India

New Delhi, September 2025 – Dua Associates has successfully steered a two-part real estate transaction in the heart of New Delhi’s prestigious Lutyens Bungalow Zone (LBZ), acting for Maharaj Kumar Yashwant Singh Ji Sahib of Alwar (https://en.wikipedia.org/wiki/Sawai_Tej_Singh_Naruka) in both the acquisition of a new residence and the sale of his historic family estate. Part I – A Royal Move to Golf Links in a deal worth ₹100 crores front-ended by Dua Associates In one leg, Dua Associates advised Yashwant Singh, scion of Rajasthan’s erstwhile royal family of Alwar, on the acquisition of a stylish 704.4-sq. yards bungalow in Golf Links for ₹100 crores. The team, led by Partner Salil Gulati along with Partner Sahil Dhawan, Principal Associate Kapil Saxena and real estate subject expert Narinder Mohan, handled every facet of the transaction: exhaustive legal due diligence, structuring, drafting and negotiation of documentation, and seamless closing. The firm also guided on the requisite clearances and the payment of over ₹8 crores in stamp duty, registration fee and corporation tax. The seller, in this transaction was Anu Jindal of DLF “The Camellia”, who was represented by a team from Savills India. Completed in record time, the deal earned the client’s appreciation. Part II – Dua Associates advises on record-setting real estate sale of ₹310 crores Dua Associates being the long-term legal advisers of the Alwar royal family also counselled them on divesting their iconic bungalow on APJ Abdul Kalam Road (formerly Aurangzeb Road)—a colonial-era property spread over 3,540 sq. yards—to Gentex Merchants Pvt. Ltd., a company linked to steel magnate Lakshmi Mittal. Registered at ₹310 crores, the transaction ranks among 2025’s costliest property deals in Delhi, with the buyer paying ₹24.80 crores in stamp duty, registration fee and corporation tax. Again, led by Partner Salil Gulati along with Partner Sahil Dhawan, Principal Associate Kapil Saxena and real estate subject expert Narinder Mohan, under the able guidance of the doyen of real estate advisory, the late Shashivansh Bahadur, the team oversaw legal due diligence, deal structuring, regulatory clearances and approvals and comprehensive documentation, ensuring a swift and secure close to a marquee transaction that underscores the enduring allure of Lutyens Delhi. The purchaser in this transaction was represented by a team from Shardul Amarchand Mangaldas (SAM). Setting a Benchmark in High-Value Real Estate Advisory From sourcing and structuring to execution, Dua Associates’ end-to-end counsel exemplifies the firm’s ability to manage complex, high-value real estate matters with speed, discretion and precision. This two-part transaction—culminating in both a strategic downsizing and a record-setting sale, reaffirms Dua Associates’ position as a go-to advisor for India’s most discerning property clients. About Dua Associates: Dua Associates is a leading law firm in India with a nearly 4-decade track record of delivering critical legal solutions for its clients including Fortune 500 companies, financial institutions, governments and SMEs. The Firm is widely recognized for the depth of experienced legal talent and the significant experience of its 250 professionals including 75 partners.

    I.  Introduction The question of whether a party to an arbitration agreement may unilaterally appoint an arbitrator has long been contested in Indian jurisprudence. The issue, though seemingly technical, strikes at the heart of arbitral fairness and the principle of party equality. Indian courts, over the last two decades, have oscillated between allowing limited forms of unilateral appointments and striking them down as incompatible with neutrality. The debate reached its sharpest expression in TRF Ltd. v. Energo Engineering Projects Ltd., where the Supreme Court invalidated clauses permitting ineligible arbitrators to nominate others.[1] Shortly thereafter, in Perkins Eastman Architects DPC v. HSCC (India) Ltd., the Court extended this reasoning to strike down unilateral appointment powers vested in one contracting party.[2] Yet in Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML (JV) (“CORE I”), the Court upheld a government contract clause allowing the Railways to curate a panel of arbitrators, suggesting that sufficient “counter-balance” existed.[3] This divergence culminated in Union of India v. Tantia Constructions Ltd., where the Court referred the matter to a Constitution Bench.[4] In its recent decision in Central Organisation for Railway (“CORE II”) case, the Bench held unilateral appointment clauses invalid, relying on Section 18 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) and Article 14 of the Constitution.[5] However, the Court declined to employ the doctrine of unconscionability, even as minority opinions emphasised party autonomy and statutory flexibility. This article revisits CORE II by situating it within prior jurisprudence, assessing the competing opinions, and arguing that unconscionability remains a vital tool for addressing inequality in arbitral appointments, especially for smaller entities contracting with dominant actors.   II.  Evolution of Jurisprudence on Arbitrator Appointments Indian arbitration law has consistently grappled with the compatibility of unilateral appointment mechanisms with the fundamental principles of neutrality and party equality. The trajectory of decisions leading up to CORE II illustrates a gradual tightening of judicial scrutiny. The debate first sharpened in Voestalpine Schienen GmbH v. Delhi Metro Rail Corporation Ltd., where the Supreme Court discouraged narrow, one-sided panels of government officers and directed the creation of “broad-based panels” to enhance neutrality.[6] This approach signalled judicial concern with appointments emanating from interested parties. The turning point arrived in TRF Ltd. v. Energo Engineering Projects Ltd. Here, a contractual clause empowered the Managing Director, who was himself ineligible to act as arbitrator, to nominate another arbitrator. The Court invalidated the clause, reasoning that an ineligible arbitrator could not indirectly achieve what he could not do directly. This decision underscored the concern with derivative bias. In Perkins Eastman Architects DPC v. HSCC (India) Ltd., the principle was extended. The Court distinguished between two scenarios: first, where an ineligible person appoints, and second, where a party with a vested interest retains unilateral appointment power. In both situations, the Court held, the likelihood of bias taints the process. However, in CORE I, the Court upheld Clause 64(3)(b) of the General Conditions of Contract of the Railways.⁴ The clause allowed the Railways to propose a panel of serving officers, from which the private contractor could select names for the tribunal. The Court found that the “counter-balance” afforded by such selection preserved fairness. This reasoning, however, appeared inconsistent with Perkins Eastman, since unilateral control over the pool of arbitrators remained with one party. The inconsistency prompted referral in Tantia Constructions Ltd., where the Court noted that the matter raised questions of constitutional significance.⁵ The stage was thus set for CORE II, where the Constitution Bench was tasked with clarifying whether equality and impartiality are compatible with unilateral appointment provisions. III.  The Constitution Bench in CORE II The Constitution Bench in CORE II provided the most authoritative pronouncement on unilateral appointment of arbitrators. The decision, though unanimous in striking down unilateral clauses, reflected a deep divide in the reasoning between the majority and the minority. A.    Majority Opinion The majority opinion, authored by Chief Justice D.Y. Chandrachud, anchored its reasoning in Section 18 of the Arbitration Act.[7] Section 18 guarantees equal treatment of parties and fair opportunity of participation. The Court reasoned that this principle is not confined to hearings but extends to every stage of arbitral proceedings, including appointment.[8] Thus, unilateral appointment clauses were deemed inherently violative of statutory equality. Further, the Court invoked Article 14 of the Constitution to reinforce its conclusion.[9] It emphasised that arbitral tribunals exercise quasi-judicial powers in adjudicating rights and obligations, and hence, appointment mechanisms must conform to constitutional guarantees of fairness. The majority thus constitutionalised the appointment process, extending equality principles into the contractual domain. Importantly, the Court rejected the argument that the doctrine of unconscionability could serve as an alternate ground.[10] According to the majority, arbitration agreements in the present case were executed between sophisticated commercial actors, thereby eliminating concerns of unequal bargaining power. By presuming parity of bargaining strength, the majority declined to employ unconscionability as a basis of invalidation. B.     Minority Opinion Justices Hrishikesh Roy and P.S. Narasimha authored separate opinions, concurring in the result but diverging sharply in reasoning. Both emphasised that unilateral appointments are not expressly prohibited by the Arbitration Act. Justice Roy underlined that Section 12(5) read with the Fifth and Seventh Schedules already provided a comprehensive mechanism for assessing arbitrator independence.[11] He argued that if impartiality is ensured through these safeguards, unilateral appointment in itself does not offend equality. Justice Narasimha drew a clear distinction between ineligibility and unilateral appointment.[12] While ineligibility, as in TRF Ltd., renders an arbitrator legally incapable of acting, unilateral appointment is a matter of contractual design. He also stated that the “unconscionability” argument would not stand because commercial contracts between parties of equal power do not hold would not give rise to such a situation. C.    Critical Note The majority opinion included constitutional equality while considering procedural aspects of arbitration, but failed to consider the practical implications of parties with skewed power to bargain. The minority opinion restricted itself to the word of the Arbitration Act, but failed to correctly asses the risk of bias, which is a consideration in unilateral employment. Both approaches did not consider the unconscionability argument, thus refusing to employ a flexible tool with great potential to address inequality in standard-form contracts. IV.  The Doctrine of Unconscionability: Comparative Perspectives The doctrine of unconscionability has been developed in several jurisdictions as a safeguard against unfair contractual terms, particularly in situations marked by disparities in bargaining power. Its treatment in the United States of America and Australia could serve as a guide for the Indian pproach as well. A. United States In the United States, the Uniform Commercial Code (“UCC”) codifies unconscionability under section 2-302.[13] Courts applying this provision recognise both procedural unconscionability, which concerns the manner of contract formation, and substantive unconscionability, which relates to the unfairness of terms themselves.[14] The doctrine is not limited to consumer disputes; it has also been applied in commercial contexts. In Mobile Home Fact Outlet v. Butler, a court confirmed that arbitration agreements, like other contracts, are subject to unconscionability defences.[15] This recognition is significant, as it undermines the presumption that commercial entities are always equals in negotiations. The commentary appended to § 2-302 further instructs courts to examine the commercial setting and background at the time of contracting, acknowledging that context often determines fairness.[16] B. Australia Australia has similarly embraced statutory interventions to address unfair terms. The Contract Review Act, 1980 empowers courts to review “unjust” contracts, taking into account the purpose, effect, and surrounding circumstances, without excluding business-to-business dealings.[17] Section 17 prohibits parties from contracting out of its protections, ensuring that even arbitration agreements may be scrutinised for unconscionability.[18] Further, reforms through the Treasury Laws Amendment (More Competition, Better Prices) Act, 2022 extended protections against unfair contract terms to small businesses.[19] Australian courts have applied this regime to franchise and supply contracts, striking down arbitration clauses that entrenched the superior bargaining position of one party. The American and Australian jurisdictions approach unconscionability as a tool to both protect consumers as well as to broadly target imbalance in bargaining powers, even when it pertains to commercial arbitration contracts. Considering this, India could follow their lead and reconsider its complete rejection of the unconscionability doctrine in the CORE II case.   V.  The Indian Position on Unconscionability It is recognised in Indian contract law that any obtained consent in a situation with unequal bargaining power can be vitiated. In the Indian Contract Act, 1872, Section 16 defines undue influence as the misuse of a dominant position to obtain an advantage unfairly; and Section 23 declares contracts with objects or considerations opposed to public policy to be void in their entirety.[20] Courts use these provisions to target and invalidate contracts where one party in unable to choose freely and thus may have entered into an unequal or exploitative agreement. In Central Inland Water Transport Corp. v. Brojo Nath Ganguly, the Supreme Court held a termination clause in an employment contract of a state enterprise to be invalid because it was “unconscionable” and “against public policy”.[21]  The Court stated that freedom to contract could not allow or authorise clauses that exploit the vulnerable party or disturb the conscience. Although the case was regarding an employment contract, the principle laid down by the Court broadly recognised that skewed bargaining power could exist even in a seemingly voluntary arrangement. In LIC of India v. Consumer Education & Research Centre, the Court restated that a standard form of contract, specifically those used by public corporations, could and should be inspected for unfair terms.[22]  It was observed that smaller entities or individuals party to such contracts realistically often have little choice except accepting whatever is imposed upon them by the stronger party, and judicial supervision was important to prevent this. The Law Commission’s 2006 Report on “Unfair (Procedural and Substantive) Terms in Contracts” also brought up such concerns, and recommended legal recognition of unconscionable clauses even in commercial relationships.[23] The Report also noted that smaller enterprises contracting with larger enterprises or state corporations are especially vulnerable to unconscionable terms. However, the Supreme Court in CORE II chose to disregard this jurisprudence and reform recommendations and rejected the unconscionability argument, assuming that entities enter into commercial relationships with equal power. This narrow interpretation and assumption has disregarded the reality of the Indian market, where smaller franchisees, contractors or suppliers are often severely dependent on larger parties. VI.  Implications for Startups and Small Enterprises The exclusion of unconscionability from arbitration jurisprudence in CORE II has particularly adverse implications for startups and small enterprises. In India’s contemporary economy, many such entities are compelled to contract with larger corporations, state instrumentalities, or public sector undertakings to access markets or resources. The bargaining asymmetry in these relationships is evident, yet the Court assumed that commercial actors always negotiate on an equal footing. Startups often depend on investment or supply agreements drafted entirely by dominant parties. Arbitration clauses in these agreements may designate the forum, language, and seat of arbitration, and occasionally permit unilateral appointment of arbitrators. The broader problem persists even when unilateral clauses have been declared void, as the weaker party is forced to accept other unfavourable terms and concessions in the form of prohibitive costs, exclusive jurisdiction clauses or foreign seat provisions, all of which function as barriers to access.[24] By disregarding the doctrine of unconscionability, Indian courts do not have a standard flexible enough to oversee any such unfair terms. In comparison, the Australian and United States jurisdictions protect even small businesses entering into agreements with larger firms under the unconscionability doctrine.[25] Such protections recognise that economic dependence may lead to vulnerability that is usually seen in consumers and not contracting parties. The Indian approach, in contrast, confuses “commercial” with “equal”, thus failing to recognise the variations in commercial actors. This may impact commercial policy in India. India’s startup ecosystem, often celebrated as a driver of innovation, is particularly exposed to contractual overreach. Early-stage enterprises rarely have the legal or financial capacity to negotiate balanced arbitration clauses.[26] The absence of a judicial mechanism to intervene in cases of procedural or substantive unfairness increases the risk that arbitration becomes a tool for entrenching inequality rather than delivering justice. Thus, while CORE II marks a progressive step in eliminating unilateral appointment of arbitrators, its refusal to engage with unconscionability undercuts protection for weaker commercial entities. The challenge ahead lies in reconciling the principles of contractual autonomy with safeguards against systemic unfairness in arbitration agreements. VII.  Conclusion The CORE II decision decisively invalidated unilateral appointment of arbitrators, reinforcing equality under Section 18 and Article 14. Yet, by excluding unconscionability, the Court overlooked the vulnerabilities of startups and small enterprises contracting with dominant parties. Comparative experiences from the United States and Australia illustrate that unconscionability is not confined to consumer protection but serves as a safeguard in commercial contexts as well. For India, striking a balance between contractual autonomy and fairness remains essential. Without this, arbitration risks becoming an instrument of inequality rather than a mechanism of justice.   [1] TRF Ltd. v. Energo Eng’g Projects Ltd., (2017) 8 SCC 377. [2] Perkins Eastman Architects DPC v. HSCC (India) Ltd., (2020) 20 SCC 760. [3] Cent. Org. for Ry. Electrification v. ECI-SPIC-SMO-MCML (JV), (2020) 14 SCC 712. [4] Union of India v. Tantia Constrs. Ltd., (2021) 10 SCC 385. [5] Cent. Org. for Ry. Electrification v. ECI-SPIC-SMO-MCML (JV), 2024 SCC OnLine SC 123. [6] Voestalpine Schienen GmbH v. Delhi Metro Rail Corp. Ltd., (2017) 4 SCC 665. [7] Arbitration and Conciliation Act, No. 26 of 1996, § 18. [8] Cent. Org. for Ry. Electrification v. ECI-SPIC-SMO-MCML (JV), 2024 SCC OnLine SC 123, ¶ 54. [9] Id. ¶ 61. [10] Id. ¶ 72. [11] Arbitration and Conciliation Act, No. 26 of 1996, § 12(5) & Schs. V, VII. [12] Cent. Org. for Ry. Electrification v. ECI-SPIC-SMO-MCML (JV), 2024 SCC OnLine SC 123, Narasimha, J., dissenting, ¶ 32. [13] U.C.C. § 2-302 (Am. L. Inst. & Unif. L. Comm’n 2022) (U.S.). [14] Williams v. Walker-Thomas Furniture Co., 350 F.2d 445, 449–50 (D.C. Cir. 1965) (U.S.). [15] Mobile Home Fact Outlet v. Butler, 564 S.E.2d 728, 732 (N.C. Ct. App. 2002) (U.S.). [16] U.C.C. § 2-302 cmt. 1 (U.S.). [17] Contract Review Act 1980 (NSW) §§ 9(1), 9(2)(l) (Austl.). [18] Id. § 17(1), § 17(5). [19] Treasury Laws Amendment (More Competition, Better Prices) Act 2022 (Cth) (Austl.). [20] Indian Contract Act, No. 9 of 1872, §§ 16, 23 (India). [21] Cent. Inland Water Transp. Corp. v. Brojo Nath Ganguly, (1986) 3 S.C.C. 156, 209. [22] LIC of India v. Consumer Educ. & Research Ctr., (1995) 5 S.C.C. 482, 510. [23] Law Comm’n of India, 199th Report on Unfair (Procedural & Substantive) Terms in Contracts 25–27 (2006). [24] Itek Corp. v. Compagnie Int’l Pour l’Informatique CII Honeywell Bull S.A., 566 F. Supp. 1210, 1215 (D. Mass. 1983) (U.S.). [25] U.C.C. § 2-302 (Am. L. Inst. & Unif. L. Comm’n 2022); Contract Review Act 1980 (NSW) § 9 (Austl.). [26] Law Comm’n of India, 199th Report on Unfair (Procedural & Substantive) Terms in Contracts 38–39 (2006).

I. Introduction The objective behind introducing the Insolvency and Bankruptcy Code, 2016 (“IBC”) was to maximising value and protecting the rights of creditors. It aims to balance the interests of all stakeholders while enabling distressed firms to either restructure or exit efficiently. However, a recurring issue which lurks behind is the legal standing of secured creditors within this system, especially when their claims intersect with state laws relating to asset attachment. Supreme Court in its recent ruling in the National Spot Exchange Ltd. v. Union of India, 2025 (“NSEL case”). The case revolved around the treatment of assets attached under special state and central statutes, specifically the Maharashtra Protection of Interest of Depositors in financial establishments Act, 1999 (“MPID Act”) and the Prevention of Money laundering Act, 2002 (“PMLA”) in the context of corporate insolvency proceedings. The main issue before the court was to determine whether secured creditors could enforce their rights over assets already attached under these statutes, or whether such enforcement would conflict with the moratorium and waterfall mechanism under Section 14 and Section 53 respectively. In its judgment, the Supreme Court held that the MPID Act and PMLA would take precedence over the IBC, SARFAESI, and the Recovery of Debts and Bankruptcy Act, thereby denying secured creditors the right to enforce security over attached properties. Supreme Court also held that the MPID Act and PMLA would take precedence over the IBC, SARFESI, and the Recovery of Debts and Bankruptcy Act,[1] meaning thereby, IBC’s moratorium would not override attachments made under these statues prior to the initiation of insolvency proceedings. This judgment raises critical concerns about the consistency and integrity of the IBC’s design. Traditionally, secured creditors have enjoyed a privileged position under insolvency law, with Sections 52 and 53 offering a structured choice which was either to enforce security outside the liquidation estate or relinquish it and participate in the common distribution mechanism.[2] By allowing the enforcement of special statutes to interfere with this choice, the Court has arguably opened a backdoor for state-driven priorities to displace the collective resolution model envisaged by the IBC. The ruling is particularly significant given the backdrop of systemic financial fraud and regulatory breakdown in the NSEL case. Thousands of investors were defrauded of over ₹5,600 crore due to the unauthorised trading of paired contracts, prompting investigative and enforcement action by multiple agencies.[3]While the state’s interest in securing assets for investor compensation is undeniably valid, it now stands at odds with the uniform creditor recovery process under the IBC. The Court’s endorsement of this disjunction invites further inquiry into the future of insolvency jurisprudence and the place of secured creditors within it. II. Rights of Secured Creditors under the IBC The IBC accords secured creditors a distinctly privileged position in the insolvency framework. At the heart of this structure lies Section 52, which offers a secured creditor the option to either (a) enforce its security interest outside the liquidation estate in accordance with applicable laws, or (b) relinquish such interest and participate in the distribution of assets under Section 53.[4] The law, therefore, acknowledges both the autonomy of secured creditors and the need for collective resolution where they choose to join the liquidation pool. When opting for enforcement outside the estate, secured creditors are entitled to realise their security under existing laws, such as the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI”) or the Recovery of Debts and Bankruptcy Act, 1993. This allows banks and financial institutions to bypass judicial approval, facilitating faster recovery through auction or possession of the mortgaged property.[5] The IBC does not inhibit this route, provided it does not obstruct the conduct of insolvency proceedings or contravene the moratorium under Section 14. On the other hand, if secured creditors choose to surrender their security and fall in line with other claimants under Section 53, the Code grants them a top-tier priority in the waterfall. They rank second only to the insolvency resolution process costs and liquidation expenses.[6] This ensures that their claims are met before those of operational creditors, government dues, and shareholders. The Supreme Court has previously upheld this dual-choice architecture as intrinsic to the Code’s creditor-driven ethos. In India Resurgence ARC Pvt. Ltd. v. Amit Metaliks Ltd., the Court recognised the commercial wisdom of financial creditors as paramount, reiterating that the Code’s object was to facilitate resolution rather than recovery.[7] At the same time, it affirmed that secured creditors possess enforceable rights that cannot be diluted arbitrarily by other statutes unless such interference is explicitly sanctioned. This autonomy is unfettered, any parallel proceedings that may jeopardise the corporate debtor’s resolution or liquidation process is restricted by IBC. Section 238 establishes an overriding effect over other laws “notwithstanding anything inconsistent therewith,” allowing it to displace conflicting statutory schemes.[8]. III. Interplay between the IBC and Asset Attachment Laws A critical fault line in the Indian Legal landscape seems to be the growth of friction between insolvency law and state-led asset attachments. While the IBC attempts to centralise claims resolution and maximise asset value through a structured process, parallel statutes, especially those concerning criminal law and investor protection, frequently intervene by freezing assets under investigation. Due to this, secured creditors find themselves entangled in jurisdictional stand-offs. Several laws enable the state to attach or confiscate property on the grounds of fraud, misappropriation or public interest. These include the PMLA, the MPID Act, and other state-specific legislations aimed at safeguarding investor money. Once such attachment orders are passed, they often take precedence over civil enforcement, including insolvency claims. Courts have been inconsistent in resolving this overlap. In P. Mohanraj v. Shah Brothers Ispat Pvt. Ltd., the Supreme Court acknowledged that criminal proceedings cannot be stayed under the IBC’s moratorium.[9] However, it left open the extent to which state attachment laws could override creditor rights under the Code. A key source of this conflict lies in the interpretation of Section 238 of the IBC, which gives the Code primacy over “inconsistent” laws. Courts have held that where the objective of another statute diverges fundamentally from that of the IBC, such as protecting defrauded investors or punishing economic offences—Section 238 may not apply.[10] This reasoning has led to a de facto erosion of the IBC’s supremacy in certain enforcement contexts, particularly in cases involving alleged fraud or financial scams. One such example is The Directorate of Enforcement v. Manoj Kumar Agarwal, where the Delhi High Court upheld the attachment of assets by the ED under the PMLA even though they formed part of the liquidation estate. The Court reasoned that proceeds of crime cannot be allowed to benefit creditors, regardless of their security status.[11] In contrast, in Directorate of Economic Offences v. Binay Kumar Singhania, the Calcutta High Court ruled in favour of the Resolution Professional, holding that attached properties must be released to enable resolution under the IBC.[12] The lack of a settled judicial approach has left creditors in a precarious position. Where state authorities attach assets during or prior to the initiation of insolvency proceedings, the effectiveness of resolution plans and the value realisation for creditors suffer greatly. In particular, secured creditors find their security rendered ineffective, unable to access collateral that is otherwise protected under the Code. It is in this conflicted space that the recent NSEL ruling intervenes. The NCLT and CoC would find themselves negotiating with a fragmented estate, significantly reducing recoveries for all stakeholders.[13] IV. Assessing the Future Trajectory of Creditor Rights in a Dual-Regulatory Ecosystem 1. The Expanding Role of Enforcement Statutes Post-NSEL, there has been a visible trend where state and central agencies move swiftly to secure assets under penal statutes, even before any commercial resolution is considered. In high-profile insolvency cases involving alleged fraud, such as those concerning DHFL and ABG Shipyard, enforcement agencies have attached properties well before resolution professionals could take control under the IBC. This reflects a growing reality where enforcement statutes are no longer merely ancillary but operate as de facto gatekeepers to insolvency assets. Such pre-emptive action creates confusion about who controls the corporate debtor's estate, undermining the clean-slate objective and reducing asset realisation potential. It also adds to the compliance and litigation burden on resolution professionals and delays the approval of resolution plans. 2. Reassessing the Scope of Section 238 of the IBC One immediate question arising from the Supreme Court’s approach in NSEL is whether Section 238, which grants overriding effect to the IBC in cases of inconsistency, has been weakened in substance. Critics argue that the Court adopted an overly narrow reading of "inconsistency", one that does not take into account the IBC's broad objective of maximising asset value and promoting timely resolution.[14] If every penal or investor-protection statute can operate in parallel without being overridden, it leaves the insolvency framework vulnerable to constant disruption. Going forward, courts and the legislature must engage in a principled determination of “field overlap”, rather than treating each statute in silos. 3. The Case for Asset Ring-Fencing and Legislative Clarification The situation calls for a legislative solution that can bridge the growing friction. One possible reform is the statutory ring-fencing of assets that are subject to legitimate security interests or resolution plans approved under the IBC, shielding them from post-facto attachments unless the resolution itself is proven to be fraudulent. A precedent in this regard can be found in Singapore’s Insolvency, Restructuring and Dissolution Act, 2018, which allows court-supervised moratoriums to prevail over certain criminal proceedings to protect the corporate debtor’s restructuring prospects.[15] Similarly, UK’s Corporate Insolvency and Governance Act 2020 introduced restrictions on creditor action during restructuring periods, recognising that enforcement must occasionally take a backseat to economic revival. Indian law could take cues from these models and enact a harmonisation clause that mediates between creditor rights and state enforcement, especially when both claim to be acting in the public interest. 4. Credit Risk and Market Behaviour The erosion of secured creditor primacy may also have a downstream effect on credit risk assessment, particularly in sectors prone to regulatory action or political scrutiny. Financial institutions may begin to charge higher interest rates, demand stricter covenants, or altogether avoid sectors where post-default asset access is uncertain. These kinds of reactions result in the loss of MSMEs and companies in emerging industries, where regulatory frameworks are still evolving. It is also likely to deter foreign creditors, who often rely on enforceability of security interests as a proxy for rule-of-law standards in emerging markets. V. Conclusion: Striking a Balance between Commercial Finality and Justice The NSEL judgement has undoubtedly triggered a watershed moment in India’s insolvency regime. It highlights that insolvency law does not operate in isolation, but alongside a wider legal framework that includes, economic, social and criminal laws. The challenge, therefore, lies not in asserting the dominance of one legislative instrument over another, but in developing a coherent and coordinated regulatory ecosystem. The clean slate principle is not a judicial favour but a tool to ensure business continuity and value recovery. When courts allow post-resolution attachments, as seen in the Anil Agarwal decision, it creates uncertainty and undermines investor trust.[16] A more balanced approach would involve legal reforms and clearer judicial guidance to align enforcement actions with the objectives of resolution under the IBC.   [1] National Spot Exchange Ltd. v. Union of India, 2025 SCC OnLine SC 113. [2] Insolvency and Bankruptcy Code, 2016, §§ 52, 53. [3] “SBI Seeks Review of SC Ruling Denying Secured Creditors Priority over Attached Assets,” The Economic Times (May 15, 2025), [4] Insolvency and Bankruptcy Code, 2016, § 52. [5] See Transcore v. Union of India, (2008) 1 SCC 125 [6] Insolvency and Bankruptcy Code, 2016, § 53(1)(b). [7] India Resurgence ARC (P) Ltd. v. Amit Metaliks Ltd., (2021) 19 SCC 672. [8] Insolvency and Bankruptcy Code, 2016, § 238. [9] P. Mohanraj v. Shah Bros. Ispat (P) Ltd., (2021) 6 SCC 258. [10] Rotomac Global (P) Ltd. v. Director, Directorate of Enforcement, 2019 SCC OnLine NCLAT 1545. [11] Ashok Kumar Sarawagi v. Enforcement of Directorate, 2022 SCC OnLine NCLAT 3453. [12] Directorate of Economic Offences v. Binay Kumar Singhania, 2021 SCC OnLine NCLAT 159. [13] Arka Majumdar et al., Supreme Court’s Decision in National Spot Exchange Limited v. Union of India: Priority of Secured Creditors in Flux?, IBC – NCLAT Fortnightly Summary, Mondaq, https://www.mondaq.com/india/insolvencybankruptcy/1630702/supreme-courts-decision-in-national-spot-exchange-limited-v-union-of-india-priority-of-secured-creditors-in-flux. [14]Ashish Dasgupta, “IBC and Enforcement Laws: Inconsistent or Interlocking?”, LiveLaw (2023), https://www.livelaw.in/columns/ibc-and-enforcement-laws-inconsistent-or-interlocking-230489. [15] Insolvency, Restructuring and Dissolution Act 2018 (Singapore), Part 5, §§ 64–70. [16] Anil Agarwal Foundation v. State of Orissa, (2023) 20 SCC 1

I.  Introduction Over the past few years, carbon credits have become a thriving global trade system valued in billions. In particular, the voluntary market (“VCM”), has attracted growing interest from private actors looking to offset emissions, and from project developers in the Global South seeking finance for sustainable initiatives. Simultaneously, an increasing number of disputes have begun to surface.[1] Unlike earlier, they are no longer confined to questions of contract law. They often involve deeply technical debates around environmental integrity, scientific validation, and data verification. Traditional dispute resolution methods, especially international arbitration, are struggling to adapt to this evolving landscape. Arbitration institutions like the International Chamber of Commerce (“ICC”), the London Court of International Arbitration (“LCIA”), and others have long been the default forums for resolving transnational commercial disagreements. Yet when applied to carbon credit conflicts, they appear slow, costly, and ill-equipped to manage the scientific and regulatory complexity of these cases. Several disputes related to carbon credits have emerged involving alleged double issuance of credits, delays in validation, challenges to additionality, and the sale of credits from projects that failed to meet permanence standards. These disagreements are often governed by standard contracts, but their underlying factual disputes are rooted in climate science, satellite data, and rapidly changing market regulations.[2] As the carbon economy expands, the trustworthiness of offset credits has become central to their legal and financial viability. The credibility of these markets will, in large part, depend on whether the disputes they give rise to are resolved in a timely, transparent, and technically sound manner. This article argues that the current international arbitration frameworks are falling short of this standard and must be reshaped if they are to meet the demands of a decarbonising world. II. The Evolution of Carbon Markets and the Nature of Disputes Carbon markets were introduced as part of a broader attempt to tackle climate change using economic tools. The idea was straightforward: to allow entities that exceed their emission reduction targets to sell excess reductions to those that do not. Under the Kyoto Protocol, the Clean Development Mechanism (“CDM”) allowed developed countries to invest in emission-reduction projects in developing nations and receive certified emission reductions (“CERs”) in return. This laid the groundwork for carbon credits as tradable instruments in a global marketplace. The voluntary carbon market has grown rapidly and largely independently, whereas the compliance markets continue to operate under governmental or intergovernmental mandates. It enables businesses and individual to buy carbon offsets outside of regulatory obligations, often to meet internal or domestic environmental commitment. Although the certificates vary in methodology and oversight, standards such as Verra’s Verified Carbon and the Gold Standard have emerged to ensure credibility. The disputes have been increasing proportionally with the financial projects in these offsetting projects. At the centre of many of these disputes is the question of integrity. One recurring issue is additionality. For generating credits, a project must produce emissions reductions that would not have occurred without it. Disputes mainly arise, when this claim is contested through updates data or scientific reassessments. Another pultruding issue is of permanence. This becomes problematic in case of forestry projects that are at risk of wildfires, pests, or illegal clearing. If such events occur, previously issues credits may lose their environmental value long after they have been traded. Double counting has been a major issue given the lack of a unified registry across the voluntary market. This happens when a single credit is sold more than once, or when both the host country and the buyer claim the same credit. As carbon credits become more commoditised, these disputes are no longer confined to technical concerns, raising significant legal, commercial and ethical questions. These disagreements usually involve parties across jurisdictions, complex scientific data, and require timely resolution. However, existing dispute resolution processes are struggling to keep pace.[3] III. Why Current International Arbitration Frameworks Fall Short International arbitration due to its neutrality, enforceability, and procedural flexibility has long been preferred for resolving cross-border commercial disputes. However, limitations start to arise as it is applied to the carbon credit market. The complex, science driven and often time-sensitive nature of these cases poses challenges that traditional arbitration systems were not designed to handle. One of the key issues is the lack of technical expertise among arbitrators. While the arbitration panels are composed of experienced legal and commercial professionals, they rarely include individuals with backgrounds in climate science, environmental economics, or carbon accounting, which creates problems when disputes turn on highly specific technical questions such as whether a carbon sequestration project meets additionality standards or whether monitoring data justifies credit issuance. In such matters, legal knowledge alone is insufficient. Another issue is of procedural delay. While many disputes over carbon credits are time sensitive, yet arbitration proceedings, under institutions like the ICC or LCIA, often extend over several months or even years. This delay undermines both the financial value of the disputed credits and the environmental objectives of the underlying projects. Another significant barrier is cost as smaller project developers, especially in the Global South, may lack the resources to pursue full arbitration proceedings. Financial pressure constrains their ability to defend their claims or challenge discrepancies, even though these parties are the ones producing credits. This results in an imbalance in procedural access, which undermines the fairness of the process. Consistency is also lacking. Carbon credit disputes do not currently benefit from any consolidated body of precedents. Awards are often confidential, fragmented, and grounded in varying contractual and institutional rules. This leaves market participants with little guidance on how similar disputes may be resolved in the future. Finally, enforcement presents its own challenges. Although arbitral awards are generally enforceable under the New York Convention, the transnational nature of carbon credit transactions, combined with regulatory ambiguity in certain jurisdictions, can make enforcement unpredictable. This uncertainty creates risk for investors and developers alike.[4] In sum, while arbitration remains a cornerstone of international commercial law, it is not yet equipped to meet the particular needs of the carbon credit market. Without reform, the gap between market complexity and procedural adequacy will continue to widen. IV.  Specific Procedural and Institutional Gaps Beyond the general mismatch between arbitration and the nature of carbon credit disputes, specific procedural and institutional features make current systems particularly unsuited to this context. Arbitrator selection is one such problem. Most arbitral institutions permit parties to nominate their own arbitrators, typically favouring those with commercial, construction, or financial backgrounds. However, disputes concerning carbon credits often involve technical evidence drawn from climate modelling, ecological monitoring, or satellite imagery. In the absence of a neutral expert or scientifically literate tribunal, the outcome of the dispute may depend not on the strength of the evidence but on the parties’ ability to explain complex data in simplified terms, which disadvantages smaller actors and reduces the integrity of the process.[5] The other challenge is of evidentiary rules. The carbon credit claims rely on highly technical material, such as validation reports, drone footage, geospatial datasets, and digital registries that do not generally align with traditional forms of proof. In this scenario, the standard evidentiary rules may either overburden the process or fail to accommodate these new types of evidence in a meaningful way. Confidentiality which goes hand in hand with arbitration, becomes a double edged sword. While parties prefer discretion in commercial matter, carbon credits disputes often implicate wider interests. A forest project that loses its credits due to non-compliance does not only affect the investor and the verifier; it can impact local livelihoods and regional climate targets. Resolving such disputes in private, give very little scope for public scrutiny or regulatory learning. Finally, there is also an issue of procedural flexibility. While institutional rules allow for expedited procedures, these are rarely invoked in practice for carbon market claims. Further, delays in resolving disputes not only affect project financing but may also lead to environmental non-performance or reputation loss of buyers. V. The Path Forward: Institutional Reforms and New Frameworks 1. Establishment of a Dedicated Carbon Arbitration Centre A specialised body focused on environmental and carbon-related disputes should be made. A Carbon Market Arbitration Centre (“CMAC”) could be housed in neutral jurisdictions with robust arbitration hubs such as Singapore or London. This centre would be equipped with rules, procedures, and personnel specifically tailored to handle disputes over carbon credit issuance, verification and trade. 2. Expert Panels with Scientific and Technical Backgrounds Rosters of experts in climate science, carbon accounting, foster management, and data verification should be there as support in Tribunals. Their appointment would be as tribunal members or they would serve in an advisory capacity. Their presence would ensure that technical arguments are assessed with the necessary depth and accuracy.[6] 3. Model Clauses for Carbon Credit Contracts Standardised arbitration clauses specifically designed for carbon markets should be adopted by market participants. These clauses should include terms regarding the forum, governing law, use of technical experts, and timelines for resolution. Institutions like the International Bar Association or UNIDROIT could lead in drafting such instruments. 4. Regional Hubs to Increase Access and Equity Dispute resolution facilities must also be accessible to parties in regions where many carbon offset projects originate. Establishing regional arbitration hubs in Africa, Southeast Asia, and Latin America would improve access to justice and reduce costs for project developers. These hubs could operate under the umbrella of the global centre, ensuring consistency in procedure and standards. 5. Procedural Streamlining and Emergency Measures Rules should incorporate fast-track procedures and emergency arbitration mechanisms for disputes that involve time-sensitive project funding, certification deadlines, or reputational risks. This would ensure that key commercial or environmental outcomes are not undermined by procedural delay. These reforms, taken together, would help create a dispute resolution ecosystem that is credible, fair, and responsive to the demands of a fast-evolving carbon market. VI. Integrating Technology in Dispute Resolution Technology has already begun to transform the way carbon credits are generated, verified, and traded. The next step is to incorporate these technological tools into the resolution of disputes. Doing so would not only enhance the accuracy and transparency of proceedings but also reduce procedural delays and costs. 1. Blockchain-Based Verification and Smart Contracts - Blockchain technology is increasingly used to track the issuance and transfer of carbon credits. Platforms like KlimaDAO and the Toucan Protocol have pioneered on-chain carbon registries that record every transaction on an immutable ledger. By integrating these records into arbitration proceedings, tribunals can verify transactions and ownership claims without relying solely on traditional documentation. Smart contracts could also automate performance obligations, reducing the scope for interpretive disputes.[7] 2. AI-Assisted Evidence Review - Disputes involving environmental claims often require analysis of large data sets. Artificial intelligence tools can help in reviewing satellite imagery, drone footage, and validation reports. These tools can flag anomalies, generate patterns, and assist arbitrators in assessing factual claims. For example, AI has already been used to detect illegal deforestation in carbon projects by analysing changes in land cover over time.[8] 3. Online Dispute Resolution (ODR) Platforms - Given the global nature of carbon markets, ODR can make arbitration more accessible and affordable. Cloud-based platforms can host digital hearings, allow secure document submissions, and accommodate parties from different jurisdictions and time zones. These systems also allow for transparent, multilingual proceedings, improving participation from project developers in non-English-speaking regions. 4. Data Registries as Evidence Sources - Verified carbon registries that operate publicly and transparently can serve as admissible sources of truth in arbitration. When these registries are linked to independent monitoring systems, such as satellite-based carbon measurement platforms, they offer a more objective basis for resolving disputes. Integrating these technologies into arbitration would not only improve efficiency but also help restore market confidence by creating a more objective and traceable process for handling carbon-related claims. VII. Conclusion As the carbon credit market grows in scale and complexity, its credibility increasingly depends on the strength of the legal mechanisms that underpin it. Rising disputes over verification, ownership and project integrity are no longer hypothetical. Investments, community trust, and the environmental value of offsets are already being affected. Even though the current arbitration framework is well established in commercial contexts, a gaping hole still remains in the context of carbon credit market. If carbon credits are to play a meaningful role in global climate mitigation, their legitimacy must be protected, which will require coordinated reforms across several levels. A specialised arbitration centre with scientific expertise which integrates technology would strengthen the procedural reliability of the system. The private stakeholders, arbitral institutions and policy actors must work together to shape a dispute resolution framework that reflects the urgency and complexity of climate action for arbitration to contribute meaningfully to integrity and resilience of the carbon economy. [1] Nishtha Singh, Harman Singh, Chetna Arora & Vaibhav Chaturvedi, Role of Financial Players in the Indian Carbon Market: Learning from Existing Markets and Stakeholder Perspectives, Council on Energy, Environment and Water Issue Brief (Oct. 22, 2024), https://www.ceew.in/publications/role-financial-players-indian-carbon-market [2] Dispute Resolution in Carbon Markets, Kluwer Arbitration Blog (Sept. 16, 2023), https://arbitrationblog.kluwerarbitration.com/2023/09/16/dispute-resolution-in-carbon-markets/ [3] See David Takacs, Carbon Offsets & Inequality, 56 Harv. Int’l L.J. 167, 176–78 (2015). [4] See Gary B. Born, International Commercial Arbitration 394–96 (3d ed. 2021). [5] Michael Scherer, International Arbitration and Climate Change, 38 Arb. Int’l 1, 7 (2022). [6] See Catherine Kessedjian et al., Principles on Climate Obligations of Enterprises, 51 Geo. Wash. Int’l L. Rev. 683, 701–03 (2019). [7] Klaus Schwab & Nicholas Davis, Shaping the Fourth Industrial Revolution 82 (2018). [8] Celine Herweijer et al., Building the Climate-Resilient Company, McKinsey & Co. (2022).