"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.

Sunday, August 22, 2010

The Clarion Call for Reforms in Legal Education

Part I

It was heartening to read Mr. Veerappa Moily, Union Minister for Law and Justice, some days back in Indian Express on yesterday’s need for reforms in legal education. He, in this piece, place the issue in perspective and underscore that gone are the days where legal education was catering to the single segment, bar and marginally to academia. The institutional and curricular designs of legal education remain majorly of those bygone days that he thinks to save any institution from obsoleteness, timely and regular reforms are integral.

The conceptualisation about the function of legal education, per him, should be akin to the contribution science has made to the advancement of the society. He visualizes development of ‘global lawyers’ to cater to the needs of trade, commerce, industry as well as bench and the bar. He also sees the relevance of legal education as the axis of governance, rule of law and democracy. This is an echo of the outlook of the National Knowledge Commission (NKC) (Page, 79).

NKC’s roadmap for reforms ranges from regulatory environment to curriculum development. To be more specific they are;

1. New Regulatory Mechanism: Handing over the regulatory baton from the Bar Council of India (BCI) to a new regulatory mechanism is the primary need. A twenty five member Standing Committee for legal education comprising of representatives of BCI, judges, academics, trade, commerce and industry, economists, social workers and students is to deal with the entire gamut of legal education.

2. Independent Rating System: Rating could be used to benchmark quality and as an indicator for awarding and continuing of accreditation

3. Curriculum Development: Autonomy to develop curriculum is the way forward. Multidisciplinary approach interwoven with contemporary and cutting edge issues is expected to be the highlight of the curriculum

4. Examination System: A continuing system of examination with project and viva and reorienting the approach of evaluation which will test the analytical, writing and communicative skills.

5. Attracting and Retaining Talented Faculty: Incentivisation and imaginative career development schemes to attract and retain talented minds. Removing fetters for practice of law for teachers is a recommendation so that the perceived divide between classroom teaching and practice of law is mended.

6. Development of Research Tradition: Serious efforts to be undertaken to develop a culture of research. Methodologies such as having an academic component on research skills, rationalising teaching load of teachers to free their time for research, enhancing library facilities, and incentivising research are suggested.

7. Centre for Advanced Legal Studies and Research (CALSAR): Four regional institutions with a network between to carry out research on contemporary issues and to provide advise for the Government. To be established.

8. Financing Legal Education: Fees is considered as the major source of revenue. Autonomy in fixing of fees with certain guidelines is the prescription. Public private partnership, the way forward.

9. Dimensions of Internationalisation: Imbibing the spirit of developments in international arena of legal education and legal profession and understanding the domestic law in a comparative perspective. This is to be achieved through partnership and collaborative ventures.

10. Technological Assistance in Legal Education: Use of technological advancement in the development of legal education. Digitalisation and networking to share the resources is the suggested mode.

The Minister has not made any particular suggestions of his own but is seemingly endorsing the reports submitted by the agencies appointed by the Government to look into the higher education sector, namely the Yashpal Committee and National Knowledge Commission. It also needs to be borne in mind that change in the legal education primarily is in the court of Ministry of Human Resources. Mr. Kapil Sibal has already started acting on these reports and have a catena of legislation on table, in the pipeline, and in the closet.

What intrigued me as a part of the legal education fraternity is the identification of law schools as the islands of excellence, which is far from reality. True, it started as a refreshing change in the deteriorating environment of legal education and carried an aura of distinction and superiority but this claim today is far from reality. The law schools are ailing from similar maladies of the rest. The law schools maintain the rank mostly on the past glory and recruitments. For recruiters it is nothing but relative best available in the market. I am not oblivious of the individual merit of the students and certain teachers in the law schools but they are “the islands” in law schools today. The same is true with any traditional institutions imparting legal education, sparks are there as well. The differentiating factor then is the exposure a student of law school gets in terms of infrastructure, resources and opportunities. These opportunities are in the form of moot invitations, internships, exchange deals, visiting faculties from foreign universities, library resources, relatively more regular classes, courses catered to the needs of the market and continuing examination system. Ostensibly this is a picture perfect system. The ensuing question is how come law schools do all these whereas other institutions of legal education cannot. Autonomy is the answer in the forefront.

To be continued...

Thursday, August 19, 2010

Call for Papers: Journal of Indian Law and Society

The Journal of Indian Law and Society has asked us to publish this call for papers for their journal. Their call is reproduced below:



Journal of Indian Law & Society is currently soliciting submissions for its second issue due in December, 2010. The deadline for submissions is October 5, 2010. Please send in your submissions under the categories mentioned below. All submissions to the Journal are double blind refereed and edited by the student editorial board. For general queries relating to your submissions, kindly write to us at jils@nujs.edu


Journal of Indian Law & Society is a peer-reviewed and student-edited Journal of interdisciplinary studies on law and society. It is based at and published from The National University of Juridical Sciences, Kolkata. The Journal seeks to present a dedicated forum of debate for work bearing upon the cultural, economic, political and social lives of law in India.

Published bi-annually in June and December, the Journal solicits articles, notes and comments covering judicial decisions, legislative developments, and empirical research on Indian legal system, public policy studies and theoretical analysis from related fields of inquiry. We welcome submissions from academics, practitioners, policymakers and students from within the legal community and have a strong preference for articles that are not descriptive but prescriptive and argumentatively focused.


The Journal subscribes to the view that law is a reflection of a society’s fears, inhibitions, values and aspirations. The body of law therefore must continually evolve to suit the needs of a dynamic world. However, seldom does either perfectly mirror the other. These inaccuracies need to be minimized.

Academic debates, deliberations and discussions are the first step towards conceptualizing an ideal inter-play between law and society. There is a need today to explore and continually question this relationship and the values our society embodies to catalyze the process of evolution. In a globalised world, it is even more imperative to carve out a niche for Indian thought and understanding. This would be best served through a socio-legal understanding of our concerns, based in and influenced by our historical, cultural and economic context. Through the medium of our Journal we seek to influence the body of law to make it more responsive to and compatible with the desired societal goals.

We, therefore invite you to help us in our endeavor to highlight the change that is required and the direction we must take to better serve the common objectives of law and society.



A. Articles (8000-10000 words, inclusive of footnotes)

Submissions in this category should provide a comprehensive analysis of a particular issue in the law and society domain, with a specific discussion of the legal nuances. It should review the existing literature extensively and also highlight the specific contemporary developments in the issue being discussed. The authors are encouraged to discuss the challenges surrounding the issue and to suggest changes to overcome the same.

B. Notes (5000-8000 words, inclusive of footnotes)

This category is more suited for writings on specific themes. Hence possibly more appropriate for our student contributors. The nature of the note should be analytical apart from being descriptive and they should mainly deal with recent developments. 

C. Book Reviews (2000-2500 words, inclusive of footnotes)

In choosing a book for reviewing, authors are encouraged to review a book that offers a unique perspective on any issue affecting Indian society and the legal implications it has. It is recommended that the book chosen is a recent publication (within the last 2 years) in keeping with the contemporary focus of the Journal.

D. Essays (3000-5000 words, inclusive of footnotes)

Submissions in this category should provide a concise overview of a specific issue. New ideas and perspectives are encouraged under this category. The idea is to promote a new understanding of an existing or contemporary problem through a central argument. For the purpose of writing an essay, the author can dispense with an extensive review of the existing literature.

E. Case Comments (2000-3000 words, inclusive of footnotes)

Submissions in this category would include a comprehensive analysis of a recent judicial pronouncement, engaging with the underlying theme of law and society. It should provide an analysis of the law prior to the ruling as well as the subsequent implications of the ruling. The comment could also highlight the inconsistencies associated with the judgment, if any. 

F. Legislative Briefs (2000 – 3000 words, inclusive of footnotes)

Legislative briefs are policy tools to generate information and propel debate on legislations. Legislative briefs should be extensively analysed, helping readers grasp the background, objectives and main provisions of a particular legislation. Preparing a brief requires synthesizing complex data, fact and statistics and they should be readily understandable, clear and concise. Use of graphs and tables, along with a one-page summary, is encouraged. Briefs must be objective in reporting facts and provisions, but a short section at the end should list down possible problems or inconsistencies to propel further debate. Facts and figures in briefs should be credibly sourced, mostly from the government surveys, commission reports, international organisations and civil society. For any further guidance, feel free to write to us.


1.        Contact Address: The Journal accepts only electronic form of submissions and they should be mailed to jils@nujs.edu 

2.       Deadline: The Journal accepts submissions on a rolling basis. The deadline for submissions for this issue is October 5, 2010. Submissions received thereafter shall be considered for publication in the next issue.

3.       Covering Letter: All submissions must be accompanied with a covering letter, containing the name of the author, institutional affiliation, title and category of the submission and a contact address of the author, including the e-mail address. Submissions should be sent as MS word (.doc format) attachments with the title  of the article as the file name.

4.       Identification Details: The body of the submission must contain no identification of any kind, including the name and institutional affiliation of the author, which must be provided in the covering letter. This is to ensure an impartial review and a fair assessment of your submission.

5.       Theme: The Editorial Board has refrained from imposing a theme. A submission is welcome as long as it is in tune with the Objectives of the Journal as outlined above.

6.       Decision on Publication: The Journal promptly acknowledges the receipt of submissions and a decision on publication takes around 8 weeks. All submissions made to the Journal are double blind refereed. The issue is out in print within 4 weeks of a decision to publish.  Requests for expedited reviews can be forwarded to the Editorial Board when the submission is being considered for publication by other Journals. Please mention the name of the Journal for which the submission is in consideration, one contact person in the Editorial Board of that Journal and a date by which you expect our response. Relaxation of any rules regarding submissions is subject to the discretion of the Board of Editors.


1.    Form of Submission: Submissions must be in electronic form. All submissions must be word-processed, double-spaced in Times New Roman. Main text should be in font size 12 and footnotes in font size 10. The prescribed word limits are inclusive of footnotes and contributors are expected to strictly conform to length policy and the Submission and Style Guidelines. Kindly go through them carefully before mailing your submissions.

2.  Abstract: All submissions must contain an abstract of not more than 250 words describing the relevant conclusions drawn in the paper. There is no requirement of prior submission of the abstract.

3.   Title: The Journal does not recommend any specific guidelines regarding the titles and sub- titles. However, the main titles must be centered, typed in small capitals and emphasized in bold. The titles must be uniform, concise and descriptive.

4.  Quotations: Quotations should be clearly indicated and it is vital that they are accurate. Double quotation marks should be inserted at the beginning and end of every quotation and where the quotation will run to more than forty words it should be typed as a separate paragraph and left-indented.

5.   Foreign words: Foreign words not currently absorbed into the English language should be italicized, e.g., “inter alia”, “bona fide” etc.

6.   References and Citations: The Rules of Citation are generally derived from The Bluebook, A Uniform System of Citation (18th Ed.)"

Tuesday, August 17, 2010

News, Links and Comments

Kumkum Sen has written this article in Business Standard on the Sumitomo v. ONGC case we had discussed previously in this blog. Do check it out.

State of Himachal Pradesh v. Himachal Techno Engineers & Anr. (MANU/SC/0524/2010) is about how limitation period for challenge of arbitral award under S 34 ought to be calculated. Two conclusions from the decision are stated below:

  • The date of receipt by a government entity on a holiday cannot be taken as the date of receipt of the award. The date of receipt is the working day immediately after the said holiday. So, the date of receipt in S 34 is the date of effective receipt.
  • A month is not equivalent to thirty days. It refers to the actual days in a calendar month. Thus, for example, February would consist of 28 or 29 days. Similarly January would consist of 31 days. Thus, "within three months from 1st January" would mean "prior to or on 1st April".
Added after posting: Also do check out this article in the Arizona Journal of International and Comparative Law  [27 Ariz. J. Int'l & Comp. L. 1(2010)] criticising the law as it stands on S 56 of the Indian Contract Act, 1872.

    Monday, August 16, 2010

    Fortnightly Roundup of SSRN Articles on Arbitration (August 1-15)


    In many ways, United States courts are still searching for a coherent theory to guide their treatment of arbitral tribunals and their relationship to the country where they are located. In reference to the application of 28 USC 1782, recent cases have shown divergences in the approach. This article analyzes the text of the statute and how it relates to discovery in the United States and the courts treatment of arbitration.

    Rodney Quinn Smith II and Mauricio Gomm Santos Sr., The Changing Landscape of Arbitration in the United States and its Effects on International Arbitration


    The contemplated Arbitration Fairness Act would reshape significant parts of arbitration jurisprudence, but with the amendments offered in 2009, it appears the drafters have exempted international arbitration. This article analyzes the effects of the Arbitration Fairness Act on international arbitration in the context of the State's attempts to control arbitration through statute.

    Rodney Quinn Smith II and Omar Ibrahem, Arbitrating at the Crossroads of East and West: An Overview of Prominent Arab National Arbitration Laws


    International companies and law firms increasingly look to the Middle East to invest and conduct business. Arbitration is often an excellent way to resolve disputes for these types of investments, but many investors feel anxious about the legal structure and application of local arbitration laws. This article addresses some of the most prominent national laws, demonstrating their differences and roots in Arab and Islamic history.

    Rodney Quinn Smith II, Sotomayor's Position on Arbitration: A Survey of Past Cases and a View to the Future


    With the appointment of Justice Sonia Sotomayor to the Supreme Court, the majority of criticism has focused on the typical, hot button issues, but little comment has addressed her stance on arbitration. This article reviews the cases where she participated in the drafting of the opinion as either an author or panelist. It shows a careful style by Justice Sotomayor and familiarity with the subject matter. Her opinions appear well-researched, studious, and adhering to the tenets familiar to students of international arbitration.

    Prof Loukas Mistelis and Crina Baltag, Trends and Challenges in International Arbitration: Two Surveys of In-House Counsel of Major Corporations


    International commercial disputes are often resolved effectively by arbitration. While many publications and other print and electronic resources address the law and practice of international arbitration, many questions remain unanswered: How much do we know about arbitration practice and, more importantly, what do users of arbitration think about the process? Why do users select it, and what expectations do they have?

    The School of International Arbitration at Queen Mary, University of London, with funding from PricewaterhouseCoopers, has conducted two empirical surveys on the attitudes of corporations towards international arbitration, in 2006 and 2008. The motivation for these SIA/PwC Surveys lies first in the fact that still little empirical data is available in international arbitration. Second, the Surveys focus on corporations rather than their outside lawyers, since corporations are the ultimate users of this process. Third, the Surveys were designed for revealing not only the advantages of international arbitration, but also what fails to work and what can be improved.

    This paper briefly present the findings of the two SIA/PwC Surveys, which generally confirm international arbitration’s status as an effective (but imperfect) dispute resolution process; even though the process largely works well, it can be improved. This will be dealt with in the second and third parts of the article, with focus on the significance and impact of the Surveys on the arbitration community and the arbitration proceedings, laws and regulations.

    Mauricio Gomm Santos Sr. and Rodney Quinn Smith II, The Extent of the Arbitral Tribunal's Power to Manage Discovery in the United States of America


    Parties to an arbitration increasingly need the tribunal's help to obtain documents and testimony for use in the proceedings. Many authors have discussed 28 USC 1782, but a key provision of the Federal Arbitration Act often gets lost in the shuffle. In this article, the authors analyze recent case law interpreting 9 USC 7, which gives the tribunal the authority to subpoena documents for use at a hearing. Recent case law has revealed differences in the circuits and merits consideration when plotting the strategy of handling an arbitration.

    Luke R. Nottage, New Legislative Agendas, Legal Professionals and Dispute Resolution in Australia and Japan: 2009-2010


    This paper is the third in a series of edited and updated selections of my postings to the ‘East Asia Forum’ blog (indicated with a double asterisk in the Table of Contents below) and my partly-overlapping ‘Japanese Law and the Asia-Pacific’ blog. They mainly cover developments from mid-2009 through to mid-2010, with a focus on law and policy in Australia and Japan in a wider regional and sometimes global context.

    Half of the postings introduce some new policy and legislative agendas proclaimed by the then Prime Ministers of Australia (Kevin Rudd, in late July 2009) and Japan (Yukio Hatoyama, through the Democratic Party of Japan [DPJ] which he led to a remarkable general election victory in late August 2009). Both had resigned by mid-2010, indicating some of the difficulties involved in implementing ambitious reforms in both countries. All the more so, perhaps, if innovative measures are to be added to both countries’ Free Trade Agreements (FTAs) in order to foster more sustainable socio-economic development in the aftermath of the Global Financial Crisis (GFC).

    The remaining postings end by introducing Australia’s regime for international (and domestic) commercial arbitration enacted in mid-2010, centred on a United Nations Model Law – like Japan’s Arbitration Act of 2003. However it sets these enactments in broader context by focusing on legal professionals – lawyers, judges and specialists in Alternative Dispute Resolution (ADR) – as well as aspects of the legal education systems in both countries. Those systems will need to gel better as well for both Australia and Japan to achieve the ‘cultural reform’ needed to generate sustainable critical mass in commercial (and investor-state) arbitration activity.

    The order of postings has been changed somewhat in this paper to create more of a ‘chain novel’ narrative effect. However, as with the previous two papers, readers may still prefer to move around the topics in a different order.

    Mark L. Movsesian, Fiqh and Canons: Reflections on Islamic and Christian Jurisprudence


    This essay, a contribution to a symposium on Religious Legal Theory, compares Islamic and Christian conceptions of law and suggests implications for contemporary debates about religious dispute settlement. Both Islam and Christianity begin with faith, but they express that faith differently – and the difference relates to law. In Islam, a comprehensive body of law, fiqh, sacralizes daily life and connects believers to God. In Christianity, by contrast, law serves an auxiliary function; it is facilitative, not constitutive, of believers’ relationship to God. Moreover, unlike classical fiqh, canon law has a limited scope and is not exegetical. This essay explores these differences and shows how they influence the ways in which Muslims and Christians view religious tribunals today, as evidenced by recent controversies over Islamic family and commercial law arbitration in Canada and the United Kingdom.

    Rohullah Azizi, Grounds for Refusing Enforcement of Foreign Arbitral Awards under the New York Convention (A Comparison of the US and Sharia Law)


    In this section, the refusal grounds under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards is discussed. This requires discussing about different types of refusal grounds in light of Article V of the New York Convention. After that, the implementation of the New York Convention is discussed in the United States and under the Sharia Law. The question is how the US courts have construed each of those grounds? In other words, while the New York Convention does not give any definition from the refusal grounds, how broad or narrow the US courts have interpreted each of the grounds? The answer for the same question is followed under the Sharia Law. For finding the answer of this question, we need to refer to judicial decisions of the United States Courts in the cases in which one or more of those grounds are raised. However, discussing about what would be Sharia Law’s interpretation from those grounds will not be easy. Under the Sharia section, the theatrical bases for arbitration along with the relevant discussions to the refusal grounds both in Sharia’s main sources and Islamic jurisprudence (School of thoughts) is discussed. Finally, it is concluded that how the courts in the United States and under the Sharia Law construe and apply each of the refusal grounds.

    Samuel Estreicher and Zev J. Eigen, The Forum for Adjudication of Employment Disputes


    This chapter focuses on the appropriate design of the forum for adjudication of employment disputes. By the term “adjudication,” we refer to the resolution of “rights” disputes – disputes over the application of a contract or the application of a statutory or regulatory rule to a particular factual situation. We are not referring to “interests” disputes – disputes over the substantive content of an initial contract or renewal agreement. In considering the design question, we assume that all involved actors, (employees, employers, unions, etc.) retain whatever endowments they currently possess in terms of intelligence, energy, income, occupational status, access to resources, union representation, and statutory and contractual rights. Holding these endowments constant, we ask what institutional arrangements for adjudicating rights disputes would do the best job of resolving those disputes in a fair, efficient manner for workers, managers and the public generally.

    On the legislative front, we oppose current efforts in Congress to amend the Federal Arbitration Act to prohibit predispute arbitration agreements. At least if applied in the employment context, this is a case of throwing out the baby with the bath water. Employment arbitration, if it is properly structured and regulated, improves the likelihood that employees, and most especially those who are relatively low-paid, will be able to obtain an adjudication on the merits of their rights disputes with the employer. Abolition of employment arbitration simply relegates those employees to the courts to fare as best they can on their own in a complex, formal litigation environment.

    Based on what is practically and politically feasible as of this writing, employer-promulgated ADR should be the basis of an employment adjudication system that supplements the work of courts, administrative agencies and, in the union sector, the grievance and arbitration process. We say this because unless adequate resources are provided to administrative agency adjudicators or courts to handle responsibly the vast increase in self-represented employee claims – which we think unlikely – the appropriate legislative response, even for critics of employer-promulgated ADR, is to develop safeguards that help minimize their concerns without driving employers to abandon the process entirely.

    If we were starting from scratch, we would be inclined to consider a system similar to Great Britain’s. The UK approach started as a wrongful dismissal statute and over time also assumed adjudicatory authority over discrimination claims. The UK system mixes government-supplied mediation services with a tripartite government-funded, public adjudication. The system supersedes any common law cause of action for breach of the employment agreement and employment statutes; employment disputes that go to the regular civil courts are limited to libel and slander, certain torts and claims for injunctive relief for breach of restrictive covenants. Class actions are not authorized.

    There may be some institutional features of the UK approach that are difficult to replicate here. One such feature is the tripartite adjudicatory structure used in England. With our low union density in private companies and the fact that employers tend not to form representative associations in the employment law field, it will take some ingenuity to develop a regularized procedure for selecting employer- and employee-side adjudicators.

    The more difficult question is whether there is any political will to adopt something like the UK system. Lawyers representing employees would not necessarily oppose such legislation if they could remove all caps on recovery and retain their ability to bring lawsuits (including class actions) in the courts. Employers might support such legislation, if it did not include abolition of employment at-will and there was some institutional guarantee of modest awards of the UK variety. Most employees, we believe, would be best off under the UK approach but we cannot get there politically. Therein lies the dilemma for law reform.

    We do believe, however, that working with what is in place at many companies, much can be done to improve employer-promulgated ADR to pick up many of the desirable features of the UK approach but in an American flavor responsive to U.S. legal and popular culture.

    Jorge E. Vinuales, Foreign Investment and the Environment in International Law: An Ambiguous Relationship


    The purpose of this study is to analyse the interactions between two thriving fields of current international law, namely international investment law (IIL) and international environmental law (IEL). Since their modern inception back in the 1960s, the historical development of these two bodies of law has been characterised by a remarkable transformation from loosely-defined arrays of standards and principles, often controversial and with limited legal impact, to sophisticated legal fields, of considerable importance from both the policy and business perspectives. This transformation has also changed the relations between IIL and IEL.

    The emerging legal literature on the interactions between IIL and IEL seeks to capture different dimensions of this interface, focusing on issues such as the environmental responsibility of multinational corporations, the scope of investment protection clauses, the role of non-disputing parties, the operation of emergency or necessity clauses, or the treatment given in foreign investment disputes to some particular environmental question. Despite the importance of this research, the overall picture that emerges from these contributions remains difficult to appraise, mostly as a result of the specific nature of the issues and perspectives selected.

    Building on this literature, the study presents a broader assessment of the current state of international law on this topic. In the first section, the study provides a conceptual framework to facilitate the analysis of both mutually supportive and conflicting interactions between foreign investment and environmental protection and their international legal regimes (II). This is followed by an analysis of the most significant questions posed by such interactions in the light of the relevant investment-related decisions from international courts and tribunals. The analysis is structured into two sections dealing with issues arising, respectively, in the conduct of arbitration proceedings (jurisdiction, applicable law, procedural issues) (III) and in the assessment of the merits of investment claims (normative and legitimacy conflicts, compensation) (IV). The last section is devoted to some prospective considerations concerning the interactions between IIL and IEL (V).

    Najman Alexander Aizenstatd, Guyana v. Suriname Maritime Boundary Arbitration

    Keyword contribution for the Max Planck Encyclopedia of Public International Law.

    Jan Kleinheisterkamp, Brazil and Disputes with Foreign Investors

    This article in Portuguese language traces the roots of the Brazilian resistance against international arbitration as a means for settling disputes with foreign investors. It sketches how all bilateral treaties on the protection of foreign investments signed by the Brazilian government have systematically been rejected by the Brazilian Parliament. The arguments forwarded for this rejection show that the notorious Calvo doctrine is everything but dead. This paper argues that the foundations of the Calvo doctrine can hardly be ignored. Brazil's resistance and the persistence of the Calvo doctrine give valuable insight on how the present investment dispute settlement mechanisms contained bilateral and multilateral investment treaties could be adapted in order to remove their "imperialist" image and gain broader global acceptability.

    Jason N. Summerfield, The Corruption Defense in Investment Disputes: A Discussion of the Imbalance between International Discourse and Arbitral Decisions

    Corruption is a defense to expropriation. Disputes submitted for arbitration look to international conventions and domestic laws that universally chastise corruption. Arbitrators are accordingly willing to punish those that participate in such illicit conduct through the denial of a favorable award. But the actual operation of the corruption defense raises uncertainty with respect to how the defense is applied, uncertainty that often leads to inequitable results; between two parties that engaged in corrupt practices, one will not recover their expenses and one will walk away with an economic windfall.

    Arbitrators should be concerned with the impact and harms of a corrupt practice on the daily lives of a country’s citizens, but the interests of this unrepresented group are not reflected in arbitral awards. Corruption poses risks of harm to four separate targets: the host state, citizens of the host state, investors, and the independent judgment of arbitrators.

    This paper proposes a shift in the corruption defense to reflect the apparent evils that normative policies against corrupt practices are designed to address. Arbitrators should consider whether a cognizable harm was caused by the investment to determine if the influence and benefits exchanged in a corrupted agreement were in fact ‘undue’ and thus whether the defense of corruption applies to a dispute.

    Salim Rizvi, The Essential-Facilities-Doctrine in the USA, EC and Switzerland with a Special Focus on FRAND

    There have been many books, essays and decisions by courts about the Essential-Facilities-Doctrine, especially since the famous decision of US Supreme Court on United States v. Terminal Railroad Ass’s in 1912.

    In this paper I give an overview about the Essential-Facilities-Doctrine in the US, EC and Switzerland. In the first part I will explain the Essential-Facilities-Doctrine in general and point out some open and unsolved questions. In the second part selected leading cases in the US, EC and Switzerland will be presented. In part three, I will focus on the FRAND-Principle, which was a hot issue at the EU-Commission (e.g. Case of Qualcomm) and on Arbitration. The paper ends with a final conclusion and prospects.

    Michael Z. Green, Alternative Dispute Resolution of Employment Discrimination Claims: Does Race Matter When Reading Ricci and Pyett?

    In the landmark article by Richard Delgado and his co-authors, Fairness and Formality: Minimizing the Risk of Prejudice in Alternative Dispute Resolution, 1985 Wisc. L. Rev. 1359, the authors attacked the increasing use of alternative dispute resolution (ADR) to resolve disputes because of the risks of prejudice. Using social science research, the authors argued that the informality of these methods of dispute resolution had a negative impact on persons of color. This paper looks at the impact of ADR in the workplace as a method to resolve employment discrimination claims and re-examines the concerns espoused by the Delgado article which has reached its twenty-five year anniversary. In particular, the paper compares the opportunities for formalized resolution of employment discrimiantion disputes through the courts with the informalized resolution of employment discrimination disputes under ADR. Using the Supreme Court's analysis in two recent cases, Ricci v. DeStefano and 14 Penn Plaza v. Pyett, as a framework for understanding purported post-racial analysis of employment discrimination dispute resolution, the author's thesis asserts that a balance of both informal and formal dispute resolution processes would represent the best possibilities for employees of color seeking racial justice in today's workplace. To achieve this balance, the author focuses on developing workplace arbitration and mediation processes that offer workers of color a fair opportunity for voice and resolution. WIth this focus, the author searches for racial justice opportunities that will allow employers, employees, and unions to converge their interests to support a comprehensive dispute resolution system.

    Friday, August 13, 2010

    SEBI Circular on Arbitration Mechanism in Stock Exchanges

    Business Standard reports that the Securities and Exchange Board of India (SEBI) has come up with new norms on arbitration conducted under the aegis of stock exchanges. The relevant circular of SEBI titled "Arbitration Mechanism in Stock Exchanges" can be obtained from here. This post provides the salient features of the Circular.
    1. This Circular has been issued by the SEBI under Section 11 (1) of the Securities and Exchange Board of India Act 1992, read with Section 10 of the Securities Contracts (Regulation) Act, 1956 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and shall come into effect from September 1, 2010.
    2. The purpose of the Circular is to streamline the arbitral procedures in arbitrations between a client and members of the stock exchanges- stock brokers, trading members and clearing members
    3. Broadly, the Arbitration and Conciliation Act, 1996 will be applicable for such arbitration, but without prejudice to the Circular.
    4. Stock Exchanges (SEs) shall maintain a panel of arbitrators. SEs shall ensure arbitrators have adequate qualifications and are included in the panel in accordance with fair and transparent criteria.
    5. The Circular provides for a short code of conduct for the arbitrators. Specifically the arbitrators are to act in a fair, impartial and independent manner, and shall disclose circumstances where there is conflict of interest.
    6. Claims up to Rs 25 lakhs will be dealt with by a sole arbitrator and claims beyond the said amount, by three arbitrators
    7. Arbitral award shall be given by the arbitrators within four months from the date of appointment, unless the Managing Director/ Executive Director of the Stock Exchange allows extension. This is really interesting. It would be interesting to conduct an empirical survey on how far the arbitrators have been successful in complying with this requirement.
    8. Appeal from the arbitral award shall be to the Appellate Tribunal, which shall decide the appeal within three months from appointment of the appellate tribunal.
    9. Fixed fee for the arbitrators
    10. Stock Exchanges having nationwide terminals shall provide arbitration facilities in all their regional centres.
    11. Once arbitral award is passed, the money under the award shall be kept in an escrow account. 
    12. The SE shall implement the arbitral award, by making payment to the client, along with interest earned on the amount that has been set aside, as soon as the time for preferring an appeal before the appellate panel of arbitrators has expired and no appeal has been preferred.
    13. The The SE shall implement the appellate arbitral award, by making payment to the client, along with interest earned on the amount that has been set aside, as soon as an application to a Court to set aside such appellate arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996, having been made, but where no stay has been granted by such Court within a period of three months from the date on which the party making that application had received the appellate arbitral award.This rule is what was proposed in the recent consultation paper proposing amendments to the Arbitration and Conciliation Act, 1996. Under the Act, an award could not be implemented unless the proceedings for setting aside arbitral awards are over. Here, even when the setting aside proceedings are pending, an award could be implemented unless the court specifically stays the implementation of the award. 
    14. Stock exchanges shall preserve the records pertaining to arbitration. The details of arbitrations and arbitrator-wise disposal of arbitrations should be maintained as per Form A and B of the Circular and published in their websites. The stock exchanges shall also publish arbitral awards in their websites, as per the April 2010 SEBI Circular.
    15. The stock exchanges ought to make necessary amendments to their bye-laws as a follow up to this Circular and keep SEBI updated about this.

    Monday, August 9, 2010

    Sumitomo Heavy Industries v ONGC

    ONGC Platform at Mumbai High (formerly Bombay High)* 

    Case No.: Civil Appeal No. 3185/ 2002
    Date: 28.07.2010
    Bench: RV Raveendran & HL Gokhale, JJ.

    Preliminary Comments:

    On the third of this month, we had a post giving the link to the ONGC v. Sumitomo judgement and had promised we would be having a post on this issue, considering the importance of the case. ONGC v Sumitomo is worth noting for two aspects. One, the case is an example of how in the Indian arbitral system the "award-debtor" could simply delay the execution of the arbitral award by challenging the arbitral award. Dhananjay Mahapatra from the Times of India has adequately commented on this aspect in this article. So we do no more but give the link to Mahapatra's article.

    The second reason why this judgement is significant is because it discusses an oft-contested issue of the contractual consequences of imposition of tax due to change of law and the liability to reimburse costs due to change of such law. Despite the fact that contracts generally address this aspect, parties to the contract violently contest with each other the ultimate liability to bear the costs of such change of law. This case is an example of such a dispute.

    (Some facts are taken from the decisions by the lower courts)

    ONGC invited tenders for installation and commissioning of a well-cum-Production platform deck and connected system on a turnkey basis at Bombay High (the relevant location of the project was 100 miles away from the coastline. The bid closing date was 11.10.1982.

    Bid was submitted by SHI and the bid was accepted.

    31.03.1983: Notification by Department of Revenue, Ministry of Finance extending the Income Tax Act, 1961 to the continental shelf and exclusive economic zone of India. with effect from 01.04.1983. Thus, income accruing to MHI and MII under the Contract were subject to income tax. 
    (almost one year after bid submission) ONGC and MHI executed the contract. The contract provided that the price was firm without escalation but subject to the provisions of the contract.

    Relevant provisions of the General Conditions of the Contract were

    "13.2.7 The Company shall not be responsible/obliged for making any payments or any other related obligations under this Contract to the Contractor's Sub-contractor/Vendors. The Contractor shall be fully liable and responsible for meeting all such obligations and all payments to be made to its Sub-contractors/ Vendors and any other third party engaged by the Contractor in any way connected with the discharge of the Contractor's obligation under the Contract and in any manner whatsoever."

    "13.3.4 Neither the Company nor the Contractor shall be liable to the other for any matter or thing arising out of or in connection with the contract or the doing of the works unless the party asserting the liability has given the other party written notice of its claim before the issue of the last Discharge Certificate under this Clause."

    "17.0. Laws/Arbitration
    17.1. Applicable Laws
    All questions, disputes or differences arising under, out of or in connection with this Contract shall be subject to the laws of India.
    17.2. Arbitration
    If any dispute, difference or question shall at any time hereafter arise between the parties hereto or their respective representatives or assigns in respect of the construction of these presents or concerning anything herein contained or arising out of these presents or as to the rights, liabilities or duties of the said parties hereunder which cannot be mutually resolved by the parties, the same shall be referred to arbitration, the proceedings of which shall be held at London, U.K. Within 30 days of the receipt of the notice of intention of appointing arbitrators each party shall appoint an arbitrator of its own choice and inform the other party. Before entering upon the arbitration, the two arbitrators shall appoint an umpire. In case the parties fail to appoint its arbitrator within 30 days from the receipt of a notice from the other party in this behalf or if any dispute in selection of umpire, the president of International Chamber of Commerce, Paris, shall appoint the arbitrator and/or the umpire as the case may be.
    The decision of the arbitrators and failing to an agreed decision by them, the decision of the umpire shall be final and binding on the parties.
    The arbitration proceedings shall be held in accordance with the provision of International Chamber of Commerce and the rules made thereunder as amended from time to time. The arbitration proceedings shall be conducted in English language.
    17.3 Change of Law
    Should there be, after the date of bid closing a change in any legal provision of the Republic of India or of any political subdivision thereof or should there be a change in the interpretation of the said legal provision by the Supreme Court of India and/or enforcement of any such legal provision by the Republic of India or  any political subdivision; thereof which affects economically the position of the Contractor; than the Company shall compensate contractor for all necessary and reasonable extra cost caused by such a change."

    "23.0 Duties and Taxes
    Indian Customs Duties, if any, levied upon fabricated structures, sub-assemblies and equipment and all components which are to be incorporated in the works under the contract shall be borne by the company. The company shall bear all Indian income taxes levied or imposed on the Contractor under the Contract, onaccount of its or their offshore personnel while working at offshore or on account of payments received by Contractor from the company for work done under the contract. Notwithstanding the foregoing, the company shall have no obligation whatsoever in respect of the Contractor's onshore employees whether they may be expatriate or nationals."

    "27.2 The Company shall in no event be responsible for or liable to the contractor or its Sub-contractors for consequential damages suffered by the Contractor or its Sub-contractors including without limitation, business interruption or loss of profits. Whether such liability is based or claimed to be based upon (i) any breach by the Company of its obligations under the Contract or (ii) any negligent act or omission on the part of the Company or any of its employees, agents or appointed representative in connection with the performance of the work."

    28.12.1983: For sub-contracting a major part of its work under the Contract, MHI entered into a (sub)contract with McDermott International Inc (McDII). This fact was within the knowledge of ONGC.

    11.04.1984: Issue of Certificate of Completion and Acceptance by ONGC certifying that the work under the contract was completed successfully.

    18.05.1984: Certificate of discharge issued. 

    1987: Section 44 BB was introduced into the statute book with restrospective effect from 01.04.1983. The Foreign Tax Division of the Department of Revenue issued a circular on turnkey projects and calculation of liability of foreign contractors for income tax.

    1988: The income tax authorities asked McDII to re-open its assessments for the Previous Years during which it earned income from the project. Following this, income tax was imposed on McDII.

    October 1989: McDII asked MHI to reimburse the amount of income tax it had to bear. After exchange of correspondences, MHI paid approx $ 1.12 to McDII. MHI asked ONGC to reimburse the amounts paid to, and to be paid to, McDII, which ONGC refused. MHI invoked arbitration.
    06.03.1991: Invocation of arbitration by MHI.

    11.03.1991-11.05.1991: Appointment by both parties of their arbitrators. Subsequently, both parties appointed Sir Michael Kerr as the umpire. Under the Arbitration Act, 1940, the umpire system was followed. In case the two arbitrators, each appointed by the parties, the umpire "entered upon reference" and his decision was to be final.

    22.06.1995: Arbitral award by Sir. Michael Kerr in favour of MHI.In sum, the umpire held that reimbursement of income tax by MHI to MII was a consequence of change in law which caused necessary and reasonable increase in costs to MHI and in view of Article 17.3 of the Contract, ONGC was liable to reimburse MHI to that extent.

    (Since we are more concerned about what the decision on the issue pertaining to liability for new tax imposed during the currency of the contract, we will and skip summarising the argument of the parties and the decision by the lower courts, and focus on the decision. But to complete the chronology, we'll list the dates of the decision of the lower courts.)

    29.11.1999: Decision by Single Judge of the Bombay High Court setting aside the award in favour of ONGC.

    19.12.2001: Decision by Division Bench of the Bombay High Court dismissing the appeal filed by SHI.
    The court had to decide whether the decision of the umpire was such that intervention by the court was necessary due to any finding of the umpire exceeding his jurisdiction or empire committing an error that was apparent on the face of the record..

    The court held that if two views as to the interpretation of provision were possible, the court would not get into the question of whether the arbitrator was right in choosing a particular interpretation. Thus, all the court needed to decide was whether the interpretation afforded by the Umpire was possible.

    The court concluded that the lower courts erred in striking the award down on the matter of a plausible interpretation of a provision by the Umpire.

    The court held that the term employed in Article 17.3 was "cost" and since there was an increase in costs due to imposition of income tax, the interpretation placed by the umpire was a plausible one. Further, it held that McDII had to pay income tax due to retrospective change of law made effective subsequent to submission of bid.

    The evidence placed showed, according to the court, that McDII was to be the principal subcontractor; consequently, "[t]he respondent had taken up the responsibility for the income tax liabilities of the appellant. So had the appellant taken up the responsibility for the tax liabilities of MII and the respondent cannot be said to be ignorant there of."

    Hence, the court concluded that the Umpire did not exceed his jurisdiction nor was there any error apparent on the face of the record. 

    Further, citing Triveni Rubber & Plastics v. Commsr. of Central Excise (AIR 1994 SC 1341), the court held that a perverse finding was one which no reasonable person could have arrived at. The court concluded that since the arbitrator's finding was after due consideration of the material available, it was not perverse but well-reasoned.


    Though the SC's decision seems to be reasonable, it is sad that the court did not consider the law on the liability of a contractual party to bear increase in costs due to change of law during the currency of the contract. This is the problem with arbitration. The courts are forced to rule on whether the award was perverse or not rather than consider what should actually be the law on the issue. The main issue is taken outside the realm of the court. Essentially what the court has stated here is that Article 17.3 could either be narrowly construed like the Division Bench wanted it to be or broadly constructed as was done by the arbitrator. But what is the true law?
    This decision must not be taken to mean that all increases in costs due to change of law will be borne by the service receiver/ principal. This judgement only states that if the service receiver/ principal his agreed to bear such risks, it would be to his account. 

    But if the service provider/ contractor has agreed to bear such risks, the increase in costs would be to his account. It ultimately depends on the contract. But what would happen if the contract is silent on this aspect?

    * Image taken from here.


    Some news/ article links

    Teapot as a place of arbitration in Indian Express
    Mukesh Butani's article in the Business Standard on the use of arbitration in international taxation
    Government has allotted Rs. 30 crores for the Kishenganga Dispute with Pakistan, says this Economic Times article.

    Wednesday, August 4, 2010

    Contract Law Resources, Arbitration and other News

    MJ Antony's article in the Business Standard commenting on the case of Afcons Infrastructure v. Cherian Varkey was a fun read, though this blogger vehemently disagrees that the Arbitration and Conciliation Act, 1996 contains drafting errors and omissions to the extent stated in Bhatia International. Ask the Drafters of this Act; I am sure they'll have an altogether different story to tell. And they may be right too.

    IBNLive reports a statement made by the CJ of the Bombay HC to the effect that a "dedicated court" (possibly referring to a Bench) would be constituted to deal with arbitration matters. And the said report also reports statements made by Justice Dalveer Bhandari of the Supreme Court to the effect that a panel of retired judges should be formed and arbitrators should be picked only from this panel. If this report is true and Justice Bhandari had meant to state that only retired judges should be appointed as arbitrators, he is singing the tune which the Law Commission sang a almost decade ago, The proposal of the Law Commission was rightly rejected by the Saraf Committee and also Department Related Parliamentary Standing Committee on Personnel, Public Grievances, Law and Justice's Report. On this purported proposal, I only give this link

    Financial Express reports this important SC decision in which the SC has decided in favour of Sumitomo in a claim by Sumitomo for reimbursement of income tax imposed after submission of its bid. This is an important issue and we'll definitely try to have a post it.

    [Added After Posting: You can download the Sumitomo v. ONGC judgement from this link]

    On the Contract Law front:
    Active readers and blawggers on the blawgosphere would be aware of an excellent set of posts under the label Recent Scholarships in the Contracts Prof Blog relating to the Current Scholarship in Contract Law. Readers might want to regularly check out these posts.In the alternative and to easily access the said posts ,you could go to the link titled "Contracts Professor Blog: Recent Scholarship" located under the gadget "Law Journals/ Reviews" located at the bottom left hand side of this blog.

    Readers may also check out SSRN's Contracts and Commercial Law eJournal, which basically consolidates the Contract Law and Commercial Law papers posted in SSRN. Like the Contracts Prof 's Recent Scholarship thing, we have added this to the Law Journals/ Reviews gadget under the title "SSRN: Contracts and Commercial Law eJournal".

    Happy researching and reading!

    Tuesday, August 3, 2010

    UNCITRAL Arbitration Rules 2010- Part II

    A few days back, we had a post that dealt with what was new about the UNCITRAL Rules 2010 ("2010 Rules" or "New Rules"). Owing to the length that a post with such an objective would demand, we had stopped at Article 10 of the 2010 Rules and had promised we would have a post on the Articles subsequently. In this post we survey and summarize the rest of the New Rules.

    Articles 11- 13

    Duty of the prospective arbitrator to disclose circumstances likely to give rise to justifiable doubts as to his or her independence or impartiality to other arbitrators has been added. Previously such duty was only towards the parties.

    Article 14-15
    • If an arbitrator is to be replaced due to any reason, and if the appointing authority is of the opinion that it ought to deprive a party of its right to appoint a substitute arbitrator, it may do so. In that case, the appointing authority might, after giving opportunity of being heard to the parties and after obtaining the views of the arbitrators, either appoint a substitute arbitrator or if the need for replacement occurs after the hearings are over, authorize the existing tribunal to continue with the the arbitral proceedings without appointing another arbitrator.
    • The previous position was that the hearings would have to commence afresh if the presiding arbitrator had to be replaced. But this time, the new Rules leaves this decision to the arbitral tribunal.
    Article 16
    A new insertion, this provision concerns waiver by the parties of all claims against the arbitrator to the extent permitted by law. The exception is intentional wrongdoing.

    Article 17
    • Stress on efficiency of arbitral proceedings apart from fairness.
    • Establishment of preliminary timetable soon after the tribunal is constituted
    • Shortening/ extension of time limits after consulting with the parties
    • Power of the the tribunal, at request of one party, to direct a party to the Arbitration agreement to join the arbitral proceedings.
    Article 18
    Award is deemed to have been made in the place of arbitration. Under the 1976 Rules, there was a requirement that the award be made in the place of arbitration (article 16). This requirement has been done away with.

    Article 19- 22
    Statement of claim, statement of defence and counter-claim to be accompanied by supporting evidences/ documents

    Article 23
    • The Model law wordings on the power of tribunal to rule on its jurisdiction  has replaced the old wordings. In effect, there is no substantial difference between the Model Law and the current provisions.
    • Plea regarding the absence of arbitral jurisdiction has to be raised during the arbitral proceedings and the tribunal may at its discretion, decide the matter as a preliminary point.

    Article 25

    The period of time for communication of Claims and WS should not exceed 45 days. This requirement is very onerous and in highly techncial arbitrations, it is virtually impossible to comply with such a requirement. A large company with lot of resources might but a normal company would not. For this reason alone, it is prudent to not adopt Rules, though discretion is given to the arbitral tribunal to extend the time limits.

    Article 26
    • Provision regarding interim measure by the arbitral tribunal. Provides for examples of interim measures and the requirements to be established to be entitled for a plea for interim measure.
    • Reiterates the principle in Article 9 of the Model law that it is not incomaptible with the arbitration agreement to approach a court for interim measures
    The requirement in the old Article 25.3 that the arbitral tribunal must arrange translation of oral statements made during hearings has been deleted in the new Rules

    Article 28

    Examination of witnesses through means of telecommunication not requiring physical presence of the witness, such as through video conferencing etc

    Article 29

    The right of parties to object to tribunal's independent expert, especially with regard to the independece or impartiality of the expert.

    Article 32

    The exception to the waiver of right to object to non-compliance with the Rules or with the arbitration agreement is if such party shows that it was justified in its failure to object

    Article 33

    Award to be made public only:

    (a) if consented by all parties
    (b) to the extent required

    (i) by law
    (ii)for enforcing a legal right
    (iii)in relation to legal or other proceedings before an authority

    Removal of requirement of registration by tribunal of the arbitral award if the law of the place where award is made so warrants

    Article 37

    If request for correction is made by a party to the arbitration, and the tribunal decides to make it, the tribunal shall do it within 45 days. Previously, the tribunal had to correct it within 30 days.

    Article 40

    In relation to interpretation, correction or completion of award, the tribunal may charge reasonable costs but shall not charge additional fees

    Article 41
    Procedure in case the fee charged by the tribunal is not reasonable

    The new Rules also contains model statements of independence and impartiality of arbitrators.

    A comparison of the 1976 and the 2010 Rules can be found here.