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The Emerging Role of MedArb in Corporate Disputes Disputes are an inescapable part of corporate interactions in this dynamic world. Traditionally, they have been resolved through expensive and lengthy court proceedings. However, there is a new approach that is gaining momentum: Mediation-Arbitration, or Med-Arb. This hybrid form of dispute resolution is changing the way corporations handle disputes and resolve them, being more efficient, cost-effective, and relationship-preserving compared to traditional litigation. Understanding Med-Arb: A Hybrid Approach Mediation-arbitration is a sophisticated conflict resolution which, along with other processes, brings in two distinct processes: mediation in which a neutral third-party facilitator engages in exploring mutually acceptable solutions by attempting to help the disputing parties; and hence, going into arbitration if mediation fails, whereby a binding award will be given by the neutral arbitrator. Key Advantages of Med-Arb Legal Framework in India Industries Embracing Med-Arb Different industries are now largely embracing Med-Arb as a preferred method of dispute resolution for efficiency and the easy maintenance of relationships. Med-Arb vs. Traditional Arbitration Challenges in Med-Arb Conclusion Med-Arb has an influential future with corporate disputes. It is likely to be sought more by businesses seeking efficient, low-cost, and relationshippreserving means for conflict resolution. It would be a compelling alternative to litigation, since it combines the strengths of mediation and arbitration, and fulfils modern demands in flexibility for dispute management. With the evolution of this model, ethical considerations and procedural safeguards will be vital in assuring the integrity and effectiveness of this model vis-a-vis corporate disputes.

Introduction The Reserve Bank of India’s (RBI) Digital Lending Guidelines, introduced in September 2022, represent a significant regulatory shift aimed at ensuring not only responsible lending practices in the rapidly evolving digital lending landscape but also at enhancing consumer protection. These guidelines have profound implications for FinTech companies and Non-Banking Financial Companies (NBFCs) operating in India. Key Features of the Guidelines: The RBI’s Digital Guidelines will have a transformative effect on the way both fintech companies and NBFCs operate in India. While the guidelines impose certain compliance requirements, they also create an environment that supports responsible innovation and fosters growth in the digital finance ecosystem. Companies that can adapt quickly to these regulations while leveraging technology for customer benefit will be better positioned to succeed in the evolving landscape. However, those that fail to comply or integrate sound risk management practices may face penalties or operational difficulties, affecting their long-term sustainability. Implications for FinTech: RBI’s regulatory framework for fintech encompasses various aspects, including licensing, data protection, outsourcing, KYC, digital lending and customer due diligence Implication For NBFC Regulatory Scrutiny: NBFCs have to operate in a more stringent regulatory environment where adherence to the Digital Lending Guidelines is strictly monitored. Non-adherence may attract penalties or even restrictions on operations. Risk Management Enhancements: The requirement for NBFCs to follow sound credit assessment practices while utilizing FLDG arrangements may lead to improved risk management strategies, thereby reducing default rates and enhancing financial stability within the sector. Consumer Trust and Market Stability: These guidelines shall help build greater trust among borrowers by strengthening responsible lending practices and improved consumer protection measures, thus working towards market stability and growth in the digital lending ecosystem. Implementation Challenges: Conclusion RBI’s Digital Lending Guidelines represent a significant stride in making lending digitally transparent, accountable, and consumer-friendly. Challenging though these guidelines are to FinTechs and NBFCs, there’s a huge opportunity for growth in terms of innovation, thus winning the trust of customers for longterm use. Continued dialogue between regulators, financial institutions, and technology companies will be key to the success of these guidelines in finding a balance between financial innovation and consumer protection. Stay tuned for more legal insights!

– Mandeep Singh, Associate The corporate veil is one of the most fundamental yet complex principles in corporate law. At its heart, this doctrine separates the company as a legal entity distinct from the individuals behind it. Enshrined in Salomon v. A. Salomon & Co. Ltd. (1897), the corporate veil ensures that shareholders and directors are not personally liable for the company’s debts and obligations. This concept has revolutionized entrepreneurship by enabling individuals to take risks without fearing personal financial ruin. However, courts have recognized that this legal shield is not impenetrable. In certain cases—particularly where fraud or unjust conduct is involved—the courts may “lift” or “pierce” the corporate veil, holding individuals accountable for the company’s actions. The Concept of the Corporate Veil The corporate veil refers to the metaphorical shield that separates the legal identity of a company from its shareholders or directors. This distinction allows individuals to invest in companies with the assurance that their liability will be limited to the extent of their investment in the firm. The principle behind this is crucial for fostering entrepreneurship and economic growth. By protecting shareholders from personal liability, the law encourages risk-taking and innovation, as individuals know their assets are not at stake in case the business fails. This principle was famously articulated in Salomon v. Salomon, where it was established that once a company is legally incorporated, it becomes an entity distinct from its owners. It can own property, incur debts, and sue or be sued in its name. However, this separation is not absolute, and courts can sometimes look beyond this legal fiction to the individuals behind the company. Emergence of the Corporate Veil The corporate veil doctrine emerged during the industrial revolution when businesses grew in complexity and scope. The decision in Salomon v. Salomon firmly established that upon incorporation, a company becomes a legal person, separate from its shareholders. This shield of limited liability is what gives corporations their power to attract investment and grow without shareholders fearing personal loss. However, as corporations evolved and began to be used as tools for both legitimate and illegitimate purposes, courts around the world saw the need to balance this protection with accountability. Over time, the doctrine of lifting the corporate veil developed, ensuring that individuals could not misuse corporate structures for fraudulent or improper purposes. Lifting the Corporate Veil in India In India, the doctrine of lifting the corporate veil is acknowledged through various statutes and judicial interpretations. The Companies Act, 2013, specifies provisions for lifting the veil in instances of fraud or misconduct, notably: Judicial Reasoning in Lifting the Veil: Courts do not pierce the corporate veil lightly. The reasoning behind lifting the veil often hinges on the nature of the wrongdoing and the role the company played in it. In cases like Gilford Motor Co. v. Horne, where the company was used as a tool to evade contractual obligations, the court saw through the corporate structure and held the individual personally liable. Similarly, in the Indian case of Tata Engineering Locomotive Co. Ltd. v. State of Bihar, the Supreme Court recognized that while corporations are separate legal entities, they cannot be used to shield unlawful actions like tax evasion or fraudulent conduct. The court’s reasoning in these cases underscores that the veil will only be lifted when justice demands it, especially in cases where the company is a mere façade. When is the Corporate Veil Lifted? Courts are generally reluctant to lift the corporate veil, but they will do so in specific situations where justice requires it. Here are some of the most common circumstances: Fraud or Improper Conduct: One of the most straightforward instances where the veil may be lifted is when the company is being used to perpetrate fraud or illegal activities. Courts will not allow individuals to hide behind the corporate structure to escape liability for their wrongdoing. Agency Relationship: Sometimes, a subsidiary company may merely act as an agent for the parent company. In such cases, courts might treat the two as one entity, effectively piercing the corporate veil. This was seen in DHN Food Distributors Ltd. v. Tower Hamlets (1976), where the courts held that the parent company had control over its subsidiaries to such an extent that they were not separate entities. Evasion of Legal Obligations: When the corporate structure is used to evade legal duties, courts may decide to lift the veil. In Gilford Motor Co. Ltd v. Horne (1933), the corporate veil was pierced because a company was formed specifically to avoid a non-compete clause. Tax Evasion: If individuals use a corporation as a device to evade taxes, courts may intervene. The case of Juggilal Kamlapat v. CIT (1969) is a notable example where the corporate veil was lifted in India to prevent tax avoidance. Public Interest and National Security: In cases where the corporate form threatens national security or public interest, courts may disregard the separate entity principle. For example, during wartime, the courts lifted the veil in Daimler Co Ltd v. Continental Tyre & Rubber Co (Great Britain) Ltd (1916) because the company was effectively controlled by enemy nationals. Corporate Veil in India In India, the corporate veil doctrine, rooted in English common law, has been widely accepted. The courts have used this doctrine to balance the need for corporate autonomy with the need to ensure accountability. The Supreme Court of India has lifted the corporate veil in several significant cases: In Tata Engineering Locomotive Co. Ltd. v. State of Bihar (1964), the Supreme Court held that a corporation, while a separate legal entity, can be held accountable if the corporate form is abused. Another landmark case is LIC of India v. Escorts Ltd. (1986), where Justice O. Chinnappa Reddy emphasized that the corporate veil could be lifted when companies are inextricably connected to serve a single business purpose. The Bhopal Gas tragedy case and the Renusagar Power Co. case are further instances where the Supreme Court of India pierced the corporate veil. In the