In this blog post, Ranjeet Yadav, an Ex-Commissioner of Railway Safety with the Indian Railways and a student pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, describes the London Court of International Arbitration in India.

Introduction

The London Court of International Arbitration (well-knowned as LCIA) is an institution based in London, United Kingdom providing the service of institutional arbitration at an international level. Though its administrative office is based in London, it is an international institution whose activities are spread over the globe to provide forum for dispute resolutions for all parties, irrespective of their geographical location or system of laws. Its origin dates back to 1883. Over the years, it evolved with different names as a tribunal. In 1903, the tribunal took the name of the London Court of Arbitration, and in 1981 the name of the court was changed to ‘The London Court of International Arbitration’ to reflect the nature of its work which expanded world over.

Setting up of LCIA India

LCIA India began its operation in 2009 in Delhi and was operationally independent of the LCIA. It was established with the objective to bring international quality arbitration to Indian parties at costs compatible enough to Indian rates. The institution operated under a three-tier structure, consisting of the Company, the Arbitration Court and the Secretariat. As a company, it was incorporated under the Indian Companies Act as a non-profit entity. Its board of directors composed of well-known Indian and international arbitration practitioners. The administration of arbitration cases was not in the purview of the board. The LCIA Court of Arbitration served as the arbitration court of LCIA India. Its main role was to appoint tribunals, decide challenges to arbitrators and to control the costs of arbitration. The LCIA Court is a multi-national body served by eminent practitioners of arbitration laws. The LCIA India Secretariat was based in New Delhi. It was headed by its Registrar who was responsible for the day-to-day administration of disputes referred to LCIA India. The function of the secretariat was purely administrative and it had no role with regards to legal services or advice.

LCIA India Rules  

It published its first set of rules in April 2010. These rules were to a very large extent based on the LCIA’s own tried and tested arbitration rules, but with changes to reflect the interface with the Indian Arbitration and Conciliation Act, arbitration practices in India and various decisions of the Supreme Court of India on matters related with arbitration cases.

Some of the salient features of the LCIA India rules are as follows:

1) Unlike the LCIA rules, which provide London as a default seat, the LCIA India does not provide for a default seat. The seat of arbitration was kept open, to be decided with mutual agreement by the parties at dispute. In absence of party’s agreement for a seat of arbitration, the seat will be determined by the LCIA court, taking into account inter alia proposal of parties.

2) Article 10 of the rules gives power to the LCIA Court to revoke an arbitrators’ appointment in the event that the arbitrator does not conduct or participate in the arbitration proceedings with reasonable diligence, avoiding unnecessary delay and expenses.

3) Article 14 of the rules places corresponding duties on parties and tribunals to ensure that proceedings are conducted fairly, efficiently and expeditiously.

4) A number of new provisions aimed at expediting proceedings have been included in the rules. They include an express requirement that all prospective arbitrators confirm their ability to devote sufficient time to ensure the expeditious conduct of the arbitration. It also provides that the arbitration tribunal may take into account the conduct and cooperation or non-cooperation of the parties during the arbitration while determining the allocation of costs.

5) LCIA India has also prepared set of “Notes for Arbitrators “, to provide guidance to arbitrators conducting arbitration under its rules on issues relating to independence, impartiality, confidentiality and the management of time and costs.

6) The LCIA India Rules though are directed at parties doing business in and through India, and are essentially an international set of rules which are suitable for operation under any system of law and can be used in any seat chosen for arbitration.

7) Apart from being an efficient mode of providing alternate dispute redress, arbitration is envisaged to be making the justice available at lesser costs also vis-à-vis litigation. The LCIA India rules came up with an extremely attractive framework of arbitration costs keeping this spirit in mind. It endeavoured to change the perception that the institutional arbitration was less cost-effective than ad hoc proceedings which had hitherto deterred a more widespread use of institutional arbitration in India. The Rules provided for an hourly rate of compensation for the arbitrators capped at INR 20,000 per hour. This was a welcome departure from the generally prevalent practice in India of per sitting fees charged in almost all ad hock arbitrations. These sitting fees varied from INR 25000 to INR 100,000 charged by former High Court judges, and between INR 50000 and INR 150,000 charged by former Supreme Court Judges, depending on the values of money involved in claims/counterclaims and complexities of the case. A sitting is usually capped by arbitrators at 3 hours, any spill over is treated as the second sitting for the day. As most of the arbitrators undertaking ad hock arbitration also charge an initial ‘reading fee’ and separate fees for drafting the award, the fees prescribed as per the LCIA rules were considered to be attractive for the parties to decide in favour of institutional arbitration.

The rules also put a cap on its administrative charges, making them within acceptable figures for the parties. Besides, the rules mandated the arbitral tribunal to award costs based not only on the outcome of the arbitration, but also on the conduct of the parties during the proceedings which caused undue delay in concluding the arbitration proceedings.

Clauses recommended by LCIA India

LCIA India also recommended certain clauses to be incorporated in contract agreement by the parties who intend to have future disputes referred to arbitration and/or mediation under the auspices of LCIA India. Some of the important clauses recommended by LCIA India were:

Arbitration only

1. a) Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration under the LCIA India Arbitration Rules, which Rules are deemed to be incorporated by reference into this clause.
2. b) The number of arbitrators shall be [ one/three].
3. c) The seat, or legal place, of arbitration shall be [City and/or Country].
4. d) The language to be used in the arbitration shall be [      ].
5. e) The governing law of the contract shall be the substantive law of [    ].  

Mediation and Arbitration:

1. a) In the event of a dispute arising out of or relating to this contract, including any question regarding its existence, validity or termination, the parties shall first seek settlement of that dispute by mediation in accordance with the LCIA India Mediation Rules, which Rules are deemed to be incorporated by reference into the clause. If the dispute is not settled by mediation within [  ] days of the appointment of the mediator, or such further period as the parties shall agree in writing, the dispute shall be referred to and finally resolved by arbitration under the LCIA India Arbitration Rules, which Rules are deemed to be incorporated by reference into the clause.
2. b) Other clauses are same as those for the arbitration as above.

Role of LCIA India

In India, ad hoc arbitration is being usually practiced (nearly up to 95%) due to its perceived flexibility and comparative low costs. But in many a case, due to lack of predetermined procedural rules it resulted in protracted and expensive proceedings.  On the other hand, institutional arbitration has been few and far between. With setting up of LCIA India in New Delhi, it provided a great fill up towards the enlargement of scope of institutional arbitration which is a much superior system. LCIA being a well-established internationally reputed institution for arbitration, LCIA India provided a hope to Indian entities to be in a vantage position to avail world-class dispute redressal mechanism at a reasonable cost at the convenient location. It also provided greater opportunities for Indian lawyers and law firms to represent clients in administered international arbitrations. Besides, the institution also facilitated in spreading international arbitration techniques and contributed towards introducing international best practices in India by way of organising symposia, conferences and other training initiatives. These initiatives helped in creating a larger pool of competent arbitrators in the country.

Over and above administering arbitrations under its own rules, LCIA India, with parties’ agreement, was in a position to administer arbitrations under the UNCITRAL rules or other ad hoc procedures. It could also administer mediations under the LCIA India Mediation Rules and extend its administrative services to expert determinations and adjudications.

Closure of LCIA India  

It received some referrals. However, the case load remained in single digit and work load was inadequate to sustain its viability. The LCIA decided to end its physical presence in India with closure of its independent subsidiary, LCIA India. Starting 1 June 2016, existing cases before LCIA India would be supported from the London office and the London base casework team under the LCIA India rules. New referrals under the LCIA India rules based on contracts concluded prior to 1 June 2016 would be administered from London under the LCIA India rules. New referrals based on contracts concluded post 1 June 2016 will be dealt as per LCIA rules if the parties mutually agreed to it.

Despite its short life span, LCIA India played an important role in dissemination of the benefits of institutional arbitration in India.

In this blog post, Rahul Ranjan, a Third Year student studying at Vinoba Bhave University, Hazaribagh, Jharkhand and pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, describes authorized dealers for handling foreign exchange.

Introduction

Foreign Exchange Reserve is generally referred to the money or other any assets next to money held by Central Bank or similar monetary authority. The foreign exchange reserve is comprised of various monetary products ranging from foreign banknote, foreign bank deposits, and foreign treasury bills to short & long term foreign government securities. However, in common usage, it includes the gold reserves, SDRs (Special Drawing Rights), International Monetary Fund (IMF) reserve Fund.

In India, RBI is the supreme regulator of Foreign exchange Transaction with the provision & regulation laid under the Foreign Exchange Management Act 1999 i.e., FEMA Act 1999.RBI Act & FEMA Act  incorporates the legal provision for governing the foreign exchange market & reserve .The FEMA Act , an Act of Parliament, enacted with the aim to consolidate & amend the law relating to foreign exchange with the objective of facilitating external trade & promoting the orderly development and maintenance of foreign exchange market in India.

The liberalization of Indian economy results in an increase in volume of transaction of foreign exchange. In the fast changing era of globalization, the Foreign Direct Investment (FDI) & Portfolio Investment became important instruments of foreign exchange.

Authorized Dealer – Concept & Its Utilities

The term authorized dealer refers to any type of financial institutions who has received authorization from the RBI as a dealer to involve in trading of foreign currencies. The transaction of the authorized dealer should have been conducted in pursuance of a legal mode and under the framework established by law. Authorized dealers are nothing else but the market pronounced name of AMC i.e., Authorized Money Changer. As per master circular no. 10/2013-14 of RBI dated 01st July 2013 it describes that the AMC/ADs are entities, authorized by the Reserve Bank under section 10of the Foreign exchange Management Act 1999. In addition to Authorized Dealers category-I Banks (AD Category –I Banks) and Authorized Dealer Category – II (Ads category- II), Full Fledged Money Changers (FFMCs) are authorized by Reserve Bank to deal in Foreign exchange for specified purposes, to widen the access of foreign exchange facilities to residents and tourists while ensuring efficient customer service through competition.

Categories of Authorized Dealers in India

Brief Explanation Of Different Category of Investor’s

1.    Authorized Dealers Category – I (ADs – I)

As per the latest circular Issued by the RBI, there are around 110 entities who are qualified under the segment of Authorized Dealers category – I. It includes all type of Commercial Banks irrespective of Nationalized Banks, Scheduled Banks, Private Banks and Foreign Commercial Banks operating in India. These segments of banks allowed to deals in all type of foreign exchange transaction related to current and capital account transaction according to the norms and procedure laid down by RBI.

2.     Authorized Dealers Category – II (ADs –II)

The second category of authorized dealer operates under the restrictive environment for the implementation of some specified purposes prescribed by RBI. It includes the Upgraded Full Fledged Money Changer and another new inclusion like Department Of Post and various types of NBFCs who are operated in open markets. As per RBI the detailed of dealers classified under this category are considered as per region basis. At present, there are 11 region in India which under this category.

3.    Authorized Dealers Category -III (ADs –II)

The third category of authorized dealer operates with the purpose to boost the international trade by proving them adequate availability foreign currency for promotion of international trade as per the norms lay down in section 10 of the FEMA Act 1999. It includes the major player of financial institutions like IFCI, SIDBI EXIM Bank and various Factor Agencies.

4.    Full-Fledged money Change (FFMCs)

It is the new aspect of regulation of Indian Foreign Exchange markets. It may be any financial entity other than Commercial Banks who qualified the norms and criteria laid down by RBI. FFMCs are authorized to purchase foreign exchange from resident and non-resident visiting India and to sell Foreign Exchange for certain approved purposes. The main objective of the enactment of FFMCs is to provide easy access to foreign exchange transaction to common masses.

Eligibility Criteria for FFMCs to Obtain Authorization from RBI:-

(i)            The Applicant has to be company registered under the Companies Act 1956 or 2013,

(ii)           The minimum Net Owned Funds (NOF) required for consideration as FFMC are as follows:

Note: The net-owned funds of applicants, other than banks, should be calculated as per the following.

(a)  Owned Funds:  (Paid-up Capital + Free Reserves + Credit balance in Profit & Loss A/c) minus (Accumulated balance of loss, Deferred revenue expenditure and Other Intangible Assets).

(b)  Net Owned Funds: Owned funds minus the amount of investments in share of its subsidiaries,  companies in the same group, all (other) nom-banking financial companies as also the book value of debenture, bonds, outstanding loans and advances made to and deposit with its subsidiaries and companies in the same group in excess of 10 percent of the Owned funds.

Various Forms to be filled up by Different Category of Authorized Dealers

(i)FORM RMC-F: Applicable for selection/Appointment of Franchisee

(ii) FLM-1: Daily Summary and Balance Book (Foreign Currency Notes/coins)

(iii)          FLM-2:  Daily Summary and Balance Book (Traveller’s Cheques)

(iv)         FLM-3: Register of Purchase of foreign Exchange from the Public

(v)          FLM- 4: Register of Purchase of foreign currency notes/coins from Authorized dealers and authorized money changers,

(vi)         FLM- 5: Register of sales of foreign currencies to the Public

(vii)        FLM -6: Register of Sales of foreign currency notes /coins to Authorized dealers/Full Fledged money Changers/ Overseas banks.

(viii)       FLM-7: Register of travellers cheques surrendered to authorized dealers/ authorized money changers/exported

(ix)         FLM- 8 (For FFMCs& AD- II) :- Summary details of purchase and sales of foreign currency notes during the month of ____________of 20_____

Foreign Exchange Dealer’s Association  of India (FEDAI)

FEDAI was set up in 1958 as an association of banks dealing in foreign exchange in India (classified as Authorized Dealer- ADs), as a self-regulatory body and is incorporated under section 25 of the Companies act 1956. The main objectives of its establishment were to frame the rules and guidelines to conducts of foreign exchange business among the member’s banks and with the public in general. FDAI has to liaison with RBI for reform and development of forex-market. It is on the part of FEDAI to announce the daily and periodical rates to member banks. Along with regulatory or advisory aspects, FEDAI also maximize the benefits derived from synergies of members bank through innovation in area like new customized products, bench marking against international standards on accounting, market practices, risk management system, etc.

LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:  

https://t.me/joinchat/J_0YrBa4IBSHdpuTfQO_sA

References: –

www.rbi.org.in

Study material of NUJS Diploma Course

Master circular No. 10/2013-14 dated 01st July 2013 issued by RBI

In this blog post, Sanjay Khan Chowdhury, who is pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, describes the conflict that may arise while appointing an arbitrator.

Introduction

Arbitration is an alternate method of settlement of dispute and is faster compared to the traditional litigation process. The method involved in settlement of dispute is like conciliation, mediation, negotiation etc. Still, arbitration is the most used form of alternate dispute resolution. The Arbitration and Conciliation Act was enacted in 1996 after amending the old Arbitration Act 0f 1940.The arbitration is enforced only after a clause in agreement is stated to settle their dispute through arbitration, in ‘Shyam Sundar Agarwal V. P. Narotham Rao’ – (2011) CLA 105 (Snr.) AP 2. The Arbitration and Conciliation Act has many stages through which they are followed.

Provision for Appointment of Arbitrator:

The parties to agreement are free to determine the number of arbitrators. Section 10(1) provides that parties are free to determine the number of arbitrators provided that they are equal in both sides of the party. If there is an absence of such an agreement, then there would be only one (sole) arbitrator.

Section 11 deals with the appointment of arbitrators.

• A person of any nationality may be an arbitrator, unless otherwise agreed by the parties – Sec. 11(1);
• The parties are free to agree on a procedure for appointing the arbitrator or arbitrators – Sec. 11(2);
• If there is no agreement, in an arbitration with three arbitrators, each party shall appoint one arbitrator and the two appointed arbitrators shall appoint the third arbitrator who shall act as the Presiding Arbitrator – Sec. 11(3);
• In the above case if a party fails to appoint an arbitrator within thirty days from the receipt of request to do so from the other party or the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, the appointment shall be made upon request of a party, by the Chief Justice or any person or institution designated by him – Sec. 11(4);
• In an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Chief Justice/his designate – Sec. 11(5);
• Under an appointment procedure agreed upon by the parties-

1. A party fails to act as required under the procedure; or
2. The parties, or the two appointed arbitrators, fail to reach an agreement expected of them under the procedure; or
3. A person, including an institution, fails to perform any function entrusted to him or it under that procedure

A party may request the Chief Justice or his designate to take necessary measures unless the agreement or the appointment procedure provides other means for securing the appointment – Sec. 11(6);

• The decision of the Chief Justice/his designate in appointing an arbitrator is final-Sec. 11(7);
• The Chief Justice/his designate while appointing an arbitrator shall take regard to-

• Any qualifications required of the arbitrator by the agreement of the parties; and
• Other considerations as are likely to secure the appointment of an independent and impartial arbitrator- Sec. 11(8);

• In the case of appointment of sole or third arbitrator in an international commercial arbitration, the Chief Justice/his designate may appoint an arbitrator of a nationality other than the nationalities of the parties where the parties belong to different nationalities – Sec.11(9);

Section 12 deals with the ground for challenge of the appointment of an arbitrator.  This section provides that when a person is approached in connection with his possible appointment as an arbitrator, he shall decide in writing any circumstances likely to give rise to justifiable doubts as to his independence or impartiality.  An arbitrator may be challenged only if:

• Circumstances exist that give rise to justifiable doubts as to his independence or impartiality; or
• He does not possess the qualifications agreed to by the parties.

A party may challenge an arbitrator appointed by him, or in whose appointment he has participated only for reasons of which he becomes aware after the appointment has been made.

Section 15 deals with the substitution of arbitrator.  It provides that where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced.

‘Bharat Rasiklal Ashra V. Gautam Rasiklal Ashra and another’ – 2014 (5) TMI 372. The honorable supreme court held that it’s a well-established principle that the arbitrator can be appointed under Section 11 only if there is agreement to the contract in question.

‘Jagdish Chander V. Ramesh Chander’ – 2007 (4) TMI 624. It was held that the existence of an arbitration agreement as defined under Section 7 of the Act is a condition precedent for exercise of power to appoint an arbitrator/arbitral tribunal under Section 11 of the Act by the Chief Justice or his designate. It is not possible to appoint arbitrator to settle the disputes between the parties in the absence of an arbitral agreement or mutual consent.

‘Gujarat Security Services V. DSC Limited’ – 2009 (9) TMI 908. It was held that the prayer of the petitioner for appointment of sole independent arbitrator, different from the one given in the arbitration clause, is not tenable and cannot be granted since once the parties have agreed upon a named arbitrator they are bound by the arbitration clause.

Number of arbitrators

Where the arbitration clause in the agreement between the parties is silent as to the number of arbitrators, Section 10 (5) would apply where the arbitral tribunal is to consist of a sole arbitrator in default of the determination of number as held by the Supreme Court in ‘Sime Darby Engineering SDN.BHD V. Engineers India Limited’ – 2009 (7) TMI 1199. The plea as to the appointment of panel of three arbitrators raised on the basis of use of the expression ‘arbitrator(s)’ in the arbitration clause of the arbitration agreement is not tenable.

Sole arbitrator in international commercial arbitration

In ‘Omnia Technologies (P) Limited V. W.M.A. Van Loosreek’ – 2011 (3) TMI 1511, it was held that where the parties to an original international commercial agreement containing arbitration clause have finally agreed to the appointment of sole arbitrator by the Chief Justice of India or his designate to adjudicate all disputes between them under the original agreement as well as termination agreement including the dispute as to the existence of arbitral dispute, the designate Judge will have no reason not to make appointment of sole arbitrator to adjudicate the disputes between the parties.

Limitation

The procedure prescribed under Section 11 for approaching the court for appointment of arbitrator being mandatory, the question of party preferring an application under Section 11 (4) or Section 11(6) to the Chief Justice or his designate does not arise unless the procedure of giving notice is followed and without such procedure being followed there would be no cause of action for the petition. Thus, the limitation for filing an application under Section 11(4) would commence running only from the expiry of 30 days from the receipt of request mentioned in clause (a) or (b) thereof and limitation for an application under Section 11(6) would commence running from the happening of the contingencies mentioned in clause (a) or (b) or (c) thereof.

In ‘Rajesh Kumar Garg V. MCD’ – 2008 (3) TMI 655, it was held that where in terms of contract the final bill was required to be submitted within three months of completion of work, seeking the appointment of arbitrator for reference of alleged disputes after expiry of 6 to 8 years from the date of accrual of cause of action would be stale and barred by limitation.

Eligibility of arbitrator

In ‘Northern Railway Administration V. Patel Engineering Co. Limited’ 2008 (8) TMI 801, it was held that where the High Court has not kept in view the twin requirement of Section 11(8) while making the appointment of arbitrator(s), the appointment becomes vulnerable.

Bias of the arbitrator

Either of the parties to the agreement may challenge the appointment of arbitrator on the ground of bias on the part of the arbitrator.  At the initial stage, a party cannot agitate on the biased nature of the arbitrator.

In ‘National Highways Authority of India V. K.K. Sarin and others’ – (2009) 26 CLA-BL Supp (Snr.) 17 (Delhi) it was held that a party alleging bias is required to first follow the procedure as laid down in Section 12 and 13. If the party is unsuccessful, he has a choice of either waiting till the stage of Section 34 or if he feels bias can be summarily established or shown, should approach the court immediately under Section 14 after the challenge being unsuccessful, for court to render a decision.

            Thus, there are many conflicts in appointing Arbitrator by parties but such disputes depend upon each facts and circumstances of the case.

Footnotes:

www.icaindia.co.in/icanet/rules/c

http://:interarb.com/clout/11.htm

http://:arbitrationandcouciliattionwordp

http://:indiakanoon.org/doc/170945616/.

http://:icaindia.co.in/icanet/judgmen

In this blog post, Rebecca Furtado, an Instructional Analyst and a Lawyer practicing at the Bombay High Court and pursuing a Diploma in Entrepreneurship Administration and Business laws from NUJS, Kolkata, discusses the effectiveness of arbitration as a dispute resolution mechanism in e-commerce.

What is Arbitration?

Arbitration in simple layman terms is a consensual procedure wherein two parties in agreement bring or submit their grievance or dispute before a neutral arbitrator (third party person) or three arbitrators to make a decision on the dispute that is binding on both parties. [1]

It is pertinent to note that when the matter of the third party arbitrator arises, the two arbitrators, one each from both the parties, chooses a neutral arbitrator to help bring a binding decision on the parties to the dispute. Per se, this manner of sorting an issue without resorting to judicial proceedings is called Arbitration.

Types of Arbitration

Arbitration being a matter of protecting the interests of the parties in the dispute as well as having the opinion of a third-party is classified mainly into three types. These are:

• Commercial Arbitration: The parties in this dispute are two commercial entities.
• Consumer Arbitration: The parties in this dispute are a consumer of goods as well as a supplier of the disputed goods.
• Labor Arbitration: The parties in this dispute generally involve an employer and an employee.

Importance of Arbitration

Arbitration in this day and age is a much better alternative than a court/judicial proceeding.  Though arbitration may be a costly affair due to expensive arbitrator fees, it’s a generally much more favored medium of conciliation.  Arbitration helps ease the burden on courts while providing gratifying relief to the disputants to the arbitration.

Arbitration is helpful in the following cases:

• It is a consensual process as it requires the specific permission to both parties of the dispute.
• It is a confidential yet neutral procedure as it is protects the identity of the disputants, existence of the arbitration, disclosures made during the process and the award of the arbitration. Arbitration does not sympathize with any of the party involved; it is the product of mutual understanding of both the parties.
• Unlike in a court proceeding, the disputants in an arbitration process have the liberty to choose their arbitrator.
• The award to the dispute given by an arbitral tribunal is enforceable and final. These awards can be set aside or can be challenged only in exceptional situations.

Arbitration In India

The Arbitration and Conciliation Act, 1996 is roughly drawn on the lines of the 1985 UNICTRAL Model Law on International Commercial Arbitration and also from the UNICTRAL Arbitration Rules, 1976. The Act provides for domestic, international commercial arbitration as well as the enforcement of foreign awards. It also describes the process of conciliation and mediation.

With the paucity of legal officers in courts, Arbitration is quickly gaining a firm foot in dispute resolution mechanisms. [2]

What is e-commerce?

E-commerce or electronic commerce involves the buying and selling of services and goods, transmission of data or funds, through an electronic network, in this case, the internet.  Generally, this term is used in relation to electronic transactions while shopping online. Business transactions usually are carried out in the following four sections:

• Business-to-business
• Business-to-consumer
• Consumer-to-consumer
• Consumer-to-business

E-commerce in India

With the introduction of 100% FDI in the e-commerce retail sector the face of e-commerce in India is rapidly changing. More transactions are taking place in the online sphere then in public spaces.  Amitabh Kant who states, “To provide a level playing field to stakeholders, there is a move in the government to harmonize these varied policies”, has further emphasized on the 100% FDI move by the Government.

This move enables the domestic market, which is a storehouse of indigenous products to scale up and enhance the quality of their services and products, which would help them penetrate global markets.

However, despite many policies and programs that promote the e-commerce sector, there still seems to be a slump in this sector. One of the main reasons includes the lack of an effective and efficient online dispute resolution mechanism in the country. The ironic part is that despite the coming up of many “smart cities” the online world still lacks an efficient dispute resolution system that will cater to the ever growing needs of the online population.

Arbitration in E-commerce

The global market today attracts a lot of footfall by millions of people worldwide. This market is supported b e-commerce facilities that in turn may sometimes prove risky due to the failure of commercial contracts that lead to disputes. There arises a need for an arbitration clause while conducting business online.

The Thomson v. Handa Lopez, Inc.,[3]  case is a popular case that ascertains and provides the risk of doing business without a dispute resolution clause. It is necessary to protect the interests of both the parties as well as helps provide a solution to the aggrieved party in a dispute.

The E-commerce sector also is a viable market for class action suits. This sector allows enterprises reach customers instantly rather than wait for the growth of a market base of customers gradually. E-commerce sectors face the need for online arbitration mechanisms as facing judicial proceedings in a courthouse may be a costly affair. This is moreover true in terms where the e-commerce business does not cater to a particular party but caters world-wide.

Arbitration in E-commerce in India

Arbitration in E-commerce in India is still a small growing façade that will take time to reach its optimum level of growth. India feels the need for technology based legal amendments in law as current arbitration proceedings do not cater well to the e-commerce sector.

E-commerce Arbitration generally comes under the purview of international commercial arbitration in India. The disputants to the arbitration are generally parties from different global jurisdictions. A question of conflict of law arises in such situation. E-commerce resolutions can come only under the purview of Section 13 of the Civil Procedure Code but then again it is a debatable process.

Conclusion

This backstory is that India still has a long way to go in terms of Online Arbitration Proceedings. It’s a showstopper in these cases. Indian laws should be amended so that India can be a destination for international commercial arbitration in the world.

[1] http://www.wipo.int/amc/en/arbitration/what-is-arb.html

[2] http://www.ficci-arbitration.com/htm/arbiinindia.htm

[3] http://ubiquity.acm.org/article.cfm?id=339334

 In this blog post, Prakhil Mishra, a student of Institute of Law, Nirma University, Ahmedabad, who is currently pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, describes the process of arbitration in the case of sexual harassment.

Introduction

Sexual harassment claims are the most cursed upbringing of the modern era. There are several cases all around the world reflecting the plight of female employees working in unhealthy circumstances and who are prone to such harassment. It has been incumbent for the lawmakers to consider this issue with utmost seriousness. The USA is one of those countries where cases of sexual harassment are increasing exponentially with the increase in industrialization. Hence, the present article is focusing upon the discussion going around the world right now about dealing with such issues in arbitral forums. Pursuant to same, I would like to draw an inference of such model evolving in the USA.

The US Supreme Court and the Federal Courts have reached to diversified outcomes while ascertaining the question whether sexual assault and harassment cases shall be dealt within the broad scope of arbitration clauses. There are different views of the court regarding this:

1. The claims of sexual assault and harassment are arbitrable;
2. The claims of sexual harassment is arbitrable but sexual assault is not;
3. Neither of them is arbitrable.

Here the major controversy is related to lack of uniformity between cases as each of them ensues different factual circumstances and it is difficult to construe them in single opinion whether the cases of such heinous nature should be subject to arbitration or not.

The present article would give effect to a debate about making such acts arbitrable or not. In the USA, the increased prevalence of mandatory arbitration in employment contracts is a comparatively new drift that has resulted from the Supreme Court’s sustain of arbitration as a proper method of resolving disputes post Gardner-Denver case. Also, in this case, Supreme Court has supported the view that under employee’s contract, employers should not bind employees for a mandatory arbitration clause and waiving off his right to bring a claim under statutory machinery.

Mandatory Arbitration Shall not be a Part of Contractual Agreements

President Obama signed the Franken Amendment to the 2010 Defense Appropriations bill into law. The Franken Amendment to the bill prohibits the use of any funds made accessible by the Act if a contractor or subcontractor providing services or equipment under the Act requires its employees to arbitrate certain claims. It was the first law which has prohibited employers from binding employees’ in mandatory arbitration for the sexual harassment cases.

Arbitration in sexual harassment cases in the US

If I interpret what has been said in one of the three landmark cases in the Steelworkers Trilogy that in several cases or grievances of workers inclusive of Title VII grievances which may also relate to sexual harassment cases, the national labor policy favors the mode of arbitration because an arbitrator would know the background of the workplace and conditions prevailing in a much better way. It is also commonly known as ‘common law of the shop’.  With the growing body of reported arbitration cases of the sexual harassment, various important and essential evidences have become apparent.

Some years ago, the National Academy of Arbitrators went into an extended, sometimes heated, discussion on this issue. For large number National Academy of arbitrators, and perhaps other arbitrators, that debate may now be moot. The interpretation of the texts of arbitral decisions clearly reflects arbitrator recognition that external law and the content of collective bargaining agreements are parallel paths for resolution of workplace disputes and it has taken an important position in the modern legal world. No workplace issue shows the influence of external law on arbitral decision-making as clearly as sexual harassment. Study of arbitral sexual harassment cases in print in the last five years in Labor Arbitration Reports and in Labor Arbitration Awards reflected that the preponderance of such cases involved, as in court cases, an allegation of hostile work environment. The published awards show some interesting dichotomies in how arbitrators view the relationship between conduct and the appropriate penalty.

It can be argued that these arbitral dichotomies are steady with the way Federal courts characterize what constitutes severe or pervasive conduct that alters the terms and conditions of another person’s employment. Here when it is found put that the case which has happened is very serious and grave then the punishment which is given is also serious and grave, which may in include the termination of the employer from the services. Additionally, if the cases are not severe then the arbitrators for the just and legal procedures go for different analysis of the cases which include procedural and substantive dynamics.

Arbitration and Sexual Harassment: Position in India

Contrary to the established practices in America, where the contractual agreements contain the Arbitration clause which is often resorted to by the parties in such matters, Indian laws do not provide for arbitration mechanisms. The laws governing the sexual harassment of women are Indian Penal Code, 1860, Indecent Representation of Women’s Act 1986, and Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013.

The instances of sexual harassment are dealt with utmost severity as IPC provides for 1-3 years of imprisonment or fine or with both. The Sexual Harassment of Women at Workplace Act, 2013 is another instrument which covers women not only from organized sector but also from unorganized sector. As far as the ‘arbitration’ in harassment cases is concerned, none of the provisions exist in India. But, Sec. 10 and Sec. 11 of the Sexual Harassment of Women at Workplace Act, 2013 provides for ‘conciliation’ in such matters. You can learn more about sexual harassment and laws governing them by taking up this course. You can also learn about sexual harassment at workplace by taking up this course by National University of Juridical Sciences. 

The process is given in Sec. 11 where a written complaint has to be filed by the victim within 3 months from the date of the incident and the inquiry has to be completed within 90 days by the Internal Complaints Committee or the Local Complaints Committee. The inquiry report has to be issued within 10 days from the completion of the inquiry. Thereafter the employer is bound to act on the recommendations of the committee within 60 days. Now the appeal if any goes to the Tribunal or Court.The situation for appeal may arise in three circumstances viz, an action for misconduct, no action by the employer, and punishment for the frivolous complaints.

Section 10 provides the scope and power for conciliation. It states that the Internal Committee or, as the case may be, the Local Committee, may, before initiating an inquiry under section 11 and at the request of the aggrieved woman take steps to settle the matter between her and the respondent through conciliation. This means that the efforts for conciliation are made before the inquiry is initiated. This is not binding upon the victim. She can choose not to go for conciliation and initiate the suit.

We need to deliberate on the fact whether there is any room for arbitration in India and whether there is any latent story behind this conciliation. As far as conciliation is concerned, as already discussed, the employee is not bound by it but there might be circumstances where she can be pressurized to settle the matter. A number of factors such as position in the department, the risk of losing the job, demotion, hostile attitude, impact on the performance of work play the role in deciding whether the employee wants to go for conciliation. There have been numerous instances where the employees were forced to resign because they initiated suits against the harassment. But with respect to arbitration, the situation has not reached up to that level where the employee is forced to accept the arbitration clause and settle accordingly. Even in United States of America amendment was brought to do away with it. As of now, the courts handle the harassment cases if the inquiry committee does not give satisfactory remedy. The scope of Arbitration in sexual harassment cases in India is yet to spread its roots because we have not accepted such mechanism since the beginning in our laws. In my opinion, matters as important and delicate as harassment should not be dealt by arbitration because the deterrent effect of the IPC may lose its purpose. It may also end up in the creation of ‘market’ where disputes like these are let go by mere compensation or any other benefits. This might not prove to be a healthy practice in the long run.

Conclusion

The utility of introducing alternative dispute resolution mechanism was never understood to be beneficial for solving the matters related to sexual assault and harassment. It is essential to know the object and purpose of the law as a catalyst for social change. Moreover, by giving a right to an employer of including a clause of arbitration in cases of sexual harassment will surely infuse the imbalance in the approach of handling such serious offenses. Arbitration has always been a feasible option for commercialized transactions. On the other hand, to bring it under the garb of labor law will entail certain consequences for which India is not ready with a mitigation plan as on the present day. It will be highly condemned and criticized by the legal luminaries and fraternity in toto. Therefore, a specialized law commission has to be commissioned for the in-depth analysis of this area of law.

In this blog post, Nabarun Roy, Superintendent of Central Excise and Customs, Export Refund Section, Central Excise, Kolkata – I Commissionerate, Kolkata under the Dept. of Revenue, Ministry of Finance, Government of India, who is currently pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata discusses the process of arbitration in environmental disputes.

Arbitration is a consensual, quasi-judicial method for settling struggle. It is a type of alternative dispute resolution (or ADR) often utilized after wilful arrangement and intercession has failed to determine the conflict. In arbitration, the parties to a conflict commonly concur upon a private judge or judges whom they engage to choose debated issues of law, actuality, or both. All parts of the ‘listening to’ method are liable to transaction by the parties. While arbitration can take place after a trial or prosecution proceeding, they contrast in a general sense in that the parties are the wellspring of the referee’s energy. In a trial or prosecution proceeding, a sovereign state’s constitution gives control (likewise called ward) to a legal body or branch, which thusly may urge unwilling parties to show up before it and take an interest in the trial.

The UN empowers consensual debate determination as the favoured means for settling every single global question. Be that as it may, the limit of the UN to propel states to respect the power of the UN or its legal bodies is still in advancement. At the season of composing, the considerable greater part of global natural question took care of through quasi-judicial procedures are for all down to earth purposes arbitrations, since they originate from a wilful or arranged understanding by a state to present the debate to a quasi-judicial discussion. That agreement may take the form of a permanent treaty or an ad hoc submission.  While the part of the UN is changing, there is so far no overall sovereign government with lawful power and energy to force an unwilling state, to missing a deliberately arranged bargain, or to present a natural debate that crosses national limits to the ward of any one gathering. The state must agree to the gathering’s purview through bargain or specially appointed consent to referee. For this reason, arbitration is and will keep on being the overwhelming quasi-judicial type of debate determination for worldwide ecological question.

Mediation can take a wide assortment of structures. It might be arbitration of rights or interests. Rights mediation happens when the judge chooses parties’ commitments under a current agreement, bargain, law, or other standard. It is reviewed, and by and large, figures out which gathering was correct or wrong on a given standard of direct as for sure past conduct. Illustrations incorporate grievance mediation under an aggregate haggling understanding, or business arbitration concerning rights under an agreement for merchandise or administrations. Intrigue arbitration happens when the authority helps the parties in building up an understanding, arrangement, or standard for their future dealings. It is imminent, and builds up the rights and commitments of the parties as for future conduct. Illustrations incorporate open segment work arbitrations to determine a question in regards to wages and terms and states of work in a successor aggregate dealing agreement. Arbitration may likewise be last and official, or non-authoritative and counselling. At the national level, restricting arbitration is normally enforceable through the legal framework.

Arbitration systems shift broadly as an element of the arranged understanding of the parties, which is frequently called the “trade off” in universal arbitration. The parties may arrange an accommodation characterizing the extent of debated issues submitted for choice, and the forces and constraints of the tribunal. They may concur on the number and nature of the judges. For instance, they may utilize a solitary nonpartisan mediator, or a board of numerous unbiased judges. They may pick rather a board including both unbiased judge or gathering mediators who keep on advocating for one gathering amid the thoughts phase of the hearing. They may pick the English customary law convention, which utilizes an antagonistic proceeding, or the European code custom, which utilizes an inquisitorial proceeding. In an ill-disposed proceeding, parties enlist direction to present confirmation in support of their perspective of the case. The judge is a latent beneficiary of confirmation, and direction is divided. In an inquisitorial proceeding, the mediator plays a dynamic part in gathering the proof, and any insight owes their essential commitment to the authority. Guide, in principle act in support of the referee, not the parties. The parties may concede to specific means and timetables for trading important confirmation (likewise called disclosure), the nature of permissible proof (declaration, sworn statement, tape, phone, individual investigation, and so on.), the accessibility of encounter and round of questioning of witnesses, the utilization of specialists, the timetable for the procedures and honor, the type of the honor (basic or contemplated), installment for the costs of the mediators and expenses of the procedure, and the honor’s enforceability. They may likewise concur upon the settlement, law, or substantive standard for the referee’s choice on the question.

The twentieth century has seen the rise of endeavors to manufacture a universal agreement on environment policy. Through a progression of universal parties, states have arranged an assortment of traditions, conventions, arbitrations, agreements and different writings giving substantive direction on the commitments of states to ensure the world’s surroundings. These writings frequently give requirement systems requiring the utilization of debate determination forms, by and large moving from consensual arrangement, to intercession with the help of an outsider nonpartisan, to a quasi-judicial official or admonitory arbitration prepare before a named discussion or before different judges to be assigned by the disputants. This area inspects power to referee under chosen major significant writings.

The UN does not have the force of obligatory ward over part states concerning natural debate. All purview are a result of agreement and respective or multilateral settlements between and among states. Various understandings exist, and the global group keeps on arranging more. This implies there is no legitimate, or by law, normal worldwide law of the environment that represents each country on the planet. Be that as it may, the variety of agreements and roads for change are step by step making an accepted universal standard law. Therefore, arbitration case point of reference from one gathering may give powerful power to referees in another discussion or translating another bargain with comparable dialect.

United Nations Convention on the Law of the Seas [UNCLOS] (1984) UNCLOS builds up exhaustive, substantive global commitments to shield the hydrosphere from ecological harm. It joins parts of various earlier accords concerning the law of the ocean. Part XV on Settlement of Disputes makes a commitment to settle debate concerning the elucidation or use of the Convention by tranquil means according to the UN Charter (Art. 279), gives the parties energy to concur commonly to any tranquil technique for settling the debate (Art. 280), and gives that any understanding or settlement to present the question to a procedure that involves a coupling choice might supersede the general obligatory systems of UNCLOS (Art. 282, 286). Something else, when marking, sanctioning or agreeing to UNCLOS, a state must proclaim in composing which methodology it will use to settle debate.

The Montreal Protocol supplements the Vienna Convention for the Protection of the Ozone Layer (1985) to build up substantive global commitments to shield the air from natural harm owing to controlled substances that drain the ozone layer. It accommodates arbitration of question in a way like UNCLOS, however does not accommodate obligatory locale. Under the Vienna Convention (Art. 11), parties with a question concerning the translation or utilization of the Convention should first turn to arrangement and intercession. Parties may announce in composing that uncertain debate will be liable to the obligatory locale of mediation or the ICJ. Be that as it may, on the off chance that they don’t acknowledge obligatory ward, then the question will go to an appeasement commission, a type of counselling arbitration. The commission is contained an equivalent number of gathering individuals and a together picked unbiased seat. Together they should render a last recommendatory grant for the parties to consider in compliance with common decency.

The Rio Declaration reaffirms the Declaration of the United Nations Conference on the Human Environment (Stockholm 1972) and embraces the strategy of reasonable advancement, which makes ecological insurance a basic part of the improvement procedure all together impartially to meet the formative and natural needs of present and future eras. In Article 26, it gives that states should resolve all their ecological debate gently and by fitting means as per the UN Charter.

The Convention on Biological Diversity builds up worldwide commitments to shield the biosphere from ecological harm as loss of natural assorted qualities, characterized as reduced changeability among living life forms from all sources including earthbound, marine and other oceanic environments, and incorporates differing qualities inside species, amongst species and of environments. Art. 27 accommodate settlement of debate first by transaction and intervention, and if those fall flat, allows yet does not require a state to announce a necessary means from either discretion or the ICJ. On the off chance that the state has not announced a necessary strategy, Annex II accommodates placation. Annex II portrays an arbitration strategy that gives a tripartite agreement, in which the two expresses each select a gathering authority, who thusly selects the nonpartisan president of the board. The president may not be a national, inhabitant, or representative of either state. The board has locale to decide the extent of assertion where the gatherings are in disagreement about the topic, and to decide its system without an understanding between the gatherings. Annex II gives a commitment to uncover data to the mediators, and renders the procedure classified. The arbitration honor is last and restricting unless the gatherings have concurred ahead of time to an investigative technique. In the event that a state has not announced an obligatory technique for question settlement, the pacification arrangements of Annex II accommodate non-restricting consultative discretion.