Unless ONGC v. Saw Pipes is reconsidered, arbitration cannot work – In Conversation with Agarwal Law Associates’ Mahesh Agarwal

Advocate Mahesh Agarwal, Managing Partner at Agarwal Law Associates, is a well known name in corporate and litigation circles. Agarwal, who has been in the profession for two decades, has been engaged in a number of high profile matters. Recently, Agarwal Law Associates was ranked no. 1 by Chambers & Partners for dispute resolution. In this interview with Bar & Bench, Agarwal talks about his entry into the profession, his experience as a lawyer in the dispute between Ambani brothers and his views on other legal issues..Bar & Bench: Why and how did you take up law?.Mahesh Agarwal: Since my early years, I knew I would be a lawyer. Possibly because I grew up around lawyers- my grandfather was a lawyer and my father is a practicing lawyer. I pursued law at the Government Law College (GLC) in Bombay, graduating in 1993. I started working in a law firm in Bombay- Dhruve Liladhar & Co. even before I joined college. I would attend the morning batch at GLC and thereafter, go straight to work..Bar & Bench: Why did you come back to Delhi?.Mahesh Agarwal: Delhi has always been my base. I went to Bombay only to gain exposure to the Bombay law practice, which has had a pre-dominant “Firm culture”. After completing my degree, I came back and expanded my father’s Supreme Court practice to other forums. And then we set up the law firm called Agarwal Law Associates..Bar & Bench: Tell us more about Agarwal Law Associates..Mahesh Agarwal: We are a medium sized firm with about 35 lawyers and a support staff of 20-25. We are quite active in the Supreme Court, Delhi High Court and other regulatory forums. We are also involved in some International Arbitrations. Our client pool encompasses some major corporate houses in the country, high net-worth individuals and also some Government Corporations. As the next step, we are visualizing ourselves as a firm with presence in other cities and possibly overseas..Bar & Bench: How many partners are there currently and what is the equity distribution?.Mahesh Agarwal: As of now, it is predominantly a family firm, with one non-family partner – Shally Bhasin. But obviously, to grow and move forward we have to and we will induct new partners including equity partners. It can be organic growth from our own firm and it can also be an independent lawyer with independent practice in a particular field who can join as an equity partner. We are exploring all options..Bar & Bench: What cultural and professional differences have you found between law firms in Bombay and Delhi?.Mahesh Agarwal: Twenty years ago, there used to be a huge difference between Delhi firms and Bombay firms. Bombay firms were professionally managed. They were like a corporate set up with huge amount of discipline. There were handful of [such] firms [in Delhi] but now I think there are no differences between Delhi and Bombay firms..Bar & Bench: You were engaged in the Reliance gas dispute between the Ambani brothers? Could you talk about that experience?.Mahesh Agarwal: It was a challenging case for any lawyer. Possibly, one of the biggest and most vociferously fought corporate battles in India. It was a great learning curve – the level of intensity, preparation and hard work that went into the matter was enormous..We were involved in the matter right from the High Court stage to the Supreme Court. We succeeded completely before the single judge and the division bench in the High Court. In the Supreme Court, the scenario changed due to the intervention of the Union government. Anyhow, the good thing was that it led to a settlement within the family..Bar & Bench: On a different note, what is your take on privatization of key natural resources? Supreme Court has become a battleground between NGOs and corporate giants on such issues..Mahesh Agarwal: The NGOs, who are fighting in the Supreme Court, are perceived to be doing a very great job – [claiming] that natural resources belong to the citizens of the country and that there should be auctions etc. But that is not the answer or the final solution. A balance needs to be struck between corporate interests, public interest and the state interest..For example, if you auction coal or spectrum, the crippling effect would be borne by the consumer. From 2007 to 2009, call rates on mobile phones had dropped to 40 to 50 paisa and were going further down. Today, the call rates are slowly increasing. They are already at Rs. 1.25. The government exchequer has definitely benefited by receiving a huge amount pursuant to an auction but the pockets of large number of consumers all over India are being pinched!.An entrepreneur is bound to pass-on the cost of natural resources, acquired through an auction, as part of the cost-price of his goods/services to the Consumer. Similarly if you auction coal today, the price of power which is between Rs. 5 to Rs. 8 all over India is bound to increase. What I feel is there has to be a balance. To recommend an auction for all natural recourses is not an answer. Probably, we need a policy to regulate and balance the interest of the consumer, the entrepreneur and also the government..Bar & Bench: Coming to another issue – delay in environmental clearances. How do you see this? How does it affect the investment morale?.Mahesh Agarwal: That is an example of a complete policy break down and a deterrent to fast-paced economic growth. For instance, when a coal block is allocated, the allocatee has to set-up the end-use plant in 3 years. Many a times, the environmental clearances get stalled for 3 to 5 years. Naturally, the commissioning of the end-use plant is delayed. As a result, the cost of the project goes up, bank interest goes up and ultimately projects become unviable..A policy framework needs to be implemented prescribing timely outcome for grant of statutory clearances. This way, the entrepreneur knows where he stands and is not stuck with a project under-development endlessly. I think this is something that can be done..Bar & Bench: What are your thoughts on the state of Alternate Dispute Resolution (ADR) in India?.Mahesh Agarwal: According to me, ADR in India has failed! The purpose of ADR is to reduce the burden of courts by providing for an expeditious remedy outside the court. The parties should accept the arbitral award, follow it and implement it. Contrary to the intended result, arbitration has become the first stage of the trial. From there you first go to single judge, then division bench and then the Supreme Court. The courts are treating a challenge to an arbitral decree as a first appeal..Unless and until the judgment of the Supreme Court in the case of ONGC v. Saw Pipes – wherein it expanded the entire landscape – is reconsidered, arbitration cannot work. The Court has expanded the scope for challenge of an arbitral award. If there is a scope for challenge of an award on multiple grounds, a single judge of the court or the district court is bound to have a look at it and then it is subject to appeals. So, what has to be done is that the scope of challenge has to be narrowed which was the intention of the Arbitration and Conciliation Act of 1996. However, it has not been implemented. ADR can be successful only if the judicial intervention is reduced..Bar & Bench: Recently, there was some confusion with regard to the listing of a matter before an “inappropriate” Bench in the Supreme Court. The Court had apparently relied upon the mentioning made by a Senior Counsel. This has led to Chief Justice Sathasivam becoming circumspect about the practice of oral mentioning. What do you think about the practice?.Mahesh Agarwal: Oral mentioning is very necessary for urgent and important matters that have to be taken up. There is no alternate mechanism to get them listed except by oral mentioning. Only a judge can understand, realize the urgency in the matter and list the matter. I cannot comment on what happened in the Supreme Court. The Chief Justice can only give a direction placing his faith and confidence in the mentioning that has taken place. The court must not give up this practice of mentioning only because of a few bad examples..Bar & Bench: What are your views on the entry of foreign law firms?.Mahesh Agarwal: I would really welcome foreign law firms to enter India. In fact, we are representing six UK firms in the case pending before the Supreme Court relating to entry of foreign law firms in India..I think it will enhance the standards of legal practice in India. A client is entitled to demand the best legal service available anywhere in the world. A legal advice or a legal service would include other factors in addition to a good legal mind alone, such as a professional setup, a team for doing proper research, having the best legal resources from around the world and the best business practices. All that would give a composite effect to the practice..Bar & Bench: Your thoughts on the Advocate on Record (AoR) system prevalent in the Supreme Court..Mahesh Agarwal: According to me, the AoR system is necessary. The reason is that you cannot have a lawyer practicing anywhere in India filing a case in the Supreme Court because there are procedural issues. For example, service, accountability etc. for which a person has to have a particular standard. There are certain criteria that an AoR has to meet. For example, an AoR is required to have an office and address in Delhi and a clerk registered with the Supreme Court Clerks’ Association. That said, a pre-requisite of an examination is not necessary to register as an AoR. As long as you have a system by which an authorized person or a person who is enrolled in the Supreme Court in a particular manner is allowed to file cases in the Court, it is good enough..Bar & Bench: Since you do a lot of corporate matters and work with large companies, how do you see the role of in – house counsels evolving?.Mahesh Agarwal: I think it is very essential for large companies and even decent sized corporate set ups to have top class in-house counsels. They are able to reduce legal costs. A lot of regular, procedural work can be handled by in-house legal counsels. A corporate should not go to a law firm unless they need specialized service or have to go to court. Also, an in-house counsel is in a much better position to engage a lawyer, interact with him and brief him when compared to a business person in the same organization..Bar & Bench: Your thoughts on the fees charged by the senior advocates..Mahesh Agarwal: It is simple economic theory of demand, supply and willingness to pay. The fee charged by senior counsels is completely dependent on the willingness of the client to pay that fee. As long as that balance is maintained – it is fine..Bar & Bench: As a law firm Partner, how do you perceive pro bono work? Do you do a lot of pro bono work?.Mahesh Agarwal: It all depends on how people perceive you. We are perceived as a law firm catering to corporates, so very seldom do people come to us for pro bono work. But pro bono work is most welcome. We have done a lot of pro bono work in the past and we will continue to do that but, obviously, it does not constitute a big percentage of our work..Bar & Bench: How do you unwind?.Mahesh Agarwal: Law is a passion for me, so I don’t find the need to unwind from it. However, I do enjoy taking a few vacations in the year with my family! .Bar & Bench would like to thank advocate Neeha Nagpal for her assistance in arranging this interview.