Aircel-Maxis, International Law and Judicial Restraint

A Three Judge Bench of the Supreme Court today passed this six page long order in an application filed by the Centre for Public Interest Litigation which sought directions in the Aircel-Maxis case. The order made headlines in India (Hindu, Business-Standard, NDTV, Indian Express) with extracts of the terse observations in the order being carried. Most of these are focused on the conclusions in paragraph 10 that the sale of spectrum remains stayed. As I explore in this post, the Order is extremely troubling, illegal, contrary to national and international law, and yet another instance of the White Knight complex that many people have so often written about.

What's the case about and Why was there a Petition in the Supreme Court?

Not so long ago in 2012, the corruption scandal surrounding allocation of 2-G spectrum arrived on the scene and refuses to leave. Investigations are still on-going and are linking supplementary sales of spectrum to be part of the initial scam that allegedly involved Shahid Balwa, Sanjay Chandra, A. Raja and the like. One of these linked cases concerns the sale of spectrum by Aircel to Maxis in 2006. The CBI has alleged that this sale was vitiated by corruption and has filed a chargesheet against Dayanidhi Maran (the then Minister for Communications), Aircel, Maxis, and the responsible officers of these companies. The case is currently pending at the stage of charge before the Special Court hearing 2-G Scam cases in Patiala House, New Delhi. 

The 2-G Scam petition itself was filed in 2010 and continues to be pending. This Application - filed by the Centre for Public Interest Litigation - sought directions to prevent the sale of spectrum by Aircel-Maxis that was said to be on the cards. The Application stated (as per news reports) that allowing the sale would mean the accused persons would profit despite not appearing before the courts despite summons having been issued against them [This Blog had earlier discussed the issue of summoning foreign entities here].

The Order Passed Today

The news media reports on proceedings as they happen inside court and often differ from the eventual order that is published for proceedings online. Something like this seems to have happened here as well, but not to a great extent. Naturally, all that matters is what is in the order itself. 

The Court notes the background:

3. The predicament expressed in I.A.No.82/2016, and the eventual prayer made therein, emerges on account of non-service of summons on Mr. Ananda Krishna Tatparanandam (Accused No.iv) and M/s. Maxis Communications, Berhad, Malaysia (Accused No.vii), and the other accused referred to above (Accused No.iii and vi). 

4. In so far as, the instant aspect of the matter is concerned, the factual position depicted in the reply affidavit, filed on behalf of the Central Bureau of Investigation, reveals as under : “21. That on 31.08.2016, a letter was received by the Ld. Special judge from the Attorney General's Chambers, Malaysia, dated 17.08.2016, inter alia stating that upon consideration of the facts disclosed in the Request for Assistance and further clarifications supplied by the CBI, the requirements as per the provisions under section 20(1)(f) of the Mutual Assistance in Criminal Matters Act, 2002 [Act 621] were not fulfilled, and hence the requests to serve the summons could not be acceded to.” 

So, the Malaysia-based accused persons (not Indian) had not appeared in court due to non-service of summons. In cases like this, when investigation requires processes to happen in another country, we resort to Mutual Legal Assistance Treaties. India and Malaysia have one such Treaty, and the service of summons etc. would have to comply with this in order for summons to be served. If not, the recipient country is under no obligation to enforce service of summons. The Malaysian Act of 2002 referred to is the Malaysian domestic law on how to treat requests by Treaty states for assistance in criminal matters. Section 20 specifies when assistance is to be refused by the Attorney General, and 20(1)(f) states that the request for assistance shall be refused if the Attorney General is of the opinion that "the request relates to the investigation, prosecution or punishment of a person in respect of an act or omission that, if it had occurred in Malaysia, would not have constituted an offence against the laws of Malaysia". Paragraph 4 extracted above shows that non-compliance with this provision is what prevented the service of summons rather than the accused persons wilfully avoiding the process of law. Basically, it shows that the CBI is yet to satisfy the Malaysian Attorney General's office that the acts/omissions alleged are also crimes under Malaysian law.  

In the next paragraph, the Court notes:

5. It is imperative to ensure, in our considered view, that the process of law should not be permitted to be frustrated by non-service of summons to the accused. In order to enforce the presence of accused ... we propose to restrain, earning of any revenue, by using the 2G Spectrum licenses, which were originally granted to M/s Aircel Communications ...

The Court has permitted the accused to make representations before the Special Court (paragraph 8), and has instructed the Union of India to ensure publication of this order in two leading Malaysian newspapers (paragraph 9). Starkly, the Court states that "it will not be open to any of the accused, to raise an objection with reference to any monetary loss, emerging out of the proposed order."  

And All That is Wrong With it

A non-sequitur if there ever was one. That, in short, sums up what has happened here. After all, how else can one explain the Court noting in paragraph 4 that the non-service of summons is due to a failure on part of the Union to fulfil the requirements of the Mutual Legal Assistance Treaty, and then moving on to squarely placing the blame on the accused persons for their fault of residing abroad.

The Court seems to have conflated the domestic methods of ensuring service of summons as provided under Chapter VI of the Criminal Procedure Code 1973 [Cr.P.C.] with such process as applicable under international law which are covered in Chapter VII. This is apparent with the Court suggesting publication in Malaysian newspapers as if it were dealing with an issue of proclamations for absconders under Sections 82 and 83 of the Cr.P.C. If we go a bit further and see Section 105 Cr.P.C., it provides for the specific manner in which this service of summons must happen. 

Now, someone may argue that Article 142 allows the Supreme Court to do nearly anything it wishes so why not this? Well, while I strongly resist that submission itself and argue that nothing in Article 142 allows the Court to transgress existing statutory law, that still does not justify the violation of International Law. Adopting this ad-hoc method for serving summons and processes would violate India's obligations under the Mutual Legal Assistance Treaty with Malaysia. Action taken pursuant to these orders by the Indian authorities would be open to challenge, though I am not an expert on what shape that challenge may take. 

I still cannot understand the conclusions that the Court arrives at. But if we return to the idea that the judiciary has been burdened with expectations of cleaning up the system of corruption (White Knight complex), it definitely makes sense. So what if the Executive is proving unable to comply with the law? Or, in case of the National Anthem Order, what if the Executive wants to do something but is fettered by the law. The Judiciary seems to suggest that it is willing to go ahead and change the law itself, all for the cause of Justice. One interim order at a time - but please, no final judgments.

[this post was updated on 7 January to add the portions on the Malaysian Mutual Assistance in Criminal Matters Act of 2002]

Long Armed Laws - Summoning Alien Accused Companies

Consider this. The police, after completing investigation, file a Final Report alleging that X, an Indian company, and its directors be summoned for offences under Section 420 IPC. It also alleges that Y, the American holding company of X, be summoned as a co-accused. The Indian company is a wholly-owned subsidiary of the foreign company. Today, can a Magistrate in India summon the foreign company by serving the summons on its wholly-owned Indian subsidiary? If you think this is an innocuous question, you're mistaken. These problems are coming to the fore as more companies are prosecuted for the various strict liability offences on the Indian statute book. The issue shot to prominence last year in the U.S.A., when a District Court upheld service of summons on the American wholly-owned subsidiary of a Chinese company, in a trial with counts of espionage [See, here, here and here].

The question: 'Summoning' Persons/Companies Abroad

States across the world contain something or the other on summoning corporations in their criminal procedure laws. The U.S.A. has Rule 4 of the Federal Rules of Criminal Procedure explaining this process. India has Section 63 of the Cr.P.C. which says that service may be effected on a corporation by either (i) serving it on the secretary, local manager or other principal officer of the corporation, or (ii) by letter sent by registered post, addressed to the chief officer of the corporation in India. Section 65 may also be attracted to serving summons on a company, for it applies when service cannot be effected as per the method under Section 63 (and Sections 62 and 64). The officer may affix one of the duplicates of the summons to some conspicuous part of the house or homestead in which the person summoned ordinarily resides.

Section 105 Cr.P.C. tells us what the Court must do whenever it desires to issue a summons/warrant for any person residing in any country/place outside India. The Court is required to send the summons to the authority in the foreign country notified by the Central Government in this behalf. This notification usually occurs through a Mutual Legal Assistance Treaty [MLAT] that India may enter into with a State. This authority, upon receiving the summons/warrant, is then responsible for its execution within its territory. Can it be argued that a foreign company is not in any country or place outside India if that company has a wholly-owned Indian subsidiary? Serving summons of the parent upon its subsidiaries and agents is permitted in civil proceedings in certain situations [Order V, Rules 12-14 Civil Procedure Code 1908]. If permitted in criminal cases, the Government can effect service on that Indian subsidiary for the foreign parent through Section 63 without having to resort to the rigmarole of Section 105 Cr.P.C. Since the latter is a cumbersome process involving two governments and many authorities, allowing service of summons in the ordinary course would undoubtedly hasten the legal proceedings.

Unearthing Rationale - Summons and Corporate Veil
To answer these questions, we need to understand the rationale behind 'summons'. To me, it serves at least two objectives. One: giving notice to the person of there being a set of allegations against her which is the basic premise of a fair trial. Two: through summons, a court assumes jurisdiction over the person/company and can thus ensure appearance of the accused. Service of summons creates a link between the person and Court; the presumption of knowledge so created allows a Court to take coercive steps to ensure participation in proceedings. Think about Proclaimed Offender proceedings under Section 82/83 Cr.P.C. - a Court only moves to that measure on the basis that an accused is knowingly evading the process of law. Along with these two objectives is the underlying difference between allegations in civil and criminal cases, which makes personal service of summons important rather than being always satisfied with a presumption of knowledge. Criminal liability is necessarily personal, only extraordinarily vicarious, and a trial and conviction entails stigma. Thus, only as a last resort are we permitted to derogate from having to make the accused personally aware, Remember, though, that knowledge can be deemed [the proclaimed offender example], and that today there are several strict liability offences which test the generalisations about criminal law.

If you agree with my perfunctory analysis, let us reconsider the initial question. Would the accused foreign parent company get personal notice of allegations upon service of summons to its co-accused Indian wholly-owned subsidiary? In arguing this, the Government seeks to pierce the veil of incorporation and suggest they are the same legal entity. This would in theory mean personal service is effected on the foreign parent by serving summons on the officers of the domestic subsidiary under Section 63 Cr.P.C. Taking this path is problematic. Piercing the corporate veil by its very definition would require appreciating evidence and facts; would it be proper for a Court to engage in that analysis at this primary stage of proceedings? Perhaps not. But allowing this analysis carries strong policy benefits, so even if summons are treated as served cannot the foreign company challenge that exercise of jurisdiction? On principle, one might say it is finely balanced. Looking at practice in the USA, it seems a different yardstick is applied while dealing with civil/tort liability where piercing for jurisdictional purposes is common, and criminal liability where it is not so. Importantly though, American Courts have not held piercing of corporate veil to be impermissible at this stage.

Consequences of Irregularly Exercising Jurisdiction
Assume in our case a Court issued summons to co-accused wholly-owned domestic subsidiary under Section 63 Cr.P.C. for the accused foreign parent as well, and found that service is properly effected. Today if the foreign company chooses to appear - either at the outset or after it is convicted - and raise a jurisdictional challenge, will it succeed?

The company would argue this piercing of corporate veil is improper at the outset for it relies upon an analysis of evidence. Such a technique would amount to subverting the clear process of law, as laid out in Section 105 Cr.P.C. The rationale behind that provision would be found in International Law. While International Law permits domestic statutes to have extraterritorial jurisdiction, it prohibits States from enforcing this jurisdiction extraterritorially. For example: International Law permits the IPC to criminalise offences committed abroad, and the IPC does so through Section 4. While the IPC does then apply to a murder committed by an Indian in California, this does not enable the CBI/police to fly out to California and arrest the accused. Summons are effected through police officers, and thus are no different. The company would argue that these limits are recognised in the Cr.P.C. beyond Section 105 as well. Section 77 Cr.P.C. provides a warrant of arrest may be executed at any place in India. Similarly, Section 60 Cr.P.C. ordains an officer may pursue and arrest persons in any place in India. The extraterritorial enforcement of laws is barred for good reasons too. Imagine a situation where every state's laws apply globally, and every state can enforce these laws globally through its officers. Persons across the world would be subject to multiple sets of laws while having the remotest links to that legal system. There would be no sanctity of international borders left, and states would be at the mercy of wanton external interference in handling its domestic affairs.

The problem is this. States haven't always been willing to set aside proceedings on the basis of an irregular exercise of jurisdiction. For this, I rely upon the practice of states as seen in cases where accused persons were illegally arrested abroad and brought to face trial in domestic courts. We discussed this earlier on the blog and I highlighted a divergence in practice. One view considers the illegal arrest as one circumstance to be relied upon for arguing the unfairness of trial. The other view considers the circumstances of arrest inconsequential to determining the fairness or legality of the subsequent trial. India follows the latter view. In Om Hemrajani the Supreme Court observed: "How the accused gets there [to court] is immaterial. It does not matter whether he comes voluntarily or in answer to summons or under illegal arrest." If the individual can be brought to face trial after an illegal arrest, why would a company be treated any differently if it is brought to court through illegal summons?

Conclusion
With the ever-burgeoning scope of strict liability offences and corruption trials in India, we may find a thorough judicial discussion of this issue soon. As this post suggests, the judiciary is bound to have its hands full. To put in my two cents, I would argue that the position in Om Hemrajani must be revised to make illegal arrests important for determining the validity of subsequent trial. Flowing from this, a strict interpretation of Section 105 Cr.P.C. should be adopted requiring that procedure to be followed for every company located abroad, regardless of its domestic presence.

Interception and Hot Pursuit of a 'Terror' Boat

In the previous post, I discussed extra-territorial jurisdiction of law enforcement. International Law, ever since the decision in Lotus, restricts law enforcement by states to within their territories. A rather unpleasant situation would arise if states could send their agents to enforce their laws on foreign soil. Imagine the Delhi Police arresting Indian citizens in Colorado for engaging in homosexual activity [which would be an offence under the IPC]. This eventuality, thankfully, is prevented through this basic rule. But, like every other rule this also carries exceptions. A most notable exception to this rule is found in context of the Law of the Sea, evocatively labelled 'Hot Pursuit'. Contrary to what you may think, this is not always about a high-speed chase after cold-blooded criminals. In fact, most pursuits are over foreign ships violating fishing laws! 

But, two days ago the Indian media was covering a story of an alleged exercise of Hot Pursuit by the Indian Coast Guard of a vessel bearing a Pakistani Flag, which culminated with the suspect vessel sinking after explosions occurred on board probably killing the crew [see here, here and here]. The media has with near-uniformity accepted the theory of this vessel being engaged in terrorist activity, with the explosion being triggered by terrorists who sought to avoid capture. The veracity of these claims may never be proven, and therefore doesn't fit the 'Proof of Guilt' theme of the blog. What I am interested in is the interception and pursuit, which led to this alleged act of self-immolation. 

Crucial Facts

The alleged hot pursuit began nearly 365 KM South-West off the coast of Porbandar, when the suspected vessel refused to stop after being intercepted by the Coast Guard vessel Rajratan. It continued for nearly an hour with the suspected vessel moving further away from the Indian coast. The suspected vessel stopped after warning shots were fired from the Rajratan and the crew was allegedly seen to move below the deck. Soon after, there were explosions and the vessel caught fire. Due to bad weather conditions, rescue operations could not be conducted, but searches are currently ongoing.

Interception and Hot Pursuit of Vessels under International Law

Ships are considered exclusively subject to the enforcement jurisdiction of whichever state's Flag they fly: much like territory itself. So the interception of foreign ships at sea is an exceptional situation, which is determined by the Law of the Sea Convention 1982 [LOSC]. Interception and subsequent pursuit of ships is a rather technical subject, which requires a brief introduction on jurisdiction in the Law of the Sea. Every Coastal State today has a 12 nautical mile Territorial Sea [Article 3, LOSC]. This is considered an extension of territory itself, and a State has near-complete jurisdiction over affairs here [Articles 17-32, LOSC]. States may claim a Contiguous Zone [Article 33, LOSC], which continues for a further 12 nautical miles after the Territorial Sea. This confers limited jurisdiction relating to 'fiscal, customs, immigration, and sanitation' matters. Lastly, States may claim an Exclusive Economic Zone, that can extend to 200 nautical miles from the coast [Article  55, LOSC]. Jurisdiction within the EEZ is further restricted to enforcement of fisheries and similar resource-exploitation based legislation [Article 56, LOSC]. Beyond this, States have universal jurisdiction to deal with certain situations, such as piracy [Article 100, LOSC].

Suppose a foreign ship violates Indian criminal laws within our Territorial Sea. The Coast Guard intercepts but it flees, with the Coast Guard hot on its tail. Must the chase end before the 12 n.m. boundary, as criminal laws are not enforceable beyond? International Law has thankfully avoided conferring such impunity upon offenders through the right of Hot Pursuit, which permits the chase to continue out to the High Seas. In order to avoid its, States agreed upon inserting several conditions while recognising this right in both Article 23 of the Geneva Convention on the High Seas 1958 and Article 111 of the LOSC. Perhaps the most important of these is the restriction on what violations can give rise to Hot Pursuit from the specific jurisdictional zones. Any municipal law violations within the Territorial Sea can sustain Hot Pursuit. But to begin a Hot Pursuit from the Contiguous Zone or EEZ, the initial violation must be of laws that are enforceable there. So, a pursuit cannot begin in the EEZ for a violation of the State's criminal laws, as the corresponding enforcement jurisdiction is lacking. 

Triumphant, but Possibly Illegal?

Most comments in the aftermath of the operation are of triumph at having foiled a potential terror attack. Few, however, commented on the possibly illegal interception and Hot Pursuit that led to this. I have to admit, the information currently available leaves no doubt that the interception as well subsequent Hot Pursuit were not legal. 

What illegality am I referring to? The alleged interception occurred nearly 365 KM, or nearly 197 nautical miles from India's coast. This means the ships were in the EEZ, where the only bases for the Coast Guard to stop a foreign vessel is either violation of India's fishery laws, or suspicion that the Ship was a Pirate Ship. The suspected ship was confirmed as a Pakistani vessel in the Official Press Release, taking away any possible arguments of Piracy and a resulting universal jurisdiction. There are other bases relating to terrorism that the SUA Protocol of 2005 confers upon States, but India is not yet a Party. Therefore, legally, we had no basis to stop that ship in the first place. 

This brings me to the Hot Pursuit. Article 111 LOSC lays down several conditions, and the Law of the Sea Tribunal expressly clarified in the M.V. Saiga Case (No. 2) Judgment of 1999 that all of these must be cumulatively satisfied for Hot Pursuit to be legal [paragraph 146]. It appears that a most fundamental condition was not complied with, that of conducting a pursuit from the EEZ for violation of EEZ-specific laws. The Saiga Case had a similar pursuit from the EEZ, where Guinean authorities pursued and arrested the Saiga for evading customs laws. The Tribunal held such enforcement was without any lawful basis, as EEZ jurisdiction was limited under the Convention. 

Does it Matter?

India seems to have acted out of bounds, and the apparent illegality of the episode cannot be brushed aside by linking the suspected ship to terror operations. Instructive here is an incident involving the vessel So San, back in 2002. The ship left North Korea and was suspected by the United States as carrying Scud Missiles. The U.S. Navy intercepted the So San, but it refused to stop and a pursuit followed. Shots were fired and only after the So San was damaged did it stop. the Scud Missiles were there, hidden beneath the reported cargo. What happened next? After Yemen claimed ownership of the missiles, the United States let the So San go. It acknowledged that there was no basis under International Law to prevent the ship was proceeding to Yemen. In fact, it only intercepted the ship because it had no flag [read the New York Times report here]. 

This incident was slightly a year after the 9/11 attacks, but the U.S. respected the limits of International Law (something that certainly decreased with time). The interception and hot pursuit strike a harsh note not only for India-Pakistan relations, but also potentially harm the freedom of navigation enjoyed by ships of both States in an already troubled area. 

Section 188 Cr.P.C. and Extra-Territorial Jurisdiction - Part II

In the previous post Section 188 Cr.P.C. was discussed, focusing on one question: which Court within India would have jurisdiction under the Section. This, we saw, was determined by the phrase "at which he may be found". But, there is a prior question which is usually ignored today: the impact of how the Accused was brought to a particular court. If X was improperly arrested abroad and brought to India to face trial, would this illegal arrest affect the jurisdiction of a court over X?

Enforcement Jurisdiction and Territoriality

It is common for statutes to have clauses that extend their reach beyond a state's borders [eg: Section 4 of the IPC], but their extra-territorial enforcement is a separate matter altogether. 'Enforcement Jurisdiction' is strictly wound with territoriality. Under customary international law, a State cannot enforce its laws/rules or any other aspect of its sovereignty beyond its territory [See, The Case of the S.S. “Lotus”, Series A No. 27 (7 September, 1927) (Permanent Court of International Justice); Ian Brownlie, Principles of Public International Law, p. 309-10 (7th edn., 2008); Cydric Ryngaert Jurisdiction in International Law, p. 23-25 (2008)].

India has not dissented from this position, as can be gleaned from both statute and case law. Section 60 Cr.P.C. extends the power of the Police to arrest to "any place in India", but not beyond. Recently, the Supreme Court confirmed the territorial limitations on enforcement in Republic of Italy v Union of India [Italian Marines Case]. The procedure to secure presence of offenders abroad is largely governed by bilateral treaties in the nature of Mutual Legal Assistance Treaty [MLAT] between nations [a list of India's MLATs is available here]. 

Illegal Arrests and Jurisdiction: Two Views

That said, history is littered with incidents of persons being illegally arrested/abducted on foreign soil by state-agents to face trial for offences. Municipal courts across several states have considered the potential effect illegal arrests/abductions should have on the subsequent jurisdiction of courts to try individuals, and it is fair to say that two views seem to emerge: the classical and contemporary.  

The classical view favours retaining jurisdiction ignoring the circumstances of arrest, applying the Latin maxim Male Captus Bene Detentus. An illegal arrest, it is argued, is a procedural defect and the guilty person cannot be allowed to flee taking advantage of such a minor point. This was famously applied in the Eichmann Case, where the Israeli Supreme Court refused to consider Adolf Eichmann's alleged abduction from Argentina in determining whether he could be prosecuted. More recently, the Supreme Court of the United States in United States v. Alvarez-Machain (1992) upheld that country's long-held view that circumstances of arrest are immaterial to decide subsequent jurisdiction to prosecute.  

The more contemporary view rejects blithely ignoring the circumstances of arrest when determining the jurisdiction to try an accused. An illegal abduction from foreign soil is an important factor to decide whether or not an accused should face trial. The best exponent of the modern view is perhaps the House of Lords decision in Ex Parte Bennett (1993), wherein other instances are also cited. This view does not claim that a blanket prohibition should be in place completely barring a trial following illegal arrest. Rather, the circumstances of arrest and detention are considered relevant to decide whether the trial would result in an abuse of process.

The Indian Position: A Need for Review? 

India adopts the classical view, with the Bombay High Court decision in Emperor v Vinayak Damodar Savarkar being relied upon since 1910 without exception. There, it was contended that Savarkar had been illegally arrested in Marseilles by British authorities, and this illegality precluded the Court from exercising any further jurisdiction over him. The Court assumed the arrest was illegal, only to flatly reject the contention stating that "where a man is in the country and is charged before a Magistrate with an offence under the Indian Penal Code, it will not avail to him to say that he was brought there illegally from a foreign country." 

That this is considered a non-issue today was evinced from the Supreme Court decision in Om Hemrajani (2004) where the Court casually mentions: "How the accused gets there [to court] is immaterial. It does not matter whether he comes voluntarily or in answer to summons or under illegal arrest." But is this acceptable today? No. The settled position of the classical view which India adopts is a thing of the past. Admittedly, it cannot be said that International Law clearly warrants that States renege jurisdiction following illegal arrests. But the fact that the international community disapproves of illegal abductions to bring offenders to justice today was witnessed by widespread condemnation of the decision in Alvarez-Machain itself. 

The Bennett approach of considering circumstances of arrest as relevant in determining whether exercising jurisdiction amounts to an 'abuse of process' fits neatly with the inquiry a High Court must conduct in applications under Section 482 Cr.P.C. Currently, arrests in contravention of statutory restrictions are considered illegal and can render proceedings quashed [Emperor v Chandri Bawoo,1924]. There is no reason why the same principle should not be extended to cases where arrests are effected abroad, representing a more fundamental illegality of action.