This article is written by Abhinay Bhattacharya, pursuing a Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho.
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It has been more than 8 months since the inception of the Coronavirus outbreak. India, together with the whole world, had made a unanimous decision of initiating a countrywide lockdown to curb its fatality. Many individuals and industry sectors were affected by this which caused economic challenges and led to economic and social downturn.
The legal industry was also very much influenced by the catastrophe. Many courts in the country were at a standstill for months which led to huge backlog and loss.
With companies and individuals facing monetary losses and scope of slow recovery, are turning towards more cost-effective ideas and ways to reduce the expense. Although litigation being an efficient mechanism for redressal, it has its own cons of the burden of time and money.
During such unprecedented times, the boon of arbitration will not only ease the work style but also will cut off the expense of lawsuits for disputes arising out of Intellectual Property Rights and deliver a standard result.
Arbitration in India
Arbitration is a process where two parties meet together to settle a dispute and select an Arbitrator who acts as an adjudicator to hear the dispute and give speedy relief to the parties. Arbitration is a kind of an Alternative Dispute Resolution (ADR) method, that allows the parties for an out of court settlement. In India the process of Arbitration is governed by the Arbitration and Conciliation Act, 1996. The decision made by an Arbitrator is called an award and is considered binding on both the parties.
The parties may choose one or more Arbitrator(s) accordingly, who have a neutral view on the subject of the case and thus render efficient and speedy justice. Also, the proceeding is kept confidential thus, keeping the whole process a private affair.
Advantages & disadvantages of arbitration during COVID pandemic
- Faster Redressal: As COVID cases are on a rise, the parties involved for the settlement won’t have to wait months for their relief. Arbitration will provide short and swift methods to avoid the hectic schedule of courts and paperwork of litigation. This will give a safe and secure approach to the cases without any lack of morality.
- Scope for Remote Proceedings: With the onset of the pandemic and restrictions on mobility, the ability to hold distant proceedings through Internet and Online methods will pave a great way for disposal and settlement of the disputes. Even before the pandemic, international arbitrations were being held worldwide. The Seoul Protocol on Video Conferencing in International Arbitration was issued in March 2020 to conduct remote arbitrations. It has provided tremendous support and guidance to many aspects of legal proceeding including evidence corroborating, witness examination, testimonies, documents and many more through video conferencing and calls.
- Cost Effective: With a reduction in manual disposal of cases and physical hearings, the expense on day-to-day listings, papers, travelling, and many other variable costs will be zero. Also, as the redressal will be swift, no extra costs for long proceedings will also be cut down.
- Professional Arbitrators with technical background: In most cases during physical hearings in courts, the judge presiding is not very knowledgeable with the IP matters and thus there is rarely a chance when the presiding body is of expertise. As IP matters are mostly technical in nature, the adjudicator being of a relevant background will provide high prospects for correct evaluation and justice to both the parties. The arbitrator being a neutral body with high knowledge and professional skills will provide an eagles’ view to the dispute.
The Subsequent Growth of International Arbitration
- Discoverability: As the disposal rate of Arbitration will be high there will be a chance of error through limitation on discovery of facts. This could lead to further problems in proving any material and verification of the same.
- Limitation on Accessibility: With the rise of the pandemic, shifting to online methods would be one of the effective ways to dispute resolution by maintaining the social distancing norms. Although India has now become a technical giant but still there are remote places where the aid of the internet is yet to arrive. Also, due to lack of education people still need to learn the basics of computer knowledge which acts as an obstacle for speedy settlement of IP disputes.
- Limited scope for Appeal: For a party to go for an appeal for any arbitral award will be quite limited. Also, a party cannot file for a second appeal if he has applied for an appeal on a particular award.
Arbitrability of IP disputes in India – current scenario
During these pandemic times, arbitrability of IP disputes is a huge aid to the IPR industry and has its set of advantages. With the enormous amount of pendency of cases, arbitration will provide tremendous support to the backlog of cases.
The test for the arbitrability of a case is determined by its subject matter which has been laid down in two landmark judgements viz. Booz Allen Case followed by the Ayyasami Case. Thus, summing up, there are two categories of disputes in toto that describe the in-arbitrability of a subject matter:
- Disputes arising out of subject matter in rem rather than that of in personam, e.g., criminal offences, family matters, etc.
- Disputes from a special statute, where the jurisdiction falls on special courts e.g., CBI courts.
These tests decide the arbitrability of a matter and shall lead the IP disputes too.
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IP Law a statutory law
IP law is widely divided into three categories being trademarks, copyright and patent law. All these three are governed by their respective statutes that distinctly define the enforceability of rights in case of a dispute or conflict. The corresponding statutes define that the jurisdiction shall befall upon the civil courts and the remedy for the disputes must be accordingly dealt with.
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The statutory hindrance causes the first barrier for the arbitrability of the IP disputes.
The Ayyaswamy case – a settled precedent
The Supreme Court in this case held in its obiter removing all possibilities of arbitrability in an IP case. It declared Trademarks, Copyrights and Patents to be considered as non-arbitrable. This brought a complete standstill to the scope of arbitration. It is usually considered as a limitation to the subject of arbitrability regarding IP disputes in India.
Many High Courts also followed the same trend to declare in-arbitrability in cases such as the Mundipharma Case where the Delhi High Court rejected the plea to consider a matter of copyright to be arbitrated.
In Impact Metals v. MSR India, the Hyderabad High Court relied on the Booz Allen case and concluded that the subject matter of the case was regarding rights in rem thus keeping it aside from arbitrable matters.
The Eros International case – a ray of hope
In this case, this was the first time when the courts tried to consider the arbitrability of a matter and shed the negative movement.
The dispute was regarding a Copyright Infringement. The respondent had violated the terms of the contract. The petitioner had thus moved towards arbitration of the matter.
The Bombay High Court distinctly stated that all IP disputes to be considered as in-arbitrable would be a very vague and broad classification regarding the subject matter of the disputes. The scope of Section 62(1) of the Copyrights Act, 1957 and its applicability was in question. The Hon’ble High Court applied the first test of arbitrability and found that cases that are arising out of breach of contracts are violation of rights in personam and thus are accordingly arbitrable. The decision whether there was any infringement or not are within the powers of the arbitrator to adjudicate.
The second test was refuted in this case stating that statute did not mention anywhere the inadmissibility and regarded the courts as ‘exclusive forums.’ Thus, in such cases where there is no underlying public policy that determines the jurisdiction of courts, arbitration comes into play.
Like this the case of Eros International refuted both the tests and was allowed for arbitration.
Similar outlooks have been followed in subsequent cases like in the case of Deepak Thorat vs. Vidli Restaurant Ltd and Swedish Match vs. SEBI where the interpretation of statutes followed by the Indian courts was taken into consideration.
International arbitration and the COVID-19 revolution
The scope and availability of International Arbitration was tested during these pandemic times. Things like written and oral submissions, witness testimonials, evidence collection were some of the challenges that were faced consecutively.
Remote access and video conferencing were some of the measures taken to mitigate the problems and dissolve the obstacles.
With the onset of the pandemic, all sectors including the arbitration sector would not remain the same. The functioning, use of technology, flexibility and financial assistance, all have been reformed during these desperate times which has created possibilities for many R&D.
A detailed view of this topic, the challenges and overcoming and all the support and guidance has been described in the book International Arbitration and COVID-19 Revolution.
The views of arbitration of IP laws are still changing with the courts detailing and enlisting the bullet points to consider the arbitrability. As the pandemic is still on rise and disposable rate of cases and pendency is still at large the laws regarding arbitration have to be looked upon. When weighing the scales of the applicability of arbitration in IPR we find that the advantages outweigh all the temporary lacunas. With the effective management and proper use of resources arbitration can be one of the greatest alternatives to dispute resolution during these COVID times. Countries like the USA and Switzerland have permitted arbitration in many instances. Similar approach in India during these unprecedented times would provide a balance of rights between the public and the courts ensuring a robust and effective redressal environment.
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