India Business Law Journal – July/August 2020

Battling On

When will we see the turn of the tide?

Making an investment in India today, as in other jurisdictions around the world, is arguably all about taking a long view. Blackstone, which has about US$13 billion invested in India after 13 years of being here, has said, as far as its real estate investment was concerned: “India is a story of patience”. Other investors from within India and abroad will have had similar experiences. For while having the stamina to endure is all important, good things surely come to those who wait.

But does this hold true for an India battered by covid-19? The challenges that lie ahead for the country are daunting, and while efforts to tackle it are underway, there are questions about whether enough is being done. With little by way of good news on the pandemic front, prospects are bleak. We would all agree that the time for decisive and effective action to help companies and the population at large is now. There is little to be gained by waiting.

As our Cover story details, there is similarly little to be gained by delaying the privatization of many of India’s public sector enterprises. While several have been undergoing a winding-up, liquidation or strategic disinvestment, many others have negative net worth. Privatizing such volatile government entities – which are financially burdened and adversely affecting the public purse – to make them self-reliant appears essential.

A new public sector enterprises policy is in the works with plans to privatize all public sector entities except the ones functioning in certain strategic sectors. Will it strike a balance between the concept of the welfare state and privatization of the economy? And will a new privatization drive succeed where earlier attempts have failed? Only time will tell.

In this issue’s Vantage point, Justice Prathiba M Singh, of the Delhi High Court, writes the pandemic has not been able to destroy the resilience of the court system. She says the system “has fought back against the crippling pandemic, and will continue to do so in the days and months to come”.

Prior to the pandemic, the courts used videoconferencing as a tool for the recording of evidence in some cases and for making submissions on rare occasions. The onset of covid-19 has seen the absorption of technology being fast-forwarded in the courts. As a result, Justice Singh is of the opinion that the day is not far away when virtual courts are blended with physical courts to increase the efficiency and productivity of the judicial system.

In What’s blocking the chain? we turn the spotlight on blockchain, which can be a disruptive technology for the administration of smart contracts in the financial sector. However, as we point out, without a regulatory framework that recognizes the enforceability and admissibility of a smart contract under the existing provisions of laws, the implementation of this technology remains difficult. Our coverage details statutes that will need to be amended. In What’s the deal? we take a close look at monetizing intellectual property (IP) rights. As we detail, this will require IP and research and development teams to work together. While companies that have failed to recognize and appreciate the importance of IP have suffered, doing so can foster innovation and expand product offerings, through licensing or joint ventures, to satisfy the unmet needs in the market, which in turn generates new income streams. Our coverage provides an analysis of how R&D and IP teams can come together to understand the significance of operating in synergy to achieve business goals.

Our Intelligence report, which is our annual report on the state of the Indian legal market, finds the heads of India’s law firms taking on the challenges of the current situation. While some appear to be upbeat, others are understandably anxious.

As such, while Vivek Chandy, a joint managing partner of J Sagar Associates, reports that the “extra time that was saved on travel to the office was judiciously utilized for the training of attorneys and staff”, Manoj Kumar, founder of New Delhi-based Hammurabi & Solomon Partners, speaks for the majority when he says law firms “are facing challenges such as fewer inquiries, disturbed operations, stalled cashflow, increased fixed expenses, risk of closing the business, and stress and low morale”.

With India’s GDP having recorded a fall in growth of 23.9% in the April-June 2020 quarter in comparison to the same period last year, India’s law firms are enduring one of the most challenging periods in their history.

Yet, as several lawyers have pointed out, there have been some silver linings as lawyers and law firms have been pushed to embrace technology for the sake of their trade. Law firms, both big and small, have been investing in software and technology, and interactive portals and mobile apps for their clients, and this appears to have become the norm. Add to this the digitalization of due diligence, contract review and legal research, and there is little doubt that digital technologies will significantly change the practise of law.

Clients will benefit not least from safer, faster dispute resolution for clients. For as Shiraz Patodia, at Dua Associates, says: “Online courts, online arbitration and mediation could be the ‘new normal’ for all of us going forward”. Still, the tragedy of the covid-19 pandemic persists, and all of us wait for the turn of the tide.