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Four rules that will help you navigate the perils of online legal research

DeekshaSinghAs online resources become the primary tool for legal research, some basic rules will help avoid common pitfalls.

1. Have a research plan

We have all gone online to look up one thing and ended up some time later reading or watching something completely unrelated. It is easy to lose track of where you are up to and even what things you have already looked at.

To deal with this, you could maintain handwritten notes or keep notes on a separate document open on your computer. List the websites that you have been to and keep track of the sources you want to come back to. Many subscription services, such as Manupatra, even provide a function where you can save all or some of your search results.

Also remember that when you use search engines like Google, Yahoo!, and the like to find resources, you need to follow a research plan. If you do not know what you are looking for, then a general Internet search is probably going to result in you wasting more time, rather than finding anything useful. In those cases, it’s better to start with a general text or other treatise on the subject. However, if you do know what you are looking for—a specific case or author, for example—then you may find online, exactly what you need, very quickly.

A note of caution here—if you are presenting a research paper in law school, for example, do not simply rely on the contents of what comes up in the first one or two pages of a Google search. If you do, you will likely find that your research is no more extensive (and almost identical) to that of many other students in your class.

2. Identify the correct search terms

One of the key steps of legal research, whether online or offline, is generating the right search terms.

Keep a note of key words that come to mind as you are analysing the legal problem. It is easier to generate key search terms by keeping in mind categories of information such as the parties, the places and things involved in the case, the potential claims or cross-claims and defences, the conduct of the parties, and the injury or harm suffered.

JuvenileJusticeWordCloudIt helps to start with broad search terms and to narrow them down as your research proceeds, especially if you are researching an issue in an unfamiliar area of law. You can narrow the search terms down once you are sure you are on the right path. Looking at the results from broad search terms and reconsidering the research issue before you, will help you generate narrower search terms.

Remember, in online research, you may have to play around with several search terms to ensure that you are aiming your research in the right direction. Starting with a simple one-word Google search is most likely going to be useless, or at least a waste of time.

The increased use of technology has also changed the legal research landscape in many ways. We now have access to a wider variety of authorities, both within and from outside any jurisdiction. This makes the analysis of information and critical thinking about the law even more difficult and we need to be able to do more than enter queries into search engines. We need to be able to access, sort, and analyse information intelligently and in a continuously flexible fashion.

It might actually be more helpful to begin with a general textbook or other print resource if you are doing research in an area that you are unfamiliar with. Something as simple as scanning a table of contents might help you frame a more effective search term, find the leading case or main statute, or help you narrow down the areas you need to look into further.

3. Know when your research is sufficient

When do you know that you have done enough research? Efficient research requires knowing not only how and where to begin research, but also having an idea of where to draw the line in the research process. No matter what form of research you are doing, you will need to learn to recognise when to stop your research and collate it.

The challenge with legal research these days is to find the information that you need from amongst the massive amount of information available online. Any search that you conduct turns up hundreds, or thousands, of results. Often two practical considerations will limit your research: namely economics (or the costs involved), and the time you have to complete your research.

When you are given a topic to research at work, it is important to evaluate the stakes that are involved. If it is a legal opinion for a client, then you need to decide beforehand, the amount of information your client would require at that stage. If your firm is billing the client by the hour, the research can be endless but time is an important factor that will dictate the conclusion of your research.

Apart from these practical considerations, the findings of your research may by themselves indicate when you need to stop. It is highly unlikely, for example, that you will find a case with facts identical to your case, but if you have found a case with similar legal issues, and from a superior court in your jurisdiction, in short, a case that is ‘on point’, then you can probably safely end your research on that issue. Another indication that your research is complete is when you begin bumping into the same authority repeatedly.

4. Ensure the information you find is credible and accurate

One of the biggest challenges in online research is ensuring the credibility of your sources and the accuracy of the information you get.

librarycardstackIn the case of primary sources, for example, you might wonder how you know whether the legislation that you are reading is the most up-to-date version. The variety of secondary sources presents even greater difficulties. You might find an article but how do you know whether the person who has written it is credible, or has sufficient knowledge in the area so as to be reliable?

Often, you will not be able to confirm the veracity of your sources but you can, however, ensure that you choose more popular sites more often, and rely on those sites, services, and authors that are generally considered credible. Use your common sense—it might be okay to present a blog post as evidence of someone’s opinion, but unless the author is an established expert in the field, it is probably not a good idea to rely on that opinion as truth or authority, or as a way of establishing something as a fact.

Most departments of the government and government bodies such as courts and regulatory bodies have websites. While some are better than others, many of them contain a wealth of information. Legislation and the judgments from most superior courts in India are available online. The versions of judgments and statutes that you find on these websites are usually reliable as they are published by the very body that produced or authored them. When conducting research on areas of international law, take the time to find the official government websites.

A note of caution here—unfortunately in India, government websites are often not updated to reflect the most current statute. You will often find old versions. Always combine your research on government websites with research on paid subscription resources or even a recent printed text to be sure that you are relying on current legislation.

Databases hosted by universities and other higher learning institutions are often excellent sources for authoritative journal articles.

Then, there are unofficial websites that focus on law and legal research. By ‘unofficial’, we mean those that are not hosted by a recognised governmental department or established university. Just keep in mind that you may need to back up or check your research with a more credible source, or with a print resource, depending on what you are researching and the kind of audience your research will be presented to. Some free, popular and useful websites for Indian law resources on the Internet are JUDIS, Google Scholar, and IndianKanoon.

In addition, there are subscription databases that you will only have access to if you, your firm, university, or company has a paid subscription. These databases, such as Manupatra, LexisNexis, and Westlaw, include judgments and legislation, and many also offer a significant database of scholarly articles and textbook-style material. Each of these databases is presented and used differently, so you do need to ensure that you learn how to use them properly to research efficiently and effectively.

To conclude, as with most aspects of legal research, online research takes practice and some patience. We should not make the mistake of thinking that, because we are all so familiar with the Internet these days and use it constantly, that online legal research will be similarly easy or familiar. Take some time to learn about the different resources that are available, and familiarise yourself with the various search techniques that you need to use across those resources. As you develop your research skills, you will become familiar with the sites that you consider most reliable and simple to use. By relying on those sites and databases that you trust, as well as constantly being on the look out for new resources, you will always have the information that you need at your fingertips.

Deeksha Singh is part of the faculty at myLaw.net.

Written by myLaw

Carpet area definition, regulatory sweep, funds in escrow remain concerns in welcome real estate law

VeraShrivastavThe objective of the Real Estate (Regulation and Development) Bill, 2013 (“Bill”) was to inject transparency and good governance norms in the real estate sector and to address some of the recurring grievances of consumers including unfair buyers’ agreements, unauthorised constructions, the diversion of funds by builders, black money transactions, regulatory delays, lack of clarity on approvals, failure to complete the projects within stipulated times, delays in delivering possession, delays due to litigations or proceedings arising during the development of projects, and the lack of accountability. The Competition Commission of India, in Belaire Owners Association v. DLF had highlighted the absence of a robust consumer grievance redress mechanism.

The Bill proposes to establish a Real Estate Regulatory Authority (“RERA”) in each state to regulate and monitor real estate transactions in an efficient and transparent manner. All projects have to be registered mandatorily with the RERA. Layout plans, builder details, and the status of land and approvals and other such information has to be mandatorily disclosed.

In 2014, the Parliamentary Standing Committee recommended some changes to the Bill but for the most part, recent amendments have not considered these recommendations.

Definition of “carpet area”

“Carpet area” has been defined as the “net usable floor area”. The Standing Committee had recommended clearly defining this term but the Bill has only defined it in relation to its definition under the National Building Code. Effectively, this means that the term “carpet area” can be revised without amending the law. The definition is thus easily susceptible to abuse.

Regulatory sweep

Projects smaller than 1000 square meters or twelve apartments are excluded from the Bill’s purview. The Committee had recommended excluding only projects smaller than 100 square meters or three apartments, but this has not been accepted. A large number of small housing projects will therefore be outside regulatory supervision.

Funds in escrow

A certain part of the buyers’ investment has to be maintained in a separate account to be used only for construction purposes. This was to ensure the proper use of buyers’ funds and to prevent the diversion of that money. The Bill had proposed that the buyer should maintain 70% of the buyers’ investment in this manner but permitted state governments to set a lower or higher standard. This was a major loophole as governments may be vulnerable to pressure from politicians and builder’s lobbies. The figure of 70% was further reduced to 50% with the amendment.

This provision should provide a fixed percentage of the funds to be maintained in escrow and state governments should only be allowed to modify this requirement under exceptional circumstances.

Post-grant registration

RealEstateIndiaOriginally, a project had to be registered within fifteen days of an application to the RERA but this period has now been extended to three months. This could lead to uncertainty about the project, which is compounded because the consequences of the rejection of an application are also not clearly spelt out. The buyer will be monetarily refunded but his time, effort, and cost of opportunity lost in finding other suitable projects are irreplaceable. Abhishek Sharma, a partner at Khaitan & Co. recommended retaining the original clause.

Extension of registration

Originally, the authority could permit the extension of a project  under conditions prescribed in the regulations by RERA. The amendment now specifically provides for extension on grounds of ‘regulatory delay’ in the act itself, which are  not attributable to the builder. This is over and above the conditions prescribed in the regulations.

This is a necessary and practical carve out so that the builder will not be unnecessarily blamed for regulatory delays on approvals and permissions. Even if these express exclusions are not eventually allowed under the law, the authority will have the discretion to provide them under the regulations.

In 2012-13, the Committee on Streamlining Approval Procedures for Real Estate Projects had recommended establishing a single window clearance system for approvals to fast track the process. It may be worth having another look at it.

Alternation of structure and rectification of defects

Once submitted to the authority, the alteration of the structure was prohibited. Moreover, a builder was required to rectify any structural defects without charge to buyer, if such defect was discovered within two years from handing over possession. The Committee had recommended increasing this time period to five years but this has not been adopted.

The amendment now permits minor alterations to the structure as required by the buyer or as recommended and verified by an authorised architect or engineer. The fact that minor alterations cannot be effected without the consent of the buyer or proper verification by authorised experts is sufficient safeguard for the buyers.

Any other alteration to the proposed structure would require the consent of a 2/3rd majority of the buyers. While this appears to be fair, Mr. Sharma points out that the well-intentioned deletion of a provision requiring the builder to provide, on the website of the authority, a quarterly list of the details of apartment or plots booked, will make it hard to ascertain the majority of buyers.

Further, builders now will need to not only cure structural defects but also defects in workmanship, quality or provision of services, and other obligations of the builder.

Bias

The Bill originally disbarred a chairperson or a member of RERA from accepting any employment with any person or organisation connected with any work regulated under the bill after retirement. By placing a bar for only two years after retirement, the amendment opens the door for bias.

Thus the Bill, barring a few contentious provisions, appears to be a welcome move to bring in accountability and transparency in the real estate sector. The RERA will have wide powers to regulate projects and penalise defaulters and the timely completion of projects will provide much-needed respite.

(Vera Shrivastav is an Associate at the LegaLogic law firm and is a part time researcher and writer.)

Written by myLaw

Best efforts clauses: Reluctance of US courts to define a “best effort” shows it is important to define it in the contract

SamarJha“Best efforts” clauses are among the most contentious and heavily negotiated clauses in asset purchase and share purchase agreements. They require one (or both) of the parties to use their highest efforts to perform some obligation. While the clause may (or may not) require a party to achieve a specific goal, the use of the term “best efforts” creates a strict standard of compliance. Effort clauses therefore require a party to commit to a particular standard of effort to comply with the provisions of the contract. For instance, in the clause, “Supplier agrees to use commercially reasonable best efforts to satisfy the requirements of…”, the best efforts clause is qualified with the term “commercially reasonable”. Common variations of “best efforts” include “reasonable efforts” and “commercially reasonable efforts”.

These clauses are generally used in situations where a party cannot guarantee a particular outcome that has to be performed under a contract, where a situation is beyond a party’s control, where there is unpredictability about the promising party’s ability to achieve an objective, or where a promising party refuses to agree on a covenant. For example, a clause may specifically state, “The Purchaser shall make any necessary filings with respect to, and use its [best efforts/reasonable best efforts/commercially reasonable efforts] promptly to obtain, all authorizations, consents, orders and approvals of all Governmental Authorities and officials that may be or become necessary for its execution and delivery of, and the performance of its obligations pursuant to, this Agreement and will cooperate fully with the other parties in promptly seeking to obtain all such authorizations, consents, orders and approvals.

According to § 2-306 (2) of the Uniform Commercial Code (“UCC”), a lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposes, unless otherwise agreed, an obligation on the seller to use “best efforts” to supply the goods, and on the buyer to use “best efforts” to promote their sale.

The UCC standards are unclear because Official Comment 5 does not distinguish between “best” and “reasonable” standards of effort. It explains that the obligation on the parties is to use “reasonable diligence as well as good faith”. On the face of it, it looks as if the standard is not that strict.

Your reasonable efforts are your best efforts, say US courts

BestEffort

 

Interpreting such terms according to the facts and circumstances of the case, courts have interpreted “best efforts” as “reasonable efforts” and in decisions such as Soroof Trading Development Company LTD. v. GE Fuel Cell Systems LLC, 842 F. Supp. 2d 502 (S.D.N.Y., 2012) by the Southern District of New York, these terms have even been used interchangeably. In Bloor v. Falstaff [601 F.2d 609 (2d Cir. 1979)], the court stated that while performing its obligations using best efforts does not necessarily “prevent the party from giving reasonable consideration to its own interest”, such action or inaction has to be in “good faith and to the extent of its own total capabilities” and like an “average prudent” performer. In US Airways Group, Inc. v. British Airways PLC [989 F. Supp. 482 (S.D.N.Y. 1997)], British Airways delayed investments totaling USD 750 million into the US Airways Group by not obtaining the necessary approvals without telling the latter about their intentions to not continue with the deal. The duty of good faith and fair dealing, the court said, is implied in every contract and the actions of British Airways were construed as not being their “reasonable best efforts” and a transaction done in ba

In Hexion Speciality Chem. Inc. v. Huntsman Corp. [965 A.2d 715 (Del. Ch. 2008)], the court held that the buyer breached its covenant to use “reasonable best efforts” to close the merger (Huntsman was the target, and Hexion the buyer) when Hexion took steps to subvert the financing it was seeking to acquire Huntsman. Hexion filed a suit seeking to terminate the merger without paying the contractually mandated reverse break-up fee. It argued that the surviving entity after the merger would be insolvent and Huntsman’s poor financial results triggered the material adverse effect clause in the agreement. It was held however, that one poor financial result does not trigger it and that ultimately, since Hexion did not perform the obligation in good faith, its actions constituted a willful and intentional breach.

Recently, in Apollo Tires v. Cooper Tires, Civil Action No. 8980-VCG, the moot point was whether Apollo Tires (the buyer) had failed to use “reasonable best efforts” to reach the negotiated agreement with the United Steelworkers Union (“USW”) as required by the merger agreement. The court said that a provision that specifically mandated an obligation to obtain antitrust and other regulatory approvals couldn’t be interpreted to include within it, an obligation to obtain third-party contractual consents. The language of the efforts clause asked for obtaining antitrust and other regulatory approvals and did not talk about third-party consents. In the end, Cooper Tires could not prove that Apollo Tires did not use “reasonable best efforts” to obtain the consent from USW.

Courts clearly are reluctant to provide a definition for “best efforts”. They rightly treat this issue according to the specific facts and circumstances of the case and do not have a particular definition for the term. It is not a “hell or high water” clause as it is sometimes called because, as we have seen, the promising party does not always have to do everything in its power to conclude the obligation. The courts make sure that the promising party does not ignore their own interest, incur losses just to perform the obligation, or ignore its fiduciary duties. It is important however, that the promising party’s obligation is performed in good faith and there is no willful breach of the obligation.

Define “best efforts” to reduce uncertainty

To avoid uncertainty in terms of performing obligations and enforcement, firstly, it is important for the parties understand their rights and obligations under the “best efforts” provisions. Parties can also define the terms in the contract. As we have seen, courts have provided a subjective interpretation only when the agreement did not provide a definition for “best efforts”. The definition should clearly define the promisor’s capability, reasonable business practice, and the industry standard in relation to the obligation. Providing objective criteria would implore the courts to stick to the contractual language.

Samar Jha recently received an LLM from the University of Pennsylvania Law School.

Written by myLaw

After Satyam – how a scandal changed corporate governance law in India

VeraShrivastav

[Learn Corporate Governance and the Fundamentals of Company Law.]

The Satyam scandal of 2009 gave Indian corporate stakeholders a cataclysmic jolt. Ramalinga Raju, who was recently sentenced to seven years in jail, was the chairman of Satyam Computer Services who committed financial fraud to the tune of Rs. 7000 crore. Shockingly, the company’s auditors, PricewaterhouseCoopers, did not notice it. The scale of the scandal and the auditing firm’s neglect brought to light glaring loopholes in the regulatory and legal framework dealing with the directors and the auditors of companies. Eventually, it led to changes in the law.

Before Satyam

Before the scandal, the erstwhile Companies Act, 1956, the primary legislation dealing with the conduct of corporations in India, did not contain any provision for independent directors or impose any stringent obligations on auditors. The report of the Kumar Manglam Birla Committee in 1999 recommended improvements to the function and structure of the board of directors of a company and emphasised disclosures to shareholders. Clause 49 of SEBI’s Listing Agreement (applicable to listed companies only) became a reflection of these recommendations. In 2002, the Naresh Chandra Committee on corporate audit and governance, drawing from the Sarbanes-Oxley Act in the United States, suggested various reforms relating to the appointment of auditors, audit fee, and the certification of accounts. In 2003, the Narayana Murthy committee analysed the role of independent directors, related parties, and financial disclosures. Clause 49 was amended to incorporate its recommendations with respect to the requirement of independent directors on corporate boards and audit committees and the compulsory disclosures that listed companies had to make to its shareholders.
[Learn Corporate Governance and the Fundamentals of Company Law.]

After Satyam

After the scandal, the Confederation of Indian Industries set up a task force to suggest reforms and the National Association of Software and Services Companies established a corporate governance and ethics committee headed by Narayana Murthy. The report of the latter addressed reforms relating to audit committees, shareholder rights, and whistleblower policy. SEBI’s committee on
disclosure and accounting standards issued a discussion paper in 2009 to deliberate on (i) the voluntary adoption of international financial reporting standards; (ii) the appointment of chief financial officers by audit committees based on qualifications, experience, and background; and (iii) the rotation of auditors every five years so that familiarity does not lead to corporate malpractice and mismanagement. In 2010, SEBI amended the Listing Agreement to include the provision dealing with the appointment of a chief financial officer but it did not insist on the compulsory rotation of auditors.

In 2009, the Ministry of Corporate Affairs also released a set of voluntary guidelines for corporate governance, dealing with the independence of directors, the roles and responsibilities of audit committees and the boards of companies, whistleblower policies, the separation of the offices of the chairman and the CEO to ensure independence and a system of checks and balances, and various other provisions relating to directors such as their tenures, remuneration, evaluation, the issuance of a formal letter of appointment, and placing limits on the number of companies in which an individual can be a director.

A new company law – independent directors, accountable auditors, additional disclosures

India’s 2013 company law incorporated many provisions and reforms suggested by the various committees and organisations during the past decade. It clearly established the responsibility and accountability of independent directors and auditors. It provided for the compulsory rotation of auditors and audit firms. In fact, it even prescribed a statutory cooling off period of five years following one term as an auditor.

Under the Companies Act, 2013 (“the Act”), an auditor cannot perform non-audit services for the company and its holding and subsidiary companies. This provision seeks to ensure that there is no conflict of interest, which is likely to arise if an auditor performs several diverse functions for the same company such as accounting and investment consultancy services. Auditors also have the duty to report fraudulent acts noticed by them during the performance of their duties.

Ramalinga Raju

Ramalinga Raju

The new law also insisted on companies having independent directors, that is, directors who do not have a material or pecuniary relationship with a company. The requirement under Clause 49 of the Listing Agreement, which applied only to listed companies, would thus apply to many more companies. Independent directors have been prohibited from receiving stock options and are not entitled to receive remuneration for their services, except for reimbursement. At least one-third of the board of a company has to consist of independent directors. Even the audit committee has to feature a majority of independent directors. One independent director is required to be a member of the remuneration committee as well.

Additional disclosure norms such as the formal evaluation of the performance of the board of directors, filing returns with the Registrar of Companies with respect to any change in the shareholding positions of promoters and the top ten shareholders, were also mandated. After Satyam, aggrieved Satyam stakeholders in the United States were able to initiate class action suits against the company and its auditors for damages. The same remedy is now available to Indian stakeholders.

(Vera Shrivastav is an Associate at LegaLogic law firm and is a part time researcher and writer.)
We hope you liked this article. You might want to check out our courses on  Corporate Governance and the Fundamentals of Company Law.]

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A neutral Internet may not be the best idea for India

ShreedharSasikumarMost consultation papers go straight from the printer to the archives but the latest from India’s telecommunications regulator, the TRAI, on a regulatory framework for over the top (“OTT”) services, has prompted strong dissent.

Let us get this out of the way early. The paper is a terrible piece of public policy. It reads as if written by a lobbyist for Airtel and the synopsis could well be, “Internet publishers like Google and Facebook are making a boatload of money using our (Telecom Service Providers) networks and we want a bigger cut”.

Most of the ‘angst’ expressed by telecom service providers (“TSPs”) is directed at messaging services (like Whatsapp) and Voip services (like Skype), which are ‘free-riding’ on TSP networks. These OTT services provide customers an alternative to TSP services like SMS and international calls. Since OTT services are exempt from the various quality and consumer protection regulations placed on TSPs, the paper argues that OTT services deprive ‘licensed operators and governments of their legitimate revenues’. The paper then continues on to twist itself in loops to expand the definition of OTT services to services offered by YouTube, Facebook and Flipkart, that is, pretty much any service on the Internet that makes any money (TSPs cant really charge messaging and Voip services because they have infinitesimal revenue). The paper ‘asks’ whether OTTs should be regulated and if there is ‘a justification for charging differential prices for data access’.

top_bannerAnd it is this point on ‘differential pricing’ that has attracted the ire of advocates who warn that if TSPs are allowed to charge publishers, TSPs and deep-pocketed publishers (but not consumers) will decide what Internet services the public will access. To their opponents, zero-rating plans like Internet.org and Airtel Zero presage a fragmentation of the Internet in to gated playgrounds, in short, the death of the open and free Internet.

‘What is ‘Net Neutrality’?

‘Net neutrality’ might be (simplistically) summarised as the principle that the ISPs have to treat all data on the Internet equally. Customers pay ISPs for unrestricted access to all the data on the Internet. So ISPs should not be able to make agreements to favour one Internet service or the other.

Under net-neutrality principles, Airtel cannot allow the Indian Express to pay to have its webpage load faster than that of the Times of India. Nor can Vodafone charge data fees for videos watched on Hulu while foregoing data charges for YouTube users. Net-neutrality principles create a ‘firewall’ between the creators of Internet content and the middlemen, the ISPs. Customers remain the sole arbiter of which Internet website or service or app they want to access.

Why publishers are not entirely sure about a neutral Internet

Large Internet publishers like Google, Amazon, and Facebook are usually supportive of net-neutrality principles. They want to avoid having to pay ISPs to reach Internet users and they want to prevent their products from being blocked by an ISP, while the ISP offers a competing service of its own. Google’s struggles in launching Google Wallet even as telecom companies were working on their competing product, Softcard, illustrate this.

However net-neutrality is not always in the interest of established or deep-pocketed publishers. On the Internet, the kid in a garage can (in theory) compete with Google as long as he has a better algorithm, the last true meritocracy. However in a world without net-neutrality, Google could pay ISPs to make sure their pages load quicker through a dedicated line, leaving the garage genius’s algorithmic brilliance defenceless against Google’s cheque-book. Why would any Reliance user now try a new social network like Ello, for which they have to incur data charges to use, unlike Facebook, which is free to access on Reliance’s network?

If ISPs can make direct arrangements with publishers for favorable access, it creates a ‘pay to play’ system. In such a world, the successful Internet services will be the ones that pay the ISPs the most, not the ones that create the most customer value. ’Net-neutrality’ therefore, is central to keeping the Internet a level playing field.

What neutrality without the Internet?

In the developing world however, the primary challenge for Internet publishers is the fact that users are not connected to the Internet. Most of Africa seems to have Internet penetration rates of less than 10 per cent of the population. Less than 20 per cent of the Indian population is connected to the Internet.

Construction_worker_cellphone

The unconnected represent a veritable ocean of potential ad-clicks and e-commerce, giving Internet companies a powerful incentive to assist in getting the world online. This is especially true of Google and Facebook whose revenues on any given day are essentially a function of how many people are online to see ads. This is to some extent the motivation behind initiatives like Internet.org or Android zero-rating. Amazon, Flipkart, Uber, India Today, and really any publisher whose profit-per-user is higher than the data costs, has an incentive to participate in programs like ‘zero-rating’, that subsidise a customer’s Internet use. In turn, guaranteed payments from publishers give TSPs and ISPs a strong incentive to build network capacity in underserved rural areas rather than run risk of their expansions going unused because subscriber incomes are too low to afford Internet services. So if Facebook wants to pay your Internet bill, why not let them?

Because, unless you believe that Internet publishers are altruists, Pandora is not going to pay for streaming Spotify, nor is Ola going to support the use of Uber. ‘Zero-rating’ will create Internet corners where only a subset of services are available. This means a fragmented Internet and a steep uphill slope for new Internet publishers. Any consumer benefit from ‘free’ data could also be short-lived. Over the long-term, publishers might pass the data costs back to consumers, either though more ads or higher usage fees for the Internet service.

But what is the point of a ‘neutral net’ if 80 per cent of the public cannot get online? Bing might be a terrible search engine, but it is still better than the offline alternative of the local library. An Internet restricted to publishers who can subsidise data costs might be better than no Internet at all.

Safety in nuance

Net-neutrality (like most public policy) does not need to be a ‘one size fits all’ policy. Countries like South Korea (or the US) where a high proportion of the population is connected can afford a strong net neutrality regime since access is not a constraint. Countries like India might want to prioritise investments in access over competitiveness and progressively adjust their net neutrality regulations over time as greater proportions of the population come online and can afford their own Internet access.

ethernet-cableNet-neutrality could also be rendered ‘moot’ in markets where there is a high level of competition between local ISPs or TSPs. If consumers have their choice of ISP, they will punish any attempts to restrict access to their favorite websites by switching providers. Unfortunately, the high fixed investments mean that there are very few markets have more than two or three viable ISPs.

All net-neutrality laws are not created equal. We can almost universally agree that ISPs should never be allowed to restrict consumer choice by blocking content. But ‘blanket-bans’ on any publisher-ISP relationship is not necessary. An example of compromise between access and competition might be to cap the amount of data that can be zero-rated, that is, say a company can at most subsidise 100 MB of data to ensure the subsidies mostly flow to those who could not afford the data otherwise. In the net-neutrality debate, it is the details that will make the difference between throttling or freeing the Internet.

Regulations that prevent differential pricing but are silent on whether ISPs can charge for direct connections and other types of preferential access would be worse than useless. Such a situation would allow preferential access to powerful publishers without even the benefit of subsidies to consumers as in zero-rating plans. One could argue that this is the situation the US finds itself in despite being considered a ‘net neutral’ country. Netflix already pays ISPs for direct access to their network. Google sends hard-disks with popular YouTube videos to ISPs so that they be cached and delivered faster than any other video service. Even the newly proposed FCC regulations are largely silent on the matter of ‘inter-connection’ fees, leaving open the prospect for ISPs to price discriminate by charging for ‘direct access’ to their networks. The specific implementation of net-neutrality matters.

iLaw_InternationalCoursesNet-neutrality questions have engendered passionate discussion across continents these past two years. The dimensions of the question are far more complex than a single article like this can encompass. For example, we have spoken little about inter-connection fees between ISPs, publishers becoming ISPs, or governments restricting content and these questions might be even more crucial to Internet openness than differential data pricing.

Given these complexities, applications of net-neutrality principles must be tailored to the context. Knee-jerk support, both for and against, is terrible public policy. The truth in public policy is that the right answers depend on calibrating any regulations to the needs of the given context and time.

(Shree is a wandering economist who has changed his address fourteen times in the last fourteen years. At one of those addresses, he worked for Google. He has few ideas except those opposite to who he is talking to.)

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Law Commission targets money influence in elections, bats for greater transparency in donations and party accounts

PraptiPatelThe Law Commission of India has suggested sweeping reforms to India’s electoral system in its 255th report, which was submitted to the Union Ministry of Law and Justice on March 12, 2015. The report follows growing public dissatisfaction with the lack of transparency and accountability in India’s electoral system. It targets the influence of money in elections and bats for greater transparency in donations and party accounts. It has also dealt with the issues of “paid news”, independent candidates, the “none-of-the-above” vote and the right to reject, the use of totalisers for counting votes, and the reorganisation of the office of the Election Commission of India. Significant among the previous efforts to examine the challenges of conducting free and fair elections in India have been the 170th report of the Law Commission of India in 1999 and the 2004 report from the Election Commission of India.

Period of election finance regulation

Section 77 of the Representation of People Act, 1951 regulates the amount of money that can be spent by candidates or their agents. The report recommends an amendment to this provision so that the regulation applies for a longer period, that is, from the date of notification of elections to the date of declaration of results. Currently, this section only applied to money spent from the date of nomination to the date to declaration of the results.

More controls on private donations

Calling for stricter laws on donations by private entities to political parties, the report recommends that a company must necessarily pass a resolution at an annual general meeting to authorise a contribution to a political party, instead of simply consulting its Board of Directors, as is the rule currently.

Greater disclosure of donations by candidates

The existing rules on the subject merely require candidates to maintain an account of electoral expenses but the report recommends greater disclosure obligations, requiring candidates to not only maintain an account but also disclose the names, addresses, and PAN card numbers of donors and the amounts they have contributed. It also recommends provisions for the disqualification of a candidate for failing to lodge an account of election expenses and reports of contributions.

Greater disclosure of donations by parties

All parties must be required to disclose all contributions in excess of Rs. 20,000, including aggregate contributions from a single donor amounting to Rs. 20,000. Previously, the provision only required candidates to disclose contributions in excess of Rs. 20,000 without any rule on aggregate contributions, leading to multiple cheques of a smaller amount or cash transactions.

The Election Commission must also prescribe guidelines for a “statement of election expenditure” that should be filed by every party contesting an election within 75 days of the elections to the state assembly and 90 days of the general elections.

Image above is from Al Jazeera English's photostream on Flickr. CC BY-SA 2.0

Image above is from Al Jazeera English’s photostream on Flickr. CC BY-SA 2.0

Audit and public inspection of political party accounts

The report recommends that political parties must compulsorily maintain and submit annual accounts to the Election Commission. These accounts need to be duly audited by a chartered accountant chosen from a panel maintained by the Comptroller and Auditor General. The Election Commission must also be authorised to levy a fine of up to Rs. 50 lakhs if its finds that any particulars in the party’s statements have been falsified. This information must be available for public inspection as framework for such rules exists, currently.

Changes to anti-defection law

An amendment has been recommended to the Tenth Schedule of the Constitution of India by which the power to decide on questions of disqualification on the ground of defection will be with the President of India for the Parliament and the governors of the states for the legislative assemblies, instead of the current practice of decision-making by the Speaker or the Chairman.

Strengthen the Election Commission of India

Currently, the office of the Election Commission of India consists of Chief Election Commissioner (“CEC”) and two Election Commissioners and while the office of the CEC is granted the same level of constitutional protection as that of a judge of the Supreme Court, the removal of the Election Commissioners can be affected by the President. The Law Commission has recommended that all three members receive equal constitutional protection.

The issue of appointment of the CEC and the ECs was also discussed in the report, calling to make the process more consultative by having a statutory provision under which the President must consult the Prime Minister, the Chief Justice of India, and the Leader of Opposition in order to make these appointments. This is a step up from the current practice in which the President takes the decision by himself.

Lastly, the report also recommended the creation of a permanent, independent secretariat.

Paid news and political advertisements

Justice (Retd.) A.P. Shah is the Chairman of the Law Commission of India.

Justice (Retd.) A.P. Shah is the Chairman of the Law Commission of India.

Paid news and political advertisements, the report recommended, must receive recognition in the Representation of People Act. The terms “paying for news”, “receiving payment for news”, and “political advertisement” need to be defined and treated as electoral offences and strict punishment should be prescribed for them. All forms of media should also be required to make disclosures so that disguised political advertisement can be prevented.

Opinion polls

The Report has suggested recommendations to the Representation of Peoples Act to ensure that organisations releasing opinion polls possess the necessary credentials and to make the public aware that such polls are simply forecasts liable to error.

NOTA and the right to reject

The Law Commission is of the opinion that good governance can be achieved by bringing about changes in accountability, transparency, and decriminalisation, and without invalidating elections through the extension of the “none-of-the-above” vote to a right to reject a candidate.

The use of a totaliser for counting votes

The Law Commission has endorsed the Election Commission’s suggestion of introducing a totaliser for counting votes recorded in electronic voting machines. The main reason for this is that the current system of counting votes reveals voting patterns in each polling station, leaving the voters vulnerable to potential harassment and victimisation. If a totaliser is employed, it can connect to voting machines of up to 14 polling stations, which will go a long way in maintaining secrecy and preventing the disclosure of voting patterns.

The recommendation on restriction of government sponsored advertisements

The report has also recommended restrictions on government-sponsored advertisements six months prior to the date of the expiry of the legislature. This means that the party in power cannot use its position and influence as a means of advertising its achievements. An exception has been suggested for advertisements highlighting the government’s poverty alleviation and health-related schemes.

Restrict the number of seats from which a candidate can contest elections

Section 33(7) of the Representation of People Act permits a candidate to contest any election (parliamentary, assembly, biennial council, or by-elections) from up to two constituencies. The Law Commission has recommended an amendment to restrict candidates to one constituency.

Independent candidates

The Law Commission has also called for disallowing independent candidates from contesting elections since it is of the opinion that most of them are “dummy/non-serious candidates”, only serving to increase confusion among voters.

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Arbitration appointments and appointing authorities – Drafting to prevent court involvement in arbitrator appointments

SindhuSivakumar_DraftingForArbitrationMostly of the ad hoc kind, domestic arbitrations in India regularly break down and seek assistance from the courts. The process breaks down almost as soon as it is commenced, when parties cannot constitute the tribunal on their own. They invoke Section 11 the Arbitration and Conciliation Act, 1996 (“ACA”) to have a high court make the appointments for them. As the annual reports of various high courts will testify, a significant volume of Section 11 applications are pending before them and practitioners too corroborate that a domestic arbitration that does not involve a Section 11 application is rare.

Section 11 proceedings are not efficient by any means. While practitioners suggest that the duration of these proceedings depends on the high court in question and on the complexity of each case, they have been known to sometimes stretch up to five years. They are also potentially subject to long review proceedings before the Supreme Court through the Special Leave Petition process. A 2013 survey conducted by Price Waterhouse Coopers found that the constitution of the arbitral tribunal consumed the most amount of time in the arbitral process in India, more than other time-consuming factors such as the discovery and inspection of documents and the enforcement of awards.

Here, we will discuss the need to contractually avoid requiring the support of the courts in the constitution of the tribunal and the means of doing so.

Judicial overreach is not the reason for the glut of Section 11 applications

Most literature on arbitration in India posits the problem of the involvement of courts in arbitrator appointments as one of ‘judicial overreach’, that is, the judiciary is seen as unnecessarily ‘interfering’ in the appointments process. Judicial overreach is undoubtedly a part of the problem and is the reason arbitrator appointments are subject to the special leave petition review process. Ultimately however, it is the parties who are responsible for the large number of Section 11 applications pending before the courts. Section 11, after all, requires an application from a party to initiate the process; the proceedings are not suo motu. Thus, merely changing judicial attitudes (of interference) towards arbitration is unlikely to be the only answer to the problem of arbitration-court entanglement in arbitrator appointments in India; rather, we need to understand what drives the practice of parties routinely approaching courts to appoint arbitrators, and what can be done to avoid this.

international_arbitration_new

The real reasons

Both statute and arbitral infrastructure (or lack thereof) create the perverse incentive structures that drive the frequent invocation of Section 11. For one, there is a lack of awareness amongst practitioners of simple drafting practices than can avoid the need to resort to a Section 11 application. Most arbitration clauses we have examined do not provide for either institutional arbitration or an appointing authority in case of ad hoc arbitration, both of which can avoid the need to approach a high court when, as is often the case, a respondent fails to cooperate in the constitution of the tribunal.

Secondly, there is a perception that Section 11 is not the most time-consuming or costly affair. This is partially true in the sense that the court fees involved in Section 11 (only Rs. 500 in Karnataka) are likely to be lower than what an arbitral institution or trade body will charge to act as an appointing authority; however, when one factors in counsel fees as well as the potential duration of Section 11 proceedings (especially when SLP proceedings are also involved), the costs become significant.

Statute panders to the ‘uncooperative respondent’

Another important driver of the large number of Section 11 applications seems to be statute itself. The ACA does not provide for the eventuality of one of the parties turning uncooperative (in appointing arbitrators), even though recalcitrant behavior is quite typical in adversarial proceedings (one party usually always stands to benefit from engaging in dilatory tactics). Under the ACA, if one of the parties does not cooperate in appointing the arbitrator(s), the court is automatically called into play. In England, by contrast, the default provision provides for the other side’s appointment to be final, thereby eliminating the need for court intervention in typical cases of respondent non-cooperation. A simple correction of the default rule of arbitrator could go a long way in reducing the number of Section 11 applications, especially since practitioners suggest that the ‘uncooperative respondent’ is common feature of arbitration appointments in India.

Drafters should opt for institutional arbitration or provide for an appointing authority

The court fee required to file a Section 11 application before the Karnataka High Court (above) is only five hundred rupees. That should not obscure the fact that proceedings can drag on for years and drive up legal costs.

The court fee required to file a Section 11 application before the Karnataka High Court (above) is only five hundred rupees. That should not obscure the fact that proceedings can drag on for years and drive up legal costs. Image above is from Börkur Sigurbjörnsson’s photostream on Flickr. CC BY 2.0

While statutory reform is out of a contractual drafter’s control, drafters can choose to opt in for institutional arbitration (whose rules will inevitably provide that the institution will act as appointing authority should the parties be unable to agree on the tribunal within a stipulated timeframe) or provide for an appointing authority as a fallback in their ad hoc arbitration clauses to avoid the need to go to the courts under Section 11. There are several trade bodies and arbitral institutions willing to act as appointing authorities, and any costs incurred in making use of these facilities is likely to be offset by the costs saved in going through the Section 11 process.

(Sindhu Sivakumar is a solicitor on the rolls of England and Wales and qualified as an advocate in India.)

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How Narrain, Narasappa, and Salelkar built organisations that helped non-legal actors engage with the law

AtreyeeMajumder_CraftingLawCareersA lawyer is conventionally imagined as a standalone creature – someone who exercises the faculties of research, drafting, and argumentation as an individual. A lawyer operates in these modes, usually aided by clerks and junior associates. With the expansion of the modes of negotiation-based lawyering, legal work has spread across large teams and progresses along associational logics. This is especially true for legal practice in transactional advice, due-diligence exercises, arbitration, and so on. Of the four figures I have spoken about before, three have started or helped start new organisations – Arvind Narrain started the Alternative Law Forum, Amba Salelkar helped with the establishment of the Inclusive Planet Centre for Disability Law and Policy, and Harish Narasappa has been involved with starting two organisations – Samvad Partners and Daksh India. I wish to focus on the specific skill of beginning, sustaining, and spreading an organisation. It is not a skill that lawyering necessarily teaches. Why did these lawyers see value in initiating organisations?

We might derive organisational models from the eminent French sociologist Emile Durkheim – shared values and goals lead to a mechanical solidarity, while organic solidarity arises out of a community fitting into each other’s needs. It is difficult to fit a legal organisation clearly into the fold of one or the other. In focusing on three policy reform and legal activism organisations, I might show that their inception is closely linked with a different strategy of lawyering, and therefore, form the bases of mechanical solidarity.

Harish Narasappa at the launch of Daksh's Rule of Law Project on February 7, 2015.

Harish Narasappa at the launch of Daksh’s Rule of Law Project on February 7, 2015.

The Alternative Law Forum (“ALF”) quite literally spells its agenda out as ‘alternative’; the others too attempt to put in place a professional architecture where a diverse set of lawyering services may be nurtured and delivered. Inclusive Planet attempts to provide a bridge between mainstream lawyering wisdom and large numbers of persons with disability, advocates, caregivers, and others, who need a basic understanding of what the law is and what it can deliver for them to address disability. The spread of such legal literacy is at the heart of the ALF’s long career as well – Narrain and his colleagues speak to many non-legal audiences, especially students, about legal issues of contemporary importance, especially on gender and sexuality. At Daksh, the engagement with the public is to train a certain ear for information which is to be culled out, collated, published, and fed back into the citizenry in order to be used for effective democratic practice, in elections and elsewhere. These methods generate solidarities beyond the technological walls of legal learning and expertise. Publics involved in the journey towards a certain mode of justice or equity, come to use and inhabit the law and its machinery through such organisations. Publics are able to imagine themselves as active users of legal and judicial wings of the state. As much as this habitation may bring concrete benefits in terms of legal reform or relief, it also generates a live register in which to rehearse and consolidate the terms of citizenship.

Organisations like the Lawyers’ Collective and individual lawyers like Rajeev Dhavan, Indira Jaisingh, Prashant Bhushan, and others have provided such organisational leadership in the litigating domain. These lawyers have formed bridges between social movements, civil society orgnisations, and the judiciary, often urging the judiciary to take activist stances towards various state and private bodies. Their lawyering has yielded expansive interpretations of fundamental rights especially in the context of free speech, discrimination, the rights of minorities, affirmative action, and so on. There is no doubt that the tradition of judicial activism has been a key tool for the broadening of access to law by the general public.

ALF's Lawrence Liang (left) speaking at the iCommons summit in Dubrovnik in 2007.  CC BY 2.0

ALF’s Lawrence Liang (left) speaking at the iCommons summit in Dubrovnik in 2007. CC BY 2.0

Between the law and the public, a dynamic and inchoate space has been sustained by efforts of public interest legal organisations. One could argue that this space is one among many other civil society spaces. I would argue that the use of the law and the conscious engagement of a public in such legal activism, is a specific register of civil society – one that exercises a facility in speaking the impervious state language. It may earn legal benefits. But the long view of benefits is more towards empowering a shade of public voice that speaks the language that the state speaks in. With Daksh especially, we find the ability and scale of operation to be one that impacts the everyday practice of democracy (at the localised scale of the MP and the MLA) for large numbers of citizens. To the extent that it is possible to make democracy meaningful for each citizen, organisational spaces that percolate the effect of law are most important. To this extent, the activities of legal sensitisation, teaching law to non-lawyers, campaigns for non-judicial law reform, implementation efforts that engage state actors, affected parties, intellectuals, and activists are of key importance in the wide arena of civil society efforts to engage the government. To be aware of the law, talk in its idioms, and talk back to law-making and implementing authorities is close to impossible without the assistance of organisations such as this. That lawyers such as Narrain, Salelkar, and Narasappa are able to open spaces for such active engagement with the law, involving non-legal actors, is a significant contribution to the role of law in the functioning of a democracy.

(Atreyee Majumder is an anthropologist. She teaches at the School of Development, Azim Premji University.)

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GST concludes indirect tax reform but much depends on implementation by states and model GST law

Gautham_Gururaj_authorThe Constitution (One Hundred and Twenty Second Amendment) Bill, 2014 (“Bill”) seeks to introduce the goods and services tax (“GST”) by conferring concurrent taxing powers on the Union and state governments on every transaction involving the supply of goods or the supply of services or both. It would immediately allow the Union to levy tax on the sale of goods which has been in the domain of the states, and the states similarly would be able to levy tax on services which until now was mostly in the domain of the Union government.

The introduction of the GST in this manner would, without doubt, be the most widespread restructuring of India’s indirect taxation system, which currently involves a multiplicity of taxes as well as cascading effects.

Removal of cascading effects

For instance, the central excise duty component suffered by goods during the manufacturing process and the additional excise duty component on imported goods are included in the value of the goods when the states levy value added tax (“VAT”). The Bill seeks to subsume various central indirect taxes and levies such as central excise duty, additional excise duties, additional customs duty, special additional duty of customs, service tax, and surcharges and cesses in relation to the supply of goods and services. The Bill also simultaneously provides for the subsuming of value added tax or sales tax, entertainment tax, central sales tax, octroi or entry tax, purchase tax, luxury tax, taxes on lottery, betting and gambling, and state cesses and surcharges imposed by the states in relation to the supply of goods and services. The removal of these various taxes and the introduction of a single point GST will thus remove the cascading effect of taxes and also simplify the number of taxes that are levied on a transaction involving goods or services. While the current scheme of the Central Excise Act, 1944 and the Finance Act, 1994 provided for the removal of the cascading effect of taxes in respect of certain central indirect taxes, and the VAT system introduced in states provided for the removal of the cascading effect in respect of tax on the sale of goods, the GST will be the first time that the cascading effect will stand removed in respect of both central and state indirect taxes. The GST, therefore, can be seen as a logical step for having an indirect tax system that seeks to capture only the value addition in the goods and services at each level, and not capture the taxes being levied at each level for the purposes of further taxation.

Types of GST taxes

To implement GST, the Bill proposes the introduction of Article 246A into the Constitution – a non obstante clause that provides that the Parliament, and with the exception of tax on the supply of goods and services in the course of inter-state trade or commerce, the states shall have the power to make laws with respect to goods and services tax to be imposed by the Union or by the states. Keeping in mind the federal structure, the Union and the states will levy the GST at each point of time in the taxation of goods and services, with the Union levying a central goods and services tax (“CGST”) and the states levying a state goods and services tax (“SGST”).

ArunJaitley

The Union Finance Minister Arun Jaitley introduced the constitutional amendment bill on the goods and services tax in the Lok Sabha on December 19, 2014.

The Bill also proposes an amendment to Article 286 of the Constitution to ensure that the supply of goods and services continues to remain outside the purview of the states’ power to tax if such supply takes place outside the state or in the course of import of goods into India or the export of goods outside India. However, this amendment is merely clarificatory. The substance and the intention of the provision continues to remain the same. Equally important is the amendment proposed to Article 248. The exclusive power of the Parliament to make any law with respect to any matter not enumerated in the Concurrent List or the State List in Schedule VII, including the imposition of tax on such matters, will now be subject to Article 246A. This essentially means that any new matters involving goods or services, including their taxes, will necessarily have to be routed by the Union through the mechanism of the GST; and thereby necessarily enabling the states to tax such matters as well.

Additionally, Article 246A(2) empowers the Parliament with the exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-state trade or commerce. This tax is called the integrated goods and services tax (“IGST”). Hence, every point in taxation will necessarily be subject to CGST, and either SGST or IGST, depending on whether the movement of goods or supply of services involves intra-state or inter-state trade or commerce. Under the proposed Article 269A, the IGST should be levied and collected by the Union but be apportioned between the Union and the States.

The additional tax – a wrong move

The manner of taxation on products such as alcohol and petroleum under the GST mechanism has been a point of disagreement between the Union and the states because of the amount of revenue generated by the states in taxing these products. The Bill has sought to address this issue and keep the states happy by keeping the taxation of alcohol and petroleum outside the purview of GST altogether. This essentially means that the states will continue to tax the sale of alcohol and petroleum under its existing state excise and sale tax laws. Additionally, to address the long standing (but slightly unjustified) concerns of revenue loss to the states, the Bill proposes an additional tax not exceeding 1 per cent on the supply of goods in the course of inter-state trade or commerce to be levied and collected by the Union Government for a period of at least two years, but assigned to the states from where the supply of goods originates. However, since this 1 per cent additional tax is intended to be collected in addition to the IGST under Article 269A, it appears that this 1 per cent additional tax falls outside the purview of the GST framework altogether; else, it could have been specifically incorporated into Article 269A itself.

This is an incorrect move under the Bill and the intention of simplifying the tax net will be partially lost if certain taxes are proposed to be kept outside the GST scheme. Further, if the 1 per cent additional tax is kept outside the GST scheme, then the assessees will not be able to avail credit of the 1 per cent additional tax being paid on the supply of goods in the course of inter-state trade or commerce; and this will become a cost that will eventually be passed on to the end customers.

The council

A commendable and necessary but tricky insertion in the Bill is the creation of the GST Council under the proposed Article 279A of the Constitution. The GST Council is intended to be an all-powerful body comprising the Union Finance Minister, the Union Minister of State for Finance, and the State Finance Minister of each state government to formulate principles and make recommendations on the following aspects of the GST:

(a) the rates, including floor rates with bands of GST;

(b) the goods and services that may be subjected to, or exempted from GST;

(c) model goods and services tax laws for adoption by the Union and the states and principles for the levy and apportionment of IGST;

(d) the threshold limit of turnover below which goods and services may be exempted from GST;

(e) special provisions with respect to the North Eastern States, Jammu and Kashmir, Himachal Pradesh and Uttarakhand; and

(f) any other matter relating to GST, as the GST Council may decide.

iLaw_InternationalCoursesHaving a GST Council of this nature will ensure greater coordination between the Union and states and among states. While the decisions of the GST Council are intended to be binding on the Union and the states, the principal issue here is the extent to which the model GST Law will be binding on and be implemented by the states. If one or more states, for instance, decide to make even procedural changes while adopting and enacting the model GST Law, then one of the purposes of GST – the benefit of uniformity – will be lost on the assessees; not to mention, give rise to much confusion among the assessees who are subject to taxation in multiple states. Secondly, instead of providing floor rates and bands of GST, it would have been advisable that the Bill provided for a fixed rate of taxation under the GST (subject to certain exemptions and abatements, of course). Providing for flexibility in terms of the rates that can be charged as SGST could potentially become the subject matter of much confusion in the hands of the assessees, not to mention a whole lot of business structuring and restructuring around taxation. At the same time, this proposal could lead to a healthy competition between the states and could result in SGST being charged only at the floor rates in the long run. The third and most important issue could arise not with the model GST law itself, but with its implementation. Would an issue under the SGST raised by a state government in respect of an assessee also become an issue under the CGST to be taken note of by the Union government, and vice-versa? What happens if there is a difference of opinion between the CGST authorities and SGST authorities in respect of the same issue involving the same assessee? Can proceedings be commenced only under CGST or only under SGST, or do they necessarily have to be clubbed? Which authorities get jurisdiction over the matter? Does an assessee have to respond to dual proceedings under CGST and SGST in respect of the same cause of action? While one does not expect the Bill to address these issues naturally, one hopes that the model GST law clearly enunciates and addresses such issues; and the GST Council ensures that little or no modifications are made by the states while enacting the model GST law.

Interesting in itself is the mode of decision-making by the GST Council, which has been provided in Article 279A(9). Every decision of the GST Council shall be taken by a majority of not less than three-fourths of the weighted votes of the members present and voting: (A) the vote of the Union government shall have a weightage of one-third of the total votes cast, and (B) the votes of all the state governments taken together shall have a weightage of two-thirds of the total votes cast in that meeting. One wonders how the states acceded to a situation wherein the Union government has a weightage of one-third of the votes cast. And given the current political map of India, this could result in a situation where the majority group at the Union government has complete control over the decision making process of the GST Council.

Concluding step in indirect tax reform

The introduction of the GST is the concluding step in the reformation of the indirect tax system in India. From an assessee and government point of view, GST enables ease of compliance, transparency on the exact amount of tax being suffered by goods and services, and ease of administration. From the perspective of the end consumer, the removal of the cascading effect of taxes will result in an immediate reduction on the overall tax burden on goods and services; and it is hoped that this reduction in the tax burden will in turn help bring down the cost of goods and services, moving ahead.

The Union government has repeatedly said that it intends to rollout the GST with effect from April 1, 2016. Hence, it is unlikely that the Central Government will undertake any major tinkering with the scheme of indirect taxation in the forthcoming Union Budget, especially considering that the it also intends to introduce the Bill in this budget session of the Parliament. Having said that, the forthcoming Union Budget can actually be utilised as a good opportunity to merge certain lesser avenues of taxation into the central excise and services taxes and also do away with a several cesses that form the body of central indirect taxation. Additionally, procedural compliances can be simplified and brought closer to a format that the Union government intends to adopt for compliances under the CGST. Doing so will not only ease the road for the introduction of the GST in its intended form, but also provide assessees a full twelve months to get accustomed to the compliance processes.

Gautham Gururaj is an advocate based in Bangalore.

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Be true to the cause, use litigation to support movements and advance the law

Manish_goodhumanrightslawyeringIt’s that every now and again – not often, but occasionally – you get to be a part of justice being done. That really is quite a thrill when that happens.

– Tom Hanks (as Andrew Beckett in Philadelphia)

Across generations, human rights lawyering is fundamentally driven by the passion of seeing justice done. For veteran advocates like the Punjab-based Rajvinder Singh Bains, passion may arise out of witnessing injustice and atrocities. Younger advocates, on the other hand, may be inspired by the work of path-breaking people before them, while also bringing newer perspectives and ideas to the practice. In either case, the passion for the cause is an essential element of being a human rights lawyer.

Beyond passion

MihirDesai_humanrightslawyer

Mihir Desai has three decades of experience with human rights lawyering.

However, while being passionate is important, being effective in court is even more important. “To be a good human rights lawyer, you have to be a good lawyer first,” says Mihir Desai, a veteran advocate and activist from Bombay. Mr. Desai, who has been practising for three decades now, is also the co-founder of the Indian People’s Tribunal on Environment and Human Rights (“IPT”), which describes itself as an “alternative People’s Court that gives voice to the struggles of grass-roots organizations and affected communities” and conducts investigations on human rights and environmental issues. He has worked extensively on human rights issues at the trial court level, and has been instrumental in bringing them into mainstream jurisprudence, through his litigation before courts, movements such as the IPT, and publications like Combat Law. Given the marginalisation of human rights issues at the trial court level, it is all the more important for a lawyer working in this field to have an excellent grasp of procedural as well as substantive law, which is why Mr. Desai encourages all young lawyers in the field to hone their skills in the courtroom.

Among these young lawyers is Rajat Kumar, 28, a graduate from the Gujarat National Law University, who has been practising at the courts in Delhi for just under five years. Headed down the standard National Law University path – with corporate internship after corporate internship, an internship with the Alternative Law Forum, Bangalore introduced him to the world of human rights lawyering and he was immediately attracted to it. A subsequent internship provided him an opportunity to work on the Narmada Bachao Andolan case, as part of which he made a visit to the site of the Sardar Sarovar Dam and interacted with displaced people. The realisation, like the one had by the protagonist in Philadelphia, that one was part of an actual process that was bringing justice to people, was a powerful experience that Mr. Kumar describes as life-changing, and he has never looked back since. After graduating, he joined the offices of Jawahar Raja in Delhi, and now works primarily on criminal and labour law matters.

Mr. Kumar argues most of his labour cases (where he represents workers’ unions) before the Board for Industrial and Financial Reconstruction under the Sick Industrial Companies (Special Provisions) Act, 1985. Contract labour and regularisation of employment is also a major issue, and Mr. Kumar has argued the cases of workers who have been denied benefits due to them, and are trapped in sham contracts. He perceives that the scene for labour rights is not as positive as it used to be. With the increased focus on economic development, he said that there is a corresponding perception that courts are increasingly hostile and reluctant to grant relief to labour, citing the instance of the 2013 Punjab and Haryana High Court order denying bail to the Maruti workers who were arrested during the unrest at Manesar, which mentioned as a ground, the risk to foreign investment due to “fear of labour unrest”. However, as a human rights advocate, it is important to keep the faith and continue the fight for the cause.

Staying the course, true to the cause

Mr. Desai says that a good human rights lawyer works for a cause throughout. There cannot be any inconsistency in the stand that one takes on an issue. The human rights lawyer is committed to the issue and the advocate needs to let go of individual ego and think of the cause. Staying true to a cause also inspires greater levels of trust and confidence among one’s clients. This is why it is important, as a lawyer in this field, to choose one’s cases and remain committed to the cause – for instance, in a labour court, one cannot defend workers one day and managements the next. He clarifies that the right to legal representation is important, but so is the right of an advocate to choose her cases and causes: “An accused rapist is definitely has a right to receive legal representation; but I would not want to be his legal representative. And that’s a consistent stand I take.”

"Important to choose one's cases and remain committed to the cause" - the 28-year-old

“Important to choose one’s cases and remain committed to the cause” – the 28-year-old Rajat Kumar.

The ability to inspire trust and confidence from one’s clients is critical to good human rights lawyering. To illustrate this, Mr. Desai draws on his experiences while arguing some of the Gujarat riot cases as a lawyer for the victims, where despite his perception that the judges were not supportive, he, rather than give up, continued to advance his arguments.

In such situations, where people have been at the receiving end of severe human rights violations and have lost everything except their faith in the law, it is particularly important that they are able to trust their lawyer. A good human rights lawyer should be willing to be there throughout for her clients, no matter what difficulties one might face along the way. Ultimately, says Mr. Desai, what the victims want is complete support and dedication from their lawyer and – irrespective of the final outcome – the feeling that they have been heard, and had their day in court.

Social transformation through human rights litigation

Mr. Desai said that a human rights advocate should be able to use the court process to help and support movements. Therefore, strategy and court craft are critical to the practice of human rights lawyering, even more so at the trial court. Mr. Kumar says that it is important for a lawyer arguing at the trial court to be able to anticipate arguments at the High Court or even the Supreme Court, should her case be dismissed or appealed against. This is particularly significant since the higher courts do not normally deal with matters of evidence. They usually rely on the evidence brought on record before the trial court. Further, while it is difficult to make a direct prayer for relief at the trial court based on a constitutional argument, it is nevertheless important to frame these arguments since even if they are rejected by the trial court, the High Court has the power to recognise them and grant appropriate legal relief. In this context an important part of human rights lawyering is to use arguments that may have not traditionally been accepted by courts. Thus, an advocate has to try at all times to expand the horizon of the courts’ human rights jurisdiction by advancing arguments in that direction, rather than restricting oneself to a narrow legal perspective.

Public interest litigation, or the use of the Cr.P.C. to obtain basic amenities from local authorities, are all examples of this approach. As K.G. Kannabiran argued, lawyering for social justice necessitates a certain stretching of principles and breaking new ground in order to advance the progress of the law as an instrument of social transformation.

Sustainable human rights lawyering

Both Mr. Desai and Mr. Kumar dismiss the misconception that practising human rights lawyering is financially unsustainable. Says Mr. Desai, “If your ambition is to have a Mercedes and stay in five-star hotels, it won’t be remunerative. But it is definitely sustainable in that it will help you lead a reasonably comfortable standard of living.” Both of them cross-subsidise their human rights practice with revenue from regular commercial cases. While accepting commercial cases, they remain conscious of the conflict of interest and only accept cases from clients who do not put them in a situation where they have to compromise on their human rights work or the causes that they espouse. In addition, they also point out that not all human rights work is pro bono – there are several clients who are able to pay, although in these cases one would have to charge according to the client’s capacity and not the regular fees that one would charge in commercial matters.

Personal and professional growth as an advocate is greatly helped by having a mentor in the profession. In this regard, Mr. Desai recalls his early days when he started practising in the chambers of Indira Jaising, who was then (as also now) a leading light in the field of human rights, and an inspirational figure and role model in the profession. Mr. Kumar is grateful to Jawahar Raja, from whom he says he has learned more about the law than he ever did in his five years of law school. It is not an easy practice – as Mr. Desai puts it, while in mainstream lawyering one might win 70 per cent of the time, as a human rights lawyer one might only win 30 per cent of the time. Nevertheless, both Mr. Desai and Mr. Kumar suggest that human rights lawyering is a passion, rather than a sacrifice – both of them whole-heartedly state that they enjoy their work and there is nothing else they would rather be doing.

(Manish is a 2013 graduate of NLSIU, Bangalore and works on issues of access to justice. He is currently based in Ahmedabad.)

Written by myLaw