On my first day in Law School, as a vaguely clueless kid, all of seventeen years, I entered the library, and wandered around until I found my way to the top floor. Seeing a senior sitting there, I went up to him, and asked, “Could you recommend to me a book about the law?” He looked at me quizzically. “What do you mean by that?” “You know… a book about what law is.” By now, he’d probably recognised that I was a first year, and utterly lost. “Do you mean jurisprudence?” I’d heard my father once talk about “jurisprudence” as if it was something nice. I nodded vaguely. “I don’t know. I think so.” He grinned. “You do mean jurisprudence. Come with me.” He took me to the NLS Juris section, and pulled out The Concept of Law. ”Here, this should give you a good place to start.” He paused. “Or, if you’re feeling adventurous…” He walked a little distance, and pulled out a purple book with a vaguely statuesque, wreathed female figure on the cover, and the emblazoned title that read: Taking Rights Seriously. He grinned again. “Try this. And in your next legal methods class, tell Rahul Singh that you’ve been reading Dworkin.”

And that was the first time I heard the name of Ronald Dworkin, a name that would go on to become one of the most familiar things in the world, conjuring up, the moment it was spoken, a raft of thoughts, feelings, emotions, memories. I didn’t read Taking Rights Seriously, then. I didn’t read jurisprudence at all, through my first year of college. But then came constitutional law. Suddenly, there were a host of issues that I found myself passionately interested in. Free speech. The freedom of religion. Equality. Personal liberty. What were these words that sounded so alluring, and yet bore the faintly vague promise of the breaking of barriers, of constraints, of… danger? What did they mean? What were all these arguments about? I went back to the juris and the political philosophy shelves, and quite by chance, my eyes alighted upon Freedom’s Law. I took a look at the list of contents. Seemed interesting enough. I took it down and started to read. And a world exploded in my head. A constitutive conception of democracy. What was this radical way of thinking, about a democracy that didn’t treat the vote of the majority as determinative? What were these words, “equal concern and respect“, that seemed to lie at the heart of a new, compelling order of things? And above all else, the writing, oh, the writing, so beautiful, so simple, so elegant, so utterly, absolutely, bewitchingly compelling. I was hooked. I read Freedom’s Law. I read A Matter of Principle. I tried to read Taking Rights Seriously. I don’t think I understood much, back then (I don’t know how much I understand now). But I knew that I had found a voice that spoke to me, a voice that made thinking seem beautiful, a voice that, by turns, surprised, astounded, bewildered and outraged, but never failed to inspire.

Because Dworkin didn’t just write legal or political philosophy; he created a world, a world that you wanted to believe in with all your heart, to argue for, to fight to build and protect, if it came to that. It was a world of liberal egalitarianism, of individual rights, of strong and principled judicial ‘activism’ (a word that I know D would disapprove of), a world of – to use his own words – “equal concern and respect“. A world of Brown v Board of Education, Roe v Wade, American Booksellers v Hudnut and Lawrence v Texas. I am no longer as entranced by that world as I once was; but Dworkin, as its exponent, was utterly convincing.

In my fourth year, after having read and re-read Dworkin’s political philosophy, I finally summoned up the courage to tackle Law’s Empire. And, just like in the case of TRS, I felt the frisson all over again, and in all its glory. Interpretation. What a marvelous idea. The philosophers of courtesy. Interpretive concepts. And then came that bit about intention, literary theory, art and constructive interpretation. It was frisson after frisson then, explosion after explosion, a hurricane, a typhoon of ideas swirling in my head, clashing dissonantly with each other, din, chaos, confusion, disharmony, disarray, and oh, all so beautiful. Dilthey. Gadamer. Habermas. Stanley Cavell. Language. Literature. Law. Hamlet, for heaven’s sake! If there has ever been a time when a single text transformed my life, it was the time I first read Chapter Two of Law’s Empire. It changed the way I read, the way I understood, it changed the very way that I thought. And everything that I’ve done since then can, I think, in one way, be traced back to that wild, trembling reading of Chapter Two.

I read all of Law’s Empire, went back and read Taking Rights Seriously, and then back and forth, criss-crossing through Dworkin’s corpus. Gradually he converted me from being vehemently anti-abortion to qualifiedly pro, from being in favour of banning pornography to being entirely opposed to any form of ban, from being supportive of restrictions on free speech to being in opposition to them. In short, I was moving across the spectrum from social conservative to social liberal, purely on the reasoned eloquence, the gentle yet firm and persistant argumentation, and the utterly inspiring vision of Ronald Dworkin. He was a segue into other things: Rawls, Hart, Raz, Berlin, Hayek, Nozick – Dworkin was the foundation, the starting point, the fount of ideas and engagements, and the ultimate point of comparison. When I came out of college, I had developed – in however vague and ill-defined a sense – a “philosophy of life”. At the heart of it was Dworkinian liberalism.

And that, I think, is what makes Ronald Dworkin so special, so central, so integral a figure in my own, individual life’s journey. There is a time in our lives, I feel, when we first experience the need to define ourselves for ourselves, and to position ourselves in relation to others, to the rest of the world. A time in our lives when we first feel the irresistible pull of those tortuous, haunting questions: how should I live? What ought I do? What is true, good, right, just? What is the meaning of it all? It is a time when we first begin to struggle with our own sense of the self, and with a world that is out of joint, where everything seems by turns senseless and hopeless, when nihilism is a step and a shadow away. And I think that at that time, there is nothing more important than to have a guide, a Virgil taking Dante through hell, a set of signposts, a voice that can bring a semblance of order to the maelstrom of our thoughts. And I don’t mean someone who can give us answers – but rather, a compass, a point of reference, that safe harbour from which we can begin our journey, always knowing that we can sail back to it for a while, to rest and recover, if the open sea becomes too frightening. Someone who can set us thinking, in some direction. The rest, I believe, is up to us – but the point of reference is critical. Dworkin was – is – my point of reference.

I’m grateful to Dworkin because I cannot imagine having selected – albeit through pure luck – a better point of reference. That is not because I think he’s correct (I don’t anymore, not entirely), but because he taught me to think. He taught me to question the premises of every argument, to critically imagine my own deepest, most naked convictions, to follow where the argument leads, and above all else, to never stop arguing, questioning and thinking. He taught me that there are no absolutes, no positions that are beyond criticism, modification or reversal, no questions that are or can be off the table, no ideas that ought ever to be taken for granted. For six years, since the time I first ‘discovered’ him, he has been with me, that voice, again, that always reminds me to take nothing for granted, assume no axioms, establish no postulates, think, think, think. But parallel to that, he has taught me also that there are questions worth thinking about; things that matter, issues that count. He has saved me from both mocking cynicism and Thrasymachean amoralism, one of which two seem to infect so many of the people I see around me, and in doing so, has taught me to believe that there can be a meaning to life, and that one must always strive to seek it, even though, like the horizon, it always recedes from your grasp. I do not think that there can be a greater service that one human being may render to another.

I came to Oxford a confirmed Dworkinian. Not the most comfortable of positions to take in the home of analytical positivism. I was apprehensive, at the beginning of the BCL year, that the heirs of Joseph Raz would, through sheer intellectual power, convert me to their side, and the vision of Dworkin was one that I did not want to give up. The exact opposite happened. I brought all my Dworkinian bloody-mindedness to class, spending all my year defending – or trying to defend – Dworkin. I told Professor John Gardner that he perhaps hadn’t quite taken theoretical disagreement into account.  I spoke about plovers’ eggs to Professor Green. I took along Law’s Empire to Professor Finnis’ class, holding it up and reading out passages like some circus showman, to make the point that Dworkin had been misrepresented by his critics. I suggested to Professor Endicott that, if he examined his own position closely enough, he would find that he was a Dworkinian. I texted my friend telling him that Nicos Stavropoulos’ exegesis of Dworkinian interpretivism was so beautiful, that it showed Dworkin’s structure for the magnificent, coherent whole that it was so perfectly, that it had brought tears to my eyes. I walked with another friend in the Balliol Fellows’ Garden, saying things like “But why can’t they bloody see that Dworkin is just… bloody… right! It’s blindingly obvious… isn’t it?” I messaged a third with stuff like “Today, I argued for fifteen minutes with Professor Endicott, and at the end he said… “that’s… interesting.” Yes!!!” It was the taking up of lances, the riding out the joust, the thrill of (trying to) cross swords with the foremost men of jurisprudence, in defence of a man and a set of ideas that I was passionately committed to. It was fun. It was brilliant. It was life. And then, in the middle of the year,Justice for Hedgehogs came out. I bought my copy at Blackwell’s the first time I saw it, and stayed up all night reading it. It was, of course, the last of Dworkin’s books, and the last of my frissons on reading a new Dworkin work. It was a beautiful synthesis, the coming together of a lifetime’s work on law, politics and moral philosophy; and as I read it that night I saw, once and only once, not just law, but the world, the whole world, according to Dworkin: coherence, elegance, simplicity, beauty – the final, harmonious coming together of all things. I have never seen it that way since, but the blinding power of that vision has remained with me, and one of the most beautiful things that Dworkin has done for me is to make me believe if for but one moment, that such a world is possible to imagine.

I applied for an MPhil on Dworkin (of course). What better way to spend a year than reading Dworkin? And over the last few months, the journey has taken me to wild and unexpected places: to literary theory, via Stanley Fish, Derrida, Bakhtin and Foucault; to the philosophy of language, via Wittgenstein, McDowell and Hacker; to aesthetics, via Roger Scruton; and to radical political theory, via Marx. It’s been utterly wild. I’ve gone off in random directions based on my hunches on reading a line in Law’s Empire here, a sentence in Hedgehogs there, a phrase in TRS, and so on. Yet although it’s been random, it’s been incredibly enriching. Although I now find myself disagreeing with Dworkin as much as I agree with him, although I no longer find the ideal of coherence and harmony as compelling as I once did, it’s because he created in me the urge to question. And although I am as confused and lost as I was six years ago, it’s been some ride along the way!

I had a dream. That after finishing my MPhil, I would send it to Dworkin, and he would tell me what he thought - whatever it was – about my bumbling, year-long efforts to defend his legal philosophy against the positivists. I did dream of finally meeting him, and I imagined our conversation many, many times in my head. Now time has killed the dream… like it kills so much else.

–

In my journey along the path I have taken, the study of law, there are two men without whom I would (for better or for worse) be nothing today. One of them is gone. That’s why, today, I feel bereft. That’s why, despite never having met the man, I feel like I’ve lost someone very close to a parent. Although I will return to his work, now, and in the future, again and again and again, I can never again imagine the presence behind those beautiful words. That voice, so powerful, so eloquent, so… liberal, is forever stilled. And the world is a poorer place for it.

What comforts me is that until the very end, he wrote. He wrote in defence of the causes he believed in, the ideas he was passionate about, the things he thought mattered most. He was shattering his lances in the joust even as death whispered a lullaby, he was on the field until the last sun set forever. Like Voltaire, nothing could halt his pen but the grave. And for me, there can be no better example of a life lived well and long, in service of cause and ideal. If I can die like that after having lived like that, I think I will die happy. Because, as Dworkin once told us…

“On occasions like this one it is hard to resist speaking directly to young scholars who have not yet joined a doctrinal army. So I close with this appeal to those of you who plan to take up legal philosophy. When you do, take up philosophy’s rightful burdens, and abandon the cloak of neutrality. Speak for Mrs Sorensen and for all the others whose fate depends upon novel claims about what the law already is. Or, if you can’t speak for them, at least speak to them, and explain why they have no right to what they ask. Speak to the lawyers and judges who must puzzle about what to do with the new Human Rights Act. Don’t tell the judges that they should exercise their discretion as they think best. They want to know how to understand the Act as law, how to decide, and from what record, how freedom and equality have now been made not just political ideals but legal rights. If you help them, if you speak to the world in this way, then you will remain more true to Herbert Hart’s passion and genius than if you follow his narrower ideas about the character and limits of analytic jurisprudence. I warn you, however, that if you set out in this way, then you are in grave danger of being, well, interesting.”

[Image Attribution: By David Shankbone. (Own work.) [CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0) or GFDL (http://www.gnu.org/copyleft/fdl.html)], via Wikimedia Commons]

The key section is S. 31(5), which states:

“After the arbitral award is made, a signed copy shall be delivered to each party.” (Emphasis Supplied)

S. 34(3) states:

“An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award.” (Emphasis Supplied)

The High Court found in favour of the first of the two abovementioned alternatives. In the High Court, the judgment turned upon the meaning of the word “delivered” in S. 31(5). The Court distinguished between the words “delivered” and “dispatched”, and held that “delivered” simply means that a copy of the award should be handed over to the proper parties. It went on to hold that there had been “sufficient compliance” with S. 31(5), as the Respondents had delivered a copy of the Award to the representative of the appellants nine months before the Appellants filed their S. 34 application.

Rejecting the decision of the High Court, the Supreme Court observed that S. 31(1) mandated an arbitral award to be signed by members of the arbitral tribunal, and S. 31(5) referred to a signed copy that was required to be delivered to each party. On this ground, the Court held that what was required was the delivery of a signed copy by the arbitrator, and not any other copy. The Court then went on to hold that S. 34(3)’s requirement of the receipt of an arbitral award could not be read in isolation, and that in the context of S. 31(5), the receipt of the arbitral award referred to the award signed by the arbitrator, as required by S. 31(1).

The Court then relied upon its decision in 2005, in Tecco Trichy Engineers, to hold that the delivery contemplated by S. 31(5) was not a matter of mere formality, but a matter of substance, since the termination of the arbitral proceedings could take place only after its completion. Furthermore, since this led to the creation of certain rights (such as, for instance, the right to file an application to set aside the award), it was an important stage in the arbitral proceedings, and could not lightly be ignored.

Thus, the Court held that: “If the law prescribes that a copy of the order/award is to be communicated, delivered, dispatched, forwarded, rendered or sent to the parties concerned in a particular way and in case the law also sets a period of limitation for challenging the order/award in question by the aggrieved party, then the period of limitation can only commence from the date on which the order/award was received by the party concerned in the manner prescribed by the law.”

Finally, the Court rejected the suggestion that it should interpret the Section the other way in light of the unfair consequences that ensued. While accepting the fact that the Appellants appeared to have derived an undue advantage from the arbitrator’s omission coupled with the Respondents providing them a copy, it held that “that would not change the legal position and it would be wrong to tailor the law according to the facts of a particular case.”

It is interesting to note the Court’s rejection of the substantial compliance doctrine in the present case, in favour of a strict construction of the terms of the statute. Although in many situations, the parties may indeed receive the terms and substance of the award before the arbitrator’s official signed copy, the Court nevertheless preferred to stick to the text of the statute, and avoid relaxing its operation by bringing in the doctrine of substantial compliance, or a like concept. This is a clear example of the Court’s refusal to allow policy considerations to affect its interpretation of a commercial statute. Whether or not that is desirable is an open question.

Secretary, Ministry for Information and Broadcasting v. Cricket Association of Bengal was a case decided in 1995, when the immense commercial potential of TV broadcasting of cricket was perhaps just beginning to be tapped. Broadly, the Court was asked to rule upon, inter alia, whether Governmental agencies such as DD could claim a monopoly over airwaves – and thus, by implication, over the telecasting and broadcasting of a particular event (in the instant case, the live broadcasting of cricket matches organised by the Cricket Association of Bengal) – or, alternatively, did the organizer or the producer of the event have the right to select a broadcasting agency of his own choice?

The technical issues dealing with the limitations of available frequencies need not concern us here. What is important to note, however, is that the Court framed the debate in the language of an Article 19(1)(a) freedom of speech and expression violation, which was sought to be justified by recourse to Article 19(2). The Court held that undoubtedly, broadcasting came within the ambit of the protected freedom under Art. 19(1)(a). It went on to observe: “in a democratic polity, neither any private individual, institution or organisation nor any Government or Government organisation can claim exclusive right over it. Our Constitution also forbids monopoly either in the print or electronic media.”

Addressing the Government’s argument about public interest, the Court pointed out, in a lengthy paragraph that deserves to be quoted in full:

“…the monopoly… is often claimed by the Government to utilise the public resources in the form of the limited frequencies available for the benefit of the society at large. It is justified by the Government to prevent the concentration of the frequencies in the hands of the rich few who can monopolise the dissemination of views and information… the claim to monopoly made on this ground may, however, lose all its raison d’etre if either any section of the society is unreasonably denied an access to broadcasting or the governmental agency claims exclusive right to prepare and relay programmes. The ground is further not available when those claiming an access do not make a demand on the limited frequencies controlled by the Government or claim the frequency which is not utilised and is available for transmission…. if the Government is vested with an unbridled discretion to grant or refuse to grant the license or access to the media, the reason for creating monopoly will lose its validity. For then it is the government which will be enabled to effectively suppress the freedom of speech and expression instead of protecting it and utilising the licensing power strictly for the purposes for which it is conferred. It is for this reason that in most of the democratic countries an independent autonomous broadcasting authority is created to control all aspects of the operation of the electronic media.”

Furthermore, although under the Telegraph Act the Central Government did have the power to grant licenses for the utilization of the electro-magnetic waves below certain frequency levels, even this power was held to be subject to the freedom of expression under Art. 19(1)(a), and therefore only permissible if any of the criteria set out in Art. 19(2) was complied with.

On the side of the State, it was argued that this was a purely commercial matter, and therefore Art. 19(1)(g) was attracted, giving the State a wider latitude to regulate its distribution of licenses. It is interesting to note that the Court rejected this argument on two grounds: first, that sport was a form of expression, and dissemination of information about sport was also a part of the freedom of expression; and secondly, that the character of the telecasters, i.e. the BCCI and the Cricket Association of Bengal, was that of non-profit organizations seeking to popularize the game of cricket through the best possible methods. Indeed, the Court expressly distinguished the case of a purely profit-making organization, and an organization whose primary function involved an incidental inflow of profits.

The Court went on to hold, consequently, that the Cricket Association of Bengal had the right to enter into contracts with non-Doordarshan broadcasters to telecast the cricket matches in question.

In sum, therefore, this case raises the following two points for consideration: first, that the airwaves involved in telecasting and broadcasting through TV were held to be “public property”, and therefore subject to regulation; secondly, that in light of Art. 19(1)(a), such regulation could only be carried out under one of the permitted constitutional grounds under Art. 19(2). However, this entire framework was applicable only applicable when the telecaster was not primarily a profit-based entity.

Since the time of this case, however, the law has traveled a fair distance. The Courts are now far more lenient towards considering commercial speech to be a part of the right to freedom of speech and expression under Art. 19(1)(a), and are also more sympathetic to protecting speech one of whose primary purposes may be profit-making. The realities of broadcasting have also changed, with several players now being part of the market, some of whom undoubtedly are predominantly commercial in nature. What, for instance, would be the position of the Court if the State sought to regulate or restrict the coverage of the IPL, which is admittedly a commercial enterprise? Can foreign broadcasting companies claim a violation of the constitutional rights of viewers if the State restricts their entry into the market? All these questions, it is submitted, have been left open by the fairly ambiguous manner in which the Court has located cricket broadcasting within the contours of Art. 19(1)(a) of the Constitution!

S. 9 of the Arbitration and Conciliation Act, 1996 is surely no stranger to controversy. It formed an integral element of the much-maligned decision in Bhatia International, and the jurisprudence that followed. In this post, I discuss another interesting interesting issue that was brought to the fore in two 2009 judgments of the Delhi High Court, delivered by Endlaw J.

S. 9 of the Act confers upon the parties the right to apply to the Court for interim measures dealing with aspects such as guardianship, preservation of goods, inspection of property etc., at any stage prior to the enforcement of the arbitral award. In Value Advisory Services v. ZTE Corporation and Ors., available here, the Delhi High Court was called upon to decide whether a S. 9 interim award could be passed and enforced against an entity not party to the original contract or to the arbitral proceedings (a third party). In the case, the petitioner had a monetary claim against Respondents Nos. 1 and 2. The petitioner claimed that Respondent No. 3 owed certain money to Respondents Nos. 1 and 2, and wished to prevent Respondent No. 3 from releasing this money on the ground that it would leave the Petitioner remediless to enforce its own claims. By a prior order, the Court had restrained Respondent No. 3 from releasing the stated amount to Respondents Nos. 1 and 2. While this order was still in force, the Petitioner filed for an interim application requesting the Court to direct Respondent No. 3 to deposit the stated amount in Court. Respondent No. 3 objected by arguing that neither was it a party to the arbitration agreement and nor was it concerned with the dispute between the Petitioner and Respondents Nos. 1 and 2. In any event, until the case was decided on merits, it could not be said that to be entitled to any money. Some other arguments were made about the provisions of the SICA, with which we are not concerned here. On the other hand, the Petitioner argued that Respondent No. 3 was closely connected with the contract, as it was the Petitioner’s task to facilitate transactions between Respondents Nos. 1 and 2 on one side, and Respondent No. 3 on the other. It was also claimed that the relief sought was in the nature of a garnishee order available under S. 9(ii)(b) of the Act or that, alternatively, provisions of the CPC dealing with attachment before judgment – which were admittedly applicable against third parties – could be invoked.

The Court was called upon to consider numerous conflicting judgments of single-judge benches of the High Court, which had varyingly held that interim orders both could and could not be made against third parties. After examining prior law on the point, Endlaw J. came to the conclusion that “no general principle of maintainability/applicability or non-maintainability/non-applicability can be laid down. It will have to be determined by the court in the facts of each case whether for the purpose of interim measure of protection, preservation, sale of any goods, securing the amount in dispute, an order affecting a third party can be made or not.” He reasoned that if a general rule prohibiting issuance of interim orders was accepted, it would “hamper the efficacy” of S. 9. For instance, a guardian may not be such a party, or the goods may be required to be kept in custody, or sold to third parties etc. He also reasoned that the practice of issuing interim orders, including pre-decretal ones, against third parties, was well-accepted under the C.P.C., and that therefore it would be illogical not to extend the same powers to the Court under the Arbitration Act. Considerations of preventing the defendant from arranging his affairs so as to render the final award infructuous, during the proceedings of the arbitration, was another reason why such a construction was preferred.

Having ruled thus far, Endlaw J. was also required to go into the question of what would happen if the third party contested such an application, or set up a defence to it. While the C.P.C. provides for adjudication by a trial, Endlaw J. observed that the entire purpose of the Arbitration Act, that is, to reduce the time and costs involved in litigation, would  be defeated if such a requirement was imported from the C.P.C. as well. Therefore, he held that the Court was entitled to pass an order under S. 9 based upon a “prima facie” determination of the matter. On the facts of the instant case, Endlaw J. held that where the case was still proceeding, and the earlier order already protected the rights of the Petitioner to an adequate extent, there was no need to require Respondent No. 3 to deposit the monies in Court.

It is submitted with respect that Endlaw J.’s holding is in need of some clarification. While holding that the decision of when to issue an interim order against a third party must be determined on a case-to-case basis, Endlaw J. did not provide any guidance as to what factors should aid the Court in making such a determination. Should the Court proceed with a normal adjudication of whether the provisions of S. 9 are attracted, as it seems to have done in the last part of the above case? Are C.P.C. principles of attachment-before-judgment orders against third parties relevant? Are there some specific rules governing the degree of involvement that a third party must have (a contention that was raised, but not addressed) with the arbitration agreement and the main dispute? The uncertainty is exacerbated further, because in Ajay Makhija v. Dollarmine Exports, decided a month later (available here), Endlaw J. rejected an application for issuing interim orders against a third party, which was based upon a plea for lifting the corporate veil between the third party and the party to the dispute. Scant reasoning was provided for the same. It will therefore be interesting to see how the Delhi High Court evolves and develops its jurisprudence in this regard.

S. 34(3) of the Arbitration Act states:

“An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal

Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.”

S. 4 of the Limitation Act states:

When the prescribed period for any suit, appeal or application expires on a day when the court is closed, the suit, appeal or application may be instituted, preferred or made on the day when the court reopens.

In order to assess the applicability of S. 4 of the Limitation Act notwithstanding the specified period under S. 34(3), the Court was called upon to consider the 2001 decision of the Apex Court in Union of India v. M/s Popular Construction Company. In that case, it was held that S. 5 of the Limitation Act, which provided for a general extension of the limitation period provided that sufficient cause was shown to the Court, could not be used to save an application that was in breach of both the three-month period under S. 34(3), as well as the extended time period of thirty days under the proviso. While admittedly the Supreme Court’s decision was limited to S. 5, its observations were “so sweeping that most of the High Courts treated it as sacrosanct and took the view that… S. 4 [was] not applicable” to an issue involving S. 34(3). Thus, the term “and not thereafter” at the end of the proviso to S. 34(3) was interpreted by the High Courts to mean that the specified time under S. 34 was “absolute and unextendable”.

In 2008, however, the Supreme Court in Consolidated Engineering Enterprises v. Principal Secretary, Irrigation Dep., noted that the provisions of S. 5 were impliedly excluded by the proviso to S. 34(3). This is because S. 5 provides for a general extension of the limitation period where sufficient cause is shown, while S. 34 specifically provides for a thirty-day extension for the very same reason. In accordance with the well accepted principle of specific statutes overriding general ones in cases of overlap, S. 34(3) would therefore exclude the operation of S. 5. This, in effect, was the holding of the Court.

The Delhi High Court then noted that, in contradistinction with the object of S. 5, S. 4 “does not enlarge the period of limitation but it only enables the party to file any suit, application, etc. on the reopening day of the Court if the Court is closed on a day when limitation expires.” As there was no overlap of any sort between S. 4 and S. 34(3) – indeed, the two dealt with completely different issues – the Court held that S. 4 was not excluded, and would continue to apply in cases where there was neither any inaction, nor a lack of due diligence on the part of the applicant. Interestingly, the Court also held that S. 4 was applicable even to situations where the proviso to S. 34(3) was attracted – i.e., the thirty-day condonation period. In the present case, bureaucratic delays between departments were the main reasons for the delay, and were therefore held to constitute sufficient cause for attracting both the thirty-day extension period, as well as consequently necessitating the application of S. 4.

The Court also had occasion to deal with another point of interest, i.e., the meaning of “the party… [who had] received the arbitral award” under S. 34(3). Under S. 2(h) of the Arbitration Act, the word “party” means a “party to an arbitration agreement”. An argument was raised that, in light of a recent Supreme Court decision (Teccho Trichy Engineers), “in the context of a huge organization like Railways the copy of the Award has to be received by the person who has knowledge of the proceedings and who would be the best person to understand and appreciate the arbitral Award and also to take a decision in the matter of moving an application.” Rejecting this contention, the Court held that supervision of the day-to-day working under the contract, as well as being in-charge of all correspondence thereto was irrelevant in determining who the “party” to the arbitration agreement was. Rather, it was the signatory to the arbitration agreement who was deemed to be the requisite party, as defined under the Arbitration Act. While that was the determining factor, other aspects such as the party in whose name the application for setting aside the arbitral award was filed, or a subsequent appeal, were also relevant aspects that needed to be taken into account.

In my submission, the Court is correct on both counts. It correctly identified that the rationale of the Popular Construction Company was not the overriding or absolute nature of S. 34(3), but rather, the fact that it excluded the operation of S. 5 due to their overlapping nature. As S. 4 and S. 34(3) deal with two very different types of exceptions to limitations, it is reasonable to give both their full effect. Secondly, while the argument that an effectual, or purposive interpretation should be given to the word “party”, it must be remembered that “party” is a term of art that has a specific legal definition. The Court was bound both by the provisions of the Arbitration Act as well as Teccho Trichy Engineers in rejecting the contention.

After the preliminaries (paragraphs 1 – 14), an account of the factual matrix follows (paragraphs 15 – 20), and then a brief foray into the human rights and consular rights violations (paragraphs 49 – 99), none of which need concern us here. It is then that the Court comes to the issues of immediate relevance. It was argued by Guinea that the all-pervasive nature Mr. Diallo’s powers over the companies mandated a finding that both “in fact and in law”, the companies could be equated with Mr. Diallo himself. The Court rejected this argument on two levels: first, it cited the Barcelona Traction to highlight the importance of the relevant municipal law (in this case, Congolese law) in determining to what extent the concept of separate legal personality was prevalent. An argument was made, however, that under Congolese law Mr. Diallo was in complete “factual charge and control” over the companies (in particular, the legal position of an “associe”). The Court’s response to this, the second level of argument, was interesting, and deserves to be quoted in full:

“In the following paragraphs, the Court is careful to maintain the strict distinction between the alleged infringements of the rights  of the two SPRLs at issue and the alleged infringements of Mr. Diallo’s direct rights as associé of these latter… the Court understands that such a distinction could appear artificial in the case of an SPRL in which the parts sociales are held in practice by a single associé.  It is nonetheless well-founded juridically, and it is essential rigorously to observe it in the present case.”

It is submitted with respect that the above paragraph is somewhat unclear. Once the Court had abandoned reference to Congolese law, “juridical foundation” is no ground to hold a principle valid under international law. It was open to the Court to take the path at least impliedly taken by Barcelona Traction, and argue the concept of separate legal personality (and by implication, the distinction between rights enjoyed by a company and rights enjoyed by a shareholder in that company) is a general principle of law recognized by civilized nations (Art. 38(1)(c) of the Statute of the International Court of Justice). In order to sustain such a holding, however, the Court would have been bound to look at a number of diverse municipal legal systems, and cull out certain principles. It did not.

In any event, it would now seem to appear that notwithstanding a directly contrary provision in the municipal statute (in which case the position remains unclear), the Court will use the broad common law concept of separate legal personality to draw clear dividing lines between company rights and shareholder rights, despite extensive ownership and factual control.

The next contention raised by Guinea was that his arrest and expulsion amounted to a denial of his direct right to take part in the general meeting, and vote accordingly. Here, the Court accepted the legal argument, once again upon the twin bases of domestic Congolese law and the verdict in Barcelona Traction, that such rights were indeed individual rights, and enforceable. However, it found on fact that no general meetings had actually been convened, and in any event, the possibility of voting through proxy militated against Mr. Diallo’s claims. Other similar claims based upon violations of the right of management were also rejected on fact.

The next interesting argument raised by Guinea was that the “creeping expropriation” initiated by Congo had violated Mr. Diallo’s property rights in his companies. While it is impossible to go into the law of expropriation here, it may be stated in brief that Guinea’s argument was that the falling value of investment in the companies, and their near-bankruptcy, had resulted in a position where Mr. Diallo “was lastingly deprived of effective control over, or actual use of, or value of those rights.” Once again, the Court’s response deserves to be quoted in full:

“The Court observes that international law has repeatedly acknowledged the principle of domestic law that a company has a legal personality distinct from that of its shareholders. This remains true even in the case of an SPRL which may have become unipersonal in the present case.  Therefore, the rights and assets of a company must be distinguished from the rights and assets of an associé.  In this respect, it is legally untenable to consider, as Guinea argues, that the property of the corporation merges with the property of the shareholder. Furthermore, it must be recognized that the liabilities of the company are not the liabilities of the shareholder…”

Lastly, an argument made as to the bankruptcy of the companies, and its practical effect on Mr. Diallo, was rejected, the Court citing Barcelona Traction with approval for the proposition that “company’s status alone in law is relevant, and not its economic condition, nor even the possibility of it being practically defunct.”

The above observations, along with the judgment’s repeated affirmation of Barcelona Traction, decided 40 years ago, raise some interesting food for thought with respect to the international law on diplomatic protection for companies and shareholders, and the enforceability of shareholders’ and company rights in cases of adverse State action before an international tribunal.

Unless otherwise stipulated by a treaty, there are two situations which provide States with legal standing to bring a claim in the ICJ, or another international forum. The first, which we are not concerned with here, is a case where a State’s direct rights have been violated (e.g., use of force against a State’s territorial integrity). The second, which is relevant for our purpose, is situations in which the nationals of a State are injured by another State, or its agents. Since the default rule is that individuals are not subjects of international law (subject, no doubt, to certain well-defined exceptions), and therefore are not entitled to pursue a claim in the international legal sphere, States are entitled to represent their nationals before the appropriate forums. This is known as the right of diplomatic protection.

The right of diplomatic protection, when applied to corporations and the relationship between corporations and individuals, throws up some interesting questions. What is the test for determining the nationality of companies operating across jurisdictions? More importantly, in light of the principle of separate legal personality of corporations, known throughout diverse legal systems, what rights are deemed to belong to a company, and what rights to its shareholders? The answer, obviously, will directly affect the issue of diplomatic protection. Most often, it will so happen that the State responsible for the alleged infringement of rights will also be the national State of the company. This leaves the issue of defining the scope and ambit of the rights in question a rather vexed one.

The seminal ICJ case dealing with this issue was Barcelona Traction Light and Power Company (Belgium v. Spain), decided in 1970. Barcelona Traction Ltd. was a company incorporated and having its head office in Canada, a majority of whose shareholders were Belgian nationals, and who had a number of subsidiaries operating in Spain. The Spanish government took various actions which resulted in the eventual bankruptcy of Barcelona Traction’s subsidiaries. The question before the Court was whether Belgium, appearing on behalf of its national shareholders in Barcelona Traction, had the legal standing to impugn the Spanish government’s actions. Belgium’s argument was that its nationals had been deprived of control over the companies as well as their property, and that damage to the company had resulted in damage to them as well – thus injuring their independent rights as shareholders.

The Court held that in the corporate entity was primarily a municipal law concept, and would have to be incorporated into the international domain as such. Thus, the Court used municipal law – in particular, the concept of separate legal personality – to draw a distinction between shareholders’ rights and company rights. It drew a further distinction between a “right” and an “interest”, and held that while damage to a company in the form of bankruptcy or confiscation of property may affect a shareholder’s interest, it did not touch any legally enforceable right vested in him. Examples of such rights would be the right to receive dividend, the right to vote etc.

This harshness of this rule was mitigated by providing for two exceptions: where the company ceased to exist, or where the national State of the company lacked the legal capacity to exercise diplomatic protection. If, on the other hand, these exceptions did not apply, and the national State of the company chose not to exercise diplomatic protection, the shareholders would have no remedy in international law.

The numerous criticisms of the dictum in Barcelona Traction, and the arguments that international law has moved away from such a standard, need not detain us here. It may, however, be briefly noted that the International Law Commission’s Draft Articles on Diplomatic Protection provide for a third exception to the Barcelona Traction rule: a situation where the national State of the company is itself responsible for the alleged violation of rights. The legal force of this rule is, however, hotly disputed.

This is the legal framework within which the ICJ’s decision in Diallo may be analysed. Mr. Ahmadou Sadio Diallo was a Guinean citizen, who settled in the Congo in 1964. There, he founded two companies. After engaging in numerous litigations for various debts owed to his companies by Congolese entities, Mr. Diallo was arrested, detained, and finally expelled from Congo (Zaire) in 1996. The question was whether and to what extent his rights as a shareholder and controller of his companies had been violated, vesting in Guinea a right of diplomatic protection to bring forward claims of that nature. In the admissibility phase of the proceedings in 2007, the Court declared that Guinea had the right of diplomatic protection insofar as it related to the protection of Mr. Diallo’s direct rights in his companies. The question of what constituted direct rights in the companies was for the Court to decide in the merits phase, and that is what will be discussed in the next post.

It is questionable, however, whether the recommendations of the Consultation Paper achieve this objective. In an earlier post, Mr. Anirudh Krishnan had made some pertinent observations about the proposals as a whole. (See http://www.criticaltwenties.in/lawthejudiciary/proposed-amendments-to-the-arbitration-and-conciliation-act-1996) In this post, I wish to focus specifically on the impact of the Paper’s recommendations on one very controversial area: the appointment of arbitrators under Section 11 of the Act

Readers will be aware that in Patel Engineering, a seven-judge bench of the Supreme Court put to rest a long-standing controversy relating to the function of the Chief Justice in appointing an arbitrator in the event that the parties were not in agreement. The Court held that the Chief Justice’s function was “judicial” in nature, i.e. he (or his designate) was empowered to look into the merits of the parties’ claim (subject to some reservations which need not here be dealt with).

The majority decision in Patel has been severely criticized. Two of the most important criticisms are: first, one of the reasons why arbitration was adopted as a method of alternative dispute resolution was because of concerns of swiftness and efficacy in disposing of proceedings, something of special importance to the international business community. The judgment defeats this objective; and secondly, the decision effectively nullifies the power of the arbitral tribunal to decide upon its own competence (kompetenz-kompetenz), something that is widely accepted to be one of the cornerstones of arbitration, and is embodied in S. 16 of the Act. Indeed, in a powerful dissent, Justice Thakker pointed out all these shortcomings with the majority judgment, and proposed that the scrutiny of the Court be limited to a prima facie examination of the validity of the arbitration agreement.

Subsequent to Patel, Courts that have been aware of its shortcomings, but nevertheless, been bound by its holding, have performed various contortions to narrow its scope. The Supreme Court in Boghara Polyfab, for instance, made a distinction between three types of scrutiny, one that the Court was bound to undertake (questions about the existence and validity of the agreement), one that it could undertake (e.g., whether the claim was live), and one that it was not permitted to undertake (the merits of the parties’ claim). This case, in turn, has been interpreted and modified by subsequent cases. The position of law, therefore, is rather uncertain, and ripe for clarification by the legislature.

It is therefore a matter of some perplexity that the Consultation Paper, after detailing and summarizing all the cases that ended with Patel Engineering, completely sidesteps the controversy described above. Instead, it chooses to focus on the impact of the decision on the functional of arbitral institutions! It specifies, as a preliminary point, that the purpose of the Act is to “encourage litigants to alternative dispute resolution mechanism by arbitration.” It is therefore extremely strange that it chooses to ignore the most significant fall-out of the Patel decision with respect to popularizing arbitration in India. The Consultation Paper goes into a lengthy analysis of the benefits of institutional arbitration, and then proposes that amendments be made in order to ensure that the Patel dictum notwithstanding, institutional arbitration is an option that can be had recourse to. Consequently, it proposes replacing “Chief Justice” with “High Court” or “Supreme Court” as the case may be, and making referral to arbitral institutions mandatory in cases of a “Commercial dispute of specified value”.

Apart from doing nothing to clarify the Patel situation, this proposal also has an unexpected fall-out. Readers who have closely followed the controversy relating to Patel will recall that one of the arguments made by counsel in that case turned upon the replacement of the word “Court” in the UNCITRAL Model Law with “Chief Justice” in the Arbitration Act. The Court rejected the argument on what many consider to be tenuous grounds; however, legislative substitution of “Chief Justice” with “Court” will only serve to entrench the majority’s decision, and undermine any future attempts – legislative or judicial – to overturn Patel. Of course, it may be argued, citing the UNCITRAL Secretariat’s explanatory note, that even the use of the word “Court” in the Model Law refers only to an administrative decision by that organ. Nevertheless, any argument against Patel will certainly be weakened if the crucial term being interpreted is “Court”, as opposed to “Chief Justice”.

Lastly, one amendment proposes to set a time limit (60 days) for the disposal of any application for appointment of arbitrators. However, even this is worded in the language of a recommendation (“endeavour shall be made…”), and consequently, may be toothless when employed in practice.

In sum therefore, the Consultation Paper has missed an important chance to clarify and improve a markedly unsatisfactory situation in the Arbitration Act. When compared with its proactive and laudatory proposal with respect to other controversies such as Bhatia International’s interpretation of the meaning “international commercial arbitration”, this section of the Paper provides more than a fair degree of disappointment.