"I realise that some of my criticisms may be mistaken; but to refuse to criticize judgements for fear of being mistaken is to abandon criticism altogether... If any of my criticisms are found to be correct, the cause is served; and if any are found to be incorrect the very process of finding out my mistakes must lead to the discovery of the right reasons, or better reasons than I have been able to give, and the cause is served just as well." -Mr. HM Seervai, Preface to the 1st ed., Constitutional Law of India.

Monday, November 18, 2013

One Reason Why Indian Law Journals Need to Put More Effort

Last year, we did a blog post critically analysing the Sulamerica case decided by the English Court of Appeal and comparing the decision with Indian law on the issue. While perusing through the recent issue of the Indian Journal of Arbitration law, this blawgger found that the said post has been reproduced in substance in a paper titled "Sulamerica & NTPC: A Comparative Interface" (p. 14-17). Shocked at seeing the same, I wrote to the Journal and to the faculty advisor. I also wrote a letter to the authors The annexure to the letter contained a comparative statement on the similarities between the paper and the above post. The said comparison speaks for itself. The following is the substance of the email (in italics):

"Dear Editor,

Kindly refer to the recent article titled "Sulamerica & NTPC: A Comparative Interface" by [authors name removed] published in Volume II Issue 2 of your reputed journal. I have been a follower of your journal and have contributed to two papers (one in the first issue and the second in the recent issue). The editorial team has been doing an excellent job in getting good papers published. 

However, I came across the above mentioned article and was dismayed to see that p. 14-17 are a virtual repetition of a blog post of mine that appeared in the practical academic blog. The link to the said post is below:


As you might see, even the table in the said blog has been repeated. While my complaint is less about the authors not acknowledging the source, it is a unhappy state of affairs that the article brings about nothing new but merely repeats what has already been published in the said blog post. 

Publishing of such papers bring great disrepute to your journal. I hope there is more quality control in the papers your publish. Otherwise, IJAL will meet the same fate as most other journals."

The faculty advisor replied on the same date (in italics):

"Deat Badri,

Thanks for pointing this out. It's a serious issue.

I'll take it up with my student editorial team and rectify it soon."

The response of the Editorial team of the law review is reproduced in italics:

"Dear Badrinath,

Thank you for bringing it to our notice. We would be extremely careful about the same next time."

I wrote the following letter to the authors of the said paper:

"Hearty congratulations on getting a wonderful paper ("Sulamerica & NTPC: A Comparative Interface") published in Volume II issue 2 of the Indian Journal of Arbitration Law. The paper is well analysed and what is most admirable is that you have disagreed with the English Court of Appeal “after having studied exhaustively the English jurisprudence on the choice of proper law of governing the arbitration agreement” and have concluded that the Sulamerica ratio should not be followed in India, where NTPC v. Singer rules the field. I once again congratulate you on the excellent work.

The purpose of this letter goes beyond the above congratulatory message. I thank you for citing a blog post of mine that appeared in the Practical Academic blog.[1] The said post was cited in your paper when you discussed the “exceptional circumstances” proposition in NTPC v. Singer. I feel proud to state that my views in the said blog post have been reiterated in a paper of students of an august national law school. I am also thrilled by the fact that you read the Practical Academic Blog. I have been writing blog posts in the said blog since 2008 and I thought that there are only handful readers for the blog. I never knew that two national law school students took their time away from their busy schedule to read the blog. I am also ecstatic because p. 14 -17 of your paper are a virtual repetition of my blog post (See Annexure) and the Editors of the Indian Journal of Arbitration Law have found it fit to be published in their journal (Volume II Issue 2)!

Although, you have not acknowledged this fact in your paper (except in two places), I am happy that the ideas in my blog post have been published almost verbatim (with changes here and there, of course) in such a wonderful law journal.

I hope you keep up the excellent work and make your parents and your law school proud by copying from other writings without due acknowledgement and without any application of mind.

Yours sincerely,



Badrinath Srinivasan


CC:[removed]


Annexure
Similar/ Identical Sentences Used without Acknowledgement

Choice of Proper Law of Arbitration Agreement: Sulamerica (Blog post)[2]
Sulamerica & NTPC: A Comparative Interface (paper) [3][4]
One of the earliest cases to decide on the determination of the law of the arbitration agreement in the absence of express choice is the well-known case of NTPC v. Singer AIR 1993 SC 998, where the Supreme Court held that the proper law of the arbitration agreement was “normally” the proper law of the contract expressly chosen by the parties.


The court clarified that where the parties had expressly agreed on the proper law of the contract but had not designated the proper law of the arbitration agreement, “[i]t is Indian law which governs the contract, including the arbitration clause, although in certain respects regarding the conduct of the arbitration proceedings the foreign procedural law and the competent courts of that country may have a certain measure of control."

It must be noted that the court stated that in “exceptional cases”, the expressly designated proper law of the contract may not be the proper law of the arbitration agreement, although the court did not elaborate on what the exceptional circumstances were.
The earliest case in India to consider and decide upon the moot question at hand i.e. the determination of the proper law of the arbitration agreement in the absence of express choice was in the case of NTPC v. Singer, wherein the Apex Court held that “the proper law of the arbitration agreement was ‘normally’ the proper law of the contract expressly chosen by the parties”

and also went on to clarify that where the parties had expressly agreed on the proper law of the contract but had not designated the proper law of the arbitration agreement, “[i]t is Indian law which governs the contract, including the arbitration clause, although in certain respects regarding the conduct of the arbitration proceedings the foreign procedural law and the competent courts of that country may have a certain measure of control.”

However it is pertinent to note that the Court stated in “exceptional cases”, the expressly designated proper law of the contract shall not prevail as to be the proper law of the arbitration agreement, although the court refrained from elaborating on the exceptional circumstances.
In NTPC v. Singer, it was held:
“Where, there is no express choice of the law governing the contract as a whole, or the arbitration agreement as such, a presumption may arise that the law of the country where the arbitration is agreed to be held is the proper law of the arbitration agreement. But that is only a rebuttable presumption..”

Thus, where neither the proper law of contract nor the proper law of arbitration agreement is chosen, it would be presumed that the latter would be the seat of arbitration.


This does not mean that where the proper law of contract is expressly chosen, the law of the seat of arbitration would nevertheless be the proper law of arbitration agreement.

The Apex Court held that, “Where, there is no express choice of the law governing the contract as a whole, or the arbitration agreement as such, a presumption may arise that the law of the country where the arbitration is agreed to be held is the proper law of the arbitration agreement. But that is only a rebuttable presumption.”

Thus, where neither the proper law of contract nor the proper law of arbitration agreement is chosen, the Court should take up the stand to presume that the latter would be the seat of arbitration.

This shall not affect a situation wherein the proper law of contract is expressly chosen, the law of the seat of arbitration would continue be in accordance with the proper law of arbitration agreement.
The Indian position can be summed up in three propositions:
1.      In the absence of express choice of the law of arbitration agreement, the choice of the proper law of the contract will also govern the arbitration clause.
2.      However, in exceptional circumstances, even if the proper law of the contract is chosen, such may not be the law of the arbitration agreement where the agreement is silent.
3.      Where neither the proper law of contract nor the proper law of arbitration agreement is chosen, it would be presumed that the latter would be the seat of arbitration.
The Indian Position can be summed up in three propositions:
1. When there is absence of express choice of the law to govern the arbitration agreement, the choice of the proper law of the contract will also govern the arbitration clause.
2. However, in exceptional circumstances, even if the proper law of the contract is chosen, such may not be the law of the arbitration agreement where the agreement is silent or doesn’t provide to the contrary.
3. Nonetheless in a commercial arrangement when neither the proper law of contract nor the proper law to govern the arbitration agreement is chosen, it would be presumed that the latter would be seat of arbitration.
The phrase “exceptional cases” employed in NTPC v. Singer has not been explained in any of the decided cases.

However, from the decided cases, one can decipher what does not amount to an exceptional case. In NTPC v. Singer, for instance, the proper law of contract was Indian law, the courts at Delhi had exclusive jurisdiction, the seat was London and the arbitral rules were the ICC Rules. Even so, the Supreme Court held:
"It is Indian law which governs the contract, including the arbitration clause, although in certain respects regarding the conduct of the arbitration proceedings the foreign procedural law and the competent courts of that country may have a certain measure of control."
The phrase “exceptional cases” employed in NTPC v. Singer has not been explained in any of the decided cases.

However, from the list of decided cases, one can decipher as to ‘what shall not constitute an exceptional case’. For instance, the proper law of contract was Indian law, the courts at Delhi had exclusive jurisdiction, the seat of arbitration was London and the lexarbitriwere the ICC Rules. Still, the Supreme Court held: “It is Indian law which governs the contract, including the arbitration clause, although in certain respects regarding the conduct of the arbitration proceedings the foreign procedural law and the competent courts of that country may have a certain measure of control”.
This judgement has been cited with approval in several cases under the 1940 and the 1996 Acts. 
This very ratio has been cited with approval in several cases under the 1940 and the 1996 Arbitration Act
Even so, the conclusions arrived at by the Court of Appeal and the Supreme Court are different. In the future, Sulamerica would probably be cited in an Indian court to canvass the proposition that even if the proper law of the contract is expressly designated by the parties, the proper law of arbitration agreement would be the law of seat (which is different from that of the proper law of the contract).
Even if the conclusions arrived at by the Court of Appeal and the Supreme Court of India are dissimilar, there still exists a high probability that SulAmérica would be perused as an authority in Indian courts to canvass the proposition that even if the proper law of the contract is expressly designated by the parties, the proper law of arbitration agreement would be the law of seat (which is different from that of the proper law of the contract).

Following are the reasons why the proper law of arbitration agreement should be the expressly designated proper law of contract and not the seat of arbitration:
1. At a basic level, it is only logical that the arbitration clause, which forms a part of the contract, would be governed by the same law that the rest of the contract is.
2. In India, unlike in several other countries, often business managers solely negotiate contracts without any legal advice. In such cases, the law on choice of law should not be intricate or complicated and should proceed on the basis of logic and common sense. Considering that, the conclusion reached in NTPC v. Singer is commonsensical and in accord with business understanding and common sense.
3. The consequence of Sulamerica is to make the parties agree on the proper law of arbitration agreement in addition to that of the contract so as to prevent ambiguities. From a transaction cost point of view, this would lead to additional cost to negotiate a proper law of arbitration agreement, in addition to the proper law of contract.
4. Indian precedents, as discussed above, are not in favour of Sulamerica approach.


Following are the reasons why the proper law of arbitration agreement should be the expressly designated proper law of contract and not the seat of arbitration:
1. At a basic level, it is only logical that the arbitration clause, which forms a part of the contract, would be governed by the same law that governs the rest of the contract is.
2. In India, unlike in several other countries, often business managers solely negotiate contracts without any legal advice. In such cases, the law on choice of law should not be intricate or complicated and should proceed on the basis of logic and common sense. Considering that, the conclusion reached in NTPC v. Singer out of commonsense and in
accordance with the business understanding.
3. The consequence of SulAméricais to make the parties agree on the proper law of arbitration agreement in addition to that of the contract so as to prevent ambiguities. From a transaction cost point of view, this would lead to additional cost to negotiate a proper law of arbitration agreement, in addition to the proper law of contract.
4. However the judgements rendered by the Indian courts reflect an approach which is not
in consonance with the approach adopted by English courts in SulAmérica Case.
5… Assume for a moment that a contract identical to the one in Sulamerica is agreed to between two parties. If Sulamerica approach is adopted, English Law would be the law of arbitration agreement. Assume that prior to reference of a dispute under the contract to arbitration, the Brazilian legal requirement of further consent is removed by an amendment to the law. In such a case, would English Law still remain the law of arbitration agreement? This hypothetical example points out the defect of the Sulamerica approach. The choice of the law of arbitration agreement would change during the currency of the contract not by an amendment to the contract but by operation of Brazilian law, which the parties might not even be aware of. Law on choice of law is already complicated. Why make it murkier? [Note that Sulamerica can be read as holding that even if the contract provides for the proper law of contract but not the proper law of arbitration agreement, the latter would be the law of the foreign seat…
Nevertheless the drawback persists of this approach. We can better understand this with the help of the following hypothetical example i.e. let’s assume that before the Court in SulAméricaa contract identical to the one at hand is entered into by the parties. If SulAmérica approach is adhered to, English Law shall be the law of arbitration agreement. Now assuming that prior to reference of a dispute under the contract to arbitration, there was an amendment to the proper law of contract. In such a situation, would English Law still remain the law governing the arbitration agreement? The answer would take us at the same spot from where we had started; hence this example highlights the shortcomings that any judicial system shall face on applying the SulAmérica approach blindly. The choice of the law of arbitration agreement would change during the continuance of the contract not by an amendment to the contract but by operation of proper law, which the parties at times might not even be aware of. The choice of the law of arbitration agreement would change during the continuance of the contract not by an amendment to the contract but by operation of Brazilian law, which the parties at times might not be aware of. Law on choice of law is very complex butSulAmérica can be interpreted as even if the contract provides for the proper law of contract but not the proper law of arbitration agreement, the latter would be the law of the foreign seat.
It may be noted that the Sulamerica approach is not altogether disadvantageous. If the law of the seat is to be the law of arbitration agreement in the absence of express designation, a foreign party entering into a contractual relationship with Indian law as the substantive law of contract providing for arbitration in London need not worry about the Indian arbitration law (in a scenario where Bhatia International does not exist). The party needs to only look at the English arbitration law which it would in any case do considering that the lex arbitri would be English Law.  However, considering the above reasons, it makes sense for India to continue to apply NTPC v. Singer.
At this juncture it is also indispensable to note that the SulAmérica approach is not prejucial because if the law of the seat is to be the law of arbitration agreement in the non-existence of express designation, a foreign party entering into a commercial arrangement with Indian law involved as the substantive law of contract providing for seat of arbitration can do without the Arbitration and Conciliation Act, 1996. While taking into account the current Indian conditions and its increasing popularity of being seat of arbitration in most of the international commercial arbitrations, it is necessary for Indian judiciary to carry forward the foundation laid down in the NTPC v. Singer Case with respect to choice of proper law governing the arbitration agreement.





[1] Badrinath Srinivasan, Choice of Proper Law of Arbitration Agreement: Sulameric, (25 July 2012), available at http://practicalacademic.blogspot.in/2012/07/choice-of-proper-law-of-arbitration.html (accessed on 16 November 2013)
[4] Footnotes omitted

On the entire issue, this blawgger has the following questions:

1) The authors belong to a reputed national law school. They should have definitely got in after a competitive process. Despite this, the authors showed a complete lack of quality by merely copying the paper and added/ removed/ replaced a few words.

2) The authors displayed a complete lack of morality by publishing the paper. It may be noted that the authors  akcnolweged the post in respect of two propositions. However, the most of p. 14-17 of the paper was a virtual reproduction of the blog post. The abject lack of morality is shocking!

3) The Indian Journal of Arbitration Law is a student run journal. It is expected that students would put in some effort in verifying whether a paper submitted for publication is plagirised or not. From my own experience, the said journal seemed to have a robust check at plagiarism. However, omission of this magnitude from the journal is shocking, to say the least.

4) While the faculty advisor's response to the email that the said paper was plagiarised was positive, the editorial team's response lacked any sense of propriety. Perhaps, the journal lacked a policy on how to respond to plagiarism. However, one would expect a little more responsible reply from the journal. A journal which publishes plagiarised content is surely on its way to oblivion. 

I wish Indian Law Journals and students were more responsible. 

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