All you need to know about assessing damages for breach of contract

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August 5, 2021

This article is written by Aakriti Bansal who is pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from Lawsikho.

Table of Contents

Introduction

With the rapid increase in corporate and commercial transactions in our growing economy and other allied areas, contracts have assumed increased importance. It is nonetheless inevitable that with contracts governing almost all forms of transactions and other relations between parties, the disputes arising out of them have also increased.

In situations wherein the Parties fail to honour the obligations set forth in the contract governing their relation, it is essential to evaluate the resources and remedies available in such situations. One such recourse provided under law is that of Damages in lieu of breach of a contract.

Damages have to be determined keeping in mind a lot of factors, thus this article will aim to systematically list down all the key factors to be kept in mind while assessing damages and will critically examine the same through the help of statutory provisions, case laws and illustrations.

Breach of contract and statutory provisions

Taking the aspect of breach of contract under consideration, the very foremost essential for breach of contract to happen is the existence of a valid contract.

A contract is an agreement that binds parties and obligates them to perform certain specified tasks as envisaged in the agreement between them. The term contract is defined in the Indian Contract Act, 1872 under Section 2(h) as “An agreement which is enforceable by law”.

From the definition it is clear when the agreement becomes enforceable by law, it transforms into a contract, creating legal obligations for the parties. There are certain essential defined under the Indian Contract, 1872 which need to be met in order for a contract to qualify as a valid contract. Some of these conditions are offer and acceptance, the intention of parties to create a legal obligation, consideration, and consensus among other essentials.

Section 39 of the Indian Contract Act, 1872 gives out the concept of “breach of contract”. Although this Section doesn’t use the term breach of contract, yet the conditions set out form the basis of a breach of contract.

According to this Section, breach of contract happens when the party to a contract refuses or has failed or omits or disables himself, to perform his part of the promise as set out in the contract between the parties.

This may put an end to the contract unless the breaching party signifies on words or conducts his acquiescence in continuing to perform his obligations. It is basically a violation of the contract terms when one party fails to fulfil its promises.

Example:

A enters into an agreement with B to deliver certain goods to B within a period of 20 days, starting from the date of execution of the agreement. A fails to deliver these goods to B. There is a breach of contract on part of A.

A breach can be of various types, from material breach of contract wherein the breach is so grave in nature that it dishonours the entire purpose of the contract; to an actual breach of contract wherein, the party fully refuses to perform its part of the promise or an anticipatory breach of contract, wherein from the conduct of one party, its intention of non-performance can be clearly made out. Section 73 of the Indian Contract, 1872, further lays the provision for governing breach of contract; this is discussed in the next part of this article.

Remedies available in case of breach of contract

“Ubi jus, ibi remedium”, meaning that where there is a right there is a remedy. Thus, since a contract creates some rights in favour of the parties, in case of a breach there is always a remedy available.

There can be numerous remedies available in case of a breach of contract, depending upon the nature of the contract, the surrounding circumstances and the intention and position of parties. Some of these remedies are an award for damages, specific performance, restitution, and rescission, injunctions.

The Indian Contract Act, 1872, along with the Specific Relief Act, 1963, provides for various remedies in case of breach of contract:

Damages

This implies that compensation in monetary terms is provided by the breaching party to the party who has suffered loss or injury on account of the breach. Section 73 and Section 74 of the Indian Contract Act, 1872 lays down the provisions relating to the same.

Restitution

Restitution is a remedy that is used to restore the status quo of the injured party to the contract in a position before the contract or as if the contract never happened. For example, the breaching party can be directed to return the property of the injured party on account of the breach.

Rescission

Rescission happens when a contract is terminated on the order of the court. This remedy comes into the picture when the consent to contract is obtained via fraud or undue influence and the contract terms are detrimental to one party in such a case and it would only be justified to rescind the contract.

Specific performance

When monetary damages are not adequate to compensate the injured party, the court could direct specific performance of the contract under dispute. It basically means that the court could direct the breaching party to specifically perform his promise or some part of it. The provisions for the same are laid down in the Specific Relief Act, 1963.

Injunction

Injunction basically implies a restraint from breaching the contract by the other party. It is basically in the form of a court direction.

What are damages and their kinds

The term damages is not defined per se defined under the Indian Contract Act, 1872. However, in a common general sense, damages mean an award in terms of money to be paid by the breaching party to the injured party as compensation for the loss that it suffered on account of the breaching party’s default of the terms and conditions of the contract.

In the case of Common Cause v. Union of India, the Supreme Court of India, emphasized on the definition of Damages as, “Damages are the pecuniary compensation, obtainable by success in an action, for a wrong which is either a tort or a breach of contract, the compensation being in the form of a lump sum which is awarded unconditionally”.

There are three basic essential of damages that were pointed out by the Supreme Court in the case of Organo Chemical Industries v. Union of India;

The detriment caused to one party by the wrongdoing or not doing of another;
Reparation to be awarded to the injured party through the legal remedies; and
Determination of quantum on the basis of pecuniary compensation for the loss suffered and punitive addition as a deterrent.

Consequences of breach of contract

Section 73 to 75 of the India Contract Act, 1872, layout the provisions for consequences of breach of contract and for an award of Damages.

Compensation for damage due to breach of contract (Section 73)

When one party breaches the contract and another party suffers the consequences of such a breach, then the injured party is entitled to compensation. The compensation will not be given for any remote or indirect damage.

Example: A contracts with B, to buy an exclusive car for 5 crores rupees from B, on delivery of the car, B fails to make the payment, B is entitled to compensation.

Compensation for breach of contract where penalty stipulated (Section 74)

It might be possible that in some cases, the amount of compensation is envisaged under a clause in the contract itself, in case of a breach of contract. In such cases, the compensation should be paid which is not exceeding the amount already stipulated in the contract.

Example: X contracts with Y to supply lentils to Y on an agreed amount, in the contract it is stipulated that on the failure of any party to perform their obligations, the injured party will be liable to compensation of 5 Lacs. Thus, the compensation amount cannot exceed 5 Lacs.

Party rightfully rescinding contract entitled to compensation (Section 75)

A person who rightfully rescinds a contract under the Indian Contract Act, 1872 is thereby entitled to compensation for any damage that he might have suffered due to the rescission of the contract.

Kinds of damages

Unliquidated damages

Damages in the monetary form are awarded by the court after due assessment of the situation of the breach. This is provided for under Section 73 of the Indian Contract Act, 1872.

Liquidated damages

Damages that are stated and stipulated specifically in the contract are called liquidated damages; the amount is specified in the contract itself. This is provided for under Section 74 of the Indian Contract Act, 1872.

Ordinary or general damages

Section 73 of the Indian Contract Act, 1872 identifies general damages to mean the damages which naturally occurred in the usual course events or things from the breach that has been caused, or which the parties were sure would arise in the event of a breach.

Example: Anish decides to sell and transport 10 bags of potatoes to Ram for Rs 5,000 subsequently after two months. On the date of transfer, the rate of potatoes increased and Anish denies to complete his promise. Ram buys 10 bags of potatoes for Rs 5,500. He can receive Rs 500 from Anish as ordinary damages arising directly from the breach.

Special damages or consequential damages

Special damages can arise on account of unusual or differing circumstances affecting the injured party, which couldn’t have been foreseen and eventually result into consequential damages.

These damages are usually not recoverable unless the special varying circumstances are brought to the due knowledge of the breaching party, so the possibility of loss can be evaded by them.

Consequential Damages are losses above the general losses incurred due to the breach of contract and don’t directly flow from the act of the party but as a consequence of a wrongful act. They focus on the cost outside the contract as was held in the case of Reliance General Insurance v. Anish Sebastian.

Punitive damages

Punitive Damages refer to those damages which are a penalty to the breaching party in the form of punishment to act as a deterrent. Courts rarely award punitive damages in breach of contract cases. They are generally awarded in cases of torts.

Nominal damages

Nominal damages are basic to bare minimum damages awarded to the injured party who might not have suffered a heavy monetary loss due to the breach.

Factors to be considered while assessing damages

Causation

For a claim of damages to succeed and for the purpose of affixing liability on the defaulting party, there needs to exist a causal connection between the breach committed by the party and the loss or injury that has been suffered.

This causal connection is said to be established if it is the act of the defendant that has ultimately amounted to the breach of the contract and it is the only “real and effective” cause with respect to the injury or loss that has been incurred for which damages are being claimed.

For establishing a causal link, the courts follow various tests with consideration to the facts and circumstances of each case, out of which the most prominent test is the “but for” test, wherein the court seeks to determine whether the damage would have accrued but for the acts of the defendant.(Pannalal Jankidas v. Mohanlal, AIR 1951 SC 144)

If it is found out by the court that the breach of contract cannot be asserted to the acts of the defendant, it may decide in favour of not awarding damages in any form to the plaintiff.

Remoteness of damage

One of the vital requirements for an award for damages to succeed is to that the loss or the damage should arise in the normal or usual course of things from such a breach; or that the parties knew that such damage could arise, at the time of entering into the contract. Thereby, absolving the defendant of any liability that may have arisen as a remote consequence of a breach of contract.

This aspect is related to special or consequential damages as enumerated in the above Section. It was in the landmark case of Hadley v. Baxendale, that the principle of the remoteness of damage was laid down.

Damages for direct, consequential and incidental losses and damage

In the event of a breach of contract, besides the compensation that is payable due to the loss or the damage caused, the defendant is also liable to compensate for the damages that arise directly in consequence of such loss or damage.

For example, In a contract of construction by a builder, if the construction is so bad that it falls down and is to be rebuilt and subsequent to that it cannot be let out, the builder would be held liable to compensate for the expenses incurred in rebuilding along with the loss of potential rent. If the losses are reasonably foreseeable, they can be compensated for, be it consequential or indirect loss.

Damages for loss of profit

Usually, the defendant is accountable for the loss of profits that emerge directly from the breach of the contractual obligations. For instance, loss of normal profits due to delay in delivery of relevant material by the defendant can be covered under this head. However, if loss of profits, which are not direct consequences of the breach of contract, wouldn’t attract such damages.

Date of valuation for period of loss

For claiming damages for loss for any kind of profit, the period of loss and the date from which it is calculated become important factors for claiming damages. For instance, it might be possible that a person has incurred a loss of profit during his business, but he might not be functioning under an obligation to the contract, thus the other party is not liable to make good that loss during that period.

Future losses

Generally, future losses are problematic to determine than past losses and courts don’t tend to award compensation in the context of future losses. The more evidence there is of the ability to generate future cash flows and profits, the higher the chance there is that the court may award damages in such a situation. For there to be more evidence, it is important to keep copies of all transactions that take place between the parties and to even incorporate such a situation of future losses in the contract.

Damages for non-pecuniary losses

In normal circumstances, damages are usually as compensation for pecuniary losses incurred due to the breach of contract. There may arise situations wherein the plaintiff claims damages for non-pecuniary losses that might have been incurred to him. Courts are usually not inclined to award compensation for such losses however, damages for such nature can be awarded wherein the essence of the contract itself is relating to a non-pecuniary subject.(Ghazibad development Authority v. Union of India AIR 2000 SC 2003.)

For example, damages for mental anguish or suffering may be awarded in cases where the contract itself is for providing enjoyment, pleasure, like a contract of service to click pictures during a wedding ceremony( Disen v. Sampson (1971) SLT (Sh Ct) 49. ).

Mitigation

For an award of damage, it is necessary that the party which is claiming damages on account of the breach, itself was willing to perform its part of the promise under the contract or has already performed it. Therefore, the duty to mitigate losses is indispensable, prior to claiming damages. The party claiming damages has a duty to take all reasonable steps necessary to avoid such damages.

A party cannot just let the situation worsen without taking any affirmative steps on its part to avoid such a breach. The duty of implementing reasonable steps to alleviate the loss is supplemented by the duty to hold back from resorting to unnecessary means that would further aggravate such a loss(Burn & Co. Ltd. V. Thakur Sahib Lakhdirjee AIR 1924 Cal 42.). Thus, it is necessary to evaluate whether the party claiming damages undertook such steps or not.

For instance, a builder breaches a contract by failing to repair a leak in the roof of an office building and then when the owner of the property discovers the same, he let all his computer equipment sit there without shifting them, where he could have easily done that.

Later if the owner claims damages for damage to the computer due to the leaking roof, the court would dismiss his claim to that extent because he didn’t take any steps to mitigate the situation.

Contributory Negligence

Contributory negligence refers to a situation wherein the party claiming damages has itself contributed to the negligence that leads to the loss. The basic principle is that no one can benefit from his own fault. If the court finds that the plaintiff has contributed towards the breach, then the finding of contributory negligence can lead to a reduction in the award of damages.

For example, in a contract to repair a computer, if after reparation, the user uses it negligently and drops it and spills water on it, he has contributed towards the damage thus his claim of award for damages will be affected.

Measures and calculation of damages

The aim of an award of damages in case of breach of a contract is to restore the party against whom the breach has been committed in a position that would have persisted if the contract never took place. Therefore, the damages awarded cannot exceed the loss suffered by the party or are likely to be suffered by the party. The Supreme Court in the case of Murlidhar Chiranjilal vs. Harishchandra Dwarkadas had laid down two important principles with respect to the calculation of damages subsequent to breach of contract:

On proof of breach of contract, the claiming party is to be placed so far as money can do it in as good a situation as if the performance of the contract took place;

It is the duty of the plaintiff to take all reasonable steps to mitigate the loss incurred due to the breach, and he cannot claim any damage resultant of his failure to mitigate such a loss.

With respect to the time and place for assessment of damages, generally, the value of goods is calculated on the basis of where and when the goods were originally to be delivered under the contract or where and when such services were to be performed.

Interest on damages

Interest, despite the fact that it is statutory or contractual, depicts the profits the creditor might have made if he was in a position to use that money or the loss he suffered because he couldn’t use it (as held in the case of Dr. Shamlal Narula v. Commissioner of Income Tax, AIR 1964 SC 1878.).

Grant of interest in the case of a contractual breach greatly depends upon the terms and conditions of the agreement, the customs that govern those payments and the relevant provisions of the statutes.

Interests that are granted as damages would be calculated at the rate of interest that the person to whom it ought to have been paid would have got on it, if it had been paid per the terms of the contract. Section 34 of the Civil Procedure Code provides that rates for such interests shall not exceed 6%.

Taxation

If a compensation amount received as damages, qualifies as income under the Income Tax Act, 1961, then it may be liable to tax in certain situations. In a case where the applicable tax rate on profits is equivalent to the rate of tax on a damages award, then the damages claim may be calculated on a pre-tax (or grossed-up) basis. Care should be taken, however, to ensure that any claim for interest on the tax payable for the award is calculated in line with the underlying cash flows. Thus, the tax laws can affect the value of the award.

Conclusion

Many of the issues encountered by courts and experts in the assessment of damages are based on the above-laid criteria and factors, thus it is important to keep these points in not only while assessing damages but also while entering into contracts. It is always preferable, to whatever extent possible it is favourable to specify the number of damages in the contract itself, which saves a lot of litigation costs and effort and other resources of both parties. Thus, it is always suggested to do intense research before entering into contracts and draft the contracts with utmost diligence.

Reference

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UN’s Human Rights bodies and the Palestine crisis

By

Sneha Mahawar

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August 5, 2021

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UN-human-rights — Image Source: https://rb.gy/fmy3p4

This article is written by Akshita Rohatgi, a student at GGSIP University, New Delhi. It analyses the role the UN Has played in the Palestine crisis, with recommendations for the future.

Introduction

In May 2021, the UN High Commissioner for Human Rights, Michelle Bachelet, addressed the Palestine Crisis and called for a ‘genuine and inclusive peace process’. She condemned the acts of the pro-Palestinian militant group, Hamas, as well as Israeli airstrikes in dense areas, that claimed 242 lives. The international community and Human Rights activists around the globe watching the destruction ensue in horror had one question- is the statement all the UN can do? What is the importance of the United Nations- an organization made after World War II, to prevent future wars, if it can’t prevent this?

The Palestine situation: an overview

Pre- World War I

The theory of Zionism came up as a reaction against the persecution of Jewish people throughout history. It claimed that the only way out of this never-ending bigotry was for the community to have a separate state. The holiest site in Judaism was Jerusalem– considered the spiritual homeland for Jewish people. Jerusalem lies in the once- Palestine, now-Israeli territory. Over the years, more and more Jewish people started migrating there.

Post World War I

After the first World War, Britain gained control of Palestine and freely allowed the immigration of Jews. As their numbers grew, ethnic conflicts and violence increased. The rise of Nazism and persecution of Jewish people in Germany gave further impetus to the migration.

UN’s 1947 Plan

In 1947, the UN finally took cognizance of the conflict and gave its sanction to a British plan for separation of British Palestine, based on a communal majority. Jerusalem, a holy site of Judaism, Islam, and Christianity, was given to the ethnic Arab Muslims, representing Palestinians. While the Jews accepted this plan, the Arabs looked at it as another form of colonialism by the Europeans. Consequently, they declared war on Israel.

Post-war refugee crisis

This war resulted in an Israeli victory. Now, Israel gained control of the western half of Jerusalem, along with other territories well beyond the UN-mandated plan. Israel’s forces also started expelling Arabs from its newly- acquired territory. This resulted in an enormous refugee crisis of around 7,00,000 Palestinian people. Before the war, the UN plan gave 56% of the total territory to the Israelites. After the war, it possessed 77%. Other Arab countries in the Middle East responded by expelling Jewish people from their territory. These settlers came to Israel.

1967’s Six-Day war

In 1967, a coalition of Arab Countries, mainly Jordan, Syria, and the UAE, declared war on Israel. This was due to the bad blood left behind after the Arab Countries supported Palestine in the 1947 war and the 1956 Suez crisis. The Suez Crisis involved Israel, UK, and France attacked Egypt in response to Egypt’s nationalization of the Suez Canal. This was followed by a series of border disputes of Arab Countries with Israel, and Egypt forces expelling a UN Peacekeeping force guarding the Egypt- Israel border.

The Six-Day war started with a pre-emptive airstrike by Israel to Egypt and its allies, which caused staggering damages. The war ended with a ceasefire brokered by the UN. In the war, Israel had seized significant parts of the neighbouring countries. This included Gaza and West Bank- erstwhile Palestinian territories.

Aftermath of the six-day war

In 1978, the US-brokered a peace treaty between Israel and Egypt called the ‘ Camp David Accords’. This gave the territory of Sinai, seized by Israel during the war, back to Egypt. These accords represented a new era of peace between Israel and the Arab states. Now, the conflict transformed into an exclusively Israel and Palestine one.

Rise of the Palestine Liberation Organization (PLO)

An organization claiming to speak for the Palestinians, called the Palestine Liberation Organization, came up around the time of the Six-Day War. Gradually, it came to be recognized as a representative of the Palestinians. Initially, it demanded a secular Palestinian state. Later, however, it changed its stance to a two-state framework. Increasing frustration among Palestinians after the Camp David Accords led the PLO to guerrilla warfare, and it attacked Israel from its bases in Jordan. In 1971, the Jordan army expelled the PLO from its territory.

Settlements in Israel-occupied territories

Around the same time, Jewish people started moving and forming ‘ settlements’ in the Israel- occupied territories. Reasons for this included subsidies by the Israeli government, as well as the desire to ‘mark’ their territories. These settlers had the support of the Israeli army and often forced Palestinians to leave their homes. These settlements were to make it all the more difficult for Palestinians to achieve their independent state. Most scholars consider these settlements illegal under international law.

The first Intifada (1987- 1993)

In Arabic, ‘intifada’ means ‘uprising’. Initially, in the form of protests, this anger soon turned violent. The Israeli authorities responded with heavy brute force, in the form of university shutdowns, arrests, and deportations. This lasted for five years.

The casualties on the Palestinian side were high, over a thousand. According to Save the Children, 29.9 thousand children required heavy medical treatment due to beating by the Israeli forces. About 150 Israelis were killed, including about a hundred civilian Israelis.

This gave impetus to the formation of Hamas, an organization that considered the PLO too moderate. It did away with the PLO’s objective of a secular state, and demanded a Palestine state, trying to achieve it through violence.

Oslo Accords

In 1993, Oslo Accords were signed between the Israeli government and the PLO to make peace. An independent Palestinian Authority would be established to implement limited self-governance in some Palestinian areas. However, the final authority and military control would rest with the Israeli government.

This represented the recognition of the PLO by the Israeli government as a representative of the Palestine people. It also promised future negotiations with the PLO on the issues in contention. People from both camps tried to derail talks and committed various acts of violence for the same. Shortly after signing the accords, the Prime Minister was shot dead by far-right Israelis, who called him a “traitor”.

The Second Intifada (2000-2005)

In 2000, the Camp David summit between the US president and Israeli Prime Minister showed potential, and there were high hopes of success. However, the summit came up empty and different leaders gave contradictory statements on its outcome.

The lack of any result fed the despondency among Palestinians and led to a Second Intifada (uprising). This one was more violent than the first, and repression by authorities was even worse. Palestinian casualties ranged around 3,200 and around 1,000 Israelis were killed.

This led to a change in Israeli attitudes, and a peace process is now looked upon as less favourable. Israel authorities now built checkpoints to control its Palestinian population, and this move further alienated the ethnic Arabs.

Hamas takeover of Gaza

In 2005, the Israeli Defense Forces (IDF) withdrew from Gaza. According to the official statement, this was to improve Israel’s security, international relations, and its international status. After the withdrawal, there is a Hamas takeover of Gaza. This resulted in a civil war, causing a split between the Palestinian Authority and Hamas, and a separation between the two Palestinian territories- Gaza and West Bank.

This led Israel to impose a stifling blockade on Gaza in 2007, declaring it a ‘hostile entity. This included heavy restrictions on imports, power cuts, and the closing of Israeli borders. Hamas responded by demolishing parts of the border with Egypt, causing large-scale emigration. The blockade is still present and is the main reason for employment in Gaza to have risen to 43%.

Present status

In 2014, Hamas allied with the Palestinian Authority’s ruling party. This further derailed the peace process and led to another cycle of violence between Hamas and the Israeli government. In 2020, the UAE and Brahin agreed to normalize their relations with Palestine in an Accord brokered by the US. These countries follow Egypt and Jordan, which normalized relations in 1979 and 1994, respectively.

The conflict is ongoing. Since the blockade was imposed, Gaza’s economy and its people have suffered. Jewish settlements in the West Bank have increased. This has led to various conflicts, sometimes violent. Palestinians keep losing hope of achieving their independent state, and common Israelis are mostly supportive of their government, or apathetic.

Since 2008, Palestinians have overwhelmingly suffered. According to the UN, the ratio of casualties of Palestinians to Israelis is around 2,236: 100. The UN recognizes 4.3 Million Palestinians as refugees in Gaza, West Bank, Syria, and Lebanon. The future looks gloomy.

US aid to Israel

The US supported the creation of Israel in 1948. Since the first World War, Israel has been the largest recipient of US foreign aid. During the Cold War, the US supported Israel due to its democracy and anti-communist leanings. It saw it as a powerful ally in the Middle East and started giving it financial and military aid. After the Cold War, close relations with Israel persisted. After the 9/11 attacks, the US public came to view Israel as a democracy surrounded by hostile Islamic nations, fighting against terrorism, and public support for it soared. Most Americans still support Israel and oppose an independent Palestinian state.

Out of a total of 83 times, the US has exercised its veto power in the UN Security Council (UNSC), 42 have been against resolutions condemning Israel. According to its Negroponte doctrine, it would oppose any resolution containing condemnation of Israel without condemnation of terrorism, implied to be committed by pro-Palestine groups.

It is also actively involved in the Israel-Palestine peace process, playing a mediator. However, its proposed solutions have often been criticized as being biased towards Israel. In 2018, the US Government relocated the US Embassy to Israel from Tel Aviv to Jerusalem, to reflect its recognition of Jerusalem as rightfully Israel’s. The US-brokered the Abraham accords that normalized relations of the UAE and Brahin towards Israel.

As of 2020, the cumulative aid amounted to $146 Billion. According to a 2016 Memorandum of Understanding, the US is to provide $38 Billion in military aid to Israel. Currently, it is also the biggest supplier of arms to the Jewish state.

Role of UN’s human rights agencies in the crisis

In 1948, the UN General Assembly passed a resolution upholding the Palestinians right to return to their homes and made Israel’s membership contingent on this. The UN Relief and Works Agency (UNRWA) was established for this purpose. However, the UN’s General Assembly (UNGA), with all the world’s nations, gradually came to be excluded from decision making. Instead, the UNSC’s veto-wielding member, the USA, gained considerable influence.

The UN was proactive in providing peacekeeping forces and diplomatic help, but its influence was severely limited by the US. After the 1967 war, the UN advocated strongly for an international peace conference with all parties, to end the conflict, but the US voted no. In 1996, Israel under ‘operation Grapes of Wrath’ bombed a UN centre for refugees in Lebanon, which created anger in UN circles. However, no actual change took place after. The failed Camp David summit of 2000 had completely sidelined the UN.

A major win for the UN was a 1974 resolution to recognize the right of the Palestinians to self-determination, only opposed by 4 states (including the US and Israel). However, this was not enforceable. This incident reflects that apart from the US, Israel does not have many supporters of its excessive use of force against civilians. Yet, that is what prevails.

Currently, the UN’s most important role in the crises is fact-finding, reports and most importantly, aid to the refugees.

UN Relief and Works Association (UNRWA)

The UNRWA was created in 1949, specifically with the mandate to help Palestinian refugees. It provided aid to Palestinian refugees living in Israel till 1952 when the Israeli government took over responsibility for them. It operates primarily in the Gaza Strip, West Bank (including East Jerusalem), Lebanon, Jordan, and Syria, providing the refugees with education and healthcare. The association covers 5.7 Million refugees eligible to access its services, and 2.8 Million of them were provided health service by it.

UN Human Rights Council (UNHRC)

The UNHRC has tabled a total of 85 resolutions concerning the Israel-Palestine dispute, condemning the violation of international humanitarian law. However, these are simply expressions of political commitments and do not necessarily equal any tangible measures being taken.

In 2009, the UN established a fact-finding commission, called the ‘Goldstone report’. It was to investigate allegations of violation of international human rights and humanitarian law by Israel in the occupied Palestinian territories, especially the Gaza strip. This commission was to focus on the operations between December 2008 to January 2009. Israel refused to cooperate, claiming that the UNHRC was biased against it. The end report criticized the Israeli government, as well as Palestinian militants for violating international human rights law. It was ratified by the UNHRC. This report was significant as it especially focused on fact-finding, thus giving a direction to other human rights organizations and future reports. This report also led the way for another UN fact-finding report on the 2014 Gaza conflict, that reached the same conclusion.

Others

The UN, over time, has created various platforms to ensure the voice of the Palestinian people is heard. These include the UN’s Division for Palestinian Rights, Committee on the Exercise of the Inalienable Rights of the Palestinian People, the Special Committee to Investigate Israeli Practices Affecting the Human Rights of the Palestinian People, and the UN Information System on the Question of Palestine (UNISPAL).

Additionally, the UN declared November 29th of each year as an ‘International day of solidarity with the Palestinian people’. This was to commemorate the UN’s 1947 plan that divided the territory into two separate nations.

It has also put forward various resolutions concerning the situation. However, most are simply expressions of opinion of the UN General Assembly and are non-binding. So, they do not lead to any tangible measures.

Recommendations

Scholars around the globe are uncertain about an end to this conflict. A pragmatic solution to solve the crisis has not yet materialized. In the midst of all this, Micah Goodman, published a book Catch-67, presenting his argument that the focus should not be on ‘solving’ the conflict. Instead, it must be on de-escalation, concessions, and presenting a road towards peace.

To achieve this, Israel must tone down the military presence, and there should be a reduction of activities by extremists on both sides, using concessions. Derailment of peace talks through violence must be clamped down upon. For pro-Israel extremists, the Israeli government must do a better job at clamping down. This would be a concession and give impetus to negotiations with Hamas. Convincing Israel of this would be strenuous, which is where the role of the international community comes in.

The International Community

The current situation does not demand a military offensive against Israel or military support to the PLO or Hamas. These measures would simply lead to an escalation and prolonging the conflict. Foreign powers would throw their military weight behind one nation, which would attract opponents of these powers to support the other side. Instead, de-escalation and giving the people of Palestine their right to self-determination is key.

Economic and Diplomatic initiatives across the world need to convince Israel to allow the Palestinians to exercise their right to self-determination. The biggest suppliers of arms to the Israeli military- the US, Germany, Italy, and the UK must stop this support. The UN must speak in a unified voice, condemning the occupation unequivocally. This unanimity and diplomatic pressure would incentivize Israel to treat Palestinians humanely and stop the unstable occupation. UN’s secondary status to Palestinian refugees

A prominent critique levelled at the UN is a denial of the same refugee rights to Palestinians as other refugees. While UNRWA simply provides relief, the UNHCR focuses on finding temporary or permanent homes for refugees- by repatriation to the original country or resettlement at the new one.

By giving UNRWA sole jurisdiction over the Palestinian refugees in Gaza Strip, West Bank (including East Jerusalem), Lebanon, Jordan, and Syria, the UN excludes the jurisdiction of UNHCR. Thus, the scope of UNHCR’s activity is severely limited. This must be rectified. The UN must also increase diplomatic pressure against Israel, as much as it can in the face of the USA.

US dominance in the UN

In 2018, the US Government stopped funding for a UN Relief agency that provided aid to Palestinian refugees. This is especially significant as the US is the largest donor to the UN’s Relief and Works Agency (UNRWA), contributing one-third of its total budget. Out of the total, the US currently contributes to over one-fifth of the UN budget, which gives it considerable influence over decision making. The UN is also physically located in the US, and a considerable number of its bureaucracy resides in the US, which adds to its influence. The UN is bound to have some unfair leaning towards Israel in this dispute, considering that the US is a close ally of the country.

UNSC Reform

As an appraisal of the current situation has shown, the US is the most prominent source of failure of UN initiatives condemning Israel. The current composition of the UN makes it impossible for any major UN initiatives to pass through without the assent of the US.

The only way to resolve this systemic issue is a restructuring of the UN. This starts with the removal of veto powers of the security council and making it more representative. However, this is a mammoth task, since the US has veto power to veto this too. Its dominance in current world politics makes the task next to impossible. Options, like military opposition by other states or coercive economic or diplomatic measures against the US, do not seem to hold out much hope, considering its power

The US

A way out of this stalemate is the superpower’s well-oiled domestic democracy. Convincing American people to stop meaningless wars is a way out. Though a daunting task, this strategy worked to put an end to the Vietnam war. However, American support in the Vietnam war included military troops in Vietnam which stoked anger among those forced to part with family members for the war. In the case of Israel, it is mostly in monetary terms and support at the UN. Thus, the challenge is much more daunting. One way that this can be achieved is by NATO. The US is accountable to its North American and European allies, which form part of its formidable military alliance- NATO. Putting pressure on these institutions to convince the US seems to be the most pragmatic way for restructuring the UNSC.

In the meantime, putting pressure on the US government, through its people, to stop supporting the war via aid to Israel is favourable. Instead, it can also use its vast diplomatic expertise to be an ‘honest broker’ and help reach a solution acceptable to both parties. It must also stop the veto of UN resolutions condemning Israel unequivocally, to up the ante on diplomatic pressure. This wouldn’t immediately solve the problem, since Israel has a well-functioning domestic weapons industry. However, it would give Israel an incentive to lower the costs of war. As of now, this is the best the international community can do. This is, however, a temporary fix to the UN’s problem. It would last till the US supports another war in other countries.

Conclusion

Measures like convincing the US to stop support to Israel, and instead promote initiatives for peace in the region hold out hope. However, these are temporary fixes, and would not solve the structural impasse within the UN. A complete restructuring of the UNSC is needed. This would prove to be impossible without an upheaval in the current world order. However, it is essential to implement the UN’s primary task i.e., preventing wars.

References

https://fas.org/sgp/crs/mideast/RL33222.pdf

https://www.ushistory.org/us/55d.asp

https://ncert.nic.in/textbook.php?leps1=3-9

https://forward.com/opinion/424591/its-time-to-end-americas-blank-check-military-aid-to-israel/

https://www.aljazeera.com/news/2021/5/19/a-history-of-the-us-blocking-un-resolutions-against-israel

https://www.britannica.com/event/Arab-Israeli-wars

https://www.history.com/topics/ancient-middle-east/history-of-jerusalem

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Enforceability of arbitration agreement in the event of the underlying contract not being stamped

By

Oishika Banerji

-

August 5, 2021

0

lj_4674_Contracts — Image source: https://blog.ipleaders.in/common-contracts-canada-india/

This article has been written by Jordi Malayil, pursuing the Certificate Course in Arbitration: Strategy, Procedure and Drafting from LawSikho.

Table of Contents

Introduction

Arbitration is considered to be the most comprehensive, efficient, and cost-effective way of litigation. More importantly, unlike litigation in courts, this alternative dispute resolution mechanism saves time. Apart from the progressive steps taken to minimize court interference through the various amendments of the Arbitration and Conciliation Act, 1966, the judiciary has also taken a positive approach to arbitration free of technical impediments. In this context, examining the possibility of enforceability of an arbitration agreement contained in an unstamped/deficiently stamped contract is important.

In the case of F.C.I. Vs. Joginderpal Mohinderpal (1989), the Supreme Court remarked that the law of arbitration must be simple, less technical, and more responsible to the actual realities of the situation. Whenever the question of stamping of the underlying contract be necessary for the enforcement of the arbitration agreement came for judicial review, different benches of the Apex Court have expressed different opinions. In N.N. Global Mercantile Pvt. Ltd. Vs. Indo Unique Flame Ltd (2021), a three-judge Bench in a recent judgment, took a differing view to the previous judgments and referred the issue to a Constitution Bench in light of the conflicting views of different benches. This article analyses provisions of different laws and rulings of courts of the enforceability of an arbitration agreement in the event of the underlying contract not being stamped.

Stamping of a contract- What laws state

The Indian Stamp Act,1899, requires stamp duty on specific instruments to get it executed. Section 35 of the Act envisions the instruments not duly stamped inadmissible as evidence in the court of law. Section 35 (a) further says, such an instrument that wants to be considered as evidence must be duly stamped. Unless stamp duty and penalty due are paid, the court cannot consider the instrument, i.e., the arbitration agreement, as evidence.

The Arbitration and Conciliation Act, 1996, ensures the competence of the arbitral tribunal to rule on its jurisdiction. Section 16 (a) proposes that an arbitration clause of a contract shall be considered as an independent agreement. Section 16 (b) states that a decision by the arbitral tribunal that a contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.

Further, the law does not insist that the arbitration clause incorporated in a contract should be stamped. In G.E.O. Group Communication Inc. Vs. I.O.L. Broadband Ltd. (2010), the Supreme Court observed that on the reason of not stamping the agreement, therefore, the argument that the applicant is not entitled to get relief is not acceptable.

UNCITRAL Model Law on International Commercial Arbitration, 1985, upon which the Indian Arbitration Act established its base, proposes that an arbitration clause of a contract shall be treated as an agreement independent of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail by the law itself the invalidity of the arbitration clause.

The Doctrine of separability and kompetenz-kompetenz

In this context, it is important to have a quick look at the doctrine of separability and kompetenz-kompetenz. An arbitration agreement is decisive and distinct in nature, independent from the underlying substantive contract. It is presumed that when two parties signed a contract having an arbitration clause entering two agreements, i.e.,

the substantive contract which comprises the rights and obligations of the parties emanated from the contract;
the arbitration agreement which demands the obligation of the parties to settle their difference through the mode of arbitration.

The autonomy of the arbitration agreement is based on the doctrine of separability and kompetenz-kompetenz.

A. Separability means an arbitration clause must be considered as an agreement independent of the other clauses of the contract. It prevents the invalidity of one agreement affects the validity of the other. In other words, it establishes the autonomy of the arbitration agreement and proceedings from the underlying contract. An arbitration agreement is distinctive and independent from the substantive agreement underlying the contract. Therefore, the arbitration agreement is valid irrespective of the invalidity, ineffectiveness, or termination of the underlying contract.

In National Agriculture Co-op. Mktg. Federation (India) Ltd. Vs. Gains Trading Ltd. (2007), the Supreme Court observed the presence of the doctrine of separability stated that the arbitration clause is to be treated as an agreement independent of the underlying contract. It further opined that an order declaring the contract null and void not necessitates by the law itself the invalidity of an arbitration agreement.

B. Kompetenz-Kompetenz gives the capacity to the arbitral tribunal to rule independently on the question of its jurisdiction, including objections regarding the existence or validity of the arbitration agreement prior to involving the court at a later stage. Firstly, this principle gives authentication to the arbitrators to decide the jurisdiction without the help of the court. Then it gives the arbitral tribunal certain dominance over the decision on the dispute before the interference of the court.

In the case of M/S Duro Felguera S.A. Vs. M/S Gangavaram port Ltd. (2017), the Supreme Court emphasized the principle of Kompetenz-Kompetenz and observed that the intention of the parliament is unambiguous that the court should and must only look into one point, i.e., the existence of an arbitration agreement. In Uttarakhand Purv Sainik Kalyan Ltd. Vs. Northern Coal Field Ltd. (2019), the Supreme Court held that all other preliminary or threshold matters other than the existence of the arbitration agreement are left to be decided by the arbitrator.

Court rulings

Over the years, the Apex Court, in its different orders, has discussed the issue of non-stamping of a contract containing an arbitration clause, and therefore, the invalidity of the arbitration agreement. The issue was first addressed by the Apex court in the case of M/S SMS Tea Estates Pvt. Ltd. Vs. M/S Chandmari Tea Co. Pvt. Ltd (2011). The Bench led by R.V. Raveendran, J., held that the arbitration clause in an unstamped contract has no validity and cannot be enforced until it is duly stamped. Subsequently, in different cases, the Supreme Court has taken the same legal position. It took a decade for the Court to take an opposite view in the case of N.N. Global Mercantile Pvt. Ltd. Vs. Indo Unique Flame Ltd.

i. SMS Tea Estates case

In this case, the Supreme Court had to consider whether an arbitration agreement mentioned in an unregistered instrument not duly stamped is valid and enforceable. Relied on Section 35 of the Indian Stamp Act, which explicitly prohibits the court from acting on an unstamped instrument, the Supreme Court held that the arbitration agreement in an instrument not stamped is invalid and enforceable until the stamp duty and penalty being paid.

Even though, acknowledged the doctrine of separability and observed it in a right manner that the arbitration agreement is independent of the instrument, the Supreme Court held that the severability would not save the arbitration agreement by any provision of the Indian Stamp Act, as it is a part of the instrument.

In Garware Wall Ropes Ltd. Vs. Coastal Marine Constructions (2019), the Supreme Court, recapitulated the rulings of SMS Tea Estates case, has rejected the argument that the arbitration clause to be considered as independent of the underlying contract. It further observed that the Indian Stamp Act pertains to the agreement as a whole. So, it is not possible to separate the arbitration clause from the base contract to give it an independent existence.

The Court added that the provisions of the Indian Stamp Act, read with the Contract Act, 1872, would give clarity that an arbitration clause in an agreement would not exist when it is not enforceable by law. If it wants to get enforced, it should have got stamped. The three-judge bench headed by N.V. Ramana, J., in Vidya Drolia Vs. Durga Trading Corporation (2020), affirmed the findings in the Garware Wall Ropes case, remarked that the existence and validity are intertwined, and the arbitration does not exist if it is illegal or does not satisfy mandatory legal requirements. An invalid agreement is no agreement.

ii. N.N. Global Mercantile case

In this case, the Supreme Court’s decision showed a transforming shift to a prospective and pro-arbitration approach. Acknowledging the doctrine of separability and kompetenz – kompetenz, the Court remarked that an arbitration agreement is separate and independent from the substantive agreement embedded in the underlying contract.

The three-judge Bench ruled that the arbitration agreement would not be rendered invalid, unenforceable, or non-existent, even if the substantive contract is not admissible in evidence or cannot be acted upon on account of non-payment of stamp duty. Even though payment of stamp duty on the substantive contract is pending, there are no legal constraints to enforce the arbitration agreement.

Further, the Bench cited in the present case that Schedule -1 of the Maharashtra Stamp Act does not include an arbitration agreement as an instrument chargeable with stamp duty. This also asserts that even if the substantive contract is not duly stamped, there is no legal impediment to enforce the arbitration agreement.

Another important observation of the Bench is related to the impounding of an instrument. While giving an ad-interim relief on an application filed under Section 9 of the Arbitration Act, the court simultaneously impounds the substantive contract and directs the concerned party to take necessary steps for the payment of the requisite stamp duty in accordance with the provisions of the relevant stamp act within a time-bound period. In Gautam Landscapes (P) Ltd. Vs. Shailesh S. Shah (2019), the Full Bench of the Bombay High Court, also held that the court may grant interim or ad-interim relief in an application filed under Section 9 of the Arbitration Act when a document contains arbitration clause is unstamped or insufficiently stamped.

The Bench categorically pointed out that the decision in the SMS Tea Estates case did not apply the correct position in law on the issue of the enforceability of an arbitration agreement in an unstamped contract. Since the arbitration agreement is an independent agreement and is not chargeable to payment of stamp duty, the non-payment of stamp duty on the underlying substantive contract would not invalidate the arbitration clause or render it unenforceable since it has an independent existence of its own. It again observed that the non-payment of stamp duty on the substantive contract would not invalidate even the main contract. Non-payment or insufficient payment of stamp duty is a deficiency curable on payment of the requisite stamp duty.

The three-judge Bench also remarked that the finding in the Garware Wall Ropes judgment regarding the non-existence of an arbitration agreement in law and its unenforceability, till stamp duty duly paid, is erroneous and does not apply the correct position in law. An arbitration agreement is distinct and independent from the substantive contract. If the arbitration agreement has an independent existence, it can be acted upon, irrespective of the alleged invalidity of the commercial contract. After revisiting the law on the issue of validity, existence, and enforceability of an arbitration agreement in an unstamped document and overruled the judgments of SMS Tea Estates and Garware Wall Ropes cases.

Reference to the Constitution bench

While overruling the judgments of SMS Tea Estates and Garware Wall Ropes cases, the Bench, comprises Justice D.Y. Chandrachud, Justice Indu Malhotra, Justice Indira Banarjee, held that the findings in these judgments are not the correct position in law. Simultaneously, the Bench referred the issue, whether non-payment of stamp duty on the substantive contract invalidates an arbitration agreement, to a Constitution Bench to settle it authoritatively, at the instance of the finding in paragraph 92 of the judgment of Vidya Drolia Vs. Durga Trading Corporation by the co-ordinate bench, which had affirmed the judgment of the Garware Wall Ropes case. The issue that the Bench referred as follows:

“Whether the statutory bar contained in Section 35 of the Indian Stamp Act, 1899 applicable to instruments chargeable to Stamp Duty under Section 3 read with the Schedule to the Act, would also render the arbitration agreement contained in such an instrument, which is not chargeable to payment of stamp duty, as being non-existent, unenforceable, or invalid, pending payment of stamp duty on the substantive contract/instrument?”

Conclusion

Considering the growing importance of alternative dispute resolution, especially arbitration, and hoping to become the hub of arbitration proceedings, the Indian arbitration regime must undergo drastic changes in its approach. Dynamic and proactive dispute resolution mechanism is vital for businesses to consider India as a viable option for investments. The law of arbitration must be simple and less technical. In addition, the judiciary must take a proactive stand to rejuvenate the arbitration mechanism. In Hindustan Steel Limited Vs. M/S Dilip Construction Company (1969), the Supreme Court observed that the Stamp Act is a fiscal measure and not enacted to arm a litigant with a weapon of technicality to meet the case of his/her opponent. Now, the ball is in the court of the Constitution Bench to resolve the dilemma that emerged from the contradicting decisions of different three-judge benches in Vidya Drolia and N.N. Global Mercantile cases.

References

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Statehood movement for Washington DC in the USA

By

Rachit Garg

-

August 5, 2021

0

Usa-America-Statue-Liberty-Statue-Of-Liberty-2835696 — Image Source- https://bit.ly/39ciG7a

This article is written by Manasvee Malviya from the University of Petroleum and Energy Studies, Dehradun. The author exhaustively deals with the statehood movement for Washington DC.

Table of Contents

Introduction

In 1776, the United States was declared independent from British rule. The founding leaders of the nation desired that the new national capital must be founded on a federal district and should not be part of any state. Thus, the creation of the district was named after the explorer Columbus and the city was named after the first President of the US, George Washington. To follow the ideals of American democracy, statehood needs to be instituted. Residents of Washington have been denied the right to participate in the democracy and have been deprived of the basic right – to have their voice and their votes to be heard in Congress. The residents of Washington DC demand full equality and autonomy as the 51st state.

History of Washington DC

Washington DC is the ancestral home of Anacostans. They were driven out of their land by the British colonists and became part of Maryland and Virginia. In 1790, the Residence Act was passed; the Act approved the creation of new territory as the new national capital – the District of Columbia.

District of Columbia Organic Act, 1801

This Act was enacted according to Article 1, Section 8 of the American Constitution, which incorporated the counties of Washington and created the district of Columbia from Maryland and Virginia. This was set up according to the constitutional provisions and authority of the Constitution. Thus, Congress presumed control and jurisdiction over the district.

The Act provided the district’s governance and didn’t provide for the voting representation of the residents. Further, this violated the right of representation of the residents, as they were not considered to be part of Maryland or Virginia. The residents had no voting rights in representation in Congress or the Electoral College or the Constitutional amendment.

Furthermore, the Act established Washington’s first municipal charter and allowed the voter to elect a 12 member council headed by the Mayor, elected by the President. In 1820, Congress amended the provision of the Mayor being elected by the President and the power to elect the Mayor was with the voters through direct election.

Retrocession of Alexandria

After the creation of the district of Columbia, it was a topic for national debate and interest. At the same time, the abolitionists were working to free the district of Columbia of slavery. The Virginia General Assembly in 1846 passed a Bill for the retrocession of Alexandria and Alexandria county. The Bill was approved and signed by President James Polk, which returned thirty-six miles of land to Virginia and reinstated the rights of the residents and Congressional representation. The residents of the district of Columbia experienced constitutional neglect and the anger of the residents started to grow as they were denied the necessary rights which existed in every state of the Union.

The Organic Act, 1878

The district continued to be operated under self-governance. The Congress unified the district’s municipal government in 1871 which included Washington City, Washington County and Georgetown. All municipal governments were consolidated into one government, led by the governor and council (appointed by the President) and non-voting delegates of Congress. Due to the budget issues, Congress reformed the government structure and the Organic Act of 1878 was established. This Act lasted almost 100 years. The district of Columbia was governed by three commissioners appointed by the President as municipal corporations.

District of Columbia Home Rule Act

Around the 1950s-1960s, the Civil Rights Movement brought attention to the district of Columbia’s disenfranchisement. Since the beginning of time, the district has been a majority-minority city. The 23rd Amendment was ratified in 1961 which provides, “the district which constitutes the seat of government shall be appointed in the manner prescribed by the Congress, the number of electors of President and Vice President must be equal to the number of Senator and representatives in the Congress to which the district would be entitled if it is a state but not in the circumstances more than the least populous state”. The Commissioner- led government established by the Organic Act of 1878 was replaced in 1967 by the mayor-commission model and nine-member city council (both appointed by the President).

Further, in 1973, the Home Rule Act was passed by Congress, also known as the District of Columbia Self-Governing and Governmental Reorganization Act. The first elected Mayor under this legislation was Walter E. Washington. It provides authority to the residents to directly elect their Mayor and the Council, though there are certain legislative and budgetary restrictions. The restrictions limit the Mayor and the Council to work effectively.

Until the physical copies are delivered to Congress, the Bill passed in the district by the Council and signed by the Mayor cannot become law. After the delivery of the physical copies, a 30 days legislative review is enacted. In case the legislation affects the criminal code, the period of legislative review is 60 days. No other state in the U.S. has to go through this mechanism for enacting legislation. Moreover, the budget of DC has to be sanctioned by Congress and then by the President of the United States.

Modern Statehood movement

The home-rule was established in Washington DC. In the 1990s, the district started electing the shadow members of the Congress, although these positions should not be confused with the non-voting delegates of the DC. Since 1971, the district has consistently had non-voting delegates. The only difference between the shadow members and the non-voting delegate is that shadow members are not recognized by the federal government but the latter is recognized by the federal government.

The district of Columbia in the year 1993 introduced a statehood Bill – the New Columbia Admission Act. The Bill was defeated by a vote of 153/277 in the House of Representatives. Over the years several attempts have been made to grant congressional voting representation, like the D.C. House Voting Rights Act and the District of Columbia House Voting Rights Act, 2007.

Recently to secure statehood in the district, the Washington DC Admission Act has been passed by the district. First time in 27 years, the statehood bill was considered on the floor of the House of Representatives and it is the first time that the Bill passed both the House and Senate. The Bill was introduced by Delegate Eleanor Holmes Norton on January 3, 2019. On February 28 Senator Thomas Carper introduced Companion Bill to the H R 51. Further, the House Committee on February 11, 2020, held a mark upon a separate statehood bill, H.R. 5803. H.R.5803 was introduced on February 7, 2020, by Eleanor Holmes Norton. This was similar to H.R. 51, but this Bill provided details regarding the statehood transition in DC. This Bill will admit Washington DC as the 51st state of the United States on the Doctrine of equal footing with the other States in all respects. The Bill, on June 26, 2020, passed the House by votes 232/180.

Provision to admit a new State

Article IV, Section 3, clause 1 of the U.S Constitution deals with the admission clause. The Article provides power to congress to form a new state. The admission clause under the U.S Constitution reads that – “The New States may be admitted by the Congress into this Union, but no new State shall be formed or erected within the Jurisdiction of any other State; nor any State is formed by the junction of two or more States, or Parts of States, without the Consent of the Legislatures of the States concerned as well as of the Congress”.

In 1959, Hawaii was the 50th state to be admitted to the Union, marking the last time statehood was subjected to votes in the House and Senate. The Congress confers power under this provision to admit new states, where the new state is formed from the states already in existence with the consent of the existing states. The admission clause is subjected to objections on the grounds that the few existing states wouldn’t consent for a state to become a part of a larger existing state, and thus the existing states will become more and more powerful over the period. Like, for the formation of Maine, Massachusetts consented and most interestingly, at the time of the formation of West Virginia, Virginia was considered to be the consenting state.

In American history, the power given to Congress to admit new states has played a significant role. Only 13 states are ratified as per Article VII whereas all the remaining 37 states were added by the Congress to the Union. The power provided to congress is an important one, yet there is no guidance in the Constitution as to how it should be exercised. Further, the admission clause is not defined explicitly, it is to be either interpreted from the case laws or from the practice of Congress in admitting states, that is, from 1791 with Vermont and ending in 1959 with Alaska and Hawaii.

The Admission clause provides that for admitting a new state it requires at least one Act Congress. However, Congress has always followed a more complex process for admitting a new state. In several cases of admitting new states, Congress first passed an Enabling Act. The Enabling Act of 1934 authorizes the population of the territory to summon a constitutional convention in order to draft a constitution for the proposed state ( new state ) and for applying to Congress to initiate the process of admitting a new state. The Congress specifies the number of conditions which widely vary across time and states, that the proposed new state had to meet for admission.

The foremost issue that the courts face while interpreting the Admission clause is the extent to which it limits the power of Congress to impose conditions for admitting new states. Once the Constitution is drafted of the proposed state, it is sent to Congress, it is the discretion of Congress whether to pass an additional act or resolution admitting the state. The Enabling Act process involves the final approval of the President.

After World War II, the effort to admit Alaska and Hawaii as new states with an equal footing with the other states had strategic importance of the territories whereas, in the statehood movement of Washington, politics played its role.

The doctrine of equal footing

This doctrine applies to the matters of state sovereignty, not the economic, geographic or ecological conditions of the states. The equal footing doctrine was first constitutionalized in Pollard’s Lessee v. Hegan (1845). The Supreme Court observed and upheld that in the matters related to the basic sovereignty, all states have ownership of the beds of their navigable waterways because the newly admitted states must be on equal footing with the other existing states. The objective of this doctrine is to ensure that, when a new state is admitted to the union, it has the same ownership rights as the existing states. Further, the Supreme Court applied this doctrine in the case of Coyle v. Smith (1911). The court invalidated the condition in the Oklahoma Enabling Act, 1906, which restrained the ability of new states to move the location of their capital and held that Congress doesn’t have the power to restrict the decisions taken by existing states regarding where to locate their state’s capital. Under this doctrine, Congress can’t control the location of the new admitted state capital.

Constitutionality of statehood movement

The U.S Constitution grants authority to congress to provide statehood and imposes few limits on forming new states out of the existing states. The Constitution doesn’t mention the conditions for achieving statehood or the process of achieving statehood. In the past, Congress has granted statehood through a variety of legislative procedures. The most common procedure selected by the House and Senate is to pass a bill or joint resolution to approve statehood and which is signed by the President. Several events have occurred in the past before the statehood admission, the events include:

The residents of the proposed state exhibit their belief in the principle of republican government;
Majority support for the statehood by the residents; and
The proposed state establishes its capacity to pay the federal costs.

Article 1, Section 8 of the Constitution only sets the maximum size that is not exceeding 10 miles square for the federal districts – the seat of Government of the United States. Congress has the power to redefine the federal district borders. In 1846 the portion west of Potomac was returned to Virginia, now known as Arlington and Alexandria counties.

Why do people of the capital demand statehood

In the United States, the district has its own geographical and political entity, where the residents bear the responsibilities of a citizen. The residents pay taxes and they are citizens with partial rights and privileges of citizenship. The residents of Washington pay taxes more than the 22 states, also, more per capita to the federal government and yet they have no votes in the Congress.

The district also faces issues with the interference of Congress with the local laws, fundings and operations. Interestingly, the residents are citizens of the United States but neither they have the same rights nor are they treated as citizens. The residents of DC want statehood and equal treatment like the other 50 states of the United States. The residents have contributed like all the other states to the nation. Since World War I, the residents have been serving the nation and fighting for American values, few of them never made home and more than 11,000 residents are in the military, serving the nation, yet they have no voting rights in the place of residence. DC has a delegate in the US House of Representatives who can draft legislation but have no voting right over legislation. The need for statehood can be dealt with in 2 folds.

Racial inequality – American democracy

Washington DC is a city with a majority of the black population. Where American democracy white voters are overrepresented at the expense of the black voters and the other voters. The structure provides the Senate less voting power for the coloured voters than the white voters. In this case, Washington DC has zero representation in Congress. The lack of representation is disenfranchisement and oppression of the Black Community in the United States. The admission of the state will make Washington DC the only plural Black state in the Country and will make congress more active towards the need of fixing racial democracy.

Equal treatment

On January 6, 2021, the supporters of the Former President Donald Trump attacked the Capitol, where the DC Police Department supported the federal authorities to restore the capital despite not having full representation in Congress. This creates a clear vision of the need to control its own national guard. Currently, to take any actions the order must come from the White House.

Arguments for statehood of Washington DC

Washington DC is larger than the states of Wyoming and Vermont and almost all the other states.
Washington DC has a population of more than 700,000 and is larger than the states that were at the time of admission, including Hawaii and Alaska.
In 2016, 86 per cent of the residents voted in the favour of statehood.
The residents pay taxes but have no representation with the vote in Congress.
In DC, there are civil rights issues, because of the black plurality. Statehood in the state is essential as the residents are disenfranchised- lack of representation in Congress.
With no representation votes in Congress, it is violating the principles of the American Revolution that were fought. Thus, in the Democratic world, Washington DC is the only capital where the residents have no voting rights for representation.
The admission of Washington DC would put the state near the top of all states in terms of median income. Further, it ranks near the highest rate of per capita – federal income taxes.

Arguments against statehood for Washington DC

The territorial area of Washington is smaller than Rhode Island- the smallest state.
Making Washington DC a state will violate the intention of the nation’s founding fathers. In the first place, the framers never intended to have small federal jurisdiction surrounded by a single state.
The admission of the state is against the 23rd amendment. The constitutional amendment gives 3 electoral votes.
Further, it was argued that the residents are too corrupt and financially dependent on the federal government.
The admission of the state is likely to favour one political party and the balance of power will be on the side of the Senate.
The federal government will have unmoderated influence by the State, as it is housed there.

Alternative solutions proposed

Virginia has managed to resolve the problem of no representation in Congress, despite being questioned for its constitutionality and had gained representation for the residents of Alexandria. This led to an alternative resolution for the statehood movement of Washington DC and suggestions were made that Maryland should proceed with the same actions and should reinstate the previously held territory. This idea was suggested for the first time in 1839, the congressmen suggested the retrocession of a part of the district into the territory of Maryland, however, without any benefit. Further, in 2001 the republican lawmakers drafted and sponsored a bill that would return all donated territories to Maryland, and it would grant two more votes in Congress. Apart from this, the only remaining territories would be the ones included in the National capital area, though the bill failed to pass. If Maryland would try to annex the territories, certain problems would arise as it would be considered unconstitutional, similar to the case of Virginia. The residents of Maryland are not in favour of reinstatement of the district’s territories. Although, this can be done through constitutional amendment without the consent of the residents of the state.

The residents of Washington DC can acquire representation in Congress if they are treated as the residents of Maryland. This could be achieved through the District of Columbia Voting Right Restoration Act, 2004, without distributing the organization of the cities.

Conclusion

On June 26, 2020, the bill was passed by the House of Representatives to make Washington DC the 51st State with a vote of 232/180. The state will be unusual in several ways while addressing the question of how should or how can a state function. The residents of Washington have been deprived of rights since the formation of the district and Congress has failed to provide a remedy for the injustice suffered by the residents. Therefore, it is impossible to ignore the concerns of the residents, it’s time to take a stand for the residents of Washington DC.

References

https://statehood.dc.gov/page/about-dc-statehood

https://indianexpress.com/article/explained/explained-obstacles-washington-dc-51st-us-state-7286179/

http://www.dchistory.org/wp-content/uploads/2020/03/03-Statehood-Is-Far-More-Difficult-Struggle-for-DC-Self-Determination-by-Derek-Musgrove-29-2.pdf

https://fas.org/sgp/crs/misc/IF11443.pdf

https://www.texasattorneygeneral.gov/sites/default/files/images/admin/2021/Press/DC%20Statehood%20letter%20as%20sent%20(02539672xD2C78)%20(002).pdf

https://constitution.congress.gov/browse/essay/artIV_S3_C1_1_1_2/

https://constitutioncenter.org/interactive-constitution/interpretation/article-iv/clauses/46

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BCCI versus Deccan Chargers

By

Rachit Garg

-

August 5, 2021

0

This article is written by S A Rishikesh from Shri Ramswaroop Memorial University, Lucknow. This article tries to analyze the issue of termination of the contract of the Deccan Chargers by the Board of Control for Cricket in India. This will also throw some light on the Kochi Tuskers Kerala issue.

Table of Contents

Background

Cricket is more than five centuries old but still young at heart, especially after it got a T20 booster shot in England by Stuart Robertson. In probably one of the biggest ironies of all time, it is the Indians who took this concept from England and made it world-famous. All thanks to Lalit Modi and BCCI’s brainchild, the Indian Premier League (IPL), with the perfect mix of cricket, Bollywood and big money, is in a league of its own. Though the franchise is loved for its cricket, it is not just all fun and games, it is business and it thrives on its profits.

The IPL works on similar terms as that of the English Premier League (EPL) and the National Basketball League (NBA) of the United States of America. It is a franchise-based competitive sport where franchisees have the power of hiring and transferring players. It had eight franchises when it started in 2008 representing eight cities or states of India namely Bangalore, Chennai, Delhi, Hyderabad, Rajasthan, Kolkata, Punjab and Mumbai. Mukesh Ambani’s Reliance Industries Limited (RIL) owned Mumbai Franchise named Mumbai Indians being the most expensive for $111.9 Million.

Why was Deccan Chargers terminated from the IPL

Deccan Chargers was one of the eight founding franchises of the IPL. This team was based in the city of Hyderabad. The team finished at the last spot of the first IPL, despite being one of the favourites and then went on to win the trophy in the 2009 edition. Despite high hopes, the team could not perform well in the upcoming seasons. The team was not in news because of its performance, but the controversies going on around its owners Deccan Chronicle Holdings Ltd. (DCHL).

It all began in late July 2012 when the owners of the Deccan Chargers were unable to pay INR 13 Crores second instalment of the player salaries. The owners asked for an extension up to August 10, citing that many of their sponsors had not paid them. The BCCI allowed it but the deadline was not met.

As a result, the Chairperson of the franchise again met the members of the governing council of the IPL on August 14 and asked for further issues citing the problems in which the owner of the company was. The Deccan Chargers owners were given time till September 15, to fix all their issues and regularize with the operations to maintain the integrity of the league. A notice which reached them further stated if the owners were unable to comply with this deadline, their franchise would stand terminated.

Apart from this, all the franchises have to give 10% of the amount in which they bought the franchise, to BCCI in form of a bank guarantee from a nationalised bank, before the start of every IPL which is returned to the franchises when the season ends. Deccan Chargers had to pay $19 million or INR 100 crores. Things changed drastically on September 14, when the BCCI called an emergency meeting and terminated the contract of the Deccan Chargers just one day before the deadline.

New bids for the franchise after termination

BCCI blamed the change of stance by the franchise for the termination of Deccan Chargers but this did not go down too well for the franchise. They knocked on the door of the Bombay High Court on October 1. The final judgement was pronounced by Justice S J Kathawala, who asked Deccan Chronicle Holdings Ltd. (DCHL) owners of the Deccan Chargers to comply with the terms and conditions of the contract with BCCI and pay them INR 100 crores bank guarantee from a nationalised bank in a month. The owners asked for a three days extension to do so. But they failed again.

Failure simply meant the termination of the franchise was upheld and the BCCI was allowed to invite bids for the new franchise. The termination of Deccan Chargers became effective from October 12, 2012. The Hyderabad franchise then went to the Sun Network, which currently owns the franchise Sunrisers Hyderabad.

Arbitration proceedings and their results

The Bombay High Court decision was a setback for the owners of Deccan Chargers. Yet they went ahead with the petition alleging they had been discriminated against and put up some serious allegations against the BCCI. The court accepted the petition and appointed retired Supreme Court Justice (Retd.) C. K. Thakker as the sole arbitrator to settle the dispute.

Justice Thakker gave his judgement on July 17, 2020. He held the termination of Deccan Chargers illegal and discriminatory by the BCCI. He ordered the BCCI to pay INR 4,814 crore to the Deccan Chronicle Holdings Ltd.

BCCI’s challenge to the arbitral award

The BCCI immediately, under Section 34 of the Arbitration and Conciliation Act, 1996, challenged the decision of the arbitrator in the Bombay High Court. A single-judge bench composed of Justice Gautam Patel overruled the decision of the arbitrator.

Contentions of the parties

Petitioner – Board of Control for Cricket in India (BCCI)

BCCI justified the termination of Deccan Chargers on three grounds which were:

Not paying players and others,
creating charges on the assets (mortgaging assets to different banks), and
insolvency proceedings against the company.

The contract between the BCCI and the Deccan Charges said the first two were curable; if uncured, it may lead to termination. While the third ground could trigger immediate termination.

The award given by the arbitrator was given ignoring all the evidence, going far away from the terms of the contract and the reliefs given, were not prayed for.

Respondent – Deccan Chronicle Holdings Ltd.

One of the main contentions of the DCHL was that the BCCI terminated their contract one day before the deadline given to them. Next, they alleged that the BCCI was acting with malafide and malicious intention against them as there were other franchises also who had defaulted on the payment of the players but the action was taken against them. Moreover, it was found that BCCI owed INR 36 Crores to the Deccan Chargers.

The award given by the Tribunal is fair and more than sufficient reasons are given in the award itself justifying the conclusions.

Final findings of the Court

The Court accepted all the contentions of Mr Tushar Mehta representing the BCCI and set aside the award of the Tribunal. Justice Patel held that all the defaults mentioned by BCCI were not addressed satisfactorily by the DCHL in the present case, yet the arbitral award in the favour of the franchise clearly shows the award proceeded to ignore evidence and taking into account views that were not even possible.

Justice Patel also found that the BCCI could terminate the contract with the franchise before the deadline, as it was not bound to give any show-cause notice and moreover the third breach of insolvency could invite immediate termination as per the contract between the BCCI and the franchise. Regarding insolvency proceedings, DHCL has agreed to make all payments in four instalments to the Industrial Finance Corporation of India (IFCI) and therefore to the date of termination, that is, September 14, 2020, it could not be said that the Insolvency Event was no more in existence as the winding-up petition was neither disposed nor dismissed till that date.

However, Justice Patel held that BCCI was liable to pay INR 34.07 Crores it owed to the franchise and as mentioned in the arbitral award also.

Similar issue with Kochi Tuskers Kerala

Kochi Tuskers Kerala as the name suggests itself represent the state of Kerala. It was added to the 2011 edition of IPL along with Rising Pune Supergiants. The franchise was owned by the Kochi Cricket Pvt. Ltd. and it was a consortium of many companies. Notably, the Kochi Tuskers Kerala played only for one season and was terminated immediately after that.

The franchise was in the middle of controversies from the very beginning since many companies together owned the franchise that there was a dispute regarding the share among the shareholders. There were disputes related to home ground and names also. The dispute among multiple shareholders led to the non-payment of the ten percent bank guarantee and according to the BCCI. Several reminders were sent to them but they failed. So the then BCCI President Mr. N. Srinivas terminated the Kochi Tuskers Kerala. On October 14, 2011, BCCI decided to go with just nine teams in the 2012 season.

In February 2012, Rendezvous Sports World, one of the shareholders of the Kochi Tuskers Kerala announced that it will take the matter to the court. In July 2015, the court-appointed arbitrator Justice Lahoti, who passed his order in favour of the franchise and asked BCCI to pay a compensation of INR 550 crores with an 18 percent interest rate per annum. This decision was challenged in the Supreme Court by the BCCI, but the Supreme Court also ruled against the BCCI. The BCCI is yet to pay compensation to the shareholders of Kochi Tuskers Kerala.

Conclusion

The BCCI has become the richest Cricket Board in the world, thanks to the IPL. But the same IPL has haunted the BCCI at times. The BCCI needs to be more careful while terminating contracts and must use a legal system to terminate contracts as such issues not only damage the brand value of IPL but gives the world a chance to mock the non-payment of dues of players and staff of such franchises.

References

https://www.espncricinfo.com/story/deccan-chargers-terminated-from-ipl-586468

https://www.indiatoday.in/sports/cricket/story/bombay-high-court-rules-in-favour-of-bcci-sets-aside-arbitrators-order-of-paying-deccan-chargers-4800-crores-1815426-2021-06-16

https://timesofindia.indiatimes.com/sports/cricket/news/removal-of-deccan-chargers-bcci-to-pay-dchl-rs-4800-crore-says-arbitrator/articleshow/77022075.cms

https://www.hindustantimes.com/cricket/deccan-chargers-case-arbitration-setback-for-bcci-could-cost-it-rs-4800-crore/story-nEyk2eIeMbAJPrV3AhiKcO.html

https://www.livelaw.in/pdf_upload/bcci-deccan-chargers-judgment-bombay-high-court-395096.pdf

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Fashion industry and challenges for IP protection

By

Oishika Banerji

-

August 5, 2021

0

Image source: https://blog.ipleaders.in/indispensable-need-definite-laws-fashion-merchandising-industry/

This article has been written by Namrata, pursuing the Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho.

Table of Contents

Introduction

The fashion industry is evolving rapidly over time. In the current times, fashion is certainly more than just clothing and attire. Intellectual property has a big role to play in the substantial development of the fashion industry. The intellectual property law has the capability to secure various creations in the fashion industry including components of fashion design, artistic and literary work, images and symbols that were used in commerce and trade. However, it should be taken into account that there have been short insights into the types of intellectual property and the applicability it has on the fashion industry. This article also sheds light on the various improvements that are required in the intellectual property law to offer better protection to numerous products in the fashion industry.

Intellectual property and the fashion industry

The primary purpose of intellectual property law is to offer protection to the ideas and concepts of a person, be it in the fashion industry or any other industry. It should be noted that an idea is not protectable, whereas the artistic expression of the idea can rightfully be protected and the same is guaranteed by the intellectual property law. Intellectual property law is basically a mix of copyright, trademark and patents. Another significant aspect to be taken note of is that the fashion industry is not just restricted to clothes, whereas it also includes accessories, footwear, jewellery etc. As the fashion industry is rapidly evolving in recent times, there arises a dire need to obtain the protection of the products in terms of their creativity and other such processes invested therewith.

Challenges posed to the fashion industry in terms of protection of IP

Various Indian designers including JJ Valya, Ritu Kumar, Rahul Bal have been successful in obtaining protection of their fashion designs. The numerous challenges that are encountered in the fashion industry in terms of IP protection will be discussed in the forth-coming segment of this article through the bifurcation of numerous aspects that fall under the ambit of IP:

Trademark law and the challenges posed to the fashion industry- One won’t be wrong in stating trademark law has a humongous impact on the fashion industry. Trademark is the logo and the brand. However, the logo and the brand can be more than just a name. Most of the prodigious brands like that of Ralph Lauren, H&M, Tiffany and Co., Calvin Klein, Gucci, Kate Spade, LOUIS VITTON, and Channel etc are all well-known brands and the same have been trademarked. The prime intention behind obtaining a trademark is to evade confusion in the marketplace among the customers.

The failure of offering protection to the unique designs with respect to intellectual property is the prime issue behind the susceptibility of the fashion industry to any kind of violation when it comes to intellectual property law. As a consequence of the same, various instances have come to light whereby a number of designers have sued for the infringement of their fashion designs. The same has been discussed in the form of case laws in the forth-coming segment of the article.

a. Section 2(zb) of the Trademark Act, 1999– This section states that a trademark is something that is capable of being represented graphically and at the same time, it can also be distinguished from the goods and services of one person from another. This can also include the different shapes of the goods, a combination of colours and even their packaging. In addition to this, the trademark law also offers protection even to the trade dress which includes under its ambit, packing of the product. However, the courts in various instances have dragged the attention of the public towards the fact that product packaging forms an important aspect of design in fashion apparel. The same has been discussed in the latter part of the article. The emphasis was also put on the fact that trade dress is something that involves shape, colour combination, graphics, texture, size and even particular techniques of sales etc. and hence it finds protection being offered to it under the trademark law.

Trademark is something that is beyond just brand and logo. This aspect will be discussed in the following segment of the article by making a reference to various case laws:

Registration of Three Stripes by Adidas – Adidas, the renowned sports brand had applied for the registration of the Three Stripes. However, the European court had to rule against the appeal made by the company to trademark its product further. This decision of the court came in the backdrop of the rising patent concerns in the sporting industry. The court in its final ruling held that the trademarked stripes cannot go sideways.

Bettina Liano’s registration for the pocket stitching on the clothes as a trademark– Bettina Liano had registered for the unique pocket stitching on its garments. However, the British fashion house, Burberry already held the trademark rights in both Burberry check pattern and even ‘Burberry’.

Can a trademark be made applicable even to colour?– In order to understand this concept, one can analyse the case of Christian Louboutin v. Yves Saint Laurent. This is considered to be a landmark case, which throws light on the aspect of trademarking colour. Christian Louboutin happens to be a French designer who has been trademarked in US and even in many other countries. The court gave a nod for the colour to be rightfully trademarked. Hence, the red colour associated with the shoe has been trademarked and one can identify that the red colour of the shoe with that of Christian Louboutin. This can rather be termed as a high definition of a trademark. Many other companies have also established the trademark rights of goods in colour. These companies include – Ferrari’s red, Tiffany and Co.’s blue, etc.

From the aforementioned analysis, it can be rather concluded that trademark isn’t something that is just restricted to brand and logo, it includes various other components under its ambit ranging from designs, components and features of the fashion apparel.

b. Designs and Copyright and the Challenges to the fashion industry– The primary purpose of copyright is to increase artistic creation and expression. This is done by way of giving creative control to the owner of such a work. Once there has been a creation, drawing, music composition or be it any design, creation etc. the author of such a work can claim copyright over such work. Copyright can be granted to dramatic, literary, artistic, original and musical work. Speaking about the Indian Copyrights Act, 1957, it can be stated that there is protection granted to the fashion designs when fashion designs are included under artistic works.

2. The Copyrights Act, 1957 states that Artistic work can include under its ambit, a drawing, painting or sculpture. It can even include a photograph or an engraving (this is irrespective of such a work containing or not containing artistic quality).

a. Section 15 of the Copyright Act, 1954– This section states that copyright will not be made applicable on any design which has been already registered or has the capability of being registered under the Designs Act, 2000. A significant point to be taken under consideration here is that the idea itself cannot be protected, whereas the design of the clothing or the dress can be protected under copyright.

For instance, considering the example of Diane Von Furstenberg, the wrap dress itself is not protectable, whereas the design of the dress is protectable. The next segment of this article will look into certain important case laws in terms of the fashion industry:

Rajesh Masrani v. Tahliani Designs– This was one of the cases where the Delhi High Court took into consideration the designs of the clothing. The plaintiffs, in this case, alleged that the drawings which were made in pursuance of the development of accessories and garments were artistic works Section 2(i)(c) as under the Copyright Act, 1957. In addition to this, the plaintiff even claimed that the embroidery and the printed patterns on the fabric also came under the garb of artistic work. In response to the claims put forth by the plaintiffs, a single bench judge issued an injunction order in favour of the plaintiffs.

Star Athletica v. Varsity Brand– This is considered to be a landmark case in terms of IP protection with respect to the fashion industry. In this case, an employee of a company made the uniforms of the cheerleaders. Further, he went to a different country and made the cheerleader uniform there and the designs of these uniforms were similar to that stitched in the older company. An important question as to whether a series of shapes and styles on the clothing can be protected was dealt with in this case. The court, while passing a judgment, in this case, ruled that copyright will rightfully protect the design of the clothing but not the cut of the clothing.

b. Piracy and its prevalence in Design and Copyright Industry- One won’t be wrong in stating that piracy is a common phenomenon in the design industry. In simple terms, piracy can be explained as unauthorized copying of the original designs.

In order to provide robust protection to the designs of the fashion designers, the following categories of IP:

The Designs Act, 2000 provides protection to the designs under the class 03, 05, 02, 10 and 11of the third schedule.

The Copyright Act, 1957 offers protection to the colour combination.

The Trademark Act, 1999 offers protection to the logo designs.

The Patents Act, 1970 and Designs Act, 2000 offer protection to material or fabric that is used in the design or art.

Patents protection and the challenges posed in the fashion industry

The inventions that can be integrated into products are provided protection under patent. Speaking about the fashion industry, it can be stated that various products have been granted patent protection. Some of the examples of such products have been discussed here. For instance, the technologies that were used in UV filtering textiles are water-repelling and fire-resistant, wrinkle-free fabric and even the manufacture of CROCS shoes.

An important point to be noted here is that patents cannot be granted to artistic designs. Hence, most fashion designers do not opt for the protection of the apparel through patents. Also, fashion is a dynamic industry and a new change is brought about every now. Due to this, getting patents does not seem to be a better option for fashion designers to protect their products. Further, obtaining a patent also seems to be highly expensive unless the same fashion is repeated every year.

However, speaking of the technological aspect, inventions can give a great push in the already existing highly competitive fashion market. A legal right is granted to the inventor by way of a patent. This right will be granted to the inventor as a legal right and by way of the same, he can protect his invention. Protection can also be granted to the design, product or even the process related to the fashion designs. Lastly, from this discussion, it can be concluded that an inventor can rather secure and safeguard a novel invention and its rights to its intellectual property.

Conclusion

It can be concluded that there exist numerous loopholes in the protection of the fashion industry in terms of IP. An important observation that can be drawn from this is there exists a dire need to reconsider the already existing protective measures in the fashion industry. There is a need to revamp the IP protection of the fashion industry. In addition, fashion designers are also required to educate themselves with regard to IP protection and determine the best kind of protection that can be made available to their products. Lastly, to enable a nation to attain prosperity through its intellectual property, individual rights need to be sensitized. The same can be achieved by addressing the existing loopholes in the protection of the fashion industry through IP.

References

Anjali Srivastava, ‘Intellectual Property in Fashion Industry’, (23rd February 2019) https://www.brandstock.com/intellectual-property-in-the-fashion-industry, accessed on 23rd February 2021.
Chadha and Chadha Intellectual Property Law firm, ‘Significance of Intellectual Property in fashion industry’, (15th January 2020) https://www.lexology.com/library/detail.aspx?g=3011b365-d004-402f-8a62-1a52265787b0 accessed on 21st February 2021.
Shivani Vora, ‘Fashion and Intellectual Property’, (3rd August 2019) http://www.legalserviceindia.com/legal/article-3317-fashion-and-intellectual-property.html accessed on 22nd February 2021.
Saranash Chaturvedi, ‘India: Fashion Industry and Challenges for IP Protection’, (12th November 2020) https://www.mondaq.com/india/trademark/1024232/fashion-industry-and-challenges-for-ip-protection, accessed on 22nd February 2021.
Amit Tiwari, ‘Fashion industry and Challenges to IP Protection’, (21st December 2019) https://iiprd.wordpress.com/2021/01/09/fashion-industry-and-challenges-for-ip-protection/?utm_source=Mondaq&utm_medium=syndication&utm_campaign=LinkedIn-integration, accessed on 22nd February 2021.

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E-doping in esports : how can Sports Law cope with the developments

By

Rachit Garg

-

August 5, 2021

0

sports — Image Source: https://bit.ly/2ouTyax

This article is written by Ms. Nikara Liesha Fernandez from the School of Law, Christ University, Bangalore. This article deals with the emerging concept of esports and how various countries have tried to regulate these fast-changing developments of the same, in particular the menace of e-doping.

Table of Contents

Introduction

Esports, a relatively new concept and competitor of traditional sports, has seen exponential growth all over the world and continues to have the sky as its limit, currently being an industry that is worth more than a billion dollars. Esports, literally as the name indicates, means electronic sports. A common misconception is that esports and online gaming are the same thing, however, the main differentiating aspect between the two is the competitive nature of esports which is absent in online gaming. In esports, individuals or teams compete against each other to win certain video games which are broadcasted on mostly free streaming platforms, the most famous one being Twitch, owned by Amazon. Sometimes, famous YouTube channels, through live-streaming of their events for the public to watch, have garnered a humongous fan following.

The appeal of esports as compared to traditional sports is its gender-neutral aspect and even people with physical handicaps are on an equal playing field as their non-handicapped counterparts since these games require a different kind of physical strain as compared to traditional sport. This is not to say that esports do not have their fair share of health concerns. Targeting an age group of youth and young adults ranging from teenagers as young as 14 years old to individuals in their late twenties, an age group where their bodies are at their prime and still developing, sitting continuously for as long as 10 hours every day, which is what professional training demands in the esports industry, is detrimental to an individual’s mental and physical health.

Health effects of esports

Esports competitors have been vocal about the harmful effects the sports craze has had on them which include developing over compulsive disorder, chronic back and shoulder pain, carpal tunnel syndrome and wrist injuries. As the main cash source of esports are the sponsors of the same (such as big brands like Mercedes Benz, Audi and Red Bull to name a few) who select the best players from the professional market and pay them in millions of dollars to represent them and endorse them in addition to organizations that offer league salaries, the individuals undergo intense mental stress and pressure given the constant competitive atmosphere where the verdict of a single game can either make or break their career.

Composition of the esports audience

The majority of esports viewers and players hail mainly from the Asia-Pacific region which makes up more than 57% of the esports enthusiasts (as of 2019). A large portion of the same is from North America, China and South Korea. The most famous esport is League of Legends which offers almost 9 million dollars to the winning team. Teams of esports consist of anywhere from two to six players per team for multiplayer online battle arena (MOBA) events, such as Dota 2 and League of Legends, fighter games like Mortal Kombat and Super Smash Bros, sports games like Madden and NBA2K (an electronic version of the traditional NBA game) and single-player/team games commonly known as First-person shooter (FPS) events like Call of Duty and Halo.

As ubiquitous as esports are all over the world, certain countries are excluded from this global affair due to poor network accessibility as even a 100 millisecond lag in the game can grievously hamper the final result and cause an unfair advantage to the opposing team. It is due to this reason and the lack of infrastructure that South Africa is at an unfair disadvantage in participating in the esports arena.

As the traditional doping methods which are rife in the regular sports industry cannot have the same effects and relevance in the esports arena and due to a lack of regulation of the same, the players of esports have resorted to something known as e-doping such as consuming large quantities of caffeine and Adderall to keep them nimble and on edge as their reflexes have to be as sharp as possible to beat their opponents were as stated before every millisecond can change their fate in the game. This closely resembles the traditional doping methods but the more important one which shall be elaborated upon further on in this article is exclusive with regard to esports is mechanical doping. E-doping also extends the players’ career in the game which normally would end when they hit thirty but through the use of e-doping and stimulants, players try to trick the normal ageing process of their brain and reflexes in desperation to stay relevant in the esports industry and beat early retirement.

Developments in Sports Law

Sports law per se has embodied identity of its own only during the last few decades. Before this, it was understood to be more of an amalgamation of various areas of law that could apply to the field of sports or the sports industry. These sports included only traditional sports such as football, tennis and golf to name a few. As such, there was no separate and distinct field of law known as sports law compared to the popular fields of civil and criminal law.

Over time, however, sports law has gained recognition globally as an independent field of law whose scope extended not just to ensure that the rules of a certain game are followed to ensure a certain standard of conduct is maintained, thus, preserving the integrity of the game, but also providing a remedy for several other interlinking legal issues such as anti-doping, match-fixing and gambling. It also ranges from processes such as regulating diverse sports to the broadcasting of the same to places all over the world.

Sports law in the United States of America is categorized into amateur sport, professional sport, and international sport which are all headed by different committees charted under different legislations due to the federal nature of governance in the USA.

The United Kingdom is regulated by an organization known as UK Sport which collaborates with the local sports councils to manage and distribute public investment as the statutory distributor of funds raised by the national lottery.

The national legislation of China, known as the People’s Republic of China on Physical Culture and Sports, 1995, much like the name of the legislation itself, is aimed at targeting the promotion and development of physical culture and sports in China.

The sports scenario in India is headed by the Ministry of Youth Affairs and Sports and largely lays its emphasis on the field of cricket. There are a number of other national-level bodies as well which oversee different areas in the field as sports such as the Indian Olympic Association, the Board of Control for Cricket in India (BCCI) which are all registered under the Societies Registration Act, 1860. The field of sports law in India especially is in charge of governing a multi-billion-dollar industry of sports in India which continues to develop at a manifold rate.

Esports and law – around the world

As esports is a still-emerging concept as the internet and electronic media form an essential part of it which itself is so dynamic, the rules and laws to govern and regulate the same seem to find themselves in a grey area with not too much homogeneity across different countries in the world.

In the field of esports itself, there are different kinds of developers of the same content. Firstly the developers, known as the ‘hands off’ developers, such as Microsoft and Nintendo, do not organize esport events themselves but permit the community to organize them instead with their prior permission. The other school of developers are the ‘hands on’ developers, such as Riot Games and Activision Blizzard, who themselves own and control the intellectual property rights of their content and actively organize the professional scene of their games and have the final say on how they want their game to be played and the power to determine their target audience as well. The problem with the latter is the tendency towards a sort of hegemony where it would be very easy for the developers to abuse the power in their control. Due to these factors and a host of other problems, it becomes nearly impossible to establish a uniform law to govern the entire body of esports.

Esports picked up speed accidentally and locally in South Korea in the early 2000s as a remedy to cope with their financial crisis. On realizing the recognition and fan following it was getting, the Korean Government formed the Korean Esport Association (KeSPA) which was the first governmental body dedicated to regulating esports in the world, mainly in the area of broadcasting rights and players contracts. This move spearheaded the governments of other countries to form similar bodies and it was not too long before the British Esports Association (UKeSPA) was founded in 2014 followed by the Association for Chinese Esports (ACE).

The need for regulatory bodies was necessary to ensure that due process was followed by the ‘hands off’ developers where there were grievances of the players not being paid by the companies who were sponsoring them, such as in Canada and Malaysia. Problems were also being faced by the ‘hands on’ developers with regard to the player’s welfare in the face of allegations of the inhumane working conditions, and concerns regarding the player’s welfare they were forced to endure in addition to discrepancies with respect to the age limit required to participate in various games also known as player contracts.

For example, in the European Union and the United States, the minimum age of the players to enter into a contract was at least 18 years whereas in Scotland for example, they could do so at 16 years itself. This gave rise to legal problems covering areas of contract law, visa-related issues for international tournaments, Intellectual Property Rights (IPR) law and endorsement-related legal issues, legal betting and gambling with regards to the probable winners of tournaments and the area of mergers and acquisitions and other employment issues.

Due to the failure of the esports regulating authorities for the individual countries, there was a need to create a global governing organization of the esports sector which led to the birth of the World Esports Association, Professional Esports Association and the International Esports Federation.

Modes of e-doping : how it is different from traditional doping

The issue with e-doping, as opposed to traditional doping (which is also carried out in a similar manner in esports), is that it often goes unnoticed as the players of esports, rather than a face to face set up like traditional sports, interact through an electronic medium where it is quite difficult to make out whether they are under the influence of dopants or not.

The two main modes of e-doping are traditional doping, which strongly resembles the doping in regular sports which mainly use drugs, such as Adderall, Ritalin, Selegiline and other ‘performance-enhancing substances’, effects of which can have effects on enhancing the concentration, calmness and reduction of fatigue amongst players.

The other form of e-doping is known as mechanical doping which is solely a method of cheating the system of esports wherein instead of enhancing the physical and mental potentials of the players themselves, efforts are instead diverted towards fixing of the machines used for the tournaments through manipulation of the software or hardware, thus giving the players a specific advantage within the game which influences the outcome of the same by increasing the chances of winning for a given player/team. The four main forms of mechanical doping are – allowing computers to automate actions, allowing the player to see through objects such as walls and smoke, adding additional powers to work to the player’s advantage (such as the ability to fly or gain strength in the game) and attacking the server of the host causing long lags in the games which hamper the opponent’s performance.

How are laws coping with the emergence of e-doping

Countries such as Poland have made efforts to include esports in the definition of a sport in the form of a competition based on ‘intellectual activity’. South Korea is another example where the KeSPA, as mentioned earlier, regulates esports tournaments including the provision of linking virtual accounts to real people to be able to affix responsibility in cases of the commission of criminal acts. Another Korean Act that punishes offenders who are found guilty of boosting profits is the Game Industry Promotion, Act (2006).

Anti-cheating software is another tool employed by countries to curb the menace of e-doping. An example of such software is Valve Anti-Cheat (VAC) which also enables the regulating authorities to directly track the player’s keyboard and mouse movements to ensure that they reflect what the player is actually doing. Some regulating authorities even mandate the use of previously unopened equipment for esport professional events to ensure that the software of the same is not manipulated beforehand.

The Electronic Sports League (ESL) partnered with the World Anti-Doping Agency (WADA) to develop the very first anti-doping policy of the esports industry. The World Esports Association (WESA) was the main authority formed as a result of the joining hands of ESL and a number of other esports teams from countries across the world to ensure that all events supported by WESA would be free from illegal, immoral and unethical practices.

India and esports : what does it lack?

India is no stranger to the troubles of esports. In a country that has one of the largest youth populations in the world and especially in light of the present situation of the global pandemic, an increasing number of individuals have taken to the addiction and allure of esports.

Seeing how the developed countries are still struggling to grapple with the fast-emerging techniques and cybercrimes that occur as part and parcel of the esports industry, it is no surprise that India is finding it even more troublesome to deal with the same.

For example, an Indian by the name of Nikhil Kumawat, now known as Nikhil ‘forsaken’ Kumawat who was a global offensive player was caught cheating at the Extremesland 2018 Asia Finals as an unfortunate result of which he was barred for a period of five years by the Esports Integrity Commission (ESIC) from participating in any esports-related activity.

Esports in India is controlled by the Esports Federation of India (ESFI) who shares its membership with the International Esports Federation (IeSF) and the Asian Electronic Sports Federation (AESF). A major problem the esports industry in India faces is its lack of funding which hampers its development keeping it on an inferior footing as compared to the other developed countries.

The lack of connectivity and infrastructure especially in the remote rural areas which actually house the majority of the Indian population suffer from the same accessibility issues which have been discussed previously with relation to South Africa. Lack of high internet speed, modems, high-end computers, and the basic facility of electricity itself make it challenging for the individuals from rural areas who are just as capable as the urban population from participating in esport events.

A lack of general awareness of the concept of esports, in general, is another issue that prevents the nurturing of talent of potential esports players due to the ignorance of the world of esports itself.

Conclusion

Though there have been serious attempts by regulating authorities all over the world to govern the area of esports and control of e-doping, they have been largely ineffective and insufficient to deal with the ocean of problems that are already existing and fast emerging through the rapid growth of electronic media. As cyberspace continues to be something that consists of a major grey area concerning the depths to which it can go itself, formulating laws to prevent the misuse of the same and its strict implementation, as well as proper penalties for offenders, are the only way forward for esports developers and the regulating authorities of countries to ensure that esports can continue to grow with all its benefits in a healthy competitive environment while maintaining a high standard of morality.

References

https://britishesports.org/advice/what-are-esports-an-overview-for-non-fans/

https://www.ey.com/en_in/media-entertainment/the-dawn-of-esports-in-india#:~:text=The%20number%20of%20Indian%20gaming,in%20the%20country%20by%202025.

https://bitspawn.gg/what-is-esports/

https://learn.g2.com/esports

https://hir.harvard.edu/esports-part-1-what-are-esports/

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Artificial Intelligence and authorship in copyright : an overview

By

Oishika Banerji

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August 5, 2021

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This article has been written by Namrata, pursuing the Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho.

Table of Contents

Introduction

With the dynamics in the technology evolving rapidly, Artificial Intelligence (AI) has gained ground. Speaking about Intellectual Property (IP), the advent of AI has rather posed various challenges to the protection of works through IP laws. Computers have been in use for a long time now, but when they were invented little did anyone think they would fall under the ambit of copyright laws. This is because the task was completed by the computer because of the commands given by the humans. It was the humans who authorized just a task to be completed by the computer. Back then, computers were simply seen as tools that needed a human interface to perform tasks.

Copyright is a legal right that protects the content that is original and is pertaining to the creations of the human mind and intelligence. This protection under copyright is provided in terms of moral and economic rights. The term authorship refers to the person who creates the copyrightable work. There have been various laws in place that protect the work created by humans, but when it comes to AI generating the copyrightable work; there arise various questions as to the laws applicable for the same and the need to being about the required changes in the existing IP laws. The same shall be discussed in length in this article.

The advent of AI and its impact on IP laws

The advent of AI took the world of Intellectual property through a storm. 2010 marked the year when AI began to grow and expand in a humongous way. Speaking about the work created by AI, it can be stated with conviction that such a work is at par human excellence. Another important question to be pondered here is whether the current laws are adept enough to regulate the work of AI. The answer to this question would not be affirmative. The existing laws, especially the ones related to copyright are equipped enough to protect the work generated by human beings. Not the ones generated by machines. Now the significant question to be answered is whether the work of the machines should be included under the grab and scrutiny of copyright law. This article will shed light on various aspects ranging from creative aspects of AI, whether the same should be protected under the existing laws, and the scenario in different countries. Lastly, the possible problems that come about in applying the traditional approach to AI and the possible solutions to these problems will be discussed in length.

Significant aspects of authorship in copyright that make AI creative

AI has come a long way; so much so that they can create their own work. Some of the important aspects of AI have been discussed below:

Unpredictability– An innovative feature of AI is that it can create new works without copying anything from the older version of the same. This is possible because of their ability to produce unpredictable routes to device optional solutions. The AI takes the data and recomposes it to come up with completely different kinds of data.
Independence– Whenever a device is capable of executing a high-end task without taking any external help whatsoever; such a device can be termed to be independent. AI has been successful in completing numerous tasks without any human interface.
Competency– AI is capable of processing huge amounts of data in one go. The processing is accurate and competent to the extent that humans can go wrong in such calculations while AI never does.
Free Choice– This aspect puts emphasis on the fact that whenever an alternative or a choice is available to the AI, it chooses the best alternative available by its own. Through this, the AI arrives at the best possible solution.
Learning Proficiencies– Once the AI receives data, it keeps on processing the data. While doing so, it gets feedback and keeps on improving the results.
Goal-Oriented– The AI always works in accordance with the goals that are already set for them. For Instance- writing, researching, storytelling etc.
Creativity– AI is something that creates work that is original and new. Hence, here they act as creators of creative work. This aspect has a major role to play in terms of Intellectual Property Rights.

A look into the laws of different countries: Are the existing statutes capable of protecting the works of AI?

In this segment, the article will look into the existing laws in various countries if the same can be applied for protecting the works of the AI:

Japan-The copyright laws of Japan state that whenever there exists free expression of thoughts or sentiments and if these fall under the ambit of literary, music, scientific or artistic domain, they are rightfully protected by copyright laws.

The term creativity should be further interpreted here, it covers the aspect where it is basically the personality of the author that is expressed in different ways. This is further interpreted by the courts in different manners. Here the word ‘creativity puts an onus on the personality of the author. Therefore, it can be inferred from this that only the work of humans is given prominence. There is no inclusion of creativity of the machines or AI. Hence, no protection is offered to work of machines or artificial intelligence under Japanese laws.

2. The USA– Following the same norm as that of Japan, even the US does not identify or offer protection to the creative work of the AI or the machines. The US Constitution bestows the power to congress to enact Copyright laws. Hence, the US copyright law states that the US Congress has the power to uphold the development of science and the useful arts, but these are restricted to the times of the author, and the authors tend to have exclusive rights here. Hence, there has been no place for AI-related creativity work in the US Copyright laws. In addition, the US courts have exclusively stated that there would be no protection offered to the work of AI and machines.

3. Germany– Copyright laws of Germany expressly state that only the works of the individual are protected under it. Hence, the work of the machines or that of AI is not protected under the copyright law of Germany. Hence, authorship with respect to artificial intelligence is not conferred upon any protection under the copyright regime.

4. United Kingdom– UK laws make a U-turn from the common practice followed in most of the countries that have been discussed above. Section 9, Para 3 of the Copyright, Design and Patent Act, 1970 states that, in the case where the literary, music or dramatic work is generated by the computer, the author shall be considered as the person who made the necessary arrangements for the creation of such a work.

From this, it can be concluded that the copyright, trademark, and patents act of the UK offers protection towards the work generated by the AI and the machines.

Numerous problems encountered in providing authorship rights to AI

When the traditional copyright laws are applied to machines and AI, there are various complications and obstacles encountered. The same will be analyzed and discussed below:

A machine is given the status of an author– There is a possibility of giving authorship rights in copyright to a machine in AI. But by doing so, one would be emphasizing the fact that the machine will be accountable for the making of the copyrightable work. However, the court would not be in line with such a development. This is because the courts do not consider machines in AI as legal entities or legal persons. This is one loophole that needs to be looked into.

Further, looking at the flip side, there is even an advantage in making machines the authors. The IP laws reinforce the fact that the creator of the work is himself the author. This comes in handy, as the complicated legal solution of assigning the authorship rights to someone who hasn’t contributed to the creative process will be solved.

The authorship rights can be assigned to AI on the below-mentioned circumstances:

It is the AI that decides on its own as to when to create the work.
The work created by the AI is casual and cannot be anticipated.
AI should be independent in terms of its algorithm, that is, it should be bereft of human interference.

A possible solution to the problem posed above

An appropriate solution to the problems that have been posted above is to make the work of AI available in the public domain. There do exist drawbacks to this, but these drawbacks are rather minor and few in number. Here, the author himself will be considered as the machine. Since the software cannot be considered a legal entity, it would not be deprived of any rights; there is no rights in the first place. The programmer here can get the code copyrighted. Therefore, the programmer will receive passable protection and compensation. Furthermore, the end-user who was deprived of his work can create a work in that derivative work. This work can be copyrighted by the end-user and the required protection will be granted for the same. Lastly, when AI work is made available in the public domain, even the public will benefit from it. This is because the public can access the creative work without there being prejudice caused to the content producers. Looking at the flip side, this kind of framework would still pose a problem in terms of enforcing false copyrights. In this case, the infringers will have to prove that the work was exclusive of the AI and the protection granted to the work was not valid in the first place.

Conclusion

With the dynamics of AI evolving rapidly with the changing times, it calls for a revamp in the existing IP laws. The existing laws are not capable of offering protection to the creative works of AI as discussed in the earlier segment of the article. To turn this around, there is a dire need to amend the existing laws. This amendment should be in such a way that it should be inclusive of the current day scenario and the rapidly changing aspects of the technology. As there are numerous difficulties identified with respect to IP laws protecting the work of AI, a necessary revamp in the working of these laws is the need of the hour.

References

Rithvik M Kulkarni, Of Artificial Intelligence and Authorship, SpicyIP, https://spicyip.com/2016/12/of-artificial-intelligence-and-authorship.html, (11th December 2016).

Avishek Chakraborty, Authorship of AI-generated works under Copyrights Act, 1957: An Analytical Study, SSRN journal, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3443006, (2nd July 2020).

Divya Rai, Copyright law and Authorship: Authorship rights of Artificial Intelligence works, IIPRD blog, https://iiprd.wordpress.com/2021/02/27/copyright-law-and-authorship-authorship-rights-of-artificial-intelligence-works/?utm_source=Mondaq&utm_medium=syndication&utm_campaign=LinkedIn-integration, (5th August 2020).

Yashik Sahni, Should the work created by AI machines be protected under Copyright law?, Khurana and Khurana IP blog, https://www.khuranaandkhurana.com/2020/02/05/should-the-works-created-by-artificial-intelligence-machine-be-protected-under-the-copyright-law/, (5th February 2020).

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Kedar Nath Singh case – interpretation of sedition with regard to Article 19(1)(a)

By

Vanshika Kapoor

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August 5, 2021

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This article is written by Ronika Tater, from the University of Petroleum and Energy Studies, School of Law. In this article, she discusses the importance of the Kedar Nath case in consonance with Article 19(1)(a). Also, provides various other case laws to justify the title of the given article.

Introduction

Section 124A deals with the law of sedition in India and it is mentioned under Chapter VI of the Indian Penal Code, 1860 (IPC). The objective behind adding this provision is that every State with its present Government is envisaged with the power to punish whosoever by their conduct harms the safety and stability of the State, or spreads the feeling of disloyalty or enmity to disrupt the function of the State or public order. Hence, the existence of the Government is essential for the stability of the State. The offence of conditions the sedition should be in the letter and spirit of the Constitution of India and not encroach upon the fundamental rights of the individual.

Meaning of sedition

It was enacted in the Indian Penal Code after the recommendations of the first law commission. The meaning of sedition was well explained by Lord Fitzgerald in the case of, Reg v. Alexander Martin Sullivan, (1868). Sedition is a crime against society and it consists of the practices, by words, deed or writing, expression, visual representation with the attempt to disrupt the peace of the State. The object of sedition is to induce or incite discontent and to provoke the Government and bring the function of the State into contempt. Moreover, it is important to note that the disapprobation of the administration or criticism of political matters is not sedition. The actions without the lack of intention to excite or induce hatred, contempt, or disaffection towards the Government do not constitute an offence under the IPC.

Essential ingredients of Section 124A

The following are the essential ingredients to constitute an offence under this Act are as below-mentioned:

Sedition activities such as words, signs, visual representation, or any other means by which the offence can be committed.
The sedition activities must bring or attempt to bring into hatred or contempt.
Excite disaffection is contrary to disapprobation as if the sedition activities are caused with the intention of disposition not to obey the lawful activities of the Government in the minds of the hearers or reader, they will be guilty of the offence.
The disaffection should be towards the government established by law and not its agencies.
Expressing disapprobation is not punishable as fair criticism is protected under the freedom of speech and expression.

Case laws

Queen-Empress v. Jogendra Chandra Bose, (1891), is the first case in India and the first-ever trial under sedition law. In this case, the Chief Justice of Calcutta High Court explained the term disaffection and its distinction with the term disapprobation. The court observed that whoever excites or attempts a feeling opposite of affection is liable for sedition. Queen-Empress v. Bal Gangadhar Tilak, (1897), is the first case wherein the sedition law under Section 124A is outlined. The court states that the amount or intensity of the disloyalty towards the Government is immaterial. The act of hatred and disaffection either great or small will be guilty under this provision.

The case of, Niharendu Dutt Majumdar v. King-Emperor, (1897), held that the essential ingredient to constitute the offence of sedition is incitement of violence, not mere abusive words. The acts or words complained should cause incitement and reasonable anticipation or likelihood of public disorder to constitute disaffection. The court also stated that the words, deeds, or writing constituting sedition should be seen from two sides. If they have the intention or tendency then it is easy to constitute sedition. But, if the sedition activities are made where the Government and the law cease to obey the law and only anarchy follows.

The constitutional validity of Section 124A

On 1st December 1948, K.M. Munshi proposed an amendment in the Constituent Assembly discussion for dropping the sedition law as a restriction, etc. The fact that the sedition is against the essence of democracy. However, after independence Section 124A IPC was for the first time came into consideration in the case of Ramesh Thapar v. State of Madras, (1950). Subsequently, the Constitution First (Amendment) Act, 1951, inserted two words namely “in the interest of the security of the State” and “public order” under Article 19(2) which defines the reasonable restriction that can be put by the law on freedom of speech and expression under Article 19(1)(a). In the case of Tara Singh Gopichand v. State, (1951), the court declared Section 124A to be unconstitutional and it has no place in a democratic government. In a similar case of, Ram Nandan v. State of Uttar Pradesh, (1959), the Allahabad High Court declared Section 124A to be ultra vires of the Constitution as it imposes a restriction on Article 19(1)(a) and it is not in the interest of the general public.

Case analysis of Kedar Nath v. State of Bihar, 1962

The Constitutional Bench of the Supreme Court in Kedar Nath Singh v. State of Bihar, (1962), upheld the constitutionality of Section 124A and held it to be in harmony with Article 19(1)(a).

Facts

In this case, Kedar Nath Singh, a member of the Forward Communist Party, had taken on the ruling party of congress by using the wrong words. For instance, the ‘dogs of the CID’, congress ‘goondas to the gaddi’, the blood of the mazdoors, and Kisan are being sucked by the ruling party. He also stated that the ‘capitalists and the zamindars’ helped Congress. He believed in revolution and specifically targeted Vinoba Bhave for creating confusion in the minds of the public and that Congress is entangling them with bribery, corruption, and black marketing. In this case, the accused was charged for sedition and Section 505 IPC

Issues

Whether Section 124A and 505 of the IPC are ultra vires of A.19(1)(a) read with A.19(2) of the Constitution?
Whether the intention of the accused is to create disorder, disaffection, incitement to violence in order to be guilty of the offence of sedition law?

Judgment

In a democratic country, the right to freedom of speech and expression is a sine qua non, but reasonable restriction as mentioned under A. 19(2) is necessary in the interest of the sovereignty, safety, integrity, friendly relations with foreign states, public order, decency, morality or contempt of court. Consequently, any law which is made in the interest of public order is intra vires of the Constitution. Hence, the Supreme Court held that Section 124A and Section 505 of IPC are intra vires of the Constitution and in harmony with A.19(1)(a) read with A.19(2) of the Constitution. Also, that the accused has no intention to create public disorder, disturbance of law and order established by the law.

Relevance

This case is essential in understanding that the line separating attempting disaffection towards the Government and legitimate political activity in a democratic form of Government is very thin and sensitive. Hence, legitimate political criticism of the Government in power no matter how strongly worded would be within reasonable limits and consistent with the fundamental right of freedom of speech and expression. In nutshell, the Supreme Court has stated that S.124A cannot be interpreted literally. The following are the two essential ingredients to be satisfied to establish the crime of sedition under this provision:

The act must be accompanied to cause the ‘effect of subverting the Government in power by violent means.
The act must be with the intention, tendency, to create disorder or disturbance of public tranquillity or law and order by inciting or attempting violence.

Recent case laws

In Balwant Singh v. State of Punjab, (1995), the Supreme Court held that raising lonesome slogans by few individuals without anything more could be seen as to incite any response or reaction from anyone in the public does not constitute the office of sedition. There is a need to satisfy one of the essential ingredients established in the Kedar Nath case.

In Vinod Dua v. Union of India, (2021), the Supreme Court while quashing the sedition case against the journalist Vinod Dua stated that every journalist is entitled to the protection of Kedar Nath Judgement. It also stated that every prosecution under Section 124A and 505 IPC should strictly abide by the scope and ambit of the said Sections as law laid down in the Kedar Nath Singh case.

Facts

In a video, Journalist Vinod Dua has criticised Prime Minister Narender Modi and the Centre for mishandling the migrant crisis last year during the time of COVID-19. The Himachal Pradesh government and the ruling party filed a case of sedition against Vinod Dua under S. 124A. They stated that Vinod Dua has attempted to spread misinformation or incorrect information in the public causing panic among them. For instance, the statement that “some people feared that there could be a food riot post lockdown without any facts has led to panic in the public”.

Issues

Whether Section 124A is ultra vires of A.19(1)(a)?
Whether the intention was to create disorder, disaffection, incitement to violence in order to be guilty of the offence of sedition law?
Whether such statements were deliberate or unintended and innocent assertions?

Judgment

The Supreme Court while quashing the sedition case stated that the remarks constituted genuine criticism of the government and could be said to be seditious. It upheld the right of every journalist under the right to freedom of speech and expression to criticise, even strongly the measures of the government with the view of not resorting to violence. The free speech of a journalist should be protected under Article 19 of the Constitution and should be protected from charges of sedition. While stating the judgment the court also observed that the essence of true democracy is in the mere criticism of governments. The right to fair and reasonable criticism is a source of strength for a nation rather than a weakness. Hence, the Government should try to suppress the speech and expression of individuals.

Reforms required

The following are some of the defects that required reforms in the Section 124A of the IPC:

The tendency of intention required to commit sedition has not been defined.
The scope of the Section should be widened as disaffection does not take into account the Constitution, Legislatures, Executive, and the Administration of justice.
Bridging the odd gap of punishment either ‘imprisonment for life’ or ‘imprisonment for a term of three years only’, by incorporating the maximum punishment for sedition to be of seven years rigorous imprisonment or fine.

Further, the recent Law Commission of India in, Consultation Paper of Sedition, 2018, has provided ten crucial points to be relooked concerning the need to protect national integrity, the right to free speech and expression, dissent, and criticism of policy issues.

Conclusion

The Kedar Nath Singh v. State of Bihar is one of the most important and widely used precedents by the courts all over and it has also supported judicial development concerning cases under the sedition law. The judgment highlights the importance of the fundamental right of speech and expression, reasonable restriction put on the rights, and has mentioned a link between the legitimate power of criticism and disruption of public order. It has been seen that the provisions are used by the government to suppress the voice of anyone standing to dissent their opinion in the name of disaffection towards the ruling government. However, the judgment still holds strong and provides the two conditions which are required to be fulfilled to constitute the crime.

References

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COVID-19 and justice – how people suffer because of court policies

By

Rachit Garg

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August 5, 2021

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This article is written by Ms, Aporva Shekhar from KIIT School of law. This article is a brief analysis of the issue of backlog of cases due to the pandemic.

Table of Contents

Introduction

The judiciary was already overburdened with pending cases before the pandemic started and now even more so. The Covid-19 crisis has forced the judiciary to intervene in many time-sensitive cases related to pandemic management and public health which has created even more of a backlog of pending cases. The Bombay High Court judge, J G S Patel, expressed concern regarding the judiciary’s response towards cases that were overlooked due to the ongoing crisis. He exclaimed that how long could they tell people that their case was not important enough to be heard during the Covid-19 crisis. Access to justice is a fundamental right and due to the ongoing crisis, this right might be getting hampered due to existing court policies and parameters that were formulated to deal with the crisis.

Cause of the backlog

Before Covid-19 the Indian judicial system was already preparing to digitize its operations and the development of the e-court services app and the e-courts were a part of that effort. But even with such revolutionary developments, the courts have failed to address the issues of many people due to the gravity of the crisis faced by the country. In situations where the executive failed to perform its intended role, the judiciary had to step in to fill its shoes. Through judicial activism, the judiciary sought to intervene in matters requiring immediate action, like the supply of essential commodities. The Supreme Court took suo moto cognizance and adjudicated in the case of In Re: Distribution of essential supplies and services during pandemic 2021 to solve a time-sensitive problem. And while the judicial activism of Indian courts was lauded all around the globe, this was also the reason why many other cases got delayed. The current infrastructure for hearings is focused on the suit’s characteristics, the cases that require debates get postponed and the district courts take up simpler cases first.

Change in courts’ working hours

The pandemic has altered every aspect of society, and the working of the courts are no exception. In order to contain the spread of the virus, the courts had to shift their operation to a digital platform. This shift from the normal working conditions also created a change in the workload of the courts. The working hours were also significantly altered and in a situation where there was a limited amount of time the courts focused more on priority cases and postponed the rest. The change in the working hours is one of the reasons why several cases are being deemed less time-sensitive by the courts and hence are being postponed. The backlog only extends with time as the paucity of time and operating conditions are forcing courts to take up time-sensitive cases, which are mostly the new ones that are filed amid the pandemic concerning essential supplies or public healthcare services that needed immediate attention. Bail proceedings, the succession of estates and other such regular cases were deemed to be not as time-sensitive and hence were postponed.

Judicial infrastructure

The judiciary has responded rapidly to the pandemic and streamlined its digitization process, which was a significant positive development that was lauded by many. But India is still a country where internet connection is a luxury for many, the rural and semi-urban population who are not familiar with technology have struggled due to this new development. Lawyers from areas with intermittent or total lack of connectivity are unable to present their cases, and there is no recourse left since courts stopped operating physically due to the pandemic. Due to the digitization of proceedings, several cases go unheard or are postponed to a prospective date. The swift change from physical courts to the digital platform has left several advocates struggling too. People who had less urgent cases now have to wait even longer to have their pleas heard, the judiciary that is already overburdened will now become even more so because of the pandemic.

Basis of case priority and tracking

Another important reason for the delay is how the cases are tracked in courts, the administrative system tracks them on the basis of their assignment to courts. The district courts take up cases that require simple resolutions and the cases that need hearings and arguments are postponed to a later date. This system of postponement for argumentative cases results in the overall number of resolved cases unchanged with new ones piling on. The roster for cases also gives priority to the newly filed cases while the older ones are pushed further down on the list of priority. The system itself places more emphasis on the hearing of new cases days within they are filed, and considering the pandemic situation, all cases related to pandemic management and public health automatically gained precedence over other civil matters leading to them being delayed even more.

Effect of the backlog

The precautionary restrictions imposed are there to contain the spread of the coronavirus and the judiciary is also working within those restrictions. But e-courts are not accessible by all as lawyers who reside in areas with less to no connectivity cannot appear for their cases. Another possible issue that concerned legal professionals around the country was that the delay in the hearing of the cases would give malefactors ample opportunity to tamper with the evidence. This issue is not a new one and it had plagued the legal system long before the pandemic even started, but the pandemic brought with it more delays and this extra time could be misappropriated by miscreants to tip the scales in their favour. Consequently, another side effect of the delay is that people in police custody that have a pending bail proceeding would have to spend longer as their case goes unheard due to the ongoing crisis. The postponement of non-urgent cases to adjudicate more urgent ones are leading to even more of a backlog and delays in justice. And the effects will only amplify and create further delays when the courts start functioning normally again as the existing gives more importance to new cases that are filed. So when the courts do reopen the influx of newly filed cases will further create delays as new cases appear first on the roster followed by notice cases and then the old ones. The courts consider the older cases after hearing the new ones, and this might result in more delays.

Possible strategies for judicial sector response

The issue of delayed justice is a recurring problem that the Indian courts face and this issue has only become more severe with the effect of lockdowns and the pandemic crisis. The effect of the backlog is also felt differently with certain categories of people disproportionately being affected by it. Equal access to justice is the mandate of law and it is said that justice delayed is justice denied. While the restrictive pandemic protocols aim to protect the masses from the virus the negative effects of the same are manifold. But there are several ways that the judicial sector can try to counter these negative effects in order to give everyone equal access to justice and ensure speedy and efficient discharge of cases.

Establishing continuity plans for the judicial sector

The digitization projects that were streamlined due to the pandemic should be developed further. The e-platforms should pose a hindrance to equal access to justice, and therefore, to ensure that people all over the country can access e-platforms, the judicial sector should rethink its approach to accommodate all sections of people in the country. The pandemic provides an opportunity for the justice system to revamp it entirely to bring about efficiency to attack the problem of backlogs. This could include improving the existing communication and information technology systems. Another change that could potentially improve the situation would be digitizing the case management system entirely along with prison management systems in order to accurately assess the priority of cases in a lesser amount of time and more efficiently.

Establishing the criterion for prioritization of cases

The judiciary needs to establish a more elaborate criterion for determining the priority of cases without compromising on the rights of parties to seek justice. For example, crimes against children and by children should be prioritised more and in the case of the latter detention should be the last resort considering the condition of overpopulated correctional facilities which might become even more prejudicial in this pandemic situation. Violence against women and children should be given the most priority as such people are usually dependents and are often trapped with their abusers, and due to the lockdown and pandemic the cases, both reported and unreported have increased manifold. Violence against women and girls has been dubbed as the shadow pandemic, owing to the increase in violence and abuse owing to the Covid-19 pandemic according to UN sources The priority of cases should also be determined on the basis of accountability of crimes where they might be affected due to statute of limitations.

More emphasis should also be placed on the cases of people who have been disproportionately affected by the emergency measure and limitations. The focus of the judicial sector should be on developing procedures to facilitate the prioritization of cases that involve subject matter of non-derogable rights like human and fundamental rights. This needs to be done to ensure that a delay or postponement of a case does not deny the victims the justice they seek. The determination of priority should be free from external influence, mindful of the right to trial and non-discriminatory in nature. Additionally, the courts should use their discretion to provide interim relief in the form of temporary injunctions, procedural guarantees, restraining orders and other forms of resolutions based on summary proceedings.

Provision of personal protective equipment for law enforcement and judicial officers

E-court services are a positive development but in a country like India, it might deny access to justice for certain classes of people who lack proper technical knowledge and internet connectivity. So e-court services cannot be the only solution, instead, they should be developed in conjunction with physical courts. In order to open courts physically again, all involved personnel should be provided PPE to prevent the spread of disease. Police officers, court clerks, judges and advocates and all others provide an essential service that has been enshrined in our constitution. Along with frontline workers, the people in the judicial sector need PPE to open physical courts again.

Promoting restorative justice services

The pandemic provides an opportunity for the judicial sector to promote alternative dispute resolutions and restorative justice services. Processes like mediation and conciliation can prove beneficial to deal with cases involving family disputes or any other civil dispute which might not be prioritized by the courts in a crisis. It has been established that courts are overburdened with cases and due to the paucity of time sometimes may postpone less urgent cases in favour of ones that require immediate attention. But with mediation and other alternative dispute remedies, the cases can be resolved outside courts which might reduce the burdens of courts significantly. Even with online proceedings, the judicial system is buckling under the pressure of new cases being filed every day but restorative justice services can reduce some of that pressure by resolving issues without the need for hearings. In the current situation, a mandatory mediation or alternate dispute resolution would be educational and beneficial for the people, as not many know about such services and spend a lot of time, effort and money waiting for their cases to be resolved by overburdened courts.

Conclusion

The judicial system has been dealing with its own issues with reference to the lack of judges and backlogs that have prevented the system from working more efficiently. And the pandemic has only added salt to the wounds, the judiciary had to step up and take many different roles during the pandemic to ensure the public’s welfare where the executive failed to do so. But even with these best intentions and with the interest of the public in mind, the judiciary has to face yet another issue created and exacerbated by the pandemic. With the constant influx of newer cases, the judiciary has been forced to pick and choose based on their urgency which has left several others disgruntled.

References

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