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WHETHER UNSTAMPED ARBITRATION AGREEMENT IS EXECUTABLE? THE CONCEPT OF SEPARABILITY OF THE ARBITRATION CLAUSE/AGREEMENT FROM THE UNDERLYING CONTRACT

September 14, 2021

Here we will discuss the following issues: (i) Whether an arbitration agreement contained in an unregistered (but compulsorily registrable) instrument is valid and enforceable? (ii) Whether an arbitration agreement in an unregistered instrument which is not duly stamped, is valid and enforceable? (iii) Whether there is an arbitration agreement between the parties and whether an Arbitrator should be appointed? What is an Arbitration Agreement? Its provided in Section 7 of the Arbitration Act, 1996. It reads as under: Arbitration agreement.—(1) In this Part, “arbitration agreement” means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. (2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. (3) An arbitration agreement shall be in writing. (4) An arbitration agreement is in writing if it is contained in— (a) a document signed by the parties; (b) exchange of letters, telex, telegrams or other means of telecommunication 1 [including communication through electronic means] which provide a record of the agreement; or (c) an exchange of statements of claim and defense in which the existence of the agreement is alleged by one party and not denied by the other. (5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract. Section 17 of Registration Act provides for compulsory Registration: https://indiankanoon.org/doc/561156/ ( click on the link for detailed provision.) Section 49 of the said Act lays down the effect of the non-registration of documents. https://indiankanoon.org/doc/1768154/ ( click on the link for detailed provision.) Section 49 makes it clear that a document which is compulsorily registrable, if not registered, will not affect the immovable property comprised therein in any manner. It will also not be received as evidence of any transaction affecting such property, except for two limited purposes. First is as evidence of a contract in a suit for specific performance. The second is as evidence of any collateral transaction which by itself is not required to be effected by a registered instrument. A collateral transaction is not the transaction affecting the immovable property, but a transaction which is incidentally connected with that transaction. The question is whether a provision for arbitration in an unregistered document (which is compulsorily registrable) is a collateral transaction, in respect of which such unregistered document can be received as evidence under the proviso to section 49 of the Registration Act. English Law Views on distinct identity and separation of Arbitration Clause: Lord Wright in his opinion stated that: “An arbitration agreement is a collateral to the substantial stipulations of the contract. It is merely procedural and ancillary, it is a mode of settling disputes, though the agreement to do so is itself subject to the discretion of the court.” Lord MacMillan in his opinion stated that “It survives for the purpose of measuring the claims […]

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CAN THERE BE ORAL COPY RIGHT ASSIGNMENT? CAN COPY RIGHTS BE CLAIMED WITHOUT AGREEMENT?

December 3, 2020

Sections 18 and 19 of Copy Right Act 1957 is important for discussion. Let’s see provision of two relevant Sections. 18. Assignment of copyright.— (1) The owner of the copyright in an existing work or the prospective owner of the copyright in a future work may assign to any person the copyright either wholly or partially and either generally or subject to limitations and either for the whole of the copyright or any part thereof: Provided that in the case of the assignment of copyright in any future work, the assignment shall take effect only when the work comes into existence. (2) Where the assignee of a copyright becomes entitled to any right comprised in the copyright, the assignee as respects the rights so assigned, and the assignor as respects the rights not assigned, shall be treated for the purposes of this Act as the owner of copyright and the provisions of this Act shall have effect accordingly. (3) In this section, the expression “assignee” as respects the assignment of the copyright in any future work includes the legal representatives of the assignee, if the assignee dies before the work comes into existence. 19. Mode of assignment.—[ (1) ] No assignment of the copyright in any work shall be valid unless it is in writing signed by the assignor or by his duly authorised agent  [(2) The assignment of copyright in any work shall identify such work, and shall specify the rights assigned and the duration and territorial extent of such assignment. (3) The assignment of copyright in any work shall also specify the amount of royalty payable, if any, to the author or his legal heirs during the currency of the assignment and the assignment shall be subject to revision, extension or termination on terms mutually agreed upon by the parties. (4) Where the assignee does not exercise the right assigned to him under any of the other sub-sections of this section within period of one year from the date of assignment, the assignment in respect of such rights shall be deemed to have lapsed after the expiry of the said period unless otherwise specified in the assignment. (5) If the period of assignment is not stated, it shall be deemed to be five years from the date of assignment. (6) If the territorial extent of assignment of the rights is not specified, it shall be presumed to extend within India. (7) Nothing in sub-section (2) or sub-section (3) or sub-section (4) or sub-section (5) or sub-section (6) shall be applicable to assignments made before the coming into force of the Copyright (Amendment) Act, 1994.]] There is landmark judgment on this issue passed by Karnataka High Court. Judicial Views: In K.A. Venugopala Setty vs Dr. Suryakantha U. Kamath, Karnataka High Court  it framed question on oral agreement for Assignment and held that, “from the aforesaid provisions contained in S. 19 of the Act, it is clear that assignment of the copyright must be in writing and signed by the assignor or his duly authorised agent. In addition to this, the assignment must in clear terms state the rights proposed to be assigned and the size of the work. […]

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