The Securities Appellate Tribunal (SAT) passed an order (Order)[1] recently, ruling that it is empowered to hear and decide appeals even in the absence of a Technical Member. The Order was prompted by an objection raised by the Securities and Exchange Board of India (SEBI) regarding the constitution of SAT’s Bench, in light of the earlier technical member of SAT having demitted office on March 31, 2021, and the ensuing vacancy of such office.
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Adarsh Saxena
Director - International Arbitration in the Dispute Resolution Practice at the Singapore office of Cyril Amarchand Mangaldas. Adarsh has experience in civil/ commercial litigation before the Bombay High Court. He has advised clients in court litigations as well as arbitration. His practice covers disputes relating to joint ventures, shareholder agreements, media rights contracts, franchise agreements, construction projects and sports law related issues, etc.
Adarsh joined the firm soon after his graduation from National Law School of India University, Bangalore in 2010. He can be reached at adarsh.saxena@cyrilshroff.com
Invoking Material Adverse Change based on Covid-19: Easier said than done
A Material Adverse Change (MAC), also known as Material Adverse Event (MAE), clause enables a party to withdraw from a contract in circumstances where there is a material change after its signing. Such clauses are usually found in acquisition and financing agreements. In acquisition agreements, the MAC clause gives the buyer the option of withdrawing from the transaction whereas in financing agreements, it gives the lender the option of not disbursing the amount agreed to be advanced.
MAC clauses are essentially definitions that reflect the allocation of risks between contracting parties. The risks allocated to the seller or borrower (as appropriate) are covered by the MAC clause whereas all other risks are allocated to the buyer or lender, respectively. Generally, systemic and industry-wide risks are allocated to the buyer/ lender while risks that are specific to the business/ borrower are allocated to the seller/ borrower. The MAC clause is used in conjunction with other provisions of an agreement. For instance, in acquisition agreements, the absence of any MAC could be a condition precedent for closing or a representation/ warranty by the seller. Additionally, the occurrence of a MAC could also be a ground for termination by the buyer. Similarly, in financing agreements, the absence of any MAC could be a condition precedent to drawdown/ disbursement under a facility or a representation/ warranty by the borrower. At the same time, the occurrence of a MAC could also be an event of default entitling the lender to accelerate/ recall the loan.
Continue Reading Invoking Material Adverse Change based on Covid-19: Easier said than done
COVID-19: Absence of Legislative Intervention may impact Commercial Insurance Claims
The onset of the COVID-19 pandemic and the subsequent nationwide lockdown to control its spread has impacted businesses significantly and also led to various entertainment and sporting events being either postponed or cancelled. While one would expect business interruption and event cancellation insurance to cover such losses, such claims are likely to encounter certain issues, which are discussed in this post.
Being Covered under an Insured Peril
Most insurance policies have a list of causes/ events that are covered by the policy. These events/ causes are called insured perils. Only losses/ damages that are caused by insured perils can form the basis of a claim under the said policy. For instance, the policy wording of a standard-form future events insurance covers certain specified losses if any insured event is cancelled due to either (i) loss or damage to the venue due to fire, allied perils, earthquake, flood or cyclone, resulting in cancellation of the event; or (ii) death of current Prime Minister, President of the Republic of India, Chief Minister of the State in which the event is being held, due to which National/ State mourning is declared or any other prominent personality.[1] Claims under such policies are generally triggered when events like sporting tournaments, award functions, etc., are cancelled due to insured perils. It is possible for insurance companies to include epidemic/ pandemic as an insured peril in such policies and charge a higher premium for doing so. For instance, the All England Lawn Tennis Association has been paying a higher premium for the past 15 years for such insurance.[2] In contrast, the cancellation of Indian sporting events like the Indian Premier League are unlikely to have insurance coverage for epidemic/ pandemic since the same are generally not underwritten by insurers in India.[3]
Continue Reading COVID-19: Absence of Legislative Intervention may impact Commercial Insurance Claims
FORCE MAJEURE IN THE TIMES OF COVID -19
The onset of the Covid-19 pandemic in India has proven not only to be a humanitarian crisis, but also an economic crisis of an unprecedented scale. Specifically, restrictions on movement of persons and goods, save for those involved in essential services, have raised serious doubts on the ability of parties to perform their obligations under contracts when these are not ordinarily classified as ‘essential services’. Uncertainty as to the performance of contracts has led to parties envisaging breaches of contract and assessing their rights and remedies in relation to the same.
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SC rules on limitation period for execution of foreign decrees under Section 44A
In its recent decision in Bank of Baroda v. Kotak Mahindra Bank[1], the Supreme Court has ruled on the limitation period applicable for execution of a foreign decree under Section 44A of the Code of Civil Procedure, 1908 (“CPC”), after considering the previously divergent views of different High Courts on the issue.
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Farewell to DCR 1967: Old Rules applicable to CRZ-II areas of Mumbai will soon be obsolete
The Coastal Regulation Zone Notification dated January 18, 2019 (“CRZ 2019”), requires the respective Coastal Zone Management Plans (“CZMPs”) framed under the Coastal Regulation Zone Notification dated January 6, 2011 (“CRZ 2011”) to be revised or updated as per CRZ 2019, before being submitted to the Ministry of Environment, Forests and Climate Change (“MOEFCC”). CRZ 2019 says that until and unless the CZMPs are so revised or updated, the provisions under CRZ 2011 will continue to be followed[1]. Accordingly, suggestions/ comments on the draft revised/ updated CZMPs of Mumbai city and Mumbai Suburban District under CRZ 2019 were invited for a period of 45 days commencing from January 16, 2020.[2] After district level hearings have been conducted[3] and based on the suggestions and objections received, the CZMPs will be revised and approval of the MOEFCC shall be obtained.[4] This has specific implications for construction projects in CRZ-II areas of Mumbai.Continue Reading Farewell to DCR 1967: Old Rules applicable to CRZ-II areas of Mumbai will soon be obsolete
UEFA shows Manchester City the Red Card: Why Indian Football should take note
Manchester City Football Club (“MCFC”) was banned from participating in club competitions of the Union des Associations Européenes de Football (“UEFA”) for the next two seasons, on February 14, 2020. A fine of EUR 30 million was also imposed on the grounds of having committed serious breaches of UEFA Club Licensing and Financial Fair Play Regulations (“UEFA Regulations”), and because of failure to cooperate with the investigation. The Adjudicatory Chamber of the UEFA Club Financial Control Body (“CFCB”) has found that MCFC overstated its sponsorship revenue in its accounts submitted to UEFA between 2012 and 2016.[1]
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‘BUY NOW’ or ‘REMOVE FROM CART’? – Delhi HC allows e-commerce platforms to list products of direct selling entities without their consent
E-commerce websites such as Amazon, Flipkart, Snapdeal and 1MG (“Online Platforms”) can now breathe a sigh of relief. The Division Bench of the Delhi High Court (‘Division Bench’), in a recent judgment in Amazon Seller Services Pvt. Ltd. v. Amway India Enterprises Pvt. Ltd. & Others[1], allowed e-commerce websites/ platforms/ mobile applications to list products of direct selling entities like Amway, Modicare and Oriflame (“Direct Selling Entities”) without their consent.
In July 2019, a single-judge (“Single Judge”) bench of the Court had, in Amway India Enterprises Pvt. Ltd. v. 1MG Technologies Pvt. Ltd. & Another[2], restrained such online platforms from displaying, advertising, offering for sale, selling, facilitating repackaging of any products of Direct Selling Entities, without their written permission/ consent. The Single Judge had also directed Direct Selling Entities to give notice to the concerned Online Platforms to take down relevant listings if they found their products being displayed on such platforms without their consent. Accordingly, the Online Platforms would then have to take down the said listings within 36 hours.
Continue Reading ‘BUY NOW’ or ‘REMOVE FROM CART’? – Delhi HC allows e-commerce platforms to list products of direct selling entities without their consent