Ark Juris

29/03/2021

Happy Holi

10/03/2021

- MOST FAVOURED NATIONS (MFN) CLAUSE IN CONTRACT (PART IV)

A MFN clause is a contract provision in which a seller/licensor agrees to give the buyer/licensee the best terms it makes available to any other buyer.

•In some contexts, the use of such clauses may become commonplace. For eg. when online e-book retailers contract with publishers for the supply of e-books. It may provoke concerns about anticompetitive influences & antitrust violations, while in other contexts, the influence may be viewed as pro competitive.

•MFN clauses in institutional investment advisory contracts: Here, if a certain no. of conditions are met, one client may be entitled to the lowest fee offered to other clients with a substantially identical investment strategy & same/lower level of assets under management.

•MFN clause in an agreement b/w a state & a company/an investor. It involves the provision of special privileges & advantages although the state cannot use contractual mechanisms to avoid its MFN treatment obligations with other countries.

Unlike the relationship among states where a nation accorded an MFN status cannot be treated less advantageously than another, the host nation does not breach MFN treatment if it provides different privileges to different investors.

08/03/2021

Happy Women's Day!

08/03/2021

ARK TRIVIA - MOST FAVOURED NATION (PART III)

In general, Most Favoured Nation means that every time a country lowers a trade barrier/opens up a market, it has to do so for the same goods/services from all its trading partners-whether rich/poor, weak/strong

However, MFN Clauses are considered to hold the following exceptions:

- Regional Integrtion: GATT Article XXIV provides that it may be allowed as an exception to the MFN principle only if following conditions are met-
(a) tariffs & other barriers to trade must be eliminated w.r.t. substantially all trade within the region;
(b) the tariffs & other barriers to trade applied to outside countries must not be higher or more restrictive than they were prior to regional integration

- It has been recognized in principle by the GATT members that the MFN rule should be relaxed in order to accommodate the needs of developing countries.
Also, the UN Conference on Trade & Development (estd. in 1964) has sought to extend preferential treatment to the exports of the developing countries

- To assist the poorer countries in their economic development efforts

- The countries can also set up a free trade agreement that applies only to goods traded within the group i.e. discriminating against goods from outside

07/03/2021

ARK TRIVIA - MOST FAVOURED NATION PRINCIPLE (PART II)

As Most Favoured Nation (MFN) clauses promote non-discrimination among countries, they also tend to promote the objective of free trade in general.

MFN Clauses are considered to hold the following benefits:

-Increases trade creation & decreases trade diversion: it encourages more free trade b/w countries. It allows efficient outcomes since the lowest cost producers can export goods to areas with the highest demand without government intervention

-Simplified trade laws: complex trade agreements established bilaterally b/w countries gets simplified. If all countries are under the same trade terms, it makes trade laws much transparent & simple

-Equal treatment of disadvantaged countries: MFN clause allows smaller countries to participate in advantages that they may not normally receive & not get overlooked among the large global trade players. It helps them negotiate favorable trade terms that they normally would not receive

- MFN Clauses also restrains domestic special interests from obtaining protectionist measures

03/03/2021

ARK TRIVIA - MOST FAVOURED NATION (Part I)

Under rules of the World Trade Organisation (WTO), a member country is not allowed to discriminate b/w trade partners and if a special status is granted to one trade partner, the country is required to extend it to all members of the WTO.

In international economic relations & international politics, Most Favoured Nation (MFN) is a status or level of treatment which is accorded by one state to another in international trade.

It requires a country to provide any concessions/ privileges/immunities granted to one nation in a trade agreement to all other WTO member countries. It is the first clause in the General Agreement on Tariffs and Trade (GATT).

Meaning, MFN status is given to an international trade partner to ensure non-discriminatory trade b/w all partner countries of the WTO. Unlike its name which implies favoritism toward another nation, it denotes equal treatment of all countries.

In a nutshell, MFN is a non-discriminatory trade policy as it ensures equal trading among all WTO member nations rather than exclusive trading privileges.

28/02/2021

: FREE TRADE AGREEMENT (Part II)

Recently, India & Mauritius signed a free trade agreement called Comprehensive Economic Cooperation and Partnership Agreement (CECPA). It is the first free trade agreement signed by India with an African country. India & Mauritius have been negotiating this agreement since 2005.

It aims to provide timely boost for the revival of our post-Covid economies and also enable Indian investors to use Mauritius as a launch-pad for business expansion into African continent.

CECPA will provide preferential access to Mauritius for the bulk of trade & also for many "aspirational items" in the Indian market. These items include frozen fish, speciality sugar, biscuits, fresh fruits, juices, mineral water, soaps, bags, medical & surgical equipment, and apparel. Mauritius will also get preferential access for the export of 40,000 tonnes of sugar into India at an early time frame.

Another agreement was inked between the countries, as per which India will provide a Dornier aircraft and Advanced Light Helicopter 'Dhruv' on lease to Mauritius on a gratis basis for two years. Further, an agreement for a special US$ 100 million Defence Line of Credit has also been signed between the countries.



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27/02/2021

ARK TRIVIA - Free Trade Agreements

A free trade agreement is an agreement according to International law to form a free-trade area between the cooperating states. There are two types of trade agreements - bilateral (two nations) or multi-lateral (multiple nations).

It is an agreement between two or more countries where the countries agree on certain obligations that affect trade in goods & services, and protections for investors and intellectual property rights.

These agreements not only reduce & eliminate tariffs, but also help address behind-the-border barriers which might impede the flow of goods & services, encourage investment as well as improve the rules affecting issues of e-commerce and government procurement.

India has entered into bilateral free trade agreements with many countries like Afghanistan, European Union, ASEAN, Japan, to name a few.

Mauritius is the latest to be added in the list wherein a free trade agreement has been signed b/w the two countries. In this regard, the Indian market for frozen fish, speciality sugar, biscuits, fresh fruits, juices, mineral water, soaps, bags, medical, surgical equipment, & apparel will open up.



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27/02/2021

In the case of Chintels India Ltd v. Bhayana Builders Pvt Ltd (2021), the SC held that an order refusing to condone the delay in filing an appeal u/s 34 of A&C Act, 1996 is appealable u/s 37 of the Act.

The Court said that when the language of the provision allows for such appeals to be filed, the court cannot limit its scope. It rejected the argument that since the Act allows for minimal judicial intervention, such appeals should not be entertained.

J. Nariman observed that "undoubtedly, a limited right of appeal is given u/s 37 of the Act. But it is not the province/duty of this Court to further limit such right by excluding appeals which are in fact provided, given the language of the provision as interpreted by us."

It was observed that the expression "setting aside/refusing to set aside an arbitral award" does not stand by itself. It has to be r/w the expression that follows "under S.34". S.34 is not limited to grounds being made out u/s 34(2).

Also, the language of S.37(1)(c), wherein the expression "under S.34" refers to the entire section & not only to S.34(2), strengthens the fact that an arbitral award can be refused to be set aside for refusal to condone delay under section 34(3)


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20/02/2021

ARK TRIVIA: Consumer Protection/ Beneficiary Legislation

In the case of Amitabha Dasgupta v. United Bank of India (LL 2021 SC 101), the Supreme Court has directed the Reserve Bank of India to lay down Rules & Regulations mandating the steps to be taken by banks w.r.t locker facility/safe deposit facility management.

It has observed that the Banks, as service providers under the earlier Consumer Protection Act, 1986, as well as the newly enacted Consumer Protection Act, 2019, owe a duty of care to exercise due diligence in maintaining & operating their locker/safety deposit systems and that they cannot contract out of the minimum standard of care in this regard.

The Court found that the present state of regulations on the subject of locker management is inadequate and muddled. Also, that each bank is following its own set of procedures and there exists no uniformity in the rules.

Thus, the banks cannot claim that they bear no liability towards their customers for the operation of the locker.

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19/02/2021

: Geographical Indications - A European Treasure worth €74.76 billion!

Agri-food & drink products whose names are protected by the European Union as “Geographical Indications” (GIs) represent a sales value of €74.76 billion, according to a study published by the European Commission.

The study found that the sales value of a product with a protected name is on average double that for similar products without a certification. Also, over 1/5th of this amount results from exports outside the European Union.

European food is famous for being safe, nutritious and of high quality. Traditional production methods contribute to the EU objective to become the global standard for sustainability in food production.

Well known examples of GIs are - Parma Ham (comes from Parma, a city of France), Champagne (comes from Champagne wine region of Italy) and Feta (comes from particular area of Greece). Some other famous GIs are-
•Tiroler Speck: Bacon
•Calasparra: Rice
•Moutarde de Bourgogne :Mustard

16/02/2021

Some pointers to keep you updated with the recent crypto currency (CCs) debate!

2018: RBI directed not to deal in CCs or provide any services for facilitating any person in dealing/settling with CCs

2020: Supreme Court quashed restrictions imposed by RBI calling them disproportionate & unsustainable (Internet & Mobile Assn. of India v. RBI)
-Also held that RBI has inherent powers to regulate the trading of CCs in the interest of banking system, monetary stability & sound economic growth

2021: Parliament proposes to introduce 'Cryptocurrency & Regulation of Official Digital Currency Bill, 2021'

-Bill seeks to
a)ban all private CCs
b)create legitimate framework for official digital currency in India, backed by government/RBI
c)provide certain exceptions to promote the underlying technology driving the digital currency
-Unclarity as to what is a private cryptocurrency; as the draft of the Bill not been made available to public
-Whether there will be an outright ban OR be treated as a 'currency' or a 'stock' is a question!
-High anticipation whether there will be an outright ban/there will be a regulatory framework on CCs/hybrid currency regulated by RBI