Thursday, January 31, 2008

Are Indian Court Judgments Copyrightable?

In a very interesting copyright case, the Supreme Court of India recently ruled that there can be no copyright in the raw text of court judgments/decisions. Well, we don't exactly need a court to tell us this, as section 52 (1) (q) of the Copyright Act makes this crystal clear. (Incidentally, Vikram posed this very query to me just a few days back).

The real issue before the court was: how much of work ought one to do to on such "raw" judgments to make them copyrightable? Will mere copy-editing (the mere correction of clerical errors or syntax) in the judgment suffice?

The facts of Eastern Book Company & Ors vs D.B. Modak & Anr (Civil Appeal No. 6472 of 2004) are as below:

Eastern Book Company (EBC) is a leading publisher of law reports/journals in India. One such publication is a law report titled “Supreme Court Cases” (“SCC”), containing all Supreme Court judgments. Raw judgments are copy-edited by a team of assistant staff and various inputs are put in the judgments and orders to make them user friendly. These include an addition of cross-references, standardization or formatting of the text, paragraph numbering, verification and by putting other inputs.

EBC also prepares the headnotes comprising of two portions, the short note consisting of catch/lead words written in bold; and the long note, which is comprised of a brief discussion of the facts and the relevant extracts from the judgments and orders of the Court. EBC argues that the preparation of the headnotes and putting the various inputs in the raw text of the judgments and orders received from the Supreme Court Registry require considerable amount of skill, labour and expertise and a lot of effort and expenditure.

Therefore, "SCC" constitutes an `original literary work’ of the appellants in which copyright subsists under Section 13 of the Copyright Act, 1957 and EBC alone has the exclusive right to make printed as well as electronic copies of the same under Section 14 of the Act. EBC alleges that two defendants (Spectrum Business Support Ltd and Regent Data Tech Pvt Ltd) market software packages that infringe EBC's copyright in SCC. Sprectrum markets “Grand Jurix” (published on CD-ROMs) and Regent Data Tech Pvt. Ltd markets “The Laws” (again on CD-ROMs).

As per EBC, all the modules in the defendants’ software packages have been lifted verbatim from the SCC. In particular, EBC alleged that the defendants' have copied EBC's sequencing, selection and arrangement of the cases coupled with the entire text of copy-edited judgments as published in SCC, along with and including the style and formatting, the copy-editing paragraph numbers, footnote numbers, cross-references, etc. Interestingly, the court adopted the "minimal degree of creativity" as the threshold for copyright protection.

Deploying such a standard, the court held that mere copy editing would not suffice, as this involved mere labour and nothing else. However, since there is some creativity involved in the making of headnotes, such headnotes would qualify for copyright protection. (Incidentally, Mr Surendra Malik, the owner of EBC writes the headnotes himself! I had the great pleasure of studying with his son, Sumeet Malik in law school. Sumeet joined his dad at the EBC, after a stint at the Franklin Pearce Law Center [FPLC], a school reputed for its IP program. Sumeet was the one who alerted me to this judgment).

Unsurprisingly, the judgment of the court rambles on for 100 odd pages, with the court religiously reproducing arguments of counsel and the various case law that they cite. The real crux of the decision is only about 4 pages!! This seems to have become a way of life for our judiciary, with none of them paying any heed to the great bard who pleaded that "brevity was the soul of wit".

I want to highlight one inconsistency in the court's judgment. The Court appears to endorse a standard enunciated in a recent Canadian Supreme Court case (CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 (1) SCR 339 (Canada). This case strikes a "middle path" between the two extreme doctrines enunciated by courts (in the US and elsewhere) to explain as to when a work can be considered "original" enough to merit copyright protection. At one extreme lies the "sweat of the brow" approach to originality, which the Canadian court held as too low a standard.

Such a standard (which entitles anyone expending "labour" and "capital" to claim copyright protection) shifts the balance of copyright protection too far in favour of the owner, and fails to allow copyright to protect the public’s interest in maximizing the production and dissemination of intellectual works. At the other extreme, we have the "creativity" standard, which implies that something must be novel or non-obvious - concepts more properly associated with patent law than copyright law. The court therefore adopted a "middle path" approach by enunciating an "excercise of skill and judgment" standard.

In essence, the court held that to claim copyright in a compilation, the author must produce a material with "exercise of his skill and judgment" which may not be creativity in the sense that it is not novel or non-obvious, but at the same time it is not the product of merely labour and capital. The Indian Supreme Court endorses the above standard of the Canadian Supreme Court (that the appropriate standard is neither one of "sweat of the brow" nor of "creativity") and holds that: "Creative works by definition are original and are protected by copyright, but creativity is not required in order to render a work original. The original work should be the product of an exercise of skill and judgment and it is a workable yet fair standard".

Yet, a few paragraphs later, the Indian Supreme Court notes:

“novelty or invention or innovative idea is not the requirement for protection of copyright but it does require minimal degree of creativity.”!!

Under such a standard, the court held that mere copy-editing (clerical corrections, syntax etc) wouldn't qualify as they did not involve "creativity", but skill expended in writing head-notes, footnotes and editorial notes would qualify. The Supreme Court therefore “restrained the respondents from copying head notes, footnotes and editorial notes appearing in their law journals.”

The Harbhajan verdict: Why Level 2.8 charge against him fails to carry conviction

I had suggested in my last post that the speculation that Harbhajan Singh might be imposed only fine in lieu of match-ban by the Appeals Commisioner Justice John Hansen was wrong because for a level 3.3. offence -which Singh was found to have committed by the Adjudicator, Mike Procter - the penalty is only match-ban and not fine. I also suggested that it was possible to substitute harsh penalty with a lighter one, if it pertains to the same class of offences, by reducing the finding of severity or seriousness, but it is not possible to substitute one serious offence with another minor offence, so as to mitigate the penalty.

Well, I have been proved wrong, because, I did not anticipate that Justice Hansen would be confronted with a statement of agreed facts, and an admission from Symonds himself that he did not consider Singh's offence as a level 3.3. offence.

Having said that, I must add that I am not comfortable with Justice Hansen's reasoning.

His finding that the allegation of Level 3.3. offence against Singh fails because of the reasons he cited is persuasive.

However, his finding that Singh committed Level 2.8 offence on the basis of his own confession that he used offensive language against Symonds appears to be on a weaker foundation.

Let's for instance, accept that Singh used teri ma ki. The words are offensive in India, and would have been found offensive to any reasonable and ordinary person in India. But in Australia? Symonds and other Australian players, as Justice Hansen himself found out, did not understand the language at all, though Symonds admitted the words could have been probably used by Singh. Justice Hansen recognises the cultural differences that characterised this exchange between Singh and Symonds, but he was perhaps reluctant to take these cultural differences to their logical conclusion. In Paragraph 51, he says offensive language is to be gauged by its effect on a reasonable or ordinary person, that is, not in terms of the intentions of the user of offensive language, in this case, Singh. How does Justice Hansen treat the reasonable or ordinary person in India and Australia alike, overlooking the cultural and linguistic differences, which could result in different levels of comprehension of an expression?

In Paragraph 56, Justice Hansen accepted the claim of the Counsel for Cricket Austrialia that Symonds took Singh's language to be offensive and seriously insulting, but did not consider it falling under Level 3.3. Justice Hansen failed to ask the Counsel, Mr.Ward, how he could have found the language offensive, when he did not understand the meaning of teri ma ki.

Thus by Justice Hansen's own reasoning, applying the balance of probability standard - rather than the standard of beyond reasonable doubt - the level 2.8 charge against Singh must have also been found to be not proved. After all, the Australian side found the language offensive because it felt it was racial. Once it was found that it was not racial, then the basis for it being called offensive also disappears.

To be precise, the level 2.8 charge was Justice Hansen's inference, and not born out of an allegation from Australian players, thus raising the question whether his judgment met the ends of justice.

UPDATE: PLEA BARGAINING THROUGH THE BACK DOOR?: I maintain that Justice Hansen's reasoning in finding Singh guilty under Level 2.8 is flawed. But I don't condone BCCI's desperation to remove the racial slur. ICC Conduct Rule 5.6 clearly says Plea Bargaining is not permitted. However, by confessing to have uttered the offensive word, (which he has not done so before Procter) has not Harbhajan Singh plea bargained, and invited a lesser kind of penalty from Justice Hansen? Rule 5.6 clearly circumscribes the powers of the Adjudicator. Justice Hansen,as Appeals Commissioner, however, appears to have expanded his discretionary powers inexplicably, and allowed plea bargaining by Harbhajan Singh, without actually calling it so. Obviously, the ICC Conduct Rules need clarity and fine-tuning.

The Organ Trade Debate on IBNLive

In light of the ongoing illegal kidney trade scandal, CNN-IBNLive had a debate on the question of organ trade. Some interesting points were made by the anchor in support of legalizing it including the right to life of the recipient. Several of the panelists held a contrary view.

Reading the transcript, I was intrigued by some of the Q&As between the anchor Sagarika Ghose and Colin Gonsalves. Here are some excerpts:

“Ghose: But what about surrogate mothers? They usually rent out wombs for money.

Gonsalves: That is not donation of an organ. In the case of surrogate mothers, the organ is taken out and transplanted in someone else's body. The hospitals are registered both for removal and transplantation simultaneously. On the contrary, there is seven years of imprisonment for sale of organs in this country.

…Why couldn’t a person dying of kidney failure go to the open market and purchase it?

To which Gonsalves replied saying that if someone needs an organ and his friends and family are not willing to step forward then it is too bad for him.

Ghose: But don’t people buy blood?

Gonsalves: Blood donation is not like taking a part of your body away. It does not affect you that severely.”

There are two questions here. (1) Does an egg, sperm or blood constitute an organ? The definition under the Transplantation of Human Organs Act, 1994 states: “"human organ" means any part of a human body consisting of a structured arrangement of tissues which, if wholly re- moved, cannot be replicated by the body”. Egg, sperm and blood could not be termed ‘structured arrangement of tissues’, so he is right that they would not constitute organs. However, with regard to blood, its status has nothing to do with severity.

(2) Does the time gap between removal from the donor and transplantation affect the legality of the procedure? The relevant provision is cited below:

"Punishment for commercial dealings in human organs: Whoever (a) makes or receives any payment for the supply of, or for an offer to supply, any human organ; (b) seeks to find a person willing to supply for payment any human organ; (c) offers to supply any human organ for payment; (d) initiates or negotiates any arrangement involving the making of any payment for the supply of, or for an offer to supply, any human organ:, (e) takes part in the management or control of a body of persons, whether a society, firm or company, whose activities consist of or include the initiation or negotiation of any arrangement referred to in clause (d); or (f) Publishes or distributes or causes to be published or distributed any advertisement,-- (a) inviting persons to supply for payment of any human organ; (b) offering to supply any human organ for payment; or (c) indicating that the advertiser is willing to initiate or negotiate any arrangement referred to in clause (d), shall be punishable..."

Though he is right that organs are not stored except for very short periods owing to technical reasons, there is nothing here to suggest that the sale would become legal if only the entire procedure were to be executed in one go.

The moral arguments against it were that the thought of people selling their organs is quite repugnant and if allowed to do so, only the poor would be selling their organs for money. The first is a matter of sentiment (imagine donors hawking their kidneys on eBay!) but the second is debatable. Are those selling them for money going to suffer more than those donating it currently for altruistic motives? If not, how is the ban going to help the poor? Ghose did not however ask these questions.

Today’s HT has an op-ed by Lalita Panicker on the same issue. She notes a number of details of this sordid affair but strangely ends up berating the government for not raising healthcare spending. Huh? I am still trying to figure out what the connection is.

Wednesday, January 30, 2008

Digitising Legal Scholarship - II

A couple of weeks ago, I wrote a post on the sorry state of digital archives of legal scholarship in India. Since then, I have had many responses on archives and searches that do exist at the moment, and several initiatives being taken in this direction. This post is to summarize these responses and acknowledge these initiatives.

Shamnaad has already introduced Sushant in a previous post. Sushant has made Supreme Court cases searchable in a user-friendly fashion that should put some of the subscription sites to shame. Indian Kanoon, his search engine promises to include High Court decisions, Constituent Assembly Debates, Law Commission Reports and journal articles in its database very soon.

The other person I want to introduce is Devranjan, a third year student at National Law School, Bangalore. Along with some other students, he has founded the 'Open Book Society'. Their purpose is to digitize and make searchable archives of important Indian Journals. They have already managed to do this for the Central India Law Quarterly and the National Law School of India Review. They need prior permission from journals to digitize them. As I understand it, they put in all the effort into doing so themselves - the Journals just have to agree. This is a fantastic initiative and deserves all praise and help. This is the message he asked me to pass on:
'Would u be able to help the society in any way for instance
raising money, getting
journals, or just giving us
better visibility?
'
If anyone wants to get in touch with Devranjan, please let me know and I will put you in touch with him.

Here is the list of freely available articles, indices and search options that I found out in the last two weeks. Only some of this is really good quality, but hopefully the other established journals like the Journal of Indian Law Institute, Indian Journal of International Law, the journal section of Supreme Court Cases, Cochin University Law Review, Indian Bar Review and other journals published by various law schools will learn from the Central India Law Quarterly and let Devranjan's team digitize their archives.

Freely accessible online articles:
Central India Law Quarterly
National Law School of India Review
Indian Journal of International Law (only table of contents is archived)
Scholasticus - Journal of National Law University (only table of contents is archived)
National Law Institute University WebJournal
The Practical Lawyer
Lawyers' Collective Magazine (only current issue is online - I could not locate the archives)
Combat Law
Manupatra Articles
IndLaw Articles
Legal Services India Articles
Free search engines:
Indian Kanoon
NLSIU Journal Index


Please let me know if I have missed out anything and I will
update these lists.

The reach of the Indian State and Legal System in Rural India: Findings of an MIDS study

Today’s Hindu features an article by two academics from the Madras Institute of Development Studies (MIDS) which reports the findings of an interesting study conducted by the institute. The question the researchers were concerned with was the reach of the Indian state in rural India, and their report focused on the role of panchayats in three states (West Bengal, Tamil Nadu and Karnataka). Although the empirical and research basis for the study seems thin (a fact that the authors draw attention to at the outset), its conclusions suggest that the importance of panchayats may be growing owing to a number of factors. The study uses techniques of ethnography, and the short overview of its methods, contents and conclusions provided in the article make for interesting – and intriguing – reading. (The full paper, if available, should make for even more interesting reading, but the website of the MIDS does not seem to provide links to the listed working papers). The authors make a compelling argument that the issue is crying out for far more elaborate study and analysis.

Although Panchayati Raj was institutionalised by the 73rd Constitutional Amendment more than fifteen years ago, legal scholars have not focused upon this issue, especially in more recent years. As the article suggests, observers of - and participants in - India’s political and legal system may be ignoring panchayati raj institutions at their own peril.

Tuesday, January 29, 2008

'Pith and Substance' in the Characterisation of Statutes: A Comparative Study

Professor Tony Blackshield, Professor Emeritus at Macquarie University, will deliver a lecture on the above subject at a seminar being organised by the Centre for the Study of Law and Governance, Jawaharlal Nehru University, New Delhi, on February 1 at its Conference Room. An abstract on the seminar, prepared by the Centre, reads as follows:
A federal system involves a distribution of legislative powers, so that different legislatures have power to enact statutes on different subjects. Hence statutes are often challenged on the ground that they relate to a subject on which the enacting legislature has no power to make laws. For the purpose of resolving such questions under the Canadian Constitution, the nineteenth-century Privy Council introduced the metaphor of "pith and substance" – thus giving expression to an essentialist idea that every statute has one uniquely "real" or "true" character. Modern (or postmodern) federal systems take a much more flexible view of such questions. The High Court of Australia has achieved flexibility by rejecting the metaphor of "pith and substance". The Supreme Court of India has achieved the same flexibility by retaining the metaphor, but reinterpreting it in a distinctive way.

Monday, January 28, 2008

Republic Day Awards: Why Balaji Raghavan needs to be reconsidered

This year's R-Day awards, as usual, have become controversial. If the non-award of Bharat Ratna was preceded by open lobbying by almost all sections of political spectrum, not all the names of the awardees in other categories suggest a rational selection process.

Justice Rajinder Sachar claimed he turned down the honour on the principle that the government should not be giving away such awards. "Governments in general should govern and not be involved in giving awards", he has said. He felt that the awards had value if they were conferred either by peer organisations or by the public but not by the government as it unnecessarily became controversial. He also added that the awards are against the principles of equality and democracy. He also equated refusing the award with keeping public life free from corruption. (As Justice Sachar's name does not figure in the list of this year's awardees, I presume the Government must have dropped his name, after his refusal).

In the light of Justice Sachar's refusal, I decided to revisit the Balaji Raghavan verdict of the Supreme Court's Constitution Bench, to understand how the Court addressed concerns similar to those raised by Justice Sachar.

Let me take Justice Sachar's arguments against the awards, as reported by Asian Age (27th Jan.) and examine how Balaji Raghavan addressed them.

1.Giving awards is alien to the principal function of the Government, that is, to govern.

Balaji Raghavan did not address this issue at all, as the petitioner apparently did not raise it.

2. Awards by Government leads to controversies:

In Balaji Raghavan, the Court held as follows: "It has been contended before us that over the years, the purpose for which these awards were instituted has been diluted and they are granted liberally to persons who are undeserving of them. The perversion of the system was the motivating factor behind the Bill introduced in Parliament by Acharya Kripalani to abolish these decorations. It is to be remembered that Acharya Kripalani was the Chairman of the Sub-Committee on Fundamental Rights where the present Article 18(1) was originally formulated. He was, therefore, fully aware of the exact import of Article 18(1). It is significant that in the debates in Parliament, the thrust of his attack was on the misuse of these decorations. However, it is axiomatic that the misuse of a concept does not change its inherent nature."

The Court then went on to suggest a mechanism (a high-level committee appointed by the PM in consultation with the President to suggest names, which should have the approval of the PM and the President (as per Justice Kuldip Singh's concurrent opinion) to prevent misuse of these awards. Thus essentially, the Government will have a dominant say in the selection of awardees. The Court-proposed mechanism does not seem to be a fool-proof method to avoid controversies of the kind we are witnessing. Do all awardees invite respect rather than suspicion? It is difficult to say yes.

3. Awards are against the principle of equality and democracy:

In Balaji Raghavan, the Court held: "The National Awards are not violative of the principles of equality as guaranteed by the provisions of the Constitution. The theory of equality does not mandate that merit should not be recognized. Article 51A of the Constitution speaks of the fundamental duties of every citizen of India. In this context, we may refer to the various clauses of Article 51A and specifically clause (j) which exhorts every citizen "to strive towards excellence in all spheres of individual and collective activity, so that the nation constantly rises to higher levels of endeavour and achievement." It is, therefore, necessary that there should be a system of awards and decorations to recognise excellence in the performance of these duties. (My view: This part is hardly convincing. It is not clear why the Court felt that the Government, by virtue of Article 51A must recognise excellence and achievement)

The Court added: "Hereditary titles of nobility conflict with the principle of equality insofar as they create a separate, identifiable class of people who are distinct from the rest of society and have access to special privileges. Titles that are not hereditary but carry suffixes or prefixes have the same effect, though the degree may be lesser. While other Constitutions also prohibit the conferment of titles of nobility, ours may perhaps be unique in requiring that awards conferred by the State are not to be used as suffixes or prefixes. This difference is borne out of the peculiar problems that these titles had created in pre-independent India and the earnest desire of the framers to prevent the repetition of these circumstances in Free, Independent India."

(My view: It is agreed that awards are not used as titles, and as suffixes or prefixes. But how does this restriction matter if the awardees do make use of them in their professional or personal lives for personal advancement or in claiming special privileges as most of them very often do)

4. Awards are inconsistent with freeing public life from corruption.

As the Government influences the selection process, it cannot be denied that there is a quid pro quo between some of the awardees, and the Government. But the Court did not address this issue at all in the judgment.

Worse, many of the suggestions of the Court in that judgment have not been followed at all by the Government. The Court wanted the number of awards to be restricted to 50 (J.Kuldip Singh). This year's awards number 119. The Government had amended the norms after the Judgment, as in its view, there are far too many people to be recognised for their excellence.

More important, the Court had suggested that an important anomaly be removed. "The criteria for awarding these decorations are not very clear. The Bharat Ratna is to be awarded for exceptional service towards the advancement of art, literature and science, whereas the Padma Vibhushan is to be awarded for exceptional and distinguished service. Bharat Ratna is for exceptional service and Padma Vibhushan is for exceptional and distinguished service. Exceptional and distinguished service must be given the number one decoration and not number two. So, there is a patent fallacy in this type of criteria which has been laid down." One does not know to date whether this anomaly has been removed.

It is not clear why the Government has not made the criteria for selection of awardees transparent, even if there are strong reasons not to divulge the names of persons in the high-level committee to suggest the proposed awardees. Following Balaji Raghavan judgment, a committee was appointed to recommend suitable criteria and procedure. It is only following this committee's report, the present system has been put in place. It is important that this committee's report is in the public domain, as it is not in the Home Ministry's website. Simply providing the list of awardees makes no sense: the Government ought to mention on its website, why each awardee deserved selection.

Sunday, January 27, 2008

Supreme Court Admissions (to be heard or simply read)

In my last post, I questioned the wisdom of certain filing rules (or non-rules) regarding page limits and annexure requirements at the Supreme Court. I think the lack of better defined rules on these two issues weakens arguments and ultimately the decisions rendered. I got some push back in comments, but I still feel the same way about these filing rules (although certainly not steadfastly so). In the same spirit, I’d like to get people’s thoughts on the utility of Monday-Friday days (i.e. admission days) at the Supreme Court. My current feeling about this is that although this tradition has some value, it is limited and comes at great cost, and reforms should be taken to either move away from it entirely or at least refine these days to more closely tailor them to their perceived benefits.

I know of no other highest court in the world that has the same practice of the Indian Supreme Court of allowing oral argument for every matter that is placed before it for admission. This doesn’t mean it shouldn’t be done, but I think this fact should immediately draw scrutiny to the practice (which constitutes about 2/5ths of the Supreme Court’s courtroom time). Also, speaking with Supreme Court lawyers I know there is some questioning, frustration, and occasional expression of embarrassment about the tradition amongst some of those who practice there.

On a typical Monday or Friday one courtroom of the Supreme Court may go through a hundred admission matters. My understanding is that most of these cases have been heard in the lower courts and are being appealed, although some are being filed before the Supreme Court as a court of first instance (which is the case for many PILs for example).

The scene that then unfolds on these days is quite dramatic to any outsider of the Indian legal system. This is my take: Lawyers line up in the court to make their admission argument. The senior justice will begin to listen to the argument and then usually cut them off very quickly. Generally they will do so saying that they have no argument. The lawyer will ask their lordship (almost always using this word at this critical juncture) to give more consideration to their case. Justices will then often criticize (even berate) the lawyer for bringing the case and wasting the Court’s time – the case is then dismissed after a couple more failed attempts by the lawyer to change the Court’s mind. Alternatively, if it is a good case there is a bit of discussion and then the case is relatively quickly placed on the Court’s calendar – in some instances this discussion might drag on for some while if facts or points of law are unclear. In the third instance, the Court will sometimes initially seem to quickly dismiss the case, but the lawyer will succeed in drawing the justice to some fact they missed or misunderstood and successfully get the case placed on the Court’s regular calendar. This is the relatively rare case, but it does happen with some frequency. This is a bit reductionist, but I think gets to the basics of what is going on during admission days.

My question is whether this oral argument admissions tradition is a better use of the Court’s time than having an all-written admission procedure like other highest courts do?
To begin to answer this question we have to ask, why does this practice exist? One explanation is that is comes down to distrust. First, there is an implicit distrust of the lower courts. The Supreme Court can’t feel confident that the High Courts have aired the matter thoroughly and so another oral argument at admissions is necessary to double-check. This probably wouldn’t be necessary if not for another type of distrust. That is the fear that lawyers haven’t properly put forward their argument in their filings. If the justices can’t be sure that the filings clearly and concisely articulate the argument than they need to give the lawyers a chance to redeem themselves at the hearing. Finally, I think there is some implicit distrust by the justices of their own system of venting these filings before argument. Justices generally read these admissions matters the night before. Some have clerks write notes on them that they then go through. However, with dozens of cases each admissions day justices don’t have enough time to go over each case as carefully as they might like and the clerkship system is so new and underdeveloped here (some justices don’t have them, while the others have only one) there is a fear that they have missed something. Therefore, it makes sense to give the lawyers another chance to argue it out. Of course, if the justices didn’t have to go to court on Monday and Friday they could sit in the office only reading these filings and some of these time constraint fears might disappear.

Another argument for oral argument for admissions is the idea that everyone should be able to come to the Supreme Court and be heard by a justice (not just read, but actually heard). It is a populist impulse that has done much to create the Court’s image as the people’s Court. It also serves to create a certain transparency for the Court. If the Court dismisses what seems like a valid case there is some pressure to give at least a verbal reason why, where if the procedure was entirely written it would arguably be easier to do so without comment or with more cryptic language. Admissions day therefore confers a certain type of legitimacy on the Court, and a populist one at that. However, it is unclear to me how much ending this practice would really hurt this legitimacy. Many petitions are dismissed with what amounts to no or little reason oral or otherwise, most Indians probably don’t even know the Court has this oral practice, everyone could still get to have their case heard (not just read) at the High Court level, and the Court has famously taken letters from those writing it for help as petitions (thereby suggesting that the most downtrodden who need the Court’s help would still be given as fair a hearing by the Court if the process was written and that many of the poorest in the country can’t make it to the Supreme Court anyway and can only write in). Further, I think some petitions are unfairly admitted on admissions days simply because they are argued by a prestigious lawyer. Some senior lawyers have gained such a reputation that it becomes difficult for justices (who are often younger than these seniors and less famous) to dismiss their cases no matter their merit. It would be easier to do so in an all-written proceeding where the rest of the legal community is not so physically gazing in as spectators.

Finally, I have heard some argue that the practice of oral argument for admissions is practiced only because of the Supreme Court Bar. There are a lot of lawyers at the Supreme Court and they gain many billable hours (and some prestige in they eyes of the client) by appearing at the Supreme Court for admission matters. Indeed, for some lawyers this comprises the bulk of their courtroom time as they actually end up arguing very few cases on regular hearing days. If Monday-Friday days were abolished it would adversely affect the political economy of the bar and few justices want to be in the position of upsetting these lawyers. This argument could certainly have some merit, but I don’t know the ins and outs of the bar well enough to say much about it.

It strikes me that a lot of the justices’ time is wasted on admissions days (indeed, most of it - and we are talking 2/5ths of their in-court time). With the backlog of cases before the Court it seems that there needs to be serious thinking about whether it’s worth their time vis a vis other ways they could be spending it – this is a question of what is best for the system for the delivery of justice. Perhaps, this doesn’t have to be an all or nothing choice though. The Supreme Court categorizes its cases into a variety of different types on its computer system (property, civil service, PIL, etc.) I think it would be worth a study to find out from which categories of cases it most often dismisses and which it most often accepts (if possible it would be great to find out which types of cases the Court most often changes its mind on in oral argument – this is hard to gather objectively, but a more subjective survey of justices could probably lend some light on the issue). If it turns out the Court dismisses the vast majority of property matters (and is rarely swayed by oral arguments) perhaps it’s smart to only have written admissions for appeals involving property matters. Alternatively, perhaps for PILs, especially if they are being heard for the first time, there should be oral arguments for admissions. This is just one idea about how to find potential middle ground to both improve efficiency and reduce the distorting effect of well-known lawyers in admission matters, but keep some of the benefits admissions days offer. I’m sure others have more developed thoughts about how to streamline the process if not get rid of it altogether, or alternatively more solid defences of the current system than my generalizations. Would love to hear them.

Are Youth Bulges the Root Cause of Terrorism?

Arundhati Roy has a new article published in Outlook (it says it is an excerpt of her lecture). This one is not only longer than her previous write-up ‘Scandal in the Palace’ (which was debated on this blog) but extends much further as she launches into one long and uninterrupted rant against much of modern society and civilization. Even though her moral opprobrium (which I naturally share) of state-sponsored/ abetted genocide is justified whether it is the one orchestrated against Armenians by the Ottoman empire or against Muslims in Gujarat, and her pacifist view that all wars and armed interventions are driven by an atavistic human desire to commit mass murder is a noteworthy sentiment, she takes the analogy much further. In her characteristically acerbic style, she vents against all symbols, indeed the very idea of progress. No one is spared - in her worldview, middle-class materialism and a cultivated indifference to larger socio-political concerns are apparently signs albeit early ones of a predilection for (future) genocide, the SC has partaken in ecocide which is again a prelude to genocide and SEZs are a present-day version of the Nazi notion of lebensraum (‘living space’, i.e., displacing ‘more primitive/defeated peoples’ to make way for the superior German race). Amidst all the vituperative rhetoric, I was unsure where her peregrination was headed until the very end – apparently, she concludes by defending naxalism (?!) which, in case she failed to notice, is only a recipe for more armed conflict and according to her own perspective, genocide! The shock value of her remarks perhaps owes more to the fact that we do not have that many well-educated liberals in India penning English commentaries (at least in the mainstream media) extolling old-fashioned nihilism (the trendy, up and coming nihilists prefer to conduct their discourses on seedy websites and their lingua franca is often south asian vernaculars or Arabic).

That aside, the purpose of this post is not so much to respond to her fulminations but to elaborate on another article by Gunner Heinsohn that came out a couple of months ago regarding the impact of the ‘youth bulge’ on genocide (I only mention Roy because her talk of genocide reminded me of this). Heinsohn is a professor of comparative genocide at the Raphael-Lemkin Institute, University of Bremen. To begin with, the term ‘youth bulge’ as defined by Goldstone (who works in the field) stands for an unusually high proportion of 15-24 year old youths (Heinsohn extends it up to 29) relative to the total adult population. He says that ‘Most major revolutions—the English evolution of the seventeenth century, the French revolution of the eighteenth century and most twentieth-century revolutions in developing countries—have occurred where exceptionally large youth bulges were present’. The reason? ‘Rapid growth of youth can undermine existing political coalitions, creating instability. Large youth cohorts are often drawn to new ideas and heterodox religions, challenging older forms of authority. In addition, because most young people have fewer responsibilities for families and careers, they are relatively easily mobilized for social or political conflicts.’ None of this is really news – our own political leaders are quite familiar with this idea which is why, on internal security matters, they often hold forth on topics like ‘bringing the disaffected youth back to the national fold’, youth employment schemes, etc. Heinsohn not only cites other related reasons for this phenomenon but takes the argument further. Caldwell summarizes his basic arguments succinctly:

“In Mr Heinsohn's view, when 15 to 29-year-olds make up more than 30 per cent of the population, violence tends to happen; when large percentages are under 15, violence is often imminent. The "causes" in the name of which that violence is committed can be immaterial. There are 67 countries in the world with such "youth bulges" now and 60 of them are undergoing some kind of civil war or mass killing.

The problem, rather, is that in a youth-bulge society there are not enough positions to provide all these young men with prestige and standing. Envy against older, inheriting brothers is unleashed. So is ambition. Military heroism presents itself as a time-honored way for a second or third son to wrest a position of respectability from an otherwise indifferent society. Societies with a glut of young men become temperamentally different from "singleton societies" such as Europe's, where the prospect of sending an only child to war is almost unthinkable.”

He applies this model to various conflict-ridden countries across the world such as Iraq, Israel/Palestine, Sudan, Pakistan/Afghanistan etc. (click here and here for links through Wikipedia to documents he has authored). Thus, according to him, Palestinian violence is not explained by the Israeli occupation, poverty or humiliation but by the rapid growth of its population (which of course fits neatly with the neoconservative worldview and I suspect, is the reason why his article figured in that magazine); civil war that began in the mid-‘70s and raged through the ‘80s in El Salvador was not driven by poverty or hunger - in fact, the conflict was preceded by a 27% increase in per capita income – but because of the youth bulge; the internecine bloodletting in Iraq is the result of an uninterrupted chain of youth bulges since 1950 and is being run by ‘superfluous’ males who are no longer involved in war or organized genocide… and so on. He scoffs at the notion that poverty and radical Islamic rhetoric are to blame for Pakistan’s current predicament:

“Pakistan’s growing wave of internal terror that led Pervez Musharraf to assume dictatorial powers on November 3 is commonly blamed on the country's poverty. Such an assessment, however, is not supported by the facts. Between 1979 and 2007, per capita income in Pakistan jumped from 600 PPP-$ to 2,600. Other observers blame Pakistan's domestic chaos on religious leaders preaching hatred. But why would Pakistanis respond to radical rhetoric at a time when prosperity is improving their quality of life? However, prosperity itself may stoke the fires of civil conflict when it is accompanied by a "youth bulge"…”. His explanation of the cause:

“General Musharraf was born in 1943. In his cohort of 60 to 64 year olds, Pakistan has just 1.6 million men. However, in the prime fighting age cohort of 20 to 24 there are 8.6 million potential warriors who are followed by 10.7 million boys aged 0 to 4. This rapid upsurge, which I call demographic armament, translates into every 1,000 pensioners being followed by 5,400 men of military age, who in turn will one day be replaced by 6,700 boys. The United States, by comparison, is in demographic neutrality. Every 1,000 older American men are succeeded by 1,570 young men, who will in turn be succeeded by 1,540 boys. The United Kingdom is in demographic decline: 1,000, to 1,186, to 970. My native country Germany provides an example for demographic capitulation. It goes from 1,000 via 1,150 to 820.”

And his prediction for the future of the region: “Pakistan's bloodletting will not be ending soon. A burgeoning population of young men shares the Taliban's dream of a nuclear-armed Islam, with a united Afghanistan and Pakistan as its core territory and led by a new Caliphate. Although the fertility rate among Pakistani women has declined from close to six in 2000 to an average of four children each in 2007, their sisters in Afghanistan are still having close to seven. That is why in the Hindu Kush every 1,000 pensioners are followed by 5,570 men of best military age and 11,130 boys aged 0 to 4. This means the troubles in Pakistan and Afghanistan will be with us for at least 20 more years.“ European pacifism as a policy, in his view, is a direct result of the millions of individual decisions in those countries to not have children. This also explains the marked reluctance of NATO member-nations in Europe to contribute more troops or to take more active part in combat operations in Afghanistan as has been reported recently.

Thus, he says that religion is only a pretext to ‘cloak bloodshed in respectability and honor’. “The cruelties of terrorism are not caused by pious books, or by those who might abuse those books. They are caused by people who do not want to appear as common killers. They are the ones who feel the urge to dust off the sacred texts. Therefore, the rage of young Islamic males cannot be assuaged with explanations of the “actual” or “really intended” contents of the archaic volumes. The unceasing flood of articles about the evil influence of radical Islamic teachers simply reverses cause and effect. Where at first there are no suitable masses, even agitators of genius achieve practically nothing. And even where it can be shown that Islamic schools manage without terrorism in their curriculum, this does not prevent their graduates from fighting for a new Caliphate.” And quoting an example of Spanish conquistadores from medieval history (which I will not repeat here for reason of space), he suggests that political compromise or even capitulation will not be enough to satiate this urge for violent adventure.

The concept is attractive and has created quite a buzz. Yet, it has also been criticized as supporting an ethically questionable hands-off policy to deal with on-going conflicts. He however seems to suggest that that is not what he means, only that no workable political approach has emerged so far.

Is his claim true for India as well? Being such a heterogeneous subcontinent with a number of historical and localized conflicts, surely the truth of his propositions could be tested here. Henrik Urdal who has written upon this question in relation to conflicts across the world has also conducted one such study in India. His report, based on a compilation of conflict-related data from across the country, concludes that 'youth bulges increase the risk of armed conflict, particularly in states with large male compared to female populations'. He finds the same result to be true for other forms of violent political events. He does not however look into this feature in troubled spots individually which, given their own unique situations and characteristics, may throw more light upon this question. Surprisingly, I could find no studies of that nature. Nevertheless, looking at the census data of some of the conflict-ridden states gives us some idea about the issue (Heinsohn uses fertility rates which are not readily available for the early decades; population growth rates ought to work as a reasonable proxy):


Decadal Population Growth Rate

State

1961-71

1971-81

1981-91

1991-2001

Jammu & Kashmir

15.62

45.46

28.91

30.46

Punjab

21.70

23.81

20.88

19.76

Nagaland

39.84

50.00

56.20

64.43

Assam

34.95

23.36

22.74

20.30

Mizoram

24.81

48.49

39.76

29.32

Applying a 15-20 year lag between the peak of the insurgent movement and the zenith of the annual population growth rate curve provides interesting insight.

Jammu and Kashmir: The J&K population growth rate probably peaked in the early-to-mid ‘70s, so the impact of the youth bulge would be expected to be most intensely felt in the late ‘80s to early ‘90s which is exactly around the period when violence was at its height; its subsequent decline could also be attributed to the fall in growth rate. It has however not ended despite a considerable decline in the growth rate, a fact that may be attributed to the high absolute rate (despite the decline) as well as other factors such as external infiltration.

Punjab: A similar profile is seen here. The growth rate probably peaked by 1971 and the effects of the bulge would be expected by the mid-‘80s which again matches the timing of the violent aftermath of Operation Blue Star (in light of this, is Blue Star which is routinely blamed for the escalation the paramount cause of it after all?). The falling growth rate may have been instrumental in its demise by the early ‘90s.

Nagaland: The stubborn persistence of this conflict through the decades could also be attributed to incessant series of youth bulges through the decades. The trend, if this theory is true, indicates that no resolution must be expected in the near future which may lend support to the Center’s continuing ceasefire with the dominant I.Muviah faction.

Assam: In case of Assam however, the growth rate was in inexorable decline through the ‘70s which ought to have translated into a peaceful ‘90s which was not the case – there was considerable violence through the early ‘90s and ULFA, though no longer as potent, continued to retain enough potential for mayhem even through the first decade of the 21st century.

Mizoram: This case is more problematic. The population curve must have peaked in the early ‘70s, a fact that would have favored the greatest likelihood of violent conflict in the mid-80s which, contrary to that expectation, was precisely when the Mizo accord was signed (1986) bringing the whole saga of militancy to an end. In a sense, the accord represented the Center’s capitulation by acceding to a long-standing demand for statehood; yet if this analysis and Heinsohn’s theory were correct, violence being an end in itself, the prospect of such an accord ought to have met with outrage, rejection and the voicing of other maximalist demands to frustrate it failing which rebellious youth would have derided it as a ‘sell-out’ and continued their ‘resistance’. Reality was however otherwise and the theory clearly cannot account for it.

In summary, it appears that youth bulge is an important factor in sustaining violent conflicts and preventing the restoration of political stability. However, such problems are multidimensional and it is only one (albeit an important one) amongst several factors. Heinsohn’s idea of it as the nidus upon which all else coalesces to create the storm may therefore not be quite accurate. For the same reason, political efforts can play an effective role though they may not succeed in every instance.

Stock Market Turmoil and the Role of Regulation

Riding the downward tide of the global capital markets, Indian stock prices too tumbled 1,408 points on Monday, January 21, 2008 making investors poorer by $155 billion in a single day. The rout continued on Tuesday as well, before the markets partially recovered towards the end of the week. Reports indicate that investors have lost Rs. 18.05 trillion in 7 days; many of them saw their life-savings being wiped-out while some went bankrupt. The Gujarat police despatched a posse of policemen to secure Ahmedabad’s largest lake – yes, there is a connection – due to the fear of suicides by distraught investors and brokers.

Reasons

Several reasons have been proffered for the Indian stock market crash. First is the fear of a recession in the United States (US) sparked by the subprime crisis, which is expected to have an impact on the global markets. The Economist reports (in the general context of the global crash):

“For some, this merely represents a case of stockmarkets catching up with reality. It is now a year since the subprime crisis first emerged. In that time central banks have cut interest rates, investment banks have announced big write-offs and various rescue packages have been suggested. But the end of the crisis is not yet in sight. Indeed, another leg of the debt crisis may be under way, if problems of monoline debt-insurers (an obscure but important bunch who guarantee the timely repayment of bond principal and interest when the issuer defaults) are not contained. If the American economy is not now in recession, it is close enough not to make a practical difference to sentiment.

For much of past year equity investors knew those salient facts but chose instead to take comfort from three more bullish factors. First was that the Federal Reserve would rescue both the markets and the economy, as it has done so often before. Second, even if the American economy faltered, the rest of the world (particularly Asia) could take up the burden of producing global growth. Third, given the global picture, corporate profits could stay high.

All three assumptions are now coming under question. … An indication of the change in sentiment came when America's administration announced plans for a fiscal stimulus on Friday. In good times, that would have kick-started a market rally; in the current mood, the package was seen as a sign of desperation.”
The second reason attributed to the Indian stock market’s decline is massive divestment of Indian stocks by hedge funds and foreign institutional investors (FIIs) either to cash in on the previous bull run in the Indian markets or as a result of reallocation of their investment portfolios arising out of the battering they may have taken due to the US subprime crisis and the lack of liquidity. The global movement of capital in and out of countries (including India) may have caused stocks to turn volatile.

The third is tight domestic liquidity position caused by investors blocking their money in large IPO applications such as that of Reliance Power and Emaar MGF.

The fourth is several chinks exposed in the financial markets’ infrastructure. Just to list a few (and these may not be the only ones), stock exchanges required brokers to pay additional margin money amid declining markets, but brokers were unable to do so as payments from their clients were still awaited as cheques take at least 2 days to clear for the brokers to obtain money from their clients. It has been argued that there is a mismatch between the financial market system and the banking system in terms of timing. Some have gone even further and argued that the margin system enforced by SEBI and stock exchanges is itself questionable (see this column by Surjit Bhalla in the Business Standard).

Last, but not the least, is the omnipresent spectre that pervades any stock market crash – the idea of “irrational exuberance” (a phrase said to have been coined by the former chairman of the US Federal Reserve, Alan Greenspan) on the part of investors and overvaluation of stocks which results in a correction of the markets at some point in time. Some see this as the correction of the markets bringing them down to their real levels.

The Debate

Speaking for myself, it may still be early days before blame can be pinpointed on any single person or institutions or groups of them for either triggering off the present crisis or failing to take adequate steps to prevent or mitigate such a crisis. This may require an in-depth study of the turn of events. Unlike certain previous stock market crises (which have been termed “scams”, and appropriately so), there yet appear to be no allegations of shenanigans in any of the market players. Readers will recollect that the 1992 scam was largely attributed to the (mis)conduct of the late Harshad Mehta, while the 2001 scam to broker Ketan Parikh. Those scams did propel the Government to set up Joint Parliamentary Committees (JPC) to investigate the actions of various parties involved in stock market transactions. I am yet to come across either any such allegations of deviousness or any calls for such a JPC in this case.

This episode nevertheless has assumed political proportions. The Government, speaking through the Finance Minister has reiterated that the fundamentals of the Indian economy are strong, and that the market fall is attributable to continuing uncertainties in the global economy. Unsurprisingly, the BJP and the CPI have refused to buy the Government’s argument. The BJP has not only demanded intervention by SEBI, but has also blamed the Finance Ministry and SEBI for allowing overvalued IPOs, not restraining over-speculation and not improving the faulty settlement mechanism. Not to be left behind, the CPI alleges ‘malpractices’ in the stock markets that led to the crash (without further substantiation) and has called for an increase in the securities transaction tax.

All this begs the question: would the existence of a better regulatory system governing markets have prevented the turmoil? Should the financial market regulators (the Finance Ministry, SEBI and RBI) have taken measures to prevent the occurrence of such a crisis? Does this episode demonstrate the need for tighter governmental regulation on financial markets?

Role of Regulation

Since events are still unfolding and we do not have intricate details of acts by market players, and further there is no evidence of egregiousness or fraud, this analysis will necessarily have to be limited to the reasons for the crash as set out earlier in the post. The reasons can be categorized into three types: (i) external shocks (US recession, subprime crisis and sell-down by hedge funds and FIIs), (ii) internal system failures (illiquidity due to large IPOs and failure of markets’ infrastructure), and (iii) irrational exuberance of investors (overvaluation of stocks).

1. External Shocks

This seems the most plausible reason for the crash on the Indian markets. Not only does the crash come in the wake of the subprime crisis and fears of a US recession, it correlates directly with the decline in markets all over the world; it is not as if this was a phenomenon isolated to India. To blame Indian regulators for this would not hold water. It is nothing but the result of globalization and free flow of capital across the world. That naturally leads me to my next point. One important lesson that the Indian financial regulators can learn from this, though, is that “decoupling” of emerging economies (like India and China) from those of the developed economies (like the US and Western European nations) is a myth. Events that occur in one part of the world are bound to have a serious impact in other parts of the world. It seems to me that the turmoil of last week takes a further step in silencing the proponents of the “decoupling” theory. It is important that the Indian financial regulators recognize this while tailoring their policies for the financial markets.

Let us look at the menu of options available to the policy makers. A safe option would be to revert to the protectionist policies that were followed before India embarked on its new economic policy in 1991. While that would effectively insulate India from global volatility, this is not something one would advocate because we are not only far ahead down the path of economic liberalisation but any such stance would lead to India’s economic isolation. The other option would be to let the market control events (and correct itself) and hence impose minimal governmental regulation. But, to embrace dogmatic capitalism and a laissez-faire approach would be counterproductive. The path that the Indian regulators have adopted is somewhat of a midway approach of progressive liberalisation and de-regulation.

India still does have several restrictions on foreign investment, both on the strategic side and the portfolio side. On the portfolio side, which is what the stock markets are largely concerned with, SEBI has prescribed regulations for foreign institutional investors (FIIs) that require FIIs to register with SEBI and also imposes various curbs on their conduct. More recently, SEBI has placed severe restrictions on investments by hedge funds and required them to “come through the front door” (a statement attributable to the SEBI Chairman, Mr. M. Damodaran) rather than investing through the opaque participatory note (PN) structure that they hitherto used. Despite resistance from market players as being a harsh move and the consequent mini-market-crash in October 2007, SEBI did not relent under pressure and persisted with the rule, which became final on October 25, 2007. India is one of the few nations that tightly regulate hedge funds, in as much as this move is constantly pounded with criticism from the western media as indirect strengthening of capital controls on the Indian economy. The reader might well ask: why then was there a sell down in last week’s turmoil purportedly by hedge funds and FIIs that SEBI could not prevent? Perhaps the answer lies in the fact that the revised regulations on hedge funds are not only new, but also have inbuilt time periods (e.g. an 18-month period) for parts of it to come into effect.

While regulators or regulations cannot prevent external shocks altogether, measures can be taken to mitigate its impact.

2. Internal System Failures

While the external shocks seem primarily responsible for causing the markets to tumble, the downfall may have exacerbated by internal system failures. These include settlement-related issues, margin requirements, circuit breakers and other technical matters involved in stock trading and stock exchange operations. This does give rise to the need for introspection – perhaps it is this precise area where regulatory reforms will play a significant role to prevent recurrences. SEBI needs to investigate further to identify the systemic failures in the financial markets and make suitable modifications and corrections to the system with the assistance of financial market experts.

3. Irrational Exuberance

Investors pump money into the stock markets in the expectation that the price of their stock will go up and provide (sometimes quick) returns. But, often stocks are overvalued and investors enter the markets during a boom and then suffer losses when there is a subsequent downfall. The criticism is that investors make investment decisions without regard to the underlying fundamentals of either the company in which they invest or the economy itself. What role can regulation play here, and is there always a failure of regulation when markets go on a downward spiral and cause losses to investors?

At the outset, I find it hard to sympathize with the position that the government should be blamed for all the adverse outcomes (and consequent ill-fortunes) of its citizens’ financial choices. Financial markets are risky indeed, and it is not everyone who plays in that market that can absorb or handle the risk involved. Is it right to ask the government to adopt a paternalistic attitude and protect all investors against such risks? If not, to what extent can investors rely on the government for protection?

There are two types of investors. One consists of the institutional investors, such as FIIs, hedge funds, banks, insurance companies and so on, or individual investors such as high-net worth individuals, who possess a certain level of sophistication – their funds are managed by qualified and experienced investment managers. Such sophisticated investors may require less regulatory protection as they are well aware of the risks of the stock market; they are also well funded and capitalized to absorb shocks.

It is the second type of investors, the men and women on the street (referred to as retail investors) that do not possess knowledge and sophistication when it comes to investment matters, who beseech governmental protection. They often invest their life-savings that sometimes turn into dust, as many of them experienced during last week’s meltdown. While law and regulation cannot hand-hold such investors and protect them from their irrationalities, it can certain equip them and provide them with enough information and knowledge that can help them make rational choices. Regulators lay down disclosure norms that require companies to publish all investment risks in their offer documents.

In the Indian context, the SEBI (Disclosure and Investor Protection) Guidelines, 2000 that have been strengthened over the years, impose strict disclosure norms on companies issuing capital to investors. However, this is applicable only when companies make public offerings (an initial public offering (IPO) or a follow-on public offering (FPO)) or qualified institutional placements (QIP) of shares to investors; these are typically known as primary market transactions. But, once the shares of the company are already traded on the stock exchange, the obligations of companies to make disclosure are much less severe. Hence, a person who buys shares of a listed company on the stock exchange in a secondary market transaction has far less information compared to a person who purchases shares in a public offering. This causes many retail secondary market investors to acquire shares in overvalued stocks during a boom without having understood the fundamentals of the company and the economy. This disparity between disclosures in primary market transactions and secondary market transactions may require correction by SEBI.

Another area to protect individual investors is through investor education. Though SEBI and the Ministry of Company Affairs have initiated several programmes to this end (here is SEBI’s Investor Awareness site) they do not appear to have gathered enough steam. This is an area where regulators can play a far greater role in minimizing the damage caused to investors in case of market turmoil.

Suggestions have been made (by the CPI General Secretary, A. P. Bardhan in particular) that the securities transaction tax (STT) must be heavily hiked from its current rate of 0.1%. It is not clear if this is mere rhetoric or how this proposal will help, as it will still be the individual investors (in addition to the other investors of course) who will have to bear the burden of the additional outgo.

In sum, the recent market turmoil has exposed the need for further regulatory action to safeguard investors in the Indian markets as we have seen above, but it is my belief that commentators are overplaying the scenario and taking it too far by attributing the crisis to regulatory failure. The crises would have occurred anyway, but its blow could have been softened with better regulation.

The ShockGen Effect

On a slightly different note, but still remaining within the confines of financial market regulation, a single trader named Jerome Kerviel belonging to Societe Generale (SocGen) was reported last Thursday to have caused the bank a loss of over €5 billion in the largest ever fraud in the investment banking history. He is said to have far exceed his sanctioned trading limits, manipulated computer records and created elaborate fictitious hedging limits to cover up his scheme, and still managed to remain undetected for almost 10 days despite high levels of compliance controls. Query: will any number of regulators or any amount of regulation have prevented this crisis?

Refugee Protection and Indian Law

Tarunabh's recent post, below, makes for very interesting reading especially, on Republic Day. I very much appreciated his analysis. I was not aware that the Andhra Pradesh High Court has held that non-refoulement (an impossibly difficult term to pronounce correctly in Indian English) is part of Article 21. And I think that the Supreme Court's decision in the Arunachal Pradesh case is a fascinating one. That case deserves a lot more serious attention than it has received in critical constitutional examination. Inspired by Tarunabh's post, I would like to pose the following issues for my blog colleagues and co-authors to further consider.

1. It is most unfortunate, in my personal view, that India did not sign the 1951 Refugee Convention. Accession to that convention in the 1950s would have been a strong signal to our fledgling republic's commitment to human rights and human dignity. It is a bit hard to understand why India, having adopted a constitution that was directly influenced by Western constitutional traditions and ideas of human rights, would reject the Refugee Convention a year later. I'd welcome pointers on historical research about our refusal to sign the agreement.

2. Even though India is not a formal party to the 1951 Convention, it is bound by those principles of the convention that constitute customary international law. I recall that several writers and authors of international refugee law have argued that non-refoulement is one such principle. However, I am curious to know whether this argument has been made in any court given that our Supreme Court has previously invoked provisions of international conventions to which India had appended express reservations (the CEDAW Case).

3. Again speaking personally, I wonder whether one could argue that, once a foreigner or refugee is entitled to the same basic protection of constitutional rights and freedoms that a citizen enjoys, that foreigner or refugee cannot be subject to greater restrictions on those rights and freedoms than the restrictions that apply to citizens.

Saturday, January 26, 2008

Taslima Nasreen and India's treatment of refugees

So, Taslima Nasreen's visa has been generously extended for six more months. I will try to present certain legal issues that her stay in India present.

Although one can go further back in history, let us begin with the Foreigners Act, 1946, whose preamble provides 'for the exercise by the Central Government of certain powers in respect of the entry of foreigners into India, their presence therein and their departure therefrom'. The Act effectively provides the Central Government with complete discretion in its dealings with all foreigners. This has largely been the basis of the legal framework for the treatment of foreigners in independent India - the only exception is that now foreigners in India are also entitled to certain fundamental rights that are not expressly restricted to citizens. For example, the Supreme Court famously ruled in
National Human Rights Commission v. Arunachal Pradesh (1996) 1 SCC 742 that '... the State is bound to protect the life and liberty of every human being, be he a citizen or otherwise ……The State Government must act impartially and carry out its legal obligations to safeguard the life, health and well-being of Chakmas residing in the State without being inhibited by local politics.'

As such, Indian law does not clearly recognise a
sub-category of 'refugees' within 'foreigners'. In many other countries, the treatment of foreigners is still largely a political decision, but the status of refugees has been judicialised by granting them rights. The Refugee Convention 1951 (read with its Protocol 1967) defines a refugee as someone who 'owing to wellfounded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion' is outside his/her country of nationality and cannot return. Although the fact has not been adjudicated upon by any court, it is fair to suggest that Taslima Nasreen was persecuted in Bangladesh for her political opinions that forced her to leave the country (it is not necessary to show that the persecution was done by the State itself). As such, she can avail the rights of a refugee outlined in the Convention in any of the member-states. One of the most basic of these rights is the right to non-refoulment in Article 33 of the Convention, that forbids the expulsion or return of a refugee to a State where his/her life or freedom will be endangered on account of her race, political opinion etc.

India, unfortunately, never signed the Convention and is not a member-state. India's refusal to join the Convention was a protest against its narrow understanding of a 'refugee' and its Euro-centric nature (which did not address the problem of the post-partition refugees that India was still dealing with in 1951). This does not mean that India has refused to accept refugees and provide them with protection. Thousands of Tibetan refugees and Bangladeshi refugees during the 1971 war were allowed to stay in the country. Even without having signed the Convention, India allows the UNHCR to decide upon the 'refugee' status for certain classes of applicants.

The main difference in India, it seems, is that the decision to accord any rights to refugees, or even allowing the UNHCR to function with a limited mandate in India, is a political rather than a legal one (just like any other foreigners). While this appears to be the practice of the Indian state, the Gujarat High Court did hold in
Ktaer Abbas Habib Al Qutaifi v. Union of India (1999 Cri L J 919) that the the principle of non-refoulement is encompassed in Article 21 of the Constitution, so long as the presence of the refugee is not prejudicial to the law and order and security of India.

One wonders what the reaction of the Supreme Court will be in a case of violation of basic rights of refugees (say, if the hypothetical decision to expel a refugee like Taslima Nasreen is challenged because it violates the principle of non-refoulment). The patchy picture that emerges from the equally patchy description of law and practice above makes it difficult to hazard a guess.
Of course, even if the Gujarat High Court judgment is endorsed by the Supreme Court, given the qualification of 'law and order' and how easily a 'law and order' problem can be manufactured in India, its utility in Taslima's case is doubtful. (If the Supreme Court has already ruled on this aspect, it has missed my attention - please enlighten.)

Perhaps, the best way forward, as the NHRC suggests, is that a comprehensive national law ought to be devised, keeping in view the decisions of the Supreme Court as well as international instruments on the subject. (Annual Report 2000-01, para 4.24 - available in the archives section of its website).

Till then, Taslima must rely on political generosity of the government of the day rather than legal rights.

Friday, January 25, 2008

Speculation on the outcome of India's appeal against Mike Procter's verdict on Harbhajan Singh

Today's Times of India has carried a news item speculating the possible outcome of India's appeal against Mike Procter's verdict on Harbhajan Singh. The report says Indian legal eagles are trying hard to reduce the penalty from match-ban to one of fine. The report smacks of ignorance of the ICC Conduct Rules.

For a level 3.3 offence which Harbhajan has been found guilty of, no fines can be imposed as penalty. It can only be match-ban. Had it been a Level 4 offence, the penalty could have been so reduced as it would have been applicable to a Level 3 offence. If fines are to be imposed rather than match-ban, then the Level of offence should have been either 1 or 2, which cannot apply to Harbhajan Singh at all.

Secondly, the ICC conduct rules do not allow Plea Bargaining. Therefore, it is surprising that the so-called legal eagles are in fact suggesting that fines could be imposed on the Player in lieu of the match-ban. Are they not suggesting that even imposition of fines would make the Player guilty of the offence under Level 3.3? The intense criticism in the media following Procter's decision was not against the intensity of the punishment, but against the finding of guilt itself.

Thursday, January 24, 2008

Our Blog's Landmark Day & A Few Thoughts

Today, our blog has recorded a landmark number of visits by our readers -796 on the previous day (see the hit counter on the left). Whether it is a transcient phenomenon, one doesn't know. But there is no doubt that this is a moment, I think, all of us would be proud of. The credit undoubtedly goes to Vikram, Arun and others who had the foresight in 2005 to think of this medium as the most convenient and useful tool to exchange ideas, and record our views. Over the last two years, it has emerged as the best inter-disciplinary blog on Indian affairs, not just restricted to legal issues, with all its jargon. It is a collective effort to explore the legal and related dimensions of contemporary issues in a reader-friendly manner. No wonder, many non-legal general blogs have acknowledged our contributions during the past few months. As we celebrate this occasion, we immensely thank our readers who have chosen to visit this blog again and again, looking for that extra value addition to public discourse, which is lacking in the mainstream media. That is also a big challenge to all of us, to make the blog much more active than what it has been so far, keeping its dignity and focus intact.

Novartis Patent Case: Paper dealing with Constitutional Law Issues

Along with Prashant Reddy (who blogs me with me at SpicyIP), I just finished a paper analysing the Madras High Court judgment in the Novartis case. We focus in particular on the TRIPS compatibility and "constitutionality" of section 3(d) in this paper. I'm copying the abstract below. If you need to access a copy of the article, please click here. Once the page opens, scroll down and click the "download the document from SSRN" button. This is still a very rough draft --so we would love your comments. Any inputs will be gratefully acknowledged in the paper.

Anyway, here is the abstract of the paper dealing with section 3(d) and TRIPS/international law/constitutionality:

Title: Section 3(d) of India's Patent Act: Crude, Yet Constitutional

Abstract:

"Indian patent law recently landed itself in the eye of a TRIPS storm on account of the rejection of a patent application covering Novartis' famed anticancer drug, Glivec. The rejection stemmed, inter-alia from a unique section in the Indian patent regime (section 3(d)) that prohibits the patenting of new forms of existing pharmaceutical substances that do not demonstrate significantly enhanced efficacy.

Not only did Novartis appeal the patent office decision, but in a rather controversial move, it challenged the TRIPS compatibility and constitutionality of section 3(d). The Madras High Court ruled that section 3(d) was constitutional. More importantly, it also stated that it did not have jurisdiction to rule on the TRIPS issue. As one can appreciate, this does not conclusively settle the TRIPS issue, but only shifts the jurisdictional venue. It is therefore an opportune moment to examine section 3(d), the Madras High Court decision and TRIPS compliance issues.

The paper will argue that section 3(d) is compatible with TRIPS. It will also argue that although the Madras High Court got its conclusions right, it's reasoning leaves much to be desired. It relied on an antiquated and wrong notion of contract law to rule that it had no jurisdiction to rule on a WTO-TRIPS issue. In order to defend the constitutionality of section 3(d), it relies on propositions that are mutually contradictory and sometimes wrong.

This is deplorable, given the fine repertoire of constitutional law jurisprudence that India is home to and which the court might have dipped into. The court also reveals a fascination for citing foreign case law, even when some of these judgments issued more than a century back and are sometimes at loggerheads with what the Supremes have ruled in this country.

On a broader note, this paper will demonstrate that constitutionality notwithstanding, section 3(d) remains a poorly drafted section. Therefore, the government needs to take urgent steps to iron out the creases in section 3(d)."

Wednesday, January 23, 2008

A critical analysis of recent anti-conversion legislation: Focus on the SAHRDC

Before getting to the substance of this post, I want to join Vikram and V. Venkatesan in welcoming our new contributors. The success of this blog depends on regular contributors and commentators (and a healthy debate among them), and its great to see the heightened activity on the blog at the start of the new year. Let us hope that this trend continues. Though this continues to be a hectic time at work for me, I am inspired by the recent enthusiasm exhibited on the blog, and this post is the result. I hope other contributors (some of whom have remained silent for what seems like an eternity) will be similarly inspired.

An area that I follow closely in my own research is that of secularism, especially the evolving model of secularism in
India in the aftermath of the rise of the BJP as a national party, as exhibited in legal developments. In recent years, several states (especially those where the BJP is in power, but even those ruled by non-BJP parties) have experimented with laws on issues that have either a direct or incidental impact on religion. We have already seen how the anti-cow slaughter laws passed by BJP governments have resulted in a drastic revision of some basic elements of the Indian legal model of secularism (I refer here to the over-ruling of the Mohd. Qureshi case by a seven-judge Constitution Bench headed by Chief Justice Lahoti, which was briefly adverted to in this previous post).

One such trend is the recent enactment of anti-conversion laws by several states. As is somewhat typical in our country, much of what passes for legal discussion and debate remains focused on the output of the Supreme Court (a charge that most contributors to this blog, myself included, are equally guilty of). Fortunately, there are at least some organisations that focus on these legislative changes, which could have momentous consequences.

A recent issue of the EPW carries an excellent article by the South Asia Human Rights Documentation Centre (SAHRDC), which focuses on several such anti-conversion laws. The article lists out the germane provisions in a law that was recently passed by the legislative assembly in Himachal Pradesh, which in turn is similar to laws passed in Orissa, Gujarat, Chattisgarh, Madhya Pradesh, Rajasthan and Arunachal Pradesh. It then analyses these laws against the backdrop of applicable constitutional provisions (including an analysis of debates in the Constituent Assembly), Supreme Court precedents, and the relevant international law. The article concludes as follows:

It is clear that the anti-conversion legislations [sic], as they stand, pose serious challenges to both the intrinsic structure of Indian society and the international perception of the country’s legal system. It is difficult to escape the conclusion that these legislations [sic] are primarily motivated by a religious ideology and will detrimentally impact religious minorities. Should the courts acquiesce in this emasculation of tolerance and secularism amid an increasing number of such laws passed by different state governments, Indian democracy and its founding principles of equality and tolerance will be seriously weakened.

The issue in general, and the specific arguments raised by SAHRDC, deserve closer scrutiny and analysis.

The institutional author of the piece, SAHRDC, is an interesting NGO, with a long track record of publications on issues of human rights in the South Asian region. Though the website of SAHRDC is parsimonious in providing details about the organizational structure and people involved, it does provide links to publications that bear the promise of containing rich information on a wide variety of topics.