{"id":249345,"date":"2021-06-05T14:30:09","date_gmt":"2021-06-05T09:00:09","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=249345"},"modified":"2021-06-05T16:36:44","modified_gmt":"2021-06-05T11:06:44","slug":"e-commerce-suits","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2021\/06\/05\/e-commerce-suits\/","title":{"rendered":"Place of suing and cause of action in e-commerce disputes"},"content":{"rendered":"

Introduction<\/strong><\/span><\/h3>\n

Dr B.R. Ambedkar while presenting the Indian Constitution, 1950[1]<\/a>, in the Constituent Assembly, said that every generation is a nation of its own.\u00a0 It is this perennial change in generational thought that demands the law to be adaptive[2]<\/a>. With the rapid advancement upon the advent of the internet has allowed us to possess goods or services with a click of a button. Now more than ever before, we need the law to clearly state guidelines to allow the smooth functioning of e-commerce transactions. The purpose of the law should be to present solutions to resolve the probability of miscommunication, that could arise, because of the barrier caused by physical distance.<\/p>\n

The term “e-commerce” is a common abbreviation used for “electronic commerce”. It includes carrying out business activities electronically, rather than abiding by the conventional method of physical shopping. With different stages involved in online shopping, it is realistic to say that in case of a dispute it will be extremely difficult to decide which court will have a jurisdiction in the matter, due to the multifaceted jurisdictional nature of such transactions. Sections 15-20 of the Code of Civil Procedure, 19082<\/a> (hereinafter “CPC\u201d) deals with different types of jurisdiction and the “place of suing”. In simple terms, it specifies the venue of a particular case that is triable before a court.3<\/a> Jurisdiction is of three types \u2013 pecuniary, territorial, and subject-matter jurisdiction. To exercise territorial jurisdiction more effectively, the law segregates products that can be purchased into two categories \u2013 immovable properties and movable properties. Immovable as the word suggests means a property that cannot be moved from one place to another because it is fixed to the ground. Sections 16-18 of CPC deals with such properties, and the law applied is simple since the jurisdiction of a court, in case of immovable property, lies where the property is located.4<\/a> However, it should be noted that in cases of a parties only wanting to have benefit on property, different rules are applied.<\/p>\n

This article aims to focus on the second category at hand, which is movable property. Through this piece, I shall explore the various statutory templates that are followed by courts in adjudicating jurisdictional disputes involving moveable property, particularly in the field of e-commerce matters. Subsequently, I shall analyse the impact of foreign judgments on cross-border jurisdictions followed by a brief examination of alternative mechanisms that can be utilised to resolve such disputes.<\/p>\n

The term “movable property” is defined as property which can be transferred from one place to another. Sections 19 and 20 of the CPC lays down the law according to which courts shall have jurisdiction in cases concerning movable properties. The two places where the law provides for a jurisdiction to file for the suit depends on:<\/p>\n

(a<\/em>) the person who is aggrieved files a case that is where the cause of action happens; and<\/p>\n

(b<\/em>) where the defendant\/perpetrator of the grievance carried on his business that is where the breach took place.5<\/a><\/p>\n

The concept of “exclusive jurisdiction contracts” complicates the concept of place of suing in case of movable property. In such cases, it should be kept in mind that the contract exists between the company and the customer and that the manufacturers are not involved in case of any dispute.<\/p>\n

The establishment of the e-commerce market has given birth to companies like Amazon, Nykaa, etc. \u2013 which have become popular, not just regionally, but throughout the world. Such online business companies insert exclusive jurisdiction clauses into their contracts which instructs that only courts, of a specific place\/State\/region, shall have the jurisdiction to settle potential disputes. This is in accordance with Official Trustee <\/em>v. Sachindra Nath Chatterjee<\/em>6<\/a> where the Supreme Court observed that before a court can be held to have jurisdiction to decide a particular matter, it must not merely have the jurisdiction to try the suit brought before it. It must also have the authority to pass the order sought for. Hence, there is no scope to create a new jurisdiction that does not exist at the first place.7<\/a><\/p>\n

T<\/strong>ests to decide jurisdiction in e-commerce matters<\/strong><\/span><\/h3>\n

As it has already been established, with the advent of e-commerce transactions, there is plenty of scope for confusion regarding the jurisdiction of courts. This varies with the nature of good in question, as well as place where the suit is filed. In India, civil matters intertwined with aspects of e-commerce are traditionally governed by Sections 15-19 of the CPC. At times, the issue(s) gets intermingled with complications due to the nature of business, wherein a specific territory cannot be ascertained to settle a jurisdictional dispute.<\/p>\n

It is pertinent to mention that this legal vacuum has not gone unrecognised by the courts. To fill this gap in the current absence of a decisive law, courts have employed several tests to determine jurisdiction in e-commerce matters. One such test is the purposeful availment test as given by a 2011 US Supreme Court decision8<\/a> and affirmed by a 2009 Delhi High Court judgment of Banyan Tree Holding (P) Ltd. <\/em>v. A. Murali Krishna Reddy<\/em>9<\/a>, and further explained via another 2017 Delhi High Court judgment of Impresario Entertainment & Hospitality <\/em>(P<\/em>) Ltd. <\/em>v. S&D Hospitality<\/em>10<\/a>. The US Supreme Court laid down the interpretation of the purposeful availment test. The Court held that this test could be understood as the placing of goods into the stream of commerce, by the defendant, with the expectation that they will be purchased by consumers within the forum of the State. They further elucidated this concept by explaining that this, however, did not amend the rule of personam jurisdiction11<\/a>. It was merely an observation that a defendant may then be subjected to a certain jurisdiction without ever entering the certain forum. The real test was associated with the defendant\u2019s “intentionality” and whether their activities were intended to submit to the power of that sovereign.12<\/a><\/p>\n

The Banyan Tree<\/em> case, as decided by the Delhi High Court, expounded on this further considering e-commerce disputes. They deliberated on the issue of mere accessibility versus purposeful usage and held that:<\/p>\n

\u2026to establish jurisdiction in cases where the defendant does not reside\/carry on business in the forum state but the website in question is “universally accessible”, the plaintiff will have to show that the defendant purposefully availed the jurisdiction of the forum court.13<\/a><\/p><\/blockquote>\n

In other words what was required to establish jurisdiction was the defendant\u2019s intention to engage in a commercial transaction specifically at a forum state. In the Impresario Entertainment<\/em> case14<\/a>, the High Court further clarified this position by differentiating between the purposeful availment test from the purposeful avoidance test. The Court explained that to decide jurisdiction, it was not enough for the defendant to show that he had avoided the forum state but rather essential for the plaintiff to prove that the defendant had purposely availed the jurisdiction of the forum state.<\/p>\n

Another test that can be used to decide jurisdiction in e-commerce matters is the forum convenience test. This is a test derived from the general doctrine of forum non conveniens which pertains to all civil matters. The general principle is that a court can recognise that a select forum is inconvenient for the parties involved in a suit and can, in accordance with that recognition, send the case to a more appropriate court. This change is to be made in the interests of all the parties and intent of reaching end of justice. 15<\/a><\/p>\n

In the Supreme Court\u2019s decision in Kusum Ingots & Alloys Ltd. <\/em>v. Union of India<\/em>16<\/a>, this principle was legitimised and allowed in the Indian context when it laid down that in appropriate cases as it deemed fit, the Court could refuse to exercise its discretionary jurisdiction by invoking the doctrine of forum convenience. Part of cause of action arising in a certain territorial jurisdiction cannot compel the relevant court to decide the case conclusively. Instead, they can choose to exercise this principle to concede and confer jurisdiction. In light of this, it is reasonable to infer that this principle can be applied to e-commerce matters, when appropriate, as well. Considering this is a legitimate principle under the law and has been affirmed by the Supreme Court, there is no reason why it cannot be applied.<\/p>\n

While Indian courts have not adopted a specific manner of adjudication, there are many more available tests derived from law across the world that can be applied and derived for deciding jurisdiction in e-commerce disputes. One such significant example is the minimum contacts test. This is a test based on a theory first instituted in the US Supreme Court\u2019s decision in International Shoe Co. <\/em>v. Washington<\/em> 17<\/a>. It governs personam jurisdiction in a forum state when parties are \u201cnon-residents\u201d. Curiously, this theory works where the personam jurisdiction is derived from connections and contacts to forum state. It can be applied if the court feels that a person has \u201csufficient minimum contacts\u201d \u2013 which may be the defendant\u2019s physical presence, conferred jurisdiction through a contract, a stream of commerce, etc.<\/p>\n

More tests like the substantial connection test18<\/a>, zippo test19<\/a> and the effects test20<\/a> are also continually being adopted for e-commerce cases abroad. Clearly, there is a substantial number of precedents available internationally, regarding jurisdiction in e-commerce. Ultimately, it is up to Indian courts to decide which test is most suitable for them or to come up with a new test altogether.\u00a0<\/u><\/strong><\/span><\/p>\n

Analysing Indian judicial precedents <\/strong><\/span><\/h3>\n

With the advent of the internet and e-commerce, Indian courts as well as courts around the world are having a difficult time in deciding the place where a person can sue, or which courts shall have the requisite jurisdiction. This becomes increasingly complicated because e-commerce is not like the traditional business transaction. It involves various intermediaries before the final product reaches the beneficiary. When there are more people involved, things get even more complicated as far as exact jurisdiction, and the power of courts are concerned. This section of the paper will try and analyse Indian case laws to provide some clarity in cases pertaining to e-commerce.<\/p>\n

Naturally, the question that arises is why it is necessary to delve into a discourse pertaining to the jurisdictions of courts. Ergo, this discussion would entail exploring the implications of a court not having any jurisdiction. In Kiran Singh <\/em>v. Chaman Paswan<\/em>21<\/a>, the court held that any decision passed by courts without having a proper jurisdiction to adjudicate the suit would end up as a nullity. A defect in jurisdiction can be of anything \u2013 meaning territorial, pecuniary, or even subject-matter. Therefore, if the court does not have proper jurisdiction, then it loses all its power to decide a case. Even if both parties consent to a particular court\u2019s jurisdiction, the law will strike down the authority of the court, in such a case.22<\/a><\/p>\n

Initially when the courts were not experienced while dealing with questions of jurisdiction in cases dealing with transactions over the internet, certain incorrect judgments were made. One of them is Casio <\/em>(I<\/em>) Co. Ltd. <\/em>v. Ashita Tele Systems<\/em> (P<\/em>) Ltd.<\/em>23<\/a>.<\/em> The court in this case held that only because the plaintiff was able to use the internet from a particular place, the court had the requisite jurisdiction to adjudicate upon the matter.24<\/a> This case is perhaps against the interest of the defendants which the CPC would certainly not endorse. Perhaps the court did not envisage the wrong precedent it was setting up because if this case were to be applied in the current times where any website could be virtually accessed from anywhere, then according to this judgment every court would have competent jurisdiction.<\/p>\n

After this the Banyan Tree<\/em>25<\/a> case removed the inadequacy with the Casio <\/em>(I<\/em>) Co. Ltd<\/em>.26<\/a> judgment. In Banyan Tree<\/em>27<\/a>, the defendant challenged the jurisdiction of the High Court of Delhi. The plaintiff argued relying on the Casio<\/em>28<\/a> case that since the internet is accessible to everyone in India, therefore, the question of jurisdiction should not be entertained. This argument of the plaintiff is completely erroneous, and the court rightfully rejected this claim of the plaintiffs. The court held that plaintiff either must show that he or she carried on a business within the jurisdiction of the court and if not, he or she should show that the injury arose within the jurisdiction of the court where the plaintiff has filed the case. This case was the very few ones who set a right precedent and tried to bring in some objectivity in absence of any previous judgments.<\/p>\n

Things get quite perplexing as one cannot possibly fathom what the term “carrying business” encompasses. In today\u2019s times with large e-commerce companies spread across several jurisdictions, it is difficult to specify where exactly the customer can sue a particular e-commerce company. For further clarity, we can refer to Dhodha House <\/em>v. S.K. Maingi<\/em>29<\/a>. In this case, the court clarified the meaning of the term “carrying business”. A mere presence of an agent at a particular place, say X, does not mean that the firm carries out its business at the place X. For example: Amazon has various agents across the country which deliver its packages to many places. Just because its agents deliver packages to various places it cannot be said that Amazon carries out its business from all those places. One would have to look at that branch of Amazon which regularly receives orders and initiates the transactions. This place does not have to be the head branch necessarily. If we go by the reasoning of the Dhodha House<\/em> case30<\/a>, Amazon can be sued even those places where there are sub-branches. However, it should be shown that the specific branch does in fact carry out substantial business of Amazon.<\/p>\n

Indian laws and precedents still do not provide a clear picture specifically in cases involving business to customer transactions (B2C). Indian laws were enacted without considering the numerous complexities that the internet creates. It is highly recommended that there should be separate legislation in the form of a statute specifically dedicated to e-commerce transactions or if not, then certain additions must be made to the CPC so that there is no room for confusion when dealing with such transactions. Although there is some clarity regarding B2B transactions, issues arise when there are multiple intermediaries and consumers are involved.<\/p>\n

Understanding the impact of foreign judgments on cross-border jurisdictions<\/strong><\/span><\/h3>\n

Indian statutory provisions accommodate and acknowledge the applicability of certain rulings that are in\u00a0compliance with the judgments of\u00a0international courts. The implication of international rulings on courts within the Indian jurisdiction\u00a0is laid down in Section 13 of the CPC31<\/a>. This provision also allows for judicial compliance in all situations, except for a few scenarios wherein\u00a0the courts would have to\u00a0delve further to ascertain the court’s jurisdiction. In certain cases, courts have noted that if there was a mutual arrangement to accede to a particular\u00a0court’s jurisdiction, then the\u00a0court would be officially recognised as having presiding authority\u00a0over the issue at hand. As a result, its final verdict would be binding upon both parties.32<\/a><\/p>\n

The role of legislation holds utmost importance especially with regards to decisions of foreign tribunals concerning internet-related conflicts. The Indian judiciary does not refuse to implement the decision of a foreign court. It\u00a0can only maintain that the decision of a foreign court is incomplete when it does not comply with the requirements specified under Section 13 of the CPC.33<\/a> Hence, if a judgment is issued against such a citizen of India in consequence of any egregious infringement of some other country’s laws, the judgment would be implemented against such an Indian citizen within the subcontinent, given that they\u00a0do not have to bear\u00a0any of the maladies laid down\u00a0in Section 13 of the Code of Civil Procedure.34<\/a> When it becomes an issue of who shall be vested with the\u00a0“primary jurisdiction”\u00a0over the internet, the legal precedents\u00a0examined would strongly suggest\u00a0that the Indian courts will have no reservation in endorsing a rational judgment of a foreign court,\u00a0in the instance of such a court passing\u00a0an extra-territorial judgment to be enforced against an Indian citizen.35<\/a><\/p>\n

Understanding the corpus of private international law (PIL) and alternative dispute resolution (ADR)<\/strong><\/span><\/h3>\n

Private international law, which is\u00a0referred to\u00a0as a dispute\u00a0of laws in more common law-based countries, is a corpus of statutes\u00a0that aims to address any issues stemming from the existence of an external factor in contractual relationships.36<\/a> Upon the\u00a0emergence of the internet, cross-border ties gradually escalated, creating increasingly complicated issues of purview and relevant legislation. A variety of unique features of internet-based operations has\u00a0also introduced\u00a0fresh complexities.\u00a0The fundamental challenge in dealing with legal relations involving international facets arises from the fact that the legal structures of more than a\u00a0few nations\u00a0can be observed to have a correlation with each other.37<\/a> Thus, the implementation of the regulations from one regulatory regime, instead of the latter, would, for most cases, yield different outcomes.38<\/a><\/p>\n

Theory of harmonisation and reaching a middle ground<\/strong><\/span><\/h3>\n

A proposed solution to this issue seems to be the option of choosing, on the basis on some parameters between the multiple presumably practicable systems, the legislation of a one\u00a0specific legal framework to regulate the contractual relationship. This would mean\u00a0the process of deciding the relevant legislation\u00a0could take place under\u00a0private international law. This also happens to be the approach that has the minimum impact on existing national legislation, since it does not entail any amendments to it to tackle the issue presented by way of\u00a0inclusion of a foreign factor.39<\/a><\/p>\n

Concepts of private international law are acknowledged in the\u00a0Indian subcontinent. The Supreme Court held in 1964 that India follows the very well-established concept of private international law that the “law of the forum”, in which the litigation is commenced,\u00a0regulates all issues of procedural practice.40<\/a> It is left at the discretion of\u00a0the parties to consent and select\u00a0one or more appropriate court systems\u00a0to resolve their differences. If the respondents and plaintiffs\u00a0specifically agree, in compliance according to their own arrangement, that their case be heard by a specific court, the two\u00a0parties shall be obliged by the “forum selection”\u00a0provision in their contract.41<\/a><\/p>\n

The other approach, that is far more invasive to established domestic law, would be to attempt via a mechanism of\u00a0“harmonization”, to eliminate the root cause of the issue by removing the discrepancies that arise amongst\u00a0the law and regulations of a nation. “Harmonization” can be implemented via the conciliation process\u00a0between nations by way of\u00a0treaties instituting uniform policy and following ratification by the participating nations\u00a0of the foreign conventions concerned. The results in the adjustment of state laws to harmonise them into conformity with the provisions of the requisite convention.42<\/a><\/p>\n

Conclusion<\/strong><\/span><\/h3>\n

Not only can e-commerce platforms\u00a0have revolutionary multidisciplinary facilities, but also well-functioning\u00a0information systems including appropriate data protection and precautions for individuals. The clauses\u00a0of the agreement, based on the location of the products, must not be generic, but instead should be\u00a0specific in nature in order to avoid jurisdiction discrepancies in the event of disputes. These must be drawn to the customer’s appropriate attention and should\u00a0even provide them with a\u00a0sufficient chance to read, review\u00a0and then finally\u00a0accept the conditions\u00a0given. It will indicate that perhaps the concerns continue to be properly dealt with\u00a0or that at minimum e-commerce\u00a0platforms have a resolute plan in place to tackle such issues with ease and efficiency.<\/p>\n

\n

\u2020<\/a> Undergraduate student enrolled in the BA, LLB (Hons.) course at Jindal Global Law School (Authored on 10-11-2020), e-mail:<\/strong><\/span> 18jgls-raghav.sg@jgu.edu.in<\/a><\/u>.<\/u><\/p>\n

[1]<\/a> <http:\/\/www.scconline.com\/DocumentLink\/Uei3bEDC<\/a>>.<\/p>\n

[2]<\/a> Misra, J.P., and J.P. Mishra, Dr B.R. Ambedkar and the Constitution \u2013 Making in India, Proceedings of the Indian History Congress 52 (1991): 534-41, accessed 17-10-2020. <http:\/\/www.jstor.org\/stable\/44142653<\/a>>.<\/a><\/p>\n

3<\/a> Mishra, Sachin, 2020, Determining Jurisdiction over E-Commerce Disputes in India, docs.manupatra.in, accessed October 8 <http:\/\/docs.manupatra.in\/newsline\/articles\/Upload\/FE4BA350-DBEF-49DA-97D4-09E54ED8B813.pdf<\/a>>.<\/p>\n

4<\/a> India, Legal, 2020, Jurisdiction of Civil Court and Place of Suing, legalservicesindia.com, accessed October 9 <http:\/\/www.legalservicesindia.com\/article\/1780\/Jurisdiction-of-Civil-Court-and-Place-of-Suing.html<\/a>>.<\/p>\n

5<\/a> India, Legal, 2020. Jurisdictional Challenges in Online Transactions, legalservicesindia.com, accessed October 13 <http:\/\/www.legalservicesindia.com\/article\/2268\/Jurisdictional-Challenges-in-Online-Transactions.html<\/a>>.<\/p>\n

6<\/a> (1969) 3 SCR 92<\/a><\/p>\n

7<\/a> Ibid<\/em>.<\/p>\n

8<\/a> J. McIntyre Machinery Ltd. <\/em>v. Nicastro<\/em>, 2011 SCC OnLine US SC 122: 564 US 873 (2011)\u00a0<\/a><\/p>\n

9<\/a> 2009 SCC OnLine Del 3780<\/a><\/p>\n

10<\/a> 2018 SCC OnLine Del 6392<\/a><\/p>\n

11<\/a> Ibid.<\/em><\/p>\n

12<\/a> Ibid.<\/em><\/p>\n

13<\/a> Banyan Tree Holding (P) Ltd.<\/em>, supra <\/em>note 9.<\/p>\n

14<\/a> 2018 SCC OnLine Del 6392<\/a><\/p>\n

15<\/a> Bryan A. Garner and Henry Campbell Black,\u00a0Black’s Law Dictionary\u00a0<\/em>(St. Paul, Minn. West Group, 1999).<\/p>\n

16<\/a> (2004) 6 SCC 254<\/a><\/p>\n

17<\/a> 1945 SCC OnLine US SC 158 : 326 US 310 (1945)\u00a0<\/a><\/p>\n

18<\/a> Douglas De Savoye <\/em>v. Morguard Investments Ltd.<\/em>, 1990 SCC OnLine Can SC 124 : (1990) 3 SCR 1077\u00a0<\/a><\/p>\n

19<\/a> Zippo Mfg. Co. <\/em>v. Zippo Dot Com Inc.<\/em>, 952 F Supp 1119 (WD Pa 1997).<\/p>\n

20<\/a> Calder <\/em>v. Jones<\/em>, 1984 SCC OnLine US SC 58<\/a> : 465 US 783 (1984)<\/p>\n

21<\/a> (1955) 1 SCR 117<\/a><\/p>\n

22<\/a> Ibid.<\/em><\/p>\n

23<\/a> 2003 SCC OnLine Del 833<\/a><\/p>\n

24<\/a> Ibid.<\/em><\/p>\n

25<\/a> 2009 SCC OnLine Del 3780<\/a><\/p>\n

26<\/a> 2003 SCC OnLine Del 833<\/a><\/p>\n

27<\/a> 2009 SCC OnLine Del 3780<\/a><\/p>\n

28<\/a> 2003 SCC OnLine Del 833<\/a><\/p>\n

29<\/a> (2006) 9 SCC 41<\/a><\/p>\n

30<\/a> (2006) 9 SCC 41<\/a><\/p>\n

31<\/a> <http:\/\/www.scconline.com\/DocumentLink\/Mw0TY9U5<\/a>>.<\/p>\n

32<\/a> Narhari Shivram Shet Narvekar <\/em>v. Pannalal Umediram<\/em>, (1976) 3 SCC 203<\/a><\/p>\n

33<\/a> Ibid.<\/em><\/p>\n

34<\/a> Lalji Raja and Sons <\/em>v. Firm Hansraj Nathuram<\/em>, (1971) 1 SCC 721<\/a><\/p>\n

35<\/a> O.P. Verma <\/em>v. Gehrilal<\/em>, 1960 SCC OnLine Raj 89<\/a><\/p>\n

36<\/a> Dr Verschraegen Bea, Private International Law, 1st edn.,\u00a0(Kluwer\u00a0Law International, 2001)<\/p>\n

37<\/a> Malcolm N. Shaw, International Law <\/em>573 (Cambridge University Press, 5th edn. 2003).<\/p>\n

38<\/a> Ibid.<\/em><\/p>\n

39<\/a> S.C. Symeonides, Private International Law Bibliography 2017: US and Foreign Sources in English, American Journal of Comparative Law, 66 (2018), No. 2, pp. 89-100.<\/p>\n

40<\/a> Ramanathan Chettiar <\/em>v. Somasundaram Chettiar<\/em>, 1963 SCC OnLine Mad 187<\/a><\/p>\n

41<\/a> Ibid.<\/em><\/p>\n

42<\/a> P. Hay, P.J. Borchers and R.D. Freer, Conflict of Laws: Private International Law: Cases and Materials,<\/em> St. Paul, MN, Foundation Press, 2017.<\/p>\n","protected":false},"excerpt":{"rendered":"

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