Updated (2): Cabinet Approves Arbitration & Conciliation Amendment Ordinance

The electronic media is abuzz with the news that the Cabinet has okayed amendments to the Arbitration and Conciliation Act, 1996 through an ordinance. The PIB Press Release, which is not available now on the PIB site, stated that the following were the proposed changes:

The salient features of the proposed amendments are as under: 

(i) Insertion of a new provision to provide that Arbitrator shall charge composite fees for disposal of case and not on the basis of per sitting or per hearing, as has been the practice. 

(ii) Insertion of a new provision that the Arbitral Tribunal shall make its award within a period of 9 months. If the Court finds that the Arbitrator has delayed the matter for his personal benefit, it may debar the Arbitrator from taking fresh arbitration for 3 years. 

(iii) Amendment of Section 34 relating to grounds for challenge of an arbitral award, to restrict the term 'Public Policy of India" (as a ground for challenging the award) by explaining that only where making of award was induced by fraud or corruption or is in conflict with the fundamental policy of Indian Law or is in conflict with the most basic notions of morality or justice, the award shall be treated as against the Public Policy of India. 

(iv) A new provision to provide that application to challenge the award is to be disposed of by the Court within one year. 

(v) Amendment to Section 36 to the effect that mere filing of an application for challenging the award would not automatically stay execution of the award. Award can only be stayed where the Court passed any specific order on an application filed by the party. 

(vi) A new sub-section of Section 11 to the effect that an application for appointment of an Arbitrator shall be disposed of by the High Court or Supreme Court as expeditiously as possible and an endeavour should be made to dispose of the matter within 60 days. 

(vii) A new sub-section of Section 11 to the effect that while considering any application for appointment of Arbitrator, the High Court or the Supreme Court shall only examine the existence of a prima facie arbitration agreement and not other issues. It is also proposed to insert a new sub-section to the effect that the Court while appointing an Arbitrator shall also fix the fees of the Arbitrator. 

Apart from above, amendments in Sections 2(l)(e), 2(l)(f)(iii), 7(4)(b), 8(1) and (2), 9, 11, 12(1), 14(1), 16A, 17(3), 23, 24, 25, 28(3), 31(7)(b), 34 (2A) 37, 48, 56 and in Section 57 are also proposed for making arbitration process more effective.

Source: Cached Copy of the PIB Press Release (link). The amendment has come as a surprise as it was expected that the amendments would only be introduced in the next session of the Parliament. More on the same in the next post.

Update 1: Certain news reports (here and here) suggest that the PIB has withdrawn the Press Release suggesting that the Government may not be ready with the Ordinance.

More on this once there is clarity.

Update 2: News reports confirm that the Cabinet has actually approved an Ordinance to amend the arbitration laws in India and the same has been sent to the President for assent.

Award of Interest on Pre-Award Interest Payable under Award is Valid: SCI

Recently, a three judge Bench of the Supreme Court of India has held in Hyder Consulting (UK) Ltd. v. State of Orissa that a tribunal under Section 31(7) of the Arbitration and Conciliation Act, 1996 is empowered to award interest on any sum payable under the Award and such "sum" may include pre-award interest as well.

Interestingly, there are three individual opinions on the issue. While AM Sapre, J. concurred with SA Bobde, J., the former rendered a separate opinion. HL Dattu, CJI delivered the minority view.

The decision can be accessed from this link (pdf).



Trade Law and Development: Latest Issue

TL&D has been ranked as the best law journal in India (2013, 2012, 2011) and the tenth best law journal in the field of international trade worldwide (2013, 2012) by the Washington and Lee University Law Library in its annual rankings of law journals. Since its establishment in 2009, the journal's efforts have been recognized by the International Centre for Settlement of Investment Disputes and the World Trade Organization.

The issue and its contents can be accessed online on our website here: 

The Contents of this Issue are as follows:

Editorials A 'Heated' Debate: The WTO's Climate Question Ali Amerjee & Nakul Nayak Three Core Issues Thomas Cottier Articles Trade Proposals for Climate Action  Rafael Leal-Arcas Real or Imagined Controversies? A Climate Law Perspective on the Growing Links between the International Trade and Climate Change Regimes Kati Kulowesi Why Developing Countries Won't Negotiate? The Case of the WTO Environmental Goods Agreement  Mark Wu Clash of Rationalities: Revisiting the Trade and Environment Debate in Light of WTO Disputes over Green Industrial Policy  Sadeq Z. Bigdeli Notes and Comments The Case for 'Sui Generis' Developing Country-led Initiatives on Carbon Footprint Labelling Mahesh Sugathan

PDF 1-8PDF 9-10 Abstract PDF 11-54Abstract PDF 55-92 Abstract PDF 93-176 Abstract PDF 177-209 Abstract PDF 210-228

Settlement of Insurance Claim and the Discharge of Insurance Contract

Recently, a two judge Bench of the Supreme Court of India had the occasion in New India Assurance Co. Ltd. v. Genus Power Infrastructure (04.12.2014) to discuss the law on discharge of an insurance contract.

Facts: 

Genus Power Infrastructure Ltd. (Genus) purchased a Standard Fire and Special Perils Policy (Policy) from New India Assurance Co. Ltd. (NIA) for its manufacturing unit. The total sum assured under the one-year policy was Rs. 91.10 crores. Within seven months from the date of the policy, a fire explosion occurred in the adjoining terminal of the Indian Oil Corporation. This caused severe damage to the manufacturing unit of Genus. Genus notified NIA of the accident and NIA appointed a surveyor and a loss assessor. The loss as per Genus was 28.79 crores while the surveyor assessed Rs. 6.09 crores as the loss. 

Genus signed a detailed letter of subrogation duly stamped accepting Rs. 5.96 crores in full and final settlement of its claim under the Policy. After three weeks from the letter of subrogation, Genus issued a notice to NIA stating that the discharge voucher was signed under extreme duress, coercion and undue influence by NIA who took undue advantage of the financial difficulties of Genus in trying to get the amount of 5.96 crores settled under the Policy and sought nomination of arbitrator. NIA replied that there was no arbitrable dispute in view of the letter of subrogation where Genus had accepted Rs. 5.96 crores and the full and final settlement of the claim.

Genus filed a petition under S. 11 of the Arbitration and Conciliation Act, 1996 for appointment of the arbitrator. The Delhi High Court determined that there was a valid arbitration agreement and appointed an arbitrator. This order was challenged by NIA through a Special Leave Petition to the Supreme Court.

Contentions:

Following were the contentions of NIA in the SLP: 

• The letter of subrogation was a detailed agreement signed after negotiations between the parties in the presence of two witness and should be therefore given effect. 
• The amount was as recommended by the surveyor reduced by the mandatory reinstatement premium payable under the policy. 
• When the company’s annual turnover was Rs. 500 crores, it is improbable that such a company would be financially coerced in giving the discharge receipt. 

Contentions on behalf of Genus were following:

NIA knew fully well that its manufacturing unit had been destroyed and therefore NIA used its dominant position to force Genus to sign the discharge voucher. 

Question: According to the Supreme Court, the following question arose for determination: 

“[W]hether the discharge in the present case upon acceptance of compensation and signing of subrogation was not voluntary and whether the claimant was subject to compulsion or coercion and as such could validly invoke the jurisdiction under Section 11 of the Act.”

Decision:

Following is the summary of the court’s decision 

• A bald plea or fraud/ coercion, duress or undue influence is not sufficient and a party which pleads that the above-stated acts have occurred should establish the same. 
• Factually, there was no protest or demur raised around the time or soon after the letter of subrogation was signed. 
• The notice by Genus was given only three weeks after the letter of subrogation. 
• The financial position of Genus was not so precarious that it was left with no remedy but to accept the said letter. 
• Since there was full and final satisfaction of the claim, noting in the policy survived and therefore, there was no arbitrable dispute for the court to exercise its power under Section 11 of the 1996 Act.

Comment

General insurance companies such as the NIA generally follow the procedure of determining the claim and informing the insured following which they give a pre-determined format of a letter of subrogation which provides, among other things, that the claim paid was in full and final settlement of the claim under the policy. Only after the signed letter of subrogation is given does the insurer makes payment of the claim. If the insured who had suffered loss (at times enormous loss) protests with the Insurance Company of the claim, even that amount would be locked up for a long time in disputes. So, the question is, as a matter of policy, should the letter of subrogation providing for full and final settlement of the claim be taken seriously? The second question is whether in such cases the insured should be asked to prove undue influence / coercion when the industry practice is well-known? 

First, given that by the very nature of the position of the parties, the insurer is in a dominant position. Two, how is the acknowledgement of full and final settlement of the claim different from an agreement that the insured will not file any suit/ invoke arbitration if the amount determined by the insurer is paid? The latter is a void agreement as it restrains legal proceedings while the former does not restrain access to legal fora but makes such access meaningless. 

What should be material is whether the protest subsequent to the letter of subrogation is genuine or merely an afterthought. From this perspective, the date of receipt of the money by the insured could be a very relevant in deciding whether the protest was in time or not. 

In this case, the court was perhaps strict in stating that the protest was belated (three weeks after the letter of subrogation). In any case, the insured should, in future, immediately (within a day or two) make a protest (through email or registered post with acknowledgement due) of the amount of loss failing which the insured may lose the opportunity to question the correctness of the surveyor’s or the insurer’s determination of loss.

Indian Journal of Arbitration Law: Call for Papers

The Call for Papers of the Indian Journal of Arbitration Law is below:

Call for Papers

The Indian Journal of Arbitration Law is a biannual, student reviewed Journal by the Centre for Advanced Research and Training in Arbitration Law of National Law University, Jodhpur.

National Law University, Jodhpur, one of the premier law schools in India, is taking successful initiatives for the promotion of areas related to the specialized fields of law. To strengthen the promotion of knowledge, research and legal interaction in the subject of arbitration law, it has established the Centre for Advanced Research and Training in Arbitration Law. The Indian Journal of Arbitration Law is one such initiative of this centre towards the development of this expert legal arena.

The Journal strives to inculcate the prevalent theories in the field of arbitration with their practical relevance. The editorial board seeks to achieve this feat by including contributions from individuals with varied expertise of practicing arbitration and by focusing on developing trends. In this regard, the board would give due emphasis to the rich thought processes of students of law, who bring to the forefront the innovative academic research currently underway in most law schools all over the world. Inclusion of changing regional trends will play a vital part in understanding the scope and extant of this discipline and would therefore find due importance in the Journal.

The Indian Journal of Arbitration Law is pleased to announce its upcoming issue (Volume 4: Issue 1), which is to be published in April, next year.

Theme: UNCITRAL Model Law’s 30^th Anniversary. We also welcome notes on the 246^th Law Commission Report.

The Board of Editors cordially invites original, unpublished submissions for publication in the following categories:

- Articles

- Notes

- Comments

- Book Reviews

Manuscripts may be submitted via email to editor.cartal@gmail.com latest by 5^th February, 2015.

For further details regarding Editorial policy and submission guidelines please visit the website here.

Amendments to the Arbitration & Conciliation Act, 1996 Soon?

News reports (here and here) suggest that a Bill containing amendments to the Arbitration and Conciliation Act, 1996 would be introduced in the month-long Winter Session of the Parliament. Recently, the Law Commission of India suggested several amendments to the said enactment. It is expected that the Bill will be substantially in line with the Law Commission's proposal, which are not altogether free from defects.

Partial Setting Aside of Arbitral Awards & Compensation for Breach of Vishaka Guidelines

A recent decision of the Madras High Court is extremely interesting from two perspectives. The first issue is that the Single Judge, after an incisive analysis, rejected the prevailing view (especially in the Madras High Court-see this article titled "Anugraha Engineers & Contractors V. Union of India, 2014 (3) CTC 116: A Critique" noting and criticising the same) that awards could not be partially set aside or modified by a court hearing a petition for setting aside an award under S. 34 of the Arbitration and Conciliation Act, 1996 (1996 Act).

The second interesting point is that the judge held that where there was a complaint of sexual harassment, non-constitution by the employer of a committee as per the Vishaka Guidelines (at the time of the complaint, the Sexual Harassment of Women at Workplace Act 2013 was not enacted) was illegal and the employee who had complained against sexual harassment was entitled to compensation from the Employer. In the present case, the court awarded the complainant an ad hoc amount of Rs. 1.68 crores as damages for non-constitution of sexual harassment committee as per Vishaka Guidelines. The court held in this regard:

"137. Therefore, considering the status occupied and the position in which the petitioner was employed in the first respondent organisation and considering the opportunities that she lost on account of the non constitution of the committee, I am of the view that the grant of an amount equivalent the severance benefit of Rs.1,68,00,000/-, as compensation towards the 12th head of claim, would be appropriate."

The decision in Ms. G. v. ISG Novasoft Technologies Ltd. is accessible from this link (pdf).

Is the Arbitrator Obligated to Frame Issues?

Srinivasan, Badrinath, Is the Arbitrator Obligated to Frame Issues? (September 3, 2014). Current Tamil Nadu Cases, Volume 20, Issue 36, Journal Section, pp. 162-167. 

One of the frequent questions that a non-lawyer arbitrator faces is how to frame issues. Framing of issues involves comprehensive reading of the pleadings and coming up with the real and substantial points of difference between the parties. This is not easy even for lawyers. Therefore, the question arises whether the arbitral tribunal is obligated to frame issues.

The arbitrator’s power to determine the manner in which the arbitration is to be conducted is expansive [Section 19(3) of the Indian Arbitration and Conciliation Act, 1996 ("1996 Act")] and is circumscribed only by the agreement between the parties and the legislative fiat to treat the parties equally [Section 19(2)]. The arbitrator has the power to determine his own jurisdiction [Section 16]; he is empowered to pass interim orders [Section 17]; his award is enforceable in the same manner as that of a decree of a civil court [Section 36]. For most purposes, the arbitrator is a substitute to the civil court. Nevertheless, the arbitrator is not bound to strictly follow the Indian Evidence Act, 1872 or the Code of Civil Procedure, 1908 [Section 19(1)]. The 1996 Act is silent as regards whether the arbitrator is obligated to frame issues to determine the dispute, akin to a court of law.

This short paper, published in the Journal Section of the Current Tamil Nadu Cases addresses this topic of practical significance. Further, it also discusses the possibilities of alternatives to framing issues to enable the arbitrator resolve the disputes in an effective manner.

The paper can also be accessed from the below link:

http://ssrn.com/abstract=2503375

Blue skies of Hong Kong - less pollution and hope of freedom & democracy in the air

The boycott of students have turned into a spontaneous "occupy central" by the last weekend. Instead of heavy traffic, pollution and commercial activities, the busy roads of central district of Hong Kong and certain outlying areas are now venues of student protest. The first night of occupation deepened the mistrust of the youth towards the administration. The images of indiscriminate use of tear gas canisters and pepper sprays on a mass of visibly unarmed students who made all efforts to convey to the police force their intention of non-violence touched the raw nerve of the community at large. 

Many whom I met on the on the streets and could strike up a conversation, overcoming the language barrier, shared the same sentiments- they could not remain at home after watching the images of use of force, students need support, we wont let them face this alone.  Most carried with them bottles of water, wet towels and food for the youngsters. This reaction might explain the complete absence of the police from the streets from day two. There were many, who were either neutral or would not have joined the protest in the streets but for the images flashed in local channels. Having said that, one cannot compare the actions of the police with the brutal force we are familiar in a country like India. That very night of standoff between police and protesters, students could be seen resting popped up against parked police vans. The next day morning Mongkok woke up to a police van sporting a flower on its front windshield with an invite to join the struggle for democracy. 

The continued siege from the next day onward show less of tension but more of responsibilities. A few ten thousands are always there on the streets, led and provided for by themselves. There is no visible leader in command, but of course the new age media is of immense help to communicate and coordinate. The occupy central leadership accept that the protest is ahead of schedule that the logistics planned are not in place. Students have organised provision supply points, first aid posts, trash collection and clearing arrangements. They manage themselves in order, at ease and in true sense of democracy. 

The values of democracy, freedom and the images of students armed with umbrellas and the resolve that cover them against the force of gas, sprays and the power have shaken up many people in various walks of life. The union of teachers of public school have declared strike, so also many other labour unions. The script of resistance so far is familiar and predictable, even the response of the administration. Chief Executive of Hong Kong have dug in heals and seems to have taken a position, let the occupation continue as long as it can last. The strategy as of now seems to be waiting for the steam to ebb out and the community to turn against the youth for disrupting daily life and livelihood.

Administration seems to sense that they were caught in the wrong foot in the use of force against the students that it brought the hitherto neutral bunch of people out into the street to rally up with the students.  Not all those who support the students stand for the cause but is touched by the media images. The wait is for the images to fade. Once media attention and interest is reduced for lack of action, sympathizers might turn around and begin to see the students as meddlers.

After the occupation, today is the first day the Chief Executive addressed the Territory. In his 15 minutes speech, he appealed the demonstrators to withdraw the illegal assembly that is causing disruption and inconvenience to the city, citizens and business. Stressed upon how this movement is affecting essential services like health, transport and ambulance. The leaders of Students Federation and Occupy Central have duly responded that they are ready to create humanitarian corridors for facilitating emergency vehicles to pass through. 

It is a stalemate. Even the Chief Executive have limited area to negotiate as strings are pulled by the Big Brother. The picture in South China Morning Post today is quiet ominous, a lone person viewing the streets of Hong Kong where protests are happening through a binocular from the People's Liberation Army Head Quarters and a series of tripods. 

   

Yellow is the Colour of Democracy in Hong Kong and Youth the Image

Joshua Wong was 15 in 2011 when he started a sit-in with few of his friends in the Legislative House premises of Hong Kong to protest against pro-China nationalist education in Hong Kong. This humble beginning magnified into a movement, of a scale, never before seen by Hong Kong in recent past. It was the moment of self-realization of power within by the Hong Kong youth. The government cowed down eventually. Wong, now 17 can’t be expected to be quiet when Hong Kong is at another historical juncture. He and the group Scholarism is in the forefront of the ‘Occupy Central with Love and Peace Movement’ demanding democracy in Hong Kong.

Today is the fourth day of the boycott of classes by the university students. A group of concerned staff and members of faculty are supporting the protest. Professors are recording and uploading their lectures to make good the missing classes. Students are gathered in Tamar Park, where the central Government offices are located. Speeches, discussions, protest banners, processions- the place is buzzing with activity. Thousands of students move in and out wearing black t-shirts with slogans printed in Cantonese, sporting yellow ribbon. Yellow is the colour; of democracy, liberty, freedom, happiness and the responsibility they have shouldered.

The spark youth carries is the defining factor of society’s political health. Hong Kong youth like their counterparts in other regions have been at the receiving end of criticisms for being apathetic to social and political causes, strictly rule bound, looking west forgetting home. The 2011 incident shook up Hong Kongers to the potential of the Hong Kong youth and now it is felt that if someone can make change it is they.

Chambers of Commerce of different countries including India have issued statements against the pro-democracy protests. The billionaires of Hong Kong have lot to loose. It is anybody’s guess that status quo is the best for them that they shuttle to China to broker peace. They have business interests both in the mainland and Hong Kong. The Hong Kong government is openly pro- China and the students can't expect to have a repeat of 2011 that easily as stakes are much too high this time.

The hope but is only with the students of Hong Kong and the support that has to flow from the community. After all, it is the students of Hong Kong who reminded the administration of Chinese University of Hong Kong that universities should be places of neutrality and should demonstrate the courage to face historical facts, in their struggle to place the statue of ‘Goddess of Democracy’ commemorating the pro-democracy movement of Tiananmen Square, in the University grounds.

"Vote for the candidate who love the country and love Hong Kong". We give you the list who love both: University students of Hong Kong boycott classes for a week demanding right to choose

Today is the second day of boycott by the university students of Hong Kong demanding the most fundamental democratic rights, the right to choose. It is a prelude to the impending 'occupy central with peace and love' movement.  The basic law of Hong Kong holds out a promise to strive for universal suffrage. The package offered by Beijing is to freely elect from the practically vetted nominations by the Central Government. 

Three Judge Bench of SCI Decides Comprehensively on "Court" under the Arbitration & Conciliation Act 1996

A Three Judge Bench of the Supreme Court has comprehensively decided on "court" in the Arbitration and Conciliation Act, 1996 in the case of State of West Bengal v. Associated Contractors (10.09.2014). Previously, a two judge Bench of the Supreme Court of India was to consider the question as to which court will be a Court for the purposes of deciding an application under Section 34 of the Act for setting aside arbitral awards. The same was referred to the Chief Justice of India for constituting a larger bench in view of the conflicting views of judgements.

After hearing the matter, the three judge Bench, through Rohington Nariman, J. laid down the following as regards the issues pertaining to the appropriate Court for filing application in view of Section 2(1)(e)(which defines "Court"), Section 42 and other provisions of the 1996 Act:

" (a) Section 2(1)(e) contains an exhaustive definition marking out only the Principal Civil Court of original jurisdiction in a district or a High Court having original civil jurisdiction in the State, and no other court as "court" for the purpose of Part-I of the Arbitration Act, 1996.

(b) The expression "with respect to an arbitration agreement" makes it clear that Section 42 will apply to all applications made whether before or during arbitral proceedings or after an Award is pronounced under Part-I of the 1996 Act.

(c) However, Section 42 only applies to applications made under Part-I if they are made to a court as defined. Since applications made Under Section 8 are made to judicial authorities and since applications Under Section 11 are made to the Chief Justice or his designate, the judicial authority and the Chief Justice or his designate not being court as defined, such applications would be outside Section 42.

(d) Section 9 applications being applications made to a court and Section 34 applications to set aside arbitral awards are applications which are within Section 42.

(e) In no circumstances can the Supreme Court be "court" for the purposes of Section 2(1)(e), and whether the Supreme Court does or does not retain seisin after appointing an Arbitrator, applications will follow the first application made before either a High Court having original jurisdiction in the State or a Principal Civil court having original jurisdiction in the district as the case may be.

(f) Section 42 will apply to applications made after the arbitral proceedings have come to an end provided they are made under Part-I.

(g) If a first application is made to a court which is neither a Principal Court of original jurisdiction in a district or a High Court exercising original jurisdiction in a State, such application not being to a court as defined would be outside Section 42. Also, an application made to a court without subject matter jurisdiction would be outside Section 42."

The decision can be downloaded from this link (pdf)

Criminals have a better chance to be a Minister in India! - Reveries

The Indian PM got his math correct; people returned 34% of the representatives with criminal records and he gave back 27% of them as their ministers. The ADR and NEW analysis shows that candidates charged with crime actually fare better at elections than ‘clean’ candidate. It is also noted that candidate with criminal cases tend to be given ticket repeatedly. (See, here, page 16) When the political and criminal graphs are intricately connected, it is better to be a criminal if not already. It was Thomas Jefferson, who said; 'The Government you elect is the Government you deserve.”

Even with NOTA, if one third of our representatives at center are with criminal records, something is seriously ailing our democracy.  The lofty eloquence of the SC in its August 27^th, 2014 judgment in Narula is of little consequence. Narula poses a vital issue; does democracy means freedom to choose without restrictions. Constitution of India and Representation of People Laws places skeletal regulation on qualification to contest elections. Legislation is slightly more expressive with regard to disqualification to represent.  For being a minister, much lesser are the requirements. One need not even be a representative for the first six month of ministerial berth. Non-prescription of qualification is both liberating and a slippery slope. Perhaps the ominous disquiet expressed by Dr. Rajendra Prasad, the President of the Constituent Assembly, in the context of laying down qualification for representatives that it is impossible to articulate yardsticks for measuring moral virtues of human beings, that it will remain the short coming of our constitution remain true as ever.

The fundamental question to ask is, where in democracy shall the screening be placed? Or is it a case that we should question the basic assumptions taken. Should there be a screening of persons who shall contest election at all. Is there anything inherently evil in criminals/ people with criminal background being elected, if people prefer them to be their representatives? After all, Robin Hood was of the mass. Good and evil are always constructed on the scales we use. I leave this discussion for later.

In the circle of democracy that we practice, we have already 'democratically formed' certain rules and regulations regarding representation. These rules presently hold that person convicted of an offence of specified categories are not qualified to be representing others in legislative bodies and therefore occupy ministerial position as well (see, B.R Kapur). There is no rule prohibiting any person charged with an offense from neither contesting nor holding ministerial position.

Now the game changes into the realm of constitutional convention, implied limitation, political proprietary, trust, morality, legitimate expectation to prevent tainted from becoming a minister.  Most of these terms in party politics scenario is oxymoronic and call for a hearty laugh.

The central issue remains, why do people elect tainted persons? The right to information wave was a relief that it brought a hope that the flow of sunlight will be the best disinfectant. Despite that MPs with crime records increased by 4% from last House in Center. Efforts to check criminalization of politics have been perpetual. The pages written by official commissions are enough to bury the all the criminals. Law Commission in its 244^th report, of which ink is yet to dry, has spent its time and energy to collate required legislative changes on disqualification of elected representatives.  In reality, Nitin Gadkari and Uma Bharati rules, so also 10 others in central government, some even with charges of murder and rioting.

It is natural then to raise questions about democracy itself. Or as frequently hear, India’s maturity to handle democracy. Often failures are blamed on democracy as a choice of governance but it is overlooked that success of democracy needs existence of collateral liberal institutions, public spaces and deliberations. Public memory is known to be short. In a nation like India where survival is the primary issue which is further complicated with boundaries set by cast, religion and region, conscious efforts need to be taken to make public memory alive.  Development of a collective consciousness is the backbone of any social co-existence and is primal for democracy.   

The deluge of “breaking news” and unreal melodramatic soap operas, which gives voyeuristic pleasure, is degenerating this public space. Social media is gradually reduced into narcissist selfies, shaping a community inept for democratic living.

True,

“Democracy is a poor system of government at best; the only thing that can honestly be said in its favor is that it is about eight times as good as any other method the human race has ever tried. Democracy's worst fault is that its leaders are likely to reflect the faults and virtues of their constituents — a depressingly low level, but what else can you expect?” (Robert A. Heinlein, in Stranger in a Strange Land ).”

Democracy is all what we have. Let us work with it. The significance of media, universities and civil society organizations are here.

Bombay High Court Follows Swiss Timing Instead of Maestro Engineers

We had noted in a previous post (Is this the End of N. Radhakrishnan v. Maestro Engineers? Swiss Timing v Organising Committee) the decision of the Supreme Court in Swiss Timing v Organising Committee, Commonwealth Games (May 2014: SC) where a Single Judge of the Supreme Court refused to follow a decision of a Two Judge Bench of the Supreme Court in N. Radhakrishnan v. Maestro Engineers (2009: SC) on the ground that it was rendered per incuriam. 

Image link

Maestro Engineers was a decision by two judges of the Supreme Court while Swiss Timing was by a Single Judge. Therefore, the issue as to whether a Single Judge could effectively end the reign of a two judge precedent was expected to be canvassed while citing Swiss Timing. In Avitel Post Studioz Ltd v. HSBC PI Holdings (Mauritius) Ltd., a Division Bench of the Bombay High Court had the occasion to consider the binding force of Maestro Engineers. Therefore, the Court followed Swiss Timing and followed the ruling in Swiss Timing that Maestro Engineers was indeed rendered per incuriam despite the fact that one of the contentions was that Maestro Engineers prevailed over Swiss Timing due to the larger bench strength in Mestro Engineers. . 

It may however be noted that a Single Judge of the Calcutta High Court in Guiness Securities Limited vs Geeta Dilip Vyas has taken note of Swiss Timing but has leaned in favour of Maestro Engineers although he has not conclusively ruled on the issue. According to the Judge:

"In the instant case, there is no challenge to the existence of the arbitration agreement, or the agreement containing the arbitration clause. The arbitration is a mode of resolution of a dispute agreed by the parties. If the agreement is vitiated by fraud or by misrepresentation then it goes to the very root of the matter. Arbitration is consensual. A claim founded on the agreement containing an arbitration clause if is a product of fraud, the ratio of India House Hold and N. Radha Krishnan could apply." (emphasis supplied)

It is going to be interesting as to how the courts would deal with Swiss Timing. Going by the Supreme Court's pro-arbitration record in the past since 2012 (BALCO), Swiss Timing would probably be the end of Maestro Engineers. 

Part V of the Comments on the Law Commission's 246th Report: Amendment to Arbitration and Conciliation Act, 1996

We continue with our endeavour of commenting bit by bit on the Law Commission's 246th Report proposing amendments to the Arbitration and Conciliation Act 1996.

Form and Content of Arbitration Agreement:

The amendments as regards Section 7 of the 1996 Act concerning arbitration agreement can be grouped into two aspects:

(1) Amendment to S 7(1) recommending addition of "concerning a subject matter capable of settlement by arbitration" clarifies that the arbitration agreement should be in respect of a dispute that is arbitrable.

(2) Section 7 has been amended to include the amendments introduced into the UNCITRAL Model Law in 2006 regarding form and content of the arbitration agreement. Clauses 3A, 3B and its Explanation are imports from the Model Law. 

These amendments further dilute the form requirement of arbitration agreement by bringing it in line with international practice. These amendments to form requirements have also been recommended to be added in several jurisdictions. See, for instance, What Constitutes an "Agreement in Writing" in International Commercial Arbitration? Conflicts Between the New York Convention and the Federal Arbitration Act, 48 Stanford Journal of International Law 47, 89-90 (2012). Further it is only logical that the amendments introduced to the Model Law are incorporated in the 1996 Act considering that the latter was adopted from the former. 

While  the idea of incorporation of the 2006 amendments is good, it is to be noted that the proposed amendments to S. 7 are in a haphazard manner. For instance, Cl. 3A states what constitutes a written arbitration agreement but Cl. 4 also states what constitutes a written arbitration agreement although both cover different aspects. Hence, it would do good to merge Clauses 3A and 4.

Amendments on Reference by Court of a Dispute to Arbitration:

The amendments to Section 8 are important primarily because they would go a long way in reforming the existing law and eliminating confusions. These amendments deal with four different aspects:

(1) Amendments to S 8(2) address a practical problem. Often, only one of the contracting parties retain the original contract/ arbitration agreement while the other(s) retain a copy of the same. Hence, the the amendment empowers the applicant to submit a copy of the arbitration agreement accompanied by an affidavit calling upon the other party to produce the original/ duly certified copy in possession of the other party.

(2) What amounted to "first statement on the substance of the dispute" was confusing. The proposed amendment provides in an Explanation that a pleading filed in relation to an interim application shall not be a first statement on the substance of the dispute. Thus, this would mean that even if such a pleading does not even refer to the existence of an arbitration agreement, nevertheless court would refer a matter to arbitration if the first pleading on the substance of the dispute mentions its existence.

(3) Section 8 has been amended to refer to arbitration only those parties who were parties (or those claiming under them) to the arbitration agreement. Further, the proviso states that no reference can be made where necessary parties to the action are not parties to the arbitration agreement. This clarifies the Sukanya Holdings decision of the Supreme Court and at the same time eliminates misuse of the holding by impleading a party in the action when it is not "necessary" to do so. The determination as to whether a party is a necessary party would be as per the provisions contained in Order 1 Rule 10(2) of the Code of Civil Procedure, 1908.

(4) The second proviso to Section 8 would state that the judicial authority will not refer the matter to arbitration if it finds that the arbitration agreement does not exist or is null and void. Unlike Section 45, the amendment restricts refusal to refer only on the grounds that the arbitration agreement does not exist of that the arbitration agreement is null and void but not on the grounds that the same became inoperable or incapable of being performed. Thus, in the latter two cases, the court need not finally determine the question. Further, it states that the scope of the decision making is only "prima facie". Thus, if the authority is prima facie satisfied that the arbitration agreement exists or is not null and void,  the same is sufficient to refer the matter to arbitration which shall determine the question de novo and in full. If the authority finds that the arbitration agreement does not exists or that it is null and void, the determination of the judicial authority is final. However, the amendment also proposes to make an order refusing reference to arbitration as an appealable order under S. 37(1)(a).

This amendment has the potential to cause confusion on when a judicial authority would be prima facie satisfied and might require judicial exposition akin to Boghara Polyfab.

Previous Parts of the topic under discussion can be read from the following links: Part I, Part II, Part III, Part IV.

More on the Report in the next few posts.

Call for Papers: NLS Business Law Review

Call for papers request has been received from NLS Business Law Review:

 

"Hello,

It gives me great pleasure to announce the NLS Business Law Review, an initiative by the National Law School of India University to recognise and foster academic research and scholarship in corporate and commercial law. The law review intends to examine the interface between the myriad regulatory frameworks that impact doing business in India, particularly in light of comparative international perspectives. Since its formation in late 2013, the mandate of the law review has evolved to encompass company law, securities and capital markets regulation, banking and finance, taxation, foreign investment, competition law, commercial dispute resolution, contract and commercial law, and employment lawinter alia.

We are now accepting submissions to the inaugural issue (Volume 1) of the NLS Business Law Review and would be immensely grateful if you would help us circulate this call to the legal and business fraternity by publishing the following information on your website:

NLS Business Law Review (Volume 1): Call for Submissions

The NLS Business Law Review, an initiative by the National Law School of India University to recognise and foster academic research and scholarship in corporate and commercial law. The law review intends to examine the interface between the myriad regulatory frameworks that impact doing business in India, particularly in light of comparative international perspectives. The mandate of the NLS Business Law Review thus includes company law, securities and capital markets regulation, banking and finance, taxation, foreign investment, competition law, commercial dispute resolution, contract and commercial law, and employment law inter alia.

The NLS Business Law Review (NLSBLR) is now accepting submissions to its inaugural issue (Volume 1) under the following categories:

• Articles (6,000 - 10,000 words) are comprehensive publications that analyse important themes, and may adopt comparative perspectives.
• Essays (4,000 - 6,000 words) typically identify a specific issue, which may be of contemporary relevance, and present a central argument.
• Case Notes, Legislative Comments, Book/Article Reviews (1,500 - 3,000 words)

The call for submissions to Volume 1, which details the submission guidelines and policy of the journal, is available on our website www.nlsblr.in (download available at http://bit.ly/1wkGOj3). The last date for submissions to Volume 1 is December 10, 2014. Submissions and clarifications may be emailed to nlsblr@nls.ac.in.

For more information and updates, please visit our website www.nlsblr.in, and follow us on Facebook (https://www.facebook.com/nlsblr) and Twitter (@NLSBLR).

Thanking you and looking forward to your favourable response at the earliest,

Warm regards,

Sahaj Badaya

On behalf of NLS Business Law Review

National Law School of India University
Bangalore - 560072"

National Judicial Appointments Commission: will it be sweet or sour?

The 121^st amendment to the constitution, shunting out the collegium system of judicial appointment and replacing it with National Judicial Appointments Commission (NJAC), has seen the light of the day  (pending Presidential Assent) and brought with it a volley of discussions. The life of the Amendment Act is to kick-start with an impending challenge on its constitutionality.  Four petitions doubting the constitutional worthiness of the Amendment Act is due to be heard in the Supreme Court today. The Act has to meet the behemoth – basic structure.

A major drawbacks of the collegium system, besides it being extra constitutional, was the shroud of secrecy in which it functioned. Also the fact that judges appointing their brethren were unheard of in a system that runs on the basic principles of separation of powers.

The establishment of NJAC is justified due to the failed collegium system and legitimated through the constitutional amendment. The patent difference between the collegium and NJAC is the composition of the selection body, which has non-judicial representation.  Involvement of the Executive is through the presence of the Law Minister and the committee to appoint the two eminent persons.    The committee to nominate eminent persons consists of the Prime Minister, the Chief Justice of India and the Leader of Opposition in the House of the People/the Leader of single largest opposition party in the House of the People. Law Minister and the appointed eminent persons bring in the non-judicial component.

Even this structure if work beyond public gaze can be plagued by the same problems that collegium system had, secrecy. The collegium system comprising of presumably superior legal minds had no reason to fail but on the principle of separation of powers. Whereas it was failed for the choices it made. The appointments made and the method of choosing has been in the line of fire for long and were condemned as arbitrary.  To analyse whether the procedure adopted by the collegium were faulty that it attracted criticism is far from possible as we are blind about how its business were conducted.

It could be assumed that transparency is the major factor that can save an institution from the critique that it acts arbitrarily. Laying out clear and unambiguous procedure is one way of tackling arbitrariness. So also, making the proceedings transparent. This transparency if infused into the procedure will be a perfect mixture. The discussions in the Commission and the Committee to nominate eminent persons shall be recorded. The statements a member makes when recorded and made public will add accountability factor, which is an offshoot of transparency.

It could be argued that members may be reluctant to speak freely if the discussions are made public. It is a ridicule even to suggest that the persons of the stature who shall be the members of the Commission will be afraid to speak out and be accountable for their statements. Also, the matter in discussion is not whether a prospective groom or bride is eligible that open statements may hurt the sentiments, but vital judicial positions with enormous implication for the nation and its future. 

Proof of the pudding is in the eating and the taste depends upon the ingredients and the cooking method. Let us hope, surviving the constitutional challenge, the procedure laid out for the functioning of NJAC will lift the cloud of secrecy from the process of selection of the higher judiciary.