In this blogpost, Harsha Asnani, student, NIRMA University, Ahmedabad writes about arbitration as a legal recourse in cases of Intellectual Property disputes. The author also writes about the benefits received by a party to the suit by opting for such a suit and increasing use of this method in India.

In the past decade, there has been a parallel increase in the trade volumes and competition between various industries on one side and commercial, international and trade disputes on the other. With the increase in the number of disputes, there is a growing need for speedy disposal of such disputes. Since such disputes involve high costs and wastage of resources, it becomes essential that these disputes should be settled in a manner that they bear minimum costs to both the parties to a dispute.

The methods that best suits this need are arbitration, mediation and reconciliation. These three methods have been regarded by many scholars as the new age methods of dispute resolution. As far as the disputes in the matters of Intellectual Property are concerned, these disputes are majorly commercial in nature. Due to increasing cross-border trade and involvement of citizens of multiple jurisdictions in such trades, international dimensions have been infused to such disputes. Intellectual properties though constitute to be incorporeal in nature but because of the fact that they have become an integral part of corporate assets, they have started demanding same treatment as their corporeal counterparts. Taking into consideration the intangibleness of the intellectual properties and nuanced nature of technology, Intellectual property rights battles have become protracted and expensive.

The reason as to why these Intellectual property right battles have proved to be very expensive in their nature is because of the fact that in such suits, technical issues are to be addressed. Not only the bench but also the bar is to be informed and taught about various intricacies involved. Various additional costs such as those of hiring technical and financial experts, additional counsels have to be borne. All these factors demand a lot of financial resources be invested. With regard to this Kingston has stated that one of the major reason as to why the intellectual property has not been able to generate much innovation is because of the excessive costs involved in ordinary court litigations.

Comparison of various issues involved in IP disputes

• International issues – Increasingly, IP disputes have become a common matter between internationally trading institutions. In the ordinary court litigation procedure, problems such as multiple proceedings under different laws coupled with the risk of conflicting results have to be faced. Each party would try to persuade the other party so that the case can be tried in his or her jurisdiction since there would exist a possibility of actual or perceived home-court advantage. All these problems can be solved if the matter is referred to an arbitrator because firstly, the question of jurisdiction is solved by a prior choosing of an arbitrator. By this, the multi-jurisdictional disputes can be resolved together in a single arbitral forum. Secondly, a single proceeding would take place under the law that is determined by the parties, thirdly, the arbitral procedure can be neutral to the nationality of the parties, their laws, language and institutional culture.
• Technical Issues – In the ordinary court setup, the judge deciding the suit may or may not be holding an expertise that is required for such matters and hence additional time and cost would have to be assigned for this purpose. However, in the arbitration process, the parties to the dispute would beforehand select the arbitrators with relevant expertise. Hence, the problem of time and cost shall be saved.
• Urgency issues – In the case of intellectual property disputes the offences are of continuing nature, therefore it becomes important that the court provides the suffering party with immediate relief. Such immediate reliefs are called interim injunctions. These interims reliefs are not available in all jurisdictions. Therefore, proper relief cannot be claimed by parties in whose jurisdiction this interim relief is not available. Also lengthy and drawn out procedures are yet another problem. Whereas in cases of arbitrators the parties can by mutual consent authorise the arbitrator to shorten the procedure. Under the WIPO arbitration, provisional measures can be included but such measures cannot preclude seeking court ordered injunction.
• Appeal issues – In cases of ordinary court proceedings, there remains a possibility of appeal. Whereas in cases of matters settled by way of arbitration, unless agreed to by the parties, there is a limited appeal option.
• Risk issues – In Open Court or Public Proceedings, there exists a constant threat to the confidential information, trade secrets and reputation. This problem of risk and threat to secrets can be solved by way of arbitration because both the proceedings and awards can be kept secret and confidential as per the requirement.
• Party Autonomy – By using arbitration as a method of dispute resolution in IPR disputes, the parties shall be enabled with a higher control over the dispute resolution procedure. Procedural rules can be tailored; location and language of the proceedings are chosen by mutual consent so that the specific needs of both the parties can be resolved.
• Neutrality – Arbitration is neutral to the law, language and judicial systems of both the parties involved in the dispute. This helps in avoiding the prejudice in the mindset of both the parties that the other one will be able to have home court advantage. It is essential that the arbitrator is neutral. The partiality of the arbitrator is one of the grounds on which the arbitral award can be struck down by the court.
• Flexibility – Unlike courts, the arbitrators have a choice between various types of remedies that they can give to the suffering parties. A combination of Traditional remedies such as compensation and injunctions and Non-traditional remedies such as directing the infringer of copyright to purchase the license can be given.

Initially, it was suggested that since the IP battles involve such property which is granted by national authorities, therefore, any resultant dispute should be resolved by a public authority. Since it is now accepted that that IP rights are arbitrable, such disputes can be settled through out of court processes based on mutual understanding of both the parties.

Disadvantages of using arbitration as a method of dispute

Although arbitration can be termed as one of the most useful methods but it is not the most feasible method in every situation. Firstly, arbitration can be used as the best legal recourse if the parties to a dispute have on a prior basis included the clause of arbitration in their contracts. Unless there is a pre-existing contractual relationship, it becomes very difficult for one party to convince the other to agree to arbitration. Secondly, if the parties are unequal in terms of their resources, the party with higher resources can obtain a tactical advantage over the other. An arbitral award has no binding value. It cannot be used as a public legal precedent. While considering as to whether arbitration should be chosen as a method resolving IP disputes, it must be first decided whether such issues can be arbitrated or not and also the laws of those jurisdictions where enforcement would likely be necessary.

Alternative dispute resolution in intellectual property laws in India

Initially, prior to the year of 2002, there was no trend of using arbitration as a method of dispute resolution in the Indian regime. Majorly the cases were settled by way of court litigation in which the grant of the interim injunction would determine the final outcome. Very few cases were settled this way. Others would just vanish before the trial. The factors that brought about changes to this regime were made by way of changes made to the IPR laws on account of TRIPS and the Code of Civil Procedure. With section 89 of the CPC coming into force the courts were now given a discretion that if the elements of arbitration, conciliation or mediation or settlement could suit to the case at hand then the court can on its own motion refer the disputes to such legal recourse as per the procedure laid down in the said section. Mediation as a method of dispute resolution had been opted by very few parties until this stage. Lack of success rate may be a probable reason for less number of cases being referred to the mediation method.

With the passage of time, judges were now exposed to various new methods related to dispute resolution and also many High Courts had started to award damages in cases of intellectual property disputes. The damages, now awarded were both compensatory and punitive and exemplary in nature. With these changes, many parties were now not reluctant to opt for such method. The fact that during 2004-2007, the Supreme Court decided 349 arbitration cases and the Delhi High Court’s mediation and conciliation centre decided 668 out of 868 cases indicates a growing appreciation of the importance of arbitration as an alternate dispute resolution mechanism in India.[1]

[1] http://www.lexmantis.com/pdf/May-2013-LexMantis-Arbitration-And-IP.pdf

In this blogpost, Komal Rastogi, Student, Nirma University, Ahmedabad, writes about the conditions of slum dwellers, reasons to migrate to urban areas and the schemes to decrease slum areas in Mumbai.

Introduction

In recent years, the population of cities has been growing very fast. India is one of the fastest developing countries which have many metropolitan areas like Pune, Delhi, Bombay, etc. Cities are the center of attraction for the people living in villages. The migration of people from villages to cities affects the city life because there are limited resources. People living in rural areas shift to cities in search of jobs but due to poverty, or poor housing plan, they have to adjust themselves in slum areas. The other reasons to shift in slums are because of increasing urbanization, shortage of developed land, high prices of land or a large influx of rural migrants to urban areas, etc.[1]

 Slum dwellers are the most overlooked section of an Indian Society. 26% of the Indian population are poorest of the poor in urban areas. Few characteristics that describe the word slums in India: 1) population living below poverty line, 2) non-existing sewage system, 3) nil drinking water supply, 4) shortage of living areas, etc. People choose to live in slum areas due to less rent of rooms. Slums can be defined as the by-product of the modern era. Due to the rush in metropolitan areas, the environmental quality and sustainable development have been degraded rapidly. The major problem due to slums in India is transportation, health, safety, and population.

The migration of people to urban areas led to a shortage of food, water, etc., unwarranted unemployment, floods, social class conflicts, pestilence, and caste tensions.[2] “Slums are usually considered to be low-cost habitats of the marginalized people, mostly made up of makeshift shelters, in overcrowded and unhealthy conditions on land “encroached” upon and worsened further by the lack of basic civic amenities.”[3]

The factors that contribute to the growth of slums in India are

Firstly, the employment opportunities are one of the major factors that rural people migrate. The possibility is high because urban areas are the hubs for economic and commercial growth. As a result, skilled as well as unskilled people are attracted towards it and migrate.

Secondly, unemployment and lack of employment opportunities in rural areas due to various agricultural sectors as well as large scale industrial sectors.

Thirdly, due to the lack of secure tenures, the slum dwellers do not maintain their surroundings, and it remains unhygienic.

Fourthly, lack of political will which enables the slum area to be legalized in the fear of more illegal settlements.

The development of slums within the city and outside the city is very important. People living in slums within the cities face scarcity, poor health facility, poor sanitation; living conditions are deplorable; crime rate is high, etc. There is a need for better plans and schemes to rehabilitate the slum peoples. The slums in India is not only the problem of people who are suffering but also a huge hurdle in the country’s development. By solving the problems of slum dwellers, the problems in country’s development will automatically be solved. Hence, there is a need for proper provisions and special laws to decrease the slum areas in our country.

Efforts made by the government of India

The government of India had been making efforts for eradicating slums since the 1880s, but the efforts have grown since 1970s. In the year 1956, Mumbai initiated a programme called Slum Areas (Improvement and Clearance) Act which states different provisions to decrease slums. Section 10 of this act states the clearance of slums area on the order of government. For example: if government orders to demolish a building, then within six weeks the building should be vacated. This act gives power to the state to declare slum clearance by surveys. This programme seems to be ineffective because the problem is such which requires more capital to make the programme useful.

In the year 1971, the Slum Improvement Programme was initiated in which state recognizes the resettlement of the slum dwellers who were displaced by the earlier scheme. This act made a major change in the Slum policies. The state recognized that it is a very inadequate step to clear all the slum area, so the state makes sure that the slums are no danger to the health and safety to the people.

Under this act, only a few lands were under the project which provides sanitation, healthy drinking water, etc. This act only improves the conditions of the only handful of land. For a broader perspective, amendments were made to this Act in the year 1973. Slum Improvement Board was set up in the interest of expediting the providing of utilities.[4] This scheme has unintended effects too. After putting this act together with the MRTP, it gives slum dwellers a legal right to encroach on a private land. The court of Maharashtra in the case of State of Maharashtra Vs. Mahadeo Pandharinath Dhole and Ors[5] quashed the order of state government that declared the private land as a slum.

Despite the utilities which were given to the slum people, the state was violating several human rights in the process. In the case of Janata Colony, The Bhabha Atomic Energy Commission gave notice to approximately seventy thousand dwellers to leave the place without any compensation. Fifty thousand people protested against it, but all in vain. The conditions of people in camps were inhumane. The Scheme was not a spectacular success. It did not fulfill most of its promises.

The next initiative was taken in the year 1985 in the form of Slum Upgrading Programme. In this year, Supreme Court gave a landmark judgment in Olga Tellis vs. Bombay Municipal Corporation case.[6] Tellis sued the slum dwellers for illegally occupying his private land. The court was not against the slum dwellers living in private property but ordered them to vacate the land on certain terms and conditions. The resettlement has certain clause which states that:

• “Sites should be provided to residents presented with census cards in 1976;
• Slums in existence for 20 years or more were not to be removed unless land was required for public purposes and, in that case, alternative sites must be provided;
• High priority should be given to resettlement.” [7]

The Slum Upgrading Programme, which was initiated in Mumbai, was funded by World Bank based on the three philosophy i.e. cost recovery, affordability, and replicability. Like every other scheme, this act also has some loopholes. A major problem faced was that middle-income families used this scheme to get accommodation in prime locations at very low or negligible rates.

The Slum Rehabilitation Act 1995 was passed by the Maharashtra government to protect the rights of slum dwellers and also to improve the conditions of slums. Through this act, pavement dwellers were for the first time into the classification of households are entitled to land for relocation.[8]

Some people argued that the scheme is as worst as the previous ones and also criticized it by stating that the scheme needs guidance. Some people argued that there was an improvement from the previous schemes as it was based on the cost recovery scheme. After the research, it was declared that the scheme was miserably failed by rehabilitating only 26,000 households by 2002.

Conclusion

The Slum Rehabilitation Programme is still active in Mumbai. This scheme acts as a single point of contact and decision makers for the slum rehabilitation efforts. There are only certain modifications have done to this scheme otherwise the fundamental model is same. This act is applicable only to the borders of greater Mumbai. The rest of the state’s slum is covered under Slum Redevelopment Scheme (SRD) of 1992. The major difference between Slum Rehabilitation Scheme 1995 and Slum Redevelopment Scheme 1992 remains the 25% cap on the profits made by the developers.[9] In the year 2013, the high court asked the government of Mumbai to develop slums into a township and named the project as cluster development projects. Court also ordered to take consent from 75% of the slum dwellers for this purpose. The concept worked well and had allocated 1,524 slum redevelopment projects, out of which only 197 have yet been completed.

[1] Retrieved on http://www.shortparagraph.com/society/3-reasons-for-the-growth-of-slums-in-urban-areas-india/343

[2] Retrieved on https://www.academia.edu/10920148/Slum_Dwellers_and_Their_Conditions_in_Indian_States?auto=download

[3] Ibid

[4] Retrieved on https://repositories.lib.utexas.edu/bitstream/handle/2152/26620/JAGDALE-MASTERSREPORT-2014.pdf?sequence=1

[5] 1980 AIR (Bom) 348

[6] 1986 AIR 180, 1985 SCR Supl. (2) 51

[7] Supra Note 4

[8] Supra Note 4

[9] Supra Note 4

In this blogpost, Pramit Bhattacharya, Damodaram Sanjivayya National Law University, writes about the doctrine of Precautionary Principle. The post highlights the global acceptance of the doctrine as a global instrument. The post also looks into the status of the doctrine in India.

The Precautionary Principle has been adopted in many environmental instruments all over the world. The principle states that if there is a risk of severe damage to the environment absence of any scientific or conclusive proof is not to be given as a reason for the inaction. The Precautionary Principle shifts the burden of proof on the shoulders of the person who is arguing that the activity he is carrying out is not harmful. The principle follows the approach of being safe than being sorry. This principle is in contrast to the wait-and-watch approach which is generally followed in environmental issues. The Precautionary Principle encourages “action taking” to antedate and prevent damage to the environment.  The Precautionary Principle is one of the most popular legal approaches in the field of environmental law today. Whereas traditional approaches are reactive, this approach encourages “action taking” to antedate and prevent damage to the environment.[1]

Many times the scientific evidence do not give any conclusive information. In such a case risk assessment should be done and a balance should be maintained between protection of the environment and unnecessary and extensive restrictions. In such a scenario, Precautionary Principle is used. While applying the principle, it is very crucial to understand the consequences of applying it.[2]

Origin of Precautionary Principle

To understand the concept of Precautionary Principle, it is very important that we should go through a brief history of how the Precautionary Principle originated. In one of the Parliamentary Earth Summit of UN Conference on Environment and Development, Dalai Lama stated that Tibet may be the first country in which the principle originated because from the seventeenth century itself Tibet started to take proactive measures so save the environment.[3] For them, the struggle between protection of environment and safeguard of human health gave rise to the concept.

Under the contemporary public policy, this principle can be traced back to the 1950s under the name of “safe minimum standards of conservation.” Some major environmental issues in the 1960s, for instance, the DDT (dichloro diphenyl trichloroethane) case paved the way for the principle based on the idea of assimilative capacity. This idea stated that environment and humans can tolerate disturbances only to a certain extent, and this amount can be calculated and governed. Then in the 1970s, the Germans probably became the first country to provide for a precautionary approach in its legislations and policies towards the protection and the conservation of the environment.[4]

Definition of Precautionary Principle

There are two definitions of Precautionary Principle which are widely accepted-

1. The first definition is given in the Rio Declaration of 1992. It states that in order to protect the environment every state should apply the principle to the best of their abilities. When there are chances of irreversible and serious damage, lack of full scientific should not be the reason for the postponement of preventive measure.[5]
2. The second definition is based on the Wingspread Statement on Precautionary Principle, which was given 1998. This definition states that when there is a threat to the environment and human health, precautionary measures should be taken even when full scientific data is not available. The principle should examine the alternative options available (even the option of taking no action).

There is a significant difference between the two definitions. The first definition talks about “irreversible and serious damage, but the second definition talks about “harm” to the environment and human health in general. Thus, the scope of the second definition is wider.

Precautionary Principle-International Instruments

The Precautionary Principle appeared on the global stage in the 1980s. It was first acknowledged formally in the Preamble to the Vienna Convention for the Protection of the Ozone Layer. The parties who were signatory to the Convention acknowledged the precautionary measures which have already been taken at the international and the national levels to protect the ozone layer.[6] Banking on this recognition, the Montreal Protocol was introduced in 1987 where the signatories agreed to undertake precautionary measures to control the emission of substances which depleted the ozone layer. In this Protocol also, measures taken earlier to reduce the emission of chlorofluorocarbons were recognized.[7] The need to adopt which were precautionary in nature was also recognized in the Second North Sea Conference Ministerial Declaration (the London Declaration) in 1987.[8] At the Third Sea Conference, the parties came to a decision that they would continue applying preventive measures to prevent damage, even there is no scientific evidence. The precautionary principle was also included in the Convention on the Protection of the Marine Environment of the North-East Atlantic, which was introduced in the year 1992.[9]

The Bergen Ministerial Declaration on Sustainable Development in the Economic Commission for Europe Region, 1990 stated that the precautionary principle has a very crucial link with the concept of sustainable development.[10] The Convention on the Ban of Import into Africa and the Control of Transboundary Movement and Management of Hazardous Wastes within Africa, 1991 (Bamako Convention) stated that the signatories should adopt and implement precautionary and preventive measures to prevent the release of such substances in the environment which harms the environment, even when there is scientific proof available that such substances are causing the harm.[11]

In the year 1992, the signatories of the Helsinki Convention on the Protection and Use of Transboundary Watercourses and International Lakes was introduced. The signatories to this Convention decided to be guided by the Precautionary Principle.[12]

The year of 1992 was very important in this regard. There was a convergence of the precautionary principle and the climate change issue in International Law. The Precautionary Principle was acknowledged on an international level when the UN Framework Convention on Climate Change was adopted.

Precautionary Principle and Indian Law

The Indian Judiciary actively supports the Precautionary Principle. In the judicial pronouncement of Vellore Citizens Welfare Forum v UOI,[13] the Court opined that sustainable development t is the need of the hour. The court emphasized on the fact that there should be a balance between economic growth and protection of the environment. The Court rejected the traditional concept that ecology and development are opposed to each other. The Court also reviewed the development of the concept of sustainable development in the international sphere. The Court referred to the Stockholm Declaration of 1972, Caring for Earth, 1991, the Earth Summit, and the Rio Declaration of 1992 and opined that the Precautionary Principle and the Polluter Pays Principle are indispensable features of Sustainable Development. In the case of M C Mehta v Kamal Nath, the Supreme Court reiterated the decision given in Vellore Citizens Welfare Forum case stating that the Precautionary Principle is a part of the environment law in India.[14]

The Precautionary Principle was very comprehensively reviewed by the Apex Court in the case of AP Control Pollution Board vs. Prof M V Nayadu.[15] The Court stated that it is better to go wrong in taking caution and prevent environmental harm rather than waiting for the issue to materialize into an irreversible problem. The Court opined that the Precautionary Principle was evolved because of lack of scientific certainty only, and the principle involves anticipating the harm the environment may suffer and act on the basis of that. In the case of Narmada Bachao Andolan v UOI,[16] the Apex Court very clearly laid down the proposition of law, and specifically of Precautionary Principle. The Court stated that when an issue pertains to environmental damage, the onus of proof is on the person who is contending that the activities carried on by him are not harmful to the environment. The party who is giving such contention also has to satisfy the Court of the same, that there will be no environmental degradation due to his activities.

Concluding Remarks

Apart from being a part of the environmental protection instruments, Precautionary Principle has also become a crucial part of the Public International Law. With the law gaining significant momentum in the sphere of sustainable development, it is only inevitable that concept such as these is accepted by all the nations. Precautionary Principle, a fundamental element of sustainable development has been discussed much in the legal context, but improvements are still needed in implementation. Many countries still do not follow such principles because they believe that it’ll add to unnecessary expenditures and cost, to react proactively, without any concrete data. They believe in relying upon conclusive data to formulate plans and policies. This is done with the view that when plans and policies are made on the basis of conclusive data, they are at their optimal level.

Judiciary plays an immense role in linking the law with the concept of sustainable development. So, it is vital that the judiciary also supports this kind of approaches. The support of the judiciary is required so that protection of environment gets a legal sanctity. As an offshoot of legal recognition, the Precautionary Principle was also adopted by the National Environmental Policy as a guiding principle. However, there is still a long way to go for the Precautionary Principle to gain its rightful place in the field of environmental law. And till it does not get its rightful place, it will be very difficult to implement it.

[1] http://www.lumes.lu.se/database/alumni/04.05/theses/rabbi_deloso.pdf

[2] http://coe.mse.ac.in/dp/Precaution-Kavi.pdf

[3] Address of His Holiness the XIV Dalai Lama on 7 June 1992 to the Parliamentary Earth Summit (Global Forum) of the United Nations Conference on Environment and Development (UNCED) held in Rio de Janeiro, Brazil (Environment and Development Desk, 2004: 26).

[4] http://www.lec.lawlink.nsw.gov.au/agdbasev7wr/_assets/lec/m420301l721754/speech_10jan06_preston.pdf

[5] Principle 15 of Rio Declaration.

[6] Vienna Convention for the Protection of the Ozone Layer: Preamble.

[7] Montreal Protocol on Substances that Deplete the Ozone Layer: Paras 6 and 8.

[8] Second North Sea Conference Ministerial Declaration, 1987: Articles VII, XV(i) and XVI, http://www.lec.lawlink.nsw.gov.au/agdbasev7wr/_assets/lec/m420301l721754/speech_10jan06_preston.pdf

[9] Convention on the Protection of the Marine Environment of the North–East Atlantic: Article 2(2) (a). This Convention is not yet in force.

[10] Bergen Ministerial Declaration on Sustainable Development in the Economic Commission for Europe Region: para 7.

[11] Bamako Convention: Article 4(3) (f).

[12] Helsinki Convention on the Protection and Use of Transboundary Watercourses and International Lakes: Article 2(5) (a).

[13] AIR 1996 SC 2715.

[14] (1997) 1 SCC 388.

[15] AIR 1999 SC 812.

[16] AIR 2000 SC 3751.

In this blogpost, Mr.Sreeraj.K.V, Student, Government Law College, Kerala writes an article on the impact of animal testing in India. The areas covered under this article includes cruelties faced by animals, laws for the protection of animals as well as various current issues such as the ban on cosmetic testing on animals.

We all have certain fundamental rights especially right to life which has to be enforced by law. Any infringement of this right may lead to certain penal actions. In this context, is there any law which enforces right to life for animals? In fact, there are no certain laws or statutes working in favour of animals irrespective of the fact that they too have equal right in this universe as they share a habitat with us. Recently, Government of India banned the testing of cosmetics on animals by adding a new rule 148 –C which prohibits testing cosmetics on the animals in India – no person shall use any animal for testing cosmetics in India.[1] This can be treated as a major step towards the protection of the life of animals in India.

There was yet another issue regarding the killing of street dogs in many cities of Kerala. The issue gained mass public response as the issue was then taken by various animal welfare boards including celebrities. There arises a question that whether animals also have their own right to life or they are deprived of this right as they can’t express it through words. Various discussions and debates are going on in this matter and majority are of the opinion that animals also have a right on their life but not par with humans.

Looking to its legal factors, we have Prevention against cruelty to animals Act, 1960 as one of the major enactments for the protection animals from any kind of cruel acts or tortures. Under the light of this statute, the Animal Welfare Board was formulated. But the Act has limited powers as it does not extend to the various rights of animals but looks into the matter of right to life of the animal in a much serious way. Chapter I deal with definitions of various terms like animal, which means any living creature other than human being. There are certain other provisions as to the definitions regarding terms like ‘captive animals’, ‘domestic animals’, ‘local authorities’ etc. Section 3 of the Act deals with various duties of a person to take care of an animal and not to inflict any harm or pain towards such animals. Chapter II deals with the establishment as well as the importance of Animal Welfare Board by the Government of India. The importance of such an organisation is that it regulates or prevents certain cruelties monitors whether such acts are done in any of the places in India. The Act also depicts certain functions by the board which involves:

• To keep law enforced in all parts of India for the prevention of any types of cruelty to animals and making constant studies and advice the Government in making certain amendments from time to time.
• To advise the Central Government in making certain rules regarding protection of animals from certain unnecessary pains or sufferings especially during the time of its transportation from one place to another.
• To advise the concerned authorities regarding certain improvements in designing vehicles so as to lessen the burden of draught animals.
• To advise the authorities in the construction of shelters, sheds, water troughs and other basic amenities regarding veterinary assistance to them
• To advise the authorities in maintaining slaughterhouses in such a way that slaughter may not inflict physical or mental pain during pre-slaughter stages and it must be done as humane as possible.
• To advise the authorities in destroying unwanted animals if they feel fit to do so, either instantaneously or after being rendered insensible to pain or suffering.
• For making necessary steps in forming shelter for such animals and birds who are old and useless or the one who needs protection
• To give financial assistance to certain animal welfare committees for activities involving protection and welfare to them.
• To provide certain steps regarding proper medical assistance to the animals.

Chapter III deals with various cruelty against animals by the people such as beating, kicking, not providing adequate food and shelter, inflicting certain injuries to them etc. All such acts may lead to certain penal liabilities upon the persons. Presiding chapters deal with experimentation upon animals and exhibition and performance of animals in various occasions. The Act clearly states that experimentation and operation upon animals for the purpose of enhancement of certain knowledge in the field of physiology or any other field in favour of humans or animals pretend to be unlawful. It also provides for the implementation of various committees and sub-committees in order to regulate the experimentation on animals.[2]  The Act has its own limitation as it does not interfere in killing of animals for religious ceremonies of various communities in India.

In the light of certain issues which took place recently, Government took a major step in protecting the life of animals from being a testing sample for certain cosmetics. Under the Drugs and cosmetic Rules 1945, a new provision under rule 148 C was introduced as no animal must be used for testing of cosmetics. This rule not only brings regulations but also brings hope that further enactments will be developed in future regarding protection of animals from being harmed or killed. The government also took a major step in banning of import of cosmetics which is tested on animals. So it will make the companies concerned to take such essential steps regarding this so that no animals will be harmed anymore for such commercial purposes. Not only in the field of business, but also in the field of science and technology, various tests and researches are being done on animals for testing.

The issues regarding cruelty against animals have gained international concerns as in many countries; animals are being sexually exploited also. In India, even though there are very few cases dealing with this matter, we have section 377, IPC, which deals with unnatural offences wherein a person voluntary has carnal intercourse against the order of nature with any man, women or animal, shall be punished with an imprisonment for life or, a term which may be not less than 10 years along with a fine.[3]

Conclusion

Animals are one of the best companions of a human being. But at times, they turn out to be the worst affected victims of certain cruelties against them. In India, the Protection against the cruelty of animals Act, 1960 was later on amended as Indian Animal Welfare Act, 2011 due to the increase in various types of cruelties against them and also due to the emerging needs in updating the 51 years old Act. Even though there are certain laws in favour of animals, the attitude against them still has not changed due to the prevailing social conditions. But there is an increase in various animal welfare organisations protecting them from such cruelties. All such organisations are running short of money and certain other facilities. So it is up to the Government to look after such matters involving improvement of working ability of certain organisations so that they can reach certain areas where animals are being harmed and abused by others.

[1] Retrieved on: http://www.petaindia.com/blog/cosmetics-testing-banned-on-animals/

[2] Retrieved on: http://bamu.ac.in/dept/zoology/1.%20Prevention%20of%20cruelty%20to%20animals%20act.%201960.pdf

[3] Retrieved on: https://www.quora.com/What-does-Section-377-of-the-Indian-Penal-Code-make-illegal

 In this blogpost, Pramit Bhattacharya, Student, Damodaram Sanjivayya National Law University writes about the concept of phone tapping in Indian Context. The post looks at the Procedural and Substantive Safeguards a person has against unauthorized phone tapping. The post also dwells into the question of admissibility of the information procured through phone tapping as evidence.

In the recent times, there has been a lot of advancement in the field of technology. While the advantages of technology cannot be denied, everything has a negative side to it also. The world has shrunk a lot due to the advancement in technology. We can connect to people sitting a thousand miles away with just sending them a mail or calling or texting them. With this, the issue of security also comes in. There has been a rise in cases where the government has started tapping phone calls, texts, and emails of people in the name of national security. The question that arises here is that is this not a violation of the right to privacy of a person.

With these incidents on a rise, it is very important to set up rules and regulations and a legal framework on the issue. The legislature should come out with laws which state the extent to which phone tapping (or tapping off any communication) will be allowed. It is also crucial that the Judiciary lays down some guidelines with regards to using this information as evidence.

Article 21 of our Constitution lays down that no person shall be deprived of his life and personal liberty except according to the procedure which has been laid down by the law. The phrase “personal liberty” also includes within its ambit the right to privacy. Although this is not mentioned expressly, but the right to privacy is an implied right guaranteed by the Constitution of India. The Judiciary has also recognized this proposition.

Coming to the issue of phone-tapping, it can be defined as a scheme of things where telephonic activities are secretly recorded or are listened to, for the purpose of gaining information about the activities of the person who are communicating through the call. Phone-tapping is also known as wire-tapping in some countries.[1]

For obvious security reasons, it is imperative that phone-tapping be done to some extent, but only in an authorized manner. If done in an unauthorized manner, it can lead to a breach of the right to privacy and may lead to prosecution.

Phone tapping in India

Under entry 31 of the Union List of the Constitution and Entry 7 of the Federal List of the Government of India Act, 1935, telephonic along with other communication devices is mentioned.[2]

Both the State Government and the Central Government has the right to tap phones of people under Section 5 (2) of the Indian Telegraphic Act, 1885.[3] There are times when the investigation requires that the authority or agency record the conversation of a person who is under suspicion. Such authorities must seek permission from the Home Ministry before they can tap the calls of the person. In the application to the Ministry, the agency or authority has to mention reasons and the needs for tapping the phone calls. In the case of State, the permission has to be taken from State Home secretary. A telephonic conversation of political leaders cannot be tapped officially.[4]

Safeguards against Phone-Tapping

1. Procedural Safeguards

In the last decade, a lot of scandals came to light regarding the issue of phone tapping. The issue became so intense that it was turned into a political agenda. Politicians from opposite parties accused each other. It was alleged that phones were tapped by the government on command of the ruling party. It was then that the Peoples Union of Civil Liberties [PUCL] filed a PIL[5] to the Apex Court requesting them to clarify the law on the point of electronic tapping and interception.[6] The petitioners contended that the arbitrary power provided under Section 5 (2) of the Indian Telegraphic Act, 1885 should be regulated. They also contended that the amendment which was made to Section 5 (2) in 1971 was extremely dangerous as it allowed interception not just in cases of emergencies and for public order and safety, but also for incitement of offenses.

The Apex Court opined that tapping of phones or wiretaps as a  whole is a serious invasion of privacy of an individual, and also recognized that right to privacy falls under Article 21 of the Constitution. But Section 5 (2) was held to be Constitutional by the Court. Right to privacy is also enshrined in Article 17[7] of the International Covenant on Civil and Political Rights (ICCPR), to which India is a party. When a person is making a telephonic call and communicating with the other party, the person is also exercising his right to freedom of speech and expression under Article 19 (1) (a). Thus, tapping of the call would violate this provision, until and unless it falls under reasonable restriction provided under Article 19 (2). The point to be noted here is that the Apex Court did not want to scrap the system of phone tapping in totality because it felt that in some cases it is very necessary to take a few steps like this for the security of the nation. But the Court did mandate the setting up of high-level committee to review the tapping of phones and ascertain whether the taping was legal or not.

After the PUCL case, the Union Government bought some amendment in the Indian Telegraphic Rules, 1951 and inserted Rule 491-A to regulate the tapping of phones.[8] But this amendment also did not change the situation much.

2. Substantive Safeguards

Although Section 5 (2) was not held unconstitutional by the Court, they also recognized the fact that there was an absence of procedural safeguards for the substantive provisions. The Court stated that it was very crucial to back the substantive law with some procedural laws. The Court opined that if the proper procedure is not followed, it will render the substantive provisions.

The Telegraph Act do provide some substantive safeguard also. Section 25 of the Act states that if any person intends to intercept or make himself acquainted with any message and tampers with any deceive with that motive in mind shall be punished with an imprisonment which may extend up to three years or fine or both.[9]

Remedies

1. Unauthorized tapping or interception is a violation of the right to privacy, and the aggrieved party can file a complaint with the National Human Rights Commission.
2. The aggrieved party can also file an FIR against unauthorized tapping.
3. The aggrieved person can also move to the Court against the person doing any unauthorized act under Section 26 (b) of the Indian Telegraphic Act.[10]

Taped conversation as evidence

In the judicial pronouncement of R M Malkani vs. State of Maharashtra,[11]  the question was debated whether a criminal prosecution could be initiated on the basis of a telephonic conversation or not when the conversation is of a self-incriminating nature. In the following case, the Coroner of Mumbai wanted to take some bribe from a doctor. The doctor instead of giving the bribe contacted the Anti-Corruption Bureau. A trap was laid, and the officials asked the doctor to have a telephonic conversation with the Coroner, and in that conversation, the Coroner made some self-incriminating statements like the amount of bribe, place of delivery, etc. The conversation was recorded, and charges were filed on the basis of the conversation.

The Court appreciated the method employed but then realized that it may give way to many such activities like this. The Court added that such methods should be used very sparingly under proper authorization and direction.

In the case of S Pratap Singh v State of Punjab,[12] the Supreme Court admitted a tape recorded telephonic conversation which took place between the Chief Minister’s wife and a doctor. In the case of Yusuf alli Esmail Nagree v State of Maharashtra,[13] a conversation was recorded by placing a tape record inside a room. This conversation was also admitted by the Court as evidence. The Court stated that in case the interception was authorized, and the person who was being taped had no idea about it and he was not under duress or coercion.

While this method is a relatively easy method to collect evidence, it also encroaches on the right of the citizen. Also, there are no guidelines given about the means through which the results can be achieved. Unfortunately, the safeguards are inadequate to protect the victim in such a case.

Concluding Remarks

It cannot be agreed more that advancement in technology has brought the world closer than before. But as long as criminals and terrorist use technology in furtherance of their motives, the government will also put some counter-measures in place, which may intentionally or unintentionally invade our private lives. Tapping or intercepting of calls, messages and emails can be considered as a necessary evil. The problem with these kinds of issues is that everyone condemns them, but nobody refrains from using these methods.

All said and done, even if the procedure is not scrapped entirely, there should be an extent to which it should be practiced. If it is not regulated, private lives of people will be at a serious risk.

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[1]  http://www.ssrn.com

[2] HM Seervai, Constitutional Law of India, vol 3, 4th edn, NM Tripathi, 1996

[3] https://indiankanoon.org/doc/1445510/

[4] Report of Standing Committee on Home Affairs

[5] http://www.pucl.org/Topics/Law/2009/telegraph-act.html

[6] http://www.lawctopus.com/academike/law-phone-tapping-india/

[7] 1. No one shall be subjected to arbitrary or unlawful interference with his privacy, family, home or correspondence, nor to unlawful attacks on his honor and reputation.

2. Everyone has the right to the protection of the law against such interference or attacks.

http://www.ohchr.org/en/professionalinterest/pages/ccpr.aspx

[8] http://cis-india.org/internet-governance/resources/rule-419-a-indian-telegraph-rules-1951

[9] https://indiankanoon.org/doc/1034087/

[10] https://indiankanoon.org/doc/87176/

[11]  AIR 1973 SC 157

[12]  AIR 1964 SC 72

[13] AIR 1968 SC 147

In this blogpost, Pramit Bhattacharya, Student, Damodaram Sanjivayya National Law University, writes about, the concept of One Person Company. This article deals with the features of a One Person Company. The advantages and disadvantages of forming a One Person Company are also highlighted.

One Person Company is a company in which only one person is required. He is the shareholder and the Director at the same time. The concept of OPC opens up numerous opportunities for sole entrepreneurs and sole proprietors who can also take the advantage of Limited Liability Partnership and Corporation. The biggest advantage of an OPC is that limited in the case of OPC that liability is only limited to the extent of assets available to the business. In the case of sole proprietorship, the liability extends to personal assets of the proprietor also. There are various advantages of an OPC. It provides the opportunity to people to take advantage of the unique characteristics of a company while remaining independent.

Indian Context

The Companies Act of 1956 was the first comprehensive statute which related to companies and other related matters. The Companies Act, 1956 was based on the English Companies Act, 1948. Although the 1956 Act was very comprehensive, but it was very bulky. It was replaced by the Companies Act, 2013. This Act is up to date and is par with the international standards.

The concept of OPC was first recommended by the JJ Irani Committee in the year 2005.[1] The Report given by the Committee stated that with the increase in the use of computers and information technology as a whole, it is important to provide an outlet to entrepreneurs to showcase their skills. Such outlet can be provided by the creation of an economic company in the form of an economic company. To facilitate this, the Committee recommend the introduction of One Person Company. A One Person Company is provided with a relaxed regime so that the person engaged in this activity do not get much entangled in procedural matters. OPC will give businessmen all the benefits that are with a private business. With this, they’ll have limited liability, access to the market, legal protection, access to credit from banks, etc. with this the OPCs will also get the status of a separate legal entity.

Reason for formation

Under the old Companies Act, there was a requirement of at least two people to form a private limited company. This proved to be a major hurdle for those businessmen who wanted to do business alone. The only options were either to go for a private limited company with two members or a public limited company with seven members.[2] The reason why a private limited company necessarily have to have at least two people was to differentiate it from a sole proprietorship, which any individual could start on his own accord. To overcome this problem, individuals started forming companies by appointing Directors, who were nothing but nominal Directors. They were given only one share, which was mandatory to become a member of the company. The rest of the shares were retained by the person who created the company. In this manner, the law was bent to accommodate the needs of the businessman and also fulfill the legal requisites. This was considered as a fraudulent activity, even though it complied with every requirement. The intention of the legislature was defeated when people started forming companies in this manner. Later, the legislature realized that there was no harm in allowing a single individual to form a company provided that there was a proper system of check and balances in place. This thought coincided with the right provided by the Constitution also, which allows a person to start a business, trade or commerce of his own choice.

In order to achieve this, the idea of OPC was given some serious consideration for the first time in the year 2009, but unfortunately, the idea could not materialize itself into something concrete. Then again in 2012, efforts were made to implement the idea, and it became a reality with the introduction of the Companies Act, 2013.

Features of one person Company

1. One Person

One of the most significant features of an OPC is that it consist of only one person as both Director and a shareholder. Since there is only one Director, he has complete over the conduct and operations of the company. He is also the single shareholder of the company. OPC starts with one person only. But the number of Directors can go up to 15.[3] The member who formed the company acts as the first Director until the other Directors are appointed.

2. Minimum Share Capital  An OPC should have a minimum share capital of Rs 1 lac.
3. Nominee

The Act states that the Director of the company has to appoint a nominee who will control the affairs of the company if the Director dies or becomes disabled. The nominee has to be a natural person and a citizen and resident of India.[4] The nominee can be changed anytime, in which case the Registrar of Companies has to be informed.

4. Meetings

Board Meetings- Board Meetings are governed by Section 149 (1) (a) of the 2013 Act. The section states that there should be at least one board meeting in each half of the calendar year. The gap between any two meetings should not be less than 90 days. Also, no board meeting is required if there is only a single Director. If there are any transactions which require the consent of the Board, and there is only one Director, consent of such Director will be sufficient.

Annual General Meeting- AGM is governed by Section 96 (1) of the Act. There is no requirement to hold an AGM. If there is a transaction which requires special or general resolution, it’ll be considered passed by the OPC if the resolution is communicated by the members to the company.

5. Financial Statement

Section 40 states that a cash flow statement is not necessary for the financial statements of an OPC. Balance Sheet and Profit & Loss Statement of the company will be deemed to be enough. If there is only one Director in the Board, his signature will suffice.

6. Annual Return

An OPC should submit its Annual Report, and it should be signed by the Secretary of the Company (CS). If there is no Company Secretary, then it has to be signed by any Director of the company.

Advantages of OPC

1. Independent Existence

The OPC like any other company has its own independent existence, i.e. it is considered as a separate legal entity. In the eyes of the law, a company is a person, having a common seal, and having perpetual succession. Hence, an OPC also becomes a body corporate after it has been registered. It gets the authority to exercise all the functions of an incorporated person. This is not the case in a sole proprietorship, where no separate identity is given to the proprietorship.

2. Limited Liability

An OPC functions like a private company.[5] While the concept of limited liability of an OPC is not stated expressly, it is implied that in the case of OPC the liability of the member will be up to the extent of his share in the company. In an OPC, one person holds all the share and has complete authority over the operation of the business. So, it can be interpreted that the liability of the person will be to the extent he has invested in the business. All his shares can be attached if any liability is needed to be discharged, but his personal property wouldn’t be attached.

But in the case of a proprietorship, even the personal property of the proprietor can be attached to discharge the liabilities.

3. Perpetual Succession

An OPC also follows the principle of perpetual succession. Thus, a Director has to compulsorily appoint a nominee who will look after the affairs of the company if the Director is disabled or dies. The business will continue to survive even if it is handed over to any other person.[6]

In the case of a proprietorship, the business ceases to exist as soon as the proprietor becomes disabled or dies, as a sole proprietorship do not follow the principle of perpetual succession.

4. Transferability of Shares

In the case of an OPC, there is only one shareholder. The issue of transferring a portion of the share do not arise at all because if it is done, the company will cease to be a “one person” company. Transferring all the shares is also not practicable as it’ll change the entire structure of the company as the owner of the company is changing. The issue hasn’t yet been dealt with, and interpretation of the law may provide us with the explanation that in an OPC, transfer of share is not allowed.

5. Separate Property

An OPC will have its own separate property as it gains its own identity and functions as a separate legal entity. The OPC will become the owner of its assets, and the members will not have any insurable rights in the assets of the company.

In the case of a proprietorship, the distinction of identity is not there. All the property of the proprietorship will also be the owner’s property. This is the reason why the personal property can also be attached while discharging any liability in case of a sole proprietorship.

Conversion of an OPC

An OPC will cease to be an OPC either the paid-up share capital of the company exceeds Rs 50 lac or either the average annual turnover of the company exceeds Rs 2 crores. In such a case the OPC will have to convert itself into a private or public limited company.

Disadvantages of an OPC

1. Tax Liability

Since an OPC is incorporated as a company, its tax liability is very high. An OPC has to pay a corporate tax of 30%. OPC is considered as a company and will be taxed more than a sole proprietorship.

2. Fraud

In the case of an OPC, the chances of fraud go up, since there is no actual system of check and balance. One person acts both as a member and the Director. It is easier for a single person to commit fraud for his own personal gains. For instance, under the law, one person can incorporate as many as five OPC. A single person may open up a number of OPCs and transfer the assets from one OPC to the other to avoid liabilities and to evade tax.

3. Liability of the Directors

The law has made it pretty clear that a Director is liable for the action of the company. In case there is only one Director, it becomes very easy to make him criminally liable. Even in the case where the Director is not personally liable, the liability will be directed towards him only as he is the governing authority of the business.

Concluding Remarks

OPC can indeed act as a forerunner in the growth and development process as a lot of people who have good ideas, but not enough finances will also be able to access the market. However, improvements in the legislation are always welcome. For instance, there can be a regulatory body which ensures that there is a proper system of check and balances in case of OPC. Also, provisions like a single person allowed to open up 5 OPCs at a time should be made a little more stringent. A few more restrictions may be imposed to ensure that OPCs does not become a platform to commit fraud for personal benefits. All things said the advantages of an OPC cannot be denied, and it is expected that a concept like this will give a boost to the economy as well as the corporate sector.

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[1] http://www.primedirectors.com/pdf/JJ%20Irani%20Report-MCA.pdf

[2] The Companies Act,1956 – S.12

[3] The 2013 Act at S. 149(1) of

[4] Resident in India will mean a person who has stayed in India for a period of not less than 182 days during the immediately preceding one financial year.

[5] The 2013 Act at S.3

[6] Gower, Principles of Modern Company Law, 76 (3^rd Edn., 1969)

In this blogpost, Subhojit Das, Student, Jindal Global Law School, Haryana, analysis a trail of judicial decisions on section 34 of the Arbitration and Conciliation Act, 1996 

Introduction

“Public Policy is a very unruly horse, and when once you get astride it you never know where you are going.” – Justice Burrough[2]

The Indian position on ‘Public Policy’ as a ground for setting aside an arbitral award befits the aforementioned quote. In this paper, I shall analyze a trail of Indian judicial decisions on ‘public policy’ and argue that a restrictive interpretation of the term would be required in this era of globalization or else due to excessive judicial interference, foreign investors would be deterred from carrying out commercial relationships in India – a country increasingly becoming arbitration unfriendly.

Section 34(2)(b) of the 1996 Act[3], which states that the Court may set aside an arbitral award if on examination is found to be in conflict with the ‘Public Policy of India’ has been the source of much controversy across jurisdictions. The explanation that was annexed to it before the amendments[4] provided a brief outline of what was to be understood as ‘Public Policy of India,’ namely – fraud, corruption, and violation of s.75 or s.81. However, the judiciary over the last two decades has expanded the scope of this expression giving the courts the vast discretion to interpret it whimsically.

Arbitral Finality or Judicial Review?

The year was 1994 when the Supreme Court, in Renusagar[5] construed ‘public policy’ under the Foreign Awards Act, 1961[6] to mean: a (i) fundamental policy of Indian law; (ii) the interests of India; or (iii) justice or morality. Subsequently, 9 years later the Supreme Court in Saw Pipes[7] expanded the scope of the expression by including “patent-illegality” as a new ground to set aside an arbitral award apart from the ones laid in Renusagar. The court further expounded that the “illegality” must go to the very root of the matter because of which subsequent proceedings which followed the holding of Saw Pipes started delving into the merits of the cases going against the very spirit of arbitration – a consensual adjudication process where parties agree to accept an award passed by an arbitrator even if it is wrong, given proper procedures are followed. In other words, the Courts should not interfere with the decision of an arbitrator on the ground that the decision is based on ‘error of law or fact’.[8]

A decade later in 2014, the Supreme Court in Western Geco[9] expanded the hitherto undefined scope of the phrase ‘fundamental policy of Indian law’ – one of the elements of ‘public policy’ in Section 34. It laid down three distinct principles within its ambit, i.e. (i) the judiciary should not rule on a whimsical basis, (ii) decisions taken by courts should be based on principles of natural justice, and (iii) that the court should avoid reaching a decision so perverse or irrational that no ‘reasonable’ person would have arrived at it.[10] As a consequence, the courts acquired wide powers to reopen well-reasoned awards by going into the facts of each case and reviewing the award on merits, something against one of the principle objectives of the 1996 Act and international practice.[11]

The resulting problem here was this: As the Supplementary to the 246^th Report[12] had suggested if the expression ‘fundamental policy of Indian law’ is not construed narrowly, the application of Wednesbury Principles to ‘public policy’ will open the floodgates for judicial encroachment. This would be a significant concern for both domestic and foreign investors about the efficacy of alternative dispute resolution mechanisms in India.

A thin ray of hope came in Associate Builders[13] when the hitherto pro-judicial intervention stands taken by the Supreme Court slowed its pace as it applied the principles laid down in Renusagar, Saw Pipes and particularly expounded the law laid down in Western Geco, albeit with a minor change. With regard to “fundamental policy of Indian law”, the Court held that the arbitrator is the sole judge with respect to the quality and quantity of facts, and therefore an award is not capable of being set aside solely on account of little evidence or if the quality of such evidence is inferior. It further held that the court ought not to act as a court of appeal and consequently, ‘errors of fact’ cannot be corrected unless the arbitrators approach is manifestly arbitrary. The court went as far as to delve into the meaning behind the expression ‘justice and morality’ by observing that this would apply only when it shocks the conscience of the court.

Thus, the ruling in Associate Builders has been regarded as a welcome decision in so far as ‘public policy’ had been somewhat clarified in order to provide guidance on the level of interference sought to be made under Section 34(2)(b) of the Act.

However, the nearly limitless judicial review that ensued as a result of Saw Pipes was contrary to the 1996 Act’s objective of minimal court interference. The “patent-illegality” test opened up a Pandora’s Box for numerous litigants as they started approaching Indian courts to set aside awards they were not satisfied with, thereby vitiating the very purpose of arbitration as a speedy dispute resolution mechanism.

Arguably, it is precisely this judicial review of the merits of the case that Section 34 of the 1996 Act, as well as the corresponding UNCITRAL Model Law[14] provisions, were intended to prevent in order to ensure the finality of arbitral awards on the merits[15], thereby maintaining the much-needed uniformity of arbitration procedures. In other words, a provision enacted to bring uniformity in arbitral laws became the reason for non-uniformity.

In this regard, it becomes crucial to look into the reasoning of the Court in Saw Pipes when it added “patently illegal” in addition to the three grounds laid down in Renusagar. It held that if the award was contrary to a substantive provision of law, the Act or against the terms of the contract, it could be set aside as being “patently illegal”.[16] However, this was seemingly clearly unnecessary. If one analyses s.34(2)(a)(iv) and s.34(2)(a)(v) carefully, it is seen that s.34(2)(a)(iv) deals with setting aside an award if the dispute is not contemplated by or not falling within the terms of the submission to arbitration and s.34(2)(a)(v) states that if the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, then the award can be set aside.[17] Hence, the inclusion of “illegality” separately as a new head of ‘public policy’ was not necessary for the Court.   

Indian district courts in the remote corners of this vast country never had the expertise to deal with complex commercial dealings, let alone sit and adjudicate over awards passed by leading international arbitral institutions, the likes of LCIA and ICC. The 2015 Amendment has, however, amended Section 2(1)(e) of the Act[18] to provide a new definition to “Court” for international commercial arbitration, i.e. with respect to arbitration seated in India but involving at least one foreign party. In all international commercial arbitrations, but not domestic arbitrations, the High Courts have been made the exclusive forum for reliefs under the Act, replacing the Principal Civil Courts, as it was earlier.

This has been seen as a welcoming change by many, as foreign parties unaware of the legal system in India, would be spared from having to litigate in such district courts where hearings proceed at an abysmally slow rate.[19] Furthermore, it has been proposed that such arbitration-related hearings at the High Court would be decided by ‘commercially-oriented’ judges[20], apart from them proceeding expeditiously.

Nevertheless, everything good is said to have a downside. Shifting more responsibility on to the High Courts, which are already overloaded with a backlog of cases, might actually result in potential delays.

Foreign investors before entering into commercial transactions always tend to consider the potential legal costs to be incurred for enforcing their rights. A judicial system which does not lend any assurance of neither speed nor certainty does not bode well for the citadel of International Commercial Arbitration in India. A ‘risk premium’ gets added to the cost of the transaction which, if excessive, ultimately makes the transaction commercially unviable.[21]

Conclusion

The decision of Shri Lal Mahal[22] in 2014 which narrowed down the scope of ‘public policy’ with regard to enforcement of foreign arbitral awards did reinstate the pro-arbitration and commercial atmosphere in the country in line with the trend at the international stage.[23] However, there still remains a question whether a developing economy like India can afford to have broad interpretations and retain the growth of foreign investment at the same time.

Maybe with these recent amendments coupled with the judicial maturity adopted by the Supreme Court in the last two years, an effort could be seen to re-establish India as a pro-arbitration jurisdiction rather than an arbitration-unfriendly one, which might eventually reinstate the integrity of the Indian legal system. However, if judicial intervention under Section 34 is not restricted further, the challenges faced by practitioners all over the globe would indeed turn out to be never-ending. Only time will tell whether the long awaited ‘dream’ of visualizing India as an arbitration hub is in the process of being realized or still remains only a ‘distant-dream’.

[2] Richardson v. Mellish (1824) 2 Bing 229.

[3] The Arbitration and Conciliation Act, 1996.

[4] The Arbitration and Conciliation (Amendment) Ordinance, 2015.

[5] Renusagar v. General Electric Co. 1994 S.C.C. Supl. (1) 644.

[6] Renusagar was decided prior to 1996 and therefore it dealt with an interpretation of public policy as applied to the enforcement of a foreign award under the now-repealed Foreign Awards (Recognition and Enforcement) Act 1961.

[7] Oil & Natural Gas Corporation Ltd v. Saw Pipes (2003) 5 S.C.C. 705.

[8] Rajasthan State Mines and Minerals Limited v. Eastern Engineering Enterprise.

[9] Oil & Natural Gas Corporation Ltd. v. Western Geco International (2014) 9 S.C.C. 263.

[10] Incorporating the Wednesbury principle of ‘Reasonableness’ as laid down in Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation (1948) 1 KB 233.

[11]  The 1996 Act, Statement of Objects and Reasons, paragraph 4(v) – “minimization of judicial intervention”.

[12] Law Commission of India, Supplementary to Report No. 246 on Amendments to Arbitration and Conciliation Act, 1996: “Public Policy” Developments post-Report No. 246, dated February 2015, at pp. 18-19.

[13] Associate Builders v. Delhi Development Authority 2014 (4) ARBLR 307 (SC).

[14] The UNCITRAL Model Law on International Commercial Arbitration, 1985.

[15] Jean-Paul Beraudo, Egregious Error of Law as Grounds for Setting Aside an Arbitral Award, 23(4) J. of Intl., Arb. 351 (2006).

[16] Supra note at 6.

[17] Arya, Garima Budhiraja; Sebastian, Tania – “Critical Appraisal of ‘Patent Illegaility’ as a Ground for Setting Aside an Arbitral Award in India”; (2012) 24(2) Bond Law Review, pp.168-172.

[18] Supra note at 3.

[19] ‘District Courts will take 10 years to clear cases’, Available at: http://www.thehindu.com/data/district-courts-will-take-10-years-to-clear-cases/article7692850.ece

[20] “The Commercial Division and Commercial Appellate Division of High Courts Ordinance, 2015”. These new commercial courts are expected to focus solely on commercial disputes.

[21] Hazari Tanuj, ‘Judicial Intervention in arbitral awards: the obsolete notions of ‘Public policy’ and Applicability clause’, India Law Journal, Vol. 2, Issue 4, 2009.

[22] Shri Lal Mahal v. Progetto Grano Spa (2014) 2 SCC 433.

[23] Brostrom Tankers v. AB (Sweden) v. Factorias Vulcano SA (Spain), Yearbook of Commercial Arbitration Vol. XXX (2005),  Ireland No.1, p.591.