Electronic Contract - Jurisdictional Issues And Challenges

Author: LawSphereX

Category: Evidence & Procedure

Published: 2026-08-23T19:38:03.997Z

Updated: 2026-08-30T07:10:59.589Z

ELECTRONIC CONTRACT: JURISDICTIONAL ISSUES AND

CHALLENGES

Prashottam Lal, Research Scholar, Department of Laws, Guru Nanak Dev University, Amritsar, Punjab. Ajay Kumar Jaswal, Assistant Professor, Department of Laws, Awasthi Group of Institutes, Solan, Himachal Pradesh.

ABSTRACT

The present article discusses the various issues and challenges of jurisdiction in e-contract dispute. One of the primary issues before a court is weather the court has jurisdiction or not. Jurisdiction determines the applicability of the legislation of a particular place. In case of e-contract, the contracting parties are far away from each other and hence contracts are formed in a virtual space. Contrary to the generally accepted understanding of jurisdiction, econtract creates complex situations for determining jurisdiction. It might happen that there might be multiple jurisdictions pertaining to the same suit. Enforcement and implementation of foreign decrees also hold a great challenge. In order to implement the foreign decree, it should be final with respect to the subjects.

Cyber space is a world with limitless boundary it becomes difficult to determine the power of court to adjudicate upon the matter hence the need of the hour is to develop a unique law which can be applied to deal with the disputes of e-contract without any difficulty or confusion. Thus, the study also reflects the urgent need of a specific legislation to settle the confusions regarding e-contract jurisdiction.

The technological development has reached to such an extent that life without electronic communication devices is not possible. It is evident that cyber space has no restriction of a physical boundary therefore it becomes convenient for anyone to communicate from any part of the world with the means of computer or electronic devices. Once the communication has been completed the confusion of jurisdiction arises as to where the suit should be filled for the remedy. Jurisdiction is the power or authority of the court to hear and determine the cause and adjudicate upon the matters that are filed before it. But, when it comes to determine the jurisdiction in context of cyber space it becomes enthusiastic part of law. In SIL Import v.

Exim Aides Silk Importers1 the court successfully highlighted the need of interpretation of the statute by judiciary in the light of technological advancement that has occurred so far. Until there is specific legislation in regard to the jurisdiction of the Indian Courts with respect to Internet disputes, or unless India is a signatory to an International Treaty under which the jurisdiction of the national courts and circumstances under which they can be exercised are spelt out, the Indian courts will have to give a wide interpretation to the existing statutes, for exercising Internet disputes.

1. ELECTRONIC CONTRACT

Electronic contract form the cornerstone of e-commerce and therefore, sufficient attention must be paid towards formation of valid e-contract before finalizing and going ahead with transactions. The autonomy of the parties to agree on the terms is fully preserved. Once the legal requirements are complied with, e-contracts open up multifarious opportunities for business. Since the commercial entities use Internet as medium to spread and expand business practices, it becomes quintessential to enter into many e-contracts. The term Contract was derived from a Latin word Contractum. The word contractum means drawn together. Section 2(h) defines the term contract as an agreement enforceable by law. However, neither the Indian Contract Act, 1872 nor Information Technology Act, 2000 has defined the term Electronic Contract.

But, an e-contract can be understood as a contract modeled, executed and enacted by a software system. It is a contract “drafted” and “signed” in an electronic form. Further, the term electronic from means any information generated,

1 Sil Import v Exim Aides Silk Importers [1999] 4 SCC 567

sent, received or stored in media, magnetic, optical, computer memory, micro film, computer generated micro fiche or similar device. Electronic contract is any kind of contract formed in the course of e-commerce by the interaction of two or more individuals using electronic means, such as e-mail, the interaction of an individual with an electronic agent, such as a computer program, or the interaction of at least two electronic agents that are programmed to recognize the existence of a contract. 2 Electronic contracts are conceptually very similar to paper based commercial contracts. Vendors present their products, prices and terms to prospective buyers. In the electronic age, the whole transaction can be completed in minutes with both parties simply affixing their digital signatures to an electronic copy of the contract.

There is no need for delayed couriers and additional travelling costs in such a scenario. 3 In electronic contract, e-proposal is sent by the proposer and e-acceptance is given by offeree or e-acceptor. E-proposal or eacceptance may be called e-records. The parties to e-records are originator, address0ee and intermediary. Addressee: The term addressee is define under section 2(1)(b) of Information Technology Act, 2000. It includes a recipient of electronic record planned by originator. So the essential ingredients of an addressee are: a) a person b) as intended by the originator, c) to receive an electronic record. Intermediary: The term Intermediary is defined under section 2(1)(w) of Information Technology Act, 2000.

An intermediary under this Act is defined not as a generic category with respect to each electronic message, thus recognizing that the same person could be the originator or addressee of one electronic message and an intermediary with respect to 2 USLEGAL, E-Contrat Law and Legal Definition accessed 17 December 2023 3 M. Pragadeeswaran and Aswathy Rajan, Critical Study on Different Types of E-Contract With Special Reference to the Remedies Available on Breach, (2018) Vol. 119 No. 17 International Journal of Pure and Applied Mathematics 1730 another electronic message. The functionality of an intermediary is to be seen with respect to electronic message existing in electronic form. 4 Originator: The term Originator is defined under section 2(1)(za) of Information Technology Act, 2000. The role of an Originator has to be understood vis-à-vis addressee and an intermediary.

Intermediary mean any person who on behalf of another person receives, stores or transmits that record or provides any service with respect to that record and includes telecom service providers, network service providers, internet service providers, web-hosting service providers, search engines, online payment sites, onlineauction sites, online market places and cyber cafes, and an Addressee is a person who is intended by the originator to receive the electronic record, where an Originator is a person who sends, generates, stores or transmits any electronic message, or causes any electronic message to be sent, generated, stored or transmitted to any other person, but both addressee and originator, do not include an intermediary. 5

2. GENERAL PRINCIPLES GOVERNING ELECTRONIC CONTRACTS

The Information Technology Act, 2000 is enacted to provide legal recognition for transactions carried out by means of electronic data interchange and other means of electronic communication, commonly referred to as electronic commerce. It provides various procedural, administrative guidelines and regulates the provisions relating to all kinds of electronic transactions. These include computer data protection, authentication of documents by way of digital or electronic signature. The Act is to be read and understood from the point of facilitating international trade, and as an alternative to paper based methods of communication and storage of information.

6 This part provides the general principles of electronic contract in India and presents the argument that The Information Technology Act, 2000 supplemented by the traditional doctrines of contract law, regulates the existing electronic contract issues adequately. A. Formation of Electronic Contracts B. Recognition and Validity of Electronic Contracts 4 Vakul Sharma, Information Technology Law and Practice, Cyber Law & E-Commerce (7th edn, Universal Law Publishing Co. Pvt. Ltd. 2019) 23

5 S.S. Kaptan, Indian Banking In Electronic Era (Sarup & Sons 2003) 197

6 Sharma, (n 4) 3

C. Attribution of Electronic Records D. Acknowledgment of Receipt E. Time and Place of Dispatch and Receipt of Electronic Record F. Specific Exclusion A. FORMATION OF ELECTRONIC CONTRACTS An electronic contract has been formed over a series of electronic communications where the essential elements of the contract such as offer, acceptance, consideration etc. are captured separately and then proper maintenance of all such electronic records and emails becomes essential to prove the record of the contractual arrangement between the parties. There are few processes available for forming an electronic contract such as email by which offers and acceptances can be exchanged. An electronic contract can be formed by completing the website form provided for availing good or services offered by the seller in the website for example air tickets.

The person who intends to avail the good or services offered in the website can place an order on the website by filling the concerned form and communicating such. The goods offered can be delivered directly through electronic means for eg. e- tickets or may be later for eg. clothes. 7 Another process available for the formation of an electronic contract is through online agreements by clicking on the button that says „ I Accept‟ while connecting to a software and by clicking on „I Agree‟ button while signing up for an e-mail account. 8 B. RECOGNITION AND VALIDITY OF ELECTRONIC CONTRACTS Electronic contracts have also found statutory recognition under Section 10A of The Information Technology Act, 2000.

Amongst other things it specifically states that a contract shall not be deemed unenforceable, solely on the ground that electronic form or means were used for communication of proposals, acceptance of proposals, revocation of proposals or acceptances, as the case may. 7 Ajay Thakur, All You Know Need to Know About Online Contracts accessed 22 December 2023

8 Pragadeeswaran, (n 3) 1730

Section 10A of The Information Technology Act, 2000, “Validity of contracts formed through electronic means — Where in a contract formation, the communication of proposals, the acceptance of proposals, the revocation of proposals and acceptances, as the case may be, are expressed in electronic form or by means of an electronic records, such contract shall not be deemed to be unenforceable solely on the ground that such electronic form or means was used for that purpose. ” The aim and object of this section is to recognize legal binding character of electronic contracts. This section is in the spirit of Article 11 of United Nation Commission on International Trade Law on Electronic Commerce, 1996 which provides the Formation and validity of contracts by electronic means.

It deals not only with the issue of contract formation, but also with the form in which an offer and an acceptance may be expressed. It covers not merely the cases in which both the offer and the acceptance are communicated by electronic means but also cases in which only the offer or only the acceptance or revocation of proposals and acceptances is communicated electronically. 9 The Information Technology Act, 2000 also recognizes "digital signatures" or "electronic signatures" and validation of the authentication of electronic records by using such digital or electronic signatures. The contents of electronic records can also be proved in evidence by the parties in accordance with the provisions of the Indian Evidence Act,

1872. The definition of “evidence” as provided under Section 3(2) of the Evidence Act

includes “all documents including electronic records produced for the inspection of the court. ” Further, Section 47A of the Evidence Act stipulates that when the Court has to form an opinion as to the electronic signature of any person, the opinion of the Certifying Authority which has issued the electronic Signature Certificate is a relevant fact, and Section 85B of the Evidence Act stipulates that unless the contrary is proved, the Court shall presume that the secure electronic record has not been modified since the specific point of time to which the secure status relates. The secure electronic signature shall be affixed by the subscriber for signature or approval of the electronic record.

An electronic contract is simply a communication between two parties in regard to transfer of goods or services and as per The Indian Evidence Act, 1872 any e- mail communication and other communication made electronically is recognized as valid

9 The United Nations Commission on International Trade Law on E-Commerce, 1996, art 11

evidence in a Court of law. By considering these points, it can be concluded that the contract that follows the electronic communication is valid too and Indian law thus recognizes the validity of electronic contracts.10 C. ATTRIBUTION OF ELECTRONIC RECORDS Section 11 solves the question of intention in transactions which are carried on through autonomous machines and where offers and acceptances are generated solely by computers without human intervention, namely, contract through electronic data interchange. Section

11 of Information Technology Act, 2000, in a very plain language, says that an electronic

record shall be attributed to the originator if sent by an information system programmed by or on behalf of the originator to operate automatically. To understand section 11 of the Information Technology Act, 2000, one has to read it along with section 88A of the Evidence Act, 1872, which deals with 'presumption as to electronic message'. This section is self-explanatory as it purports to follow the basic rules of a valid hard-copy agreement. The words "may presume" authorize the court to use its discretionary power as regards presumption. The provision deals with attribution of data messages by establishing a presumption that under certain circumstances a data message would be considered as a message of the originator, and goes on to qualify that presumption in case the addressee knew or ought to have known that the data message was not that of the originator. D.

ACKNOWLEDGEMENT

OF RECEIPT Once an offer or acceptance in the form of an electronic record has been sent, the next question is of its receipt considering the peculiar nature of electronic communications. Such communication issue is resolved by Section 12 of the Information Technology Act, 2000, which provides the receipt rule and mandates acknowledgement of receipt of each and every message. The acknowledgement of receipt simply evidences that the offer has been received. According to the section 12(1) of Information Technology Act, 2000, where the originator has not stipulated that the acknowledgment be given in a particular form or by particular method. Here, the acknowledgment may be by any means or even by conduct,

10 The Indian Evidence Act 1872, s 65B

which is good enough to indicate to the originator that the electronic record has been received. So, this sub-section of Information Technology Act, 2000 provides for methods in which the acknowledgment of receipt of an electronic record may be given provided no particular method has been agreed upon between the originator and the recipient. 11 Section 12(2) of the Information Technology Act, 2000 states that where the originator has stipulated that the electronic record shall be binding only on receipt of an acknowledgment, then, unless acknowledgment has been received, the electronic record shall be deemed to have been never sent by the originator.

Section 12(3) of the Information Technology Act, 2000 provides procedure to be adopted by the originator in case of non-receipt of acknowledgment, the originator may give notice to the addressee and specify a reasonable time for acknowledgment and if no acknowledgment is received within the aforesaid time limit he may after giving notice to the addressee and treat the electronic record as though it has never been sent. Receipt acknowledgment does not change the binding nature of the receipt of electronic records, but where the originator has stipulated that the electronic record is binding only after receipt has been received by him of an acknowledgment of such electronic record, the electronic record shall be considered never to have been submitted by the originator until such receipt has been obtained.

Thus, it can be concluded that India has followed a complex theory of reception with the complexities of receipt recognition. E. TIME AND PLACE OF DESPATCH AND RECEIPT OF ELECTRONIC RECORD The time and place of dispatch and receipt of electronic record has been legally recognized under Section 13 of Indian Information Technology Act, 2000. For the purpose of present research we can divide section 13 in two parts -

1. Time of Despatch and Receipt of Electronic Record

2. Place of Despatch and Receipt of Electronic Record

11 Shivani Verma and Yash, Critical Analysis of The Junctures Between E-Contract and Indian Legal System (2020) Supremo Amicus 547

1. Time of Dispatch and Receipt of Electronic Record

The concept of 'dispatch' refers to the commencement of the electronic transmission of the data message. In virtual world, dispatch of e-record is similar to posting a letter in real world, which once posted or dropped into letter box, then it becomes out of the power of sender. Section 13(1) of Information Technology Act, 2000 provides for the time of dispatch of a data message as the time when the data message enters a computer resource outside the control of the originator, which may be the computer resource12 of an intermediary or a computer resource of the addressee. Section 13(2) of Information Technology Act, 2000 describes the time of receipt of a data message.

It addressee the situation where the addressee unilaterally or with mutual understanding with the originator, designates a specific computer resource for the receipt of a message, in such a situation, receipt occurs at the time when the electronic record enters the designated computer resource. If, however, the data message reaches a computer resource of the addressee that is not the designated one, then the receipt is deemed to occur when the data message is retrieved by the addressee. In third situation if the addressee has not designated a computer resource receipt occurs when the electronic record enters the computer resource of the addressee.

Section 13 of the Information Technology Act, 2000 providing rules for determining the time of dispatch and receipt of electronic record, cannot be read in isolation but has to conjoin with Section 12 of the Act, which provides for the acknowledgement of receipt. In other words, Section 13 will take effect only when Section 12 has been satisfied.

2. Place of Dispatch and Receipt of Electronic Record

As per sub section (3) of section 13 of Information Technology Act, 2000 an electronic record is deemed to be dispatched at the place where the originator has place of business, and is deemed to be received at the place where the addressee has his place of business. Parties may enter into an agreement contrary to section 13(3), and where such contrary agreement is entered into, then, that agreement will prevail and section 13(3) will not be

12 The Information Technology Act, 2000 s 2(1)(k)

applicable. Nevertheless, such an agreement must not be contrary to the provisions of the Civil Procedure Code, 1908. The place of business is determined in the following manner: i. Where the originator or the addressee has more than one place of business, the principal place of business shall be the place of business; ii. Where the originator or the addressee does not have a place of business, his usual place of residence shall be deemed to be the place of business; iii. 'Usual place of residence’, in relation to a body corporate means the place where it is registered. 13 F) SPECIFIC EXCLUSIONS As per sub section (4) of section 1 the Information Technology Act, 2000 following documents are excludes from electronic transactions : a) Negotiable Instruments except cheque. b) Power of Attorney. c) Trust Deed. d) Will.

e) Sale Deed or Conveyance deed with respect to the immovable property or any documents relating to any interest in an immovable property.

3. JURISDICTION RULES UNDER INDIAN JUDICIAL SYSTEM

The word jurisdiction is derived from Latin terms “juris” and “dicto” which means “I speak by the Law”. Jurisdiction is the authority of a court to hear a case and resolve a dispute involving person, property and subject matter. These principles of jurisdiction are enshrined in the constitution of a State and part of its jurisdictional sovereignty. All sovereign

13 The Information Technology Act 2000, s 13

independent States possess jurisdiction over all persons and things within its territorial limits and all causes, civil and criminal, arising within these limits.14 The jurisdiction of court can be classified into following categories: A.

Jurisdiction of Civil Courts Under The Code of Civil Procedure

Presence, Domicile or Residence Based Jurisdiction

Jurisdiction Based on The Agreement Between The Parties

Jurisdiction Based on The Submission of The Defendant

Jurisdiction Under The Hague Convention

JURISDICTION OF CIVIL COURTS UNDER THE CODE OF CIVIL

PROCEDURE Section 9 of the Code of Civil Procedure, 1908 lay down general provision regarding the institution of suits in India. As per Section 9, the courts in India shall have jurisdiction to try all suits of a civil nature subject to the condition that if the cognizance of any suit or suits is expressly or impliedly barred by the statute, then in such case the court cannot take cognizance of that case. Section 15 of the Code states that the institution of civil suits in India shall proceed from the lowest court among the hierarchy of courts in India. Section 20 is an important section for the suits relating to commercial contracts as all the commercial cases are dealt under this section.

As per section 20 of the Code, if the suits are not of the nature described under section 16, 17, 18 or 19, the suit shall be instituted where the defendant resides or carries on business or personally work for gain or cause of action arises. Every such suit shall be instituted in a court within the local limits of whose jurisdiction:- a) The defendant, or each of the defendant where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on

14 Mudassir Nazir, Jurisdiction in Cyber Space

Issues and Challenges, (2019) 9 Cpj Law Journal 200 business or personally works for gain, or b) Any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, Provided that in such a case either the leave of the court is given, or the defendant who do not reside, or carry on business, or personally work for gain as aforesaid, acquire in such institution; or c) The cause of action, wholly or in part arises. The expression cause of action has not been defined in the Indian Code of Civil Procedure, but the meaning of it has been well defined in the judicial pronouncement of the country.

From the earliest time and in most of the cases under the Indian Judicial system, the cause of action has been held to mean every fact which is material to entitle the plaintiff to succeed every fact which the defendant would have a right to transverse. 15 The Indian Code of Civil Procedure does not contain any special category of provisions dealing exclusive with the jurisdictional disputes arising out of commercial contract cases. In general all the commercial disputes are dealt by section 20 (c) of the code. But, where the suit falls under section 20 (c) of the Indian Civil Procedure Code and the question for determination is to find out the place where the contract has taken place either in whole or in part, the determination of the question should be decided in the light of principles governing the Indian Contract Law.

Section 21 of the Indian Civil Procedure Code provided that if there is any doubt regarding the local, territorial or pecuniary jurisdiction of the court to assume jurisdiction against the defendant, then the defendant should object to such jurisdiction at the earliest in the court of first instance. Defendant would not be allowed to take objection in the appellant or the revisional Court or when the issues got settled. As per section 21 where there is a complete failure of justice due to not taking of objection at the earliest stage, such an objection may be allowed at the subsequent stage. If the defendant fails to take any objection regarding the jurisdictional defect falling under the provision of section 20 of the civil

15 1 S.C Sarkar, Commentary on The Code of Civil Procedure (Dwivedi Law Agency 2013) 416

procedure, it shall be deemed to have been waived by the defendant. However, it is to be remembered that where there jurisdictional defect as to the competency of a court to try the case, it goes to the very root of the jurisdiction and it cannot be corrected. It will be a case of inherent lack of jurisdiction. 16 In common parlance when it comes to traditional contracts the place of execution of contract is the appropriate jurisdiction. But, in the matter of E-Commerce, the contracting parties are far away from each other and hence there is no as such place of execution, they are executed in a virtual space. The parties may mutually agree upon the jurisdiction but that still does not do away with the uncertainty jurisdiction by default in absence of a “place of execution”. In the case of P. R. Transport Agency v.

Union of India17, it was established that the place of business is the deciding factor for determination of jurisdiction. Further the Information Technology Act, 2000 provides provisions regarding time and place of dispatch of electronic record. Section 13(3) of the Information Technology Act 2000 states: a) An electronic record is deemed to be despatched at the place where the originator has his place of business, and b) An electronic record is deemed to be received at the place where the addressee has his place of business.

In case originator or addressee has no place of business or has more than one place of business, section 13(5) of the Act provides explanationa) If the originator or the addressee has more than one place of business, the principal place of business, shall be the place of business; b) If the originator or the addressee does not have a place of business, his usual place of residence shall be deemed to be the place of business; c) Usual place of residence, in relation to a body corporate, means the place where

16 C.K. Takwani, Civil Procedure ( 9th edn, Eastern Book Company 2023) 41

17 P.R. Transport Agency v Union of India AIR 2006 ALL 23

it is registered. In Banyan Tree Holding Ltd. v. A. Murali Krishna Reddy18 Delhi High Court held that for the purpose of a passing off action, or an infringement action where the plaintiff is not carrying on business within the jurisdiction of a court, and in order to satisfy the forum court that it has jurisdiction to entertain the suit, the plaintiff would have to show that the defendant ‘purposefully availed’ itself of the jurisdiction of the forum court. For this it would have to be prime facie shown that the nature of the activity indulged in by the defendant by the use of the website was with an intention to conclude a commercial transaction with the website user and that the defendant result in an injury or harm to the plaintiff within the forum state.

Court Further held that for the purpose of section 20(c) Code of Civil Procedure, in order to show that some part of the cause of action has arisen in the forum state by the use of the internet by the defendant, the plaintiff will have to show prima facie that the said website, whether termed as passive plus or interactive, was specifically targeted at viewers in the forum state for the commercial transaction, that is, also known as Effect Test in United States. B.

PRESENCE, DOMICILE OR RESIDENCE BASED JURISDICTION

One of the common law principles relating the assumption of jurisdiction over the defendant is that if the defendant is physically present within the territory of the court, that court has direct right over such defendant due to his physical presence within the jurisdiction of the court.19 Jurisdiction based on the presence or residence of the defendant in India has long been settled by the Indian courts. The court held that, though the court had no jurisdiction over the defendant under the Civil Procedure Code, but nevertheless, since the Indian courts follow the English law in such matters, hence the court has jurisdiction over the defendant based on his presence within the territory of the court when the suit was instituted. Similarly, where the person is domicile in India, the courts in India have territorial jurisdiction over him.20

18 Banyan Tree Holding Ltd. v A. Murali Krishna Reddy [2009] SCCONLINE DEL 3780

19 Paras Diwan And Peeyushi Diwan, Private International Law - Indian And English (4th edn, Deep And Deep Publications 1998) 193

20 Pradeep Jain v Union of India AIR 1984 SC 142

Further, in Myspace Inc. v. Super Cassettes Industries Ltd.21 court held that to sue a foreign defendant, the foreigner must be resident and carry on business within the jurisdiction of the forum court. However, the operation of this rule is not absolute and is subject to the municipal law. If municipal law provides otherwise or overrides the private International Law principles, then the municipal law will prevail. C.

JURISDICTION BASED ON THE AGREEMENT BETWEEN THE

PARTIES Under the Indian law it is well established principle that a party’s consent to submit itself to the jurisdiction of a court which does not have jurisdiction to try the case, cannot confer jurisdiction on such court. Consent can neither confer nor take away jurisdiction of a court. In the case of Bahrein Petroleum Co. Ltd. v. P. J. Pappu,22 the Supreme Court has held that, neither consent nor waiver nor acquiescence can confer jurisdiction upon a court, otherwise incompetent to try the suit. It is well-settled and needs no authority that where a court takes upon itself to exercise a jurisdiction it does not possess its decision amounts to nothing. A decree passed by a court without jurisdiction is a coram non judice. Any judgment passed by such court cannot be taken to be valid and could be challenged at any stage of the suit.

A defect in the jurisdiction goes to the root of the matter which cannot be cured by the consent of the parties. Such judgment would be regarded as null and void. But, where a case is between domestic defendants within the domestic jurisdiction of Indian Courts and two or more courts have inherent jurisdiction to try the suit and the parties to a contract make an agreement that a particular court among them, should have jurisdiction to try the case, then in such a case the agreement is not void per se. Such an agreement is not opposed to public policy. 23 D.

JURISDICTION

BASED ON THE SUBMISSION OF THE DEFENDANT If the defendant voluntary submit himself to the jurisdiction of the court in India, that court is entitled to assert jurisdiction over him. The rule applies both to domestic as well as

21 Myspace Inc. v Super Cassettes Industries Ltd. [2016] SCCONLINE DEL 6382

22 Bahrein Petroleum Co. Ltd. v P.J. Pappu AIR 1966 SC 634

23 Hakam Singh v Gammon (India) Ltd. [1971] 1 SCC 286

foreign defendant. However, where a case is of domestic nature between domestic defendants, the court before whom the defendant submits should actually have jurisdiction to try the case, because, the law in India is clear that a party’s consent to submit itself to the jurisdiction of a court which does not have jurisdiction to try the case, cannot confer jurisdiction on such court. Consent can neither confer nor take away jurisdiction of a court. But, in the international cases, the parties may contract between themselves to submit their dispute to the jurisdiction of the court which is unrelated to either of the parties and so if in such case the defendant makes an unconditional appearance before such court, it will amount to submission.

Similarly, where a defendant appears before the court and contest the jurisdiction of the court on merits, instructs its solicitor to accept the service of summons or himself acknowledging the service of summons, waiving the objection as to jurisdiction etc. , then in all such cases it shall be deemed that he has submitted himself to the jurisdiction of that court. But, where the defendant merely makes an appearance to protest that the court does not have jurisdiction, then his appearance will not constitute submission, even if the defendant also seeks stay of proceedings pending the outcome of proceedings abroad. 24 E.

JURISDICTION UNDER THE HAGUE CONVENTION

India is a party to Hague Convention on the Service Abroad of Judicial and Extra Judicial Documents in Civil and commercial matters. India ratified the said convention on 23rd November 2006 and the convention came into force on 1st August 2007. Under the convention the state parties can serve the process of their judicial or extra judicial documents from their own state to another state without following any consular or diplomatic channels. The convention primarily deals with the transmission of documents. It does not address or comprise substantive rules relating to the actual service of process. Article 2 of the Convention requires the member states to appoint a central authority to receive Letters of Request from a judicial authority of another Contracting State and to transmit them to the authority competent to execute them.

The Central Authority designated by India for this purpose is the Ministry of Law and Justice and the High Courts in all states and union

24 British India Steam Navigation v Shanmugha Vilas Cashew [1990] SCC (3) 481

territories in India.25 The Republic of India will not execute Letters of Request issued in pursuance of Article 23 of the Convention for the purpose of obtaining pre-trial discovery of documents, which requires a person to produce any documents other than particular documents specified in the Letter of Request, which are likely to be in his possession, custody or power. For any treaty or convention to take effect the Indian parliament has to pass a law for that purpose.26 Since no law has been passed till date to give effect to the convention, the provisions of the Indian Civil Procedure Code apply to act on Letters of Request.27

4. JURISDICTION RULES IN EUROPEAN UNION

The jurisdictional matter of civil and commercial disputes of the European Union is governed by the new Brussels Recast Regulation on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial matters.28 The new Brussels Recast Regulation was issued by the Council of European Union and enforced from 10th January,

2015. The Recast Regulation has made some important changes and has modified the

provisions of old Brussels Regulation. The provisions aim to ease and make jurisdictional issues less complicated for the parties. Article 25 provides that, if the parties regardless of their domicile, have agreed that a court or the courts of a member state are to have Jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction, unless the agreement is null and void as to its substantive validity under the law of that member state. Article 27 of the old Brussels 1 Regulation dealt with lis pendens related actions.

According to the said article where there was same cause of action between the same parties brought in the courts of different member state, then the court before whom the proceedings were first brought would have jurisdiction and the other court before whom the proceedings 25 Hague Convention on The Service Abroad of Judicial and Extra Judicial Documents in Civil and Commercial Matters

26 The Constitution of India 1950, art 246 Seventh Schedule List 1 Entries 10 & 14

27 The Code of Civil Procedure 1908, O 26 R 19-22

28 Regulation (Eu) No 1215/2012 of The European Parliament and of The Council European Union on Jurisdiction and The Recognition and Enforcement of Judgments in Civil and Commercial Matters On 12 December 2012 (Effective From 10 January 2015) were brought after the first court sized of jurisdiction would have to stay the proceedings brought before it until such time the first court’s jurisdiction was established. Where the first court established its jurisdiction the other court would have to decline jurisdiction in favour of that first court. Article 29 of the Regulation aim to avoid the multiplicity of proceedings and conflict of judgments on the same matters between different courts which may crop up when two different courts give the different judgments on the same matter.

Now as per exception added to the Article 29 of the recast regulation, if the parties enter into an exclusive jurisdiction agreement conferring exclusive jurisdiction to a particular court and also there are parallel proceedings going on in the court of another member state, then in such case the court of the another member state shall stay the proceedings in their court up to the time, the court on which the exclusive jurisdiction is conferred by the agreement between the parties declares that it has no jurisdiction under the agreement entered into between the parties. But where such court declares that it has jurisdiction under the agreement any other court of another member state shall decline to exercise jurisdiction over the dispute in the favour of the court designated in the agreement between the parties.

Further Article 39 of Recast, a judgment given in a Member State which is enforceable in that Member State shall be enforceable in the other Member States without any declaration of enforceability being required.

5. JURISDICTION RULES IN UNITED STATES OF AMERICA

According to the United States America constitution, the lawsuits can be brought either in a state or of federal court. Provided that the state in which the court is located must have a long-arm statute which allows the court to assert jurisdiction over non-resident defendant. Although these statutes will differ from state to state, Fifth and Fourteen Amendments of the United States America Constitution lay down the outer limits for the courts while asserting jurisdiction. Before moving further, it is pertinent that the United States has not codified the law of jurisdiction. Due to this, Courts have evolved the various tests to measure the legitimate exercise of judicial power over the parties to the litigation. Following are the various tests used in United States America:- A.

Minimum Contacts Test

Sliding Scale Test

The Effect Test

MINIMUM CONTACTS TEST

In International Shoe Co. v. State of Washington29 a two-part test for determining jurisdiction of the forum court over a defendant, not residing or carrying on business within its jurisdiction was evolved. It was held that in such instance the plaintiff had to show that the defendant has sufficient ‘minimum contacts’ in the forum state. In other words, the defendant must have purposefully directed its activities towards the forum state or otherwise purposefully availed of the privilege of conducting activities in the forum state. Further, the forum court had to be satisfied that exercising jurisdiction would comport with the traditional notions of fair play and substantial justice. The minimum contacts test in International Shoe case has been understood as to have performed “two related, but distinguishable, functions.

”30 The first was to protect the defendant from the burden of litigating in a distant or inconvenient forum. The second was to ensure that the states do not “reach out beyond the limits imposed on them by their status as coequal sovereigns in a federal system. ” It established the following three criteria for establishing “minimum contacts”:31 a) The defendant must “purposeful avail” himself of the privilege of doing business with the forum state; b) The cause of action arises from defendant’s activities in the forum state; and c) The exercise of jurisdiction would be fair and reasonable. The ‘minimum contact’ principle laid the foundation of state’s jurisdiction over other state’s subject. It advocated establishment of ‘minimum contacts’ to give rise to obligations between the defendant and the forum state.

Primarily, it does not look into the issue whether the contacts were sufficient or insufficient to establish “purposeful availment”. Recently, the

29 International Shoe Co. v State of Washington 326 US 340 (1945)

30 World-Wide Volkswagen v Woodson 444 US 286 (1980)

31 Sharma, (n 4) 362

Court of Appeals for the Ninth Circuit in Boschetto v. Hansing32 while rejecting the ‘sliding scale’ test (laid down in the Zippo case) has followed the minimum contacts test. However, the traditional minimum contacts approach is limited to the category of cases to which International Shoe most directly applied, i.e., long-range commercial transactions. It would not be applicable to cases involving remote torts or goods that were moved after purchase and other non-commercial transaction cases. B.

SLIDING SCALE TEST

In the case of Zippo Mfg. Co. v. Zippo Dot Com Inc. 33 the plaintiff was a Pennsylvania corporation making cigarette lighters. The defendant was a California corporation operating an internet website and an internet news service. It had offices only in California. Viewers who were residents of other states had to go to the website in order to subscribe for the defendant’s news service by filling out an online application. The defendant was sued in a Pennsylvania court for trademark dilution, infringement and false designation. After discussing the development of the law till then, the District Court determine whether the exercise of specific personal jurisdiction over a non-resident defendant is appropriate.

For this purpose the following point has been noted :- a) The defendant must have sufficient ‘minimum contacts’ with the forum state; b) The claim asserted against the defendant must arise out of those contacts; c) The exercise of jurisdiction must be reasonable. The court in Zippo case classified websites as passive, interactive and integral to the defendant’s business. On facts it was found that the defendant’s website was an interactive one. Accordingly, it was held that the court had jurisdiction to try the suit. The Zippo court’s observation that the personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of commercial activity that an entity conducts over the internet has been compared by that court to a ‘sliding scale.

’ The court further held that if the defendant enters into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet, personal jurisdiction

32 Boschetto v Hansing 539 F.3D 1011 (9TH CIR. 2008)

33 Zippo Mfg. Co. v Zippo Dot Com Inc. 952 F. SUPP. 1119 (W.D. PA. 1997)

is proper. A passive Website that does little more than make information available to those who are interested in it is not grounds for the exercise of personal jurisdiction. C.

EFFECT TEST

The difficulty experienced with the application of the Zippo sliding scale test has paved the way for application of the effects test. Thus, in Calder v. Zones34 the courts moved from the subjective territoriality test to an objective territoriality or ‘effects’ test in which the forum court will exercise jurisdiction if it is shown that effects of the defendant’s website are felt in the forum state. It must have resulted in some harm or injury to the plaintiff within the territory of the forum state. The plaintiff needs to establish that the website targeted and cause the effect in the forum intentionally and knowingly. Apart from that the United States has now Federal long arm statute which takes care of the cases which are not to be covered by the above jurisdiction rules. The plaintiff must demonstrate that: a) It has a cause of action arising under federal law.

b) The defendant is not subject to the jurisdiction of the court to any state. c) The defendant’s contact with the United States as a whole is sufficient to satisfy the requirements of the due process. In order to establish the jurisdiction of the forum court, even when a long arm statute exists, the plaintiff would have to show that the defendant purposefully availed of jurisdiction of the forum state by specifically targeting customers within the forum state. A mere hosting of an interactive web page without any commercial activity being shown as having been conducted within the forum state, would not enable the forum court to assume jurisdiction. Even if one were to apply the ‘effects’ test, it would have to be shown that the defendant specifically directed its activities towards the forum state and intended to produce the injurious effects on the plaintiff within the forum state.

34 Calder v Zones 465 US 783 (1984)

6 CONCLUSION

AND SUGGESTIONS Jurisdiction is an ever-persistent issue that has been prevalent not only in cyber law but in several legs of law. Unlike the conventional understanding of jurisdiction, cyber transactions pose difficult situations to determine the jurisdiction. It might happen that there might be multiple jurisdictions pertaining to the same suit. Enforcement and implementation of foreign decrees hold a great challenge. In order to implement the foreign decree, it should be final order with respect to the subjects, therefore, concisely settled by the parties amongst themselves. The following are suggestions to tackle the jurisdiction issue precisely:- a) An impartial body with binding power must be create, that acts as a dispute resolution body to deal with the cyberspace disputes, that takes place between people from different countries.

b) An international monitoring or regulatory body with some binding authority may be assigned the task of analyzing rules of cyber jurisdiction. c) The dispute resolution should work on basis of the guidelines that have already been provided by the United Nation Commission on Trade Law. d) All domestic cyber disputes should be tackled by the domestic courts of the various countries in accordance with their own laws. e) Necessary amendments should be made in Code of Civil Procedure, 1908 and Information Technology Act, 2000.