Trail Smelter case : an analysis

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November 16, 2021

This article has been written by Oishika Banerji of Amity Law School, Kolkata. This article provides a detailed analysis of the Trail Smelter case and the legacy it carries on.

Table of Contents

Introduction

One of the most well-referenced and important decisions in international environmental law began as a local dispute between two small communities and a smelting factory. Northport is a small community in Washington’s Stevens County. The Trail is a community in British Columbia, Canada, about 20 miles north of Northport on the other side of the border. Both cities are located along the Columbia River, which flows from British Columbia to Oregon. A smelting factory in Trail was vital to the economy and way of life of the town’s residents. It had the financial and political clout to get away with contaminating the surroundings and inflicting harm on local farmers’ land. The trash discharged by the factory crossed international borders, resulting in two large-scale international disputes; the first, and most famous, in the mid-twentieth century over air pollution, and the second, in the late twentieth century over slag dumped into the Columbia River. This article provides a detailed analysis of the Trail Smelter case and also presents an insight into the legacy being carried on by the decision made in this case.

Trail Smelter case

The Trail Smelter case involved the United States suing Canada for infringing on its sovereignty, and the Court’s judgment established basic rules for international environmental law.

Facts of the case

The Canadian Consolidated Mining and Smelting Company Limited operated a zinc and lead smelter in Trail, British Columbia, about 10 miles north of the international border with the State of Washington. This corporation increased the size of the facility and, as a result, the capacity to smelt zinc and lead ores. Two enormous, 400-foot smokestacks were erected in 1925 and 1927, however. As a result, the amount of sulphur released into the atmosphere increased. The quantity of sulphur emitted from the facility on a monthly basis nearly quadrupled from what it was in 1924 over the same time period.

Between 1925 and 1935, the United States complained to the Canadian government that the operation’s sulphur dioxide emissions were causing harm to the Columbia River valley in a 30-mile area from the international border to Kettle Falls, Washington. In an attempt to resolve the issue, the two governments used formal arbitration twice, once from 1928 to 1931 and again from 1935 to 1941. The issue was referred to the International Joint Commission by the United States and Canada (IJC-UC) for resolution on August 7, 1928. On February 28, 1931, the IJC-UC determined that the Trail smelter should restrict its sulphur dioxide emissions and that Canada should pay the United States $350,000 in damages. Despite the IJC-UC decision, the Trail smelter’s circumstances did not change. As a result, by February 1933, the US government made further complaints to the Canadian government regarding the smelter’s status. These protests resulted in the two sides signing an emissions Convention on April 15, 1935. The verdict of both the arbitration between the parties (1928-31 and 1935-41) resulted in the Canadian government making a settlement to the State of Washington for the damages it had caused. The latter judgment also established a set of operational standards under which Trail’s smelter would be shut down for at least a year and a half. The United States’ major worry was that the smelter’s sulphur dioxide emissions were affecting the soil and trees of the Columbia River Valley, which were utilized for logging, farming, and cattle grazing, which comprised the most important businesses of that area. Yellow pines, Douglas firs, larch, and cedar were the most impacted species. Alfalfa, wheat, and oat harvests were also affected.

Issues before the Tribunal

The Convention asked for the establishment of a Tribunal to decide four questions:

1. Has the smelter caused any damage to Washington State since January 1, 1932?

2. Should the smelter be required to refrain from causing damage in the future if it has been shown to have done so?

3. Should the smelting be restricted in any way?

4. In light of the responses to questions 2 and 3, should any compensation be paid?

Judgment

The Canadian government was ordered to pay the United States $78,000 in compensation for the harm the Trail Smelter caused to the State of Washington between 1932 and 1937. The compensation was mostly for the valley of the Columbia River in the United States.
Instruments to detect wind direction and velocity, turbulence, ambient temperature, barometric pressure, and sulphur dioxide concentrations were to be used at the Trail Smelter. It was also handed a chart listing the maximum acceptable sulphur emissions at each particular time of day. The smelter was required to keep sulphur dioxide emissions below the authorized threshold regardless of weather conditions. Readings from all of the smelter’s instruments were to be sent to the Canadian and US governments on a monthly basis.
The Tribunal concluded that the emissions from Trail caused real damage to the uncleared forest area and cleared farmland along the Columbia River valley in northern Washington State, but not to the land, cattle, or enterprises in over 140,000 acres along the Columbia River valley, as was contended by the US government. In November 1949, the US Secretary of State wrote to the Canadian Ambassador in the US, offering to repay US$8,828.19 that the Canadian government had paid to the US as compensation for losses caused by the Trail smelter’s operation. The refund was accepted by the Canadian government.

Legal analysis of the case

In terms of international law, this case was absolutely historic. Never before had the World Court or any other international judicial system pronounced a ruling on a case that was so far away and localized. The Tribunal endeavoured to reach a fair conclusion. The smelter was allowed to resume operations, the farmers were no longer impacted by the smoke and they were compensated appropriately. The overall purpose, as expressed in the decision’s text, was sovereignty. The Tribunal’s ultimate judgment stated that the Dominion of Canada is accountable in international law for the smelter’s acts.

As long as it follows the law, a State can contaminate its own land as much as it wishes. When pollution crosses an international border and has major consequences, the State has breached international law’s sovereignty premise. The pollution must be of grave importance, implying that the court must determine if the pollution is impeding an individual’s or group’s ability to live a healthy and successful life. In this case, it was never addressed whether or not the smelting smoke was hazardous to the farmers’ health. The Tribunal concentrated on the magnitude of the economic damage caused by the noxious smoke in order to determine whether it was of significant importance. The Tribunal determined that the damage to cleared and uncleared areas was significant enough to justify compensation. It determined that the damage to animals and property in Northport was not severe enough to warrant compensation. What may be learned from this is that demonstrating pollution-caused damage is insufficient. It must be demonstrated that the damage is significant. The meaning of ‘serious’ given by a court is arbitrary and based on the facts and the court.

Principle 22 of the Stockholm Principles lays down that, ‘States shall co-operate to develop further the international law regarding liability and compensation for the victims of pollution and other environmental damage caused by activities within the jurisdiction or control of such States to areas beyond their jurisdiction’. The present case of Trail Smelter is entirely applicable while talking about this Principle. It is important to note that the Court’s judgment was not intended to impose legally enforceable responsibilities on both parties. The choices are a reflection of an aim or a concept of international justice. In light of this instance, two ideas are frequently addressed:

The first is that a state has a responsibility to avoid transboundary harm.
The polluter pays principle.

The first solution was to provide direct financial compensation to the farmers. The second solution was to change how activities at the smelter were carried out in order to limit the number of hazardous chemicals generated during processing. For the smelter, this regime was extremely costly, costing roughly $20 million. The Tribunal was essentially putting the smelter on the hook for responsibility and expenses without shutting it down. The State was forced to pay for the terrible damage it had caused to the farmers’ land in order to bring justice to the farmers. As a result, the polluter pays principle was formed. The Tribunal placed a high priority on investigating and determining a regulatory system that would restrict the threat existing to the farmers’ land. Due to the substantial money generated by the Trail smelter, shutting it down would allegedly have negative consequences for Canada’s economy. The Tribunal did not strive to halt pollution as part of what is regarded to be a fair and balanced approach to resolving this problem. Its purpose was to use regulatory approaches to reduce the harm caused by pollution. This may be seen as a flaw in the judgment since it created a precedent of permitting a firm to pollute as long as it paid the price. It may also be claimed that the judgment was acceptable and fair because it protected commercial interests while resolving the situation.

Conclusion

Today, the Trail smelter is still operational. It is owned by Vancouver-based Cominco Limited, which refines lead, zinc, silver, gold, bismuth, cadmium, and indium. The smelter has 125 employees at present. The Trail smelting controversy exemplifies the ongoing fight between big business and the working man, as well as corporate power vs. grassroots activism. Environmental protection is pitted against financial benefits. Perhaps most crucially, it posed a problem to lawmakers in determining how to attain sovereignty between two nations, one of which sought the right to pollute for economic growth and the other protecting its right not to be injured by a foreign country. The two ideas resulting from the first Trail smelter case, namely the polluter pays and that nation’s duty to prevent transboundary harm, are the bedrock of international environmental law.

References

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Right to shelter vs right to government accommodation

By

Sneha Mahawar

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November 16, 2021

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This article is authored by Akash Krishnan, a law student from ICFAI Law School, Hyderabad. It discusses in detail the concept of the right to shelter and whether the right to government accommodation is included within the ambit of the right to shelter.

Table of Contents

Introduction

In this modern world, it is important to understand that with changing times, the needs of the people also change. Several rights that were not explicitly included in the Constitution of India have now been incorporated into different Articles by the courts. For example, the right to lead a quality life was read into Article 21 of the Constitution in the case of Francis Coralie vs. Administrator, Union Territory of Delhi (1981). Similarly, the right to livelihood was recognised as a fundamental right in the case of Olga Tellis vs. Bombay Municipal Corporation (1985), the right to medical care was recognised in Parmanand Katara vs. Union of India (1989), and so on.

In light of the same, several other rights were included within the ambit of the right to life and personal liberty that is guaranteed under Article 21 of the Constitution. This article deals with one such right, i.e., the right to shelter and discusses in detail whether the right to claim a government accommodation falls under the right to shelter.

Right to shelter

The right to shelter means the right of an individual to claim a reasonable accommodation so that the individual could grow mentally, physically and intellectually so as to become a useful citizen of the country. Apart from an adequate living space, the right to shelter includes a clean and well-lit living space, access to electricity, roads etc, clean water and any other infrastructure that is necessary to lead a reasonable life.

Let us now look into some of the landmark cases that established that the right to shelter is a fundamental right guaranteed under the Constitution.

Landmark cases

Shantistar Builders v. Narayan Khimalal Totame (1990)

This case was one of the first cases to deal with the question of the right to shelter. Herein, the Supreme Court stated that there are three basic needs for a man to lead his life, i.e., food, clothing and shelter. The Court, while emphasising the need for shelter, stated that for a human being to grow mentally, physically and intellectually, it is necessary that he has access to suitable accommodation. It further stated that human development is not possible in the absence of suitable accommodation and thus it is necessary that every citizen of India has access to a reasonable form of accommodation. While making the aforesaid observations, the Court held that the right to a reasonable accommodation is an indispensable necessity under the Constitution and it should be included under the ambit of right to life guaranteed under Article 21.

Shri P. G. Gupta v. State Of Gujarat (1994)

This question regarding the right to shelter again rose for consideration in this c a se. The Supreme Court herein while interpreting Article 19(1)(e) of the Indian Constitution observed that every citizen of India has the right to reside and settle in any part within the territory of India. The Court whilst connecting this to Article 21 stated that the following provisions should be read together so as to expand the meaning of the right to life under Article 21. The provisions have been enumerated below:

The Preamble of the Constitution: The Preamble declares that all citizens should have equal status and opportunity and should lead a dignified life.
Directive Principles of State Policy: The DPSP enshrined under Part IV of the Constitution are fundamental to the proper governance of the country.
Article 39(b): It is the responsibility of the State to distribute the material resources of the community so as to ensure the common good of the people.
Article 46: It is the responsibility of the State to protect the weaker sections of the society from any form of social injustice.

In light of these provisions, the Court held that the right to reside and settle in any part within the territory of India guaranteed under Article 19(1)(e) is an integral part of the right to life guaranteed under Article 21. The Court reiterated the principles laid down in the case of Shantisar Builders and observed that the State should ensure that the minimal human rights of food, shelter and clothing are accessible by all the citizens of the country and the State should introduce schemes for providing permanent housing accommodation to the poor so as to ensure that the right to shelter and the right to residence and settlement are not violated.

Chameli Singh v. State of Uttar Pradesh (1995)

This case laid down the fundamental principles of the right to shelter. The Supreme Court herein whilst recognising the right to shelter as a fundamental right under Article 21, made the following observations:

The right to live as a human being can be ensured only if all facilities for his mental and physical development are available to him.
The right to live in any civilised society includes the right of access to proper food and water, a clean environment, education, shelter and medical care.
Access to proper shelter ensures the mental, physical, intellectual and spiritual growth of a human being.
The right to shelter is not restricted to the right to live in an enclosed space with an overhead roof. It includes all the infrastructure that is necessary to facilitate human growth.
Apart from an adequate living space, the right to shelter includes a clean and well-lit living space, access to electricity, roads etc, clean water and any other infrastructure that is necessary to lead a reasonable life.
In the absence of the right to shelter, a human being cannot develop into a useful citizen of the society and can neither perform his fundamental duties nor participate in the democratic process.

Some other cases

In State of Karnataka vs. Narsimhamurthy (1996), the Supreme Court held that the right to shelter is a fundamental right guaranteed under Article 19(1)(e) of the Constitution. It is the duty of the State to acquire lands and provide those lands to poor and homeless people so that they can build houses for themselves.

In Kurra Subba Rao vs. District Collector of Andhra Pradesh (1986), the Andhra Pradesh High Court held that it is the fundamental duty of the State to provide shelter to the weaker sections of the society. The Court herein observed that for any individual, the right to life and liberty cannot exist without property.

In Rajesh Yadav vs. State of UP (2019), the Supreme Court observed that the right to shelter is a fundamental right embodied under Article 19(1)(e) of the Constitution read with Article 21 of the Constitution. It is the constitutional duty of the State to protect this right and to provide adequate facilities for the free exercise of this right.

Right to government accommodation

The right to government accommodation is a fictional right under which a Government servant claims that he has the right to continue to reside in the government accommodation even after leaving the public office, i.e, after resignation, superannuation or termination.

The question as to whether the right to shelter includes the right to government accommodation was raised and answered negatively in the case of Union of India vs. Onkar Nath Dhar (2021). The case has been discussed in detail below.

Union of India v. Onkar Nath Dhar

Brief facts

The Respondent was a Kashmiri migrant who shifted to Jammu & Kashmir in the year 1989. Thereafter, he had joined the Intelligence Bureau in Delhi and was transferred to the Bureau office in Faridabad. He was allotted government accommodation by the Bureau in Faridabad. He attained the age of superannuation and retired from service thereafter in the year 2006.
Post superannuation, he filed an application for extension of the facilities of government accommodation for one year and his application was accepted. After one year, he submitted yet another application for extending his stay till the situation in Jammu and Kashmir was normal and he could return to his native place. However, the same was rejected and an order of eviction was issued against him.
On an application filed to the District Court of Delhi, the Court stayed the order of eviction. An appeal for the same was filed in the High Court of Punjab and Haryana. The High Court held that in the present circumstances, the Respondent could not return to his home state and thus, the order of eviction should be stayed until the situation resolves. It further directed the Government to allow him to continue residing in the provided accommodation on a nominal license fee or provide him with alternative accommodation and collect a nominal license fee from him for the same. This order of the High Court was appealed by the Government to the Supreme Court of India.

The argument of the Respondent

The Respondent had again relied on the case of J.L. Koul vs. State of Jammu & Kashmir (2009). In this case, 31 retired government employees were allowed to stay in the government accommodation even after retirement. The High Court had passed the ruling in favour of the Respondent by relying on this case.

Observations of the Supreme Court

The Court held that the order of the High Court is unsound and overruled the same. In reaching this conclusion, the Supreme Court placed reliance on the following cases:

Shiv Sagar Tiwari v. Union of India (1996)

In this case, the matter related to providing residential accommodation to government employees was being examined because government houses were being allotted out of turn to employees. It was held that when it comes to residential accommodation being provided by the government, shelter cannot be denied by providing houses through a fraudulent system of allotment of houses.

S.D. Bandi v. Divisional Traffic Officer, Karnataka State Road Transport Corporation (2013)

In this case, the question for consideration was whether the period of government accommodation granted to an employee can be extended. The Court herein observed that when an individual overstays at a government accommodation, he is infringing the right of some other individual who was supposed to get the government accommodation after him. In light of the same, it was held that once an individual has completed his period of allotted accommodation, he should not be allowed to extend the same and continue to live in the government accommodation.

Lok Prahari (II) v. State of Uttar Pradesh (2018)

In this case, the provisions of the U.P. Ministers (Salaries, Allowances and Miscellaneous Provisions) Act, 1981 were challenged on the ground that it allowed the Chief Minister and other Ministers to continue to reside in government accommodations even after they leave their office. The Court herein observed that government accommodation is a part of public property and it should be only used by current office bearers. Public property is a scarce resource and should be utilised only to serve the needs of the serving public servants.

In light of the aforesaid judgments, the Court concluded that government residences can only be claimed by officers who are currently serving the Government and no exception could be made in this regard. It further held that even though there were problems going on in Jammu & Kashmir, one cannot be allotted a government residence indefinitely. The Government had already allowed the Respondent to continue to reside in the government residence for one-year post superannuation and if the same is allowed to continue, it will defeat the very purpose for which government accommodations are in place, i.e., to serve the needs of accommodation of serving-officers.

Inapplicability of J.L. Koul v. State of Jammu & Kashmir

In J.L. Koul vs. State of Jammu & Kashmir, the retired government employees were allowed to continue residing in their government allotted residential apartments under a state-sponsored rehabilitation scheme. Under this scheme, the State was rehabilitating all those people who were victims of terrorist violence and it had allowed the retired government officials to stay in the government residences till they were rehabilitated under the scheme.

In Indian Bank v. ABS Marine Products (P) Ltd (2006), the Supreme Court had held that the Courts while giving judgements should ensure that they follow the ratio of the judgements of the superior courts and not follow the relief given under special facts. When the Court in its judgment relaxes the application of law in certain cases based on the special facts involved, such orders come under the purview of Article 142 of the Constitution. However, when such orders are passed by the Courts, they do not carry the value of an enforceable precedent.

In light of the observation made above, the Supreme Court herein held that the judgment passed in J.L. Koul vs. State of Jammu & Kashmir was based on special facts and therefore the order therein would come under the purview of Article 142 of the Constitution. Thus, the High Court cannot rely on that judgment to pass an order in this case where no special circumstances are involved.

Conclusion

What is to be noted herein is that even though the right to shelter has been recognised as a fundamental right, it has its own limitation in the form of the right to government accommodation. The main objective behind incorporating the right to shelter under Articles 19 and 21 of the Constitution was to ensure that the homeless and other weaker sections of the society do not perish. But when it comes to government residences, the resource involved is a public resource and it should be used by people who are serving the people in an official capacity. Therefore, the right to government accommodation even after leaving the public office cannot be termed as a fundamental right.

References

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French administrative court challenges facial recognition

By

Oishika Banerji

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November 16, 2021

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Screen-Shot- — Image source - https://bit.ly/3EWRHwF

This article has been written by Eascham pursuing the Diploma in International Data Protection and Privacy Laws from LawSikho. This article has been edited by Zigishu Singh (Associate, Lawsikho) and Smriti Katiyar (Associate, Lawsikho).

Table of Contents

Introduction

A lawsuit filed before the French Administrative Court of Marseille for the removal of biometric facial recognition technology (FRT) in two high schools was successful. The French administrative court invalidated the deliberation of the Provence-Alpes-Côte d’Azur Regional Council (PACA) and canceled the experiment.

This case is significant e because it’s the first French administrative Court decision applying the General Data Protection Regulation (GDPR) on AI biometric technology. Being in a democratic society, keeping in mind the fundamental rights, this case gave a clearer insight on when facial recognition is necessary, and when it is needless and unwarranted.

Facts of the case

In October 2017, the President of the Provence-Alpes-Côte d’Azur (PACA) Regional Council sought CNIL’s (Commission nationale de l’informatique et des libertés, France’s data protection authority) assistance for the purpose of conducting a series of facial recognition tests at the entrance of two High Schools located in Nice and Marseille (South of France), for granting or refusing access to the students.

Even though CNIL did not authorize it, the Regional Council, PACA, ignored the warning and, in a deliberation dated 14 December 2018, still went ahead with the plan by labeling it an experiment.

Several French data protection and human and civil rights associations and NGOs like La Ligue des Droits de l’Homme, La Quadrature du Net, and the federation of parents of pupils of the public schools of the Alpes-Maritimes, protested this experiment, claiming that it was illegal as it violated the GDPR. And therefore, filed an action for annulment for PACA’s deliberation before the French Administrative Court of Marseille on 14 February 2019.

On 27th February 2020, the french Administrative Tribunal, in conclusion, annulled the facial recognition system because the biometric data of underage children had been processed without the backing of any legal basis.

Objective of the experiment

The experiment intended to assist the staff of the high schools. It aimed to control and speed up the entry of students and to regulate the premise access of occasional visitors in order to determine the entry of only authorized people. Another objective of the experiment was to avoid identity card theft or misuse.

The FRT that was to ensure the required security measures, comprised virtual access control devices, by which cameras would recognize high school students and grant them access and be able to follow the trajectory of people.

The role of CNIL

The CNIL, a FRENCH DATA PROTECTION AUTHORITY (DPA), is an independent administrative authority that practices in conformity with the French Data Protection Act of the 6th of January 1978 (amended in August 2004). They have many powers including advisory power, investigation powers, and administrative sanctioning powers.

The CNIL’s role is to analyze the repercussions of innovations and technologies on citizens’ fundamental right to privacy and liberty. It is their responsibility to share information and raise awareness on data protection culture. DPAs ensure that information technology should always be at the service of the citizen, and they should gain from it and that technology should not undermine human rights, privacy, and their liberties in the name of service.

The CNIL comes under the membership of the EUROPEAN DATA PROTECTION BOARD (EDPB). The EDPB was established by GDPR under Article 68-76.

GDPR

THE GENERAL DATA PROTECTION REGULATIONS are a legal framework for ensuring data protection and privacy of the citizens (data subjects) in the European Union (EU) and the European Economic Area (EEA). They are Regulations on the protection of natural persons with regard to the processing of personal data and the free movement of such data.

Reasons for CNIL, the data protection authority, to not authorise the experiment

The CNIL showed its disagreement with PACAs decision to carry on the experiment. It was convinced that FRTs were unnecessary and they were very intrusive biometric mechanisms that processed and stored sensitive personal data.

Considering the privacy and civil liberties of the citizens, there was a huge risk involved. It emphasized the fact that people involved in this experiment (data subjects) were minors, making matters all the more sensitive.

GDPR requires a necessity and proportionality test and minimization of data but the experiment that was carried out was contrary to both principles.

Necessity and proportionality test

Necessity is the fundamental test for assessing the validity of the processing of personal data. It is an essential criterion to ensure that the restriction of fundamental rights to the protection of personal data is reasonable.

Proportionality is a principle of EU law. Considering fundamental rights to the protection of personal data ensures that the advantages of limiting the right are not outweighed by the disadvantages to exercising the right. In short, the limitation or restriction on the right must be reasonable and justified.

Therefore, both necessity and proportionality require authorities to strike a balance between the means used and the intended aim.

The objective of FRT was to increase the security and fluidity of traffic, CNIL firmly believed that there were other means that already existed, that were less intrusive and could achieve the same result. (such as badge/ID control).

The Court’s decision of February 27th, 2020

The decision taken on 27 February 2020 confirmed the CNIL interpretation and analysis of GDPR in its entirety. The Administrative Court of Marseille invalidated the decision of the PACA region council.

The court justified its decision on the following basis:

Consent, a legal basis for processing

Art. 7 GDPR talks about the conditions for consent. For a consent (recital 32) to be legally valid it has to be a freely given, specific, informed, and unambiguous indication of the data subject’s agreement to the processing of personal data.

But in the present case, it was observed that the PACA region counsel tried to legally justify the consent taken from the students and the legal representatives of the minor students for processing of the biometric data through a simple form signed by high school students in a subordinate position to their respective high schools’ directors. It was evident enough that students under the direct authority, cannot guarantee that the consent was freely given and was an informed choice.

The Court concluded, simple signature in a form is not sufficient grounds for valid consent under GDPR.

The French Act of 20 June 2018, amending the Data Protection Act, in line with European texts stated that in the absence of consent, an operator, whether public or private, may only implement biometric processing if it has first been authorized by law.

On the proportionality test

The Court thus used the CNIL’s interpretation of proportionality test and GDPR and concluded that PACA counsel could not convince the court that access control by a badge or ID card along with video surveillance (CCTV), was insufficient and could not achieve the same results as from FRT.

The proportionality criteria were not satisfied because of the existence of other less intrusive means that could give the same results as the FRT and were more appropriate. Therefore, the FRT test undertaken violates Article 9 of the GDPR and cannot be justified by the exceptions announced in para. 2 of this Article.

PACA’s authority to conduct the experiment

Responsibility for school safety lies with the Head of School, not the Region PACA, so the latter acted ultra vires by engaging in such an FRT experiment.

Processing of minors personal data

The Court remained silent on the processing of biometric data of students predominantly minors. Since Minors are a vulnerable group within the meaning of the GDPR, there is still a void in certain provisions of the GDPR and French Data Protection Act concerning the processing of their sensitive biometric data.

Conclusion

Facial recognition falls under the category of biometric technology. Biometrics are AI, automated processes that can assess physical characteristics like fingerprints, blood vessel patterns, iris structure, and even physiological and behavioral characteristics in certain cases. The GDPR defines these characteristics as “biometric data”, and they come under sensitive personal data. “sensitive” data under GDPR, includes data like health or sex life, political opinions, and religious beliefs.

With the present technology, biometrics, no matter how legitimate, are still prone to cyber-attacks and can have particularly very serious consequences. Therefore like other biometric techniques, facial recognition is never a completely harmless type of data processing. Hence, a strict legal framework has been reinforced by GDPR laws and national data protection laws.

Furthermore, data protection principles cannot be ruled out even in the experimental stage, especially data concerning sensitive data of “vulnerable persons” such as minors according to the GDPR. While deploying FRTs, it is expected of the controllers to demonstrate a high level of compliance with data protection principles due to the complexity of ensuring compliance when deploying facial recognition tools.

Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.

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India’s blazing counterfeit culture : is “fake in India” better than “make in India”

By

Diganth Raj Sehgal

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November 16, 2021

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This article is written by Anindita Deb, a student of Symbiosis Law School, Noida. The objective of this article is to discuss the counterfeit culture grasping its roots in India and what are the legal provisions attached to it.

Table of Contents

Introduction

Walking through Sarojini Nagar, you’ll hear numerous vendors call out to you claiming they have the exact copy of the ABC brand. A friend of yours who has an annual income of Rs. 3 Lac owns the latest model of iPhone which he claims to have bought at only Rs. 20,000. These are called the first copy of goods, which is costlier than the second or third copy that can be bought at much cheaper prices. These copies of goods constitute the majority of the consumer goods market, encouraging a culture that is referred to as counterfeiting.

Counterfeiting and counterfeit goods

Counterfeiting involves the manufacturing or selling of goods under a brand name without the brand’s permission. Counterfeit goods are usually manufactured using lower-quality materials but are made in a manner so as to imitate the goods produced by a brand (usually higher-priced or luxury brands). Countless sectors are impacted by counterfeit goods, including fashion, accessories, music, software, pharmaceuticals, and cigarettes, as well as vehicle and airplane components, consumer goods, toys, and electronics. The biggest impact of the counterfeit culture, however, can be seen in the consumer goods sector, especially the fashion industry. India has turned out to be a hotspot for counterfeit goods in recent years, with almost all the cities boasting of a marketplace that sells premium brand products at much cheaper prices.

Counterfeiting in daily goods such as food, beverages, medicine, auto parts, cosmetic products, and software is the main source of concern. Almost a third of each of these categories is infested with counterfeits, causing sleepless nights for market leaders who are always easy targets for counterfeiters.

Impact of counterfeiting on the Indian economy

Every year 8 June is observed as the World Anti-Counterfeiting Day. This year on this occasion, the Authentication Solution Providers’ Association (ASPA), which is a self-regulated industry body of anti-counterfeiting and traceability solutions, released the latest edition of its report “The State of Counterfeiting in India-2021”. The goal is to raise awareness among industry stakeholders about the fight against counterfeit goods.

The report examines and discusses trends in counterfeiting occurrences recorded in India from January 2018 to December 2020, with a focus on incidents reported in 2020. Counterfeiting cases have increased rapidly/consistently in recent years, according to the research. In the last three years, there has been a 20 percent increase in the number of counterfeiting occurrences reported (from January 2018 to December 2020). In comparison to 2019, the number of recorded occurrences has grown by 17% in 2020.

While counterfeiting is a global problem that has touched every economy in the globe, the recent trends are concerning for the Indian economy and its citizens’ lives. It has been observed that criminals are contaminating the market by selling fake and substandard products, endangering the lives of our paramedical professionals, security volunteers, patients, and society at large, by taking advantage of the high demand for medicines, health supplements, safety products, hygiene products, and other essentials created by the COVID crisis.

There has been an increase in ‘unsophisticated’ frauds in recent years. The COVID-19 epidemic has also demonstrated how criminals adapt swiftly to changing trade environments and discover new ways to infiltrate legitimate supply chains with counterfeit and frequently hazardous items.

There has been an increase in ‘unsophisticated’ frauds in recent years. The COVID-19 epidemic has also demonstrated how criminals adapt swiftly to changing trade environments and discover new ways to infiltrate legitimate supply chains with counterfeit and frequently hazardous items. Professional scammers are now using new-age manufacturing and printing technology to imitate finishes, print boxes, labels, codes, and packaging that perfectly resembles genuine products. For the ordinary customer, fakes go by nearly undetected. Increased occurrences of fraud, such as diversion, counterfeiting, and black marketing of pharmaceuticals and other necessary commodities, are adding to the issues faced by our healthcare workers, who are already overworked due to a personnel deficit. A number of incidents of counterfeit COVID-19 medicine have been detected in recent months.

According to the ASPA report, alcohol, cigarettes, FMCG packaged goods, currency, and pharmaceuticals are the top five industries that have been hit the worst. More than 84 percent of all counterfeit instances are recorded in these industries. During the COVID-19 lockdown, there was a significant increase in offenses involving illicit liquor, cigarette smuggling, and medicinal supplies, particularly PPE kits and sanitizers. Tobacco products now have the most significant growth in 2020 compared to 2019 and 2018. Between April 2020 and February 2021, Indian officials recovered illegally imported cigarettes worth Rs 1,772-crore, according to a query response raised in the Lok Sabha. In the preceding financial year, seizures of Rs 187.6 crore were made.

Uttar Pradesh, Rajasthan, Madhya Pradesh, Jharkhand, Haryana, Bihar, Punjab, West Bengal, Maharashtra, and Odisha are among the top ten states that require immediate attention owing to counterfeiting incidents, which necessitate a more detailed analysis of the problem, as well as stringent anti-counterfeiting policy mechanisms and implementations.

Counterfeiting isn’t restricted to high-end luxury goods. Criminals are increasingly reported counterfeiting common everyday commodities such as cumin seeds, mustard cooking oil, ghee, hair oil, soaps, infant care, and medicine.

Growing trends of counterfeit culture in the fashion industry

One of the key benefits that can be enjoyed by owning a trademark to a good or service is the element of monopoly that comes with it. The fact that a trademark holder has an exclusive proprietary right in his or her trademark which conveys the source of the goods or service being purchased/availed to the consumer who encounters it, exclusivity benefits both the trademark holder and the consumer. In the fashion sector, when wearing or possessing products of a certain brand is closely connected with an individual’s position, eminence, and desirability, the necessity for monopoly becomes even more vital. Brands such as Louis Vuitton, Bulgari, Gucci, Prada, Hermes, Rolex, etc. are examples of ‘luxury brands’ that promise to confer a sense of power and status on the person wearing these brands as a result of their immense reputation, which has been built up over decades in some cases. With the growth of technology, customer brand recognition has become an important aspect of earning revenue for both small businesses and large corporations. Furthermore, with many e-commerce websites and expanding accessibility to a broad consumer base, significant players in the clothes and accessories business have had to construct a unique narrative to attract consumers to want their brand. As a result, brands, particularly in the fashion industry, have sought the help of loyalists or ‘influencers’ (as they are known on social media) to promote or advocate their products with the goal of ‘influencing’ consumers’ opinions in their favor. However, brand owners are learning that the faster their brand accomplishes the result of ‘trending’ on social media, the faster it becomes a target for large-scale counterfeiting.

Counterfeiting in the fashion business is divided into two types: deceptive and non-deceptive. Deceptive counterfeiting happens when a consumer is unaware that he or she is acquiring a fake or fraudulent good, while on the other hand, non-deceptive counterfeiting occurs when a consumer purchases a replica of the original product knowingly and with complete knowledge.

Consumers in the fashion industry, in particular, have indicated a preference for counterfeited products, or ‘knock-offs’ (in popular parlance), despite knowing that the products they are purchasing are of lower quality and durability. This is likely due to the fact that the pricing of these counterfeit goods has been lowered by 60-70 percent, combined with the displaying of a popular brand or a popular attribute of a brand while one wears or carries these counterfeited goods.

The rampant trend of counterfeiting of garments and accessories in India is assumed to be a result of increased counterfeit manufacturing in the Southeast Asian Region. Notably, the national capital alone has bustling markets selling counterfeit items in the open, with brands such as ‘GUCI’, ‘ABIBAS,’ and ‘FUMA,’ among others. Due to the strong demand for these products among consumers and the fact that these marketplaces have existed for decades, law enforcement agencies have been unable to do much to combat the counterfeiting problem, which has been on the rise in India.

Legal provisions against counterfeiting goods

Indian law does not have a specific set of laws dedicated to dealing with the counterfeiting of goods. However, there are certain provisions that might come to the rescue of brand owners who wish to file an action against the sale of counterfeit goods under their brand name.

The owner of the brand or the rights holder has rights under Indian trademark laws under the law of “passing off.” Passing off refers to the manufacturing of goods under the same or similar brand name in order to profit from the brand’s goodwill. India is also a member of the agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Article 51 of the TRIPS Agreement defines ‘Counterfeit trademark goods’ as items that bear a trademark that is similar to, or cannot be distinguished in essential aspects from, a registered trademark without authorization. TRIPS Article 61 stipulates that member nations must provide for criminal proceedings and sanctions in cases of willful trademark counterfeiting or commercial copyright piracy.

The IP Rights (Imported Goods) Enforcement Rules, 2007 and the India Customs Act, 1962 allow trademark, design, and brand owners to register their rights with Indian Customs Authorities for the seizure of imported counterfeit goods. Counterfeit products are per se prohibited items under the Customs Act, thus the Authority will notify the rights holder of any imported goods, which will be destroyed in front of the rights holder if determined to be fake. In some cases, even if the rights holder has not registered with the Authority, the Authority will notify them. Counterfeiting and piracy are cognizable offenses in India, which means that law enforcement has search and seizure powers.

Sections 102, 103, and 135 of the Trademarks Act of 1999, which deals with falsification and false application of a trademark, can be used as remedies against infringement and counterfeiting. Section 103, for example, makes counterfeiting punishable by three (3) years imprisonment and a fine of up to two lakh rupees if it is proved that a person has falsified goods under the provisions of Section 102. Section 135 provides relief in suits for infringement or passing off.

In India, counterfeiters of spurious drugs are held liable under the Drugs and Cosmetics Act, 1940 (DCA). According to Section 17B, ‘Spurious drugs’ are defined as those that are deliberately and fraudulently mislabelled and created to deceive patients by concealing their identity, source of manufacture, and content, in order to profit from the popularity of fast-moving branded or generic medicines. Offenses are cognizable under the DCA and offenders may be prosecuted under the Indian Code of Criminal Procedure, 1973. The DCA allows law enforcement to inspect, seize, and confiscate any fake, adulterated, or misbranded pharmaceuticals.

Steps taken by marketers to combat the counterfeit culture

Hindustan Unilever (HUL) uses a three-pillar strategy to combat counterfeiters as part of its Combating Unfair Competition (CUC) program:

Creating a dedicated team with adequate money and resources;
Educating consumers about IPR; and
Working with the government on regulation and enforcement.

The onus is not solely on the government, which is why HUL observes World Intellectual Property Day and World Anti-Counterfeiting Day every year to raise awareness about IPRs.

Brands are also becoming more aware of internet counterfeiting. Brands aren’t the only ones who are adopting technology-based solutions. Two government agencies have implemented on-spot solutions, which include a unique QR code embedded in product packaging that can be scanned using the same app or a standard QR code reader in real-time to check product authenticity. Several other market giants hire private investigators to go after counterfeiters.

Conclusion

In the age where maintaining a social image is being given so much importance, people tend to move to counterfeited goods more easily in order to appear to maintain a standard of purchasing that is much beyond their affordability. Peer pressure and the fear of being the one who is left out from social circles because of standards have attracted more customers to adopt the counterfeit culture. As a result, the market for counterfeit goods has grown substantially over the years. There are certain legal provisions that can be used to combat this growing concern that exploits popular brand names. However, a more stringent legal framework is required to put an end to this practice that is taking roots in the Indian economy.

References

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The concept of dilution of trademark

By

Abanti Bose

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November 16, 2021

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This article is written by Ajay Kumar, pursuing Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho. The article has been edited by Zigishu Singh (Associate, LawSikho) and Smriti Katiyar (Associate, LawSikho).

Table of Contents

Introduction

A trademark is a unique design, mark, image, symbol, mark, or phrase attached to a specific item for sale to differentiate the goods from those sold or made by others, requiring the manufacturer to identify the source of the product. Once authorised, the producer can legally exercise the rights, and the marks become his property which provides the producer with the legal right to sue the infringer. As a result, marks that have been preserved are better protected legally.

The Indian parliament replaced the Trade and Merchandise Marks Act, 1958, with the Trademarks Act, 1999, to provide better protection to the goods and services and protect fraudulent marks. The Trademarks Act, 1999 introduced the concept of trademark dilution.

Trademark dilution

Trademark dilution is a form of trademark infringement, where the owner of a well-known trademark has the right to prevent others from using their mark because it tarnishes their exclusivity or undermines their reputation. In practice, no one has the right to copy any well-known trademark or abuse the reputation of a well-known trademark. Instead, dilution protection is intended to protect a sufficiently strong and well-known trademark from losing its sole association in the public’s mind with a particular product.

History of trademark dilution

We can trace the history of trademark dilution back to 1927. The renowned author of the “Historical Foundations of the Law Relating to Trade-Marks”, Mr. Frank Isaac Schechter, first propounded the principle of trademark dilution in his article “The Rational Basis of Trademark Protection”, published in the Harvard Law Review. In his article, Schechter argued that trademark protection should not be limited to addressing issues related to the deception of the public but should extend to preventing people from “destroying the originality and uniqueness of the mark”. Frank Schechter is known as the ‘father of dilution’ because of his work which outlined the theory of dilution.

Types of trademark dilution

Trademark dilution takes place when an unauthorised party uses a trademark in a way that affects, tarnishes or blemishes the image of a well-known trademark. Mainly, trademark dilution occurs between businesses or individuals that do not compete with each other. Trademark dilution is categorised into two categories: blurring and tarnishing.

What is blurring?

Blurring occurs when a famous trademark’s uniqueness is tarnished due to a trademark created by an unauthorised party. For example, if a business uses the ‘AMUL’ mark on kitchenware, consumers may begin to associate the well-known AMUL mark with the kitchenware brand. This can lead to affecting the brand image of AMUL negatively.

Understanding the term tarnishing

Tarnishing occurs when the status of a similar mark or well-known mark concerning a trading name is injured. This generally applies when the defendant’s use of the mark is considered offensive or associated with inferior products or services. For example, if someone sells undergarments under the mark ‘BENZ’, the use of “BENZ” on undergarments can blemish the reputation of the renowned manufacturer of the finest engineered cars BENZ.

The act of dilution of the trademark by way of tarnishment is always with regard to well recognised, strong and famous trademarks. This has the effect of reducing or weakening the strength and identifying the value of the trademark. There is no need to establish the likelihood of confusion as to source, affiliation and connection. This is so as some potential purchasers are confused as to source or affiliation while others may not.

The doctrine of dilution of trademarks

The doctrine of dilution is independent and distinct. The underlying object of the doctrine is that there is a presumption that the relevant Customers begin to associate the trademark with a new and different source of goods and services. The doctrine of dilution of trademarks leads to a principle in trademark law that protects a trademark from any form of disintegration. According to the doctrine, to establish dilution of the trademark, the Plaintiff has an obligation to prove that;

1 The infringer has used a mark that is precisely similar to the well-known trademark to monetize or profit from the goodwill and image of a well-known trademark.

2. The economic damage has been done by reducing the value of the well-known trademark.

The doctrine of trademark dilution in India

The word dilution has not been defined in the Trade Marks Act, 1999 but Section 29(4) of the Trade Marks Act, 1999 talks about the dilution of a trademark. This section provides that if a trademark has a reputation in India, the use of a mark identical with or similar to it, even the goods or services which are different, constitutes infringement as such use without due cause, would take unfair advantage of a reputed trademark or harm its distinctive character. So this Section postulates that a registered trademark is infringed by marks which:

1. Identical or similar to a registered trademark already having a reputation in India and is used concerning goods or services which are not identical to those for which the trademark is registered.

2. When any person takes undue advantage of an eminent mark or mark having a distinctive character.

Exceptions to dilution of trademarks

There are certain conditions under which the infringing mark shall not be actionable as dilution. This includes situations where the mark is used to criticise, parody, news reporting, commentary, educational, and entertainment purposes. Such cases may fall under the ambit of descriptive or nominative fair use and hence, cannot be considered trademark dilution. In addition, advertising or promotional activities that allow consumers of a brand to compare goods or services are permitted and will not be actionable as trademark dilution.

Case laws

In Caterpillar Inc. vs Mehtab Ahmed And Ors, Plaintiff filed a suit for a permanent injunction against the defendant for selling various articles, including footwear, using the identical trademarks ‘CAT’ and ‘CATERPILLAR’. The Delhi High Court decreed in favour of the Plaintiff and stated that “So far as the doctrine of dilution is concerned, it is an independent and distinct doctrine. The underlying object of this doctrine is that there is a presumption that the relevant customers start associating the mark or trademark with a new and different source. It smears or partially affects the descriptive link between the prior user’s mark and its goods. In other words, the connection between the mark and the goods is blurred. It amounts to reducing the force or value of the trademark and gradually tapers the commercial value of the marks slice by slice. Such kind of dilution is not a fair practice that is expected in trade and commerce.”

In ITC Ltd. v. Philip Morris Products SA, Plaintiff owned the ‘WELCOMEGROUP’ logo, a device depicting folded hands. In a suit for dilution of trademark, the Court held that Plaintiff must pass a more rigorous test (compared to the deceptive similarity standard) of proving identity or similarity. The Court further held that a “global” look is to be taken rather than focusing only on the common elements of the mark while considering if the impugned mark infringes an existing registered mark by dilution. Plaintiff’s mark resembles a “W”, but “Namaste” is discernible. All the defendant’s previous marks resemble “M”. Considering the overall marks for the logo, without classifying the similarity or dissimilarities minutely, the Court discerns no ‘identity’ or ‘similarity’ in the overall presentation of the two. The case has established that there may be infringement by way of dilution if the impugned mark is identical to the well-known part, the well-known mark has a reputation in India, The impugned mark has been used without any reason, and using the impugned mark is detrimental to the distinctive character of the impugned mark.

In Bayerische Motoren Werke AG v. Om Balajee Automobile (India) Private Limited, Plaintiff is a German automobile manufacturing company that owns the mark ‘BMW’ and manufactures and sells automobiles under the mark ‘BMW’. The defendant was using a similar mark, ‘DMW’ in their E-rickshaws. The Delhi High Court observed that the defendant had adopted the essential characteristics of the Plaintiff’s mark and that the visual and phonetic similarity was evident. Because of this, the defendant’s mark DMW was likely to deceive and cause confusion. The Court passed the ad-interim injunction and restrained the defendant from using the similar mark.

This decision gives due importance to the protection of well-known and reputed trademarks from the threat of dilution as infringement. It reinforces the concept that the dilution test does not equate to illusory equality.

Conclusion

The power conferred on the well-versed trademark owner is known as the concept of dilution. This philosophy will help protect the reputation of the company and prevent fraudulent acts that may occur over time. These well-known enterprises contribute to the GDP growth of our country, and it is the responsibility of the administration to defend them against unfair competition and other deceptive practices. Section 29(4) is a remedy that exists in addition to contravention action. The concept of dilution is based on the authority of the courts and the conditions laid down by them. To prevent confusion, if a trademark fails to pass court standards, it is not authorized to market in the marketplace.

References

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Trial in absentia : a mechanism of criminal justice

By

Diganth Raj Sehgal

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November 16, 2021

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This article is written by Srilakshmi S P, a student of JSS Law College, Mysuru. This article explains about how the accused is the main subject of adjudication and the procedure to be followed as provided in international convention and its legality.

Table of Contents

Introduction

The main objective of the criminal trial is attainment of justice and maintenance of rule of law. It is the right of the accused to appear in person before the court and is considered as inherent in the notion of a fair trial. Trial in absentia is derived from the Latin word which means ‘trial in absence’. Trial in Absence (TIA) is the conducting of a trial when the accused is willfully absent and has surrendered his right to be present in the trial. It is entailing the criminal trial in the absence of the accused. The trial of the criminal cases suffers due to absconding of the accused as it is the right of the accused to be present in trial proceedings but not a duty.

Legitimacy of trials in absentia

The rationale behind the trial in absentia is that the accused cannot delay the administration of justice by abandoning himself from the trial. On the contrary it violates the right to trial of the accused. A trial in absentia is an important principle of law and must not be dismissed, as it has proved to be beneficial in certain circumstances.

The accused has to wait for a long time for his charges to be proved in court of law and the same also applies to the victim who awaits justice and requires closure of the case through legal means. Such delay defeats the purpose of efficient court proceedings as time is the essence of a fair trial, and it becomes detrimental to both the parties and administration of every proceedings.
Deterioration and destruction of evidence due to the passage of time is also another weakness of trial in absentia. The accused will abscond and evade from the criminal justice system. Most of the time political pressure is deployed on the judiciary to dispense justice to the parties involved. In such a situation a trial in absentia will be a viable solution, so that the proceedings are not delayed by the accused absence.

Roots of trials in absentia

In civil law countries like France and Germany which follow an inquisitorial system of law, trial in absentia are a part of criminal procedure and can be used when the accused is safeguarded by the codes like European Convention on Human Rights or International Covenant on Civil and Political Rights.

In common law countries like India, U.K which follows an adversarial system of law, trial in absentia can be used only if an accused voluntarily absconds after the commencement of the trial during which the accused was present.

Earlier when the accused was absent from the trial, he was not tried in absentia or adjudged guilty by default, but declared as “outlaw” and was subjected to summary execution. An exception was granted that the defendant’s presence is jurisdictional in capital cases and if he is not in custody, he could waive the right to be present by voluntarily absenting himself after the trial had commenced.

Effect on justice

The rationale of trial in absentia

It prevents the accused from dictating when the case against him will proceed.
It reduces the stress on victims by ensuring trial proceeds on the scheduled date and disposed of in a timely manner.
Reduces inconvenience to victims, witnesses and judges.
Avoid problems with multi-accused trials when one of the accused fails to appear and the other accused are ready to proceed.

The three main conditions for trial in absentia

The accused have already been called for trial.
He has been duly notified about the trial.
His failure to appear for the trial is inexcusable.

There are two types of absconding of accused

Accused absconds during the investigation at the pre-arrest stage.
Accused who abscond after they are arrested and enlarged on bail.

Section 82 and 83 of CrPC provides for the proclamation and attachment of properties but it is not effective if the accused does not have any property. Section 174 A was added to IPC which states that if the accused fails to appear before the court at a specified time and place he will be punished for three years and fine. And Section 229 A of IPC states that if the accused does not appear before the court after being enlarged on bail he will be punished for one-year imprisonment and fine. To blame the police for their inability to execute the warrant of arrest and to secure the attendance of the accused is not a solution.

Major defence for protecting trial in absentia are:

Legal representation by the counsel.
Access to all relevant evidence of the case.
Right to challenge the judgement in default.

Trial in absentia and popular people

When a celebrity is in conflict with the law there comes public sentiment in two portrayals. One, where the power and wealth will show judges being chary and the second being the slowed justice system for obliqueness in favour of celebrities. In most of the cases, the counsel representing the celebrity accused will appear before the court. Section 205 of CrPC provides for permanent exemption of appearance before the court. So the personal examination of the accused will also be dispensed which is provided under Section 313 of CrPC. In an instance actress Sonali Bendre was accused of obscenity and she was granted exemption from appearance except for the framing of charges. In another instance, actress Kangana Ranaut pleaded for permanent exemption from personal appearance for a defamation case filed against her and the same was granted by the Mumbai court. Famous politician Rahul Gandhi also asked for permanent exemption from personal appearance before court for a defamation case and the same was granted by the Ahmedabad Court. Prayag Thakur was also granted the exemption on the ground that she was a newly elected legislator and should attend the parliamentary session by the NIA Court.

European Convention on Human Rights

Article 6 of the Convention speaks about the right to a fair trial. It states that a trial in absentia is not a violation of the right to a fair trial and does not infringe the rights of the accused, but the accused should be appropriately defended and his counsel who wishes to attend the trial should be permitted to plead the case. The ECHR jurisprudence holds the trial by providing the following safeguard:

The accused should have effective knowledge of the proceedings and hearings of the case.
The accused should have legal representation by the counsel. It is the burden of the state to show that the accused counsel has represented effectively without any undue influence or pressure.
The accused should have the right to a retrial or an ex novo trial in his or her presence. He has to prove the merit of charges both the facts and law.

The duty to guarantee the right of a criminal defendant to be present in the courtroom ranks accordingly as one of the essential requirements of Article 6.

International Covenant on Civil and Political Rights

Trial in absentia is controversial in international criminal law. It is a fundamental right to present in one’s own trial, and the same has been incorporated in ICCPR. Article 14(3)(d) of the Covenant provides three separate rights, they are:

Right to be present in one’s own trial.
Right to defend themselves personally or through counsel.
Right to representation even when the accused cannot afford it.

The United Nations Human Rights Committee has the right to monitor the state parties as to adhering to the rights incorporated in the Covenant.

International Criminal Courts

International Criminal Courts are established to set international standards for conducting trials for international crimes. Article 63 of the ICC prohibits trial in absentia except in a few circumstances. They are:

If the accused is present in the court and disrupts the trial, the Trial Chamber can remove the accused and can make the provision to observe the trial through communication technology from outside the courtroom by instructing the counsel. This measure is used in exceptional circumstances after exhausting reasonable alternatives is proved inadequate.

Some delegation had differences of opinions on trials in absentia:

That it would degenerate into show trials and would discredit the ICC quickly.
That it has little practical value as the accused have the right to a new trial upon appearance before the court.
That due to the nature of crimes in the statute it would become impossible to compel the appearance of the accused.

Trial in Absentia in India

In a very large number of cases, the accused absconds in different stages of the trial which results in the delay of the cases for want of appearing of cases. When there are multiple accused in a single case and one or more accused absconds which results in multiple proceedings for the same case. And the primary reason why the courts are not liberal in granting bail is the apprehension of absconding of accused in the trial.

Section 273 of CrPC makes an obligation to the magistrate to take the evidence in the proceedings of the case in the presence of the accused, if his presence is dispensed then in the presence of the accused pleader.

This does not conclude the trial but enables the accused to evade adjudication and the adjudicatory process will be self-possessed at the will of the accused to appear before the court. Due to a lapse of time, the vital evidence will have vanished and the victims become dejected too.

Section 299 of CrPC is an exception which states that the evidence can be recorded in the absence of the accused and can be used against him. But the above provision is not absolute, as the recorded evidence cannot be used as long as the witness has died or his appearance cannot be secured without undue delay. In the case of multiple accused the victims have to dispose of multiple times as and when the accused are arrested. For example rape cases, multi-million fraud cases.

Section 317 of CrPC provides for holding of trial in any stage in the absence of the accused. If the court is satisfied with reasons that the personal appearance of the accused before the Court is not necessary or is disturbing the proceedings of the court he can be exempted from the appearance.

Section 89 of CrPC makes provision that if the person has ensured of appearance through bond and does not appear, then the court can issue a warrant of arrest of the person.

The magnitude of the Trial in absentia came to keen notice in the case Hari Singh v. State of Jharkhand (2018 SCC Online Jhar 2534) where the Jharkhand High Court observed that there should be some Amendments to Section 299 of CrPC.

The Indian judicial system should adopt the trial in absentia principle with utmost care and caution and only in situations where the justice is barred due to the accused absence and there won’t exist any reasonable way of presenting him to court. So such trial would not violate either principle of natural justice or the accused right to a fair trial

Conclusion

Different jurists have diverse opinions on the trial in absentia procedure as some claim it fosters disrespect to the law and the practice is inherently unfair. As the defendant will be priorly informed about the time, place of the trial and do not participate, it’s a standing to complain. Some jurists opine that a trial in absentia involves a forfeiture rather than a waiver and that the right to be present might be lost without an intention to waive it. It affects the progress of the case at every stage from investigation, inquiry, and trial and even after the conclusion of trial for execution of warrant of conviction. So proper codification should be made so that there will be speedy adjudication without the dispensation of justice.

References

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All you need to know about the CGTMSE Scheme cover

By

Abanti Bose

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November 16, 2021

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cgtmse-scheme — Image Source: https://rb.gy/u0djun

This article is written by Anjali, pursuing Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from LawSikho. The article has been edited by Prashant Baviskar (Associate, LawSikho).

Table of Contents

Introduction

It is estimated that India has about 63.5 million micro and small enterprises (MSEs). These MSEs provide employment to an estimated 55 million people. The MSE sector gives nearly 45% to the manufacturing sector production and 39 % of the country’s exports. MSEs faced a problem of non-attainability of timely and appropriate credit at a suitable interest rate. High-risk perception of the banks while giving loans to MSEs is one of the main reasons for the low attainability of bank finance to this sector.

CGTMSE is an acronym for Credit Guarantee Fund Scheme of Micro and Small Enterprises. This scheme was launched by The Ministry of Micro, Small & Medium Enterprises (MSME) on August 30, 2000, to provide non-guaranteed credit to the MSE sector. All existing and new small & medium enterprises are eligible to be covered under the scheme.

Definitions

Collateral security

Security provided in addition to the primary security, in connection with the credit facility offered by a lending institution to a borrower is called Collateral Security.

SIDBI

Small Industries Development Bank of India also known as SIDBI, regulates the overall licensing and regulation of MSEs. SIDBI was established on April 2, 1990.

Guarantee cover

It means maximum cover available per competent borrower of the amount in default in respect of the credit facility offered by the lending institution.

Lending institution(s)

It is a commercial bank for the time being included in the;

Second Schedule to the Reserve Bank of India Act, 1934,
New Age Fin-Tech NBFCs,
Scheduled Urban Co-operative Banks and Small Finance Banks as may be specified by the Trust every now and then, or
NBFCs, Regional Rural Banks,
Any other institution(s) as may be directed by the Govt. of India every now and then.

MSME

Ministry of Micro, Small & Medium Enterprises.

Guideline for CGTMSE

As per this scheme, the government of India will take 85% (Eighty-Five percent) of the loan amount on your behalf.
In this scheme, you can apply for a loan of 10(Ten) Lakhs to 2(Two) crore Indian Rupees.
If you will take a loan of up to 5 (Five) lakhs, then the government will give you up to 85% (Eighty-Five percent) guarantee and for 5(Five) lakhs to 2(Two) crores 75% guarantee.

Accessibility of bank credit without the requirement of collaterals/third party guarantees would be an important source of support to the first-generation business person to realise their goal of setting up a unit of their own Micro and Small venture.

Why do we need this scheme?

To find the investment and funding one has to work hard. This problem existed even fifty years ago. For any business, be it a start-up or an established business, money always works like fuel. Before this scheme, MSME (micro, small & medium enterprises) played an important role in the Indian economy and contributed an estimated 10% to the country’s GDP. MSME provides employment to 7 crore people as per conservative estimate. But it faces so many problems in procuring finances and loans. In spite of their existence in the market segments, they still face several challenges and hardships.

To control such situations, the government of India has launched the scheme CGTMSE under the MSME, and SIDBI to prompt the flow of institutional credit to micro-small enterprises (MSES).

Eligibility criteria for the CGTMSE scheme

Lending Borrower:- All existing micro and new small enterprises engaged in manufacturing or service activity extended training institutions, agriculture, Self Help Groups, educational institutions etc.
Lending Institutions:- Lending institutions that provide financial support to specific zones are in agreement with CGTMSE. These include:

Scheduled commercial banks (SCBs).
Small Financial Banks (SBFs).
Regional Rural Banks (RRBs).
Small Industrial Development Bank of India (SIDBI).
North Eastern Development Finance Corporation Ltd.
Non-Banking Financial Companies (NBFCs).
National Small Industries Corporation (NSIC).

Guarantee Cover: – Below are the guarantee cover available under this scheme

The extent of 75% (Seventy-Five percent) of the sanctioned amount of the credit facility.
The extent of guarantee cover is 80% (Eighty percent) for:

Women operated or owned MSEs;
Loans up to ₹5 Lakhs for Micro Enterprises; and
Loans distributed in the North-East Region. In case of default, Trust settles the claim up to 75% (Seventy-Five percent) or 80% (Eighty percent) wherever applicable of the amount in default of the credit facility offered by the lending institution.

For the abovementioned point, the amount in default is calculated as the principal amount unpaid in the account of the borrower, in respect of term loan, and amount of unpaid working capital facilities, including interest, as on the date of the account turning Non-Performing Asset (NPA).

The process to get a bank loan under CGTMSE

Idea: – Have a successful business idea or project in mind to execute.
Incorporated: – Incorporate a business entity and obtain necessary registration to apply for a bank loan.
Business plan: – Create a business plan or project report to submit to the banker for sanction of bank loan.
Bank loan sanction: – Submit the business plan or project report to banks providing loans under the CGTMSE scheme and obtain sanction.
CGTMSE Cover: – Once the loan is sanctioned, the bank will apply to CGTMSE and provide CGTMSE scheme coverage.

Documents required

Aadhaar card/PAN card/Business PAN.
Passport-size photographs.
Business incorporated letter.
Shop act licence/LLP.
Udhayam Aadhar.
Business project report.
Rent agreement.

Conditions of availing credit

The lending institution should have applied for a guarantee prior to credit proposals sanctioned quarter.
The activity or business of the borrower for which the credit facility was accepted has not ceased.
Without prior consent, the credit facility has not been utilized for the adjustment of any bad or doubtful debt.
The dues to the lending institution have not become bad or uncertain of recovery.

The extent of guarantee coverage

Cases sanctioned on or after April 01, 2018, the trust shall provide a guarantee as per the below table:

Category (Borrowers)	Maximum extent of Guarantee Coverage where credit facility is
Up to ₹5 Lakhs	Above ₹5 Lakhs & up to ₹50 Lakhs	Above ₹50 Lakhs & up to ₹200 Lakhs
Micro Enterprises	85% (maximum of ₹4.25 Lakhs)	75% (maximum of ₹37.50 Lakhs)	75% (maximum of ₹150 Lakhs)
Womenentrepreneurs/ Enterprises Located in North East Region (including Sikkim) (other than credit facility up to ₹5 Lakhs to micro-enterprises)	80% (maximum of ₹ 40 Lakhs)
MSE Retail Trade (up to ₹100 Lakhs)	50% (maximum of ₹50 Lakhs)
All other eligible categories of borrowers	75% (maximum of ₹150 Lakhs)

Annual Guarantee Fee (AGF)

AGF will be charged on the guaranteed amount for the first year and on the outstanding amount for the remaining tenure of the credit facilities sanctioned/renewed to MSEs:

Credit Facility	Annual Guarantee Fee (AGF) [% per annum] *
Women, Micro Enterprises and Units covered in North East Region	Others
Up to ₹5 Lakhs	1.00% plus Risk Premium as per guidelines provided by Trust
Above ₹5 Lakhs and up to ₹50 Lakhs	1.35% plus Risk Premium as per guidelines provided by Trust	1.50% plus Risk Premium as per guidelines provided by Trust
Above ₹50 Lakhs and up to ₹200 Lakhs	1.80% plus Risk Premium as per guidelines provided by Trust
Retail Trade (up to ₹100 Lakhs)	2.00% plus Risk Premium as per guidelines provided by Trust
* For the first year AGF will be charged on the guaranteed amount and for remaining tenure on the outstanding amount of the credit facility.

Lock-in period in CGTMSE

CGTMSE scheme has an 18 (Eighteen) months lock-in period from either the date of last payment of the loan or when the guarantee came effective in respect of the particular credit facility, whichever later is considered.

Payment of AGF

AGF shall be paid to the Trust by the institution availing of the guarantee within 30 (Thirty) days from the date of the first payment of credit facility (not applicable for Net Working capital) or 30 (Thirty) days from the date of Demand Advice of guarantee fee whichever is later or such date as stated by the Trust.
The Annual Guarantee fee (subsequent to first time fee) at a specified rate (as specified above) on a pro-rata basis for the first and last year and in full for the intervening years would be generated by 2nd week of February every year. AGF so demanded would be paid by the MLIs on or before 15th April each year or any other specified date by CGTMSE, of every year.

Conclusion

The Indian Economy is heavily dependent on the MSME sector. The MSME sector creates employment opportunities and also works for the development of artisans. CGTMSE scheme definitely helps the MSME sector and Indian Economy.

The logo of Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) — a colourful flying bird — reflects the entrepreneurial zest of the country’s youth, who have sensational ideas, but have no third-party guarantee or collateral security to get loans from formal sources. CGTMSE aims to support these young, aspiring entrepreneurs in setting up sustainable micro and small enterprises, transforming them from employment seekers to employment providers

The CGTMSE scheme, a brainchild of the Government of India’s Ministry of Micro, Small and Medium Enterprises, intends to improve the credit distribution system and ease the flow of credit to MSEs. (Micro and Small Enterprises). The unique offering fills the vacuum between an idea and its execution, by extending financial support to micro and small entrepreneurs.

References

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Analyse the approach of Indian courts to emergency arbitrations in the light of the judgment in Amazon v. Future

By

Rachit Garg

-

November 15, 2021

0

litigation-and-dispute-resolution-force-majeure — Image source: https://blog.ipleaders.in/highlights-amazon-future-group-dispute/

This article has been written by Vivek Sanghi, pursuing a Certificate Course in International Commercial Arbitration and Mediation from LawSikho. It has been edited by Prashant Baviskar (Associate, LawSikho) and Ruchika Mohapatra (Associate, Lawsikho).

Table of Contents

Introduction

In the last two years, we have come to realise the increasing importance of emergency dispute resolution mechanisms. Emergency arbitration is one such mechanism that provides for a disputing party to apply for urgent interim relief even before an arbitration tribunal has been formally constituted. An emergency arbitrator is an arbitrator that gets appointed urgently by an arbitral institution in response to an application for interim relief that cannot wait for the constitution of the arbitration tribunal that shall adjudicate the substantive dispute between the parties and subsequently pass an award. One such award passed in an emergency arbitration conducted as per SIAC Rules assumed significance before the Indian Courts. This article is going to analyse the approach of Indian Courts to Emergency Arbitrations in the light of that particular judgment i.e. Amazon v Future Retail.

Reliefs possible in the case emergency arbitration

Restraining the respondent, in the interim, from committing a violative action.
Relief of status-quo pending dispute resolution.
Securing monetary claims by praying for freezing orders, deposits of money in an escrow account, and interim payment orders.
Preserve evidence that may be material and relevant to the resolution of the dispute.
Take action or refrain from taking an action that could likely cause prejudice to the arbitral process.

Emergency Arbitration: Position under Indian Law

The term ‘Emergency Arbitration’, surprisingly, has no definition under the Indian Arbitration and Conciliation Act, considering the growing prevalence and popularity of international commercial arbitration, coupled with the fact that foreign investment in India is becoming a primary driver of growth in the corporate economy. To alleviate this situation and bring recognition to the orders passed by a foreign seated emergency arbitrator, the 246^th Law Commission report and the B.N. Srikrishna Report had recommended inclusion of the definition of the term “Emergency Arbitrator ” under the definition of the arbitral tribunal in Section 2(d) of the Indian Arbitration and Conciliation Act. Besides this, they had further suggested incorporating the term “emergency award” under the definition of “arbitral award” which currently only includes the term “interim award” under Section 2(1)(c) of the Indian Arbitration and Conciliation Act. However, the said recommendations were ignored both in the 2015 Amendment Act and the 2019 Amendment Act. This has created lacuna and compelled the pro-arbitration judiciary of India, through its High courts and its apex Supreme Court, to pass judgments that acknowledge and provide legal force to emergency arbitration awards, thereby setting precedents that shall fill up the lacunae that await the attention of the legislature.

Enforceability of Emergency Arbitration Awards in India

Situation pre 2015 Amendment of the Arbitration and Conciliation Act

A mere mention, explicit or implied, of a foreign seat was enough for the Hon’ble Courts to decide that arbitration laws of India would not be applicable. Emergency Arbitrators in foreign seated arbitration have no recognition or acknowledgment in the Arbitration and Conciliation Act of India and they were considered aliens by courts of Law in India. This made it impossible to enforce any foreign-seated Emergency Arbitration orders or awards in India.

In several cases the Indian courts refused to recognize the orders and awards of emergency arbitrators (particularly foreign seated ones), for example in: –

Harmony Innovation Shipping Ltd. v. Gupta Coal India Ltd., (2015) 9 SCC 172 – As the seat is London, Part-I of the Indian Arbitration and Conciliation Act is impliedly excluded.
Yograj Infrastructure Ltd. vs. Ssangyong Engineering Construction Co. Ltd., – Since the arbitral proceedings were conducted under Singapore International Arbitration Centre (SIAC), and Rule 32 of SIAC Rules provides that where the seat of arbitration was Singapore, the law governing the arbitration under SIAC Rules would be the International Arbitration Act of Singapore and not Indian law. {stark contrast to stand taken by the Hon’ble Supreme Court in Amazon.com NV Investment Holdings LLC v Future Retail Limited & Others}

Hardy Oil and Gas Limited vs. Hindustan Oil Exploration Company Limited and Ors., (2006) 1 GLR 658 – An agreement where the parties had agreed that the law of the arbitration would be the English law, fell within the purview of the rule of ‘implied exclusion’ laid in Bhatia International. Accordingly, the Gujarat High Court held that an Indian Court did not have the jurisdiction to try the petition filed under Section 9 of the Indian Arbitration and Conciliation Act.

Raffles Design v. Educomp Professional Education – The High Court of Delhi in this case held that an emergency award passed by a foreign-seated arbitration tribunal was unenforceable under the Indian Arbitration and Conciliation Act. The Court held that the party that has obtained a foreign-seated emergency award would have to file a fresh civil suit in an Indian court seeking provisional or interim orders therefrom, in terms of the emergency award. The approach in this order defeats the very purpose of an arbitration clause and the concepts of party autonomy and competence – competence.

Situation post 2015 Amendment of the Arbitration and Conciliation Act

After the 2015 amendment to the Arbitration and Conciliation Act, Section 27 of the said act became applicable to foreign seated arbitrations (vide the amendment to the Section 2(2) of the said Act). Section 27(5) of the Arbitration and Conciliation Act is now available to be used for enforcement of emergency awards of arbitration tribunals seated abroad, in the same manner that Section 27 (5) is applied for enforcing interim orders of domestic arbitration tribunals.
To elucidate the above point with judgments related to interim awards passed by domestic arbitration tribunals in India, it may be noted that in Sri Krishan v. Anand the High Court of Delhi, held that it had the authority to punish a party for contempt, under Section 27(5) of the Arbitration and Conciliation Act, at behest of the arbitration tribunal if a party breached interim orders of the arbitration tribunal. This interpretation was upheld by the Hon’ble Supreme Court in the judgment passed in Alka Chandewar v. Shamshul Ishrar Khan where the Hon’ble Supreme Court observed that “the orders of the arbitral tribunal cannot be rendered a dead letter”.
Now the 2015 amendment (supra) makes it possible to start contempt of court proceedings even for foreign seated emergency arbitration awards.
Section 43(2) empowers the Court to subject persons guilty of contempt of the arbitration tribunal to the same penalties and punishments as offences in suits tried before the Court. This provision has now been incorporated in section 27(5) of the Arbitration and Conciliation Act by way of legislative amendment.
Section 44 of the Arbitration and Conciliation Act within its scope of the definition of a foreign award, also encompasses a foreign-seated emergency arbitration award, subject to the nature of the relief granted by the emergency arbitrator. This is again possible by the 2015 Amendment to Section 2(2) of the act.
In dealing with a Singapore International Arbitration Centre (SIAC) emergency arbitration order, the High Court of Maharashtra seated in Mumbai, in HSBC vs. Avitel came to characterise the Emergency Arbitrator’s decision as an award and the same was upheld by the Hon’ble Supreme Court.
It may be noted that merely having a foreign seat and foreign venue in the arbitration agreement, is no longer going to be construed as an intention to exclude Part One of the Indian Arbitration and Conciliation Act.
An award made by an emergency arbitrator is still not directly enforceable in India, but the same may be enforced indirectly by: –

Filing an application with an Indian court under Section 9 of the Arbitration and Conciliation Act; (or)
Approaching an Indian Court to initiate contempt proceedings against the defaulting party under Section 27(5) of the Arbitration and Conciliation Act. This works only with respect to interim measures or orders by the arbitration tribunal not in the form of an interim award, considering that ‘interim award’ is expressly included in the definition of the ‘award’ under the Arbitration and Conciliation Act.

Therefore, despite the 2015 amendment to the Arbitration and Conciliation Act, an emergency arbitrator is not yet recognised under Indian law and the aforementioned ‘round-about’ ways need to be followed to enforce the emergency award of a foreign seated arbitration tribunal. This situation is likely to remain until the recommendation (supra) of the 246^th Law Commission of India Report, 2014, is given effect by the legislature.

What changes with the case of Amazon vs Future Retail Limited & Others?

Factual Matrix of the Case with Timeline

S.No.	Date	Particulars
1	August 2019	Amazon entered into three shareholder agreements with Future Retail Limited, Future Coupons Pvt. Ltd., and its promoters and directors led by Mr. Kishore Biyani, and all collectively referred to as “Biyani Group” or “Future Group”The Shareholders’ Agreement executed on 12^th August 2019 is in relation to Future Retail Limited wherein Future Coupons Pvt Ltd was accorded negative, protective, special, and material rights regarding Future Retail Limited more particularly, Future Retail Limited’s retail stores. The rights granted to Future Coupons Pvt Ltd under the said Shareholders’ Agreement were for the purpose of being exercised for Amazon’s benefit and thus were reflected in a Shareholders’ Agreement executed on 22^nd August 2019 between Amazon, Future Coupons Pvt Ltd and the Future Group. Amazon agreed to invest a sum of Rs.1431 crores only (international: Rupees Fourteen Billion Three Hundred and Ten Million Only), in Future Coupons Pvt Ltd to buy 49% stake in it, based on the rights obtained by Future Coupons Pvt Ltd under previous Shareholders’ Agreements. Future Coupons Pvt Ltd holds a 7.3% stake in Future Retail Limited, effectively giving Amazon an indirect stake of 3.58% in Future Retail Limited because of the said transaction.Future Retail Limited could not transfer its retail assets without Future Coupons Private Limited’s explicit consent which could not be granted until and unless Amazon had consented to it.Future Retail Limited and Biyani family were also prohibited from dealing with ‘restricted persons’ regarding the sale or encumbrance of assets of Future Retail Limited. Mukesh Dhirubhai Ambani Group (“Reliance Group”) was one such restricted person.This Shareholder’s Agreement dated 22^nd August 2019, had a dispute resolution clause where any disputes were agreed to be resolved by arbitration under SIAC Rules and seated in Singapore.
2	December 2019	Future Coupons Pvt Ltd received s a payment of INR 1,431 Crores only, from Amazon and began injecting it in Future Retail Limited.
3	29^th August 2020	Future Retail Limited, Future Coupons Pvt. Ltd., and its promoters / directors entered a transaction with Reliance Retail (part of the Mukesh Dhirubhai Ambani Group or “Reliance Group”) which envisions the amalgamation of Future Retail Limited with Reliance Group, the resultant cessation of Future Retail Limited as an entity, and the complete disposal/transfer of its assets in favour of the said group.
4	5^th October 2020	Amazon, aggrieved by the events of 29^th August 2020, initiated arbitration proceedings and sought emergency interim relief of injunction from an emergency arbitrator appointed by SIAC under the SIAC Rules.
5	25^th October 2020	The emergency arbitrator of SIAC passed an emergency award against the Future Group and in favour of Amazon. However the Future Group proceeded with the disputed transaction, terming the emergency award a ‘nullity’ and the emergency arbitrator as coram non judice.
6	7^th November 2020	Future Retail Limited moved High Court of Delhi against Amazon by filing a civil suit before the High Court of Delhi in C.S. No. 493 of 2020, in which Future Retail Limited sought to prohibit the arbitration proceedings and asked for interim relief seeking to restrain Amazon from making representations to the statutory authorities based on the SIAC emergency arbitrator’s award, calling it a tortious interference with its civil rights.
7	20^th November 2020	The deal dated 29^th August 2020, between Future Group and Mukesh Dhirubhai Ambani Group got the nod from Competition Commission of India.
8	November 2020	Amazon pressed a petition under Section 17(2) of the Indian Arbitration and Conciliation Act which was heard and disposed of by a learned single Judge bench of the High Court of Delhi.
9	21^stDecember 2020	In C.S. No. 493 of 2020, a single Judge bench of the High Court of Delhi refused to stay the disputed deal (as prayed by Amazon), upheld the August 29^th board resolution for Future Retail Limited, but allowed Amazon to make representations to statutory regulators. The said bench upheld Future Retail’s claim of alleged tortious interference by Amazon.
10	January 2021	SIAC constituted a 3-member arbitration panel to pass the final verdict.
11	13^th January 2021	A notice was issued to Future Group by the High Court of Delhi’s division bench, on Amazon’s plea against 21^st December 2020 order.
12	20^th January 2021	SEBI gave a nod to Future Group – Reliance Group deal.
13	2^nd February 2021	A single Judge bench of the High Court of Delhi passed an order of status quo restraining the Future Group from proceeding with the impugned transaction.
14	3^rd February 2021	Future Group disputed the status-quo order before a two-judge bench before the High Court of Delhi.
15	8^th February 2021	The operation of both the above orders of learned single Judge was stayed by a Division Bench of the High Court of Delhi vide two separate orders passed on Future Group’s appeal.
16	11^th February 2021	Amazon moved the Supreme Court to challenge revoking of “status-quo” orders by a division bench of the High Court of Delhi.
17	12^th February 2021	NCLT heard and reserved the order on the plea by Future Group for calling a meeting of shareholders to approve the deal with Reliance Group.
18	22^nd February 2021	The Supreme Court permitted the Future Group to go ahead with its plea before NCLT but restrained NCLT from passing final orders approving the Future Group’s amalgamation scheme. The apex court issued notice to Future Group on Amazon plea seeking status quo.
19	18^th March 2021	The order passed on 2^nd February 2021 by the learned single Judge bench of the High Court of Delhi was followed by a detailed judgment where the Judge held that the interim award made by the SIAC Emergency Arbitrator was enforceable under the arbitration laws of India. The Court stated that Future Retail Limited, Kishore Biyani and other promoters, directors of Future Group deliberately and wilfully disobeyed the order of the Court, liable to face action. The Court directed that the assets of Kishore Biyani, other Future Group Promoters, Directors be attached. The Court asked Future Retail Limited and Future Coupons Pvt Ltd to approach statutory regulators and seek a recall of the grant of deal approval.
20	20^th March 2021	Future Group appealed against the orders directing stay on the disputed deal regarding the attachment of assets of Mr. Kishore Biyani and other Future Group Promoters/ Directors.
21	22^nd March 2021	The High Court of Delhi stayed the order granting status quo passed by the single-Judge bench, and further stayed the order that directed attachment of assets of Future Group promoters.
22	17^th April 2021	Future Retail Limited’s board approved a resolution plan to restructure a secured financial debt under the circular of RBI dated 6^th August 2020.
23	19^th May 2021	Reliance Group approached the NCLT, seeking a nod to call for a shareholder meeting.
24	22^nd June 2021	NCLT reserved the order on Reliance Group’s plea to call a shareholder meeting.
25	20^th July 2021	The Supreme Court resumed hearing of Amazon plea seeking a stay on Future Retail Limited – Reliance Retail deal.
26	29^th July 2021	The Supreme Court reserved judgment in the appeals filed by Amazon seeking to stay the sale of Future Retail Limited.
27	06^th August 2021	The Supreme Court held that Singapore’s Emergency Arbitrator award was enforceable.

Detailed Order of the Hon’ble High Court of Delhi in Amazon’s appeal

In the month of November of 2020, Amazon filed a petition under Section 17(2) of the Arbitration and Conciliation Act that was heard and later disposed of by a learned single Judge of the High Court of Delhi. On 2^nd February 2021, the learned single Judge passed an order of status-quo restraining the Future Group from proceeding with the disputed transaction with Reliance Group, stating that reasons and a detailed order will follow.

On 18^th March 2021, the said learned single Judge passed a detailed judgment giving elaborate reasoning for the order passed under Section 17(2) of Arbitration and Conciliation Act read with Order XXXIX Rule 2-A of the Code of Civil Procedure, in which the Judge held that an Emergency Arbitrator’s award is an order under Section 17(1) of the Arbitration and Conciliation Act.

A review of the language in the conclusion portion of the said order is valuable in understanding how the learned Single Judge interpreted the Arbitration and Conciliation Act, thus laying the foundation for the judgment to be passed later by the Hon’ble Supreme Court, which came to be regarded as a landmark decision.

Applicability of Group of Companies doctrine and other facts considered by the High Court of Delhi

The Court considered the Emergency Arbitrator’s order alongside the following factual grounds:

Future Coupons Pvt Ltd and Future Retail Limited belong to the same business group hence ‘Group of Companies’ doctrine applies.
The conduct of the parties i.e., Amazon and Future Coupons Pvt ltd reflects the clear intention to bind Future Retail Limited.
Concurrent negotiations of the agreements occurred; a common negotiation and legal team represented both Future Coupons Pvt Ltd and Future Retail Limited.
The direct relationship of Future Retail Limited with Future Coupons Pvt Ltd, makes evident the harmony of the subject matter.
The composite nature and structure of transaction between the parties makes it apparent that neither the Future Coupons Pvt Limited Shareholders’ Agreement nor the Future Retail Limited Shareholders’ Agreement would take place without the others.
Funds received by Future Coupons Pvt Ltd have been used to financially support Future Retail Limited.
The multitude of agreements are intermingled and only their composite performance shall discharge the parties of their respective obligations under the said agreements.
Presence of similar ‘dispute resolution clauses’ in both, Future Coupons Pvt Ltd’s Shareholders’ Agreement, and the Future Retail Limited’s Shareholders’ Agreement, reflects the common intention of all the parties (whether signatory or non-signatory) to resolve their disputes by arbitration.

Issues in the Appeal before the Hon’ble Supreme Court

Whether an “award” delivered by an Emergency Arbitrator appointed under Schedule 1 of the SIAC Rules can be said to be an order under Section 17(1) of the Act?

The Hon’ble Supreme Court held that emergency arbitration was within the purview of the Arbitration and Conciliation Act and the definition of an arbitration tribunal, included within its scope an Emergency Arbitration.
The Hon’ble Supreme Court held that vide the 2015 Amendment to the Arbitration and Conciliation Act, the Section 17(2) was inserted to provide for creation of a legal fiction that any order issued by an arbitration tribunal (seated in India) shall be considered as an order of the Court and shall become enforceable. Therefore, since the arbitration tribunal in Amazon v. Future Group was India seated, the emergency award passed therein, was enforceable under this provision.
The Hon’ble Supreme Court observed that Section 2(1)(d) of the Arbitration & Conciliation Act defines ‘arbitration tribunal’ to encompass an arbitrator or a panel of arbitrators. The Supreme Court observed that the definition of ‘arbitration tribunal’ under the said Section 2(1)(d) does not include an “emergency arbitrator”. However, it stated that Section 1 of the Arbitration & Conciliation Act, opens with the words “unless the context otherwise requires”. When the said Section 1 is read together with Section 2(1)(a) of the Arbitration & Conciliation Act (that provides for “any” arbitration, whether or not administered by an arbitral institution) and Section 2(6) and Section 2(8) of the Arbitration & Conciliation Act (which permit incorporation of rules of arbitral institutions), it becomes apparent that interim orders passed by an emergency arbitrator under the rules of an arbitration institution are included within the purview of orders passed by an arbitration tribunal under Section 17(1) of the Arbitration & Conciliation Act.
The Hon’ble Supreme Court referred to the report of the Srikrishna Committee and stated that it is valid to interpret Section 17(2) of the Arbitration & Conciliation Act to enforce emergency awards for India-seated arbitrations and the said report had recommended that the Arbitration & Conciliation Act be amended such that it is abreast with international practice of recognising and enforcing an emergency award.
The Hon’ble Supreme Court held that a party after having agreed to institutional rules (in this case the SIAC Rules) providing for emergency arbitration and participating in an Emergency Arbitration proceeding, would be estopped by its acts and deeds, from subsequently contending that it could not be bound by the order of the Emergency Arbitrator.
With reference to the dispute raised stating that an emergency arbitration occurring prior to arbitral proceedings or prior to the constitution of the arbitration tribunal, is not covered by Section 17 of the Arbitration & Conciliation Act, the Hon’ble Supreme Court dismissed the said contention and held that Section 21 of the Arbitration & Conciliation Act, provides that arbitration proceedings with respect to a dispute commence from the date on which a request for that matter to be referred to arbitration is received by the other side. Also, Rule 3.3 of the SIAC Rules provides that the date of commencement of the arbitration is the date of receipt of the Notice of arbitration by the registrar as per SIAC Rules. Therefore, the Supreme Court inferred that the arbitral proceedings commence when a notice of arbitration is issued, which is preceding the constitution of an arbitration tribunal and the contentions of Future Group fail.

Whether an order passed under Section 17(2) of the Act in enforcement of the award of an Emergency Arbitrator by a learned Single Judge of the High Court is appealable?

The Supreme Court observed that the legal fiction deemed under Section 17(2) is solely for the purpose of enforcing orders passed by the arbitration tribunal as orders of the court. The Supreme Court relied on the judgment in Union of India v. Vedanta Ltd, where the Court had observed that an application to enforce a foreign award is to be considered as an application under the Indian Arbitration and Conciliation Act. Appeals from court orders enforcing an order under Section 17(2) cannot be made in the same manner as appeals from court orders under Section 9 of the Arbitration and Conciliation Act.
The Supreme Court noted that appeals from orders made under Arbitration and Conciliation Act are to be made within the bounds of Section 37 of the Arbitration and Conciliation Act. It was stated that Section 37 as a code is in itself whole so far as appeals from orders and awards made under the Arbitration and Conciliation Act are concerned. This has been validated further by the addition of the non-obstante clause by the Arbitration and Conciliation (Amendment) Act, 2019.
The Hon’ble Supreme Court referred to Section 37 of the Arbitration and Conciliation Act which deals with appeals and to Section 17(2) of the same act. The Supreme Court concluded that proceedings for enforcement of awards are not covered by the appeal provision and hence no appeal would be possible against the order of emergency awards under Section 37 of the Arbitration and Conciliation Act.

Key Highlights

The Court observed that “a conjoint reading of these provisions (Section 17(1), Section 17(2) of the Arbitration and Conciliation Act, and Rule 3.3 of SIAC Rules) coupled with there being no prohibition, either express or by necessary implication, against an Emergency Arbitrator would show that an Emergency Arbitrator’s orders, if provided for under institutional rules, would be covered by the Arbitration and Conciliation Act.”

Future Group argued that the emergency arbitrator was appointed before the arbitration tribunal was constituted therefore the emergency arbitrator would not fall under the realm of Section 17 (1) of the Indian Arbitration and Conciliation Act. The Supreme Court rejected this argument and held that Section 17(1) is “elastic enough” to capture emergency arbitration proceedings.

The Court observed that “there is nothing in the Arbitration and Conciliation Act that prohibits contracting parties from agreeing to a provision providing for an award being made by an Emergency Arbitrator. On the contrary, when properly read, various Sections of the Act which speak of party autonomy in choosing to be governed by institutional rules would make it clear that the said rules would apply to govern the rights between the parties, a position which, far from being prohibited by the Act, is specifically endorsed by it.”

The Court stated that “the introduction of Sections 9(2) and 9(3) would show that the objective was to avoid courts being flooded with Section 9 petitions when an arbitration tribunal is constituted for two good reasons – (i) that the clogged court system ought to be decongested, and (ii) that an arbitration tribunal, once constituted, would be able to grant interim relief in a timely and efficacious manner.”

The Court observed that “the parties having agreed to paragraph 12 of Schedule 1 contained in the SIAC Rules, it cannot lie in the mouth of a party to ignore an Emergency Arbitrator’s award by stating that it is a nullity when such party expressly agrees to the binding nature of such award from the date it is made and further undertakes to carry out the said interim order immediately and without delay.” (estoppel)

Following the law laid down in BGS SGS SOMA JV v. NHPC, the Court observed that “this judgment is determinative of the issue before us as it specifically ruled out appeals under Order XLIII Rule 1 of the Code of Civil Procedure when it comes to orders being made under the Arbitration Act.”

The issue in question pertains to an India-seated arbitration with venue as Singapore and rules of conduct of arbitration being SIAC Rules. Clarity is still needed on matters where the arbitration is seated abroad (out of India).

Future Implications

The judgment of the Hon’ble Supreme Court in the case of Amazon vs Future Retail Limited and Others provides support to emergency arbitration provisions contained in the institutional rules of various arbitration institutions in India and around the world. Parties can be expected to resort to institutional arbitration to avail the benefits of emergency arbitration without worrying much about the enforcement.

The said judgment encourages contracting parties to choose the seat of arbitration as India.

The said judgment leaves much to be desired for those who want to choose a seat of arbitration other than India, and the legal fraternity shall await clarity regarding enforcement (in India) of foreign seated emergency awards.

References

Mundi, J. (2021, August 2). “Jus Mundi: Wiki Notes for Investment Law & Arbitration”. Jus Mundi. Retrieved November 3, 2021, from https://jusmundi.com/en/document/wiki/en-emergency-arbitration
Sahai, R. (2009, August 18). “Sri Krishan vs Anand”. Indian Kanoon. https://indiankanoon.org/doc/155719426/
Kaul, K., & Nariman, F. (2017, July 6). “Alka Chandewar vs Shamshul Ishrar Khan”. Indian Kanoon. https://indiankanoon.org/doc/53620809/
Virmani, A., Nick Papadimos (Assistant Editor for Australia, New Zealand, and the Pacific Islands), & Scherer, M. (2021, October 2). “Rekindling the Debate on Enforcement of Foreign Seated Emergency Awards in India”. Kluwer Arbitration Blog. http://arbitrationblog.kluwerarbitration.com/2021/10/03/rekindling-the-debate-on-enforcement-of-foreign-seated-emergency-awards-in-india/
Deshmukh, I. (2020, August 28). “Avitel v. HSBC – Finality on the Question of Arbitrability when Allegations of Fraud are Raised SMM”. India Corporate Law. https://corporate.cyrilamarchandblogs.com/2020/08/avitel-v-hsbc-finality-on-the-question-of-arbitrability-when-allegations-of-fraud-are-raised-smm/

Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.

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

Follow us on Instagram and subscribe to our YouTube channel for more amazing legal content.

Blog competition winner announcement (Week 4th September 2021)

By

Rachit Garg

-

November 15, 2021

0

So today is the day! We are finally announcing the winners of our Blog Writing Competition for 4th week of September 2021 (From 20th September 2021 to 26th September 2021).

We’d like to say a big thanks to everyone for participating! It has been a great pleasure receiving your articles on a different legal topic, they were all amazing!

And now we’d like to congratulate our top 5 contestants, who become the undoubted winners. They will receive Prize money of Rs 2000, LawSikho store credits worth Rs. 1000 and a Certificate of Merit from team LawSikho.

They will also get an opportunity to intern at iPleaders under the mentorship of Ramanuj Mukherjee, Abhyuday Agarwal, Harsh Jain, and Komal Shah. Their articles will get published on the iPleaders blog (India’s largest legal blog). Click here to see other perks available to them.

Their entries (see below) received maximum marks based on the average marks given by the panel of editors, and have been crowned the winners!

S.no	Name	About Author	Article
1	Astitva Kumar	Intern	The idea of public laws : a comparative study of public laws in Canada and the US
2	Aditi Aggarwal		The first judicial murder in colonial India : Raja Nand Kumar case
3	Nikara Liesha Fernandez	Intern	Wills in India and a global outlook on the history of the same
4	Aditya	Student pursuing Certificate Course in Competition Law from LawSikho	Who has the locus standi to approach the Competition Commission of India
5	Dnyaneshwari Patil	Intern	Advocates insurance scheme being formed for advocates in the other states as carried out by the Delhi Government

Meet our next 5 contestants who made it to top 10 here. They will receive a Certificate of Excellence from team LawSikho.

They will also get an opportunity to intern at iPleaders under the mentorship of Ramanuj Mukherjee, Abhyuday Agarwal, Harsh Jain, and Komal Shah. Their articles got published on iPleaders blog (India’s largest legal blog). Click here to see other perks available to them.

S.no	Name	About Author	Article
6	Swetalika Das	Intern	A look into the treatment of expert witness evidence in English law in light of the 21st Century
7	Ankita Jangid	Intern	An overview of animal protection laws in India
8	Aastha Verma	Intern	International laws for environmental protection and role of judiciary in India
9	Tripti M Kumar	Student pursuing Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho	World’s first AI-generated patent might stir the world of intellectual property
10	Anurag Singh	Intern	Law of war : an overview

Click here to see all of the contest entries.

Our panel of judges, which include the iPleaders Blog Team, chose the winning entry based on how well it exemplified the entry requirements.

Certificates will be sent on the email address given by the contestant while submitting the article. The contestants have to claim their prize money by sending their account details as a reply to the mail in which they received their certificate within 1 month (30 days) of the date of declaration of results and not afterwards.

For any other queries feel free to contact Vanshika Kapoor (Senior Managing Editor, iPleaders) at [email protected].

LawSikho credits can be claimed within twelve months from the date of declaration of the results (after which, credits will expire).

Congratulations to all the participants!

Regards,

Team LawSikho

Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.

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

Follow us on Instagram and subscribe to our YouTube channel for more amazing legal content.

Blog competition winner announcement (Week 3rd September 2021)

By

Rachit Garg

-

November 15, 2021

0

So today is the day! We are finally announcing the winners of our Blog Writing Competition for 3rd week of September 2021 (From 13th September 2021 to 19th September 2021).

We’d like to say a big thanks to everyone for participating! It has been a great pleasure receiving your articles on a different legal topic, they were all amazing!

And now we’d like to congratulate our top 5 contestants, who become the undoubted winners. They will receive Prize money of Rs 2000, LawSikho store credits worth Rs. 1000 and a Certificate of Merit from team LawSikho.

They will also get an opportunity to intern at iPleaders under the mentorship of Ramanuj Mukherjee, Abhyuday Agarwal, Harsh Jain, and Komal Shah. Their articles will get published on the iPleaders blog (India’s largest legal blog). Click here to see other perks available to them.

Their entries (see below) received maximum marks based on the average marks given by the panel of editors, and have been crowned the winners!

S.no	Name	About Author	Article
1	Gyaaneshwar Joshi	Intern	Punishment for animal cruelty and laws for animal welfare in India
2	Akshita Gupta	Intern	Taliban takeover and analysis of the current situation in Afghanistan
3	Nikita Arora	Student pursuing Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from LawSikho	How would you draft a net listing agreement in real estate
4	Surbhi Jindal	Intern	Laws relating to the dark web in India
5	Daisy Jain	Intern	Relation between bar and bench : a critique

Meet our next 5 contestants who made it to top 10 here. They will receive a Certificate of Excellence from team LawSikho.

They will also get an opportunity to intern at iPleaders under the mentorship of Ramanuj Mukherjee, Abhyuday Agarwal, Harsh Jain, and Komal Shah. Their articles got published on iPleaders blog (India’s largest legal blog). Click here to see other perks available to them.

S.no	Name	About Author	Article
6	Yash Dhawan	Student pursuing Certificate Course in Insolvency and Bankruptcy Code from LawSikho	The juxtaposition between income tax laws and the Insolvency and Bankruptcy Code, 2016
7	Nishtha Garhwal	Intern	Right to self-incrimination and forensic science : a critical study
8	Aditi Aggarwal	Intern	Legal procedure for the approval of Bharat Biotech’s Covaxin (without phase 3 data)
9	Pranjali Aggarwal	Intern	Critical analysis on Sree Padmanabhaswamy temple case
10	Gopavaram Ramya Teja	Student pursuing Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from LawSikho	Online privacy and e-contracts

Click here to see all of the contest entries.

Our panel of judges, which include the iPleaders Blog Team, chose the winning entry based on how well it exemplified the entry requirements.

Certificates will be sent on the email address given by the contestant while submitting the article. The contestants have to claim their prize money by sending their account details as a reply to the mail in which they received their certificate within 1 month (30 days) of the date of declaration of results and not afterwards.

For any other queries feel free to contact Vanshika Kapoor (Senior Managing Editor, iPleaders) at [email protected].

LawSikho credits can be claimed within twelve months from the date of declaration of the results (after which, credits will expire).

Congratulations to all the participants!

Regards,

Team LawSikho

Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.

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

Follow us on Instagram and subscribe to our YouTube channel for more amazing legal content.