"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.

Friday, July 26, 2013

The National Law School of India Review: Call for Papers

The National Law School of India Review is now accepting submissions for its upcoming issue - Volume 26(1). The National Law School of India Review (NLSIR) is the flagship law journal of the National Law School of India University, Bangalore, India. The NLSIR is a bi-annual, student edited, peer-reviewed law journal providing incisive legal scholarship on issues that are at the forefront of contemporary legal discourse. Over the last 20 years, the NLSIR has regularly featured articles authored by judges of the Indian Supreme Court, Senior Counsel practicing at the Indian bar, and several renowned academics. 

The most recent issue of the NLSIR, Vol. 24(2), featured contributions by Prof. Martin Hunter (Leading authority on International Commercial Arbitration and Barrister), Mr. V. Umakanth (Professor, National University of Singapore) and Mr. Rajat Sethi (Founding Partner, S&R Associates) among several others. Moreover, in August 2009, NLSIR attained the unique distinction of being the only Indian student-run law journal to be cited by the Supreme Court of India, in Action Committee, Un-Aided Private Schools v. Director of Education. NLSIR has also recently been cited in Justice R. S. Bachawat's Law of Arbitration and Conciliation, a leading treatise on arbitration law in India. 

Papers may be submitted under the following categories:

1. Long Articles: Between 5000 and 8000 words, inclusive of footnotes. Papers in this category are expected to engage with the theme comprehensively, examine literature comprehensively, and offer an innovative reassessment of the current understanding of that theme. It is advisable, though not necessary, to choose a theme that is of contemporary importance. Purely theoretical pieces are also welcomed.

2. Essays: Between 3000 and 5000 words, inclusive of footnotes. Essays are far more concise in scope. These papers usually deal with a very specific issue, and argue that the issue must be conceptualized differently. They are more engaging, and make a more easily identifiable, concrete argument.

3. Case Notes and Legislative Comments: Between 1500 and 2500 words, inclusive of footnotes. This is an analysis of any contemporary judicial pronouncement, whether in India or elsewhere. It must identify and examine the line of cases in which the decision in question came about, and comment on implications for the evolution of that branch of law.

Submissions are preferred in Times New Roman font, double-spaced. Main text should be in font size 12 and footnotes in font size 10. All submissions must be word processed, and compatible with Microsoft Word 2003 and 2007. The Review uses only footnotes (and not end-notes) as a method of citation. Submissions must conform to the Bluebook (19th edn.) system of citation. 

The NLSIR strongly recommends electronic submissions, though hard copies are also accepted. In case of hard copy submissions, two copies of the submission are required. Please submit the paper to mail.nlsir@gmail.com indicating which category your paper is intended for. All submissions should contain the name of the author, professional information, the title of the manuscript, and contact information. The last date for submissions to Volume 26(1) is November 1, 2013. Submissions may be emailed to mail.nlsir@gmail.com under the subject heading '26(1) NLSIR - Submissions'. Submissions received after this date will however be considered for the next issue.

Saturday, July 20, 2013

Phulchand Exports v. OOO Patriot Overruled: Public Policy of India in Section 48(2)(b) Gets a Narrow Interpretation

In the recent decision of Shri Lal Mahal Ltd. v. Progetto Grano Spa, the Supreme Court of India has overruled Phulchand Exports v. OOO Patriot and has held that the Renusagar test (narrow interpretation) for public policy and not the Saw Pipes (broad interpretation) test would apply. The Renusagar test did not provide for "patent illegality" a sub-genus of violation of public policy while Saw Pipes did include patent illegality in the context of Section 34(2)(b)(ii). Phulchand Exports held that the Saw Pipes test would equally apply to the case of enforcement of foreign awards as well. This has been overruled in Shri Lal Mahal case. The relevant portions of the judgement are quoted below:
"25.       In our  view,  what  has  been  stated  by  this  Court  in Renusagar3 with reference to Section 7(1)(b)(ii) of the Foreign  Awards  Act must equally apply to the ambit and scope of Section 48(2)(b)  of  the  1996 Act. In Renusagar3 it has  been  expressly  exposited  that  the  expression “public policy” in Section 7(1)(b)(ii) of the Foreign Awards Act  refers  to the public policy of India. The expression “public policy” used  in  Section 7(1)(b)(ii) was held to mean “public policy of India”. A distinction in  the rule of public policy between a matter governed by the domestic  law  and  a matter involving conflict of laws has been noticed in  Renusagar3.  For  all this there is no reason why Renusagar3  should  not  apply  as  regards  the scope of inquiry under Section 48(2)(b).  Following   Renusagar3,  we  think that for the purposes of Section 48(2)(b), the expression “public policy  of India” must be given narrow meaning and the  enforcement  of  foreign  award would be refused on the ground that it  is  contrary  to  public  policy  of India if it is  covered  by  one  of  the  three  categories  enumerated  in Renusagar3.   Although the same expression ‘public policy of India’ is  used both in Section 34(2(b)(ii)  and  Section  48(2)(b)  and  the  concept  of ‘public policy in India’ is same in nature in both the Sections but, in  our view, its application differs in degree insofar as these  two  Sections  are concerned. The application of ‘public policy  of  India’  doctrine  for  the purposes of Section 48(2)(b) is more limited than  the  application  of  the same expression in respect of the domestic arbitral award.
26.           We  are  not   persuaded   to   accept   the   submission   of     Mr. Rohinton F. Nariman that the expression “public policy of India”  in Section 48(2)(b) is an expression of wider import than the  “public  policy” in Section 7(1)(b)(ii) of the Foreign Awards Act. We have no  hesitation  in holding that Renusagar3 must apply for the purposes of Section  48(2)(b)  of the 1996 Act.  Insofar as the proceeding for setting aside an   award  under Section 34 is concerned, the  principles  laid  down  in  Saw  Pipes1  would govern the scope of such proceedings.
27.         We accordingly hold that enforcement  of  foreign   award  would be refused  under  Section  48(2)(b)  only  if  such  enforcement  would  be contrary to (i) fundamental policy of Indian law; or (2)  the  interests  of India;  or  (3)  justice  or  morality.  The  wider  meaning  given  to  the expression “public policy of India” occurring  in  Section  34(2)(b)(ii)  in Saw Pipes1 is not applicable where objection is raised  to  the  enforcement of the foreign award under Section 48(2)(b).
28.         It is true that  in Phulchand Exports2 , a  two-Judge  Bench  of this Court speaking through  one  of  us  (R.M.  Lodha,  J.)   accepted  the submission made on behalf of the appellant therein that  the  meaning  given to the expression “public policy of India”  in  Section  34  in  Saw  Pipes1 must be applied to the same expression occurring in Section 48(2)(b) of  the 1996 Act.  However,  in what we have discussed above it must  be  held  that the statement in paragraph 16 of the  Report  that  the  expression  “public policy of India used in Section 48(2)(b) has to be  given  a  wider  meaning and the award could be set aside, if it is patently illegal” does not lay down correct law and is overruled."

On the scope of the enquiry under Section 48(2)(b(ii), the court stated:

"Moreover,  Section  48  of  the  1996  Act  does  not  give  an opportunity to have a ‘second look’ at the foreign  award  in  the  award  - enforcement stage. The scope of inquiry under  Section 48  does  not  permit review of the foreign award on merits. Procedural defects (like taking  into consideration  inadmissible  evidence  or  ignoring/rejecting  the  evidence which may be of binding nature) in the course of foreign arbitration do  not lead necessarily to excuse an  award  from  enforcement  on  the  ground  of public policy."
The Shri Lal Mahal case can be accessed from here. Thanks to Ms. Roshni Rajiv for bringing this case to our attention.

Tuesday, July 16, 2013

UNCITRAL Adopts Transparency Rules in Investor-State Arbitration

In furtherance of the calls for transparency in Investor-State arbitration, UNCITRAL has come up with an independent Transparency Rules that could be adopted in Treaties in furtherance of transparency in Investor-State Arbitration. The Rules could be applied as stand alone rules or along with UNCITRAL Arbitration Rules. The Transparency Rules would come into force from 01.04.2014. Among other things, the Rules provide for creation of a repository of published information (Secretary General of the United Naitions of an Institution named by UNCITRAL). The Transparency Rules provide that the disputing parties shall communicate copy of the Notice invoking arbitration, pleadings, table of exhibits, transcripts of hearings of the dispute  to the Repository. This includes even submissions by third persons, such as amici curiae in such arbitrations. The said Rules obligate the arbitral tribunal to make logistical arrangements to facilitate public access to arbitral hearings. The Rules contain exceptions to transparency.

To incorporate this development in the UNCITRAL Arbitration Rules, 2010, para 4 has been inserted in Article 1 of the said 2010 Rules.

The Transparency Rules can be accessed from here. UNCITRAL's press release is available here.

Monday, July 8, 2013

Exclusive Jurisdiction Clause: Sense Prevails Finally!

There was always a risk of exclusive jurisdiction clauses being held by the courts as non-exclsuive in the absence of specific words like "only", "alone" etc. For instance, in ABC Laminart v AP Agencies (1989) 2 SCC 163, the clause in issue provided that any dispute arising out of the sale "shall be subject to Kaira jurisdiction". Despite a clear choice of court, the Madras High Court and the Supreme Court (on appeal) held that the Salem court had jurisdiction to entertain a suit pertaining to the said sale.
In view of the ambivalent approach of the courts towards jurisdiction clauses, parties which could afford the cost of legal advice often used the terms "only", "alone", etc in the jurisdiction clauses to signify grant of exclusive jurisdiction to a particular court having jurisdiction. 
It may be noted that parties incur additional transaction costs for negotiating an additional contractual term. If so, the court should prudently give force to such clauses. Instead, requiring that jurisdiction clauses must be unequivocal and must employ terms such as  "only", "alone", etc. does fall flat of reason. Why should parties by agreement designate a particular court in their agreement if their intent is not to refer all disputes to that particular court?
In a recent judgement (03.07.2013) in M/s Swastik Gases P. Ltd. v. Indian Oil Corp., the Supreme Court has held the following clause to be an exclusive jurisdiction clause: "The Agreement shall be subject to jurisdiction of the courts at Kolkata." Of the three judges, Madan B. Lokur, J. in his concurring judgement has rightly stated  that "parties would not have included the ouster clause in their agreement were it not to carry any meaning at all... [I]f the parties had intended that all Courts where the cause of action or a part thereof had arisen would continue to have jurisdiction over the dispute, the exclusion clause would not have found a place in the agreement between the parties." (para 27, concurring judgement). Justice RM lodha (with whom Justice Kurian Joseph agreed) applied the maxim expressio unius est exclusio alterius (meaning the expression of one thing is the exclusion of another) and held that parties had intended that all disputes should be referred to the courts at Kolkata in the absence of any intent to the contrary. The court held: "Where the contract specifies the jurisdiction of the courts at a particular place and such courts have jurisdiction to deal with the matter, we think an inference may be drawn that parties intended to exclude all other courts."
The judgement can be accessed from here (pdf).

Thursday, July 4, 2013

Bombay High Court's View on Retrospective Operation of the MSMED Act, 2006

Faridabad Metal Udyog Pvt. Ltd. v. BPCL & Anr. (Bombay HC: 17.06.2013) is perhaps one of the first, if not the first, judgement to rule on the restrospective applicability of the MSMED Act, 2006. According to the Single Judge of the High Court:

 "On perusal of the facts of this case and on conjoint reading of definition of Section 2(b) and (n) of the MSME Act, it is clear that dispute between the parties to these proceedings arose much prior to the said Act having came into force. In my view, remedy under Section 18 to refer the dispute to Micro and Small Scale Enterprises Facilitation Council would not apply to the dispute arising out of existing arbitration agreement between the parties. Similarly, the said provisions also cannot be invoked in respect of the dispute having arisen between the parties prior to the said Act having came into force and prior to the "Supplier" having filed the memorandum and is registered under Section 8 of the said Act. Admittedly these first four petitioners were registered as micro small enterprises much after the dispute had arisen between the parties. In my view, the said provisions would not apply with retrospective effect to the past transaction and thus provisions of the said MSME Act have no applicability to the facts of this case." (para 13)

The relevant portions (virtually all of the above para) are underlined. But the observation of the judge in the last line seem to present a view that the MSMED Act, 2006 would not affect past agreements. Comments, anyone?

See previous posts (here and here) in this blog on the subject.