Month: December 2013

Categories
Uncategorized

RBI needs to take a position on Bitcoin’s status soon

DeekshaSinghBangalore was the venue for an interesting event almost two weeks ago. The Global Bitcoin Conference was organised by the digital currency awareness organisation CoinMonk to highlight the importance of virtual or digital currencies. Bitcoin is the most prominent currency among these virtual currencies, that is, money that exists as computer code. Various stakeholders are keen on convincing the government and regulators that Bitcoin is a valuable economic innovation, and that it will not be used for illegal transactions.

What is Bitcoin?

Bitcoin is an open source, peer-to-peer, electronic cash system. It is software that allows the virtual currency named Bitcoin to be mined and stored in a personal Bitcoin wallet. It also allows users to send and receive Bitcoin(s). Bitcoin cannot be redeemed for another type of money or for a commodity, like gold. It is not backed by any government or other legal institution.

Traditional currency usually has the following features: scarcity, divisibility, portability, and easy storage. They are minted and issued by central banks of countries.

In the case of Bitcoin however, new Bitcoins are issued to competing ‘miners’ online. These miners solve problems using their computers and thus generate Bitcoin. A person can create unlimited free Bitcoin accounts. You can find a primer on the use of Bitcoins here.

BitcoinThe growing popularity of Bitcoin, since its inception in 2008, has resulted in the evolution of a number of entities such as exchanges, transaction services providers, and joint mining operations. It is now accepted by a number of service providers.

In India too, Bitcoin has found a fair number of users. According to this article in the Mint, more than 24,000 people in India have downloaded Bitcoin in 2013 itself. While this number of users is nowhere close to countries like U.S., China, or Germany, there is enough activity to suggest that government and regulators in India should pay attention. The Reserve Bank of India (“RBI”) however, is yet to take a stand.

Is Bitcoin currency?

Earlier this year, a U.S. District Court in Securities and Exchange Commission v. Trendon T. Shavers, as part of a larger discussion, discussed whether Bitcoin is a currency. The court held that:

“It is clear that Bitcoin can be used as money. It can be used to purchase goods or services, and as Shavers stated, used to pay for individual living expenses. The only limitation of Bitcoin is that it is limited to those places that accept it as currency. However, it can also be exchanged for conventional currencies, such as the U.S. dollar, Euro, Yen, and Yuan. Therefore, Bitcoin is a currency or form of money, and investors wishing to invest in BTCST provided an investment of money.”

Now, in India, Entry 36 in List I in the Seventh Schedule to the Constitution of India, 1950 squarely places the power of making law on the subject of ‘currency, coinage, and legal tender’ with the Union Government. The RBI was formed under the Reserve Bank of India Act, 1934 (“RBI Act”) to take over the management and issue of currency from the Central Government. Section 22 of the RBI Act gives the RBI the sole right to “issue currency notes of the Government of India”. Interestingly, there is no definition of ‘currency’ or ‘currency notes’ in the RBI Act. At the same time, there is also no express prohibition on issue of ‘private currency’ by private entities.

Blog-Corporate-Law-Banners

There is a definition of currency in Section 2(h) of the Foreign Exchange Management Act, 1999, according to which ‘currency’ includes “includes all currency notes, postal notes, postal orders, money orders, cheques, drafts, travellers cheques, letters of credit, bills of exchange and promissory notes, credit cards or such other similar instruments, as may be notified by the Reserve Bank”. This means that until the RBI notifies virtual currencies as ‘currency’, the management and issue of Bitcoin remains legally, a grey area.

The RBI is certainly aware of the existence of, and the risks involved with virtual currencies. While it has stated that the absence of a distinct legal framework means that the traditional rules of financial sector regulation and supervision are not involved, it has remained silent on what rules need be evolved to deal with such currencies.

That the regulation of Bitcoin and other virtual currencies is necessary is obvious even from a cursory examination of the legal issues it throws up. For example, a question similar to the issue in the Shavers case mentioned above, is whether Bitcoin investments in Indian entities will be considered ‘securities’? What about the ramifications on foreign exchange management and regulation? To quote this article, the use of Bitcoin can significantly reduce the costs of transferring U.S. dollars across the border from India. Of course, the opportunities for the use of such a currency—which is fungible with other currencies but is not owned or regulated by any government or legal entity—provides huge avenues for money laundering and use in illegal activities.

So, as the number of Bitcoin users in India increases and Bitcoin exchanges like Buttercoin gear up to start operations in India next year, the RBI (which has currently adopted a wait-and-watch policy) will need to clarify its position sooner rather than later.

(Deeksha Singh is part of the faculty on myLaw.net.)

Categories
Human Rights

A judgment very much in error — Part 3 (presumption of constitutionality and judicial overreach)

NoticeAndStayAdityaVerma_SupremeCourtcolumnWe need to get rid of two red herrings that have captured at least some of the debate that followed the Supreme Court’s decision in Suresh Kumar Koushal and Another v. NAZ Foundation and Others. The first is the issue of the presumption of constitutionality of the Indian Penal Code, 1860 (“IPC”) and the second relates to whether the Court characterised the Delhi High Court’s judgment as an instance of judicial overreach.

The question of presumtion of constitutionality

The rule of presumption of constitutionality of laws is that when any law is under judicial review, it is for the person challenging its constitutionality to establish its unconstitutionality. It is a rule of procedure applicable to cases in which the constitutional validity of a law has been called into question. It is not a substantive rule. If the law is not shown to be unconstitutional, its validity will be upheld. Conversely, the presumption of constitutionality is rebuttable, and it does not prevent a law from being declared unconstitutional.

The presumption of constitutionality of a law does not mean that a law is actually constitutional any more than the presumption of innocence until proof of guilt in criminal cases means that a person accused of a crime is actually innocent — it only means that the task of proving guilt lies on the prosecution.

Indian colonial laws authored by people like Thomas Babington Macaulay (left) and James Fitzjames Stephen (right) continue to benefit from the presumption of constitutionality.
Indian colonial laws authored by people like Thomas Babington Macaulay (left) and James Fitzjames Stephen (right) continue to benefit from the presumption of constitutionality. Macaulay is considered the author of the Indian Penal Code while Stephen is considered the author of the Indian Evidence Act. 

There is little controversy about the rule of presumption of constitutionality applying to laws made after the Constitution of India came into force. However, the IPC (including Section 377) is a pre-Constitution law. The High Court stated (Paragraph 105 of its judgment) and others have argued that the presumption of constitutionality of laws does not or ought not to apply to pre-Constitution laws, primarily because the colonial law could not possibly have anticipated the requirements of constitutional validity.

To the contrary, in Madhu Limaye v. Sub-Divisional Magistrate, (1970) 3 SCC 746, at page 753, a seven-judge bench of the Supreme Court has held:

“Pre-constitution laws are not to be regarded as unconstitutional. We do not start with the presumption that, being a pre-constitution law, the burden is upon the State to establish its validity. All existing laws are continued till this Court declares them to be in conflict with a fundamental right and, therefore, void. The burden must be placed on those who contend that a particular law has become void after the coming into force of the Constitution by reason of Article 13(1), read with any of the guaranteed freedoms.”

According to Article 395 of the Constitution, two pre-Constitution laws that were obviously at odds with the Constitution were expressly repealed – the Indian Independence Act, 1947, and the Government of India Act, 1935. According to the Article 372, laws in force prior to the commencement of the Constitution shall continue in force, subject to the other provisions of the Constitution, until altered or repealed. This should be read with Article 13(1), which makes pre-Constitution laws void “in so far as they are inconsistent with the provisions of [Part III – Fundamental Rights]”. This constitutional stricture applicable to pre-Constitution laws applies in analogous terms to post-Constitution laws, by virtue of Article 13(2).

The standard for validity of laws remains the same, whether the law in question is a pre-Constitution law or a post-Constitution law. Therefore, if Parliament does not repeal a law (such as Section 377, IPC), it remains in force by virtue of Article 372, unless its unconstitutionality is established. It bears reiteration that the presumption of constitutionality does not imply that Section 377 is actually constitutional any more than the presumption of constitutionality implies that any post-Constitution law is actually constitutional.

If the presumption of constitutionality does not apply to pre-Constitution laws, two anomalies arise.

– Firstly, there is no reason for anyone to consider themselves bound by any provisions of a law such as the IPC (which also criminalises murder, for instance), unless those provisions are declared constitutional. Not having a presumption of constitutionality is another way of saying that the law is not valid until found to be so by the Supreme Court or any high court.

– Secondly, many pre-Constitution laws still in force today are relatively innocuous – for instance, the Indian Contract Act, 1872, the Transfer of Property Act, 1882, the much-loved Code of Civil Procedure, 1908, and a substantial chunk of the law of tort (not all pre-Constitution laws are in the form of statutes). Is there any reason these laws should not have the presumption of constitutionality?

The Supreme Court in this case was correct to state that the presumption of constitutionality applies to Section 377. The error, as far as this issue is concerned, was in then stating (in Para 32 of the judgment):

“While [the presumption of constitutionality] does not make the law immune from constitutional challenge, it must nonetheless guide our understanding of character, scope, ambit and import.”

Article13(1)_ConstitutionofIndia.jpgThe phrase ‘character, scope, ambit and import’ appears to refer to the constitutional challenge. In other words, the presumption of constitutionality appears to erroneously guide the understanding of the question of the validity of the law, as if the presumption is a self-reinforcing one. A procedural rule was allowed to have a substantive impact. The presumption is only a rule of procedure meant to indicate that the party challenging constitutionality must establish it to succeed.

The fact that Parliament has not interfered with Section 377 only means that the presumption of constitutionality is applicable to it, not that the law, by virtue of having implied popular approval, is somehow more likely to be constitutionally valid. Popular approval has no relevance to Article 13. The question of whether a law is consistent with fundamental rights has to be decided by analysing the law with reference to those fundamental rights, and not by looking at how many people (presumably) support that law. The Constitution guarantees fundamental rights and democracy, not fundamental rights subject to democracy.

Did the Supreme Court characterise the High Court judgment as a case of judicial overreach?

Two or three passages from the Supreme Court’s judgment appear to have created an impression (especially prior to the publication of the full judgment online) that the main reason for setting aside the judgment of the High Court was the doctrine of separation of powers, with the Court acknowledging that interpreting Section 377 as unconstitutional would be an instance of judicial overreach. These passages perhaps were:

“In fact a constitutional duty has been cast upon this Court to test the laws of the land on the touchstone of the Constitution and provide appropriate remedy if and when called upon to do so. Seen in this light the power of judicial review over legislations is plenary. However, keeping in mind the importance of separation of powers and out of a sense of deference to the value of democracy that parliamentary acts embody, self-restraint has been exercised by the judiciary when dealing with challenges to the constitutionality of laws.” (Paragraph 26)

“In its anxiety to protect the so-called rights of LGBT persons and to declare that Section 377 IPC violates the right to privacy, autonomy and dignity, the High Court has extensively relied upon the judgments of other jurisdictions.” (Paragraph 52)

“Notwithstanding this verdict, the competent legislature shall be free to consider the desirability and propriety of deleting Section 377 IPC from the statute book or amend the same as per the suggestion made by the Attorney General.” (Paragraph 56)

By describing the interpretation by the High Court of Section 377 as “legally unsustainable”, the Supreme Court has impliedly endorsed the previous interpretations of Section 377, as a result of which any carnal intercourse other than penile-vaginal sex is classified as ‘against the order of nature’. Admittedly, this position of law was a result of judicial interpretation, which is certainly not beyond the scope of the Supreme Court.

While deference to legislative preference may appear to be part of the overall reluctance to uphold the judgment of the High Court, adjudication upon the core issues of the constitutional validity of Section 377 vis-à-vis Articles 14, 15, and 21 was unavoidable. The judgment of the Supreme Court is unambiguous in concluding that in substance, Section 377, as interpreted prior to the judgment of the High Court, does not violate the Constitution.

(The previous parts of this article are here and here.)

(Aditya Verma practices as an Advocate at the Supreme Court of India. He is an alumnus of NLSIU, Bangalore, and is on the roll of solicitors in England and Wales.)

Categories
Uncategorized

Clarity long overdue in FDI limits for corporate agents in the insurance sector

DeepaMookerjee.jpgThe Insurance Laws (Amendment) Bill, 2008 proposes to increase the foreign direct investment (“FDI”) limit in the insurance sector to 49 per cent from the current limit of 26 per cent. Since there is no clear indication of when Parliament will pass it, we can focus on clearing some ambiguity about the current foreign investment regime.

The Department of Industrial Policy and Promotion (“DIPP”) in its Consolidated FDI Policy (effective from April 4, 2013) states that 26 per cent FDI is permitted in the insurance sector under the automatic route, provided the companies bringing in FDI obtain the necessary licenses from the Insurance Regulatory and Development Authority (“IRDA”), India’s insurance regulator of India. This means that provided a licence is obtained from the IRDA, there is no need to obtain approval from the Government, the Foreign Investment Promotion Board (“FIPB”), or the DIPP for any foreign investment up to 26 per cent.

Section 2(7A) of the Insurance Act, 1938 states that the 26 per cent limit applies to insurance companies. What about intermediaries or other players in the insurance sector, such as corporate agents, insurance brokers, third party administrators, and insurance surveyors? The Act does not mention whether such a limit applies to them.

The IRDA has notified rules and regulations in relation each intermediary. The IRDA (Insurance Brokers) Regulations, 2002 (at Regulation 10(2)) and the IRDA (Third Party Administrators-Health Services) Regulations, 2001 (at Regulation 3(6)) clearly specify that foreign investment up to 26 per cent is permitted. A recent amendment to the Insurance Surveyors and Loss Assessors (Licensing, Professional Requirement and Code of Conduct) Regulations, 2000 (regulating insurance surveyors) has also specifically inserted the 26 per cent limit. The position of these intermediaries is therefore clear, both under the FIPB policy and under the IRDA rules and regulations.

There is however, another key category of intermediaries about which the IRDA has not issued any clarifications — corporate agents. Corporate agents are intermediaries in the insurance sector who sell and solicit insurance products. Simply put, an insurer appoints a corporate agent (who is registered with the IRDA) to sell its insurance products to the public. Sale by an unregistered intermediary is prohibited.

Blog-Corporate-Law-BannersCorporate agents are governed by the IRDA (Licensing of Corporate Agents) Regulations, 2002 and the Guidelines on Licensing of Corporate Agents dated July 14, 2005. None of these regulations specify any FDI limit. In absence of any specific reference however, it can be argued that one should refer to the Consolidated FDI Policy since it is the one document that consolidates all instructions regarding FDI in India. If this interpretation is to be taken, corporate agents, being a part of the insurance sector will automatically be subject to the 26 per cent FDI cap. However, Berkshire India, a corporate insurance agent, is shown as a majority owned subsidiary of Berkshire Hathaway Inc., a foreign company. This would mean that there is 100 per cent foreign investment in Berkshire India. While news reports suggest that the FIPB is concerned about 100 per cent foreign investment in corporate agents, there is no clear circular or regulation issued by the IRDA in this regard.

In the absence of clarity, it can be argued that the amount of foreign investment permitted depends on the nature of the corporate agency.

Corporate agency is not meant to be the principal business of an entity. This is evident from the Guidelines on Licensing of Corporate Agents dated July 14, 2005, which states at Paragraph 1 that an applicant for corporate agency should normally be a company whose principal business is something other than the distribution of insurance products. Insurance distribution should be a subsidiary activity.

FDI limits for intermediaries in the insurance sector
FDI limits for intermediaries in the insurance sector

This means that corporate agents are normally entities that carry on other businesses as their principal activity. Commercial banks, for example, carry on banking business as their principal activity and corporate agency as their subsidiary activity. In such a situation, the foreign investment limit should be governed by the amount of foreign investment permitted in the principal activity. So, a bank will be governed by foreign direct investment of the banking sector rather than of the insurance sector. This is because the bank’s principle business is banking.

Some provisions on the other hand, permit stand-alone corporate agents. These are entities that solely carry out corporate agency business. In such a case, the 26 per cent cap should strictly govern these entities, as they are only engaged in the insurance sector.

This means that the amount of FDI in a corporate agent can differ depending upon the nature of the corporate agency business. If corporate agency is the principal activity, the 26 per cent cap will apply. If corporate agency is a subsidiary activity, the rules governing the principal business, will determine the FDI limit.

While there is no formal clarification, either from the FIPB or from the IRDA, given that entities such as commercial banks cannot be subject to two different FDI investment limits, this appears to be a likely explanation.

In any event, formal clarification from the IRDA to clear the air on FDI limits for corporate agents is long overdue.

(Deepa Mookerjee is part of the faculty on myLaw.net.)

Categories
Human Rights

A judgment very much in error — Part 2 (Dignity, privacy, and reasonableness)

Article21_ProtectionOfLifeAndPersonalLiberty_ConstitutionofIndia.jpgThe Delhi High Court had concluded that interpreting Section 377 to include consensual acts between adults violated Article 21. The Court had reasoned that not doing so would result in:

– Violation of the right to dignity, which is part of the right to life, as interpreted by the Supreme Court. The High Court provided a Kantian colour to the meaning of ‘dignity’, stating that “at root of the dignity is the autonomy of the private will and a person’s freedom of choice and of action”, and that “Section 377 IPC denies a person’s dignity and criminalises his or her core identity solely on account of his or her sexuality and thus violates Article 21 of the Constitution.”

NoticeAndStayAdityaVerma_SupremeCourtcolumn– Violation of the right to privacy, which is part of the right to life, as interpreted by the Supreme Court, and internationally. The right to privacy thus has been held to protect a “private space in which man may become and remain himself”, and “privacy recognises that we all have a right to a sphere of private intimacy and autonomy which allows us to establish and nurture human relationships without interference from the outside community. The way in which one gives expression to one’s sexuality is at the core of this area of private intimacy.”

– The law being unreasonable, as no compelling state interest was proved — this is a requirement under Article 21 as interpreted by the Supreme Court for validity of a law curtailing personal liberty. The high incidence of HIV/AIDS among male homosexuals and their medical treatment to ‘cure’ them of homosexuality were raised as arguments to show a compelling state interest in support of criminalisation. These arguments were rejected in the face of contrary evidence (from the National Aids Control Organisation and the Ministry of Health) that criminalisation actually increases health risks by driving affected individuals underground where they are susceptible to severe harassment, and psychological studies indicating that homosexuality is not a ‘disease’. ‘Reasonableness’ therefore, was not proved, especially as the State admitted that Section 377 was not enforced against homosexuals in practice, which betrayed the absence of a genuine public health interest. Popular morality against homosexuality, it was also argued, provided a compelling state interest in criminalising it. This argument was rejected as popular morality is distinct from constitutional morality, and only the latter can be used to restrict fundamental rights. Mere disapproval is not a sufficient reason for criminalising an activity.

Again, there were three distinct grounds (highlighted in bold above) in relation to life and personal liberty on the basis of which the High Court interpreted Section 377 to exclude carnal intercourse between consenting adults in private. In order to set aside the judgment of the High Court, it was necessary for the Supreme Court to conclude that each of these grounds was fallacious.

Analysis of the Supreme Court judgment in relation to life and personal liberty (Paragraphs 45 to 49 and 52 to 53)

In Paragraph 45, the judgment recognises that Article 21 requires laws to be just, fair, and reasonable. Paragraphs 46, 47, and 50 acknowledge that privacy and dignity are within the ambit of Article 21.

In Paragraph 48, a case is cited in the context of reproductive rights and abortion to demonstrate that while a woman has full control over her reproductive rights under Article 21, the right to abortion is not absolute. The conditions for abortion specified in the Medical Termination of Pregnancy Act, 1971 are reasonable given the “compelling state interest in protecting the life of the prospective child”. The judgment does not discuss how this case provides a sufficient analogy to establish a compelling state interest in criminalising consensual penile–non-vaginal intercourse.

In Paragraph 49, another case is cited in the context of the medical duty of confidentiality of patients. Recognising that although a patient has a general right of privacy, the duty of confidentiality does not prevent a doctor from informing the patient’s wife-to-be that he (the patient) is HIV+. Again, there is no discussion how this analogy is relevant in to consensual penile–non-vaginal intercourse.

Needless to say, in contrast to the examples in Paragraphs 48 and 49, the existence of consent and the absence of harm would be distinguishing factors.

Out of the three challenges under Article 21, the judgment only attempts to deal with ‘reasonableness’ and ‘existence of a compelling state interest’. The challenges under the right to privacy and the right to dignity are not refuted.

In Paragraphs 52 to 53, the judgment cites other cases to the effect that judgments from foreign jurisdictions need not necessarily be adopted by Indian courts. This is correct, The reliance on foreign judgments by the High Court however, was only to develop persuasive reasons within the framework of the requirements of the Indian Constitution, and not as an appeal to formal authority. Without addressing the arguments on privacy and dignity, disapproving the reliance on foreign judgments and using it to set aside the judgment of the High Court is a case of missing the forest for the trees.

There were six distinct constitutional challenges to the existing interpretation of Section 377 – three each under Articles 14 and 15 (which I wrote about in the first part of this article) on one hand, and Article 21 on the other. To set aside the judgment of the High Court, the Supreme Court had to refute each of these six challenges. To say it fell short of doing so in respect of any of them is an understatement.

Amidst signs of a possible political solution to negate the effect of the judgment, it is clearly not a stage where something like a ‘jail bharo’ campaign would appear to be a conscientious imperative to force a change in an unjust law. It would be ideal that the Supreme Court sets right this constitutional malady on its own in review or curative proceedings.

The next part of this article will look at the debate around the presumption of constitutionality of laws and judicial overreach.

(Aditya Verma practices as an Advocate at the Supreme Court of India. He is an alumnus of NLSIU, Bangalore, and is on the roll of solicitors in England and Wales.)

Categories
Uncategorized

The more “catch-all” the reference, the better

SindhuSivakumar_DraftingForArbitrationDispute resolution clauses, including arbitration clauses, are often called “midnight clauses”, because parties and their counsel have a tendency to treat these clauses as “boilerplate”, leaving their negotiation and drafting to the absolute last minute. Rarely is attention paid to the precision of the language used. In fact, many clauses  — for instance, “English law – arbitration, if any, London according ICC Rules” — are not even complete sentences. As we will explore in this post, this can sometimes have unintended consequences for the parties.

The language used tends to vary widely in relation to the scope of reference in the arbitration clause. Even the model arbitration clauses provided by the different arbitral institutions are not consistent.

For example, the London Court of International Arbitration (“LCIA”) model clause prefers the language: “Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration under the LCIA Rules, which Rules are deemed to be incorporated by reference into this clause.”

On the other hand, the International Chamber of Commerce (“ICC”) recommended clause reads: “All disputes arising out of or in connection with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules.”

Some arbitration clauses will contain language that is even simpler than this: “All disputes arising under this agreement shall be referred to arbitration.”

Does the language you use matter? Generally speaking, the answer is ‘No’. Most Model Law jurisdictions follow a pro-arbitration policy of giving effect to arbitration clauses unless the language makes it almost impossible to do so, as was the case with the Sulamerica clauses.

Blog-Corporate-Law-Banners

That said, there are several cases where the courts have been more semantic in their approach. For example, in one case, the language “arising under” was said to signify a narrower reference than “arising out of” (Heyman v. Darwins Ltd., [1942] AC 356).  In another (Overseas Union Insurance Ltd. v. AA Mutual International Insurance Co. Ltd., [1988] 2 Lloyd’s Rep 63), the words “arising under a contract” were not considered wide enough to include disputes in relation to the validity of the contract itself, such as a misrepresentation claims. In order to include such disputes within the scope of reference, language like “in relation to” or “in connection with” was held to be required.

However, these decisions were much criticised by Lord Hoffman of the House of Lords in Fiona Trust and Holding Corp. v. Privalov, [2008] 1 Lloyd’s Rep. 254 (H.L.). He said:

“…in my opinion the distinctions which they [the cases we referred to] make reflect no credit upon English commercial law. It may be a great disappointment to the judges who explained so carefully the effects of the various linguistic nuances if they could learn that the draftsman… regarded the expressions “arising under this charter”…and “arisen out of this charter”… as mutually interchangeable. … the time has come to draw a line under the authorities to date and make a fresh start…”

Courts, Lord Hoffman recommended, need to “…give effect to the reasonable commercial expectations of the parties about the questions which they intended to be decided by arbitration….”

This approach will find favour in most modern courts, including in India. See, for example, the decision of the Andhra Pradesh High Court in M/s. Krebs Biochemicals v. Nannapaneni Venkatrao (July 6, 2009).

From a drafting perspective, the lesson one takes away is this — be as wide as possible with the language of the scope of the reference in your arbitration clause; the more “catch-all” it is, the better. That said, the mere fact that you don’t include the words “in connection with” or “in relation to” or “including any question regarding its existence, validity or termination” should not be fatal. In all likelihood, your clause will still be held to cover issues such as the validity of the agreement.

(Sindhu Sivakumar is a member of the faculty on myLaw.net.)