Courts, Contracts, and Coronavirus

There's little doubt that we've entered unprecedented times. Our courts are barely functioning; we've been asked not to step outdoors without good reason, and to maintain a healthy physical distance from each other.

Access to law has been becoming increasingly difficult: although attempts to ameliorate the effects of coronavirus are being made, often by employing technologies hitherto barely used by the legal fraternity, they have not (yet) been able to ensure that the working of the courts or law enforcement is entirely normal.

Of course, it isn't just lawyers and judges who are suddenly having to find the means to work whilst being physically distant. On the contrary, it is almost every organisation in India and elsewhere which is having to do so in order to try to survive the onslaught of COVID-19. Wherever possible, employees have, for the most part, been trying to work from home with the aid of the Internet. Physical presence at workplaces not providing essential services has been either discouraged or prohibited. In some cases, this has led to unusual situations within companies: for example, broadcast studios may be functional while their corporate offices (where the legal right to broadcast content is cleared) may be closed with company lawyers scrambling to coordinate with business teams, and to negotiate and sign the required contracts online.

Not everything has changed though. The substantive fundamentals of access to law remain the same, and the new methods being used to conduct business have to be deployed in a manner which ensures that they fit into old, established methodologies. It is still necessary to ensure that one’s agreements adhere to contract laws to be valid contracts, to approach the right court for their enforcement, to follow prescribed procedures tweaked though they might well be to adapt to the times we live in, and to generally ensure that the opposite party is heard before decisions are made.

Which Court Does One Approach?

The slightest acquaintance with the legal system would inform one that approaching the wrong court will not do a great deal to help one resolve a dispute. Assuming that a crime isn't involved, one’s choice of court or judicial authority is determined with reference to what one aims to achieve, the monetary value of whatever it is that one is dealing with, and where one’s grouse has arisen.

There isn't much point approaching a family court to complain about having been defamed by a random stranger on SocMed, for example, even if one is alleged to have neglected one’s children or committed adultery (both of which issues could, in some circumstances, be brought up in a family court). Such a court would not ordinarily be the right forum to attempt to hold a random stranger accountable for defamation. Instead, one would have to refer to codes to civil procedure, and determine which court should be approached depending on the contours of the issue at hand.

In addition to the mandates of the civil procedure, if one’s dispute arose in respect of a contract, any agreement one may have entered into with the other parties to the dispute regarding which court to approach would also have to be taken into consideration. The law grants contracting parties a great deal of freedom in the structuring of their agreements, and they are almost always not only permitted to choose which law they will be governed by but also in which territory a court would have the power to adjudicate their disputes.

In technical terms, the power or authority of a court to make decisions is referred to as its jurisdiction. Obviously, jurisdiction cannot be exercised unless it exists in the first place. And, so, to determine if a court has the authority to adjudicate a matter, the issue is considered from four different angles under the heads of subject-matter jurisdiction, pecuniary jurisdiction, territorial jurisdiction, and personal jurisdiction which roughly correspond to the questions of ‘What? How much? Where? and Who?’ in a matter.

A court has jurisdiction only if the answers to these questions fall within a range which legal codes consider acceptable. For example, it would generally not be acceptable to bring up a matter in a court situated on a hill station solely because of the pleasantness of its weather if the matter at hand had no connection to the place. In such a case, the court would likely lack territorial jurisdiction (unless the dispute were contractual and the parties agreed that it had jurisdiction), and an objection could be raised to its hearing the matter.

Objections regarding the lack of territorial jurisdiction, as well as pecuniary and personal jurisdiction, are considered to be procedural in nature because these three forms of jurisdiction do not impact the authority of courts to adjudicate the substantive rights of parties. Consequently, such objections should be made at the first possible instance if they are to be made at all – the failure to raise them early on may result in their being disallowed in appeal. After all, the parties to contracts can often decide where their contractual disputes will be heard, and a failure to object could be construed as an implicit agreement that a court does in fact have jurisdiction.

Subject-matter jurisdiction relating to the 'What' of a matter, however, works differently as it speaks directly to substantive rights, and strikes at the very existence of a court’s power or authority to adjudicate a dispute. The absence of subject-matter jurisdiction is the inherent lack of a court’s competence to determine rights and liabilities of the parties.

Disputing parties cannot cure a lack of subject-matter jurisdiction by waivers or acquiescence or agreement. They cannot consent to a court adjudicating a dispute if it does not have subject-matter jurisdiction in relation to the subject of the dispute. In other words, parties cannot confer subject-matter jurisdiction on a court where none exists. By the same yardstick, they cannot divest courts of subject-matter jurisdiction either. So, although it is often possible to agree to settle disputes by arbitration, a dispute which the law says must only be decided by a specialised statutory tribunal cannot, with the consent of the parties, be referred to arbitration.

Why Does Jurisdiction Matter?

In ordinary times, the nature of disputes which could arise in one’s dealings with others can usually be anticipated, and parties make dispute resolution arrangements long before their relationship sours. This lends some degree of certainty to the dispute resolution process, and it leaves the intricacies of jurisdictional issues to lawyers who may find them endlessly fascinating without bothering others who may find them soporific.

The usual equation has, however, now changed with a pandemic having been declared and with borders having been shut in many parts of the world. Questions about how to settle non-contractual disputes, and how to interpret existing contracts have arisen as have questions about how to draft contracts going ahead.

Jurisprudence on these issues isn't crystal clear, to put it mildly, and, as far as contracts are concerned, part of the problem is the unforeseen sudden need to adopt unfamiliar software that's often proprietary to coordinate between team members working from home. It doesn't help that neither the contracts governing proprietary software nor those which are currently regulating business activity are geared towards working in a pandemic.

The contractual clauses which have now become critical have, in the past, generally been considered ‘boilerplate’ and have barely merited a second glance. They include so-called force majeure clauses which determine the obligations of parties should supervening events obstruct anticipated performance, severability clauses which sometimes allow non-material parts of agreements to be cut out of a contract with the remainder remaining in full force, and merger clauses which prevent prior and contemporaneous agreements from becoming part of final agreements – these prior and contemporaneous agreements may be important given that contracts are now rarely being signed face-to-face with every detail of the terms being discussed and included in the final document.

Present drafting constraints aside, in existing contracts, 'boilerplate' clauses have often become especially problematic because of not having been carefully considered. In negotiated contracts, they have tended to be barely thought through, and in standard form contracts (of the kind that govern the use of proprietary software, for example) drafted by one party alone, they have tended to be extremely one-sided. The problems they can create have therefore begun to impact existing contractual arrangements since, all too often, no-one is absolutely certain what they mean. Complicating the issue is that work and negotiations are currently being carried out using proprietary software which is not necessarily designed to maximise user privacy either through contractual commitments, through the use of end-to-end encryption, or through statutory mandates.

Other than choosing one’s software and its settings carefully, there isn't a great deal that can be immediately done to address privacy concerns caused by software that facilitates collaboration especially since India does not have a comprehensive data protection law; the country's privacy regime is still a patchwork of laws crudely sewn together. Cross-border non-contractual disputes too have no quick fixes beyond approaching courts which will have to formulate processes to deal with them. However, when it comes to contractual issues, it should often be possible to interpret contracts to protect the interests of all the parties involved in a dispute.

Where Do We Now Stand?

Underpinning Indian law is the ideal of equity. Equal treatment of equals before the law is enshrined in the Constitution of India, and equity underpins all of the country's contract law. Courts have mechanisms at their disposal to suppress the enforcement of agreements which are blatantly unfair, unconscionable, impractical, or unlawful, if disputing parties fail to reach viable agreements with each other. And, whether or not a dispute is contractual, there is no legal basis to have its resolution be anything but equitable.

Some countries are preparing for recessions of a kind not seen in our lifetimes, and we can be reasonably sure that the way we work will change. With the opportunity to cut operational costs by taking advantage of technological advances, and the precariousness of just-in-time supply chains becoming obvious, there will almost certainly be changes in both manufacturing and services sectors. The latter is also likely to spill into governance and the judiciary once digitised systems to support work are put into place.

Although manufacturing may become more localised, that may not be the case for many services: coordinating with partners across jurisdictions may become more common, and the technology used to facilitate such partnerships may be licensed from a place where none of the parties operate.

Although no-one knows what a post-pandemic world will look like, questions regarding jurisdiction of courts to determine rights and liabilities of parties would probably arise more frequently. Where they arise out of contractual relationships, there is sufficient judicial guidance to enable contracting parties to structure their agreements so as to protect themselves from the vagaries of nature and the markets.

However, there is limited jurisprudence in India to indicate how non-contractual relationships might play out except in broad terms. The adjudication of disputes caused by the exercise of competing rights in different parts of the world is unclear, for example. So, too, is the process by which accountability would be fixed for online conduct which could violate third party rights.

Such disputes would raise questions about whether a court’s jurisdiction could extend to passing orders impacting the rights and liabilities of persons beyond its territory, and what legitimate restrictions on a court’s power might look like. In a globalised world, should a competent court’s jurisdiction be restricted by territory at all when such restrictions could allow illegitimate globalised operations? These are not entirely new issues but they are likely to become more pressing as time goes by.

For example: If an Internet user in India made a purchase on a website which sold products exclusively in a foreign territory but which directed purchasers outside its territory to a courier service that mailed their purchases to India, could the person exclusively licensed to sell the same product in India object to the transaction on the ground that it would interfere with his right to sell in India?

Precedent offers us some guidance but the short answer to where we now stand is: we’re not sure. Additionally, the prospect of cross-border enforceability is sometimes so dim that, even if one obtains a favourable order, it offers cold comfort.

So, What Comes Next?

Clearly, we need to draft contracts more carefully and the blind use of templates, much practised in some circles, should be phased out. The tried-and-tested will not do where circumstances have changed: we need agreements cognisant of current requirements.

Side by side, we need to develop processes to deal with invasions of privacy and the maintenance of confidentiality, critical in many professions including legal ones. What does one do if an online meeting intended to be private is hacked into, for example? Who bears responsibility? How does one respond if the proprietor of the software one uses listens in and sells information? Or if private data is collected solely with the authorisation of a standard form contract – a practice which could simultaneously be both legal and unethical?

Such questions may seem complex but they can, to an extent, be addressed by applying first principles of law.

In late 2019, in the case of Swami Ramdev & Anr. v. Facebook & Ors., the Delhi High Court held that takedown orders pertaining to defamatory content uploaded on to SocMed sites from India should apply globally. After noting that content is made available globally by these sites once it is uploaded, and upon applying the provisions of the 2000 Indian Information Technology Act, the court stated: "The act of uploading vests jurisdiction in the Courts where the uploading takes place. [....] The removal or disabling cannot be restricted to a part of that resource, serving a geographical location. [....] So long as the uploading from India led to the data or information residing in the network or being connected to' the network, the same ought to be disabled or blocked globally." Considering that the Delhi High Court had subject-matter jurisdiction in the case, its ordering a global takedown of defamatory content under Indian law was justified particularly since the information technology statute which it referred to has extraterritorial application beyond India.

So far, however, the judiciary has not comprehensively addressed the issue of different territories having vastly different legal standards, particularly when it comes to free speech, or engaged with the issue of the enforceability of global takedown orders should those they order to remove content worldwide not comply with their orders. In many instances, realpolitik may nudge parties against whom such orders are issued to comply with them, especially if they are multinational companies who desire to continue doing business in India, but, in general terms, the incentives and constraints which apply to them are unlikely to be universal.

One can only hope that going ahead, if the rights and liabilities of parties have been determined by a competent court, mechanisms are developed to ensure the enforceability of its orders in foreign territories to help preserve international amity, to provide seamlessness in countering illegitimate conduct online, and to ensure the finality of litigation. Expecting aggrieved parties to approach one court in each of the world's countries when an offence is committed online and its effects are felt globally is absurd: to do so would be prohibitively expensive and impractical for almost everyone.

Still, conferring or assuming the existence of jurisdiction on the basis of tenuous links would not be acceptable. So, for example, the mere fact that a sister-concern or subsidiary of a foreign company conducted business in India world not grant Indian courts subject-matter jurisdiction in respect of the company's conduct outside India. Similarly, if a copyrighted work of an Indian owner was made accessible abroad via a foreign website, Indian courts would not necessarily have jurisdiction to adjudicate such a claim.

One could argue that the country in which an impugned act is originally committed should be the country to determine its legality. If that were the standard adopted then, in the case of uploading content, to continue with the same example, the existence of differing free speech standards and tests in various countries would be irrelevant. That said, the manner in which jurisdictional issues should be dealt with at the international level requires closer examination.

For example, if a woman's banal speech about a picnic were published online without her wearing a headscarf from a country which mandated headscarves, a court in that country could well term the recording and its publication illegal, and order it to be taken down. It would be a bit of a stretch to argue that the courts of every country in the world should respect and enforce a takedown order in such circumstances: to do so could well result in supporting injustice instead of helping to promote justice.

In the short term, the problems which could crop up whilst determining dispute resolution mechanisms can be ameliorated with well-drafted contracts that anticipate potential issues and respond to them. In the long-term, however, the only way forward is to create processes to untangle the jurisdictional conundrum on a multilateral international basis.

The authors are Sidharth Chopra and Nandita Saikia, who are lawyers and colleagues. They engage with dispute resolution and legal policy in relation to media, eCommerce, and software. The opinions contained in this article are their own.