to arbitration can be appealed under section 37.

Note that an application under section 34 will not be akin to a full-fledged appeal on the underlying contract/dispute - the Court is not expected to revisit the issues de novo on account of a dissatisfied party. The relevant provisions and how they are construed will vary depending on the type of arbitration and the facts of each case.

BK Singh Advocate will advise on the relevant provisions and the potential avenues open at any given stage of the dispute.

How Does the DIAC Arbitration Process Work for Corporate Disputes?

Institutional arbitration comprises multiple steps which may overlap and interrelate with one another, depending on the specific terms of the arbitration clause, DIAC Arbitration Rules, and/or tribunal orders.

1. Examination of the underlying contract

   It will first be necessary to determine if a binding arbitration agreement exists between the parties.

   The analysis of the clause(s) would include the extent to which disputes may be referred to arbitration, the named institution, applicable law and arbitral seat, and any preconditions such as a requirement to attempt negotiation/mediation prior to referral.

   Depending on its terms, it may be necessary to consider if the parties have complied with any precondition to negotiation/mediation.

2. Delineating the dispute and arbitration referral

   A business contemplating arbitration should seek to ascertain what contractual term(s) are said to have been contravened and what redress is sought (e.g., invoice(s) due and owing; quantum; performance of a contract etc.).

   Relevant documentary evidence should be canvassed and considered prior to the arbitration being referred formally.

   BK Singh Advocate can advise in this regard, including by examining the correspondence and relevant documents between the parties to assist in framing the contractual dispute and the requisite referral documentation.

3. Appointment of arbitral tribunal

   Depending on the arbitration clause, the Rules and the applicable law, the arbitral tribunal will be appointed.

   Due weight is placed on the arbitrators' independence and impartiality.

   There are well-established grounds for objecting to an arbitrator's appointment in certain circumstances.

4. Statement of Claim / Defence & Counterclaim

   Typically, the Claimant will set out the relevant provisions of the contract, the alleged breach(es), attach evidence in support of the claim and state its prayers. The Respondent will respond thereto with any grounds of defence, which may include a Counterclaim if appropriate.

   Further tribunal orders will issue regarding exchange of documentary/electronic evidence, any witness statements, written submissions and/or oral hearings.

5. Hearing / Adjudication of evidence

   As alluded to above, most commercial arbitration matters will rely primarily on documentary evidence, which can range from POs, shipping/delivery/acknowledgement notes, payment advices, correspondence, engineering documentation etc. Oral testimony/expert evidence may be adduced in some instances.

   BK Singh Advocate can assist in drafting arbitration submissions, marshalling and adducing evidence, and represent parties in arbitration hearings.

6. Award & post-award process

   Upon conclusion of the arbitration and consideration of all materials put before the Tribunal, an award will typically be rendered which may address (among other things) sums payable, declaration of rights, interest, costs etc. to the extent of the Tribunal's competence.

   Should an award be obtained in favour of your client, it may then be necessary to commence enforcement action against the adverse party. Any application to set aside the award is subject to applicable legislative parameters and limitation periods.

Can DIAC Arbitration Help Businesses Recover Unpaid Commercial Dues?

If there is a sufficient arbitration clause and the subject matter is amenable to arbitration, DIAC can be an appropriate venue to pursue outstanding sums owed to you in respect of your business. You would need to show what you are entitled to under the contract, that this has been performed, the quantum due and what remedy you seek from DIAC.

Outstanding sums typically arise in relation to goods supplied, provision of consulting services, IT solutions and building works etc.

It would be naΓ―ve of a party to believe that mere issuance of an invoice entitles them to payment.

Counterparties will raise issues regarding non-supply/non-conformity of goods/services, price, authority to incur spend, contractual criteria met and/or set-off.

Example:

Let us assume that there is a supplier of industrial machinery based at Ghaziabad, who sells to a buyer at Pune.

The goods are received by the buyer who subsequently refuses to make payment on grounds that some items did not meet the requirements set out in the contract.

Supplier contends otherwise and wishes to recover the unpaid balance from the buyer.

The relevant issues to consider would include the terms of sale, protocol for inspection & acceptance of goods, documentation on receipt of goods, warranties, communications between parties and arbitration (if any) under the sale contract.

BK Singh Advocate can help to consider the contending positions between the parties and whether recourse to arbitration is open in respect of the unpaid dues.

It will additionally be necessary to consider the provisions of the MSMED Act, 2006 where the supplier is an 'MSME' as defined therein. This would need to be analysed in parallel with the arbitration agreement, if any, under the sale contract.

What Documents Are Required for DIAC Corporate Arbitration?

In most cases involving trade disputes, documentary evidence is key to deciding the matter. Therefore it is imperative for businesses to ensure they have full documentary support prior to commencing / defending an arbitration claim.

Such documentation will typically comprise:

• executed contracts, arbitration agreements, amendments & addenda
• invoices, proof of payments, bank statements/ledger, statement of dues
• communication between the parties (email/correspondence/notices)
• proof of supply/performance - e.g. challans, completion certificates, test reports etc.
• any notice(s), rejoinder(s), negotiations or other proceedings inter partes
• documents evidencing corporate mandate to act
• any technical/witness reports, computations and other ancillary documents

This would be further augmented by e.evidence in case of IT contracts and/or transactions effected remotely. It is important that original electronic records are maintained and that email/correspondence is not altered following a dispute.

BK Singh Advocate can assist with collating such documentary records, assess their adequacy and guide the client on the prospects of his claim/defence.

Can Businesses Obtain Emergency Relief During DIAC Arbitration?

Depending on the institution's Rules and applicable law, emergency/interim measures may be sought in DIAC arbitration.

DIAC Rules provide for an Emergency Arbitrator and granting Interim Measures.

Delhi International Arbitration Centre

A party/company may wish to prevent disposal of the subject property which is in dispute, pending determination by the arbitral tribunal.

Similarly, other parties may need an order to preserve trade secrets or vital material from being lost.

Availability of any interim measure would depend on the basis invoked, exigency, procedure adopted and decision by the appropriate authority.

BK Singh Advocate can advise if approach to Court / seek direction from Tribunal / avail of Emergency Arbitrator (where available) would be warranted.

Applicants should bear in mind that merely filing the application does not ensure the grant of such urgent relief.

What Are the Costs and Timelines of DIAC Arbitration?

Costs associated with corporate arbitration will vary based on the quantum of claim, size of the tribunal, fees payable to the arbitral institution, costs of legal team and nature of the dispute/proceedings.

DIAC prescribes various tariff structures for administrative costs and arbitrator remuneration. Depending on the case, these could vary for purely domestic disputes, international commercial arbitrations and other classes of disputes.

The tariff provisions/tables of the arbitral institution would need to be considered while arriving at an indicative estimate.

Delhi International Arbitration Centre+1

Parties would also have to factor in the costs of engaging legal and expert advice, collation of documents, conducting hearings etc.

An indication of time involved in the arbitration would also be useful.

Under section 29A of the A&C Act, a ceiling has been placed for certain classes of domestic arbitrations. This does not apply in full to all international commercial arbitrations.

The existence of any fast.track/expedited procedure would also merit consideration if triggered.

We at BK Singh Advocate would be happy to advise clients on the process that could reasonably be expected to arise and weigh it against the value of the claim.

When Should a Company Consult a DIAC Arbitration Lawyer?

It is advisable for a business to take out legal advice prior to its dispute with another party proceeding to arbitration.

This will apply, for example, upon receipt of a notice of arbitration, if a large sum of money is being sought against a company, there is an issue as to the discharge/termination of a contract or there is property which needs to be preserved.

Legal assistance may also be needed to determine if an arbitration clause is applicable, correct jurisdiction and/or selection of arbitrator.

Delaying until the date of the first arbitration hearing can lead to undesirable consequences if documentation is lacking or there are questions around limitation periods.

BK Singh Advocate will be able to review your position under the relevant contract(s), highlight any issues and advise on your course of action.

Similarly, upon receipt of an Arbitration Award, it is prudent for a company to obtain legal advice in view of the limitation period for bringing any statutory claim.

How Can Legals365 Help With DIAC Corporate Arbitration?

Legals365 advises and represents clients in relation to commercial/corporate litigation and arbitrations arising out of contracts, as well as ancillary claims and reliefs.

The aim would be to provide clarity to the concerned entity regarding its rights and remedies under contract prior to deploying significant financial and managerial attention to the dispute.

This could extend to perusal of contract documents, analysis of the arbitration agreement, issue of relevant notices, pleadings (claim/defence), appraisal of facts/evidence, and pursuit of claims in the relevant forum(s).

We can support corporate entities in determining viability of a contractual claim, assessing options for interim reliefs, readying the party for an arbitration hearing, and exploring consequences/reliefs arising from an arbitral award.

Companies based in or carrying out business from Delhi NCR (Noida/Ghaziabad/Gurgaon/Faridabad), Mumbai, Pune, Bangalore, Hyderabad, Chennai, Kolkata, and across India can approach us as appropriate to their situation.

Each matter must be carefully considered from the lens of contract terms, jurisdiction, time.bar, evidence, relief etc.

Frequently Asked Questions

Final Thoughts:

Companies involved in disputes need to understand much more than just their contracts. A number of factors come into play including: legal entitlements, monetary stakes, processes to follow and the ramifications of extending the dispute.

Our DIAC Arbitration team can advise on whether a business's dispute falls under its contract and assist with initiating action through an arbitration institution.

Proper scrutiny of the contract, evidence and legal counsel will allow a company to take the necessary steps.

BK Singh Advocate via Legals365 can advise businesses in respect of any commercial dispute and the use of arbitration as well as applicable law in bringing/defending an action.

Legals365 is available to speak with you about your matter if you would like to discuss further.

Author Bio

BK Singh Advocate practices with Legals365 and deals with Corporate/Commercial/Litigation matters across India. These include Contract disputes, Debt recovery (commercial), Arbitration and Commercial disputes between business and/or natural persons.

He focuses his practice around careful study of contracts and documents, ascertaining relevant documentation and material for the case, deciding on the appropriate forum to pursue and advising the client on their options/remedies. He will via Legals365 advise clients and represent them on disputes arising under the Arbitration & Conciliation Act 1996, be it before an arbitral tribunal or Court (for pre/post arbitration related reliefs). Such assistance is rendered depending upon the merits of the case, governing law, forum and procedure.