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(1.) INTRODUCTION: An order of the Bar Council of India dated 27-2-1999 passed in BCI TR No. 73/1997 refusing to enquire into a complaint of purported misconduct on the part of the respondent herein is in question in this appeal preferred by the Appellant herein under Section 38 of the Advocates Act, 1961. (2.) The relationship between the appellant and the respondents herein is that of landlords and tenant. A rent control proceeding was initiated by the respondents against the appellant. While
Typology: Lecture notes
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A U T H O R E D B Y M A N O H A R S A M A L & A B H I V A R D H A N
This is a work of fiction. Any resemblance to actual events or locales or persons, living or dead, is entirely coincidental. If any participant team's member(s) are found communicating with any of the authors of the moot problem for any advisory or other reasons, with respect to the preparation of this Moot, the participant team shall be disqualified from participating in the Indian Moot on Artificial Intelligence & Law, 2021. Any unauthorized reproduction or plagiarization of the Moot Problem in any virtual or physical form possible shall be considered as a violation of copyright law. Adaptations can be considered provided the permission of the Organizers of the Moot and the authors of the moot is taken in writing. © Indian Society of Artificial Intelligence and Law.
In August, 2023 while testing few of the delivered artificially intelligent unmanned aerial vehicles, one of them crashed into a military tank while landing. On investigation it was found out that since the military tank used algorithmic camouflage, the unmanned aerial vehicle could not identify it and miscalculated the landing trajectory. The Windivan Ministry of Defence contacted Aveeron Group upon which its representatives denied all forms of assistance stating that algorithmic camouflages were countermeasure technology. The Windivan Ministry of Defence objected to this interpretation and presented its counter- argument showing how algorithmic camouflages were not countermeasure technologies so as to be excluded for after sale service under their contract. However, Aveeron Group did not respond. The terms of the awarded contract stated that a payment of USD 200 Million had to be made in four tranches and that upon payment of each tranche, 25 artificially intelligent unmanned aerial vehicles would be delivered to the Government of Windiva. The mode of payment chosen in the contract was blockchain enabled smart contracts and the company hired for providing these services was a Windivan based company called Anubandh. A liquidated damages clause was not negotiated looking at the fact that the payments and orders would be executed automatically through the smart contract. After sale service clauses for the artificial intelligence software as well as the hardware of the aerial vehicles were specified in the contract but problems arising out of countermeasure technology were not covered in the after sale service clause. The first tranche of USD 50 Million was paid by the Government of Windiva to Aveeron Group in June, 2023 and the second, third and fourth tranches were scheduled for December 2023, June 2024 and November 2024 along with their correlative orders on the smart contract.
© Indian Society of Artificial Intelligence and Law.
Meanwhile, in September 2023, civil unrest and violent protests took place in the city of Mekhli against the Population Control Bill which was introduced in the Parliament by the Central Government of Windiva. The civil unrest and violent protests wreaked havoc in the city of Mekhli since protestors damaged alot of Government owned as well as private property and this included significant damage to Aveeron Group’s Indian branch office. Aveeron Group made several applications to the Government of Windiva up till November, 2023 seeking compensation by specifying Article 3 of the BIT (Annexure) between Windiva and Aveeron Group’s home country, Firel which stated that all investors would be granted full protection and security in the host country. However, a response rejecting the claims of Aveeron Group was sent to them stating that the damage to the company’s property was caused out of a force majeure event which was excluded under Article 3 of the BIT. In December, 2023 (the month in which the second tranche payment and its co- relating order was scheduled on the smart contract), the tranche payment did not take place because of an error in the code of the blockchain enabled smart contract. Upon enquiry it was found by Aveeron Group that the payment had defaulted since the blockchain technology being used by Anubandh for the smart contract was actually being tested under a regulatory sandbox framework where similar blockchain technologies were being tested and that the company Anubandh had concealed this fact to Aveeron Group.
© Indian Society of Artificial Intelligence and Law.
After legal consultation, it was brought to the notice of Aveeron Group that in April, 2023 the Windivan Government had exempted Central Goods and Services Tax and State Goods and Services Tax for indigenous manufacturers of defence equipment under the Windivan Nirbharta Scheme and that the exemption was not reversed for indigenous manufacturers from January, 2024. It was also brought to the notice of Aveeron Group through legal consultation that despite having a local manufacturing unit, Aveeron Group would have to incur Integrated Goods and Services Tax since as per Windivan law, movement of goods from a Special Economic Zone to other States and provinces of Windiva tantamount to “import.” As a result, Aveeron Group had to make several representations before the tax appellate forums including the Goods and Services Tax Tribunal where it lost the case and the IGST authorities attached the bank accounts of Aveeron Group for recovery. Aveeron Group made several representations before the Governmnet of Windiva claiming the violation of principle of national treatment and breach of legitimate expectation on the fair and equitable standard claiming that there was differential treatment in indirect tax imposition between Aveeron Group and indigenous manufacturers of defence equipment. In response, the Government of Windiva stated through correspondence that the withdrawal of the IGST exemption was inevitable since the Exemption Notification clearly stated that the tenure of the exemption would be from 2019 to 2023, making it an event which pre- existed the BIT. © Indian Society of Artificial Intelligence and Law.
After a failed domestic dispute resolution process for 1 year as per the Articles of the BIT, Aveeron Group transmitted a notice of dispute to the Government of Windiva. No fruitful results emanated from attempts to resolve the dispute amicably for a period of 6 months and thus, Aveeron Group served a notice of arbitration to the Government of Windva and filed a request for arbitration before the International Centre for Settlement of Investment Disputes after 60 days claiming damages of USD 670 Million in addition to the full costs of the arbitration proceedings. After an assessment of the claims of both the parties in the first session by the ICSID, the following issues were framed:
Whether Aveeron Group’s cause of action before the International Centre for Settlement of Investment Disputes has arisen out of an underlying contract to the BIT/ violation of contract leading to violation of BIT or is it a pure breach of contract to be solved before domestic courts of Windiva? Whether Aveeron Group is correct in claiming violation of doctrine of full protection and security or is the Windivan Government correct in using the force majeure exception? Whether Aveeron Group is justified in treating algorithmic camouflage as countermeasure technology so as to not provide after sale service to the Government of Windiva and whether the Government of Windiva breached business-related confidential information while dispatching few unmanned aerial vehicles (UAVs) to an indigenous company specializing in defence technology? The Issues (1) (2) (3) © Indian Society of Artificial Intelligence and Law.
It is clarified that for the purposes of the present moot court competition: (A) (B) (C) (D) (E)
for Participants The Government of Firel ratified the ICSID Convention in 1983 and the Government of Windiva ratified the ICSID Convention inJuly,
Looking at the fact that the moot problem is set at a future date, it is important to clarify that apart from the situations and the legal developments specified in the moot problem, laws, judicial precedents and legal literature should reflect status quo and thus, non- existent legal developments except those provided in the moot problem will not be entertained during the competition. The laws of Firel reflect the laws of present day Israel and the laws of Windiva reflect the laws of present day India and all additional legal developments explicated in the moot problem have to be read into their present legal systems. Participants are expected to possess basic knowledge about the forms of artificial intelligence technologies used in fully autonomous unmanned aerial vehicles, the underlying technology of blockchain enabled smart contracts and algorithmic camouflages in addition to the legal issues during oral proceedings. Participants are not allowed to make any further additions to the issues framed under the moot problem. © Indian Society of Artificial Intelligence and Law.
Preamble
BILATERAL INVESTMENT TREATY BETWEEN THE GOVERNMENT OF WINDIVA AND THE GOVERNMENT OF FIREL The Government of Windiva and the Government of Firel (hereinafter referred to as the “Party” individually or the “Parties" collectively); Desiring to promote bilateral cooperation between the Parties with respect to foreign investments; and Recognizing that the promotion and the protection of investments of investors of one Party in the territory of the other Party will be conducive to the stimulation of mutually beneficial business activity, to the development of economic cooperation between them and to the promotion of sustainable development, Reaffirming the right of Parties to regulate investments in their territory in accordance with their law and policy objectives. Have agreed as follows: © Indian Society of Artificial Intelligence and Law.
(a) shares, stocks and other forms of equity instruments of the enterprise or in another enterprise; (b) a debt instrument or security of another enterprise; (c) a loan to another enterprise (i) where the enterprise is an affiliate of the investor, or (ii) where the original maturity of the loan is at least three years; (d) licenses, permits, authorisations or similar rights conferred in accordance with the law of a Party; (e) rights conferred by contracts of a long-term nature such as those to cultivate, extract or exploit natural resources in accordance with the law of a Party, or (f) Copyrights, know-how and intellectual property rights such as patents, trademarks, industrial designs and trade names, to the extent they are recognized under the law of a Party; and (g) moveable or immovable property and related rights; (h) any other interests of the enterprise which involve substantial economic activity and out of which the enterprise derives significant financial value; For greater clarity, investment does not include the following assets of an enterprise: (i) portfolio investments of the enterprise or in another enterprise; (ii) debt securities issued by a government or government- owned or controlled enterprise, or loans to a government or government-owned or controlled enterprise; © Indian Society of Artificial Intelligence and Law.
(iii) any pre-operational expenditure relating to admission, establishment, acquisition or expansion of the enterprise incurred before the commencement of substantial business operations of the enterprise in the territory of the Party where the investment is made; (iv) claims to money that arise solely from commercial contracts not leading to a violation of this Treaty, for the sale of goods or services by a national or enterprise in the territory of a Party to an enterprise in the territory of another Party; (v) goodwill, brand value, market share or similar intangible rights; (vi) claims to money that arise solely from the extension of credit in connection with any commercial transaction; (vii) an order or judgment sought or entered in any judicial, administrative or arbitral proceeding; (viii)any other claims to money that do not involve the kind of interests or operations set out in the definition of investment in this Treaty. 1.5 “investor” means a natural or juridical person of a Party, other than a representative office, that has made an investment in the territory of the other Party; For the purposes of this definition, a “juridical person” means: (a) a legal entity that is constituted, organised and operated under the law of that Party and that has substantial business activities in the territory of that Party; or © Indian Society of Artificial Intelligence and Law.
2.3 This Treaty shall not apply to claims arising out of events which occurred, or claims which have been raised prior to the entry into force of this Treaty. Article 3: Full Protection and Security 3.1 Each Party shall accord in its territory to investments of the other Party and to investors with respect to their investments full protection and security. For greater certainty, “full protection and security” only refers to a Party’s obligations relating to physical security of investors and to investments made by the investors of the other Party and not to any other obligation whatsoever. 3 .2 In considering an alleged breach of this article, a Tribunal shall take account of whether the investor or, as appropriate, the locally- established enterprise, pursued action for remedies before domestic courts or tribunals prior to initiating a claim under this Treaty. 3.3 Force majeure events do not constitute a valid breach under this article and the Parties can be excluded from their obligations in case of occurrence of force majeure events. Article 4: National Treatment 4.1 Each Party shall not apply to investor or to investments made by investors of the other Party, measures that accord less favourable treatment than that it accords, in like circumstances, to its own investors or to investments by such investors with respect to the management, conduct, operation, sale or other disposition of investments in its territory. © Indian Society of Artificial Intelligence and Law.
4.2 The treatment accorded by a Party under Article 4.1 means, with respect to a Sub-national government, treatment no less favourable than the treatment accorded, in like circumstances, by that Sub- national government to investors, and to investments of investors, of the Party of which it forms a part. Article 5: Compensation for Losses Each Party shall accord to investors of another Party, and to investments by such investors, non-discriminatory treatment with respect to measures, including restitution, indemnification, compensation or other settlement, it adopts or maintains relating to losses suffered by investments in its territory but does not include losses caused out of force majeure events. Article 6: Investor Obligations The parties reaffirm and recognize that: (i) Investors and their investments shall comply with all laws, regulations, administrative guidelines and policies of a Party concerning the establishment, acquisition, management, operation and disposition of investments. (ii) Investors and their investments shall not, either prior to or after the establishment of an investment, offer, promise, or give any undue pecuniary advantage, gratification or gift whatsoever, whether directly or indirectly, to a public servant or official of a Party as an inducement or reward for doing or forbearing to do any official act or obtain or maintain other improper advantage nor shall be complicit in inciting, aiding, abetting, or conspiring to commit such acts. © Indian Society of Artificial Intelligence and Law.
8.2 In addition to paragraph 8.1, this Article shall also apply to a dispute between a Party and an investor of the other Party with respect of its investment, arising out of an alleged breach of contract, provided that the breach is not a pure breach of contract but either violates the Articles of this Treaty in any manner or is an underlying contract to the BIT. All other forms of pure breaches of contracts shall only be resolved by domestic courts. 8.3 In respect of a claim that the Defending Party has breached an obligation under this Treaty, a disputing investor must first submit its claim before the relevant domestic courts or administrative bodies within a period of 6 months from the alleged breach. 8.4 Where applicable, if, after exhausting remedies before relevant domestic courts or administrative bodies for at least a period of 1 year from the date on which the alleged breach took place, no resolution has been reached satisfactory to the investor, the investor may transmit a “notice of dispute” to the Defending Party which should specify the name and address of the disputing investor or the enterprise, where applicable; set out the factual basis of the claim, including the measures at issue; specify the provisions of the Treaty alleged to have been breached and any other relevant provisions; specify the relief sought and the approximate amount of damages claimed; and furnish evidence establishing that the disputing investor is an investor of the other Party. 8.5 After receipt of the notice of dispute, the disputing parties shall use their best efforts to try and resolve the disputes amicably through meaningful consultation, negotiation or other third party procedures for a period of not less than 6 months and the place for the amicable dispute resolution shall be the capital city of the Defending party. © Indian Society of Artificial Intelligence and Law.
8.6 In the event that the disputing parties cannot settle the dispute amicably, the disputing investor has to transmit a “notice of arbitration” to the Defending Party at least 60 days before submitting any claim to arbitration. 8.7 All disputes under this Treaty have to be submitted to arbitration to the International Center for Settlement of Investment Disputes (ICSID) provided that the conditions laid down from paragraphs 7.1 to 7.6 have been satisfied. 9.1 The place and mode of arbitration shall be “virtual”. 9.2 The disputing investor at all times bears the burden of establishing: (a) jurisdiction; (b) the existence of an obligation under Chapter II of this Treaty, other than the obligation under Article 9 or 10; (c) a breach of such obligation; (d) that the investment, or the investor with respect to its investment, has suffered actual and non-speculative losses as a result of the breach; and (e) that those losses were foreseeable and directly caused by the breach. Article 9: Applicable Law and Place for Settlement of Disputes © Indian Society of Artificial Intelligence and Law.
