The relationship between national and international law : an analysis

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August 7, 2021

International-Law — Image source: https://bit.ly/3mrcVu7

This article is written by Ishan Arun Mudbidri from Marathwada Mitra Mandal’s Shankarrao Chavan Law College, Pune. This article talks about the link between international law and national law.

Introduction

International laws are considered superior to national laws. This seems quite obvious as the States apply international rules to prepare their national laws. But, the relationship between the two is still complicated and not yet clear.

An overview of International Law

International law refers to the general set of rules or principles that help in resolving international problems like laws of the sea, the dispute between two countries, the part of the land that belongs to which country, how to maintain international behaviour, etc. However, the point to be noted here is that international laws are a standard system of rules which apply to all countries. So, it depends on each country how to apply these rules and pass the law for their land.

Components of International Law

The entities which have an obligation towards the international law are:

The States

The international legal system is dominated by the States. The States inculcate the international legal rules and enforce them as laws of their land. It is the States who can become members of the International Court of Justice and other organizations. The States have to constantly evolve. To maintain international relations, States must be recognized by the other States. With the emergence of newly recognized States, the balance of power can be changed and international relations can run smoothly.

International organizations

International organizations are established by the States to maintain a balance in international relations. For example, the United Nations was a combined effort of the States to maintain peace after World War II. Each international organization has different obligations and duties set by international law. One of the main organs of the United Nations, the International Court of Justice has the power to challenge the decisions of the States in the context of international laws.

Role of the individuals

Individuals play a very important role in the formation of the international legal system. The legal rules mentioned in the international law do not include the individuals but, indirectly the obligations mentioned for the States apply to the individuals because, if an individual is happy then, the State flourishes. Individuals are linked to each State by their nationality. Nationality is acquired by birth, acquisition, naturalization, etc. Each state has different criteria for acquiring nationality.

Sources of International Law

Article 38(1) of the Statute of the International Court of Justice has mentioned a few sources of international law, which are as follows:

Treaties

Rules given by international law are mainly in the form of treaties. Treaties are given various other names like conventions, agreements, rules, etc. Treaties were the only source of hope in times of war. Although, some treaties have also ignited wars, for example, the Treaty of Versailles. Post the war phase, the Vienna Convention on the Law of Treaties (1969) was set up. This Convention is also known as the law of treaties. It contains everything about how treaties should be formed. The important point of notice here is that all treaties are binding only on the States and not any third party.

Customs

Customs are followed by two nations while maintaining international relations with each other. Custom is a practice that is accepted as a law by the States over a period of time. Customary law rules are binding in all States. The States are generally the main contributors in establishing a new custom. For example, in the Cold War era, the United States and the Soviet Union came up with new customs regarding Space laws. The ICJ also refers to a lot of customs while delivering judgments.

The International Law Commission

The United Nations International Law Commission was established in 1948. The ILC has thirty-four members. The main function of the ILC is to codify international laws. The International Law Commission prepares draft articles for the international laws over a period of time and then submits the draft to the United Nations General Assembly for a draft convention.

General principles of law

General principles are recognized by many nations, so they are an important source of International law. Not all disputes between nations are resolved by treaties. General principles are used when there is no provision for treaties. General principles can be seen in all legal systems. Examples of these general principles are good faith, the impartiality of judges, laches, etc.

The link between National and International Law

As mentioned above, the individual actors have no legal obligations under the international law, however, it is individuals who have mentioned certain theories which stand out as the distinctive feature when talking about national and international laws. The two very important ones are referred to as dualism and monism.

Dualism

Under a dualistic tradition, the national legal system is considered completely different from the international legal system. In this context, the international rules will be valid only in the international legal circuit and not in the domestic legal order. According to this theory, international law applies to laws between the states and national law applies to laws within each state.

Monism

The monism theory of international law is exactly the opposite of the dualistic theory. This theory states that international and national laws should be combined into one legal order. On this basis, there will be a balance between both national and international laws. The main exponents of this theory were Hans Kelsen and Hersch Lauterpacht.

Hersch Lauterpacht’s views on monism

Lauterpacht observed that it is the individuals that drive international laws. The States exist on their own. International law is the best source of justice for individuals and human affairs.

Hans Kelsen’s views on monism

According to Kelsen, monism is established in international law and national law is part of the same legal order. Kelsen formulates that the States should behave according to the customs. Thus, Kelsen developed a monistic theory of the relationship between national and international law.

Consent theory

The key exponents of the consent theory were Triepel and Anzilotti. According to the consent theory, the will of the State is binding on international law. It is the will of the State that rules the international and national laws.

Dionisio Anzilotti and Heinrich Triepel’s views

Dionisio Anzilotti an Italian jurist observed that the maxim ‘pacta sund servanda’, which means agreements between States should be respected, is the binding force behind international law. He further states that the treaties and customary rules are all based on the consent of the States. Similarly, Heinrich Triepel also stated that the common will of the States and the agreement between the States was the basis of international law.

The major defect in the consent theory is the fact that there has to be the consent of the States for the international laws to function. Further, treaties and customs are not the only sources of international law. Article 38(1) of the Statute of the International Court of Justice, proves this fact. Despite the criticisms, consent theory has influenced international laws.

Case laws

Lagrand case (2001)

Two Lagrand brothers were involved in a bank robbery in Arizona USA and killed a man during the robbery. Both the brothers were from Germany and were in the United States without US citizenship. They were charged for murder and were awarded the death penalty. They were not provided with consular assistance under the Vienna Convention and were both hanged to death.
Germany filed a suit against the United States in the ICJ stating that the United States did not give the brothers their rights under the Vienna Convention. Now, Article 36(1)(b) of the Vienna Convention on Consular Relations, 1963 states that the foreigners involved in a death penalty case have a right to get consular assistance. Before the case went to the ICJ, the Germans were hanged to death.
The court observed that the United States had breached its obligations given under the Vienna Convention. The court further held that the United States had violated individual rights given to the foreigners under the Vienna Convention.

Anglo-Norwegian fisheries case (1951)

In 1911, a few British boats were seized by the Norwegian Authorities for crossing the boundaries within which fishing for foreigners was prohibited. The United Kingdom filed a suit against the Norwegian Government for this incident. The Norway Government had passed an order in 1935 regarding the delimitation of the Norwegian fisheries zone in which the boundaries for fishing were drawn.
The United Kingdom claimed damages as compensation by the Norwegian authorities and also the validity of the fisheries lines. The ICJ mainly relied on the Maritime laws and held that the line drawn by the Norwegian Government for the delimitation of the fisheries zone was not contrary to the international law. Hence, the case went in favour of Norway.

Bosnian genocide case (1996)

When Yugoslavia broke up in the 1990s, Bosnia and Herzegovina declared independence. In the events following this, Serbia and Montenegro declared themselves the Federal Republic of Yugoslavia. The Serbian forces attacked the Bosnian Muslim population killing around eight thousand people during the armed conflicts going on in Bosnia and Herzegovina.
The Bosnian Government filed a suit against the Federal Republic of Yugoslavia in the International Court of Justice claiming that the Serbian forces had violated the Prevention and Punishment of the Crime of Genocide Convention and that the Federal Republic of Yugoslavia was responsible for this act.
The ICJ held that an act done by a State organ will be considered as an act by the State. This rule was stated in Article 4 of the International Law Commission Articles of State Responsibility.

Corfu Channel case (1949)

During the Greece Civil War, in an encounter between Albania and the United Kingdom, two British warships which were passing through the Corfu Channel were fired at by the Albanian forces. The Albanian Government took a stand by stating that no foreign ships can pass through Albanian waters without prior permission. The United Kingdom contended that the ships can pass through any strait or channel for international navigation purposes. The Albanian Government claimed that the Corfu Channel is not a part of the international highways through which ships have a right of passage.
The dispute went to the International Court of Justice. The court held that the Corfu Channel is a part of the international highways hence, a right of passage cannot be prohibited in times of peace by a coastal State. Hence the judgment went in favour of the United Kingdom.

Kulbhushan Jadhav case (2019)

In recent times, another case in which the ICJ has stepped in is the Kulbhushan Jadhav case (2019). In this case, an Indian Navy officer Kulbhushan Jadhav was arrested in Pakistan on the grounds of spying and terrorism and was sentenced to death. India approached the ICJ for denial for consular assistance to Mr. Jadhav by Pakistan. The ICJ held that Pakistan should grant consular access to Mr. Jadhav under Article 36 of the Vienna Convention on Consular Relations. This case, however, is still pending in the ICJ.

Conclusion

The relationship between the international laws and the national laws has not been a point of debate or dispute between any country. Both the laws are operating in their own jurisdictions without any disturbance. The international laws help in maintaining international relations whereas the national laws help in the sovereignty and development of the nation-states. Many people believe that international laws are superior to national laws but such a debate should only start if there is a conflict between the two. Otherwise, both the laws are equally important.

References

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Merger control regime in Hungary

By

Abanti Bose

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August 7, 2021

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img_102557_merger (1) — Image Source https://rb.gy/qlvqkn

This article is written by Sayantan Dey, pursuing Diploma in M&A, Institutional Finance and Investment Laws (PE and VC transactions) from Lawsikho.

Introduction

India has always maintained a robust relation with Hungary. S&T is a key focus area in India-Hungary relations with the current bilateral cooperation being executed through 2 agreements – between Indian National Science Academy (INSA) and the HAS and between Department of S&T and NIH, Ministry for National Economy. There has been significant Indian investment in Hungary in recent years with India being the largest Greenfield investor in Hungary for 2014. Major Indian companies in Hungary include; Apollo Tyres, SMR Automotive, Sun Pharmaceuticals, Orion Electronics Ltd., Sona BLW, Cosmos and major IT service providers TCS, WIPRO, Cognizant and Tech Mahendra.

It can be inferred that many Indian companies view Hungary as a viable place to conduct business and corporate transactions are an important part of any business. Indian entrepreneurs willing to set up businesses in Hungary or Indian executives working for Indians based companies in Hungary need to be aware of the Merger control regime of Hungary to ensure transactions for respective companies can proceed in a smooth manner without complications. In the light of this, it will be interesting to understand the merger control regime of Hungary, the legislative framework around it and a few prominent cases.

Merger control regime

Merger control is a regulatory process by which competition authorities of a particular nation impose checks and balances by way of competition legislation to ensure that mergers and acquisitions taking place at any given time in any given market do not lead to any form of Appreciable Adverse Effect on Competition (AAEC). This enables the respective regulators to not prevent the formation of monopolies by big corporations trying to acquire smaller but high performing companies to capture higher market share in a given market thus wiping out free competition in the process which leads to degradation of small business and an indelible negative impact on the economy.

Merger: Definition

The Hungarian competition legislation clearly explains through its provisions contained in Article 23(1) the nature of transactions which would constitute a merger. The following transactions would be categorised as a merger under Hungarian competition law;

i) When two or more independent entities would undergo a merger or a specific part or section of an independent entity would merge with another entity which would have been previously independent.
ii) When a single undertaking or multiple undertakings jointly would possess some form of control whether in a direct or indirect manner over one or more undertakings which would previously have been independent.

iii) When independent entities go on to form a jointly controlled venture which would function thereon bearing all the characteristics of a normal fully functioning joint venture.

Definition of control

Control in Hungarian competition regulation is defined on the basis of rights, contracts or other means which either separately or in a combination enable a company to exercise decisive influence over an undertaking by way of;

Holding over 50% of the shares, stocks or voting rights in the controlled company;
Having the power to designate, appoint or dismiss the majority of the executive officers of the other company;
Having the power, by contract, to assert major influence over the decisions of the other company; and
Acquiring the ability to assert major influence over the decisions of the other company (de facto control).

Control can also be of two categories, such as;

Positive and negative sole control

Positive sole control arises under Hungarian competition law when a single shareholder has the ability to influence decisive decisions in a given target company usually by acquiring 50% or more of voting rights in the target company.

Negative sole control arises under Hungarian competition law when a single shareholder has the ability to block essential management decisions of a target company. Generally, a single shareholder would not be capable of withholding such decisions without the joint consent from other shareholders of the company but would be able to block all other decisions.

Positive and negative joint control

Positive joint control arises when 2 or more entities jointly controlling a target company would have the ability to influence decisive company decisions.

Negative joint control arises when 2 or more entities jointly controlling a target company would be able to block important management decisions which they could accomplish by coming to an agreement with each other.

Joint ventures

Any joint venture which has the capacity to perform all business activities emulating that of any independent business perennially then it would fall under the purview of merger control.

Joint ventures which are structured to enable coordination of the joint venture partners however are not assessed in line with cartel provisions.

Merger control in Hungary

Regulatory framework

The primary regulator for Merger control in Hungary is the; Hungarian Competition Authority (Gazdasági Versenyhivatal or GVH), the GVH consists of a decision making body by the name of the Competition Council. A key feature of the GVH is that it is an independent state administrative body that is not answerable to the government but only to the Hungarian parliament. The decisions dispensed by the GVH may be challenged before the Budapest Capital Administrative and Labour Court.

The merger legislation in force is derived from the Hungarian Competition Act 1996 on the prohibition of unfair and restrictive market practices. With a specific focus on Part I Chapter 6 of the aforementioned act which lays out substantive and procedural rules for merger proceedings. The GVH is bound by the Public Administration Act 2004, the general procedures all apply to the GVH if the Competition Act does not bear a particular solution to a specific situation. Essential guidelines are termed “position statements” and notices such as notice to “differentiating between concentrations subject to authorisation in simplified or full procedure”.

Filing for merger

Filing for every merger is a mandatory process that all companies must abide by if they breach specific thresholds laid down in the Hungarian competition legislation.

Article 24(1) of the Hungarian competition Act constitutes provisions that point out the necessity of filing for mergers that hit specified thresholds.

Article 24(4) of the Hungarian competition act on the other hand constitutes provisions that can be said to be mostly voluntary in nature. Filing under Article 24(4) although seems to have an obligatory aspect to it under the Hungarian competition act, the provisions it entails would suggest otherwise. The Hungarian competition authority does not bear the power to impose penal provisions on failure to notify under the provisions of Article 24(4) as well as being incapable of starting a trial on any entities that have consummated a merger under the aforementioned article and 6 months have lapsed ever since the merger was conducted.

Due to the lack of any defined repercussions on failure to fine with respect to Article 24(4) of the Hungarian competition act it is considered widely as a voluntary provision.

Thresholds

Hungarian competition law describes 2 distinct forms of thresholds with one being based purely on turnover of companies while the other would have mixed aspects to it.

Article 24(1) of the Hungarian competition specifies as to when any form of merger needs to be notified if certain particular circumstances are met –

The collective turnover of all businesses related to the merger exceeded the amount of HUF 15 billion in the previous business year.
A minimum of 2 entities in Hungary at least having collected HUF 1 billion each in turnover in the previous business year.

If these specific sets of thresholds cannot be applied to a certain merger, then that merger will still have to comply with the second set of thresholds under Article 24 (4) under Hungarian competition law.

The thresholds under Article 24(4) have both a mixed turnover and market aspect attached to them. The circumstances mentioned under these thresholds are stated as –

The collective turnover of all businesses related to a merger exceeded HUF 5 billion in the previous business year.
It cannot be ascertained clearly that a particular merger will not lead to loss of competition in some for a given market due to reinforcement of a dominant position by a company.

As mentioned, one of the thresholds set by the Hungarian competition authorities is not based on a specific quantifiable limit but rather on a self-assessment exercise to ascertain the fact that it can be clearly proven that the merger does not lead to any form of loss in the competition. The GVH clearly lays down situations under which it can be proved beyond any doubt that a merger does not lead to any loss in the competition. Situations may be stated as;

1) The merger would not lead to any horizontal, vertical or portfolio (conglomerate) effects;

2) For a horizontal merger, the parties’ joint market share should remain less than 20%;

3) For a horizontal merger, the market share increment remains to be insignificant (a few percentages); in a vertical or portfolio merger, the market share of any of the parties in any of the related markets remains below 30%.

GVH also entertains confidential discussions with parties to a merger and advises them after analysing the transaction whether its need to be notified or not, such advice is not however legally binding.

Exemptions

Temporary change of control

The GVH only considers mergers to be notifiable if they would lead to a permanent or lasting change of control from one company to the other.

A transaction whereby a company is acquired by any entity only for it to be split and sold to another entity subsequently in such a situation only the latter part of the transaction is considered to be a notifiable one. The GVH does not consider an interim change of control transactions to be notifiable if there is sufficient proof that such a transaction is part of a larger transaction scheme that is legally binding.

Specific transactions

The Hungarian competition act provides certain exceptions to transactions falling under specific situations which may include;

The purpose of the acquisition is to prepare for a subsequent sale.
The entity assuming control does not take full control of the acquiring company or does so to the minimum level stipulated by the law for a sale.
Duration of control does not exceed a year.

Regulatory proceedings

Pursuant to the applicable rules, the parties to the proceeding may access the files at any time during the proceeding. Third parties may also access the non-confidential version of the file after the end of the proceeding. Moreover, third parties may also have access to the file prior to the end of the proceeding if they can prove a legal interest (such as the enforcement of their rights or compliance with an obligation). In order to protect commercially sensitive information, the parties to the proceeding must specifically request, with detailed reasoning, for each piece of data or information to be treated as confidential, i.e. that third parties access to the provided documents or to the making of copies thereof be limited.

The competition council ends the phase 1 and phase 2 process with a decision either clearing the transaction or prohibiting the transaction. The GVH’s decision may be challenged by the parties within 30 days from receipt of the decision. It is also possible that the applicant withdraws the filing or that the GVH establishes that no authorisation was required. In this case, the proceeding ends with a decision of the GVH on the termination of the proceeding.

Notification procedure

Phase	Duration/deadline
Pre-notification phase The function of the pre-notification phase is to define the data which is critical for the purposes of the notification, as well as to discuss issues of market definition and competitive assessment. Prenotification discussions can be proceeded by the same parties who can submit the merger filing. Even if the discussions are oral, the parties must provide a draft of the notification or a written memorandum, or a detailed presentation.	There is no strict set duration or deadline in terms of pre-notification procedures.
Following successful pre-notification proceedings, the GVH may expedite proceedings, provided that it is obvious that the merger will not substantially lessen competition on any market. Expedited proceedings are concluded with the issuing of a Certificate that testifies that the parties are entitled to implement the merger. The Certificate is a one-page document, and it is not a fully reasoned decision but it has the same legal effect as a fully reasoned clearance decision. If the certificate cannot be issued within 8 days following the submission of the complete notification, the GVH proceeds to open Phase I proceedings.	8 days following submission of a complete notification.
Phase I proceedings If the GVH, on the basis of the original notification, cannot decide on the question of whether or not the notified transaction could benefit from the expedited proceedings (i.e. whether or not it is obvious that the merger will not substantially lessen competition on any markets), Phase I proceedings shall be initiated. In practice, Phase I proceedings are for the assessment of those mergers, where the post-merger market shares of the parties and/or the effects of the merger would not be significant according to the statements and calculations presented by the parties, but the GVH find it (for any reason) necessary to request the opinion of third parties relating to the size of the relevant markets or turn to its fellow-authorities (eg. the Hungarian Central Statistical Office) who might dispose of official/relevant databases.	30 days upon initiating Phase I proceedings which deadline can be extended once by 20 days. It is also important to highlight that every single request for information (issued by the GVH either to the parties or any third parties) stops the clock, thus, Phase I proceedings usually take about 2 months in reality.
Phase II If the GVH, based on the original notification or as a result of its Phase I proceedings, finds that it is not obvious that the merger will not substantially lessen competition on any markets, Phase II proceedings shall be initiated. In practice, Phase II proceedings are for in-depth competition analysis of the effects of the merger, which necessitates market tests, economic analyses and a detailed review of the relevant markets concerned by the transaction.	4 months upon initiating Phase I proceedings which deadline can be extended once by 2 months. As every single request for information by the GVH stops the clock, thus, Phase II proceedings usually take between 4-8 months in reality.

What is gun jumping?

The Hungarian competition authority had in 2015 imposed a fine of HUF 1 million (approx EUR 3,200) on CEE Holding Group Limited and Olympic International Holdings Limited, for implementing a concentration prior to authorisation by the HCA. Moving forward with this transaction without clearance from the Hungarian competition authority meant that the applicants in question had breached the standstill obligation contained in the Hungarian competition act.

The HCA was notified 64 days in a voluntary fashion after shares were transferred already between the applicants.

Prohibition to proceed with a transaction without notifying the HCA was only introduced recently in 2014 by bringing the Hungarian competition law in line with before which Hungary was one of the few countries where there were no penalties levied on parties who proceeded and completed a transaction without prior approval of the HCA who only analysed a transaction after it was completed. A 10% fine is generally levied if such infringement is found with regards to the annual turnover of a previous business year although if transactions are voluntarily notified after being completed then a nominal penalty is levied on the parties.

Budapest Bank Case

The Budapest Bank Case was a great example of the functioning of competition law in Hungary. In 1996 it was found that several banks had adopted a unified MIF (Multilateral Interchange Fee) which is an amount charged by the cardholder’s bank to the merchant for every transaction which is completed. A unified MIF was announced for both VISA and Mastercard credit card systems. The HCA found such an agreement to be diminishing competition through object and effect and also stated that there was an infringement of art 101 of the TFEU (Treaty on the Functioning of the European Union). On 2nd April 2020, the Court of Justice of the European Union (CJEU) delivered an important judgement concerning the stated matter and provided clarity to the concept of restriction of competition by object.

The CJEU firstly stated that any court or competition authority had the necessary powers to classify any agreement to be anti-competitive by way of restriction by object but that would not mean that the court or competition authority in question would not have to support the proper documents or evidence required to prove their actions. The court or competition authority would also need to support to what extent would each piece of evidence lead to restriction of competition. Secondly, the CJEU states that an agreement could not be considered to be causing any adverse effect on competition by object restriction unless there is sufficient experience of occurrence of such an event.

The CJEU also refers to the judgement of Groupement Des Cartes Bancaires to specify that the concept of diminishing competition by object restriction ought to be viewed restrictively and will only be considered as such if there is proof of sufficient harm being caused to competition. The CJEU finally states that it does not believe that the MIF agreement contained any anti-competitive elements and that the agreement was constructed to provide parity to the issues and acquisition activities. The CJEU concludes the judgement by stating that the evidence submitted by the HCA is not sufficient enough to prove that there is sufficient experience of the agreement to have caused any harm to competition in the main proceedings.

Instances of prohibited transactions

(I) On 20 February 2017, the Hungarian Competition Authority (“GVH”) prohibited the merger between Magyar RTL Televízió Zrt., a Bertelsmann Group company, and Central Digitális Média Kft, an online content provider and advertising business.

The transaction was originally notified on 15 October 2016. The prohibition by the GVH follows the 24 January 2017 refusal by the Hungarian Media Council on media plurality grounds to give its special administrative approval to the deal. Under Hungarian media law (Act CLXXXV of 2010 on Media Services and Mass Communication), the GVH is required to seek administrative approval from the Hungarian Media Council in certain media mergers. Moreover, the GVH is bound by the resolution of the Media Council refusing a special administrative approval.

(II) On 2 May 2017 the Hungarian Competition Authority (HCA) revoked its foreign-to-foreign merger clearance decision granted in January 2017 to Infineon Technologies AG for the acquisition of Wolfspeed (i.e. the Power and RF division of Cree, Inc.) due to misleading information provided in the application. The HCO also imposed a fine of HUF 75.8 million (EUR 242,000/USD 263,000) on Infineon.

Following the HCA’s clearance of the Infineon/Cree merger on 10 January 2017, the Federal Trade Commission (FTC) sent the HCA various documents relating to the notification of the same transaction in the US. On reviewing those documents, the HCA noticed that Infineon provided different worldwide turnover data and different market share data to the FTC and to the HCA and did not disclose the vertical relationship between the relevant products to the HCA. The HCA says that if the data provided to the FTC had also been provided to HCA the review process of the HCA would have had to go into more detail, and a Phase II procedure should have been launched.

The HCA opened a new investigation to investigate the inconsistencies, during which Infineon argued that the information provided to the HCA was not misleading and that the same information was provided to the German and Austrian authorities. The HCA did not accept those arguments and revoked its earlier clearance.

Conclusion

Hungary is one of the most well-planned countries in the European Union and has shown tremendous economic growth and stability among eastern European countries since it has joined the EU. The nation is the biggest export market for Hong Kong in eastern Europe and has also seen a steady rise of its GDP in the 21st century with a 4% rise in the latter part of the 1990s. Hungary’s accession to the EU has only served to further advance its already liberal business environment which is more liberal when it comes to business activities than any western country.

The advanced financial and legal environment of Hungary means it is at the forefront of finance, trade and business in central and eastern Europe. Hungary has also seen considerably large to medium-sized M&A deals occur in 2020 like the acquisition of Aegon in Hungary by Vienna Insurance Group which amounted to 550 million Euros. Considering the ease of doing business and looking at recent transactions that have taken place within Hungary it can be understood that the Hungarian regulatory environment has not been structured to not impose any undue limitations on companies so that they can thrive actively which is also observed in the competition regime of Hungary which although bearing penal provisions and a multifarious process of notification does not seem to be limiting in a large way to companies especially in post notification scenarios. It is crucial for the Hungarian competition regime to evolve in the coming years with the rising business and financial transactions of the country so as to ensure economic growth and advancement while preserving a free and competitive market for all consumers and entrepreneurs.

References

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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Major ship repair contract : essential clauses to include in a ship repair contract

By

Abanti Bose

-

August 7, 2021

0

Vessels Bill — Image source - https://bit.ly/37vzd6W

This article is written by Aarushi Pandey, pursuing Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from LawSikho.

Table of Contents

Introduction

The value of a marine vessel is typically in the millions of dollars, with consequential damages for loss of usage easily running into the thousands of dollars every day. As a result, ship repair is a significant undertaking, and all parties must be completely aware of their respective roles in the process. Owners and contractors should understand their contractual rights and liabilities. This article aims to give a brief overview of how to draft ship repair contracts, different types of ship repair contracts, major clauses to not miss out on while drafting such a contract, and contentious disputes along with case laws related to such contracts.

What is a ship repair contract?

Contracts are the result of proposals, acceptance, considerations, and negotiations, and they are finalized by the fulfilment of essential requirements.

A maritime contract is an agreement pertaining to the operations, navigation, maintenance, and repair or provisioning of a vessel. When a contract is made relating to a ship or if the parties are engaged in a trade where transport is through sea then contracts formed are called maritime contracts.

Maritime contracts are regulated by specific laws that govern nautical issues on open water or maritime laws. The rules and procedures which govern the substantive aspect of law or the adjective of maritime law are known as admiralty law. However, the terms admiralty and maritime law are often used interchangeably. The shipping industry is also governed under the rules and regulations framed by the International Maritime Organization (IMO).

A ship repair contract is a type of maritime contract. By the term itself, a ship repair contract includes maintenance, ship conversions, modifications, major and minor damage repairs. It’s the most crucial aspect of the shipping and shipbuilding industries.

International shipping relies heavily on the ship repair business. Ships must be maintained and repaired on a regular basis in order to function correctly. Routine repairs are often carried out by the ship’s crew while a vessel is underway. Major repairs, on the other hand, are conducted by shoreside repair yards due to the particular characteristics of ships like size, complicated equipment, and unavailability of replacement parts. These highly specialized facilities have the requisite experience, equipment, and qualified labour force to resolve ship maintenance issues.

Contracts for marine repairs might be informal or written. There is an implied warranty that the repair will be done in a workmanlike manner if the contract is oral. If the repairer is careless and breaks the warranty, the vessel owner has the right to claim for any foreseeable damages. If the contract is written, the ship repairer will typically utilize a limitation of responsibility clause (sometimes known as a ‘red-letter clause’) that is printed on standard repair contract forms to limit his obligation.

Proper coordination and an intensive bidding process are required for ship repair contracts. The navy, commercial ship owners, and other marine structure owners are typically the consumers for repair services.

Firm Fixed Price (FFP), Firm Fixed Price Award Fee (FFPAF), Cost Plus Fixed Fee (CPFF), Cost Plus Award Fee (CPAF), and urgent repair contracts are all examples of such contracts. When a shipyard is asked for a Request for Proposal (RFP) or an Invitation for Bid(IFB), the repair process begins in the marketing department. The IFB contract is given based on the lowest bid price, whereas an RFP award might be based on a variety of parameters. Under the repair contract, the repair estimate groups prepare the cost estimate and proposal for the repair contract. Labour hours and wage rates, materials, overhead, special service costs, overtime and shift premiums, other fees, facility expenses of money, and the estimated contract price based on these are all included in bid estimates. A manufacturing strategy is prepared as soon as the contract is signed.

What is a major ship repair contract?

Major ship repair contracts are agreements for major ship repair works generally carried out at a ship repair yard. Major repairs are difficult or large-scale repairs that may necessitate the ship to be taken out of service. Most large-scale repairs, particularly those carried out in a ship repair yard, require the supervision of a classification society. The ship must be readied for repair at a deballasting facility for oceangoing ships, notable tankers. The tank must be thoroughly cleaned and its ‘slops’ (greywater and hydrocarbon residues) must be pumped ashore according to environmental regulations. Such contracts can be modified to include ship conversion work.

What is a minor ship repair contract?

Minor ship repair contracts are agreements for minor repair and maintenance operations that can be performed at sea or by the crew when a ship is in port. Minor repairs can be afloat at a commercial berth or anchorage. Such contracts incorporate a clearly stated liability and limitation regime. Such contracts came about to address the need for a contract for small, ad hoc repairs such as a plumber attending to deal with blocked drains, or an electrician to sort out lighting problems, or a carpenter attending onboard. Such contracts can be used by shipowners to conclude written contracts with individuals or subcontractors performing minor repairs who would normally be reluctant to read or sign a longer contract.

What clauses ‘must’ be included in a ship repair contract?

1. Owners’ work

Owners’ work clause is a basic operative clause that defines that the work performed on the vessel by other parties would be within the parameters of the owners’ work and with due permission of the owners, the liability of which shall be incurred by the owners of the vessel themselves.

Sample:

The owners, or the master and crew, or any subcontractor employed or engaged by the owners, shall be permitted to carry out the owners’ own work on the vessel, subject to a prior written agreement with the contractors, whose consent shall not be unreasonably withheld, provided they comply at all times with the contractors’ safety and environmental rules and provided the owners remain liable for a claim against the contractors. any such work must not obstruct or delay the works in any way.

2. Delivery, redelivery, and acceptance of the vessel

Delivery of a huge vessel is not an easy task as it consumes lots of time, energy and money hence this clause is paramount. A specific date and time for delivery are decided between the parties and in case of cancellation of the delivery, redelivery provisions should also be duly mentioned.

Delivery

Sample:

The vessel shall be delivered on the delivery date to a safe location nominated by the contractors, safely afloat and, unless otherwise agreed, gas-free and/or inert, free of cargo, slops, sludge, dirty ballast, and any dangerous or harmful to health substances in the structure of the vessel in the way of the works.

Any modifications to the vessel’s delivery date must be immediately communicated to the contractors by the owners.

The parties must sign a delivery protocol stating the time of delivery.

Contractors’ cancellation

Sample:

If the vessel is not delivered to the contractors by 1500 hours local time on the cancellation date for any reason, the contractors shall have the right to cancel this contract and recover any costs and expenses they have reasonably incurred in the performance of the contract up to the date of cancellation (exercisable no later than 1700 hours local time the same day).

Owners’ cancellation

Sample:

If the contractors fail to begin the works in accordance with the scope of work within forty-eight (48) hours of the vessel being delivered for whatever reason, the owners shall have the right to cancel this contract within twenty-four (24) hours and shall be entitled to demand immediate redelivery of the vessel without compensation to the contractors, and to recover (a) any sums already paid to the contractors, plus interest at the rate, and (b) all other expenses reasonably incurred by the owners in connection with this contract.

Redelivery

Sample:

The vessel must be re-delivered to the owners within the contract period without prejudice to guarantee, such inspections, tests, and/or trials as are necessary to determine whether the vessel at redelivery conforms with the requirements of this contract shall be carried out in the presence of the owners’ representative prior to redelivery. The contractors must keep the owners informed of their progress and the estimated completion and redelivery dates.

Defects and defaults in the performance of the works must be documented in a protocol developed by the parties. Unless the owners agree that parts of the works can be completed after redelivery, the contractors shall repair any such flaws and defaults at their expense prior to redelivery.

Without prejudice to the conditions of the guarantee, the parties shall sign a redelivery and acceptance protocol on the date of redelivery, which will designate any works to be completed after redelivery.

3. Financial provisions

It is important to clear out the financial provisions with reasonable rates including the additional incurred prices like tariff including implicit and explicit details of the payment and title of vessel and obligation should be cleared to mitigate any future dispute.

Price

Sample:

All elements in the scope of work for which a fixed price has been agreed upon are included in the contract price.

If a fixed price has not been quoted for any item in the scope of work and/or additional works, the price will be estimated using the tariff or, if no tariff exists, reasonable rates in the contractors’ yard location.

Payment

Sample:

The owners shall pay the contract price in the () currency, free of all taxes, bank charges, and exchange control laws, and in accordance with the payment conditions agreed upon or, if no such terms are agreed upon, before redelivery.

The contractors’ bank account will be used to receive payment. Any changes to the account number or details must be in writing and signed by or on behalf of the parties.

If the payment terms agreed to require interim payments prior to redelivery and the owners fail to pay any such sums on the agreed-upon dates, the owners shall pay interest on such outstanding monies at the previously agreed-upon rate. If such payments (including accumulated interest) are not paid within three (3) working days of their due date, the contractors shall have the right to halt work on this contract without incurring liability to the owners until the outstanding sums are paid (including accrued interest). To the extent not otherwise expressly excluded, the contractors shall have the right to collect from the owners all reasonable costs arising from such suspension of work.

If the payment terms agreed to require payments to be made after redelivery and the owners fail to make any such payments, the owners shall pay interest at the rate stated, and any other payment instalments agreed to be paid at a later date shall become due immediately if such outstanding sums (together with accrued interest) are not paid within three (3) working days of their due date.

Title to the vessel

Sample:

The owners retain ownership of the vessel at all times. The contractors shall not authorize or suffer any lien to be created on the vessel as a result of their or the subcontractors’ work, save as provided in the financial provisions.

Before redelivery, the contractors shall be entitled to a possessory lien on the vessel for all payments owing to them on or before redelivery.

4. Liquidated damages for delay

The liquidated damages clause specifies a particular amount of money that will be payable in the event of default attempting to quantify damages on the higher side.

Sample:

If redelivery is delayed beyond the contract period, the contractors accept liability for liquidated damages in the amounts specified for each day of delay, up to the maximum amount specified. If nothing else has been agreed upon, ten per cent (10%) of the contract price will be charged.

5. Liabilities and indemnities

The liability clause will define the onus of each party in case of certain scenarios and the indemnity clause will hold the indemnifying party to be responsible for and cover the loss of the indemnified party in circumstances where it would be unfair for the indemnified party to bear the loss.

Liability for loss or damage

Sample:

The contractors are only liable to the owners under this contract if the loss or damage was caused by the contractors’ or those for whom they are responsible for carelessness or willful misconduct.

Except as stated under cancellation, guarantee, termination, and sundry provisions, the contractors’ responsibilities arising out of or in connection with this contract, of whatever form and however arising, shall stop with redelivery or, if later, completion.

The owners are only liable to the contractors under this contract if the loss or damage was caused by the owners’ carelessness or deliberate misconduct or those for whom they are responsible.

Any tests, trials, or movements of the vessel shall be at the sole risk and responsibility of the owners, and the contractors shall have no liability to the owners for any loss, damage, or expense incurred as a result of such tests, trials, or movements unless caused by the contractors’ intervention, act, or omission.

Liability for death or personal injury

Sample:

Regardless of the cause of death or personal injury, and whether or not caused by the negligence of the other party, or those entities for whom the other party is responsible under this contract, each party accepts responsibility and liability for the death or personal injury of its own personnel, and the personnel of those entities for whom they are responsible under this contract.

In the event that the aforementioned personnel or their dependents seek claims for death or personal injury against the party who is not responsible for them under this contract, each party agrees to indemnify and hold the other party blameless in terms of both liability and legal fees. Such accusations must be reported to the other responsible party by the party not responsible. Whether or not the claim(s) is made against it or the other party, the party who is responsible for the claim(s) under this contract shall take over the conduct of the claim(s).

Third parties

Sample:

Each party agrees to indemnify the other against all claims made against the other party by third parties (those individuals and entities for whom neither party is responsible under this contract) in any way related to this contract, where such claims are caused, or to the extent that they are contributed to, by the indemnifying party’s negligence or willful misconduct, or that of those liable for the indemnifying party’s negligence or willful misconduct.

All investigations and defences of all claims against which the other party is indemnified under liabilities and indemnities, above, as well as all legal procedures arising therefrom, including the indemnified party’s legal fees, shall be borne by the indemnifying party.

6. Limitation of liability

The limitation/exclusion of liability clause limits the liability for breach limiting the quantum damages.

Sample:

Even in the event of negligence, the contractors’ responsibility arising out of or in connection with this contract shall be limited to the contractors’ total liability.
Even in the event of negligence, the owners’ responsibility arising out of or in connection with this contract shall be limited to the owners’ total liability.
Employees, servants, agents, and subcontractors: The restrictions on each party’s responsibility set forth in limitation apply to individuals for whom that party is liable under this contract. Each party further agrees that it will not, and will ensure that those for whom it is responsible do not, circumvent the aforementioned limitations and allocation of responsibility by bringing legal action against the other party’s employees, servants, or agents and that to this extent, each party shall be deemed to be acting as agent or trustee on behalf of and for the other party.
Nothing in this agreement affects the parties’ right to restrict their responsibility under any current statutory law
Unless otherwise stated in liquidated damages for delay, neither party’s responsibility to the other shall include any payment for: loss of hire, loss of profit, loss of use or business, or any other comparable direct or indirect losses; or other consequential losses whatsoever.

Arising out of or in connection with the performance or non-performance of this Contract, whether or not such performance or non-performance is due to any breach of contract, carelessness, intentional misconduct, or other faults on the part of either Party or those for whom they are responsible.

7. Guarantee

The guarantee clause pertains to the guarantee on the works performed by the contractors on the vessel including the liability arising out of such guarantees.

Sample:

The contractors’ materials and equipment, as well as the Works performed, are covered by the guarantee.
The contractors are responsible for correcting deficiencies in materials, equipment, and workmanship that exist at the time of redelivery or, if later, completion, provided that notice of such defects is received in writing by the contractors within the number of months following the completion date. If the deficiency has caused damage to the vessel or any portion of it, this responsibility extends to the repair or replacement of any vessel part(s) that have been damaged as a result of the defect.
In cases where the contractors are liable for defects under the guarantee, the owners shall be entitled to have the work and replacements performed at any yard or workshop other than the contractors’ yard if, in the owners’ reasonable opinion, such work and replacements must be completed promptly and it is not practicable or cost-effective for the owners to bring the work and replacements to the contractors’ yard. In such instances, the contractors’ sole duty shall be to pay or reimburse the actual cost of such work and replacements, provided that, before transferring the vessel to another yard or workshop, the owners shall:

Notify the contractors of their intention to do so and ask for any assistance the contractors may be able to provide to help reduce the cost; use reasonable efforts to ensure that the cost does not exceed the cost of having the same work done at the contractors’ yard.

In such instances, the vessel shall be transported at the owners’ expense and risk to the chosen location, ready in every way for the guarantee work to begin.

When the contractors conduct repairs or renewals in accordance with the guarantee, the contractors must guarantee the repairs or renewals on the same conditions as guarantee.

8. Disruptions

Disruptions (force majeure) clause specifies situations that are outside the control of parties and are unforeseeable, and under which the parties cannot be compelled to perform under the contract.

Sample:

a. When any of the following events cause a delay in the contractors’ performance of the works, the contract period will be extended, provided that the contractors have complied with the disruptions hereunder and have made all reasonable efforts to avoid or minimize the effects such events may have on the performance of the works:

Force majeure events like:

Acts of God;
Any request, control, intervention, obligation, or interference by the government; any circumstances deriving from a war, threatened act of war, or warlike operations, terrorist acts, or the repercussions thereof;
Riots, civil commotions, blockades or embargoes;
Epidemics;
Earthquakes, landslides, floods, or other unusual weather events;
Strikes, lockouts, or other industrial action, but only if of a general nature and not limited to the contractors and/or the subcontractors; or Fire, accident, or explosion (whether in the contractors’ yard or elsewhere), unless caused by the contractors’ and/or subcontractors’ proven negligence.

Other events like:

Failure of the owners and/or owners’ regulatory bodies to review/approve technical information in a timely manner;
Suspension of the works pursuant to payment;
Failure of the owners to deliver the vessel in the condition stipulated in delivery;
Breach of owners’ representatives;
Disruption of the works in breach of owners’ work; or
Late delivery of any products that the owners are required to provide.

b. The contractors must notify the owners in writing within two (2) working days of the occurrence of any incident of delay for which the contractors allege they are entitled to a contract period extension. Failure to do so will preclude the contractors from requesting an extension to the contract period. The contractors must additionally notify the owners in writing (a) within two (2) working days of the end of any event notified under this clause that the event has finished, and (b) as soon as practically possible after (a) the length of the contract period extension requested by the contractors.

9. Termination

The termination clause mentions the circumstances under which the agreement can be terminated including termination for convenience and in case of breach (by default).

Contractors’ default

Sample:

The owners shall have the right to cancel the contract by giving written notice to the contractors if:

The contractors are deemed insolvent pursuant to termination–deemed insolvency; or without lawful excuse, the contractors fail to perform the works or any substantial part of them for a period of at least five (5) days without lawful excuse, provided that the owners give the contractors at least two (2) days prior written notice of their intention to terminate under termination–contractors’ default, and the contractors fail to remedy within that period; or

The contractors fail to redeliver the vessel in the condition required by the contract by the redelivery termination date, as may be adjusted pursuant to performance and approval of the work–performance of works and disruptions–other events; or

The contractors are liable under the provisions of the contract for damage to the vessel that occurs during the works, and the reasonably anticipated cost of fixing such damage exceeds the contractors’ total liability.

On termination, the owners shall pay any part of the contract price that relates to the works performed up to the date of termination. However, the owners may set off against such payment (a) any sums payable pursuant to liquidated damages for delay, and (b) any losses and/or claims not otherwise excluded which they may suffer by reason of the termination. To the extent that (a) and (b) exceeds the contractors’ total liability, the owners shall be discharged from their obligation to pay an equivalent sum out of any unpaid part of the contract price. Following that, the owners shall have the right to withdraw the vessel from the contractors’ yard without hindrance or interference from the contractors or those for whom they are accountable, notwithstanding the provisions of financial provisions–title to the vessel.

Owners’ default

Sample:

The contractors shall have the right to cancel the contract by giving the owners written notice if:

The owners are deemed insolvent pursuant to termination–deemed insolvency; or

without lawful excuse, the owners (a) fail to pay any sums due under the contract for a period of five (5) days provided that thereafter the contractors give the owners at least two (2) days prior written notice of their intention to terminate under termination–owners’ default, and within that period owners fail to remedy the breach, or (b) clearly indicate their intention not to perform the contract; or the contractors’ property is damaged during the works for which the owners are liable under the contract conditions, and the reasonably estimated cost of fixing the damage exceeds the owners’ total liability.

The contractors shall be entitled to recover any unpaid portion of the contract price that relates to the works performed up to the date of termination, as well as (a) any losses or liability to subcontractors and others they may incur as a result of the termination, except as otherwise excluded, and (b) their reasonable costs of accommodating the termination, pending payment of (a) their reasonable costs of accommodating the vessel, although both (a) and (b) are subject to the owners’ total liability at all times.

Any other claims the Parties may have against each other will be unaffected by the termination.

Deemed insolvency

Sample:

Either party shall be deemed insolvent as the “insolvent party” if it:

(a) Becomes subject to a voluntary agreement with its creditors, or is placed under administration, or is liquidated (otherwise than for the purposes of amalgamation or reconstruction); or

(B) Any of the insolvent party’s property or assets are encumbered, or a receiver is appointed over any of the insolvent party’s property or assets; or

(C) The other party reasonably believes that any of the events listed in (a) or (b) above is about to occur in relation to the insolvent party and is not reasonably assured of its continued creditworthiness and/or is not furnished with sufficient guarantees following notification to the insolvent party.

10. Insurance

The insurance clause outlines the risks assumed by either party detailing exactly the risks the insurer is liable for paying and defining the scope of the coverage.

Contractors’ insurances

Sample:

The contractors shall effect and maintain ship repairers’ liability insurance at no cost to the owners, providing coverage for any loss or damage for which the contractors may be held liable to the owners under this contract, and shall, upon the owners’ request, make copies of insurance certificates and policies to provide evidence and details of cover immediately available to the owners.

Owners’ insurances

Sample:

The contractors shall effect and maintain ship repairers’ liability insurance at no cost to the owners, providing coverage for any loss or damage for which the contractors may be held liable to the owners under this contract, and shall, upon the owners’ request, make copies of insurance certificates and policies to provide evidence and details of cover immediately available to the owners.

Case laws relevant to ship repair contracts

Federated States of Micronesia v MT HL Achiever (I) (30 August 1995)

Admiralty: The defendant’s vessel in a rem action cannot be moved to a new location. The defendant’s vessel was docked in Chuuk, and the FSM wanted to move it to Pohnpei because the surveillance vessel that was protecting it needed repairs, and ship keeper fees in Pohnpei were lower. The FSM has filed a motion to have the temporary restraining order overturned.

Decision: The court ordered that the temporary restraining order be lifted. The defendant vessel cannot be transported from Chuuk State without a court order.

Held: There is no possibility of transfer because the Admiralty Act does not allow for it. Because jurisdiction and venue are so linked, the outcome of relocation in an in rem forfeiture of the defendant’s vessel is unknown.

Donald Pickering & Sons Enterprises Ltd v Karim’s Ltd (6 February 1997)

Admiralty: The possibility of remedy in an in rem lawsuit does not need the filing of a maritime lien. Plaintiffs claimed they were not paid for work done on two vessels and obtained arrest warrants for the defendants. The defendant owner responded by requesting that the warrants be dismissed, saying that the plaintiffs lacked a maritime lien and hence were not entitled to the vessels’ arrest.

Decision: The motion of the defendant was denied.

Held: It is a common misconception that if there is no maritime lien, there is no right to continue in rem. When the vessels are beneficially held by the defendant who requested the work, and the money owing by the debtor pertain to “maritime debts”, even if such debts are not capable of giving rise to maritime liens, an in rem action may be launched against the vessel. The court cited common law precedent that has been enshrined in statutory authority, citing the Administration of Justice Act 1956 as applied to the High Court of Fiji, which expressly places ship repairs in the category of “maritime debts” properly brought within the purview of the Admiralty division; and Section 3(4) of the Act, which provides that in rem actions may be brought against a ship where the owner of the vessel is not present.

Chandra v Kiribati Shipping Services Ltd (4 February 2010)

Admiralty: In rem action—procedure for in rem action in the absence of a maritime lien. A payment owed for electrical repairs and upkeep to a vessel was sought by the plaintiff. The plaintiffs requested that the vessel be impounded.

Decision: An arrest warrant has been issued for the vessel.

Held: The claim for repairs could not be considered a maritime lien, according to the court. The court relied on legislative requirements to support the in rem suit. The High Court of Fiji’s in rem jurisdiction is drawn from Section 21 of the High Court Act Cap 13. The High Court of Fiji has jurisdiction over a claim for the construction and repair of a vessel under Section 1(1) of the Administration of Justice Act. No warrant of arrest is issued before an affidavit stating the parties and the basis of the claim is filed, according to the High Court (Admiralty) Rules. The plaintiff was able to show a valid right to recover amounts due and owing pursuant to a contract, and so established a claim on which a man arrest order might be based, according to the court.

Captain & Crew of the MV Voseleai v Owners of the MV Voseleai (28 October 1994)

Admiralty: Action in rem- action in rem for crew wages- security for vessel release.

For repairs, the ship sailed from Honiara to Suva. The Master and crew filed an action in rem for unpaid salaries and allowances 10 months after her arrival. The vessel’s owner filed a motion to have the arrest warrant dismissed, stating that the crew’s conduct was illegal and in violation of the Shipping Act.

Decision: The crew’s actions were legal, and the court had jurisdiction; the vessel was ordered to be released upon payment of a $25,000 bond.

Held: The Supreme Court Rules and British Admiralty law supported action in rem for the pay of the crew on that vessel, according to the court. In terms of the vessel’s release, the court determined that the ship must be released only once the plaintiff’s claim is secured. The plaintiff has the right to demand as much security as is necessary to cover his reasonably best arguable case, and it is the plaintiff’s responsibility to define that amount after an application for vessel release has been submitted.

Capek v The Yacht ‘Freja’ (23 April 1980)

Admiralty: The substance of the action must be derived from the statement of claim, not from the affidavit supporting the arrest. The plaintiff was suing for supplies given to the defendant’s vessel. The defendant raised the issue of whether the in rem suit was lawfully based. The plaintiff indicated in the affidavit supporting the vessel’s detention that the claim was for work done on the yacht. The plaintiff’s claim was based on supplies provided to the vessel in the statement of claim.

Decision: The right action is to issue a writ.

Held: The Admiralty Courts Act of 1840, 1861 established power of ‘action in rem’ in the case of a claim for necessaries provided to a foreign ship. The Act, on the other hand, does not create a right of ‘action in rem’ in connection to shipping repairs and equipping. The substance of the plaintiff’s claim will be determined by the particulars of the Statement of Claim, not by the information provided in the affidavit filed for the vessel’s arrest. (New Guinea Cocoa (Export) Co Pty Ltd v Vedbaek, Owner of MV ‘Aya Trigon’ [1980] did not follow this rule.)

Baobab Industries Ltd v Owners of the Yacht ‘Jubilant’ (19 August 2009)

Admiralty: In rem action—procedure for taking action in rem when there is no maritime lien. No practice of limiting the duration of arrest orders. The plaintiff must deposit an amount into the court to reimburse the charges and expenses of the Admiralty Marshal for the arrest. The plaintiff claimed to have performed repairs on the vessel and demanded money. The plaintiffs filed an ex parte motion for the arrest of the boat under the High Court’s Admiralty jurisdiction.

Decision: A warrant has been issued for the arrest of the yacht.

Held: The plaintiffs have a valid claim for contract repairs. The court disregards the prior ruling in Star Marine Ltd v Nambuk Fisheries Company Ltd. (2002), which limited the arrest warrant to seven days. The plaintiff must do more than offer a promise to indemnify the Admiralty Marshall, according to the court, and must deposit a sum into the court to cover charges and expenditures related to the arrest.

All Engineering (Fiji) Ltd v Owners of Bulou and Barge Pro Dive II (25 November 2009)

Admiralty: Despite the lack of a maritime lien, action in rem is possible. The complainant had not been compensated for the vessel’s repairs. The defendant admitted to being in debt but requested a time extension. The defendant requested that the vessel be impounded.

Decision: The application has been approved.

Held: The court concluded that despite the lack of a maritime lien, a vessel repairer has action in rem against the vessel, citing Donald Pickering & Sons Enterprises Ltd v Karim’s Ltd (6 February 1997) and Baobab Industries Ltd v Owners of the Yacht “Jubilant” (19 August 2009).

Contentious disputes pertaining to ‘negligence’ and ‘limited liability’ in ship repair contracts

Tony D’aquisto Et Al. V. Campbell Industries, Civ. No. 31084(December 20, 1984)

Admiralty: Recoveries for improper vessel repairs that resulted in lost fishing time and, as a result, the fishermen’s portion of the catch. The fishermen filed a lawsuit against Campbell, alleging that Campbell negligently rebuilt the vessel, causing them to lose pay. Campbell was sued by the vessel’s owners for negligent repairs, breach of contract, and breach of guarantee. Campbell demanded payment for the repairs it had completed.

Decision: Campbell was awarded summary judgment by the trial court. The fisherman has filed an appeal.

Held: Paul Eugene Overton, the trial judge, concluded that an exculpatory clause in the owners’ contract with Campbell was legitimate and enforceable. Although the jury found Campbell negligent and in violation of the contract, they only awarded the owners nominal damages ($1) for each cause of action. Based on a poll of the jurors done before their release, Judge Overton ruled that as to the negligence cause of action, “the jurors did not follow the law; thus, the verdict was contrary to the court’s directions,” and that the owners should take no action. An appeal is now underway in this case.

MP Leasing Corp. v. Colonna’s Shipyard, Inc., Civil Action No. 2:07cv273 (April 3, 2008)

Decision: The motion to dismiss implied warranty of workmanlike performance is denied and the motion to dismiss negligence/gross negligence on the claim of gross negligence is denied in part and granted in part.

Held: A contractor in admiralty is bound by a warranty to carry out ship repairs in a workmanlike manner. [Ryan Stevedoring Co. v. Pan-Atlantic Steamship Corp.(1956); American Export Lines v. Norfolk Shipbuilding Drydock Corp.(4th Cir. 1964); Tebbs v. Baker-Whiteley Towing Co.(4th Cir. 1969)]

Although the warranty of workmanlike service does not offer the repairer a guarantee of results, it is fairly broad and has been used to determine culpability in cases when repair projects have been completed incorrectly. [Little Beaver Enterprises v. Humphreys Railways, Inc.(4th Cir. 1983)]

Clauses that purport to limit a party’s legal liability are closely construed, and in order to be given effect, they must explain clearly the intent of all parties whose liability is affected by the agreement. [Nathaniel Shipping, Inc. v. General Elec. Co.(5th Cir. 1991)]

Contract terms must be construed in such a way that each part of the contract is given effect and no part of the contract is rendered meaningless. [Goodman v. Resolution Trust Corp. (4th Cir. 1993)]

Defendant’s view of the indemnification provision is clearly at odds with the preceding provision, rendering it worthless. The court concludes that the clear language in this contract is insufficient to disclaim all duty under the implicit assurance of workmanlike service when seen as a whole.

A shipowner has a cause of action under maritime law, whether he sues in a contract for a breach by a party with whom he has a contract for the vessel’s repairs, or in tort for negligent fulfilment of the maritime contract. [Newport News Shipbuilding Drydock Company v. United States (4th Cir. 1955); Todd Shipyards Corp. v. Turbine Serv., Inc. (5th Cir. 1982); Alcoa S.S. Co. v. Charles Ferran Co. (5th Cir. 1967)]

A ship repairer may be held accountable in a contract for failing to fulfil expressly assumed obligations or failing to uphold an implied assurance of workmanlike performance attached to admiralty contracts. [La Esperanza De P.R., Inc. v. Perez Y Cia. De Puerto Rico, Inc. (1st Cir. 1997)]

Defendant also mentions examples in which the vessel owner and the vessel repairer are not related. Because this is a case involving the repair of a vessel, maritime law applies, and the negligence claim will not be dismissed.

The term “hurt intentionally inflicted or caused by gross or wanton negligence” has been defined as “injury willfully inflicted or caused by gross or wanton negligence.” (Todd Shipyards Corp)

Nathaniel Shipping, Inc. v. General Elec. Co.(5th Cir. 1991)

This case presents some fascinating considerations about ship repairers’ liability. The main question on appeal in the Nathaniel case was whether a ship owner’s claim against a negligent subcontracted repairman with whom it had no contractual relationship would be precluded by the Supreme Court’s economic loss concept, which was established in 1986 in its East River decision.

Fact: During a cruise, a thrust block in the main engine of a vessel that absorbs the action of the ship’s propeller shattered. A repair facility was hired by the vessel’s owner to replace the block. The job was subcontracted to a subcontractor who did not perform its duties in a professional manner. The shipowner was forced to incur additional costs as a result of the extensive remedial repairs that were required, including the loss of the vessel’s usage for 56 days.

Decision: The shipowner was granted $229,342 in damages by the trial court, the majority of which was for economic losses. The shipowner could not be reimbursed for the vessel’s loss of use, according to the Fifth Circuit Court of Appeals, which overruled the trial court. The ruling was based on the Supreme Court’s broadening of the economic loss notion along the East River. A product manufacturer has no duty under tort law to prevent a product from injuring itself, according to the judgement in the East River case. Only economic losses occur when a product’s failure to perform adequately causes harm. To recover simply economic losses, only contract concepts can be applied (as opposed to personal or property harm). Parties are, of course, allowed to employ warranties or disclaimers to allocate risks and liabilities in their contracts.

A petition for review was submitted in the Nathaniel case, stating that the economic loss approach should not be expanded to account for ship maintenance contract conflicts. It is claimed that if the idea is expanded, the long-standing implied warranty of workmanlike performance connected with maritime service and repair contracts will be terminated. If this happens, the only method for a shipowner to avoid financial losses related to ship repairs is to establish formal contracts with all repair contractors and demand contractual warranty protection from them all.

‘Commercial morality’ and the ‘doctrine of unconscionability’ in ship repair contracts

Repairing a ship is famously costly. Both ship owners and ship repairers have discovered the importance of meticulously preparing repair contracts. Marine engineers are frequently involved in the negotiations of these contracts, which are often reached after weeks or months of meticulous planning, pricing, and negotiating.

In most cases, courts do not intervene when one party to a contract makes a terrible bargain with the other. When a shipowner and a shipyard, for example, reach a clear understanding of the cost of repair, the court is unlikely to sympathize if one party feels unfairly treated at the conclusion of the engagement.

The doctrine of unconscionability is an exception to the general norm that courts do not intervene with contracts. This doctrine holds that a contracting party can be released from its responsibilities if the agreement is unconscionable, or if the bargaining process was unethical. The concept is an odd blend of trade and morality, which can make for strange bedfellows.

A recent British Columbia Supreme Court decision involving a West Coast shipyard and pleasure vessel gives an important example of how the court used the doctrine of unconscionability to protect a party who did not negotiate a fair contract. The court found the $4,500/day lay day penalty to be outrageous and dismissed the shipyard’s claim, substituting it with a $350/day charge.

The following is how the court summarized the standard for whether a contract was conscionable: First, proof of inequity in the parties’ positions resulting from the weaker party’s ignorance, need, or anguish, leaving the weaker party in the power of the stronger, and second, proof of considerable injustice in the bargain obtained by the stronger. Once these characteristics are established, the burden of evidence changes to the stronger party, who must demonstrate that the deal is fair, just, and reasonable in order to keep his agreement. The criterion is whether the transaction as a whole deviates significantly from community standards of commercial morality to warrant cancellation.

Conclusion

Negotiating and drafting a ship repair contract like any other contracts is a crucial step and plays an important role in determining the fate of future disputes in case it arises by any chance. The rationale behind drafting a watertight contract is to better prepare for plausible future disputes or disagreements thus every possible contingency should be properly outweighed. The contract must be narrow enough to cover predictable scenarios and interests of contracting parties but also broad enough to justify unprecedented issues that may arise. BIMCO has revised and updated versions of its two standard ship repair contracts: REPAIRCON, for major work; and MIN REPCON, for minor repair work which can be downloaded and used as a checklist for a perfect draft.

References

https://www.marinelink.com/articles/maritime/ship-repair-100162

http://www.legalserviceindia.com/legal/article-4493-contract-forming-under-maritime-law-dockage-agreements.html

https://heinonline.org/HOL/LandingPage?handle=hein.journals/usfm6&div=24&id=&page=

https://www.bimco.org/contracts-and-clauses/bimco-contracts/minrepcon-2018#

https://www.bimco.org/contracts-and-clauses/bimco-contracts/repaircon-2018#

https://blog.ipleaders.in/10-types-of-maritime-contracts-all-you-need-to-know-about-it/

http://www.paclii.org/libraries/maritime_law/summaries-of-important-cases/case-summaries-arrest-of-ships-and-pre-judgment-security/index.html

http://www.cmac.org.cn/wp-content/uploads/2019/09/%E7%82%B9%E5%87%BB%E4%B8%8B%E8%BD%BD%EF%BC%9A%E8%88%B9%E8%88%B6%E4%BF%AE%E7%90%86%E5%90%88%E5%90%8C%EF%BC%88%E8%8B%B1%E6%96%87%EF%BC%89-Contract-for-Ship-RepairsEnglish.docx

https://caselaw.findlaw.com/ca-court-of-appeal/1841082.html

https://law.justia.com/cases/california/court-of-appeal/3d/162/1208.html

https://casetext.com/case/mp-leasing-corp-v-colonnas-shipyard?__cf_chl_jschl_tk__=121e34dfb86ab1bf1d635c9a7cf53ff1d8b367dc-1625178494-0-AaviIeW68zogJIqBmfRFW-6ilDOQGoRqzDxkf3lhJWtyclBBVzlnOK0fH4BTsbz5FTflwxpXKyHQvhQlNvTwR7Z_cNDonSYKI7aiUWfKo24NPL9NueDjndBB58RSx9eOgsoBQkxjTxKy6WP7jXAqlB1YGCAYa7tYbhQQR3kpePslAfS8BeTma7-ouoPQNte5qtH7NIHHv3EXgT6adQcpUvVg_76zcaOpznLrhKnE1CKM8jzxoDebLYQPdkMxfgg_SdzDu4_671Dzk47ZJ-eR9L1yBHG7rbPSNptRHrZKvNe4vYwT-oWfn-jVLQrCSqge0h2Xzr3BMoLEoFMwBgov_g5hE_0Kf-1FC3yYQ0ZQFKEoaMAIbD-OGmRFOnOl9_oicFHKmgmHjq-3sj-g6xx0xqVElPLhyhOOTYZN1RJtU4T8VgE3s_AVdtlMT3a41WgJvVv84f6k1AAQgT_1F0E3M5VCSJmF8CYgSufNrosifYedKaq-QkSGMkugCyKQs7ZmvA

http://www.paclii.org/libraries/maritime_law/summaries-of-important-cases/case-summaries-arrest-of-ships-and-pre-judgment-security/index.html

https://www.joc.com/maritime-news/appeals-court-finds-negligent-ship-repairer-not-liable-shipowners-losses_19910306.html

https://iistl.blog/2016/08/04/niggling-points-in-ship-repair-contracts/

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Liability of the internet service provider

By

Abanti Bose

-

August 7, 2021

0

top-5-isp-in-Nepal (1) — Image Source: https://rb.gy/84awcl

This article is written by Jatin K. Chheda, pursuing Diploma in Cyber Law, FinTech Regulations, and Technology Contracts from Lawsikho.

Table of Contents

Introduction

With the advent of the internet, there has become a parallel world in cyberspace where people connect, relate and communicate. The world of cyberspace is driven by data, data that is available to publish, use and disposal of the internet. Data spans across all kinds of content from written, textual, audio, video and other media and entertainment-related content to business-related content, all of these are accessed, used and consumed by the masses who put forward their trust and participate in this giant data exchange we call the cyber community. Needless to say, the trust comes on one end towards the genuine of data being projected and consumed, and more its authenticity is of utmost importance, on the other hand, the privacy of the people accessing the information, content and services offered is of utmost and crucial importance.

As the internet and digital consumption advanced through time, it became more and more crucial to bring in mechanisms to check and control the authenticity, security and privacy of data. From piracy to phishing to data leaks, tampering of information, misguiding and misleading information, fake imposters and all kinds of inauthentic content from conspiracy theories to online scams and scandal, imposters and fake porn, the internet were becoming a bane to mankind as much it was a boon in integrating the world into one big giant community. But just like society, cyberspace also had its perils with authenticity and infringement of data being the determinant source of all problems.

What is an ISP?

Let us look at cyberspace as the digital form of the world, wherein real-world road, air and rail networks were the access to travel, offered by the respective states and their governments, the network access to people on cyberspace to surf was brought about by the ISP’s, the internet services providers. In the simplest terms, to be an intermediary is to be like a conduit for the passage of any information/communication. They act like aggregators between those who wanted to generate and spread information and those who wanted to consume information. Needless to say, when the time came where the dubious and inauthentic information had become a nuisance for global peace, economy, trade, etc. There was a need to regulate and control the information on the internet, and since it was difficult to keep track of individuals worldwide, it was done through the source that acted as a medium to aggregate this connectivity, the ISP’s, the internet service providers.

The issue of online copyright infringement liability for the ISP’s thus became prevalent since the use of the internet started to expand rapidly. The imperative question that arises here is to what extent are ISPs responsible for the third party material put on the internet by users of their facilities?

Because of the hurdles and constraints on keeping track and catching hold of individuals on a worldwide level, because of geo-cultural, geopolitical and simply inability of copyright and intellectual property owners to seek infringement damages against those who misappropriate their intellectual or digital properties, the internet service providers have become an accessible mule to address this problem, namely since they allow the internet or data pirates to exist, for which reason the content owners find it righteous to sue the ISP’s for their data infringement because the ISP’s naturally are in a position to control and secure the internet through plausible policing.

In this paper, we explore the role of the ISP’s communication on the internet, their various approaches for determining the liability of the ISP’s for eg. the horizontal approach, the non-horizontal approach and explain the liability of ISPs for copyright infringement under the Copyright Act, 1957, and the Information Technology Act, 2000.

ISP’s role in communication on the internet

ISP is the gateway or an aggregator that provides the network infrastructure, in common parlance, a bandwidth (road network) which gives people access to navigate through the world wide web and access data and information on one end, and on the other, they give hosting and website building and other such services for the supply of data and content. Other than ISP’s various parties are involved in offering solutions for creating, storing, hosting, delivering and accessing information and content from the content creator to the content consumers such as blogging sites, cloud platforms, hosting servers, database servers, etc. at the end of the day all the information gets stored in a server and is accessed from that servers through the internet. In common parlance, the server is an address where one seeks to access the information through the highway and road network which is provided by the ISP through the internet and bandwidth, to be able to navigate and access the information stored on these servers. The various intermediaries that host, store, process data and data services are all connected to the content providers on one end and the consumers on the other through the ISP’s which are the road network that enables the transport of information and people (albeit virtually) between one point to another.

The website host deploys servers where FTP’s, file transfer protocols are deployed for storing, accessing and transporting files, website hosting is done on these servers. These days cloud computing offers remote storage of data that can be accessed on multiple points. Upon storage, on such servers and cloud servers, this data gets availed to anybody with an internet connection and the address to the server location. An access provider on the other hand provides access to the internet. In the process, all this is happening through the network infrastructure of the internet service provider, ISP. This network infrastructure transports this data to the designated consumer. ISP’s are aggregators who create access and network to transport information exchange.

Liability of internet service provider

The liability for copyright infringement rests on three theories; direct, vicarious and contributory infringement. Direct infringement occurs when a person violates any exclusive right of the copyright owner. Vicarious liability arises when a person fails to prevent infringement when he can and has a right to do so and is directly benefited by such infringement.

In the United States, one of the Acts which provides liability for the ISPs is the Digital Millennium Copyright Act, 1998. This Act governs the liability of the internet sites and ISPs for the copyright infringement of its user. It provides a mechanism for copyright owners to force site owners and ISPs to remove infringing material.

The following elements are part of the regime under the DMCA:

1) The online service provider [hereinafter OSP] must have a designated agent to receive notices and it must use a public portion of its Web site for receipt of notices;

2) The OSP must notify the U.S. Copyright Office of the agent’s identity and the Copyright Office will also maintain electronic and hard copy registries of Web site agents.

Various approaches to determine the liability of internet service providers

The scope of an ISP’s liability extends to the branch of law pertaining and relating to the content and subject matter in question. It could be private or personal, criminal, tort, intellectual property like copyright, trademark, patent, etc., competition law, consumer protection, etc. and thus the liability of the ISP’s has been burning, constantly evolving and expanding. These have been done broadly through two approaches:

1. Horizontal approach

Which covers not just copyright infringement but all other areas and branches of law, where the liability of ISP arises directly and it raises fixed liabilities irrespective of the content and extent of the illegality of the content.

2. Non-horizontal approach

The potential of the liability is determined by the provisions and jurisdictions of the law. In this approach, the statutes determine the extent of liability, in which a case of defamation would be covered under defamation laws, copyright infringement would be covered under intellectual property rights law, harm to person, death and rape threats would be covered under IPC, etc.

Copyright is dealt with preserving the efforts and performance of the intellect. The concern of copyright is the protection of literary and artistic works. These consist of music, writings, the efforts of the fine arts, music, such as sculptures and paintings, technology-based works such as computer programs and electronic databases. The liability for copyright infringement rests on three theories- direct, vicarious and contributory infringement. Direct infringement occurs when a person violates any exclusive right of the copyright owner. Vicarious liability arises when a person fails to prevent infringement when he can and has a right to do so and is directly benefited by such infringement. These two theories are based on the strict liability principle and a person will be liable without any regard to his mental state or intention. Contributory liability arises when a person participates in the act of direct infringement and has knowledge of the infringing activity. The question arises as to which standard should be applied in order to fix the responsibility of service providers.

Provisions under the Indian Copyright Act, 1957

The Indian Copyright Act is unable to protect the unauthorized distribution and use of work over the internet. Infringement over the internet and piracy poses a threat to creative works worldwide and thus the growth of the internet, e-commerce and the digital economy. The law related to ISP liability is vague and ambiguous in India. The Indian Copyright Act 1957, though amended in 1994 and 1197, doesn’t cover or even mention copyright infringements and liability of ISPs regarding them.

The crux of copyright infringement according to the Act is that whether a person is gaining economic gains out of the infringement and in case of ISPs liability, the ISPs are gaining any direct economic gains out of copyright infringement. Users however do pay ISPs for using internet services, but they usually get away with the excuse that they did not know their acts were in the violence of owners copyrights. Moreover, Section 63 of the copyright Act, 1957 provides for abutment regards to copyright infringements, but whether ISPs can be said to be abetting would again be a case to b settled in the court of law since ISPs clearly would state no intention as their basis to avoid legal liability.

These issues have been addressed in Section 79 of the Information Technology Act, 2000.

Provisions under Information Technology Act, 2000

Chapter XII of the Act provides for issues regarding the liability of the service providers. The Act refers to ISPs as ‘network service providers’ and exempts them from their liability. Section 79 absolves the ISP’s liability if they can prove they had no knowledge about the infringement or due diligence was exercised for prevention of such acts. The Indian position in liability of service providers for copyright infringement must be made more explicit. The Act must include sections that address the financial aspect of the transaction, and the relationship between an ISP and a third party, because this is vital to determining the identity of the violator. The American concept of contributory infringement can also be incorporated into the Indian Act so that if any person with knowledge of the infringing activity, induces, causes, or materially contributes to the infringing conduct of another, the person can be made liable.

In order to be exempt from liability, the Indian Act requires the service provider to exercise due diligence to prevent the commission of copyright infringement. The Act does not provide the meaning of the term due diligence. If due diligence means policing each and every aspect of the internet, it can lead to loss of privacy and can ultimately have a disastrous effect. There is a need for a consensus on the meaning of the term due diligence because the primary function of ISPs is to build the internet, not to play the role of a policeman. If the behaviour of an ISP is reasonable, then that ISP should not be held liable for each and every activity on the internet as has been held by the US courts.

Various international scenarios

The WIPO Copyright Treaty, 1996 first caught international attention on copyrights. The treaties updated the Berne Convention by incorporating the existing TRIPS provisions in its folds and granted additional rights to the authors in the context of the internet. A new right referred to as the right of communication to the public was incorporated and the right of distribution was specifically spelt out. It also provided for legal remedies against the circumvention of technological measures used by the authors to protect their work. Legal protection was also granted to rights management information systems used by the authors while transmitting works in a digital environment. It was further made clear that mere provision of physical facilities for enabling or making a communication does not itself amount to communication with the meaning of this provision.

Since there was no agreement to treat both temporary and permanent reproduction as a part of reproduction rights in digital format, no specific provision was included in the WCT in this regard. It was the failure of the international community due to the pressure from interest groups to reach a definitive conclusion on the nature of the liability of service providers and users, that left the international law unsettled and it was left to the respective Nation States to introduce appropriate provisions in the domestic law to protect the interests of the owners. One of the first countries to legislate on the Treaty provisions was the US through its Digital Millennium Copyright Act (DMCA) that came into force in 1998. Before referring to the DMCA it is necessary to refer to some of the judicial pronouncements of US Courts on the issue. In Playboy Enterprises v. Frena, the court was called upon to determine the liability of the electronic Bulletin Board System (BBS) operator for the acts of users who had uploaded and downloaded the plaintiff’s copyrighted photographs. The court found Frena liable for violating the plaintiffs right to publicly distribute and display copies of its work. The defendant contended that he had in fact removed the photographs from the BBS when he received the complaint and had since monitored the BBS to prevent additional photographs of Playboy from being uploaded.

Internet service providers being made liable to suit for copyright infringement on the internet

Frequently in copyright infringements suits being filed for actions of infringement on the internet most certainly involve the ISPs. The reason being that ISPs are far more in a superior position to police, track and take action in cases of piracy or infringement, than an owner who will be rather completely unaware of the whereabouts of such infringements taking place, the ISPs would have the internet traffic data relating to such activities that show downloads of the infringed product. But ISPs are large business bodies or corporations with deep pockets and with concentrated market share, so it is almost difficult to see a likely outcome since one infringement will result in causing many more.

Conclusion

India needs a more robust and comprehensive law extending the liability of ISPs. The ambitious and rather loose ended statutes governing the scenario of copyright infringement pose a challenging question for the genuine owners who, with the increase of the digital age, are contributing heavily in terms of cyber content. The law is rather handicapped, falling short and mere sighted. Even though a leading technology solutions provider in the global arena, the situation back home is far from high-tech. The ISPs are the gateway, the infrastructure network and the transport system of cyberspace.

The laws relating to regulation, traffic and control need to be devised such that there is clear, transparent and speedy execution in terms of both prevention of crime, and execution of penalty in case a situation arises. Making an ISP liable will not completely solve the issue, but adopting a strategy whereby making them a friend of law in bringing justice to infringed owners’ in their copyrights will be a breakthrough strategy to digital and cyberspace policing. Liability of the ISPs should extend to the extent that it penalises them in not standing in favour of or aiding the investigations in such matters. These liabilities could include penal consequences like monetary penalties, cancellation of licences or permanent ban from providing internet services in case they do not act according to a certain framework to monitor, track, police or aid agencies in preventing crimes in the digital space.

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Aims and objectives of the Employees Compensation Act and the duties of employers towards employees

By

Abanti Bose

-

August 7, 2021

0

iStock_000012204568_Large (1) — Image Source: https://rb.gy/pdvhxx

This article is written by Jatin K. Chheda, pursuing Diploma in Cyber Law, FinTech Regulations, and Technology Contracts from Lawsikho.

Introduction

Through the course of history, the employer-employee relationship dynamics has seen a transformational change as have societies and civilisations. Historically speaking, the employees were largely at the mercy of their employers, who in case of injury would exercise, at their own discretion based on their will whether or not to or how to in case of injury or death while at work, compensate an employee or their dependents.

With the oncoming of industrial age and implementation of large labour based workforces, there came about a time where employees started working for employers in possibly riskier environments with exposure to sophisticated machinery, technology, toxic chemicals etc., exposing the workmen to riskier environments at the behest of earning profits for the employer.

While earlier the question of compensation arose only in cases of negligence of the employer, with the passage of time, the legal mechanism and machinery provided for wider adoption of scope for compensation to employees.

This paper looks at the aims, objectives and purposes of the Indian law enacted as the Employee Compensation Act, 1923 and the duties of the employer towards the employee.

In 1923, India saw an enactment of the Workmen’s Compensation Act, 1923. With the enforcement of this law, employees were no longer at the mercy of the will of their employer alone, to be compensated for any injury or death arising at the workplace.

The object of the Act is to provide for the payment of compensation by certain employers to their employees for injury caused to them by accident while in employment. If an employee contracts an occupational disease while in employment, it is also treated under the Act as injury caused by accident.

In 2009, vide an amendment of the Act, which enforced on 18th January, 2010, the name of the Act was amended to the Employee’s Compensation Act.

In Works Manager, E. I. Railway v. Mahavir, A.I.R. 1954, Allahabad High Court observed that a person is responsible, when he for his own profit, sets agencies that expose others to risks. When applied to the Employee Compensation Act, 1923, this context is applicable rightly to the employer

Employee relationship, whereby the employer, through his agency or business, sets up a facility which is his own responsibility, whereby an employee works for his employer so that the latter is able to carry out his business and earn profits from the same. The risk that the employee is exposed to in the due course of carrying out the work for the employer, viz. Working on a machine that can cause injury, exposure to work-related diseases or illness, death as an occurrence of the job engaged in, etc., ties down the employer to be responsible to compensate the Employee or the dependents for the damage, injury and loss caused due to the mishaps.

Section 1 of the Act states that the Employee Compensation Act is applicable to the whole of India. While the Act was enacted in 1923, it came into force on the 1st of July, 1924.

However, the provisions of this Act do not apply to the persons covered under the provisions of the Employee’s State Insurance Act. The benefit of this Act was observed in Rengasamy v. Amalraj, 2002, where the court held:

“The Act is a Beneficial piece of Legislation that has been enacted to Compensate the Workmen and their dependent’s in the event of accidents during the course of Employment. It is not to be used to extort money from people with whom there is no nexus of employment. It is unfortunate that a beneficial enactment such as this is misused by some persons.”

Understanding the Employee Compensation Act 1923

The Act exhaustively covers the scope of workplace relationship dynamics of an employer and employee, while taking into its ambit the due measures arising out of situations that require legal remedies, measures and provisions for adequate compensation to employees, in that it spreads cover as social security in the guise of a well-constituted framework of compensation. Section 2 of the Act lays forth various definitions of terms like employer, employee, dependent, wages, partial and total disablement, and many more which are covered within the ambit of the Act.

Since the scope of this Act is largely specific to compensate the employees or to their dependents in case of injury, death, illness as a result of job undertaken, etc. It is essential to have a lucid basis upon which the liability to pay compensation may be formulated. Section 3 of the Act exhaustively and expressly lays down not only the provisions for the principles on which the compensation is payable but also promulgates where the compensation is not payable. The scope of the Act also covers an occupational disease to be deemed as an injury arising out of an accident, and Section 3 of the Act clearly states the provisions for such classification. This section enables the employee to recover compensation from the employer due to injury arising out of an accident, likewise, it also enables the dependents of a deceased employee to recover compensation for his death.

Object and purpose of the Act

To better understand the object and purpose of the Act it is necessary to understand the basic definitions, scope and concept upon which the Act stands. For this, we are going to review some of the important features and definitions promulgated under the Act.

For this, we are going to cover the following essential features as defined under the provisions of the Act:

1. Dependant

The Act proceeds to primarily define dependents. Dependent in this case means those relations of a deceased employee, who were dependent on the employee wholly or partially for sustenance.

These dependents are broadly categorised into three categories, viz. 1) direct dependents, like a widow 2) major dependents like a son or daughter and 3) other dependents like for example parents, who are (wholly or partially) dependent on the employee.

This definition is essential, as in case of death of an employee, at the time it would be essential to understand who is considered and in particular to the case who are the dependants deserving to be compensated on account of the death of the employee.

The above relationship chart illustrates clearly the relations classified as the dependents of a deceased employee. as defined by the Employee Compensation Act, 1923:

As shown above, the following relations of deceased employees are classified as a dependant under Section 2(1)(d) of the Act:

A widow, a minor or legitimate or adopted son, an unmarried legitimate or adopted daughter, or a widowed mother.
If wholly dependent on the earnings of the employee at the time of his death- a son or a daughter who has attained the age of 18 years, and who is infirm.
If wholly or in part dependent on the earnings of the employee at the time of his death
A widower
A parent other than a widowed mother.
A minor illegitimate son, an unmarried illegitimate daughter or a daughter, legitimate or illegitimate or adopted, if married and a minor, or if widowed and a minor.
A minor brother or unmarried sister, or a widowed sister, if a minor.
A widowed daughter-in-law.
A minor child of a predeceased son.
A minor child of a predeceased daughter, where no parent of the child is alive;
A paternal grandparent, if no parent of the employee is alive.

2. Employer

According to Section 2(1)(e), an employer includes:

Any body of persons, whether incorporated or not.
Any managing agent of an employer.
The legal representative of a deceased employer.
When the services of an employee are temporarily lent or let out to another person by the compensation with whom the employee has entered into a contract of service or apprenticeship, i.e. such other person while the employee is working for him.

It is essential to define the ‘employer’ as it is the employer who is liable to pay the compensation as per the Act, nobody other than the someone who satisfies the definition of the employer as per the definition laid down in the Act of one who is made expressly liable to pay compensation shall be responsible to pay the compensation.

3. Employee

The chart is illustrative of the definition of employee as per Section(1)(dd) of the Act. However, the Schedule II of the Act exhaustively defines further those defined as employees under the Act. The definition of employee is far wider than the employer under the Act. The central and state governments have been empowered to add to Schedule II, any class of personnel employed in any occupation, which satisfies the government to be classified as a hazardous occupation. The injuries that fall under such provisions can be expressly defined with limitations. It is important to note that as stated the definition of the term employee is exhaustive as it covers what the definition includes as well as does not include in the definition of an employee.

4. Wages

Section 2(1)(m) defines wages as including any privilege or benefit which is capable of being estimated in money. The definition of wages is important as the amount of compensation lays its entire base on the amount of wages of the employee.

5. Disablement: Partial and total

The Act doesn’t expressly define disablement. It only defines partial and total disablement. These definitions elicit the idea that disablement under the ambit of the Act is the loss of capacity to earn and depending on the nature of injury and percentage of loss of earning capacity, can be expressly defined as partial or total.

6. Compensation

The amount paid by the employer, liable to compensate the employee for loss of earning capacity or incapacitated by the disablement arising out of injury or accident or occupational illness, etc. Or the amount to the dependents of a deceased employee that the employee is liable to pay as defined by Section 2(1)(c) of the Employee Compensation Act, 1923.

Now that the context of the Employee Compensation Act, 1923, is clear with the illustration of the important definitions under the Act. It is now important to understand how the Act relates employer and employee in terms of liabilities and compensation, which will also in turn expressly lay out the main aims and objectives upon which this enactment was brought about.

Liability

Section 3 provides the basis of liability, under three heads:

1. Employer’s liability

When an employee, in the course of his employment incurs a personal injury by an accident arisen while in course of such employment, is bound to compensate by his employer who is liable to offer such compensation to such employee. These compensations should be in accordance with provisions of Sections 3 to 18A of the Act.

However, the employer is not liable to compensate the employee in cases as under:

These defences, however, are not available to the employer in case of the death of the workman, in which case, even though the employee was negligent, the employer is liable to pay full compensation to the dependants of the workman, whose death arose out of and in the course of his employment.

The case related to employer’s liability in case of workman’s death is illustrated as under:

There is sufficient judicial precedent for the liability of the employer for compensation due to death in the course of his employment. To bolster the above two scenarios following was held by the courts in various cases:

1) In the case of the Regional Director, E.S.I. Corporation & Anr. v Francis De Costa & Anr. a Three-Judge Bench of the court held as under; “In the case of Dover Navigation Company Limited v. Isabella Craig 1940 A.C. 190, it was observed by Lord Wright that nothing could be simpler than the words “arising out of and in the course of the employment.” It is clear that there are two conditions to be fulfilled. What arises “in the course of the employment is to be distinguished from what arises “out of the employment.” The former words relate to time conditioned by reference to the man’s service, the latter to causality. Not every accident which occurs to a man during the time when he is on his employment, that is directly or indirectly engaged on what he is employed to do, gives a claim to compensation unless it also arises out of the employment. Hence the section imports a distinction which it does not define. The language is simple and unqualified.

2) It has been held by various High Courts that mere negligence does not disentitle a workman to compensation. Lord Atkin in the case of Harris v. Associated Portland Cement Manufacturers Ltd. observed as under; “Once you have found the work which he is seeking to be within his employment the question of negligence, great or small, is irrelevant and no amount of negligence in doing an employment job can change the workman’s action into a non-employment job … In my opinion, if a workman is doing an act which is within the scope of his employment in a way which is negligent in any degree and is injured by a risk incurred only by that way of doing it he is entitled to compensation.”

On analysis of the above provisions, it is apparent that the employer is liable to pay compensation when:

There is a personal injury caused to the workman;
Such jury is caused by an accident;
The accident has arisen out of and in the course of, his employment.

2. Occupational diseases

Since injuries arising out of accidents are liable to be compensated, it was considered necessary to specify that occupational diseases are to be regarded as injuries arising out of accidents.

An occupational disease is one that arises out of the occupation or employment and is peculiar to that employment. There arises a need to protect the workmen from the risk of contracting such occupational diseases, therefore it is necessary that employers be made liable to compensate for adequate safety of workmen.

For example, there are certain occupations that expose employees to particular diseases that are inherent;

Infra-red radiations;
Skin diseases due to chemical or leather processing units;
Hearing impairment caused by noise;
Lung cancer is caused by asbestos dust and diseases due to the effect of extreme climatic conditions.

Example- Sometimes miners develop lung diseases due to exposure to dust. The people who work in agricultural lands, develop diseases through the spraying of pesticides. These pesticides are toxic in nature and are health hazards to many farmers.

Provided that the employer shall not be liable:

(a) if any injury does not result in the total or partial disablement of the employee for a period exceeding three days;

(b) if any injury does not result in death or permanent total disablement caused by an accident which is directly attributable to;

If the employee is under the influence of drink or drugs at that time,
The willful disobedience of the employee to an order expressly given, or to a rule expressly framed, for the purpose of securing the safety of employees,
The wilful removal by the employee of any safety guard or other devices which he knew to have been provided for the purpose of securing the safety of employees.

Part A of Schedule III

If an employee contracts any disease that is mentioned in occupational diseases or the employee is employed for a continuous period of six months (this does not include the service period) and not less than that, the employer shall not be liable to pay the compensation as the disease will be deemed to be injury and it shall be considered as out of the course of employment.

Part B of Schedule III

Diseases caused by phosphorus or the toxic substance present, all include exposure to risk concerned.
Diseases caused by mercury or toxic substances found exposure to the risk concerned.
Diseases caused by benzene or the toxic substances found which pose risk to the concerned.
Diseases caused by nitro and amino toxic substances of benzene involve risk to the concerned.

These diseases are considered occupational diseases, and they are deemed to be out of the course of employment and therefore the employer will not be liable to pay the compensation.

Part C of Schedule III

If an employee contracts a disease that is mentioned as an occupational disease that is specific to that employment, during a continuous period that is less than the period mentioned under this part of Schedule 3 is known as an occupational disease. It will be deemed that the disease has arisen out of and in the course of the employment, the contracting of such disease will be deemed to be an injury by accident within the meaning of this Section:

Section 3(3)

The Central Government or the State Government gives a notification in the Official Gazette which species the diseases will be deemed to be occupational diseases under the provisions of sub-section(2) and in the case of notification by the state government, these diseases are declared by the Act.

2. Section 3(4)

No compensation will be payable to an employee unless the disease is directly attributable to a specific injury that arises out of or in the course of employment.

3. Bar to claim

Under Section 3(5), a claim for compensation under the Act is barred in lieu of a prior civil suit for damages on account of the injury. Section 3 revokes the right of compensation to a workman in respect of any injury if he has instituted a suit in Civil Court for damages of the injury against the employer or any other person.

The provision for the bar is made against the possibility of double recovery, thus a workman cannot twice claim compensation for the same injury.

Compensation

Section 4 of the Act deals with the amount of compensation. The provisions related to the quantum of compensation can be divided into 4 contingencies as under:

The amount of compensation varies in each case, as demonstrated by the chart below:

The above provisions are subject to two conditions:

From the lump sum or half-monthly payments, one must deduct the amount of any payment of allowance which the employee has received from the employer by way of compensation other than payment for medical treatment, during the period of disablement prior to receipt of such lump sum or do the first half-monthly payment.
No half-monthly payment can, in any case, exceed the amount, if any, by which half the amount of the monthly wages of the employee before the accident exceeds half the amount of such wages which he is earning after the accident.

Cessation of disablement: In case disablement ceases before the half monthly payment is due, payment shall be made proportional to the number of days in the half-monthly cycle.
Funeral expenses: In case of death due to injury, the employer must, apart from the compensation pay Rs. 5000 to the eldest surviving dependant of the deceased, as funeral expenses.
Reimbursement of Medical Expenses: By the amendment of 2009 provision is made for the employee to get full reimbursement of the actual medical expenses incurred by him for the treatment of injuries caused to him during the course of his employment.
Provisions of the Act, not sympathy or generosity will be the determining factor: In Oriental Insurance Co. v. Mohammed, 2002, the Kerala Court held that the provisions of Section 4 will determine the compensation in case of injuries falling in Schedule I. The courts cannot act ignore the statutory mandate and act as benevolent kings; generosity and sympathy cannot be exercised at the expense of others.

Penalty for default

To ensure quick payment of compensation, there are provisions made in Section 4A that ensure compensation should be paid as soon as it is due.

Compensation to be paid when due and penalty for default;

Compensation under Section 4 shall be paid as soon as it falls due.
In cases where the employer does not accept the liability for compensation to the extent claimed, he shall be bound to make provisional payment based on the extent of liability which he accepts, and, such payment shall be deposited with the Commissioner or made to the workman, as the case may be, without prejudice to the right of the workman to make any further claim.
Where any employer is in default in paying the compensation due under this Act within one month from the date it fell due, the Commissioner shall;
Direct that the employer shall, in addition to the amount of the arrears, pay simple interest thereon at the rate of twelve per cent per annum or at such higher rate not exceeding the maximum of the lending rates of any scheduled bank as may be specified by the central government, by notification in the Official Gazette, on the amount due; and
If, in his opinion, there is no justification for the delay, direct that the employer shall, in addition to the amount of the arrears, and interest thereon pays a further sum not exceeding fifty per cent of such amount by way of penalty:

Provided that an order for the payment of penalty shall not be passed under clause (b) without giving a reasonable opportunity to the employer to show cause why it should not be passed.

Explanation: For the purposes of this subsection, “scheduled bank” means a bank for the time being included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934). The interest and the penalty payable under sub-section (3) shall be paid to the workman or his dependant, as the case may be.

Ancillary duties of an employer

To pay compensation for an accident suffered by an employee, in accordance with the Act.
To submit a statement to the Commissioner (within 30 days of receiving the notice) in the prescribed form, giving the circumstances attending the death of a workman as a result of an accident and indicating whether he is liable to deposit any compensation for the same.
To submit an accident report to the Commissioner in the prescribed form within 7 days of the accident, which results in the death of a workman or a serious bodily injury to a workman.
To maintain a notice book in the prescribed format. A place where it is readily accessible to the workman.
To submit an annual return of accidents specifying the number of injuries for which compensation has been paid during the year, the amount of such compensation and other prescribed particulars.

Conclusion

The Employee’s Compensation Act, 1923, formerly known as the Workmen’s Compensation Act, 1923 lays down laws and statutes, as an ad-hoc measure of providing social security to the employees/workmen in case of injury, accident or occupational illness arising in the course of their employment. The Act also covers the dependents of a deceased employee in case of death in the course of employment. The Employee’s Compensation Act, 1923, is applicable in all of India and provides for Compensation with regards to mishaps and the resulting loss of earning capacity arising out of these mishaps to the employee. While in olden days, the employees were solely at the mercy of their employers or master, who exercised their will at their own whims to exercise discretion in terms of compensation to the aggrieved. The Employee’s Compensation Act transcends such ambiguity and uncertainty towards the workmen and provides all-encompassing statutes which expressly define the inclusions and exclusions, parties, compensation, types of injuries and disablement, accident, death, etc. Today, the Act grants a statutory right to the workers to recover compensation for injuries caused by accidents arising out of, and in the course of, their employment. The express object of the Act is to provide for payment by certain classes of employers, to their employees, of compensation for injury by accidents, and to compensate the dependents of the deceased workmen. The Act however doesn’t cover in its scope those employees covered under the Employee State Insurance Act. Subsequently, the Act also says exclusions through various measures, to cover the employer from double recovery, or in case of a civil suit seeking damages, the Act also defines expressly who cannot claim for compensation as a result of their own regressive actions.

It seems that the Act is a recognition of the fact of a mechanised Industrial Age, where the worker can no longer be looked upon as a mere cog in the industrial machinery. The statement of objects and reasons of the Employee Compensation Act, 1923 elicits such aspects as:

“The growing complexity of the industry, with the increasing use of machinery and consequent danger to the employee, along with the comparative poverty of the employee themselves, renders it advisable that they should be protected, as far as possible, from hardships arising out of accidents. This Act provides for cheaper and quicker disposal of Disputes relating to compensation through Special tribunals than was possible under the Civil Law.”

Thus the Act provides for the payment of compensation proportional with the risk an employee undertakes and it would only be fair to say that the object of the Act is to provide social security and to ensure social justice, and it certainly is not to punish the employer, it is thereby not punitive in nature, it only seeks to provide justice for the employee.

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Here’s Everything You Need To Know About Examsnap Microsoft MS-100 Certification Exam

By

Diva Rai

-

August 6, 2021

0

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Are you an experienced professional that would like to certify your skills as a Microsoft 365 Enterprise Administrator? Getting the Microsoft 365 Certified: Enterprise Administrator Expert certification is the best thing you can do. For this, you need to pass two relevant exams, MS-100 and MS-101.

But first things first. And, this article will give you everything you need to know about exam MS-100: Microsoft 365 Identity and Services http://www.exam-labs.com.

Outline of the Examsnap Microsoft 365 Certified: Enterprise Administrator Expert Certification

In more detail, this qualification is a mark of excellence for administrators to showcase their abilities in designing and implementing Microsoft 365 services and security, managing access, authentication, user identity, and roles as well as implementing device services. Concerning salary, according to ZipRecruiter, Microsoft Enterprise Administrators earn an average of $96,679 per annum. Moreover, obtaining this certificate can enhance your employability and possibly raise your earning to $171k if you have sufficient experience.

Meanwhile, as this is an expert-level designation, you will need to certify for one of the associate-level certificates for Microsoft Administrators before passing appropriate exams.

About the Microsoft MS-100 Exam

As you already understand, this exam is for pros that have experience working with Microsoft 365 workloads and Windows as a Service. They will have to confirm it with the help of the MS-100 exam. It is a 40-60 question test with a duration of 120 minutes that is administered by the Pearson VUE platform visit https://www.examlabs.com.

Regarding the syllabus, the main domains tested are management of user roles and identity, implementation of numerous Examsnap Microsoft 365 services, planning of Office 365 apps and workloads, and management of authentication and access. As a result, you will receive a Pass or Fail, depending on whether you can achieve a passing grade of 70% or more.

Exam Preparation Tips

As this is a Microsoft role-based exam, it would certainly help to have prior experience as an administrator to pass. However, if you feel you are weak in any exam areas Microsoft provides self-paced learning paths that cover all exam.

At the same time, the official instructor-led course covers Microsoft 365 service and tenant management, Office 365 management, and Microsoft 365 identity management which are the three main elements of Examsnap Microsoft 365 enterprise administration. As a result, you will gain an in-depth understanding of Microsoft 365 and its product functionality. Furthermore, you will also be taught how to plan for and implement Azure Active Directory Connect and much more.

As a source of training tools, you can also consider the Microsoft Press Store and Amazon sites where you can find reliable study guides for self-preparation. And to consolidate the result, you can use the dumps and maximize your chances of.

Conclusion

So, with an advanced-level certificate such as the Microsoft 365 Certified: Enterprise Administrator Expert, you are guaranteed to attract benefits for your professional path. Yes, this designation is not an easy one. But after completion of the MS-100 accreditation exam, you can use the knowledge and experience you gained to ace the MS-101 test as well.

Vermin u/s 62 of the Wildlife Protection Act, 1972

By

Diva Rai

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August 6, 2021

0

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This article is written by Sonia Shrinivasan, intern of RTI Cell, iPleaders.

Table of Contents

What do we mean by the term ‘vermin’?

The Oxford Dictionary defines vermin as “wild animals which are believed to be harmful to crops, farm animals, or game, or which carry diseases.” Simply putting, these are usually pests and animals harmful to crops and livestock. The term, most commonly used for rodents and insects, is increasingly applied to bigger animals.

What is their legal status?

The statute aiming to protect and preserve animals and wildlife in the country is the Wildlife Protection Act, 1972. The statute enlists detailed provisions for ensuring the flourishing of India’s flora and fauna and generally penalizes the killing of any of the protected animals enlisted under the succeeding schedules of the Act. Interestingly enough, the Act nowhere defines the term ‘vermin’; however, Section 62 of the Act reads as follows:

“The Central Government may, by notification, declare any wild animal other than those specified in Schedule I and Part II of Schedule II to be vermin for any area and for such period as may be specified therein and so long as such notification is in force, such wild animal shall be deemed to have been included in Schedule V.”

Simply put, the inclusion of any animal under the category of vermin legalizes their killing/culling in specified areas for a limited period of time. The request for the declaration of any wild animal as vermin is put forth by the concerned state government before the Central government (Ministry of Environment Forest and Climate Change), accompanied with the reasons for requesting the same. Upon detailed perusal of the species in question, the central government, their population in the said area, reasons for the same, etc., may or may not issue a notification specifying the details regarding the districts and period of time for which the animal would be considered as vermin.

This being said, Section 62 expressly forbids the declaration of animals under Schedule I and part II of Schedule II of the Act. These include animals like blackbucks, snow leopards, Kashmiri stags, etc.- usually those which are expressly declared endangered by the state. Also, it may be noted that such inclusion will not be indefinitely and is strictly subjected to a specified time frame.

Current scenario

Many states have periodically written to the Central government to declare certain animals as vermin, which has received a critical backlash from animal rights activists, politicians, and citizens alike. In 2015, the animals like wild boars, blue bulls, and rhesus macaques had been declared so in Bihar and Himachal Pradesh states, respectively.

Animals like wild boars, blue bulls, monkeys, pigs have already been declared so, at the request of the governments of Gujarat, Kerala, Telangana, Uttarakhand, Maharashtra, and Odisha; the concerned local bodies giving free rein on the culling of such animals over many districts. What is interesting to note is that wild boar- belonging to the II Schedule of the Act; implying that, killing or attacking the animal even for protecting one’s property invokes penal provisions of the Act.

Requests have been made to an extent by states like Goa and Maharashtra to declare India’s National Bird- The Peacock as vermin u/s 62 of the Act; West Bengal requested the declaration of the Great Indian Elephant as vermin under the Act.

Even the Judiciary, at many instances, has refused to stay the government notifications permitting the culling of Blue Bulls and Wild boars in the states of Bihar and Uttarakhand, which challenged the atrocities committed onto these animals under the excuse of these notifications, which have been condemned by the Animal Welfare Board, animal activists and environmentalists at large.

What are the concerns?

Activists and concerned citizens alike have opined time and again about how the spirit and soul of the Wildlife Protection Act, 1972 is to protect and preserve the rich wildlife in the country. Labelling animals as vermin and giving individuals free rein to kill certain animals defeats the spirit and intention of the legislation itself.

The root cause behind the categorization of animals under this heading is human-animal conflict, and eliminating one end of the conflict does not offer a sustainable and ecological solution to treat the problem at hand.

Questions have been raised before the Supreme Court challenging the constitutional validity of S.62 for the above-mentioned reasons, along with it being violative of Article 14, 21 and various provisions of the Directive Principles of State Policy read with the Fundamental Duties Enshrined in the Constitution of India, which require the state to be extremely cautious while enacting laws for formulating and enacting laws for animals and wildlife in general.

The provision fails the test for Article 14, which calls for equal protection of laws for one and all since the wordings of the said section permit the killing of all animals except those belonging to Schedules I & II, without stating the rationale behind such a classification.

As for Article 21, in a much-criticized decision of the Apex Court wherein the scope of Right to life u/a 21 was expanded to apply to animals and humans alike, was subsequently furthered by the High Courts of Uttarakhand and Punjab & Haryana to expressly declare all members of the animal kingdom as legal entities having rights similar to living persons. In light of these rulings, the rights of life and personal liberty apply to all animals and cannot be taken away without due process of law.

Article 48A of the constitution reads as,

“The State shall endeavor to protect and improve the environment and to safeguard the forests and wildlife of the country.”

Article 51(A)(g) reads as under,

“It shall be the duty of every citizen of India to protect and improve the natural environment including forests, lakes, rivers, and wildlife, and to have compassion for living creatures.”

The Supreme Court has laid down that while deciding any ecological issue, the courts should bear in mind specifically Articles 48A and 51(A)(g), and hence, the state and its organs are compulsorily obligated to protect and nurture the environment. When such culling is ordered and pursued by the state, it fails to perform its constitutional duty.

What are the proposed alternatives?

In order to ensure and maintain a harmonious balance between man and animal, minimizing the loss of life and property on both ends, it becomes essential to look for effective alternatives which can be pursued.

According to wildlife experts and activists, along with ensuring the clearing of illegally and forcefully occupied forest land by dwellers, to give wild animals to thrive in their natural surroundings; it is essential to educate the masses, primarily those living in or near forestlands, about animals and their behaviour inform them about precautionary measures and refrain them from indulging in retaliatory killings.

The creation of physical barriers using scientific methods like solar/electric fencing wherein low voltage electric current is used to prevent animals from venturing into private and farmlands, which have been successfully implemented in certain states with the aid of local authorities.

Conclusion

Since it’s equally important to concentrate on both sides of a coin, it would rather be biased and unfair to focus just on the negatives of Section 62 of the Act. Upon an academic and rational analysis of the wordings of the section, it can be inferred that the said section was enacted with the intention to minimize the loss caused to man, his settlements, and most importantly his life, due to increased wild animal attacks, by keeping them at bay, it has managed to fulfil the aim behind its inclusion in the statute. Only when the exercise of this control becomes reckless does this assume a garb of a big, ecological problem, disastrous for the coexistence of man and nature together.

However, it is evident that the government notifications u/s 62 of the Wildlife Protection Act, 1972 are usually loosely worded and more often than contain no scientific basis for the classification; it usually relies singlehandedly on the request of the states, their analyses on, and the amount and nature of the loss thus reported. The lack of a proper procedure in place for scientific methods to identify the species and areas only adds to the long list of problems with the section.

Even those in favour of the provision argue that the lack of a proper grievance redressal system in place for those bearing the loss caused by the intervention of such animals leads to the loss of their livelihood. Even after the notification is passed, the lethargy on the part of bureaucrats and officials involved, giving rise to bureaucratic delays, adds to the woes.

Recent happenings around the country point towards the fact that in its present and already existing form, Section 62 does not necessarily correspond with the spirit of Articles 14 and 21 of the Constitution of India, and questions the already sensitive relationship between man and nature, and challenging our fundamental human values of compassion, empathy, and respect towards other life forms.

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Key legal issues surrounding healthcare M&A in the light of Covid-19 in India

By

Bushra Tungekar

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August 6, 2021

0

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This article is written by Tanya Gupta who is pursuing a Diploma in M&A, Institutional Finance and Investment Laws (PE and VC transactions) from Lawsikho.

Table of Contents

Introduction

Governments across the world are enforcing strict lockdown and social distancing measures due to the Covid-19 crisis deepens and the number of positive cases and casualties continues to mount rapidly. Pandemic plunged the global economy into an unparalleled recession as it mutated into an economic crisis due to all these mergers and acquisitions in India is sniffle, snuffle and sneeze in India in the short term.

There is a change and fundamental shift in M&A Landscape. The healthcare facilities are overburdened with work due to Covid-19 and the economy has been at a standstill. It has been instructed to all the people to stay at their homes and in case of emergency while going outside they should wear masks and carry alcohol sanitiser with them.

The virus with its effect has been spread almost in every country due to which it makes it a global issue. Due to the social distancing concept which has to be maintained due to Covid-19 all the businesses are at a standstill with share markets recording great losses.

What are M&A Transactions?

In M&A transactions, two companies are consolidated through economic transactions by either taking the assets of another company or by combining shares of another company with their own thus increasing the valuation of the company.

The mutual agreement of two equal companies to come together and merge the value of their shares is called a merger. When the parent company takes over the charge of another company and the shares of another company completely cease to exist is called acquisition and the new company or entity which is formed is legally identified.

The type of transaction basically depends on the manner of acquiring the business. In acquisition, the board of directors are removed from their position with immediate actions. In a merger, the board of directors of both the companies mutually work together in the interest of both the companies.

M&A Activity in Healthcare Industry

There is a rise in urgent care M&A activity as 2021 begins. We have seen urgent care systems taking the control of small urgent systems, healthcare companies that do not play a significant role in urgent care mergers and acquisitions and urgent care buying companies that complement their services.

For example, more healthcare clinics are opened by retail chains like Walmart and CVS. Nowadays these urgent care clinics are not just used for urgency but they are also used for giving out vaccines, medicines and even doing annuals.

A merger’s significant goal in the healthcare industry is to lower the expenses while concurrent driving licenses and to make the quality of care better. When your firm is only known for one thing than to stay and run the business is more challenging nowadays. On the other hand, larger firms help the patient and provider pocket by offering more services.

M&A trends triggered by Covid-19

In 2021 and beyond various trends may witness a robust M&A market. Firstly, we can expect more megadeals from pharma companies while they acquire early phase products and private equity acquisitions. Scale and access to newer markets would be proven as a considerable benefit for larger companies.

As it is a situation of pandemic corporate remained to focus on strengthening positions, investing in scale and the sectors which are powered by technology and healthcare should be continued. In the pandemic, the situation scale is very significant and it is also proven that in order to survive you have to be large.

In 2021 M&A volume was contributed by private equity firms meaningfully. In 2020 M&A sponsored backed transaction comprises 26% per cent of M&A activity In fact by the end of 2020 financial sponsors have a record of 2.9 billion trillions of capital. Last year it is evident that many private equity funds investing across the capital to provide the companies with much more cash in these challenging times.

M&A transactions impacted by Covid-19

The most significant impact of covid-19 is a worldwide recession. The Recession means an increase in unemployment, lack of demand in the market, low money supply and other negative effects. The current scenario is that the company can determine the ratio of their incomes to their expenditure. The positive ratio is able to make the company quality transaction and the negative ratio is able to mitigate the losses by taking precautionary measures.

The followings are some of the ways in which M&A Transactions would be impacted which are as follows:

Material Adverse Change (MAC) Clauses

Due to the pandemic situation, the focus is more on the documentation process of M&A translation and on the termination clause while again thinking about the continuation of the M&A deal.The material adverse change clause provides the opportunity for the stakeholder to walk away from the ongoing transaction. This clause is basically given in the purchase agreement.

The Material Adverse Change clause provides the opportunity to the purchaser to terminate the ongoing deal when there is a material adverse change in the seller’s company. It is a tedious task in itself to negotiate in this clause on the materiality of the event. Even the courts in our country have failed to provide any guidelines on the materiality event and given the opinion that any event which makes it impossible or restricted the party is considered as a material adverse change clause.

This clause is enumerated in Section 56 of the Indian Contract Act, where the doctrine of frustration provides that the contract becomes void when the promisor due to an act after the contract is made can’t prevent an event.

Due to Covid-19, the problem for the sellers is to negotiate to include narrower terms in MAC Clause and for the buyers to include the lockdowns, epidemic, closure of territorial boundaries to be included in the agreement.

A party seeking to invoke the MAC clause should check if there is an alternative which they are left with. If there is any other alternative then that should be their first priority. It is the duty of the parties to balance between the termination clause and the agreed term of performance.

Earlier epidemics and other public health events were not included in this definition but nowadays these are the most important terms that were included in the contract and in future contracts.

For Example: If the completion of the agreement is based on the investors that if during the due diligence process of the seller’s company they reveal any fact or event which materially or adversely affecting the company then the buyer has the option to terminate the deal and walk away.

Force Majeure Clause

Due to Covid-19, there has been an economic crisis all over the world. Parties of the contract are not being able to perform the obligation of the contract that constitute essential services due to which serious questions arise owing to the ability of the parties.

The restriction has been imposed by the ministry of health and state governments on the movement of goods and persons due to which suspicion has been aroused for the performance of the terms and breach of contract is there.

This clause means any event which cannot be controlled. These events include both acts of nature and acts of people. This clause is negotiated to include war, terrorism, god, riots, government Force majeure clause includes both artificial and natural events with specific prescription and on the other in the force majeure clause events are not prescribed.

The affected parties are released from the contract when the force majeure clause arises. In the Indian Contract Act, 1872 there are two provisions that are related to the Act of God and the force majeure clause.

Section 56 of the Act provides that contract becomes void if it becomes impossible by happening of the event if the promiser couldn’t prevent. It explains the doctrine of frustration which means an act that is beyond one’s control which makes the performance of the contract impossible.

It is challenging for the parties to invoke the clause during the Covid-19 pandemic to get relieved from the performance of the contract as the event should have a direct impact on non-performance and also the party should search for alternate means of performance.

The question arises whether covid-19 have a direct impact on non-performance of a contractual obligation or is the steps taken by the government by imposing lockdown which restrict the movement of goods and services

For example: Suppose delivery prices to the customers suddenly go up due to new government legislation. This force majeure that is an unexpected situation means you don’t need to deliver the goods at the fixed price anymore then you have the right to negotiate the new prices.

Representation and Warranties

The Preliminary negotiating clause by the seller is representation and Warranties. The need of this clause in the M&A agreement is to protect the losses which arise due to the seller breach of representation in the agreement.

The risk which emerges from the pandemic the purchaser would assess them and seek warranties for it. The buyers to secure price adjustments have an edge to additional incentive to push for a holdback of price along with payment of indemnity claims.

The buyers are free to walk away from the deal if they believe that representations and warranties are untrue in the agreement.

At last, the most diligently negotiated contract due to a pandemic is insurance. Many exclusion clauses have been brought into place as well as insurance companies seek to indemnify the losses Such exclusion clauses helps to recover every loss arising due to covid-19 and the scope of such clauses is limited by negotiation.

Ordinary Course of Business and Time between Signing and Closing of the Deal

Covenants and undertakings are present in the draft of the M & A agreement which mandates the target company to continue in the “ordinary course of business” signifying the business to operate on a day to day basis to preserve the value of the target business. The compensation of employees is not changed or terminated or to make the capital expenditure only with the permission of the buyer, pledge assets outside the normal course of business are the terms which are included in the covenants.

Due to covid-19 even in covenants, some exceptions need to be included which enables the target company to execute the business and due to adhering to the government some actions need to be taken by the companies which would prove outside the ordinary course of business which may be in the best interest of the company.

Conclusion

The Merger is the mutual agreement of both the companies of coming together through economic transactions on the other hand acquisition involves the company taking over of another company through taking over the assets replacing the board of directors of another company.

The M&A transactions are the type of contract which consolidate or combine two or more companies. In both cases, a single entity is formed which are independent and legally recognized in the corporate world.

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An analysis of the Madhya Pradesh Freedom of Religion Act, 2021

By

Bushra Tungekar

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August 6, 2021

0

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This article is written by Gyaaneshwar Joshi, a student of the Faculty of Law, Jamia Millia Islamia, New Delhi. This article discusses the provisions and controversies related to the MP Freedom of Religion Act.

Table of Contents

Introduction

The Governor of Madhya Pradesh promulgated the Madhya Pradesh Freedom of Religion Ordinance on 7 January 2021, which after being notified by the State Government on 27 March 2021 became the Madhya Pradesh Freedom of Religion Act, 2021 (the Act). The main purpose of the Act is to restrain any kind of forceful and illegal religious conversions done by religious organizations or extremist groups. The Act also declares any marriage done solely for religious conversions as null and void, and mandates to provide maintenance to the wife and children.

The Madhya Pradesh Freedom of Religion Act, 2021

The objective of the Act is to:

Penalize religious conversions through fraudulent means, especially those done for the sake of marriage.
Declare marriages performed with the intent to convert any person as null and void.
Introduce long-term imprisonments and hefty fines for violators.
Add provisions to support wife and children.
Mandate religious priests to inform the authority before organizing any conversion ceremony.

The Preamble of the Act reads:

“An Act to provide freedom of religion by prohibiting conversion from one religion to another by misrepresentation, allurement, use of threat or force, undue influence, coercion, marriage or any fraudulent means and for the matters connected therewith or incidental thereto.”

This Act is divided into 18 sections. The key provisions in the Act are as follows:

SECTION 3: Prohibition of unlawful conversion from one religion to another

Any conversion through misrepresentation, allurement, force, undue influence, coercion, marriage, or any other fraudulent means, shall be considered null and void. Also, abetment and conspiracy for religious conversion shall be prohibited.

SECTION 4: Complaint against the unlawful conversion of religion

A written complaint can be filed to the local police station by a person who has been unlawfully converted, or the parents and siblings can also file a complaint on behalf of the victim. The ‘guardian’ or ‘custodian’ can approach the court with their complaint and get an order for an offence to be registered with the police.

SECTION 5: Punishments for contravention of Section 3

Whoever converts or attempts to convert any person through misrepresentation, allurement, force, undue influence, coercion, marriage or any other fraudulent means is liable for a punishment of 1 to 5 years imprisonment with a minimum fine of Rs. 25,000.
Whoever indulged in illegal conversions of members of Scheduled Castes, Scheduled Tribes, and minors is liable for a punishment of 2 to 10 years imprisonment with a minimum fine of Rs. 50,000.
Whoever intentionally conceals their religion while solemnizing the marriage to the person of another religion is liable for imprisonment of 3 to 10 years and a minimum fine of Rs. 50,000.
In the cancelled case of mass conversion, that is. conversion of two or more persons at the same time shall be punished with 5 to 10 years imprisonment and a minimum fine of Rs. 1 lakh.
If the offence is committed for a second time or in case of a subsequent offence, the imprisonment shall be of 5 to 10 years with a fine.

SECTION 6: Legality of marriage performed with the intent to convert a person

Any marriage solemnized in contravention of Section 3 shall be considered null and void.

SECTION 7: Jurisdiction of Court

A person filing a petition to declare a marriage null and void, or in a case under Section 4, if any sibling, parents, or person who is related by blood, marriage, or adoption is filing on the victim’s behalf, shall be mandatory present before the Family court, or the court having jurisdiction within the local limits where;

The marriage was solemnized
The petitioner who is filing a petition resides
Any of the party to the marriage resides
Petitioner resides on the date of presentation of the petition.

SECTION 8: Inheritance Right

A child born out to the victim woman shall be considered ‘legitimate’ even after the marriage is declared void. Any woman whose marriage is declared null and void under Section 6, her children are entitled to receive maintenance and inherit the father’s property, according to law governing the inheritance of the father.

SECTION 9: Right to Maintenance

Any woman whose marriage is declared null and void under Section 7 is entitled to receive maintenance as provided under Section 125 of the Criminal Procedure Code, 1973.

SECTION 10: Declaration before conversion of religion

Any person willing to convert needs to apply to the District Magistrate 60 days in advance and shall submit a declaration stating that person wants to undergo a religious conversion of their own free will and without any force, coercion, undue influence, and allurement. Also, the religious leaders facilitating the conversion will have to inform the District Magistrate 60 days before the intended date of conversion.

SECTION 11: Punishment for violation of Section 10

Any institution and organization that violates any provisions of the Act or any person connected to such organization and institution shall be liable for punishment as provided under section 3.

The registration of an institution or organization that indulges in promoting or doing conversions will get canceled by the Competent Authority.

SECTION 12: Burden of Proof

The burden of proving innocence lies on the accused. The guilty person has to prove that conversion was not done through misrepresentation, allurement, use of threat or force, undue influence, coercion, or any other fraudulent means.

SECTION 13: Category of offence

Every offence committed under the Act shall be cognizable, non-bailable, and tried by the Court of Session.

SECTION 14: Investigation of offence

The investigation shall only be done by the police officer not lower than the Sub-Inspector rank at the local police station.

The need to repeal the Madhya Pradesh Dharma Swatantrya Adhiniyam, 1968

The Act repealed the Madhya Pradesh Dharma Swatantrya Adhiniyam, 1968. The State Government said that earlier legislation did not effectively handle the skyrocketed cases of forceful conversions in the state.

Each offence was ‘bailable’ in the previous Act, therefore acquiring bail was an easy task, but now all the offences are non-bailable with long-term imprisonments. Similarly, several provisions like the inheritance right of a child on the father’s property and the right to maintenance are now added, which were absent in the previous Act.

Right to Religion versus Right to Convert

Article 25(1) of the Indian Constitution empowers every Indian citizen to freely practice, profess and propagate one’s religion within the prescribed limits of the law. The Supreme Court in the judgment of Digyadarsan Rajendra Ramdassji v. State of Andhra Pradesh (1969) decided that the right to propagate one’s religion means a right to communicate a person’s belief to another person or to expose tenets of that faith, and does not include the right to ‘convert’ any person to the former’s faith. Therefore, the right to convert is exempted and does not enjoy legal protection under the right to freedom of religion enshrined in the constitution.

This judgment was later challenged in Rev Stanislaus v. State of Madhya Pradesh (1977) which discussed the issue of whether the fundamental right to practice and propagate religion includes the right to convert.

The Court held that Article 25(1) provides freedom of conscience to every citizen, but purposely converting another person to one’s religion in the pretext of spreading the tenets of that religion, infringes the essence of ‘freedom to conscience’ guaranteed by the constitution. Therefore, if a person wants to adopt any other religion, valid reasons must be produced for such conversion which shall be accompanied by free will.

Controversies

A bunch of Public Interest Litigations have been filed by the religious organizations and law students, in both the Supreme Court and the High Court of Madhya Pradesh. However, the Supreme Court refused to entertain a PIL filed against the ordinance and asked the petitioners to first approach the Madhya Pradesh High Court for getting the views of the High Court regarding this matter.

A PIL was filed before the Madhya Pradesh High Court to challenge the ordinance on the grounds of being violative of Articles 14, 19, 21, and 25 of the Constitution. The petitioner submitted that ordinance was abruptly passed by the State Government without any formal consultations and suggestions and in the absence of requisite data of forced conversions happened in the state, which is a gross violation of the principle of ‘due process of law’ and reflects the abuse of legislative powers.

The ordinance was also challenged on the ground of being violative of the ‘right to privacy’ held by the Supreme Court in the KS Puttaswamy v. Union of India (2017) judgment. This judgment defines the term ‘privacy’ in which every citizen has the right to be left alone and make their own decision about family life, marriage, procreation, etc.

Whereas, a mandatory approval from the District Magistrate before any religious conversion for solemnizing interfaith marriage violates the right of privacy enshrined under Article 21 of the Constitution.

One of the petitioners stated that the proposed ordinance negates the concept of ‘transformative constitutionalism’ and can be used to target a particular religion or group that could lead to promoting hate, divisiveness and schism in society. The arbitrariness of Section 10(3) was challenged on the ground that it does not prescribe the required time for the District Magistrate to acknowledge the reply of the notice, which may result in unnecessary harassment of an innocent person and his family members.

The session court is empowered to hear matters registered under the Act, whereas Section 12 provides that the burden of proving innocence lies wholly on the accused, which means a person will be assumed guilty until proven innocent. A PIL was filed against this provision for violating the fundamental principles of criminal jurisprudence which mandates that – every person is innocent of any offence until proven guilty. This PIL was backed by the judgment of Shakti Vahini v. Union of India (2018) where the Supreme Court stated that the burden of proof can be reversed only in matters where some foundational facts are proved by the prosecution.

Similarities with the Prohibition of Unlawful Conversion of Religion Ordinance, 2020

Both the Madhya Pradesh Freedom of Religion Act, 2021 and UP’s Prohibition of Unlawful Conversion of Religion Ordinance, 2020 show resemblance in many of the provisions and both have declared marriages solemnized for unlawful religious conversions as null and void, and contain a similar imprisonment term for 2 to 10 years.

However, there are certain provisions like inheritance of father’s property and providing maintenance to the family which is absent in UP’s Ordinance, thus making Madhya Pradesh’s Act the most stringent law against religious conversions in the country.

In both states, an organization or priest needs to apply to the district administration 60 days in advance of the religious conversion ceremony taking place. Failing to comply with the rules can cancel the registration of the organization and the priest facilitating the conversion can be sentenced to imprisonment as per rules mentioned under Section 5 of the Act.

A strong deterrent towards better development

Three Indian states have implemented anti-conversion laws that outlaw marriages done solely for religious conversions, while recently Madhya Pradesh was added to this list followed by Uttar Pradesh and Himachal Pradesh. Some state governments have expressed their desire to adopt similar kinds of rules to prevent the illegal practices of forceful conversions, or at least to declare marriages that specifically took place for conversions as null and void.

The anti-conversion laws can be beneficial to restrain unlawful marriages solemnized only for conversions. The strict rules in the provisions of the Act can be beneficial to curtail unlawful conversions and to instil fear in the mind of the offender to stop enforcing personal religious beliefs on another person.

Religious acts are always deterrent to crimes and never made to target any particular religion, but they are made to properly execute the principles of ‘right to freedom of religion’, which is the basic fundamental and human right of every citizen.

Judicial role with respect to marriage and religion in India

A.S. Narayana v. State of Andhra Pradesh (1996)

The Supreme Court held that the word ‘religion’ under Articles 25 & 26 of the Constitution is personal to each individual, who is having faith and belief in his/her religion.

Rev Stanislaus v. State of Madhya Pradesh (1977)

The court clarified the term ‘right to convert’ in the context of the fundamental right to practice & propagate religion as defined under Article 25 of the Constitution. The court held that the right to propagate one’s religion does not allow anyone to ‘forcibly’ convert any person to one’s religion.

Shafin Jahan v. Ashoka KM (2018)

The Supreme Court held that the matters of dress, food, idea or ideology, love, and partnership are central aspects of one’s identity, and neither the state nor law can dictate a choice of partners to limit the free ability of every person to decide on these matters. This judgment allowed the “Right to choose a partner of your choice” as a fundamental right of every citizen.

Conclusion

The Madhya Pradesh Chief Minister, Shivraj Singh Chauhan said the law will generate a leeway to Beti Bachao’s campaign and does restrict only forceful conversions because the provisions in the new Act allow for lawful conversion that can be done by informing the District Magistrate.

Since the law came into force, it has been severely criticized by the opposition party and several legal activists for violating certain fundamental rights. However, the state government still needs to work on some of the provisions because the proviso is missing in the new Act that will listen to any person restrained by the ‘sufficient cause’ while discharging lawful duty in compliance with the Act.

References

https://www.livelaw.in/news-updates/madhya-pradesh-freedom-of-religion-act-2020-madhya-pradesh-government-notification-171971?infinitescroll=1

https://indianexpress.com/article/explained/religion-conversion-bill-bjp-7129285/

https://www.livelaw.in/news-updates/madhya-pradesh-high-court-religious-conversion-ordinance-168394?infinitescroll=1

https://www.tribuneindia.com/news/nation/love-jihad-sc-refuses-to-entertain-pil-against-mp-law-on-religious-conversions-214753

https://www.hindustantimes.com/india-news/madhya-pradesh-conversion-law-tougher-than-up-s/story-6p45HbHvS3gSfa5IOQPR4I.html

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Ujjwal Kumar v. Chief Election Commissioner & Ors : case analysis

By

Sneha Mahawar

-

August 6, 2021

0

This article is written by Raslin Saluja, from KIIT School of Law, Bhubaneswar. This is an exhaustive article analysing the hypertechnical errors by the returning officer in the nomination application in the case of Ujjwal Kumar v. Chief Election Commissioner & Ors.

Table of Contents

Introduction

The Election Commission of India is a constitutional body empowered to conduct the state and union elections to Lok Sabha, Rajya Sabha, State Legislative Assemblies in India, and the offices of the President and Vice President in the country. Their decision can be challenged by way of petitions before the high courts and the Supreme Court subject to certain provisions which restrict this judicial intervention once the election process has begun. The only remedy here is by way of an election petition to get the results of the election reviewed by the judiciary. In the present case of Ujjwal Kumar v. Chief Election Commissioner & Ors (2021), the writ jurisdiction of the Court was invoked based on the hypertechnical error made upon the checking of the nomination application which has been dealt with elaborately under the following subheads.

Brief facts of the case

The petitioner, Mr. Ujjwal Kumar, had applied for the nomination of a candidate for Trinamool Congress in the election for the Assembly Constituencies from Jaipur constituency in Purulia district but his application was rejected by the Election Commission (EC) citing an error in his affidavit. The returning officer rejected the nomination citing the reasons as the blank left in the third dependent column and no mention on whether any dues are left pending over a government accommodation. Aggrieved by this decision of the Election Commission, Kumar moved to the Calcutta High Court under Article 226 of the Indian Constitution on 11th March 2021 via video conferencing.

The contention of the petitioner

The counsel appearing for the petitioner argued on the following grounds:

That the grounds assigned for the rejection of the nomination of the candidature in the checklist of documents were bad in law.
That the column that has been alleged to have not been filled up by the petitioner is not applicable in the first place as it pertains to the third dependent of the electoral candidate.
Relying on the concerned form and proforma, it is evident that the question of the third dependant would only arise when dependant nos.1 and 2 are mentioned.
That the petitioner has already in his application disclosed that he has no dependant at all, therefore there is no question of naming any third dependant.
That according to Section 36(5) of the Representation of Peoples Act, 1951, the rejection of the nomination candidature by the returning officer shall not be on any grounds of defect which are not of substantial characters such as an interruption by riot or open violence or situation beyond the control.
That the ground was far from being substantial rather the non-mention of the third dependant was rather redundant and does not qualify as a defect in its true sense.
That no opportunity to present was given to the petitioner in contravention to Section 36(5) of the Representation of Peoples Act, 1951. The mentioned Section provides that the candidate must be allowed time to rebut at least one day after the date of scrutiny.
That no reason was furnished in the document uploaded on the official website for rejecting the nomination candidature of the petitioner, which is contrary to law.
The other defect that was pointed out by the officer scrutinizing the nomination application was leaving vacant the column of declaration as to the address of petitioner’s government accommodation and any dues that remain payable. However, it is not applicable to the petitioner as the petitioner does not have any government accommodation and therefore the fulfillment of such conditions is hyper-technical in nature.
Further, the petitioner still submitted a corrected form to the concerned officer the very next day, which was however not considered.
That the service of copies of the writ petition and on mention of the matter being taken out of turn, the respondents did not appear.

Reasoning and decision of the Court

After the submissions of the contentions from the counsel for the petitioner, the Court went on to dispose of the matter ex parte considering the extreme urgency of the matter since the very next day was the last date for withdrawal of candidature. The Court referred to the relevant documents cited by the counsel and observed that the defects as pointed out by the concerned authorities were not of substantial nature and were not defects in a true sense since the columns left blank were not applicable to the petitioner as has been disclosed. Further, the right of hearing in pursuance of Section 36(5) of the Representation of Peoples Act, 1951 ought to have been given to the petitioner.

The Court set aside the impugned rejection, which was uploaded on the official government website, for being contrary to the law. It directed the respondents to permit the petitioner in the oncoming elections and consider the nomination application and attached affidavit as valid and in accordance with the law. Further, it stated that the respondents are to act based on this communication and not insist on producing a prior production of a certified copy.

Appeal

Upon receiving the order of the Single Judge for considering the petitioner’s application, the respondents (now appellants) filed for an intra-court appeal challenging the aforementioned decision. The appeal was primarily based on the plea that the order was given by the Single Judge on the face of the bar on the courts from interfering in electoral matters of either House of Parliament or to the House, or either House of the Legislature of a State which is imposed under Article 329(b) of the Constitution of India. Further, the impugned order in this appeal was issued without notice to the statutory authorities involved under the Representation of Peoples Act, including the concerned returning officer.

In support of the appeal, the case of Mohinder Singh Gill and another v. The Chief Election Commissioner, New Delhi & others (1978) was referred. Herein, the appellant and the third respondent were candidates for election in the Parliamentary constituency. It was alleged by the appellant that at the final hour of counting when it seemed as he had won the election, mob violence broke out at the instance of respondent no.3, and certain postal ballots papers and ballot boxes were all destroyed which led to the postponing of result declaration by the returning officer. Thus, the poll was cancelled and a re-poll was ordered in the entire constituency. A petition was then filed under Article 226 alleging the cancellation of the poll as arbitrary and violative of a vestige of fairness. The respondents urged that the High Court has no jurisdiction to entertain the writ petition in view of Article 329(b) and the Commission’s action was within the powers under Articles 324 and 273. To that end, the HC dismissed the petition.

It was held that the catch-all jurisdiction under Article 226 cannot consider the correctness, legality, or otherwise of the direction for cancellation integrated with the repoll. Article 329(b) imposes a blanket ban on the litigation challenge to electoral steps taken by the Election Commission. That the sole remedy for anyone who wants to challenge any election is an election petition. Other remedies are excluded due to the non-obstante clause used in Article 329(b). Part XV of the Constitution in itself covers the whole mechanism for the conduct of elections. Thus, these provisions read with the Act speak substantially the same language and form an integral scheme.

Moreover, paragraphs 28 and 30 of the case of the Election Commission of India v. Ashok Kumar (2000) were specifically referred to which stated that election disputes are not like other private civil disputes just between two parties since the stakes of the whole constituency are on trial. Extreme approaches need to be avoided in the determination of the fate of the constituency and the citizens in general. It has been held earlier by the Constitution Benches that the RP Act only provides for one remedy being an election petition which is to be presented after the election is over and not in any intermediate stage. The extent of Article 329(b) which has an overriding effect over Article 226 depends on the non-obstante clause which pushes out Article 226 in the case where dispute takes place in the form of calling in question an election.

While the respondents, in this case, argued that seeking judicial review in relation to the noted defects in the nomination application and the resultant decision will not amount to interrupting, obstructing, or protracting the election proceedings when any related question is raised before the decided time for withdrawal of the nominations. Further, there was no substantial defect in relation to the concerned material papers of the writ petition.

Decision-based on analysis of the error

The Court then examined Section 36(4) and Section 100(1)(c) of the Representation of Peoples Act and noted that the election process entails a stage of scrutinizing the nomination papers whose results are available for adjudication as per Section 100(1)(c). To that end, under Section 100(1)(c), the ground for improper rejection of nomination is void in the present case. Similarly, under Section 36(4), the returning officer shall not reject any nomination paper based on defects that are not of substantial nature. Correlating improper rejection and defect, not of substantial nature would favour keeping the issue open for consideration of the election petition. Both these grounds essentially form mixed questions of facts and law and can easily be understood comprehensively under Chapter III in Part VI of the Act. The Court said “such questions are not to be decided by writ court merely as if it is a jurisdictional issue or an issue of law only”

The Court then relied on the case of N.P. Ponnuswami Vs. Returning Officer, Namakkal Constituency, Namakkal, Salem Dist. & others (1952), and on Manda Jaganath Vs. K.S. Rathnam and others (2004) wherein it was quoted that “The law of elections in India does not contemplate that there should be two attacks on matters connected with election proceedings, one while they are going on by invoking the extraordinary jurisdiction of the High Court under Article. 226 of the Constitution (the ordinary jurisdiction of the Courts having been expressly excluded) and another after they have been completed by means of an election petition.”

Based on such views, the Court held that the possible erroneous actions of the returning officer which can be considered as amenable for correction in the writ jurisdiction will need to have the effects of obstructing/interfering with the free flow of the scheduled election or hinder the progress of the election. Thus, the Court under Article 226 cannot interfere with the orders of the returning officer if the conduct of the election is not hindered by the alleged erroneous order and the remedy for it lies in the election petition considering the progress of the election.

Thus, the order of the Single Judge was set aside and the appeal succeeded.

Conclusion

Thereafter the aggrieved candidate decided to move to Supreme Court after the decision of the Single Judge was set aside by the Division Bench. The petitioner filed a special leave to appeal before the Supreme Court through video conferencing on 25th March 2021 and the Court ordered to list the matter after the Holi holidays. Later on 9th April 2021, the Court dismissed the special leave petition as the petitioner prayed for withdrawal of the petition with liberty to seek remedy in accordance with the law.

References

https://timesofindia.indiatimes.com/city/kolkata/hc-reverses-ec-decision-to-reject-trinamool-candidate-from-joypur/articleshow/81456677.cms

https://www.latestlaws.com/latest-news/hc-sets-aside-order-of-election-commission-regarding-rejection-of-trinamool-congress-candidate-s-nomination-read-order/

https://www.aninews.in/news/national/general-news/wb-polls-calcutta-hc-permits-tmcs-ujjwal-kumar-to-contest-from-joypur-sets-aside-ecs-decision20210311221555/

https://indianexpress.com/article/cities/kolkata/hc-overturns-ec-order-rejecting-nomination/

https://www.livelaw.in/news-updates/wb-assembly-polls-2021-calcutta-high-court-set-aside-election-commissions-rejection-of-trinamool-congress-candidates-nomination-171080?infinitescroll=1

https://www.barandbench.com/news/litigation/west-bengal-assembly-elections-calcutta-high-court-sets-aside-returning-officer-order-rejecting-nomination-ujjwal-kumar

https://indianexpress.com/elections/calcutta-hc-sets-aside-election-commissions-decision-of-rejecting-tmc-candidates-nomination-7224252/

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Introduction

An overview of International Law

Components of International Law

The States

International organizations

Role of the individuals

Sources of International Law

Treaties

Customs

The International Law Commission

General principles of law

The link between National and International Law

Dualism

Monism

Hersch Lauterpacht’s views on monism

Hans Kelsen’s views on monism

Consent theory

Dionisio Anzilotti and Heinrich Triepel’s views

Case laws

Lagrand case (2001)

Anglo-Norwegian fisheries case (1951)

Bosnian genocide case (1996)

Corfu Channel case (1949)

Kulbhushan Jadhav case (2019)

Conclusion

References

Introduction

Merger control regime

Merger: Definition

Definition of control

Positive and negative sole control

Positive and negative joint control

Joint ventures

Merger control in Hungary

Regulatory framework

Filing for merger

Thresholds

Exemptions

Temporary change of control

Specific transactions

Regulatory proceedings

Notification procedure

What is gun jumping?

Budapest Bank Case

Instances of prohibited transactions

Conclusion

References

Introduction

What is a ship repair contract?

What is a major ship repair contract?

What is a minor ship repair contract?

What clauses ‘must’ be included in a ship repair contract?

1. Owners’ work

2. Delivery, redelivery, and acceptance of the vessel

Delivery

Contractors’ cancellation

Owners’ cancellation

Redelivery

3. Financial provisions

Price

Payment

Title to the vessel

4. Liquidated damages for delay

5. Liabilities and indemnities

Liability for loss or damage

Liability for death or personal injury

Third parties

6. Limitation of liability

7. Guarantee

8. Disruptions

9. Termination

Contractors’ default

Owners’ default

Deemed insolvency

10. Insurance

Contractors’ insurances

Owners’ insurances

Case laws relevant to ship repair contracts

Federated States of Micronesia v MT HL Achiever (I) (30 August 1995)

Donald Pickering & Sons Enterprises Ltd v Karim’s Ltd (6 February 1997)