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Enforcement and Execution of Foreign Arbitral Awards: Law & Procedure – By Kashif Zafar Hussain

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Enforcement and Execution of Foreign Arbitral Awards: Law & Procedure – By Kashif Zafar Hussain

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INTRODUCTION

As world trade began to expand outstandingly in the 1960s, national Governments began to understand the need for a global set of standards and rules to harmonize national and regional regulations. Consequently, the United Nations Commission on International Trade Law (UNCITRAL) was established by the General Assembly in 1966. At its 1^st session in 1968, UNCITRAL incorporated international commercial arbitration as a priority area as a result of which on 28^th April 1976, a set of procedural laws for the conduct of international commercial arbitration were approved known as UNCITRAL Arbitration Laws. But there were still problems with the laws of different countries and this developed various uncertainties. Therefore, for the harmonization of national arbitration statutes, the UNCITRAL on 21^st June, 1985 adopted UNCITRAL Model Law (herein referred to as ‘Model Law’) on International Commercial Arbitration.

International Commercial Arbitration has been witnessing its eruptive success in the since past century however enforcement of its awards turned out to be a rather peculiar & complex scheme. Attempt to address the issue was first made in International forum through League of Nation whereby Geneva Convention was enacted in 1927 (1). Then subsequently in 1958, the second attempt to address this issue by made by UNCITRAL (United Nations Commission on International Trade Law) where New York Convention was enacted. Consequently, these Conventions were ratified and effected by the India by enacting separate statutes. Therefore, before the 1996 Act, domestic regime consisted of three statues namely the Arbitration and Conciliation Act 1940, Arbitration (Protocol and Convention) Act, 1937; Foreign Awards (Recognition and Enforcement) Act, 1961. The 1996 Act sought to consolidate and amend the law relating to domestic arbitration, international commercial arbitration, enforcement of foreign arbitral awards, and to define the law relating to conciliation, taking into account the UNCITRAL Model Rules (2).

Now, the conflicts arise when the question of enforcement of this foreign award comes into question.

Section 2(1)(f) of the Arbitration and Conciliation Act, 1996 lays down the definition of International Commercial Arbitration. The dissection of same shows that in order to constitute ‘International Commercial Arbitration’ following elements are required: – (i) Arbitration relates to disputes arising out of legal relationships whether contractual or not (ii) dispute must be commercial under the law in force in India (iii) at least one of the parties is not an Indian national/resident/body corporate.

Therefore, from the definition it is apparent that three types of Awards are covered under the 1996 Act. Firstly, purely domestic awards where both the parties are Indian nationals and the award is made in India, secondly, awards passed in International Commercial Arbitration seated in India, thirdly, awards passed in International Commercial Arbitration seated outside India.

The present paper deals with issues arising in enforcement of awards passed in foreign seated International Commercial Arbitration.

1. LEGISLATIVE PROVISIONS AND ISSUES

International Commercial Arbitration has brought about revolutionary change and certainty in International trade & finance, albeit the humungous growth world commerce has witnessed because of it, the very nature of International Commercial Arbitration though intended to provide simplicity to international commercial disputes, is riddled with complexities which sometimes defeats the very purpose of the whole proceedings. Since the very nature of International Commercial Arbitration involves multiple-jurisdictions, the issues with respect to the enforcement of these awards are multifarious.

1.1. JUDICIAL INTERPRETATION OF SECTION 48

Both the Geneva Convention and New York Convention provides for limited grounds on which the recognition & enforcement of an award can be refused. Some of the common grounds inter-alia are: –

a. That the agreement/submission on which the arbitration proceedings were initiated and award passed was valid under the law applicable to it.(3)

b. That the arbitral award passed is against the public policy of the country where the said award is to be enforced.(4)

c. That the arbitral award is not capable of settlement under the law of the country where the said award is intended to be enforced.(5)

Similarly, these grounds have been incorporated into the 1996 Act under the respective headings. (6)

1.1.1 PUBLIC POLICY UNDER SECTION 48(2)(B)

The most controverted and notorious of all the grounds specified in the Conventions and subsequently incorporated in the 1996 Act is the ground of refusal to enforce the arbitral award if the same is against the public policy of the country where it is sought to be enforced. This wide, unfettered and vague liberty given to the countries has left the enforcement of arbitral award at the mercy of the judicial set-up of the country where the said award is sought to be enforced. The concept of public policy is highly dynamic as it changes in matters of months. What may be acceptable in a country today may be highly objectionable to the same public after three months. Different countries have different culture, different political outlook, different approach to economic activities and similarly different perceptions of justice & morality. It is on the culmination of these perceptions that a public policy of a country is skeletonised. Therefore, it is quite possible that a particular award may be enforced in one country and at the same time may be refused in another on the ground of public policy. The volksgeist or the common conscience of the people of a country creates and shapes its public policy. This creates a problem in the process of getting a foreign award recognized and enforced because it is not easy to comprehend whether an award in a country would be according to its public policy. Moreover, these perceptions coupled with the judge’s own notions of fairness and justice creates prejudice in the mind of Courts against a foreign decree or judgment. Resultantly, judges end up adopting a parochial view. So, in the interest of the parties, it is essential that uniformity in the interpretation of public policy is established.

Due to the vagueness of the term ‘Public Policy’ particularly in India, it is the interpretation of the term by the judiciary which decides the fate of the award. In, as back as 1824, J. Burrough in ‘Richardson v. Mellish’ (7) rightly described public policy as “a very unruly horse and when once you get astride it you never know where it will carry you. It may lead you from sound law. It is never argued at all, but when other points fail”

In order to attract foreign investment and foster bilateral trade it is pertinent that a country has a pro-arbitration legal system. Therefore, to establish an arbitration friendly environment it is imperative for the Courts and law of the country to be have a non-obtrusive and non-interfering approach with respect to foreign arbitral awards. The Courts interpreting the provision of these Conventions and Statute play a very pivotal role. They are required to de horse the litigation mind-set imbibed in them and give impetus to the arbitration keeping in view the economic implications and furthering the legislative intent of the statute. However, the interpretation accorded by the Indian Courts in few of its landmarks judgment reveals a contrary approach.

One of the very first and landmark judgment pronounced by the Hon’ble Supreme Court of India was in ‘Renusagar Power Electric Ltd.v. General Electric‘ (8) (hereinafter referred to as’ Renusagar’) wherein a two-faceted objection was raised against the award passed by the arbitral tribunal, firstly that the Renusagar was unable to present its case and secondly that the enforcement of the award would be against the Public Policy. One of the bizarre contention with respect to the second objection was that the term “Public policy” has to be interpreted in a liberal sense so as to include not only the Public Policy of India but also the Public policy of the country which governs the contract. Fortunately, this argument was rejected by the Apex Court. It is quite apparent from the judgment in Renusagar that up till that point, the judiciary was well acquainted with the outlook with which it was supposed to approach the field of public policy. In this case, the Apex Court settled the controversy by enunciating that a narrow interpretation is to be accorded to the term public policy so far as it related to foreign award and thus specified a different standard for international public policy. The Court in its ratio laid down the criteria for refusal of enforcement on the ground of public policy, that if the same is against: (i) Fundamental policy of India law (ii) Interests of India (iii) Justice or Morality.

The jurisprudence established by Renusagar saw its first modification in ‘Oil and Natural Gas Corporation v. SAW Pipes ltd.’ (9) (hereinafter referred to as ‘ONGC case’)wherein the ambit and scope of Court’s jurisdiction in case where award passed by the Arbitral Tribunal is challenged under Section 34 of the 1996 Act was under consideration. In adjudication of the same, the Court brought a distinction between enforcement of an award which has attained finality and challenging the validity of the award and thus in case of latter it enlarged under the scope of ‘public policy’ under Section 34 of the 1996 Act, empowering Courts with wide power of judicial review and thus advocated that narrow meaning should not be assigned to the term ‘public policy’ instead a wide interpretation should be bestowed. This led the Court to modify the ratio laid down in Renusagar whereby it introduced a new ground to the list propounded in list enumerated in Renusagar, i.e. refusal to enforce is the same is patently illegal. Ground of Patent illegality as propounded in this case included violation of statutory provisions or violation of express provisions of contract. This judgment virtually allowed the parties to challenge the entire award on merits and re-argue the case, thus frustrating the entire purpose of arbitration (10). The Court erred in not realising that the ratio laid down in Renusagar was with respect to foreign awards only keeping in view the standard public policy in private international law.

The judgment in ONGC although rightly criticised for its adverse effect on domestic arbitrations, it is however often mis-read and mis-understood for its implications on foreign awards. The judgment, if read in isolation, has no bearing on the awards passed by Foreign Arbitral Tribunal and therefore as such the ground of patent illegality is not only by the virtue of the judgment in ONGC applicable to foreign awards. However, the issue arises when this judgment is read with the ratio laid down by the Hon’ble Supreme Court in ‘Bhatia International v. Bulk Trading SA’ (11) (hereinafter referred to as ‘Bhatia’s case’), wherein it was held that Part -I of the 1996 Act is applicable to all the arbitrations irrespective of the place of arbitration unless the parties by agreement, express or implied, choose to exclude all or any of the provisions of Part- I. In this scenario, if the party apparently fails to exclude the provisions of Part I then the foreign arbitral award can be subjected to the wide test of Public Policy under Section 34 including the ground of patent illegality. The ruling in Bhatia’s case was followed by the Courts in many subsequent judgments (12) and subsequently led to ‘Venture Global Engineering v. Satyam Complex Services Ltd.’ (13) (hereinafter referred to as ‘Venture Global’). The catastrophic judgment in Venture Global, where the Hon’ble Court after considering the judgment in Bhatia’s case, endorsed the same by further propounding that foreign awards can be challenged in India under Section 34 and that the same is not inconsistent with Section 48 of the Act. The thought process of the court behind the same is abundantly clear from the judgment wherein the Court observed that the broader/extended test of public policy under Section 34 which includes the ground of patent illegality has to be made applicable to foreign awards. Similar trend continued till the judgment in ‘Phulchand Exports Ltd. v. O.O.O Patriot’ (14) (hereinafter referred to as ‘Phulchand’) wherein the Supreme Court completely diminished the already fading line between Section 34 and Section 48 of the Act with respect to public policy and brought the two at the same pedestal. The Court expressly held that the ratio laid down in ONGC is also applicable to foreign awards. The ratio of Renusagar was overruled to the extent that narrow meaning is to be given to ‘Public policy’ under Section 48. It was held that wide meaning has to be given and that the award could be set aside. Phulchand was culminationof series of judgments which deviated from Renusagar.

Before venturing into the later decision which have fortunately over-ruled the above-mentioned case law, it is crucial to first dissect and divulge into the chaotic position of law created by the co-joint reading of the judgments in ONGC, Bhatia, Venture Global and Phulchand.

Firstly, the decision in Bhatia it correct to the extent of its concern towards the awards passed in countries not party to the convention and to identify that there indeed is lacuna on behalf of the legislature in not providing for the same. Although it’s a different debate whether the legislature actually intended the enforcement of awards passed in a non-convention country. However, the same couldn’t have been corrected by subjecting all the awards passed in International Commercial Arbitrations to the Part-I of the 1996 Act including those passed by countries party to the Conventions. As the scheme of Part-I of the 1996 Act is wide and in comparison, to Part- II more regulatory and controlling in nature.

Secondly, an important aspect which the Hon’ble Court in Bhatia and Venture Global missed was that in Renusagar the ratio was laid down by the Court after identifying the distinction between the application of ‘Public policy’ test in domestic matters and in cases involving foreign element/ conflict of laws. Although the concept of public policy is the same in nature in these two spheres of law i.e. municipal and in conflicts on law, its application differs in degree and occasion, corresponding to the fact that transactions containing a foreign element may constitute a less serious threat to municipal institutions than would purely local transactions (15). The same is manifest in ONGC judgment as the Court recognized this distinction and was careful so as to confine the extended test of public policy (Patent illegality) to domestic awards only although the whole point of extending the same was erroneous but still it was not read into Section 48 but only confined to Section 34.

Thirdly, the reason why only limited grounds were given in New York and Geneva Convention for refusal to enforce an award, which were subsequently incorporated into the 1996 Act, was that these grounds were intended to provide minimum resistance against foreign awards and as such the intent of the legislature was to facilitate the growth and development of International trade and Commerce. “The essence of the theory of transnational arbitration is that the institution of international commercial arbitration is an autonomous juristic entity which is independent of all national courts and all national systems of law” (16). Therefore, in order to properly encapsulate the intent of the legislature an interpretation which facilitates the enforcement of a foreign award ought to be accorded to the provisions of Part-II. Thus, Part-II cannot be read together with Part-I instead it has to be read in isolation. The purpose of consolidating all three acts and enacting 1996 Act was limited to the extent of having a comprehensive legislation. Both the parts cater to different class of arbitrations therefore both are amenable to their respective provisions only. While a domestic award can be set aside in India a foreign award can only be set aside in the country where it has been passed (17). Thus, the role of the enforcement Court is very limited in this regard. Therefore, the Court in Venture Global ignored the very essence behind the special purpose of Part-II.

Subsequently, the landmark judgment of the Hon’ble Supreme Court in ‘Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc.’ (18)(hereinafter referred to as ‘Balco’) straightened out the deviations and brought the position of law in sync with the legislative intent. In this case although the interpretation of the term ‘public policy’ was not under consideration before the Court. Instead the issue was whether the Part-I is applicable to foreign seated International Commercial Arbitration. Answering the same in negative the Hon’ble Supreme Court rightly propounded that both Part I and Part II or the Act are mutually exclusive. It acknowledged the existence of territorial principle in the UNICTRL Model Law which forms the basis of 1996 Act and thus seat of the arbitration determines the supervisory jurisdictions of the Courts on them. The Court over-ruled the ratio laid down in Bhatia and in Venture Global.

Finally, in Shri Lal Mahal Ltd. v. Progetto Grano SPA (19) (hereinafter referred to as ‘Lal Mahal’) the three-judge bench of the Hon’ble Supreme Court laid the controversy with regard to public policy to rest by confirming and reiterating Renusagar’s interpretation of ‘Public Policy’. It was held that the scope of public policy under Section 48 is limited and thus although the expression ‘public policy’ is same in both Section 34 and 48, its application is different and as such in case of former wider meaning as given in ONGC case and in case of latter a narrow and strict meaning has to be given and therefore Court endorsed the test of public policy as originally conceived in Renusagar. Commenting on Section 48 the Court further limited its scope by expressly barring any “second look” or review of the award under Section 48.

The implications of Balco judgment read with Lal Mahal with respect to public policy is that a foreign award cannot be set aside under Section 34 and thus is excluded from being challenged under its wide provisions more particularly from the wide ambit of public policy. Moreover, when enforcement of a foreign award is challenged under Section 48(2)(b) the Court only has to see whether the award is against (i) fundamental policy of Indian Law (ii)interest of India (iii) justice and morality.

These judgments particularly Balco ushered a new era in Arbitration law in India and significantly helped in casting aside Indian judiciary’s anti-arbitration reputation worldwide.

1.1.2. POSITION IN DIFFERENT COUNTRIES

Since the UNCITRAL Model Law as well as the respective conventions have been adopted by most of the states in the world. The domestic statutes of these contracting states also have similar provision of public policy. In most of the developing and developed economies there is minimal court intervention in foreign awards as well as a very narrow and strict approach towards the doctrine of public policy.

In Singapore, the courts have consistently accorded a very strict and narrow interpretation to the term ‘public policy’ as is evident from the landmark judgments such as PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA (20),in the para 59 of the judgment the Hon’ble Court correctly stated that public policy encompasses a very narrow scope. In the preceding paragraph the Court also considered the decision of Indian Supreme Court in ONGC and criticised the same as the Court considered the view taken by Indian Supreme Court in ONGC inconsistent with the legislative intent of the Act. Similar view has been reiterated in later judgments of the Court of Appeal (21).

Similarly, Australian Courts have also emphasised for the requirement of a pro-arbitration bias in landmark cases like ESCO Corporation v Bradken Resources Pty Ltd (22), and Uganda Telecom Limited v Hi-Tech Telecom Pty Ltd.(23). In France, the public policy has been given two levels of interpretation, one for domestic matter and another for international consideration, a narrow interpretation is given to the latter. American Courts also necessitates that a pro-arbitration bias has to be followed.(24)

1.1.3. 20^TH LAW COMMISSION REPORT AND SUBSEQUENT ARBITRATION AND CONCILIATION (AMENDMENT) ACT, 2015

The 20^th Law Commission in its 246^th report titled ‘Amendment to the Arbitration and Conciliation Act 1996’ (25) proposed significant amendments to the 1996 Act. With respect to the term ‘Public Policy’ the Commission after considering the reasoning laid down in Renusagar, ONGC and Lal Mahal further opined to curtail the ambit of ‘Public policy’ under both Section 34 & 48 by proposing to amend the ratio of Renusagar to the extent of deleting the ground of “Interest of India”. The commission proposed insertion of an explanation to both these sections whereby the scope of public policy is limited to (i)fundamental policy of Indian law (ii) basic notions of morality or justice. Instead of retaining the ground of patent illegality under the tern ‘Public policy’ the Commission proposed insertion of Section 34(2A) whereby the only the purely domestic awards are made subject to the test of patent illegality.

These proposals of the Law Commission were duly incorporated in the Arbitration and Conciliation (Amendment) Act, 2015 and subsequently Sub-Section 2A was inserted in Section 34 along with respective explanations to Public Policy in both Section 34 and Section 48.

Thus, the Arbitration and Conciliation Act as is currently drafted limits the scope of public policy under Section 48.

2.2. AWARDS PASSED IN NON-CONVENTION & NON-RECIPROCATING COUNTRIES

From the above discussion it is conclusive enough that Part-I of the Act applies to purely domestic awards and awards passed in India seated International Commercial Arbitrations whereas Part-II of the Act is confined to New York Convention awards and Geneva Convention awards. However, the 1996 Act is silent as to the treatment of an award where the seat of the arbitration is not party to either of the above-mentioned Conventions.

Furthermore, another complexity that arises is that New-York Convention gives the liberty to the contracting parties to opt for the inter-alia reciprocity reservation (26).This reciprocity reservation gives the party liberty to make the convention applicable only to the territory of the State party to the Convention. While this reservation is optional in case of New York Convention the same is obligatory in case of Geneva Convention (27). India has incorporated this reciprocity clause with respect to both the Conventions in the 1996 Act.(28) Thus, even though 142 countries are signatory to the New York Convention, its application in India will be limited to the States which are notified by the Central Government in the official Gazette. So far only 48 countries have been notified in the official gazette by the Central Government.(29)

In case of awards passed in Non-Convention countries there have been varying judicial decision. A landmark decision on this issue can be traced back to the Supreme Court judgment in Bhatia wherein the Court observed that there were lacunae in the legislation as the legislature failed to provide for the enforcement of these awards. Thus, the Court held that since Part-II is strictly applicable to awards passed in Convention, for the purpose of enforcement, the awards passed in Non-Convention countries will be considered domestic awards and as such will be covered under Part-I of the Act.

Whilst the judgment in Bhatia faced severe criticism particularly for exposing foreign awards to the provisions of Part-I. This particular aspect of judgment though later over-ruled, provided remedy to parties holding awards made in Non-Convention countries.

Later in Balco, a five-judge constitution bench over-ruled this law sub-planted in Bhatia by along with its entire ratio. The Court observed that the very fact the legislature did not provide for the enforcement of awards made in Non-Convention countries does not ipso facto means that there is lacuna in the Act. Court held that the Act has not provided for the treatment of these awards then it means that the parliament intended that these awards should not be enforced.

Thus, after the judgment in Balco it is clear that the 1996 Act as it is drafted now, does not provide for the enforcement of these awards. However, in another case law much prior to Bhatia where the provision of Arbitration Protocol and Convention Act 1937 were under consideration the Supreme Court held that the awards passed in Non-Convention country can be enforced in India on the same grounds as in English Common Law i.e. on the ground of equity, justice and good conscience (30). The correctness & applicability of this case law is still uncertain.

Therefore as of now, until parliament comes to rescue, there is no remedy for the awards passed in Non-Convention Countries.

2.3. DOCTRINE OF DOUBLE EXEQUATUR

The Geneva Convention, 1923, had a very peculiar feature, opposed to the idea promulgated in the New York Convention. It stated that the burden to make the enforcement of the foreign award lay upon the shoulders of the party seeking such an enforcement. In other words, the concept of exequatur had to be satisfied i.e. the party seeking such an enforcement had to confirm the award from the competent authority of the country in which the award is made final.

The proved to be extremely cumbersome and fraught with structural defects, as some countries, pursuance of same, required a written order from the court of the country where the award has been passed, along with the consent of the country in which the award is to be made enforceable, subsequently resulting in the anomaly of ‘double exequatur’.

This confusion and multiplicity of proceedings that ensued were a menace in the interest of justice, and as a preventive measure, the New York Convention, 1958, was enacted with a view to achieve two goals, namely i) to eliminate the requirement of the double exequatur, and ii) to shift the burden of proof upon the party that pleads to refuse the enforcement, as the enforcement should be the norm, and the refusal, a dire exception.

The New York Convention, vide Article V(1)(e), vehemently moved to eradicate the existence of ‘double exequatur’ by replacing the word ‘final’ with the word ‘binding’, as a stoic effort to indicate that the enforcement of an award doesn’t necessitate the exequatur of the country in which the award has been passed. As a consequent ramification, a foreign award under the New York Convention becomes enforceable immediately, unless it is vilified or overruled as per Article V(1)(e) of the Convention, or Article 48(2) of the 1996 Act.

The first time these changes were recognised in the Indian context was by the Delhi High Court in Universal Tractor Holdings V. Escorts Limited (31), where the question arose as to the binding nature of a foreign award, where no prior consent was taken from the competent authority of the country passing the award, in lieu of double exequatur.

The Delhi High Court, in this landmark judgment, put its weight behind the New York Convention, and categorically stated that it is not necessary for the party seeking the aforesaid enforcement to show leave from the country passing such an award. The court further recognised three aspects of the New York Convention, namely;

The concept of double exequatur was disregarded
The term ‘final’ was replaced with ‘binding’ when it came to enforcement of foreign awards
The burden was shifted from the party seeking enforcement to the party pleading for a refusal.

The judgement debtors, aggrieved by the order being in favour of the decree holder, filed an appeal in the Supreme Court vide Escorts Ltd. v. Universal Tractor Holdings (32). The apex court reiterated the decision of the Delhi Court and stated specifically, as a ratio, that it is not necessary to take leave from the country where the award was passed, thereby abrogating double exequatur.

In Dicey and Morris (33), it is stated as follows:

“…The Private International Law Committee in their Fifth Report suggest that an Award is “binding” if no further recourse may be had to another arbitral tribunal (e.g. an appeals tribunal); and that the fact that recourse may be had to a Court of law does not prevent the Award from being ‘binding’. One thing seems clear: the Conference which approved the New York Convention wished to avoid a double exequatur of arbitration Awards, one in the country where the Award was made and the other in the country where it is sought to be enforced.”

The question regarding double exequatur isn’t novel to the Indian jurisprudential and judicial circles. Prior to the Universal Tractor case, it has come up in a catena of judgements such as Oil and Natural Gas Commission v. Western Company of North America and Smita Conductors Ltd. v. Euro Alloys Ltd.(34)

2.4. POINT OF DEPRTURE IN JURISDICTIONAL CONTEXT

An arbitral award may be set aside if it is found that the tribunal by which it was passed did not have adequate jurisdiction to pass the award. Jurisdictional grounds include matters where the validity of the arbitration agreement itself comes into question. These grounds also include matters in which the issues whether the tribunal was properly constituted and whether the matters submitted to the tribunal under the agreement are arbitrable have been raised. An award may be challenged if the constitution of the arbitral tribunal is of an irregular nature. If it is found that a party lacked the capacity to enter into an arbitration agreement, the agreement is to be considered as void.

Usually, challenges under the ground of incapacity are made at the beginning of the arbitration proceedings. In Republic of Poland v. Saar Papier Vertriebs GmbH (35), it was held that if a party does not raise an objection to the lack of capacity at the outset of the arbitration, it risks losing its right to challenge at a subsequent date. An award may also be challenged on the grounds of irregularity in the conduct of arbitral proceedings. For example, a proceeding in which a proper notice of appointment of the arbitrators or of the commencement of the arbitration proceedings is not given to a party, or a proceeding in which a party was not given the opportunity to present its case is an irregular proceeding. However, mere irregularity in proceedings is not enough to make the award subject to challenge. The challenging party must prove that such procedural irregularity has violated its rights and has caused an injustice. If the procedural errors committed by the arbitrators have led to a mistake of facts but not a mistake of law, the award passed by such erroneous proceedings cannot be challenged (36).

2.5. COMPETENCE-COMPETENCE DOCTRINE

The essence of an arbitration proceeding lies in the principle of party-autonomy and the doctrine of competence-competence. Both these doctrines personify the entire purpose behind the process of arbitration. Therefore, if these sacrosanct doctrines are not given their due regard by the Courts then the whole idea behind the alternative dispute redressal gets frustrated.

The competence-competence doctrine garnered recognition due to its empowering nature. The text, quite literally, translates to the statement that ‘a court is competent to decide its own competence’. This doctrine states, as a general principle of international commercial arbitration, that every tribunal has the authority to demarcate its own jurisdiction. This empowers them to determine the jurisdiction of the substantive disputes they deal with. This principle has been incorporated under Section 16 as well as Section 45 of the 1996 Act.

However, in accordance with the much-celebrated belief, absolute discretion is constitutional blasphemy, and thus it mustn’t be mistaken as the sole authority for the same. This doctrine, most certainly, does not abrogate the right of an enforcing court which isn’t at the seat of arbitration to review the decision of the tribunal. Fouchard Gaillard and Goldman, in their book on International Commercial Arbitration, categorically state that;

“Arbitrators cannot be sole judges of their jurisdiction. That would be neither logical nor acceptable. In fact, the real purpose of the competence-competence rule is in no way to leave the question of the arbitrators’ jurisdiction in the hands of the arbitrators alone. Their jurisdiction must instead be reviewed by the courts if an action is brought to set aside or to enforce the award.” (37)

The main issue lies in the judicial approach towards the doctrine. If the intent of the legislature is to establish a pro-arbitration environment then the ideal judicial approach should be aimed towards the minimum curtailment of the Arbitral Tribunal’s autonomy. Thus the over-zealous Courts in order to foster International Trade and finance should ensure minimal supervisory intervention under Section 45.

Section 45 mandates the judicial authority to compulsorily refer the matter for arbitration (38) unless if the agreement is null and void, inoperative of being performed. This conditional Compulsion given under Section 45 is not to be understood so as to be conferring the judicial authority power to review the legality of the entire agreement altogether. An inquiry into the legality of the substantive contract under the guise of Section 45 is not permissible.(39) The scope of inspection under Section 45 is minimum. The standard of review by a Court should be limited to ascertaining if the agreement prima facie is not null and void or there is nothing patently or fundamentally illegal on the fact of it. (40)

DISTINCTION BETWEEN RECOGNITION AND ENFORCEMENT WITH RESPECT TO PERIOD OF LIMITATION FOR ENFORCING A FOREIGN AWARD

It is essential that a reasonable period of time is prescribed in each country during which a foreign award can be recognized and enforced. In many countries, the period of limitation in this regard is so long that the parties do not apply for the enforcement of the award whereas in others, the period of limitation is short, compelling the parties to get their awards enforced in due time. For instance, in Canada, the period of limitation in this regard is two years (41). This period is sufficient enough to compel the parties to apply for the recognition and enforcement of their awards.

In India, the law of limitation is ambiguous in this regard. Different High Courts have given different opinions. These conflicting opinions are result of the confusion surrounding the nature of the awards i.e. whether an award is to be first recognised as a decree and then enforced or it is a deemed decree and thus directly liable to be enforced. The Part -II of the Act only uses the expression ‘enforcement’ and does not use the expression ‘recognition’. two expressions ‘recognition’ and ‘enforcement’ are distinct and have different meanings. An award if enforced is necessarily recognized by the Court which orders its enforcement but an award which is recognized may not necessarily be enforced. Recognition alone may be asked for as a shield against re-agitation of issues with which the award deals. Where a Court is asked to enforce an award, it must not only recognize the legal effect of the award, but also use legal sanctions to ensure that it is carried out (42) . Recognition is a defensive process which is used as a protection against an endeavor to raise in a fresh proceeding in respect of the case that has already been adjudicated and decided in an earlier arbitration proceeding. A party which receives a favourable award is entitled to raise an objection to subsequent re-consideration with respect to the dispute which was the subject matter of the arbitration, since the earlier judgment will act as res-judicata (43). As opposed to the expression ‘recognition’, which is a defensive process, ‘enforcement’ is a weapon of offence as it involves recovery of the award amount, if the award is monetary in nature. In cases of foreign seated International Commercial Arbitration as per 1996 Act, the Courts are concerned only with the ‘enforcement’ of these awards not the recognition as the statute has bestowed the same by declaring them as ‘deemed awards’ (44).

In Noy Vallesina v. Jindal Drugs Limited (45), the Hon’ble Bombay High Court opined that for enforcement of a foreign award it first has to be recognized as a decree by the Indian Court by which the residuary provision (46) of the Limitation Act would be applicable whereby the limitation period is 3 years and it is only after the recognition of the same as a decree that the limitation period for the enforcement of a decree i.e. 12 years would be applicable.

A different view to this point was taken in Compania Naviera Sodnac v. Bharat Refineries Ltd. (47) by Madras High Court which rightly stated in light of Section 49 (48) of the 1996 Act that foreign awards are deemed decrees therefore there is no need for a prior recognition of the same for the purpose of enforcement. Therefore, the limitation period will only be of 12 years.

The position of law stated in Compania Naviera Sodnac case stands substantiated with a 2001 judgment of Hon’ble Supreme Court in M/s Fuerst Day Lawson Ltd. v. Jindal Exports Ltd.(49) wherein it was held that a foreign award is already stamped as a decree. Therefore the Court only has to see whether the award is enforceable and it is the answer is in affirmative then the Court can proceed to execute the same.

INTERIM RELIEF AND THE BHATIA-BALCO CONUNDRUM

As an aberration however, the entire row regarding the applicability of the provisions of Part I of the Act on disputes in lieu of part II, defined so ably by the Balco judgment, which stated that both the parts are mutually exclusive and independent, is criticized on just one ground – that of lack of provisions and clarity of interim relief in matters of International Commercial Arbitrations and Foreign Awards.

The purpose of enacting section 9, read in the light of model law and the UNCITRAL Rules, is to provide a relief in the nature of an interim measure of protection. The intention behind the insertion of section 9 was to ensure that during the pendency of the arbitral proceedings, the party against which the award is sought does not unlawfully and dishonestly dispose its assets, or siphon off liquefiable investments and contingency funds in order to frustrate the purpose of the proceedings and make it infructuous. The efficacy of this section lay in the existence of a preventive measure that would curb such shrewd and astute tactics. The order of the court shall fall in the category of interim measures of protection as distinguished from an all time or permanent protection. The purpose is to protect the rights of the parties, which are under adjudication, to be frustrated (50). Section 17, on the other hand, deals with interim measures that can be potentially undertaken by an Arbitral Tribunal in exercise of their powers under this Act.

The Amendment Act, 2015, inserted subsection (2) in section 2, which clearly elucidates that in respect of matters under section 9 of the Act, amongst other sections, the ambit shall extend to matters of International Commercial Arbitration as well, even if the seat is outside India, unless the parties have expressly denounced it. This amendment sought to find a solution to the Bhatia-Balco conundrum, which were contrary judgements of the Supreme Court on the applicability of section 9 on other parts apart from Part I.

In Bhatia International V. Bulk Trading & Ors., (51) it was emphatically held by the Hon’ble Supreme Court that the provisions of sections 9, 17, and 2, all of which are incidental to the issue of interim measures, are, unless expressly excluded in pursuance of a prior agreement, equally applicable to matters of International Commercial Arbitration held outside India. Furthermore, it was opined by the court that general principles that are applicable to all types of arbitration such as those contained in section 9 and 17 are not repeated in every part as such principles are applicable to all parts and chapters unless the contrary is expressly stated.

The Bhatia International judgement was reiterated by the Hon’ble Supreme Court in Venture Global Engineering v. Satyam Complex Services Ltd. (52), where the court, in absolute affirmation of the aforementioned Bhatia judgment, held that provisions of part I such as those expressly stated in section 9 and section 17, are also applicable to foreign awards in international commercial arbitration where the seat is outside India, unless expressly excluded.

However, as an unfortunate clog in the swiftly rotating wheel of arbitration in India, what followed in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc.(53) (BALCO), spelt doom for the erstwhile Bhatia and Venture Global Judgments. The apex court in BALCO, while prospectively overruling the abovementioned judgements, categorically stated that no application for interim relief or for interim injunction simpliciter, in lieu of sections 9 and 17, is maintainable for foreign seated arbitrations.

This had an adverse effect on parties seeking interim application, as on one hand, there is no explicit provision in Part II regarding interim measures, and the entire purpose of enacting a holistic, inclusive legislation was to ensure that unnecessary and prolonged delays cease to exist, and there is clarity on certain matters that the erstwhile separate legislations (1937, 1940, and 1961 Acts) might have overlooked. On the other hand, by disallowing the provisions of section 9 to be applied to foreign seated matters, there lingers ambiguity and a conundrum in the face of vacant and hollow legislation, as to questions of interim applications, thereby frustrating the entire arbitral process.

THE ARBITRATION AND CONCILIATION (AMENDMENT) ACT, 2015

In order to address and rectify this hotly debated conundrum, the amendment Act, 2015, sought to introduce sub-section (2) to section 2, which, as a final clarification on this issue, stated that unless an agreement to the contrary exists, provisions such as section 9, section 27, and section 37(1)(a) and (3) shall be applicable to matters where the seat is outside India. Thus, by reiterating what was said in the 2002 and 2008 judgments of Bhatia and venture global, balance was restored, and while stating that Part I and Part II are mutually exclusive, it saved the purpose and essence of section 9 and the concept of interim measures from being abrogated.

CONCLUSION

The swiftly increasing importance of arbitration, and a hassle free, efficacious, and progressive legislation or procedure in pursuance of the same, is undeniably akin to lesser sharp swords on the iron throne of dispute resolution and judicial excellence. Perhaps had Austin been alive today, he would be immensely proud of the fact that modern legislation concerning arbitration has accorded paramount importance to the ‘enforcement’ part of the arbitral awards. It is, however, a juxtaposition of what is, and what ought to be, in betwixt of which our current legislation languishes, albeit marching swiftly towards the ideal structure.

The author, throughout this paper, have sought to demarcate and expressly elucidate the importance of the 1996 Act, the subsequent 2015 Amendment, previous international conventions and the UNCITRAL Model, and the erstwhile Indian statutes that embodied the same.

Due emphasis has been laid on a catena of issues that demanded a discussion, such as the evolution of the doctrine of public policy, and the crucial change made in section 48 by the 2015 Amendment Act; on the independent nature and importance of Parts I and II of the 1996 Act and the importance of awards passed when the seat is in India or otherwise; on doctrines such as competence-competence and double exequatur, and the authority of the court to decide its own jurisdiction, but to simultaneously understand that it isn’t to be inscribed on stone, and the removal of multiplicity of proceedings while adhering the 1958 convention respectively; on the distinction between enforcement and recognition, and the importance of the context of territorial nexus; and on matters regarding purpose and scope of interim measures such as those provided in section 9 and 17, and their applicability in light of subsequent Supreme Court judgments and parliamentary amendments.

Finally, in furtherance of the cited authorities and the study undertaken above, the author would finally like to suggest measures that can be adopted by legislature in furtherance of creating a pro-arbitration bias and turning India into a global commercial hub for arbitration, so that the country doesn’t have to face the utter embarrassment which it faced in White Industries Australia ltd. v. Republic of India (54). Although, recommendations of 20^th Law Commission in its 246^th report has squarely covered and rectified the problematic areas. Thus, the author, while applauding the legislature for incorporating most of these recommendations, also reiterate the proposal of Law Commission that the objections under Section 48 should be subject to a strict period of limitation. Moreover, the hearing of the same should be expeditious and made time-bound most preferably within a period of one year from the date of the passing of the award. Furthermore, since the interim award passed by the arbitral tribunal would not constitute a final judgment or decree under Section 13 and 44A of CPC, the same cannot be enforced in India, thus in such a case the order-holder stands remediless. Therefore, deliberation on the same should be considered and suitable mechanism adopted.

It is, however, our solemn duty to protect and preserve the progressive intention of the legislature behind the enactment of such statutes, and to ensure that our structure doesn’t turn out to be akin to an arbitration between a lion and a lamb where the lamb is in the stomach of the lion the next morning, and yet a false notion of justice is apparently achieved.

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Kashif Zafar Hussain is Partner, Clarion Legal.

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1. Ibid.

2. TDM Infrastructure Pvt. Ltd. v. UE Development India (P) Ltd., (2008) 14 SCC 271.

3. New York Convention, art. (V) 1 (a).

4. Geneva Convention, art 1 (e)

5. New York Convention, art. (V) 2 (a)

6. The Arbitration and Conciliation Act, 1996 (Act 26 of 1996) ss. 48, 54.

7. (1824) 2 SCC 252.

8. (1994) Supp (1) SCC 644.

9. (2003) 5 SCC 705

10. Varuna Bhanrale, Ashish Kabra, et. Al. “Widened scope of “Public Policy” leaves arbitral awards susceptible to further scrutiny by courts”, available at:http://www.nishithdesai.com/information/research-and-articles/nda-hotline/nda-hotline-single-view/article/widened-scope-0f-public-policy-leaves-arbitral-awards-susceptible-to-further-scrutiny-by-courts.html?no_cache=1&cHash=bd6a9abae83687808f2ccb78211ea511.

11. (2002) 4 SCC 105.

12. Indian Technical Services Pvt. Ltd. v. Atkins PLC (2008) 10 SCC 308; Infowares Ltd. v. Equinox Corp. (2009) 7 SCC 220.

13. (2008) 4 SCC 190

14. (2011) 10 SCC 300

15. R.H. Graveson, Conflict of Laws, 165 (Eastern Book House, Delhi, 7th edn., 2016)

16. Sir Michael John, Transnational Arbitration in English Law 193 (Oxford University Press, Oxfordshire, 2014)

17. International Standard Electric Corp. v. Bridas Sociedad Anonima Petrolera, 745 F.supp.172

18. (2012) 9 SCC 552

19. AIR 2013 SC 552

20. (2007) 1 SLR 597; (2006) SGCA 41

21. AJU v. AJT, (2011) SGCA 41

22. (2011) FCA 905.

23. Uganda Telecom Limited v. Hi-Tech Telecom Pty Ltd (2011) FCA 131.

24. Parsons & Whittemore Overseas Co., Inc. v. Societe Generale De L’industrie Du Papier 508 F.2d 969 (2nd Cir. 1974)

25. Law Commission of India, 246^th Report on Amendment to the Arbitration and Conciliation Act 1996 (Auhust, 2014).

26. Convention on Recognition and Enforcement of Foreign Arbitral Awards, 1958, art. 1(3)

27. Convention on the Execution of Foreign Arbitral Awards, 1927, art. 1

28. The Arbitration and Conciliation Act, 1996 (Act 26 of 1996) ss. 48, 54.

29. Australia; Austria; Belgium; Botswana; Bulgaria; Central African Republic; Chile; China (including Hong Kong and Macau) Cuba; Czechoslovak Socialist Republic; Denmark; Ecuador; Federal Republic of Germany; Finland; France; German; Democratic Republic; Ghana; Greece; Hungary; Italy; Japan; Kuwait; Malagasy Republic; Malaysia; Mauritius, Mexico; Morocco; Nigeria; Norway; Philippines; Poland; Republic of Korea; Romania; Russia; San Marino; Singapore; Spain; Sweden; Switzerland; Syrian Arab Republic; Thailand; The Arab Republic of Egypt; The Netherlands; Trinidad and Tobago; Tunisia; United Kingdom; United Republic of Tanzania and United States of America

30. Badat & Co. Bombay v. East India Trading Co. (1964) AIR 538.

31. 2012 (3) ArbLR434 (Delhi)

32. (2013) 10 SCC 717

33. Dicey, Morris, The Conflict of Laws, 586 (New York University Press , New York, 1999).

34. (2001) 7 SCC 728

35. Andrew Tweeddale, Arbitration of Commercial Disputes: International and English Law and Practice, (Oxford University Press,Oxfordshire 2007).

36. Coimbatore District Podu Samgam v. Bala Subramania Foundary, AIR (1987) SC 2045: (1987) 3 SCC 723: 1987 (3) SCJ 157: 1987 (2) Supreme 215.

37. Fouchard, Gaillard, et. al,, International Commercial Arbitration, 586 (Kluwer Law International).

38. State of Orissa v. Klockner & Co., AIR (1996) SC 2140.

39. Sasan Power Ltd. v. North American Coal Corporation India Pvt. Ltd. AIR 2016 SC 3974.

40. Emmanuel Gaillard, The Urgency of not Revising the New York Convention, (Albert Jon Van Den Berg ed., 2009).

41. Yugraneft Corp v. Rexx Management Corp., (2010) 12 SCC 19.

42. Brace Transport Corporation of Monrovia, Bermuda v. Orient Middle East Lines Ltd., Saudi Arabia, AIR 1994 SC 1715.

43. Harsh Sethi , Arpan Kr. Gupta, International Commercial Arbitration & Its Indian Perspective, 255-56 ( Eastern Books, Delhi, 2011).

44. The Arbitration and Conciliation Act, 1996 (Act 26 of 1996) ss. 49, 58.

45. 2006 (3) ARBLR 510 (Bom).

46. Limitation Act 1963, Entry No. 113 to the Schedule

47. AIR 2007 Mad 251.

48. Enforcement of Foreign Awards- Where the Court is satisfied that the foreign award is enforceable under this Chapter, the award shall be deemed to be a decree of that Court.

49. (2001) 6 SCC 356.

50. Ashok Traders v. Gurumukh Das Saluja (2004) 3 SCC 155.

51. (2002) 4 SCC 105.

52. (2008) 4 SCC 190.

53. (2012) 9 SCC 552.

54. IIC 529 (2011)

Columns

Importance of HR and Employment Advisory in India – By Tania Ahlawat

September 18, 2020 0Comments 245Views

Which is the most complicated, love-hate, unavoidable relationship in this world? That one person you wish you could do without but definitely can not? I’m sure no one guessed it right the first time around and I’ve given you food for thought on a very different tangent but for now, I want to draw your attention to that ever oscillating relationship of the professional world – that of an employer with his employees or vice versa.

The independent success of the hirer and the hired are so co-dependent on the effective and time-bound execution of a task as well as proof of talent to climb the corporate ladder, that this association is the most crucial relationship to invest in. The productive functionality and co-existence of both have proved to be the winning formula for long term job satisfaction and success of a company.

The search for educated, competent and driven employees is the goal of all companies which for a country like India with the growing efforts to provide skill and education is an ever-rising number. However, the actual challenge arises in the retention of talent. It is absolutely imperative for an organisation to have an HR team that not just successfully manages a competent person.

But also works in tandem with competent employment advisors or a resourceful labour law firm to keep them consistently updated about the applicable law and review employment contracts and employment manuals on periodic bases. Engaging experienced and proactive labour law advisors has become the key to retention and successful management of a company.

Partner Tania Ahlawat of Ahlawat & Associates discusses the importance of sound employment policies and why companies should invest in engaging a labour law advisor to ensure all obligations are met and rights covered.

Importance of HR and Employment Advisors In India

The compliance of the ever-changing and complex employment or labour laws in India should be the foundation of an organisation. Most companies believe that hiring an HR professional/ advisor ticks that box, however, the qualification of an HR professional in most countries, especially India is that of strategically managing employees within an organization and remaining compliant with the basic employee rights and employer obligations. This may seem like the cost-efficient means to meet an end and companies put off engaging a labour law firm for as long as possible. It is this very thought process that has proven to be extremely counterproductive, leading to tedious correction, government penalties and unfortunate labour disputes.

Employment matters may seem as simple as retention, terms of employment and method of termination. Unfortunately, it is not that simple and it is only when an employee slaps the employer/ company with a legal notice or worse, drags them to the labour court, does a company realise the importance of covering their rights and obligations in a more detailed manner.

Where does the complexity lie?

#1 The Basics:

Indian labour law refers to laws regulating the workforce in India. Labour and employment laws are part of the Concurrent List in the Indian Constitution, which means that the government at the Centre and each State have equal powers to enact laws relating to all labour and employment matters in India. The legislations can be categorized as follows:

Labour laws enacted by the Central Government, where the Central Government has the sole responsibility for enforcement.
Labour laws enacted by the Central Government and enforced both by Central and State Governments.
Labour laws enacted by the Central Government and enforced by the State Governments.
Labour laws enacted and enforced by the various State Governments which apply to respective States.

Therefore, laws such as sexual harassment, workmen’s compensation and employee provident fund are central acts and applicable to all organisations irrespective of the sector, while there are state acts such as shops and establishment, gratuity, minimum wages, can vary from state to state.

#2 Categories of Employees

Further, Indian labour and employment laws distinguish between the kind of employees as workmen (blue-collar jobs) and non – workmen (white-collar jobs or those in management/supervisory/ administrative roles). Most legislations regulate the service conditions of and protect the rights of only those who qualify as workmen under Indian laws.

The service conditions of non-workmen are more or less governed by the terms of the employment contracts/ agreement and internal policies such as employment manual, sexual harassment policies, etc of a company. Determining whether a particular employee is a workman or not or can fall within the definition of both, has to be undertaken on a case by case basis.

#3 Understanding the Laws Involved

Apart from the hundreds of State labour legislation and approximately 50 Central labour-related laws, it is important to be well versed with the Indian Contract Act, which is the principal legislation governing contracts in India.

Some other points that add to the complexity of HR and Employment:

India does follow the US model of employment-at-will.
Agreements which restrict trade, business or profession are void
Differed impact on employment bonds, non-compete and non-solicit covenants
Dealing with India’s very well entrenched trade unions and their propensity to raise disputes

Traditionally, the Indian government at both the federal and state level try to ensure a high degree of protection for workers hence draft legislation in favour of the labours/ employees. Therefore, labour law reforms are an ongoing and continuous process and the government has been introducing new laws and amending the existing ones in response to the emerging needs of the workers in a constantly dynamic economic environment.

Labour Law Consultant – The Only Solution

If you will not hire a doctor to do a mechanics job, why would you hire an HR personnel to take care of matters best left to a labour law firm? When dealing with matters of such legal density, engaging a labour law advisor is the smartest move a company can make.

We live in a world of the most enterprising people, especially in India, where every professional think they can do the other’s job, because how hard can it be? However, hiring a labour law consultant without the pre-requisite qualifications and corporate experience will do more harm than good and that is when the penalties start piling up, lawsuits and labour disputes come knocking on the door and your so-called hired labour expert or accountant is clueless about what was missed or how to resolve the issue.

Who is a labour law consultant?

Irrespective of the nomenclature used to describe it, in simple terms – A labour law advisor must be a qualified lawyer or preferably law firm that has experience in labour and corporate matters. When dealing with a company’s employment agreements, contracts, policies, regulations, umpteen corporate filings, employee issues, severance payouts, tweaking corporate contracts for maximum legal benefit and protection, a corporate law firm which also specialises in HR and Employment advisory is essential. It negates all the possible loopholes in contracts, ensures labour law compliance at all times and is responsible for favourably handling of all workmen and non-workmen related arbitrations and disputes.

Who needs a labour advisor?

Whether you are a startup, a partnership, an established company with 5, 50 or 500 employees, or an international company that has set up a company in India or has a branch office or a subsidiary in India, there are immense benefits gained by engaging a labour law firm. Be it organizational structuring, employment compliance laws, acquisitions, outsourcing, data protection, international workforce relations, litigations or risk management, an experienced corporate labour law firm can provide you with the optimal solution and help the company cut costs.

One size fits all

A company may have multiple branches or operations across the country, therefore one might think, considering the applicability of varies labour laws being state-specific, that hiring a labour law consultant in Mumbai for that state and another labour law consultant in Bangalore for that state and yet another labour law consultant in Gurgaon for that state is an expense you will have to incur.

Fortunately, that is not a scenario you will need to deal with. A labour law firm worth their salt, will not only be well versed with the laws in every state but will also be resourceful enough to have their state-specific labour law consultants in place to deal with any employment matters that require attention.

Conclusion

Labour law at any one time is both the product of and a component of, struggles between different interests in society. Experience shows that labour legislation can only fulfil these functions effectively if it is responsive to the conditions and needs of the parties involved. The most efficient way of ensuring that these are taken fully into account is if those concerned are closely involved in formulating a solution.

As the saying goes “you can’t make everyone happy” but if you have resourceful, solution-driven labour law advisors, you can come very close to achieving it.

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Tania Ahlawat is Co- Managing Partner, Ahlawat & Associates.

Columns

Ownership and Authorship of AI under the ambit of Copyright law – By Ramit Rana

September 15, 2020 0Comments 245Views

Introduction –

There is no doubt about the fact that technology has been rising in these contemporary times like never before. The unprecedented technological advancement has sparked a series of debates and a demand to change legal parameters regarding technology and law. One such trending topic is about the ownership and authorship of artificial intelligence under the purview of copyright law. Artificial intelligence is the branch of computer science which deals with the simulacrum of intelligent behavior in computers. In other words, it is the capability of a machine to mimic intelligent human behavior. One such human behavior is related to creating an Intellectual Property that qualifies to get copyright protection. Artificial Intelligence is capable of creating works which are subject to copyright. It includes works related to literary, artistic, scientific or musical domain. There is a tremendous scope of Artificial Intelligence in today’s time. Now, the Artificial Intelligence industry has an international market worth billions of dollars. This rapid rise of Artificial Intelligence has started legal debates about the ownership and authorship issues related to the fusion of Intellectual Property and Artificial Intelligence.

Artificial Intelligence as an Author of creative work under Copyright-

AI systems have already become a dominating factor in our day to day life. Artificial intelligence has achieved landmark success in various fields such that now we have AI doctors, AI lawyers, AI therapists. Moreover, AI systems have also significantly influenced many other fields, such as automated weapons,espionage, and even social policymaking. Apart from this, Artificial intelligence has created various works as an author that are subject to copyright. In 2016,the new Rembrandt painting was created by an AI system nearly 400 years after the death of the famous Dutch painterRembrandt Harmenszoon van Rijn. The painting was based on Rembrandt’s use of geometry, composition, and painting materials. AI systems have also made original works in almost every copyrightable medium, such as music, poetry, literature, news, and many others. There is an unfathomable rise in the technological input of intellectual property and Artificial intelligence is one of the harbingers of it. Thus, there is a scope of authorship and ownership under copyright laws in the creative work made by artificial intelligence. However, there is still a major roadblock to Artificial intelligence copyright due to current rigid and inflexible copyright legislation.

Ownership and Authorship of AI under Copyright law-

Section 2(d) of the Copyright Act deals with the Author of the work. Thus, Authorship under copyright is about an individual ‘who causes the work to be created’.Apart from this, the copyright must have an owner i.e. it must be owned by the human. Intellectual property is the intellectual creation of the human mind and it cannot belong to a non-living entity. Section 17 of the copyright act,1957 specifically deals with the first owner of the copyright entities such as literary, dramatic, musical, and artistic work in different circumstances There is a major conflict regarding the authorship and the ownership of the entities created by Artificial Intelligence. Authorship and Ownership both have similar factors regarding the artificial intelligence -generated work i.e. when the work is made by the artificial intelligence with human Interference, at that point the responsibility for work should be asserted by the human who gives systematic contributions to the artificial intelligence, Meanwhile, if there is an occurrence of the work made by the artificial intelligence with no human impedance, the proprietorship might be guaranteed by the copyright proprietor of the artificial intelligence, for example, the one who holds copyright over the artificial intelligence programming.

International Copyright Scenario for AI generated work –

Now the question arises who will be the author or owner of the creation of artificial intelligence which is subject to copyright? There is still ambiguity about the ownership and authorship of the creative work of Artificial intelligence among various country’s copyright laws. There is a wide polarisation such that some countries like Australia, the USA are not in favor of non-human copyright. Whereas countries like UK, Ireland, New Zealand, Hong Kong, etc are in favor of giving authorship to the programmer of Artificial intelligence. (details can be accessed here.)The copyright of computer generated works in the U.K. is attributed to “the person by whom the arrangements necessary for the creation of the work are undertaken,” under section 9(3) of the U.K. Copyright, Designs and Patents Act, 1988.Whereas, the U.S. Copyright Office practices have clearly stated thatthe Office won’t register works delivered by a machine or simple mechanical procedure that works arbitrarily or consequently with no inventive information or intercession from a human author.In the majority of cases, it is the programmer of the artificial intelligence who will be the first owner even if the work has been done by artificial intelligence. Therefore, there are different legal views regarding authorship and ownership in different countries.

Case laws based on AI ownership and authorship –

There is a sharp contrast in judgments among courts of different countries. In case of Acohs Pty Ltd v Ucorp Pty Ltd, Acohs attested that copyright subsisted in the HTML code of the security data sheets, the Australian Federal Court found that the machine-produced HTML codes were not liable to copyright protection as they were not made by the human creators. Whereas, UK High Court in Nova Production Ltd v. Mazooma Game Ltd, held that the author of the computer game was the programmer who “devised the appearance of the various elements of the game and the rules and logic by which it was generated and who wrote the relevant computer program”. There are landmark cases where it has been held that non-human entity cannot be an owner of copyrighted work. In the case of Naruto vs Slater, which is also known as the monkey selfie case, the question arises that does the monkey has copyright over his selfie? The U.S. court held that the animal lacks statutory standing to claim copyright infringement of photographs known as the ‘Monkey Selfies. In Goldstein v. California, the U.S. Supreme Court interpreted the authorship requirement to include “any physical rendering of the fruits of creative intellectual or aesthetic labor.”. The Court reasoned that, in most cases, in order for a computer to generate any kind of artistic work, it would require significant input from an author or user. Thus, there is no uniformity of legal viewin the matter of ownership and authorship of artificial intelligence.

Indian Copyright Act Conundrums-

As per Indian Copyright laws, there is still much ambiguity regarding ownership of non-human entities such as artificial intelligence. There is no concrete point regarding the first owner of a non-human entity and the transfer of its ownership under section 17 of the copyright act. Moreover, Moral rights of the author granted under section 57, are not applicable to the lifeless, emotionless Artificial Intelligence. Apart from this, there are many economic rights issues related to artificial intelligence. The collection of royalty from humans to AI or from one AI to another AI is inapplicable and almost impossible in practice. Also, there is an accountability issue regarding Artificial Intelligence as to who will be liable for any wrongdoings done by an AI. One cannot punish or penalize a non-human entity as it doesn’t have any possibility. Thus, Indian copyright legislation is not flexible and hence India is not ready for this. Henceforth, there is hardly any chance of Artificial Intelligence to get its separate ownership or authorship as per the Indian scenario.

Future Scenario-

In today’s time, technology is ubiquitous such that many of the games, music, paintings, etc are generated by Artificial intelligence. The current bone of contention is the fact that the lack of copyright protection in Artificial intelligence which can make the creators of games, music, etc economically vulnerable in the market. Their work can easily be copied by anyone which will lead them to drastic loss. Therefore, there should be a consensus among lawmakers to frame laws according to the current need for a technologically advanced society. World Intellectual property Organization (WIPO) has taken an initiative by organizing WIPO conversation on Artificial Intelligence and Intellectual Property. The aim of this initiative is to find a proper uniform legal parameter to curb this present issue of Artificial Intelligence and Intellectual Property. In the future, there is a possibility of amendments in copyright laws regarding ownership and authorship of advanced technology such as Artificial Intelligence. Also, There are suggestion to apply hire work doctrine in AI related works. According to the doctrine, if a work is made for hire, the employer is considered the creator of the work even if the employee i.e. AI actually created such work.

Conclusion-

The ongoing advancement of Artificial Intelligence abilities has brought about an expanded number of Artificial Intelligence -created works and an understanding that humans are no longer the onlysource of creativity, inventiveness, or advancement.Theoutdated nature of the current Copyright laws, neglects to mirror this contemporary reality, that there is an advent of an incredible number of Artificial Intelligence created works into the open space. The current copyright laws are not in favor of the programmers and owners of Artificial Intelligence devices and this limits their willingness to invest resources in the future development of Artificial Intelligence. There is an urgent need for the legal incentive which will financially benefit those responsible for Artificial Intelligence development, resulting in a significant boost in research and investment in the Artificial Intelligence sector. It is said that law is never constant, it changes with the change in society. Thus, there should be new copyright law that are flexible with the rising demand of the authorship and ownership of the Artificial Intelligencegenerated work.

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Ramit Rana is a founding Partner at STEP NEXT LEGAL Advocates & Legal Consultants, New Delhi. He is a Practising Advocate at the Delhi High Court and other lower courts of Delhi. He has industry experience in Networking and Testing, as he has a B.Tech degree in Computer Science. Ramit has worked on cases under IPR (Trademark, Patents &Copyright), RERA, CCI, Arbitrations, DRC, Cyber Laws, Data Protection and Privacy laws, Property, Recovery Suits, 138 NI Act, Custom Matters, Arbitration, L.A, N.C.L.T. and all kinds of Civil and Criminal matters. He can be contacted at ramitrana89@gmail.com.

Columns

The Puzzle Of The Geospatial Technology Legal Framework – By Ankit Guha and Spandan Saxena

September 10, 2020 0Comments 177Views

A. BACKGROUND

Geospatial technology is a multidisciplinary field that covers various forms of technology that are implemented in fields such as archaeology, geology, geography, statistics, etc. At present, there are a multitude of laws in India with respect to geospatial technologies and the regulation of geospatial data. This article attempts to enumerate the various legislations currently in force and the draft stage.

The different types of geospatial technologies include the following:

a. Remote Sensing: this includes images and data collected by instruments from space – or through aerial cameras and sensor-based platforms.

b. Geographic Information Systems (GIS): This includes software-based tools for mapping and examining data collected and the georeferencing of data. These systems are put to use to detect geographic patterns, such as disease clusters stemming from toxins, sub-optimal water access, etc.

c. Global Positioning System (GPS): a network of satellites which can give precise coordinate locations to civilian and military users.

B. INDIAN FRAMEWORK

The usage of such geospatial technology results in the creation of geospatial information. In the Indian context, geospatial information has been defined under the draft Geospatial Technology Bill, 2016 (“draft Bill”) as “geospatial imagery or data acquired through space or aerial platforms such as satellite, aircrafts, airships, balloons, unmanned aerial vehicles including value addition; or graphical or digital data depicting natural or man-made physical features, phenomenon or boundaries of the earth or any information related thereto including surveys, charts, maps, terrestrial photos referenced to a co-ordinate system and having attributes.”

The definition of geospatial information has been kept very open-ended and can potentially incorporate everything from satellite imagery, to books, navigation systems, newspapers, magazines, town plans, survey data, to every smartphone that bears a GPS chip.

C. GEOGRAPHIC INFORMATION SYSTEMS

Traditionally, mapping has been an activity solely reserved for the Survey of India, which was formed in the year 1767. However, the National Map Policy of 2005 was released on May 19, 2005 due to the recognition of the importance of high quality spatial data in various facets such as conservation of natural resources, socio-economic development, infrastructure development etc. The intent of this policy was to “liberalize access” to spatial data without compromising security concerns.

With the aim of realizing the security concerns, a dual-classification was designed with respect to the maps, namely – i) Defence Series Maps (“DSM”) and ii) Open Series Maps (“OSM”). While the DSM constitutes of topographical maps that mainly cater to defence and security requirements of the country, the OSM supports developmental activities.

Henceforth DSMs, irrespective of whether they are in analogue or digital form, shall be classified under this category and the power to issue guidelines with respect to their usage lies mainly for developmental purposes. They are not openly accessible ipso facto and need to gain the ‘unrestricted’ tag after clearance from the Ministry of Defence.

While the DSMs are completely classified, restrictive provisions regarding usage and dissemination of OSMs have also been incorporated in the policy. OSMs are not allowed to show any civil and military Vulnerable Areas and Vulnerable Points (VA’s/VP’s). OSMs on a scale larger than 1:1 needs to be disseminated either by sale or an agreement, which will allow the entity engaged in the activity of mapping to add its own value to the maps obtained, and to share these maps with others.

D. REMOTE SENSING

In 2011, the confusion pertaining to applicability of the National Map Policy of 2005 to both territorial and satellite mapping was resolved with the release of the Remote Sensing Data Policy of 2011. The policy recognized the importance of remote sensing data and noted that it was largely used by government and non-government users from Indian and foreign remote sensing satellites.

However, again banking upon the need for security considerations, the policy was released with the purpose of “…managing and/ or permitting the acquisition/dissemination of remote sensing data in support of developmental activities“. The Department of Science (“DOS”) was made the nodal government agency for all actions pertaining to remote sensing data under the policy.

A perusal of the policy indicates a parallelism between the Remote Sensing Policy of 2011 and the National Map Policy of 2005. Thus, similar to National Map Policy of 2005, Remote Sensing Policy of 2011 assures of a government managed Indian Remote Sensing Satellites (IRS) Programme, the data produced by which will be owned solely by government, and any users other than the government would be provided with licences on a case to case basis, only if such need arises. It further provides that any attempt at acquiring and/or dissemination of remote sensing data within India shall require permission through the nodal government agency.

National Remote Sensing Centre (“NRSC”) of the Indian Space Research Organisation (ISRO)/ DOS is vested with the authority to acquire and disseminate all satellite remote sensing data in India, both from Indian and foreign satellites. NRSC is also supposed to maintain a systematic National Remote Sensing Data Archive, and a log of all acquisitions/ sales of data for all satellites. Therefore, nodal government agencies were established for both terrestrial mapping and satellite imagery, former being Survey of India and latter NRSC.

E. CIVIL AVIATION – OPERATION OF DRONES

Drones, as we know them today, represents a significant development in robotic technology. Unmanned aerial vehicles, or Remote Piloted Aircraft Systems (“RPAS”), as termed by the International Civil Aviation Organisation have been defined as “a set of configurable elements consisting of a remotely-piloted aircraft, its associated remote pilot station(s), the required command and control links and any other system elements as may be required, at any point during flight operation.”

In December 2018, the Director General of Civil Aviation issued the Civil Aviation Requirements 1.0 (“CAR”) under Rule 15A and 133A of The Aircraft Rules, 1937. The CAR classifies RPAS based on their weight (including payload), as under:

a. Nano – under 250 grams.

b. Micro – between 250 grams and 2kg.

c. Small – between 2kg and 25kg.

d. Medium – between 25kg and 150kg.

e. Large – greater than 150kg.

Eligibility for operators of RPAS:

a. Citizen of India; or

b. Central Government or any State Government or any company or corporation owned or controlled by either of the said Governments; or a company or a body corporate provided that:

it is registered and has its principal place of business within India;
its chairman and at least two-thirds of its directors are citizens of India; and,
its substantial ownership and effective control is vested in Indian nationals; or

c. Company or corporation registered elsewhere than in India, provided that such company or corporation has leased the RPAs to any organization mentioned as above.

For all RPAS other than those falling under the nano category, the mandatory equipment required for operation are:

a. Global Navigation Satellite System (GPS);

b. Return-to-home;

c. Anti-collision light;

d. ID plate;

e. Flight controller with flight data logging capability; and

f. Radio Frequency Identification (RFID) and SIM/ No Permission No Takeoff.

Additionally, RPAS would be required to operate within visual line of sight, during the day and only up to a maximum altitude of 400 feet. The CAR also demarcate the permissible zones for operation of drones into three categories:

a. Red Zone: operation of drones not permitted

b. Yellow Zone: this is a controlled zone and operation of drones would be subject to prior approval. For operation of drones in this zone, filing of flight plans and obtaining Air Defence Clearance/ Flight Information Centre number would be necessary.

c. Green Zone: this would form the uncontrolled airspace with an automatic permission for operation of drones.

The Regulations also define No Drone Zones which would cover the following areas:

a. Radius areas of 5 kms from airports;

b. Within a radius of 50 km from the international borders;

c. Within a radius of 5 km from Vijay Chowk; and

d. Buildings such as State Secretarial Complex in State Capitals, strategic and military installations.

The enforcement actions provided for include:

a. Suspension or cancellation of registration or permit;

b. Penalties under the Aircraft Act, 1934 or Aircraft Rules; and

c. Penalties under Indian Penal Code such as:

Section 287 – negligent conduct with respect to machinery; or
Section 336 – act endangering life or personal safety of others; or
Section 337 – causing hurt by endangering life or personal safety of others; and
Section 338 – causing grievous hurt by act endangering life or personal safety of others.

The Drone Policy 2.0 was released on January 15, 2019, which sought to address issues of Beyond Visual Line of Sight (“BVLOS”) and regulate autonomous operations. The key changes proposed were:

a. Privacy by Design – Manufacturers to adhere to a privacy by design standard, eliminating risks of future privacy harms by operators.

b. Drone Corridors – To segregate air routes of commercial airliners and RPAS, limit human presence, enable autonomous takeoff and landing at designated drone-ports.

c. BVLOS and night-time operations – as opposed to the current visual line of sight of 400ft, and day-time operations only.

d. Droneports – To facilitate takeoff and landing, operate as distribution centers/ cargo holds and battery charging stations. They must be integrated with Digital Sky Platform and listed on the National Droneport Registry.

e. Unmanned Aircraft System Traffic Management (“UTM”) – Hyper-local and real-time tracking and management of UAS induced traffic in Drone Corridors and detect obstacles and avoid collisions. UTM will give Digital Sky the ability to electronically disrupt operations of a rogue UAS.

f. Artificial Intelligence (“AI”) – Enable re-routing and de-confliction by integrating AI into the UTM system.

g. Airworthiness Certifications – Pursuant to BVLOS and night-time operations, it provides a broad criterion of airworthiness for manufacturers.

h. Commercial Operations of UAS – Enables transportation of bodily organs for emergencies, surveying of landscapes and active monitoring of rail/road traffic.

i. Foreign Direct Investment (“FDI”) – 100% FDI under the automatic route in RPAS-based commercial civil aviation services, subject to the financial threshold applicable to non-scheduled air transport operators.

j. Insurance – Cover the liability towards the cargo, hull loss and third-party risks that may be possessed due to commercial and/or BVLOS operations of the UAS in compliance with the Carriage by Air Act, 1972 or any other applicable law.

k. Autonomous Operations – Pursuant to BVLOS, operators need not maintain control of the UAS, provided it is used for ethical purposes and subject to protection of security and privacy of human beings.

F. GLOBAL POSITIONING SYSTEMS

Global positioning systems play a key role in identification, location and navigation. These systems are reliant solely on the operation of satellites and transmission/ collection of data using such satellites.

The legislative framework surrounding the operation of satellites in India is currently lacking. India has ratified the 1967 Outer Space Treaty, 1968 Rescue Agreement, 1972 Liability Convention, and 1975 Registration Convention that govern the operation of satellites in outer space.

Despite such ratifications, no specified legislation has yet been enacted by the Indian legislation in this regard. The only legislations that are considered to constitute India’s policy framework with respect to the operation of satellites and handling of data generated in this regard are the SATCOM policy of 2000 and the Remote Sensing Policy of 2011. However, neither are applicable to satellite navigation.

The SATCOM policy of 2000 addresses policy implementation for nationwide satellite communications whereas the Remote Sensing Policy of 2011 establishes the modalities for permitting and/or managing remote sensing data acquisition to support development activities.

The data collected with respect to global positioning systems would be deemed as geospatial information under the draft Bill and any person or entity generating such geospatial information would be required to obtain a license to own or use such data.

G. WAY FORWARD

As is evident, there is a lack of a specific and concise legislation with respect to regulating the domain of geospatial information. The draft Bill was introduced in the right direction in 2016 but has not been worked upon further. At present, the regulation of geospatial technology is spread across various policy documents that often leads to a lot of confusion with respect to compliance for businesses operating in this business domain.

The regulation of geospatial technology and geospatial information is a multi-faceted domain which spills into many sectors including information technology, space technology, remote sensing, defence, and even aviation if we include drones. Therefore, any policy related to geospatial must be framed by an interdisciplinary group which has a clear understanding of what the technology means and entails.

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Ankit Guha is Partner, Algo Legal.

Spandan Saxena is Associate, Algo Legal.

Columns

Real-time market of Electricity in India – By Apoorva Misra and Soumya Prakash

September 4, 2020 0Comments 218Views

Real-time Electricity Market (RTEM) is an attempt by the Central Electricity Regulatory Commission (CERC) to create a platform that can help address and balance the power supply-demand scenario in the country. RTEM is an organized market platform to enable buyers and sellers across India to meet their energy requirements closer to real-time operation. It is intended to act as a tool to mitigate and address challenges to grid management due to intermittent and variable nature of renewable energy generation and help integrate higher quantum of renewable energy resources into the grid.

Key objectives of the RTEM platform

The aim to launch RTEM is to provide an alternate mechanism for the distribution companies to access and manage their power demand on a larger platform. The press release issued by Ministry of Power on the launch of RTEM stated that “The Government of India has set a target of attaining 175 GW in renewable capacity addition by 2022 by driving accelerated renewable penetration pan-India. Shorter bidding time, faster scheduling, and defined processes (e.g. gate closure) are expected to enable the participants to access resources throughout the all-India grid, promoting competition. It would lead to better portfolio management by the utilities with efficient power procurement planning, scheduling, and imbalance handling.”

With the introduction of RTEM in India, generating companies can sell their un-requisitioned capacity in order to enable efficient use of such generating power plants. As reflected from the Statement of Reason (SOR) issued along with the amendment regulations, CERC is of the view that participation in RTEM should not only be limited to those participants who have participated in the day-ahead collective transactions, as in cases of long term PPA holders who typically self-schedule their capacities on day-ahead basis. Therefore, CERC expects the State Commissions to implement Scheduling, Metering, Accounting and Settlement of Transactions in Electricity (SAMAST) in the states to let intrastate entities participate in RTEM.

Additionally, generators having long term PPAs with distributing companies can be allowed to participate in RTEM as this would help distribution companies to address and manage the variability of RE generation. Besides, on the issue of ramping up constraints (increasing the generation capacity) as highlighted by the stakeholder, CERC is of the view that the generating companies should consider and submit the bids for the quantum of power to be injected after considering ramping and other technical capabilities. Regulations have been amended to allow the generating companies with long term PPAs to access the power market through RTEM for transacting their un-requisitioned surpluses.

In this regard, CERC has provided that the generating companies whose tariff is determined under section 62 of the Electricity Act, 2003 (Act) and are willing to participate in this market, will have to share the net gains (after accounting for the energy charge) with the distribution companies in the ratio of 50:50 subject to a ceiling of share of 7 paise/kWh to the generating company and the balance to the beneficiary. This mechanism aims to provide adequate compensation to both buyers and sellers participating in the market. The distribution companies also have the option to sell power in the RTEM for which the entire net gains will be retained by such distribution company. However, generating companies falling under section 63 of the Act, will have to sign a supplementary PPA based on mutual agreement between the generator and the buyer.

Functioning of the RTEM

CERC vide a suo-moto order dated May 28,2020, stipulated methodology of allocation of transmission corridor to the power exchanges for RTEM. National Load Despatch Centre (NLDC) has been entrusted with the responsibility to announce the available transfer capacity for RTEM transactions. Both the power exchanges, therefore, will have to allow trading of electricity considering the notified available transfer capacity. The initial market clearing volume derived in this process shall be submitted to NLDC, which shall verify the combined volume cleared in both exchanges against the available transfer capacity for RTEM. If the combined cleared volume of both the power exchanges is within the available transfer capacity for RTEM, transaction will be allowed by NLDC. However, in an event the combined volume exceeds the available transfer capacity for RTEM, the allocation of available corridor margin between the two power exchanges shall be in the ratio of the initial market clearing volume of RTEM in the respective power exchanges. The power exchanges shall thereafter submit the final trades in conformity with the available corridor margin as provided by the NLDC. It is intended that this entire process will be completed within a single time block i.e. within 15 minutes.

Further, CERC has provided detailed instructions on how RTEM trading is to be conducted and ordered for the complete records of transactions on monthly basis to be compiled and examined by the NLDC. With the approval from CERC, the Power Exchange India Limited (PXIL) and Indian Energy Exchange (IEX) had started the RTEM trading platforms for electricity transactions from June 1, 2020.

How does the platform work?

As per the Regulations and guidelines, RTEM would be opened every 30 minutes in a day, based on double-sided closed auction with uniform price. The concept of ‘gate closure’ has been introduced for bringing in the desired firmness in schedules during the hours of market operation. Buyers or sellers shall have the option of placing buy or sell bids for each 15-minute time block.

There will be 48 auction sessions during the day with delivery of power within one hour of closure of the bid session. This would aid distribution companies to manage power demand-supply variation and meet 24×7 power supply needs in a better manner.

Along with the implementation of RTEM, detailed rules with provisions relating to price discovery mechanism, timelines, bidding formats, enabling generators to buy back power in case of forced outage, etc. are to be prepared suitably by the power exchanges as per the amended Regulations. Till the issuance of such procedures, the distribution companies are required to follow the current practice if they so choose to sell their share of capacity in a generating station in the RTEM. Therefore, appropriate mechanism is awaited to be issued by the power exchanges for stable payment structure so that the initiative taken is not misused and inefficiencies are addressed.

Conclusion

By introducing RTEM, India has joined the league of a handful of nations to have such a market. While the generating companies and distribution companies can manage their power supply and purchase arrangement more optimally, it will likely result in optimization of power purchase cost and serve the consumers with a reliable supply of power. RTEM will not only provide easy access for sale and purchase of electricity throughout the country but will also be a platform for trade of power, which will augment sale of electricity with the neighboring countries by creating a common pool for cross border market.

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Apoorva Misra is Partner at Hemant Sahai Associates. He is a member of the firm’s highly reputed energy and regulatory disputes practice. His primary area of practice is Regulatory Disputes Litigation in the Power sector, Oil & Gas projects, Mining & Environment.

Soumya Prakash is Associate at Hemant Sahai Associates.

Interviews

Interviews, Trending

Time for judiciary to introspect and see what can be done to restore people’s faith – Justice Lokur

February 3, 2020 0Comments 606Views

Justice Madan B Lokur, was a Supreme Court judge from June 2012 to December 2018. He is now a judge of the non-resident panel of the Supreme Court of Fiji. He spoke to LegitQuest on January 25, 2020.

Q: You were a Supreme Court judge for more than 6 years. Do SC judges have their own ups and downs, in the sense that do you have any frustrations about cases, things not working out, the kind of issues that come to you?

A: There are no ups and downs in that sense but sometimes you do get a little upset at the pace of justice delivery. I felt that there were occasions when justice could have been delivered much faster, a case could have been decided much faster than it actually was. (When there is) resistance in that regard normally from the state, from the establishment, then you kind of feel what’s happening, what can I do about it.

Q: So you have had the feeling that the establishment is trying to interfere in the matters?

A: No, not interfering in matters but not giving the necessary importance to some cases. So if something has to be done in four weeks, for example if reply has to be filed within four weeks and they don’t file it in four weeks just because they feel that it doesn’t matter, and it’s ok if we file it within six weeks how does it make a difference. But it does make a difference.

Q: Do you think this attitude is merely a lax attitude or is it an infrastructure related problem?

A: I don’t know. Sometimes on some issues the government or the establishment takes it easy. They don’t realise the urgency. So that’s one. Sometimes there are systemic issues, for example, you may have a case that takes much longer than anticipated and therefore you can’t take up some other case. Then that necessarily has to be adjourned. So these things have to be planned very carefully.

Q: Are there any cases that you have special memories of in terms of your personal experiences while dealing with the case? It might have moved you or it may have made you feel that this case is really important though it may not be considered important by the government or may have escaped the media glare?

A: All the cases that I did with regard to social justice, cases which concern social justice and which concern the environment, I think all of them were important. They gave me some satisfaction, some frustration also, in the sense of time, but I would certainly remember all these cases.

Q: Even though you were at the Supreme Court as a jurist, were there any learning experiences for you that may have surprised you?

A: There were learning experiences, yes. And plenty of them. Every case is a learning experience because you tend to look at the same case with two different perspectives. So every case is a great learning experience. You know how society functions, how the state functions, what is going on in the minds of the people, what is it that has prompted them to come the court. There is a great learning, not only in terms of people and institutions but also in terms of law.

Q: You are a Judge of the Supreme Court of Fiji, though a Non-Resident Judge. How different is it in comparison to being a Judge in India?

A: There are some procedural distinctions. For example, there is a great reliance in Fiji on written submissions and for the oral submissions they give 45 minutes to a side. So the case is over within 1 1/2 hours maximum. That’s not the situation here in India. The number of cases in Fiji are very few. Yes, it’s a small country, with a small number of cases. Cases are very few so it’s only when they have an adequate number of cases that they will have a session and as far as I am aware they do not have more than two or three sessions in a year and the session lasts for maybe about three weeks. So it’s not that the court sits every day or that I have to shift to Fiji. When it is necessary and there are a good number of cases then they will have a session, unlike here. It is then that I am required to go to Fiji for three weeks. The other difference is that in every case that comes to the (Fiji) Supreme Court, even if special leave is not granted, you have to give a detailed judgement which is not the practice here.

Q: There is a lot of backlog in the lower courts in India which creates a problem for the justice delivery system. One reason is definitely shortage of judges. What are the other reasons as to why there is so much backlog of cases in the trial courts?

A: I think case management is absolutely necessary and unless we introduce case management and alternative methods of dispute resolution, we will not be able to solve the problem. I will give you a very recent example about the Muzaffarpur children’s home case (in Bihar) where about 34 girls were systematically raped. There were about 17 or 18 accused persons but the entire trial finished within six months. Now that was only because of the management and the efforts of the trial judge and I think that needs to be studied how he could do it. If he could do such a complex case with so many eyewitnesses and so many accused persons in a short frame of time, I don’t see why other cases cannot be decided within a specified time frame. That’s case management. The second thing is so far as other methods of disposal of cases are concerned, we have had a very good experience in trial courts in Delhi where more than one lakh cases have been disposed of through mediation. So, mediation must be encouraged at the trial level because if you can dispose so many cases you can reduce the workload. For criminal cases, you have Plea Bargaining that has been introduced in 2009 but not put into practice. We did make an attempt in the Tis Hazari Courts. It worked to some extent but after that it fell into disuse. So, plea bargaining can take care of a lot of cases. And there will be certain categories of cases which we need to look at carefully. For example, you have cases of compoundable offences, you have cases where fine is the punishment and not necessarily imprisonment, or maybe it’s imprisonment say one month or two month’s imprisonment. Do we need to actually go through a regular trial for these kind of cases? Can they not be resolved or adjudicated through Plea Bargaining? This will help the system, it will help in Prison Reforms, (prevent) overcrowding in prisons. So there are a lot of avenues available for reducing the backlog. But I think an effort has to be made to resolve all that.

Q: Do you think there are any systemic flaws in the country’s justice system, or the way trial courts work?

A: I don’t think there are any major systemic flaws. It’s just that case management has not been given importance. If case management is given importance, then whatever systematic flaws are existing, they will certainly come down.

Q; And what about technology. Do you think technology can play a role in improving the functioning of the justice delivery system?

I think technology is very important. You are aware of the e-courts project. Now I have been told by many judges and many judicial academies that the e-courts project has brought about sort of a revolution in the trial courts. There is a lot of information that is available for the litigants, judges, lawyers and researchers and if it is put to optimum use or even semi optimum use, it can make a huge difference. Today there are many judges who are using technology and particularly the benefits of the e-courts project is an adjunct to their work. Some studies on how technology can be used or the e-courts project can be used to improve the system will make a huge difference.

Q: What kind of technology would you recommend that courts should have?

A: The work that was assigned to the e-committee I think has been taken care of, if not fully, then largely to the maximum possible extent. Now having done the work you have to try and take advantage of the work that’s been done, find out all the flaws and see how you can rectify it or remove those flaws. For example, we came across a case where 94 adjournments were given in a criminal case. Now why were 94 adjournments given? Somebody needs to study that, so that information is available. And unless you process that information, things will just continue, you will just be collecting information. So as far as I am concerned, the task of collecting information is over. We now need to improve information collection and process available information and that is something I think should be done.

Q: There is a debate going on about the rights of death row convicts. CJI Justice Bobde recently objected to death row convicts filing lot of petitions, making use of every legal remedy available to them. He said the rights of the victim should be given more importance over the rights of the accused. But a lot of legal experts have said that these remedies are available to correct the anomalies, if any, in the justice delivery. Even the Centre has urged the court to adopt a more victim-centric approach. What is your opinion on that?

You see so far as procedures are concerned, when a person knows that s/he is going to die in a few days or a few months, s/he will do everything possible to live. Now you can’t tell a person who has got terminal cancer that there is no point in undergoing chemotherapy because you are going to die anyway. A person is going to fight for her/his life to the maximum extent. So if a person is on death row s/he will do everything possible to survive. You have very exceptional people like Bhagat Singh who are ready to face (the gallows) but that’s why they are exceptional. So an ordinary person will do everything possible (to survive). So if the law permits them to do all this, they will do it.

Q: Do you think law should permit this to death row convicts?

A: That is for the Parliament to decide. The law is there, the Constitution is there. Now if the Parliament chooses not to enact a law which takes into consideration the rights of the victims and the people who are on death row, what can anyone do? You can’t tell a person on death row that listen, if you don’t file a review petition within one week, I will hang you. If you do not file a curative petition within three days, then I will hang you. You also have to look at the frame of mind of a person facing death. Victims certainly, but also the convict.

Q: From the point of jurisprudence, do you think death row convicts’ rights are essential? Or can their rights be done away with?

A: I don’t know you can take away the right of a person fighting for his life but you have to strike a balance somewhere. To say that you must file a review or curative or mercy petition in one week, it’s very difficult. You tell somebody else who is not on a death row that you can file a review petition within 30 days but a person who is on death row you tell him that I will give you only one week, it doesn’t make any sense to me. In fact it should probably be the other way round.

Q: What about capital punishment as a means of punishment itself?

A: There has been a lot of debate and discussion about capital punishment but I think that world over it has now been accepted, more or less, that death penalty has not served the purpose for which it was intended. So, there are very few countries that are executing people. The United States, Saudi Arabia, China, Pakistan also, but it hasn’t brought down the crime rate. And India has been very conservative in imposing the death penalty. I think the last 3-4 executions have happened for the persons who were terrorists. And apart from that there was one from Calcutta who was hanged for rape and murder. But the fact that he was hanged for rape and murder has not deterred people (from committing rape and murder). So the accepted view is that death penalty has not served the purpose. We certainly need to rethink the continuance of capital punishment. On the other hand, if capital punishment is abolished, there might be fake encounter killings or extra judicial killings.

Q: These days there is the psyche among people of ‘instant justice’, like we saw in the case of the Hyderabad vet who was raped and murdered. The four accused in the case were killed in an encounter and the public at large and even politicians hailed it as justice being delivery. Do you think this ‘lynch mob mentality’ reflects people’s lack of faith in the justice system?

A: I think in this particular case about what happened in Telangana, investigation was still going on. About what actually happened there, an enquiry is going on. So no definite conclusions have come out. According to the police these people tried to snatch weapons so they had to be shot. Now it is very difficult to believe, as far as I am concerned, that 10 armed policeman could not overpower four unarmed accused persons. This is very difficult to believe. And assuming one of them happened to have snatched a (cop’s) weapon, maybe he could have been incapacitated but why the other three? So there are a lot of questions that are unanswered. So far as the celebrations are concerned, the people who are celebrating, do they know for certain that they (those killed in the encounter) were the ones who did the crime? How can they be so sure about it? They were not eye witnesses. Even witnesses sometimes make mistakes. This is really not a cause for celebration. Certainly not.

Q: It seems some people are losing their faith in the country’s justice delivery system. How to repose people’s faith in the legal process?

A: You see we again come back to case management and speedy justice. Suppose the Nirbhaya case would have been decided within two or three years, would this (Telangana) incident have happened? One can’t say. The attack on Parliament case was decided in two or three years but that has not wiped out terrorism. There are a lot of factors that go into all this, so there is a need to find ways of improving justice delivery so that you don’t have any extremes – where a case takes 10 years or another extreme where there is instant justice. There has to be something in between, some balance has to be drawn. Now you have that case where Phoolan Devi was gangraped followed by the Behmai massacre. Now this is a case of 1981, it has been 40 years and the trial court has still not delivered a judgement. It’s due any day now, (but) whose fault is that. You have another case in Maharashtra that has been transferred to National Investigating Agency two years after the incident, the Bhima-Koregaon case. Investigation is supposedly not complete after two years also. Whose fault is that? So you have to look at the entire system in a holistic manner. There are many players – the investigation agency is one player, the prosecution is one player, the defence is one player, the justice delivery system is one player. So unless all of them are in a position to coordinate… you cannot blame only the justice delivery system. If the Telangana police was so sure that the persons they have caught are guilty, why did they not file the charge sheet immediately? If they were so sure the charge sheet should have been filed within one day. Why didn’t they do it?

Q: At the trial level, there are many instances of flaws in evidence collection. Do you think the police or whoever the investigators are, do they lack training?

A: Yes they do! The police lacks training. I think there is a recent report that has come out last week which says very few people (in the police) have been trained (to collect evidence).

Q: You think giving proper training to police to prepare a case will make a difference?

A: Yes, it will make a difference.

Q: You have a keen interest in juvenile justice. Unfortunately, a lot of heinous crimes are committed by juveniles. How can we correct that?

A: You see it depends upon what perspective we are looking at. Now these heinous crimes are committed by juveniles. Heinous crimes are committed by adults also, so why pick upon juveniles alone and say something should be done because juveniles are committing heinous crimes. Why is it that people are not saying that something should be done when adults are committing heinous crimes? That’s one perspective. There are a lot of heinous crimes that are committed against juveniles. The number of crimes committed against juveniles or children are much more than the crimes committed by juveniles. How come nobody is talking about that? And the people committing heinous crimes against children are adults. So is it okay to say that the State has imposed death penalty for an offence against the child? So that’s good enough, nothing more needs to be done? I don’t think that’s a valid answer. The establishment must keep in mind the fact that the number of heinous crimes against children are much more than those committed by juveniles. We must shift focus.

Q: Coming to NRC and CAA. Protests have been happening since December last year, the SC is waiting for the Centre’s reply, the Delhi HC has refused to directly intervene. Neither the protesters nor the government is budging. How do we achieve a breakthrough?

A: It is for the government to decide what they want to do. If the government says it is not going to budge, and the people say they are not going to budge, the stalemate could continue forever.

Q: Do you think the CAA and the NRC will have an impact on civil liberties, personal liberties and people’s rights?

A: Yes, and that is one of the reasons why there is protest all over the country. And people have realised that it is going to happen, it is going to have an impact on their lives, on their rights and that’s why they are protesting. So the answer to your question is yes.

Q: Across the world and in India, we are seeing an erosion of the value system upholding rights and liberties. How important is it for the healthy functioning of a country that social justice, people’s liberties, people’s rights are maintained?

A: I think social justice issues, fundamental rights are of prime importance in our country, in any democracy, and the preamble to our Constitution makes it absolutely clear and the judgement of the Supreme Court in Kesavananda Bharati and many other subsequent judgments also make it clear that you cannot change the basic structure of the Constitution. If you cannot do that then obviously you cannot take away some basic democratic rights like freedom of assembly, freedom of movement, you cannot take them away. So if you have to live in a democracy, we have to accept the fact that these rights cannot be taken away. Otherwise there are many countries where there is no democracy. I don’t know whether those people are happy or not happy.

Q: What will happen if in a democracy these rights are controlled by hook or by crook?

A: It depends upon how much they are controlled. If the control is excessive then that is wrong. The Constitution says there must be a reasonable restriction. So reasonable restriction by law is very important.

Q: The way in which the sexual harassment case against Justice Gogoi was handled was pretty controversial. The woman has now been reinstated in the Supreme Court as a staffer. Does this action of the Supreme Court sort of vindicate her?

A: I find this very confusing you know. There is an old joke among lawyers: Lawyer for the petitioner argued before the judge and the judge said you are right; then the lawyer for the respondent argued before the judge and the judge said you’re right; then a third person sitting over there says how can both of them be right and the judge says you’re also right. So this is what has happened in this case. It was found (by the SC committee) that what she said had no substance. And therefore, she was wrong and the accused was right. Now she has been reinstated with back wages and all. I don’t know, I find it very confusing.

Q: Do you think the retirement age of Supreme Court Judges should be raised to 70 years and there should be a fixed tenure?

A: I haven’t thought about it as yet. There are some advantages, there are some disadvantages. (When) You have extended age or life tenure as in the United States, and the Supreme Court has a particular point of view, it will continue for a long time. So in the United States you have liberal judges and conservative judges, so if the number of conservative judges is high then the court will always be conservative. If the number of liberal judges is high, the court will always be liberal. There is this disadvantage but there is also an advantage that if it’s a liberal court and if it is a liberal democracy then it will work for the benefit of the people. But I have not given any serious thought onthis.

Q: Is there any other thing you would like to say?

A: I think the time has come for the judiciary to sit down, introspect and see what can be done, because people have faith in the judiciary. A lot of that faith has been eroded in the last couple of years. So one has to restore that faith and then increase that faith. I think the judiciary definitely needs to introspect.

Columns

Enforcement and Execution of Foreign Arbitral Awards: Law & Procedure – By Kashif Zafar Hussain

Importance of HR and Employment Advisory in India – By Tania Ahlawat

Ownership and Authorship of AI under the ambit of Copyright law – By Ramit Rana

The Puzzle Of The Geospatial Technology Legal Framework – By Ankit Guha and Spandan Saxena

Real-time market of Electricity in India – By Apoorva Misra and Soumya Prakash

Introduction to Investigation & Adjudication Under The Foreign Exchange Management Act (FEMA) – By Priyank Ladoia & Tanmay Sharma

Admissibility of Electronic Evidence And Its Impact On Judicial Proceedings – By Akash Yadav

Proposed use of drones by e-commerce companies in India under the draft Unmanned Aircraft System Rules, 2020 – By Arjun Anand & Utkarsh

Resolving The Conundrum: Section 65B Of The Indian Evidence Act, 1872 – By Abhishek Bagga & Pragyesh Yogendra Shrivastav

‘Illegitimate’ Children and the Law: A Primer on the Rights of Children Born Out of Wedlock in India – By Prachi Dutta

Webinar on “Cartographing the future of Research Publications of Indian Law Schools” (Launching JLSS – Volume IV & V)

Associate at Mediation Practice (AMP-KFCRI) Accreditation Course

Internet Infringement Impacts Transborder Reputation & Jurisdiction under IPR

Enforcement and Execution of Foreign Arbitral Awards: Law & Procedure – By Kashif Zafar Hussain

Importance of HR and Employment Advisory in India – By Tania Ahlawat

Ownership and Authorship of AI under the ambit of Copyright law – By Ramit Rana

Artificial Intelligence as an Author of creative work under Copyright-

Ownership and Authorship of AI under Copyright law-

The Puzzle Of The Geospatial Technology Legal Framework – By Ankit Guha and Spandan Saxena

Real-time market of Electricity in India – By Apoorva Misra and Soumya Prakash

Supreme Court Recent Judgment

NATIONAL INSURANCE COMPANY LTD. V. BIRENDER

M.E. SHIVALINGAMURTHY V. CENTRAL BUREAU OF INVESTIGATION, BENGALURU

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