Contract of Sale of Goods

The United Nations Convention for Contract of Sale of Goods (CISG); and Indian Sales of Goods Act, 1930

The Convention of International Sale of Goods, 1980 does not apply to India since it is not a signatory to the same. Therefore, by the virtue of it, the rules of this international convention, do not apply in case of a purchase or a sale agreement with an Indian entity. And thereby, the domestic laws of the country (India) will have applicability to such agreements
The Sale of Goods Act, 1930 applies in such a case and therefore, the seller as well as the purchaser would be governed by the provisions of the Act.

A. Common Features

	Convention on Contract of International Sale of Goods (CISG, 1980)	Indian Sales of Goods Act, 1930
Rights, Duties, liabilities and Obligations of Buyer and Seller	Provisions for seller are given in chapter II of the part III from articles 30 – 44. With regard to buyer, chapter III of part III from articles 53-60 is relevant.	Rights and Duties of the seller and buyer are given in chapter IV performance of contract. They are more or less same as given in the UN Convention. And further chapter V states about the rights of unpaid seller against the goods
Suit for Breach	In both the cases it will depend on the agreement between the parties that any dispute they refer to the court of law or the arbitration
Remedies in case of Breach	In case of breach by the seller, articles 45 -52 are relevant and in case of breach by the buyer articles 61 - 65 are relevant.	Remedies in case of breach are available for the parties in chapter VI of the Act. One party can sue another for the damages in case of breach by latter.
Indemnity	In both the cases it shall depend on the nature of the agreement and the intention of the parties to the contract. And in case of the transaction includes transportation also
Fixation of price of the goods	In both the document the, provisions for determination or fixation of price are wide in nature. Parties can fix it according to their interest and the nature of the goods in question by the contract or it may be determined in the course of dealing in future.	Sections 9 & 10

B. Provisions that make difference

	CISG, 1980	Indian sales of Goods Act, 1930
Third party claim	Articles 41-44 deals with third party claim. It says that the seller must not deliver the goods over which any third party is having any right or claim.	The Indian Act, is silent about this kind of provision
Auction Sale	Article 2 excludes the sale by auction from the applicability of the Convention	Whereas Indian Act provides the Auction Sale in section 64.
Agreement	The CISG provides only general contractual terms in relation to Contract of Sale of Goods	Whereas the Act clearly gives the meaning of Contract of Sale of Goods and Agreement to Sell and the future or contingent conditions
Damages	Damages have been given in Articles 74-77 of the Convention which are somehow fix in nature and according to the value of the goods in question or dispute	The aggrieved party may sue for the damages and in that case the court or the tribunal shall decide the amount of damages
Exemption	The Convention provides exemptions in case of any circumstances beyond the parties’ control

C. Provisions about which both the documents are silent

The provisions about which both the documents are silent are:

1. Mistake
2. Misrepresentation
3. Fraud

In case where Indian Law is the applicable law, the above three provisions, about which the International Convention is silent, will be dealt by the Indian Contract Act, 1872.

But if the International Convention is the Governing Law of the Agreement or Contract, the land law of the particular country will be applicable, wherein the proceedings of the court or arbitration are going to be held.

In certain cases, the applicable law shall be the law of the land according to the interest of the parties or the law of the land with that the parties and the agreement is having closest connection.

Continued in the second issue…

Contributed by:- Manish Sharma, LL.M. II year, NALSAR, Hyderabad.

Email: msharma28@gmail.com

'Softwares':Things to know

Difference between the Box Packed Software and Software Downloaded directly from Internet
With Internet becoming a necessity, softwares have also become inevitable. Everybody of us use or have used some kind of software. A Software is a program designed to perform some specific task in a computer; for example: Operating system (Windows XP, Windows Vista), Document processing (MS Words), Database Management – DBMS – (MS Excel, MS Access, Oracle), Presentation (MS PowerPoint), Photo Editing (Adobe Photoshop), Document Reader (Adobe Acrobat Reader), Antivirus and Firewall and so on. It is a help to the hardware and without softwares, hardware cannot perform the essential functions.

Software usually comes in two forms:
1. Type 1 Software: Software available in a shop or a Mall or from a vendor or from a reseller, which comes in a “Box Packed Type” and usually such softwares are written/burned on a CD/DVD. But these can be stored in a Flash/Pen Drive or on a media which the purchaser obtains in a “Hard Copy Format” i.e. on a CD/DVD, Flash/Pen Drive or on Floppy/Hard Drive, etc.

2. Type 2 Software: Softwares available on the internet fall in this category. Such Softwares can be obtained by downloading it directly from the internet. The seller or the reseller in this case had uploaded that software on his FTP server, which can be located anywhere in the world. There can be a plethora of FTP Servers and the same software can be available on different “Mirror” FTP Servers at different places all over the world. Such software does not come in a “Hard Copy” format and the user downloads such software directly on to his computer Hard Drives.

We use a plenty of softwares without even realising the difference between the above stated two different types. We think that software which is available in the shop (in Hard Copy Format) is the same as the software which is available over the internet and can be downloaded directly from the internet. However, there is a great difference between the Type 1 and Type 2 Software in both commercial and legal sense.

The Type 1 Softwares are generally categorised as “Products” or “Goods” and the Type 2 Software are generally categorised as “Services” in Commercial and legal sense.

The Type 1 Software is traded as “Goods” and follows all the principles and laws relating to “Sale of Goods” in legal and commercial sense.

The Type 2 Software is traded as “Services” and follows the principles and laws relating to “Trade in Services” in legal and commercial sense. The “Services” also includes the Software “Updates” and “Upgrades”.

The “Updates” available on the internet are those softwares which come in “Patches” and are meant only to update the existing software which a user has already installed in his system. By updating, the version of the software does not change, but it becomes “up-to-date”. These upgrade the existing software to a higher version. The user has a choice of buying a new version of software directly from market or “upgrading” the existing software to the latest version of that software. The version of the software changes while upgrading. For Example: “Norton Antivirus 2006” is “updated” to achieve the latest definition of virus databases, the version is not changed, while “Norton Antivirus 2006” can be “upgraded” to achieve “Norton Antivirus 2008”. The user has a choice that he can buy a new and fresh “Norton Antivirus 2008” from market/internet or he shall “upgrade” it from existing “Norton Antivirus 2006” to achieve the “Norton Antivirus 2008”. Usually the Upgrade options are preferred by the users as the costs of the upgrades are always less than the fresh and new software.

The License Agreement (LA) Factor
Every genuine software comes with a License Agreement (LA). Though the software works in almost similar way, even then the Licence Agreement pertaining to Type 1 and LA pertaining to Type 2 is totally different. It can be observed by reading the License Agreement or the “Digital Contract” attached with both types of software. “Digital Contract” is the Contract of use of software which is in digital form. Almost all of us have seen such “Digital Contract” while installing the software, where a dialogue box opens and the user has to “read” it and “print” it and the software can only be installed if the user selects “I Agree” or “Accept”, but if the user selects “I Disagree” or “Reject”, the installation of the software fails. Such types of “Digital Contracts” or “Licence Agreement” are normally known as “End User Licence Agreement” (EULA).

The EULA pertaining to Type 1 software are related to softwares termed as “Goods” and the EULA pertaining to Type 2 are related to softwares termed as “Services”.
For Type 1 Software, the Digital Contract or EULA as it being a Standard Contract comes with a print outside the package or the box of the software. The reason for this is that, the EULA being in digital form, the user must read and know about it at the time he purchases it and not at the time he starts using it. After he buys the software and uses it for the first time, even if he disagrees with the EULA clause which is usually asked from the user when using it for the very first time, then he cannot return the purchased ‘Box’ Software, because he has already opened the Box or the packing material containing the software and only after agreeing to the License Agreement. Therefore, the EULA has to be printed on the outmost covering of the box software, for the purpose that the customer can read the EULA in printed form and can decide whether he agrees or disagrees with the EULA, thereby making his decision whether to purchase the software or not.

Whereas, for a Type 2 Software, the EULA is digitally available just before/near the “Download Link/Button”, from where the downloading can be started. Because of this, the customer who intends to purchase and download the software can read and understand the EULA, thereafter making his decision whether to purchase or not accordingly.

The Taxation and Other Factors
In India, Type 1 and Type 2 softwares are taxed in different ways. Type 1 is taxed as Goods and all taxes, direct or indirect, are levied on Type 1 as Goods i.e. customs, excise, octroi, VAT, etc. are all levied on Type 1 considering it as “Goods”. While Type 2 are taxed as Services and the “Service Tax” as and when applicable is levied.
Some other factors like the Warranty issues pertaining to the two classified softwares are also different. Type 1 softwares being “Goods”, such software carries a warranty with all the terms and condition of warranty. Type 2 softwares being “Services”, such softwares do not have any warranty because warranty is a virtue of “Goods” and not of “Services”.

The above difference is made clear under the UNCTRAL Model law relating to Digital Contract and e-commerce whereby the effort has been made to make e-commerce between countries and individuals easy and less complicated in terms of Taxation, Warranty and Licence Agreement.

Contributed By: Rameet Verma, LL.M., International Trade and Business Laws, NALSAR University of Law, Hyderabad.
Email: verma.ramit@gmail.com

WTO Dispute Settlement Mechanism: a Milestone with 400 Cases

The biggest change in the WTO from GATT 1947 was the establishment of an effective and efficient dispute settlement system. The member states concluded a separate Agreement in Annexure II of Marrakesh Agreement titled as ‘Understanding on Rules and Procedures Governing the Settlement of Dispute’.

The Mechanism has written lot of successful stories with getting the 400th complaint recently on 2nd November, 2009 which is an evidence of the member states’ confidence in the WTO system. On this occasion WTO Director General Pascal Lamy said, “This is surely a vote of confidence in a system which many consider to be a role model for the peaceful resolution of disputes in other areas of international political or economic relations.” Further he remarked, “All the political muscle-flexing and grandiloquence is discarded at the door once the case enters the WTO.”

Since coming into existence in January 1995, the WTO's 153 members initiated an average of approximately 27 disputes per year under the provisions of the Dispute Settlement Understanding, the WTO treaty governing the settlement of all disputes among the organization's members.

Of the 400 cases filed so far, approximately half have eventually been settled directly between the parties, under the system's mandatory consultation requirements, without going to litigation. Of the remainder, 169 have been the subject of panel and, where appealed, Appellate Body proceedings, 17 are currently in adjudication, and 12 are still the subject of active consultation between the parties.

There is also lot of criticism about the WTO DSM that it is dominated by the developed countries mostly EC and US. On this point the DG said that “Certainly, these two trading giants are the most frequent users of the system. This is not surprising since they are the world's biggest traders, as is increasingly the case with China. But the figures also show that developing countries do not play coy hand-maidens to their richer trading partners. During the period 1995-2009, developing countries have been complainants in more than 45 per cent of all cases, and have been respondents in more than 42 per cent of the cases.”

But still the problems are there before the developing countries specially the least developed countries when they have to enforce the findings of the Dispute Settlement Body against developed countries. The examples can be taken from the cases like US-Shrimp Case in which Malaysia tried a lot to enforce the findings against US. Sometimes the developed countries put pressure upon developing countries to make changes in their domestic laws according to the developed country’s interest; and failure of that they impose various type of sanctions under the loopholes of WTO System.

Therefore, the WTO DSM needs some changes so that it can be just, fair and equitable with the poor world. The ongoing review of the functioning of the WTO's dispute settlement system has given rise to many proposals for clarification and improvement. But WTO Members agree that, as the bedrock of the multilateral trading system, the dispute settlement system will not be subject to any seismic shift in its fundamental structure as a result of the Members' deliberations.

Summary of disputes (as of 2 November 2009)
To date, 400 disputes have been brought to the WTO, of which:
• 84 appear to have been resolved bilaterally but for which no outcome notified to WTO
• 95 were resolved bilaterally for which outcome notified to WTO
• 23 were resolved bilaterally after a panel was established but before the panel was composed
• 12 are currently the subject of active consultations between parties
• 186 went into litigation

Contributed by: Manish Sharma, LL.M. II year, NALSAR, Hyderabad.
Email: msharma28@gmail.com

FDI in India – A brief Introduction

The Indian Government embarked on liberalizing the Indian regulatory framework with specific reference to foreign investment, through the Statement on Industrial Policy of 1991. Since then the Indian regulatory environment for foreign investment has been eased consistently to make it increasingly investor-friendly.

Entity Options
A foreign company looking at setting up operations in India has the following options for formulating its entry strategy:

1: Operating as an Indian Company, through:

(A) Wholly owned Subsidiary Company

A foreign company can set up a wholly owned subsidiary company in India for carrying out its activities.
Such subsidiary is treated as an Indian resident and an Indian Company for all Indian regulations (incl. Income Tax, FEMA and Companies Act), despite being 100% foreign owned. At least two and seven members are mandatory for a private limited and public limited company respectively.

(B) Joint Venture with Indian Partner : equity participation
Though a wholly owned subsidiary has been the most preferred option, foreign companies have also been setting up shop in India by forging strategic alliances with Indian partners. The trend in this respect is to choose a partner who is in the same field/area of activity or brings synergy to the foreign investor’s plans for India.

2: Operating as a Foreign Company, through:
(A) Liaison Office
(B) Project Office
(C) Branch Office

Foreign Investment not permitted
Under the current FDI framework, foreign investment is permitted from all categories of investors and in all sectors except in certain sectors, namely:
• Atomic Energy
• Lottery Business, Gambling & Betting
• Agriculture (excluding floriculture, horticulture, seed development, animal husbandry, pisciculture and cultivation of vegetables, mushrooms etc.)
• Plantations (excluding Tea plantation)
• Retail Trading (other than Single Brand retail)
• Real Estate (except construction development projects)

Sectors where Foreign Investment is permitted
For other sectors, there are two approval routes for foreign investment in India:
• Automatic route under delegated powers exercised by the Reserve Bank of India (RBI),
• Approval by the Government through the Foreign Investment Promotion Board (FIPB) under the Ministry of Finance.

Automatic Route
FDI is permitted under the automatic route (i.e. without requiring prior approval) for all items/activities except the following:
• where the foreign collaborator has an existing venture/tie-up in India in the same field (‘same field’ means 1987 NIC code) as on January 12, 2005, with the exception of following cases which would not require prior FIPB approval :
• investment by a Venture Capital Fund registered with SEBI;
• existing joint venture has less than 3% investment by either party;
• existing joint venture is defunct or sick.
• proposals falling outside notified sectoral policy/caps or sectors in which FDI is not permitted.

Automatic Route is not available to:
• Unregistered entities overseas
• Investments other than shares and convertible debentures
• For consideration other than cash (except for capitalization of ECB due for repayment and interest on such ECB, technology royalty due for payment)

FIPB Route
In all other cases of foreign investment, where the project does not qualify for automatic approval, as given above, prior approval is required from FIPB.

The proposal for foreign investment is decided on a case-to-case basis depending upon the merits of the case and in accordance with the prescribed sectoral policy.

to be continued...

(Disclaimer: Please check the latest rules and regulations by the appropriate authorities as they are subject to change at any time)

Seventh WTO Ministerial Conference

The Seventh Session of the WTO Ministerial Conference will be held from 30 November to 2 December 2009. The Conference is taking place four years after the last Ministerial Conference in 2005, where the emphasis will be on transparency and open discussion. The general theme for the discussion shall be “The WTO, the Multilateral Trading System and the Current Global Economic Environment”. The Conference provides an opportunity to look at some systemic issues in the WTO with a view to strengthening the multilateral trading system.

In the pursuance of its intention in General Council Meeting held on 26th May, 2009, on 2nd July, 2009, India submitted a set of five proposals to General Council which are intended to enhance the usefulness of WTO and to make the system more relevant, vibrant and user friendly for both the member states and the larger trading community. India considered these proposals important from the perspective of improving the functioning and efficiency of WTO as a rule-based system.

1. Trade Information System based on Member Notifications: there is a significant gap in the information available on non-tariff measures (NTMs). The WTO took a step in the right direction when it implemented the Integrated Data Base (IDB) covering tariff (applied and bound) and trade data (partner-wise) which are electronically available at the national tariff line level. This has proved to be of immense assistance in formulating not just negotiating positions but also for various research activities. It is time that NTMs are integrated with the IDB in a common format and for similar use. For the trade operatives, the proposal is to create a comprehensive information system that provides at the national tariff line level the tariff and non-tariff measures imposed by any member. This kind of a system will grant member regimes a level of transparency that is not presently available from any source would be an invaluable improvement to the present situation. It will enhance the cooperation with the related multilateral agencies and provide technical assistance to developing and least developed countries.

2. Revitalize WTO Committees: for the better functioning and to improve the utility of the various committees, India has proposed some suggestions to be adopted – a) monitoring the recent developments in the member states on trade disciplines covered by the respective committee; b) a general discussion on the current practices and the recent developments on the trade disciplines of the concerned committees and also to include the outside experts in these discussions; c) to enable the committees to discuss and offer possible solutions to specific trade concerns of the members; and, d) the frequency of the meetings of committees should be increased.


3. WTO’s Engagement with RTAs: the ministers of the member states must issues directives collectively to for monitoring the developing trends in RTAs and their relationship with the WTO. There must be non-binding best practices guidelines for reference while negotiating new RTAs. There should be an effective transparency mechanism. The Secretariat should publish an annual review of the working of RTAs.

4. Omnibus Legal Instrument for Preferential Market Access to LDCs: it has been proposed to establish a ‘steering group’ or a subsidiary body under the General Council to comprehensively examine all WTO related instruments allowing members to grant preferences to LDCs. Following such examination, members to consider; propose and adopt a single instrument that would address all forms of preferential market access for LDCs.

5. Reaffirm primacy of International Standards and Standard Setting for WTO Obligations: Statement from Ministers in the Conference outcome document, reaffirming the provisions relating to the need to adopt international standards in respect of sanitary, phyto-sanitary and technical barriers to trade, stressing the need for members to primarily base domestic regulations on such international standards for all trade in goods. Encourage increased participation in international standard setting activities.

On 15 October 2009, following text from Australia, Brazil, Canada, China, Hong Kong China, European Communities, India, Japan, Korea, Malaysia, Mauritius, Mexico, Norway, South Africa, Switzerland, Turkey, United States and Uruguay, was circulated at the request of the Delegation of India for the inclusion in the outcome document of the 7th Ministerial Conference:

"The rapid change in the global economic environment requires the WTO to be agile and responsive in order to preserve its central role in the global trading system. With a view to maintaining the effective functioning of the rules based multilateral trading system, the WTO needs to periodically engage in a process of review of its functioning, efficiency and transparency and consider systemic improvements, as appropriate. Ministers have invited the General Council therefore, to establish an appropriate deliberative process to review the organization’s functioning, efficiency and transparency and consider possible improvements, while bearing in mind the high priority we attach to the successful conclusion of the DDA negotiations. We look forward to reviewing the progress in this regard in our next meeting."

Contributed by: Manish Sharma, LL.M. II year, NALSAR, Hyderabad.
Email: msharma28@gmail.com

GATS and Legal Services in India

The GATS brought under its purview the entire gamut of services trade, as classified into 161 service activities under 12 broad sector heads in the GATS sectoral classification list.

However, this breadth of coverage was achieved at the cost of certain flexibilities. One of the key flexibilities embedded in the GATS is the discretion that a member country of the WTO enjoys in deciding which of the services sectors it wants to schedule for undertaking liberalisation commitments under the GATS rules. This is often termed a ‘positive list’ approach or a ‘bottom-up’ approach.

‘Legal Services’
Legal Service has been classified as a professional service under the category of Business services as per the World Trade Organization's Classification list of Services Sector (W/120). Description of Legal services has been defined in UNCPC (United Nations Central Product Classification) which includes legal advisory and representation services and is as follows:.

Legal Services Definition (CPC 861) - This sector corresponds to the United Nations Central Product Classification (UN CPC) at the three-digit level. The definition includes:

8611: Legal advisory and representation services in the different fields of law: (86111 - Legal advisory and representation services concerning criminal law):-
Legal advisory and representation services during the litigation process, and drafting services of legal documentation in relation to criminal law. Generally, this implies the defence of a client in front of a judicial body in a case of criminal offence. However, it can also consist of acting as a prosecutor in a case of criminal offence when private legal practitioners are hired on a fee basis by the government. Included are both the pleading of a case in court and out-of-court legal work. The latter comprises research and other work for the preparation of a criminal case (e.g. researching legal documentation, interviewing witnesses, reviewing police and other reports), and the execution of post-litigation work, in relation to criminal law.

8611: (86119 - Legal advisory and representation services in judicial procedures concerning other fields of law):-
Legal advisory and representation services during the litigation process, and drafting services of legal documentation in relation to law other than criminal law. Representation services generally consist of either acting as a prosecutor on behalf of the client, or defending the client from a prosecution. Included are both the pleading of a case in court, and out-of-court legal work. The latter comprises research and other work for the preparation of a case (e.g. researching legal documentation, interviewing witnesses, reviewing police and other reports), and the execution of post-litigation work, in relation to law other than criminal law.

8612: (86120 - Legal advisory and representation services in statutory procedures of quasi-judicial tribunals, boards, etc.):-
Legal advisory and representation services during the litigation process, and drafting services of legal documentation in relation to statutory procedures. Generally, this implies the representation of a client in front of a statutory body (e.g. an administrative tribunal). Included are both the pleading of a case in front of authorized bodies other than judicial courts, and the related legal work. The latter comprises research and other work for the preparation of a non-judicial case (e.g. researching legal documentation, interviewing witnesses, reviewing reports), and the execution of post-litigation work.

8613: (86130 - Legal documentation and certification services) :-
Preparation, drawing up and certification services of legal documents. The services generally comprise the provision of a number of related legal services including the provision of advice and the execution of various tasks necessary for the drawing up or certification of documents. Included are the drawing up of wills, marriage contracts, commercial contracts, business charters, etc.

8619 (86190 - Other legal advisory and information services):-
Advisory services to clients related to their legal rights and obligations and providing information on legal matters not elsewhere classified. Services such as escrow services and estate settlement services are included.

GATS schedules distinguish between the following legal services: (a) host country law (advisory/representation); (b) home country law and/or third country law (advisory/representation); (c) international law (advisory/representation); (d) other legal documentation, certification, advisory, and information services.
The GATS covers all advisory and representation services in the various fields of law and in statutory procedures. This includes notarial services since they are supplied on a commercial basis. However, activities related to the administration of justice (judges, court clerks, public prosecutors, etc.) are effectively excluded from the scope of the GATS as in most countries it is considered a “service supplied in the exercise of governmental authority.”

Modes of Supply and Legal Services
In order to capture the complex nature and diverse forms of international transactions in services, the GATS adopted a novel approach of classifying the entire range of services trade into four ‘modes’:
• Mode 1 (cross-border)
• Mode 2 (consumption abroad)
• Mode 3 (commercial presence)
• Mode 4 (movement of natural persons)
Major ways in which service suppliers serve their clients (corresponding to the modes of supply mentioned above). Countries have to say whether or not they allow:
• foreign firms to deal with clients in their market from across the border (i.e. to give legal advice electronically);
• their citizens to travel abroad to visit the supplier ( e.g. a foreigner comes to India to consume the services of an Indian lawyer of law firm) in order to consume a service;
• foreign service suppliers to establish an operation ( e.g. law firm etc) in their market; or
• suppliers to enter the country in person ( e.g. a lawyer) to do business.
As a result, firms know where they stand in foreign markets and in their dealings with foreign clients. If they encounter barriers related to these modes of supply, they can verify whether the GATS Member concerned has made legal commitments in this area and ask for the assistance of their government in resolving the issue. All Members have recourse to a WTO dispute settlement process in case another Member does not conform to its obligations.

Provisions/Commitments under GATS
The GATS, among other elements, consists of a series of general provisions that largely apply across the board to all measures affecting trade in services.
However, the GATS also includes a set of ‘specific commitments’ that applies only to service sectors that are enlisted in a member’s GATS schedule. For each specific sector scheduled by it, a member undertakes ‘specific commitments’ on market access (MA) and national treatment (NT) for each mode of services trade.
Importantly, members need not grant full MA and can deny NT by inscribing limitations on MA and/or NT in their respective schedules.
Members are at liberty to schedule their commitments in one of the following ways:
(i) Full commitment: “none” or “no limitations”, which implies that the Member does not seek in any way to limit market access or national treatment through measures inconsistent with Articles XVI or XVII of GATS.
(ii) Commitment with limitations: the Member details the measures maintained which are inconsistent with market access or national treatment, and implicitly commits itself to take no other inconsistent measures.
(iii) No commitment: “unbound” indicates that the Member remains free to maintain or introduce measures inconsistent with market access or national treatment.
(iv) No commitment technically feasible: “unbound*” indicates that in the sector in question, a particular mode of supply cannot be used.

“Commitments” generally involve the following obligations:

I) General Obligations:-

MFN: The ‘most favoured nation’ obligation applies across all sectors and all modes of supply, unless otherwise indicated through an exemption in the ‘MFN Exemption List’. This obligation forces all members to give the most favourable treatment that it has accorded to any of its trading partners to all other WTO members. In short, it obliges each country to not discriminate against any of its fellow members in the WTO.
Transparency: This principle obliges all members to identify and publicise all rules and regulations affecting trade in services. Any change in the regulations must also be made public. Information about any particular regulation must be readily available through national enquiry points.

II) Specific Obligations:-

National Treatment: This obligation requires non-discrimination between foreign and domestic services and service suppliers once they have entered the market. If a member wishes to discriminate for in a particular service he must enter it into its ‘Schedule of Commitments’.
Market Access: This obligation means that there can be no discrimination among services and service suppliers and that the only restrictions that can be enforced by members, provided they are scheduled (in the ‘Schedule of Commitments’ as mentioned above), are quantitative and legal restrictions on:
• the number of service operations
• the value of service transactions or assets
• the number of operations or quantity of output
• the number of natural persons supplying a service
• the participation of foreign capital
• the type of legal entity

Requests made to India under Legal Services (GATS)
There are certain requests to India by a number of countries to open up the legal services market. The plurilateral request in legal services is cosponsored by Australia, Canada, the EC, Japan, New Zealand, Norway, and the USA. Certain other countries have also joined in with the above cosponsors requesting India to open up its legal services sector.

For details of requests made to India by different countries and commitments offered please see the consultation paper of the Department of Commerce, Government of India available at: http://commerce.nic.in/trade/consultation_paper_legal_services_GATS.pdf

Maiden Post Graduate National Moot Court Competition at Pune

Department of Law, University of Pune is organising a Post Graduate National Moot Court Competition which is to be held on January 23-25th 2010. The moot problem is on the adjudication of issues of Bio-Piracy, Human Rights, State Responsibility and other aspects of International law.

For more details please see the 'News and Announcements' section of the University of Pune website http://www.unipune.ac.in/

Foreign Law firms and India

In 1994, two New York-based and one London-based law firm had sought permission from the Reserve Bank of India (RBI) to begin liaison office activities in India to advise and assist non-Indian clients in connection with their activities in India and outside India. The three law firms, White & Case (NY), Chadbourne & Parke (NY) and Ashurst Morris Crisp (UK) were granted permission by RBI under the Foreign Exchange Regulation Act (FERA) to start liaison activities . But the entry of foreign law firms was put on hold by an interim order of the Bombay High Court.

In the year 2005 Britain and Australia had approached the Bar Council of India seeking permission to set up their law firms in the country. But the Bar Council of India made it clear to them that it was opposed to the entry of foreign lawyers and foreign law firms in the country. An American law firm had also approached the BCI to open its branch office here to render legal services. But its request was also turned down.

Despite the resistance to their entry, foreign law firms have tie-ups and associate offices in India with whom they continue to work. So, even if they have not set up offices in India, they have liaison offices or India departments that effectively do the work: the London-based Clifford Chance and Baker & McKenzie, both have lawyers for India-related practice. Allen & Overy LLP entered into a referral, training and joint marketing relationship in 2008 with Trilegal. A Washington-based firm set up by a Jones Day partner in 1995, with New Delhi-based P&A Law Offices. London’s Linklaters LLP allied with Mumbai-based Talwar Thakore & Associates in 2007. Clyde & Co. has plans to ener into some kind of an arrangment with ALMT Legal. Certain other law firms in India have alliances with foreign law firms.

Many British and American Law firms have set up Indian Practises based in London, Dubai, Hong Kong or Singapore or forged alliances with leading domestic firms to refer work in and out of India.

There has been a change in the government’s policy. The Government came up with the Limited Liability Partnerships Bill (LLPs) which became an Act in the year 2008. This Act enables such law firms (as well as accounting firms) operate in India by entering into Joint Ventures.

Pending Case: Lawyers’ Collective vs. Bar Council of India & Ors. (Bombay High Court- WP/1526/1995)
In 1995, Lawyers’ Collective, a public interest trust set up by lawyers to provide legal aid, moved Bombay High Court challenging the right of foreign law firms to “practice law” in India. They alleged that these firms were exercising active legal practice in India against the statutory requirements and the permission granted by Reserve Bank of India to merely operate as liaison offices.

The High Court in an interim order had held that the practices engaged by these firms amounted to “practicing the law” and hence were not to be permitted. The Court also said that, in India, since there is no distinction between solicitors and advocates, both counselling and providing legal advice to the clients will be an 'act' of Advocacy and the representatives of these foreign firms will have to be enrolled under the Advocates Act. (The word attorney was removed from the Act by amendments to the Act)

The foreign law firms challenged the HC order in the Supreme Court, which in March 1996, reverted the case back to Bombay HC, asking it to decide the matter expeditiously.

Question which arose in this case: whether the term “practice the profession of law” extends beyond appearing before a court to advising clients and drafting legal documents?

The Court had stated in its interim order that the Advocates Act, 1961, provides that only advocates enrolled in India are entitled to practice the profession of law in India. It argued that the term “practice the profession of law” would include not only appearance before courts and giving legal advice as attorney, but also drafting legal documents, advising clients on international standards and customary practices and transactions. The HC said, “In our view, establishing a firm for rendering legal assistance and/or for executing documents, negotiations and settlements of documents would certainly amount to practice of law.”

The judges held that the RBI licence did not amount to a permission to practice law, but only to establish a branch office to act as a communication channel between the head office and their parties in India. The HC ordered the government to conduct an inquiry into the issue and take appropriate action against the firms.

White & Case pulled out voluntarily after the ruling, as did Chadbourne, though Ashurst remains in New Delhi. No new licenses are being issued. The writ petition in the Bombay High Court is on the ‘Final Hearing’ stage now.

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The era of globalization has transformed the way business is carried on all over the world. International trade has become the key word for the economic development of all countries. As a consequence, cross border commercial transactions have proliferated. With these developments, a plethora of legal issues have emerged in such cross border transactions. The birth of World Trade Organisation (WTO) and the agreements under its ambit have caused key changes in legal systems of almost all member countries. With that the negotiation and conclusion of Regional Trade Agreements between various nations have resulted in a complex web of international rules and regulations. Since 1990, India’s share in International Trade has been growing consistently. With an increase in Trade there is also a rise in the legal problems in International Business. This blog exclusively and exhaustively deals with such legal issues.
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The blog studies WTO laws and policies with an in-depth examination of India’s involvement in WTO and the impact of such laws and policies on India. Besides WTO, an effort has been made to study India’s regional trade bindings with various countries from a Trade law point of view.