"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.

Wednesday, November 28, 2012

Judiciary sans independence: the Sri Lankan chronicle

(Published in Colombo Telegraph on 28/11/12. see, http://www.colombotelegraph.com/index.php/judiciary-sans-independence-the-sri-lankan-chronicle/)

The future of a judge who would have been the longest serving Chief Justice of the nation is grim in Sri Lanka. Widely alleged as politically motivated, the current move by the President to impeach her gives an opportunity to analyze the soundness of constitutional principles relating to judiciary in general and impeachment of judges in particular.

Constitution is the bedrock on which the judiciary in Sri Lanka is built like most constitutional democracies. Unlike many constitutions, it has very detailed provisions, spanning from Articles 107 to 147 with myriad of amendments, relating to judiciary.  

The primary concern in the present context is the competence of the relevant constitutional provisions to safeguard the interests of the institution of judiciary in a democracy. The most fundamental value would be independence of judiciary.  The independence is not only an end in itself but is also a means. It is in the independence of the institution, the present and future of a democracy rests. Independence of judiciary is a prerequisite of a sound legal and governance system. The provisions relating to appointment, tenure, conditions of service and removal are the bulwarks of judicial independence. Provisions of Sri Lankan constitution are an anathema to the claim of independence.

In the context of the current attempt to impeach a judge, an assessment of the provisions and procedure of removal is taken up to test on the claim of judicial independence.

Removal of judge in Sri Lanka as per the constitutional scheme is virtually in the hands of the executive. This cuts at the very root of judicial independence. Though the legislature is involved, the requirement of the simple majority makes the ultimate decision at the sweet will of any government, which invariably will have majority in the parliament. Article 107 of the constitution of Sri Lanka provides that the President may remove a judge on proved misbehavior and incapacity. The process is established by the standing orders (see, Standing Orders 78A). The impeachment process is kick started by the parliamentarians with a notice of resolution signed by one third of the members. After the lapse of one month, the speaker shall appoint a select committee of not less than eleven members who investigates and submits a report within a stipulated timeframe, which is one month from the commencement of the sitting of the committee. On the report of the select committee a resolution shall be passed by the parliament and the same shall be presented to the President for the action of removal. In this scheme of events, the judiciary is entirely under the benignancy of the government in power. It therefore remains as the affair of the government in power.

The breaches of independence vis-à-vis removal in the above scheme could be best understood in contrast with the structure provided by India, a neighbouring nation. Removal of a judge in India is commenced on the recommendation by the judiciary. The proceedings are detailed in the Judges Inquiry Act of 1968. It has elaborate provisions about the process. The enquiry is conducted by a committee of three; two from judiciary and one a distinguished jurists. The report of the committee is so decisive that if it does not find alleged misbehavior or incapacity, the proceedings are dropped.   Only on an adverse finding that there will be any further proceedings in the House and the same shall be discussion and adoption of the motion to impeach with special majority.  This process if nothing else does not leave the judges at the mercy of the government in power.

This limited comparative exercise brings out the inadequacies of the Sri Lankan scheme of removal of a judge, which is a heavy setback on independence of the institution. Judicial independence has been accepted as a coveted virtue world over. The lack of it is a severe dent on the rule of law record, human rights protection and liberty quotient of the citizen in its relation to its own government.

Sunday, November 25, 2012

Kasab, buried with rights

Madabhushi Sridhar wrote a interesting piece in the Hindu on 23 Nov 2012 on the constitutional impropriety involved in the execution of Ajmal Kasab. Post series of judicial decisions, judicial review of the exercise of power of pardon is established in India. (See, Kehar Singh, Maru Ram, Dhanajoy Chatterjee and Epuru Sudhakar to mention few important decisions.)

The position of law on review of order by the President or the Governor under Articles 72 or 161 respectively is clear and in the positive. In Epuru Sudhakar, the court also summarise the grounds as follows

(a) that the order has been passed without application of mind
(b) that the order is mala fide
(c) that the order has been passed on extraneous or wholly irrelevant
(d) that relevant materials have been kept out of consideration
(e) that the order suffers from arbitrariness

Kasab therefore had the right to invoke the review power of the court of the order rejecting his mercy petition. A decision on that application would have sealed his fate. 

From the available news reports it is not clear whether he was aware of this opportunity and also the reasons to reject the petition by the President. There has also been debate as to whether the order rejecting mercy petitions has to be reasoned and courts have given contrary signals on this issues. Having said that, a reasoned order becomes imperative to exercise judicial review meaningfully. (See S. R Bommai) 

Monday, November 5, 2012

Composite Transactions and the Applicability of Arbitration Agreement to Non-Signatories: Chloro Controls: Part II

Composite Transactions and the Applicability of Arbitration Agreement to Non-Signatories: Chloro Controls: Part II

By Badrinath Srinivasan & Roshni Rajiv

In the previous post, we had dealt with a portion of the decision in Chloro Controls (I) Pvt. Ltd. v. Severn Trent Water Purification Inc. & Others. In this post, we complete the descriptive comment on the decision.

  • In Sumitomo Corporation v. CDS Financial Services , the Supreme Court held that the parties in the judicial proceedings who are to be referred to arbitration in the disputes should be parties to the arbitration agreement as per Section 2(1)(h) of the 1996 Act ("party" means a party to an arbitration agreement.). However, the said decision is not altogether correct as regards Section 45 as the context in which the said provision is used demands the inclusion of a person claiming under such party as well. In fact, Section 2(1)(h) begins with the expression “unless the context otherwise requires”. Also, Sumitomo Corporation is not a binding precedent as this question never arose directly for consideration there.  
  • A seven Bench of the Supreme Court in SBP & Co. v. Patel Engineering has settled the legal position that the nature of enquiry under Section 45 is identical to that of Section 11(6) of the 1996 Act. Patel Engineering has been explained and the kind of questions to be decided under Section 11(6) has been comprehensively dealt with in National Insurance Co. v. Boghara Polyfab. However, the case of Shree Ram Mills v Utility Premises seem to be at “some variance” with the above cases as in Shree Ram, the court was of the view that prima facie satisfaction of existence of live disputes is sufficient. The observations in Shree Ram are obiter and not binding, considering that a larger bench seems to have contradicted with Shree Ram. Thus, under Section 45, the determination by the court of questions that are decided there ( in line with Patel Engineering and Boghara Polyfab) are final and binding and not prima facie. 
  • However, the question as to whether the determinations by the court can be reexamined by the tribunal or by the enforcement court under Section 48 does not directly arise in the case and is left open. However, as regards Section 11, Patel Engineering is clear in making the determination final. The advantage of such finality is that it would save considerable costs and money for the parties. 
  • The correctness of Sukanya Holdings was questioned before the court. It is not necessary to decide the correctness of Sukanya Holdings as it arose under Section 8 which is not the case here. Further, there was no composite transaction involved in Sukanya Holdings, which is the case here. Sukanya Holdings is also distinguishable on facts. 
  • Section 9 of CPC is not an absolute right. It contains certain inbuilt restrictions. Therefore, Section 45 of 1996 Act can prevail over provisions of CPC when Court is satisfied that an agreement is enforceable and operative and the Court is obliged to refer it to arbitration.
  • On facts, the intra-legal relationship between the parties is directed towards one particular object - successful implementation of joint venture. The joint venture is not dependent on one single agreement but several agreements which is “one single chain consisting of different components”. 
  • All the five agreements signed by the parties were primarily to fulfill their obligations and ensure performance of the Principal Agreement. (Para 138,139). Further, all the agreements were executed simultaneously on the same date which implies that parties intended to have all these agreements as a composite transaction.(para 147) . It being a composite transaction gives the parties the right to opt for any remedy from all the remedies provided under the agreements.(para 151,154)
  • The arbitration clause in the Principal agreement is comprehensive enough to include the disputes arising ‘under and in connection with’ the agreement. The word ‘connection’ has been added by the parties to expand the scope of the disputes under the agreements.(para 144). The other agreements originate from the Principal Agreement and are covered under the arbitration clause contained in the Mother/ Shareholders agreement.(para 146) 
  • As per the “Group of Companies Doctrine”, a party being non-signatory to one or other agreement may not be of much significance as performance of one may be quite different with the performance and fulfillment of the Principal/mother agreement(para 150).
  • In certain agreements, there are arbitration & jurisdiction clauses. These clauses are restricted to disputes arising under those agreements. The real intention of the parties was to refer to arbitration disputes not only arising under those agreements in which the arbitration clauses were agreed to but even disputes which arose under the mother agreement. (152-154)
Thus, the court held that in case of composite transactions involving on 'mother' agreement followed by a series of other agreements, a party claiming under the party to the arbitration agreement has the right to apply to the court to get the matter referred to arbitration even if such party is not a party to some of the several agreements in the composite transaction, in which case the arbitration clause in the mother agreement will prevail.

Sunday, November 4, 2012

Call for Papers: Indian Journal of Arbitration Law

The Call for Papers for Issue 1, Volume 2 of the Indian Journal of Arbitration Law is below

The Indian Journal of Arbitration Law is the flagship journal of the Centre for Advanced Research & Training in Arbitration Law [CARTAL], published under the aegis of National Law University Jodhpur. The inaugural edition of IJAL was launched in September and it would appear bi-annually, providing timely insights useful to the international arbitration community. The online edition is available here.

On 3rd November, Professor Martin Hunter, editorial advisor of IJAL has released the theme for the second issue (Volume 2: Issue 1) to be published in February 2013.

The editorial board is pleased to announce the call for submissions for this upcoming issue on the following theme:

“Investment Treaty Arbitration and Developing Countries: What Now & What Next”

Manuscripts may be submitted via email to editor.cartal@gmail.com latest by January 5, 2013

For further details regarding Editorial policy and submission guidelines please visit: http://www.ijal.in/?q=node/3